ChinaFangdaGroupCo.,Ltd.

2025InterimReport

August2025

Chapter1ImportantStatement,TableofContentsandDefinitions

ThemembersoftheBoardofDirectorsandtheseniormanagementguaranteethattheannouncementisfreefromanyfalseinformation,misleadingstatementormaterialomissionandarejointlyandseverallyliablefortheinformation'struthfulness,accuracyandintegrity.

Mr.XiongJianming,theChairmanofBoard,Mr.LinKebin,theChiefFinancialOfficer,andMr.WuBohua,themanagerofaccountingdepartmentdeclare:theFinancialReportcarriedinthisreportisauthenticandcompleted.

AlltheDirectorshaveattendedthemeetingoftheboardmeetingatwhichthisreportwasexamined.

Thissemi-annualreportcontainsforward-lookingstatementssuchasfutureplans,whichdonotconstituteasubstantialcommitmentbytheCompanytoinvestors.Investorsandrelatedpartiesshouldmaintainsufficientriskawarenessandunderstandthedifferencesbetweenplans,forecasts,andcommitments.

TheCompanyhasdetailedthepotentialrisksthecompanymayfaceinthisreport.PleaserefertothesectionXI.RisksandCountermeasuresFacedbytheCompanyinChapter3ManagementDiscussionandAnalysisformoreinformation.

TheCompanywilldistributenocashdividendsorbonussharesandhasnoreservecapitalizationplan.

TableofContents

Chapter1ImportantStatement,TableofContentsandDefinitions ...... 2

ChapterIIAbouttheCompanyandFinancialHighlights ...... 7

I.CompanyProfile.............................................................................................................................................7

II.ContactsandLiaisons...................................................................................................................................7

III.OtherInformation.......................................................................................................................................7

IV.FinancialHighlight......................................................................................................................................8

V.DifferencesinAccountingDataUnderDomesticandForeignAccountingStandards.........................8

VI.AccidentalGain/LossItemandAmount...................................................................................................9

ChapterIIIManagementDiscussionandAnalysis ...... 10

1.MajorBusinessesoftheCompanyduringtheReportPeriod.................................................................10

II.CoreCompetitivenessAnalysis.................................................................................................................14

III.IndustrySituationDuringtheReportingPeriod...................................................................................18

IV.MainBusinessAnalysis.............................................................................................................................24

V.Non-coreBusinessAnalysis........................................................................................................................26

VI.AssetsandLiabilities.................................................................................................................................27

VII.Investment.................................................................................................................................................28

VIII.MajorAssetsandEquitySales..............................................................................................................31

IX.AnalysisofMajorJointStockCompanies..............................................................................................31

X.StructuralEntitiesControlledbytheCompany......................................................................................32

XI.RisksFacedbytheCompanyandCountermeasures............................................................................32

XIII.ImplementationoftheActionPlanfor"DoubleImprovementofQualityandReturn"...............33

ChapterIVCorporateGovernance,Environment,andSociety ...... 33

I.ChangesintheDirectors,SupervisorsandSeniorExecutives................................................................33

II.ProfitDistributionandReserveCapitalizationintheReportPeriod...................................................33

III.ShareIncentiveSchemes,StaffShareholdingProgramorOtherIncentivePlans............................34

IV.DisclosureofEnvironmentalInformation..............................................................................................34

V.SocialResponsibility...................................................................................................................................34

ChapterVSignificantEvents ...... 35I.CommitmentsthatHaveBeenFulfilledandNotFulfilledbyActualController,Shareholders,RelatedParties,AcquirersoftheCompany ...... 35

II.Non-operatingCapitalUsebytheControllingShareholderorRelatedPartiesintheReportingTerm ...... 35

III.IncompliantExternalGuarantee.............................................................................................................35

IV.EngagingandDismissingofCPA............................................................................................................35V.StatementoftheBoardonthe“Non-StandardAuditors'Report”IssuedbytheCPAontheCurrentReportPeriod ...... 35

VI.StatementoftheBoardofDirectorsontheNon-standardAuditor'sReportforH12014...............35

VII.BankruptcyandCapitalReorganizing..................................................................................................35

VIII.Lawsuit....................................................................................................................................................35

IX.PunishmentandRectification..................................................................................................................36

X.CredibilityoftheCompany,ControllingShareholderandActualController....................................36

XI.MaterialRelatedTransactions.................................................................................................................36

XII.SignificantContractsandPerformance................................................................................................37

13.OtherMaterialEvents...............................................................................................................................45

XIV.MaterialEventsofSubsidiaries............................................................................................................45

ChapterVIChangesinShareCapitalandShareholders ...... 46

I.ChangesinShares.........................................................................................................................................46

II.SharePlacingandListing..........................................................................................................................48

III.ShareholdersandShareholding...............................................................................................................48

IV.ChangesinShareholdingofDirectorsandSeniorManagement.........................................................50

V.ChangesinControllingShareholderorActualController....................................................................50

VI.PreferredShares........................................................................................................................................52

ChapterVIIInformationabouttheCompany'sSecurities ...... 53

ChapterVIIIFinancialStatements ...... 54

I.Auditor'sReport...........................................................................................................................................54

II.FinancialStatements...................................................................................................................................54

III.GeneralInformation.................................................................................................................................68

IV.BasisforthePreparationofFinancialStatements.................................................................................69

V.SignificantAccountPoliciesandEstimates..............................................................................................69

VI.Taxation....................................................................................................................................................129

VII.NotestotheConsolidatedFinancialStatements.................................................................................131

VIII.R&DExpenses......................................................................................................................................176

IX.ChangetoConsolidationScope..............................................................................................................176

X.EquityinOtherEntities...........................................................................................................................176

XI.GovernmentSubsidies.............................................................................................................................181

XII.RisksofFinancialTools.........................................................................................................................182

XIII.FairValue..............................................................................................................................................187

XIV.RelatedPartiesandTransactions.......................................................................................................189

XV.CommitmentandContingentEvents...................................................................................................193

XVI.Post-balance-sheetEvents....................................................................................................................197

XVII.OtherMaterialEvents........................................................................................................................197

XVIII.NotestoFinancialStatementsoftheParent...................................................................................198

XIX.SupplementaryMaterials.....................................................................................................................204

ChapterIXOtherSubmittedData ...... 207

I.OtherMajorSocialSafetyIssues..............................................................................................................207II.RegisterofActivitiessuchasResearch,Communication,andInterviewsduringtheReportingPeriod ...... 207

III.FinancialTransactionsbetweentheListedCompanyandItsControllingShareholderandOtherRelatedParties ...... 207

Reference

1.Financialstatementsstampedandsignedbythelegalrepresentative,CFOandaccountingmanager;

2.OriginalsofalldocumentsandmanuscriptsofPublicNoticesoftheCompanydisclosedinpublic.

Definitions

ChapterIIAbouttheCompanyandFinancialHighlightsI.CompanyProfile

II.ContactsandLiaisons

III.OtherInformation

1.LiaisonChangestotheCompany'sregistrationaddress,officeaddress,postcode,websiteoremailduringthereportperiod?Applicable□Inapplicable

2.Informationdisclosureandinquiring

Changestotheinformationdisclosureandinquiringplace

□Applicable?InapplicableThenamesandwebsitesofthesecuritiesexchangewebsitesandmediawherethecompanydisclosesitssemi-annualreport,aswellasthelocationofthecompany'ssemi-annualreport,remainunchangedduringthereportingperiod.Pleaserefertothe2024annualreportforspecificdetails.

3.Otherinformation

Whetherotherrelevantinformationhaschangedduringthereportingperiod

□Applicable?InapplicableIV.FinancialHighlight

WhethertheCompanyneedstomakeretroactiveadjustmentorrestatementoffinancialdataofpreviousyears

□Yes?No

TheCompany'snetprofitattributabletoshareholdersofthelistedcompanydecreasedby85.20%inthefirsthalfof2025,primarilyduetotheincreaseinimpairmentprovisionforaccountsreceivableinthecurtainwallsystemandnewmaterialsindustry,aswellasadeclineinoperatingrevenue.

V.DifferencesinAccountingDataUnderDomesticandForeignAccountingStandards

1.DifferencesinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheinternationalandChineseaccountstandards

□Applicable?InapplicableThereisnodifferenceinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheinternationalandChineseaccountstandardsduringthereportperiod.

2.DifferencesinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheoverseasandChineseaccountstandards

□Applicable?InapplicableThereisnodifferenceinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheinternationalandChineseaccountstandardsduringthereportperiod.VI.AccidentalGain/LossItemandAmount?Applicable□Inapplicable

InRMB

Othergain/lossitemssatisfyingthedefinitionofnon-recurringgain/lossaccount:

□Applicable?InapplicableTheCompanyhasnoothergain/lossitemssatisfyingthedefinitionofnon-recurringgain/lossaccountCircumstancethatshouldbedefinedasrecurrentprofitandlosstoExplanationAnnouncementofInformationDisclosureNo.1-Non-recurringgain/loss

□Applicable?InapplicableTheCompanyhasnocircumstancethatshouldbedefinedasrecurrentprofitandlosstoExplanationAnnouncementofInformationDisclosureNo.1-Non-recurringgain/loss

ChapterIIIManagementDiscussionandAnalysis

1.MajorBusinessesoftheCompanyduringtheReportPeriod

EstablishedinShenzhenin1991,ChinaFangdaGroupCo.,Ltd.primarilyengagesinbusinessessuchasintelligentplatformscreendoorequipmentandsystemsforrailtransit,high-endintelligentcurtainwallsystemsandnewmaterials,newenergy,andcommercialmanagementandservices.TheCompany'smainproducts,intelligentplatformscreendoorequipmentandsystemsforrailtransit,andintelligentcurtainwallshavebecomeglobalindustrybenchmarks.Theurbanrailtransitplatformscreendoorsystemhasbeenrecognizedasa"SingleChampionProductinManufacturing"bytheMinistryofIndustryandInformationTechnology,andthecomprehensivestrengthoftheintelligentcurtainwallsystemranksamongtheindustryleaders.TheCompanycurrentlyhas7nationalhigh-techenterprises,6"specializedandinnovative"enterprises,2"nationalintellectualpropertyadvantageenterprises,"1"nationalqualityleaderenterprise,"and2provincialengineeringtechnologyresearchcenters.Inthefaceofincreasedexternalpressures,deepindustryadjustments,andintensifiedmarketcompetition,theCompanyadherestothegeneralprincipleofseekingprogresswhilemaintainingstability.Itfocusesonthethemeof"DigitalIntelligenceEmpowermentandScientificManagement,"vigorouslypromotingthedeepintegrationofAItechnologywithvariousindustriestocontinuouslydrivehigh-qualitydevelopment.Inthefirsthalfof2025,theCompanyachievedanoperatingrevenueofRMB1598,286,500andanetprofitattributabletotheownersoftheparentcompanyofRMB17,289,600.Asoftheendofthereportingperiod,theCompany'sorderreservesamountedtoRMB7,172,677,700,whichis4.49timestheoperatingrevenueforthefirsthalfof2025,providingasolidfoundationforachievingtheCompany'sfutureproductionandoperationalgoals.

(I)IntelligentPlatformScreenDoorEquipmentandSystemsforRailTransit

①GloballyLeadingCompetitiveAdvantageAsapioneerandleaderintheintelligentplatformscreendoorindustryforrailtransit,theCompanyiscommittedtoimplementingthenational"GoGlobal"strategyandactivelyrespondingtothe"BeltandRoadInitiative."Bycontinuouslyenhancingtheintrinsicvalueofitsbrandandleveragingitsinherentstrengths,theCompanyhasgainedrespectandrecognitioninbothdomesticandinternationalmarketsthroughinnovativetechnology,high-qualityproducts,andexcellentservices.Withovertwentyyearsofexperience,theCompanyhasdevelopedindustry-leadingadvantagesintechnology,brand,andservice.Ithassecuredprojectsforrailtransitscreendoorsystemsincountriesandregionsalongthe"BeltandRoad",includingSingapore,Malaysia,HongKong,Taipei,Thailand,India,Greece,Colombia,andthePhilippines.WithastrongindependentbrandandR&Dcapabilities,theCompanyhassuccessfullyexpandedintointernationalmarkets,transitioningfrommerelyexportingproductstoexportingtechnologyandbrand,becominga"goldenbusinesscard"forChina'shigh-endrailtransitequipmentmanufacturingontheglobalstage.Duringthereportingperiod,theCompany'sintelligentplatformscreendoorequipmentandsystemsforrailtransitgeneratedanoperatingrevenueofRMB316,923,500,representinga20.30%increasecomparedtothesameperiodlastyear.Ofthis,overseasbusinessrevenuewasRMB122,580,200,whichisan8.34%increasefromthepreviousyear.Asoftheendofthereportingperiod,theorderreservesforthissectoramountedtoRMB2,256,940,700,whichis7.12timestheoperatingrevenueforthefirsthalfof2025.Despitethelackofstrongrecoveryintheglobaleconomyandinsufficienteffectivedemanddomestically,theCompany'sintelligentplatformscreendoorequipmentandsystemsforrailtransithavemaintainedstrongresilience,demonstratingrobustcompetitivenessandcomprehensivestrengthintechnology,brand,andmarket,aswellassignificantadvantagesinnewqualityproductivity.Duringthereportingperiod,theCompanysecuredtheorderforthePhaseIplatformdoorrenovationprojectatShenzhenFutianHigh-SpeedRailStation.ThisincludesthedismantlingofexistingplatformdoorsandtheR&D,design,production,andinstallationofnewintelligentfull-heightplatformdoorsthataccommodateflexibleandvariedtrainmodels.Thesuccessfulimplementationofthisprojectisofmilestonesignificance,markingahistoricleapforFangda'splatformdoorsystemfromthemetroeratothehigh-speedrailera.Itwillcreatethree"firsts"inChina:thefirsthigh-speedrailplatformdoorsetnearthe

platformedge,thefirsttoadoptafullyintelligentvehiclerecognitionsystem,andthefirsthigh-speedrailplatformdoortopassChinaRailway'sinspectionandcertification.TheCompanywillbecomeafoundationalproviderofsolutionsforthehigh-speedrailerainChina.

②ComprehensiveBreakthroughinCoreTechnology

TheCompanyconsistentlyadherestoatechnology-drivenapproachandmarket-orientedstrategy,committedtoprovidinghigh-qualityplatformscreendoorproductsandservicesforglobalcustomers.Duringthereportingperiod,theCompany'sprojectfortheinstallationofplatformdoorsontheHongKongEastRailLinewascompletedsixmonthsaheadofschedule,markingtheofficialentryofHongKong'scentury-oldrailwayintoanewphaseofintelligentandsafeoperation.Thisprojectutilizedmodulartechnologyandprecisemanagement,employingthepioneering"installanduseimmediately"constructionmodel.Theentireprocesswascompletedwithintheextremewindowperiodof1:30AMto3:30AM,ensuringzerointerferencewithdaytimeoperations.Theprojectsetanindustryrecordbyinstallingthreeunitdoorswithinthreehoursandcompletingtheinstallationofa215-meter-longplatformsidewithinfourweeks.Toaddresstheglobalchallengeofinstallingcurvedplatformdoors,theCompanyindependentlydevelopedthe"centralpivotpointdesignforunitslidingdoors,"achievingseamlessdooropeningandclosingthroughhigh-precisionmeasurement.TheprojectalsofeaturedaSIL2safety-ratedlaserradardetectionsystem,eliminatingtheriskofpassengerentrapment.TheequipmentwascertifiedwithIP65protection,providingresistancetotyphoons,heavyrain,andultravioletrays,makingitsuitableforHongKong'scomplexclimate.ThesuccessofthisprojectprovidesavaluablemodelforplatformscreendoorprojectsintheGuangdong-HongKong-MacaoGreaterBayAreaandglobally,drivingtechnologicalinnovationintheindustry.

③ContinuousAdvancementintheIndustrializationofAITechnologyTheCompanyhasbeendeeplyinvolvedintheplatformscreendoorsectorofrailtransitforovertwentyyears,possessingafullyautonomousandefficientR&Dcapabilityacrosstheentirechain.ThisenablestheCompanytooffercustomersmoreintelligent,efficient,eco-friendly,andreliablerailtransitequipmentandfulllife-cyclesystemsolutions,achievingmulti-winandwin-winoutcomeswithstakeholders.Duringthereportingperiod,theCompanycontinuedtoadvancetheindustrializationofAItechnology,achievingsignificantmilestones.

IntelligentInteractionSystem:TheintegrationoftheAIvoicerecognitionmodulewithintelligentadvisorysoftwarewascompleted,supportingmulti-terminalvoicecommandcontrolandprofessionalQ&Afunctionalities.Thesystemhasundergoneprototypevalidation,achievinganin-depthcombinationofnaturallanguageprocessingtechnologyandrailtransitscenarios.Userscanperformequipmentcontrolandreceiveprofessionalconsultationonplatformscreendoorsthroughvoiceinteraction.

IntelligentOperationsandMaintenanceSystem:TheindependentlydevelopedCBMSintelligentoperationsandmaintenancesystem(includingbothwebandmobileapplications)wasfullydeployedintheHongKong1254project.ItiscurrentlyrunningstablyinasharedcloudenvironmentandisundertrialusebyMTRCorporation,receivingpositivefeedbackonsystemreliabilityanduserexperience.

VisualRecognitionTechnology:TheAIvisualrecognitionsystemfortrains,optimizedforhigh-speedrailscenarios,completedcoretechnologicalbreakthroughsatShenzhenFutianStation.Afteron-siterealtrainverificationatShenzhenNorthStation,allperformanceindicatorsmetoperationalstandards,providingcrucialtechnicalsupportfortheconstructionofintelligentstations.

TheCompanyiscommittedtocontinuousR&Dinvestment.Asofnow,theCompanyholds313domesticandinternationalpatentsforplatformscreendoorsystemsinurbanrailtransit(including69inventionpatents),22internationalPCTpatents,and15computersoftwarecopyrights,formingacoretechnologygroupandintellectualpropertysystemwithfullyindependentintellectualpropertyrights.

④IntelligentOperationsandMaintenanceEmpoweringtheRailTransitAftermarket

Withtherapidgrowthofurbanrailtransitoperatingmileage,theexpansiverailtransitaftermarketisenteringanupwardcycle.Thedemandforoperationsandmaintenanceisbecomingincreasinglyprominent,positioningtheoperationsandmaintenancemarketasanewblueoceanforextendingthevalueoftheindustrychain.Intelligenceandspecializationaresetto

becomefuturedevelopmenttrends.TheCompanyhasindependentlydevelopedanintelligentoperationsandmaintenancesupportsystemforplatformscreendoors,leveragingAI,bigdata,andotherinformationtechnologies.Thissystemeffectivelyenablesreal-timemonitoringofrailtransitsystemequipmentstatus,faultprediction,andintelligentmaintenancedecision-making,therebyreducingsystemmaintenancecosts,loweringequipmentfailurerates,andimprovingmaintenanceefficiencyandstationoperationalintelligence.Duringthereportingperiod,theCompany'srevenuefrommaintenanceservicesintherailtransitplatformscreendoorindustryreachedRMB33,455,800,accountingfor10.56%oftherailtransitplatformscreendoorbusinessrevenue,representinga2.84%increasecomparedtothesameperiodlastyearandsettinganewhistoricalhigh.ThepromisingdevelopmentopportunitiesintheCompany'sprofessionaltechnicalmaintenanceservicebusinessaregraduallyemerging.Thedesign,manufacturing,andoperationsandmaintenancesystemsoftheCompany'srailtransitplatformscreendoorshavebeencomprehensivelyupgradedwithinnovativetechnologiessuchasAIand5G.Withstrongtechnicalreserves,outstandingbrandadvantages,andsignificantcompetitiveadvantages,thesesystemshavebecomeanimportantgrowthenginefortheCompany.

(II)IntelligentCurtainWallSystemsandNewMaterialsIndustry

①"SmartManufacturing+AI"EmpoweringIndustryDevelopment

Duringthereportingperiod,theCompanyfocusedon"greenintelligence"asitsstrategiccore,achievingcomprehensivebreakthroughsfromproductR&DtoindustryupgradingbyenhancingR&Deffortsintechnologicalinnovation,AIempowerment,anddigitaltools.TheCompanynotonlyconsolidateditsleadingpositioninthecurtainwallindustrybutalsobuiltcorecompetitivenessthroughtechnologicalbarriers,promotingtheindustry'sdevelopmenttowardsdigitalizationandsustainability.TechnologicalBreakthroughsSettingIndustryBenchmarks:Duringthereportingperiod,theCompanylaunched30projectsunderthesmartcurtainwallsystemsandnewmaterialsR&Dplan,filed30newpatentapplications,andreceived37newpatentgrants.TheCompanyhasobtained705patentsforsmartcurtainwallsystemsandnewmaterials,21softwarecopyrights,andparticipatedindrafting35national/industrytechnicalspecificationsandstandards.TheCompanyinvestedRMB61,514,200inR&Dduringthereportingperiod,withanR&Dexpenseratioof3.85%.Itsuccessfullydevelopednewcurtainwallproductssuchasthe"NewSunshadeEnergy-savingGlassLanternCurtainWallSystem"andthe"AIIntelligentWindandRainSensingElectricSlidingWindowSystem,"significantlyenhancingbuildingenergyefficiencyandsettingnewbenchmarksforgreenbuildings.Thedevelopmentandproductionoftheindustry'sfirstfullyautomatedaluminumpanelproductionlinemarkedabreakthroughin"MadeinChina,"leadingforeigntechnologicalinnovations,significantlyenhancingproductionefficiency,andachievingproductperformanceataninternationallyleadinglevel.

AcceleratingtheTransformationofTechnologicalInnovations:TheCompanycontinuouslyimprovesitstechnologicalinnovationsystem,activelypromotingthetransformationandapplicationoftechnologicalinnovationachievements,achievingaleapinproductivityquality.Duringthereportingperiod,theCompany'sself-developedproducts"FangdaSystemLouvers"and"FangdaSlotEmbeddedParts"werewidelyappliedinsmartcurtainwallprojectssuchasGuangzhouYuehaiCloudPortCityandXiangjiangNo.1.Innovativeproductslikethe"NewDouble-curvedAluminumCompositePanelUnitCurtainWallSystem"andthe"Ultra-highWeather-resistantTitaniumHoneycombPanel"havegeneratedeconomicbenefits.Inthefuture,theCompanywillcontinueits"innovation-transformation-application"developmentmodeltobuildsustainablecompetitivebarriers.

DigitalReconstructionofIndustryEcology:Duringthereportingperiod,theCompanyestablishedthecurtainwallindustry'sfirstfulllifecycledigitaltwinsystem(BIM+AI+3Dscanning),achievingfull-processcoordinationfromdesigntoproductiontoconstruction,improvingtheaccuracyandefficiencyofcomplexcurtainwalls,andshorteningprojecttimelinesby20%.TheCompany'sdevelopmentofninemajorinformationmanagementsystemshasadvanceditsdigitaldevelopment,includingtheOAOfficeSystem,HRHumanResourcesSystem,ERPFinancialManagementSystem,CRMCustomerRelationshipManagementSystem,PMSProjectManagementSystem,MESProductionManagementSystem,VPOSupplyManagementSystem,CMSContractManagementSystem,andQASQualityandSafetyManagementSystem.Thesesystemsenableinformationexchangeandresourcesharingfrompersonnelmanagementandofficemanagementtothefulllifecycleofcurtainwalls.

GlobalTechnologyExport:TheCompanyindependentlydevelopedcurtainwallsystemsthatmeetAmericanandAustralianstandards(suchasASNZS4284-2008Testingofbuildingfacades),includingthe"60SeriesFramedCurtainWall"andthe"Ultra-largeSeismicGRCGreenEnergy-savingUnitCurtainWall,"coveringoverseasprojectsintheMiddleEastandAustralia,becomingabenchmarkforChinesecurtainwalltechnologygoingglobal.

②DiverseHigh-QualityProjectMatrixLeadingtheNewEraofIntelligentCurtainWalls

Inthecontextofindustry-widepressure,theCompanyadherestoaprincipleofcontrollableriskwhileactivelyexploringhigh-endcurtainwallmarketsbothdomesticallyandinternationally.Byfocusingonpremiumclientsandkeyregionsandprojects,theCompanyseekstodeliverhigh-qualityengineeringbycontinuouslytappingintoitspotential,aimingtoprovidecomprehensiveone-stopservicesforbuildingcurtainwallprojectstoglobalclients.TheCompanyhasundertakennumerouslandmarkbuildingsinareassuchassuperhigh-risebuildings,governmentpublicculturalvenues,corporateheadquartersbuildings,officebuildings,hospitals,andschools,establishingitselfasthepreferredbrandinthehigh-endcurtainwallsystemsandmaterialsindustry.Duringthereportingperiod,theCompanysecuredmultipleinternationalhigh-qualitycurtainwallprojectorders.Theseincludedomesticbenchmarkprojectslikethelandmarkbuildings"HangzhouAntFinancialGlobalHeadquartersPhaseII,"the"JDShenzhenHeadquartersComplex"smartpark,andthemusictechnologylandmark"GuangzhouKugouMusicBuilding."Additionally,theCompanysuccessfullyobtainedseveralinternationalorders,rangingfromhigh-endofficebuildingsinthecorebusinessdistrictsofdevelopedcountrieslike"525ChurchStinMelbourne,Australia,"toprojectsincountriesalongtheBeltandRoadInitiativesuchasthe"MiraibyNirmanprojectinDhaka,Bangladesh."ThisdiverseprojectmatrixfullydemonstratestheCompany'stechnicalstrengthinthecurtainwallfield,internationalprojectmanagementcapability,andoutstandingbrandpremiumcapability.Inthefirsthalfof2025,theCompany'srevenuefromtheintelligentcurtainwallandnewmaterialsindustryreachedRMB1,184,916,500.Asoftheendofthereportingperiod,theorderreserveamountwasRMB4,915,737,000,whichis

4.15timestherevenuefromthisindustryinthefirsthalfof2025,indicatingasufficientorderreserve.

③DeepeningGlobalLayoutAgainsttheTrend,HighlightingOverseasStrategyEffectiveness

Amidintensifiedcompetitioninthedomesticcurtainwallmarketanddeepadjustmentsintherealestateindustry,theCompanysteadfastlyimplementsitsoverseasstrategy,continuouslyexpandingintooverseasmarkets.WhileconsolidatingitsadvantageousmarketssuchasAustralia,theCompanyhascompletedstrategiclayoutsinSoutheastAsiaandtheMiddleEast,implementinglocalizedmanagementstrategiesandoperationalmodelsbasedonmarketcharacteristicstobuildawell-structuredoverseasmarketsystem.Byconcentratingqualityhumanandmaterialresources,theCompanyensuresampleresourcesupportforoverseasbusinesstomeetitsdevelopmentneeds.TheCompanyhasestablishedlong-termstrategicpartnershipswithinternationalcurtainwallconsultancyfirmssuchasINHABIT,MEINHARDT,andALTtoprovidedesigncertificationforoverseasprojects,reducingoverseastechnicalrisks.Additionally,theCompanyengagedinexchangeswithavisitingdelegationofgovernmentofficialsfromFrancophoneAfricancountries,buildingasolidbridgefordeepcooperationinmultiplefields,particularlyintechnologyandsmartinfrastructure,withFrancophoneAfricancountries.TheoverseasbusinesslayoutwillopennewmarketspacesandprofitgrowthpointsfortheCompany.

④"GreenIslandProject"SetsBenchmarkforSharedEnvironmentalInfrastructure

Inthepursuitofthe"dualcarbon"goalsandthedevelopmentofnewqualityproductivity,theCompanyactivelyundertakesitsmissioninthecurrentera,vigorouslypromotingthehigh-end,intelligent,andgreendevelopmentofthemanufacturingindustry.In2024,theCompany'sFangda(Ganzhou)Low-CarbonIntelligentManufacturingBasecommencedoperations.Thisbaseisa"5G+SmartFactory"integrating5G,digitalization,theInternetofThings,andintelligence.ItscoatingcenterisrecognizedbytheMinistryofEcologyandEnvironmentasanational-level"GreenIslandProject."Throughtheco-constructionandsharingofintensiveenvironmentalprotectioninfrastructure,theprojectachievesunifiedpollutioncontrolandresourcerecyclingwithinthepark,completelytransformingthetraditionaldecentralizedmodelofmanufacturingenterprisesandrealizingscaleeffects.Theprojectemploysadvancedenvironmentaltreatmenttechnologiestoachievezeropollutionandzeroemissions,providingtheCompanywiththemostadvancedgreenenvironmentalproductioncapacity.Surpluscapacitycanbesharedwithsurrounding

manufacturingenterprises,promotingtheoverallgreenupgradeofregionalindustries.The"GreenIslandModel"hasbecomeamodelofnationalgreenmanufacturingdemonstrationprojects.

(3)Newenergyindustry

Guidedbythenational"dualcarbon"strategicgoals,theCompanycontinuestodeepenitslayoutinthenewenergyindustry,focusingonthedevelopmentofBuildingIntegratedPhotovoltaics(BIPV)anddistributedphotovoltaicpowerstationbusinesses.AsoneofthefirstdomesticenterprisesinBIPVtechnologyresearchandapplication,theCompanyhasestablishedafullindustrychainservicesystemcoveringdesign,manufacturing,integration,andoperation,accumulatingsignificanttechnologicaladvantagesinthegreenenergyfield.ProjectssuchasthedistributedphotovoltaicpowerstationinPingxiang,Jiangxi,theNanchangJiangxiIsuzuMotorsparkinglotphotovoltaicpowerstation,andtheSongshanLakebasephotovoltaicpowerstationinDongguan,Guangdong,havemaintainedgoodoperation,continuouslycontributingstableprofitsandcashflowtotheCompany.Duringthereportingperiod,theCompany'scontractedprojects,includingtheShenzhenLuhuCenterandtheGuangzhouKugouMusicBuildingcurtainwallproject,adoptedBIPVtechnology.Thephotovoltaiccurtainwallcoversanareaofapproximately1,400squaremeters,withanestimatedannualpowergenerationofabout230,000kWh,saving92tonsofstandardcoalannuallyandreducingcarbondioxideemissionsby230tons.Thisprovidesareplicabletechnicalpathforcarbonneutralityinurbanbuildings.(IV)CommercialManagementandServiceIndustry

TheCompany'scommercialmanagementandpropertyserviceprojectsaremainlydistributedinthecoreareasofShenzhenandNanchang.Throughdifferentiatedpositioningandadigitalleasingsystem,theCompanyachievesprecisecustomerprofilingandmatching.IntheShenzhenmarket,theCompanyfullyleveragesthelocationaladvantageofthecoreenginecityoftheGuangdong-HongKong-MacaoGreaterBayArea.Drivenbythedualenginesof"precisepositioning+digitalempowerment,"theCompanyconsistentlymaintainsahigher-than-industryaveragedecontaminationrateandoccupancyrate.Bytheendofthereportingperiod,theFangdaTownprojectachievedasalesdecontaminationrateof98.84%andaself-ownedpropertyoccupancyrateof74.57%.TheFangdaTechnologyBuildinghadanoccupancyrateof83.45%.IntheNanchangmarket,theFangdaCenterprojectislocatedinthecoreareaoftheHonggutanCBD.BenefitingfromtheadvancementofJiangxiProvince's"StrongProvincialCapital"strategy,ithasgoodmarketexpectations.Bytheendofthereportingperiod,thesalesdecontaminationratewas43.55%,andtheself-ownedpropertyoccupancyratewas88.74%.

