Shenzhen China Bicycle Company (Holdings) Limited

Semi-Annual Report 2025

August 2025

Section I. Important Notice, Contents and InterpretationBoard of Directors, Supervisory Committee, all directors, supervisors and senior executives of ShenzhenChina Bicycle Company (Holdings) Limited(hereinafter referred to as the Company) hereby confirm thatthere are no any fictitious statements, misleading statements, or important omissions carried in this report,and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of thewhole contents.

Wang Shenghong, Principal of the Company, Sun Longlong, person in charge of accounting works and SheHanxing, person in charge of accounting organ (accounting principal) hereby confirm that the FinancialReport of 2025 Semi-Annual Report is authentic, accurate and complete.All directors are attended the Board Meeting for report deliberation.The Company plans not to distribute cash dividends, not to send bonus shares, and no reserve Capitalizing.

Contents

Section I Important Notice, Contents and InterpretationSection II Company Profile and Main Financial IndexesSection III Management Discussion and AnalysisSection IV Corporate Governance, Environmental and Social ResponsibilitySection V Importan EventsSection VI Changes in Shares and Particular About ShareholdersSection VII Corporate BondsSection VIII Financial ReportSection IX Other Submitted Date

Documents Available for Reference

1. Accounting statement carrying the signatures and seals of the legal representative, person in charge ofaccounting and person in charge of accounting organ.

2. Originals documents of the Company and manuscripts of public notices that disclosed in the newspaperdesignated by CSRC during the reporting period.

3. English version of the Semi-Annual Report 2025

Interpretation

Section II Company Profile and Main Financial IndexesI. Company Profile

II. Person/Way to contact

III. Other

1. Way of contact

Whether registrations address, offices address and codes as well as website and email of the Company changed inreporting period or not

□ Applicable √ Not applicable

Registrations address, offices address and codes as well as website and email of the Company has no changein reporting period, found more details in annual report 2024.

2. Information inquiry

Whether information disclosure and preparation place changed in reporting period or not

□ Applicable √ Not applicable

None of the official presses, website, and place of enquiry has been changed in the semi report period. Fordetails please find the Annual Report 2024.

3. Other relevant information

Did any change occur to other relevant information during the reporting period?

□ Applicable √ Not applicable

IV. Main accounting data and financial indexesWhether it has retroactive adjustment or re-statement on previous accounting data or not

□Yes ?No

V. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□Applicable?Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS(International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

2. Difference of the net profit and net assets disclosed in financial report, under both foreign accountingrules and Chinese GAAP (Generally Accepted Accounting Principles)

□Applicable?Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report, under either foreignaccounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period.VI. Items and amounts of extraordinary profit (gains)/loss?Applicable □Not applicable

In RMB

Other gains/losses items that conform to the definition of non-recurring gains/losses:

□Applicable?Not applicable

The Company does not haveother gains/losses items that conform to the definition of non-recurring gains/lossesInformation on the definition of non-recurring profit(gain)/loss that listed in theQ&A Announcement No.1 onInformation Disclosure for Companies Offering Their Securities to the Public --- Extraordinary (non-recurring)Profit(gain)/loss as the recurring profit(gain)/loss

□Applicable?Not applicable

The Company does not have any non-recurring profit(gain)/loss listed under theQ&A Announcement No.1 onInformation Disclosure for Companies Offering Their Securities to the Public --- Extraordinary (non-recurring)Profit(gain)/lossdefined as recurring profit(gain)/loss

Section III Management Discussion and AnalysisI. Main business of the Company during the reporting periodMain business of the Company during the reporting period including jewelry gold business, bicycle and newenergy lithium battery materials: (1) The gold jewelry business-the company connected with downstream goldjewelry brands, purchased gold and diamonds according to their product needs, and then commissioned goldjewelry processing plants for processing, made product certification for the processed finished products afterpassing the inspection, and downstream jewelry brand enterprises and distributors. Through the integration ofupstream supplier resources and downstream customer resources, the turnover rate of gold jewelry products in theupstream and downstream was improved, the cost of circulation links was reduced, and the overall competitiveadvantage of the upstream and downstream was formed. (2) Bicycle and new energy lithium battery materialsincluding manufacturing, assembling, purchasing and selling bicycles & electric bicycles, purchasing, selling andcommissioning the lithium battery materials.The Company shall comply with the disclosure requirement of jewelry-related industries in the “Shenzhen StockExchange Self-Regulatory Guidelines for Listed Companies No. 3- Industry Disclosure”

(1) Industry development

China is one of the most important jewelry producer and consumer in the world at present. With the growth ofnational economy and the accumulation of residents' wealth, people gradually increase their consumption of high-end consumer goods after meeting the basic living needs. Jewelry with the property of preserving value andshowing personality has become a hot spot of consumer interest of Chinese residents. At the same time, with therise of young consumers and emerging middle class, the demand for quality personal consumption is graduallyupgrading, and the young generation's consumption of jewelry tends to be more routine, which can improve therepurchase rate of jewelry products under various occasions, providing greater development space for the jewelryindustry.Under the background of slowdown in economic growth or increased uncertainty, people tend to spend morerationally and pay more attention to the safety and reliability of family asset allocation. Compared with otherconsumer goods, gold and silver jewelry can not only beautify our life, but also be accepted by more and moreconsumers for its strong functions of preserving wealth, dispersing investment risks and protecting property safety.On the other hand, the jewelry industry has continuously increased its efforts in style design, craft materials,cultural marketing and consumption experience, which has also become an important driving force forconsumption growth.

(2) Industry development trend analysis

1. Intensified market segmentation and consumption tiering

The jewelry market will witness further consumption tiering in the future, with the high-end jewelry marketpoised for sustained growth while competition in the mass jewelry market increasingly centers on cost-performance ratios, product diversity, and personalized expression. On one hand, the expanding new middle class

and high-net-worth individuals will drive growth in art investments and luxury consumption. Fine jewelry,leveraging its advantages as an asset-preservation vehicle, cultural-artistic value, and high liquidity, will gaingreater development space in the high-end consumer market. On the other hand, younger consumers, guided byrational spending principles, prioritize cost performance, design innovation, and emotional resonance, and favorjewelry products that combine quality craftsmanship, social attributes, and personalized expression, making fast-fashion jewelry a potential new market hotspot.

2. Digitalization and artificial intelligence as new growth drivers

The accelerated development of AI and digital technologies is reshaping the jewelry industry's businessmodels. AI empowers jewelry design and supply chains through intelligent algorithms to analyze consumptiontrends, accurately predict market demand, and achieve efficient production with precise inventory management,thus significantly enhancing overall operational efficiency. Social commerce has become the primary purchasingchannel for younger consumers, with short videos and livestream shopping emerging as critical brand touch points.By leveraging digital social tools, brands construct multi-dimensional interactive scenarios to amplifycommunication and topic marketing, further increasing brand visibility and influence while creating higherpremium potential. The proliferation of virtual try-on, AR/VR experiences, and other innovative technologiesdelivers more immersive shopping experiences, which not only boosts online conversion rates but also helpsbrands build digital assets and strengthens market competitiveness.

3. Design and craftsmanship innovation as key drivers

Driven by technological advancement and growing consumer demand for high-quality intricate designs,innovation in design and craftsmanship has become a pivotal force propelling the gold jewelry industry forward.Brands are increasingly emphasizing artisanal techniques, combining traditional goldsmithing skills with modernaesthetics to preserve cultural heritage while infusing products with uniqueness. China's gold jewelry market isundergoing a significant transformation, with designs becoming younger and more avant-garde under theinfluence of younger consumers' distinctive tastes. This demographic merges traditional values with contemporaryfashion trends, creating strong demand for designs that balance modern fashion with cultural significance.Intellectual property (IP) serves both as a protective shield for innovative achievements and a catalyst for newquality productive forces. The protection and commercialization of IP not only incentivize gold jewelryenterprises to deepen product R&D and creative design but also elevate the industry's overall design standards andbrand value.

4. Channel strength will be regarded as the core competitiveness of enterprises for a long timeThe internal competition in the jewelry industry is relatively large, and the fierce market competition makes theconstruction and control of sales channels for jewelry companies crucial. At the same time, due to the high valueof jewelry, consumers are often worried about the quality of the product and the reasonableness of the price whenpurchasing, which often prompts them to purchase through physical channels. There is a certain scarcity of high-quality physical channels, and the number of high-quality shops in a region’s high-quality business districts isscarce. Such high-quality shops can not only provide higher traffic, improve the retail performance of jewelry, but

also have the important value of brand promotion. Therefore, in the fierce market competition, it is very importantfor jewelry enterprises to control high-quality physical channels, which reflects the core competitiveness ofenterprises on the other side.

5. The rapid development of e-commerce market creates omni-channel marketing modelThe Internet has provided more convenient and more widely spread way of information sharing, guiding theconsumers' demands and choices. In recent years, jewelry retail enterprises have further strengthened onlinelayout, built new media matrix through various social communication platforms, formed multi-channel customersources, realized rapid spread of online brands and drainage and sales of offline stores, and created a new mode ofomni-channel marketing. The development of sharing platforms and e-commerce platforms has changed theconsumption habits of consumers, especially the young generation. Online consumers can more convenientlyunderstand product features and share user experience, which has become an important trend of productpromotion and future sales. Especially with the rise of live streaming platforms of e-commerce and social contact,the market share of live streaming e-commerce is increasing rapidly.

6. Supply chain management has become an important business method for jewelry enterprisesFrom the perspective of supply chain in the jewelry industry, it mainly involves raw material mining, processingand smelting, blank processing, jewelry production, warehousing, distribution and sales. The jewelry enterprisecontinue to optimize their supply chain management in order to shorten the supplying cycle and lower operatingcosts while guarantee the quality. More and more well-known domestic jewelry brands have outsourced part or allof the intermediate processing links with low gross profit and large investment over recent years, focusing onpremium front-end design, brand operation and back-end marketing network construction. Supply chainmanagement has become a major means for Jewelry enterprise to improving their operational efficiency.

(3) Competitive advantages of the company to engage in the jewelry and gold business

1. Superior quality of upstream supplier system

Currently, the Company has formed a stable gold procurement business relationship with the Shanghai GoldExchange, and has established a relatively stable cooperative relationship with major diamond suppliers andprocessors at home and abroad, which has advantages in raw material procurement costs, order production cyclesand product quality control, and can continuously reduce supply costs and improveoperating efficiency.

2. Diversified downstream market channels and customer resources

The Company actively expands gold and jewelry customers, and has cooperated with many domestic jewelrybrands, wholesalers and distributors, with diversified customers.

3. Improve the industrial chain of production and design

The company has a one-stop industrial chain of design, production, processing, testing, and wholesale. Brandowners can rely on our jewelry processing resources to hand over lower value-added links such as manufacturingand distribution to the company, so as to focus on the higher value-added brand operation and sales links.Outsourcing in the production and design process can improve the homogenization of gold jewelry products.

4. Closed-loop business process and risk control system

The company has formulated strict business internal control processes such as supplier admittance standards,customer evaluation system, full-process order tracking system, and procurement price comparison system, and

has realized the closed-loop control of capital flow, information flow and logistics and the multi-level risk controlthrough the integrated service platform of supply system and the integrated solution of capital management.(IV)Main business models during the reporting period

1. Sales model

According to the market requirement, customer's requirement and customer's annual order planning andregular purchase requirement, the company conducts raw material procurement, product development and design,processing/outsourced processing, etc., to provide goods for B-end customers, meet customer's requirement andcontinuously improve supply efficiency.

Purchasing and processing: After the customer places an order with the company according to their ownrequirements, the company will purchase raw materials and perform outsourced processing to form finishedproducts for sale to the customer;

Customized development: The customer entrusts the company to develop and design product styles accordingto the characteristics of the customer's own brand and future development requirements, and deliver the processedproducts to the customer.

Group sales: Group the products by integrating the product styles and spot resources of suppliers such asupstream factories and exhibition halls, and provide corresponding product structure according to the brandcharacteristics of customers and the requirements of the end market.

2.Procurement model

The upstream raw material suppliers of the company’s gold jewelry supply chain business were mainlydiamonds and gold, of which the diamond suppliers were mainly source producers or wholesalers from India orHong Kong, and domestic mature diamond wholesalers (generally members of the Shanghai DiamondExchange) ), gold was mainly purchased from the Shanghai Gold Exchange through the company's membershipqualifications at Shanghai Gold Exchange. The company has established professional procurement departmentand team to be responsible for the procurement of diamond products and jewellery. The specific procurementmodels varied according to customer needs.

3. Production model

By integrating upstream commissioned processing plants, the company outsourced the production ofproducts ordered by customers to professional jewelry manufacturers to give full play to their professional andscale effect. In view of the current situation and characteristics of domestic jewelry processing enterprises, thecompany established a set of effective supplier management mechanisms and evaluation standards to achieve abenign interaction between the production system of outsourced manufacturers and the company's businessdevelopment.(V) Operation of the physical store during the reporting period

During the reporting period, gold and jewelry business of the Company mainly provides supply chainmanagement and services in the vertical field of gold and jewelry, it connects with the downstream gold jewelrybrand and does not have the physical stores.（VI）Operation of online sales of jewelry business during the reporting periodDuring the reporting period, the company's online sales accounted for a relatively small proportion, The

Company's jewelry business achieved sales revenue online through third-party platforms, which accounts for lessthan 1% of the total operating income.（VII）Inventory of jewelry business during the reporting period

As of the reporting period(2025.6.30), inventory of the jewelry business was 243,592,630.31 yuan, anincrease of 189 % from the beginning of the period. Type of the inventories including:

In RMB

II. Core Competitiveness Analysis

Jewelry and gold business is the core business of the Company. The Company pays attention to both theeconomic situation and the fluctuation of raw material prices at home and abroad. During the reporting period, theCompany strove to develop new customers, maintain old customers, select the superior and eliminate the inferior,and further enrich and expand the customer base; With subsidiaries including Xinsen Company and the Groupheadquarters as core suppliers, it pursued supplier qualification certification for jewelry brands to become theirmulti-category approved suppliers; enhanced product development and quality management; promoted innovativecraftsmanship applications; strengthened IP protection and commercialization to boost differentiated advantagesand market competitiveness of the company; It strengthened product development and quality management; Itsupplied raw materials such as gold purchased from Shanghai Gold Exchange and diamonds purchased fromqualified suppliers to brands, wholesalers and distributors in batches through product design,processing/commissioned processing and quality inspection and acceptance. During the reporting period, theCompany continued to operate the bicycle and electric bicycle business, followed the development of new energyindustries, strove to develop new products, and carried out online and offline sales and brand management, etc.Competitive advantage of the Company in jewelry and gold business:

1. High-quality upstream supplier system

Currently, the Company has formed a stable gold procurement business relationship with the Shanghai GoldExchange, and has established a relatively stable cooperative relationship with major diamond suppliers andprocessors at home and abroad, which has advantages in raw material procurement costs, order production cyclesand product quality control, and can continuously reduce supply costs and improve operating efficiency.

2. Diversified downstream market channels and customer resources

The Company actively expands gold and jewelry customers, and has cooperated with many domestic jewelrybrands, wholesalers and distributors, with diversified customers.

3. Industrial chain improvement of production and design links

The company has an industrial chain process coordinating design, production, processing, inspection andwholesale. Brand owners can rely on our jewelry processing resource advantages and hand over low value-added

links such as manufacturing and distribution to the company, so as to focus on the brand operation and sales linkswith higher added value. Outsourcing of production and design can improve the homogeneity of gold and jewelryproducts.

4. Closed-loop business process and risk control system

The company has developed strict internal business control processes such as supplier admittance criterion,customer evaluation system, whole-process order tracking system and purchase price comparison system.Through integrated service platform of supply system and integrated solution of fund management, the companyhas realized closed-loop control of capital flow, information flow and logistics, and realized multi-level riskcontrol.III. Main business analysisOverviewSee the “I-Main businesses of the Company during the reporting period”Y-o-y changes of main financial data

In RMB

Major changes on profit composition or profit resources in reporting period

□Applicable?Not applicable

No major changes on profit composition or profit resources occurred in reporting period.

Constitution of operation revenue

In RMB

Industries, products or regions that account for more than 10% of the operating revenue or operating profit of theCompany?Applicable □Not applicable

In RMB

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted mainbusiness based on latest one year’s scope of period-end

□Applicable?Not applicable

IV. Analysis of the non-main business

□Applicable?Not applicable

V. Assets and liability analysis

1. Major changes of assets composition

In RMB

2. Main overseas assets

?Applicable □Not applicable

In RMB

3. Assets and liability measured by fair value

□Applicable?Not applicable

4. Assets rights restricted as at the end of the period

1. Among the fixed total output value at the end of the current period, the original value of six propertiespurchased in 2016 in Lianxin Home, Luohu District, Shenzhen was 2,959,824.00 yuan. which were affordable

housing purchased from the Housing and Construction Bureau of Luohu District to provide to enterprise talentsfor living. The contract stipulated that the purchasing enterprise is not allowed to conduct any form of propertyrights transaction with any units or individual other than the government.

