ChinaFangdaGroupCo.,Ltd.

2025AnnualReport

April2026

2025AnnualReport

Chapter1ImportantStatement,TableofContentsand

Definitions

TheBoardofDirectors,individualdirectors,andseniormanagementoftheCompanyherebyaffirmthatthecontentofthisannualreportistrue,accurate,andcomplete,andthattherearenofalserecords,misleadingstatements,ormaterialomissions.Theyassumeindividualandjointlegalliabilityaccordingly.

Mr.XiongJianming,theCompany'sprincipalofficer;Mr.LinKebin,theofficerinchargeofaccountingaffairs;andMs.WangHuan,headoftheaccountingdepartment(chiefaccountingofficer),declarethattheyguaranteethetruthfulness,accuracy,andcompletenessofthefinancialstatementsincludedinthisannualreport.

AlltheDirectorshaveattendedthemeetingoftheboardmeetingatwhichthisreportwasexamined.

Thisannualreportcontainsforward-lookingstatementsregardingfutureplansandexpectations.SuchstatementsdonotconstitutesubstantivecommitmentsbytheCompanytoinvestors.Investorsandotherinterestedpartiesshouldfullyrecognizetheassociatedrisksandunderstandthedistinctionsamongplans,forecasts,andactualcommitments.

Thecompanyhasdescribedtheexistingmarketrisks,managementrisksandproductionandoperationrisksinthisreport.Pleaserefertotherisksthatmaybefacedmentionedin"11.ProspectsfortheCompany'sFutureDevelopment"inIIIManagementDiscussionandAnalysis.

Fortheyear2025,theCompany'sconsolidatedfinancialstatementsreportedanetlossattributabletoshareholdersofthelistedcompany.PursuanttotheArticlesofAssociation,theCompanydidnotmeettheconditionsforcashdividenddistributionin2025.Accordingly,theCompanywillnotdistributecashdividends,issuebonusshares,orconvertcapitalreservesintosharecapitalfor2025.

Contents

第一节重要提示、目录和释义 ...... 2

第二节公司简介和主要财务指标 ...... 8

第三节管理层讨论与分析 ...... 13

第四节公司治理、环境和社会 ...... 62

第五节重要事项 ...... 79

第六节股份变动及股东情况 ...... 92

第七节债券相关情况 ...... 99

第八节财务报告 ...... 100

Reference

1.Financialstatementsstampedandsignedbythelegalrepresentative,CFOandaccountingmanager;

2.OriginalcopyoftheAuditors'ReportunderthesealoftheCPAandsignedbyandunderthesealofcertifiedaccountants;

3.OriginalsofalldocumentsandmanuscriptsofPublicNoticesoftheCompanydisclosedinpublic.

Definitions

ChapterIIAbouttheCompanyandFinancialHighlights

1.Companyprofiles

2.Contactsandliaisons

3.Informationdisclosureandinquiring

4.Registrationchanges

5.Otherinformation

PublicaccountantsemployedbytheCompany

SponsorengagedbytheCompanytoperformcontinuedsupervisionandguideduringthereportingperiod

□Applicable?InapplicableFinancialadvisorengagedbytheCompanytoperformcontinuedsupervisionandguideduringthereportingperiod

□Applicable?Inapplicable

6.FinancialHighlight

WhethertheCompanyneedstomakeretroactiveadjustmentorrestatementoffinancialdataofpreviousyears

□Yes?No

TheCompany'snetprofitbeforeandafternon-recurringgainsandlosseswasnegativeforthelastthreefiscalyears,andthelatestauditreportshoweduncertaintyabouttheCompany'sabilitytocontinueoperating

□Yes?NoThelowestoftheCompany'sauditedprofitbeforetax,netprofit,andnetprofitafterdeductingnon-recurringgainsandlossesforthereportingperiodwasnegative.?Yes□No

7.Differencesinaccountingdataunderdomesticandforeignaccountingstandards

1.DifferencesinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheinternationalandChineseaccountstandards

□Applicable?InapplicableThereisnodifferenceinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheinternationalandChineseaccountstandardsduringthereportperiod.

2.DifferencesinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheoverseasandChineseaccountstandards

□Applicable?InapplicableThereisnodifferenceinnetprofitsandassetsinfinancialstatementsdisclosedaccordingtotheinternationalandChineseaccountstandardsduringthereportperiod.

8.Financialhighlightsbyquarters

InRMB

Wherethereisdifferencebetweentheabove-mentionedfinancialdataorsumandrelatedfinancialdatainquarterreportandinterimreportdisclosedbytheCompany

□Yes?No

9.Accidentalgain/lossitemandamount

?Applicable□Inapplicable

InRMB

Othergain/lossitemssatisfyingthedefinitionofnon-recurringgain/lossaccount:

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

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

ChapterIIIManagementDiscussionandAnalysis

1.MajorbusinessesoftheCompanyduringthereportperiod

ChinaFangdaGroupCo.,Ltd.wasfoundedinShenzhenin1991,withbusinessesspanningintelligentplatformscreendoorsystemsforrailtransit,high-endsmartcurtainwallsystemsandmaterials,newenergy,andcommercialservices.Intermsofcorebusinesscompetitiveness,theCompany'sintelligentplatformscreendoorsystemsforrailtransitandsmartcurtainwallsystemsarebothindustry-leading.Notably,itsurbanrailtransitplatformscreendoorsystemhasbeenawardedthetitleof"ManufacturingSingle-ProductChampion"byChina'sMinistryofIndustryandInformationTechnology.TheCompanyownssevennationalhigh-techenterprises,six"Specialized,Sophisticated,Distinctive,andInnovative"(SSDI)enterprises,two"NationalIntellectualPropertyAdvantageEnterprises,"one"NationalQualityLeaderEnterprise,"andtwoprovincial-levelengineeringtechnologyresearchcenters.

Duringthereportingperiod,theCompanycloselyfolloweditsannualthemeof"DigitalIntelligenceEmpowermentandScientificManagement,"achievingnotableprogressininnovation-drivendevelopment,overseasmarketexpansion,andoperationalriskcontrol.Adheringtoaninnovation-drivenstrategy,theCompanyactivelypromotesdeepintegrationofartificialintelligence(AI)technologiesacrossallbusinesssegments,embedsriskmanagementthroughouttheentireproductionandoperationprocess,andrigorously

managesoperatingcashflowtoeffectivelysafeguardoperationalsecurity.Whilesolidifyingits

competitiveedgeinthedomesticmarket,theCompanyhasexpandeditsglobalfootprintthroughhigh-qualityproductsandsuperiorservices,demonstratingstrongresilienceandgrowthpotentialacrossallbusinesssegments.Forthefullyear,theCompanyreportedoperatingrevenueofRMB3,377,303,100,netoperatingcashflowofRMB187,412,900,newlysignedoverseasordersaccountingfor27.06%oftotalneworders,andanend-of-periodorderbacklogofRMB6,610,286,300,includingRMB2,536,530,100inoverseasorders,anincreaseof

12.31%year-on-year.ChinaFangdaGroupCo.,Ltd.maintainedasolidoperationalstanceamidacomplexenvironmentthroughrobustcashflowmanagementandacontinuouslyoptimizedorderportfolio,layingastrongfoundationfortransformation,upgrading,andsustainabledevelopment.

(I)IntelligentPlatformScreenDoorSystemsforRailTransit

1.EmpoweredbyArtificialIntelligence(AI)Technology,PioneeringaNewGrowthFrontierintheIndustry

TheCompanyadherestoaninnovation-drivenstrategytocultivatenew-qualityproductiveforces.Duringthereportingperiod,theCompanybecamethefirstintheindustrytoenterthe"unchartedterritory"ofintelligentsafetyprotectionsystemsforhigh-speedrailplatforms.Leveragingartificialintelligence(AI)technology,itsuccessfullydevelopedtheworld'sfirstfullyslidingdoorsystemforhigh-speedrailplatforms,achievingamajorbreakthroughinacriticaldomain.ThesystemcommencedsuccessfuloperationatShenzhenFutianHigh-SpeedRailwayStationinOctober2025.ThismilestonenotonlyopenedacompletelynewbusinessfrontierfortheCompanybutalsoestablishedapowerfulengineforitshigh-qualitygrowth.ThissystemintegratesAI-poweredmultimodalfusiontechnology,deliveringthreeworld-firstachievements:

thefirstplatformscreendoorsystemcompatiblewithalltrainmodels;thefirstcapableofdeployment

alongvaryingplatformedgeconfigurationsforadjacenthigh-speedrailtracks;andthefirsttoobtainCRCCcertificationforhigh-speedrailplatformdoors.ByharnessingAItechnologyandleveragingitsend-to-endin-housecapabilities—fromindependentR&Dandmanufacturingtoservicedelivery—theCompanyeffectivelyaddresseslong-standingindustrychallengesrelatedtocompatibilityandprecisealignmentofexistinghigh-speedrailplatformdoors.Itprovidescustomerswithsmarter,moreefficient,energy-saving,environmentallyfriendly,andsaferrailtransitequipment,alongwithcomprehensivelifecyclesystemsolutions.TheCompany'sindependentlydevelopedCBMSintelligentoperationandmaintenancesystem(includingbothwebandmobileapplications)hasbeenfullydeployedinMTRCorporation'sProject1254inHongKongandisstablyoperatinginapubliccloudenvironment,receivingpositivefeedbackonbothsystemreliabilityanduserexperience.ThroughAI-driventechnologicalinnovation,theCompanyhasreachedanewheightinitsinnovationcapabilityandisnowleadingtheglobalraceinthissector.Focusingoncriticalreliabilitybottlenecksduringproductoperation,theCompanysuccessfullyovercamemultiplecoretechnicalchallengesintheindustry,includingvoltagedropinsafetycircuits,connectordurability,andswitchcontactstability.Throughin-depthanalysisandvalidationofrepresentativeissues,theCompanyhasdevelopedreusablestandardizedtechnicalsolutionsandsystematicallyintegratedthemintotheR&Dandmanufacturingprocessesofnewprojects—markingastrategicleapfrom"solvingindividualcases"to"buildingasystematicframework."Thisadvancementhassignificantlyenhancedproductreliabilityandoperationalstability,furtherstrengtheningtheCompany'stechnologicalmoatinthefieldofintelligentplatformscreendoorsforrailtransit,andprovidingasolidfoundationtoconsistentlymeetthedemandingrequirementsofhigh-safety,high-availabilityapplicationscenarios.

Inthefieldofretrofittingexistingrailtransitplatformscreendoorsystemsandsafetycontrol,theCompanyhassuccessfullydevelopedrapiditerationandintegrationsolutionsforlegacysystemsfromothermanufacturersonolderlines.ThedevelopmentofaSIL4-certifiedplatformscreendoorcontrolsystemhasachievedabreakthrough,layingasolidtechnicalfoundationforretrofittingbothdomesticandinternationalrailtransitlines.TheCompanyhasbeendeeplyinvolvedintheformulationofnationalandindustrystandards.Itservedastheleadeditorforthefirstnationalstandardintheurbanrailtransitplatformscreendoorsector—"PlatformScreenDoorSystemsforUrbanRailTransit"(GB/T46749-2025)—andthefirstindustrystandard—"PlatformScreenDoorsforUrbanRailTransit"(CJ/T236-2022).Italsoparticipatedindrafting"TechnicalSpecificationforPlatformScreenDoorSystemsofUrbanRailTransit,""TechnicalGuidelinesforSmartStationConstructioninRailTransit,""TechnicalSpecificationforIntelligentForeignObjectDetectionSystemsBetweenPlatformScreenDoorsandTrainDoorsinUrbanRailTransit,""AcceptanceSpecificationforFullyAutomatedOperationSystemsinUrbanRailTransit,"and"TechnicalSpecificationforPlatformDoorSystemsofHigh-SpeedRailways."Throughthesestandardizationefforts,theCompanyhasfurtherconsolidateditsleadingpositionintheindustry,promotedstandardizedandregulateddevelopmentoftherailtransitplatformscreendoorsector,andprovidedChinesetechnicalstandardstosupporttechnologyadaptationforprojectsalongthe"BeltandRoad"routes.

TheCompanyadherestosustainedinvestmentinR&Dandinnovation.Asofnow,theCompanyholds315patents(including70inventionpatents)foritsintelligenturbanrailtransitplatformscreendoorsystemsinChinaandoverseas,22internationalPCTpatents,and15softwarecopyrights,formingacoretechnologyclusterandacomprehensiveintellectualpropertysystemwithfullindependentownership.

2.DeepeningOverseasMarketPenetrationandAchievingDualImprovementinScaleandQualityofGlobalLayout

Formanyyears,theCompanyhascontinuouslyexpandedintooverseasrailtransitmarkets,establishingamarketdevelopmentpatternthatfostersmutualreinforcementbetweendomesticandinternationaldualcirculation.Duringthereportingperiod,theCompanyachievedhistoricbreakthroughsinbothorderacquisitionandprojectexecutionacrossdomesticandoverseasmarkets.Inthedomesticmarket,theCompanyfocusedoncoreurbanagglomerations—includingtheGuangdong-HongKong-MacaoGreaterBayArea,theYangtzeRiverDelta,andtheBeijing-Tianjin-Hebeiregion—aswellaskeycitiesincentralandwesternChina,activelysupportingthenetworkeddevelopmentofurbanrailtransitsystems.Itsuccessfullydeliveredsevenmajordomesticprojectstohighstandards,includingDongguanMetroLine1andShenzhenMetroLine16PhaseII.Internationally,itcompletedthelandmarkMumbaiMetroLine3projectinIndia,achievingcommercialoperationforatotalofeightprojectsworldwide—fourdomesticallyandfouroverseas.Amongthese,theopeningofDongguanMetroLine1propelledtheGreaterBayAreaintoaneweraofgrid-basedrailtransitoperations;ShenzhenMetroLine8PhaseIIIrealized"subwayconnectivityineverydistrict"acrossShenzhen;andthenewlyopenedsectionofNanningMetroLine4markedthefirst-evermetroserviceinYongningDistrict.

Meanwhile,MumbaiMetroLine3—thefirstfullyundergroundmetrolineinIndia—hasfundamentallytransformedlocalpublictransportationpatterns,demonstratingtheCompany'sstrongcapabilityinhigh-qualityprojectdelivery.Intermsofmarketexpansion,in2025theCompanysuccessfullywonbidsforkeydomesticprojectssuchasShenzhenMetroLine13PhaseIIandShijiazhuangMetroLine4PhaseI,aswellastheAlmatyMetroLine1projectinKazakhstan.ItsorderbacklogreachedRMB2,301,044,700,withnewlysignedoverseasordersaccountingfor46.46%oftotalordersinthisbusinesssegment.TheCompanyhasfurtherdeepeneditspresenceinSoutheastAsia,CentralAsia,andSouthAsia,whilealsoexpandingitsreachintoemergingmarketsinEuropeandSouthAmerica,writinganewchapterinitsglobalmarketdevelopment.Bycloselyaligningwiththedevelopmentstatusofoverseasrailtransitmarkets,theCompanyprovidescustomizedtechnicalsolutionsandproductservices,establishingitselfasaleadingbenchmarkfortheinternationalizationofChina'srailtransitequipmenttechnology.

3.EnhancingIntegratedTechnicalServiceCapabilitiesandContinuouslyRefiningFull-ChainIndustrialLayout

TheCompanyisacceleratingitstransformationfromarailtransitplatformscreendoorsystemequipmentmanufacturertoafull-industry-chainserviceproviderintegrating"equipmentmanufacturing+integratedtechnicalservices."Duringthereportingperiod,theCompanysecuredoverseasprojectsincludinglong-termmaintenanceandservicingcontractsforplatformscreendoorsystemsinHongKong.Notably,the30-yearlong-termmaintenancecontractforhalf-heightsafetydoorsonSingapore'sJurongRegionLineandthe6-yearmaintenancecontractforHongKong'sEastRailLinemarksignificant

breakthroughsintheCompany'safter-salesservicecapabilitiesintherailtransitplatformscreendoorsector,usheringinanewchapterforintegratedtechnicalserviceofferingsintheindustry.Intheareaoftechnicalretrofitsforrailtransitplatformscreendoorsystems,theCompanyhasconsistentlyremainedattheforefrontoftheindustry.In2025,leveragingitsproprietary"plug-and-play"technology,theCompanywonthecontracttoinstallhalf-heightdoorsonHongKong'sEastRailLineandcompletedtheprojectsixmonthsaheadofschedule,earningthe"OutstandingCollaborationAward"fromMTRCorporationLimited.Thisprojecthasbecomeabenchmarkcaseexemplifyingtheintegrationofadvancedtechnologyandhigh-qualityserviceintheindustry.

TheCompanyhasestablishedafull-industry-chainservicesystemcovering"R&D–manufacturing–installation–maintenance,"successfullyupgradingitsbusinessmodelfromproduct-onlydeliverytodualoutputof"products+services,"providingstrongsupportforglobalmarketexpansion.Intermsofindustriallayout,theCompanycloselyalignswithoverseasmarketdemandsandhasfurtheroptimizeditsglobaloperationsandmaintenancecenternetworkbyestablishingamaintenancecenterinHongKong,significantlyenhancingserviceefficiencyforinternationalclients.Domestically,theWuhanproductionbasecommencedsmoothoperationsduringthereportingperiod.

Forthereportingperiod,theCompany'srailtransitplatformscreendoorbusinessgeneratedrevenueofRMB596,770,500,ofwhichintegratedtechnicalservicerevenueamountedtoRMB87,850,600,accountingfor

14.72%.Newlysignedordersforintegratedtechnicalservicesincreasedby32.32%comparedtothesameperiodoftheprioryear.

4.DeepeningInternationalCooperationandStrengtheningtheIndustrialEcosysteminOverseasMarkets

Usingtechnicalexchangeasabridgeandwin-wincollaborationasthecoreprinciple,theCompanyhascontinuouslydeepenedindustryengagementandinternationalcooperationbothdomesticallyandoverseas.In2025,itconductedmorethan20externaltechnicalexchangeswithinternationallyrenownedenterprisesandinstitutions—includingAlstomheadquarters(France),LandTransportAuthority(LTA)headquarters(Singapore),andEgypt'sNationalAuthorityforTunnels—aswellasleadingdomesticentitiessuchasShanghaiShentongMetroandGuangzhouMetro—significantlyenhancingitsglobalbrandinfluenceandindustryrecognition.Initsinternationalcollaborations,theCompanyhasactivelyintegratedintotheindustrialecosystemoftheBeltandRoadInitiative.ItsignedaMemorandumofUnderstanding(MoU)on"LocalizationofPlatformScreenDoorSystems"withEgypt'sNationalAuthorityforTunnels,promotinglocalizeddeploymentandapplicationofplatformscreendoortechnologyintheregion.Additionally,theCompanyjointlyestablishedthe"RailTransitConstructionandDevelopmentLaboratory"withHoChiMinhCityUniversityofTransport.ThislaboratoryservesasashowcaseforChina'srailtransittechnologyexports,supportinglocaltalentdevelopmentwhileachievingdeepintegrationoftechnologyandindustry,therebyinjectingChineseexpertiseintotheadvancementofoverseasrailtransitmarkets.

(II)IntelligentCurtainWallSystemsandNewMaterials

1.FocusingonaHigh-EndPremiumStrategyandBuildingBrandFoundationthroughBenchmarkProjects

TheCompanyadherestoaninnovation-drivenapproachtodevelopnew-qualityproductiveforces,focusingonahigh-endpremiumstrategyandcounteringtheindustry's"involutionary"competitionbydeliveringhigh-qualityproductsandsuperiorservicestoclients.Itpreciselytargetsthehigh-endcurtainwallmarketsbothdomesticallyandinternationally,deepensengagementwithpremiumclientgroupsandkey

regions,andsecuresmajorbenchmarkprojects,providingclientswithend-to-end,one-stopintegratedcurtainwallsolutions.Thisconsistentdeliveryofhigh-qualityprojectsreinforcesitscorecompetitiveadvantage.Duringthereportingperiod,theCompanywonbidsforaseriesofhigh-qualitybenchmarkprojects,includingtheMedicalSchoolofTheChineseUniversityofHongKong,Shenzhen;PhaseI(EmergencyComprehensiveBuilding)oftheShenzhenPeople'sHospitalExpansionandReconstructionProject;ShenzhenGuoxingCoreTower;ZhuhaiYibos'R&D,Operations,andIntelligentManufacturingHeadquarters;JDGroupShanghaiHeadquartersT1;andthepodiumbuildingofChinaMerchantsShekouTowerinShenzhen—furtherdemonstratingitsstrongcompetitivenessinthehigh-endmarket.In2025,theCompany'sintelligentcurtainwallandnewmaterialsbusinessgeneratedrevenueofRMB2,569,944,700,withanorderbacklogatyear-endamountingtoRMB4,309,241,600,whichis1.68timesthesegment's2025revenue.Therobustorderpipelineprovidessolidsupportforsustainedandstablebusinessgrowth.

Throughexceptionalengineeringqualityandprofessionalservice,theCompanyhasearnedwidespreadrecognitionandhighpraisefromclients.Duringthereportingperiod,thecurtainwallprojectsforShenzhenChinaElectronicsTowerandQianhaiInformationHubTowerinShenzhenreceivedthe"Excellent"ratingintheGuangdongProvincialEvaluationofBuildingDecorationEngineeringQuality.QianhaiFinancialHoldingsTowerinShenzhenwasrecognizedamongthe"Top10InnovativeProjects"inthecurtainwallindustry.ProjectsincludingTencentDigitalBuilding,ByteDanceHouhaiCenter,andKingdeeCloudTowerinShenzhenweredesignatedas"ShenzhenStandard"DemonstrationProjects.Additionally,ShenzhenBayCulturalPlaza,TheSeventhAffiliatedHospitalofSunYat-senUniversity(Shenzhen),FutianGreaterBaySmartPlaza,ChinaMerchantsShekouTower,OPPOBinhaiBayIntelligentManufacturingIndustrialPark,andAntGroupGlobalHeadquartersPhaseIIallreceivedhighcommendationsfromtheirrespectiveclients.Thesuccessful,high-qualitydeliveryofthesebenchmarkprojectsandthestrongmarketrecognitiontheyhavegarneredfullyreflecttheCompany'stechnicalexcellenceandbrandinfluenceinthecurtainwallengineeringsector,layingasolidreputationfoundationforcontinuedhigh-qualitybusinessdevelopment.

2.DeepeningtheGlobalizationStrategyandBuildingNewGrowthEnginesOverseas

FacedwithdualpressuresfromslowingglobaleconomicgrowthandintensifyingcompetitioninChina'sdomesticcurtainwallmarket,theCompanyhasfirmlyadvanceditsinternationaltransformationstrategy.Throughagloballydiversifiedlayout,iteffectivelyhedgesagainstrisksassociatedwithrelianceonasinglemarket.In2025,overseasbusinessachievedsimultaneousgrowthinbothvolumeandquality,withnewlysignedoverseasordersincreasingby48.67%year-on-year.Breakthroughprogresswasmadeinkeyregions—includingAustralia,theMiddleEast,SouthAsia,andSouthAmerica—establishingthemascriticaldriversfortheCompany'shigh-qualityindustrialdevelopment.

Australia,asacorestrategicmarket,continuestobedeeplycultivated,resultinginamatureoperationalframeworkcenteredon"twohubs—MelbourneandSydney—withmulti-pointradiatingcoverage."TheCompanyhasestablishedlong-termstrategicpartnershipswithleadinglocalcontractorsandtop-tierdistributorsandhassuccessfullypassedCodeMarkcertificationaudits,furthersolidifyingitsbrandpositionintheregion.Duringthereportingperiod,theCompanysecuredkeyprojectsinSydneyandBrisbane,fullyimplementinglocalizedoperationsbyestablishinglocalprojectmanagementanddesignteams.Thisapproachenablesefficientalignmentwithlocaltechnicalstandardsandmarketregulations,significantlyenhancingprojectexecutionefficiencyandservicequality.

EmergingmarketsintheMiddleEast,SouthAsia,andSouthAmericahaveseenacceleratedbreakthroughsacrossmultiplefronts.IntheMiddleEast,theCompanyachievedthe"FangdaSpeed"—establishingalocalteam,securingprojects,andcommencingimplementationallwithinthesameyear.ItforgeddeepcollaborationswithrenownedDubai-basedcontractorsandleadingdevelopers,winningthecurtainwallcontractforthelandmarkOneRiverPointprojectinDubaiandsigninganaluminumpanelorderforthewind-responsivefa?adeprojectwithDPWorld(DubaiPortsWorld).InSouthAsia,Bangladeshservesasthefocalpoint,withtheCompanysuccessivelywinningbidsformultiplepremiumcurtainwallprojects,includingForumTower,Pinnacle,andMiraiofNirman.InSouthAmerica,theCompanysuccessfullydeliveredthecurtainwallprojectforBogotáMetroStationinColombia,whereitsultra-largeterracottapanelunitizedcurtainwalltechnologyreceivedhighpraisefromtheclient.Leveragingsuperiorproductquality,comprehensiveservicecapabilities,rapidadaptabilitytolocalregulatoryrequirements,andcustomizeddesignexpertise,theCompanypreciselymeetsthedifferentiateddemandsofhigh-endprojects,earningstrongrecognitionfromclientsandlayingasolidfoundationforfurtherexpansionintoemergingmarkets.

Lookingahead,theCompanywillcontinuetodeepenitspresenceinoverseasmarkets,prioritizebreakthroughsinthehigh-endMiddleEasternmarket,steadilyexpanditsbusinessfootprintinSoutheastAsiaandSouthAmerica,andcontinuouslyincreasetheshareofoverseasrevenue.ThisstrategicfocusaimstodriveleapfroggrowthininternationaloperationsandestablishChinaFangdaGroupCo.,Ltd.asagloballeaderinintelligentcurtainwallsystems.

3.EmpoweringTechnologicalInnovationwithArtificialIntelligence(AI)toStrengthenCoreIndustrialAdvantages

TheCompanyconsistentlyregardsintelligentmanufacturingandartificialintelligence(AI)technologiesasthecoreenginesofindustrialupgrading,integratingtechnologicalinnovationacrosskeyareasincludinggreenenergyefficiency,prefabricatedconstruction,newmaterialapplications,andcomplexcurtainwallsystems.ThisapproachhasenabledtheCompanytoestablishend-to-endbreakthroughcapabilitiesspanningR&D,productiteration,andengineeringimplementation.

①DeepAIIntegrationAcrosstheEntireIndustrialChain

TheCompanyhascomprehensivelyadvanceditsdigitalandintelligentmanufacturingstrategy.Itsnineself-developedinformationmanagementsystems—includingtheOAofficesystem,PMSprojectmanagementsystem,andMESproductionmanagementsystem—enableseamlessinformationexchangeandresourcesharingacrossdailyoperationsandtheentirecurtainwalllifecycle.

Inengineeringpractice,theCompanyhasdeeplyintegratedfull-processBIMapplication,3Dscanning,andreversemodelingtoenhancethepracticalapplicationofdigitaltwintechnology.BycombiningaBIMparametricdesignplatformwithAIintelligentalgorithms,ithasdevelopedanintegratedsolutionforintelligentcurtainwallconstructiondrawingdesignandprecisematerialcutting.Additionally,leveraginglightweightcomponentmodelsandQRcodetraceabilitytechnology,theCompanyhasestablishedacomprehensivedigitalcurtainwallconstructionsystemthatachievesend-to-enddataconnectivityacrossdesign,fabrication,andconstruction.Thissystemhasbeensuccessfullyappliedtomultiplelandmarkprojectsfeaturingsupertallstructuresandcomplexgeometries,includingShenzhenBayCulturalPlazaandFutianSmartPlaza.

Inproduction,theCompanypartneredwithHuaweiCloudtoupgradeitsmanufacturingbase'sMESsystem,integratingcoremodulessuchasproductionplanningandexecutioncontrol.ByfusingAIintelligentalgorithms,itbuiltanautomatedaluminumpanelunfoldingmodellinkedwiththeMESsystem,establishingadigitalcontrolcenterfortheentirealuminumpanelprocessingworkflow.Thishasrealizeddigitalprocessupgradesandrefinedclosed-loopmanagementofthefabricationprocess.Furthermore,theCompanyhasembeddedAItechnologyintocoreprocesseslikeproductionschedulingandqualityinspection.Bycombiningdeeplearningalgorithmswithhigh-precisionvisualrecognition,itisactivelyexploringscenario-basedapplicationsforaluminumpanelsurfacequalityinspection,effectivelyovercomingthelimitationsofmanualinspectionandsignificantlyenhancingproductionefficiencyandqualitycontrol.

Inthefieldofintelligentoperationandmaintenance,theCompanyhasinitiatedtechnicalcollaborationswithmultipledroneandroboticscompanies,achievingsuccessfulcommercialapplicationattheShenzhenGreaterBayAreaFashionHeadquartersCenterproject.

Moreover,theCompanyhasindependentlydevelopedandlaunchedseveralprofessionalcurtainwallAIagentscoveringdiverseofficescenariossuchasintelligentimageprocessing,copywritingassistance,engineeringdocumentretrieval,andfull-cycledesignmanagement.TheseAIagentsempowerend-to-endefficiencygains,comprehensivelydrivingthedigitalandintelligenttransformationofcurtainwallengineeringdesignandconstructionmethodologies.

②AcceleratingtheMarketTransformationofInnovationAchievements

TheCompanyactivelyrespondstonationalpoliciesonenergyconservationandcarbonreduction,focusingonkeyareassuchasgreenenergyefficiency,prefabricatedconstruction,high-performancenewmaterials,andpremiumcurtainwallsystems.LeveragingtheplatformadvantagesoftheGuangdongProvincialPrefabricatedBuildingCurtainWallEngineeringTechnologyResearchCenter,itcontinuouslyintensifiestechnologicalR&Dandproductinnovation,significantlyacceleratingthecommercializationofscientificandtechnologicalachievementsandbreakthroughsincoretechnologiestopreciselymeetthediversified,high-qualityapplicationrequirementsofglobalclients.

Inproductinnovation,theCompanyprioritizesthedevelopmentofnext-generationcurtainwallsystems,includingthenovelshadingandenergy-savingglasslight-wellcurtainwallsystem,AI-intelligentweather-responsivemotorizedcasementwindowsystem,andultra-high-weatherabilitytitaniumhoneycombpanelsystem.Amongthese,theAI-intelligentweather-responsivemotorizedcasementwindowsystem—integratingAIalgorithmsandsmartsensingtechnology—hasbeensuccessfullyimplementedattheShenzhenBayCoastalBusinessCenterproject,furtherexpandingtheapplicationboundariesofintelligentcurtainwalltechnology.TheCompany'sself-developedproductseries—includingFangdaSystemLouvers,FangdaChannelEmbedments,andFangdaSystemWindows—havebeenwidelyappliedinlandmarkbuildingssuchasGuangzhouXiangjiangNo.1andShenzhenMedicalAcademy,empoweringpremiumarchitecturalqualitythroughtechnologicalinnovation.

RelyingonChina'sfirstintelligentfullyautomatedaluminumpanelproductionlinebuiltindependentlybytheCompany,amajorbreakthroughin"MadeinChina"forintelligentaluminumpanelmanufacturinghasbeenachieved.Newproducts,includingultra-high-precisionprefabricateddouble-curvedaluminumpanelsandhigh-performance,ultra-weather-resistantcopper-finishbrushedaluminumpanels,haveenteredlarge-scalemassproduction.Notably,thecopper-finishbrushedaluminumpanels—apioneeringachievement—havebeen

successfullyappliedtotheXiong'anHeadquartersProjectofChinaMineralResourcesGroup.Additionally,theCompany'sself-developedintegratedcorner-formingtechnologyforstone-effectroller-coatedaluminumpanelswasimplementedatscaleforthefirsttimeintheWuhanBusinessCollegeproject,successfullyachievingdomesticsubstitutionforimportedU.S.WhiteGranitematerial,therebysignificantlyenhancingsupplychainautonomy,controllability,andcorecompetitiveness.

Ininternationalmarketexpansion,theCompanycontinuouslylaunchescustomizedproductstailoredtoregionalmarketdemands.IntheAustralianmarket,theCompanystrictlyadherestotheAustralianStandardASNZS4284-2008"Testingofbuildingfacades,"independentlydevelopinganextra-largeseismic-resistantGRCgreenenergy-efficientunitizedcurtainwallsystem.Ithasalsocompletedcriticalperformancevalidations—includingCWCTsoft-bodyimpactandhailresistancetests—forterracottapanels,providingrobusttechnicalassuranceforthesafeandreliableapplicationofcurtainwallsystems.ThesetechnologieshavealreadybeensuccessfullydeployedinprojectsinMelbourneandBallarat.TheCompanyhasdevelopedaseriesofproductscompliantwithAustralianstandards,includingtheFD-WW115x70Bgreenenergy-efficientwindow-wallsystem,FD-CW145x90Agreenenergy-efficientunitizedcurtainwallsystem,high-performancedouble-layerrain-resistantventilationlouvers,andgreenenergy-efficientslidingdoors.TheseproductshavebeenappliedinprojectsinMelbourne,Australia,andBangladesh,continuouslyenhancingbrandinfluenceandmarketrecognition.

IntheSouthAmericanmarket,targetingrailtransitandpublicbuildingscenarios,theCompanyhasspecificallydevelopeddistinctiveproductssuchasextra-largeenergy-efficientwindow-wallsystems,extra-largeterracottaunitizedcurtainwalls,andceramic-effectaluminumunitizedcurtainwalls.ItefficientlydeliveredthecurtainwallprojectforBogotáMetroStationinColombia,leveragingmaturetechnicalsolutionstoenterthehigh-endcurtainwallmarketinSouthAmerica.

IntheMiddleEasternmarket,theCompanyhaspartneredwithalocalDubai-basedcurtainwallsystemsfirmandtheinternationallyrenownedconsultancyInhabittoco-developcustomizedsolutions—includinganovelenergy-efficientframingsystem,sand-resistantlouversystem,andenergy-efficientunitizedcurtainwallskylightsystem—tailoredtoregionalclimaticconditionsandproject-specificrequirements.Theseinnovationscomprehensivelyaddressthechallengesofhightemperaturesandsandstorms,establishingasolidfoundationformarketexpansionintheMiddleEastthroughlocalizedcollaborativeinnovation.

③SynergisticIndustry-Academia-ResearchCollaboration

TheCompanysteadfastlyadvancesdeepintegrationofindustry,academia,andresearch,activelybuildingacollaborativeinnovationecosystemlinking"universities–enterprises–industries."InR&Dtalentdevelopment,theCompanyregularlyorganizesinnovationtrainingsessionsandtechnicalexchangeactivitiesforemployees,invitingindustryexpertstodeliverlecturesandprovideguidance—broadeningstaffhorizonsandenhancinginnovativecapabilities.TheCompanyhasestablishedtalentcultivationcooperationframeworkswithmultipleuniversities,includingJinanUniversityandGuangdongPolytechnicCollege,tosecureasteadypipelineofR&Dpersonnel.Duringthereportingperiod,theCompanysuccessfullyobtainedapprovaltoestablishthe"ShenzhenPostdoctoralInnovationPracticeBase,"creatingapowerfulhubforattractingandnurturinghigh-endscientificresearchtalentanddrivingcurtainwalltechnologiestowardintelligentandgreendevelopment.Leveragingthisplatform,theCompanycontinuesto

intensifyR&Deffortsoncorekeytechnologies.Itstwoindependentlydevelopedinnovations—the"OffsetUpper-LowerCurtainWallClosureSystem"andthe"Extra-LargeHigh-VanadiumCable-SupportedCurtainWallTechnology"—earnedtheCompanyinclusioninthe24th"ShenzhenEnterpriseInnovation(China)Records,"highlightingitssystematicandleading-edgetechnicalcapabilitiesincomplexcurtainwallengineering.

TheCompanyalsoactivelycontributesitsaccumulatedtechnicalexpertisebacktothebroaderindustry.Itssubsidiary,FangdaYunzhu,participatedindraftingtheindustrystandard"StandardTestMethodsforBuildingCurtainWallEngineering."Thiseffortnotonlyadvancestheupgradingofindustry-widequalityinspectionsystemsbutalsocontinuouslyreinforcestheCompany'sinfluenceandauthorityinindustrystandardization.

4.EnhancingtheGanzhouBasetoStrengthenFoundationsforIntelligentandGreenDevelopment

In2025,theGanzhouintelligentmanufacturingbasefocusedcomprehensivelyonmarketexpansion,technologicalinnovation,capacityupgrading,managementenhancement,andgreenmanufacturing—solidifyingthefoundationforhigh-qualitydevelopmentandcontinuouslystrengtheningitsindustrialcarryingcapacityandcorecompetitiveness.

