深纺织Ｂ：2026年半年度报告（英文版）

Shenzhen Textile (Holdings) Co., Ltd

2026 Semi-annual Report

August 2026

Section I Important Notes, Table of Contents and Interpretations

The Board of Directors, directors and senior officers 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.

The Principal LI Gang, the Chief Finance Officer LIU Yu and the Chief Accountant (accounting supervisor) LI Zhenyu declare that they will ensure the authenticity, accuracy and completeness of the financial report in this semi- annual report.

All directors have attended the board meeting at which this semiannual report was considered.

Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors, Investors and related persons shall keep sufficient risk awareness, and shall understand the differences between plans, forecasts and commitments, and remind investors of investment risks.

The Company is exposed to macroeconomic risks, market risks, raw materials risks and intensified competition risks. Investors are advised to pay attention to investment risks. For details, please refer to "X. Risks and Countermeasures Faced by the Company" in "Section

III Management Discussion and Analysis" of this report.

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

This report is prepared in both Chinese and English. In the event of any discrepancy in the interpretation of the Chinese and English texts, the Chinese version shall prevail.

TABLE OF CONTENTS

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

Section II Company Profile and Major Financial Indicators....7

Section III Management Discussion & Analysis....11

Section IV Corporate governance, Environment and Society....27

Section V Significant Events....29

Section VI Share Changes and Shareholder Information....36

Section VII Bonds....41

Section VIII Financial Statements....42

Documents available for inspection

1. Accounting statements carried with personal signatures and seals of legal representative, Genera Manager, Chief Financial officer.

II. The original of all the Company's documents and the original of the announcement that have been publicly disclosed by the Company on the website designated by the China Securities Regulatory Commission during the reporting period.

The above documents were completely placed at the Office of Secretaries of the Board of Directors of the Company.

Interpretations

Section II Company Profile and Major Financial Indicators

I. Company profile

II. Contact person and contact manner

III. Other circumstances

1. Company contact information

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

☑Applicable □Not applicable

2. Information disclosure and storage location

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

□Applicable ☑Not applicable

□Applicable Not Applicable The website of the stock exchange and the name and address of the media where the company discloses the semi-annual report, and the storage location where the Company's semi-annual report is prepared has not changed during the reporting period. For details, please refer to the 2025 Annual Report.

3. Other relevant information

Whether other relevant information has changed during the reporting period

□Applicable ☑Not applicable

IV. Key accounting data and financial indicators

May the Company make retroactive adjustment or restatement of the accounting data of the previous years

□Yes ☑ No

V. Differences between accounting data under domestic and overseas accounting standards

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

□Applicable ☑Not applicable

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

□ Applicable□√ Not applicable

□Applicable ☑Not applicable

2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. □ Applicable √Not applicable None

VI. Non-recurring profit or loss items and amounts

☑Applicable □Not applicable

In RMB

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

□Applicable ☑Not applicable

Due to the special nature of the impairment provision for management and maintenance expenses advanced by the Guangzhou-Foshan Expressway to be clarified, it will affect the normal judgment of the Company's operating performance and profitability by the user of the report.

None For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Companies Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason.

□Applicable ☑Not applicable

None of Non-recurring gain /loss items recognized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non –recurring gain/loss in the report period.

Section III Management Discussion & Analysis

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

(I) Development of the industry to which the company belongs

Polarizers are also known as polaroid, which can control the polarization direction of specific light beams. When natural light passes through the polarizer, the light whose vibration direction is perpendicular to the transmission axis of the polarizer will be absorbed, leaving only polarized light whose vibration direction is parallel to the transmission axis of the polarizer. The downstream polarizer is mainly used in the panel industry. According to different panel types, polarizers mainly include TN, STN, TFT and OLED. Currently, the global polarizer market is dominated by TFT-LCD polarizers. Each LCD panel requires two polarizers.

The high-quality development of the polarizer industry has a profound impact on the entire display industry. As one of the core raw materials of the display panel, the demand for polarizer is directly affected by the fluctuation of the display panel market. In recent years, with the accelerated transfer of the global display panel industry to China China's polarizer industry has ushered in a stage of rapid development. The production capacity and process technology level of domestic polarizer manufacturers have continuously jumped. China's polarizer industry has significantly improved its position and influence in the global market. Chinese mainland has become the world's largest polarizer production base.

The company is one of the main domestic polarizer research and development, production, and sales enterprises. It is a pioneer in the polarizer industry in China and has now developed into a leading enterprise in the domestic polarizer industry, becoming an important supplier of mainstream panel enterprises worldwide. In the first half of 2026, affected by multiple overlapping factors such as the complex and volatile global economic and geopolitical situations, supply and price fluctuations of upstream petrochemical commodities caused by disruptions to international shipping and logistics, continuous optimization and adjustment of the national policies related to "Two-New and Two-Priority" policies (namely, large-scale equipment upgrades and consumer goods trade-in programs, and major national strategies and security capacity building in key areas), phased demand release driven by large-scale sports events and the rising prices of materials for storage devices stimulated by AI industry development, the global display panel and terminal market generally showed a slow recovery trend, but there were still a certain degree of fluctuations and challenges. Currently, the polarizer industry is witnessing continuous M&A consolidation and capacity expansion. In the future, key attention should be paid to risks regarding the evolution of the industry's competitive landscape, the pace of the release of effective market demand, the upward pressure of raw material costs, and supply chain security.

(II) Main businesses engaged by the Company

The Company's main business is a high-tech industry focusing on the R&D, production and sales of polarizers for OLED and LCD display, and the operation and management of its own properties.

During the reporting period, the Company's main business has not changed significantly. First, the Company actively adjusted its product structure, implemented a product differentiation strategy, and increased the sales proportion of high-value-added products. It has the sales volume of ultra-large-size (85" and above) polarizers and polarizers for OLED mobile surged significantly; Secondly, it continued to carry out lean management to further increase the production line speed, and improve the manufacturing efficiency; Thirdly, it steadily promoted the construction of Line 8 project, advanced the pile foundation engineering construction, and was about to enter the main building construction stage of the plant; Fourthly, it ensured work safety, improved the construction of safety management system, strengthened safety training and education, carried out safety risk identification and hidden danger investigation and rectification, shore up weak links, and prevented accidents; Fifthly, it continued to well manage its own properties, optimized property service quality, and improved tenant satisfaction, maintaining a stable property occupancy rate and ensuring stable revenue from property leasing business under the condition of substantial fluctuations in market demand

During the reporting period, the Company recorded operating revenue of RMB 1.589 billion, representing a decrease of 0.73% compared with the same period of the prior year. Net profit attributable to shareholders of the listed company amounted to RMB 50.7762 million, an increase of 44.11% year-on-year. This growth was primarily attributable to the Company's quality- and efficiency-enhancement initiatives, including the optimization of its produc mix, strengthened supply chain management to reduce procurement costs, upgrading of production processes, and implementation of refined management and control measures, further compounded by the decline in overall procurement costs resulting from the depreciation of the Japanese yen during the period. The Company's profitability improved, and its overall operations remained steady and sound..

(III) Main products of the Company and their applications

Currently, the Company has 7 mass-production polarizer production lines, and its main products cover OLED, and LCD polarizers. These products are mainly applied to products such as TVs, laptops, monitors, vehicles, industria controls, instruments and meters, smartphones, and wearable devices. By continuously strengthening the expansion of sales channels and the construction of its own brand, the Company has become a qualified supplier for mainstream panel enterprises such as CSOT, BOE, LGD, Xianyang Caihong, HKC, Tianma Microelectronics, Sharp and so on.

The main product types and applications of the Company's polarizer production lines are as follows:

(IV) Business model of the Company

The polarizer industry has gradually shifted from a traditional business model of R&D, production, and sales to a customer-centric, joint research and development, and comprehensive service business model. By understanding customer needs, the Company jointly develops and carries out high-standard production management, manufactures high-quality products, uses advanced polarizer roll-on equipment to cooperate with downstream panel manufacturers production lines, optimizes production and logistics links, reduces production and transportation costs, creates value for customers, and achieves win-win cooperation.

(V) Market position of company products

The Company is one of the main domestic enterprises in the R&D, production, and sales of polarizers. It began its polarizer business in 1995 and achieved the first mass production of polarizers in China in 1998, becoming a pioneer in China's polarizer industry. The Company has mastered core technologies for the R&D and production of TN/STN-LCD, TFT-LCD, and OLED polarizers, with the capability to produce a full range of polarizer products in large, medium, and small sizes. The Company was the first to achieve mass production of polarizers for OLED TVs and OLED mobile phones in China, filling a gap in the domestic industry.

(VI)Main performance drivers of the Company

See "II. Core Competitiveness Analysis" in this section for details.

II. Analysis of core competitiveness

(I) Technology advantages. SAPO Photoelectric is one of the earliest national high-tech enterprises in China to enter the field of display polarizer research and development and production. It has 30 years of polarizer industry operation experience, and its products cover mainstream display applications such as TN/STN LCD, TFT LCD, OLED, etc. It has a complete set of proprietary technology and independent intellectual property rights for polarizers that can meet customer needs, and has the production capacity of a full range of polarizers in large, medium and small sizes. SAPO Photoelectric has three innovation platforms, including "Guangdong Provincial Engineering Research Center", "Shenzhen Polarization Material and Technology Engineering Laboratory" and "Shenzhen Enterprise Technology Center". The platforms focus on the R&D and industrialization of the core production technologies of polarizers for OLED and LCD. As of the end of the reporting period, SAPO Photoelectric has obtained a total of 119 patent authorizations, including 23 domestic invention patents, 92 domestic utility model patents, and 4 overseas utility model patents. Four national standards and two industry standards were independently drafted and formulated by SAPO Photoelectric and approved for implementation. In addition, it participated in the drafting and formulation of 1 industry standard, which has been approved for implementation. Further, it participated in the drafting and formulation of 3 group standards, which have been approved for implementation.

(II) Talent advantages. The Company consistently practices the core strategy of "strengthening the enterprise with talents." Based on the development path of independent R&D and relying on a specialized innovative R&D platform, it has built a standardized and efficient R&D management system. The Company has gathered a group of highly versatile professionals deeply rooted in the display materials industry with a global operational vision. The team covers core key positions such as cutting-edge technology R&D and refined production and operation management, building a solid talent foundation for the localized substitution of the domestic polarizer industry and the high-quality development of the Company. The Company has established and improved an all-round, multi-level system for talent introduction, cultivation, and incentive, continuously consolidating its core talent competitiveness and fully unleashing the innovative vitality of its talents. First, set up dedicated core R&D teams for tackling key technical challenges. The Company has built a dual career development tracks for technical and management roles. Combined with diversified cultivation models such as specialized skills training and in-depth cooperation between universities and enterprises, it accurately empowers the growth of technical talents and efficiently promotes the R&D, technological iteration, and industrialization of new polarizer products. Second, improve the talent echelon building for mid-level backbones. Through a dual-track selection mechanism involving market-oriented external recruitment and internal open competition, the Company continuously replenishes the talent reserves for key positions in manufacturing, R&D and innovation, and market operations, continuously delivering high-quality professional manpower for the Company's capacity expansion, customer development, and business expansion. Third, carry out regular talent rotation exchanges and specialized empowerment training. Focusing on the targeted cultivation of core backbone employees, the Company comprehensively enhances the professional performance capabilities and cross-departmenta collaborative efficiency of management personnel and front-line core employees, continuously activating the interna momentum of the team and organizational vitality. Fourth, improve the incentive and restraint mechanism to promote the implementation of strategic objectives. In response to the company's core technical challenges, performance breakthrough points, and key project construction, establish a special reward system to guide key employees to poo their efforts and focus on advancing key projects and resolving major problems. Meanwhile, explore the establishment of an equity incentive mechanism to align the value creation of the core team with the company's economic profits and strategic objectives, and build a medium- to long-term value creation and sharing mechanism featuring shared benefits and shared risks..

(III) Market advantages. The Company has a good domestic and international customer base. Compared with advanced foreign competing manufacturers, the greatest advantage lies in having localized supporting capabilities close to the panel market and strong support from national industrial policies. In terms of market demand, with the successive mass production of high-generation TFT-LCD panel production lines such as domestic 10.5-generation and 11-generation lines, as well as the accelerated development of larger-sized panels and terminal products, the demand for polarizers, especially ultra-large-size polarizers, in the domestic market has shown a steady growth trend. The Company possesses one of the few 2,500mm ultra-wide polarizer production lines in the world, maintaining an industry-leading advantage in both technology and production capacity for ultra-large and large-size polarizers, which enables the Company to better align with the market demand for the ultra-large-size polarizers. With the continuous breakthrough of cutting-edge technology, the demand for high-end polarizer products such as OLED and vehiclemounted polarizer is growing rapidly, and is becoming a blue ocean market for polarizer companies to compete. The Company has achieved mass production breakthroughs and continuous supply in OLED TVs and mobile phone polarizers, and has accumulated rich experience in the production of high-quality automotive polarizers, which will pu it in a favorable position in market competition. In terms of market development, the Company focuses on customer needs, continuously optimizes the production process and product structure, improves quality control, organically combines production and sales, establishes a rapid response mechanism, gives full play to the advantages of localization, effectively provides point-to-point professional services, and promotes the verification of various models around the overall strategic deployment to form a stable supply chain and continuously improve market share.

(IV) Quality advantages. The Company always adheres to the quality policy of "meeting customer needs, pursuing excellent quality; implementing green manufacturing and persisting on continuous improvement", pays attention to product quality control, and the product quality is comparable to international standards. The Company strictly controls product performance indicators, standardizes incoming inspection standards, and takes quality improvement and consumption reduction as the starting point to achieve simultaneous improvement of output and quality; introduces modern management system, and passes ISO9001 quality management system, ISO14001 environmental management system, ISO45001 occupational health and safety management system, QCO80000 hazardous substance management system and ISO50001 energy management system certification; The products meet the environment protection requirements of RoHS directive, and realize the standardized management of the whole process from raw materials supply, manufacturing, marketing to customer service, so as to ensure the stability of product quality.

(V).Management advantages. The Company has been deeply involved in the polarizer industry for 30 years, accumulated rich production and management experience, and establishes a leading domestic management process control system, quality management system, and stable raw material supply channels. The Company has carried ou in-depth and comprehensive benchmarking work, organized management personnel to learn advanced experience from customers and peers, vigorously promoted standardized and refined management, and learned from the management experience of domestic and overseas polarizer enterprises to optimize the organizational structure, reduce the management levels, and continuously improve the Company's management efficiency; The Company continues to optimize the management systems and incentive mechanisms to improve the decision-making efficiency and the market response speed, and refine the R&D reward system. In addition, it achieves a deeper integration of corporate value and employee value, effectively stimulating new business vitality; the Company steadily promotes strategic transformation, optimizes resource allocation, and orderly phases out "non-core businesses and inefficien assets" to promote the concentration of resources in the main business; the Company continues to improve the level o production management, increase the production speed, stabilize the product yield rate, and steadily enhance the efficiency of production lines, so that the production technical indicators reach a higher level in the industry; the Company continuously strengthened whole-process quality management, effectively reduced customer complaints and product returns, and won quality improvement awards from several key customers by virtue of quality improvemen achievements; through the approach of listing tasks based on project initiation, the Company has effectively improved efficiency and quality, resulting in noticeable reductions in material costs and an increase in product yield rates.