VI. Investment analysis

1. Overall situation

?Applicable □Not applicable

2. The major equity investment obtained in the reporting period

□Applicable?Not applicable

3. The major non-equity investment doing in the reporting period

□Applicable?Not applicable

4. Financial assets investment

(1) Securities investment

□Applicable?Not applicable

The Company has no securities investment in the Period

(2) Derivative investment

□Applicable?Not applicable

The Company has no derivatives investment in the Period

5. Application of raised proceeds

?Applicable □Not applicableThe Company has no application of raised proceeds in the PeriodVII. Sales of major assets and equity

1. Sales of major assets

□Applicable ?Not applicable

The Company had no major assets sold in the Period.

2. Sales of major equity

□Applicable?Not applicable

VIII. Analysis of main holding company and stock-jointly companies?Applicable □Not applicableParticular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Particular about subsidiaries obtained or disposed in report period

□Applicable ?Not applicable

Notes of holding and stock-jointly companiesIX. Structured vehicle controlled by the Company

□Applicable?Not applicable

X. Risks and countermeasures

1. Risks for the Company:

(1) Price fluctuation risk of major raw materials

The main raw materials of the company are gold, diamonds, etc. In recent years, affected by changes in theinternational and domestic economic situation, the listed price of gold at the gold exchange fluctuates greatly. Themarket price of platinum is generally positively correlated with the market price of gold. In the long run, themarket price of diamond is in a moderate rising trend. The selling price of the company's gold products calculatedby gram is linked with the listed price of gold and platinum at the gold exchange. If the market prices of gold,platinum, diamonds and other raw materials fall significantly during the inventory turnover period of the company,on the one hand, the company has the risk of gross profit margin decline due to the decline in product selling price;on the other hand, the company will also face the risk of decline in operating performance due to the provision forinventory write down. At the same time, the rise in selling price caused by the sharp rise in the market price ofraw materials such as gold and diamonds may lead to the decrease of consumers' willingness and the decline ofsales volume, thus adversely affecting the business performance.

(2) The risk of intensifying market competition

In recent years, the jewelry market in China has been developing continuously, and the consumption demand ofjewelry has been developing in the direction of individuation and diversification. At present, China's jewelryindustry has presented diversified competitions. Excellent enterprises in the industry have formed competitiveadvantages in a certain segment by deeply exploring the consumption preferences of specific groups. The marketcompetition has gradually changed from price competition to comprehensive competition among brand, business

model, marketing channel, product design and quality, the competition tends to be fierce. In the futuredevelopment, if the company cannot continue to give full play to its advantages, there will be a risk of profitabilitydecline due to intensified competition in the industry.

(3) Risk of market demand decline

As an optional consumption, jewelry is especially sensitive to market demand, economic outlook and consumerpreference. China has become one of the countries with the most obvious growth in the jewelry and jade jewelryindustry in the world. If the economic growth rate declines in the future, the growth of market consumptiondemand may slow down accordingly, which will adversely affect the company's business condition.For the above-mentioned potential risks, the following countermeasures will be taken by the Company:

（1）Enhancing corporate governance, standardize operations, further reform and improve the internal operationmanagement system, assessment mechanism, strengthen the construction of management teams, business teamsand technical teams. Perfected the development plan of the Company.

（2）In terms of gold and jewelry business, further establish supplier systems and expand customer resources,the business cooperation between the well-known brands and listed company in particular, expandinginternational business, improve internal business processes and internal control system construction, promote theconstruction of supply chain system platform, improve operation quality and efficiency, and promote businessdevelopment.

（3）In terms of bicycle, electric bicycle and new energy business, with the goal of brand maintenance andnational market expansion, discuss and promote the deepening cooperation between the Company and majordistributors on EMMELLE brand and business. The company expanded sales network, strengthened qualitymanagement, strengthened brand management, and promoted the growth of order business. It continued to followup the development of new energy and new material of lithium battery, and explored and sought newbreakthroughs.

（4）It continued to cooperate with the manager to carry out asset custody business and relevant litigationresponse, ensured asset safety and protected the rights and interests of interested parties. It continued to follow upthe execution of Guangshui Jiaxu's lawsuit.XI. Formulation and implementation of market value management system and valuation boost planWhether the Company has established a market value management system

□Yes?No

Whether the Company has disclosed plans for valuation boost.

□Yes?No

XII. The implementation of the action plan of "Double improvement of quality and return".Whether the Company has disclosed the action plan of "Double improvement of quality and return".

□Yes?No

Section IV Corporate Governance, Enviornmental and Social ResponsibilityI. Changes of directors, supervisors and senior executives

□Applicable?Not applicable

There were no changes in the directors, supervisors and senior executive of the Company during the Period, foundmore in the Annual Report 2024II. Profit distribution plan and capitalizing of common reserves plan for the Period

□Applicable?Not applicable

The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capitalreserve either for the semi-annual.III. Implementation of the company’s stock incentive plan, employee stock ownership plan or otheremployee incentives

□Applicable?Not applicable

The Company had no implementation of the company’s stock incentive plan, employee stock ownership plan orother employee incentives in the reporting period.IV. Environmental information disclosure situationWhether the listed companies and their main subsidiaries are included in the list of enterprises that discloseenvironmental information according to law

□Yes ?No

V. Social responsibilityDuring the reporting period, the company conscientiously fulfilled its corporate social responsibility, paidattention to protecting the interests of shareholders, especially minority shareholders; Treated suppliers, customersand consumers with integrity; Earnestly fulfilled the responsibilities and obligations to the society, shareholders,employees and other stakeholders, created a harmonious environment for enterprise development, and realized thecommon development of the enterprise and stakeholders.

1. Protection of shareholders' rights and interests

The company strictly complies with the provisions of relevant laws and regulations such as the Company Law, theSecurities Law and the Governance Code for Listed Companies, continuously improves the corporate governancestructure, adheres to handing over the important matters to the resolutions of the shareholders' meeting, providesconvenience for medium and small investors to participate in the shareholders' meeting, fully listens to the smalland medium-sized investors’ reasonable advice on the company's development and governance, and safeguardsthe legitimate rights and interests of shareholders.In the first half of 2025, the board of directors of the company convened 1 shareholders' meetings, the meetingadopted the combination of on-site voting and online voting, the votes of small and medium investors werecounted separately, provided convenience for the majority of investors to participate in the voting at theshareholders' meeting, and ensured the participation right and supervision right of the small and medium-sizedinvestors.

In the first half of 2025, the company strengthened communication with investors, especially investors from thepublic, answered questions about which the public and investors concerned, and ensured the investors' right toknow in line with the Information Disclosure Affairs Management System and Reception and Promotion WorkSystem and by means of various forms such as the interactive platform of Shenzhen Stock Exchange, hotline ofthe company’s securities affairs department, and so on.On 15 May 2025, the company held the 2024 annual performance briefing, in which the company made onlinecommunication with investors on the company's performance, operating conditions and other issues of concern toinvestors. A total of 10 questions were raised by investors during the briefing, which were answered by directorsand senior management personnel.The company is committed to protecting the rights and interests of investors by improving the corporategovernance structure, improving the level of information disclosure and investor relationship management, andcarrying out investor education, and guiding investors to form value investment concept through real and effectivecommunication. In order to effectively ensure smooth service channels for investors, the company has arrangedfull-time personnel to answer investors' hotline calls and answer questions on the interactive platform, andrelevant staff has patiently analyzed the announcement information for investors to help investors understand thecompany's situation in time.

2. Protection of workers' rights and interests

The company adheres to the people-oriented, comprehensively implements the Labor Law and Labor ContractLaw, attaches great importance to guarantee of the employees' rights and interests, at the same time, establishesgood communication channels throughout the whole process of staff management and care, pays attention to staffgrowth, improves the staff overall quality, cultivates excellent internal training culture system, creates a goodlearning environment. Meanwhile, the company pays attention to enriching the spiritual life of employees,regularly carries out staff activities, and improves team cohesion. In accordance with the Labor Contract Law ofthe People's Republic of China and other relevant national and local labor laws and regulations, the company signslabor contracts with employees to protect their rights and interests. The company and its subsidiaries strictlyimplement the national employment system, labor protection system, social security system and medical securitysystem, and pay the housing provident fund, medical insurance, endowment insurance, unemployment insurance,work-related injury insurance and maternity insurance for employees according to the state regulations. Thecompany adheres to corporate culture of efficient coordination, people-oriented, on-demand training, training bylevel, and echelon training. The company establishes internal knowledge sharing system, promotes informationand knowledge exchange among various modules of the company, and improves team coordination ability. Itencourages employees to participate in continuing education and enhances the knowledge structure optimizationand professional quality promotion of workers at various positions.

3. Protection of rights and interests of suppliers, customers and consumers

The company actively organizes and carries out customer management, takes measures to ensure the rights andinterests of customers and actively promotes customer satisfaction and service excellence. It makes full use of therich social resources in the market, and establishes a good partnership with suppliers. The company promises notto abuse or misuse consumer information for the protection of rights and interests of consumers.

Section V Important EventsI. Commitments completed in Period and those without completed till end of the Period from actualcontroller, shareholders, related parties, purchaser and companies?Applicable □Not applicable

II. Non-operational fund occupation from controlling shareholders and its related party

□Applicable ?Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.III. External guarantee out of the regulations

□Applicable ?Not applicable

No external guarantee out of the regulations occurred in the period.IV. Appointment and non-reappointment (dismissal) of CPAWhether the semi-annual financial report had been audited

□Yes √ No

The semi-annual report was not auditedV. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion” that issuedby CPA

□Applicable?Not applicable

VI. Explanation from the BOD for “Qualified Opinion” of last year

□Applicable?Not applicable

VII. Bankruptcy reorganization

□Applicable ?Not applicable

No bankruptcy reorganization for the Company in reporting periodVIII. Litigations and arbitrationsSignificant litigations and arbitrations

□ Applicable √ Not applicable

No such cases in the reporting period.Other lawsuits

□ Applicable √ Not applicable

IX. Penalty and rectification

□ Applicable √ Not applicable

During the reporting period, the Company had no Penalty and rectification.X. Integrity of the company and its controlling shareholders and actual controllers

□ Applicable √ Not applicable

XI. Major related transaction

1. Related transaction with routine operation concerned

□ Applicable √ Not applicable

No such cases in the reporting period.

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

□Applicable √ Not applicable

No such cases in the reporting period.

3. Main related transactions of mutual investment outside

□Applicable ?Not applicable

No main related transactions of mutual investment outside for the Company in reporting period.

4. Contact of related credit and debt

?Applicable □Not applicable

Whether exist non-operating contact of related credit and debt or not?Yes □NoClaim receivable from related party

Debts payable to related party

5. Contact with the related finance companies

□Applicable ?Not applicable

There are no deposits, loans, credits or other financial business between the finance companies with associatedrelationship and related parties

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

□Applicable ?Not applicable

There are no deposits, loans, credits or other financial business between the finance companies controlled by theCompany and related parties

7. Other material related transactions

□Applicable ?Not applicable

The company had no other material related transactions in reporting period.XII. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

□Applicable ?Not applicable

No trusteeship occurred in reporting period.

(2) Contract

□Applicable ?Not applicable

No contract occurred in reporting period.

(3) Leasing

□Applicable ?Not applicable

No leasing occurred in reporting period.

2. Major guarantee

□Applicable ?Not applicable

No major guarantee occurred in reporting period.

3.Trust financing

□Applicable?Not applicable

No trust financing for the Company in reporting period.

4. Other significant contracts

□Applicable?Not applicable

No other significant contract in reporting period.XIII. Explanation of other important events?Applicable □Not applicable

1. Matters related to performance commitment

According to the Cooperation Agreement signed by the company with Wansheng Industrial and GrandSunergy on December 14, 2020 and the unqualified audit report with the report number of GXS Zi [2025] No.

24014510017 issued by Huaxing Certified Public Accountants LLP (special general partnership) on April 18,2025, in 2024, the net profit attributable to the owners of the parent company in Shenzhen China Bicycle wasRMB 16.8452 million, and the actual completion was lower than the performance commitment by RMB 35million, and the completion rate of performance commitment was 48.13%, which failed to meet the performancecommitment target. According to the performance commitment, Wansheng Industrial shall pay the company RMB

18.1548 million in cash for the 2024 annual performance compensation within ten working days after the issuanceof the 2024 annual audit report of Shenzhen China Bicycle. On April 29, 2025, the company received performancecompensation of RMB 18.1548 million from Wansheng Industrial, and Wansheng Industrial fulfilled itsperformance compensation obligations in 2024 in accordance with the Cooperation Agreement. For details, pleaserefer to the Announcement on Completion of 2024 Annual Performance Commitment of Wansheng IndustrialHoldings (Shenzhen) Co., Ltd. and the Announcement on Receiving Performance Compensation disclosed by thecompany on CNINF on April 22 and April 30, 2025.XIV. Significant event of subsidiary of the Company?Applicable □Not applicable

1. Matters concerning the signing of a patent licensing contract

The Company places high importance on intellectual property rights, actively fostering industry consensus on IPprotection and promoting continuous innovative breakthroughs and commercialization in gold jewelry design andprocessing, thereby continuously enhancing its differentiated advantages and market competitiveness. OnDecember 31, 2024, the Company's wholly-owned sub-subsidiary Xinsen Precision entered into a patent licensingcontract with Shenzhen Saturday Jewellery, granting non-exclusive product sales rights specified in the PatentCertificate of Utility Model (Certificate No. 17165569, 17645124, 18632060, 19511377, 20788110, 21771571,21772343) within mainland China for sales of gold ring category, with a license term effective from the agreementdate until May 30, 2025. This transaction aims to leverage Saturday Jewellery's brand strength and marketchannels to facilitate widespread adoption of new processes and realize efficient commercialization of IPachievements, creating synergistic advantages and enhancing competitiveness in the gold jewelry industry. Fordetails, please refer to the Announcement on Signing Patent License Contract (No. 2024035) disclosed on CNINFon January 2, 2025. The contract is performed normally during the reporting period.

Section VI Changes in Shares and Particular about ShareholdersI. Changes in Share Capital

1. Changes in Share Capital

In Shares

Reasons for share changed

□Applicable?Not applicable

Approval of share changed

□Applicable?Not applicable

Ownership transfer of share changed

□Applicable?Not applicable

Progress of shares buy-back

□Applicable?Not applicable

Implementation progress of reducing holdings of shares buy-back by centralized bidding

□Applicable?Not applicable

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable tocommon shareholders of Company in latest year and period

□Applicable?Not applicable

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

□Applicable?Not applicable

2. Changes of lock-up(restricted) shares

□Applicable?Not applicable

II. Securities issuance and listing

□Applicable?Not applicable

III. Number of shareholders and particular about share holding

In Shares

providing securities brokerage services to retail and institutional clients. Its main business is brokerage of Hong Kong stocks, andit also provides securities brokerage and services in overseas markets. According to the email sent by UOB Kay Hian (HongKong) Limited, as of June 30, 2025, UOB Kay Hian (Hong Kong) Limited held 40,817,329 B shares of Shenshen China Bicyclefor three retail customers. Although the shareholding ratio has reached 5.92%, that of a single customer did not exceed 5%, andthe three retail customers were not acting in concert an did not hold the shares of Shenzhen China Bicycle on other platforms.

Information of shareholders holding more than 5% of the shares, the top 10 shareholders and the top 10shareholders of unrestricted tradable shares participating in the lending of shares in securities lending andborrowing business

□ Applicable √ Not applicable

The top 10 shareholders and the top 10 shareholders of unrestricted tradable shares have changed compared withthe previous period due to the securities lending/returning,

□ Applicable √ Not applicable

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

□ Yes √ No

The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Companyhave no buy –back agreement dealing in reporting period.IV. Changes of shares held by directors, supervisors and senior executives

□Applicable?Not applicable

Shares held by directors, supervisors and senior executives have no changes in reporting period, found moredetails in Annual Report 2024.V. Changes in controlling shareholders or actual controllersChange of controlling shareholder during the reporting period

□Applicable?Not applicable

The Company had no change of controlling shareholder during the reporting period

Change of actual controller during the reporting period

□Applicable?Not applicable

The Company had no change of actual controller during the reporting period

VI.Preferred stock

□Applicable?Not applicable

The Company had no preferred stock in the Period.

