Annual Report 2023

Company Code: 603163 Company Abbreviation : Acter Group

Acter Technology Integration Group Co. Ltd.Annual Report 2023

1 / 250Annual Report 2023

Important Notices

I. The Board of Directors Supervisory Committee Directors Supervisors and Senior Management of

the Company guarantee the truthfulness accuracy and completeness of the contents of the annual

report and assume individual and joint legal liabilities for any false records misleading statements or

material omissions.II. All Directors of the Company attended the Board meeting.III. ShineWing Certified Public Accountants LLP has issued a standard unreserved audit report for

the Company.IV. Liang Jinli the person in charge of the Company Chen Zhihao the person in charge of accounting

work and Xiao Jingxia the person in charge of the accounting organization (accounting supervisor)

hereby certify that the financial report set out in the annual report is true accurate and complete. V.Proposals for profit distribution or capitalization of provident fund for the reporting period adopted

by resolution of the Board of Directors

The Board of Directors of the Company proposes to distribute a cash dividend of RMB 8 (inclusive of tax)

for every 10 shares to all shareholders on the basis of the total share capital of 100 million shares as at the

end of 2023 totaling RMB 80000000.00 (inclusive of tax) with no stock dividend or capitalization and

the remaining undistributed profits will be carried forward to be distributed in future years.VI. Risk Disclosure of Forward-Looking Statements

√ Applicable □ N/A

The forward-looking descriptions of future plans development strategies and other forward-looking

statements in this report do not constitute substantial commitments of the Company to investors and

investors are advised to pay attention to investment risks.VII. Whether there is non-operational appropriation of funds by controlling shareholders and other

related parties

No

VIII. Whether there is any violation of the required decision-making procedures for the provision of

external guarantees

No

IX. Whether more than half of the directors are unable to guarantee the truthfulness accuracy and

completeness of the annual report disclosed by the Company

No

X. Significant Risk WarningFor details please refer to the possible risks mentioned in “Section III: Management Discussion and AnalysisVI、Discussion and Analysis of the Future Development of the Company (IV) Possible Risks”.XI. Others

□ Applicable √ N/A

2 / 250Annual Report 2023

Table of Contents

Section I Definitions ............................... 4

Section II Company Profile and Key Financial Indic... 6

Section III Management Discussion and Analysis ..... 11

Section IV Corporate Governance .................... 42

Section V Environmental and Social Responsibility... 64

Section VI Important Events ........................ 66

Section VII Changes in Shares and Information abou.. 87

Section VIII Relevant Information of Preferred Sto.. 96

Section IX Relevant Information of Bonds ........... 97

Section X Financial Reporting ...................... 97

The full text and abstract of this annual report signed by the current legal

representative and sealed by the Company;

Financial statements containing the signatures and seals of the person in

charge of the company the person in charge of accounting work and the

Catalog of Documents person in charge of the accounting organization (accounting supervisor).Available for Inspection The original audit report containing the seal of the accounting firm and the

signature and seal of the certified public accountant;

The originals of all the Company’s documents and announcements publicly

disclosed in the newspapers designated by the CSRC during the reporting

period.

3 / 250Annual Report 2023

Section I Definitions

I.Definitions

In this report unless the context otherwise requires the following terms shall have the meanings set out

below:

Definitions of commonly used terms

Company the Company Acter

Group Suzhou Acter refer to Acter Technology Integration Group Co. Ltd.Sheng Huei Limited refers to Sheng Huei (Suzhou) Engineering Co. Ltd. the predecessor of the Company

Sheng Huei International refers to Sheng Huei International Co. Ltd. a direct controlling shareholder of the Company

Acter (Taiwan) refers to Acter Co. Ltd. an indirect controlling shareholder of the Company

Suzhou Songhuei Business Management Consulting

Suzhou Songhuei refers to Partnership (Limited Partnership) an employee

shareholding platform of the Company

Suzhou Shengzhan Business Management Consulting

Suzhou Shengzhan refers to Partnership (Limited Partnership) a platform for

shareholding by employees of the Company

Acter (Shenzhen) refers to Shenghuei Engineering Technology (Shenzhen) Co. Ltd.Shenzhen Dingmao refers to Shenzhen Dingmao Trading Co. Ltd.Acter (Vietnam) refers to Sheng Huei Engineering Technology Company Limited

Acter (Hong Kong) refers to Acter International Limited

Acter (Singapore) Sheng Huei

(Singapore) refer to Acter Technology Singapore Pte. Ltd.Acter (Indonesia) Sheng Huei

(Indonesia) refer to Pt. Acter Technology Indonesia

Acter (Malaysia) Sheng Huei

(Malaysia) refer to Acter Technology Malaysia Sdn. Bhd.Acter (Thailand) Sheng Huei

(Thailand) refer to Acter Technology Company Limited

Space (Thailand) refers to Space Engineering Company Limited

New Point (Seychelles) refers to New Point Group Limited

Indonesia Joint Venture refers to Pt. Acter Integration Technology Indonesia

HER SUO (Taiwan) refers to HER SUO ENG. CO. LTD.Enrich (Taiwan) refers to Enrich Tech Co. Ltd.NOVA (Taiwan) refers to NOVA Technology Corp.Winmega (Taiwan) refers to Winmega Technology Corp.WASTE refers to WASTE Recovery Technology Inc.Winmax (Shanghai) refers to Winmax Technology Corp.Winmax (Suzhou) refers to Suzhou Winmax Technology Corp. It used to be called Suzhou Guanbo Controlling Technology Co. Ltd.Novatech (Singapore) refers to Novatech Engineering & Construction Pte. Ltd.

4 / 250Annual Report 2023

Rayzher Industrial refers to Rayzher Industrial Co. Ltd.SMIC refers to Smic Manufacturing (Shaoxing) Co. LTD

Lankao Yufu Precision Technology Co. Ltd.Futaihua Industrial (Shenzhen) Co. Ltd.Shanghai Foxconn Co. Ltd.Foxconn Technology Group refers to Yecheng Optoelectronics (Wuxi) Co. Ltd. .Interface Optoelectronics (SZ) Co. Ltd.Interface Technology (Chengdu) Co. Ltd.Siliconware Technology refers to Siliconware Technology (Suzhou) Limited Quliang Electronics Co. Ltd

Sanan Integrated refers to Xiamen Sanan Integrated Circuit Co. Ltd.Wistron InfoComm refers to Wistron Info Comm Co. Ltd.ASE refers to ASE WeiHai Inc.Nexchip refers to Nexchip Semiconductor Corporation

Wafer Works refers to Wafer Works (Shanghai) Co. Ltd.Reporting Period refers to The period from January 1 2023 to December 31 2023

Articles of Association refers to Articles of Association of Acter Technology Integration Group Co. Ltd.General Meeting refers to General Meeting of Shareholders of Acter Technology Integration Group Co. Ltd.Board of Directors refers to The Board of Directors of Acter Technology Integration Group Co. Ltd.Supervisory Committee refers to Supervisory Committee of Acter Technology Integration Group Co. Ltd.CSRC refers to CSRC

Company Law refers to Company Law of the People’s Republic of China

Securities Law refers to Securities Law of the People’s Republic of China

RMB/Yuan RMB

Million/100 RMB refer to Renminbi/Chinese Yuan RMB Ten Thousand Yuan RMB

Million*100 One Hundred Million Yuan

an enclosed space for high-end manufacturing industry

also known as clean plant and clean room to control

airborne particles harmful gases microorganisms

Clean Room refers to temperature relative humidity spatial airflow distribution airflow speed in all directions as well as vibration static

electricity electromagnetic interference and noise etc. in

order to satisfy the needs of the production process of

products.the concentration of dust existedin the air within an air

environment. Typically it refers to the quantity of particles

Cleanliness refers to equal to or exceeding a specified particle size within a designated volume of air. Elevated dust levels are linked to

reduced cleanliness whereas low dust content signifies

high cleanliness.the business of combining software hardware and

System Integration refers to communication technology to solve information processing

problems for users. The separated parts of the integration

5 / 250Annual Report 2023

are originally independent systems and the parts of the

integrated whole can work organically and coordinately

with each other to bring out the overall effect and achieve

the purpose of overall optimization.the connection from the main system piping to the process

Hook-up refers to equipment. Scope includes electricity water supply and

drainage pipes process piping exhaust systems etc.a semiconductor manufacturing process in which a

number of transistors resistors capacitors and other

IC Semiconductor refers to components are fabricated on a small monocrystalline

silicon wafer and assembled into a complete electronic

circuit using multi-layer wiring or tunnel wiring.the shell in which a semiconductor integrated circuit chip is

mounted which not only plays the role of placing fixing

Package refers to sealing protecting the chip and enhancing the electrical and

thermal properties but also serves as a bridge between the

internal and external circuits of the chip.an industrial sector that manufactures electronic equipment

electronic components electronic devices and specialized

raw materials. It mainly produces electronic computers

televisions radios and equipment for communication

radar broadcasting navigation electronic control and

Electronics Industry refers to electronic instrumentation; resistors capacitors inductors

printed circuit boards plug-in components and devices

such as tubes transistors and integrated circuits; as well as

high-frequency magnetic materials high-frequency

insulating materials and semiconductor materials and

other specialized raw materials.Building Information Modeling in short which is a new

BIM refers to tool for architecture engineering and civil engineering and is a computer-aided design tool based on three-dimensional

graphics object orientation and architecture.Printed Circuit Board in short which is an important

PCB refers to electronic component the support body of electronic components and the carrier for the electrical

interconnection of electronic components.the general contracting entrusted by the owner in

EPCO refers to accordance with the contract for the whole process of design procurement construction operation and other

integration of engineering construction projects.Good Manufacturing Practice in short a system for

GMP refers to ensuring the continuous production of pharmaceutical

products at a specified quality.Section II Company Profile and Key Financial Indicators

I. Company Information

Full Legal Name in Chinese 圣晖系统集成集团股份有限公司

Short Legal Name in Chinese 圣晖集成

Full Legal Name in English ACTER TECHNOLOGY INTEGRATION GROUP CO. LTD.Short Legal Name in English ACTER GROUP

6 / 250Annual Report 2023

Legal Representative Liang Jinli

II. Contact Information

Secretary of the Board of Directors Securities Representative

Name Chen Zhihao Gao Jiejie

No. 189 Shilin Road Xushuguan No. 189 Shilin Road Xushuguan

Address Economic Development Zone Suzhou Hi- Economic Development Zone Suzhou Hi-

Tech Zone Jiangsu Province China Tech Zone Jiangsu Province China

Tel. 0512-85186368 0512-85186368

Fax 0512-87773169 0512-87773169

E-Mail acter.china@acter.com.cn 603163@acter.com.cn

III. Basic Information

No. 189 Shilin Road Xushuguan Economic

Registered Address Development Zone Suzhou Hi-Tech Zone Jiangsu

Province China

Historical Changes in Registered Address N/A

No. 189 Shilin Road Xushuguan Economic

Business Address Development Zone Suzhou Hi-Tech Zone Jiangsu

Province China

Zip Code of the Business Address 215151 Suzhou

Company’s Website www.acter.com.cn

E-mail acter.china@acter.com.cn

IV. Place for Information Disclosure and Deposit

China Securities Journal: https://www.cs.com.cn/

Name and website of the media for Shanghai Securities News: https://www.cnstock.com/

information disclosure in annual report STCN: http://www.stcn.com/

Securities Daily: http://www.zqrb.cn/

Website of the stock exchange for

publishing annual reports www.sse.com.cn

Office of the Board of Directors of Acter Group No. 189

Deposit place of annual report Shilin Road Xuushuguan Economic Development Zone

Suzhou Hi-Tech Zone Jiangsu Province China

V. Profile of Company Stock

Profile of Company Stock

Stock Type Stock Exchange of Stock Short Name Stock Code Stock Short Name Shares Listed Before Change

A-share Shanghai Stock Exchange Acter Group 603163 N/A

VI. Other Information

Name of Firm ShineWing Certified Public Accountants LLP

Accounting Firm 8/F Block A Fuhua Mansion No. 8

engaged by the Business Address Chaoyangmen North Street Dongcheng

Company (domestic) District Beijing China

7 / 250Annual Report 2023

Name of the Signatory

Accountants Liu Yuehua Hou Shoufeng

Name of Sponsor Soochow Securities Co. Ltd.Sponsoring

organization Office Address No. 5 Xingyang Street Suzhou Industrial Park

performing Name of Signatory Sponsor

continuous Representative Xia Jianyang Zhang Boxiong

supervision during the Period of Continuous

reporting period Supervision October 13 2022 to December 31 2024

VII. Key Accounting Data and Financial Indicators for the Previous Three Years

(I) Key Accounting Data

Unit: Yuan Currency: RMB

Yoy change

Key Accounting Data 2023 2022 (%) 2021

Operating revenue 2008924995.68 1627895120.49 23.41 1702334398.59

Net profit attributable to

shareholders of listed 138590474.42 122867982.79 12.80 123603770.26

companies

Net profit attributable to

shareholders of the listed

company after

extraordinary gains and 136061341.30 113463515.78 19.92 123839170.02

losses

Net cash flows from

operating activities 133522931.23 161089465.80 -17.11 -64818199.36

End of 2023 End of 2022 Yoy change (%) End of 2021

Net assets attributable

to shareholders of listed 1082257514.27 1009348273.61 7.22 423289612.23

companies

Total assets 1904362490.44 1777146294.25 7.16 1159716566.13

(II) Key Financial Indicators

Key Financial Indicators 2023 2022 Yoy change (%) 2021

Basic earnings per share (yuan/share) 1.39 1.51 -7.95 1.65

Diluted earnings per share (yuan/share) 1.39 1.51 -7.95 1.65

Basic earnings per share after

extraordinary gains and losses 1.36 1.40 -2.86 1.65

(yuan/share)

Weighted average return on net assets

(%) 13.67 21.19 Decrease of 7.52% 33.59

Weighted average return on equity

after extraordinary gains and losses 13.42 19.56 Decrease of 6.14% 33.65

Average return on net assets (%)

Explanations on key accounting data and financial indicators of the Company for the previous three years

as at the end of the reporting period

√ Applicable □ N/A

According to the “Proposal on the Profit Distribution Plan for the Year 2022” considered and approved

at the Sixth Meeting of the Second Session of the Board of Directors and the Fifth Meeting of the Second

8 / 250Annual Report 2023

Session of the Supervisory Committee of the Company held on April 7 2023 and the Annual General

Meeting of the Company held on April 28 2023 based on the total share capital of 80000000 shares prior

to the implementation of the equity distribution the Company transferred 2.5 shares for every 10 shares to

all shareholders by way of capitalization of capital reserve resulting in a total of 20000000 shares. After

this capitalization the total share capital of the Company became 100000000 shares. The equity distribution

was completed during the reporting period. In order to ensure the comparability of accounting indicators the

basic earnings per share for 2022 and 2021 have been recalculated and presented based on the changed

number of shares.VIII. Differences in Accounting Data under Domestic and Overseas Accounting Standards

(I) Difference in net profit and net assets attributable to shareholders of the listed company between

the financial reports disclosed in accordance with international accounting standards and those

disclosed in accordance with China accounting standards

□ Applicable √ N/A

(II) Difference in net profit and net assets attributable to shareholders of the listed company between

the financial reports disclosed in accordance with overseas accounting standards and those

disclosed in accordance with China accounting standards

□ Applicable √ N/A

(III) Explanation of the differences between domestic and overseas accounting standards:

□ Applicable √ N/A

IX. Key Financial Data of 2023 by Quarter

Unit: Yuan Currency: RMB

Q1 Q3 Q4

(January- Q2

March) (April-June)

(July- (October-

September) December)

Operating Revenue 419848138.55 495472283.17 530389260.88 563215313.08

Net profit attributable to

shareholders of listed 36223388.39 40844180.88 37061523.72 24461381.43

companies

Net profit after extraordinary

gains and losses attributable to

shareholders of listed 34320192.92 41129128.30 36239469.39 24372550.69

companies

Net cash flows from operating

activities -32077131.59 73739081.78 -99323932.35 191184913.39

Explanation of differences between quarterly data and data in disclosed periodic reports

□ Applicable √ N/A

X. Non-recurring Profit and Loss and Amount

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Note

Non-recurring profit and loss items Amount for (If Amount for Amount 2023 applicable) 2022 for 2021

Profits or losses on disposal of non-current

assets including elimination of provision for 52564.23 237578.33 352738.82

asset impairment

Government grants recognized in profit or loss

for the current period except for those 3731552.00 3524827.14 174197.46

government grants that are closely related to

9 / 250Annual Report 2023

the Company’s normal business operations in

line with national policies and in accordance

with defined criteria and have a continuing

impact on the Company’s profit or loss

Profits or losses from changes in fair value of

financial assets and liabilities held by non-

financial enterprises and profits or losses from

the disposal of financial assets and liabilities

except for effective hedging business related to 117673.57 -11643.74

the Company’s normal business operations

Occupancy fees charged to non-financial

enterprises recognized in profit or loss for the

period

Profits or losses on entrusted investment or

asset management

Profits or losses on entrusted external loans

Losses on assets due to force majeure such as

natural disaster

Reversal of provision for impairment of

receivables individually tested for impairment -35000.00

Gain arising from the difference between the

cost of investment in subsidiaries associates

and joint ventures and the fair value of net

identifiable assets of the investee at the time of

investment acquisition

Subsidiaries arising from a business

combination under the same control Net gain

or loss for the period from the beginning of

the period to the date of the combination

Gain or loss on exchange of non-monetary

assets

Profits or losses on debt restructuring

One-time costs incurred by the enterprise due

to discontinuation of relevant business

activities such as employee relocation

expenses etc.One-time impact on profit or loss due to

adjustments in tax accounting and other laws

and regulations.One-time share-based payment expenses

recognized due to cancellation or

modification of the share incentive plan

Gains or losses arising from changes in the fair

value of employee remuneration payable after

the feasible date for cash-settled share-based

payments

Gains or losses from changes in fair value of

investment properties subsequently measured

using the fair value model

Profits or losses from transactions with an

apparent unfair price

Gains or losses arising from contingencies

unrelated to the Company’s normal business

operations

Custodian fee income from entrusted

operations

10 / 250Annual Report 2023

Non-operating revenue and expenses other -

than those mentioned above -811609.16 -840019.94 785670.35

Other profits or losses that meet the definition

of non-recurring profits or losses 9569293.94

Less: Income tax effect 445099.41 3204886.03 -69978.05

Effect of minority interests (after tax) -1725.46

Total 2529133.12 9404467.01 -235399.76If the company recognizes as non-recurring profit and loss items that are not listed in “InterpretativeAnnouncement for Information Disclosure of Companies Issuing Public Securities No. 1 - Non-RecurringProfit and Loss” and the amount is material and if the company defines non-recurring profit and loss itemslisted in “Interpretative Announcement for Information Disclosure of Companies Issuing Public SecuritiesNo. 1 - Non-Recurring Profit and Loss” as recurring profit and loss the reasons shall be explained.□ Applicable √ N/A

XI. Items Measured Using Fair Value

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Name Opening balance Closing balance Current period Amount of impact changes on current profit

Structured deposits 122119888.89 0 122000000.00 -119888.89

Total 122119888.89 0 122000000.00 -119888.89

XII. Others

□ Applicable √ N/A

Section III Management Discussion and Analysis

I. Discussion and Analysis of Operating ConditionsIn 2023 the Company continues to implement the corporate culture policy of “doing it right the firsttime doing it well every time” consistently and wholeheartedly providing comprehensive services to every

client and is committed to becoming a creator of high-quality spaces. Looking back on the past year

“involution” has become the best summary cliche of the increasingly intense Chinese market competition

while the foreign market is facing pressure due to the increase in labor cases leading to a shortage of versatile

and professional talents. Facing the complex Chinese and international business environment the Company

continuously optimizes internal processes actively takes risk response measures focuses on the quarterly

business goals conveyed by the lean meeting and implements strategic measures with small steps and steady

progress. It diligently organizes various tasks actively adjusts client and product structures and lays a good

foundation for stability and improvement of competitiveness in terms of cost quality safety progress and

environmental protection.The year of 2023 marks a year in which the Company’s research and development technologyachievements are demonstrated. During the reporting period the Company was honored as a “high-techenterprise”. As of the end of 2023 the Company held 61 patents including 9 invention patents 52 utility

model patents and 3 software copyrights.

11 / 250Annual Report 2023

As of the end of 2023 the Company has held a total of 61 authorized patents

including 9 invention patents 52 utility model patents and 3 software

copyrights. Besides the Company has also registered a total of 15 trademarks.In 2023 the Company achieved steady growth in its business performance. The annual business goals

were met as scheduled with substantial increases in both revenue and net profit. During the reporting period

the Company achieved operating revenue of RMB 2009 million an increase of 23.41% year-on-year and a

net profit of RMB 140 million an increase of 13.86% year-on-year. The Company’s performance growth

was mainly due to increased demand from downstream application clients in the clean room industry the

fruitful results of the Company’s early layout in the Southeast Asia region continuous development of new

clients while maintaining stable relationships with existing high-quality clients and strengthening service

innovation capabilities and overall competitiveness through talent development skills training and industry-

university-research cooperation. The Company’s management team led all employees in standing up to

external pressures overcoming internal difficulties and making strenuous efforts to successfully fulfill the

main objective tasks.RMB 2009 million

RMB 1628 million

Operating Revenue (RMB 100 million)

Year-on-year

growth rate:

23.41%20222023

RMB 140 million

RMB 123 million

Net profit (RMB 100 million)

Year-on-year

growth rate:

13.86%20222023

12 / 250Annual Report 2023

II. Industry in which the Company operated during the reporting period

(I) Basic Overview of the Industry

The Company is primarily engaged in providing clean room system integration engineering solutions

for the advanced manufacturing industry as a professional service provider. According to the classification

standards of the “National Economic Industry Classification” and the “Industry Classification Guidelines forListed Companies” issued by the CSRC the Company’s clean room engineering service belongs to the sub-

category “E49 – Building Installation” within the “E – Construction” industry.From the perspective of the industrial chain the clean room industry can be divided into upstream

supply midstream construction and downstream applications. Specifically:

- Upstream involves suppliers of building materials system equipment and electromechanical

equipment which directly impact the progress and completion of projects. Their prices directly affect the

industry’s costs and significantly influence the profits of industry enterprises.- Midstream encompasses the Company’s industry mainly including engineering survey engineering

design and engineering construction processes.- Downstream refers to industries that require clean rooms in their production or operation processes

mainly in the fields of integrated circuits (IC) photovoltaics and display panels. The IC semiconductor

industry in the electronics sector is currently the primary downstream industry for clean room engineering

and its development significantly influences the future development of industry enterprises. It drives the

demand for clean room engineering services which are fulfilled by industry enterprises. With the continuous

advancement of industrial technology downstream industries constantly raise their requirements for clean

rooms thereby pushing industry enterprises to continually research and develop new technologies and apply

new construction techniques to adapt to the changing market demand.The Company focuses on the integrated engineering of clean room systems in the advanced

manufacturing industry with the “Engineering Procurement Construction and Operation (EPCO)”. It can

provide clean workshop construction planning design suggestions equipment configuration clean room

environmental system integration engineering and maintenance services belonging to the midstream

construction industry of the clean room industry chain.Cleanroom Industry Chain Diagram

Upstream Supply Midstream Downstream Construction Applications

IC Semiconductor

Building

Materials/Hardware Engineering Survey

Optoelectronic Panels

Fire Protection/Control Precision

Equipment Manufacturing

Engineering Design

Air Biopharmaceuticals

conditioning/Purification

Equipment Food & Chemicals

Electromechanical/Lighting Engineering Aerospace

Equipment etc. Construction

New Energy etc.(II) Development Overview of Clean Room Industry

The development of the clean room industry in China began in the 1960s drawing on the early

technology of the former Soviet Union mainly used in national defense aerospace atomic energy and

scientific research and later gradually expanded to the control of environmental conditions in industries such

13 / 250Annual Report 2023

as precision machinery non-ferrous metal purification in metallurgical systems and pulling monocrystalline

silicon.The clean room industry in China experienced vigorous development from the 1970s to the 1990s. In

1977 the first high-level biological clean room was established and since the 1980s the construction of

biological clean rooms has gradually increased extensively used in the daily chemical industry.Subsequently clean rooms began to be applied in the pharmaceutical and food industries especially after

the announcement of China’s GMP certification in 1982 leading to a significant increase in the demand for

clean room construction in the pharmaceutical industry. The construction of clean rooms for medical

facilities such as aseptic operating rooms also rapidly expanded. After the reform and opening up the

introduction of foreign-funded enterprises led to the widespread application of higher-level air cleaning

technologies in various fields.From the 1990s to the present China’s technological level has been developing vigorously. The global

transfer of production capacity in precision electronics such as semiconductors and new displays has

accelerated towards China greatly increasing the market demand and technological research and

development level of the clean room industry as a result of advances in the research and development of

pharmaceuticals and biotechnology. This has effectively driven the rapid development of China’s clean room

industry. In order to achieve the strategic goal of “carbon neutrality” China will reduce carbon emissions

through energy substitution energy conservation and efficiency improvement. According to data from the

National Energy Administration it is expected that during the “14th Five-Year Plan” period China’s average

annual increase in newly installed photovoltaic capacity will be between 70-90GW. As an important part of

the construction of solar cell production plants the demand for the construction of clean rooms will continue

to grow alongside the vigorous development of photovoltaic production lines.(III) Cyclical Characteristics of the Clean Room Industry

The downstream industries of the clean room engineering are influenced by the macroeconomic

situation industry policy regulation and downstream industry investment conditions and therefore show a

certain cyclical characteristic. The main downstream industries of the clean room engineering industry are

strategic emerging industries such as the electronics industry. In order to narrow the gap with developed

countries and promote the development of intelligent manufacturing information technology and other

industries in China a number of policies have been formulated in China in recent years to promote the

development of related industries. This has also led to a relatively stable and sustained development market

trend in the clean room engineering industry.The “Outline of the Fourteenth Five-Year Plan for National Economic and Social Development andthe Long-Range Objectives Through the Year 2035 of the People’s Republic of China” clearly states the

cultivation of advanced manufacturing clusters promoting the innovative development of industries such as

integrated circuits aerospace pharmaceuticals and medical devices. It focuses on strategic emerging

industries such as next-generation information technology biotechnology new energy new materials high-

end equipment new energy vehicles green environmental protection as well as aerospace and marine

equipment. Industrial policies not only promote the development of industries such as semiconductors and

integrated circuits but also drive the development of the upstream industry the clean room engineering

14 / 250Annual Report 2023

industry. The continuous expansion of the scale of downstream industries the ongoing process of

localization substitution the rise of new fields such as new energy and automotive electronics and the

gradual improvement in the quality of life of the population have provided good development opportunities

for the clean room industry with rapid construction of new production lines for downstream industry

products.(IV) Industry Position of the Company

Currently the competition in the Chinese clean room market is intense with a larger number of

business groups but a smaller number of enterprises are capable of undertaking high-level clean room

system integration solutions. Enterprises with the strength to undertake clean room engineering projects are

gradually gaining a stable market share in the high-end segment. Our focus lies on clean room engineering

projects for high-tech plants in the electronic industry such as IC semiconductors and precision

manufacturing. The investment in high-tech plants in the high-end electronic industry is substantial with

high requirements for clean room stability. To mitigate investment risks lower costs and ensure product

yield owners typically choose to collaborate with engineering service companies with rich experience

historical performance and industry leadership. Only few companies in this fieldpossess the technical know-

how to create high-level clean rooms for such specialized applications.Our Company is currently the Chinese company with the capability and experience to construct clean

rooms for the entire semiconductor industry chain possessing strong brand influence in enhancing client

product yield. With leading computational fluid dynamics analysis and air sampling and analysis technology

we can provide clients with pre-simulation analysis and post-sampling analysis optimize clean room layout

improve production processes reduce production costs and enhance product yield significantly improving

the stability and reliability of clean room engineering projects.For the past twenty years our Company has been focused on the integration and engineering of

advanced manufacturing clean room systems. We have undertaken clean room projects for leading

companies in various industries including Siliconware Technology Sanan Integrated ASE Foxconn

Technology Group Wistron Info Comm SMIC Nexchip and Wafer Works. In 2023 we were honored with

multiple recognitions such as “Excellent Safety Vendor” “Best Safety Management” and “Best Supplier”

which reflects the consistent approval of our engineering quality by the clients. We hold a substantial market

share in the high-end clean room engineering field enjoying a strong reputation and market influence within

the industry and possess a high industry standing.(V) Major Laws and Regulations of the Industry and the Impact of Industrial Policies

The current legal and regulatory framework related to the clean room system integration engineering

services provided by our Company mainly includes industry qualification management industry business

standards and industry quality management as follows:

15 / 250Annual Report 2023

The industrial policy support for the main downstream industries served by the Company is conducive

to the sustainable growth of the related industries thus driving the overall market demand for clean room

engineering. In recent years China has continuously introduced relevant policies to promote the

development of industries such as semiconductors new displays life sciences and food and pharmaceuticals

thereby promoting the growth of the clean room industry demand. In addition clean room engineering is

part of the construction industry and China has been continuously introducing policies to promote the

greening and intelligent development of the construction industry vigorously promoting the application of

BIM technology and other information technologies used in clean room construction and policies promoting

the development of prefabricated buildings have also driven the development of clean rooms.The main industrial policies of the downstream industries served by the Company are as follows:

III. Businesses in which the Company was engaged during the reporting period

(I) Overview of the Main Business of the Company

The Company’s main business is to provide clean room engineering electromechanical engineering

and other services for the construction of IC semiconductor optoelectronics high-tech electronic industries

as well as for the food pharmaceutical cloud computing centers and related fields. This includes clean

factory construction planning design recommendations equipment configuration clean room environment

system integration engineering and maintenance services.