(VI).Policy advantages. Polarizer industry is an important part of the new display industry chain. The continuous development of the Company's polarizer business has improved the overall supply capacity of domestic polarizer, greatly reduced the dependence of domestic panel enterprises on imported polarizer, maintained the safety of the country's new display industry, played a positive role in enhancing the overall competitiveness of China's new display industry chain, and boosted the coordinated development of the whole industrial chain of "20+8" ultra-high-definition video display industry cluster in Shenzhen. The Company's polarizer business unit, SAPO Photoelectric, has continued to receive the recognition as a national high-tech enterprise and its polarizer projects have received multiple policy and financial supports from national and local governments; in addition, SAPO Photoelectric also enjoys the preferential policy of import duty exemptions on key raw materials.

III. Analysis of primary business

Overview

See the relevant contents of "I. Main business engaged in by the Company during the reporting period".

YoY changes in key financial data

In RMB

Significant changes in the Company's profit composition or profit sources during the reporting period

There were no significant changes in the Company's profit composition or profit sources during the reporting period. Composition of operating revenue

In RMB

Industry, product or region accounting for more than 10% of the Company's operating revenue or operating profit ☑Applicable □Not applicable

In RMB

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

□Applicable ☑Not applicable

IV. Analysis of non-primary business

☑Applicable □Not applicable

In RMB

V. Analysis of assets and liabilities

1.Condition of Asset Causing Significant Change

In RMB

2. Main overseas assets

□Applicable ☑Not applicable

3. Assets and liabilities measured at fair value

☑Applicable □Not applicable

In RMB

Other changes

None

Did great change take place in measurement of the principal assets in the reporting period ?

□Yes ☑No

4. Restricted asset rights as of the end of this Reporting Period

(1) The restricted monetary funds mainly include the funds equivalent to RMB 8,799,040.80 due to the freezing of accounts and the bill and L/C guarantee of RMB 6,920,565.27.

(2) Restricted notes receivable shall be notes receivable endorsed or discounted by the Company and not yet due on the balance sheet date.

(3)The restricted fixed assets and intangible assets are mainly the mortgage loans applied for subsidiary SAPO Photoelectric with part of its self-owned properties from the syndicate led by Bank of Communications Co., Ltd. Shenzhen Branch, and the guarantee provided by the Company for the mortgage loans. For details, please refer to the Announcement on the Provision of Guarantees by the Company for Subsidiaries to Apply for Bank Mortgage Loans (No. 2020-19) and the Announcement on the Progress of the Provision of Guarantees by the Company fo Subsidiaries (No. 2020-46) published by the Company on Cninfo (http://www.cninfo.com.cn).

VI. Analysis of investment status

1. General

□Applicable ☑Not applicable

2.Condition of Acquiring Significant Share Right Investment during the Report Period

□Applicable ☑Not applicable

3.Situation of the Significant Non-equity Investment Undergoing in the Report Period

☑Applicable □Not applicable

In RMB

4.Investment of Financial Asset

(1)Securities investment

□Applicable ☑Not applicable

The Company had no securities investment during the reporting period.

(2)Investment in Derivatives

☑Applicable □Not applicable

1)Derivatives investment for the purpose of hedging during the reporting period

☑Applicable □Not applicable

Unit:RMB 10,000

2) Speculative derivatives investments during the reporting period

□Applicable ☑Not applicable

The company did not have derivatives investment for speculative purposes during the reporting period.

5.Application of the raised capital

□Applicable ☑Not applicable

The Company had no application of the raised capital in the reporting period.

VII. Sale of major assets and equities

1. Sales of major assets

□Applicable ☑Not applicable

The Company had no sales of major assets in the reporting period.

2.Sales of major equity

□Applicable ☑Not applicable

VIII. Analysis of major holding and participating companies

☑Applicable □Not applicable

Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company

In RMB

Subsidiaries obtained or disposed in the reporting period

□Applicable ☑Not applicable

Description of the main holding and equity participation companies

The financial data of the subsidiary SAPO Photoelectric in the above table are the data of its consolidated financial statements. For details of its performance fluctuations and reasons for changes, please refer to "III Analysis of primary business" in "Section III Management Discussion and Analysis".

IX. Structured entities controlled by the Company

□Applicable ☑Not applicable

X. Risks faced by the Company and countermeasures

(I)Macroeconomic risks

At present, the domestic economy is stable and progressing, and the overall situation is repairing. However, the international environment is complex and severe, geopolitical tensions, and global economic growth is facing slowdown pressure. As one of the upstream manufacturers in the display product market, the Company cannot rule out the risk that unpredictable macroeconomic fluctuations may affect the Company's performance.

Countermeasures: The Company will pay close attention to the economic development dynamics at home and abroad, take the initiative to study and judge the macroeconomic environment, study the national policy orientation, strengthen the tracking and analysis of major industry information, timely grasp the development trend of the industry, improve the early warning ability of business risks, and timely adjust the Company's operation and management strategies according to the market changes. At the same time, the Company will continue to optimize the produc structure, improve the market development ability, strengthen internal management, control business risks, and ensure the steady development of the Company.

(II) Market risks

As polarizer is a core and key material in the new display industry chain, its development is closely dependent on the iteration of display panel technology and changes in market demand. Currently, China's polarizer industry is in a critical period of accelerated domestic substitution, and driven by emerging application scenarios such as ultra-large sizing, OLED flexibility and automotive displays, the demand for technological upgrading is urgent. If the Company fails to keep up with the technological development trends in a timely manner, resulting in lagging R&D of new product or application verification not meeting expectations; Alternatively, intensified industry competition could lead to a decline in the price of display panel, thereby transmitting the cost pressure to the upstream polarizer segment, which may adversely affect the Company's operating performance and market competitiveness.

Countermeasures: Under the complex market environment, the Company actively promotes the introduction of new product clients to stabilize customer confidence; Efficiently advancing the construction of the Line 8 project, expanding the production capacity of polarizers, and enhancing the supply capacity of high value-added products. At the same time, it will maintain close communication with customers at all levels, pay attention to the dynamics of product demand, deeply explore market potential capabilities, optimize product structure, and increase market share;

In addition, it adheres to technological innovation, improves and optimizes the R&D innovation system, continuously enhances the product development ability to meet market demand, continuously improves the yield of production lines, reduces material losses, effectively enhances core competitiveness, and cope with market risks.

(III)Raw materials risk

There are high barriers to the core production technology of upstream materials of polarizers, which are mostly monopolized by foreign manufacturers, and the localization rate is not high. At present, the key raw materials required for the manufacture of polarizers, such as PVA film, TAC film and other optical films, are basically monopolized by Japanese enterprises. The price of the main optical film materials is affected by the production capacity of Japanese suppliers, market demand and the exchange rate of Japanese yen, thus affecting the unit cost of the Company's products.

Countermeasures: The Company will continuously optimize the supply chain system, increase the diversified expansion of suppliers, improve its bargaining power with suppliers, actively explore the localized substitution of imported raw materials, promote the introduction of highly cost-effective raw materials, steadily upgrade production management standards, continuously boost equipment utilization rate and reduce the loss rate, maintain production stability and continuity, and reduce product production costs; If necessary, the Company can choose to take measures such as forward foreign exchange and foreign exchange options to reduce the cost risk caused by drastic fluctuations in exchange rates.

(IV)Risks of intensified competition

With major domestic polarizer manufacturers accelerating the construction and expansion of production lines in recent years, the production capacity of polarizers, especially large-sized polarizers, will continue to grow in the future. If the downstream consumer market recovers less than expected, the competition in the polarizer industry will furthe intensify.

Countermeasures: Facing fierce competition, the Company will strengthen the close cooperation with existing high-quality customers through excellent product quality and customer service. It will strengthen the synergy efficiency among various production lines to enhance the profitability of the Company's polarizer business. At the same time, pay close attention to the dynamics of new product demand, increase R&D investment, optimize product structure, continuously explore potential markets, and increase market share.

XI. Formulation and implementation of market value management system and valuation improvement plan

Whether the Company has formulated a market value management system.

□Yes ☑No

Whether the Company has disclosed plans for valuation enhancement.

☑Yes ☐No

To effectively enhance the investment value of the listed company, increase investor returns, and safeguard the legitimate rights and interests of both the company and its investors, the company has actively responded to and implemented regulatory requirements by developing a valuation enhancement plan tailored to its specific circumstances. The company will focus on improving the quality and efficiency of its core business operations, innovating its capital management practices, strengthening its incentive and restraint mechanisms, prioritizing shareholder returns, enhancing the quality of information disclosure and the depth of investor communication, reinforcing compliance and risk management measures, embracing sustainable development principles, and continuously driving the enhancement of the company's investment value.

In accordance with the relevant provisions of the "Regulatory Guidelines for Listed Companies No.10 – Market

Capitalization Management" and the Company's Articles of Association, among other applicable regulations, the Company held its Fourth Meeting of the Ninth Board of Directors on August 18,2026, at which the "Proposal on Formulating the' Valuation Enhancement Plan '" was reviewed and approved. For further details, please refer to the Company's "Announcement on the Valuation Enhancement Plan" (No.2026-29) published on the CNINFO Information Network (http://www.cninfo.com.cn) on August 19,2026.

XII. Implementation of the action plan of "double improvement of quality and return"

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

Section IV Corporate governance, Environment and Society

I. Changes in directors and senior officers of the Company

☑Applicable □Not applicable

II. Profit distribution and conversion of capital reserves into share capital during the reporting period

□Applicable ☑Not applicable

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

III. Implementation of the Company's equity incentive plan, employee stock ownership plan or other employee incentive measures

□Applicable ☑Not applicable

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

IV. Environmental information disclosure

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

☑Yes □No

V. Social responsibilities

In the Reporting Period, the Company actively fulfilled its corporate social responsibility, actively participated in consumption assistance work, and completed consumption assistance procurement of RMB 435,100. The company disclosed the "2025 Environmental, Social and Corporate Governance (ESG) Report", which systematically displayed the company's achievements in environmental, social and corporate governance in 2025. For details, please refer to the "2025 Environmental, Social and Corporate Governance (ESG) Report" of Cninfo (http://www.cninfo.com.cn) on May 21, 2026.

Section V Significant Events

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

□Applicable ☑Not applicable

□Applicable Not Applicable During the reporting period, there were no commitments that have been fulfilled by the Company's actual controller, shareholders, related parties, acquirers, the Company and other related parties during the reporting period and have not been fulfilled beyond the time limit as of the end of the reporting period.

II. Particulars about the non-operating occupation of funds by the controlling shareholder

□Applicable ☑Not applicable

None

III. Illegal provision of guarantees for external parties

□Applicable ☑Not applicable

None

IV. Appointment and dismissal of the accounting firm

Whether the semi-annual financial report has been audited

□Yes ☑No

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

V. Explanation of the Board of Directors on the "modified audit report" of the accounting firm during the reporting period

□Applicable ☑Not applicable

VI. Explanation of the Board of Directors on the "Modified Audit Report" of the previous year

□Applicable ☑Not applicable

VII. Matters relating to bankruptcy and reorganization

□Applicable ☑Not applicable

None

VIII. Litigation matters

Significant litigation and arbitration

□Applicable ☑Not applicable

There were no significant litigation or arbitration during the reporting period.

Other litigation matters

☑Applicable □Not applicable

IX. Penalties and rectification

□Applicable ☑Not applicable

None

X. Integrity status of the Company and its controlling shareholders and actual owner

☑Applicable □Not applicable

No such cases in the Reporting Period.

XI. Major related party transactions

1. Related transactions in connection with daily operation

☑Applicable □Not applicable

2. Related-party transactions arising from asset acquisition or sale

□Applicable ☑Not applicable

None

3. Related-party transitions with joint investments

□Applicable ☑Not applicable

None

4. Credits and liabilities with related parties

☐Applicable ☑Not applicable

During the reporting period, the Company did not have any related-party credit or debt transactions.

5. Transactions with related finance company, especially one that is controlled by the Company

□Applicable ☑Not applicable

None

6. Transactions between the financial company controlled by the Company and related parties

□Applicable ☑Not applicable

There is no deposit, loan, credit or other financial business between the financial company controlled by the Company and related parties.

7. Other significant related-party transactions

□Applicable ☑Not applicable

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

XII. Major contracts and their performance

1.Entrustments, contracting and leasing

(1)Entrustment

□Applicable ☑Not applicable

No such cases in the reporting period.

(2)Contracting

□Applicable ☑Not applicable

No such cases in the reporting period.

(3)Leasing

□Applicable ☑Not applicable

No such cases in the reporting period.

II. Other significant contract

☑Applicable □Not applicable

Unit:RMB 10,000

Explanation of the specific situation of the guarantee by the adoption of composite method

None

3. Entrusted wealth management

☑Applicable □Not applicable

Unit:RMB 10,000

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

□Applicable ☑Not applicable

4. Other significant contract

□Applicable ☑Not applicable

No such cases in the reporting period.

XIII. Registration form for reception, survey, communication, interview and other activities during the reporting period

☑Applicable □Not applicable

XIV. Explanation on other significant events

☑Applicable ☐Not applicable

Regarding the 2026 Stock Option Incentive Plan

To further establish and strengthen the Company's long-term incentive mechanism, attract and retain outstanding talent, fully mobilize the enthusiasm of the Company's core team, effectively align the interests of shareholders, the Company, and employees, and ensure that all parties jointly focus on the Company's long-term development, the Company, while fully safeguarding the interests of shareholders and in accordance with the principle of "equity between returns and contributions," held the Fourth Meeting of the Ninth Board of Directors on August 18,2026, at which the following resolutions were adopted: "Resolution on the' 2026 Stock Option Incentive Plan (Draft) 'and its Summary," "Resolution on the' Assessment and Management Measures for the 2026 Stock Option Incentive Plan '," and "Resolution on Requesting the Shareholders' Meeting to Authorize the Board of Directors to Handle Matters Related to the 2026 Stock Option Incentive Plan." For detailed information, please refer to the "2026 Stock Option Incentive Plan (Draft)" and its "Summary" published by the Company on the Cninfo website (http://www.cninfo.com.cn) on August 19,2026..

XV. Significant event of subsidiary of the Company

☑Applicable □Not applicable

On October 15, 2025, the Company held the 45th meeting of the 8th Board of Directors, at which the "Proposal on Investment and Construction of 1.49m-wide Polarizer Production Line Project (Line 8) by a Subsidiary" was deliberated and approved. It is agreed that the subsidiary, Shenzhen SAPO Photoelectric Co., Ltd., based on the market demand for polarizers and its own development needs, would use a combination of its own funds and bank loans, with a planned total investment of approximately RMB 1.334 billion, to build a new plant building and supporting facilities by purchasing land in Pingshan District, Shenzhen, and to purchase equipment and instruments to construct a 1.49mwide LCD and OLED polarizer production line with a designed capacity of approximately 18 million square meters per year. For details, please refer to the "Announcement on Investment and Construction of 1.49m-wide Polarizer Production Line Project (Line 8) by a Subsidiary" (No. 2025-39) published by the Company on Cninfo (http://www.cninfo.com.cn) on October 16, 2025. As of the end of this reporting period, the pile foundation engineering construction of the project was advancing steadily, and the project was about to enter the main building construction stage of the plant.

