2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual Report

March 2026

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual ReportSection I Important Notes, Table of Contents and InterpretationsThe Board of Directors, the directors, and the executives of the Company guarantee that there are nosignificant omissions, fictitious or misleading statements carried in the Report and we will accept individualand joint responsibilities for the truthfulness, accuracy and completeness of the Report.The Principal LI Gang, the Chief Finance Officer LIU Yu and the Chief Accountant (accounting supervisor)LI Zhenyu declare that they will ensure the authenticity, accuracy and completeness of the financial reportin this annual report.All directors attended the board meeting at which this report was considered.Forward-looking statements such as future development plans involved in this report do not constitute asubstantial commitment by the Company to investors. Investors and related persons should maintainsufficient risk awareness and understand the differences between plans, forecasts and commitments.Investors are requested to pay attention to investment risks.The Company is exposed to macroeconomic risks, market risks, raw materials risks and intensifiedcompetition risks. Investors are advised to pay attention to investment risks. For details, please refer to "XI.Outlook for the Company's Future Development (III) Possible Risks" in "Section III ManagementDiscussion and Analysis" of this report.The Board has approved a final dividend plan as follows: based on the total share capital of 506,521,849shares, a cash dividend of RMB0.48 (tax inclusive) per 10 shares is to be distributed to the shareholders,with no bonus issue from either profit or capital reserves.This report is prepared in Chinese and English respectively. In case of any ambiguity between the Chineseand foreign versions, the Chinese version shall prevail.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Table of Contents

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

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

Section III Management's Discussion and Analysis ...... 10

Section IV Corporate Governance, Environment and Society ...... 29

Section V Significant Events ...... 49

Section VI. Share Changes and Shareholder Information ....................................................................................... 58

Section VII Bonds ...... 64

Section VIII Financial Statements ...... 65

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

List of Reference DocumentsI. Accounting statements bearing the signatures and seals of the legal representative, Finance Director and ChiefAccountant of the Company;II. The original audit report bearing the seal of the accounting firm and the signature and seal of the certifiedpublic accountant;III. The original of all the Company's documents and the original of the announcement that have been publiclydisclosed by the Company on the website designated by the China Securities Regulatory Commission during thereporting period.The above-mentioned documents are kept in the office of the Board of Directors for reference.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Interpretations

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section II Company Profile and Major Financial IndicatorsI. Information about the Company

II. Contact person and contact information

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

III. Information disclosure and storage location

IV. Registration changes

V. Other relevant information

Accounting firm engaged by the Company

Sponsor engaged by the Company to perform continuous supervision during the reporting period

□ Applicable ? Not applicable

Financial consultant engaged by the Company to perform continuous supervision during the reporting period

□ Applicable ? Not applicable

VI. Main accounting data and financial indicators

Whether the Company needs to retroactively adjust or restate the accounting data of previous years? Yes ? No

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

The net profit of the Company in the last three fiscal years before and after deducting non-recurring profit or lossis negative, and the audit report of the latest year shows that the going-concern ability of the Company is uncertain? Yes ? NoThe lowest of the Company's audited total profit, net profit, and net profit attributable to the listed company’sshareholders after exceptional gains and losses during the reporting period was negative.? Yes ? No

VII.Differences between accounting data under domestic and foreign accounting standards

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

□ Applicable ? Not applicable

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

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

□ Applicable ? Not applicable

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

VIII. Main financial indicators by quarter

Unit: RMB

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Whether the above financial indicators or their aggregate are significantly different from the financial indicatorsrelated to the Company's disclosed quarterly and semi-annual reports? Yes ? NoIX. Non-recurring profit or loss items and amounts? Applicable ? Not applicable

Unit: RMB

Specific circumstances of other profit or loss items that meet the definition of non-recurring profit or loss:

□ Applicable ? Not applicable

The Company had no specific profit or loss items that meet the definition of non-recurring profit or loss.Notes on the definition of the non-recurring profit or loss items listed in the "Interpretive Announcement No. 1 onInformation Disclosure of Companies Issuing Securities to the Public - Non-recurring Profit or Loss" as recurringprofit or loss items

□ Applicable ? Not applicable

The Company had no circumstances of definition of the non-recurring profit or loss items listed in the"Interpretive Announcement No. 1 on Information Disclosure of Companies Issuing Securities to the Public -Non-recurring Profit or Loss" as recurring profit or loss items.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section III Management's Discussion and AnalysisI. Main business engaged in by the Company during the reporting period(I) Main business of the CompanyThe Company's main business is a high-tech industry focusing on the R&D, production and sales of polarizers forOLED and LCD display, and the operation and management of its own properties.During the reporting period, there was no significant change in the Company's primary business. First, theCompany actively adjusted its product structure, implemented a product differentiation strategy, and increased thesales proportion of high-value-added products. It has the sales volume of ultra-large-size (85" and above)polarizers surged significantly; second, the Company made every effort to overcome quality problems, improvecustomer satisfaction, reduce product return losses and management costs, and at the same time, played a sales-driven role to promote sales by production, and the production and sales volume repeatedly hit a record high; third,the Company strengthened lean management, effectively reduced the raw material losses, and saved theproduction costs; fourth, the Company strengthened the innovation-led drive, focused on key technologybreakthroughs, promoted the development and industrialization of cutting-edge products, and successfullyachieved the development and first delivery of VA-type high-transmittance and high-polarization 2.0 polarizers;fifth, the Company initiated the investment and construction of the Line 8 project to break through the productioncapacity bottleneck for mid-to-high-end products; sixth, the Company actively promoted the elimination ofenterprises with "non-main business assets non-dominant business assets, inefficient assets and ineffective assets",improved the mechanism for survival of the fittest enterprises, guided the concentration of resources to the corebusiness, and enhanced the efficiency of resource utilization; seventh, the Company strengthened supervision andmanagement, focused on work safety, improved the institutional system, formulated emergency disposal plans,enhanced safety training and education, carried out safety risk identification, hidden danger investigation andrectification, consolidated the weak links, and prevented accidents; eighth, continuously improved the quality ofproperty management service, improve tenant satisfaction, strived to maintain the Company's property rental rateat a high level, and ensured the stability of the Company's property leasing management business income.(II) Main products of the Company and their usesCurrently, the Company has 7 mass-production polarizer production lines, and its products cover OLED and LCDpolarizers. These products are mainly applied to products such as TVs, laptops, monitors, vehicles, industrialcontrols, instruments and meters, smartphones, and wearable devices. By continuously strengthening theexpansion of sales channels and the construction of its own brand, the Company has become a qualified supplierfor mainstream panel enterprises such as CSOT, BOE, LGD, Xianyang Caihong, HKC, Tianma Microelectronicsand Sharp.The main product types and applications of the Company's polarizer production lines are as follows:

(III) Business model of the CompanyThe polarizer industry is gradually shifting from the traditional business model of R&D, production and sales to acustomer-centric, joint R&D and comprehensive service business model. By understanding customer needs, theCompany jointly develops and carries out high-standard production management, manufactures high-qualityproducts, uses advanced polarizer roll-on equipment to cooperate with downstream panel manufacturers'production lines, optimizes production and logistics links, reduces production and transportation costs, createsvalue for customers, and achieves win-win cooperation.(IV) Market position of the Company's productsThe Company is one of the main domestic enterprises in the R&D, production, and sales of polarizers. It began itspolarizer business in 1995 and achieved the first mass production of polarizers in China in 1998, becoming apioneer in China's polarizer industry. The Company has mastered core technologies for the R&D and productionof TN/STN-LCD, TFT-LCD, and OLED polarizers. It is one of the few domestic polarizer manufacturers with thecapability to produce a full range of polarizer products in large, medium, and small sizes. The Company was the

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

first to achieve mass production of polarizers for OLED TVs and OLED mobile phones, filling a gap in thedomestic market.The Company's Line 7 is one of the few 2500mm ultra wide polarizing film production lines in the world, whichcan meet the needs of higher generation panel production lines such as the 8.5/8.6/10.5/11 generation globally.Especially matching the production line 10.5/11 generation of panel has the best economic production efficiency,and has industry-leading advantages in the technical level and production capacity of ultra large and large-sizedpolarizers.(V) Competitive advantages and disadvantages

1. Advantages of competition

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

2. Disadvantages of competition

See "(III) Possible risks of XI. Outlook for the Company's future development" in this chapter for details.(VI) Main performance driversSee "III. Core Competitiveness Analysis" in this section for details.II. Industry Overview for the Reporting PeriodThe polarizer is also called polarized light sheet, which can control the polarization direction of a specific beam.When the natural light passes through the polarizer, the light with the vibration direction perpendicular to thepolarizer transmission axis will be absorbed, and only the polarized light with the vibration direction parallel tothe polarizer transmission axis will be transmitted. The downstream applications of polarizers are mainly in thepanel industry. According to different panel types, polarizer are mainly classified into TN type, STN type, TFTtype and OLED type. Currently, the global polarizer market is dominated by TFT-LCD polarizers. Each LCDpanel requires two polarizers.The high-quality development of the polarizer industry has a profound impact on the entire display industry. Asone of the three core raw materials of the display panel, the demand for polarizer is directly affected by thefluctuation of the display panel market. In recent years, with the accelerated transfer of the global display panelindustry to China, China's polarizer industry has ushered in a stage of rapid development. The production capacityand process technology level of domestic polarizer manufacturers have continuously jumped. China's polarizerindustry has significantly improved its position and influence in the global market. Chinese mainland has becomethe world's largest polarizer production base.The Company is one of the main polarizer R&D, production and sales enterprises in China. It is the pioneer ofChina's polarizer industry. Now it has developed into a leading enterprise in China's polarizer industry, and hasbecome an important supplier of mainstream panel enterprises in the world. In 2025, influenced by multiplefactors such as the complex and volatile global economy and geopolitics, the transition of the national "trade-in"policy, and rising prices of raw materials like storage devices driven by the AI wave, the global display panel andterminal market demand still experiences a certain degree of fluctuation while continuing its slow recovery. In thefuture, with the capacity expansion and industry consolidation in the polarizer industry, it is necessary to be morevigilant about risks such as changes in the competitive landscape, rising raw material costs, and the security ofraw material supply.III. Analysis of core competitiveness(I) Technical advantages. SAPO Photoelectric is one of the earliest national high-tech enterprises in China to enterthe field of display polarizer research, development and production. It has 30 years of polarizer industry operationexperience, and its products cover mainstream display applications such as TN type, STN type, TFT type, OLED,etc. It has a complete set of proprietary technology and independent intellectual property rights for polarizers thatcan meet customer needs, and has the production capacity of a full range of polarizers in large, medium and smallsizes. SAPO Photoelectric has three innovation platforms, including "Guangdong Provincial EngineeringResearch Center", "ShenzhenPolarization Material and Technology Engineering Laboratory" and "ShenzhenEnterprise Technology Center". The platforms focus on the R&D and industrialization of the core productiontechnologies of polarizers for OLED and LCD. As of the end of the reporting period, SAPO Photoelectric hasbeen granted 117 patents, including: 22 domestic invention patents, 91 domestic utility model patents and 4overseas utility model patents. Four national standards and two industry standards were independently drafted andformulated by SAPO Photoelectric and approved for implementation. In addition, it participated in the draftingand formulation of 1 industry standard, which has been approved for implementation. Further, it participated inthe drafting and formulation of 3 group standards, which have been approved for implementation.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

(II) Talent advantages. As a pioneer and leading enterprise in China's polarizer industry, the company has alwaysregarded talent strategy as the core pillar of high-quality development, comprehensively promoting theconstruction of its talent team based on its main business, and laying a solid foundation for technologicalinnovation, capacity expansion, and market development. The company adheres to an independent innovationstrategy, building an efficient R&D management system based on professional innovation platforms. It bringstogether a professional team with years of industry experience and an international perspective, includingcomposite talents in core technology R&D and high-end production management, providing key talent support forthe development of the domestic polarizer industry. First, it builds a core technical team and establishes a dual-channel promotion system for both technical and management tracks. Through models like specialized trainingand industry-university-research collaboration, it continuously promotes the R&D and mass production of high-end polarizer products, maintaining an industry-leading technology commercialization rate. Second, it improvesthe construction of its key talent pipeline. Through diverse channels such as market-oriented recruitment andinternal competition, it precisely supplements talent in key areas like high-end manufacturing and R&Dmanagement, injecting momentum into capacity expansion and high-end customer development. Third, we willdeepen talent exchange and empowerment. In 2025, we will continue to carry out two-way exchanges of cadres,hold special training to cover core backbones, enhance the performance capabilities and collaboration efficiencyof cadres and employees, and further stimulate the vitality of the team. Fourth, we will improve the incentive andconstraint mechanism. Adhering to the principle of "strategy-driven and performance-based," we will optimize thecompensation and assessment system, and allocate the incentive resources toward core R&D and managementpersonnel, to maintain the stability of our core talent team and fully mobilize the employees' enthusiasm forinnovation and creation.(III) Market advantages. The Company has a good domestic and international customer base. Compared withadvanced foreign competing manufacturerss, the greatest advantage lies in having localized supportingcapabilities close to the panel market and strong support from national industrial policies. In terms of marketdemand, with the successive mass production of high-generation TFT-LCD panel production lines such asdomestic 10.5-generation and 11-generation lines, as well as the accelerated development of larger-sized panelsand terminal products, the demand for polarizers, especially ultra-large-size polarizers, in the domestic market hasshown a steady growth trend. The Company possesses one of the few 2,500mm ultra-wide polarizer productionlines in the world, maintaining an industry-leading advantage in both technology and production capacity forultra-large and large-size polarizers, which enables the Company to better align with the market demand for theultra-large-size polarizers. With the continuous breakthrough of cutting-edge technology, the demand for high-endpolarizer products such as OLED and vehicle-mounted polarizer is growing rapidly, and is becoming a blue oceanmarket for polarizer companies to compete. The Company has achieved mass production breakthroughs in OLEDTVs and mobile phones, and has accumulated rich technical experience in the production of high-qualityautomotive polarizers, which will put it in a favorable position in market competition. In terms of marketdevelopment, the Company focuses on customer needs, continuously optimizes the production process andproduct structure, improves quality control, organically combines production and sales, establishes a rapidresponse mechanism, gives full play to the advantages of localization, effectively provides point-to-pointprofessional services, and promotes the verification of various models around the overall strategic deployment toform a stable supply chain and continuously improve market share.(IV) Quality advantages. The Company always adheres to the quality policy of "meeting customer needs, pursuingexcellent quality; implementing green manufacturing and persisting on continuous improvement", pays attentionto product quality control, and the product quality is comparable to international standards. The Company strictlycontrols product performance indicators, standardizes incoming inspection standards, and takes qualityimprovement and consumption reduction as the starting point to achieve simultaneous improvement of output andquality; introduces modern management system, and passes ISO9001 quality management system, ISO14001environmental management system, ISO450001 occupational health and safety management system, QCO80000hazardous substance management system and ISO50001 energy management system certification; the productsmeet the environment protection requirements of RoHS directive, and realize the standardized management of thewhole process from raw materials supply, manufacturing, marketing to customer service, so as to ensure thestability of product quality.(V) Management advantages. The Company has been deeply involved in the polarizer industry for 30 years,accumulated rich production and management experience, and establishes a leading domestic managementprocess control system, quality management system, and stable raw material supply channels. The Company hascarried out in-depth and comprehensive benchmarking work, organized management personnel to learn advancedexperience from customers and peers, vigorously promoted standardized and refined management, and learnedfrom the management experience of domestic and overseas polarizer enterprises to optimize the organizationalstructure, reduce the management levels, and continuously improve the Company's management efficiency; the

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Company continues to optimize the management systems and incentive mechanisms to improve the decision-making efficiency and the market response speed, and refine the R&D reward system. In addition, it achieves adeeper integration of corporate value and employee value, effectively stimulating new business vitality; theCompany steadily promotes strategic transformation, optimizes resource allocation, and orderly phases out "non-core businesses and inefficient assets" to promote the concentration of resources in the main business; theCompany continues to improve the level of production management, increase the production speed, stabilize theproduct yield rate, and steadily enhance the efficiency of production lines, so that the production technicalindicators reach a higher level in the industry; the Company has strengthened quality management, leading to asignificant reduction in customer complaints and return rates, earning multiple quality improvement awards frommultiple key customers; through the approach of listing tasks based on project initiation, the Company haseffectively improved efficiency and quality, resulting in noticeable reductions in material costs and an increase inproduct yield rates.(VI) Policy advantages. Polarizer industry is an important part of the new display industry chain. The continuousdevelopment of the Company's polarizer business has improved the overall supply capacity of domestic polarizer,greatly reduced the dependence of domestic panel enterprises on imported polarizer, maintained the safety of thecountry's new display industry, played a positive role in enhancing the overall competitiveness of China's newdisplay industry chain, and boosted the coordinated development of the whole industrial chain of "20+8" ultra-high-definition video display industry cluster in Shenzhen. SAPO Photoelectric, the polarizer business carrier, hasbeen continuously recognized by national high-tech enterprises, and the polarizer project has been supported bynational, provincial and municipal policies and funds for many times, enjoying the preferential policy of duty-freeimport of main raw materials.

IV. Analysis of primary business

1. Overview

In 2025, the Company focused on its main business of polarizer and ensure its steady and sound development byoptimizing the product structure, improving product quality, enhancing operational efficiency, promoting thedevelopment and mass production of cutting-edge products, and strengthening on-site technical management. Dueto the intensified competition in the polarizer market and the limitations of the Company's production lineequipment and process capabilities, insufficient order was acquired for the high-end OLED polarizer, resulting inan overall trend of "increased volume and decreased price" in polarizer sales. Affected by the above, theCompany's operating revenue in 2025 was RMB 3241 million, a year-on-year decrease of 2.82%; the total profitwas RMB 108 million, a year-on-year decrease of 29.08%; the net profit attributable to the parent company wasRMB 68 million, a year-on-year decrease of 23.44%.The key work reviewed by the Company in 2025 as follows:

(I) Deeply cultivate the operation and management of main business, and drive high-quality development withdifferentiation strategyFirst, the Company actively adjusted its product structure, implemented a product differentiation strategy, andincreased the sales proportion of high-value-added products. It has the sales volume of MNT and OLED mobilepolarizers surged significantly. Second, the Company continued to promote lean management, strictly controlledthe manufacturing costs, reduced material losses, and improved the customer satisfaction. Third, the Companycontinued to strengthen innovation leadership, promoted the development and mass production of cutting-edgeproducts, focused on key technological breakthroughs, and successfully achieved mass production of circularpolarizing eye-care MNT products; fourth, the Company strengthened on-site technical management, and the firstpass yield of RTS large-size products was further improved.(II) Consolidate the technological innovation ecosystem and empower the domestic substitution for breakthroughof key technologiesThe Company actively coordinated the upstream and downstream enterprises in the industry chain, accelerated theresearch and development of key technologies such as low color deviation circular polarizer for fixed curvatureAMOLED and key technologies for vehicle display polarizer. At the end of 2025, the R&D project on the keytechnology of low color deviation circular polarizers for fixed-curvature AMOLED successfully passed theacceptance.In 2025, the Company completed 15 new patent applications, including 7 invention patents and 8 utility modelpatents; obtained 8 authorized patents, including 1 invention patents and 7 utility model patents.(III) Scientifically invest in and constructed the Line 8 project to address the production capacity bottleneck forhigh-end products

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

To address the capacity bottleneck faced by SAPO Photoelectric, the Company, after careful research, decided toinvest in the construction of Line 8 project (Announcement on the Investment and Construction of the 1.49m-widePolarizer Production Line Project (Line 8)) (No. 2025-39) by a Subsidiary, on CNINFO(http://www.cninfo.com.cn). Currently, the project has obtained the land use right, and ALL construction worksare progressing in an orderly manner.(IV) Maintain the stable development of the leasing business, and improve tenant satisfaction with high-qualityserviceIn 2025, the leasing market situation was grim, the vacancy rate continued to rise, and rents generally declined.The property management enterprises affiliated to the Company continuously improved their management, andtheir operation and development have made steady progress. First, judged the market trend and the customerdemand, and scientifically and reasonably formulated the annual property leasing plan based on the actualsituation of the property enterprise; second, strengthened the operation management, designed flexible lease termsand flexible payment methods, and ensured the refined implementation of the lease plan; third, continuouslyimproved the quality of property management service, timely responded to the needs of tenants, facilitated theupgrade of hardware and software facilities, and continuously enhanced tenant satisfaction. The Company'sproperty leasing and management business achieved steady development throughout the year, contributing stablecash flows to the Company.(V) Focus on the main business to optimize the asset structure and promote the concentration of resources in corebusinessesThe Company steadily promoted strategic transformation, optimized resource allocation and promoted high-quality development of the main businesses. First, we promoted the gradual withdrawal of the textile business andcompleted the disposal of textile equipment, inventory, and environmental protection equipment of MeibainianCompany; second, the work for liquidation of "non-core businesses and non-performing assets" was performed inorder, and the participating enterprises Yehui International Co., Ltd. has substantially completed the liquidationprocedures; third, the idle assets was revitalized to improve the utilization efficiency of vacant properties.(VI) Build a firm concept of work safety, and comprehensively strengthen work safety managementThe Company firmly established the concept of safety development, adhered to the safety red line and bottom linethinking, comprehensively consolidated the safety foundation, improved the safety management level, and createda good safety environment for production and operation. First, improved the safety management system,optimized the safety management system, established and improved the work safety responsibility system,compacted the responsibilities at all levels, and ensured that all safety measures are implemented in place; second,strengthened safety education and training, carried out in-depth safety and skill training for all employees throughdiversified forms, and effectively improved employees' safety awareness and operation ability; third, improved theemergency response capabilities, organized and carried out multi-level and multi-scenario emergency drills, andstrengthened employees' emergency disposal capabilities; fourth, deepened the risk prevention and control as wellas the investigation and rectification of hidden dangers, comprehensively carried out safety risk identification andhidden danger rectification, addressed management weaknesses, and ensured the safe and stable production andoperation.(VII) Improve the quality of Party building and empower the enterprise to achieve steady and long-termdevelopment.The Company unswervingly strengthened party building, continuously deepened the Party's innovative theoreticalarmament, steadily carried out Party discipline learning and education and the construction of party conduct andclean government, promoted the Party building research, and gave full play to the vanguard and exemplary role ofgrassroots party organizations as fighting bastions and party members and cadres; the Company adhered to thefocus on party building around the center and overall service, focused on straightening out the relationshipbetween diversified shareholders of important subsidiary, and formed a joint force for the Company'sdevelopment; it created differentiated competitive advantages under the drive of party building-led innovation; theCompany empowered team building with party building, forged a loyal and responsible cadre team, and led theCompany's high-quality development through high-quality party building.

