Shenzhen Properties Group深房集团

Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd.

2026 Interim Report

2026-039

[August 26, 2026]

Section I Important Notes, Table of Contents and Interpretations

The Board of Directors, the directors, and the executives of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report.

Principal CHEN Ming, Chief Finance Officer WANG Jianfei and Chief Accountant (accounting officer) ZHOU Hongpu declare that they guarantee the authenticity, accuracy and completeness of the financial report in the Semi-annual Report.

All directors attended the board meeting at which this Semiannual Report was considered.

Some of the descriptions in the Company's semi-annual report relating to future business plans or business work arrangements are subject to various factors and do not constitute a substantial commitment by the Company to investors. Investors and related persons should maintain sufficient risk awareness and understand the differences between plans, forecasts and commitments.

The Company plans not to distribute cash dividends, issue bonus shares, or increase share capital through capitalization of reserves.

Table of Contents

Section I Important Notes, Table of Contents and Interpretations....2

Section II Company Profile and Major Financial Indicators....6

Section III Management's Discussion and Analysis....9

Section IV Corporate Governance, Environment and Society....23

Section V Significant Events....24

Section VI. Share Changes and Shareholder Information....35

Section VII Bonds....42

Section VIII Financial Statements....43

List of Reference Documents

1. The financial statements with the personal signatures and stamps of the Company’s legal representative, Chief Financial Officer and head of the financial department.

2. The originals of all the documents and announcements disclosed by the Company on the designated information disclosure media during the Reporting Period.

Interpretations

Section II Company Profile and Major Financial Indicators

I. Company Profile

II. Contact information

III. Other Information

1. Company contact information

Whether the Company's registered address, office address and their postal codes, Company website, email address, etc. changed during the reporting period

□ Applicable Not applicable

The Company's registered address, office address and their postal codes, Company website, email address, etc. did not change during the reporting period. Please refer to the 2025 Annual Report for details.

2. Information disclosure and storage location

Whether the information disclosure and storage location changed during the reporting period

□ Applicable Not applicable

The stock exchange website and media names and websites where the Company discloses its semi-annual report, and the storage location of the Company's semi-annual report did not change during the reporting period. Please refer to the 2025 Annual Report for details.

3. Other related information

Whether other related information changed during the reporting period

□ Applicable Not applicable

IV. Key Accounting Data and Financial Indicators

Whether the Company needs to retroactively adjust or restate the accounting data of previous years

☐ Yes No

V. Differences Between Accounting Data Under Domestic and Foreign Accounting Standards

1. Differences in net profit and net assets in the financial reports disclosed in accordance with the international accounting standards and the Chinese accounting standards

□ Applicable Not applicable

During the reporting period of the Company, there was no difference in net profits and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards

2. Differences in net profit and net assets in financial reports disclosed in accordance with both the international accounting standards and Chinese accounting standards

□ Applicable Not applicable

During the reporting period of the Company, there was no difference in net profits and net assets in financial reports disclosed in accordance with the international accounting standards and Chinese accounting standards

VI. Non-recurring Profit or Loss Items and Amounts

☑ Applicable ☐ Not applicable

Unit: RMB

Specific circumstances of other profit or loss items that meet the definition of non-recurring profit or loss:

□ Applicable Not applicable

The Company had no specific profit or loss items that meet the definition of non-recurring profit or loss.

Notes on the definition of the non-recurring profit or loss items listed in the "Interpretive Announcement No. 1 on Information Disclosure of Companies Issuing Securities to the Public - Non-recurring Profit or Loss" as recurring profit or loss items

☑ Applicable ☐ Not applicable

Section III Management's Discussion and Analysis

I. Main business engaged in by the Company during the reporting period

(I) Industry development during reporting period

On July 15, the official website of the National Bureau of Statistics released the national economic performance for the first half of 2026. In the first half of the year, China's economy withstood pressure and operated within a reasonable range, with production and supply growing relatively fast, employment generally stable, prices rising moderately, foreign trade maintaining a good momentum, new drivers of growth developing rapidly, people's livelihood effectively secured, and development resilience continuously demonstrated. In terms of the industry, in recent years, various regions have implemented city-specific policies, continuously optimized and adjusted real estate policies to control increments, reduce inventory destocking pressure, and improve supply. They have orderly relaxed house purchase restrictions, deepened the reform of the housing provident fund system, increased the supply of affordable housing, and promoted urban renewal and renovation. By working from both the supply and demand sides, a coordinated set of policy measures has been introduced. The supply and demand relationship in the real estate market has gradually improved, and market expectations have picked up.

(II) Company's operations during reporting period

In the first half of the year, facing a complex and volatile external environment and arduous development tasks, all cadres and employees of the Company overcame difficulties and forged ahead with determination, making certain progress in all tasks:

1. Main businesses operated under pressure with obvious structural differentiation. First, rea estate sales fell short of expectations, and destocking pressure remained prominent; Second, property leasing and operation advanced steadily, with rental income in the first half of the year reaching 40% of the annual target; Third, operations of affiliated enterprises showed mixed results; some affiliated enterprises remained in a state of loss, and there was a certain gap between major economic indicators and annual assessment targets.

2. Exploration of future development steadily advanced, continuously consolidating foundational support. First, focusing on key fields and critical industries, the Company successively engaged in research on multiple industrial projects, laying a theoretical foundation for its future development; Second, a project expansion and screening mechanism was established to connect with high-quality internal and external resources and actively explore diversified capital cooperation models.

3. Risk mitigation remained controllable, and safety defense line was continuously strengthened. First, regarding the bankruptcy liquidation of Jianbang Company, the Company maintained

continuous communication with the special task force, the court, and the administrator to safeguard its legitimate rights and interests. Second, 30 safety inspections were cumulatively carried out, and over 70 hidden dangers were rectified in a closed-loop manner, effectively preventing safety risks; Third, risk and hidden danger screening and early warning were carried out on a regular basis, and no major petition-related matters or public opinion incidents occurred during the Reporting Period.

4. Comprehensive capabilities were continuously improved, and governance efficiency was constantly optimized. First, the revision of the headquarters' compensation and performance assessment systems was completed, human resource allocation was optimized, and organizational effectiveness was steadily improved; Second, information disclosure was strictly managed, compliance reviews were strengthened, and corporate governance became more standardized and orderly; Third, the centralized management of funds was strengthened, budget and settlement reviews were strictly conducted, and results in cost reduction and efficiency enhancement were evident.

5. Party-building integration deepened continuously, and political guidance was consistently strengthened. First, study and education on establishing and practicing a correct view of performance were solidly advanced, promoting the organic unity of "immediate rectification" and "long-term establishment" through a supervisory mechanism of "three inspections and three rectifications"; Second, the Group's leadership team members visited the frontline at the primary level and provided point-to-point support to designated enterprises on 21 occasions, continuously deepening the construction of the "one enterprise, one brand" initiative in Party building; Third, responsibility letters for Party conduct and clean governance were signed at each level, pre-holiday integrity education was organized, and supervision and discipline enforcement were strengthened by focusing on key links such as bidding and procurement, building a solid defense line against integrity risks.

The Company shall comply with the disclosure requirements for the real estate industry as set out in the Guidelines for Self-Regulation of Listed Companies of Shenzhen Stock Exchange No. 3 - Industry Information Disclosure New land reserve projects

Cumulative Land Reserve

Development of main projects

Sales of main projects

Leasing of main projects

Level-I land development

□ Applicable Not applicable

Financing approach

Development strategy and business plan for the next year

Note: 1 Factoring of accounts receivable

In the second half of the year, the Company will overcome difficulties and comprehensively advance the following five key areas of work:

(I) Focusing on main business breakthroughs and making every effort to sprint toward annual business objectives. First, focus on advancing the destocking of existing housing while making every effort to advance the US land sale task, fighting a tough battle in project marketing; Second, efficiently revitalize self-owned property resources, strengthen daily operation, maintenance and customer services, and improve the quality and efficiency of asset operations; Third, all affiliated enterprises should anchor their annual assessment indicators, close gaps, catch up on progress, and promote the achievement of production and efficiency targets.

(II) Focusing on future development and accelerating the cultivation of a second growth curve. First, focusing on "what the country needs, where the industry trends, what Shenzhen requires, and what SPG is capable of," strengthen strategic synergy and communication with the controlling shareholder, accurately target the primary direction of future development, and clarify specific implementation paths and promotion measures; Second, improve the market-oriented operating mechanism, accelerate the adjustment of the business structure towards a direction that better meets market demand and has more development resilience, and consolidate the foundation for long-term development.

(III) Focusing on steady operations and firmly building a bottom line for risk prevention. First, continuously follow up on bankruptcy liquidation cases, accelerate the disposal of "non-core and nonadvantageous businesses, inefficient and ineffective assets" and the governance of loss-making enterprises, and make every effort to resolve various operational risks; Second, deepen the construction of a dual preventive mechanism, perfect the assessment and accountability system, and strictly implement closed-loop rectification of hidden dangers to ensure a stable and controllable work safety situation throughout the year; Third, promptly resolve current petition-related matters and resolutely prevent major sudden unstable events, creating a stable and orderly internal and external environment for the Company's development

(IV) Focusing on lean governance to comprehensively stimulate endogenous development momentum. First, build a high-quality, professional talent team adaptable to the Company's development, solidly conduct annual assessments, and fully stimulate the team's vitality in entrepreneurship and work; Second, continuously deepen ESG governance and sustainable development practices, enhance the quality of information disclosure, strengthen the construction of a compliance management system, and standardize the modern governance system; Third, strengthen the budget management and dynamic monitoring of key expenses, deeply explore the potential of internal cost reduction, and further enhance overall operational efficiency.

(V) Focusing on Party-building integration to foster a clean and upright development environment. First, solidly complete the "second half of the article" in the study and education on establishing and practicing a correct view of performance, guiding cadres at all levels to focus their minds on practical work and devote their energy to implementation; Second, carry out a "review and reassessment" of the implementation of the spirit of the Party building conference for state-owned enterprises, systematically summarize experience, benchmark against standards to identify deficiencies, and lead and guarantee high-quality development with high-quality Party building; Third, regularize Party spirit education and warning education, persistently rectify the "four forms of decadence", comprehensively promote the mechanism ensuring that officials "dare not, cannot, and do not want to be corrupt", and continuously cultivate a clean and upright political ecosystem.

