Stock Codes: 000037, 200037

Stock Abbreviation: Shennan Power A, Shennan Power B

Announcement No.: 2026-050

Shenzhen Nanshan Power Co., Ltd.

2026 Semi-Annual Report

August 25, 2026

Section I Important Notes, Table of Contents and Interpretations

The Board of Directors, directors, and senior executives of the Company guarantee the authenticity, accuracy and completeness of the contents of the semi-annual report, and bear individual and joint legal liabilities for any false records, misleading statements or major omissions.

Kong Guoliang, Principal and Person in Charge of Accounting of the Company, Zhang Xiaoyin, Chief Finance Officer of the Company, and Lin Xiaojia, Chief Accountant (accounting officer) of the Company, hereby declare that they guarantee the authenticity, accuracy, and completeness of the financial report in this Semi-annual Report.

All the Company's directors have attended the board meeting for the review of this Semi-Annual Report.

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

Any plans for the future or other forward-looking statements mentioned in this Semi-Annual Report shall not be considered as absolute promises of the Company to investors. Therefore, investors are reminded to exercise caution when making investment-related decisions.

This Semi-Annual Report is prepared in both Chinese and English. In case of any discrepancy in the understanding of the two versions, the Chinese version shall prevail. Investors are advised to read the full text of this Semi-Annual Report carefully.

Table of Contents

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

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

Section III Discussion and Analysis of the Management ....9

Section IV Corporate Governance, Environment, and Society ....25

Section V Important Matters....27

Section VI. Share Changes and Shareholders....38

Section VII Bonds....45

Section VIII Financial Report....46

Documents Available for Reference

I. The original of the 2026 Semi-Annual Report with the signature of the Company's legal representative.

II. Financial statements signed and sealed by the Company's legal representative, Person in Charge of Accounting, Chief

Finance Officer, and Head of Accounting (accounting officer).

III. The originals of all the Company's documents and announcements that have been publicly disclosed in the

designated media during the Reporting Period.

IV. Place of reference: Office of the Board of Directors of the Company.

Interpretations

Section II Company Profile and Financial Indicators

I. Company Profile

II. Contact Information

III. Other Information

1. Contact Information of the Company

Whether the registered address, office address and postal code, website, and email of the Company changed during the Reporting Period

□ Applicable  Not applicable

The registered address, office address and postal code, website, and email of the Company remained unchanged during the Reporting Period. For details, please refer to the 2025 Annual Report.

2. Information Disclosure and Place where this Report is Lodged

Whether the media for information disclosure and the place where this Report is lodged changed during the Reporting Period

□ Applicable  Not applicable

The name and website of the stock exchange and media where the Company discloses its semi-annual report, and the place where the semi-annual report is lodged remained unchanged during the Reporting Period. For details, please refer to the 2025 Annual Report

3. Other Related Information

Whether other related information changed during the Reporting Period

□ Applicable  Not applicable

IV. Key Accounting Information and Financial Indicators

Whether the Company needs to retrospectively adjust or restate the accounting data of previous years □ Yes  No

V. Differences in Accounting Data under Domestic and Foreign Accounting Standards

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

□ Applicable  Not applicable

During the Reporting Period, there were no differences in net profit and net assets in the financial reports disclosed by the Company in accordance with both international accounting standards and Chinese accounting standards.

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

□ Applicable  Not applicable

During the Reporting Period, there were no differences in net profit and net assets in the financial reports disclosed by the Company in accordance with both overseas accounting standards and Chinese accounting standards.

VI. Items and Amounts of Non-recurring Gains/Losses

Applicable □Not applicable

Unit: RMB

Particulars about other gains/losses that meet the definition of non-recurring gains/losses:

□ Applicable  Not applicable

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

Explanation on the definition of non-recurring profit and loss items as recurrent profit and loss items in the Explanatory Announcement No. 1 on Information Disclosure of Companies Publicly Issuing Securities - Non-recurring Gains/Losses

□ Applicable  Not applicable

The Company had no circumstances of 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.

Section III Discussion and Analysis of the Management

I. Principal Activities of the Company during the Reporting Period

In the first half of 2026, the cumulative total electricity consumption of the society totaled 5.0999 trillion kWh, a yearon-year increase of 5.3%. In terms of electricity consumption by industry, the electricity consumption of the primary industry was 71.1 billion kWh, a year-on-year increase of 4.9%. The electricity consumption of the secondary industry was 3.3057 trillion kWh, a year-on-year increase of 5.1%, among which the industrial electricity consumption was 3.2760 trillion kWh, a year-on-year increase of 5.3%, and the electricity consumption of the high-tech and equipment manufacturing industry was 600.8 billion kWh, a year-on-year increase of 9.8%. The electricity consumption of the tertiary industry was 991.6 billion kWh, a year-on-year increase of 8.0%, among which the electricity consumption of the charging and swapping service industry and the Internet data service industry was 81.0 billion kWh and 49.4 billion kWh respectively, with growth rates of 56.9% and 44.0% respectively. The electricity consumption of urban and rural residents was 731.5 billion kWh, a year-on-year increase of 3.1%

The main businesses of the Company cover electricity generation and sales, as well as comprehensive energy services. By the end of the Reporting Period, the Nanshan Thermal Power Station had 3 sets of 9E gas-steam combined cycle power generation units with a total installed capacity of 540MW. The power station is located in the power load center of Shenzhen and serves as a peak-shaving power source in the region. During the Reporting Period, Nanshan Therma Power Station actively fulfilled its responsibility for stable power supply, strictly maintained safety standards, scientifically coordinated gas and electricity matching, dynamically adjusted electricity marketing and fuel procurement strategies, completed an on-grid power generation of 119 million kWh, purchased a total of 83 million kWh as an agent, and achieved a medium and long-term contract power of 176 million kWh. Its subsidiary Shennandian Environmental Protection Company fully expanded its electricity sales business and acted as an agent for a total of 27.19 million kWh for users. The cumulative charging and discharging capacities of the Zhongshan Independent Energy Storage Station (Phase I) project of Shennandian Xiwan Company were 50.67 million kWh and 45.39 million kWh respectively, and the cumulative mileage of participation in frequency regulation was 2,215,830MW.

In the first half of 2026, focusing on the annual targets, the Company systematically promoted the market expansion, project construction, and industrial landscape of its affiliates, actively expanded comprehensive energy service businesses such as new energy and energy storage, continuously improved the integrated industrial chain of "investment, construction, operation, mana ement, and maintenance", and steadily enhanced the business syner y and value creation ability of the entire comprehensive energy service chain. In terms of project construction and operation, Shennandian Xiwan Company continued to optimize the operation efficiency of the Zhongshan Independent Energy Storage Station (Phase I) project, and accumulated full-cycle management experience in energy storage projects, while efficiently promoting the construction preparation of the Zhongshan Independent Energy Storage Station (Phases II and III) project, continuously expanding the Company's energy storage industry layout. In terms of engineering and technical services, Shennandian Engineering Company gave full play to its technological and resource accumulation advantages in the field of gas turbine power plan engineering, and orderly implemented the relevant work of the operation and maintenance service project for the 2×450MW gas combined cycle power station in Koh Kong Province, Cambodia. In terms of industrial investment layout, the Company jointly established Shennandian Shangao Smart Energy (Shenzhen) mathtt C o. , Ltd. with Shandong Hi-Speed (Shenzhen) Investment Co., Ltd. as the core cooperation platform for both parties to conduct investment, operation, and management in the fields of new energy and energy storage industries. Through the establishment of a specialized industrial cooperation platform, industrial synergy and linkage were deepened, project development channels were broadened, and the industria chain layout was improved, empowering and advancing the momentum for the subsequent development of new energy and energy storage businesses.

During the Reporting Period, the Company realized an operating income of RMB 201,808,300, a net profit attributable to shareholders of the listed company of RMB 19,833,300, and earnings per share of RMB 0.0329.

The Company shall comply with the disclosure requirements for the Power Supply Industry as set out in the Guidelines for Self-Regulation of Listed Companies of Shenzhen Stock Exchange No. 3 - Industry Information Disclosure.

II. Core Competitiveness Analysis

In recent years, affected by the macroeconomic conditions and common problems in the gas turbine electricity generation industry, the main business of the Company - electricity generation has been in face of difficulties and challenges. However, the basic core competitiveness formed through more than 30 years of operation and development, the strong support of the Company's major shareholders, and the operation and management innovation adopted by the Company's Board of Directors and Management have laid a solid foundation for the Company's continuous operation and transformation and development. During the Reporting Period, the Company adhered to a prudent development philosophy, firmed up its strategic belief, flexibly adjusted its operating strategies, carefully optimized resource allocation, successfully overcame a series of development difficulties, and further consolidated and enhanced the Company's core competitiveness.

1. Hard-working and innovative management culture. The Company has a group of operation and management talents with innovative awareness and fighting spirit. By deepening human resource reform and building a performanceoriented performance appraisal and incentive mechanism, the Company advocates and creates a management culture of unity, struggle, innovation, and progress. Meanwhile, the Company vigorously promotes the construction of institutiona system, management system, and compliance system, adheres to standard management in accordance with laws and regulations, scientific rigor, and high efficiency and orderliness, which lays a good foundation to deeply explore internal potential and actively seek external opportunities through process-oriented, refined, and standardized managemen orientation.

2. Professional and enterprising technical talents. The Company has been deeply engaged in the gas electricity generation industry for over 30 years. Relying on its industry influence, it has gathered and cultivated a group of professional technical experts and key talents, and holds rich practical experience in the construction and operation management of gas-fired power plants. In order to adapt to the market-oriented reform of the power market in Guangdong Province, the Company has set up a professional power marketing team, continuously optimized trading strategies and marketing models, and has mature market-oriented operation capabilities of the electricity market. In addition, thanks to its strong technical strength, Shennan Power Engineering Company provides comprehensive professional services such as technical consultation, commissioning, and operation guarantee for dozens of gas-fired power stations at home and abroad; the Company has successively undertaken the technical personnel training business of dozens of domestic and overseas power plants. Backed up by high-quality training and a professional teaching team, the Company built a well-known professional talent training base in the domestic gas turbine industry and established a good reputation and a professional brand image in the industry.

3. Cutting-edge professionalism and techniques. In recent years, the Company, driven by the philosophy of innovation-driven development, has been steadily promoting technological innovation. Based on the self-owned independent invention patents, utility model patents, and software copyrights, the Company jointly drafted and prepared one national standard, offering strong support for the Company's high-quality development. During the Reporting Period, the Company declared a total of two invention patents. six utility model patents. and one software copyright to the China National Intellectual Property Administration, and five utility model patents and one software copyright were authorized.

The total number of authorized patents of the Company reached 51 (including 5 invention patents) and 14 software copyrights, which greatly enhanced the Company's brand image and industry competitiveness.

4. Abundant experience in industrial exploration. The Company gives full play to its own advantages and exerts every effort to develop comprehensive energy service business, while fostering experience in the construction and operation of the new energy and energy storage industries. Based on the construction and operation of projects such as energy storage black start, photovoltaics, and MTC industrial and commercial energy storage, the construction and commissioning of Zhongshan independent energy storage power station, and the implementation of integrated solar-storage-charging projects, combined with the continuous expansion of off-site and overseas power station operation and maintenance businesses in Qinghai, Hainan, Cambodia, etc., the Company has accumulated rich practical experience in the construction, commissioning, and operation and maintenance of new energy and energy storage projects, and cultivated a group of professional technical talents. Superimposing the talent reserves and technical advantages of the traditiona power industry, the Company has reserved sufficient technical and talent resources for the Company to deeply engage in the comprehensive energy service field, laying a solid foundation.

5. Leading environmental protection effects. The Company's generator sets are all gas generator sets, with natura gas as fuel. The mathtt C O _ 2 emission in the flue gas is about 42% of that of coal-fired power plants, providing strong support for the national "dual carbon" goals. The nitrogen oxide emissions of each of the Company's units are all within 15mg/m³, reaching the world's most advanced level.

III. Main Business Analysis

Overview

Please refer to the relevant content in "I. Main Businesses of the Company during the Reporting Period".

Year-on-year changes in key financial data

Unit: RMB

Material changes in the composition or sources of the Company's profits during the Reporting Period □ Applicable  Not applicable No material change was found in the composition or sources of the Company's profits during the Reporting Period.

Composition of operating income Unit: RMB Industries, products, or regions that account for over 10% of the Company's operating income or operating profit

Applicable □Not applicable Unit: RMB The Company's main business data for the last period adjusted according to the data at the end of the Reporting Period

after the statistics of the Company's principal business data was adjusted during the Reporting Period □ Applicable  Not applicable

IV. Analysis of Non-Core Businesses

Applicable □Not applicable

Unit: RMB

V. Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

2. Main overseas assets

□ Applicable  Not applicable

3. Assets and Liabilities at Fair Value

Applicable □Not applicable

Unit: RMB

Other changes

Not applicable

Whether there is any significant change to the measurement attributes of the major assets in the Reporting Period □ Yes  No

4. Restricted Asset Rights at the End of the Reporting Period

VI. Investments Analysis

1. Overview

Applicable □Not applicable

2. Major equity investments made in the Reporting Period

Applicable □Not applicable

Unit: RMB

3. Major non-equity investments ongoing in the Reporting Period

Applicable □Not applicable

Unit: RMB

4. Financial Investments

(1) Securities Investments

□ Applicable  Not applicable

The Company had no securities investment during the reporting period.

(2) Investments in Derivatives

□ Applicable  Not applicable

The Company had no investments in derivatives during the Reporting Period.

