GuangdongDongfangPrecisionScience&TechnologyCo.,Ltd.

Semi-AnnualReport2025

【DateofDisclosure】14August2025

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PartIImportantNotes,TableofContentsandDefinitionsTheBoardofDirectors(orthe“Board”),theSupervisoryCommitteeaswellasthedirectors,supervisorsandseniormanagementofGuangdongDongfangPrecisionScience&TechnologyCo.,Ltd.(hereinafterreferredtoasthe“Company”)herebyguaranteethatthecontentsofthisReportaretrue,accurateandcompleteandfreeofanymisrepresentations,misleadingstatements,ormaterialomissions,andcollectivelyandindividuallyacceptlegalresponsibilityforsuchcontents.

TangZhuolin,theCompany’slegalrepresentative,ShaoYongfeng,theCompany’sChiefFinancialOfficer,andChenLin,theHeadoftheCompany’sAccountingDepartment(equivalenttoFinancialManager)herebyguaranteethatthefinancialstatementscarriedinthisReportaretruthful,accurateandcomplete.AlldirectorsoftheCompanyattendedinpersontheboardmeetingfortheapprovalofthisReport.ForpossibleriskswithrespecttotheCompany,pleasereferto“XRisksFacedbytheCompanyandCountermeasures”of“PartIIIManagementDiscussionandAnalysis”herein.Andinvestorsarekindlyadvisedtoreadthroughtheaforesaidcontents.TheCompanyhasnosemi-annualdividendplan,eitherintheformofcashorstock.SpecialDeclarationThisReporthasbeenpreparedinChineseandtranslatedintoEnglish.Shouldtherebeanydiscrepanciesormisunderstandingsbetweenthetwoversions,theChineseversionshallprevail.

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TableofContents

PartIImportantNotes,TableofContentsandDefinitions ...... 2

PartIICorporateInformationandKeyFinancialInformation ...... 7

PartIIIManagementDiscussionandAnalysis ...... 10

PartIVCorporateGovernance,EnvironmentalandSocialResponsibilities ...... 65

PartVSignificantEvents ...... 69

PartVIShareChangesandShareholderInformation ...... 75

PartVIICorporateBonds ...... 83

PartVIIICorporateFinancialStatements ...... 84

PartIXOtherReportedData ...... 194

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DocumentsAvailableforReference

1.ThefinancialstatementssignedandsealedbytheCompany’slegalrepresentative,ChiefFinancialOfficer,andtheperson-in-chargeofthefinancialorgan.

2.AlltheoriginalsoftheCompany’sannouncementsanddocumentsthatweredisclosedtothepublicduringtheReportingPeriodonthemediadesignatedbytheCSRCforinformationdisclosure.

3.The2025Semi-AnnualReportcarryingthesignatureofthelegalrepresentative.

4.ThedocumentsabovearelodgedintheSecuritiesDepartmentoftheCompany,18A,ChinaMerchantsPlaza,1166WanghaiRoad,Shekou,ShuiwanCommunity,ZhaoshangStreet,NanshanDistrict,ShenzhenCity,GuangdongProvince,China.

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Definitions

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PartIICorporateInformationandKeyFinancialInformation

ICorporateInformation

IIContactInformation

IIIOtherInformation

1.ContactinformationofthecompanyWhetherthecompany'sregisteredaddress,companyofficeaddressanditspostalcode,companywebsiteande-mailaddresshavechangedduringthereportingperiod.

□Applicable?NotapplicableThecompany'sregisteredaddress,companyofficeaddressanditspostalcode,thecompany'swebsiteande-mailaddressremainunchangedduringthereportingperiod,whichcanbefoundinthe2024Annualreport.

2.Informationdisclosureandlocation.Whethertheinformationdisclosureandlocationhavechangedduringthereportingperiod.

□Applicable?Notapplicable

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ThenameandaddressofthestockexchangewebsiteandmediawheretheCompanydisclosesitshalf-yearlyreportandtheplacewheretheCompany'shalf-yearlyreporthasbeenfiledhasnotchangedduringthereportingperiod,whichcanbefoundintheAnnualReport2024.

3.OtherrelevantinformationWhetherotherrelevantinformationhaschangedinthereportingperiod

□Applicable√Notapplicable

IVKeyFinancialInformationIndicatewhetherthereisanyretrospectivelyrestateddatuminthetablebelow.

□Yes√No

VAccountingDataDifferencesunderChina’sAccountingStandardsforBusinessEnterprises(CAS)andInternationalFinancialReportingStandards(IFRS)andForeignAccountingStandards

1.NetProfitandEquityunderCASandIFRS

□Applicable?NotapplicableNodifferencefortheReportingPeriod.

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2.NetProfitandEquityunderCASandForeignAccountingStandards

□Applicable?NotapplicableNodifferencefortheReportingPeriod.

VIExceptionalGainsandLosses

?Applicable□Notapplicable

Unit:RMByuan

Detailsofotherprofitandlossitemsthatmeetthedefinitionofnon-recurringprofitorloss.

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.ExplanationofwhytheCompanyreclassifiesasrecurrentanexceptionalgain/lossitemdefinedorlistedintheExplanatoryAnnouncementNo.1onInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic—ExceptionalGain/LossItems:

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

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PartIIIManagementDiscussionandAnalysisWith“intelligentequipmentmanufacturing”asitsprimarystrategicfocus,DongfangPrecisionconcentratesonthemanufacturingofhigh-endintelligentequipment.Itsprincipaloperationsinclude“intelligentpackagingequipment”and“waterpowersportsequipment”.The“intelligentpackagingequipmentbusiness”consistsofsmartcorrugatedpackagingequipment,digitalprinters,andindustrialInternetindustrysolutions.DongfangPrecisionaccountsforapproximately15%oftheglobalcorrugatedpackagingequipmentmarket,rankingfirstamongdomesticenterprisesofthesametypeandTop2intheglobalmarket.Thecompanyhasthecapabilitytoflexiblycustomizeintelligent,efficient,andintegratedproductionlineequipmentforcustomers.LeveragingitscapabilitiesinindustrialInternetindustrysolutionsanditsadvancementsinthefieldofartificialintelligence,thecompanyisupgradingfromintelligentequipmentmanufacturingtohigh-qualitydigitalandintelligentdevelopment,achievingacomprehensivebreakthroughinits“digitalandintelligent”strategy.

Regardingthe“thebusinessdivisionofwaterpowersportsequipment”,thecontrolledsubsidiary,ParsunPower,hasrankedfirstinthedomesticindustryforthreeconsecutiveyears(2020-2022)intermsofoutboardmotors.In2021and2023,ParsunPowersuccessfullymass-produced115-horsepowerand130-horsepowergasolineoutboardmotors,respectively.In2024,ParsunPowerreleaseditsfirstdomesticallyproduced300-horsepowergasolineoutboardmotor.Inthefirsthalfof2025,ParsunPowersuccessfullyachievedmassproductionanddeliveryofthe300-horsepowergasolineoutboardmotor,becomingthefirstcompanyinChinatomass-producethismodel.ThisachievementmakesChinathethirdcountryintheworld,aftertheUnitedStatesandJapan,capableofsuccessfullymass-producinga300-horsepowergasolineoutboardmotor.ItmarksChina’sleapfrombeinga“follower”toa“competitor”inthefieldofhigh-endhigh-horsepoweroutboardmotorsintheglobalhigh-endequipmentmanufacturingindustry.Italsoannouncesthatdomesticoutboardmotorswillfullyentertheglobalhigh-endmainstreammarkettocompeteonthesamestagewithinternationalbrandsworldwide.In2025,thecompanylauncheditsfirstelectrictrollingmotor,establishinganewgrowthcurvecenteredonthepositioningofbecoming“asupplierofcomprehensivewaterpowersportssolutionsandproducts”.

Duringthe14yearssinceitslistingontheShenzhenStockExchangein2011,DongfangPrecisionhasalwayshighlyvaluedthe“organicgrowth+externalexpansion”strategicdevelopmentmodel.Guidedbytheprincipleof“theprincipalbusinessesasthecore+extendedinvestmentasthesupport”,thismodeldrivestheCompanyforwardonacircularbasis.Intermsofstrategicdevelopment,DongfangPrecisionhasalwayscloselyfollowedthestrategicblueprintforthetransformationandupgradingofChina’smanufacturingindustryoutlinedbythestate,focusingonthecorethemeof“high-qualitydevelopment”.Since2020,ithaspromoted“digitaltransformation”,creatingindustry-specificdigitalfactorysolutionsforthelargepackagingsector,facilitatingthedigitaltransformationandupgradingoftheindustrychain.In2024,theCompanyfollowedthenationalstrategicdirectionofthenewqualityproductiveforces,accuratelytargetingthe“artificialintelligence+robotics”strategicemergingindustries.Atthesametime,itbeganlayingoutfutureindustrytrackssuchas“keystructuralmaterialsforcontrollednuclearfusion+nuclearpowerequipment”,buildinganinvestmentmatrixspanningtwomajorstrategicfieldsattheindustrychainlevel.TheCompanyhasdeeplyintegrateditscoreresourcesandexcellentcapabilitiesaccumulatedinequipmentmanufacturingovertheyears,andhasorganicallylinkedwithstrategicallyinvestedcompaniesincutting-edgefieldslikehumanoidrobots,AIbigmodels,andkeystructuralmaterialsforcontrollednuclearfusion.Thegoalistoseekcooperationinproductionmanufacturing,applicationscenarios,andmarketexpansion,tojointlyexploretheinfinitepotentialofcutting-edgeapplicationscenarios,andtoultimatelyachievedeepco-creation,sharing,andwin-wincooperationofupstreamdownstreamvalueentitiesacrosstheentireindustrychain.

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IPrincipalOperationsoftheCompanyintheReportingPeriod(I)IndustriesinwhichtheCompanyprincipallyoperatesAccordingtotheClassificationofStrategicEmergingIndustries(2018)andtheIndustrialClassificationforNationalEconomicActivities(GB/T4754-2017),theindustriesinwhichtheCompanyprincipallyoperatesareshownbelow:

TheCompany’sPrincipalBusinessDivisionsandTheirIndustries

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(II)Industryoverview

1.TheIndustriestowhichtheCompany'sIntelligentPackagingEquipmentBusinessSegmentBelongs

1.1Demandside—customersTheintelligentpackagingequipmentdivisionoftheCompanyprimarilyservesB-endcustomerssuchascorrugatedcardboardandcorrugatedboxmanufacturers.TheCompanyprovidesvarioussinglemachineandcompleteproductionlineproductsforcardboardandboxproduction.Enddemandforcorrugatedpackagingisgrowing:.Corrugatedpackagingproductsareusedinavastnumberoffields,includingfoodandbeverage,householdchemicals,electronicproducts,ande-commerceexpressdelivery,andareinelasticallydemandedbyconsumers.Electronicproducts,food,beverage,andexpressdeliverytakeup26%,20%,21%,and13%respectivelyofthedownstreamapplicationmarketofpaperpackaging.China’sexpressmarketandtherelevantfieldssuchase-commerceandlogisticsshowanincreasingdemandforcorrugatedboxandboardpackaging,whichwilldrivetheexpansionofthecapacityofcorrugatedpackagingenterprisesandthusincreasethedemandforcorrugatedpackagingmachinery.

Digitalandintelligentupgradingbringsnewdevelopmentopportunities.The“strategyofrobotassemblingline”and“smartfactory”areincreasinglyrecognizedbytheindustry.Additionally,leadingpackagingenterprises,includingXiamenHexingPackagingPrintingCo.,Ltd.(HXPP),MYSGroupCo.Ltd.(MYS),ShenzhenYUTOPackagingTechnologyCo.,Ltd.,andShenzhenJinjiaGroupCo.,Ltd.,havesuccessivelyenteredmarketssuchasintelligentmanufacturingoneafteranother.Thecapacityupgradeinthepaperpackagingandprintingindustrycontinuestodeepen.Againstthebackdropofintelligentmanufacturing,leadingenterprisesinthecorrugatedpaperpackagingequipmentindustryarealsoexpectedtoembracenewopportunitiesfordevelopment.

Overseasdemandisgrowingsteadily:Inrecentyearswhenenvironmentalpollutionbecomesmoreandmoreserious,growingenvironmentalawarenesshasledto“plasticbansandrestrictions”acrosstheworld,providingamajorboosttopaperasanalternativetoplastic.TheglobalgreenpackagingmarketisprojectedtogrowfromUSD262.27billionin2023toUSD381.98billionin2028,withacompoundannualgrowthrateof

7.81%duringtheforecastperiod(2023-2028).

Thecorrugatedcardboardproducedbycorrugatedcardboardproductionlinesisusedtomakevariouscorrugatedboxes,corrugatedcartonsandothercorrugatedpackagingmaterials,whicharerigidconsumerproductsinEuropeanandAmericancountries.Thephilosophyof“sustainability”isgaininggroundintheEuropeanandUSconsumergoodspackagingmarkets.Withthegrowingtrendof"replacingplasticswithpaper"

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inthepackagingindustry,demandforcorrugatedpackagingmaterialsintheEuropeanandUSconsumergoodsmarketscontinuestogrowsteadily,helpingtodrivedemandforcorrugatedpackagingproductionlineequipment.Therapiddevelopmentofdigitalprintingbringsmoredevelopmentopportunitiesfortheindustry.AccordingtothelatestreportbySmithersPira,duringtheperiodfrom2024to2029,thecompoundannualgrowthrateofdigitalinkjetprintinginthepackagingfieldwillbeapproximately15%.Itisestimatedthattheglobalmarketsizeofdigitalinkjetprintinginthepackagingfieldwillreach18.08billionUSdollarsby2029.IntheChinesemarket,withthecontinuousgrowthofdemandfor"small-batch+multi-variety+personalized+customized"packaginginthepackagingfield,digitalinkjetprintingisrapidlypenetratingthepackagingsector.AccordingtotheforecastofQianzhanResearchInstitute,thecompoundannualgrowthrateofdigitalinkjetprintinginChina'spackagingfieldwillbeabout18.0%from2024to2029.

1.2Supplyside——theCompany’spresenceintheindustryInthefieldofintelligentpackagingequipment,DongfangPrecisionhasacompletelayoutandhasformedamulti-segmentbusinesssystemcoveringcorrugatedcardboardproductionlines,corecomponentsofcorrugatedboardproductionlines,cartonprintingandpackaginglinesaswellasdigitalprintingequipment.Relyingonitscomprehensiveindustrialchainlayoutandstrongtechnologicalstrength,thecompany,withitswiderangeofproductsandadvancedtechnologies,providesglobalcustomerswithone-stopandall-roundintelligentpackagingequipmentsolutions.

Corrugatedcardboardproductionlines:MajormanufacturersofcorrugatedcardboardproductionlinesaroundtheworldincludeFosberGroup,BHS,Marquip,andJ.S.Machine.TheFosberGroup,alongwithitsmajorcompetitorBHSfromGermany,ranksinthefirsttier.FosberGroupholdsapproximately30%oftheglobalmiddle-andhigh-endcorrugatedcardboardproductionlinemarketandmorethan50%oftheNorthAmericanmarket.

Corrugated&pressurerollers,keycomponentsofcorrugatedcardboardproductionlines:ThesubsidiaryTiru?aGrouphasmorethan40yearsofexperienceinthecorrugatedandpressurerollersegmentandisrenownedinEuropeasaworld-leadingspecialistinthissegment.

Corrugatedboxprintingandpackagingproductionlineequipment:MajormanufacturersinthisfieldincludeDongfangPrecision,Bobst,Gopfert,Ward,DingLong(Shanghai),andGuangzhouKeshenglong.Withanadvantageinglobalresourcecoordination,leadingdesignconcept,excellentoverallR&Dstrength,andaproductsystemfeaturingcompletecategoriesandrichspecifications,DongfangPrecisionisanindustryleaderinChinaandiscompetitivewiththeglobalindustryleader,Bobst,fromSwitzerland.

Digitalprinters:MajormanufacturersincludeHP,EFI,Koenig&BauerDurst,WonderDigital,HanhuaGongye,andAtexco,amongothers.WonderDigital,amajority-ownedsubsidiaryofDongfangPrecision,isaleaderinthedomesticdigitalprinterindustry,andhasbeencommittedtoextendingdigitalprintingtechnologytosuchfieldsaspaperpackaging(colourprinting&pre-printing),advertising,homefurnishing,buildingmaterials,andlabelprinting.

DongfangPrecisionleadstheworldintermsofitscomprehensivestrengthinsmartcorrugatedpackagingequipmentbusinessandcanprovidedownstreamcustomerssuchascardboardplantsandboxplantswith“one-stop”machineryandservicesupportthatcoverseachproductionprocess,includingcorrugatedcardboard

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production,corrugatedboxproduction,andpre-printingandpost-printingproductionprocesses,anddifferenttechnologyroadmaps,includingflexographicprintinganddigitalprinting.ThevalueoftheglobalcorrugatedpackagingequipmentmarketisestimatedtobeaboutRMB30-40billion.Intermsofoperatingrevenue,DongfangPrecisionaccountsforapproximately15%oftheglobalcorrugatedpackagingequipmentmarket,rankingfirstamongdomesticenterprisesofthesametypeandsecondintheglobalmarket.

2.Theindustrytowhichthecompany'sindustrialInternetindustrysolutionsbusinessbelongsPolicyside:.Foreightconsecutiveyearsfrom2018to2025,"IndustrialInternet"hasappearedinthegovernmentworkreporteveryyear.Thegovernmentworkreportin2025putforwardtheideaof"vigorouslypromotingnewindustrializationandacceleratingtheinnovativedevelopmentoftheIndustrialInternet".The"14thFive-YearPlanfortheIn-depthIntegrationofInformatizationandIndustrializationDevelopment"proposedthatby2025,informatizationandindustrializationwouldachieveintegrateddevelopmentonabroaderscale,atadeeperlevelandatahigherlevel.Undertheguidanceandsupportofaseriesofpolicies,theIndustrialInternetandsmartfactorieshavealwaysbeenimportantdirectionsforthetransformationandupgradingofthemanufacturingindustry.Marketside:ChinaistheonlycountryintheworldwhoseindustriescoverallindustrialcategoriesintheUnitedNations’industrialclassification.Concurrently,itisexpectedtogrowintotheworld’slargestindustrialdigitalizationmarket.ForthecurrentmanufacturingindustryofChina,digitaltransformationisnolongeran“option”buta“compulsorycourse”thatiscriticaltoitssurvivalandlong-termdevelopment.

AccordingtotheBluebookontheDigitalTransformationofEnterprises--EmpoweringtheLow-carbonandGreenTransformationoftheRealEconomywithNewITreleasedbytheChinaAcademyofInformationandCommunicationsTechnology,afterrelevantmanufacturingenterprisescompletedigitaltransformation,onaverage,theirproductionefficiencywillbeboosted,theiroperatingexpenseswillbelowered,andtheirenergyutilisationratewillbeimproved.Concurrently,withtherapiddevelopmentandcontinuousiterationofthenew-generationinformationtechnology,thecostofdigitaltransformationofenterprisesisgraduallydecreasing.

AccordingtothedatareleasedbyFrost&Sullivan,thescaleofthemarketofindustrialInternetplatformsandrelevantsolutionsinChinaby2025isestimatedtoreachRMB193.12billion.

Supplyside:ThekeytechnologiesandindustriesthattheindustrialInternetinvolvesareextensiveandcomplexandcanhardlybefullycoveredbyenterprises.Thus,developingtheindustrialInternetbyrelyingonindustrialmanufacturingenterprisesbecomesatypicaldevelopmentpathofindustrialInternetenterprises,suchasRootCloud,MideaCloud.Inthepackagingfield,majormanufacturersthatprovideindustrialInternet-relatedproductsandsolutionsservicesincludeYunyin,DongfangDigicom,andShanghaiWantit.

ThesubsidiaryDongfangDigicom,carryingDongfangPrecision’smissionsofexpandingintotheindustrialInternetindustryandimplementing“digitalandintelligenttransformationstrategies”,wasestablishedin2020.Withthevision“tobecomeaworld-leadingproviderofindustrialInternetindustrysolutions”,DongfangDigicomisengagedinbuildingindustrialInternetplatformsforindustriesusingnew-generationinformationtechnologies,suchastheIoT,cloudcomputing,bigdata,andartificialintelligencetofacilitatedigitalandintelligentupgrading.

3.TheIndustriestowhichthecompany'swaterpowerproductssegmentbelongs

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3.1Demandside——customersOutboardmotorsarethekeyauxiliaryequipmentforsmall-andmedium-sizedshipsandarecharacterizedbytheircompactstructures,lightweights,convenientinstallationandmaintenance,easyoperations,andlownoise.Thedownstreamoftheoutboardmotorindustryinvolvestheshipbuildingindustry,primarilyappliedinareassuchasyachts,sailboats,andothervessels,encompassingapplicationsinrecreationalsports,commercialoperations,andmilitarymaritimeactivities.

ApplicationsofParsunPower’sOutboardMotors

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GlobalMarket:AccordingtoareportbytheinternationalmarketresearchagencyGMI,theglobalmarketsalesforoutboardmotorsareexpectedtoreachUSD15,975millionby2030,withacompoundannualgrowthrate(CAGR)of5.35%from2023to2030.

Figure:GlobalOutboardMotorSalesVolumeandMarketSize,2023–2030(intenthousandsofunits,inhundredsofmillionsofUSdollars)

ByApplicationField:Therecreationalboatingsectoristhelargestdownstreamapplicationmarketforoutboardmotors.By2030,itisexpectedthatthemarketshareofoutboardmotorsusedinwater-basedleisuresportswillaccountfor73.22%globally.Yachtsareoneofthemaindownstreamproductsequippedwithoutboardmotors.Inrecentyears,theglobalyachtindustryhasshownatrendofexpandingscale.AccordingtoareportbytheChinaAssociationoftheNationalShipbuildingIndustry,thegloballeisureboatmarketsizeisexpectedtogrowfromUSD16.4billionin2021toUSD23.6billionin2027,withaCAGRofapproximately6.20%.Benefitingfromtherapidgrowthofthedownstreamyachtmarket,theglobaloutboardmotormarketforwaterleisuresportsisexpectedtogrowsteadily.

ByPowerSize:Themarketshareofmid-to-highpoweroutboardmotorsaccountsformorethanthree-quartersofthetotalmarket.In2023,themid-to-highpoweroutboardmotormarketshareintheglobaloutboard

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motormarketwas79.72%.NorthAmericaandEuropearethemainmarketsformid-to-highpoweroutboardmotors.From2023to2030,thecompoundannualgrowthrate(CAGR)ofthemid-to-highpoweroutboardmotormarketintheAsia-Pacificregionisexpectedtoreach8.97%.

Figure:MarketSizeandForecastofOutboardMotorsbyHP,2023–2030(inhundredsofmillionsofUSdollars)

ByPowerType:Gasolineoutboardmotorsarethemainstreammodelintheglobaloutboardmotorconsumptionmarket.By2030,itisexpectedthatthemarketshareofgasoline,diesel,andelectricoutboardmotorsgloballywillbe80.21%,11.49%,and8.30%,respectively.Dieselengineshavecertainmarketspaceinspecificfields.Electricoutboardmotorsareprimarilyusedforlowhorsepower,withahigherpricebutfeaturessuchasgreaterenvironmentalfriendlinessandeasiermaintenance.Withincreasinglystringentenvironmentalregulationsinvariouscountriesandcontinuousadvancementsinbatterytechnology,theapplicationofelectricoutboardmotorsisbecomingmorewidespread.

Figure:MarketSizeandForecastofOutboardMotorsbyFuelType,2023–2030(inhundredsofmillionsofUSdollars)

Gasoline

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ChineseMarket:By2030,themarketsizeofoutboardmotorsinChinaisexpectedtoreachUSD588million,withacompoundannualgrowthrate(CAGR)of9.79%from2022to2030,significantlyhigherthantheglobalCAGR.BenefitingfromtherapidgrowthofChina’seconomyandchangesinresidents’recreationalhabits,Chinahasbecomeoneofthefastest-growingcountriesintheglobaloutboardmotormarket.

Inrecentyears,consideringthedevelopmentofChina’swatertourismandrecreationalindustryandtheemphasisofthegovernmentonmaritimerights,theChinesegovernmentagenciesatalllevelshavegrantedvigorouspolicysupporttoship-relatedindustries.Forexample,theNationalDevelopmentandReformCommissionhasincludedhigh-performanceships,suchassuperyachts,luxurycruiseships,marinesurveillancevessels,andsmall-waterplane-areatwinhulls,amongitemsforencouragement.TheMinistryofIndustryandInformationTechnologyhasproposeddevelopingbrandproducts,suchasluxurysuperyachts,sightseeingboats,andofficialboats.TheStateCouncilhasalsoproposedvigorouslydevelopingmarinetourism,manufacturinglocalisedtourismequipmentsuchascruisesandcruiseyachts,andvigorouslydevelopingcruiseyachttourism.China’syachtindustrywillusherinrapiddevelopment.

Domesticsubstitutionhasbecomethemainstreamtrendinthedevelopmentofthedomesticoutboardmotorindustry.AccordingtoChina’scustomsimportandexportdata,theimportvalueofoutboardmotorsintoChinareachedRMB1,283millionin2023.Inthepublicserviceandmilitaryfields,China’smilitaryoutboardmotorsinthemid-to-highpowerrangeprimarilyuseoverseasbrands.Againstthebackdropofthenationalpolicyencouragingdomesticequipmenttoreplaceimports,withtheriseofdomesticoutboardmotorcompanies,Chinaisexpectedtoenteranewstageofprosperousdevelopmentfortheriseofdomesticoutboardmotorcompanies.Leadingdomesticoutboardmotorcompanieswillbenefitfromboththeindustry’srapidgrowthanddomesticsubstitution.