Section VII Corporate Bonds

□Applicable?Not applicable

Section VIII Financial ReportI. Audit reportWhether the semi-annual report is audited

□Yes ?No

The company's semi-annual financial report has not been auditedII. Financial StatementStatement in Financial Notes are carried Unit: RMB/CNY

1. Consolidated Balance Sheet

Prepared by Shenzhen China Bicycle Company (Holdings) Limited

June 30, 2025

In RMB

Legal Representative: Wang ShenghongPerson in charge of Accounting Works: Sun LonglongPerson in charge of Accounting Institution: She Hanxing

2. Balance Sheet of Parent Company

I n RMB

3. Consolidated Profit Statement

In RMB

As for the enterprise combined under the same control, net profit of 0.00Yuan achieved by the merged party before combinationwhile 0.00 Yuan achieved last period.Legal Representative: Wang ShenghongPerson in charge of Accounting Works: Sun LonglongPerson in charge of Accounting Institution: She Hanxing

4. Profit Statement of Parent Company

In RMB

5. Consolidated Cash Flow Statement

In RMB

6. Cash Flow Statement of Parent Company

In RMB

7. Statement of Changes in Owners’ Equity (Consolidated)

Current Amount

In RMB

Amount of the previous period

In RMB

8. Statement of Changes in Owners’ Equity (Parent Company)

Current Amount

In RMB

Amount of the previous period

In RMB

III. Basic information

1. Company Profile

According to the Approval Document SFBF (1991) No. 888 issued by the People’s Government of Shenzhen,Shenzhen China Bicycle Company (Holdings) Co., Ltd. (hereinafter referred to as the CBC) was reincorporated asthe company limited by shares in November 1991. On 28 December 1991, upon the Approval DocumentSRYFZ(1991) No. 119 issued by Shenzhen Special Economic Zone Branch of the People’s Bank of China, theCompany got listed on Shenzhen Stock Exchange. Registered of the Company amounted as 689,184,933.00 Yuan.Legal representative: Wang ShenghongLocation: No. 3008, Buxin Road, Luohu District, ShenzhenOffice address: 8/F Shuibei Jinzuo Building, No.89 Beili North Road, Cuizhu Street, Luohu District, ShenzhenCertificate for Uniform Social Credit Code: 914403006188304524。

2. Business nature and main operation activities

Main business activities: Research & development of the bicycles, electric bicycles, electric motorcycles,motorcycles, electric tricycles, electric four-wheeler, children's bicycles, exercise bikes, sports equipment,mechanical products, toys, electric toys, electronic products, new energy equipment and storage equipment(lithium batteries, batteries, etc.), household appliances and spare parts, and electronic components; wholesale,retail, import and export and related supporting business of above-mentioned products (excluding commoditiessubject to state trade management, handling the application according to the relevant national regulations forcommodities involving quotas, license management and other special provisions and management,); fine chemicalproducts (excluding dangerous goods), wholesale and retail of carbon fiber composite materials; technologydevelopment of computer software, transfer of self-developed technological achievements, and providing relevanttechnical information consultation; own property leasing; property management. (The above projects do notinvolve special administrative measures for the implementation access of national regulations, and those involvingrestricted projects and pre-existing administrative licenses must obtain the pre-existing administrative licensingdocuments before operation.) Purchase and sale of gold products, platinum jewelry, palladium jewelry, K-goldjewelry, silver jewelry, inlaid jewelry, jewelry, jade ware, gem-and-jade products, clocks and watches, preciousmetal materials, diamonds, jadeite, crafts (except ivory and its products), calligraphy and painting, collection(except for antiques, cultural relics, and items prohibited by national laws and administrative regulations).Main products or services currently offered are: Gold jewelry, EMMELLE bicycles and electrical bicycles,lithium battery material.

3.Actual controller of the Company

Actual controller of the Company is Wang Shenghong, The controlling shareholder is Wansheng IndustrialHolding (Shenzhen) Co., Ltd.,who held or controlled 20% shares of the Company.

4. Release of the financial report

The Financial Report was approved to report at the 20

th Session of 11

th

BOD of CBC on August 15, 2025.

IV. Compilation Basis of Financial Statement

1. Compilation Basis

On the basis of going concern, the Company recognizes and measures according to the actual transactionsand events, the Accounting Standards for Business Enterprises-Basic Standards and other specific accountingstandards, application guidelines, standard interpretation and other relevant provisions (hereinafter referred to asthe Accounting Standards for Business Enterprises), and on this basis, it compiles the financial statements incombination with the provisions of the No.15 Rules on Information Disclosure and Compilation of CompaniesOffering Securities to the Public - General Provisions on Financial Reports (revised in 2023) issued by ChinaSecurities Regulatory Commission.

2. Going concern

The Company has the ability to continue to operate for at least 12 months from the end of this reporting period,and there is no major issue affecting its ability to continue to operate.V. Main accounting policy and Accounting EstimateTips for specific accounting policy and estimate:

Nil

1. Declaration on compliance with accounting standards for business enterprise

The financial statements prepared by the Company meet the requirements of the Accounting Standards forBusiness Enterprises, and truly and completely reflect the Company's financial status, operating results, changesin owners' equity and cash flow and other relevant information.

2. Accounting period

Calendar year is the accounting period for the CBC, which is starting from 1 January to 31 December.

3. Business cycles

The Company takes 12 months as a business cycle.

4. Book-keeping currency

The CBC takes RMB as the standard currency for bookkeeping.

5.Determination method and selection basis of importance standard

?Applicable □Not applicable

6. Accounting treatment for business combinations under the same control and those not under the samecontrol

1. Business merger under the same control: The assets and liabilities acquired by the Company in businessmerger are measured according to the book value of the assets and liabilities of the merged party (including thegoodwill formed by the acquisition of the merged party by the ultimate controlling party) in the consolidatedfinancial statements of the ultimate controlling party on the date of merger. For the difference between the bookvalue of the net assets obtained in the merger and the book value of the merger consideration paid (or the totalface value of the issued shares), adjust the capital premium or share capital premium in the capital reserve. Ifthe capital premium or share capital premium in the capital reserve is insufficient to offset, adjust the retainedincome.

2. Business merger not under the same control: The assets paid, liabilities incurred or assumed by theCompany as the consideration for business merger are measured at fair value on the date of purchase, and thedifference between fair value and book value is included in the current profits and losses. The Companyrecognizes the difference between the merger cost and the fair value share of the net identifiable assets of theacquiree obtained in the merger as goodwill; For the difference between the merger cost and the fair value shareof the net identifiable assets of the acquiree (which is larger than the merger cost), it reviews the fair values ofthe assets and liabilities obtained in the merger, the non-cash assets as the merger consideration or the equitysecurities issued, and the review results show that the determination of the fair values of the determinedidentifiable assets and liabilities is appropriate. The difference between the business merger cost and the fairvalue share of the net identifiable assets of the acquiree (which is larger than the business merger cost) isincluded in the non-operating income in the current merger period.

The business merger not under the same control is realized step by step through multiple transactions, andthe merger cost is the sum of the consideration paid on the date of purchase and the fair value of the equity of

the acquiree held before the date of purchase; The equity of the purchased party held before the date of purchaseshall be re-measured according to the fair value on the date of purchase, and the difference between the fairvalue and its book value shall be included in the current investment income. Other comprehensive income of thelong-term equity investment of the acquiree held before the date of purchase under the accounting by equitymethod shall be subject to accounting treatment on the same basis as the direct disposal of relevant assets orliabilities by the investee. Changes in other shareholders' equity except net profits and losses, othercomprehensive income and profit distribution shall be converted into current profits and losses on the date ofpurchase. For other equity instrument investments of the acquiree held before the date of purchase, the changesin fair value of the equity instrument investments accumulated in other comprehensive income before the dateof purchase are transferred to retained profits and losses.

3. Disposal of related expenses in business merger: Intermediary expenses such as audit, legal services,evaluation and consultation and other related management expenses incurred for business merger are includedin current profits and losses when incurred; The transaction costs of equity securities or debt securities issued asthe merger consideration are included in the initial recognition amount of equity securities or debt securities.

7. Criteria for control and preparation method of consolidated financial statements

1. Criteria for control and preparation scope of consolidated statements

Control means that the investor has the power over the investee, enjoys variable returns by participating inthe related activities of the investee, and has the ability to influence the amount of returns by using the powerover the investee. As for whether to control the investee, the Company's criterion factors include:

(1) Have the power over the investee and the ability to lead the related activities of the investee;

(2) Be entitled to variable returns to the investee;

(3) Have the ability to use the power over the investee to influence its return amount.

Unless there is conclusive evidence that the Company cannot lead the related activities of the investee, theCompany has the power over the investee if:

(1) It holds more than half of the voting rights of the investee;

(2) It holds half or less of the voting rights of the investee, but controls more than half of the voting rightsthrough agreements with other voting rights holders.

If the Company holds half or less of the voting rights of the investee, but after comprehensiveconsideration of the following facts and circumstances, it is judged that the voting rights held are sufficient tolead the relevant activities of the investee, it is deemed that the Company has power over the investee:

(1) The size of the voting rights held relative to the voting rights held by other investors, and the degree ofdispersion of the voting rights held by other investors;

(2) The potential voting rights of the investee held by other investors, such as convertible corporate bondsand executable warrants;

(3) Other contractual rights;

(4) Other relevant facts and circumstances such as the past voting rights of the investee.The Company evaluates the variability of returns based on the nature of contractual arrangements ratherthan the legal form of returns.If the Company exercises the decision-making power as the main responsible person, or if other partieshave the decision-making power and other parties exercise the decision-making power as the agents of theCompany, it shows that the Company controls the investee.

Once the changes in relevant facts and circumstances lead to changes in the relevant factors involved inthe definition of control, the Company will re-evaluate.

The scope of consolidation of the consolidated financial statements is determined on the basis of control,including not only subsidiaries determined by voting rights (or similar rights) themselves or in combinationwith other arrangements, but also structured entities determined by one or more contractual arrangements.

2. Merger procedure

The consolidated financial statements are based on the financial statements of the Company and itssubsidiaries, and are prepared according to other relevant information.

The Company unifies the accounting policies and accounting periods adopted by its subsidiaries, so thatthe accounting policies and accounting periods adopted by its subsidiaries are consistent with those adopted bythe Company. When preparing consolidated financial statements, it follows the principle of materiality to offsetthe internal exchanges, internal transactions and equity investment projects between the parent company and thesubsidiaries, and between the subsidiaries.

The equity and profit and loss attributable to minority shareholders of the subsidiaries are listed separatelyunder the item of the owners' equity in the consolidated balance sheet and under the item of net profit in theconsolidated income statement. The current loss shared by minority shareholders of a subsidiary exceeds thebalance formed by minority shareholders' share in the initial owners' equity of the subsidiary, thus offsettingminority shareholders' equity.

(1) Increase of subsidiaries and businesses

During the reporting period, when preparing the consolidated balance sheet due to the business mergerunder the same control and the subsidiaries and businesses increased, the opening balance of the consolidatedbalance sheet is adjusted; When preparing the income statement, the income, expenses and profits of thesubsidiary and business merger from the beginning of the current period to the end of the reporting period areincluded in the consolidated income statement; When the cash flow statement is consolidated, the cash flows ofthe subsidiary and the business combination from the beginning of the current period to the end of the reportingperiod are included in the consolidated cash flow statement; At the same time, the relevant items of thecomparative statements shall be adjusted, as if the merged reporting entity had existed since the ultimatecontrolling party started to control.

During the reporting period, when preparing the consolidated balance sheet for subsidiaries and businessesincreased due to business merger not under the same control or other means, the opening balance of theconsolidated balance sheet will not be adjusted. When preparing the income statement, the income, expensesand profits of the subsidiary and the business from the date of purchase to the end of the reporting period shallbe included in the consolidated income statement. When preparing the cash flow statement, the cash flow of thesubsidiary from the date of purchase to the end of the reporting period shall be included in the consolidated cashflow statement.

The Company prepares consolidated financial statements based on the amount of identifiable assets,liabilities and contingent liabilities determined on the basis of the fair value on the date of purchase reflected inthe individual financial statements of subsidiaries at the current balance sheet date. The difference between themerger cost and the fair value share of the net identifiable assets of the acquiree obtained in the merger shall berecognized as goodwill. The difference between the merger cost and the fair value share of the net identifiableassets of the acquiree obtained in the merger shall be included in the current profits and losses after review.

If the business merger not under the same control is realized step by step through multiple transactions, inthe consolidated financial statements, the equity of the acquiree held before the date of purchase shall be re-measured according to the fair value of the equity on the date of purchase, and the difference between the fairvalue and its book value shall be included in the current investment income. Other comprehensive income of thelong-term equity investment of the acquiree held before the date of purchase under the accounting by equitymethod shall be subject to accounting treatment on the same basis as the direct disposal of relevant assets orliabilities by the investee. Changes in other shareholders' equity except net profits and losses, othercomprehensive income and profit distribution shall be converted into current profits and losses on the date ofpurchase. For other equity instrument investments of the acquiree held before the date of purchase, the changesin fair value of the equity instrument investments accumulated in other comprehensive income before the dateof purchase are transferred to retained profits and losses.

(2) Disposal of subsidiaries and businesses

A. General disposal methods

During the reporting period, if the Company disposes of its subsidiaries and businesses, the income,expenses and profits of the subsidiaries and businesses from the beginning to the disposal date will be includedin the consolidated income statement; The cash flow of the subsidiaries and businesses from the beginning tothe disposal date will be included in the consolidated cash flow statement.

If the Company loses control of its original subsidiaries due to the disposal of some equity investments,the remaining equity shall be re-measured according to its fair value on the date of loss of control in theconsolidated financial statements. The sum of the consideration obtained from the disposal of the equity and thefair value of the remaining equity, minus the difference between the share of the net assets that should becontinuously calculated by the original subsidiary from the date of purchase or the date of merger according to

the original shareholding ratio, is included in the current investment income when the control right is lost, andthe goodwill is also offset. Other comprehensive income related to the original subsidiary's equity investmentshall be subject to accounting treatment on the same basis as the subsidiary's direct disposal of relevant assets orliabilities when it loses control. Shareholders' equity recognized due to changes in other shareholders' equityrelated to the original subsidiary except net profit and loss, other comprehensive income and profit distributionshall be converted into current profits and losses when it loses control.

B. Dispose of equity step by step until loss of controlIf the enterprise disposes of its equity investment in a subsidiary step by step through multiple transactionsuntil it loses control, if the transaction of disposing of its equity investment in a subsidiary until the loss ofcontrol is a package transaction, it shall treat each transaction as a transaction of disposing of the subsidiary andloss of control; However, the difference between the price of each disposal before the loss of control and theshare of the subsidiary's net assets corresponding to the disposal investment shall be recognized as othercomprehensive income in the consolidated financial statements, and transferred to the current profits and losseswhen the control is lost.The terms, conditions and economic impact of various transactions dealing with equity investment insubsidiaries meet one or more of the following conditions, which usually indicates that multiple transactionsshall be subject to accounting treatment as a package transaction:

(A) These transactions are concluded at the same time or under the consideration of mutual impact;(B) These transactions as a whole can achieve a complete commercial result;(C) The occurrence of one transaction depends on the occurrence of at least one other transaction;(D) A transaction is uneconomical when considered alone, but it is economical when considered togetherwith other transactions.

(3) Purchase of minority shares of the subsidiaries

The Company shall adjust the capital premium or share capital premium in the capital reserve in theconsolidated balance sheet for the difference between the newly acquired long-term equity investment due tothe purchase of minority shares and the share of net identifiable assets that should be continuously calculated bythe subsidiaries from the date of purchase (or date of merger) according to the new shareholding ratio. If thecapital premium or share capital premium in the capital reserve is insufficient to offset, the retained incomeshall be adjusted.

(4) Partial disposal of equity investment in subsidiaries without loss of control

For the difference between the disposal price obtained from the partial disposal of the long-term equityinvestment in the subsidiary and the share of the net assets of the subsidiary that is continuously calculated fromthe date of purchase or the date of merger corresponding to the disposal of the long-term equity investment,adjust the capital premium or share capital premium in the capital reserve in the consolidated balance sheet. If

the capital premium or share capital premium in the capital reserve is insufficient to offset, adjust the retainedincome.

8. Classification of joint venture arrangement and accounting treatment for joint control

A joint venture arrangement refers to an arrangement controlled jointly by two or more participants. Jointventure arrangements are divided into joint operation and joint ventures.