Intermsofproductioncapacity,thebasehascommissionedadouble-curvedpanelproductionline,ahoneycombpanelprocessingline,andadedicatedplatformscreendoorproductionline.Bothdouble-curvedaluminumpanelsandhoneycombpanelsnowachievestablelarge-scaleproductionwithfullcoverageacrossallpaneltypes,stronglysupportingtheCompany'scompetitiveedgeinthehigh-endcomplex-shapedaluminumpanelmarketandlayingasolidcapacityfoundationforsustainedcorebusinessgrowth.

Regardingdigitalandintelligentempowerment,thenewMESplatformhasbeenfullylaunched,enablingdynamicreal-timemonitoringoftheentireproductionprocessandprecisecostaccounting,significantlyimprovingmanufacturingoperationalefficiency.TheCRMsystemhasbeensuccessfullydeployedandputintouse,continuouslyenhancingsalesmanagementanddata-drivencapabilities.Moreover,theindustry'sfirstfullyautomatedaluminumsingle-panelproductionlineinChinahasachievedlarge-scalemassproduction,simultaneouslyelevatingbothproductionefficiencyandproductquality.

Ongreenmanufacturingandcertificationsystems,theGanzhoufactoryhasbeenawardedmultiplerecognitions:High-TechEnterprise,"Specialized,Sophisticated,Distinctive,andInnovative"SME,JiangxiProvinceDigitalTransformationL6-LevelEnterprise,andPerformanceGradeBEnterpriseamongkeyatmospheric-emission-intensivesectorsinJiangxiProvince.Notably,itistheonlyenterpriseinZhanggongDistrict,GanzhouCity,JiangxiProvince,exemptedfrommandatoryproductionhaltsoroutputrestrictionsduringheavypollutionweatheremergencyresponses—providingrobustassuranceforuninterruptedproductionandefficientorderfulfillment.Additionally,thebasehassuccessfullyobtainedAlstomsupplierqualificationandISO3834-2internationalweldingsystemcertification.ItcontinuestomaintainrigorouscompliancewithISO9001,ISO45001,ISO14001,andLevel-3WorkSafetyStandardizationmanagementsystems,empoweringsteadyindustrialgrowththroughhigh-standardgovernance.

(3)Newenergyindustry

NewenergyisoneoftheCompany'skeybusinesssegments.TheCompanyactivelyrespondstoChina'snational"DualCarbon"strategy,positioningnewenergyasacriticalengineforgreentransformationandsustainabledevelopment.Beyondoperatingitsowndistributedphotovoltaic(PV)powerstations,theCompanyfocusesondevelopingBuilding-IntegratedPhotovoltaics(BIPV)solutionsforclients.AsoneofChina's

earliestenterprisesengagedinBIPVtechnologyR&Dandapplication,theCompanyhasestablishedafull-industry-chainservicesystemcoveringdesign,manufacturing,integration,andoperation,accumulatingsignificanttechnologicalleadershipinthegreenenergysector.Duringthereportingperiod,theCompanysuccessfullydeliveredBIPVdistributedpowerstationsforprojectsincludingShenzhenLuhuCenterandGuangzhouKuGouMusicBuilding.Thephotovoltaicpowerstationscoveranareaofapproximately1,400squaremeters,withanestimatedaverageannualpowergenerationofabout230,000kWh—equivalenttosaving92tonsofstandardcoalandreducingCO?emissionsby230tonsannually—offeringareplicabletechnicalpathwaytowardurbanbuildingcarbonneutrality.

TheCompany'sself-ownedPVpowerstationprojectsinPingxiangandNanchang(JiangxiIsuzuAutomobileparkinglot),JiangxiProvince,andSongshanLakeBaseinDongguan,GuangdongProvince,continuetooperatereliably,generatingstableprofitsandcashflow.Duringthereportingperiod,theCompanyfullyutilizedtherooftopspaceoftheGanzhoufactorytoconstructadistributedPVpowerstationwithaninstalledcapacityof3,200kWp,expectedtogenerateapproximately3.52millionkWhannually.Operatingunderthe"self-generationforself-use,surpluspowertogrid"model,over80%ofthegeneratedelectricityisconsumedon-siteduringpeak-loadperiods,reducingexternalelectricitypurchasesbyabout2.82millionkWhperyear—savingapproximately1,056tonsofstandardcoalandcuttingCO?emissionsbyroughly2,800tonsannually.AttheShanghaifactory,aPVpowerstationwithaninstalledcapacityof806.4kWpwasbuiltonthefacilityrooftops,projectedtogenerate887,000kWhannuallyandreduceCO?emissionsbyapproximately696tonseachyear.

Lookingahead,theCompanywillcontinuedeepeningitsnewenergyindustriallayout,leveragingtechnologicalinnovationtoexpandPVapplicationscenariosanddrivingdeeperintegrationofgreenenergywitharchitectureandmanufacturing—contributingFangda'sstrengthtowardachievingChina's"DualCarbon"goals.

(IV)CommercialManagementandServices

TheCompany'scommercialmanagementandpropertyservicesareprimarilylocatedinShenzhenandNanchang.LeveragingthegeographicaladvantagesoftheGuangdong-HongKong-MacaoGreaterBayAreaandthepolicydividendsfromJiangxiProvince's"StrongProvincialCapital"strategy,theCompanycontinuouslyenhancesassetoperationefficiencyandservicequalitythroughadual-drivenapproachof"precisepositioning+digitalempowerment."IntheShenzhenmarket,theCompanyfullycapitalizesonthecity'sconcentrationofinnovationresourcesandheadquarterseconomyadvantages.Throughinnovativeleasingstrategiesandoperationalupgrades,itconsistentlymaintainsoccupancyandleasingratesaboveindustryaverages.Bytheendofthereportingperiod,theFangdaTownprojectachievedasalesdecontaminationrateof98.84%andaself-ownedpropertyoccupancyrateof71.34%.TheFangdaTechnologyBuildinghadanoccupancyrateof82.21%.TheNanchangFangdaCenterprojectissituatedinthecoreareaofHonggutanCBD,benefitingfromsteadilyimprovingmarketexpectations.Asoftheendofthereportingperiod,itssalesabsorptionratestoodat46.83%,andtheoccupancyrateofself-heldpropertiesreached88.87%.

TheCompanyiscomprehensivelyadvancingdeepintegrationof"AI+PropertyManagement,"reshapingserviceexperiencesanddrivingoperationalefficiencythroughdigitalmeans.Inparkingmanagement,theCompanycompletedtheintelligentupgradeoftheFangdaBuildingparkinglotandoptimizeditsonlinepaymentsystem,improvingserviceefficiencybyover60%.Inenergyconsumptionmanagement,AIalgorithms

wereintroducedtooptimizetheoperatingstrategyofthecentralair-conditioningsystem,achievingacomprehensiveenergy-savingrateofover24%.Thepublic-arealightingsystemnowenablesprecisezonalandtime-basedcontrol,effectivelyreducingoperationalenergyconsumptionbyapproximately20%.Regardingcommercialfacilityoperations,theCompanyhascompletedtheintelligentretrofitofelevatoradvertisingdisplays,enablingremotecentralizedcontentmanagementandultra-fastdeployment—providinganefficientplatformforprecision-targetedadvertising.Goingforward,theCompanywillcontinueenhancingpropertyoperationalefficiencyandcustomerserviceexperiencebyleveragingintegrateddigitalandintelligenttechnologies.

ThespecialplanningworkfortheCompany'sHenggangDakangUrbanRenewalProjectinShenzheniscurrentlyunderway.

1.Newlandreserveprojects

2.Totallandreserve

3.Mainproductiondevelopmentstatus

4.Mainprojectsales

r

City/regio

n

5.Mainprojectlease

6.First-leveldevelopmentofland

□Applicable?InapplicableFinancingsource

7.DevelopmentstrategyandoperationplaninnextyearThemaintasksfortheCompany'sfuturecommercialmanagementandservicebusinessaretoincreasetheoccupancyrateoftheShenzhenFangdaTownprojectandtocleartheremaininginventory,whilevigorouslypromotingthesalesoftheNanchangFangdaCenterproject.TheCompanyaimstocontinuouslyenhanceprojectleasing,operations,andservicelevels,deeplyadvancingdigitalizationinthepropertyservicesector,andactivelyexploringtheapplicationofnewtechnologieslikeartificialintelligenceinpropertymanagement.Atthesametime,theCompanywill,accordingtothelatestpolicies,integrateandoptimizeexistingresourcestosteadilyadvancetheapplicationandapprovalprocessfortheurbanrenewalprojectoftheShenzhenHenggangDakanproject.

8.Bankmortgageloanguaranteeprovidedforcommercialhousingpurchasers?Applicable□InapplicableInaccordancewithbusinesspractices,theCompany'scommercialmanagementandservicebusinessprovidesmortgageloanguaranteestopurchasersofcommercialhousing,withthetypeofguaranteebeingaphasedguarantee.Thetermoftheperiodicguaranteelastsfromtheeffectivenessofguaranteecontractstothecompletionofmortgageregistrationandtransferofhousingownershipcertificatestobanks.AsofDecember31,2025,theCompany'soutstandingamountfortheabove-mentionedphasedguaranteeswasRMB4,890,000.

9.JointInvestmentbyDirectors,SeniorManagement,andtheListedCompany(applicablewheretheinvestmententityincludesdirectorsorseniormanagementofthelistedcompany)

□Applicable?InapplicableII.CoreCompetitivenessAnalysis

(1)RailTransitPlatformScreenDoorEquipmentandSystems

1.TechnicalR&Dadvantage

ChinaFangdaGroupCo.,Ltd.adherestoindependentinnovation,wasthefirstinChinatobreakforeignmonopolies,andhasestablishedafullyindigenousintellectualproperty-basedtechnologysystemforrailtransitplatformscreendoors.Throughyearsofpracticalapplicationandcontinuousiteration,the

Company'stechnologicalR&Dadvantageshavebeenfurthersolidified.IthasbeenrecognizedbytheGuangdongProvincialDepartmentofScienceandTechnologyasan"GuangdongProvincialEngineeringTechnologyResearchCenter,"andmaintainsaprofessional,experienced,andinternationallyorientedtechnicalteam.TheCompanyhassuccessivelyreceivedhonorsincludingthe"GuangdongProvincialScienceandTechnologyAward"andthe"ShenzhenScienceandTechnologyProgressAward."TheCompanyservedastheleadeditorforChina'sfirstnationalstandard,"PlatformScreenDoorSystemsforUrbanRailTransit"(GB/T46749-2025),andthefirstindustrystandard,"PlatformScreenDoorsforUrbanRailTransit"(CJ/T236-2022).TheCompanysuccessfullydevelopedtheworld'sfirstAI-poweredfullyslidingplatformscreendoorsystem,overcomingcompatibilitychallengeswithexistinghigh-speedrailplatformsandachievingthreeworld-classbreakthroughs—pioneeringanewdevelopmentpathforhigh-speedrailplatformdoors.ThistechnologyhasbeensuccessfullyimplementedatShenzhenFutianHigh-SpeedRailwayStation,furtherreinforcingtheCompany'scomprehensiveleadershipinrailtransitequipment.FangdaZhiyuan(asubsidiaryofChinaFangdaGroupCo.,Ltd.)hasbeenhonoredasa"NationalIntellectualPropertyAdvantageEnterprise"anda"ShenzhenSpecialized,Sophisticated,Distinctive,andInnovativeEnterprise."ItsurbanrailtransitplatformscreendoorshavebeendesignatedbyChina'sMinistryofIndustryandInformationTechnologyasa"ManufacturingSingleChampionProduct."TheCompanyhasalsosetmultipleentriesinthe"ShenzhenEnterpriseInnovation(China)Records,"fullydemonstratingitsindustryleadership.

2.IndustrychainadvantageAsoneoftheearliestChineseenterprisestoenterthemetroplatformscreendoorsector,theCompanyoffersend-to-endintegratedcapabilitiesacrosstheentirevaluechain—includingR&Danddesign,equipmentmanufacturing,engineeringservices,maintenance,andsparepartssupply.Thisverticallyintegratedsynergyenablesresourcesharingandefficientcoordinationacrossallbusinesssegments,allowingtheCompanytopreciselymeetdiversemarketdemandsforspecializedproductsandservices,effectivelyreduceproductionandmanagementcosts,andcontinuouslyenhanceprofitabilityandoverallcompetitiveness.

AsChina'surbanrailtransitnetworkcontinuestoexpand,metroplatformscreendoorsystemsareprogressivelyenteringtheirmaintenanceandservicecycles.TheCompanyhasproactivelypositioneditselfinintelligentoperationsandmaintenance(O&M),independentlydevelopinganintelligentmaintenancemanagementsystemthatprovidesreal-timestatisticalanalysisofequipmentperformanceatstationsanddeliverstimely,efficienttechnicalsupportthroughremoteguidancetoon-siteserviceteams.Inbusinessmodelinnovation,theCompanyhasachievedamajorbreakthrough:itsecuredSingapore'sJurongRegionLinesemi-highsafetydoor30-yearlong-termmaintenancecontractandHongKongEastRailLine's6-yearmaintenanceproject—markingitssuccessfultransformationfromanequipmentsuppliertoafull-lifecycle"product+service"provider.Currently,theCompany'sO&Mserviceteamsoperateinmorethan30citiesworldwide.Withcontinuouslyenhancedservicecapabilitiesandgrowingclientrecognition,technicalservicerevenueisexpectedtosteadilyincrease,injectingnewmomentumintotheCompany'shigh-qualitydevelopment.

3.BrandandMarketPositionAdvantages

Havingspecializedinplatformscreendoorsystemsforover20years,theCompanyhasearnedextensiveacclaimanddeeptrustfromclientsworldwidethankstotheoutstandingsafety,reliability,availability,

andmaintainabilityofitsproducts—solidifyingFangda'sstatusasanindustrybenchmarkbrand.Duringthereportingperiod,FangdaZhiyuansuccessfullypassedthere-evaluationforthenational"ManufacturingSingleChampion"designation,retaineditspositionamongthe"Top100ShenzhenIndustryLeaderEnterprises"formultipleconsecutiveyears,andwasincludedinthe"GreaterBayAreaCorporateInnovationPowerList."Ithasalsobeenawardedtitlessuchas"OutstandingEquipmentSupplier,""OutstandingContributor,"and"OutstandingMaintenanceServiceProvider"bymultiplemetrooperators.Inthefieldofrailtransitplatformscreendoorsystems,theCompanycollaborateswithinternationalfirmsincludingAlstom,Siemens,andLGonglobalprojects.AsapioneerinexportingChina'shigh-endrailtransitequipment,theCompanyleveragesdeeptechnicalexpertiseandexceptionalprojectexecutioncapabilitiestocontinuouslyexpanditsglobalfootprint.Bytheendof2025,Fangdaplatformscreendoorsystemshadbeendeployedinover40citiesworldwide,servingmorethan120railtransitlines.Duringthereportingperiod,theCompanysuccessfullycompletedtheretrofitprojectofsemi-highplatformdoorsonHongKong'sEastRailLineandreceivedthe"OutstandingCollaborationAward"fromMTRCorporation,furtherstrengtheningitsbrandreputationintheHongKongmarket.TheCompanyhasnowsecuredmultiplelarge-scaleprojectsinSingapore,Malaysia,HongKongSAR,Taipei,Thailand,India,Colombia,Greece,thePhilippines,Kazakhstan,andotherregions.ItsproductR&D,designcapabilities,on-timedelivery,andconsistentqualityhavegainedbroadrecognitionfrominternationalclients.ThisstrongbrandimageandmarketvisibilityprovideasolidfoundationfortheCompany'ssustainedcompetitiveadvantageandhealthygrowth.

4.AdvantagesofAdaptingtoMultinationalTechnicalStandardsInitsglobalstrategiclayout,theCompanyhasbuiltacomprehensive,multidimensionalstandardsdatabasecoveringEN(EuropeanNorms),BS(BritishStandards),NFPA130(U.S.StandardforFixedGuidewayTransitSystems),AAMA(AmericanArchitecturalManufacturersAssociationstandards),SingaporeBCA(BuildingandConstructionAuthority),Colombiantechnicalspecifications,andothers.Thisenablesaclosed-loopsolution—from"standardspre-research→productdevelopment→acceleratedcertification"—ensuringpreciselocalizationoftechnicalparameters.Ininternationalmarketexpansion,theCompanyhasestablishedstrategicpartnershipswithglobalEPCgiantssuchasAlstom,Siemens,andLGElectronics,formingasynergistic"market+technology"collaborationmodeltojointlyparticipateinglobalplatformscreendoorprojects.InthePhilippines'North–SouthCommuterRailway(NSCR)project,theCompany

partneredwithaJapanesefirmontechnicalcooperationtoco-developahighlyreliablescreendoorsystem.IntheAlmatyMetroLine1projectinKazakhstan,theCompany'splatformdoortechnicalproposalandproductcompliancestandardsreceivedhighclientapproval,andthedesigncontracthasbeensuccessfullydelivered.Thisglobalstandardsadaptationcapabilityhasbecomeacorecompetitiveadvantagein

internationalmarkets,providingarobusttechnicalpassportfor"MadeinChina"togoglobal.

5.OrganizationalstructureadvantageWithdecadesofdeepexpertiseinrailtransitplatformscreendoors,theCompanyhasestablishedahighlycoordinated,specializedorganizationalstructurespanningthefullproductlifecycle—"R&D–Design–Manufacturing–Testing–Installation–O&M."Topreciselyaddresstheindustrycharacteristicsoflongprojectexecutioncyclesandhighcustomizationrequirements,theCompanyhasassembleddedicatedcross-functionalteams:itsR&Dcentercanrapidlytackleuniquecustomertechnical

demands;itsdesignteampossessesextensiveexperienceinimplementingcomplexengineeringprojects;itslarge-scalemanufacturingbasesandstable,reliablesupplychainensurehigh-qualityproductdelivery;anditsprofessionaltestingequipmentandcomprehensivetestmethodologiesguaranteeproductperformancereliability.Inengineeringimplementation,theCompanyholdsClass-AProfessionalContractingQualificationforBuildingMechanical&ElectricalInstallation,enablingittoindependentlyundertakeinstallationtasks.InO&Mservices,itoperatesacentralizedOperations&MaintenanceCenterand,supportedbyitsglobalfootprint,hasestablishedmultipleregionalmaintenancecentersnearclientsitestodeliverfasterandmoreresponsivelocalizedsupport.Duringthereportingperiod,theCompanyfurtheroptimizedandupgradeditsorganizationalstructure.TheWuhanproductionbasecommencedoperations,strengtheningcapacitydeploymentanddeliverycapabilitiesinCentralChina.TheHongKongMaintenanceCenterwasofficiallyestablished,enhancingtheglobalO&Mnetworkandsignificantlyimprovingresponseefficiencyforoverseasclients.Leveragingthisincreasinglyrobustglobalservicearchitecture,theCompanysecureditsfirst30-yearlong-termmaintenancecontractforSingapore'sJurongRegionLinesemi-highsafetydoors—achievingastrategicleapfrom"productdelivery"to"full-lifecycleservice."ThismilestonefullyvalidatestheforesightandcompetitivenessoftheCompany'sorganizationalstructureandservicesystem.

(2)IntelligentCurtainWallSystemsandMaterials

1.TechnologicalInnovationAdvantagesChinaFangdaGroupCo.,Ltd.adherestoaninnovation-drivendevelopmentstrategy,deeplyintegratingartificialintelligence(AI)technologiestoempowerthetransformationandupgradingofthetraditionalcurtainwallindustry,continuouslyreinforcingitstechnologicalleadershipinthesector.Asoftheendofthereportingperiod,theCompanyhadcumulativelyobtained721patentsand31softwarecopyrights,participatedintheformulationof35nationalandindustrytechnicalspecificationsandstandards,andset20newrecordsrecognizedby"ChinaEnterpriseNewRecords,"establishingacomprehensiveinnovationsystemencompassingintellectualpropertyprotection,standarddevelopment,andtechnologycommercialization.

TheCompanyhasbuiltarobustindustry-academia-researchcollaborativeinnovationplatform,becomingthefirstintheindustrytoestablishapostdoctoralworkstationandaprovincial-levelengineeringtechnologyresearchcenter.In2025,itwasapprovedtosetupthe"ShenzhenPostdoctoralInnovationPracticeBase."Sixofitssubsidiariesarecertifiedasnationalhigh-techenterprises(includingfiverecognizedas"Specialized,Sophisticated,Distinctive,andInnovative"enterprises),formingapowerfulinstitutionalfoundationthatsupportshigh-qualitydevelopment.Inintelligentmanufacturing,theCompanyhasdeepeneditsstrategiccollaborationwithHuaweiCloudandbuiltanindustry-leadingfullyautomatedproductionline,leveragingdigitalizationandintelligencetosignificantlyelevateitsmanufacturingcapabilities.

Productinnovationcloselyalignswithstrategicdirectionssuchasgreenlow-carbondevelopmentandprefabricatedconstruction.TheCompany'sself-developedseriesofnewproductshavebeenappliedinnumerouslandmarkprojectsacrossChina.Itsgreen,energy-efficientcurtainwallsystems—compliantwithinternationalstandards—haveachievedlarge-scaledeploymentinoverseasmarketsincludingAustralia,theMiddleEast,andSoutheastAsia.Thesetechnologicalachievementsarerapidlybeingconvertedintoglobal

marketvalue,fullydemonstratingtheCompany'sleapfrogcapabilityfromtechnologicalbreakthroughtoindustrialleadership.

2.BrandValueAdvantagesWithoverthirtyyearsofdeepexpertiseincurtainwallsystems,theCompanyhasalwaysuphelda"quality-first"philosophy.Throughexceptionalproductperformanceandservicesystems,ithasbuiltstrongbrandequityandmarketcredibility.TheCompanyhasreceivednumerousaccolades,includingthe"NationalQualityAward,""LubanAward(NationalQualityProjectAward),""ZhanTianyouCivilEngineeringAward,""ChinaBuildingDecorationAward,"andover200provincialandministerial-levelawards.Globally,theCompanyhasdeliveredmorethan1,000landmarkhigh-qualityprojectsandhasbecomealeadingbrandinthehigh-endcurtainwallsegment.TheFangdatrademarkhasbeenrecognizedasa"ChinaWell-knownTrademark,"andhasalsobeenawardedthetitlesof"InternationalReputationBrand"and"ShenzhenOldBrand."ThecontinuousriseoftheCompany'sbrandvalueandindustrystandingprovidesasolidfoundationofmarkettrustandclientconfidence,underpinningitshigh-qualitydevelopment.

3.IndustryExperienceAdvantageTheCompany'swholly-ownedsubsidiary,FangdaJianke,holdsthehighestlevelqualificationsforcurtainwalldesignandconstructionenterprisesinChina—Grade1ProfessionalContractingQualificationforBuildingCurtainWallEngineeringandGradeAQualificationforBuildingCurtainWallEngineeringDesign.ItisoneoftheleadingenterprisesinthecurtainwallindustryinChina.TheCompany'sintelligentcurtainwallprojectsencompasssuperhigh-risebuildings,largepublicbuildings,corporateheadquarters,commercialrealestate,hospitals,hotels,andotherprojects,featuringdiverseformsandstructures.Throughconstructingvarioustypesofprojects,theCompanyhasaccumulatedawealthofvaluableconstructionexperience.ChinaFangdaGroupCo.,Ltd.hasearnedconsistentclientacclaimthroughitssystematicintelligentconstructionsystem,extensiveprojectmanagementandimplementationexperience,andoutstandingconstructionquality.

4.IndustriallayoutadvantagesAfteryearsoffocuseddevelopment,theCompany'sintelligentcurtainwallsystemsandnewmaterialsbusinesshasestablishedanationwidestrategiclayoutcenteredonShenzhenasitsheadquarters,supportedbyfourmajorproductionbasesinShanghai,Chengdu,Dongguan,andGanzhou.Thisnetworkunderpinsanintegratedfull-industry-chainservicesystemcoveringR&Danddesign,manufacturing,projectmanagement,constructionandinstallation,andmaintenanceservices.Amongthese,Fangda(Ganzhou)Low-CarbonIntelligentManufacturingBase—a"5G+SmartFactory"integrating5G,digitalization,andtheInternetofThings—hasbeenrecognizedasanational-level"GreenIslandProject,"continuouslyleadingindustryadvancementinintelligentmanufacturingandgreen,low-carbondevelopment.Leveragingthiswell-structuredproductionbasenetworkandstrongindustrialchainsynergy,theCompanyeffectivelyoptimizesproductioncosts,enhancesoperationalefficiency,andrapidlyrespondstoevolvingmarketdemands—providingasolidfoundationforincreasingmarketshareandstrengtheningcomprehensivecompetitiveness,therebyfurtherconsolidatingitsleadershippositioninthehigh-endcurtainwallsector.

5.TalentTheCompanyconsistentlyregardstalentasthecoreengineofinnovation-drivengrowth.Throughyearsofaccumulation,ithasbuiltaseniormanagementteamwithbothglobalvisionandlocalexpertise,

alongsideamid-levelbackboneworkforceknownforprofessionalcompetenceandstrongexecutioncapabilities.Intalentrecruitmentanddevelopment,theCompanyhasbeenapprovedtoestablishthe"ShenzhenPostdoctoralInnovationPracticeBase,"furtherintegratingthetalentcirculationchannelamong"universities–enterprises–industries."Additionally,ithasrecruitedmultipleinternationalhigh-endtechnicalexpertsfromregionsincludingAustraliaandtheMiddleEast,injectingrobustmomentumintooverseasmarketexpansionandtechnologicalinnovation.TheCompanyhasalsoestablishedacomprehensiveincentivemechanismandperformanceevaluationsystemfortechnologycommercialization,fullystimulatingR&Dpersonnel'sinnovativedriveandgenuinelyimplementingamerit-basedapproachthatrewardsexcellenceandimprovesefficiencythroughoptimizedstaffing.Bycontinuouslyrefiningcareerdevelopmentpathwaysfortalentandleveragingtechnologicalinnovationtodrivequalityimprovementandefficiencygains,theCompanyremainssteadfastlycommittedtoindependentinnovation,forgingasolidtalentfoundationforhigh-qualityenterprisedevelopment.

(3)NewenergyindustryTheCompany'snewenergybusinessfocusesonsolarphotovoltaic(PV)powerstationsandBuilding-IntegratedPhotovoltaics(BIPV),spanningboththeconstructionandPVsectorstocreateauniquecross-industryintegrationadvantage.Asearlyasovertwodecadesago,theCompanypioneeredthedevelopmentofsolarPVcurtainwalltechnologyandwasamongChina'searliestenterprisesengagedinBIPVsystemdesign,manufacturing,andintegration—accumulatingprofoundtechnicalexpertiseandextensiveprojectexperience.

ThenewenergybusinessexhibitsstrongsynergywiththeCompany'scoreintelligentcurtainwalloperations.DistributedPVsystemsnaturallyintegratewithbuildingstructures,creatingcomplementaryeffectsintechnologicalpathways,productintegration,andcustomerresources.Drawingonmorethantwentyyearsofexperienceinelectromechanicalsystemintegrationandprojectmanagement,theCompanymaintainsacoreteamequippedwithcomprehensiveprofessionalqualificationsandexceptionalcross-domainintegrationcapabilities,enablingittodeliverend-to-endsolutions—fromPVcurtainwalldesignandconstructiontooperationandmaintenance—forclients.Builtupondualtechnicalfoundationsinarchitectureandphotovoltaics,alongwithsynergisticindustrialchainadvantages,theCompanyisacceleratingthelarge-scaledeploymentofgreenenergyinbuildingapplicationsandcontinuouslyreinforcingitscorecompetitivenessintheBuilding-IntegratedPhotovoltaics(BIPV)field.(IV)CommercialManagementandServicesChinaFangdaGroupCo.,Ltd.hasbeendeeplyengagedincommercialmanagementandpropertyservicesformanyyears.Leveraginghigh-qualityassetsincorecitiessuchasShenzhenandNanchang,theCompanycontinuestoadvancedeepintegrationof"AI+PropertyManagement,"reshapingserviceexperiencesanddrivingoperationalefficiencythroughdigitalsolutions.Throughadifferentiatedpositioningstrategyandadigitalizedtenantacquisitionsystem,theCompanyachievesprecisecustomerprofilingandmatching.Itsseasonedprofessionaloperationsteamandstrongexecutioncapabilities—furtherempoweredbyadvanceddigitaltools—provideasolidfoundationforcontinuouslyenhancingbrandvalueandreinforcingitsleadingpositioninregionalmarkets.

III.IndustrySituationDuringtheReportingPeriod

(1)IntelligentRailTransitPlatformScreenDoorEquipmentandSystems

1.IndustrydevelopmentUnderthepolicyguidanceofinitiativessuchasbuildinga"TransportationPower,"promotingcoordinateddevelopmentofcityclusters,andimplementingthe"DualCarbon"strategy,China'srailtransitindustryisacceleratingitscriticaltransitionfromscaleexpansiontoqualityenhancement.Guidingdocumentsincludingthe"OutlineforBuildingaTransportationPower"andthe"NationalComprehensiveThree-DimensionalTransportNetworkPlanningOutline"continuetoprovidestrongsupportfortherailtransitequipmentsectorinwhichChinaFangdaGroupCo.,Ltd.operates.In2025,sevengovernmentdepartmentsjointlyissuedthe"ImplementationOpinionsonArtificialIntelligence+Transportation,"promotinglarge-scaleinnovativeapplicationsofartificialintelligenceinthetransportationsectorandinjectingnewmomentumintotheindustry'sintelligenttransformation.Astheopeningyearofthe"15thFive-YearPlan"period(2026–2030),thestatehasclearlyidentified"perfectingamodernizedintegratedtransportationsystem"astheprimaryfocus,drivingintegrationacrosstransportmodes,enhancedsafety,digital-intelligentupgrades,andgreentransformation.Duringthe"15thFive-YearPlan"period,Chinaaimstobasicallyachieverailwaymodernization,ensurecorekeytechnologiesareindependentlycontrollable,andacceleratethedevelopmentofintelligentandgreentechnologies.Industryconsensushascoalescedaroundadvancinghigh-qualityintegratedtransportservicesundertheframeworkof"OneNetwork,FourModernizations".

AccordingtooperationaldatareleasedbytheMinistryofTransport,bytheendof2025,urbanrailtransitsystemswereoperatingin54citiesnationwide,with343linesinserviceandatotalnetworklengthof11,710.3kilometers.In2025alone,18newlinesopened,adding764.7kilometersofoperationalmileage.Urbanrailtransitcontinuestogrowsteadily,withbothoperationalscaleandservicequalityconsistentlyimproving.

Ascountriesalongthe"BeltandRoad"furtherincreaseinvestmentinurbanrailtransitinfrastructure,Chinesehigh-endequipmentmanufacturersareexpectedtoplayanevengreaterroleininternationalmarkets.Asaleaderintheconstructionandoperation&maintenanceofrailtransitplatformscreendoorsystems,theCompanywillcontinuetoalignwithnationalstrategiesandrelevantindustrialpolicies,respondproactivelytoindustrytrendsandmarketdemands,intensifytechnologicalinnovation,focusondevelopinghigh-value-addedproducts,andfurtherexpanditsmarketshare—contributinga"Chinesesolution"toglobalurbanrailtransitdevelopment.

2.BusinessStatus

(1)Mainproductsandpurposes

ChinaFangdaGroupCo.,Ltd.hasbeendeeplyengagedintherailtransitplatformscreendoorsectorforovertwodecades.Itscoreproductsconsistofintelligentplatformscreendoorsystemsdeployedinurbanrailtransitandhigh-speedrailwaystations,complementedbyfull-lifecycleoperation&maintenanceservicesandvalue-addedtechnicalsupport.

①UrbanRailTransitPlatformScreenDoorSystems

Urbanrailtransitplatformscreendoorsystemsareinstalledalongtheedgeofstationplatformsinmetro,lightrail,andotherurbanrailtransitstations.Thesesystemsphysicallyseparatethetrainoperationzonefromthepassengerwaitingareaandconsistofcontinuous,movablebarrierdoorsthatalignwithtraindoorsandcanbeopenedorclosedviamulti-levelcontrolmechanisms.ChinaFangdaGroupCo.,Ltd.offersacomprehensiveproductportfoliocoveringthreemaintypes:full-heightenclosedplatformscreendoorsystems,full-heightnon-enclosedplatformscreendoorsystems,andhalf-heightplatformscreendoorsystems—capableofmeetingdiverseoperationalrequirementsacrossdifferentrailtransitsystemsandclimateconditions.

Intermsofsafetyprotection,platformscreendoorsystemseffectivelysafeguardpassengersbypreventingaccidentalfallsontotracksandunauthorizedaccesstotunnelareas.Infireorotheremergencyscenarios,thesystemintegrateswithenvironmentalmonitoring,signaling,andothersubsystemstoenablecoordinatedcontrol,rapidlyactivatingsmokeexhaustmodesandpassengerevacuationroutestoestablishmultiplelayersofsafetyassurance.Regardingenvironmentalenhancement,thesystemeffectivelyblocksdust,noise,andpistonwindpressurefromtunnelsfromenteringtheplatformwaitingarea,creatingaquiet,comfortable,andtemperature-stableboardingenvironmentforpassengers.Inintelligentservices,theCompany'sproductsinnovativelyintegratepassengerflowcountingfunctionality.Duringpeakhours,dynamicguidanceenablesintelligentdiversionofpassengerflowstowardlower-densitytraincars.Additionally,thedoorunitscanhostpassengerinformationsystems,supportingmultimediainteractivefunctionssuchasreal-timeannouncements,informationdissemination,andcommercialadvertising—makingthemkeyinteractiveterminalsinsmartstations.

②High-SpeedRailwayPlatformSafetyDoorSystems

Duringthereportingperiod,theCompanyindependentlydevelopedtheworld'sfirstintelligentAI-poweredfullyslidingplatformdoorsystemforhigh-speedrailways—abreakthroughsolutiontailoredtothecomplexoperatingenvironmentofhigh-speedrailplatforms,representingamajortechnologicaladvancement.Thissystemusesintelligentrecognitionandcontroltechnologytoautomaticallyalignandoperateplatformsafetydoorsaccordingtothedoorpositionsofincominghigh-speedtrainsofvaryingmodels—effectivelysolvingthelong-standingindustrychallengeposedbythediversityofhigh-speedtrainmodelsandinconsistentdoorlocations.TheproducthasbeensuccessfullydeployedatShenzhenFutianHigh-SpeedRailwayStation,achievingthree"firstsinChina":

–thefirstsystemcompatiblewithallhigh-speedtrainmodels,–thefirstinstalleddirectlyattheedgeofahigh-speedrailplatform,and–thefirsttoobtainCRCC(ChinaRailwayCertificationCenter)certification—therebypioneeringanentirelynewsegmentinhigh-speedrailplatformdoorsystems.

③Full-LifecycleOperation&MaintenanceServices

Leveragingitsself-developedintelligentmaintenancemanagementsystemandglobalservicenetwork,ChinaFangdaGroupCo.,Ltd.providesfull-lifecycleoperation&maintenanceservices—includingremote

diagnostics,on-siterepairs,sparepartssupply,andsystemupgrades—enablingreal-timeequipmentmonitoringandpredictivemaintenancetoensurelong-term,safe,andstablerailoperations.

(2)MainbusinessmodelTheCompany'srailtransitintelligentscreendoorequipmentindustryisoperatedbyitssubsidiary,FangdaZhiyuan,whichisanintegratedsupplierandserviceproviderofrailtransitintelligentscreendoorsystems,encompassingresearchanddevelopment,design,manufacturing,installation,andtechnicalservices,withacompleteindustrialchain.Amatureandcompletemanagementsystemforresearchanddevelopment,procurement,production,salesandO&Mhasbeenestablished.InR&D,theCompanyemploysaproject-driveninnovationmechanismthatintegratesfundamentalresearchwithspecificcustomerrequirements.Inprocurement,adedicatedprocurementdepartmentmanagessourcingactivities.Inproduction,operationsaremanagedaccordingtocontracttermsandcustomerproductioninstructions.Insales,theCompanyservesmetrooperatorsandelectromechanicalgeneralcontractorsintheglobalrailtransitsectorexclusivelythroughdirectsales,withnodistributionchannelsinvolved.Inoperation&maintenance,theCompanyhasdeployedanintelligentplatformscreendoorO&Msupportsystemcapableofreal-timedatamonitoringandrapidfaultdiagnosisandresolution.