2. Revenue and cost

(1) Composition of operating revenue

Unit: RMB

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

(2) Industry, product, region and sales model accounting for more than 10% of the company's operatingrevenue or operating profit? Applicable ? Not applicable

Unit: RMB

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

□ Applicable ? Not applicable

(3) Whether the company's physical sales revenue is greater than the revenue of labor services? Yes ? No

Reasons for the YoY change of more than 30% in relevant data

□ Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

(4) Performance of major sales contracts and major procurement contracts signed by the Company as ofthe reporting period

□ Applicable ? Not applicable

(5) Composition of operating costs

Industry and product classification

Unit: RMB

Unit: RMB

NotesNone

(6) Whether there was any change in the consolidation scope during the reporting period? Yes ?? NoThe Company's subsidiary, Shenzhen Huaqiang Hotel Co., Ltd, completed its liquidation and distribution in 2024and is no longer included in the scope of consolidation this year.

(7) Information about significant changes or adjustments in the Company's business, products or servicesduring the reporting period

□ Applicable ? Not applicable

(8) Main sales customers and suppliers

Main sales customers of the Company

Information on the Company's top 5 customers

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Other information of main customers

□ Applicable ? Not applicable

Main suppliers of the Company

Information on the Company's top 5 suppliers

Other information of main suppliers

□ Applicable ? Not applicable

During the reporting period, the Company's trading business revenue accounted for more than 10% of itsoperating revenue

□ Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

3. Costs

Unit: RMB

4. R&D investment

? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

R&D personnel of the Company

R&D investment

Reasons and impact of major changes in the composition of the Company's R&D personnel

□ Applicable ? Not applicable

Reasons for the significant change in the proportion of total R&D investment to operating revenue compared withthe previous year

□ Applicable ? Not applicable

Reasons for the significant change in the capitalization rate of R&D investment and its rationality explanation

□ Applicable ? Not applicable

5.Cash flows

Unit: RMB

Description of main influencing factors of significant YoY changes in relevant data? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Net cash flow generated by operating activities increased by 50.39% year-on-year, mainly due to a decrease incash flow for purchasing goods during the reporting period.Net cash flow generated by investment activities decreased by 409.20% year-on-year, mainly due to the increasein cash outflow for purchasing fixed assets during the reporting period.The subtotal of cash inflows generated by fund-raising activities increased by 100.00% year-on-year, mainly dueto new loans during the reporting period;The subtotal of cash outflows generated by fund-raising activities decreased by 79.40% year-on-year, mainly dueto the decrease in repayment of loan principal during the reporting period;The net cash flow generated by fund-raising activities increased by 109.79% year-on-year, mainly due to the newloans during the reporting periodThe net increase in cash and cash equivalents increased by 192.37% year-on-year, mainly due to the decrease incash flow for purchasing goods during the reporting period.Explanation of the reasons for the significant difference between the net cash flow generated from the operatingactivities of the Company and the net profit of the current year during the reporting period

□ Applicable ? Not applicable

V. Analysis of non-primary business

? Applicable ? Not applicable

Unit: RMB

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

VI. Analysis of assets and liabilities

1. Major changes in asset composition

Unit: RMB

High proportion of overseas assets

□ Applicable ? Not applicable

2. Assets and liabilities measured at fair value

? Applicable ? Not applicable

Unit: RMB

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Other changesNoneWhether there were significant changes in the measurement attributes of the Company's major assets during thereporting period? Yes ? No

3. Restrictions on asset rights as of the end of the reporting period

(1) The restricted monetary funds mainly include the funds equivalent to RMB 684,860.26 due to the freezing ofaccounts and the bill and L/C guarantee of RMB 536.39.

(2) Restricted notes receivable are notes receivable that have been endorsed by the Company and have not yetmatured on the balance sheet date.

(3) Limited fixed assets and intangible assets are mainly subsidiary SAPO Photoelectric with its part of selfsustaining property to the Bank of Communications Co., Ltd. Shenzhen Branch as the lead of syndicatedapplication for mortgage loans, and the Company for the mortgage guarantee. See information network(http://www.cninfo.com.cn) on the Company for Subsidiary Bank Mortgage Guarantee Announcement (2020-19),and the Announcement of the Progress of the Company for the Subsidiary Guarantee (2020-46).VII. Analysis of investment status

1. Overall situation

□ Applicable ? Not applicable

2. Major equity investments acquired during the reporting period

□ Applicable ? Not applicable

3. Major non-equity investments in progress during the reporting period

? Applicable ? Not applicable

Unit: RMB

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

4. Investment in the financial assets

(1) Securities investment

□ Applicable ? Not applicable

The Company had no securities investment during the reporting period.

(2) Derivative investment

? Applicable ? Not applicable

1) Derivative investments for hedging purposes during the reporting period? Applicable ? Not applicable

Unit: RMB10,000

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2) Derivative investments for speculative purposes during the reporting period

□ Applicable ? Not applicable

The Company did not engage in derivative investments for speculative purposes during the reporting period.

VIII. Sales of major assets and equities

1. Sales of major assets

□ Applicable ? Not applicable

The Company did not sell major assets during the reporting period.

2. Sale of major equity

□ Applicable ? Not applicable

IX. Analysis of major holding and participating companies

? Applicable ? Not applicableMajor subsidiaries and participating companies with an impact of 10% or more on the Company's net profit

Unit: RMB

Information on acquisition and disposal of subsidiaries during the reporting period

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

□ Applicable ? Not applicable

Notes to main holding and participating companiesThe financial data of the subsidiary SAPO Photoelectric in the above table are the data of its consolidatedfinancial statements. For details of its performance fluctuations and reasons for changes, please refer to "IVAnalysis of primary business" in "Section III Management Discussion and Analysis".X. Structured entities controlled by the Company

□ Applicable ? Not applicable

XI. Prospects for the future development of the Company(i) Industry competition pattern and development trend

1. Industry competition pattern

The polarizer industry is a highly concentrated industry. At present, there are about 10 major polarizermanufacturers in the world, mainly located in Chinese mainland, Japan and Taiwan. With the continuous transferof production capacity to China and the continuous expansion of production by manufacturers from Chinesemainland, China has become the world's largest polarizer production base. According to research data from theindustry institutions, the production capacity of polarizers in China mainland accounted for about 65% of theglobal total in 2025, and it is expected to further increase to about 75% in 2026. As the competitive advantage ofultra-wide polarizer production line driven by the rapid growth of demand for large-size display products (65inches and above) continuously stands out, Chinese mainland continues to maintain its leading position in theindustry.

2. Industry development trend

With the recovery of the global economy, the gradual recovery of the consumer electronics market and theincreasing maturity of various types of display technologies and products in multiple scenarios, the global displayindustry has entered a recovery upward channel. As one of the key raw materials upstream of the display panel,polarizers are expected to fully benefit from the recovery of the industry, and the multi-screen demand driven bythe large-sizing of display products, AI empowerment of IT products, and the electrification andintellectualization of automobiles, entering a new period of demand growth. According to research data fromindustry institutions, the global demand for polarizers is expected to grow from 605 million square meters in 2024to 685 million square meters in 2028, with a cumulative growth of 13.41% from 2024 to 2028 and a compoundannual growth rate of about 3.20%. Among them, the demand for OLED polarizers is expected to grow from

18.40 million square meters in 2024 to 26.07 million square meters in 2028, with a compound annual growth rateof 9.11%. The demand for automotive polarizers is expected to grow from about 12 million square meters in 2024to about 16 million square meters in 2028, with a compound annual growth rate of 7.46%. In the future,manufacturers with large-size polarizer products, as well as high-end and cutting-edge polarizer technologyreserves and mass production capabilities such as OLED and automotive polarizers will occupy greatercompetitive advantages.(II) Development strategy of the CompanyDuring the 15th Five-Year Plan period, the Company will build on its existing industrial foundation, pursuedevelopment driven by innovation leadership and capital operation, continuously enhance its technologicalinnovation capability, strengthen quality improvement, cost reduction and efficiency enhancement, further expand,strengthen and optimize its core polarizer business, accelerate the exploration of extending its layout to advancednew material sectors such as upstream materials for polarizers, optoelectronic materials and new display materials,strive to build a high-quality business system featuring "strengthening the foundation and advancing throughexpansion", accelerate the upgrading and development of the Company, and build itself into a world-class newmaterial technology group.(III) Possible risks

1. Macroeconomic risks

At present, the domestic economy is stable and progressing, and the overall situation is repairing. However, theinternational environment is complex and severe, with geopolitical tensions. As one of the upstreammanufacturers in the display product market, the Company cannot rule out the risk that unpredictablemacroeconomic fluctuations may affect the Company's performance.

2. Market risks

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

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

3. Raw materials risks

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

4. Risks of intensified competition

With the accelerated production of new and expanded production lines by major domestic polarizer manufacturersin recent years, polarizer production capacity, especially large-size polarizer production capacity, will continue togrow in the future. If the recovery of downstream consumer markets is weaker than expected, the competition inthe polarizer industry will further intensify.(IV) Priorities in 2026

1. Promote quality and upgrading of the core main business

In the face of the current macroeconomic environment and industry competition, the Company will focus onimproving the operational efficiency of its polarizer business, strengthening R&D innovation, production control,and sales synergy to comprehensively enhance its core competitiveness. First, we will strengthen the leadership ofinnovation and accelerate the development of new product. Second, we will increase the market promotion of coreproducts and expand the sales scale. Third, we will enhance the process capability of production lines, optimizethe production processes, and improve the production efficiency and yield. Fourth, we will further reduce the costin procurement and increase the procurement volume and proportion of domestic raw materials.

2. Accelerate the construction of new projects

We will fully promote the construction of the SAPO Photoelectric 1.49m-wide polarizer production line (Line 8).We will strengthen project supervision and risk prevention and control of safety production to lay the foundationfor achieving the expected benefits and strategic goals after the project is put into production.

3. Promote the disposal of "non-core/non-competitive businesses and inefficient/non- performing assets" andoptimize the business layoutOn the one hand, we will continuously optimize the quality of property management services to ensure a stablecash flow for the Company. On the other hand, we will dynamically optimize the disposal plan for "non-core/non-competitive businesses and inefficient/non- performing assets" and steadily advance the clearance of non-core/non-competitive assets. We will actively promote the liquidation of the textile and garment business and thetransfer of small equity in some participating enterprises to effectively optimize asset allocation and improve assetoperation efficiency, to lay a solid foundation for the Company to focus on the main polarizer business andaccelerate the transformation and development.

4. Strengthen the construction of talent team, and ensure development with talent-driven innovationWe will deeply implement the talent-driven strategy, focus on the high-quality development of the main polarizerbusiness, continuously optimize the structure of the cadre team, and strengthen the capacity building of key talents.First, we will adhere to the principle of integrity and competence with a focus on application, increase theintroduction of talents in key functions such as high technology and international operations, systematicallycultivate versatile talents, and broaden career development channels for talents. Second, we will deepen theinnovation of incentive mechanisms, benchmark against the advanced management experience in the industry,improve a flexible and diversified medium- and long-term incentive system, and fully unleash the innovative andcreative potential of talents. Third, we will continuously create a good ecosystem of "recognizing talents,cherishing talents, loving talents, and using talents", give full play to the professional, intellectual, and resource

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

advantages of talents, empower the Company's technological breakthroughs, capacity upgrading, and marketexpansion with a high-quality talent team, and comprehensively consolidate the Company's core competitiveness.

5. Firmly establish the concept of safe development and consolidate the foundation of safe productionThe Company always adheres to the safe production policy of "safety first, prevention foremost, andcomprehensive governance," firmly establishes the concept of safe development, continuously improves the safetyproduction responsibility system, and implements the safety responsibilities at all levels to ensure that theresponsibilities are assigned to individuals and effectively implemented; we will further increase investment inproduction safety, focus on the investigation and rectification of major safety risks and hidden dangers, andresolutely prevent and defuse the major safety risks; we will insist on carrying out regular safety education andtraining and emergency drills to continuously enhance the work safety awareness, safe operation skills, andemergency response capabilities of all employees; we will carry out multi-dimensional and all-round special worksafety inspections and daily investigations to promptly discover and absolutely eliminate the safety hazards,thereby fully ensuring the safe and stable operation of all the Company's businesses.

6. Improve the risk control compliance system and enhance the ability of comprehensive risk prevention andcontrolWe will continuously optimize and improve the risk control management system, extend the coverage of thecompliance system to our subordinate enterprises, to standardize and normalize the Company's overall compliancemanagement; we will standardize the compliance management processes, strengthen risk prediction, preventionand control, effectively reduce the operating risks, and earnestly safeguard the Company's legitimate rights andinterests; we will strengthen compliance education for all employees, and organize special compliance training, toenhance the compliance awareness and performance capabilities of all employees.

7. Enhance market value management level and promote high-quality development of the CompanyBased on high-quality information disclosure, we will refine and improve the investor relations management, andconvey the Company's strategy and operating results through various forms such as organizing performancebriefings and investor research, to guide long-term value investment. We will timely and reasonably use methodssuch as mergers and acquisitions, equity incentives, share repurchases, and cash dividends to boost the confidenceof market investors in the company, enhance the investors' confidence and sense of gain, and continuouslyincrease the investment value of the listed company.

8. Strengthen the leadership of party building and innovate the construction of corporate cultureIn strict accordance with the unified deployment and arrangements of the Party Central Committee and superiorParty committees, we will give full play to the leadership role of the Party Committee in "setting the direction,managing the overall situation, and ensuring the implementation". We will promote the deep integration of partybuilding with business development, so that the grassroots Party organizations become a solid fortress to promotethe production and operation and unite the employees; make every effort to build a characteristic party buildingbrand of enterprises, and play a vanguard and exemplary leading role of party members in core key positions suchas production line and scientific research and innovation; pay close attention to the construction of the work styleof the cadre team, promote the improvement and implementation of the Company's system, promote the clarityand implementation of the corporate strategy, and lay a solid foundation and provide guarantee for the healthydevelopment of the Company.XII. Reception, survey, communication, interview and other activities during the reportingperiod

? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

XIII. Formulation and implementation of market value management system and valuationimprovement planWhether the Company has formulated a market value management system.? Yes ? NoWhether the Company has disclosed plans for valuation enhancement.? Yes ? No

XIV. Implementation of the action plan of "double improvement of quality return".Whether the company has disclosed the announcement of the action plan of "double improvement of qualityreturn".? Yes ? No

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section IV Corporate Governance, Environment and Society

I. Basic status of corporate governance

During the reporting period, the Company operated in strict accordance with the requirements of the SecuritiesLaw, the Company Law, the Code of Corporate Governance for Listed Companies, the Guidelines for Self-Regulation of Companies Listed on Shenzhen Stock Exchange No. 1 - Standardized Operation of CompaniesListed on the Main Board, and other relevant laws, regulations and normative documents, strengthened riskmanagement and control, and ensured the healthy and stable development of the Company. At present, theCompany's various governance systems are basically sound, its operation is standardized, and its legal persongovernance structure is perfect, which meets the requirements of the normative documents on the corporategovernance of listed companies issued by the China Securities Regulatory Commission.(I) Operation of the general meeting of shareholdersIn 2025, the Company held a total of 6 general meetings, which were convened and held in strict accordance withthe provisions and requirements of the Company Law, the Company's Articles of Association and the Rules ofProcedure for the General Meeting, the voting procedures were standardized, and the resolutions were legal andvalid. Companies actively protected the voting rights of minority investors, and general meetings were convenedin the form of live network to adequately assure small investors of their rights to exercise.(II) Operation of the Board of DirectorsIn 2025, the Board of Directors of the Company held a total of 13 meetings. The convening, holding and votingprocedures of the Board of Directors were carried out in strict accordance with the provisions of the Articles ofAssociation and the Rules of Procedures of the Board of Directors of the Company. All directors performed theirduties as directors, lawfully exercised their rights as directors, attended relevant meetings in time, activelyparticipated in the training organized by the regulatory authorities and the Company, and deeply studied andmastered the relevant laws and regulations in a conscientious, diligent and honest manner. Independent directors,in strict accordance with the Company Law and other relevant laws and regulations, as well as the Articles ofAssociation and the Working System for Independent Directors, performed their duties as independent directorsindependently, objectively and prudently. They conducted careful and meticulous deliberation on the majormatters of the Company, and provided constructive opinions and suggestions for the Company's decision-makingwith their independent perspective, professional quality, and rich experience, effectively playing the supervisory,check-and-balance, and professional support role of independent directors. The Board of Directors has establisheda strategic planning committee, an audit committee, a remuneration and assessment committee, and a nominationcommittee. The special committees perform their relevant duties in strict accordance with the working regulations,providing scientific and professional reference opinions for the decision-making by the Board of Directors. In2025, the Company completed the reform of the Board of Supervisors. The audit committee of the Board ofDirectors fully took over the functions of the Board of Supervisors, focusing on strengthening the financial,internal control, and compliance supervision to ensure the effective implementation of supervisory functions andsafeguard the overall interests of the Company.(III) Operation of the managementThe management of the Company performed its duties in strict accordance with the Company Law, the Guidelinesfor Self-Regulation of Companies Listed on Shenzhen Stock Exchange No. 1 - Standardized Operation ofCompanies Listed on the Main Board, the Articles of Association and the Working Rules of the General Manager.The Company conducted internal information communication through the weekly general manager's officemeeting, reviewed the performance and gave feedback on budget implementation through quarterly businessanalysis meetings to ensure that all kinds of information were transmitted in a timely, accurate and efficientmanner within the Company. The management was fully responsible for the Company's production and operationmanagement, and strictly implemented all resolutions made by the Board of Directors. The members of themanagement had a clear division of labor, defined powers and responsibilities, and efficient collaboration. Theyearnestly fulfilled their management and operation duties, fully promoted the realization of the Company'sbusiness objectives, and ensured that the Company's business activities were carried out in a standard, orderly andefficient manner.(IV) Information disclosure and transparencyIn 2025, the Company continued to improve the quality of information disclosure, enhance the transparency ofinformation disclosure, strengthen the management of investor relations, and effectively protect the legitimaterights and interests of all investors. During the reporting period, the Company strictly complied with the Articlesof Association, the Measures for the Administration of Information Disclosure of Listed Companies and other

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

relevant provisions, abided by the principle of "openness, fairness and impartiality" in information disclosure,fulfilled its information disclosure obligations in a true, accurate, complete and timely manner, and continuouslyimproved the specific measures to protect investors' interests. The Company strictly implemented the insiderinformation confidentiality system, strengthened the confidentiality education, standardized the registration andfiling of insiders, and strictly prevented the leakage of insider information to ensure the equal right of allshareholders to obtain information; the Company attached great importance to the management of investorrelations, timely answered the questions raised by investors through telephone, e-mail, and especially theShenzhen Stock Exchange's investor relations interactive platform, and timely reported the needs, suggestions andreasonable demands of investors to the management. At the same time, the Company continued to improve thevoting mechanism for small and medium investors. The votes of small and medium investors were countedseparately at the 6 general meetings of the Company in 2025, and the results of the separate counting werepublicly disclosed in the resolution announcement of the general meeting, fully protecting the rights of small andmedium investors.Whether there is any significant difference between the actual status of corporate governance and the laws,administrative regulations and the provisions issued by the China Securities Regulatory Commission on thegovernance of listed companies? Yes ? NoThere are no significant differences between the actual status of corporate governance and the laws, administrativeregulations and the provisions issued by the China Securities Regulatory Commission on the governance of listedcompaniesII. The independence of the Company from the controlling shareholder and actual owner interms of assets, personnel, finance, organization and businessDuring the reporting period, the controlling shareholders of the Company behaved in a standard manner, and didnot directly or indirectly intervene in the Company's decision-making and operating activities beyond the generalmeeting. The Company has independent and complete business and independent operation abilities, and canachieve "five separations" in terms of personnel, finance, assets, institutions and business.III. Horizontal competitions

□ Applicable ? Not applicable

IV. Directors and Senior Management

1. Basic information

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Whether there have been departures of any directors, supervisors, or dismissals of senior management personnelduring their terms of office in the reporting period? Yes ? No

1. Wang Chuan, the director and former deputy general manager of the Company, resigned as the deputy generalmanager of the company on January 21, 2025, and Ning Maozai, the former Deputy Secretary of the PartyCommittee and director of the Company, resigned on January 22, 2025. On January 24, 2025, the Company heldthe 36th meeting of the 8th Board of Directors, at which the "Proposal on Appointing the Company's GeneralManager" and the "Proposal on Appointing the Company's Deputy General Managers" were deliberated andapproved. Upon review by the nomination committee of the 8th Board of Directors, the Board of Directors agreedto appoint Ma Jie as the Company's general manager and Lin Xia and Wang Zihan as the deputy general managers,with their terms of office being the same as that of the 8th Board of Directors. Besides, the "Proposal on Adjustingthe Non-independent Directors of the 8th Board of Directors" was deliberated and approved. Upon review by thenomination committee of the 8th Board of Directors, the Board of Directors agreed to nominate Ma Jie and WeiJunfeng as candidates of the non-independent directors of the 8th Board of Directors, with their terms of officebeing the same as that of the 8th Board of Directors. For details, please refer to the Announcement on AdjustingDirectors and Senior Officers (No. 2025-02) published by the Company on Cninfo (http://www.cninfo.com.cn).On February 18, 2025, the Company held the first extraordinary general meeting in 2025, at which the "Proposalon Electing Non-independent Directors of the 8th Board of Directors" was deliberated and approved. Ma Jie andWei Junfeng were elected as the non-independent directors of the Company, with their terms of office being thesame as that of the 8th Board of Directors, commencing from the date of approval at the general meeting. Fordetails, please refer to the Announcement on the Resolution of the First Extraordinary General Meeting in 2025(No. 2025-06) published by the Company on Cninfo (http://www.cninfo.com.cn).