1. Joint operation refers to the joint venture arrangement in which the Company is entitled to the assets relatedto the arrangement and undertakes the liabilities related to the arrangement. The Company recognizes thefollowing items related to the share of interests in joint operation:

(1) Recognize the assets held separately, and recognize the assets held jointly according to their shares;

(2) Recognize the liabilities undertaken separately, and recognize the liabilities jointly undertaken according totheir shares;

(3) Recognize the income generated from the sale of its share of joint operation output;

(4) Recognize the income generated by the sale of output in the joint operation according to its share;

(5) Recognize the expenses incurred separately, and recognize the expenses incurred in joint operationaccording to their shares.

2. Joint venture refers to a joint venture arrangement in which the Company has rights only to the net assets ofthe arrangement. The Company shall carry out accounting treatment for the investment of the joint venture inaccordance with the provisions on accounting by equity method for long-term equity investment.

9. Recognition of cash and cash equivalents

When preparing the cash flow statement, the Company will recognize the cash on hand and the depositsthat can be used for payment at any time as cash. An investment with short term (usually due within threemonths from the date of purchase), strong liquidity, easy conversion into known cash and little risk of valuechange will be determined as a cash equivalent. Restricted bank deposits will not be regarded as cash and cashequivalents in the cash flow statement.

10. Foreign currency transaction and financial statement conversion

1. Foreign currency business

When foreign currency business occurs, the amount of foreign currency is converted into RMB forrecording according to the spot exchange rate on the date of transaction, and foreign currency monetary itemsand foreign currency non-monetary items are treated in the following ways at the end of the period:

(1) Foreign currency monetary items are converted at the spot exchange rate on the balance sheet date.Exchange differences arising from the difference between the spot exchange rate on the balance sheet date andthe initial recognition or the spot exchange rate on the previous balance sheet date are included in the currentprofits and losses.

(2) Foreign currency non-monetary items measured at historical cost are still converted at the spot exchange rateon the date of transaction, and the amount of their recording currency will not be changed.

(3) Foreign currency non-monetary items measured at fair value shall be converted at the spot exchange rate onthe fair value determination date, and the resulting exchange gains and losses shall be included in the currentprofits and losses or other comprehensive income.

(4) Foreign currency exchange gains and losses, except the exchange gains and losses arising from foreigncurrency special borrowing related to the purchase, construction or production of assets eligible forcapitalization, are included in the cost of assets eligible for capitalization before the assets reach the scheduledserviceable or saleable state, and the rest are included in the current profits and losses.

2. Conversion in foreign currency financial statements

(1) Assets and liabilities in the balance sheet are converted at the spot exchange rate on the balance sheet date;Except for the "undistributed profit", other items of owners' equity are converted at the spot exchange rate at thetime of occurrence.

(2) The income and expenses in the income statement are converted at the approximate exchange rate of thespot exchange rate on the date of transaction.

(3) The conversion difference of foreign currency financial statements generated according to the aboveconversion is included in other comprehensive income. When disposing of overseas operations, the conversiondifference of foreign currency financial statements related to the overseas operations shall be transferred fromthe owners' equity to the current profits and losses.

(4) The cash flow statement is converted by the approximate exchange rate of the spot exchange rate on thedate of cash flow occurrence. As a reconciliation item, the influence of exchange rate changes on cash is listedseparately in the cash flow statement.

11. Financial instruments

When the Company becomes a party to the financial instrument contract, it recognizes a financial asset orfinancial liability related to it.

1. Classification, recognition basis and measurement method of financial assets

According to the business model of financial assets under management and the contractual cash flowcharacteristics of financial assets, the Company divides financial assets into three categories: financial assetsmeasured by amortized cost, financial assets measured by fair value with its changes included in othercomprehensive income, and financial assets measured by fair value with its changes included in current profitsand losses.

Financial assets are measured at fair value upon initial recognition. For financial assets measured at fairvalue with its changes included in the current profits and losses, relevant transaction costs are directly includedin the current profits and losses; For financial assets of other types, relevant transaction costs are included in theinitial recognition amount. If the accounts receivable initially recognized by the Company do not contain

significant financing components as defined in the Accounting Standards for Business Enterprises No.14-Income, or the financing components in contracts with a duration of no more than one year are not consideredaccording to the provisions of Accounting Standards for Business Enterprises No.14-Income, the initialmeasurement shall be made according to the transaction price of the consideration expected to be charged.

(1) Financial assets measured in amortized cost

The Company's business model of managing such financial assets is to collect contract cash flow, and thecash flow generated on a specific date is only for the payment of principal and interest based on the unpaidprincipal amount. For such financial assets, the Company adopts the effective interest rate method forsubsequent measurement according to amortized cost, and the gains or losses arising from amortization orimpairment are included in the current profits and losses.

(2) Financial assets measured at fair value with changes included in other comprehensive income

The Company's business model of managing such financial assets is to collect contract cash flow and sellit, and the cash flow generated on a specific date is only for the payment of principal and interest based on theunpaid principal amount. Such financial assets are measured at fair value with changes included in othercomprehensive income, but impairment losses or gains, exchange gains and losses and interest incomecalculated according to the effective interest rate method are included in current profits and losses.

For the investment in non-transactional equity instruments, the Company can irrevocably designate it as afinancial asset measured at fair value with changes included in other comprehensive income at the initialrecognition. The designation is made on the basis of a single investment, and the relevant investment conformsto the definition of equity instrument from the issuer's point of view. The Company includes the relevantdividend income of such financial assets in the current profits and losses, and the changes in fair value in othercomprehensive income. When the financial asset is derecognized, the accumulated gains or losses previouslyincluded in other comprehensive income will be transferred from other comprehensive income to retainedincome and will not be included in the current profits and losses.

(3) Financial assets measured at fair value with changes included in the current profits and losses

Except for the above financial assets measured in amortized cost and the financial assets measured at fairvalue with changes included in other comprehensive income, the Company classifies all other financial assets asfinancial assets measured at fair value with changes included in current profits and losses. In addition, at thetime of initial recognition, in order to eliminate or significantly reduce the accounting mismatch, the Companydesignated some financial assets as the financial assets measured at fair value with changes included in thecurrent profits and losses. Such financial assets are subsequently measured at fair value, with changes in fairvalue included in current profits and losses.

2. Classification, recognition basis and measurement method of financial liabilities

The Company's financial liabilities are classified into financial liabilities measured at fair value withchanges included in current profits and losses and other financial liabilities at initial recognition. For financial

liabilities measured at fair value with changes included in the current profits and losses, the related transactioncosts are directly included in the current profits and losses, and the related transaction costs of other financialliabilities are included in their initial recognition amount.

(1) Financial liabilities measured at fair value with changes included in the current profits and lossesFinancial liabilities measured at fair value with changes included in current profits and losses includetransactional financial liabilities (including derivatives belonging to financial liabilities) and financial liabilitiesdesignated as measured at fair value with changes included in current profits and losses.Transactional financial liabilities (including derivatives belonging to financial liabilities) are subsequentlymeasured at fair value, and changes in fair value are included in current profits and losses, except those relatedto hedging accounting.

For financial liabilities that are designated as being measured at fair value with changes included incurrent profits and losses at the time of initial recognition, the changes in fair value caused by changes in theCompany's own credit risk are included in other comprehensive income, and when the liability is derecognized,the accumulated changes in its fair value caused by changes in its own credit risk included in othercomprehensive income are transferred to retained income. Other changes in fair value are included in currentprofits and losses. If the accounting mismatch in profit and loss will be caused or enlarged by handling theimpact of the changes in credit risk of these financial liabilities in the above way, the Company will include allthe gains or losses of the financial liabilities (including the amount affected by the changes in the enterprise'scredit risk) in the current profits and losses.

(2) Other financial liabilities

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

3. Methods for determining the fair value of financial assets and financial liabilities

The fair value of financial instruments with an active market shall be determined by the quotation in theactive market. The fair value of financial instruments without active market shall be determined by valuationtechnology. At the time of valuation, the Company adopts the valuation technology that is applicable in thecurrent situation and supported by sufficient available data and other information, selects the input values thatare consistent with the characteristics of assets or liabilities considered by market participants in the transactionof relevant assets or liabilities, and gives priority to the relevant observable input values. Unobservable inputvalues can only be used if the relevant observable input values are unavailable or impracticable.

4. Recognition basis and measurement method for transfer of financial assets

Recognition for transfer of financial assets

Almost all risks andrewards in the ownership offinancial assets are neithertransferred nor retained

The Company divides the transfer of financial assets into the overall transfer and partial transfer of financialassets.

(1) If the overall transfer of financial assets meets the conditions for derecognition, the difference between thefollowing two amounts shall be included in the current profits and losses: the book value of the transferredfinancial assets on the derecognition date; The sum of the consideration received for the transfer of financialassets and the cumulative amount of changes in fair value that were originally directly included in othercomprehensive income (the financial assets involved in the transfer are those classified as financial assetsmeasured at fair value with changes included in other comprehensive income in Article 18 of AccountingStandards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments).

(2) If a part of the financial assets is transferred, and the transferred part as a whole meets the conditions forderecognition, the book value of the whole financial assets before the transfer shall be allocated between thederecognition part and the continued recognition part (in this case, the retained service assets shall be regardedas part of continued recognition of financial asset) according to their respective relative fair values on the dateof transfer, and the difference between the following two amounts shall be included in the current profits andlosses: the book value of the derecognition part on the derecognition date; The sum of the considerationreceived for the derecognition part (including all new assets acquired minus all new liabilities assumed) and thecorresponding derecognition amount in the accumulated amount of changes in fair value originally included inother comprehensive income (the financial assets involved in partial transfer are those classified as financialassets measured at fair value with changes included in other comprehensive income in Article 18 of AccountingStandards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments).If the transfer of financial assets does not meet the conditions for derecognition, the whole transferredfinancial assets shall be continuously recognized, and the received consideration shall be recognized as afinancial liability.

5. Conditions for derecognition of financial liabilities

If the current obligations of financial liabilities(or part of them) have been discharged, the financialliabilities (or part of them) shall be derecognized. If the following conditions exist:

(1) If the Company transfers the assets used to pay financial liabilities to an institution or establishes a trust, andthe obligation of debt payment still exists, it shall not derecognize the financial liabilities.

(2) The Company (the borrower) and the lender sign an agreement to replace the original financial liabilities (orpart of them) by taking on new financial liabilities, and the contractual terms are essentially different. TheCompany shall derecognize the original financial liabilities (or part of them) and recognize a new financialliability at the same time.

If the financial liabilities (or part of them) are derecognized, the Company will record the differencebetween the book value and the consideration paid (including the transferred non-cash assets or liabilities) intothe current profits and losses.

6. Impairment of financial assets

(1) Recognition method of impairment provision

The Company conducts impairment accounting treatment on financial assets (including receivables)measured in amortized cost, debt instrument investment and lease receivables measured at fair value withchanges included in other comprehensive income on the basis of expected credit losses, and recognizes the lossprovisions. In addition, for contract assets, loan commitments and financial guarantee contracts, impairmentprovisions are also accrued and impairment losses are recognized in accordance with the accounting policiesdescribed in this section.

Expected credit loss refers to the weighted mean of credit loss of financial instruments weighted by therisk of default. Credit loss refers to the difference between all contracted cash flows that the Companydiscounted at the original actual interest rate and all cash flows that it is expected to receive, that is, the presentvalue of all cash shortages.

Except for the purchased or originated financial assets with credit impairment, the Company evaluateswhether the credit risk of relevant financial assets has increased significantly since the initial recognition oneach balance sheet date. If the credit risk has not increased significantly since the initial recognition. it is in thefirst stage, and the Company will measure the loss provision according to the amount equivalent to the expectedcredit loss of the financial asset in the next 12 months; If the credit risk has increased significantly since theinitial recognition but with no credit impairment, it is in the second stage, and the Company will measure theloss provision according to the amount equivalent to the expected credit loss of the financial asset during thewhole duration; If the financial asset has suffered credit impairment since its initial recognition, it is in the thirdstage, and the Company will measure the loss provision according to the amount equivalent to the expectedcredit loss of the financial asset in the whole duration. When evaluating the expected credit loss, the Companyconsiders the reasonable and well-founded information, including forward-looking information, about pastevents, current situation and future economic situation prediction that can be obtained on the balance sheet datewithout unnecessary extra cost or effort.

The expected credit loss in the next 12 months refers to the expected credit loss caused by financial assetdefault events that may occur within 12 months after the balance sheet date (if the expected duration of financial

assets is less than 12 months, within the expected duration), which is a part of the expected credit loss in thewhole duration.For financial instruments with low credit risk on the balance sheet date, the Company assumes that thecredit risk has not increased significantly since the initial recognition, and chooses to measure the loss provisionaccording to the expected credit loss in the next 12 months.For the financial assets in the first and second stages and with low credit risk, the Company calculates theinterest income according to the book balance without deducting the impairment provision and the actualinterest rate. For the financial assets in the third stage, the interest income shall be calculated according to thebook balance minus the amortized cost and the actual interest rate after the impairment provision has beenaccrued.

(2) Financial asset with impairment

When the Company anticipates that one or more events that have an adverse effect on the future cash flowof a financial asset occur, the financial asset becomes a financial asset with credit impairment. Evidence ofcredit impairment of financial assets includes the following observable information:

A. The issuer or the debtor has major financial difficulties;B. The debtor has breached the contract, such as default or overdue payment of interest or principal;C. The creditor makes concessions to the debtor that it will not make under any other circumstances due toeconomic or contractual considerations related to its financial difficulties;D. The debtor is likely to go bankrupt or carry out other financial restructuring;E. The financial difficulties of the issuer or debtor lead to the disappearance of the active market of the financialasset;F. A financial asset is purchased or originated at a large discount, which reflects the fact that credit loss hasoccurred.

Credit impairment of financial assets may be caused by the joint action of multiple events, not necessarilyby an event that can be identified separately.

(3) Financial assets with credit impairment purchased or originated

For the purchased or originated financial assets with credit impairment, the Company only recognizes thecumulative change of expected credit loss in the whole duration after initial recognition as loss provision on thebalance sheet date. On each balance sheet date, the change amount of expected credit loss during the wholeduration is included in the current profits and losses as impairment loss or gain. Even if the expected credit lossdetermined on the balance sheet date is less than the amount of the expected credit loss reflected by theestimated cash flow at the time of initial recognition, the favorable change of expected credit loss will berecognized as impairment gain.

(4) Criteria for judging significant increase in credit risk

If the default probability of a financial asset in the estimated duration determined on the balance sheet dateis significantly higher than that in the estimated duration determined at the initial recognition, it indicates thatthe credit risk of the financial asset is significantly increased. Except in special circumstances, the Companyuses the change of default risk in the next 12 months as a reasonable estimate of the change in default risk in thewhole duration to determine whether the credit risk has increased significantly since the initial recognition.

(5) Method of evaluating the expected credit loss of financial assets

The Company evaluates the expected credit loss of financial assets based on individual and combineditems. It individually evaluates the credit risk of financial assets with significantly different credit risks, such as:

receivables from related parties; accounts receivable from government agencies and units; and receivables withobvious signs that the debtor is likely to be unable to fulfill the repayment obligations.

Except for financial assets whose credit risks are individually evaluated, the Company divides financialassets into different groups based on common risk characteristics, and evaluates the credit risks on the basis ofcombination.

(6) Accounting treatment method for impairment of financial assets

The Company calculates the expected credit losses of various financial assets on the balance sheet date,and the resulting increase or reversal amount of loss provision is included in the current profits and losses asimpairment losses or gains.

If the Company actually suffers from credit losses, and the relevant financial assets are determined to beirrecoverable and approved for write-off, the book balance of the financial assets will be directly written down.If the financial assets written down are recovered later, they will be included in the current profits and losses ofrecovery as the reversal of impairment losses.

7. Financial guarantee contract

A financial guarantee contract refers to a contract in which the issuer pays a certain amount to the contractholder who has suffered losses when the debtor fails to repay the debt according to the original or revised termsof the debt instrument at maturity. The financial guarantee contract shall be measured at fair value upon initialrecognition. For the financial guarantee contract for a financial liability not designated as being measured at fairvalue with changes included into the current profits and losses, after the initial recognition, subsequentmeasurement shall be made according to the higher of the expected credit loss provision amount determined onthe balance sheet date and the balance of the initial recognition amount after deducting the accumulatedamortization amount determined according to the income recognition principle.

8. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are listed separately in the balance sheet without mutual offset.However, if the following conditions are met at the same time, the net amount after mutual offset shall be listedin the balance sheet:

(1) The Company has the legal right to offset the recognized financial assets and financial liabilities, and suchlegal right is now enforceable;

(2) The Company plans to settle accounts by netting, or realize the financial assets and pay off the financialliabilities at the same time.