(3)MarketcompetitionpatterninwhichtheCompanyislocatedandtheCompany'smarketpositionAsagloballeaderinrailtransitplatformscreendoorsystems,ChinaFangdaGroupCo.,Ltd.continuestoleadthemarketthankstoitsdeeptechnicalexpertiseandstrongbrandinfluence.TheCompany'sintelligentrailtransitplatformscreendoorsystemshaveachievedacoveragerateofover60%amongChinesecitieswithoperationalmetrolines,servingmorethan120railtransitlinesacrossover40citiesworldwide.Itsmarketsharehasconsistentlyrankedamongtheindustry'stopformanyconsecutiveyears.FangdaZhiyuan(theCompany'ssubsidiary)hasbeenrepeatedlyincludedinthe"Top100IndustryLeaderEnterprisesinShenzhen,"underscoringitsabsoluteleadershipandinnovation-drivenimpactinthisspecializedfield.

ActivelyrespondingtoChina's"BeltandRoad"Initiative,theCompanyhasbecomeapioneerinexportinghigh-endrailtransitequipmentoverseas.Foroveradecade,ithasdeeplyengagedinternationalmarketsandsecuredmultiplelandmarkplatformscreendoorsystemprojectsin"BeltandRoad"countriesandregions—includingSingapore,Malaysia,Thailand,India,Colombia,Greece,thePhilippines,Kazakhstan,HongKongSAR,andTaipei.Withthecontinuousexpansionanddeepeningofitsoverseasbusiness,theCompany'sglobalfootprintisbecomingincreasinglyrobust,anditsinternationalcompetitivenessissteadilystrengthening—providingsustainedmomentumforhigh-qualitycooperationunderthe"BeltandRoad"framework.

TheCompanyhasestablishedacoretechnologysystembasedentirelyonindependentintellectualpropertyrights.ItledthedraftingofChina'sfirstindustrystandard,"PlatformScreenDoorsforUrbanRailTransit,"andthefirstnationalproductstandard,"PlatformScreenDoorSystemsforUrbanRailTransit".Additionally,theCompanyparticipatedindevelopingmultiplestandards,including:

–"TechnicalGuidelinesforSmartStationConstructioninRailTransit,"–"TechnicalSpecificationforIntelligentForeignObjectDetectionSystemsintheGapBetweenUrbanRail

TransitPlatformScreenDoorsandTrainDoors,"and–"High-SpeedRailwayPlatformDoorSystems,"demonstratingitsprofoundtechnicalfoundationandleadershipinstandard-setting.

Owingtoitsexceptionaltechnicalcapabilitiesandproductquality,theCompany'surbanrailtransitplatformsafetydoorswererecognizedbyChina'sMinistryofIndustryandInformationTechnology(MIIT)asa"ManufacturingSingle-ProductChampion."Thedesignationwassuccessfullyrenewedin2025followingre-evaluation.TheCompanyhasreceivednumeroushonorsandcertifications,including"NationalIntellectualPropertyAdvantageEnterprise","GuangdongProvincialScienceandTechnologyAward,""NationalKeyNewProduct","NationalTorchProgramIndustrializationDemonstrationProject","GuangdongProvincialEngineeringTechnologyResearchCenterforIntelligentRailTransitPlatformDoors","ShenzhenMunicipalScienceandTechnologyProgressAward",and"ShenzhenSpecialized,Sophisticated,Unique,andInnovative(‘ZhuanJingTeXin')Enterprise."ItwasalsoamongthefirstintheindustrytoachievecertificationundertheInternationalRailwayIndustryStandard(IRIS)managementsystemandRAMS(Reliability,Availability,Maintainability,andSafety)compliance.ItwasalsoamongthefirstintheindustrytoachievecertificationundertheInternationalRailwayIndustryStandard(IRIS)managementsystemandRAMS(Reliability,Availability,Maintainability,andSafety)compliance.TheCompanyholdsasubstantialportfolioofpatentsandsoftwarecopyrightsinChinaandabroad,formingacomprehensivecoretechnologyclusterandintellectualpropertysystembasedentirelyonindependentIP—layingasolidfoundationforsustainingitscompetitiveedgeinthemarket.

(2)IntelligentCurtainWallSystemsandMaterials

1.Industrydevelopment

In2025,China'scurtainwallindustryisreachingacriticalinflectionpoint—transitioningfromscale-drivenexpansiontoquality-ledadvancement—underthedualdriversofthedeepimplementationofthe"DualCarbon"strategyandtheclearpolicyorientationtoward"high-qualityhousing."Onthepolicyfront,thestatecontinuestostrengthenitsgreenbuildingagenda.Documentssuchasthe"GeneralCodeforBuildingEnergyEfficiencyandRenewableEnergyUtilization"explicitlymandatethatallnewlyconstructedpublicbuildingsadoptenergy-efficientcurtainwallsandpromoteenergy-savingretrofitsofexistingbuildingfacades.Meanwhile,urbanrenewalpoliciesareunlockingsustaineddividends.Thecoverageofurbanvillagerenovationpolicieshasexpandedfrom35megaandlargecitiestonearly300prefecture-levelcities,makingtherevitalizationofagingneighborhoodsandindustrialzonesanewblueoceanforgrowthintheconstructionsector.

Intermsofmarketdynamics,theindustryfacessignificantpressureduetoglobaluncertaintiesandstructuraladjustmentsindomesticdemand.Overcapacityintheconstructionsectorhasintensifiedcompetitionandcompressedprofitmargins,acceleratingtheconcentrationofresourcestowardleadingenterpriseswithstrongriskresilience.Thecompetitivelandscapeisnowcharacterizedbytop-tierfirmsdominatingthehigh-endmarketwhilesmallandmedium-sizedenterprisesfocusonnichesegments.Integrated

solutionsspanning"R&D–design–manufacturing–installation–operation&maintenance"havebecomethecoreofcompetitiveness.Ontheinnovationfront,theCompanyisacceleratingtechnologicalbreakthroughscenteredonthreepillars:energyefficiency,intelligence,andsafety.Greenandenergy-savingproducts—includingBuilding-IntegratedPhotovoltaics(BIPV),low-emissivity(Low-E)glass,andsmartelectrochromicglass—areseeingsteadilyrisingadoptionrates.Incertainprojects,winterheatingenergyconsumptionhasbeenreducedby30%,andsummercoolingenergyconsumptionby25%.Today'sintelligentcurtainwallsarenolongermerebuildingenvelopes;theyhaveevolvedintosmartterminalsthatintegrateenvironmentalregulation,energymanagement,andsafetyprotection.LifecyclemanagementpoweredbyBIMtechnologyandIoTsensorsystems—combinedwithdroneinspectionsandremotemonitoring—hasbecomeanindustrystandard.Internationally,theCompanyisrapidlyshiftingfrom"productexport"toanewglobaldevelopmentmodeldrivenbybothtechnologyandbrand.EmergingmarketsinSoutheastAsia,theMiddleEast,EasternEurope,andLatinAmericaoffersubstantialpotential,andthe"regionalmanufacturinghub+localizedproduction"approachisbecomingakeypathwayforoptimizingglobalfootprint.

Duringthereportingperiod,theCompanypursueddual-trackdevelopmentinbothdomesticandinternationalmarkets.Domestically,itpreciselyalignedwithpolicydirectionsandmarketdemands,continuouslyrefiningitscustomertargetingandcompetitivestrategies.Overseas,theCompanydeployedeliteteamstoreinforceitsleadershippositionintheAustralianmarketandsteadilyadvancestrategiclayoutsinemergingmarketssuchasSoutheastAsiaandtheMiddleEast,achievingordergrowthundercontrolledriskexposure.

2.BusinessStatus

(1)Mainproductsandpurposes

ChinaFangdaGroupCo.,Ltd.'sintelligentcurtainwallsystemsarewidelyapplicabletoexteriororroofingprojectsofpremiumurbanpublicbuildings—includinghigh-endofficetowers,corporateheadquarters,urbancomplexes,hotels,large-scalevenues,andgovernmentadministrativebuildings—aswellasluxuryresidentialdevelopments.Theseproductsintegratemodernarchitecturaltechnologieswithintelligentsystems,enablingmoderatecontroloverHVAC,daylighting,ventilation,andpowersystems.Byleveragingdigitalizationandartificialintelligence,theysignificantlyenhanceenergyefficiencyandenvironmentalperformancewhileelevatingaestheticappeal.TheCompany'sintelligentcurtainwallprojectshaverepeatedlywontopindustryhonorssuchasthe"LubanAward(NationalQualityEngineeringAward),"placingitscompetitivenessamongthegloballeadersandestablishingitasagloballyrecognizedbrandinthecurtainwallsector—fullyembodyingthehigh-qualityattributesofnewproductiveforces.

Backedbydeeptechnicalexpertiseandaprofessionalserviceteam,theCompanyactivelyprovidestechnicalservicesforexistingbuildingenvelopesystems—includinginspectionandassessment,energy-efficiencyretrofits,waterproofing,anti-corrosiontreatments,andmaintenance—coveringover8millionsquaremetersofbuildingareaandestablishingstrongcompetitiveadvantagesintheindustry.

NewmaterialsrepresentakeystrategicfocusfortheCompany,withproductscenteredonlow-carbon,eco-friendly,intelligent,andsustainablefeatures.TheCompanypossessesrobustR&DcapabilitiesandadvancedmanufacturingbasesforPVDF-coatedaluminumcompositepanelsandaluminumhoneycombpanels.Its

productshavebeenwidelyappliedinmajorprojectsacrossmorethan160citiesglobally,consistentlydeliveringhigh-qualitymaterialsupportforgreenbuildingsandurbanrenewalinitiatives.

(2)Mainbusinessmodes,specificrisksandchanges;TheCompany'sintelligentcurtainwallsystemsandnewmaterialsbusinessprimarilyfollowsanintegrated"R&D–design–production–construction"operatingmodel,whichremainedunchangedduringthereportingperiod.Contractsforintelligentcurtainwalldesignandinstallationareprimarilysecuredthroughpublicorinvitedtenders.TheCompanydeliversend-to-endsolutionscoveringconceptualdesign,rawmaterialprocurement,production,on-siteinstallation,andafter-salesservice,tailoredtospecificorderrequirements.Thismodelisinherentlynon-standardizedandhighlycustomized.Grossmarginsvarysignificantlyacrossordersduetomultiplefactors,includingtheclient'sbudgetallocation,biddingcompetitionintensity,materialselection,structuralcomplexityofthebuilding,projecttimeline,on-siteconstructionmanagement,andcostcontrolcapabilities.Projectpaymentsettlementstypicallyfollowstagedmilestones:advancepayment,progresspayments,acceptancepaymentuponcompletion,finalsettlementpayment,andretention(qualityassurance)deposit.Thetimingandproportionsofeachpaymentareexecutedbasedonprojectprogressandcontractualterms.Giventhelongimplementationcyclesofcurtainwallprojects,thebusinessishighlysensitivetoshiftsinnationalindustrialpolicies,fluctuationsinrawmaterialprices,andchangesinlabormarketconditions.Significantvariationsintechnicalrequirementsacrossprojectsprecludesimplereplicationofpastexperience,placinghighdemandsontheCompany'stechnologyintegrationandprojectmanagementcapabilities.Cashflowriskremainsoneoftheprimarychallengesfacingthecurtainwallindustry.Underthetypicalengineeringcontractingmodel,companiesmustfrontsubstantialcapitalformaterialprocurementandconstruction,whileprojectrepaymentsoftenhaveextendedcycles.AmidtheongoingdeepadjustmentinChina'srealestatesector,someclientsfaceliquidityconstraints,leadingtoincreasedaccountsreceivableandgreateruncertaintyincollectiontimelines.Additionally,rawmaterialpricevolatilityandrisinglaborcostsmayadverselyaffectprojectprofitability.

Toaddresstheserisks,theCompanyhascontinuouslyrefineditsbusinessmodelandriskcontrolframework.Attheprojectsourcingstage,itstrictlyenforcesentrycriteria,prioritizinghigh-quality

projectswithfavorablepaymenttermsandstrongclientcreditworthiness—therebyfilteringoutpotentialcollectionrisksatthesourceandensuringhealthycashflowoperations.Inprocessmanagement,theCompanyestablishedadedicatedcollectionstaskforcetocoordinatereceivablesrecovery,enhancedcontractperformanceoversight,andimplementedtailoredcollectionstrategies—includingnegotiation,formaldemandletters,andotherdiversifiedapproaches—toimprovetheprecisionandeffectivenessofcollections.Furthermore,theCompanyhasinstitutedafull-lifecycleprojectriskassessmentmechanismwithtiered,dynamicriskcontrols.Collectionperformanceisincorporatedintoemployeeevaluations,formingaclosed-loopmanagementsystemintegrating"organizationalsupport,standardizedprocesses,riskcontrol,andperformance-basedincentives."Asofthereportingperiodend,despiteaslowingglobaleconomyanddomesticmarketpressures,theCompanygeneratednetoperatingcashflowofRMB187,412,900,effectivelysafeguardingoperationalsecurityanddemonstratingrobustriskresilienceandsoundcashflowmanagement—layingasolidfinancialfoundationforsustainedhigh-qualitydevelopment.

(3)MarketcompetitionpatterninwhichtheCompanyislocatedandtheCompany'smarketpositionIn2025,againstthebackdropofmacroeconomicheadwindsandprofoundpolicyrecalibrations,thebuildingcurtainwallindustryexhibitedacompetitivelandscapemarkedby"stabilityamidpressureandacceleratingdifferentiation."Thedomesticmarket,impactedbythedeeprestructuringoftherealestatesector,slowinggrowthinnewprojects,andintensifiedcompetitionintheexistingbuildingsegment,sawslightdeclinesinoverallrevenue,margincompression,andwidespreadcashflowtightness.Manysmallerenterpriseswithlimitedriskresilienceexperiencednotabledownturnsorevenexistentialcrises,furtheracceleratingresourceconsolidationtowardindustryleadersanddrivingupmarketconcentration.Inresponsetostructuralshiftsindomesticdemand,theCompanyacceleratedits"goingglobal"strategy,intensifyingexpansioneffortsintheMiddleEast,SoutheastAsia,Australia,andotheroverseasmarkets.

Duringthereportingperiod,thankstoitsdeeptechnicalheritage,exceptionalservicequality,andcontinuouslystrengtheningbrandinfluence,theCompanymaintaineditspositionwithintheindustry'stoptierwithoutsignificantchange.Amidacomplexandvolatilemarketenvironment,itreinforceditscompetitiveedgethroughmeasuressuchasoptimizingclientportfolios,deepeningregionalengagement,andexpeditingglobaldeployment.TheCompany'sintelligentcurtainwallproductshaverepeatedlyreceivednational-levelaccoladeslikethe"LubanAward"andhavebeenconsecutivelylistedamongthe"ShenzhenTop500Enterprises"and"GuangdongTop500ManufacturingEnterprises,"sustainingleadingglobalbrandrecognitionandmarketreputationinthecurtainwallsector—fullyreflectingthecomprehensivestrengthofanindustryfrontrunner.

(4)Industryqualificationtypesandvalidityperiod

TheCompanyhasaClassAqualificationforbuildingcurtainwallengineeringcontractingandclassAqualificationforbuildingcurtainwallengineeringdesign.ItisthehighestlevelforcurtainwalldesignandconstructioncompaniesinChina.Duringthereportingperiod,theCompany'srelevantqualificationshavenotchangedsignificantly,andthevalidityperiodhasnotexpired.Detailsofthemeetingsaredisclosedasfollows:

(5)Qualitycontrolsystem,implementationstandards,controlmeasuresandoverallevaluation

Qualitycontrolsystem:Asaleadingenterpriseofhigh-endcurtainwall,theCompanypaysattentiontoqualitymanagement.ItisthefirstintheindustrytopassISO9001,ISO14001,OHSAS18001internationalanddomesticdualcertification,GB/T29490intellectualpropertymanagementsystemcertification,andisthefirsttoestablishsales,design,supply,production,one-stopqualitycontrolsystemsuchasconstruction,after-sales,customerservice,etc.,implementstrictqualitycontrolandsupervisionforeachlink,andcreateastrongqualitymanagementsystem.Implementationofthestandard:Intheprocessofbuildingcurtainwallbusiness,theCompanystrictlycomplieswithGB/T21086-2007"BuildingCurtainWall",JG/T231-2007"BuildingGlassLightingRoof"andothernationalandindustrialstandards.systemanddedicatedqualitymanagementorganization.Ithasintroduceddigitalandinformation-basedmanagementandleveragesadvancedtechnologiessuchasartificialintelligence(AI)toempowerallbusinessprocesses.Throughcloud-terminaltechnology,theCompanyenablesrapidinformationtransmissionandcollaborativeapplicationsharing.Strictlyimplementvariousqualitymanagementandcontrolmeasurestoprovidecustomerswithhigh-qualityproductsandservices.Overallevaluation:TheCompany'squalitycontrolsystemandexecutivestandardsmeettherelevantrequirementsofthecurrentrelevantnationalnormsandstandards,maintaingoodoperation,andprovidecustomerswithstableandreliableproductsandservices.

(6)Majorprojectqualityproblemduringthereportingperiod

None.

(7)ImplementationoftheWorkSafetyManagementSystem

ChinaFangdaGroupCo.,Ltd.consistentlyadherestotheworksafetyprincipleof"safetyfirst,prevention-oriented,andcomprehensivegovernance,"firmlyestablishingasafety-focuseddevelopmentphilosophy.TheCompanyfulfillsitsprimaryresponsibilityforworksafetybyestablishingarobustsafetyassurancesystem,signing"WorkSafetyResponsibilityAgreements,"andorganizingannual"WorkSafetyMonth"campaigns.Theseinitiativesstrengthenfoundationalsafetymanagement,enhanceon-sitesupervision,improvecapabilitiesinidentifyingandmitigatingrisksandhazards,andbolsteremployees'emergencyresponsecompetencies—therebyfurtherelevatingtheoperationaleffectivenessofitssafetymanagementsystem.Duringthereportingperiod,theCompany'ssafetymanagementsystemoperatedeffectively,withnomajorsafetyincidentsreported.

(3)Newenergyindustry

Building-IntegratedPhotovoltaics(BIPV),asacriticalpathwayforreducingbuildingenergyconsumptionandcarbonemissions,israpidlytransitioningfrom"technologydemonstration"to"large-scaleapplication."The"AdministrativeMeasuresfortheDevelopmentandConstructionofDistributedPhotovoltaicPowerGeneration,"issuedin2025,explicitlyencouragestheadoptionofBIPV-integratedconstructionmodels,providinginstitutionalsupportforBIPVdevelopment.Furthermore,theNationalEnergyAdministration's"GuidingOpinionsonPromotingIntegratedandCoordinatedDevelopmentofNewEnergy"callsforadvancingBIPVdeploymentandpromotingthesynchronizedplanning,design,andconstructionofphotovoltaicsystemsalongsidebuildings,aimingtobuildanewgenerationof"solar-storage-DC-flexible"("GuangChuZhiRou")buildings.BIPVtransformsbuildingsfrom"energyconsumers"into"energyproducers."

Withcontinueddeclinesinphotovoltaiccostsandtheimplementationofsupportivepolicies,BIPVpenetrationisexpectedtorisefurther,deliveringsustainedgrowthmomentumtotheindustry.(IV)CommercialManagementandServices

1.IndustrydevelopmentIn2025,againstthemacrobackdropofstabilizingtherealestatemarket,thecommercialrealestatesectorexhibitedcharacteristicsof"structuraloptimizationandvaluereconfiguration,"withregionaldivergencecreatingnewdevelopmentopportunitiesforcorecities.AsacoreengineoftheGreaterBayArea,Shenzhencontinuestodemonstraterobustofficedemand,drivenbyitsstrongindustrialbaseandpopulationappeal.Technologyenterprisesremainthetopleasingsegment,withnotableactivityinspecializedfieldssuchassoftwaredevelopmentandartificialintelligence.DeepeningShenzhen-HongKongintegrationfurthersupportscorporateoccupancy,underscoringsignificantgrowthpotentialinShenzhen'smarketgoingforward.

2.MainBusinessModel,BusinessProjectFormats,CompanyMarketPositionandCompetitiveAdvantages,MainRisksandCountermeasures

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

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

1.SummarySee"I.MainBusinessConditionsoftheCompanyDuringtheReportingPeriod"inChapterIIIManagementDiscussionandAnalysis.

2.Incomeandcosts

(1)Turnovercomposition

InRMB

(2)Industry,product,regionandsalesmodeaccountingformorethan10%oftheCompany'soperatingrevenueoroperatingprofit?Applicable□Inapplicable

InRMB

Mainbusinessstatisticsadjustedintherecentoneyearwiththestatisticscriteriaadjustedinthereportperiod

□Applicable?Inapplicable

InRMB

Mainbusinessstatisticsadjustedintherecentoneyearwiththestatisticscriteriaadjustedinthereportperiod

□Applicable?InapplicableDifferentbusinesstypesoftheCompany

InRMB

WhethertheCompanyrunsbusinessthroughtheInternet

□Yes?NoWhethertheCompanyrunsoverseasprojects?Yes□No

(3)Thephysicalsalesrevenueishighthelaborservicerevenue

□Yes?No

(4)PerformanceofmajorsalescontractsandmajorpurchasecontractssignedbytheCompanyasofthereportingperiod?Applicable□InapplicablePerformanceStatusofMajorSalesContractsSignedasoftheReportingPeriod

□Applicable?InapplicablePerformanceStatusofMajorProcurementContractsSignedasoftheReportingPeriod

□Applicable?Inapplicable

InRMB

Majorunfinishedproject?Applicable□Inapplicable

InRMB

Others:

□Applicable?Inapplicable

InRMB

Anymajoroutstandingunsettledprojectsduringthereportingperio.?Applicable□Inapplicable

InRMB

Others:

□Applicable?Inapplicable

(5)OperationcostcompositionIndustry

InRMB

Note:Apartfromtheaforementionedcosts,othercostitemsprimarilyincludeutilityexpensessuchaswaterandelectricity,andrentalfeesfortheMetalManufacturingandRailTransitsegments.Inthecurrentperiod,theoperatingcostsoftheCommercialServicessegmentincludeRMB25,257,752.23representingthecostofinventorypreviouslyrecognizedandwrittenoffuponterminationoftheBangshenIndustrialParkproject;othercostsmainlyconsistoflandandconstruction-relatedexpenses.Mainbusinesscost

InRMB

(6)Changetotheconsolidationscopeinthereportperiod?Yes□NoDuringthecurrentperiod,theCompany'sconsolidatedscopeexpandedthroughtheestablishmentoftwonewsubsidiaries:FangdaFacade(NSW)PtyLtd(CurtainWallSydneyCompany)andFANGDAFACADE

CONTRACTINGL.L.C(CurtainWallUAECompany).

(7)Majorchangesoradjustmentofbusiness,productsorservicesinthereportperiod

□Applicable?Inapplicable

(8)MajorsalescustomersandsuppliersMaincustomers

InformationoftheCompany'stop5customers

Otherinformationaboutmajorcustomers?Applicable□InapplicableThereisnoaffiliationbetweentheCompanyanditstopfivecustomers.TherearenodirectorindirectownershipinterestsheldbytheCompany'sdirectors,seniormanagementpersonnel,coretechnicalpersonnel,shareholderswithmorethan5%stake,actualcontrollers,orotherrelatedpartiesamongitsmajorclients.Mainsuppliers

InformationoftheCompany'stop5suppliers

Otherinformationaboutmajorsuppliers?Applicable□InapplicableThereisnoaffiliationbetweentheCompanyanditstopfivesuppliers.TherearenodirectorindirectownershipinterestsheldbytheCompany'sdirectors,seniormanagementpersonnel,coretechnicalpersonnel,shareholderswithmorethan5%stake,actualcontrollers,orotherrelatedpartiesamongitsmajorsuppliers.Tradebusinessrevenueaccountedformorethan10%oftheCompany'stotaloperatingrevenueduringthereportingperiod.

□Applicable?Inapplicable

3.Expenses

InRMB

4.R&Dinvestment

?Applicable□Inapplicable

R&Dpersonnel

R&Dinvestment

ReasonsandeffectsofmajorchangesinthecompositionofR&DpersonneloftheCompany

□Applicable?InapplicableReasonfortheincreaseinthepercentageofR&Dinvestmentinthebusinessturnover

□Applicable?InapplicableExplanationoftheincreaseinthecapitalizationofR&Dinvestment

□Applicable?Inapplicable

5.Cashflow

InRMB

Explanationofmajorchangesinrelateddatafromthesameperiodlastyear

?Applicable□InapplicableThenetcashflowfrominvestingactivitiesduringthereportingperiodincreasedby82.17%comparedtothesameperiodlastyear,primarilyduetothepaymentmadeinthecorrespondingperiodoflastyearfortheconstructionandequipmentofPhaseIofFangdaGanzhouLow-CarbonIntelligentManufacturingBase.Boththesubtotalsofcashinflowsandoutflowsfrominvestingactivitiesincreasedsignificantly,mainlyattributabletothepurchaseandredemptionofbankwealthmanagementproductsduringthecurrentperiod.Thenetcashflowfromfinancingactivitiesdecreasedby137.08%comparedtothesameperiodlastyear,primarilyduetothereducednetproceedsfrombankborrowingsduringthecurrentperiod.Explanationofmajordifferencebetweenthecashflowgeneratedbyoperatingactivitiesandthenetprofitintheyear?Applicable□InapplicableThedifferencebetweennetcashflowfromoperatingactivitiesandnetprofitfortheyearisprimarilyduetotherecognitionofafairvaluelossofRMB280,732,000oninvestmentpropertiesandtheprovisionforassetimpairmentlossestotalingRMB283,171,000duringthereportingperiod.V.Non-corebusinessanalysis?Applicable□Inapplicable

InRMB

VI.AssetsandLiabilities

1.Majorchangesinassetscomposition

InRMB

Theproportionofoverseasassetsisrelativelyhigh

□Applicable?Inapplicable

2.Assetsandliabilitiesmeasuredatfairvalue

?Applicable□Inapplicable

InRMB

MajorchangesintheassetsmeasurementpropertyoftheCompanyinthereportperiod

□Yes?No

3.Rightrestrictionofassetsattheendoftheperiod

VII.Investment

1.Generalsituation

□Applicable?Inapplicable

2.Majorequityinvestmentinthereportperiod

□Applicable?Inapplicable

3.Majornon-equityinvestmentinthereportperiod

□Applicable?Inapplicable

4.Financialassetsinvestment

(1)Securitiesinvestment

□Applicable?InapplicableTheCompanymadenoinvestmentinsecuritiesinthereportperiod

2.Derivativeinvestment?Applicable□Inapplicable

1)Derivativeinvestmentsforhedgingpurposesduringthereportingperiod

?Applicable□Inapplicable

InRMB10,000

valueofthederivativeinthereportperiod,theanalysisofthederivative'sfairvalueshoulddisclosethemethodusedandrelatedassumptionsandparameters.

2)Derivativeinvestmentforthepurposeofspeculationduringthereportingperiod

□Applicable?InapplicableDuringthereportingperiod,therewasnoderivativeinvestmentforthepurposeofspeculation.

VIII.Majorassetsandequitysales

1.Majorassetssales

□Applicable?InapplicableTheCompanysoldnoassetsinthereportperiod.

2.Majorequitysales

□Applicable?Inapplicable

IX.Analysisofmajorjointstockcompanies

?Applicable□InapplicableMajorsubsidiariesandjointstockcompaniesaffectingmorethan10%oftheCompany'snetprofit

InRMB

Acquisitionanddisposalofsubsidiariesinthereportperiod?Applicable□Inapplicable

Majorjoint-stockcompanies

ExplanationofSubsidiaryPerformanceVolatility:FangdaConstructionTechnologyCo.,Ltd.reportedanetlossofRMB264,329,169.54duringthereportingperiod,primarilyduetoassetimpairmentprovisionstotalingRMB216,465,527.09(mainlyonaccountsreceivableandcontractassets)andagrossprofitreductionofRMB259,859,790.31resultingfromlowerrevenueanddeclininggrossmargins,collectivelyreducingnetprofitbyRMB404,876,519.79.FangdaRealEstateCo.,Ltd.recordedanetlossofRMB171,155,798.89,mainlyduetoafairvaluelossofRMB185,846,384.00recognizedoninvestmentpropertiesrelatedtotheFangdaCityproject,whichreducednetprofitbyRMB139,384,788.00.JiangxiZhidiRealEstateCo.,Ltd.incurredanetlossofRMB78,082,066.97,primarilydrivenbyafairvaluelossofRMB88,125,226.00oninvestmentpropertiesoftheNanchangFangdaCenterprojectandaninventorywrite-downprovisionofRMB23,306,214.74,togetherreducingnetprofitbyRMB83,573,580.56.

X.StructuralentitiescontrolledbytheCompany

□Applicable?Inapplicable

XI.FutureProspect

(1)Competitionmapanddevelopmenttrend

1.RailTransitPlatformScreenDoorEquipmentandSystemsWiththecontinueddeepeningofChina'snationalurbanizationstrategy,theintegrationofintercityandmetropolitanrailtransitnetworksisaccelerating,creatingsignificantdevelopmentopportunitiesforintercityandsuburbanrailsystems.Intermsofcompetitivelandscape,therailtransitequipmentsectoriswitnessingconsolidationofadvantagesamongleadingenterprises,withresourcesincreasinglyconcentratingintechnologicallyadvancedplayers.Regardingindustrytrends,asthenumberofoperationalrailtransitlinesinChinacontinuestogrow,alargevolumeofequipmentisenteringthemaintenancephase,rapidlyunlockingtheaftermarketforinspection,repair,andmaintenanceservices,therebyexpandingthescaleoftheafter-salesmarket.Countriesandregionsalongthe"BeltandRoad"arecontinuouslyincreasinginvestmentinurbanrailtransitinfrastructure,presentingstrategicopportunitiesforChinesehigh-endequipmentmanufacturerstoexpandintooverseasmarkets.Theindustryisacceleratingitstransformationtowardintelligentandgreendevelopment,withtechnologicalinnovations—particularlyinartificialintelligence(AI)andbigdata—deeplyempoweringequipmentmaintenanceandsystemintegrationservices.

2.IntelligentCurtainWallandMaterialsSystemsInrecentyears,thecompetitivelandscapeofthecurtainwallindustryhascontinuedtoevolve,withincreasingindustryconcentrationandscale.Leadingenterprisespossessingcomprehensiveadvantagesintalent,technology,brand,andcapitalhavedemonstratedpronouncedcapabilitiesinundertakingcomplex,innovative,andintegratedprojects,resultinginacontinuousshiftofmarketsharetowardtheseadvantagedcompanies.Meanwhile,technologicalinnovations—suchasartificialintelligence(AI),modularprefabrication,andBuildingInformationModeling(BIM)—areacceleratingtheindustry'stransformationandupgrading,becomingakeyenginedrivingsectoraldevelopment.Theacceleratedconstructionofaunifiednationalmarketisprovidingleadingenterpriseswithbroadermarketopportunities.Ashigh-qualitycooperationunderthe"BeltandRoad"initiativedeepensanddeliverstangibleresults,Chinesecurtainwallcompaniesarerapidlytransitioningfrom"productexport"toaglobalizationmodeldrivenbyboth"technologyandbrand."

3.NewEnergyDrivenbythecontinuedadvancementofChina's"dualcarbon"strategicgoalsandthefullimplementationofgreenbuildingpolicies,Building-IntegratedPhotovoltaics(BIPV)—asacriticalpathwayforbuildingenergyefficiencyandcarbonreduction—isenteringanewphaseofhigh-qualitydevelopment.Withcontinuousdeclinesinphotovoltaicmodulecostsandacceleratedtechnologicaliteration,enterprisespossessingsystemintegrationcapabilities,productinnovationstrengths,andfull-industry-chainserviceadvantagesareincreasinglystandingoutinmarketcompetition.BIPVcompetitionisnowcharacterizedbydualdriversof"technology+brand."Leadingenterprises,leveragingrobustR&Dcapabilitiesandextensive

projectexperience,arerapidlycapturingpremiumsegments—includinghigh-endcommercialbuildings,publicinfrastructure,andurbanrenewalprojects.Astheinauguralyearofthe"15thFive-YearPlan"period,2026sawtheGovernmentWorkReportexplicitlycallforvigorousdevelopmentofthegreenandlow-carboneconomyanddeeperpromotionofzero-carbonparksandfactories,signalingclearmomentumtowardthedeepintegrationofnewenergywithtraditionalindustries.

4.CommercialManagementandServicesIn2025,sustainedpolicysupportgraduallyrestoredconfidenceinthepropertymarketandbolsteredbroadersocio-economicrecovery.RegionaldivergenceiscreatingnewdevelopmentopportunitiesfortheGuangdong-HongKong-MacaoGreaterBayArea,whichbenefitsfrommatureindustrialecosystems,strongpopulationappeal,highcorporateoccupancyrates,andongoingShenzhen-HongKongintegration—indicatingsignificantfuturepotentialforShenzhen'smarket.

(2)CompanydevelopmentstrategyandbusinessplanIn2026,ChinaFangdaGroupCo.,Ltd.willcloselyalignwithitsglobalstrategy,adheringtoabalancedapproachofprudentoperationsandinnovativebreakthroughs.TheCompanywillcontinuetoreinforceitscorebusinesses—includingrailtransitplatformscreendoorsystemsandhigh-endintelligentcurtainwalls—deepencoordinateddomesticandinternationalmarketdeployment,comprehensivelyempowerindustrialupgradingthroughemergingtechnologiessuchasAI,systematicallymitigateoperationalrisks,andbuildrobustcorecompetitivenesstodrivestrategictransformationandperformanceenhancementacrossallbusinesssegments.Inlinewithitsannualoperationaltargets,theCompanywillprioritizethefollowingkeyinitiatives:

1.FocusonSci-TechInnovationtoCultivateNewGrowthDriversTheCompanywillupholdinnovationasthecornerstoneofitsdevelopment,applyingAIcomprehensivelyacrossR&D,manufacturing,andoperations.Itwillstrategicallyinvestinfrontiertechnologiesandnewproductdevelopment,activelyexploringnewtechnologies,products,industries,andmarketssuitedtoitsgrowthtrajectory—withintensifiedR&Dandapplicationinintelligenttransportationequipment,advancedmaterials,greenandenergy-efficientproducts,andprefabricatedconstruction.Itwillfurtherrefineitsindustry-academia-researchcollaborativeinnovationsystem,leveragingpostdoctoralinnovationplatformsandotherR&Dinstitutionstostrengthencoretechnicalteams,acceleratetheefficientconversionofscientificachievements,fosternewqualityproductiveforces,andsolidifytechnologicalbarriers.

2.DeepenMarketDeploymentandUpgradeBusinessModelsDomestically,theCompanywillfirmlyimplementakey-accountstrategy,forginglong-term,symbioticstrategicpartnershipswithhigh-qualityclients.Internationally,itwillaccelerateoverseasexpansion,advancelocalizationofitsglobaloperations,enhanceitsoverseasprojectexecutionandriskmanagementsystems,andstrengthenglobalbrandbuilding—therebyfosteringamutuallyreinforcingdomestic-internationaldual-circulationmarketstructureandfurtherelevatingitsglobalmarketshareandbrandinfluence.

3.StrengthenOperationalControltoEnhanceQualityandEfficiencyTheCompanywillcomprehensivelyreducecontractassetsandaccountsreceivablebyrigorouslyassessingclientcreditworthinessandcontractqualityatthesource,acceleratingsettlementandcollectionofexistingreceivables,andreinforcingoperationalsafety.Itwillrestructureitsprocurementsystem,

integrateandcultivatehigh-qualitysupplierresources,andestablishacorecompetitiveadvantagethroughscaledprocurement.Itwilladvanceintegrationofbusinessandfinance,elevatefinancialmanagementanddigitalcapabilities,andenabledata-drivendecision-making.Cleardelineationofresponsibilities,rights,andinterestsacrossallorganizationallevels,alongwithoptimizedstructuresandworkflows,willbreakdowndepartmentalsilosandcomprehensivelyenhancegroup-levelcontrolandprojectdeliveryperformance.