Guarantee to buyers of commercial housing for bank mortgage

☑ Applicable ☐ Not applicable

Joint investments by directors and senior management and the listed company (applicable for such investments where the directors and senior management are the major source of investment):

□ Applicable Not applicable

II. Analysis of Core Competitiveness

As the earliest real estate developer founded in the Shenzhen Special Economic Zone, the Company helped build the early city, and has created a number of "first places" in the history of real estate development in China. For example, the first to use the paid state-owned land, the first to introduce the foreign investment for the cooperative land development, the first to raise development funds by means of pre-sale of buildings, the first to carry out public bidding for construction projects in accordance with international practices, the first to set up a property management company to the buildings and residences developed in an all-rounded manner, as well as winning the bid in the new China’s first auction of land use rights held in the Shenzhen Special Economic Zone.

After more than 40 years of development, the Company has grown into a business group with real estate development and operation as its main business, integrating engineering and construction, project supervision, asset management and other diversified operations. In the future, the Company will actively cultivate and promote a corporate culture of compliance, integrity and excellence. It will remain committed to giving back to society with high-quality products and building its reputation through quality, striving to become a respected and trustworthy listed company.

III. Analysis of Primary Business

Overview

Please refer to "I. Main businesses engaged in by the Company during the reporting period".

YoY changes in key financial data

Unit: RMB

Significant changes in profit composition or profit sources of the Company during the Reporting Period

□ Applicable Not applicable

There were no significant changes in the profit composition or profit sources of the Company during the Reporting Period.

Composition of operating revenue

Unit: RMB

Industry, product or region accounting for more than 10% of the Company's operating revenue or operating profit ☑ Applicable ☐ Not applicable Unit: RMB

Under the circumstances that the calculation method of the Company's main business data is adjusted during the reporting period, the Company's main business data for the latest period is adjusted according to the calculation method at the end of the reporting period

□ Applicable Not applicable

IV. Analysis of Non-primary Business

□ Applicable Not applicable

V. Analysis of Assets and Liabilities

1. Major changes in asset composition

Unit: RMB

2. Major overseas assets

□ Applicable Not applicable

3. Assets and liabilities measured at fair value

☑ Applicable ☐ Not applicable

Unit: RMB

Other changes

Whether there were significant changes in the measurement attributes of the Company's major assets during the reporting period

☐ Yes No

4. Restrictions on asset rights as of the end of the reporting period

Unit: RMB

VI. Investments Analysis

1. Overall situation

☑ Applicable ☐ Not applicable

2. Major equity investments acquired during the reporting period

□ Applicable Not applicable

3. Major non-equity investments in progress during the reporting period

□ Applicable Not applicable

4. Investment in the financial assets

(1) Securities investment

□ Applicable Not applicable

The Company had no securities investment during the reporting period.

(2) Derivative investment

□ Applicable Not applicable

The Company had no derivative investment during the reporting period.

5. Use of funds raised

□ Applicable Not applicable

The Company had no use of funds raised during the reporting period.

VII. Sales of Major Assets and Equities

1. Sales of major assets

□ Applicable Not applicable

The Company did not sell major assets during the reporting period.

2. Sale of major equity

□ Applicable Not applicable

VIII. Major Subsidiaries

☑ Applicable ☐ Not applicable

Major subsidiaries and participating companies with an impact of 10% or more on the Company's net profit

Unit: RMB

Information on acquisition and disposal of subsidiaries during the reporting period □ Applicable Not applicable Notes to main holding and participating companies

1. The subordinate subsidiaries engaged in real estate development include: Shenzhen Shenfang Chuanqi Rea Estate Development Co., Ltd., Shenzhen SPG Longgang Development Co., Ltd., Shantou SEZ Wellam FTY Building Development, Co., Ltd., Shantou Huafeng RealEstate Development Co., Ltd. Among them, the SPG Guangmingl project developed by Chuanqi Company (excluding the commercial part) and the Cuilinyuan project developed by Longgang Company have been completely sold out; the Jinyedao and Yuejing Dongfang developed by Shantou SEZ Wellam FTY Building Development, Co., Ltd. left a few amount of remaining buildings for sale; Shantou Huafeng Rea Estate Development Co., Ltd. was responsible for the development of Tianyuewan project (divided into Phase I and Phase II). Tianyuewan Phase I was open for sale in October 2016 and completed in December 2019. The Phase II started construction in November 2018 and was completed at the end of June2021. As of June 30, 2026, the overall sales progress is relatively slow with an accumulated sales rate of 76.6% for Tianyuewan Phase I and 10.11% fo Phase II.

2. Shenzhen Zhentong Engineering Co., Ltd. was engaged in the business of building installation and maintenance with the operating revenues of RMB 72.3753 million in the first half of 2026, accounting for 48.49% of the Group's operating revenues.

3. The 2026 net profit of Xin Feng Enterprise Co., Ltd. was RMB -849,300, which is mainly due to the depreciation and amortization of investment property.

IX. Structured Bodies Controlled by the Company

□ Applicable Not applicable

X. Risks Faced by the Company and Countermeasures

(I) Macroeconomic risks and countermeasures

Currently, the external environment is confronted with complex challenges such as frequent geopolitical conflicts and accelerated anti-globalization. However, China's economy has a solid foundation, numerous advantages, strong resilience, and great potential, with the supporting conditions and fundamental trend of long-term positive growth unchanged. The real estate industry has a greater correlation with the macroeconomy andis more influenced by the macroeconomic cycle. The Company will continue paying close attention to the international and domestic macroeconomic situations and proactively adjust its operation strategies.

(II) Industry development risks and countermeasures

At this stage, as existing policies continue to show effects, new policies are effectively implemented, and the combined impact of policies is continuously released, the real estate market is in the critical stage of stabilizing and halting the decline amid fluctuations. Nevertheless, for some time to come, the real estate industry will still face many risks and potential hidden dangers, and the market competition pattern will present a new situation. The Company will closely monitor industry policies, follow national strategic direction, continuously optimize the business development path, and actively explore innovative operating models to better adapt to changes in the external environment.

(III) Business operating risks and countermeasures

Against the backdrop of increasingly fierce competition in the real estate market, the Company is facing challenges such as insufficient reserves of development land resources, difficulties in selling inventory projects, and a lack of substantial results in new business expansion, all of which are putting pressure on corporate operation and development. The Company will closely monitor market dynamics and industry policy trends, focus on property leasing and sales, the operations of its subsidiaries, and business expansion, and actively seek innovative models and paths that align with its actual development needs to flexibly respond to market challenges and explore broader development space.

XI. Formulation and Implementation of Market Capitalization Management System and Valuation Enhancement Plan

Whether the Company has formulated a market value management system.

☐ Yes No

Whether the Company has disclosed plans for valuation enhancement.

☐ Yes No

XII. Implementation of the "Quality and Return Dual Enhancement" Action Plan

Whether the company has disclosed the announcement of the action plan of "double improvement of quality return". ☐ Yes No

Section IV Corporate Governance, Environment and Society

I. Changes in Directors and Senior Management of the Company

☑ Applicable ☐ Not applicable

II. Profit Distribution and Conversion of Capital Reserves into Share Capital during the Reporting Period

□ Applicable Not applicable

The Company plans not to distribute cash dividends, issue bonus shares, or convert capital reserve into share capital for the half year.

III. Implementation of the Company's Equity Incentive Plan, Employee Stock Ownership Plan or Other Employee Incentive Measures

□ Applicable Not applicable

During the reporting period, the Company had no equity incentive plan, employee stock ownership plan or othe employee incentive measures and their implementation.

IV. Disclosure of Environmental Information

Whether the listed company and its main subsidiaries are included in the list of enterprises required to disclose the environmental information by law

☐ Yes No

V. Social Responsibilities

While pursuing economic benefits and protecting shareholders' interests, the Company actively fulfilled its socia responsibilities, demonstrating its corporate social value and sense of responsibility. During the reporting period, the Company actively participated in special poverty alleviation through consumption campaigns to promote consumption assistance and rural revitalization in Shenzhen; continuously implemented the assistance project in Longdou Town, Chenghai District, Shantou City; and organized comprehensive fire emergency drills for merchants in the property buildings under its jurisdiction to enhance public awareness of fire safety and prevention

Section V Significant Events

I. Commitments made by the Company's De Facto Controller, shareholders, related parties, acquirers, the Company and other related parties that have been fulfilled within the reporting period and those that have not been fulfilled as of the end of the reporting period

□ Applicable Not applicable

During the reporting period, there were no commitments made by the Company's De Facto Controller, shareholders, related parties, acquirers, the Company and other related parties that have been fulfilled within the reporting period and those that have not been fulfilled as of the end of the reporting period.

II. Non-operational occupation of funds by the controlling shareholders and other related parties of the listed company

□ Applicable Not applicable

During the reporting period, there were no non-operational funds occupied by the controlling shareholders and other related parties for the listed company.

III. Illegal external guarantees

□ Applicable Not applicable

The Company had no illegal external guarantee during the reporting period.

IV. Appointment and Dismissal of Accounting Firm

Whether the semi-annual financial report has been audited

☐ Yes No

The Company's semi-annual report has not been audited.

V. Explanations Given by the Board of Directors Regarding the Accounting Firm's "Modified Opinion" on the Financial Statements of the Reporting Period

□ Applicable Not applicable

VI. Explanations Given by the Board of Directors Regarding the "Modified Opinion" on the Financial Statements of the Previous Year

□ Applicable Not applicable

VII. Matters Related to Bankruptcy and Reorganization

□ Applicable Not applicable

During the reporting period, the Company had no bankruptcy restructuring related matters.

VIII. Litigation Matters

☑ Applicable ☐ Not applicable

Other litigation matters

□ Applicable Not applicable

IX. Punishments and Rectifications

□ Applicable Not applicable

There was no punishment or rectification during the reporting period.

X. Credit Quality of the Company as well as Its Controlling Shareholder and De Facto Controller

□ Applicable Not applicable

XI. Major Related-Party Transactions

1. Related party transactions related to daily operations

□ Applicable Not applicable

During the reporting period, the Company had no related party transactions related to daily operations.