TheCompanyactivelybuildsa"AI+Property"digitalecosystemtoacceleratethedigitalupgradeofpropertyservices.Duringthereportingperiod,theCompanysuccessfullyimplementedanintelligentparkingsystemandanintelligentworkordersystem,achievingrapidresponsetocustomerneeds.Throughtheintelligentenergy-savingrenovationofthecentralairconditioninginFangdaBuildingandthepublicarealightinginFangdaTown,theCompanyoptimizedequipmentoperationlogicusingAIalgorithms,reducingenergyconsumptionby20%withoutaffectingcustomerexperience.Additionally,byestablishingcustomerbehavioranalysismodels,theprecisionservicematchingrateincreasedby40%.TheseintelligentmeasuresprovidecustomerswithamoreconvenientserviceexperienceandreflecttheCompany'sactiveexplorationandprogressinthefieldofsmartpropertymanagement.

TheCompany'sHenggangDakangurbanrenewalprojectinShenzhencontinuestoadvanceinitsplanningandprojectestablishmentwork.

II.CoreCompetitivenessAnalysis

(1)RailTransitPlatformScreenDoorEquipmentandSystemsIndustry

1.TechnicalR&Dadvantage

TheCompanyadherestoindependentinnovationandhastakentheleadindevelopingarailtransitplatformscreendoorsystemwithindependentintellectualpropertyrightsinChina,breakingthemonopolyofforeignenterprisesinthefieldofChineserailtransitplatformscreendoors.Afteryearsofcontinuousengineeringpracticeandtechnologicalinnovation,ithasformeda

profoundtechnicalaccumulationandpossessestechnologicalresearchanddevelopmentadvantagesTheCompanyhasamaturetechnicalresearchanddevelopmentsystem.ThePlatformScreenDoorSystemR&DCenterofFangdaZhiyuanwasawardedthe"GuangdongProvincialEngineeringTechnologyResearchCenter"bytheGuangdongProvincialDepartmentofScienceandTechnology.TheCompanyboastsacomprehensiveteamofinternationaltechnicalexperts,withextensiveexperienceandexcellentskills.TheR&Dteamhasstrongtechnologicalinnovationcapabilities,anditsresearchachievementshavesuccessivelywonthe"GuangdongScienceandTechnologyAward"andthe"ShenzhenScienceandTechnologyProgressAward."TheCompany'surbanrailtransitplatformsafetydoorshavebeenrecognizedasa"SingleChampionProductinManufacturing"bytheMinistryofIndustryandInformationTechnology.FangdaZhiyuanhasbeenlistedasa"NationalIntellectualPropertyAdvantageEnterprise"anda"Specialized,Refined,andInnovativeEnterpriseofShenzhen."IthasalsoledthedraftingofChina'sfirstindustrystandardfor"UrbanRailTransitPlatformScreenDoors."China'sfirstnationalstandardforscreendoorproducts,"UrbanRailTransitPlatformScreenDoorSystems,"wasalsoledbyFangdaZhiyuan.IthasbeenreviewedandapprovedbytheNationalUrbanRailTransitStandardizationTechnicalCommittee,andthecompilationworkhasbeensuccessfullycompleted.Thehigh-speedrailwaystationplatformdoorsystemprojectdevelopedbytheCompanyhasbeenrecognizedasa"ShenzhenEnterpriseInnovationRecord"andhasbeensuccessfullyimplementedatShenzhenFutianHigh-SpeedRailwayStation.ThishighlightsFangda'ssustainedcomprehensiveleadingstrengthandindustrybenchmarkpositioninthefieldofurbanrailtransitequipment.

2.IndustrychainadvantageAsoneofthefirstcompaniestoenterthesubwayscreendoorindustryinChina,theCompanypossessesthecapabilitytoprovideone-stopservicesacrosstheentireindustrychain,includingR&Ddesign,equipmentmanufacturing,engineeringservices,technicalservicesandmaintenance,andsparepartssupply.AcompleteindustrialchainhelpstheCompanytorealizeresourcesharingatallstagesandmeetthemarketdemandforspecializedproductsandservices,therebyeffectivelyreducingtheCompany'sproductionandmanagementcostsandimprovingprofitabilityandcompetitiveadvantages.

Withthecontinuousincreaseintheoperatingmileageofdomesticurbanrailtransit,manysubwayscreendoorsystemsareenteringthemaintenanceperiod.TheintelligentmaintenancemanagementsystemdevelopedbytheCompanycanstatisticallyanalyzetheoperatingstatusofstationequipmentinreal-timeandprovideprofessionaltechnicalsupporttocustomersefficientlyandpromptlythroughremoteguidanceofon-sitetechnicalserviceteams.TheCompany'soperationsandmaintenancemanagementserviceteamisnowspreadacrossmorethan30citiesworldwide.Asservicecapabilitiesimproveandcustomerrecognitionincreases,therevenuecontributionfromtheCompany'stechnicalserviceswillcontinuetogrow.

3.BrandandMarketPositionAdvantages

TheCompanyenteredtheplatformscreendoorsystemfieldearlyandhasbeenhighlypraisedandrecognizedbynumerouscustomersforitsoutstandingadvantagesinsafety,reliability,availability,andsustainabilityofitsproducts,establishingFangda'sbrandadvantageandmarketposition.FangdaZhiyuanhasbeenrepeatedlyratedasoneofthe"Top100IndustryLeadersinShenzhen"andhasbeenlistedonthe"Guangdong-HongKong-MacaoGreaterBayAreaEnterpriseInnovationList."Ithasbeenawardedtitlessuchas"ExcellentEquipmentSupplier,""OutstandingContributionUnit,"and"ExcellentMaintenanceUnit"byseveralsubwaycompanies.Inthefieldofrailtransitscreendoorsystems,theCompanyservesasthesolestrategicpartnerforgloballyinfluentialcompanieslikeAlstom,Siemens,andLG,participatingintheconstructionofglobalurbanrailtransitscreendoorsystemprojects.

AsapioneerofChina'shigh-endrailtransitequipmentgoingglobal,theCompanyhassecuredseveralmajorrailtransitscreendoorsystemprojectsincountriesandregionssuchasSingapore,Malaysia,HongKong,Taipei,Thailand,India,Greece,Colombia,andthePhilippines.TheCompany'scapabilitiesinproductdesign,timelydelivery,andproductqualitystabilityhavebeenfullyrecognizedbyoverseasclients.TheCompany'sexcellentbrandimageandmarketreputationcontributetothecontinuousenhancementofitscompetitiveness,layingasolidfoundationfortheCompany'shealthydevelopment.

4.AdvantagesofAdaptingtoMultinationalTechnicalStandards

Initsglobalstrategiclayout,theCompanyhasdeeplyparticipatedinmetroplatformscreendoorprojectsinregionssuchastheEuropeanUnion,NorthAmerica,SoutheastAsia,andSouthAmerica.Ithasbuiltacomprehensivestandarddatabasecovering

EN(Europeanstandards),BS(Britishstandards),NFPA130(U.S.passengerrailtransportationsystemstandards),SingaporeBCA(BuildingandConstructionAuthority),andColombianationaltechnicalspecifications.Thissystemnotonlyachievespreciselocalizationoftechnicalparametersbutalsoformsaclosed-loopsolutionof"standardpre-research-productdevelopment-certificationacceleration."ThiscapabilitytoadapttoglobalstandardsisbecomingtheCompany'scorecompetitivenessinparticipatingininternationalcompetition,pavingthewayfor"IntelligentManufacturinginChina"togoglobal.

5.OrganizationalstructureadvantageTheCompanyofferscustomizedurbanrailtransitplatformscreendoorsystems,whichinvolvevariousmanagementstagesfromorderacquisitiontofinalprojectdelivery,includingresearchanddevelopment,design,manufacturing,testing,installation,andmaintenance.Theseservicesarecharacterizedbyhighcontractworkrefinementandlongperformancecycles.Toprovidemorecomprehensiveservices,theCompanyhasestablishedanorganizationalstructurethatmeetscustomerneeds,equippedwithprofessionalsineachservicestage.

TheCompanyhasahighlyskilledandwell-configuredR&Dteamcapableofcompletingtechnicalsolutionsforcustomers'specialrequirements.Inproductdesign,theCompany'stechnicalteamisexperienced;inproductmanufacturing,theCompanyhaslarge-scaleproductionfactorieswithacompleteandreliablesupplychain;inproducttesting,theCompanypossessescomprehensiveandprofessionaltestingequipmentandmethods;ininstallation,theCompanyholdsanationalfirst-classqualificationforprofessionalcontractingofbuildingmechanicalandelectricalinstallationengineering,allowingittoindependentlyundertakeinstallationwork;inmaintenance,theCompanyhasestablishedanoperationandmaintenancecenterwithaprofessionalmaintenanceteam,andhasmaintenancecentersatcustomerandprojectlocations,providingfasterandmoreconsiderateservices.

(II)IntelligentCurtainWallSystemsandNewMaterialsIndustry

1.TechnologicalInnovationAdvantages

TheCompanyadherestoastrategyoftechnology-driveninnovation,activelyutilizingdigitalandgreentechnologies,andempoweringthetraditionalcurtainwallindustrywithartificialintelligence(AI)technology.TheCompanyhasobtained701patentsforintelligentcurtainwallsystemsandnewmaterials,aswellas21softwarecopyrights.Ithasparticipatedindrafting35nationalorindustrystandards,includingthe"EnergyConservationDesignStandardsforPublicBuildings,"setting18newrecordsforChineseenterprises.Itwasthefirstinthedomesticindustrytoestablishacorporatepostdoctoralworkstation,provincialengineeringtechnologyresearchcenter,andresearchdesigninstitute,achievingadvancedlevelsofindependentinnovationandtechnologywithintheindustry.TheCompanyhasplayedasignificantroleinproductinnovation,processinnovation,resultstransformation,andtalentcultivation.Sixsubsidiariesengagedintheintelligentcurtainwallsystemsandmaterialsindustryarerecognizedasnationalhigh-techenterprises,withfiveofthembeing"specialized,refined,andinnovative"enterprises.ThisprovidesastrongplatformfortheCompany'shigh-qualityinnovativedevelopment.Ithasbeenawardedtitlessuchas"NationalIntellectualPropertyAdvantageEnterprise,""NationalQualityLeaderEnterprise,""Specialized,Refined,andInnovativeLittleGiant,""GuangdongProvincialEngineeringTechnologyResearchCenter,""JiangxiProvincialEnterpriseTechnologyCenter,""JiangxiProvincialIntelligentManufacturingBenchmarkEnterprise,"and"GuangdongProvincialInnovativeSME."TheCompany'sindependentandcontinuousinnovationfostersitsleadingtechnologicallevelandproductdeliverycapability.

2.BrandValueAdvantages

TheCompanyhasbeendeeplyinvolvedinthecurtainwallfieldforover30years,consistentlyupholdingacommitmenttoquality.Ithasearnedhighrecognitionfromtheindustryandnumerousprofessionalsthroughitslong-standingexcellenceinproductadvantagesandservicequality,establishingastrongreputationasoneofthepreferredbrandsinthedomestichigh-endcurtainwallsystemmaterialsindustry.TheCompanyhasreceivednumerousaccolades,includingthe"NationalQualityAward,""LubanAward(NationalQualityProjectAward),""ZhanTianyouCivilEngineeringAward,""ChinaBuildingDecorationAward,"andover200provincialandministerial-levelawards.Withover1,000landmarkprojectsglobally,theCompanyhasbecomealeadingbrandinthehigh-endcurtainwallsector.TheFangdatrademarkhasbeenrecognizedasa"ChinaWell-knownTrademark,"andhasalsobeenawardedthetitlesof"InternationalReputationBrand"and"ShenzhenOldBrand."

3.ConstructionExperienceAdvantages

TheCompany'swholly-ownedsubsidiary,FangdaJianke,holdsthehighestlevelqualificationsforcurtainwalldesignandconstructionenterprisesinChina—Grade1ProfessionalContractingQualificationforBuildingCurtainWallEngineeringandGradeAQualificationforBuildingCurtainWallEngineeringDesign.ItisoneoftheleadingenterprisesinthecurtainwallindustryinChina.TheCompany'sintelligentcurtainwallprojectsencompasssuperhigh-risebuildings,largepublicbuildings,corporateheadquarters,commercialrealestate,hospitals,hotels,andotherprojects,featuringdiverseformsandstructures.Throughconstructingvarioustypesofprojects,theCompanyhasaccumulatedawealthofvaluableconstructionexperience.TheCompanyhasearnedunanimouspraisefromclientsforitssystematicintelligentconstructionframework,extensiveprojectmanagementexperience,andsuperiorconstructionquality.

4.Industriallayoutadvantages

Overtheyears,theCompanyhasdevelopedanindustrylayoutforitsintelligentcurtainwallsystemsandmaterials,withShenzhenastheheadquartersandShanghai,Chengdu,Dongguan,andGanzhouasproductionbases,providingcustomerswithintegratedsolutionsthatincluderesearchanddevelopment,design,production,projectmanagement,construction,andmaintenanceservices,therebycreatingacompleteindustrialchaininthecurtainwallsystemsandmaterialssector.Amongthese,Fangda(Ganzhou)Low-CarbonIntelligentManufacturingBaseisa"5G+IntelligentFactory"thatintegrates5G,digitization,theInternetofThings,andintelligenttechnologies.Itleadstheindustryinsysteminnovation,productdevelopment,andmanufacturing,andhasnowbecomea"GreenIsland"factoryintheintelligentmanufacturing+AIsystem.TheCompany'scomprehensiveproductionbaselayoutandcompleteindustrialchainoptimizeproductioncosts,enhanceefficiency,andquicklyrespondtomarketdemandchanges,providingsignificantsupportforincreasingmarketshareandoverallcompetitiveness.

5.Talent

TheCompanyconsistentlyemphasizesthedevelopmentofitstalentpool.Overtheyears,ithascultivatedanexperienced,internationally-mindedseniormanagementteamandaprofessional,execution-orientedmiddlemanagementteam,withawell-establishedtalenttrainingsystemandtalentreserve,offeringclearcareerdevelopmentpaths.TheCompanyhasacompleteincentiveandevaluationsystemforthetransformationofscientificandtechnologicalachievements,trulyimplementingasurvivalofthefittestapproachtoreducestaffwhileincreasingefficiency,fullystimulatingtheinnovativevitalityofR&Dpersonnel.ThistechnologicalinnovationsupportsandleadstheCompany'simprovementinqualityandefficiency,ensuringsustainableandhealthydevelopment,andfirmlyfollowsthepathofindependentinnovation,becomingadrivingforceforhigh-qualityenterprisedevelopment.

(3)Newenergyindustry

TheCompany'snewenergyindustryprimarilyfocusesontheapplicationofnewenergyandenergy-savingtechnologies,suchassolarphotovoltaicpowerplantsandbuilding-integratedphotovoltaics(BIPV).Itsbusinessscopespansacrosstheconstructionandphotovoltaicpowergenerationindustries.Morethantwentyyearsago,theCompanyactivelypursuedthedevelopmentofsolarphotovoltaiccurtainwallsystemtechnology,makingitoneoftheearliestenterprisesinChinaengagedinthedesign,manufacturing,andintegrationofBuildingIntegratedPhotovoltaic(BIPV)systems.

DistributedsolarpowerPVpowergenerationiscloselyrelatedtotheCompany'scurtainwallbusiness.PartofthedistributedsolarpowerPVsystemsarecloselyrelatedtoconstruction.Moreover,intermsofproductsystemintegration,theCompanyhasovertwentyyearsofexperienceinelectromechanicalproductintegrationandprojectmanagement.Itpossessesprofessionalqualificationsinmechanicalandelectricalinstallation,amongothers.

(IV)CommercialManagementandServiceIndustry

TheCompanycontinuestodelvedeeplyintoartificialintelligenceandAItechnology,leveragingdifferentiatedpositioningandadigitalinvestmentattractionsystemtocontinuouslyenhancethevalueandeffectivenessoftheFangdabrand,steadilyadvancingamidstintensemarketcompetition.Overtheyears,theCompanyhasaccumulatedextensiveexperienceinthecommercialmanagementandservicesindustry,ensuringefficientmanagementandstrongexecutioncapabilities.

III.IndustrySituationDuringtheReportingPeriod

(I)IntelligentPlatformScreenDoorEquipmentandSystemsforRailTransit

1.IndustrydevelopmentChina'srailtransitindustryisachievingacriticalleapfromscaleexpansiontoqualityenhancementunderthebackdropofbuildingastrongtransportationnation,urbanagglomerationdevelopment,andthe"DualCarbon"goals.Guidingpolicydocumentssuchasthe"OutlineforBuildingaStrongTransportationNation,"the"14thFive-YearPlanforNationalEconomicandSocialDevelopmentandLong-RangeObjectivesfor2035,"andthe"14thFive-YearPlanforModernComprehensiveTransportationSystemDevelopment"providerobustsupportfortherailtransitequipmentindustryinwhichtheCompanyoperates,pointingthewayfortheCompanytoconductresearchanddevelopnewproducts.

Accordingtothe"UrbanRailTransitOperationDataExpress"releasedbytheMinistryofTransport,asoftheendofJune2025,therewere54citiesinChinaoperating330urbanrailtransitlines,withanoperationalmileageof11,127.6kilometers.Inthefirsthalfof2025,atotalof149.3kilometersofoperationalmileagewasadded,and4newoperationallineswereintroduced,indicatingastabledevelopmenttrendinurbanrailtransit.AscountriesandregionsalongtheBeltandRoadInitiativeincreasetheirinvestmentinurbanrailtransitconstruction,Chinesehigh-endequipmentmanufacturingenterprisesareexpectedtoplayamoresignificantroleintheinternationalmarket.Asaleaderandpromoterintheconstructionandoperation&maintenanceofrailtransitplatformscreendoorsystems,ChinaFangdaGroupCo.,Ltd.willcontinuetobeguidedbynationalstrategiesandrelevantindustrialpolicies.TheCompanywillalignwithindustrydevelopmenttrendsandmarketdemands,intensifytechnologicalinnovation,continuouslyenhanceitscorecompetitiveness,focusondevelopinghigh-techvalue-addedproducts,andfurtherincreaseitsmarketshareintherailtransitplatformscreendoorsystemsector.

2.BusinessStatus

(1)Mainproductsandpurposes

TheCompany'smainproductsareplatformintelligentscreendoorsystemsforurbanrailtransit,anditalsoprovidesproductoperationandmaintenanceservices.Urbanrailtransitplatformscreendoorsystemsareinstalledattheplatformedgesofurbanrailtransitstations,isolatingthetrackareafromthewaitingarea.Theyfeaturecontinuousmovabledoorbarriersthatcorrespondtotraindoorsandcanbecontrolledtoopenandcloseatmultiplelevels,includingfull-heightenclosedscreendoorsystems,full-heightnon-enclosedscreendoorsystems,andhalf-heightscreendoorsystems.Additionally,theCompany'sindependentlydevelopedplatformsafetydoorsystem,suitableforcomplexhigh-speedrailenvironments,canintelligentlyopenplatformsafetydoorscorrespondingtodifferenttypesofincominghigh-speedtrains.Thisinnovationwillopennewapplicationscenariosandmarketspacesinthefuture.

Theplatformscreendoorsystemisolatesthetrackfromtheplatformwaitingarea,effectivelyensuringthesafetyofpassengers,preventingthemfromfallingoffthetrack,andalsopreventingunauthorizedentryintothetunnel;Incaseoffireorotherfaultmodes,itcanbelinkedandcontrolledwithrelevantsystemstoachieverapidsmokeexhaustandpassengerevacuationandescapefunctions.Theplatformscreendoorsystemcaneffectivelyreducedust,noise,andtunnelwindpressureenteringtheplatformfromthetunnel,providingaquiet,comfortable,andsafetravelenvironmentforpassengers.Furthermore,theplatformscreendoorsystemfeaturespassengerflowcounting,facilitatingthediversionofpassengerflowtolow-densitycarriagesduringpeaktimes.Thedoorbodyoftheplatformscreendoorsystemcanalsoserveasapassengerinformationsystemplatform,enablingmultimediainteractivefunctionssuchasinformationbroadcasting,inquirydissemination,andcommercialpromotion.

(2)Mainbusinessmodel

TheCompany'srailtransitintelligentscreendoorequipmentindustryisoperatedbyitssubsidiary,FangdaZhiyuan,whichisanintegratedsupplierandserviceproviderofrailtransitintelligentscreendoorsystems,encompassingresearchanddevelopment,design,manufacturing,installation,andtechnicalservices,withacompleteindustrialchain.Amatureandcompletemanagementsystemforresearchanddevelopment,procurement,production,salesandO&Mhasbeenestablished.Intermsofresearchand

development,theCompanyhasformedaresearchanddevelopmentprojectinitiationmechanismthatcombinesindependentbasicresearchwithprojectneeds;Intermsofprocurement,suppliersaremainlyselectedandpurchasedbytheproject,andaspecialprocurementteamissetuptocarryouttheprocurementwork;Intermsofproduction,managetheCompany'sproductionactivitiesaccordingtocontractrequirementsandcustomer'sproductioninstructions;Intermsofsales,theCompany'scustomersaremetrocompaniesaroundtheworldandelectromechanicalgeneralcontractingunitsintherailtransitindustry,allofwhicharedirectsales,andthereisnodistribution;intermsofoperationandmaintenance,theCompanyalreadyhasanintelligentoperationandmaintenanceguaranteesystemforplatformscreendoors,whichcanmonitortheoperationdatainrealtimeandquicklydiagnoseandeliminatefaults.

(3)MarketcompetitionpatterninwhichtheCompanyislocatedandtheCompany'smarketposition

Asaworld-classsupplierofrailtransitscreendoorsystems,theCompanyisthemosttrustedexpertinrailtransitscreendoorsystemsbyitscustomers.TheCompany'srailtransitintelligentscreendoorsystemscovermorethan60%ofcitieswithoperationalmetrosystemsinChinaandover120linesinmorethan40citiesglobally,maintainingastrongleadingposition.TheCompanyactivelyrespondstothenational"BeltandRoadInitiative,"anditsoverseasscreendoorbusinessisinagoldenperiodofdevelopment,securingmajorrailtransitscreendoorsystemprojectsin"BeltandRoad"countriesandregionssuchasSingapore,Malaysia,HongKong,Taipei,Thailand,India,Greece,Colombia,andthePhilippines.Withthecontinuousexpansionanddeepeningofitsoverseasbusiness,theCompanyisexpectedtooccupyamoresignificantpositionintheglobalrailtransitintelligentscreendoorfield.

TheCompanyhasbeendedicatedtotherailtransitplatformscreendoorfieldforover20years,successfullydevelopingrailtransitintelligentscreendoorsystemswithindependentintellectualpropertyrightsandmaintainingaleadingtechnologicaladvantage.TheCompanyhasacomprehensiveteamofspecializedtalentsinresearchanddevelopment,design,manufacturing,installation,andtechnicalservices.Ithasauthoredthefirstindustrystandardforrailtransitplatformscreendoors,"UrbanRailTransitPlatformScreenDoors"(CJ/T236-2022),andparticipatedinthecompilationofthegroupstandard"AcceptanceSpecificationforUrbanRailTransitFullyAutomatedOperationSystem"(T/URTA0009-2022).TheCompany'sauthoredthefirstnationalstandardforscreendoorproducts,"UrbanRailTransitPlatformScreenDoorSystem,"whichhasbeenreviewedandapprovedbytheNationalUrbanRailTransitStandardizationTechnicalCommittee,withthecompilationworksuccessfullycompleted.Additionally,theCompanyco-authoredthe"TechnicalGuidelinesforSmartStationConstructioninRailTransit,""TechnicalSpecificationsforIntelligentDetectionSystemofForeignObjectsBetweenUrbanRailTransitPlatformScreenDoorsandTrainDoors,"and"High-SpeedRailPlatformDoorSystem,"showcasingtheCompany'sprofoundtechnicalexpertiseandleadingindustryposition.

Moreover,theCompany'surbanrailtransitplatformsafetydoorshavebeenrecognizedbytheMinistryofIndustryandInformationTechnologyas"SingleChampionProductsinManufacturing."FangdaZhiyuanhasbeenawardedseveralhonorsandqualifications,including"NationalIntellectualPropertyAdvantageEnterprise,""GuangdongProvinceScienceandTechnologyAward,""NationalKeyNewProduct,""NationalTorchProgramIndustrializationDemonstrationProject,""GuangdongProvinceIntelligentRailTransitPlatformDoorEngineeringTechnologyResearchCenter,""ShenzhenScienceandTechnologyProgressAward,"and"ShenzhenSpecializedandNewEnterprise."IthasalsobeenthefirsttopasstheinternationalrailwayindustrystandardIRISmanagementsystemandRAMScertification.TheCompany'sdomesticandinternationalpatentsandcomputersoftwarecopyrightshaveformedacoretechnologygroupandintellectualpropertysystemwithindependentintellectualpropertyrights.

(II)IntelligentCurtainWallSystemsandMaterialsIndustry

1.Industrydevelopment

Inthefirsthalfof2025,thedevelopmentofChina'scurtainwallindustrywassignificantlyinfluencedbythemacroeconomicsituationandpolicyenvironment.Accordingtothe2025StateCouncilGovernmentWorkReport,theGDPgrowthtargetissetataround5%,withanexpectedurbanjobcreationofover12million.Whileaseriesofgrowth-stabilizingpoliciesimplementedbythestateprovidedsomesupporttothebuildingcurtainwallindustry,thesectorfacedsignificantpressureduetoglobal

uncertaintiesandinsufficientdomesticdemand.Overcapacityintheconstructionindustryledtointensifiedmarketcompetitionanddecliningprofitmargins,withresourcesrapidlyconcentratingtowardsleadingenterpriseswithstrongriskresistance,whilesmallandmedium-sizedenterprisesencounteredoperationaldifficultiessuchascashflowconstraints.Currentpoliciesfocusongreenbuildingandenergyconservation.DocumentssuchastheMinistryofHousingandUrban-RuralDevelopment's"14thFive-YearPlanforBuildingEnergyEfficiency"andtheStateCouncil's"EnergyConservationandCarbonReductionPlanfortheBuildingSector"explicitlyrequirethepromotionofexistingbuildingrenovations,prefabricatedbuildings,andthedevelopmentofnewgreenbuildings.Theindustryisacceleratingitstransitiontoproducinggreen,energy-efficient,andintelligentcurtainwallproductsthroughinnovativedesign,smartmanufacturing,andsafeinstallation,becomingacoredriverinachievingthegoalofbuilding"goodhouses."TheMinistryofFinanceandtheMinistryofHousingandUrban-RuralDevelopmenthaveincludedtherenovationofoldareasinthescopeofsupportfordemonstrationcities.Theurbanvillagerenovationpolicyhasexpandedfrom35megaandsuper-largecitiestonearly300prefecture-levelcities.TheGeneralOfficeoftheCPCCentralCommitteeandtheGeneralOfficeoftheStateCouncil's"OpinionsonContinuouslyPromotingUrbanRenewalActions"clearlyliststherenovationofoldneighborhoods,factoryareas,andurbanvillagesascoretasks.Withthecontinuousreleaseofpolicybenefits,theurbanrenewalmarketinvolvingover300citiesisbecominganewblueoceanforgrowthintheconstructionindustry.Duringthereportingperiod,theCompanyfocusedondual-linedevelopmentdomesticallyandinternationally.Domestically,itoptimizedcustomergrouppositioningandcompetitionstrategies,emphasizedresourceinvestmentinregionssuchasHangzhou,Suzhou,Chengdu,andChongqing,andenhancedlargecustomerqualitythroughspecializedservices.Italsoimprovedthestandardizedmanagementsystembasedonhigh-endresidentialprojectexperience.Simultaneously,theCompanyacceleratedoverseasexpansionbydeployingeliteteamstoconsolidatetheAustralianmarketandsteadilyadvancinglayoutsinemergingmarketsinSoutheastAsiaandtheMiddleEast,achievingordergrowthwithcontrollablerisks.

2.Business

(1)Mainproductsandpurposes

TheCompany'ssmartcurtainwallsystemsarewidelyusedinvariousbuildingssuchashigh-endofficebuildings,corporateheadquarters,urbancomplexes,hotels,largevenues,institutionalorgovernmentofficebuildings,andhigh-endresidentialbuildings.Theyeffectivelyenhancethevisualaestheticsofbuildings,improveenergyefficiencyandenvironmentalprotection,andbettermeetpeople'sworkandlivingneeds.Thesmartcurtainwallintegratesmodernbuildingtechnologyandintelligentsystems,basedonintelligentbuildingtechnology,incorporatingmoderatecontrolofauxiliarytechnologies(suchasheating,heat,light,andelectricity),andreducesbuildingenergyconsumptionthroughdigitalandartificialintelligencetechnologies.TheCompany'ssmartcurtainwallprojectshaverepeatedlywonthehighestawardinChina'sconstructionfield,the"LubanAward(NationalQualityEngineeringAward),"positioningitattheforefrontofglobalpeersandestablishingitasarenownedglobalcurtainwallbrand,reflectingthehigh-qualitycharacteristicsofnewqualityproductivity.TheCompanyfullyleveragesitsadvantagesintechnology,services,andtalenttoconductinspectionsandchecksonbuildingexteriormaintenancesystems,buildingenergy-savingrenovations,waterproofingandanti-corrosion,maintenance,andrelatedtechnicalservices.Ithasprovidedtheseservicesforover8millionsquaremetersofbuildings,demonstratingstrongcompetitivenessintheindustry.

Newmaterials,withafocusonlow-carbon,environmentalprotection,intelligence,andsustainability,areoneofthekeyindustriestheCompanyisactivelydeveloping.ChinaFangdaGroupCo.,Ltd.possessesstrongresearchanddevelopmentcapabilitiesandadvancedproductionbasesforPVDFaluminumpanelsandaluminumhoneycombpanels.Itsproductshavebeenwidelyusedinnumerousmajorprojectsacrossmorethan160citiesworldwide.

(2)Mainbusinessmodes,specificrisksandchanges;

TheCompany'sprimarybusinessmodelisanintegrated"design-production-construction"model,whichremainedunchangedduringthereportingperiod.TheCompanysecurescontractsforsmartcurtainwalldesign,installation,andconstructionmainlythroughbiddingprocesses(publicbiddingandinvitedbidding).Accordingtoorderrequirements,theCompanyprovides

comprehensivesolutionsencompassingdesign,rawmaterialprocurement,production,installation,andafter-salesservice.Theseordersaretypicallynon-standardizedandcustomized,withgrossmarginsinfluencedbyvariousfactors,includingtheowner'sbudget,biddingcompetition,productmaterials,buildingstructurecomplexity,projecttimeline,andon-siteconstructionandcostmanagement.Additionally,duetothelongimplementationcyclesoforders,theyaresignificantlyaffectedbynationalindustrialpolicies,rawmaterialprices,andlabormarketfluctuations.Thetechnicalrequirementsofdifferentordersvaryandcannotsimplyreplicateexistingexperiences,demandinghighlevelsoftechnicalandmanagementexpertise.Theengineeringpaymentsettlementprocessforordersisdividedintostagessuchasengineeringadvancepayment,engineeringprogresspayment,completionacceptance,completionsettlementpayment,andqualityguaranteedeposit.Thespecificsettlementsituationdependsonthecompletionprogressandcontractagreement.Oneofthemainchallengesfacedbycurtainwallcompaniesistheriskofcapitalturnover.Theengineeringcontractingmodeloftenrequirescompaniestoadvancesubstantialfundsformaterialprocurementandconstruction,whileprojectpaymentcyclesarelengthy.Inthecurrentcontextofadjustmentsintherealestateindustry,accountsreceivablehaveincreased,andsomeclientsfaceobstaclesinfundrepayment.