Section VI Share Changes and Shareholder Information

I. Changes in share capital

1. Changes in share capital

In shares

Reasons for share changed

□Applicable ☑Not applicable

Approval of Change of Shares

□Applicable ☑Not applicable

Ownership transfer of share changes

□Applicable ☑Not applicable

Progress in implementation of share repurchase

□Applicable ☑Not applicable

Implementation progress of reducing repurchased shares by centralized bidding

□Applicable ☑Not applicable

Progress on any share repurchase: □ Applicable √ Not applicable Progress on reducing the repurchased shares by means of centralized bidding: □ Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period

□Applicable ☑Not applicable

Other information necessary to disclose for the company or need to disclosed under requirement from security regulators

□Applicable ☑Not applicable

2. Change of shares with limited sales condition

□Applicable ☑Not applicable

II. Securities issue and listing

□Applicable ☑Not applicable

III. Number of the Company's shareholders and shareholding ratios

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

□Applicable ☑Not applicable

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

□Applicable ☑Not applicable

Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period.

□Yes ☑No

The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy –back agreement dealing in reporting period.

IV. Changes in shareholdings of directors and senior officers

□Applicable ☑Not applicable

There was no change in the shareholdings of the Company's directors and senior officers during the reporting period. For details, please refer to the 2025 Annual Report.

V. Changes in controlling shareholders or actual controllers

If the Company previously disclosed that the actual controller planned a change of control but it has not been completed, please explain the progress of the change of control.

□Applicable ☑Not applicable

Changes of controlling shareholder in reporting period

□Applicable ☑Not applicable

No changes of controlling shareholder for the Company in reporting period.

Changes of controlling shareholder in reporting period

□Applicable ☑Not applicable

No changes of controlling shareholder for the Company in reporting period

VI. Preferred shares

□Applicable ☑Not applicable

The Company had no preferred shares in the reporting period.

Section VII Bonds

□Applicable ☑Not applicable

Section VIII Financial Statements

I. Audit report

Whether the semi-annual report has been audited

□Yes ☑No

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

II. Financial statements

The unit in the notes to the financial statements is: RMB

1. Consolidated balance sheet

Prepared by: Shenzhen Textile (Holdings) Co., Ltd.

June 30, 2026 In RMB

Legal representative: LI Gang Principal Chief Finance Officer: LIU Yu Chief Accountant: LI Zhenyu

2. Balance sheet of the parent company

In RMB

3. Consolidated income statement

In RMB

In case of any business combination under the same control in the current period, the net profit realized by the combinee before the combination was RMB0.00, and the net profit realized by the combinee in the previous period was RMB 0.00.

Legal representative: LI Gang Principal Chief Finance Officer: LIU Yu Chief Accountant: LI Zhenyu

4. Income statement of the parent company

In RMB

5. Consolidated statement of cash flows

In RMB

6. The statement of cash flows of the parent company

In RMB

7. Consolidated statements of changes in owners' equity

The current period

In RMB

Full text of 2026 Semi-annual Report of Shenzhen Textile (Holdings) Co., Ltd.

amount of prior year

In RMB

Full text of 2026 Semi-annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Full text of 2026 Semi-annual Report of Shenzhen Textile (Holdings) Co., Ltd.

8. Statement of changes in owner's equity of parent company

The current period

In RMB

Full text of 2026 Semi-annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Amounts for the Prior Year

In RMB

Full text of 2026 Semi-annual Report of Shenzhen Textile (Holdings) Co., Ltd.

III. Company profile

1. Company profile

Shenzhen Textile (Holdings) Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited company registered in Guangdong Province. The Company was listed on Shenzhen Stock Exchange in August 1994. The Company has publicly issued RMB ordinary shares (A shares) and domestically listed foreign shares (B shares) to the domestic and foreign public respectively, and listed for trading.

Headquartered in Shenzhen, Guangdong Province, the main business of the Company and its subsidiaries (hereinafter referred to as "the Group") includes the research and development, production and marketing of polarizers for liquid crystal display, as well as property management business mainly located in the prosperous commercial area of Shenzhen.

2. The date of approval of the financial statements

The financial statements have been authorized for issuance of Board of Directors of the Company on [August 24, 2026].

IV. Basis for preparation of financial statements

1. Basis for preparation

The Group implements the accounting standards for enterprises and related regulations promulgated by the Ministry of Finance. In addition, the Group also discloses relevant financial information in accordance with the No. 15 Compilation Rules for Disclosure of Information by Companies of Issuing Securities to the Public-General Provisions for Financial Reporting (2023 Revision).

2. Going concern

The Group evaluated its ability to continue as a going concern for the 12 months from 30 June 2026 and found no matters or circumstances that raised significant doubts about its ability to continue as a going concern. Accordingly, the present financial report has been prepared on the basis of going concern assumptions.

3. Accounting basis and pricing principle

The Group's accounting is based on the accrual basis. Except for certain financial instruments-which are measured at fair value, the financial report uses the historical cost as the measurement basis. If the asset is impaired, the corresponding impairment provision will be made in accordance with the relevant regulations.

Under historical cost measurement, an asset is measured at the fair value of the amount of cash or cash equivalents paid or the consideration paid at the time of acquisition. Liabilities are measured by the amount of mone or assets actually received as a result of the present obligation is assumed, or the contractual amount of the present obligation is incurred, or the amount of cash or cash equivalents expected to be paid in the ordinary course of life to repay the liability.

Fair value is the price that market participants shall have to receive for the sale of an asset or shall to pay for a transfer of a liability in an orderly transaction that occurs on the measurement date. Whether the fair value is observable or estimated using valuation techniques, the fair value measured and disclosed in this financial report is determined on that basis.

For financial assets where the transaction price is taken as the fair value at initial recognition and valuation techniques involving unobservable input value are used in the subsequent measurement of fair value, the valuation techniques are corrected during the valuation process to make the initial recognition result determined by the valuation techniques equal to the transaction price.

Fair value measurement is divided into three levels as to the observability of fair value inputs, and the importance of such inputs to fair value measurement as a value inputs, and the importance of such inputs to fair value measurement as a whole:

The first level of input is the unadjusted quotation of the same asset or liability in an active market that can be obtained at the measurement date.

The second-level input value is the input value that is directly or indirectly observable for the underlying asset or liability in addition to the first-level input.

The third level input value is the unobservable input value of the underlying asset or liability.

V. Significant accounting policies and accounting estimates

Tips of specific accounting policies and accounting estimates:

None

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

The financial statements prepared by the Company meet the requirements of the Accounting Standards fo Business Enterprises, and truly and completely reflect the Company's consolidated and parent company's financia position as at June 30, 2026, and the consolidated and parent company's operating results, changes in consolidated and parent company's shareholders' equity and consolidated and parent company's cash flows for 2026 H1.

2. Accounting period

The Group's fiscal year is the Gregorian calendar year, i.e. from January 1 to December 31 of each year.

3. Operating cycle

The business cycle is the period from the time an enterprise purchases an asset for processing to the realization of cash or cash equivalents. The Company's business cycle is 12 months.

4. Recording currency

RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries operate, and the Company and its domestic subsidiaries use RMB as the base accounting currency. The overseas subsidiaries of the Company determine RMB as their base accounting currency according to the currency of the main economic environment in which they operate. The currency used by the Company in the preparation of this financia report is RMB.

5. Determination methods and selection basis for materiality threshold

☑Applicable □Not applicable

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

Business combinations are divided into business combinations under common control and business combinations under non-common control.

6.1 Business combinations under common control

The enterprises participating in the merger are ultimately controlled by the same party or multiple parties before and after the merger, and the control is not temporary, therefore it is a business combination under the common control.

The assets and liabilities obtained in the business combination are measured at their book value as recorded in the consolidated financial statements of the ultimate controller on the combination date. The difference between the carrying amount of net assets acquired by the merging party and the carrying amount of the merger consideration paid is adjusted for the equity premium in the capital reserve or for retained earnings if the equity premium is insufficient to be offset. Direct carrying value on the consolidated party at the date of consolidation. The difference between the carrying amount of net assets acquired by the merging party and the carrying amount of the merger consideration paid is adjusted for the equity premium in the capital reserve or for retained earnings if the equity premium is insufficient to be offset.

Direct expenses incurred in connection with the business combination are recognized in profit or loss for the period when incurred.

6.2 Business combinations and goodwill under non-common control

The enterprises participating in a merger are not ultimately controlled by the same party or multiple parties before and after the merger, therefore it is a business combination under non-common control.

Consolidation cost is the fair value of assets paid, liabilities incurred or assumed and equity instruments issued to gain control of the acquired party by the purchaser. Intermediary fees such as auditing, legal services, valuation consulting and other related management expenses incurred by the purchaser for the business combination are recognized in the profit or loss of the period when incurred.

Any identifiable assets, liabilities, and contingent liabilities of the acquiree that meet the recognition criteria and are obtained by the acquirer in the combination are measured at fair value on the acquisition date.

If the combination cost exceeds the acquiree's fair value share of net identifiable assets obtained, this difference is recognized as goodwill and initially measured at cost. If the cost of the merger is less than the fair value share of the acquiree's identifiable net assets acquired in the merger, the fair value of the acquired acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the merger are first reviewed, and if the consolidated cost after review is still less than the fair value share of the acquiree's identifiable net assets share acquired in the merger, which shall be included in profit or loss for the period occurred.

Goodwill resulting from business combinations is presented separately in the consolidated financial statement and measured at cost less accumulated impairment provisions.

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

7.1 Criteria for determining control

Control means that the investor has the power over the investee, enjoys variable returns by participating in the related activities of the investee, and has the ability to influence the amount of returns by using the power over the investee. The Group will reassess the relevant elements involved in the above definition of controls as a result of changes in the relevant facts and circumstances.

7.2. Methodology for the preparation of consolidated financial statement

The consolidated scope of the consolidated financial statement is determined on a control basis.

The merger of subsidiaries begins when the Group acquires control of the subsidiary and terminates when the Group loses control of the subsidiary.

For subsidiaries disposed of by the Group, the results of operations and cash flows prior to the date of disposa (the date of loss of control) have been duly included in the consolidated statement of income and the consolidated statement of cash flows.

For subsidiaries acquired through a business combination under non-common control, the results of operations and cash flows from the date of purchase (the date of acquisition of control) have been appropriately included in the consolidated statement of income and the consolidated statement of cash flows.

For subsidiaries acquired through a business combination under common control, regardless of when the business combination takes place in any point of the reporting period, the subsidiary shall be deemed to be included in the scope of the Group's consolidation on the date on which the subsidiary is under the control of the ultimate controlling party, the results of operations and cash flows from the beginning of the earliest period of the reporting period are duly included in the consolidated income statement and the consolidated statement of cash flows.

The principal accounting policies and the accounting periods adopted by the subsidiaries are determined in accordance with the accounting policies and accounting periods uniformly prescribed by the Company.

Any effects on the consolidated financial statements from intercompany transactions between the Company and its subsidiaries, or among the subsidiaries themselves, are eliminated upon consolidation.

The share of owners' equity of a subsidiary not attributable to the parent company is presented as minority equity and listed as "minority equity" under the owners' equity item in the consolidated balance sheet. The shares of the subsidiary's net profit or loss for the period that belongs to minority interests is shown under the item "minority profit and loss" under the net profit item in the consolidated statement of income.

The minority shareholders’ share of the subsidiary's losses exceeds the minority shareholders’ share of ownership interest enjoyed in the beginning of the period, and its balance is still offset by the minority shareholders’ equity.

For transactions that purchase minority stakes in a subsidiary or dispose of part of the equity investment without losing control of the subsidiary, it’s accounted as equity transactions, and the carrying amount of the owner's interest and minority interest attributable to the parent company is adjusted to reflect their change in the relevant interest in the subsidiary. The difference between the adjustment of minority interests and the fair value of the consideration paid/received is adjusted to the capital reserve, and if the capital reserve is insufficient to offset it, then it’s adjusted to the retained earnings. 8. Joint venture arrangement

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

Joint venture arrangements are classified as either joint operations or joint ventures, based on the rights and obligations of the parties—determined by factors such as the arrangement's structure, legal form, and contractual terms. A joint operation is a joint arrangement in which the parties have rights to the related assets and obligations for the related liabilities. Commonly-operated refers to a joint arrangement in which the joint venture parties enjoy the assets related to the arrangement and bear the liabilities related to the arrangement. The jointly-operated is a joint arrangement in which the joint venture party has rights only to the net assets of the joint arrangement.

The Group's investments in joint ventures are accounted for under the equity method. For details, please refer to "17 Long-term equity investment".

9. Determination criteria for cash and cash equivalents

Cash refers to cash on hand and deposits that can be used to pay at any time. Cash equivalents refer to investments held by the Group for a short period (generally within three months from the date of purchase), highly liquid, easily convertible into a known amount of cash, and with little risk of change in value.

10. Foreign currency transactions and translation of foreign currency statements

10.1 Foreign currency transactions

Foreign currency transactions are initially recognized at an exchange rate similar to the spot exchange rate on the date of the transaction, and the exchange rate similar to the spot rate on the date of the transaction is determined in a systematic and reasonable manner.

At each balance sheet date, foreign currency monetary items are translated into RMB at the spot rate on that date. Any exchange differences arising from changes in the spot exchange rate (compared to the rate at initial recognition o the previous balance sheet date) are recognized in current profit or loss, except for: (1) exchange differences on foreign-currency-specific borrowings that qualify for capitalization, which are capitalized as part of the cost of the related asset during the capitalization period; (2) The exchange difference of hedging instruments for hedging in order to avoid foreign exchange risk is treated according to the hedge accounting method; The exchange difference results from changes in other carrying balances other than amortized cost for monetary items classified as measured at fair value and changes in which are included in other comprehensive income, it shall be recognized as profit or loss for the period.

Where the preparation of the consolidated financial statement involves overseas operations, if there are foreign currency monetary items that substantially constitute net investment in overseas operations, the exchange difference arising from exchange rate changes is included in the "foreign currency statement translation difference" item; included in other comprehensive income When disposing of overseas operations, it is included in the profit or loss of the period of disposal.

Foreign currency non-monetary items measured at historical cost are still measured at the base currency amoun translated at the spot exchange rate on the date of the transaction. For foreign currency non-monetary items measured at fair value, the spot exchange rate on the date the fair value is determined is used for translation. Any difference between the translated amount in recording currency and the original currency is treated as a fair value change (including fluctuation in exchange rate) and is recognized in current profit or loss or other comprehensive income, as appropriate.

10.2 Translation of foreign-currency financial statements

For the purpose of preparing consolidated financial statement, foreign currency financial statements for overseas operations are converted into RMB statements in the following manner: all assets and liabilities in the balance sheet are converted at the spot exchange rate at the balance sheet date; Shareholders' equity items are converted at the spot exchange rate at the time of incurrence; All items in the income statement and items reflecting the amount of profit distribution are converted at an exchange rate similar to the spot exchange rate on the date of the transaction; The difference between the converted asset items and the total of liability items and shareholders' equity items is recognized as other comprehensive income and included in shareholders' equity.