9. Equity instruments

Equity instruments refer to contracts that can prove that the Company has residual interests in assets afterdeducting all liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equityinstruments by the Company are treated as changes in equity. The Company does not recognize changes in thefair value of equity instruments. Transaction costs related to equity transactions are deducted from equity.Various distributions (excluding stock dividends) made by the Company to holders of equity instrumentsare used as profit distribution to reduce the owners' equity. The stock dividends distributed do not affect thetotal owners' equity.The Company shall comply with the disclosure requirement of jewelry-related industries in the “ShenzhenStock Exchange Self-Regulatory Guidelines for Listed Companies No. 3- Industry Disclosure”

12. Note receivable

The Company measures the loss provision for notes receivable according to the expected credit lossamount of the whole duration.

Except for the notes receivable whose credit risk is evaluated individually, the Company divides the notesreceivable into different portfolios based on the credit risk of their acceptors as a common risk characteristic,and calculates the expected credit loss on the basis of the portfolios. The basis for determining the portfolios isas follows:

The Company individually tests the impairment of the notes receivable with objective evidence and othernotes that are suitable for individual evaluation, recognizes the expected credit loss, and calculates theindividual impairment provision.

13. Account receivable

The CBC adopts the simplified model of expected credit loss for accounts receivables specified in “AccountingStandards for Business Enterprises No.14 - Revenue” and without containing significant financing components(including the case that the financing components in contracts that do not exceed one year are not consideredaccording to the standards), that is, always measures their loss provisions according to the amount of expected

credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision isincluded in the current profit and loss as an impairment loss or gain.Based on common risk characteristics, the Company divides accounts receivable into different groupsaccording to common credit risk characteristics such as customer categories:

(1) Individual identification portfolio: For receivables with an ending balance of more than RMB 5 million(including RMB 5 million), or accounts receivable with insignificant individual amount but high risk,impairment test shall be conducted separately for each customer. Impairment test shall be conducted separatelyfor accounts receivable with objective evidence indicating impairment and other accounts receivable applicableto individual evaluation (such as accounts receivable in dispute with the other party or involving litigation andarbitration; accounts receivable with obvious signs that the debtor is likely to be unable to fulfill the repaymentobligations, etc.), to recognize expected credit loss and calculate individual impairment provision.

(2) Aging portfolio: For accounts receivable that have not been impaired after individual testing or whoseindividual amount is not significant but with low risk, the Company evaluates the expected credit loss of variousaccounts receivable based on the actual loss rate of the same or similar accounts receivable portfolio withsimilar credit risk characteristics in previous years. The Company determines the aging of accounts receivablebased on the period from the entry date to the balance sheet date.

(3) Associated portfolio: Unless there is conclusive evidence indicating an impairment, the accounts receivableformed between related parties shall not be accrued for bad debt provision.

14. Receivable financing

Receivable financing reflects notes receivable and accounts receivable that are measured at fair value onthe balance sheet date with changes included in other comprehensive income. For the accounting treatmentmethod, please refer to the related treatment of the financial assets measured at fair value with changes includedin other comprehensive income classified in Item (XI) Financial Instrument of this accounting policy.

15. Other account receivable

Determination method and accounting treatment of the expected credit loss of other account receivable

For other receivables, the expected credit loss is determined according to historical data and forward-looking information. Based on whether the credit risk of other receivables has increased significantly since the

initial recognition, the Company adopts the amount equivalent to the expected credit loss in the next 12 monthsor the whole duration to measure the impairment loss. For specific accounting treatment methods, please referto Item (XIII) Accounts Receivable of this accounting policy.

16. Contractual assets

Contract assets refer to the right that the Company has transferred the goods to customers and has the rightto receive consideration, and such right depends on other factors besides the passage of time.

17. Inventory

The Company shall comply with the disclosure requirement of jewelry-related industries in the “ShenzhenStock Exchange Self-Regulatory Guidelines for Listed Companies No. 3- Industry Disclosure”

(1) Classification of inventory

The CBC classifies the inventory into raw materials, goods in process, goods on hand, wrap page, low valueconsumables, materials for consigned processing and goods sold, etc.

(2) Valuation of inventories

Inventories are initially measured at cost upon acquisition, which includes procurement costs, processing costsand other costs. Cost of the inventory issued is carried forward on the basis of a combination of the weightedaverage method and specific identification when inventories are issued.

(3)Inventory system

Perpetual inventory system is adopted.

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

"One-time amortization method" is adopted for accounting.

(5) Provision for inventory impairment

When a comprehensive count of inventories is done at the end of the period, provision for inventory impairment isallocated or adjusted using the lower of the cost of inventory and the net realizable value. The net realizable valueof stock in inventory (including finished products, goods in stock and materials for sale) that can be sold directlyis determined using the estimated saleable price of such inventory deducted by the cost of sales and relevanttaxation over the course of ordinary production and operation. The net realizable value of material in inventorythat requires processing is determined using the estimated saleable price of the finished product deducted by thecost to completion, estimated cost of sales and relevant taxation over the course of ordinary production andoperation. The net realizable value of inventory held for performance of sales contract or labor service contract isdetermined based on the contractual price; in case the amount of inventory held exceeds the contractual amount,the net realizable value of the excess portion of inventory is calculated using the normal saleable price.Provision for impairment is made according to individual items of inventories at the end of the period; however,for inventories with large quantity and low unit price, the provision is made by categories; inventories of productsthat are produced and sold in the same region or with the same or similar purpose or usage and are difficult to bemeasured separately are combined for provision for impairment.If the factors causing a previous write-off of inventory value has disappeared, the amount written-off is reversedand the amount provided for inventory impairment is reversed and recognized in profit or loss for the period.

During the reporting period, the specific methods and implementation of the Company's inventoryimpairment measurement are as follows:

(1) Inventory impairment method

The issuer's inventory mainly includes raw materials, inventory goods and materials commissioned forprocessing. The ending inventory of the Company is measured according to the lower of cost and net realizablevalue. When the net realizable value is lower than the cost, the inventory depreciation provision is accrued.

①Specific methods for measuring the impairment of raw materials

Raw materials mainly include gold and diamond raw materials. The closing net realizable value of goldraw materials is determined according to the closing price of spot gold trading announced by Shanghai GoldExchange at the end of the period. For the part with the book cost higher than the closing net realizable value,inventory depreciation provision is accrued; Diamond raw materials are used for processing finished diamondinlaid products, but the finished diamond inlaid products are with great difference. At the end of the year, theCompany will comprehensively judge whether there are signs of impairment based on the price fluctuation ofdiamonds in that year, processing rates and pricing policies, and if there are signs of impairment, it will measurethe impairment one by one.

② Specific methods for measuring the impairment of inventory goods

Inventory goods mainly include finished gold products, finished K-gold products and finished inlaidproducts. The depreciation of finished gold products and finished K-gold products shall be measured one by one,and the closing net realizable value shall be determined by referring to the sales outbound price at the end of theperiod after deducting the relevant sales expenses and taxes. For finished products whose closing book cost ishigher than the net realizable value, the inventory depreciation provision shall be accrued. The finished inlaidproducts are quite different. At the end of the period, the Company will comprehensively judge whether thereare signs of impairment according to the price fluctuation of diamonds in that year and the pricing policy. Ifthere are signs of impairment, the impairment will be measured one by one.

③ Specific methods for measuring the impairment of materials commissioned for processing

Materials commissioned for processing mainly include gold and diamond raw materials, which are similarin nature to raw materials, so the measurement method is consistent with that of raw materials.

18. Assets held for sale

1. Basis for classification as non-current assets held for sale or disposal group

If the book value of an non-current asset is recovered mainly through sales (including the exchange ofnon-monetary assets with commercial substance) rather than continuous use or disposal group, the Companywill classify it as held for sale. The specific standard is to meet the following conditions at the same time:

(1) According to the practice of sales of such assets or disposal groups in similar transactions, they can besold immediately under the current situation;

(2) The Company has made a resolution on a sale plan and obtained a firm purchase commitment. It isexpected that the sale will be completed within one year (if the relevant regulations require the approval of therelevant authority or regulatory department of the Company before the sale, such approval has been obtained).

If the control right of the subsidiary is lost due to the sale of the investment in the subsidiary, regardless ofwhether part of the equity investment is retained after the sale and the conditions for classification of the held-for-sale category are met, the investment in the subsidiary as a whole will be classified as held-for-sale categoryin the individual financial statements of the parent company, and all assets and liabilities of the subsidiary willbe classified as held-for-sale category in the consolidated financial statements.

2. Accounting treatment of non-current assets or disposal groups held for sale

When the Company initially measures or re-measures the non-current assets or disposal groups held forsale on the balance sheet date, if the book value is higher than the net amount of fair value minus the sale

expenses, the book value will be written down to the net amount of fair value minus the sale expenses, and thewritten-down amount will be recognized as asset impairment loss and included in the current profits and losses,and impairment provision of assets held for sale will be accrued at the same time. If the net amount of the fairvalue of non-current assets held for sale on the subsequent balance sheet date is increased after deducting thesale expenses, the previously written-down amount will be restored and reversed within the amount of assetimpairment loss recognized after being classified as held for sale, and the reversed amount will be included inthe current profits and losses. Assets impairment losses recognized before being classified as held for sale shallnot be reversed.

For the amount of asset impairment loss recognized by the disposal group held for sale, the book value ofgoodwill in the disposal group shall be deducted first, and then the book value of non-current assets in thedisposal group shall be deducted proportionally according to the proportion of the book value of non-currentassets in the disposal group. For the subsequent reversal amount of asset impairment losses recognized by thedisposal group held for sale, the book value will be increased in proportion according to the proportion of thebook value of non-current assets except goodwill in the disposal group.Non-current assets held for sale or non-current assets in disposal group are not depreciated or amortized,and interest and other expenses of liabilities in disposal group held for sale continue to be recognized.When the Company derecognizes the non-current assets held for sale or disposal groups, the unrecognizedgains or losses will be included in the current profits and losses.When non-current assets or disposal groups are no longer classified as held for sale because they nolonger meet the classification conditions of held for sale, or non-current assets are removed from the disposalgroups held for sale, the measurement shall be based on the lower of the following two amounts:

(1) For the book value before being classified as held for sale, the adjusted amount based on depreciation,amortization or impairment that should have been recognized if it is not classified as held for sale;

(2) Recoverable amount.

3. Determination standard and presentation method of discontinued operation

Discontinued operations refers to a component that meets any of the following conditions and can bedistinguished separately and has been disposed of by the Company or classified as a component held for sale:

(1) This component represents an independent main business or a single main business area;

(2) This component is part of an associated plan to dispose of an independent main business or a separatemain business area;

(3) This component is a subsidiary acquired exclusively for resale.

For the discontinued operation listed in the current period, the Company separately lists the profit and lossof continuing operation and the profit and loss of discontinued operation in the current income statement, andre-lists the information originally listed as the profit and loss of continuing operation as the profit and loss ofdiscontinued operation in comparable accounting period in the income statement of the comparative period.

19. Debt investment

For debt investment, the Company determines the expected credit loss on each balance sheet dateaccording to the types of counterparties and risk exposures and in consideration of historical default andindustry forward-looking information or various external actual and expected economic information. For thedetermination method and accounting treatment method of expected credit loss, please refer to the provisions ofItem (XI) Financial Instruments of this accounting policy.

20. Other debt investment

For Other debt investment, the Company determines the expected credit loss on each balance sheet dateaccording to the types of counterparties and risk exposures and in consideration of historical default andindustry forward-looking information or various external actual and expected economic information. For thedetermination method and accounting treatment method of expected credit loss, please refer to the provisions ofItem (XI) Financial Instruments of this accounting policy.

21. Long-term account receivable

The Company's long-term receivables include receivable financial lease and other long-term receivables.

For the receivable financial lease formed by the transactions regulated in Accounting Standards forBusiness Enterprises No.21-Lease, the loss provision shall be measured according to the amount equivalent tothe expected credit loss during the whole duration.

For other long-term receivables, the Company determines the expected credit loss on each balance sheetdate according to the types of counterparties and risk exposures and in consideration of historical default andreasonable forward-looking information or various external actual and expected economic information.

Based on whether the credit risk has increased significantly since the initial recognition, the Companyadopts the amount equivalent to the expected credit loss in the next 12 months or the whole duration to measurethe impairment loss of long-term receivables. Except for the long-term receivables whose credit risk isevaluated individually, they are divided into different portfolios based on their credit risk characteristics:

22. Long-term equity investment

1. Basis for determining joint control and significant influence on the investee

Joint control refers to the common control of an arrangement according to the relevant agreement, and thatthe related activities of the arrangement must be unanimously agreed by the participants who share the controlrights before making decisions. When judging whether there is joint control, firstly, it is judged whether allparticipants or a group of participants collectively control the arrangement. If all participants or a group ofparticipants must act in concert to decide the related activities of an arrangement, it is considered that allparticipants or a group of participants collectively control the arrangement. Secondly, it is judged whether thedecision of the related activities of the arrangement must be unanimously agreed by the participants whocollectively control the arrangement, and joint control can only be formed if and only if the decision of therelated activities requires the unanimous consent of the participants who collectively control the arrangement. Ifthere are two or more participants who can collectively control an arrangement, it does not constitute jointcontrol. When judging whether there is joint control, the protective rights enjoyed are not considered.

Significant influence refers to that the investor has the right to participate in the decision-making of thefinancial and operating policies of the investee, but it cannot control or jointly control the formulation of thesepolicies with other parties. When determining whether a significant influence can be exerted on the investee,

consider the influence of the investor's direct or indirect holding of the voting shares of the investee and thepotential voting rights held by the investor and other parties in the current period after it is assumed to beconverted into the equity of the investee, including the influence of the current convertible warrants, stockoptions and convertible corporate bonds issued by the investee. When foreign investment meets the followingconditions, it is generally determined that it has a significant impact on the investing unit: ① It is represented inthe Board of Directors or similar authority of the investee; ② It participates in the formulation of the financialand business policies of the investee; ③ Important transactions with the investee occur; ④ Managementpersonnel are sent to the investee; ⑤ Key technical data is provided to the investee. When directly or indirectlyowning more than 20% but less than 50% of the voting shares of the investee, it is generally considered to havea significant impact on the investee.

2. Determination of initial investment cost

(1) Long-term equity investment formed by business merger

A. In the case of business merger under the same control, if cash payment, transfer of non-cash assets ortaking on debts and issuance of equity securities are adopted as the merger consideration, the initial investmentcost of long-term equity investment shall be the share of the book value of the owners' equity of the mergedparty in the consolidated financial statements of the final controlling party on the date of merger. If the investeeunder the same control can be controlled due to additional investment and other reasons, the initial investmentcost of long-term equity investment shall be determined according to the share of the net assets of the mergedparty in the book value of the consolidated financial statements of the final controlling party on the date ofmerger. For the difference between the initial investment cost of the long-term equity investment on the date ofmerger and the book value of the long-term equity investment before the merger plus the book value of thenewly paid consideration for the shares on the date of merger, adjust the capital premium or share capitalpremium. If the capital premium or share capital premium is insufficient to offset, the retained income will beoffset.B. For the business merger not under the same control, the merger cost shall be determined as the initialinvestment cost of long-term equity investment on the date of purchase in accordance with the relevantprovisions of the Accounting Standards for Business Enterprises No.20-Business Merger. If the investees notunder the same control can be controlled due to additional investment and other reasons, the sum of the bookvalue of the original equity investment plus the new investment cost shall be taken as the initial investment costcalculated by the cost method.

(2) In addition to the long-term equity investment formed by business merger, the initial investment costof long-term equity investment obtained by other means shall be determined in accordance with the followingprovisions:

A. For long-term equity investment obtained by paying cash, the initial investment cost shall be the actualpurchase price. The initial investment cost includes expenses, taxes and other necessary expenses directlyrelated to obtaining long-term equity investment.

B. For long-term equity investment obtained by issuing equity securities, the initial investment cost shallbe the fair value of issuing equity securities.

C. For long-term equity investment obtained by exchange of non-monetary assets, the initial investmentcost shall be determined in accordance with the Accounting Standards for Business Enterprises No.7-Exchangeof Non-monetary Assets.

D. For long-term equity investment obtained by debt restructuring, its initial investment cost shall bedetermined in accordance with the Accounting Standards for Business Enterprises No.12-Debt Restructuring.

