CHANGCHAICOMPANY,LIMITED

2025Semi-AnnualReport

August2025

PartIImportantNotes,TableofContentsandDefinitions

TheBoardofDirectors,SupervisoryCommittee,andalldirectors,supervisors,andseniormanagementmembersoftheCompanywarrantthatthecontentofthissemi-annualreportistruthful,accurate,andcomplete,withoutanyfalserecords,misleadingstatements,ormaterialomissions,andshallbearindividualandjointlegalliabilitiesaccordingly.Mr.XieGuozhong,thelegalrepresentativeoftheCompany;Mr.XieGuozhong,theexecutiveinchargeofaccounting;andMs.JiangHe,theheadoftheaccountingdepartment(chiefaccountingofficer),herebyconfirmthetruthfulness,accuracy,andcompletenessofthefinancialstatementsinthissemi-annualreport.

AlldirectorsattendedtheBoardmeetingconvenedtoreviewthissemi-annualreport.

Thisreportcontainsforward-lookingstatementsregardingfutureplans,whichdonotconstitutesubstantivecommitmentstoinvestors.Investorsareadvisedtoexercisecautionregardinginvestmentrisks.

TheCompanyhascomprehensivelyaddressedpotentialrisksin“PartIIIManagementDiscussionandAnalysis”specificallyunder"XRisksandCountermeasures."

TheCompanyplansneithertodistributecashdividends,nortoissuebonusshares,nortoconvertcapitalreservesintosharecapital.

Content

PartIImportantNotes,TableofContentsandDefinitions ...... 2

PartIICorporateInformationandKeyFinancialInformation ...... 6

PartIIIManagementDiscussionandAnalysis ...... 9

PartIVCorporateGovernance,Environment,andSocialResponsibility ...... 26

PartVSignificantEvents ...... 30

PartVIShareChangesandShareholderInformation ...... 35

PartVIIPreferenceShares ...... 41

PartVIIIFinancialStatements ...... 42

PartIXOtherReportedInformation ...... 174

DocumentsAvailableforReference

1.FinancialstatementsbearingthesignaturesandsealsoftheCompany’slegalrepresentative,theexecutiveinchargeofaccounting,andtheheadoftheaccountingdepartment(chiefaccountingofficer).

2.OriginalcopiesofallannouncementsanddocumentsdisclosedontheChinaSecuritiesRegulatoryCommission(CSRC)-designatedwebsitesduringthereportingperiod.

3.Semi-annualreportspublishedinothersecuritiesmarkets.TheabovereferencedocumentsarekeptinfullattheofficeoftheCompany’sBoardSecretary.Thissemi-annualreportispreparedinbothChineseandEnglish.Incaseofanydiscrepancyininterpretation,theChineseversionshallprevail.

Definitions

Term

PartIICorporateInformationandKeyFinancialInformation

ICorporateInformation

Stockname

IIContactInformation

IIIOtherInformation

1.CompanyContactInformationWhethertherewereanychangestothecompany'sregisteredaddress,officeaddressandpostalcode,website,oremailduringthereportingperiod

□Applicable√NotApplicableThecompany'sregisteredaddress,officeaddressandpostalcode,website,andemailremainedunchangedduringthereportingperiod.Fordetails,pleaserefertothe2024AnnualReport.

2.InformationDisclosureandStorageLocationWhethertherewereanychangestotheinformationdisclosureandstoragelocationduringthereportingperiod

□Applicable√NotApplicableThestockexchangewebsiteandmedianames/URLswherethecompanydiscloseditssemi-annualreport,aswellasthestoragelocationofthesemi-annualreport,remainedunchangedduringthereportingperiod.Fordetails,

pleaserefertothe2024AnnualReport.

3.OtherrelevantmaterialsWhethertherewerechangestootherrelevantmaterialsduringthereportingperiod

□Applicable√NotApplicableVIKeyFinancialInformationWhethertheCompanyneedstoretrospectivelyadjustorrestateprior-yearaccountingdata

□Yes√No

CurrentReportingPeriod

V.DifferencesinAccountingDataUnderDomesticandForeignAccountingStandards

1.DifferencesinNetProfitandNetAssetsBetweenFinancialReportsPreparedUnderInternationalAccountingStandardsandChineseAccountingStandards

□Applicable√NotApplicableTherewerenodifferencesinnetprofitornetassetsbetweenfinancialreportspreparedunderInternationalAccountingStandardsandChineseAccountingStandardsduringthereportingperiod.

2.DifferencesinNetProfitandNetAssetsBetweenFinancialReportsPreparedUnderForeignAccountingStandardsandChineseAccountingStandards

□Applicable√NotApplicableTherewerenodifferencesinnetprofitornetassetsbetweenfinancialreportspreparedunderforeignaccountingstandardsandChineseAccountingStandardsduringthereportingperiod.VIExceptionalGainsandLosses

√Applicable□Notapplicable

Unit:RMB

Item

Particularsaboutotheritemsthatmeetthedefinitionofexceptionalgain/loss:

□Applicable√NotapplicableNosuchcasesfortheReportingPeriod.ExplanationofwhytheCompanyreclassifiesasrecurrentanexceptionalgain/lossitemlistedintheExplanatoryAnnouncementNo.1onInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic—ExceptionalGain/LossItems:

□Applicable√NotapplicableNosuchcasesfortheReportingPeriod.

PartIIIManagementDiscussionandAnalysisIPrincipalBusinessActivitiesoftheCompanyDuringtheReportingPeriod

1.IndustryDevelopmentStatusTheCompanyoperatesintheinternalcombustionengineandcomponentsmanufacturingsectorwithinthegeneralequipmentmanufacturingindustry.Classifiedbyfueltype,internalcombustionenginesareprimarilycategorizedintodieselenginesandgasolineengines.TheCompany'sdieselandgasolineengineproductsaremainlyusedinoff-roadmobilemachineryapplicationssuchasharvesters,tractors,plantprotectionequipment,compactconstructionmachinery,andmarineengines.

(1)IndustryOverviewInternalcombustionenginesserveasacriticalpillarsupportingChina'smanufacturingsecurity,energysecurity,andnationaldefensesecurity,representingafundamentalindustryforbothnationaleconomicdevelopmentanddefenseconstruction.Theyarethethermalpowerdeviceswiththehighestpowerdensity,thermalefficiency,andmostextensiveapplicationscope.Toimplementthenationaldevelopmentstrategiesofenergyconservation,emissionsreduction,andindustrialtransformation/upgrading,theinternalcombustionengineandagriculturalmachineryindustrieswillstrengthenindependentinnovationandR&D,acceleratetheconstructionofcommonfoundationaltechnologyplatforms,optimizeupstreamanddownstreamindustrialchaindevelopment,implementintelligentmanufacturing,activelyconductinternationalexchangesandcooperation,andexpediteindustrialtechnologicalupgrading.

(2)IndustryDevelopmentLandscapeandTrendsFromthepolicyperspective,energyconservationandemissionsreductionhavebeenemphasizedaskeypriorities,withgreen,circular,low-carbon,environmentallyfriendly,energy-efficient,emissions-reducing,andreliabledevelopmentbecomingthemainthemesguidinginternalcombustionengineadvancement.Theindustryisprogressivelytransitioningtowardgreenerandsmartersolutionsthroughoptimizedcombustiontechnologies,emissioncontrolsystems,andintelligentmonitoring-therebyreducingenvironmentalimpactwhileenhancingoperationalefficiency.Inrecentyears,Chinahasintroducedaseriesofpoliciessupportingagriculturalmachinerymarketdevelopment,includingagriculturalequipmentpurchasesubsidyprograms,scrappagerenewalsubsidypolicies,andsupportmeasuresforagriculturalmachinerydistributionsectors.The2025No.1CentralPolicyDocumentanchoredgoalsofadvancingcomprehensiveruralrevitalizationandbuildinganagriculturalpowerhouse,proposingtopromotehigh-qualitydevelopmentofagriculturalmachineryequipment,accelerateR&Dandapplicationofdomesticallyproducedadvancedagriculturalmachinery,facilitateretirementandrenewalofoutdatedagriculturalequipment,andsupportsmartagriculturedevelopmentbyexpandingapplicationscenariosforAI,bigdata,andlow-altitudetechnologies.Theseinitiativeshavecreatednewdevelopmentopportunitiesforagriculturalmachinerywhilesimultaneouslyimposinghigherrequirementsfortechnologicalinnovationandindustrialupgrading.Duringthefirsthalfof2025,affectedbypersistentlylowgrainpricesandfrequentextremeweathereventsamongotherfactors,China'sagriculturalmachinerymarketunderperformedexpectationsoverall,withsalesdecliningacrossmostproductcategories.Forspecificproducts,tractorsastraditionalmainstayproductsshowedweakperformancewithdecliningproduction/sales.Intheharvestersegment,trackedharvestersachievedcounter-trendgrowthleveragingexportadvantageswhilewheeledharvesterssawsignificantproduction/salesdeclinesduetoreducedwheatyields.Thetransplantermarketexhibiteddivergenttrends,withthesalesproportionofwalking

transplanterssurpassingthatofhigh-speedtransplanters.Premiumagriculturalmachinerydemonstratedstrongresilience-forinstance,traditionalmechanicaltransmissiontractorsarebeingdisplacedaspower-shiftmodelscontinuegainingmarketshare.Currently,theagriculturalmachinerymarketisundergoingstructuraladjustment.Regardingthecompetitivelandscape,leadingfirmsmasteringcoretechnologiesarestrengtheningcompetitiveadvantageswithincreasingmarketconcentration,whilemidstream/downstreamenterprisesfacegreatersurvivalpressuresamidacceleratedindustryconsolidation.Fromtheproductstructureperspective,high-endproductshavebecomekeygrowthfocuses,withsomefirmscompletingstrategictransitionstowardpremium/intelligentsolutions.Intermsofdevelopmenttrends,technologicalinnovationdrivesindustrialupgradingwhilepolicysupportexpandsmarketcapacity.WithrapidadvancesinAI,bigdata,newenergy,andenergy-saving/environmentaltechnologies,agriculturalmachineryistransitioningfromtraditionalmechanizationtowardpremium,intelligent,digital,andgreendevelopment-propellinganewroundofstructuraltransformationwhereenterprisessimultaneouslyenterahigh-qualitydevelopmentphase,acceleratingadvancementandapplicationofadvancedtechnologies/productsinenergyconservation,smartmanufacturing,andefficiencyimprovement.Newdevelopmentopportunitiesareemergingwithinnationalstrategicdeploymentsandacceleratedtransformation/upgradingprocesses,indicatingvastpotentialforagriculturalmachinerymarketexpansion.

2.PrincipalOperationsoftheCompanyWemainlyspecializeintheR&D,manufactureandsalesofdieselenginesunderthebrand"Changchai"andgasolineenginesunderthebrand"Robin".Ourproductsaremainlyusedinagriculturalmachinery,smallengineeringmachinery,generatorsetsandshipbornemachineryandotherfieldscloselyrelatedtopeople'slivelihood.IntheReportingPeriod,therewerenomajorchangesintheCompany'scorebusinessandmainproducts.

3.MainProductsoftheCompanyOurmainproductsaredividedintotwocategories:dieselenginesandgasolineengines.Thedetailsareasfollows:

Mainproducts

America,Africa,Japanandothercountriesandregions.

4.MajorBusinessModels

(1)R&DmodelWehaveestablishedaninnovativetechnologymanagementsystemforinternalcombustionenginebasedonmarketdemandandforward-lookingtechnologies.Priortothenewproductsornewtechnologiesdevelopment,themarketingdepartmentfirstconductsmarketassessmentandcustomerresearch,andtheninitiatesaprojectaccordingtotheforecastedmarketdemand;thetechnologycenterconductsdevelopmentaccordingtotheprojectmaterials,andcollectsfeedbackinformationfromthemarketandcustomersinrealtimeduringthedevelopmentprocesstoensuretechnologyleadershipandproductsuitability.

(2)PurchasingmodelWeadoptthe"purchase-to-order"purchasingmodel.TheERPsystemconvertsthesalesorders,thesalesplandevelopedbythesalesdepartmentandtheproductionplandrawnupbytheproductiondepartmentintothedemandofpartsneeded,andthepurchasingdepartmentorganizesthepurchaseaccordingtosuchdemand.Meanwhile,thepurchasingdepartmentmakesaplantoguidepartsprocurementaccordingtothesalesdepartment'ssalesplan,andprovideittothesupplier,andurgethesuppliertoprepareforthegoods.

(3)ProductionmodelWeadoptthe"make-to-order"productionmanagementmodel.Thesalesdepartmentmakessalesplansfordifferentstagesaccordingtotheordersinhand,salesdatainpreviousyears,marketdemandjudgmentandfeedbackofexistingcustomers'purchasingintentions.TheCompany'sproductiondepartmentmakestheproductionplanaccordingtothesalesordersdisplayedintheERPsystem,thesalesplanmadebythesalesdepartmentandthereserveinventorydemand,andorganizestheproductiontaskinstrictaccordancewiththeplan.Duringtheproductionprocess,thequalityassurancedepartmentarrangesregularinspectiontoensuretheproductquality.

(4)SalemodelWeadoptthesalesmodelof"directselling+distribution",i.e.thedirectsellingmodelforthemainenginefactory,andthedistributionmodelfortheindividualcirculationmarketrepresentedbyfarmersandoverseasmarket.

5.TheCompany'spositioninthemarketWemainlyspecializeintheR&D,manufactureandsalesofdieselenginesunderthebrand"Changchai"andgasolineenginesunderthebrand"Robin".Uptonow,wehavesuccessfullydevelopedanumberofadvancedcoretechnologieswithindependentintellectualpropertyrights.Intermsofdieselengine,accordingtothestatisticsofChinaInternalCombustionEngineIndustryAssociation(CICEIA),asthelargestsmall-andmedium-sizedsingle-cylinderdieselenginemanufacturerintheagriculturalmachineryindustryofChina,wehavemaintainedahighmarketshareofsingle-cylinderengines,andourmarketshareofsingle-cylinderdieselenginesofsomepowerrangeshasrankedfirstinChina.Formanyyears,intheprocessofachievingsteadyeconomicdevelopmentoftheenterprise,wedevelopedinasoundmannerandcultivatedthe"Changchai"brand,afamoussmalldieselenginebrandofChinawithindependentintellectualpropertyrights.

5.KeyPerformanceDrivers

(1)Nationalpolicydriver

Inrecentyears,theChinesegovernmenthasintroducedaseriesofpoliciestosupportthedevelopmentoftheagriculturalmachinerymarket,includingsubsidiesforagriculturalequipmentpurchasesandreplacements,aswellassupportpoliciesfortheagriculturalmachinerydistributionindustry.The2025No.1CentralPolicyDocumentproposedpromotinghigh-qualitydevelopmentofagriculturalmachineryequipment,acceleratingtheresearch,developmentandapplicationofdomesticallyproducedadvancedagriculturalmachinery,facilitatingtheretirementandrenewalofoutdatedagriculturalequipment,andsupportingthedevelopmentofsmartagriculturebyexpandingapplicationscenariosforartificialintelligence,bigdata,low-altitudetechnologiesandotherinnovations.China'sagriculturalmachineryequipmentindustrylayouthasalwaystakeninnovationasthemainline,focusingoncoretechnologiesandstrengtheninginnovationcapacitybuilding.Afterthenewthree-yearagriculturalmachinerysubsidyplanclearlyproposedtopromotehigh-qualitydevelopmentofagriculturalmachineryequipment,relevantsupportingpolicieshavebeencontinuouslystrengthened.Theagriculturalmachinerysubsidypolicyfavorsadvancedandapplicablemodels,whilerelevantsmartagriculturedevelopmentpolicieshavealsocreatedafavorableenvironmentforthedevelopmentofhigh-endproducts.ThefullimplementationofChinaIVemissionstandardsandthedevelopmentorientationofhigh-endandintelligentagriculturalmachineryhavebroughttheagriculturalmachineryindustryintoanewdevelopmentstage.Thetrade-inactionplanhasacceleratedthereplacementprocessofoutdatedconstructionmachineryequipment,creatingafavorablepolicyenvironmentforapplicationsintheinternalcombustionenginefield.

(2)IndustrialchainsynergyempowerssustainablecorporatedevelopmentThecompanyhasbuiltitsowncastingandmachiningplantstomeetpartofthedemandfordieselenginecomponents.Significantsynergieshavebeenformedbetweenproductionandqualityaspectsanditsinternalcombustionengineassemblysector.Thecastingmanufacturingsectorandinternalcombustionengineassemblysectorjointlyimprovetoformamutuallyreinforcingpositivefeedbackloop,therebyhelpingthecompanyintegratetheinternalcombustionengineindustrychainandbuilddifferentiatedindustrybarriers.Intermsofproductionsynergy,reducingexternalprocurementisofgreatsignificanceforreducingprocessflow,loweringintermediatelosses,improvingproductionefficiency,shorteningdeliverytimesandincreasingprocurementbargainingpower.Intermsofqualitysynergy,self-builtfoundriescanenhancethecompany'squalitycontrolofcomponents,therebyimprovingtheyieldrateandreliabilityofinternalcombustionengineproducts.

(3)StableandefficientR&DteamThecompanyhasanexperiencedtechnicalmanagementteamandacomprehensivetechnicalsupportteam.CoretechnicalpersonnelandR&Dmanagementpersonnelhavelongbeenengagedintheresearch,development,designandmanufacturingofinternalcombustionengines,possessingprofoundprofessionalknowledgeandrichpracticalexperience,withstrongforesightandscientificjudgmentinmarketdirectionandtechnicalrouteselection.Atthesametime,thecompanyhasestablishedaneffectivetrainingmechanismtoprovidestrongtalentguaranteeforsubsequentR&D.

(4)RecognizedbrandwithnumerousprestigiousclientsThecompany'spredecessorwasChangzhouDieselEngineFactory,acentury-oldnationalindustrialenterpriseandoneofChina'searliestprofessionalmanufacturersofinternalcombustionengines.Thecompany'sdieselandgasolineengineproducts,aspowersourcesforagriculturalmachineryandconstructionmachinery,havedemonstratedexcellentperformanceinpowerrange,reliability,specificpower,noisecontrolandemissionstandards,andhavegainedcustomerrecognition.Thecompanyhasmaintainedlong-termcooperationwithitsmajorcustomers,withcumulativecooperationperiodsexceeding15years.ManyofitsOEMcustomersarewell-knownenterprisesintheagriculturalmachineryindustry,withmarketsharesrankingattheforefrontintheirrespectivemarkets.

6.BusinessOperationsDuringtheReportingPeriod

Inthefirsthalfof2025,againstanincreasinglycomplexandsevereinternationalenvironment,China'smacroeconomygenerallymaintainedstablegrowthwhilefacingunresolvedstructuralcontradictionsbetweensupplyanddemandandinsufficientconsumption.Thetraditionalagriculturalmachineryindustryiscurrentlyinacriticalperiodofadjustmentandrecovery,withslowinggrowthmomentum,thoughemergingmarketsegmentsandnewapplicationareascontinuetoshowgrowthpotentialalongsideincreasingdemandformid-to-high-endproducts.Asagriculturalmodernizationadvances,theagriculturalmachinerymarketisenteringanewphaseofhigher-qualitydevelopment.Thecompanyhasuniteditsworkforcetoupholdthedevelopmentphilosophyof"seekingprogresswhilemaintainingstabilitythroughinnovation,"focusingonannualobjectives,productandmarketdevelopment,aswellasqualityandproduction,achievingstableandhealthycorporategrowth.Duringthereportingperiod,thecompanysold355,100dieselengines,gasolineengines,andgeneratorsets,generatingsalesrevenueof1.561billionyuan,representinga4.36%year-on-yearincrease.InproductR&Dandmatching,thecompanypromotedtheintegrationofmulti-cylinderengineproductssuchasthe4G36V16Aand4H11V16withOEMpartnersfornewproductapplications,continuouslyimprovingproductcompatibilityandperformancebasedonmarketdemandandfeedback.ChinaIV-compliantsingle-cylinderdieselengineshavebeenfullylaunchedintothemarketandenteredserialproduction,withlarge-horsepowerwater-cooledsingle-cylindermodelsgainingincreasingsalesandmarketrecognitionbothdomesticallyandinternationally.Small-horsepowerwater-cooleddieselengineshavecompletedverificationandenteredthemarketfortrackingfeedback.Inproductdevelopment,the4H13dieselengineadoptedadual-pathaftertreatmentdevelopmentstrategytosupportvariouspowerharvesters,whilelightweightengineseriesproductsandlarge-displacementdieselenginesprogressedsteadilyaccordingtoplan.Additionally,thehybridpowertrainprojectachievedphasedresults,completingthedesignofa120-140horsepowertractorrange-extenderhybridsystemconfigurationandrelatedcomponents,layingasolidfoundationforsubsequentR&Dandapplications.Insalesandservices,thecompanystrengthenedchannelmanagementforsingle-cylinderenginestoconsolidatemarketshareinexistingindustrialclusters,enhancedend-marketcoordinationformulti-cylinderenginestomaintaintraditionalstrongholdswhileexpandingintoincrementalharvestermarkets,andintensifiedeffortsinnon-agriculturalsectors,withintegratedchargingstationssuccessfullyenteringtheaerialapplicationmarket.Exportsalesachievedsignificantgrowthinemergingmarkets.Thecompanycontinuedoptimizingserviceresourceallocation,strengtheningservicecollaborationtocompletepeak-seasonsupport,whileexpandingnewmediamarketingtoenhanceoutreachandquality.Inqualitymanagement,thecompanydeepenedqualityengineeringthroughcross-departmentalcollaborationforfull-chaincontrol,implementingstrict,rapid,andprecisestandardsthroughoutprocesseswhileeffectivelydeliveringqualityimprovementsduringbusyfarmingseasons.Forsupplychains,thecompanyestablishedanSQEsupplierqualitymanagementteamtostandardizesupplieroversight,enhancetechnicalexchanges,andintroducenewsuppliers,achievingnotablecostreductions.Productionsystemsmaintainedefficientoperationsthroughprocessoptimizationtolowercostsandimprovelaborproductivity,whileleveragingemergencyresponseteams,equipmentmaintenancespecialists,andoverseastrainingservices.Thecompanyalsooptimizedinnovationincentivemechanismstomotivateemployees.Ininternalmanagement,thecompanystrengthenedsubsidiaryoversight,deepenedinter-subsidiaryresourceintegrationandequitystructureadjustments,emphasizedperformanceevaluationandriskself-inspectionstoensurecompliance,andimprovedoperationalefficiency.Continuoussafetyriskcontrolandhazardeffectivelymitigatedvariousrisks,promotingstablesafetyperformance.ThePartyCommitteereinforcedParty-buildingleadership,implementedtheCentralEight-PointRegulations,andadvancedintegratedlearning-inspection-reforminitiatives.Fortalentdevelopment,thecompanyintensifiedcadretrainingtorejuvenateleadership,implementedindustryreformresponsibilitylists,promotedmodelworkerinnovationstudiosandskillscompetitions,and

refinedincentivemechanismstomotivatestaff.Duringthereportingperiod,thegovernmentinitiatedtheexpropriationofbuildingswithinthescopeofthecompany'sfoundryplantandsurroundingarearedevelopmentproject(PhaseI),whichwasapprovedatthe2025FirstInterimShareholders'Meeting,pendingfinalcompensationagreementsigning.Wholly-ownedsubsidiaryChangchaiRobincompletedtheabsorptionofanotherwholly-ownedsubsidiary,HorizonAgriculturalEquipment,assumingallassets,liabilities,businesses,andotherrights/obligations,withHorizon'slegalentitystatusderegistered.Anotherwholly-ownedsubsidiary,ChangniuMachinery,isabsorbingChangbenDieselEngineParts,inheritingallassets,liabilities,businesses,rights/obligations,aswellastheoriginalregisteredcapital,ownershipstructure,andgovernanceframeworkofChangben.Asofnow,creditornotificationandannouncementprocedureswerecompleted,withindustrialandcommercialregistrationchangesunderway.IICoreCompetitivenessAnalysis

1.BrandAdvantagesChangchaiisacentury-oldnationalindustrialenterpriseandoneofChina'searliestprofessionalmanufacturersofinternalcombustionengines.The"Changchai"brandtrademarkwasamongthefirstinChina'sproductionmaterialssectortoberecognizedasaChinaFamousTrademark,whileChangchaidieselenginesareChinaBrandNameProducts.ThecompanyhasobtainedISO9001andIATF16949qualitysystemcertifications,ISO14001environmentalmanagementsystemcertification,andnationalexportcommodityinspectionexemptionstatus.ChangchaihasrepeatedlybeenrankedamongChina'sTop100MachineryEnterprisesandChinaIndustryPioneerEnterprises,receivingnumeroushonorsincludingNationalContract-honoring&CreditworthyEnterprise,ChinaAgriculturalMachineryComponentsLeadingEnterprise,AAACredit-ratedAgriculturalMachineryEnterprise,JiangsuProvincialQualityManagementExcellenceAward,andChangzhouMayor'sQualityAward.Forconsecutiveyears,ithasbeenvotedamongtheTop10MostSatisfactoryAfter-salesServiceBrandsinthe"PrecisionCultivationCup"awards.Duringthereportingperiod,thecompanywasrecognizedasaNationalProduct&ServiceQualityIntegrityCommitmentEnterprise,NationalStable&QualifiedQualityInspectionProduct,andrankedamongJiangsuProvince'sTop10AgriculturalMachineryEquipmentManufacturersin2024.Overdecadesofstableeconomicdevelopment,Changchaihascultivateditsproprietary"Changchai"brand-arenownedChinesenationalbrandinthesmalldieselenginesectorwithglobalrecognition.