4.StrengthenTalentFoundationandTeamCapabilitiesTheCompanywillintensifyrecruitmentanddevelopmentofhigh-caliber,multidisciplinary,andinternationaltalents,withpriorityhiringincriticalareassuchasoverseasoperationsandAItechnology,andactivelypromoteoutstandingyoungprofessionalsregardlessofconventionalconstraints.Itwillrefinetalentincentiveanddevelopmentmechanisms,optimizetalentpipelinestructures,enhancestrategicthinkingandmanagementtrainingforleaders,andencouragecompany-wideadoptionofemergingtechnologieslikeAItocultivate"superindividuals."Itwillbuildlearning-oriented,innovation-driventeamstoensurerobusttalentsupplyforglobalexpansionanddigital-intelligenttransformation.

5.ConsolidateFoundationalManagementandElevateCorporateGovernanceTheCompanywilladvancemanagementsysteminnovation,streamlineprocesses,reduceadministrativecosts,andimproveoveralloperationalandexecutionefficiency.Itwillenforceend-to-endcostcontrol,instilla"everyoneisacostcenter"mindset,andestablishaholisticcost-reductionframeworkacrossthevaluechain.Itwillstrengthenitsriskmanagementframework—withfocusedattentiononoverseastax,foreignexchange,andlegalrisks—aswellascomprehensiveoversightofcontractualperformance,worksafety,andcompliance,therebyadvancingthemodernizationofcorporategovernance.

(3)PotentialRisks

1.RisksofmacroenvironmentandpolicychangesTheCompany'scorebusinessesarecloselytiedtothemacro-economyandindustrypolicies,renderingthemhighlysensitivetooverallmacroeconomicconditions.AstheCompanydeepensitsglobalmarketfootprint,adverseshiftsindomesticorinternationalmacroeconomicconditions—suchasaslowdowninfixed-assetinvestment—combinedwithgeopoliticalconflicts,localizedwars,andregionalinstability,couldleadtoreduceddemandinsectorslikerailtransitequipmentandbuildingcurtainwalls,orintensifyindustrycompetition.SuchdevelopmentsmayadverselyaffecttheCompany'sprofitabilityandoperatingperformance.

Toeffectivelyaddressrisksandchallengesarisingfrommacroeconomicandpolicychanges,theCompanywillcloselymonitordevelopmentsinthedomesticandglobalmacroeconomy,industrypolicies,andgeopoliticaldynamics,andpromptlyoptimizeandadjustitsbusinessstrategiesaccordingly.Itwillcontinuouslystrengthentechnologicalinnovationanddigitaltransformation,activelypromotethedeepintegrationofartificialintelligence(AI)intoR&D,operations,andmanagement,andenhanceitscorecompetitivenessandriskresiliencetoensuresustainedandstablegrowth.

2.Marketcompetitionrisks

TheCompanyprimarilyoperatesintherailtransitplatformscreendoorsystemsandhigh-endbuildingcurtainwallsegments—industriescharacterizedbyahighdegreeofmarketization.InChina'srailtransitplatformscreendoorsector,domesticmanufacturers'technologiesarematuringrapidly,leadingtointensifiedcompetition.Meanwhile,thecurtainwallindustryremainsfragmented,withincreasinglyfierce

competitionforhigh-endlandmarkandkeyprojects.IftheCompanyfailstosustainitsadvantagesintechnology,brand,andservice,itsmarketshareandoperationalperformancecouldbenegativelyimpacted.Toproactivelymitigatecompetitiverisks,theCompanywillcloselytrackindustrytrendsandtechnologicalevolution,adheretoinnovation-drivendevelopmentandrefinedmanagement,andcontinuouslyenhanceproductcompetitivenessandoperationalefficiency.Itwilldeepenindustry-academia-researchcollaboration,acceleratefrontiertechnologyresearchandcommercializationofscientificachievements,andremaincommittedtohigh-quality,high-efficiencygrowth.Whilereinforcingitsdominantpositioninthedomesticmarket,theCompanywillactivelyexpandintooverseasmarkets—particularlyalongthe"BeltandRoad"—tobuildamutuallyreinforcingdomestic-internationaldual-circulationdevelopmentmodelandmaintainitsindustryleadership.

3.ProductionandoperationrisksTheCompany'sproductionandoperationsaresignificantlyinfluencedbymacroeconomicconditionsandsupply-demanddynamics.Sharpfluctuationsinpricesofkeyrawmaterialsandpersistentlyrisinglaborcostscoulddirectlyimpairproductprofitabilityandincreaseoperationaluncertaintyandrisk.Toeffectivelymanagetheserisks,theCompanywillemployhedginginstrumentssuchasfutures,negotiatecontractadjustmentswithpartners,andimplementscientificallyoptimizedrawmaterialprocurementplanstomitigatepricevolatility.Itwillstrictlyenforcesuppliermanagementmechanisms,continuouslyelevatethetechnologicalsophisticationofproductionmanagement,increaseR&Dinvestment,refinemanufacturingprocesses,andadvanceautomationandintelligentupgradesofproductionequipmenttoreducematerialwaste.Additionally,theCompanywilldeepentheconstructionofintelligentanddigitalizedconstructionsystems,promotetheadoptionofnewtechnologiesandprocesses,andenhanceworkforceskillstraining—toimproveproductqualityandproductionefficiencywhileensuringsafety,therebystrengtheningoperationalresilience.

4.ManagementrisksAstheCompany'sbusinessscaleexpandsandoverseasoperationsgrow,thecomplexityofgroup-levelmanagementincreases,exposingtheCompanytocertainorganizationalandinternalcontrolrisks.Moreover,withincreasinglystringentcapitalmarketregulatoryrequirements,theCompanyfaceshigherexpectationsforstandardizedandrefinedcorporategovernance.Toeffectivelypreventmanagementrisks,theCompanywillcontinuetodeepenmanagementreforms,optimizeorganizationalstructuresandbusinessprocesses,andstrengthenitsinternalcontrolframeworkandsupportingmanagementsystems.Itwillalsocontinuouslyimprovetalentrecruitmentanddevelopmentmechanisms,activelyattracthigh-caliber,highlyskilled,andmultidisciplinarytechnicalandmanagerialpersonnel,optimizetalentpipelinesandhumanresourceallocation,andcomprehensivelyenhanceoverallmanagementeffectivenessandgovernancestandards—providingasolidfoundationforhigh-qualitydevelopment.

XII.Receptionofinvestigations,communications,orinterviewsinthereportingperiod?Applicable□Inapplicable

XIII.ImplementationStatusofMarketCapitalizationManagementSystemandValuationEnhancementPlanHastheCompanyformulatedamarketvaluemanagementsystem?

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

XIV.ImplementationStatusofthe"DualEnhancementofQualityandReturns"ActionPlanHastheCompanydisclosedtheannouncementofthe"QualityandReturnDoubleEnhancement"actionplan??Yes□NoFordetails,pleaserefertothe"ChinaFangdaGroupCo.,Ltd.Announcementonthe'QualityandReturnDualEnhancement'SpecialActionPlan"disclosedbytheCompanyonApril8,2026,ontheCNINFO(http://www.cninfo.com.cn).

ChapterIVCorporateGovernance,Environment,andSociety

1.OverviewInaccordancewithrelevantlaws,regulations,andnormativedocuments—includingthePRCCompanyLaw,theSecuritiesLaw,theAdministrativeMeasuresforIndependentDirectorsofListedCompanies,andtheCodeofCorporateGovernanceforListedCompanies—theCompanyhascontinuouslyoptimizeditscorporategovernancestructureandestablishedasoundinternalcontrolsystemalongwithcomprehensiveinternalmanagementpolicies.Duringthereportingperiod,incompliancewiththelatestrequirementsofthePRCCompanyLawandtheCSRC'sGuidelinesontheArticlesofAssociationforListedCompanies,theCompanyabolisheditsBoardofSupervisors,transferringitsfunctionstotheAuditCommitteeoftheBoardofDirectors.Concurrently,theCompanyreviseditsinternalrulesandregulationsaccordingly,furtherrefiningitsgovernancestructureandstandardizingcorporateoperations.Anysignificantdifferencebetweentheactualsituationofcorporategovernanceandthelaws,administrativeregulationsandtheprovisionsonthegovernanceoflistedcompaniesissuedbytheCSRC

□Yes?NoThereisnosignificantdifferencebetweentheactualsituationofcorporategovernanceandthelaws,administrativeregulationsandtheprovisionsonthegovernanceoflistedcompaniesissuedbytheCSRC.

2.TheindependenceoftheCompanyrelativetothecontrollingshareholdersandactualcontrollersinensuringthecompany'sassets,personnel,finance,institutions,business,etcTheCompanymaintainscompleteseparationfromitscontrollingshareholderandactualcontrollerintermsofbusiness,personnel,assets,organizationalstructure,andfinance,andpossessesanindependent,integratedbusinesssystemandautonomousoperationalcapability.Detailsofthemeetingsaredisclosedasfollows:

(1)Intheaspectofbusiness:theCompanyhasitsownpurchasing,production,sales,andcustomerservicesystemwhichperformingindependently.Thereisnotanymaterialrelatedtransactionsoccurredwiththecontrollingshareholders.

(2)Inpersonnel,thelabormanagement,personnelandsalarymanagementareoperatedindependentlyfromthecontrollingshareholder.TheseniormanagementstakesalariesfromtheCompanyandnoneofthemtakesseniormanagementpositioninthecontrollingparty.

(3)Inassets,theCompanyownsitsproduction,supplementaryproductionsystemandaccessoryequipmentsindependently,andpossessesitsownindustrialproperties,non-patenttechnologies,andtrademark.

(4)Inorganization,theproductionandbusinessoperation,executivemanagement,anddepartmentsettingarecompletelyindependentfromthecontrollingshareholder.Nosituationofcombinedofficeexists.TheCompanyadjustsitsorganizingstructureonlyforitsownpracticalrequirementofdevelopmentandmanagement.

(5)Inaccounting,thecompanyhasitsownindependentaccountingandauditingdivision,establishedindependentandcompletedaccountingsystemandmanagementrules,hasitsownbankaccount,andexerciseitsliabilityoftaxationindependently.

3.Competition

□Applicable?Inapplicable

IV.DirectorsandSeniorManagement

1.Profiles

Whetheranydirectorsorseniormanagementpersonnelleftofficeduringtheirterminthereportingperiod

□Yes?NoChangesintheCompany'sdirectorsandseniormanagement

□Applicable?Inapplicable

2.OfficeDescription

Professionalbackgrounds,keycareerexperiences,andcurrentprimaryresponsibilitiesoftheCompany'sincumbentdirectorsandseniormanagement

(1)Mr.XiongJianming:Ph.D.inBusinessAdministrationPhilosophy,SeniorEngineer,FounderoftheCompany,andcurrentlyChairmanoftheCompany.—NationalDeputytothe14thNationalPeople'sCongress;PresidentofGanShangGeneralChamberofCommerce;ChairpersonofNanshanDistrictFederationofIndustryandCommerce,Shenzhen.HepreviouslyworkedattheJiangxiProvincialIndustrialMechanicalDesignandResearchInstituteandtheShekouDistrictAdministrationBureauoftheShenzhenMunicipalPeople'sGovernment.Heformerlyservedasadelegatetothe13thNationalPeople'sCongress,acouncilmemberoftheSixthSessionoftheChinaGuangcaiEnterprisePromotionAssociation,adelegatetothe10thGuangdongProvincialPeople'sCongress,amemberofthe11thJiangxiProvincialCommitteeoftheChinesePeople'sPoliticalConsultativeConference(CPPCC),adelegatetothe4thPartyCongressofShenzhenMunicipality,adelegatetothe2nd,3rd,and6thShenzhenMunicipalPeople'sCongresses,amemberofthe5thCPPCCShenzhenMunicipalCommittee,andfoundingpresidentoftheShenzhenSolid-StateLightingPromotionAssociation.

(2)Mr.XiongXi:Master'sdegree.CurrentlyservesasViceChairmanandPresidentoftheCompany,andChairmanofFangdaZhiyuanCompany;alsoamemberofthe7thShenzhenMunicipalCommitteeoftheChinesePeople'sPoliticalConsultativeConference(CPPCC).PreviouslyservedasDatabaseEngineeratChinaMerchantsBankCo.,Ltd.;DeputyDirectoroftheCompany'sTechnology&InformationDepartmentandHumanResourcesDepartment;AssistanttothePresident;andDeputyGeneralManagerofFangdaConstructionTechnologyCo.,Ltd.

(3)Mr.XiongJianwei:Masterofbusinessadministration.NowheisthedirectoroftheCompany,chairmanofFangdaJiankecompany,andmemberofthe14thNanchangCPPCCStandingCommittee.

(4)Mr.LinKebin:Bachelor'sdegree.CurrentlyservesasDirectorandVicePresidentoftheCompany,andGeneralManagerofFangdaZhiyuanCompany.PreviouslyservedasChiefFinancialOfficeroftheCompany.

(5)Mr.CaoZhongxiong:Ph.D.CurrentlyservesasIndependentDirectoroftheCompany,AssistanttothePresidentofChinaDevelopmentInstitute(China·Shenzhen),andDirectoroftheInstitute'sDigitalStrategyandEconomicsResearchCenter,specializinginresearchandconsultingonneweconomyandcorporatestrategy.HeusedtobeatechnicianofChinaChemicalGroupBluestarDetergentCo.,Ltd.andtheexecutivedirectoroftheNewEconomyResearchInstituteoftheComprehensiveDevelopmentResearchInstitute(Shenzhen,China).

(6)Mr.ZhanWeizai:Ph.D.,CertifiedSeniorAccountant.HecurrentlyservesasanIndependentDirectorofChinaFangdaGroupCo.,Ltd.,aDirectorofTianyinCommunicationHoldingCo.,Ltd.,andanIndependentDirectorofShenzhenEverwinPrecisionTechnologyCo.,Ltd.andShenzhenZhiweiIntelligentTechnologyCo.,Ltd.HeisalsoaGuestProfessorattheSchoolofEconomicsandManagementofWuhanUniversityandtheSchoolofMathematicsandStatisticsofCentralChinaNormalUniversity,andanAdjunctMentoratJiangxiUniversityofFinanceandEconomics.HepreviouslyservedasChairmanofShenzhenJiangcaiRenEducationManagementCo.,Ltd.,SupervisorofShenzhenDewoIndustrialDevelopmentCo.,Ltd.,andIndependentDirectorofShenzhenWeiyeDecorationGroupCo.,Ltd.andChongqingZhijianElectronicCo.,Ltd.

(7)Ms.SongMing:Ph.D.inLaw.ShecurrentlyservesasanIndependentDirectorofChinaFangdaGroupCo.,Ltd.,DirectoroftheSpecialEconomicZoneLegislativeResearchCenter,DirectoroftheConstitutionalandAdministrativeLawTeachingandResearchSection,andDirectoroftheAdministrativeRuleofLawResearchCenterattheLawSchoolofShenzhenUniversity,wheresheisalsoaDoctoralSupervisor.SheconcurrentlyservesasanExecutiveCouncilMemberoftheShenzhenLawSociety,ChairoftheAdministrativeLawResearchAssociationoftheShenzhenLawSociety,InvitedSupervisorofthePoliticalandLegalAffairsCommissionoftheShenzhenMunicipalCommitteeoftheCPC,andExpertLayJudgeoftheShenzhenAdministrativeTrialCenter.

(8)Mr.WeiYuexing:Bachelor'sdegree,SeniorEngineer.CurrentlyservesasVicePresidentoftheCompanyandGeneralManagerofFangdaConstructionTechnologyCo.,Ltd.

(9)Mr.DongGelin:Bachelor'sdegree,SeniorEngineer.CurrentlyservesasVicePresidentoftheCompanyandDeputytothe8thPeople'sCongressofNanshanDistrict,Shenzhen.HehasservedasasupervisoroftheCompany,adesignerofFangdaConstructionEngineeringCompany,achiefengineerofadesigninstitute,ageneralmanagerofFangdaConstructionEngineeringBeijingBranch,andadeputygeneralmanagerofFangdaConstructionEngineering.

(13)Mr.YeZhiqing:Bachelor'sdegree,SeniorEngineer.CurrentlyservesasSecretaryoftheBoardofDirectorsoftheCompanyandChairmanoftheSupervisoryBoardofFangdaZhiyuanCompany.PreviouslyheldpositionsincludingSupervisoroftheCompany,GeneralManagerofFangdaRealEstateCo.,Ltd.,DeputyDeanoftheDesignInstituteofFangdaJiankeCo.,Ltd.,AssistanttotheGeneralManagerofFangdaConstructionTechnologyCo.,Ltd.,andGeneralManagerofShanghaiBranchofFangdaConstructionTechnologyCo.,Ltd.SituationwherethecontrollingshareholderoractualcontrollerconcurrentlyservesasbothChairmanandGeneralManagerofthelistedcompany

□Applicable?InapplicableOfficesheldatshareholdersentities?Applicable□Inapplicable

Officesheldatotherentities?Applicable□Inapplicable

PenaltiesimposedbysecuritiesregulatoryauthoritiesontheCompany'sincumbentandformerdirectorsandseniormanagementduringthereportingperiodoverthepastthreeyears

□Applicable?Inapplicable

3.CompensationofDirectorsandSeniorManagement

Decision-makingprocedures,determinationbasis,andactualpaymentstatusofcompensationfordirectorsandseniormanagement

1.RemunerationschemesfordirectorsareproposedbytheRemunerationandAssessmentCommitteeoftheBoard,andimplementeduponapprovaloftheBoardandtheShareholders'Meetings;theremunerationschemesforexecutivesareapprovedandimplementedbytheBoard.TheremunerationschemefordirectorsoftheCompanyshallbedeterminedbytheshareholders'generalmeeting,whilethecompensationschemeforseniorexecutivesshallbedeterminedbytheBoardofDirectors.Additionally,theremunerationandassessmentcommitteeoftheBoardofDirectorsshallreviewtheactualpaymentofremunerationonanannualbasis.Compensationofdirectorsandseniormanagementduringthereportingperiod

InRMB10,000

Basisforperformanceevaluationunderlyingtheactualcompensationreceivedbyalldirectorsandseniormanagementasoftheendofthereportingperiod

Othermatters

□Applicable?Inapplicable

V.PerformanceofDutiesbyDirectorsDuringtheReportingPeriod

1.AttendanceofDirectorsatBoardandShareholders'Meetings

Statementforabsencefortwoconsecutiveboardmeetings

Inapplicable

2.Objectionraisedbydirectors

AnyobjectionraisedbydirectorsagainsttheCompany'srelatedissues?Yes??No

DirectorsmadenoobjectiononrelatedissuedoftheCompanyinthereportperiod.

3.OtherstatementforperformanceofdirectorsAdoptionofsuggestionproposedbydirectors?Yes□NoStatementforsuggestionadoptedornotbytheCompanyThedirectorsoftheCompanystrictlycomplywiththeprovisionsoflawsandregulationssuchasthe

CompanyLaw,SecuritiesLaw,MeasuresfortheAdministrationofIndependentDirectorsofListedCompanies,GuidelinesforCorporateGovernanceofListedCompanies,ShenzhenStockExchangeListingRules,ArticlesofAssociation,andotherrelevantcompanysystems.Theyfulfilltheirresponsibilitiesinaccordancewiththelaw.Duringthereportingperiod,thedirectorsoftheCompanyattendedthemeetingsoftheBoardofDirectors,andexpressedtheirviewsandin-depthdiscussionsonvariousproposalssubmittedtotheboardofdirectorsforconsideration,madesuggestionsforthehealthydevelopmentoftheCompany,fullyconsideredtheinterestsanddemandsofminorityshareholderswhenmakingdecisions,andeffectivelystrengthenedthescientificityandfeasibilityofthedecision-makingoftheboardofdirectors.Atthesametime,thedirectorsoftheCompanyactivelyparticipateinrelevanttraining,improvetheirabilitytoperformtheirduties,activelypayattentiontothecompany'soperationandmanagementinformation,financialstatusandmajorevents,andpromotethesustainable,stableandhealthydevelopmentoftheCompany'sproductionandoperation.TheindependentdirectorshavediligentlyperformedtheirdutiesandcarefullyreviewedvariousresolutionsoftheBoardofDirectors,playinganactiveroleinsafeguardingtheinterestsoftheCompanyandminorityshareholders.

VI.ActivitiesoftheBoard'sSpecializedCommitteesDuringtheReportingPeriod

VII.WorkoftheAuditCommittee

WhethertheAuditCommitteeidentifiedanyrisksattheCompanyduringitssupervisoryactivitiesinthereportingperiod

□Yes?NoTheAuditCommitteeraisednoobjectionstothematterssupervisedduringthereportingperiod.

VIII.EmployeeInformation

1.Staffnumber,professionalcompositionandeducation

2024compliedwiththeCompany'scompensationmanagementpoliciesfordirectorsandseniormanagement.Staffnumberoftheparentattheendofthereportingperiod

2.Remunerationpolicy

Staffremunerationpolicy:TheCompany'sstaffremunerationcomprisespostwage,performancewage,allowanceandannualbonus.TheCompanyhassetupaneconomicresponsibilityassessmentsystemaccordingtotheannualoperationtargetandresponsibilityindicatorsforalldepartments.Theperformancewageisdeterminedbytheeconomicindicators,managementindicators,optimizationindicatorsandinternalcontrol.TheannualbonusisdeterminedbytheCompany'sannualprofitandfulfillmentoftargetssetforvariousdepartments.ThestaffremunerationandwelfarewillbeadjustedaccordingtotheCompany'sbusinessoperationandchangesinthelocalstandardoflivingandpriceindex.Since2008,theCompanyhasbeenimplementingtheRegulationsonPaidAnnualLeaveforEmployees(StateCouncilOrderNo.514)issuedbytheStateCouncil.AllemployeesoftheCompanyareentitledtopaidannualleaveinaccordancewiththeseregulations.

3.Trainingprogram

Stafftrainingplan:TheCompanyhaspaidcontinuousattentiontotraininganddevelopmentofthestaffandintroducesinnovativelearningaspartofthelong-termstrategy.Weprovidetrainingprogramsthroughdifferentchannelsandindifferentfieldsfordifferentemployeeswillhelpthemfulfilltheirworks,includingnewstafftraining,on-the-jobtraining,operationandmanagementtrainingprograms.TheseprogramshavelargelyelevatedcapabilitiesofthestaffandunderpinthesuccessoftheCompany.

4.Laboroutsourcing

?Applicable□Inapplicable

IX.ProfitDistributionandConversionofCapitalReserveintoShareCapital

Establishment,implementationoradjustmentofprofitdistributionpoliciesespeciallythecashdividendpolicyduringthereportperiod?Applicable□Inapplicable

Duringthereportperiod,theCompanyimplementedtheprofitdistributionplanfor2024.Atthe2024AnnualGeneralMeetingheldonMay12,2025,theCompany's2024profitdistributionplanwasapprovedasfollows:basedonthetotalsharecapitalof1,073,874,227sharesasofthecloseofbusinessontherecorddatefortheimplementationoftheprofitdistributionplan,theCompanywilldistributeacashdividendofRMB0.50(taxinclusive)per10sharestoallshareholders,amountingtoatotalcashdistributionofRMB53,693,711.35.Nobonusshareswillbeissued,andnoconversionofcapitalreserveintosharecapitalwillbecarriedout.

TheCompanyattachesimportancetothereasonablereturntoinvestors,implementsacontinuousandstableprofitdistributionpolicy,theformulationandimplementationoftheprofitdistributionpolicycomplywiththerelevantprovisionsoftheArticlesofAssociationandtherequirementsoftheresolutions

oftheGeneralMeetingofShareholders,thedividendstandardandproportionareclearandclear,therelevantdecision-makingproceduresandmechanismsarecomplete,theindependentdirectorsperformtheirdutiesandplaytheirduerole,andthecompany'sprofitdistributionplansaresubmittedtotheGeneralMeetingofShareholdersforconsideration,Theprofitdistributionpolicyiscompliantandtransparent.Smallandmedium-sizedshareholdershavetheopportunitytofullyexpresstheiropinionsandappeals,andtheirlegitimaterightsandinterestshavebeenfullyprotected.

Thecompanymadeprofitsduringthereportingperiodandtheprofitavailabletoshareholdersoftheparentcompanywaspositive,butnocashdividenddistributionplanwasproposed

□Applicable?InapplicableProfitDistributionandReserveCapitalizationintheReportPeriod

□Applicable?InapplicableTheCompanydoesnotplantodistributecashdividends,issuebonusshares,orconvertcapitalreserveintosharecapitalfortheyear.X.Shareincentiveschemes,staffshareholdingprogramorotherincentiveplans

□Applicable?InapplicableThereisnoshareincentiveschemes,staffshareholdingprogramorotherincentiveplansinthereportperiod

XI.EstablishmentandImplementationofInternalControlSystemsDuringtheReportingPeriod

1.ConstructionandimplementationofinternalcontrolTheCompanyhasestablishedandimproveditsinternalcontrolsysteminaccordancewiththeBasicNormsforEnterpriseInternalControlanditssupportingguidelines,aswellasotherinternalcontrol

supervisionrequirements,combinedwiththeactualsituationofthecompany.TheriskinternalcontrolmanagementorganizationalsystemofthecompanyisjointlycomposedoftheAuditCommitteeandtheInternalAuditDepartment,whichsupervisesandevaluatestheCompany'sinternalcontrolmanagement,improvestheCompany'sstandardizedoperationlevel,andpromotesthehealthyandsustainabledevelopmentoftheCompany.The2025InternalControlSelfEvaluationReportdisclosedbytheCompanyonhttp://www.cninfo.com.cn,truthfully,andaccuratelyreflectstheactualsituationoftheCompany'sinternalcontrol.Duringthereportingperiod,theCompanydidnothaveanysignificantdeficienciesininternalcontrol.

2.Majorproblemsininternalcontroldiscoveredinthereportperiod

□Yes?No

XII.ManagementandControlofSubsidiariesDuringtheReportingPeriod

Abnormalitiesexistinthemanagementandcontrolofsubsidiaries.

□Yes?No

XIII.InternalControlEvaluationReportorInternalControlAuditReport

1.Internalcontrolreport

2.Internalcontrolauditreport

?Applicable□Inapplicable

Non-standardinternalcontrolauditreportbytheCFA

□Yes?NoConsistencybetweentheinternalcontrolauditreportandself-evaluationreport?Yes□NoWhetheranon-standardinternalcontrolauditopinionwasissuedforthereportingperiodortheprioryear

□Yes?No

XIV.Self-InspectionandRectificationundertheListedCompanyGovernanceSpecialActionInapplicable

XV.EnvironmentalInformationDisclosure

Whetherthelistedcompanyanditsmajorsubsidiariesareincludedinthelistofenterprisesrequiredbylawtodiscloseenvironmentalinformation

□Yes?NoXVI.CorporateSocialResponsibility

TheCompanyremainstruetoitsfoundingmission,placesgreatimportanceonenvironmentalandsocialsustainability,andactivelyfulfillsitscorporatesocialresponsibilities.In2025,theCompanyhasearnestlyperformedsocialresponsibilitiesinregulatinggovernanceandoperation,protectingtherightsandinterestsofshareholdersandcreditors,safeproduction,environmentalprotection,energyconservationandemissionreduction,protectingtherightsandinterestsofemployees,protectingtherightsandinterestsofsuppliers,customersandconsumers,publicrelationsandsocialpublicwelfareundertakings.Seecninfo.com

http://www.cninfo.com.cnforthe2025socialresponsibilityreportofChinaFangda

GroupCo.,Ltd.

XVII.EffortstoConsolidateandExpandAchievementsinPovertyAlleviationandAdvanceRuralRevitalizationWhilecreatingeconomicvalue,theCompanyactivelyfulfillsitscorporatesocialresponsibilitiesandpromotessustainablesocialdevelopment.Bymakingpositiveexamplesinthefieldsofecologicalenvironmentalprotectionandpromotingsocialdevelopment,theCompanyhasdemonstratedtheresponsibilityofanindustryleader.TheCompanyhascarriedoutindustrialsupportinGuangdong,Shaanxi,Guizhou,JiangxiandTibet,helpingruralareastoplantcashcropssuchasteamushroomsandliliesaccordingtolocalconditions,supportingruralcollectivebreedingindustryprojects,constructinggreenhousephotovoltaicpowerstations,distributedphotovoltaicpowerstationsandotherruralindustrial"blood-creation"projects,andfosteringnewimpetustothedevelopmentofruraleconomy,helpingtobuildathrivingindustryandecologicaldevelopment.Helpingtobuildabeautifulcountrysideintheneweraofprosperousindustry,ecologicallivability,civilizedcountryside,effectivegovernance,andaffluentlife,whichhasachievedgoodsocialeffectsandgainedhighpraisefromallwalksoflife.

Inaddition,theCompanyhasbeenactivelyinvolvedinvariouspublicwelfareactivities,includingpubliceducation,publichealth,ruralmedicalcare,disasterrelief,environmentalprotection,ruralrevitalizationandmanyotheraspects.Formanyconsecutiveyears,theCompanyhasbeenawardedhonorsincluding"National(Shenzhen)OutstandingForeign-InvestedEnterprise–Green&CarbonReductionPromotionAward"and"OutstandingEnterpriseinFulfillingSocialResponsibility."

Chapter5SignificantEventsI.Performanceofpromises

1.Commitmentsthathavebeenfulfilledandnotfulfilledbyactualcontroller,shareholders,relatedparties,acquirersoftheCompany

□Applicable?InapplicableThereisnocommitmentthathasnotbeenfulfilledbyactualcontroller,shareholders,relatedparties,acquirersoftheCompany

2.Explanationandreasonofprofitforecastsonassetsorprojectsthatremaininthereportperiod

□Applicable?Inapplicable

3.Company'sInvolvementinPerformanceCommitments

□Applicable?Inapplicable

II.Non-operatingcapitalusebythecontrollingshareholderorrelatedpartiesinthereportingterm

□Applicable?InapplicableThecontrollingshareholderanditsaffiliatesoccupiednocapitalfornon-operatingpurposeoftheCompanyduringthereportperiod.III.Incompliantexternalguarantee

□Applicable?InapplicableTheCompanymadenoincompliantexternalguaranteeinthereportperiod.

IV.Descriptionoftheboardofdirectorsonthelatest"non-standardauditreport"

□Applicable?Inapplicable

V.ExplanationsbytheBoardofDirectorsandIndependentDirectors(ifany)RegardingtheAccountingFirm's"Non-StandardAuditReport"fortheCurrentReportingPeriod

□Applicable?Inapplicable

VI.Descriptionofchangesinaccountingpolicies,accountingestimatesorcorrectionofmajoraccountingerrorscomparedwiththefinancialreportofthepreviousyear?Applicable□Inapplicable

InRMB

VII.Statementofchangeinthefinancialstatementconsolidationscopecomparedwiththepreviousfinancialreport

?Applicable□InapplicableDuringthecurrentperiod,theCompany'sconsolidatedscopeexpandedthroughtheestablishmentoftwonewsubsidiaries:FangdaFacade(NSW)PtyLtd(CurtainWallSydneyCompany)andFANGDAFACADECONTRACTING

L.L.C(CurtainWallUAECompany).

VIII.EngaginganddismissingofCPA

CPAengagedcurrently

andisalignedwiththeactualbusinesscharacteristicsandoperatingconditions,inordertopresenttheCompany'sfinancialpositionandoperatingresultsmoreobjectivelyandfairly.

Domesticpublicaccountantsname

WhethertheCPAisreplaced

□Yes?NoEngagingofinternalcontrolauditCPA,financialadvisorandsponsor?Applicable□InapplicableDuringthereportingperiod,theCompanycontinuedengagingRSMChina(limitedliabilitypartnership)asthefinancialstatementandinternalcontrolauditingCPAwithafeeofRMB1.5million.

IX.Delistingafterdisclosureofannualreport

□Applicable?InapplicableX.Bankruptcyandcapitalreorganizing

□Applicable?InapplicableTheCompanyhasnobankruptcyorreorganizationeventsinthereportperiod.

XI.Significantlawsuitandarbitration

□Applicable?InapplicableTheCompanyhasnosignificantlawsuitorarbitrationaffairinthereportperiod.

XII.Punishmentandrectification

□Applicable?InapplicableTheCompanyreceivednopenaltyandmadenocorrectioninthereportperiod.

XIII.CredibilityoftheCompany,controllingshareholderandactualcontroller

?Applicable□InapplicableTheCompanyanditscontrollingshareholdersandactualcontrollersdonotfailtoperformtheeffectivejudgmentofthecourt,andthedebtswithalargeamountarenotpaidoffwhendue.XIV.Materialrelatedtransactions

1.Relatedtransactionsrelatedtoroutineoperation

□Applicable?InapplicableTheCompanymadenorelatedtransactionrelatedtodailyoperatinginthereportperiod.

2.Relatedtransactionsrelatedtoassetstransactions

□Applicable?InapplicableTheCompanymadenorelatedtransactionofassetsorequityrequisitionandsalesinthereportperiod.

3.Relatedtransactionsrelatedtojointexternalinvestment

□Applicable?InapplicableTheCompanymadenorelatedtransactionofjointexternalinvestmentinthereportperiod.

4.Relatedcreditsanddebts

□Applicable?Inapplicable

TheCompanyhadnorelateddebtinthereportperiod.

5.Transactionswithrelatedfinancialcompanies

□Applicable?InapplicableThereisnodeposit,loan,creditorotherfinancialbusinessbetweenthecompanyandtherelatedfinancialcompany.

6.Transactionsbetweenfinancialcompaniescontrolledbythecompanyandrelatedparties

□Applicable?InapplicableThereisnodeposit,loan,creditorotherfinancialbusinessbetweenthefinancialcompanycontrolledbythecompanyanditsrelatedparties.

7.Othermajorrelatedtransactions

□Applicable?InapplicableTheCompanyhasnoothersignificantrelatedtransactioninthereportperiod.

XV.Significantcontractsandperformance

1.Assetentrusting,leasing,contracting

(1)Assetentrusting

□Applicable?InapplicableTheCompanymadenocustodyinthereportperiod.

(2)Contracting

□Applicable?InapplicableTheCompanymadenocontractinthereportperiod

(3)Leasing

□Applicable?InapplicableTherearenosignificantleasingsituationsduringthereportingperiod.

2.Significantguarantee?Applicable□Inapplicable

InRMB10,000

NoteofcompoundguaranteeNone

3.Entrustedcashcapitalmanagement

(1)Wealthmanagement?Applicable□InapplicableWealthmanagementduringthereportingperiod

InRMB10,000

SpecificcircumstanceswheretheCompany,asasoleprincipal,entrustsfinancialinstitutionstoconductassetmanagementorinvestsinhigh-riskentrustedwealthmanagementproductswithlowersafetyandpoorerliquidity

□Applicable?Inapplicable

(2)Trustedloans

□Applicable?InapplicableTheCompanyborrowednotrustloaninthereportperiod.

4.Othersignificantcontract

□Applicable?InapplicableTheCompanyenteredintonoothersignificantcontractinthereport.

XVI.UseofRaisedFunds

□Applicable?InapplicableTheCompanyusednoraisedcapitalinthereportperiod.

XVII.ExplanationofOtherMaterialMatters

□Applicable?InapplicableTherearenoothersignificantmattersrequiringexplanationduringthereportingperiod.