3. Subsequent measurement and profit and loss recognition method

(1) Accounting by cost method: Long-term equity investment that can be controlled by the investee shallbe accounted by cost method. When accounting by cost method, the cost of long-term equity investment isadjusted by adding or recovering investment. For the long-term equity investment accounted by the cost method,except for the declared but undistributed cash dividends or profits included in the price or consideration actuallypaid at the time of investment, the Company shall recognize the investment income according to the cashdividends or profits declared by the investee, and no longer distinguish whether it belongs to the net profitrealized by the investee before and after the investment.

(2) Accounting by equity method: For the long-term equity investment jointly controlled or significantlyinfluenced by the investee, except for the equity investment in the associated enterprise, part of it is indirectlyheld by venture capital institutions, mutual funds, trust companies or similar entities including investment withinsurance funds, regardless of whether the above entities have a significant influence on this part of theinvestment, the Company to measure this part of the indirectly held investment at fair value with its changesincluded in profits and losses in accordance with the relevant provisions of Accounting Standards for BusinessEnterprises No.22-Recognition and Measurement of Financial Instruments, and adopts the equity method foraccounting. When accounting by equity method, after the Company obtains the long-term equity investment,the investment income and other comprehensive income are recognized respectively according to the share ofthe net profit and loss and other comprehensive income realized by the investee, and the book value of the long-term equity investment is adjusted; The Company shall calculate its share according to the profit or cashdividend declared by the investee, and correspondingly reduce the book value of long-term equity investment;The Company shall adjust the book value of the long-term equity investment and include it in the owners' equityfor other changes in the owners' equity of the investee except the net profit and loss, other comprehensiveincome and profit distribution. The Company recognizes the net loss of the investee to the extent that the bookvalue of the long-term equity investment and other long-term rights and interests that substantially constitute thenet investment of the investee are written down to zero, unless the Company has the obligation to bearadditional losses. If the investee realizes the net profit in the future, the Company will resume the recognition ofthe income share after the income share makes up for the unrecognized loss share. When recognizing the shareof the net profit and loss of the investee, the Company will adjust the net profit of the investee based on the fairvalue of the identifiable assets of the investee at the time of investment, and offset the gains and losses ofinternal transactions between the Company and associated enterprises and joint ventures, and recognize theinvestment profit and loss on this basis. The internal transaction losses between the Company and the investeeshall be recognized in full if they belong to asset impairment losses according to the Accounting Standards forBusiness Enterprises No.8-Asset Impairment. If the accounting policies and accounting periods adopted by theinvestee are inconsistent with those of the Company, the financial statements of the investee shall be adjustedaccording to the accounting policies and accounting periods of the Company, so as to recognize the investmentprofits and losses.

Long-term equity investments in associated enterprises and joint ventures held before the first executiondate, if there is any debit difference of equity investments related to the investment, shall be amortized by theoriginal remaining term straight-line method, and the amortized amount shall be included in the current profitsand losses.

(3) When disposing of long-term equity investment, the difference between its book value and the actualpurchase price is included in the current profits and losses. If the long-term equity investment accounted byequity method is included in the owners' equity due to other changes in the owners' equity of the investee exceptthe net profit and loss, the part originally included in the owners' equity will be transferred to the current profits

and losses in proportion when disposing of the investment, except for other comprehensive income arising fromthe investee's re-measurement of the changes in defined benefit plan net liabilities or net assets.

23. Investment real estate

Measurement modeMeasured by cost methodDepreciation or amortization methodInvestment real estate refers to real estate held to earn rent or capital appreciation, or both. It includesleased land use rights, land use rights held and ready to be transferred after appreciation, and leased buildings.When the Company can obtain rental income or value-added income related to investment real estate and thecost of investment real estate can be measured reliably, the Company will initially measure it according to theactual expenditure of purchase or construction.The Company adopts the cost model to measure the investment real estate on the balance sheet date.Under the cost model, the Company measures the investment real estate and makes depreciation or amortizationin accordance with the provisions of Item (23) Fixed Assets and Item (26) Intangible Assets of this accountingpolicy. When the investment real estate is disposed of, or permanently withdrawn from use, and it is notexpected to obtain economic benefits from its disposal, the recognition of the investment real estate shall beterminated. When the Company sells, transfers, scraps or damages the investment real estate, the amount ofdisposal income after deducting its book value and relevant taxes shall be included in the current profits andlosses.

24. Fixed assets

(1) Recognition conditions

Fixed assets refer to tangible assets with a service life of more than one fiscal year, which are held forproducing goods, providing labor services, leasing or managing.

(2) Depreciation methods

25. Construction in progress

The construction in progress is measured according to the actual cost, which includes all necessary projectexpenditures incurred during the construction period, borrowing costs that should be capitalized before theproject reaches the scheduled serviceable state, and other related expenses.Construction in progress is carried forward to fixed assets when it reaches the scheduled serviceable state.The criteria for scheduled serviceable state shall meet one of the following conditions:

(1) The physical construction (including installation) or production of fixed assets has been completely orsubstantially completed;

(2) It has been put into trial production or trial operation, and the results show that the assets can normallyproduce qualified products, or the trial operation results show that it can operate or operate properly;

(3) The amount of expenditure that continues to occur on fixed assets purchased, constructed or produced isvery small or almost none;

(4) The fixed assets purchased, constructed or produced have reached the design or contract requirements, orare basically in line with the design or contract requirements.

26. Borrowing expenses

1. Recognition principle of capitalization of borrowing costs

Borrowing costs include interest incurred by borrowing, amortization of discount or premium andauxiliary expenses, as well as exchange difference incurred by borrowing in foreign currency. If the borrowingcosts incurred by the Company can be directly attributed to the purchase, construction or production of assetsthat meet the capitalization conditions, they shall be capitalized and included in the cost of relevant assets;Other borrowing costs shall be recognized as expenses when incurred according to the amount incurred, andincluded in the current profits and losses.

Assets eligible for capitalization include fixed assets, investment real estate, inventory and other assetsthat need to go through a long period of purchase, construction or production activities to reach thepredetermined serviceable or saleable state.

Borrowing costs shall be capitalized when the following conditions are met at the same time:

(1) Asset expenditure has occurred, including the expenditure occurred in the form of paying cash, transferringnon-cash assets or undertaking interest-bearing debts for purchasing, constructing or producing assets that meetcapitalization conditions;

(2) Borrowing costs have been incurred;

(3) The purchase, construction or production activities necessary to make the assets reach the expectedserviceable or saleable state have started.

2. Period of capitalization of borrowing costs

Borrowing expenses incurred for purchasing, constructing or producing assets that meet the capitalizationconditions, if they meet the above capitalization conditions and occur before the assets reach the predeterminedserviceable or saleable state, shall be included in the cost of the assets; If the purchase, construction orproduction activities of the assets are abnormally interrupted for more than 3 months, the capitalization ofborrowing costs shall be suspended and recognized as current expenses until the purchase, construction orproduction activities of the assets resume; When the purchased, constructed or produced assets reach thepredetermined serviceable or saleable state, the capitalization of their borrowing costs will be stopped.Borrowing costs incurred after reaching the intended serviceable or saleable state are directly included infinancial expenses in the current period.

3. Calculation method of capitalized amount of borrowing costs

During the capitalization period, the capitalization amount of interest (including amortization of discountor premium) in each accounting period shall be determined in accordance with the following provisions:

(1) Where a special borrowing is borrowed for the purpose of purchasing, constructing or producing assets thatmeet the capitalization conditions, it shall be determined by the actual interest expenses incurred in the currentperiod of the special borrowing, minus the interest income obtained by depositing unused borrowing funds inthe bank or the investment income obtained by temporary investment.

(2) If the general borrowing is occupied for the purpose of purchasing, constructing or producing assets thatmeet the capitalization conditions, the interest amount that should be capitalized on the general loan shall becalculated and determined according to the weighted mean of the accumulated asset expenditure exceeding thespecial borrowing portion multiplied by the capitalization rate of the occupied general borrowing.

27. Biological assets

None

28. Oil and gas asset

None

29. Intangible assets

(1) Service life and its determination basis, estimation, amortization method or review procedure

1. Service life and its determination basis, estimation, amortization method or review procedure

Intangible assets are measured at actual cost. The cost of outsourced intangible assets includes thepurchase price, relevant taxes, and other expenses directly attributable to making the assets reach the intendeduse. If intangible assets are purchased by installment, and the purchase price of intangible assets exceeds the

normal credit conditions and actually with financing nature, the cost of intangible assets is the present value ofthe purchase price. The cost of intangible assets invested by investors shall be determined according to the valueagreed in the investment contract or agreement. If the value agreed in the investment contract or agreement isunfair, it shall be recorded according to the fair value of intangible assets. For intangible assets obtained byexchange of non-monetary assets, the initial investment cost shall be determined in accordance with theAccounting Standards for Business Enterprises No.7-Exchange of Non-monetary Assets. For intangible assetsobtained by debt restructuring, its initial investment cost shall be determined in accordance with the AccountingStandards for Business Enterprises No.12-Debt Restructuring. For intangible assets acquired by merger ofenterprises under the same control, their entry value shall be determined according to the book value of themerged party; For intangible assets acquired by merger of enterprises not under the same control, their entryvalue shall be determined at the fair value.The Company analyzes and judges the service life of intangible assets when acquiring them, and dividesthem into intangible assets with limited service life and intangible assets with uncertain service life. Intangibleassets with limited service life shall be amortized within the expected service life by adopting the amortizationmethod that can reflect the expected realization mode of economic benefits related to such assets from the timewhen the intangible assets are available for use; If the expected realization mode cannot be reliably determined,straight-line amortization method shall be adopted.

Amortization method, service life, determination basis and residual rate of various intangible assets withlimited service life:

At the end of each year, the Company reviews the service life and amortization method of intangibleassets with limited service life. If the service life and amortization method of intangible assets are different fromthose previously estimated, the amortization period and amortization method shall be changed.

The Company regards intangible assets with unpredictable future economic benefits as intangible assetswith uncertain service life, and does not amortize intangible assets with uncertain service life. The Company

reviews the service life of intangible assets with uncertain service life in each accounting period. If there isevidence that the service life of intangible assets is limited, its service life shall be estimate and treatment shallbe carried out according to the above provisions.Please refer to Item (27) Impairment of Long-term Assets in this accounting policy for details on theimpairment test method and accrual method for impairment provision of intangible assets.

(2) Collection scope of R&D expenditure and related accounting treatment methodsR&D expenditure is directly related to R&D activities of the enterprise, including R&D employeecompensation, direct input expenses, depreciation expenses and long-term deferred expenses, design expenses,equipment debugging expenses, intangible assets amortization expenses, commissioned external R&D expenses,and other expenses. The collection and calculation of R&D expenditure is based on the fact that relevantresources are actually invested in R&D activities. R&D expenditure includes expensed R&D expenditure andcapitalized development expenditure.

The division standard of research stage expenditure and development stage expenditure of R&D projects:

Research stage expenditure refers to the expenditure incurred by original planned investigation for acquiringand understanding new scientific or technical knowledge; Development stage expenditure refers to theexpenditure incurred by applying research results or other knowledge to a plan or design to produce new orsubstantially improved materials, devices and products before commercial production or use.

Expenditures of intangible assets developed by the Company itself during the research stage of R&Dprojects are included in the current profits and losses when incurred. Expenditure in the development stage ofthe development project can only be recognized as intangible assets if the following conditions are met at thesame time:

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

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

(3) For the ways in which intangible assets generate economic benefits, including the ability to prove that theproducts produced by using the intangible assets exist in the market or the intangible assets themselves exist inthe market, if the intangible assets will be used internally, their usefulness shall be proved;

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

(5) Expenditure attributable to the development stage of the intangible assets can be reliably measured.The expenditure in the development stage that has been expensed in the previous period is no longer adjusted.

30. Impairment of long-term assets

None

31. Long-term expenses to be apportioned

Long-term deferred expenses refer to the expenses that have been incurred by the Company but should beborne by the current period and subsequent periods with an amortization period of more than 1 year, includingthe improvement expenses of fixed assets rented by operating lease. Long-term deferred expenses shall beamortized evenly during the benefit period of relevant projects.

32. Contractual liability

Contractual liabilities reflect the Company's obligation to transfer goods to customers for received orreceivable consideration from customers. If the customer has paid the contract consideration or the Companyhas obtained the unconditional right to receive the contract consideration before the Company transfers thegoods to the customer, the contractual liabilities shall be recognized according to the amount received orreceivable when the customer actually issues the payment or the payment is due, whichever is earlier.

Contract assets and contractual liabilities under the same contract are listed on a net basis, and contractassets and contractual liabilities under different contracts are not offset.

33. Employee compensation

(1) Accounting treatment for short-term compensation

Short-term salary refers to the employee's salary that the Company needs to pay in full within 12 monthsafter the end of the annual report period when employees provide relevant services, except post-employmentbenefits and dismissal benefits. During the accounting period when employees provide services, the Companyrecognizes the actual short-term salary as a liability, and includes it into relevant asset costs and expensesaccording to the beneficiaries of employees' services.

(2) Accounting treatment for post-employment benefit

Post-employment benefits refer to various forms of remuneration and benefits provided by the Companyafter employees retire or terminate labor relations with the Company in order to obtain services provided byemployees, except short-term remuneration and dismissal benefits. Post-employment benefit plans includedefined contribution plan and defined benefit plans. Defined contribution plan refers to the post-employmentbenefit plan in which the Company will not undertake further payment obligations after paying a fixed fee foran independent fund; Defined benefit plan refers to the post-employment benefit plan except the definedcontribution plan.

(1) Defined contribution plan

Defined contribution plan includes basic old-age insurance and unemployment insurance. During theaccounting period when employees provide services for the Company, the amount payable shall be calculatedaccording to the local payment base and proportion, recognized as liabilities, and included in the current profitsand losses or related asset costs.During the accounting period when employees provide services, the amount payable calculated accordingto the defined contribution plan is recognized as a liability and included in the current profits and losses orrelated asset costs.

(2) Defined benefit plan

According to the formula determined by the expected cumulative benefit unit method, the Companyattributes the benefit obligations generated by defined benefit plan to the period when employees providedservices, and includes them in the current profits and losses or related asset costs. The employee compensationcost caused by defined benefit plan of the Company includes the following components:

A. Service costs, including current service costs, past service costs and settlement gains or losses. Currentservice costs refer to the increase in the present value of defined benefit plan obligations caused by employees'provision of services in the current period; Past service costs refer to the increase or decrease of the presentvalue of defined benefit plan obligations related to employee service in the previous period caused by therevision of the defined benefit plan.B. Net interest of net liabilities or net assets in defined benefit plan, including the interest income of plannedassets, the interest expense of defined benefit plan obligations and the interest affected by the asset ceiling.C. Changes arising from re-measurement of net liabilities or net assets in defined benefit plan.

Unless other accounting standards require or allow employee benefit costs to be included in the asset costs,the Company will include the above items A and B in the current profits and losses, and include Item C in othercomprehensive income which will not be transferred back to profit or loss in subsequent accounting periods, butthese amounts recognized in other comprehensive income can be transferred within the scope of equity.

(3) Accounting for retirement benefits

Dismissal benefits refer to the compensation provided to employees by the Company for terminating thelabor relationship with employees before the expiration of their labor contracts or for encouraging employees tovoluntarily accept layoffs. If the Company provides dismissal benefits to employees, the employeecompensation liabilities arising from the dismissal benefits shall be recognized at the earlier of the followingtwo dates, and included in the current profits and losses: when the Company cannot unilaterally withdraw thedismissal benefits provided by the plan to terminate labor relations or the proposal to cut back; When theCompany recognizes the costs or expenses related to the reorganization involving the payment of dismissalbenefits.

(4) Accounting for other long-term employee benefits

Other long-term employee benefits refer to all employee compensation except short-term salary, post-employment benefits and dismissal benefits, including long-term paid absences, long-term disability benefitsand long-term profit sharing plans. Other long-term employee benefits provided by the Company to employees,if they meet the requirements of the defined contribution plan, shall be handled in accordance with the relevantprovisions of the defined contribution plan; For other long-term employee benefits other than the above, the netliabilities or net assets of other long-term employee benefits shall be recognized and measured according to therelevant regulations of the defined benefit plan. At the end of the reporting period, the Company attributed thebenefit obligations arising from other long-term employee benefits to the period when employees providedservices, and included them in the current profits and losses or related asset costs.

34. Accrual liability

If the Company's obligation related to contingencies meet the following conditions at the same time, itwill be recognized as a liability: (1) This obligation is the current obligation undertaken by the Company; (2)The performance of this obligation may lead to the outflow of economic benefits; (3) The amount of theobligation can be measured reliably.