Foreign currency cash flows and cash flows of overseas subsidiaries are translated using exchange rates simila to the spot exchange rate on the occurrence date of cash flow, and the impact amount of exchange rate changes on cash and cash equivalents is used as a reconciliation item and is shown separately in the statement of cash flows as "Impact of exchange rate changes on cash and cash equivalents" separately.

The prior-year year-end amounts and the prior-year actual are presented on the basis of the amounts converted from the prior-year financial statement.

Where the Group losses control of overseas operations due to disposing of all the ownership interests in overseas operations or the disposal of part of the equity investment or other reasons, the difference in the translation of the foreign currency statements in the ownership interests attributable to the parent company related to the overseas operations shown below the items of shareholders' equity in the balance sheet shall be transferred to the profit or loss of the period of disposal.

Where the proportion of equity interests held in overseas operations decreases due to the disposal of part of the equity investment or other reasons without lost the control of the overseas operations, the difference in the translation of foreign currency statements related to the disposal part of the overseas operations shall be attributed to the minority shareholders' interests and shall not be transferred to the profit or loss of the period. When disposing of a portion of equity in an overseas operation that is classified as an associate or a joint venture, the differences on translation of foreign currency statements related to that operation are transferred to profit or loss in the disposal period, in proportion to the percentage of equity disposed.

11. Financial instruments

The Group recognizes a financial asset or financial liability when it becomes a party to a financial instrument contract.

In the case of the purchase or sale of financial assets in the usual manner, it shall recognize the assets to be received and the liabilities to be incurred on the transaction date, or derecognize the assets sold on the transaction date.

Financial assets and financial liabilities are measured at fair value at initial recognition (for the determination method of the fair value of financial assets and financial liabilities, please refer to the relevant disclosure in "IV. Basis of preparation of financial statements" in this chapter). For financial assets and financial liabilities measured at fair value and changes in which are recorded in profit or loss for the period, the related transaction costs are recognized directly in profit or loss for the period; For other categories of financial assets and financial liabilities, the related transaction costs are included in the initial recognition amount. When the Group initially recognizes accounts receivable that do not include a significant financing component, or when the financing component of a contract not exceeding one year is disregarded under Accounting Standards for Business Enterprises No. 14 - Revenue ("Revenue Standard"), such receivables are initially measured at the transaction price as defined in the Revenue Standard.

The effective interest rate method refers to the method of calculating the amortized cost of financial assets o financial liabilities and apportioning interest income or interest expense into each accounting period.

The effective interest rate is the interest rate used to discount the estimated future cash flows of a financial asset or financial liability over the expected life of the financial asset to the carrying balance of the financial asset or the amortized cost of the financial liability. In determining the effective interest rate, the expected cash flow is estimated taking into account all contractual terms of the financial asset or financial liability (such as early repayment, rollover, call option or other similar option, etc.), without taking into account the expected credit loss.

The amortized cost of a financial asset or financial liability is the amount initially recognized less the principal repaid, plus or minus the accumulated amortization resulting from the amortization of the difference between the initia recognition amount and the amount due date using the effective interest rate method, and then deduct the accumulated provision for losses (for financial assets only).

11.1 Classification, recognition and measurement of financial assets

After initial recognition, the Group conducts subsequent measurements of different classes of financial assets at amortized cost, measured at fair value and changes in which are recognized in other comprehensive income, o measured at fair value and changes in which are recorded in profit or loss for the period.

The contractual clauses of a financial asset provide that the cash flows generated on a given date are only the payment of principal and interest based on the outstanding principal amount, and the Group's business model is aimed for managing the financial asset is to collect contractual cash flows, then the Group classifies the financial asset as a financial asset measured at amortized cost. Such financial assets mainly include monetary funds, notes receivable, accounts receivable and other receivables.

If the contractual terms of a financial asset stipulate that, on specified dates, cash flows comprise solely payments of principal and interest on the outstanding principal, and the Group's business model for managing the financial asse is both to collect contractual cash flows and to sell the financial asset, then the Group classifies this asset as measured at fair value through other comprehensive income. Such financial assets with a maturity of more than one year from the date of acquisition are listed as other debt investments, and if they mature within one year (inclusive) from the balance sheet date, they are shown as non-current assets maturing within one year; Accounts receivable and notes receivable classified as measured at fair value and changes in which are recognized in other comprehensive income at the time of acquisition are shown in receivables financing, and the other acquired with a maturity of one year (inclusive) are shown in other current assets.

At initial recognition, the Group may irrevocably designate investments in non-tradable equity instruments other than contingent consideration recognized in business combinations that are under non-common control as financia assets measured at fair value and changes in which are recognized in other comprehensive income on a single financial asset basis. Such financial assets are listed as investments in other equity instruments.

Where a financial asset meets any of the following conditions, it indicates that the Group's purpose in holding the financial asset is transactional:

 The purpose of acquiring the underlying financial asset is primarily for the purpose of the recent sale.

The underlying financial assets were part of a centrally managed portfolio of identifiable financial instruments at the time of initial recognition and there was objective evidence of an actual pattern of short-term profits in the recent.

The financial asset is a derivative, Except for derivatives that meet the definition of financial guarantee contract and derivatives that are designated as effective hedging instruments.

Financial assets measured at fair value and changes in which are recorded in profit or loss for the period include financial assets classified as measured at fair value and changes in which are recorded in profit or loss for the period and financial assets designated as measured at fair value and changes in which are recorded in profit or loss for the period:

Financial assets that do not qualify as financial assets measured at amortized cost and financial assets measured at fair value and changes in which are included in other comprehensive income are classified as financial assets measured at fair value and changes in which are recorded in profit or loss for the period.

At the time of initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Group may irrevocably designate financial assets as financial assets measured at fair value and changes in which are recorded in profit or loss for the period.

Financial assets measured at fair value through profit or loss are presented under "Financial assets held fo trading." Those due in more than one year from the balance sheet date (or with no fixed maturity) and expected to be held for more than one year are presented under "Other non-current financial assets."

11.1.1 Financial assets measured at amortized cost

Financial assets measured at amortized cost are subsequently measured at amortized cost using the effective interest rate method, and the gains or losses arising from impairment or derecognition are included in profit or loss for the period.

The Group recognizes interest income on financial assets measured at amortized cost in accordance with the effective interest rate method. For financial assets purchased or derived that have incurred credit impairment, the Group determines interest income based on the amortized cost of the financial asset and the credit-adjusted effective interest rate from the initial recognition. In addition, the Group determines interest income based on the carrying balance of financial assets multiplied by the effective interest rate.

11.1.2 Financial assets measured at fair value and changes in which are recorded in other comprehensive income

Impairment losses or gains and interest income calculated using the effective interest rate method related to financial assets classified as measured at fair value and changes in which are included in other comprehensive income are recognized in profit or loss for the period, and except that, changes in the fair value of such financial assets are recognized in other comprehensive income. The amount of the financial asset recognized in profit or loss for each period is equal to the amount that is recognized in profit or loss for each period as if it had been measured at amortized cost. When the financial asset is derecognized, the accumulated gain or loss previously recognized in othe comprehensive income is transferred from other comprehensive income and recognized in profit or loss for the period.

Changes in fair value in investments in non-traded equity instruments designated as measured at fair value and the change in which are recognized in other comprehensive income are recognized in other comprehensive income, and when the financial asset is derecognized, the accumulated gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income to retained earnings. During the period during which the Group holds the investment in the non-tradable equity instrument, the dividend income is recognized and recorded in profit or loss for the period when the Group's right to receive dividends has been established, the economic benefits associated with the dividends are likely to flow into the Group and the amount of the dividends can be reliably measured.

11.1.3 Financial assets measured at fair value and changes in which are recorded in profit or loss for the period

Financial assets measured at fair value and changes in which are recorded in profit or loss for the period are subsequently measured at fair value, and gains or losses resulting from changes in fair value and dividends and interest income related to the financial asset are recorded in profit or loss for the period. 11.2 Impairment of Financia Instruments

11.2 Impairment offinancial instruments

The Group recognizes impairment allowances and provision for losses based on expected credit losses for financial assets measured at amortized cost, financial assets classified as fair value through other comprehensive income, and lease receivables.

The Group measures the loss provision at an amount equivalent to the expected credit loss over the life of notes receivable and accounts receivable formed by transactions regulated by revenue standards that do not contain a material financing element or do not take into account the financing component of contracts not exceeding one year, as well as operating leases receivable arising from transactions regulated by No. 21Accounting Standard for Business Enterprises -Leases.

For other financial instruments, except for those purchased or originated with credit loss, the Group evaluates changes in credit risk since initial recognition at each balance sheet date. If the credit risk of the Financial Instrument has increased significantly since the initial recognition, the Group measures its loss provision by an amount equivalent to the expected credit loss over the life of the financial instrument; If the credit risk of the financial instrument does not increase significantly since the initial recognition, the Group measures its loss provision by an amount equivalent to the expected credit loss of the financial instrument in the next 12 months. Increases or reversals of credit loss provisions are recognized as impairment losses or gains in profit or loss for the period, except for financial assets classified as measured at fair value and changes in which are recognized in other comprehensive income. For financial assets classified as measured at fair value and the change thereof is recorded in other comprehensive income, the Group recognizes a credit loss provision in other comprehensive income and includes impairment losses or gains in profit or loss for the period without reducing the carrying amount of the financial asset as shown in the balance sheet.

Where the Group has measured a loss provision in the preceding accounting period by an amount equivalent to the expected credit loss over the life of the financial instrument, but the financial instrument is no longer subject to a significant increase in credit risk since the initial recognition at the period balance sheet date, the Group measures the loss provision for the financial instrument at the period balance sheet date by an amount equivalent to the expected credit loss in the next 12 months, and the resulting reversal amount for loss provision is recognized as an impairment gain in profit or loss for the period

11.2.1 Significant increase in credit risk

Using reasonably and evidence-based forward-looking information available, the Group compares the risk of default on financial instruments at the balance sheet date with the risk of default on the initial recognition date to determine whether the credit risk of financial instruments has increased significantly since initial recognition.

In assessing whether credit risk has increased significantly, the Group will consider the following factors:

(1) whether the internal price indicators have changed significantly due to changes in credit risk.

(2) whether the interest rate or other terms of an existing financial instrument have changed significantly (e.g., stricter contractual terms, additional collateral or higher yields) if the existing financial instrument is derived or issued as a new financial instrument at the balance sheet date.

(3) whether there has been a significant change in the external market indicators of the credit risk of the same financial instrument or similar financial instruments with the same estimated duration. These indicators include: credit spreads, credit default swap prices for borrowers, the length and extent to which the fair value of financial assets is less than their amortized cost, and other market information relevant to borrowers (such as changes in the price o borrowers' debt or equity instruments).

(4) whether there has been a significant change in the external credit rating of the financial instrument in fact or expectation.

(5) whether the actual or expected internal credit rating of the debtor has been downgraded.

(6) Whether there has been an adverse change in the debtor's business, financial, or economic conditions that is expected to significantly affect the debtor's ability to meet its debt obligations.

(7) Whether the debtor's operating performance, whether actual or expected, has changed significantly.

(8) whether the credit risk of other financial instruments issued by the same debtor has increased significantly.

(9) whether there has been a significant adverse change in the regulatory, economic or technical environment in which the debtor is located.

(10) whether there has been a significant change in the value of the collateral used as collateral for the debt or in the quality of the guarantee or credit enhancement provided by a third party. These changes are expected to reduce the economic incentive for the debtor to repay the loan within the term specified in the contract or affect the probability of default.

(11) whether there has been a significant change in the economic incentive expected to reduce the borrower's repayment within the term agreed in the contract.

(12) whether there has been a change in the expectations of the loan contract, including the waiver or amendment of contractual obligations that may result from the anticipated breach of the contract, the granting of interest-free periods, interest rate jumps, requests for additional collateral or guarantees, or other changes to the contractual framework of financial instruments

(13) whether there has been a significant change in the debtor's expected performance and repayment behavior.

(14) Whether the Group's credit management methods for financial instruments have changed.

Regardless of whether the credit risk has increased significantly after the above assessment, when the payment of a financial instrument contract has been overdue for more than (inclusive) 30 days, it indicates that the credit risk of the financial instrument has increased significantly.

At the balance sheet date, if the Group determines that a financial instrument has only a low credit risk, the Group assumes that the credit risk of the financial instrument has not increased significantly since its initial recognition. A financial instrument is considered to have a low credit risk if it has a low risk of default, the borrower's ability to meet its contractual cash flow obligations in the short term is strong, and even if there are adverse changes in the economic situation and operating environment over a longer period of time that do not necessarily reduce the borrower's performance of its contractual cash obligations.

11.2.2 Financial assets that have undergone credit impairment

Where one or more events occur in which the Group expects to adversely affect the future cash flows of a financial asset, the financial asset becomes a financial asset that has experienced credit impairment. Evidence that credit impairment of financial assets has occurred includes the following observable information:

(1) significant financial difficulties of the issuer or debtor;

(2) Breach of contract by the debtor, such as default or delay in payment of interest or principal;

(3) The creditor gives the debtor concessions under economic or contractual considerations relating to the debtor's financial difficulties that would not have been made under any other circumstances;

(4) The debtor is likely to go bankrupt or undergo other financial restructuring;

(5) The financial difficulties of the issuer or debtor that result in the disappearance of an active market for that financial asset;

(6) Purchase or derive a financial asset at a substantial discount that reflects the fact that a credit loss has occurred.

Based on the Group's internal credit risk management, if internal recommendations or externally obtained information indicates that the debtor of a financial instrument cannot fully repay all creditors, including the Group (regardless of any guarantee obtained by the Group), the Group considers this a default event.

Notwithstanding the above assessment, if a contract payment for a financial instrument is overdue for more than 90 days(inclusive), the Group presumes that the financial instrument has defaulted. 11.2.3 Determination of Expected Credit Loss

11.2.3 The Group uses an impairment matrix on a portfolio basis on notes receivable, accounts receivable and other receivables to determine credit losses on relevant financial instruments.

The Group classifies financial instruments into different groups based on common risk characteristics. The common credit risk characteristics adopted by the Group include: type of financial instrument, credit risk rating, type of collateral, date of initial recognition, industry in which the debtor is in, value of collateral relative to financial assets, etc.

For financial assets and lease receivables, the expected credit loss is the present value of the difference between the contractual cash flows due to the Group and the cash flows expected to be collected.

The reflection factors of the Group's methodology for measuring expected credit losses on financial instruments include: an unbiased probability-weighted average amount determined by evaluating a range of possible outcomes; the time value of money; reasonable and well-founded information about past events, current conditions, and projections of future economic conditions that can be obtained at the balance sheet date without unnecessary additional costs or efforts.

11.2.4 Write-down ofFinancial Assets

Where the Group no longer reasonably expects that the contractual cash flows of financial assets will be recovered in whole or in part, the carrying balance of the financial assets will be written down directly. Such writedowns constitute derecognition of the underlying financial assets.