Toaddresstheriskofpaymentobstacles,theCompanyhasstrengthenedprojectcontracttrackingandaccountsreceivablemanagement,includingadjustingorganizationalstructure,establishingspecializedteamsforcollections,andcoordinatingcollectionmanagementtasks.TheCompanyhasimproveditscontractperformancemanagementmechanisms,implementingdiversifiedcollectionmethodssuchasnegotiation,formalnotifications,andlegalproceedingsaccordingtoprojectcharacteristicstoensurepreciseandeffectivecollections.Acomprehensiveprojectlifecycleriskassessmentmechanismhasbeenestablished,implementingtiereddynamicriskcontrolwhileintensifyingtheassessmentofaccountsreceivablecollections.Throughtheseorganizationalsafeguards,processstandardization,riskcontrol,andassessmentincentives,theCompanyhasgraduallyimproveditscapitalrecoveryefficiency,furthermitigatingpaymentobstacles.Simultaneously,intermsoforderselection,theCompanywillraiseentrythresholds,focusingonprojectswithbetterpaymentconditionstocontrolrisksatthesource,ensuringapositivecashflowcycleandtheCompany'sstabledevelopment.

(3)MarketcompetitionpatterninwhichtheCompanyislocatedandtheCompany'smarketposition

Duringthereportingperiod,thebuildingcurtainwallindustryexhibitedcharacteristicsof"stabilityunderpressureandaccelerateddifferentiation."Theindustry'soverallrevenueslightlydeclined,netprofitwasunderpressure,andcashflowwasgenerallytight.Somesmallandmedium-sizedenterprisesbegantoshowsignificantdeclinesorevenfacesurvivalcrises,andmarketconcentrationwithintheindustryisaccelerating.Inresponsetothedomesticmarket'ssluggishcondition,largerenterpriseswithstrongmanagementcapabilitiesarechoosingtoexpandoverseasorintensifytheirinternationalexpansionefforts.Competitionamongmajorenterpriseswithintheindustryisnolongerlimitedtothedomesticmarket,quietlyextendingtoregionssuchastheMiddleEast.

Duringthereportingperiod,theCompany'smarketpositionremainedstable,firmlypositionedasanindustryleader,consistentlyleadingwithoutstandingtechnology,service,andbrandinfluence,demonstratingresilienceagainstcyclicalfluctuations.

(3)Newenergyindustry

Withtheadvancementof"carbonneutrality"andgreenbuildingpolicies,thephotovoltaicpowergenerationindustryhasenteredanewstageofhigh-qualitydevelopment.Building-integratedphotovoltaics(BIPV)hasbecomethemaindevelopmentdirectionforthecurtainwallindustry.Policiessuchasthe"GeneralSpecificationforBuildingEnergyEfficiencyandRenewableEnergyUtilization"issuedbytheMinistryofHousingandUrban-RuralDevelopmentprovidelegalassuranceforthepromotionofBIPVandcreateincrementalmarketspacefortheapplicationofphotovoltaicsystemsinnewbuildings.Furthermore,withthereductioninphotovoltaicmodulecostsandtechnologicaladvancements,thepenetrationrateofBIPVisexpectedtofurtherincrease,bringingnewgrowthopportunitiestotheindustry.

(IV)CommercialManagementandServiceIndustry

1.Industrydevelopment

In2025,withtheimplementationofaseriesofnationalpolicies,therealestatemarketismovingtowardsstabilization,andthesocio-economicconditionscontinuetoimprove.RegionaldifferentiationwillbringnewdevelopmentopportunitiestotheGuangdong-HongKong-MacaoGreaterBayArea,characterizedbymatureindustrialdevelopment,strongpopulationattraction,ahighrateofenterprisesettlement,andongoingintegrationbetweenShenzhenandHongKong.TheShenzhenmarketstillholdssignificantpotentialforthefuture.

2.MainBusinessModel,BusinessProjectFormats,CompanyMarketPositionandCompetitiveAdvantages,MainRisksandCountermeasures

TheCompany'scommercialdevelopmentprojectsprimarilyadoptaself-developmentmodelwithacombinationofpartialsalesandpartialholding.Currently,theproductsdevelopedbytheCompanymainlyincludeofficespaces,commercialproperties,andapartments.Throughyearsofoperationalservices,theCompanyhasestablishedaprofessionalandefficientteam,effectivemanagementprocesses,andaninformationsystemcapableofprovidinghigh-qualitymanagementandservices.TheCompany'sspecializationcapabilities,brandrecognition,occupancyrates,andrevenuelevelscontinuetoimprove.

Leveragingthebrandadvantage,differentiatedpositioning,andregionaladvantagesofitscommercialprojects,theCompanyhassecuredacertainmarketposition.However,itstillfacesmultipleriskssuchashousingpricefluctuations,policyregulations,andmarketcompetition.TheCompanywillemployrefinedmanagement,flexiblyadjuststrategies,andcapitalizeonpolicybenefitstocontinuouslyoptimizebrandbuildingandmarketingpromotion,therebyreducingoperationalandmanagementrisksandmaintainingstabledevelopment.

3.Newlandreserveprojects

4.Totallandreserve

5.Mainproductiondevelopmentstatus

6.Mainprojectsales

7.Mainprojectlease

8.First-leveldevelopmentofland

□Applicable?Inapplicable

9.Financingchannel

10.DevelopmentstrategyandoperationplaninnextyearThemaintasksfortheCompany'sfuturecommercialmanagementandservicebusinessaretoincreasetheoccupancyrateoftheShenzhenFangdaTownprojectandtocleartheremaininginventory,whilevigorouslypromotingthesalesoftheNanchangFangdaCenterproject.TheCompanyaimstocontinuouslyenhanceprojectleasing,operations,andservicelevels,deeplyadvancingdigitalizationinthepropertyservicesector,andactivelyexploringtheapplicationofnewtechnologieslikeartificialintelligenceinpropertymanagement.Examplesincludesmartcustomerservice,intelligentsecuritysystems,andsmartcleaningrobots,providingcustomerswithintelligentshoppingguidance,behavioranalysis,andoptimizingmalllayoutdesignusingbigdata,toachieveconvenience,efficiency,andintelligence,therebyenhancingthecustomershoppingexperience.

Atthesametime,theCompanywill,accordingtothelatestpolicies,integrateandoptimizeexistingresourcestosteadilyadvancetheapplicationandapprovalprocessfortheurbanrenewalprojectoftheShenzhenHenggangDakanproject.

11.Bankmortgageloanguaranteeprovidedforcommercialhousingpurchasers?Applicable□InapplicableInaccordancewithbusinesspractices,theCompany'scommercialmanagementandservicebusinessprovidesmortgageloanguaranteestopurchasersofcommercialhousing,withthetypeofguaranteebeingaphasedguarantee.Thetermoftheperiodicguaranteelastsfromtheeffectivenessofguaranteecontractstothecompletionofmortgageregistrationandtransferofhousingownershipcertificatestobanks.AsofJune30,2025,theCompany'soutstandingamountfortheabove-mentionedphasedguaranteeswasRMB4,000,000.

12.JointInvestmentsbyDirectors,Supervisors,SeniorManagement,andtheListedCompany

□Applicable?InapplicableIV.MainBusinessAnalysis

OverviewSeeI.MajorbusinessesoftheCompanyduringtheReportPeriodYear-on-yearchangesinmajorfinancialdata

InRMB

Majorchangesinprofitcompositionorsourcesduringthereportperiod

□Applicable?InapplicableTheprofitcompositionorsourcesoftheCompanyhaveremainedlargelyunchangedduringthereportperiod.Turnovercomposition

InRMB

Industries,products,orregionsaccountingformorethan10%oftheCompany'soperatingrevenueorprofit?Applicable□Inapplicable

InRMB

Mainbusinessstatisticsadjustedintherecentoneyearwiththestatisticscriteriaadjustedinthereportperiod

□Applicable?InapplicableV.Non-coreBusinessAnalysis

?Applicable□Inapplicable

InRMB

VI.AssetsandLiabilities

1.Majorchangesinassetscomposition

InRMB

2.Majorforeignassets

□Applicable?Inapplicable

3.Assetsandliabilitiesmeasuredatfairvalue

?Applicable□Inapplicable

InRMB

MajorchangesintheassetsmeasurementpropertyoftheCompanyinthereportperiod

□Yes?No

4.Rightrestrictionofassetsattheendoftheperiod

VII.Investment

1.Generalsituation

□Applicable?Inapplicable

2.Majorequityinvestmentinthereportperiod

□Applicable?Inapplicable

3.Majornon-equityinvestmentinthereportperiod

□Applicable?Inapplicable

4.Financialassetsinvestment

(1)Securitiesinvestment

□Applicable?InapplicableTheCompanymadenoinvestmentinsecuritiesinthereportperiod

2.Derivativeinvestment?Applicable□Inapplicable

1)Derivativeinvestmentsforhedgingpurposesduringthereportingperiod?Applicable□Inapplicable

InRMB10,000

2)Derivativeinvestmentforthepurposeofspeculationduringthereportingperiod

□Applicable?InapplicableDuringthereportingperiod,therewasnoderivativeinvestmentforthepurposeofspeculation.

5.Useofraisedcapital

□Applicable?InapplicableTheCompanyusednoraisedcapitalinthereportperiod.

VIII.MajorAssetsandEquitySales

1.Majorassetssales

□Applicable?InapplicableTheCompanysoldnoassetsinthereportperiod.

2.Majorequitysales

□Applicable?InapplicableIX.AnalysisofMajorJointStockCompanies

?Applicable□InapplicableMajorsubsidiariesandjointstockcompaniesaffectingmorethan10%oftheCompany'snetprofit

InRMB

Acquisitionanddisposalofsubsidiariesinthereportperiod

□Applicable?InapplicableMajorjoint-stockcompanies

Duringthisreportingperiod,FangdaJiankeCompany'soperatingrevenuewasRMB1,110,643,841.18,withmainbusinessrevenueofRMB1,105,425,060.32,andanoperatingprofitofRMB-36,633,052.68,withmainbusinessprofitofRMB-35,290,314.66.ShanghaiZhijianCompanyreportedoperatingrevenueofRMB113,380,305.99,mainbusinessrevenueofRMB101,031,142.90,andanoperatingprofitofRMB6,404,083.36,withmainbusinessprofitofRMB5,556,887.34.ZhiyuanTechnologyCompanyhadoperatingrevenueofRMB316,923,499.00,withmainbusinessrevenueofRMB310,463,389.65,andanoperatingprofitofRMB59,702,466.56,withmainbusinessprofitofRMB59,454,538.96.FangdaRealEstateCompany'soperatingrevenuewasRMB39,768,253.97,withmainbusinessrevenueofRMB39,737,214.67,andanoperatingprofitofRMB7,791,827.65,withmainbusinessprofitofRMB7,760,788.35.FangdaPropertyCompany'soperatingrevenuewasRMB36,066,478.84,withmainbusinessrevenueofRMB36,058,148.70,andanoperatingprofitofRMB14,760,059.22,withmainbusinessprofitofRMB14,751,729.08.

X.StructuralEntitiesControlledbytheCompany

□Applicable?Inapplicable

XI.RisksFacedbytheCompanyandCountermeasures

1.RisksofmacroenvironmentandpolicychangesTheCompany'smainbusinesssegmentsarecloselyrelatedtomacroeconomicandindustrialpoliciesandaregreatlyaffectedbytheoverallmacroenvironment.TheCompanyisactivelyexpandingitsglobalmarket.Ifadversechangesoccurinthefutureinternationalanddomesticmacroeconomicenvironment,suchassloweconomicdevelopmentandreducedfixedassetinvestmentaffectingdemandinthepublicbuildingcurtainwallindustryandrailtransitequipmentindustry,oriftheCompanyfacesindustrydownturnsorexcessivecompetition,itwilladverselyimpacttheCompany'sfutureprofitabilityandthusaffectitsoperatingperformance.

Tobetterrespondtotheopportunitiesandchallengesbroughtbychangesintheeconomicenvironmentandpolicies,theCompanywillcloselymonitorchangesindomesticandinternationalmacroeconomicandpolicysituations,adjustingitsbusinessstrategiesinatimelymanner.Simultaneously,theCompanyisactivelyexploringtheapplicationofartificialintelligence(AI)inmanagementandbusinessoperationstoempowerhigh-qualitydevelopmentinmanagementandindustry,increasemarketshare,andmitigaterisksfrommacroeconomicandpolicychanges.

2.Marketcompetitionrisks

IntherailtransitPSDmarket,thetechnologyofotherdomesticmanufacturersisbecomingmoreandmoremature,andthecompanymayfacetheriskofintensifiedmarketcompetition.IftheCompanycannotmaintainaleadingpositioninthemarket,itwillhaveacertainadverseimpactonthedevelopmentandbenefitsoftheCompany'srailtransitPSDbusiness.Inthisregard,theCompanywillcontinuetoadoptastablebusinesspolicy,improvethecompetitiveadvantageofproductsthroughtechnologicalinnovationandfinemanagement,acceleratethereturnoffunds,andimprovetheoperationefficiencyandmarketcompetitivenessoftheCompany.

TheCompanywillcloselytrackindustrydevelopmenttrendsandtechnologicalupdates,enhancingproductcompetitivenessthroughtechnologicalinnovationandrefinedmanagement,andacceleratingtherecoveryoffunds.Byleveragingindustry-university-researchcooperation,theCompanywilljointlyconductcutting-edgetechnologyresearchandproductdevelopment,acceleratingthetransformationofscientificandtechnologicalachievements,andpursuinghigh-qualitygrowthwithhightechnologyandhighefficiency.Whileconsolidatingthedomesticmarket,theCompanywillintensifyeffortstoexpandtheinternationalmarket,solidifyingthedual-cycledevelopmentpatternofdomesticandinternationalmarkets.

3.Productionandoperationrisks

Themacro-economyandmarketdemandhaveaddedtothefluctuationinpricesofmainrawmaterialsandlabor,affectingtheCompany’sprofitabilityandcreatingadditionalproductionandoperationrisksfortheCompany.

TheCompanywillusefuturesproductsforhedging,negotiatewithpartnerstoincreasecontractamounts,andreasonablyarrangematerialprocurementplanstohedgeandtransfersomeoftherawmaterialpricefluctuationrisks.TheCompanyimplementsastrictsuppliermanagementmechanism,activelyenhancesthetechnologicallevelofproductionmanagement,increaseseffortsintechnologicalresearchanddevelopment,focusesonprocessimprovements,andaimstoincreasetheautomationandintelligenceofproductionequipmenttoreducerawmaterialwastage.TheCompanywillcontinuetopromoteintelligentanddigitalconstructionsystem,widelyapplynewtechnologiesandprocesses,strengthenstaffskilltraining,andimprovequalityandefficiencyonthebasisofensuringsafety.

4.ManagementRisks

Inrecentyears,withtheexpansionoftheCompany'sbusinessscaleandtheincreaseofthenumberofsubsidiaries,thedailymanagementofthecompanyisbecomingmoreandmoredifficult,whichmayfacethemanagementriskofindustrialscaleexpansion.Inaddition,inrecentyears,theregulatoryrequirementsforlistedcompanieshavebeencontinuouslyimprovedand

deepened.TheCompanyneedstofurtherstrengthenmanagement,continuetopromotemanagementreform,constantlyoptimizeprocessandorganizationalstructure,improvevariousrulesandregulations,andvigorouslyintroducehigh-quality,highlyskilledandmultidisciplinarytechnologyandmanagementtalents,graduallyoptimizetheallocationofhumanresources,optimizetheechelonstructure,andeffectivelyreducethemanagementrisksbroughtbybusinessdevelopment.XII.ImplementationStatusofMarketValueManagementSystemandValuationEnhancementPlanHastheCompanyformulatedamarketvaluemanagementsystem?

□Yes?NoHastheCompanydisclosedavaluationenhancementplan??Yes□NoOnApril22,2025,theCompanydisclosedthe"ChinaFangdaGroupCo.,Ltd.ValuationEnhancementPlan"oncninfo.com.cn(http://www.cninfo.com.cn),detailingthetriggeringcircumstancesandproceduresforformulatingthevaluationenhancementplan,andintroducingspecificmeasurestakenbytheCompanytoenhancevaluation.ThisplaniscloselyalignedwiththeCompany'sactualsituationanddevelopmentstrategy,helpingtoimprovetheCompany'soperatingqualityandinvestmentvalue,enhanceinvestorreturns,andpromotetheCompany'slong-termstabledevelopment.XIII.ImplementationoftheActionPlanfor"DoubleImprovementofQualityandReturn"

HastheCompanydisclosedtheannouncementofthe"QualityandReturnDoubleEnhancement"actionplan?

□Yes?NoChapterIVCorporateGovernance,Environment,andSociety

I.ChangesintheDirectors,SupervisorsandSeniorExecutives

?Applicable□Inapplicable

II.ProfitDistributionandReserveCapitalizationintheReportPeriod

□Applicable?InapplicableTheCompanydistributednocashdividendsorbonussharesandhasnoreservecapitalizationplan.

III.ShareIncentiveSchemes,StaffShareholdingProgramorOtherIncentivePlans

□Applicable?InapplicableThereisnoshareincentiveschemes,staffshareholdingprogramorotherincentiveplansinthereportperiod

IV.DisclosureofEnvironmentalInformation

Whetherthelistedcompanyanditsmajorsubsidiariesareincludedinthelistofenterprisesrequiredbylawtodiscloseenvironmentalinformation

□Yes?NoV.SocialResponsibilityWhilecreatingeconomicvalue,theCompanyplacesahighemphasisonsustainabledevelopmentoftheenvironmentandsociety,activelyfulfillingitscorporatesocialresponsibilities.Ithasproactivelypublishedasocialresponsibilityreportforsevenconsecutiveyears.Bysettingapositiveexampleinareassuchasecologicalenvironmentalprotectionandpromotingsocialdevelopment,theCompanydemonstratesitssenseofcorporateresponsibility.TheCompanyhascarriedoutindustrialsupportinGuangdong,Shaanxi,Guizhou,JiangxiandTibet,helpingruralareastoplantcashcropssuchasteamushroomsandliliesaccordingtolocalconditions,supportingruralcollectivebreedingindustryprojects,constructinggreenhousephotovoltaicpowerstations,distributedphotovoltaicpowerstationsandotherruralindustrial"blood-creation"projects,andfosteringnewimpetustothedevelopmentofruraleconomy,helpingtobuildathrivingindustryandecologicaldevelopment.Helpingtobuildabeautifulcountrysideintheneweraofprosperousindustry,ecologicallivability,civilizedcountryside,effectivegovernance,andaffluentlife,whichhasachievedgoodsocialeffectsandgainedhighpraisefromallwalksoflife.

Additionally,theCompanyactivelyparticipatesinvariouspublicwelfareactivities,coveringareassuchaseducationalsupport,publichealth,ruralmedicalaid,disasterrelief,environmentalprotection,andruralrevitalization,therebypracticingcorporatesocialresponsibilityandcontributingtobuildingaharmonioussocietyandpromotingsocialprogress.Forseveralconsecutiveyears,theCompanyhasbeenhonoredwithtitlessuchas"OutstandingEnterpriseinFulfillingSocialResponsibility."

ChapterVSignificantEvents

I.CommitmentsthatHaveBeenFulfilledandNotFulfilledbyActualController,Shareholders,RelatedParties,AcquirersoftheCompany

□Applicable?InapplicableThereisnocommitmentthathasnotbeenfulfilledbyactualcontroller,shareholders,relatedparties,acquirersoftheCompany

II.Non-operatingCapitalUsebytheControllingShareholderorRelatedPartiesintheReportingTerm

□Applicable?InapplicableThecontrollingshareholderanditsaffiliatesoccupiednocapitalfornon-operatingpurposeoftheCompanyduringthereportperiod.III.IncompliantExternalGuarantee

□Applicable?InapplicableTheCompanymadenoincompliantexternalguaranteeinthereportperiod.

IV.EngagingandDismissingofCPAWhethertheinterimfinancialreportisaudited

□Yes?NoTheinterimreportforH12015hasnotbeenaudited.

V.StatementoftheBoardonthe“Non-StandardAuditors'Report”IssuedbytheCPAontheCurrentReportPeriod

□Applicable?Inapplicable

VI.StatementoftheBoardofDirectorsontheNon-standardAuditor'sReportforH12014

□Applicable?InapplicableVII.BankruptcyandCapitalReorganizing

□Applicable?InapplicableTheCompanyhasnobankruptcyorreorganizationeventsinthereportperiod.

VIII.LawsuitSignificantlawsuitandarbitration

□Applicable?InapplicableTheCompanyhasnosignificantlawsuitorarbitrationaffairinthereportperiod.

Otherlawsuit?Applicable□Inapplicable

IX.PunishmentandRectification

□Applicable?InapplicableTheCompanyreceivednopenaltyandmadenocorrectioninthereportperiod.

X.CredibilityoftheCompany,ControllingShareholderandActualController?Applicable□InapplicableTheCompanyanditscontrollingshareholdersandactualcontrollersdonotfailtoperformtheeffectivejudgmentofthecourt,andthedebtswithalargeamountarenotpaidoffwhendue.XI.MaterialRelatedTransactions

1.Relatedtransactionsrelatedtoroutineoperation

□Applicable?InapplicableTheCompanymadenorelatedtransactionrelatedtodailyoperatinginthereportperiod.

2.Relatedtransactionsrelatedtoassetstransactions

□Applicable?InapplicableTheCompanymadenorelatedtransactionofassetsorequityrequisitionandsalesinthereportperiod.

3.Relatedtransactionsrelatedtojointexternalinvestment

□Applicable?InapplicableTheCompanymadenorelatedtransactionofjointexternalinvestmentinthereportperiod.

4.Relatedcreditsanddebts

□Applicable?InapplicableTheCompanyhadnorelateddebtinthereportperiod.

5.Transactionswithrelatedfinancialcompanies

□Applicable?InapplicableThereisnodeposit,loan,creditorotherfinancialbusinessbetweenthecompanyandtherelatedfinancialcompany.

6.Transactionsbetweenfinancialcompaniescontrolledbythecompanyandrelatedparties

□Applicable?InapplicableThereisnodeposit,loan,creditorotherfinancialbusinessbetweenthefinancialcompanycontrolledbythecompanyanditsrelatedparties.

7.Othermajorrelatedtransactions

□Applicable?InapplicableTheCompanyhasnoothersignificantrelatedtransactioninthereportperiod.

XII.SignificantContractsandPerformance

1.Assetentrusting,leasing,contracting

(1)Assetentrusting

□Applicable?InapplicableTheCompanymadenocustodyinthereportperiod.

(2)Contracting

□Applicable?InapplicableTheCompanymadenocontractinthereportperiod

(3)Leasing

□Applicable?InapplicableTherearenosignificantleasingsituationsduringthereportingperiod.

2.Significantguarantee?Applicable□Inapplicable

InRMB10,000

Detailsofcompositeguarantees:(1)Thebankissuedalong-termloanofRMB1.1billiontothesubsidiary,FangdaRealEstateCompany.TheCompanyprovidedaguaranteeofRMB1.1billion,with100%equitypledgeofFangdaRealEstateCompanyandamortgageonpartofthepropertiesinFangdaCity,aswellasapledgeofreceivablerents;(2)Thebankissuedalong-termloanofRMB300milliontothesubsidiary,FangdaIntelligentManufacturingCompany.TheCompanyprovidedaguaranteeofRMB300million,andFangdaIntelligentManufacturingCompanyprovidedamortgageonitsfixedassetsandindustrialland.TheCompany'snewguaranteesforsubsidiariesinthesecondquarterof2025areasfollows:

3.Entrustedwealthmanagement

?Applicable□Inapplicable

InRMB10,000

Detailsofhigh-riskentrustedfinancialmanagementwithsignificantsingleamountorlowsecurityandpoorliquidity

□Applicable?InapplicableEntrustedfinancialmanagementexpectedtofailtorecovertheprincipalorlikelyresultinimpairment

□Applicable?Inapplicable

4.Othersignificantcontract

□Applicable?InapplicableTheCompanyenteredintonoothersignificantcontractinthereport.

13.OtherMaterialEvents

□Applicable?InapplicableTherearenoothersignificantmattersrequiringexplanationduringthereportingperiod.

XIV.MaterialEventsofSubsidiaries

□Applicable?Inapplicable

ChapterVIChangesinShareCapitalandShareholdersI.ChangesinShares

1.Changesinshares

Inshare

Reasons

□Applicable?InapplicableApprovalofthechange

□Applicable?InapplicableSharetransfer

□Applicable?InapplicableProgressintheimplementationofsharerepurchase

□Applicable?InapplicableProgressintheimplementationofthereductionofshareholdingsharesbymeansofcentralizedbidding

□Applicable?InapplicableImpactsonfinancialindicatorsincludingbasicanddilutedearningspershare,netassetspershareattributabletocommonshareholdersoftheCompanyinthemostrecentyearandperiod

□Applicable?InapplicableOthersthatneedtobedisclosedasrequiredbythesecuritiessupervisor

□Applicable?Inapplicable

2.Changesinconditionalshares

?Applicable□Inapplicable

Inshare

II.SharePlacingandListing

□Applicable?InapplicableIII.ShareholdersandShareholding

Inshare

Situationofsharelendinginrefinancingbusinessbyshareholdersholdingmorethan5%,thetop10shareholders,andthetop10shareholdersofunrestrictedcirculatingshares

□Applicable?InapplicableChangesduetolending/returningofsharesinrefinancingbusinessbythetop10shareholdersandthetop10shareholdersofunrestrictedcirculatingsharescomparedtothepreviousperiod

□Applicable?InapplicableAgreedre-purchasingbytheCompany'stop10shareholdersofcommonsharesandtop10shareholdersofunconditionalcommonsharesinthereportperiod

□Yes?NoNoagreedre-purchasingbytheCompany'stop10shareholdersofcommonsharesandtop10shareholdersofunconditionalcommonsharesinthereportperiodIV.ChangesinShareholdingofDirectorsandSeniorManagement

□Applicable?InapplicableTheCompany'sDirectorsandseniormanagementshareholdinghasremainedunchangedduringthereportperiod.Fordetails,pleaserefertothe2024annualreport.V.ChangesinControllingShareholderorActualController

Changesinthecontrollingshareholderinthereportingperiod

□Applicable?InapplicableNochangeinthecontrollingshareholderinthereportperiod

Changeintheactualcontrollerinthereportperiod

□Applicable?InapplicableNochangeintheactualshareholderinthereportperiod

VI.PreferredShares

□Applicable?InapplicableTheCompanyhadnopreferredshareinthereportperiod.

ChapterVIIInformationabouttheCompany'sSecurities

□Applicable?Inapplicable

ChapterVIIIFinancialStatements

I.Auditor'sReportWhethertheinterimreportisaudited

□Yes?NoThefinancialstatementsforH12014havenotbeenaudited.

II.FinancialStatementsUnitforstatementsinnotestofinancialstatements:RMByuan

1.ConsolidatedBalanceSheet

Preparedby:ChinaFangdaGroupCo.,Ltd.

30June2025

InRMB

Legalrepresentative:XiongJianmingCFO:LinKebingAccountingManager:WuBohua

2.BalanceSheetoftheParentCompany

InRMB

3.ConsolidatedIncomeStatement

InRMB

NetprofitcontributedbyentitiesmergedundercommoncontrolinthereportperiodwasRMB0.00,netprofitrealizedbypartiesmergedduringthepreviousperiodisRMB0.00.Legalrepresentative:XiongJianmingCFO:LinKebingAccountingManager:WuBohua

4.IncomeStatementoftheParentCompany

InRMB

5.ConsolidatedCashFlowStatement

InRMB

6.CashFlowStatementoftheParentCompany

InRMB

7.StatementofChangeinOwners'Equity(Consolidated)

AmountoftheCurrentTerm

InRMB

AmountofLastYear

InRMB

8.StatementofChangeinOwners'Equity(ParentCompany)

AmountoftheCurrentTerm

InRMB

AmountofLastYear

InRMB

III.GeneralInformation

ChinaFangdaGroupCo.,Ltd.(the"Company"orthe"Group")isajointstockcompanyregisteredinShenzhen,GuangdongandwasapprovedbytheGovernmentofShenzhenwithDocument深府办函(1995)194号,andwasfounded,onthebasisofShenzhenFangdaConstructionMaterialCo.,Ltd.,bywayofshareissuinginOctober1995.Theunifiedsocialcreditcodeis:91440300192448589C;registeredaddress:FangdaTechnologyBuilding,KejiSouth12thRoad,SouthDistrict,High-techIndustrialPark,NanshanDistrict,Shenzhen.Mr.XiongJianmingisthelegalrepresentative.TheCompanyissuedforeigncurrencyshares(Bshares)andlocalcurrencyshares(Ashares)andlistedinNovember1995andApril1996respectivelyinShenzhenStockExchange.TheCompanyreceivedtheReplytotheNon-publicShareIssuanceofFangdaChinaGroupCo.,Ltd.(CSRCLicense[2016]No.825)toallowtheCompanytoconductnon-publicissuanceof32,184,931A-sharesinJune2016.Accordingtotheprofitdistributionplanfor2016approvedbythe2016generalshareholders'meeting,theCompanyissuedfivesharesforeverytensharestoallshareholdersthroughsurpluscapitalizationbasedonthetotal789,094,836sharesonDecember31,2016.Theregisteredcapitalattheendof2017wasRMB1,183,642,254.00.TheCompanyrepurchasedandcanceled28,160,568.00BsharesinAugust2018,32,097,497.00BsharesinJanuary2019,35,105,238.00BsharesinMay2020,14404724.00BsharesinApril2021andcanceledinApril2021.TheexistingregisteredcapitalisRMB1,073,874,227.00yuan.

TheCompanyhasestablishedthecorporategovernancestructureoftheGeneralMeetingofShareholdersandtheBoardofDirectors.Atpresent,ithassetupthePresident'sOffice,theAdministrationDepartment,theHumanResourcesDepartment,theEnterpriseManagementDepartment,theFinanceDepartment,theAuditandSupervisionDepartment,theSecuritiesDepartment,theLegalDepartment,theInformationManagementDepartment,theTechnologyInnovationDepartment,theDevelopmentPlanningDepartmentandotherdepartments,andhasShenzhenFangdaConstructionTechnologyGroupCo.,Ltd.(hereinafter

referredtoasFangdaConstructionTechnologyCo.,Ltd.)FangdaZhiyuanTechnologyCo.,Ltd.(hereinafterreferredtoasFangdaZhiyuanTechnologyCo.,Ltd.),FangdaJiangxiNewMaterialsCo.,Ltd.,FangdaRealEstateCo.,Ltd.,FangdaNewEnergyCo.,Ltd.andothersubsidiaries.ThebusinessnatureandmainbusinessactivitiesoftheCompanyanditssubsidiariesinclude:(1)curtainwalldivision,productionandsalesofcurtainwallmaterials,design,productionandinstallationofbuildingcurtainwalls,andcurtainwalltestingandmaintenanceservices;(2)Railtransitbranch,assemblyandprocessingofsubwayscreendoors,screendoordetectionandmaintenanceservices;(3)Therealestatedivisionisengagedinrealestatedevelopment,operationandpropertymanagementonthelandthathaslegallyobtainedtherighttouse;(4)Newenergydivision,photovoltaicpowergenerationandsales;R&D,installationandsalesofphotovoltaicequipment,designandinstallationofphotovoltaicpowerstationproject.Dateoffinancialstatementapproval:ThisfinancialstatementisapprovedbytheBoardofDirectorsoftheCompanyonAugust21,2025.

IV.BasisforthePreparationofFinancialStatements

1.PreparationbasisTheCompanypreparesthefinancialstatementsbasedoncontinuousoperationandaccordingtoactualtransactionsandevents,withfiguresconfirmedandmeasuredincompliancewiththeAccountingStandardsforBusinessEnterprisesandotherspecificaccountstandards,applicationguideandinterpretations.TheCompanyhasalsodisclosedrelatedfinancialinformationaccordingtotherequirementoftheRegulationsofInformationDisclosureNo.15–GeneralProvisionsforFinancialStatements(Revisedin2023)issuedbytheCSRC.