2.TechnologicalAdvantagesChangchaioperatesaNational-levelTechnologyCenter,PostdoctoralResearchStation,andJiangsuProvincialSmall&MediumPowerEngineEngineeringResearchCenter.Asaleadingproducerofsmall-to-mediumpowersingle-cylinderandmulti-cylinderdieselengines,Changchaimaintainstheindustry'smostcomprehensiveproductportfoliowiththebroadestpowercoverageinChina'ssmalldieselsector,whereallcoreproductsfeatureproprietaryintellectualproperty.Duringthereportingperiod,thecompanysecuredauthorizationfor8utilitymodelpatents.AsofJune30,2025,Changchaiheld159validpatentsglobally,including18domesticinventionpatentsand3internationalinventionpatents.

3.MarketingAdvantagesChangchaiadherestomarket-centricprinciples,continuouslyinnovatingmarketingstrategiestoadapttomarketevolution.Thecompanyimplementsanintegrated"Five-in-One"managementsystemencompassingcompletemachinesales,sparepartssupply,warrantyservices,paymentcollection,andinformationfeedback.Itsnationwidesalesandservicenetworkcomprises24salesservicecentersand742authorizedservicestationscoveringurbanandruralmarkets-themostextensiveservicecoverageinChina'ssmall-to-mediumpowerdieselengineindustry.UndertheunifiedcoordinationofChangchai'sCustomerCallCenteratheadquarters,allserviceoutletscommitto

"proactive,rapid,convenient,andaccurate"serviceprinciplestodeliverpremiumpre-sales,in-sales,andafter-salessupport.TomeetChinaNon-RoadStageIVemissionstandardsandprovidepreciseaftermarketservices,thecompanyhasdevelopedaproprietaryservicemonitoringplatformwithdistinctiveChangchaifeatures.IIICoreBusinessAnalysis

OverviewPleaserefertotherelevantcontentunder"I.PrincipalBusinessActivitiesoftheCompanyDuringtheReportingPeriod."Year-over-yearchangesinkeyfinancialdata:

Unit:RMB

CurrentReportingPeriod

Netincreaseincashandcashequivalents

SignificantChangesinProfitCompositionorProfitSourcesDuringtheReportingPeriod

□Applicable√NotApplicableTherewerenosignificantchangesintheCompany'sprofitcompositionorprofitsourcesduringthereportingperiod.CompositionofOperatingRevenue

Unit:RMB

OperatingDivision,ProductCategory,OperatingSegmentorMarketingModelContributingover10%ofOperatingRevenueorOperatingProfit

√Applicable□Notapplicable

Unit:RMB

Internalcombustionengines

CorebusinessdataoftheprioryearrestatedaccordingtothechangedstatisticalcaliberfortheReportingPeriod:

□Applicable√NotapplicableIVAnalysisofNon-CoreBusinessOperations

√Applicable□Notapplicable

Unit:RMB

VAnalysisofAssetsandLiabilities

1.SignificantChangesinAssetComposition

Unit:RMB

30June2025

liabilities

2.Indicatewhetheroverseasassetstakeupahighpercentageintotalassets

□Applicable√Notapplicable

3.AssetsandLiabilitiesatFairValue

√Applicable□Notapplicable

Unit:RMB

liabilities

Item

Contentsofotherchange:N/ASignificantchangestothemeasurementattributesofthemajorassetsintheReportingPeriod:

□Yes√No

4.RestrictedAssetRightsasatthePeriod-End

Unit:RMB

Item

VIInvestmentStatusAnalysis

1.Overview

□Applicable√Notapplicable

2.MajorEquityInvestmentsMadeintheReportingPeriod

□Applicable√Notapplicable

3.MajorNon-EquityInvestmentsOngoingintheReportingPeriod

□Applicable√Notapplicable

4.FinancialInvestments

(1)SecuritiesInvestments

√Applicable□Notapplicable

Unit:RMB

ts

(2)InvestmentsinDerivativeFinancialInstruments

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

5.UseofRaisedFunds

□Applicable√NotapplicableDuringthereportingperiod,theCompanydidnothaveanyutilizationofraisedcapital.

VIISaleofMajorAssetsandEquityInterests

1.SaleofMajorAssets

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

2.SaleofMajorEquityInterests

□Applicable√NotapplicableVIIIMajorSubsidiaries

√Applicable□NotapplicableMajorfully/majority-ownedsubsidiariesandthoseminority-ownedsubsidiarieswithanover10%effectontheCompany’snetprofit:

Unit:RMB

Name

XingshengRealEstateManagement

SubsidiariesobtainedordisposedofintheReportingPeriod:

□Applicable√NotapplicableOtherinformationaboutprincipalsubsidiariesandjointstockcompanies:

1.EquityOwnershipandControlofZhenjiangSiyangAsoftheendofthereportingperiod,theCompanyholdsa49%equityinterestinZhenjiangSiyang,makingitthelargestshareholder.Giventhatothershareholdersarehighlydispersed,andconsideringthat4outof7boardseats(includingtheChairman)areappointedbytheCompany,theCompanyexercisesactualcontroloverZhenjiangSiyang.Accordingly,ZhenjiangSiyangmeetsthecriteriaforconsolidationunderapplicableaccountingstandards.

2.Wholly-ownedsubsidiaryChangchaiRobincompletedthestatutorymergerthroughcomprehensiveabsorptionofanotherwholly-ownedsubsidiaryHorizonAgriculturalEquipment,assumingallassets,liabilities,businessoperations,andotherrights/obligations.AsofFebruary2025,HorizonAgriculturalEquipment'sindependentlegalentitystatushasbeenderegistered,markingthefullcompletionofthemergerbetweenthesetwowholly-ownedsubsidiaries.IXStructuredBodiesControlledbytheCompany

□Applicable√Notapplicable

XRisksandCountermeasures

(1)MarketRisksTheagriculturalmachineryindustryhasenteredaperiodofadjustmentandrecovery.Influencedbynationalequipmentpurchasesubsidypolicies,industrialdevelopmentpolicies,andenvironmentalregulations,traditionalproductmarketsaredecliningwhileemergingsegmentsandnewapplicationareasmaintaingrowthmomentumwithincreasingdemandformid-to-high-endproducts.Asagriculturalmodernizationadvances,thesectoristransitioningtowardhigher-qualitydevelopment.MostenterprisesareintensifyingproductR&Dandmarketexpansioneffortsamidescalatingcompetition.Countermeasuresinclude:acceleratingproductupgradestoenhancetechnologicalcapabilities;proactivelyadaptingtodomesticandinternationalmarketchangestoimproveprofitability;focusingonqualityenhancement

forcomprehensivequalitymanagementimprovements;implementingrefinedmanagementtostrengthenfullproductlifecyclecostcontrol;aligningwithhigh-qualitydevelopmentneedsthroughstrategictalentacquisition;andstrengtheningPartyleadershipthroughstrictgovernanceimplementation.

(2)IndustrialRisksTheadvancementofnewenergytechnologiesandrelatedpolicieshaspromptedenterprisestoaccelerateR&Dandmarketdeploymentofalternativepowersolutions,partiallyimpactingdieselenginemarketshare.Whilenewenergyapplicationsinagriculturalmachinerystillfacechallengeslikehighcostsandcomplexoperatingenvironments,technologicalbreakthroughsmaygraduallyreplacedieselenginesincertainnon-roadapplications.Countermeasuresinclude:developingproductscompliantwithnationalenergyconservationpolicieswhileoptimizingproductlinesthroughsmarttechnologiesandnewmaterialstoenhancevalueandcompetitiveness;acceleratingnewenergypowertrainR&Dincludinghybridsolutionsforsustainabledevelopment;andcoordinatingproductoperationswithcapitalmanagementtofacilitateexpansionintoemergingindustries.

(3)ForeignTradeRisksTheincreasinglycomplexinternationalenvironment,markedbygeopoliticalconflictsandtradedisputes,hasnegativelyimpactedglobaleconomicrecovery,food/energysecurity,andecologicalstability,causingfluctuatingtradepoliciesandexchangeratevolatility.Significantchangesinpoliticalstabilityortradepoliciescouldsubstantiallyaffectexportsales.Countermeasuresinclude:enhancingcollaborativecapabilitiesthroughresourcesharingtoimprovetradeefficiency;adaptingproductsforoverseasmarketswithhigh-performancesolutions;developingkeymarketsleveragingOEMpartners'globalchannelswithimprovedservicetrainingandoverseassupportnetworks;mitigatingcurrencyrisksthroughoptimalpricing/settlementmethodsandexportcreditinsurance;andadjustingproductpricing/paymenttermsinresponsetomaterialcostfluctuations.

(4)RawMaterialPriceVolatilityRisksPricesofkeymaterialslikesteelandpigironfluctuateduetomacroeconomicconditions,productioncapacity,anddemandchanges,creatingmanufacturingcostpressuresthatmayaffectprofitability.Countermeasuresinclude:strengtheninginternalmanagementthroughtechnicalimprovementsandcostoptimization;buildingstableandefficientsupplychains;andcloselymonitoringmarkettrendswithproactiveinventorymanagementtomitigatepricevolatilityimpacts.

(5)TalentRisksAstalentiscrucialforsustainabledevelopment,inadequatecompensationorincentivepoliciesmayleadtoshortagesinleadership,technicalexpertise,andsuccessionpipelines,undermininginnovationandcompetitiveness.Countermeasuresinclude:refiningtalentrecruitmentandtrainingsystemstooptimizeworkforcestructure;enhancingprofessionalcapabilitiesthroughsystematictraining;improvingincentivemechanismsandperformanceevaluationtorejuvenateleadershipteams;andfosteringemployeeengagementthroughdemocraticmanagementandunionservices.XIImplementationofMarketValueManagementSystemandValuationEnhancementPlan

IndicatewhethertheCompanyhasdisclosedtheMarketValueManagementSystem

□Yes√NoIndicatewhethertheCompanyhasdisclosedtheValuationEnhancementPlan

□Yes√No

XIIImplementationStatusofthe"DualEnhancementofQualityandReturns"Initiative

IndicatewhethertheCompanyhasdisclosedthe“QualityandEarningsDualImprovement”ActionPlan.

□Yes√No

PartIVCorporateGovernance,Environment,andSocial

ResponsibilityIChangesinCompanyDirectors,Supervisors,andSeniorManagement

□Applicable√NotapplicableTherewerenochangestotheCompany'sdirectors,supervisors,orseniormanagementduringthereportingperiod.Fordetails,pleaserefertothe2024AnnualReport.

IIProfitDistributionandCapitalReserveConversionDuringtheReportingPeriod

□Applicable√NotapplicableTheCompanyplanstodistributenocashdividends,issuenobonusshares,andconvertnocapitalreservesintosharecapitalfortheinterimperiod.IIIImplementationofEquityIncentivePlans,EmployeeStockOwnershipPlans,orOtherEmployeeIncentiveMeasures

□Applicable√NotapplicableTheCompanyhadnoequityincentiveplans,employeestockownershipplans,orotheremployeeincentivemeasuresimplementedduringthereportingperiod.IVEnvironmentalInformationDisclosure

Whetherthelistedcompanyanditsmajorsubsidiariesareincludedinthelistofenterprisesrequiredtodiscloseenvironmentalinformationinaccordancewiththelaw:

√Yes□No

NumberofEnterprisesIncludedintheListofEnterprisesRequiredtoDiscloseEnvironmentalInformationinAccordancewiththeLaw(Unit:Companies)

VSocialResponsibility

Duringthereportingperiod,theCompanyattachedgreatimportancetoandactivelyfulfilleditssocialresponsibilities.Upholdingthecorevaluesof"customerfirst,employee-oriented,shareholderreturns,andsocialbenefit,"withthemissionof"providinggreenpowerforabetterlife,"theCompanyadheredtoethicaloperations,taxcompliance,andcontinuouslyenhanceditsself-developmentcapabilitiestoachievesustainablegrowth.Itdiligentlysafeguardedthelegitimaterightsandinterestsofshareholders,employees,customers,suppliers,andconsumers,activelyimplementedmeasurestoreduceenergyconsumptionandpollutionemissions,preservedahealthylivingenvironment,pursuedharmoniousdevelopmentbetweentheCompanyandsociety,andactivelycontributedtosocietalwell-being.TheCompany'sPartyCommitteeadvancedtheintegrationofPartyleadershipintocorporategovernance,implementedthe"threemajorandonelarge"decision-makingsystemandthePartyCommittee's"pre-reviewprocedures,"andstrictlyadheredtodecision-makinganddeliberationprotocols.Duringthereportingperiod,theCommitteeconductedpre-reviewstudieson26majoroperationalmatters,promptlyaddressingkeychallengesinproductionandoperations,therebyprovidingstrongsupportfortheeffectiveexecutionofcriticalprojectsandfullyleveragingthePartyCommittee'sroleinguidingdirection,managing,andensuringimplementation.IncompliancewiththeCompanyLawofthePeople'sRepublicofChina,theSecuritiesLawofthePeople'sRepublicofChina,theCorporateGovernanceGuidelinesforListedCompanies,theShenzhenStockExchangeListingRules,andotherrelevantlawsandregulations,aswellastheCompany'sArticlesofAssociation,theCompanycontinuouslyimproveditscorporategovernancestructure,establishedrobustinternalmanagementandcontrolsystems,andfurtherelevateditsgovernancestandards.TheCompanyhasbuiltagovernanceframeworkcenteredontheShareholders'Meeting,BoardofDirectors,andSupervisoryBoard,formingamoderncorporategovernancesystemwithclearresponsibilities,divisionofroles,andcoordinatedoperationsamongallentitiesandmanagement.Onthisfoundation,theCompanystrictlyadheredtointernalcontrolrequirements,furtherclarifiedtheboundariesandauthorityofalllevelsanddepartments,andcontinuouslyenhancedinstitutionalizedandrefinedoperationsthroughoptimizedmanagementprocessesandstrengthenedpolicyenforcement.

(1)ProtectionofShareholderRightsTheCompanystrictlyfollowedtheRulesforShareholders'MeetingsofListedCompanies,itsArticlesofAssociation,andtheRulesofProcedureforShareholders'Meetingstostandardizetheconvening,conduct,anddecision-makingprocessesofshareholders'meetings.Inthefirsthalfof2025,theCompanyheldtwoshareholders'meetings,ensuringshareholders'rightstoinformationandparticipationthroughstandardizedproceduresandsafeguardingtheirlegitimateinterests.Forinformationdisclosure,theCompanystrictlycompliedwithlegalrequirementstoensuretheauthenticity,accuracy,completeness,andtimelinessofdisclosedinformation.Disclosuresincludedperiodicreportssuchasthe2024AnnualReport,theBoardofDirectors'WorkReport,theSupervisoryBoard'sWorkReport,andinterimannouncementsonsignificantmatters,enablinginvestorstostayinformedabouttheCompany'soperationspromptlyandaccurately.Ininvestorcommunications,theCompanyestablishedmultiplechannels,includingonlineearningsbriefings,investorhotlines,email,andinteractiveplatforms,adheringtoprinciplesofopenness,fairness,andimpartialitytoactivelyengagewithinvestors.Duringthereportingperiod,theCompanyconductedanonlineearningsbriefingforthe2024AnnualReport,diligentlymanagedinvestorrelations,maintainedeffectivecommunicationwithshareholders,protectedtheirrighttoinformation,enhancedoperationaltransparency,andsafeguardedtheinterestsofshareholders,especiallyminorityshareholders.

Additionally,theCompanysuccessfullycompletedthe2024annualdividenddistribution,totalingRMB7.0569million.Overthepastthreeyears,thecumulativecashdividendpayoutratioreached69.64%oftheaverageannualnetprofit,exceedingdividendcommitmentsandrewardingshareholderswithtangibleactions.Furthermore,theCompanyprioritizedinsiderinformationmanagement,mitigatingrisksofinsidertradingthroughrobustinternalcontrols.Noinsidertradingoccurredduringthereportingperiod,norwerethereanyinstancesofharmtoshareholderinterests.

(2)ProtectionofCustomerandConsumerRightsTheCompanyestablishedanationwidesalesandservicenetworkwith24salesservicecentersand742authorizedservicestations.TomeetChinaNon-RoadStageIVemissionstandardsandprovidepreciseafter-salessupport,theCompanydevelopedaproprietaryservicemonitoringplatform.Itfosteredlong-termpartnershipswithcustomers,deliveringhigh-quality,efficient,andtimelyservices,earningrecognitionasapreferredsupplierformultipleOEMs.Inrecentyears,theCompanyhasbeenrepeatedlyhonoredasa"NationalExemplaryEnterpriseforProductandServiceQualityIntegrity"andrecognizedasatopsupplierbyleadingmanufacturers,withitsproductsandserviceswidelyacclaimedbycustomersandconsumers.

(3)ProtectionofSupplierRightsTheCompanystrengthenedsuppliermanagementbasedonthePartsSupplyandProcurementContractsandSupplierQualityAgreements,optimizedproductioncapacityallocation,improvedinventoryandplanningmanagement,andensuredtimelypaymentstosafeguardsuppliers'legitimateinterests.Toenhancesupplychainqualitycontrol,theCompanyrefinedsystemsandmechanisms,formedaSupplierQualityEngineer(SQE)team,andprovidedqualityguidancethroughauditsandcollaborativeproblem-solving.Leveragingdigitaltools,itcentralizedandvisualizedsupplychaindatatopreventexcessinventoryandreducesuppliercosts.Adynamicsupplierevaluationsystemwasimplementedtocontinuouslyoptimizethesupplychainstructure,supportsuppliers'technicalgrowth,andfostermutuallybeneficialrelationships.

(4)ProtectionofEmployeeRightsTheCompanyupheldapeople-orientedphilosophy,focusingonemployees'comprehensivedevelopmentthroughtheoreticalandpracticaltraining.ItestablishedHRdepartmentsandtradeunionsatalllevels,alongsidealegallycompliantemployeerepresentativeassemblysystem,tosafeguardworkers'rights.Laborpolicieswerestrictlyfollowedtoensureequitabletreatmentandstandardizedemploymentpractices.TheCompanyfosteredafair,inclusive,andharmoniousworkplace,continuouslyimprovingcompensationandbenefits.Duringthereportingperiod,itconductedover700employeevisits,organizedhealthinitiativessuchasmedicalcheck-upsandcancerscreeningsforfemalestaff,andprovidedwelfaresupportthroughunionservices.Culturalandsportsactivities,innovationcampaigns,andsafetyprogramsenrichedemployees'liveswhileenhancingengagementandawareness.Occupationalhealthlecturesandvolunteerinitiativesfurtherimprovedworkingconditionsandwell-being.TheCompanyoptimizeditsworkforcestructure,offeringrobustplatformsforgrowth,acceleratedleadershiprejuvenation,andimplemented38trainingprogramscovering210+participantstoupskillemployees.Performance-basedincentiveswererefinedtomotivatestaff,aligningpersonalgrowthwithcorporatedevelopment.

(5)WorkplaceSafetyTheCompanyenforcedsecurity,firesafety,andemergencyresponseprotocols.Duringthereportingperiod,401employeesreceivedfiresafetytraining,andfourdrillswereconductedtoenhanceemergencypreparedness.Regularsafetyeducationimprovedemployees'abilitytohandleemergenciesinvolvingoperations,equipment,andoccupationalhealth.

(6)EnvironmentalProtectionandSustainableDevelopmentTheCompanyembracedgreendevelopmentprinciples,prioritizingefficiency,energyconservation,andemissionreductiontominimizeenvironmentalimpact.Itsoperations,productdesign,andservicesadheredtothePDCA(Plan-Do-Check-Act)cycle,maintainingISO14001certification.Alignedwithitsbusinessstrategy,theCompanyadvancedR&Dofeco-friendlyproductstosupportagriculturalmodernization,improveenergyefficiency,andprotecttheenvironment.Itconscientiouslyfulfilleditssocialresponsibilitiestopromotebalancedeconomic,social,andenvironmentalsustainability.