All or part of the expenditures required for the estimated liabilities are expected to be compensated by thethird party or other parties, and the compensation amount is recognized as an asset separately when it isbasically determined that it can be received, and the recognized compensation amount does not exceed the bookvalue of the recognized liabilities. The estimated liabilities are initially measured according to the best estimateof the expenditure required to perform the relevant current obligations, with the factors related to contingencies,such as risks, uncertainties and time value of money, comprehensively considered. If the time value of moneyhas a significant impact, the best estimate shall be determined by discounting the relevant future cash outflows.

On the balance sheet date, the Company reviews the book value of the estimated liabilities. If there isconclusive evidence that the book value cannot truly reflect the current best estimate, such book value will beadjusted according to the current best estimate.

35. Share-based payment

1. Types of share-based payment

Share-based payment of the Company is divided into cash-settled share-based payment and equity-settledshare-based payment.

Equity-settled share-based payment shall be measured at the fair value of equity instruments granted toemployees. If it is exercisable immediately after the grant, it will be included in the relevant costs or expensesaccording to the fair value of the equity instrument on the grant date, and the capital reserve will be increased

accordingly. If it is exercisable only after the service within the waiting period is completed or the specifiedperformance conditions are met, on each balance sheet date within the waiting period, the service obtained inthe current period shall be included in the relevant costs or expenses and capital reserve based on the bestestimate of the number of exercisable equity instruments and according to the fair value on the grant date of theequity instruments. After the vesting date, the recognized related costs or expenses and the total owners' equitywill not be adjusted.

Cash-settled share-based payment shall be measured at fair value of liabilities calculated and determinedbased on shares or other equity instruments undertaken by the Company. If it is exercisable immediately afterthe grant, it will be included in the relevant costs or expenses at the fair value of the liabilities undertaken by theCompany on the grant date, and the liabilities will be increased accordingly. For cash-settled share-basedpayment exercisable after the service in the waiting period is completed or the specified performance conditionsare met, the service obtained in the current period shall be included in the costs or expenses and correspondingliabilities on each balance sheet date during the waiting period based on the best estimate of the vestingsituation and according to the fair value of the liabilities undertaken by the Company. On each balance sheetdate and settlement date before the settlement of related liabilities, the fair value of liabilities is re-measured,and its changes are included in the current profits and losses.

2. Accounting treatment related to implementation, modification and termination of share-based payment plan

No matter how the terms and conditions of the granted equity instruments are modified, or even the grantof the equity instruments is cancelled or the equity instruments are settled, the Company shall at least recognizethat the corresponding services obtained are measured according to the fair value of the granted equityinstruments on the grant date, unless the vesting conditions of the equity instruments (except market conditions)cannot be met.

If the Company cancels the granted equity instruments or settles the granted equity instruments within thewaiting period (except those cancelled due to failure to meet the conditions of vesting conditions), the treatmentis as follows:

(1) The cancellation or settlement will be treated as accelerated vesting, and the amount that should have beenrecognized in the remaining waiting period will be recognized immediately.

(2) All the money paid to employees at the time of cancellation or settlement shall be treated as the repurchaseof equity, and the part paid for repurchase that is higher than the fair value of the equity instrument on therepurchase date shall be included in the current expenses.

(3) If a new equity instrument is granted to employees, and it is determined that the new equity instrumentgranted is used to replace the cancelled equity instrument on the grant date of the new equity instrument, theCompany shall handle the granted alternative equity instrument in the same way as the modification of theterms and conditions of the original equity instrument.

36. Other financial instruments including preferred stock and perpetual bondsNone

37. Revenue

Disclosure of accounting policies adopted in income recognition and measurement according to business types

The Company has fulfilled its contractual obligations, that is, to recognize the income when the customerobtains the control right of relevant goods. Performance obligation refers to the commitment to transfer clearlydistinguishable goods to customers in the contract. The Company evaluates the contract on the contract startdate to identify each individual performance obligation contained in the contract. If the following conditions aremet at the same time, it is clearly distinguishable goods:

(1) Customers can benefit from the goods itself or from the use of the goods along with other easily availableresources;

(2) The commitment to transfer the goods to customers can be distinguished separately from othercommitments in the contract.

The following situations usually indicate that the commitment to transfer the goods to customers cannotbe distinguished separately from other commitments in the contract:

(1) Significant services need to be provided to integrate the goods and other goods promised in the contract intothe combined output agreed in the contract and transfer it to customers;

(2) The goods will make major modifications or customizations to other goods promised in the contract;

(3) The goods are highly correlated with other goods promised in the contract.

The transaction price is the amount of consideration that the Company is expected to receive fortransferring the goods to customers, excluding the payment collected on behalf of third parties and the paymentthat the Company is expected to return to customers. When determining the transaction price of the contract, ifthere is a variable consideration, the Company will determine the best estimate of the variable considerationaccording to the expected value or the most likely amount, and include it in the transaction price at an amountnot exceeding the amount that is unlikely to be significantly reversed when the relevant uncertainty iseliminated. If there is a significant financing component in the contract, the Company will determine thetransaction price according to the amount payable in cash when the customer obtains the goods control right,and the difference between the transaction price and the contract consideration will be amortized by theeffective interest rate method during the contract period. If the interval between the customer obtaining thegoods control right and the customer paying the price is less than one year, the Company will not consider thefinancing component. When the consideration that the Company has the right to collect from the customer dueto the transfer of goods is in the form of non-cash, the Company will determine the transaction price accordingto the fair value of the non-cash consideration on the contract start date. If the fair value of the non-cash

consideration cannot be reasonably estimated, the Company will indirectly determine the transaction price withreference to the individual selling price of the goods it promised to transfer to customers. For the payment thatthe Company expects to return to customers, except for obtaining other clearly distinguishable goods fromcustomers, the consideration payable shall be used to offset the transaction price. If the consideration payable tocustomers exceeds the fair value of clearly distinguishable goods obtained from customers, the excess amountshall be used as the consideration payable to customers to offset the transaction price. If the fair value of clearlydistinguishable goods obtained from customers cannot be reasonably estimated, the Company will fully offsetthe transaction price from the consideration payable to customers. When carrying out accounting treatment onthe transaction price offset by the consideration payable to customers, the Company will offset the currentincome at the later time of recognizing the relevant income and paying (or promising to pay) the customerconsideration.If the contract contains two or more performance obligations, the Company will allocate the transactionprice to each individual performance obligation according to the relative proportion of the individual sellingprice of the goods promised by each individual performance obligation on the contract start date, and measurethe income according to the transaction price allocated to each individual performance obligation. In case ofsubsequent changes in the transaction price, the Company will allocate the subsequent changes to theperformance obligations in the contract according to the basis adopted on the contract start date. The transactionprice will not be re-allocated due to the change of individual selling price after the contract start date.If any of the following conditions is met, the Company will perform its obligations within a certain periodof time; Otherwise, it is a fulfillment of performance obligation at a certain time point:

(1) Customers gain and consume the economic benefits brought by the Company's performance at the sametime;

(2) Customers can control the goods under construction during the performance of the Company;

(3) The goods produced during the performance of the Company have irreplaceable uses, and the Company hasthe right to collect payment for the accumulated part of the performance completed so far during the wholecontract period.

For the performance obligations performed in a certain period of time, the Company shall recognize theincome according to the performance progress during that period, except that the performance progress cannotbe reasonably determined. The Company determines the performance progress of provided services accordingto the input method. When the performance progress cannot be reasonably recognized, if the cost alreadyincurred by the Company is expected to be compensated, the revenue will be recognized according to the costamount already incurred until the performance progress can be reasonably recognized.For the performance obligations fulfilled at a certain time point, the Company recognizes the incomewhen the customer obtains the control right of relevant goods. When judging whether the customer has obtainedthe control of the goods, the Company will consider the following signs:

(1) The Company is entitled to the right of real time payment collection for the goods, that is, the customer hasthe real time payment collection obligation for the goods;

(2) The Company has transferred the legal ownership of the goods to the customer, that is, the customer has thelegal ownership of the goods;

(3) The Company has transferred the goods in kind to the customer, that is, the customer has occupied thegoods in kind;

(4) The Company has transferred the main risks and rewards on the ownership of the goods to the customer,that is, the customer has obtained the main risks and rewards on the ownership of the goods;

(5) The customer has accepted the goods.

According to whether the Company has control over the goods or services before transferring them tocustomers, the Company judges whether it is the main responsible person or the agent when engaging intransactions. If the Company can control the goods or services before transferring them to customers, theCompany is the main responsible person, and the income is recognized according to the total considerationreceived or receivable; Otherwise, the Company is an agent, and will recognize the income according to theexpected amount of commission or handling fee, which is determined according to the net amount of the totalconsideration received or receivable after deducting the price payable to other interested parties, or according tothe established commission amount or proportion.The situations in which the Company can control the goods before transferring them to customers includethe following:

(1) The enterprise transfers the control right of goods or other assets to the customer after it obtains it from athird party;

(2) The enterprise can lead the third party to provide services to customers on behalf of the enterprise;

(3) After the enterprise obtains the control right of the goods from the third party, it integrates the goods withother goods into a combined output and transfers it to the customer by providing significant services.

When judging whether it has control over the goods before transferring them to customers, the Companycomprehensively considers all relevant facts and circumstances, including:

(1) The enterprise bears the main responsibility for transferring goods to customers;

(2) The enterprise bears the inventory risk of the goods before or after their transfer;

(3) The enterprise has the right to decide the prices of the goods for trade independently;

(4) Other relevant facts and circumstances.

Different income recognition methods and measurement methods involved in different business models adoptedby similar businesses

The Company's commodity sales mainly include circulation sales, shopping mall joint operation andproprietary e-commerce, and the recognition methods of sales revenuethese three ways are as follows:

(1) Circulation sales refers to that the Company recognizes the sales revenue when the goods are delivered tothe customer and the authorized representative or the first carrier recognized by the customer at the designatedplace, and the customer and the authorized representative or the first carrier have signed for it, and the Companyhas received the payment or obtained delivery documents.

(2) The shopping mall joint operation is the Company cooperates with the shopping mall to carry out joint salesin the form of counters in the shopping mall, and according to the agreement signed with the shopping mall, theshopping mall collects the payment when the Company's counters sell goods to customers, and the Companyand the shopping mall carry out sales settlement. The shopping mall pays the Company after reconciling withthe Company at the agreed settlement time (generally the next month) and deducting the income and relatedexpenses enjoyed by the shopping mall. The Company recognizes the sales revenue after deducting thededuction profit belonging to the shopping mall according to the full amount of the completed transaction ofactual sales in the month.

(3) Proprietary e-commerce refers to that the Company retails through third-party e-commerce platforms (suchas Tmall and JD.COM), and recognizes the sales revenue when the customer signs for the goods and obtains thepayment or payment right.

38.Contract cost

Contract costs include incremental costs incurred in obtaining contract and contract performance costs.The incremental costs incurred to obtain the contract refer to the costs that the Company would not haveincurred if the contract had not been obtained (e.g., sales commission, etc.). If the cost is expected to berecovered, the Company recognizes it as an asset for the costs of acquiring the contract. Expenses incurred bythe Company in obtaining the contract, other than the incremental costs that are expected to be recovered, areincluded in profit or loss for the current period when incurred.If the costs incurred for the performance of the contract are not subject to the scope of the relevantstandards such as inventory, fixed assets or intangible assets, and the following conditions are met at the sametime, the Company recognizes them as an asset for contract performance costs:

(1) the cost is directly related to a current or an anticipated contract, including direct labor, direct materials,manufacturing expenses (or similar expenses), costs expressly borne by the customer and other costs incurredsolely as a result of the contract;

(2) the cost increases the resources that the enterprise will use to fulfill its performance obligations in the future;

(3) the cost is expected to be recovered.

The asset as recognized by the cost of acquiring the contract and the asset as recognized by the cost ofperformance of the contract are amortized on the same basis as the revenue recognition of the goods or servicesrelated to the assets, and are included in profit or loss for the current period.If the carrying amount of an asset related to the contract cost is higher than the following two differences,the Company shall make an impairment provision for the excess and recognize it as an asset impairment loss:

(1) The residual consideration that the enterprise is expected to receive as a result of the transfer of commoditiesrelated to the asset;

(2) An estimate of the costs to be incurred for the transfer of the relevant goods.

If the factors of impairment in the previous period change subsequently, so that the difference by (1)minus (2) is higher than the carrying amount of the asset, the original provision for impairment of the asset shallbe reversed and included in the profit or loss for the current period, but the carrying amount of the reversedasset shall not exceed the carrying amount of the asset on the reversal date assuming that no provision forimpairment is made.

39. Government subsidies

1. Types of government subsidies

Government subsidies refer to the monetary assets or non-monetary assets obtained by the company fromthe government free of charge, including government subsidies related to assets and government subsidiesrelated to income.

Asset-related government subsidies refer to government subsidies obtained by a company for theacquisition, construction or other formation of long-term assets.

Income-related government subsidies refer to government subsidies other than asset-related governmentsubsidies.

2. The principle and timing of recognition of government subsidies

Recognition principle of government subsidies:

(1) The company is able to meet the conditions attached by the government subsidy;

(2) The company is able to receive government subsidies.

The government subsidy can only be recognized if the above conditions are met at the same time.

3. Measurement of government subsidies

(1) If the government subsidy is a monetary asset, the company shall measure it according to the amountreceived or receivable;

(2) If the government subsidy is a non-monetary asset, the company shall measure it at fair value, and if the fairvalue cannot be reliably obtained, it shall be measured at the notional amount (the notional amount is RMB 1).

4. Accounting treatment of government subsidies

(1) Asset-related government subsidies are written off the carrying amount of the underlying assets orrecognized as deferred income upon acquisition. If it is recognized as deferred income, it shall be included inprofit or loss in installments in accordance with a reasonable and systematic method during the useful life of therelevant asset. Government subsidies measured in notional amounts are directly included in profit or loss for thecurrent period.

(2) Government subsidies related to income shall be handled as follows:

A. If it is used to compensate the company for the relevant costs, expenses or losses in subsequent periods, itshall be recognized as deferred income at the time of acquisition, and shall be included in the profit or loss forthe current period or offset the relevant costs during the period when the relevant costs, expenses or losses arerecognized.B. If it is used to compensate for the relevant costs, expenses or losses incurred by the company, it shall bedirectly included in the current profit or loss or offset the relevant costs when acquired.

(3) For government subsidies that are included in both the asset-related part and the income-related part, if theycan be distinguished, they shall be accounted for separately in different parts, and if it is difficult to distinguish,they shall be classified as income-related government subsidies as a whole.

(4) Government subsidies related to the company's routine operations shall be included in other income or offsetrelated costs and expenses according to the economic business substance. Government subsidies unrelated tothe company's routine activities are included in non-operating income and expenditure. If the financedepartment directly allocates the discount funds to the company, the company will offset the relevant borrowingcosts with the corresponding discount.

(5) If the confirmed government subsidy needs to be returned, it shall be handled according to the followingcircumstances:

A. If the carrying amount of the relevant asset is reduced at the time of initial recognition, the carryingamount of the asset shall be adjusted.

B. If there is relevant deferred income, the carrying amount of the relevant deferred income shall be writtenoff, and the excess part shall be included in the profit or loss for the current period.C. If it belongs to other circumstances, it shall be directly included in the profit or loss for the current period.

40. Deferred tax assets/deferred tax liabilities

When the company acquires assets and liabilities, it determines its tax base. If there is a temporarydifference between the carrying amount of assets and liabilities and their tax base, the deferred tax assets ordeferred tax liabilities arising from them shall be recognized in accordance with the regulations.

1. Recognition of deferred tax assets

(1) The company recognizes deferred tax assets arising from deductible temporary differences to the extent thatit is likely to obtain taxable income that can be used to offset deductible temporary differences. However,deferred tax assets arising from the initial recognition of assets or liabilities are not recognized in transactionsthat (1) is not a business combination, and (2) the transaction does not affect either accounting profits or taxableincome (or deductible losses) at the time of the transaction.

(2) The Company recognizes the corresponding deferred tax assets for deductible temporary differences relatedto investments in subsidiaries, associates and joint ventures that meet the following conditions at the same time:

(1) the temporary differences are likely to be reversed in the foreseeable future, and (2) the taxable income usedto offset the deductible temporary differences is likely to be obtained in the future.

(3) For deductible losses and tax credits that can be carried forward to subsequent years in accordance with theprovisions of the tax law, they shall be treated as deductible temporary differences, and the correspondingdeferred tax assets shall be recognized to the extent that the future taxable income that is likely to be used tooffset the deductible losses and tax credits.