16 / 250Annual Report 2023

The Company has the qualifications of Grade I General Contractor of Electromechanical Engineering

Grade I Specialist Contractor of Building Electromechanical Installation Engineering Grade II Specialist

Contractor of Electronic and Intelligent Engineering Grade II Specialist Contractor of Building Decoration

and Decoration Engineering and Grade II Specialist Contractor of Fire Fighting Facilities Engineering which

provide a solid technical foundation and professional guarantee for the development of the business of the

Company.The Company’s business scope includes system integration services; design and installation of

electromechanical systems HVAC systems aseptic systems and building equipment management systems;

construction of air purification engineering fire engineering building construction engineering interior and

exterior decoration engineering municipal public works and pipeline engineering as well as providing

related technical consulting and after-sales services; research and development and manufacturing of

industrial switch power converters and components; wholesale import and export of similar products

produced by the company as well as building materials dust-free aseptic purification equipment and related

equipment components; type III medical device operation; type II medical device sales; metal structure

manufacturing; construction decoration plumbing and other building metal products manufacturing.Licensed projects include construction engineering design and building intelligent system design.(II) Main Products and Their Uses

The production process of IC semiconductor and other advanced manufacturing industries has high

requirements on process precision process media and process environment. As a professional clean room

system integration engineering service provider the Company’s main business is centered around the core

process of downstream clients combined with the characteristics of the industry to provide standards-

compliant process environment solutions the main products are clean technology plant or clean room in a

broad sense.The clean rooms involved in the company are mainly industrial clean rooms. The clean room system

integration provided by the Company includes clean room-related air treatment system airflow and airway

system water treatment system interior system vibration damping system static electricity control system

electromagnetic interference control system process system environment inspection system electric power

17 / 250Annual Report 2023

system fire safety system and other clean room-related systems. The clean room system integration project

is shown as follows:

Cleanroom

Atmosphere System

Integration

Engineering

Clean Room

Water Compliance

supply Water

Vibration Damping System

Electricity System Fire Safety System Other Systems

General Waste

Wastewat liquids Special liquid

er Waste gas Specialty

Gases

Waste liquid and gas Specialty liquid and gas

Sewerage treatment system storage systems

(III) Business Model

The Company is a one-stop professional service provider of clean room system integration engineering

solutions for advanced manufacturing industries with the ability to implement a complete industry chain

from engineering design to procurement construction operation and maintenance and other system

integration. During the project implementation stage the Company purchases the required equipment and

materials in accordance with the specific project conditions and subcontracts the construction of clean room

system projects and the Company organizes and coordinates the contracting units of each system supervises

and guides them and coordinates the overall progress of the project. The Company makes profits by

providing clients with overall solutions for clean room projects.

1. Sales Mode

The Company’s clean room engineering clients are mainly large-scale enterprises in semiconductor

electronics and other industries. The Company’s marketing staff obtains client resources through searching

market information continuous service of existing clients and recommendation of new clients by existing

clients etc. and makes contact with clients. The Company mainly approaches clients through client bidding

invitation for bidding and commercial negotiation. The bidding mode of the Company is generally as follows:

obtaining bidding information purchasing bids passing the qualification examination of the bidding party

bidding deposit making bidding documents on-site bidding on-site opening of bids obtaining the

notification of successful bid and signing the contract and so on.

2. Procurement Mode

The Company conducts procurement of construction materials in accordance with the contract signed

with the owner or contractor mainly including construction materials and equipment. The procurement plan

of the Company is prepared based on the project cost budget and the requirements of the project execution

schedule and the corresponding procurement plan is prepared and executed on a project basis. The person

in charge of the project prepares the procurement plan according to the project progress project material

input plan processing time requirements of customized materials etc. and the procurement period of each

type of materials is clearly defined.

3. Engineering Contracting Mode

Electromagnetic

interference control system

Static electricity

control system

Humidity control

Airflow & Ducting System

Temperature

control

AMC control

Air pressure control

Environmental

Particle filtration Inspection System

Interior Systems

Pollutant detection

Air handling systems

Particle filtration

Acid-base

adjustment

Particle filtration

Temperature

control

Water treatment systemsAnnual Report 2023

In accordance with the Construction Law of the People’s Republic of China Civil Code of the People's

Republic of China Labor Law of the People’s Republic of China Provisions on the Administration of the

Qualifications of Construction Enterprises and other relevant laws and regulations as well as the project

construction contract signed with the owner the Company will contract out the clean room construction

projects according to the specific clean room projects during the implementation stage of the clean room

project. If there are restrictive clauses or explicit provisions in the general contract the Company shall obtain

the consent of the owner before contracting before selecting the contracting manufacturer. The Company

centrally coordinates organizes supervises guides and uniformly manages the contracting units of each

system during the construction process.The Procurement Department of the Company is responsible for maintaining the list of suppliers and

evaluating the contractors based on their qualifications financial strength engineering achievements and

other relevant information. When there is a demand for contracting in a construction project the person in

charge of the project will initiate a requisition for contracting and the Procurment Department will sign a

contract after comparing the contractors’ experience technology price and other factors with the approval

of the corresponding supervisor. Subsequently the Company organizes engineers and technicians to give

technical briefings to the contractors and conducts training supervision and management of the contractors

in accordance with the terms of the contract design documents and construction specifications to ensure the

normal progress of the construction.IV. Analysis of Core Competitiveness During the Reporting Period

√ Applicable □ N/A

The core competitiveness of the Company is reflected in its strong clean room system integration

technology high-end clean room project experience and engineering management capability. After years of

technology research and development and project accumulation the Company is able to plan the overall

solution of clean room project by taking into account the industrial characteristics and demands of clients

the timeliness of construction and reliability of operation etc. to achieve the precise control of the main

indexes such as cleanliness temperature and humidity micro-vibration AMC etc. and to collaborate with

the clients in upgrading the production process optimizing the product manufacturing process and improving

the yield rate of production etc. The core competitiveness of the Company is shown in the following. The

core competitiveness of the company is specifically manifested in the following aspects:

(I) Advantage in Technology and R&D

The Company mainly focuses on the clean room engineering projects of high-tech plants in the field of

IC semiconductors photoelectric panels and other electronic industries which belongs to the high-end field

of the clean room engineering industry and is characterized by high level of cleanliness large scale of

investment wide construction area complex system integration and high requirements for engineering

quality. Since it takes a long time of research and development and accumulation of practical experience to

acquire the construction technology required for such clean room projects only a few enterprises in the

industry have the technical level to construct high-grade clean rooms in such fields. The Company has

undertaken many high-end clean room projects for high-tech plants in China and is a leading and well-known

enterprise in the industry.In 2023 the Company adds 18 patents including 7 invention patents and 11 utility model patents. The

Company has set up an engineering database for clean room engineering projects which is a systematization

of years of engineering experience providing strong technical and data support for the company to contract

and implement engineering projects. The Company has industry-leading computational fluid dynamics

analysis application technology and air sampling and analysis technology which can provide clients with

pre-simulation analysis and post-sampling analysis optimize the layout of the clean room improve the

production process reduce the production cost and improve the yield rate of the finished products and

significantly improve the stability and reliability of the clean room project.

19 / 250Annual Report 2023

R&D Target Achievements in the Past Three Years

In 2021 6 intellectual In 2023 18 patents were

property rights were

obtained including 3 In 2022 18 utility model obtained including 11

patents were obtained.utility model patents and 3 utility model patents and 7

software copyrights. invention patents.(II) Engineering Performance and Brand Advantage

The downstream industries served by the Company especially the high-end electronics industry

demand high stability for clean rooms. In order to reduce investment risk lower costs and ensure product

yield clients typically choose to cooperate with engineering service companies that have rich experience a

proven track record and industry-leading capabilities. With over 20 years of continuous development theCompany has gained the ability to provide “Engineering Procurement Construction and Operation

(EPCO)” successfully implementing thousands of clean room-related projects and accumulating rich

construction experience.The Company has become a professional clean room engineering service provider with strong industry

strength high engineering service quality and significant performance. “Acter” has also become a well-

known brand in the Chinese clean room engineering industry possessing strong competitive advantages.Acter Integration is committed to becoming a

high-quality space shaper impressing customers

with professional technology and attentive

service and has won over 50 customer

recognitions.(III) Project Management and Talent Advantages

1. Excellent management team

Excellent management personnel can do targeted research development and innovation for clients in

different industries and have rich experience in the industry. Since its establishment the Company has been

engaged in clean room and other system integration engineering business and the management personnel

are professional and stable. Seventy percent of the middle management personnel are promoted from the

grassroots level with a low staff turnover rate which enables the Company to provide clients with long-term

and sustainable engineering services. The core management team has many years of experience in the

industry has long been serving the global famous enterprises in the industry and has been developing and

expanding along with the growth of the clients. They have a deep understanding and accurate knowledge of

the technical application construction organization mode competition pattern and future development trend

of the clean room engineering industry and have a deep knowledge of the technical development of the

downstream client industry.The Company attaches great importance to business management and advocates the synergistic

development of employees’ personal performance and corporate strategy. The Company carries out

construction and inspection of projects in strict accordance with the requirements of ISO9001 quality system

management and has established a complete set of effective quality management system from supplier

selection and management raw material quality acceptance construction process quality control project

20 / 250Annual Report 2023

completion acceptance and project site management. Each project team of the Company organizes and

compiles project files for each project in accordance with the Company’s internal control requirements

covering the refined management and supervision of each step of the project process. The Company has

passed GB/T50430 ISO9001 quality management system certification ISO14001 environmental

management system certification and ISO45001 occupational safety and health management system

certification and participated in the implementation of clean rooms and other system integration projects

with good quality feedback widely recognized by clients and unanimously praised.people people people people

Sales Master’ Degree

people Technician Bachelor’s Degree

Financial Staff Associate Degree

Professio Administrative Staff Education Below Associate nal al Degree

Structure structure

people 258 people people

2. Scientific and reasonable education and training

In recent years the Company has vigorously implemented the “apprenticeship system” primarily

assigning seasoned senior employees to provide one-on-one training for new employees with rich

construction experience aiming to pass on construction experience to new employees and help them

smoothly navigate the initial stage quickly become familiar with and handle related business. Regular

“reserve manager training” is conducted every year inviting a teaching team including lawyers accountants

and technical experts to provide training on internal control engineering management related laws and

regulations financial knowledge etc. to enhance team management skills and improve business

management skills. KPI OKR and skill competitions such as design and drawing skills are used to motivate

employees to understand the Company’s goals and achieve each goal in stages and tasks. The Company

opens a Magic Academy E-Learning system and organizes various offline trainings. Each quarter senior

engineering personnel summarize and analyze closed cases and monthly offline courses are conducted for

different professional systems enabling everyone to understand the advantages and disadvantages of other

projects while strengthening their own professional abilities thus better exerting personal initiative and

boosting operational efficiency.Key

Performance

During the reporting period 56 employee training sessions were conducted totaling

10935 hours of training with an average training duration of 17 hours per person

achieving a training coverage rate of 100%.(IV) Advantage of stable client relationship

The investment amount in the high-tech factory buildings of the high-end electronic industry is

substantial with high requirements for the stability of clean rooms. In order to reduce investment risks lower

costs and ensure product yield owners typically choose to collaborate with experienced engineering service

companies with leading industry expertise and a proven track record. If the initial quality of the engineering

work is recognized owners generally maintain a cooperative relationship with the service provider

increasing the likelihood of awarding subsequent clean room engineering projects to the same contractor. A

significant proportion of the Company’s main business revenue comes from repeat orders from existing

clients. The Company’s cooperative clients are mostly leading enterprises in segmented industries and well-

known upstream and downstream companies in the industry chain such as Siliconware Technology

Foxconn Technology Group etc. with whom the Company has maintained a partnership for over 15 years.In addition the Company has established a good stable and continuous partnership with Sanan Integrated

Wistron InfoComm Nexchip Wafer Works SMIC laying a solid foundation for business development. As

client investment plans are implemented there is a gradual increase in demand for clean rooms in the factory

21 / 250Annual Report 2023

construction process. The Company’s long-term efforts in establishing stable client relationships have

provided strong support for the Company’s further development.(V) Industrial diversification geographical layout advantages

The Company has a diversified layout in IC semiconductor optoelectronic panel PCB precision

manufacturing biomedical and other industries. With stable and reliable quality of engineering services and

rich product structure the Company’s engineering services have been recognized by many famous

enterprises and have maintained long-term cooperative relationships. In China the Company has two

business centers in Suzhou and Shenzhen as well as branches in Shenzhen and Xiamen with the service

scope radiating to the Yangtze River Delta and the Pearl River Delta and through the establishment of

marketing outlets in Hefei Zhengzhou Changsha Wuhan and Chongqing the Company is able to directly

face the clients quickly docking and closely serve the downstream clients of the local advanced

manufacturing industry. Early deployment in Southeast Asia enables the Company to be more familiar with

local regulations and requirements and rely on its rich experience in plant construction to provide good

localized services to overseas clients. With steady growth in overseas revenue in 2023 the Company has

great potential for development in the Southeast Asian market.Wuhan

Chongqing

Suzhou

Zhengzhou

Hefei

Changsha

Shenzhen

Xiamen

V. Major Operating Conditions During the Reporting Period

The Company is committed to consistently providing good service to every client optimizing

construction management processes continuously improving skills and R&D capabilities responding to

client needs with localized service layout and achieving the transformation from solution to mass production

finished products. This has laid the foundation for the development of multiple industries and multiple clients

thereby realizing the “production” “sales” “people” “development” and “profit” five-step development

road-map. The Company actively maintains and stabilizes business relationships with existing clients while

also laying a good foundation for the development of new clients. In 2023 the Company’s main business

revenue was RMB 2006 million an increase of 23.38% year-on-year.

22 / 250Annual Report 2023

Based on the different types of engineering services provided the Company’s main business revenue

in 2023 is divided as follows: 85.65% from clean room system integration-related projects with 75.62%

from system integration and 10.03% from hook-up works; 13.77% from other electromechanical installation

projects and 0.58% from equipment sales.Clean room system integration-related projects include clean room system integration engineering and

hook-up works. * Clean room system integration engineering refers to clean room system-related design

and construction projects before the factory is put into use including systems directly related to clean rooms

(such as air handling systems water treatment systems airflow systems air molecular pollution control

systems static control systems etc.) and clean room support system engineering (such as piping systems

power systems fire safety systems etc.). * Hook-up works refer to secondary clean room support (such as

power systems water treatment systems and airflow systems) for new equipment and production lines after

the clean room is put into operation with minimal impact on the cleanliness air molecular pollution

vibration temperature humidity pressure and static electricity of the original clean room area. The design

and construction precision and fault tolerance of hook-up works are relatively low. Other electromechanical

installation projects refer to non-clean room-related factory and office building electromechanical projects.Name Revenue (RMB) Percentage

System Integration 1517 Million 75.62%

2006

Million Secondary Distribution 201 Million 10.03%

(RMB) Engineering

Electromechanical Installation 276 Million 13.77%

Equipment Sales 12 Million 0.58%

Based on the segmentation by downstream client industries in the main business of the Company in

2023 clients from the IC semiconductor industry accounted for 67.09% followed by precision

manufacturing at 23.96%.Name Revenue (RMB) Percentage

IC Semiconductor Industry 1346 Million 67.09%

2006 Precision Manufacturing Industry 481 Million 23.96%

Million

(RMB) Optoelectronics Industry 101 Million 5.06%

Others 78 Million 3.89%

According to the division of revenue regions the main business income of the company in 2023 was

RMB 1570 million domestically accounting for 78.27% and RMB 436 million internationally accounting

for 21.73% showing an upward trend compared to last year. This indicates an upward trend compared to the

previous year attributed mainly to the company's strategic presence in the Southeast Asian market. The

Company initiated its operational bases in Vietnam in 2007 expanded to Malaysia in 2011 established a

subsidiary in Indonesia in 2013 and initiated strategic deployment in Thailand in 2019. With the localization

of employee recruitment and education and the establishment of a stable supply chain relationship

familiarity with local customs taxation and various policies and regulations riding the wave of investment

in Southeast Asia the Company is optimistic about the future growth space of overseas performance.

23 / 250Annual Report 2023

Name Revenue (RMB) Percentage

2006

Million Domestic 1570 Million 78.27%

(RMB) Overseas 436 Million 21.73%

(I) Main Business Analysis

1. Analysis of changes in relevant accounts in the income statement and cash flow statement

Unit: Yuan Currency: RMB

Account Number of current Number of same period period last year Change (%)

Operating revenue 2008924995.68 1627895120.49 23.41

Operating costs 1738841241.47 1376528425.17 26.32

Cost of sales 7954281.67 6301894.42 26.22

Administrative expenses 59193009.85 60147184.98 -1.59

Finance costs -5530329.32 6101177.95 -190.64

R&D expenses 25121209.62 19101658.87 31.51

Net cash flows from operating

activities 133522931.23 161089465.80 -17.11

Net cash flows from investing

activities 106839659.13 -126308081.06 N/A

Net cash flows from financing

activities -75002375.36 365160792.84 -120.54

Taxes and surcharges 4370539.18 3800051.12 15.01

Other gains 3731552.00 3524827.14 5.86

Investment income 1661794.44 -99328.94 N/A

Gain on change in fair value -119888.89 105417.14 -213.73

Credit impairment loss -3860633.85 -5805476.85 N/A

Impairment loss on assets 1148478.91 5978570.41 -80.79

Gain on disposal of assets 116542.37 246990.20 -52.81

Non-operating revenue 14361.33 75601.66 -81.00

Non-operating expenses 889948.63 925033.47 -3.79

Income tax expense 40713458.90 35997255.91 13.1

Minority interests 1473367.57 151056.57 875.37

Translation differences on foreign

currency statements 290286.73 2027897.54 -85.69

Other comprehensive income

attributable to minority 79151.41 84748.55 -6.60

shareholders net of taxes

24 / 250Annual Report 2023

Explanation for the changes in finance costs: Finance costs decreased by 190.64% compared with the

previous period which was attributable to the higher interest income from bank wealth management in the

current period;

Explanation for the changes in R&D expenses: Research and development expenses increased by 31.51%

compared with the previous period which was attributable to the increase in research and development

investment in the current period and the higher amount of research and development expenses;

Explanation for the changes in net cash flows from investing activities: The larger change in net cash flows

from investing activities compared with the previous period was due to the higher amount of structured

deposits recovered in the current period;

Explanation for the changes in net cash flows from financing activities: Net cash flows from financing

activities decreased by 120.54% compared with the previous period which was attributable to the higher

amount of dividend payment in the current period and the receipt of large amount of fund-raising in the

previous period;

Explanation for the changes in investment income: Investment income was higher than that of the previous

period which was mainly due to the higher income from the purchase of structured finance in the current

period;

Explanation for the changes in gain on fair value changes: Gain on changes in fair value decreased by 213.73%

compared to the previous period due to the change in fair value of structured deposits in the current period;

Explanation for the changes in credit impairment losses: Credit impairment losses decreased by a large

margin compared with the previous period mainly due to the decrease in bad debts provided for in the current

period as a result of the decrease in accounts receivable;

Explanation for the changes in impairment losses on assets: The decrease of 80.79% in impairment losses

on assets as compared with that of the previous period was attributable to the higher amount of reversal of

single provision in the previous period;

Explanation for the changes in gain on disposal of assets: The decrease of 52.81% in gain on disposal of

assets as compared with that of the previous period was attributable to the higher gain on disposal of vehicles

in the previous period;

Explanation for the changes in non-operating revenue: Non-operating revenue decreased by 81.00%

compared with that of the previous period which was due to the higher amount of write-off of long-term

unpaid amount in the previous period;

Explanation for the changes in minority interests: Minority interests increased by 875.37% compared with

the previous period which was due to the substantial increase in net profit attributable to minority interests

in the current period;

Explanation for the changes in translation differences of foreign currency statements: The decrease of 85.69%

in translation difference of foreign currency statement compared with the same period of last year was due

to the smaller change of exchange rate fluctuation in the current period compared with the previous period.Detailed description of significant changes in the company's business type profit composition or profit

sources during the period

□ Applicable √ N/A

2. Revenue and Cost Analysis

√ Applicable □ N/A

During the Reporting Period the operating revenue of the Company amounted to RMB 2008924995.68

representing an increase of 23.41% as compared with the same period of the previous year which was mainly

25 / 250Annual Report 2023

due to the fact that the Company expanded new clients and undertook projects of higher amount in the current

period; at the same time the rapid growth of the overseas business in the current period led to a further

increase in profitability in the current period.

(1). Main business by industry product region and sales pattern

Unit: Yuan Currency: RMB

Main business by industry

Gross

Operating Profit Yoy change in Yoy change in Yoy change in By Industry Revenue Operating Cost Rate operating operating costs gross profit margin

(%) revenue (%) (%) (%)

IC

Semiconductor 1345947194.70 1203919098.11 10.55 54.35 66.52 Decrease of 6.54%

Precision

Manufacturing 480697188.05 392693.935.54 18.31 17.91 8.34 Increase of 7.22%

Optoelectronics 101391692.37 80642910.19 20.46 -64.07 -67.39 Increase of 8.10%

Others 78023584.38 61470990.91 21.21 21.95 47.70 Decrease of 13.74%

Total 2006059.659.50 1738726934.75 13.33 23.38 26.32 Decrease of 2.01%

Main business by product

Gross

Operating Profit Yoy change in Yoy change in Yoy change in By Product Revenue Operating Cost Rate operating operating costs gross profit margin

(%) revenue (%) (%) (%)

Clean room

engineering 1718207574.41 1497267444.29 12.86 9.21 12.22

Decreased of

2.33%

Of which:

System 1516916.425.65 1324585896.16 12.68 9.84 13.10 Decrease of 2.52%

integration

Hook-up works 201291148.76 172681.548.13 14.21 4.73 5.87 Decrease of 0.92%

Other electrical

and mechanical

installation 276230223.29 232095.004.42 15.98 761.16 783.62 Decrease of 2.13%

works

Equipment sales 11621861.80 9364486.04 19.42 -43.33 -32.62 Decrease of 12.81%

Total 2006059.659.50 1738726934.75 13.33 23.38 26.32 Decrease of 2.01%

Main business by region

Gross

By Region Operating

Yoy change in Yoy change in Yoy change in

Revenue Operating Cost

Profit

Rate operating operating costs gross profit margin

(%) revenue (%) (%) (%)

China 1570222066.57 1387939755.27 11.61 16.89 23.06 Decrease of 4.43%

Of which: East

China 801380310.95 686106.791.33 14.38 -9.64 -9.23 Decrease of 0.39%

Central China 351672073.28 326136.350.31 7.26 137.60 228.66 Decrease of 25.70%

South China 318483907.01 296248.742.42 6.98 464.18 469.27 Decrease of 0.83%

Southwest 78094245.59 61551648.92 21.18 -65.98 -70.28 Increase 11.38%

Other Areas 20591529.74 17896222.29 13.09 -8.42 31.73 Decrease of 26.49%

Overseas 435837592.93 350787179.48 19.51 54.28 42.27 Increase of 6.79%

Of which:

Vietnam 301368854.86 238845.934.40 20.75 58.02 40.60 Increase of 9.83%

Indonesia 13789617.99 10147679.18 26.41 -67.17 -68.51 Increase of 3.13%

26 / 250Annual Report 2023

Thailand 111326700.08 92907698.80 16.54 123.64 108.97 Increase of 5.85%

Other Areas 9352420.00 8885867.10 4.99 N/A N/A N/A

Total 2006059.659.50 1738726934.75 13.33 23.38 26.32 Decrease of 2.01%

Explanation of main business by industry product region and sales mode

The reasons for the substantial increase in revenue and cost of main business by industry product and

region were mainly due to the new orders signed during the period and the higher contract amount which

led to the substantial increase in revenue and cost; the gross profit margin in the country Decreased of 4.43%

as compared with the same period of the previous year which was mainly due to the development of new

clients and the acceptance of projects at a lower price.

(2). Analysis of production and sales volume

□ Applicable √ N/A

(3). Fulfillment of major purchase contracts and major sales contracts

□ Applicable √ N/A

(4). Cost analysis table

Unit: Yuan

By Industry

Percentage

Percentag of total Percentage

By Cost Amount for the e of total Amount for the costs for the change

Industry Compositio current period cost for same period of same period from same n Item the current the previous year of the period last

period (%) previous year (%)

year (%)

Equipment

and 975046287.01 56.08 812667645.72 59.04 19.98

materials

Building Labor

Construc subcontracti 648595269.15 37.30 462360128.70 33.59 40.28

tion ng

Labor cost 75883841.01 4.36 60640452.42 4.41 25.14

Other

expenses 39201537.58 2.26 38728323.98 2.81 1.22

Share-based payment 2017567.63 0.15 -100.00

Total 1738726934.75 100.00 1376414118.45 100.00 26.32

Other notes on cost analysis

Note 1: Represents a significant increase in labor subcontracting due to the large volume of work executed

during the period.

(5). Changes in the scope of consolidation due to changes in the equity interests of major

subsidiaries during the reporting period

□ Applicable √ N/A

(6). Significant changes or adjustments in the Company’s business products or services during the

reporting period

□ Applicable √ N/A

Explanation Note 1Annual Report 2023

(7). Major sales clients and major suppliers

A. Major sales clients of the Company

√ Applicable □ N/A

The sales of the top five clients amounted to RMB 889.0282 million accounting for 44.25% of the total

annual sales; of which the sales of related parties among the sales of the top five clients amounted to RMB

0 million accounting for 0% of the total annual sales.