Theelectrictrollingmotor(alsoknownasthe“marineelectricpropeller”or“electronicanchor”)isanauxiliarypowerdeviceinstalledonfishingships.Itsprimaryfunctionistoachieveshippositioningandstability.ThroughGPS/Beidousatellitepositioningcombinedwithpowercompensationtechnology,ashipcanremaininthepredeterminedlocationwithouttheneedfortraditionalanchoring.Eveninthefaceofwind,waves,andcurrents,themotorcanautomaticallyadjustthethrustdirectiontomaintaintheship’sorientation.Theelectrictrollingmotorismainlyusedinrecreationalfishingandcompetitivefishingevents,andcanalsoserveasanauxiliaryelectricpropulsiondeviceforpositionholdingorcourseadjustment.

AccordingtotheFact.MRreport,theglobalmarketsizeforelectrictrollingmotorsisexpectedtogrowfromapproximatelyUSD583millionin2023toaroundUSD851millionby2034.Amongthem,bow-mountedmodelswillaccountforover60%ofthetotalelectrictrollingmotormarket.Inaglobalcontext,NorthAmericaandEuropearecurrentlythemainmarketsforelectrictrollingmotors,withregionssuchasEastAsiaandSoutheastAsiadevelopingatafasterpace.Domestically,theuseofelectrictrollingmotorsisconcentratedinareaswhererecreationalfishingcultureispopular,suchascoastalprovincesinChinaandlocationswherefishingenthusiastsgather.

TheChineseelectrictrollingmotormarketisinitsgrowthphase.Duetothecontinuousincreaseinthenumberofparticipantsinwater-basedrecreationalsports,greaterproductawareness,andmoreaffordablepricing.electrictrollingmotorsaregraduallypenetratingfromtheprofessionalseafishingtacklemarketintothebroader

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mass-marketwaterrecreationsector.Withongoingtrendsliketechnologicalinnovations(suchasmulti-modesatellitenavigation,high-precisionpositioningcontrolsystems,energysystemoptimizationbroughtbymotorandbatterytechnologyadvancements,andtheintroductionofAItechnology)anddomesticsubstitution,theChineseelectrictrollingmotormarkethassubstantialpotentialfordevelopment.

3.2Supplyside——theCompany’spresenceintheindustryThemajorparticipantsintheglobaloutboardmotormarketareJapaneseandAmericanbrands,includingYamahaandSuzukifromJapan,andMercuryfromtheUnitedStates.Comparedtointernationalcompetitors,ParsunPower,relyingonitsproductperformancethatisclosetothecompetitors’anditsclearpriceadvantage,competesgloballywithAmericanandJapanesemanufacturersbyofferinghighcost-performanceproducts.

ParsunPower,aholdingsubsidiary,isaleadingcompanyinthedomesticoutboardmotorindustry.From2020to2022,ParsunPower’soutboardmotorproductsrankedfirstinmarketshareinChinaforthreeconsecutiveyears.Thecompanyisanational“LittleGiant”enterprisespecializingininnovation,anationalhigh-techenterprise,theJiangsuProvinceOutboardMotorEngineeringTechnologyResearchCenter,arecognizedenterprisetechnologycenterinJiangsuProvince,aleadingenterpriseintheChineseinternalcombustionengineindustry,andamemberunitoftheSmallGasolineEngineBranchoftheChinaInternalCombustionEngineIndustryAssociation.Atthesametime,itsoutboardmotorproductshavealsoreceivedvarioushonors,includingtheNationalTorchProgramIndustrializationDemonstrationProjectCertificate,ChinaMachineryIndustryInnovativeProducts,JiangsuProvinceFamousBrandProducts,andSuzhouCityFamousBrandProducts.Intheoutboardmotorsector:ParsunPowerhasmaintainedaleadingpositioninthedomesticindustryintermsofcomprehensiveR&Dandinnovationcapacitiesformanyyears.In2021and2023,ParsunPowersuccessfullymass-produced115-horsepowerand130-horsepowergasolineoutboardmotors,respectively.In2024,ParsunPowerreleaseditsfirstdomesticallyproduced300-horsepowergasolineoutboardmotor.Inthefirsthalfof2025,ParsunPowersuccessfullyachievedmassproductionanddeliveryofthe300-horsepowergasolineoutboardmotor,becomingthefirstcompanyinChinatomass-producethismodel.ThismakesChinathethirdcountryintheworld,aftertheUnitedStatesandJapan,capableofsuccessfullymass-producinga300-horsepowergasolineoutboardmotor.Thecoretechnologyofthe300-horsepowergasolineoutboardmotorisindependentlycontrolled,withproduction,manufacturingandsupplychainlocalization,markingamilestoneinChina’sautonomoushigh-endequipmentmanufacturingintheoutboardmotorsector.ItsuccessfullybreaksthemonopolyofU.S.andJapanesemanufacturersinthehigh-horsepowerandhigh-powersegmentofoutboardmotors,signalingChina’sleapfroma“follower”toa“competitor”inthefieldofhigh-endhigh-horsepoweroutboardmotors.Italsoannouncesthatdomesticoutboardmotorswillfullyentertheglobalhigh-endmainstreammarkettocompeteonthesamestagewithinternationalbrandsworldwide.

InMarch2025,ParsunPowerreleaseditsfirstelectrictrollingmotorproductatthe28thChinaShanghaiInternationalBoatShow&ShanghaiInternationalWorkboatShow2025(“CIBS2025”).Thedevelopmentofthisproductfollowsthe“high-endpositioning,positiveR&D”philosophy,havingundergoneover40roundsofshapeoptimization,70structuraladjustments,morethan100softwareversioniterations,andnearlyathousandwatertests.ItfullydemonstratesParsunPower’syearsofaccumulatedtechnicalexpertise.ParsunPowerwillusethelaunchofitsfirstelectrictrollingmotorproductasastartingpointtocontinuouslyexpanditscomprehensive

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layoutinthewaterpowersportsproductfieldandcreateanewperformancegrowthcurve.(III)PrincipaloperationsoftheCompanyintheReportingPeriodWith“intelligentequipmentmanufacturing”asitsprimarystrategicfocus,DongfangPrecisionconcentratesonthemanufacturingofhigh-endintelligentequipment.Itsprincipaloperationsinclude“intelligentpackagingequipment”and“waterpowersportsequipment”.The“intelligentpackagingequipmentbusiness”consistsofsmartcorrugatedpackagingequipment,digitalprinters,andindustrialInternetindustrysolutions.

BusinessDivisionsandEntitiesofDongfangPrecision

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ATheintelligentpackagingequipmentdivisionTheintelligentpackagingequipmentdivisionconsistsofsmartcorrugatedpackagingequipment,digitalprinters,andindustrialInternetindustrysolutions,whichcoverthemostimportantlinksinthevaluechainofcorrugatedpackagingproduction(asshownbelow).

RelationshipbetweenCorrugatedPackagingManufacturingValueChainandtheCompany'sSmartCorrugatedPackagingEquipment

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a.Smartcorrugatedpackagingequipmentbusiness

(1)Corrugatedcardboardproductionlines(includingcorrugatedrollers)Thecorrugatedcardboardproductionlinesbusinessofthecompanyisengagedincorrugatedcardboardproductionlines(underthebrandsofFosberandQuantum)aswellascorrugatedandpressurerollers(undertheTiru?abrand),whicharekeycomponentsofcorrugatedcardboardproductionlines.WiththeoverseasFosberGroup(underit,FosberItaly,FosberAmerica,QCorr,andTiru?aGroup)aswellasthedomesticFosberAsiaandTiru?aAsia,DongfangPrecisionisabletoprovideproductsandservicesforcustomersaroundtheworld.

Overseas,FobserGroupprimarilyserveslarge-andmedium-sizedmanufacturersinEurope,NorthAmerica,LatinAmericaandothercountriesandregions.AllthebusinessunitsandprofitcentresofFosberGrouphavetheirbusiness,assetsandstafflocatedinEuropeandNorthAmerica.Theyadoptalocalmanagementandoperationmodel,anddesign,developandmanufacturetheirproductslocally.FosberGrouphasestablishedstablepartnershipswithmajormanufacturersinthecorrugatedpackagingindustryinEuropeandtheUS.

Domestically,supportedbyChina’smostcompletesupplychainacrossallindustrialsectorsglobally,aswellasthecompetitiveedgeofmanufacturing,FosberAsia’scorrugatedlineshavebeendesignedandadaptedtotheneedsofcustomersintheChinesemarket.Over90%ofthecomponentsofthecorrugatedlinesaremanufactureddomestically.Theseproducts,whicharehigh-tech,high-performanceandcost-efficientfortheyaremadeinChina,areprovidedforcorrugatedpackagingmanufacturersinChina,Asia(EastAsia,SoutheastAsia,SouthAsia,andtheMiddleEast),Africa,Russia,andLatinAmerica.Tiru?aAsiahasachievedthemassproductionanddeliveryofthefirstbatchofdomesticcorrugatedrollsandpressurerolls.WhilecateringtotheneedsofFosberAsia’scorrugatedlinesforcorrugatedandpressurerollers,Tiru?aisalsodevelopingnewmarketsinChinaandtherestofAsiaforitsproducts.

(2)CorrugatedboxprintingandpackagingproductionlinesDomestically,DongfangPrecision(China)isresponsibleforbusinessoperationsassociatedwithcorrugatedboxprintingandpackagingequipment,whileintheoverseasmarket,itisDongfangPrecision(Europe).

TheproductmatrixofDongfangPrecision(China)includescorrugatedconvertinglineandsinglemachineproductsthatareofdozensofspecificationsanddifferentmarketpositioning,featuringfixedtype/open-closetype,topprinting/bottomprinting,andothertechnologies.Theseproductsmainlyinclude“DongfangStar”QuicksetTopPrintingFFGandTopPrintingOpen-CloseTypeFFGInline,aswellas“AsiaStar”BottomPrintingDieCutterStripperVacuumStackerConvertingLine,BottomPrintingOpen-CloseTypeFFGInlineandBottomPrintingOpen-ClosedType/FFG&Stitcher.DongfangPrecision(China)isaprofessionalmanufacturerwithanearlystartandastrongfoundationamongdomesticfellowcompanies,enjoyinghighbrandawarenessandcustomerrecognitionintheindustry.Theproductsarehighlypopularnotonlyinthedomesticmarketbutalsoexportedtoover60countriesandregionsworldwide.

DongfangPrecision(Europe)specializesinhigh-endcorrugatedconvertinglineproducts.Itsprimaryproductsinclude“FD”QuicksetTopPrintingFFG,“HGL”QuicksetBottomPrintingFFG,andQuicksetBottomPrinting/DieCutterStripperVacuumLine.Theseproductsaredesignedwithnoncrushfeederdesign,fullservocontrol,andfullyautomaticcontrolfeatures,makingthemmoresuitableforhigh-definitionprinting.

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b.DigitalPrinterbusinessThebusinessisprimarilyledbythesubsidiaryShenzhenWonderDigitalTechnologyCo.,Ltd.,whichprovidessolutionsforcustomersinthedigitalprintingindustry,includingdigitalprinters,ink,accessories,andprofessionalservices.WonderDigitalhasintroducedavarietyofdigitalprinterstomeetthediverseneedsofdifferentmarketsegmentsandcustomerlevels,includingMultiPassdigitalprinterseriesapplicableforsmall-batchpaperpackagingprinting,SinglePassdigitalprinterseriesapplicableforlarge/medium/smallbatchpaperpackagingprinting,SinglePassdigitalseriesapplicableforpre-printingonrawpaperandHybridprinterseriesthatcombinesMultiPasshigh-precisionprintingandSinglePasshighspeedprintingintoone.

WonderDigitaloffersadiverserangeofproductsthatcovervarioustypesandspecifications,frompostprintingtopre-printing,fromwater-baseddye/pigment,water-basedinktospotcolourUVink,fromboxes,offsetcartonstosheetmetal.Theproductsalsosupportarangeofapplicationmodesandscenarios,fromsingle-sheetprintingtoexchangeordersseamlesslywithvariabledataprinting,andfromsinglemachineprintingtointegrationwithERPsystems.Apartfromdigitalprinters,WonderDigitalalsosellssupportingunitsafterprintingsectionincludingslottingandvarnishcoatingunits,aswellasspecialinkproductsthatarecompatiblewithitsown-brandequipment.Thesespecialinkproducts,includingwater-baseddyeink,water-basedpigmentink,andUVink.WonderDigital’shighcost-performancedigitalprintingsolutionprovidescustomerswithcost-effectiveconfigurationplansfordigitalinkjetprintingequipmentandinkformulationplans.Withitscomprehensiveproductmatrix,WonderDigitalprovidespaperpackagingdigitalprintersthatmeettheiverseneedsofindustrycustomerswithdifferentmarketpositionsandlevels.WonderDigital’sdigitalprintershavebeenexportedtocountriesandregionssuchasEurope,America,MiddleEast,LatinAmerica,andSoutheastAsia..

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PrimaryProductPortfolioofDongfangPrecision’sintelligentpackagingEquipmentBusiness-CorrugatedCardboardProductionLines

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CadrewithoutlubricationtechnologyHighboardqualityIndustry-leadingSyncrosystemcontrolProcessControlSupervision(PCS)DataTrackingSupervision(DTS)

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PrimaryProductPortfolioofDongfangPrecision’sSmartCorrugatedPackagingEquipmentBusiness-CorrugatedBoxPrintingandPackagingProductionLineEquipment

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PrimaryProductPortfolioofDongfangPrecision’sintelligentpackagingEquipmentBusiness–DigitalPrinters

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c.IndustrialInternetsolutionsbusinessDongfangDigicom,asubsidiaryofDongfangPrecision,servesastheprimarybusinessentityfor“industrialInternetindustrysolutions”.BasedontheextensiveindustryexperienceofDongfangPrecisionspanningoverthreedecadesinthefieldofcorrugatedpackagingequipment,aswellasguidedbytheGroup’sstrategies,thesubsidiaryDongfangDigicom,leveragingcutting-edgetechnologiessuchastheInternetofThings(IoT),cloudcomputing,bigdata,5G,andartificialintelligence(AI),hasdevelopediDataPioneer,anindustrialInternetplatformforthepackagingindustryinabroadsense.

One-StopDigitalFactoryOverallSolutionArchitectureDiagram

DongfangDigicomhaslaunchedcustomizedproductsforpackagingindustryclients,including“InterLink,”“MicroMes,”and“EquipmentAfter-SalesServiceManagementSystem.”TheseproductscanbeembeddedintothesaleofnewmachinesundertheDongfangPrecisionbrand,enhancingproductvalue.Theycanalsobesoldindependently,supportingtheupgradeofexistingequipmentandcompatiblewithmultiplebrands,thusmeetingthediverseneedsofindustryclientswithflexiblebusinessmodels.“InterLink”isanintelligentproductionmanagementsystemdesignedforDongfangPrecision’scorrugatedboxprintingandpackagingequipment.ItfullyutilizestheecologicalresourceadvantagesofDongfangPrecision'scorrugatedpackagingequipment,improvingmachineoperationefficiency,orderprocessingcapacity,reducingordermanagementcosts,andenhancingthemarketcompetitivenessofmachineproducts.“MicroMes”isan

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integratedapplicationsolutionbasedontheintelligentproductionmanagementsystemandenterpriseERP,achievingclosed-loopmanagementfromordercreation,scheduling,productionissuancetoreporting.Itenhancesthedigitalizationlevelofproductionprocesscontrol.The“EquipmentAfter-SalesServiceManagementSystem”focusesontheafter-salesserviceofpackagingprintingequipment.Itenablesthereuseofunderlyingtechnologiesandrealizesthedigitalizationofequipment“points,rounds,inspections,”andmaintenancethroughsystematicafter-salesservices,onlinesparepartsmanagement,fulllifecyclemanagementofequipmentrecords,andremotemaintenance.

DongfangDigicomalsoprovidesdigitaldiagnosticconsultingservicesforlargepackagingindustryclients.Throughdigitaltransformationconsulting,itdrivesproductsales,creatinga“servicesolution-drivenproductsales”closedloop.

d.Theoperationalmodeloftheintelligentpackagingequipmentbusiness

R&Dmodel:TheCompanyhasindustry-leadingindependentdesignandR&Dcapabilities,continuallyestablishinghigh-levelR&Dinnovationmanagementmechanisms.TheR&Dteam,spearheadedbyindustryexperts,employsablendoflongandshort-termproductR&Dplanning,supportedbyamarket-orientedR&Dmechanism.Additionally,arobustR&DtalentincentivemechanismenhancestheCompany’soveralltechnicalproficiency,cementingitsleadershippositionintheindustry.

Procurementandproductionmodel:TheCompanyprocuresrawmaterials,suchassteelplates,metalcomponents,andelectricalparts(suchasmotorsandPLCs),fromexternalsuppliers,whileproducingsomecorecomponentsandcorrugatedrollersin-house.

ThemajorityoftheCompany’sequipmentproductsadheretoa“made-to-orderproduction”model.Uponreceivingordersandpartialdepositsfromcustomers,theCompanypurchasesrawmaterialsfromsuppliersbasedonspecificcustomerrequirementsandinventorylevels,anddevelopsproductionplansandschedules.TheCompanyadvocatesa“leanproduction”modelforproductionandoperationalmanagement,ensuringprecisecontroloverBOMcostsandmanufacturingexpenses,whilecontinuouslyenhancingoperationalefficiency.

Duringthereportingperiod,thedeliveryperiodforordersofcorrugatedboardproductionlinesundertheFosberGroupwasaround6months.ThedeliveryperiodforordersofcorrugatedboxprintingandpackagingcompletemachineequipmentundertheDongfangPrecisionbrandwas3to6months,andthedeliveryperiodforordersofdigitalprintingequipmentundertheWonderDigitalbrandwas1to3months.

MarketingModel:TheCompanyemploysa“directselling+distribution”marketingmodel.Itutilizesadirectsalesapproachforthedomesticmarketandacombinationofdirectsalesandagentdistributionforoverseasmarkets,tailoringthestrategytosuittheuniqueneedsofdifferentcountriesandregions.Thisapproachnotonlywidensthescopeofsaleschannelsandincreasessalesvolumebutalsoreducesmarketexpansionandsalescosts.

TheCompany’scompleteproductionlineandsinglemachineproductsaretypicallyone-timesales,withmoresignificanttransactionamounts.However,accessories,software,andservicescanbesoldmultipletimesthroughoutthelife-cycleofcompleteproductionlineorsinglemachineproducts.Thegrowingnumberofexistingequipmentsoldinthedownstreamindustrymarketpresentsasteadystreamofsalesopportunitiesforaccessories,software,andservices.Additionally,providinghigh-qualitytechnicalsupportandserviceshelpstopromotethe

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salesofcompleteproductionlineproducts.Intermsofthesettlementoforders,theCompanycollectsdownpaymentinadvanceandpaymentbystagesforthesalesofcorrugatedcardboardproductionlinesandcorrugatedboxprintingandpackagingequipment.BThewaterpowersportsequipmentdivisionThemainproductsofParsunPower,asubsidiary,areoutboardmotorsofvariousspecificationsandseries.Theproductpowerrangeisbroad,coveringfrom2horsepowerto300horsepower.Theproductsareofstablequalityandreliableperformance,withsomeproductsofferingcomprehensiveperformancecomparabletointernationallyrenownedbrands,andemissionsmeetingEuropeanandAmericanstandards.MostmodelshavepassedtheChinaClassificationSociety(CCS)certification,EuropeanCEcertification,andU.S.EPAcertification.Theseproductsarewidelyusedinwaterleisuresports,fisheries,watertransportation,emergencyrescue,coastallanding,maritimepatrol,andotherfields,andareexportedglobally.

(1)OutboardmotorsParsunPowerhasachievedacompleteproductlinelayoutof“gasoline—diesel—electric”outboardmotors.Leveragingitsyearsofexperienceandleadingmarketshareinthegasolineoutboardmotorsector,thecompanyisnowadvancingtowardshigh-powerdieselandelectricoutboardmotors.Inthefuture,ParsunPower'soutboardmotorproductswillgraduallyfocusonmid-to-highpower,whileexpandingtheelectricoutboardmotorproductlinetocontinuesolidifyingitspositionasaleadingdomesticoutboardmotorbrand.

GasolineoutboardmotorsarethemostdiverseproductrangeinParsunPower’sportfolio,coveringfrom2horsepowerto300horsepower,includingtwo-strokeandfour-strokemodels.ParsunPowerhasaccumulatedextensiveexperienceinthisfieldovermanyyears,developingproprietarytechnologiesthatareappliedtoitsproducts.In2021,ParsunPowerachievedmassproductionandsalesofa115-horsepowergasolineoutboardmotor,successfullybreakingthelong-standingmonopolyofinternationallyrenownedbrandsinthispowersegment.In2023,itachievedmassproductionandsalesofa130-horsepowergasolineoutboardmotor.In2024,itreleaseda300-horsepowergasolineoutboardmotor,andmassproductionanddeliveryof300-horsepowergasolineoutboardmotorswereachievedinthefirsthalfof2025.

The300-horsepoweroutboardmotorbelongstothehigh-powersegment,withapplicationscenarioscoveringrecreational,commercial,andotherprofessionalfields,includingseafishing,surfing,marinecruising,fisheries,watertransportation,aswellasmaritimelawenforcementpatrols,maritimesearchandrescue,etc.Itemploysarangeofadvancedtechnologies,suchasfour-strokeengines,electronicfuelinjection(EFI),lightweightmaterials,andintegratedelectroniccontrolsystems.Itistherepresentativeofhigh-endpositioningandhigh-value-addedproductsintheglobaloutboardmotormarket.

AsaChinesemanufacturer,ParsunPower’sbreakthroughinthelarge-horsepowermodelallowsittodirectlytargethigh-valuemarkets,competinggloballywiththecoreadvantagesofChinesemanufacturing.ParsunPowerispoisedtobecomeoneofthecorecompetitorsintheglobalhigh-endoutboardmotormarket,layingthefoundationforitsentryintotheglobalhigh-endleisureyachtmarketandbecomingakeydriveroffuturerevenuegrowth.Inrecentyears,ParsunPowerhascontinuouslybrokenthroughtheceilingofdomesticgasolineoutboardmotors.Onthepremiseofmaintainingindependentcontrolovercoretechnologiesandlocalizingproduction,manufacturing,andsupplychains,ithasbeencommittedtobuildingmilestonesforChina'shigh-end

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manufacturingintheoutboardmotorsector.ThismarkstheofficialentryofChineseenterprisesintotheglobalhigh-endmainstreammarketforoutboardmotors.

Electricoutboardmotorsuserechargeablebatteriesasanenergysourceandconvertelectricalenergyintokineticenergyviaanelectricmotor.Comparedwithfuel-poweredoutboardmotors,theyfeaturezeroemissions,lowernoise,andareeasiertooperate.ParsunPower’selectricoutboardmotorsprimarilyfocusonsmalltomediumhorsepower,mainlyusedinenvironmentallysensitiveareassuchastouristresorts.

Dieseloutboardmotorsretaintheadvantagesofgasolineoutboardmotors,suchaseaseofinstallation,maintenance,andoperation,whilealsoofferinggreaterfuelefficiency,loweremissions,highertorque,enhancedsafety,andeasiermaintenance,mainlyusedincommercialtransport,offshoreoilextraction,andpubliclawenforcementfields..ThedevelopmentofParsunPower’sown-branddieseloutboardmotorsisadvancingrapidly.

(2)Electrictrollingmotors

InMarch2025,ParsunPowerofficiallylauncheditsfirstintelligentelectrictrollingmotorproductattheCIBS2025.ThisproductisParsunPower’sfirstelectrictrollingmotorandalsoChina’sfirstelectrictrollingmotorproductwithafoldingstructure.Duringthedevelopmentprocessofthisproduct,ParsunPowerhasadheredtothe“high-endpositioning,positiveR&D”philosophyandperformedover40roundsofshapeoptimization,morethan70structuraladjustments,over100softwareversioniterations,andnearlyathousandwatertests,achievingcoretechnologyandproductionmanufacturingindependenceandcontrol.Theproducthasnowenteredthemassproductionanddeliveryphase.

(3)Generalmachines

Generalmachinesrefertoversatilepowersolutionsandassociatedend-useritems,featuringprimarilygeneralutilitysmallgasolinemotors,generalutilitysmalldieselmotorsandgeneratorsetsusingthemassupportingpower(likeemergencypowerkits,andfieldoperationpowersupplies),agriculturalequipment(e.g.,waterpumps,cultivators),gardeningmachinery(e.g.,lawnmowers,chainsaws),compactconstructiontools(e.g.,cutters,tampers,concretemixers,andlevelers),amongothermiscellaneousapplications.Theseproductsfindextensiveusageacrossvarioussectors.