XVIII.MaterialMattersRelatingtotheCompany'sSubsidiaries

□Applicable?Inapplicable

ChapterVIChangesinShareCapitalandShareholdersI.Changesinshares

1.Changesinshares

Inshare

Reasons

□Applicable?InapplicableApprovalofthechange

□Applicable?InapplicableSharetransfer

□Applicable?InapplicableImpactsonfinancialindicatorsincludingbasicanddilutedearningspershare,netassetspershareattributabletocommonshareholdersoftheCompanyinthemostrecentyearandperiod

□Applicable?InapplicableOthersthatneedtobedisclosedasrequiredbythesecuritiessupervisor

□Applicable?Inapplicable

2.Changesinconditionalshares

□Applicable?Inapplicable

II.Shareplacingandlisting

1.Securitiesissuance(excludingpreferenceshares)duringthereportperiod

□Applicable?Inapplicable

2.Statementofchangesinsharenumberandshareholderstructure,assetsandliabilitiesstructure

□Applicable?Inapplicable

3.Currentemployees'shares

□Applicable?Inapplicable

III.ShareholdersandthesubstantialcontrolleroftheCompany

1.Shareholdersandshareholding

Inshare

Situationofsharelendinginrefinancingbusinessbyshareholdersholdingmorethan5%,thetop10shareholders,andthetop10shareholdersofunrestrictedcirculatingshares

□Applicable?InapplicableChangesduetolending/returningofsharesinrefinancingbusinessbythetop10shareholdersandthetop10shareholdersofunrestrictedcirculatingsharescomparedtothepreviousperiod

□Applicable?InapplicableAgreedre-purchasingbytheCompany'stop10shareholdersofcommonsharesandtop10shareholdersofunconditionalcommonsharesinthereportperiod

□Yes?NoNoagreedre-purchasingbytheCompany'stop10shareholdersofcommonsharesandtop10shareholdersofunconditionalcommonsharesinthereportperiod

2.Profileofthecontrollingshareholders

Shareholdernature:naturalpersonholdingTypeofshareholder:legalperson

Changesinthecontrollingshareholderinthereportingperiod

□Applicable?InapplicableNochangeinthecontrollingshareholderinthereportperiod

3.Actualcontrollerandpersonsactinginconcert

Natureofactualcontroller:domesticnaturalpersonTypeofactualcontroller:naturalperson

Changeintheactualcontrollerinthereportperiod

□Applicable?InapplicableNochangeintheactualshareholderinthereportperiod

7.Chartofthecontrollingrelationship

ControllingovertheCompanybythesubstantialcontrollerthroughtrustorotherassetmanagement

□Applicable?Inapplicable

4.ThecumulativenumberofPledgedSharesoftheCompany'scontrollingshareholderorthelargestshareholderanditsconcertedactorsaccountsfor80%oftheCompany'sshares

□Applicable?Inapplicable

5.Otherlegalpersonshareholderswithover10%oftotalshares

□Applicable?Inapplicable

6.Conditionaldecreaseofshareholdingbycontrollingshareholder,actualcontroller,reorganizerandotherentities

□Applicable?Inapplicable

IV.Specificimplementationofsharerepurchaseinthereportingperiod

Progressintheimplementationofsharerepurchase

□Applicable?InapplicableProgressintheimplementationofthereductionofshareholdingsharesbymeansofcentralizedbidding

□Applicable?Inapplicable

V.InformationRelatingtoPreferenceShares

□Applicable?InapplicableTheCompanyhadnopreferredshareinthereportperiod.

ChapterVIIInformationabouttheCompany'sSecurities

□Applicable?Inapplicable

ChapterVIIIFinancialStatements

I.Auditor'sReport

Auditors'Report

RSM[2026]No.510Z0221

TotheshareholdersofChinaFangdaGroupCo.,Ltd.:

1.Auditors'OpinionsWehaveauditedthefinancialstatementsofFangdaGroupCo.,Ltd.(hereinafterreferredtoasFangdagroupcompany),includingtheconsolidatedandparentcompany'sbalancesheetasofDecember31,2025,theconsolidatedandparentcompany'sincomestatement,consolidatedandparentcompany'scashflowstatement,consolidatedandparentcompany'sstatementofchangesinowner'sequityandnotestorelevantfinancialstatementsin2025.

WebelievethatFangdaGrouphasbeenfollowingwiththeEnterpriseAccountingStandardinpreparingoftheFinancialStatements.TheFinancialStatementsisreflecting,inallimportantaspects,thefinancialsituationofFangdaGroupasofDecember31,2025,andthebusinessperformanceandcashflowofyear2025.

2.BasisoftheOpinions

WecarriedouttheauditingworkswithcompliancetoChineseCPAAuditingStandard,The"CPA'sResponsibilityforAuditingFinancialStatements"sectionoftheauditreportfurtherelaboratedourresponsibilitiesundertheseguidelines.InaccordancewiththeCodeofProfessionalEthicsforChineseCertifiedPublicAccountantsandtheIndependenceStandardsforChineseCertifiedPublicAccountants,we

areindependentofChinaFangdaGroupCo.,Ltd.andhavecompliedwiththeprovisionsoftheindependencestandardsapplicabletoauditsoffinancialstatementsofpublicinterestentities,whilefulfillingourotherethicalresponsibilities.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

3.KeyAuditMattersThekeyauditmattersarethemattersthatwebelievearemostimportantfortheauditofthecurrentfinancialstatementsbasedonprofessionaljudgment.Theresponsetothesemattersisbasedontheoverallauditofthefinancialstatementsandtheformationofanauditopinion.Wedonotcommentonthesemattersseparately.

IncomerecognitionForrelatedinformationdisclosure,pleaserefertoNoteIII,26,NoteV,43andNoteXV,2ofthefinancialstatements.

1.DescriptionIn2025,theoperatingrevenueofFangdaGroupisRMB3.377billion,ofwhichtherevenueofcurtainwallandmetroplatformscreendooraccountsfor93.76%ofthetotalrevenueoftheGroup.

FangdaGroup'sperformanceobligationsrelatedtotheconstructionsubcontractingcontractincludebuildingcurtainwallandmetroplatformscreendoor.AsthecustomercancontrolthecommodityunderconstructionintheprocessofperformanceofFangdagroup,theCompanyregardsitastheperformanceobligationwithinacertainperiodoftime,andrecognizestherevenueaccordingtotheperformanceprogress.TheCompanyshalldeterminetheperformancescheduleofservicesaccordingtotheinputmethod.Theperformancescheduleshallbedeterminedaccordingtotheproportionoftheactualcontractcosttotheestimatedtotalcontractcost.ManagementneedstomakeareasonableestimateoftheinitialtotalcontractrevenueandtotalcontractcostsfortheEngineeringcontractingcontractandcontinuetoassessandreviseitduringthecontractimplementationprocess,whichinvolvessignificantaccountingestimatesofthemanagement.

Therefore,weidentifyrevenuerecognitionrelatedtoconstructioncontractsaskeyauditmatters.

2.AuditresponseOurauditproceduresforrevenuerecognitionrelatedtoconstructionsubcontractingcontractsmainlyinclude:

(1)Understandandevaluatethedesignofinternalcontrolrelatedtomanagementcontractandengineeringsubcontractingcontractbudgetandrevenuerecognition,andtesttheeffectivenessofkeycontrolimplementation.

(2)Obtainedamajorengineeringsubcontractingcontract,verifiedthecontractrevenue,andreviewedkeycontractterms.Checktheengineeringcontractingcontractandcostbudgetinformationonwhichmanagementexpectstotalrevenueandestimatedtotalcost.

(3)Obtaintheconstructionsubcontractingcontractaccountandprojectrevenueandcostsummarytable,carryoutanalyticalreviewonthegrossprofitoftheproject,andrecalculatetheperformanceprogressandrevenueintheconstructionsubcontractingcontractaccounttoverifyitsaccuracy.

(4)Selectsamplestochecktheprojectengineeringdetailsofthemainproject,subcontractedlaborapprovalforms,andtheowner'sproductionvalueapprovaldocumentsandrecordstoverifythecontractcostsincurred.

(5)Selectsamplestocheckiftherelevantcontractcostsarerecordedintheappropriateaccountingperiod.

(6)Selectasampletoconductasiteinspectionoftheprogressoftheprojectimagetoverifythereasonablenessoftheproject'sperformanceschedule.?Measurementoffairvalueofinvestmentrealestate

Forrelatedinformationdisclosure,pleaserefertoNoteIII,17,NoteV,15,NoteV51andNoteXIofthefinancialstatements.

1.Description

AsofWednesday,December31,2025,thebookbalanceoftheinvestmentrealestateofFangdagroupwhichadoptsthefairvaluemodelforsubsequentmeasurementisRMB5.548billion,accountingfor44.12%ofthetotalassets.TheincomefromchangesinfairvaluerealizedinthecurrentperiodisRMB-281,000,000whichhasagreatimpactonthefinancialindicatorsoftheGroup'sconsolidatedstatements.ThemanagementofFangdaGroupannuallyemploysathird-partyassessmentagencywithrelevantqualificationstoevaluatethefairvalueoftheinvestmentrealestate.Theevaluationadoptsthemarketcomparisonmethodandtheincomemethodtocomprehensivelyanalyzevariousfactorsthataffecttherealestatepriceoftheappraisalsubject.Theassessmentofthefairvalueofinvestmentrealestateinvolvesmanyestimatesandassumptions,suchastheanalysisoftheeconomicenvironmentandfuturetrendsoftherealestatewheretheinvestmentrealestateislocated,discountrates,etc.Thechangesinestimatesandassumptionswillhavebigimpactsonthefairvalueoftheinvestmentrealestateevaluated.Therefore,weidentifythemeasurementoffairvalueofinvestmentrealestateasakeyauditmatter.

2.Auditresponse

Ourauditproceduresforthemeasurementoffairvalueofinvestmentrealestatemainlyinclude:

(1)Assessthecompetency,professionalquality,independenceandobjectivityofthird-partyassessmentagenciesemployedbythemanagement.

(2)Obtaintheassessmentreport,selectedmajorortypicalsamples,anduseourrealestateappraisalexpertstoreviewandreviewtheassessmentmethodsandassumptionsusedintheassessmentreportandtherationalityoftheselectedkeyassessmentparameters.Checktheaccuracyandrelevanceofthedatausedbythemanagementinvaluation.

(3)Reviewthemeasurement,presentationanddisclosureoffairvalueofinvestmentrealestateinthefinancialstatements.?Measurementofexpectedcreditlossofaccountsreceivableandcontractassets

Forrelatedinformationdisclosure,pleaserefertoNoteIII,11,NoteV,5,NoteV,10andNoteV,21ofthefinancialstatements.

1.Description

AsofDecember31,2025,theCompany'stotalaccountsreceivableamountedtoRMB1.488billion,withanallowancefordoubtfulaccountsofRMB602million;thetotalcontractassetsamountedtoRMB2.340billion,withanimpairmentprovisionofRMB226million.Thecombinedcarryingamountofaccountsreceivableandcontractassetsrepresented23.85%oftheCompany'stotalassets.DuetothelargeamountofaccountsreceivableandcontractassetsofFangdagroup,themanagementneedstouseimportantaccountingestimationandjudgmentwhendeterminingtheexpectedrecoverableamountofaccountsreceivableandcontractassets,andtheexpectedcreditlossofaccountsreceivableandcontractassetsisimportantforfinancialstatements.Therefore,wedeterminethemeasurementofexpectedcreditlossofaccountsreceivableandcontractassetsasthekeyauditaccountingmatters.

2.Auditresponse

(1)UnderstandandevaluatetheeffectivenessofinternalcontroldesignrelatedtotheprovisionforbaddebtsofaccountsreceivableandprovisionforimpairmentofcontractassetsofFangdaGroup,andtesttheeffectivenessofkeycontroloperation.

(2)Reviewtherelevantconsiderationsandobjectiveevidenceofthemanagement'screditriskassessmentofaccountsreceivableandcontractassets,andevaluatewhetherthemanagementhasproperlyidentifiedthecreditriskcharacteristicsofvariousaccountsreceivable.

(3)Reviewtheaccrualprocessofbaddebtprovisionforaccountsreceivableandimpairmentprovisionforcontractassetsofthemanagement,including:①foraccountsreceivableandcontractassetsthatmeasureexpectedcreditlossbasedonportfolio,evaluatetherationalityofthemanagement'sdivisionofportfolioaccordingtocreditriskcharacteristics;Checkthemeasurementmodelofexpectedcreditlossandevaluatetherationalityofmajorassumptionsandkeyparametersinthemodel;Obtainthecomparisontablebetweentheagingofaccountsreceivableandtheexpectedcreditlossrateforthewholedurationpreparedbythemanagement,andtesttheaccuracyandintegrityofthedatausedbythe

managementandwhetherthecalculationofbaddebtreservesisaccurate;②Foraccountsreceivableandcontractassetswithindividualprovisionforexpectedcreditloss,reviewtheaccuracyandrationalityoftheinformationandrelevantassumptionsusedbythemanagementinthetestprocess;Checktheaccuracyoftheprovisionforimpairmentofaccountsreceivableandcontractassetswithlongaging,accountsreceivableandcontractassetsinvolvinglitigationmatters.

(4)Accordingtothecharacteristicsandnatureofcustomertransactions,selectsamplestoimplementtheaccountsreceivableconfirmationprocedureandcheckthecollectionaftertheperiod,andevaluatetherationalityoftheprovisionforbaddebtsofaccountsreceivable.

4.Otherinformation

ThemanagementofFangdaGroup(hereinafterreferredtoasmanagement)isresponsibleforotherinformation.TheotherinformationincludestheinformationcoveredinFangdaGroup's2025annualreport,butdoesnotincludethefinancialstatementsandourauditreport.

Ourauditopinionspublishedinthefinancialstatementsdonotcoverotherinformationandwedonotpublishanyformofassuranceconclusiononotherinformation.

Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadotherinformation.Intheprocess,weconsiderwhetherthereisamaterialinconsistencyorothermaterialmisstatementofotherinformationwhetheritisinthefinancialstatementsorwhatwehavelearnedduringtheauditprocess.

Basedontheworkwehaveperformed,ifwedeterminethatthereisamaterialmisstatementofotherinformation,weshouldreportthatfact.Inthisregard,wehavenothingtoreport.

5.Executives'ResponsibilitiesontheFinancialStatements

(1)PreparingthesefinancialstatementsaccordingtotheAccountingStandardsforBusinessEnterprisesandpresentingthemfairly;(2)designing,implementingandmaintainingnecessaryinternalcontroltomakesurethatthesefinancialstatementsarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inthepreparationofthefinancialstatements,themanagementisresponsibleforassessingFangdaGroup'sabilitytocontinueasagoingconcern,disclosingissuesrelatedtogoingconcern(if

applicable),andapplyingthegoingconcernassumptionunlessmanagementplanstoliquidateFangdaGroup,terminateoperationsortherearenootherrealisticchoices.

ThemanagementisresponsibleforoverseeingthefinancialreportingprocessofFangdaGroup.

6.Auditor'sresponsibilityforauditingfinancialstatementsOurobjectiveistoobtainreasonableassuranceastowhethertheentirefinancialstatementsarefreefrommaterialmisstatementduetofraudorerrorandtoissueanauditreportcontainingauditopinions.Reasonableassuranceisahighlevelofassurance,butitdoesnotguaranteethatanauditperformedinaccordancewithauditingstandardscanalwaysbediscoveredwhenamajormisstatementexists.Thereportmaybeduetofraudormistakes,andifareasonableexpectationofmisstatementaloneoraggregatedmayaffecttheeconomicdecision-makingmadebyusersoffinancialstatementsbasedonthefinancialstatements,themisstatementisgenerallyconsideredtobematerial.Intheprocessofconductingauditworkinaccordancewithauditingstandards,weuseprofessionaljudgmentandmaintainprofessionalsuspicion.Atthesametime,wealsoperformthefollowingtasks:

(1)Identifyandassessrisksofmaterialmisstatementoffinancialstatementsduetofraudorerrors,designandimplementauditprocedurestoaddresstheserisks,andobtainadequateandappropriateauditevidenceasabasisforissuingauditopinions.Asfraudmayinvolvecollusion,forgery,willfulomission,misrepresentationoroverrideofinternalcontrol,theriskofnotdiscoveringamaterialmisstatementduetofraudishigherthantheriskofnotdiscoveringamaterialmisstatementresultingfromamistake.

(2)Understandaudit-relatedinternalcontrolstodesignappropriateauditprocedures.

(3)Evaluatetheappropriatenessofaccountingpoliciesadoptedbythemanagementandthereasonablenessofaccountingestimatesandrelateddisclosures.

(4)Concludeontheappropriatenessofmanagement'suseofcontinuingoperationsassumptions.Atthesametime,basedontheauditevidenceobtained,itconcludesthatwhethertherearemajoruncertaintiesinthemattersorcircumstancesthatmaycausemajordoubtsabouttheabilityoftheCompany'scontinuingoperations.Ifweconcludethattherearesignificantuncertainties,theauditingstandardsrequireustorequesttheusersofthereporttopayattentiontotherelevantdisclosuresinthefinancialstatementsintheauditreport;ifthedisclosureisnotsufficient,weshouldpublishnon-

unqualifiedopinions.Ourconclusionsarebasedontheinformationavailableasofthedateoftheauditreport.However,futureeventsorcircumstancesmayresultinFangdaGroup'sinabilitytocontinueoperating.

(5)Evaluatetheoverallpresentation,structure,andcontentofthefinancialstatementsandevaluatewhetherthefinancialstatementsfairlyreflecttherelevanttransactionsandevents.

(6)ObtainsufficientandappropriateauditevidenceonthefinancialinformationofentityorbusinessactivitiesinFangdaGrouptoexpressopinionsonthefinancialstatements.Weareresponsiblefordirecting,supervisingandexecutinggroupauditsandassumefullresponsibilityforauditopinions.

Wecommunicatewiththegovernanceteamonplannedauditscope,timing,andmajorauditfindings,includingcommunicationoftheinternalcontroldeficienciesthatweidentifiedduringtheaudit.

Wealsoprovideastatementtothemanagementoncompliancewithethicalrequirementsrelatedtoindependence,andcommunicatewiththemanagementonallrelationshipsandothermattersthatmayreasonablybeconsideredtoaffectourindependence,aswellasrelatedpreventivemeasures(ifapplicable).

Fromthematterspassedwiththemanagement,wedeterminewhichitemsaremostimportantfortheauditofthefinancialstatementsofthecurrentperiodandthusconstitutethekeyauditmatters.Wedescribethesemattersinourauditreport,unlesslawsandregulationsprohibitthepublicdisclosureofthesematters,orinrarecases,ifitisreasonablyexpectedthatthenegativeconsequencesofcommunicatingsomethingintheauditreportwilloutweighthebenefitsinthepublicinterest,wedeterminethatsuchmattershouldnotbecommunicatedintheauditreport.

II.Financialstatements

Unitforstatementsinnotestofinancialstatements:RMByuan

1.ConsolidatedBalanceSheet

Preparedby:ChinaFangdaGroupCo.,Ltd.

InRMB

LegalRepresentative:XiongJianmingPersoninChargeofAccountingFunctions:LinKebinHeadofAccountingDepartment:WangHuan

2.BalanceSheetoftheParentCompany

InRMB

3.ConsolidatedIncomeStatement

InRMB

NetprofitcontributedbyentitiesmergedundercommoncontrolinthereportperiodwasRMB0.00,netprofitrealizedbypartiesmergedduringthepreviousperiodisRMB0.00.LegalRepresentative:XiongJianmingPersoninChargeofAccountingFunctions:LinKebinHeadofAccountingDepartment:WangHuan

4.IncomeStatementoftheParentCompany

InRMB

5.ConsolidatedCashFlowStatement

InRMB

6.CashFlowStatementoftheParentCompany

InRMB

7.StatementofChangeinOwners'Equity(Consolidated)

AmountoftheCurrentTerm

InRMB

AmountofthePreviousTerm

InRMB

8.StatementofChangeinOwners'Equity(ParentCompany)

AmountoftheCurrentTerm

InRMB

od

Item

AmountofthePreviousTerm

InRMB

period

Item

III.GeneralInformation

ChinaFangdaGroupCo.,Ltd.(the"Company"orthe"Group")isajointstockcompanyregisteredinShenzhen,GuangdongandwasapprovedbytheGovernmentofShenzhenwithDocumentShenFuBanHan(1995)No.194,andwasfounded,onthebasisofShenzhenFangdaConstructionMaterialCo.,Ltd.,bywayofshareissuinginOctober1995.Theunifiedsocialcreditcodeis:91440300192448589C;registeredaddress:

FangdaTechnologyBuilding,KejiSouth12thRoad,SouthDistrict,High-techIndustrialPark,NanshanDistrict,Shenzhen.Mr.XiongJianmingisthelegalrepresentative.

TheCompanyissuedforeigncurrencyshares(Bshares)andlocalcurrencyshares(Ashares)andlistedinNovember1995andApril1996respectivelyinShenzhenStockExchange.TheCompanyreceivedtheReplytotheNon-publicShareIssuanceofFangdaChinaGroupCo.,Ltd.(CSRCLicense[2016]No.825)toallowtheCompanytoconductnon-publicissuanceof32,184,931A-sharesinJune2016.Accordingtotheprofitdistributionplanfor2016approvedbythe2016generalshareholders'meeting,theCompanyissuedfivesharesforeverytensharestoallshareholdersthroughsurpluscapitalizationbasedonthetotal789,094,836sharesonDecember31,2016.Theregisteredcapitalattheendof2017wasRMB1,183,642,254.00.TheCompanyrepurchasedandcanceled28,160,568.00BsharesinAugust2018,32,097,497.00BsharesinJanuary2019,35,105,238.00BsharesinMay2020,14404724.00BsharesinApril2021andcanceledinApril2021.TheexistingregisteredcapitalisRMB1,073,874,227.00yuan.

TheCompanyhasestablishedthecorporategovernancestructureoftheGeneralMeetingofShareholdersandtheBoardofDirectors.Atpresent,ithassetupthePresident'sOffice,theAdministrationDepartment,theHumanResourcesDepartment,theEnterpriseManagementDepartment,theFinanceDepartment,theAuditandSupervisionDepartment,theSecuritiesDepartment,theLegalDepartment,theInformationManagementDepartment,theTechnologyInnovationDepartment,andotherdepartments,andhasShenzhenFangdaConstructionTechnologyGroupCo.,Ltd.(hereinafterreferredtoasFangdaConstructionTechnologyCo.,Ltd.)FangdaZhiyuanTechnologyCo.,Ltd.(hereinafterreferredtoasFangda

ZhiyuanTechnologyCo.,Ltd.),FangdaJiangxiNewMaterialsCo.,Ltd.,FangdaRealEstateCo.,Ltd.,FangdaNewEnergyCo.,Ltd.andothersubsidiaries.

ThebusinessnatureandmainbusinessactivitiesoftheCompanyanditssubsidiariesinclude:(1)curtainwalldivision,productionandsalesofcurtainwallmaterials,design,productionandinstallationofbuildingcurtainwalls,andcurtainwalltestingandmaintenanceservices;(2)Railtransitbranch,assemblyandprocessingofsubwayscreendoors,screendoordetectionandmaintenanceservices;(3)Therealestatedivisionisengagedinrealestatedevelopment,operationandpropertyleasingandpropertymanagementservicesonthelandthathaslegallyobtainedtherighttouse;(4)Newenergydivision,photovoltaicpowergenerationandsales;R&D,installationandsalesofphotovoltaicequipment,designandinstallationofphotovoltaicpowerstationproject.

Dateoffinancialstatementapproval:ThisfinancialstatementisapprovedbytheBoardofDirectorsoftheCompanyonApril03,2026.

IV.Basisforthepreparationoffinancialstatements

1.Preparationbasis

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

2.Continuousoperation

TheCompanyassessedthecontinuingoperationscapabilityoftheCompanyforthe12monthsfromtheendofthereportingperiod.NomatterswerefoundthatwouldaffecttheCompany'sabilitytocontinueasagoingconcern.ItisreasonablefortheCompanytopreparefinancialstatementsbasedoncontinuingoperations.

V.SignificantAccountPoliciesandEstimates

Thefollowingmajoraccountingpoliciesandaccountingestimatesshallbeformulatedinaccordancewiththeaccountingstandardsoftheenterprise.Unmentionedoperationsarecarriedoutinaccordancewiththerelevantaccountingpoliciesintheenterpriseaccountingstandards.

1.StatementofcompliancetotheEnterpriseAccountingStandard

ThesefinancialstatementsmeettherequirementsoftheAccountingStandardsforBusinessEnterprisesandtrulyandfullyreflecttheCompany'sfinancialstatus,performanceresult,changesinshareholders'equityandcashflows.

2.FiscalPeriod

TheCompanyThefiscalperiodrangesbetweenJanuary1andDecember31oftheGregoriancalendar.

3.Operationperiod

Ournormalbusinesscycleisoneyear

4.Bookkeepingstandardmoney

TheCompany'sbookkeepingstandardcurrencyisRenminbi,andoverseassubsidiariesarebasedonthecurrencyofthemaineconomicenvironmentinwhichtheyoperate.

5.Methodfordeterminingimportancecriteriaandselectioncriteria

?Applicable□Inapplicable

6.Accountingtreatmentoftheentitiesundercommonanddifferentcontrol

(1)ConsolidationofentitiesundercommoncontrolTheassetsandliabilitiesacquiredbytheCompanyinabusinesscombinationaremeasuredatthebookvalueofthecombinedpartyintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyonthedateofcombination.WherethecombinedpartyapplieddifferentaccountingpoliciesandaccountingperiodsfromthoseoftheCompanypriortothebusinesscombination,suchpoliciesandperiodshavebeenharmonizedbasedonthematerialityprinciple—specifically,thecarryingamountsofthecombinedparty'sassetsandliabilitieshavebeenadjustedinaccordancewiththeCompany'saccountingpoliciesandaccountingperiods.IfthereisadifferencebetweenthebookvalueofthenetassetsacquiredbytheCompanyinthebusinesscombinationandthebookvalueoftheconsiderationpaid,firstadjustthebalanceofthecapitalreserve(capitalpremiumorequitypremium),thebalanceofthecapitalreserve(capitalpremiumorequitypremium)Ifitisinsufficienttooffset,thesurplusreserveandundistributedprofitswillbeoffsetinsequence.Fortheaccountingtreatmentmethodofbusinesscombinationnotunderthesamecontrolthroughstep-by-steptransactions,seeChapterVIII,V.importantaccountingpoliciesandaccountingestimates7.(6).

(2)ConsolidationofentitiesunderdifferentcontrolAllidentifiableassetsandliabilitiesacquiredbytheCompanyduringthemergershallbemeasuredatitsfairvalueonthedateofpurchase.WheretheacquireeapplieddifferentaccountingpoliciesandaccountingperiodsfromthoseoftheCompanypriortothebusinesscombination,suchpoliciesandperiodshavebeenharmonizedbasedonthematerialityprinciple—specifically,thecarryingamountsoftheacquiree'sassetsandliabilitieshavebeenadjustedinaccordancewiththeCompany'saccountingpoliciesandaccountingperiods.ThemergercostoftheCompanyonthedateofpurchaseisgreaterthanthefairvalueoftheassetsandliabilitiesrecognizedbythepurchaserinthemerger,andisrecognizedasgoodwill.Ifthemergercostislessthanthedifferencebetweentheidentifiableassetsandthefairvalueoftheliabilitiesobtainedbythepurchaserintheenterprisemerger,themergercostandthefairvalueoftheidentifiableassetsandtheliabilitiesobtainedbythepurchaserintheenterprisemergerarereviewed,andthemergercostisstilllessthanthefairvalueoftheidentifiableassetsandliabilitiesobtainedbythepurchaserafterthereview,thedifferenceisconsideredastheprofitandlossofthecurrentperiodofthemerger.

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

(3)Treatmentofrelatedtransactionfeeinenterprisemerger

Agencyexpensesandotheradministrativeexpensessuchasauditing,legalconsulting,orappraisalservicesoccurredrelatingtothemergerofentitiesareaccountedintocurrentincomeaccountwhen

occurred.Thetransactionfeesofequitycertificatesorliabilitycertificatesissuedbythepurchaserforpaymentfortheacquisitionareaccountedattheinitialamountofthecertificates.

7.Judgmentcriteriaforcontrolandpreparationmethodsforconsolidatedfinancialstatements

(1)Determinationofcontrolcriteriaandconsolidationscope

ControlmeansthepowerpossessedbytheCompanyoninvestedentitiestosharevariablereturnsbyparticipatinginrelatedactivitiesoftheinvestedentitiesandtoimpacttheamountofthereturnsbyusingthepower.Thedefinitionofcontrolincludesthreebasicelements:first,theinvestorhasthepowerovertheinvestee;second,enjoysvariablereturnsduetoparticipationintheinvestee'srelatedactivities;andthird,hastheabilitytousethepowerovertheinvesteetoinfluenceitsreturnamount.WhentheCompany'sinvestmentintheinvestedpartymeetstheabovethreeelements,itindicatesthattheCompanycancontroltheinvestedparty.

Theconsolidatedscopeoftheconsolidatedfinancialstatementsisdeterminedonacontrolbasisandincludesnotonlysubsidiariesdeterminedonthebasisofvotingrights(orsimilarvotingrights)themselvesorinconjunctionwithotherarrangements,butalsostructuredsubjectsdeterminedonthebasisofoneormorecontractualarrangements.

ThesubsidiarycompanyisthesubjectcontrolledbytheCompany(includingtheenterprise,thedivisiblepartoftheinvestedunitandthestructuredsubjectcontrolledbytheenterprise,etc.).Thestructuredsubjectisthesubjectwhichisnotdesignedtodeterminethecontrollingpartybytakingthevotingrightorsimilarrightasthedecisivefactor.

(2)Specialprovisionsregardingtheparentcompanybeinganinvestmententity

Iftheparentcompanyisaninvestmententity,onlythosesubsidiarycompaniesthatprovideservicesrelatedtoinvestmentactivitiesoftheinvestmententityshallbeincludedintheconsolidationscope.Othersubsidiarycompaniesshallnotbeconsolidatedandtheirequityinvestmentsshallberecognizedasfinancialassetsmeasuredatfairvaluewithchangesinfairvaluerecognizedinprofitorloss.

Theparentcompanyqualifiesasaninvestmententitywhenitsimultaneouslymeetsthefollowingconditions:

①Thecompanyobtainsfundsfromoneormoreinvestorswiththepurposeofprovidinginvestmentmanagementservicestotheinvestors.

②Thesolepurposeofthecompany'soperationsistogeneratereturnsfortheinvestorsthroughcapitalappreciation,investmentincome,orboth.

③Thecompanyevaluatesandassessestheperformanceofalmostallofitsinvestmentsbasedonfairvalue.

Whentheparentcompanychangesfromanon-investmententitytoaninvestmententity,itshallonlyincludethosesubsidiarycompaniesthatproviderelevantservicesforitsinvestmentactivitiesinthe

preparationofconsolidatedfinancialstatements.Othersubsidiarycompaniesshallnolongerbeconsolidated,andtheprincipleofrecognizingpartiallydisposedsubsidiarycompanies'equitywhileretainingcontrolshallbeapplied.Whentheparentcompanychangesfromaninvestmententitytoanon-investmententity,thesubsidiarycompaniesthatwerepreviouslynotincludedintheconsolidationfinancialstatementsshallbeincludedasofthedateofthechange.Thefairvalueofthesesubsidiarycompaniesonthedateofthechangeshallberegardedasthetransactionpriceoftheacquisitionandaccountedforusingtheaccountingtreatmentforbusinesscombinationsundercommoncontrol.

(3)PreparationofConsolidatedFinancialStatementsTheCompanypreparesconsolidatedfinancialstatementsbasedonthefinancialstatementsofitselfanditssubsidiariesandbasedonotherrelevantinformation.TheCompanycompilesconsolidatedfinancialstatements,regardsthewholeenterprisegroupasanaccountingentity,reflectstheoverallfinancialstatus,operatingresultsandcashflowoftheenterprisegroupaccordingtotheconfirmation,measurementandpresentationrequirementsoftherelevantenterpriseaccountingstandards,andtheunifiedaccountingpolicyandaccountingperiod.

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

②Offsetthelong-termequityinvestmentoftheparentcompanytothesubsidiarycompanyandtheshareoftheparentcompanyintheownershiprightsofthesubsidiarycompany.

③Offsettheinfluenceofinternaltransactionbetweenparentcompany,subsidiarycompanyandsubsidiarycompany.Ifaninternaltransactionindicatesthattherelevantassethassufferedanimpairmentloss,thepartofthelossshallbeconfirmedinfull.

④adjustthespecialtransactionfromtheangleofenterprisegroup.

(4)Processingofsubsidiariesduringthereportingperiod

①Increaseofsubsidiariesorbusiness

A.Subsidiaryorbusinessincreasedbybusinesscombinationunderthesamecontrol

(A)Whenpreparingtheconsolidatedbalancesheet,adjusttheopeningnumberoftheconsolidatedbalancesheetandadjusttherelateditemsofthecomparativestatement.Thesamereportentityastheconsolidatedbalancesheetwillexistfromthetimeofthefinalcontrolparty.

(B)Whenpreparingtheconsolidatedcashflowstatement,thecashflowsofthesubsidiaryandthebusinesscombinationfromthebeginningofthecurrentperiodtotheendofthereportingperiodareincludedintheconsolidatedcashflowstatement,andtherelateditemsofthecomparativestatementareadjusted,whichisregardedasthecombinedreportbodysincethefinalThecontrollerhasbeentheresincethebeginningofcontrol.

(C)Whenpreparingtheconsolidatedcashflowstatement,thecashflowsofthesubsidiaryandthebusinesscombinationfromthebeginningofthecurrentperiodtotheendofthereportingperiodareincludedintheconsolidatedcashflowstatement,andtherelateditemsofthecomparativestatementareadjusted,whichisregardedasthecombinedreportbodysincethefinalThecontrollerhasbeentheresincethebeginningofcontrol.

B.Subsidiaryorbusinessincreasedbybusinesscombinationunderthesamecontrol

(A)Whenpreparingtheconsolidatedbalancesheet,theopeningnumberoftheconsolidatedbalancesheetisnotadjusted.

(B)Whenpreparingtheconsolidatedprofitstatement,theincome,expenseandprofitofthesubsidiarycompanyandthebusinessPurchasedateandClosingbalanceshallbeincludedintheconsolidatedprofitstatement.

(C)Whentheconsolidatedcashflowstatementisprepared,thecashflowfromthepurchasedateofthesubsidiarytotheendofthereportingperiodisincludedintheconsolidatedcashflowstatement.

②Disposalofsubsidiariesorbusiness

A.Whenpreparingtheconsolidatedbalancesheet,theopeningnumberoftheconsolidatedbalancesheetisnotadjusted.

B.Whenpreparingtheconsolidatedprofitstatement,theincome,expenseandprofitofthesubsidiarycompanyandthebusinessopeninganddisposaldateshallbeincludedintheconsolidatedprofitstatement.

C.Whentheconsolidatedcashflowstatementisprepared,thecashflowfromtheBeginningoftheperiodofthesubsidiarytotheendofthereportingperiodisincludedintheconsolidatedcashflowstatement.

(5)Specialconsiderationsinconsolidationoffsets

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

Thelong-termequityinvestmentsheldbythesubsidiariesareoffsetbythesharesoftheshareholdersofthesubsidiaries.

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

③Ifthereisatemporarydifferencebetweenthebookvalueofassetsandliabilitiesintheconsolidatedbalancesheetandthetaxablebasisofthetaxpayerduetotheoffsetoftheunrealizedinternalsalesgainorloss,thedeferredincometaxassetorthedeferredincometaxliabilityisconfirmedintheconsolidatedbalancesheet,andtheincometaxexpenseintheconsolidatedprofit

statementisadjusted,withtheexceptionofthedeferredincometaxrelatedtothetransactionoreventdirectlyincludedintheowner'sequityandthemergeroftheenterprise.

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

⑤Ifthecurrentlosssharedbytheminorityshareholdersofthesubsidiaryexceedstheshareoftheminorityshareholdersintheowner'sequityofthesubsidiaryatthebeginningoftheperiod,thebalanceshouldstillbeoffsetagainsttheminorityshareholders'equity.

(6)Accountingtreatmentofspecialtransactions

①Purchaseminorityshareholders'equity

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

②Step-by-stepacquisitionofcontrolofthesubsidiarythroughmultipletransactions

A.Enterprisemergerundercommoncontrolthroughmultipletransactions

Onthedateofthemerger,theCompanydeterminestheinitialinvestmentcostofthelong-termequityinvestmentintheindividualfinancialstatementsbasedontheshareofthesubsidiary'snetassetsthatshouldbeenjoyedafterthemergerinthefinalcontroller'sconsolidatedfinancialstatements;theinitialinvestmentcostandtheThedifferencebetweenthebookvalueofthelong-termequityinvestmentbeforethemergerplusthebookvalueoftheconsiderationpaidfornewsharesacquiredonthemergerdate,thecapitalreserve(capitalpremiumorequitypremium)isadjusted,andthecapitalreserve(capitalpremiumorequitypremium)isinsufficienttooffsetReduced,inturnoffsetthesurplusreserveandundistributedprofits.