2. Related party transactions arising from the acquisition and sale of assets or equity

□ Applicable Not applicable

During the reporting period, the Company had no related party transactions arising from the acquisition or sale of assets or equity.

3. Related party transactions arising from joint external investment

□ Applicable Not applicable

During the reporting period, the Company had no related party transactions arising from joint external investment.

4. Related claims and debts

□ Applicable Not applicable

During the reporting period, the Company had no related debt transactions.

5. Information on transactions with finance companies with related relationship

□ Applicable Not applicable

There was no deposit, loan, credit or other financial business between the Company and the finance companies with related relationship and their related parties.

6. Transactions between the Company's holding finance companies and its related parties

□ Applicable Not applicable

There was no deposit, loan, credit or other financial business between the Company's holding finance companies and its related parties.

7. Other major related party transactions

□ Applicable Not applicable

The Company had no other major related party transactions during the reporting period.

XII. Major Contracts and Execution Thereof

1. Custody, contracting and lease matters

(1) Custody

□ Applicable Not applicable

During the reporting period, the Company had nothing under custody.

(2) Contracting

□ Applicable Not applicable

During the reporting period, the Company had no contracting.

(3) Leases

□ Applicable Not applicable

During the reporting period, the Company had no leases.

2. Significant guarantees

□ Applicable Not applicable

The Company had no material guarantees during the reporting period.

3. Entrusted wealth management

☑ Applicable ☐ Not applicable

Unit: RMB10,000

Details of high-risk entrusted wealth management where the Company, as a single client, entrusts a financial institution for asset management, or invests in products with low safety and poor liquidity

□ Applicable Not applicable

4. Other major contracts

□ Applicable Not applicable

There were no other major contracts of the Company during the reporting period.

XIII. Registration Form for Reception, Survey, Communication, Interview and Other Activities during Reporting Period

☑ Applicable ☐ Not applicable

XIV. Notes to Other Major Matters

□ Applicable Not applicable

The Company had no other major matters to be explained during the reporting period.

XV. Major Matters of the Company's Subsidiaries

□ Applicable Not applicable

Section VI. Share Changes and Shareholder Information

I. Changes in shares

1. Changes in shares

Unit: shares

Reasons for changes in shares □ Applicable Not applicable Approval of changes in shares □ Applicable Not applicable Transfer of changes in shares □ Applicable Not applicable

Implementation progress of share repurchase

□ Applicable Not applicable

Implementation progress of reducing repurchase shares by means of centralized bidding

□ Applicable Not applicable

Effect of changes in shares on financial indicators such as basic earnings per share and diluted earnings per share in the latest year and the latest period, and net assets per share attributable to the Company's ordinary shareholders

□ Applicable Not applicable

Other contents deemed necessary by the Company or required by the securities regulators to be disclosed □ Applicable Not applicable

2. Changes in restricted shares

□ Applicable Not applicable

II. Issuance and listing of securities

□ Applicable Not applicable

III. Number of the Company's Shareholders and Shareholding Ratios

Unit: shares

Participation of shareholders holding more than 5% of the shares, the top 10 shareholders and the top 10 shareholders of unrestricted tradable shares in refinancing business and lending shares

□ Applicable Not applicable

Changes of the top 10 shareholders and the top 10 shareholders of unrestricted tradable shares compared with the previous period due to refinancing lending/repayment

□ Applicable Not applicable

Whether the Company's top 10 ordinary shareholders and the top 10 ordinary shareholders without restrictive condition for sales conduct any agreed repurchase transactions during the reporting period

☐ Yes No

The Company's top 10 ordinary shareholders, and top 10 ordinary shareholders without restrictive condition for sales

did not conduct any agreed repurchase transaction during the reporting period.

IV. Changes in Shareholding of Directors and Senior Management

□ Applicable Not applicable

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

V. Changes in Controlling Shareholders or De Facto Controller

If the Company has previously disclosed that the De Facto Controller is planning a change of control but it has not been completed, please explain the progress of the change of control.

□ Applicable Not applicable

Changes in controlling shareholders during the reporting period

□ Applicable Not applicable

There was no change in the controlling shareholder of the Company during the reporting period.

Changes in actual owner during the reporting period

□ Applicable Not applicable

There was no change in the actual owner of the Company during the reporting period.

VI. Preferred Shares

□ Applicable Not applicable

During the reporting period, the Company had no preferred shares.

Section VII Bonds

□ Applicable Not applicable

Section VIII Financial Statements

I. Audit Report

Has the semi-annual report been audited

□ Yes No

The company's semi-annual financial report has not been audited.

II. Financial Statements

The unit of the statements in the financial notes is: yuan

1. Consolidated balance sheet

Prepared by: Shenzhen Special Economic Zone Real Estate (Group) Co., Ltd

Unit: Yuan

Legal Representative: Chen Ming; Person in Charge of Accounting Work: Wang Jianfei; Head of Accounting Organization: Zhou

Hongpu

2. Balance sheet of the parent company

Unit: Yuan

3. Consolidated income statement

Unit: Yuan

For the business combination under the same control in this period, the net profit realized by the combined party before the combination is: 0.00 yuan, and the net profit realized by the combined party in the previous period is: 0.00 yuan. Legal Representative: Chen Ming; Person in Charge of Accounting Work: Wang Jianfei; Head of Accounting Organization: Zhou Hongpu

4. Income statement of the parent company

Unit: Yuan

5. Consolidated cash flow statement

Unit: Yuan

6. Cash flow statement of the parent company

Unit: Yuan

7. Consolidated statement of changes in equity

Current Amount

Unit: Yuan

Last year's amount Unit: Yuan

8. Statement of Changes in Equity of the Parent Company

Current Amount

Unit: Yuan

Last year's amount Unit: Yuan

III. Basic Information of the Company

Shenzhen Special Economic Zone Real Estate (Group) Co., Ltd. (hereinafter referred to as the "Company" or "our company") was established as a joint stock limited company through restructuring on the basis of the former Shenzhen Special Economic Zone Real Estate Corporation, with the approval of the General Office of the People's Government of Shenzhen Municipality. It was registered with the Administration for Industry and Commerce of Shenzhen, Guangdong Province, in July 1993, and its headquarters is located in Shenzhen, Guangdong Province. The company's unified social credit code is 91440300192179585N, with a registered capital of 1,011,660,000.00 yuan and a total of 1,011,660,000 shares (with a par value of 1 yuan per share). Among them, there are 891,660,000 A shares and 120,000,000 B shares that are tradable without restrictions on sales. The company's shares were listed and traded on the Shenzhen Stock Exchange on September 15, 1993 and January 10, 1994, respectively.

Our company is in the real estate industry. Our main business activities include real estate development and sales of commercial housing, property leasing and management, retail and trade of goods, hotel business, equipment installation and maintenance, construction, interior decoration, and other related businesses.

This financial statement has been approved for external release by the second meeting of the ninth session of the board of directors on August 25, 2026.

IV. Basis for Preparing Financial Statements

1. Basis of preparation

The financial statements of our company are prepared on a going concern basis.

2. Continuous operation

Our company does not have any matters or circumstances that may cast significant doubt on its ability to continue as a going concern within 12 months from the end of the reporting period.

V. Significant accounting policies and accounting estimates

Specific accounting policies and accounting estimates tips:

Important Note: The Company has formulated specific accounting policies and estimates for transactions or events such as impairment of financial instruments, inventories, depreciation of fixed assets, construction in progress, intangible assets, and revenue recognition, based on its actual production and operation characteristics.

1. Statement of compliance with enterprise accounting standards

The financial statements prepared by our company comply with the requirements of enterprise accounting standards, and they truly and comprehensively reflect the company's financial position, operating results, cash flows, and other relevant information.

2. Accounting period

The accounting year begins on January 1st and ends on December 31st according to the Gregorian calendar.

3. Operating cycle

The operating cycle of the company's business operations is relatively short, with 12 months serving as the liquidity classification standard for assets and liabilities. The operating cycle of the real estate industry, from property development to sales realization, is generally over 12 months, with the specific cycle determined based on the development project situation, and its operating cycle is used as the liquidity classification standard for assets and liabilities.

4. Bookkeeping base currency

The Renminbi (RMB) is adopted as the functional currency. Both the Company and its overseas subsidiary in Hong Kong use RMB as the functional currency. The overseas subsidiary of Great Wall Real Estate Co., Ltd. in the United States, engaged in overseas operations, chooses the US dollar, the currency of the primary economic environment in which it operates, as its functional currency. The currency used by the Company in preparing these financial statements is RMB.

5. Method for determining importance criteria and basis for selection

Applicable □ Not applicable

6. Accounting treatment methods for business combinations under and not under common control

1. Accounting treatment method for business combinations under common control

The assets and liabilities acquired by the company in a business combination are measured at the carrying amount of the combined party in the final controlling party's consolidated financial statements on the combination date. The company adjusts the capital reserves based on the difference between the share of the carrying amount of the owner's equity of the combined party in the final controlling party's consolidated financial statements and the carrying amount of the consideration paid for the combination or the total par value of the shares issued. If the capital reserves are insufficient to offset, the retained earnings are adjusted.

2. Accounting treatment methods for business combinations not under common control

On the acquisition date, the company recognizes the difference between the merger cost and the fair value of the identifiable net assets obtained from the acquiree in the merger as goodwill. If the merger cost is less than the fair value of the identifiable net assets obtained from the acquiree in the merger, the fair values of all identifiable assets, liabilities, and contingent liabilities obtained from the acquiree, as well as the measurement of the merger cost, are first reviewed. If, after review, the merger cost is still less than the fair value of the identifiable net assets obtained from the acquiree in the merger, the difference is recognized in the current profit and loss.

6. Accounting treatment methods for business combinations under and not under common control

7. Criteria for control judgment and method for preparing consolidated financial statements

1. Judgment of control

If an entity possesses power over an investee, enjoys variable returns through participating in the relevant activities of the investee, and has the ability to use its power over the investee to affect the amount of its variable returns, it is deemed to have control.

2. Preparation method of consolidated financial statements

The parent company includes all its controlled subsidiaries in the consolidation scope of its consolidated financial statements. The consolidated financial statements are prepared by the parent company based on the financial statements of the parent company and its subsidiaries, as well as other relevant information, in accordance with the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements.