PartVSignificantEvents

IFulfilledandOverdueCommitmentsbytheCompany'sActualController,Shareholders,RelatedParties,Acquirers,andOtherCommitment-RelatedPartiesDuringtheReportingPeriod

□Applicable√NotapplicableDuringthereportingperiod,therewerenofulfilledoroverduecommitmentsbytheCompany'sactualcontroller,shareholders,relatedparties,acquirers,orothercommitment-relatedparties.IINon-OperationalFundOccupancybyControllingShareholdersandOtherRelatedParties

□Applicable√NotapplicableTheCompanydidnotexperienceanynon-operationalfundoccupancybycontrollingshareholdersortheirrelatedpartiesduringthereportingperiod.IIIIrregularExternalGuarantees

□Applicable√NotapplicableNoirregularexternalguaranteesoccurredduringthereportingperiod.IVAppointment/DismissalofAccountingFirms

Whethertheinterimfinancialreporthasbeenaudited:

□Yes√NoTheCompany'sinterimreportwasunaudited.VBoardandSupervisoryBoardExplanationsRegarding"Non-StandardAuditReports"fortheCurrentReportingPeriod

□Applicable√NotapplicableVIBoard'sExplanationsRegardingPriorYear's"Non-StandardAuditReport"

□Applicable√NotapplicableVIIBankruptcyReorganizationMatters

□Applicable√NotapplicableNobankruptcyreorganizationeventsoccurredduringthereportingperiod.

VIIILitigationMatters

MajorLitigationandArbitrationMatters

□Applicable√NotapplicableTheCompanyhadnosignificantlitigationorarbitrationmattersduringthereportingperiod.OtherLitigationMatters

□Applicable√Notapplicable

IXPenaltiesandRectifications

□Applicable√NotapplicableTheCompanyincurrednopenaltiesorrectificationrequirementsduringthereportingperiod.

XIntegrityStatusoftheCompanyandItsControllingShareholders/ActualControllers

√Applicable□NotapplicableTheCompany'sactualcontrolleristheState-ownedAssetsSupervisionandAdministrationCommissionofChangzhouMunicipalPeople'sGovernment,anditscontrollingshareholderisChangzhouInvestmentGroupCo.,Ltd.Thecontrollingshareholderhasnooutstandingcourtjudgmentsorsignificantdebtsthathavebecomeduebutremainunpaid.

XIMaterialRelated-PartyTransactions

1.Related-partytransactionsrelatedtodailyoperations

□Applicable√NotapplicableNorelated-partytransactionsrelatedtodailyoperationsoccurredduringthereportingperiod.

2.Related-partytransactionsinvolvingassetorequityacquisitions/disposals

□Applicable√NotapplicableNorelated-partytransactionsinvolvingassetorequityacquisitions/disposalsoccurredduringthereportingperiod.

3.Related-partytransactionsinvolvingjointexternalinvestments

□Applicable√NotapplicableNorelated-partytransactionsinvolvingjointexternalinvestmentsoccurredduringthereportingperiod.

4.Related-partycreditor/debtorrelationships

□Applicable√NotapplicableNorelated-partycreditor/debtorrelationshipsexistedduringthereportingperiod.

5.Transactionswithrelatedfinancialcompanies

□Applicable√NotapplicableTheCompanyhadnodeposits,loans,creditextensionsorotherfinancialtransactionswithrelatedfinancialcompaniesandrelatedparties.

6.TransactionsbetweentheCompany'scontrolledfinancialcompaniesandrelatedparties

□Applicable√NotapplicableTheCompany'scontrolledfinancialcompanieshadnodeposits,loans,creditextensionsorotherfinancialtransactionswithrelatedparties.

7.Othermaterialrelated-partytransactions

□Applicable√NotapplicableNoothermaterialrelated-partytransactionsoccurredduringthereportingperiod.

XII.MaterialContractsandTheirPerformance

1.Trusteeship,contractingandleasingmatters

(1)Trusteeship

□Applicable√NotapplicableNotrusteeshiparrangementsexistedduringthereportingperiod.

(2)Contracting

□Applicable√NotapplicableNocontractingarrangementsexistedduringthereportingperiod.

(3)Leasing

□Applicable√NotapplicableNoleasingarrangementsexistedduringthereportingperiod.

2.Materialguarantees

□Applicable√NotapplicableNomaterialguaranteearrangementsexistedduringthereportingperiod.

3.Entrustedwealthmanagement

√Applicable□Notapplicable

Unit:RMB0,000

Specifictype

High-riskwealthmanagementtransactionswithasignificantsingleamount,orwithlowsecurity,lowliquidity:

□Applicable√NotapplicableWhereentrustedwealthmanagementarrangementsexhibitcircumstancesindicatingpotentialrecoverabilityofprincipalorotherimpairmenttriggers

□Applicable√Notapplicable

4.OtherMajorContracts

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.XIIIOtherSignificantEvents

√Applicable□Notapplicable

1.ExpropriationandCompensationfortheCompany'sFoundryPlantOnMarch6,2025,theCompanyreceivedtheExpropriationDecisionforState-OwnedLandandBuildings(ChangXinZheng[2025]No.1)issuedbythePeople'sGovernmentofXinbeiDistrict,Changzhou.Duetopublicinterestrequirementsforurbanredevelopment,theXinbeiDistrictGovernmentdecidedtoexpropriatebuildingswithinthescopeoftheSanjingSubdistrictFoundryPlantandsurroundingareaurbanrenewalproject(PhaseI).OnMay8,2025,theCompanyconvenedtheSecondInterimBoardMeetingandSecondInterimSupervisoryCommitteeMeetingof2025,approvingtheProposalonSigningtheExpropriationCompensationAgreementforNon-ResidentialBuildingsinXinbeiDistrict,Changzhou.ThematterwasfurtherapprovedattheFirstInterimShareholders'Meetingof2025onMay26,2025,authorizingtheCompanytosignacompensationagreementwiththeXinbeiDistrictHousingandUrban-RuralDevelopmentBureauandSanjingSubdistrict,withatotalcompensationamountofRMB346.8569million.ThefinalsigningoftheexpropriationagreementispendingcompletionofapprovalproceduresbytheXinbeiDistrictHousingandUrban-RuralDevelopmentBureauandtheSanjingSubdistrictExpropriationandCompensationServiceCenter.

2.ExpropriationandCompensationforPartoftheCompanyHeadquarters(Street-FacingShops)OnFebruary26,2025,theCompanyreceivedtheAnnouncementontheExpropriationCompensationPlanfortheWestHengjieStationProjectofChangzhouMetroLine5issuedbythePeople'sGovernmentofZhonglouDistrict,Changzhou.Duetopublicinterestneeds,theZhonglouDistrictGovernmentproposedtoexpropriatepartofthebuildingsatNo.123HuaideMiddleRoad(i.e.,theCompany'sstreet-facingshopsatitsheadquarters).OnJuly21,2025,theCompanyconvenedtheFourthInterimBoardMeetingandThirdInterimSupervisoryCommitteeMeetingof2025,approvingtheProposalonSigningtheExpropriationCompensationAgreementforState-OwnedLandandBuildingsfortheHeadquarters'Street-FacingShops.Thematterwasfurtherapprovedat

theSecondInterimShareholders'Meetingof2025onAugust6,2025,authorizingtheCompanytosignacompensationagreementwiththeZhonglouDistrictHousingandUrban-RuralDevelopmentBureau,withatotalcompensationamountofRMB48.7877million.XIVMajorMattersConcerningtheCompany'sSubsidiaries

√Applicable□Notapplicable

1.MergerofChangchaiRobinwithHorizonAgriculturalEquipmentOnNovember22,2024,theCompanyconvenedtheFifthInterimBoardMeetingof2024andapprovedtheProposalontheMergerofChangzhouChangchaiHorizonAgriculturalEquipmentCo.,Ltd.andChangzhouFujiChangchaiRobinGasolineEngineCo.,Ltd.TheBoardagreedthatwholly-ownedsubsidiaryChangzhouFujiChangchaiRobinGasolineEngineCo.,Ltd.("ChangchaiRobin")wouldabsorbandsucceedallassets,liabilities,businessoperations,andotherrightsandobligationsofwholly-ownedsubsidiaryChangzhouChangchaiHorizonAgriculturalEquipmentCo.,Ltd.("HorizonAgriculturalEquipment")throughstatutorymerger.Post-merger,ChangchaiRobincontinuesnormaloperationswhileHorizonAgriculturalEquipment'sindependentlegalentitystatuswasderegistered.InFebruary2025,theCompanyreceivedtheRegistrationNotice(No.DengZi[2025]02270081)issuedbytheAdministrativeServiceOfficeofChangzhouHigh-TechIndustrialDevelopmentZone(XinbeiDistrict),confirmingthederegistrationofHorizonAgriculturalEquipmentandcompletionofthemerger.

2.MergerofChangniuCompanywithChangchaiBenniuOnJune9,2025,theCompanyconvenedtheThirdInterimBoardMeetingof2025andapprovedtheProposalontheMergerofChangzhouChangchaiBenniuDieselEnginePartsCo.,Ltd.andChangzhouChangniuMachineryCo.,Ltd.TheBoardagreedthatChangzhouChangniuMachineryCo.,Ltd.("ChangniuCompany")wouldabsorballassets,liabilities,businessoperations,andotherrightsandobligationsofChangzhouChangchaiBenniuDieselEnginePartsCo.,Ltd.("ChangchaiBenniu"),whileinheritingChangchaiBenniu'sregisteredcapital,ownershipstructure,andgovernanceframework.Post-merger,ChangniuCompanycontinuesnormaloperations,andChangchaiBenniu'sindependentlegalentitystatuswillbederegistered.

PartVIShareChangesandShareholderInformation

IShareChanges

1.ShareChanges

Unit:share

Before

persons

ReasonsforShareCapitalChanges

□Applicable√NotapplicableApprovalStatusofShareCapitalChanges

□Applicable√NotapplicableTransferProceduresforShareCapitalChanges

□Applicable√NotapplicableImplementationProgressofShareRepurchase

□Applicable√NotapplicableImplementationProgressofRepurchasedShareReductionThroughCentralizedBidding

□Applicable√NotapplicableImpactofShareCapitalChangesonKeyFinancialIndicators

□Applicable√NotapplicableOtherDisclosuresDeemedNecessarybytheCompanyorRequiredbySecuritiesRegulators

□Applicable√Notapplicable

2.ChangesinRestrictedShares

□Applicable√NotapplicableIIIssuanceandListingofSecurities

□Applicable√Notapplicable

IIINumberofShareholdersandShareholdingStructure

Unit:share

TotalNumberofCommonShareholdersasoftheEndoftheReportingPeriod

naturalperson

WangDefu

ShareholdersHolding>5%Shares,Top10Shareholders,andTop10UnrestrictedTradableShareholders'ParticipationinSecuritiesLendingBusiness

□Applicable√NotapplicableChangesinTop10ShareholdersandTop10UnrestrictedTradableShareholdersDuetoSecuritiesLending(Borrowing/ReturningShares)ComparedtothePreviousPeriod

□Applicable√NotapplicableWhethertheTop10CommonShareholdersandTop10UnrestrictedCommonShareholdersConductedAgreedRepurchaseTransactionsDuringtheReportingPeriod

□Yes√NoheTop10commonshareholdersandTop10unrestrictedcommonshareholdersdidnotconductanyagreedrepurchasetransactionsduringthereportingperiod.IVChangesinShareholdingsofDirectors,Supervisors,andSeniorManagement

□Applicable√NotapplicableTherewerenochangesintheshareholdingsoftheCompany'sdirectors,supervisors,orseniormanagementduringthereportingperiod.Fordetails,pleaserefertothe2024AnnualReport.VChangesinControllingShareholderorActualControllerChangeincontrollingshareholderduringthereportingperiod

□Applicable√NotapplicableTheCompany'scontrollingshareholderremainedunchangedduringthereportingperiod.Changeinactualcontrollerduringthereportingperiod:

□Applicable√NotapplicableTheCompany'sactualcontrollerremainedunchangedduringthereportingperiod.

VI.PreferredSharesRelatedMatters

□Applicable√NotapplicableTheCompanyhadnopreferredsharesoutstandingduringthereportingperiod.

PartVIIPreferenceShares

□Applicable√Notapplicable

PartVIIIFinancialStatements

IAuditor’sReportWhethertheSemi-AnnualReportisAudited

□Yes√NoTheCompany'ssemi-annualfinancialstatementsareunaudited.IIFinancialStatementsCurrencyunitforthefinancialstatementsandthenotesthereto:RMB

1.ConsolidatedBalanceSheetPreparedbyChangchaiCompany,Limited

30June2025

Unit:RMB

Item

Currentportionofnon-currentassets

Financialassetssoldunderrepurchaseagreements

Less:Treasurystock

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

2.BalanceSheetoftheCompanyastheParent

Unit:RMB

Item

Goodwill

Otherequityinstruments

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

3.ConsolidatedIncomeStatement

Unit:RMB

Item

Less:Incometaxexpense

8.1Basicearningspershare

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

4.IncomeStatementoftheCompanyastheParent

Unit:RMB

Item

5.1.5Other

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

5.ConsolidatedCashFlowStatement

Unit:RMB

Item

Paymentsfortheacquisitionoffixedassets,intangibleassetsandotherlong-livedassets

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

6.CashFlowStatementoftheCompanyastheParent

Unit:RMB

Item

Netcashgeneratedfrom/usedinfinancingactivities

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

7.ConsolidatedStatementsofChangesinShareholders’EquityCurrentPeriod

Unit:RMB

Item

Preferredshares

2.Balanceasatthebeginningoftheperiod

3.2.3Share-basedpaymentsincludedinshareholders’equity

3.4.1Increaseincapital(orsharecapital)fromcapitalreserves

3.4.6Other

PriorPeriod

Unit:RMB

Add:

Adjustmentforchangeinaccountingpolicy

3.2.1Ordinarysharesincreasedbyshareholders

3.3.3Appropriationtoshareholders

3.4.4Changesindefinedbenefitschemestransferredtoretainedearnings

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

8.StatementsofChangesinShareholders’EquityoftheCompanyastheParentCurrentPeriod

Unit:RMB

Item

3.2Capitalincreasedandreducedbyshareholders

3.4.2Increaseincapital(orsharecapital)fromsurplusreserves

PriorPeriod

Unit:RMB

Item

3.2Capitalincreasedandreducedbyshareholders

3.4.1Increaseincapital(orsharecapital)fromcapitalreserves

4.Balanceasattheendoftheperiod

Legalrepresentative:XieGuozhongGeneralManager:XieGuozhongHeadoftheaccountingdepartment:JiangHe

III.CompanyProfile

1.Registeredlocation,organizationformandheadquartersaddressoftheCompanyChangchaiCompany,Limited(hereinafterreferredtoas“theCompany”)wasfoundedon5May1994,whichisacompanylimitedbysharespromotedsolelybyChangzhouDieselEnginePlantthroughtheapprovalbytheStateCommissionforRestructuringtheEconomicSystemswithdocumentTGS[1993]No.9on15January1993bywayofpublicofferingofshares.WiththeapprovalofthePeople’sGovernmentofJiangsuProvinceSZF[1993]No.67,aswellasreexaminedandapprovedbyChinaSecuritiesRegulatoryCommission(“CSRC”)throughdocumentZJFSZ(1994)No.9,theCompanyinitiallyissuedAsharestothepublicfrom15March1994to30March1994.AsapprovedbytheShenzhenStockExchangethroughdocumentSZSFZ(1994)No.15,suchtradablesharesofthepublicgotlistingon1July1994atShenzhenStockExchangewith“Changchai”forshortofstock,aswellas“0570”asstockcode(presentstockcodeis“000570”).In1996,uponrecommendationbyDocumentNo.13[1996]oftheGeneralOfficeofJiangsuProvincialPeople'sGovernment,preliminaryreviewbyDocumentNo.24[1996]ofShenzhenSecuritiesRegulatoryOffice,andapprovalbyDocumentNo.27[1996]oftheStateCouncilSecuritiesCommission,theCompanyprivatelyplaced100millionB-sharestoqualifiedinvestorsfromAugust27toAugust30,1996.TheshareswerelistedonSeptember13,1996,withthestockabbreviation"ChangchaiB"andstockcode"2570"(currentstockcode:

"200570").Throughyearsofbonussharedistributions,rightsofferings,capitalreserveconversions,andadditionalshareissuances,asofJune30,2025,theCompany'stotalissuedsharecapitalreached705,692,507shares,withregisteredcapitalofRMB705,692,507.RegisteredAddress:123HuaideMiddleRoad,Changzhou,JiangsuProvinceHeadquartersAddress:123HuaideMiddleRoad,Changzhou,JiangsuProvinceUnifiedSocialCreditCode:91320400134792410W

2.PrincipalBusinessOperationsoftheCompanyTheCompanyoperatesinthemanufacturingindustry,withitsbusinessscopeprimarilycovering:themanufacturingandsalesofdieselengines,dieselenginecomponentsandcastings,gasolineengines,gasolineenginecomponents,grainharvestingmachinery,rotarytillers,walkingtractors,molds,andfixtures,aswellastheassemblyandsalesofdieselengineunitsandgasolineengineunits.TheCompany'smainproductsorservicesinclude:theproductionandsalesofsmallandmedium-sizedsingle-cylinderandmulti-cylinderdieselenginesunderthe"Changchai"brand.ThedieselenginesproducedandsoldbytheCompanyaremainlyusedintractors,combineharvesters,lightcommercialvehicles,agriculturalequipment,smallconstructionmachinery,generatorsets,andmarineengines.Duringthereportingperiod,therewerenochangestotheCompany'scorebusinessoperations.

3.AuthorizationofFinancialStatementsThefinancialreporthasbeenapprovedtobeissuedbytheBoardofDirectorsonAugust20,2025.IV.BasisforPreparationoftheFinancialReport

1.BasisforPreparationWiththegoing-concernassumptionasthebasisandbasedontransactionsandothereventsthatactuallyoccurred,theGrouppreparedfinancialstatementsinaccordancewithTheAccountingStandardsforBusiness

Enterprises—BasicStandardissuedbytheMinistryofFinancewithDecreeNo.33andrevisedwithDecreeNo.76,thevariousspecificaccountingstandards,theApplicationGuidanceofAccountingStandardsforBusinessEnterprises,theInterpretationofAccountingStandardsforBusinessEnterprisesandotherregulationsissuedandrevisedfrom15February2006onwards(hereinafterjointlyreferredtoas“theAccountingStandardsforBusinessEnterprises”,“ChinaAccountingStandards”or“CAS”),aswellastheRulesforPreparationConventionofDisclosureofPublicOfferingCompaniesNo.15–GeneralRegulationsforFinancialReporting(revisedin2023)byChinaSecuritiesRegulatoryCommission.InaccordancewithrelevantprovisionsoftheAccountingStandardsforBusinessEnterprises,theGroupadoptedtheaccrualbasisinaccounting.Exceptforsomefinancialinstruments,whereimpairmentoccurredonanasset,animpairmentreservewaswithdrawnaccordinglypursuanttorelevantrequirements.

2.ContinuationThesefinancialstatementsarepreparedonagoingconcernbasis.TheCompanyhastheabilitytocontinueasagoingconcernforatleast12monthsfromtheendofthereportingperiod.V.ImportantAccountingPoliciesandEstimationsNotificationofspecificaccountingpoliciesandaccountingestimations:

TheCompanyanditssubsidiariesareprincipallyengagedintheproductionandsalesofsmall-to-mediumsizedsingle-cylinderandmulti-cylinderdieselenginesunderthe'Changchai'trademark.InaccordancewiththeiractualproductionandoperatingcharacteristicsandtherelevantAccountingStandardsforBusinessEnterprises,theCompanyanditssubsidiarieshaveformulatedspecificaccountingpoliciesandaccountingestimatesforvarioustransactionsandevents,asdetailedinthefollowingdescriptions.

1.StatementofCompliancewiththeAccountingStandardsforBusinessEnterprisesThefinancialstatementspreparedbytheCompanycomplywiththerequirementsoftheAccountingStandardsforBusinessEnterprises(ASBE)andpresentfairly,inallmaterialrespects,theconsolidatedandparentcompany'sfinancialpositionasofJune30,2025,andtheconsolidatedandparentcompany'soperatingresultsandcashflowsfortheyearthenended.

2.FiscalPeriodTheCompany'saccountingperiodsaredividedintofiscalyearsandinterimperiods.Aninterimaccountingperiodreferstoareportingperiodshorterthanafullfiscalyear.TheCompanyadoptstheGregoriancalendaryearasitsfiscalyear,whichstartsfromJanuary1standendsonDecember31steachyear.

3.OperatingCycleAnormaloperatingcyclereferstoaperiodfromtheGrouppurchasingassetsforprocessingtorealizingcashorcashequivalents.AnoperatingcyclefortheGroupis12months,whichisalsotheclassificationcriterionfortheliquidityofitsassetsandliabilities.

4.CurrencyUsedinBookkeepingRenminbiisthefunctionalcurrencyoftheCompany.

5.AccountingMethodsforBusinessCombinationsundertheSameControlandBusinessCombinationsnotundertheSameControlBusinessCombinationreferstotransactionsoreventsthatintegratetwoormoreseparateenterprisesintoasinglereportingentity.BusinesscombinationsarecategorizedintoBusinessCombinationsundertheSameControlandBusinessCombinationsnotundertheSameControl.

(1)BusinesscombinationsunderthesamecontrolTheenterprisesinvolvedincombinationareultimatelycontrolledbythesamepartyorpartiesbeforeandafterthecombination.Thecontrolisnottemporary,andthecombinationisunderthesamecontrol.Forbusinesscombinationunderthesamecontrol,thepartythatobtainscontroloverotherparticipatingenterprisesonthepurchasedateistheacquirer,andotherenterprisesthatparticipateinthecombinationaretheacquirees.Combinationdatereferstothedateonwhichthecombiningpartyactuallyobtainscontroltothecombinedparty.TheCompanymeasurestheassetsandliabilitiesobtainedfromconsolidationofenterprises,accordingtothebookvalueofconsolidatedparty’sassetsandliabilities(includingthegoodwillarisingfromultimatecontroller’sacquisitionoftheconsolidatedparty)intheultimatecontroller’sconsolidatedfinancialstatementontheconsolidationdate;adjuststhecapitalpremiumincapitalreserve,bythedifferencebetweenobtainednetassetbookvalueandpaidconsolidatedconsiderationbookvalue(ortotalparvalueofsharesissued),andadjustsretainedearnings,ifthecapitalpremiumincapitalreserveisinsufficienttooffset.Thedirectexpensesgeneratedbytheacquirerforthepurposeofbusinesscombinationsshallberecordedintotheprofitsandlossesforthecurrentperiod.