5. Use of raised funds

□ Applicable  Not applicable

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

VII. Sale of Major Assets and Equity Interests

1. Sale of major assets

□ Applicable  Not applicable

The Company did not sell any major assets during the Reporting Period.

2. Sale of major equity

□ Applicable  Not applicable

VIII. Major Controlling and Joint-stock Companies

Applicable □Not applicable

Major subsidiaries and joint-stock companies with an over 10% effect on the Company’s net profit

Unit: RMB10,000

Note: The net profit of the subsidiary Shennan Power Zhongshan Company is mainly derived from the business operations of the independent energy storage project of its subsidiary Shennan Power Xiwan Company. Subsidiaries obtained or disposed of in the Reporting Period

Applicable □Not applicable

About the major controlling and joint-stock companies Not applicable

IX. Structured Entities Controlled by the Company

□ Applicable  Not applicable

X. Risks and Countermeasures

1. Main businesses: Since 2026, affected by multiple factors, the power plants under the Company been facing tremendous pressure from high fuel costs and outdated unit energy efficiency. The 9E units became profitable under the competitive pressure from more efficient and lower-cost units. The Company will continue to strengthen the operation and management of existing assets, actively respond to the requirements and changes of the power market, and make every effort to improve the profitability and overall operating efficiency of main businesses. With Zhongshan Independent Energy Storage Project as a starting point, the Company will coordinately promote comprehensive energy services and traditiona power generation businesses, actively explore diversified business models, and create better conditions for the sustainable operation and healthy development of the Company.

2. Safety management: With the increasing diversity the Company's businesses, safety risks are intertwined and superimposed. The Company will continue to strengthen the overall planning and coordination of safety management, combine the risk characteristics and work requirements of each business segment, focus on prominent problems and difficulties, efficiently analyze the root causes, and formulate practical solutions to ensure that safety management conforms to business development needs and effectively prevents various safety risks. In response to the aging of power generation eguipment. the Company will scientifically prepare maintenance and technological transformation plans. and apply supporting funds and technical resources to continuously improve the maintenance and governance level of equipment. Facing new risks brought by new equipment and new technologies in the process of transformation, the Company will strengthen safety technical training, improve control measures, reinforce the accountability of production safety, and ensure the safe and stable operation of production facilities. Meanwhile, the Company will further strengthen training and emergency capability building to ensure that the "five in-places" of production safety responsibilities management, input, training, and emergency rescue are achieved, avoid any safety accidents due to human factors within the Company's system, and continue to play the supporting role of a peak-shaving power source.

3. Fuel procurement: In 2026, the natural gas procurement price was mainly affected by the impacts of fluctuations in the international fuel market and the pricing strategies of existing suppliers. In the first half of 2026, affected by geopolitica conflicts in the Middle East. the maritime passage through the Strait of Hormuz was blocked. and the natural gas procurement presented a severe "tight volume and high price". In addition, the Company's relatively single gas source structure has adversely affected the stability of gas supply, the flexibility of gas volume coordination, and the economy of gas prices. With the improvement of trading rules in the electricity spot market, the increase in capacity pricing, and the successive commissioning of power sources in areas surrounding Shenzhen, higher requirements have been placed on the stability and flexibility of natural gas supply for electricity production. In face of the aforesaid conditions, the Company will continue to optimize upstream cooperation relationships, coordinate all parties concerned to ensure the gas supply given the single gas source, and try its best to reduce natural gas procurement costs while ensuring the gas demand for electricity production.

4. Nanshan Thermal Power Station: In March 2026, the Company again learned from the official website of the Shenzhen Municipal Planning and Natural Resources Bureau about the Notice of the Municipal Planning and Natura

Resources Bureau on Issuing the Shenzhen 2026 Annual Land Preparation Plan (hereinafter referred to as the Land Preparation Plan). According to the Land Preparation Plan and appendixes thereof, the land reserve and related contents of the Nanshan Thermal Power Station affiliated with the Company are still within the Shenzhen 2026 Annual Land Preparation Plan, with no material change from the contents stated in the land preparation plans disclosed in recent years. The Company will continue to contact relevant authorities to get a clear picture, conduct in-depth discussions with lega counsel, keep monitoring and timely report our opinions and demands to relevant government departments, and safeguard the legitimate rights and interests of the listed company and all shareholders.

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

Whether the Company has formulated a market capitalization management system

□ Yes  No

Whether the Company has disclosed its valuation enhancement plan.

□ Yes  No

XII. The implementation of the action plan of "Double improvement of quality and return".

Whether the Company has disclosed an announcement on "Quality and Return Dual Enhancement" Action Plan. □ Yes  No

Section IV Corporate Governance, Environment, and Society

I. Changes of Directors and Senior Executives of the Company

Applicable □Not applicable

II. Profit Distribution and Conversion of Capital Reserve 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 half of the year.

III. Implementation of the Company's Equity Incentive Plan, Employee Stock Ownership Plan (ESOP) or Other Employee Incentives

□ Applicable  Not applicable

None.

IV. Environmental Information Disclosure

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

Yes □No

The Company shall comply with the disclosure requirements for the Power Supply Industry as set out in the Guidelines for Self-Regulation of Listed Companies of Shenzhen Stock Exchange No. 3 - Industry Information Disclosure.

Information on environmental accidents of the listed company

None

V. Social Responsibilities

In the first half of 2026, regardless of the challenges in production, operation, and management, the Company bravely assumed social responsibilities through stabilizing power supply in face of unit aging, efficiency decline, and high costs, to the best of its ability. In terms of production safety, the Company persistently tried its best to ensure safe and stable power production, actively explored the establishment of a production safety management model adapted to transformation, optimized and improved the internal production safety management system and mechanism, successfully carried out various tasks of production safety, technical supervision, and innovation management. and achieved the "five-zero" goa of production safety. In terms of environmental protection, the Company strictly observed national and local environmenta protection laws and regulations, consistently adhered to the development concept of clean power generation, effectively implemented all environmental protection work, met environmental emission standards, and had no environmental pollution accidents. In terms of care and support, the Company thoroughly implemented the decisions and deployments of the central government on the rural revitalization strategy, carried out the designated assistance tasks of stationing in towns and villages for rural revitalization, and dispatched a stationed assistant for such purpose. Meanwhile, the Company actively played a role in consumption assistance. By purchasing poverty-alleviation agricultural products and other means, the cumulative amount of consumption assistance reached over RMB 80,000 during the Reporting Period.

Section V Important Matters

I. Commitments of the Company’s de facto controller, shareholders, related parties and acquirers, as well as the Company itself and other entities fulfilled in the reporting period or ongoing as of the end of the Reporting Period

□ Applicable  Not applicable

None.

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

□ Applicable  Not applicable None.

III. Irregularities in the Provision of Guarantees

□ Applicable  Not applicable No such cases in the Reporting Period.

IV. Engagement and Disengagement of Independent Auditors

Whether the semi-annual financial report has been audited

□ Yes  No

The semi-annual financial report was not audited.

V. Explanations by the Board of Directors Regarding the "Modified Audit Report" Issued by the Independent Auditor for the Reporting Period

□ Applicable  Not applicable

VI. Explanations by the Board of Directors Regarding the "Modified Audit Report" Issued for the Previous Year

□ Applicable  Not applicable

VII. Insolvency and Reorganization

□ Applicable  Not applicable

No such cases in the Reporting Period.

VIII. Litigation

Major litigation and arbitration matters

□ Applicable  Not applicable

The Company had no major litigation or arbitration matters during the Reporting Period.

Other litigation matters

Applicable □Not applicable

IX. Punishments and Rectifications

□ Applicable  Not applicable

None.

X. Credit Quality of the Company and its Controlling Shareholder and De Facto Controller

Applicable □Not applicable

During the Reporting Period, neither the Company nor its largest shareholder failed to fulfill effective court judgments or failed to repay large amounts of debts due, indicating good credit quality. During the Reporting Period, the Company had no controlling shareholder or de facto controller.

XI. Major Related-Party Transactions

1. Related-Party transactions on daily operation

Applicable □Not applicable

2. Related-Party transactions regarding purchase or sales of assets or equity interests

□ 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 regarding joint investments in third parties

□ Applicable  Not applicable

No such cases in the Reporting Period.

4. Credits and liabilities with related parties

□ Applicable  Not applicable

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

5. Transactions with related finance companies

□ Applicable  Not applicable

The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with any related finance company or any other related parties.

6. Transactions with related parties by finance companies controlled by the Company

□ Applicable  Not applicable

The finance company controlled by the Company did not make any deposits, receive loans or credit from, and was not involved in any other finance business with any 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. Entrustment, contracting and leases

(1) Entrustment

□ Applicable  Not applicable

None.

(2) Contracting

□ Applicable  Not applicable

None.

(3) Leases

□ Applicable  Not applicable

During the reporting period, the Company had no leases.

2. Major guarantee

Applicable □Not applicable

Unit: RMB10,000

Note: 1. The Company convened the fifth meeting of the Tenth Session of the Board of Directors on April 13. 2026. which reviewed and approved the Proposal on Applying for Comprehensive Credit Line for Financing and Providing Guarantees for 2026. specifving that the Company will provide a maximum guarantee line of not more than RMB 325 million or other equivalent foreign currencies (including financing guarantees and non-financing guarantees) in total for its holding subsidiaries Shenzhen New Power Industrial Co., Ltd., Shenzhen Shennan Power Environmental Protection Co., Ltd. Shenzhen Shennan Power Gas Turbine Engineering Technology Co., Ltd., and Shennan Power Energy Technology (Sichuan) Co., Ltd. for the year 2026 (from the date this proposal is approved by the 2025 Board of Directors to the convening date of the 2026 Board of Directors). The quota can be used on a rolling basis within the validity period approved by the Board of Directors. For details, please refer to the Announcement on Providing Guarantees for Holding Subsidiaries in 2026 (Announcement No.: 2026-025) disclosed by the Company on Securities Times and CNINFO on April 15, 2026. Up to the disclosure date of this report, the quarantees provided by the Company to Shenzhen New Power Industrial Co.. Ltd., Shenzhen Shennan Power Environmental Protection Co., Ltd., and Shennan Power Energy Technology (Sichuan) Co., Ltd. have not actually occurred.

2. During the reporting period，the actual guarantee amount provided by the Company for Shenzhen Shennan Power Gas Turbine Engineering Technology Co., Ltd. is USD 5.1559 million. Based on the central parity rate of 6.8628 announced on the official website of the People's Bank of China on April 30, it is equivalent to approximately RMB 35.3841 million. For details, please refer to the Progress Announcement on Providing Guarantees for Holding Subsidiaries in 2026 (Announcement No.: 2026-033) disclosed by the Company on Securities Times and CNINFO on May 7, 2026.

Compound guarantees:

None

3. Entrusted Wealth Management

Applicable □Not applicable

Unit: RMB10,000

High-risk entrusted wealth management where the Company, as a sole trustor, entrusts a financial institution to carry out asset management, or invests in products with low security and poor liquidity

□ Applicable  Not applicable

4. Other major contracts

Applicable □Not applicable

Note: The three contracts mentioned above are all related contracts for the Operation and Maintenance Service Project of 2×450MW Gas Turbine Combined Cycle Power Plant in Koh Kong Province, Cambodia undertaken by Shennan Power Engineering Company. The total contract amount of USD 208,113,545 is an estimated amount based on the operation and

maintenance cycle, and the actual amount is subject to the amount confirmed during the contract execution process. For details, please refer to the relevant announcements disclosed by the Company on Securities Times and CNINFO. (Announcement No.: 2026-001, 2026-004, 2026-014)

XIII. Reception of Researches, Communications, Interviews and other Activities during the Reporting Period

Applicable □Not applicable

XIV. Other Significant Events

Applicable □Not applicable

Land-related matters of Nanshan Thermal Power Station: In March 2026, the Company again learned from the official website of the Shenzhen Municipal Planning and Natural Resources Bureau about the Notice of the Municipal Planning and Natural Resources Bureau on Issuing the Shenzhen 2026 Annual Land Preparation Plan. According to such notice and its appendixes, the land reserve and related contents of the Nanshan Thermal Power Station affiliated with the

Company are still within the Shenzhen 2026 Annual Land Preparation Plan, with no material change from the contents stated in the land preparation plans disclosed in recent years. (For details, please refer to the relevant announcements disclosed by the Company on Securities Times and CNINFO, Announcement No.: 2026-013)

Except for the foregoing, the refund payable for the Company's "Project Technical Transformation Beneficiary Fund" had no progress or change during the Reporting Period.

XV. Significant Events of the Company's Subsidiaries

□ Applicable  Not applicable

Section VI. Share Changes and Shareholders

I. Share Changes

1. Share changes

Unit: share

Reasons for the change □ Applicable  Not applicable Approval of the change □ Applicable  Not applicable Transfer of share ownership □ Applicable  Not applicable Progress on any share repurchases □ Applicable  Not applicable Progress on reducing the repurchase

Progress on reducing the repurchased shares by means of centralized bidding

□ Applicable  Not applicable

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

□ Applicable  Not applicable

Other information that the Company considers necessary or is required by the securities regulator to be disclosed □ Applicable  Not applicable

2. Changes in restricted shares

□ Applicable  Not applicable

II. Issuance and Listing of Securities

□ Applicable  Not applicable

III. Number of Shareholders and Shareholdings of the Company

Unit: share

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

□ Yes  No

The company's top 10 common stock shareholders and top 10 unrestricted common stock shareholders did not engage in any repurchase transactions during the reporting period.

IV. Changes in Shareholdings of Directors and Senior Executives

□ Applicable  Not applicable

There was no change in the shareholding of the Company's directors and senior executives during the Reporting Period Please refer to the 2025 Annual Report for details.

