ZhejiangDahuaTechnologyCo.,Ltd.

2025Semi-AnnualReport

August16,2025

SectionIImportantNotes,TableofContents,andDefinitionsTheBoardofDirectors,BoardofSupervisors,Directors,SupervisorsandSeniorManagementherebyguaranteethattheinformationpresentedinthisreportaretrue,accurate,andcompletewithoutanyfalserecords,misleadingstatementsormaterialomissions,andtheywillbearjointandseveralliabilityforsuchinformation.

FuLiquan,theCompany'slegalrepresentative,XuQiaofen,chiefaccountant,andZhuZhuling,personinchargeofaccountinginstitution(AccountingOfficer)herebydeclareandwarrantthatthefinancialstatementsinthesemi-annualreportareauthentic,accurate,andcomplete.AlldirectorsattendedthemeetingoftheBoardofDirectorsfordeliberationofthissemiannualreport.Duringthereportingperiod,therewasnosignificantchangeintherisksfacedbytheCompany.TheCompanyhasbeentryingtoidentifyallkindsofrisksandactivelytakecounter-measurestoavoidandreducetherisks.

(1)RiskofTechnologyUpgrading:TheAIoTindustryisaprimeexampleofatechnology-intensivesector,characterizedbyrapidadvancementsandupgrades.IftheCompanyisunabletokeepupwithdevelopmenttrendsofindustrialtechnologies,topayfullattentiontocustomers'diversifiedneeds,andtodevotesufficientR&Dinvestments,itmaystillfacetheriskoflosingmarketcompetitivenessduetodiscontinuousinnovation.ByincreasingR&Dinvestment,theCompanycontinuestostrengthenresearchonsuchcoretechnologiesas

multi-dimensionalperception,largemodelinAI,videocloud,bigdata,networkcommunication,networksecurity,andmachinevision,andreservesproduct,technology,managementandtalentresourcesforabroadermarketinthefuture,soastoachievesustainableandsteadybusinessdevelopment.

(2)Riskofbusinessmodeltransformation:Withthedevelopmentoftechnologiessuchasartificialintelligence,bigdata,cloudcomputing,networkcommunication,andIoT,aswellastheupgradingofintelligentterminalapplicationmethods,thebusinessmodelsintheeraofartificialintelligencemayimpactthedevelopmentoftraditionalindustries.Ifenterprisesfailtotimelygrasptheopportunitiesbroughtbythetransformationofbusinessmodels,theymayfacetheriskoftheiroriginalmarketpatternsbeingdisrupted.Thecompanycontinuouslymonitorsandstudiessignificantchangesintheglobaleconomy,industry,andtechnologysectors,analyzesindustrydevelopmentlogic,assessestheevolutionoftheAIoTindustry,theintegrationofvideotechnologywithdigitaltechnologiesincludingartificialintelligence,andthepotentialdiversifiedneedsofcustomers.Itconsolidatesitsexistingadvantageousmarkets,activelyexploresandpilotsnewbusinessesandnewcommercialmodels,andcarriesoutbusinessandtechnologydeployments.

(3)RisksofInternationalOperations:TheCompany'sproductsandsolutionscovermorethan100countriesandregionsoverseas,andinternationalbusinessoperationsfaceuncertaintiesandnewchallenges.Ontheonehand,theglobaleconomicgrowthratecontinuestoslowdown,geopoliticalandpoliticalconflictsinsomeregionshaveintensified,andsomecountriesarefacingriskssuchas

foreignexchangedifficultiesandexchangeratefluctuations,whichposecertainthreatsandriskstothecontinuedexpansionofbusinessinthehostcountries.Ontheotherhand,increasinglycomplexcompliancerequirementsintheinternationalbusinessenvironment,intensifiedregionaltradeprotectionismandcontrols,andtariffpolicyvolatilityhaveheightenedpressuresonoverseasmarketexpansion.Additionally,localmanufacturingrulesimposedbycertaincountriesandregionshaveescalatedsupplychainchallenges,leadingtocontinuouslyrisingdemandsforcompliancecapacitybuildingandcorrespondingcostinvestments.Tothisend,theCompanyactivelypreventsandrespondstorisksininternationaloperations,continuouslyimprovestheoveralloverseascomplianceandriskcontrolsystem,enhancesproactiveriskanticipationandsystematicresponsecapabilitiesforvariousrisks,andcontinuouslystrengthenstheCompany'sreservesanddevelopmentoflocalproductionandmanufacturingcapabilities.Atthesametime,thecompanycontinuouslystrengthensitsunderstandingofandadaptabilitytothelaws,regulations,andpoliticalandeconomicenvironmentsoftheregionsinvolvedinitsbusiness.Itformulatesdifferentiatednationalbusinessoperationstrategiesbasedonthechangesinpolitical,economic,financial,andcomplianceenvironmentsindifferentregions,applyingaonecountry,onepolicyapproachtorespondquicklytochallengesandreducebusinessoperationpressure.

(4)ExchangeRateRisk:TheCompany'sexportsalessettlementcurrencyismainlyinUSDandEUR,andwithoverseasbusinesscontinuouslygrowing,fluctuationsinexchangeratesmayhaveacertainimpactontheCompany'sprofitability.TheCompanyhasprogressivelyincreasedtheproportionof

transactionsinlocalcurrenciesofnon-USdollarcountries,withUSD-denominatedcontractsshowingadecliningtrend.

(5)Risksassociatedwithuncertainlocalfiscalpaymentcapacity:Amidthecurrentmoderateeconomicrecovery,elevateddebtlevelsinsomeregionalgovernmentshaveyettoyieldsignificantimprovementsinpaymentcapabilities.Thishasresultedindelayedprojecttenders,extendedtimelines,andheightenedselectivityinclientsandprojects.Tomitigatetheserisks,theCompanycontinuouslyrefinescreditmanagementpoliciesandoptimizesprojectvetting.Comprehensiveriskassessments—coveringclientcreditworthiness,projectbudgets,anddeliveryviability—areconductedtonavigatemarketfluctuations.TheCompanyactivelymonitorsnationaldebtrestructuringpolicies,intensifiesaccountsreceivablecollection,andsafeguardscashflowtoreduceoperationalexposure.

(6)ProductSecurityRisks:TheCompanyattachesgreatimportancetoandcontinuestosetupspecialfundstostrengthenproductsecurityconstruction,inordertopreventandrespondtosecurityrisksofproductsintheInternetapplicationenvironment,buttheremaystillberisksofbeingattackedbydenialofservice,brute-forceaccess,SQLinjection,malware,etc.,whichmayleadtosystemfailureorserviceinterruption.TheCompanyhasestablishedaNetworkandDataSecurityCommitteetoestablishandimproveaglobalend-to-endnetworkanddatasecuritysystemintermsofpolicies,organizations,processes,management,technology,andspecifications,activelyrespondtocybersecuritychallenges,andbevigilantandpreventmajorcybersecurityincidents.

(7)IntellectualPropertyRisk:ThepromotionoftheCompany'sglobalizationstrategyanditsownbrandstrategymayexposetheCompanytointellectualpropertyrightsrisksandpatentinfringement,aswellassuchrisksasbusinessrelations,fluctuationsinthepublicopinionenvironment,increasedlegalproceedingsandrisingcosts.Withahighpriorityontechnologicalinnovation,theCompanyhasestablishedamechanismfortheprotectionandmanagementofintangibleassetssuchasinnovationachievements,ownbrandsandtradesecrets,soastocontinuouslygatheradvantageousintellectualpropertyassets;withtheestablishmentofanintellectualpropertycomplianceandriskcontrolsystem,theCompanycontinuouslystrengthensitsabilitytounderstandandmasterintellectualpropertylawsandregulationsaswellastheadministrativeandjudicialenvironmentintheregionswhereitoperates.

(8)SupplyChainSecurityRisks:Theoverallsupplymarketisstable.TheCompanybuildsasustainablesupplyecosystemthroughmultiplemeasures,includingearlysupplierdesigninvolvement,universalselectionofnewmaterials,developmentofsecondarysuppliersforexclusivematerials,andflexibleinventorystrategies,ensuringsupplydelivery.Atthesametime,theCompanyfocusesonsupplieroperationalrisksbyusingaprocurementsupplysecuritymanagementplatformtomonitorsuppliers'operationalstatusinrealtime,preventingpotentialrisks.

TheCompanyplansnottopaycashdividend,givebonusshares,orconvertcapitalreserveintosharecapital.

TableofContents

SectionIImportantNotes,TableofContents,andDefinitions ...... 2

SectionIICompanyProfileandKeyFinancialIndicators ...... 13

SectionIIIManagementDiscussionandAnalysis ...... 16

SectionIVCompanyGovernance,Environment,andSociety ...... 37

SectionVSignificantEvents ...... 39

SectionVIChangesinSharesandInformationaboutShareholders ...... 54

SectionVIIBond-RelatedInformation ...... 62

SectionVIIIFinancialReport ...... 63

SectionIXOtherSubmittedData ...... 212

DocumentsAvailableforReference

(I)FinancialstatementssignedandsealedbytheCompany'spersonincharge,thechiefaccountant,andthepersoninchargeofaccountingdepartment(accountingofficer).(II)TheoriginalofalltheCompany'sdocumentspubliclydisclosedduringthereportingperiodandtheoriginaloftheannouncement.(III)Thereferencedocumentsareavailableatthecompany'sSecuritiesInvestmentDepartmentforinvestorstoreview.

Definitions

SectionIICompanyProfileandKeyFinancialIndicators

I.CompanyOverview

II.ContactPersonandContactInformation

III.OtherInformation

1.CompanyContactInformation

WhethertheCompany'sregisteredaddress,theCompany'sofficeaddressanditspostalcode,theCompany'swebsite,e-mailaddress,etc.havechangedduringthereportingperiod

□Applicable?NotapplicableThecompany'sregisteredaddress,officeaddress,postalcode,website,andemailhavenotchangedduringthereportingperiod;fordetails,pleaserefertothe2024annualreport.

2.InformationDisclosureandLocation

Whethertheinformationdisclosureandlocationhavechangedduringthereportingperiod

□Applicable?NotapplicableThestockexchangewebsiteandmedianamesandURLswherethecompany'ssemi-annualreportisdisclosedhavenotchangedduringthereportingperiod.Fordetails,pleaserefertothe2024annualreport.

3.OtherRelatedInformation

Whetherthereisanychangeinotherrelatedinformation?Applicable□Notapplicable

GuosenSecuritiesCo.,Ltd.(hereinafterreferredtoas"GuosenSecurities"orthe"Sponsor"),actingasthesponsorfortheCompany'sprivateshareplacementandlisting,conductedongoingsupervisioninaccordancewithregulations,withthesupervisionperiodspanningfromApril14,2023,toDecember31,2024.OnMarch31,2025,GuosenSecuritiesissuedthe"SummaryReportonOngoingSupervisionandSponsorshipbyGuosenSecuritiesCo.,Ltd.RegardingZhejiangDahuaTechnologyCo.,Ltd.'sPrivateSharePlacement."Thisconfirmedthattheongoingsupervisionperiodfortheprivateshareplacementandlistinghadconcluded,andtheongoingsupervisiondutieswillnolongerbeperformed.

IV.KeyAccountingDataandFinancialIndexes

WhethertheCompanyneedsretroactiveadjustmentorrestatementofaccountingdatainprioryearsornot

□Yes?No

V.DifferencesinaccountingdataUnderdomesticandoverseasaccountingstandards

1.DifferencesofnetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtotheinternationalaccountingstandardsandChineseaccountingstandards

□Applicable?NotapplicableDuringthereportingperiodofthecompany,thereisnodifferencebetweenthenetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtointernationalaccountingstandardsandChineseaccountingstandards.

2.DifferencesbetweenthenetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtotheoverseasaccountingstandardsandChineseaccountingstandards

□Applicable?NotapplicableDuringthereportingperiodofthecompany,thereisnodifferencebetweenthenetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtooverseasaccountingstandardsandChineseaccountingstandards.

3.ExplanationoftheDifferencesinAccountingDataunderDomesticandOverseasAccountingStandards

□Applicable?NotapplicableVI.Non-recurringGainsandLossesItemsandTheirAmounts

?Applicable□Notapplicable

Unit:RMB

Othergainsorlossesthatfitthedefinitionofnon-recurringgainsorlosses:

□Applicable?NotapplicableTheCompanyhasnoothergainsorlossesthatfitthedefinitionofnon-recurringgainsorlosses.Noteforthedefinitionofnon-recurringgainsandlosseslistedintheNo.1ExplanatoryAnnouncementonInformationDisclosureforCompaniesIssuanceTheirSecuritiestothePublic-Non-recurringgainsandlosses,asrecurringgainsandlosses.

□Applicable?NotapplicableTheCompanydidnotdefineanynon-recurringgainsandlosseslistedintheNo.1ExplanatoryAnnouncementonInformationDisclosureforCompaniesIssuanceTheirSecuritiestothePublic-Non-recurringgainsandlossesasrecurringgainsandlosses.

SectionIIIManagementDiscussionandAnalysisI.MainBusinessesoftheCompanyduringtheReportingPeriodThereisnomajorchangeintheCompany'smainbusinessesduringthereportingperiod.Refertothe2024AnnualReportfordetails.

II.CoreCompetitivenessAnalysis

Thereisnomajorchangeinareasofcorecompetitivenessduringthereportingperiod.Refertothe2024AnnualReportfordetails.

III.MainBusinessAnalysis

Inthefirsthalfof2025,globalgeopoliticalconflictscontinued,andtradeprotectionismreemerged,affectingtheprocessofglobaleconomicrecovery.Leveragingadvantagessuchasitsvastmarketscale,extensiveapplicationscenarios,andcomprehensiveindustrialdepth,Chinafosteredrobustgrowthinitsdigitaleconomy,injectingcriticalmomentumintohigh-qualityeconomicdevelopment.Concurrently,breakthroughsinfoundationaltechnologieslikelarge-scaleAImodelsunlockednewfrontiersforadvancedproductiveforces.Theintegrationofscienceandtechnologywithreal-worldindustrieshasaccelerated,continuouslyexpandingthedepthandbreadthoftheAIoTsector.

Amidstthiseraofdigitalizationandintelligence,theCompanyremainedresolutelydeterminedandsteadfastlyactedtopropelhigh-qualitydevelopment.InourResearchandDevelopmentefforts,weaimtoacceleratethedeepintegrationoftechnologicalinnovationwithindustrialimplementation.Ourstrategyincludespositioningourselvesinkeyareassuchasmulti-dimensionalperception,artificialintelligence,intelligentcomputing,datacommunications,andgraph-digitfusion.Wewilladvancethelarge-scaledeploymentoflargemodelsacrossvariousindustries.Additionally,wewillcontinuouslylaunchcompetitivenewproducts,includingthechatdataandTianSeriesall-in-onelargemodeldevices,theWizSeekNVR,andGlowlight2.0.Ourgoalistodevelophardwareandsoftwareproductsthatdemonstrateexceptionalcompetitiveness.IntheDomesticMarket:Fortheurbanbusinesssegment,wefocusonenhancingrefinedoperationsforexistingclients,particularlyinfiscallysupportedsectorssuchasmacro-transportation,waterconservancy,andemergency

management.Ourgoalistocapturesystematicopportunitieswhilestrengtheningclientengagementcapabilitiesandimprovingtheefficiencyofconvertingsalesopportunities.Intheenterprisebusinesssegment,wecenteroureffortsonthedigitalandintelligenttransformationofenterprises.Thisinvolvespenetratingcoreproductionworkflows,acceleratingtheresearchanddevelopmentofnext-generationdigitalintelligenceproducts,andenhancingscenario-basedsolutionstoboostproductivityandoperationalefficiency.Inthedistributionbusinesssegment,weareimplementingthe"LocalOperations&CountyMarketPenetration"strategy.Thisincludesexpandingourcoverageincounty-levelmarkets,strengtheningthedevelopmentandactivationofserviceproviders,continuouslyimprovingthesustainableoperationsandprofitabilityofouragents,andachievinggenuinewin-winoutcomes.IntheOverseasMarket:Buildahealthyandsustainablebusinessecosystem,scalekeyaccounts,optimizethestabilityoftheclientportfolio,andfocusondedicatedinitiativesinhigh-potentialcountries.Intermsofindustry,maintainastrongfocusonspecificsectors,replicatesuccessfulstrategiesacrosstargetedindustries,revitalizethegrandvideostrategy,anddeliverhigh-value,cost-competitiveproductsandsolutions.Fornewbusinessproducts,ensureoptimalresourceallocationwhilesteadilyexpandingthebusinessvolumeofleadingproducts.IntheInnovationBusinessSegment:Focusoncorestrategicareas,furtherstrengthentheintegrationandmutualreinforcementbetweeninnovativeventuresandtheGroup'scoreoperations,sustaintechnologicalinnovation,anddrivestrongergrowthacrossallbusinesssegments.

Duringthereportingperiod,despitetheinfluenceofvariousdomesticandinternationalfactors,thecompanyadheredtothebusinessphilosophyofrefinedmanagementandhigh-qualitydevelopment,achievingoperatingrevenueofRMB15.18billion,anincreaseof2.12%year-over-year;netprofitattributabletoshareholdersofthelistedcompany,excludingnon-recurringgainsorlosses,reachedRMB1.796billion,anincreaseof1.91%comparedtothesameperiodlastyear.

1.PrudentandSolidGrowth,StrategicTransformation,CommitmenttoHigh-qualityDevelopment

TheCompanyadherestohigh-qualitydevelopment,promotesgrowth,ecologyandhumanefficiency,andemphasizescustomerfirst,andpursuescommercialsuccessandcustomerdevelopment;sustainsecologicaldevelopment,buildsanewecosystemofco-construction,coexistenceandwin-winsituation,andendeavorstocreateuniqueanddifferentiatedvalueforitspartnersandachievecommongrowth;improvesthemanagementefficiency,thehumanefficiency

andtheorganizationeffectiveness;adherestobalancedbusinessdevelopment,andlaysasolidfoundationforsustainablehigh-qualitydevelopmenttomeetcustomers’needsbetter.TheCompanyactivelyassumesgreatersocialresponsibilityinESG,low-carbon,ruralrevitalization,socialpovertyalleviationandrelief,andtechnologyforequalityandgood,andfulfillsthemissionof"enablingasmarterlivingandasafersociety".

2.KeepingPrecisionInvestmentinResearchandDevelopment,andDeepening"FiveFull"CapabilitiesCenteringontechnologicalinnovationandcustomerneeds,theCompanypersistsinlarge-scaleR&Dinvestmenttocontinuouslystrengthenitsfoundational"fivefull"capabilities:FullSensing,FullIntelligence,FullConnection,FullComputing,andFullEcosystem.Inadditiontomaintaininginvestmentintraditionalvideotechnology,thecompanycontinuouslystrengthensresearch,development,andproductizationinthefieldsofmulti-dimensionalperception,AIlargemodels,dataintelligence,intelligentcomputing,cloudcomputing,softwareplatforms,networkcommunication,cybersecurity,andinnovativebusinesses,focusingonvalue-drivenbusinessscenariostobuildindustry-leadingsolutions,products,andtechnologysystems.

3.BuildFull-stackCapabilitiesforLargeModelsandPromoteAIindustrialization

Thecompanyregardsartificialintelligenceasoneofitscorestrategiesandisalwayscommittedtocoretechnologyresearchandinnovation,focusingonvision-centeredmainchannels,continuouslyenhancingartificialintelligenceresearchandengineeringcapabilities.Focusingonscenario-basedapplicationsacrossdiverseindustries,theCompanyleveragestechnologiessuchasmultimodallargemodelsandAgents.Byintegratingindustryexpertise,itbuildsfull-stacklargemodelcapabilities,furtherconsolidatesitsAIengineeringfoundation,andactivelypromotestheindustrializationandcommercialsuccessofnewAItechnologies.

4.ImproveSoftwareManagementCapabilitiesandDeepeningtheDataIndustryChain

TheCompanyhasalwaysbeencommittedtopromotingthevalue-addedprocessofdataelements.Itpositionsitselfasaproviderofdataasaresource,practitionerofdataasanasset,andenablerofdataasacommodity.Itusestechnology+ecologyasadual-wheeldrivetoformsolutionscoveringtheentirelifecycleofdata,andworkswithecologicalpartnerstohelpbuildaprosperousdataelementmarket.Proceedingfrommulti-dimensionalperception,multi-facetedconnectivity,viewintelligence,andopenplatforms,theCompanyachievesdeepintegrationbetweenitsDahualarge

modelandmulti-dimensionaldata.Thisenablesaclosedloopfromperceptualintelligencetodataintelligenceandthentooperationalintelligence,comprehensivelyempoweringefficienturbangovernanceandenterprisedigitalandintelligenttransformation.