7. Criteria for control judgment and method for preparing consolidated financial statements

8. Classification of joint venture arrangements and accounting treatment methods for joint operations

1. Joint arrangements are classified into joint operations and joint ventures.

2. When the company is a joint venturer in a joint operation, the following items related to its share of interest in the joint operation shall be recognized:

(1) Confirm assets held individually, as well as assets held jointly based on the respective shares held;

(2) Confirm the liabilities solely assumed, as well as the liabilities jointly assumed based on the share held;

(3) Recognize the revenue generated from the share of joint operating output enjoyed by the selling company;

(4) Recognize the revenue generated from the sale of assets in joint operations based on the company's shareholding;

(5) Confirm the expenses incurred individually, as well as the expenses incurred in joint operations based on the company's shareholding.

7. Criteria for control judgment and method for preparing consolidated financial statements

8. Classification of joint venture arrangements and accounting treatment methods for joint operations

9. Criteria for determining cash and cash equivalents

The cash presented in the cash flow statement refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to investments held by the enterprise that have short terms, strong liquidity, are easily convertible into known amounts of cash, and have little risk of value change.

10. Foreign currency transactions and foreign currency statement translation

1. Translation of foreign currency transactions

Upon initial recognition, foreign currency transactions are translated into RMB amounts using the spot exchange rate on the transaction date. At the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. Exchange differences arising from different exchange rates, except for those related to the principal and interest of foreign currency borrowings specifically related to the acquisition and construction of assets eligible for capitalization, are recognized in the current profit and loss. Foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the transaction date, without changing their RMB amounts. Foreign currency non-monetary items measured at fair value are translated at the spot exchange rate on the date when the fair value is determined, with any differences recognized in the current profit and loss or other comprehensive income.

2. Translation of foreign currency financial statements

The assets and liabilities items in the balance sheet are translated at the spot exchange rate on the balance sheet date; all owner's equity items, except for the "undistributed profits" item, are translated at the spot exchange rate on the transaction date; the income and expense items in the income statement are translated at the approximate exchange rate of the spot exchange rate on the transaction date. The translation differences arising from the above translations of foreign currency financial statements are recorded in other comprehensive income.

11. Financial instruments

1. Classification of financial assets and financial liabilities

Financial assets are classified into the following three categories upon initial recognition: (1) financial assets measured at amortized cost; (2) financial assets measured at fair value with changes recognized in other comprehensive income; and (3) financial assets measured at fair value with changes recognized in current profit and loss.

Financial liabilities are classified into the following four categories upon initial recognition: (1) financial liabilities measured at fair value with changes recognized in current profit and loss; (2) financial liabilities arising from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets; (3) financial guarantee contracts that do not fall under (1) or (2) above, as well as loan commitments that do not fall under (1) above and involve loans at below-market interest rates; (4) financial liabilities measured at amortized cost.

2. Recognition basis, measurement method, and derecognition conditions for financial assets and financial liabilities

(1) Recognition basis and initial measurement method of financial assets and financial liabilities

When a company becomes a party to a financial instrument contract, it recognizes a financial asset or financial liability. Upon initial recognition of a financial asset or financial liability, it is measured at fair value. For financial assets and financial liabilities measured at fair value with changes recognized in current profit and loss, the related transaction costs are directly included in current profit and loss. For other types of financial assets or financial liabilities, the related transaction costs are included in the initial recognition amount. However, if the accounts receivable initially recognized by the company do not contain significant financing components or the company does not consider the financing components in contracts that are not expected to exceed one year, the initial measurement is based on the transaction price as defined in "Accounting Standards for Business Enterprises No. 14 - Revenue".

(2) Subsequent measurement method for financial assets

1) Financial assets measured at amortized cost

The effective interest method is adopted for subsequent measurement at amortized cost. Gains or losses arising from financial assets measured at amortized cost and not part of any hedging relationship are recognized in the current period profit or loss when derecognized, reclassified, amortized using the effective interest method, or recognized as impaired.

2) Debt instrument investments measured at fair value with changes recognized in other comprehensive income

Subsequent measurement is conducted using fair value. Interest, impairment losses or gains, and exchange gains and losses calculated using the effective interest method are recognized in current profit and loss, while other gains or losses are recognized in other comprehensive income. Upon derecognition, the cumulative gains or losses previously recognized in other comprehensive income are transferred out of other comprehensive income and recognized in current profit and loss.

3) Equity instrument investments measured at fair value with changes recognized in other comprehensive income

Subsequent measurement is conducted using fair value. Dividends received (excluding those that are part of the recovery of investment costs) are recorded in the current period profit and loss, while other gains or losses are recorded in other comprehensive income. Upon derecognition, the cumulative gains or losses previously recorded in other comprehensive income are transferred out of other comprehensive income and recorded in retained earnings.

4) Financial assets measured at fair value with changes recognized in current profit and loss

Gains or losses (including interest and dividend income) arising from subsequent measurement using fair value are recognized in the current period profit and loss, unless the financial asset is part of a hedging relationship.

(3) Subsequent measurement method for financial liabilities

1) Financial liabilities measured at fair value with changes recognized in current profit and loss

Such financial liabilities include trading financial liabilities (including derivative instruments classified as financial liabilities) and financial liabilities designated to be measured at fair value with changes recognized in current profit and loss. Subsequent measurements of such financial liabilities are made at fair value. Changes in the fair value of financial liabilities designated to be measured at fair value with changes recognized in current profit and loss, which are attributable to changes in the company's own credit risk, are recorded in other comprehensive income, unless such treatment would create or amplify an accounting mismatch in profit and loss. Other gains or losses arising from such financial liabilities (including interest expenses and changes in fair value other than those attributable to changes in the company's own credit risk) are recognized in current profit and loss, unless the financial liability is part of a hedging relationship. Upon derecognition, the cumulative gains or losses previously recorded in other comprehensive income are transferred out of other comprehensive income and recognized in retained earnings.

2) The transfer of financial assets does not meet the conditions for derecognition or the financial liabilities formed by continuing involvement in the transferred financial assets

The measurement shall be conducted in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets".

3) Financial guarantee contracts that do not fall under 1) or 2) above, as well as loan commitments that do not fall under 1) above and involve loans at below-market interest rates

After initial recognition, subsequent measurement is conducted based on the higher of the following two amounts: ① the loss provision determined in accordance with the impairment provisions for financial instruments; ② the balance of the initially recognized amount after deducting the accumulated amortization determined in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

4) Financial liabilities measured at amortized cost

It is measured at amortized cost using the effective interest method. Gains or losses arising from financial liabilities that are measured at amortized cost and are not part of any hedging relationship are recognized in the current period profit or loss when derecognized and amortized using the effective interest method.

(4) De-recognition of financial assets and financial liabilities

1) When any of the following conditions is met, the recognition of financial assets shall be terminated:

① The contractual rights to receive cash flows from the financial asset have been terminated;

② The financial asset has been transferred, and the transfer satisfies the provisions of "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets" regarding the derecognition of financial assets.

2) When the current obligation of a financial liability (or part thereof) has been discharged, the financial liability (or the relevant part of the financial liability) shall be derecognized accordingly.

3. Basis for recognition and measurement method of financial asset transfers

If the company transfers almost all risks and rewards related to the ownership of financial assets, it shall derecognize the financial assets and separately recognize the rights and obligations arising from or retained in the transfer as assets or liabilities. If the company retains almost all risks and rewards related to the ownership of financial assets, it shall continue to recognize the transferred financial assets. If the company neither transfers nor retains almost all risks and rewards related to the ownership of financial assets, it shall handle it according to the following situations: (1) If the company does not retain control over the financial assets, it shall derecognize the financial assets and separately recognize the rights and obligations arising from or retained in the transfer as assets or liabilities; (2) If the company retains control over the financial assets, it shall recognize the relevant financial assets based on the degree of its continued involvement in the transferred financial assets and correspondingly recognize the relevant liabilities.

When the overall transfer of financial assets satisfies the conditions for derecognition, the difference between the following two amounts shall be included in the current profit and loss: (1) the book value of the transferred financial assets on the derecognition date; (2) the sum of the consideration received from the transfer of financial assets and the amount corresponding to the derecognized portion of the cumulative change in fair value originally recognized directly in other comprehensive income (involving the transferred financial assets being debt instrument investments measured at fair value with changes recognized in other comprehensive income). When a portion of the financial assets is transferred and the transferred portion as a whole satisfies the conditions for derecognition, the book value of the entire financial assets before transfer shall be apportioned between the derecognized portion and the portion that continues to be recognized, based on their respective relative fair values on the transfer date, and the difference between the following two amounts shall be included in the current profit and loss: (1) the book value of the derecognized portion; (2) the sum of the consideration for the derecognized portion and the amount corresponding to the derecognized portion of the cumulative change in fair value originally recognized directly in other comprehensive income (involving the transferred financial assets being debt instrument investments measured at fair value with changes recognized in other comprehensive income).

4. Method for determining the fair value of financial assets and financial liabilities

The company determines the fair value of relevant financial assets and financial liabilities using valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information. The company categorizes the input values used in valuation techniques into the following levels and uses them in order:

(1) The first level input value refers to the unadjusted quoted price of the same asset or liability that can be obtained in the active market on the measurement date;

(2) The second level of input values refers to the directly or indirectly observable input values of related assets or liabilities other than those at the first level, including: quotations of similar assets or liabilities in an active market; quotations of identical or similar assets or liabilities in a non-active market; other observable input values other than quotations, such as observable interest rates and yield curves during normal quotation intervals; market-validated input values, etc;

(3) The third level of input values refers to the unobservable input values of related assets or liabilities, including interest rates, stock volatility, future cash flows of disposal obligations assumed in business combinations, and financial forecasts made using proprietary data, which cannot be directly observed or verified by observable market data.

5. Impairment of financial instruments

Based on expected credit losses, the company performs impairment testing and recognizes loss provisions for financial assets measured at amortized cost, debt instrument investments measured at fair value with changes recognized in other comprehensive income, contract assets, lease receivables, loan commitments not classified as financial liabilities measured at fair value with changes recognized in current profit and loss, and financial guarantee contracts that are not financial liabilities measured at fair value with changes recognized in current profit and loss or financial liabilities arising from the transfer of financial assets that do not meet the conditions for derecognition or continue to involve the transferred financial assets.