ParsunPower’sgeneralmachineproductsmainlyincludegasolinemotors,gasolinegeneratorsetsandgasolinewaterpumpsets.Gasolinemotors,primarilysingle-cylinderfour-strokeunits,utilizegasolineasfuelandareadaptableforuseinagriculturalmachinery,gardeningequipment,andothersmallmachineryapplications.Gasolinegeneratorsetscombinethesemotorswithgenerators,functioningasstandbypowersources.Thegasolinewaterpumpsetsfeaturecentrifugalpumpsdrivenbygasolinemotorsandareextensivelyutilizedinagriculturalirrigation,livestockwatering,andsimilardomains.

ParsunPower’sgeneralmachineproductsaremainlysoldtoAfricaandWesternAsia.Withaleadingmarketlayoutandrelyingonexcellentproductqualityandstableperformance,ParsunPowerhasestablishedasignificantbrandadvantageandagoodmarketreputationintheseregions.

(4)Operationalmodel

Theoperationalmodelofthewaterpowersportsproductbusiness:Intermsofsales,ParsunPowerfollowsaglobalindustry-standardsalesmodelthatprimarilyreliesondistribution,supplementedbydirectselling.The

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demandforoutboardmotors,whicharethecompany’smainproduct,ismainlydistributedoverseas,withendcustomersscatteredthroughouttheworld.Adoptingadistribution-centricsalesmodelenablesParsunPowertoreachendcustomerstothefullestextentpossible.Intermsofproduction,ParsunPowerproducesoutboardmotorproductsindependently,utilizingsalesdemandforecasts,customerorders,productinventorystatus,materialdeliveryprogress,andproductproductioncyclestoformulateproductionplans.Thecompanythenorganizestheproductionofcomponentsinaccordancewithspecializedprocessesandprocedures.Inprocurement,followingtheprincipleof“salesdetermineproduction,productiondeterminesprocurement”,ParsunPowerdeterminestheprocurementrequirementsforitsoutboardmotorbusiness,whilealsotakingintoaccountreasonablesafetystock.Theoperationalmodelofthegeneralmachinebusiness:Basedonitsstrategicpositioningof“becomingaworld-classproviderofcomprehensivewaterpowersportsequipment”,ParsunPowerhasadjusteditsgeneralmachinebusinessfromtheearlyindependentproductionmodeltoanOEMoutsourcingmodel,tofocusitsresourcesonwaterpowersportsproducts.Accordingtotheprincipleof“salesdetermineprocurement”,whilealsotakingintoaccountreasonablesafetystock,ParsunPowerprovidesdesigndrawings,technicalspecifications,andqualityrequirementstotheOEMmanufacturers.Thesemanufacturersdirectlypurchaserawmaterials,carryoutcustomizedproduction,anddeliverfinishedproductsforParsunPower’sconfirmationbeforeshipment.

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PrimaryProductPortfolioofParsunPower

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IICoreCompetitivenessAnalysisTheanalysisoftheCompany’scorecompetitivenessintheReportingPeriodisasfollows:

(I)Industry-leadingtechnologyandstrongcapabilitiesofR&DandinnovationTheCompany’soverallR&Dcapabilitiesrankamongthetopindomesticenterprisesofthesametype.Bytheendof2024,theCompanyhadbeengranted491patents,anincreaseof71comparedtothepreviousyear;ithadalsobeengranted84softwarecopyrights,anincreaseof9comparedtothepreviousyear.

1.Thesmartcorrugatedpackagingequipmentbusiness:

Thehigh-endcorrugatedcardboardproductionlinesundertheFosberGroup,asubsidiary,isindustry-leadingintermsofspeed,width,accuracy,reliability,andlevelofintelligence.Ithasearnedglobalrecognitionfromcustomersforitshighquality,reliability,andintelligentsoftwaresystems.BasedonIndustry4.0technology,FosberGrouphaslaunchedacorrugatedcardboardproductionlinecontrolsystem,whichincludesmodulessuchasPro/Syncro,Pro/Care,andPro/Quality.Usingsensors,AR,AIanalytics,bigdata,andcloudcomputingtechnologies,itenableshighprecisionandintelligentmanagementofproductionlines.Amongthem,Pro/Syncroachieveshigh-speed,high-quality,andlow-energyconsumptionproduction;Pro/Careprovidesintelligentdiagnosticstoreduceequipmentdowntime;andPro/Qualityperformsreal-timedefectdetectionandqualitytraceability.FosberalsooffersremoteservicessuchasPro/VisionairandRemoteControl,significantlyreducingafter-salescostsandimprovingcustomerefficiency.FosberAsia,asubsidiary,hasintroducedandappliedthe“InstantSet”dual-moduleslitterincorrugatedcardboardproductionlines.Byindependentlycontrollingthecuttingbladesandcreaserswithservomotors,itreducestheorderchangeovertimefromtheindustryaverageof8-15secondstounder3seconds,makingitparticularlysuitableforChina’s“smallbatch,diverseproduct”ordercharacteristics.

HowFosberGroup’sPROSeriesIntelligentProductionManagementInformationTechnologySystemWorks

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WonderDigital,aholdingsubsidiary,isanationalhigh-techenterpriseanda“LittleGiant”Enterprisewithspecialties,refinedmanagement,uniquetechnologiesandinnovation.Itconnectsthephysicalanddigitalworldsthroughacompletedigitalprintingmatrix,offeringcomprehensivesolutions.WonderDigital’sbrandUVdigitalcolorprintersandhigh-speeddigitalprintersachieveaprintingaccuracyof1800NPI,withcolorprintingqualitycomparabletotraditionaloffsetprinting.ThenewproductWONDERINNOPROSINGLEPASSlaunchedin2024representsatechnologicalbreakthroughindigitalprinting,extendingfromcolortohigh-definitioncolors.Itslarge-width,roll-to-rollhigh-speeddigitalprintingmachineisleadinginChina,offeringadvantagesinsize,energyconsumption,andcost-effectiveness.

2.Thewaterpowersportsequipmentbusiness:

ParsunPowerisanational-level“LittleGiant”withspecialties,refinedmanagement,uniquetechnologiesandinnovationandahigh-techenterprise.Ithaslongfocusedontheresearchanddevelopmentofdomesticoutboardmotors,accumulatingrichinnovativeachievements.Bytheendof2024,thecompanyhadaccumulated114intellectualpropertyrightsandparticipatedintheformulationofseveralindustrystandards.IthasalsowonthesecondprizeoftheChinaMachineryIndustryScienceandTechnologyAwardtwice.In2021and2023,ParsunPowersuccessfullyachievedmassproductionof115-horsepowerand130-horsepowergasolineoutboardmotors.InMarch2024,ParsunPowerreleaseditsfirstdomesticallyproduced300-horsepowergasolineoutboardmotor,andin2025H1,ParsunPowerreleaseditsfirstdomesticallyproducedelectrictrollingmotors.Thecoretechnologiesoftheaforementionednewproductsareindependentlycontrollable,andtheirmanufacturingsupplychainshavebeenlocalized.ThishasbecomeanimportantmilestoneforChina'shigh-endmanufacturinginthefieldofwaterpowersportsequipment.

Inthefirsthalfof2025,ParsunPower’sHigh-powerOutboardMotorEmissionTestingCenterLaboratoryreceivedtheCNASLaboratoryAccreditationCertificatefromtheChinaNationalAccreditationServiceforConformityAssessment(CNAS).ThismadeParsunPowerthefirstcompanyintheChineseoutboardmotorindustrytoobtainCNAScertificationforaprofessionallaboratory,fillingthegapinChina’sspecializedtestingplatformforhigh-horsepowergasolineoutboardmotors.ThiscertificationhasfurthersolidifiedParsunPower’spositionasanindustrybenchmarkinthedomesticgasolineoutboardmotorfield.ItalsosignifiesthatParsunPower’sprofessionaltestinginthisspecializedfieldisnowonparwithinternationaltop-levelstandards,andthetestingreportswillbegloballyrecognized.

TheCNASlaboratoryaccreditationreceivedbyParsunPowerinthedomesticgasolineoutboardmotorfieldhelpsshortenR&DcyclesandreduceR&DcostsforParsunPowerinthedevelopmentandtestingofhigh-horsepoweroutboardmotors,thuscreatingamorecompetitivecoreadvantage.ItalsoprovidesstronglocalizedsupportforotherdomesticcompaniesinthesamefieldfortheR&D,production,andcertificationofhigh-performance,large-poweroutboardmotors.ThiscontributestothegreentransformationofChina’sshipbuildingindustryandtheachievementofthe“dualcarbon”goals.

Inthefirsthalfof2025,ParsunPowerwasawardedthe“NationalPostdoctoralResearchWorkstation”certificatebytheMinistryofHumanResourcesandSocialSecurityandtheNationalPostdoctoralAffairsManagementCommittee,whichmeansParsunPower’sresearchcapabilitiesinthefrontierfieldofwaterpowersportsproductsanditsabilitytonurturetoptalentandfosterindustry-academia-researchcollaborationhas

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gainednationalrecognition,andmarksanewmilestoneinthecompany’sscientificresearchstrengthandtalentdevelopment,aswellasfurtherenhancementofthecompany’stechnologicalimageandbrandinfluence.(II)Completelayoutinthecorrugatedpackagingmachineryindustrychainandthemostcompleteandrichestproductportfoliointheindustry

Amongdomesticcompaniesinthecorrugatedpackagingequipmentsector,DongfangPrecisionistheenterprisewiththemostcompleteandcomprehensiveindustrialchainlayout.Itsproductscoverthefieldsofcorrugatedcardboardproduction,cartonprintingandpackaging,anddigitalprinters.Thecompany'sbusinessencompassesallkeylinksinthecorrugatedpackagingproductionandprocessingvaluechain,anditpossessesthemostcomprehensiveanddiverseproductportfolioofcorrugatedpackagingproductionlineequipmentintheindustry.Thisenablesthecompanytomeettheneedsofdifferentmarketsegmentsandvarioustypesofcustomers,offeringdozensofdifferentspecificationsandmodelsoffull-lineandstandaloneproducts,makingittheleaderinthedomesticmarket.

1.Corrugatedcardboardproductionlines

Inthefieldof“High-EndIntelligentCorrugatedcardboardproductionlines“:FosberGroup,asubsidiary,offersthreemajorseriesofproductsofcorrugatedcardboardproductionlines:S/Line,Pro/Line,andQuantumLine,alongwithkeycomponentsforcorrugatedcardboardproductionlines,suchascorrugatingrollsandpressurerolls.Theseproductsaredesignedformediumtolarge-sizedenterprisesintheglobalcorrugatedcardboardproductionandprocessingindustry,providingmid-to-high-endcorrugatedcardboardproductionlinesinvariousspecifications,types,anddifferentpositioninglevels.

TheS/LineandPro/Lineareprimarilysuitablefortheproductionofcorrugatedcardboardwithathicknessof2mmto13mm.Thistypeofcorrugatedcardboardisknownforitsstrongload-bearingcapacity,excellentshockresistance,highplasticity,andenvironmentalfriendliness.Itiswidelyusedinlogisticsandexpressdelivery,furnitureandhomeappliances,andelectronicspackaging.TheQuantumLineismainlysuitablefortheproductionofsolidfiberboardunder2mmthickandmicro-corrugatedcardboard.Thistypeofcardboardislightweight,highinstrength,moisture-resistant,andenvironmentallyfriendly.Itiswidelyusedinpackagingforcolorboxes,high-endproducts,electronics,andculturalandartisticitems.TheTiru?abrand’scorrugatingrollsandpressurerollsarecompatiblewithvariousbrandsanddifferentspecificationsofcorrugatedcardboardproductionlines.Theycanbecustomizedbasedonthetypeofcorrugatedline,coatingrequirements,andapplicablepapertypes.

2.Corrugatedboxprintingandpackagingproductionlines

DongfangPrecision(China)andDongfangPrecision(Europe)offerhigh-qualitycorrugatedboxprintingandpackagingproductionlinesandstandaloneequipmentforboththeChineseandoverseasmarkets.Theyofferdozensofdifferentspecificationsandmarketpositioningproducts,coveringfixed/open-closetype,top-print/bottom-print,full-line(line)/standalonemodels,makingthemthemostcomprehensiveanddiversesuppliersofproductsinthisfieldglobally.

3.Digitalprinters

WonderDigitaloffersfourmajorseriesofdigitalprintingmachines,coveringawiderangeoftypesandspecifications,frompost-printingtopre-printing,fromwater-basedinkstodyesandpigments,fromwater-based

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spotcolorstoUVspotcolors,andfromcartonsandcolorboxestocoiledmaterials.Themachinessupportvariousapplicationmodesandscenarios,includingsingle-sheetprintingtovariabledataseamlessjobchangeover,standaloneprintingtoERPintegration,amongothers.WonderDigitalpositionsitselfasa“digitalprintersupermarket,”meetingtheneedsofdifferentmarketsandindustrycustomersatvariouslevelsfordigitalprintingproduction.(III)ProfoundKnow-HowexperienceandexperiencedteamintheindustryDongfangPrecisionhasateamwithdeepindustryKnow-howandextensiveexperience.Withover20yearsofexperienceinbothdomesticandinternationalmarkets,theteamhasaprofoundunderstandingoftheindustrylayout,developmentplanning,R&Droadmap,productionoperations,marketing,andteammanagementinthefield;Thecoremanagementteamhasabroadvisionandisabletodeeplygrasptheoveralldevelopmenttrendsofthesmartcorrugatedpackagingequipmentmanufacturingindustry.Throughforward-lookingstrategicplanningandlayout,thesteadyandsustainabledevelopmentoftheCompanyisachieved.Furthermore,theCompanypracticesaprofessionalmanagermanagementmodel,continuouslyimprovingorganizationalstructure,managementauthority,incentivesystems,andculturaldevelopment.ThesemeasureshelptheCompanyattracttalentandenhancetheteam’scombateffectiveness.

(IV)HighbrandpopularityandcustomerrecognitionworldwideIntelligentPackagingEquipmentSector:TheFosberbrandcorrugatedlines,Quantumcorrugatedlines,Tiru?abrandcorrugatingrollsandpressurerolls,aswellasDongfangPrecisionbrandcorrugatedboxprintingandpackaginglines,andWonderDigitalbranddigitalprinters,arewell-knownandinfluentialbothdomesticallyandinternationally.FosberGroup,asubsidiary,wasfoundedin1978andisoneofthetwocompanieswiththestrongestcomprehensivestrengthinthehigh-endcorrugatedlinesectorworldwide.TheFosberbrandenjoysahighlevelofrecognitionandreputationinthecorrugatedpackagingindustrymarketsinEurope,NorthAmerica,andLatinAmerica.Tiru?aGroup,anothersubsidiary,hasnearly40yearsofexperienceinthefieldofcorrugatingrollsandpressurerolls,withitsproductsbeingsoldinover60countriesandregions.Qcorr,asubsidiaryformerlyknownastheItaliancorrugatedlinesupplierAgnati,hasover80yearsofindustryexperience.DongfangPrecisionbrand’scorrugatedboxprintingandpackaginglinesaresoldinmorethan60countriesandregions.TheholdingsubsidiaryWonderDigitalisinthetoptierofthedomesticdigitalprinterfield,withitsproductssoldinover80countriesandregionsandamarketstockofover1,600units.

WaterPowersportsEquipmentSector:ParsunPower,asubsidiary,isaleadingcompanyinthedomesticoutboardmotorindustry.From2020to2022,ParsunPower’soutboardmotorproductsmaintainedthehighestnationalmarketshareforthreeconsecutiveyears.TheParsunPowerbrandhasreceivednumeroushonors,including“JiangsuProvinceFamousBrandProduct”and“SuzhouFamousBrandProduct”.Overseas,ParsunPower’ssalesnetworkcoversmorethan100countriesandregions,establishingbusinesspartnershipswithnumerouscustomersworldwide.

(V)Globallayoutofbusinessassets

TheCompanymainlyservescustomersinthecorrugatedpackagingindustryworldwide,andhasrealizedthegloballayoutofitsbusinessassets:

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InAsia,theCompanyhasthreeR&Dandmanufacturingbases,locatedinFoshan,Suzhou,andShenzhen.InEurope,theCompanyhasfourR&Dandmanufacturingbases,locatedinItalyandSpain.Additionally,theCompanyhasproductionbasesandserviceoutletsintheUnitedStatesandMexico.TheinternationalmarketingandservicenetworkenablestheCompanytoprovideproducts,equipment,andtechnicalservicestoindustryclientsinover100countriesandregions.Italsohelpsintegrateglobalresources,improveresourceallocationefficiency,achievecomplementaryadvantages,reducecosts,andrealizethebenefitsofoptimalresourcedistribution.

GlobalDistributionDiagramoftheCompany’sBusinessAssetsandMarketingNetwork

(VI)Strongcapabilitiesofstrategiccontrolandintegration

Sincegoingpublic,DongfangPrecisionhascontinuouslyexpandedupstreamanddownstreaminitscoreindustries.Overmanyyearsofpractice,theCompanyhasdevelopedstrongstrategiccontrolanddeepintegrationcapabilitiesacrossitsbusinesssegments,accumulatingrichexperienceandpracticalknowledge.StrategicmanagementcapabilitieshavebecometheCompany'scorestrengthinsuccessfullymanagingitsvariousbusinessentities.

Inpractice,theCompanyhasdevelopedasetofeffectivepost-investmentintegrationmanagementmethodsbydeeplyunderstandingtheindustry,forecastingindustrytrends,andfocusingonstrategicgoals.Thesemethodsincludecorporategovernancestandardizationpolicy,the“BoardofDirectors-SupervisoryCommittee-GeneralMeeting”operationmechanism,thestrategicandfinancialcontrolsystem,decentralizedauthorizationmanagement,completeaudits,andmanagementincentives,formingasetofmeasuresforeffectivecontrolsforpost-investmentintegrationwiththeCompany’sowncharacteristicstosecuretheeffectiveimplementationofthestrategicplan.

?Corrugatedcardboardproductionlines:FosberGrouprecordedacompoundannualgrowthrate(CAGR)

ofnetprofitof25%overthepastfiveyears

SinceacquiringthecontrollingstakeinFosberItalyin2014,DongfangPrecisionanditsmanagementteamhaveimplementedaseriesofeffectiveintegrationmeasures,includingadjustingstrategicplanning,business

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strategies,standardizingthemanagementsystem,managementincentives,andstrengtheningfinancialcontrol.ThesemeasuressuccessfullyenergizedFosberGroup,achievingacompoundannualrevenuegrowthrateofabout12%andacompoundannualnetprofitgrowthrateof25%from2020to2024.?Waterpowersportsproducts:ParsunPower’sCAGRsofoperatingrevenueandnetprofitachieved22%overthepastfiveyearsSinceacquiringthecontrollingstakeinParsunPowerin2015,DongfangPrecisionhashelpedParsunPowerenhanceitsR&D,marketing,supplychain,andmanufacturingthroughstrategicadjustmentsandtheintroductionofoutstandingtalent.Between2020and2024,ParsunPowerachievedacompoundannualgrowthrateof22%inbothrevenueandnetprofit.?Revitalizingestablishedenterprises:Tiru?aGroupandQCorrFrom2019to2020,DongfangPrecisioncompletedtheacquisitionofTiru?aGroupandQcorr(formerlyItaly’sAgnati)throughitssubsidiaryFosberGroup.Duringthepost-investmentintegrationphase,continuousoptimizationandadjustmentsinstrategy,R&D,marketpositioning,production,andtalentmanagementeffectivelyrevivedthesetwolong-establishedEuropeancompanies..Relyingonstrongstrategicmanagementandintegrationcapabilities,andbasedonmutualrespectandmutualtrustwithanopenmindset,theCompanyhassuccessfullyintegrateditsbusinessentities.Thesynergiesalongtheindustrialchaincontinuetobereleased,contributingtotheactivepracticeofChina’sprivateenterprisesgoingglobal,accumulatingvaluableexperience,andprovidingstrongsupportfortheCompany’ssustainableandsteadydevelopment.

(VII)Goingglobalandbringingin,integratingdomesticandinternationalindustrialChainadvantages,andstrengtheningthecompetitivemoat

Overtheyears,DongfangPrecisionhasactivelyimplementedthe“GoGlobal,BringIn”strategyinthecorrugatedpackagingequipmentsector,throughearlyoverseasexpansionanddomesticmanufacturingupgrades.Whilemaintainingtechnologicalleadershipintheindustry,theCompanyeffectivelyreducescostsbyleveragingtheadvantagesofChinesemanufacturing,improvingproductcost-effectivenessandmarketadaptability,therebyenhancingthecompetitiveadvantageofitsproductsandcontinuouslybuildingamoatinthedomestichigh-endcorrugatedpackagingequipmentsector.

SubsidiariesFosberAsiaandTiru?aAsiahaveintroducedFosber’scorrugatedcardboardproductionlinesandTiru?a’scorrugatingrollsandpressurerolls,adaptingandupgradingthemtomeettheactualneedsoftheChinesemarket.Thishasachievedtechnologylocalizationandmanufacturingdomestication,fullyleveragingChina’sadvantageastheworld’smostcompleteindustrialandmanufacturingsupportnetwork,significantlyloweringproductioncostsandimprovingproductcompetitiveness.Fosber’sdomesticmanufacturingrateformid-to-high-endcorrugatedlineshasreached90%,andTiru?aAsiadelivereditsfirstbatchofmass-producedcorrugatingrollsandpressurerollsin2024.Thedevelopmentofbothcompaniesfullyembodiestheintegrationofdomesticandforeignindustries,creatingdifferentiatedcompetitiveadvantagesfordomestichigh-endsmartequipment,andexpandingintonewmarketsinChinaandregionslikeSoutheastAsiaandSouthAsia.

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IIIAnalysisofPrincipalOperations

(I)OverviewInthefirsthalfof2025,China’snationaleconomymadesteadyprogressandachievednewresultsinhigh-qualitydevelopment.Theintelligenttransformationandupgradingofthemanufacturingindustrycontinuedtodeepen,andnewproductiveforceswereactivelydeveloped.UnderthestrongleadershipoftheBoardofDirectorsandthemanagementteam,allemployeesworkedhardandmadeprogressinthefirsthalfof2025,achievingstablegrowthintheCompany’soperationperformance.FromJanuarytoJune2025,theCompanyachievedtotaloperatingrevenueofapproximatelyRMB2,159million,ayear-on-yeardecreaseof0.1%.ThenetprofitattributabletoshareholdersofthelistedcompanywasapproximatelyRMB397million,ayear-on-yearincreaseof142.52%.Thenetprofitattributabletoshareholdersofthelistedcompany,excludingnon-recurringgainsandlosses,wasapproximatelyRMB256million,ayear-on-yearincreaseof12.12%.(II)PerformanceofprincipaloperationsduringtheReportingPeriod

1.ThebusinessdivisionofwaterpowersportsequipmentInthefirsthalfof2025,thecontrolledsubsidiaryParsunPowerachievedoperatingrevenueofRMB485million,ayear-on-yearincreaseofabout28%,andanetprofitofRMB58million,ayear-on-yearincreaseof13%.Bothrevenueandprofitsetnewhistoricalhighsforthefirsthalfoftheyear.Since2021,ParsunPowerhasenteredafastgrowthphase.Inthefirsthalfof2025,itsoperatingrevenueandnetprofitbothmorethandoubledcomparedtothefirsthalfof2021.

Breakingintothehigh-endoutboardmotormarket,andcompletingmassproductionanddeliveryof300-horsepowergasolineoutboardmotors:FollowingthelaunchofChina’sfirst300-horsepowergasolineoutboardmotorin2024,ParsunPowermadeextensiveeffortstowardmassproduction,andsuccessfullyachievedthemassproductionanddeliveryofthe300-horsepowergasolineoutboardmotorinMarch2025,makingitthefirstcompanyinChinatomass-producethismodel.ThisachievementfilledthegapinChina’shigh-horsepowergasolineoutboardmotormanufacturingsector,makingChinathethirdcountryintheworld,aftertheUnitedStatesandJapan,tosuccessfullymass-producea300-horsepowergasolineoutboardmotor.China’soutboardmotorindustrywasdrivenfromthe“follower”stageintothe“competitor”stageinthefieldofhigh-horsepowergasolineoutboardmotormanufacturingandsales.