5.DeepenengagementwiththecorebusinessesofurbanandenterprisecustomerstosupportdigitalandintelligenttransformationTheCompanydeeplycultivatesurbandigitalinnovationandenterprisedigitalandintelligenttransformation.Continuouslydiscerningindustryevolutiontrends,itdeeplyintegratesadvancedtechnologieslikeAI,bigdata,andintelligentcomputingwithindustryscenarios.Bycontinuouslyenhancinghardwarediversityandfull-stackAIcapabilities,itdeepenstheapplicationofmulti-dimensionalperceptionproductsandindustryalgorithmmodelsinscenario-basedservices.Progressivelymovingfromperipheralsystemintegrationintocoreoperationalsystemslikegovernanceandproduction,itstrivestobecomeatrustedpartnerforcustomers'digitalandintelligenttransformation.

6.PromotetheDevelopmentofInnovativeBusinessesandExpandNewHigh-PotentialGrowthPoints

Intheinnovativebusiness,theCompany,basedonitsin-depthunderstandingofcustomers'diversifiedneedsandyearsofexperienceinAIoT,continuestoexploreemergingbusinesses,including:machinevisionandmobilerobots,thermalimaging,automotiveelectronics,smartsecurityinspection,smartfirecontrol,andstoragemedium,continuouslyexpandingnewhigh-potentialgrowthpointsfortheCompany.

7.Handinhandwithpartnerstogrowtogetherandcreateaecologicalenvironmentofco-construction,symbiosisandwin-winsituation

Facingunprecedentedopportunitiesinthedigitaleconomy,theCompanyupholdsanaltruisticphilosophy.Throughcontinuousexplorationandpracticewithecosystempartners,itbuildscomprehensiveopencapabilitiesspanningtechnology,business,andservices.Byfullyopeninghardware,software,algorithms,services,andbusinessecosystemstoindustryclientsanddevelopers,itempowerspartners'continuousinnovationanddevelopment.Weworkwithpartnerstoopenupnewareas,createnewmomentum,andjointlycreateunlimitedpossibilitiesforindustrialdevelopment,empowerthedigitalandintelligentdevelopmentofthousandsofindustries,andachieveco-creation,symbiosis,andwin-winresults.

YoYratesinkeyfinancialindicators

Unit:RMB

Note:Pursuanttothe"AccountingStandardforBusinessEnterprisesNo.18"issuedbytheMinistryofFinance,theCompanyhasretrospectivelyadjustedwarrantycostsnotmeetingthecriteriaofsingleperformanceobligationsfortheyear2024,reclassifyingthemfromsellingexpensestooperatingcosts.Thesametreatmentappliesbelow.TherearemajorchangesinthecompositionorsourcesofprofitoftheCompanyinthecurrentperiod

□Applicable?NotapplicableThereisnomajorchangeinthecompositionorsourcesofprofitoftheCompanyinthecurrentperiod

Compositionofoperatingrevenue

Unit:RMB

Domesticsub-businesssegment

Unit:RMB

Note:Innovativebusinessmainlyincludesmachinevisionandmobilerobots,smartliving,thermalimaging,automotiveelectronics,smartsecurityinspection,smartfirecontrolandstoragemedium,andotherrelevantbusinesses;thesameasbelow.Industry,product,orregionaccountingformorethan10%oftheCompany'soperatingrevenueorprofit

?Applicable□Notapplicable

Unit:RMB

Whenthestatisticalcaliberofthecompany'smainbusinessdataisadjustedinthereportingperiod,thecompany'smainbusinessdatashouldbesubjecttotheoneafterthestatisticalcaliberattheendofthereportingperiodisadjustedinthemostrecentreportingperiod.

□Applicable?Notapplicable

IV.Non-MainBusinessAnalysis

□Applicable?Notapplicable

V.AnalysisofAssetsandLiabilities

1.SignificantChangesinAssetsComposition

Unit:RMB

2.MajorOverseasAssets

□Applicable?Notapplicable

3.AssetsandLiabilitiesMeasuredatFairValue

?Applicable□Notapplicable

Unit:RMB

Arethereanysignificantchangesinthemeasurementattributesofthecompany'smainassetsduringthereportingperiod?

□Yes?No

4.RestrictionsonAssetRightsasoftheEndOftheReportingPeriod

AsofJune30,2025,thecompany'srestrictedassetsituationisasfollows:

VI.InvestmentAnalysis

1.Overview

?Applicable□Notapplicable

2.SignificantEquityInvestmentsAcquiredDuringtheReportingPeriod

□Applicable?Notapplicable

3.Majornon-equityInvestmentsUnderwayDuringTheReportingPeriod?Applicable□NotapplicableFordetails,referto"5.UtilizationofRaisedFunds"

4.FinancialAssetsInvestment

(1)SecuritiesInvestment?Applicable□Notapplicable

Unit:RMB

(2)DerivativesInvestment?Applicable□Notapplicable

1)DerivativesInvestmentsforHedgingPurposesDuringtheReportingPeriod?Applicable□Notapplicable

Unit:tenthousandRMB

2)DerivativesInvestmentsforSpeculativePurposesDuringtheReportingPeriod

□Applicable?NotapplicableTheCompanyhadnoderivativesinvestmentsforspeculativepurposesduringthereportingperiod.

5.UtilizationofRaisedFunds?Applicable□Notapplicable

(1)UtilizationofRaisedFunds?Applicable□Notapplicable

Unit:tenthousandRMB

(2)ProjectswithPledgedInvestmentsUsingRaisedFunds?Applicable□Notapplicable

Unit:tenthousandRMB

Note1:Theinterestincomefrombankdepositsistheexcessoftheactualinvestmentamountofthereplenishmentofworkingcapitalprojectsoverthetotalpledgedinvestmentsusingraisedfunds.

(3)ChangeofProjectsThatUseRaisedFunds?Applicable□Notapplicable

Unit:tenthousandRMB

VII.MajorAssetsandEquitySales

1.MajorAssetsSales

□Applicable?NotapplicableNomajorassetsweresoldduringthereportingperiodoftheCompany.

2.MajorEquitySales?Applicable□Notapplicable

VIII.AnalysisofMajorSubsidiariesandAssociates

?Applicable□NotapplicableMajorsubsidiariesandjoint-stockcompanieswithanetprofitimpactofover10%.

Unit:tenthousandRMB

Acquisitionanddisposalofsubsidiariesduringthereportingperiod?Applicable□Notapplicable

IX.StructuredEntityControlledbytheCompany

□Applicable?Notapplicable

X.RisksandCountermeasures

Duringthereportingperiod,therewasnosignificantchangeintherisksfacedbytheCompany.TheCompanyhasbeentryingtoidentifyallkindsofrisksandactivelytakecounter-measurestoavoidandreducetherisks.

(1)RiskofTechnologyUpgrading:TheAIoTindustryisaprimeexampleofatechnology-intensivesector,characterizedbyrapidadvancementsandupgrades.IftheCompanyisunabletokeepupwithdevelopmenttrendsofindustrialtechnologies,topayfullattentiontocustomers'diversifiedneeds,andtodevotesufficientR&Dinvestments,itmaystillfacetheriskoflosingmarketcompetitivenessduetodiscontinuousinnovation.ByincreasingR&Dinvestment,theCompanycontinuestostrengthenresearchonsuchcoretechnologiesasmulti-dimensionalperception,largemodelinAI,videocloud,bigdata,networkcommunication,networksecurity,andmachinevision,andreservesproduct,technology,managementandtalentresourcesforabroadermarketinthefuture,soastoachievesustainableandsteadybusinessdevelopment.

(2)Riskofbusinessmodeltransformation:Withthedevelopmentoftechnologiessuchasartificialintelligence,bigdata,cloudcomputing,networkcommunication,andIoT,aswellastheupgradingofintelligentterminalapplicationmethods,thebusinessmodelsintheeraofartificialintelligencemayimpactthedevelopmentoftraditionalindustries.Ifenterprisesfailtotimelygrasptheopportunitiesbroughtbythetransformationofbusinessmodels,theymayfacetheriskoftheiroriginalmarketpatternsbeingdisrupted.Thecompanycontinuouslymonitorsandstudiessignificantchangesintheglobaleconomy,industry,andtechnologysectors,analyzesindustrydevelopmentlogic,assessestheevolutionoftheAIoTindustry,theintegrationofvideotechnologywithdigitaltechnologiesincludingartificialintelligence,andthepotentialdiversifiedneedsofcustomers.Itconsolidatesitsexistingadvantageousmarkets,activelyexploresandpilotsnewbusinessesandnewcommercialmodels,andcarriesoutbusinessandtechnologydeployments.

(3)RisksofInternationalOperations:TheCompany'sproductsandsolutionscovermorethan100countriesandregionsoverseas,andinternationalbusinessoperationsfaceuncertaintiesandnewchallenges.Ontheonehand,theglobaleconomicgrowthratecontinuestoslowdown,

geopoliticalandpoliticalconflictsinsomeregionshaveintensified,andsomecountriesarefacingriskssuchasforeignexchangedifficultiesandexchangeratefluctuations,whichposecertainthreatsandriskstothecontinuedexpansionofbusinessinthehostcountries.Ontheotherhand,increasinglycomplexcompliancerequirementsintheinternationalbusinessenvironment,intensifiedregionaltradeprotectionismandcontrols,andtariffpolicyvolatilityhaveheightenedpressuresonoverseasmarketexpansion.Additionally,localmanufacturingrulesimposedbycertaincountriesandregionshaveescalatedsupplychainchallenges,leadingtocontinuouslyrisingdemandsforcompliancecapacitybuildingandcorrespondingcostinvestments.Tothisend,theCompanyactivelypreventsandrespondstorisksininternationaloperations,continuouslyimprovestheoveralloverseascomplianceandriskcontrolsystem,enhancesproactiveriskanticipationandsystematicresponsecapabilitiesforvariousrisks,andcontinuouslystrengthenstheCompany'sreservesanddevelopmentoflocalproductionandmanufacturingcapabilities.Atthesametime,thecompanycontinuouslystrengthensitsunderstandingofandadaptabilitytothelaws,regulations,andpoliticalandeconomicenvironmentsoftheregionsinvolvedinitsbusiness.Itformulatesdifferentiatednationalbusinessoperationstrategiesbasedonthechangesinpolitical,economic,financial,andcomplianceenvironmentsindifferentregions,applyingaonecountry,onepolicyapproachtorespondquicklytochallengesandreducebusinessoperationpressure.

(4)ExchangeRateRisk:TheCompany'sexportsalessettlementcurrencyismainlyinUSDandEUR,andwithoverseasbusinesscontinuouslygrowing,fluctuationsinexchangeratesmayhaveacertainimpactontheCompany'sprofitability.TheCompanyhasprogressivelyincreasedtheproportionoftransactionsinlocalcurrenciesofnon-USdollarcountries,withUSD-denominatedcontractsshowingadecliningtrend.

(5)Risksassociatedwithuncertainlocalfiscalpaymentcapacity:Amidthecurrentmoderateeconomicrecovery,elevateddebtlevelsinsomeregionalgovernmentshaveyettoyieldsignificantimprovementsinpaymentcapabilities.Thishasresultedindelayedprojecttenders,extendedtimelines,andheightenedselectivityinclientsandprojects.Tomitigatetheserisks,theCompanycontinuouslyrefinescreditmanagementpoliciesandoptimizesprojectvetting.Comprehensiveriskassessments—coveringclientcreditworthiness,projectbudgets,anddeliveryviability—areconductedtonavigatemarketfluctuations.TheCompanyactivelymonitorsnationaldebtrestructuringpolicies,intensifiesaccountsreceivablecollection,andsafeguardscashflowtoreduceoperationalexposure.

(6)ProductSecurityRisks:TheCompanyattachesgreatimportancetoandcontinuestosetupspecialfundstostrengthenproductsecurityconstruction,inordertopreventandrespondtosecurityrisksofproductsintheInternetapplicationenvironment,buttheremaystillberisksofbeingattackedbydenialofservice,brute-forceaccess,SQLinjection,malware,etc.,whichmayleadtosystemfailureorserviceinterruption.TheCompanyhasestablishedaNetworkandDataSecurityCommitteetoestablishandimproveaglobalend-to-endnetworkanddatasecuritysystemintermsofpolicies,organizations,processes,management,technology,andspecifications,activelyrespondtocybersecuritychallenges,andbevigilantandpreventmajorcybersecurityincidents.

(7)IntellectualPropertyRisk:ThepromotionoftheCompany'sglobalizationstrategyanditsownbrandstrategymayexposetheCompanytointellectualpropertyrightsrisksandpatentinfringement,aswellassuchrisksasbusinessrelations,fluctuationsinthepublicopinionenvironment,increasedlegalproceedingsandrisingcosts.Withahighpriorityontechnologicalinnovation,theCompanyhasestablishedamechanismfortheprotectionandmanagementofintangibleassetssuchasinnovationachievements,ownbrandsandtradesecrets,soastocontinuouslygatheradvantageousintellectualpropertyassets;withtheestablishmentofanintellectualpropertycomplianceandriskcontrolsystem,theCompanycontinuouslystrengthensitsabilitytounderstandandmasterintellectualpropertylawsandregulationsaswellastheadministrativeandjudicialenvironmentintheregionswhereitoperates.

(8)SupplyChainSecurityRisks:Theoverallsupplymarketisstable.TheCompanybuildsasustainablesupplyecosystemthroughmultiplemeasures,includingearlysupplierdesigninvolvement,universalselectionofnewmaterials,developmentofsecondarysuppliersforexclusivematerials,andflexibleinventorystrategies,ensuringsupplydelivery.Atthesametime,theCompanyfocusesonsupplieroperationalrisksbyusingaprocurementsupplysecuritymanagementplatformtomonitorsuppliers'operationalstatusinrealtime,preventingpotentialrisks.

XI.DevelopmentandimplementationofmarketvaluemanagementsystemandvaluationenhancementplanWhethertheCompanyhasestablishedamarketvaluemanagementsystem.?Yes□NoWhethertheCompanyhasdiscloseditsvaluationenhancementplan.

□Yes?No

InordertostrengthentheCompany'smarketvaluemanagementwork,furtherstandardizetheCompany'smarketvaluemanagementbehavior,andsafeguardthelegitimaterightsandinterestsoftheCompany,investors,andotherstakeholders,theCompanyhasformulatedamarketvaluemanagementsystem.Thecompanywillfocusonitsmainbusiness,improveoperationalefficiencyandprofitability,and,basedonitsowncircumstances,comprehensivelyutilizemergersandacquisitions,equityincentives,employeestockownershipplans,cashdividends,investorrelationsmanagement,enhancementofinformationdisclosurequality,sharerepurchases,andotherlawfulandcompliantmethodstoincreasethecompany'sinvestmentvalue.

XII.Implementationstatusofthe"increaseinbothqualityandreturns"actionplanHastheCompanydisclosedtheannouncementofthe"IncreaseinBothQualityandReturns"actionplan??Yes□No

Tosafeguardtheinterestsofallshareholders,theCompanyhasformulatedthe"IncreaseinBothQualityandReturns"ActionPlanbasedonitsconfidenceinthefuturedevelopmentprospectsandrecognitionofitsstockvalue.Fordetails,seetheAnnouncementon"IncreaseinBothQualityandReturns"ActionPlan(AnnouncementNo.2024-013)publishedonJuchaoInformationNetworkonFebruary7,2024.

TheCompanyalwaystakeshigh-qualitydevelopmentasitsthemeandalwaysadherestothecorevaluesof"achievingcustomers,achievingstrivers".Itfulfillsthemissionof"makingsocietysmarterandlifebetter",relyingontwotechnicalstrategies:AIoTandtheintelligentIoTdataplatform.Iteffectivelyintegratesartificialintelligence,bigdata,andIoTtechnologiesintotheCompany'sproductsandsolutions,servingurbandigitalinnovationandenterprises'digitalandintelligenttransformation.TheCompanyiscommittedtobuildingapreferredbrandofAIoT,promotinghigh-quality,green,andinnovativedevelopmentoftheeconomyandsociety.

TheCompanycontinuestostrengthenthefoundationofcorporategovernance,buildasoundinternalcontrolsystem,standardizestherightsandobligationsofthecompanyandshareholders,andpreventstheabuseofshareholderrightsandthemanagement'sdominantpositionfromharmingtheinterestsofminorityinvestors.Strengthenthemanagementofinvestorrelations,broadenthechannelsforinstitutionalinvestorstoparticipateincorporategovernance,guidesmallandmedium-sizedinvestorstoactivelyparticipateingeneralmeetingofshareholders,andcreateconveniencefor

allkindsofinvestorstoparticipateinmajordecision-makingtoenhancetheirrighttospeakandsenseofgain.Whilesolidifyingitsowndevelopmentfoundation,thecompanyfirmlyestablishesashareholderreturnawarenessandhasconsistentlyimplementedcashdividendseveryyearsinceitslisting,withacumulativecashdividendamountofRMB9.098billion.Duringthereportingperiod,thecompanyformulatedandimplementedthe2024annualprofitdistributionplan,distributingacashdividendofRMB4.58(includingtax)per10sharestoallshareholders,withatotalcashdividendofapproximatelyRMB1.502billion.Atthesametime,uponapprovalbytheBoardofDirectorsandthegeneralmeetingofshareholders,thecompanywilluseequityfundstorepurchasepartofitssharesthroughcentralizedcompetitivebiddingtransactions,forthepurposeoflegallycancelingandreducingtheregisteredcapital.ThetotalamountofrepurchasefundswillbenolessthanRMB300million(inclusive)andnomorethanRMB500million(inclusive).

SectionIVCompanyGovernance,Environment,andSocietyI.ChangesofDirectors,SupervisorsandSeniorManagementoftheCompany

□Applicable?NotapplicableTherewerenochangesinthecompany'sdirectors,supervisors,andseniormanagementduringthereportingperiod.Fordetails,pleaserefertothe2024annualreport.II.ProfitDistributionandCapitalReserveConvertedtoShareCapitalintheReportingPeriod

□Applicable?NotapplicableTheCompanyplanstopaynocashdividends,nobonussharesandnocapitalincreasebywayofcapitalizationofprovidentfundforthehalf-yearIII.Implementationofthecompany'sequityincentiveplan,employeestockownershipplanorotheremployeeincentivemeasures

?Applicable□Notapplicable

1.EquityIncentive

1.OnMarch28,2025,thecompanyheldthe11thmeetingofthe8thBoardofDirectorsandthe8thmeetingofthe8thBoardofSupervisors.OnApril21,2025,the2024annualgeneralmeetingwasheld,duringwhichthe"ProposalonCancellationofSomeRestrictedSharesof2022StockOptionsandRestrictedStockIncentivePlan"wasreviewedandapproved.InviewoftheCompany'sperformancenotmeetingtheconditionsforreleasingfromrestrictedsaleandthedepartureofincentiverecipients,theCompanyresolvedtorepurchaseandcancelatotalof20,544,960restrictedsharesalreadygrantedbutnotyetreleased.TherepurchasepriceisRMB8.16pershare.Duringthereportingperiod,thecompanycompletedtherepurchaseandcancellationoftheaforementionedrestrictedshares.

2.OnMarch28,2025,thecompanyheldthe11thmeetingofthe8thBoardofDirectorsandthe8thmeetingofthe8thBoardofSupervisors,duringwhichthe"ProposalonAdjustmentoftheExercisePriceofthe2022StockOptionandRestrictedStockIncentivePlan"wasreviewedandapproved.Duetotheimplementationofthe2024annualprofitdistributionplan,inaccordancewiththeprovisionsoftheStockOptionandRestrictedShareIncentivePlan(DraftRevised)for2022andtheauthorizationgrantedbythe2021annualgeneralmeeting,theexercisepriceofthestockoptionswasadjustedfromRMB15.473persharetoRMB15.015pershare.