Expected credit losses refer to the weighted average of credit losses on financial instruments, with the risk of default as the weight. Credit losses refer to the difference between all contractual cash flows receivable under the contract, discounted at the original effective interest rate, and all expected cash flows received, representing the present value of all cash shortages. For financial assets that the company has purchased or originated and have experienced credit impairment, they are discounted at the credit-adjusted effective interest rate of the financial asset.

For financial assets that have undergone credit impairment, whether acquired or originated internally, the company recognizes only the cumulative change in expected credit losses over the entire duration since initial recognition as a loss provision on the balance sheet date.

For lease receivables, receivables formed by transactions regulated by "Accounting Standards for Business Enterprises No. 14 - Revenue", and contract assets, the company applies a simplified measurement method to measure the loss provision at an amount equivalent to the expected credit losses over the entire duration.

For financial assets other than those measured using the aforementioned methods, the company assesses whether their credit risk has significantly increased since initial recognition on each balance sheet date. If the credit risk has significantly increased since initial recognition, the company measures the loss provision based on the amount of expected credit losses over the entire duration. If the credit risk has not significantly increased since initial recognition, the company measures the loss provision based on the amount of expected credit losses for the financial instrument within the next 12 months.

The company utilizes available reasonable and well-founded information, including forward-looking information, to compare the risk of default of financial instruments at the balance sheet date with the risk of default at the initial recognition date, in order to determine whether the credit risk of financial instruments has significantly increased since initial recognition.

As of the balance sheet date, if the company determines that a financial instrument carries only a relatively low credit risk, it is assumed that the credit risk of that financial instrument has not significantly increased since its initial recognition.

The company assesses expected credit risk and measures expected credit losses based on individual financial instruments or combinations of financial instruments. When assessing based on combinations of financial instruments, the company categorizes the financial instruments into different combinations based on common risk characteristics.

The company re-measures expected credit losses on each balance sheet date. The increase or reversal amount of the resulting loss provision is recognized as impairment loss or gain in the current profit and loss. For financial assets measured at amortized cost, the loss provision offsets the carrying amount of the financial asset presented in the balance sheet. For debt investments measured at fair value with changes recognized in other comprehensive income, the company recognizes its loss provision in other comprehensive income and does not offset the carrying amount of the financial asset.

6. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are presented separately on the balance sheet and are not offset against each other. However, if both of the following conditions are met, the company presents the net amount after offsetting on the balance sheet: (1) the company has the legal right to offset the recognized amount, and this legal right is currently enforceable; (2) the company intends to settle on a net basis, or simultaneously liquidate the financial asset and settle the financial liability.

For transfers of financial assets that do not meet the conditions for derecognition, the company does not offset the transferred financial assets and related liabilities.

12. Recognition criteria and provisioning methods for expected credit losses of receivables and contract assets

1. Accounts receivable and contract assets with expected credit losses calculated and withdrawn based on combinations of credit risk characteristics

2. Recognition criteria for accounts receivable and contract assets with expected credit losses calculated on an individual basis For accounts receivable and contract assets with significant differences in credit risk and portfolio credit risk, the company accrues expected credit losses on an individual basis.

2. Recognition criteria for accounts receivable and contract assets with expected credit losses calculated on an individual basis For accounts receivable and contract assets with significant differences in credit risk and portfolio credit risk, the company accrues expected credit losses on an individual basis.

6. Offset of financial assets and financial liabilities Financial assets and financial liabilities are presented separately on the balance sheet and are not offset against each other. However, if both of the following conditions are met, the company presents the net amount after offsetting on the balance sheet: (1) the company has the legal right to offset the recognized amount, and this legal right is currently enforceable; (2) the company intends to settle on a net basis, or simultaneously liquidate the financial asset and settle the financial liability. For transfers of financial assets that do not meet the conditions for derecognition, the company does not offset the transferred financial assets and related liabilities.

12. Recognition criteria and provisioning methods for expected credit losses of receivables and contract assets

13. Inventory

1. Classification of inventory

Inventories include land held for development, development products, development products temporarily leased with the intention of selling, and development costs incurred during the development process.

2. Pricing method for issued inventory

(1) The specific identification method is adopted for the issued materials and equipment.

(2) During project development, the land used for development is allocated and included in the project's development costs based on the floor area of the development product and the differential coefficient of the occupied land parcel.

(3) The cost of the developed products is allocated using the cost coefficient method.

(4) Development products and turnover housing that are temporarily rented with the intention of sale shall be amortized evenly over the expected useful life of similar fixed assets of the company.

(5) If the public supporting facilities are completed earlier than the relevant development products, after the completion and final settlement of the public supporting facilities, the development costs shall be allocated and included in the relevant development projects according to the construction area of the relevant development projects. If the public supporting facilities are completed later than the relevant development products, the relevant development products shall first accrue the public supporting facility fees, and after the completion and final settlement of the public supporting facilities, the costs of the relevant development products shall be adjusted based on the difference between the actual amount and the accrued amount.

3. Inventory system for stock

The inventory system for goods is the perpetual inventory system.

4. Amortization method for low-value consumables and packaging materials

(1) Low-value consumables

Amortization is carried out in installments based on the number of times it is used.

(2) Packaging materials

Amortization is carried out in installments based on the number of uses.

5. Inventory falling price reserves

On the balance sheet date, inventories are measured at the lower of cost and net realizable value, and inventory falling price reserves are accrued based on the difference between the cost and the net realizable value. For inventories directly intended for sale, their net realizable value is determined by subtracting estimated selling expenses and related taxes from the estimated selling price of the inventory in the normal course of production and operation. For inventories that require processing, their net realizable value is determined by subtracting estimated costs to be incurred until completion, estimated selling expenses, and related taxes from the estimated selling price of the finished product produced in the normal course of production and operation. On the balance sheet date, if part of the same inventory has a contract price and the other part does not, their net realizable values are determined separately, and compared with their corresponding costs to separately determine the amount of inventory falling price reserves accrued or reversed.

14. Long-term equity investment

1. Judgment of joint control and significant influence

Joint control is recognized when there is shared control over an arrangement in accordance with relevant agreements, and decisions related to the arrangement's activities must be unanimously agreed upon by the parties sharing control rights. Significant influence is recognized when there is the power to participate in the decision-making process regarding the financial and operating policies of the investee, but not the ability to control or jointly control the formulation of these policies with other parties.

2. Determination of investment cost

(1) For business combinations under common control, where the acquirer pays cash, transfers non-cash assets, incurs liabilities, or issues equity securities as the consideration for the combination, the initial investment cost is determined on the combination date based on the share of the book value of the owner's equity of the acquiree in the consolidated financial statements of the ultimate controlling party. The difference between the initial investment cost of the long-term equity investment and the book value of the consideration paid or the total par value of the shares issued is adjusted to capital reserves. If the capital reserves are insufficient to offset, the retained earnings are adjusted.

The company realizes long-term equity investments through multiple transactions, step by step, under the same control in business combinations, and determines whether it is a "package deal". If it is a "package deal", all transactions are accounted for as one transaction to obtain control. If it is not a "package deal", on the merger date, the initial investment cost is determined based on the share of the book value of the net assets of the merged party in the consolidated financial statements of the ultimate controlling party after the merger. On the merger date, the difference between the initial investment cost of the long-term equity investment and the sum of the book value of the long-term equity investment before the merger and the book value of the newly paid consideration for further acquisition of shares on the merger date is adjusted to the capital reserve. If the capital reserve is insufficient to offset, the retained earnings are adjusted.

(2) For business combinations not under common control, the initial investment cost is determined based on the fair value of the consideration paid on the acquisition date.

The company realizes long-term equity investments formed through business combinations not under common control through multiple transactions in stages, and distinguishes between individual financial statements and consolidated financial statements for relevant accounting treatment:

1) In certain financial statements, the initial investment cost calculated using the cost method is determined by adding the book value of the originally held equity investment to the newly increased investment cost.

2) In consolidated financial statements, it is necessary to determine whether a transaction constitutes a "package deal." If it does, all transactions should be accounted for as one transaction to obtain control. If it does not, the equity held in the acquiree before the acquisition date should be remeasured at its fair value on the acquisition date, and the difference between the fair value and its book value should be recorded in the current investment income. If the equity held in the acquiree before the acquisition date involves other comprehensive income accounted for under the equity method, the related other comprehensive income should be transferred to the current income to which the acquisition date belongs. However, other comprehensive income arising from the remeasurement of net liabilities or net assets changes in the defined benefit plan of the investee is excluded.

(3) Except for those formed through business combinations: For those acquired by paying cash, the actual purchase price paid shall be regarded as the initial investment cost; for those acquired by issuing equity securities, the fair value of the issued equity securities shall be regarded as the initial investment cost; for those acquired through debt restructuring, the initial investment cost shall be determined in accordance with "Accounting Standards for Business Enterprises No. 12 - Debt Restructuring"; for those acquired through nonmonetary asset exchanges, the initial investment cost shall be determined in accordance with "Accounting Standards for Business Enterprises No. 7 - Non-monetary Asset Exchanges".

3. Subsequent measurement and profit and loss recognition method

The long-term equity investment that exercises control over the invested entity is accounted for using the cost method; the long-term equity investment in associated enterprises and joint ventures is accounted for using the equity method.

4. Method for disposing of investments in subsidiaries through multiple transactions in stages until losing control

(1) Judgment criteria for whether it belongs to a "package deal"

When disposing of equity investments in subsidiaries through multiple transactions until losing control, the company assesses whether the step-by-step transactions constitute a "package deal" based on various factors such as the terms of the transaction agreements for each step, the disposal consideration received separately, the party to whom the equity is sold, the method of disposal, and the timing of disposal. If the terms, conditions, and economic impacts of each transaction meet one or more of the following criteria, it generally indicates that the multiple transactions are a "package deal":

1) These transactions are entered into simultaneously or with consideration of their mutual impact;

2) These transactions, taken as a whole, can achieve a complete business outcome;

3) The occurrence of one transaction depends on the occurrence of at least one other transaction;

4) A transaction may not be economical when viewed alone, but it may be economical when considered alongside other transactions.