2. Yin Ke, the former secretary of the party committee and director of the Company, resigned on September 5,2025. On September 5, 2025, the Company held the 42nd meeting of the 8th Board of Directors, at which the

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

"Proposal on Nominating Li Gang as a Candidate Director of the 8th Board of Directors" was deliberated andapproved. Based on the recommendation of Shenzhen Investment Holdings Co., Ltd. and upon review andapproval by the nomination committee of the 8th Board of Directors, the Board of Directors agreed to nominate LiGang as a candidate director of the 8th Board of Directors. For details, please refer to the "Announcement onResolution of the 42nd Meeting of the 8th Board of Directors" (No. 2025-30) on Cninfo(http://www.cninfo.com.cn). On September 29, 2025, the Company held the second extraordinary general meetingin 2025, at which the "Proposal on Electing Li Gang as a director of the 8th Board of Directors" was deliberatedand approved. Li Gang was elected as a non-independent director of the Company, with his term of office beingthe same as that of the 8th Board of Directors, commencing from the date of approval at the general meeting. Fordetails, please refer to the Announcement on the Resolution of the Second Extraordinary General Meeting in 2025(No. 2025-35) published by the Company on Cninfo (http://www.cninfo.com.cn). On September 29, 2025, theCompany held the 44th meeting of the 8th Board of Directors, at which the "Proposal on Electing the Chairman ofthe 8th Board of Directors" was deliberated and approved. It was agreed to elect Li Gang as the Chairman of the8th Board of Directors, with his term of office being the same as that of the current Board of Directors. For details,please refer to the "Announcement on Resolution of the 44th Meeting of the 8th Board of Directors" (No. 2025-36)on Cninfo (http://www.cninfo.com.cn).

3. On August 21, 2025, the Company held the 41st meeting of the 8th Board of Directors, at which the "Proposalon Changing the Secretary of the Board of Directors" was deliberated and approved. Due to work adjustment, Ms.Jiang Peng no longer serves as the Secretary of the Board of Directors; upon nomination by the Chairman andreview by the Nomination Committee of the Board of Directors, it was agreed to appoint Huang Min as thesecretary of the Board of Directors of the Company. For details, please refer to the Company's Announcement onChanging the Secretary of the Board of Directors (No. 2025-28) on CNINF (http://www.cninfo.com.cn).

4. Wu Guangquan, a former independent director of the Company, resigned on September 16, 2025. On October24, 2025, the Company held the 46th meeting of the 8th Board of Directors, at which the "Proposal on Appointingan Additional Independent Director to the 8th Board of Directors" was deliberated and approved. Upon reviewand approval by the nomination committee of the 8th Board of Directors, the Board of Directors agreed tonominate Wang Liming as a candidate independent director of the 8th Board of Directors and the Proposal wassubmitted for election at the Company's general meeting, with his term of office being the same as that of the 8thBoard of Directors. For details, please refer to the "Announcement on Resolution of the 46th Meeting of the 8thBoard of Directors" (No. 2025-42) on Cninfo (http://www.cninfo.com.cn). On November 12, 2025, the Companyheld the third extraordinary general meeting in 2025, at which the "Proposal on Electing Wang Liming as anindependent director of the 8th Board of Directors" was deliberated and approved. Wang Liming was elected asan independent director of the Company, with his term of office being the same as that of the 8th Board ofDirectors, commencing from the date of approval at the general meeting. For details, please refer to theAnnouncement on the Resolution of the Fourth Extraordinary General Meeting in 2025 (No. 2025-48) publishedby the Company on Cninfo (http://www.cninfo.com.cn).Changes in directors and senior management of the Company? Applicable ? Not applicable

2. Office holding

Professional background, work experience and main duties in the Company of existing directors and seniormanagement(I) Directors

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Li Gang, male, born in March 1970, bachelor's degree, member of the Communist Party of China. He hassuccessively served as a senior business manager of the HR Department and deputy director of the Party and MassWork Department of Shenzhen Investment & Management Company; assistant to the General Manager andDirector of the General Office of Shenzhen Dachanwan Port Investment & Development Co., Ltd.; deputySecretary of the Party Committee and Secretary of the Discipline Inspection Commission of Shenzhen TongchanIndustrial Co., Ltd.; deputy General Manager of Shenzhen Shenchao Technology Investment Co., Ltd., andDirector of the Human Resources Department (Financial Supervision Center) of Shenzhen Investment HoldingsCo., Ltd. He is currently the Secretary of the Party Committee and Chairman of Shenzhen Investment HoldingsScience and Technology Innovation Group Co., Ltd., and the Secretary of the Party Committee and Chairman ofthe Company.Ma Jie, male, born in November 1977, master's degree and a member of the Communist Party of China. Hesuccessively served as a section member of Luohu Branch of Shenzhen Public Security Bureau and PersonnelBureau of Yantian District of Shenzhen; director and Deputy Secretary of the General Office of Shenzhen LuohuDistrict Committee of the Communist Youth League; deputy Director and Researcher of Shenzhen Luohu DistrictEnvironment Protection and Water Affairs Bureau; director of Discipline Inspection and Supervision Office andDeputy Secretary of Commission for Discipline Inspection of Shenzhen SDG Group Co., Ltd.; secretary ofCommission for Discipline Inspection and Chairman of the Board of Supervisors of Shenzhen Urban Constructionand Development (Group) Co., Ltd. He currently serves as the Deputy Secretary of the Party Committee, Directorand General Manager of the Company.Wei Junfeng, male, born in November 1979, a master's degree and a member of the Communist Party of China.He successively served as the secretary of the board of directors and the project manager of the generaldepartment of Shenzhen International Tendering Co., Ltd., the director and senior supervisor of the board office(during which he was also the risk control director and administrative director of Shenzhen Investment HoldingsDonghai Investment Co., Ltd.), and the senior supervisor and deputy director of the Strategy Research Department(the Board Office) of Shenzhen Investment Holdings Co., Ltd.. He is currently the Deputy Secretary of the PartyCommittee and Director of the Company.Wang Chuan, male, born in March 1972, master's degree, economist, engineer, and member of the CommunistParty of China. He successively served as the Deputy Director, Director and Assistant Director of the CooperativeDevelopment Department of Shenzhen National High-tech Industry Innovation Center, the Director, GeneralManager and Chairman of Shenzhen Innovation Starting Point Technology Co., Ltd., the Deputy GeneralManager of Shenzhen Tong Chan Group Co., Ltd., Director of the Investment Management Department ofShenzhen Investment Holdings Co., Ltd., member of Party Committee and Deputy General Manager of ShenzhenSDG Group Co., Ltd., and Chairman of the Company.Liu Yu, female, born in November 1971, bachelor degree, senior accountant, Chinese certified public accountant,and member of the Communist Party of China. She successively served as the Finance Director of ShenzhenWOMAN Magazine, the Deputy General Manager of Shenzhen WOMAN Magazine, and the Director andFinance Director of Shenzhen Wuzhou Guest House Group Co., Ltd. She is currently a director and FinanceDirector of the company.Meng Fei, male, born in November 1975, bachelor degree, senior accountant. He previously worked at ShenzhenTianhong Shopping Mall Co., Ltd. and Shenzhen Press Group, and served as a Senior Manager of FinancialDepartment of Shenzhen Investment Holdings Co., Ltd. and Deputy Head of the Financial Department(Settlement Center). He is currently a Director and Chief Financial Officer of Shenzhen-Hong Kong Science andTechnology Innovation Cooperation Zone Development Co., Ltd., a Director of Shenzhen Special Economic ZoneReal Estate & Properties (Group) Co., Ltd., a Supervisor of Shenzhen High-tech Zone Investment andDevelopment Group Co., Ltd., a Supervisor of Shenzhen Investment Holdings Donghai Investment Co., Ltd., aDirector of SIHC Hong Kong Investment Holdings Limited, and a Director of the Company.Wang Liming, male, born in October 1960, with a bachelor's degree in law, is a member of the CPC, a seniorpolitical engineer, and an arbitrator of the first, second and third Shenzhen Arbitration Commission. He onceserved as Deputy Director of the Research Office of the Political and Legal Affairs Commission of the GansuProvincial Committee of CPC; secretary of the Board of Supervisors, Deputy Director of the President's Office,and member of the Discipline Inspection Commission of Shenzhen Investment Management Company; chairmanof the Board of Directors of Shenzhen Longmai Information Co., Ltd.; deputy General Manager of ShenzhenInternational Modern Urban Logistics Port Co., Ltd.. He is currently an independent director of the Company.Yang Gaoyu, male, born in February 1968, of Chinese nationality, is a member of the CPPCC of Shenzhen. He isa graduate student of Business Administration at New York Institute of Technology, a Chinese Certified PublicAccountant, a Chinese Certified Tax Agent, a forensic accounting expert, and a member of China Zhi Gong Party.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

He once served as an accounting officer of A-Fontane Fabrication Industrial (Shenzhen) Co., Ltd., and the auditofficer, audit manager, partner and chief partner of Shenzhen Changcheng Accountant Office Co., Ltd. He iscurrently the director of the Shenzhen branch of Zhongzheng Tiantong Certified Public Accountants (SpecialGeneral Partnership), the executive director and general manager of Zhongtian Dexiang Taxation Firm (Shenzhen)Co., Ltd., the general manager of Shenzhen Baofuqin Enterprise Management Consulting Co., Ltd., and is also amember of the Legislative Consultation Committee of the CPPCC of Shenzhen, the deputy director of the SocialService Committee of the Shenzhen Branch of the China Zhi Gong Party, the vice president of the Shenzhen NewSocial Stratum Association, a member of the Seventh Council of the China Certified Tax Agents Association, theexecutive member of the council and vice president of the Shenzhen Tax Agents Association, the vice president ofthe Shenzhen Futian District Accounting Society, the vice president of Shenzhen Zhejiang Chamber of Commerce,the executive president of the Legal, Taxation and Finance Association of Shenzhen Jiangxi Chamber ofCommerce, the vice president of Hong Kong Fuzhou Friendship Association, supervisor of Alumni Association ofJiangxi University of Finance and Economics in Shenzhen, a visiting professor of the School of Accountancy ofJiangxi University of Finance and Economics, an invited professor of the College of Modern Economics &Management of Jiangxi University of Finance and Economics, a part-time master's supervisor of the ShenzhenResearch Institute of Jiangxi University of Finance and Economics, an entrepreneurship tutor of the Innovationand Entrepreneurship Center of the Shenzhen Research Institute of Jiangxi University of Finance and Economics,an off-campus tutor of the School of Economics of Shenzhen University for MPAcc, an independent director ofShenzhen Leaguer Co., Ltd., an independent director of Shenzhen New Trend International Logis-Tech Co., Ltd.,and an independent director of the Company.Wang Kai, male, born in September 1983, Ph.D. of Huazhong University of Science and Technology, member ofthe Communist Party of China, professor of the Department of Electronic and Electrical Engineering of SouthernUniversity of Science and Technology, National Excellent Youth, and Outstanding Youth of Guangdong Province.He serves as a member of the Technical Committee of the Beijing Branch of the Society for Information Display(SID), a member of the Optical Display Professional Committee of the Chinese Society for Optical Engineering,and the deputy director of the Key Laboratory of Quantum Dot Advanced Display and Lighting of GuangdongProvincial General Colleges and Universities. He is also the technical consultant of Shenzhen Planck InnovationTechnology Co., Ltd. and an independent director of the Company.(II) Senior managementLin Xia, female, born in October 1975, bachelor's degree, member of the Communist Party of China. He hasserved as the business supervisor of the Legal Supervision and Audit Department of Shenzhen Shenhua GroupCo., Ltd., the legal supervisor of the Board Office, the deputy director and director of the Office, and director ofthe General Office (Process and Information Center) of Shenzhen Properties & Resources Development (Group)Ltd., the deputy secretary of the branch committee (full-time rank) and the chairman of the labor union ofShenzhen Huangcheng Real Estate Co., Ltd.. and the deputy general manager of Shenzhen Municipal People'sCongress Cadre Training Center Co., Ltd. He is currently the deputy general manager of the Company.Wang Zihan, male, born in April 1989, bachelor's degree, member of the Communist Party of China. He hassuccessively served as the Deputy Director of the Marketing Department of the Commercial Operation Branch ofShenzhen SEG Group Co., Ltd., the General Manager of SEG Creative Space of Shenzhen SEG EntrepreneurshipHub Co., Ltd., and the Deputy General Manager and General Manager of the Operation Management Departmentof Shenzhen SEG Group Co., Ltd. General Manager of Shenzhen SEG High-Tech Investment Co., Ltd. He iscurrently the deputy general manager of the Company.Huang Min, male, born in December 1987, with a master's degree, a senior economist, a certified publicaccountant, and a member of the Communist Party of China. He has successively served as Senior BusinessManager of the Strategy and Information Department of FIYTA Precision Technology Co., Ltd., Audit Managerof the Shenzhen Branch of KPMG Huazhen LLP (Special General Partnership), Senior Supervisor of theIndustrial Management Department of Shenzhen Investment Holdings Co., Ltd., and Director of the FinanceDepartment of the Company. He currently serves as the Secretary of the Board of Directors of the Company.Situation where the controlling shareholder and actual controller concurrently serve as the chairman and generalmanager of the listed company

□ Applicable ? Not applicable

*.Positions held in shareholders

□ Applicable ? Not applicable

*.Position in other entities

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Punishments imposed in the recent three years by the securities regulator on the incumbent directors and seniormanagement as well as those who left in the Reporting Period:

□ Applicable ? Not applicable

3. Remuneration of Directors and Senior Management

Decision-making procedure, determination basis and actual payments of remuneration for directors and seniormanagement:

During the reporting period, the remuneration of directors and senior management who received remunerationfrom the Company was determined in accordance with the Company's Director Remuneration ManagementSystem and the Measures for Operational Performance Assessment and Remuneration Management of SeniorOfficers of STHC. the remuneration of independent directors shall be determined according to the resolution ofthe general meeting;Remuneration of directors and senior management during the Reporting Period

Unit: RMB10,000

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Note: For the aforementioned directors and senior executives who receive salaries from the Company, theirremuneration includes the basic salary and part of the performance-based salary paid in the current year, as well aspart of the performance-based salary paid out based on the assessment results of previous years.Other circumstances

□ Applicable ? Not applicable

V. Performance of Duty by Directors during the Reporting Period

1. Attendance of directors at board meetings and general meetings

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Description of the failure to attend the board meetings in person for two consecutive timesIndependent director Wu Guangquan submitted his resignation application to the Board of Directors in September2025 for personal reasons. For details, please refer to the Announcement on Resignation of an IndependentDirector (No. 2025-34) on Cninfo (http://www.cninfo.com.cn). On November 12, 2025, the Company held anextraordinary general meeting, at which Wang Liming was elected as an independent director of the Company,and then a new independent director has been supplemented.

2. Objections raised by directors to relevant matters of the Company

Whether the directors have raised any objections to relevant matters of the Company?? Yes ? NoDuring the reporting period, the directors did not raise any objection to the relevant matters of the Company.

3. Other descriptions of directors' performance of duties

Whether the relevant suggestions of the directors to the Company have been adopted? Yes ? NoDirector's statement on the adoption or non-adoption of the Company's relevant proposalsDuring the reporting period, all directors of the Company diligently and responsibly carried out their work in strictaccordance with the relevant provisions of the China Securities Regulatory Commission and Shenzhen StockExchange, as well as the Company's Articles of Association, Rules of Procedures of the Board of Directors andother systems. They paid close attention to the Company's standardized operation and management, put forwardrelevant opinions on the Company's major governance and operation decisions according to the Company's actualsituation, and formed a consensus after full communication and discussion, and they resolutely supervised andpromoted the implementation of the resolutions of the Board of Directors to ensure that the decisions are scientific,timely and efficient, and may safeguard the legitimate rights and interests of the Company and all shareholders.

VI. Performance of Duty by Specialized Committees under the Board in the Reporting Period

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

VII. Performance of Duty by the Audit CommitteeThe Audit Committee finds out whether the company has risks during the monitoring activities during thereporting period? Yes ? NoThe Audit Committee has no objection to the supervision matters during the reporting period.

VIII. Company's employees

1. Number, professional composition and education level of employees

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2. Remuneration policy

In 2025, the Company carried out employee remuneration management in strict accordance with relevant nationallaws and regulations and the Company's remuneration management system to ensure fair and reasonableemployee remuneration, give corresponding rewards and incentives to employees' contributions, promote thecommon development of employees and the Company, and reflect more humanistic care of the Company.

3. Training plan

The Company adheres to a business-oriented approach, focuses on business needs, comprehensively enhancesemployees' business capabilities and overall qualities, carries out in-depth learning and education activities, andtakes multiple measures to build a learning organization. First, we will organize special training on professionaltopics such as public opinion and internal risk control, safety management, and judicial interpretations of laborlaw to enhance employees' professional capabilities. Second, we will further improve the policies for professionaltitle subsidies and certification rewards, encouraging employees to engage in self-study and enhancing theirprofessional capabilities and career qualities. Third, continue to create an atmosphere of "reading again afterreturning from a hundred battles" and encourage employees to love reading and read good books; fourth, incombination with the Company's business development needs and the actual work of each department, organizekey employees to participate in professional training arranged by superior units and professional institutions tofurther improve the comprehensive ability, professional skills and professional quality of employees.

4. Outsourcing of labor services

□ Applicable ? Not applicable

IX. Specification of profit distribution and capitalizing of common reservesFormulation, implementation or adjustment of the profit distribution policy during the reporting period, especiallythe cash dividend policy? Applicable ? Not applicableOn May 19, 2025, the Company held the 2024 annual general meeting to deliberate on and adopt the 2024 annualprofit distribution plan. The Company's 2024 annual profit distribution plan is: based on the distributable profitsof the consolidated statements, and based on the total equity of 506,521,849 shares of the Company as ofDecember 31, 2024 (including 457,021,849 A shares and 49,500,000 B shares), the Company would distributecash dividends of RMB 0.71 (including tax) to all shareholders for every 10 shares, with a total cash dividend ofRMB 35,963,051.28 (including tax) that should be paid, and the cash dividend of RMB 35,963,029.09 (includingtax) that were actually paid, and the remaining undistributed profits would be carried forward to the next year; nobonus shares would be issued, and no capital reserve would be converted into share capital.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

The Company is profitable during the reporting period and the profit available for distribution by the parentcompany is positive, but no cash dividend distribution plan is proposed

□ Applicable ? Not applicable

Profit distribution and conversion of capital reserves into share capital during the reporting period? Applicable ? Not applicable

X. Implementation of the Company's equity incentive plan, employee stock ownership plan(ESOP) or other employee incentives

□ Applicable ? Not applicable

During the reporting period, the Company had no equity incentive plan, employee stock ownership plan or otheremployee incentive measures and their implementation.XI. Construction and implementation of internal control system during the reporting period

1. Construction and implementation of internal control

During the reporting period, the Company has updated and improved the internal control system in a timelymanner in accordance with the provisions of the Basic Standard for Enterprise Internal Control and its supportingguidelines, and established a set of internal control system that is scientifically designed, concisely applicable andeffectively operated. The Audit Committee, the Risk Control and Compliance Department, and the AuditDepartment jointly formed the Company's risk internal control management organization system to supervise andevaluate the Company's internal control management. Through the operation, analysis and evaluation of theinternal control system, the Company has effectively prevented risks in operation and management and promotedthe realization of internal control objectives.According to the identification of major deficiencies in the Company's internal control over financial report, thereare no major deficiencies in the internal control over financial report on the base date of the Evaluation Report on

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Internal Control. The Company has maintained effective internal control over financial reports in all materialrespects in accordance with the requirements of the standardized system of enterprise internal control and relevantregulations.According to the identification of major deficiencies in the Company's internal control over financial report, theCompany has not identified any major deficiencies in the internal control over financial report on the base date ofthe Evaluation Report on Internal Control.