3.Theexerciseconditionsforthesecondexerciseperiodofthecompany's2022stockoptionandrestrictedshareincentiveplanhavebeenmet.TheexerciseperiodisfromJuly11,2024toJuly10,2025.Theexercisemethodisvoluntaryexercise.Fordetails,pleaserefertothe"IndicativeAnnouncementontheVoluntaryExerciseoftheSecondExercisePeriodofthe2022StockOptionandRestrictedShareIncentivePlan"disclosedbythecompanyonJuchaoInformationNetworkonJuly10,2024.AsofJune30,2025,atotalof11,052,904stockoptionshavebeenexercisedinthesecondexerciseperiod,ofwhich4,309,703stockoptionswereexercisedinthesecondquarterof2025.

2.ImplementationofEmployeeStockOwnershipPlan

□Applicable?Notapplicable

3.OtherEmployeeIncentiveMeasures?Applicable□NotapplicableTheCompanyadherestotheconceptof"strivingforthegoal".Bylong-termincentivesforemployeesbasedontheequityoflistedcompanies,theCompanyhaslaunchedanincentiveplanforemployeestoco-investmentinspecificsubsidiarieswithinnovatedbusiness,aimingtocombinetheinterestsoftheCompanyandemployeestorealizethesustainableandhealthydevelopmentoftheCompany,andtostimulatetheemployees'enthusiasmforinnovation.IV.EnvironmentalInformationDisclosureWhetherthelistedcompanyanditsprincipalsubsidiariesareincludedinthelistofenterprisesrequiredtodiscloseenvironmentalinformationaccordingtolaw.

□Yes?No

V.SocialResponsibilities

ReportpublishedontheJuchaoInformationNetwork(Fordetails,seetheCompany's2024Environmental,SocialandGovernancewww.cninfo.com.cn).

SectionVSignificantEvents

I.CommitmentsthathavebeenfulfilledbytheCompany'sactualcontroller(s),shareholders,relatedparties,acquirers,theCompanyandtherelevantpartiesduringthereportingperiodandthosethathavenotbeenfulfilledbytheendofthereportingperiod

□Applicable?NotapplicableTherearenocommitmentsthathavebeenfulfilledbytheCompany'sactualcontroller(s),shareholders,relatedparties,acquirers,theCompanyandtherelevantpartiesduringthereportingperiodorthosethathavenotbeenfulfilledbytheendofthereportingperiod.II.Non-operationalcapitaloccupationoverlistedcompaniesbycontrollingshareholdersandtheirrelatedparties

□Applicable?NotapplicableDuringthereportingperiod,thereisnonon-operationalcapitaloccupationoverlistedcompaniesbycontrollingshareholdersandtheirrelatedparties.III.IllegalExternalGuarantees

□Applicable?NotapplicableNoillegalexternalguaranteesduringthereportingperiod.

IV.AppointmentandDismissalofAccountingFirmsWhetherthesemi-annualfinancialreporthasbeenaudited

□Yes?NoThesemi-annualfinancialreporthasnotbeenaudited.V.Explanationsmadebytheboardofdirectorsandtheboardofsupervisorsonthe"non-standardauditreport"fromtheaccountingfirmduringthereportingperiod

□Applicable?NotapplicableVI.StatementbytheBoardofDirectorsonthe"Non-standardAuditReport"ofthePreviousYear

□Applicable?Notapplicable

VII.BankruptcyandRestructuring

□Applicable?NotapplicableNosuchcaseasbankruptcyandreorganizationrelatedeventduringthereportingperiod.

VIII.LawsuitsMajorlawsuitsandarbitrations

□Applicable?NotapplicableThereisnomajorlawsuitorarbitrationduringthisreportingperiod.Otherlawsuits

□Applicable?NotapplicableIX.PenaltiesandRectification

□Applicable?NotapplicableNosuchcasesaspunishmentorrectificationduringthereportingperiod.

X.IntegrityoftheCompany,ItsControllingShareholdersandActualControllers

□Applicable?NotapplicableXI.SignificantRelated-partyTransactions

1.RelatedTransactionsRelevanttoDailyOperations

□Applicable?NotapplicableNosuchcaseassignificantrelated-partytransactionsconnectedwithdailyoperations.

2.RelatedTransactionsinAcquisitionorSaleofAssetsorEquities

□Applicable?NotapplicableNosuchcaseasrelatedsignificanttransactionsinacquisitionorsaleofassetsorequitiesinthereportingperiod.

3.SignificantRelated-partyTransactionsArisingfromJointInvestmentsonExternalParties

□Applicable?NotapplicableNosuchcaseassignificantrelated-partytransactionsinvolvingjointexternalinvestments.

4.Related-partyCreditor'sRightsandDebts

□Applicable?NotapplicableNosuchcaseasrelatedcreditsanddebtsduringthereportingperiod.

5.TransactionswithRelatedFinancialCompanies

□Applicable?NotapplicableNodeposit,loan,creditorotherfinancialbusinessbetweentheCompanyandtherelatedfinancialcompanyandtherelatedparties.

6.TransactionsbetweentheFinancialCompanyControlledbytheCompanyandTheRelatedParties

□Applicable?NotapplicableTherearenodeposit,loan,credit,orotherfinancialbusinessbetweenthefinancialcompanycontrolledbytheCompanyandtherelatedparties.

7.OtherSignificantRelated-partyTransactions?Applicable□Notapplicable

1.OnMarch28,2025,thecompanyheldthe11thmeetingofthe8thBoardofDirectorsandapprovedthe"ProposalontheEstimatedAmountofRoutineRelated-PartyTransactionsfor2025."Accordingtobusinessdevelopmentanddailyoperationalneeds,thecompanyanditssubsidiariesestimatethatthetotalamountofroutinerelated-partytransactionswithvariousrelatedpartiesin2025willbeRMB1,927.52million(excludingtax).

2.OnApril18,2025,theCompanyconvenedthe13thMeetingoftheEighthBoardofDirectors,whichreviewedandapprovedthe"ProposalontheWaiverofthePriorityRighttoAcquirePartialEquityPanoftheControllingSubsidiaryandRelatedTransactions."OthershareholdersoftheCompany'scontrollingsubsidiaries—ZhejiangHuayixinTechnologyCo.,Ltd.,ZhejiangHuaruijieTechnologyCo.,Ltd.,andZhejiangHuajianTechnologyCo.,Ltd.—intendtotransfertheirequityinterestsinsaidcompanieswithinthesamecontrollingentity.Specifically,NingboHuayingVentureCapitalPartnership(LimitedPartnership)willtransferitsequitystakesinthethreecontrollingsubsidiariestoMs.ChenAiling,theExecutivePartner.TheCompanyhaswaiveditsprioritytoaccepttransferregardingthisequitytransferarrangement.Followingtheaforementionedequitytransfer,theCompany'sproportionalownershipinterestinthesecontrollingsubsidiarieswillnotdecrease,andtherewillbenochangetothescopeofconsolidatedstatements.Websitefordisclosingtheinterimreportonsignificantrelated-partytransactions

XII.SignificantContractsandPerformance

1.MattersonTrusteeship,Contracting,andLeasehold

(1)MattersonTrusteeship

□Applicable?NotapplicableNosuchcaseascustodyduringthereportingperiod.

(2)Contracting

□Applicable?NotapplicableNosuchcaseascontractingduringthereportingperiod.

(3)Leasing?Applicable□NotapplicableExplanationsonleasesDuringthereportingperiod,someoftheCompany'sownrealestatepropertiesanddeviceswereusedforrental,andtherearenootherleasesofmajorpropertyexceptfortheleasedrealestatepropertiesusedforoffice,warehouse,andproductionworkshops.Casesthatbroughttheprofitandlossaccountedformorethan10%oftheCompany'stotalprofitduringthereportingperiod

□Applicable?NotapplicableNosuchleasesthatbroughttheprofitandlossaccountedformorethan10%oftheCompany'stotalprofitduringthereportingperiod.

2.SignificantGuarantees

?Applicable□Notapplicable

Unit:tenthousandRMB

3.EntrustedFinancing

?Applicable□Notapplicable

Unit:tenthousandRMB

Specificmattersonhigh-riskentrustedcapitalmanagementwithalargeamountforasingleitem,orwithlowsecurityandpoorliquidity?Applicable□Notapplicable

Unit:tenthousandRMB

Casesofentrustedfinancingexpectedtobeunabletorecovertheprincipalorcasesthatmayresultinimpairment

□Applicable?Notapplicable

4.OtherSignificantContracts

□Applicable?NotapplicableNosuchcaseasothersignificantcontractduringthereportingperiod.

XIII.ExplanationsonOtherSignificantMatters

?Applicable□Notapplicable

BasedonconfidenceintheCompany'sfuturedevelopmentprospectsandstrongrecognitionofitsvalue,andtosafeguardthelegitimaterightsandinterestsofinvestorswhileenhancingtheirconfidence,theBoardofDirectorsandgeneralmeetingofshareholdersapprovedtheCompany'srepurchaseofaportionofitsdomesticallyissuedcommonstocks(A-shares)throughcentralizedbiddingtransactions.Therepurchasedshareswillbecanceledtoreduceregisteredcapital,followingcomprehensiveconsiderationofoperationalconditions,businessdevelopmentprospects,financialstatus,andfutureprofitability.ThetotalrepurchaseamountshallbenolessthanRMB300million(inclusive)andnomorethanRMB500million(inclusive),withimplementationtobecompletedwithin12monthsfromthedatetherepurchaseplanisapprovedbythegeneralmeetingofshareholders.Fordetails,pleaserefertothe"ShareRepurchaseReport"publishedbytheCompanyontheJuchaoInformationNetwork(http://www.cninfo.com.cn).XIV.SignificantEventsoftheCompany'sSubsidiaries

□Applicable?Notapplicable

SectionVIChangesinSharesandInformationabout

ShareholdersI.ChangesinShares

1.ChangesinShares

Unit:share

Reasonsforchangesinshares?Applicable□Notapplicable

1.Duringthereportingperiod,pursuanttotheprovisionsoftheStockOptionandRestrictedShareIncentivePlanin2022,theCompanyrepurchasedandcanceled20,544,960restrictedsharesheldby3,837incentiverecipientsthathadbeengrantedbutremainedunlocked.

2.Duringthereportingperiod,atotalof7,757,481shareswerevoluntarilyexercisedbytheincentiverecipientsunderthe2022stockoptionandrestrictedshareincentiveplan;

3.Accordingtorelevantregulations,atthebeginningofeachyear,thelockedshareswillbere-determinedbasedonthesharesheldbydirectors,supervisors,andseniormanagement.Atthesametime,fordirectors,supervisors,andseniormanagementwhohavelefttheirpositions,theirheldshareswillbelockedatdifferentstagesandinvaryingproportionsaccordingtotheirdeparturetimeandtheoriginallystipulatedtermofoffice.Approvalforchangesinshares?Applicable□Notapplicable

1.Thecompany'srepurchaseandcancellationofrestrictedshareshavebeenapprovedbythe11thmeetingofthe8thBoardofDirectors,the8thmeetingofthe8thBoardofSupervisors,andthe2024annualgeneralmeeting.

2.OnJune19,2024,thecompanyheldthesixthmeetingoftheeighthBoardofDirectorsandthefifthmeetingoftheeighthBoardofSupervisors,duringwhichthe"ProposalonMeetingtheConditionsforExercisingtheSecondExercisePeriodof2022StockOptionsandRestrictedStockIncentivePlan"wasreviewedandapproved.AccordingtotheauthorizationofthegeneralmeetingofshareholdersandtheBoardofDirectors,thecompanycompletedtheregistrationanddeclarationworkrelatedtothevoluntaryexercisein2024.Transferforchangesinshares

□Applicable?NotapplicableTheprogressonsharerepurchases?Applicable□NotapplicableTheCompanyconvenedthe12thMeetingoftheEighthBoardofDirectorsonApril8,2025,andthe2024AnnualGeneralMeetingonApril21,2025.Bothmeetingsreviewedandapprovedthe"ProposalontheSchemefortheRepurchaseofShares",authorizingtheCompanytouseequityfundstorepurchaseaportionofitssharesthroughcentralizedbiddingtransactions.Therepurchasedshareswillbecanceledtoreduceregisteredcapitalinaccordancewiththelaw.ThetotalrepurchaseamountshallbenolessthanRMB300million(inclusive)andnomorethanRMB500million(inclusive),witharepurchasepricenotexceedingRMB27.26pershare(inclusive).Thesharerepurchaseimplementationperiodshallbewithin12monthsfromthedatethegeneralmeetingofshareholdersapprovesthisrepurchaseplan.Fordetails,pleaserefertothe"AnnouncementontheSchemefortheRepurchaseofShares"disclosedbytheCompanyontheJuchaoInformationNetwork(http://www.cninfo.com.cn)onApril9,2025.AsofJune30,2025,thecompanyrepurchased6,652,200sharesthroughthespecialsecuritiesaccountforsharerepurchaseviacompetitivebidding,withthehighesttransactionpriceatRMB15.71pershare,thelowesttransactionpriceatRMB15.16pershare,andatotaltransactionamountofRMB103.41million(excludingtransactionfees).Theprogressinreductionofre-purchasesharesbymeansofcentralizedcompetitivebidding

□Applicable?NotapplicableEffectsofchangesinsharesonthebasicearningspershare("EPS"),dilutedEPS,netassetspershare,attributabletocommonshareholdersoftheCompany,andotherfinancialindexesoverthelastyearandlastperiod?Applicable□NotapplicableDuringthereportingperiod,changesinsharecapitaloccurredduetothecompany'srepurchaseandcancellationofrestrictedsharesandthevoluntaryexerciseofincentiverecipients.Theimpactonthecompany'sbasicearningspershare,dilutedearningspershare,andnetassetpershareattributabletocommonshareholdersforthemostrecentyearandthemostrecentperiodisdetailedin"SectionII,IV.KeyAccountingDataandFinancialIndexes."

OthercontentsthattheCompanyconsidersnecessaryorarerequiredbythesecuritiesregulatoryauthoritiestodisclose

□Applicable?Notapplicable

2.ChangesinRestrictedStocks?Applicable□Notapplicable

Unit:share

II.IssuanceandListingofSecurities

□Applicable?Notapplicable

III.TotalNumberofShareholdersandTheirShareholdings

Unit:share

Shareholdersholdingmorethan5%ofshares,thetop10shareholdersandthetop10shareholderswithoutlimitedoutstandingsharesparticipatinginthelendingofsharesthroughrefinancing

□Applicable?NotapplicableChangesintop10shareholdersandtop10shareholderswithoutlimitedoutstandingsharesoverthepreviousperiodduetorefinancing,lending/returning

□Applicable?NotapplicableWhethertheCompany'stoptencommonshareholdersortoptencommonshareholderswithoutlimitedsharesagreeonanyrepurchasetransactioninthereportingperiod

□Yes?NoNoneoftheCompany'stoptencommonshareholdersortoptencommonshareholderswithoutlimitedsharesagreedonrepurchaseinthereportingperiod.

IV.ShareholdingChangesofDirectors,SupervisorsandSeniorManagement

?Applicable□Notapplicable

Note:"NumberofSharesDecreasedinthePeriod"referstotheCompany'srepurchaseandcancellationofrestrictedsharesthathadbeengrantedtodirectorsandseniormanagementbutremainedunlocked.V.ParticularsabouttheChangetotheControllingShareholdersandActualControllers

Changeofthecontrollingshareholdersinthereportingperiod

□Applicable?NotapplicableNochangehashappenedtothecontrollingshareholderinthereportingperiodoftheCompanyChangeoftheactualcontrollerinthereportingperiod

□Applicable?NotapplicableNochangehashappenedtotheactualcontrollerinthereportingperiod

VI.PreferredStockRelatedInformation

□Applicable?NotapplicableTherearenopreferredsharesinthereportingperiod.

SectionVIIBond-RelatedInformation

□Applicable?Notapplicable

SectionVIIIFinancialReportI.AuditReports

Whetherthesemi-annualreporthasbeenaudited

□Yes?NoThesemi-annualreporthasnotbeenaudited.II.FinancialStatementsUnitsoffinancialreportsinthenotes:RMB

1.ConsolidatedBalanceSheet

Preparedby:ZhejiangDahuaTechnologyCo.,Ltd.

June30,2025

Unit:RMB

Legalrepresentative:FuLiquanPersoninchargeofaccountingwork:XuQiaofenHeadofaccountingdepartment:ZhuZhuling

2.BalanceSheetoftheParentCompany

Unit:RMB

3.ConsolidatedIncomeStatement

Unit:RMB

Legalrepresentative:FuLiquanPersoninchargeofaccountingwork:XuQiaofenPersoninchargeoftheaccountinginstitution:ZhuZhuling

4.IncomeStatementoftheParentCompany

Unit:RMB

5.ConsolidatedCashFlowStatement

Unit:RMB

6.CashFlowStatementoftheParentCompany

Unit:RMB

7.ConsolidatedStatementofChangesinOwners'Equity

Amountofthisperiod

Unit:RMB

Amountofthepreviousyear

Unit:RMB

8.StatementofChangesinOwners'EquityoftheParentCompany

Amountofthisperiod

Unit:RMB

Amountofthepreviousyear

Unit:RMB

III.BasicInformationabouttheCompany

ZhejiangDahuaTechnologyCo.,Ltd.(hereinafterreferredtoasthe"Company"or"thisCompany")wasestablishedasajoint-stockcompanyinJune2002withtheapprovaloftheZhejiangProvincialPeople'sGovernmentWorkLeadingGroupforEnterpriseListingunderdocumentZheListing[2002]No.18.ItwasformedthroughtheoverallrestructuringoftheoriginalHangzhouDahuaInformationTechnologyCo.,Ltd.,jointlyinitiatedbyfivenaturalpersons:FuLiquan,ChenAiling,ZhuJiangming,LiuYunzhen,andChenJianfeng.OnApril22,2008,theCompanyissued16.8millionsharesofcommonstockinRMBtothegeneralpublicforthefirsttimeundertheapprovaldocumentNo.573[2008]SecuritiesRegulatoryIssuance,issuedbyChinaSecuritiesRegulatoryCommission("CSRC").ItwaslistedonShenzhenStockExchangeonMay20,2008witharegisteredcapitalofRMB66.8millionandthechangeregistrationfiledwithAdministrationforIndustryandCommercewascompletedonMay23,2008.TheCompany'sunifiedsocialcreditcodeis91330000727215176K.TheCompanyfallswithintheintelligentInternetofThingsindustry.AsofJune30,2025,thecompanyhasissuedatotalsharecapitalof3,282,842,254shares,withregisteredcapitalofRMB3,282,842,254.00.TheregisteredaddressisNo.1187,Bin'anRoad,BinjiangDistrict,Hangzhou,andtheheadquartersaddressisNo.1399,BixingRoad,BinjiangDistrict,Hangzhou.ThemainbusinessactivitiesoftheCompanyare:researchanddevelopment,production,andsalesofAIoTproducts,andprovisionofvideo-centricAIoTsolutionsandoperationalservices.TheactualcontrollersoftheCompanyareFuLiquanandChenAiling.ThisfinancialstatementhasbeenapprovedandissuedbytheBoardofDirectorsofthecompanyonAugust15,2025.IV.BasisforPreparingtheFinancialStatement

1.BasisforthePreparation

TheCompanypreparesthefinancialstatement,asagoingconcern,basedontransactionsandmattersthathaveactuallyoccurred,inaccordancewiththeAccountingStandardsforBusinessEnterprises-BasicStandardsissuedbytheMinistryofFinanceandallspecificaccountingstandards,applicationguidelinesforaccountingstandardsforbusinessenterprises,explanationsontheaccountingstandardsforbusinessenterprisesandotherrelatedregulations(hereinafterreferredtoas"AccountingStandardsforBusinessEnterprises"collectively),andthedisclosureprovisionsinthePreparationRulesforInformationDisclosuresbyCompaniesOfferingSecuritiestothePublicNo.15-GeneralProvisionsonFinancialReportsissuedbytheChinaSecuritiesRegulatoryCommission(CSRC).

2.GoingConcern

Thisfinancialstatementhasbeenpreparedbasedonthegoingconcern.TheCompanyhasthecapabilitytocontinueasagoingconcernforatleast12monthsasoftheendofcurrentreportingperiod,withoutanysignificantitemaffectingthecapabilityforcontinuingasagoingconcern.

V.SignificantAccountingPolicesandAccountingEstimatesTheCompanyfollowstheprincipleofmaterialitywhenpreparinganddisclosingthisfinancialstatementanddeterminestheimportanceofthedisclosedmattersintermsofbothnatureandamountbasedonactualcircumstances.Notestospecificaccountingpoliciesandaccountingestimates:

ThefollowingdisclosurescoverthespecificaccountingpoliciesandaccountingestimatesformulatedbytheCompanyaccordingtothecharacteristicsofitsproductionandoperation.