(2) Accounting treatment for transactions not classified as "package deals"

1) Individual financial statements

For the disposed equity, the difference between its book value and the actual acquisition price is recorded in the current profit and loss. For the remaining equity, if it still has significant influence on the invested entity or exercises joint control with other parties, it is accounted for using the equity method; if it can no longer exercise control, joint control, or significant influence over the invested entity, it is accounted for in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

2) Consolidated financial statements

Before losing control, the difference between the disposal price and the share of net assets of the subsidiary that corresponds to the disposal of long-term equity investment, calculated continuously from the acquisition date or consolidation date, is adjusted to capital reserves (capital surplus). If the capital surplus is insufficient to offset, the retained earnings are offset.

When losing control over a subsidiary, the remaining equity is remeasured at its fair value on the date of losing control. The difference between the sum of the consideration obtained from disposing of the equity and the fair value of the remaining equity, minus the share of the net assets of the original subsidiary that should be enjoyed based on the original shareholding ratio and calculated continuously from the acquisition date or the merger date, is recorded in the current investment income when losing control and offset against goodwill. Other comprehensive income related to the equity investment in the original subsidiary should be transferred to the current investment income when losing control.

(3) Accounting treatment for transactions classified as "package deals"

1) Individual financial statements

Account for each transaction as a disposal of a subsidiary and loss of control. However, the difference between the disposal price and the book value of the long-term equity investment corresponding to the disposal investment prior to the loss of control is recognized as other comprehensive income in individual financial statements and is transferred to the current profit and loss at the time of loss of control.

2) Consolidated financial statements

Each transaction is accounted for as a disposal of a subsidiary and the loss of control. However, the difference between the disposal price and the share of the subsidiary's net assets corresponding to the disposal investment prior to the loss of control is recognized as other comprehensive income in the consolidated financial statements and is transferred to the profit and loss for the period in which the control is lost.

15. Investment real estate

1. Investment properties include land use rights that have been leased, land use rights that are held and intended for transfer after appreciation, and buildings that have been leased.

2. Investment properties are initially measured at cost and subsequently measured using the cost model. Depreciation or amortization is accrued using the same method as for fixed assets and intangible assets.

15. Investment real estate

16. Fixed assets

1. Recognition criteria for fixed assets

Fixed assets refer to tangible assets held for the production of goods, provision of services, leasing, or business management, with a useful life exceeding one accounting year. Fixed assets are recognized when both conditions are met: it is likely that economic benefits will flow in and the cost can be reliably measured.

2. Depreciation methods for various types of fixed assets

15. Investment real estate

16. Fixed assets

17. Construction in progress

1. Construction in progress is recognized when it simultaneously meets the criteria of a high likelihood of economic benefits flowing in and the cost being reliably measurable. Construction in progress is measured at the actual cost incurred until the asset reaches its intended usable state.

2. When the construction in progress reaches the expected usable state, it shall be transferred to fixed assets at its actual cost. For those that have reached the expected usable state but have not yet undergone completion settlement, they shall be transferred to fixed assets at their estimated value. After completion settlement, the original provisional estimated value shall be adjusted based on the actual cost, but the original depreciation accrued will not be adjusted.

17. Construction in progress

18. Borrowing costs

1. Recognition principle for capitalization of borrowing costs

Borrowing costs incurred by a company that are directly attributable to the acquisition, construction, or production of assets eligible for capitalization are capitalized and included in the cost of the relevant assets. Other borrowing costs are recognized as expenses when incurred and recorded in the current period profit and loss.

2. Capitalization period of borrowing costs

(1) Capitalization of borrowing costs begins when all of the following conditions are met simultaneously: 1) asset expenditure has already occurred; 2) borrowing costs have already been incurred; 3) the acquisition, construction, or production activities necessary to prepare the asset for its intended use or sale have already begun.

(2) If the acquisition and construction or production of assets eligible for capitalization is interrupted abnormally and the interruption period lasts for more than three consecutive months, the capitalization of borrowing costs shall be suspended; the borrowing costs incurred during the interruption period shall be recognized as expenses for the current period until the acquisition and construction or production activities of the assets recommence.

(3) When the assets eligible for capitalization under acquisition and construction or production reach the expected usable or marketable state, the capitalization of borrowing costs shall cease.

3. Capitalization rate and capitalized amount of borrowing costs

For borrowings specifically incurred for the acquisition, construction, or production of assets eligible for capitalization, the amount of interest that should be capitalized is determined by subtracting the interest income earned on the unused borrowing funds deposited in the bank or the investment income earned from temporary investments from the actual interest expenses incurred in the current period of the special borrowings (including the amortization of discounts or premiums determined using the effective interest method). For general borrowings used for the acquisition, construction, or production of assets eligible for capitalization, the amount of interest that should be capitalized for general borrowings is calculated by multiplying the weighted average of cumulative asset expenditure exceeding the expenditure on special borrowings by the capitalization rate of the general borrowings.

19. Intangible assets

1. Intangible assets, including software and land use rights, are initially measured at cost.

2. Intangible assets with a limited service life shall be systematically and reasonably amortized during their service life in accordance with the expected realization method of the economic benefits related to such intangible assets. If the expected realization method cannot be reliably determined, the straight-line method shall be adopted for amortization. as follows:

3. Intangible assets with uncertain service lives are not amortized, and the company reviews the service life of such intangible assets during each accounting period.

3. Capitalization rate and capitalized amount of borrowing costs For borrowings specifically incurred for the acquisition, construction, or production of assets eligible for capitalization, the amount of interest that should be capitalized is determined by subtracting the interest income earned on the unused borrowing funds deposited in the bank or the investment income earned from temporary investments from the actual interest expenses incurred in the current period of the special borrowings (including the amortization of discounts or premiums determined using the effective interest method). For general borrowings used for the acquisition, construction, or production of assets eligible for capitalization, the amount of interest that should be capitalized for general borrowings is calculated by multiplying the weighted average of cumulative asset expenditure exceeding the expenditure on special borrowings by the capitalization rate of the general borrowings.

19. Intangible assets

20. Impairment of certain long-term assets

For long-term assets such as long-term equity investments, investment properties measured using the cost model, fixed assets, construction in progress, right-of-use assets, and intangible assets with a limited useful life, if there are indications of impairment as of the balance sheet date, their recoverable amounts are estimated. For goodwill arising from business combinations and intangible assets with an uncertain useful life, impairment tests are conducted annually, regardless of whether there are indications of impairment. Goodwill is tested for impairment in conjunction with the asset group or combination of asset groups to which it is related.

If the recoverable amount of the aforementioned long-term assets is lower than their book value, the asset impairment provision shall be recognized based on the difference and included in the current profit and loss.

21. Long-term deferred expenses

Long-term deferred expenses account for various expenses that have been paid and have an amortization period of more than one year (excluding one year). Long-term deferred expenses are recorded at actual cost and amortized evenly over the benefit period or within the prescribed period. If a long-term deferred expense item does not benefit future accounting periods, the remaining unamortized balance of the item's amortized value is fully transferred to the current profit and loss.

22. Employee compensation

1. Employee compensation includes short-term compensation, post-employment benefits, termination benefits, and other long-term employee benefits.

2. Accounting treatment method for short-term compensation

During the accounting period in which employees provide services to the company, the actual short-term compensation incurred is recognized as a liability and recorded in the current profit and loss or related asset costs.

3. Accounting treatment method for post-employment benefits

Post-employment benefits are divided into defined contribution plans and defined benefit plans.

(1) During the accounting period in which employees provide services to the company, the amount of contributions calculated based on the defined contribution plan is recognized as a liability and recorded in the current period profit and loss or related asset costs.

(2) The accounting treatment for defined benefit plans typically involves the following steps:

1) Based on the expected cumulative benefit unit method, unbiased and mutually consistent actuarial assumptions are adopted to estimate relevant demographic and financial variables, measure the obligations arising from defined benefit plans, and determine the period to which the relevant obligations belong. At the same time, the obligations arising from defined benefit plans are discounted to determine the present value of the defined benefit plan obligations and the current service cost;

2) If there are assets in the defined benefit plan, the deficit or surplus formed by subtracting the fair value of the defined benefit plan assets from the present value of the defined benefit plan obligations shall be recognized as a net liability or net asset of the defined benefit plan. If there is a surplus in the defined benefit plan, the net asset of the defined benefit plan shall be measured at the lower of the surplus and the asset cap of the defined benefit plan;

3) At the end of the period, the employee compensation costs arising from defined benefit plans are recognized as three components: service costs, net interest on net liabilities or net assets of the defined benefit plans, and changes arising from the remeasurement of net liabilities or net assets of the defined benefit plans. Among them, service costs and net interest on net liabilities or net assets of the defined benefit plans are recorded in the current profit and loss or related asset costs. Changes arising from the remeasurement of net liabilities or net assets of the defined benefit plans are recorded in other comprehensive income and are not allowed to be reversed to profit and loss in subsequent accounting periods. However, these amounts recognized in other comprehensive income can be transferred within equity.

4. Accounting treatment method for dismissal benefits

The employee compensation liabilities arising from the dismissal benefits provided to employees shall be recognized and recorded in the current profit and loss when the earlier of the following occurs: (1) when the company cannot unilaterally withdraw the dismissal benefits provided due to the termination of labor relations plan or layoff proposal; (2) when the company recognizes the costs or expenses related to the restructuring involving the payment of dismissal benefits.

5. Accounting treatment methods for other long-term employee benefits

For other long-term benefits provided to employees, if they meet the conditions of defined contribution plans, accounting treatment shall be conducted in accordance with the relevant provisions of such plans. For other long-term benefits not meeting the conditions of defined contribution plans, accounting treatment shall be conducted in accordance with the relevant provisions of defined benefit plans. To simplify the relevant accounting treatment, the employee compensation costs incurred shall be recognized as the total net amount of service costs, net interest on other long-term employee benefits net liabilities or net assets, and changes arising from the remeasurement of other long-term employee benefits net liabilities or net assets, and included in the current profit and loss or related asset costs.

23. Method for accounting of maintenance fund

According to the relevant regulations of the location where the development project is situated, the maintenance fund is collected from home buyers or accrued by the company and included in the development costs of the relevant development products during the sale (pre-sale) of the products. The maintenance fund is then uniformly submitted to the maintenance fund management department.

24. Method for calculating quality guarantee deposit

The quality assurance deposit shall be reserved from the construction unit's project funds according to the provisions of the construction contract. The maintenance costs incurred during the warranty period of the developed product shall be offset against the quality assurance deposit; upon the expiration of the agreed warranty period of the developed product, the remaining balance of the quality assurance deposit shall be refunded to the construction unit.