V. Changes in Controlling Shareholders or De Facto Controllers

If the Company previously disclosed that the actual controller was planning a change of control, which has not been completed, please explain the progress of such change.

□ Applicable  Not applicable

Change to the controlling shareholder in the Reporting Period

□ Applicable  Not applicable

None. Change of the de facto controller during the Reporting Period □ Applicable  Not applicable None.

VI. Preference Shares

□ Applicable  Not applicable

No Preference shares in the Reporting Period.

Section VII Bonds

□ Applicable  Not applicable

Section VIII Financial Report

I. Independent Auditor’s Report

Whether the semi-annual report has been audited

□ Yes  No

The semi-annual financial report of the Company was unaudited.

II. Financial Statements

Unit of the currency for the financial statements and the notes thereto: RMB

1. Consolidated Balance Sheet

Prepared by: Shenzhen Nanshan Power Co., Ltd.

Unit: RMB

2. Balance sheet of the parent company

Unit: RMB

Legal Representative: Kong Guoliang Person in Charge of Accounting: Kong Guoliang Chief Finance Officer:

Zhang Xiaoyin Head of Accounting: Lin Xiaojia

3. Consolidated income statement

Unit: RMB

Zhang Xiaoyin Head of Accounting: Lin Xiaojia

4. Income Statement of the parent company

Unit: RMB

Legal Representative: Kong Guoliang Zhang Xiaoyin Head of Accounting: Lin Xiaojia

5. Consolidated Statement of Cash Flows

Unit: RMB

Legal Representative: Kong Guoliang Person in Charge of Accounting: Kong Guoliang Chief Finance Officer: Zhang Xiaoyin Head of Accounting: Lin Xiaojia

6. Statement of Cash Flows of the Parent Company

Unit: RMB

Legal Representative: Kong Guoliang Person in Charge of Accounting: Kong Guoliang Chief Finance Officer: Zhang Xiaoyin Head of Accounting: Lin Xiaojia

7. Consolidated Statements of Changes in Owners’ Equity

Current amount

Unit: RMB

2026 Semi-Annual Report of Shenzhen Nanshan Power Co., Ltd.

Legal Representative: Kong Guoliang Person in Charge of Accounting: Kong Guoliang Chief Finance Officer: Zhang Xiaoyin Head of Accounting: Lin

Xiaojia

Amount for the previous period

Unit: RMB

Legal Representative: Kong Guoliang Xiaojia Person in Charge of Accounting: Kong Guoliang Chief Finance Officer: Zhang Xiaoyin Head of Accounting: Lin

8. Statements of Changes in Owners’ Equity of the parent company

Current amount

Unit: RMB

2026 Semi-Annual Report of Shenzhen Nanshan Power Co., Ltd.

Person in Charge of Accounting: Kong Guoliang

Legal Representative: Kong Guoliang Chief Finance Officer: Zhang Xiaoyin Head of Accounting: Lin

Xiaojia

Amount for the previous period

Unit: RMB

2026 Semi-Annual Report of Shenzhen Nanshan Power Co., Ltd.

Person in Charge of Accounting: Kong Guoliang Chief Finance Officer: Zhang Xiaoyin Head of Accounting: Lin

Legal Representative: Kong Guoliang Xiaojia

III. Company profile

1. Company Profile

Shenzhen Nanshan Power Co., Ltd. (hereinafter referred to as the "Company" or "this Company") is a joint stock limited company reorganized from a foreign-invested enterprise and incorporated on November 25, 1993, with the approva of the General Office of Shenzhen Municipal People's Government (SFBF [1993] No. 897).

With the approval of the Shenzhen Securities Management Office (Doc. SZBF [1993] No. 179), the Company issued 40 million RMB ordinary shares and 37 million domestically listed foreign shares to domestic and foreign investors respectively on January 3, 1994. On July 1, 1994 and November 28, 1994, the RMB ordinary shares (A shares) and domestically listed foreign shares (B shares) issued by the Company were successfully listed for trading on the Shenzhen Stock Exchange.

The Company is mainly engaged in power production and sales and comprehensive energy services. The Company is registered at No. 2097, Yueliangwan Avenue, Nanshan District, Shenzhen City, Guangdong Province, and headquartered at16/F and 17/F, Hantang Building, OCT, Nanshan District, Shenzhen City, Guangdong Province.

These financial statements were approved for issue by the Board of Directors of the Company on August 21, 2026.

2. Scope of the consolidated financial statements

As of June 30, 2026, the subsidiaries in the scope of the consolidated financial statements of the Company are as follows:

Note: During the current period, the Company invested and established a controlling subsidiary, Shennan Power Zhengmai Energy Technology (Shenzhen) Co., Ltd., which completed its industrial and commercial registration on May 22, 2026, and has been stated as the scope of the Company's consolidated financial statements since then.

IV. Basis for preparation of financial statements

The Company prepares these Financial Statements based on the assumption of going concern, according to actua transactions and events, in accordance with the Accounting Standards for Business Enterprises - Basic Standard and other specific accounting standards, application guidance for accounting standards for business enterprises, interpretations of accounting standards for business enterprises and other relevant regulations promulgated by the Ministry of Finance (hereinafter collectively referred to as the "Accounting Standards for Business Enterprises"), and the disclosure-related provisions of the Rules for the Information Disclosure and Compilation of Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports issued by the China Securities Regulatory Commission.

The Company has no events or conditions that raise significant doubts about its ability to continue as a going-concern ability for the twelve months following the end of the reporting period.

V. Significant accounting policies and accounting estimates

Based on actual production and operation characteristices, the Company has formulated a number of specific accounting policies and accounting estimates in accordance with the relevant accounting standards for business enterprises, mainly reflected in the provision for bad debts of receivables (see Section VIII, V, 11 (4)), inventories (see Section VIII, V, 12), fixed assets (see Section VIII, V, 18), long-term deferred expenses (see Section VIII, V, 24), revenue recognition and measurement (see Section VIII, V, 28), specific reserve (see Section VIII, V, 32), etc.

1. Statement of compliance with the Accounting Standards for Business Enterprises

These Financial Statements comply with the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect the consolidated and parent company's financial position of the Company as of June 30, 2026, as well as the consolidated and parent company's operating results and cash flows for the half year of 2026 and other relevant information.

2. Accounting Period

The accounting year starts from January 1 to December 31 on the Gregorian calendar.

3. Operating cycle

The operating cycle of the Company is 12 months, which serves as the criterion for classifying the liquidity of assets and liabilities.

4. Recording currency

The Company uses RMB as the recording currency.

5. Determination methods and selection basis for materiality threshold

6. Accounting treatments for business combinations under common control and those not under common control

(1) Business combinations under common control

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

The assets and liabilities (including goodwill arising from the acquisition of the acquiree by the ultimate controller) acquired by the Company as the merging party in a business combination involving enterprises under common control are measured at the carrying amounts of the acquiree in the consolidated financial statements of the ultimate controller at the date of combination. The difference between the carrying amount of the net assets acquired in the combination and the carrying amount of the consideration paid for the combination (or the total par value of shares issued) is adjusted to the capital premium in the capital reserve; if the capital premium in the capital reserve is insufficient to be offset, the retained earnings shall be adjusted accordingly.

(2) Business combinations not under common control

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

The identifiable assets, liabilities, and contingent liabilities of the acquiree acquired by the Company as the acquirer in a business combination not involving enterprises under common control are measured at fair value on the date of acquisition. The difference by which the combination cost exceeds the fair value share of the identifiable net assets of the acquiree acquired in the combination is recognized as goodwill. If the combination costs are less than the fair value share of the identifiable net assets of the acquiree acquired in the combination, the fair value of the identifiable assets, liabilities and contingent liabilities acquired in the combination, as well as the combination cost, shall be reviewed first. If, after the review, the combination costs remain less than the fair value of the identifiable net assets of the acquiree acquired in the combination, the difference shall be stated as the current non-operating revenue of the combination.

Directly related expenses incurred for the business combination are recorded in the current gains/losses when incurred; transaction expenses for issuing equity securities or debt securities for the business combination are stated as the initial recognition amount of the equity securities or debt securities

7. Criteria for determining control and preparation methods for consolidated financial statements

(1) Scope of Consolidation

The scope of consolidation for the consolidated financial statements of the Company is based on the control, including the Company and all subsidiaries controlled by the Company. The criteria for the Company to judge control are that the Company has the power over the investee, enjoys variable returns by participating in the relevant activities of the investee, and has the ability to use its power over the investee to affect its return amount.

(2) Procedures of Consolidation

The Company prepares consolidated financial statements based on the financial statements of the Company and its subsidiaries, and according to other relevant information. When preparing the consolidated financial statements, the Company treats the entire group as an accounting entity and reflects the overall financial position, operating results and cash flows of the group in accordance with the recognition, measurement, and presentation requirements of the relevan accounting standards for business enterprises and the unified accounting policies.

The accounting policies and periods adopted by all subsidiaries stated as the consolidation scope of the consolidated financial statements are consistent with those of the Company. If the accounting policies and periods adopted by a subsidiary are inconsistent with those of the Company, necessary adjustments shall be made in accordance with the Company's accounting policies and periods in preparing the consolidated financial statements. For subsidiaries acquired through business combinations not involving enterprises under common control, their financial statements shall be adjusted based on the fair value of identifiable net assets on the acquisition date. For subsidiaries acquired through business combination involving enterprises under common control, their financial statements shall be adjusted based on the carrying amount of their assets and liabilities (including goodwill arising from the ultimate controller's acquisition of the subsidiary) in the ultimate controller's financial statements.

The portion of a subsidiary's equity, current net gains/losses, and current comprehensive income attributable to minority shareholders is presented separately under the equity item in the consolidated balance sheet, the net profit item in the consolidated income statement, and the total comprehensive income item, respectively. If the current losses shared by the minority shareholders of a subsidiary exceed the minority shareholders' share of the subsidiary's beginning equity, the balance offsets the minority shareholders' equity.

1) Addition of subsidiaries or businesses

During the Reporting Period, if a subsidiary or business is added due to a business combination under common control, the beginning balance of the consolidated balance sheet is adjusted; the income, expenses, and profits of the subsidiary or business from the beginning of combination to the end of the Reporting Period are stated as the consolidated income statement; the cash flows of the subsidiary or business from the beginning of combination to the end of the Reporting Period are stated as the consolidated cash flow statement, and the relevant items of the comparative statements are adjusted simultaneously, as if the consolidated reporting entity has existed since the time when ultimate controlling party starts to exercise control.

If the Company can exercise control over an investee under common control due to additional investment or other reasons, adjustments are made as if the parties involved in the combination existed in current status when the ultimate controlling party began to exercise control. The relevant gains/losses, other comprehensive income, and other changes in net assets recognized from the later of the date of obtaining the original equity and the date when the combining party and the combined party are under common control to the combination date for the equity investment held before obtaining control of the combined party, reduce the beginning retained earnings or current gains/losses during the comparative statement period respectively.

During the Reporting Period, if a subsidiary or business is added due to a business combination not under common control, the beginning balance of the consolidated balance sheet is not adjusted; the income, expenses, and profits of the subsidiary or business from the acquisition date to the end of the reporting period are stated as the consolidated income statement; the cash flows of the subsidiary or business from the acquisition date to the end of the Reporting Period are stated as the consolidated cash flow statement.

If the Company can exercise control over an investee not under common control due to additional investment or other reasons, the equity of the acquiree held before the acquisition date is remeasured by the Company at the fair value of the equity at the acquisition date, and the difference between the fair value and its book value is stated as the current investment income. If the equity of the acquiree held before the acquisition date involves other comprehensive income under the equity method and other changes in owners' equity other than net gains/losses, other comprehensive income, and profit distribution, the other related comprehensive income and other changes in owners' equity are transferred to the current investment income to which the acquisition date belongs, except for other comprehensive income arising from the investee's remeasurement of changes in the net liabilities or net assets of the defined benefit plan.

2) Disposal of subsidiaries or businesses

① General treatment method

During the Reporting Period, if the Company disposes of a subsidiary or business, the income, expenses, and profits of the subsidiary or business from the beginning of the period to the disposal date are stated as the consolidated income statement; the cash flows of the subsidiary or business from the beginning of the period to the disposal date are stated as the consolidated cash flow statement.

When control over an investee is lost due to the disposal of a portion of an equity investment or other reasons, the remaining equity investment after disposal is remeasured by the Company at its fair value on the date of loss of control.

The difference between the sum of the consideration received for the disposal of the equity and the fair value of the remaining equity, less the sum of the share of net assets and goodwill of the original subsidiary calculated continuously from the acquisition date or combination date based on the original shareholding ratio, is stated as the investment income in the period when control is lost. Other comprehensive income or other changes in owners' equity other than net gains/losses, other comprehensive income, and profit distribution related to the equity investment in the original subsidiary are transferred to current investment income when control is lost, except for other comprehensive income arising from the investee's remeasurement of changes in the net liabilities or net assets of the defined benefit plan.

If the Company's shareholding ratio decreases due to capital injection by other investors into the subsidiary, resulting in loss of control, accounting treatment is performed in accordance with the above-mentioned principles

① Disposal of subsidiaries in stages

If the terms, conditions, and economic effects of multiple transactions involving the disposal of equity in a subsidiary in stages until loss of control meet one or more of the following conditions, it usually indicates that the multiple transactions are accounted for as a package of transactions:

a) The transactions are entered into either simultaneously or in contemplation of one another;

b) The transactions as a whole are necessary to achieve a complete commercial outcome;

c) The occurrence of one transaction is contingent on the occurrence of at least one other transaction;

d) A transaction is not economically viable when considered individually, but is economically viable when considered together with the others.