(2)BusinesscombinationsnotunderthesamecontrolAbusinesscombinationinvolvingenterprisesthatarenotultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthecombinationisabusinesscombinationnotundercommoncontrol.Inabusinesscombinationnotundercommoncontrol,thepartythatobtainscontrolovertheothercombiningenterprisesontheacquisitiondateistheacquirer,andtheotherenterprisesparticipatinginthecombinationaretheacquirees.Theacquisitiondateisthedateonwhichtheacquirereffectivelyobtainscontroloftheacquiree.Forabusinesscombinationnotundercommoncontrol,thecostofcombinationincludesthefairvalue,attheacquisitiondate,ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissuedbytheacquirerinexchangeforcontroloftheacquiree.Professionalfeessuchasaudit,legal,valuationandconsultingservices,aswellasotheradministrativecostsrelatedtothebusinesscombination,areexpensedasincurred.Transactioncostsincurredbytheacquirerinissuingequityordebtinstrumentsasconsiderationforthecombinationareincludedintheinitialrecognitionamountoftheequityordebtinstruments.Anycontingentconsiderationisincludedinthecostofcombinationatitsfairvalueattheacquisitiondate.Ifneworadditionalevidencerelatingtocircumstancesexistingattheacquisitiondateariseswithintwelvemonthsaftertheacquisitiondateandresultsinanadjustmenttothecontingentconsideration,theamountofgoodwillisadjustedaccordingly.Theacquirermeasuresthecostofcombinationandtheidentifiableassetsandliabilitiesacquiredattheirfairvaluesattheacquisitiondate.Theexcessofthecostofcombinationovertheacquirer'sinterestinthefairvalueoftheidentifiablenetassetsoftheacquireeattheacquisitiondateisrecognizedasgoodwill.Ifthecostofcombinationislessthantheacquirer'sinterestinthefairvalueoftheidentifiablenetassetsoftheacquiree,theacquirerfirstreassessesthemeasurementoftheidentifiableassets,liabilitiesandcontingentliabilitiesacquiredandthecostofcombination.Ifthecostof

combinationremainslessthantheacquirer'sinterestinthefairvalueoftheidentifiablenetassetsoftheacquireeafterthereassessment,thedifferenceisrecognizedinprofitorlossfortheperiod.Iftheacquirerobtainsdeductibletemporarydifferencesoftheacquireethatdonotmeettherecognitioncriteriafordeferredtaxassetsattheacquisitiondateandarethereforenotrecognized,andifwithintwelvemonthsaftertheacquisitiondateneworadditionalinformationbecomesavailableindicatingthattherelevantcircumstancesexistedattheacquisitiondateandthattheeconomicbenefitsassociatedwiththedeductibletemporarydifferencesoftheacquireeattheacquisitiondateareprobable,therelateddeferredtaxassetsarerecognizedwithacorrespondingdecreaseingoodwill.Ifthegoodwillisinsufficienttoabsorbthedecrease,theexcessisrecognizedinprofitorloss.Inallothercases,deferredtaxassetsarisingfromabusinesscombinationarerecognizedinprofitorloss.AbusinesscombinationnotundercommoncontrolachievedinstagesthroughmultipletransactionsisaccountedforbyreferencetotheprecedingparagraphsandNoteV.14"Long-termequityinvestments"ifthetransactionsarepartofasinglearrangement.Ifthetransactionsarenotpartofasinglearrangement,theaccountingtreatmentisdifferentiatedbetweentheseparatefinancialstatementsandtheconsolidatedfinancialstatements:

Intheseparatefinancialstatements,theinitialcostoftheinvestmentisthesumofthecarryingamountoftheequityinvestmentintheacquireeheldpriortotheacquisitiondateandthecostoftheadditionalinvestmentincurredontheacquisitiondate.Iftheequityinvestmentintheacquireeheldpriortotheacquisitiondateinvolvesothercomprehensiveincome,therelatedothercomprehensiveincomeisaccountedforonthesamebasisasiftheacquireehaddirectlydisposedoftherelatedassetsorliabilitieswhentheinvestmentisdisposedof(i.e.,exceptfortherelevantshareofchangesarisingfromtheacquiree'sremeasurementofdefinedbenefitplannetliabilitiesorassetsaccountedforundertheequitymethod,theremainderisreclassifiedtoinvestmentincomeinthecurrentperiod).Intheconsolidatedfinancialstatements,theequityinvestmentintheacquireeheldpriortotheacquisitiondateisremeasuredatitsfairvalueontheacquisitiondate,withanydifferencebetweenthefairvalueandthecarryingamountrecognizedininvestmentincomefortheperiod.Iftheequityinvestmentintheacquireeheldpriortotheacquisitiondateinvolvesothercomprehensiveincome,therelatedothercomprehensiveincomeisaccountedforonthesamebasisasiftheacquireehaddirectlydisposedoftherelatedassetsorliabilities(i.e.,exceptfortherelevantshareofchangesarisingfromtheacquiree'sremeasurementofdefinedbenefitplannetliabilitiesorassetsaccountedforundertheequitymethod,theremainderisreclassifiedtoinvestmentincomeintheperiodinwhichtheacquisitiondatefalls).

6.CriteriaforDeterminingControlandMethodsforPreparingConsolidatedFinancialStatements

(1)CriteriaforDeterminingControlThescopeofconsolidationisdeterminedbasedoncontrol.ControlmeansthattheCompanyhaspoweroveraninvestee,isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee,andhastheabilitytouseitspowerovertheinvesteetoaffecttheamountofthereturns.Thisgenerallyincludessituationswhere:theparentholdsmorethanhalfofthevotingrightsoftheinvestee;ortheparentholdshalforlessofthevotingrightsbuthasmorethanhalfofthevotingrightsthroughagreementswithotherinvestors;orhasthepowertogovernthefinancialandoperatingpoliciesoftheinvesteeundertheinvestee’sarticlesofassociationoragreements;orhasthepowertoappointorremovethemajorityofthemembersoftheboardofdirectorsoftheinvestee;orhasthemajorityofvotingrightsattheboardofdirectorsoftheinvestee.

(2)MethodsforPreparingConsolidatedFinancialStatementsTheCompanyincludessubsidiariesintheconsolidatedfinancialstatementsfromthedateonwhichitobtains

controloverthesubsidiaries’netassetsandoperatingdecisions,andexcludesthemfromthedateonwhichsuchcontrolceases.Forsubsidiariesdisposedof,theresultsofoperationsandcashflowspriortothedisposaldateareproperlyincludedintheconsolidatedincomestatementandconsolidatedcashflowstatement;forsubsidiariesdisposedofduringtheperiod,theopeningbalancesoftheconsolidatedbalancesheetarenotadjusted.Forsubsidiariesacquiredinbusinesscombinationsnotundercommoncontrol,theirresultsofoperationsandcashflowsaftertheacquisitiondateareproperlyincludedintheconsolidatedincomestatementandconsolidatedcashflowstatement,andtheopeningbalancesandcomparativefiguresintheconsolidatedfinancialstatementsarenotadjusted.Forsubsidiariesacquiredinbusinesscombinationsundercommoncontrolandentitiesacquiredthroughmergers,theirresultsofoperationsandcashflowsfromthebeginningoftheperiodinwhichthecombinationoccurstothecombinationdateareproperlyincludedintheconsolidatedincomestatementandconsolidatedcashflowstatement,andthecomparativefiguresintheconsolidatedfinancialstatementsareadjustedaccordingly.Whenpreparingtheconsolidatedfinancialstatements,iftheaccountingpoliciesorreportingperiodsadoptedbyasubsidiarydifferfromthoseoftheCompany,thesubsidiary’sfinancialstatementsareadjustedtoconformtotheCompany’saccountingpoliciesandreportingperiods.Forsubsidiariesacquiredinbusinesscombinationsnotundercommoncontrol,theirfinancialstatementsareadjustedbasedonthefairvaluesoftheidentifiablenetassetsattheacquisitiondate.Allsignificantintercompanybalances,transactionsandunrealizedprofitsareeliminatedinfullintheconsolidatedfinancialstatements.Theportionofequityandnetprofitorlossofsubsidiariesattributabletonon-controllinginterestsispresentedseparatelyintheconsolidatedfinancialstatementsunderequityandnetprofit,respectively.Theportionofnetprofitorlossofsubsidiariesattributabletonon-controllinginterestsispresentedas“non-controllinginterests”undernetprofitintheconsolidatedincomestatement.Lossesattributabletonon-controllinginterestsinasubsidiarythatexceedthenon-controllinginterests’shareofequityinthesubsidiaryatthebeginningoftheperiodareallocatedagainstnon-controllinginterests.Whencontroloveraformersubsidiaryislostduetodisposalofpartoftheequityinvestmentorotherreasons,theremainingequityinterestisremeasuredatitsfairvalueatthedatewhencontrolislost.Thedifferencebetweenthesumoftheconsiderationreceivedfromthedisposalandthefairvalueoftheremainingequityinterest,andtheshareofthecarryingamountoftheformersubsidiary’snetassetsattributabletotheoriginalequityinterestfromtheacquisitiondate,isrecognizedinprofitorlossfortheperiodinwhichcontrolislost.Othercomprehensiveincomerelatedtotheequityinvestmentintheformersubsidiaryisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilitieswhencontrolislost(i.e.,exceptfortherelevantshareofchangesarisingfromtheinvestee’sremeasurementofdefinedbenefitplannetliabilitiesorassets,theremainderisreclassifiedtoprofitorlossforthecurrentperiod).Subsequently,theremainingequityinterestisaccountedforinaccordancewiththerelevantprovisionsofAccountingStandardsforBusinessEnterprisesNo.2–Long-termEquityInvestmentsorAccountingStandardsforBusinessEnterprisesNo.22–RecognitionandMeasurementofFinancialInstruments.Fordetails,seeNote5.14“Long-termEquityInvestments”orNoteV.10“FinancialInstruments”.WhentheCompanylosescontroloverasubsidiarythroughmultipletransactionsthatinvolvedisposingofequityinvestmentsinthesubsidiarystepbystep,itisnecessarytodeterminewhetherthetransactionsshouldbeaccountedforasasingletransaction.Theterms,conditionsandeconomiceffectsofthetransactionsmeetoneormoreofthefollowingcircumstances,whichgenerallyindicatethatthetransactionsshouldbeaccountedforasasingletransaction:(1)thetransactionsareenteredintosimultaneouslyorincontemplationofoneanother;(2)thetransactionsformasingletransactiontoachieveanoverallcommercialeffect;(3)theoccurrenceofonetransactiondependsontheoccurrenceofatleastoneothertransaction;or(4)onetransactionconsideredaloneis

noteconomicallyjustified,butiseconomicallyjustifiedwhenconsideredtogetherwithothertransactions.Ifthetransactionsarenotpartofasingletransaction,eachtransactionisaccountedforseparatelyasappropriateundertheprinciplesapplicableto“partialdisposaloflong-termequityinvestmentsinsubsidiarieswithoutlossofcontrol”and“lossofcontroloverformersubsidiariesduetodisposalofpartofequityinvestmentsorotherreasons”.Ifthetransactionsarepartofasingletransaction,theyareaccountedforasasingletransactioninvolvingdisposalofthesubsidiaryandlossofcontrol;however,thedifferencebetweentheconsiderationreceivedfromeachdisposalbeforethelossofcontrolandtheshareofthesubsidiary’snetassetsattributabletothedisposedinvestmentisrecognizedasothercomprehensiveincomeintheconsolidatedfinancialstatementsandreclassifiedtoprofitorlossfortheperiodinwhichcontrolislost.

7.ClassificationofJointArrangementsandAccountingTreatmentforJointOperationsAjointarrangementisanarrangementofwhichtwoormorepartieshavejointcontrol.TheCompanyclassifiesjointarrangementsintojointoperationsandjointventuresbasedontherightsandobligationsarisingfromthearrangement.AjointoperationisajointarrangementwherebytheCompanyhasrightstotheassetsandobligationsfortheliabilitiesrelatingtothearrangement.AjointventureisajointarrangementwherebytheCompanyhasrightstothenetassetsofthearrangement.TheCompanyaccountsforitsinvestmentsinjointventuresusingtheequitymethod,applyingtheaccountingpoliciesdescribedinNoteV.14(2)②"Long-termEquityInvestmentsAccountedforUsingtheEquityMethod".Asajointoperatorinajointoperation,theCompanyrecognizesitsindividuallyheldassetsandassumedliabilities,aswellasitsshareofjointlyheldassetsandjointlyassumedliabilities;recognizesrevenuefromthesaleofitsshareoftheoutputfromthejointoperation;recognizesitsshareofrevenuearisingfromthesaleofoutputbythejointoperation;andrecognizesexpensesitincursindividuallyaswellasitsshareofexpensesincurredbythejointoperation.WhentheCompany,asajointoperator,contributesorsellsassets(whichdonotconstituteabusiness,thesamebelow)toajointoperation,orpurchasesassetsfromajointoperation,theCompanyonlyrecognizestheportionofgainsorlossesarisingfromthetransactionthatisattributabletotheotherjointoperatorsuntilsuchassetsaresoldtothirdparties.IftheseassetsmeetthecriteriaforimpairmentlossesasstipulatedinAccountingStandardsforBusinessEnterprisesNo.8-ImpairmentofAssetsandotherrelevantstandards,theCompanyfullyrecognizessuchlossesforassetscontributedorsoldtothejointoperationbytheCompany,andrecognizesitsshareofsuchlossesforassetspurchasedfromthejointoperationbytheCompany.

8.DeterminationofcashandcashequivalentsTheCompany’scashandcashequivalentsincludecashonhand,depositsthatcanbeusedforpaymentatanytime,investmentsthatownedbytheCompanywhichareinshort-term(usuallyduewithinthreemonthsfromthepurchasedate),highlyliquid,easytoconverttoaknownamountofcash,lowriskofvaluechange.

9.Foreigncurrencyoperations

(1)TranslationMethodsforForeignCurrencyTransactionsTheCompanytranslatesforeigncurrencytransactionsintothefunctionalcurrencyamountatthespotexchangerateonthetransactiondateuponinitialrecognition.However,forforeigncurrencyexchangetransactionsortransactionsinvolvingcurrencyexchangeconductedbytheCompany,theactualexchangerateadoptedisusedfor

translationintothefunctionalcurrencyamount.

(2)TranslationMethodsforForeignCurrencyMonetaryItemsandNon-monetaryItemsAtthebalancesheetdate,foreigncurrencymonetaryitemsaretranslatedusingthespotexchangerateonthatdate.Theresultingexchangedifferencesarerecognizedinprofitorloss,exceptfor:①exchangedifferencesarisingfromforeigncurrency-specificborrowingsrelatedtotheacquisitionorconstructionofqualifyingassets,whichareaccountedforinaccordancewiththeprinciplesforcapitalizingborrowingcosts;and②exchangedifferencesarisingfromchangesinthecarryingamountofavailable-for-saleforeigncurrencymonetaryitemsotherthanamortizedcost,whicharerecognizedinothercomprehensiveincome.Non-monetaryitemsdenominatedinforeigncurrencyandmeasuredathistoricalcostcontinuetobetranslatedusingthespotexchangerateonthetransactiondate.Non-monetaryitemsdenominatedinforeigncurrencyandmeasuredatfairvaluearetranslatedusingthespotexchangerateonthedatewhenthefairvalueisdetermined.Thedifferencebetweenthetranslatedfunctionalcurrencyamountandtheoriginalfunctionalcurrencyamountistreatedasafairvaluechange(includingexchangerateeffects)andrecognizedinprofitorlossorothercomprehensiveincome.

10.FinancialInstrumentsAfinancialassetorfinancialliabilityisrecognizedwhentheCompanybecomesapartytothefinancialinstrumentcontract.

(1)Classification,confirmationandmeasurementoffinancialassetsBasedonbusinessmodelofmanagingfinancialassetsandcontractualcashflowcharacteristicsoffinancialassets,theCompanydividesfinancialassetsinto:financialassetsmeasuredatamortizedcost;financialassetsmeasuredatfairvaluewithchangesincludedinothercomprehensiveincome;financialassetsmeasuredatfairvaluethroughprofitandloss.Financialassetsaremeasuredatfairvalueatinitialrecognition.Forthefinancialassetsatfairvalueandthroughcurrentprofitorloss,thetransactionexpensesthereofshouldberecognizeddirectlyinprofitorloss;forothercategoriesoffinancialassets,thetransactionexpensesthereofshouldberecognizedintoinitiallyrecognizedamount.Fortheaccountsreceivableorbillsreceivablearisingfromproductsalesorlaborserviceprovisionexcludingornotconsideringsignificantfinancingcomponents,theCompanyregardstheamountofconsiderationexpectedtochargeastheinitialrecognitionamount.

①FinancialassetsmeasuredatamortizedcostsThecorporatebusinessmodelformanagingfinancialassetsmeasuredatamortizedcostaimsatchargingcontractualcashflow,andthecontractualcashflowcharacteristicsofsuchfinancialassetsareconsistentwithbasicborrowingandloanarrangements,namelycashflowisgeneratedonaspecificdate,onlyforpaymentofprincipalandinterestsbasedonoutstandingprincipalamount.TheCompanyutilizeseffectiveinterestratemethodforsuchfinancialassets,andperformssubsequentmeasurementasperamortizedcost,withgainsorlossesarisingfromamortizationorimpairmentincludedincurrentprofitsandlosses.

②FinancialassetsmeasuredatfairvaluewithchangesincludedinothercomprehensiveincomeThecorporatebusinessmodelformanagingsuchfinancialassetsaimsatbothcontractualcashflowchargingandsales,andthecontractualcashflowcharacteristicsofsuchfinancialassetsareconsistentwithbasicborrowingandloanarrangements.TheCompanymeasuressuchfinancialassetsatfairvaluewithchangesincludedinothercomprehensiveincome,butimpairmentlossesorgains,exchangegainsandlosses,andinterestincomecalculatedaccordingtotheactualinterestratemethodareincludedincurrentprofitsandlosses.

Inaddition,theCompanydesignatessomenon-tradingequityinstrumentinvestmentsasfinancialassetsmeasuredatfairvaluewithchangesincludedinothercomprehensiveincome.TheCompanyrecordsrelevantdividendincomeofsuchfinancialassetsintocurrentprofitsandlosses,andrecordsfairvaluechangesintoothercomprehensiveincome.Whensuchfinancialassetsarederecognized,thecumulativegainsorlossespreviouslyrecordedinothercomprehensiveincomewilltransferfromothercomprehensiveincomeintoretainedearnings,excludedincurrentprofitsandlosses.

③FinancialLiabilitiesmeasuredatfairvaluethroughprofitandlossTheCompanyclassifiestheabovefinancialassetsmeasuredatamortizedcostandthefinancialassetsotherthanthefinancialassetsmeasuredatfairvaluewithchangesincludedinothercomprehensiveincomeasthefinancialassetsmeasuredatfairvaluethroughprofitandloss.Inaddition,duringinitialrecognition,inordertoeliminateorsignificantlyreduceaccountingmismatches,theCompanydesignatessomefinancialassetsasfinancialassetsmeasuredatfairvaluethroughprofitandloss.Forsuchfinancialassets,theCompanyusesfairvalueforsubsequentmeasurement,andfairvaluechangesareincludedincurrentprofitsandlosses.

(2)Classification,recognitionandmeasurementoffinancialliabilitiesFinancialliabilitiesareclassifiedduringinitialrecognitionasthefinancialliabilitiesmeasuredatfairvaluethroughprofitandloss,andotherfinancialliabilities.Forfinancialliabilitiesatfairvaluethroughprofitorloss,thetransactionexpensesthereofshouldberecognizeddirectlyincurrentprofitorloss,andforotherfinancialliabilities,thetransactionexpensesthereofshouldberecognizedintoinitiallyrecognizedamount.

①FinancialliabilitiesmeasuredatfairvaluethroughprofitandlossFinancialliabilitiesmeasuredatfairvaluethroughprofitandlosscontaintransactionalfinancialliabilities(includingderivativesthatbelongtofinancialliabilities)andfinancialliabilitiesdesignatedasmeasuredatfairvalueduringinitialrecognitionwithchangesincludedincurrentprofitsandlosses.Transactionalfinancialliabilities(includingderivativesthatbelongtofinancialliabilities)aresubsequentlymeasuredatfairvalue,andexceptforthoserelatedtohedgeaccounting,thefairvaluechangesareincludedincurrentprofitsandlosses.Thefinancialliabilitiesdesignatedasmeasuredatfairvaluewithchangesincludedincurrentprofitsandlosses,suchliabilitiesarecausedbytheCompany’sowncreditriskchanges,withfairvaluechangesincludedinothercomprehensiveincome,andwhentheliabilitiesarederecognized,theyareincludedinothercomprehensiveincome,causedbyowncreditriskchanges,withcumulativefairvaluechangestransferredintoretainedearnings.Theremainingfairvaluechangesareincludedincurrentprofitsandlosses.Iftreatmentofowncreditriskchangeimpactofsuchfinancialliabilitiesintheabovemannerwillcauseorexpandaccountingmismatchinprofitsandlosses,theCompanyincludesallgainsorlossesofsuchfinancialliabilities(includingtheamountofcorporateowncreditriskchangeimpact)incurrentprofitsandlosses.

②OtherfinancialliabilitiesExceptthefinancialliabilitiesandfinancialguaranteecontractarisingfromfinancialassettransferatvariancewithderecognitionconditionsorcontinuousinvolvementoftransferredfinancialassets,otherfinancialliabilitiesareclassifiedasfinancialliabilitiesmeasuredatamortizedcost,andsubsequentlymeasuredatamortizedcost,withgainsorlossesresultingfromderecognitionoramortizationincludedincurrentprofitsandlosses.