No. Top 5 Clients Project Revenue (RMB Million/100) Percentage of Revenue (%)

1 Client 1 30620.79 15.24

2 Client 2 25671.44 12.78

3 Client 3 13087.55 6.51

4 Client 4 10788.32 5.37

5 Client 5 8734.72 4.35

Total 88902.82 44.25

The proportion of sales to a single client exceeding 50% of the total amount the existence of new clients

among the top 5 clients or heavy reliance on a small number of clients during the reporting period.□ Applicable √ N/A

B. Major suppliers of the Company

√ Applicable □ N/A

The purchase amount of the top five suppliers is RMB 135.2609 million accounting for 10.58% of the

total annual purchase amount; among them the purchase amount of related parties among the top five

suppliers is RMB 0 million accounting for 0% of the total annual purchase amount.No. Top 5 Suppliers Procurement amount (RMB Million/100) Proportion of annual procurement amount (%)

1 Supplier 1 3500.16 2.74

2 Supplier 2 2764.38 2.16

3 Supplier 3 2591.22 2.03

4 Supplier 4 2569.69 2.01

5 Supplier 5 2100.64 1.64

Total 13526.09 10.58

The proportion of purchases from a single supplier exceeding 50% of the total amount the existence of new

suppliers among the top 5 suppliers or heavy reliance on a small number of suppliers during the reporting

period.□ Applicable √ N/A

Other Notes

None

3. Expenses

√ Applicable □ N/A

2023 2022 Percentage of change

in the current period

Item Percentage Amount Percentage over the same period Amount (RMB) of operating of operating of the previous year

revenue (%) (RMB) revenue (%) (%)

28 / 250Annual Report 2023

Selling

expenses 7954281.67 0.40 6301894.42 0.39 26.22

Administrativ

e expenses 59193009.85 2.95 60147184.98 3.69 -1.59

R&D

expenses 25121209.62 1.25 19101658.87 1.17 31.51

Finance costs -5530329.32 -0.28 6101177.95 0.37 -190.64

Total 86738171.82 4.32 91651916.22 5.63 -5.36

4. R&D investment

(1). Table of R&D investment

√ Applicable □ N/A

Unit: Yuan

Expensed R&D investment for the period 25121209.62

Capitalized R&D investment for the period

Total R&D investment 25121209.62

Total R&D investment as a percentage of operating revenue (%) 1.25

Share of capitalized R&D investment (%)

(2). Table of R&D personnel

√ Applicable □ N/A

Number of R&D personnel of the Company 51

Proportion of the number of R&D personnel to the total number

of employees of the Company (%) 7.97

Educational Structure of R&D personnel

Category of Educational Structure Education Structure

Doctorate 0

Master’s Degree 1

Bachelor’s Degree 32

College Degree 18

High School and Below 0

Age Structure of R&D personnel

Category of Age Structure Age Structure

Below 30 years old (excluding 30 years old) 33

30-40 years old (including 30 years old not including 40 years

old) 13

40-50 years old (including 40 years old not including 50 years

old) 4

50-60 years old (including 50 years old not including 60 years

old) 1

60 and above 0

(3). Description of situation

□ Applicable √ N/A

29 / 250Annual Report 2023

(4). Reasons for significant changes in the composition of R&D personnel and impact on the

Company's future development

□ Applicable √ N/A

5. Cash flow

√ Applicable □ N/A

Account Amount of the current

Amount of the same

period (RMB) period of the previous Percentage change (%) year (RMB)

Net cash flows from

operating activities 133522931.23 161089465.80 -17.11

Net cash flows from

investing activities 106839659.13 -126308081.06 -184.59

Net cash flows from

financing activities -75002375.36 365160792.84 -120.54

Net increase in cash

and cash equivalents 167656624.74 400390070.99 -58.13

(II) Explanation of significant changes in profit due to non-principal businesses

□ Applicable √ N/A

(III) Analysis of assets and liabilities

√ Applicable □ N/A

1. Assets and liabilities

Unit: Yuan

Percenta Percentag Percentage

ge of e of total change in the

Closing total assets at amount at the

Item Name balance of the assets at Closing the end of end of the Descript

current period the end balance of the the period over ion of the previous period previous the end of the

period period previous

(%) (%) period (%)

Currency 722496330.3

funds 8 37.94 550235202.99 30.96 31.31 Note 1

Financial

assets for 122119888.89 6.87 -100.00 Note 2

trading

Bills

receivable 43157918.28 2.27 20790441.73 1.17 107.59 Note 3

Accounts 396889272.2

receivable 6 20.84 484443368.28 27.26 -18.07

Receivables

financing 3572953.18 0.19 729937.36 0.04 389.49 Note 4

Prepayments 89024613.33 4.67 50995260.16 2.87 74.57 Note 5

Other

receivables 13378598.48 0.70 13057575.31 0.73 2.46

Inventory 66824.45 -100.00 Note 6

Contract assets 424897205.60 22.31 389293108.13 21.91 9.15

Other current

assets 97604166.69 5.13 58265105.32 3.28 67.52 Note 7

30 / 250Annual Report 2023

Percenta Percentag Percentage

ge of e of total change in the

Closing total assets at amount at the

Item Name balance of the assets at Closing the end of end of the Descript

current period the end balance of the the period over ion of the previous period previous the end of the

period period previous

(%) (%) period (%)

Long-term

equity 2332022.40 0.12 2314172.96 0.13 0.77

investments

Investment

real estate 598758.96 0.03 713065.68 0.04 -16.03

Fixed Assets 38895511.08 2.04 40095530.47 2.26 -2.99

Construction

in progress 13103863.94 0.69 0 N/A Note 8

Intangible

assets 7244475.94 0.38 7426847.54 0.42 -2.46

Utilization

right assets 3840232.40 0.20 4672377.60 0.26 -17.81

Deferred tax

assets 12482616.81 0.66 14578928.51 0.82 -14.38

Other non-

current assets 34843950.71 1.83 17348658.87 0.98 100.85 Note 9

Short-term

loans 31249307.82 1.76 -100.00 Note 10

Accounts 629857317.3

payable 3 33.07 589919678.26 33.19 6.77

Salaries

payable to 47459670.87 2.49 39456513.03 2.22 20.28

employees

Taxes payable 7980749.03 0.42 7330079.22 0.41 8.88

Other payables 25427208.65 1.34 1611097.74 0.09 1478.25 Note 11

Contract

liabilities 73351891.04 3.85 74584070.11 4.20 -1.65

Non-current

liabilities due

within one 1748003.79 0.09 1710381.30 0.10 2.20

year

Lease

liabilities 2150631.55 0.11 3151902.66 0.18 -31.77 Note 12

Projected

liabilities 11292847.91 0.59 9238016.80 0.52 22.24

Long-term

employee

remuneration 632325.46 0.03 610379.24 0.03 3.60

payable

Deferred tax

liabilities 14496782.15 0.76 4892632.32 0.28 196.30 Note 13

Equity 100000000.00 5.25 80000000.00 4.50 25.00

Capital surplus 562632775.45 29.54 582632775.45 32.78 -3.43

Other

comprehensive 3318147.61 0.17 3027860.88 0.17 9.59

income

31 / 250Annual Report 2023

Percenta Percentag Percentage

ge of e of total change in the

Closing total assets at amount at the

Item Name balance of the assets at Closing the end of end of the Descript

current period the end balance of the the period over ion of the previous period previous the end of the

period period previous

(%) (%) period (%)

Earmarked

reserves 44578849.52 2.34 45372652.93 2.55 -1.75

Surplus

reserves 39501301.38 2.07 28443197.81 1.60 38.88 Note 14

Undistributed 332226440.3

profits 1 17.45 269871786.54 15.19 23.11

Minority

interests 7707548.39 0.40 4043962.14 0.23 90.59 Note 15

Other Notes

Note 1: The increase of 31.31% in money funds as compared with that of the previous period was due to the

redemption of all structured deposits at the end of the period and the increase in the amount of bank deposits;

Note 2: The decrease of 100% in trading financial assets as compared with that of the previous period was

due to the redemption of all structured deposits at the end of the period;

Note 3: Bills receivable increased by 107.59% compared with the previous period which was due to the

higher amount of commercial acceptance bills received at the end of the period;

Note 4: The increase of 389.49% in receivables financing compared with the previous period was due to the

receipt of more bank acceptance bills with higher credit value during the period;

Note 5: Prepayment increased by 74.57% compared with the previous period which was caused by the large

amount of prepayment for materials and equipment in advance for the new projects undertaken in the current

period;

Note 6: Inventory decreased by 100% compared with the previous period which was caused by the fact that

all the remaining inventory in the current period was fully utilized in the projects and there was no balance

at the end of the period;

Note 7: Other current assets increased by 67.52% compared with the previous period due to the increase of

prepayment of taxes for more projects carried out in the field;

Note 8: Construction in progress had a big change compared with the previous period which was caused by

the newly purchased office space of Wuhan and Hefei branches and the company's workshop renovation

project in the current period;

Note 9: Other non-current assets increased by 100.85% compared with the previous period which was due

to the substantial increase of the unexpired warranty over one year compared with the same period of the

previous year;

Note 10: Short-term borrowings decreased by 100% compared with the previous period which was due to

the maturity of bank borrowings in the current period which were all returned;

Note 11: Other payables increased by 1478.25% compared with the previous period which was mainly due

to the higher amount of loan from Sheng Huei International during the current period;

Note 12: Lease liabilities decreased by 31.77% compared with the previous period which was due to the

expiration of part of the leasing contracts during the current period;

Note 13: Deferred tax liabilities increased by 196.30% compared with the previous period which was mainly

due to the increase of overseas net profit in the current period and the high amount of deferred tax arising

from profit distribution;

Note 14: Surplus reserve increased by 38.88% compared with the previous period which was due to the

increase in net profit for the current period compared with the previous period and the increase in the amount

of surplus reserve;

32 / 250Annual Report 2023

Note 15: Minority interests increased by 90.59% compared with the previous period which was due to the

significant increase in net assets attributable to minority interests for the current period.

2. Foreign assets

√ Applicable □ N/A

(1) Asset size

Of which: Overseas assets 345879823.73 (Unit: Yuan Currency: RMB) accounting for 18.16% of the

total assets.

(2) Explanations for the high proportion of overseas assets

□ Applicable √ N/A

3. Restrictions on major assets as at the end of the reporting period

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Carrying amount at the end of the period Reason for restriction

Mainly deposited as guarantee deposits

Currency funds 12499607.35 for the Group's application for issuance of

guarantee letters from banks

4. Other Notes

□ Applicable √ N/A

(IV) Analysis of industry operating information

√ Applicable □ N/AFor analysis of industry operating information please refer to “Section III Management Discussion andAnalysis” “II. Industry in which the Company operated during the reporting period”.Analysis of operating information of the construction industry

1. Projects completed and accepted during the reporting period

√ Applicable □ N/A

Unit: Million/100 Yuan Currency: RMB

Breakdown by Housing Infrastructure Specialized Architectural

industry construction projects engineering decoration Others Total

Number of

projects 491 19 39 549

Total amount 135357.02 371.61 836.10 136564.73

√ Applicable □ N/A

Unit: Million/100 Yuan Currency: RMB

Project area Number of projects Total amount (untaxed)

Domestic 430 120087.41

Oversea 119 16477.32

Of which:

Vietnam 84 6761.57

Indonesia 23 6160.69

Thailand 11 3528.96

Other 1 26.10

33 / 250Annual Report 2023

Total 549 136564.73

Other Notes

□ Applicable √ N/A

2. Projects under construction during the reporting period

√ Applicable □ N/A

Unit: Million/100 Yuan Currency: RMB

Segmentation by Housing Infrastructu Specialized Building

industry constructio Others Total n re projects engineering decoration

Number of projects 1 395 3 22 421

Total amount

(untaxed) 1128.44 391324.43 1406.61 5040.77 398900.25

√ Applicable □ N/A

Unit: Million/100 Yuan Currency: RMB

Project Area Number of projects Total amount (untaxed)

Domestic 278 288523.46

Oversea 143 110376.79

Of which:

Vietnam 90 67657.56

Indonesia 33 15268.21

Thailand 17 20392.18

Other 3 7058.84

Total 421 398900.25

Other Notes

□ Applicable √ N/A

3. Status of major projects under construction

√ Applicable □ N/A

Unit: Million/100 Yuan Currency: RMB

Cumulativ

e Project

Progre

ss of

Project Percent

Recognize Cumulativ recoveries

progre payme

Project Business Amount age of d income e as at the

ss in

Mode line

nts in

Name (untaxed) Durati comple for the recognize end of the with line on tion period d income period with (including expect expect

tax) ations ations

Project 1 Constructio 78.32 n Contract 33164.86 580 % 22085.28 25973.81 25227.80 Yes Yes

Project II Constructio 67.02 n Contract 38305.70 491 % 25671.44 25671.44 18441.34 Yes Yes

Other Notes

√ Applicable □ N/A

34 / 250Annual Report 2023

1. As it involves commercial secrets and sensitive information of the Company the cost inputs for the

current period and cumulative cost inputs are not disclosed;

2. As the transaction relating to Project 1 involves confidentiality-related provisions and for the

consideration of commercial secrets and strategic development the specific project status of the counter-

party is not disclosed. For details of the relevant announcement please refer to the announcement of the

Company disclosed on the website of the Shanghai Stock Exchange on March 10 2023 under the

announcement number of 2023-005 and the difference in the contract amount is for the additional works to

be incurred in the subsequent period;

3. As the transactions relating to Project 2 involve confidentiality-related clauses and due to

considerations of commercial secrets and strategic development the specific project information of the

counter-party will not be disclosed. For details of the relevant announcement please refer to the Company’s

announcement on the website of the Shanghai Stock Exchange dated August 1 2023 under the

announcement number 2023-032 and the difference in the contract amount is for the additional works arising

thereafter.

4. Accumulated new projects signed during the reporting period

√ Applicable □ N/A

The cumulative number of newly signed projects during the reporting period was 553 (by count)

amounting to RMB 2297.1984 million (including tax) and RMB 2141.6111 million (before tax).

5. Orders in hand at the end of the reporting period

√ Applicable □ N/A

The total amount of orders in hand at the end of the reporting period was RMB 1319.4146 million (before

tax). Among them the amount of projects for which contracts have been signed but construction has not yet

commenced is RMB 0 million and the amount of uncompleted portion of projects under construction is

RMB 1319.4146 million (before tax).Other Notes

□ Applicable √ N/A

6. Other Notes

□ Applicable √ N/A

35 / 250Annual Report 2023

(V) Analysis of investment status

Overall analysis of external equity investments

□ Applicable √ N/A

1. Significant equity investments

□ Applicable √ N/A

2. Significant non-equity investments

□ Applicable √ N/A

3. Financial assets at fair value through profit or loss

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Gain or loss on

Asset Beginning of the fair value Accumulated fair Impairment Amount

category period changes during value changes provision for

Purchase during Amount at end

recognized in equity the period the period

sold/redeemed Other changes

during the period of period the period

Structured

deposits 122119888.89 -119888.89 225000000.00 347000000.00 0.00

Total 122119888.89 -119888.89 225000000.00 347000000.00 0.00

Investment in securities

□ Applicable √ N/A

Explanation of investment in securities

□ Applicable √ N/A

Investment in private equity funds

□ Applicable √ N/A

Investment in derivatives

□ Applicable √ N/A

36 / 250Annual Report 2023

4. Specific progress of major asset reorganization and integration during the reporting period

□ Applicable √ N/A

(VI) Sale of major assets and equity interests

□ Applicable √ N/A

(VII) Analysis of major holding and participating companies

√ Applicable □ N/A

Company name Main Registered

Sharehol Total Assets Net assets Net profit

business capital ding ratio (%) (yuan) (yuan) (yuan)

Acter Development

Engineering of onshore -

Technology clean room RMB 35.2967 56361008.2

(Shenzhen) Co. engineering million

100.0076384006.228183626.949

Ltd. business

Shenzhen Purchase and

Dingmao Trading sale of RMB 5 domestic million 100.00

86704391.454883916.58961679.2

Co. Ltd. 4 3 4 equipment

Acter Oversea

International investment HK$25.32739 44712312.3 23035494.8

Limited platform 7 million

100.0015830977.68

Acter Technology Overseas

Singapore Pte. Investment S$3.37585 100.00 16483155.8 16365630.3million 0 7 -172029.20 Ltd. Platform

Sheng Huei

Engineering US$3.5 194043856. 91624738.4 41682402.Technology million 100.00 06 0 73

Company Limited

PT. Acter

Technology Development Rp 10100 100.00 29961907.3 21211040.1 1959545.9

Indonesia of oversea million 5 4 3

Acter Technology clean room -

Malaysia Sdn. engineering RM 2.6 million 100.00 8184340.44 -714256.11 1044253.2Bhd business 8

Acter Technology Baht 30 88.38 46947278.8 27068731.1 12676965.Co. Ltd million 7 8 47

PT Acter

Integration Rp 50050

Technology million 67.00 5546972.90 5338188.97 -591849.42

Indonesia

Net profit from individual subsidiaries had an impact of 10% or more on the Company’s net profit

Revenue from main business and profit from main business:

Unit: Yuan Currency: RMB

Company name Revenue from main Profit from main business business

Sheng Huei Engineering Technology Company

Limited 298027836.06 59278380.51

(VIII) Structured entities controlled by the Company

□ Applicable √ N/A

37 / 250Annual Report 2023

VI. Discussion and Analysis of the Future Development of the Company

(I) Industry pattern and trend

√ Applicable □ N/A

(1) Strong demand from downstream industries providing broad market space for the clean room industryIn recent years China has attached great importance to the semiconductor industry and the “Outlinefor Promoting the Development of the National Integrated Circuit Industry” “Made in China 2025” “13thFive-Year Plan for the Development of National Strategic Emerging Industries” “Several Policies forPromoting the Development of the Integrated Circuit Industry and the Software Industry in a New Era withHigh Quality” and the “Fourteenth Five-Year” Plan and a number of favorable semiconductor localization

policies have been introduced intensively with the semiconductor market scale continues to expand the

relevant enterprises to build factories and expand production boom driven by the rapid construction of clean

room plant.Semiconductor industry is one of the most widely used high-end clean room applications along with

cloud computing Internet of Things big data 5G and other new-generation information technology

applications as well as data centers drones and other industrial development drive the global semiconductor

industry market size is showing steady growth. According to the World Fab Forecast from 2022 to 2024

the global semiconductor industry plans to start operating 82 new fabs including 11 projects in 2023 and 42

projects in 2024 with wafer sizes ranging from 300mm to 100mm. Wafer processing plant belongs to the

semiconductor industry chain in the middle its booming development will inevitably drive the industry chain

upstream IC design and downstream packaging and testing expansion demand continues to intensify. From

the announcement of Chinese semiconductor wafer foundry factories such as SMIC and Nexchip it can be

seen that the Chinese semiconductor industry is still actively laying out the production expansion boom

continues to promote IC semiconductor and other high-end electronics manufacturing industry is the main

field of the clean room project.According to the relevant data the global cleanroom technology market size was US$ 3900 million in

2022 and is expected to reach around US$ 6960 million by 2032 with a projected compound annual growth

rate of 5.97% during the 2023-2032 forecast period. Additionally data from Zhiyan Consulting indicates

that China’s cleanroom market is expected to reach approximately RMB 237500 million by 2029.

(2) Specialized clean room system integration engineering enterprises “value" advantage highlightedClean room engineering belongs to the basic engineering of advanced manufacturing industry which

is an essential part of high-end manufacturing industry such as electronics industry. The development of

advanced manufacturing industry is largely affected by the quality and level of clean room and the

development of related industries will undoubtedly promote the growth of the scale of clean room

engineering. With different application fields the focus of clean technology is also different. With the

expansion of market space and the evolution of specialization of technical needs the clean room engineering

industry shows a trend of further specialization.In the electronics industry the production program of specific precision electronic manufacturing

usually requires factories to maintain 24-hour uninterrupted production and clients have high requirements

for the stability and reliability of clean rooms which put forward higher requirements for the technical level

38 / 250Annual Report 2023

and comprehensive management level of clean room engineering companies. Since it takes a long time to

acquire the construction technology required for such clean room projects only a few companies in the

industry have the technical level to construct high-grade clean rooms in these fields. In order to minimize

investment risks reduce costs and ensure product yields owners usually choose to cooperate with

engineering service companies that have rich experience proven track records and are leaders in the industry.Small and medium-sized industrial clients are limited by the lack of professional factory construction team

so they are more inclined to choose professional system integration engineering enterprises with rich

experience in factory construction to provide services for them.The clean room industry is characterized by a large number of participants and intense competition in

the low-end segment with a fragmented market structure. In contrast high-end clean rooms have stringent

cleanliness requirements and the investment scale of individual projects is generally larger. The cleanliness

of the factory directly affects product yield so project owners place greater emphasis on the historical project

experience of the contractors. The bidding process is typically dominated by invitation-based tenders. As a

provider of integrated clean room system solutions the Company has undertaken numerous high-end clean

room projects for high-tech manufacturing facilities in China placing it at the forefront of the industry. It is

one of the most competitive clean room engineering service providers in the Chinese market.

(3) Southeast Asia’s “investment fever” drives the layout of clean room engineering enterprises to extend

Southeast Asia is gradually becoming a global semiconductor technology investor must contend.Diplomat Magazine said that many countries in Southeast Asia has established a wide range of chip assembly

packaging and testing industry clusters. Electronic circuits (semiconductors) have been identified as one of

Vietnam’s nine key national industries. The Vietnamese media quoted Linda Tan Chairman of the Southeast

Asian Semiconductor Industry Association as saying that the Vietnamese semiconductor market is expected

to grow by 6.12% in the period from 2022 to 2027; Southeast Asian countries represented by Singapore and

Malaysia are already an important link in the global semiconductor industry chain. Compared with Singapore

and Malaysia which are at the forefront of the chip industry in Southeast Asia Thailand which is a regional

automobile manufacturing center focuses on building an automotive semiconductor industry chain.Various countries have implemented a range of policies to support industrial development. A review of

industry policies in Southeast Asian nations reveals the following:

The semiconductor companies’ investments in establishing manufacturing facilities in Southeast Asia

will objectively promote the further development of the local industry. However Southeast Asia also faces

challenges in terms of power supply technical workforce and upstream and downstream industrial chain

support. Accompanying the shift of industrial clients based on announcements from relevant industry peers

a number of Chinese clean room construction companies have gradually set their sights on the Southeast

Asian region and have begun to seize the overseas market through measures such as establishing subsidiaries

and increasing investment amounts.(II) Development strategy of the Company

√ Applicable □ N/A

The Company has conducted an analysis and forecast of the current macroeconomic situation and the

long-term planning of infrastructure construction in the main business regions and combined with its own

39 / 250Annual Report 2023

actual situation formulated the Company’s business development strategy and plan for the next three years

making reasonable expectations plans and arrangements for the Company’s business development. Due to

the possibility that the Chinese macroeconomic policies may be moderately adjusted in the future according

to the Chinese and foreign economic situation regional and industrial development and characteristics the

Company does not rule out the possibility of adjusting its business development goals based on the actual

operating conditions and economic development situation. The Company adheres to the belief of being a

“high-quality space creator” and will continue to uphold the business philosophy of “integrityprofessionalism internationalization and innovation” implement the development strategy of “quality firsttechnology leadership and perfect service” focusing on clean room engineering services as its main business

with serving the high-tech industry as the core client demand orientation technology and R&D as the

support and green energy conservation as the direction to form independent innovation and R&D

capabilities achieve sustainable corporate development and grow into a leading international provider of

clean room system integration engineering services for the high-tech industry.(III) Business plan

√ Applicable □ N/A

The Company is optimistic about future revenue and profit. Accompanied by the development trend of

the industry national policy drive business development planning and corporate governance the Company

will continue to adhere to the development strategy of “multi-client multi-industry multi-task multi-region”

introduce ESG development concepts assembly construction and actively enhance its competitiveness. At

present the construction of the R&D center project has officially begun and the construction progress will

continue to be pushed forward in 2024. After the completion of the project the Company will actively carry

out various research and development work to help clients shorten the construction period save operating

costs and improve the yield rate of products.The driving force for future growth and acquisition of better market share is mainly reflected in the

following aspects:

1. The booming development of downstream clean room industries such as domestic substitution third-

generation compound semiconductors AI intelligence and 5G will provide a broad market space for the

Company’s future growth.

2. Through horizontal integration and vertical division of labor in the industrial chain we will seize the

core of the industry gather more high-quality resources and enhance the enterprise value.

3. Set up civil construction service team obtain design qualification introduce more quality teams and

talents to join Acter and expand business development channels in different industries.

4. Steady business growth in Vietnam Thailand and Indonesia and accelerate the continuous expansion

of Malaysia market and there is still room for growth of overseas revenue in 2024 compared with that in

2023.

5. Promote “green engineering” management; the Company adheres to the path of green developmentintroduces ESG development concepts the concept of energy-saving machine rooms fully integrates “greenplanning green procurement and green engineering methods” and applies green engineering technologies

to help enterprises achieve carbon neutrality. We have introduced the concept of ESG development and the

concept of energy-saving server room.

6. Continuously increase the development of the Chinese market: the Company has now built a total of

eight molecular companies including Shenzhen Xiamen Hefei Zhengzhou Wuhan Chongqing and

consolidate and establish the regional centers in East China South China and Southeast Asia while

collecting organizing and establishing an information resource base giving full play to the Company’s brand

products technology talent and management advantages extending marketing channels expanding the

scope of business regions strengthening the allocation of resources and promoting the sustainable

development of the core business. We will give full play to our advantages in brand products technology

talents and management extend marketing channels expand the scope of business regions strengthen

resource allocation and promote the sustainable growth of core business.

7. Strengthening brand building: more and more clients take the initiative to invite tenders to the

company and the brand building of Acter as “quality space creator” has achieved results. Next the company

will further promote the Company’s brand through high-quality engineering quality and service show the

Company’s brand image to clients in all aspects penetrate the brand concept and strengthen the brand

recognition. The Company will further realize the promotion of the Company’s brand through high-quality

projects and services show the Company’s brand image to clients in all directions penetrate the brand

concept strengthen the brand cognition and enhance the brand value.

40 / 250Annual Report 2023

8. Increase R&D investment: the Company will be recognized as a high-tech enterprise in 2023 and it

is expected to maintain more than 3% R&D investment in 2024. The Company will further improve the

organizational structure of technology R&D enrich the team of talent in technology R&D improve the

performance evaluation system for encouraging independent innovation and put the R&D management

methods and R&D incentive system into practice so as to provide comprehensive R&D institutional

guarantee for technological innovation. Integrate drawing and resources with BIM to produce valueengineering and improve net profit; accelerate progress and improve project quality with “assemblyinstallation”.

9. Strengthen human resource development: human resource is the core driving force of the Company’s

development and it is the Company’s long-term planning and goal of human resource management to

reasonably allocate integrate and develop human resources and establish a perfect human resource

mechanism so as to make the best use of them and bring their potentials into full play. Combined with the

Company’s future business development plan we will enhance the Company’s overall human resource level

in the following aspects:

(1) Strengthen the continuing education of the employees upgrade the qualification certificates of the

employees increase the qualification of the existing employees in construction environment and other

related practice establish relevant incentive system to encourage colleagues upgrade the number of

employees with middle and senior titles and encourage the on-the-job continuing learning of the serving

colleagues.

(2) Strengthen the construction of talent echelon adopting the methods of rotation academic upgrading

external project management training internal trainer position agent etc. to cultivate middle-level cadres;adopting the methods of master-apprentice system passing on skills on-the-job education and the “ReserveCadre Academy” to cultivate grass-roots cadres and core backbone staffs. By “selecting nurturing utilizingand retaining talents” appropriate praise and affirmation pertinent comments and suggestions and positive

expectations and concerns we can form a succession of excellent cadres and a core reserve of manpower to

meet the needs of future business development.(IV) Possible risks

√ Applicable □ N/A

1. Macro policy risk

The Company is mainly engaged in clean room engineering services for IC semiconductors

optoelectronics and other high-tech industries. The market of the Company’s downstream industries has a

strong correlation with the macroeconomic development cycle and the fluctuation of the economic growth

rate and macro economy will directly affect the operation and development of the entire downstream

industries which will in turn have an impact on the operation of the clean room engineering services business.Therefore the slowdown in economic growth and macroeconomic fluctuations will affect the Company’s

business development and bring certain risks to the Company’s development and operation.