2. Details of major deficiencies in internal control found during the reporting period? Yes ? No

XII. Management and control of the Company's subsidiaries during the reporting period

Abnormalities in the management and control of subsidiaries? Yes ? No

XIII. Evaluation Report on Internal Control or Audit Report on Internal Control

1. Internal control evaluation report

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2. Audit Report on Internal Control

?Applicable ? Not applicable

Whether the accounting firm issues an Audit Report on Internal Control with non-standard opinions? Yes ? NoWhether the Audit Report on Internal Control issued by the accounting firm is consistent with the opinion of theself-evaluation report of the Board of Directors? Yes ? NoWhether a non-standard internal control audit opinion was issued during the reporting period or the previous year? Yes ? No

XIV. Status of rectification of self-examination issues of special actions on governance of listedcompaniesDuring the reporting period, no relevant governance issues of the Company have been found as listed in the Self-inspection Checklist for Special Governance Activities of Listed Companies.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

XV. Disclosure of Environmental Information

Whether the listed company and its main subsidiaries are included in the list of enterprises required to disclose theenvironmental information by law? Yes ? No

XVI. Social responsibility(I) Protection of shareholders' equityDuring the reporting period, the Company has operated in compliance with laws and regulations, and furtherstandardized its operation by continuously improving its governance structure in strict accordance with therequirements of laws and regulations such as the Company Law, the Securities Law and the Code of CorporateGovernance for Listed Companies. The Company has adhered to taking the deliberative system of the generalmeeting of shareholders, the Board of Directors and the independent directors as the core, further improved thecorporate governance structure and various management systems, continuously improved the internal controlsystem in the process of the Company's operation and management, adopted effective preventive measures againstoperational risks, and effectively safeguarded and protected the shareholders' equity, thus laying a solidfoundation for the Company's healthy and sustainable development. The independent directors have paid closeattention to the operation of the Company, put forward many valuable professional suggestions for the dailyoperation and key issues of the Company, and played an important role in improving the supervision mechanismand safeguarding the legitimate rights and interests of the Company and all shareholders. The Company hasstrictly performed its information disclosure obligations in accordance with the law, disclosed information that hasa significant impact on investment decisions in a true, accurate, complete, timely and fair manner, adhered toconcise and easy-to-understand disclosure contents, fully reveals risks and facilitates access by all shareholders,and further sorted out and improved the relevant systems to enhance the quality of information disclosure inaccordance with regulatory requirements.During the reporting period, the Company has further improved information disclosure and informationtransparency, performed its information disclosure obligations in strict accordance with regulatory requirements,communicated and exchanged information with investors through multiple channels, answered questions raised byinvestors in a timely manner, improved information transparency, cooperated with regulatory authorities,safeguarded the rights and interests of the majority of the investors, especially small and medium-sized investors,and achieved positive interaction and harmonious development between investors and listed companies.(II) Protection of employees' legitimate rights and interestsIn 2025, the Company has consistently prioritized the protection of employees' legitimate rights and interests,closely aligning with the labor security requirements and integrating the Company's strategic and operationaldevelopment realities with the actual needs of employees. We have systematically focused on several keydimensions, including welfare benefits, remuneration management, system construction, compliance control, andlong-term rights and interests planning. Through a series of pragmatic actions such as improving the securitysystem, standardizing the management processes, strengthening the institutional framework, enhancing thecompliance capabilities, and optimizing the service measures, we have comprehensively and multi-dimensionallysafeguarded the legitimate rights and interests of our employees, effectively enhancing their sense of gain,belonging and security, and building a solid human resources foundation for the Company's stable development.First, we improved the welfare and security system to provide a solid backing for employees' health and life. TheCompany purchased critical illness insurance, accident insurance, and outpatient medical coverage for itsemployees. Employees who suffer accidental injuries or illnesses can complete the declaration, claim settlement,and expense reimbursement procedures, effectively alleviating their worries. Second, we standardized theremuneration management to protect employees' rights to labor compensation. Employee salaries are paid on time,ensuring the accuracy of remuneration data, the stable operation of the remuneration system, and safeguarding ofthe employees' legal rights to receive reasonable labor compensation. Third, we improved the human resourcemanagement system to protect employees' career development rights. The Company has revised the managementmeasures for employee rank promotion, smoothed the dual-channel development path of "management +professional," improved the system for recognizing outstanding employees, standardized the selection criteria and

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

processes, and revised the entire human resource management process to build a closed-loop control system.These measures institutionally guarantee the employees' legal rights in career promotion, honor selection, andposition management. Fourth, we organized special compliance training to avoid employment risks and protectemployee rights. The Company organized legal training on labor disputes, risk management, and other relatedtopics to enhance compliance and risk prevention awareness in human resource management, improve the abilityto identify and control the employment risks, avoid labor disputes from the management side, and protectemployees' legal rights related to labor relations. Fifth, we effectively managed the enterprise annuity to protectemployees' pension rights. After the expiration of the enterprise annuity custody service term, a service providerwas selected through market research and democratic voting by employees. The annuity portfolio has achievedsteady returns, maximizing the enterprise annuity benefits for all employees and effectively safeguarding theirlegal rights of old-age pension.(III) Environmental protectionThe Company has always regarded building a modernized "green enterprise" as an important and long-termresponsibility to be undertaken, insisted on creating the whole process of building a green cycle of the industrialchain, realized a truly green circular economy, improved the quality of the surrounding environment of theCompany, and escorted the Company's production. During the reporting period, the off-site noise, industrialwastewater and exhaust emissions during the production process of the Company have been monitored by theenvironmental protection department and met the standard requirements of relevant laws and regulations, and nomajor environmental protection incidents have occurred. The Company has vigorously advocated green office,carried out various forms of environment protection publicity and education activities, improved employees'awareness of energy conservation and emission reduction, realized the coordinated development of productionand operation and environment protection, and earnestly fulfilled its social responsibility. During the reportingperiod, the Company has actively responded to the national development goal of "carbon peak" and "carbonneutrality", continuously improved environmental protection facilities, optimized waste gas and wastewatertreatment processes, strictly controlled the Company's waste gas and wastewater discharge, ensured the efficientand stable operation of waste gas and wastewater treatment facilities to effectively reduce the Company's carbonemissions, thus contributing to the realization of the national goal of "carbon peak" and "carbon neutrality".(IV) Protection of consumer rights and interestsThe Company has always adhered to the core values of "integrity-based and responsibility first". Beingresponsible for customers is the source of enterprise value. It is our unremitting pursuit to strive to providecustomers with professional, personalized and comprehensive products and services. Focusing on customer needs,continuously innovating customer service, and continuously improving product quality are the driving force forthe Company to achieve good performance and sustainable development, and also an important guarantee forwinning long-term trust of customers. The Company has taken the initiative to pay attention to customer needs,responded quickly to customer feedback, sincerely thought about the interests of the customers, and promoted theestablishment of long-term partnerships.

XVII. Consolidation and Expansion of the Achievements of Poverty Alleviation and RuralRevitalizationIn 2025, the Company actively fulfilled its corporate social responsibility, actively participated in consumptionassistance work, and completed consumption assistance procurement of RMB 548,900.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section V Significant Events

I. Fulfillment of commitments

1. Commitments made by the Company's actual owner, shareholders, related parties, acquirers, theCompany and other related parties that have been fulfilled within the reporting period and those that havenot been fulfilled as of the end of the reporting period? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2. If there is a profit forecast for the Company's assets or projects, and the reporting period is still in theprofit forecast period, the Company shall explain that the assets or projects have met the original profitforecast and the reasons

□ Applicable ? Not applicable

3. Performance commitments involving the Company

□ Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

II. Non-operational occupation of funds by the controlling shareholders and other relatedparties of the listed company

□ Applicable ? Not applicable

During the reporting period, there were no non-operational funds occupied by the controlling shareholders andother related parties for the listed company.III. Illegal external guarantees

□ Applicable ? Not applicable

The Company had no illegal external guarantee during the reporting period.

IV. Explanation of the Board of Directors on the latest "modified report"

□ Applicable ? Not applicable

V. Explanations Given by the Board of Directors and the Independent Directors (if any)Regarding the Independent Auditor's “Modified Opinion” on the Financial Statements of theReporting Period

□ Applicable ? Not applicable

VI. Explanation of the accounting policies, changes in accounting estimates or corrections ofsignificant accounting errors compared to the financial report of the previous year

□ Applicable ? Not applicable

During the reporting period, the Company had no accounting policies, changes in accounting estimates orcorrections of significant accounting errors.VII. Explanation of changes in the scope of consolidated statements compared to the financialreport of the previous year

? Applicable ? Not applicableThe Company's subsidiary, Shenzhen Huaqiang Hotel Co., Ltd, completed its liquidation and distribution in 2024and is no longer included in the scope of consolidation this year.VIII. Appointment and dismissal of the accounting firmCurrently appointed accounting firm

Whether to change the accounting firm in the current period? Yes ? NoEngagement of internal control audit accounting firm, financial adviser or sponsor? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

The total audit fee for 2025 is RMB 1.18 million (including tax), of which the financial statements audit fee isRMB 850,000 (including tax), the internal control audit fee is RMB 230,000 (including tax) and the auditor'scomment fee is RMB 100,000 (including tax).IX. Delisting after the disclosure of the annual report

□ Applicable ? Not applicable

X. Matters related to bankruptcy and reorganization

□ Applicable ? Not applicable

During the reporting period, the Company had no bankruptcy restructuring related matters.XI. Significant litigation and arbitration? Applicable ? Not applicable

XII. Punishment and rectification

□ Applicable ? Not applicable

There was no punishment or rectification during the reporting period.

XIII. Integrity status of the Company and its controlling shareholders and actual owner? Applicable ? Not applicableThe Company, its controlling shareholders and actual owners are in good standing in terms of their integrity andhave not failed to perform the effective judgments of the court or failed to pay the larger amount due, etc.XIV. Major related party transactions

1. Related party transactions related to daily operations

? Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2. Related party transactions arising from the acquisition and sale of assets or equity

□ Applicable ? Not applicable

During the reporting period, the Company had no related party transactions arising from the acquisition or sale ofassets or equity.

3. Related party transactions arising from joint external investment

□ Applicable ? Not applicable

During the reporting period, the Company had no related party transactions arising from joint external investment.

4. Related claims and debts

□ Applicable ? Not applicable

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

5. Information on transactions with finance companies with related relationship

□ Applicable ? Not applicable

There was no deposit, loan, credit or other financial business between the Company and the finance companieswith related relationship and their related parties.

6. Transactions between the Company's holding finance companies and its related parties

□ Applicable ? Not applicable

There was no deposit, loan, credit or other financial business between the Company's holding finance companiesand its related parties.

7. Other major related party transactions

? Applicable □ Not applicableOn October 31, 2025, the Company held the Third Extraordinary General Meeting of Shareholders for 2025,which considered and approved the Proposal on Purchase of Equipment by a Subsidiary and Connected

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Transaction.Shengbo Optoelectronics, a subsidiary controlled by the Company, plans to invest in constructing a polarizerproduction line (Line 8) with a width of 1.49 meters. To meet the front-end polarizer production requirements ofthe Line 8 project, Shengbo Optoelectronics intends to purchase idle brand-new front-end main polarizerproduction equipment (stretching machine, coating machine) from Everwide Optoelectronics Co., Ltd.The transaction is not higher than the assessed net value. For details, please refer to the Announcement onPurchase of Equipment by a Subsidiary and Connected Transaction (Announcement No. 2025-40) published onCNINFO (http://www.cninfo.com.cn) on October 16, 2025.As of the disclosure date of this report, Shengbo Optoelectronics has completed the acceptance of the aforesaidmain equipment and the payment of all funds.Elevant Queries on the Disclosure Website for Material Connected Transaction Temporary Reports

XV. Major contracts and their performance

1. Custody, contracting and lease matters

(1) Custody

□ Applicable ? Not applicable

During the reporting period, the Company had nothing under custody.

(2) Contracting

□ Applicable ? Not applicable

During the reporting period, the Company had no contracting.

(3) Leases

□ Applicable ? Not applicable

During the reporting period, the Company had no leases.

2. Significant guarantees

? Applicable ? Not applicable

Unit: RMB10,000

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

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

3. Entrustment of others for cash asset management

(1) Entrusted wealth management

? Applicable ? Not applicableOverview of entrusted wealth management during the reporting period

Unit: RMB10,000

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Details of high-risk entrusted wealth management where the Company, as a single client, entrusts a financialinstitution for asset management, or invests in products with low safety and poor liquidity?Applicable ? Not applicable

Unit: RMB10,000

(2) Entrusted loans

□ Applicable ? Not applicable

There were no entrusted loans of the Company during the reporting period.

4. Other major contracts

□ Applicable ? Not applicable

There were no other major contracts of the Company during the reporting period.XVI. Use of Raised Funds

□ Applicable ? Not applicable

The Company had no use of funds raised during the reporting period.XVII. Notes to Other Major Matters

□ Applicable ? Not applicable

The Company had no other major matters to be explained during the reporting period.

XVIII. Major Matters of the Company's Subsidiaries?Applicable ? Not applicableOn October 15, 2025, the Company held the 45th meeting of the 8th Board of Directors, at which the "Proposal onInvestment and Construction of 1.49m-wide Polarizer Production Line Project (Line 8) by a Subsidiary" wasdeliberated and approved. It is agreed that the subsidiary, Shenzhen SAPO Photoelectric Co., Ltd., based on themarket demand for polarizers and its own development needs, would use a combination of its own funds and bank

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

loans, with a planned total investment of approximately RMB 1.334 billion, to build a new plant building andsupporting facilities by purchasing land in Pingshan District, Shenzhen, and to purchase equipment andinstruments to construct a 1.49m-wide LCD and OLED polarizer production line with a designed capacity ofapproximately 18 million square meters per year. For details, please refer to the "Announcement on Investmentand Construction of 1.49m-wide Polarizer Production Line Project (Line 8) by a Subsidiary" (No. 2025-39)published by the Company on Cninfo (http://www.cninfo.com.cn) on October 16, 2025. Currently, the project hasobtained the land use right, and ALL construction works are progressing in an orderly manner.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section VI. Share Changes and Shareholder Information

I. Changes in shares

1. Changes in shares

Unit: shares

Reasons for changes in shares?Applicable ? Not applicableZhu Meizhu, the former Director and General Manager of the Company, retired on November 29, 2024, and the93,000 restricted tradable shares of the Company held by him were converted into non-restricted tradable shareson May 31, 2025.Approval of changes in shares

□ Applicable ? Not applicable

Transfer of changes in shares

□ Applicable ? Not applicable

Effect of changes in shares on financial indicators such as basic earnings per share and diluted earnings per sharein the latest year and the latest period, and net assets per share attributable to the Company's ordinary shareholders

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

□ Applicable ? Not applicable

Other contents deemed necessary by the Company or required by the securities regulators to be disclosed

□ Applicable ? Not applicable

2. Changes in restricted shares

?Applicable ? Not applicable

Unit: shares

II. Issuance and listing of securities

1. Issuance of securities (excluding preferred shares) during the reporting period

□ Applicable ? Not applicable

2. Changes in the total number of shares and shareholder structure of the Company, and changes in thestructure of assets and liabilities of the Company

□ Applicable ? Not applicable

3. Existing internal employee shares

□ Applicable ? Not applicable

III. Shareholders and actual owner

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

Unit: shares

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Explanation of the top 10ordinary shareholders'participation in marginfinancing and securitieslending business (if any)(see Note 4)

None

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

□ Applicable ? Not applicable

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

□ Applicable ? Not applicable

Whether the Company's top 10 ordinary shareholders and the top 10 ordinary shareholders without restrictivecondition for sales conduct any agreed repurchase transactions during the reporting period? Yes ? NoThe Company's top 10 ordinary shareholders, and top 10 ordinary shareholders without restrictive condition forsales did not conduct any agreed repurchase transaction during the reporting period.

2. Controlling shareholders of the Company

Nature of controlling shareholders: local state-owned holdingType of controlling shareholders: legal person

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Design Institute (301038) holds 83.66 million shares, with a shareholding ratio of 37.50%; shenzhen Energy(000027) holds 6.77 million shares, with a shareholding ratio of 0.14%; bank of Communications (601328)holds 9.52 million shares, with a shareholding ratio of 0.01%; CECEP Tech and Ecology & Environment(300197) holds 113.98 million share, with a shareholding ratio of 3.66%; china Vanke (02202) holds 77.27million shares, with a shareholding ratio of 0.66%; shenzhen SEG (000058) holds 696.16mn shares, with ashareholding ratio of 56.54%; shenzhen SDG Information (000070) holds 325.72 million shares, with ashareholding ratio of 36.18%; shenzhen Tellus Holding (000025) holds 211.59 million shares, with ashareholding ratio of 49.09%; shenzhen SDG Service (300917) holds 80.74mn shares, with a shareholdingratio of 47.78%; microgate Technology (300319) holds 72 million shares, with a shareholding ratio of

8.11%; china Merchants Shekou Industrial Zone Holdings (001979) holds 456.12 million shares, with ashareholding ratio of 5.03%.

Changes in controlling shareholders during the reporting period

□ Applicable ? Not applicable

There was no change in the controlling shareholder of the Company during the reporting period.

3. The Company's actual owner and its persons acting in concert

Nature of actual owner: local state-owned assets management agencyType of actual owner: legal person

Changes in actual owner during the reporting period

□ Applicable ? Not applicable

There was no change in the actual owner of the Company during the reporting period.Chart for the property and controlling relationships between the Company and the actual owner

The actual owner controls the Company by way of trust or other asset management methods

□ Applicable ? Not applicable

4. The cumulative number of shares pledged by the controlling shareholder or the largest shareholder ofthe Company and their persons acting in concert accounted for 80% of the number of shares held by them

□ Applicable ? Not applicable

5. Other institutional shareholders holding more than 10% of the shares

□ Applicable ? Not applicable

State-owned Assets Supervision and Administration Commission

of Shenzhen Municipal People's GovernmentShenzhen Investment Holdings Co., Ltd.

Shenzhen Shenchao Technology Investment

Co., Ltd.

Shenzhen Shenchao Technology Investment

Co., Ltd.Shenzhen Textile (Holdings) Co., Ltd.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

6. Restricted share reduction of controlling shareholder, actual owner, reorganization parties and othercommitted entities

□ Applicable ? Not applicable

IV. Specific implementation of share repurchase during the reporting periodImplementation progress of share repurchase

□ Applicable ? Not applicable

Implementation progress of reducing repurchase shares by means of centralized bidding transaction

□ Applicable ? Not applicable

V. Preferred Shares

□ Applicable ? Not applicable

During the reporting period, the Company had no preferred shares.

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section VII Bonds

□ Applicable ? Not applicable

2025 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.

Section VIII Financial StatementsI. Audit report

See the attached financial statements and notes for details.

Chairman: Li Gang

Date of approval by the Board of Directors for filing: March 26, 2026

Shenzhen Textile (Holdings) Co., Ltd.Financial Statements and Audit ReportFor the year ended December 31, 2025

Financial Statements and Audit ReportFor the year ended December 31, 2025Content PageAudit Report 1-4Consolidated and parent company's balance sheet 5-7Consolidated and parent company's income statement 8-9Consolidated and parent company's statement of cash flows 10-11Consolidated and parent company's statement of changes in shareholders' equity 12-15Notes to the financial statements 16-108

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Audit Report

DSB (S) Z (26) No. P 04066

(Page 1 of 4)All shareholders of Shenzhen Textile (Holdings) Co., Ltd.I. Audit opinionsWe have audited the financial statements of Shenzhen Textile (Holdings) Co., Ltd. (hereinafter referred to as the"Shenzhen Textile"), including the consolidated and parent company's balance sheet as at December 31, 2025, theconsolidated and parent company's income statement, consolidated and parent company's statement of cash flows,consolidated and parent company's statement of changes in shareholders' equity and related notes to the financialstatements for the year then ended.In our opinion, the attached financial statements are prepared, in all material respects, in accordance withAccounting Standards for Business Enterprises and present fairly the financial position of the Company as atDecember 31, 2025 and its operating results and cash flows for the year then ended.II. Basis for the audit opinionWe have conducted our audit in accordance with the Chinese Auditing Standards for Certified Public Accountants.Our responsibilities under these standards are further described in the "Certified Public Accountant'sResponsibilities for the Audit of Financial Statements" section of the audit report. In accordance with theIndependence Standard for Chinese Certified Public Accountants No. 1 - Requirements for Independence in Auditand Review of Financial Statement and the Code of Ethics for Chinese Certified Public Accountants, we areindependent of Shenzhen Textile and have fulfilled other ethical responsibilities. We have complied with theindependence requirements for audits of public interest entities during the audit. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.III. Key audit mattersKey audit matters are those matters that, in our professional judgment, are of most significance in our audit of thefinancial statements of the current year. These matters are addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters. We have identified the following matters as key audit matters to be communicated in the audit report.

1. Recognition of revenue from sales of polarizers

As described in the Note (V). 40 to the financial statements, in 2025, the operating revenue of Shenzhen Textile aspresented in the consolidated financial statements was RMB 3,241,380,430.62, of which the revenue from sales ofpolarizers was RMB 3,067,530,570.03, accounting for 94.64% of the total revenue. The revenue from sales ofpolarizers of Shenzhen Textile is recognized when the customer obtains control of the relevant goods. Due to theimportance of revenue from sales of polarizers to the consolidated financial statements as a whole, and the factthat the revenue is one of the key performance indicators of Shenzhen Textile, there is an inherent risk thatmanagement may manipulate the revenue recognition, in order to achieve specific goals or expectations.Therefore, we have identified the recognition of revenue from sales of polarizers as a key audit matter in the auditof the consolidated financial statements.