11.3 Transfer ofFinancial Assets

Financial assets that meet one of the following conditions are derecognized: (1) the contractual right to receive cash flows from the financial asset is terminated; (2) the financial asset has been transferred and substantially all of the risks and rewards in the ownership of the financial asset have been transferred to the transferring party; (3) the financial asset has been transferred, and although the Group has neither transferred nor retained substantially all of the risks and rewards in the ownership of the financial asset, it has not retained control over the financial asset.

Where the Group neither transfers nor retains substantially all of the risks and rewards in ownership of a financial asset, and retains control of the financial asset, it will continue to recognize the transferred financial asset to the extent that it continues to be involved in the transferred financial asset and recognize the relevant liabilities accordingly. The Group measures the relevant liabilities as follows: The Group measures that liability as follows:

Where the transferred financial asset is measured at amortized cost, the book value of the related liability equals the book value of the asset in which the Group continues to be involved minus the amortized cost of any rights retained by the Group (if the Group retained such rights due to the transfer) and plus the amortized cost of any obligations assumed by the Group (if the Group assumed such obligations due to the transfer). Such liabilities are not designated as financial liabilities measured at fair value through profit or loss.

Where the transferred financial assets are measured at fair value, the carrying amount of the relevant liabilities is equal to the carrying amount of the financial assets that continue to be involved in the transferred financial assets less the fair value of the rights retained by the Group (if the Group retains the relevant rights as a result of the transfer of financial assets) plus the fair value of the obligations assumed by the Group (if the Group has assumed such obligations as a result of the transfer of financial assets), the fair value of such rights and obligations is the fair value when measured on an independent basis.

If the overall transfer of financial assets satisfies the conditions for derecognition, the difference between the carrying amount of the transferred financial assets at the derecognition date and the consideration received as a resul of the transfer of the financial and the sum of the amount corresponding to the derecognition portion of the accumulated fair value change originally included in other comprehensive income is included in profit or loss for the period. If the Group transfers financial assets that are investments in non-traded equity instruments designated as measured at fair value and changes in which are recognized in other comprehensive income, the accrued gains or losses previously recognized in other comprehensive income are transferred from other comprehensive income and recorded in retained earnings.

If a partial transfer of financial assets satisfies the conditions for derecognition, the carrying amount of the financial assets as a whole before the transfer is apportioned between the derecognized portion and the continuing recognition portion at the respective relative fair value on the transfer date, and the difference between the sum of the amount of the consideration received in the derecognized portion and the amount corresponding to the derecognized portion of the accumulated fair value change originally included in other comprehensive income and the carrying amount of the derecognized portion at the derecognition date is included in profit or loss for the current period. If the Group transfers financial assets that are investments in non-traded equity instruments designated as measured at fair value and changes in which are recognized in other comprehensive income, the accrued gains or losses previously recognized in other comprehensive income are transferred from other comprehensive income and recorded in retained earnings.

If the conditions for derecognition are not met for the overall transfer of financial assets, the Group continues to recognize the transferred financial assets as a whole and recognizes the consideration received as a liability.

11.4 Classification of financial liabilities and equity instruments

The Group classifies the financial instruments or their components as financial liabilities or equity instruments at initial recognition according to the contract terms of the financial instruments issued and their economic essence, not just in legal form, combined with the definitions of financial liabilities and equity instruments.

11.4.1 Classification, recognition and measurement of financial liabilities

Upon initial recognition, financial liabilities are classified as financial liabilities measured at fair value through profit or loss or other financial liabilities.

11.4.1.1 Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value and whose changes are included in current profits and losses include transactional financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities designated as measured at fair value and whose changes are included in current profits and losses. Except for derivative financia liabilities which are listed separately, financial liabilities measured at fair value and whose changes are included in current profits and losses are listed as transactional financial liabilities.

Financial liabilities that meet one of the following conditions, indicate that the purpose of the Group's financial liabilities is transactional:

 The purpose of undertaking relevant financial liabilities is mainly to repurchase in the near future.

The relevant financial liabilities are part of the identifiable financial instrument portfolio under centralized management at the initial recognition, and there is objective evidence to show the actual short-term profit model in the near future.

Related financial liabilities are derivatives. Except for derivatives that meet the definition of financial guarantee contract and derivatives that are designated as effective hedging instruments.

The Group can designate financial liabilities that meet one of the following conditions as financial liabilities measured at fair value and whose changes are included in current profits and losses at initial recognition: (1) The designation can eliminate or significantly reduce accounting mismatch; (2) According to the risk management or investment strategy stated in the formal written documents of the Group, the financial liability portfolio or the portfolio of financial assets and financial liabilities are managed and evaluated on the basis of fair value, and reported to key management personnel within the Group on this basis; (3) Qualified mixed contracts containing embedded derivatives.

Transactional financial liabilities are subsequently measured at fair value, and gains or losses caused by changes in fair value and dividends or interest expenses related to these financial liabilities are included in current profits and losses.

For financial liabilities designated as being measured at fair value and whose changes are included in the current profits and losses, the changes in fair value of the financial liabilities caused by changes in the Group's own credit risk are included in other comprehensive income, and other changes in fair value are included in the current profits and losses. When the financial liabilities are derecognized, the accumulated change of its fair value caused by the change of their own credit risk previously included in other comprehensive income is carried forward to retained income. Dividends or interest expenses related to these financial liabilities are included in the current profits and losses. I treating the effect of changes in the liability's own credit risk in this manner creates or enlarges an accounting mismatch in profit or loss, the Group recognizes all gains or losses on the liability (including those related to changes in its own credit risk) in profit or loss.

11.4.1.2 Other financial liabilities

Other financial liabilities, except those caused by the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets, are classified as financial liabilities measured in amortized cost and subsequently measured in amortized cost. The gains or losses arising from derecognition or amortization are included in the current profits and losses.

If the modification or renegotiation of the contract between the Group and the counterparty does not result in the termination of the recognition of the financial liabilities that are subsequently measured according to amortized cost, but the cash flow of the contract changes, the Group recalculates the book value of the financial liabilities and records the relevant gains or losses into the current profits and losses. The recalculated book value of such financial liabilities is determined by the Group according to the present value of discounted contract cash flow that will be renegotiated or modified according to the original actual interest rate of the financial liabilities. For all costs or expenses arising from the modification or renegotiation of the contract, the Group adjusts the book value of the modified financial liabilities and amortizes them within the remaining term of the modified financial liabilities.

11.4.2 Derecognition of financial liabilities

If all or part of the current obligations of financial liabilities have been discharged, the recognition of financial liabilities or part thereof shall be terminated. If the Group (the Borrower) and the Lender will sign an agreement to replace the original financial liabilities by undertaking new financial liabilities, and the contract terms of the new financial liabilities are substantially different from those of the original financial liabilities, the Group will derecognize the original financial liabilities and recognize the new financial liabilities at the same time.

If all or part of the financial liabilities are derecognized, the difference between the book value of the derecognized part and the consideration paid (including the transferred non-cash assets or the new financial liabilities undertaken) will be included in the current profits and losses.

11.4.3 Equity instruments

Equity instruments refer to contracts that can prove that the Group has residual interests in assets after deducting all liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by the Group are treated as changes in equity. The Group does not recognize changes in the fair value of equity instruments. Transaction costs related to equity transactions are deducted from equity.

The distribution of equity instrument holders by the Group is treated as profit distribution, and the stock dividends paid do not affect the total shareholders' equity.

11.5 Derivatives

Derivatives, including forward foreign exchange contracts, are initially measured at fair value on the contract date and subsequently measured at fair value.

11.6 Offset of financial assets and financial liabilities

When the Group has the legal right to offset the recognized financial assets and financial liabilities, and this lega right is currently enforceable, and the Group plans to settle the financial assets on a net basis or realize the financia assets and pay off the financial liabilities at the same time, the financial assets and financial liabilities are listed in the balance sheet at the amount after offsetting each other. Otherwise, financial assets and financial liabilities are presented separately in the balance sheet without offset.

12. Notes receivable

12.1 Methods for determining and accounting treatment for expected credit losses of notes receivable

For notes receivable with significantly increased credit risk, such as those past due and not accepted or where there is clear evidence that the acceptor is likely unable to fulfill its acceptance obligation, the Group evaluates credit losses on an individual basis. Other notes receivable are evaluated based on their credit risk characteristics as a group.

Any increase or reversal of the provision for expected credit losses on notes receivable is recognized as a credit loss or gain in profit or loss.

12.2 Portfolio types and basis for determining credit loss provisions based on credit risk characteristics

Except for the notes receivable that assess the credit risk individually, the rest of the notes receivable are divided into different portfolios based on their credit risk characteristics:

13. Accounts receivable

13.1 Methods for determining expected credit losses and accounting treatment of accounts receivable

The Group uses an impairment matrix to determine the credit losses of accounts receivable on a portfolio basis. The increase or reversal of the provision for expected credit losses of accounts receivable shall be recognized in profit or loss for the current period as credit impairment losses or gains.

13.2 The type of portfolio and the basis for determining the provision for credit losses based on the credit risk characteristics of the portfolio.

The Group classifies accounts receivable into portfolio1 based on common risk characteristics. The common credit risk characteristics adopted by the Group mainly include the credit tenor and operating conditions of the debtor. 13.3 Calculation method of aging for credit risk characteristics portfolio recognized by aging

13.3Method for calculating aging when determining credit risk characteristic combination

The Group uses both the natural aging of accounts receivable and the overdue aging relative to the credit term as credit risk characteristics, applying an impairment matrix to determine expected credit losses. Aging is calculated from the date of its initial recognition. If the terms and conditions of the accounts receivable are modified but do not result in the derecognition of the accounts receivable, the aging shall be calculated consecutively.

13.4 Determining standard of individual provision according to individual provision for bad debts

The Group individually determines credit losses for accounts receivable where there is evidence of a significant increase in credit risk.

14. Receivables financing

14.1 Determination method and accounting treatment method for expected credit loss of accounts receivable financing

The Group determines credit losses for receivables financing on an individual-asset basis. The Group recognizes the provision for credit losses for receivables financing in other comprehensive income and records any credit loss or gain in profit or loss, without reducing the book value presented in the balance sheet.

14.2 Judgment criteria for individual provision of credit loss reserves based on individual provision

The Group evaluates the financing of corresponding receivables based on the acceptance bank credit status o bank acceptance bills and makes provisions for credit losses.

15. Other receivables

Determination method and accounting treatment of expected credit losses

The Group determines the credit losses on other receivables on a portfolio basis. Any increase or reversal of the provision for expected credit losses on other receivables is recognized as a credit loss or gain in profit or loss.

15.1 Portfolio types and basis for determining credit loss provisions based on credit risk characteristics

The Group divides other receivables into different combinations based on common credit risk characteristics. Common credit risk characteristics used by the Group include initial recognition date, remaining contract term, and length of overdue period.

15.2 Method for calculating aging when determining credit risk characteristic combination

Aging is calculated from the date of its initial recognition. If the terms and conditions of other receivables are modified but do not result in the derecognition of other receivables, the aging shall be calculated consecutively.

16. Inventories

16.1 Inventory Category, Goods Out Pricing Method, Inventory System, Amortization Method for Low-Value Consumables and Packaging

16.1.1 Inventory Category

The Group's inventory mainly includes raw materials, products in process, finished products and materials entrusted for processing. Inventories are initially measured at cost, which includes purchase costs, processing costs, and other expenditures incurred to bring the inventories to their current location and condition.

16.1.2 Method of costing for issued inventories

When inventories are issued, the actual cost is determined using the weighted average method.

16.1.3 Inventory system

The inventory system is perpetual inventory system.

16.1.4 Amortization method of low-value consumables and packaging materials

Turnover materials and low-value consumables are amortized by straight-line method or one-time write-off method.

16.2 Recognition criteria and accrual method of provision for inventory falling price loss

On the balance sheet date, inventories are measured according to the lower of cost and net realizable value. When the net realizable value is lower than the cost, the inventory depreciation provision is withdrawn.

Net realizable value refers to the estimated selling price of inventory minus the estimated cost, estimated sales expenses and related taxes and fees at the time of completion in daily activities. When determining the net realizable value of inventory, it is based on the conclusive evidence obtained, and the purpose of holding inventory and the

influence of events after the balance sheet date are also considered. Inventory depreciation provision is drawn according to the difference between the cost of a single inventory item and its net realizable value.

After the provisions for the inventory depreciation are made, the factors causing any write-down of inventory value have disappeared, leading to the net realizable values of inventories higher than its book value, the amount of writedown shall be resumed and be reversed from the original provision for inventory devaluation with the reversal being included in current profit or loss.

Generally, provisions for inventory depreciation are made on an item-by-item basis.

17. Long-term equity investments

17.1 Criteria for joint control and important influence

Control means that the investor has the power over the investee, enjoys variable returns by participating in the related activities of the investee, and has the ability to influence the amount of returns by using the power over the investee. Joint control refers to the common control of an arrangement according to the relevant agreement, and that the related activities of the arrangement must be unanimously agreed by the participants who share the control rights before making decisions. Significant influence refers to the power to participate in decision-making on the financial and operating policies of the investee, but it cannot control or jointly control the formulation of these policies with other parties. When determining whether the investor can exercise control or significant influence over the investee, the potential voting rights arising from convertible corporate bonds or exercisable warrants currently held by the investor o other parties are taken into account.

17.2 Determination of initial investment cost

For the long-term equity investment obtained by business merger under the same control, the initial investment cost of the long-term equity investment shall be the share of the book value of the owners' equity of the merged party in the consolidated financial statements of the final controlling party on the merger date. The capital reserve shall be adjusted for the difference between the initial investment cost of long-term equity investment and the book value of cash paid, non-cash assets transferred and debts undertaken; If the capital reserve is insufficient to be offset, the retained income shall be adjusted. If equity securities are issued as the merger consideration, the initial investment cost of long-term equity investment shall be the share of the book value of the owners' equity of the merged party in the consolidated financial statements of the final controlling party on the merger date, the share capital shall be the total face value of issued shares, and the capital reserve shall be adjusted according to the difference between the initial investment cost of long-term equity investment and the total face value of the issued shares; If the capital reserve is insufficient to be offset, the retained income shall be adjusted.

For the long-term equity investment obtained from the business merger not under the same control, the initia investment cost of the long-term equity investment shall be the merger cost on the purchase date.

Intermediary expenses such as audit, legal services, evaluation and consultation and other related management expenses incurred by the merging party or the purchaser for business merger are included in the current profits and losses when incurred.

Long-term equity investment obtained by other means except the long-term equity investment formed by business merger shall be initially measured at cost. If the additional investment can exert a significant influence or implement joint control which however does not constitute control on the investee, the long-term equity investment cost is the sum of the fair value of the original equity investment determined in accordance with the Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments plus the new investment cost

17.3 Subsequent measurement and profit and loss recognition method

17.3.1 Long-term equity investment calculated by cost method

The company's financial statements use the cost method to calculate the long-term equity investment in subsidiaries. Subsidiaries refer to the invested entities over which the Group can exercise control.

Long-term equity investment accounted by cost method is measured at the initial investment cost. Add or recover investment to adjust the cost of long-term equity investment. The current investment income is recognized according to the cash dividend or profit declared by the investee.