Launchingthefirstelectrictrollingmotor,andcreatinganewgrowthcurveforwaterpowersportsproducts:Whileconsolidatingitscompetitiveadvantageinoutboardmotors,ParsunPowerhasexpandeditsscopetobecomea“asupplierofcomprehensivewaterpowersportssolutions”basedonyearsofprecipitationandaccumulationinoutboardmotors.Byopeningupnewproductlines,itiscreatinganewgrowthcurve.InMarch2025,ParsunPowerofficiallylauncheditsfirstintelligentelectrictrollingmotorattheCIBS2025.ThisproductisParsunPower’sfirstelectrictrollingmotorandalsoChina’sfirstelectrictrollingmotorwithafoldingstructure.ParsunPoweradheredtothe“high-endpositioning,positiveR&D”philosophyinthedevelopmentofthis

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product.Afterover40roundsofshapeoptimization,morethan70structuraladjustments,over100softwareversioniterations,andnearlyathousandwatertests,itachievedindependenceandcontrolovercoretechnologyandproductionmanufacturing.Theproducthasnowenteredthemassproductionanddeliveryphase.Drivingefficiencyimprovementthroughdigitalandintelligentoperationstosupportrapidperformancegrowth:Inthefirsthalfof2025,ParsunPowerlaunchedtheU9ERPsystem,whichsignificantlyimprovedtheautomationleveloftheentireprocessof“sales,planning,production,anddelivery”,andeffectivelyenhancedmanagementperformanceinsupplychainmanagement,productionmanufacturing,andfinancialmanagement.Inventoryturnoverdayssignificantlydecreasedcomparedtothesameperiodin2024,andnetoperatingcashflowincreasednoticeablyduringthesameperiod.Theimprovementinoperationalefficiencyplayedasignificantroleinthegrowthofoutboardmotorpartssalesrevenueinthefirsthalfoftheyear.Throughinternalmanagementprocessimprovements,thedeliverytimeforpartssaleswasgreatlyshortened,withover90%ofpartsordersbeingdeliveredwithinonemonth.Thesalesofpartsincreasedbymorethan50%year-on-year.ApprovedasChina’sfirstCNASlaboratory,furtherstrengtheningtechnologicaladvantages:InJune2025,ParsunPower’sHigh-powerOutboardMotorEmissionTestingCenterLaboratoryreceivedtheCNASLaboratoryAccreditationCertificatefromtheCNAS,becomingthefirstCNAS-certifiedprofessionallaboratoryinChina’soutboardmotorindustry.ThisfilledthegapinChina’sspecializedtestingplatformforhigh-horsepowergasolineoutboardmotorsandfurthersolidifiedParsunPower’spositionasanindustrybenchmarkinthedomesticgasolineoutboardmotorsector.Additionally,ParsunPowerwasapprovedtoestablishaNationalPostdoctoralResearchWorkstationduringtheReportingPeriod,whichmeansParsunPower’sscientificresearchstrength,high-endtalentcultivation,andindustry-academia-researchcollaborationgainednationalrecognition,andhasfurtherenhancedthecompany’stechnologicalimageandbrandinfluence.

Makingparallelgrowthindomesticandinternationalmarketsthroughinnovativeanddiversifiedmarketingapproaches:In2025,ParsunPowerventuredintolive-streame-commerce,collaboratingwithcommercialpartnerstohostseverallive-streamingeventsontheDouyinplatform.Thisdirectapproachhelpedbridgethegapbetweenthecompanyandendconsumersandstrengthenmutualrecognition.ParsunPowerisgraduallybuildingamarketingloopof“onlinetrafficgeneration,offlineexperience,andfull-scopeconversion”,andcreatinganewomni-channelmarketingmodelwith“onlineandofflinesynergy”.ThecompanyalsopromoteditselectrictrollingmotorproductsbysponsoringLurefishingcompetitionstograduallybuildbrandrecognitionandreputationintherecreationalfishingfield.Furthermore,inthefirsthalfoftheyear,ParsunPowerparticipatedinmajordomesticexhibitionssuchasthe2025ShanghaiInternationalYachtShow,the2025CantonFair,andtheCIBS2025,theCantonFair2025,andtheShanghaiInternationalEmergencyDisasterReduction&RescueExhibition.ThecompanyalsostrengtheneditsmarketexpansioninEuropeandSoutheastAsia,withafocusonLatinAmericanandAfricanmarkets.Intermsofgeneralmachinebusiness,ParsunPower’srevenuefromthissegmentgrewbyover80%inthefirsthalfof2025comparedtothesameperiodin2024,becomingastrongsupportforthecorebusinessdevelopmentofParsunPower’swaterpowersportsproducts.

Newheadquartersputintouse,openingthe2.0era:ParsunPower’snewheadquartersinSuzhou,Jiangsu,officiallybeganoperationsinMay2025.Thelaunchofthenewheadquarters,featuringintelligentproduction

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workshops,a300-horsepoweroutboardmotorassemblyline,androboticsprayingtechnology,willlaythefoundationforfurtherimprovingParsunPower’sbusinessperformance.Between2020and2024,ParsunPowerachievedarapidgrowthrate,withaverageannualcompoundgrowthratesofmorethan20%inbothrevenueandnetprofit.Thecompanysuccessivelylaunched115-horsepower,130-horsepower,and300-horsepowergasolineoutboardmotors,fillingmanygapsintheChinesegasolineoutboardmotorsectorandachievingremarkableaccomplishments.Basedontherapiddevelopmentofthepastfiveyears,thecompletionanduseofthenewheadquartersmarksthebeginningofParsunPower’s“2.0Era”.Itwillcontinuetofocusonthetrendsof“high-horsepower,electrification,andintelligence”inthemarinepowerfield,providingcomprehensivewaterpowersportssolutionsandproductsforcustomersacrossvariousfieldsandscenarios.BuildingonitssolidpositionasanindustryleaderinChina,ParsunPoweraimstobenchmarkagainsttopinternationalenterprises,regardinnovationasitsdrivingforceandfull-industrychaincollaborationasitssupport,andstrivetobecomeaworld-classproviderofcomprehensivewaterpowersportsequipment.

2.ThebusinessdivisionofintelligentpackagingequipmentA.Thesegmentofcorrugatedcardboardproductionlines■Overseasbusinessunit:StablemarketsinEuropeandNorthAmerica,steadyexpansioninemergingmarkets,andcontinuousimprovementininternalcollaboration

Inthemid-tohigh-endcorrugatedcardboardproductionlineindustryinthecoremarketsofEuropeandNorthAmerica,thecontinuedmergerandintegrationoflargegroupcompaniesamongthetopinmarketshareintheEuropeanandAmericanpaperpackagingindustry,whichbeganin2024,haveledtoaslowdownincapitalinvestmentinthesector.However,FosberGrouphasmaintainedstable,long-termcooperativerelationshipswiththeindustryleadersandlargeenterprisesintheaboveEuropeanandAmericancorrugatedpackagingindustryformanyyears.DuringtheReportingPeriod,FosberGroupcontinuedtocloselyfollowtheinvestmentplansofitsindustrycustomersandcollaboratedeeplywiththem.Inthefirsthalfof2025,FosberGroup’soverallnewordersremainedstable.Lookingahead,uponcompletionofthemergerandintegrationofmajorplayersinthedownstreampaperpackagingindustry,theinclinationtoinvestinlarge-scale,high-capacity,andintelligentfactorieswillbenefitFosberGroup’ssteadygrowth,asithasdeepcompetitivebarriersandaleadingmarketshareinthemid-tohigh-endintelligentcorrugatedcardboardproductionlinemarketinEuropeandNorthAmerica.

Amidtheslowinggrowthincoremarkets,FosberGrouphasactivelyexploredemergingmarketslikeLatinAmericaandAfrica.In2024,Fosberestablishedanewsubsidiary,FosberMexico,whichhasshownpositivemomentuminbusinessdevelopmentinthefirsthalfof2025.Thissubsidiaryisexpectedtobecomethecoreregionforafter-salessparepartsbusiness,coveringtheentireLatinAmericanmarket,thusprovidingstrongsupportforFosberGroup’smarketexpansionandsalesgrowthintheLatinAmericanregion.

Enhancingindustrialsynergyandcontinuouslyreducingcostsandincreaseefficiency:DuringtheReportingPeriod,FosberGroupcontinuedtodeepencollaborationbetweenitsthreemainproductlines:Fosber-brandedcorrugatedline,Quantum-brandedcorrugatedline,andFosberAsia’sdomesticcorrugatedline.Inthefirsthalfoftheyear,FosberGroupmadepositiveprogressincollaborationandintegrationwithitssubsidiaryQcorrinoperationsandafter-salesservice.Additionally,collaborationbetweenFosberGroupandFosberAsiainR&D,as

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wellasprojectimplementation,alsomadepositivestrides,contributingtoimprovedcostmanagementandoperationalefficiencyintheoverallcorrugatedcardboardproductionlinebusinesssegment.

■Domesticbusinessunit:Record-highperformance,significantincreaseindomesticmarketorders,andsuccessfullaunchofanewfactory

FosberAsia,asubsidiaryofFosber,ispositionedasadomesticmid-andhigh-endcorrugatedcardboardproductionlinesupplierbasedinChinaandspanningtotheAsianmarket.Inthefirsthalfof2025,FosberAsiaachievedimpressiveresultsinthedomesticindustrymarket,withnewordersreachingarecordhigh.FosberAsia’soperatingrevenueandnetprofitduringtheReportingPeriodbothachievedthebesthalf-yearperformanceinnearlyfiveyearssince2021,withsignificantyear-on-yeargrowthinbothcompletelinesandsparepartsservicesales.

Intermsofresearchandproductdevelopment,S-line,adomesticmid-andhigh-endcorrugatedlineofFosberAsia,launchedanewlineproductof3.15-meter-widecorrugatedcardboardinthefirsthalfoftheyear,whichwassuccessfullysoldinthedomesticmarket.Inproductionandoperations,FosberAsiaachievedahistoricalhighinthenumberofcorrugatedlineprojectscompletedinthefirsthalfoftheyear.Throughimprovementsininternaloperationmanagement,productqualityandqualificationratewereimproved,andtheproductcoststructurewasfurtheroptimized.FosberAsiahascontinuedtostrengthenitsmarketcompetitivenessbybalancing“high-endtechnologicalbreakthroughs”and“domesticmanufacturingcostreduction”.

InJune2025,FosberAsia’snewfactorywassuccessfullycompletedandputintooperation.Thenewfactoryhasadesigncapacityof40linesperyear,providingstrongsupportforthegrowthofFosberAsia’sbusinessperformance.

B.Thesegmentofcorrugatedboxprintingandpackaginglineequipment

Overseasmarket:Inthecontextofmanydomesticpeersexpandingoverseas,DongfangPrecision’scorrugatedboxprintingandpackagingequipmentproducts,undertheDongfangPrecisionbrand,havecontinuedtoachievesuccessinexpandingintooverseasmarkets.Withyearsofaccumulatedgoodwill,leadingtechnologylevels,high-qualityproducts,andarobustsalesandservicesystem,theCompanyhassteadilyadvanceditsinternationalbusiness.DuringtheReportingPeriod,DongfangPrecision(China)adoptedan“agencysales+directsales”modelforitsoverseasbusiness.Thecompany’soverseasbusinesspersonnelhavecontinuouslyincreasedeffortstoexpandtheoverseasdirectsalesmarket,focusingonthe“BeltandRoad”countries,andmadeprogressinmarketssuchastheMiddleEastandSoutheastAsia,withthenumberandvalueofordersreceivedforjoint-lineprojectsintheinternationalmarketinthefirsthalfoftheyearexceedingthesameperiodlastyear.

Operationmanagement:DongfangPrecision(China)hascontinuouslypromotedenergyconservation,consumptionandcostreduction,andefficiencyimprovement.Thecompanyhasimplementeda“digitalworkshop”approachbyintroducingintelligentequipment,datacollection,dataanalysis,productionprocessoptimization,andartificialintelligenceassistance.Thisinitiativehasconsistentlyoptimizedaspectssuchasorderprogress,productionperformance,capacityanalysis,qualitymanagement,producttraceability,andinventorymanagement.DuringtheReportingPeriod,DongfangPrecision(China)deeplypromotedsupplychainmanagementandproductionprocessimprovements,andcontinuedtooptimizecostcontrol.

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Digitalprinterbusiness:Thecontrolledsubsidiary,WonderDigital,launchedanupgradedversionofits“MULTIPASS-SINGLEPASSDigitalHybridPrinter”.Withitsinnovative“dual-modeintegrationtechnology”,theproductcanmeetthediversifiedprintingneedsforvarioussizesandhelpcustomersreducecostsandincreaseefficiency.Thisproducthasgainedpopularityinthedomesticmarketbroughtthecompanyaconsiderablenumberofordersinthefirsthalfoftheyear.DuringtheReportingPeriod,salesofinkconsumablesandaccessoriesforWonderDigital’sdigitalprinterscontinuedthestronggrowthtrendseenin2024,withthesupportingeffectcontinuingtoshow.

3.Thesegmentofexternalinvestments

Whilefocusingonthetwocorebusinesssegments,theCompanyplaceshighimportanceonexternalexpansionthroughequityinvestments.Adheringtotheprincipleof“theprincipalbusinessesasthecore+extendedinvestmentasthesupport”,theCompanyleadsandcoordinates“organicgrowth+externalexpansion”withthe“1+N”developmentmodel.

“1”referstofocusingonthecorebusinessesofhigh-endintelligentequipmentmanufacturing(corrugatedpackagingequipment+waterpowersportsequipment),firmlyestablishingitsfoundationalposition,continuouslystrengtheningandexpanding,andenhancingcorecompetitivenesstomaintainandincreasemarketshareamidstthetrendsofdigitalizationandintelligence.“N”referstoexternalexpansion,whichcanincludethefollowingthreeaspects:

(1)DeepeningChainExtension:MergersandAcquisitionsSynergy,StrengtheningCoreMoat

BuildingontheadvantagesofDongfangPrecision'smainbusiness,theCompanyfocusesonacquiringhigh-qualitycompanieswithinthesameindustrychainglobally.Byverticallyintegratingthesupplychain,itimplementsprecisemergersandacquisitionsofhigh-qualitytargetsinrelatedfields.Aftertheacquisition,theCompanyperformsdeepintegration,outputskeycapabilities,andstimulatesinternalindustrychainsynergiestofurtherstrengthenitscorebusinesses.

(2)BreakingBoundariesforEcologicalCo-Creation:StrategicInvestmentandCo-CreationofStrategicEmergingIndustry“NewProductivePowerClusters”

TheCompanyfocuseson“newproductivepower”,whichisacorethemeofdevelopingstrategicemergingindustriesandfutureindustriesdesignatedbythecountry.Itcloselyfollowsthenationaldirectionofdevelopingnewproductivepowerandtargetsthetwomajordirections:strategicemergingindustriesandfutureindustries.TheCompanyhasdefinedtwokeyfieldsforitsexternalexpansionstrategy:“artificialintelligence+robotics”and“keystructuralmaterialsforcontrollednuclearfusion+nuclearpowerequipment”,withanindustrialchaininvestmentlayoutforkeyareas.Inthefirsthalfof2025,theCompany’sexternalinvestmentbusinesseffortsweremainlycenteredon“strategicinvestment”asfollows:

■“Artificialintelligence+robotics”

Inthe2025governmentworkreport,Chinaincluded“embodiedintelligence”and“intelligentrobots”aspartofthenationalfutureindustrydevelopmentdirection,markinganewopportunityfortheintelligentupgradingofChinesemanufacturing.DongfangPrecisionisimplementinga“cluster-basedstrategicinvestment”approachtodeepenitsindustriallayoutinroboticsandembodiedintelligence.

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Inthefirsthalfof2025,theCompanymadeanequityinvestmentinLejuRobot,acquiringa2.83%stake.LejuRobotisanationalspecialized,refined,featuredandinnovative“LittleGiant”enterprisethatfocusesoncorerobotictechnologyresearch,intelligentrobotproductdevelopment,andproduction.Thecompanypossessesfullyindependentintellectualpropertyrightsforhardwareandcontrolsystemsandhasadvancedtechnologiesinareassuchasoverallstructuraldesignofrobots,corecomponentmanufacturing,andAIalgorithmdevelopment.Ithaslaunchedseveralintelligentrobotproductsandderivatives,withacontinuedfocusonrobotapplicationsindiversescenariossuchasindustrialintelligentmanufacturing,commercialservices,researchandeducation,andhomeservices.Followingthisequityinvestment,DongfangPrecisionnowhasthreeequityinvestmentprojectsinthe“artificialintelligence+robotics”field,forminga“cluster-basedstrategicinvestment”landscape:

Note:TheshareholdingpercentagesintheabovetablearebasedonthebusinessregistrationinformationoftherelevantinvestedcompaniesasofJune30,2025.Anydifferencesindecimalplacesareduetoroundingtotwodecimalplaces.

DongfangPrecision’sstrategicinvestmentinthe“artificialintelligence+robotics”fieldaimstocreateamodelof“strategicinvestment+industrialcollaboration”.BycombiningDongfangPrecision’sresourcesandcapabilitiesintheequipmentmanufacturingindustrywiththeindustry-leadingtechnologies,products,andapplicationexperiencesoftheinvestedcompaniesinroboticsandAIlargemodels,theCompanyseeksefficientintegration.Thiscollaborationaimstoexplorecooperationinproductionmanufacturing,applicationscenarios,andmarketexpansion,fosteringtheco-creationandsharedvalueoftheindustrychain.

InJuly2025,theCompanysigneda“StrategicCooperationAgreement”withLejuRobot,whichfullyreflectsDongfangPrecision’sstrategyofbuildinga“strategicinvestment+industrialcollaboration”modelinthe“artificialintelligence+robotics”field.Thetwopartieswillinitiateanddeepencooperationbasedonprojectcollaborationandcomplementaryadvantages,leveragingLejuRobot'technologicalR&Dandapplicationstrengths,aswellasDongfangPrecision’sadvantagesinintelligentmanufacturingandresources.Theareasofcooperationinclude,butarenotlimitedto:

a.Production,manufacturingandservices:DongfangPrecisionwillproduceandmanufacturehumanoidrobotproductsforLejuRobotaccordingtothecompany’stechnologystandardsandcapacityrequirementsinatimelyandquality-assuredmanner,aswellassubsequentdebugging,deployment,andafter-salesservices.

b.Applicationexpansion:LejuRobotwillprovideservicesolutions,whileDongfangPrecisionwillleverageitsstrengthsinintelligentmanufacturingtojointlyexplorehumanoidrobotskillstrainingandapplications.

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c.Marketexpansionandpromotion:DongfangPrecisionwillassistLejuRobotinpromotingrobotproductsinthefieldsofindustrialintelligentmanufacturing,commercialservices,researchandeducation,andhomeservicesbyutilizingitssocialandindustryresourceadvantages.Bothpartieswilljointlyexpandthemarket.Withthesubsequentimplementationofcooperationmeasuresinthethreeareasmentionedabove,DongfangPrecisionwillfullyleveragetheadvantagesithasaccumulatedovernearlythreedecadesinthehigh-endintelligentequipmentmanufacturingfield,includingexperienceinlarge-scaleproductionandefficientoperationmanagement.TheCompanywillcollaboratewithLejuRobottojointlypromotethelarge-scalemanufacturingprocessofhumanoidrobotproducts.RelyingonDongfangPrecision’sresourceadvantagesinitscorehigh-endintelligentequipmentbusinessandexternalinvestments,theCompanywillhelpopenbroaderapplicationscenariosforLejuRobot'products.Thiswilldrivetheenhancementanddeepeningofhumanoidrobots'applicationlevelsinindustrialmanufacturingandenablebothcompaniestojointlyexploreandexpandtheapplicationandmarketforroboticproductsacrossmultiplefields.WithintheboundariesofDongfangPrecision’scapabilities,theCompanywillacceleratetheapplicationandpopularizationofrobot-relatedproducts.■“Keystructuralmaterialsforcontrollednuclearfusion+nuclearpowerequipment”DongfangPrecisionmadeitsfirstequityinvestmentinGuizhouAerospaceXinliTechnologyCo.,Ltd.(hereinafterreferredtoas“AerospaceXinli”)in2021,acquiringa3.86%stakeinit.Inthefirsthalfof2025,theCompanyfurtherincreaseditsstakeinAerospaceXinli,andbytheendoftheReportingPeriod,DongfangPrecisionhelda19.89%stake(Note:TheshareholdingpercentageisbasedonthebusinessregistrationinformationoftherelevantinvestedcompanyasofJune30,2025,andanydifferencesindecimalplacesareduetoroundingtotwodecimalplaces).AerospaceXinlifocusesontheresearchanddevelopmentofhigh-endmetalmaterials,manufacturingofcastingsandforgings,andtheproductionofsupportingproductsinfieldssuchasnuclearenergy,aerospace,andaviation.Itscorecompetitivenessliesinthenuclearpowercomponentmanufacturingfield.AsoneoftheearliestcompaniesinChinatoobtainanuclearpowermanufacturinglicense,AerospaceXinli’sproductsareusedinalldomesticnuclearpowerprojectsthathavebeencompletedorareunderconstruction.Since2014,AerospaceXinlihasundertakenimportantmanufacturingtasksforoneofthelargestinternationalscientificresearchcollaborationprojectsglobally,the“InternationalThermonuclearExperimentalReactor(ITER)”,includingthemagnetsupportandshieldingcomponents.In2022,AerospaceXinliwasthefirsttocompletethemanufacturingofthe“FirstWallwithEnhancedThermalLoad”fortheITERproject.In2024,thecompanyexclusivelywonallproductordersforthemagnetsupportsystemoftheFusionNewEnergyBESTproject.

AerospaceXinlihasundertakenthedevelopmentandproductionofnuclearlevel-ImechanicalequipmentcomponentsformostofChina’snuclearpowerstationandhasbeendeeplyinvolvedinthelocalizationprocessofChina’snuclearpowerconstruction.Thecompanyhassuccessfullycompletedtheresearchandlocalizationofdozensoftypesofnuclearenergyequipmentalloymaterialsandkeycomponents.

DongfangPrecisionmadeitsfirstequityinvestmentinAerospaceXinliin2021andhaslonghighlyrecognizedthecompany’sstrongtechnologicalinnovationcapabilities,independentcontrolofkeycoretechnologies,productreserves,anditsleadingindustrypositionbothdomesticallyandinternationallyinnuclearpowercomponentsandspecialnewmaterials.TheCompanyremainsconfidentabouttheapplicationprospectsandtheimmensedevelopmentpotentialofAerospaceXinli’sproductsinfieldssuchascontrollednuclearfusion,

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nuclearpowerequipment,andaerospaceandaviation.DongfangPrecisionplanstoincreaseitsstakeinAerospaceXinliin2025andwillseekfuturecooperationinspecialnewmaterialsandnuclearenergycomponents,contributingtotheupgradingofChina’shigh-endequipmentmanufacturingindustry.

(3)PositioningonKeyCoreTracks:Forward-lookingInvestmenttoBuildFutureCompetitivenessDongfangPrecisionanditssubsidiaryYinengInvestmentfocusonindustriesthatalignwiththeCompany’sexternalinvestmentbusiness.Theseareasarecloselytiedtothecorethemeof“high-qualitydevelopment”inChina’smanufacturingindustryduringthe14thFive-YearPlanperiod.TheCompanycentersitseffortsaroundinnovation-drivengrowth,focusingonhard-techfieldssuchasaerospace,newmaterials,andotherindustrieswithsignificanttechnologicalbarriers,broadfuturedevelopmentpotential,andnationalstrategicvalue.DongfangPrecisionaimstoidentifyexcellentcompaniesinnichesectorsandobtainsmallequitystakesinthesecompaniesthroughinvestment(withpost-investmentshareholdingnotexceeding5%).YinengInvestmenthasmadeinvestmentsinaerospaceandaviation,suchasinSichuanTengdenUAVandEXPACE,aswellasinnewmaterials,investinginYunnanYuzeSemiconductor.TheseinvestmentsaimtoyieldgoodreturnswhileexploringnewdirectionsandopportunitiesfortheCompany’sdevelopment.

4.Analysisofkeyfinancialindicatorsofprincipaloperations

Unit:RMByuan

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Therehavebeennosignificantchangesinthecompositionorsourcesofthecompany'sprofitsduringthereportingperiod.Compositionofoperatingrevenue

Unit:RMB

OperatingDivision,ProductCategoryorOperatingSegmentContributingover10%ofOperatingRevenueorOperatingProfit

√Applicable□Notapplicable

Unit:RMB

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UnderthecircumstancesthatthestatisticalcaliberoftheCompany'smainbusinessdataisadjustedintheReportingPeriod,theCompany'smainbusinessdatathatadjustedaccordingtothecaliberattheendoftheReportingPeriod

□Applicable√NotapplicableIVAnalysisofNon-CoreBusinesses

√Applicable□Notapplicable

Unit:RMByuan

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VAnalysisofAssetsandLiabilities

1.SignificantChangesinAssetComposition

Unit:RMByuan

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2、OverseasassetsthattakeupalargepercentageoftheCompany’snetassetvalue:

√Applicable□Notapplicable

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3.AssetsandLiabilitiesatFairValue

√Applicable□Notapplicable

Unit:RMByuan

IndicatewhetheranysignificantchangeoccurredtothemeasurementattributesofthemajorassetsintheReportingPeriod.

□Yes√No

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4.AssetstowhichtheCompany’sRightsWereRestrictedasatthePeriod-End

Unit:RMByuan

VIInvestmentsMade

1.TotalInvestmentAmount

√Applicable□Notapplicable

2.SignificantEquityInvestmentsAcquiredintheReportingPeriod

□Applicable√Notapplicable

3.SignificantNon-EquityInvestmentsofwhichtheAcquisitionWasUncompletedintheReportingPeriod

□Applicable√Notapplicable

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4.FinancialInvestments

(1)SecuritiesInvestments

√Applicable□Notapplicable

Unit:RMByuan

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(2)InvestmentsinDerivativeFinancialInstruments

√Applicable□Notapplicable

1)DerivativeInvestmentsforHedgingPurposesintheReportingPeriod

√Applicable□Notapplicable

Unit:RMB'0,000

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2)DerivativeInvestmentsforSpeculativePurposesintheReportingPeriod

√Applicable□Notapplicable

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Unit:RMB'0,000

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5.UseofRaisedFunds

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.ⅦSaleofMajorAssetsandEquityInvestments

1.SaleofMajorAssets

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.