25. Income

Disclose the accounting policies adopted for revenue recognition and measurement based on business types

1. Revenue recognition principle

On the contract start date, the company evaluates the contract, identifies each individual performance obligation contained within it, and determines whether each individual performance obligation is to be fulfilled within a certain time period or at a certain point in time.

When one of the following conditions is met, it is considered fulfilling the performance obligation within a certain period of time; otherwise, it is considered fulfilling the performance obligation at a certain point in time: (1) The customer obtains and consumes the economic benefits brought by the company's performance at the same time as the company performs; (2) The customer has control over the goods in progress during the company's performance; (3) The goods produced during the company's performance have irreplaceable uses, and the company has the right to collect payments for the performance completed to date throughout the contract period.

For performance obligations that are fulfilled within a certain period, the company recognizes revenue based on the progress of performance during that period. When the progress of performance cannot be reasonably determined, if the costs incurred are expected to be compensated, revenue is recognized at the amount of the costs incurred until the progress of performance can be reasonably determined. For performance obligations that are fulfilled at a certain point in time, revenue is recognized at the point when the customer obtains control over the related goods or services. In determining whether the customer has obtained control over the goods, the company considers the following indicators: (1) the company has a current right to receive payment for the goods, meaning that the customer has a current obligation to pay for the goods; (2) the company has transferred legal ownership of the goods to the customer, meaning that the customer has legal ownership of the goods; (3) the company has physically transferred the goods to the customer, meaning that the customer has physically possession of the goods; (4) the company has transferred the significant risks and rewards of ownership of the goods to the customer, meaning that the customer has obtained the significant risks and rewards of ownership of the goods; (5) the customer has accepted the goods; (6) other indicators that indicate the customer has obtained control over the goods.

2. Revenue measurement principle

(1) The company measures revenue based on the transaction price allocated to each individual performance obligation. The transaction price represents the amount of consideration the company expects to be entitled to receive for transferring goods or services to customers, excluding amounts collected on behalf of third parties and amounts expected to be refunded to customers.

(2) If there is variable consideration in the contract, the company determines the best estimate of the variable consideration based on the expected value or the most likely amount. However, the transaction price including the variable consideration shall not exceed the amount that is unlikely to result in a significant reversal of the cumulative recognized revenue when the relevant uncertainties are resolved.

(3) If there is a significant financing component in the contract, the company determines the transaction price based on the amount payable assuming that the customer pays in cash upon obtaining control of the goods or services. The difference between the transaction price and the contract consideration is amortized using the effective interest method over the contract period.

(4) If a contract includes two or more performance obligations, the company shall, on the contract start date, allocate the transaction price to each individual performance obligation based on the relative proportion of the separate selling prices of the promised goods for each individual performance obligation.

3. Specific methods for revenue recognition

(1) Specific method for recognizing revenue from sales of real estate development projects

The company's real estate sales business involves performance obligations that are fulfilled at a specific point in time. Once the development product has been completed and accepted, a sales contract has been signed and the obligations stipulated in the contract have been fulfilled, and after issuing an occupation notice or announcement to the owner, the property has been actually delivered to the owner or the contracted delivery date has expired, and the full amount of the house payment has been received, and the related costs that have occurred or will occur can be reliably measured, the realization of sales revenue is confirmed.

(2) Provide specific methods for recognizing income from property service provision

The provision of property management services by the company constitutes a performance obligation that is fulfilled over a certain period of time, and revenue is recognized based on the progress of performance. The company determines the progress of performance in providing services based on the passage of time.

(3) Method for recognizing construction revenue

The company provides construction engineering services. As the company fulfills its contract, the customer simultaneously obtains and consumes the economic benefits brought about by the company's performance. Additionally, the company has the right to collect payments for the performance completed to date throughout the contract period. The company recognizes revenue based on the performance progress as a performance obligation fulfilled within a certain period, except when the performance progress cannot be reasonably determined. The company determines the performance progress of service provision using the input method. When the performance progress cannot be reasonably determined, if the costs already incurred by the company are expected to be compensated, revenue is recognized based on the amount of costs already incurred until the performance progress can be reasonably determined.

(4) Other methods for recognizing income

Other revenues include hotel operating income, etc. For hotel room revenue, as customers obtain and consume the economic benefits brought by the company's performance while the company is fulfilling its contract, the company treats it as a performance obligation fulfilled within a certain period of time and recognizes revenue based on the progress of performance during the accounting period in which services are provided. For other revenues, revenue is recognized when the customer obtains control over the relevant goods and the relevant payment has been received or the right to receive payment has been obtained, as stipulated in the relevant contracts and agreements.

The situation where similar businesses adopt different business models involving different revenue recognition methods and measurement technique

26. Contract acquisition costs and contract performance costs

If the incremental costs incurred by the company to obtain a contract are expected to be recoverable, they are recognized as contract acquisition costs and recognized as an asset.

The costs incurred by a company for the performance of a contract, which do not fall within the scope of relevant standards such as inventory, fixed assets, or intangible assets, and meet the following conditions, are recognized as contract performance costs and recognized as an asset:

1. The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing expenses (or similar expenses), costs explicitly borne by the customer, and other costs incurred solely due to the contract;

2. This cost increases the resources that the company will use to fulfill its contractual obligations in the future;

3. The cost is expected to be recoverable.

The company amortizes assets related to contract costs on the same basis as the recognition of revenue from goods or services associated with those assets, and records them in the current period profit and loss.

If the carrying amount of an asset related to contract costs exceeds the remaining consideration expected to be obtained from the transfer of goods or services associated with that asset, less the estimated costs to be incurred, the company will make an impairment provision for the excess and recognize it as an asset impairment loss. If factors that were previously impaired change in subsequent periods, such that the remaining consideration expected to be obtained from the transfer of goods or services associated with the asset, less the estimated costs to be incurred, exceeds the carrying amount of the asset, the previously made asset impairment provision will be reversed and recorded in the current profit and loss. However, the carrying amount of the asset after reversal shall not exceed its carrying amount at the reversal date assuming no impairment provision was made.

26. Contract acquisition costs and contract performance costs If the incremental costs incurred by the company to obtain a contract are expected to be recoverable, they are recognized as contract acquisition costs and recognized as an asset. The costs incurred by a company for the performance of a contract, which do not fall within the scope of relevant standards such as inventory, fixed assets, or intangible assets, and meet the following conditions, are recognized as contract performance costs and recognized as an asset:

27. Contract assets and contract liabilities

The company presents contract assets or contract liabilities in the balance sheet based on the relationship between the performance of contractual obligations and customer payments. The company offsets contract assets and contract liabilities under the same contract and presents the net amount.

The company presents the rights to charge customers for consideration that it owns and can be exercised unconditionally (i.e., solely dependent on the passage of time) as accounts receivable, and presents the rights to charge customers for consideration that have been transferred to customers and are dependent on factors other than the passage of time as contract assets.

The company presents the obligation to transfer goods to customers for consideration received or receivable from customers as a contractual liability.

28. Government subsidies

1. Government subsidies are recognized when both of the following conditions are met: (1) the company can meet the conditions attached to the government subsidies; (2) the company can receive the government subsidies. If the government subsidies are monetary assets, they are measured at the received or receivable amount. If the government subsidies are non-monetary assets, they are measured at fair value; if the fair value cannot be reliably obtained, they are measured at nominal amount.

2. Basis for judging government subsidies related to assets and accounting treatment methods

Government documents stipulate that government subsidies used for the acquisition, construction, or other formation of long-term assets are classified as asset-related government subsidies. In cases where government documents are unclear, judgments are based on the essential conditions necessary for obtaining the subsidy. Those subsidies that are essential conditions for the acquisition, construction, or other formation of long-term assets are considered as asset-related government subsidies. Asset-related government subsidies are offset against the carrying amount of the relevant assets or recognized as deferred income. If an asset-related government subsidy is recognized as deferred income, it is amortized into profit or loss over the useful life of the relevant asset using a reasonable and systematic method. Government subsidies measured at their nominal amounts are directly recognized in the current profit or loss. If the relevant asset is sold, transferred, scrapped, or damaged before the end of its useful life, the unallocated balance of the related deferred income is transferred to the profit or loss for the period in which the asset is disposed of.

3. Basis for determining government subsidies related to earnings and accounting treatment methods

Government subsidies other than those related to assets are classified as government subsidies related to income. For government subsidies that contain both asset-related and income-related components, and it is difficult to distinguish whether they are related to assets or income, they are generally classified as government subsidies related to income. Government subsidies related to income, if used to compensate for related costs or losses in future periods, are recognized as deferred income and recorded in the current profit and loss or offset against related costs during the period when the related costs or losses are recognized. If used to compensate for related costs or losses that have already occurred, they are directly recorded in the current profit and loss or offset against related costs.

4. Government subsidies related to the company's daily business activities shall be recorded in other income or offset against related costs and expenses based on the substance of the economic transaction. Government subsidies unrelated to the company's daily activities shall be recorded in non-operating income and expenses.

5. Accounting treatment method for policy-based preferential loan discount interest

(1) When the finance department allocates discount interest funds to the lending bank, and the lending bank provides loans to the company at a preferential policy interest rate, the actual received loan amount shall be regarded as the entry value of the loan, and the relevant borrowing costs shall be calculated based on the loan principal and the preferential policy interest rate.

(2) If the finance department directly allocates the discount interest funds to the company, the corresponding discount interest will be used to offset the relevant borrowing costs.

29. Deferred tax assets/deferred tax liabilities

1. The deferred tax assets or deferred tax liabilities are recognized based on the difference between the carrying amount of assets and liabilities and their tax bases (for items not recognized as assets or liabilities, their tax bases can be determined according to tax law, and the difference between such tax bases and their carrying amounts). The calculation is based on the applicable tax rate during the expected period of asset recovery or liability settlement.

2. The recognition of deferred tax assets is limited to the taxable income that is likely to be available for offsetting deductible temporary differences. At the balance sheet date, if there is conclusive evidence indicating that sufficient taxable income is likely to be available in future periods for offsetting deductible temporary differences, the deferred tax assets that have not been recognized in previous accounting periods shall be recognized.