2. Recognition of deferred tax liabilities

(1) The company recognizes all deferred tax liabilities arising from taxable temporary differences, except forthe deferred income tax liabilities arising from the following transactions: (1) the initial recognition of goodwill,and (2) the initial recognition of assets or liabilities arising from transactions that satisfy both the followingcharacteristics: the transaction is not a business combination, and the transaction does not affect either theaccounting profit or the taxable income (or deductible loss) at the time of the transaction.

(2) The Company recognizes the corresponding deferred tax liabilities for taxable temporary differences relatedto investments in subsidiaries, associates and joint ventures, but other than those with the following conditions

are met at the same time: (1) the investment enterprise can control the time for the reversal of the temporarydifference, and (2) the temporary difference is likely not to be reversed in the foreseeable future.

3. Presentation of net offsets of deferred tax assets and deferred tax liabilities

When the company has the legal right to settle on a net basis and intends to settle on a net basis or acquireassets and settle liabilities at the same time, the company's current income tax assets and current income taxliabilities are presented on a net basis after offset.When there is a legal right to settle the current income tax assets and current income tax liabilities on a netbasis, and the deferred tax assets and deferred tax liabilities are related to the income tax levied by the same taxcollection and administration department on the same taxpayer or levied by the same tax collection andadministration department to different tax subjects, but in each period of reversal of deferred tax assets andliabilities of material nature in the future, the taxpayer involved intends to settle the current income tax assetsand liabilities on a net basis or acquire the assets and settle liabilities at the same time, the deferred tax assetsand deferred tax liabilities of the Company are presented on a net basis after offset.

41. Leasing

(1) Accounting treatment as a lessee lease

(1) Right-of-use assets

On the commencement date of the lease term, the Company, as the lessee, recognizes the right to use the leasedasset during the lease term as right-of-use asset, except for short-term leases and leases of low-value assets.

Right-of-use assets are initially measured at cost, which includes:

A. Initial measurement amount of the lease liability;B. If there is a lease incentive for the lease payment paid on or before the start date of the lease term, therelevant amount of the lease incentive already enjoyed shall be deducted;C. Initial direct costs incurred;D. Costs expected to be incurred to dismantle and remove the leased asset, restore the site on which the leasedasset is located, or restore the leased asset to the condition agreed in the lease terms, except for the productionof inventory.

The Company adopts the cost model for the subsequent measurement of right-of-use assets, and adopts thestraight-line method for depreciation of various types of right-of-use assets.

If the Company is able to reasonably determine that the ownership of the leased assets will be acquired atthe expiration of the lease term, the depreciation shall be accrued during the remaining useful life of the leasedassets, and if it cannot be reasonably determined that the ownership of the leased assets can be acquired at theexpiration of the lease term, the depreciation shall be accrued during the period which is shorter from the leaseterm and the remaining useful life of the leased assets. If the right-of-use asset is impaired, the Company willcarry out subsequent depreciation based on the carrying amount of the right-of-use asset after deducting theimpairment loss.When the Company remeasures lease liabilities based on the present value of the changed lease paymentsand adjusts the carrying amount of right-of-use assets accordingly, if the carrying amount of right-of-use assetshas been reduced to zero, but the lease liabilities still need to be further reduced, the remaining amount will beincluded in profit or loss for the current period.

The impairment test method and impairment provision method of right-of-use assets are detailed in(XXVII) Impairment of long-term assets of this accounting policy.

(2) Lease liabilities

At the commencement date of the lease term, the Company recognizes the present value of unpaid leasepayments as lease liabilities, excluding short-term leases and leases of low-value assets.

When calculating the present value of the lease payment, the Company, as the lessee, uses the interest rateimplicit in the lease as the discount rate, and if the interest rate implicit in the lease cannot be determined, theincremental borrowing rate of the Company is used as the discount rate.

The Company calculates the interest expense of lease liabilities for each period of the lease term at a fixedperiodic interest rate and includes them in profit or loss for the current period. Variable lease payments that arenot included in the measurement of lease liabilities are recognized in profit or loss for the current period whenthey are actually incurred.

After the commencement date of the lease term, the Company will remeasure the lease liability based onthe present value of the changed lease payment in the event of a change in the amount of the substantial fixedpayment, a change in the estimated amount payable for the residual value of the guarantee, a change in theindex or ratio used to determine the amount of the lease payment, a change in the evaluation result or actualexercise of the option to purchase, renew or terminate the option.

(3) Short-term leases and leases of low-value assets

A short-term lease is a lease with a lease period of not more than 12 months on the start date of the leaseterm and does not include an option to purchase. A lease of a low-value asset refers to a lease with a low valuewhen a single leased asset is a brand-new asset. If the Company subleases or expects to sublease the leasedassets, the original lease is not a low-value asset lease.

The Company chooses not to recognize right-of-use assets and lease liabilities for short-term leases andleases of low-value assets, and to include the relevant lease payments in profit or loss or the cost of relatedassets on a straight-line basis for each period of the lease term.

（2） Accounting treatment as a lessor's lease

On the lease commencement date, the Company divides the lease into the finance lease and the operatinglease. A financial lease refers to a lease that substantially transfers almost all of the risks and rewards associatedwith the ownership of the leased asset, regardless of whether the ownership is ultimately transferred. Operatingleases refer to leases other than financial leases. When the Company acts as a subleaselessor, it classifies thesublease based on the right-of-use assets generated from the original lease.

(1) Accounting treatment of operating leases

Lease receipts from operating leases are recognized as rental income on a straight-line basis for eachperiod of the lease term. The Company capitalizes the initial direct expenses incurred in connection with theoperating lease and apportion them to profit or loss for the current period on the same basis as the rental incomerecognition during the lease term. Variable lease payments that are not included in lease receipts are recognizedin profit or loss for the current period when they are actually incurred.

(2) Accounting treatment of financial leases

On the lease commencement date, the Company recognizes the financial lease receivables for the financiallease and terminates the recognition of the financial lease assets. When the Company initially measures thefinancial lease receivables, the net lease investment is recorded as the entry value of the financial leasereceivables. The net lease investment is the sum of the unsecured residual value and the present value of leasereceipts not yet received at the start date of the lease term discounted at the interest rate implicit in the lease.

The Company calculates and recognizes interest income for each period of the lease term at a fixedperiodic interest rate. The derecognition and impairment of financial lease receivables are described in (Xl)Financial instruments of this accounting policy.

Variable lease payments that are not included in the net measurement of lease investments are recognizedin profit or loss for the period when they are actually incurred.

42. Other important accounting policy and estimation

None

43. Changes of important accounting policy and estimation

(1) Changes of important accounting policy

□Applicable ?Not applicable

(2) Changes of important accounting estimation

□Applicable ?Not applicable

（3） The Company started implementing the updated accounting standards commencing from 2025and adjusted the relevant items in the financial statements at the beginning of the very year involved inthe initial implementation of the said standards

□Applicable ?Not applicable

44.Other

NoneVI. Taxes

1. Main tax and tax rate

Disclose reasons for different taxpaying body

2. Tax preference

The subsidiaries Shenzhen Xinsen Precision Manufacturing Co., Ltd., Shenzhen Jiucheng CultureTechnology Co., Ltd., Shenzhen Jinjiucheng Intangible Cultural Heritage Inheritance Co., Ltd.,DongguanXinsen Jewelry Co., Ltd.,Shenzhen Emmelle Industrial Co., Ltd., Shenzhen Emmelle Cloud Technology Co.,Ltd., Fujian Huaxinbao Jewelry Co., Ltd., Hainan Shenhua Industrial Co., Ltd., Shenzhen Cloud PreferredJewelry Technology Co., Ltd., Hangzhou Huabaohui Digital Culture Co., Ltd. andTibet Jinyaya Trading Co.,Ltd.. meet the conditions of "small and low-profit enterprises", and according to the regulations of No. 12[2023]announcement of the State Administration of Taxation of the Ministry of Finance "Announcement on FurtherSupporting the Development of Small and Micro Enterprises and Individual Industrial and CommercialHouseholds", for small enterprises with small profit, the income tax policy for the taxable income will bereduced to be 25% to calculate and the enterprise income tax paid at the rate of 20% will be extended untilDecember 31,2027.

3.Other

NoneVII. Notes to Items in the Consolidated Financial Statements

1. Monetary fund

In RMB

Other note：

2. Trading financial assets

None

3. Derivative financial assets

None

4. Note receivable

(1) Category

Not applicable

（2） According to the bad debt provision method classification disclosure

If the provision for bad debts of notes receivable is made in accordance with the general model of expectedcredit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions:

□Applicable ?Not applicable

(3) Bad debt provision accrual, collected or reversal in the period

Accrual of bad debt provision in the period:

In RMB

Including important amount of bad debt provision collected or reversal in the period:

□Applicable ?Not applicable

(4) Note receivable pledged at period-end

In RMB

(5) Note receivable which have endorsed and discount at period-end and has not expired on balance sheetdate

In RMB

(6) Note receivable actually written-off in the period

In RMB

Including important note receivable written-off:

In RMB

Explanation on note receivable written-off:

5. Account receivable

（1）Disclosure according to the aging of accountBy account age

In RMB

（2） According to the bad debt provision method classification disclosure

In RMB

Bad debt provision accrual on single basis: Single identification

In RMB

Bad debt provision accrual on portfolio: Aging portfolio

In RMB

Explanation on portfolio basis:

If the provision for bad debts of account receivable is made in accordance with the general model of expected

credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions:

□Applicable?Not applicable

(3) Bad debt provision accrual, collected or reversal in the period

Accrual of bad debt provision in the period:

In RMB

Including important amount of bad debt provision collected or reversal in the period:

I n RMB

(4) Account receivables actually write-off during the reporting period

I n RMB

Including major account receivables write-off:

I n RMB

Explanation on account receivable write-off:

(5)The top five accounts receivable and contract assets at the end of the period aggregated according todebtor

In RMB

6. Contract assets

(1) Information of contract assets

In RMB

(2) The significant amount change in book value during the reporting period and its reason

In RMB

（3） According to the bad debt provision method classification disclosure

In RMB

Provision for bad debts is made according to the general model of expected credit losses

□Applicable ?Not applicable

(4) Bad debt provision accrual, collected or reversal in the period

In RMB

Thereinto, the important amount of bad debt provision recovered or reversed in the current period:

In RMB

Other note：

（5） Contract assets actually written off in the current period

In RMB

Including important Contract asset written-off:

In RMB

Write-off explanation:

Other note：

7. Receivable financing

（1） Classification of receivables financing

In RMB

（2） According to the bad debt provision method classification disclosure

In RMB

Provision for bad debts is made according to the general model of expected credit losses

In RMB

The basis for the division of each stage and the proportion of bad debt provision

Explanation of the significant changes in the book balance of receivables financing with changes in lossprovisions in the current period:

（3） Bad debt provision accrual, collected or reversal in the period

In RMB

In RMB

Other note：

（4）Financing of accounts receivable pledged by the Company at the end of the period

In RMB

（5）Financing of accounts receivable that have been endorsed or discounted by the Company at the endof the period and have not yet matured on the balance sheet date

In RMB

（6） Financing situation of accounts receivable actually written off in this period

In RMB

The write off information of important accounts receivable financing thereinto

In RMB

Write-off explanation:

(7) Changes in accounts receivable financing and fair value changes in the current period

（8）Other note

None

8. Other account receivable

In RMB

(1) Interest receivable

1) Category

In RMB

2) Important overdue interest

In RMB

Other note:

3) Accrual of bad debt provision

□Applicable ?Not applicable

4） Bad debt provision accrual, collected or reversal in the period

In RMB

Including important amount of bad debt provision collected or reversal in the period:

In RMB

Other note：

5)Interest receivable actually written off in the current period

In RMB

Important Interest receivables write-offs thereinto

In RMB

Note：

Other note：

(2) Dividend receivable

1) Category

In RMB

2) Important dividend receivable with over one year aged

In RMB

3) Accrual of bad debt provision

□Applicable ?Not applicable

4） Bad debt provision accrual, collected or reversal in the period

In RMB

reversal

Including important amount of bad debt provision collected or reversal in the period:

In RMB

Other note：

5) Dividends receivable actually written off in the current period

In RMB

Important dividend receivables write-offs thereinto

In RMB

Note：

Other note：

(3) Other Account receivable

1) By nature

In RMB

2）By account aging

In RMB

3) Accrual of bad debt provision

?Applicable □Not applicable

In RMB

Bad debt provision accrual on portfolio: Aging portfolio

In RMB

Provision for bad debts is made according to the general model of expected credit losses

In RMB

The basis for the division of each stage and the proportion of bad debt provision

Explanation of the significant changes in the book balance of receivables financing with changes in lossprovisions in the current period:

□Applicable ?Not applicable

4）Bad debt provision accrual, collected or reversal in the periodAccrual of bad debt provision in the period:

In RMB

Important amount of bad debt provision switch-back or collection in the period:

In RMB

5） Other account receivables actually write-off during the reporting period

In RMB

Including major other account receivables write-off:

In RMB

Other Note on account receivable write-off:

6） Top 5 other account receivable collected by arrears party at ending balance

In RMB

7) Reported in other receivables due to centralized management of funds

Other note：

9. Accounts paid in advance

(1) Accounts paid in advance by ageing

In RMB

Explanation on un-settlement in time for advance payment with over one year account age and major amounts:

(2) Top 5 advance payment at ending balance by prepayment object

Other note：

10. Inventory

Whether companies need to comply with the disclosure requirements of the real estate industryNo

(1) Category

In RMB

（2）Data resources recognized as inventory

In RMB

(3)Provision for inventory depreciation or contract performance cost impairment provision

In RMB

Provision for inventory price decline that is made on a portfolio basis

In RMB

The standard for accruing the provision for inventory price decline by portfolio

(4) The explanation of the ending balance of the inventory contains the capitalized amount of borrowingcosts

(5) Explanation of the amortization amount of contract performance costs for the current period

11. Assets held for sale

In RMB

Other note:

12. Non-current asset due within one year

In RMB

（1） Debt investment due within one year

□Applicable ?Not applicable

（2）Other Debt investment due within one year

□Applicable ?Not applicable

13. Other current assets

In RMB

Other note：

14. Debt investment

（1）Debt investment

In RMB

Changes in impairment provisions for debt investments in the current period

In RMB

（2） Important debt investment

In RMB

（3） Accrual of impairment provision

In RMB

The basis for the division of each stage and the proportion of bad debt provision

(4) Information of debt investment actually written off in the current period

In RMB

Information of write-off of important debt investments thereinto.Debt Investment Write-off Explanation:

Change of book balance of loss provision with amount has major changes in the period

□Applicable ?Not applicable

Other note：

15. Other debt investment

（1）Other debt investment

In RMB

Changes in provision for impairment of other debt investments in the current period

In RMB

（2） Important debt investment

In RMB

（3） Accrual of impairment provision

In RMB

The basis for the division of each stage and the proportion of bad debt provision

（4）Other debt investments actually written off during the period

In RMB

Other important debt investment write-offs thereinto:

Explanation for write-off of other debt investments:

Change of book balance of loss provision with amount has major changes in the period

□Applicable ?Not applicable

Other note：

16. Investment in other equity instrument

In RMB

Derecognition incurred in the current period

In RMB

Itemized disclosure of investments by non-trading equity instruments for the current period

In RMB

Other note：

17. Long-term account receivable

(1) Long-term account receivable

In RMB

（2） According to the bad debt provision method classification disclosure

In RMB

Provision for bad debts is made according to the general model of expected credit losses

In RMB

The basis for the division of each stage and the proportion of bad debt provision

(3) Bad debt provision accrual, collected or reversal in the period

In RMB

The important amount of bad debt provisions reversed or recovered in the current period thereinto:

In RMB

Other note：

(4)Long-term receivables actually written off in the current period

In RMB

Important long-term accounts receivable write-off status thereinto:

In RMB

Explanation of write-off of long-term receivables:

18. Long-term equity investment

In RMB

The recoverable amount is determined on the basis of the net amount of fair value less disposal costs

□Applicable ?Not applicable

The recoverable amount is determined by the present value of the projected future cash flows

□Applicable ?Not applicable

The reason for the obvious discrepancy between the foregoing information and the information used in theimpairment test of previous years or the external informationThe reason for the obvious discrepancy between the information used in the Company's impairment test inprevious years and the actual situation in the current yearOther note

19. Other non-current financial assets

In RMB

Other note：

20. Investment real estate

(1) Investment real estate measured at cost

□Applicable ?Not applicable

(2) Investment real estate measured at fair value

□Applicable ?Not applicable

(3) Converted to investment real estate and measured at fair value

In RMB

（4）Investment real estate without property rights certificate

In RMB

Other note:

21.Fixed assets

In RMB

(1) Fixed assets

In RMB