Inconsolidatedfinancialstatements,assetsandliabilitiesobtainedbythemergingpartyfromthemergedpartyshouldbemeasuredatthebookvalueinthefinalcontrollingparty'sconsolidatedfinancialstatementsotherthantheadjustmentmadeduetodifferencesinaccountingpolicies;adjustthecapital

surplus(sharepremium)accordingtothedifferencebetweentheinitialinvestmentcostandthebookvalueoftheheldinvestmentbeforemergerplusthebookvalueoftheconsiderationpaidonthemergerdate.Wherethecapitalsurplusfallsshort,theretainedincomeshouldbeadjusted.Beforetheacquirerobtainscontroloftheacquiree,anyrecognizedgainsandlosses,othercomprehensiveincome,andchangesinotherowners'equityrelatedtotheequityinvestmentheldbytheacquirerfromthelaterofthedatewhentheoriginalequitywasobtainedorthedatewhenboththeacquirerandtheacquireewereunderthecontrolofthesamepartyuntiltheacquisitiondateshouldbeadjustedagainstthebeginningretainedearningsorthecurrentprofitsandlossesofthecomparativestatementsseparately.

A.EnterprisemergerundercommoncontrolthroughmultipletransactionsOnthemergerday,inindividualfinancialstatements,theinitialinvestmentcostofthelong-termequityinvestmentonthemergerdayisbasedonthebookvalueofthelong-termequityinvestmentpreviouslyheldplusthesumoftheadditionalinvestmentcostsonthemergerday.

Intheconsolidatedfinancialstatements,theequityheldintheacquireebeforetheacquisitiondateisremeasuredatitsfairvalueontheacquisitiondate.Iftheequityheldbeforetheacquisitiondateisdesignatedasafinancialassetmeasuredatfairvaluethroughothercomprehensiveincome,thedifferencebetweenthefairvalueanditsbookvalueisincludedinretainedearnings,andthecumulativefairvaluechangespreviouslyincludedinothercomprehensiveincomearetransferredtoretainedearnings.Iftheequityheldbeforetheacquisitiondateisdesignatedasafinancialassetmeasuredatfairvaluethroughprofitorlossorasalong-termequityinvestmentaccountedforbytheequitymethod,thedifferencebetweenthefairvalueanditsbookvalueisincludedinthecurrentperiod'sinvestmentincome.Forothercomprehensiveincomeandotherchangesinowners'equityundertheequitymethodrelatedtotheequityheldbeforetheacquisitiondate,therelatedothercomprehensiveincomeisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilitiesontheacquisitiondate,andtherelatedotherchangesinowners'equityaretransferredtothecurrentperiod'sinvestmentincomeontheacquisitiondate.

(3)TheCompanydisposesoflong-termequityinvestmentinsubsidiarieswithoutlosingcontrol

Theparentcompanypartiallydisposesofthelong-termequityinvestmentinthesubsidiarycompanywithoutlosingcontrol.Intheconsolidatedfinancialstatements,thedisposalpricecorrespondstothedisposalofthelong-termequityinvestment.Thedifferencebetweenthesharesisadjustedforthecapitalreserve(capitalpremiumorequitypremium).Ifthecapitalreserveisinsufficienttooffset,theretainedearningsareadjusted.

④TheCompanydisposesoflong-termequityinvestmentinsubsidiariesandlosescontrol

A.Onetransactiondisposition

IftheCompanylosescontrolovertheInvestedPartyduetothedisposalofpartoftheequityinvestment,itshallremeasuretheremainingequityaccordingtoitsfairvalueatthedateoflossofcontrolwhencompilingtheconsolidatedfinancialstatement.Theconsiderationreceivedfromthedisposalofequityplusthefairvalueoftheremainingequity,minustheshareofnetassetsandgoodwill

calculatedbasedontheoriginalshareholdingratiofromtheacquisitiondateorcombinationdatetothedisposaldate,isincludedintheinvestmentincomefortheperiodinwhichcontrolislost.Othercomprehensiveincomerelatedtoequityinvestmentsinformersubsidiariesisaccountedfor,uponlossofcontrol,onthesamebasisasiftherelatedassetsorliabilitiesoftheformersubsidiaryweredirectlydisposedof.Otherchangesinowners'equityrelatedtoformersubsidiariesthatwerepreviouslyrecognizedundertheequitymethodarereclassifiedtoprofitorlossintheperiodinwhichcontrolislost.B.Multi-transactionstep-by-stepdispositionInconsolidatedfinancialstatements,youshouldfirstdeterminewhetherastep-by-steptransactionisa"blankettransaction".

Ifthestep-by-steptransactiondoesnotbelongtoa"packagedeal",intheindividualfinancialstatements,foreachtransactionbeforethelossofcontrolofthesubsidiary,thebookvalueofthelong-termequityinvestmentcorrespondingtoeachdisposalofequityiscarriedforward,thepricereceivedandthedisposalThedifferencebetweenthebookvalueofthelong-termequityinvestmentisincludedinthecurrentinvestmentincome;intheconsolidatedfinancialstatements,itshouldbehandledinaccordancewiththerelevantprovisionsof"theparentcompanydisposesofthelong-termequityinvestmentinthesubsidiarywithoutlosingcontrol."Ifastep-by-steptransactionbelongstoa"blankettransaction",thetransactionshallbetreatedasatransactionthatdisposesofthesubsidiaryandlosescontrol;Inindividualfinancialstatements,thedifferencebetweeneachdisposalpricebeforethelossofcontrolandthebookvalueofthelong-termequityinvestmentcorrespondingtotheequitybeingdisposedofisfirstrecognizedasotherconsolidatedgainsandthenconvertedtothecurrentlossofcontrolatthetimeofthelossofcontrol;Intheconsolidatedfinancialstatements,foreachtransactionpriortothelossofcontrol,thedifferencebetweenthedispositionofthepriceandthedispositionoftheinvestmentcorrespondingtotheshareinthenetassetsofthesubsidiaryshallberecognizedasotherconsolidatedgainsandshall,atthetimeofthelossofcontrol,betransferredtothelossofcontrolforthecurrentperiod.

Wheretheterms,conditions,andeconomicimpactofeachtransactionmeetoneormoreofthefollowingconditions,usuallymultipletransactionsaretreatedasa"packagedeal":

(a)Thesetransactionswereconcludedatthesametimeorinconsiderationofmutualinfluence.

(b)Thesetransactionscanonlyachievethebusinessresultasawhole;

(c)Theeffectivenessofonetransactiondependstheoccurrenceofatleastanothertransaction;

(d)Asingletransactionisnoteconomicandiseconomicwhenconsideredtogetherwithothertransactions.

(5)Proportionofminorityshareholdersinfactorcompanieswhoincreasecapitalanddiluteownershipofparentcompanies

Whenothershareholders(minorityshareholders)ofasubsidiaryincreasetheirinvestmentinthesubsidiary,therebydilutingtheparentcompany'sequityproportioninthesubsidiary.Intheconsolidatedfinancialstatements,theshareoftheparentcompanyinthenetbookassetsoftheformersubsidiaryof

thecapitalincreaseiscalculatedaccordingtotheshareratiooftheparentcompanybeforethecapitalincrease,thedifferencebetweentheshareandthenetbookassetsofthelattersubsidiaryafterthecapitalincreaseiscalculatedaccordingtotheshareratiooftheparentcompany,thecapitalreserve(capitalpremiumorcapitalpremium),thecapitalreserve(capitalpremiumorcapitalpremium)isnotoffset,andtheretainedincomeisadjusted.

8.ClassificationofJointArrangementsandAccountingPoliciesforJointOperations

Ajointarrangementisanarrangementjointlycontrolledbytwoormoreparticipants.TheCompanyclassifiesitsjointarrangementsintojointoperationsandjointventures.

(1)JointOperations

AjointoperationisajointarrangementwherebytheCompanyhasrightstotherelatedassetsandobligationsfortherelatedliabilitiesofthearrangement.

TheCompanyrecognizesthefollowingitemsrelatingtoitsinterestinajointoperationandaccountsfortheminaccordancewiththerelevantenterpriseaccountingstandards:

①Recognizesassetsheldseparately,aswellasitsshareofjointlyheldassets;

②Recognizesliabilitiesborneseparately,aswellasitsshareofjointlyborneliabilities;

③Recognizesrevenuefromthesaleofitsshareofoutputfromthejointoperation;

④Recognizesitsshareofrevenuegeneratedbythejointoperationfromthesaleofoutput;

⑤Recognizesexpensesincurredseparately,aswellasitsshareofexpensesincurredbythejointoperation.

(2)JointVentures

AjointventureisajointarrangementwherebytheCompanyhasrightsonlytothenetassetsofthearrangement.

TheCompanyaccountsforitsinvestmentinjointventuresusingtheequitymethodinaccordancewiththerelevantprovisionsonlong-termequityinvestments.

9.Recognitionofcashandcashequivalents

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

10.ForeignCurrencyTransactionsandTranslationofForeignCurrencyFinancialStatements

(1)Methodsfordeterminingconversionratesinforeigncurrencytransactions

TheCompanytranslatesforeigncurrencytransactionsintothefunctionalcurrencyattheinitialrecognitionusingthespotexchangerateonthetransactiondateoranapproximateexchangeratethatisdeterminedaccordingtoareasonablemethodandisclosetothespotexchangerateonthetransactiondate.Theresultingamountisrecordedintheaccountingcurrency.

(2)Methodsofconversionofforeigncurrencyitemsonbalancesheetdays

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

(3)Translationofforeignexchangestatements

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

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

②Theincomeandexpenseitemsintheprofitstatementareconvertedatthespotexchangerateonthetransactiondateortheapproximateexchangerateofthespotexchangerate.

③Theforeigncurrencycashflowandtheforeignsubsidiary'scashflowareconvertedusingtheimmediateexchangerateortheapproximateexchangerateatthedateofthecashflow.Theimpactofexchangeratechangesoncashshouldbeusedasanadjustmentitemandpresentedseparatelyinthecashflowstatement.

④Theforeigncurrencytranslationdifferencesarisingarepresentedunderthe"OtherComprehensiveIncome"itemintheshareholders'equitysectionoftheconsolidatedbalancesheetwhenpreparingtheconsolidatedfinancialstatements.

Whenforeignoperationsaredisposedofandthecontrolrightsarelost,thedifferenceinforeigncurrencystatementsrelatedtotheoverseasoperationsthatarelistedintheshareholders'equityitemsinthebalancesheetistransferredtotheprofitorlossforthecurrentperiod,eitherinwholeorinproportiontothedisposaloftheforeignoperations.

11.Financialinstrument

Financialinstrumentreferstoacompany'sfinancialassetsandcontractsthatformotherunitsoffinancialliabilitiesorequityinstruments.

(1)Recognitionandde-recognitionoffinancialinstrument

TheCompanyrecognizesafinancialassetorliabilitywhenitbecomesonepartyinthefinancialinstrumentcontract.

Financialassetisderecognizedwhen:

①Thecontractualrighttoreceivethecashflowsofthefinancialassetsisterminated;

②Thefinancialassetistransferredandmeetsthefollowingderecognizationcondition.

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

Financialassettransactionsinregularwaysarerecognizedandde-recognizedonthetransactiondate.Theconventionalsaleoffinancialassetsmeansthedeliveryoffinancialassetsinaccordancewiththecontractualtermsandconditions,atthetimesetoutintheregulationsormarketpractices.TransactiondatereferstothedatewhentheCompanypromisestobuyorsellfinancialassets.

(2)ClassificationandsubsequentmeasurementoffinancialassetsAtinitialrecognition,theCompanyclassifiesfinancialassetsintothefollowingthreecategoriesbasedonthebusinessmodelofmanagingfinancialassetsandthecontractualcashflowcharacteristicsoffinancialassets:financialassetsmeasuredatamortizedcostaremeasuredatfairvalueandtheirchangesareincludedinotherfinancialassetswithcurrentprofitandlossandfinancialassetsmeasuredatfairvaluethroughprofitorloss.UnlesstheCompanychangesthebusinessmodelformanagingfinancialassets,inthiscase,allaffectedfinancialassetsarereclassifiedonthefirstdayofthefirstreportingperiodafterthebusinessmodelchanges,otherwisethefinancialassetsmaynotbeinitiallyconfirmed.Financialassetsaremeasuredatthefairvalueattheinitialrecognition.Forfinancialassetsmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccount,relatedtransactionexpensesareaccountedintothecurrentincome.Forotherfinancialassets,therelatedtransactionexpensesareaccountedintotheinitialrecognizedamounts.Billsreceivableandaccountsreceivablearisingfromthesaleofcommoditiesortheprovisionoflaborservicesthatdonotcontainordonotconsidersignificantfinancingcomponents,theCompanyperformsinitialmeasurementaccordingtothetransactionpricedefinedbytheincomestandard.Thesubsequentmeasurementoffinancialassetsdependsontheirclassification:

①FinancialassetsmeasuredatamortizedcostFinancialassetsthatmeetthefollowingconditionsatthesametimeareclassifiedasfinancialassetsmeasuredatamortizedcost:TheCompany'sbusinessmodelformanagingthisfinancialassetistocollectcontractualcashflowsasitsgoal;thecontracttermsofthefinancialassetstipulatethatCashflowisonlythepaymentofprincipalandinterestbasedontheoutstandingprincipalamount.Forsuchfinancialassets,theactualinterestratemethodisusedforsubsequentmeasurementaccordingtotheamortizedcost.Thegainsorlossesarisingfromtheterminationofrecognition,amortizationorimpairmentbasedontheactualinterestratemethodareincludedinthecurrentprofitandloss.

②FinancialassetsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincomeFinancialassetsthatmeetthefollowingconditionsatthesametimeareclassifiedasfinancialassetsmeasuredatfairvalueandtheirchangesareincludedinothercomprehensiveincome:TheCompany'sbusinessmodelformanagingthisfinancialassetistobothtargetthecollectionofcontractualcashflowsandthesaleoffinancialassets.Objective;Thecontractualtermsofthefinancialassetstipulatethatthecashflowgeneratedonaspecificdateisonlyforthepaymentofprincipalandinterestbasedontheoutstandingprincipalamount.Forsuchfinancialassets,fairvalueisusedforsubsequentmeasurement.Exceptforimpairmentlossesorgainsandexchangegainsandlossesrecognizedascurrentgainsandlosses,changesinthefairvalueofsuchfinancialassetsarerecognizedasothercomprehensiveincome.Untilthefinancialassetisderecognized,itsaccumulatedgainsorlossesaretransferredtocurrentgainsandlosses.However,therelevantinterestincomeofthefinancialassetcalculatedbytheactualinterestratemethodisincludedinthecurrentprofitandloss.

TheCompanyirrevocablychoosestodesignateaportionofnon-tradeableequityinstrumentinvestmentasafinancialassetmeasuredatfairvalueandwhosevariationisincludedinotherconsolidatedincome.Only

therelevantdividendincomeisincludedinthecurrentprofitandloss,andthevariationoffairvalueisrecognizedasotherconsolidatedincome.

③FinancialassetsmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccountTheabovefinancialassetsmeasuredatamortizedcostandotherfinancialassetsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincomeareclassifiedasfinancialassetsmeasuredatfairvalueandwhosechangesareincludedinthecurrentprofitandloss.Forsuchfinancialassets,fairvalueisusedforsubsequentmeasurement,andallchangesinfairvalueareincludedincurrentprofitandloss.

(3)ClassificationandmeasurementoffinancialliabilitiesTheCompanyclassifiesfinancialliabilitiesintofinancialliabilitiesmeasuredatfairvalueandtheirchangesincludedinthecurrentprofitandloss,loancommitmentsandfinancialguaranteecontractliabilitiesforloansbelowmarketinterestrates,andfinancialliabilitiesmeasuredatamortizedcost.

Thesubsequentmeasurementoffinancialliabilitiesdependsontheirclassification:

①FinancialliabilitiesmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccountSuchfinancialliabilitiesincludetransactionalfinancialliabilities(includingderivativesthatarefinancialliabilities)andfinancialliabilitiesdesignatedasatfairvaluethroughprofitorloss.Aftertheinitialrecognition,thefinancialliabilitiesaresubsequentlymeasuredatfairvalue.Exceptforthehedgeaccounting,thegainsorlosses(includinginterestexpenses)arerecognizedinprofitorloss.However,forthefinancialliabilitiesdesignatedasfairvalueandwhosevariationsareincludedintheprofitsandlossesofthecurrentperiod,thevariableamountofthefairvalueofthefinancialliabilityduetothevariationofcreditriskofthefinancialliabilityshallbeincludedintheotherconsolidatedincome.Whenthefinancialliabilityisterminated,thecumulativegainsandlossespreviouslyincludedintheotherconsolidatedincomeshallbetransferredoutoftheotherconsolidatedincomeandshallbeincludedintheretainedincome.

②LoancommitmentsandfinancialsecuritycontractualliabilitiesAloancommitmentisapromisethattheCompanyprovidestocustomerstoissueloanstocustomerswithestablishedcontracttermswithinthecommitmentperiod.Loancommitmentsareprovidedforimpairmentlossesbasedontheexpectedcreditlossmodel.AfinancialguaranteecontractreferstoacontractthatrequirestheCompanytopayaspecificamountofcompensationtothecontractholderwhosufferedalosswhenaspecificdebtorisunabletorepaythedebtinaccordancewiththeoriginalormodifieddebtinstrumentterms.Financialguaranteecontractliabilitiesaresubsequentlymeasuredbasedonthehigherofthelossreserveamountdeterminedinaccordancewiththeprincipleofimpairmentoffinancialinstrumentsandtheinitialrecognitionamountafterdeductingtheaccumulatedamortizationamountdeterminedinaccordancewiththerevenuerecognitionprinciple.

③Financialliabilitiesmeasuredatamortizedcost

Afterinitialrecognition,otherfinancialliabilitiesaremeasuredatamortizedcostusingtheeffectiveinterestmethod.Exceptinspecialcircumstances,financialliabilitiesandequityinstrumentsaredistinguishedaccordingtothefollowingprinciples:

①IftheCompanycannotunconditionallyavoiddeliveringcashorotherfinancialassetstofulfillacontractualobligation,thecontractualobligationmeetsthedefinitionoffinancialliability.Whilesomefinancialinstrumentsdonotexplicitlycontaintermsandconditionsforthedeliveryofcashorotherfinancialassets,theymayindirectlyformcontractualobligationsthroughothertermsandconditions.

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

(4)Derivativefinancialinstrumentsandembeddedderivatives

Derivativefinancialinstrumentsareinitiallymeasuredatthefairvalueofthedaywhenthederivativetransactioncontractissigned,andaresubsequentlymeasuredattheirfairvalues.Derivativefinancialinstrumentswithapositivefairvaluearerecognizedasasset,andinstrumentswithanegativefairvaluearerecognizedasliabilities.

Thegainsandlossesarisingfromthechangeinfairvalueofderivativesaredirectlyincludedintheprofitsandlossesofthecurrentperiod,exceptthatthepartofthecashflowthatisvalidinthehedgeisincludedintheotherconsolidatedincomeandtransferredoutwhenthehedgeditemaffectsthegainandlossofthecurrentperiod.

Forahybridinstrumentcontaininganembeddedderivativeinstrument,iftheprincipalcontractisafinancialasset,thehybridinstrumentasawholeappliestherelevantprovisionsofthefinancialassetclassification.Ifthemaincontractisnotafinancialasset,andthehybridinstrumentisnotmeasuredatfairvalueanditschangesareincludedinthecurrentprofitandlossforaccounting,theembeddedderivativedoesnothaveacloserelationshipwiththemaincontractintermsofeconomiccharacteristicsandrisks,anditisIftheinstrumentswiththesameconditionsandexistseparatelymeetthedefinitionofderivativeinstruments,theembeddedderivativeinstrumentsareseparatedfromthemixedinstrumentsandtreatedasseparatederivativefinancialinstruments.Ifthefairvalueoftheembeddedderivativeonthe

acquisitiondateorthesubsequentbalancesheetdatecannotbemeasuredseparately,thehybridinstrumentasawholeisdesignatedasafinancialassetorfinancialliabilitymeasuredatfairvalueandwhosechangesareincludedinthecurrentprofitorloss.

(5)FinancialinstrumentLessTheCompanyshallconfirmthepreparationforlossonthebasisofexpectedcreditlossforfinancialassetsmeasuredatamortizationcosts,creditor'srightsinvestmentsmeasuredatfairvalue,contractualassets,leasingreceivables,loancommitmentsandfinancialguaranteecontracts,etc.

①MeasurementofexpectedcreditlossesofaccountsreceivableTheexpectedcreditlossreferstotheweightedaverageofthecreditlossesoffinancialinstrumentsthatareweightedbytheriskofdefault.CreditlossreferstothedifferencebetweenallcontractualcashflowsreceivablefromthecontractandallcashflowsexpectedtobereceivedbytheCompanyattheoriginalactualinterestrate,thatis,thepresentvalueofallcashshortages.Amongthem,thefinancialassetswhichhavebeenpurchasedorbornbytheCompanyshallbediscountedaccordingtotheactualrateofcreditadjustmentofthefinancialassets.

Theexpectedlifetimecreditlossistheexpectedcreditlossduetoallpossibledefaulteventsduringtheentireexpectedlifeofthefinancialinstrument.

Expectedcreditlossesinthenext12monthsareexpectedtoresultfrompossibledefaultsinfinancialinstrumentswithin12monthsafterthebalancesheetdate(orestimateddurationoffinancialinstrumentsiftheexpecteddurationislessthan12months)Creditlossesarepartoftheexpectedlifetimecreditloss.

Oneachbalancesheetday,theCompanymeasurestheexpectedcreditlossesoffinancialinstrumentsatdifferentstages.Wherethecreditriskhasnotincreasedsignificantlysincetheinitialconfirmationofthefinancialinstrument,itisinthefirststage.TheCompanymeasuresthepreparationforlossaccordingtotheexpectedcreditlossinthenext12months.Wherethecreditriskhasincreasedsignificantlysincetheinitialconfirmationbutthecreditimpairmenthasnotoccurred,thefinancialinstrumentisinthesecondstage.Whereacreditimpairmenthasoccurredsincetheinitialconfirmationofthefinancialinstrument,itshallbeinthethirdstage,andtheCompanyshallprepareformeasuringtheexpectedcreditlossofthewholesurvivalperiodoftheinstrument.

Forfinancialinstrumentswithlowcreditriskonthebalancesheetdate,theCompanyassumesthatthecreditriskhasnotincreasedsignificantlysincetheinitialrecognition,andmeasuresthelossprovisionbasedontheexpectedcreditlossesinthenext12months.

Forfinancialinstrumentsthatareinthefirstandsecondstagesandwithlowercreditrisk,theCompanycalculatesinterestincomebasedontheirbookbalancesandactualinterestrateswithoutdeductionforimpairmentprovision.Forfinancialinstrumentsinthethirdstage,interestincomeiscalculatedbasedontheamortizedcostandtheactualinterestrateafterthebookbalanceminustheprovisionforimpairment.

Regardingbillsreceivable,accountsreceivableandfinancingreceivables,regardlessofwhetherthereisasignificantfinancingcomponent,theCompanymeasuresthelossprovisionbasedontheexpectedcreditlossesthroughouttheduration.

Accountsreceivable/contractassets

ApplicablefromDecember1,2025

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

Thebasisfordeterminingthecombinationofnotesreceivableisasfollows:

NotesReceivableCombination1CommercialAcceptanceBill

NotesReceivableCombination2BankAcceptanceBill

ForNotesreceivabledividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

Thebasisfordeterminingthecombinationofaccountsreceivableisasfollows:

AccountsReceivablePortfolio1:Receivablesfromcurtainwallbusiness

AccountsReceivablePortfolio2:Receivablesfromplatformscreendoorbusiness

AccountsReceivablePortfolio3:Receivablesfromnewmaterialsbusiness

AccountsReceivablePortfolio4:Receivablesfromnewenergybusiness

AccountsReceivablePortfolio5:Receivablesfromcommercialrealestateandothers

Otherreceivableportfolio6Receivablesfromrelatedpartieswithinthescopeofconsolidation

Fortheaccountsreceivabledividedintoacombination,theCompanyreferstothehistoricalcreditlossexperience,combinedwiththecurrentsituationandtheforecastofthefutureeconomicsituation,compilestheaccountreceivableageandthewholeexpectedcreditlossratetable,andcalculatestheexpectedcreditloss.

Thebasisfordeterminingthecombinationofotherreceivablesisasfollows:

Otherreceivableportfolio1Interestreceivable

Portfolioofotherreceivables2Dividendsreceivable

Othercombinationsofreceivables3Depositandmarginreceivable

Otherreceivableportfolio4ReceivableadvancesCombinationofotherreceivables5Value-addedtaxreceivableisincreasedandrefundedOtherreceivableportfolio6ReceivablesfromrelatedpartieswithinthescopeofconsolidationOtherreceivablesportfolio7OtherreceivablesForotherreceivablesdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.Thebasisfordeterminingthecombinationofreceivablesfinancingisasfollows:

Receivablesfinancingportfolio1bankacceptancebillForNotesreceivabledividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

Thebasisfordeterminingtheportfolioofcontractassetsisasfollows:

Contractassetsportfolio1CompletedandunsettledprojectnotmeetingcollectionconditionsContractassetsportfolio2QualityguaranteedepositnotmeetingcollectionconditionsContractassetsportfolio3conditionalcollectionrightofsalesForcontractassetsdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.ApplicableonandbeforeNovember30,2025Wherethereisobjectiveevidenceofimpairment,aswellasotherreceivableinstruments,receivables,otherreceivables,receivablesfinancingandlong-termreceivablesapplicabletoindividualassessments,separateimpairmenttestsareperformedtoconfirmexpectedcreditlossesandprepareindividualimpairment.Fornotesreceivable,accountsreceivable,otherreceivables,financingofreceivables,long-termreceivables,andcontractassetsforwhichthereisnoobjectiveevidenceofimpairment,orwhenindividualfinancialassetscannotbeassessedatareasonablecost,theCompanydividesbillsreceivable,accountsreceivable,otherreceivables,receivablefinancing,long-termreceivables,andcontractassetsintoseveralcombinationsbasedoncreditriskcharacteristics,andcalculatesexpectedcreditlossesonthebasisofthecombination.Thebasisfordeterminingthecombinationisasfollows:

Thebasisfordeterminingthecombinationofnotesreceivableisasfollows:

NotesReceivableCombination1CommercialAcceptanceBillNotesReceivableCombination2BankAcceptanceBillForNotesreceivabledividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthrough

defaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.Thebasisfordeterminingthecombinationofaccountsreceivableisasfollows:

Accountsreceivablecombination1AccountsreceivablebusinessAccountsreceivablecombination2RealestatereceivablebusinessAccountsreceivablecombination3OthersreceivablebusinessOtherreceivableportfolio4ReceivablesfromrelatedpartieswithinthescopeofconsolidationFortheaccountsreceivabledividedintoacombination,theCompanyreferstothehistoricalcreditlossexperience,combinedwiththecurrentsituationandtheforecastofthefutureeconomicsituation,compilestheaccountreceivableageandthewholeexpectedcreditlossratetable,andcalculatestheexpectedcreditloss.

Thebasisfordeterminingthecombinationofotherreceivablesisasfollows:

Otherreceivableportfolio1InterestreceivablePortfolioofotherreceivables2DividendsreceivableOthercombinationsofreceivables3DepositandmarginreceivableOtherreceivableportfolio4ReceivableadvancesCombinationofotherreceivables5Value-addedtaxreceivableisincreasedandrefundedOtherreceivableportfolio6ReceivablesfromrelatedpartieswithinthescopeofconsolidationOtherreceivablesportfolio7OtherreceivablesForotherreceivablesdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

Thebasisfordeterminingthecombinationofreceivablesfinancingisasfollows:

Receivablesfinancingportfolio1bankacceptancebillForNotesreceivabledividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.Thebasisfordeterminingtheportfolioofcontractassetsisasfollows:

Contractassetsportfolio1conditionalcollectionrightofsalesContractassetsportfolio2CompletedandunsettledprojectnotmeetingcollectionconditionsContractassetsportfolio3QualityguaranteedepositnotmeetingcollectionconditionsForcontractassetsdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthrough

defaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.OtherdebtinvestmentForotherreceivablesdividedintoportfolios,theCompanyreferstohistoricalcreditlossexperience,combinedwithcurrentconditionsandpredictionsoffutureeconomicconditions,andcalculatesthroughdefaultriskexposureandexpectedcreditlossratewithinthenext12monthsortheentiredurationExpectedcreditlosses.

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

③SignificantincreaseincreditriskTheCompanycomparesthedefaultprobabilityofthefinancialinstrumentduringtheexpectedlifetimedeterminedbythebalancesheetdatewiththedefaultprobabilityoftheexpectedlifetimeduringtheinitialconfirmationtodeterminetherelativeprobabilityofthedefaultprobabilityofthefinancialinstrumentduringtheexpectedlifetimeChangestoassesswhetherthecreditriskoffinancialinstrumentshasincreasedsignificantlysinceinitialrecognition.Indeterminingwhetherthecreditriskhasincreasedsignificantlysincetheinitialrecognition,theCompanyconsidersreasonableandevidencedinformation,includingforward-lookinginformation,thatcanbeobtainedwithoutunnecessaryadditionalcostsoreffort.TheinformationconsideredbytheCompanyincludes:

A.Significantchangesininternalpriceindicatorsresultingfromchangesincreditrisk;B.Adversechangesinbusiness,financialoreconomicconditionsthatareexpectedtocausesignificantchangesinthedebtor'sabilitytoperformitsdebtserviceobligations;C.Whethertheactualorexpectedoperatingresultsofthedebtorhavechangedsignificantly;whethertheregulatory,economicortechnicalenvironmentofthedebtorhasundergonesignificantadversechanges;

D.Whetherthereisasignificantchangeinthevalueofthecollateralusedasdebtcollateralortheguaranteeprovidedbyathirdpartyorthequalityofcreditenhancement.Thesechangesareexpectedtoreducethedebtor'seconomicmotivationforrepaymentwithinthetimelimitspecifiedinthecontractoraffecttheprobabilityofdefault;

E.Whetherthereisasignificantchangeintheeconomicmotivationthatisexpectedtoreducethedebtor'srepaymentaccordingtothecontractualdeadline;

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

G.Whethertheexpectedperformanceandrepaymentbehaviorofthedebtorhaschangedsignificantly;H.Whetherthecontractpaymentisoverdueformorethan(including)30days.Basedonthenatureoffinancialinstruments,theCompanyassesseswhethercreditriskhasincreasedsignificantlyonthebasisofasinglefinancialinstrumentorcombinationoffinancialinstruments.Whenconductinganassessmentbasedonacombinationoffinancialinstruments,theCompanycanclassifyfinancialinstrumentsbasedoncommoncreditriskcharacteristics,suchasoverdueinformationandcreditriskratings.Iftheoverdueperiodexceeds30days,theCompanyhasdeterminedthatthecreditriskoffinancialinstrumentshasincreasedsignificantly.UnlesstheCompanydoesnothavetopayexcessivecostsoreffortstoobtainreasonableandwarrantedinformation,itprovesthatalthoughithasexceededthetimelimitof30daysagreeduponintheContract,creditriskshavenotincreasedsignificantlysincetheinitialconfirmation.

④FinancialassetswithcreditimpairmentTheCompanyassessesonthebalancesheetdatewhetherfinancialassetsmeasuredatamortizedcostandcreditinvestmentsmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincomehaveundergonecreditimpairment.Whenoneormoreeventsthatadverselyaffecttheexpectedfuturecashflowsofafinancialassetoccur,thefinancialassetbecomesafinancialassetthathassufferedacreditimpairment.Evidencethatcreditimpairmenthasoccurredinfinancialassetsincludesthefollowingobservableinformation:

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

⑤Presentationofexpectedcreditlossmeasurement

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

⑥Canceled

Ifitisnolongerreasonablyexpectedthatthecontractcashflowofthefinancialassetswillbefullyorpartiallyrecovered,thebookbalanceofthefinancialassetswillbedirectlyreduced.Suchwrite-offconstitutethederecognizationofrelatedfinancialassets.ThisusuallyoccurswhentheCompany

determinesthatthedebtorhasnoassetsorsourcesofincomethatgeneratesufficientcashflowtocovertheamountthatwillbewrittendown.

Ifthefinancialassetsthathavebeenwrittendownarerecoveredinthefuture,thereversaloftheimpairmentlossisincludedintheprofitorlossofthecurrentperiod.

(6)Transferoffinancialassets

Thetransferoffinancialassetsreferstothefollowingtwosituations:

A.Transferthecontractualrighttoreceivecashflowoffinancialassetstoanotherparty;

B.Transfersthefinancialassetstotheotherpartyinwholeorinpart,butreservesthecontractualrighttocollectthecashflowofthefinancialassetsandundertakesthecontractualobligationtopaythecollectedcashflowtooneormorerecipients.

①De-identificationoftransferredfinancialassets

Thosewhohavetransferredalmostallrisksandrewardsintheownershipoffinancialassetstothetransferee,orhaveneithertransferrednorretainedalmostalltherisksandrewardsintheownershipoffinancialassets,buthavegivenupcontrolofthefinancialassets,terminatetheconfirmationThefinancialasset.

Indeterminingwhethercontroloverthetransferredfinancialassethasbeenwaived,theactualcapacityofthetransferortosellthefinancialassetisdetermined.Ifthetransferorisabletosellthetransferredfinancialassetswhollytoathirdpartythatdoesnothavearelationshipwiththem,andhasnoadditionalconditionstolimitthesale,itindicatestheCompanyhaswaivedcontroloverthefinancialassets.

TheCompanypaysattentiontotheessenceoffinancialassettransferwhenjudgingwhetherfinancialassettransfermeetstheconditionoffinancialassettermination.

Iftheoveralltransferoffinancialassetsmeetstheconditionsforterminationofconfirmation,thedifferencebetweenthefollowingtwoamountsisincludedinthecurrentprofitandloss:

A.ContinuingidentificationoftransferredBookvalue；

B.Thesumoftheamountreceivedasaresultofthetransferandtheamountaccruedasaresultofthechangeinthefairvalueofthetransferinrespectoftheterminationrecognizedportionoftheamountpreviouslychargeddirectlytotheotherconsolidatedproceeds(thefinancialassetsinvolvedinthetransferarethoseclassifiedinaccordancewithArticle18ofEnterpriseAccountingStandardNo.22-FinancialInstrumentsRecognitionandMeasurementasmeasuredbythefairvalueandwhosechangeischargedtotheotherconsolidatedproceeds).

Ifthepartialtransferoffinancialassetsmeetstheconditionsforderecognization,thebookvalueoftheentiretransferredfinancialassetswillbeincludedinthederecognizedpartandtheunterminatedpart(inthiscase,theretainedserviceassetsareregardedaspartofthecontinuedrecognitionoffinancialassets)Betweenthem,theyareapportionedaccordingtotheirrespectiverelativefairvaluesonthe

transferdate,andthedifferencebetweenthefollowingtwoamountsisincludedinthecurrentprofitandloss:

A.Terminationofthebookvalueoftherecognizedportiononthedateofderecognization;B.Thesumoftheamountreceivedasaresultofthetransferandtheamountaccruedasaresultofthechangeinthefairvalueofthetransferinrespectoftheterminationrecognizedportionoftheamountpreviouslychargedtotheotherconsolidatedproceeds(thefinancialassetsinvolvedinthetransferarethoseclassifiedinaccordancewithArticle18ofEnterpriseAccountingStandardNo.22-FinancialInstrumentsRecognitionandMeasurementasmeasuredbythefairvalueandwhosechangeischargedtotheotherconsolidatedproceeds).

②ContinuetobeinvolvedinthetransferredfinancialassetsIfneithertransfernorretainalmostalltherisksandrewardsoftheownershipoffinancialassets,andhavenotgivenupcontrolofthefinancialassets,therelevantfinancialassetsshouldbeconfirmedaccordingtotheextentoftheircontinuedinvolvementinthetransferredfinancialassets,andtherelevantliabilitiesshouldberecognizedaccordingly.

Theextenttowhichthetransferredfinancialassetscontinuetobeinvolvedreferstotheextenttowhichtheenterpriseundertakestheriskorcompensationofthevaluechangeofthetransferredfinancialassets.(III)ContinuingidentificationoftransferredfinancialassetsWherealmostallrisksandremunerationinrelationtoownershipofthetransferredfinancialassetsareretained,thewholeofthetransferredfinancialassetsshallcontinuetoberecognizedandtheconsiderationreceivedshallberecognizedasafinancialliability.

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

(7)Deductionoffinancialassetsandliabilities

Financialassetsandfinancialliabilitiesshouldbelistedseparatelyinthebalancesheet,andcannotbeoffsetagainsteachother.However,ifthefollowingconditionsaremet,thenetamountoffsetbyeachotherislistedinthebalancesheet:

TheCompanyhasastatutoryrighttooffsettheconfirmedamount,andsuchlegalrightiscurrentlyenforceable;

TheCompanyplanstosettlethenetassetsorrealizethefinancialassetsandliquidatethefinancialliabilitiesatthesametime.