1.StatementonCompliancewithAccountingStandardsforBusinessEnterprises

ThisfinancialstatementcomplieswiththeAccountingStandardsforBusinessEnterprisesissuedbytheMinistryofFinanceandtruthfullyandcompletelyreflectstheconsolidatedandparentcompanyfinancialpositionofthecompanyasofJune30,2025,aswellastheconsolidatedandparentcompanyoperatingresultandcashflowforthefirsthalfof2025.

2.AccountingPeriod

ThefiscalyearisfromJanuary1toDecember31oftheGregoriancalendar.

3.OperatingCycleTheCompany'soperatingcycleis12months.

4.FunctionalCurrencyThecompany'sdomesticoperatingunitsandoverseasunitDahuaTechnology(HK)LimiteduseRMBasthefunctionalcurrency.Theotheroverseasoperatingentitiestaketheappropriatecurrencyasthefunctionalcurrencyonthebasisofthecurrencyinthemajoreconomicenvironmentinwhichtheyoperate.ThisfinancialstatementispresentedinRMB.

5.DeterminationMethodandSelectionBasisofImportanceStandard?Applicable□Notapplicable

6.TheaccountingtreatmentofbusinesscombinationsinvolvingenterprisesundercommoncontrolandbusinesscombinationsnotinvolvingenterprisesundercommoncontrolBusinesscombinationsunderthesamecontrol:Theassetsandliabilitiesacquiredbythemergingpartyinabusinesscombination(includinggoodwillincurredintheacquisitionofthemergedpartybytheultimatecontrollingparty)shallbemeasuredatthebookvalueoftheassetsandliabilitiesofthemergedpartyintheconsolidatedfinancialstatementoftheultimatecontrollingpartyonthedateofcombination.Thedifferencebetweenthebookvalueofthenetassetsobtainedandthebookvalueoftheconsiderationpaidforthecombination(ortotalnominalvalueoftheissuedshares)isadjustedtocapitalpremiumincapitalreserve.Adjustmentsshallbemadetoretainedearningsintheeventthatthesharepremiumsinthecapitalreservesarenotsufficientforwrite-down.Businesscombinationsnotinvolvingenterprisesundercommoncontrol:Thecostofcombinationisthefairvalueoftheassetspaid,theliabilitiesincurredorassumed,andtheequitysecuritiesissuedbytheacquirertoacquirethecontroloftheacquireeontheacquisitiondate.Wherethecostofcombinationishigherthanthefairvalueoftheidentifiablenetassetsacquiredfromthemergingpartyinbusinesscombination,suchdifferenceshallberecognizedasgoodwill;wherethecostofcombinationislessthanthefairvalueoftheidentifiablenetassetsacquiredfromthemergingpartyinbusinesscombination,suchdifferenceshallbechargedtotheprofitorlossfortheperiod.Theidentifiableassets,liabilitiesandcontingentliabilitiesoftheacquireeobtainedinthecombinationthatsatisfytherecognitioncriteriashallbemeasuredbythefairvalueonthedateofacquisition.Thefeeswhicharedirectlyrelatedtothebusinesscombinationshallberecognizedastheprofitorlossintheperiodwhenthecostsareincurred;thetransactionexpensesofissuingequitysecuritiesordebtsecuritiesforbusinessmergershallbeinitiallycapitalizedforequitysecuritiesordebtsecurities.

7.JudgmentCriteriaforControlPreparationMethodofConsolidatedFinancialStatements

(1)CriteriaforControlJudgmentThescopeofconsolidationoftheconsolidatedfinancialstatementisdeterminedbasedoncontrol,andtheconsolidationscopeincludesthecompanyandallitssubsidiaries.ControlmeansthattheCompanyhasthepowerwithrespecttotheinvesteetoobtainvariablereturnsbyengaginginrelevantactivitiesoftheinvestee,andhastheabilitytoinfluencetheamountofitsreturnsbyapplyingitspowerwithrespecttotheinvestee.

(2)MethodofPreparingtheConsolidatedFinancialStatement

Thecompanyregardstheentirecorporategroupasasingleaccountingentityandpreparestheconsolidatedfinancialstatementinaccordancewithuniformaccountingpoliciestoreflecttheoverallfinancialposition,operatingresult,andcashflowofthecorporategroup.TheinfluencefromtheinternaltransactionsbetweentheCompanyandthesubsidiariesorbetweendifferentsubsidiariesshallbeeliminated.Internaltransactionsshowthatimpairmentlossofrelevantassetsshallberecognizedassuchlossinfull.Inpreparingtheconsolidatedfinancialstatements,wheretheaccountingpoliciesandtheaccountingperiodsareinconsistentbetweentheCompanyandsubsidiaries,thefinancialstatementsofsubsidiariesareadjustedinaccordancewiththeaccountingpoliciesandaccountingperiodoftheCompany.Thesharesbelongingtominorityshareholdersinowner'sequity,thenetprofitorlossandthecomprehensiveincomeofthesubsidiaryofthecurrentperiodarepresentedseparatelyundertheowners'equityintheconsolidatedbalancesheet,thenetprofits,andthetotalcomprehensiveincomeintheconsolidatedincomestatementrespectively.Wherelossesattributabletotheminorityshareholdersofasubsidiaryofthecurrentperiodexceedtheminorityshareholders'interestentitledintheshareholders'equityofthesubsidiaryatthebeginningoftheperiod,theexcessshallbeoffsetagainsttheequityofminorityshareholders.

AdditionofSubsidiariesorBusinessesDuringthereportingperiod,ifsubsidiariesorbusinessesareaddedthroughbusinesscombinationsundercommoncontrol,theoperatingresultsandcashflowsofthesubsidiariesorbusinessesfromthebeginningofthecurrentperiodtotheendofthereportingperiodshallbeincludedintheconsolidatedfinancialstatement.Atthesametime,adjustmentsshallbemadetotheopeningbalancesoftheconsolidatedfinancialstatementandtherelateditemsinthecomparativestatements,treatingthecombinedreportingentityashavingexistedcontinuouslyfromthetimepointwhentheultimatecontrollingpartybegantoexercisecontrol.Inconnectionwithimposingcontrolovertheinvesteeundercommoncontrolduetoadditionalinvestmentandotherreasons,theequityinvestmentheldbeforegainingthecontrolofthecombinedpartyisrecognizedasrelevantprofitorloss,othercomprehensiveincomeandchangesinothernetassetsatthelaterofthedateofacquisitionoftheoriginalequityandthedatewhenthecombiningandthemergedpartiesareundercommoncontrol,andshallbewrittendowntotheopeningbalanceretainedearningsorcurrentprofitorlossinthecomparativereportingperiod.Additionalsubsidiariesorbusinessduetobusinesscombinationinvolvingentitiesnotundercommoncontrolduringthereportingperiodwillbeincludedintheconsolidatedfinancialstatementsasofthedateofacquisitiononthebasisofthefairvalueoftheidentifiableassets,liabilitiesorcontingentliabilitiesdeterminedonthedateofacquisition.Inconnectionwithimposingcontrolovertheinvesteenotundercommoncontrolduetoadditionalinvestmentandotherreasons,theequityofacquireeheldbeforeacquisitiondateshallberemeasuredatthefairvalueofsuchequityontheacquisitiondateandthedifferencebetweenfairvalueandbookvalueshallberecognizedasinvestmentincomeincurrentperiod.Othercomprehensiveincomethatmaylaterbereclassifiedintoprofitorlossandchangesinotherowner'sequityaccountedbyequitymethodcontainedintheacquiree'sequityheldbeforetheacquisitiondateshallbetransferredtocurrentinvestmentgainsonthedateofacquisition.

②DisposalofSubsidiariesorBusinessesa.GeneralHandlingMethod

Whencontrolovertheinvesteeislostduetodisposalofpartoftheequityinvestmentorotherreasons,theremainingequityinvestmentafterdisposalshallberemeasuredatitsfairvalueonthedatecontrolislost.Thesumofconsiderationreceivedfromdisposalofequityinvestmentandthefairvalueoftheremainingequityinvestment,netofthedifferencebetweenthesumoftheCompany'spreviousshareofthesubsidiary'snetassetsrecordedfromtheacquisitiondateorcombinationdateandthesumofgoodwill,isrecognizedininvestmentincomeintheperiodinwhichcontrolislost.Othercomprehensiveincomethatmaylaterbereclassifiedintoprofitorlossandchangesinotherowner'sequityaccountedbyequitymethodinconnectionwiththeequityinvestmentoftheoriginalsubsidiariesshallbetransferredtothecurrentinvestmentgainswhenthecontrolislost.b.StepwiseDisposalofSubsidiariesWhenequityinvestmentinasubsidiaryisdisposedofstepbystepthroughmultipletransactionsuntilcontrolislost,andtheterms,conditions,andeconomiceffectsofeachtransactiondisposingoftheequityinvestmentinthesubsidiarymeetoneormoreofthefollowingsituations,itgenerallyindicatesthatthesemultipletransactionsconstituteapackagedeal:

?Thesetransactionsareachievedatthesametimeorthemutualeffectsoneachotherareconsidered;?Acompletesetofcommercialresultscanbeachievedwithreferencetotheseriesoftransactionsasawhole;?Occurrenceofatransactiondependsontheoccurrenceofatleastoneoftheothertransactions;?Onetransactionrecognizedseparatelyisnoteconomical,butitiseconomicalwhenconsideredtogetherwithothertransactions.Ifmultipletransactionsarerecognizedasapackagedeal,thesetransactionsshallbesubjecttoaccountingtreatmentasatransactiontodisposeofthesubsidiariesandlosecontrol.Thedifferencesbetweenthepriceoneachdisposalanddisposalofinvestmentonthesubsidiary'snetassetsshallberecognizedinothercomprehensiveincomeintheconsolidatedfinancialstatements,andincludedinprofitorlossfortheperiodwhenthecontrolislost.Ifthetransactionsarenotapackagedeal,accountingtreatmentforpartialdisposalofequityinvestmentsofthesubsidiarywithoutlosingcontrolshallbeappliedbeforecontrolislost.Whenthecontrolislost,generalaccountingtreatmentfordisposalofasubsidiaryshallbeused.

PurchaseofminorityequityinsubsidiariesThedifferencebetweenthenewlyacquiredlong-termequityinvestmentfromthepurchaseofminorityequityandtheshareofnetassetsofthesubsidiarycontinuouslycalculatedfromthepurchasedateorconsolidationdatebasedontheincreasedshareholdingratioshallbeadjustedinthestockpremiumunderthecapitalreserveintheconsolidatedbalancesheet.Ifthestockpremiumunderthecapitalreserveisinsufficienttooffset,retainedearningsshallbeadjusted.

④PartialdisposalofequityinvestmentinasubsidiarywithoutlossofcontrolThedifferencebetweenthedisposalproceedsandthenetassetshareofthesubsidiarycontinuouslycalculatedfromthepurchasedateorthemergerdatecorrespondingtothedisposedlong-termequityinvestmentshallbeusedto

adjustthestockpremiuminthecapitalreserveoftheconsolidatedbalancesheet.Ifthestockpremiuminthecapitalreserveisinsufficientforoffset,retainedearningsshallbeadjusted.

8.ClassificationofJointVentureArrangementandAccountingTreatmentMethodsforJointOperation

Jointventurearrangementisclassifiedintojointoperationandjointventure.Jointoperationmeansthejointventurearrangementinwhichthejointventurepartieshavetheassetsandassumetheliabilitiesrelatedtosucharrangement.TheCompanyrecognizesthefollowingitemsrelatedtotheshareofinterestsinthejointoperation:

(1)TheassetsseparatelyheldbytheCompanyandassetsjointlyheldasrecognizedbytheshareoftheCompany;

(2)TheliabilitiesseparatelyassumedbytheCompanyandliabilitiesjointlyassumedasrecognizedbytheshareoftheCompany;

(3)IncomefromsellingtheshareoftheCompanyintheoutputofthejointoperation;

(4)IncomefromjointoperationofthesoldoutputasrecognizedbytheshareoftheCompany;

(5)TheexpensesseparatelyincurredandexpensesjointlyincurredasrecognizedbytheshareoftheCompany.TheCompanyadoptstheequitymethodfortheinvestmentofthejointventure.Fordetails,refertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-20.Long-termEquityInvestment.

9.RecognitionCriteriaofCashandCashEquivalents

CashmeansthecashonhandanddepositsthatareavailableforpaymentatanytimeoftheCompany.CashequivalentsmeantheinvestmentsheldbytheCompanywhichareshort-term,highlyliquid,easytobeconvertedintoknownamountsofcashandhavelittleriskofvaluechange.

10.ConversionofTransactionsAndFinancialStatementsDenominatedinForeignCurrencies

(1)ForeignCurrencyBusinessForeigncurrencybusinessusesthespotexchangerateonthetransactiondateoraratedeterminedbyareasonablesystemmethodthatapproximatesthespotexchangerateonthetransactiondate(hereinafterreferredtoastheapproximatespotexchangerate)astheconversionratetotranslateforeigncurrencyamountsintofunctionalcurrencyamounts.Thebalancesofforeigncurrencymonetaryitemsonthebalancesheetdatearetranslatedatthespotexchangerateonthatdate.Theresultingexchangedifferences,exceptforthosearisingfromforeigncurrency-specificborrowings

relatedtotheacquisitionandconstructionofassetsmeetingcapitalizationcriteria—whicharetreatedaccordingtotheborrowingcostcapitalizationprinciple—areallrecognizedinthecurrentprofitorloss.

(2)TranslationofforeigncurrencyfinancialstatementsAssetsandliabilitiesinthebalancesheetaretranslatedusingthespotexchangerateonthebalancesheetdate;equityitems,exceptforthe"undistributedprofit"item,aretranslatedusingthespotexchangerateatthetimeofoccurrence.Revenueandexpenseitemsintheincomestatementaretranslatedataspotexchangerateatthetransactionoccurrencedateortheappropriateexchangerateofthespotexchangerate.Cashflowsinforeigncurrencies,aswellascashflowsfromforeignsubsidiaries,aretranslatedatthespotexchangerateonthedaywhenthecashflowsoccurortheappropriateexchangerateofthespotexchange.Fordisposalofoverseasoperation,thetranslationdifferenceasstatedintheforeigncurrencyfinancialstatementsrelatingtooverseasoperation,isaccountedforintheprofitandlossaccountinthecurrentperiodfromowners'equityitems.

11.FinancialInstrumentsAfinancialasset,financialliabilityorequityinstrumentisrecognizedwhentheCompanybecomesapartytothefinancialinstrumentcontract.

(1)ClassificationofFinancialInstrumentsAccordingtothecompany'sbusinessmodelformanagingfinancialassetsandthecontractualcashflowcharacteristicsofthefinancialassets,financialassetsareclassifiedatinitialrecognitionas:financialassetsmeasuredatamortizedcost,financialassets(debtinstruments)measuredatfairvaluewithchangesrecognizedinothercomprehensiveincome,andfinancialassetsmeasuredatfairvaluewithchangesrecognizedinprofitorlossforthecurrentperiod.Thefinancialassetswhichsatisfythefollowingconditions,andarenotdesignatedasfinancialassetsatfairvaluethroughprofitorlosswillbeclassifiedbytheCompanyasfinancialassetsatamortizedcost:

①Thebusinessmodelaimstocollectcontractualcashflow;

②Contractualcashflowrefersonlytopaymentsofprincipalandinterestbasedontheoutstandingprincipalamount.Thecompanyshallclassifyfinancialassets(debtinstruments)measuredatfairvaluewithchangesrecognizedinothercomprehensiveincomeiftheysimultaneouslymeetthefollowingconditionsandarenotdesignatedasfinancialassetsmeasuredatfairvaluewithchangesrecognizedinprofitorlossforthecurrentperiod:

①Thebusinessmodelisbothtocollectcontractualcashflowandtosellthefinancialasset;

②Thecontractualcashflowsaresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.

Fornon-tradinginvestmentsinequityinstruments,theCompanymay,atthetimeofinitialrecognition,irrevocablydesignatethemasfinancialassets(equityinstruments)atfairvaluethroughothercomprehensiveincome.Suchdesignationisbasedontheindividualinvestments,andrelevantinvestmentsfallwithinthedefinitionoftheequityinstrumentfromtheperspectiveoftheissuer.Exceptforthefinancialassetsatamortizedcost,andfinancialassetsatfairvaluethroughothercomprehensiveincome,alltheremainingfinancialassetsareclassifiedasthefinancialassetsatfairvaluethroughprofitorloss.Atthetimeofinitialrecognition,thefinancialassetswhichshouldhavebeenclassifiedasfinancialassetsatamortizedcostorfinancialassetsatfairvaluethroughothercomprehensiveincomecanbeirrevocablydesignatedbytheCompanyasfinancialassetsatfairvaluethroughprofitorlossiftheaccountingmismatchcanbeeliminatedorsignificantlyreduced.Thefinancialliabilities,wheninitiallyrecognized,areclassifiedas:financialliabilitiesatfairvaluethroughprofitorlossandfinancialliabilitiesatamortizedcost.Financialliabilitieswhichmeetoneofthefollowingconditionswillbe,wheninitiallymeasured,designatedasfinancialliabilitiesatfairvaluethroughprofitorloss:

①Thisdesignationcaneliminateorsignificantlyreduceaccountingmismatch;

②Themanagementandperformanceevaluationofthefinancialliabilityportfolioorthefinancialassetandfinancialliabilityportfolioarebasedonfairvalueaccordingtotheformallydocumentedenterpriseriskmanagementorinvestmentstrategy,andreportsaremadeinternallytokeymanagementpersonnelonthisbasis;

③Thefinancialliabilitycontainsembeddedderivativesthatneedtobeseparatelyseparated.

(2)RecognitionBasisandMeasurementMethodsofFinancialInstruments

①FinancialAssetsMeasuredatAmortizedCostFinancialassetsmeasuredatamortizedcostincludenotesreceivable,accountsreceivable,otherreceivables,long-termreceivables,creditor'srightsinvestments,etc.Theyareinitiallymeasuredatfairvalue,withrelatedtransactioncostsincludedintheinitialrecognitionamount;accountsreceivablewithoutsignificantfinancingcomponentsandaccountsreceivableforwhichthecompanydecidesnottoconsiderfinancingcomponentsnotexceedingoneyearareinitiallymeasuredatthecontracttransactionprice.Theinterestcalculatedbyeffectiveinterestmethodduringtheholdingperiodisrecordedintothecurrentprofitandloss.Atthetimeofrecoveryordisposal,thedifferencebetweenthepriceobtainedandthebookvalueshallbeincludedinthecurrentprofitorloss.

②Financialassets(debtinstruments)measuredatfairvaluewithchangesincludedinothercomprehensiveincomeFinancialassets(debtinstruments)measuredatfairvaluewithchangesincludedinothercomprehensiveincomeincludereceivablesfinancing,othercreditor'srightinvestments,etc.,initiallymeasuredatfairvalue,withrelated

transactioncostsincludedintheinitialrecognitionamount.Thesefinancialassetsaresubsequentlymeasuredatfairvalue,andthechangeinfairvalue,otherthantheinterest,theimpairmentlossorprofitandtheprofitorlossonforeignexchange,shallbeincludedinothercomprehensiveincome.Uponderecognition,thecumulativeprofitsorlossespreviouslyincludedinothercomprehensiveincomeshallberemovedfromothercomprehensiveincomeandincludedintheprofitorlossfortheperiod.

③Financialassets(equityinstruments)measuredatfairvaluewithchangesincludedinothercomprehensiveincomeFinancialassets(equityinstruments)measuredatfairvaluewithchangesincludedinothercomprehensiveincomeincludeotherequityinstrumentinvestmentsandareinitiallymeasuredatfairvalue,withrelatedtransactioncostsincludedintheinitialrecognitionamount.Thesefinancialassetsaresubsequentlymeasuredatfairvalue,andthechangeinfairvalueshallbeincludedinothercomprehensiveincome.Thedividendsobtainedshallbeincludedintheprofitorlossfortheperiod.Uponderecognition,thecumulativeprofitsorlossespreviouslyincludedinothercomprehensiveincomeshallberemovedfromothercomprehensiveincomeandincludedinthecarry-forwardretainedearnings.