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Audit Report - Continued

DSB (S) Z (26) No. P04066

(Page 2 of 4)III. Key audit matters - Continued

1. Recognition of revenue from sales of polarizers - Continued

In response to the above key audit matters, the audit procedures we performed mainly include:

? Test and evaluate the effectiveness of the operation of internal control related to the sales business ofpolarizer;? Check the sales contracts signed with major customers, identify the terms and conditions of the contractsrelated to the transfer of right of control of the goods, and evaluate whether the accounting policies forrecognition of revenue from sales of polarizers meet the requirements of the Accounting Standards forBusiness Enterprises;? Execute analytical procedures for the revenue from sales of polarizers by production line, product type andcustomer respectively, and analyze the rationality of the change in revenue from sales of polarizers incombination with market selling price and other factors;? Extract samples to perform detail tests on the revenue from sales of polarizers, check the supportingdocuments such as invoices, delivery orders and receipts related to the recognition of revenue from sales ofpolarizers, and conduct letter of confirmation on the sales amount of major customers to verify theauthenticity of revenue from sales of polarizers;? Select samples for sales transactions before and after the balance sheet date, check supporting documents

such as delivery orders, receipts and invoices, and evaluate whether the revenue from sales of polarizers isrecorded in the appropriate accounting period.

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Audit Report - Continued

DSB (S) Z (26) No. P04066

(Page 3 of 4)IV. Other informationThe management of Shenzhen Textile is responsible for other information. Other information includes informationcovered in the 2025 Annual Report of Shenzhen Textile, but excludes the financial statements and our audit report.Our audit opinion on the financial statements does not cover the other information and we do not express any formof assurance conclusion thereon.In connection with our audit of financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with financial statements or ourknowledge obtained during the audit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of the otherinformation, we are required to report that fact. We have nothing to report in this regard.IV. Responsibilities of the management and those charged with governance for financial statementsThe management of Shenzhen Textile is responsible for preparing the financial statements in accordance with therequirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing,implementing and maintaining internal control that is necessary to ensure that the financial statements are freefrom material misstatements, whether due to frauds or errors.In preparing the financial statements, the management is responsible for assessing the going-concern ability ofShenzhen Textile, disclosing matters related to going concern (if applicable) and applying the going concern basis,unless the management plans to liquidate Shenzhen Textile, terminate its operations or has no other realisticalternative.Those charged with governance are responsible for overseeing the financial reporting process of Shenzhen Textile.VI. Responsibilities of certified public accountants for the audit of financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith the audit standards will always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if, individually or in aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.We have exercised professional judgment and maintained professional skepticism in performing our audit underthe auditing standards. At the same time, we also implement the following work:

(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

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Audit Report - Continued

DSB (S) Z (26) No. P04066

(Page 4 of 4)VI. Responsibilities of certified public accountants for the audit of financial statements - Continued

(2) Understand the internal control related to the audit, so as to design appropriate audit procedures.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.

(4) Draw conclusions on the appropriateness of the management's use of the going concern basis. At the sametime, based on the audit evidence obtained, a conclusion is drawn as to whether there is a material uncertainty inevents or circumstances that may give rise to significant doubt about the going-concern ability of ShenzhenTextile. If we conclude that a material uncertainty exists, we are required to, in our audit report, draw attention ofthe users of statements to the related disclosures in the financial statements; if such disclosures are inadequate, weshould modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditreport. However, future events or circumstances may cause Shenzhen Textile to cease to continue as a goingconcern.

(5) Evaluate the overall presentation (including disclosures), structure and content of the financial statements, andwhether the financial statements fairly reflect the relevant transactions and matters.

(6) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or businessactivities within Shenzhen Textile to express an opinion on the financial statements. We are responsible for thedirection, supervision and performance of the group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding the planned scope and timing of the audit,significant audit findings and other matters, including any significant deficiencies in internal control that weidentify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and the related safeguards (if applicable).From the matters communicated with those charged with governance, we have determined which matters are ofmost significance to the audit of the financial statements in the current year and thus constitute the key auditmatters. We describe these matters in the audit report unless laws and regulations prohibit public disclosure ofthese matters, or in extremely rare circumstances, if it is reasonably expected that the negative consequences ofcommunicating a matter outweigh the benefits to the public interest in the audit report, we determine not to do so.

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Consolidated Balance SheetDecember 31, 2025

Consolidated Balance Sheet

RMB

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Consolidated Balance Sheet - ContinuedDecember 31, 2025

Consolidated Balance Sheet - Continued

RMB

The notes are an integral part of the financial statements

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Balance Sheet of the Parent CompanyDecember 31, 2025

Balance Sheet of the Parent Company

RMB

The notes are an integral part of the financial statements

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Consolidated Income StatementFor the year ended December 31, 2025

Consolidated Income Statement

RMB

The notes are an integral part of the financial statements

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Income Statement of the Parent CompanyFor the year ended December 31, 2025

Income Statement of the Parent Company

RMB

The notes are an integral part of the financial statements

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Consolidated Statement of Cash FlowsFor the year ended December 31, 2025

Consolidated Statement of Cash Flows

RMB

The notes are an integral part of the financial statements

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Statement of Cash Flows of the Parent CompanyFor the year ended December 31, 2025

Statement of Cash Flows of the Parent Company

RMB

The notes are an integral part of the financial statements

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Consolidated Statement of Changes in Shareholders' EquityFor the year ended December 31, 2025

Consolidated Statement of Changes in Shareholders' Equity

RMB

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Consolidated Statement of Changes in Shareholders' Equity - ContinuedFor the year ended December 31, 2025

Consolidated Statement of Changes in Shareholders' Equity - Continued

RMB

The notes are an integral part of the financial statements

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Statement of Changes in Shareholders' Equity of the Parent CompanyFor the year ended December 31, 2025

Statement of Changes in Shareholders' Equity of the Parent Company

RMB

Statement of Changes in Shareholders' Equity of the Parent Company - ContinuedFor the year ended December 31, 2025

Statement of Changes in Shareholders' Equity of the Parent Company - Continued

RMB

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The notes are an integral part of the financial statements

Notes to the financial statementsFor the year ended December 31, 2025

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(I) Basic information of the Company

1. Company profile

Shenzhen Textile (Holdings) Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited companyregistered in Guangdong Province. The Company was listed on Shenzhen Stock Exchange in August 1994. TheCompany has publicly issued RMB ordinary shares (A shares) and domestically listed foreign shares (B shares) tothe domestic and foreign public respectively, and listed for trading.Headquartered in Shenzhen, Guangdong Province, the Company and its subsidiaries (hereinafter referred to as"the Group") are principally engaged in the research and development, production and marketing of polarizers forliquid crystal displays, as well as property management, which are mainly located in the prosperous commercialarea of Shenzhen.

2. Approval date of financial statements

The consolidated and parent company's financial statements of the Company were approved by the Board ofDirectors on March 26, 2026.(II) Basis for the preparation of financial statements

1. Basis for preparation

The Group implements the Accounting Standards for Business Enterprises and related provisions issued by theMinistry of Finance. In addition, the Group also discloses relevant financial information in accordance with theRules for the Compilation and Reporting of Information Disclosure by Companies Issuing Securities to the PublicNo. 15 - General Provisions on Financial Reports (Revised in 2023).

2. Going concern

The Group has evaluated its going-concern ability for 12 months from December 31, 2025 and has not found anymatters or circumstances that cast significant doubt on the going-concern ability. Therefore, the financialstatements have been prepared on the going concern basis.

3. Accounting basis and valuation principle

The accounting of the Group is based on the accrual basis. Except for certain financial instruments measured atfair value, the financial statements are measured at historical cost. In the event of any asset impairment, aprovision for impairment will be made in accordance with relevant provisions.Under the historical cost measurement, assets are measured at the amount of cash or cash equivalents paid or thefair value of the consideration paid at the time of acquisition. Liabilities are measured at the amount of money orassets actually received for assuming current obligations, or the contract amount of assuming current obligations,or the amount of cash or cash equivalents expected to be paid to repay liabilities in daily activities.Fair value is the price received from the sale of an asset or paid for the transfer of a liability by a marketparticipant in an orderly transaction occurring on the measurement date. Regardless of whether the fair value isobservable or estimated by using valuation techniques, the fair value measured and disclosed in these financialstatements is determined on this basis.

Notes to the financial statementsFor the year ended December 31, 2025

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(II) Basis for the preparation of financial statements - Continued

3. Accounting basis and valuation principle - Continued

For financial assets where the transaction price is taken as the fair value at initial recognition and valuationtechniques involving unobservable input value are used in the subsequent measurement of fair value, the valuationtechniques are corrected during the valuation process to make the initial recognition result determined by thevaluation techniques equal to the transaction price.The fair value measurement is divided into three levels based on the observability of the input value of the fairvalue and the importance of such input value to the fair value measurement as a whole:

? Level 1 input value is the unadjusted quoted price in active markets for identical assets or liabilities that are availableon the measurement date.? Level 2 input value is the directly or indirectly observable input value of the relevant assets or liabilities except for thelevel 1 input value.? Level 3 input value is the unobservable input value of the relevant assets or liabilities.(III) Important accounting policies and accounting estimates

1. Statement of compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company meet the requirements of the Accounting Standards forBusiness Enterprises, and truly and completely reflect the Company's consolidated and parent company's financialposition as at December 31, 2025, and the consolidated and parent company's operating results, changes inconsolidated and parent company's shareholders' equity and consolidated and parent company's cash flows for theyear then ended.

2. Accounting period

The Company adopts the Gregorian calendar year for its accounting year, that is, from January 1 to December 31of each year.

3. Operating cycle

Operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cashequivalents by the enterprise. The operating cycle of the Company is 12 months.

4. Recording currency

RMB is the currency in the main economic environment in which the Company and its domestic subsidiariesoperate. The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company'soverseas subsidiaries determine RMB as their recording currency based on the currency in the main economicenvironment in which they operate. The currency used by the Company in preparing these financial statements isRMB.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

5. Importance criteria determination method and selection basis

6. Accounting treatments for business combinations under common control and those not under commoncontrolBusiness combinations are categorized into those under common control and those not under common control.

6.1 Business combinations under common control

If, before and after the business combination, all parties involved are ultimately controlled by the same party orthe same group of parties and such control is not temporary, the combination is considered under common control.The assets and liabilities obtained in the business combination are measured at their book value as recorded in theconsolidated financial statements of the ultimate controller on the combination date. Any difference between thebook value of the net assets acquired by the combining party and the book value of the consideration paid isadjusted against the share premium in capital reserve. If the equity premium is insufficient, the difference isadjusted against retained earnings.All direct expenses incurred for the purpose of the business combination are recognized in current profit or loss asthey occur.

6.2 Business combinations not under common control and goodwill

When the entities involved in the combination are not under the ultimate control of the same party or the samegroup of parties before and after the combination, it is considered a business combination not under commoncontrol.The combination cost refers to the fair value of the assets paid, the liabilities incurred or assumed, and the equityinstruments issued by the acquirer to obtain the right of control of the acquiree. Any intermediary fees for businesscombination, including but not limited to audit, legal, and valuation consulting services, and other related G&Aexpenses incurred by the acquirer are charged to current profit or loss as they arise.Any identifiable assets, liabilities, and contingent liabilities of the acquiree that meet the recognition criteria andare obtained by the acquirer in the combination are measured at fair value on the acquisition date.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

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

6.2 Business combinations not under common control and goodwill - Continued

If the combination cost exceeds the acquiree's fair value share of net identifiable assets obtained, this difference isrecognized as goodwill and initially measured at cost. If the combination cost is less than the acquiree's fair valueshare of net identifiable assets obtained, the acquirer shall first reassess the fair values of all identifiable assets,liabilities, and contingent liabilities of the acquiree, as well as the measurement of the combination cost. Afterreassessment, if the combination cost is still less than acquiree's fair value share of net identifiable assets obtained,the difference is included in current profit or loss.Goodwill arising from a business combination is presented separately in the consolidated financial statements andis measured at cost less any accumulated provision for impairment.

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

7.1 Criteria for control judgment

Control means that an investor has power over the investee, derives variable returns by participating in theinvestee's relevant activities, and can use that power to affect the amount of returns. Whenever changes in relevantfacts and circumstances alter any element of this definition of control, the Group will reassess the situation.

7.2 Methods of preparing consolidated financial statements

The consolidation scope in the consolidated financial statements is determined on the basis of control.A subsidiary is consolidated from the date the Group obtains the right of control over it until the date such right islost.For subsidiaries that the Group disposes of, operating results and cash flows prior to the disposal date (the datewhen the loss of control occurs) are appropriately included in the consolidated income statement and consolidatedcash flow statement.For subsidiaries acquired in a business combination not under common control, their operating results and cashflows from the acquisition date (the date when the right of control is obtained) are appropriately included in theconsolidated income statement and consolidated cash flow statement.For subsidiaries acquired in a business combination under common control, regardless of the point in time duringthe reporting period at which the combination takes place, the subsidiary is deemed to have been under theGroup's consolidation scope from the date it came under the ultimate controller. Its operating results and cashflows from the earliest beginning date of the reporting period are appropriately included in the consolidatedincome statement and consolidated cash flow statement.The primary accounting policies and reporting periods adopted by the subsidiaries are determined in accordancewith the uniform accounting policies and reporting periods set by the Company.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

7. Criteria for determining control and methods for preparing consolidated financial statements -Continued

7.2 Methods for preparing consolidated financial statements - Continued

Any effects on the consolidated financial statements from intercompany transactions between the Company andits subsidiaries, or among the subsidiaries themselves, are eliminated upon consolidation.The shares of the subsidiary's ownership interest that are not part of the parent company are shown as minorityinterests under the item "minority interests" under the item on shareholders' equity in the consolidated balancesheet. the share of the subsidiary's net profit or loss attributable to minority interests is presented in theconsolidated income statement under the net profit item as "minority interest income".If the losses borne by minority shareholders exceed the share of owners' equity they hold at the beginning of thesubsidiary's period, the excess continues to be deducted from the minority interests.Transactions involving the purchase of a subsidiary's minority interests or the partial disposal of a subsidiary'sequity investments without losing the right of control are accounted for as equity transactions. The book value ofthe parent company's owners' equity and the minority interests are adjusted to reflect the changes in theirrespective ownership in the subsidiary. Any difference between the adjustment to minority interests and the fairvalue of the consideration paid or received is adjusted against the capital reserve. If the capital reserve isinsufficient, the difference is adjusted against retained earnings.

8. Joint venture arrangements

Joint venture arrangements are classified as either joint operations or joint ventures, based on the rights andobligations of the parties—determined by factors such as the arrangement's structure, legal form, and contractualterms. A joint operation is a joint arrangement in which the parties have rights to the related assets and obligationsfor the related liabilities. A joint operation refers to those joint venture arrangements under which the joint ventureis entitled to relevant assets and be responsible for relevant liabilities. A joint venture is a joint venturearrangement in which the parties are entitled only to the arrangement's net assets.The Group accounts for investments in joint ventures using the equity method. For further details, refer to Note(III), Section 17.3.2, "Long-term equity investments accounted for under the equity method."

9. Criteria for determining cash and cash equivalents

Cash refers to cash on hand and deposits readily available for payment. Cash equivalents refer to short-term(generally maturing within three months from the purchase date), highly liquid investments held by the Group thatare easily convertible into known amounts of cash and subject to an insignificant risk of value changes.

10. Foreign currency transactions and translation of foreign currency statements

10.1 Foreign currency transactions

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

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

10. Foreign currency transactions and translation of foreign currency statements - Continued

10.1 Foreign currency transactions - Continued

At each balance sheet date, foreign currency monetary items are translated into RMB at the spot rate on that date.Any exchange differences arising from changes in the spot exchange rate (compared to the rate at initialrecognition or the previous balance sheet date) are recognized in current profit or loss, except for: (1) exchangedifferences on foreign-currency-specific borrowings that qualify for capitalization, which are capitalized as part ofthe cost of the related asset during the capitalization period; (2) exchange differences on hedging instruments usedto hedge foreign exchange risk, which are accounted for under hedge accounting; (3) foreign exchange differencesarising from changes in the book balance of monetary items classified as measured at fair value through othercomprehensive income, except for amortized costs, are recognized in current profit or loss.When preparing consolidated financial statements involving foreign operations, if a foreign currency monetaryitem essentially constitutes a net investment in a foreign operation, any exchange differences arising fromfluctuation in exchange rate are included under "Exchange differences on translation of foreign currencystatements" in other comprehensive income. Upon disposal of the foreign operation, these differences arerecognized in profit or loss for the disposal period.Foreign currency non-monetary items measured at historical cost continue to be measured using the spot exchangerate in recording currency on the transaction date. For foreign currency non-monetary items measured at fair value,the spot exchange rate on the date the fair value is determined is used for translation. Any difference between thetranslated amount in recording currency and the original currency is treated as a fair value change (includingfluctuation in exchange rate) and is recognized in current profit or loss or other comprehensive income, asappropriate.

10.2 Translation of foreign currency financial statements

To prepare consolidated financial statements, foreign-currency financial statements of overseas operations aretranslated into RMB as follows: all assets and liabilities in the balance sheet are translated at the spot exchangerate on the balance sheet date; shareholders' equity items are translated at the spot exchange rate on the date ofoccurrence; all items in the income statement and items reflecting profit distribution are translated using anexchange rate approximating the spot exchange rate on the transaction date; any difference between the sum oftranslated assets and the sum of translated liabilities plus equity items is recognized as other comprehensiveincome and included in shareholders' equity.Foreign currency cash flows and the cash flows of overseas subsidiaries are translated using an exchange rateapproximating the spot exchange rate on the date of the cash flow. The impact of fluctuation in exchange rate oncash and cash equivalents is presented separately in the statement of cash flows under "Effect of exchange ratechanges on cash and cash equivalents".The figures for the prior year-end and the actual amounts for the previous year are presented according to theamounts translated in the previous year's financial statements.When the Group disposes of its entire owners' equity in a foreign operation or otherwise loses the right of controlover a foreign operation—whether by partially disposing of equity investments or for any other reason—alldifferences on translation of foreign currency statements related to that foreign operation and presented undershareholders' equity (attributable to the parent company) in the balance sheet are transferred in full to profit or lossfor the disposal period.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

10. Foreign currency transactions and translation of foreign currency statements - Continued

10.2 Translation of foreign currency statements - Continued

When disposing of part of an equity investments or in other circumstances that reduce the Group's ownershipinterest in an overseas operation without losing the right of control over that operation, any differences ontranslation of foreign currency statements related to the disposed portion are attributed to minority interests andare not transferred to profit or loss for the current period. When disposing of a portion of equity in an overseasoperation that is classified as an associate or a joint venture, the differences on translation of foreign currencystatements related to that operation are transferred to profit or loss in the disposal period, in proportion to thepercentage of equity disposed.

11. Financial instruments

The Group recognizes a financial asset or financial liability when it becomes a party to the contractual provisionsof a financial instrument.For purchases or sales of financial assets in the ordinary course of business, the Group recognizes the assets to bereceived and the liabilities to be assumed on the trade date, or derecognizes the assets sold on the trade date.Financial assets and financial liabilities are measured at fair value upon initial recognition (see Note (II) "Basis ofaccounting and valuation principles" for details on determining fair value). For financial assets and liabilitiesmeasured at fair value through profit or loss, transaction costs are recognized directly in profit or loss for thecurrent period; for other categories of financial assets and liabilities, the relevant transaction costs are included inthe initial recognition amount. When the Group initially recognizes accounts receivable that do not include asignificant financing component, or when the financing component of a contract not exceeding one year isdisregarded under Accounting Standards for Business Enterprises No. 14 - Revenue (hereinafter referred to as“Revenue Standard”), such receivables are initially measured at the transaction price as defined in the RevenueStandard.The effective interest method is the method used to calculate the amortized cost of a financial asset or liability andto allocate the interest income or interest expenses over the relevant accounting periods.The effective interest rate is the rate that discounts the estimated future cash flows over the expected life of afinancial asset or liability to the financial asset's book balance or the financial liability's amortized cost. Indetermining the effective interest rate, the Group estimates expected cash flows based on all contractual terms ofthe financial asset or liability (e.g., early repayment, extension, call options, or other similar options), but does notfactor in expected credit losses.The amortized cost of a financial asset or liability is the initial recognized amount minus any repaid principal, plusor minus the accumulated amortization of the difference between the initial recognized amount and the amount atmaturity using the effective interest method, and then minus the accumulated provision for losses (applicable onlyto financial assets).