2. Industry competition risk

After years of development China’s clean room engineering industry has been growing and entering a

steady development stage. With the entry of various types of social capital into the clean room industry the

number of enterprises in the industry is increasing year by year and the market competition is relatively

fierce. The Company’s service targets are mainly concentrated in the segmented market of electronic industry

and it has strong competitive strength and certain leading advantages. Acter Group is one of the enterprises

in the industry that possesses the first-class qualification of general contracting for electromechanical

engineering and the first-class qualification of specialized contracting for architectural electromechanical

installation and ranks upstream in the industry in terms of business performance business level market

brand and management level and has a certain degree of popularity in the industry. With the increasing

number of entrants in the industry the Company will face competition from enterprises in the same industry.Therefore if the company fails to maintain its advantages in technology management brand name and

process the Company’s position in the industry will be affected to a certain extent.

3. Risk of gross profit rate fluctuation

During the reporting period the gross profit rate of the Company’s main business was 13.33% with

certain fluctuation compared with the same period of last year. The fluctuation of gross profit margin is

mainly related to the intensity of competition and factors such as cost control technology level project site

management ability and client groups will also affect the change of gross profit margin to a certain extent.If the competition in the industry further intensifies in the future and the Company fails to take further

measures to enhance its core competitiveness the Company may face the risk of fluctuation in gross profit

margin.

4. Risk of higher concentration of clients

41 / 250Annual Report 2023

During the reporting period the sales of the top five clients of the company amounted to RMB 889.0282

million accounting for 44.25% of the total annual sales with a high concentration of clients. It is mainly due

to the fact that the company has high reputation and good word of mouth and mainly undertakes key projects

and large-scale projects in the industry and the amount of individual projects is large. clean room

engineering industry is a project-based business the Company needs to continue to develop new clients

undertake new business to ensure that the Company’s operating results of sustained and stable growth such

as the Company’s market development strategy does not meet the market changes or does not meet the needs

of clients the Company’s existence can not be sustained stable development of new clients and maintain

the old clients to add new business may be and thus face the risk of performance decline.

5. “Transnational” management risk

The Company has been dedicated to providing clean room engineering services for high-tech

manufacturing projects since its inception. After years of development the Company has accumulated

substantial expertise in business network layout client resources and technology. Particularly in recent years

the continuous growth of overseas business has not only promoted the Company’s development but also

posed greater challenges to the Company’s risk control and asset management capabilities. If the Company’s

management structure and capabilities cannot keep up with the needs of its sustained development and its

asset management ability fails to be correspondingly enhanced it will constrain the Company’s development

pace and potentially adversely impact its operating performance.(V) Others

□ Applicable √ N/A

VII. Information and reasons for the Company’s failure to disclose information in accordance with

the Guidelines due to non-application of the provisions of the Guidelines or for special reasons such

as state secrets or commercial secrets.□ Applicable √ N/A

Section IV Corporate Governance

I. Explanation on Corporate Governance

√ Applicable □ N/A

During the reporting period the Company continuously improved its corporate governance structure

internal management and internal control system and standardized its operation in accordance with the

requirements of the Company Law the Securities Law relevant laws and regulations of the Shanghai Stock

Exchange and the actual situation of the Company. The shareholders’ general meeting the Board of Directors

and the Supervisory Committee of the Company have clear division of powers and responsibilities and each

of them performs its own duties and the decision-making is independent efficient and transparent. The

Board of Directors of the Company has set up specialized committees such as the Remuneration and

Assessment Committee the Audit Committee the Nomination Committee and the Strategy Committee to

further improve the corporate governance structure of the Company. Details of the corporate governance of

the Company are as follows:

(I) The Company and its controlling shareholders: The controlling shareholders of the Company

exercise their rights and obligations in accordance with the law and effectively fulfill their obligations of

good faith to the Company and other shareholders. The Company and the controlling shareholder are

completely independent in five aspects namely business assets personnel organization and finance and

the Company has a complete business system and the ability to operate independently in the market.(II) The shareholders’ meeting is the Company’s highest authority. The Company strictly follows the

provisions and requirements of the Articles of Association the Rules of Procedure for Shareholders’

Meetings and other regulations to standardize the convening holding and deliberation procedures of the

shareholders’ meeting. The Company engages lawyers to issue legal opinions on the legality of the

shareholders’ meeting ensuring the equal status of all shareholders especially minority shareholders fully

exercising the legitimate rights and interests of shareholders and ensuring shareholders' right to know

participate and vote on major corporate matters.(III) The board of directors strictly exercises its powers in accordance with the Company Law the

Articles of Association the Rules of Procedure for the Board of Directors and other regulations. This

includes organizing and implementing the resolutions of the shareholders’ meeting deciding on the

Company’s business plans and investment plans formulating the Company’s annual financial budget final

42 / 250Annual Report 2023

accounts and profit distribution plans drafting major acquisition plans and appointing or dismissing the

Company’s general manager and other senior management personnel. All directors faithfully and diligently

perform their duties actively participate in the decision-making of the Company’s major matters and

actively participate in relevant training. The specialized committees under the board of directors operate well

and the convening of meetings and resolutions comply with the relevant system requirements allowing them

to play their normal role.(IV) The Supervisory Committee exercises its powers and functions in strict accordance with the

Company Law the Articles of Association and the Rules of Procedure for the Board of Directors and

performs its supervisory functions diligently and conscientiously including the effective supervision of the

fulfillment of duties by the Directors and senior management as well as the operation of the Company in

accordance with the law.(V) The company strictly follows the requirements of the Information Disclosure Management System

and the Registration Management System for Insiders by implementing measures such as insider registration

and external information reporting registration. This strengthens the management of insiders standardizes

the review process for external information reporting clarifies the obligations and responsibilities of relevant

personnel to maintain the confidentiality of undisclosed information and enhances the Company’s

awareness of information disclosure. This effectively avoids the occurrence of violations in information

disclosure. Meanwhile the Company strengthens communication and interaction with investors and pays

attention to maintaining investor relations.Whether there is any material difference between the corporate governance and the laws administrative

regulations and CSRC’s regulations on the governance of listed companies; if there is such a material

difference the reasons shall be explained.□ Applicable √ N/A

II. Specific measures taken by the controlling shareholders and actual controllers of the Company to

ensure the independence of the Company in terms of assets personnel finances organization and

business as well as the solutions work progress and follow-up plans in case of the company’s

independence being affected.□ Applicable √ N/A

Controlling shareholders actual controllers and other parties controlled by them engaged in business that are

same as or similar to the company peer competition and impact of significant changes in peer competition

on the company solutions adopted working progress and subsequent solution plans

□ Applicable √ N/A

III. General Meeting of Shareholders

Index of

searches on Date of

Session of the Date of designated publication

meeting meeting websites where of Resolutions

resolutions are resolutions

published

1. Proposal on the Work Report of the

Board of Directors for the Year 2022

2. Proposal on the Work Report of the

Supervisory Board for the Year 2022

2022 Annual 3. Proposal on the Full Text and Summary

General April 28 2023 www.sse.com April 29 of the Annual Report for the Year 2022

Meeting .cn 2023 4. Proposal on the Financial Settlement Report for the Year 2022

5. Proposal on the Financial Budget

Report for the Year 2023

6. Proposal on the Estimated Guarantee

Total for the Year 2023

43 / 250Annual Report 2023

7. Proposal on the Application for

Comprehensive Credit Limit from

Financial Institutions for the Year 2023

8. Proposal on Changing the

Implementation Location and Method of

Some Raised Fund Investment Projects

9. Proposal on Adjusting the Construction

Content of Some Raised Fund Investment

Projects

10. Proposal to Revise the “MajorOperating and Investment DecisionManagement System”

11. Proposal to Revise the “Articles ofAssociation”

12. Proposal on the Profit Distribution

Plan for the Year 2022

1. Proposal on the Reappointment of the

Accounting Firm

The First 2. Proposal on the Absorption and Merger

Extraordinary

General August 29 www.sse.com.c August 30

of the Wholly-owned Subsidiary

2023 n 2023 3. Proposal on the Change of Registered Meeting of Capital Revision of the Articles of

2023 Association and Handling of the

Industrial and Commercial Registration

Change

Preferred shareholders whose voting rights have been restored requested an extraordinary general

meeting□ Applicable √ N/A

Explanation of general meetings

√ Applicable □ N/A

During the reporting period the Company held 2 general meetings of shareholders and the above meetings

complied with the relevant laws and regulations and the Articles of Association in respect of the convening

method proceedings voting method and contents of resolutions.

44 / 250Annual Report 2023

IV. Directors Supervisors and Senior Management Personnel

(I) Changes in shareholdings and remuneration of incumbent and outgoing Directors Supervisors and senior management during the reporting period

√ Applicable □ N/A

Unit: Share

Sharehol Increas Total amount of pre- Whether

Shareholdi dings at e/decre Reasons for tax remuneration remuneration

Name Position Gender Age Appointment Expiration date

ngs at the

beginning the end

ase in

shares increase or

received from the was received

date of appointment of the year of the decrease

Company during the from related

year during reporting period parties of the the year (RMB Million/100) Company

Liang Jinli Chairman Male 62 July 1 2019 July 1 2025 0 0 0 Unchanged 48.57 Yes

Chen Vice Chairman

Zhihao Secretary of the Male 58 July 1 2019 July 1 2025 0 0 0 Unchanged 111.66 No Board

Director

Zhu Qihua General Male 51 July 1 2019 July 1 2025 0 0 0 Unchanged 108.85 No

Manager

Su

Yuzhou Director Male 48 July 1 2019 July 1 2025 0 0 0 Unchanged 49.02 No

Shi Kang Independent Director Male 59 July 31 2020 July 1 2025 0 0 0 Unchanged 8.00 No

Wu Independent

Weihua Director Male 53 July 1 2019 July 1 2025 0 0 0 Unchanged 8.00 No

Gu Hailan Independent Director Female 52 July 1 2019 July 1 2025 0 0 0 Unchanged 8.00 No

Huang Chairwoman of

Yaping the Supervisory Female 48 July 1 2019 July 1 2025 0 0 0 Unchanged 36.85 No Board

Liao

Chongyou Supervisor Male 47 July 1 2019 July 1 2025 0 0 0 Unchanged 58.40 No

Wang Yu Supervisor Female 43 July 1 2019 July 1 2025 0 0 0 Unchanged 35.22 No

Xiao Chief Financial

Jingxia Officer Female 55 July 1 2019 July 1 2025 0 0 0 Unchanged 37.61 No

Total / / / / / / 0 0 / 510.18 /

45 / 250Annual Report 2023

Name Main Working Experience

Born in October 1962 with Chinese nationality of Taiwan no permanent residence in foreign countries master’s degree of EMBA senior engineer. He

was the Engineering Manager of Gongshan Air Conditioning & Refrigeration Co. Ltd.; the Director and Chairman of the board of Sheng Huei Limited;

Supervisor of Winmax (Shanghai); and Supervisor of Winmax (Suzhou). Currently he is the CEO and Chairman of Acter (Taiwan); Chairman of HER

SUO (Taiwan); Director of Acter (Shenzhen); Director of Acter (Hong Kong); Director of New Point (Seychelles); Director of Sheng Huei International;

Liang Jinli Chairman of NOVA (Taiwan); Director of Acter (Singapore); Director of Acter (Malaysia); Director of Shenzhen Dingmao; Director and CEO of Enrich

(Taiwan); Chairman of Winmega (Taiwan); Director of Novatech (Singapore); Chairman of Winmax (Suzhou); Chairman of Winmax (Shanghai);

Managing Partner of Suzhou Songhuei; Director of Sheng Huei (Vietnam); Director of WASTE; Chairman of the Board of Directors of Rayzher Industrial;

Director of Acter (Thailand); Chairman of the Board of Directors of Hengji Construction Company Limited; Director of Indonesia Joint Venture; and

Chairman of the Board of Directors of Acter Group from July 2019 to the present.Born in May 1966 with Chinese nationality of Taiwan no permanent residence in foreign countries bachelor’s degree senior engineer. He was the Deputy

General Manager of Wuhan Ronghuei Industry and Trade Co. Ltd; the Deputy General Manager of Guangzhou Danli International Trade Co. Ltd; the

Deputy General Manager of Zhongshan Acter Mechanical and Electrical Engineering Co. Ltd.; the Deputy General Manager and General Manager of

Chen Zhihao Acter (Shenzhen); General Manager and Director of ShengHuei Limited; Director and Secretary of the Board of Directors of Acter Group. Currently he

is the Director of Acter (Hong Kong); the Chairman of Acter (Shenzhen); the Chairman of Shenzhen Dingmao; the Director of Lantia Innovation Co. Ltd.;

the Director of Acter (Singapore); the Director of Sheng Huei (Vietnam); the Director of Space (Thailand); and the Director of Indonesia Joint Venture;

and from July 2020 to now he has been the Vice Chairman and the Secretary of the Board Of Directors of Acter Group.Born in April 1973 with Chinese nationality of Taiwan no permanent residence in foreign countries master degree in EMBA mid-level engineer. He was

the Assistant Manager of the Engineering Department of Kuang I Engineering Co. Ltd.; the Director of Acter (Taiwan) the Assistant Manager of the

Engineering Department of Suzhou HongHuei Mechanical and Electrical Engineering Co. Ltd. and served as the Assistant Manager Manager Associate

Zhu Qihua Manager Deputy General Manager General Manager and Director of Sheng Huei Limited. Currently he is the Director and General Manager of Acter

(Shenzhen); the Director and General Manager of Shenzhen Dingmao; the Supervisor of Sheng Huei (Vietnam); the Director of Acter (Hong Kong); the

Director of Acter (Malaysia); the Director of Acter (Thailand); the Supervisor of Acter (Indonesia); the Supervisor of Indonesia Joint Venture; and from

July 2019 to now he has been the Director and General Manager of Acter Group.Born in May 1976 with Chinese nationality of Taiwan no permanent residence in foreign countries bachelor’s degree senior engineer. He was an

Su Yuzhou engineer of Acter (Taiwan) and the Manager of the Engineering Department of Sheng Huei Limited. Currently he is the Managing Partner of Suzhou

Shengzhan; the Director of Space (Thailand); from July 2019 to now he is the Manager of the Engineering Department and the Director of Acter Group.Born on August 15 1965 with Chinese nationality no permanent residency in foreign countries bachelor’s degree. He was the Secretary of the Youth

League Committee and President of the Youth League School of the School of Computer and Information Engineering of Jiangsu University; President of

the Youth League School of Jiangsu University Youth League Committee; the Lecturer of the Specialized Vehicle Teaching and Research Department of

Shi Kang the School of Automotive Engineering in Jiangsu University; the Assistant General Manager of Jiangsu University Industrial Corporation; the Professional Lecturer of the Automobile Teaching Department of the School of Automobile Engineering in Jiangsu University; the Director of Office of the School of

Business Administration in Jiangsu University; the Deputy Secretary of the Party Committee and Vice Dean of the College of Finance and Economics in

Jiangsu University; the Vice President and Deputy Secretary of Jiangsu University Press and Magazines; the Deputy Director of the Labor Union of Jiangsu

University; the President General Manager and Executive Director of Jiangsu University Press Co. Ltd.; and the Director of Jiangsu University Asset

46 / 250Annual Report 2023

Management Co. Ltd. Currently he is a Grade 5 staff member of the Logistics Department (Logistics Group) of Jiangsu University; from July 2020 to

present he has been an Independent Director of Acter Group.Born in November 1971 with Chinese nationality no permanent residency in foreign countries master’s degree and licensed to practice law in China. He

was a practicing lawyer of Suzhou Foreign Law Firm a practicing lawyer of H&Z Group Law Firm a practicing lawyer of Suzhou Renhai Fangzhou Law

Firm a Director of the Finance and Insurance Committee of Suzhou Lawyers Association a member of Suzhou Hi-Tech District Government Lawyers’

Wu Weihua Advisory Group and a Standing Director of the Bankruptcy Law Research Association of Jiangsu Law Society. Currently he is a lecturer of Suzhou

University of Science and Technology; a practicing lawyer of Jiangsu Lantern Law Firm; the Deputy Secretary-General of Small and Medium-sized

Enterprises Committee of Jiangsu Federation of Industry and Commerce; the Vice President of Suzhou Bankruptcy Administrators’ Association; a Director

of Suzhou Lawyers’ Association; and an Independent Director of Acter Group from July 2019 to the present.Born in October 1972 with Chinese nationality no permanent residency in foreign countries master degree in MBA certified public accountant in China.She was the Financial Manager of Kunshan Huaheng Welding Equipment Technology Co. Ltd; the Financial and Administrative Manager of Hangzhou

Zhixing Automobile Co. Ltd. and Hangzhou Dongxingxing Auto Repair Co. Ltd.; the Chief Financial Officer of Kunshan Huaheng Welding Equipment

Gu Hailan Co. Ltd.; Chief Financial Officer Deputy General Manager and Chief Financial Officer Deputy General Manager and Secretary of the Board of Directors

of Shanghai Qinsen Landscape Co. Ltd.; the Secretary to the Board of Directors and Chief Financial Officer of Origincell Technology Group Ltd.Currently she is the Secretary of the Board Of Directors and Chief Financial Officer of Jiaxing Hechang Elevator Control Technology Co. Ltd.; from July

2019 to present he is an Independent Director of Acter Group.

Born in February 1976 with Chinese nationality of Taiwan permanent residency in the United States and has a graduate degree. She was the Accounts

Huang Receivable Specialist of McAllister the Finance Specialist of Texas Instruments Incorporated the Finance Manager of Acter (Shenzhen) and the Manager

Yaping of Administration Department of Sheng Huei Limited. Currently she is the Supervisor of Shenzhen Dingmao; the Supervisor of Acter (Shenzhen); and

from July 2019 to now she is the Chief Executive Officer and Chairman of the Supervisory Committee of Acter Group.Born in May 1977 with Chinese nationality of Taiwan no permanent residency in foreign countries and college degree. He was an engineer of Ming

Liao Sheng Electromechanical Co. Ltd. and the Head of Engineering Department of SILPORT Technologies Inc. and the Manager of Engineering Department

Chongyou of Acter (Taiwan) and the Associate Manager of Engineering Department of Sheng Huei Limited. From July 2019 to now he has been the Associate

Manager and Supervisor of the Engineering Department of Acter Group.Born in June 1981 with Chinese nationality no permanent residency in foreign countries bachelor’s degree. She used to work as a laborer in Haoweinai

Wang Yu Precision Technology (Suzhou) Co. Ltd; a staff member in the Management Department of Suzhou Honghuei Mechanical and Electrical Engineering Co. Ltd. From July 2019 to now she has been the Assistant Manager Deputy Manager and Employee Representative Supervisor of the Management

Integration Department of Acter Group.Born in April 1969 with Chinese nationality no permanent residency in foreign countries and bachelor’s degree. She was the Team Leader of the Audit

Department of the First Joint Accounting Firm; the Assistant Manager of the Underwriting Department of Fubon Securities Co. Ltd.; the Financial Manager

Xiao Jingxia of Taiwan Green Point Enterprises Co. Ltd.; the Financial Director of Megaforce Compan Limited; the Accountant of Shen Chuan Paper (Suzhou) Co.Ltd.; the Finance Manager of Sheng Huei Limited; and the Supervisor of Suzhou Yumanchang Food Technology Co. Ltd. From July 2019 to present she

is the Chief Financial Officer of Acter Group.Other Information

□ Applicable √ N/A

47 / 250Annual Report 2023

(II) Occupation of Directors Supervisors and Senior Management Currently in Office and Outgoing During the Reporting Period

1. Appointments in shareholders’ organizations

√ Applicable □ N/A

Name of the incumbent Name of shareholder unit Position held in the shareholders’ Date of commencement of term organization of office Date of termination

Liang Jinli Acter (Taiwan) Chief Executive Officer and Chairman of the Board August 1993

Liang Jinli Sheng Huei International Director May 2008

Liang Jinli Suzhou Songhuei Managing Partner April 2018

Su Yuzhou Suzhou Shengzhan Managing Partner April 2018

Statement of employment in

shareholders’ organizations None

2. Employment in other organizations

√ Applicable □ N/A

Name of incumbent Name of other units Positions held in other units Date of commencement of term of office Date of termination

New Point (Seychelles) Director March 2008

Enrich (Taiwan) Director Chief Executive Officer June 2014

HER SUO (Taiwan) Chairman of the Board April 1998

NOVA (Taiwan) Chairman of the Board March 2009

Winmega (Taiwan) Chairman of the Board July 2014

Liang Jinli Novatech (Singapore) Director June 2016

Winmax (Shanghai) Chairman of the Board May 2023

Winmax (Suzhou) Chairman of the Board May 2023

Rayzher Industrial Chairman of the Board June 2021

WASTE Director October 2019

Acter (Singapore) Director November 2009

48 / 250Annual Report 2023

Acter (Malaysia) Director December 2011

Acter (Shenzhen) Director June 2005

Shenzhen Dingmao Director October 2012

Acter (Thailand) Director September 2019

Acter (Hong Kong) Director November 2007

Sheng Huei (Vietnam) Director September 2018

Hengji Construction Corporation Chairman of the Board May 2023

Indonesia Joint Venture Director April 2023

Winmax (Suzhou) Supervisor May 2016 May 2023

Winmax (Shanghai) Supervisor October 2016 May 2023

Acter (Shenzhen) Chairman of the Board October 2009

Shenzhen Dingmao Chairman of the Board October 2012

Acter (Hong Kong) Director November 2007

Sheng Huei (Vietnam) Director July 2019

Chen Zhihao

Acter (Singapore) Director October 2018

Space (Thailand) Director October 2019

Lantia Innovation Co. Ltd. Director September 2015

Indonesia Joint Venture Director April 2023

Acter (Shenzhen) Director General Manager January 2018

Shenzhen Dingmao Director General Manager January 2018

Zhu Qihua

Acter (Hong Kong) Director July 2019

Sheng Huei (Vietnam) Supervisor December 2018

49 / 250Annual Report 2023

Acter (Malaysia) Director September 2019

Acter (Thailand) Director September 2019

Acter (Indonesia) Supervisor January 2023

Indonesia Joint Venture Supervisor April 2023

Su Yuzhou Space (Thailand) Director October 2019

Acter (Shenzhen) Supervisor October 2018

Huang Yaping

Shenzhen Dingmao Supervisor October 2018

Xiao Jingxia Suzhou Yumanchang Food Technology Co. Ltd. Supervisor October 2021 April 2023

Gu Hailan Jiaxing Hechang Elevator Control

Secretary of the Board of

Technology Co. Ltd. Directors and Chief Financial November 2022 Officer

Jiangsu University Press Co. Ltd. President General Manager and Executive Director May 2017 December 2023

Jiangsu University Asset Management

Shi Kang Co. Ltd. Director May 2017 December 2023

Logistics Department of Jiangsu

University (Logistics Group) Grade 5 Staff January 2024

Suzhou University of Science and

Technology Lecturer July 1993

Jiangsu Lantern Law Firm Lawyer December 2004

Small and Medium-sized Enterprises

Wu Weihua Committee of Jiangsu Federation of Deputy Secretary General October 2018

Industry and Commerce

Suzhou Bankruptcy Administrators

Association Vice President June 2019

Suzhou Lawyers Association Director February 2016

Description of positions held in

other organizations None

50 / 250Annual Report 2023

(III) Remuneration of directors supervisors and senior management personnel

√ Applicable □ N/A

With reference to the remuneration level of the Company’s industry and the region and taking into account the

Decision-making procedures for remuneration of Company’s actual operating conditions and job responsibilities the Company shall draw up a plan and implement it

Directors Supervisors and senior management after consideration and approval by the Board of Directors and the general meeting of shareholders. Among them

personnel the remuneration of Directors and Supervisors shall be decided by the shareholder’' meeting and the remuneration

of senior management shall be decided by the Board of Directors.Whether a director recuses himself/herself from

the Board of Directors’ discussion on his/her own Yes

remuneration

Details of the recommendations made by the

Remuneration and Evaluation Committee or thespecial meeting of independent directors in respect On April 7 2023 the Remuneration and Evaluation Committee considered and approved the “Proposal on theof the remuneration of directors supervisors and Remuneration Plan for Senior Management for the Year 2023”.senior management personnel

Except for the allowance for independent directors of the Company the remuneration of Directors Supervisors and

Basis for determining the remuneration of senior management who are in receipt of remuneration from the Company shall be determined on the basis of the

Directors Supervisors and senior management Company's overall remuneration policy salary standards the specific executive positions held by the individuals in

personnel the Company their work performance as well as the actual circumstances of the fulfillment of the Company’s

annual business plan.Actual payment of remuneration to Directors The actual payment of the remuneration of Directors Supervisors and senior management was made on time in

Supervisors and senior management personnel accordance with the relevant provisions mentioned above and the remuneration data were true and accurate.Total actual remuneration received by all

Directors Supervisors and senior management as RMB 5.1018 million

at the end of the Reporting Period

(IV) Changes in Directors Supervisors and senior management of the Company

□ Applicable √ N/A

(V) Explanation of penalties imposed by securities regulators in the previous three years

□ Applicable √ N/A

(VI) Others

□ Applicable √ N/A

51 / 250Annual Report 2023

V. Information on the Board of Directors’ meetings held during the reporting period

Session of the meeting Date of meeting Resolution of the meeting

1. Proposal on the Work Report of the General Manager for the Year 2022

2. Proposal on the Work Report of the Board of Directors for the Year 2022

3. Proposal on the Performance Report of Independent Directors for the Year 2022

4. Proposal on the Report on the Performance of the Audit Committee of the Board of Directors for the Year

2022

5. Proposal on the Internal Control Evaluation Report for the Year 2022

6. Proposal on the Internal Control System Declaration for the Year 2022

7. Proposal on the Full Text and Summary of the Annual Report for the Year 2022

8. Proposal on the Financial Settlement Report for the Year 2022

9. Proposal on the Financial Budget Report for the Year 2023

10. Proposal on the Business Plan for the Year 2023

11. Proposal on the Remuneration Plan for Senior Management for the Year 2023

12. Proposal on the Confirmation of Routine Related Transactions for the Year 2022 and the Expected

Routine Related Transactions for the Year 2023

13. Proposal on Signing a Rental Contract for Real Estate and Related Transactions with Suzhou Winmax

The Sixth Meeting of the Second Technology Corp.Session of the Board of April 7 2023 14. Proposal on the Estimated Guarantee Total for the Year 2023

Directors 15. Proposal to Request the Board of Directors’ Confirmation of the Detailed Guarantees between the

Company and its Subsidiaries Holding Over 50% of Shares within the Scope of Consolidated Financial

Statements

16. Proposal on the Application for Comprehensive Credit Limit from Financial Institutions for the Year

2023

17. Proposal on Applying for Comprehensive Credit Limit from China Construction Bank Suzhou High-

Tech Industrial Development Zone Branch

18. Proposal on Providing Financial Support to the Holding Subsidiary Company

19. Proposal on Providing Loans to Employees for Home Purchases and Formulating the “Employee HomePurchase Loan Management Measures”

20. Proposal on Changes in Accounting Policies

21. Proposal on the Special Report on the Deposit and Actual Use of Funds Raised by the Company in 2022

22. Proposal on Using Some Idle Own Funds for Cash Management

23. Proposal on Changing the Implementation Location and Method of Some Raised Fund Investment

Projects

24. Proposal on Adjusting the Construction Content of Some Raised Fund Investment Projects

52 / 250Annual Report 2023

25. Proposal to Request the Board of Directors to Approve the Establishment of the Joint Venture Company

for External Investment

26. Proposal to Revise the “Major Operating and Investment Decision Management System”

27. Proposal to Revise the “Articles of Association”

28. Proposal on the Profit Distribution Plan for the Year 2022

29. Proposal to Convene the 2022 Annual Shareholders’ Meeting.

Seventh Meeting of the Second 1. Proposal on the Q1 Report for 2023

Board of Directors April 27 2023 2. Proposal on Confirming that Overdue Accounts Receivable Exceeding Normal Credit for 3 Months Are Not Included in Fund Lending