④FinancialassetsmeasuredatfairvaluewithchangesrecognizedincurrentprofitorlossFinancialassetsmeasuredatfairvaluewithchangesrecognizedincurrentprofitorlossincludetradingfinancialassets,derivativefinancialassets,andothernon-currentfinancialassets.Theyareinitiallymeasuredatfairvalue,andrelatedtransactioncostsarerecognizedincurrentprofitorloss.Thesefinancialassetsaresubsequentlymeasuredatfairvalue,andthechangeinfairvalueshallbeincludedintheprofitorlossfortheperiod.

⑤FinancialliabilitiesmeasuredatfairvaluethroughprofitorlossFinancialliabilitiesmeasuredatfairvaluethroughprofitorlossincludetransactionalfinancialliabilities,derivativefinancialliabilities,etc.Theyareinitiallymeasuredatfairvalue,andrelatedtransactioncostsarerecognizedinprofitorlossforthecurrentperiod.Thesefinancialliabilitiesaresubsequentlymeasuredatfairvalue,andthechangeinfairvalueshallbeincludedintheprofitorlossfortheperiod.Uponderecognition,thedifferencebetweentheirbookvalueandtheconsiderationpaidisincludedintheprofitorlossfortheperiod.

⑥FinancialliabilitiesmeasuredatamortizedcostFinancialliabilitiesmeasuredatamortizedcostincludeshort-termloans,notespayable,accountspayable,otherpayables,long-termdebt,bondspayable,andlong-termpayables.Theyareinitiallymeasuredatfairvalue,andrelatedtransactioncostsareincludedintheinitialrecognitionamount.Theinterestcalculatedbyeffectiveinterestmethodduringtheholdingperiodisrecordedintothecurrentprofitandloss.Uponderecognition,thedifferencebetweentheconsiderationpaidandthebookvalueofthesefinancialliabilitiesisincludedinthecurrentprofitorloss.

(3)DerecognitionandTransferofFinancialAssetsThecompanyshallderecognizeafinancialassetwhenoneofthefollowingconditionsismet:

①Terminationofthecontractualrighttoreceivethecashflowofthefinancialasset;

②Thefinancialassethasbeentransferred,andalmostalltherisksandrewardsofownershipofthefinancialassethavebeentransferredtothetransferee;

③Thefinancialassethasbeentransferred,althoughthecompanyhasneithertransferrednorretainedalmostalltherisksandrewardsofownershipofthefinancialasset,controloverthefinancialassethasnotbeenretained.IftheCompanymodifiesorrenegotiatesthecontractwiththecounterparty,whichconstitutesasubstantialmodification,theoriginalfinancialassetswillbederecognisedandanewfinancialassetwillberecognizedaccordingtothemodifiedterms.ThefinancialassetswhentransferredwillnotbederecognizediftheCompanyhasretainednearlyalltherisksandrewardsrelatedtotheownershipofthefinancialassets.Thesubstance-over-formprincipleshallbeadoptedwhilemakingjudgmentonwhetherthetransferoffinancialassetssatisfiestheaboveconditionsforterminationofrecognition.Thetransferoffinancialassetscanbeclassifiedintoentiretransferandpartialtransfer.Ifthetransferofanentirefinancialassetsatisfiestheconditionsforterminationofrecognition,thedifferencebetweenthetwoamountsbelowshallberecordedintoprofitorlossfortheperiod:

①Thebookvalueofthetransferredfinancialasset;

②Thesumoftheconsiderationreceivedduetothetransferandthecumulativeamountoffairvaluechangesdirectlyrecognizedinowners'equity(incaseswherethetransferredfinancialassetisadebtinstrumentmeasuredatfairvaluewithchangesrecognizedinothercomprehensiveincome).Ifthepartialtransferoffinancialassetssatisfiestheconditionsforterminationofrecognition,theoverallbookvalueofthetransferredfinancialassetshallbeapportionedaccordingtotheirrespectiverelativefairvaluebetweentherecognitionterminatedpartandtheremainingpart,andthedifferencebetweenthetwoamountsbelowshallberecordedintoprofitorlossforthecurrentperiod:

①Thebookvalueofthederecognizedportion;

②Theconsiderationofthederecognizedportion,plustheamountcorrespondingtothederecognizedportioninthecumulativefairvaluechangesoriginallydirectlyrecordedinowners'equity(involvingtransferredfinancialassetsmeasuredatfairvaluewithchangesincludedinothercomprehensiveincomeforfinancialassets(debtinstruments)).Financialassetswillstillberecognizediftheyfailtosatisfytheconditionsforterminationofrecognition,withtheconsiderationreceivedrecognizedasafinancialliability.

(4)DerecognitionoffinancialliabilitiesIfthepresentobligationofafinancialliabilityisfullyorpartiallydischarged,thefinancialliabilityortherelevantpartshallbederecognized;ifthecompanyentersintoanagreementwiththecreditortoreplacetheexistingfinancialliabilitybyassuminganewfinancialliability,andthecontractualtermsofthenewfinancialliabilityaresubstantiallydifferentfromthoseoftheexistingfinancialliability,theexistingfinancialliabilityshallbederecognized,andthenewfinancialliabilityshallberecognizedsimultaneously.Ifallorpartofthecontracttermsoftheoriginalfinancialliabilitiesaresubstantiallyamended,therecognitionoftheoriginalfinancialliabilitieswillbeterminatedinfullorinpart,andthefinancialliabilitieswhosetermshavebeenamendedshallberecognizedasanewfinancialliability.Whenrecognitionoffinancialliabilitiesisterminatedinfullorinpart,thedifferencebetweenthebookvalueofthefinancialliabilitiesterminatedandtheconsiderationpaid(includingtransferrednon-cashassetsornewfinancialliability)isrecognizedinprofitorlossforthecurrentperiod.WheretheCompanyrepurchasespartofitsfinancialliabilities,thebookvalueofsuchfinancialliabilitieswillbeallocatedaccordingtotherelativefairvaluebetweenthecontinuedrecognizedpartandterminatedpartontherepurchasedate.Thedifferencebetweenthebookvalueofthefinancialliabilitiesterminatedandtheconsiderationpaid(includingtransferrednon-cashassetsornewfinancialliability)isrecognizedinprofitorlossforthecurrentperiod.

(5)MethodforDeterminingtheFairValueofFinancialAssetsandFinancialLiabilitiesForfinancialinstrumentswithactivemarkets,theirfairvalueisdeterminedbasedonquotationsintheactivemarket.Thefairvalueofafinancialinstrumentthatisnottradedinanactivemarketisdeterminedbyusingavaluationtechnique.TheCompanyusesthevaluationtechniquewhenitisapplicableundercurrentconditionsandthereareenoughavailabledataandotherinformationtosupportandthetechniqueshouldmaximizetheuseofrelevantobservable.Itchoosestheinputswhichareconsistentwiththeassetorliability'scharacteristicsconsideredbymarketparticipantsinthetransactionoftherelevantassetorliabilityandmakesthemaximumuseofrelevantobservableinputs.Unobservableinputsareusedunderthecircumstancethattherelevantobservableinputscannotbeobtainedornotfeasible.

(6)MethodsforTestingImpairmentofFinancialAssetsandAccountingTreatmentThecompanyappliesimpairmentaccountingbasedonexpectedcreditlossforfinancialassetsmeasuredatamortizedcost,financialassets(debtinstruments)measuredatfairvaluewithchangesrecognizedinothercomprehensiveincome,andfinancialguaranteecontracts.Takingintothereasonableandwell-groundedinformationincludingpastmatters,currentsituationandpredictionoffutureeconomicconditions,theCompanycalculatesthepossiblyweightedamountofthepresentvalueofthedifferencebetweenthecashflowsreceivableunderthecontractandthecashflowsexpectedtobereceived,takingtheriskofdefaultastheweight,andrecognizestheexpectedcreditloss.

TheCompanywillalwaysmeasurethelossprovisionfortheaccountsreceivableandcontractassetsarisingfromthetransactionsregulatedby"AccountingStandardforBusinessEnterprisesNo.14—Revenue",whethertheycontainmaterialfinancingcompositionsornot,bytheamountoftheexpectedcreditlossthroughouttheduration.Fortheleasereceivablesresultingfromtransactionsgovernedby"AccountingStandardforBusinessEnterprisesNo.21—Leasing",theCompanywillalwaysmeasurethelossprovisionfortheaccountsreceivable,bytheamountoftheexpectedcreditlossthroughouttheduration.TheCompanyassessesthechangesincreditriskofotherrelevantfinancialinstrumentssinceinitialrecognitionateachbalancesheetdate.Bycomparingtheriskofdefaultoffinancialinstrumentsonthebalancesheetdatewiththeriskofdefaultontheinitialrecognitiondate,theCompanydeterminestherelativechangeintheriskofdefaultovertheexpectedlifeoffinancialinstrumentstoassesswhetherthecreditriskoffinancialinstrumentshasincreasedsignificantlysinceinitialrecognition.Ifthefinancialinstrumentbecomesoverdueformorethan30days,theCompanybelievesthatthecreditriskofthisfinancialinstrumenthasbeensignificantlyincreased,unlessthereareconcreteevidencethatthecreditriskofthisfinancialinstrumenthasnotbeensignificantlyincreaseduponinitialrecognition.Ifthefinancialinstrumentcarrieslowcreditriskatthebalancesheetdate,theCompanybelievesthatthecreditriskofthisfinancialinstrumentisnotsignificantlyincreaseduponinitialrecognition.Ifthecreditriskofthisfinancialinstrumenthasbeensignificantlyincreaseduponinitialrecognition,theCompanymeasuresitslossprovisioninaccordancewiththeamountequivalenttotheexpectedcreditlossofthefinancialinstrumentthroughouttheduration;ifthecreditriskofthisfinancialinstrumentisnotsignificantlyincreaseduponinitialrecognition,theCompanywillmeasurethelossprovisionofthisfinancialinstrumentbytheamountofitsexpectedcreditlossinthe12monthstocome.Theincreasedorreversedamountofthelossprovisionresultingtherefromisincludedinthecurrentprofitorlossastheimpairmentlossorprofit.Forfinancialassets(debtinstruments)atfairvaluethroughothercomprehensiveincome,thelossprovisionisrecognizedinothercomprehensiveincome,andtheimpairmentlossorgainisincludedincurrentprofitsorlosses,withoutreductioninthebookvalueofthefinancialassetasstatedinthebalancesheet.Ifthereareobjectiveevidencesshowingthatacertainreceivablehasbeensubjecttocreditimpairment,theCompanywillaccrueimpairmentprovisionforthereceivableontheindividualassetbasis.Exceptfortheabove-mentionedaccountsreceivableforwhichanindividualprovisionforbaddebtshasbeenmade,theCompanydividesotherfinancialinstrumentsintoseveralcombinationsbasedontheircreditriskcharacteristics,anddeterminesexpectedcreditlossesonthebasisofthecombinations.TheCompany'scombinationcategoriesanddeterminationbasisofexpectedcreditlossesfornotesreceivable,accountsreceivable,accountsreceivablefinancing,otherreceivables,contractassets(includingcontractassetspresentedinothernon-currentassets)andlong-termreceivables(includinglong-termreceivablesduewithinoneyearpresentedinnon-currentassetsduewithinoneyear)areasfollows:

IftheCompanynolongerreasonablyexpectsthatthecashflowofthefinancialassetcontractcanberecoveredasawholeorinpart,thebookbalanceofsuchfinancialassetswillbedirectlyreduced.

12.NotesReceivableRefertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments

13.AccountsReceivable

RefertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments

14.ReceivablesFinancing

RefertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments

15.OtherReceivables

RefertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments

16.ContractAssets

(1)RecognitionMethodsandCriteriaforContractAssets

Thecompanypresentscontractassetsorcontractualliabilitiesinthebalancesheetbasedontherelationshipbetweenthefulfillmentofperformanceobligationsandcustomerpayments.ConsiderationsthattheCompanyhastherighttocollectforcommoditiestransferredorservicesprovidedtocustomers(andsuchrightdependsonotherfactorsthanpassingoftime)arepresentedascontractassets.Thecontractassetsandcontractliabilitiesunderthesamecontractarepresentedinnetamount.TheCompanyseparatelypresentstherightpossessedtocollectconsiderationfromcustomersunconditionally(onlydependingonthepassingoftime)asaccountsreceivable.

(2)DeterminationMethodandAccountingTreatmentofExpectedCreditLossonContractAssetsFordetails,pleaserefertothissectionofthefinancialreport-V.SignificantAccountingPoliciesandAccountingEstimates-11.FinancialInstruments.

17.Inventory

(1)ClassificationofInventoryInventoryisclassifiedas:rawmaterials,work-in-progress,finishedgoods,contractperformancecost,entrustedprocessingmaterials,etc.Theinventoriesareinitiallymeasuredatcost,whichcomprisesthecostofpurchase,costofconversionandotherexpenditureincurredinbringingtheinventoriestotheirpresentlocationandcondition.

(2)ValuationmethodforissuedinventoryInventoryisvaluedusingtheweightedaveragemethodwhenissued.

(3)BasisforDeterminingtheNetRealizableValueofInventoriesinDifferentCategoriesOnthebalancesheetdate,inventoriesshallbemeasuredatthelowerofcostandnetrealizablevalue.Whenthecostofinventoriesishigherthantheirnetrealizablevalue,reserveforstockdepreciationshallbeaccrued.Thenetrealizablevaluemeanstheamountafterdeductingtheestimatedcostofcompletion,estimatedsellingexpensesandrelevanttaxesfromtheestimatedsellingpriceofinventoriesinthedailyactivities.Netrealizablevalueofheld-for-salecommoditystocks,suchasfinishedgoods,goods-in-stock,andheld-for-salerawmaterials,duringthenormalcourseofproductionandoperation,shallbedeterminedbytheirestimatedsaleslesstherelatedsellingexpensesandtaxes;thenetrealizablevalueofmaterialinventories,whichneedtobeprocessed,duringthenormalcourseofproductionandoperation,shallbedeterminedbytheamountafterdeductingtheestimatedcostofcompletion,estimatedsellingexpensesandrelevanttaxesfromtheestimatedsellingpriceoffinishedgoods;thenetrealizablevalueofinventoriesheldforexecutionofsalescontractsorlaborcontractsshallbecalculatedonthegroundofthecontractedprice.Ifanenterpriseholdsmoreinventoriesthanthequantitystipulatedinthesalescontract,thenetrealizablevalueoftheexceedingpartshallbecalculatedonthegroundofgeneralsellingprice.IftheCompanyaccruestheprovisionforimpairmentofinventoriesonacombinationbasis,thecombinationcategoriesanddeterminationbasisaswellasthebasisfordeterminationofthenetrealizablevalueofdifferenttypesofinventoryareasfollows:

Ifthefactorsinfluencingthewrite-downoftheinventoryvaluehavedisappeared,resultinginhighernetrealizablevalueofinventoriesthantheirbookvalueafterthereserveforstockdepreciationisaccrued,areversalshallapplyintheamountofreserveforstockdepreciationpreviouslyaccrued,andthereservedamountshallbeincludedinthecurrentprofitorloss.

(4)InventoryCountingSystemTheperpetualinventorysystemisadopted.

(5)AmortizationMethodofLow-ValueConsumablesandPackagingMaterials

①Low-valueconsumablesareamortizedusingtheimmediatewrite-offmethod;

②Packagingmaterialsareamortizedusingtheimmediatewrite-offmethod.

18.HoldingAssetsforSale

(1)RecognitionCriteriaandAccountingTreatmentMethodsAssetsclassifiedasheldforsaleareprimarilynon-currentassetsordisposalgroupswhosebookvalueisrecoveredmainlythroughsale(includingnon-monetaryassetexchangeswithcommercialsubstance)ratherthanthroughcontinueduse.Anon-currentassetordisposedgroupisclassifiedbytheCompanyasholdingforsaleifitmeetsthefollowingcriteriaatthesametime:

①Accordingtothepracticeofsellingsuchassetsordisposalgroupsinsimilartransactions,theycanbesoldimmediatelyunderthecurrentconditions;

②Thesaleishighlylikelytooccur,meaningthecompanyhasalreadymadearesolutiononasaleplanandobtainedadefinitepurchasecommitment,withthesaleexpectedtobecompletedwithinoneyear.IfrequiredbyrelevantprovisionsthatsellingshallonlybemadeafterapprovedbytherelevantcompetentauthorityorsupervisiondepartmentoftheCompany,suchapprovalshouldhavebeenobtained.Ifthebookvalueofthenon-currentassets(excludingfinancialassets,deferredincometaxassets,andassetstoconstitutepayrollpayable)ordisposalgroupsclassifiedasholdingfor-saleassetsishigherthanthenetamountafterdeductingthesellingexpensesfromthebookvalue,thebookvaluewillbewrittendowntothenetamountafterdeductingthesellingexpensesfromthefairvalue,andtheamountwrittendownwillberecognizedastheimpairmentlossofassetsandincludedinthecurrentprofitorloss.Atthesametime,theimpairmentprovisionforholdingfor-saleassetswillbeaccrued.

(2)CriteriafortheRecognitionandReportingMethodofDiscontinuedOperationAdiscontinuedoperationisaseparatelyidentifiablecomponentthatmeetsoneofthefollowingconditionsandhasbeendisposedofbythecompanyorclassifiedbythecompanyasheldforsale:

①Thiscomponentrepresentsanindependentmajorbusinessoraseparatemainplaceofbusiness;

②Thiscomponentispartofarelatedplantodisposeofanindependentmajorbusinessoraseparatemainplaceofbusiness;

③Thiscomponentisasubsidiaryacquiredspecificallyforresale.Theprofitorlossfromgoingconcernandtheprofitorlossfromdiscontinuedoperationwillbeseparatelypresentedintheincomestatement.Theoperatingprofitorlossandtheprofitorlossfromdisposal,includingimpairmentlossandreversedamountfromdiscontinuedoperation,willbepresentedastheprofitorlossfromdiscontinuedoperation.Forthediscontinuedoperationpresentedinthecurrentperiod,theCompanywillpresenttheinformationpreviouslypresentedastheprofitorlossfromgoingconcernastheprofitorlossfromdiscontinuedoperationduringthecomparableaccountingperiod.

19.Long-termReceivables

RefertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments

20.Long-termEquityInvestments

(1)CriteriaforJointControlandSignificantInfluenceJointcontrolreferstosharedcontroloveranarrangementaccordingtorelevantagreements,wheredecisionsonthearrangement'srelatedactivitiesrequiretheunanimousconsentofallpartiessharingcontrol.TheCompanytogetherwiththeotherjointventurepartiescanjointlycontrolovertheinvesteeandareentitledtotherightofthenetassetsoftheinvestee,astheinvesteeisjointventureoftheCompany.Significantinfluencereferstothepowertoparticipateinmakingdecisionsonthefinancialandoperatingpoliciesofanenterprise,butnotthepowertocontrol,orjointlycontrol,theformulationofsuchpolicieswithotherparties.WheretheCompanycanexercisesignificantinfluenceovertheinvestee,theinvesteeisanassociateoftheCompany.

(2)DeterminationofInitialInvestmentCost

①Long-termequityinvestmentformedbyenterprisemergersForlong-termequityinvestmentsinsubsidiariesformedbyenterprisemergersundercommoncontrol,theinitialinvestmentcostofthelong-termequityinvestmentonthemergerdateshallbebasedontheshareofthebookvalueoftheacquiredparty'sowners'equityintheconsolidatedfinancialstatementoftheultimatecontrollingparty.Thesharepremiuminthecapitalreserveshallbeadjustedaccordingtothedifferencebetweentheinitialinvestmentcostofthelong-termequityinvestmentandthecarryingamountoftheconsiderationpaid;ifthesharepremiuminthe

capitalreserveisinsufficienttooffset,theretainedearningsshallbeadjusted.Inconnectionwithimposingcontrolovertheinvesteeundercommoncontrolasaresultofadditionalinvestmentandotherreasons,thesharepremiumshallbeadjustedaccordingtothedifferencebetweentheinitialinvestmentcostofthelong-termequityinvestmentasrecognizedbytheaboveprincipleandthecarryingvalueofthelong-termequityinvestmentbeforecombinationandthesumofcarryingvalueofnewlypaidconsiderationforadditionalsharesacquiredonthedateofcombination.Ifthesharepremiumisinsufficientforwrite-down,theretainedearningsshallbeoffset.Forthelong-termequityinvestmentinthesubsidiariesarisingfrombusinesscombinationsinvolvingentitiesnotundercommoncontrol,thecostofthecombinationascertainedonthedateofacquisitionshallbetakenastheinitialinvestmentcostofthelong-termequityinvestment.Inconnectionwithimposingcontrolovertheinvesteenotundercommoncontrolasaresultofadditionalinvestmentandotherreasons,theinitialinvestmentcostshallbethesumofthebookvalueoftheequityinvestmentoriginallyheldandthenewlyincreasedinitialinvestmentcost.