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.1 Classification, recognition and measurement of financial assets

After initial recognition, the Group subsequently measures different categories of financial assets at amortizedcost, at fair value through other comprehensive income, or at fair value through profit or loss.If the contractual terms of a financial asset stipulate that, on specified dates, cash flows comprise solely paymentsof principal and interest on the outstanding principal, and the Group's business model for managing this financialasset is to collect the contractual cash flows, the Group classifies this financial asset as measured at amortized cost.Such financial assets mainly include monetary funds, notes receivable, accounts receivable, and other receivables.If the contractual terms of a financial asset stipulate that, on specified dates, cash flows comprise solely paymentsof principal and interest on the outstanding principal, and the Group's business model for managing the financialasset is both to collect contractual cash flows and to sell the financial asset, then the Group classifies this asset asmeasured at fair value through other comprehensive income. Such financial assets with a maturity of more thanone year from the date of acquisition are presented as "Other debt investments," while those maturing within oneyear (inclusive) from the balance sheet date are presented under "Non-current assets due within one year."Accounts receivable and notes receivable classified upon acquisition as measured at fair value through othercomprehensive income are presented under "Receivables financing," and any other items acquired with a maturityof one year (inclusive) or less are presented under "Other current assets."At initial recognition, on an individual financial asset basis, the Group may irrevocably designate a non-tradingequity instrument investment, other than any contingent consideration recognized in a business combination notunder common control, as measured at fair value through other comprehensive income. Such financial assets arepresented as "Other equity instrument investments."If a financial asset meets any of the following conditions, it indicates that the Group holds this asset for tradingpurposes:

? The main purpose of acquiring the financial asset is to sell it in the near term.? Upon initial recognition, the financial asset is part of an identifiable portfolio of financial instruments that is

collectively managed, and there is objective evidence of a recent pattern of short-term profit-taking.? The financial asset is a derivative, except for derivatives that meet the definition of a financial guarantee

contract or are designated as effective hedging instruments.Financial assets measured at fair value through profit or loss include those classified as such and those designated

as such:

? Any financial asset that does not meet the classification criteria for measurement at amortized cost or at fair value

through other comprehensive income is classified as measured at fair value through profit or loss.? At initial recognition, to eliminate or significantly reduce accounting mismatches, the Group may irrevocably

designate a financial asset as measured at fair value through profit or loss.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.1 Classification, recognition and measurement of financial assets - ContinuedFinancial assets measured at fair value through profit or loss are presented under "Financial assets held fortrading." Those due in more than one year from the balance sheet date (or with no fixed maturity) and expected tobe held for more than one year are presented under "Other non-current financial assets."

11.1.1 Financial assets measured by amortized cost

Financial assets measured at amortized cost are subsequently measured at amortized cost using the effectiveinterest method, and any gain or loss arising from impairment or derecognition is recognized in profit or loss.The Group recognizes interest income on financial assets measured at amortized cost using the effective interestmethod. For purchased or originated financial assets that are already credit-impaired, the Group determinesinterest income from the date of initial recognition based on the asset's amortized cost and a credit-adjustedeffective interest rate. For all other financial assets, the Group calculates interest income by multiplying the bookbalance of the asset by the effective interest rate.

11.1.2 Financial assets measured at fair value through other comprehensive incomeFor a financial asset classified as measured at fair value through other comprehensive income, any impairmentloss or gain and interest income calculated using the effective interest method are recognized in profit or loss,while all other fair value changes are recognized in other comprehensive income. The amount recognized in profitor loss each period is the same as if the asset had been measured at amortized cost throughout its life. When such afinancial asset is derecognized, the cumulative gains or losses previously recognized in other comprehensiveincome are transferred from other comprehensive income to profit or loss.For a non-trading equity instrument investment designated as measured at fair value through other comprehensiveincome, fair value changes are recognized in other comprehensive income. When the financial asset isderecognized, the cumulative gains or losses previously recognized in other comprehensive income are transferredout of other comprehensive income and into retained earnings. During the period the Group holds this non-tradingequity instrument investment, if the right to receive dividends is established, the related economic benefits arelikely to flow to the Group, and the amount of dividends can be measured reliably, then the Group recognizesdividend income in profit or loss.

11.1.3 Financial assets measured at fair value through the current profit or loss

Financial assets measured at fair value through profit or loss are subsequently measured at fair value; gains orlosses arising from fair value changes, as well as any dividend and interest income related to these assets, arerecognized in profit or loss.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.2 Impairment of financial instruments

The Group recognizes impairment allowances and provision for losses based on expected credit losses forfinancial assets measured at amortized cost, financial assets classified as fair value through other comprehensiveincome, and lease receivables.For all notes receivable and accounts receivable arising from transactions governed by the Revenue Standard, aswell as operating lease receivables arising from transactions governed by Accounting Standards for BusinessEnterprises No. 21 - Leases, the Group measures the provision for loss at an amount equal to the lifetime expectedcredit losses.For other financial instruments, except for those purchased or originated with credit loss, the Group evaluateschanges in credit risk since initial recognition at each balance sheet date. If the credit risk of such a financialinstrument has significantly increased since initial recognition, the Group measures the provision for loss at anamount equal to the lifetime expected credit losses; if it has not significantly increased, the Group measures theprovision for loss at an amount equal to the 12-month expected credit losses. Except for financial assets classifiedas fair value through other comprehensive income, any increase or reversal of the provision for credit losses isrecognized as an impairment loss or gain in the current period's profit or loss. For financial assets classified as fairvalue through other comprehensive income, the Group recognizes the provision for credit losses in othercomprehensive income and records the impairment loss or gain in profit or loss, without reducing the asset's bookvalue in the balance sheet.If, in a prior period, the Group measured the provision for loss at an amount equal to the lifetime expected creditlosses (due to a significant increase in credit risk since initial recognition), but at the current balance sheet datethat significant increase in credit risk no longer applies, then the Group measures the provision for loss at anamount equal to the 12-month expected credit losses. The amount of any resulting reversal is recognized as animpairment gain in profit or loss.

11.2.1 Significant increase in credit risk

The Group uses reasonable and supportable forward-looking information to compare the risk of default on afinancial instrument at the balance sheet date with the risk of default at initial recognition, in order to determinewhether the credit risk has significantly increased since initial recognition.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.2 Impairment of financial instruments - Continued

11.2.1 Significant increase in credit risk - Continued

When the Group assesses whether credit risk has increased significantly, it considers the following factors:

(1) Whether internal price indicators resulting from changes in credit risk have undergone a significant change.

(2) Whether, if an existing financial instrument is effectively originated or issued as a new financial instrument onthe balance sheet date, there is a significant change in the interest rate or other terms of that instrument (e.g., morestringent contractual terms, increased collateral or guarantees, or a higher yield).

(3) Whether external market indicators of credit risk for the same financial instrument, or similar instruments withthe same expected term, have changed significantly. Such indicators include credit spreads, credit default swap(CDS) prices for the borrower, the length of time and extent to which a financial asset's fair value is below itsamortized cost, and other market information related to the borrower (e.g., changes in the prices of the borrower'sdebt or equity instruments).

(4) Whether the external credit rating of the financial instrument has actually changed or is expected to changesignificantly.

(5) Whether there has been a downgrade in the debtor's internal credit rating, either actual or anticipated.

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

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

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

(9) Whether there has been a significantly adverse change in the regulatory, economic, or technologicalenvironment in which the debtor operates.

(10) Whether the value of collateral securing the debt, or the quality of a third-party guarantee or creditenhancement, has changed significantly. Such changes are expected to reduce the debtor's economic incentive torepay under the contractual schedule or affect the probability of default.

(11) Whether there has been a significant change in factors that would reduce the borrower's economic incentiveto repay in accordance with the contractual terms.

(12) Whether the loan contract is expected to be modified, including the potential release or amendment ofcontractual obligations due to anticipated breaches of contract, granting interest-free periods, raising interest rates,requiring additional collateral or guarantees, or otherwise modifying the contractual framework of the financialinstrument.

(13) Whether there is a significant change in the debtor's expected performance or repayment behavior.

(14) Whether the Group's credit management approach for the financial instrument has changed.Regardless of the outcome of the above assessment, if payments under the financial instrument's contract are morethan (or equal to) 30 days past due, it indicates that the financial instrument's credit risk has increased significantly.On the balance sheet date, if the Group concludes that a financial instrument has only low credit risk, it presumesthe credit risk has not increased significantly since initial recognition. A financial instrument is considered to havelow credit risk if its risk of default is low, the borrower has a strong capacity to meet its contractual cash flowobligations in the short term, and even over a longer period, adverse changes in economic and operatingconditions would not necessarily reduce the borrower's ability to meet those obligations.(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.2 Impairment of financial instruments - Continued

11.2.2 Financial assets with credit loss

Notes to the financial statementsFor the year ended December 31, 2025

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When one or more events occur that the Group expects to adversely affect the future cash flows of a financialasset, that asset is considered credit-impaired. Evidence for a credit-impaired financial asset includes thefollowing observable information:

(1) The debtor breaches a contract, such as default or delinquency in interest or principal payments.

(2) The debtor breaches the contract, such as default or delay in repayment of interest or principal.

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

(4) The debtor is highly likely to go bankrupt or undertake other financial restructuring.

(5) The issuer's or debtor's financial difficulties lead to the disappearance of an active market for the financialasset.

(6) A financial asset is purchased or originated at a substantial discount, reflecting the fact that a credit loss hasoccurred.Based on the Group's internal credit risk management, if internal recommendations or externally obtainedinformation indicates that the debtor of a financial instrument cannot fully repay all creditors, including the Group(regardless of any guarantee obtained by the Group), the Group considers this a default event.Regardless of the above assessment, if payments under the financial instrument's contract are more than (or equalto) 90 days past due, the Group presumes the instrument is in default.

11.2.3 Determination of expected credit losses

For financial assets and lease receivables, the expected credit loss is the present value of the difference betweenthe contractual cash flows the Group is entitled to receive and the cash flows the Group actually expects to receive.When measuring the expected credit losses on financial instruments, the Group's method reflects: an unbiased,probability-weighted average determined by evaluating a range of possible outcomes; the time value of money;and reasonable and supportable information about past events, current conditions, and forecasts of futureeconomic conditions, available without undue cost or effort at the balance sheet date.

11.2.4 Write-off of financial assets

If the Group no longer reasonably expects to recover all or part of the contractual cash flows of a financial asset,the Group writes off the book balance of the financial asset directly. This write-off constitutes derecognition of therelevant financial asset.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.3 Transfer of financial assets

A financial asset is derecognized if one of the following conditions is met: (1) the contractual right to receive cashflows from the financial asset expires; (2) the financial asset has been transferred and substantially all the risksand rewards of ownership of the asset have been transferred to the transferee; or (3) the financial asset has beentransferred, and although the Group has neither transferred nor retained substantially all the risks and rewards ofownership, it has not retained control over the asset.If the Group has neither transferred nor retained substantially all the risks and rewards of ownership of thefinancial asset but retains control of it, the Group continues to recognize the transferred financial asset to theextent of its continuing involvement, and recognizes a corresponding liability. The Group measures that liabilityas follows:

? Where the transferred financial asset is measured at amortized cost, the book value of the related liability

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

the book value of the asset in which the Group continues to be involved minus the fair value of any rightsretained by the Group (if the Group retained such rights due to the transfer) and plus the fair value of anyobligations assumed by the Group (if the Group assumed such obligations due to the transfer). The fairvalues of such rights and obligations are measured on a stand-alone basis.When the full transfer of a financial asset qualifies for derecognition, the difference between the book value of thetransferred financial asset on the derecognition date and the sum of the consideration received and thecorresponding portion of the cumulative fair value changes previously recognized in other comprehensive incomeis recognized in profit or loss. If the transferred asset by the Group is a non-trading equity instrument investmentdesignated as measured at fair value through other comprehensive income, any cumulative gains or lossespreviously recognized in other comprehensive income are transferred out of other comprehensive income and intoretained earnings.When a partial transfer of a financial asset qualifies for derecognition, the book value of the original asset beforetransfer is allocated between the portion being derecognized and the portion that continues to be recognized, basedon the relative fair values of each portion on the transfer date. The difference between (a) the considerationreceived for the derecognized portion plus the corresponding portion of the cumulative fair value changespreviously recognized in other comprehensive income and (b) the book value of the derecognized portion on thederecognition date is recognized in profit or loss. If the transferred asset by the Group is a non-trading equityinstrument investment designated as measured at fair value through other comprehensive income, any cumulativegains or losses previously recognized in other comprehensive income are transferred out of other comprehensiveincome and into retained earnings.If a full transfer of a financial asset does not satisfy the derecognition criteria, the Group continues to recognizethe entire transferred financial asset and recognizes the consideration received as a liability.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.4 Classification of financial liabilities and equity instruments

Based on the contractual terms and the economic substance of the issued financial instrument rather than merelyits legal form and in conjunction with the definitions of financial liabilities and equity instruments, the Groupclassifies the financial instrument (or its components) as either a financial liability or an equity instrument atinitial recognition.

11.4.1 Classification, recognition and measurement of financial liabilities

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

11.4.1.1 Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading(including derivatives classified as financial liabilities) and those designated as measured at fair value throughprofit or loss. Except for derivative financial liabilities, which are presented separately, financial liabilitiesmeasured at fair value through profit or loss are presented as financial liabilities held for trading.If a financial liability meets any of the following conditions, it indicates that the Group has assumed this liabilityfor trading purposes:

? The primary purpose of assuming the financial liability is to repurchase it in the near term.? Upon initial recognition, the financial liability is part of an identifiable portfolio of financial instruments thatis collectively managed, and there is objective evidence of a recent pattern of short-term profit-taking.? The financial liability is a derivative, except for derivatives that meet the definition of a financial guaranteecontract or are designated as effective hedging instruments.At initial recognition, if any of the following conditions are met, the Group may designate a financial liability asmeasured at fair value through profit or loss: (1) the designation can eliminate or significantly reduce accountingmismatches; (2) under the Group's formally documented risk management or investment strategy, portfolios offinancial liabilities or combined portfolios of financial assets and liabilities are managed and evaluated on a fairvalue basis, and this is reported internally to key officers; or (3) it is part of an eligible hybrid contract containingan embedded derivative.Financial liabilities held for trading are subsequently measured at fair value, with any gains or losses arising fromfair value changes, along with dividends or interest expenses related to these liabilities, recognized in profit or loss.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.4 Classification of financial liabilities and equity instruments - Continued

11.4.1 Classification, recognition and measurement of financial liabilities - Continued

11.4.1.1 Financial liabilities measured at fair value through profit or loss - ContinuedFor a financial liability designated as measured at fair value through profit or loss, the portion of the fair valuechange attributable to the Group's own credit risk is recognized in other comprehensive income, while otherchanges in fair value are recognized in profit or loss. When the financial liability is derecognized, the accumulatedfair value change attributable to changes in the Group's own credit risk that was previously recorded in othercomprehensive income is transferred to retained earnings. Any dividends or interest expenses related to suchfinancial liabilities are recognized in profit or loss. If treating the effect of changes in the liability's own credit riskin this manner creates or enlarges an accounting mismatch in profit or loss, the Group recognizes all gains orlosses on the liability (including those related to changes in its own credit risk) in profit or loss.

11.4.1.2 Other financial liabilities

Except for financial liabilities arising from the transfer of financial assets that do not meet derecognition criteria,or where the Group continues to be involved in transferred financial assets, other financial liabilities are classifiedas financial liabilities measured at amortized cost. They are subsequently measured at amortized cost, and anygains or losses from derecognition or amortization are recognized in profit or loss.If the Group modifies or renegotiates a contract with a counterparty, and it does not result in the derecognition of afinancial liability subsequently measured at amortized cost but leads to changes in the contractual cash flows, theGroup recalculates the book value of the financial liability and recognizes any related gain or loss in profit or loss.For recalculated book value, the Group shall determine it by discounting the renegotiated or modified contractualcash flows at the original effective interest rate of the financial liability. For any costs or fees incurred as a resultof modifying or renegotiating the contract, the Group shall adjust the book value of the modified financial liabilityand amortize them over the remaining term thereof.

11.4.2 Derecognition of financial liabilities

If the present obligation of a financial liability is fully or partially discharged, the liability (or the dischargedportion) is derecognized. If the Group (as borrower) signs an agreement with a lender to replace the originalfinancial liability with a new one, and the terms of the new liability differ substantially from those of the originalliability, the Group derecognizes the original liability and recognizes the new one.When a financial liability is fully or partially derecognized, the difference between the book value of thederecognized portion and the consideration paid (including any non-cash assets transferred or new financialliabilities assumed) is recognized in profit or loss for the current period.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

11. Financial instruments - Continued

11.4 Classification of financial liabilities and equity instruments - Continued

11.4.3 Equity instruments

An equity instrument is a contract that evidences a residual interest in the Group's assets after deducting allliabilities. The Group treats the issuance (including refinancing), repurchase, sale, or cancellation of its equityinstruments as changes in equity. The Group does not recognize fair value changes in equity instruments.Transaction costs directly attributable to equity transactions are deducted from equity.The Group's distributions made to holders of equity instruments are treated as profit distribution, and any issuedstock dividends do not affect the total shareholders' equity.

11.5 Derivatives

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

11.6 Offsetting financial assets and financial liabilities

When the Group has a legal right to offset recognized financial assets and liabilities, and that right is currentlyenforceable, and the Group intends to settle on a net basis or to realize the asset and settle the liabilitysimultaneously, the financial assets and liabilities are presented on the balance sheet at the net amount. Otherwise,financial assets and financial liabilities are presented separately in the balance sheet without offset.

12. Notes receivable

12.1 Method for determining expected credit losses on notes receivable and the related accounting treatmentsFor notes receivable with significantly increased credit risk, such as those past due and not accepted or wherethere is clear evidence that the acceptor is likely unable to fulfill its acceptance obligation, the Group evaluatescredit losses on an individual basis. Other notes receivable are evaluated based on their credit risk characteristicsas a group.Any increase or reversal of the provision for expected credit losses on notes receivable is recognized as a creditloss or gain in profit or loss.

12.2 Combination categories and basis for determining provision for credit losses according to credit riskcharacteristic combinationApart from those notes receivable whose credit losses are determined on an individual basis, the Group classifiesthe remaining notes receivable into different groups based on shared credit risk characteristics:

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

13. Accounts receivable

13.1 Method for determining expected credit losses on accounts receivable and the related accounting treatmentsThe Group uses an impairment matrix at the group level to determine expected credit losses for accountsreceivable. Any increase or reversal of the provision for expected credit losses of accounts receivable isrecognized as a credit loss or gain in profit or loss.

13.2 Combination categories and basis for determining provision for credit losses according to credit riskcharacteristic combination.The Group classifies accounts receivable into Combination 1 and Combination 2 based on the credit riskcharacteristics of counterparties under different business segments. Combination 1 refers to accounts receivablearising from the polarizer business revenue, where provisions for credit losses are made based on overdue agingrelative to the credit term. Combination 2 refers to accounts receivable arising from property leasing and otherbusiness revenue, where provisions for credit losses are made based on natural aging.

13.3 Calculation method of aging for credit risk characteristics portfolio recognized by agingThe Group uses both the natural aging of accounts receivable and the overdue aging relative to the credit term ascredit risk characteristics, applying an impairment matrix to determine expected credit losses. Natural aging iscalculated starting from the date of initial recognition of the accounts receivable, while overdue aging begins oncethe natural aging exceeds the credit term granted to the customer. If the terms and conditions of an accountsreceivable are modified but do not lead to derecognition, the aging continues to accumulate.

13.4 Criteria for individual assessment of provision for credit losses

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

14. Receivables financing

14.1 Method for determining expected credit losses on receivables financing and the related accounting treatmentsThe Group determines credit losses for receivables financing on an individual-asset basis. The Group recognizesthe provision for credit losses for receivables financing in other comprehensive income and records any credit lossor gain in profit or loss, without reducing the book value presented in the balance sheet.

14.2 Criteria for individual assessment of provision for credit losses

Based on the credit status of the accepting bank for bank acceptance bills, the Group individually assesses anddetermines credit losses for receivables financing.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

15. Other receivables

15.1 Method for determining expected credit losses on other receivables and the related accounting treatmentsThe Group determines credit losses for other receivables on a group basis. Any increase or reversal of theprovision for expected credit losses on other receivables is recognized as a credit loss or gain in profit or loss.

15.2 Combination categories and basis for determining provision for credit losses according to credit riskcharacteristic combinationThe Group divides other receivables into different combinations based on common credit risk characteristics.Common credit risk characteristics used by the Group include initial recognition date, remaining contract term,and length of overdue period.

15.3 Method for calculating aging when determining credit risk characteristic combinationThe aging is calculated from the date of initial recognition. If the terms and conditions of other receivables aremodified but do not lead to derecognition, the aging continues to accumulate.

16. Inventories

16.1 Types of inventories, methods of costing for issuance, inventory system, and methods for amortizing low-value consumables and packaging materials

16.1.1 Types of inventories

The Group's inventories mainly include raw materials, work in progress, finished products, and materialsprocessed on consignment. Inventories are initially measured at cost, which includes purchase costs, processingcosts, and other expenditures incurred to bring the inventories to their current location and condition.

16.1.2 Method of costing for issued inventories

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

16.1.3 Inventory system

The Group uses a perpetual inventory system.

16.1.4 Amortization methods for low-value consumables and packaging materialsLow-value consumables and packaging materials are amortized using the straight-line method or are written off infull at once.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

16. Inventories - Continued

16.2 Criteria for recognizing and methods for making provision for inventory depreciationOn the balance sheet date, inventories are measured at the lower of cost and net realizable value. If net realizablevalue is lower than cost, a provision for inventory depreciation is made.Net realizable value is the estimated selling price of inventories in the ordinary course of business, less theestimated costs to complete, the estimated selling and distribution expenses, and related taxes. When determiningthe net realizable value of inventories, the Group uses conclusive evidence while considering the purpose ofholding the inventories and the impact of events after the balance sheet date.After the provisions for the inventory depreciation are made, the factors causing any write-down of inventoryvalue have disappeared, leading to the net realizable values of inventories higher than its book value, the amountof write-down shall be resumed and be reversed from the original provision for inventory devaluation with thereversal being included in current profit or loss.Generally, provisions for inventory depreciation are made on an item-by-item basis.