(3)RecognitionbasisandmeasurementmethodoffinancialassetstransferFinancialassetsarederecognizedinoneofthefollowingconditions:①thecontractualrighttoreceivecashflowofsuchfinancialassetsisterminated;②suchfinancialassetshavebeentransferred,andalmostallrisksandrewardsonthefinancialassetOwnershiparetransferredtothetransferee;③suchfinancialassetshavebeentransferred,andalthoughtheCompanyhasneithertransferrednorretainedalmostallrisksandrewardsonthe

financialassetOwnership,ithasgivenupcontrolofsuchfinancialassets.IftheenterpriseneithertransfersnorretainssubstantiallyalltherisksandrewardsofOwnershipofafinancialasset,andithasnotabandonedthecontrolofthatfinancialasset,therelevantfinancialassetisrecognizedattheextentofcontinuinginvolvementinthetransferredfinancialassetandthecorrespondingliabilityisrecognizedaccordingly.Thedegreeofcontinuousinvolvementinthetransferredfinancialassetreferstotherisklevelthattheenterprisefacesduetothechangeofthevalueofthefinancialasset.Whereatransferofafinancialassetinitsentirelymeetsthecriteriaofde-recognition,thedifferencebetweenthecarryingamountofthefinancialassettransferredandthesumoftheconsiderationreceivedfromthetransferandanycumulativechangeinfairvaluethathasbeenrecognizedinothercomprehensiveincomeisrecognizedincurrentprofitorloss.Whereatransferoffinancialassetpartlymeetsthecriteriaofde-recognition,thecarryingamountofthefinancialassettransferredshouldbeamortizedbetweenthepartthatisderecognizedandthepartthatisnotderecognizedaccordingtothefairvalue,andthedifferencebetweenthesumoftheconsiderationreceivedfromthetransferandanycumulativechangeinfairvaluethathasbeenrecognizedinothercomprehensiveincomeandshouldbeamortizedtothederecognizedpart,andttheamortizedcarryingamountoftheabove-mentionedfinancialasset,shallberecordedintocurrentprofitorloss.WhentheCompanyusesfinancialassetssoldwithrecourseorsellsfinancialassetsheldinanendorsement,itmustdeterminewhetherallrisksandrewardsofOwnershipofthefinancialassetshavebeenalmosttransferred.IfalltherisksandrewardsofOwnershipofthefinancialassetarealmosttransferredtothetransferee,andthefinancialassetisderecognized;ifalltherisksandrewardsontheOwnershipofthefinancialassetareretained,thefinancialassetisnotderecognized;alltherisksandrewardsofOwnershipoffinancialassetsarenotalmosttransferredorretained,continuetodeterminewhethertheCompanyretainsthecontrolovertheassetsandperformtheaccountingoperationbasedontheprinciplesdescribedintheprecedingparagraphs.

(4)De-recognitionoffinancialliabilitiesIfcurrentobligationsoffinancialliabilities(orapartthereof)areremoved,theCompanyderecognizessuchfinancialliabilities(orapartthereof).IftheCompany(borrower)signsanagreementwiththelender,toreplacetheoriginalfinancialliabilitiesbybearingnewfinancialliabilities,andcontractclausesofnewfinancialliabilitiesandoriginalfinancialliabilitiesaresubstantiallydifferent,theoriginalfinancialliabilitiesarederecognized,whilerecognizinganewfinancialliability.IftheCompanymakessubstantialmodificationtothecontractualclausesoforiginalfinancialliabilities(orapartthereof),theoriginalfinancialliabilitiesarederecognized,andanewfinancialliabilityisrecognizedaccordingtotheclausesaftermodification.Iffinancialliabilities(orapartthereof)arederecognized,theCompanyrecordsthedifferencebetweentheirbookvalueandconsiderationpaid(includingnon-cashassetstransferredoutorliabilitiesassumed)intocurrentprofitsandlosses.

(5)OffsetoffinancialassetsandfinancialliabilitiesWhentheCompanyhaslegalrighttooffsetfinancialassetsandfinancialliabilitiesoftherecognizedamount,andsuchlegalrightsarecurrentlyenforceable,meanwhile,theCompanyplanstosettlebynetassetsorconcurrentlyliquidatesuchfinancialassetsandrepaysuchfinancialliabilities,financialassetsandfinancialliabilitiesarepresentedinthebalancesheetbynetamountsaftermutualoffset.Inaddition,financialassetsandfinancialliabilitiesareseparatelypresentedinthebalancesheet,whicharenotoffsetbyeachother.

(6)DeterminingmethodofthefairvalueoffinancialassetsandfinancialliabilitiesFairvaluereferstothepricethatamarketparticipantcanbereceivedforthesaleofanassetorthepriceheneedstopayfortransferringaliabilityinanorderlytransactionoccurringonthemeasurementdate.Wherethefinancial

instrumentsexistonactivemarket,theCompanydeterminestheirfairvaluebyusingquotationonactivemarket.Quotedmarketpricesinanactivemarketrefertothepricesthatarereadilytobegetregularlyfromtheexchange,thebroker,thetradeassociation,pricingservicesinstitution,etc.,andtheyrepresenttheactualmarkettransactionpricesinthefairtransactions.Wherethefinancialinstrumentsdonotexistonactivemarket,theCompanydeterminestheirfairvaluebyusingvaluationtechniques.Valuationtechniquesincludereferstothepricesusedinrecentmarkettransactionsbythepartiesthatarefamiliartothesituationandarevoluntarytoparticipateinthetransaction,referstothecurrentfairvaluesofotheressentiallythesamefinancialinstruments,discountcashflowvaluation,optionpricingmodels,etc.Atthetimeofvaluation,theCompanyleveragesvaluationtechniquesthatareapplicableinthecurrentcircumstancesandadequatelysupportedbyavailabledataandotherinformation,choosestheinputvalueconsistentwiththecharacteristicsofassetsorliabilitiesconsideredbymarketparticipantsintransactionofrelevantassetsorliabilities,andpreferstousetherelevantobservableinputvalue.Thevaluethatcannotbeinputtedisutilized,whentherelevantobservableinputvalueisunavailableorunfeasibletoobtain.

11.ImpairmentoffinancialassetsTheCompanyassessesimpairmentlossesforthefollowingfinancialassets:Financialassetsmeasuredatamortizedcost;Debtinstrumentsmeasuredatfairvaluethroughothercomprehensiveincome(FVOCI);Theseprimarilyinclude:Notesreceivable;Accountsreceivable;Contractassets;Otherreceivables;Debtinvestments;Otherdebtinvestments;Long-termreceivables;Additionally,impairmentprovisionsandcreditimpairmentlossesforcertainfinancialguaranteecontractsarerecognizedinaccordancewiththeaccountingpoliciesoutlinedbelow.

(1)MethodforRecognizingImpairmentProvisionsTheCompanymeasuresexpectedcreditlosses(ECL)fortheaboveitemsusingeitherthegeneralapproachorthesimplifiedapproach,dependingontheirapplicability,andrecognizescorrespondingcreditimpairmentlosses.CreditlossreferstothepresentvalueofallcontractualcashflowstheCompanyisentitledtoreceiveunderthecontract,discountedattheoriginaleffectiveinterestrate,minusthepresentvalueofallexpectedcashflowstobecollected.Forpurchasedororiginatedcredit-impaired(POCI)financialassets,thediscountrateappliedisthecredit-adjustedeffectiveinterestrate.GeneralApproachforECLMeasurementAteachreportingdate,theCompanyassesseswhetherthecreditriskofafinancialassethasincreasedsignificantlysinceinitialrecognition:

Ifcreditriskhasincreasedsignificantly,theCompanymeasuresthelossallowanceatanamountequaltolifetimeECL.Ifcreditriskhasnotincreasedsignificantly,thelossallowanceismeasuredat12-monthECL.Theassessmentincorporatesallreasonableandsupportableinformation,includingforward-lookingdata.Forfinancialinstrumentswithlowcreditriskatthereportingdate,theCompanyassumesnosignificantincreaseincreditrisksinceinitialrecognitionandappliesthe12-monthECLapproach.

(2)CriteriaforDeterminingSignificantIncreaseinCreditRiskAsignificantincreaseincreditriskispresumediftheprobabilityofdefault(PD)overtheremaininglifetimeatthereportingdateissubstantiallyhigherthanthePDestimatedatinitialrecognition.Unlessexceptionalcircumstancesexist,theCompanyuseschangesinthe12-monthPDasareasonableproxyforlifetimePDchangestodeterminewhethercreditriskhasincreasedsignificantly.Factorsconsideredinassessingsignificantincreasesincreditrisk:

Actualorexpectedmaterialdeteriorationinthedebtor’soperatingperformance;

Materialadversechangesinthedebtor’sregulatory,economic,ortechnologicalenvironment;Significantdeclineincollateralvalueorqualityofthird-partyguarantees/creditenhancements,whichmayreducethedebtor’seconomicincentivetorepayoraffectPD;Materialchangesinthedebtor’sexpectedbehaviororrepaymentpatterns;ChangesintheCompany’screditmanagementpracticesforthefinancialinstrument.Lowcreditriskpresumption:

Atthereportingdate,ifafinancialinstrumentisdeterminedtohavelowcreditrisk,theCompanyassumesnosignificantincreaseincreditrisksinceinitialrecognition.Afinancialinstrumentisconsideredlowriskif:

Thedebtorhasastrongcapacitytomeetshort-termcontractualcashflowobligations;Adverseeconomicoroperationalconditionsoveralongerperiodwouldnotnecessarilyimpairthedebtor’sabilitytofulfillitsobligations.

(3)Portfolio-BasedAssessmentofExpectedCreditRiskTheCompanyevaluatescreditriskindividuallyforfinancialassetswithdistinctlydifferentriskprofiles,suchas:

Receivablesunderdispute,litigation,orarbitration;Receivableswithclearevidenceindicatingthedebtor’sinabilitytorepay.Forallotherfinancialassets,theCompanygroupsthembasedonsharedcreditriskcharacteristics,including:

FinancialinstrumenttypeCreditriskratingAgingprofile(e.g.,current,overduesegments)

(4)AccountingTreatmentforFinancialAssetImpairmentAtperiod-end,theCompanycalculatesECLforeachcategoryoffinancialassets:

IftheECLexceedsthecurrentcarryingamountoftheimpairmentallowance,thedifferenceisrecognizedasanimpairmentloss;IftheECLislowerthanthecurrentallowance,thedifferenceisrecognizedasanimpairmentgain.

(5)Methodforrecognizingcreditlossesofvariousfinancialassets

①BillsreceivableTheCompanymeasureslossprovisionforbillsreceivablebasedontheamountequivalenttoexpectedcreditlossesthroughouttheexistenceperiod.Basedoncreditriskcharacteristicsofbillsreceivable,theyaredividedintodifferentportfolios:

Items

②AccountsreceivableandcontractassetsWithregardtoaccountsreceivableandcontractassetsexcludingmajorfinancingcomponents,theCompanymeasureslossreserveattheamountequivalenttotheexpectedcreditlossthroughouttheduration.Withregardtoaccountsreceivableandcontractassetsincludingmajorfinancingcomponents,theCompanychoosestoalwaysmeasurelossreserveattheamountequivalenttotheexpectedcreditlossthroughouttheduration.

Inadditiontoaccountsreceivablewithindividualassessmentofcreditrisks,theyaredividedintodifferentportfoliosbasedontheircreditriskcharacteristics:

Items

a.TheagingoftheCompany'sreceivablesiscalculatedfromthedateofoccurrence.Fortheportfolio,theaging-basedgroupingmethodisadoptedtomeasureexpectedcreditlosses(ECL):

b.CriteriaforRecognizingIndividuallyAssessedBadDebtProvisions:

Afinancialassetisconsideredcredit-impairedwhenoneormoreeventsthathaveadetrimentalimpactontheasset'sexpectedfuturecashflowsoccur.Observableevidenceofcreditimpairmentincludes,butisnotlimitedto,thefollowing:

Theissuerordebtorisexperiencingsignificantfinancialdifficulties.Thedebtorhasbreachedcontractualterms,suchasdefaultingordelayingpaymentsofinterestorprincipal.Thecreditorhasgrantedconcessionstothedebtor(e.g.,paymentextensions,reducedinterestrates,orprincipalforgiveness)thatwouldnototherwisebeconsideredduetothedebtor'sfinancialdistress.Thedebtorislikelytoenterbankruptcyorundergofinancialrestructuring.Theactivemarketforthefinancialassethasdisappearedduetothefinancialdifficultiesoftheissuerordebtor.Thefinancialassetwasacquiredororiginatedatasignificantdiscount,reflectingincurredcreditlosses.Creditimpairmentmayresultfromacombinationoffactorsanddoesnotnecessarilystemfromasingleidentifiableevent.

③ReceivablesFinancingFinancialassetsclassifiedasnotesreceivableandaccountsreceivablemeasuredatfairvaluethroughothercomprehensiveincome(FVTOCI)shallbepresentedasfollows:

"Receivablesfinancing"forportionswithoriginalmaturitiesofoneyearorlessfromthedateofacquisition;"Otherdebtinvestments"forportionswithoriginalmaturitiesexceedingoneyearfromthedateofacquisition.

Exceptforindividuallyassessedaccountsreceivable,thesefinancialassetsaregroupedintodifferentportfoliosbasedontheircreditriskcharacteristics.

Item

④OtherreceivablesTheCompanymeasuresimpairmentlossesbasedonwhetherthecreditrisksofotherreceivableshaveincreasedsignificantlysinceinitialrecognition,byusingtheamountequivalenttoexpectedcreditlosseswithinthenext12monthsorthroughouttheexistenceperiod.Inadditiontootherreceivableswithindividualassessmentofcreditrisks,theyaredividedintodifferentportfoliosbasedontheircreditriskcharacteristics:

12.Inventories

(1)ClassificationofInventoriesInventoriesmainlyincluderawmaterials,materialsinoutsideprocessing,workinprogress,finishedgoods,andlow-valueconsumables.

(2)MeasurementMethodforIssuanceAllcategoriesofinventoriesarepurchasedandreceivedatplannedcosts,andissuedusingtheweightedaveragemethod.Finishedgoodscostsaretransferredatactualcostsincurredduringtheperiod,whilecostofsalesisrecognizedusingtheweightedaveragemethod.

(3)InventoryCountingSystemTheperpetualinventorysystemisadopted.

(4)AmortizationMethodforLow-ValueConsumablesandPackagingMaterialsLow-valueconsumablesarefullyamortizeduponissuance(one-timeamortizationmethod).Packagingmaterialsarefullyamortizeduponissuance(one-timeamortizationmethod).

(5)RecognitionCriteriaandProvisionMethodforInventoryWrite-DownThenetrealizablevalue(NRV)ofinventoryreferstotheestimatedsellingpriceintheordinarycourseofbusiness,minustheestimatedcoststocomplete,sellingexpenses,andrelatedtaxes.ThedeterminationofNRVisbasedonreliableevidence,whilealsoconsideringthepurposeofholdingtheinventoryandtheimpactofeventsafterthereportingperiod.Atthebalancesheetdate,inventoriesaremeasuredatthelowerofcostorNRV.Basedonacomprehensiveyear-endphysicalcount,provisionsaremadeforinventoriesthataredamaged,obsolete,pricedbelowcost,orotherwiseunrecoverable.Write-downsarerecognizedforindividualinventoryitemswherecostexceedsNRV,withthelossrecordedinprofitorloss.MethodsforDeterminingNRV:

?Finishedgoods,merchandise,andmaterialsheldforsale:NRV=Estimatedsellingprice?Estimated

sellingexpenses?Relatedtaxes.?Materialsrequiringfurtherprocessing:NRV=Estimatedsellingpriceoffinishedproducts?Estimated

coststocomplete?Estimatedsellingexpenses?Relatedtaxes.?Partialcontractpricing:Ifpartofaninventoryitemhasacontractpricewhiletheremainderdoesnot,

NRVisdeterminedseparately.?Aggregateassessment:Forinventorieswithsimilaruseorproduced/soldinthesameregion,

write-downsareassessedcollectivelyifindividualvaluationisimpractical.?High-volume,low-costitems:Write-downsareassessedbyinventorycategory.Ifthefactorsthatpreviouslycausedinventorywrite-downsnolongerexist,resultinginNRVexceedingthecarryingamount,thereversal(limitedtotheoriginalprovisionamount)isrecognizedinprofitorloss.

13.Assetsheldforsale

(1)Non-currentAssetsandDisposalGroupsHeld-for-saleTheCompanyclassifiesanon-currentassetordisposalgroupasheld-for-saleifitscarryingamountwillberecoveredprincipallythroughasaletransaction(includingnon-monetaryassetexchangeswithcommercialsubstance,thesameappliesbelow)ratherthanthroughcontinuinguse.Thespecificcriteriaarethatallofthefollowingconditionsaremet:(i)thenon-currentassetordisposalgroupisavailableforimmediatesaleinitspresentconditionsubjectonlytotermsthatareusualandcustomaryforsalesofsuchassetsordisposalgroups;(ii)theCompanyhasapprovedthesaleplanandobtainedafirmpurchasecommitment;and(iii)thesaleisexpectedtobecompletedwithinoneyear.Adisposalgroupreferstoagroupofassetstobedisposedof,bysaleorotherwise,togetherasagroupinasingletransaction,andliabilitiesdirectlyassociatedwiththoseassetsthatwillbetransferredinthetransaction.Ifthegoodwillacquiredinabusinesscombinationwasallocatedtoacash-generatingunitorgroupofcash-generatingunitstowhichthedisposalgroupbelongsunderAccountingStandardsforBusinessEnterprisesNo.8—ImpairmentofAssets,thedisposalgroupshallincludethegoodwillallocatedtoit.Wheninitiallymeasuringorremeasuringnon-currentassetsordisposalgroupsclassifiedasheld-for-saleatthebalancesheetdate,iftheircarryingamountexceedstheirfairvaluelesscoststosell,thecarryingamountiswrittendowntofairvaluelesscoststosell.Theamountofthewrite-downisrecognizedasanimpairmentlossinprofitorlossforthecurrentperiod,andaprovisionforimpairmentofheld-for-saleassetsismade.Fordisposalgroups,therecognizedimpairmentlossisfirstallocatedtoreducethecarryingamountofanygoodwillinthedisposalgroup,andthentoreducethecarryingamountsoftheothernon-currentassetsinthedisposalgroupthataresubjecttothemeasurementrequirementsofAccountingStandardsforBusinessEnterprisesNo.42—Non-currentAssetsHeld-for-saleandDiscontinuedOperations(hereinafterreferredtoasthe"held-for-salestandards")onapro-ratabasis.Ifthefairvaluelesscoststosellofaheld-for-saledisposalgroupincreasesinsubsequentbalancesheetdates,thepreviouslyrecognizedimpairmentlossshallbereversed.Thereversalislimitedtothecumulativeimpairmentlossrecognizedforthenon-currentassetsinthedisposalgroupthataresubjecttothemeasurementrequirementsoftheheld-for-salestandardsafterclassificationasheld-for-sale,andthereversalamountisrecognizedinprofitorlossforthecurrentperiod.Thecarryingamountsofthenon-currentassetsinthedisposalgroupthataresubjecttothemeasurementrequirementsoftheheld-for-salestandards(excludinggoodwill)areincreasedonapro-ratabasisaccordingtotheirrelativecarryingamounts.Thecarryingamountofgoodwillthathasbeenreduced,aswellasimpairmentlossesrecognizedfornon-currentassetssubjecttothemeasurementrequirementsoftheheld-for-salestandardsbeforeclassificationasheld-for-sale,shallnotbe

reversed.Non-currentassetsinadisposalgroupclassifiedasheld-for-salearenotdepreciatedoramortized,whileinterestandotherexpensesonliabilitiesinaheld-for-saledisposalgroupcontinuetoberecognized.Whenanon-currentassetordisposalgroupnolongermeetsthecriteriaforclassificationasheld-for-sale,theCompanyceasestoclassifyitasheld-for-saleorremovesthenon-currentassetfromtheheld-for-saledisposalgroup,andmeasuresitatthelowerof:(i)itscarryingamountbeforeclassificationasheld-for-sale,adjustedforanydepreciation,amortization,orimpairmentthatwouldhavebeenrecognizedhaditnotbeenclassifiedasheld-for-sale;and(ii)itsrecoverableamount.

(2)CriteriaforIdentifyingandPresentationMethodsforDiscontinuedOperationsAdiscontinuedoperationisacomponentoftheCompanythateitherhasbeendisposedoforisclassifiedasheld-for-saleandmeetsanyofthefollowingcriteria:(i)thecomponentrepresentsaseparatemajorlineofbusinessorgeographicalareaofoperations;(ii)thecomponentispartofasinglecoordinatedplantodisposeofaseparatemajorlineofbusinessorgeographicalareaofoperations;or(iii)thecomponentisasubsidiaryacquiredexclusivelywithaviewtoresale.TheCompanypresentstherelevantprofitorlossfromdiscontinuedoperationsintheincomestatementanddisclosestheeffectsofdiscontinuedoperationsinthenotes.

14.Long-termEquityInvestmentsThelong-termequityinvestmentsreferredtointhissectionarethoseinwhichtheCompanyhascontrol,jointcontrol,orsignificantinfluenceovertheinvestee.Long-termequityinvestmentsinwhichtheCompanydoesnothavecontrol,jointcontrol,orsignificantinfluenceareaccountedforasfinancialassetsmeasuredatfairvaluethroughprofitorloss.Fornon-tradinginvestments,theCompanymayelectatinitialrecognitiontoclassifythemasfinancialassetsmeasuredatfairvaluethroughothercomprehensiveincome,asdetailedinNoteV.10"FinancialInstruments."JointcontrolreferstotheCompany'ssharedcontroloveranarrangementinaccordancewithrelevantagreements,wheredecisionsregardingtherelevantactivitiesofthearrangementrequireunanimousconsentfromallpartiessharingcontrol.SignificantinfluencereferstotheCompany'spowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutnottocontrolorjointlycontrolthosepolicieswithotherparties.