1. Proposal on the Full Text and Summary of the Semi-Annual Report for the Year 2023

2. Proposal on the Special Semi-Annual Report on the Deposit and Actual Use of Funds Raised by the

Company in 2023

3. Proposal on Providing Financial Support to the Holding Subsidiary Company

4. Proposal on Capital Increase to the Hong Kong Subsidiary

5. Proposal on Applying for Comprehensive Credit Line from the Bank

Eighth Meeting of the Second August 11 2023 6. Proposal on Confirming that Overdue Accounts Receivable Exceeding Normal Credit for 3 Months Are Board of Directors Not Included in Fund Lending

7. Proposal on Seeking the Board’s Approval for Relevant Matters

8. Proposal on the Reappointment of the Accounting Firm

9. Proposal on the Absorption and Merger of the Wholly-Owned Subsidiary

10. Proposal on the Change of Registered Capital Revision of the Articles of Association and Handling of

the Industrial and Commercial Registration Change

11. Proposal on Convening the First Extraordinary General Meeting of Shareholders in 2023

1. Proposal on the Q3 Report for 2023

2. Proposal on the Expected Trading Volume of Financial Derivative Products

3. Proposal on Using Some Idle Raised Funds for Cash Management

4. Proposal on the Postponement of Some Raised Investment Projects

Ninth Meeting of the Second October 27 2023 5. Proposal on Confirming that Overdue Accounts Receivable Exceeding Normal Credit for 3 Months Are Board of Directors Not Included in Fund Lending

6. Proposal on the Outbound Investment

7. Proposal to Request the Board of Directors’ Confirmation of the Detailed Guarantees between the

Company and its Subsidiaries Holding Over 50% of Shares within the Scope of Consolidated Financial

Statements

VI. Fulfillment of Duties by Directors

53 / 250Annual Report 2023

(I) Participation of Directors in the Board of Directors’ Meetings and Shareholders’ Meetings

54 / 250Annual Report 2023

Name of Independent Participation in

Director Director or not Participation in the Board of Directors shareholders’ meetings

Required Whether there have Number of

attendances of Attendance Attendance by Attendances been two consecutive attendances at the

Board meetings in person telecommunica by proxy

Absences failures to attend in shareholders'

tion person meeting

Liang Jinli No 4 4 4 0 0 No 2

Chen Zhihao No 4 4 0 0 0 No 2

Zhu Qihua No 4 4 0 0 0 No 2

Su Yuzhou No 4 4 4 0 0 No 2

Shi Kang Yes 4 4 4 0 0 No 2

Wu Weihua Yes 4 4 4 0 0 No 2

Gu Hailan Yes 4 4 4 0 0 No 2

Explanation for two consecutive failures to attend in person

□ Applicable √ N/A

Number of board meetings held during the year 4

Of which: Number of on-site meetings 0

Number of meetings held via telecommunication 0

Number of meetings held on-site and via communication 4

(II) Objections raised by directors to matters relating to the Company

□ Applicable √ N/A

(III) Others

□ Applicable √ N/A

55 / 250Annual Report 2023

VII. Specialized committees under the Board of Directors

√ Applicable □ N/A

(I) Membership of specialized committees under the Board of Directors

Type of specialized committees Name of member

Audit Committee Liang Jinli Wu Weihua Gu Hailan

Nomination Committee Liang Jinli Shi Kang Wu Weihua

Remuneration and Appraisal Committee Liang Jinli Shi Kang Gu Hailan

Strategy Committee Liang Jinli Chen Zhihao Zhu Qihua

(II) The Audit Committee held 4 meetings during the reporting period

Date of meeting Contents of meetings Important opinions and Other performance recommendations of duties

1. Proposal on the Report on the Performance of the Audit Committee of the Board of

Directors for the Year 2022

2. Proposal on the Internal Control Evaluation Report for the Year 2022

3. Proposal on the Internal Control System Declaration for the Year 2022

4. Proposal on the Full Text and Summary of the Annual Report for the Year 2022

5. Proposal on the Financial Settlement Report for the Year 2022

6. Proposal on the Financial Budget Report for the Year 2023

7. Proposal on the Confirmation of Routine Related Transactions for the Year 2022 and the

Expected Routine Related Transactions for the Year 2023

8. Proposal on Signing a Rental Contract for Real Estate and Related Transactions with

Suzhou Winmax Technology Corp.

9. Proposal on the Estimated Guarantee Total for the Year 2023

10. Proposal to Request the Board of Directors’ Confirmation of the Detailed Guarantees

April 7 2023 between the Company and its Subsidiaries Holding Over 50% of Shares within the Scope of Considered and

Consolidated Financial Statements approved None

11. Proposal on the Application for Comprehensive Credit Limit from Financial Institutions

for the Year 2023

56 / 250Annual Report 2023

12. Proposal on Applying for Comprehensive Credit Limit from China Construction Bank

Suzhou High-Tech Industrial Development Zone Branch

13. Proposal on Providing Financial Support to the Holding Subsidiary Company

14. Proposal on Providing Loans to Employees for Home Purchases and Formulating the

“Employee Home Purchase Loan Management Measures”

15. Proposal on Changes in Accounting Policies

16. Proposal on the Special Report on the Deposit and Actual Use of Funds Raised by the

Company in 2022

17. Proposal on Using Some Idle Own Funds for Cash Management

18. Proposal on Changing the Implementation Location and Method of Some Raised Fund

Investment Projects

19. Proposal on Adjusting the Construction Content of Some Raised Fund Investment Projects

20. Proposal on the Profit Distribution Plan for the Year 2022

1. Proposal on the Q1 Report for 2023

April 27 2023 2. Proposal on Confirming that Overdue Accounts Receivable Exceeding Normal Credit for 3 Considered and None

Months Are Not Included in Fund Lending approved

1. Proposal on the Full Text and Summary of the Semi-Annual Report for the Year 2023

2. Proposal on the Special Semi-Annual Report on the Deposit and Actual Use of Funds

Raised by the Company in 2023

3. Proposal on Providing Financial Support to the Holding Subsidiary Company

4. Proposal on Capital Increase to the Hong Kong Subsidiary

5. Proposal on Applying for Comprehensive Credit Line from the Bank

August 11 2023 6. Proposal on Confirming that Overdue Accounts Receivable Exceeding Normal Credit for 3 Considered and None

Months Are Not Included in Fund Lending approved

7. Proposal on Seeking the Board's Approval for Relevant Matters

8. Proposal on the Reappointment of the Accounting Firm

1. Proposal on the Q3 Report for 2023

2. Proposal on the Expected Trading Volume of Financial Derivative Products

3. Proposal on Using Some Idle Raised Funds for Cash Management

4. Proposal on the Postponement of Some Raised Investment Projects

5. Proposal on Confirming that Overdue Accounts Receivable Exceeding Normal Credit for 3

Months Are Not Included in Fund Lending

October 27 2023 6. Proposal on the Outbound Investment Considered and None

7. Proposal to Request the Board of Directors’ Confirmation of the Detailed Guarantees approved

between the Company and its Subsidiaries Holding Over 50% of Shares within the Scope of

Consolidated Financial Statements

57 / 250Annual Report 2023

(III) The Nomination Committee held one meeting during the reporting period

Date of meeting Contents of the meeting Important opinions and recommendations Other performance of duties

October 27 2023 1. Proposal to Review the Qualifications of the Current Independent Directors of the Company Considered and approved None

(IV) The Remuneration and Evaluation Committee held one meeting during the reporting period

Date of meeting Content of the meeting Important opinions and recommendations Other performance of duties

April 7 2023 1. Proposal on the Remuneration Plan for Senior Management for the Year 2023 Considered and approved None

(V) The Strategy Committee held three meetings during the reporting period

Date of meeting Contents of meetings Important opinions and recommendations Other performance of duties

1. Proposal on the Business Plan for the Year 2023

April 7 2023 2. Proposal to Request the Board of Directors to Approve the Considered and approved None

Establishment of the Joint Venture Company for External Investment

August 11 2023 1. Proposal on the Absorption and Merger of the Wholly-Owned Subsidiary Considered and approved None

1. Proposal on the Expected Trading Volume of Financial Derivative

October 27 2023 Products Considered and approved None

2. Proposal on the Outbound Investment

(VI) Details of disagreements

□ Applicable √ N/A

VIII. Explanation of risks found by the Supervisory Committee to exist in the Company

□ Applicable √ N/A

The Supervisory Committee has no objection to the supervisory matters during the reporting period.IX. Employees of the parent company and major subsidiaries at the end of the reporting period

(I) Employees

58 / 250Annual Report 2023

Number of employees in service of the Parent Company 442

Number of employees on board of major subsidiaries 198

Total number of staff 640

Number of retired employees subject to expenses of the parent company and major

subsidiaries 1

Specialty Composition

Type of breakdown by function Number of Professionals

Production staff 0

Sales staff 5

Technical staff 525

Finance staff 25

Administrative staff 72

Management staff 13

Total 640

Educational Level

Breakdown by educational background Number (persons)

Master's degree and above 13

Bachelor’s degree 324

College 258

College and below 45

Total 640

(II) Remuneration policy

√ Applicable □ N/A

59 / 250Annual Report 2023

The Company’s remuneration system closely follows the principles of prioritizing efficiency taking into account fairness and incentives. Internally it reflects the value

differences of different levels grades and positions according to the differences in responsibilities abilities and performance achievements; externally it conducts annual

market salary level surveys to ensure the market competitiveness of the Company’s salaries.(III) Training program

√ Applicable □ N/A

In order to achieve the Company’s mission vision and development goals Acter Group continues to invest resources in cultivating talents to maintain the core

competitive advantage of “diversified layout and multi-tasking talents”. Following the “education and training program” and the strategic direction of talent development of

“developing employees’ potentials and promoting self-learning” Acter Group invests sufficient resources in employees of different positions and grades to learn and develop

in a systematic training program such as new employee training on-the-job training and self-study etc. to strengthen employees’ professional skills improve work efficiency

and quality and at the same time satisfy employees’ lifelong learning needs and support the Company’s long-term growth.The Company conducts a training needs survey in the Q4 of each year plans corresponding development courses based on the functional needs of supervisors and

employees and offers online or physical courses to achieve the goals of cultural inheritance strengthening the management qualities of all levels of management and

developing the strength of talents. In addition to setting up mandatory courses to assist employees in improving their work performance employees can also participate in

various training courses based on their personal needs and future development plans so as to prepare for the next stage of career planning and development in advance.(IV) Labor Outsourcing

√ Applicable □ N/A

Total number of labor hours outsourced 18960 hours

Total remuneration paid for labor outsourcing RMB 391200.00

X. Proposed profit distribution or capitalization of capital reserves

(I) Formulation implementation or adjustment of cash dividend policy

√ Applicable □ N/A

In accordance with the CSRC’s “Notice on Further Implementation of Matters Relating to Cash Dividends for Listed Companies” “Supervisory Guideline for ListedCompanies No. 3 - Cash Dividends for Listed Companies” and other relevant regulations the Company has formulated the cash dividend policy and the decision-making

procedures and mechanisms relating to profit distribution matters are clearly stipulated in the Articles of Association of the Company. As considered and approved at the

Twelfth Meeting of the Second Session of the Board of Directors of the Company the Company proposes to distribute profits for the year 2023 on the basis of the total share

capital registered on the date of registration of the shareholders for the implementation of the equity distribution. The Company proposes to distribute a cash dividend of RMB

8 (including tax) for every 10 shares to all shareholders. As at December 31 2023 the total share capital of the Company was 100000000 shares and the total cash dividend

to be distributed is RMB 80000000 (including tax). The cash dividend distribution ratio of the Company for the year is 57.72%. The implementation of this profit distribution

plan is in compliance with the provisions of the Articles of Association and the requirements of the resolution of the shareholders’ meeting. This profit distribution proposal

has yet to be submitted to the 2023 Annual General Meeting for consideration.During the reporting period the Company did not adjust or change its profit distribution policy.

60 / 250Annual Report 2023

(II) Special explanation on cash dividend policy

√ Applicable □ N/A

Compliance with the provisions of the Articles of Association of the Company or the requirements of the resolutions of the

shareholders’ general meeting √ Yes □ No

Whether the criteria and proportion of dividend distribution are clear and unambiguous √ Yes □ No

Whether the relevant decision-making procedures and mechanisms are complete √ Yes □ No

Whether the independent directors have performed their duties and played their due role √ Yes □ No

Whether the small and medium-sized shareholders have sufficient opportunities to express their opinions and demands and whether

their legitimate rights and interests are adequately protected √ Yes □ No

(III) If the reporting period is profitable and the parent company has positive profit available for distribution to shareholders but has not put forward a proposal

for a cash profit distribution plan the Company shall disclose in detail the reasons therefor as well as the use of the undistributed profit and the plan for its

utilization

□ Applicable √ N/A

(IV) Proposals for profit distribution and capitalization of capital reserve for the reporting period

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Number of bonus shares per 10 shares (shares) 0.00

Dividend per 10 shares (yuan) (including tax) 8.00

Dividend per 10 shares (shares) 0.00

Cash dividend amount (including tax) 80000000.00

Net profit attributable to ordinary shareholders of the listed company in the

consolidated statement for the year of dividend distribution 138590474.42

Ratio to net profit attributable to ordinary shareholders of the listed company in the

consolidated statement (%) 57.72

Amount of shares repurchased for cash included in cash dividends 0.00

Total amount of dividends (including tax) 80000000.00

Ratio of total dividend amount to net profit attributable to ordinary shareholders of

the listed company in the consolidated statement (%) 57.72

XI. Status of the Company’s share incentive scheme employee shareholding plan or other employee incentives and their impacts

61 / 250Annual Report 2023

(I) Where the relevant incentive matters have been disclosed in the interim announcement and there is no progress or change in subsequent implementation

□ Applicable √ N/A

(II) Incentives not disclosed in the interim announcement or with subsequent progress

Equity incentives

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

Employee Stock Ownership Plan

□ Applicable √ N/A

Other incentives

□ Applicable √ N/A

(III) Share incentives granted to Directors and senior management during the reporting period

□ Applicable √ N/A

(IV) Evaluation mechanism for senior management personnel and establishment and implementation of incentive mechanism during the reporting period

□ Applicable √ N/A

XII. Construction and Implementation of Internal Control System During the Reporting Period

√ Applicable □ N/A

For the evaluation of the Company’s internal control please refer to the “Internal Control Evaluation Report for the Year 2023” disclosed by the Company on March 30

2024 on the website of Shanghai Stock Exchange (www.sse.com.cn).

Explanation on the existence of significant deficiencies in internal control during the reporting period

□ Applicable √ N/A

XIII. Management Control over Subsidiaries During the Reporting Period

62 / 250Annual Report 2023

√ Applicable □ N/A

During the reporting period the Company formulated the “Management System for Subsidiaries” in accordance with the Company Law the Securities Law the Self-

disciplinary Supervision Guidelines for Listed Companies of Shanghai Stock Exchange No. 1 - Standardized Operation and other laws and regulations as well as relevantprovisions of the Articles of Association of the Company and in conjunction with the actual situation of the Company. The Company has strictly complied with the “SubsidiaryManagement System” further strengthened the management of subsidiaries established an effective control mechanism and carried out risk control over the organization

resources assets investment and operation of the Company so as to improve the overall operational efficiency and risk-resistant capability of the Company.The subsidiaries operate in compliance with the law within the framework of the Company’s overall policies and objectives and report information on material matters to the

Company in a timely accurate truthful and complete manner in strict accordance with the provisions of the Company’s “Information Disclosure Management System” and

there is no information on material matters that shall be disclosed but has not been disclosed.XIV. Explanation of the Relevant Information of the Internal Control Audit Report

√ Applicable □ N/A

The Company has engaged ShineWing Certified Public Accountants LLP to conduct an independent audit of the internal control of the Company and issued a standard

unqualified opinion. Details of the internal control audit report can be found in the “Internal Control Audit Report for the Year 2023” disclosed by the Company on March

30 2024 on the website of Shanghai Stock Exchange (www.sse.com.cn).

Whether to disclose the internal control audit report: Yes

Type of opinion of the internal control audit report: Standard unqualified opinion

XV. Self-Inspection and Rectification of Issues in the Special Action on Governance of Listed Companies

In FY2023 the Company carried out the self-inspection activities of the special action for governance of listed companies and there were no rectification matters after self-

inspection of the Company.XVI. Others

□ Applicable √ N/A

63 / 250Annual Report 2023

Section V Environmental and Social Responsibility

I. Environmental Information

Whether to establish mechanisms related to environmental protection Yes

Investment in environmental protection during the reporting period (Unit: RMB Million/100) 18.61

(I) Explanation of the environmental protection status of the Company and its major subsidiaries which are key emission units announced by the environmental

protection department

□ Applicable √ N/A

(II) Explanation on the environmental protection situation of companies other than key emission units

□ Applicable √ N/A

(III) Information related to the protection of ecology prevention of pollution and fulfillment of environmental responsibility

□ Applicable √ N/A

(IV) Measures taken to reduce its carbon emissions during the reporting period and their effects

Whether to take measures to reduce carbon emissions Yes

Reduction of carbon dioxide equivalent emissions (unit: tons) N/A

The Company implements pollution prevention for environmental factors involved in the

Type of carbon reduction measures (e.g. use of clean energy for construction and service process controls and treats them in accordance with the regulations of

power generation use of carbon reduction technologies in relevant departments controls sewage and noise emissions reduces construction dust and

production processes R&D and production of new products that construction waste saves energy and reduces consumption rationally utilizes resources and energy

contribute to carbon reduction etc.) and prevents or reduces pollution to the environment; it also cooperates with suppliers and contractors to jointly prevent pollution and protect the ecological environment. We will take strong

measures to prevent pollution throughout the construction process.Specific description

√ Applicable □ N/A

The Company has introduced modern environmental management methods and formulated environmental management systems such as Quality Environment and Safety

Management Manual Safety and Civilized Construction Management Procedures and Energy Saving and Consumption Reduction Control Procedures in strict accordance

with the requirements of GB/T24001-2016/IS014001:2015. The environmental management involved in the construction of electromechanical installation works fire-fighting

works and architectural works within the scope of qualification is evaluated by an external certification organization and the company has obtained ISO14001 certification.

64 / 250Annual Report 2023

II. Social Responsibility

(I) Whether to disclose social responsibility report sustainable development report or ESG report separately

√ Applicable □ N/A

For details please refer to the “2023 Environmental Social and Governance (ESG) Report of Acter Technology Integration Group Co. Ltd.” disclosed on the website of

Shanghai Stock Exchange (www.sse.com.cn) on March 30 2024 by the Company.(II) Details of social responsibility work

√ Applicable □ N/A

External donations and public welfare items Number/content Description

Total input (RMB Million/100) 29.60

Of which: Funds (RMB Million/100) 29.60

Material Discount (RMB Million/100) 0.00

Number of people benefited (persons) Unknown

Specific description

√ Applicable □ N/A

During the reporting period the Company conscientiously fulfilled its social responsibilities actively promoted the harmonious development of society extensively

participated in various social activities and supported public welfare undertakings. The Company established and improved various rules and regulations internally

strengthened corporate culture construction actively took various measures to protect the legitimate rights and interests of employees and improved employee benefits.Externally the Company has always adhered to sharing its development achievements with society actively engaged in public welfare and charity undertakings called on

employees to join the volunteer team and invested resources in multiple public welfare and charity areas such as earthquake relief education assistance and assistance to

vulnerable groups continuously fulfilling social responsibilities and shaping the image of a responsible enterprise.Online public welfare delivers boundless love. The Acter Volunteer Group went to the Suzhou Social Welfare Home to bring stickers coloring boards puzzles and other

toys to the children in the welfare home and accompanied them in making delicate handicrafts allowing them to feel the warmth and care of society.Caring for education warming the heart. In order to encourage all students to achieve academic success Acter Group held the second “Acter Scholarship” award ceremony

at Wuhan University of Science and Technology with a total of 20 students receiving scholarships. In order to effectively improve the current lack of modern teaching

equipment in schools in Tibetan areas and enhance the overall teaching quality of schools the Company donated computers to Xueyu Civilization Charity School to help the

school cultivate more talents and contribute to the revitalization of rural education.In the future the Company will continue to actively fulfill its social responsibilities express the original intention of the enterprise to convey warmth and give back to society

with practical actions take the initiative to assume the social responsibilities bestowed upon enterprises in the new era and achieve high-quality and sustainable development

of the enterprise through hard work.III. Consolidating and Expanding the Results of Poverty Alleviation Rural Revitalization and Other Specifics

65 / 250Annual Report 2023

□ Applicable √ N/A

Specific description:

□ Applicable √ N/A

Section VI Important Events

I. Fulfillment of commitments

(I) Commitments made by the Company’s actual controllers shareholders connected parties acquirers and other parties related to the Company’s commitments

during the reporting period or continuing into the reporting period

√ Applicable □ N/A

Whether If not fulfilled

Commit there is a Timely in time

If not

fulfilled in

Background of Type of deadline and strict specify the

commitments commitment Commitment party

ment Date of

Content Commitment for Commitment period complianc reasons for

time next

fulfillmen e incomplete steps shall be

t fulfillment. indicated.Commitments

relating to the Restriction on Sale Sheng Huei International October 13 2022 to

IPO of Shares Acter (Taiwan)

Note 1 June 22 2021 Yes October 12 2025 Yes N/A N/A

Commitments

relating to the Restriction on Sale Suzhou Songhuei Suzhou of Shares Shengzhan Note 2 June 22 2021 Yes

October 13 2022 to

IPO October 12 2023

Yes N/A N/A

Commitments Liang Jinli Chen Zhihao Zhu

relating to the Restriction on Sale Qihua Su Yuzhou Huang

October 13 2022 to

IPO of Shares Yaping Liao Chongyou

Note 3 June 22 2021 Yes October 12 2023 Yes N/A N/A

Wang Yu Xiao Jingxia Yes

Commitments

relating to the Resolution of Sheng Huei International

IPO competition Acter (Taiwan)

Note 4 June 22 2021 No Long-term Yes N/A N/A

Commitments Acter Group Sheng Huei

relating to the Others International Acter (Taiwan) Note 5 June 22 2021 No Long-term Yes N/A N/A

IPO directors and senior management of the Company

Commitments Acter Group Sheng Huei

relating to the Others International Acter (Taiwan) Note 6 June 22 2021 Yes October 13 2022 to October 12 2025 Yes N/A N/A IPO directors (excluding

66 / 250Annual Report 2023

independent directors) and

senior management

Acter Group Sheng Huei

Commitments International Acter (Taiwan)

relating to the directors supervisors senior

IPO Others management Suzhou Note 7

June 22 2021 No Long-term Yes N/A N/A

SongHuei Suzhou

ShengZhan

Note 1:

The direct controlling shareholder of the Company Sheng Huei International and the indirect controlling shareholder of the Company Acter (Taiwan) undertook that:

(1) Within 36 months from the date of listing of the Company's shares the Company will not transfer or entrust others to manage the shares issued before the public

offering of the Company directly or indirectly held by the Company nor will the Company repurchase such shares.

(2) Within 6 months after the listing of the Company if the closing price of the Company's shares is lower than the issue price for 20 consecutive trading days or if the

closing price of the Company's shares is lower than the issue price at the end of the 6-month period after the listing (or if such day is not a trading day then it shall be the first

trading day thereafter) the lock-up period for the Company's shareholdings in the Company shall be automatically extended for 6 months. During the extended lock-up period

the Company shall not transfer or delegate the management of the shares directly or indirectly held by the Company that were issued prior to the public offering of the

Company nor shall the Company repurchase such shares.

(3) Within two years after the expiration of the aforesaid lock-up period the Company shall reduce its shareholding in each year by not more than 25% of the total

number of shares held by the Company directly and indirectly at a price not lower than the issue price. The said issue price refers to the issue price of the Company's IPO. In

case of ex-rights and ex-dividends due to equity distribution capitalization of provident fund share allotment etc. the ex-rights and ex-dividends shall be dealt with in

accordance with the relevant provisions of the Shanghai Stock Exchange. The methods of share reduction include centralized bidding transactions block trading transfer by

agreement and other methods in compliance with the regulations of the CSRC and the Shanghai Stock Exchange.

(4) When the Company reduces its shareholding in the Company it will strictly comply with the provisions of the Securities Law of the People's Republic of China

Certain Provisions on Reduction of Shareholdings by Shareholders Directors and Supervisors of Listed Companies Implementing Rules for the Reduction of Shareholdings

by Shareholders Directors Supervisors and Senior Management of Listed Companies of the Shanghai Stock Exchange Rules for Listing of Stocks of the Shanghai Stock

Exchange and other relevant laws regulations and standardized documents. If the CSRC and the Shanghai Stock Exchange issue other regulations before the Company reduces

its shareholding in the Company the Company undertakes to strictly comply with the regulations in force at the time of the reduction of the Company's shareholding in the

Company to implement the reduction.

(5) In the event that the Company violates the aforesaid undertakings the proceeds from the transfer of the Company's shares in breach of the undertakings ("proceeds

from the transfer in breach of the undertakings") shall belong to the Company. If the Company fails to hand over to the Company the proceeds from the aforesaid violation

the Company shall have the right to freeze the remaining shares of the Company held by the Company and may withhold the cash dividends payable to the Company and

apply them against the proceeds from the violation due to the Company until the proceeds from the violation due to the Company have been remedied.Note 2:

The shareholders of the Company Suzhou Songhuei and Suzhou Shengzhan undertook that:

67 / 250Annual Report 2023

(1) Within 12 months from the date of listing of the Company's shares the Company will not transfer or delegate the management of the shares held directly or indirectly

by the Company prior to the public offering of the Company's shares nor will the Company repurchase such shares.

(2) If the Company reduces its holdings of the Company's shares within two years after the expiration of the lock-up period for the Company's shares the price of such

reduction shall not be less than the issue price of the Company's IPO. The aforesaid issue price refers to the issue price of the Company's IPO. In the event of ex-rights and

ex-dividends due to equity distribution capitalization of capital from provident fund share allotment etc. the ex-rights and ex-dividends shall be dealt with in accordance

with the relevant provisions of the Shanghai Stock Exchange.

(3) In addition to the aforesaid lock-up period during the period when the shareholders/partners of the Company serve as directors/senior management personnel of the

Company the shares of the Company to be transferred by the Company each year shall not exceed 25% of the total number of shares of the Company directly or indirectly

held by the Company; and the shareholders of the Company shall not transfer the shares of the Company directly or indirectly held by the Company within half a year after

they have ceased to serve as directors/senior management personnel of the Company.

(4) In reducing its shareholding in the Company the Company will strictly comply with the provisions of the Securities Law of the People's Republic of China Certain

Provisions on Reduction of Shareholdings by Shareholders Directors and Supervisors of Listed Companies Implementing Rules for the Reduction of Shareholdings by

Shareholders Directors Supervisors and Senior Management of Listed Companies of the Shanghai Stock Exchange Rules for the Listing of Stocks on the Shanghai Stock

Exchange and other relevant laws regulations and standardized documents. If the CSRC and the Shanghai Stock Exchange have any other regulations before the Company

reduces its shareholding in the Company the Company undertakes to strictly comply with the regulations in force at the time of the reduction of the Company's shareholding

in the Company to implement the reduction.

(5) In the event that the Company violates the aforesaid undertakings the proceeds of the violation shall belong to the Company. If the Enterprise fails to hand over to

the Company the proceeds of the aforesaid violation of transfer the Company shall have the right to freeze the remaining shares of the Company held by the Enterprise and

may withhold the cash dividends payable to the Enterprise and apply them against the proceeds of the violation of transfer due to the Company until it makes up for the

proceeds of the violation of transfer due to the Enterprise.Note 3:

Directors Supervisors and senior management who indirectly hold shares of the Company Liang Jinli Chen Zhihao Zhu Qihua Su Yuzhou Huang Yaping Liao

Chongyou Wang Yu and Xiao Jingxia undertook that:

(1) Within 12 months from the date of listing of the Company's shares I will not transfer or delegate the management of the shares held by me directly or indirectly that

were issued before the Company's public offering nor will the Company repurchase such shares.