②Long-termequityinvestmentsacquiredbymeansotherthanbusinesscombinationsLong-termequityinvestmentsacquiredbycashpaymentshallberecognizedattheactualpurchasepricepaidastheinitialinvestmentcost.Theinitialcostofinvestmentofalong-termequityinvestmentobtainedbymeansofissuanceofequitysecuritiesshallbethefairvalueoftheequitysecuritiesissued.

(3)SubsequentMeasurementandProfitandLossRecognitionMethods

①Long-termequityinvestmentsaccountedforusingthecostmethodThecompany'slong-termequityinvestmentsinsubsidiariesareaccountedforusingthecostmethod,unlesstheinvestmentsmeetthecriteriaforheld-for-saleclassification.exceptfortheactualconsiderationpaidfortheacquisitionofinvestmentorthedeclaredbutnotyetdistributedcashdividendsorprofitswhichareincludedintheconsideration,investmentgainsarerecognizedastheCompany'sharesofthecashdividendsorprofitsdeclaredbytheinvestee.

②Long-termequityinvestmentsaccountedforusingtheequitymethodLong-termequityinvestmentsinjointventuresandjointventuresareaccountedforusingtheequitymethod.Wheretheinitialinvestmentcostofthelong-termequityinvestmentexceedstheinvestor'sinterestinthefairvalueoftheinvestee'sidentifiablenetassetsattheacquisitiondate,noadjustmentshallbemadetotheinitialinvestmentcost;wheretheinitialinvestmentcostislessthantheinvestor'sinterestinthefairvalueoftheinvestee'sidentifiablenetassetsattheacquisitiondate,thedifferenceshallbechargedtotheprofitorlossforthecurrentperiod.Atthesametime,thecostofthelong-termequityinvestmentshallbeadjusted.TheCompanyrecognizestheinvestmentincomeandothercomprehensiveincomeaccordingtothesharesofnetprofitorlossandothercomprehensiveincomerealizedbytheinvesteewhichitshallbeentitledorsharedrespectively,andsimultaneouslymakesadjustmenttothebookvalueoflong-termequityinvestment;Thebookvalueoflong-termequityinvestmentshallbereducedbyattributableshareoftheprofitorcashdividendsfordistributiondeclaredbytheinvestee.Inrelationtootherchangesintheowner'sequityexceptfornetprofitsandlosses,othercomprehensive

incomeandprofitdistributionsoftheinvestee(hereinafterreferredtoas"ChangesinOtherOwner'sEquity"),thebookvalueofthelong-termequityinvestmentshallbeadjustedandincludedinowner'sequity.Whendeterminingtheamountofproportionofnetprofitorloss,othercomprehensiveincomeandotherchangesintheowner'sequityintheinvesteewhichitentitles,thefairvalueofeachidentifiablenetassetsoftheinvesteeatthetimewhentheinvestmentisobtainedshallbeusedasbasis,andaccordingtotheaccountingpoliciesandaccountingperiodoftheCompany,adjustmentshallbemadetothenetprofitandothercomprehensiveincomeoftheinvestee.TheunrealizedprofitorlossresultingfromtransactionsbetweentheCompanyanditsassociatesorjointventureshallbeeliminatedinproportiontotheinvestor'sequityinterestofinvestee,basedonwhichinvestmentincomeorlossshallberecognized,exceptforthoseassetsinvestedorsoldconstitutingabusiness.Anylossesresultingfromtransactions,whichareattributabletoimpairmentofassets,shallbefullyrecognized.ThenetlossincurredbytheCompanytothejointventuresoraffiliatesiscappedwhenthecarryingamountoflong-termequityinvestmentandthelong-termequitythatsubstantiallyconstitutesthenetinvestmentinthejointventuresoraffiliateshavebeenwrittendowntozero,excepttotheextentthattheCompanyhasanadditionallossobligation.Ifthejointventuresoraffiliateslaterrealizenetprofit,theCompanywillresumerecognitionoftheincomeshareaftertheincomesharemakesuptheunrecognizedlossshare.

③Disposaloflong-termequityinvestmentsThedifferencebetweenthebookvalueofthedisposedlong-termequityinvestmentandtheactualconsiderationreceivedisrecognizedinthecurrentperiodprofitorloss.Iftheremainingequityisstillsubjecttotheequitymethodinpartialdisposalofthelong-termequityinvestmentundertheequitymethod,othercomprehensiveincomerecognizedintheoriginalequityinvestmentshallbecarriedforwardattheappropriateproportiononthesamebasisusedbytheinvesteefordirectdisposalofrelevantassetsorliabilities,andotherchangesintheowner'sequityshallbecarriedforwardintothecurrentprofitorlossattheappropriateproportion.Whenlosingthecontrolormaterialinfluenceovertheinvesteeduetodisposaloftheequityinvestmentandotherreasons,othercomprehensiveincomerecognizedintheoriginalequityinvestmentduetoadoptionoftheequitymethodshallbesubjecttoaccountingtreatmentonthesamebasisusedbytheinvesteefordirectdisposalofrelevantassetsorliabilitieswhenceasingtousetheequitymethod,andotherchangesintheowner'sequityshallbecarriedforwardintothecurrentprofitorlossinfullwhenceasingtousetheequitymethod.Ifthecontrolovertheinvesteeislostduetopartialdisposaloftheequityinvestmentandotherreasons,andiftheremainingequitiescanexercisecommoncontrolormaterialinfluenceovertheinvesteeinpreparingtheindividualfinancialstatements,theremainingequitiesshallbeaccountedbytheequitymethodandshallbeadjustedasifsuchremainingequitieshavebeenaccountedforundertheequitymethodsincetheyareobtained.Othercomprehensiveincomerecognizedbeforethecontrolovertheinvesteeisobtainedshallbecarriedforwardprorataonthesamebasisusedbytheinvesteefordirectdisposalofrelevantassetsorliabilities,andotherchangesintheowner'sequityrecognizedundertheequitymethodshallbecarriedforwardintothecurrentprofitorlossprorata.Theremainingequitieswhichcannotexercisecommoncontrolormaterialinfluenceovertheinvesteeshallberecognizedasfinancial

assets,andthedifferencebetweentheirfairvalueandbookvalueonthedatewhenthecontrolislostshallbeincludedinthecurrentprofitorloss.Whendisposingofequityinvestmentsinasubsidiarystepbystepthroughmultipletransactionsuntilcontrolislost,iftheseconstituteapackagedeal,alltransactionsshallbeaccountedforasasingledisposaloftheequityinvestmentinthesubsidiaryresultinginlossofcontrol;beforethelossofcontrol,thedifferencebetweenthedisposalproceedsofeachtransactionandthebookvalueofthecorrespondinglong-termequityinvestmentshall,intheindividualfinancialstatement,firstberecognizedasothercomprehensiveincomeandthentransferredinfulltothecurrentprofitorlossuponlossofcontrol.Ifitisnotapackagedeal,eachtransactionshallbesubjecttoaccountingtreatment.

21.InvestmentProperties

Investmentpropertyreferstotherealestateheldtogeneraterentalincomeorcapitalappreciation,orboth,includingleasedlanduserights,landuserightsheldfortransferafterappreciation,andleasedbuildings(includingbuildingsthatareleasedaftercompletionofself-constructionordevelopmentactivitiesandbuildingsinconstructionordevelopmentthatareusedforrentalinthefuture).TheCompanyadoptsthecostmodetomeasuretheexistinginvestmentproperty.Thesubsequentexpenditurerelatedtotheinvestmentpropertywillbeincludedinthecostoftheinvestmentpropertywhenrelevanteconomicbenefitsarelikelytoflowinandcostscanbemeasuredreliably,orotherwisebeincludedinthecurrentprofitorlosswhenoccurred.Investmentpropertymeasuredatcost-buildingsheldforleasingshalladoptthesamedepreciationpolicyforfixedassetsofthecompany,landuserightsheldforleasingshalladoptthesameamortizationpolicyfortheintangibleassets.

22.FixedAssets

(1)ConditionsofRecognitionFixedassetsaretangibleassetsthatareheldforuseintheproductionorsupplyofgoodsorservices,forrentaltoothers,orforadministrativepurposes;andhaveaservicelifeofmorethanonefiscalyear.Fixedassetisrecognizedwhenitmeetsthefollowingconditions:①Itisprobablethattheeconomicbenefitsassociatedwiththefixedassetwillflowtotheenterprise;②Itscostcanbereliablymeasured.Thefixedassetsareinitiallymeasuredatcost(withtheimpactofpredicteddiscardexpensetakenintoaccount).Thesubsequentexpenditurerelatedtothefixedassetswillbeincludedinthecostofthefixedassetswhentheeconomicbenefitsinconnectiontherewitharelikelytoflowinandcostscanbemeasuredreliably;thebookvalueofthereplacedpartwillbederecognized;allothersubsequentexpenditurewillbeincludedinthecurrentprofitorlosswhenoccurred.

(2)MethodsforDepreciation

Fixedassetsaredepreciatedbycategoriesusingthestraight-linemethod,andtheannualdepreciationratesaredeterminedbycategoriesbasedupontheirestimatedusefullivesandtheirestimatedresidualvalues.Wherethepartsofafixedassethavedifferentusefullivesorcauseeconomicbenefitsfortheenterpriseindifferentways,differentdepreciationratesordepreciationmethodsshallapply,andeachpartisdepreciatedseparately.

Thedepreciationmethods,depreciationperiods,residualratios,andannualdepreciationratesofvarioustypesoffixedassetsareasfollows:

(3)DisposalofFixedAssets

Whenfixedassetsaredisposedoforwhennoeconomicbenefitscanbeexpectedthroughuseordisposalthereof,suchfixedassetswillbederecognized.Theincomefromdisposalofthefixedassetsthroughsale,transfer,scrappingordamagewiththebookvaluethereofandrelevanttaxesdeductedisincludedinthecurrentprofitorloss.

23.ConstructioninProgressTheprojectsunderconstructionaremeasuredattheactualcost.Theactualcostcomprisesthebuildingcost,installationcost,borrowingcostqualifiedforcapitalizationandothernecessaryexpendituresincurredtobringtheprojectsunderconstructiontotheconditionsbeforetheyaremadereadyfortheintendeduse.Theprojectsunderconstructionwillbeconvertedintofixedassetswhentheyarereadyforintendeduseandwillbedepreciatedfromthenextmonthon.ThestandardsandtimepointsforconversingtheCompany'sprojectsunderconstructionintofixedassetsareasfollows:

24.BorrowingCosts

(1)PrinciplesfortheCapitalizationofBorrowingCostBorrowingcostsincurredbythecompanythatcanbedirectlyattributedtotheacquisition,construction,orproductionofqualifyingassetsshallbecapitalizedandincludedinthecostoftherelatedassets;otherborrowingcostsshallberecognizedasexpenseswhenincurredandchargedtothecurrentprofitorloss.Assetsqualifiedforcapitalizationareassets(fixedassets,investmentproperty,inventories,etc.)thatnecessarilytakeasubstantialperiodoftimeforacquisition,constructionorproductiontogetreadyfortheirintendeduseorsale.

(2)CapitalizationPeriodofBorrowingCostThecapitalizationperiodreferstothetimepointfromwhentheborrowingcostbeginstobecapitalizedtowhenthecapitalizationstops.Periodsduringwhichtheborrowingcostcapitalizationissuspendedarenotincluded.

Borrowingcostsbegintobecapitalizedwhenthefollowingconditionsaremetsimultaneously:

①Assetexpenditureshavealreadyoccurred.Assetexpendituresincludepaymentsmadeincash,transfersofnon-cashassets,ortheassumptionofborrowingcostsincurredforthepurchase,construction,orproductionofassetsthatmeetcapitalizationcriteria;

②Borrowingcostshavealreadybeenincurred;

③Thepurchase,construction,orproductionactivitiesnecessarytobringtheassettoitsintendeduseorsaleableconditionhavealreadycommenced.Capitalizationofborrowingcostsshallbesuspendedduringperiodsinwhichthequalifyingassetunderacquisitionandconstructionorproductionreadyfortheintendeduseorsale.

(3)SuspensionPeriodofCapitalizationIfaqualifyingassetexperiencesanabnormalinterruptionduringitsacquisitionorproductionprocess,andtheinterruptionlastscontinuouslyformorethan3months,borrowingcostcapitalizationshallbesuspended;iftheinterruptionisduetonecessaryproceduresfortheacquiredorproducedqualifyingassettoreachthepredeterminedusableorsaleablestatus,borrowingcostcapitalizationshallcontinue.Theborrowingcostsincurredduringsuchperiodshallberecognizedasprofitsandlossesofthecurrentperiod.Whentheacquisitionandconstructionorproductionoftheassetresumes,thecapitalizationofborrowingcostscommences.

(4)CalculationMethodforCapitalizationRateandCapitalizedAmountofBorrowingCostForspecificborrowingsincurredtopurchaseorproduceassetsthatmeetcapitalizationcriteria,thecapitalizedamountofborrowingcostisdeterminedbytakingtheactualborrowingcostincurredduringthecurrentperiodforthespecificborrowings,minustheinterestincomeearnedfromdepositingtheunusedborrowedfundsinbanksortheinvestmentincomeobtainedfromtemporaryinvestments.Generalborrowingsfortheacquisition,constructionorproductionofassetsqualifiedforcapitalization,theto-be-capitalizedamountofinterestsonthegeneralborrowingshallbecalculatedanddeterminedbymultiplyingtheweightedaverageassetdisbursementofthepartoftheaccumulativeassetdisbursementsminusthespecificallyborrowedloansbythecapitalizationrateofthegeneralborrowingused.Thecapitalizationrateshallbecalculatedanddeterminedaccordingtotheweightedaverageinterestrateofthegeneralborrowing.Duringthecapitalization,thedifferencebetweentheprincipalandinterestofspecialborrowingsinforeigncurrencyshallbecapitalizedandincludedinthecostofassetsqualifiedforcapitalization.Thedifferencebetweentheprincipalandinterestoftheborrowingsinforeigncurrencyotherthanthespecialborrowingsinforeigncurrencyshallbeincludedinthecurrentprofitorloss.

25.IntangibleAssets

(1)ServiceLife,DeterminationBasis,Estimation,AmortizationMethodorReviewProcedures

①Valuationmethodofintangibleassets

a.ThecompanyinitiallymeasuresintangibleassetsatcostuponacquisitionThecostofpurchasedintangibleassetsincludesthepurchaseprice,relatedtaxes,andotherexpendituresdirectlyattributabletobringingtheassettoitsintendeduse.B.SubsequentmeasurementAnalyzeanddeterminetheservicelifewhenacquiringintangibleassets.Asforintangibleassetswithafiniteservicelife,theyareamortizedusingthestraight-linemethodovertheterminwhicheconomicbenefitsarebroughttothefirm;Iftheterminwhicheconomicbenefitsarebroughttothefirmbyanintangibleassetcannotbeestimated,theintangibleassetshallbetakenasanintangibleassetwithindefiniteservicelife,andshallnotbeamortized.

②Estimationofservicelifeoftheintangibleassetswithlimitedservicelife

Attheendofeachfiscalyear,reviewtheservicelifeandamortizationmethodofintangibleassetswithlimitedservicelife.Uponreview,servicelifeandamortizationmethodfortheintangibleassetsarethesamewiththepreviousestimateattheendofthisperiod.

③JudgmentbasisforintangibleassetswithuncertainservicelifeandproceduresforreviewingtheirservicelifeAsofthebalancesheetdate,thecompanyhasnointangibleassetswithuncertainservicelife.

(2)ThescopeofR&DExpenditureCollectionandRelatedAccountingTreatmentMethods

①ScopeofR&DExpenditureCollectionTheexpensesincurredbythecompanyduringtheresearchanddevelopmentprocessincluderelatedemployeecompensationforpersonnelengagedinR&Dactivities,consumedmaterials,relateddepreciationandamortizationexpenses,andotherrelatedcosts.

②SpecificcriteriafordividingtheresearchphaseandthedevelopmentphaseThecompany'sinternalresearchanddevelopmentprojectexpendituresaredividedintoresearchphaseexpendituresanddevelopmentphaseexpenditures.

Researchphase:Scheduledinnovativeinvestigationsandresearchactivitiestoobtainandunderstandscientificortechnologicalknowledge.Developmentphase:Applytheresearchoutcomesorotherknowledgetoaplanordesignpriortoacommercialproductionoruseinordertoproduceneworessentially-improvedmaterials,devices,products,etc.

③SpecificconditionsforcapitalizationofdevelopmentstageexpendituresExpendituresduringtheresearchstagearerecognizedinthecurrentperiodprofitorlossasincurred.Theexpensesinthedevelopmentphasearerecognizedasintangibleassetsifthefollowingconditionsarefulfilled,andareincludedinthecurrentprofitorlossiffollowingconditionsarenotfulfilled:

a.Completetheintangibleassettomakeittechnicallyfeasibleforuseorsale;b.Havetheintentiontocompletetheintangibleassetanduseorsellit;c.Thewaytheintangibleassetgenerateseconomicbenefits,includingtheabilitytodemonstratetheexistenceofamarketforproductsproducedusingtheintangibleassetoramarketfortheintangibleassetitself;forintangibleassetsintendedforinternaluse,theabilitytodemonstratetheirusefulness;d.Havesufficienttechnical,financial,andotherresourcestosupportthecompletionoftheintangibleasset'sdevelopmentandthecapabilitytouseorselltheintangibleasset;e.Expendituresattributabletothedevelopmentphaseoftheintangibleassetcanbereliablymeasured.Iftheexpensesintheresearchphaseandexpensesinthedevelopmentphasecannotbedistinguished,alltheexpensesincurredforR&Dareincludedinthecurrentprofitorloss.

26.ImpairmentofLong-termAssets

Long-termassets,suchaslong-termequityinvestment,investmentpropertiesthataremeasuredatcost,fixedassets,constructioninprogress,intangibleassetswithlimitedservicelifeandoilandgasassetsaretestedforimpairmentifthereisanyindicationthatanassetmaybeimpairedatthebalancesheetdate.Iftheresultoftheimpairmenttestindicatesthattherecoverableamountoftheassetislessthanitsbookvalue,aprovisionforimpairmentandanimpairmentlossarerecognizedfortheamountbywhichtheasset'sbookvalueexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset'sfairvaluelesscoststosellandthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheasset.Provisionforassetimpairmentisdeterminedandrecognizedontheindividualassetbasis.Ifitisnotpossibletoestimatetherecoverableamountofanindividualasset,therecoverableamountofagroupofassetstowhichtheassetbelongstoisdetermined.Agroupofassetsisthesmallestgroupofassetsthatisabletogeneratecashinflowsindependently.Forthegoodwillarisingfrombusinesscombination,intangibleassetswithuncertainservicelife,andintangibleassetswhicharenotreadyforintendeduse,impairmenttestshallbeconductedatleastattheendofeachyear,regardlessofwhethertherearesignsofimpairmentornot.

WhentheCompanycarryoutimpairmenttesttogoodwill,theCompanyshall,asofthepurchasingday,allocateonareasonablebasisthebookvalueofthegoodwillformedbymergerofenterprisestotherelevantassetgroups,orifthereisadifficultyinallocation,toallocateittothesetsofassetgroups.Relevantassetgroupsorthesetsofassetgroupsmeanthosecanbenefitfromthesynergyofbusinesscombination.Forthepurposeofimpairmenttestontherelevantassetgroupsorthesetsofassetgroupscontaininggoodwill,ifanyevidenceshowsthattheimpairmentofassetgroupsorsetsofassetgroupsrelatedtogoodwillispossible,animpairmenttestwillbemadefirstontheassetgroupsorsetsofassetgroupsnotcontaininggoodwill,thuscalculatingtherecoverableamountandcomparingitwiththerelevantbookvaluesoastorecognizethecorrespondingimpairmentloss.Animpairmenttestwillbemadeontheassetgroupsorsetsofassetgroupscontaininggoodwilltocomparethebookvalueoftheseassetgroupsorsetsofassetgroupswiththerecoverableamount.Wheretherecoverableamountislowerthanthebookvalue,theamountofimpairmentlossshallsetoffandbeapportionedtothebookvalueofthegoodwillintheassetgroupsorsetsofassetgroups,andthensetoffthebookvalueofotherassetsprorataaccordingtotheproportionofthebookvalueofotherassetsotherthanthegoodwillintheassetgroupsorsetsofassetgroups.Oncetheaboveassetimpairmentlossisrecognized,itwillnotbereversedinthesubsequentaccountingperiods.