(1)DeterminationofInvestmentCostForlong-termequityinvestmentsacquiredthroughbusinesscombinationsundercommoncontrol,theinitialinvestmentcostismeasuredattheshareofthecarryingvalueoftheacquiree'sequityintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyonthecombinationdate.Thedifferencebetweentheinitialinvestmentcostandthesumofthecashpaid,thecarryingvalueofnon-cashassetstransferred,andliabilitiesassumedisadjustedagainstcapitalreserve.Ifcapitalreserveisinsufficient,theremainingdifferenceisadjustedagainstretainedearnings.Ifequityinstrumentsareissuedasconsideration,theinitialinvestmentcostismeasuredattheshareofthecarryingvalueoftheacquiree'sequityintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyonthecombinationdate,withthetotalparvalueofthesharesissuedrecognizedassharecapital.Thedifferencebetweentheinitialinvestmentcostandthetotalparvalueofthesharesissuedisadjustedagainstcapitalreserve.Ifcapitalreserveisinsufficient,theremainingdifferenceisadjustedagainstretainedearnings.Forstep-by-stepacquisitionsofequityinanacquireeundercommoncontrolthatultimatelyresultinabusinesscombinationundercommoncontrol,thetransactionsareaccountedforseparatelybasedonwhethertheyconstitutea"packagetransaction."Iftheyconstitutea"packagetransaction,"thetransactionsaretreatedasasingletransactiontoobtaincontrol.Ifnot,theinitialinvestmentcostonthecombinationdateismeasuredatthe

shareofthecarryingvalueoftheacquiree'sequityintheconsolidatedfinancialstatementsoftheultimatecontrollingparty.Thedifferencebetweentheinitialinvestmentcostandthesumofthecarryingvalueofthelong-termequityinvestmentbeforethecombinationandthecarryingvalueofadditionalconsiderationpaidonthecombinationdateisadjustedagainstcapitalreserve.Ifcapitalreserveisinsufficient,theremainingdifferenceisadjustedagainstretainedearnings.Othercomprehensiveincomerecognizedforequityinvestmentsheldbeforethecombinationdateundertheequitymethodorasfinancialassetsmeasuredatfairvaluethroughothercomprehensiveincomeisnotaccountedforatthisstage.Forlong-termequityinvestmentsacquiredthroughbusinesscombinationsnotundercommoncontrol,theinitialinvestmentcostismeasuredatthecombinationcostontheacquisitiondate.Thecombinationcostincludesthesumofthefairvalueofassetspaid,liabilitiesincurredorassumed,andequityinstrumentsissuedbytheacquirer.Forstep-by-stepacquisitionsofequityinanacquireethatultimatelyresultinabusinesscombinationnotundercommoncontrol,thetransactionsareaccountedforseparatelybasedonwhethertheyconstitutea"packagetransaction."Iftheyconstitutea"packagetransaction,"thetransactionsaretreatedasasingletransactiontoobtaincontrol.Ifnot,theinitialinvestmentcostofthelong-termequityinvestmentaccountedforunderthecostmethodisthesumofthecarryingvalueofthepreviouslyheldequityinvestmentandtheadditionalinvestmentcost.Othercomprehensiveincomerelatedtothepreviouslyheldequityinvestmentaccountedforundertheequitymethodisnotaccountedforatthisstage.Intermediaryfeessuchasaudit,legal,andvaluationconsultingservices,aswellasotherrelatedadministrativeexpensesincurredbythecombiningoracquiringpartyforthebusinesscombination,arerecognizedinprofitorlosswhenincurred.Forotherequityinvestmentsnotformedthroughbusinesscombinations,theinitialmeasurementisbasedoncost,whichisdeterminedaccordingtotheactualcashpurchasepricepaidbytheCompany,thefairvalueofequityinstrumentsissuedbytheCompany,thevalueagreedintheinvestmentcontractoragreement,thefairvalueororiginalcarryingvalueofassetsexchangedinnon-monetaryassetexchanges,orthefairvalueofthelong-termequityinvestmentitself.Directlyattributablecosts,taxes,andothernecessaryexpensesarealsoincludedintheinvestmentcost.ForadditionalinvestmentsthatenabletheCompanytoexertsignificantinfluenceorjointcontrolovertheinvestee(butnotcontrol),thecostofthelong-termequityinvestmentisthesumofthefairvalueofthepreviouslyheldequityinvestmentdeterminedinaccordancewithAccountingStandardsforBusinessEnterprisesNo.22—RecognitionandMeasurementofFinancialInstrumentsandtheadditionalinvestmentcost.

(2)SubsequentMeasurementandProfit/LossRecognitionMethodsLong-termequityinvestmentsinwhichtheCompanyhasjointcontrol(excludingjointoperations)orsignificantinfluenceareaccountedforusingtheequitymethod.Additionally,theCompany'sfinancialstatementsusethecostmethodtoaccountforlong-termequityinvestmentsthatenabletheCompanytocontroltheinvestee.

①Long-termEquityInvestmentsAccountedforUsingtheCostMethodUnderthecostmethod,long-termequityinvestmentsaremeasuredatinitialinvestmentcost,withadjustmentsmadeforadditionalinvestmentsordisposals.InvestmentincomefortheperiodisrecognizedbasedontheCompany'sshareofcashdividendsorprofitsdeclaredbytheinvestee,excludinganydividendsorprofitsdeclaredbutnotyetdistributedatthetimeofinvestment.

②Long-termEquityInvestmentsAccountedforUsingtheEquityMethodUndertheequitymethod,iftheinitialinvestmentcostexceedstheCompany'sshareoftheinvestee'sidentifiablenetassetsatfairvalueattheinvestmentdate,theinitialinvestmentcostisnotadjusted.IftheinitialinvestmentcostislessthantheCompany'sshareoftheinvestee'sidentifiablenetassetsatfairvalueattheinvestmentdate,thedifferenceisrecognizedinprofitorloss,andthecostofthelong-termequityinvestmentisadjusted

accordingly.Undertheequitymethod,theCompanyrecognizesinvestmentincomeandothercomprehensiveincomebasedonitsshareoftheinvestee'snetprofitorlossandothercomprehensiveincome,adjustingthecarryingvalueofthelong-termequityinvestmentaccordingly.ThecarryingvalueisreducedbytheCompany'sshareofprofitsorcashdividendsdeclaredbytheinvestee.Forotherchangesintheinvestee'sequitynotincludedinnetprofitorloss,othercomprehensiveincome,orprofitdistribution,thecarryingvalueofthelong-termequityinvestmentisadjustedandrecognizedincapitalreserve.Whenrecognizingtheshareoftheinvestee'snetprofitorloss,theinvestee'snetprofitisadjustedbasedonthefairvalueofidentifiableassetsattheinvestmentdate.Iftheinvestee'saccountingpoliciesorreportingperiodsdifferfromtheCompany's,theinvestee'sfinancialstatementsareadjustedtoalignwiththeCompany'spoliciesandperiodsbeforerecognizinginvestmentincomeandothercomprehensiveincome.FortransactionsbetweentheCompanyanditsassociatesorjointventureswheretheassetscontributedorsolddonotconstituteabusiness,unrealizedinternaltransactionprofitsorlossesattributabletotheCompanyareeliminatedbasedontheCompany'sshare,andinvestmentincomeisrecognizedafterthisadjustment.However,unrealizedinternaltransactionlossesattributabletoimpairmentlossesonthetransferredassetsarenoteliminated.IftheCompanycontributesassetsconstitutingabusinesstoajointventureorassociateandobtainslong-termequityinvestmentwithoutcontrol,thefairvalueofthecontributedbusinessisusedastheinitialinvestmentcostofthenewlong-termequityinvestment.Thedifferencebetweentheinitialinvestmentcostandthecarryingvalueofthecontributedbusinessisfullyrecognizedinprofitorloss.Similarly,iftheCompanysellsassetsconstitutingabusinesstoajointventureorassociate,thedifferencebetweentheconsiderationreceivedandthecarryingvalueofthebusinessisfullyrecognizedinprofitorloss.IftheCompanypurchasesassetsconstitutingabusinessfromanassociateorjointventure,thetransactionisaccountedforunderAccountingStandardsforBusinessEnterprisesNo.20—BusinessCombinations,withgainsorlossesfullyrecognized.Whenrecognizingtheshareoftheinvestee'snetlosses,thecarryingvalueofthelong-termequityinvestmentandotherlong-termintereststhatsubstantiallyconstituteanetinvestmentintheinvesteearereducedtozero.IftheCompanyhasanobligationtoassumeadditionallosses,aprovisionisrecognizedfortheestimatedobligationandincludedininvestmentlossesfortheperiod.Iftheinvesteesubsequentlyreportsnetprofits,theCompanyresumesrecognizingitsshareofprofitsafteroffsettingunconfirmedlossshares.

③AcquisitionofMinorityInterestsWhenpreparingconsolidatedfinancialstatements,thedifferencebetweentheadditionallong-termequityinvestmentfromacquiringminorityinterestsandtheshareofthesubsidiary'snetassetscalculatedbasedontheadditionalOwnershippercentage,continuouslymeasuredfromtheacquisitiondate(orcombinationdate),isadjustedagainstcapitalreserve.Ifcapitalreserveisinsufficient,theremainingdifferenceisadjustedagainstretainedearnings.

④DisposalofLong-termEquityInvestmentsInconsolidatedfinancialstatements,iftheparentpartiallydisposesofitslong-termequityinvestmentinasubsidiarywithoutlosingcontrol,thedifferencebetweenthedisposalproceedsandtheshareofthesubsidiary'snetassetscorrespondingtothedisposedlong-termequityinvestmentisrecognizedinequity.Ifthepartialdisposalresultsinlossofcontroloverthesubsidiary,therelevantaccountingpolicydescribedinNote5.6(2)"PreparationMethodsforConsolidatedFinancialStatements"applies.Forotherdisposalsoflong-termequityinvestments,thedifferencebetweenthecarryingvalueofthedisposedequityandtheactualproceedsisrecognizedinprofitorloss.Forlong-termequityinvestmentsaccountedforundertheequitymethod,iftheremainingequityafterdisposal

continuestobeaccountedforundertheequitymethod,theportionofothercomprehensiveincomepreviouslyrecognizedinequityisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilities.Changesinequityrecognizedduetootherchangesintheinvestee'sequity(excludingnetprofitorloss,othercomprehensiveincome,andprofitdistribution)areproportionallyreclassifiedtoprofitorloss.Forlong-termequityinvestmentsaccountedforunderthecostmethod,iftheremainingequityafterdisposalcontinuestobeaccountedforunderthecostmethod,othercomprehensiveincomerecognizedbeforeobtainingcontrolundertheequitymethodorfinancialinstrumentstandardsisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilitiesandproportionallyreclassifiedtoprofitorloss.Changesinequityrecognizedundertheequitymethodduetootherchangesintheinvestee'sequity(excludingnetprofitorloss,othercomprehensiveincome,andprofitdistribution)areproportionallyreclassifiedtoprofitorloss.IftheCompanylosescontrolofaninvesteeduetopartialdisposalofequityinvestments,initsseparatefinancialstatements,theremainingequitythatenablestheCompanytoexertjointcontrolorsignificantinfluenceovertheinvesteeisreclassifiedtotheequitymethod,withadjustmentsmadeasiftheequitymethodhadbeenappliedfromtheinitialacquisition.Iftheremainingequitydoesnotenablejointcontrolorsignificantinfluence,itisreclassifiedunderthefinancialinstrumentstandards,withthedifferencebetweenfairvalueandcarryingvalueatthedateoflosingcontrolrecognizedinprofitorloss.Othercomprehensiveincomerecognizedbeforeobtainingcontrolundertheequitymethodorfinancialinstrumentstandardsisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilities.Changesinequityrecognizedundertheequitymethodduetootherchangesintheinvestee'sequity(excludingnetprofitorloss,othercomprehensiveincome,andprofitdistribution)arereclassifiedtoprofitorlossatthedateoflosingcontrol.Forremainingequityaccountedforundertheequitymethod,othercomprehensiveincomeandotherequitychangesareproportionallyreclassified.Forremainingequityreclassifiedunderthefinancialinstrumentstandards,othercomprehensiveincomeandotherequitychangesarefullyreclassified.IftheCompanylosesjointcontrolorsignificantinfluenceoveraninvesteeduetopartialdisposalofequityinvestments,theremainingequityisreclassifiedunderthefinancialinstrumentstandards,withthedifferencebetweenfairvalueandcarryingvalueatthedateoflosingjointcontrolorsignificantinfluencerecognizedinprofitorloss.Othercomprehensiveincomerecognizedundertheequitymethodisaccountedforonthesamebasisasiftheinvesteehaddirectlydisposedoftherelatedassetsorliabilitieswhentheequitymethodisdiscontinued.Changesinequityrecognizedduetootherchangesintheinvestee'sequity(excludingnetprofitorloss,othercomprehensiveincome,andprofitdistribution)arefullyreclassifiedtoinvestmentincomewhentheequitymethodisdiscontinued.IftheCompanydisposesofitsequityinvestmentsinasubsidiarystep-by-stepthroughmultipletransactionsuntilcontrolislost,andthesetransactionsconstitutea"packagetransaction,"theyaretreatedasasingletransactiontodisposeofthesubsidiary'sequityinvestmentsandlosecontrol.Beforelosingcontrol,thedifferencebetweenthedisposalproceedsandthecarryingvalueofthedisposedequitycorrespondingtothelong-termequityinvestmentisinitiallyrecognizedinothercomprehensiveincomeandreclassifiedtoprofitorlossatthetimecontrolislost.

15.InvestmentPropertiesInvestmentpropertiesrefertopropertiesheldtoearnrentalincomeorforcapitalappreciation,orboth.Theseincludeleasedlanduserights,landuserightsheldforfutureappreciationandtransfer,andleasedbuildings.Investmentpropertiesareinitiallymeasuredatcost.SubsequentexpendituresrelatedtoinvestmentpropertiesarecapitalizedifitisprobablethatfutureeconomicbenefitsassociatedwiththepropertywillflowtotheCompanyandthecostcanbemeasuredreliably.Allothersubsequentexpendituresarerecognizedinprofitorlossas

incurred.TheCompanyappliesthecostmodelforsubsequentmeasurementofinvestmentpropertiesanddepreciatesoramortizesthemusingpoliciesconsistentwiththoseappliedtobuildingsorlanduserights.TheimpairmenttestingmethodandprovisionmethodforinvestmentpropertiesaredetailedinNoteV.20"ImpairmentofLong-termAssets."Whenowner-occupiedpropertiesorinventoriesareconvertedtoinvestmentproperties,orviceversa,thecarryingamountpriortoconversionisusedasthepost-conversioncarryingamount.Whentheuseofaninvestmentpropertychangestoowner-occupied,thepropertyisreclassifiedasfixedassetsorintangibleassetsfromthedateofchange.Whentheuseofowner-occupiedpropertychangestorentalorcapitalappreciationpurposes,thefixedassetorintangibleassetisreclassifiedasaninvestmentpropertyfromthedateofchange.Forconversions:

Toinvestmentpropertiesmeasuredusingthecostmodel,thepre-conversioncarryingamountisusedasthepost-conversioncarryingamount.Toinvestmentpropertiesmeasuredusingthefairvaluemodel,thefairvalueattheconversiondateisusedasthepost-conversioncarryingamount.Aninvestmentpropertyisderecognizedwhendisposedoforpermanentlywithdrawnfromusewithnoexpectedfutureeconomicbenefits.Gainsorlossesfromthesale,transfer,retirement,ordamageofinvestmentpropertiesarecalculatedasthedisposalproceedsminusthecarryingamountandrelatedtaxes/expenses,andarerecognizedinprofitorloss.

16.FixedAssets

(1)RecognitionCriteriaforFixedAssetsFixedassetsaretangibleassetsheldfortheproductionofgoods,provisionofservices,rental,oradministrativepurposeswithausefullifeexceedingoneaccountingyear.FixedassetsarerecognizedonlywhenitisprobablethatrelatedeconomicbenefitswillflowtotheCompanyandtheircostscanbereliablymeasured.Fixedassetsareinitiallymeasuredatcost,takingintoaccounttheeffectsofestimatedabandonmentcosts.

(2)DepreciationMethodsforVariousCategoriesofFixedAssetsDepreciationoffixedassetsiscalculatedonastraight-linebasisovertheirusefullives,commencingfromthemonthfollowingthedatewhentheassetsarereadyforintendeduse.Theusefullives,estimatedresidualvalues,andannualdepreciationratesforeachcategoryoffixedassetsareasfollows:

Category

(2)EstimatedresidualvaluereferstotheamountthattheCompanycurrentlyexpectstoobtainfromdisposaloftheasset,afterdeductingestimateddisposalexpenses,assumingthefixedassethasreachedtheendofitsexpected

usefullifeandisintheexpectedconditionatthattime.

(3)TheimpairmenttestingmethodandprovisionmethodforfixedassetsaredetailedinNoteV.20"ImpairmentofLong-termAssets."

(4)OtherDisclosuresSubsequentexpendituresrelatedtofixedassetsarecapitalizedifitisprobablethatfutureeconomicbenefitsassociatedwiththefixedassetwillflowtotheCompanyandthecostcanbemeasuredreliably.Thecarryingamountofreplacedpartsisderecognized.Allothersubsequentexpendituresarerecognizedinprofitorlossasincurred.Afixedassetisderecognizedwhenitisdisposedoforwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Gainsorlossesarisingfromthesale,transfer,retirementordamageoffixedassetsarecalculatedasthedisposalproceedsminusthecarryingamountandrelatedtaxes/expenses,andarerecognizedinprofitorloss.TheCompanyreviewstheusefullives,estimatedresidualvaluesanddepreciationmethodsoffixedassetsatleastateachfinancialyear-end.Changesinestimatesareaccountedforaschangesinaccountingestimates.

17.ConstructioninprogressTheCompanyclassifiesconstructioninprogressintotwotypes:self-constructedandcontractor-constructed.Constructioninprogressistransferredtofixedassetswhentheprojectiscompletedandreachestheintendedusablecondition.Thecriteriafordeterminingtheintendedusableconditionshallmeetanyofthefollowingcircumstances:

?Thephysicalconstruction(includinginstallation)ofthefixedassethasbeenfullycompletedor

substantiallycompleted;?Trialproductionortestoperationhasbeenconducted,andtheresultsindicatethattheassetcanoperate

normallyorstablyproducequalifiedproducts,orthetestoperationresultsshowthatitcanoperateor

functionnormally;?Theamountofexpendituresontheconstructionofthefixedassetisminimaloralmostnolonger

occurs;?Theconstructedoracquiredfixedassethasmetorsubstantiallymetthedesignorcontractrequirements.Whenconstructioninprogressreachestheintendedusablecondition,itistransferredtofixedassetsattheactualprojectcost.Forprojectsthathavereachedtheintendedusableconditionbuthavenotyetcompletedfinalsettlement,theyarefirsttransferredtofixedassetsatanestimatedvalue.Afterfinalsettlementiscompleted,theoriginalprovisionalvalueisadjustedtotheactualcost,butnoadjustmentismadetopreviouslycalculateddepreciation.TheimpairmenttestingmethodandprovisionmethodforconstructioninprogressaredetailedinNoteV.20"ImpairmentofLong-termAssets."

18.BorrowingCostsBorrowingcostsincludeinterestexpensesonborrowings,amortizationofdiscountsorpremiums,ancillarycosts,andexchangedifferencesarisingfromforeigncurrencyborrowings.Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarecapitalizedwhen:

?Expendituresfortheassethavebeenincurred;?Borrowingcostshavebeenincurred;and

?Activitiesnecessarytopreparetheassetforitsintendeduseorsalehavecommenced.Capitalizationceaseswhenthequalifyingassetreachesitsintendedusableorsaleablecondition.Allotherborrowingcostsarerecognizedasexpensesintheperiodinwhichtheyareincurred.Forspecificborrowings,theamounttobecapitalizedistheactualinterestexpenseincurredduringtheperiod,lessanyinterestincomeearnedontheunusedportionoftheborrowingsdepositedinbanksorfromtemporaryinvestments.Forgeneralborrowings,theamounttobecapitalizedisdeterminedbymultiplyingtheweightedaverageofaccumulatedexpendituresonthequalifyingassetinexcessofspecificborrowingsbythecapitalizationrateapplicabletothegeneralborrowings.Thecapitalizationrateiscalculatedbasedontheweightedaverageinterestrateofthegeneralborrowings.Duringthecapitalizationperiod,exchangedifferencesonforeigncurrencyspecificborrowingsarefullycapitalized,whileexchangedifferencesonforeigncurrencygeneralborrowingsarerecognizedinprofitorloss.Aqualifyingassetreferstoassetssuchasfixedassets,investmentpropertiesandinventoriesthatrequireasubstantialperiodoftimefortheiracquisition,constructionorproductionbeforetheyarereadyfortheirintendeduseorsale.Iftheacquisition,constructionorproductionofaqualifyingassetisinterruptedabnormallyandtheinterruptionlastsformorethanthreeconsecutivemonths,thecapitalizationofborrowingcostsshallbesuspendeduntiltheacquisition,constructionorproductionactivitiesrecommence.Aqualifyingassetreferstoassetssuchasfixedassets,investmentpropertiesandinventoriesthatrequireasubstantialperiodoftimefortheiracquisition,constructionorproductionbeforetheyarereadyfortheirintendeduseorsale.

19.IntangibleAssets

(1)IntangibleAssetsIntangibleassetsrefertoidentifiablenon-monetaryassetswithoutphysicalformthatareownedorcontrolledbytheCompany.Intangibleassetsareinitiallymeasuredatcost.ExpendituresrelatedtointangibleassetsarecapitalizedifitisprobablethatfutureeconomicbenefitswillflowtotheCompanyandthecostscanbereliablymeasured.Allotherexpendituresarerecognizedasexpenseswhenincurred.Landuserightsacquiredarenormallyaccountedforasintangibleassets.Forself-constructedbuildingssuchasfactories,therelatedlanduserightsexpendituresandbuildingconstructioncostsareaccountedforasintangibleassetsandfixedassetsseparately.Forpurchasedbuildings,thepurchasepriceisallocatedbetweenthelanduserightsandbuildings.Iftheallocationcannotbemadereasonably,theentireamountisaccountedforasfixedassets.Intangibleassetswithfiniteusefullivesareamortizedonastraight-linebasisovertheirestimatedusefullivesfromthedatewhentheyareavailableforuse,basedontheoriginalcostlessestimatedresidualvalueandaccumulatedimpairmentlosses.Intangibleassetswithindefiniteusefullivesarenotamortized.Attheendofeachperiod,theusefullivesandamortizationmethodsofintangibleassetswithfiniteusefullivesarereviewed.Anychangesaretreatedaschangesinaccountingestimates.Inaddition,theusefullivesofintangibleassetswithindefiniteusefullivesarereviewed.Ifevidenceindicatesthattheperiodofeconomicbenefitsfromtheintangibleassetisforeseeable,itsusefullifeisestimatedandamortizedaccordingtothepolicyforintangibleassetswithfiniteusefullives.