(2) Within 6 months after the listing of the Company if the closing price of the Company's shares is lower than the issue price for 20 consecutive trading days or if the

closing price of the Company's shares is lower than the issue price at the end of the 6-month period after the listing (or if that day is not a trading day then it is the first trading

day thereafter) the lock-up period of the Company's shares held by me shall be automatically extended for 6 months. During the extended lock-up period I will not transfer

or delegate the management of the shares held directly or indirectly by me that were issued prior to the public offering of the Company nor will the Company repurchase

such shares.

(3) If I reduce my holdings of the Company's shares within two years after the expiration of the lock-up period the price of such reduction shall not be less than the issue

price of the Company's IPO. The aforesaid issue price refers to the issue price of the Company's IPO. In case of ex-rights and ex-dividends due to equity distribution

capitalization of capital from provident fund share allotment etc. the ex-rights and ex-dividends shall be dealt with in accordance with the relevant provisions of the Shanghai

Stock Exchange.

(4) In addition to the foregoing lock-up period during the period in which I serve as a director supervisor and senior management of the Company and if I leave office

before the expiration of my term of office during the term of office determined at the time of my assumption of office and within 6 months after the expiration of the term of

68 / 250Annual Report 2023

office: (I) the transfer of the shares shall not exceed 25% of the total number of the shares of the Company held directly or indirectly by me each year; and (II) I shall not

transfer the shares of the Company held directly or indirectly by me within 6 months of my leaving office.

(5) When I reduce my shareholding in the Company I will strictly comply with the provisions of the Securities Law of the People's Republic of China Certain Provisions

on Reduction of Shareholdings by Shareholders Directors and Supervisors of Listed Companies Implementing Rules for the Reduction of Shareholdings by Shareholders

Directors Supervisors and Senior Managers of Listed Companies on the Shanghai Stock Exchange Rules for Listing of Stocks on the Shanghai Stock Exchange and other

relevant laws regulations and standardized documents. If the CSRC and the Shanghai Stock Exchange have other regulations before I reduce my shareholding in the Company

I undertake to strictly comply with the regulations in force at the time I reduce my shareholding in the Company.

(6) I will not refuse to fulfill the above undertakings due to change of position or departure from office. If I violate the above undertaking the proceeds of the violation

of the transfer shall belong to the Company. If I fail to hand over to the Company the proceeds of the aforesaid illegal transfer the Company shall have the right to freeze the

remaining shares of the Company held by me and may withhold the cash dividends payable to me and apply them against the proceeds of the illegal transfer due to the

Company until it makes up for the proceeds of the illegal transfer due to me.Note 4:

(I) Sheng Huei International the direct controlling shareholder of the Company has issued the "Commitment Letter on the Avoidance of Competition in the Same

Industry" in respect of the avoidance of competition in the same industry with specific commitments as follows:

1. As at the date of this commitment letter except for the investment company the Company and the subsidiaries directly or indirectly controlled by the Company have

not engaged in any business which is or may be in the same line of competition with the Company and its subsidiaries in any manner directly or indirectly within or outside

the PRC.

2. The Company and the subsidiaries directly or indirectly controlled by the Company will not in the future engage in any form of business or activity that constitutes or

has the potential to constitute competition in the same line of business with the business operated by the Company and its subsidiaries and will not directly or indirectly take

a controlling interest in acquire or merge with any enterprise or other economic organization that competes or is likely to compete with the business operated by the Company

and its subsidiaries.

3. If the Company and its subsidiaries directly or indirectly controlled by the Company have any business opportunities to participate in or acquire shares in any business

which may compete or may compete with the business operated by the Company and its subsidiaries the Company will immediately notify the Company and provide such

business opportunities to the Company and its subsidiaries in an appropriate manner with priority and the Company and its subsidiaries will have priority to acquire the assets

or equity involved in the business under the same conditions. The Company will immediately notify the Company of such business opportunities in an appropriate manner

and the Company and its subsidiaries will have priority in acquiring the assets or equity interests involved in the relevant business under the same conditions so as to avoid

competing with the Company and its subsidiaries.

4. From the date of this Undertaking if the Company further expands its main products and main business scope the Company and other enterprises controlled by the

Company at that time guarantee that they will not compete with the Company's expanded main products or main business; in case of competition with the Company's expanded

main products or main business the Company and other enterprises controlled by the Company at that time guarantee to withdraw from the competition with the Company

in accordance with the following methods including but not limited to

(1) Cessation of production of products that compete or may compete with the Company's expanded principal products;

(2) Cessation of the operation of businesses that compete or may compete with the Company's expanded main business;

(3) Incorporate into the Company with the Company's consent businesses that compete with the Company's expanded principal business;

(4) Transferring the business competing with the Company's expanded main business to an unrelated third party.

69 / 250Annual Report 2023

5. This commitment letter shall be effective from the date of issuance and shall remain effective during the period in which the Company is the controlling shareholder

of Acter Group.

6. In case of any breach of the above undertakings the Company is willing to bear the corresponding compensation liability arising from the breach of the above

undertakings in accordance with the law.(II) Acter (Taiwan) the indirect controlling shareholder of the Company has issued the "Commitment Letter on the Avoidance of Competition in the Same Industry"

in respect of avoidance of competition in the same industry with specific commitments as follows:

1. As at the date of this commitment letter except for the investment company the Company and the subsidiaries directly or indirectly controlled by the Company have

not engaged in any business in any manner directly or indirectly other than in the Taiwan region of the PRC that is in the same business competition or potential same

business competition with the Company and its subsidiaries.

2. The Company and the subsidiaries directly or indirectly controlled by the Company will not in the future engage in any form of business or activities that compete or

potentially compete with the business operated by the Company and its subsidiaries in any manner directly or indirectly in other regions outside of the Taiwan region of

China and will not directly or indirectly in other regions outside of the Taiwan region of China take a controlling stake in acquire merge or amalgamate businesses that

compete or potentially compete with the business operated by the Company and its subsidiaries. We will not directly or indirectly hold acquire merge with or acquire

enterprises or other economic organizations that compete or may compete with the business operated by the Company and its subsidiaries in any region other than Taiwan

China.

3. If the Company and its subsidiaries directly or indirectly controlled by the Company have any business opportunities in other regions outside of the Taiwan region of

China to participate in or acquire shares in any business that may compete or potentially compete with the business operated by the Company and its subsidiaries the Company

will immediately notify the Company and provide such business opportunities to the Company and its subsidiaries on a priority basis in an appropriate manner so that the

Company and its subsidiaries can acquire the business involved on a priority basis under the same terms and conditions. The Company will immediately notify the Company

to provide such business opportunities to the Company and its subsidiaries on a priority basis in an appropriate manner and the Company and its subsidiaries will acquire the

assets or equity involved in the relevant business on a priority basis under the same conditions so as to avoid competing with the Company and its subsidiaries.

4. From the date of this commitment letter if Acter Group further expands its main products and main business scope the Company and other enterprises controlled by

the Company at that time guarantee that they will not compete with the Company's expanded main products or main business; in case of competition with Acter Group's

expanded main products or main business the Company and other enterprises controlled by the Company at that time guarantee that they will withdraw from the competition

in accordance with the following methods The Company and other enterprises controlled by the Company at that time undertake to withdraw from competition with the

Company in the following manner including but not limited to the following:

(1) Cease production of products that compete or may compete with the Company's expanded principal products;

(2) Cease to operate businesses that compete or may compete with the Company's expanded main business;

(3) Incorporate into the Company with the Company's consent businesses that compete with the Company's expanded principal business;

(4) Transferring the business competing with the Company's expanded main business to an unrelated third party.

5. This commitment letter shall be effective from the date of issuance and shall continue to be effective during the period in which the Company is an indirect controlling

shareholder of the Company.

6. In the event of any breach of the above undertakings the Company is willing to bear the corresponding liability for compensation arising from the breach of the above

undertakings in accordance with the law.

70 / 250Annual Report 2023

Note 5:

(I) In order to ensure that the Company's measures to fill the immediate returns can be effectively fulfilled the Company's direct controlling shareholder Sheng Huei

International and its indirect controlling shareholder Acter (Taiwan) have made the following undertakings:

1. Undertake not to intervene in the operation and management activities of the Company beyond their authority.

2. Undertake not to encroach on the interests of the Company.

3. Undertake not to harm the interests of the Company.

4. Undertake not to effectively fulfill any commitments made by the Company in relation to the measures to fill in the returns. If the Company violates such commitments

and causes losses to the Company or the investors the Company is willing to bear the compensation liability to the Company or the investors in accordance with the law.The Company as the responsible party for the above undertakings will be liable for compensation in accordance with the law if it violates the above undertakings and

causes losses to the Company or investors.(II) In order to guarantee that the Company's measures to fill in the immediate returns can be practically fulfilled the directors and senior management of the Company

undertake that:

1. I undertake not to transfer benefits to other units or individuals without compensation or on unfair terms nor to use other means to harm the interests of the Company;

2. I undertake to restrain my consumption behavior in office;

3 I undertake not to use the Company's assets to engage in investment and consumption activities unrelated to the performance of their duties;

4. I undertake to fully support the remuneration system when it is formulated by the Board of Directors or the Remuneration and Evaluation Committee to link the

remuneration system with the implementation of the Company's measures to fill in the returns and to vote in favor of the relevant motions when they are being considered (if

I have the right to vote);

5. If the Company subsequently launches the equity incentive policy I undertake to fully support the Board of Directors' and shareholders' meetings' motions to be

announced that the exercise conditions of the Company's equity incentives are linked to the implementation of the Company's measures to fill in the returns and I will be

willing to vote in favor of (if I have the right to vote) such motions;

6. After the date of this undertaking and before the completion of the implementation of the IPO and listing of the Company if the CSRC makes any other new regulatory

provisions on the measures and undertakings for filling the returns and if the above undertakings fail to satisfy such provisions of the CSRC I undertake to issue supplementary

undertakings in accordance with the latest provisions of the CSRC at that time;

7. I undertake to effectively fulfill the relevant measures formulated by the Company to fill in the returns and any commitments I have made in relation to the measures

to fill in the returns and I am willing to bear the responsibility of compensating the Company or investors in accordance with the law in the event of any violation of such

commitments by me and any loss caused to the Company or investors.

8. As one of the parties responsible for the measures to fill in the returns if I violate the above undertakings or refuse to fulfill the above undertakings I agree to be

punished or take relevant management measures in accordance with the relevant regulations and rules formulated or issued by the CSRC and the Shanghai Stock Exchange

and other securities regulatory authorities.(III) In order to protect the right to information of small and medium-sized investors and safeguard the interests of small and medium-sized investors the Company has

conducted a careful analysis of the impact of the IPO on the dilution of the immediate returns and has put forward specific measures and undertakings to cover the diluted

immediate returns:

1. Comprehensively enhance the management level of the Company and improve the efficiency of capital utilization

To improve the Company's operational efficiency strengthen budget management control the Company's expenses improve the efficiency of capital utilization

comprehensively and effectively control the Company's operation and risk management and enhance operational efficiency and profitability. In addition the Company will

improve the remuneration and incentive mechanism introduce outstanding talents in the market and maximize the motivation of its employees to tap the creativity and

71 / 250Annual Report 2023

potential power of the Company's employees. Through the above measures the Company will comprehensively improve the operational efficiency reduce costs and enhance

the Company's operating results.

2. Strengthen the supervision of investment projects to ensure the reasonable and legal use of funds raised.

In order to standardize the use and management of the Company's issue proceeds and ensure that the issue proceeds are used in a standardized safe and efficient manner

the Company has formulated the "Proceeds Management System" and other relevant systems. The Board of Directors has passed a resolution on the establishment of a special

account for the use and management of the issue proceeds and the issue proceeds will be deposited in the special account designated by the Board of Directors for the exclusive

use of the special account. The Company will strictly manage the use of proceeds in accordance with relevant laws and regulations and the requirements of the "Proceeds

Management System" and will actively cooperate with the regulatory banks and sponsoring organizations in the inspection and supervision of the use of proceeds so as to

ensure that the proceeds are reasonably used in a normal manner and to reasonably guard against the risk of the use of proceeds.

3. Accelerate the investment progress of the fund-raising projects and strive to realize the expected benefits of the projects as soon as possible.

The implementation of the fund-raising investment projects of the Offering is in line with the Company's development strategy which can effectively enhance the

Company's business capacity and profitability and is conducive to the Company's sustainable and rapid development. Prior to the availability of the proceeds the Issuer

intends to actively raise funds through a variety of channels to accelerate the investment progress of the fund-raising projects and strive to realize the expected benefits of the

projects as early as possible so as to enhance the shareholders' returns in the next few years and to reduce the risk of dilution of the current returns caused by the Issue.

4. Further improve the profit distribution system and strengthen the investor return mechanism.

The Company has amended the Draft Articles of Association in accordance with relevant laws and regulations and established a sound and effective shareholder return

mechanism. Upon completion of the Offering the Company will in accordance with the provisions of laws and regulations and the Draft Articles of Association actively

promote the distribution of profits to shareholders where the conditions for profit distribution are met so as to effectively maintain and increase the returns to shareholders.Note 6:

In order to protect the interests of investors and further specify the measures to stabilize the share price of the Company when the share price of the Company is lower

than the net asset per share within three years after the listing of the Company and in accordance with the relevant requirements of the Opinions on Further Promoting the

Reform of the New Issue System of New Shares issued by the CSRC the Second Extraordinary Shareholders' General Meeting of the Company for the year 2021 considered

and passed the Proposal of Stabilizing the Share Price of Acter Technology Integration Group Co. Ltd.''.(I) Effective period of the Plan

The Plan shall be valid for three years from the date of listing of the Company's shares.(II) Conditions for activation and cessation of the share price stabilization plan

1. Conditions for activation

Within three years after the listing of the Company's shares if the closing price of the Company's shares for 20 consecutive trading days is lower than the Company's

audited net asset value per share as at the end of the most recent period (in the event that the closing price of the said shares is not comparable with the Company's audited net

asset value per share as at the end of the most recent period due to ex-rights and ex-dividend matters the said net asset value per share shall be adjusted accordingly) and if

the provisions of relevant laws regulations and standardized documents relating to the buyback and holding of additional shares are also met the plan shall be triggered.normative documents then the Company controlling shareholders directors (excluding independent directors) and senior management shall be triggered to fulfill the measures

to stabilize the Company's share price.

2. Cessation Conditions

During the implementation period if any of the following circumstances occurs the implementation of the stock price stabilization measures and the fulfillment of the

commitments shall be deemed to be completed and the announced stock price stabilization plan shall cease to be implemented:

72 / 250Annual Report 2023

* The closing price of the Company's shares for 5 consecutive trading days is higher than the Company's unaudited net assets per share for the latest period (if the

closing price of the said shares is not comparable with the Company's audited net assets per share at the end of the latest period due to ex-rights and ex-dividend matters the

said net assets per share shall be adjusted accordingly);

* Continuing to repurchase or hold additional shares of the Company will result in the Company's shareholding distribution failing to meet the listing conditions;

* Continuing to hold additional shares will result in the need to fulfill the obligation to make a tender offer and it has not planned to implement the tender offer.

3. Specific measures of the share price stabilization plan

(1) Buyback by the Company

* The Company shall convene the Board of Directors within 10 trading days from the date of triggering the activation conditions of the share price stabilization measures

in accordance with the laws regulations and the Articles of Association of the Company. The Board of Directors shall formulate a clear and specific buyback plan the content

of which shall include but not be limited to the types of shares to be repurchased by the Company the number of ranges the price ranges the period of implementation etc.and submit it to the General Meeting of Shareholders of the Company for deliberation and approval; the buyback plan will become effective upon consideration and approval

by the General Meeting. The buyback plan shall become effective after it is considered and approved by the general meeting of the Company. However if the share price of

the Company before or during the implementation of the share buyback plan already fails to meet the conditions for initiating measures to stabilize the Company's share price

the program may not be continued.* After the share buyback plan is approved by the shareholders' meeting the Company will notify creditors in accordance with the law and submit relevant materials to

the competent authorities such as the securities regulatory authorities and stock exchanges for approval or filing. The buyback price of the Company shall not be higher than

the Company's audited net asset value per share as at the end of the most recent period (if the closing price of the said shares is not comparable to the Company's audited net

asset value per share as at the end of the most recent period due to ex-rights and ex-dividend matters the said net asset value per share shall be adjusted accordingly) and the

method of buyback of shares shall be by way of centralized competitive bidding and trading by way of an offer or by other methods approved by the securities regulatory

authorities.* If the share price of the Company triggers the above conditions for price stabilization measures several times in a fiscal year the Company will continue to implement

the above share price stabilization plan but shall follow the following principles: (i) the amount of funds used for share buyback in a single buyback shall not be higher than

10% of the audited net profit attributable to the shareholders of the parent company of the previous fiscal year; (ii) the total amount of buyback funds used to stabilize the

share price in a single fiscal year shall not exceed 30% of the audited net profit attributable to shareholders of the parent company in the preceding fiscal year. If the above

criteria are exceeded the relevant share price stabilization measures will not be continued in the current year. However in the event that circumstances requiring the activation

of share price stabilization measures continue to arise in the following year the Company will continue to implement the share price stabilization plan in accordance with the

above principles.

(2) Increase in shareholdings by controlling shareholders

* If the board of directors fails to formulate and announce a share buyback plan within 10 trading days after triggering the obligation or if the share buyback plan is

rejected by the shareholders' meeting or if the company fails to fulfill or is unable to fulfill the obligation to repurchase shares within 30 days after announcing the specific

implementation plan for the buyback or if the company fails to stabilize the closing price of its stock above the audited net asset value per share for more than 5 consecutive

trading days after reaching the upper limit of the buyback plan it will trigger the obligation for the controlling shareholder to increase its shareholding.* On the premise of not affecting the company's listing conditions the company's controlling shareholders shall be triggered within 3 trading days from the date of the

obligation to increase the proposed plan to increase the company's shareholding (including the number of shares to be increased price range time etc.) and in accordance

with the law to carry out the necessary approvals and notify the company within 3 trading days of approval the company shall be in accordance with the relevant provisions

of the disclosure of the plan for the increase in the purchase of shares. The Company shall disclose the plan to increase its shareholding in accordance with the relevant

73 / 250Annual Report 2023

regulations. Three trading days after the Company discloses the plan to increase its shareholding in accordance with the plan the Company shall commence the implementation

of the plan to increase its shareholding in accordance with the plan.* The method for the controlling shareholder of the Company to increase its shareholding shall be by way of centralized bidding and trading offer or other methods

approved by the securities regulatory authorities and the price of the additional shareholding shall not exceed the audited net asset value per share as at the end of the most

recent period (in the event that the closing price of the aforesaid shares is not comparable with the audited net asset value per share as at the end of the most recent period due

to ex-rights and ex-dividend etc. the aforesaid net asset value per share shall be adjusted accordingly). However if the share price of the Company no longer meets the

conditions for activating the measures to stabilize the Company's share price prior to or in the course of the implementation of the plan to increase the shareholding of the

Company the plan may not be continued.If the Company's share price triggers the above conditions for the need to take share price stabilization measures several times within a fiscal year the controlling

shareholder will continue to implement the share price stabilization plan in accordance with the above but shall follow the following principles: (i) the amount of funds used

to increase shareholdings on a single occasion shall not be less than 20% of the amount of after-tax cash dividends received by the controlling shareholder from the Company

on the most recent occasion; (ii) the amount of funds used to stabilize the share price to increase shareholdings in a single year shall not exceed 50% of the amount of after-

tax cash dividends received by the controlling shareholder from the Company on the most recent occasion. If the above criteria are exceeded the relevant share price

stabilization measures will not be continued in the current year. However in the event that circumstances requiring the activation of share price stabilization measures continue

to arise in the following year the Company will continue to implement the share price stabilization plan in accordance with the above principles. In the event that the share

price stabilization measures are triggered in the following year the amount of funds already used for share price stabilization in previous years will no longer be counted as

part of the cumulative cash dividends.

(3) Increase in shareholdings by directors (excluding independent directors) and senior management personnel

* If the controlling shareholder of the Company fails to propose a plan to increase the shareholding of the Company within 10 trading days from the date of triggering

the obligation to increase shareholding or fails to commence the implementation of the plan to increase shareholding within 30 days from the date of the Company's

announcement of the plan to increase shareholding or if after the controlling shareholder of the Company has reached the maximum limit of the plan to increase shareholding

the closing price of the Company's shares still fails to be stabilized at a level higher than the Company's audited net asset value per share as of the end of the most recent

period for a period of more than 5 trading days then the obligation of the Company's directors (excluding independent directors) and senior management will be triggered to

increase their holdings of the Company's shares.* Without affecting the listing conditions of the company the company's directors (excluding independent directors) senior management shall be triggered within 3

trading days from the date of the obligation to increase the proposed plan to increase the company's shares (including the number of shares to be increased the price range

time etc.) and comply with the law to carry out the necessary approval procedures and notify the company within 3 trading days of approval the company shall disclose the

plan to increase the acquisition of shares in accordance with the relevant provisions. The Company shall disclose the plan to increase its shareholding in accordance with the

relevant regulations. After 3 trading days from the date of disclosure of the Company's plan to increase its shareholding in the Company it will commence the implementation

of the plan to increase its shareholding in the Company in accordance with the plan.* The directors (excluding independent directors) and senior management of the Company will purchase the Company's shares through competitive bidding transactions

to stabilize the Company's share price at a price not higher than the Company's audited net asset value per share as at the end of the most recent period (in the event that the

closing price of the aforesaid shares is not comparable to the audited net asset value per share as at the end of the most recent period due to ex-rights and ex-dividend etc.the aforesaid net asset value per share shall be adjusted accordingly). However if the share price of the Company does not meet the conditions for the activation of measures

to stabilize the Company's share price within 3 trading days of the disclosure of the Company's purchase plan or in the course of the implementation of the plan the Company

may cease to implement the above plan to increase the Company's shareholding. If the share price of the Company triggers the above conditions for price stabilization measures

several times within a fiscal year the directors (excluding independent directors) and senior management of the Company will continue to implement the above share price

74 / 250Annual Report 2023

stabilization plan but shall comply with the following principles: (i) the amount of funds used for the purchase of shares on a single occasion shall not be less than 20% of

the after-tax remuneration that he/she received from the Company during the previous fiscal year while he/she was serving as a director or a senior manager; (ii) the amount

of funds used to stabilize the share price in a single year shall not exceed 50% of the after-tax remuneration received from the Company in the previous fiscal year during the

period in which he or she held the position of director or senior executive. If the above criteria are exceeded the relevant share price stabilization measures shall not be

continued in the current year. However in the event that circumstances requiring the activation of price stabilization measures continue to arise in the following year the

share price stabilization plan will continue to be implemented in accordance with the above principles.If the Company appoints new directors (excluding independent directors) and senior management the Company will require the newly appointed directors and senior

management to fulfill the corresponding commitments made by the directors and senior management when the Company was listed.

4. Restrictive measures for failure to activate share price stabilization measures

If the Company controlling shareholders directors (excluding independent directors) and senior management fail to take the above specific measures to stabilize the

share price when the conditions for the activation of the price stabilization measures are met the Company undertakes to accept the following binding measures:

(1) The Company controlling shareholders directors (excluding independent directors) and senior management will publicly explain the specific reasons for failing to

take the aforesaid stock price stabilization measures and apologize to the shareholders of the Company and public investors in the general meeting of the Company and in

the disclosure media designated by the CSRC.

(2) The controlling shareholder of the Company undertakes that if the controlling shareholder fails to take the above specific measures to stabilize the share price when

the conditions for the initiation of the share price stabilization measures are met the Company shall have the right to withhold or deduct the cash dividends payable to the

Unit in an amount equal to the amount used for the implementation of the Share Increase Plan.

(3) The directors (excluding independent directors) and senior management of the Company undertake that when the conditions for the activation of the share price

stabilization measures are met the Company shall have the right to withhold or reduce the remuneration and cash dividends payable to the Company if the Company fails to

take the aforesaid specific measures to stabilize the share price.

5. Legal Procedures of the Proposal

In the event that the Company shall make adjustments to the proposal in the event that the proposal is inconsistent with the relevant provisions due to revisions of laws

and regulations or changes in policies such adjustments shall be approved by more than two-thirds of the total number of voting shares held by shareholders present at the

general meeting of shareholders.Note 7:

(I) Restrictive measures by the Company regarding non-fulfillment of public commitments:

The Company will strictly fulfill all matters of public commitments made by the Company in connection with the IPO and listing of shares and actively accept social

supervision. Unless otherwise specifically constrained if the Company fails to fully and effectively fulfill the undertakings made in the course of its IPO and listing the

Company undertakes to take the following measures to be constrained:

1. If the Company fails to fulfill its public commitments or if the fulfillment of the commitments is not conducive to the protection of the Company's rights and interests

due to reasons other than force majeure the Company shall propose to replace the original commitments with new commitments or propose to waive the fulfillment of the

obligations under the commitments. The above changes shall be submitted to the shareholders' general meeting for consideration and the Company will provide shareholders

with the means of internet voting and will urge the shareholders involved in the commitment matters to abstain from voting. If new commitments are proposed to replace the

original ones the relevant commitments shall comply with the prevailing laws regulations and the Articles of Association of the Company and the Company undertakes to

accept the following constraints until the fulfillment of the commitments or the implementation of the corresponding remedial measures is completed:

75 / 250Annual Report 2023

(1) Publicly explain the specific reasons and apologize to the shareholders and public investors in the general meeting of shareholders and the disclosure media designated

by the CSRC;

(2) Reduction or suspension of the remuneration or allowances of directors supervisors and senior management who are personally liable for the Company's failure to

fulfill the undertakings (if such persons are on the Company's payroll);

(3) Not to approve the application for voluntary departure of directors supervisors and senior management who have failed to fulfill their undertakings but may make

changes in their positions;

(4) In case of losses caused to investors the Company will be liable to compensate investors in accordance with the law;

(5) In accordance with the laws regulations and the requirements of the relevant regulatory bodies to assume the corresponding responsibilities.