If the transactions involving the disposal of equity investment in a subsidiary until loss of control belong to a package of transactions, the Company shall account for the transactions as a single transaction involving the disposal of a subsidiary and loss of control; however, the difference between the disposal consideration for each disposal before the loss of contro and the share of the subsidiary's net assets corresponding to the disposed investment is recognized as other comprehensive income in the consolidated financial statements, and is transferred to the profit or loss of the period of losing control.

If the transactions involving the disposal of equity investment in a subsidiary until loss of control do not belong to a package of transactions, prior to the loss of control, accounting treatment is conducted in accordance with the policies on the partial disposal of equity investment in a subsidiary without loss of control; upon the loss of control, accounting treatment is conducted in accordance with the general treatment method for the disposal of a subsidiary.

3) Purchase of minority shareholders' equity in a subsidiary

The difference between the newly acquired long-term equity investment due to the purchase of minority equity by the Company and the share of net assets of the subsidiary calculated continuously from the acquisition date (or combination date) based on the newly added shareholding ratio, the share premium in the capital reserve under the consolidated balance sheet is adjusted. If the share premium in the capital reserve is insufficient to absorb the difference, retained earnings are adjusted.

4) Partial disposal of equity investment in a subsidiary without losing control

The difference between the disposal proceeds obtained from the partial disposal of a long-term equity investment in a subsidiary without losing control and the share of the subsidiary's net assets calculated continuously from the acquisition date or combination date corresponding to the disposed long-term equity investment, the share premium in the capita reserve under the consolidated balance sheet is adjusted. If the share premium in the capital reserve is insufficient to absorb the difference, retained earnings are adjusted.

8. Classification of joint venture arrangements and accounting treatments for joint operations

When the Company is a joint venturer in a joint arrangement, enjoys the assets related to the arrangement, and bears the liabilities related to the arrangement, a joint operation constitutes.

The Company recognizes the following items related to its share of interests in a joint operation and accounts for the same in accordance with the provisions of relevant accounting standards for business enterprises:

(1) Recognize the assets held separately by the Company and the jointly held assets according to the Company's share;

(2) Recognize individually incurred liabilities and jointly incurred liabilities based on the Company's share;

(3) Recognize the revenue generated from the sale of the Company's share of the output of the joint operations;

(4) Recognize the Company's share of the revenue generated by the joint operation from the sale of output;

(5) Recognize individually incurred expenses and expenses of the joint operations based on the Company's share.

For the accounting policies of the Company's investments in joint ventures, please refer to Section VIII, V, (16) Longterm Equity Investments.

9. Determination criteria for cash and cash equivalents

Cash in the Company's cash flow statement refers to cash on hand and deposits that can be readily drawn on demand. Cash equivalents in the cash flow statement refers to the investments with a holding period of no more than 3 months that are highly liquid, readily convertible to known amounts of cash, and subject to an insignificant risk of changes in value

10. Foreign currency transactions and translation of foreign currency statements

（1） Foreign Currency Transaction

Foreign currency transactions of the Company are converted into the functional currency at the spot exchange rate on the transaction date at initial recognition. On the balance sheet date, monetary items denominated in foreign currencies are converted into the functional currency at the spot exchange rate on the balance sheet date. The resulting exchange differences are recognized directly in gains/losses for the current period, except for exchange differences arising from specific foreign currency borrowings for the construction or production of assets qualifying for capitalization, which are

treated according to the principle of capitalization.

（2） Translation of Foreign Currency Financial Statements

When preparing consolidated financial statements, the Company converts the financial statements of overseas operations into RMB., among which assets and liabilities in the foreign currency balance sheet are converted at the spot exchange rate on the balance sheet date; shareholders' equity items, except for "undistributed profits", are converted at the spot exchange rate at the time of the transaction; income and expense items in the income statement are converted at the spot exchange rate on the transaction date. Upon disposal of an overseas operation, the exchange differences arising from the translation of foreign currency financial statements related to the overseas operation are transferred from shareholders' equity to profit or loss for the period of disposal. Cash flows in foreign currency are converted at the spot exchange rate on the date the cash flows occur. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

11. Financial instruments

（1） Recognition and Derecognition of Financial Instruments

The Company recognizes financial assets or financial liabilities when it becomes a party to financial instruments contracts.

A financial asset (or a part of a financial asset, or a part of a group of similar financial assets) is derecognized, that is removed from the balance sheet, when the following conditions are met: 1) The contractual rights to receive cash flows from the financial asset have expired; 2) the rights to receive cash flows from the financial asset have been transferred, or an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through arrangement" has been assumed; and substantially all the risks and rewards of ownership of the financial asset have been transferred, or although substantially all the risks and rewards of ownership of the financial asset have neither been transferred nor retained, the control over the financial asset has been relinquished.

A financial liability is derecognized when the obligation under the liability is discharged, cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, with the difference recognized in the gains/losses for the current period.

Purchases or sales of financial assets in a regular manner are recognized and derecognized by accounting method at the transaction date. The transaction date refers to the date on which the Company commits to purchase or sell the financial asset.

（2） Classification and measurement of financial assets

At initial recognition, the Company's financial assets are classified into financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income, and financial assets measured at fair value through gains/losses for the current period, based on the Company's business model for managing financial assets and the contractual cash flow characteristics of the financial assets. The Company reclassifies all affected financial assets only when it changes its business model for managing financial assets.

In determining the business model, the Company considers how the performance of the financial assets is evaluated and reported to key senior executives, the risks affecting the performance of the financial assets and how they are managed, and how relevant business managers are compensated. In evaluating whether the objective is to collect contractual cash flows, the Company analyzes and judges the reasons for, timing, frequency, and value of sales before the maturity date of the financial assets.

Financial assets are initially measured at fair value, while accounts receivable or notes receivable arising from the sale of goods or provision of services that do not contain a significant financing component or do not consider financing components not exceeding one year are initially measured at the transaction price.

For financial assets measured at fair value through gains/losses for the current period, related transaction costs are directly recognized in the gains/losses for the current period. For other categories of financial assets, related transaction costs are stated as their initially recognized amount.

The subsequent measurement of financial assets depends on their classification.

1) Financial assets measured at amortized cost

Financial assets are classified as those measured at amortized cost if both of the following conditions are met: ① The business model for managing the financial asset is to collect contractual cash flows; ① the contract terms of the financia asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Such financial assets are recognized for interest income by the effective interest method, and the gains/losses arising from their derecognition, modification, or impairment are recognized gains/losses for the current period. The Company's financial assets in this category mainly include monetary funds, accounts receivable, notes receivable, and other receivables.

2) Investments in debt instruments measured at fair value with changes recognized in other comprehensive income

Financial assets are classified as those measured at fair value through other comprehensive income if both of the following conditions are met: ① The Company's business model for managing the financial asset aims to collect contractua cash flows and sell the financial asset; ① the contract terms of the financial asset specify that the cash flows generated on the specific date that are solely payments of principal and interest on the principal amount outstanding. Such financial assets are recognized for interest income by the effective interest method. Except for interest income, impairment losses, and exchange differences which are recognized in profit or loss for the current period, other changes in fair value are recognized in other comprehensive income. Upon derecognition of the financial asset, the cumulative gains/losses previously recognized in other comprehensive income are reclassified from other comprehensive income to gains/losses for the current period.

3) Investments in equity instruments measured at fair value with changes recognized in other comprehensive

income

The Company irrevocably designates certain non-trading equity instrument investments as financial assets measured at fair value through other comprehensive income. The Company only recognizes relevant dividend income (except for those clearly recovered as part of the investment costs) in the gains/losses for the current period, and subsequent changes in fair value are recognized in other comprehensive income without the need for impairment provision. Upon derecognition of the financial asset, the cumulative gains/losses previously recognized in other comprehensive income are reclassified from other comprehensive income to retained earnings. The Company's financial assets in this category are investments in other equity instruments.

4) Financial assets measured at fair values through current profit or loss

Except for the financial assets classified as those measured at amortized cost and those classified or designated as financial assets measured at fair value through other comprehensive income as mentioned above, the Company classifies the same as financial assets measured at fair value through current gains/losses. Such financial assets are subsequently measured at fair value, and all changes in fair value are stated as the current gains/losses, except those related to hedge accounting. The financial assets classified in this category by the Company mainly include trading financial assets.

The contingent consideration recognized by the Company in business merger not under the same control which constitutes a financial asset is classified as the financial assets measured at fair value through current gains/losses.

（3） Classification, recognition and measurement of financial liabilities

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

Financial liabilities measured at fair value through current gains/losses include trading financial liabilities and derivative financial liabilities, which are initially measured at fair value, and related transaction costs are stated as the current gains/losses. Such financial liabilities are subsequently measured at fair value, and changes in fair value are stated as the current gains/losses.

Upon derecognition, the difference between its book value and the consideration paid is stated as the current gains/losses.

2) Financial liabilities measured at amortized costs

Financial liabilities measured at amortized cost include short-term borrowings, notes payable, accounts payable, other payables, long-term borrowings, bonds payable, and long-term payables, which are initially measured at fair value, and related transaction costs are stated as the initial recognition amount.

Interest calculated using the effective interest method during the holding period is stated as current gains/losses.

Upon derecognition, the difference between the consideration paid and the book value of the financial liability is stated as current gains/losses.

（4） Impairment of financial instruments

The Company considers all reasonable and supportable information, including forward-looking information, to estimate the expected credit losses of financial assets measured at amortized cost and financial assets (debt instruments) measured at fair value through other comprehensive income on an individual or portfolio basis. The expected credit losses are measured on whether the credit risk of financial assets increases significantly since initial recognition.

Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows receivable under the contract (discounted by the Company using the original effective interest rate) and all expected cash flows to be collected, i.e., the present value of all cash shortfalls.

For all notes receivable, contract assets, accounts receivable, and lease receivables generated from daily operations such as sale of goods and provision of services regulated by the income standard, the Company uses a simplified method to measure the loss provision based on the expected credit loss over the entire lifetime; for other notes receivable, receivables financing, and other receivables divided into portfolios, the Company calculates the expected credit loss through the exposure at default and the expected credit loss rate within the next 12 months or over the entire lifetime, by referring to historical credit loss experience, current conditions, and forecasts of future economic conditions.

Except for the other various receivables and temporary payments adopting the simplified measurement method and purchased or originated credit-impaired financial assets mentioned above, the Company assesses whether the credit risk of relevant financial instruments has increased significantly since initial recognition on the balance sheet date, and measures their loss provisions, recognizes expected credit losses and changes.

1) Recognition criteria and withdrawal methods for bad debt provision of receivables with significant single amount and individual withdrawal for bad debts

The Company conducts an impairment test separately on receivables with a significant single amount and also financial assets without impairment, including test in a portfolio of financial assets with similar credit risk characteristics. Receivables for which impairment losses have been recognized in a single test are no longer stated as a portfolio of receivables with similar credit risk characteristics for impairment testing

2) Receivables with insignificant single amount and individual withdrawl for bad debts

For receivables with an insignificant single amount but possessing the following characteristics, such as receivables that fall in disputes with the counterparty or are involved in litigation or arbitration; receivables for which contact with the debtor has been lost and there is no third-party recovering person; receivables with obvious indications that the debtor is likely unable to fulfill the repayment obligation, etc., a separate impairment test is conducted. If there is an objective evidence that impairment occurs, an impairment loss is recognized and an impairment provision is accrued based on the difference by which the present value of its future cash flows is lower than its book value.

3) Basis for determination and calculation method of receivables calculating expected credit losses by credit risk portfolio

If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost by individual instruments, the

Company refers to historical credit loss experience, current conditions, and judgments on future economic conditions, divides notes receivable, accounts receivable, other receivables, and contract assets into several portfolios based on credit risk characteristics, and calculates expected credit losses on a portfolio basis.

4) Write-off of provision for impairment

Where the Company no longer reasonably expects to recover the contractual cash flows of a financial asset in whole or in part, the Company directly writes down the book balance of the financial asset. If the written-down financial asset is subsequently recovered, it is recognized as a reversal of impairment loss in gains or losses for the period of recovery.

（5） Recognition and measurement of financial asset transfers

For any transaction on financial asset transfer, if the Company has transferred substantially all the risks and rewards of ownership of the financial asset to the transferee, the financial asset is derecognized; if substantially all the risks and rewards of ownership of the financial asset are retained, the financial asset is not derecognized; if the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, and has relinquished contro of the financial asset, the financial asset is derecognized and the resulting assets and liabilities are recognized; if the control of the financial asset is not relinquished, the relevant financial asset is recognized to the extent of its continuing involvement in the transferred financial asset, and the relevant liabilities are recognized accordingly.

If the transfer of a financial asset in its entirety satisfies the conditions for derecognition, the difference between the sum of the consideration received for the transfer and the amount of the cumulative changes in fair value previously recognized in other comprehensive income corresponding to the derecognized part (where the transferred financial asset simultaneously meets the following conditions: ① the Company's business model for managing the financial asset aims to collect contractual cash flows and sell the financial asset; ① the contractual terms of the financial asset stipulate that the cash flows generated on specific dates are solely payments of principal and interest on the outstanding principal amount) and the book value of the transferred financial asset at the date of derecognition is recognized in the current gains/losses.