2.SaleofMajorEquityInvestments

□Applicable√NotapplicableNosuchcasesintheReportingPeriod.ⅧPrincipalSubsidiariesandJointStockCompanies

√Applicable□NotapplicablePrincipalsubsidiariesandjointstockcompanieswithanover10%effectontheconsolidatednetprofit:

Unit:RMByuan

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ⅨStructuredBodiesControlledbytheCompany

√Applicable□Notapplicable

1.InMarch2021,theCompanyestablishedTianjinHangchuangZhijinInvestmentPartnership(LimitedPartnership)(the"TianjinHangchuangFund")withAVICInnovationCapitalManagementCo.,Ltd.TheCompany,asthesoleLPoftheFund,subscribedforthePartnership'scontributionshareofRMB20,000,000.TheFundisaspecialfundwhichistoinvestintheequityofSichuanDajinStainlessSteelCo.,Ltd.(nowrenamedasChengduDajinAero-TechCo.,Ltd.).ThisinvestmentisinlinewiththeCompany’sdevelopmentstrategyconsideringtheFund’sinvestmentdirection,decision-making,management,incomedistribution,lossallocation,etc.Fromtheperspectiveofbusinessnature,theCompanyprovidesmuchofthecapitaloftheTianjinHangchuangFund,soitisreasonabletoincludetheFundintheCompany’sconsolidatedfinancialstatementsoftheReportingPeriod.

2.InMarch2022,thewhollyownedsubsidiaryYinengInvestmentindirectlyinvestedinBeijingSinoscienceFullcryoTechnologyCo.,Ltd.(referredtoas"Fullcryo"inthisReport)andSinoscienceFullcryo(Zhongshan)EquipmentManufacturingCo.,Ltd.bymakingacapitalcontributiontoalimitedpartnershipandobtainednon-controllinginterestsofthetwocompanies.

Asoneofthelimitedpartnersofthepartnership,YinengInvestmentaccountsfor94.86%ofthetotalcapitalcontributions.Consideringthepartnership'sagreementsoninvestmentorientation,investmentdecisions,operationandmanagement,incomeapportionment,andlossbearing,andthefactthatYinengInvestmentaccountsforthemajorityofthecapitalcontributionstothepartnership,thepartnershipisincludedintheconsolidatedstatementsofDongfangPrecisionasa"structuredbodycontrolledbytheCompany"fromtheperspectiveofcommercialsubstanceandaftercomplyingwiththeAccountingStandardforBusinessEnterprisesandreferringtotheprofessionalopinionsoftheindependentauditor.

Ⅹ.Possiblerisksandcountermeasures

1.Risksarisingfromfluctuationsinexchangerates

ThemainsettlementcurrencyandrecordingcurrencyofFosberGroup,theprincipaloverseasbusinessentityoftheCompany,areeuros,whiletherevenueofFosberAmericaanddomesticentitiesfromexportismainlysettledwiththeUSdollar.FluctuationsintheUSdollarandeuroexchangeratesdonotsignificantlyimpacttheroutineoperationofoverseasbusinessentitiesbutexertcertainimpactsonthepresentationoftheirassetsandoperatingresultsintheconsolidatedfinancialstatements.

Factorssuchasdomesticmacroeconomicconditionsandpolicies,changesintheFederalReserve’sinterestratecutexpectations,globalgeopoliticalandtradesituationchanges,centralbankmonetarypolicychanges,internationalbalanceofpayments,inflationrates,andinterestlevelscanallaffecttheRMBexchangerate.Underthecomprehensiveinfluenceofmultiplecomplexfactors,the

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volatilityoftheRMBforeignexchangemarkethassignificantlyincreased.

Countermeasures:

TheCompanycancloselytracktheglobalfinancialmarketandnationalexchangeratepolicies,maketimelydecisionstoselectproperexchangeratemanagementtoolstomanageexchangeraterisksactively.ItcanalsoreduceriskexposureandincreaseexchangegainsbyincreasingdebtsofforeigncurrencyandrelyonGroupmanagementtostrengthenthelevelofcapitalcoordinationindifferentcountriesandregions,balance,andoffsetfluctuationrisksattheGrouplevel.

2.Potentialrisksoffinancialinvestmentbusiness

Inrecentyears,theCompanyhasarrangedsomeofitsidleownedfundstocarryoutfinancialinvestmentbusinesssuchassecuritiesinvestmentandentrustedwealthmanagementinanappropriatemanner,basedontheactualanddevelopmentneeds.Therearecertainrisksofcarryingouttheabovebusinessduetofluctuationsinthefinancialmarketanduncertaintyofincome;andtheriskthattheCompanymaysuffercertaininvestmentlossesincaseofriskeventsintheprocessofwealthmanagementactivitiesintermsofinvestmentstrategiesanduseoffunds.

Countermeasures:

Onthepremisethatthefundsrequiredforthedailyoperationofthemainbusinesswillnotbeaffected,theCompanyreasonablycontrolsthecapitalscaleforfinancialinvestment;itestablishesandimprovestheinternalcontrolsystemandmechanismstandardsforsecuritiesinvestmentandentrustedfinancialmanagement,andstrengthenstheriskcontrolmanagementofsecuritiesinvestmentbusiness,safeguardthesafetyofinvestmentfunds,andstrictlycontroltheriskexposure.Inaccordancewiththeeconomicsituationandchangesinthefinancialmarket,itcontinuouslytracksandanalysestheprogressofsecuritiesinvestmentandtheinvestmentoffunds,theprogressofprojectinvestmentandtheperformanceofthecapitalmarket,andtimelytakescorrespondingpreservationmeasurestocontrolinvestmentrisks.

Ⅺ.ImplementationofMarketValueManagementSystemandValuationEnhancementPlanwhethertheCompanyhasformulatedamarketvaluemanagementsystem.

□Yes√NowhethertheCompanyhasdisclosedavaluationenhancementplan.

□Yes√No

ⅪI.Implementationofthe“QualityandEarningsDualImprovement”ActionPlanwhethertheCompanyhasdisclosedthe“QualityandEarningsDualImprovement”ActionPlan.

□Yes√No

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PartIVCorporateGovernance,EnvironmentalandSocial

Responsibilities

IChangesofDirectors,SupervisorsandSeniorManagement

□Applicable?NotapplicableTheCompany’sdirectors,supervisorsandseniormanagementremainedunchangedduringtheReportingPeriod.Fordetails,seethe2024AnnualReport.IIDividendPlanfortheReportingPeriod

□Applicable?NotapplicableTheCompanyhasnosemi-annualdividendplan,eitherintheformofcashorstock.

IIIEquityIncentivePlans,EmployeeStockOwnershipPlansorOtherIncentiveMeasuresforEmployees?Applicable□Notapplicable

1.EquityIncentives

1.Thecompanyheldthe1st(Interim)shareholders’meetingof2024onMay27,2024,whichreviewedandapprovedthe"ProposalontheFailuretoMeettheUnlockingConditionsfortheSecondUnlockingPeriodoftheFirstGrantunderthe2022RestrictedStockIncentivePlanandtheRepurchaseandCancellationofSomeRestrictedStocks".OnDecember30,2024,thecompanyheldthe5th(Interim)shareholders’meetingof2024,whichreviewedandapprovedthe"ProposalontheRepurchaseandCancellationofSomeRestrictedStocks".InaccordancewiththerelevantprovisionsoftheMeasuresfortheAdministrationofEquityIncentivesofListedCompanies,thecompany's2022RestrictedStockIncentivePlanandtheMeasuresfortheAssessmentandAdministrationoftheImplementationofthe2022RestrictedStockIncentivePlan,thecompanydecidedtorepurchaseandcancel1,280,000restrictedshares,accountingforapproximately0.10%ofthecompany'stotalsharecapitalbeforetherepurchaseandcancellation,atarepurchasepriceofRMB1pershare.

OnJanuary15,2025,thecompanydisclosedtheAnnouncementontheCompletionofRepurchaseandCancellationofSomeRestrictedStocks.ChinaSecuritiesDepositoryandClearingCorporationLimitedShenzhenBranchconfirmedthattheproceduresfortherepurchaseandcancellationof1,280,000restrictedshareshavebeencompleted.

2.OnApril25,2025,thecompanyheldthe14th(Interim)MeetingoftheFifthBoardofDirectorsandthe12th(Interim)MeetingoftheFifthSupervisoryBoard,whichreviewedandapprovedthe"ProposalontheFailuretoMeettheUnlockingConditionsfortheThirdUnlockingPeriodoftheFirstGrantunderthe2022RestrictedStockIncentivePlanandtheRepurchaseandCancellationofSomeRestrictedStocks".Inviewofthefailuretoachievethecompany-levelperformanceassessmenttargetforthethirdunlockingperiod,resultinginthefailuretomeettheunlockingconditionsforthethirdunlockingperiod,inaccordancewiththe

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incentiveplan,thecompanyshallrepurchaseandcancel480,000restrictedsharesheldby5incentiverecipientscorrespondingtothethirdunlockingperiodofthefirstgrantunderthe2022RestrictedStockIncentivePlanatthegrantprice.OnMay12,2025,thecompanyheldthe1st(Interim)shareholders’meetingof2025,whichreviewedandapprovedtheaforesaidproposal.OnMay28,2025,thecompanydisclosedtheAnnouncementontheCompletionofRepurchaseandCancellationofSomeRestrictedStocks.ChinaSecuritiesDepositoryandClearingCorporationLimitedShenzhenBranchconfirmedthattheproceduresfortherepurchaseandcancellationof480,000restrictedshareshavebeencompleted.

2.ImplementationofEmployeeStockOwnershipPlans

?Applicable□NotapplicableThesituationofalleffectiveemployeestockownershipplansduringthereportingperiod

Theshareholdingofdirectors,supervisorsandseniormanagementpersonnelintheemployeestockownershipplanduringthereportingperiod

Changesinassetmanagementinstitutionsduringthereportingperiod

□Applicable√NotapplicableChangesinequitycausedbyholders'disposalofshares,etc.duringthereportingperiod

□Applicable√NotapplicableThesituationoftheexerciseofshareholders'rightsduringthereportingperiod.

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Duringthereportingperiod,thecompanyimplementedtheequitydistributionforthefirstquarterof2025.Inaccordancewiththecompany's"2024EmployeeStockOwnershipPlanScheme",holdersareentitledtotherightsandinterestsofthisemployeestockownershipplaninproportiontotheshareoftheemployeestockownershipplantheyhold.Otherrelevantmattersregardingtheemployeestockownershipplanduringthereportingperiod

□Applicable√NotapplicableChangesinthemembersofthemanagementcommitteeoftheemployeestockownershipplan

□Applicable√NotapplicableThefinancialimpactoftheemployeestockownershipplanonthelistedcompanyduringthereportingperiodandrelevantaccountingtreatments?Applicable□NotapplicableAccordingto"AccountingStandardsforBusinessEnterprisesNo.11-Share-basedPayments",forequity-settledshare-basedpaymentsinexchangeforemployees'servicesthatcanonlybeexercisedwhentheservicesduringthewaitingperiodarecompletedorthestipulatedperformanceconditionsaremet,oneachbalancesheetdateduringthewaitingperiod,theservicesobtainedinthecurrentperiodshouldbeincludedinrelevantcostsorexpensesandcapitalreservebasedonthebestestimateofthenumberofexercisableequityinstrumentsandinaccordancewiththefairvalueoftheequityinstrumentsonthegrantdate.Theamortizationexpenseofthecompany'semployeestockownershipplanin2025H1was16.1299millionyuan,whichwasincludedinrelevantexpenseaccountsandcapitalreserve.Thesituationoftheterminationoftheemployeestockownershipplanduringthereportingperiod.

□Applicable√Notapplicable

3.OtherIncentiveMeasuresforEmployees

□Applicable√Notapplicable

IVDisclosureofEnvironmentInformation?Applicable□NotapplicableWhetherthelistedcompanyanditsmajorsubsidiariesareincludedinthelistofenterprisesrequiredtodiscloseenvironmentalinformationinaccordancewiththelaw?Yes□No

VSocialResponsibilities

TheCompanyattachedimportancetofulfillingsocialresponsibilityindailyoperations,intendingtopromoteharmonyandco-prosperitybetweenitandpartiesrelatedtoitsinterests.TheCompanyalsotookactivemeasuresintheprotectionoftherightsand

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interestsofshareholders,creditors,employees,suppliers,customers,andconsumers,environmentalprotection,sustainabledevelopment,publicrelations,andsocialpublicwelfareundertakings,andstrivedtomaximizecomprehensivesocialbenefitsincludingthesustainabledevelopmentofitself.

(1)Corporategovernance:DuringtheReportingPeriod,theCompanystrictlyabidedbytheCompanyLaw,theSecuritiesLawandCodeofCorporateGovernanceforListedCompanies,continuedtorefinethecorporategovernancestructure,improvetheinternalcontrolsystem,formedthedecision-makingsystemcomprisingtheShareholders'GeneralMeeting,theBoardofDirectors,theSupervisoryCommitteeandtheManagement,andtimelyfulfilleditsobligationofinformationdisclosureaccordingtolawsandregulationsandeffectivelysafeguardedtherightsandinterestsofallshareholders.

(2)Rightsandinterestsofemployees:TheCompanyprovidedemployeeswithwelfareandcarebyprovidingholidaygiftsandholdingemployeebirthdayparties,annualmeetings,andteam-buildingactivities,improvedemployees'professionalcompetencebyofferingregularorirregulartrainingtoemployeesintheheadquartersanddomesticandforeignbranchesandsubsidiaries,andcontinuedtoimprovethecompetitivecomprehensiveremunerationsystemtoretainandattracttalentsneededfortheCompany'ssustainabledevelopment.

(3)Relationshipwithcustomersandsuppliers:Longadheringtotheprincipleof"honestbusiness"and"mutualbenefitandwin-win",theCompanytooktheinitiativetoconstructanddevelopastrategicpartnershipwithsuppliersandcustomersandjointlybuiltaplatformoftrustandcooperation,andearnestlyfulfilleditssocialresponsibilitiestosuppliers,customersandconsumers.TheCompanyhasbeenwell-performingcontractswithsuppliersandcustomersandensuringthattherightsandinterestsofallpartiesarehighlyvaluedanddulyprotected.

(4)Productionsafety:TheCompanystrictlyabidedbytheLabourLawandtheLabourContractLaw,adheredtothe"people-oriented"principle,attachedimportancetotheneedsofemployees,strivedtoimprovetheworkingandlivingenvironmentsofemployees,andhassetupalabouruniontoeffectivelyprotecttheinterestsofemployees.Italsoprovidedlabourprotectionsuppliesaccordingtotheriskfactorsofdifferentposts,organizedoccupationalhealthexaminationsforemployees(beforetakingthepost,onthepostandbeforeleavingthepost),andboughtsafetyliabilityinsuranceforemployeesonhighlyriskyposts.In2020,DongfangPrecisionextendeditsGradeIIProductionSafetyStandardizationCertificateforMachineryEnterprises,andParsunPowerandFosberAsiaweregrantedtheGradeIIIProductionSafetyStandardizationCertificateforMachineryEnterprises.

(5)Environmentalprotection:DongfangPrecisionwasgrantedtheNationalPollutantDischargePermitandregularlycompletesthefillingofdataforpost-licensemonitoringoftheNationalDischargeLicense.Itcommissionedthequalifiedthird-partyenvironmentalprotectionagenciestocompiletheContingencyPlansforEnvironmentalEmergenciesandupdateitonaregularbasis.TheCompanyestablishedthe"EnvironmentalSelf-MonitoringProgramme",entrustedathirdpartytoinstallandoperate24-hoursewageon-lineflowmonitoringequipment,andentrustedathird-partymonitoringorganisationtocarryoutquarterlytestingofwastewater,exhaustgasandnoiseandissuethird-partytestreports.Moreover,theCompany’senvironmentalprotectionfacilitiespassedthequalificationre-examinationonOHSAS18001:2007OccupationalHealthandSafetyManagementSystemsandISO14001:2005EnvironmentalManagementSystem..SubsidiaryParsunPowerhasobtainedtheNationalPollutantDischargePermitandpassedtheISO14001:2015environmentalmanagementsystemcertification.Ithaspurchasedenvironmentalprotectionequipmentincludinga50,000m?/horganicwastegastreatmentdeviceandawastegasrecoverysystem,whichcanmeetthedailyrequirementsforpollutanttreatment.

(6)Anti-fraud:TheGroupcompliedathoroughinternalauthorizationmanualthatdetailedprovisionsoninternalauthorizationprocessofmajormatterstoensureappropriateinternalcontrolandreducetheriskoffraud.Inordertocreateafair,just,honestandnon-corruptinternalbusinessenvironmentandstrengtheninternalmonitoring,theCompanyalsoestablishedandlaunchedtheanti-fraudreportingplatformtoencourageemployeestoreportfraudfindings.

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PartVSignificantEventsIUndertakingsoftheCompany’sActualController,Shareholders,RelatedPartiesandAcquirers,aswellastheCompanyItselfandOtherEntitiesFulfilledintheReportingPeriodorUnfulfilledandOverdueatthePeriod-End

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

IIOccupationoftheCompany’sCapitalbytheControllingShareholderorOtherRelatedPartiesforNon-OperatingPurposes

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

IIIIrregularitiesinProvisionofGuarantees

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

IVEngagementandDisengagementofIndependentAuditorWhetherthesemi-annualfinancialreportwasaudited.

□Yes√NoThesemi-annualfinancialreportwasnotaudited.VExplanationsGivenbytheBoardofDirectorsandtheSupervisoryCommitteeRegardingtheIndependentAuditor's“ModifiedOpinion”ontheFinancialStatementsoftheReportingPeriod

□Applicable?NotapplicableVIExplanationsGivenbytheBoardofDirectorsRegarding“ModifiedOpinion”ontheFinancialStatementsofLastYear

□Applicable?Notapplicable

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VIIInsolvencyandReorganization

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

VIIILegalMattersSignificantLegalMatters

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.OtherLegalMatter

□Applicable?NotapplicableIXPunishmentsandRectifications

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

XCreditQualityoftheCompanyaswellasItsControllingShareholderandActualController

□Applicable?Notapplicable

XISignificantRelated-PartyTransactions

1.ContinuingRelated-PartyTransactions

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

2.Related-PartyTransactionsRegardingPurchaseorSalesofAssetsorEquityInvestments

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

3.Related-PartyTransactionsRegardingJointInvestmentsinThirdParties

□Applicable?Notapplicable

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NosuchcasesintheReportingPeriod.

4.AmountsDuetoandfromRelatedParties

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

5.TransactionswithRelatedFinancialCompanies

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

6.Transactionsbetweenthefinancecompanycontrolledbythecompanyandrelatedparties

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

7.OtherSignificantRelated-PartyTransactions

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

XIISignificantContractsandExecutionthereof

1.Entrustment,ContractingandLeases

(1)Entrustment

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

(2)Contracting

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

(3)Leases

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

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2.SignificantGuarantees?Applicable□Notapplicable

GuaranteesprovidedbytheCompanyastheparentforitssubsidiaries

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3.CashEntrustedforWealthManagement

?Applicable□NotapplicableUnit:RMB’0,000High-riskwealthmanagementtransactionswithasignificantsingleamountorwithlowsecurity,lowliquidity,andnoprincipal

protection:

□Applicable?NotapplicableWealthmanagementtransactionswheretheprincipalisexpectedlyirrecoverableoranimpairmentmaybeincurred:

?Applicable□NotapplicableAsoftheendoftheReportingPeriod,theunrecoveredamountoftrustproductswasRMB3.5862million,forwhichanimpairment

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allowanceofRMB3.5862millionwasestablished.

4.OtherSignificantContracts

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.

XIIIOtherSignificantEvents

□Applicable?NotapplicableXIVSignificantEventsofSubsidiaries

□Applicable?Notapplicable

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PartVIShareChangesandShareholderInformationIShareChanges

1.ShareChanges

Unit:share

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Reasonsforsharechanges:

?Applicable□Notapplicable

1.RepurchaseandCancellationofRestrictedSharesunderEquityIncentive

(1).Thecompanyheldthe1st(Interim)shareholders’meetingof2024onMay27,2024,whichreviewedandapprovedthe"ProposalontheFailuretoMeettheUnlockingConditionsfortheSecondUnlockingPeriodoftheFirstGrantunderthe2022RestrictedStockIncentivePlanandtheRepurchaseandCancellationofSomeRestrictedStocks".OnDecember30,2024,thecompanyheldthe5th(Interim)shareholders’meetingof2024,whichreviewedandapprovedthe"ProposalontheRepurchaseandCancellationofSomeRestrictedStocks".InaccordancewiththerelevantprovisionsoftheMeasuresfortheAdministrationofEquityIncentivesofListedCompanies,thecompany's2022RestrictedStockIncentivePlanandtheMeasuresfortheAssessmentandAdministrationoftheImplementationofthe2022RestrictedStockIncentivePlan,thecompanydecidedtorepurchaseandcancel1,280,000restrictedshares,accountingforapproximately0.10%ofthecompany'stotalsharecapitalbeforetherepurchaseandcancellation,atarepurchasepriceofRMB1pershare.

OnJanuary15,2025,thecompanydisclosedtheAnnouncementontheCompletionofRepurchaseandCancellationofSomeRestrictedStocks.ChinaSecuritiesDepositoryandClearingCorporationLimitedShenzhenBranchconfirmedthattheproceduresfortherepurchaseandcancellationof1,280,000restrictedshareshavebeencompleted.

(2).OnApril25,2025,thecompanyheldthe14th(Interim)MeetingoftheFifthBoardofDirectorsandthe12th(Interim)MeetingoftheFifthSupervisoryBoard,whichreviewedandapprovedthe"ProposalontheFailuretoMeettheUnlockingConditionsfortheThirdUnlockingPeriodoftheFirstGrantunderthe2022RestrictedStockIncentivePlanandtheRepurchaseandCancellationofSomeRestrictedStocks".Inviewofthefailuretoachievethecompany-levelperformanceassessmenttargetforthethirdunlockingperiod,resultinginthefailuretomeettheunlockingconditionsforthethirdunlockingperiod,inaccordancewiththeincentiveplan,thecompanyshallrepurchaseandcancel480,000restrictedsharesheldby5incentiverecipientscorrespondingtothethirdunlockingperiodofthefirstgrantunderthe2022RestrictedStockIncentivePlanatthegrantprice.OnMay12,2025,thecompanyheldthe1st(Interim)shareholders’meetingof2025,whichreviewedandapprovedtheaforesaidproposal.

OnMay28,2025,thecompanydisclosedtheAnnouncementontheCompletionofRepurchaseandCancellationofSomeRestrictedStocks.ChinaSecuritiesDepositoryandClearingCorporationLimitedShenzhenBranchconfirmedthattheproceduresfortherepurchaseandcancellationof480,000restrictedshareshavebeencompleted..

2.ChangesinRestrictedsharesofseniormanagementMr.TangZhuolinandMr.XieWeiwei,whoserveasdirectorsandseniormanagements,hadchangesintheirshareholdingsin2024.Inearly2025,basedontheirlatestshareholdingamounts,ChinaSecuritiesDepositoryandClearingCorporationLimitedcalculatedtheirstatutoryquotaoftransferablesharesforthecurrentyearat25%oftheirholdings.Atotalof7,125,900shareswereunlockedduringthereportingperiod.

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Approvalofsharechanges:

?Applicable□NotapplicableIntheReportingPeriod,withrespecttosharechanges,theCompanyfollowedtheapplicablelawsandregulationsanditsArticlesofAssociation,executedtheapprovalprocedureswiththegeneralmeetingandtheBoardofDirectors,andobtainedapprovalfromtheShenzhenStockExchange.Transferofshareownership:

?Applicable□NotapplicableIntheReportingPeriod,withrespecttothetransfersofshareownership,theCompanycompletedthetransferswiththeShenzhenbranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.aftertheywereapprovedbytheShenzhenStockExchange.Progressofimplementationofsharebuyback

□Applicable?NotapplicableProgressonreducingtherepurchasedsharesbywayofcentralizedbidding:

□Applicable?NotapplicableEffectsofsharechangesonthebasicearningspershare,dilutedearningspershare,equitypershareattributabletotheCompany’sordinaryshareholders,andotherfinancialindicatorsoftheprioryearandtheprioraccountingperiod,respectively:

□Applicable?NotapplicableOtherinformationthattheCompanyconsidersnecessaryorisrequiredbythesecuritiesregulatortobedisclosed:

□Applicable?Notapplicable

2.ChangesinRestrictedShares?Applicable□Notapplicable

Unit:share

IIIssuanceandListingofSecurities

□Applicable?Notapplicable

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IIIShareholdersandTheirShareholdings

Unit:share

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Top10shareholdersinvolvedinrefinancingshareslending:

□Applicable√NotapplicableChangesintop10shareholderscomparedwiththepriorperiod:

□Applicable√NotapplicableIndicatewhetheranyofthetop10ordinaryshareholdersorthetop10unrestrictedordinaryshareholdersoftheCompanyconductedanypromissoryrepoduringtheReportingPeriod.

□Yes?No

NosuchcasesintheReportingPeriod

IVChangesintheShareholdingsofDirectors,SupervisorsandSeniorManagement?Applicable?Notapplicable

VChangesoftheCompany’sControllingShareholderandActualController

ControllingShareholderchangedduringtheReportingPeriod

□Applicable?NotapplicableNosuchcasesintheReportingPeriod.ActualControllerchangedduringtheReportingPeriod

□Applicable?Notapplicable

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NosuchcasesintheReportingPeriod.

VIPreferenceShares

□Applicable?NotapplicableNopreferencesharesintheReportingPeriod.

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PartVIICorporateBonds

□Applicable?Notapplicable

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PartVIIICorporateFinancialStatements

IAuditor’sReport

Whetherthesemi-annualfinancialstatementswereaudited.

□Yes?NoThesemi-annualfinancialstatementswerenotaudited.

IIFinancialStatementsCurrencyunitforthetablesinthenotestothefinancialstatements:RMByuan

1.ConsolidatedBalanceSheetPreparedby:GuangdongDongfangPrecisionScience&TechnologyCo.,Ltd.

30June2025

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IIICorporateBackground

GuangdongDongfangPrecisionScience&TechnologyCo.,Ltd.(the"Company"),ajointstockcompanywithlimitedliabilityregisteredinGuangdongProvinceofthePeople'sRepublicofChinaandestablishedon9December1996,obtainedaBusinessLicenseforEnterpriseLegalPersonwitharegistrationnumberof440682000040868.InAugust2011,upontheapprovalbytheChinaSecuritiesRegulatoryCommission(CSRC)intheReplyonApprovingtheInitialPublicOfferingofSharesbyGuangdongDongfangPrecisionScience&TechnologyCo.,Ltd.(ZH.J.X.K.[2011]No.1237),theCompanyissuedRenminbi-denominatedordinarysharestothepublic,andwaslistedontheShenzhenStockExchangeinthesamemonth.TheCompanystartedtousetheunifiedsocialcreditcode(914406002318313119)in2016.TheCompanyisheadquarteredin2QiangshiRoad,ShishanTown,NanhaiDistrict,FoshanCity,GuangdongProvince,China.TheGroup'smainbusinessesincludefourmajorbusinesssegments:smartcorrugatedpackagingequipment,industrialInternetindustrysolutions,digitalprinters,andwaterpowersportsequipment.TheactualcontrollersoftheCompanyareTangZhuolinandTangZhuomian.ThesefinancialstatementswereauthorizedforissuebytheBoardofDirectorsoftheCompanyon13Aug2025.IV.BasisofPreparationoftheFinancialStatements

ThesefinancialstatementshavebeenpreparedinaccordancewithChina’s“AccountingStandardsforBusinessEnterprises—BasicStandards”promulgatedbytheMinistryofFinanceandthespecificaccountingstandards,applicationguidance,interpretationsandotherrelevantregulationsissuedoramendedthereafter(hereaftercollectivelyreferredtoas“AccountingStandardsforBusinessEnterprises”or“CAS”).Inaddition,thefinancialstatementsalsodiscloserelevantfinancialinformationinaccordancewiththeRulesNo.15forthePreparationofInformationDisclosurebyCompaniesOfferingSecuritiestothePublic-GeneralProvisionsonFinancialReports.Thefinancialstatementsarepreparedonagoingconcernbasis.

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V.PrincipalAccountingPoliciesandAccountingEstimatesTheGrouphasformulatedspecificaccountingpoliciesandaccountingestimatesaccordingtothecharacteristicsofitsactualproductionandoperation,whichismainlyembodiedintheprovisionforthebaddebtofaccountsreceivable,provisionforwrite-downofinventories,depreciationoffixedassets,provisionforproductwarranties,capitalizationconditionsforexpenditureonthedevelopmentphaseofresearchanddevelopmentexpensesandrecognitionandmeasurementofrevenue.

1.StatementofcomplianceThefinancialstatementspresenttrulyandcompletelythefinancialpositionsoftheGroupandtheCompanyasat30June2025,andthefinancialperformanceandthecashflowsforthe1

st

halfof2025thenendedinaccordancewithAccountingStandardsforBusinessEnterprises.

2.AccountingyearTheaccountingyearoftheGroupisfrom1Januaryto31Decemberofeachcalendaryear.

3.FunctionalcurrencyTheGroup’sfunctionalcurrencyandthecurrencyusedinpreparingthefinancialstatementswereRenminbi.TheamountsinthefinancialstatementsweredenominatedinRenminbiyuan,unlessotherwisestated.

4.Determinationmethodandselectionbasisofmaterialitycriteria

MaterialitycriteriaSignificantconstructionin

progress

5.Businesscombination

Businesscombinationsareclassifiedintobusinesscombinationsinvolvingentitiesundercommoncontrolandbusinesscombinationsnotinvolvingentitiesundercommoncontrol.BusinesscombinationsinvolvingentitiesundercommoncontrolAbusinesscombinationinvolvingentitiesundercommoncontrolisabusinesscombinationinwhichallofthecombiningentitiesareultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthebusinesscombination,andthatcontrolisnottransitory.

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5.Businesscombination(cont’d)Businesscombinationsinvolvingentitiesundercommoncontrol(cont’d)Assetsandliabilitiesobtainedbycombiningpartyinthebusinesscombinationinvolvingentitiesundercommoncontrol(includinggoodwillarisingfromtheacquisitionofthemergedpartybytheultimatecontroller)arerecognizedonthebasisoftheircarryingamountsatthecombinationdaterecordedonthefinancialstatementsoftheultimatecontrollingparty.Thedifferencebetweenthecarryingamountoftheconsiderationpaidforthecombination(oraggregatefacevaluesofthesharesissued)andthecarryingamountofthenetassetsobtainedisadjustedtocapitalsurplus.Ifthecapitalsurplusarenotsufficienttoabsorbthedifference,anyexcessisadjustedtoretainedearnings.

Businesscombinationsnotinvolvingentitiesundercommoncontrol

Abusinesscombinationnotinvolvingentitiesundercommoncontrolisabusinesscombinationinwhichallofthecombiningentitiesarenotultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthebusinesscombination.Theacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesarerecognizedattheirfairvaluesattheacquisitiondate.Theexcessofthesumoftheconsiderationpaid(orequitiesissued)forbusinesscombinationandequityinterestsintheacquireeheldpriortothedateofacquisitionovertheshareoftheattributablenetidentifiableassetsoftheacquiree,measuredatfairvalue,wasrecognizedasgoodwill,whichissubsequentlymeasuredatcostlesscumulativeimpairmentloss.Incasethefairvalueofthesumoftheconsiderationpaid(orequitiesissued)andequityinterestsintheacquireheldpriortothedateofacquisitionislessthanthefairvalueoftheshareoftheattributablenetidentifiableassetsoftheacquiree,areviewofthemeasurementofthefairvaluesoftheidentifiableassets,liabilitiesandcontingentliabilities,theconsiderationpaidforthecombination(orequityissued)andtheequityinterestsintheacquireeheldpriortothedateofacquisitionisconducted.Ifthereviewindicatesthatthefairvalueofthesumoftheconsiderationpaid(orequitiesissued)andequityinterestsintheacquireeheldpriortothedateofacquisitionisindeedlessthanthefairvalueoftheshareoftheattributablenetidentifiableassetsoftheacquiree,thedifferenceisrecognizedinprofitorloss.

6.ConsolidatedfinancialstatementsTheconsolidationscopeforconsolidatedfinancialstatementsisdeterminedbasedontheconceptofcontrol,includingtheCompanyandallsubsidiaries’financialstatements.SubsidiariesarethoseenterprisesorentitieswhichtheCompanyhascontrolover(includingenterprises,separablecomponentsofinvesteeunitsandstructuredentitiescontrolledbytheCompany).Aninvestorcontrolsaninvesteewhentheinvestorisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.ThefinancialstatementsofthesubsidiariesarepreparedforthesamereportingperiodastheCompany,usingconsistentaccountingpolicies.AnyinconsistentaccountingpolicieshavebeenadjustedtobecomeconsistentwiththeCompany’saccountingpolicies.Allassets,liabilities,equities,revenues,costsandcashflowsarisingfromintercompanytransactionsareeliminatedonconsolidation.

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6.Consolidatedfinancialstatements(cont’d)

Theexcessofcurrentlossattributabletonon-controllingshareholdersofasubsidiaryovertheirentitlementstotheopeningbalanceofequityshallbechargedtonon-controllinginterests.Forsubsidiariesobtainedthroughabusinesscombinationnotinvolvingentitiesundercommoncontrol,theoperatingresultsandcashflowsoftheacquireeswillberecognizedinconsolidatedfinancialstatementsfromthedatetheGroupeffectivelyobtainsthecontroluntilthedatethatcontrolisterminated.Whenconsolidatedfinancialstatementisprepared,thesubsidiaries’financialstatementswillbeadjustedbasedonthefairvaluesoftheidentifiableassets,liabilitiesandcontingentliabilitiesattheacquisitiondate.Forsubsidiariesacquiredthroughcombinationofentitiesundercommoncontrol,thebusinessresultsandcashflowsofthecombinedentitiesareincludedintheconsolidatedfinancialstatementsfromthebeginningoftheperiodinwhichthecombinationoccurred.Whenpreparingandcomparingtheconsolidatedfinancialstatements,theGroupmakesadjustmentstorelevantitemsofthefinancialstatementsofthepreviousperiod,deemingthereportingentityformedthroughcombinationasexistingsinceinitialimplementationofcontrolbytheultimatecontrollingparty.Intheeventofthechangeinoneormoreelementsofcontrolasaresultofchangesinrelevantfactsandconditions,theGroupreassesseswhetherithascontrolovertheinvestee.Ifthecontrolrightisnotlost,thechangeofminorityshareholders'equityshallberegardedasequitytransaction.

7.CashandcashequivalentsCashcomprisescashonhandanddepositsreadilyavailableforpayments.Cashequivalentsrepresentshort-termhighlyliquidinvestmentswhicharereadilyconvertibletoknownamountsofcash,andsubjecttoaninsignificantriskofchangesinvalue.

8.ForeigncurrencytranslationForforeigncurrencytransactions,theGrouptranslatestheforeigncurrencyintoitsfunctionalcurrency.Uponinitialrecognition,foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingthespotexchangerateofthedatesonwhichtransactionsoccur.Atthebalancesheetdate,foreigncurrencymonetaryitemsaretranslatedusingthespotexchangerateatthebalancesheetdate.Thetranslationdifferencesarisingfromthesettlementandforeigncurrencymonetaryitemsarerecognizedinprofitorloss.Alsoatthebalancesheetdate,foreigncurrencynon-monetaryitemsmeasuredathistoricalcostcontinuetobetranslatedusingthespotexchangerateatthedatesofthetransactionsanditdoesnotchangeitscarryingamountinfunctionalcurrency.Foreigncurrencynon-monetaryitemsmeasuredatfairvaluearetranslatedusingthespotexchangerate.Thedifferencesarisingfromtheabovetranslationsarerecognizedincurrentprofitorlossorothercomprehensiveincomeaccordingtothenatureofforeigncurrencynon-monetaryitems.

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8.Foreigncurrencytranslation(cont’d)TheGrouptranslatesthefunctionalcurrenciesofforeignoperationsintoRenminbiwhenpreparingthefinancialstatements.Assetandliabilityitemsinthebalancesheetaretranslatedatthespotexchangerateprevailingatthebalancesheetdate.Equityitems,exceptforretainedearnings,aretranslatedatthespotexchangeratesatthedatewhensuchitemsarose.Revenueandexpenseitemsintheincomestatementaretranslatedusingtheaverageexchangeratefortheperiodswhentransactionsoccur.Translationdifferencesarisingfromtheaforesaidtranslationoffinancialstatementsdenominatedinforeigncurrencyshallberecognizedasothercomprehensiveincome.Whenforeignoperationsaredisposed,othercomprehensiveincomerelatingtotheforeignoperationistransferredtocurrentprofitorloss.Partialdisposalshallberecognizedonapro-ratabasis.Cashflowsdenominatedinforeigncurrenciesandforeignsubsidiaries’cashflowsaretranslatedusingtheaverageexchangeratefortheperiodwhencashflowsoccur.Theimpactoncashbythefluctuationofexchangeratesispresentedasaseparatelineitemofreconciliationinthestatementofcashflows.

9.FinancialinstrumentsFinancialinstrumentsrefertothecontractswhichgiverisetoafinancialassetinoneentityandafinancialliabilityorequityinstrumentinanotherentity.RecognitionandderecognitionoffinancialinstrumentsTheGrouprecognizesafinancialassetorafinancialliabilitywhenitbecomesapartytothecontractualprovisionsofthefinancialinstrument.Afinancialasset(orpartofit,orapartofagroupofsimilarfinancialasset)isderecognizedwhenoneofthefollowingcriteriaismet,thatis,whenafinancialassetiswrittenofffromitsaccountandbalancesheet:

(1)Therightofreceivingthecashflowgeneratedfromthefinancialassethasexpired;

(2)Therightofreceivingcashflowgeneratedbythefinancialassetsistransferred,oranobligationofpaying

thefullamountofcashflowreceivedtothirdpartiesinatimelymannerhasbeenundertakenunder“pass-through”agreements,where(a)substantiallyallrisksandrewardsoftheownershipofsuchtypeoffinancialassetshavebeentransferred,or(b)controloversuchtypeoffinancialassetshasnotbeenretainedeventhoughsubstantiallyallrisksandrewardsoftheownershipofsuchtypeoffinancialassetshavebeenneithertransferrednorretained.Iftheobligationoffinancialliabilityhasbeenfulfilled,cancelledorexpired,thefinancialliabilityisderecognized.Ifthepresentfinancialliabilityissubstitutedbythesamedebteewithanotherliabilitydifferinginsubstance,orthetermsofthepresentliabilityhavebeensubstantiallymodified,thissubstitutionormodificationistreatedasderecognitionofapresentliabilityandrecognitionofanewliabilitywithanyarisingdifferencesrecognizedinprofitorloss.Conventionaldealingsinfinancialassetsarerecognizedorderecognizedunderthetradedayaccountingmethod.Conventionaldealingsrefertothereceiptordeliveryoffinancialassetswithinperiodsstipulatedbythelawandaccordingtousualpractices.ThetradedayisthedateonwhichtheGroupundertakestobuyorsellafinancialasset.

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9.Financialinstruments(cont’d)ClassificationandmeasurementoffinancialassetsAtinitialrecognition,theGroupclassifiesitsfinancialassetsinto:financialassetsatfairvaluethroughprofitorloss,financialassetsatamortizedcost,orfinancialassetsatfairvaluethroughothercomprehensiveincome,accordingtotheGroup’sbusinessmodelformanagingfinancialassetsandthecontractcashflowcharacteristicsofthefinancialassets.WhenandonlywhentheGroupchangesitsbusinessmodelofmanagingfinancialassets,allrelevantfinancialassetsaffectedwillbere-classified.Financialassetsaremeasuredatfairvalueoninitialrecognition,butiftheaccountsreceivableornotesreceivablegeneratedfromthesalesofgoodsorprovisionofservicesdonotcontainsignificantfinancingcomponentsordonotconsiderfinancingcomponentsofnolongerthanoneyear,theinitialmeasurementwillbebasedonthetransactionprice.Forfinancialassetsatfairvaluethroughprofitorloss,therelevanttransactioncostsaredirectlyrecognizedinprofitorloss;forotherfinancialassets,therelevanttransactioncostsarerecognizedintheirinitialrecognitionamount.Thesubsequentmeasurementoffinancialassetsisdependentonitsclassification:

DebtinstrumentsmeasuredatamortizedcostFinancialassetsfulfillingallofthefollowingconditionsareclassifiedasfinancialassetsatamortizedcost:theobjectiveoftheGroup’sbusinessmanagementmodelinrespectofsuchtypeoffinancialassetsistogeneratecontractcashflow;thecontracttermsofsuchtypeoffinancialassetsprovidethatcashflowgeneratedonspecificdatesrepresentsinterestpaymentinrelationtoprincipalamountsbasedonoutstandingprincipalamountsonly.Interestincomefromsuchtypeoffinancialassetsarerecognizedusingtheeffectiveinterestratemethod,andanyprofitorlossarisingfromderecognition,amendmentsorimpairmentshallbechargedtocurrentprofitorloss.DebtinstrumentsatfairvaluethroughothercomprehensiveincomeFinancialassetsfulfillingallofthefollowingconditionsareclassifiedasfinancialassetsatfairvaluethroughothercomprehensiveincome:theobjectiveoftheGroup’sbusinessmanagementmodelinrespectofsuchtypeoffinancialassetsisbothtogeneratecontractcashflowandtosellsuchtypeoffinancialassets;thecontracttermsofsuchtypeoffinancialassetsprovidethatcashflowgeneratedonspecificdatesrepresentsinterestpaymentinrelationtoprincipalamountsbasedonoutstandingprincipalamountsonly.Interestincomefromthistypeoffinancialassetsisrecognizedusingtheeffectiveinterestratemethod.Otherthaninterestincome,impairmentlossandexchangedifferenceswhichshallberecognizedascurrentprofitorloss,otherfairvaluechangesshallbeincludedinothercomprehensiveincome.Uponderecognitionofthefinancialassets,thecumulativegainsorlossespreviouslyincludedinothercomprehensiveincomeshallbetransferredfromothercomprehensiveincometocurrentprofitorloss.FinancialassetsatfairvaluethroughprofitorlossOtherthanfinancialassetsmeasuredatamortizedcostandfinancialassetsatfairvaluethroughothercomprehensiveincomeasaforementioned,allfinancialassetsareclassifiedasfinancialassetsatfairvaluethroughprofitorloss,whicharesubsequentlymeasuredatfairvalue,anychangesofwhicharerecognizedincurrentprofitorloss.

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9.Financialinstruments(cont’d)ClassificationandmeasurementoffinancialliabilitiesTheGroupclassifiesitsfinancialliabilitiesatinitialrecognition:financialliabilitiesatfairvaluethroughprofitorloss,andotherfinancialliabilities.Forfinancialliabilitiesatfairvaluethroughprofitorloss,therelevanttransactioncostsaredirectlyrecognizedinprofitorloss;forotherfinancialliabilities,therelevanttransactioncostsarerecognizedintheirinitialrecognitionamount.Thesubsequentmeasurementoffinancialliabilitiesisdependentonitsclassification:

FinancialliabilitiesatfairvaluethroughprofitorlossFinancialliabilitiesatfairvaluethroughprofitorlossincludemainlyfinancialliabilitiesheldfortrading(comprisingderivativesclassifiedasfinancialliabilities).Financialliabilitiesheldfortrading(comprisingderivativesclassifiedasfinancialliabilities)aresubsequentlymeasuredatfairvalueandallchangesarerecognizedincurrentprofitorloss.OtherfinancialliabilitiesSubsequenttoinitialrecognition,thesefinancialliabilitiesarecarriedatamortizedcostusingtheeffectiveinterestmethod.ImpairmentoffinancialinstrumentsMethodsfordeterminingexpectedcreditlossesandaccountingtreatmentmethodsTheGroupperformsimpairmenttreatmentonfinancialassetsatamortizedcost,debtinstrumentsatfairvaluethroughothercomprehensiveincomeandcontractassetsbasedonexpectedcreditlosses(ECL)andrecognizesallowancesforlosses.Forreceivablesandcontractassetsthatdonotcontainsignificantfinancingcomponents,theGroupadoptsasimplifiedmeasurementmethodtomeasureallowancesforlossesbasedonanamountequivalenttothelifetimeexpectedcreditlosses.Financialassetsotherthanthosemeasuredwithsimplifiedvaluationmethods,theGroupevaluatesateachbalancesheetdatewhetheritscreditriskhassignificantlyincreasedsinceinitialrecognition.Theperiodduringwhichcreditriskhasnotsignificantlyincreasedsinceinitialrecognitionisconsideredthefirststage,atwhichtheGroupshallmeasurelossallowancebasedontheamountofexpectedcreditlossforthenext12monthsandshallcomputeinterestincomeaccordingtothebookbalanceandeffectiveinterestrate;theperiodduringwhichcreditriskhassignificantlyincreasedsinceinitialrecognitionalthoughnocreditimpairmenthasoccurredisconsideredthesecondstage,atwhichtheGroupshallmeasurelossallowancebasedontheamountofexpectedcreditlossfortheentirevalidperiodandshallcomputeinterestincomeaccordingtothebookbalanceandeffectiveinterestrate;Theperiodduringwhichcreditimpairmenthasoccurredafterinitialrecognitionisconsideredthethirdstage,atwhichtheGroupshallmeasurelossallowancebasedontheamountofthelifetimeexpectedcreditlossandshallcomputeinterestincomeaccordingtotheamortizedcostandeffectiveinterestrate.Forfinancialinstrumentswithlowcreditriskatthebalancesheetdate,theGroupassumesthattheircreditriskhasnotincreasedsignificantlysinceinitialrecognition.TheGroupestimatestheexpectedcreditlossoffinancialinstrumentsindividuallyandonagroupbasis.TheGroupconsidersthecreditriskfeaturesofdifferentcustomersandestimatestheexpectedcreditlossesoffinancialinstrumentsbasedonagingportfolio.

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9.Financialinstruments(cont’d)Impairmentoffinancialinstruments(cont’d)FortheGroup’scriteriaforjudgingwhethercreditriskshavesignificantlyincreased,thedefinitionofassetssubjectedtocreditimpairment,andassumptionsunderlyingthemeasurementofexpectedcreditlosses,pleaserefertoNoteIX.2.

TheGroup'sapproachtomeasuringECLsonfinancialinstrumentsreflectsfactorssuchastheunbiasedprobability-weightedaverageamountdeterminedbyevaluatingarangeofpossibleoutcomes,thetimevalueofmoney,andreasonableandsupportableinformationaboutpastevents,currentconditionsandprojectionsoffutureeconomicconditionsavailableatthebalancesheetdatewithoutundueadditionalcostoreffort.

WhentheGroupnolongerreasonablyexpectstobeabletofullyorpartiallyrecoverthecontractcashflowoffinancialassets,theGroupdirectlywritesdownthebookbalanceofsuchfinancialassets.DerivativefinancialinstrumentsTheGroupusesderivativefinancialinstruments.Derivativefinancialinstrumentsareinitiallyrecognizedatfairvalueonthedateonwhichaderivativecontractisenteredintoandaresubsequentlyre-measuredatfairvalue.Derivativesarecarriedasassetswhenthefairvalueispositiveandasliabilitieswhenthefairvalueisnegative.Gainsorlossesarisingfromchangesinthefairvalueofderivativeinstrumentsshallbedirectlyrecognizedincurrentprofitorloss.TransferoffinancialassetsIftheGrouphastransferredsubstantiallyalltherisksandrewardsassociatedwiththeownershipofafinancialassettothetransferee,theassetshouldbederecognized.IftheGroupretainssubstantiallyalltherisksandrewardsofownershipofafinancialasset,theassetshouldnotbederecognized.WhentheGrouphasneithertransferrednorretainedsubstantiallyalltherisksandrewardsofownershipofthefinancialasset,itmayeitherderecognizethefinancialassetandrecognizeanyassociatedassetsandliabilitiesifcontrolofthefinancialassethasnotbeenretained;orrecognizesthefinancialassettotheextentofitscontinuinginvolvementinthetransferredfinancialassetandrecognizesanassociatedliabilityifcontrolhasbeenretained.Assetsformedbythecontinuinginvolvementbywayoftheprovisionoffinancialguaranteeinrespectofthetransferredfinancialassetsshallberecognizedasthelowerofthecarryingvalueofthefinancialassetandtheamountoffinancialguarantee.Theamountoffinancialguaranteemeansthemaximumamountamongconsiderationsreceivedtoberequiredforrepayment.

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10.InventoriesInventoriesincluderawmaterials,work-in-progress,finishedgoods,productdeliveries,semi-finishedgoods,materialsconsignedforprocessing,etc.Inventoriesareinitiallyrecordedatcosts.Inventories’costsincludepurchasingcosts,processingcostsandothercosts.Actualcostsofproductdeliveriesarerecognizedusingtheweightedaveragemethod.Turnovermaterialsincludelow-valueconsumables,packagingmaterials,etc.,whichareexpensedinfull.TheGroupadoptstheperpetualinventorysystem.Inventoriesonthebalancesheetdatearestatedatthelowerofcostornetrealisablevalue.Inventoryvaluationallowanceismadeandrecognizedinprofitorlosswhenthenetrealisablevalueislowerthancost.Netrealizablevalueisdeterminedbasedontheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcoststocompletionandestimatedcostsnecessarytomakethesaleandrelatedtaxes.Valuationallowancesforrawmaterialsareestablishedbycategory,andthoseforfinishedgoodsbyindividualitem.Forinventoriesthatrelatetoproductsproducedandsoldinthesameregion,havethesameorsimilarultimatepurpose,andaredifficulttoseparateinmeasurement,valuationallowancesareestablishedonacombinedbasis.