2.ContinuousoperationTheCompanyassessedthecontinuingoperationscapabilityoftheCompanyforthe12monthsfromtheendofthereportingperiod.NomatterswerefoundthatwouldaffecttheCompany'sabilitytocontinueasagoingconcern.ItisreasonablefortheCompanytopreparefinancialstatementsbasedoncontinuingoperations.V.SignificantAccountPoliciesandEstimatesThefollowingmajoraccountingpoliciesandaccountingestimatesshallbeformulatedinaccordancewiththeaccountingstandardsoftheenterprise.Unmentionedoperationsarecarriedoutinaccordancewiththerelevantaccountingpoliciesintheenterpriseaccountingstandards.

1.StatementofcompliancetotheEnterpriseAccountingStandard

ThesefinancialstatementsmeettherequirementsoftheAccountingStandardsforBusinessEnterprisesandtrulyandfullyreflecttheCompany'sfinancialstatus,performanceresult,changesinshareholders'equityandcashflows.

2.FiscalPeriod

TheCompanyThefiscalperiodrangesbetweenJanuary1andDecember31oftheGregoriancalendar.

3.Operationperiod

Ournormalbusinesscycleisoneyear

4.Bookkeepingstandardmoney

TheCompany'sbookkeepingstandardcurrencyisRenminbi,andoverseassubsidiariesarebasedonthecurrencyofthemaineconomicenvironmentinwhichtheyoperate.

5.Methodfordeterminingimportancecriteriaandselectioncriteria

?Applicable□Inapplicable

6.Accountingtreatmentoftheentitiesundercommonanddifferentcontrol

(1)Consolidationofentitiesundercommoncontrol

TheassetsandliabilitiesacquiredbytheCompanyinabusinesscombinationaremeasuredatthebookvalueofthecombinedpartyintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyonthedateofcombination.ForentitieswithdifferentaccountingpoliciesandperiodsfromtheCompanypriortothebusinesscombination,accountingpoliciesareunifiedbasedontheprincipleofmateriality.Thismeansadjustingthebookvalueoftheassetsandliabilitiesofthecombined

entityinaccordancewiththeCompany'saccountingpoliciesandperiods.IfthereisadifferencebetweenthebookvalueofthenetassetsacquiredbytheCompanyinthebusinesscombinationandthebookvalueoftheconsiderationpaid,firstadjustthebalanceofthecapitalreserve(capitalpremiumorequitypremium),thebalanceofthecapitalreserve(capitalpremiumorequitypremium)Ifitisinsufficienttooffset,thesurplusreserveandundistributedprofitswillbeoffsetinsequence.

Fortheaccountingtreatmentmethodofbusinesscombinationnotunderthesamecontrolthroughstep-by-steptransactions,seeChapterVIII,V.importantaccountingpoliciesandaccountingestimates7.(6).

(2)Consolidationofentitiesunderdifferentcontrol

AllidentifiableassetsandliabilitiesacquiredbytheCompanyduringthemergershallbemeasuredatitsfairvalueonthedateofpurchase.ForentitieswithdifferentaccountingpoliciesandperiodsfromtheCompanypriortothebusinesscombination,accountingpoliciesareunifiedbasedontheprincipleofmateriality.ThismeansadjustingthebookvalueoftheassetsandliabilitiesoftheacquiredentityinaccordancewiththeCompany'saccountingpoliciesandperiods.ThemergercostoftheCompanyonthedateofpurchaseisgreaterthanthefairvalueoftheassetsandliabilitiesrecognizedbythepurchaserinthemerger,andisrecognizedasgoodwill.Ifthemergercostislessthanthedifferencebetweentheidentifiableassetsandthefairvalueoftheliabilitiesobtainedbythepurchaserintheenterprisemerger,themergercostandthefairvalueoftheidentifiableassetsandtheliabilitiesobtainedbythepurchaserintheenterprisemergerarereviewed,andthemergercostisstilllessthanthefairvalueoftheidentifiableassetsandliabilitiesobtainedbythepurchaserafterthereview,thedifferenceisconsideredastheprofitandlossofthecurrentperiodofthemerger.

Fortheaccountingtreatmentmethodofbusinesscombinationsnotundercommoncontrolachievedthroughstep-by-steptransactions,seeSectionVIII,V,ImportantAccountingPoliciesandEstimates,7,(6).

(3)Treatmentofrelatedtransactionfeeinenterprisemerger

Agencyexpensesandotheradministrativeexpensessuchasauditing,legalconsulting,orappraisalservicesoccurredrelatingtothemergerofentitiesareaccountedintocurrentincomeaccountwhenoccurred.Thetransactionfeesofequitycertificatesorliabilitycertificatesissuedbythepurchaserforpaymentfortheacquisitionareaccountedattheinitialamountofthecertificates.

7.Judgmentcriteriaforcontrolandpreparationmethodsforconsolidatedfinancialstatements

(1)Determinationofcontrolcriteriaandconsolidationscope

ControlmeansthepowerpossessedbytheCompanyoninvestedentitiestosharevariablereturnsbyparticipatinginrelatedactivitiesoftheinvestedentitiesandtoimpacttheamountofthereturnsbyusingthepower.Thedefinitionofcontrolincludesthreebasicelements:first,theinvestorhasthepowerovertheinvestee;second,enjoysvariablereturnsduetoparticipationintheinvestee'srelatedactivities;andthird,hastheabilitytousethepowerovertheinvesteetoinfluenceitsreturnamount.WhentheCompany'sinvestmentintheinvestedpartymeetstheabovethreeelements,itindicatesthattheCompanycancontroltheinvestedparty.Theconsolidatedscopeoftheconsolidatedfinancialstatementsisdeterminedonacontrolbasisandincludesnotonlysubsidiariesdeterminedonthebasisofvotingrights(orsimilarvotingrights)themselvesorinconjunctionwithotherarrangements,butalsostructuredsubjectsdeterminedonthebasisofoneormorecontractualarrangements.ThesubsidiarycompanyisthesubjectcontrolledbytheCompany(includingtheenterprise,thedivisiblepartoftheinvestedunitandthestructuredsubjectcontrolledbytheenterprise,etc.).Thestructuredsubjectisthesubjectwhichisnotdesignedtodeterminethecontrollingpartybytakingthevotingrightorsimilarrightasthedecisivefactor.

(2)Specialprovisionsregardingtheparentcompanybeinganinvestmententity

Iftheparentcompanyisaninvestmententity,onlythosesubsidiarycompaniesthatprovideservicesrelatedtoinvestmentactivitiesoftheinvestmententityshallbeincludedintheconsolidationscope.Othersubsidiarycompaniesshallnotbeconsolidatedandtheirequityinvestmentsshallberecognizedasfinancialassetsmeasuredatfairvaluewithchangesinfairvaluerecognizedinprofitorloss.

Theparentcompanyqualifiesasaninvestmententitywhenitsimultaneouslymeetsthefollowingconditions:

①Thecompanyobtainsfundsfromoneormoreinvestorswiththepurposeofprovidinginvestmentmanagementservicestotheinvestors.

②Thesolepurposeofthecompany'soperationsistogeneratereturnsfortheinvestorsthroughcapitalappreciation,investmentincome,orboth.

③Thecompanyevaluatesandassessestheperformanceofalmostallofitsinvestmentsbasedonfairvalue.

Whentheparentcompanychangesfromanon-investmententitytoaninvestmententity,itshallonlyincludethosesubsidiarycompaniesthatproviderelevantservicesforitsinvestmentactivitiesinthepreparationofconsolidatedfinancialstatements.Othersubsidiarycompaniesshallnolongerbeconsolidated,andtheprincipleofrecognizingpartiallydisposedsubsidiarycompanies'equitywhileretainingcontrolshallbeapplied.

Whentheparentcompanychangesfromaninvestmententitytoanon-investmententity,thesubsidiarycompaniesthatwerepreviouslynotincludedintheconsolidationfinancialstatementsshallbeincludedasofthedateofthechange.Thefairvalueofthesesubsidiarycompaniesonthedateofthechangeshallberegardedasthetransactionpriceoftheacquisitionandaccountedforusingtheaccountingtreatmentforbusinesscombinationsundercommoncontrol.

(3)PreparationofConsolidatedFinancialStatements

TheCompanypreparesconsolidatedfinancialstatementsbasedonthefinancialstatementsofitselfanditssubsidiariesandbasedonotherrelevantinformation.

TheCompanycompilesconsolidatedfinancialstatements,regardsthewholeenterprisegroupasanaccountingentity,reflectstheoverallfinancialstatus,operatingresultsandcashflowoftheenterprisegroupaccordingtotheconfirmation,measurementandpresentationrequirementsoftherelevantenterpriseaccountingstandards,andtheunifiedaccountingpolicyandaccountingperiod.

①Mergetheassets,liabilities,owner'srightsandinterests,income,expensesandcashflowofparentcompanyandsubsidiarycompany.

②Offsetthelong-termequityinvestmentoftheparentcompanytothesubsidiarycompanyandtheshareoftheparentcompanyintheownershiprightsofthesubsidiarycompany.

③Offsettheinfluenceofinternaltransactionbetweenparentcompany,subsidiarycompanyandsubsidiarycompany.Ifaninternaltransactionindicatesthattherelevantassethassufferedanimpairmentloss,thepartofthelossshallbeconfirmedinfull.

④adjustthespecialtransactionfromtheangleofenterprisegroup.

(4)Processingofsubsidiariesduringthereportingperiod

①Increaseofsubsidiariesorbusiness

A.Subsidiaryorbusinessincreasedbybusinesscombinationunderthesamecontrol

(A)Whenpreparingtheconsolidatedbalancesheet,adjusttheopeningnumberoftheconsolidatedbalancesheetandadjusttherelateditemsofthecomparativestatement.Thesamereportentityastheconsolidatedbalancesheetwillexistfromthetimeofthefinalcontrolparty.

(B)Whenpreparingtheconsolidatedcashflowstatement,thecashflowsofthesubsidiaryandthebusinesscombinationfromthebeginningofthecurrentperiodtotheendofthereportingperiodareincludedintheconsolidatedcashflowstatement,

andtherelateditemsofthecomparativestatementareadjusted,whichisregardedasthecombinedreportbodysincethefinalThecontrollerhasbeentheresincethebeginningofcontrol.(C)Whenpreparingtheconsolidatedcashflowstatement,thecashflowsofthesubsidiaryandthebusinesscombinationfromthebeginningofthecurrentperiodtotheendofthereportingperiodareincludedintheconsolidatedcashflowstatement,andtherelateditemsofthecomparativestatementareadjusted,whichisregardedasthecombinedreportbodysincethefinalThecontrollerhasbeentheresincethebeginningofcontrol.B.Subsidiaryorbusinessincreasedbybusinesscombinationunderthesamecontrol(A)Whenpreparingtheconsolidatedbalancesheet,theopeningnumberoftheconsolidatedbalancesheetisnotadjusted.(B)Whenpreparingtheconsolidatedprofitstatement,theincome,expenseandprofitofthesubsidiarycompanyandthebusinessPurchasedateandClosingbalanceshallbeincludedintheconsolidatedprofitstatement.(C)Whentheconsolidatedcashflowstatementisprepared,thecashflowfromthepurchasedateofthesubsidiarytotheendofthereportingperiodisincludedintheconsolidatedcashflowstatement.

②DisposalofsubsidiariesorbusinessA.Whenpreparingtheconsolidatedbalancesheet,theopeningnumberoftheconsolidatedbalancesheetisnotadjusted.B.Whenpreparingtheconsolidatedprofitstatement,theincome,expenseandprofitofthesubsidiarycompanyandthebusinessopeninganddisposaldateshallbeincludedintheconsolidatedprofitstatement.

C.Whentheconsolidatedcashflowstatementisprepared,thecashflowfromtheBeginningoftheperiodofthesubsidiarytotheendofthereportingperiodisincludedintheconsolidatedcashflowstatement.

(5)Specialconsiderationsinconsolidationoffsets

①Thelong-termequityinvestmentheldbyasubsidiarycompanyshallberegardedastheinventorysharesoftheCompanyasasubtractionoftheowner'srightsandinterests,whichshallbelistedundertheitemof"subtraction:Stockshares"undertheitemofowner'srightsandinterestsintheconsolidatedbalancesheet.

Thelong-termequityinvestmentsheldbythesubsidiariesareoffsetbythesharesoftheshareholdersofthesubsidiaries.

②The"specialreserve"and"generalriskpreparation"projects,becausetheyareneitherrealcapital(orsharecapital)norcapitalreserve,butalsodifferentfromtheretainedincomeandundistributedprofits,arerestoredaccordingtotheownershipoftheparentcompanyafterthelong-termequityinvestmentisoffsetbytheownershiprightsandinterestsofthesubsidiarycompany.

③Ifthereisatemporarydifferencebetweenthebookvalueofassetsandliabilitiesintheconsolidatedbalancesheetandthetaxablebasisofthetaxpayerduetotheoffsetoftheunrealizedinternalsalesgainorloss,thedeferredincometaxassetorthedeferredincometaxliabilityisconfirmedintheconsolidatedbalancesheet,andtheincometaxexpenseintheconsolidatedprofitstatementisadjusted,withtheexceptionofthedeferredincometaxrelatedtothetransactionoreventdirectlyincludedintheowner'sequityandthemergeroftheenterprise.

④TheunrealizedinternaltransactiongainsandlossesincurredbytheCompanyfromsellingassetstosubsidiariesshallbefullyoffsetagainstthe"netprofitattributabletotheownersoftheparentcompany".TheunrealizedinternaltransactiongainsandlossesarisingfromthesaleofassetsbythesubsidiarytotheCompanyshallbeoffsetbetweenthe"netprofitattributabletotheownersoftheparentcompany"andthe"minorityshareholdergainsandlosses"inaccordancewiththeCompany'sdistributionratiotothesubsidiary.Theunrealizedinternaltransactiongainsandlossesarisingfromthesaleofassetsbetweensubsidiariesshallbeoffsetbetweenthe"netprofitattributabletotheownersoftheparentcompany"andthe"minorityshareholders'gainsandlosses"inaccordancewiththeCompany'sdistributionratiototheseller'ssubsidiary.

⑤Ifthecurrentlosssharedbytheminorityshareholdersofthesubsidiaryexceedstheshareoftheminorityshareholdersintheowner'sequityofthesubsidiaryatthebeginningoftheperiod,thebalanceshouldstillbeoffsetagainsttheminorityshareholders'equity.

(6)Accountingtreatmentofspecialtransactions

①Purchaseminorityshareholders'equity

TheCompanypurchasesthesharesofthesubsidiariesownedbytheminorityshareholdersofthesubsidiaries.Intheindividualfinancialstatements,theinvestmentcostsofthenewlyacquiredlong-terminvestmentsoftheminoritysharesshallbemeasuredatthefairvalueofthepricepaid.Intheconsolidatedfinancialstatements,thedifferencebetweenthenewlyacquiredlong-termequityinvestmentduetothepurchaseofminorityequityandtheshareofnetassetsthatshouldbecontinuouslycalculatedbythesubsidiarysincethepurchasedateorthemergerdateshouldbeadjustedaccordingtothenewshareholdingratio.Theproduct(capitalpremiumorequitypremium),ifthecapitalreserveisinsufficienttooffset,thesurplusreserveandundistributedprofitsareoffsetinturn.

②Step-by-stepacquisitionofcontrolofthesubsidiarythroughmultipletransactions

A.Enterprisemergerundercommoncontrolthroughmultipletransactions

Onthedateofthemerger,theCompanydeterminestheinitialinvestmentcostofthelong-termequityinvestmentintheindividualfinancialstatementsbasedontheshareofthesubsidiary'snetassetsthatshouldbeenjoyedafterthemergerinthefinal

controller'sconsolidatedfinancialstatements;theinitialinvestmentcostandthedifferencebetweenthebookvalueofthelong-termequityinvestmentbeforethemergerplusthebookvalueoftheconsiderationpaidfornewsharesacquiredonthemergerdate,thecapitalreserve(capitalpremiumorequitypremium)isadjusted,andthecapitalreserve(capitalpremiumorequitypremium)isinsufficienttooffsetReduced,inturnoffsetthesurplusreserveandundistributedprofits.Inconsolidatedfinancialstatements,assetsandliabilitiesobtainedbythemergingpartyfromthemergedpartyshouldbemeasuredatthebookvalueinthefinalcontrollingparty'sconsolidatedfinancialstatementsotherthantheadjustmentmadeduetodifferencesinaccountingpolicies;adjustthecapitalsurplus(sharepremium)accordingtothedifferencebetweentheinitialinvestmentcostandthebookvalueoftheheldinvestmentbeforemergerplusthebookvalueoftheconsiderationpaidonthemergerdate.Wherethecapitalsurplusfallsshort,theretainedincomeshouldbeadjusted.

Beforetheacquirerobtainscontroloftheacquiree,anyrecognizedgainsandlosses,othercomprehensiveincome,andchangesinotherowners'equityrelatedtotheequityinvestmentheldbytheacquirerfromthelaterofthedatewhentheoriginalequitywasobtainedorthedatewhenboththeacquirerandtheacquireewereunderthecontrolofthesamepartyuntiltheacquisitiondateshouldbeadjustedagainstthebeginningretainedearningsorthecurrentprofitsandlossesofthecomparativestatementsseparately.A.EnterprisemergerundercommoncontrolthroughmultipletransactionsOnthemergerday,inindividualfinancialstatements,theinitialinvestmentcostofthelong-termequityinvestmentonthemergerdayisbasedonthebookvalueofthelong-termequityinvestmentpreviouslyheldplusthesumoftheadditionalinvestmentcostsonthemergerday.Intheconsolidatedfinancialstatements,theequityheldintheacquireebeforetheacquisitiondateisremeasuredatitsfairvalueontheacquisitiondate.Iftheequityheldbeforetheacquisitiondateisdesignatedasafinancialassetmeasuredatfairvaluethroughothercomprehensiveincome,thedifferencebetweenthefairvalueanditsbookvalueisincludedinretainedearnings,andthecumulativefairvaluechangespreviouslyincludedinothercomprehensiveincomearetransferredtoretainedearnings.Iftheequityheldbeforetheacquisitiondateisdesignatedasafinancialassetmeasuredatfairvaluethroughprofitorlossorasalong-termequityinvestmentaccountedforbytheequitymethod,thedifferencebetweenthefairvalueanditsbookvalueisincludedinthecurrentperiod'sinvestmentincome.Forothercomprehensiveincomeandotherchangesinowners'equityundertheequitymethodrelatedtotheequityheldbeforetheacquisitiondate,therelatedothercomprehensiveincomeisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilitiesontheacquisitiondate,andtherelatedotherchangesinowners'equityaretransferredtothecurrentperiod'sinvestmentincomeontheacquisitiondate.

(3)TheCompanydisposesoflong-termequityinvestmentinsubsidiarieswithoutlosingcontrolTheparentcompanypartiallydisposesofthelong-termequityinvestmentinthesubsidiarycompanywithoutlosingcontrol.Intheconsolidatedfinancialstatements,thedisposalpricecorrespondstothedisposalofthelong-termequityinvestment.Thedifferencebetweenthesharesisadjustedforthecapitalreserve(capitalpremiumorequitypremium).Ifthecapitalreserveisinsufficienttooffset,theretainedearningsareadjusted.

④TheCompanydisposesoflong-termequityinvestmentinsubsidiariesandlosescontrolA.OnetransactiondispositionIftheCompanylosescontrolovertheInvestedPartyduetothedisposalofpartoftheequityinvestment,itshallremeasuretheremainingequityaccordingtoitsfairvalueatthedateoflossofcontrolwhencompilingtheconsolidatedfinancialstatement.Theconsiderationreceivedfromthedisposalofequityplusthefairvalueoftheremainingequity,minustheshareofnetassetsandgoodwillcalculatedbasedontheoriginalshareholdingratiofromtheacquisitiondateorcombinationdatetothedisposaldate,isincludedintheinvestmentincomefortheperiodinwhichcontrolislost.Othercomprehensiveincomeandotherchangesinowners'equityrelatedtotheequityinvestmentintheoriginalsubsidiaryareaccountedforonthesamebasisasifthesubsidiaryhaddirectlydisposedoftherelatedassetsorliabilitieswhencontrolislost,andotherchangesinowners'equityundertheequitymethodrelatedtotheoriginalsubsidiaryaretransferredtothecurrentperiod'sprofitorlosswhencontrolislost.B.Multi-transactionstep-by-stepdispositionInconsolidatedfinancialstatements,youshouldfirstdeterminewhetherastep-by-steptransactionisa"blankettransaction".Ifthestep-by-steptransactiondoesnotbelongtoa"packagedeal",intheindividualfinancialstatements,foreachtransactionbeforethelossofcontrolofthesubsidiary,thebookvalueofthelong-termequityinvestmentcorrespondingtoeachdisposalofequityiscarriedforward,thepricereceivedandthedisposalThedifferencebetweenthebookvalueofthelong-termequityinvestmentisincludedinthecurrentinvestmentincome;intheconsolidatedfinancialstatements,itshouldbehandledinaccordancewiththerelevantprovisionsof"theparentcompanydisposesofthelong-termequityinvestmentinthesubsidiarywithoutlosingcontrol."

Ifastep-by-steptransactionbelongstoa"blankettransaction",thetransactionshallbetreatedasatransactionthatdisposesofthesubsidiaryandlosescontrol;Inindividualfinancialstatements,thedifferencebetweeneachdisposalpricebeforethelossofcontrolandthebookvalueofthelong-termequityinvestmentcorrespondingtotheequitybeingdisposedofisfirstrecognizedas

otherconsolidatedgainsandthenconvertedtothecurrentlossofcontrolatthetimeofthelossofcontrol;Intheconsolidatedfinancialstatements,foreachtransactionpriortothelossofcontrol,thedifferencebetweenthedispositionofthepriceandthedispositionoftheinvestmentcorrespondingtotheshareinthenetassetsofthesubsidiaryshallberecognizedasotherconsolidatedgainsandshall,atthetimeofthelossofcontrol,betransferredtothelossofcontrolforthecurrentperiod.

Wheretheterms,conditions,andeconomicimpactofeachtransactionmeetoneormoreofthefollowingconditions,usuallymultipletransactionsaretreatedasa"packagedeal":

(a)Thesetransactionswereconcludedatthesametimeorinconsiderationofmutualinfluence.

(b)Thesetransactionscanonlyachievethebusinessresultasawhole;

(c)Theeffectivenessofonetransactiondependstheoccurrenceofatleastanothertransaction;

(d)Asingletransactionisnoteconomicandiseconomicwhenconsideredtogetherwithothertransactions.

(5)Proportionofminorityshareholdersinfactorcompanieswhoincreasecapitalanddiluteownershipofparentcompanies

Whenothershareholders(minorityshareholders)ofasubsidiaryincreasetheirinvestmentinthesubsidiary,therebydilutingtheparentcompany'sequityproportioninthesubsidiary.Intheconsolidatedfinancialstatements,theshareoftheparentcompanyinthenetbookassetsoftheformersubsidiaryofthecapitalincreaseiscalculatedaccordingtotheshareratiooftheparentcompanybeforethecapitalincrease,thedifferencebetweentheshareandthenetbookassetsofthelattersubsidiaryafterthecapitalincreaseiscalculatedaccordingtotheshareratiooftheparentcompany,thecapitalreserve(capitalpremiumorcapitalpremium),thecapitalreserve(capitalpremiumorcapitalpremium)isnotoffset,andtheretainedincomeisadjusted.

8.Recognitionofcashandcashequivalents

Cashreferstocashinstockanddepositsthatcanbeusedforpaymentatanytime.Cashequivalentsrefertoinvestmentswithashortholdingperiod(generallyreferringtoexpirywithinthreemonthsfromthedateofpurchase),strongliquidity,easytoconverttoaknownamountofcash,andlittleriskofvaluechange.

9.Foreignexchangebusinessandforeignexchangestatementtranslation

(1)Methodsfordeterminingconversionratesinforeigncurrencytransactions

TheCompanytranslatesforeigncurrencytransactionsintothefunctionalcurrencyattheinitialrecognitionusingthespotexchangerateonthetransactiondateoranapproximateexchangeratethatisdeterminedaccordingtoareasonablemethodandisclosetothespotexchangerateonthetransactiondate.Theresultingamountisrecordedintheaccountingcurrency.

(2)MethodsofconversionofforeigncurrencycurrencycurrencyitemsonbalancesheetdaysAtthebalancesheetdate,foreigncurrencyitemsaretranslatedonthespotexchangerateofthebalancesheetdate.Theexchangedifferencescausedbythedifferenceinexchangeratesonthebalancesheetdateandinitialrecognizingdateorpreviousbalancesheetdateareincludedinthecurrentprofitsandlosses.Fornon-monetaryitemsmeasuredathistoricalcostinforeigncurrencies,theyaretranslatedusingthespotexchangerateonthetransactiondate.Forinventoriesmeasuredatthelowerofcostandnetrealizablevalue,iftheinventorieswerepurchasedinforeigncurrenciesandtheirnetrealizablevalueisreflectedinforeigncurrenciesasofthebalancesheetdate,thenetrealizablevalueisfirsttranslatedintothefunctionalcurrencyatthespotexchangerateonthebalancesheetdate,andthencomparedwiththeinventorycostreflectedinthefunctionalcurrencytodeterminetheendingvalueoftheinventories.Non-monetaryitemsmeasuredatfairvalueinforeigncurrenciesaretranslatedusingthespotexchangerateonthedatethefairvalueisdetermined.Forfinancialassetsmeasuredatfairvaluewithchangesrecognizedinthecurrentperiod'sprofitorloss,thedifferencebetweenthetranslatedamountinthefunctionalcurrencyandtheoriginalamountinthefunctionalcurrencyisrecognizedinthecurrentperiod'sprofitorloss.Fornon-tradingequityinvestmentsdesignatedtobemeasuredatfairvaluewithchangesrecognizedinothercomprehensiveincome,thedifferencebetweenthetranslatedamountinthefunctionalcurrencyandtheoriginalamountinthefunctionalcurrencyisrecognizedinothercomprehensiveincome.

(3)TranslationofforeignexchangestatementsPriortotheconversionofthefinancialstatementsofanenterprise'soverseasoperations,theaccountingperiodandpolicyoftheoverseasoperationsshouldbeadjustedtoconformtotheaccountingperiodandpolicyoftheenterprise.Thefinancialstatementsofthecorrespondingcurrency(otherthanthefunctionalcurrency)shouldbepreparedaccordingtotheadjustedaccountingpolicyandtheaccountingperiod.Thefinancialstatementsoftheoverseasoperationsshouldbeconvertedaccordingtothefollowingmethods:

①Theassetsandliabilitiesitemsinthebalancesheetaretranslatedatthespotexchangerateonthebalancesheetdate.Exceptforthe"undistributedprofits"items,theowner'sequityitemsaretranslatedatthespotexchangeratewhentheyoccur.

②Theincomeandexpenseitemsintheprofitstatementareconvertedatthespotexchangerateonthetransactiondateortheapproximateexchangerateofthespotexchangerate.

③Theforeigncurrencycashflowandtheforeignsubsidiary'scashflowareconvertedusingtheimmediateexchangerateortheapproximateexchangerateatthedateofthecashflow.Theimpactofexchangeratechangesoncashshouldbeusedasanadjustmentitemandpresentedseparatelyinthecashflowstatement.

④Theforeigncurrencytranslationdifferencesarisingarepresentedunderthe"OtherComprehensiveIncome"itemintheshareholders'equitysectionoftheconsolidatedbalancesheetwhenpreparingtheconsolidatedfinancialstatements.

Whenforeignoperationsaredisposedofandthecontrolrightsarelost,thedifferenceinforeigncurrencystatementsrelatedtotheoverseasoperationsthatarelistedintheshareholders'equityitemsinthebalancesheetistransferredtotheprofitorlossforthecurrentperiod,eitherinwholeorinproportiontothedisposaloftheforeignoperations.

10.Financialinstrument

Financialinstrumentreferstoacompany'sfinancialassetsandcontractsthatformotherunitsoffinancialliabilitiesorequityinstruments.

(1)Recognitionandde-recognitionoffinancialinstrument

TheCompanyrecognizesafinancialassetorliabilitywhenitbecomesonepartyinthefinancialinstrumentcontract.

Financialassetisderecognizedwhen:

①Thecontractualrighttoreceivethecashflowsofthefinancialassetsisterminated;

②Thefinancialassetistransferredandmeetsthefollowingderecognizationcondition.

Ifthecurrentobligationofafinancialliability(orpartofit)hasbeendischarged,theCompanyderecognisesthefinancialliability(orpartofthefinancialliability).WhentheCompany(borrower)andlenderenterintoanagreementtoreplacetheoriginalfinancialliabilitiesbyundertakingnewfinancialliabilitiesandthecontracttermsforthenewfinancialliabilitiesareessentiallydifferentfromthosefortheoriginalone,theoriginalfinancialliabilitieswillbederecognizedandnewfinancialliabilitieswillberecognized.WheretheCompanymakessubstantialamendmentstothecontracttermsoftheoriginalfinancialliability(orpartthereof),itshallterminatetheoriginalfinancialliabilityandconfirmanewfinancialliabilityinaccordancewiththeamendedterms.

Financialassettransactionsinregularwaysarerecognizedandde-recognizedonthetransactiondate.Theconventionalsaleoffinancialassetsmeansthedeliveryoffinancialassetsinaccordancewiththecontractualtermsandconditions,atthetimesetoutintheregulationsormarketpractices.TransactiondatereferstothedatewhentheCompanypromisestobuyorsellfinancialassets.

(2)Classificationandsubsequentmeasurementoffinancialassets

Atinitialrecognition,theCompanyclassifiesfinancialassetsintothefollowingthreecategoriesbasedonthebusinessmodelofmanagingfinancialassetsandthecontractualcashflowcharacteristicsoffinancialassets:financialassetsmeasuredatamortizedcostaremeasuredatfairvalueandtheirchangesareincludedinotherfinancialassetswithcurrentprofitandlossandfinancialassetsmeasuredatfairvaluethroughprofitorloss.UnlesstheCompanychangesthebusinessmodelformanagingfinancialassets,inthiscase,allaffectedfinancialassetsarereclassifiedonthefirstdayofthefirstreportingperiodafterthebusinessmodelchanges,otherwisethefinancialassetsmaynotbeinitiallyconfirmed.

Financialassetsaremeasuredatthefairvalueattheinitialrecognition.Forfinancialassetsmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccount,relatedtransactionexpensesareaccountedintothecurrentincome.Forotherfinancialassets,therelatedtransactionexpensesareaccountedintotheinitialrecognizedamounts.Billsreceivableandaccountsreceivablearisingfromthesaleofcommoditiesortheprovisionoflaborservicesthatdonotcontainordonotconsidersignificantfinancingcomponents,theCompanyperformsinitialmeasurementaccordingtothetransactionpricedefinedbytheincomestandard.

Thesubsequentmeasurementoffinancialassetsdependsontheirclassification:

①Financialassetsmeasuredatamortizedcost

Financialassetsthatmeetthefollowingconditionsatthesametimeareclassifiedasfinancialassetsmeasuredatamortizedcost:TheCompany'sbusinessmodelformanagingthisfinancialassetistocollectcontractualcashflowsasitsgoal;thecontracttermsofthefinancialassetstipulatethatCashflowisonlythepaymentofprincipalandinterestbasedontheoutstandingprincipalamount.Forsuchfinancialassets,theactualinterestratemethodisusedforsubsequentmeasurementaccordingtotheamortizedcost.Thegainsorlossesarisingfromtheterminationofrecognition,amortizationorimpairmentbasedontheactualinterestratemethodareincludedinthecurrentprofitandloss.

②Financialassetsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincome

Financialassetsthatmeetthefollowingconditionsatthesametimeareclassifiedasfinancialassetsmeasuredatfairvalueandtheirchangesareincludedinothercomprehensiveincome:TheCompany'sbusinessmodelformanagingthisfinancialassetistobothtargetthecollectionofcontractualcashflowsandthesaleoffinancialassets.Objective;Thecontractualtermsofthefinancialassetstipulatethatthecashflowgeneratedonaspecificdateisonlyforthepaymentofprincipalandinterestbasedontheoutstandingprincipalamount.Forsuchfinancialassets,fairvalueisusedforsubsequentmeasurement.Exceptforimpairmentlossesorgainsandexchangegainsandlossesrecognizedascurrentgainsandlosses,changesinthefairvalueofsuchfinancialassetsarerecognizedasothercomprehensiveincome.Untilthefinancialassetisderecognized,itsaccumulatedgainsorlossesare

transferredtocurrentgainsandlosses.However,therelevantinterestincomeofthefinancialassetcalculatedbytheactualinterestratemethodisincludedinthecurrentprofitandloss.

TheCompanyirrevocablychoosestodesignateaportionofnon-tradableequityinstrumentinvestmentasafinancialassetmeasuredatfairvalueandwhosevariationisincludedinotherconsolidatedincome.Onlytherelevantdividendincomeisincludedinthecurrentprofitandloss,andthevariationoffairvalueisrecognizedasotherconsolidatedincome.

③Financialassetsmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccount

Theabovefinancialassetsmeasuredatamortizedcostandotherfinancialassetsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincomeareclassifiedasfinancialassetsmeasuredatfairvalueandwhosechangesareincludedinthecurrentprofitandloss.Forsuchfinancialassets,fairvalueisusedforsubsequentmeasurement,andallchangesinfairvalueareincludedincurrentprofitandloss.

(3)Classificationandmeasurementoffinancialliabilities

TheCompanyclassifiesfinancialliabilitiesintofinancialliabilitiesmeasuredatfairvalueandtheirchangesincludedinthecurrentprofitandloss,loancommitmentsandfinancialguaranteecontractliabilitiesforloansbelowmarketinterestrates,andfinancialliabilitiesmeasuredatamortizedcost.

Thesubsequentmeasurementoffinancialliabilitiesdependsontheirclassification:

①Financialliabilitiesmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccount

Suchfinancialliabilitiesincludetransactionalfinancialliabilities(includingderivativesthatarefinancialliabilities)andfinancialliabilitiesdesignatedasatfairvaluethroughprofitorloss.Aftertheinitialrecognition,thefinancialliabilitiesaresubsequentlymeasuredatfairvalue.Exceptforthehedgeaccounting,thegainsorlosses(includinginterestexpenses)arerecognizedinprofitorloss.However,forthefinancialliabilitiesdesignatedasfairvalueandwhosevariationsareincludedintheprofitsandlossesofthecurrentperiod,thevariableamountofthefairvalueofthefinancialliabilityduetothevariationofcreditriskofthefinancialliabilityshallbeincludedintheotherconsolidatedincome.Whenthefinancialliabilityisterminated,thecumulativegainsandlossespreviouslyincludedintheotherconsolidatedincomeshallbetransferredoutoftheotherconsolidatedincomeandshallbeincludedintheretainedincome.

②Loancommitmentsandfinancialsecuritycontractualliabilities

AloancommitmentisapromisethattheCompanyprovidestocustomerstoissueloanstocustomerswithestablishedcontracttermswithinthecommitmentperiod.Loancommitmentsareprovidedforimpairmentlossesbasedontheexpectedcreditlossmodel.AfinancialguaranteecontractreferstoacontractthatrequirestheCompanytopayaspecificamountofcompensationtothecontractholderwhosufferedalosswhenaspecificdebtorisunabletorepaythedebtinaccordancewiththeoriginalormodifieddebtinstrumentterms.Financialguaranteecontractliabilitiesaresubsequentlymeasuredbasedonthehigherofthelossreserveamountdeterminedinaccordancewiththeprincipleofimpairmentoffinancialinstrumentsandtheinitialrecognitionamountafterdeductingtheaccumulatedamortizationamountdeterminedinaccordancewiththerevenuerecognitionprinciple.

③Financialliabilitiesmeasuredatamortizedcost

Afterinitialrecognition,otherfinancialliabilitiesaremeasuredatamortizedcostusingtheeffectiveinterestmethod.

Exceptinspecialcircumstances,financialliabilitiesandequityinstrumentsaredistinguishedaccordingtothefollowingprinciples:

①IftheCompanycannotunconditionallyavoiddeliveringcashorotherfinancialassetstofulfillacontractualobligation,thecontractualobligationmeetsthedefinitionoffinancialliability.Whilesomefinancialinstrumentsdonotexplicitlycontaintermsandconditionsforthedeliveryofcashorotherfinancialassets,theymayindirectlyformcontractualobligationsthroughothertermsandconditions.

IfafinancialinstrumentisrequiredtobesettledwithorcanbesettledwiththeCompany'sownequityinstruments,theCompany'sownequityinstrumentusedtosettletheinstrumentneedstobeconsideredasasubstituteforcashorotherfinancialassetsorfortheholderoftheinstrumenttoenjoytheremainingequityintheassetsafterallliabilitiesarededucted.Ifitistheformer,theinstrumentisthefinancialliabilitiesoftheissuer;ifitisthelatter,theinstrumentistheequityinstrumentoftheissuer.Insomecases,afinancialinstrumentcontractprovidesthattheCompanyshallormayuseitsowninstrumentofinterest,inwhichtheamountofacontractualrightorobligationisequaltotheamountoftheinstrumentofitsowninterestwhichmaybeacquiredordeliveredmultipliedbyitsfairvalueatthetimeofsettlement,whethertheamountofthecontractualrightorobligationisfixedorisbasedentirelyorinpartonavariationofavariableotherthanthemarketpriceoftheinstrumentofitsowninterest,suchastherateofinterest,thepriceofacommodityorthepriceofafinancialinstrument,thecontractisclassifiedasafinancialliability.

(4)Derivativefinancialinstrumentsandembeddedderivatives

Derivativefinancialinstrumentsareinitiallymeasuredatthefairvalueofthedaywhenthederivativetransactioncontractissigned,andaresubsequentlymeasuredattheirfairvalues.Derivativefinancialinstrumentswithapositivefairvaluearerecognizedasasset,andinstrumentswithanegativefairvaluearerecognizedasliabilities.

Thegainsandlossesarisingfromthechangeinfairvalueofderivativesaredirectlyincludedintheprofitsandlossesofthecurrentperiod,exceptthatthepartofthecashflowthatisvalidinthehedgeisincludedintheotherconsolidatedincomeandtransferredoutwhenthehedgeditemaffectsthegainandlossofthecurrentperiod.

Forahybridinstrumentcontaininganembeddedderivativeinstrument,iftheprincipalcontractisafinancialasset,thehybridinstrumentasawholeappliestherelevantprovisionsofthefinancialassetclassification.Ifthemaincontractisnotafinancialasset,andthehybridinstrumentisnotmeasuredatfairvalueanditschangesareincludedinthecurrentprofitandlossforaccounting,theembeddedderivativedoesnothaveacloserelationshipwiththemaincontractintermsofeconomiccharacteristicsandrisks,anditisIftheinstrumentswiththesameconditionsandexistseparatelymeetthedefinitionofderivativeinstruments,theembeddedderivativeinstrumentsareseparatedfromthemixedinstrumentsandtreatedasseparatederivativefinancialinstruments.Ifthefairvalueoftheembeddedderivativeontheacquisitiondateorthesubsequentbalancesheetdatecannotbemeasuredseparately,thehybridinstrumentasawholeisdesignatedasafinancialassetorfinancialliabilitymeasuredatfairvalueandwhosechangesareincludedinthecurrentprofitorloss.

(5)FinancialinstrumentLess

TheCompanyshallconfirmthepreparationforlossonthebasisofexpectedcreditlossforfinancialassetsmeasuredatamortizationcosts,creditor'srightsinvestmentsmeasuredatfairvalue,contractualassets,leasingreceivables,loancommitmentsandfinancialguaranteecontracts,etc.

①Measurementofexpectedcreditlossesofaccountsreceivable

Theexpectedcreditlossreferstotheweightedaverageofthecreditlossesoffinancialinstrumentsthatareweightedbytheriskofdefault.CreditlossreferstothedifferencebetweenallcontractualcashflowsreceivablefromthecontractandallcashflowsexpectedtobereceivedbytheCompanyattheoriginalactualinterestrate,thatis,thepresentvalueofallcashshortages.Amongthem,thefinancialassetswhichhavebeenpurchasedorbornbytheCompanyshallbediscountedaccordingtotheactualrateofcreditadjustmentofthefinancialassets.

Theexpectedlifetimecreditlossistheexpectedcreditlossduetoallpossibledefaulteventsduringtheentireexpectedlifeofthefinancialinstrument.

Expectedcreditlossesinthenext12monthsareexpectedtoresultfrompossibledefaultsinfinancialinstrumentswithin12monthsafterthebalancesheetdate(orestimateddurationoffinancialinstrumentsiftheexpecteddurationislessthan12months)Creditlossesarepartoftheexpectedlifetimecreditloss.Oneachbalancesheetday,theCompanymeasurestheexpectedcreditlossesoffinancialinstrumentsatdifferentstages.Wherethecreditriskhasnotincreasedsignificantlysincetheinitialconfirmationofthefinancialinstrument,itisinthefirststage.TheCompanymeasuresthepreparationforlossaccordingtotheexpectedcreditlossinthenext12months.Wherethecreditriskhasincreasedsignificantlysincetheinitialconfirmationbutthecreditimpairmenthasnotoccurred,thefinancialinstrumentisinthesecondstage.Whereacreditimpairmenthasoccurredsincetheinitialconfirmationofthefinancialinstrument,itshallbeinthethirdstage,andtheCompanyshallprepareformeasuringtheexpectedcreditlossofthewholesurvivalperiodoftheinstrument.Forfinancialinstrumentswithlowcreditriskonthebalancesheetdate,theCompanyassumesthatthecreditriskhasnotincreasedsignificantlysincetheinitialrecognition,andmeasuresthelossprovisionbasedontheexpectedcreditlossesinthenext12months.

Forfinancialinstrumentsthatareinthefirstandsecondstagesandwithlowercreditrisk,theCompanycalculatesinterestincomebasedontheirbookbalancesandactualinterestrateswithoutdeductionforimpairmentprovision.Forfinancialinstrumentsinthethirdstage,interestincomeiscalculatedbasedontheamortizedcostandtheactualinterestrateafterthebookbalanceminustheprovisionforimpairment.

Regardingbillsreceivable,accountsreceivableandfinancingreceivables,regardlessofwhetherthereisasignificantfinancingcomponent,theCompanymeasuresthelossprovisionbasedontheexpectedcreditlossesthroughouttheduration.

Accountsreceivable/contractassets

Wherethereisobjectiveevidenceofimpairment,aswellasotherreceivableinstruments,receivables,otherreceivables,receivablesfinancingandlong-termreceivablesapplicabletoindividualassessments,separateimpairmenttestsareperformedtoconfirmexpectedcreditlossesandprepareindividualimpairment.Fornotesreceivable,accountsreceivable,otherreceivables,financingofreceivables,long-termreceivables,andcontractassetsforwhichthereisnoobjectiveevidenceofimpairment,orwhenindividualfinancialassetscannotbeassessedatareasonablecost,theCompanydividesbillsreceivable,accountsreceivable,otherreceivables,receivablefinancing,long-termreceivables,andcontractassetsintoseveralcombinationsbasedoncreditriskcharacteristics,andcalculatesexpectedcreditlossesonthebasisofthecombination.Thebasisfordeterminingthecombinationisasfollows:

Thebasisfordeterminingthecombinationofnotesreceivableisasfollows:

NotesReceivableCombination1CommercialAcceptanceBillNotesReceivableCombination2BankAcceptanceBillForNotesreceivabledividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.Thebasisfordeterminingthecombinationofaccountsreceivableisasfollows:

Accountsreceivablecombination1AccountsreceivablebusinessAccountsreceivablecombination2RealestatereceivablebusinessAccountsreceivablecombination3OthersreceivablebusinessOtherreceivableportfolio4ReceivablesfromrelatedpartieswithinthescopeofconsolidationFortheaccountsreceivabledividedintoacombination,theCompanyreferstothehistoricalcreditlossexperience,combinedwiththecurrentsituationandtheforecastofthefutureeconomicsituation,compilestheaccountreceivableageandthewholeexpectedcreditlossratetable,andcalculatestheexpectedcreditloss.

Thebasisfordeterminingthecombinationofotherreceivablesisasfollows:

Otherreceivableportfolio1InterestreceivablePortfolioofotherreceivables2DividendsreceivableOthercombinationsofreceivables3DepositandmarginreceivableOtherreceivableportfolio4ReceivableadvancesCombinationofotherreceivables5Value-addedtaxreceivableisincreasedandrefundedOtherreceivableportfolio6ReceivablesfromrelatedpartieswithinthescopeofconsolidationOtherreceivablesportfolio7OtherreceivablesForotherreceivablesdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

Thebasisfordeterminingthecombinationofreceivablesfinancingisasfollows:

Receivablesfinancingportfolio1bankacceptancebillForNotesreceivabledividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

Thebasisfordeterminingtheportfolioofcontractassetsisasfollows:

Contractassetsportfolio1conditionalcollectionrightofsalesContractassetsportfolio2CompletedandunsettledprojectnotmeetingcollectionconditionsContractassetsportfolio3QualityguaranteedepositnotmeetingcollectionconditionsForcontractassetsdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.OtherdebtinvestmentForotherreceivablesdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

②LowercreditriskIftheriskofdefaultonfinancialinstrumentsislow,theborrower'sabilitytomeetitscontractualcashflowobligationsintheshorttermisstrong,andeveniftheeconomicsituationandoperatingenvironmentareadverselychangedoveralongperiodoftime,itmaynotnecessarilyreducethereceivables'performanceoftheircontractualcash.Theabilityoftheflowobligation,thefinancialinstrumentisconsideredtohavealowercreditrisk.

③SignificantincreaseincreditriskTheCompanycomparesthedefaultprobabilityofthefinancialinstrumentduringtheexpectedlifetimedeterminedbythebalancesheetdatewiththedefaultprobabilityoftheexpectedlifetimeduringtheinitialconfirmationtodeterminetherelativeprobabilityofthedefaultprobabilityofthefinancialinstrumentduringtheexpectedlifetimeChangestoassesswhetherthecreditriskoffinancialinstrumentshasincreasedsignificantlysinceinitialrecognition.

Indeterminingwhetherthecreditriskhasincreasedsignificantlysincetheinitialrecognition,theCompanyconsidersreasonableandevidencedinformation,includingforward-lookinginformation,thatcanbeobtainedwithoutunnecessaryadditionalcostsoreffort.TheinformationconsideredbytheCompanyincludes:

A.Significantchangesininternalpriceindicatorsresultingfromchangesincreditrisk;

B.Adversechangesinbusiness,financialoreconomicconditionsthatareexpectedtocausesignificantchangesinthedebtor'sabilitytoperformitsdebtserviceobligations;

C.Whethertheactualorexpectedoperatingresultsofthedebtorhavechangedsignificantly;whethertheregulatory,economicortechnicalenvironmentofthedebtorhasundergonesignificantadversechanges;

D.Whetherthereisasignificantchangeinthevalueofthecollateralusedasdebtcollateralortheguaranteeprovidedbyathirdpartyorthequalityofcreditenhancement.Thesechangesareexpectedtoreducethedebtor'seconomicmotivationforrepaymentwithinthetimelimitspecifiedinthecontractoraffecttheprobabilityofdefault;

E.Whetherthereisasignificantchangeintheeconomicmotivationthatisexpectedtoreducethedebtor'srepaymentaccordingtothecontractualdeadline;

F.Anticipatedchangestotheloancontract,includingwhethertheexpectedviolationofthecontractmayresultintheexemptionorrevisionofcontractobligations,grantinginterest-freeperiods,risinginterestrates,requiringadditionalcollateralorguarantees,ormakingotherchangestothecontractualframeworkoffinancialinstrumentschange;

G.Whethertheexpectedperformanceandrepaymentbehaviorofthedebtorhaschangedsignificantly;

H.Whetherthecontractpaymentisoverdueformorethan(including)30days.

Basedonthenatureoffinancialinstruments,theCompanyassesseswhethercreditriskhasincreasedsignificantlyonthebasisofasinglefinancialinstrumentorcombinationoffinancialinstruments.Whenconductinganassessmentbasedonacombinationoffinancialinstruments,theCompanycanclassifyfinancialinstrumentsbasedoncommoncreditriskcharacteristics,suchasoverdueinformationandcreditriskratings.

Iftheoverdueperiodexceeds30days,theCompanyhasdeterminedthatthecreditriskoffinancialinstrumentshasincreasedsignificantly.UnlesstheCompanydoesnothavetopayexcessivecostsoreffortstoobtainreasonableandwarrantedinformation,itprovesthatalthoughithasexceededthetimelimitof30daysagreeduponintheContract,creditriskshavenotincreasedsignificantlysincetheinitialconfirmation.

④Financialassetswithcreditimpairment

TheCompanyassessesonthebalancesheetdatewhetherfinancialassetsmeasuredatamortizedcostandcreditinvestmentsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincomehaveundergonecreditimpairment.Whenoneormoreeventsthatadverselyaffecttheexpectedfuturecashflowsofafinancialassetoccur,thefinancialassetbecomesafinancialassetthathassufferedacreditimpairment.Evidencethatcreditimpairmenthasoccurredinfinancialassetsincludesthefollowingobservableinformation:

Majorfinancialdifficultieshaveoccurredtotheissuerorthedebtor;Breachofcontractbythedebtor,suchaspaymentofinterestordefaultoroverdueofprincipal;(B)Theconcessionthatthedebtorwouldnotmakeunderanyothercircumstancesforeconomicorcontractualconsiderationsrelatingtothefinancialdifficultiesofthedebtor;Thedebtorislikelytobebankruptorundertakeotherfinancialrestructuring;Thefinancialdifficultiesoftheissuerordebtorleadtothedisappearanceoftheactivemarketforthefinancialasset;Topurchaseorgenerateafinancialassetatasubstantialdiscount,whichreflectsthefactthatacreditlosshasoccurred.

⑤Presentationofexpectedcreditlossmeasurement

Inordertoreflectthechangesinthecreditriskoffinancialinstrumentssincetheinitialrecognition,theCompanyre-measurestheexpectedcreditlossesoneachbalancesheetdate,andtheincreaseorreversalofthelossprovisionresultingtherefromisincludedasanimpairmentlossorgain.Currentprofitandloss.Forfinancialassetsmeasuredatamortizedcost,thelossallowanceoffsetsthebookvalueofthefinancialassetlistedonthebalancesheet;fordebtinvestmentsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincome,theCompanyRecognitionofitslossprovisionsingainsdoesnotoffsetthebookvalueofthefinancialasset.

⑥Canceled

Ifitisnolongerreasonablyexpectedthatthecontractcashflowofthefinancialassetswillbefullyorpartiallyrecovered,thebookbalanceofthefinancialassetswillbedirectlyreduced.Suchwrite-offconstitutethederecognizationofrelatedfinancialassets.ThisusuallyoccurswhentheCompanydeterminesthatthedebtorhasnoassetsorsourcesofincomethatgeneratesufficientcashflowtocovertheamountthatwillbewrittendown.

Ifthefinancialassetsthathavebeenwrittendownarerecoveredinthefuture,thereversaloftheimpairmentlossisincludedintheprofitorlossofthecurrentperiod.

(6)Transferoffinancialassets

Thetransferoffinancialassetsreferstothefollowingtwosituations:

A.Transferthecontractualrighttoreceivecashflowoffinancialassetstoanotherparty;B.Transfersthefinancialassetstotheotherpartyinwholeorinpart,butreservesthecontractualrighttocollectthecashflowofthefinancialassetsandundertakesthecontractualobligationtopaythecollectedcashflowtooneormorerecipients.

①De-identificationoftransferredfinancialassetsThosewhohavetransferredalmostallrisksandrewardsintheownershipoffinancialassetstothetransferee,orhaveneithertransferrednorretainedalmostalltherisksandrewardsintheownershipoffinancialassets,buthavegivenupcontrolofthefinancialassets,terminatetheconfirmationThefinancialasset.Indeterminingwhethercontroloverthetransferredfinancialassethasbeenwaived,theactualcapacityofthetransferortosellthefinancialassetisdetermined.Ifthetransferorisabletosellthetransferredfinancialassetswhollytoathirdpartythatdoesnothavearelationshipwiththem,andhasnoadditionalconditionstolimitthesale,itindicatestheCompanyhaswaivedcontroloverthefinancialassets.TheCompanypaysattentiontotheessenceoffinancialassettransferwhenjudgingwhetherfinancialassettransfermeetstheconditionoffinancialassettermination.Iftheoveralltransferoffinancialassetsmeetstheconditionsforterminationofconfirmation,thedifferencebetweenthefollowingtwoamountsisincludedinthecurrentprofitandloss:

A.ContinuingidentificationoftransferredBookvalue；B.Thesumoftheamountreceivedasaresultofthetransferandtheamountaccruedasaresultofthechangeinthefairvalueofthetransferinrespectoftheterminationrecognizedportionoftheamountpreviouslychargeddirectlytotheotherconsolidatedproceeds(thefinancialassetsinvolvedinthetransferarethoseclassifiedinaccordancewithArticle18ofEnterpriseAccountingStandardNo.22-FinancialInstrumentsRecognitionandMeasurementasmeasuredbythefairvalueandwhosechangeischargedtotheotherconsolidatedproceeds).

Ifthepartialtransferoffinancialassetsmeetstheconditionsforderecognization,thebookvalueoftheentiretransferredfinancialassetswillbeincludedinthederecognizedpartandtheunterminatedpart(inthiscase,theretainedserviceassetsareregardedaspartofthecontinuedrecognitionoffinancialassets)Betweenthem,theyareapportionedaccordingtotheirrespectiverelativefairvaluesonthetransferdate,andthedifferencebetweenthefollowingtwoamountsisincludedinthecurrentprofitandloss:

A.Terminationofthebookvalueoftherecognizedportiononthedateofderecognization;

B.Thesumoftheamountreceivedasaresultofthetransferandtheamountaccruedasaresultofthechangeinthefairvalueofthetransferinrespectoftheterminationrecognizedportionoftheamountpreviouslychargedtotheotherconsolidatedproceeds(thefinancialassetsinvolvedinthetransferarethoseclassifiedinaccordancewithArticle18ofEnterpriseAccountingStandardNo.22-FinancialInstrumentsRecognitionandMeasurementasmeasuredbythefairvalueandwhosechangeischargedtotheotherconsolidatedproceeds).

②Continuetobeinvolvedinthetransferredfinancialassets

Ifneithertransfernorretainalmostalltherisksandrewardsoftheownershipoffinancialassets,andhavenotgivenupcontrolofthefinancialassets,therelevantfinancialassetsshouldbeconfirmedaccordingtotheextentoftheircontinuedinvolvementinthetransferredfinancialassets,andtherelevantliabilitiesshouldberecognizedaccordingly.

Theextenttowhichthetransferredfinancialassetscontinuetobeinvolvedreferstotheextenttowhichtheenterpriseundertakestheriskorcompensationofthevaluechangeofthetransferredfinancialassets.

(III)Continuingidentificationoftransferredfinancialassets

Wherealmostallrisksandremunerationinrelationtoownershipofthetransferredfinancialassetsareretained,thewholeofthetransferredfinancialassetsshallcontinuetoberecognizedandtheconsiderationreceivedshallberecognizedasafinancialliability.

Thefinancialassetandtherecognizedrelatedfinancialliabilitiesshallnotoffseteachother.Inthesubsequentaccountingperiod,theenterpriseshallcontinuetorecognizetheincome(orgain)generatedbythefinancialassetandthecosts(orlosses)incurredbythefinancialliability.

(7)Deductionoffinancialassetsandliabilities

Financialassetsandfinancialliabilitiesshouldbelistedseparatelyinthebalancesheet,andcannotbeoffsetagainsteachother.However,ifthefollowingconditionsaremet,thenetamountoffsetbyeachotherislistedinthebalancesheet:

TheCompanyhasastatutoryrighttooffsettheconfirmedamount,andsuchlegalrightiscurrentlyenforceable;

TheCompanyplanstosettlethenetassetsorrealizethefinancialassetsandliquidatethefinancialliabilitiesatthesametime.

Thetransferringpartyshallnotoffsetthetransferredfinancialassetsandrelatedliabilitiesifitdoesnotmeettheconditionsforterminatingtherecognition.

(8)RecognitionoffairvalueofFinanceinstruments

Forthemethodfordeterminingthefairvalueoffinancialassetsandfinancialliabilities,see33(3)inChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.

11.Notesreceivable

SeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates10.FinancialTools.

12.Accountreceivable

SeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates10.FinancialTools.TheCompanyneedstocomplywiththedisclosurerequirementsofthedecorationanddecorationindustryintheGuidelinesfortheSelf-disciplineandSupervisionofListedCompaniesofShenzhenStockExchangeNo.3-IndustryInformationDisclosure.

13.Receivablefinancing

SeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates10.FinancialTools.

14.Otherreceivables

SeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates10.FinancialTools.

15.Contractassets

TheCompanypresentscontractassetsorliabilitiesinthebalancesheetaccordingtotherelationshipbetweenperformanceobligationandcustomerpayment.TheconsiderationforwhichtheCompanyisentitledtoreceive(subjecttofactorsotherthanthepassageoftime)forthetransferofgoodsortheprovisionofservicestocustomersislistedascontractassets.TheCompany'sobligationtotransfergoodsorprovideservicestocustomersforconsiderationreceivedorreceivablefromcustomersislistedascontractualliabilities.

Contractassetsandcontractliabilitiesarelistedseparatelyinthebalancesheet.Contractassetsandcontractliabilitiesunderthesamecontractarelistedinnetamount.Ifthenetamountisthedebitbalance,itshallbelistedin"contractassets"or"othernoncurrentassets"accordingtoitsliquidity;ifthenetamountisthecreditbalance,itshallbelistedin"contractliabilities"or"othernoncurrentliabilities"accordingtoitsliquidity.Contractassetsandcontractliabilitiesunderdifferentcontractscannotoffseteachother.ForthedeterminationmethodandaccountingtreatmentmethodoftheCompany'sexpectedcreditlossofcontractassets,see

10.FinancialinstrumentsinChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.

16.Inventories

(1)ClassificationofinventoriesInventoryreferstothefinishedproductsorcommoditiesheldbytheCompanyforsaleindailyactivities,theproductsinprocessofproduction,thematerialsandmaterialsconsumedintheprocessofproductionorprovidinglaborservices,includingentrustedprocessingmaterials,rawmaterials,productsinprocess,materialsintransit,storedgoods,lowvalueconsumables,developmentcosts,developmentproductsandcontractperformancecosts,etc.

(2)PricingofdeliveringinventoryInventoriesaremeasuredatcostwhenprocured.Rawmaterials,productsinprocessandcommoditystocksintransitaremeasuredbytheweightedaveragemethod.Theinventoryofrealestatebusinessmainlyincludesinventorymaterials,developmentcosts,developmentproducts,etc.Theactualcostsofdevelopmentproductsincludelandtransferpayment,infrastructureandfacilitycosts,installationengineeringcosts,borrowsbeforecompletionofthedevelopmentandothercostsduringthedevelopmentprocess.Thespecialmaintenancefundscollectedinthefirstperiodareincludedinthedevelopmentoverheads.Whenthecontrolrightofdevelopmentproductsistransferred,theindividualvaluationmethodisusedtodetermineitsactualcost.

(3)InventorysystemTheCompanyinventoryadoptstheperpetualinventorysystem,countingatleastonceayear,theinventoryprofitandlossamountisincludedinthecurrentyear'sprofitandloss.

(4)CriteriaforrecognizingandprovidingforprovisionfordeclineinvalueofinventoriesOnthebalancesheetdate,inventoriesareaccounteddependingonwhichislowerbetweenthecostandthenetrealizablevalue.Ifthecostishigherthanthenetrealizablevalue,theimpairmentprovisionwillbemade.Therealizablenetvalueofinventoryshouldberecognizedbasedonsolidevidencewiththepurposeoftheinventoryandafter-balance-sheet-dateeventstakenintoconsideration.

(1)Inthecourseofnormalproductionandoperation,thenetrealizablevalueoffinishedgoods,commoditiesandmaterialsdirectlyusedforsaleshallbedeterminedbytheestimatedpriceoftheinventoryminustheestimatedcostofsaleandrelatedtaxes.Theinventoryheldfortheexecutionofasalescontractoralaborcontractshallbemeasuredonthebasisofthecontractpriceasitsnetrealizablevalue;Ifthequantityheldisgreaterthanthequantityorderedunderthesalescontract,thenetrealizablevalueof

theexcessinventoryismeasuredonthebasisofthegeneralsalesprice.Formaterialsusedforsale,themarketpriceshallbeusedasthemeasurementbasisforthenetrealizablevalue.

②Inthenormalproductionandoperationprocess,theinventoryofmaterialsthatneedtobeprocessedisdeterminedbytheamountoftheestimatedsellingpriceofthefinishedproductminustheestimatedcosttobeincurredatthetimeofcompletion,estimatedsalesexpensesandrelatedtaxesRealizethenetvalue.Ifthenetrealizablevalueofthefinishedproductproducedbyitishigherthanthecost,thematerialismeasuredatcost;Ifthedecreaseinthepriceofthematerialindicatesthatthenetrealizablevalueofthefinishedproductislowerthanthecost,thematerialismeasuredasthenetrealizablevalueandtheinventoryispreparedforadecreasebasedonitsdifference.

③Ifthefactorsaffectingthepreviouswrite-downofinventoryvaluehavedisappearedonthebalancesheetdate,theamountofthewrite-downwillberestoredandtransferredbackwithintheamountofinventorydepreciationreservethathasbeenaccrued,andtheamountreturnedwillbeincludedinthecurrentprofitandloss.

(5)Methodsofamortizationofswingmaterials

Low-valueconsumablesareamortizedonon-offamortizationbasisatusing.

17.Long-termshareequityinvestment

TheGroup'slong-termequityinvestmentincludescontroloninvestedentitiesandsignificantimpactsonequityinvestment.InvestedentitiesonwhichtheGrouphassignificantimpactsareassociatesoftheGroup.

(1)Basisforrecognitionofcommoncontrolandmajorinfluenceoninvestedentities

Commoncontrolreferstothecommoncontrolofanarrangementinaccordancewiththerelevantagreement,andtherelevantactivitiesofthearrangementmustbeagreeduponbytheparticipantswhosharecontrol.Indeterminingwhetherthereiscommoncontrol,thefirststepistodeterminewhetheralloragroupofparticipantscollectivelycontrolthearrangement,whichisconsideredcollectivecontrolbyalloragroupofparticipantsifalloragroupofparticipantsmustacttogethertodeterminetheactivitiesassociatedwiththearrangement.Secondly,itisjudgedwhetherthedecisiononrelatedactivitiesofthearrangementmustbeagreedbytheparticipantswhocollectivelycontrolthearrangement.Ifthereisacombinationoftwoormorepartiesthatcancollectivelycontrolanarrangement,itdoesnotconstitutejointcontrol.Whenjudgingwhetherthereisjointcontrol,theprotectiverightsenjoyedarenotconsidered.