2. If the company fails to fulfill its public commitments or fails to fulfill its public commitments on schedule due to force majeure the Company shall propose new

commitments (the relevant commitments shall comply with the laws regulations articles of association and fulfill the relevant approval procedures) and shall be subject to

the following constraints until the commitments have been fulfilled or the corresponding remedial measures have been implemented:

(1) To publicly explain the specific reasons and apologize to shareholders and public investors in the shareholders' general meeting and in the disclosure media designated

by the CSRC;

(2) To expeditiously study the handling plan to minimize the loss of investors' interests and submit it to the shareholders' general meeting for consideration so as to

protect the interests of the Company's investors as far as possible.(II) Controlling Shareholders' Restrictive Measures on Failure to Fulfill Public Undertakings

Unless otherwise specifically constrained if Sheng Huei International the direct controlling shareholder of the Company and Acter (Taiwan) the indirect controlling

shareholder of the Company fail to fully and effectively fulfill the undertakings they have made in the course of the IPO and listing of Acter Group they undertake to take

the following measures to be constrained:

1. In the event that the Company fails to fully and effectively fulfill its obligations or responsibilities under the aforementioned undertakings the Company undertakes

to actively cooperate with the relevant regulatory authorities in their investigations and accept the corresponding penalties;

2. To compensate public investors with its own funds for direct losses suffered as a result of relying on the relevant undertakings to implement the transactions with the

amount of compensation to be determined on the basis of the amount negotiated between the Company and the investor or in the manner or in the amount determined by the

relevant regulatory authorities or judicial organs;

(3) If income is obtained as a result of non-performance of the undertakings (i.e. such income cannot be obtained in the case of performance of the undertakings) the

income obtained shall belong to the Company which will pay the aforesaid income to the Company's designated account within 5 days of obtaining the income; and if losses

are incurred by the Company or other investors as a result of the non-performance of the undertakings the Company or other investors shall be held liable for compensation

according to the law.(III) Restrictive measures for directors supervisors and senior management of the Company in respect of non-fulfillment of the undertakings:

The directors supervisors and senior management of the Company undertake:

I have made relevant undertakings in the process of IPO and listing of shares of Acter Group and if I fail to fulfill them or if I am unable to fulfill them or if I am unable

to fulfill them on schedule (except for those due to relevant laws and regulations policy changes natural disasters and other force majeure and other objective reasons beyond

my control) or if the fulfillment of the relevant undertakings will be detrimental to the safeguarding of the rights and interests of the Company and the investors I will take

the following measures:

1. Through the Company to disclose in a timely manner the specific reasons why I have failed to fulfill my commitments unable to fulfill them or unable to fulfill them

on schedule;

76 / 250Annual Report 2023

2. To submit to the Company and its investors an application for change of undertakings or exemption from fulfillment of undertakings and submit it to the shareholders'

general meeting for consideration in order to protect the rights and interests of the Company and its investors. I will recuse myself from voting at the shareholders' meeting

when the matter is considered (if I am a shareholder of the Company at that time);

3. Attribute to the Company the proceeds from my breach of my undertaking.

If any loss is caused to the Company or investors as a result of my undertaking not being fulfilled not being able to be fulfilled or not being able to be fulfilled on time

I will compensate the Company or investors in accordance with the law and the following procedures:

1. I agree that the Company shall reduce or cease to pay my salary bonus allowance dividend (if any) etc. and use the reduced or ceased salary bonus allowance

dividend (if any) etc. to implement the unfulfilled commitments or to compensate for the losses caused to the Company and the investors as a result of the unfulfilled

commitments;

2. If I reduce my shareholding before the compensation is completed the funds obtained from the reduction will be supervised by the Board of Directors of the Company

and used exclusively for the fulfillment of the commitments or compensation until I have fulfilled my commitments or compensated for the losses incurred by the Company

and the investors (if I am a shareholder of the Company at that time).In the event that I fail to fulfill my commitments unable to fulfill them or unable to fulfill them on schedule due to objective reasons beyond my control such as relevant

laws and regulations policy changes natural disasters etc. I will disclose through the Company in a timely manner the specific reasons why I fail to fulfill my commitments

unable to fulfill them or unable to fulfill them on schedule and will actively take measures to change my commitments supplement my commitments and other means to

safeguard the rights and interests of the Company and the investors.I will not refuse to fulfill the above commitments due to change of position departure and other reasons.(IV) Suzhou Songhuei and Suzhou Shengzhan on the binding measures for failure to fulfill the commitments

The shareholders of the Company Suzhou Songhuei and Suzhou Shengzhan undertake:

As shareholders of the Company unless otherwise specified if the Company fails to fully and effectively fulfill the undertakings made in the course of the Company's

IPO and listing the Company undertakes to take the following measures to bind itself:

1. If the Enterprise fails to fully and effectively fulfill the obligations or responsibilities in the foregoing undertakings the Company undertakes to actively cooperate

with the relevant regulatory authorities in their investigations and accept the corresponding penalties;

2. To compensate public investors with its own funds for direct losses suffered as a result of relying on the relevant undertakings to implement the transactions with the

amount of compensation to be determined on the basis of the amount negotiated between the Company and the investor or in the manner or in the amount determined by the

relevant supervisory authorities or judicial organs;

3. If the Company obtains income from the non-fulfillment of the commitments (i.e. such income cannot be obtained in the case of fulfillment of the commitments) the

income obtained shall belong to the Company and the Company will pay the aforesaid income to the designated account of the Company within 5 days from the date of

obtaining the income; and if the non-fulfillment of the commitments causes losses to the Company or other investors the Company will be liable to compensate for the losses

to the Company or other investors according to the law.

77 / 250Annual Report 2023

(II) If there is a profit forecast for the Company's assets or projects and the reporting period is still

in the profit forecast period the Company shall make a statement on whether the assets or projects

have met the original profit forecast and the reasons thereof.□ Achieved □ Not achieved √ N/A

(III) Completion of performance commitments and their impact on the impairment test of goodwill

□ Applicable √ N/A

II. Non-operational appropriation of funds by controlling shareholders and other connected parties

during the reporting period

□ Applicable √ N/A

III. Violation of guarantees

□ Applicable √ N/A

IV. Explanation of the Board of Directors of the Company on the "Non-standard Opinion Audit

Report" of the Accounting Firm

□ Applicable √ N/A

V. Explanation of the Company's analysis of the reasons for and impact of changes in accounting

policies accounting estimates or correction of material accounting errors

(I) Explanation of the Company's analysis of the reasons for and impact of changes in accounting

policies and accounting estimates

√ Applicable □ N/A

Unit: Yuan

Contents and reasons for changes in accounting policies Name of statement items Amount of materially affected impact

On November 30 2022 the Ministry of Finance ("MOF") Deferred tax assets 1135468.71

issued "Interpretation No. 16 of the Accounting Standards

for Business Enterprises (ASBE)" (C.K. [2022] No. 31

hereinafter referred to as Interpretation No. 16)

"Accounting Treatment of Deferred Taxes Related to Deferred tax liabilities 1316653.59

Assets and Liabilities Arising from Individual Transactions

to which the Initial Recognition Exemption Doesn't Apply"

has been implemented since January 1 2023 allowing Undistributed profits -177717.08

enterprises to implement it in advance from the year of

issuance.Minority interests -3467.80

(II) Explanation of the Company's analysis of the reasons for and impact of the correction of

significant accounting errors

□ Applicable √ N/A

(III) Communication with the former accounting firm

□ Applicable √ N/A

(IV) Approval procedures and Other Notes

□ Applicable √ N/A

VI. Appointment and Dismissal of Accounting Firms

78 / 250Annual Report 2023

Unit: Yuan Currency: RMB

Current Appointment

Name of domestic accounting firm ShineWing Certified Public Accountants LLP

Remuneration of domestic accounting firm 801886.79

Years of audit experience of domestic accounting firm 2

Name of certified public accountants of the domestic

accounting firm Liu Yuehua Hou Shoufeng

Cumulative years of audit service of the certified public

accountants of the domestic accounting firms 2

Name of overseas accounting firm N/A

Remuneration of the overseas accounting firm N/A

Years of audit by overseas accounting firms N/A

Name Remuneration

Internal control audit accounting

firm ShineWing Certified Public Accountants LLP 188679.25

Financial consultant N/A N/A

Sponsor N/A N/A

Appointment and dismissal of accounting firm

√ Applicable □ N/A

At the Eighth Meeting of the Second Session of the Board of Directors held on August 11 2023 and the First

Extraordinary General Meeting of Shareholders of the Company held on August 29 2023 the Company

considered and passed the "Resolution on the Re-appointment of Accounting Firm" and agreed to re-appoint

ShineWing Certified Public Accountants LLP as the auditing organization of the Company's annual financial

report and internal control for the year of 2023.Explanation on the reappointment of the accounting firm during the audit period

□ Applicable √ N/A

Explanation on the decrease of 20% or more (including 20%) in the audit fee as compared with that of the

previous year

□ Applicable √ N/A

VII. Situations facing the risk of delisting

(I) Reasons for delisting risk warning

□ Applicable √ N/A

(II) Countermeasures to be taken by the Company

□ Applicable √ N/A

(III) Circumstances and reasons for termination of listing

□ Applicable √ N/A

VIII. Matters Relating to Bankruptcy and Reorganization

□ Applicable √ N/A

79 / 250Annual Report 2023

IX. Significant Litigation and Arbitration Matters

□ Major litigation and arbitration matters in the current year

√ No major litigation and arbitration matters in the current year

X. Punishment and rectification on the listed company its directors supervisors senior

management controlling shareholders and actual controllers due to suspect of law violations.□ Applicable √ N/A

XI. Explanation on the integrity status of the Company its controlling shareholders and actual

controllers during the reporting period

□ Applicable √ N/A

XII. Significant Related Transactions

(I) Related transactions related to daily operations

(1) Matters disclosed in the interim announcement and with no progress or change in subsequent

implementation

□ Applicable √ N/A

2. Matters disclosed in the interim announcement but with progress or changes in subsequent

implementation

√ Applicable □ N/A

On April 7 2023 the Company held the Sixth Meeting of the Second Session of the Board of Directors and

the Fifth Meeting of the Second Session of the Board of Supervisors to consider and approve the ''Resolution

on the Confirmation of Daily Related Transactions of the Company for the Year 2022 and the Estimation of

Daily RelatedTransactions for the Year 2023'' respectively. As at the end of the reporting period the daily

related transactions between the Company and the proposed connected persons are as follows and have not

exceeded the projected amounts:

Category of related Estimated amount Actual amount in

transactions Related party for 2023 (RMB 2023 (RMB Million/100) Million/100)

Rental of buildings to Suzhou Winmax Technology

related parties Corp. 350 330.09

Acceptance of rental NOVA TECH

housing from related parties ENGINEERING & 10 3.86 CONSTRUCTION PTE.Total 360.00 333.95

For details of the relevant matters please refer to the ''Proposal on the Confirmation of Routine Related

Transactions for the Year 2022 and the Expected Routine Related Transactions for the Year 2023''

(Announcement No. 2023-009) disclosed by the Company on the website of the Shanghai Stock Exchange

(www.sse.com.cn) and the designated media on April 8 2023.

3. Matters not disclosed in the interim announcement

□ Applicable √ N/A

(II) Related transactions arising from the acquisition or disposal of assets or equity interests

1. Matters disclosed in the Interim Announcement with no progress or changes in subsequent

implementation

□ Applicable √ N/A

2. Matters that have been disclosed in the interim announcement but with progress or changes in

subsequent implementation

□ Applicable √ N/A

80 / 250Annual Report 2023

3. Matters not disclosed in the interim announcement

□ Applicable √ N/A

4. If performance agreement is involved the performance realization of the reporting period shall be

disclosed.□ Applicable √ N/A

(III) Significant related transactions of joint foreign investment

1. Matters that have been disclosed in the interim announcement and there is no progress or change

in subsequent implementation

□ Applicable √ N/A

2. Matters that have been disclosed in the interim announcement but with progress or change in

subsequent implementation

□ Applicable √ N/A

3. Matters not disclosed in the interim announcement

□ Applicable √ N/A

(IV) Related debt transactions

1. Matters disclosed in the interim announcement with no progress or change in subsequent

implementation

□ Applicable √ N/A

2. Matters that have been disclosed in the interim announcement but with progress or changes in

subsequent implementation

□ Applicable √ N/A

3. Matters not disclosed in the interim announcement

□ Applicable √ N/A

(V) Financial business between the Company and finance companies with which it has a connected

relationship and between the Company's holding company and connected parties

□ Applicable √ N/A

(VI) Others

□ Applicable √ N/A

XIII. Significant Contracts and Their Fulfillment

(I) Trusteeship contracting and leasing matters

1. Trusteeship

□ Applicable √ N/A

2. Contracting

□ Applicable √ N/A

3. Leasing

□ Applicable √ N/A

81 / 250Annual Report 2023

(II) Guarantees

√ Applicable □ N/A

Unit: Yuan Currency. RMB

External guarantees of the Company (excluding guarantees to subsidiaries)

Relations Guarant Amount Date of Guarante Guarantee Type of Collat Whether the Whether Guaranto hip with guarantee Guarantee eed of e starting expiration guarante eral (if guarantee the Amount Counter- for related Relationr the listed party guarantee (date of date date e any) has been guarantee overdue guarantee ship company agreement) fulfilled is overdue parties

Total amount of guarantees incurred during the reporting period (excluding

guarantees to subsidiaries) 0

Total guarantee balance at the end of the reporting period (A) (excluding

guarantees to subsidiaries) 0

Guarantees by the Company and its subsidiaries to subsidiaries

Total amount of guarantee incurred for subsidiaries during the reporting period 296188978.35

Total balance of guarantees to subsidiaries at the end of the reporting period (B) 537116975.79

Status of total corporate guarantees (including guarantees to subsidiaries)

Total amount of guarantees (A+B) 537116975.79

Ratio of total guarantees to the company's net assets (%) 49.63

Of which:

Amount of guarantees in favor of shareholders actual controllers and their related

parties (C) 0

Amount of debt guarantees provided directly or indirectly for guaranteed objects

with asset-liability ratio exceeding 70% (D) 0

Amount of the portion of total guarantees exceeding 50% of net assets (E) 0

Total amount of the above three guarantees (C+D+E) 0

Explanation of possible joint and several liability for outstanding guarantees None

Description of guarantees None

82 / 250Annual Report 2023

(III) Entrusted Cash Asset Management

1. Entrusted financial management

(1) Overall entrusted wealth management

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Type Source of funds Amount incurred Outstanding balance Overdue amount not recovered

Bank financial products Collected Funds 92000000.00

Bank financial products Own Funds 100000000.00

Others

□ Applicable √ N/A

(2) Individual entrusted financial management

□ Applicable √ N/A

Others

□ Applicable √ N/A

(3) Provision for impairment of entrusted finance

□ Applicable √ N/A

2. Entrusted loans

(1) Overall situation of entrusted loans

□ Applicable √ N/A

Others

□ Applicable √ N/A

83 / 250Annual Report 2023

(2) Individual entrusted loans

□ Applicable √ N/A

Others

□ Applicable √ N/A

(3) Provision for impairment of entrusted loans

□ Applicable √ N/A

3. Others

Others □ Applicable √ N/A

(IV) Other significant contracts

□ Applicable √ N/A

XIV. Explanation on the Progress of the Use of Proceeds

√ Applicable □ N/A

(I) Overall utilization of proceeds raised

√ Applicable □ N/A

Unit: Yuan

Total

Sour Cumulative total Cumulative

ce of Time of Of which: amount of progress of Percentage

amount

fund arrival of Total amount Amount of Net proceeds Total committed

Adjusted total proceeds inputs as at Amount of current of

- the fund- of fund- over- after issue investment of

committed invested as of the the end of the invested year's input procee

raisi raising raising raised expenses proceeds

investment of during the ds

funds proceeds (1)

end of the reporting amount (%)

ng reporting period period (%)

year (4) (5) = (4)/(1) from

(2) (3)=(2)/(1) change of use

IPO Septembe 545000000. 485347160.3r 29 2022 00 4 485347160.34 485347160.34 458213767.30 94.41%

311140820.

8764.11%/

84 / 250Annual Report 2023

(II) Details of the fund-raising projects

√ Applicable □ N/A

Unit: Million/100 Yuan

Cumula

Accumul tive Has there

ated total input Specifi been a

Invol Time Total Wheth commit Adjust Amo amount progres

Date Whether c Benefit Benefit significan

Proje ving of

project the reasons s t change

inves Procee fundrai er to ted ed total unt

of issue s as of reaches progress why s proceeds the end realize in the

Amo

Item name ct tmen ds sing use invest invest inves invested of the intende

Clos

ed or of inputs inputs

realize d or feasibility unt

natur t Source funds over- ment of ment of ted as of the reportin d not is in line did not

d

during R&D of the

of

e chan in raised project procee this end of the g useable with the progres the results project

savi

ge place funds fund- ds(1) year reporting period conditio planned s as of the and if so

ngs

raising period (2) (%) ) n schedule planne

year project please

) (3) d provide

=(2)/(1) details

Supplement

al Clean

Room

Project O& Septem 43764. 43764. 29.7

Supporting M No IPO ber 29 No 42 42 03.2 43988.47

100.51

% / Yes Yes / N/A N/A No /

Working 2022 5

Capital

Project

R&D

Center SeptemR&D No IPO ber 29 No 2539.5 2539.5 117. January Constructio 2022 0 0 37

230.64 9.08 % 2025 No Yes / N/A N/A No /

n Project

Marketing

and Service O& SeptemNetwork No IPO ber 29 No 2230.8 2230.8 129 1602.26 71.8 October No Yes / N/A N/A No /

Constructio M 2022 0 0 3.47 2% 2024

n Project

85 / 250Annual Report 2023

(III) Changes in or termination of fund-raising investments during the reporting period

□ Applicable √ N/A

(IV) Other use of proceeds during the reporting period

1. Prior investment and replacement of issue proceeds investment projects

□ Applicable √ N/A

2. Temporarily supplementing liquidity with idle proceeds

□ Applicable √ N/A

3. Cash management of idle issue proceeds and investment in related products

√ Applicable □ N/A

Unit: Million/100 Yuan Currency: RMB

Considered by the Effective Consideration Whether the maximum balance for

Board of Directors Amount of Proceeds Used for Start Date Ending date

Cash management balance at the the period exceeds the authorized

Cash Management end of the reporting period amount

October 27 2022 40000.00 November 22 2022 November 21 2023 / No

October 27 2023 3000.00 October 27 2023 October 26 2024 1600.00 No

Other Notes

None

4. Permanent replenishment of working capital or repayment of bank loans with over-provisioned funds

□ Applicable √ N/A

5. Others

□ Applicable √ N/A

XV. Explanation of other significant matters that have a significant impact on investors’ value judgment and investment decisions

□ Applicable √ N/A

86 / 250Annual Report 2023

Section VII Changes in Shares and Information about Shareholders

I. Changes in Share Capital

(I) Table of changes in shares

1. Table of changes in shares

Unit: Shares

Before this change Increase/decrease (+ -) After this change

Issue

Conversio

Bo n of

Propor of nus shares Number of Proport

Number tion new sha from Others Subtotal share shares ion (%) (%) s res provident fund

I.Restricted 60000000 75.00

1500000-

0 10002750 4997250 64997250 65.00 shares

1. Shares

held by

the state

2. Shares

held by

state-

owned

corporatio

ns

3. Other

domestic 8002200 10.00 2000550 -10002750 -8002200 0 shares

Of which:

shares

held by

domestic 8002200 10.00 2000550 -

non-state 10002750

-80022000

legal

persons

Shares

held by

domestic

natural

persons

4.

Overseas 5199780 1299945 1299945

shares 0

65.00006499725065.00

Of which:

shares

held by 5199780 65.00 1299945 1299945overseas 0 0 0 64997250 65.00

legal

persons

Shares

held by

overseas

natural

persons

II.Unlimited 20000000 25.00 5000000 10002750

1500275

shares in 0

3500275035.00

87 / 250Annual Report 2023

circulatio

n

1. RMB

common 20000000 25.00 5000000 10002750

1500275

0 35002750 35.00 shares

2. Domest

ic listed

foreign

shares

3. Overse

as listed

foreign

shares

4. Others

III. Total

number of 8000000 2000000 2000000

shares 0

100.0000100000000100.00

2. Description of changes in shares

√ Applicable □ N/A

The Company held the Sixth Meeting of the Second Session of the Board of Directors and the Fifth Meeting

of the Second Session of the Supervisory Committee on April 7 2023 and the Annual General Meeting of

2022 on April 28 2023 respectively and considered and passed the Proposal on the Profit Distribution Plan

of the Company for the Year 2022. Based on the total share capital of 80000000 shares before the

implementation of the profit distribution and capitalization plan the Company will transfer 2.5 shares for

every 10 shares to all shareholders and after the transfer of 20000000 shares the total share capital of the

Company will be 100000000 shares. For details please refer to "Announcement on Implementation of 2022

Annual Equity Distribution of Acter Technology Integration Group Co. Ltd." (Announcement No. 2023-

028) published on the website of Shanghai Stock Exchange on June 9 2023 at www.sse.com.cn.

3. Impact of changes in shares on financial indicators such as earnings per share and net assets per

share for the last year and the last period (if any)

√ Applicable □ N/A

Major financial indicators Current reporting period The same period of the previous year

Basic earnings per share (yuan/share) 1.39 1.51

Net assets per share attributable to shareholders of

listed companies (yuan/share) 10.82 12.42

According to the "Proposal on the Profit Distribution Plan for the Year 2022" considered and approved at

the Sixth Meeting of the Second Session of the Board of Directors and the Fifth Meeting of the Second

Session of the Supervisory Committee of the Company held on April 7 2023 and the Annual General

Meeting of the Company for the year 2022 held on April 28 2023 the Company shall transfer 2.5 shares for

every 10 shares to all shareholders by way of capitalization of capital reserve on the basis of the total share

capital of 80000000 shares prior to the implementation of the equity distribution with the total number of

shares to be transferred by way of capitalization of capital reserve to be increased by a total of 20000000

shares. After this capitalization the total share capital of the Company became 100000000 shares. The

equity distribution was completed during the reporting period. In order to ensure the comparability of

accounting indicators the basic earnings per share for the year 2022 has been recalculated and presented on

the basis of the changed number of shares.

4. Other disclosures deemed necessary by the Company or required by securities regulatory

authorities

□ Applicable √ N/A

(II) Changes in restricted shares

√ Applicable □ N/A

88 / 250Annual Report 2023

Unit: Shares

Number of

Number of shares Increase in Number of

restricted released the number of restricted Reason Date of

Name of shareholder shares at the from restricted shares at the for release of

beginning of restricted shares during end of the restrictio restricted

the year sale during the year year n shares

the year

SHENG HUEI

INTERNATIONAL 51997800 12999450 64997250 IPO October

CO. LTD. 13 2025

Suzhou Songhuei

Enterprise

Management

Consulting 6498000 8122500 1624500 IPO

October

132023

Partnership (Limited

Partnership)

Suzhou Shengzhan

Enterprise

Management October

Consulting 1504200 1880250 376050 IPO 13 2023

Partnership (Limited

Partnership)

Total 60000000 10002750 15000000 64997250 / /

II. Issuance and Listing of Securities

(I) Issuance of securities up to the reporting period

□ Applicable √ N/A

Explanation of securities issuance as of the reporting period (for bonds with different interest rates during

the subsistence period please explain separately)

□ Applicable √ N/A

(II) Changes in the total number of shares and shareholder structure of the Company and changes

in the Company's asset and liability structure

√ Applicable □ N/A

According to the ''Proposal on the Profit Distribution Plan for the Year 2022'' considered and approved

at the Sixth Meeting of the Second Session of the Board of Directors and the Fifth Meeting of the Second

Session of the Supervisory Committee of the Company held on April 7 2023 and the Annual General

Meeting of the Company for the year 2022 held on April 28 2023 the Company shall on the basis of the

total share capital of 80000000 shares prior to the implementation of the distribution of the Company's

share capital increase 2.5 shares for every 10 shares by way of capitalization of capital reserve to all

shareholders totaling 20000000 shares. After this capitalization the total share capital of the company

became 100000000 shares. Before the implementation of this equity distribution Sheng Huei International

held 51.9978 million shares with a shareholding ratio of 65.00% Suzhou Songhuei held 6.498 million shares

with a shareholding ratio of 8.12% and Suzhou Shengzhan held 1.5042 million shares with a shareholding

ratio of 1.88%; the shareholding ratio remained unchanged after the implementation of the equity distribution

with Sheng Huei International's shareholding changed to 64.99725 million shares Suzhou SongHuei to

8.1225 million shares and Suzhou ShengZhan to 1.88025 million shares.

At the beginning of the reporting period total assets amounted to RMB 1778.2818 million and total

liabilities amounted to RMB 765.0707 million with an asset-liability ratio of 43.02%; at the end of the

reporting period total assets amounted to RMB 1904.3625 million and total liabilities amounted to RMB

814.3974 million with an asset-liability ratio of 42.76%.

(III) Existing internal employee shares

□ Applicable √ N/A

89 / 250Annual Report 2023

III. Shareholders and actual controllers

(I) Total number of shareholders

Total number of common shareholders as of the end

of the reporting period (households) 10170

Total number of common shareholders as of the end

of the month prior to the date of the annual report 9715

(households)

Total number of preferred stockholders with voting

rights restored as of the end of the reporting period N/A

(households)

Total number of preferred stockholders with voting

rights restored at the end of the month preceding the N/A

annual report disclosure date (households)

(II) Shareholdings of top ten shareholders and top ten outstanding shareholders (or shareholders

with unlimited rights to sell) as at the end of the reporting period

Unit: shares

Shareholdings of the top ten shareholders (excluding shares lent through transfer)

Pledged

Increase/decr Number of Number of marked or Nature

Name of shareholders ease during shares held at Proport shares held frozen of

(full name) the reporting the end of the ion (%) under limited Shareh sharehol

period period selling Numconditions olding Status ber

ders

SHENG HUEI Overseas

INTERNATIONAL 12999450 64997250 65.00 64997250 None 0 legal

CO. LTD. person

Suzhou Songhuei

Enterprise

Management 1624500 8122500 8.12 0 None 0 Other

Consulting Partnership

(Limited Partnership)

Suzhou Shengzhan

Enterprise

Management 376050 1880250 1.88 0 None 0 Other

Consulting Partnership

(Limited Partnership)

Ping An Asset - ICBC

- Ping An Asset Ruyi

No. 15 Asset 581125 581125 0.58 0 None 0 Other

Management Product

Domesti

Huang Junfeng 460600 460600 0.46 0 None 0 c natural

person

Domesti

Zhu Zexin 390900 390900 0.39 0 None 0 c natural

person

Industrial and

Commercial Bank of

China Limited - CITIC

Prudential Multi-

Strategy Flexible 325800 325800 0.33 0 None 0 Other

Allocation Mixed

Securities Investment

Fund (LOF)

90 / 250Annual Report 2023

Tian An Life Insurance

Company Limited -

Ping An Asset Multi- 300000 300000 0.30 0 None 0 Other

Asset Portfolio

Domesti

Zhu Zejia 287800 287800 0.29 0 None 0 c natural

person

Domesti

Kelsang Rinzin 112525 257525 0.26 0 None 0 c natural

person

Shareholdings of the top ten shareholders with unlimited sales conditions

Number of shares held in Type and number of shares

Name of shareholders circulation with unlimited

Type Number of selling conditions shares

Suzhou Songhuei Enterprise

Management Consulting Partnership 8122500 Renminbi ordinary

(Limited Partnership) shares

8122500

Suzhou Shengzhan Enterprise

Management Consulting Partnership 1880250 Renminbi ordinary 1880250

(Limited Partnership) shares

Ping An Assets - ICBC - Ping An

Assets Ruyi No. 15 Asset 581125 Renminbi ordinary 581125

Management Product shares

Huang Junfeng 460600 Renminbi ordinary shares 460600

Zhu Zexin 390900 Renminbi ordinary shares 390900

Industrial and Commercial Bank of

China Limited - CITIC-Prudential

Multi-Strategy Flexible Allocation Renminbi ordinary

Mixed Securities Investment Fund 325800 shares 325800

(LOF)

Tian An Life Insurance Company

Limited - Ping An Asset Multi-Asset 300000 Renminbi ordinary

Portfolio shares

300000

Zhu Zejia 287800 Renminbi ordinary shares 287800

Kelsang Rinchen 257525 Renminbi ordinary shares 257525

Zhu Xuewen 240950 Renminbi ordinary shares 240950

Description of buyback special

accounts among the top ten None

shareholders

Explanation of the above

shareholders' proxy voting rights

entrusted voting rights and waiver of None

voting rights

Description of the above shareholders'

affiliation or concerted action None

Description of preferred stockholders

whose voting rights have been

restored and the number of shares they None

hold

Participation of the top ten shareholders in lending of shares in the transfer and financing business

91 / 250Annual Report 2023

□ Applicable √ N/A

Changes in the top ten shareholders compared with the previous period

√ Applicable □ N/A

Unit: shares

Changes in the top ten shareholders from the end of the previous period

Number of shares lent on Number of shares held in shareholders'

Name of New/withdra transfer and not yet returned

ordinary accounts and credit accounts

shareholders (full wn during at the end of the period

and outstanding shares lent on transfer at

the reporting the end of the period name) period Total Quantity Proportion (%) Total Quantity Proportion (%)

Bank of China -E-

Funds Positive

Growth Securities Withdrawal N/A N/A 0 0.00

Investment Fund

Sun Qinghua Withdrawal N/A N/A 0 0.00

Shao Jialin Withdrawal N/A N/A 0 0.00

CITIC Securities

Co. Ltd. Withdrawal N/A N/A 200351 0.20

Guotai Junan

Securities Co. Withdrawal N/A N/A 77161 0.08

Ltd.Everbright

Securities Co. Withdrawal N/A N/A 47604 0.05

Ltd.Ping An Asset -

ICBC - Ping An

Asset Ruyi No. 15

Asset New N/A N/A 581125 0.58

Management

Product

Huang Junfeng New N/A N/A 460600 0.46

Zhu Zexin New N/A N/A 390900 0.39

Industrial and

Commercial Bank

of China Limited -

CITIC-Prudential

Multi-Strategy

Flexible New N/A N/A 325800 0.33

Allocation Mixed

Securities

Investment Fund

(LOF)

Tian An Life

Insurance

Company Limited

- Ping An Asset New N/A N/A 300000 0.30

Multi-Asset

Portfolio

Zhu Zejia New N/A N/A 287800 0.29

Number of shares held by the top ten shareholders with limited selling conditions and the conditions of

limited selling

√ Applicable □ N/A

92 / 250Annual Report 2023

Unit: shares

Listing and trading of shares subject to

Name of Number of shares selling restrictions

No. restricted subject to selling

Number of new Restricted

shareholders restrictions Time of availability shares available for listing and trading for listing and shares

trading

Lock-up of

SHENG HUEI shares for 36

1 INTERNATION 64997250 October 13 2025 0 months from AL CO. LTD. the date of

listing

Description of the

relationship or concerted

action of the above None

shareholders

(III) Strategic investors or general corporations becoming top 10 shareholders as a result of placing

of new shares

□ Applicable √ N/A

IV. Controlling shareholders and actual controllers

(I) Controlling shareholders

1 Legal person

√ Applicable □ N/A

Name of the Company: SHENG HUEI INTERNATIONAL CO. LTD.Person in charge of the organization or legal

representative Liang Jinli

Date of Establishment July 15 2003

Main Businesses Equity investment

Equity interests in other domestic and overseas

listed companies held and participated in during the None

reporting period

Other information None

2 Natural persons

□ Applicable √ N/A

3 Special explanations on the absence of controlling shareholders of the Company

□ Applicable √ N/A

4 Explanation on the change of controlling shareholders during the reporting period

□ Applicable √ N/A

5 Block diagram of the ownership and control relationship between the Company and the

controlling shareholders

√ Applicable □ N/A

93 / 250Annual Report 2023

Acter Co. Ltd.Acter Technology

Integration Group

Acter Technology Acter Engineering

Integration Group Technology Shenzhen Dingmao

Co. Ltd. Shenzhen (Shenzhen) Co. Trading Co. Ltd.Branch Ltd.Acter Technology Acter Engineering

Integration Group Technology

Co. Ltd. Hefei (Shenzhen) Co.Branch Ltd. Xiamen

Branch

Acter Technology

Integration Group

Co. Ltd.Zhengzhou Branch

Acter Technology

Integration Group

Co. Ltd. Wuhan

Branch

(II) Situation of actual controllers

1 Legal person

□ Applicable √ N/A

2 Natural person

□ Applicable √ N/A

3 Special explanation on the absence of actual controllers of the Company

□ Applicable √ N/A

4 Explanation on the change of control of the Company during the reporting period

□ Applicable √ N/A

5 Block diagram of the ownership and control relationship between the Company and the actual

controller

□ Applicable √ N/A

6 Control of the Company by the actual controller through trust or other asset management

methods

□ Applicable √ N/A

(III) Other information of controlling shareholders and actual controllers

□ Applicable √ N/A

V. The proportion of shares pledged by controlling shareholders or the largest shareholder and

persons acting in concert with them to the number of shares held by them reaches more than

80%.