If the transfer of a financial asset in part satisfies the conditions for derecognition, the entire book value of the transferred financial asset is allocated between the derecognized part and the non-derecognized part based on thei respective relative fair values, and the difference between the sum of the consideration received for the transfer and the amount corresponding to the derecognized part of the cumulative changes in fair value previously recognized in othe comprehensive income that shall be allocated to the derecognized part (where the transferred financial asse simultaneously meets the following conditions: ① the Company's business model for managing the financial asset aims to collect contractual cash flows and sell the financial asset; ① the contractual terms of the financial asset stipulate that the cash flows generated on specific dates are solely payments of principal and interest on the outstanding principal amount) and the allocated overall book value of the aforementioned financial asset is recognized in the current gains/losses.

Where continuing involvement is achieved by providing a financial guarantee for the transferred financial asset, the asset resulting from continuing involvement is recognized at the lower of the book value of the financial asset and the amount of financial guarantee. The amount of financial guarantee refers to the maximum amount of the consideration received that the Company shall be required to repay.

（6） Conditions for Derecognition of Financial Liabilities

If the present obligations of a financial liability are fully or partially discharged, the financial liability or the respective part thereof is derecognized. If the Company enters into an agreement with a creditor to replace an existing financial liability with a new one, and the contractual terms of the new financial liability are substantially different from those of the existing financial liability, the existing financial liability is derecognized, and the new financial liability is recognized at the same time.

If the Company makes substantial modifications to the contractual terms of an existing financial liability in whole or in part, the existing financial liability or a part thereof is derecognized, and the financial liability with modified terms is recognized as a new one.

Upon derecognition of a financial liability in full or in part, the difference between the book value of the derecognized financial liability and the consideration paid (including any non-cash assets transferred out or new financial liabilities assumed) is recognized in the current gains/losses.

If the Company repurchases in part a financial liability, the book value of the financial liability as a whole is allocated on the repurchase date based on the relative fair values of the part that continues to be recognized and the derecognized. The difference between the book value allocated to the derecognized part and the consideration paid (including any non cash assets transferred out or new financial liabilities assumed) is recognized in the current gains/losses.

（7） Methods to determine the fair value of financial assets and liabilities

For any financial instrument on the active market, its fair value is determined based on the quoted prices in the active market. For any financial instrument not on an active market, valuation techniques are used to determine its fair value. In valuation, the Company uses such techniques that are applicable in the current circumstances and supported by sufficient available data and other information, selects inputs that are consistent with the characteristics of the asset or liability considered by market participants in transactions involving the relevant asset or liability, and prioritizes the use of relevant observable inputs. Unobservable inputs are used only when relevant observable inputs are unavailable or impractical to obtain.

（8） The distinction between financial liabilities and equity instruments and related treatment methods

The Company distinguishes financial liabilities from equity instruments in the following principles: 1) If the Company cannot unconditionally avoid fulfilling a contractual obligation by delivering cash or another financial asset, that contractua obligation meets the definition of a financial liability. Although some financial instruments do not explicitly include terms and conditions imposing an obligation to deliver cash or another financial asset, they may indirectly create a contractua obligation through other terms and conditions. 2) If a financial instrument must or may be settled in any of equity instruments owned by the Company, it is necessary to consider whether the instrument owned by the Company used for the settlement of such instrument serves as a substitute for cash or other financial assets, or is intended to give the holder of the instrument a residual interest in the assets of the issuer after deduction of all its liabilities. In the former case, the instrument is a financial liability of the issuer; while in the latter case, the instrument is an equity instrument of the issuer. In certain circumstances, a financial instrument contract requires that the Company must or may settle the financial instrument using its own equity instrument, where the amount of the contractual right or obligation is equal to the number of its own equity instruments to be obtained or delivered multiplied by their fair value at settlement. Whether the amount of the contractua right or obligation is fixed, or fluctuates entirely or partially based on changes in variables other than the market price of the equity instruments owned by the Company (such as interest rates, the price of a certain commodity, or the price of a certain financial instrument), the contract is classified as a financial liability.

In classifying the financial instruments (or components thereof) in the consolidated financial statements, the Company considers all terms and conditions agreed upon between members of the Company and the holders of the financial instruments. If the Company as a whole assumes an obligation due to the instrument to deliver cash, other financial assets or to settle in any other way that causes the instrument to become a financial liability, the instrument shall be classified as a financial liability.

12. Inventories

(1) Classification of inventories

The Company is mainly engaged in power production and sales, for which purpose its inventories are mainly materials and supplies consumed during production or the provision of services, including fuel, raw materials, spare parts, and maintenance equipment.

(2) Pricing method of inventories dispatched

Inventories are initially measured at cost upon acquisition and are valued by the specific identification method upon issuance.

(3) Basis to determine the net realizable value for different categories of inventories

For finished goods, materials for sale, and other commodity inventories directly for sale, the net realizable value is determined in the normal course of production and operation by the estimated selling price of the inventory less the estimated selling expenses and related taxes; for material inventories requiring processing, the net realizable value is determined in the normal course of production and operation by the estimated selling price of the finished products less the estimated costs to be incurred upon completion, estimated selling expenses, and related taxes;

For inventories held to execute sales contracts or service contracts, the net realizable value is calculated based on the contract price; if the quantity of inventories held exceeds the quantity ordered in the sales contracts, the net realizable value of the excess inventories is calculated based on the general sales price.

By the end of the period, the inventory depreciation provision is withdrawn based on individual inventory items. However, for inventories with a large quantity and a low unit price, the inventory depreciation provision is withdrawn based on inventory categories; for inventories related to product series produced and sold in the same region, having the same or similar final uses or purposes, and difficult to measure separately from other items, the inventory depreciation provision is withdrawn on a consolidated basis.

After the withdrawal of the depreciation reserves for inventories, if the factors, which cause any write-down of the inventories, have disappeared, causing the net realizable value of inventories is higher than its book value; the amount of write-down shall be reversed from the original amount of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses of the current period.

(4) Inventory system of inventories

The perpetual inventory system is adopted.

(5) Amortization method of low-value consumables and packaging materials

Low-value consumables are amortized by the one-off amortization method, and packaging materials are amortized by the one-off amortization method.

13. Contract assets and liabilities

（1） Contract assets

Contract assets refer to the Company's right to consideration in exchange for goods that has been transferred to customers, where such right is conditioned on factors other than the passage of time. The Company's unconditional right to receive consideration from the customers (i.e., depending solely on the passage of time) is separately presented as receivables.

For the determination method and accounting treatment method of expected credit losses on contract assets, please refer to Section VIII, Item V, (11, 4) Accounting Treatment of Accounts Receivable in Impairment of Financial Instruments.

（2） Contract liabilities

Liabilities of contracts refer to the Company's obligation to transfer goods to customers due to the consideration received or receivable from customers.

Contract assets and contract liabilities under the same contract are presented by their net amounts.

14. Contract costs

The Company's assets related to contract costs include the costs for contract performance and contract acquisition. Based on the liquidity, contract performance costs are presented in inventories and other non-current assets, while contrac acquisition costs are presented in other current assets and other non-current assets, respectively.

(1) Contract performance costs

Contract performance costs, namely the costs incurred by the Company to perform a contract, which fall out of the scope of relevant accounting standards such as inventories. fixed assets, or intangible assets and satisfy all the following conditions, are recognized as asset as contract performance costs: Such costs are directly related to a current or expected contract, including direct labor, direct materials, manufacturing overheads (or similar costs), costs explicitly borne by the customer, and other costs incurred solely for the contract; the costs generate or enhance resources of the Company that will be used in satisfying performance obligations in the future; and the costs are expected to be recovered.

(2) Contract acquisition costs

If the incremental costs (i.e., costs that would not be incurred if the contract fails to be obtained) incurred by the Company to obtain a contract are expected to be recovered. they are recognized as assets and amortized on the same basis as the recognition of revenue from goods or services related to the assets, and stated as the current gains/losses. I the amortization period of the assets does not exceed one year, they are stated as the current gains/losses when incurred. Other expenditures incurred by the Company to obtain a contract are stated as the current gains/losses when incurred, except those explicitly borne by the customer.

(3) Impairment of contract costs

If the carrying amount of an asset related to contract cost is higher than the difference between the following two items, the Company makes an impairment provision for the excess and recognizes it as an asset impairment loss: ① The remaining consideration that the enterprise expects to receive in exchange for the goods related to the asset; ① the cost estimated to be incurred to transfer the related goods. After the impairment provision is made, if the factors of impairment in previous periods change, resulting in the difference between the above two items higher than the carrying amount of the asset, the previously recognized asset impairment provision is reversed and stated as the current gains/losses, while the carrying amount of the asset after reversal shall not exceed the carrying amount of the asset on the reversal date assuming no impairment provision is made.

15. Assets held for sale

(1) The Company classifies non-current assets or disposal groups that meet all the following conditions into the held-for-sale category:

1) They are available for immediate sale in their present condition, subject only to terms that are usual and customary for sales of such assets or disposal groups in similar transactions;

2) The sale is highly probable, that is the Company has resolved on a sale plan and obtained a firm purchase commitment, and the sale is expected to be completed within one year. Where relevant regulations require approval from the relevant competent authority or regulator of the Company before the sale can be made, approval has been obtained.

(2) The Company separates a component that can be separately distinguished and meets one of the following conditions, and that component has been disposed of or classified into the held-for-sale category:

1) The component represents a separate major business or a sole major business area;

2) The component is a part of the associated plan on the intended disposal of an independent major business or a sole major business area; or

3) The component is a subsidiary acquired only for re-sale.

(3) Presentation method

The Company presents the non-current assets held for sale or assets in the disposal group held for sale separately from other assets in the balance sheet, and presents the liabilities in the disposal group held for sale separately from other liabilities. The non-current assets held for sale or assets in the disposal group held for sale and the liabilities in the disposa group held for sale shall not be offset against each other, and shall be presented as current assets and current liabilities respectively. The Company presents the gains/losses from continuing operations and those from discontinued operations separately in the income statement. For non-current assets or disposal groups held for sale that fail to meet the definition of discontinued operations, their impairment losses, reversal amounts, and disposal gains/losses shall be presented as gains/losses from continuing operations. Operating gains/losses such as impairment losses and reversal amounts, and disposal gains/losses of discontinued operations shall be presented as gains/losses from discontinued operations.

16. Long-term equity investments

The Company's long-term equity investments mainly consist of investments in subsidiaries, associated enterprises, and joint ventures.

(1) Judgment of Significant Influence and Common Control

The Company's equity investments that have a significant influence on the investee are investments in associated enterprises. Significant influence refers to the power of the Company to participate in decisions on an investee's financia and operating policies, but not to control or commonly control the formation of those policies.

The Company's equity investments in an investee over which it exercises common control with other joint venturers and has rights to the net assets of the investee are investments in joint ventures. Common control refers to the shared control over an arrangement in accordance with the relevant agreement, and decisions on relevant activities of the arrangement must be made with the unanimous consent of the parties sharing the control. The Company's judgment o common control is based on the collective control of the arrangement by all parties or a combination of parties, and decisions on relevant activities of the arrangement must be unanimously agreed upon by the parties that collectively contro the arrangement.

(2) Accounting Treatment Method

The Company initially measures the acquired long-term equity investments at the initial investment cost.

For long-term equity investments acquired through business merger involving enterprises under common control, the share of the book value of the merged party's net assets in the consolidated financial statements of the ultimate controlling party on the date of merger is taken as the initial investment cost; if the book value of the merged party's net assets on the date of merger is negative, the initial investment cost is determined as zero.

For long-term equity investment acquired through business combination not under the same control, the initial investment cost shall be the consolidation cost.

Except for long-term equity investments formed by business merger, for long-term equity investments acquired by cash payment, the actual purchase price paid and the expenses, taxes, and other necessary expenditures directly related to the acquisition of the long-term equity investments are taken as the initial investment cost; for long-term equity investments acquired by issuing equity securities, the fair value of the issued equity securities is taken as the investment cost.

The Company's investments in subsidiaries are accounted for by the cost method in its separate financial statements. When the cost method is adopted, long-term equity investments are valued at the initial investment cost. When additional investments are made, the book value of the long-term equity investment cost is increased along with the fair value of the costs paid for the additional investment and the related transaction costs incurred. Cash dividends or profits declared and distributed by the investee are recognized as current investment income according to the entitled amount.

The Company's investments in joint ventures and associated enterprises are accounted for by the equity method. When the equity method is adopted, if the initial investment cost of the long-term equity investment is greater than the share of the fair value of the investee's identifiable net assets to which the Company is entitled at the time of investment, the book value of the long-term equity investment is not adjusted; if the initial investment cost of the long-term equity investment is less than the share of the fair value of the investee's identifiable net assets to which the Company is entitled at the time of investment, the difference is adjusted to increase the book value of the long-term equity investment and stated as the gains/losses for the period in which the investment is acquired.

For long-term equity investments subsequently measured by the equity method, during the holding period, the book value of the long-term equity investment is increased or decreased in response to the changes to the owners' equity of the investee. In recognizing the share of the investee's net profit or loss to which the Company is entitled, the net profit of the investee is adjusted and recognized based on the fair value of the investee's identifiable assets at the acquisition of the investment, in accordance with the Company's accounting policies and accounting periods, and following the offset of unrealized internal transaction gains/losses generated from transactions that do not constitute a business with associated enterprises and joint ventures attributable to the Company according to the entitled proportion (internal transaction losses belonging to asset impairment losses are fully recognized). The net loss incurred by the investee recognized by the Company is limited to reducing the book value of the long-term equity investment and other long-term equities that in substance constitute a net investment in the investee to zero, except where the Company has an obligation to bear

additional losses.

For the long-term equity investment with equity method for subsequent measurement, the book value of the long-term equity investment will increase or decrease with the change of the owner's equity of the invested entity.