17. Long-term equity investments

17.1 Criteria for determining common control and significant influence

Control means that an investor has power over the investee, derives variable returns by participating in theinvestee's relevant activities, and can use that power to affect the amount of returns. Common control refers toshared control over an arrangement under relevant agreements, where decisions about the arrangement's relevantactivities require the unanimous consent of the parties sharing the right of control. Significant influence refers tothe power to participate in decisions on an investee's financial and operating policies, but not to control orcommonly control the formation of those policies. When determining whether the investor can exercise control orsignificant influence over the investee, the potential voting rights arising from convertible corporate bonds orexercisable warrants currently held by the investor or other parties are taken into account.

17.2 Determination of initial investment cost

For a long-term equity investment acquired in a business combination under common control, the initialinvestment cost is determined on the combination date based on the share of the book value of the acquiree'sowners' equity in the ultimate controller's consolidated financial statements. Any difference between the initialinvestment cost of the long-term equity investment and the book value of the cash paid, non-cash assetstransferred, or liabilities assumed is adjusted against capital reserve. If the capital reserve is insufficient, thedifference is adjusted against retained earnings. Where equity securities are issued as consideration for thecombination, on the combination date, the initial investment cost of the long-term equity investment is determinedbased on the share of the book value of the acquiree's owners' equity in the ultimate controller's consolidatedfinancial statements. The total par value of the issued shares is recognized as share capital, and any differencebetween the initial investment cost and the total par value of the shares issued is adjusted against capital reserve. Ifthe capital reserve is insufficient, the difference is adjusted against retained earnings.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

17. Long-term equity investments - Continued

17.2 Determination of initial investment cost - Continued

For a long-term equity investment acquired in a business combination not under common control, on theacquisition date the initial investment cost is determined based on the combination cost.Audit, legal, valuation, consulting, and other related G&A expenses incurred by the acquirer or purchaser for thebusiness combination are recognized in profit or loss when they occur.Long-term equity investments obtained through methods other than a business combination are initially measuredat cost. Where an investor gains significant influence or common control but not control over an investee throughadditional investment, the cost of the long-term equity investment is the sum of the fair value of the previouslyheld equity investment (as determined in accordance with Accounting Standards for Business Enterprises No. 22 -Recognition and Measurement of Financial Instruments) and the new investment cost.

17.3 Subsequent measurement and recognition method of profit or loss

17.3.1 Long-term equity investments accounted for under the cost method

In the parent company's financial statements, long-term equity investments in subsidiaries are measured using thecost method. A subsidiary is an investee over which the Group can exercise control.Under the cost method, long-term equity investments are measured at their initial investment cost. Any additionalinvestment or capital recovery adjusts the cost of the long-term equity investment. Current investment income isrecognized based on the amount of cash dividends or profits declared and distributed by the investee.

17.3.2 Long-term equity investments measured using the equity method

The Group applies the equity method to its investments in associates and joint ventures. An associate is aninvestee over which the Group has significant influence, and a joint venture is a joint venture arrangement underwhich the Group has rights to the net assets of the arrangement.Under the equity method, if the initial investment cost of the long-term equity investment exceeds the share of thefair value of the investee's identifiable net assets at the time of investment, the initial investment cost is notadjusted. If the initial investment cost is less than the share of the fair value of the investee's identifiable net assetsat the time of investment, the difference is recognized in current profit or loss, and the cost of the long-term equityinvestment is adjusted accordingly.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

17. Long-term equity investments - Continued

17.3 Subsequent measurement and recognition method of profit or loss - Continued

17.3.2 Long-term equity investments measured using the equity method - ContinuedWhen the equity method is adopted for accounting, the Group, based on its attributable share of the net profit orloss and other comprehensive income realized by the investee, respectively recognize the investment income andother comprehensive income, and simultaneously adjust the book value of the long-term equity investment.COOEC shall calculate the shares according to profits or cash dividends declared by the investee andcorrespondingly reduce the book value of long-term equity investments; as to any change in owners' equity of theinvestee other than net profit or loss, other comprehensive income and profit distribution, the Group shall adjustthe book value of the long-term equity investment and include such change in capital reserves. When recoginzingthe attributable share of net profit or loss of the investee, the Group shall, based on the fair value of identifiablenet asset of the investee when it obtains the investment,recognize the net profits of the investee after adjustment. Ifaccounting policies and accounting periods adopted by the investee are inconsistent with those of the Company,the financial statements of the investee shall be adjusted according to the accounting policies and accountingperiods of the Company and investment income and other comprehensive income etc. shall be recognized on suchbasis. For transactions between the Group and associates and joint ventures, if the invested or sold assets do notconstitute business, the unrealized profit or loss from internal transactions will be offset at the part attributable tothe Group and the investment profit or loss will be recognized on that basis However, the unrealized losses frominternal transactions between the Group and any investee shall not be offset if they belong to the losses from theimpairment of the transferred assets.When recognizing the net losses occurred in the investee that shall be shared, the reduction value of book value oflong-term equity investments and other long-term equities that constitute net investments in the investee will bethe limit until it becomes zero. In addition, if the Group has the obligation to assume extra-amount losses for theinvestee, the estimated liabilities are recognized according to the estimated obligations and included in the currentinvestment losses. Where the investee realizes net profits in the subsequent period, the Group shall restore theincome shared after making up for unrecognized losses undertaken by such income.

17.4 Disposal of long-term equity investments

When a long-term equity investment is disposed of, the difference between its book value and the actual proceedsis recognized in current profit or loss. If a long-term equity investment has been accounted for using the equitymethod and the remaining equity after disposal is still accounted for using the equity method, any othercomprehensive income previously recognized under the equity method is treated on the same basis as if theinvestee had directly disposed of the related assets or liabilities, and is transferred proportionately. Any otherchanges in owners' equity of the investee, other than net profit or loss, other comprehensive income, and profitdistribution, which were previously recognized, are transferred proportionately to the current profit or loss. If along-term equity investment is accounted for using the cost method and the remaining equity after disposalcontinues to be accounted for using the cost method, any other comprehensive income recognized before theGroup gained control, under either the equity method or the accounting standards for recognizing and measuringfinancial instruments, is treated on the same basis as if the investee had directly disposed of the related assets orliabilities, and is transferred proportionately. Other changes in owners' equity other than net profit or loss, othercomprehensive income and profit distribution in net asset of the investee accounted for and recognized by usingthe equity method shall be carried forward to the current profit or loss.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

17. Long-term equity investments - Continued

17.4 Disposal of long-term equity investments - Continued

Where the Group loses the control over the investee due to the disposal of part of the equity investments, when itprepares separate financial statements, the remaining equity after disposal that can commonly control or havesignificant influence on the investee will be measured under the equity method, and the remaining equity shall bedeemed to have been adjusted under the equity method on acquisition. If the remaining equity after disposal cannot exercise common control or significant influence on the investee, such equity will be changed to be accountedfor according to recognition and measurement standards of financial instruments and the difference between fairvalue and book value on the date of loss of the control shall be included in the current profit or loss. For othercomprehensive income recognized by using the equity method or financial instruments recognition andmeasurement standards before the Group obtains the control over the investee, accounting treatment shall be madeon the same basis as that for direct disposal of relevant assets or liabilities by the investee when the Group losesthe control over the investee. Other changes in owners' equity other than net profit or loss, other comprehensiveincome and profit distribution in net asset of the investee recognized by using the equity methodshall be carriedforward to the current profit or loss when the control over the investee is lost. Where the remaining equities afterdisposal are accounted for under the equity method, the other comprehensive income and other owners' equityshall be carried forward in proportion. If the remaining equity after disposal is changed to be accounted foraccording to the recognition and measurement standards of the financial instruments, the other comprehensiveincome and other owner's equity shall be fully carried forward.In case the common control or significant influence over the investee is lost for disposing part of equityinvestments, the remaining equity will be changed to be accounted for according to the recognition andmeasurement principles of financial instruments. The difference between the fair value and the book value on thedate of the loss of common control or significant influence shall be included in the current profit or loss. Anyother comprehensive income previously recognized under the equity method for the original equity investment isaccounted for on the same basis as if the investee had directly disposed of related assets or liabilities once theequity method ceases to apply. All other changes in owners' equity recognized due to factors other than net profitor loss, other comprehensive income, and profit distribution of the investee are transferred in full to currentinvestment income when the equity method is no longer applied.Where the Group disposes of equity investments in subsidiaries through multiple transactions and by stages untilloss of control, if the above transactions belong to a package of transactions, accounting treatment shall be madeon the transactions as a transaction to dispose equity investments of subsidiaries and lose the control. Thedifference between each disposal cost and the book value of long-term equity investments corresponding todisposed equities before the loss of control shall be firstly recognized as other comprehensive income and thentransferred into the current profit or loss at the loss of control.

18. Investment properties

Investment property refers to property held to earn rentals or for capital appreciation, or both, and includes leasedland use rights and leased buildings.Investment property is initially measured at cost. Subsequent expenses related to the investment property, if theeconomic benefits related to the asset are likely to flow in and the cost can be measured reliably, shall be includedin the cost of the investment property. Other subsequent expenses shall be included in the current profit or losswhen incurred.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

18. Investment properties - Continued

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

When an investment property is being disposed of or permanently withdraws from use without any economicbenefits expected from the disposal, the investment property shall be derecognized.The difference between the disposal proceeds of an investment property (through sale, transfer, retirement, ordamage) and its book value, net of related taxes and fees, is recognized in current profit or loss.

19. Fixed assets

19.1 Recognition conditions

Fixed assets refer to tangible assets held for the purpose of producing goods, providing services, renting oroperating management, with a service life exceeding one fiscal year. Fixed assets will only be recognized whenthe economic benefits associated with such assets are likely to flow into the Group and the cost can be measuredreliably. A fixed asset is initially measured at cost.For the subsequent expenses related to the fixed assets, if the economic benefits related to the fixed assets arelikely to flow in and the cost can be measured reliably, they shall be included in the cost of the fixed assets, andthe book value of the replaced part shall be derecognized, Other subsequent expenses shall be included into thecurrent profit or loss when incurred.

19.2 Depreciation method

From the month following the date a fixed asset is in working condition for intended use, the Group depreciatesthe asset on a straight-line basis over its service life. The depreciation method, service year, estimated residualvalue, and annual depreciation rates for each category of fixed assets are as follows:

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

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

19. Fixed assets - Continued

19.3 Other explanations

When the fixed assets are disposed of or it is expected that no economic benefits can be generated through use ordisposal, the fixed assets shall be derecognized. The difference of the revenue from disposal of fixed assets suchas sales, transfer, retirement or damage deducting their book value and related taxes shall be included into thecurrent profit or loss.The Group will review service life, estimated net residual value and depreciation methods of the fixed assets at theend of each year. Changes, if any, shall be handled as changes in accounting estimates.

20. Construction in progress

The construction in progress is measured at actual cost, which includes various project expenditures incurredduring the construction period, capitalized borrowing costs before the project reaches working condition forintended use, and other related costs. No depreciation is made for construction in progress.The construction in progress shall be carried forward to the fixed assets after it reaches the working condition forintended use. The criteria and timing for the conversion of various types of construction in progress into fixedassets are as follows:

21. Borrowing costs

The capitalization of the borrowing costs that can be directly attributable to the acquisition, construction orproduction of assets that meet the capitalization conditions will start when the asset expenditure has incurred, theborrowing costs have incurred, and the acquisition, construction or production activities necessary for the asset toreach the intended usable or salable state have begun; the capitalization shall be ceased when the acquired andconstructed or produced assets eligible for capitalization have reached their working condition for intended use orsales condition. The remaining borrowing costs are recognized as expenses on occurrence.For specialized borrowings, the capitalization amount is based on the actual interest expenses incurred in thecurrent period, after deducting the interest income earned from unused borrowing funds deposited in the bank orinvestment income earned from temporary investments; general borrowings shall be determined by multiplyingthe weighted average of asset disbursements of the part of accumulated asset disbursements exceeding specialborrowings by the capitalization rate of used general borrowings, and on this basis, the capitalization amount isdetermined. The capitalization rate is calculated and recognized as per the weighted average interest rate ofgeneral borrowing.

Notes to the financial statementsFor the year ended December 31, 2025

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(III) Significant accounting policies and accounting estimates - Continued

22. Intangible assets

22.1 Service life and its basis for determination, estimate, amortization method or review procedureIntangible assets include land use right, software and patent rights, etc.The intangible assets shall be initially measured at the costs. For intangible assets with limited service life, theoriginal value shall be evenly amortized by straight-line method within the expected service life from the timewhen they are available for use. The intangible assets with uncertain service life shall not be amortized. Theamortization method, service life and residual value rate of various intangible assets are as follows:

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

22.2 The collection scope and related accounting treatments for research expendituresThe expenditures in research phase will be included in current profit or loss on occurrence.Expenditures in the development stage will be recognized as intangible assets only when the following conditionsare simultaneously satisfied, and included in current profit or loss if the following conditions are not satisfied:

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

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

(3) The manner in which an intangible asset generates economic benefits includes the ability to prove that there isa market for the products produced through the use of this intangible asset or a market for the intangible assetitself. In the case that the intangible asset will be used internally, its usefulness shall be proven.

(4) With the support of sufficient technology, financial resources and other resources, it is able to complete thedevelopment of the intangible assets, and it is able to use or sell the intangible assets;

(5) The expenditures attributable to the intangible assets in the development stage can be measured reliably.Where the research expenditures and the development expenditures are indistinguishable, the COOEC shallinclude research expenditures and development expenditures incurred in current profit or loss. The cost of theintangible assets formed by internal development activities only includes the total expenditure incurred from thetime when the capitalization conditions are met to the time when the intangible assets reach the intended use. Theexpenses recognized in profit or loss before meeting the capitalization conditions during the development for thesame intangible asset will not be adjusted.The scope of R&D expenditure includes wages, salaries, and welfare expenses of personnel directly engaged inR&D activities, materials, fuel and power costs directly consumed in R&D activities, and depreciation expensesof instruments and equipment for R&D activities, etc.

Notes to the financial statementsFor the year ended December 31, 2025

- 41 -

(III) Significant accounting policies and accounting estimates - Continued

23. Impairment of long-term assets

On each balance sheet date, the Group checks whether there is any indication that long-term equity investments,investment properties measured by the cost model, fixed assets, construction in progress, right-of-use assets andintangible assets with a definite service life may have impairment. If there are indications of impairment of suchassets, the recoverable amount shall be estimated. Intangible assets with indefinite service life and intangibleassets that have not yet reached a usable state are subject to impairment testing every year regardless of whetherthere are indications of impairment.The recoverable amount of the estimated asset is based on a single asset. If it is difficult to estimate therecoverable amount of a single asset, the recoverable amount of the asset group shall be determined on the basis ofthe asset group to which the asset belongs. The recoverable amount is the higher of the net amount obtained bydeducting the disposal expenses from the fair value of an asset or an asset group and the present value of itsexpected future cash flows.If the recoverable amount of the asset is lower than its book value, the provision for asset impairment shall bemade at the difference and included in the current profit or loss.The goodwill shall be tested for impairment at least at the end of each year. The impairment test of goodwill shallbe carried out in combination with the asset group or combination of asset groups related to it. That is, from theacquisition date, the book value of goodwill shall be allocated using a reasonable method to the asset group orportfolio of asset groups that benefit from the synergies of the business combination. If the recoverable amount ofthe asset group or group of asset groups including the allocated goodwill is lower than its book value, thecorresponding impairment losses shall be recognized. Amount of impairment losses shall be firstly used to deductthe book value of goodwill allocated to the asset group or portfolio of asset groups, and then deduct book value ofother assets according to the proportion of the book values of other assets (except for goodwill) in the asset groupor portfolio of asset groups.The above losses from assets impairment will not be reversed in subsequent accounting periods once recognized.

24. Long-term deferred expenses

Long-term deferred expenses refer to the expenses which have been already incurred but will be borne in thecurrent period and in the future with an amortization period of over 1 year. Long-term deferred expenses areamortized evenly over the expected benefit period.

25. Contract liabilities

Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for considerationreceived or receivable from customers. Contract assets and contract liabilities under the same contract arepresented by their net amounts.

26. Employee remuneration

26.1 Accounting treatments for short-term compensation

During the accounting period when employees provide services for the Group, the Group recognizes the short-term compensation actually incurred as liabilities and includes it in the current profit or loss or related asset costs.The employee welfare expenses incurred by the Group shall be included in the current profit or loss or relatedasset costs according to the actual amount incurred. If the employee benefits are non-monetary benefits, they shallbe measured at fair value.

Notes to the financial statementsFor the year ended December 31, 2025

- 42 -

(III) Significant accounting policies and accounting estimates - Continued

26. Employee employee compensation - Continued

26.1 Accounting treatments for short-term compensation - Continued

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

26.2 Accounting treatments for post-employment benefits

Post-employment benefits are all defined contribution plans.During the accounting period when employees provide services for the Group, the Group recognizes the amountpayable calculated according to the defined contribution plans as a liability and includes it in the current profit orloss or related asset costs.

26.3 Accounting treatments for dismissal benefits

When the Group provides dismissal benefits to employees, the employee compensation liability arising from thedismissal benefits shall be recognized at the earlier of the following dates and included in the current profit or loss:

when the Group cannot unilaterally withdraw the dismissal benefits provided due to the termination of laborrelationship plan or the layoff proposal; when the Group recognizes the costs or expenses related to therestructuring involving the payment of dismissal benefits.

27. Estimated liabilities

When the obligation related to the contingency such as product quality guarantee is a current obligation of theGroup, and the performance of such obligation is likely to result in the outflow of economic benefits, and theamount of such obligation can be measured reliably, it is recognized as estimated liabilities.On the balance sheet date, by considering the risks, uncertainty and time value of money and other factors relatedto contingency, the estimated liabilities will be measured according to the best estimate of the requiredexpenditures for performace of relevant present obligation. If the time value of money is significant, the bestestimate shall be determined by the amount discounted by the estimated future cash flows.

28. Revenue

28.1 Accounting policies adopted for revenue recognition and measurement disclosed by business typeWhen the Group has fulfilled its performance obligations under the contract, that is, when the customer obtainsright of control of the relevant goods or services, the revenue is recognized based on the transaction pricesallocated to the specific performance obligation. Performance obligations refer to the contractual commitments inwhich the Group transfers clearly distinguishable goods or services to the customers.

Notes to the financial statementsFor the year ended December 31, 2025

- 43 -

(III) Significant accounting policies and accounting estimates - Continued

28. Revenue - Continued

28.1 Accounting policies adopted for revenue recognition and measurement disclosed by business type -ContinuedThe Group evaluates the contract on the contract commencement date, identifies each individual performanceobligation contained in the contract, and determines whether each individual performance obligation is performedwithin a certain period of time or at a certain point in time. If one of the following conditions is met, it is aperformance obligation performed within a certain period of time, and the Group recognizes revenue within acertain period of time according to the performance progress: (1) the customer obtains and consumes theeconomic benefits brought by the Group at the same time as the Group performs the contract; (2) The customer isable to control the goods under construction in the course of the Group's performance; (3) The goods producedduring the performance of the Group have irreplaceable uses, and the Group has the right to receive payment forthe performance accumulated to date throughout the contract period. Otherwise, the Group recognizes the revenueat the point when the customer obtains the right of control of the relevant goods or services.For goods sold to customers, the Group recognizes revenue when the right of control of the goods is transferred,that is, when the goods are delivered to the designated place of the other party and signed by the other party. Forproperty service, the Group recognizes revenue in the course of providing property service.Transaction prices refer to the amount of consideration that the Group is expected to be entitled to receive as aresult of the transfer of goods or services to customers, but does not include the amount received on behalf of thirdparties and the amount expected to be returned to customers by the Group. When determining the transactionprices, the Group considers the impact of variable consideration, significant financing components in the contract,non-cash consideration, consideration payable to customers and other factors.If the contract contains two or more performance obligations, the Group shall, on the commencement date of thecontract, allocate the transaction prices to each individual performance obligation according to the relative ratio ofthe individual selling price of the goods or services promised by each individual performance obligation. However,if there is conclusive evidence that the contractual discount or variable consideration is only related to one or more(but not all) performance obligations in the contract, the Group shall allocate the contractual discount or variableconsideration to the relevant one or more performance obligations. Individual selling price refers to the price atwhich the Group sells goods or services to customers separately. If the individual selling price cannot be directlyobserved, the Group will comprehensively consider all the information that can be reasonably obtained andestimate the individual selling price by maximizing the use of observable input value.For sales with sales return clauses, the Group recognizes revenue at the amount of consideration expected to beentitled to receive due to the transfer of goods to the customer (i.e., excluding the amount expected to be returneddue to sales return) when the customer obtains the relevant control over goods, and recognizes liabilities at theamount expected to be returned due to sales return; at the same time, the balance of the book value of the expectedgoods to be returned at the time of transfer after deducting the expected cost of recovering the goods (includingthe impairment of the value of the returned goods) is recognized as an asset. The net amount after deducting thecost of the above asset will be transferred as cost based on the book value of the transferred goods.For sales with quality assurance clauses, if the quality assurance provides a separate service in addition to assuringthe customer that the goods or services sold meet the established standards, the quality assurance constitutes asingle performance obligation. Otherwise, the Group shall conduct accounting treatment for the quality assuranceliability in accordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies.The Group determines whether it is the principal or the agent when engaging in transactions based on whether ithas the right of control over the goods or services before transferring them to the customer. If the Group cancontrol the goods or services before transferring them to the customer, the Group is the main responsible personand recognizes the revenue according to the total consideration received or receivable; otherwise, the Group is anagent and recognizes revenue based on the expected commissions or service fee it is entitled to receive. Thisamount is determined by subtracting the price payable to other related parties from the total consideration receivedor receivable.