Majorinfluencereferstothepowertoparticipateindecision-makingoffinancialandoperationpoliciesofacompany,butcannotcontrolorjointlycontrolthemakingofthepolicies.WhenconsideringwhethertheCompanycanimposesignificant

impactsontheinvestedentity,impactsofconversionofshareswithvotingrightshelddirectlyorindirectlybytheinvestorandvotingrightsthatcanbeexecutedinthisperiodheldbytheinvestorandotherpartyintosharesoftheinvestedentityshouldbeconsidered.IftheCompanydirectlyorthroughsubsidiariesholdsmorethan20%(inclusive)butlessthan50%oftheshareswithvotingrightsoftheinvestedentity,unlessthereisclearevidenceprovingthattheCompanycannotparticipatethedecision-makingofproductionandoperationoftheinvestedentity,theCompanyhasmajorinfluenceontheinvestedentity.

(2)RecognitionofinitialinvestmentcostsLong-termequityinvestmentsformedbymergerofenterprisesshallbedeterminedinaccordancewiththefollowingprovisions:

A.Inthecaseofanenterprisemergerunderthesamecontrol,wherethemergingpartymakesavaluationofthemergerbypaymentofcash,transferofnon-cashassetsorundertakingliabilities,theshareofthebookvalueoftheowner'sinterestinthefinalcontrollingparty'sconsolidatedfinancialstatementsastheinitialinvestmentcostofthelong-termequityinvestmentatthedateofthemerger.Thedifferencebetweentheinitialinvestmentcostoflong-termequityinvestmentandthecashpaid,thetransferrednon-cashassetsandthebookvalueofthedebtassumedshallbeadjustedtothecapitalreserve;ifthecapitalreserveisinsufficienttooffset,theretainedearningsshallbeadjusted;

Long-termequityinvestmentgeneratedbyenterprisemerger:forlong-termequityinvestmentobtainedbymergerofenterprisesundercommoncontrol,theobtainedshareofbookvalueoftheinterestsofthemergedparty'sownerintheconsolidatefinancialstatementsonthemergerdateiscosts;forlong-termequityinvestmentobtainedbymergerofenterprisesnotundercommoncontrol,themergercostistheinvestmentcost.Adjustthecapitalreserveaccordingtothedifferencebetweentheinitialinvestmentcostoflong-termequityinvestmentandthetotalfacevalueoftheissuedshares.Ifthecapitalreserveisinsufficienttooffsetorreduce,theretainedincomeshallbeadjusted;

Formergerofentitiesunderdifferentcontrol,themergercostisthefairvalueoftheassetpaid,liabilityundertaken,andequitysecuritiesissuedforexchangingofcontrolpowerovertheentitiesatthedayofacquisition.Agencyexpensesandotheradministrativeexpensessuchasauditing,legalconsulting,orappraisalservicesoccurredrelatingtothemergerofentitiesareaccountedintocurrentincomeaccountwhenoccurred.

Long-termequityinvestmentsformedbymergerofenterprisesshallbedeterminedinaccordancewiththefollowingprovisions:

Forlong-termequityinvestmentobtainedbycash,theactuallypaidconsiderationistheinitialinvestmentcost.Initialinvestmentcostsincludeexpenses,taxesandothernecessaryexpendituresdirectlyrelatedtotheacquisitionoflong-termequityinvestments;B.Long-termequityinvestmentsacquiredfromtheissuanceofinterestsecuritiesaretheinitialinvestmentcostsbasedonthefairvalueoftheissueinterestsecurities;

C.Forlong-termequityinvestmentsobtainedthroughnon-monetaryassetexchanges,iftheexchangehascommercialsubstanceandthefairvalueoftheexchangedassetsorexchangedassetscanbereliablymeasured,thefairvalueoftheexchangedassetsandrelevanttaxesshallbeusedastheinitialInvestmentcost,thedifferencebetweenthefairvalueandbookvalueoftheswapped-outassetisincludedinthecurrentprofitandloss;ifthenon-monetaryassetexchangedoesnotmeettheabovetwoconditionsatthesametime,thebookvalueoftheswapped-outassetandrelevanttaxeswillbeusedastheinitialinvestmentcost.

D.Long-termequityinvestmentsacquiredthroughdebtrestructuringdeterminetheirrecordedvalueatthefairvalueofthewaivedclaimsandothercostssuchastaxesdirectlyattributabletotheassetsandaccountforthedifferencebetweenthefairvalueandthebookvalueofthewaivedclaims.

(3)Subsequentmeasurementandrecognitionofgain/loss

TheCompanyusesthecostmethodtomeasurelong-termshareequityinvestmentinwhichtheCompanycancontroltheinvestedentity;andusestheequitymethodtomeasurelong-termshareequityinvestmentinwhichtheCompanyhassubstantialinfluenceontheinvestedentity.

①Cost

Forthelong-termequityinvestmentmeasuredonthecostbasis,exceptfortheannouncedcashdividendorprofitincludedinthepracticalcostorpricewhentheinvestmentwasmade,thecashdividendsorprofitdistributedbytheinvestedentityarerecognizedasinvestmentgainsinthecurrentgain/lossaccount.

Equity

Gainsfromlong-termequityinvestmentmeasuredbyequity

Whentheequitymethodisusedtomeasurelong-termequityinvestment,theinvestmentcostwillnotbeadjustediftheinvestmentcostofthelong-termequityinvestmentislargerthantheshareoffairvalueoftherecognizableassetsoftheinvestedentity.Whenitissmallerthantheshareoffairvalueoftherecognizableassetsoftheinvestedentity,thebookvaluewillbeadjustedandthedifferenceisincludedinthecurrentgainsoftheinvestment.

Whentheequitymethodisused,thecurrentinvestmentgainistheshareofthenetgainrealizedinthecurrentyearthatcanbesharedorborne,recognizedasinvestmentgainandothermisc.income.Thebookvalueofthelong-termequityinvestmentisadjustedaccordingly.Thebookvalueofthelong-termequityinvestmentshouldbeaccordinglydecreasedbasedontheshareofprofitorcashdividendannouncedbytheinvestedentity;accordingtootherchangesintheowner'sequityexceptfornetprofitandloss,othermiscincomeandprofitdistributionoftheinvestedentity,adjustthebookvalueofthelong-termequityinvestmentandrecorditinthecapitalsurplus(othercapitalsurplus).Whentheshareofthenetgainsthatcanbeenjoyedisrecognized,itisrecognizedafterthenetprofitoftheinvestedentityisadjustedbasedonthefairvalueoftherecognizableassetsoftheinvestedentityaccordingtotheCompany'saccountingpoliciesandaccountingperiod.WheretheaccountingpolicyandaccountingperiodadoptedbytheInvestedunitareinconsistentwiththeCompany,thefinancialstatementsoftheInvestedunitshallbeadjustedinaccordancewiththeaccountingpolicyandaccountingperiodoftheCompany,andtheinvestmentincomeandotherconsolidatedincomeshallberecognized.InternaltransactiongainnotrealizedbetweentheCompanyandaffiliatesismeasuredaccordingtotheshareholdingproportionandtheinvestmentgainsisrecognizedafterdeduction.TheunrealizedinternaltransactionlossbetweentheCompanyandtheinvestedentityistheimpairmentlossoftransferredassetsandshouldnotbewrittenoff.

Wheresubstantialinfluenceoninvestedentitiesisimposedorjointcontrolisimplementedduetoincreaseininvestment,thesumofthefairvalueoftheoriginalequityandincreasedinvestmentontheconversiondateistheinitialinvestmentcostundertheequitymethod.Iftheequityinvestmentoriginallyheldisclassifiedasotherequityinstrumentinvestment,thedifferencebetweenthefairvalueandthebookvalue,aswellastheaccumulatedgainsorlossesoriginallyincludedinothercomprehensiveincome,shallbetransferredoutofothercomprehensiveincomeandincludedinretainedincomeinthecurrentperiodwhentheequitymethodisadopted.

Wherejointcontrolorsubstantialinfluenceoninvestedentitiesislostduetodisposalofpartofinvestment,theremainingequityafterthedisposalshouldbetreatedaccordingtotheEnterpriseAccountingStandardNo.22–RecognitionandMeasurementofFinancialInstrumentsfromthedateoflosingthejointcontrolorsubstantialinfluence.Thedifferencebetweenthefairvalueandbookvalueshouldbeaccountedtheprofitandlossofthecurrentperiod.Forothermisc.incomesoforiginalshareequityinvestmentdeterminedusingtheequitymethod,whentheequitymethodisnolongerused,itshouldbetreatedbasedonthesamebasisofthetreatmentofrelatedassetsorliabilityoftheinvestedentities;theotherowners'interestsrelatedtotheoriginalshareequityinvestmentshouldbetransferredtogain/lossofthecurrentperiod.

(4)Equityinvestmentheldforsale

Fortheremainingequityinvestmentsnotclassifiedasassetsheldforsale,theequitymethodisadoptedforaccountingtreatment.

Equityinvestmentsclassifiedasheldforsaletoassociatesthatarenolongereligibletoholdclassifiedassetsforsaleareretrospectivelyadjustedusingtheequitymethodstartingfromthedatethattheyareclassifiedasheldforsale.Theclassificationisadjustedtoholdthefinancialstatementsfortheperiodtobesold.

(5)Impairmentexaminationandprovidingofimpairmentprovision

Forinvestmentsinsubsidiaries,associatesandjointventures,themethodofaccruingassetimpairmentisshownin23.Long-termassetimpairmentinChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.XVIII.InvestmentRealEstates

(1)Classificationofinvestmentrealestate

Investmentrealestatesareheldforrentorcapitalappreciation,orboth.Theseinclude,interalia:

①Leasedlandusingright

(2)therighttousethelandthatistransferredafterholdingandpreparingfortheincrement.

③Leasedbuilding

(2)Measurementofinvestmentrealestate

ForinvestmentrealestateswithanactiverealestatetransactionmarketandtheCompanycanobtainmarketpriceandotherinformationofsameorsimilarrealestatestoreasonablyestimatetheinvestmentrealestates'fairvalue,theCompanywillusethefairvaluemodetomeasuretheinvestmentrealestatessubsequently.Variationsinfairvalueareaccountedintothecurrentgain/lossaccount.

Thefairvalueofinvestmentrealestateisdeterminedwithreferencetothecurrentmarketpricesofsameorsimilarrealestatesinactivemarkets;whennosuchpriceisavailable,withreferencetotherecenttransactionpricesandconsiderationoffactorsincludingtransactionbackground,dateanddistricttoreasonablyestimatethefairvalue;orbasedontheestimatedleasegainsandpresentvalueofrelatedcashflows.

Forinvestmentrealestateunderconstruction(includinginvestmentrealestateunderconstructionforthefirsttime),ifthefairvaluecannotbereliablydeterminedbuttheexpectedfairvalueoftherealestateaftercompletioniscontinuouslyandreliablyobtained,theinvestmentrealestateunderconstructionismeasuredbycost.Whenthefairvaluecanbemeasuredreliablyoraftercompletion(theearlierone),itismeasuredatfairvalue.Foraninvestmentrealestatewhosefairvalueisprovenunabletobe

obtainedcontinuouslyandreliablybyobjectiveevidence,therealestatewillbemeasuredatcostbasisuntilitisdisposedandnoresidualvalueremainsasassumed.Ifthecostmodelisusedforsubsequentmeasurementofinvestmentrealestate,depreciationoramortizationiscalculatedaccordingtothestraight-linemethodafterthecostofinvestmentrealestateminusaccumulatedimpairmentandnetresidualvalue.SeeChapterVIII,V.Importantaccountingpolicies,forthemethodofaccruingassetimpairment23.Impairmentoflong-termassetsinaccountingestimates.Thetypesofinvestmentrealestate,estimatedeconomicusefullifeandestimatednetresidualvalueratearedeterminedasfollows:

19.Fixedassets

(1)RecognitionconditionsFixedassetsarerecognizedattheactualcostofacquisitionwhenthefollowingconditionsaremet:(1)Theeconomicbenefitsassociatedwiththefixedassetsarelikelytoflowintotheenterprise.Fixedassetsarerecognizedattheactualcostofacquisitionwhenthefollowingconditionsaremet:(1)Theeconomicbenefitsassociatedwiththefixedassetsarelikelytoflowintotheenterprise.②Thecostofthefixedassetscanbemeasuredreliably.Overhaulcostgeneratedbyregularexaminationonfixedassetsisrecognizedasfixedassetscostswhenthereisevidenceprovingthatitmeetsfixassetsrecognitionconditions.Ifnot,itwillbeaccountedintothecurrentgain/lossaccount.

(2)Depreciationmethod

20.Constructioninprocess

(1)Constructioninprogressisaccountedforbyprojectclassification.

(2)StandardandtimingfortransferringconstructioninprocessintofixedassetsThefullexpenditureincurredontheconstruction-in-progressprojectasafixedassetisrecordedasthevalueoftheassetbeforetheassetisconstructedtotheintendedusablestate.Thisincludesconstructioncosts,theoriginalcostofequipment,othernecessaryexpendituresincurredinordertoenabletheconstructionworkstoreachtheintendedusablestatusandtheborrowingcostsincurredforthespecificborrowingoftheprojectandthegeneralborrowingexpensesincurredbeforetheassetsreachtheintendedusablestatus.Constructioninprocesswillbetransferredtofixedassetswhenitreachesthepresetservicecondition.Thefixedassetsthathavereachedtheintendedusablestatebuthavenotbeencompletedshallbetransferredtothefixedassetsaccordingtotheestimatedvalueaccordingtotheestimatedvalueaccordingtotheestimatedvalueaccordingtotheprojectbudget,costoractualprojectcost,etc.ThedepreciationofthefixedassetsshallbeaccruedaccordingtotheCompany'sfixedassetsdepreciationpolicy.Theoriginalestimatedvalueshallbeadjustedaccordingtotheactualcostafterthecompletion.

XXI.Borrowingexpenses

(1)RecognitionprinciplesforcapitalizationofborrowingexpensesBorrowingexpensesoccurredtotheCompanythatcanbeaccountedaspurchasingorproductionofassetsatisfyingtheconditionsofcapitalizing,arecapitalizedandaccountedascostofrelatedasset.

(1)Assetexpenditurehasoccurred;

②Theborrowingexpensehasalreadyoccurred;

③Purchasingorproductionactivity,whichisnecessaryfortheassettoreachtheusefulstatus,hasalreadystarted.Otherinterestonloans,discountsorpremiumsandexchangedifferencesareincludedintheincomeandlossincurredinthecurrentperiod.

Iftheconstructionorproductionofassetssatisfyingthecapitalizingconditionsissuspendedabnormallyforover3months,capitalizingofborrowingexpensesshallbesuspended.Duringthenormalsuspensionperiod,borrowingexpenseswillbecapitalizedcontinuously.Whentheassetsatisfyingthecapitalizingconditionshasreacheditsusableorsellablestatus,capitalizingofborrowingexpensesshallbeterminated.

(2)CalculationofthecapitalizationamountofborrowingexpenseInterestexpensesgeneratedbyspecialborrowingslesstheinterestsincomeobtainedfromthedepositofunusedborrowingsorinvestmentgainsfromtemporaryinvestmentiscapitalized;thecapitalizationamountforgeneralborrowingisdeterminedbasedonthecapitalizationratewhichistheexceedingpartoftheaccumulativeassetsexpenseoverweightedaverageoftheassetsexpenseofthespecialborrowing/usedgeneralborrowing.

Iftheassetsthatareconstructedorproducedundertheconditionofcapitalizationoccupythegeneralborrowing,theinterestamounttobecapitalizedinthegeneralborrowingshallbecalculatedanddeterminedbymultiplyingthecapitalrateofthegeneralborrowingbytheweightedaverageoftheassetexpenditureoftheaccumulatedassetswhoseexpenditureexceedsthatofthespecializedborrowing.Thecapitalizationratioistheweightedaverageinterestrateofgeneralborrowings.

XXII.Intangibleassets

Recordedattheactualcostofacquisition.

(1)Amortizationofintangibleassets

①Usefullifeofintangibleassetswithlimitedusefullife

Attheendofeachyear,theCompanywillreexaminetheusefullifeandamortizationbasisofintangibleassetswithlimitedusefullife.Uponreview,theservicelifeandamortizationmethodsofintangibleassetsattheendoftheperiodarenotdifferentfromthosepreviouslyestimated.

(2)Intangibleassetswhichcannotbeforeseeabletobringeconomicbenefitstoenterprisesshallberegardedasintangibleassetswhoseusefullifeisuncertain.Forintangibleassetswithuncertainservicelife,theCompanyreviewstheservicelifeof

intangibleassetswithuncertainservicelifeattheendofeachyear.Ifitisstilluncertainafterrechecking,itshallconductanimpairmenttestonthebalancesheetdate.

③AmortizationofintangibleassetsForintangibleassetswithfiniteusefullives,theCompanydeterminestheirusefullifeuponacquisitionandsystematicallyamortizesthemusingthestraight-linemethodovertheirusefullife.Theamortizationamountisincludedinthecurrentprofitorlossofthebenefitingprojectoraddedtothecostoftherelatedasset.Thespecificamortizationamountistheamountafterthecostisdeductedfromtheestimatedresidualvalue.Forfixedassetsforwhichdepreciationprovisionismade,thedepreciationratewillbedeterminedaftertheaccumulativedepreciationprovisionamountisdeducted.Theresidualvalueofanintangibleassetwithlimitedusefullifeistreatedaszero,exceptwhereathirdpartyundertakestopurchasetheintangibleassetattheendofitsusefullifeortoobtainexpectedresidualvalueinformationbasedontheactivemarket,whichislikelytoexistattheendofitsusefullife.

Intangibleassetswithuncertainservicelifewillnotbeamortized.Attheendofeachyear,theusefullifeofintangibleassetswithuncertainusefullifeisreviewed,andifthereisevidencethattheusefullifeofintangibleassetsislimited,theusefullifeisestimatedandthesystemisreasonablyamortizedwithintheexpectedusefullife.

(2)ScopeofR&Dexpendituresandrelatedaccountingtreatment

Specificstandardfordistinguishbetweenresearchanddevelopmentstage

①TheCompanytakestheinformationandrelatedpreparatoryactivitiesforfurtherdevelopmentactivitiesastheresearchstage,andtheintangibleassetsexpenditureintheresearchstageisincludedinthecurrentprofitandlossperiod.

②ThedevelopmentactivitiescarriedoutaftertheCompanyhascompletedtheresearchstageasthedevelopmentstage.

Specificconditionsforcapitalizationofexpendituresinthedevelopmentphase

Expendituresinthedevelopmentphasecanberecognizedasintangibleassetsonlywhenthefollowingconditionsaremet:

A.Itistechnicallyfeasibletocompletetheintangibleassetsothatitcanbeusedorsold;

B.Havetheintentiontocompletetheintangibleassetanduseorsellit;

C.Thewayintangibleassetsgenerateeconomicbenefits,includingtheabilitytoprovethattheproductsproducedbytheintangibleassetsexistinthemarketortheintangibleassetsthemselvesexistinthemarket,andtheintangibleassetswillbeusedinternally,whichcanprovetheirusefulness;

D.Havesufficienttechnical,financialandotherresourcesupporttocompletethedevelopmentoftheintangibleasset,andhavetheabilitytouseorselltheintangibleasset;E.Theexpenditureattributabletothedevelopmentstageoftheintangibleassetcanbereliablymeasured.

23.Assetsimpairment

TheGroupusesthecostmodetocontinuemeasuringtheassetsimpairmenttoinvestmentrealestate,fixedassetsconstructioninprogress,intangibleassetsandgoodwill(exceptfortheinventories,investmentrealestatemeasuredbythefairvaluemode,deferredincometaxassetsandfinancialassets).Themethodisdeterminedasfollows:

TheCompanyjudgeswhetherthereisasignofimpairmenttoassetsonthebalancesheetday.Ifsuchsignexists,theCompanyestimatestherecoverableamountandconductstheimpairmenttest.Impairmenttestisconductedannuallyforgoodwillgeneratedbymergersandintangibleassetsthathavenotreachedtheusefulconditionnomatterwhethertheimpairmentsignexists.

Therecoverableamountisdeterminedbythehigherofthenetoffairvalueminusdisposalexpenseandthepresentvalueofthepredictedfuturecashflow.TheCompanyestimatestherecoverableamountontheindividualassetitembasis;whetheritishardtoestimatetherecoverableamountontheindividualassetitembasis,determinetherecoverableamountbasedontheassetgroupthattheassetsbelongto.TheassetsgroupisdeterminedbywhetherthemaincashflowgeneratedbytheGroupisindependentfromthosegeneratedbyotherassetsorassetsgroups.

Whentherecoverableamountoftheassetsorassetsgroupislowerthanitsbookvalue,theCompanywritesdownthebookvaluetotherecoverableamount,thewrite-downamountisaccountedintothecurrentincomeaccountandtheassetsimpairmentprovisionismade.

Forgoodwillimpairmenttest,thebookvalueofgoodwillgeneratedbymergersisamortizedthroughreasonablemeasuressincethepurchasedaytorelatedassetgroups;thosecannotbeamortizedtorelatedassetsgroupsareamortizedtorelatedcombinationofassetgroups.TherelatedassetgroupsorcombinationofassetgroupsrefertothosethatcanbenefitfromthesynergisticeffectofmergersandmustnotexceedtothereportingrangedeterminedbytheCompany.

Whentheimpairmenttestisconducted,ifthereissignofimpairmenttotheassetgrouporcombinationofassetgroupsrelatedtogoodwill,firstperformimpairtestforassetgrouporcombinationofassetgroupswithoutgoodwillandcalculatetherecoverableamountandrecognizetherelatedimpairmentloss.Thenconductimpairmenttestonthosewithgoodwill,comparethebookvaluewithrecoverableamount.Iftherecoverableamountislowerthanthebookvalue,recognizetheimpairmentlossofthegoodwill.

Oncerecognized,theassetimpairmentlosscannotbewrittenbackinsubsequentaccountingperiod.

24.Long-termamortizableexpensesThelong-termdeferredexpensesshallbeusedtocalculatetheexpensesthathaveoccurredbutshouldbebornebytheCompanyinthecurrentandsubsequentperiodswithaamortizationperiodofmorethanoneyear.TheCompany'slong-termdeferredexpensesareamortizedaveragelyduringthebenefitperiod.

25.Contractliabilities

See15.ContractassetsinChapterVIII,V.ImportantAccountingPoliciesandAccountingEstimatesfordetails.

26.Staffremuneration

(1)Accountingofoperationalleasing①Basicsalaryofemployees(salary,bonus,allowance,subsidy)Intheaccountingperiodforwhichthestaffandworkersprovideservices,theCompanyshallconfirmtheactualshort-termremunerationasliabilitiesandshallaccountforthecurrentincomeandloss,exceptasrequiredorpermittedbyotheraccountingstandards.

②EmployeewelfareTheemployeebenefitsincurredbytheCompanyshallbeincludedinthecurrentprofitandlossorrelatedassetcostsaccordingtotheactualamountincurred.Wheretheemployee'sbenefitisnon-monetary,itshallbemeasuredonthebasisoffairvalue.

③Socialinsurancepremiumsandhousingaccumulationfundssuchashealthinsurancepremiums,workinjurypremiums,birthinsurancepremiums,tradeunionfundsandstaffandeducationfundsTheCompanypaysthemedicalinsurancepremiums,workinjuryinsurancepremiums,birthinsurancepremiums,etc.socialinsurancepremiumsandhousingaccumulationfundsforthestaffandworkers,aswellastheunionfundsandthestaffandworkerseducationfundsaccordingtotheregulations,intheaccountingperiodforwhichthestaffandworkersprovideservices,thecorrespondingsalaryamountofthestaffandworkers,andconfirmsthecorrespondingliabilities,whichareincludedinthecurrentprofitandlossorrelatedassetcosts.④Short-termpaidleave

TheCompanyaccumulatesthesalaryoftheemployeeswhoareabsentfromworkwithpaywhentheemployeesprovideservice,thusincreasingtheirfuturerightofabsencewithpay.TheCompanyconfirmsthesalaryoftheemployeerelatedtotheabsenceofnon-cumulativesalaryduringtheactualabsenceaccountingperiod.

⑤Short-termprofitshareprogram

Iftheprofit-sharingplanmeetsthefollowingconditionsatthesametime,theCompanyshallconfirmthesalarypayabletothestaffandworkers:

A.Thelegalorpresumptiveobligationoftheenterprisetopaytheremunerationofitsemployeesasaresultofpastmatters;

B.Theamountofemployeecompensationobligationsduetotheprofitsharingplancanbereliablyestimated.

(2)Accountingofpost-employmentwelfare

TheCompany'spost-employmentbenefitplanisdefinedcontributionplan.Definedcontributionplansincludebasicendowmentinsurance,unemploymentinsurance,etc.Duringtheaccountingperiodwhenemployeesprovideservicesforthem,theCompanyshallrecognizethedepositamountcalculatedaccordingtothedefineddepositplanasliabilitiesandincludeitinthecurrentprofitsandlossesorrelatedassetcosts.

(3)Accountingofdismisswelfare

IftheCompanyprovidesterminationbenefitstoemployees,theemployeecompensationliabilitiesarisingfromtheterminationbenefitsshallberecognizedattheearliestofthefollowingtwoandshallbeincludedinthecurrentprofitandloss:

①Anenterprisemaynotunilaterallywithdrawtheresignationbenefitsprovidedforbythedismissalplanorreductionproposal;

②Whentheenterpriserecognizesthecostsorexpensesrelatedtothereorganizationinvolvingthepaymentofresignationbenefits.

27.Anticipatedliabilities

(1)Recognitionstandardsofanticipatedliabilities

Whenresponsibilitiesoccurredinconnectiontocontingentissues,andallofthefollowingconditionsaresatisfied,theyarerecognizedasexpectableliabilityinthebalancesheet:

①ThisresponsibilityisacurrentresponsibilityundertakenbytheCompany;

②ExecutionofthisresponsibilitymaycausefinancialbenefitoutflowfromtheCompany;

③Amountoftheliabilitycanbereliablymeasured.

(2)MeasurementofanticipatedliabilitiesExpectedliabilitiesareinitiallymeasuredatthebestestimationontheexpensestoexercisethecurrentresponsibility,andwithconsiderationstotherelativerisks,uncertainty,andperiodicvalueofcurrency.Oneachbalancesheetdate,reviewthebookvalueoftheestimatedliabilities.Wherethereisconclusiveevidencethatthebookvaluedoesnotreflectthecurrentbestestimate,thebookvalueisadjustedtothecurrentbestestimate.

28.Revenue

(1)GeneralprinciplesIncomeisthetotalinflowofeconomicbenefitsformedinthedailyactivitiesoftheCompany,whichwillleadtotheincreaseofshareholders'equityandhasnothingtodowiththecapitalinvestedbyshareholders.

TheCompanyhasfulfilledtheperformanceobligationinthecontract,thatis,therevenueisrecognizedwhenthecustomerobtainsthecontrolrightofrelevantgoods.Toobtainthecontrolrightoftherelevantcommoditymeanstobeabletodominatetheuseofthecommodityandobtainalmostalltheeconomicbenefitsfromit.

Iftherearetwoormoreperformanceobligationsinthecontract,theCompanywillallocatethetransactionpricetoeachsingleperformanceobligationaccordingtotherelativeproportionoftheseparatesellingpriceofthegoodsorservicespromisedbyeachsingleperformanceobligationonthestartdateofthecontract,andmeasuretheincomeaccordingtothetransactionpriceallocatedtoeachsingleperformanceobligation.

ThetransactionpricereferstotheamountofconsiderationthattheCompanyisexpectedtobeentitledtoreceiveduetothetransferofgoodsorservicestocustomers,excludingtheamountcollectedonbehalfofathirdparty.Whendeterminingthecontracttransactionprice,ifthereisavariableconsideration,theCompanyshalldeterminethebestestimateofthevariableconsiderationaccordingtotheexpectedvalueorthemostlikelyamount,andincludeitinthetransactionpricewiththeamountnotexceedingtheaccumulatedrecognizedincomewhentherelevantuncertaintyiseliminated,whichismostlikelynottohaveasignificantreversal.Ifthereisasignificantfinancingcomponentinthecontract,theCompanywilldeterminethetransactionpriceaccordingtotheamountpayableincashwhenthecustomerobtainsthecontrolrightofthecommodity.Thedifferencebetweenthetransactionpriceandthecontractconsiderationwillbeamortizedbytheeffectiveinterestmethodduringthecontractperiod.If

theintervalbetweenthecontrolrighttransferandthecustomer'spaymentislessthanoneyear,theCompanywillnotconsiderthefinancingcomponentPoints.Ifoneofthefollowingconditionsismet,theperformanceobligationshallbeperformedwithinacertainperiodoftime;otherwise,theperformanceobligationshallbeperformedatacertainpointoftime:

①WhenthecustomerperformsthecontractintheCompany,heobtainsandconsumestheeconomicbenefitsbroughtbytheCompany'sperformance;

②Customerscancontrolthegoodsunderconstructionduringtheperformanceofthecontract;

③ThegoodsproducedbytheCompanyintheprocessofperformancehaveirreplaceableuses,andtheCompanyhastherighttocollectmoneyfortheperformancepartthathasbeencompletedsofarduringthewholecontractperiod.

Fortheperformanceobligationsperformedwithinacertainperiodoftime,theCompanyshallrecognizetherevenueaccordingtotheperformanceprogresswithinthatperiod,exceptthattheperformanceprogresscannotbereasonablydetermined.TheCompanydeterminestheprogressofperformancefortheprovisionofservicesonthebasisoftheinput(oroutput)method.Whentheprogressofperformancecannotbereasonablydetermined,ifthecostincurredbytheCompanyisexpectedtobecompensated,therevenueshallberecognizedaccordingtotheamountofcostincurreduntiltheprogressofperformancecanbereasonablydetermined.

Fortheperformanceobligationperformedatacertaintimepoint,theCompanyrecognizestherevenueatthetimepointwhenthecustomerobtainsthecontrolrightofrelevantgoods.Indeterminingwhetheracustomerhasacquiredcontrolofgoodsorservices,theCompanywillconsiderthefollowingsigns:

①TheCompanyhastherighttoreceivepaymentforthegoodsorservices,thatis,thecustomerhastheobligationtopayforthegoods;

②TheCompanyhastransferredthelegalownershipofthegoodstothecustomer,thatis,thecustomerhasthelegalownershipofthegoods;

③TheCompanyhastransferredthegoodsinkindtothecustomer,thatis,thecustomerhaspossessedthegoodsinkind;

④TheCompanyhastransferredthemainrisksandrewardsoftheownershipofthegoodstothecustomer,thatis,thecustomerhasobtainedthemainrisksandrewardsoftheownershipofthegoods;

⑤Theproducthasbeenacceptedbythecustomer.