For long-term equity investments accounted for by the equity method, other related comprehensive income originally accounted for by the equity method is treated on the same basis as if the investee had directly disposed of related assets or liabilities when the equity method is terminated, and the owners' equity recognized due to changes in other owners equity of the investee other than net gains/losses, other comprehensive income, and profit distribution is fully transferred to current investment income when the equity method is terminated.

If the remaining equity after the disposal of partial equity is still accounted for by the equity method, the other related comprehensive income originally accounted for by the equity method is treated on the same basis as if the investee had directly disposed of related assets or liabilities and carried forward proportionately, and the owners' equity recognized due to changes in other owners' equity of the investee other than net gains/losses, other comprehensive income, and profit distribution is carried forward proportionately to current investment income.

If the common control or significant influence over an investee is lost due to the disposal of a part of equity, the remaining equity after disposal is recognized as a financial asset, and the difference between the fair value and the book value of the remaining equity on the date of loss of common control or significant influence is stated as the current gains/losses.

If the control over an investee is lost due to the disposal of long-term equity investments in part, and the remaining equity after disposal may help exercise common control or exert significant influence over the investee, it is instead accounted for by the equity method, the difference between the book value of the disposed equity and the disposal consideration is stated as investment income, and the remaining equity is adjusted as if it had been accounted for by the equity method since its acquisition; if the remaining equity after disposal cannot help exercise common control or exert significant influence over the investee, it is recognized as a financial asset, the difference between the book value of the disposed equity and the disposal consideration is stated as investment income, and the difference between the fair value and the book value of the remaining equity on the date of loss of control is stated as the current gains/losses.

For all transactions involving the disposal of equity by stage until loss of control, if they fall out of the package of transactions, each transaction is accounted for separately; if they fall in the package, each transaction is accounted for as a single transaction involving the disposal of a subsidiary and loss of control. The difference between the disposal consideration for each transaction before the loss of control and the book value of the long-term equity investment corresponding to the disposed equity is recognized as other comprehensive income and transferred to the gains/losses of the period in which control is lost when control is lost.

17. Investment properties

An investment property is real estate property purchased with the intention of earning a return on the investment either through rental income, the future resale of the property, or both, including leased land use rights, land use rights held and prepared for transfer after appreciation, and leased buildings (including buildings built or developed for lease after completion and buildings under construction or development for lease in the future).

The Company measures existing investment properties by the cost model. For investment property buildings for lease measured by the cost model, the same depreciation policy as the Company's fixed assets is adopted, and land use rights for lease are executed according to the same amortization policy as intangible assets.

18. Fixed assets

(1) Recognition criteria for fixed assets

The Company's fixed assets are tangible assets held for commodity manufacturing, labor provisions, leasing, or management with a service life exceeding one year.

Fixed assets are recognized if it is likely that the economic benefits associated therewith might flow to the Company and their costs can be reliably measured. The Company's fixed assets include houses and buildings, machinery and equipment, electronic equipment, transportation equipment, office equipment, etc.

(2) Depreciation methods

Depreciation of fixed assets is provided on a category basis by the straight-line method (or unit-of-production method double declining balance method, sum-of-the-years'-digits method, etc.). The depreciation rate is determined based on the category, estimated service life, and estimated net residual value rate of the fixed assets. If the components of a fixed asset hold different useful lives or provide economic benefits to the enterprise in different patterns, different depreciation rates or depreciation methods are chosen for depreciation separately.

The depreciation method, service life, residual value rate, and annual depreciation rate of various fixed assets are as follows:

(3) Subsequent expenditures

Subsequent expenditures on fixed assets refer to the expenditures for renewal, transformation, repair, etc. incurred during the use of fixed assets. Subsequent expenditures such as renewal and transformation of fixed assets that meet the capitalization conditions shall be stated as the cost of fixed assets, and the book value of the replaced part shall be deducted at the same time; repair expenses for fixed assets that do not meet the capitalization conditions shall be stated as current gains/losses when incurred.

19. Construction in progress

The cost of construction in progress is determined based on actual project expenditures, including all necessary project expenditures incurred during construction, borrowing costs to be capitalized before the project reaches its predetermined usable state, and other related expenses, etc.

The Company's construction in progress is classified into capital construction projects, technical transformation projects, comprehensive energy services, informatization construction, etc.

For construction in progress, the necessary expenditures incurred before the asset reaches its intended usable state are recorded as the book value of the fixed asset. If the constructed fixed asset has reached its intended usable state bu the final completion settlement has not been handled, it is transferred to fixed assets at the estimated value based on the project budget, cost or actual cost of the project from the date it reaches the intended usable state, and the depreciation of fixed assets is provided in accordance with the Company's depreciation policies for fixed assets. Following the settlement for completion, the original estimated value is adjusted based on the actual cost, while the previously provided depreciation amount is not adjusted.

Construction in progress is transferred to fixed assets upon reaching the intended usable state, with the criteria as follows:

20. Borrowing costs

(1) Recognition principles of capitalization of borrowing costs

Borrowing costs include borrowing interest, amortization of discount or premium, supporting expenses, and exchange differences arising from borrowings in foreign currency.

Borrowing costs are directly attributable to the acquisition, construction, or production of qualifying assets are capitalized as part of the cost of those assets; other borrowing costs are recognized as expenses in the period in which they are incurred and stated as the current gains/losses.

Assets qualified for capitalization ("qualifying assets") are fixed assets, investment properties, inventories, etc. that necessarily take a substantial period of time to get ready for intended use or sale.

Capitalization of borrowing costs commences when the following three conditions are satisfied at the same time:

1) Expenditures for the asset occur, including expenditures incurred in the form of payment of cash, transfer of noncash assets or bearing of interest-bearing liabilities for the acquisition, construction or production of a qualifying asset;

2) Borrowing costs have been incurred; and

3) The acquisition, construction, or production activities that are necessary to prepare the asset for its intended use or sale have commenced.

(2) Capitalization period of borrowing costs

The capitalization period refers to the period from the time when the capitalization of borrowing costs commences to the time when it ceases, excluding the period when the capitalization of borrowing costs is suspended.

When the acquired, constructed, or produced assets eligible for capitalization reaches its intended states of use or sale, the capitalization of borrowing costs ceases.

When some projects of the acquired, constructed, or produced qualifying assets are completed separately and can be used individually, the capitalization of borrowing costs for such assets ceases.

If each part of the acquired, constructed, or produced asset is completed separately but can only be used or sold after the entire asset is completed, the capitalization of borrowing costs ceases when the entire asset is completed.

(3) Period of suspended capitalization

If an abnormal interruption occurs during the acquisition, construction, or production of a qualifying asset and the interruption lasts for more than three consecutive months, the capitalization of borrowing costs is suspended; if the interruption is a necessary procedure for the acquired, constructed, or produced qualifying asset to reach its intended state of use and sale, the capitalization of borrowing costs continues. Borrowing costs incurred during the interruption period are recognized in the current gains/losses until the acquisition, construction, or production activities of the asset restart, at which time the capitalization of borrowing costs continues.

(4) Calculation methods for the capitalization rate and capitalized amount of borrowing costs

For specific borrowings obtained for the acquisition, construction, or production of qualifying assets, the capitalized amount of borrowing costs is determined based on the actual borrowing costs incurred for the specific borrowings in the current period, less the interest income from depositing the unused borrowed funds in banks or the investment income from temporary investments.

Where general borrowings are occupied for the acquisition, construction, or production of qualifying assets, the amount of borrowing costs to be capitalized for general borrowings is calculated and determined by multiplying the weighted average of accumulated asset expenditures exceeding the specific borrowings by the capitalization rate of the occupied general borrowings. The capitalization rate is calculated and determined based on the weighted average interest rate o the general borrowings.

21. Right-of-use assets

Except for short-term leases and leases of low-value assets, the Company recognizes right-of-use assets for leases at the lease commencement date. The lease commencement date refers to the date when the lessor starts to provide the leased asset to make it available for use by the Company. Right-of-use assets are initially measured at cost. Such costs include

(1) The initial measurement amount of the lease liability;

(2) Lease payments made on or before the lease commencement date, less any lease incentives enjoyed (if any);

(3) Initial direct costs incurred by the Company; and

(4) Costs expected to be incurred by the Company for dismantling and removing the leased asset, restoring the site where the leased asset is located, or restoring the leased asset to the condition agreed in the lease terms, excluding the costs incurred for the production of inventories.

The Company calculates the depreciation for right-of-use assets with reference to the depreciation-related provisions under the Accounting Standard for Business Enterprises No. 4 - Fixed Assets. If the Company can reasonably determine that the ownership of the leased asset will be obtained at the end of the lease term, the right-of-use asset is depreciated over the remaining service life of the leased asset. If it is impossible to reasonably determine that the ownership of the leased asset will be obtained at the end of the lease term, the right-of-use asset is depreciated over the shorter of the lease term and the remaining service life of the leased asset.

The Company determines whether the right-of-use asset is impaired in accordance with the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, and performs accounting treatment for the identified impairment losses.

22. Intangible assets

Intangible assets include land use rights, patented technologies, software, etc., which are initially measured at actua cost.

(1) Valuation methods for intangible assets

1) Initial measurement of intangible assets

Costs of purchased intangible assets include the purchase price, relevant taxes and fees, and other expenditures directly attributable to causing the asset to its intended use. If the payment for the purchase of an intangible asset is deferred beyond normal credit terms and has a financing nature in substance, the cost of the intangible asset is subject to the present value of the purchase price.

For an intangible asset acquired from a debtor for debt settlement through debt restructuring, its book value is determined based on the fair value of the relinquished debt and other costs such as taxes that are directly attributable to causing the asset to its intended use, and the difference between the fair value and the carrying amount of the relinquished debt is recognized in the current gains/losses.

Provided that the non-monetary asset exchange has commercial substance and the fair values of both the received asset and the surrendered asset can be measured reliably, the book value of the intangible asset received in a nonmonetary asset exchange is determined based on the fair value of the surrendered asset, unless there is conclusive evidence that the fair value of the received asset is more reliable. For non-monetary asset exchanges that fall out of the above prerequisites, the carrying amount of the surrendered asset and the relevant taxes and fees payable are taken as the cost of the received intangible asset, and no gains/losses are recognized.

2) Subsequent measurement

The service life of an intangible asset is analyzed and judged upon acquisition.

For an intangible asset with a finite service life, it is amortized on a straight-line basis over the period in which it brings economic benefits to the enterprise; if it is impossible to foresee the period during which the intangible asset will bring economic benefits to the enterprise, it is regarded as an intangible asset with an indefinite service life and is not amortized.

(2) Estimation of the service life of intangible assets with finite service life

(3) Basis for determining intangible assets with indefinite service life and procedures for reviewing the service life

The service life of an intangible asset with an indefinite service life is reviewed. If there is evidence that the period during which the intangible asset brings economic benefits to the enterprise is foreseeable, its service life is estimated and amortized in accordance with the amortization policy for intangible assets with finite service life.

(4) Specific criteria for distinguishing between the research stage and development stage

The expenditures of the Company's internal research and development projects are classified into research expenditures and development expenditures.

Research stage: The stage of original and planned investigation and research activities undertaken to acquire and clarify new scientific or technical knowledge.

Development stage: The stage of applying research findings or other knowledge to a plan or design to produce new or substantially improved materials, devices, products, etc., prior to commercial production or use.

Specific criteria for capitalizing expenditures in the development stage

Expenditures in the development stage of an internal research and development project are recognized as intangible assets when all the following conditions are met:

1) It is technically feasible the completion of the intangible asset will make it available for use or sale;

2) There is an intention to complete the intangible asset and use or sell the same;

3) The means of generating economic benefits by the intangible asset, including the ability to prove that there is a market for the products produced by applying the intangible asset or the intangible asset itself has a market, and, if the intangible asset is to be used internally, the ability to prove its usefulness;

4) There are sufficient technical, financial and other resources to support the development of the intangible asset and the ability to use or sell the intangible asset; and

5) The expenditures attributable to the development phase of the intangible asset can be measured reliably.

23. Impairment of long-term assets

Long-term assets such as long-term equity investments, investment properties measured by the cost model, fixed assets, construction in progress, right-of-use assets, and intangible assets with finite service life are tested for impairment if there is any indication of impairment at the balance sheet date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment is made for the difference and recognized as an impairment loss. The recoverable amount is the higher of the fair value of an asset less the costs of disposal and the present value of the expected cash flows of the asset in the future. The provision for asset impairment is calculated and recognized on an individual basis. If it is difficult to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs is determined. An asset group is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Goodwill, intangible assets with indefinite service life, and intangible assets not yet available for use are tested for

impairment at least at the end of each year.

The Company conducts goodwill impairment testing. The carrying amount of goodwill arising from business merger is allocated to relevant asset groups on a reasonable basis from the acquisition date; if it is difficult to allocate it to relevan asset groups, it is allocated to relevant asset group portfolios. In allocating the carrying amount of goodwill, the Company allocates it based on the relative benefits that the relevant asset groups or portfolios of asset groups can obtain from the synergies of the business merger, and conducts the goodwill impairment testing on such basis.

In testing a relevant asset group or a portfolio of asset groups containing goodwill for impairment, if there is any indication of impairment for the group or the portfolio related to goodwill, such group or portfolio not containing goodwill is tested for impairment first to calculate its recoverable amount, which is compared with the relevant carrying amount to recognize the corresponding impairment loss. Then, the asset group or the portfolio of asset groups containing goodwill is tested for impairment, and the carrying amount of such groups or portfolios (including the allocated carrying amount of goodwill) is compared with its recoverable amount. If the recoverable amount of the relevant group or portfolio is lower than its carrying amount, an impairment loss on goodwill is recognized. Once the above asset impairment loss is recognized, it will not be reversed in subsequent accounting periods.