Thetransferringpartyshallnotoffsetthetransferredfinancialassetsandrelatedliabilitiesifitdoesnotmeettheconditionsforterminatingtherecognition.

(8)RecognitionoffairvalueofFinanceinstrumentsForthemethodfordeterminingthefairvalueoffinancialassetsandfinancialliabilities,see34(2)inChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.

12.Notesreceivable

SeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates11.FinancialTools.

13.AccountreceivableSeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates11.FinancialTools.TheCompanyneedstocomplywiththedisclosurerequirementsofthedecorationanddecorationindustryintheGuidelinesfortheSelf-disciplineandSupervisionofListedCompaniesofShenzhenStockExchangeNo.3-IndustryInformationDisclosure.

14.Receivablefinancing

SeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates11.FinancialTools.

15.OtherreceivablesSeeChapterVIII,V,ImportantAccountingPoliciesandAccountingEstimates11.FinancialTools.

16.ContractassetsTheCompanypresentscontractassetsorliabilitiesinthebalancesheetaccordingtotherelationshipbetweenperformanceobligationandcustomerpayment.TheconsiderationforwhichtheCompanyisentitledtoreceive(subjecttofactorsotherthanthepassageoftime)forthetransferofgoodsortheprovisionofservicestocustomersislistedascontractassets.TheCompany'sobligationtotransfergoodsorprovideservicestocustomersforconsiderationreceivedorreceivablefromcustomersislistedascontractualliabilities.Contractassetsandcontractliabilitiesarelistedseparatelyinthebalancesheet.Contractassetsandcontractliabilitiesunderthesamecontractarelistedinnetamount.Ifthenetamountisthedebitbalance,itshallbelistedin"contractassets"or"othernoncurrentassets"accordingtoitsliquidity;ifthenetamountisthecreditbalance,itshallbelistedin"contractliabilities"or"othernoncurrentliabilities"accordingtoitsliquidity.Contractassetsandcontractliabilitiesunderdifferentcontractscannotoffseteachother.

ForthedeterminationmethodandaccountingtreatmentmethodoftheCompany'sexpectedcreditlossofcontractassets,see11.FinancialinstrumentsinChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.

17.Inventories

(1)ClassificationofinventoriesInventoriesrefertofinishedgoodsormerchandiseheldforsaleintheordinarycourseofbusiness,work-in-process,andmaterialsandsuppliesconsumedintheproductionprocessorduringtherenderingofservices,includingrawmaterials,work-in-process,semi-finishedgoods,finishedgoods,merchandiseinventories,andreusablematerials.

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

(3)InventorysystemTheCompanyinventoryadoptstheperpetualinventorysystem,countingatleastonceayear,theinventoryprofitandlossamountisincludedinthecurrentyear'sprofitandloss.

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

(1)Inthecourseofnormalproductionandoperation,thenetrealizablevalueoffinishedgoods,commoditiesandmaterialsdirectlyusedforsaleshallbedeterminedbytheestimatedpriceoftheinventoryminustheestimatedcostofsaleandrelatedtaxes.Theinventoryheldfortheexecutionofasalescontractoralaborcontractshallbemeasuredonthebasisofthecontractpriceasitsnetrealizablevalue;Ifthequantityheldisgreaterthanthequantityorderedunderthesalescontract,thenetrealizablevalueoftheexcessinventoryismeasuredonthebasisofthegeneralsalesprice.Formaterialsusedforsale,themarketpriceshallbeusedasthemeasurementbasisforthenetrealizablevalue.

②Inthenormalproductionandoperationprocess,theinventoryofmaterialsthatneedtobeprocessedisdeterminedbytheamountoftheestimatedsellingpriceofthefinishedproductminustheestimatedcost

tobeincurredatthetimeofcompletion,estimatedsalesexpensesandrelatedtaxesRealizethenetvalue.Ifthenetrealizablevalueofthefinishedproductproducedbyitishigherthanthecost,thematerialismeasuredatcost;Ifthedecreaseinthepriceofthematerialindicatesthatthenetrealizablevalueofthefinishedproductislowerthanthecost,thematerialismeasuredasthenetrealizablevalueandtheinventoryispreparedforadecreasebasedonitsdifference.

③Ifthefactorsaffectingthepreviouswrite-downofinventoryvaluehavedisappearedonthebalancesheetdate,theamountofthewrite-downwillberestoredandtransferredbackwithintheamountofinventorydepreciationreservethathasbeenaccrued,andtheamountreturnedwillbeincludedinthecurrentprofitandloss.

(5)Methodsofamortizationofswingmaterials

①Low-valueconsumablesareamortizedonon-offamortizationbasisatusing.

②Packagesareamortizedonon-offamortizationbasisatusing.

18.Long-termshareequityinvestment

TheGroup'slong-termequityinvestmentincludescontroloninvestedentitiesandsignificantimpactsonequityinvestment.InvestedentitiesonwhichtheGrouphassignificantimpactsareassociatesoftheGroup.

(1)Basisforrecognitionofcommoncontrolandmajorinfluenceoninvestedentities

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

Majorinfluencereferstothepowertoparticipateindecision-makingoffinancialandoperationpoliciesofacompany,butcannotcontrolorjointlycontrolthemakingofthepolicies.WhenconsideringwhethertheCompanycanimposesignificantimpactsontheinvestedentity,impactsofconversionofshareswithvotingrightshelddirectlyorindirectlybytheinvestorandvotingrightsthatcanbeexecutedinthisperiodheldbytheinvestorandotherpartyintosharesoftheinvestedentityshouldbeconsidered.

IftheCompanydirectlyorthroughsubsidiariesholdsmorethan20%(inclusive)butlessthan50%oftheshareswithvotingrightsoftheinvestedentity,unlessthereisclearevidenceprovingthatthe

Companycannotparticipatethedecision-makingofproductionandoperationoftheinvestedentity,theCompanyhasmajorinfluenceontheinvestedentity.

(2)RecognitionofinitialinvestmentcostsLong-termequityinvestmentsformedbymergerofenterprisesshallbedeterminedinaccordancewiththefollowingprovisions:

A.Inthecaseofanenterprisemergerunderthesamecontrol,wherethemergingpartymakesavaluationofthemergerbypaymentofcash,transferofnon-cashassetsorundertakingliabilities,theshareofthebookvalueoftheowner'sinterestinthefinalcontrollingparty'sconsolidatedfinancialstatementsastheinitialinvestmentcostofthelong-termequityinvestmentatthedateofthemerger.Thedifferencebetweentheinitialinvestmentcostoflong-termequityinvestmentandthecashpaid,thetransferrednon-cashassetsandthebookvalueofthedebtassumedshallbeadjustedtothecapitalreserve;ifthecapitalreserveisinsufficienttooffset,theretainedearningsshallbeadjusted;Long-termequityinvestmentgeneratedbyenterprisemerger:forlong-termequityinvestmentobtainedbymergerofenterprisesundercommoncontrol,theobtainedshareofbookvalueoftheinterestsofthemergedparty'sownerintheconsolidatefinancialstatementsonthemergerdateiscosts;forlong-termequityinvestmentobtainedbymergerofenterprisesnotundercommoncontrol,themergercostistheinvestmentcost.Adjustthecapitalreserveaccordingtothedifferencebetweentheinitialinvestmentcostoflong-termequityinvestmentandthetotalfacevalueoftheissuedshares.Ifthecapitalreserveisinsufficienttooffsetorreduce,theretainedincomeshallbeadjusted;

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

Long-termequityinvestmentsformedbymergerofenterprisesshallbedeterminedinaccordancewiththefollowingprovisions:

Forlong-termequityinvestmentobtainedbycash,theactuallypaidconsiderationistheinitialinvestmentcost.Initialinvestmentcostsincludeexpenses,taxesandothernecessaryexpendituresdirectlyrelatedtotheacquisitionoflong-termequityinvestments;

B.Long-termequityinvestmentsacquiredfromtheissuanceofinterestsecuritiesaretheinitialinvestmentcostsbasedonthefairvalueoftheissueinterestsecurities;

C.Forlong-termequityinvestmentsobtainedthroughnon-monetaryassetexchanges,iftheexchangehascommercialsubstanceandthefairvalueoftheexchangedassetsorexchangedassetscanbereliablymeasured,thefairvalueoftheexchangedassetsandrelevanttaxesshallbeusedastheinitialInvestmentcost,thedifferencebetweenthefairvalueandbookvalueoftheswapped-outassetisincludedinthecurrentprofitandloss;ifthenon-monetaryassetexchangedoesnotmeettheabovetwoconditionsatthe

sametime,thebookvalueoftheswapped-outassetandrelevanttaxeswillbeusedastheinitialinvestmentcost.D.Long-termequityinvestmentsacquiredthroughdebtrestructuringdeterminetheirrecordedvalueatthefairvalueofthewaivedclaimsandothercostssuchastaxesdirectlyattributabletotheassetsandaccountforthedifferencebetweenthefairvalueandthebookvalueofthewaivedclaims.

(3)Subsequentmeasurementandrecognitionofgain/lossTheCompanyusesthecostmethodtomeasurelong-termshareequityinvestmentinwhichtheCompanycancontroltheinvestedentity;andusestheequitymethodtomeasurelong-termshareequityinvestmentinwhichtheCompanyhassubstantialinfluenceontheinvestedentity.

①CostForthelong-termequityinvestmentmeasuredonthecostbasis,exceptfortheannouncedcashdividendorprofitincludedinthepracticalcostorpricewhentheinvestmentwasmade,thecashdividendsorprofitdistributedbytheinvestedentityarerecognizedasinvestmentgainsinthecurrentgain/lossaccount.EquityGainsfromlong-termequityinvestmentmeasuredbyequityWhentheequitymethodisusedtomeasurelong-termequityinvestment,theinvestmentcostwillnotbeadjustediftheinvestmentcostofthelong-termequityinvestmentislargerthantheshareoffairvalueoftherecognizableassetsoftheinvestedentity.Whenitissmallerthantheshareoffairvalueoftherecognizableassetsoftheinvestedentity,thebookvaluewillbeadjustedandthedifferenceisincludedinthecurrentgainsoftheinvestment.

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

Wheresubstantialinfluenceoninvestedentitiesisimposedorjointcontrolisimplementedduetoincreaseininvestment,thesumofthefairvalueoftheoriginalequityandincreasedinvestmentontheconversiondateistheinitialinvestmentcostundertheequitymethod.Iftheequityinvestmentoriginallyheldisclassifiedasotherequityinstrumentinvestment,thedifferencebetweenthefairvalueandthebookvalue,aswellastheaccumulatedgainsorlossesoriginallyincludedinothercomprehensiveincome,shallbetransferredoutofothercomprehensiveincomeandincludedinretainedincomeinthecurrentperiodwhentheequitymethodisadopted.Wherejointcontrolorsubstantialinfluenceoninvestedentitiesislostduetodisposalofpartofinvestment,theremainingequityafterthedisposalshouldbetreatedaccordingtotheEnterpriseAccountingStandardNo.22–RecognitionandMeasurementofFinancialInstrumentsfromthedateoflosingthejointcontrolorsubstantialinfluence.Thedifferencebetweenthefairvalueandbookvalueshouldbeaccountedtheprofitandlossofthecurrentperiod.Forothermisc.incomesoforiginalshareequityinvestmentdeterminedusingtheequitymethod,whentheequitymethodisnolongerused,itshouldbetreatedbasedonthesamebasisofthetreatmentofrelatedassetsorliabilityoftheinvestedentities;theotherowners'interestsrelatedtotheoriginalshareequityinvestmentshouldbetransferredtogain/lossofthecurrentperiod.

(4)Equityinvestmentheldforsale

Fortheremainingequityinvestmentsnotclassifiedasassetsheldforsale,theequitymethodisadoptedforaccountingtreatment.

Equityinvestmentsclassifiedasheldforsaletoassociatesthatarenolongereligibletoholdclassifiedassetsforsaleareretrospectivelyadjustedusingtheequitymethodstartingfromthedatethattheyareclassifiedasheldforsale.Theclassificationisadjustedtoholdthefinancialstatementsfortheperiodtobesold.

(5)Impairmentexaminationandprovidingofimpairmentprovision

Forinvestmentsinsubsidiaries,associatesandjointventures,themethodofaccruingassetimpairmentisshownin24.Long-termassetimpairmentinChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.

19.Investmentrealestates

(1)Classificationofinvestmentrealestate

Investmentrealestatesareheldforrentorcapitalappreciation,orboth.Theseinclude,interalia:

①Leasedlandusingright

(2)therighttousethelandthatistransferredafterholdingandpreparingfortheincrement.

③Leasedbuilding

(2)MeasurementofinvestmentrealestateForinvestmentrealestateswithanactiverealestatetransactionmarketandtheCompanycanobtainmarketpriceandotherinformationofsameorsimilarrealestatestoreasonablyestimatetheinvestmentrealestates'fairvalue,theCompanywillusethefairvaluemodetomeasuretheinvestmentrealestatessubsequently.Variationsinfairvalueareaccountedintothecurrentgain/lossaccount.Thefairvalueofinvestmentrealestateisdeterminedwithreferencetothecurrentmarketpricesofsameorsimilarrealestatesinactivemarkets;whennosuchpriceisavailable,withreferencetotherecenttransactionpricesandconsiderationoffactorsincludingtransactionbackground,dateanddistricttoreasonablyestimatethefairvalue;orbasedontheestimatedleasegainsandpresentvalueofrelatedcashflows.

Forinvestmentrealestateunderconstruction(includinginvestmentrealestateunderconstructionforthefirsttime),ifthefairvaluecannotbereliablydeterminedbuttheexpectedfairvalueoftherealestateaftercompletioniscontinuouslyandreliablyobtained,theinvestmentrealestateunderconstructionismeasuredbycost.Whenthefairvaluecanbemeasuredreliablyoraftercompletion(theearlierone),itismeasuredatfairvalue.Foraninvestmentrealestatewhosefairvalueisprovenunabletobeobtainedcontinuouslyandreliablybyobjectiveevidence,therealestatewillbemeasuredatcostbasisuntilitisdisposedandnoresidualvalueremainsasassumed.

20.Fixedassets

Fixedassetsisdefinedasthetangibleassetswhichareheldforthepurposeofproducinggoods,providingservices,leaseorforoperation&management,andhavemorethanoneaccountingyearofservicelife.

(1)Recognitionconditions

Fixedassetsarerecognizedattheactualcostofacquisitionwhenthefollowingconditionsaremet:(1)Theeconomicbenefitsassociatedwiththefixedassetsarelikelytoflowintotheenterprise.

Fixedassetsarerecognizedattheactualcostofacquisitionwhenthefollowingconditionsaremet:(1)Theeconomicbenefitsassociatedwiththefixedassetsarelikelytoflowintotheenterprise.

②Thecostofthefixedassetscanbemeasuredreliably.

Overhaulcostgeneratedbyregularexaminationonfixedassetsisrecognizedasfixedassetscostswhenthereisevidenceprovingthatitmeetsfixassetsrecognitionconditions.Ifnot,itwillbeaccountedintothecurrentgain/lossaccount.

(2)Depreciationmethod

21.Constructioninprocess

(1)Constructioninprogressisaccountedforbyprojectclassification.

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

22.BorrowingCosts

(1)RecognitionprinciplesforcapitalizationofborrowingexpensesBorrowingexpensesoccurredtotheCompanythatcanbeaccountedaspurchasingorproductionofassetsatisfyingtheconditionsofcapitalizing,arecapitalizedandaccountedascostofrelatedasset.

(1)Assetexpenditurehasoccurred;

②Theborrowingexpensehasalreadyoccurred;

③Purchasingorproductionactivity,whichisnecessaryfortheassettoreachtheusefulstatus,hasalreadystarted.

Otherinterestonloans,discountsorpremiumsandexchangedifferencesareincludedintheincomeandlossincurredinthecurrentperiod.

Iftheconstructionorproductionofassetssatisfyingthecapitalizingconditionsissuspendedabnormallyforover3months,capitalizingofborrowingexpensesshallbesuspended.Duringthenormalsuspensionperiod,borrowingexpenseswillbecapitalizedcontinuously.

Whentheassetsatisfyingthecapitalizingconditionshasreacheditsusableorsellablestatus,capitalizingofborrowingexpensesshallbeterminated.

(2)CalculationofthecapitalizationamountofborrowingexpenseInterestexpensesgeneratedbyspecialborrowingslesstheinterestsincomeobtainedfromthedepositofunusedborrowingsorinvestmentgainsfromtemporaryinvestmentiscapitalized;thecapitalizationamountforgeneralborrowingisdeterminedbasedonthecapitalizationratewhichistheexceedingpartoftheaccumulativeassetsexpenseoverweightedaverageoftheassetsexpenseofthespecialborrowing/usedgeneralborrowing.Iftheassetsthatareconstructedorproducedundertheconditionofcapitalizationoccupythegeneralborrowing,theinterestamounttobecapitalizedinthegeneralborrowingshallbecalculatedanddeterminedbymultiplyingthecapitalrateofthegeneralborrowingbytheweightedaverageoftheassetexpenditureoftheaccumulatedassetswhoseexpenditureexceedsthatofthespecializedborrowing.Thecapitalizationratioistheweightedaverageinterestrateofgeneralborrowings.

23.Intangibleassets

Recordedattheactualcostofacquisition.

(1)Amortizationofintangibleassets

①Usefullifeofintangibleassetswithlimitedusefullife

Attheendofeachyear,theCompanywillreexaminetheusefullifeandamortizationbasisofintangibleassetswithlimitedusefullife.Uponreview,theservicelifeandamortizationmethodsofintangibleassetsattheendoftheperiodarenotdifferentfromthosepreviouslyestimated.

(2)Intangibleassetswhichcannotbeforeseeabletobringeconomicbenefitstoenterprisesshallberegardedasintangibleassetswhoseusefullifeisuncertain.Forintangibleassetswithuncertainservicelife,theCompanyreviewstheservicelifeofintangibleassetswithuncertainservicelifeattheendofeachyear.Ifitisstilluncertainafterrechecking,itshallconductanimpairmenttestonthebalancesheetdate.

③Amortizationofintangibleassets

Forintangibleassetswithfiniteusefullives,theCompanydeterminestheirusefullifeuponacquisitionandsystematicallyamortizesthemusingthestraight-linemethodovertheirusefullife.The

amortizationamountisincludedinthecurrentprofitorlossofthebenefitingprojectoraddedtothecostoftherelatedasset.Thespecificamortizationamountistheamountafterthecostisdeductedfromtheestimatedresidualvalue.Forfixedassetsforwhichdepreciationprovisionismade,thedepreciationratewillbedeterminedaftertheaccumulativedepreciationprovisionamountisdeducted.Theresidualvalueofanintangibleassetwithlimitedusefullifeistreatedaszero,exceptwhereathirdpartyundertakestopurchasetheintangibleassetattheendofitsusefullifeortoobtainexpectedresidualvalueinformationbasedontheactivemarket,whichislikelytoexistattheendofitsusefullife.Intangibleassetswithuncertainservicelifewillnotbeamortized.Attheendofeachyear,theusefullifeofintangibleassetswithuncertainusefullifeisreviewed,andifthereisevidencethattheusefullifeofintangibleassetsislimited,theusefullifeisestimatedandthesystemisreasonablyamortizedwithintheexpectedusefullife.

(2)ScopeofR&DexpendituresandrelatedaccountingtreatmentSpecificstandardfordistinguishbetweenresearchanddevelopmentstage

①TheCompanytakestheinformationandrelatedpreparatoryactivitiesforfurtherdevelopmentactivitiesastheresearchstage,andtheintangibleassetsexpenditureintheresearchstageisincludedinthecurrentprofitandlossperiod.

②ThedevelopmentactivitiescarriedoutaftertheCompanyhascompletedtheresearchstageasthedevelopmentstage.

Specificconditionsforcapitalizationofexpendituresinthedevelopmentphase

Expendituresinthedevelopmentphasecanberecognizedasintangibleassetsonlywhenthefollowingconditionsaremet:

A.Itistechnicallyfeasibletocompletetheintangibleassetsothatitcanbeusedorsold;

B.Havetheintentiontocompletetheintangibleassetanduseorsellit;

C.Thewayintangibleassetsgenerateeconomicbenefits,includingtheabilitytoprovethattheproductsproducedbytheintangibleassetsexistinthemarketortheintangibleassetsthemselvesexistinthemarket,andtheintangibleassetswillbeusedinternally,whichcanprovetheirusefulness;

D.Havesufficienttechnical,financialandotherresourcesupporttocompletethedevelopmentoftheintangibleasset,andhavetheabilitytouseorselltheintangibleasset;

E.Theexpenditureattributabletothedevelopmentstageoftheintangibleassetcanbereliablymeasured.

24.Assetsimpairment

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

TheCompanyjudgeswhetherthereisasignofimpairmenttoassetsonthebalancesheetday.Ifsuchsignexists,theCompanyestimatestherecoverableamountandconductstheimpairmenttest.Impairmenttestisconductedannuallyforgoodwillgeneratedbymergersandintangibleassetsthathavenotreachedtheusefulconditionnomatterwhethertheimpairmentsignexists.Therecoverableamountisdeterminedbythehigherofthenetoffairvalueminusdisposalexpenseandthepresentvalueofthepredictedfuturecashflow.TheCompanyestimatestherecoverableamountontheindividualassetitembasis;whetheritishardtoestimatetherecoverableamountontheindividualassetitembasis,determinetherecoverableamountbasedontheassetgroupthattheassetsbelongto.TheassetsgroupisdeterminedbywhetherthemaincashflowgeneratedbytheGroupisindependentfromthosegeneratedbyotherassetsorassetsgroups.

Whentherecoverableamountoftheassetsorassetsgroupislowerthanitsbookvalue,theCompanywritesdownthebookvaluetotherecoverableamount,thewrite-downamountisaccountedintothecurrentincomeaccountandtheassetsimpairmentprovisionismade.

Forgoodwillimpairmenttest,thebookvalueofgoodwillgeneratedbymergersisamortizedthroughreasonablemeasuressincethepurchasedaytorelatedassetgroups;thosecannotbeamortizedtorelatedassetsgroupsareamortizedtorelatedcombinationofassetgroups.TherelatedassetgroupsorcombinationofassetgroupsrefertothosethatcanbenefitfromthesynergisticeffectofmergersandmustnotexceedtothereportingrangedeterminedbytheCompany.

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

Oncerecognized,theassetimpairmentlosscannotbewrittenbackinsubsequentaccountingperiod.

25.Long-termamortizableexpenses

Thelong-termdeferredexpensesshallbeusedtocalculatetheexpensesthathaveoccurredbutshouldbebornebytheCompanyinthecurrentandsubsequentperiodswithaamortizationperiodofmorethanoneyear.TheCompany'slong-termdeferredexpensesareamortizedaveragelyduringthebenefitperiod.

26.Contractliabilities

See16.ContractassetsinChapterVIII,V.ImportantAccountingPoliciesandAccountingEstimatesfordetails.

27.Staffremuneration

(1)Accountingofoperationalleasing

①Basicsalaryofemployees(salary,bonus,allowance,subsidy)

Intheaccountingperiodforwhichthestaffandworkersprovideservices,theCompanyshallconfirmtheactualshort-termremunerationasliabilitiesandshallaccountforthecurrentincomeandloss,exceptasrequiredorpermittedbyotheraccountingstandards.

②Employeewelfare

TheemployeebenefitsincurredbytheCompanyshallbeincludedinthecurrentprofitandlossorrelatedassetcostsaccordingtotheactualamountincurred.Wheretheemployee'sbenefitisnon-monetary,itshallbemeasuredonthebasisoffairvalue.

③Socialinsurancepremiumsandhousingaccumulationfundssuchashealthinsurancepremiums,workinjurypremiums,birthinsurancepremiums,tradeunionfundsandstaffandeducationfunds

TheCompanypaysthemedicalinsurancepremiums,workinjuryinsurancepremiums,birthinsurancepremiums,etc.socialinsurancepremiumsandhousingaccumulationfundsforthestaffandworkers,aswellastheunionfundsandthestaffandworkerseducationfundsaccordingtotheregulations,intheaccountingperiodforwhichthestaffandworkersprovideservices,thecorrespondingsalaryamountofthestaffandworkers,andconfirmsthecorrespondingliabilities,whichareincludedinthecurrentprofitandlossorrelatedassetcosts.

④Short-termpaidleave

TheCompanyaccumulatesthesalaryoftheemployeeswhoareabsentfromworkwithpaywhentheemployeesprovideservice,thusincreasingtheirfuturerightofabsencewithpay.TheCompanyconfirmsthesalaryoftheemployeerelatedtotheabsenceofnon-cumulativesalaryduringtheactualabsenceaccountingperiod.

⑤Short-termprofitshareprogram

Iftheprofit-sharingplanmeetsthefollowingconditionsatthesametime,theCompanyshallconfirmthesalarypayabletothestaffandworkers:

A.Thelegalorpresumptiveobligationoftheenterprisetopaytheremunerationofitsemployeesasaresultofpastmatters;

B.Theamountofemployeecompensationobligationsduetotheprofitsharingplancanbereliablyestimated.

(2)Accountingofpost-employmentwelfare

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

(3)AccountingofdismisswelfareIftheCompanyprovidesterminationbenefitstoemployees,theemployeecompensationliabilitiesarisingfromtheterminationbenefitsshallberecognizedattheearliestofthefollowingtwoandshallbeincludedinthecurrentprofitandloss:

①Anenterprisemaynotunilaterallywithdrawtheresignationbenefitsprovidedforbythedismissalplanorreductionproposal;

②Whentheenterpriserecognizesthecostsorexpensesrelatedtothereorganizationinvolvingthepaymentofresignationbenefits.

28.Anticipatedliabilities

(1)Recognitionstandardsofanticipatedliabilities

Whenresponsibilitiesoccurredinconnectiontocontingentissues,andallofthefollowingconditionsaresatisfied,theyarerecognizedasexpectableliabilityinthebalancesheet:

①ThisresponsibilityisacurrentresponsibilityundertakenbytheCompany;

②ExecutionofthisresponsibilitymaycausefinancialbenefitoutflowfromtheCompany;

③Amountoftheliabilitycanbereliablymeasured.

(2)Measurementofanticipatedliabilities

Expectedliabilitiesareinitiallymeasuredatthebestestimationontheexpensestoexercisethecurrentresponsibility,andwithconsiderationstotherelativerisks,uncertainty,andperiodicvalueofcurrency.Oneachbalancesheetdate,reviewthebookvalueoftheestimatedliabilities.Wherethereisconclusiveevidencethatthebookvaluedoesnotreflectthecurrentbestestimate,thebookvalueisadjustedtothecurrentbestestimate.

29.Revenue

Disclosureofaccountingpoliciesadoptedforrevenuerecognitionandmeasurementbybusinesstype

(1)Generalprinciples

IncomeisthetotalinflowofeconomicbenefitsformedinthedailyactivitiesoftheCompany,whichwillleadtotheincreaseofshareholders'equityandhasnothingtodowiththecapitalinvestedbyshareholders.

TheCompanyhasfulfilledtheperformanceobligationinthecontract,thatis,therevenueisrecognizedwhenthecustomerobtainsthecontrolrightofrelevantgoods.Toobtainthecontrolrightoftherelevantcommoditymeanstobeabletodominatetheuseofthecommodityandobtainalmostalltheeconomicbenefitsfromit.

Iftherearetwoormoreperformanceobligationsinthecontract,theCompanywillallocatethetransactionpricetoeachsingleperformanceobligationaccordingtotherelativeproportionoftheseparatesellingpriceofthegoodsorservicespromisedbyeachsingleperformanceobligationonthestartdateofthecontract,andmeasuretheincomeaccordingtothetransactionpriceallocatedtoeachsingleperformanceobligation.

ThetransactionpricereferstotheamountofconsiderationthattheCompanyisexpectedtobeentitledtoreceiveduetothetransferofgoodsorservicestocustomers,excludingtheamountcollectedonbehalfofathirdparty.Whendeterminingthecontracttransactionprice,ifthereisavariableconsideration,theCompanyshalldeterminethebestestimateofthevariableconsiderationaccordingtotheexpectedvalueorthemostlikelyamount,andincludeitinthetransactionpricewiththeamountnotexceedingtheaccumulatedrecognizedincomewhentherelevantuncertaintyiseliminated,whichismostlikelynottohaveasignificantreversal.Ifthereisasignificantfinancingcomponentinthecontract,theCompanywilldeterminethetransactionpriceaccordingtotheamountpayableincashwhenthecustomerobtainsthecontrolrightofthecommodity.Thedifferencebetweenthetransactionpriceandthecontractconsiderationwillbeamortizedbytheeffectiveinterestmethodduringthecontractperiod.Iftheintervalbetweenthecontrolrighttransferandthecustomer'spaymentislessthanoneyear,theCompanywillnotconsiderthefinancingcomponentPoints.

Ifoneofthefollowingconditionsismet,theperformanceobligationshallbeperformedwithinacertainperiodoftime;otherwise,theperformanceobligationshallbeperformedatacertainpointoftime:

①WhenthecustomerperformsthecontractintheCompany,heobtainsandconsumestheeconomicbenefitsbroughtbytheCompany'sperformance;

②Customerscancontrolthegoodsunderconstructionduringtheperformanceofthecontract;

③ThegoodsproducedbytheCompanyintheprocessofperformancehaveirreplaceableuses,andtheCompanyhastherighttocollectmoneyfortheperformancepartthathasbeencompletedsofarduringthewholecontractperiod.

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

Fortheperformanceobligationperformedatacertaintimepoint,theCompanyrecognizestherevenueatthetimepointwhenthecustomerobtainsthecontrolrightofrelevantgoods.Indeterminingwhetheracustomerhasacquiredcontrolofgoodsorservices,theCompanywillconsiderthefollowingsigns:

①TheCompanyhastherighttoreceivepaymentforthegoodsorservices,thatis,thecustomerhastheobligationtopayforthegoods;

②TheCompanyhastransferredthelegalownershipofthegoodstothecustomer,thatis,thecustomerhasthelegalownershipofthegoods;

③TheCompanyhastransferredthegoodsinkindtothecustomer,thatis,thecustomerhaspossessedthegoodsinkind;

④TheCompanyhastransferredthemainrisksandrewardsoftheownershipofthegoodstothecustomer,thatis,thecustomerhasobtainedthemainrisksandrewardsoftheownershipofthegoods;

⑤Theproducthasbeenacceptedbythecustomer.

Salesreturnclause

Forthesaleswithsalesreturnclauses,whenthecustomerobtainsthecontrolrightoftherelevantgoods,theCompanyshallrecognizetherevenueaccordingtotheamountofconsiderationitisentitledtoobtainduetothetransferofthegoodstothecustomer,andrecognizetheamountexpectedtobereturnedduetothesalesreturnastheestimatedliability;atthesametime,theCompanyshalldeducttheestimatedcostofrecoveringthegoodsaccordingtothebookvalueoftheexpectedreturnedgoodsatthetimeoftransfer(Thebalanceafterdeductingthevalueofthereturnedgoodsisrecognizedasanasset,thatis,thecostofreturnreceivable,whichiscarriedforwardbydeductingthenetcostoftheaboveassetsaccordingtothebookvalueofthetransferredgoodsatthetimeoftransfer.Oneachbalancesheetdate,theCompanyreestimatesthereturnoffuturesalesandremeasurestheaboveassetsandliabilities.

Warrantyobligations

Accordingtothecontractandlegalprovisions,theCompanyprovidesqualityassuranceforthegoodssoldandtheprojectsconstructed.Fortheguaranteequalityassurancetoensurethatthegoodssoldmeettheestablishedstandards,theCompanyconductsaccountingtreatmentinaccordancewiththeaccountingstandardsforBusinessEnterprisesNo.13-contingencies.Fortheservicequalityassurancewhichprovidesaseparateserviceinadditiontoguaranteeingthatthegoodssoldmeettheestablishedstandards,theCompanytakesitasasingleperformanceobligation,allocatespartofthetransactionpricetotheservicequalityassuranceaccordingtotherelativeproportionoftheseparatesellingpriceofthegoodsandservicequalityassurance,andrecognizestherevenuewhenthecustomerobtainstheservicecontrolright.Whenevaluatingwhetherthequalityassuranceprovidesaseparateserviceinadditiontoassuringcustomersthatthegoodssoldmeettheestablishedstandards,theCompanyconsiderswhetherthequalityassuranceisastatutoryrequirement,thequalityassuranceperiod,andthenatureoftheCompany'scommitmenttoperformthetask.

Customerconsiderationpayable

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

Contractualrightsnotexercisedbycustomers

IftheCompanyadvancessalesofgoodsorservicestocustomers,theamountshallberecognizedasliabilitiesfirst,andthenconvertedintoincomewhenrelevantperformanceobligationsarefulfilled.When

theCompanydoesnotneedtoreturntheadvancepaymentandthecustomermaygiveupallorpartofthecontractrights,iftheCompanyexpectstohavetherighttoobtaintheamountrelatedtothecontractrightsgivenupbythecustomer,theaboveamountshallberecognizedasincomeinproportionaccordingtothemodeofthecustomerexercisingthecontractrights;otherwise,theCompanyonlyhastheverylowpossibilityofthecustomerrequiringtoperformtheremainingperformanceobligationsTherelevantbalanceoftheaboveliabilitiesisconvertedintoincome.

ContractchangeWhentheconstructioncontractbetweentheCompanyandthecustomerischanged:

①Ifthecontractchangeincreasestheclearlydistinguishableconstructionserviceandcontractprice,andthenewcontractpricereflectstheseparatepriceofthenewconstructionservice,theCompanywilltreatthecontractchangeasaseparatecontractforaccounting;

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

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

(2)Specificmethods

ThespecificmethodsofrevenuerecognitionoftheCompanyareasfollows:

①Commoditysalescontract

Thecommoditysalescontractbetweenthecompanyandthecustomerincludestheperformanceobligationoftransferringcurtainwallmaterials,screendoormaterials,electricenergy,etc.,whichbelongstotheperformanceobligationatacertaintimepoint.

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

Thefollowingconditionsshouldbemetfortherecognitionofexportproductrevenue:theCompanyhasdeclaredtheproductaccordingtothecontract,obtainedthebilloflading,collectedthepaymentforgoodsorobtainedthereceiptcertificate,andtherelevanteconomicbenefitsarelikelytoflowin,the

mainrisksandrewardsoftheownershipofgoodshavebeentransferred,andthelegalownershipofgoodshasbeentransferred.

②ServicecontractTheservicecontractbetweentheCompanyanditscustomersincludestheperformanceobligationsofmetroplatformscreendooroperationmaintenance,curtainwallmaintenanceandpropertyservices.AstheCompany'sperformanceatthesametime,thecustomersobtainandconsumetheeconomicbenefitsbroughtbytheCompany'sperformance,theCompanytakesitastheperformanceobligationwithinacertainperiodoftimeandallocatesitequallyduringtheserviceprovisionperiod.

③EngineeringcontractTheprojectcontractbetweentheCompanyandthecustomerincludestheperformanceobligationsofcurtainwallprojectandmetroplatformscreendoorprojectconstruction.AsthecustomercancontrolthegoodsunderconstructionintheprocessoftheCompany'sperformance,theCompanytakesthemastheperformanceobligationswithinacertainperiodoftime,andrecognizestheincomeaccordingtotheperformanceprogress,exceptthattheperformanceprogresscannotbereasonablydetermined.TheCompanydeterminestheperformancescheduleofprovidingconstructionservicesaccordingtotheinputmethod.Theperformancescheduleshallbedeterminedaccordingtotheproportionoftheactualcontractcosttotheestimatedtotalcontractcost.

④RealestatesalescontractTheincomeoftheCompany'srealestatedevelopmentbusinessisrecognizedwhenthecontrolofthepropertyistransferredtothecustomer.TheincomeisrecognizedwhenthecustomerobtainsthephysicalownershiporlegalownershipofthecompletedpropertyandtheCompanyhasobtainedthecurrentrightofcollectionandislikelytorecovertheconsideration.Whenconfirmingthecontracttransactionprice,ifthefinancingcomponentissignificant,theCompanywilladjustthecontractcommitmentconsiderationaccordingtothefinancingcomponentofthecontract.

(3)AdoptionofdifferentbusinessmodelsforthesametypeofbusinessinvolvingdifferentrevenuerecognitionandmeasurementmethodsThereisnodifferenceinrevenuerecognitionduetotheadoptionofdifferentaccountingpoliciesforsimilarbusinesses.

30.Contractcosts

Contractcostisdividedintocontractperformancecostandcontractacquisitioncost.

ThecostincurredbytheCompanyinperformingthecontractshallberecognizedasanassetwhenthefollowingconditionsaremetsimultaneously:

Thecostisdirectlyrelatedtoacurrentorexpectedcontract,includingdirectlabor,directmaterials,manufacturingexpenses(orsimilarexpenses),clearlybornebythecustomer,andothercostsincurredonlyduetothecontract;

②ThiscostincreasestheCompany'sfutureresourcesforfulfillingitsperformanceobligations.

③Thecostisexpectedtoberecovered.IftheincrementalcostincurredbytheCompanytoobtainthecontractisexpectedtoberecovered,itshallberecognizedasanassetasthecontractacquisitioncost.Theassetsrelatedtothecontractcostshallbeamortizedonthesamebasisastheincomefromgoodsorservicesrelatedtotheassets;however,iftheamortizationperiodofthecontractacquisitioncostislessthanoneyear,theCompanyshallincludeitinthecurrentprofitandlosswhenitoccurs.

Ifthebookvalueoftheassetsrelatedtothecontractcostishigherthanthedifferencebetweenthefollowingtwoitems,theCompanywillmakeprovisionforimpairmentfortheexcesspartandrecognizeitasthelossofassetimpairment,andfurtherconsiderwhethertheestimatedliabilitiesrelatedtothelosscontractshouldbemade:

①Theresidualconsiderationexpectedtobeobtainedduetothetransferofgoodsorservicesrelatedtotheasset;

②Theestimatedcosttobeincurredforthetransferoftherelevantgoodsorservices.

Iftheaboveprovisionforimpairmentofassetsissubsequentlyreversed,thebookvalueoftheassetafterreversalshallnotexceedthebookvalueoftheassetonthereversaldatewithoutprovisionforimpairment.

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

Thecontractacquisitioncostrecognizedasanassetshallbelistedintheitemof"othercurrentassets"whentheamortizationperioddoesnotexceedoneyearoronenormalbusinesscycleatthetimeofinitialrecognition,andlistedintheitemof"othernoncurrentassets"whentheamortizationperiodexceedsoneyearoronenormalbusinesscycleatthetimeofinitialrecognition.

31.Governmentsubsidy

(1)Governmentsubsidy

Governmentsubsidiesarerecognizedwhenthefollowingconditionsaremet:

①Requirementsattachedtogovernmentsubsidies;

②TheCompanycanreceivegovernmentsubsidies.

(2)Governmentsubsidy

Whenagovernmentsubsidyismonetarycapital,itismeasuredatthereceivedorreceivableamount.Nonemonetarycapitalaremeasuredatfairvalue;ifnoreliablefairvalueavailable,recognizedatRMB1.

(3)Recognitionofgovernmentsubsidies

①Assets-relatedGovernmentsubsidiesrelatedtoassetsareobtainedbytheCompanytopurchase,buildorformulateinothermannerslong-termassets;orsubsidiesrelatedtobenefits.Iftheasset-relatedgovernmentsubsidyisrecognizedasdeferredgain,shouldberecordedingainandlossintheservicelife.Governmentsubsidymeasuredatthenominalamountisaccountedintocurrentincomeaccount.Iftherelevantassetsaresold,transferred,scrappedordamagedbeforetheendoftheirusefullife,theunallocatedrelevantdeferredincomebalanceshallbetransferredtotheprofitandlossofthecurrentperiodofdispositionoftheassets.

Gain-relatedgovernmentsubsidyshouldbeaccountedasfollows:

TheCompanydividesgovernmentsubsidiesintoassets-relatedandearnings-relatedgovernmentsubsidies.Gain-relatedgovernmentsubsidyshouldbeaccountedasfollows:

Subsidythatwillbeusedtocompensaterelatedfuturecostsorlossesshouldberecognizedasdeferredgainandrecordedinthegainandlossofthecurrentreportandoffsetrelatedcost;

Subsidythatisusedtocompensateexistingcostorlossshouldberecordedinthegainandlossofthecurrentperiodoroffsetrelatedcost.

Forgovernmentsubsidiesthatincludebothasset-relatedandincome-relatedparts,separatedifferentpartsforaccountingtreatment;Itisdifficulttodistinguishbetweentheoverallclassificationofgovernmentsubsidiesrelatedtobenefits.

Governmentsubsidyrelatedtoroutineoperationsshouldberecordedinothergainsoroffsetrelatedcost.Governmentsubsidynotrelatedtoroutineoperationsshouldberecordedinnon-operatingincomeorexpense.

③Policypreferentialloandiscount

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

Ifthegovernmentallocatestheinterest-bearingfundsdirectlytotheGroup,discountinterestwilloffsettheborrowingcosts.

④Governmentsubsidyrefund

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

32.DifferedincometaxassetsanddifferedincometaxliabilitiesTheCompanyusesthetemporarydifferencebetweenthebookvalueoftheassetsandliabilitiesonthebalancesheetdayandthetaxbaseandtheliabilitiesmethodtorecognizethedeferredincometax.26.Deferredincometaxassetsanddeferredincometaxliabilities

(1)DeferredincometaxassetsFordeductibletemporarydiscrepancies,deductiblelossesandtaxoffsetsthatcanbecarriedforwardforfutureyears,theimpactonincometaxiscalculatedattheestimatedincometaxrateforthetransfer-backperiodandtheimpactisrecognizedasdeferredincometaxassets,providedthattheCompanyislikelytoobtainfuturetaxableincomefordeductibletemporarydiscrepancies,deductiblelossesandtaxoffsets.Atthesametime,theimpactonincometaxofdeductibletemporarydiscrepanciesresultingfromtheinitialrecognitionofassetsorliabilitiesintransactionsormatterswiththefollowingcharacteristicsisinconclusiveasdeferredincometaxassets:

A.Thetransactionisnotabusinesscombination;B.thetransactionisnotamergerandthetransactiondoesnotaffecttheaccountingprofitortaxableproceeds;However,forindividualtransactionsthatsimultaneouslymeettheabovetwoconditionsandresultinequaltaxabletemporarydifferencesanddeductibletemporarydifferencesuponinitialrecognitionofassetsandliabilities,theexemptionfrominitialrecognitionofdeferredtaxliabilitiesanddeferredtaxassetsdoesnotapply.Fortaxabletemporarydifferencesanddeductibletemporarydifferencesarisingfromtheinitialrecognitionofassetsandliabilitiesinsuchtransactions,theCompanyrecognizesthecorrespondingdeferredtaxliabilitiesanddeferredtaxassetsatthetimeofthetransaction.

Intheeventoftemporarydiscrepancyofdeductibleinvestmentrelatedtosubsidiaries,jointventuresandjointventures,andmeetingthefollowingtwoconditions,theamountofimpact(talent)onincometaxshallbedeemedasdeferredincometaxassets:

A.Temporarydiscrepanciesarelikelytobereversedintheforeseeablefuture;

B.Inthefuture,itislikelytoobtaintaxableincomethatcanbeusedtooffsetthedeductibletemporarydifferences;

Onthebalancesheetdate,ifthereisconclusiveevidencethatsufficienttaxableincomeislikelytobeobtainedinthefuturetooffsetthedeductibletemporarydifferences,thedeferredincometaxassetsthathavenotbeenrecognizedinthepreviousperiodarerecognized.

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

(2)DeferredincometaxassetsAllprovisionaldifferencesintaxableincomeoftheCompanyshallbemeasuredonthebasisoftheestimatedincometaxratefortheperiodoftransfer-backandshallberecognizedasdeferredincometaxliabilities,exceptthat:

Atthesametime,theimpactonincometaxofdeductibletemporarydiscrepanciesresultingtheinitialrecognitionofassetsorliabilitiesintransactionsormatterswiththefollowingcharacteristicsisinconclusiveasdeferredincometaxLiabilities:

A.Initialrecognitionofgoodwill;

B.Initialrecognitionofgoodwill,orofassetsorliabilitiesgeneratedintransactionswiththefollowingfeatures:thetransactionisnotamergerandthetransactiondoesnotaffecttheaccountingprofitortaxableproceeds;

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

A.TheCompanyisabletocontrolthetimeoftemporarydiscrepancytransfers;

BTemporarydiscrepanciesarelikelytobereversedintheforeseeablefuture;

(3)Deferredincometaxassets

(1)Deferredincometaxliabilitiesorassetsassociatedwithenterpriseconsolidation

Temporarydifferenceoftaxabletaxordeductibletemporarydifferencegeneratedbyenterprisemergerundernon-samecontrol.Whendeferredincometaxliabilityordeferredincometaxassetisrecognized,relateddeferredincometaxexpense(orincome)isusuallyadjustedasrecognizedgoodwillinenterprisemerger.

②Amountofsharespaidandaccountedasowners'equity

Exceptfortheadjustmentgoodwillgeneratedbymergersordeferredincometaxrelatedtotransactionsoreventsdirectlyaccountedintotheowners'equity,incometaxisaccountedasincometaxexpenseintothecurrentgain/lossaccount.Theeffectsoftemporarydiscrepancyonincometaxincludethefollowing:

Otherintegratedbenefitssuchasfairvaluechangeoffinancialassetsavailableforsale,retroactiveadjustmentofaccountingpolicychangesorretroactiverestatementofaccountingerrorcorrectiondiscrepancytoadjusttheinitialretainedincome,andmixedfinancialinstrumentsincludingliabilitiesandequity.

③Compensationforlossesandtaxdeductions

A.CompensablelossesandtaxdeductionsfromtheCompany'sownoperations

Deductiblelossesrefertothelossescalculatedanddeterminedinaccordancewiththeprovisionsofthetaxlawthatareallowedtobemadeupwiththetaxableincomeofsubsequentyears.Theuncoveredlosses(deductiblelosses)andtaxdeductionsthatcanbecarriedforwardinaccordancewiththetaxlaw

aretreatedasdeductibletemporarydifferences.Whenitisexpectedthatsufficienttaxableincomeislikelytobeobtainedinthefutureperiodwhenitisexpectedtobeavailabletomakeupforlossesortaxdeductions,thecorrespondingdeferredincometaxassetsarerecognizedwithinthelimitofthetaxableincomethatislikelytobeobtained,whilereducingthecurrentperiodIncometaxexpenseintheincomestatement.B.CompensableuncoveredlossesofthemergedcompanyduetobusinessmergerInabusinesscombination,iftheCompanyobtainsthedeductibletemporarydifferenceofthepurchasedpartyanddoesnotmeetthedeferredincometaxassetrecognitionconditionsonthepurchasedate,itshallnotberecognized.Within12monthsafterthepurchasedate,ifneworfurtherinformationisobtainedindicatingthattherelevantconditionsonthepurchasedatealreadyexist,andtheeconomicbenefitsbroughtaboutbythetemporarydifferenceareexpectedtobedeductedonthepurchasedate,confirmtherelevantdelivery.Deferredincometaxassets,whilereducinggoodwill,ifthegoodwillisnotenoughtooffset,thedifferenceisrecognizedasthecurrentprofitandloss;exceptfortheabovecircumstances,thedeferredtaxassetsrelatedtothebusinesscombinationarerecognizedandincludedinthecurrentprofitandloss.

④TemporarydifferencecausedbymergeroffsetIfthereisatemporarydifferencebetweenthebookvalueofassetsandliabilitiesintheconsolidatedbalancesheetandthetaxablebasisofthetaxpayerduetotheoffsetoftheunrealizedinternalsalesgainorloss,thedeferredincometaxassetorthedeferredincometaxliabilityisconfirmedintheconsolidatedbalancesheet,andtheincometaxexpenseintheconsolidatedprofitstatementisadjusted,withtheexceptionofthedeferredincometaxrelatedtothetransactionoreventdirectlyincludedintheowner'sequityandthemergeroftheenterprise.

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

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

(4)BasisforpresentationofdeferredtaxassetsanddeferredtaxliabilitiesonanetbasisThedeferredincometaxassetsanddeferredincometaxliabilitiesofthecompanyarepresentedasanetamountafteroffsettingwhenthefollowingconditionsaremetsimultaneously:

①TheCompanyhasalegalrighttooffsetcurrentincometaxassetsandcurrentincometaxliabilitiesonanetbasis.

Thedeferredincometaxassetsanddeferredincometaxliabilitiesarerelatedtoincometaxesleviedbythesametaxauthorityonthesametaxableentity,orarerelatedtoincometaxesleviedbydifferenttaxauthoritiesbutthesignificantdeferredincometaxassetsanddeferredincometaxliabilitieswillbesettledonanetbasisforcurrentincometaxesorsimultaneousacquisitionofassetsandsettlementofliabilitieswithineachfutureperiodinwhichtherelatedtaxableentityintendstosettlethecurrentincometaxassetsandliabilitiesonanetbasis.

33.Leasing

(1)Identificationoflease

Onthecommencementdateofthecontract,thecompanyevaluateswhetherthecontractisaleaseorincludesalease.Ifonepartyinthecontracttransferstherighttocontroltheuseofoneormoreidentifiedassetswithinacertainperiodinexchangeforconsideration,thecontractisaleaseorincludesalease.Inordertodeterminewhetherthecontracttransferstherighttocontroltheuseoftheidentifiedassetswithinacertainperiod,thecompanyevaluateswhetherthecustomersinthecontracthavetherighttoobtainalmostalltheeconomicbenefitsarisingfromtheuseoftheidentifiedassetsduringtheuseperiod,andhavetherighttodominatetheuseoftheidentifiedassetsduringtheuseperiod.

(2)Separateidentificationoflease

Ifthecontractincludesmultipleseparateleasesatthesametime,thecompanywillsplitthecontractandconductaccountingtreatmentforeachseparatelease.Ifthefollowingconditionsaremetatthesametime,therighttousetheidentifiedassetconstitutesaseparateleaseinthecontract:①thelesseecanprofitfromusingtheassetaloneortogetherwithothereasilyavailableresources;②Theassetisnothighlydependentorhighlyrelatedtootherassetsinthecontract.

(3)AccountingtreatmentmethodoftheCompanyaslessee

Onthebeginningdateoftheleaseterm,theCompanyrecognizestheleasewithaleasetermofnomorethan12monthsandexcludingthepurchaseoptionasashort-termlease;Whenasingleleasedassetisabrand-newasset,theleasewithlowervalueisrecognizedasalowvalueassetlease.IftheCompanysubletsorexpectstosublettheleasedassets,theoriginalleaseisnotrecognizedasalowvalueassetlease.

Forallshort-termleasesandlowvalueassetleases,theCompanywillrecordtheleasepaymentamountintotherelevantassetcostorcurrentprofitandlossaccordingtothestraight-linemethod(orothersystematicandreasonablemethods)ineachperiodoftheleaseterm.

Inadditiontotheaboveshort-termleasesandlowvalueassetleaseswithsimplifiedtreatment,theCompanyrecognizestherighttouseassetsandleaseliabilitiesfortheleaseonthebeginningdateoftheleaseterm.

①Userightassets

Theterm"righttouseassets"referstotherightofthelesseetousetheleasedassetsduringtheleaseterm.

Atthebeginningoftheleaseterm,therightofuseassetsareinitiallymeasuredatcost.Thiscostincludes:

Theinitialmeasurementamountofleaseliabilities;

Fortheleasepaymentpaidonorbeforethebeginningoftheleaseterm,ifthereisleaseincentive,therelevantamountofleaseincentiveenjoyedshallbededucted;

Initialdirectexpensesincurredbythelessee;

Theestimatedcostincurredbythelesseefordismantlingandremovingtheleasedassets,restoringthesitewheretheleasedassetsarelocatedorrestoringtheleasedassetstothestateagreedintheleaseterms.TheCompanyrecognizesandmeasuresthecostinaccordancewiththerecognitionstandardsandmeasurementmethodsofestimatedliabilities.See28.EstimatedliabilitiesinChapterVIII,V.importantaccountingpoliciesandaccountingestimatesfordetails.Iftheabovecostsareincurredfortheproductionofinventories,theywillbeincludedinthecostofinventories.

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

②Leaseliabilities

TheleaseliabilitiesareinitiallymeasuredCompanyshallaccordingtothepresentvalueoftheunpaidleasepaymentsatthebeginningoftheleaseterm.Theleasepaymentincludesthefollowingfiveitems:

Fixedpaymentamountandsubstantialfixedpaymentamount.Ifthereisleaseincentive,therelevantamountofleaseincentiveshallbededucted;

Variableleasepaymentsdependingonindexorratio;

Theexercisepriceofthepurchaseoption,providedthatthelesseereasonablydeterminesthattheoptionwillbeexercised;

Theamounttobepaidforexercisingtheoptiontoterminatethelease,providedthattheleasetermreflectsthatthelesseewillexercisetheoptiontoterminatethelease;Theamountexpectedtobepaidaccordingtotheresidualvalueoftheguaranteeprovidedbythelessee.Whencalculatingthepresentvalueofleasepayments,theimplicitinterestrateoftheleaseisusedasthediscountrate.Iftheimplicitinterestrateoftheleasecannotbedetermined,theincrementalborrowinginterestrateofthecompanyisusedasthediscountrate.Thedifferencebetweentheleasepaymentamountanditspresentvalueisregardedasunrecognizedfinancingexpenses,andtheinterestexpensesarerecognizedaccordingtothediscountrateofthepresentvalueoftheleasepaymentamountduringeachperiodoftheleasetermandincludedinthecurrentprofitandloss.Theamountofvariableleasepaymentsnotincludedinthemeasurementofleaseliabilitiesshallbeincludedinthecurrentprofitandlosswhenactuallyincurred.Afterthebeginningdateoftheleaseterm,whentheactualfixedpaymentamountchanges,theexpectedpayableamountoftheguaranteedresidualvaluechanges,theindexorratiousedtodeterminetheleasepaymentamountchanges,theevaluationresultsoractualexerciseofthepurchaseoption,renewaloptionorterminationoptionchanges,theCompanyremeasurestheleaseliabilityaccordingtothepresentvalueofthechangedleasepaymentamount,Andadjustthebookvalueoftherighttouseassetsaccordingly.

(4)AccountingtreatmentmethodoftheCompanyaslessor

Ontheleasecommencementdate,theCompanyclassifiesleasesthathavesubstantiallytransferredalmostalltherisksandrewardsrelatedtotheownershipoftheleasedassetsasfinancialleases,andallotherleasesareoperatingleases.

①Operatinglease

TheCompanyrecognizesleasereceiptsasrentalincomeovertheleasetermonastraight-linebasis(oranothersystematicandrationalmethod).Initialdirectcostsincurredarecapitalizedandamortizedonthesamebasisasrentalincomerecognition,withtheamortizationchargedtoprofitorlossovertherelevantperiods.ThevariableleasepaymentsobtainedbytheCompanyrelatedtooperatingleasesthatarenotincludedintheleasereceiptsareincludedinthecurrentprofitsandlosseswhenactuallyincurred.

②Financelease

Ontheleasebeginningdate,theCompanyrecognizesthefinancialleasereceivablesaccordingtothenetamountoftheleaseinvestment(thesumoftheunsecuredresidualvalueandthepresentvalueoftheleasereceiptsnotreceivedontheleasebeginningdatediscountedaccordingtotheleaseembeddedinterestrate),andterminatestherecognitionofthefinancialleaseassets.Duringeachperiodoftheleaseterm,theCompanycalculatesandrecognizestheinterestincomeaccordingtotheinterestrateembeddedinthelease.

TheamountofvariableleasepaymentsobtainedbytheCompanythatarenotincludedinthemeasurementofnetleaseinvestmentshallbeincludedinthecurrentprofitandlosswhenactuallyincurred.

(5)Accountingtreatmentofleasechange

①ChangeofleaseasaseparateleaseIftheleasechangesandmeetsthefollowingconditionsatthesametime,theCompanywilltreattheleasechangeasaseparateleaseforaccounting:a.theleasechangeexpandstheleasescopebyincreasingtheuserightofoneormoreleasedassets;B.Theincreasedconsiderationisequivalenttotheamountadjustedaccordingtotheconditionsofthecontractattheseparatepriceformostoftheexpansionoftheleasescope.

②TheleasechangeisnottreatedasaseparateleaseA.TheCompanyaslesseeOntheeffectivedateoftheleasechange,theCompanyreconfirmedtheleasetermanddiscountedthechangedleasepaymentatthereviseddiscountratetore-measuretheleaseliability.Whencalculatingthepresentvalueoftheleasepaymentafterthechange,theimplicitinterestrateoftheleaseduringtheremainingleaseperiodshallbeusedasthediscountrate;Ifitisimpossibletodeterminetheimplicitinterestrateoftheleasefortheremainingleaseperiod,theincrementalloaninterestrateontheeffectivedateoftheleasechangeshallbeusedasthediscountrate.

Theimpactoftheaboveleaseliabilityadjustmentshallbeaccountedforaccordingtothefollowingcircumstances:

Iftheleasescopeisreducedortheleasetermisshortenedduetotheleasechange,thebookvalueoftherighttouseassetsshallbereduced,andtherelevantgainsorlossesofpartialorcompleteterminationoftheleaseshallbeincludedinthecurrentprofitsandlosses;

Forotherleasechanges,thebookvalueoftherighttouseassetsshallbeadjustedaccordingly.

TheCompanyasleasor

Iftheoperatingleaseischanged,theCompanywilltreatitasanewleaseforaccountingfromtheeffectivedateofthechange,andtheamountofleasereceiptsreceivedinadvanceorreceivablerelatedtotheleasebeforethechangeisregardedastheamountofnewleasereceipts.

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

(6)Saleandlease-back

TheCompanyassessesanddetermineswhethertheassettransferinthesaleandleasebacktransactionisasaleinaccordancewiththeprovisionsof29.IncomeinChapterVIII,V,Importantaccountingpoliciesandaccountingestimates.

①TheCompanyasseller(lessee)Iftheassettransferinthesaleandleasebacktransactiondoesnotbelongtosales,theCompanywillcontinuetorecognizethetransferredassets,recognizeafinancialliabilityequaltothetransferincome,andconductaccountingtreatmentforthefinancialliabilityinaccordancewith11。FinancialinstrumentsinChapterVIII,V,Importantaccountingpoliciesandaccountingestimates.Iftheassettransferbelongstosales,theCompanymeasurestherighttouseassetsformedbysaleandleasebackaccordingtothepartofthebookvalueoftheoriginalassetsrelatedtotherighttouseobtainedbyleaseback,andonlyrecognizestherelevantgainsorlossesontherightstransferredtothelessor.

②TheCompanyasbuyer(lessor)Iftheassettransferinthesaleandleasebacktransactiondoesnotbelongtosales,thecompanydoesnotrecognizethetransferredasset,butrecognizesafinancialassetequaltothetransferincome,andcarriesoutaccountingtreatmentonthefinancialassetinaccordancewith11.FinancialinstrumentsinChapterVIII,V.Importantaccountingpoliciesandaccountingestimates.Iftheassettransferbelongstosales,theCompanyshallconductaccountingtreatmentforassetpurchaseandassetleaseinaccordancewithotherapplicableaccountingstandardsforbusinessenterprises.

34.Othersignificantaccountingpoliciesandestimates

(1)Accountingofhedging(1.1)ClassificationofinventoriesTheCompanydividesitshedgingstrategiesintofairvaluehedges,cashflowhedges,andnetinvestmenthedges.

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

①Cashflowhedgingreferstothehedgingofcashflowrisk.Thechangeincashflowisderivedfromspecificrisksassociatedwithrecognizedassetsorliabilities,expectedtransactionsthatarelikelytooccur,orwithrespecttothecomponentsoftheabove-mentionedprojectandwillaffecttheprofitsandlossesoftheenterprise.

③Netinvestmenthedgeforoverseasoperationsreferstohedgingactivitiesconductedtomitigatetheforeignexchangeriskexposureofthenetinvestmentinoverseasoperations.Thehedgedriskinthenetinvestmenthedgeisthetranslationdifferencebetweenthefunctionalcurrencyoftheoverseasoperationsandthereportingcurrencyoftheparentcompany.

(1.2)HedgingtoolsandhedgedprojectsHedgingmeansafinancialinstrumentdesignatedbytheCompanyforthepurposeofhedging,whosefairvalueorcashflowvariationisexpectedtooffsetthefairvalueorcashflowvariationofthehedgeditem,including:

①FinancialliabilitiesmeasuredatfairvaluewithvariationsaccountedintocurrentincomeaccountCheck-outoptionscanonlybeusedasahedgingtooliftheoptionishedged,includingthoseembeddedinahybridcontract.Derivativesembeddedinahybridcontractbutnotsplitcannotbeusedasseparatehedgingtools.

②Non-derivativefinancialassetsornon-derivativefinancialliabilitiesthataremeasuredatfairvalueandwhosechangesareincludedinthecurrentprofitandloss,butdesignatedasfairvalueandwhosechangesareincludedinthecurrentprofitandloss,andtheirowncreditriskchangescausedbychangesinfairvalueexceptforfinancialliabilitiesincludedinothercomprehensiveincome.

Ownequityinstrumentsarenotfinancialassetsorfinancialliabilitiesandcannotbeusedashedginginstruments.

AhedgeditemreferstoanitemthatexposestheCompanytotheriskofchangesinfairvalueorcashflowandisdesignatedasthehedgedobjectandcanbereliablymeasured.TheCompanydesignatesthefollowingindividualprojects,projectportfoliosortheircomponentsashedgedprojects:

①Confirmedassetsorliabilities.

②Confirmedcommitmentsthathavenotyetbeenconfirmed.Confirmedcommitmentreferstoalegallybindingagreementtoexchangeaspecificamountofresourcesatanagreedpriceonaspecificdateorperiodinthefuture.

③Expectedtransactionsthatarelikelytooccur.Anticipatedtransactionsrefertotransactionsthathavenotyetbeencommittedbutareexpectedtooccur.

④Netinvestmentinoverseasoperations.

Theabove-mentionedprojectcomponentsrefertothepartsthatarelessthantheoverallfairvalueorcashflowchangesoftheproject.TheCompanydesignatesthefollowingprojectcomponentsortheircombinationsashedgeditems:

①Thepartofthechangeinfairvalueorcashflow(riskcomponent)thatisonlycausedbyoneormorespecificrisksintheoverallfairvalueorcashflowchangesoftheproject.Accordingtotheassessmentinaspecificmarketenvironment,theriskcomponentshouldbeabletobeindividuallyidentifiedandreliablymeasured.Theriskcomponentalsoincludesthepartwherethefairvalueorcashflowofthehedgeditemchangesonlyaboveorbelowaspecificpriceorothervariables.

②Oneormoreselectedcontractualcashflows.

③Thecomponentofthenominalamountoftheproject,thatis,thespecificpartofthewholeamountorquantityoftheproject,maybeacertainproportionofthewholeproject,ormaybeacertainlevelofthewholeproject.Ifacertainlevelincludesearlyrepaymentrightsandthefairvalueoftheearlyrepaymentrightsisaffectedbychangesintheriskofthehedge,thelevelshallnotbedesignatedasthe

hedgeditemofthefairvaluehedge,butinthemeasurementofthehedgeditemexceptwhenthefairvaluehasincludedtheinfluenceoftheprepaymentright.(1.3)EvaluationofhedgingrelationshipWhenthehedgingrelationshipisinitiallyspecified,theGroupofficiallyspecifiestherelatedhedgingrelationshipswithofficialdocumentsrecordingthehedgingrelationships,riskmanagementtargetsandhedgingstrategies.Thisdocumentsetsoutthehedgingtools,hedgeditems,thenatureofhedgedrisks,andtheCompany'sassessmentofhedgedeffectiveness.HedgingmeansafinancialinstrumentdesignatedbytheCompanyforthepurposeofhedging,whosefairvalueorcashflowvariationisoffsetthefairvalueorcashflowvariationofthehedgeditem,including:Suchhedgesarecontinuouslyevaluatedonandaftertheinitialspecifieddatetomeettherequirementsforhedgingvalidity.

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

Ifthehedgingrelationshipnolongermeetstherequirementsforhedgingeffectivenessduetothehedgingratio,buttheriskmanagementobjectiveofthedesignatedhedgingrelationshiphasnotchanged,theCompanyshallrebalancethehedgingrelationship.

(1.4)Revenuetheofrevenuerecognitionandmeasurement

Iftheconditionsforapplyinghedgeaccountingmethodaremet,itshallbehandledaccordingtothefollowingmethods:

①Fairvaluehedging

Gainsorlossesarisingfromhedginginstrumentsarerecognizedinthecurrentperiod'sincomestatement.Ifthehedgingisconductedforspecifiednon-derivativeequityinvestments(orcomponentsthereof)measuredatfairvaluewithchangesinfairvaluerecognizedinothercomprehensiveincome,gainsorlossesfromthehedginginstrumentsarerecognizedinothercomprehensiveincome.Gainsorlossesarisingfromthehedgeditemsduetothehedgingriskexposurearerecognizedintheincomestatement.Atthesametime,thecarryingamountofthedesignatedhedgeditemsthatarenotmeasuredatfairvalueisadjusted.Ifthehedgeditemisaspecifiednon-derivativeequityinvestment(orcomponentthereof)measuredatfairvaluewithchangesinfairvaluerecognizedinothercomprehensiveincome,gainsorlossesresultingfromthehedgingriskexposurearerecognizedinothercomprehensiveincome,andthecarryingamountofthehedgeditemhasalreadybeenmeasuredatfairvalueanddoesnotrequireadjustment.

Regardingfairvaluehedgesrelatedtofinancialinstruments(orcomponentsthereof)measuredatamortizedcost,anyadjustmentsmadetothecarryingamountofthehedgeditemareamortizedusingtheeffectiveinterestraterecalculatedfromthedateofthecommencementofamortizationandrecognizedin

theincomestatement.Theamortizationdateforadjustmentsshouldbeginfromtheadjustmentdateandshouldnotbelaterthanthepointatwhichhedginggainsandlossesareadjusteduponterminationofthehedgeditem.Forhedgeditemsthatarefinancialassets(orcomponentsthereof)measuredatfairvaluewithchangesinfairvaluerecognizedinothercomprehensiveincome,theaccumulatedhedginggainsorlossesshouldbeamortizedinthesamemannerandrecognizedintheincomestatement.However,thecarryingamountofthefinancialassets(orcomponentsthereof)shouldnotbeadjusted.

Forhedgeditemsthatareunrecognizedfirmcommitments(orcomponentsthereof),thecumulativefairvaluechangescausedbythehedgingriskafterthehedgingrelationshipisdesignatedshouldberecognizedasanassetorliability.Therelatedgainsorlossesshouldberecognizedintheincomestatement.Whenfulfillingafirmcommitmentandacquiringanassetorassumingaliability,theinitialrecognizedamountoftheassetorliabilityshouldbeadjustedtoincludethecumulativefairvaluechangesofthedesignatedhedgeditemthathavebeenrecognized.

②Cashflowhedge

Thepartofhedgingtoolgainsorlossesthatisvalidforhedgingisrecognizedasothercomprehensiveincomeasacashflowhedgingreserve,andthepartthatisinvalidforhedging(thatis,othergainsorlossesafterdeductingothercomprehensiveincome),arecountedIntothecurrentprofitandloss.Theamountofcashflowhedgingreserveisdeterminedaccordingtotheloweroftheabsoluteamountsofthefollowingtwoitems:①accumulatedgainsorlossesofhedginginstrumentssincethehedging.Theamountintheeffectivearbitrageisrecognizedbytheaccumulativegainsorlossesfromthestartingofarbitrageandaccumulativechangestothecurrentvalueoffutureforecastcashflowsfromthestartofarbitrage.

Iftheexpectedtransactionofthehedgedassetissubsequentlyrecognizedasanon-financialassetornon-financialliability,oriftheexpectedtransactionofthenon-financialassetornon-financialliabilityformsadefinedcommitmenttotheapplicablefairvaluehedgeaccounting,theamountofthecashflowhedgereserveoriginallyrecognizedintheotherconsolidatedincomeistransferredouttoaccountfortheinitialrecognizedamountoftheassetorliability.Fortheremainingcashflowhedges,duringthesameperiodwhentheexpectedcashflowtobehedgedaffectstheprofitandloss,iftheexpectedsalesoccur,thecashflowhedgereserverecognizedinothercomprehensiveincomeistransferredoutandincludedinthecurrentprofitandloss.

③Netinvestmentinoverseasoperationshedge

Forhedgingofforeignoperationnetinvestments,theportionofgainsorlossesfromthehedginginstrumentsthatqualifyaseffectivehedgesisdirectlyrecognizedinothercomprehensiveincome.Theportionofgainsorlossesfromthehedginginstrumentsthatdonotqualifyaseffectivehedgesisrecognizedintheincomestatement.Upondisposaloftheforeignoperation,thepreviouslyrecognizedgainsorlossesfromthehedginginstrumentsreflectedinothercomprehensiveincomearereclassifiedtotheincomestatement.

(2)MeasurementofFairValueFairvaluereferstotheamountofassetexchangeorliabilitiessettlementbybothtransactionpartiesfamiliarwiththesituationinafairdealonavoluntarybasis.TheCompanymeasuresthefairvalueofrelatedassetsorliabilitiesatthepricesinthemainmarket.Ifthereisnomajormarket,theCompanymeasuresthefairvalueoftherelevantassetsorliabilitiesatthemostfavorablemarketprices.TheGroupusesassumptionsthatmarketparticipantsusetomaximizetheireconomicbenefitswhenpricingtheassetorliability.

Themainmarketreferstothemarketwiththehighesttransactionvolumeandactivityoftherelatedassetsorliabilities.Themostfavorablemarketmeansthemarketthatcanselltherelatedassetsatthehighestamountortransfertherelatedliabilitiesatthelowestamountafterconsideringthetransactioncostandtransportationcost.

Forfinancialassetsorliabilitiesinanactivemarket,TheCompanydeterminestheirfairvaluebasedonquotationsintheactivemarket.Ifthereisnoactivemarket,theCompanyusesevaluationtechniquestodeterminethefairvalue.

Forthemeasurementofnon-financialassetsatfairvalue,theabilityofmarketparticipantstousetheassetsforoptimalpurposestogenerateeconomicbenefits,ortheabilitytoselltheassetstoothermarketparticipantsthatcanbeusedforoptimalpurposestogenerateeconomicbenefits.

①Valuationtechnology

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

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

②Fairvaluehierarchy

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

tothefirstlevelinputvalue.Theinputvalueofthethirdlevelistheunobservableinputvalueoftherelatedassetorliability.

(3)SignificantaccountingjudgmentandestimateTheCompanycontinuouslyreviewssignificantaccountingjudgmentandestimateadoptedforthereasonableforecastoffutureeventsbasedonitshistoricalexperienceandotherfactors.Significantaccountingjudgmentandassumptionsthatmayleadtomajoradjustmentofthebookvalueofassetsandliabilitiesinthenextaccountingyeararelistedasfollows:

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

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

Incomerecognition

TheCompany'srevenuefromprovidingcurtainwallconstructionandmetroplatformscreendoorinstallationservicesisrecognizedoveraperiodoftime.TherecognitionoftheincomeandprofitofsuchengineeringinstallationservicesdependsontheCompany'sestimationofthecontractresultsandperformanceprogress.Iftheactualamountoftotalrevenueandtotalcostishigherorlowerthantheestimatedvalueofthemanagement,itwillaffecttheamountofrevenueandprofitrecognitionoftheCompanyinthefuture.

Engineeringcontract

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

Estimateoffairvalue

TheCompanyusesfairvaluetomeasureinvestmentrealestateandneedstoestimatethefairvalueofinvestmentrealestateatleastquarterly.Thisrequiresthemanagementtoreasonablyestimatethefairvalueoftheinvestmentrealestatewiththehelpofvaluationexperts.

Developmentcost

Forpropertythathasbeenhandedoverwithincomerecognized,butwhosepublicfacilitieshavenotbeenconstructedornotbeencompleted,themanagementwillestimatethedevelopmentcostforthepartthathasnotbeenstartedaccordingtothebudgettoreflecttheoperationresultofthepropertysales.

35.Majorchangesinaccountingpoliciesandestimates

1.Changesinimportantaccountingpolicies

□Applicable?Inapplicable

(2)Changesinmajoraccountingestimates

?Applicable□Inapplicable

InRMB