(2)ResearchandDevelopmentExpendituresTheCompanyclassifiesinternalresearchanddevelopmentprojectexpendituresintoresearchphaseexpendituresanddevelopmentphaseexpenditures.Expendituresintheresearchphasearerecognizedasexpenseswhenincurred.TheCompany'sR&Dexpendituresincludematerialsconsumed,laborandservicecosts,amortizationofR&Dequipment,amortizationofotherintangibleassetsandfixedassetsusedinthedevelopmentprocess,andutilitiesexpenses.TheCompany'sspecificcriteriafordistinguishingbetweenresearchphaseanddevelopmentphaseexpenditures:

Theresearchphasereferstothestageoforiginalandplannedinvestigationundertakentogainnewscientificortechnicalknowledge.Thedevelopmentphasereferstothestageofapplyingresearchfindingsorotherknowledgetoaplanordesigntoproduceneworsubstantiallyimprovedmaterials,devices,products,etc.beforecommercialproductionoruse.Developmentphaseexpendituresarerecognizedasintangibleassetsonlywhenallthefollowingconditionsaremet.Otherwise,theyarerecognizedasexpenseswhenincurred:

①Technicalfeasibilityofcompletingtheintangibleassetforuseorsale;

②Intentiontocompleteanduseorselltheintangibleasset;

③Abilitytogenerateeconomicbenefits,includingdemonstratingamarketforproductsusingtheintangibleassetorfortheintangibleassetitself,oritsusefulnessforinternaluse;

④Availabilityofadequatetechnical,financialandotherresourcestocompletedevelopmentandtouseorselltheintangibleasset;

⑤Abilitytoreliablymeasureexpendituresattributabletothedevelopmentphase.TheCompany'sspecificconditionsforcapitalizingdevelopmentphaseexpenditures:technicalfeasibilityofcompletion;intentiontocompleteanduse/sell;abilitytogenerateeconomicbenefits;availabilityofadequateresources;andreliablemeasurementofattributableexpenditures.Ifresearchphaseanddevelopmentphaseexpenditurescannotbedistinguished,allR&Dexpendituresarerecognizedasexpenseswhenincurred.

(3)ImpairmentTestingMethodandProvisionMethodforIntangibleAssetsTheimpairmenttestingmethodandprovisionmethodforintangibleassetsaredetailedinNoteV.20"ImpairmentofLong-termAssets."

20.Long-termAssetImpairmentFornon-currentnon-financialassetssuchasfixedassets,constructioninprogress,intangibleassetswithfiniteusefullives,right-of-useassets,investmentpropertiesmeasuredatcostmodel,andlong-termequityinvestmentsinsubsidiaries,jointventuresandassociates,theCompanyassessesateachbalancesheetdatewhetherthereisanyindicationofimpairment.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedtodeterminetheimpairmentloss.Goodwill,intangibleassetswithindefiniteusefullivesandintangibleassetsnotyetavailableforusearetestedforimpairmentannually,regardlessofwhetherthereisanyindicationofimpairment.Whentherecoverableamountislessthanthecarryingamount,animpairmentlossisrecognizedforthedifference.Therecoverableamountisthehigherofanasset'sfairvaluelesscostsofdisposalanditsvalueinuse.Fairvalueisdeterminedbasedonthepriceinthesalesagreementunderfairtransactions;ifthereisnosalesagreementbut

anactivemarketexists,fairvalueisdeterminedbasedontheasset'sbidprice;ifneitherexists,fairvalueisestimatedbasedonthebestavailableinformation.Costsofdisposalincludelegalfees,relatedtaxes,transportationcostsandotherdirectcoststobringtheassettoasaleablecondition.Valueinuseisdeterminedbydiscountingtheestimatedfuturecashflowsexpectedfromtheasset'scontinuinguseandultimatedisposalatanappropriatediscountrate.Impairmentlossesarecalculatedandrecognizedforindividualassets.Ifitisdifficulttoestimatetherecoverableamountofanindividualasset,therecoverableamountisdeterminedforthecash-generatingunittowhichtheassetbelongs.Acash-generatingunitisthesmallestidentifiablegroupofassetsthatgeneratescashinflowsindependently.Forgoodwillpresentedseparatelyinthefinancialstatements,thecarryingamountofgoodwillisallocatedtocash-generatingunitsorgroupsofcash-generatingunitsexpectedtobenefitfromthesynergiesofthebusinesscombinationwhenperformingimpairmenttests.Iftherecoverableamountofacash-generatingunitorgroupofunitsincludingallocatedgoodwillislessthanitscarryingamount,theimpairmentlossisrecognized.Theimpairmentlossisfirstallocatedtoreducethecarryingamountofgoodwillallocatedtotheunitorgroup,thentootherassetsoftheunitorgroupproratabasedontheircarryingamounts.Oncerecognized,impairmentlossesfortheaboveassetsarenotreversedinsubsequentperiods.

21.Long-termDeferredExpensesLong-termdeferredexpensesrefertoexpensesincurredbuttobeamortizedovermorethanoneyearinthecurrentandfutureperiods.TheCompanymeasureslong-termdeferredexpensesatactualcostandamortizesthemevenlyovertheexpectedbenefitperiod.Forlong-termdeferredexpensesthatwillnotbenefitfutureaccountingperiods,theircarryingamountsarefullyrecognizedinprofitorlosswhendetermined.

22.ContractLiabilitiesContractliabilitiesrepresenttheCompany'sobligationtotransfergoodsorservicestocustomersforwhichconsiderationhasbeenreceivedorisreceivable.IfthecustomerhaspaidconsiderationortheCompanyhasobtainedanunconditionalrighttopaymentbeforetransferringgoodsorservices,theCompanypresentstheamountreceivedorreceivableasacontractliabilityattheearlierofwhenpaymentisactuallyreceivedorwhenpaymentisdue.Contractassetsandliabilitiesunderthesamecontractarepresentednet,whilethoseunderdifferentcontractsarenotoffset.

23.EmployeeBenefitsTheCompany'semployeebenefitsmainlyincludeshort-termemployeebenefits,post-employmentbenefitsandterminationbenefits.Short-termbenefitsmainlyincludewages,bonuses,allowancesandsubsidies,employeewelfareexpenses,medicalinsurance,maternityinsurance,workinjuryinsurance,housingprovidentfund,laborunionfundsandemployeeeducationfunds,andnon-monetarybenefits.TheCompanyrecognizesactualshort-termemployeebenefitsasliabilitiesduringtheaccountingperiodswhenemployeesrenderservices,andchargesthemtoprofitorlossorrelevantassetcosts.Non-monetarybenefitsaremeasuredatfairvalue.Post-employmentbenefitsmainlyincludebasicpensioninsuranceandunemploymentinsurance.Post-employmentbenefitplansincludedefinedcontributionplans.Fordefinedcontributionplans,thecorrespondingpayableamountsarechargedtorelevantassetcostsorprofitorlosswhenincurred.

TerminationbenefitsarerecognizedasemployeebenefitliabilitieswhentheCompanycannolongerunilaterallywithdrawtheterminationbenefitsofferedundertheredundancyplanorproposal,orwhentheCompanyrecognizescostsrelatedtorestructuringinvolvingterminationbenefits,whicheverisearlier,andchargedtoprofitorloss.However,terminationbenefitsexpectedtobepaidmorethantwelvemonthsafterthereportingperiodaretreatedasotherlong-termemployeebenefits.Internalretirementplansareaccountedforusingthesameprinciplesasterminationbenefitsabove.TheCompanyrecognizessalariesandsocialinsurancecontributionstobepaidtointernallyretiredemployeesfromthedatetheystoprenderingservicestothenormalretirementdateasprofitorloss(terminationbenefits)whentherecognitioncriteriaforprovisionsaremet.Otherlong-termemployeebenefitsprovidedbytheCompanyareaccountedforasdefinedcontributionplansiftheymeetthecriteria;otherwise,theyareaccountedforasdefinedbenefitplans.

24.ProvisionsProvisionsarerecognizedwhentheCompanyhasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation,andareliableestimatecanbemadeoftheamountoftheobligation.Provisionsareinitiallymeasuredatthebestestimateoftheexpenditurerequiredtosettlethepresentobligation,andthecarryingamountsarereviewedateachbalancesheetdate.Ifallorpartoftheexpenditurerequiredtosettleaprovisionisexpectedtobereimbursedbyathirdparty,thereimbursementisrecognizedasaseparateassetwhenitsreceiptisvirtuallycertain,andtheamountrecognizeddoesnotexceedthecarryingamountoftheprovision.

25.Share-basedPayment

(1)AccountingTreatmentforShare-basedPaymentShare-basedpaymentreferstotransactionsinwhichequityinstrumentsaregrantedorliabilitiesbasedonequityinstrumentsareassumedinexchangeforservicesprovidedbyemployeesorotherparties.Share-basedpaymentsareclassifiedintoequity-settledshare-basedpaymentsandcash-settledshare-basedpayments.

①Equity-settledShare-basedPaymentForequity-settledshare-basedpaymentstoobtainemployeeservices,thefairvalueoftheequityinstrumentsgrantedismeasuredatthegrantdate.?Ifthevestingoftheequityinstrumentsisconditionaluponcompletingaspecifiedserviceperiodormeeting

performanceconditions,thefairvalueisrecognizedoverthevestingperiodonastraight-linebasis,basedonthebestestimateofthenumberofinstrumentsexpectedtovest,withcorrespondingincreasesincapitalreserves.?Iftheequityinstrumentsvestimmediatelyupongrant,thefairvalueisrecognizedasanexpenseonthegrantdate,withacorrespondingincreaseincapitalreserves.Ateachbalancesheetdateduringthevestingperiod,theCompanyrevisesitsestimateofthenumberofequityinstrumentsexpectedtovestbasedonthelatestinformation(e.g.,changesinthenumberofemployeeseligibleforvesting).Anyadjustmentsarerecognizedinthecurrentperiod’scostsorexpenses,withcorrespondingadjustmentstocapitalreserves.Forequity-settledshare-basedpaymentstoobtainservicesfromnon-employees:

Ifthefairvalueoftheservicesreceivedcanbereliablymeasured,theexpenseisrecognizedbasedonthefairvalueoftheservicesattheacquisitiondate.Ifthefairvalueoftheservicescannotbereliablymeasuredbutthefairvalueoftheequityinstrumentscan,theexpenseisrecognizedbasedonthefairvalueoftheequityinstrumentsattheserviceacquisitiondate,withacorrespondingincreaseinshareholders’equity.

②Cash-settledShare-basedPaymentCash-settledshare-basedpaymentsaremeasuredatthefairvalueoftheliabilityincurred,determinedbasedonsharesorotherequityinstruments.?Iftheinstrumentsvestimmediatelyupongrant,theliabilityisrecognizedonthegrantdateasanexpense.?Ifvestingisconditionaluponcompletingaserviceperiodormeetingperformanceconditions,theexpenseisrecognizedoverthevestingperiodbasedonthebestestimateofthenumberofinstrumentsexpectedtovest,withacorrespondingincreaseinliabilities.Ateachbalancesheetdateuntilsettlement,theliabilityisremeasuredatfairvalue,withchangesrecognizedinprofitorloss.

(2)AccountingforModificationsorTerminationsofShare-basedPaymentPlans?Ifamodificationincreasesthefairvalueoftheequityinstrumentsgranted,theincrementalfairvalue(i.e.,thedifferencebetweenthefairvaluebeforeandaftermodification)isrecognizedasadditionalservicecost.?Ifamodificationreducesthetotalfairvalueorisotherwiseunfavorabletoemployees,theoriginalaccountingtreatmentcontinuesasifthemodificationneveroccurred,unlesstheequityinstrumentsarepartiallyorfullycanceled.?Ifgrantedequityinstrumentsarecanceledduringthevestingperiod,theremainingunvestedamountis

recognizedimmediatelyinprofitorlossasanacceleratedvestingexpense,withacorrespondingadjustmenttocapitalreserves.Ifemployeesorotherpartiesfailtomeetnon-vestingconditions(despitehavingtheoptiontodoso),thegrantistreatedascanceled.

(3)AccountingforShare-basedPaymentsInvolvingtheCompany’sshareholdersorControllingPartiesForshare-basedpaymenttransactionsbetweentheCompanyanditsshareholdersorcontrollingparties,whereoneparty(thesettlemententity)iswithintheCompany’sconsolidatedscopeandtheother(theservicerecipient)isoutside:

ConsolidatedFinancialStatementsTreatment:

?Ifthesettlemententitysettlesusingitsownequityinstruments,thetransactionistreatedasanequity-settled

share-basedpayment.Otherwise,itistreatedasacash-settledshare-basedpayment.?Ifthesettlemententityisaninvestorintheservicerecipient,itrecognizesalong-termequityinvestmentat

thegrant-datefairvalueoftheequityinstrumentsorliability,withacorrespondingincreaseincapital

reserves(othercapitalreserves)orliabilities.?Iftheservicerecipienthasnosettlementobligationorgrantsitsownequityinstrumentstoemployees,the

transactionistreatedasequity-settled.Iftheservicerecipienthasasettlementobligationandgrants

instrumentsotherthanitsownequity,thetransactionistreatedascash-settled.IndividualFinancialStatementsTreatment:

FortransactionsbetweenentitieswithintheCompany’sconsolidatedscopewheretheservicerecipientandsettlemententitydiffer,eachentityaccountsforthetransactioninitsindividualfinancialstatementsfollowingtheaboveprinciples.

26.OtherFinancialInstrumentsSuchasPreferenceSharesandPerpetualBonds

(1)ClassificationofPerpetualBondsandPreferenceSharesFinancialinstrumentssuchasperpetualbondsandpreferencesharesissuedbytheCompanyshallbeclassifiedasequityinstrumentsonlyiftheymeetallofthefollowingconditions:

①Theinstrumentdoesnotimposeanycontractualobligationtodelivercashorotherfinancialassetstoanotherparty,ortoexchangefinancialassetsorliabilitiesunderpotentiallyunfavorableconditions;

②IfsettlementmayormustoccurusingtheCompany’sownequityinstrumentsinthefuture:

?Fornon-derivativeinstruments,thereisnocontractualobligationtodeliveravariablenumberofthe

Company’sownequityinstrumentsforsettlement;?Forderivativeinstruments,settlementcanonlybemadebyexchangingafixednumberoftheCompany’s

ownequityinstrumentsforafixedamountofcashorotherfinancialassets.FinancialinstrumentsissuedbytheCompanythatdonotmeettheaboveconditionsshallbeclassifiedasfinancialliabilities.ForcompoundfinancialinstrumentsissuedbytheCompany:

?Theliabilitycomponentismeasuredatfairvalueandrecognizedasaliability.?Theresidualamount(totalproceedsreceivedminusthefairvalueoftheliabilitycomponent)isrecognizedas

"otherequityinstruments."?Transactioncostsareallocatedbetweentheliabilityandequitycomponentsinproportiontotheirrespective

sharesofthetotalissuanceproceeds.

(2)AccountingTreatmentforPerpetualBondsandPreferenceSharesForperpetualbondsandpreferencesharesclassifiedasfinancialliabilities:

Interest,dividends,gains/losses,andgains/lossesfromredemptionorrefinancingarerecognizedinprofitorloss,exceptforborrowingcostseligibleforcapitalization(seeNoteIII.18"BorrowingCosts").Forperpetualbondsandpreferencesharesclassifiedasequityinstruments:

Issuance(includingrefinancing),repurchase,sale,orcancellationistreatedasachangeinequity,withrelatedtransactioncostsdeductedfromequity.?Distributionstoholdersofequityinstrumentsaretreatedasprofitdistributions.?TheCompanydoesnotrecognizechangesinthefairvalueofequityinstruments.

27.RevenueTheCompanyrecognizesrevenuewhencontroloftherelevantgoodsistransferredtothecustomer,providedallthefollowingconditionsaremet:thecontracthasbeenapprovedbyallpartieswhoarecommittedtofulfillingtheirrespectiveobligations;thecontractclearlyspecifiestherightsandobligationsofeachpartyregardingthegoodsorservicestobetransferred;thecontractcontainsclearpaymenttermsrelatedtothegoodstobetransferred;thecontracthascommercialsubstance,meaningitsperformancewillchangetherisk,timingoramountoftheCompany'sfuturecashflows;andtheconsiderationtowhichtheCompanyisentitledfortransferringgoodstothecustomerisprobableofcollection.Atcontractinception,theCompanyidentifiesthedistinctperformanceobligationsinthecontractandallocatesthetransactionpricetoeachperformanceobligationbasedontherelativestand-alonesellingpricesofthegoodsorservicespromised.Indeterminingthetransactionprice,theCompanyconsiderstheeffectsofvariable

consideration,significantfinancingcomponentsinthecontract,non-cashconsideration,andconsiderationpayabletocustomers.Foreachperformanceobligation,theCompanyrecognizesrevenueovertimebymeasuringprogresstowardcompletesatisfactionofthatperformanceobligationifanyofthefollowingcriteriaaremet:thecustomersimultaneouslyreceivesandconsumesthebenefitsastheCompanyperforms;thecustomercontrolstheassetasitiscreatedorenhanced;ortheassethasnoalternativeuseandtheCompanyhasanenforceablerighttopaymentforperformancecompletedtodate.Progressismeasuredusinganinputmethodappropriatetothenatureofthegoodstransferred.Whenprogresscannotbereasonablymeasured,revenueisrecognizedtotheextentofcostsincurredthatareexpectedtoberecoverableuntilprogresscanbereasonablymeasured.Ifnoneoftheabovecriteriaaremet,revenueisrecognizedatthepointintimewhencontrolofthegoodsistransferredtothecustomer.Inassessingwhethercontrolhastransferred,theCompanyconsidersindicatorsincluding:theCompany'spresentrighttopayment;transferoflegaltitle;physicalpossession;transferofsignificantrisksandrewardsofOwnership;customeracceptance;andotherindicatorsofcontroltransfer.Forcontractswithvariableconsideration,theCompanyestimatestheamountusingeithertheexpectedvalueormostlikelyamountmethod.Thetransactionpriceincludingvariableconsiderationdoesnotexceedtheamountforwhichitishighlyprobablethatcumulativerevenuerecognizedwillnotreversewhenuncertaintyisresolved.Ateachreportingdate,theCompanyreassessesestimatesofvariableconsiderationincludedinthetransactionprice.Considerationpayabletoacustomerisdeductedfromthetransactionpriceunlessitisfordistinctgoodsorservices,withthereductionrecognizedatthelaterofrevenuerecognitionorpayment(orcommitmenttopay)date.TheCompanyassesseswhetheritisaprincipaloragentbasedonwhetheritcontrolsthegoodsorservicesbeforetransfertothecustomer.Asprincipal,revenueisrecognizedatthegrossamountofconsideration;asagent,revenueisrecognizedatthenetamountretainedafterpayingotherparties.TheCompany'sspecificrevenuerecognitionmethodsareasfollows:

Salescontractstypicallycontainasingleperformanceobligationtotransfergoods,satisfiedatapointintime.Domesticsalesrevenueisrecognizedwhen:goodsaredeliveredandacceptedpercontract;paymentisreceivedorcollectabilityisprobable;significantrisks/rewardsaretransferred;andlegaltitlepasses.Exportsalesrevenueisrecognizedwhen:goodsareclearedthroughcustomswithbillofladingobtained;paymentisreceivedorcollectabilityisprobable;significantrisks/rewardsaretransferred;andlegaltitlepasses.Interestincomeisrecognizedbasedontimeandeffectiveinterestrate.

28.ContractCostsContractcostscomprisecoststofulfillandcoststoobtaincontracts.Coststofulfillarecapitalizedasassetsif:

(1)Directlyrelatedtoacontract(labor,materials,overhead,client-reimbursablecosts);

(2)Enhanceresourcesforfutureperformance;and

(3)Probableofrecovery.Incrementalcoststoobtaincontractsarecapitalizedifprobableofrecovery,unlesstheamortizationperiodwouldbeoneyearorless.Capitalizedcontractcostsareamortizedconsistentlywithrevenuerecognition.Impairmentlossesarerecognizedwhencarryingamountexceedsthehigherof:

(1)Expectedremainingconsideration;and

(2)Estimatedcoststocompletetransfer.Reversalscannotexceedthecarryingamountthatwouldhaveexistedwithoutimpairment.

29.GovernmentGrantsGovernmentgrantsrefertomonetaryornon-monetaryassetsobtainedbytheCompanyfromthegovernmentwithoutcompensation,excludingcapitalcontributionsmadebythegovernmentasaninvestorwithcorrespondingOwnershiprights.Governmentgrantsareclassifiedintoasset-relatedgovernmentgrantsandincome-relatedgovernmentgrants.Grantsobtainedfortheacquisitionorconstructionoflong-termassetsthroughothermeansaredefinedasasset-relatedgovernmentgrants;othergovernmentgrantsaredefinedasincome-relatedgovernmentgrants.Ifgovernmentdocumentsdonotexplicitlyspecifythegrantrecipient,thefollowingmethodsareusedtoclassifythegrants:

(1)Forgovernmentdocumentsthatspecifyparticularprojects,classificationisbasedontherelativeproportionofexpendituresformingassetsversusexpensesintheprojectbudget,withthisproportionreviewedateachbalancesheetdateandadjustedifnecessary;

(2)Forgovernmentdocumentsthatonlyprovidegeneraldescriptionsofusagewithoutspecifyingparticularprojects,thegrantsaretreatedasincome-relatedgovernmentgrants.Governmentgrantsintheformofmonetaryassetsaremeasuredattheamountreceivedorreceivable.Governmentgrantsintheformofnon-monetaryassetsaremeasuredatfairvalue;iffairvaluecannotbereliablydetermined,theyaremeasuredatnominalamount.Governmentgrantsmeasuredatnominalamountaredirectlyrecognizedincurrentperiodprofitorloss.TheCompanygenerallyrecognizesandmeasuresgovernmentgrantsbasedontheactualamountreceived.However,atperiod-end,ifthereisconclusiveevidencethattheCompanymeetstherelevantconditionsoffiscalsupportpoliciesandexpectstoreceivefiscalsupportfunds,thegrantsaremeasuredatthereceivableamount.Governmentgrantsmeasuredatreceivableamountmustsimultaneouslymeetthefollowingconditions:

(1)Thereceivablegrantamounthasbeenconfirmedbythecompetentgovernmentauthorityorcanbereasonablyestimatedbasedonofficiallyreleasedfiscalfundmanagementregulations,withnosignificantuncertaintyexpectedintheamount;

(2)Thegrantsarebasedonfiscalsupportprojectsandcorrespondingfiscalfundmanagementregulationsofficiallyreleasedbylocalfinancedepartmentsinaccordancewiththe"GovernmentInformationDisclosureRegulations,"andsuchregulationsmustbeuniversallyapplicable(availabletoanyenterprisemeetingthespecifiedconditions)ratherthanspecificallydesignedforparticularenterprises;

(3)Therelevantgrantapprovaldocumentsclearlyspecifythepaymenttimeline,andthepaymentissupportedbycorrespondingfiscalbudgets,therebyreasonablyensuringreceiptwithinthestipulatedperiod.Asset-relatedgovernmentgrantsarerecognizedasdeferredincomeandsystematicallyamortizedintocurrentperiodprofitorlossovertheusefullifeoftherelevantassets.Income-relatedgovernmentgrantsusedtocompensateforfuturerelatedcosts,expenses,orlossesarerecognizedasdeferredincomeandamortizedintocurrentperiodprofitorlosswhentherelatedcosts,expenses,orlossesarerecognized;thoseusedtocompensateforalreadyincurredrelatedcosts,expenses,orlossesaredirectlyrecognizedincurrentperiodprofitorloss.Governmentgrantscontainingbothasset-relatedandincome-relatedcomponentsareaccountedforseparatelybycomponent;ifthecomponentscannotbereasonablydistinguished,theentiregrantisclassifiedasincome-related.GovernmentgrantsrelatedtotheCompany'sordinaryactivitiesarerecognizedinotherincomeoroffsetagainst

relatedcostsandexpensesbasedontheeconomicsubstanceofthetransaction;grantsunrelatedtoordinaryactivitiesarerecognizedinnon-operatingincomeorexpenses.Whenrecognizedgovernmentgrantsneedtobereturned,anyremainingdeferredincomebalanceisfirstoffset,withanyexcessrecognizedincurrentperiodprofitorloss;inothercases,thereturnisdirectlyrecognizedincurrentperiodprofitorloss.