27.Long-termDeferredExpensesLong-termdeferredexpensesareexpenseswhichhaveoccurredbutwillbenefitover1yearandshallbeamortizedoverthecurrentperiodandsubsequentperiods.Theamortizationperiodandamortizationmethodofvariousexpensesare:

28.ContractLiabilities

TheCompanylistscontractassetsorcontractliabilitiesinthebalancesheetaccordingtotherelationshipbetweenperformanceobligationsandcustomerpayments.TheCompanyliststheobligationtotransfercommoditiesorofferservicestocustomersfortheconsiderationreceivedorreceivablefromcustomersascontractliabilities.Thecontractassetsandcontractliabilitiesunderthesamecontractarepresentedinnetamount.

29.EmployeeCompensation

(1)AccountantTreatmentofShort-termRemuneration

Duringtheaccountingperiodwhenthestaffprovidesservice,theCompanywillrecognizetheshort-termremunerationactuallyincurredasliabilities,andtheliabilitieswouldbechargedintocurrentprofitsandlossorcostsofassets.TheCompanywillpaysocialinsuranceandhousingfunds,andwillmakeprovisionoftradeunionfundsandstaffeducationcostsinaccordancewiththerequirements.Duringtheaccountingperiodwhenthestaffprovidesservice,

theCompanywilldeterminetherelevantamountofemployeebenefitsinaccordancewiththerequiredprovisionbasisandprovisionratios.EmployeecompensationactuallyincurredbytheCompanywillbeincludedinthecurrentprofitorlossorrelevantassetcostswhenactuallyincurred,inwhichnon-monetarybenefitswillbemeasuredatthefairvalue.

(2)AccountantTreatmentofRetirementBenefitPlan

①SetthecontributionplanThecompanypaysbasicpensioninsuranceandunemploymentinsuranceforemployeesinaccordancewiththerelevantlocalgovernmentregulations.Duringtheaccountingperiodinwhichemployeesprovideservicestothecompany,thepayableamountiscalculatedbasedonthelocalprescribedcontributionbaseandrate,recognizedasaliability,andincludedinthecurrentperiod'sprofitorlossorrelatedassetcosts.

②DefinedbenefitplanThecompanyallocatesthebenefitobligationsarisingfromdefinedbenefitplanstotheperiodsofemployeeservicebasedontheformuladeterminedbytheprojectedunitcreditmethodandrecognizestheminthecurrentprofitorlossorthecostofrelatedassets.

(3)AccountantTreatmentofTerminationBenefits

Forthedismissalwelfareprovidedtoemployees,theemployeecompensationliabilitiesarisingfromthedismissalwelfareshallbedeterminedattheearliestofthefollowingtwo,andincludedinthecurrentprofitsandlosses:(1)WhentheCompanycannotunilaterallywithdrawthedismissalwelfareprovidedduetotheterminationoflaborrelationsplanorlayoffproposal;(2)WhentheCompanydeterminesthecostsorexpensesassociatedwiththerestructuringinvolvingthepaymentofdismissalwelfare.

30.EstimatedLiabilities

TheCompanyshallrecognizetheobligationsrelatedtocontingenciesasestimatedliabilities,whenallofthefollowingconditionsaresatisfied:

(1)TheobligationisacurrentobligationoftheCompany;

(2)Itisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation;

(3)Theamountoftheobligationcanbemeasuredreliably.Estimatedliabilitiesshallbeinitiallymeasuredatthebestestimateoftheexpenditurerequiredtosettletherelatedpresentobligation.Factorspertainingtoacontingencysuchasrisk,uncertainties,andtimevalueofmoneyshallbetakenintoaccountasawholeinreachingthebestestimate.Wheretheeffectofthetimevalueofmoneyismaterial,thebestestimateshallbedeterminedbydiscountingtherelatedfuturecashoutflow.

Theexpensesrequiredhaveasuccessiverange,inwhichthepossibilitiesofoccurrenceofeachresultarethesame,andthebestestimateshouldbedeterminedasthemiddlevaluefortherange;inothercircumstances,thebestestimatewillbehandledasfollows,respectively:

(1)Forcontingentmattersinvolvingasingleitem,determinebasedonthemostlikelyamount;

(2)Forcontingentmattersinvolvingmultipleitems,determinebasedonthecalculationofvariouspossibleoutcomesandtheirrelatedprobabilities.Wheresomeoralloftheexpenditurerequiredtosettleanestimatedliabilityisexpectedtobereimbursedbyathirdparty,thereimbursementisseparatelyrecognizedasanassetwhenitisvirtuallycertainthatthereimbursementwillbereceived.Theamountrecognizedforthereimbursementislimitedtothebookvalueoftheestimatedliability.TheCompanywillreviewthebookvalueoftheestimatedliabilitiesonthebalancesheetdate,andifthereareconcreteevidencesthatsuchbookvaluecannotreflectthecurrentbestestimate,thebookvaluewillbeadjustedaccordingtothecurrentbestestimate.

31.Share-basedPayment

TheCompany'sshare-basedpaymentreferstoatransactioninwhichanenterprisedeterminestheliabilitiesonthebasisofequityinstrumentsgrantingorbearingfortheacquisitionofservicefromitsemployeesorotherparties.TheCompany'sshare-basedpaymentisequity-settled.Astoanequity-settledshare-basedpaymentinreturnforservicesofemployees,calculationwillbebasedonthefairvalueoftheequityinstrumentgrantedtotheemployees.Theshare-basedpaymenttransactionsvestedimmediatelyafterthedateofgrantwillbeincludedintherelevantcostorexpensebasedonthefairvalueoftheequityinstrumentonthedateofgrant,andthecapitalreservewillbeincreasedaccordingly.Fortheserviceswithinthewaitingperiodortheshare-basedpaymenttransactionsthatmayonlybevestedwhenthespecifiedperformanceconditionsaremetafterthedateofgrant,theCompanywillincludetheservicesobtainedinthecurrentperiodinrelevantcostorexpenseandincreasethecapitalreserveatthefairvalueonthedateofgrantaccordingtothebestestimateofthenumberoftheexercisableequityinstrumentsoneachbalancesheetdateinthewaitingperiod.Ifthetermsoftheequity-settledshare-basedpaymentareamended,theCompanyshallrecognizetheservicesreceivedatleastbasedonthesituationbeforetheamendmentwasmade.Inaddition,anyamendmentresultingintheincreaseofthefairvalueoftheequityinstrumentgrantedorchangesthatarebeneficialtothestaffontheamendmentdate,willberecognizedasanincreaseintheservicereceived.Iftheequityinstrumentsvestedarecanceledduringthewaitingperiod,theCompanywilltakethevestedequityinstrumentscanceledasacceleratedexercise,andimmediatelyincludetheamounttoberecognizedduringthewaitingperiodinthecurrentprofitorloss.Atthesametime,thecapitalreservewillberecognized.However,ifnewequityinstrumentsarevestedandtheyareverifiedatthevestingdateofnewequityinstrumentasalternativesvestedtocanceledequityinstruments,thetreatmentonthenewequityinstrumentisinconformitywiththemodifiedtreatmentondisposalofequityinstrument.

32.Income

(1)AccountingPoliciesforRevenueRecognitionandMeasurementThecompanyrecognizesrevenueuponfulfillingtheperformanceobligationsinthecontract,thatis,whenthecustomerobtainscontroloftherelatedgoodsorservices.Acquisitionofcontroloverrelevantcommoditiesorservicesmeansgainingtheabilitytodirecttheuseofsuchcommoditiesorservicesandobtainnearlyalltheeconomicbenefitstherefrom.Ifthecontractcontainstwoormoreperformanceobligations,theCompanyshallapportionthetransactionpricetoeachindividualperformanceobligationonthecontractcommencementdateaccordingtotherelativeproportionoftheindividualsellingpriceofthecommoditiesorservicespromisedbyeachindividualperformanceobligation.TheCompanymeasurestherevenueaccordingtothetransactionpriceapportionedtoeachindividualperformanceobligation.ThetransactionpricereferstotheamountofconsiderationthattheCompanyisexpectedtobeentitledtocollectduetothetransferofcommoditiesorservicestocustomers,excludingthepaymentscollectedonbehalfofthirdpartiesandthepaymentsexpectedtobereturnedtocustomers.TheCompanywilldeterminethetransactionpriceaccordingtothecontractprovisionsanditspastpractices,andmaytakeintoaccounttheimpactfromthevariableconsideration,themajorfinancingcomponentsinthecontract,thenon-cashconsideration,thepayablecustomerconsiderationandotherfactorswhendeterminingthetransactionprice.TheCompanyshalldeterminethetransactionpricecontainingthevariableconsiderationaccordingtotheamountnotexceedingtheamountbywhichtheaccumulativerecognizedrevenueismuchmoreunlikelytobesignificantlyreversedwhenrelevantuncertaintiesareeliminated.Iftherearemajorfinancingcomponentsinthecontract,theCompanyshalldeterminethetransactionpriceaccordingtotheamountdueassumedtobepaidincashwhenthecustomeracquiresthecontroloverthecommoditiesorservices,andshallamortizethedifferencebetweensuchtransactionpriceandthecontractconsiderationusingtheeffectiveinterestratemethodduringthecontractperiod.Whenoneofthefollowingconditionsismet,itbelongstotheperformanceobligationwithinacertainperiodoftime,orotherwiseitbelongstotheperformanceobligationatacertainpointoftime:

①Thecustomerobtainsandconsumestheeconomicbenefitbroughtbythecompany'sperformancesimultaneouslywiththecompany'sfulfillmentofthecontract;

②Thecustomerisabletocontrolthegoodsunderconstructionduringthecompany'sperformanceprocess;

③Thegoodsproducedduringthecompany'sperformanceprocesshaveirreplaceableuses,andthecompanyhastherighttocollectpaymentforthecumulativecompletedperformanceportionthroughouttheentirecontractperiod.Fortheperformanceobligationsperformedwithinacertainperiodoftime,theCompanyshallrecognizetherevenueaccordingtotheperformanceprogresswithinthatperiodoftime,exceptthattheperformanceprogresscannotbereasonablydetermined.TheCompanywilldeterminetheperformanceprogressthroughtheoutputorinputmethodbytakingintoaccountthenatureofcommoditiesorservices.Iftheperformanceprogresscannotbereasonablyrecognizedandthecostsincurredareexpectedtobecompensated,theCompanywillrecognizetherevenueaccordingtotheamountofcostsincurreduntiltheperformanceprogresscanbereasonablyrecognized.

Fortheperformanceobligationsperformedatacertainpointoftime,theCompanywillrecognizetherevenuewhenthecustomeracquirestherightofcontroloverrelevantcommoditiesorservices.Whiledeterminingwhetherthecustomerhasacquiredthecontroloverthecommoditiesorservices,theCompanyshalltakethefollowingintoconsideration:

①Thecompanyhasthecurrentrighttoreceivepaymentforthegoodsorservices,meaningthecustomerhasanexistingpaymentobligationforthegoodsorservices;

②Thecompanyhastransferredthelegaltitleofthegoodstothecustomer,meaningthecustomerhasobtainedthelegaltitleofthegoods;

③Thecompanyhasphysicallytransferredthegoodstothecustomer,meaningthecustomerhasphysicalpossessionofthegoods;

④Thecompanyhastransferredthemajorrisksandrewardsofownershipofthegoodstothecustomer,meaningthecustomerhasobtainedthemajorrisksandrewardsofownershipofthegoods;

⑤Thecustomerhasacceptedthegoodsorservices.TheCompanydetermineswhetheritisaprincipaloragentwhenengagingintransactionsbasedonitscontroloverthegoodsorservicesbeforetransferringthemtothecustomer.TheCompanyisaprincipalandrecognizesitsrevenuebasedonthetotalamountofconsiderationreceivedorreceivableifitcancontrolthegoodsorservicesbeforetransferringthemtothecustomer;otherwise,theCompanyisanagentandrecognizesitsrevenuebasedontheamountofcommissionsorfeesitexpectstobeentitledto.

(2)Disclosureofspecificrevenuerecognitionmethodsandmeasurementapproachesbybusinesstype

①Principlesforrecognizingsalesrevenueofstandardproductsfordomesticsales:Thecompanysellsstandardproductstocontractors,distributors,andothercustomersthroughacombinationofdirectsellinganddistributors.Thatis,thecompanysignssalescontractswithcustomersanddeliversgoodstocustomersaccordingtothedeliverytermsstipulatedinthesalescontracts,orcustomerspickupthegoodsthemselves.Thecompanyrecognizessalesrevenueafterthecustomerreceivesthegoods;

②Principlesforrecognizingrevenuefromoverseassalesofstandardproducts:Fordirectexportsbydomesticcompanies,salesrevenueismainlyrecognizedunderFOBandCIFtermsafterthework-in-progressisdeclaredforcustomsexport.Foroverseassubsidiaries'salesabroad,revenueisrecognizedafterthegoodsaredeliveredtothecustomeraccordingtotheagreeddeliverymethodorafterthecustomerpicksupthegoodsandreceivesthem;

③Principlesforrecognizingsalesrevenuefromsystemintegration:salesofthecompany'ssystemintegrationproductsincludeprovidingcustomerswithsolutiondesign,supportingproducts,installation,commissioning,andpilotrunservices,withsalesrevenuerecognizedafteracceptanceandqualification;

④Principlesforrecognizingrevenuefromlaborservices:revenueisrecognizedatthetimethelaborserviceisprovided.

33.ContractCosts

Thecontractcostscomprisethecontractperformancecostandthecosttoobtainacontract.ThecostsincurredbytheCompanyforcontractperformancewhichfalloutsidethescopeoftheenterpriseaccountingstandardssuchasinventories,fixedassetsorintangibleassetswillbeidentifiedasanassetofthecontractperformancecostsuponsatisfyingallofthefollowingconditions:

(1)Thecostsaredirectlyrelatedtooneexistingcontractoronecontractthatisexpectedtobeobtained;

(2)ThecostsenrichtheCompany'sresourcesforfuturecontractperformance;

(3)Thecostsareestimatedtoberecovered.TheincrementalcostswhichareincurredbytheCompanytoobtainthecontractandareexpectedtoberecoveredwillbeidentifiedasanassetofthecoststoobtainacontract.Theassetsrelatedtothecontractcostswillbeamortizedonthesamebasisforrecognitionoftheincomefromcommoditiesorservicesrelatedtotheassets;butiftheamortizationperiodofthecoststoobtainthecontractisnomorethan1year,theCompanywillincludesuchcostsinthecurrentprofitorlossonceoccurred.Incasethatthebookvalueofassetsrelatedtocontractcostsishigherthanthedifferencebetweenthetwoitemsbelow,theCompanywillaccruetheimpairmentprovisionfortheextrapart,andrecognizethatpartasimpairmentloss:

(1)Theremainingconsiderationexpectedtobeobtainedfromthetransferofgoodsorservicesrelatedtotheasset;

(2)Theestimatedcoststobeincurredfortransferringtherelatedgoodsorservices.Ifthefactorsforimpairmentinthepreviousperiodsaresubsequentlychanged,makingtheaforesaiddifferencehigherthanthebookvalueoftheassets,theCompanywillreversetheaccruedimpairmentprovisionandincludeitinthecurrentprofitorloss,providedthatthebookvalueofthereversedassetsdoesnotexceedthebookvalueoftheassetswithoutimpairmentprovisionaccruedonsuchdateofreversal.

34.GovernmentSubsidies

(1)TypeGovernmentgrantsaremonetaryassetsandnon-monetaryassetsobtainedbythecompanyfromthegovernmentwithoutcompensation.Governmentgrantsareclassifiedintogovernmentgrantsrelatedtoassetsandgovernmentgrantsrelatedtorevenue.GovernmentgrantsrelatedtoassetsrefertogovernmentgrantsacquiredbytheCompanyforthepurposeofpurchasingorconstructingorotherwiseforminglong-termassets.Governmentgrantsrelatedtorevenuerefertothegovernmentgrantsotherthanthoserelatedtoassets.

(2)RecognitiontimepointGovernmentgrantsarerecognizedwhenthecompanymeetstheattachedconditionsandisabletoreceivethem.

(3)AccountingtreatmentGovernmentgrantsrelatedtoassetsareusedtooffsetthebookvalueoftherelatedassetsorrecognizedasdeferredincome.Deferredincomeisrecognizedandamortizedintocurrentprofitorlossovertheservicelifeoftherelatedassetsusingareasonableandsystematicmethod(ifrelatedtothecompany'sdailyactivities,itisincludedinotherincome;ifunrelatedtothecompany'sdailyactivities,itisincludedinnon-operatingrevenue);Governmentgrantsrelatedtoincomethatareusedtocompensateforrelevantcosts,expenses,orlossesinfutureperiodsarerecognizedasdeferredincomeandincludedincurrentprofitorlossduringtheperiodswhentherelatedcosts,expenses,orlossesarerecognized(ifrelatedtothecompany'sdailyactivities,includedinotherincome;ifunrelatedtothecompany'sdailyactivities,includedinnon-operatingrevenue)oroffsetagainsttherelatedcosts,expenses,orlosses;governmentgrantsusedtocompensateforrelevantcosts,expenses,orlossesalreadyincurredbythecompanyaredirectlyincludedincurrentprofitorloss(ifrelatedtothecompany'sdailyactivities,includedinotherincome;ifunrelatedtothecompany'sdailyactivities,includedinnon-operatingrevenue)oroffsetagainsttherelatedcosts,expenses,orlosses.Thepolicy-orientedconcessionalloandiscountinterestsobtainedbytheCompanywillbesubjecttoaccountingtreatmentinthefollowingtwocircumstances:

①Whenthefinancedepartmentallocatesdiscountinterestfundstothelendingbank,andthelendingbankprovidesloanstothecompanyatapreferentialinterestrateunderpolicy,thecompanyshallusetheactualloanamountreceivedastheentryvalueoftheborrowingandcalculatetherelatedborrowingcostbasedontheprincipalandthepreferentialinterestrate;

②Whenthefinancedepartmentallocatesdiscountinterestfundsdirectlytothecompany,thecompanyshalloffsetthecorrespondingdiscountinterestagainsttherelatedborrowingcost.