Salesreturnclause

Forthesaleswithsalesreturnclauses,whenthecustomerobtainsthecontrolrightoftherelevantgoods,theCompanyshallrecognizetherevenueaccordingtotheamountofconsiderationitisentitledtoobtainduetothetransferofthegoodstothecustomer,andrecognizetheamountexpectedtobereturnedduetothesalesreturnastheestimatedliability;atthesametime,theCompanyshalldeducttheestimatedcostofrecoveringthegoodsaccordingtothebookvalueoftheexpectedreturnedgoodsatthetimeoftransfer(Thebalanceafterdeductingthevalueofthereturnedgoodsisrecognizedasanasset,thatis,thecostofreturnreceivable,whichiscarriedforwardbydeductingthenetcostoftheaboveassetsaccordingtothebookvalueofthetransferredgoodsatthetimeoftransfer.Oneachbalancesheetdate,theCompanyreestimatesthereturnoffuturesalesandremeasurestheaboveassetsandliabilities.WarrantyobligationsAccordingtothecontractandlegalprovisions,theCompanyprovidesqualityassuranceforthegoodssoldandtheprojectsconstructed.Fortheguaranteequalityassurancetoensurethatthegoodssoldmeettheestablishedstandards,theCompanyconductsaccountingtreatmentinaccordancewiththeaccountingstandardsforBusinessEnterprisesNo.13-contingencies.Fortheservicequalityassurancewhichprovidesaseparateserviceinadditiontoguaranteeingthatthegoodssoldmeettheestablishedstandards,theCompanytakesitasasingleperformanceobligation,allocatespartofthetransactionpricetotheservicequalityassuranceaccordingtotherelativeproportionoftheseparatesellingpriceofthegoodsandservicequalityassurance,andrecognizestherevenuewhenthecustomerobtainstheservicecontrolright.Whenevaluatingwhetherthequalityassuranceprovidesaseparateserviceinadditiontoassuringcustomersthatthegoodssoldmeettheestablishedstandards,theCompanyconsiderswhetherthequalityassuranceisastatutoryrequirement,thequalityassuranceperiod,andthenatureoftheCompany'scommitmenttoperformthetask.

Customerconsiderationpayable

Ifthereisconsiderationpayabletothecustomerinthecontract,unlesstheconsiderationistoobtainotherclearlydistinguishablegoodsorservicesfromthecustomer,theCompanywilloffsetthetransactionpricewiththeconsiderationpayable,andoffsetthecurrentincomeatthelatertimeofconfirmingtherelevantincomeorpaying(orpromisingtopay)thecustomer'sconsideration.

Contractualrightsnotexercisedbycustomers

IftheCompanyadvancessalesofgoodsorservicestocustomers,theamountshallberecognizedasliabilitiesfirst,andthenconvertedintoincomewhenrelevantperformanceobligationsarefulfilled.WhentheCompanydoesnotneedtoreturntheadvancepaymentandthecustomermaygiveupallorpartofthecontractrights,iftheCompanyexpectstohavetherighttoobtain

theamountrelatedtothecontractrightsgivenupbythecustomer,theaboveamountshallberecognizedasincomeinproportionaccordingtothemodeofthecustomerexercisingthecontractrights;otherwise,theCompanyonlyhastheverylowpossibilityofthecustomerrequiringtoperformtheremainingperformanceobligationsTherelevantbalanceoftheaboveliabilitiesisconvertedintoincome.

ContractchangeWhentheconstructioncontractbetweentheCompanyandthecustomerischanged:

①Ifthecontractchangeincreasestheclearlydistinguishableconstructionserviceandcontractprice,andthenewcontractpricereflectstheseparatepriceofthenewconstructionservice,theCompanywilltreatthecontractchangeasaseparatecontractforaccounting;

②Ifthecontractchangedoesnotbelongtotheabove-mentionedsituation(1),andthereisacleardistinctionbetweenthetransferredconstructionserviceandthenontransferredconstructionserviceonthedateofcontractchange,theCompanywillregarditastheterminationoftheoriginalcontract,andatthesametime,combinethenonperformancepartoftheoriginalcontractandthecontractchangepartintoanewcontractforaccountingtreatment;

③Ifthecontractchangedoesnotbelongtotheabovesituation(1),andthereisnocleardistinctionbetweenthetransferredconstructionservicesandthenontransferredconstructionservicesonthedateofcontractchange,theCompanywilltakethecontractchangepartasanintegralpartoftheoriginalcontractforaccountingtreatment,andtheresultingimpactontherecognizedincomewillbeadjustedtothecurrentincomeonthedateofcontractchange.

(2)ThespecificmethodsofrevenuerecognitionoftheCompanyareasfollows:

①Commoditysalescontract

Thecommoditysalescontractbetweenthecompanyandthecustomerincludestheperformanceobligationoftransferringcurtainwallmaterials,screendoormaterials,electricenergy,etc.,whichbelongstotheperformanceobligationatacertaintimepoint.

Revenuefromdomesticsalesofproductsisrecognizedatthetimewhenthecustomerobtainstherightofcontrolofthegoodsonthebasisofcomprehensiveconsiderationofthefollowingfactors:theCompanyhasdeliveredtheproductstothecustomeraccordingtothecontract,thecustomerhasacceptedthegoods,thepaymentforgoodshasbeenrecoveredorthereceipthasbeenobtained,andtherelevanteconomicbenefitsarelikelytoflowin,themainrisksandrewardsoftheownershipofthegoodshavebeentransferred,thelegalownershiphasbeentransferred;

Thefollowingconditionsshouldbemetfortherecognitionofexportproductrevenue:theCompanyhasdeclaredtheproductaccordingtothecontract,obtainedthebilloflading,collectedthepaymentforgoodsorobtainedthereceiptcertificate,andtherelevanteconomicbenefitsarelikelytoflowin,themainrisksandrewardsoftheownershipofgoodshavebeentransferred,andthelegalownershipofgoodshasbeentransferred.

②Servicecontract

TheservicecontractbetweentheCompanyanditscustomersincludestheperformanceobligationsofmetroplatformscreendooroperationmaintenance,curtainwallmaintenanceandpropertyservices.AstheCompany'sperformanceatthesametime,thecustomersobtainandconsumetheeconomicbenefitsbroughtbytheCompany'sperformance,theCompanytakesitastheperformanceobligationwithinacertainperiodoftimeandallocatesitequallyduringtheserviceprovisionperiod.

③Engineeringcontract

TheprojectcontractbetweentheCompanyandthecustomerincludestheperformanceobligationsofcurtainwallprojectandmetroplatformscreendoorprojectconstruction.AsthecustomercancontrolthegoodsunderconstructionintheprocessoftheCompany'sperformance,theCompanytakesthemastheperformanceobligationswithinacertainperiodoftime,andrecognizestheincomeaccordingtotheperformanceprogress,exceptthattheperformanceprogresscannotbereasonablydetermined.TheCompanydeterminestheperformancescheduleofprovidingconstructionservicesaccordingtotheinputmethod.Theperformancescheduleshallbedeterminedaccordingtotheproportionoftheactualcontractcosttotheestimatedtotalcontractcost.

④Realestatesalescontract

TheincomeoftheCompany'srealestatedevelopmentbusinessisrecognizedwhenthecontrolofthepropertyistransferredtothecustomer.TheincomeisrecognizedwhenthecustomerobtainsthephysicalownershiporlegalownershipofthecompletedpropertyandtheCompanyhasobtainedthecurrentrightofcollectionandislikelytorecovertheconsideration.Whenconfirmingthecontracttransactionprice,ifthefinancingcomponentissignificant,theCompanywilladjustthecontractcommitmentconsiderationaccordingtothefinancingcomponentofthecontract.

(3)Adoptionofdifferentbusinessmodelsforthesametypeofbusinessinvolvingdifferentrevenuerecognitionandmeasurementmethods

Thereisnodifferenceinrevenuerecognitionduetotheadoptionofdifferentaccountingpoliciesforsimilarbusinesses.

29.Contractcosts

Contractcostisdividedintocontractperformancecostandcontractacquisitioncost.ThecostincurredbytheCompanyinperformingthecontractshallberecognizedasanassetwhenthefollowingconditionsaremetsimultaneously:

Thecostisdirectlyrelatedtoacurrentorexpectedcontract,includingdirectlabor,directmaterials,manufacturingexpenses(orsimilarexpenses),clearlybornebythecustomer,andothercostsincurredonlyduetothecontract;②ThiscostincreasestheCompany'sfutureresourcesforfulfillingitsperformanceobligations.③Thecostisexpectedtoberecovered.IftheincrementalcostincurredbytheCompanytoobtainthecontractisexpectedtoberecovered,itshallberecognizedasanassetasthecontractacquisitioncost.Theassetsrelatedtothecontractcostshallbeamortizedonthesamebasisastheincomefromgoodsorservicesrelatedtotheassets;however,iftheamortizationperiodofthecontractacquisitioncostislessthanoneyear,theCompanyshallincludeitinthecurrentprofitandlosswhenitoccurs.Ifthebookvalueoftheassetsrelatedtothecontractcostishigherthanthedifferencebetweenthefollowingtwoitems,theCompanywillmakeprovisionforimpairmentfortheexcesspartandrecognizeitasthelossofassetimpairment,andfurtherconsiderwhethertheestimatedliabilitiesrelatedtothelosscontractshouldbemade:

①Theresidualconsiderationexpectedtobeobtainedduetothetransferofgoodsorservicesrelatedtotheasset;

②Theestimatedcosttobeincurredforthetransferoftherelevantgoodsorservices.

Iftheaboveprovisionforimpairmentofassetsissubsequentlyreversed,thebookvalueoftheassetafterreversalshallnotexceedthebookvalueoftheassetonthereversaldatewithoutprovisionforimpairment.

Thecontractperformancecostrecognizedasanassetwithanamortizationperiodofnomorethanoneyearoronenormalbusinesscycleatthetimeofinitialrecognitionshallbelistedinthe"inventory"item,andtheamortizationperiodofnomorethanoneyearoronenormalbusinesscycleatthetimeofinitialrecognitionshallbelistedinthe"othernoncurrentassets"item.

Thecontractacquisitioncostrecognizedasanassetshallbelistedintheitemof"othercurrentassets"whentheamortizationperioddoesnotexceedoneyearoronenormalbusinesscycleatthetimeofinitialrecognition,andlistedintheitem

of"othernoncurrentassets"whentheamortizationperiodexceedsoneyearoronenormalbusinesscycleatthetimeofinitialrecognition.

30.Governmentsubsidy

(1)GovernmentsubsidyGovernmentsubsidiesarerecognizedwhenthefollowingconditionsaremet:

①Requirementsattachedtogovernmentsubsidies;②TheCompanycanreceivegovernmentsubsidies.

(2)GovernmentsubsidyWhenagovernmentsubsidyismonetarycapital,itismeasuredatthereceivedorreceivableamount.Nonemonetarycapitalaremeasuredatfairvalue;ifnoreliablefairvalueavailable,recognizedatRMB1.

(3)Recognitionofgovernmentsubsidies①Assets-relatedGovernmentsubsidiesrelatedtoassetsareobtainedbytheCompanytopurchase,buildorformulateinothermannerslong-termassets;orsubsidiesrelatedtobenefits.Iftheasset-relatedgovernmentsubsidyisrecognizedasdeferredgain,shouldberecordedingainandlossintheservicelife.Governmentsubsidymeasuredatthenominalamountisaccountedintocurrentincomeaccount.Iftherelevantassetsaresold,transferred,scrappedordamagedbeforetheendoftheirusefullife,theunallocatedrelevantdeferredincomebalanceshallbetransferredtotheprofitandlossofthecurrentperiodofdispositionoftheassets.Gain-relatedgovernmentsubsidyshouldbeaccountedasfollows:

TheCompanydividesgovernmentsubsidiesintoassets-relatedandearnings-relatedgovernmentsubsidies.Gain-relatedgovernmentsubsidyshouldbeaccountedasfollows:

Subsidythatwillbeusedtocompensaterelatedfuturecostsorlossesshouldberecognizedasdeferredgainandrecordedinthegainandlossofthecurrentreportandoffsetrelatedcost;

Subsidythatisusedtocompensateexistingcostorlossshouldberecordedinthegainandlossofthecurrentperiodoroffsetrelatedcost.

Forgovernmentsubsidiesthatincludebothasset-relatedandincome-relatedparts,separatedifferentpartsforaccountingtreatment;Itisdifficulttodistinguishbetweentheoverallclassificationofgovernmentsubsidiesrelatedtobenefits.Governmentsubsidyrelatedtoroutineoperationsshouldberecordedinothergainsoroffsetrelatedcost.Governmentsubsidynotrelatedtoroutineoperationsshouldberecordedinnon-operatingincomeorexpense.

③Policypreferentialloandiscount

Thepolicy-basedpreferentialloanobtainedhasinterestsubsidy.Ifthegovernmentallocatestheinterest-subsidyfundstothelendingbank,theloanamountactuallyreceivedwillbeusedastheentryvalueoftheloan,andtheborrowingcostwillbecalculatedbasedontheloanprincipalandpolicy-basedpreferentialinterestrate.

Ifthegovernmentallocatestheinterest-bearingfundsdirectlytotheGroup,discountinterestwilloffsettheborrowingcosts.

④Governmentsubsidyrefund

Whenaconfirmedgovernmentsubsidyneedstobereturned,thebookvalueoftheassetisadjustedagainstthebookvalueoftherelevantassetatinitialrecognition.Ifthereisarelateddeferredincomebalance,thebookbalanceoftherelateddeferredincomeiswrittenoffandtheexcessiscreditedtothecurrentprofitorloss;Inothercases,itisdirectlyincludedinthecurrentprofitandloss.

31.Differedincometaxassetsanddifferedincometaxliabilities

TheCompanyusesthetemporarydifferencebetweenthebookvalueoftheassetsandliabilitiesonthebalancesheetdayandthetaxbaseandtheliabilitiesmethodtorecognizethedeferredincometax.26.Deferredincometaxassetsanddeferredincometaxliabilities

(1)Deferredincometaxassets

Fordeductibletemporarydiscrepancies,deductiblelossesandtaxoffsetsthatcanbecarriedforwardforfutureyears,theimpactonincometaxiscalculatedattheestimatedincometaxrateforthetransfer-backperiodandtheimpactisrecognizedasdeferredincometaxassets,providedthattheCompanyislikelytoobtainfuturetaxableincomefordeductibletemporarydiscrepancies,deductiblelossesandtaxoffsets.

Atthesametime,theimpactonincometaxofdeductibletemporarydiscrepanciesresultingfromtheinitialrecognitionofassetsorliabilitiesintransactionsormatterswiththefollowingcharacteristicsisinconclusiveasdeferredincometaxassets:

A.Thetransactionisnotabusinesscombination;

B.thetransactionisnotamergerandthetransactiondoesnotaffecttheaccountingprofitortaxableproceeds;However,forindividualtransactionsthatsimultaneouslymeettheabovetwoconditionsandresultinequaltaxabletemporarydifferencesanddeductibletemporarydifferencesuponinitialrecognitionofassetsandliabilities,theexemptionfrominitialrecognitionofdeferredtaxliabilitiesanddeferredtaxassetsdoesnotapply.Fortaxabletemporarydifferencesanddeductibletemporarydifferencesarisingfromtheinitialrecognitionofassetsandliabilitiesinsuchtransactions,theCompanyrecognizesthecorrespondingdeferredtaxliabilitiesanddeferredtaxassetsatthetimeofthetransaction.Intheeventoftemporarydiscrepancyofdeductibleinvestmentrelatedtosubsidiaries,jointventuresandjointventures,andmeetingthefollowingtwoconditions,theamountofimpact(talent)onincometaxshallbedeemedasdeferredincometaxassets:

A.Temporarydiscrepanciesarelikelytobereversedintheforeseeablefuture;B.Inthefuture,itislikelytoobtaintaxableincomethatcanbeusedtooffsetthedeductibletemporarydifferences;Onthebalancesheetdate,ifthereisconclusiveevidencethatsufficienttaxableincomeislikelytobeobtainedinthefuturetooffsetthedeductibletemporarydifferences,thedeferredincometaxassetsthathavenotbeenrecognizedinthepreviousperiodarerecognized.

Onthebalancesheetday,theCompanyre-examinesthebookvalueofthedeferredincometaxassets.Ifitisunlikelytohaveadequatetaxableproceedstoreducethebenefitsofthedeferredincometaxassets,lessthedeferredincometaxassets'bookvalue.Whenthereisadequatetaxableproceeds,thelessenedamountwillbereversed.

(2)Deferredincometaxassets

AllprovisionaldifferencesintaxableincomeoftheCompanyshallbemeasuredonthebasisoftheestimatedincometaxratefortheperiodoftransfer-backandshallberecognizedasdeferredincometaxliabilities,exceptthat:

Atthesametime,theimpactonincometaxofdeductibletemporarydiscrepanciesresultingtheinitialrecognitionofassetsorliabilitiesintransactionsormatterswiththefollowingcharacteristicsisinconclusiveasdeferredincometaxLiabilities:

A.Initialrecognitionofgoodwill;

B.Initialrecognitionofgoodwill,orofassetsorliabilitiesgeneratedintransactionswiththefollowingfeatures:thetransactionisnotamergerandthetransactiondoesnotaffecttheaccountingprofitortaxableproceeds;

②Intheeventoftemporarydiscrepancyofdeductibleinvestmentrelatedtosubsidiaries,Jointventurejointventures,andmeetingthetwoconditions,theamountofimpact(talent)onincometaxshallbedeemedasdeferredincometaxassets:

A.TheCompanyisabletocontrolthetimeoftemporarydiscrepancytransfers;BTemporarydiscrepanciesarelikelytobereversedintheforeseeablefuture;

(3)Deferredincometaxassets

(1)DeferredincometaxliabilitiesorassetsassociatedwithenterpriseconsolidationTemporarydifferenceoftaxabletaxordeductibletemporarydifferencegeneratedbyenterprisemergerundernon-samecontrol.Whendeferredincometaxliabilityordeferredincometaxassetisrecognized,relateddeferredincometaxexpense(orincome)isusuallyadjustedasrecognizedgoodwillinenterprisemerger.

②Amountofsharespaidandaccountedasowners'equityExceptfortheadjustmentgoodwillgeneratedbymergersordeferredincometaxrelatedtotransactionsoreventsdirectlyaccountedintotheowners'equity,incometaxisaccountedasincometaxexpenseintothecurrentgain/lossaccount.Theeffectsoftemporarydiscrepancyonincometaxincludethefollowing:Otherintegratedbenefitssuchasfairvaluechangeoffinancialassetsavailableforsale,retroactiveadjustmentofaccountingpolicychangesorretroactiverestatementofaccountingerrorcorrectiondiscrepancytoadjusttheinitialretainedincome,andmixedfinancialinstrumentsincludingliabilitiesandequity.

③CompensationforlossesandtaxdeductionsA.CompensablelossesandtaxdeductionsfromtheCompany'sownoperationsDeductiblelossesrefertothelossescalculatedanddeterminedinaccordancewiththeprovisionsofthetaxlawthatareallowedtobemadeupwiththetaxableincomeofsubsequentyears.Theuncoveredlosses(deductiblelosses)andtaxdeductionsthatcanbecarriedforwardinaccordancewiththetaxlawaretreatedasdeductibletemporarydifferences.Whenitisexpectedthatsufficienttaxableincomeislikelytobeobtainedinthefutureperiodwhenitisexpectedtobeavailabletomakeupforlossesortaxdeductions,thecorrespondingdeferredincometaxassetsarerecognizedwithinthelimitofthetaxableincomethatislikelytobeobtained,whilereducingthecurrentperiodIncometaxexpenseintheincomestatement.

B.CompensableuncoveredlossesofthemergedcompanyduetobusinessmergerInabusinesscombination,iftheCompanyobtainsthedeductibletemporarydifferenceofthepurchasedpartyanddoesnotmeetthedeferredincometaxassetrecognitionconditionsonthepurchasedate,itshallnotberecognized.Within12monthsafterthepurchasedate,ifneworfurtherinformationisobtainedindicatingthattherelevantconditionsonthepurchasedatealreadyexist,andtheeconomicbenefitsbroughtaboutbythetemporarydifferenceareexpectedtobedeductedonthepurchasedate,confirmtherelevantdelivery.Deferredincometaxassets,whilereducinggoodwill,ifthegoodwillisnotenoughtooffset,the

differenceisrecognizedasthecurrentprofitandloss;exceptfortheabovecircumstances,thedeferredtaxassetsrelatedtothebusinesscombinationarerecognizedandincludedinthecurrentprofitandloss.

④TemporarydifferencecausedbymergeroffsetIfthereisatemporarydifferencebetweenthebookvalueofassetsandliabilitiesintheconsolidatedbalancesheetandthetaxablebasisofthetaxpayerduetotheoffsetoftheunrealizedinternalsalesgainorloss,thedeferredincometaxassetorthedeferredincometaxliabilityisconfirmedintheconsolidatedbalancesheet,andtheincometaxexpenseintheconsolidatedprofitstatementisadjusted,withtheexceptionofthedeferredincometaxrelatedtothetransactionoreventdirectlyincludedintheowner'sequityandthemergeroftheenterprise.

⑤SharepaymentsettledbyequityIfthetaxlawprovidesforallowableper-taxdeductionofexpensesrelatedtosharepayment,withintheperiodforwhichthecostandexpensearerecognizedinaccordancewiththeaccountingstandards,theCompanyshallcalculatethetaxbasisandtemporarydiscrepancybasedontheestimatedper-taxdeductionamountattheendoftheaccountingperiodandconfirmtherelevantdeferredincometaxifitmeetstheconditionsforconfirmation.Ofthese,theamountthatcanbedeductedbeforetaxinthefutureexceedsthecostrelatedtosharepaymentrecognizedinaccordancewiththeaccountingstandards,andtheexcessincometaxshallbedirectlyincludedintheowner'sequity.

⑥DividendsrelatedtofinancialinstrumentsclassifiedasequityinstrumentsForfinancialinstrumentsclassifiedasequityinstrumentswheretheCompanyistheissuer,anydividendexpenditurethatisdeductibleforcorporateincometaxpurposesaccordingtotaxpolicyisrecognizedforitsincometaximpactwhenthedividendspayablearerecognized.Ifthedistributedprofitsoriginatefromtransactionsoreventspreviouslyaffectingprofitorloss,theincometaximpactofsuchdividendsisincludedinthecurrentprofitorloss.Ifthedistributedprofitsoriginatefromtransactionsoreventspreviouslyrecognizedinequity,theincometaximpactofsuchdividendsisincludedinequityitems.

(4)BasisforpresentationofdeferredtaxassetsanddeferredtaxliabilitiesonanetbasisThedeferredincometaxassetsanddeferredincometaxliabilitiesofthecompanyarepresentedasanetamountafteroffsettingwhenthefollowingconditionsaremetsimultaneously:

TheCompanyhasalegalrighttooffsetcurrentincometaxassetsandcurrentincometaxliabilitiesonanetbasis.Thedeferredincometaxassetsanddeferredincometaxliabilitiesarerelatedtoincometaxesleviedbythesametaxauthorityonthesametaxableentity,orarerelatedtoincometaxesleviedbydifferenttaxauthoritiesbutthesignificantdeferred

incometaxassetsanddeferredincometaxliabilitieswillbesettledonanetbasisforcurrentincometaxesorsimultaneousacquisitionofassetsandsettlementofliabilitieswithineachfutureperiodinwhichtherelatedtaxableentityintendstosettlethecurrentincometaxassetsandliabilitiesonanetbasis.

32.Leasing

(1)IdentificationofleaseOnthecommencementdateofthecontract,thecompanyevaluateswhetherthecontractisaleaseorincludesalease.Ifonepartyinthecontracttransferstherighttocontroltheuseofoneormoreidentifiedassetswithinacertainperiodinexchangeforconsideration,thecontractisaleaseorincludesalease.Inordertodeterminewhetherthecontracttransferstherighttocontroltheuseoftheidentifiedassetswithinacertainperiod,thecompanyevaluateswhetherthecustomersinthecontracthavetherighttoobtainalmostalltheeconomicbenefitsarisingfromtheuseoftheidentifiedassetsduringtheuseperiod,andhavetherighttodominatetheuseoftheidentifiedassetsduringtheuseperiod.

(2)SeparateidentificationofleaseIfthecontractincludesmultipleseparateleasesatthesametime,thecompanywillsplitthecontractandconductaccountingtreatmentforeachseparatelease.Ifthefollowingconditionsaremetatthesametime,therighttousetheidentifiedassetconstitutesaseparateleaseinthecontract:

①thelesseecanprofitfromusingtheassetaloneortogetherwithothereasilyavailableresources;②Theassetisnothighlydependentorhighlyrelatedtootherassetsinthecontract.

(3)AccountingtreatmentmethodoftheCompanyaslesseeOnthebeginningdateoftheleaseterm,theCompanyrecognizestheleasewithaleasetermofnomorethan12monthsandexcludingthepurchaseoptionasashort-termlease;Whenasingleleasedassetisabrand-newasset,theleasewithlowervalueisrecognizedasalowvalueassetlease.IftheCompanysubletsorexpectstosublettheleasedassets,theoriginalleaseisnotrecognizedasalowvalueassetlease.Forallshort-termleasesandlowvalueassetleases,theCompanywillrecordtheleasepaymentamountintotherelevantassetcostorcurrentprofitandlossaccordingtothestraight-linemethod(orothersystematicandreasonablemethods)ineachperiodoftheleaseterm.Inadditiontotheaboveshort-termleasesandlowvalueassetleaseswithsimplifiedtreatment,theCompanyrecognizestherighttouseassetsandleaseliabilitiesfortheleaseonthebeginningdateoftheleaseterm.

①Userightassets

Theterm"righttouseassets"referstotherightofthelesseetousetheleasedassetsduringtheleaseterm.Atthebeginningoftheleaseterm,therightofuseassetsareinitiallymeasuredatcost.Thiscostincludes:

?Theinitialmeasurementamountofleaseliabilities;?Fortheleasepaymentpaidonorbeforethebeginningoftheleaseterm,ifthereisleaseincentive,therelevantamountof

leaseincentiveenjoyedshallbededucted;?Initialdirectexpensesincurredbythelessee;?Theestimatedcostincurredbythelesseefordismantlingandremovingtheleasedassets,restoringthesitewherethe

leasedassetsarelocatedorrestoringtheleasedassetstothestateagreedintheleaseterms.TheCompanyrecognizes

andmeasuresthecostinaccordancewiththerecognitionstandardsandmeasurementmethodsofestimatedliabilities.

See27.EstimatedliabilitiesinChapterVIII,V.importantaccountingpoliciesandaccountingestimatesfordetails.Ifthe

abovecostsareincurredfortheproductionofinventories,theywillbeincludedinthecostofinventories.Depreciationofrightofuseassetsisaccruedbyusingthestraight-linemethod.Ifitcanbereasonablydeterminedthattheownershipoftheleasedassetwillbeobtainedattheexpirationoftheleaseterm,thedepreciationrateshallbedeterminedaccordingtotheassetcategoryoftherighttouseandtheestimatednetresidualvalueratewithintheexpectedremainingservicelifeoftheleasedasset;Ifitisimpossibletoreasonablydeterminethattheownershipoftheleasedassetwillbeobtainedattheexpirationoftheleaseterm,thedepreciationrateshallbedeterminedaccordingtotheassetcategoryoftherightofusewithintheshorteroftheleasetermandtheremainingservicelifeoftheleasedasset.

②LeaseliabilitiesTheleaseliabilitiesareinitiallymeasuredCompanyshallaccordingtothepresentvalueoftheunpaidleasepaymentsatthebeginningoftheleaseterm.Theleasepaymentincludesthefollowingfiveitems:

?Fixedpaymentamountandsubstantialfixedpaymentamount.Ifthereisleaseincentive,therelevantamountoflease

incentiveshallbededucted;

?Variableleasepaymentsdependingonindexorratio;?Theexercisepriceofthepurchaseoption,providedthatthelesseereasonablydeterminesthattheoptionwillbe

exercised;

?Theamounttobepaidforexercisingtheoptiontoterminatethelease,providedthattheleasetermreflectsthatthelessee

willexercisetheoptiontoterminatethelease;

?Theamountexpectedtobepaidaccordingtotheresidualvalueoftheguaranteeprovidedbythelessee.

Whencalculatingthepresentvalueofleasepayments,theimplicitinterestrateoftheleaseisusedasthediscountrate.Iftheimplicitinterestrateoftheleasecannotbedetermined,theincrementalborrowinginterestrateofthecompanyisusedasthediscountrate.Thedifferencebetweentheleasepaymentamountanditspresentvalueisregardedasunrecognizedfinancingexpenses,andtheinterestexpensesarerecognizedaccordingtothediscountrateofthepresentvalueoftheleasepaymentamount

duringeachperiodoftheleasetermandincludedinthecurrentprofitandloss.Theamountofvariableleasepaymentsnotincludedinthemeasurementofleaseliabilitiesshallbeincludedinthecurrentprofitandlosswhenactuallyincurred.Afterthebeginningdateoftheleaseterm,whentheactualfixedpaymentamountchanges,theexpectedpayableamountoftheguaranteedresidualvaluechanges,theindexorratiousedtodeterminetheleasepaymentamountchanges,theevaluationresultsoractualexerciseofthepurchaseoption,renewaloptionorterminationoptionchanges,theCompanyremeasurestheleaseliabilityaccordingtothepresentvalueofthechangedleasepaymentamount,Andadjustthebookvalueoftherighttouseassetsaccordingly.

(4)AccountingtreatmentmethodoftheCompanyaslessorOntheleasecommencementdate,theCompanyclassifiesleasesthathavesubstantiallytransferredalmostalltherisksandrewardsrelatedtotheownershipoftheleasedassetsasfinancialleases,andallotherleasesareoperatingleases.

①OperatingleaseDuringeachperiodoftheleaseterm,theCompanyrecognizestheleasereceiptsasrentalincomeaccordingtothestraight-linemethod(orothersystematicandreasonablemethods),andtheinitialdirectexpensesincurredarecapitalized,amortizedonthesamebasisastherecognitionofrentalincome,andincludedinthecurrentprofitandlossbystages.ThevariableleasepaymentsobtainedbytheCompanyrelatedtooperatingleasesthatarenotincludedintheleasereceiptsareincludedinthecurrentprofitsandlosseswhenactuallyincurred.

②FinanceleaseOntheleasebeginningdate,theCompanyrecognizesthefinancialleasereceivablesaccordingtothenetamountoftheleaseinvestment(thesumoftheunsecuredresidualvalueandthepresentvalueoftheleasereceiptsnotreceivedontheleasebeginningdatediscountedaccordingtotheleaseembeddedinterestrate),andterminatestherecognitionofthefinancialleaseassets.Duringeachperiodoftheleaseterm,theCompanycalculatesandrecognizestheinterestincomeaccordingtotheinterestrateembeddedinthelease.

TheamountofvariableleasepaymentsobtainedbytheCompanythatarenotincludedinthemeasurementofnetleaseinvestmentshallbeincludedinthecurrentprofitandlosswhenactuallyincurred.

(5)Accountingtreatmentofleasechange

①Changeofleaseasaseparatelease

Iftheleasechangesandmeetsthefollowingconditionsatthesametime,theCompanywilltreattheleasechangeasaseparateleaseforaccounting:a.theleasechangeexpandstheleasescopebyincreasingtheuserightofoneormoreleasedassets;B.Theincreasedconsiderationisequivalenttotheamountadjustedaccordingtotheconditionsofthecontractattheseparatepriceformostoftheexpansionoftheleasescope.

②Theleasechangeisnottreatedasaseparatelease

A.TheCompanyaslessee

Ontheeffectivedateoftheleasechange,theCompanyreconfirmedtheleasetermanddiscountedthechangedleasepaymentatthereviseddiscountratetore-measuretheleaseliability.Whencalculatingthepresentvalueoftheleasepaymentafterthechange,theimplicitinterestrateoftheleaseduringtheremainingleaseperiodshallbeusedasthediscountrate;Ifitisimpossibletodeterminetheimplicitinterestrateoftheleasefortheremainingleaseperiod,theincrementalloaninterestrateontheeffectivedateoftheleasechangeshallbeusedasthediscountrate.

Theimpactoftheaboveleaseliabilityadjustmentshallbeaccountedforaccordingtothefollowingcircumstances:

?Iftheleasescopeisreducedortheleasetermisshortenedduetotheleasechange,thebookvalueoftherighttouseassetsshallbereduced,andtherelevantgainsorlossesofpartialorcompleteterminationoftheleaseshallbeincludedinthecurrentprofitsandlosses;?Forotherleasechanges,thebookvalueoftherighttouseassetsshallbeadjustedaccordingly.