3. On the balance sheet date, the carrying amount of deferred tax assets is reviewed. If it is likely that sufficient taxable income will not be available in future periods to offset the benefit of the deferred tax asset, the carrying amount of the deferred tax asset is reduced. When sufficient taxable income is likely to be available, the reduced amount is reversed.

4. The current income tax and deferred income tax of the company are recognized as income tax expenses or income in the current profit and loss, excluding income tax arising from the following circumstances: (1) business combinations; (2) transactions or events directly recognized in owner's equity.

When the following conditions are simultaneously met, the company presents the deferred tax assets and deferred tax liabilities at their net amount after offsetting: (1) having the legal right to settle current tax assets and current tax liabilities at their net amount; (2) the deferred tax assets and deferred tax liabilities are related to income taxes levied by the same tax authority on the same taxable entity, or related to different taxable entities, but during the future reversal period of each significant deferred tax asset and deferred tax liability, the involved taxable entities intend to settle current tax assets and current tax liabilities at their net amount, or simultaneously acquire assets and settle liabilities.

30. Leasing

(1) Accounting treatment method for leasing as a lessee

On the commencement date of the lease term, the company recognizes leases with a term not exceeding 12 months and excluding purchase options as short-term leases; it also recognizes leases where the individual leased asset is a new asset with a relatively low value as low-value asset leases. If the company subleases or expects to sublease the leased asset, the original lease is not recognized as a low-value asset lease.

For all short-term leases and low-value asset leases, the company recognizes the lease payments as related asset costs or current profit and loss using the straight-line method over each period of the lease term.

Except for the short-term leases and low-value asset leases that have been simplified, on the lease commencement date, the company recognizes the right-of-use assets and lease liabilities for the lease.

(1) Right-to-use assets

The right-of-use asset is initially measured at cost, which includes: 1) the initial measurement amount of the lease liability; 2) the lease payments made on or before the lease term commencement date, after deducting the amount related to any lease incentives already enjoyed; 3) the initial direct expenses incurred by the lessee; 4) the estimated costs that the lessee will incur for dismantling and removing the leased asset, restoring the site where the leased asset is located, or restoring the leased asset to the condition specified in the lease terms.

The company accrues depreciation for right-of-use assets using the straight-line method. If it is reasonably certain that ownership of the leased asset will be obtained upon the expiration of the lease term, the company accrues depreciation over the remaining useful life of the leased asset. If it is not reasonably certain that ownership of the leased asset will be obtained upon the expiration of the lease term, the company accrues depreciation over the shorter of the lease term or the remaining useful life of the leased asset.

(2) Lease liabilities

On the lease commencement date, the company recognizes the present value of the lease payments that have not yet been paid as the lease liability. When calculating the present value of the lease payments, the lease implicit interest rate is used as the discount rate. If the lease implicit interest rate cannot be determined, the company's incremental borrowing rate is used as the discount rate. The difference between the lease payments and their present value is recognized as unrecognized financing expenses. Interest expenses are recognized during each period of the lease term based on the discount rate used to recognize the present value of the lease payments and are included in the current profit and loss. Variable lease payments that are not included in the measurement of the lease liability are included in the current profit and loss when they are actually incurred.

After the commencement date of the lease term, when there are changes in the fixed payment amount, changes in the estimated payable amount of the residual value guarantee, changes in the index or ratio used to determine the lease payment amount, or changes in the assessment results or actual exercise of purchase options, renewal options, or termination options, the company re-measures the lease liability based on the present value of the changed lease payment amount and adjusts the book value of the right-of-use asset accordingly. If the book value of the right-of-use asset has been reduced to zero, but the lease liability still needs further reduction, the remaining amount will be included in the current profit and loss.

(2) Accounting treatment method for leasing as a lessor

On the lease commencement date, the company categorizes leases that have essentially transferred almost all risks and rewards related to the ownership of the leased asset as financing leases, while all others are classified as operating leases.

(1) Operating lease

During the various periods within the lease term, the company recognizes the lease payment amounts as rental income using the straight-line method. The initial direct expenses incurred are capitalized and amortized on the same basis as the recognition of rental income, and are recorded in the current profit and loss on a periodic basis. The variable lease payments related to operating leases that are not included in the lease payment amounts are recognized in the current profit and loss when they are actually incurred.

(2) Financial leasing

On the lease commencement date, the company recognizes the financing lease receivables based on the net investment in the lease (the sum of the unguaranteed residual value and the present value of the lease payments not yet received at the lease commencement date, discounted at the lease's effective interest rate), and derecognizes the financing lease assets. During each period of the lease term, the company calculates and recognizes interest income based on the lease's effective interest rate.

The variable lease payments obtained by the company that are not included in the measurement of net investment in leases are recorded in the current profit and loss when they are actually incurred.

31. Changes in significant accounting policies and accounting estimates

(1) Changes in significant accounting policies

□ Applicable Not Applicable

(2) Changes in significant accounting estimates

□ Applicable Not Applicable

(3) Adjustments to relevant items in the financial statements at the beginning of the year for the first time implementing the new accounting standards from 2026

□ Applicable Not applicable

VI. Tax Items

1. Main tax categories and tax rates

If there are taxpayers with different enterprise income tax rates, disclose the relevant information and explanations

2. Tax incentives

According to the "Announcement of the Ministry of Finance and the State Taxation Administration on Preferential Income Tax Policies for Small and Micro Enterprises and Individual Businesses" (Announcement No. 6 of the Ministry of Finance and the State Taxation Administration in 2023), for small and micro-profit enterprises with an annual taxable income not exceeding 1 million yuan, the taxable income shall be calculated at a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20%. The implementation period is from January 1, 2023, to December 31, 2027. The subsidiary companies of our company, Huazhan Jianli and Shantou Songshan Company, are subject to the preferential tax rate of 20% for small and microprofit enterprises.

VII. Notes to items in the consolidated financial statements

1. Monetary funds

Unit: Yuan

Other instructions

As of June 30, 2026, the restricted funds in bank deposits amounted to RMB 2,337,426.17, of which RMB 2,201,283.57 was frozen due to litigation, RMB 70,010.20 was from suspended accounts and payment halts, RMB 50,000 was for regular project deposits, and RMB 16,132.40 was from special accounts for migrant workers

2. Trading financial assets

Unit: Yuan

Other instructions

3. Bills receivable

(1) Classification and presentation of notes receivable

Unit: Yuan

(2) Disclosure by classification based on bad debt provision method

Unit: Yuan

Provision for bad debts of notes receivable is calculated and withdrawn based on the general model of expected credit losses as follows: □ Applicable Not Applicable

4. Accounts receivable

(1) Disclosure by aging

Unit: Yuan

(2) Disclosure by classification of bad debt provision method

Unit: Yuan

Category name for individual provision for bad debts: accounts receivable with significant individual provision for bad debts

Unit: Yuan

Category name for combined provision for bad debts: Closing balance, book balance, provision for bad debts ratio Unit: Yuan

Explanation for determining the basis of this combination: If the provision for bad debts of accounts receivable is calculated and withdrawn according to the general model of expected credit losses:

□ Applicable Not Applicable

(3) Provision for bad debts accrued, recovered, or reversed in the current period

Provision for bad debts in the current period:

Unit: Yuan

Among them, the amounts of bad debt provisions recovered or reversed in the current period are significant: Unit: Yuan

(4) Accounts receivable and contract assets, ranked by the top five ending balances, aggregated by the debtors

Unit: Yuan

5. Contract assets

(1) Contract asset status

Unit: Yuan

(2) Disclosure by classification based on bad debt provision method

Unit: Yuan

Accrue bad debt reserves based on the general model of expected credit losses □ Applicable Not Applicable

(3) Provision for bad debts accrued, recovered, or reversed in the current period

Unit: Yuan

Among them, the amounts of bad debt provision recovered or reversed in the current period are significant:

Unit: Yuan

Other instructions

6. Other receivables

Unit: Yuan

(1) Other receivables

1) Classification of other receivables by nature of payment

Unit: Yuan

2) Disclosure by aging

Unit: Yuan

3) Disclosure by classification based on bad debt provision method

Applicable □ Not applicable

Unit: Yuan

Provision for bad debts based on the general model of expected credit losses: Unit: Yuan

Basis for stage division and provision ratio for bad debt reserves Changes in book balance of significant amounts in loss provisions during the current period □ Applicable Not Applicable

4) Provision for bad debts accrued, recovered, or reversed in the current period

Provision for bad debts in the current period:

Unit: Yuan

For those with significant amounts of bad debt provision reversed or recovered in the current period:

Unit: Yuan

5) Other receivables with the top five ending balances, categorized by debtors

Unit: Yuan

7. Prepayments

(1) Prepayments are presented by aging

Unit: Yuan

Explanation for the reasons why prepayments with an account age exceeding 1 year and significant amounts have not been settled in a timely manner:

(2) Prepayments of the top five ending balances categorized by prepayment objects

Unit: yuan

Other notes:

8. Inventory

Does the company need to comply with the disclosure requirements of the real estate industry is

(1) Inventory classification

The company is required to comply with the disclosure requirements for the "Real Estate Industry" as stipulated in the "Shenzhen Stock Exchange Listed Companies Self-regulatory Guidelines No. 3 - Industry Information Disclosure" Classified by nature:

Unit: Yuan

Disclose the main items of "development costs" and their capitalization of interest in the following format: Unit: Yuan

Disclose the main project information of "development products" according to the following format:

Unit: Yuan

Disclose the "installment collection of development products", "rental development products", and "turnover housing" by item in the following format: Unit: Yuan

(2) Provision for inventory depreciation and impairment provision for contract performance costs

Disclose the provision for inventory depreciation reserves in the following format:

Classified by nature:

Unit: Yuan

Classified by major projects: Unit: Yuan

(3) Interest capitalization rate in the ending balance of inventory

As of June 30, 2026, the amount of capitalized borrowing costs included in the inventory balance of the Group was RMB 289,401.37.

9. Other current assets

Unit: Yuan

Information related to compensatory assets

Other notes:

10. Other equity instrument investments

Unit: Yuan

There is derecognition in the current period Unit: Yuan

Disclose the non-trading equity instrument investments for the current period by item Unit: Yuan

Other notes:

11. Long-term equity investment

Unit: Yuan