After the asset impairment loss is determined, recoverable value amounts would not be returned in future.

24. Long-term deferred expenses

(1) Amortization methods

The Company's long-term prepaid expenses include major repair expenditures, renovation costs, etc. Long-term prepaid expenses refer to the expenses that have already been incurred with a benefit period of more than one year (excluding one year). Long-term prepaid expenses are amortized in installments over the benefit period of the expense items. If a long-term prepaid expense item cannot benefit subsequent accounting periods, the unamortized carrying value of the item is fully transferred to the current gains/losses.

The renovation of premises rented under operating leases is recognized as long-term prepaid expenses and amortized over the shorter of the following two periods:

1) The estimated service life of the renovation (the estimated time until the next renovation);

2) The estimated remaining service life of the main structure of the building.

Subsequent expenditures that fall out of the recognition criteria for fixed assets, such as major repair expenses, are recognized as long-term prepaid expenses in the year of occurrence and amortized in installments over the benefit period subsequently.

(2) Amortization period

25. Employee compensation

The employee benefits of the Company include short-term employee remuneration, post-employment benefits, termination benefits, and other long-term benefits.

(1) Accounting treatments of short-term compensation

During the accounting period when employees provide services to the Company, the Company recognizes the actual short-term employee remuneration incurred as a liability and includes the same in the current gains/losses or the cost of related assets.

For social insurance premiums and housing provident funds paid by the Company for its employees, as well as trade union funds and employee education funds withdrawn in accordance with regulations, the Company calculates and determines the corresponding amount of employee benefits based on the prescribed basis and percentage during the accounting period when employees provide services to the Company.

If the employee benefits are non-monetary benefits and can be reliably measured, they are measured at fair value.

(2) Accounting treatments of post-employment benefits

Defined contribution plans

The Company pays basic pension insurance and unemployment insurance for its employees in accordance with relevant regulations of the local government. During the accounting period when employees provide services to the Company, the amount payable is calculated based on the local payment basis and proportion, recognized as a liability, and stated as the current gains/losses or the cost of related assets.

In addition to basic pension insurance, the Company has also established an enterprise annuity payment system and enterprise annuity plan in accordance with relevant policies of the national enterprise annuity system. The Company makes contributions to the local social insurance institution / annuity plan in a certain percentage of the total wages of employees, where the corresponding expenditures are stated as the current gains/losses or the cost of related assets.

(3) Accounting treatments of dismissal benefits

The Company recognizes the employee benefits liability arising from termination benefits and states the same as the current gains/losses when it fails to unilaterally withdraw the termination benefits arising from the labor relationship termination plan or reduction proposal, or when it recognizes the costs or expenses related to a restructuring involving the payment of termination benefits, whichever is earlier.

26. Lease liabilities

Except for short-term leases and leases of low-value assets, the Company initially measures the lease liability at the present value of the lease payments that are not paid at the lease commencement date. In calculating the present value of the lease payments, the Company uses the interest rate implicit in the lease as the discount rate; if the interest rate implicit in the lease cannot be determined, the Company uses the incremental borrowing rate as the discount rate.

Lease payments refer to the payments made by the Company to the lessor in connection with the right to use the leased assets during the lease term, including:

(1) Fixed payment (including substantial fixed payment), and the relevant amount after deducting the lease incentive if any;

(2) Variable lease payment amount depending on index or ratio;

(3) The Company reasonably determines the exercise price of purchase option to be exercised;

(4) Lease term reflects the amount that needs to be paid if the Company exercises the option to termination of leases; and

(5) The amount expected to be paid according to the residual value of the guarantee provided by the Company.

Variable lease payments that depend on an index or a rate are determined at initial measurement based on the index or rate as at the lease commencement date. Variable lease payments not stated as the measurement of the lease liability are recognized in the gains/losses or the cost of underlying assets in the period in which they are incurred.

After the lease commencement date, the Company calculates the interest expenses of the lease liabilities for each period of the lease term at a fixed cyclical interest rate and includes it in the current profit or loss or related asset costs.

After the lease commencement date, if any of the following circumstances occurs, the Company shall remeasure the lease liabilities and adjust the corresponding right-of-use assets. If the book value of the right-of-use assets has been reduced to zero, but the lease liabilities still needs to be further reduced, the Company shall state the difference in the current gains/losses:

(1) If lease term changes or the valuation result of purchase option changes, the Company remeasures lease liabilities based on the present value of the changed lease payments and the revised discount rate;

(2) If the estimated payable amount according to the guarantee residual value or the index or proportion used to determine the lease payment changes, the Company remeasures the lease liabilities according to the present value calculated by the changed lease payment amount and the original discount rate. If the change in lease payments results from a change in floating interest rates, a revised discount rate is used to calculate the present value.

Lease liabilities are presented as current liabilities or non-current liabilities in the balance sheet based on their liquidity. The closing carrying amount of non-current lease liabilities due for settlement within one year from the balance sheet date is reflected in the item "Non-current Liabilities due within One Year".

27. Estimated liabilities

(1) Recognition criteria for estimated liabilities

When obligations related to contingencies such as pending litigation or arbitration and product quality warranties simultaneously meet the following conditions, the Company recognizes the same as liabilities: the obligation is a present obligation of the Company; the fulfillment of obligation is likely to result in the outflow of economic benefits; and the amoun of the obligation can be measured reliably.

(2) Measurement methods for estimated liabilities

Estimated liabilities are initially measured in accordance with the optimal estimate of the necessary expenses for the fulfillment of the current obligation, with the risks related to contingent matters, uncertainty, the time value of money, and other factors taken into consideration. The Company reviews the best estimate at the balance sheet date and adjusts the carrying amount of the estimated liability.

The best estimate is handled in the following circumstances:

In the case of a continuous range (or interval) for the necessary expenses and probabilities for all the outcomes within this range are equal, the best estimate is determined at the median of the range, which is the average of the upper and lower limits.

In the case of no continuous range (or interval) for the necessary expenses, or in the case of a continuous range where the probabilities for all outcomes within this range are not equal, if the contingency involves a single item, the best estimate is determined based on the most likely outcome; if the contingency involves multiple items, the best estimate is calculated and determined based on all possible outcomes and the associated probabilities.

When all or some of the expenses necessary for the liquidation of an provisions of an enterprise is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. Besides, the amount recognized for the reimbursement should not exceed the book value of the estimated liabilities.

Estimated liabilities expected to be paid within one year from the balance sheet date are presented as current liabilities.

28. Income

Accounting policies adopted for revenue recognition and measurement disclosed by business type. The Company's income is mainly derived from the following business types:

① Income from electricity generation and sales; ① Income from comprehensive energy services ① Other income.

（1） General principles

The Company recognizes income when it has fulfilled its performance obligations in the contract, that is, when a customer obtains control of the relevant goods or services. Obtaining control over related goods or services means being able to lead the use of the goods or the provision of such services and obtain almost all of the economic benefits from it.

Performance obligation refers to the commitment of the Company to transfer distinct goods to the customer in the contract. The Company's performance obligation falls within a period of time if one of the following conditions is met; otherwise, it belongs to a 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; ① the customer can control the goods unde construction during the Company's performance; ① the goods produced during the Company's performance have irreplaceable uses, and the Company has the right to collect payments for the cumulative completed performance portion during the entire contract term.

For performance obligations over a period of time, the Company recognizes the income according to the performance progress during such period. When the performance progress cannot be reasonably determined, if the costs already incurred by the Company are expected to be compensated, the income is recognized based on the amount of costs already incurred until the performance progress can be reasonably determined

For performance obligations at a point in time, the Company recognizes the income at the point when the customer obtains control of the relevant goods. When judging whether the customer has obtained control over the goods, the Company comprehensively considers the following indicators: ① The Company has a right to receive the payment for the goods, that is, the customer has a obligation to pay for the goods; ① the Company has transferred the legal title of the goods to the customer, that is, the customer has the legal title of the goods; ① the Company has transferred physica possession of the goods to the customer, that is, the customer has physical possession of the goods; ① the Company has transferred the significant risks and rewards of ownership of the goods to the customer, that is, the customer has obtained the significant risks and rewards of ownership of the goods; ① the customer has accepted the goods; ① other indicators showing that the customer has obtained the control over the goods.

If the contract contains two or more performance obligations, at the commencement date of the contract, the Company allocates the transaction price to each single performance obligation based on the relative proportion of the stand-alone selling price of the goods or services promised under each single performance obligation. Income is measured at the transaction price of each single performance obligation.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties and amounts expected to be refunded to the customer. In determining the transaction price, the Company considers the impact of factors such as variable consideration and the existence of a significant financing component in the contract.

In case of 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. The transaction price including variable consideration shall not exceed the amount for which it is very likely that a significant reversal in the amount of cumulative income recognized may not occur when the uncertainty associated with the variable consideration is subsequently resolved. At each balance sheet date, the Company re-estimates the amount of variable consideration to be stated as the transaction price.

In case of a significant financing component in the contract, the Company determines the transaction price based on the payable amount assumed to be paid in cash by the customer when obtaining control over the goods, and amortizes the difference between the determined transaction price and the consideration amount promised in the contract during the contract period using the effective interest method at the discount rate that discounts the nominal amount of the contract consideration to the cash selling price of the goods. On the commencement date of the contract, no significant financing component in the contract is taken into account if the interval between the customer obtaining control over the goods or services and the customer's payment is expected to be no more than one year.

（2） Principal Person in Charge and Agent

The Company determines its identity in transactions is a principal person in charge or an agent based on whether it has control over the goods before transfer to customers. If the Company is able to control the goods before transfer to customers, the Company is the principal person in charge and recognizes income based on the total amount of consideration received or receivable; otherwise, it is an agent and recognizes income based on the amount of commission or fees it expects to be entitled to, which shall be determined based on the net amount of the total consideration received or receivable after deducting the price payable to other relevant parties, or based on the established commission amount or proportion.

（3） Sales with Quality Warranty Terms

For sales with quality assurance clauses, if the quality assurance provides a separate service in addition to assuring the customer that the goods or services sold meet the established standards, the quality assurance constitutes a single performance obligation. Otherwise, the Company conducts accounting treatment for the quality warranty liabilities in accordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies

(4) Specific principles

The Company recognizes income when it has fulfilled its performance obligations in the contract, that is, when a customer obtains control of the relevant goods or services. Obtaining control over related goods or services means being able to lead the use of the goods or the provision of such services and obtain almost all of the economic benefits from it.

1) Income from electricity generation and sales

When the electricity is transmitted to the power grid company stipulated in the power sales contract, that is, the power grid company obtains control of the power, the Company recognizes the realization of sales income.

2) Income from comprehensive energy services

The Company's comprehensive energy services are mainly divided into energy storage power station business, electricity facilities commissioning, installation, and construction business, and power project operation and maintenance business. The relevant service content and main business entities are as follows:

① Specific Accounting Policies, Recognition Timing, and Basis for Recognition of all Types of Business

Income

② Methods and basis for estimated income recognition

For energy storage power station business, at the end of each settlement period, the Company estimates the income realized in the current period without a formal settlement documents, based on the accomplishment of charge and discharge and FM service volume, as well as the data such as market clearing price and performance coefficient.

For electricity facility commissioning, installation, and construction business, at the end of each settlement period, the Company recognizes estimated income based on the output value of the actual performance progress completed at the project site in the current period.

For power project operation and maintenance business, at the end of each settlement period, the Company estimates the income based on the number of man-days occurred at the project site in the current period, as well as the man-day unit price of personnel at all levels under the relevant contract.

On the balance sheet date, if the performance progress cannot be reasonably determined, and the costs incurred are expected to be recovered, the income shall be recognized based on the amount of costs incurred until the

performance progress can be reasonably determined. In the period when the Company obtains the formal settlement documents, it shall offset the operating income recognized previously on an estimated basis, and recognize the operating income for the current period based on the formal settlement amount. The difference between the estimated amount and the formal settlement amount shall be used to adjust the operating income in the period when the settlement documents are obtained.

29. Government subsidies

(1) Type

Government grants are monetary assets and non-monetary assets obtained by the Company from the government without consideration, and are divided into government grants related to assets and government grants related to income.

Among them, government grants related to assets refer to government grants obtained by the Company to purchase, construct, or otherwise form long-term assets, while government grants related to income refer to government grants othe than those related to assets. If the target of the grant is not clearly specified in the government documents, the Company makes judgement in line with the above-mentioned principles, and if it is difficult to distinguish, it is classified as a government grant related to income as a whole.

(2) Timing

If there is evidence at the end of the period that the Company can meet the conditions under the financial support policies and it is expected to receive the financial support funds, the government grant are recognized as per the receivable amount. Otherwise, government grants are recognized when actually received.

If a government grant is a monetary asset, it is measured at the amount received or receivable. If a government grant is a non-monetary asset, it is measured at fair value; if the fair value cannot be reliably obtained, it is measured at a nomina amount (RMB 1). A government grant measured at a nominal amount is directly stated as the current gains/losses.

(3) Accounting treatment

Government grants related to assets are offset against the carrying amount of the relevant assets or recognized as deferred income. If recognized as deferred income, the grants are stated as current gains/losses in installments on a reasonable and systematic basis over the service life of the said assets (those related to the daily activities of the Company stated as other income; those not related to the daily activities of the Company stated as non-operating income).