17.3.2 Long-term equity investment calculated by equity method

The Group's investment in associated enterprises and joint ventures is accounted for by the equity method. An associate is an investee over which the Group has significant influence, and a joint venture is a joint venture arrangement under which the Group has rights to the net assets of the arrangement.

Under the equity method, if the initial investment cost of the long-term equity investment exceeds the share of the fair value of the investee's identifiable net assets at the time of investment, the initial investment cost is not adjusted. If the initial investment cost is less than the fair value share of the identifiable net assets of the investee, the difference shall be included in the current profits and losses, and the cost of long-term equity investment shall be adjusted.

When accounting by the equity method, the investment income and other comprehensive income are recognized respectively according to the share of the net profit and loss and other comprehensive income realized by the investee, and the book value of long-term equity investment is adjusted; The share is calculated according to the profit or cash dividend declared by the investee, and the book value of long-term equity investment is reduced accordingly; For othe changes in the owners' equity of the investee except the net profit and loss, other comprehensive income and profit distribution, the book value of the long-term equity investment shall be adjusted and included in the capital reserve. When recognizing the share of the net profit and loss of the investee, the net profit of the investee shall be adjusted and recognized based on the fair value of the identifiable assets of the investee at the time of investment. If the accounting policies and accounting periods adopted by the investee are inconsistent with those of the Company, the financial statements of the investee shall be adjusted according to the accounting policies and accounting periods of the Company, so as to recognize the investment income and other comprehensive income. For the transactions between the Group and the associated enterprises and joint ventures, if the assets invested or sold do not constitute business, the unrealized internal transaction gains and losses shall be offset by the portion belonging to the Group according to the proportion enjoyed, and the investment gains and losses shall be recognized on this basis. However, the unrealized internal transaction losses between the Group and the investee belong to the impairment losses of the transferred assets and shall not be offset.

When recognizing the share of the net loss of the investee, the book value of the long-term equity investment and other long-term rights and interests that substantially constitute the net investment of the investee shall be written down to zero. In addition, if the Group is obligated to bear additional losses to the investee, the estimated liabilities will be recognized according to the expected obligations and included in the current investment losses. If the investee realizes the net profit in the future, the Group will resume the recognition of the income share after the income share makes up for the unrecognized loss share.

17..4 Disposal of long-term equity investment

When disposing of long-term equity investment, the difference between its book value and the actual purchase price is included in the current profits and losses. If a long-term equity investment has been accounted for using the equity method and the remaining equity after disposal is still accounted for using the equity method, any other comprehensive income previously recognized under the equity method is treated on the same basis as if the investee had directly disposed of the related assets or liabilities, and is transferred proportionately. Owners' equity recognized by changes in other owners' equity of the investee except net profit and loss, other comprehensive income and profit distribution shall be carried forward to current profits and losses in proportion. If a long-term equity investment is accounted for using the cost method and the remaining equity after disposal continues to be accounted for using the cost method, any other comprehensive income recognized before the Group gained control, under either the equity method or the accounting standards for recognizing and measuring financial instruments, is treated on the same basis as if the investee had directly disposed of the related assets or liabilities, and is transferred proportionately. Other changes in owners' equity other than net profit or loss, other comprehensive income and profit distribution in net asset of the investee accounted for and recognized by using the equity method shall be carried forward to the current profit or loss.

Where the Group loses the control over the investee due to the disposal of part of the equity investments, when it prepares separate financial statements, the remaining equity after disposal that can commonly control or have significant influence on the investee will be measured under the equity method, and the remaining equity shall be deemed to have been adjusted under the equity method on acquisition. If the remaining equity after disposal cannot be jointly controlled or exert significant influence on the investee, it shall be accounted for according to the relevant provisions of the standards for the recognition and measurement of financial instruments, and the difference between its fair value and book value on the date of control loss shall be included in the current profits and losses. For othe comprehensive income recognized by the Group before it gains control of the investee, when it loses control of the investee, it shall be treated on the same basis as the direct disposal of related assets or liabilities by the investee Changes in owners' equity in the net assets of the investee, except net profit and loss, other comprehensive income and profit distribution, shall be carried forward to current profits and losses when it loses control of the investee. If the remaining equity after disposal is accounted by the equity method, other comprehensive income and other owners equity will be carried forward in proportion; If the remaining equity after disposal is changed to accounting treatmen according to the recognition and measurement standards of financial instruments, all other comprehensive income and other owners' equity will be carried forward.

If the Group loses joint control or significant influence on the investee due to the disposal of some equity investments, the remaining equity after disposal shall be accounted for according to the recognition and measuremen standards of financial instruments, and the difference between its fair value and book value on the date of joint control loss or significant influence shall be included in the current profits and losses. Other comprehensive income recognized by the original equity investment due to accounting by the equity method shall be accounted for on the same basis as the direct disposal of relevant assets or liabilities by the investee when the equity method is terminated. All the owners' equity recognized by the investee due to changes in other owners' equity except net profit and loss, other comprehensive income and profit distribution shall be carried forward to the current investment income when the equity method is terminated.

The Group disposes of the equity investment in its subsidiaries step by step through multiple transactions until it loses control. If the above transactions belong to a package transaction, each transaction will be treated as a transaction that disposes of the equity investment in its subsidiaries and loses control. Before losing control, the difference between the price of each disposal and the book value of the long-term equity investment corresponding to the disposed equity will be recognized as other comprehensive income, and then carried forward to the current profits and losses when it loses control. Provision for inventory falling price loss is generally made on the basis of a single inventory item.

18. Investment properties

Measurement mode of investment properties

Measurement by cost method

Depreciation and amortization methods

Investment real estate refers to real estate held to earn rent or capital appreciation, or both, including rented houses and buildings.

Investment real estate is initially measured at cost. Subsequent expenditures related to investment real estate are included in the cost of investment real estate if the economic benefits related to the asset are likely to flow in and the cost can be measured reliably. Other subsequent expenditures are included in the current profits and losses when incurred.

The Group uses the cost model for subsequent measurement of investment property and provides for depreciation on a straight-line basis over its service life. The depreciation method, useful life, estimated residual value, and annual depreciation rates for each category of investment property are as follows:

When the investment real estate is disposed of, or permanently withdrawn from use, and it is not expected to obtain economic benefits from its disposal, the recognition of the investment real estate will be terminated.

The difference between the disposal income from the sale, transfer, scrapping or damage of investment real estate after deducting its book value and related taxes is included in the current profits and losses.

19. Fixed assets

(1) Recognition conditions

Fixed assets refer to tangible assets held for producing goods, providing services, leasing or management, with a service life of more than one fiscal year. Fixed assets are recognized only when the economic benefits related to them are likely to flow into the Group and their costs can be measured reliably. Fixed assets are initially measured at cost.

Subsequent expenditures related to fixed assets shall be included in the cost of fixed assets if the economic benefits related to the fixed assets are likely to flow in and the cost can be measured reliably, and the book value of the replaced part shall be derecognized. Other subsequent expenditures are included in the current profits and losses when incurred.

(2) Depreciation method

Starting from the month subsequent to the date when the fixed-assets are ready for their intended use, depreciation is accrued over the service life using the straight-line method. The depreciation method, depreciation life, estimated residual value rate and annual depreciation rate of various fixed assets are detailed in the table above.

Estimated net residual value refers to the amount obtained by the Group from the disposal of the fixed assets at present after deducting the estimated disposal expenses, assuming that the estimated service life of the fixed asset has expired and the fixed asset is in the expected state at the end of its service life.

Other explanations

When the fixed assets are disposed of or it is expected that no economic benefits can be generated through the use or disposal, the fixed assets is derecognized. The difference between the disposal income from the sale, transfer, scrapping or damage of fix assets after deducting its book value and related taxes is included in the current profits and losses.

At least at the end of the year, the Group will review the service life, estimated net salvage and depreciation method of fixed assets, and if there is any change, it will be treated as a change in accounting estimate. 20. Construction in progress

20. Construction in progress

The construction in progress is measured at actual cost, which includes various project expenditures incurred during the construction period, capitalized borrowing costs before the project reaches working condition for intended use, and other related costs. No depreciation is allowed for construction in progress.

When an in-progress construction project reaches its intended usable state, its cost shall be transferred to fixed assets at the actual cost. If the project has reached its intended usable state but the final accounting settlement has not yet been completed, it shall initially be recorded as fixed assets at an estimated value; upon completion of the fina accounting settlement, the original estimated value shall be adjusted to reflect the actual cost, but any previously recognized depreciation shall not be adjusted. The criteria and timing for transferring various types of in-progress construction projects to fixed assets are as follows:

21. Borrowing costs

Borrowing costs that can be directly attributed to the purchase, construction or production of assets that meet the capitalization conditions will be capitalized when the asset expenditure has occurred, the borrowing costs have occurred, and the necessary purchase, construction or production activities to make the assets reach the predetermined serviceable or saleable state have begun; Capitalization shall stop when the assets that meet the capitalization conditions purchased, constructed or produced reach the predetermined serviceable state or saleable state. The remaining borrowing costs are recognized as expenses in the current period.

For specialized borrowings, the capitalization amount is based on the actual interest expenses incurred in the current period, after deducting the interest income earned from unused borrowing funds deposited in the bank or investment income earned from temporary investments; General borrowings shall be determined by multiplying the weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special borrowings by the capitalization rate of used general borrowings, and on this basis, the capitalization amount is determined. The capitalization rate is calculated and recognized as per the weighted average interest rate of genera borrowing.

22. Intangible assets

22.1 Service life and basis for determination, estimates, amortization method or review procedure

Intangible assets include land use rights, software and patent rights.

Intangible assets are initially measured at cost. Intangible assets with limited service life shall be amortized by straight-line method in equal installments within their expected service life from the time they are available for use. Intangible assets with uncertain service life shall not be amortized. The amortization method, service life and estimated net salvage of various intangible assets are as follows:

At the end of the period, the service life and amortization method of intangible assets with limited service life shall be reviewed and adjusted if necessary.

22.2 Scope of R&D expenditures and related accounting treatments

Expenditure in the research stage is included in the current profits and losses when incurred.

Expenditures in the development stage are recognized as intangible assets if they meet the following conditions at the same time. Expenditures in the development stage that cannot meet the following conditions are included in the current profits and losses:

(1) It is technically feasible to complete the intangible assets so that they can be used or sold;

(2) Having the intention to complete the intangible assets and use or sell them;

(3) The ways in which intangible assets generate economic benefits, including the ability to prove that the products produced by using the intangible assets exist in the market or the intangible assets themselves exist in the market, and the intangible assets will be used internally, which can prove their usefulness;

(4) Having sufficient technical, financial and other resources to support the development of the intangible assets, and having the ability to use or sell the intangible assets;

(5) Expenditure attributable to the development stage of the intangible assets can be reliably measured.

If it is impossible to distinguish between research stage expenditure and development stage expenditure, all the R&D expenditures incurred shall be included in the current profits and losses. The cost of the intangible assets formed by internal development activities only includes the total expenditure incurred from the time when the capitalization conditions are met to the time when the intangible assets reach the intended use. The expenses recognized in profit or loss before meeting the capitalization conditions during the development for the same intangible asset will not be adjusted.

The scope of R&D expenditure includes wages, salaries, and welfare expenses of personnel directly engaged in R&D activities, materials, fuel and power costs directly consumed in R&D activities, and depreciation expenses of instruments and equipment for R&D activities, etc.

23. Impairment of long-term assets

On each balance sheet date, the Group checks whether there is any indication that long-term equity investments, investment properties measured by the cost model, fixed assets, construction in progress, right-of-use assets and intangible assets with a definite service life may have impairment. If these assets show signs of impairment, the recoverable amount is estimated. Intangible assets with uncertain service life and intangible assets that have not yet reached the serviceable state are tested for impairment every year, regardless of whether with signs of impairment.

Estimating the recoverable amount of an asset is based on a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of the asset group is determined based on the asset group to which the asset belongs. The recoverable amount is the higher of the net amount of the fair value of the asset or asset group minus the disposal expenses or the present value of its expected future cash flow.

If the recoverable amount of an asset is lower than its book value, the asset impairment provision shall be accrued according to the difference and included in the current profits and losses.

Goodwill shall be tested for impairment at least at the end of each year. When testing the impairment of goodwill, it shall be conducted in combination with the related asset group or asset group portfolio. That is, from the purchase date, the book value of goodwill is allocated to the asset group or asset group portfolio that can benefit from the synergistic effect of business merger in a reasonable way. If the recoverable amount of the asset group or asset group portfolio containing the allocated goodwill is lower than its book value, the corresponding impairment loss will be recognized. The amount of impairment loss will firstly deduct the book value of goodwill allocated to the asset group or asset group portfolio, and then deduct the book value of other assets according to the proportion of the book value of assets other than goodwill in the asset group or asset group portfolio.

Once the above-mentioned asset impairment losses are recognized, they will not be reversed in future accounting periods.

24. Long-term deferred expenses

Long-term deferred expenses refer to the expenses that have occurred but should be borne by the current period and subsequent periods with an amortization period of more than one year. Long-term deferred expenses shall be amortized evenly by stages during the expected benefit period.

25. Contract liabilities

Contractual liabilities refer to the obligation of the Group to transfer goods or services to customers fo consideration received or receivable from customers. Contract assets and liabilities under the same contract are listed on a net basis.

26. Employee compensation

(1) Accounting treatments of short-term compensation

During the accounting period when employees provide services for the Group, the Group recognizes the actua short-term remuneration as a liability, and records it into the current profits and losses or related asset costs. The employee welfare expenses incurred by the Group are included in the current profits and losses or related asset costs according to the actual amount when actually incurred. If employee welfare expenses are non-monetary benefits, they shall be measured at fair value.

For the medical insurance premiums, work-related injury insurance premiums, maternity insurance premiums and other social insurance premiums and housing provident funds paid by the Group for employees, as well as the labo union funds and employee education expenses withdrawn by the Group in accordance with the provisions, the corresponding employee compensation amount shall be calculated and determined according to the prescribed accrual basis and accrual ratio during the accounting period when employees provide services for the Group, and the corresponding liabilities shall be recognized and included in the current profit or loss or related asset costs.

(2) Accounting treatments of post-employment benefits

Post-employment benefits are all defined contribution plans.

During the accounting period when employees provide services for the Group, the amount payable calculated according to the set deposit plan is recognized as a liability, and included in the current profits and losses or related asset costs.

(3) Accounting treatments of dismissal benefits

If the Group provides dismissal benefits to employees, the employee compensation liabilities arising from the dismissal benefits shall be recognized at the earlier of the following two dates, and included in the current profits and losses: when the Group cannot unilaterally withdraw the dismissal benefits provided by the plan to terminate labo relations or the proposal to cut back; When the Group recognizes the costs or expenses related to the reorganization involving the payment of dismissal benefits.

(4) Accounting treatments of other long-term employee benefits

None

27. Estimated liabilities

When the obligation related to the contingency such as product quality guarantee is a current obligation of the Group, and the performance of such obligation is likely to result in the outflow of economic benefits, and the amount of such obligation can be measured reliably, it is recognized as estimated liabilities.