35.DeferredIncomeTaxAssets/DeferredIncomeTaxLiabilities

Incometaxcomprisescurrentincometaxanddeferredincometax.Exceptfortheincometaxesarisingfromthebusinesscombinationandthetransactionsormattersthataredirectlyincludedintheowner'sequity(includingothercomprehensiveincome),theCompanywillincludethecurrentincometaxanddeferredincometaxintothecurrentprofitorloss.Deferredincometaxassetsanddeferredincometaxliabilitieswillbecalculatedandrecognizedaccordingtothedifference(temporarydifference)betweenthetaxbasisandthebookvalueofassetsandliabilities.Deferredincometaxassetsarerecognizedtotheextentthatitisprobablethatfuturetaxableincomewillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilized.Fordeductiblelossesandtaxcreditsthatcanbereversedinthefutureperiod,deferredincometaxassetsshallberecognizedtotheextentthatitisprobablethattaxableincomewillbeavailableinthefuturetooffsetthedeductiblelossesandtaxcredits.Saveastheexceptions,deferredincometaxliabilitiesshallberecognizedforthetaxabletemporarydifference.Theexceptionswheredeferredincometaxassetsandliabilitiesarenotrecognizedinclude:

(1)Initialrecognitionofgoodwill;

(2)Transactionsoreventsthatareneitherbusinesscombinationsnoraffectaccountingprofitandtaxableincome(ordeductiblelosses)atthetimeofoccurrence.Taxabletemporarydifferencerelatedtoinvestmentinthesubsidiaries,affiliatesandjointventureswillberecognizedasdeferredincometaxliabilities,unlesstheCompanycancontrolthetimetoreversesuchtemporarydifferenceandsuchtemporarydifferenceismuchmoreunlikelytobereversedinthepredictablefuture.Deductibletemporarydifferencerelatedtoinvestmentinthesubsidiaries,affiliatesandjointventureswillberecognizedasdeferredincometaxassetswhensuchtemporarydifferenceismuchmorelikelytobereversedinthepredictablefutureandismuchmorelikelytobeobtainedtodeductthetaxableincomeofthedeductibletemporarydifference.Onthebalancesheetdate,thedeferredincometaxassetsandthedeferredincometaxliabilitieswillbemeasuredatthetaxrateapplicableduringtherecoveryofrelevantassetsorpaymentofrelevantliabilitiesasexpectedaccordingtotheprovisionsofthetaxlaw.Onthebalancesheetdate,theCompanywillreviewthebookvalueofthedeferredincometaxassets.Ifnosufficienttaxableincomeislikelytobeobtainedtooffsetthebenefitsofdeferredincometaxassetsinthefuture,thebookvalueofdeferredincometaxassetsshallbewrittendown.Theamountwrittendownshallbereversedwhenitislikelytoobtainsufficienttaxableincome.Aftergrantedthelegalrightsofnetsettlementandwiththeintentiontousenetsettlementorobtainassetsandrepaydebtatthesametime,thenetamountafteroffsettingitscurrentincometaxassetsandcurrentincometaxliabilitiesshallberecorded.Onthebalancesheetdate,thedeferredincometaxassetsandthedeferredincometaxliabilitieswillbepresentedbythenetamountafteroffsettingwhenthefollowingconditionsarefulfilled:

(1)Thetaxpayerhasthelegalrighttonetsettlementofcurrentincometaxassetsandcurrentincometaxliabilities;

(2)Deferredincometaxassetsanddeferredincometaxliabilitiesarerelatedtoincometaxesleviedbythesametaxauthorityonthesametaxpayer,orrelatedtodifferenttaxpayers,butduringeachfutureperiodinwhichthedeferredincometaxassetsandliabilitiesofmaterialsignificancearereversed,theinvolvedtaxpayersintendtonetsettlethecurrentincometaxassetsandliabilitiesorsimultaneouslyrealizetheassetsandsettletheliabilities.

36.Lease

Leasemeansthecontractbywhichthelessortransferstherighttousetheassetstothelesseeforagivenperiodtoobtaintheconsideration.Onthecommencementofthecontract,theCompanywillassesswhetherthecontractisaleaseorcontainsthelease.Ifapartytothecontractconveystherighttocontroltheuseofoneormoreidentifiedassetsforagivenperiodtoobtainaconsideration,thiscontractisaleaseorcontainsthelease.Ifacontractcontainsseveralindividualleases,theCompanywillsplitthecontractandconductaccountingtreatmentofeachindividualleaseseparately.Ifacontactcontainsbothleaseandnon-lease,thelesseeandthelessorwillsplittheleaseandnon-leaseparts.

Ifallthefollowingconditionsaremet,theCompanywillsimplifyalltheleaseoptionswithoutassessingwhethertheleaseischangedorreassessingtheleaseclassification:

(1)Theconsiderationoftheleaseaftertheconcessionisreducedorremainsbasicallyunchangedcomparedtobeforetheconcession,wheretheleaseconsiderationmaybeundiscountedordiscountedusingthediscountratebeforetheconcession;

(2)Aftercomprehensivelyconsideringqualitativeandquantitativefactors,itisdeterminedthattherearenosignificantchangesinothertermsandconditionsofthelease.

(1)AccountingTreatmentofLeasesasaLessee

①Right-of-useassetOntheleasetermcommencementdate,thecompanyrecognizesright-of-useassetsforleasesotherthanshort-termleasesandlow-valueassetleases.Theright-to-useassetsareinitiallymeasuredatcost.whichincludes:

A.Theinitialmeasurementamountoftheleaseliability;b.Leasepaymentsmadeonorbeforetheleasetermcommencementdate,lessanyleaseincentivesreceived;c.Initialdirectcostsincurredbythecompany;d.Costsexpectedtobeincurredbythecompanyfordismantlingandremovingtheleasedasset,restoringthesitewheretheleasedassetislocated,orrestoringtheleasedassettotheconditionrequiredbytheleaseterms,excludingcostsincurredforproducinginventory.Thecompanysubsequentlyusesthestraight-linemethodtoaccruedepreciationontheright-of-useasset.Ifitcanbereasonablyrecognizedthatthetitleoftheleasedassetisacquiredattheexpirationoftheleaseterm,theCompanyshallaccruedepreciationwithintheremainingservicelifeoftheleasedasset;orotherwise,theleasedassetshallbedepreciatedwithintheshorteroftheleasetermandtheremainingservicelifeoftheleasedasset.TheCompanywilldeterminewhethertheright-of-useassetsareimpairedandconductaccountingtreatmentovertheidentifiedimpairmentlossaccordingtotheprinciplessetoutinthissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-26.ImpairmentofLong-termAssets.

②LeaseliabilityOntheleasetermcommencementdate,thecompanyrecognizesleaseliabilitiesforleasesotherthanshort-termleasesandlow-valueassetleases.Leaseliabilitiesshallbeinitiallymeasuredatthepresentvalueoftheunpaidleasepayments.Leasepaymentsinclude:

a.Fixedpayment(includingactualfixedpayment),andifthereareleaseincentives,therelevantamountofleaseincentivesshallbededucted;b.Variableleasepaymentdependingontheindexorratio;c.PredictedpaymentonthebasisoftheguaranteedresidualvalueprovidedbytheCompany;

d.Exercisepriceofthecalloption,providedthattheCompanywillexercisesuchoption,asreasonablydetermined;e.Paymentforexerciseoftheleaseterminationoption,providedthattheleasetermreflectstheCompany'sfutureexerciseoftheleaseterminationoption.TheinterestrateimplicitinleaseisappliedbytheCompanyasthediscountrate.Iftheinterestrateimplicitinleasecannotbereasonablydetermined,theCompany'sinterestrateonincrementalborrowingsisappliedasthediscountrate.TheCompanyshallcalculatetheinterestexpenseoftheleaseliabilitiesduringeachperiodoftheleasetermatafixedperiodicinterestrateandincludeitinthecurrentprofitorlossorrelevantassetcost.Thevariableleasepaymentwhichisnotincludedinthemeasurementofleaseliabilitiesshallbeincludedinthecurrentprofitorlossorrelevantassetcostwhenactuallyincurred.Ifanyofthefollowingcircumstanceshappensoncommencementoftheleaseterm,theCompanywillremeasuretheleaseliabilitiesandadjustthecorrespondingright-of-useassets,andifthebookvalueoftheright-of-useassetshasbeenreducedtozero,buttheleaseliabilitiesstillneedtobefurtherreduced,thedifferenceshallbeincludedinthecurrentprofitorloss:

A.Whentheassessmentresultsofthepurchaseoption,renewaloption,orterminationoptionchange,orwhentheactualexerciseoftheaforementionedoptionsisinconsistentwiththeoriginalassessmentresults,thecompanyshallremeasuretheleaseliabilityatthepresentvaluecalculatedusingthechangedleasepaymentandthereviseddiscountrate;b.Whenthesubstantivefixedpaymentchanges,theexpectedpayableamountoftheguaranteedresidualvaluechanges,ortheindexorrateusedtodeterminetheleasepaymentchanges,thecompanyshallremeasuretheleaseliabilityatthepresentvaluecalculatedusingthechangedleasepaymentandtheoriginaldiscountrate.Ifthechangeintheleasepaymentoriginatesfromthechangeinthefloatinginterestrate,thepresentvaluewillbecalculatedusingthereviseddiscountrate.

③Short-termleasesandlow-valueassetleasesThecompanychoosesnottorecognizeright-of-useassetsandleaseliabilitiesforshort-termleasesandlow-valueassetleases,andtherelatedleasepaymentsarerecognizedonastraight-linebasisovertheleaseterminthecurrentperiod'sprofitorlossorthecostoftherelatedassets.Short-termleasemeanstheleaseofnomorethan12monthsandexcludingthecalloptiononthecommencementoftheleaseterm.Low-valueassetleasemeansaleaseoflowervaluewhenthesingleleasedassetisbrand-new.IftheCompanysubletsorisexpectedtosublettheleasedassets,theoriginalleaseisnotalow-valueassetlease.

④LeaseModificationIfaleasemodificationoccursandsimultaneouslymeetsthefollowingconditions,thecompanywillaccountfortheleasemodificationasaseparatelease:

a.Theleasemodificationexpandstheleasescopebyaddingtherighttouseoneormoreleasedassets;

b.Theincreasedconsiderationisequivalenttothestandalonepriceoftheexpandedleasescopeportion,adjustedaccordingtothecontractconditions.Iftheleasechangeisnottakenasaseparateleaseforaccountingtreatment,ontheeffectivedateoftheleasechange,theCompanywillre-apportiontheconsiderationofthechangedcontract,re-determinetheleaseterm,andremeasuretheleaseliabilitiesatthepresentvalueworkedoutaccordingtothechangedleasepaymentandthereviseddiscountrate.Iftheleasechangeresultsinnarrowerscopeofleaseorshorterleaseterm,theCompanywillreducethebookvalueoftheright-of-useassetsaccordingly,andwillincluderelevantgainorlossfrompartialorfullterminationoftheleaseinthecurrentprofitorloss.Ifotherleasechangesresultinre-measurementoftheleaseliabilities,theCompanywilladjustthebookvalueoftheright-to-useassetsaccordingly.

(2)AccountingTreatmentofLeasesasaLessor

Oncommencementoftheleaseterm,theCompanywilldividetheleaseintofinancialleaseandoperatinglease.Financialleasemeanstheleasethathassubstantiallytransferredalmostalltherisksandrewardsrelatedtothetitleoftheleasedassets,whetherornotthetitlewillbefinallytransferred.Operatingleasemeansanyleaseotherthanfinanciallease.WhentheCompanyservesasalessorofthesublease,thesubleasewillbeclassifiedonthebasisoftheright-to-useassetsresultingfromtheoriginallease.

①OperatingLeaseAccountingTreatmentRentalincomefromoperatingleasesisrecognizedonastraight-linebasisovertheleaseterm.TheinitialdirectfeerelatedtotheoperatingleasetobeincurredbytheCompanywillbecapitalizedandwillbeapportionedandincludedinthecurrentprofitorlossonthesamebasisasthatforrecognitionoftherentalincomeintheleaseterm.Thevariableleasepaymentsthatarenotincludedintheleasereceiptsshallbeincludedinthecurrentprofitorlosswhentheyactuallyoccur.Incaseofachangetotheoperatinglease,theCompanywillconductaccountingtreatmentwithrespecttothechangedoperatingleaseasanewleaseasoftheeffectivedateofthechange,andtheleasepaymentsreceivedinadvanceorreceivablewithrespecttotheleasebeforethechangewillbetakenastheleasereceiptsforthenewlease.

②FinanceLeaseAccountingTreatmentOntheleasecommencementdate,thecompanyrecognizesthefinanceleasereceivableandderecognizestheleasedasset.TheCompanywilltakethenetleaseinvestmentastheentryvalueofthefinancialleasereceivableswheninitiallymeasuringthefinancialleasereceivables.Thenetleaseinvestmentisthesumoftheunguaranteedresidualvalueandthepresentvalueoftheunreceivedleasereceiptsdiscountedaccordingtotheinterestrateimplicitinleaseonthecommencementoftheleaseterm.TheCompanywillcalculateandrecognizetheinterestincomeduringeachperiodoftheleasetermatafixedperiodicinterestrate.ThederecognitionandimpairmentofthefinancialleasereceivableswillbesubjecttoaccountingtreatmentaccordingtothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments.

Thevariableleasepaymentsthatarenotincludedinthemeasurementofthenetleaseinvestmentshallbeincludedinthecurrentprofitorlosswhentheyactuallyoccur.Ifthefinancialleaseischangedandmeetsallofthefollowingconditions,theCompanywillconductaccountingtreatmentwithrespecttosuchchangeasasinglelease:

A.Thischangeexpandstheleasescopebyaddingtherighttouseoneormoreleasedassets;b.Theincreasedconsiderationisequivalenttotheadjustedamountofthestandalonepricefortheexpandedleasescopeunderthecontractconditions.Ifthechangeinthefinancialleaseisnotsubjecttoaccountingtreatmentasasinglelease,theCompanywilltreatthechangedleaseinthefollowingcircumstances:

a.Ifthechangetakeseffectoncommencementoftheleasetermandtheleaseisclassifiedasoperatinglease,theCompanywillconductaccountingtreatmentwithrespecttosuchleaseasanewleaseasoftheeffectivedateoftheleasechange,andwilltakethenetleaseinvestmentbeforetheeffectivedateoftheleasechangeasthebookvalueoftheleasedasset;b.Ifthechangetakeseffectonthecommencementdateofthelease,andsuchleaseisclassifiedasthefinanciallease,theCompanywillconductaccountingtreatmentaccordingtothepolicyregardingmodificationorre-negotiationofthecontractinthissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments.

(3)SaleandLeasebackTransactionTheCompanyevaluatesanddetermineswhethertheassettransferinthesaleandleasebacktransactionbelongstoasaleinaccordancewiththeprovisionsofthissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-32.Income.

AsthelesseeIftheassettransferinasaleandleasebacktransactionqualifiesasasale,thecompany,asthelessee,measurestheright-of-useassetarisingfromthesaleandleasebackbasedontheportionoftheoriginalasset'sbookvaluerelatedtotherightobtainedthroughtheleaseback,andrecognizesonlythegainorlossrelatedtotherightstransferredtothelessor;iftheassettransferinthesaleandleasebacktransactiondoesnotqualifyasasale,thecompany,asthelessee,continuestorecognizethetransferredassetandsimultaneouslyrecognizesafinancialliabilityequaltothetransferproceeds.Foraccountingtreatmentofthefinancialliabilities,refertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments.

②AsthelessorIftheassettransferinasaleandleasebacktransactionqualifiesasasale,thecompany,asthelessor,accountsfortheassetpurchaseandappliestheaccountingtreatmentforassetleasinginaccordancewiththeaforementionedpolicyunder"(2)Accountingtreatmentforleasingasthelessor."Iftheassettransferinasaleandleasebacktransactiondoesnotqualifyasasale,thecompany,asthelessor,doesnotrecognizethetransferredassetbut

recognizesafinancialassetequaltothetransferproceeds.Foraccountingtreatmentofthefinancialassets,refertothissectionFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments.

37.OtherSignificantAccountingPoliciesandAccountingEstimates

(1)RepurchaseoftheCompany'sSharesWhenthecompanyrepurchasesitssharesforreasonssuchasreducingregisteredcapitalorrewardingemployees,theactualamountpaidshallbetreatedastreasuryshares,andtherepurchaseshallberegisteredforrecord.Iftherepurchasedsharesarecanceled,thedifferencebetweenthetotalnominalvaluecalculatedbythenominalvalueofthecanceledsharesandthenumberofcanceledsharesandtheactualamountpaidfortherepurchaseshallbeoffsetagainstthecapitalreserve.Ifthecapitalreserveisinsufficienttooffset,theretainedearningsshallbeoffset;iftherepurchasedsharesaregrantedtothecompany'semployeesasshare-basedpaymentsettledinequity,whenemployeesexercisetherighttopurchasethecompany'ssharesandpaytheconsideration,thecostoftreasurysharesdeliveredtoemployeesandtheaccumulatedamountofcapitalreserve(othercapitalreserve)duringthewaitingperiodshallbewrittenoff,andatthesametime,thecapitalreserve(stockpremium)shallbeadjustedaccordingtotheirdifference.

(2)DebtRestructuring

①TheCompanyasaCreditorTheCompanyterminatestherecognitionofthecreditor'srightswhenthecontractualrighttoreceivethecreditor'scashflowisterminated.Incaseofdebtrestructuringbypayingoffthedebtwithassetsorconvertingintoequityinstruments,theCompanywillrecognizerelevantassetswhentheymeettheirdefinitionandconditionsofrecognition.Incaseofdebtrestructuringbypayingoffthedebtwithassets,theCompanyinitiallyrecognizesthetransferrednon-financialassetatcost.Thecostofinventoryincludesthefairvalueoftherelinquishedclaimaswellastaxes,transportationfees,handlingfeesandinsurancefeesandothercostsdirectlyattributedtotheassetthatoccurtobringtheassettoitscurrentlocationandcondition.Thecostofinvestmentinanassociateorjointventureincludesthefairvalueofrelinquishedclaimandtaxesandothercostsdirectlyattributedtotheasset.Thecostofinvestmentpropertyincludesthefairvalueofrelinquishedclaimandothercostsdirectlyattributedtotheasset.Thecostoffixedassetsincludesthefairvalueofrelinquishedclaimaswellastaxes,transportationfees,handlingfees,installationfees,servicefeesforprofessionalsandothercostsdirectlyattributedtotheassetthatoccurtobringtheassettoitsintendedusablecondition.Thecostofbiologicalassetsincludesthefairvalueofrelinquishedclaimaswellastaxes,transportationfees,insurancefeesandothercostsdirectlyattributedtotheasset.Thecostofintangibleassetsincludesthefairvalueofrelinquishedrightsandtaxesandothercoststhatareincurredtobringtheassettoitsintendeduse.Incasethatthedebtrestructuringbyconvertingdebtintoequityinstrumentsresultsinthecreditorconvertingitscreditor'srightsintoanequityinvestmentinanassociateorjointventure,theCompanyshallmeasureitsinitialinvestmentcostbasedonthefairvalueoftherelinquishedclaimandtaxesandothercostsdirectlyattributabletotheasset.Thedifferencebetweenthefairvalueofrelinquishedclaimandthebookvalueshallbeincludedinthecurrentprofitorloss.

Incaseofdebtrestructuringbymodifyingotherclauses,theCompanyrecognizesandmeasurestherestructuredcreditor'srightsaccordingtotheFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstrumentsIncaseofdebtrestructuringbypayingoffdebtswithmultipleassetsorcombiningthem,theCompanyfirstrecognizesandmeasuresthetransferredfinancialassetsandrestructuredcreditor'srightsaccordingtoFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstrumentsinthissection,andthenallocatesthefairvalueoftherelinquishedclaimstothenetamountafterdeductingtherecognizedamountsofthetransferredfinancialassetsandtherestructuredclaimsinproportiontothefairvalueofeachoftheassetsotherthanthetransferredfinancialassetsand,basedonthat,determinesthecostsoftheassetsseparatelybythemethoddescribedintheprecedingparagraph.Thedifferencebetweenthefairvalueofrelinquishedclaimandthebookvalueshallbeincludedinthecurrentprofitorloss.

②Asthedebtor,thecompanyderecognizesthedebtwhenthepresentobligationofthedebtisdischarged.Inthecaseofdebtrestructuringbypayingoffdebtswithassets,theCompanyderecognizestherelevantassetsandthedebtswhentheymeettheconditionsforderecognition,andthedifferencebetweenthebookvalueofthedebtspaidoffandthatofthetransferredassetsisincludedinthecurrentprofitsandlosses.Incaseofdebtrestructuringbytransferringthedebtintoequityinstruments,theCompanywillderecognizethedebtpaidoffwhenitmeetstheconditionsofrecognition.TheCompanyinitiallyrecognizesequityinstrumentsattheirfairvalue,andatthefairvalueofthedebtpaidoffifitisnotreliabletomeasureatthefairvalueoftheequityinstrument.Thedifferencebetweenthebookvalueofthedebtpaidoffandtheamountrecognizedfortheequityinstrumentshallbeincludedincurrentprofitsandlosses.Incaseofdebtrestructuringbymodifyingotherclauses,theCompanyrecognizesandmeasurestherestructuredcreditor'srightsaccordingtotheFinancialReport-V.SignificantAccountingPolicesandAccountingEstimates-11.FinancialInstruments.Incaseofdebtrestructuringbypayingoffdebtswithmultipleassetsorcombiningthem,theCompanyrecognizesandmeasuresequityinstrumentsandrestructureddebtsaccordingtotheabovemethods,andthedifferencebetweenthebookvalueofthedebtpaidoffandthebookvalueofthetransferredassetsaswellasthedifferencebetweentheequityinstrumentsandtheamountrecognizedoftherestructureddebtsshallbeincludedincurrentprofitsandlosses.

38.ChangesinSignificantAccountingPoliciesandAccountingEstimates

(1)ChangesinSignificantAccountingPolicies