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11.Long-termequityinvestmentsLong-termequityinvestmentsincludeequityinvestmentsinsubsidiaries,jointventuresandassociates.Long-termequityinvestmentswererecordedatinitialinvestmentcostonacquisition.Forlong-termequityinvestmentsacquiredthroughthebusinesscombinationofentitiesundercommoncontrol,theinitialinvestmentcostshallbetheshareofcarryingvalueoftheequityofthemergedpartyatthedateofcombinationasstatedintheconsolidatedfinancialstatementsoftheultimatecontrollingparty.Anydifferencebetweentheinitialinvestmentcostandthecarryingvalueoftheconsiderationforthecombinationshallbedealtwithbyadjustingthecapitalsurplus(ifthecapitalsurplusareinsufficientforsettingoffthedifference,suchdifferenceshallbefurthersetoffagainstretainedearnings).Upondisposaloftheinvestment,othercomprehensiveincomepriortothedateofcombinationshallbedealtwithonthesamebasisasiftherelevantassetsorliabilitiesweredisposedofdirectlybytheinvestee.Equityrecognizedasaresultofchangesinequityotherthantheset-offofprofitandloss,othercomprehensiveincomeandprofitallocationoftheinvesteeshallbetransferredtocurrentprofitandlossupondisposaloftheinvestment.Itemswhichremainlong-termequityinvestmentsafterthedisposalshallbeaccountedforonapro-ratabasis,whileitemsreclassifiedasfinancialinstrumentsfollowingthedisposalshallbeaccountedforinfull.Forlong-termequityinvestmentsacquiredthroughthebusinesscombinationofentitiesnotundercommoncontrol,theinitialinvestmentcostshallbethecostofcombination(forbusinesscombinationsofentitiesnotundercommoncontrolachievedinstagesthroughmultipletransactions,theinitialinvestmentcostshallbethesumofthecarryingvalueoftheequityinvestmentintheacquiredpartyheldatthedateofacquisitionandnewinvestmentcostincurredasatthedateofacquisition).Thecostofcombinationshallbethesumofassetscontributedbytheacquiringparty,liabilitiesincurredorassumedbytheacquiringpartyandthefairvalueofequitysecuritiesissued.Upondisposaloftheinvestment,othercomprehensiveincomerecognizedundertheequitymethodheldpriortothedateofacquisitionshallbedealtwithonthesamebasisasiftherelevantassetsorliabilitiesweredisposedofdirectlybytheinvestee.Equityrecognizedasaresultofchangesinequityotherthantheset-offofprofitandloss,othercomprehensiveincomeandprofitallocationoftheinvesteeshallbetransferredtocurrentprofitandlossupondisposaloftheinvestment.Itemswhichremainlong-termequityinvestmentsafterthedisposalshallbeaccountedforonapro-ratabasis,whileitemsreclassifiedasfinancialinstrumentsfollowingthedisposalshallbeaccountedforinfull.Theinitialinvestmentcostoflong-termequityinvestmentsotherthanthoseacquiredthroughbusinesscombinationshallberecognizedinaccordancewiththefollowing:forthoseacquiredbywayofcashpayments,theinitialinvestmentcostshallbetheconsiderationactuallypaidplusexpenses,taxamountsandothernecessaryoutgoingsdirectlyrelatedtotheacquisitionofthelong-termequityinvestments.InthefinancialstatementsoftheCompany,thecostmethodisusedforlongtermequityinvestmentsininvesteesoverwhichtheCompanyexercisescontrol.Controlisdefinedasthepowerexercisableovertheinvestee,theentitlementtovariablereturnthroughinvolvementintheactivitiesoftheinvesteeandtheabilitytoinfluencetheamountofreturnusingthepowerovertheinvestee.Whenthecostmethodisused,long-termequityinvestmentsaremeasuredatinitialcostonacquisition.Whenadditionalinvestmentsaremadeorinvestmentsarerecouped,thecostoflongtermequityinvestmentsshallbeadjusted.Cashdividendorprofitdistributiondeclaredbytheinvesteeshallberecognizedasinvestmentincomefortheperiod.

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11.Long-termequityinvestments(cont’d)Theequitymethodisusedtoaccountforlong-termequityinvestmentswhentheGroupcanjointlycontrolorhassignificantinfluenceovertheinvestedentity.Jointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingcontrol.Significantinfluencemeanshavingtheauthoritytotakepartinthedecisionoverthefinancialandoperationalpoliciesbutnottheauthoritytocontrolorjointlycontrolwithotherpartiestheformulationofsuchpolicies.Undertheequitymethod,anyexcessoftheinitialinvestmentcostovertheCompany’sshareofthenetfairvalueoftheinvestment’sidentifiableassetsandliabilitiesisincludedintheinitialinvestmentcostofthelong-termequityinvestment.WhenthecarryingamountoftheinvestmentislessthantheCompany’sshareofthefairvalueoftheinvestment’sidentifiablenetassets,thedifferenceisrecognizedinprofitorlossofthecurrentperiodanddebitedtolong-termequityinvestments.Undertheequitymethod,afterthelong-termequityinvestmentsareacquired,investmentgainsorlossesandothercomprehensiveincomearerecognizedaccordingtotheentitledshareofnetprofitorlossandothercomprehensiveincomeoftheinvesteeandthecarryingamountofthelong-termequityinvestmentisadjustedaccordingly.WhenrecognisingtheGroup’sshareofthenetprofitorlossoftheinvestedentity,theGroupmakesadjustmentsbasedonfairvaluesoftheinvestees’identifiableassetsandliabilitiesattheacquisitiondateinaccordancewiththeGroup’saccountingpolicyandaccountingperiodtoinvestee’snetprofits,eliminatingpro-rataprofitorlossfrominternaltransactionswithassociatesandjointventuresattributedtoinvestor(exceptthatlossfrominter-grouptransactionsdeemedasassetimpairmentlossshallbefullyrecognized),providedthatinvestedorsoldassetsconstitutingbusinessesshallbeexcluded.Whentheinvestedenterprisedeclaresprofitdistributionorcashdividends,thecarryingamountofinvestmentisadjusteddownbytheGroup’sshareoftheprofitdistributionanddividends.TheGroupshallderecognizeitsshareofthelossesoftheinvesteeafterthelong-termequityinvestmenttogetherwithanylong-termintereststhatinsubstanceformspartoftheGroup’snetinvestmentintheinvesteearereducedtozero,excepttotheextentthattheGrouphasincurredobligationstoassumeadditionallosses.TheGroupalsoadjuststhecarryingamountoflong-termequityinvestmentsforotherchangesinowner’sequityoftheinvestees(otherthanthenet-offofnetprofitsorlosses,othercomprehensiveincomeandprofitdistributionoftheinvestee),andincludesthecorrespondingadjustmentinequity.

12.FixedassetsAfixedassetisrecognizedwhen,andonlywhen,itisprobablethatfutureeconomicbenefitsthatareassociatedwiththefixedassetwillflowtotheGroupandthecostcanbemeasuredreliably.Subsequentexpendituresrelatedtoafixedassetarerecognizedinthecarryingamountofthefixedassetiftheaboverecognitioncriteriaaremet,andthecarryingvalueofthereplacedpartisderecognized;otherwise,thoseexpendituresarerecognizedinprofitorlossasincurred.Fixedassetsareinitiallyrecognizedatcost.Costofpurchasedfixedassetsincludespurchasingprice,relevanttaxes,andanydirectlyattributableexpenditureforbringingtheassettoworkingconditionsforitsintendeduse.

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12.Fixedassets(cont’d)Exceptforthoseincurredbyusingtheaccruedexpensesforsafetyproduction,fixedassetsaredepreciatedonastraight-linebasis,andtherespectiveestimatedusefullives,estimatedresidualvalueratiosandannualdepreciationratesareasfollows:

Buildingsandconstructions

TheGroupreviews,atleastateachyearend,usefullives,estimatedresidualvalues,anddepreciationmethodsoffixedassetsandmakesadjustmentsifnecessary.

13.ConstructioninprogressConstructioninprogressismeasuredattheactualconstructionexpenditures,includingnecessaryprojectworkexpensesincurredduringtheperiodwhileconstructionisinprogress,andotherrelatedfees.

Thecriteriaforconstructioninprogresstobetransferredtofixedassetswhenitisreadyforitsintendeduseareasfollows:

CriteriaBuildingsandconstructions

14.BorrowingcostsTheborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarecapitalized.Theamountsofotherborrowingcostsincurredarerecognisedasanexpenseintheperiodinwhichtheyareincurred.Whenassetsthatmeetthecapitalisationcriteriaareconstructedorproducedandreachtheirintendedusableorsaleablestate,borrowingcostsceasetobecapitalised.Borrowingcostsincurredthereafterarerecognisedinprofitorlossfortheperiod.Duringthecapitalisationperiod,theamountofinterestcapitalisedforeachaccountingperiodisdeterminedasfollows:forspecificborrowings,theamountisdeterminedbydeductingtemporarydepositinterestincomeorinvestmentincomefromtheactualinterestexpensesincurredduringtheperiod;forgeneralborrowingswithintheGroup,therewerenoborrowingsthatmetthecapitalisationcriteriaduringthecurrentyear.Iftheconstructionorproductionofanassetthatmeetsthecapitalisationcriteriaissubjecttoanabnormal

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interruption,otherthanthosenecessarytoachievetheintendedusableorsaleablestate,andtheinterruptionlastscontinuouslyformorethanthreemonths,capitalisationofborrowingcostsissuspended.Borrowingcostsincurredduringtheinterruptionperiodarerecognisedasexpensesandchargedtothecurrentperiod'sprofitorlossuntiltheconstructionorproductionactivitiesoftheassetresume.

V.PrincipalAccountingPoliciesandAccountingEstimates(Cont’d)

15.IntangibleassetsOverseaslanduserightsandtrademarkrightsareintangibleassetswithindefiniteusefullives.Impairmenttestsshallbeconductedannuallyregardlessofwhetherthereareindicationsofimpairment.Suchintangibleassetsshallnotbeamortizedandtheirusefullifeshallbereviewedduringeachaccountingperiod.Ifthereisevidencesuggestingthattheirusefullifeislimited,accountingtreatmentwillbeperformedaccordingtotheabovepolicyonintangibleassetswithdefiniteusefullife.Otherintangibleassetsareamortisedonastraight-linebasisovertheirusefullivesasfollows:

Landuserights

ThelandownershipofFosberS.p.A.("FosberGroup"),asubsidiaryoftheCompany,inItalyhasapermanentterm,andtheCompanybelievesthatthelandownershipwillbeusedandwillbringexpectedinflowsofeconomicbenefitstotheCompanyintheforeseeablefuture,soitsusefullifeisregardedasindefinite.ThetrademarksregisteredbysubsidiariesFosberGroupandFosberAmerica,Inc.("FosberAmerica")haveausefullifeinaccordancewiththelaw,butattheexpirationoftheprotectionperiod,FosberGroupandFosberAmericacanapplyforanextensionatlowservicecharges,sotheCompanywillbenefitfromtheabovetrademarksinthelongterm.Thus,theCompanyrecognizedthetrademarkuserightasintangibleassetswithindefiniteusefullife.Theusefullifeofintangibleassetswithindefiniteusefullifewillbereviewedattheendofeachyear.Afterreview,theusefullifeoftheaboveintangibleassetsisstilluncertain.TheGroupclassifiestheexpensesforinternalresearchanddevelopmentasresearchcostsanddevelopmentcosts.Allresearchcostsarechargedtothecurrentprofitorlossasincurred.ExpenditureincurredonprojectstodevelopnewproductsiscapitalizedanddeferredonlywhentheGroupcandemonstratethetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale,itsintentiontocompleteanditsabilitytouseorselltheasset,howtheassetwillgeneratefutureeconomicbenefits(includingdemonstrationthattheproductderivedfromtheintangibleassetortheintangibleassetitselfwillbemarketableor,inthecaseofinternaluse,theusefulnessoftheintangibleassetassuch),theavailabilityoftechnicalandfinancialresourcestocompletetheprojectandprocuretheuseorsaleoftheintangibleasset,andtheabilitytomeasurereliablytheexpenditureduringthedevelopment.Developmentcostswhichdonotmeetthesecriteriaisrecognizedinprofitorlosswhenincurred.Aftermeetingtheaboveconditions,passingthetechnicalfeasibilityandeconomicfeasibilitystudy,thecorrespondingprojectsoftheGroupenterthedevelopmentstageandbegintobecapitalizedafterbeingreviewedandapproved.

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16.ImpairmentTheGroupassessesimpairmentofassetsotherthaninventories,contractassetsandassetsrelatedtocontractcosts,deferredtaxassetsandfinancialassets,usingthemethodsdescribedbelow:

Impairmentofassets(otherthantheimpairmentofinventories,contractassetsandcontractcostassets,investmentpropertiesmeasuredusingthefairvaluemodel,deferredtaxassets,andfinancialassets)isdeterminedinthefollowingway:theGroupassessesatthebalancesheetdatewhetherthereisanyindicationthatanassetmaybeimpaired;ifanyindicationexiststhatanassetmaybeimpaired,theGroupestimatestherecoverableamountoftheassetandperformsimpairmenttesting;goodwillarisingfromabusinesscombination,intangibleassetswithindefiniteusefullivesandintangibleassetsnotyetavailableforusearetestedforimpairmentatleastateachyearend,irrespectiveofwhetherthereisanyindicationthattheassetmaybeimpaired.Therecoverableamountisthehigheroftheasset’sfairvaluelesscoststosellanditspresentvalueofestimatedfuturecashflows.TheGroupestimatesrecoverablevalueforindividualassets.Whenitisdifficulttoestimateindividually,therecoverablevalueofthecashgeneratingunitswhichtheassetbelongstowillbeestimated.Thedefinitionofcashgeneratingunitsisdeterminedonthebasisofwhetherthecashgeneratingunitsgeneratecashflowswhicharelargelyindependentofthosefromothercashgeneratingunits.Wherethecarryingamountofanassetoracashgeneratingunitexceedsitsrecoverableamount,theassetorcashgeneratingunitisconsideredimpairedandiswrittendowntoitsrecoverableamount.Thedifferencebetweenthecarryingamountandrecoverableamountisrecognizedinprofitorlossandallowanceforimpairmentismadeaccordingly.Inconnectionwithimpairmenttestsforgoodwill,thecarryingvalueofgoodwillarisingfrombusinesscombinationisallocatedtorelevantcashgeneratingunits(“CGU”)fromthedateofacquisitiononareasonablebasis.IfitisdifficulttoallocatesuchgoodwilltoarelevantCGU,itshouldbeallocatedtoarelevantCGUgroup.ArelevantCGUorCGUgroupisdefinedasonewhichcanbenefitfromthesynergiesofthebusinesscombinationandisnotlargerthanthereportingsegmentsdeterminedbytheGroup.InconnectionwithimpairmenttestsforCGUsorCGUgroupsthatcomprisegoodwill,whereindicationsofimpairmentexistsinaCGUorCGUgrouprelatedtogoodwill,impairmenttestsshouldbeperformedfirstonCGUsorCGUgroupsthatdonotcomprisegoodwillandrecognizeimpairmentlossafterestimatingtherecoverableamount.ThenimpairmenttestsonCGUsorCGUgroupsthatcomprisegoodwillshouldbeperformedandthecarryingvalueandrecoverableamountshouldbecompared.Wheretherecoverableamountislowerthanthecarryingvalue,theimpairmentlossshouldfirstbeoffsetagainstthecarryingvalueofthegoodwillallocatedtoCGUsorCGUgroupsandthenagainstassetsintheCGUsorCGUgroupsotherthangoodwillinproportiontotheweightingoftheseassets.Previouslyrecognizedimpairmentlossesarenotreversedinsubsequentperiods.

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17.Long-termprepaidexpensesLong-termprepaidexpensesareamortizedusingthestraight-linemethod,withtheamortizationperiodsasfollows:

AmortizationperiodDecorationexpenditures

18.EmployeebenefitsEmployeebenefitsincludeallkindsofrewardsorcompensationincurredbytheGroupinexchangeforservicerenderedbyemployeesorintheterminationofemployment,otherthanshare-basedpayment.Employeebenefitsincludeshort-termbenefits,retirementbenefits,dismissionbenefitsandotherlong-termemployees’benefits.BenefitsprovidedbytheGrouptothespouses,childrenanddependentsofemployeesandfamiliesofdeceasedemployeesarealsoapartofemployeebenefits.Short-termbenefitsForaccountingperiodsduringwhichservicesarerenderedbyemployees,short-termbenefitsthatwillincurisrecognizedasliabilityandincludedinprofitandlossorrelatedcapitalcosts.Retirementbenefits(definedcontributionschemes)EmployeesoftheGroupparticipatedinpensioninsuranceandunemploymentinsuranceschemesmanagedbythelocalgovernment.Thecontributioncostsarechargedasassetcostortoprofitorlosswhenincurred.Retirementbenefits(definedbenefitschemes)TheGroupoperatesadefinedbenefitpensionscheme,whichrequirespaymentstoanindependentlyoperatedfund.Nofundshavebeeninjectedintothescheme.Thecostofbenefitsprovidedunderthedefinedbenefitschemeiscalculatedusingtheexpectedbenefitaccrualunitapproach.Remeasurementarisingfromdefinedbenefitpensionschemes,includingactuarialgainsorlosses,changesintheassetcapeffect(deductingamountsincludedinnetinterestonnetliabilitiesofthedefinedbenefitschemes)andreturnonschemeassets(deductingamountsincludedinnetinterestonnetliabilitiesofthedefinedbenefitschemes)areinstantlyrecognizedinthebalancesheetandchargedtoequitythroughothercomprehensiveincomefortheperiodduringwhichitisincurred.Itwillnotbereversedtoprofitandlossinsubsequentperiods.Previousservicecostsarerecognizedascurrentexpenseswhen:thedefinedbenefitschemeisrevised,orrelevantrestructuringcostsordismissionbenefitsarerecognizedbytheGroup,whicheverearlier.

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18.Employeebenefits(cont’d)Retirementbenefits(definedbenefitschemes)(cont’d)Netinterestisarrivedatbymultiplyingnetliabilitiesornetassetsofdefinedbenefitswithadiscountrate.Changesinnetobligationsofdefinedbenefitsarerecognizedascostofsales,administrativeexpenses,R&Dexpenses,sellingexpensesandfinancecostsintheincomestatement.Servicecostsincludedcurrentservicescosts,pastservicecostsandsettlementofprofitorloss.Netinterestincludedinterestincomefromschemeassets,interestexpensesforschemeobligationsandinterestoftheassetcapeffect.

19.ProvisionsOtherthancontingentconsiderationandassumedcontingentliabilitiesinabusinesscombinationnotinvolvingentitiesundercommoncontrol,theGrouprecognizesasprovisionanobligationthatisrelatedtocontingentmatterswhenallofthefollowingcriteriaarefulfilled:

(1)theobligationisapresentobligationoftheGroup;

(2)theobligationwouldprobablyresultinanoutflowofeconomicbenefitsfromtheGroup;

(3)theobligationcouldbereliablymeasured.Provisionsareinitiallymeasuredaccordingtothebestestimateofexpensesonfulfillingthecurrentliabilities,inconnectionwiththerisk,uncertaintyandtimingvalueofthecurrency.Thecarryingvalueoftheprovisionswouldbereassessedoneverybalancesheetdate.Thecarryingvaluewillbeadjustedtothebestestimatedvalueifthereiscertainevidencethatthecurrentcarryingvalueisnotthebestestimate.Thecontingentliabilitiesobtainedfromabusinesscombinationnotinvolvingentitiesundercommoncontrolshallbemeasuredatfairvalueatthetimeofinitialrecognition.Aftertheinitialrecognition,accordingtotheamountconfirmedbyprovisionsandthebalanceoftheinitialrecognitionamountafterdeductingtheaccumulatedamortizationdeterminedbytherevenuerecognitionprinciple,thehigherofthetwoshallprevailforsubsequentmeasurements.

20.Share-basedpaymentsShare-basedpaymentscanbedistinguishedintoequity-settledshare-basedpaymentsandcash-settledshare-basedpayments.Equity-settledshare-basedpaymentsaretransactionsoftheGroupsettledthroughthepaymentofsharesorotherequityinstrumentsinconsiderationforreceivingservices.Equity-settledshare-basedpaymentsmadeinexchangeforservicesrenderedbyemployeesaremeasuredatthefairvalueofequityinstrumentsgrantedtoemployees.Instrumentswhicharevestedimmediatelyuponthegrantarechargedtorelevantcostsorexpensesatthefairvalueonthedateofgrantandthecapitalsurplusarecreditedaccordingly.InstrumentsofwhichvestingisconditionaluponcompletionofservicesorfulfillmentofperformanceconditionsaremeasuredbyrecognisingservicesrenderedduringtheperiodinrelevantcostsorexpensesandcreditingthecapitalsurplusaccordinglyatthefairvalueonthedateofgrantaccordingtothebestestimatesofthenumberofexercisableequityinstrumentsconductedbytheGroupateachbalancesheetdateduringthependingperiod.ThefairvalueofequityinstrumentsisdeterminedusingtheclosingpriceoftheCompany’sstockonthedateofgrant.

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21.RevenuegeneratingfromcontractswithcustomersTheGrouprecognizesitsrevenueuponthefulfilmentofcontractualperformanceobligationsunderacontract,namely,whenthecustomerobtainscontrolovertherelevantproductsorservices.Theacquisitioncontroloverrelevantproductsorservicesshallmeantheabilitytodirecttheuseoftheproductsortheprovisionoftheservicesandreceivesubstantiallyalleconomicbenefitsderivedtherefrom.ContractforthesalesofproductsTheproductsalescontractbetweentheGroupanditscustomerstypicallyincludesdifferentcontractualperformanceobligationsforthetransferofproductsandtherenderingofservices.Withrespecttothesalesofproducts,theGrouptypicallyrecognizesitsrevenueatthetimewhenthecustomertakescontrolovertheproducts,takingintoaccountthefollowingfactors:theacquisitionofthecurrentrighttoreceivepaymentsfortheproducts,thetransferofmajorrisksandrewardsofownership,thetransferofthelegaltitleoftheproducts,thetransferofthephysicalassetsoftheproducts,andcustomers’acceptanceoftheproducts.ContractfortherenderingofinstallationservicesTheservicecontractbetweentheGroupanditscustomersincludescontractualperformanceobligationsforinstallationservices.AsthecustomerisabletoforthwithobtainandconsumetheeconomicbenefitsbroughtbytheGroup’scontractualperformancewhentheGroupperformsacontract,theGroupconsiderssuchcontractualperformanceobligationstobeobligationsperformedoveraperiodoftime,andrevenueshallberecognizedoneachbalancesheetdateaccordingtotheprogressofinstallation.SignificantfinancingcomponentWhereacontractcontainsasignificantfinancingcomponent,theGroupdeterminestransactionpricesbasedonamountspayableassumedtobesettledincashbycustomersimmediatelyupontheacquisitionofcontrolovertheproductsorservices.Thedifferencebetweensuchtransactionpriceandcontractconsiderationisamortizedoverthecontractperiodusingtheeffectiveinterestmethodbasedonaratiothatdiscountsthenominalcontractualconsiderationtothecurrentsellingpriceoftheproductsorservices.TheGroupshallnotgiveconsiderationtoanysignificantfinancingcomponentinacontractifthegapbetweenthecustomer’sacquisitionofcontrolovertheproductsorservicesandpaymentofconsiderationisexpectedtobelessthan1year.WarrantyclausesTheGroupprovidesqualityassuranceforproductssoldinaccordancewithcontracttermsandlawsandregulations.TheaccountingtreatmentofqualityassuranceintheformofwarrantyassuringcustomersproductssoldareincompliancewithrequiredstandardsissetoutinNoteIII.20.WheretheGroupprovidesaservicewarrantyforastandaloneserviceinadditiontotheassuranceofcomplianceofproductswithrequiredstandards,suchwarrantyistreatedasastandalonecontractualperformanceobligation,andaportionofthetransactionpriceshallbeallocatedtotheservicewarrantybasedonapercentageofthestandalonepricefortheprovisionofproductandservicewarranty.Whenassessingwhetherawarrantyisrenderingastandaloneserviceinadditiontoprovidingguaranteetocustomersthatallsoldgoodsareincompliancewithrequiredstandards,theGroupwillconsiderwhetherornotsuchwarrantyisastatutoryrequirement,thetermofthewarrantyandthenatureoftheGroup’sundertakingtoperformitsobligations.

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22.ContractassetsandcontractliabilitiesTheGrouppresentscontractassetsorcontractliabilitiesonthebalancesheetaccordingtotherelationshipbetweencontractualperformanceobligationsandcustomerpayments.ContractassetsContractassetsaretherighttoreceiveconsiderationfollowingthetransferofproductsorservicestocustomerswhichisdependentonfactorsotherthanthepassageoftime.FordetailsoftheGroup’sdeterminationandaccountingtreatmentofexpectedcreditlossesfromcontractassets,pleaserefertoNoteIII.8.ContractliabilitiesContractliabilitiesaretheobligationtopassproductsorservicestocustomersinconnectionwithcustomerconsiderationreceivedorreceivable,forexample,amountsreceivedpriortothetransferofthepromisedproductsorservices.

23.AssetsrelatingtocontractcostTheGroup’sassetsrelatingtocontractcostsincludethecontractacquisitioncostsandcontractperformancecosts.Thecostsarepresentedininventory,othercurrentassetsorothernon-currentassetsbasedonliquidityoftheassets.WheretheGroupexpectstheincrementalcostsforacquiringacontracttoberecoverable,suchcontractacquisitioncostsarerecognizedasanasset(unlesstheamortisationperiodoftheassetisnotmorethan1year).CostsincurredbytheGroupfortheperformanceofacontractarerecognizedasanassetascontractperformancecostsiftheydonotfallunderthescopeoftherelevantstandardsforinventories,fixedassetsorintangibleassetsbutmeetallthefollowingconditions:

(1)theyaredirectlyrelatedtoacurrentoranticipatedcontract,includingdirectlabour,directmaterials,

manufacturingexpenses(orsimilarexpenses),tobebornebycustomersasspecificallystipulated,andotherwiseincurredsolelyinconnectionwiththecontract;

(2)theywillincreasetheresourcestobeutilizedintheCompany’sfutureperformanceofitscontractual

obligations;

(3)theyareexpectedtoberecoverable.