On the balance sheet date, considering the risk, uncertainty and time value of money related to contingencies, the estimated liabilities are measured according to the best estimate of the expenditure required to fulfill the relevant current obligations. If the time value of money is significant, the best estimate is determined by the discounted amount of expected future cash outflow.

28. Revenue

28.1Accounting policies adopted for revenue recognition and measurement disclosed by business type

The Group has fulfilled its contractual obligation, that is, when the customer obtains the control right of the relevant goods or services, the income will be recognized according to the transaction price allocated to the performance obligation. Performance obligation refers to the commitment of the Group to transfer clearly distinguishable goods or services to customers in the contract. Transaction price refers to the amount of consideration that the Group is expected to receive due to the transfer of goods or services to customers, which however, does not include the money received on behalf of third parties and the money that the Group expects to return to customers.

The Group evaluates the contract on the start date of the contract, identifies the individual performance obligations contained in the contract, and determines whether each individual performance obligation is performed within a certain period of time or at a certain point of time. If one of the following conditions is met, it belongs to the performance obligation within a certain period of time, and the Group recognizes the income within a certain period of time according to the performance progress: (1) The customer obtains and consumes the economic benefits brought by the performance of the Group; (2) The customer can control the goods under construction during the performance of the Group; (3) The goods produced during the performance of the Group have irreplaceable uses, and the Group has the right to receive payment for the performance accumulated to date throughout the contract period. Otherwise, the Group recognizes the revenue at the point when the customer obtains the right of control of the relevant goods or services.

For goods sold to customers, the Group recognizes income when the control of the goods is transferred, that is, when the goods are delivered to the designated place of the other party and signed by the other party. The Group recognizes income in the process of providing property and leasing services.

Transaction prices refer to the amount of consideration that the Group is expected to be entitled to receive as a result of the transfer of goods or services to customers, but does not include the amount received on behalf of third parties and the amount expected to be returned to customers by the Group. In determining the transaction price, the Group takes into account the impact of factors such as variable consideration, significant financing elements in the contract, non-cash consideration, consideration payable to customers, etc.

If the contract contains two or more performance obligations, the Group will allocate the transaction price to each individual performance obligation on the contract start date according to the relative proportion of the separate selling price of the goods or services promised by each individual performance obligation. However, if there is conclusive evidence that the contract discount or variable consideration is only related to one or more (but not all) performance obligations in the contract, the Group will allocate the contract discount or variable consideration to one or more related performance obligations. Separate selling price refers to the price at which the Group sells goods or services to customers separately. If the separate selling price cannot be directly observed, the Group comprehensively considers all relevant information that can be reasonably obtained, and estimates the separate selling price by using observable input values to the maximum extent.

For sales with return clauses, when the customer obtains the control right of the relevant goods, the Group recognizes the income according to the amount of consideration expected to be charged due to the transfer of goods to the customer (that is, excluding the amount expected to be refunded due to sales return), and recognizes the liabilities according to the amount expected to be refunded due to sales return; At the same time, according to the book value of the expected returned goods at the time of transfer, the balance after deducting the expected cost o recovering the goods (including the loss of the value of the returned goods) is recognized as an asset, and the net carry-over cost of the above assets is deducted according to the book value of the transferred goods at the time o transfer.

For sales with quality assurance clauses, if the quality assurance provides a separate service in addition to assuring customers that the goods or services sold meet the established standards, the quality assurance constitutes a single performance obligation. Otherwise, the Group shall handle the quality assurance responsibility in accordance with the Accounting Standards for Business Enterprises No.13-Contingencies.

According to whether the Group has control over the goods or services before transferring them to customers, the Group judges whether it is the main responsible person or the agent when engaging in transactions. If the Group can control the goods or services before transferring them to customers, the Group is the main responsible person, and the income is recognized according to the total consideration received or receivable; Otherwise, the Group, as an agent, recognizes income according to the expected amount of commission or handling fee, which is determined according to the net amount of the total consideration received or receivable after deducting the price payable to other interested parties.

If the Group receives the payment for the sale of goods or services from customers in advance, it will firs recognize the payment as a liability, and then change it to income when the relevant performance obligations are fulfilled. When the advance payment of the Group does not need to be returned, and the customer may give up all or part of its contractual rights, if the Group is expected to be entitled to the amount related to the contractual rights given up by the customer, the above amount will be recognized as income in proportion according to the mode of the customer's exercise of contractual rights; Otherwise, the Group will only convert the relevant balance of the above liabilities into income when it is extremely unlikely that the customer will demand to perform the remaining performance obligations.

Different revenue recognition methods and measurement methods involved in the use of different business models for similar business

29. Government subsidies

Government subsidies refer to the monetary assets and non-monetary assets obtained by the Group from the government free of charge. Government subsidies are recognized when they can meet the conditions attached to government subsidies and can be received.

If government subsidies are monetary assets, they shall be measured according to the amount received or receivable.

29.1Judgment basis and accounting treatment method of government subsidies related to assets

As long-term assets can be formed in the production line subsidies and equipment subsidies of the Group's government subsidies, these government subsidies are government subsidies related to assets.

Government subsidies related to assets are recognized as deferred income, and are included in the current profits and losses in installments according to the straight-line method within the service life of the related assets.

29.2Judgment basis and accounting treatment method of government subsidies related to income

As the Group's government subsidies, such as industry development support funds, enterprise development support funds and tax subsidies, cannot form long-term assets, these government subsidies are government subsidies related to income.

Government subsidies related to income, if used to compensate related costs and losses in future periods, will be recognized as deferred income, and are included in the current profits and losses during the period when related costs or expenses are recognized; if used to compensate the related costs and losses that have occurred, will be directly included in the current profits and losses.

Government subsidies related to the daily activities of the Group are included in other income according to the nature of economic business. Government subsidies unrelated to the daily activities of the Group are included in nonoperating income.

When the confirmed government subsidy needs to be returned, if there is a relevant deferred revenue balance, the relevant deferred income book balance will be offset, and the excess will be included in the current profits and losses; If there is no relevant deferred income, it will be directly included in the current profits and losses.

30. Deferred tax assets/deferred tax liabilities

Income tax expenses include current income tax and deferred income tax.

30.1 Current income tax

On the balance sheet date, the current income tax liabilities (or assets) formed in the current and previous periods shall be measured by the expected income tax payable (or refunded) calculated in accordance with the provisions of the tax law.

30.2 Deferred income tax assets and deferred income tax liabilities

For the difference between the book values of some assets and liabilities and their tax basis, and the temporary difference between the book values of items that are not recognized as assets and liabilities but can be determined in tax basis according to the provisions of the tax law and tax basis, the balance sheet liability method is adopted to recognize deferred income tax assets and deferred income tax liabilities.

In general, all temporary differences are recognized as related deferred income tax. However, for deductible temporary differences, the Group recognizes related deferred income tax assets to the extent that it is likely to obtain taxable income to offset the deductible temporary differences. In addition, for the temporary differences related to the initial recognition of goodwill and the initial recognition of assets or liabilities arising from transactions that are neither business merger nor affect accounting profits and taxable income (or deductible losses), the relevant deferred income tax assets or liabilities are not recognized.

For deductible losses and tax deductions that can be carried forward to future years, the corresponding deferred income tax assets are recognized to the extent that it is likely to obtain future taxable income for deducting deductible losses and tax deductions.

The Group recognizes deferred income tax liabilities arising from taxable temporary differences related to investments in subsidiaries, associated enterprises and joint ventures, unless the Group can control the time when the temporary differences are reversed, and the temporary differences are unlikely to be reversed in the foreseeable future. For deductible temporary differences related to the investments of subsidiaries, associated enterprises and joint ventures, the Group recognizes the deferred income tax assets only when the temporary differences are likely to be reversed in the foreseeable future and the taxable income used to offset the deductible temporary differences is likely to be obtained in the future.

On the balance sheet date, deferred income tax assets and deferred income tax liabilities shall be measured according to the applicable tax rate during the expected recovery of related assets or settlement of related liabilities.

Except that the current income tax and deferred income tax related to transactions and events directly included in other comprehensive income or shareholders' equity are included in other comprehensive income or shareholders equity, and the deferred income tax arising from business merger adjusts the book value of goodwill, the remaining current income tax and deferred income tax expenses or gains are included in the current profits and losses. On the balance sheet date, the book value of deferred income tax assets shall be rechecked.

On the balance sheet date, the book value of the deferred tax assets shall be reviewed. If it is likely that sufficient taxable income will not be available in the future to offset the benefits of the deferred tax assets, the book value of the deferred tax assets shall be written down. When it is likely to earn sufficient taxable income, the written down amount is reversed.

30.3 Offset of income tax

When the Group has the legal right to settle on a net basis and intends to settle on a net basis or acquire assets and pay off liabilities at the same time, the Group's current income tax assets and current income tax liabilities are presented on an offset net basis.

When the taxpayer has the legal right to settle the current income tax assets and liabilities on a net basis, and the deferred income tax assets and liabilities are related to the income tax levied by the same tax collection department on the same taxpayer or to different taxpayers, but in the future, the taxpayers involved intend to settle the current income tax assets and liabilities on a net basis, or acquire assets and pay off liabilities at the same time, the Group's deferred income tax assets and liabilities are presented on an offset net basis.

31. Lease

31.1Accounting treatments for leases in which the Company is the lessee

31.1.1Split of lease

If the contract contains one or more leased and non-leased parts at the same time, the Group will split each separate leased and non-leased part and allocate the contract consideration according to the relative proportion of the sum of the separate prices of each leased part and the non-leased part.

31.1.2Right-to-use assets

Except for short-term leases, the Group recognizes the right-to-use assets on the start date of lease term. The start date of lease term refers to the start date when the lessor provides the leased assets for the use of the Group. The right-to-use assets is initially measured according to the cost. The cost includes:

 Initial measurement amount of lease liabilities;

For the lease payment paid on or before the start date of the lease term, if there are lease incentives, deduct the amount related to the lease incentives enjoyed;

 Initial direct expenses incurred by the Group;

The estimated costs incurred by the Group for dismantling and removing the leased assets, restoring the premises where the leased assets are located or restoring the leased assets to the state agreed in the lease clauses.

The Group refers to the depreciation provisions in Accounting Standards for Business Enterprises No.4-Fixed Assets, and accrues depreciation for right-to-use assets. If the Group can reasonably determine that it has acquired the ownership of the leased assets at the expiration of the lease term, the right-to-use assets will be depreciated within the remaining service life of the leased assets. If it cannot be reasonably determined that the ownership of the leased assets can be obtained at the expiration of the lease term, depreciation shall be accrued during the lease term or the remaining service life of the leased assets, whichever is shorter.

According to the Accounting Standards for Business Enterprises No.8-Impairment of Assets, the Group determines whether the right-to-use assets have been impaired, and carries out accounting treatment for the identified impairment losses.

31.1.3 Lease liabilities

Except for short-term leases, the Group initially measures the lease liabilities on the start date of lease term according to the present value of the unpaid lease payment on that date. When calculating the present value of the lease payment, the Group uses the lease interest rate as the discount rate.

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

Fixed payment amount and substantial fixed payment amount. If there is lease incentive, the relevant amount of lease incentive shall be deducted;

 Variable lease payment amount depending on index or ratio;

 The exercise price of the option reasonably determined by the Group to be exercised;

The amount to be paid to terminate the lease when the lease term reflects that the Group will exercise the option;

 The amount expected to be paid according to the residual value of the guarantee provided by the Group.

After the start of the lease term, the Group calculates the interest expense of the lease liabilities in each period of the lease term at a fixed periodic interest rate, and includes it in the current profits and losses or related asset costs.

After the commencement of the lease term, if the following circumstances occur, the Group will re-measure the lease liabilities and adjust the corresponding right-to-use assets. If the book value of the right-to-use assets has been reduced to zero, but the lease liabilities still need to be further reduced, the Group will include the difference in the current profits and losses:

If the lease term changes or the evaluation result of the purchase option changes, the Group will re-measure the lease liabilities according to the present value calculated by the changed lease payment amount and the revised discount rate;

If the estimated payable amount according to the guarantee residual value or the index or proportion used to determine the lease payment changes, the Group will re-measure the lease liabilities according to the present value calculated by the changed lease payment amount and the original discount rate.

31.1.4 As the judgment basis and accounting treatment method for the lessee to simplify the treatment ofthe short-term lease

For the short-term lease of some factories and some rented warehouses, the Group chooses not to recognize the right-to-use assets and lease liabilities. Short-term lease refers to the lease that does not exceed 12 months and does not include the option to purchase on the start date of the lease term. The Group will charge the lease payment fo short-term lease to the current profits and losses or related asset costs in accordance with the straight-line method in each period of the lease term

31.1.5 Lease change

If the lease changes and the following conditions are met at the same time, the Group will carry out accounting treatment on the lease change as a separate lease:

The lease modification expands the scope of the lease by adding one or more right of use of the leased assets;

The increased consideration is equivalent to the individual price of the expanded part of the lease scope adjusted according to the contract situation.

If the lease modification is not accounted for as a separate lease, on the effective date of the lease modification, the Group re-apportions the consideration of the modified contract, re-determines the lease term, and re-measures the lease liabilities at the present value calculated according to the modified lease payments and the revised discount rate.

If the lease scope is reduced or the lease term is shortened due to lease change, the Group shall correspondingly reduce the book value of the right-to-use assets, and include the related gains or losses of partial or full termination of lease in the current profits and losses. If other lease changes lead to the re-measurement of lease liabilities, the Group will adjust the book value of the right-to-use assets accordingly.

31.2 Accounting treatments for leases in which the Company is the lessor

31.2.1 Split of lease

If the contract contains both leased and non-leased parts, the Group will allocate the contract consideration according to the provisions of the Accounting Standards for Business Enterprises Revenues on transaction price allocation, and the basis of allocation is the separate prices of the leased part and the non-leased part.

31.2.2 Classification and accounting treatment for rental housing leases

A lease that essentially transfers almost all the risks and rewards related to the ownership of the leased assets is a financial lease. Other leases except financing lease are operating leases.

31.2.2.1 The Group as a lessor records the operating lease business

During each period of the lease term, the Group adopts the straight-line method to recognize the lease receipts from operating lease as rental income. The initial direct expenses incurred by the Group in connection with operating leases are capitalized when incurred, apportioned on the same basis as rental income recognition during the lease term, and included in current profits and losses in installments.

The variable lease receipts related to operating leases obtained by the Group, which are not included in the lease receipts, are included in the current profits and losses when actually incurred.

31.2.3 Lease change

If the operating lease is changed, the Group will account for it as a new lease from the effective date of the change, and the advance or receivable lease receipts related to the lease before the change will be regarded as the receipt amount of the new lease.