TheCompanyasleasor

Iftheoperatingleaseischanged,theCompanywilltreatitasanewleaseforaccountingfromtheeffectivedateofthechange,andtheamountofleasereceiptsreceivedinadvanceorreceivablerelatedtotheleasebeforethechangeisregardedastheamountofnewleasereceipts.

Ifthechangeoffinancialleaseisnotaccountedforasaseparatelease,theCompanywilldealwiththechangedleaseunderthefollowingcircumstances:ifthechangeofleasetakeseffectontheleasecommencementdateandtheleasewillbeclassifiedasanoperatinglease,theCompanywillaccountforitasanewleasefromtheeffectivedateofleasechange,andtakethenetleaseinvestmentbeforetheeffectivedateofleasechangeasthebookvalueofleasedassets;Iftheleasechangetakeseffectontheleasecommencementdate,theleasewillbeclassifiedasafinanciallease,andtheCompanywillconductaccountingtreatmentinaccordancewiththeprovisionsonmodifyingorrenegotiatingthecontract.

(6)Saleandlease-back

TheCompanyassessesanddetermineswhethertheassettransferinthesaleandleasebacktransactionisasaleinaccordancewiththeprovisionsof28.IncomeinChapterVIII,V,Importantaccountingpoliciesandaccountingestimates.

TheCompanyasseller(lessee)

Iftheassettransferinthesaleandleasebacktransactiondoesnotbelongtosales,theCompanywillcontinuetorecognizethetransferredassets,recognizeafinancialliabilityequaltothetransferincome,andconductaccountingtreatmentforthefinancialliabilityinaccordancewith10。FinancialinstrumentsinChapterVIII,V,Importantaccountingpoliciesandaccountingestimates.Iftheassettransferbelongstosales,theCompanymeasurestherighttouseassetsformedbysaleandleasebackaccordingtothepartofthebookvalueoftheoriginalassetsrelatedtotherighttouseobtainedbyleaseback,andonlyrecognizestherelevantgainsorlossesontherightstransferredtothelessor.

TheCompanyasbuyer(lessor)

Iftheassettransferinthesaleandleasebacktransactiondoesnotbelongtosales,thecompanydoesnotrecognizethetransferredasset,butrecognizesafinancialassetequaltothetransferincome,andcarriesoutaccountingtreatmentonthefinancialassetinaccordancewith10.FinancialinstrumentsinChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.Iftheassettransferbelongstosales,theCompanyshallconductaccountingtreatmentforassetpurchaseandassetleaseinaccordancewithotherapplicableaccountingstandardsforbusinessenterprises.

33.Othersignificantaccountingpoliciesandestimates

(1)Accountingofhedging

(1.1)Classificationofinventories

TheCompanyclassifieshedgesintofairvaluehedgesandcashflowhedges.

①Fairvaluehedge.Itreferstohedgingactivitiesconductedtomitigatetheriskofchangesinthefairvalueofrecognizedassetsorliabilities,unrecognizedfirmcommitments,orcomponentsoftheaforementioneditems.ThefairvaluechangesarecausedbyspecificrisksthatwillimpacttheCompany'sprofitorothercomprehensiveincome.

①Cashflowhedgingreferstothehedgingofcashflowrisk.Thechangeincashflowisderivedfromspecificrisksassociatedwithrecognizedassetsorliabilities,expectedtransactionsthatarelikelytooccur,orwithrespecttothecomponentsoftheabove-mentionedprojectandwillaffecttheprofitsandlossesoftheenterprise.

(1.2)HedgingtoolsandhedgedprojectsHedgingmeansafinancialinstrumentdesignatedbytheCompanyforthepurposeofhedging,whosefairvalueorcashflowvariationisexpectedtooffsetthefairvalueorcashflowvariationofthehedgeditem,including:

①FinancialliabilitiesmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccountCheck-outoptionscanonlybeusedasahedgingtooliftheoptionishedged,includingthoseembeddedinahybridcontract.Derivativesembeddedinahybridcontractbutnotsplitcannotbeusedasseparatehedgingtools.

②Non-derivativefinancialassetsornon-derivativefinancialliabilitiesthataremeasuredatfairvalueandwhosechangesareincludedinthecurrentprofitandloss,butdesignatedasfairvalueandwhosechangesareincludedinthecurrentprofitandloss,andtheirowncreditriskchangescausedbychangesinfairvalueexceptforfinancialliabilitiesincludedinothercomprehensiveincome.

Ownequityinstrumentsarenotfinancialassetsorfinancialliabilitiesandcannotbeusedashedginginstruments.

AhedgeditemreferstoanitemthatexposestheCompanytotheriskofchangesinfairvalueorcashflowandisdesignatedasthehedgedobjectandcanbereliablymeasured.TheCompanydesignatesthefollowingindividualprojects,projectportfoliosortheircomponentsashedgedprojects:

①Confirmedassetsorliabilities.

②Confirmedcommitmentsthathavenotyetbeenconfirmed.Confirmedcommitmentreferstoalegallybindingagreementtoexchangeaspecificamountofresourcesatanagreedpriceonaspecificdateorperiodinthefuture.

③Expectedtransactionsthatarelikelytooccur.Anticipatedtransactionsrefertotransactionsthathavenotyetbeencommittedbutareexpectedtooccur.

④Netinvestmentinoverseasoperations.

Theabove-mentionedprojectcomponentsrefertothepartsthatarelessthantheoverallfairvalueorcashflowchangesoftheproject.TheCompanydesignatesthefollowingprojectcomponentsortheircombinationsashedgeditems:

①Thepartofthechangeinfairvalueorcashflow(riskcomponent)thatisonlycausedbyoneormorespecificrisksinthe

overallfairvalueorcashflowchangesoftheproject.Accordingtotheassessmentinaspecificmarketenvironment,theriskcomponentshouldbeabletobeindividuallyidentifiedandreliablymeasured.Theriskcomponentalsoincludesthepartwherethefairvalueorcashflowofthehedgeditemchangesonlyaboveorbelowaspecificpriceorothervariables.

②Oneormoreselectedcontractualcashflows.

③Thecomponentofthenominalamountoftheproject,thatis,thespecificpartofthewholeamountorquantityoftheproject,maybeacertainproportionofthewholeproject,ormaybeacertainlevelofthewholeproject.Ifacertainlevelincludesearlyrepaymentrightsandthefairvalueoftheearlyrepaymentrightsisaffectedbychangesintheriskofthehedge,thelevelshallnotbedesignatedasthehedgeditemofthefairvaluehedge,butinthemeasurementofthehedgeditemexceptwhenthefairvaluehasincludedtheinfluenceoftheprepaymentright.(1.3)EvaluationofhedgingrelationshipWhenthehedgingrelationshipisinitiallyspecified,theGroupofficiallyspecifiestherelatedhedgingrelationshipswithofficialdocumentsrecordingthehedgingrelationships,riskmanagementtargetsandhedgingstrategies.Thisdocumentsetsoutthehedgingtools,hedgeditems,thenatureofhedgedrisks,andtheCompany'sassessmentofhedgedeffectiveness.HedgingmeansafinancialinstrumentdesignatedbytheCompanyforthepurposeofhedging,whosefairvalueorcashflowvariationisoffsetthefairvalueorcashflowvariationofthehedgeditem,including:Suchhedgesarecontinuouslyevaluatedonandaftertheinitialspecifieddatetomeettherequirementsforhedgingvalidity.

Ifthehedginginstrumenthasexpired,beensold,thecontractisterminatedorexercised(buttheextensionorreplacementaspartofthehedgingstrategyisnottreatedasexpiredorcontracttermination),ortheriskmanagementobjectivechanges,resultinginhedgingTherelationshipnolongermeetstheriskmanagementobjectives,ortheeconomicrelationshipbetweenthehedgeditemandthehedginginstrumentnolongerexists,ortheimpactofcreditriskbeginstodominateinthevaluechangescausedbytheeconomicrelationshipbetweenthehedgeditemandthehedginginstrument,orwhenthehedgenolongermeetstheotherconditionsofthehedgeaccountingmethod,theCompanyterminatestheuseofhedgeaccounting.

Ifthehedgingrelationshipnolongermeetstherequirementsforhedgingeffectivenessduetothehedgingratio,buttheriskmanagementobjectiveofthedesignatedhedgingrelationshiphasnotchanged,theCompanyshallrebalancethehedgingrelationship.

(1.4)RevenuetheofrevenuerecognitionandmeasurementIftheconditionsforapplyinghedgeaccountingmethodaremet,itshallbehandledaccordingtothefollowingmethods:

①FairvaluehedgingGainsorlossesarisingfromhedginginstrumentsarerecognizedinthecurrentperiod'sincomestatement.Ifthehedgingisconductedforspecifiednon-derivativeequityinvestments(orcomponentsthereof)measuredatfairvaluewithchangesinfairvaluerecognizedinothercomprehensiveincome,gainsorlossesfromthehedginginstrumentsarerecognizedinothercomprehensiveincome.Gainsorlossesarisingfromthehedgeditemsduetothehedgingriskexposurearerecognizedintheincomestatement.Atthesametime,thecarryingamountofthedesignatedhedgeditemsthatarenotmeasuredatfairvalueisadjusted.Ifthehedgeditemisaspecifiednon-derivativeequityinvestment(orcomponentthereof)measuredatfairvaluewithchangesinfairvaluerecognizedinothercomprehensiveincome,gainsorlossesresultingfromthehedgingriskexposurearerecognizedinothercomprehensiveincome,andthecarryingamountofthehedgeditemhasalreadybeenmeasuredatfairvalueanddoesnotrequireadjustment.Regardingfairvaluehedgesrelatedtofinancialinstruments(orcomponentsthereof)measuredatamortizedcost,anyadjustmentsmadetothecarryingamountofthehedgeditemareamortizedusingtheeffectiveinterestraterecalculatedfromthedateofthecommencementofamortizationandrecognizedintheincomestatement.Theamortizationdateforadjustmentsshouldbeginfromtheadjustmentdateandshouldnotbelaterthanthepointatwhichhedginggainsandlossesareadjusteduponterminationofthehedgeditem.Forhedgeditemsthatarefinancialassets(orcomponentsthereof)measuredatfairvaluewithchangesinfairvaluerecognizedinothercomprehensiveincome,theaccumulatedhedginggainsorlossesshouldbeamortizedinthesamemannerandrecognizedintheincomestatement.However,thecarryingamountofthefinancialassets(orcomponentsthereof)shouldnotbeadjusted.Forhedgeditemsthatareunrecognizedfirmcommitments(orcomponentsthereof),thecumulativefairvaluechangescausedbythehedgingriskafterthehedgingrelationshipisdesignatedshouldberecognizedasanassetorliability.Therelatedgainsorlossesshouldberecognizedintheincomestatement.Whenfulfillingafirmcommitmentandacquiringanassetorassumingaliability,theinitialrecognizedamountoftheassetorliabilityshouldbeadjustedtoincludethecumulativefairvaluechangesofthedesignatedhedgeditemthathavebeenrecognized.

②Cashflowhedge

Thepartofhedgingtoolgainsorlossesthatisvalidforhedgingisrecognizedasothercomprehensiveincomeasacashflowhedgingreserve,andthepartthatisinvalidforhedging(thatis,othergainsorlossesafterdeductingothercomprehensiveincome),arecountedIntothecurrentprofitandloss.Theamountofcashflowhedgingreserveisdeterminedaccordingtotheloweroftheabsoluteamountsofthefollowingtwoitems:①accumulatedgainsorlossesofhedginginstrumentssincethehedging.Theamountintheeffectivearbitrageisrecognizedbytheaccumulativegainsorlossesfromthestartingofarbitrageandaccumulativechangestothecurrentvalueoffutureforecastcashflowsfromthestartofarbitrage.Iftheexpectedtransactionofthehedgedassetissubsequentlyrecognizedasanon-financialassetornon-financialliability,oriftheexpectedtransactionofthenon-financialassetornon-financialliabilityformsadefinedcommitmenttotheapplicablefairvaluehedgeaccounting,theamountofthecashflowhedgereserveoriginallyrecognizedintheotherconsolidatedincomeistransferredouttoaccountfortheinitialrecognizedamountoftheassetorliability.Fortheremainingcashflowhedges,duringthesameperiodwhentheexpectedcashflowtobehedgedaffectstheprofitandloss,iftheexpectedsalesoccur,thecashflowhedgereserverecognizedinothercomprehensiveincomeistransferredoutandincludedinthecurrentprofitandloss.

(2)ShareRepurchasebytheCompany

①IntheeventofareductionintheCompany'ssharecapitalasapprovedbylegalprocedure,theCompanyshallreducethesharecapitalbythetotalamountofthewritten-offshares,adjusttheowner'sequitybythedifferencebetweenthepricepaidbythepurchasedstocks(includingtransactioncosts)andthetotalamountofthewritten-offshares,offsetthecapitalreserve(sharecapitalpremium),surplusreserveandundistributedprofitsinturn;Aportionofacapitalreserve(sharecapitalpremium)thatislessthanthetotalfacevalueandlessthanthetotalfacevalue.

②ThetotalexpenditureoftherepurchasesharesoftheCompany,whichismanagedasaninventorysharebeforetheyarecanceledortransferred,isconvertedtothecostoftheinventoryshares.

③Increaseinthecapitalreserve(capitalpremium)atthetimeoftransferofaninventoryunit,theportionofthetransferincomeabovethecostoftheinventoryunit;Lowerthantheinventorystockcost,thecapitalreserve(sharecapitalpremium),surplusreserve,undistributedprofitsinturn.

(3)MeasurementofFairValue

Fairvaluereferstotheamountofassetexchangeorliabilitiessettlementbybothtransactionpartiesfamiliarwiththesituationinafairdealonavoluntarybasis.

TheCompanymeasuresthefairvalueofrelatedassetsorliabilitiesatthepricesinthemainmarket.Ifthereisnomajormarket,theCompanymeasuresthefairvalueoftherelevantassetsorliabilitiesatthemostfavorablemarketprices.TheGroupusesassumptionsthatmarketparticipantsusetomaximizetheireconomicbenefitswhenpricingtheassetorliability.Themainmarketreferstothemarketwiththehighesttransactionvolumeandactivityoftherelatedassetsorliabilities.Themostfavorablemarketmeansthemarketthatcanselltherelatedassetsatthehighestamountortransfertherelatedliabilitiesatthelowestamountafterconsideringthetransactioncostandtransportationcost.Forfinancialassetsorliabilitiesinanactivemarket,TheCompanydeterminestheirfairvaluebasedonquotationsintheactivemarket.Ifthereisnoactivemarket,theCompanyusesevaluationtechniquestodeterminethefairvalue.Forthemeasurementofnon-financialassetsatfairvalue,theabilityofmarketparticipantstousetheassetsforoptimalpurposestogenerateeconomicbenefits,ortheabilitytoselltheassetstoothermarketparticipantsthatcanbeusedforoptimalpurposestogenerateeconomicbenefits.

①Valuationtechnology

TheCompanyadoptsvaluationtechniquesthatareapplicableinthecurrentperiodandaresupportedbysufficientdataandotherinformation.Thevaluationtechniquesusedmainlyincludemarketmethod,incomemethodandcostmethod.TheCompanyusesamethodconsistentwithoneormoreofthevaluationtechniquestomeasurefairvalue.Ifmultiplevaluationtechniquesareusedtomeasurefairvalue,thereasonablenessofeachvaluationresultshallbeconsidered,andthefairvalueshallbeselectedasthemostrepresentativeoffairvalueunderthecurrentcircumstances.Theamountofvalueisregardedasfairvalue.

TheCompanyequipmentareapplicableinthecurrentcircumstancesandhavesufficientavailabledataandotherinformationtosupporttheuseoftherelevantobservableinputvaluesprioritized.Unobservableinputvaluesareusedonlywhentheobservableinputvaluecannotbeobtainedorisnotfeasible.Observableinputvaluesareinputvaluesthatcanbeobtainedfrommarketdata.TheGroupusesassumptionsthatmarketparticipantsusetomaximizetheireconomicbenefitswhenpricingtheassetorliability.Non-observableinputvaluesareinputvaluesthatcannotbeobtainedfrommarketdata.Theinputvalueisobtainedbasedonthebestinformationavailableonassumptionsusedbymarketparticipantsinpricingtherelevantassetorliability.

②Fairvaluehierarchy

Thiscompanydividestheinputvalueusedinfairvaluemeasurementintothreelevels,andfirstusesthefirstlevelinputvalue,thenusesthesecondlevelinputvalue,andfinallyusesthethirdlevelinputvalue.Firstlevel:quotationofsameassetsorliabilitiesinanactivemarket(unadjusted)Thesecondlevelinputvalueisadirectlyorindirectlyobservableinputvalueoftheassetorliabilityinadditiontothefirstlevelinputvalue.Theinputvalueofthethirdlevelistheunobservableinputvalueofthe

relatedassetorliability.

(4)SignificantaccountingjudgmentandestimateTheCompanycontinuouslyreviewssignificantaccountingjudgmentandestimateadoptedforthereasonableforecastoffutureeventsbasedonitshistoricalexperienceandotherfactors.Significantaccountingjudgmentandassumptionsthatmayleadtomajoradjustmentofthebookvalueofassetsandliabilitiesinthenextaccountingyeararelistedasfollows:

ClassificationoffinancialassetsThemajorjudgmentsinvolvedintheclassificationoffinancialassetsincludetheanalysisofbusinessmodelandcontractcashflowcharacteristics.Thecompanydeterminesthebusinessmodeofmanagingfinancialassetsattheleveloffinancialassetportfolio,takingintoaccountsuchfactorsashowtoevaluateandreportfinancialassetperformancetokeymanagers,therisksthataffectfinancialassetperformanceandhowtomanageit,andhowtoobtainremunerationforrelatedbusinessmanagers.Whenthecompanyassesseswhetherthecontractualcashflowoffinancialassetsisconsistentwiththebasicborrowingarrangement,therearethefollowingmainjudgments:whethertheprincipalmaychangeduetoearlyrepaymentandotherreasonsduringthedurationoftheperiodortheamountofchange;whethertheinterestIncludingthetimevalueofmoney,creditrisk,otherbasicborrowingrisks,andconsiderationofcostsandprofits.Forexample,doestheamountpaidinadvancereflectonlytheunpaidprincipalandtheinterestbasedontheunpaidprincipal,aswellasthereasonablecompensationpaidforearlyterminationofthecontract.

MeasurementofexpectedcreditlossesofaccountsreceivableTheCompanycalculatestheexpectedcreditlossofaccountsreceivablethroughtheriskexposureofaccountsreceivabledefaultandtheexpectedcreditlossrate,anddeterminestheexpectedcreditlossratebasedonthedefaultprobabilityandthedefaultlossrate.Whendeterminingtheexpectedcreditlossrate,theCompanyusesinternalhistoricalcreditlossexperienceandotherdata,combinedwithcurrentconditionsandforward-lookinginformationtoadjustthehistoricaldata.Whenconsideringforward-lookinginformation,theindicatorsusedbytheCompanyincludetherisksofeconomicdownturn,changesintheexternalmarketenvironment,technologicalenvironment,andcustomerconditions.TheCompanyregularlymonitorsandreviewsassumptionsrelatedtothecalculationofexpectedcreditlosses.

DeferredincometaxassetsIfthereisadequatetaxableprofittodeducttheloss,thedeferredincometaxassetsshouldberecognizedbyalltheunused

taxloss.Thisrequiresthemanagementtomakealotofjudgmenttoforecastthetimeandamountoffuturetaxableprofitanddeterminetheamountofthedeferredtaxassetsbasedonthetaxationstrategy.IncomerecognitionTheCompany'srevenuefromprovidingcurtainwallconstructionandmetroplatformscreendoorinstallationservicesisrecognizedoveraperiodoftime.TherecognitionoftheincomeandprofitofsuchengineeringinstallationservicesdependsontheCompany'sestimationofthecontractresultsandperformanceprogress.Iftheactualamountoftotalrevenueandtotalcostishigherorlowerthantheestimatedvalueofthemanagement,itwillaffecttheamountofrevenueandprofitrecognitionoftheCompanyinthefuture.

EngineeringcontractThemanagementshallmakerelevantjudgmenttoconfirmtheincomeandexpensesofprojectcontractingbusinessaccordingtotheperformanceprogress.Iflossesareexpectedtooccurintheprojectcontract,suchlossesshallberecognizedascurrentexpenses.ThemanagementoftheCompanyestimatesthepossiblelossesaccordingtothebudgetoftheprojectcontract.TheCompanydeterminesthetransactionpriceaccordingtothetermsofthecontractandincombinationwithpreviouscustomarypractices,andconsiderstheinfluenceofvariableconsideration,majorfinancingcomponentsinthecontractandotherfactors.Duringtheperformanceofthecontract,theCompanycontinuouslyreviewstheestimatedtotalcontractrevenueandtheestimatedtotalcontractcost.Whentheinitialestimatechanges,suchascontractchanges,claimsandawards,theestimatedtotalcontractrevenueandtheestimatedtotalcontractcostarerevised.Whentheestimatedtotalcontractcostexceedsthetotalcontractrevenue,themainbusinesscostandestimatedliabilitiesshallberecognizedaccordingtothelosscontracttobeexecuted.

EstimateoffairvalueTheCompanyusesfairvaluetomeasureinvestmentrealestateandneedstoestimatethefairvalueofinvestmentrealestateatleastquarterly.Thisrequiresthemanagementtoreasonablyestimatethefairvalueoftheinvestmentrealestatewiththehelpofvaluationexperts.

Developmentcost

Forpropertythathasbeenhandedoverwithincomerecognized,butwhosepublicfacilitieshavenotbeenconstructedornotbeencompleted,themanagementwillestimatethedevelopmentcostforthepartthathasnotbeenstartedaccordingtothebudgettoreflecttheoperationresultofthepropertysales.

34.Majorchangesinaccountingpoliciesandestimates

1.Changesinimportantaccountingpolicies

□Applicable?Inapplicable

(2)Changesinmajoraccountingestimates

□Applicable?Inapplicable

(3)Implementationofnewaccountingstandardsadjustmentforthefirsttimestartingfrom2025,andimplementationoffinancialstatementrelateditemsatthebeginningoftheyearforthefirsttime

□Applicable?Inapplicable

VI.Taxation

1.Majortaxesandtaxrates

Taxratesapplicablefordifferenttaxpayers

2.Taxpreference

(1)OnDecember26,2024,thesubsidiaryFangdaJiankeobtainedthecertificateofhigh-techenterprisejointlyissuedbytheIndustryandInformationTechnologyBureauofShenzhenMunicipality,ShenzhenFinanceBureau,StateAdministrationofTaxationandShenzhenTaxationBureau.ThecertificatenumberisGR202444207062.Withinthreeyearsafterobtainingthequalificationofhigh-techenterprise(from2024to2026),theincometaxwillbeleviedat15%.

(2)OnDecember26,2024,thesubsidiaryFangdaZhiyuanTechnologyCo.,Ltd.obtainedthecertificateofhightechenterprisejointlyissuedbytheIndustryandInformationTechnologyBureauofShenzhenMunicipality,ShenzhenFinanceBureau,

StateAdministrationofTaxationandShenzhenTaxationBureau.ThecertificatenumberisGR202444201506.Withinthreeyearsafterobtainingthequalificationofhightechenterprise(from2024to2026),theincometaxwillbeleviedat15%.

(3)OnOctober16,2023,thesubsidiaryFangdaChengduTechnologyobtainedthecertificateofhightechenterpriseNo.GR202351000927jointlyissuedbytheDepartmentofScienceandTechnologyofSichuanProvince,theDepartmentofFinanceofSichuanProvince,theStateAdministrationofTaxationandtheSichuanProvincialTaxationBureau.Withinthreeyearsafterobtainingthequalificationofhightechenterprise(2023-2025),theincometaxwillcontinuetobeleviedat15%.

(4)ThesubsidiaryKechuangyuanSoftwareisanenterpriselocatedinQianhaiShenzhenHongKongModernServiceIndustryCooperationZone.ItsmainbusinessmeetstheconditionsofPreferentialCatalogueofEnterpriseIncomeTaxinQianhaiShenzhenHongKongModernServiceIndustryCooperationZone(2021)(theRegulationshallbeimplementedfromJanuary1,2021toDecember31,2025),andtheincometaxisleviedat15%.

(5)OnNovember15,2023,thesubsidiaryFangdaShanghaiZhijianobtainedthecertificateofhightechenterpriseGR202331002267jointlyissuedbyShanghaiScienceandTechnologyCommission,ShanghaiFinanceBureauandShanghaiTaxationBureau.Withinthreeyears(from2023to2025)afterobtainingthequalificationofhightechenterprise,theincometaxwillcontinuetobechargedat15%.

(6)OnNovember15,2023,thesubsidiaryFangdaYunzhuCo.,Ltd.obtainedthecertificateofhightechenterprisejointlyissuedbyShenzhenScienceandTechnologyInnovationCommission,ShenzhenFinanceBureau,StateAdministrationofTaxationandShenzhenTaxationBureau.ThecertificatenumberisGR202344205791.Withinthreeyearsafterobtainingthequalificationofhightechenterprise(from2023to2025),theincometaxwillbeleviedat15%.

(7)Accordingtothe"AnnouncementonFurtherSupportingtheDevelopmentofSmallandMicroEnterprisesandIndividualBusinesseswithRelevantTaxandFeePolicies"(AnnouncementNo.12,2023oftheMinistryofFinanceandtheStateTaxationAdministration),somecompaniesqualifyassmalllow-profitenterprisesin2025,andtheirincomeissubjecttocorporateincometaxinaccordancewiththeprovisionsoftheaforementioneddocument.

VII.NotestotheConsolidatedFinancialStatements

1.Monetarycapital

InRMB

Others:

(1)Oftheendingbalanceofbankdeposits,RMB45,987,644.26isrestrictedinuse,includingrestricteddepositsofRMB43,708,530.33inspecialaccounts,RMB2,246,354.74frozenbyjudicialauthorities,andRMB32,759.19asstageguaranteedepositsforcommercialhousingpurchasers.Oftheendingbalanceofothermonetaryfunds,RMB305,433,904.56isrestrictedinuse,mainlyincludingbilldeposits,stageguaranteedeposits,andguaranteedepositsforissuinglettersofguarantee.Inthepreparationofthecashflowstatement,theabove-mentioneddepositsandotherrestricteddepositsarenotusedascashandcashequivalents.

(2)Apartfromtheabove,therearenootherfundswithintheendingmonetaryfundsthatarerestrictedinuseduetomortgage,pledge,orfreeze,norarethereanywithpotentialrecoveryrisks.

2.Derivativefinancialassets

InRMB

3.Notesreceivable

(1)Classificationofnotesreceivable

InRMB

(2)Disclosurebybaddebtaccrualmethod

InRMB

Provisionforbaddebtsbycategory:bankacceptancebills

InRMB

Provisionforbaddebtsbycategory:commercialacceptancebills

InRMB

Iftheprovisionforbaddebtsonaccountsreceivableisbeingmadebasedontheexpectedcreditlossgeneralmodel:

□Applicable?Inapplicable

(3)Baddebtprovisionmade,returnedorrecoveredintheperiod

Baddebtprovisionmadeintheperiod:

InRMB

Includingsignificantrecoveryorreversal:

□Applicable?Inapplicable

(4)TheGrouphasnoendorsedordiscountedimmaturereceivablenotesattheendoftheperiod.

InRMB

4.Accountreceivable

(1)Accountage

InRMB

TheCompanyneedstocomplywiththedisclosurerequirementsofthedecorationanddecorationindustryintheGuidelinesfortheSelf-disciplineandSupervisionofListedCompaniesofShenzhenStockExchangeNo.3-IndustryInformationDisclosure.Significantindividualamountsofaccountsreceivableinthecurtainwallandmaterialsindustrythathaveexceededthreeyearsinage

(2)Disclosurebybaddebtaccrualmethod

InRMB

Provisionforbaddebtsbyindividualitem:individualprovision

InRMB

Provisionforbaddebtsbycategory:Portfolio1:Engineeringbusinesspayments

InRMB

Grouprecognitionbasis:

See10.FinancialToolsinChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimatesfortherecognitioncriteriaandinstructionsforwithdrawingbaddebtreservesbyportfolioProvisionforbaddebtsbycategory:Portfolio2:Realestatebusinesspayments

InRMB

Provisionforbaddebtsbycategory:Portfolio3:Otherbusinesspayments

InRMB

Iftheprovisionforbaddebtsonaccountsreceivableisbeingmadebasedontheexpectedcreditlossgeneralmodel:

□Applicable?Inapplicable

(3)Baddebtprovisionmade,returnedorrecoveredintheperiodBaddebtprovisionmadeintheperiod:

InRMB

(5)Accountsreceivableandcontractassetswiththetop-5endingbalances,groupedbypartyowed

InRMB

5.Contractassets

(1)Contractassets

InRMB

(2)Theamountandreasonforthesignificantchangeinthebookvalueduringthereportingperiod

InRMB

(3)Disclosurebybaddebtaccrualmethod

InRMB

Provisionforbaddebtsbyindividualitem:individualprovision

InRMB

Provisionforbaddebtsbycategory:Salesproceedswithconditionalcollectionrights

InRMB

Grouprecognitionbasis:

See10.FinancialToolsinChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimatesfortherecognitioncriteriaandinstructionsforwithdrawingbaddebtreservesbyportfolioProvisionforbaddebtsbycategory:Completedbutunsettledengineeringpaymentsthathavenotmetcollectionconditions

InRMB

Provisionforbaddebtsbycategory:Warrantydepositsthathavenotmetcollectionconditions

InRMB

Provisionforbaddebtsbasedongeneralmodelofexpectedcreditlosses

□Applicable?Inapplicable

(4)Baddebtprovisionmade,returnedorrecoveredintheperiod

InRMB

6.Receivablefinancing

(1)Presentationofreceivablesfinancingclassification

InRMB

(2)Disclosurebybaddebtaccrualmethod

InRMB

Provisionforbaddebtsbycategory:bankacceptancebills

InRMB

Grouprecognitionbasis:

See10.FinancialToolsinChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimatesfortherecognitioncriteriaandinstructionsforwithdrawingbaddebtreservesbyportfolio

(3)ReceivablesfinancingendorsedordiscountedbytheCompanyandnotyetdueasofthebalancesheetdate

InRMB

7.Otherreceivables

InRMB

(1)Otherreceivables

1)Otherreceivablesaredisclosedbynature

InRMB

(2)Accountage

InRMB

TheCompanyneedstocomplywiththedisclosurerequirementsofthedecorationanddecorationindustryintheGuidelinesfortheSelf-disciplineandSupervisionofListedCompaniesofShenzhenStockExchangeNo.3-IndustryInformationDisclosure.Significantindividualamountsofotheraccountsreceivableinthecurtainwallandmaterialsindustrythathaveexceededthreeyearsinage

(3)Disclosurebybaddebtaccrualmethod?Applicable□Inapplicable

InRMB

Provisionforbaddebtsbycategory:Portfolio1:Stageone

InRMB

Descriptionofthebasisfordeterminingtheportfolio:Provisionforbaddebtsismadeonthebasisofthegeneralmodelofexpectedcreditlosses.Provisionforbaddebtsbycategory:Portfolio2:Stagetwo

InRMB

Provisionforbaddebtsbycategory:Portfolio3:Stagethree

InRMB

Provisionforbaddebtsbasedongeneralmodelofexpectedcreditlosses

InRMB

Criteriaforstagedivisionandprovisionratiosforbaddebts

Changesinbookbalanceswithsignificantchangesinthecurrentperiod

□Applicable?Inapplicable

4)Baddebtprovisionmade,returnedorrecoveredintheperiodBaddebtprovisionmadeintheperiod:

InRMB