30.DeferredTaxAssets/DeferredTaxLiabilitiesDeferredtaxassetsordeferredtaxliabilitiesarerecognizedbasedonthedifferencesbetweenthecarryingamountsandtaxbasesofassetsandliabilities(includingitemsnotrecognizedasassetsorliabilitiesbuthavingdeterminabletaxbasesundertaxlaws),calculatedusingtheapplicabletaxratesexpectedtoapplywhentheassetsarerecoveredorliabilitiesaresettled.Deferredtaxassetsarerecognizedonlytotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferencescanbeutilized.Atthebalancesheetdate,ifthereisconclusiveevidenceindicatingsufficienttaxableprofitwilllikelybeavailableinfutureperiodstoutilizedeductibletemporarydifferences,previouslyunrecognizeddeferredtaxassetsarerecognized.Ateachbalancesheetdate,thecarryingamountsofdeferredtaxassetsarereviewed.Ifitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletorealizethebenefitofthedeferredtaxasset,thecarryingamountisreduced.Thereductionisreversedwhenitbecomesprobablethatsufficienttaxableprofitwillbeavailable.TheCompany'scurrenttaxanddeferredtaxarerecognizedasincometaxexpenseorincomeinprofitorloss,exceptforincometaxesarisingfrom:businesscombinations;andtransactionsoreventsrecognizeddirectlyinequity.WhentheCompanyhasalegallyenforceablerighttosettlecurrenttaxassetsandliabilitiesonanetbasisandintendseithertosettleonanetbasisortorealizetheassetandsettletheliabilitysimultaneously,currenttaxassetsandcurrenttaxliabilitiesarepresentednet.

31.Leases

(1)TheCompanyasaLesseeTheCompany'sleasedassetsareprimarilybuildings.Atthecommencementdateoftheleaseterm,theCompanyrecognizesright-of-useassetsandleaseliabilitiesforleasesotherthanshort-termleasesandleasesoflow-valueassets,andrecognizesdepreciationexpensesandinterestexpensesseparatelyduringtheleaseterm.Forshort-termleasesandleasesoflow-valueassets,theCompanyrecognizesleasepaymentsonastraight-linebasisasexpensesintherespectiveperiodsoftheleaseterm.

①Right-of-useAssetsRight-of-useassetsrepresentthelessee'srighttousetheleasedassetduringtheleaseterm.Atthecommencementdateoftheleaseterm,right-of-useassetsareinitiallymeasuredatcost,whichincludes:

Theinitialmeasurementamountoftheleaseliability;Leasepaymentsmadeatorbeforethecommencementdate,lessanyleaseincentivesreceived;Initialdirectcostsincurredbythelessee;Estimatedcoststobeincurredbythelesseefordismantlingandremovingtheleasedasset,restoringthesitewheretheassetislocated,orreturningtheassettotheconditionrequiredbytheleaseterms.

TheCompanydepreciatesright-of-useassetsusingthestraight-linemethodbycategory.ForassetswhereOwnershipisreasonablycertaintobeobtainedattheendoftheleaseterm,depreciationiscalculatedovertheremainingusefullifeoftheleasedasset.ForassetswhereOwnershipcannotbereasonablydetermined,depreciationiscalculatedovertheshorteroftheleasetermortheremainingusefullifeoftheleasedasset.TheCompanydetermineswhetherright-of-useassetsareimpairedandaccountsfortheminaccordancewiththerelevantprovisionsofAccountingStandardsforBusinessEnterprisesNo.8—ImpairmentofAssets.

②LeaseLiabilitiesLeaseliabilitiesareinitiallymeasuredatthepresentvalueofleasepaymentsnotyetpaidatthecommencementdateoftheleaseterm.Leasepaymentsinclude:

Fixedpayments(includingin-substancefixedpayments),lessanyleaseincentives;Variableleasepaymentsthatdependonanindexorrate;Amountsexpectedtobepayableunderresidualvalueguaranteesprovidedbythelessee;Theexercisepriceofpurchaseoptions,ifthelesseeisreasonablycertaintoexercisetheoption;Paymentsrequiredtoexerciseterminationoptions,iftheleasetermreflectsthelesseeexercisingtheterminationoption.TheCompanyusestheinterestrateimplicitintheleaseasthediscountrate;ifthiscannotbereasonablydetermined,theCompany'sincrementalborrowingrateisused.Interestexpensesonleaseliabilitiesarecalculatedusingafixedperiodicinterestrateandrecordedinfinancialexpenses.TheperiodicinterestrateisthediscountrateorreviseddiscountrateusedbytheCompany.Variableleasepaymentsnotincludedinthemeasurementofleaseliabilitiesarerecognizedinprofitorlosswhenincurred.WhentheCompany'sassessmentofrenewaloptions,terminationoptions,orpurchaseoptionschanges,theleaseliabilityisremeasuredatthepresentvalueoftherevisedleasepaymentsusingthereviseddiscountrate,withcorrespondingadjustmentstothecarryingamountoftheright-of-useasset.Whenin-substancefixedpayments,expectedpaymentsunderresidualvalueguarantees,orvariableleasepaymentsdependentonanindexorratechange,theleaseliabilityisremeasuredatthepresentvalueoftherevisedleasepaymentsusingtheoriginaldiscountrate,withcorrespondingadjustmentstothecarryingamountoftheright-of-useasset.

③Short-termLeasesandLeasesofLow-valueAssetsForshort-termleases(leaseswithatermof12monthsorlessatcommencementdate)andleasesoflow-valueassets(valuebelowRMB2,000),theCompanyappliesasimplifiedapproachbynotrecognizingright-of-useassetsorleaseliabilities,andinsteadrecognizesleasepaymentsonastraight-linebasisoranothersystematicandrationalbasisasexpensesintherespectiveperiodsoftheleaseterm.

(2)TheCompanyasaLessor

①OperatingLeasesTheCompanyrecognizesleasereceiptsfromoperatingleasesasrentalincomeonastraight-linebasisovertheleaseterm.Variableleasepaymentsnotincludedinleasereceiptsarerecognizedinprofitorlosswhenincurred.

②FinanceLeasesAtthecommencementdateoftheleaseterm,theCompanyrecognizesfinanceleasereceivablesandderecognizestheleasedassets.Financeleasereceivablesareinitiallymeasuredatthenetinvestmentinthelease(thesumoftheunguaranteedresidualvalueandthepresentvalueofleasereceiptsnotyetreceivedatthecommencementdate,discountedusingtheinterestrateimplicitinthelease),withinterestincomerecognizedduringtheleasetermusingafixedperiodicinterestrate.Variableleasepaymentsnotincludedinthemeasurementofthenetinvestment

intheleasearerecognizedinprofitorlosswhenincurred.

32.MethodsforDeterminingMaterialityThresholdsandBasisforSelection

√Applicable□Notapplicable

DisclosureMattersInvolvingMateriality

JudgmentCriteria

33.OtherSignificantAccountingPoliciesandAccountingEstimatesDebtRestructuring

(1)TimingofRecognizingDebtRestructuringGainsandLossesTheCompanymayderecognizetherelevantreceivablesandpayablesandrecognizegainsandlossesrelatedtodebtrestructuringonlyonthedebtrestructuringcompletiondatewhenthederecognitionconditionsforfinancialassetsandfinancialliabilitiesaremet.Thedebtrestructuringcompletiondatereferstothedatewhentheboardofdirectorsandshareholders'meetingresolutionshavebeenapproved,thedebtrestructuringagreementhasbeensignedorthecourtrulinghasbeenissued,therelevantassetshavebeentransferredtothecreditor,thedebthasbeenconvertedintocapital,orthemodifieddebttermshavecommencedexecution.

Fordebtrestructuringthroughassetsettlement,therecognitionpointiswhentherelevantassetshavebeendeliveredandtheOwnershiptransferprocedureshavebeencompleted.Fordebtrestructuringthroughconversionofdebtintoequity,therecognitionpointiswhentheindustrialandcommercialregistrationproceduresortheequityregistrationwiththeregistrationauthorityhavebeencompleted.Fordebtrestructuringthroughmodificationofdebtterms,therecognitionpointiswhenitisdeterminedthatthetermscanbeperformedandexecutionhascommenced.Debtrestructuringnegotiationsthatcommencedduringthereportingperiodbutwerecompletedafterthebalancesheetdatearenottreatedaspost-balance-sheetevents.

(2)AccountingTreatmentbytheCreditorWhentheCompanyactsasacreditor,thedifferencebetweenthefairvalueoftherelinquishedclaimanditscarryingamountisrecognizedinprofitorloss.

(3)AccountingTreatmentbytheDebtorA.Fordebtrestructuringthroughassetsettlement,therelevantassetsandthesettleddebtarederecognizedwhenthederecognitionconditionsaremet.Thedifferencebetweenthecarryingamountofthesettleddebtandthecarryingamountofthetransferredassetsisrecognizedinprofitorloss.B.Fordebtrestructuringthroughconversionofdebtintoequityinstruments,thesettleddebtisderecognizedwhenthederecognitionconditionsaremet.Thedifferencebetweenthecarryingamountofthesettleddebtandtheamountdeterminedbasedonthefairvalueoftheequityinstrumentsisrecognizedinprofitorloss.C.Fordebtrestructuringthroughmodificationofotherterms,therestructureddebtisre-recognizedandremeasured.Thedifferencebetweentheremeasureddebtandtheoriginaldebtisrecognizedinprofitorloss.D.Fordebtrestructuringthroughsettlementwithmultipleassetsoracombinationofmethods,theequityinstrumentsandrestructureddebtarerecognizedandmeasuredinaccordancewiththeAccountingStandardsforBusinessEnterprises.Thedifferencebetweenthecarryingamountofthesettleddebtandthesumofthecarryingamountsofthetransferredassetsandtherecognizedamountsoftheequityinstrumentsandrestructureddebtisrecognizedinprofitorloss.

34.ChangesinMainAccountingPoliciesandEstimates

(1)ChangeofAccountingPolicies

√Applicable□Notapplicable

(2)ChangesinAccountingEstimates

□Applicable√Notapplicable

(3)AdjustmentstoOpeningBalanceSheetItemsforInitialApplicationofNewAccountingStandardsEffective2025

□Applicable√Notapplicable

VI.Taxation

1.MainTaxesandTaxRate

Categoryoftaxes

Notesofthedisclosuresituationofthetaxpayingbodieswithdifferententerprisesincometaxrates

2.TaxPreference

(1)OnNovember6,2024,theCompanyreneweditsHigh-TechEnterpriseCertificationandcontinuedtoenjoyapreferentialcorporateincometaxrateof15%duringthereportingperiod.

(2)ControlledsubsidiaryChangchaiWanzhouDieselEngineCo.,Ltd.qualifiesforthe15%reducedcorporateincometaxratefromJanuary1,2011toDecember31,2030undertheNoticeonTaxPoliciesfortheImplementationoftheWesternDevelopmentStrategy(jointlyissuedbytheMinistryofFinance,GeneralAdministrationofCustoms,andStateTaxationAdministration)andtheAnnouncementonExtendingWesternDevelopmentEnterpriseIncomeTaxPolicies(MinistryofFinanceAnnouncement[2020]No.23).

(3)OnNovember6,2023,wholly-ownedsubsidiaryChangzhouFujiChangchaiRobinGasolineEngineCo.,Ltd.reneweditsHigh-TechEnterpriseCertificationandappliedthe15%preferentialtaxrateduringthereportingperiod.

(4)Wholly-ownedsubsidiaryChangzhouXingshengPropertyManagementCo.,Ltd.,asaqualifiedsmallandlow-profitenterprise,appliedthe5%reducedtaxrateforsuchentitiesduringthereportingperiod.

(5)SubsidiaryZhenjiangSiyangDieselEngineManufacturingCo.,Ltd.obtaineditsHigh-TechEnterpriseCertificationonDecember12,2022andmaintainedthe15%preferentialtaxrateduringthereportingperiod.VII.NotestoMajorItemsintheConsolidatedFinancialStatementsoftheCompany

1.MonetaryAssets

Unit:RMB

Item

AdditionalNotes:

Attheendofthereportingperiod,othermonetaryfundsincluded:

Accruedinterestontimedeposits:RMB312,507.76Restrictedfundscomprising:

Billguarantees:RMB102,991,363.01Guaranteebondsandperformancebonds:RMB1,903,386.43Timedeposits:RMB39,312,507.76

2.TradingFinancialAssets

Unit:RMB

3.NotesReceivable

(1)NotesReceivableListedbyCategory

Unit:RMB

Item

(2)DisclosurebyWithdrawalMethodsforBadDebts

Unit:RMB

Theallowancefordoubtfulaccountsonnotesreceivablewasrecognizedbasedonthegeneralexpectedcreditlossmodel.

□Applicable√Notapplicable

(3)NotesReceivablePledgedbytheCompanyatthePeriod-end:None

(4)NotesReceivablewhichbeenHadEndorsedbytheCompanyorhadbeenDiscountedbuthadnotDueontheBalanceSheetDateatthePeriod-end

Unit:RMB

Item

(5)NotesTransferredtoAccountsReceivableDuetoNon-performancebyIssuersatPeriod-endAsoftheperiod-end,therewerenonotestransferredtoaccountsreceivableduetonon-performancebyissuers.

4.AccountsReceivable

(1)DisclosurebyAging

Unit:RMB

(2)DisclosurebyWithdrawalMethodsforBadDebts

Unit:RMB

Accountsreceivablewithdrawalofbaddebtprovisionseparatelyaccrued

IndividuallyAssessedBadDebtProvisions:RMB25,386,678.05,includingsignificantimpairmentitemsofRMB23,609,074.17.Thedetailsarepresentedbelow:

Unit:RMB

Customer5

Withdrawalofbaddebtprovisionbygroup:Provisionforbaddebtsbycreditriskcharacteristicgroup

Unit:RMB

Theallowancefordoubtfulaccountsonaccountsreceivablewasrecognizedbasedonthegeneralexpectedcreditlossmodel:

□Applicable√Notapplicable

(3)BadDebtProvisionWithdrawal,ReversedorRecoveredintheCurrentPeriodWithdrawalofbaddebtprovision:

Unit:RMB

Withdrawalofbaddebtprovisionbygroup

(4)AccountsReceivableWritten-offinCurrentPeriod

Unit:RMB

Ofwhichtheverificationofsignificantaccountsreceivable:

Unit:RMB

(5)Top5oftheEndingBalanceoftheAccountsReceivableandtheContractAssetsCollectedaccordingtoArrearsParty

Unit:RMB

5.AccountsReceivableFinancing

(1)AccountsReceivableFinancingListedbyCategory

Unit:RMB

Item

(2)NotesReceivablePledgedbytheCompanyatthePeriod-end:None

(3)AccountsreceivablefinancingwhichhadbeenendorsedbytheCompanyorhaddiscountedbuthadnotdueattheperiod-end

Unit:RMB

(4)ChangesinReceivablesFinancingandFairValueFluctuationsDuringtheReportingPeriod

Unit:RMB

6.OtherReceivables

Unit:RMB

（1）Dividendreceivable

Unit:RMB

Projects(orInvesteeEntities)

（2）OtherReceivables

1)OtherReceivablesClassifiedbyAccountsNature

Unit:RMB

2)DisclosurebyAging

Unit:RMB

3)DisclosurebyWithdrawalMethodsforBadDebts

√Applicable□NotapplicableProvisionforbaddebtsbasedongeneralmodelofexpectedcreditlosses

Unit:RMB

Baddebtprovision

Thebasisforthedivisionofeachstageandthewithdrawalproportionofbaddebtprovision:NoneChangesofcarryingamountwithsignificantchangesinamountoflossprovisioninthecurrentperiod

□Applicable√Notapplicable

4)BadDebtProvisionWithdrawn,ReversedorRecoveredintheCurrentPeriodWithdrawalofbaddebtprovision:

Unit:RMB

Baddebtprovisionseparatelyaccrued

5）Write-offofOtherReceivablesDuringtheReportingPeriod:None

6)Top5oftheEndingBalanceofOtherReceivablesCollectedaccordingtotheArrearsParty

Unit:RMB

7.Prepayments

(1)PrepaymentListedbyAgingAnalysis

Unit:RMB

Within1year

(2)Top5PrepaymentinEndingBalanceCollectedaccordingtothePrepaymentTarget

Unit:RMB

8.InventoriesWhethertheCompanyneedstocomplywiththedisclosurerequirementsfortherealestateindustry:No

(1)CategoryofInventory

Unit:RMB

Materialsprocessedoncommission

(2)FallingPriceReservesofInventoryandImpairmentReservesforContractPerformanceCosts

Unit:RMB

9.OtherCurrentAssets

Unit:RMB

10.OtherEquityInstrumentInvestment

Unit:RMB

inothercomprehensiveincomeinthecurrentperiod

Non-tradingequityinstrumentinvestmentdisclosedbycategory

Unit:RMB

11.Long-termEquityInvestment

Unit:RMB

Invest

ees

Therecoverableamountisdeterminedbasedonthenetamountofthefairvalueminusdisposalcosts

□Applicable√NotapplicableTherecoverableamountisdeterminedbythepresentvalueoftheforecastedfuturecashflow.

□Applicable√NotapplicableThereasonforthediscrepancybetweentheforegoinginformationandtheinformationusedintheimpairmenttestsinprioryearsorexternalinformation:NotapplicableThereasonforthediscrepancybetweentheinformationusedintheCompany'simpairmenttestsinprioryearsandtheactualsituationofthoseyears:Notapplicable

12.OtherNon-currentFinancialAssets

Unit:RMB

13.InvestmentProperty

(1)InvestmentPropertyAdoptingtheCostMeasurementMode

√Applicable□Notapplicable

Unit:RMB

Item

Item

(1)Disposal

Therecoverableamountisdeterminedbasedonthenetamountofthefairvalueminusdisposalcosts

□Applicable√NotapplicableTherecoverableamountisdeterminedbythepresentvalueoftheforecastedfuturecashflow.

□Applicable√NotapplicableThereasonforthediscrepancybetweentheforegoinginformationandtheinformationusedintheimpairmenttestsinprioryearsorexternalinformation:NotapplicableThereasonforthediscrepancybetweentheinformationusedintheCompany'simpairmenttestsinprioryearsandtheactualsituationofthoseyears:Notapplicable

14.FixedAssets

Unit:RMB

(1)ListofFixedAssets

Unit:RMB

(2)Transferfromconstructioninprogress

3.Decreasedamountoftheperiod

(2)ListofTemporarilyIdleFixedAssets

Unit:RMB

Note1:Duetopublicinterestrequirementsforurbanredevelopment,thePeople'sGovernmentofXinbeiDistrict,ChangzhouhasdecidedtoexpropriatebuildingswithinthescopeoftheSanjingSubdistrictFoundryPlantandsurroundingareaurbanrenewalproject(PhaseI).TheexpropriationareacoverstheCompany'sformerfoundrybase,wheresomefixedassetsoftheoriginalfoundrybaseremainidle.

(3)DisposalofFixedAssets

Unit:RMB

15.ConstructioninProgress

Unit:RMB

Item

(1)ListofConstructioninProgress

Unit:RMB

(2)SignificantChangesinConstruction-in-ProgressProjectsDuringtheCurrentPeriod

Unit:RMB

（3）ImpairmentTestofConstructioninProgress

□Applicable√Notapplicable

16.IntangibleAssets

(1)ListofIntangibleAssets

Unit:RMB

Item

(1)Withdrawal

17.Long-termPrepaidExpenses

Unit:RMB

18.DeferredIncomeTaxAssets/DeferredIncomeTaxLiabilities

(1)DeferredIncomeTaxAssetsthatHadnotBeenOff-set

Unit:RMB

(2)DeferredIncomeTaxLiabilitiesHadNotBeenOffset

Unit:RMB

Item

(3)ListofUnrecognizedDeferredIncomeTaxAssets

Unit:RMB

(4)DeductibleLossesofUnrecognizedDeferredIncomeTaxAssetswillbedueintheFollowingYears

Unit:RMB

19.OtherNon-currentAssets

Unit:RMB

Item

20.AssetswithRestrictedOwnershiporRightofUse

Unit:RMB

ngdiscountednotes

21.Short-termBorrowings

(1)CategoryofShort-termBorrowings

Unit:RMB

22.NotesPayable

Unit:RMB

Item

Attheendofthecurrentperiod,therewerenonotespayabledueandnotpaid.

23.AccountsPayable

(1)ListofAccountsPayable

Unit:RMB

(2)SignificantAccountsPayableAgingoverOneYearorOverdue

Unit:RMB

24.OtherPayables

Unit:RMB

(1)DividendsPayable

Unit:RMB

Dividendsfornon-controllingshareholders

Thereasonfornon-paymentforoveroneyear:Notreceivedbyshareholdersyet.

(2)OtherPayables

1)OtherPayablesListedbyNatureofAccount

Unit:RMB

2)SignificantOtherPayablesAgingoverOneYearThesignificantotherpayableswithagingoveroneyearatperiod-endmainlyconsistofunsettledtemporaryreceiptsandoutstandingpayables.

25.Advancesfromcustomers

(1)ListofAdvancesfromcustomers

Unit:RMB

26.Contractliabilities

Unit:RMB

Total

27.Employeebenefitspayable

(1)Listofemployeebenefitspayable

Unit:RMB

(2)ListofShort-termSalary

Unit:RMB

6.Short-termabsencewithsalary

(3)ListofDefinedContributionPlans

Unit:RMB

28.TaxesPayable

Unit:RMB

29.OtherCurrentLiabilities

Unit:RMB

Saleservicefee

30.Provisions

Unit:RMB

31.DeferredIncome

Unit:RMB

Note:

Liabilityitemsinvolvinggovernmentgrants

Unit:RMB

Removecompensation