Notes to the financial statementsFor the year ended December 31, 2025

- 44 -

(III) Significant accounting policies and accounting estimates - Continued

28. Revenue - Continued

28.1 Accounting policies adopted for revenue recognition and measurement disclosed by business type -ContinuedIf the Group receives payment in advance from customers for sales of goods or services, the payment is firstrecognized as a liability and then transferred to revenue when the relevant performance obligations are fulfilled.When the Group's advances from customers do not need to be returned and the customer may waive all or part ofits contractual rights, the Group expects to be entitled to the amount related to the contractual rights waived by thecustomer, and recognizes the above amount as revenue in ratio according to the mode of the customer's exerciseof contractual rights; otherwise, the Group will only transfer the relevant balance of the above-mentionedliabilities to revenue when it is highly unlikely that the customer will request the fulfillment of the remainingperformance obligations.

29. Government subsidies

Government subsidies refer to the monetary assets and non-monetary assets obtained by the Group from thegovernment for free. Government subsidies are recognized when they can meet the conditions attached togovernment subsidies and can be received.The government subsidies considered as monetary assets are measured at the amount received or receivable.

29.1 Judgment basis and accounting treatments for government subsidies related to assetsThe subsidies fro production line and equipment in the Group's government subsidies can form long-term assets,so such government subsidies are asset-related government subsidies.Government subsidies related to assets are recognized as deferred income and included in the current profit or lossby stages according to the straight-line method within the service life of the relevant assets.

29.2 Judgment basis and accounting treatments for government subsidies related to incomeThe industry development support funds and enterprise development support funds in the Group's governmentsubsidies cannot form long-term assets, so such government subsidies are income-related government subsidies.Income-related government subsidies used to compensate for relevant costs and losses in subsequent periods arerecognized as deferred income and included in the current profit or loss in the period when the relevant costs orexpenses are recognized; if it is used to compensate the relevant costs and losses incurred, it shall be directlyincluded in the current profit or loss.Government subsidies related to the daily activities of the Group are included in other income according to theessence of economic business. Government subsidies unrelated to the daily activities of the Group are included inthe non-operating revenue.When the recognized government subsidies need to be returned, if there is relevant deferred income balance, thebook balance of relevant deferred income shall be offset, and the excess shall be included in the current profit orloss; if there is no relevant deferred income, it shall be directly included in the current profit or loss.

Notes to the financial statementsFor the year ended December 31, 2025

- 45 -

(III) Significant accounting policies and accounting estimates - Continued

30. Leases

Leases refers to a contract in which the lessor transfers the right of use of the asset to the lessee for considerationwithin a certain period of time.At the commencement date of the contract, the Group assesses whether the contract is a lease contract or containsa lease. Unless the terms and conditions of the contract change, the Group does not reassess whether the contractis a lease contract or contains a lease.

30.1 The Group as a lessee

30.1.1 Spin-off of the lease

When a contract contains one or more lease and non-lease parts, the Group will split the individual lease and non-lease parts and allocate the contract consideration according to the relative ratio of the sum of the individual priceof each lease part and the individual price of the non-lease part.

30.1.2 Right-of-use assets

Except for short-term leases, the Group recognizes the right-of-use assets of the lease on the lease commencementdate. The lease commencement date refers to the starting date when the lessor provides the leased assets for use bythe Group. Right-of-use assets are initially measured at cost. The cost includes:

? The initial measurement amount of the lease liabilities;? the lease payments made on or before the lease commencement date, or the relevant amount after deductingthe lease incentive already enjoyed if any;? Initial direct expenses incurred by the Group;? The estimated costs incurred by the Group for dismantling and removing the leased assets, restoring the

premises where the leased assets are located or restoring the leased assets to the state agreed in the leaseclauses.The Group depreciates right right-of-use assets with reference to the depreciation provisions of AccountingStandards for Business Enterprises No. 4 — Fixed Assets. If the Group can reasonably determine that theownership of leased assets will be obtained at the expiration of the lease term, the right-of-use assets shall bedepreciated within the remaining service life of the leased assets. If it is not reasonably certain that ownership ofleased assets will be obtained at the expiration of the lease term, the depreciation shall be accrued during theshorter of the lease term and remaining service life leased assets.

The Group determines whether the right-of-use assets are impairment in accordance with the AccountingStandards for Business Enterprises No. 8 - Asset Impairment and performs accounting treatment on the identifiedimpairment losses.

30.1.3 Lease liabilities

Except for short-term leases, the Group makes initial measurement of the lease liabilities on the leasecommencement date according to the present value of the lease payments that have not been paid on that date.When calculating the present value of lease payments, the Group uses the interest rate implicit in lease as thediscount rate, and if the interest rate implicit in lease cannot be determined, the incremental borrowing rate is usedas the discount rate.

Notes to the financial statementsFor the year ended December 31, 2025

- 46 -

(III) Significant accounting policies and accounting estimates - Continued

30. Leases - continued

30.1 The Group as a lessee - Continued

30.1.3 Lease liabilities - Continued

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

? Fixed payment amount and substantial fixed payment amount. If there is lease incentive, the relevant amountof lease incentive shall be deducted;? Variable lease payment amount depending on index or ratio;? The exercise price of the option reasonably determined by the Group to be exercised;? The amount to be paid to terminate the lease when the lease term reflects that the Group will exercise theoption;? The amount expected to be paid according to the residual value of the guarantee provided by the Group.After the lease commencement date, the Group calculates the interest expenses of the lease liabilities for eachperiod of the lease term at a fixed cyclical interest rate and includes it in the current profit or loss or related assetcosts.After the lease commencement date, if any of the following circumstances occurs, the Group shall remeasure thelease liabilities and adjust the corresponding right-of-use assets. If the book value of the right-of-use assets hasbeen reduced to zero, but the lease liabilities still needs to be further reduced, the Group shall include thedifference in the current profit or loss:

? If the lease term changes or the evaluation result of the purchase option changes, the Group will re-measurethe lease liabilities according to the present value calculated by the changed lease payment amount and the reviseddiscount rate;? If the estimated payable amount according to the guarantee residual value or the index or proportion used todetermine the lease payment changes, the Group will re-measure the lease liabilities according to the present valuecalculated by the changed lease payment amount and the original discount rate.

30.1.4 As the basis for judgment and accounting treatments for the simplified treatment of short-term leases bythe lesseeThe Group chooses not to recognize right-of-use assets and lease liabilities for short-term leases of some plantsand some leased warehouses. Short-term lease refers to a lease that lasts for no more than 12 months and includesno purchase options at the lease commencement date. The Group includes the lease payments of short-term leasesin the current profit or loss or related asset costs according to the straight-line method in each period of the leaseterm.

30.1.5 Lease modification

If the lease is modified and the following conditions are met at the same time, the Group will account for the leasemodification as a separate lease:

? The lease modification expands the scope of the lease by adding one or more right of use of the leased assets;? The increased consideration is equivalent to the individual price of the expanded part adjusted according to

the contract.

Notes to the financial statementsFor the year ended December 31, 2025

- 47 -

(III) Significant accounting policies and accounting estimates - Continued

30. Leases - continued

30.1 The Group as a lessee - Continued

30.1.5 Lease modifications - Continued

If the lease modification is not accounted for as a separate lease, on the effective date of the lease modification,the Group re-apportions the consideration of the modified contract, re-determines the lease term, and re-measuresthe lease liabilities at the present value calculated according to the modified lease payments and the reviseddiscount rate.If the lease modification results in a reduction in the scope of the lease or the lease term, the Group shall reducethe book value of the right-of-use assets accordingly, and include the relevant gains or losses of partial orcomplete termination of leases into the current profit or loss. If the lease liabilities are remeasured due to otherlease modification, the Group shall adjust the book value of the right-of-use assets accordingly.

30.2 The Group as a lessor

30.2.1 Spin-off of the lease

If the contract contains both the lease and non-lease parts, the Group shall allocate the contract considerationaccording to the provisions of the revenue standards on the allocation of transaction prices, and the basis ofallocation shall be the separate price of the lease part and the non-lease part.

30.2.2 Classification criteria and accounting treatments as a lessor

Leases that substantially transfer substantially all of the risks and rewards associated with the ownership of leasedassets are financing leases Leases other than financing lease are operating leases.

30.2.2.1 The Group records operating leases as a lessor

During each period of the lease term, the Group recognizes the lease receipts of operating leases as rental incomeby using the straight-line method. The initial direct costs incurred by the Group in connection with operatingleases are capitalized when incurred, amortized on the same basis as rental income recognition during the leaseterm, and included in the current profit or loss in installments.The variable lease receipts related to operating leases acquired by the Group and not included in the lease receiptsare included in the current profit or loss when actually incurred.

30.2.3 Lease modification

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

Notes to the financial statementsFor the year ended December 31, 2025

- 48 -

(III) Significant accounting policies and accounting estimates - Continued

31. Deferred tax assets and deferred tax liabilities

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

31.1 Current income tax

On the balance sheet date, the current income tax liabilities (or assets) formed in the current and prior periods aremeasured at the expected income tax payable (or refundable) calculated in accordance with the tax law.

31.2 Deferred tax assets and deferred tax liabilities

For the difference between the book value of certain assets and liabilities and their tax bases, and the temporarydifferences arising from the difference between the book value and tax base of items that are not recognized asassets and liabilities but whose tax bases can be determined in accordance with the tax law, the balance sheetliability method is adopted to recognize deferred tax assets and deferred tax liabilities.In general, the relevant deferred income taxes are recognized for all temporary differences. However, fordeductible temporary differences, the Group recognizes the relevant deferred tax assets to the extent of the taxableincome that is likely to be obtained to offset the deductible temporary differences. In addition, deferred tax assetsor liabilities are not recognized for temporary differences associated with the initial recognition of goodwill andwith the initial recognition of assets or liabilities arising from transactions that are neither business combinationsnor affect accounting profit or taxable income (or deductible losses) and do not result in equal taxable temporarydifferences and deductible temporary differences.For deductible loss and tax credits that can be carried forward to subsequent years, the corresponding deferred taxassets arising therefrom are recognized to the extent that future taxable income will be probable to be availableagainst deductible losses and tax credits.The Group recognizes deferred tax liabilities arising from taxable temporary differences associated withsubsidiaries, associates and investments in joint ventures, unless the Group is able to control the timing of thereversal of the temporary differences and it is probable that the temporary differences will not be reversed in theforeseeable future. For deductible temporary differences related to subsidiaries, associates and investments in jointventures, the Group recognizes deferred tax assets only if it is probable that the temporary differences will reversein the foreseeable future and it is probable that taxable income will be available to offset the deductible temporarydifferences in the future.On the balance sheet date, deferred tax assets and deferred tax liabilities should be measured at the applicable taxrate during the period of expected recovery of the relevant assets or liquidation of the relevant assets according tothe provisions of tax laws.Except for the current income tax and deferred income taxes related to transactions and events directly included inother comprehensive income or shareholders' equity, which are included in other comprehensive income orshareholders' equity, and the book value of deferred income taxes arising from business combination to adjustgoodwill, the remaining current income tax and deferred income tax expenses or income are included in thecurrent profit or loss.On the balance sheet date, the book value of the deferred tax assets shall be reviewed. If it is likely that sufficienttaxable income will not be available in the future to offset the benefits of the deferred tax assets, the book value ofthe deferred tax assets shall be written down. When it is likely to earn sufficient taxable income, the written downamount is reversed.

Notes to the financial statementsFor the year ended December 31, 2025

- 49 -

(III) Significant accounting policies and accounting estimates - Continued

31. Deferred tax assets and deferred tax liabilities - Continued

31.3 Offset of income tax

When the Group has a legal right to settle on a net basis and intends to settle with net amount or acquire assets andpay off liabilities simultaneously, the Group reports the net amount of current income tax assets and current taxliabilities after offsetting.When the Group has the legal right to settle current income tax assets and current income tax liabilities on a netbasis, and the deferred tax assets and deferred tax liabilities are related to the income tax levied by the same taxcollection authority on the same taxpayer or on different taxpayers, but in each important future period of reversalof deferred tax assets and liabilities, the involved taxpayer intends to settle current income tax assets and liabilitieson a net basis or to obtain assets and settle liabilities at the same time, the deferred tax assets and deferred taxliabilities of the Group are presented at the net amount after offset.

32. Changes in significant accounting policies and accounting estimates

32.1 Adjustments for changes in significant accounting policies

32.1.1 The Interpretation No. 19 of the Accounting Standards for Business Enterprises

On December 5, 2025, the Ministry of Finance issued the Interpretation No. 19 of the Accounting Standards forBusiness Enterprises, hereinafter referred to as the "Interpretation No.19"). Interpretation No. 19 specifies theassessment of the cash flow characteristics of financial asset contracts and related disclosures, as well as thedisclosures for equity instruments designated to be measured at fair value with changes recorded in othercomprehensive income, and it will come into effect on January 1, 2026.Assessment of the contractual cash flow characteristics of financial assets and related disclosureTo assesses whether the contractual cash flows of a financial asset are consistent with a basic lending arrangement,the entity may need to consider the different components of interest. The assessment of interest should focus onwhat the entity is being compensated for, rather than the amount of compensation, although the latter may indicatethat the entity is being compensated for factors other than the basic lending risks and costs. If the contractual cashflows are linked to variables other than the basic lending risks or costs (such as the value of an equity instrumentor the price of a commodity), or if the contractual cash flows represent a portion of the debtor's revenue or profit,then the contractual cash flows are inconsistent with the basic lending arrangement. The Group will implementthis provision as of January 1, 2026, and believes that the adoption of the above provisions has no material impacton the Group's financial statements.Disclosure of designated equity instruments measured at fair value with changes recognized in othercomprehensive incomeInterpretation No. 19 stipulates that an entity shall, at a minimum, disclose by category the fair value of designatedinvestment in equity instruments measured at fair value through other comprehensive income at the end of thereporting period, and the changes in their fair value during the reporting period, and may make further disclosureby item based on the principle of materiality and in conjunction with the entity's actual situation. Among these, theamount of change related to investments derecognized during the reporting period and the amount of changerelated to investments held at the end of the reporting period shall be disclosed separately. The entity shall alsodisclose the transfer of cumulative gains or losses included in equity related to investments derecognized duringthe reporting period. The Group will implement this provision as of January 1, 2026, and believes that theadoption of the above provisions has no material impact on the Group's financial statements.

Notes to the financial statementsFor the year ended December 31, 2025

- 50 -

(III) Significant accounting policies and accounting estimates - Continued

32. Changes in significant accounting policies and accounting estimates - Continued

32.2 Changes in accounting estimates

The Group has no significant changes in accounting estimates during the year.(IV) Taxes

1.Main tax types and tax rates

Notes to the taxpayers with different corporate income tax rates:

Note 1: See Note (IV) and 2(2) for details.Note 2: according to the Inland Revenue Ordinance of Hong Kong, SATO (Hong Kong) Limited is subject to atwo-tier profits tax system. The first HKD 2 million of taxable profits shall taxed at a rate of 8.25%, and theprofits generated thereafter shall be taxed at a rate of 16.5%.Note 3: See Note (IV) and 2(1) for details.

2.Tax incentives

(1) In 2025, SAPO Photoelectric, a subsidiary of the Company, was jointly recognized as Industry andInformation Technology Bureau of Shenzhen Municipality, Shenzhen Finance Bureau and Shenzhen Tax Service,State Taxation Administration, respectively, with a certification period of 3 years, and the certificate numbers ofGR202544204289 respectively. Since SAPO Photoelectric was recognized as a high-tech enterprise, it is eligiblefor the tax incentives for high-tech enterprises for three years. After filing with the competent tax bureau, SAPOPhotoelectric has paid corporate income tax at a tax rate of 15%.

Notes to the financial statementsFor the year ended December 31, 2025

- 51 -

(IV) Taxes - continued

2. Tax incentives - continued

(2) The Company's subsidiaries, Shenzhen Meibainian Garment Co., Ltd., Shenzhen Lisi Industrial DevelopmentCo., Ltd., Shenzhen Shenfang Sungang Property Management Co., Ltd. and Shenzhen Shenfang PropertyManagement Co., Ltd. are qualified small low-profit enterprises. According to the Announcement of the Ministryof Finance and the State Taxation Administration of Taxation on Further Implementing Preferential Policies forCorporate Income Tax of Small and Micro Enterprises (No. 13, 2022) and the Announcement of the Ministry ofFinance and the State Taxation Administration on Preferential Policies for Corporate Income Tax of Small andMicro Enterprises and Individual Industrial and Commercial Households (No. 6, 2023), the part of the annualtaxable income not exceeding RMB 3 million will be included in the taxable income after deducting 25%, andcorporate income tax will be paid at a tax rate of 20%.

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

(4) According to the Announcement on the Policy of Additional Value-Added Tax Deduction for AdvancedManufacturing Enterprises (CZBSWZJGG [2023] No.43) issued by the Ministry of Finance and the StateTaxation Administration in September 2023, from January 1, 2023 to December 31, 2027, advancedmanufacturing enterprises are allowed to deduct the value-added tax payable by 5% of the deductible input tax forthe current period. SAPO Photoelectric, a subsidiary of the Company, meets the relevant conditions and enjoyedthe policy of additional deduction of value-added tax (VAT) in 2025.(V) Notes to financial statements items

1. Monetary funds

RMB

Notes to the financial statementsFor the year ended December 31, 2025

- 52 -

(V) Notes to financial statements - continued

1. Monetary funds - continued

Note 1: On December 31, 2025, the bank deposits include interest income from current deposits, agreementdeposit and 7-day notice deposits amounting to RMB 21,498.92 (on December 31, 2024: RMB 31,765.51).Note 2: On December 31, 2025, the Group's other monetary funds included RMB 684,860.26 (December 31, 2024:

RMB 3,401,500.00) restricted in use due to account freezing, and RMB536.39 (December 31, 2024: RMB35,443,338.96) deposits for bills and letters of credit.

2. Financial assets held for trading

RMB

3. Notes receivable

(1) Classification of notes receivable

RMB

(2) As at December 31, 2025, the Group has no pledged notes receivable.

(3) As of December 31, 2025, notes receivable endorsed or discounted by the Group and not yet due on the balancesheet date at the end of the period.

RMB

(4) Disclosure by provision method for bad debts

RMB

(5) In 2025, the Group has no actual write-off of notes receivable.

Notes to the financial statementsFor the year ended December 31, 2025

- 53 -

(V) Notes to financial statements - continued

4. Accounts receivable

(1) Disclosure by aging

RMB

(2) Disclosure by provision method for bad debts

RMB

RMB

As of December 31, 2025, the Company has no significant accounts receivable with individual provision for baddebts.As of December 31, 2025, the credit risk and provision for bad debts of accounts receivable of Portfolio 1 are asfollows:

RMB

Notes to the financial statementsFor the year ended December 31, 2025

- 54 -

(V) Notes to financial statements - continued

4. Accounts receivable - continued

(2) Disclosure by provision method for bad debts - Continued

As of December 31, 2025, the credit risk and provision for bad debts of accounts receivable of Portfolio 2 are asfollows:

RMB

As of December 31, 2025, provision for bad debts is made based on the simplified expected credit losses model

RMB

(3) Provision for bad debts

RMB

There was no significant amount of provision for bad debts recovered or reversed this year.

(4) There are no accounts receivable actually written off this year.

Notes to the financial statementsFor the year ended December 31, 2025

- 55 -

(V) Notes to financial statements - continued

4. Accounts receivable - continued

(5) Top 5 accounts receivable in terms of the ending balances by debtors

RMB

5. Receivables financing

(1) Presentation of receivables financing by category

RMB

The Group believes that the bank acceptance bills it holds are issued by banks with high credit ratings and carryno significant credit risk; therefore, no provision for bad debts has been made.As at December 31, 2025, the Group has no pledged receivables financing.

(3) As of December 31, 2025, receivables financing endorsed or discounted by the Group and not yet due on thebalance sheet date at the end of the period

RMB

(4) In 2025, the Group has no receivables financing with actual write-off.

Notes to the financial statementsFor the year ended December 31, 2025

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(V) Notes to financial statements - continued

6. Advances to suppliers

(1) Disclosure of advances to suppliers by aging

RMB

As of December 31, 2025, the Group has no advances to suppliers with an aging of more than 1 year and animportant amount.

(2) Top 5 advances to suppliers in terms of the ending balances by prepayment objectsThe total amount of the top five prepayments categorized by prepayment objects as of the end of the year wasRMB 24,076,887.09, accounting for 77.27% of the ending balance of advances to suppliers.

7. Other receivables

(1) Disclosure by aging

RMB

(2) Disclosure by nature of payment

RMB

Notes to the financial statementsFor the year ended December 31, 2025

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(V) Notes to financial statements - continued

7. Other receivables - continued

(3) Provision for bad debts

As of December 31, 2025, provision for bad debts is made based on general model of expected credit losses

RMB