Government grants related to income, if used to compensate for the relevant costs, expenses, or losses of the Company in subsequent periods, are recognized as deferred income, and are recognized as current gains/losses during the period when such costs, expenses, or losses are recognized (those related to the daily activities of the Company stated as other income; those not related to the daily activities of the Company are stated as non-operating income) or offse against such costs, expenses, or losses; if used to compensate for the relevant costs, expenses, or losses already incurred by the Company, are directly stated as current gains/losses (those related to the daily activities of the Company stated as other income; those not related to the daily activities of the Company stated as non-operating income) or offset against

such costs, expenses, or losses.

The Company obtains interest grants on policy-related concessional loans in two different ways: the interest subsidy funds are allocated by the government either to the lending bank or directly to the Company. The respective accounting treatment is carried out as follows:

1) Where the government allocates the funds to the lending bank, and the bank provides a loan to the Company at a policy-related preferential interest rate, the actual amount of the loan received is taken as the entry value, and the borrowing costs are calculated based on the loan principal and the policy-related preferential interest rate.

2) Where the government allocates the funds directly to the Company, the grants are offset against borrowing costs.

30. Deferred tax assets and deferred tax liabilities

Deferred tax assets that can be recognized for deductible temporary differences are subject to the taxable profit available in the future against which the deductible temporary differences can be utilized. For deductible losses and tax credits that can be carried forward to subsequent years, the corresponding deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the deductible losses and tax credits can be utilized.

For taxable temporary differences, deferred tax liabilities are recognized except in special circumstances.

Special circumstances where deferred tax assets or deferred tax liabilities are not recognized include the initia recognition of goodwill, and other transactions or events occurred outside of a business merger and affect neither accounting profit nor taxable profit (or deductible losses) at the time of occurrence.

When the Company has a legal right to settle on a net basis and intends to settle with net amount or acquire assets and pay off liabilities simultaneously, the Company reports the net amount of current income tax assets and current tax liabilities after offsetting.

When the Company has the legal right to settle current income tax assets and current income tax liabilities on a net basis, and the deferred tax assets and deferred tax liabilities are related to the income tax levied by the same tax collection authority on the same taxpayer or on different taxpayers, but in each important future period of reversal of deferred tax assets and liabilities, the involved taxpayer intends to settle current income tax assets and liabilities on a net basis or to obtain assets and settle liabilities at the same time, the deferred tax assets and deferred tax liabilities of the Company are presented at the net amount after offset.

31. Leases

（1） Identification of Leases

On the commencement date of the contract, the Company assesses whether the contract is, or contains, a lease. If a party to the contract transfers the right allowing the control over the use of one or more assets that have been identified within a certain period, in exchange for a consideration, such contract is a lease or includes a lease

If a contract contains several separate leases, the Company separates the contract and accounts for each separate lease. If a contract contains both lease and non-lease components, the Company separates the lease and non-lease components and accounts for them respectively. Each lease component is accounted for in accordance with the lease standard, and the non-lease components are accounted for in accordance with other applicable accounting standards for business enterprises.

（2） The Company as a lessee

1） Lease recognition

Except for short-term leases and leases of low-value assets, the Company recognizes right-of-use assets and lease liabilities for leases on the lease commencement date.

The right-of-use asset refers to the right of the Company as a lessee to use the leased asset during the lease term, which is initially measured at cost. The cost includes: ① The initial measurement amount of the lease liability; ① the lease payments made on or before the lease commencement date, less the amount of lease incentives enjoyed; ① the initia direct costs incurred; ① the expected costs to be incurred for dismantling and removing the leased asset, restoring the site where the leased asset is located, or restoring the leased asset to the state agreed in the lease terms (except those incurred for the production of inventories). If the Company remeasures the lease liability in accordance with the relevant provisions of the lease standard, the carrying amount of the right-of-use asset is adjusted accordingly.

The Company calculates and withdraws depreciation for right-of-use assets on a straight-line basis according to the expected consumption pattern of economic benefits related to such assets. If it can be reasonably determined that the ownership of the leased asset can be obtained at the end of the lease term, the depreciation is withdrawn over the remaining service life of the leased asset; if it is impossible to reasonably determine that the ownership of the leased asset can be obtained at the end of the lease term, the depreciation is calculated and withdrawn over the shorter of the lease term and the remaining service life of the leased asset. The amount of depreciation withdrawn is stated as the cost of relevant assets or the current gains/losses according to the purpose of the right-of-use assets.

The Company initially measures the lease liabilities at the present value of the lease payments that are not paid on the commencement date of the lease. The lease payments include: (1) Fixed payments and in-substance fixed payments, less any lease incentives receivable; (2) variable lease payments depending on an index or a rate; (3) exercise price of a purchase option if the Company is reasonably certain to exercise that option; (4) payments of penalties for terminating the lease, if the lease term reflects the Company exercising an option to terminate the lease; and (5) amounts expected to be paid by the Company as per the balance of value guarantees.

In calculating the present value of lease payments, the Company uses the interest rate implicit in the lease as the discount rate. If the interest rate implicit in the lease cannot be determined, the Company's incremental borrowing rate is used as the discount rate. The Company calculates the interests on the lease liabilities for each period during the lease term with a constant periodic rate of interest, and states the same as current gains/losses, except for those that shall be capitalized.

Subsequent to the commencement date of the lease, the Company increases the carrying amount of the lease liability when recognizing the interest on such liability, and reduces the carrying amount of such liability when making lease payments. The Company remeasures the lease liability at the present value of the modified lease payments in case of any change to in-substance fixed payments, any change to the amounts expected to be payable under a residual value guarantee, any change to future lease payments resulting from the change in an index or a rate used to determine those payments, or any change to the assessment or actual exercise of a purchase option, an renewal option, or a termination option.

2） Short-term lease and low-value asset lease

For short-term leases with a term of not more than 12 months and leases of low-value assets where the individua leased asset is of low value when it is brand new, the Company chooses not to recognize right-of-use assets and lease liabilities. The Company recognizes the lease payments associated with short-term leases and leases of low-value assets as expenses on a straight-line basis or another systematic and rational basis over the lease term in the cost of relevant assets or current gains/losses.

（3） The Company as a lessor

As a lessor, the Company classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to the ownership of an underlying asset, while all other leases are classified as operating leases.

1） Finance lease

On the commencement date of the lease, the Company recognizes a finance lease receivable for a finance lease and derecognizes the finance lease asset. When the Company initially measures the finance lease receivable, the net investment in the lease is used as the entry value of the finance lease receivable.

The net investment in the lease is the sum of the unguaranteed residual value and the present value of the lease payments receivable that are not received on the commencement date of the lease discounted at the interest rate implicit in the lease. The Company calculates and recognizes interest income for each period during the lease term at a constant periodic rate of interest. Variable lease payments received by the Company that are not stated as the net investment for measurement in the lease are recognized in the gains/losses for the period of occurrence.

2） Operating lease

During each period of the lease term, the Company recognizes lease receipts from operating leases as rental income on a straight-line basis.

Initial direct costs incurred by the Company in relation to an operating lease are capitalized to the cost of the underlying asset, and are recognized as an expense over the lease term on the same basis as the lease income. Variable lease payments received by the Company in relation to an operating lease that are not stated as the lease receipts are stated as gains/losses for the period of occurrence.

In case of any modification to the operating lease, the Group regards it as a new lease for accounting treatment from the effective date of the change. The advance receipt or the lease receivable related to the lease prior to the change is recognized as the payment receivable of the new lease.

32. Special reserves

The production safety expenses withdrawn by the Company for its electricity generation business in accordance with national regulations are stated as the cost of relevant products or current gains/losses. and also stated as the "specia reserve" account. The current provision standard is based on the operating income of the previous year, and the amoun to be withdrawn for the current year is determined by adopting the excess regressive method, and is withdrawn evenly on a monthly basis, stated as the cost of relevant products or current gains/losses, and also stated as the "special reserve" account. When the Company uses the special reserve, if it is an expenditure, it directly offsets the special reserve; if it forms a fixed asset, it is recognized as a fixed asset when the relevant asset reaches the intended state of use; while the special reserve is offset against the cost of forming the fixed asset, and the accumulated depreciation of the same amount is recognized. The fixed asset is no longer depreciated in subsequent periods.

33. Major changes in accounting policies and accounting estimates

There was no material change in accounting policies and accounting estimates during the Reporting Period.

VI. Taxation

1. Main tax types and tax rates

The taxpayers with different corporate income tax rates are as follows:

2. Tax incentives

(1) Enterprise income tax

The Company obtained the National High-tech Enterprise Certificate (No. GR202444200365) valid for 3 years from 2024 to 2026, during which the Company enjoys the high-tech enterprise income tax preference and pays enterprise income tax at a reduced rate of 15%.

(2) Value-added tax

VII. Notes to items in consolidated financial statements

1. Monetary funds

Unit: RMB

The details of monetary funds that are restricted from use due to mortgage, pledge or freezing, as well as monetary funds kept overseas with restricted repatriation are as follows:

Besides, there are no other funds with restricted use due to mortgage, pledge or freezing, or with potential recovery risks in the balance of monetary funds as of June 30, 2026.

2. Financial assets held for trading

Unit: RMB

Note 1: Other tradable financial assets of the Company refer to structural deposits and monetary funds reserved in commercial banks. As of June 30, 2026, the balance of structural deposits and monetary funds was RMB 162,600,453.64.

Note 2: Other financial assets of the Company designated to be measured at fair value through current gains/losses refer to the investments in private equity funds.

3. Notes receivable

(1) Presentation of notes receivable by category

Unit: RMB

(2) Disclosure by provision method for bad debts

Unit: RMB

(Continued)

1） There was no provision for bad debts of notes receivable accrued on an individual basis in the current period

2） Provision set aside for bad debts of notes receivable by portfolio

(3) Provision for bad debts of notes receivable withdrawn, recovered, or reversed for the current period

(4) No pledged notes receivable of the Company by the end of the current period

(5) No notes receivable endorsed or discounted by the Company and not yet due on the balance sheet date by the end of the current period

(6) No actual write-off of notes receivable for the current period

4. Accounts receivable

(1) Disclosure by aging

Unit: RMB

(2) Disclosure by provision method for bad debts Unit: RMB

(Continued)

Accounts receivable with provision for bad debts on an individual basis:

Accounts receivable with provision for bad debts on a portfolio basis:

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

Unit: RMB

Of which, there was no recovery or reversal of provision for bad debts with significant amounts in the current period. (4) No actual write-off of accounts receivable for the current period

(5) Top five accounts receivable by the debtor in terms of the ending balance and contract assets Unit: RMB

5. Contract assets

(1) Details of contract assets

Unit: RMB

(2) Major changes of book value during the reporting period and reasons

Unit: RMB

(3).Disclosure by provision method for bad debts

Unit: RMB

(Continued)

1）There was no provision for bad debts of contract assets accrued on an individual basis in the current period

2）Provision set aside for bad debts of contract assets by portfolio

(4) No provision for bad debts of contract assets was accrued, recovered or reversed in the current period

(5) No actual write-off of contract assets for the current period

6. Other receivables

Unit: RMB

Note: Land resumption compensation receivable refers to the government compensation receivable arising from the land resumption of the Company's subsidiary, Shennandian Zhongshan. The total compensation price for the land resumption of Shennandian Zhongshan in Cuiheng New District is RMB 584.45 million, involving Parcel A and Parcel B:

The total compensation for Parcel A is RMB 224.71 million, of which RMB 112.41 million has been recovered in the early stage, including an initial payment of RMB 67.41 million and a progress payment of RMB 45.00 million. The cancellation of the land ownership certificate and the confirmation of the parcel handover for Parcel A were completed in 2024. At the end of the period, the remaining receivable balance was RMB 112.30 million. According to the agreement, the payment will be recovered by December 31, 2026 at the latest.

The total compensation for Parcel B is RMB 359.74 million, of which an initial payment of RMB 107.92 million has been received. The cancellation of the land ownership certificate for Parcel B was completed in 2024, and the confirmation of the parcel handover was completed in 2025. During the actual handover confirmation process of Parce B, RMB 9.15 million was deducted from the compensation price accordingly due to the expiration and cancellation of the right to use the sea area in relation to the wharf and the inability to hand over the covered bridge due to demolition. At the end of the period, the remaining receivables totaled RMB 242.67 million. Pursuant to relevant agreement, the settlement deadline for the payment is December 31, 2027.

By the end of the Reporting Period, the unrecovered land resumption compensation for Parcels A and B totaled RMB 354.97 million. The Company continues to communicate with the Management Committee of Cuiheng New District to actively promote the recovery of funds. All remaining land resumption receivables are within the payment credit period under the relevant agreement.

6.1 Other receivables

(1) Classification of other receivables by nature of payment

Unit: RMB

(2) Disclosure by aging

Unit: RMB

(3).Disclosure by provision method for bad debts

(Continued)

1） Provision for bad debts of other receivables by single item

2） Provision set aside for bad debts of other receivables by portfolio

3） Provision set aside for bad debts of other receivables by the general expected credit loss model

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

Unit: RMB

Of which, there was no recovery or reversal of provision for bad debts with significant amounts in the current period.

(5) No actual write-off of other receivables for the current period

(6) Other receivables of the top five ending balances collected by debtor

Unit: RMB

7、 Prepayments

(1) Advances to suppliers are listed by aging

Unit: RMB

There was no prepayment aged over one year and of significant amount at the end of the period.

(2) Prepayment status of the top five year-end balances collected by prepaid objects

Unit: RMB

8. Inventories

(1) Inventories Classification

Unit: RMB

(Continued)

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

9. Other current assets

Unit: RMB

Unit: RMB

10. Other equity instrument investments

(1) Other equity instrument investments Unit: RMB