32. Major changes in accounting policies and accounting estimates

(1) Major changes in accounting policies

☑Applicable ☐Not applicable

(2) Major changes in accounting estimates

□Applicable ☑Not applicable

(3) Adjustments of relevant items of financial statements at the beginning of the year in the year of initia implementation of new accounting standards from 2026

□Applicable ☑Not applicable

VI. Taxation

1. Main tax types and tax rates

If there are taxpayers with different corporate income tax rates, please disclose with an explanation

2. Tax incentives

（1）In 2025, SAPO Photoelectric, a subsidiary of the Company, was jointly recognized as Industry and Information Technology Bureau of Shenzhen Municipality, Shenzhen Finance Bureau and Shenzhen Tax Service, State Taxation Administration, respectively, with a certification period of 3 years, and the certificate numbers of GR202544204289 respectively. It shall apply the preferential tax policies for high-tech enterprises within three years after it is recognized as a high-tech enterprise, and pay enterprise income tax at the rate of 15% after being filed by the competent tax bureau.

（2）The Company's subsidiaries, Shenzhen Meibainian Garment Co., Ltd., Shenzhen Lisi Industria Development Co., Ltd., Shenzhen Shenfang Sungang Property Management Co., Ltd. and Shenzhen Shenfang Property Management Co., Ltd. are qualified small low-profit enterprises. According to the Announcement of the Ministry of Finance and the State Taxation Administration on Further Implementing Preferential Policies for Corporate Income Tax of Small and Micro Enterprises (No. 13, 2022) and the Announcement of the Ministry of Finance and the State Taxation Administration on Preferential Policies for Corporate Income Tax of Small and Micro Enterprises and Individual Industrial and Commercial Households (No. 6, 2023), the part of the annual taxable income not exceeding RMB 3 million will be included in the taxable income after deducting 25%, and corporate income tax will be paid at a tax rate of 20%. (3)According to the relevant provisions of the Notice of the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration on the Import Tax Policies for Supporting the Development of the New Display Device Industry (CGS

（3）In accordance with the relevant provisions of the Notice of the State Administration of Taxation of the General Administration of Customs of Ministry of Finance on Import Tax Policies for Supporting the Development o the New Display Device Industry (No. 19[2021]Cai Guan Shui ), SAPO Photoelectric , a subsidiary of the Company, meets the relevant conditions and enjoys the policy of exemption from import duties for related products from January 1, 2021 to December 31, 2030.

（4）According to the Announcement on the Policy of Additional Value-Added Tax Deduction for Advanced Manufacturing Enterprises (CZBSWZJGG [2023] No.43) issued by the Ministry of Finance and the State Taxation Administration in September 2023, from January 1, 2023 to December 31, 2027, advanced manufacturing enterprises are allowed to deduct the value-added tax payable by 5% of the deductible input tax for the current period. SAPO Photoelectric, a subsidiary of the Company, meets the relevant conditions and enjoyed the policy of additiona deduction of value-added tax (VAT) in H1, 2026.

3. Others

Note 1: See "2. Tax preferences" for details.

Note 2: according to the Inland Revenue Ordinance of Hong Kong, SATO (Hong Kong) Limited is subject to a twotier profits tax system. The first HKD 2 million of taxable profits shall taxed at a rate of 8.25%, and the profits generated thereafter shall be taxed at a rate of 16.5%.

Note 3: See "2. Tax preferences" for details.

VII. Notes to items in consolidated financial statements

1. Monetary funds

In RMB

Other explanations

1. On June 30, 2026, the bank deposits include interest income from current deposits, agreement deposit and 7- day notice deposits amounting to RMB 239,998.72 (on December 31, 2025: RMB 21,498.92).

2. On June 30, 2026, the Group's other monetary funds included RMB 8,799,040.80 (December 31, 2025: RMB 684,860.26) restricted in use due to account freezing, and RMB6,920,565.27 (December 31, 2025: RMB 536.39) deposits for bills and letters of credit.

1. Monetary funds In RMB Rewards for the key management personnel Items Ending balance Beginning balance Cash on hand 8,507.96 15,510.21 Bank deposits 502,126,048.66 449,263,543.52 Other monetary funds 15,719,606.07 685,396.65 Deposits with finance companies 0.00 0.00 Tota 517,854,162.69 449,964,450.38 Other explanations

2. Financial assets held for trading

In RMB

3. Notes receivable

(1) Presentation of notes receivable by category

In RMB

(2) Disclosure by provision method for bad debts

In RMB

Name of category of provision for bad debts on a combination basis: banker's acceptance bill In RMB

Explanation on the basis for determining the combination:

If the provision for bad debts of notes receivable is made in accordance with the general model of expected credit losses:

□Applicable ☑Not applicable

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

Provision for bad debts for the current period:NoneSignificant amounts of recovered or reversed provision for bad debts for the current period:

□Applicable ☑Not applicable

(4) The Company's pledged notes receivable at the end of the period

At the end of the reporting period, the Group did not hold any 应收 notes pledged as collateral.

(5) Notes receivable endorsed or discounted by the Company and not yet due on the balance sheet date at the end of the period

In RMB

(6) Actual write-off of notes receivable for the current period

At end of the reporting period, the Group had no actual write-off of notes receivable.

4. Accounts receivable

(1) Disclosure by aging

In RMB

(2) Disclosure by provision method for bad debts

In RMB

Name of category of provision for bad debts on an individual basis: provision for bad debts on an individual basis

In RMB

Name of category of provision for bad debts on a combination basis: portfolio 1 In RMB

Explanation on the basis for determining the combination:

Based on the industry nature and credit status of customers, the degree of credit risk varies with the number of days overdue, so different credit loss rates are adopted for customers with different days overdue.

Name of category of provision for bad debts on a combination basis: portfolio 2

In RMB

Explanation on the basis for determining the combination:

Group customers other than SAPO Photoelectric are mainly leasing customers, and the provision for credit impairment is made according to the aging method combination.

If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses:

□Applicable ☑Not applicable

As of June 30,2026, a provision for bad debts was recognized in accordance with the Simplified Expected Credit Loss Model.

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

Provision for bad debts for the current period:

In RMB

Significant amounts of recovered or reversed provision for bad debts for the current period:

In RMB

There was no significant amount of provision for bad debts recovered or reversed during the reporting period.

(4).Actual write-off of accounts receivable for the current period

In RMB

Including write-off of important accounts receivable:

In RMB

Explanation on write-off of accounts receivable:

There were no accounts receivable with actual write-off during the reporting period.

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

In RMB

5. Receivables financing

(1) Presentation of receivables financing by category

In RMB

(2) Disclosure by provision method for bad debts

Recognize a bad debt provision using the expected credit loss model:not have

Basis for stage and bad debt provision accrual ratio:not have

Explanation of the significant change in the carrying amount of receivables financing resulting from changes in loss provisions for the current period:not have

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

The Group believes that the bank acceptance bills it holds are issued by banks with high credit ratings and carry no significant credit risk; therefore, no provision for bad debts has been made.

(4) The Company's pledged receivables financing at the end of the period

None

(5) Receivables financing endorsed or discounted by the Company and not yet due on the balance sheet date at the end of the period

At end of the reporting period, the Company had no receivables financing with actual write-off.

(7) Increases/decreases and fair value changes of receivables financing for the current period

None

(8) Other explanations

At the end of the reporting period, the Group had no pledged receivables financing.

6. Other receivables

In RMB

(1) Interest receivable

1) Classification of interest receivable

None

2) Significant overdue interest

None

3) Disclosure by provision method for bad debts

□Applicable ☑Not applicable

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

None

5) Actual write-off of interest receivable for the current period

None

(2) Dividends receivable

1) Classification of dividends receivable

In RMB

2) Significant dividends receivable with aging over 1 year

None

3) Disclosure by provision method for bad debts

None

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

None

5) Actual write-off of dividends receivable in the current period

There were no dividends receivable with actual write-off during the reporting period.

(3) Other receivables

1) Classification of other receivables by nature of payment

In RMB

2) Disclosure by aging

In RMB

3) Disclosure by provision method for bad debts

☑Applicable □Not applicable

In RMB

Name of category of provision for bad debts on a portfolio basis: Other receivables with provision for bad debts on a portfolio basis by credit risk characteristics

In RMB

Explanation on the basis for determining the combination:

The Group divides other receivables into different combinations based on common credit risk characteristics. Common credit risk characteristics used by the Group include initial recognition date, remaining contract term, and length of overdue period.

The provision for bad debts made according to the general model of expected credit losses In RMB

Basis for division of each stage and ratio of provision for bad debts

Changes in the book balance of provision for loss with significant changes in the current period □Applicable ☑Not applicable

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

Provision for bad debts for the current period:

In RMB

Reversal or recovery of significant amount of provision for bad debts in the current period:

In RMB

There was no provision for bad debts recovery or reversal of significant amount during the reporting period.

5) Other receivables actually write-off in the current period

In RMB

In RMB

Explanations on write-off of other receivables:

There was no other receivables with actual write-off during the reporting period.

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

In RMB

7) Reported as other receivables due to centralized fund management

None

7. Advances to suppliers

(1) Advances to suppliers are listed by aging

In RMB

Explanation of the reasons for the delayed settlement of advances to suppliers with an aging of over 1 year and significant amounts:

At the end of the reporting period, the Group had no significant prepayments with an aging of more than 1 year and an important amount.

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

As at the end of the current period, the aggregate amount of the top five prepayment balances by counterparty was RMB 25,300,555.35, representing 69.19% of the total prepayment balance.

8. Inventories

Whether the company needs to comply with the disclosure requirements of the real estate industry No

(1) Inventories Classification

In RMB

(2) Data resources recognized as inventories

None

(3) Provision for inventory depreciation and provision for impairment of contract performance costs In RMB

The specific basis for determining the net realizable value of inventories and the reasons for the provision for the inventories price decline reversed or resold during the period:

Inventory depreciation provision accrued by portfolio

In RMB

Accrual standard of inventory depreciation provision accrued by portfolio

(4)Explanation on the ending balance of inventories containing the capitalization amount of borrowing costs

At the end of the reporting period, there was no amount of capitalization of borrowing costs.

(5)Explanation on the amortization amount of contract performance costs in the current period None

9. Other current assets

In RMB

Relevant information on compensating assets

10. Other equity instrument investments

In RMB

There is no derecognition of other equity instrument investments this period.

11. Long-term equity investments

In RMB

The recoverable amount is determined at the net amount of the fair value minus the disposal expenses □Applicable ☑Not applicable

The recoverable amount is determined based on the present value of the estimated future cash flows

□Applicable ☑Not applicable

Reasons for the obvious inconsistency between the above information and the information used in previous impairment test or external information

None

Reasons for the difference between the information used in the impairment test of the Company in previous years and the actual situation of the current year

None

12. Investment properties

(1) Investment properties measured at the cost mode

☑Applicable □Not applicable

In RMB

The recoverable amount is determined at the net amount of the fair value minus the disposal expenses □Applicable ☑Not applicable

The recoverable amount is determined based on the present value of the estimated future cash flow

□Applicable ☑Not applicable

Reasons for the obvious inconsistency between the above information and the information used in previous impairment test or external information

None

Reasons for the difference between the information used in the impairment test of the Company in previous years and the actual situation of the current year

None

(2) Investment properties measured by fair value

□Applicable ☑Not applicable

(3) Conversion to investment properties and measurement at fair value

None

(4) Investment properties without certificate of title

In RMB

13. Fixed assets

In RMB

(1) Fixed assets

In RMB

(2) Temporarily idle fixed assets

None

(3)Fixed assets leased out through operating leases

None

(4) Fixed assets without certificate of title

In RMB

Other explanations

At the end of the reporting period, the Group's fixed assets mortgaged for bank borrowings are detailed in "21. Assets with restricted ownership or right of use".

(5) Impairment test of fixed assets

□Applicable ☑Not applicable

(6) Disposal of fixed assets

None

14. Construction in progress

In RMB

(1) Construction in progress situation

In RMB

(2) Changes of significant construction in progress in the current period

In RMB

(3) Provision for impairment of construction in progress in the current period None

(4) Impairment test of construction in progress

□Applicable ☑Not applicable

(5) Project materials

None

15. Right-of-use assets

(1) Right-of-use assets status

In RMB

(2) Impairment test of right-of-use assets

□Applicable ☑Not applicable

16. Intangible assets

(1) Intangible assets situation

In RMB

The ratio of intangible assets formed through the Company's internal research and development to the balance of intangible assets at the end of the current period is 0.00%

(2) Data resources recognized as intangible assets

None

(3) Details of land use right without certificate of title

None

(4) Impairment test of intangible assets

□Applicable ☑Not applicable

17. Goodwill

(1) Original book value of goodwill

In RMB

(2) Provision for impairment of goodwill

In RMB

(3) Relevant information on the asset group or portfolio of asset groups of the goodwill belongs to

None

(4) Specific determination method of recoverable amount

The recoverable amount is determined at the net amount of the fair value minus the disposal expenses □Applicable ☑Not applicable

The recoverable amount is determined based on the present value of the estimated future cash flows □Applicable ☑Not applicable

Reasons for the obvious inconsistency between the above information and the information used in previous impairment test or external information

None

Reasons for the difference between the information used in the impairment test of the Company in previous years and the actual situation of the current year

None

(5) Completion of performance commitment and corresponding goodwill impairment

There is a performance commitment when the goodwill is formed and the reporting period or the previous period of the reporting period is within the performance commitment period

□Applicable ☑Not applicable

Other explanations

18. Long-term deferred expenses

In RMB

19. Deferred tax assets/deferred tax liabilities

(1) Deferred tax assets without offset

In RMB

(2) Deferred tax liabilities without offset

In RMB

(3) Deferred tax assets or liabilities listed net amount after write-offs

In RMB

(4) Details of unconfirmed deferred tax assets

In RMB

(5) Deductible losses from unrecognized deferred tax assets will be expired in the following years

In RMB

Other explanations

Based on the Group's profit forecast for the future periods, the Group believes that it is highly probable to obtain sufficient taxable income to utilize the above-mentioned deductible temporary differences and deductible losses in the future periods, so the relevant deferred tax assets are recognized.

20. Other non-current assets

In RMB

21. Assets with restrictions on the ownership or right of use

In RMB

22. Derivative financial liabilities

In RMB

23. Notes payable

In RMB

At the end of the current period, the Totall amount of matured but unpaid notes payable was RMB 0.00. The reason for non-payment upon maturity is that the Group had no matured but unpaid notes payable at the end of the reporting period.

24. Accounts payable

(1) Presentation of accounts payable

In RMB

(2) Significant accounts payable aging more than one year or overdue

In RMB

Other explanations:

At the end of the reporting period, the Group had no significant accounts payable with aging over 1 year or overdue.

25. Other payables

In RMB

In RMB

(1) Interest payable

None

(2) Dividends payable

None

(3) Other payable

1) List other payable by nature of payment

In RMB

2) Other significant payable aging over one year or overdue

Other explanations

At the end of the reporting period, the Group had no other significant accounts payable with aging over 1 year or overdue.

26. Advances from customers

(1) Presentation of advances from customers

In RMB

(2) Important advances from customers with aging more than 1 year or overdue

At the end of the reporting period, the Group had no significant accounts receivable with aging over 1 year or overdue.

27. Contract liabilities

In RMB Significant contract liabilities with aging over 1 year

None

Amount and reasons for significant changes in book value during the reporting period

None

28. Employee compensation payable

(1) Presentation of employee compensation payable

In RMB

(2) Presentation of short-term compensation

In RMB