24.GovernmentgrantsGovernmentgrantsarerecognizedwhenthereisreasonableassurancethatthegrantwillbereceivedandallattachingconditionswillbecompliedwith.Thegrantismeasuredastheamountreceivedorreceivablewhereittakestheformofacashasset,oratfairvaluewhereitisnotacashasset.Wherethefairvaluecannotbereliablyobtained,itshouldbemeasuredatthenominalvalue.Inaccordancewiththestipulationsofthegovernmentinstruments,governmentgrantsappliedtowardsacquisitionortheformationoflong-termassetsinothermannersareasset-relatedgovernmentgrants;theinstrumentsunspecificallyrefertotheexerciseofjudgementbasedonthebasicconditionsforreceivingtheasset-relatedgrantappliedtowardsortheformationoflong-termassetsinothermanners.Allothergrantsarerecognizedasincome-relatedgovernmentgrants.

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24.Governmentgrants(cont’d)Governmentgrantsrelatingtoincomeandappliedtomakeupforrelatedcostsorlossesinfutureperiodsshallberecognizedasdeferredincome,andshallberecognizedinprofitorlossoftheperiodforwhichrelatedcostsorlossarerecognized.Governmentgrantsspecificallyappliedforthereimbursementofincurredrelatedcostsandexpensesshallbedirectlyrecognizedinprofitorloss.Governmentgrantsrelatingtoassetsshalloffsetthecarryingamountofrelatedassets,orberecognizedasdeferredincomeandcreditedtoprofitorlossovertheusefullifeoftheassetconcernedbyreasonableandsystematicinstalments(providedthatgovernmentgrantsmeasuredatnominalvalueshallbedirectlyrecognizedinprofitorloss).Wheretheassetconcernedisdisposedof,transferred,retiredordamagedpriortotheendofitsusefullife,thebalanceofthedeferredincomeyettobeallocatedshallbetransferredto“assetdisposal”undercurrentprofitorloss.

25.DeferredtaxassetsTheGrouprecognizesdeferredtaxassetsandliabilitiesbasedontemporarydifferencesusingthebalancesheetliabilitymethod.Temporarydifferencesaredifferencesbetweenthecarryingamountofassetsorliabilitiesinthebalancesheetandtheirtaxbaseonthebalancesheetdate.Temporarydifferencesalsoincludethedifferencesbetweenthecarryingvaluesandtaxbasesofitemsnotrecognizedasassetsorliabilitieswherethetaxbasecanbecalculatedaccordingtotherelevanttaxregulations.Deferredtaxliabilitiesarerecognizedforalltaxabletemporarydifferences,except:

(1)wherethetaxabletemporarydifferencearisesfromgoodwillortheinitialrecognitionofanassetor

liabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;

(2)inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesand

interestsinjointventures,wherethetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.Deferredtaxassetsarerecognizedforalldeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,andthecarryforwardofunusedtaxcreditsandunusedtaxlossescanbeutilizedexcept:

(1)wherethedeductibletemporarydifferencearisesfromtransactionthatisnotabusinesscombinationand,

atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;

(2)deductibletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterestsin

jointventuresarerecognizedwhenallfollowingconditionsaremet:itisprobablethatthetemporarydifferenceswillreverseintheforeseeablefuture,itisprobablethattaxableprofitagainstthedeductibletemporarydifferenceswillbeavailable.

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25.Deferredtaxassets(cont’d)Asatbalancesheetdate,deferredtaxassetsandliabilitiesaremeasuredinaccordancewithrelevanttaxlawsatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealizedortheliabilityissettled,andreflectsthetaxconsequencesthatwouldfollowthemannerinwhichtheGroupexpects,atthebalancesheetdate,torecovertheassetsorsettlethecarryingamountofitsassetsandliabilities.Thecarryingamountofdeferredtaxassetsisreviewedattheendofeachreportingperiodandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilized.Unrecognizeddeferredtaxassetsarereassessedattheendofeachreportingperiodandarerecognizedtotheextentthatithasbecomeprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettoberecovered.Deferredtaxassetsandliabilitiesareoffsetandpresentedasanetamountifallofthefollowingconditionsaremet:theGrouphasthelegalrighttosetoffthecurrentincometaxassetsandliabilitiesandthedeferredtaxassetsandliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentityordifferenttaxableentities,providedthatthetaxableentityconcernedintendseithertosettlecurrentincometaxliabilitiesandassetsonanetbasis,ortorealizetheassetsandsettletheliabilitiessimultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxliabilitiesorassetsareexpectedtobesettledorrecovered.

26.LeasesAtinceptionofacontract,theGroupassesseswhetherthecontractis,orcontains,alease.Acontractis,orcontains,aleaseifthecontractconveystherighttocontroltheuseofanidentifiedassetforaperiodoftimeinexchangeforconsideration.AslesseeTheGrouprecognizesleasesastheright-of-useassetandleaseliabilities,exceptforshort-termleasesandleasesoflow-valueassets.Right-of-useassetsAtthecommencementdateofthelease,theGrouprecognizesaright-of-useasset.Thecostoftheright-of-useassetcomprises:(1)theamountoftheinitialmeasurementoftheleaseliability;(2)anyleasepaymentsmadeatorbeforethecommencementdatelessanyleaseincentivesreceived;(3)anyinitialdirectcostincurred;(4)anestimateofcostsincurredbythelesseeindismantlingandremovingtheunderlyingasset,restoringthesiteonwhichitislocatedorrestoringtheunderlyingassettotheconditionrequiredbythetermsandconditionsofthelease.Theright-of-useassetsaredepreciatedonastraight-linebasissubsequentlybytheGroup.IfownershipoftheleasedassettransferstotheGroupattheendoftheleaseterm,depreciationiscalculatedusingtheestimatedusefullifeoftheasset.Otherwise,theright-of-useassetsaredepreciatedovertheshorteroftheleasetermandtheestimatedusefullivesoftheassets.

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26.Leases(cont’d)

LeaseliabilitiesAtthecommencementdate,theGroupmeasurestheleaseliabilityatthepresentvalueoftheleasepaymentsthatarenotpaidatthatdate,exceptforshort-termleasesandlow-valueassetleases.Leasepaymentsincludeconstantpaymentsandthesubstantialconstantpaymentsnetofleaseincentives,variableleasepaymentsthatdependonanindexorratio,theestimatedpayablesofguaranteedresidualvalue,andalsoincludetheexercisepriceofthepurchaseoptionortheamounttobepaiduponvestoftheterminationoption,providedthattheGroupisreasonablycertainthattheoptionwillbevestedorthattheleasetermreflectsthattheGroupwillexercisetheterminationoption.Incalculatingthepresentvalueoftheleasepayments,theGroupusestheinterestrateimplicitintheleaseasthediscountrate.Ifthatratecannotbereadilydetermined,theGroupusesthelessee’sincrementalborrowingrate.TheGroupcalculatestheinterestexpensesoftheleaseliabilityineachperiodduringtheleasetermusingtheconstantperiodicrateofinterest,andrecognizessuchinterestexpensesinprofitorloss,exceptthosethatintherelatedassetcostsasrequired.Variableleasepaymentsthatarenotincludedinthemeasurementoftheleaseassetsarerecognizedinprofitorlossasincurred,exceptthosethatshallbeincludedintherelatedassetcostsasrequired.Afterthecommencementdate,theGroupincreasesthebookvalueoftheleaseliabilitywheninterestisrecognizedanddecreasesthebookvalueoftheleaseliabilitywhenleasepaymentsaremade.Intheeventofanychangetothesubstantialconstantpayments,theestimatedpayablesofguaranteedresidualvalue,theindexorratiousedtodetermineleasepayments,theassessmentresultsoractualvestingofthepurchaseoption,therenewaloptionortheterminationoption,theGroupremeasurestheleaseliabilityatthepresentvalueofthemodifiedleasepayments.Short-termleasesandleasesoflow-valueassetsAshort-termleaseisaleasethat,atthecommencementdate,hasaleasetermof12monthsorless,anddoesnotcontainsanypurchaseoption.TheGroupdoesnotrecognizetheright-of-useassetsandleaseliabilitiesforbuildingsshort-termleases.TheGrouprecognizesleasepaymentsonshort-termleasesandleasesoflow-valueassetsintherelatedassetcostsorprofitorlossonastraight-linebasisovertheleaseterm.AsalessorAleaseisclassifiedasafinanceleaseifittransferssubstantiallyalltherisksandrewardsincidentaltoownershipofanunderlyingasset,exceptthataleaseisclassifiedasanoperatingleaseattheinceptiondate.AsalessorofoperatingleasesRentalincomeofoperatingleasesisrecognizedincurrentprofitorlossovertherespectiveperiodsduringtheleasetermonastraight-linebasis,whilevariableleasepaymentnotincludedinleasereceiptsischargedtoprofitorlossasandwhenincurred.Initialdirectcostsarecapitalisedandrecognisedovertheleasetermonthesamebasisasrentalincome,throughprofitorloss.

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27.SharerepurchaseTheconsiderationandtransactioncostspaidtorepurchaseequityinstrumentsarechargedagainstowner’sequity.Exceptforshare-basedpayments,theissue(includingrefinancing),repurchase,disposalorretirementoftheCompany’sownequityinstrumentsareaccountedforaschangesinequity.

28.ExpensesforsafetyproductionTheexpensesforsafetyproductionsetsideasstipulatedshallbeincludedinthecostofrelevantproductsorcurrentprofitsandlosses,andincludedinthespecialreserveatthesametime.Whensuchexpensesareused,accountingtreatmentwillbeperformedaccordingtowhetherfixedassetsareformed.Ifidentifiedasexpenseexpenditures,thespecialreservewillbewrittendowndirectly;iffixedassetsareformed,theexpensesincurredwillbecollected,fixedassetswillberecognizedwhentheyreachapredeterminedusablestate,andtheequivalentamountofspecialreservewillbewrittendownandtheequivalentaccumulateddepreciationwillberecognized.

29.Putoptionrelatedtonon-controllinginterestsIntheprocessofacquiringmajorityequityofsubsidiaries,theGroupgrantstominorityshareholderstheoptiontosellthesharesofsubsidiariesheldbythemtotheGroup(putoption).TheGrouprecognizesthesharesofsubsidiariesheldbyminorityshareholdersasnon-controllinginterestsinitsconsolidatedfinancialstatements;fortheputoption,theGroupundertakestheobligationtoredeemthesharesofthesubsidiariesheldbyminorityshareholdersincash.TheGroupremovesthepresentvalueoftheamountpayabletoredeemtheputoptionfromitsequity(excludingnon-controllinginterests)andclassifiesitasfinancialliability,whichisremeasuredinsubsequentperiodsatthepresentvalueofthetheamountpayabletoredeemtheputoptionandrecognizedinprofitorloss.

30.FairvaluemeasurementAteachbalancesheetdate,theGroupmeasuresthefairvalueofderivativefinancialinstrumentsandequityinstrumentinvestments.Fairvaluemeansthepricereceivablefromthedisposalofanassetorrequiredtobepaidforthetransferofaliabilityinanorderlytransactionincurredbymarketparticipantsonthemeasurementdate.Thefairvaluehierarchytowhichanassetorliabilitymeasuredordisclosedinthefinancialstatementsatfairvaluewillbedeterminedonthebasisofthelowestlevelofinputwhichissignificantforthefairvaluemeasurementasawhole.Inputatthefirstlevelrepresentsunadjustedquotedpricesinanactivemarketfortheacquisitionofthesameassetorliabilityonthemeasurementdate.Inputatthesecondlevelrepresentsdirectlyorindirectlyobservableassetsorliabilitiesapartfrominputatthefirstlevel.Inputatthethirdlevelrepresentsunobservableinputfortheassetorliability.Ateachbalancesheetdate,theGroupreassessesassetsandliabilitiesmeasuredatfairvalueonanongoingbasisrecognizedinthefinancialstatementstodeterminewhethertheleveloffairvaluemeasurementshouldbechanged.

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31.SignificantaccountingjudgementsandestimatesThepreparationoffinancialstatementsrequiresjudgementandestimationofthemanagement.Suchjudgementandestimationwillaffectthereportedamountsofrevenue,expenses,assetsandliabilitiesandthedisclosureofcontingentliabilitiesasatthebalancesheetdate.However,theconsequencearisingfromtheuncertainnatureofsuchestimationmayresultinsignificantadjustmenttothecarryingvalueoftheassetorliabilityaffectedinthefuture.JudgementIntheprocessofapplyingtheGroup’saccountingpolicies,managementhasmadethefollowingjudgements,whichhavethemostsignificanteffectontheamountsrecognizedinthefinancialstatements:

DeterminationofstandalonecontractualperformanceobligationsTheintelligentpackagingequipment(printersandcorrugators)businessoftheGroupincludesfourkindsofproductorservicecommitments,i.e.thesale,installation,transportationandinsuranceservicesofmachinery.Asthecustomercanbenefitfromtheindividualuseofthefourkindsofproductsorservicesortheirusetogetherwithotherreadilyavailableresourcesandsuchproductorservicecommitmentsaredistinctlyseparablefromotherproductsorservicecommitments,theaforesaidproductorservicecommitmentsconstitutestandalonecontractualperformanceobligationsrespectively.BusinessmodelTheclassificationoffinancialassetsatinitialrecognitionisdependentontheGroup’sbusinessmodelformanagingtheassets.FactorsconsideredbytheGroupinjudgingthebusinessmodelincludeenterprisevaluation,themethodofreportingtheresultsoffinancialassetstokeymanagementmembers,risksaffectingtheresultsoffinancialassetsandthemethodformanagingsuchrisks,aswellastheformofremunerationreceivedbythemanagementpersonnelofthebusinessesconcerned.Inassessingwhetherthebusinessmodelisaimedatreceivingcontractcashflow,theGroupisrequiredtoanalyseandexercisejudgmentinrespectofthereasons,timing,frequencyandvaluesofanydisposalspriortomaturity.CharacteristicsofcontractcashflowTheclassificationoffinancialassetsatinitialrecognitionisdependentonthecharacteristicsofthecontractcashflowofsuchtypeoffinancialassets.Judgementisrequiredtodeterminewhetherthecontractcashflowrepresentsinterestpaymentinrelationtoprincipalamountsbasedonoutstandingprincipalamountsonly,includingjudgementofwhetheritissignificantlydifferentfromthebenchmarkcashflowwhenassessingmodificationstothetimevalueofcurrencies,andjudgementofwhetherthefairvalueofearlyrepaymentfeaturesisminimalwherethefinancialassetsincludesuchearlyrepaymentfeatures.EstimationuncertaintyThekeyassumptionsconcerningthefutureandotherkeysourcesofestimationuncertaintyatthebalancesheetdate,thathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinsubsequentfinancialyears,arediscussedbelow.

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31.Significantaccountingjudgementsandestimates(cont’d)Estimationuncertainty(cont’d)ImpairmentoffinancialinstrumentsandcontractassetsTheGrouphasadoptedtheexpectedcreditlossmodeltoevaluatetheimpairmentoffinancialinstrumentsandcontractassets.Theapplicationoftheexpectedcreditlossmodelrequiressignificantjudgementandestimatesandtheconsiderationofallreasonableandsoundlybasedinformation,includingforward-lookinginformation.Inmakingsuchjudgementandestimates,theGroupestimatestheprojectedmovementsofthedebtor’screditriskaccordingtopastrepaymentrecords,economicpolicies,macro-economicindicatorsandindustryrisks.Differentestimatesmayaffectimpairmentallowances,andestablishedimpairmentallowancesmaynotequaltheactualimpairmentlossamountinthefuture.Impairmentofnon-currentassetsotherthanfinancialassets(exclusiveofgoodwill)TheGroupassessesateachbalancesheetdatewhetherthereisanindicationthatanon-currentassetotherthanfinancialassetsmaybeimpaired.Foranintangibleassetwithanindefiniteusefullife,inadditiontotheannualimpairmenttest,itisalsotestedwhenthereisanindicationthatitmaybeimpaired.Non-currentassetsotherthanfinancialassetsaretestedforimpairmentwhenthereisanindicationthatthecarryingamountisirrecoverable.Wherethecarryingamountofanassetoranassetgroupexceedsitsrecoverableamount—thehigheroftheassetorassetgroup’sfairvaluelesscoststosellanditspresentvalueofestimatedfuturecashflows,itisconsideredimpaired.Thenetamountofthefairvaluelesscoststosellisdeterminedbasedonthepriceofasimilarasset’ssalescontractinafairtransactionortheobservablemarketpricelesstheincrementalcostdirectlyattributabletothedisposaloftheasset.Whenestimatingthepresentvalueoffuturecashflows,themanagementmustchooseaproperdiscountrate.ImpairmentofgoodwillGoodwillmustbetestedforimpairmentatleastannually.Itrequiresestimatingthepresentvalueoffuturecashflowsofanassetgrouporassetgroupportfolioallocatedwithgoodwill.Whenestimatingthepresentvalueoffuturecashflows,theGroupneedstoestimatefuturecashflowsgeneratingfromtheassetgrouporassetgroupportfolio,andatthesametimechooseaproperdiscountratetodeterminethepresentvalueoffuturecashflows.Fordetails,seeNoteV.20.FairvalueofunlistedequityinvestmentsTheunlistedequityinvestmentshavebeenvaluedbasedontheexpectedcashflowsdiscountedatcurrentratesapplicableforitemswithsimilartermsandriskcharacteristics.ThisvaluationrequirestheGrouptomakeestimatesaboutexpectedfuturecashflows,creditrisk,volatilityanddiscountrates,andhencetheyaresubjecttouncertainty.DeferredtaxassetsDeferredtaxassetsarerecognizedforallunusedtaxlosses,totheextentthatitislikelythattaxableprofitwillbeavailabletoutilizetheseunusedtaxlosses.Significantjudgmentsareneededfrommanagementtoestimatethetimingandamountoftaxableprofitinthefuture,withtaxplanningstrategies,todeterminetheamountofthedeferredtaxassetsthatshouldberecognized.

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V.PrincipalAccountingPoliciesandAccountingEstimates(Cont’d)

31.Significantaccountingjudgementsandestimates(cont’d)Estimationuncertainty(cont’d)Lessee’sincrementalborrowingrateIftheinterestrateimplicitintheleasecannotbereadilydetermined,theGroupmeasurestheleaseliabilityatthepresentvalueoftheleasepaymentsthatarenotpaidatthatdate.TheGroupdiscountedtheleasepaymentsusingthelessee’sincrementalborrowingrate.TheGroupdeterminestheincrementalborrowingratebasedontheeconomicenvironmentbyreferencetotheobservableinterestrate.ThentheGroupadjuststhereferenceinterestratebasedonitsowncircumstances,underlyingassets,leasetermsandamountsofleaseliabilitiestodeterminetheapplicableincrementalborrowingrate.ProvisionsTheGroupestimatesandmakescorrespondingprovisionforproductqualityguarantyaccordingtocontractterms,existingknowledgeandpastexperience.WhensuchcontingencieshaveformedapresentobligationanditisprobablethatanoutflowofeconomicbenefitsfromtheGroupwillberequiredtosettletheobligation,theGrouprecognizesthecontingenciesasprovisionsbasedonthebestestimateoftheexpenditurerequiredtosettletherelatedpresentobligation.Therecognitionandmeasurementofprovisionslargelydependonthejudgmentofmanagement.Intheprocessofmakingjudgment,theGroupisrequiredtoassesstherisks,uncertainties,timevalueofmoneyandotherfactorsrelatedtosuchcontingencies.TheGroupwillundertaketheprovisionsforpost-salequalitymaintenanceprovidedtocustomersforthesale,maintenanceandrenovationofthesoldgoods.TheprovisionshavebeenmadetakingintoaccounttheGroup’srecentdataofmaintenanceexperience,andtakingintoaccounttherisks,uncertaintiesandotherfactorsrelatedtomaintenancematters.Anyincreaseordecreaseinthisprovisionmayaffecttheprofitandlossinfutureyears.

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VI.Taxation

1.Principaltaxitemsandtaxrates

Value-addedtax(VAT)

Thetaxpayingentitiessubjecttodifferentcorporateincometaxratesareasfollows:

IncometaxrateGuangdongDongfangPrecisionScience&TechnologyCo.,Ltd.

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VI.Taxation(Cont’d)

2.TaxconcessionsOn28December2023,theCompanypassedthehigh-techenterprisereviewbytheDepartmentofScienceandTechnologyofGuangdongProvince,DepartmentofFinanceofGuangdongProvince,GuangdongProvincialTaxServiceofStateTaxationAdministrationandGuangdongProvincialLocalTaxationBureauandobtainedaHigh-techEnterpriseCertificate(certificateno.:GR202344004676)jointlyissuedbytheaboveauthorities,withavalidityofthreeyears,duringwhichtheCompanypaidthecorporateincometaxatareducedrateof15%,sothepreferentialtaxrateof15%wasapplicabletotheCompany'scorporateincometaxasat30June2024.SuzhouParsunPowerMachineCo.,Ltd.,asubsidiaryoftheCompany,passedthehigh-techenterprisereviewbytheDepartmentofScienceandTechnologyofJiangsuProvince,DepartmentofFinanceofJiangsuProvinceandJiangsuProvincialTaxServiceofStateTaxationAdministrationon18November2022andobtainedaHigh-techEnterpriseCertificate(certificateno.:GR202232005866)jointlyissuedbytheaboveauthorities,withavalidityofthreeyears,duringwhichthesubsidiarypaidthecorporateincometaxatareducedrateof15%,sothepreferentialtaxrateof15%wasapplicabletothecorporateincometaxofParsunPowerasat30June2025.GuangdongFosberIntelligentEquipmentCo.,Ltd.,asubsidiaryoftheCompany,passedthehigh-techenterprisereviewbytheDepartmentofScienceandTechnologyofGuangdongProvince,DepartmentofFinanceofGuangdongProvinceandGuangdongProvincialTaxServiceofStateTaxationAdministrationon20December2021andobtainedaHigh-techEnterpriseCertificate(certificateno.:GR202144003984)jointlyissuedbytheaboveauthorities,withavalidityofthreeyears,duringwhichthesubsidiarypaidthecorporateincometaxatareducedrateof15%,andpassedthere-certificationasahigh-techenterpriseon28November2024(CertificateNumber:GR202444004278),withavalidityperiodofthreeyears.Duringthisperiod,thecompanyiseligibletopaycorporateincometaxatareducedrateof15%,sothepreferentialtaxrateof15%wasapplicabletothecorporateincometaxofFosberAsiaasat30June2025.ShenzhenWonderPrintingSystemCo.,Ltd.,asubsidiaryoftheCompany,passedthehigh-techenterprisereviewbytheDepartmentofScienceandTechnologyofGuangdongProvince,DepartmentofFinanceofGuangdongProvinceandGuangdongProvincialTaxServiceofStateTaxationAdministrationon19December2022andobtainedaHigh-techEnterpriseCertificate(certificateno.:GR202244206125)jointlyissuedbytheaboveauthorities,withavalidityofthreeyears,duringwhichthesubsidiarypaidthecorporateincometaxatareducedrateof15%,sothepreferentialtaxrateof15%wasapplicabletothecorporateincometaxofWonderPrintingasat30June2025.

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VIINotestotheConsolidatedFinancialStatements

1.Cashandbankbalances

Unit:RMByuan

Otherinformation:

ThefunddepositedabroadwithrestrictionsonrepatriationwasequivalenttoRMB14,276,910.32(On31December2024,thenumberwasRMB10,859,642.60).Currentbankdepositsearninterestincomebasedoninterestratesforcurrentdeposits.

2.Financialassetsheldfortrading

Unit:RMByuan

Total

3.Derivativefinancialassets

4.Notesreceivable

(1)Notesreceivablebytype

Unit:RMByuan

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(2)Attheendoftheperiod,thecompanyhadendorsedordiscountednotesreceivablethathadnotyetmaturedasofthebalancesheetdate.

Unit:RMByuan

5.Accountsreceivable

(1)Disclosurebytheagingofaccountsreceivable

Unit:RMByuan

(2)Disclosureclassifiedbytheallowanceprovisionmethodofaccountsreceivable

Unit:RMByuan

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Accountsreceivableforwhichtheallowancesareestablishedindividually:

Unit:RMByuan

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Accountsreceivableforwhichtheallowancesareestablishedbygroupwithsimilarcreditriskcharacteristicsareasfollows:

Unit:RMByuan

（3）Allowancesestablishedorreversedinthecurrentperiod

Allowancesinthecurrentperiod:

Unit:RMByuan

（4）Topfiveentitieswithrespecttoaccountsreceivable

Unit:RMByuan

6、Contractassets

（1）Contractassets

Unit:RMByuan

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（2）Disclosureclassifiedbytheallowanceprovisionmethod

Unit:RMByuan

Accountsreceivableforwhichtheallowancesareestablishedbygroup:

Unit:RMByuan

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（3）Allowancesestablishedorreversedinthecurrentperiod

Unit:RMByuan

7.Receivablesfinancing

Unit:RMByuan

8.Otherreceivables

Unit:RMByuan

(1)Otherreceivables

1)Disclosurebynature

Unit:RMByuan

2)Disclosurebytheaging

Unit:RMByuan

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3)Disclosureclassifiedbytheallowancesprovisionmethods

Unit:RMByuan