94 / 250Annual Report 2023

□ Applicable √ N/A

VI. Other legal shareholders holding more than 10% of the company's shares

□ Applicable √ N/A

VII. Explanation on the restriction on the reduction of shareholding

□ Applicable √ N/A

VIII. Specific implementation of share buyback during the reporting period

□ Applicable √ N/A

95 / 250Annual Report 2023

Section VIII Preferred Stock

□ Applicable √ N/A

96 / 250Annual Report 2023

Section IX Relevant Information of Bonds

I. Enterprise bonds corporate bonds and debt financing instruments for non-financial enterprises

□ Applicable √ N/A

II. Convertible corporate bonds

□ Applicable √ N/A

Section X Financial Reporting

I. Audit Report

√ Applicable □ N/A

Audit Report

XYZH/2024SUAA1B0017

Acter Technology Integration Group Co. Ltd.All shareholders of Acter Technology Integration Group Co. Ltd.I. Audit Opinion

We have audited the financial statements of Acter Technology Integration Group Co. Ltd. Ltd

(hereinafter referred to as "Acter Group") which comprise the consolidated and parent company

balance sheets as of December 31 2023 the consolidated and parent company income statements the

consolidated and parent company cash flow statements and the consolidated and parent company

statements of changes in stockholders' equity for the year ended December 31 2023 and the related

notes to the financial statements.In our opinion the accompanying financial statements present fairly in all material respects the

consolidated and parent company financial position of Acter Group as of December 31 2023 and the

consolidated and parent company results of operations and cash flows for the year ended December 31

2023 in conformity with the Accounting Standards for Business Enterprises (ASBE).

II. Basis of Audit Opinion

We have performed our audit in accordance with the provisions of the Chinese Standards on

Auditing for Certified Public Accountants. Our responsibilities under those standards are further

described in the "Responsibilities of Certified Public Accountants for the Audit of Financial Statements"

section of the audit report. In accordance with the Code of Ethics for Certified Public Accountants of

the People's Republic of China we are independent of Acter Group and have fulfilled our other

responsibilities with respect to professional ethics. We believe that the audit evidence we have obtained

is sufficient and appropriate to provide a basis for our audit opinion.III. Key Audit Matters

97 / 250Annual Report 2023

Key audit matters are matters that in our professional judgment are of most significance to the

audit of the financial statements. These matters are dealt with in the context of the audit of the financial

statements as a whole and the formation of an audit opinion and we do not express an opinion on these

matters separately.

1. Revenue recognition for construction contracts

Please refer to the accounting policies described in "IV. Significant Accounting Policies and

Accounting Estimates" 32 in the notes to the financial statements and "VI. Notes to the Financial

Statements" 35 in the notes to the financial statements.Key Audit Matters Audit Response

Acter Group is mainly engaged in the

design and construction of MEP related to The audit procedures related to the evaluation of revenue

clean room projects and the revenue from recognition of construction contracts mainly include the

construction contracts in FY2023 following procedures:

amounted to RMB 1994437797.70 (1) Understanding and evaluating the design and operating

accounting for 99.28% of the operating effectiveness of key internal controls over financial

revenue in the consolidated income reporting related to revenue recognition for construction

statement. contracts;

Starting from January 1 2020 Acter (2) Selecting the construction contracts signed betweenGroup will implement “ASBE No. Acter Group and its clients examining the main terms of

14"Revenue (Revised)”. Acter Group the contracts and evaluating whether the accounting

evaluated the terms of the contracts and policies of Acter Group for revenue recognition are in

business arrangements and concluded that compliance with the requirements of the Accounting

construction contracts are performance Standards for Business Enterprises (ASBE);

obligations to be fulfilled within a certain (3) Selecting construction contracts and examining the

period of time and recognized revenue basis for the estimated total cost of the contracts and the

based on the progress of performance related cost budget information. If there is any adjustment

over the period of time in which the to the estimated total cost of the contract check whether

construction contracts are performed. The the adjustment to the estimated total cost has been

progress of performance is determined approved and inquire the management about the reasons

based on the proportion of actual contract and basis for the adjustment to evaluate whether the

costs incurred by Acter Group to the estimation made by the management is reasonable and

estimated total contract costs. based on sufficient information;

Management of Acter Group is required (4) Selecting contract costs actually incurred during the

to make reasonable judgments regarding reporting period and checking relevant supporting

documents such as procurement contracts purchase orders

the progress of completion or material receipts requisition ratios invoices etc. to

performance of construction contracts. evaluate the authenticity and accuracy of the actual

During the course of execution of the construction costs;

contracts Acter Group is required to

continually evaluate and make (5) Contract costs incurred around the balance sheet date

adjustments to the contract amounts and are selected and reconciled to the relevant supporting

documents including purchase contracts purchase orders

estimated total contract costs which material receipts requisition ratios invoices and other

involves the exercise of significant relevant supporting documents in order to evaluate

management judgments.

98 / 250Annual Report 2023

1. Revenue recognition for construction contracts

Please refer to the accounting policies described in "IV. Significant Accounting Policies and

Accounting Estimates" 32 in the notes to the financial statements and "VI. Notes to the Financial

Statements" 35 in the notes to the financial statements.Key Audit Matters Audit Response

We identified revenue recognition for whether the relevant contract costs are recorded in the

construction contracts as a key audit appropriate accounting period;

matter because revenue is one of the key (6) Selecting construction contracts that have not been

performance indicators of Acter Group completed at the end of the reporting period reviewing the

there is an inherent risk that Acter Group accuracy of the calculation of the percentage of completion

may manipulate revenue to meet certain or progress of performance and recalculating the

objectives or expectations and revenue cumulative revenue recognized and the revenue to be

recognition for construction contracts recognized in the current period and reconciling them with

involves significant management the financial records;

judgment. (7) Selecting clients and conducting correspondence

regarding the amount of construction contracts and

receivables signed between Acter Group and them during

the reporting period;

(8) Selecting construction contracts not yet completed as at

the end of the reporting period conducting on-site

inspections of the project sites observing the image of the

on-site works interrogating the project engineers or

management personnel and checking the progress

information of the projects at the construction sites so as

to evaluate the reasonableness of the management's

estimation on the progress of the project completion or the

progress of the fulfillment of the contract;

(9) Selecting construction contracts checking the total

costing sheet of the approved contract budget and the actual

implementation of the budget during the reporting period

reviewing the difference between the total budgeted cost

and the actual cost of completed contracts and evaluating

whether there is any indication of management bias;

(10) Evaluating whether the revenue from construction

contracts has been appropriately disclosed in the financial

statements.

2. Evaluation of bad debt provision for accounts receivable

Please refer to the accounting policies described in "IV. Significant Accounting Policies and

Accounting Estimates" 13 in the notes to the financial statements and "VI. Notes to the Financial

Statements" 4 in the notes to the financial statements.Key Audit Matters Audit Response

As at December 31 2023 the original value of The audit procedures related to the evaluation of the

accounts receivable in the consolidated balance bad debt provision for accounts receivable included

sheet of Acter Group was RMB the following procedures:

99 / 250Annual Report 2023

2. Evaluation of bad debt provision for accounts receivable

Please refer to the accounting policies described in "IV. Significant Accounting Policies and

Accounting Estimates" 13 in the notes to the financial statements and "VI. Notes to the Financial

Statements" 4 in the notes to the financial statements.Key Audit Matters Audit Response

432299306.51 and the provision for bad (1) Understanding and evaluating the design and

debts was RMB 35410034.25. Based on the operating effectiveness of Acter Group’s key internal

expected credit loss rate of accounts controls over financial reporting related to credit risk

receivable the management measured the bad control collection and provisioning for bad debts;

debt provision for accounts receivable at an (2) Evaluating whether the accounting policy for bad

amount equivalent to the expected credit losses debt provision of Acter Group for the reporting period

over the life of the accounts receivable. complies with the requirements of enterprise

accounting standards;

The expected credit loss rate takes into account

the age of the accounts receivable historical (3) Evaluating the appropriateness of the aging of

payments current market conditions and accounts receivable by selecting items from the

accounts receivable aging table reviewing relevant

forward-looking information and this supporting documents and taking into account the

assessment involves significant management information on the credit periods granted by Acter

judgment and estimates. Group to its clients;

(4) Understanding the key parameters and

assumptions used in Acter Group’s expected credit

loss model including management’s judgment on

whether to group accounts receivable based on

clients’ credit risk characteristics and the historical

loss data included in Acter Group’s expected loss

ratio;

(5) Evaluating the appropriateness of Acter Group’s

estimate of expected credit losses by examining the

information used by Acter Group to make the

estimate including examining the accuracy of the

historical loss data and evaluating whether

management has adjusted the historical loss rate by

taking into account the current market conditions and

forward-looking information in determining the

expected credit loss rate;

(6) Recalculation of bad debt allowance as of

December 31 2023 based on the expected credit loss

model of accounts receivable of Acter Group.IV. Other Information

The management of Acter Group (hereinafter referred to as "management") is responsible for the

other information. Other information includes the information covered in the 2023 annual report of

Acter Group but excludes the financial statements and our audit report.

100 / 250Annual Report 2023

Our audit opinion on the financial statements does not cover the other information and we do not

express any form of assurance conclusion on the other information.In connection with our audit of the financial statements it is our responsibility to read the other

information and in doing so to consider whether the other information is materially inconsistent with

or appears to be materially misstated in relation to the financial statements or our knowledge gained in

the course of the audit.Based on the work we have performed if we determine that other information is materially

misstated we shall report that fact. We have no matters to report in this regard.V. Management’s and Governance’s Responsibility for the Financial Statements

The management is responsible for the preparation of financial statements that present fairly in

accordance with the provisions of the Ind AS and for designing implementing and maintaining internal

control necessary to enable the preparation of financial statements that are free from material

misstatement whether due to fraud or error.In preparing the financial statements management is responsible for assessing Acter Group's

ability to continue as a going concern disclosing as applicable matters related to going concern and

applying the going concern assumptions unless management plans to liquidate Acter Group

discontinue operations or has no realistic alternative.Governance is responsible for overseeing the financial reporting process of Acter Group.VI. CPA's Responsibility for the Audit of Financial Statements

Our objective is to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement whether due to fraud or error and to issue an audit report

containing an audit opinion. Reasonable assurance is a high level of assurance but it does not guarantee

that an audit performed in accordance with auditing standards will always detect a material

misstatement when it exists. Misstatements may result from fraud or error and are generally considered

to be material if it is reasonable to expect that the misstatements individually or in the aggregate could

affect the economic decisions of users of financial statements based on the financial statements.We use professional judgment and maintain professional skepticism in performing the audit in

accordance with auditing standards. We also perform the following tasks:

(1) Identifying and assessing the risks of material misstatement of the financial statements due to

fraud or error design and perform audit procedures to address those risks and obtaining sufficient

appropriate audit evidence as a basis for an audit opinion. The risk of not detecting a material

misstatement due to fraud is higher than the risk of not detecting a material misstatement due to error

because fraud may involve collusion forgery willful omission misrepresentation or overriding

internal controls.

101 / 250Annual Report 2023

(2) Obtaining an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion

on the effectiveness of internal control.

(3) Evaluating the appropriateness of accounting policies selected and the reasonableness of

accounting estimates and related disclosures made by management.

(4) Expressing a conclusion on the appropriateness of management's use of the going concern

assumption. At the same time based on the audit evidence obtained we conclude whether there is a

material uncertainty regarding the matters or circumstances that may cast significant doubt on the ability

of Acter Group to continue as a going concern. If we conclude that a material uncertainty exists auditing

standards require that we draw the attention of users of the financial statements to the relevant

disclosures in our audit report; if the disclosures are not sufficient we shall express an unqualified

opinion. Our conclusions are based on information available at the date of the audit report. However

future events or circumstances may cause Acter Group to be unable to continue as a going concern.

(5) Evaluating the overall presentation structure and content of the financial statements and to

evaluate whether the financial statements present fairly the related transactions and events.

(6) Obtaining sufficient and appropriate audit evidence about the financial information of the

entities or business activities of Acter Group to express an opinion on the financial statements. We are

responsible for directing supervising and performing the audit of the Group and accept full

responsibility for the audit opinion.We communicate with governance on matters such as the scope timing and significant findings of

the planned audit including internal control deficiencies of concern identified in our audit.We also provide governance with a statement of compliance with ethical requirements related to

independence and communicate with governance all relationships and other matters that could

reasonably be perceived to affect our independence as well as related safeguards.From the matters communicated with governance we determined which matters were most

significant to the audit of the current financial statements and therefore constituted key audit matters.We describe these matters in our audit report except where public disclosure of the matters is prohibited

by law or regulation or in rare circumstances we determine that a matter shall not be communicated in

the audit report if it is reasonably foreseeable that the adverse consequences of communicating the

matter would outweigh the benefits to the public interest.ShineWing Certified Public Accountants LLP Certified Public Accountants China:

(Project Partner)

Certified Public Accountant China:

102 / 250Annual Report 2023

Beijing China March 29 2024

103 / 250Annual Report 2023

II. Financial Statements

Consolidated Balance Sheet

December 31 2023

Prepared by: Acter Technology Integration Group Co. Ltd.Unit: Yuan Currency: RMB

Item Notes December 31 2023 December 31 2022

Current assets

Monetary funds 722496330.38 550235202.99

Provision for settlement fund

Funds lent

Financial assets held for

trading 122119888.89

Derivative financial assets

Bills receivable 43157918.28 20790441.73

Accounts receivable 396889272.26 484443368.28

Receivables financing 3572953.18 729937.36

Prepayments 89024613.33 50995260.16

Premiums receivable

Reinsurance receivables

Reserve for reinsurance

contracts receivable

Other receivables 13378598.48 13057575.31

Of which: Interest receivable

Dividends receivable

Financial assets purchased for

resale

Inventories 66824.45

Contract assets 424897205.60 389293108.13

Assets held for sale

Non-current assets due within

one year

Other current assets 97604166.69 58265105.32

Total current assets 1791021058.20 1689996712.62

Non-current assets:

Loans and advances granted

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments 2332022.40 2314172.96

Investments in other equity

instruments

Other non-current financial

assets

Investment properties 598758.96 713065.68

Fixed assets 38895511.08 40095530.47

Construction in progress 13103863.94

Producing biological assets

Oil and gas assets

Utilization right assets 3840232.40 4672377.60

Intangible assets 7244475.94 7426847.54

Development expenditure

Goodwill

104 / 250Annual Report 2023

Long-term prepaid expenses

Deferred income tax assets 12482616.81 14578928.51

Other non-current assets 34843950.71 17348658.87

Total non-current assets 113341432.24 87149581.63

Total assets 1904362490.44 1777146294.25

Current liabilities:

Short-term borrowings 31249307.82

Borrowing from the central

bank

Funds borrowed

Financial liabilities held for

trading

Derivative financial liabilities

Bills payable

Accounts payable 629857317.33 589919678.26

Advance receipts

Contract liabilities 73351891.04 74584070.11

Amounts for sale and buyback

of financial assets

Deposit-taking and interbank

deposits

Securities trading agency

Underwriting of securities

Employee remuneration

payable 47459670.87 39456513.03

Taxes payable 7980749.03 7330079.22

Other payables 25427208.65 1611097.74

Of which: Interest payable

Dividends payable

Fees and commissions payable

Sub-insurance payable

Liabilities held for sale

Non-current liabilities due

within one year 1748003.79 1710381.30

Other current liabilities

Total current liabilities 785824840.71 745861127.48

Non-current liabilities:

Reserves for insurance

contracts

Long-term borrowings

Bonds payable

Of which: Preferred stock

Perpetual bonds

Lease liabilities 2150631.55 3151902.66

Long-term accounts payable

Long-term employee

remuneration payable 632325.46 610379.24

Projected liabilities 11292847.91 9238016.80

Deferred income

Deferred tax liabilities 14496782.15 4892632.32

Other non-current liabilities

Total non-current liabilities 28572587.07 17892931.02

105 / 250Annual Report 2023

Total liabilities 814397427.78 763754058.50

Owners' equity (or shareholders' equity)

Paid-in capital (or share

capital) 100000000.00 80000000.00

Other equity instruments

Of which: Preference stock

Perpetual bonds

Capital surplus 562632775.45 582632775.45

Less: Treasury stock

Other comprehensive income 3318147.61 3027860.88

Earmarked reserves 44578849.52 45372652.93

Surplus reserves 39501301.38 28443197.81

Provision for general risks

Undistributed profits 332226440.31 269871786.54

Total owners' equity (or

shareholders' equity) attributable 1082257514.27 1009348273.61

to the parent company

Minority interests 7707548.39 4043962.14

Total owners' equity (or

shareholders' equity) 1089965062.66 1013392235.75

Total liabilities and

owners' equity (or shareholders' 1904362490.44 1777146294.25

equity)

Person in charge of the Company: Liang Jinli

Person in charge of Accounting: Chen Zhihao

Person of Accounting Organization: Xiao Jingxia

106 / 250Annual Report 2023

Parent Company Balance Sheet

December 31 2023 Prepared by: Acter Technology Integration

Group Co. Ltd.Unit: Yuan Currency: RMB

Item Notes December 31 2023 December 31 2022

Current assets

Monetary funds 562122045.11 426921105.55

Financial assets held for trading 122119888.89

Derivative financial assets

Bills receivable 41826722.94 3741507.00

Accounts receivable 315117444.36 389406545.69

Receivables financing 2161091.23 350000.00

Prepayment 62282120.10 30190351.40

Other receivables 31069788.93 39103210.81

Of which: Interest receivable

Dividends receivable

Inventories 62842.15

Contract assets 316838756.89 307849835.96

Assets held for sale

Non-current assets due within

one year

Other current assets 45758769.25 21837642.67

Total current assets 1377176738.81 1341582930.12

Non-current assets:

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments 88485289.33 84542333.88

Investments in other equity

instruments

Other non-current financial

assets

Investment properties 598758.96 713065.68

Fixed assets 36738851.20 38986702.82

Construction in progress 13103863.94

Producing biological assets

Oil and gas assets

Utilization right assets 2451451.14 2760402.11

Intangible assets 7206780.52 7379278.80

Development expenditure

Goodwill

Long-term amortization

Deferred tax assets 9838099.85 11724393.96

Other non-current assets 29178404.91 3168562.17

Total non-current assets 187601499.85 149274739.42

Total assets 1564778238.66 1490857669.54

Current liabilities:

Short-term borrowings

Transaction financial liabilities

Derivative financial liabilities

Notes payable

107 / 250Annual Report 2023

Accounts payable 521711872.40 504944256.04

Receipts in advance

Contract liabilities 46861981.30 38253734.48

Employee remuneration payable 36511580.37 32483986.99

Taxes payable 810992.90 3265740.36

Other payables 1806759.40 1278644.31

Of which: Interest payable

Dividends payable

Liabilities held for sale

Non-current liabilities due

within one year 968648.33 902393.93

Other current liabilities

Total current liabilities 608671834.70 581128756.11

Non-current liabilities:

Long-term loans

Bonds payable

Of which: Preferred stock

Perpetual bonds

Lease liabilities 1797832.84 2118253.78

Long-term accounts payable

Long-term employee

remuneration payable

Projected liabilities 7199017.54 5723958.25

Deferred income

Deferred tax liabilities 367717.70

Other non-current liabilities

Total non-current liabilities 9364568.08 7842212.03

Total liabilities 618036402.78 588970968.14

Owners' equity (or shareholders' equity)

Paid-in capital (or share capital) 100000000.00 80000000.00

Other equity instruments

Of which: Preferred stock

Perpetual bonds

Capital surplus 564223330.95 584223330.95

Less: Treasury stock

Other comprehensive income

Earmarked reserves 36814726.26 37608529.67

Surplus reserves 39501301.38 28443197.81

Undistributed profits 206202477.29 171611642.97

Total owners' equity (or

shareholders' equity) 946741835.88 901886701.40

Total liabilities and owners'

equity (or shareholders' equity) 1564778238.66 1490857669.54

Person in charge of the Company: Liang Jinli

Person in charge of Accounting: Chen Zhihao

Person in charge of Accounting Organization: Xiao Jingxia

108 / 250Annual Report 2023

Consolidated Income Statement

January-December 2023

Unit: Yuan Currency: RMB

Item Notes FY2023 FY2022

I. Total operating revenue 2008924995.68 1627895120.49

Of which: operating revenue 2008924995.68 1627895120.49

Interest income

Earned premiums

Fee and commission income

II. Total operating costs 1829949952.47 1471980392.51

Of which: Operating costs 1738841241.47 1376528425.17

Interest expenses

Handling fee and commission

expenses

Surrender premiums

Net claims expenses

Net withdrawal of insurance

liability reserve

Policy dividend expense

Reinsurance expenses

Taxes and surcharges 4370539.18 3800051.12

Selling expenses 7954281.67 6301894.42

Administrative expenses 59193009.85 60147184.98

R&D expenses 25121209.62 19101658.87

Finance costs -5530329.32 6101177.95

Of which: Interest expense 1360920.96 3693006.56

Interest income 6309355.80 1787232.96

Add: Other gains 3731552.00 3524827.14

Investment income (loss denoted

by "-") 1661794.44 -99328.94

Of which: Investment income

from associates and joint ventures

Gain on derecognition of

financial assets measured at amortized

cost

Foreign exchange gains (loss

denoted by "-")

Gain on net open hedges (loss

denoted by "-")

Gain on change in fair value (loss

denoted by "-") -119888.89 105417.14

Credit impairment loss (loss

denoted by "-") -3860633.85 -5805476.85

Impairment loss on assets (loss

denoted by "-") 1148478.91 5978570.41

Gain on disposal of assets (loss

denoted by "-") 116542.37 246990.20

III. Operating profit (loss denoted by "-") 181652888.19 159865727.08

Add: Non-operating revenue 14361.33 75601.66

Less: Non-operating expenses 889948.63 925033.47

109 / 250Annual Report 2023

IV. Total profit (total loss denoted by " -

")180777300.89159016295.27

Less: Income tax expense 40713458.90 35997255.91

V. Net profit (net loss denoted by "-") 140063841.99 123019039.36

(I) Classification by continuity of operations

1. Net profit from continuing

operations (net loss denoted by "-") 140063841.99 123019039.36

2. Net profit from discontinued

operations (net loss denoted by "-")

(II) Classification by ownership attribution

1. Net profit attributable to

shareholders of the parent company (net 138590474.42 122867982.79

loss denoted by "-")

2. Gains and losses of minority

shareholders (net loss denoted by "-") 1473367.57 151056.57

VI. Other comprehensive income net of

tax 369438.14 2112646.09

(I) other comprehensive income

attributable to owners of the parent 290286.73 2027897.54

company net of taxes

1. Other comprehensive income

that cannot be reclassified to profit or

loss

(1) Remeasurement of changes in

defined benefit plans

(2) Other comprehensive income that

cannot be reclassified to profit or loss

under the equity method

(3) Changes in fair value of

investments in other equity instruments

(4) Changes in fair value of own

credit risk

2. Other comprehensive income to

be reclassified to profit or loss 290286.73 2027897.54

(1) Other comprehensive income

available for reclassification to profit or

loss under the equity method

(2) Changes in fair value of other debt

instruments

(3) Reclassification of financial assets

to other comprehensive income

(4) Provision for credit impairment of

other debt investments

(5) Cash flow hedge reserve

(6) Translation difference of foreign

currency financial statements 290286.73 2027897.54

(7) Others

(II) Other comprehensive income

attributable to minority shareholders net 79151.41 84748.55

of taxes

VII. Total comprehensive income 140433280.13 125131685.45

(I) Total comprehensive income

attributable to owners of the parent 138880761.15 124895880.33

company

110 / 250Annual Report 2023

(II) Total comprehensive income

attributable to minority shareholders 1552518.98 235805.12

VIII. Earnings per share:

(I) Basic earnings per share

(yuan/share) 1.39 1.51

(II) Diluted earnings per share

(yuan/share) 1.39 1.51

In the event of a business combination under the same control during the current period the net

profit realized by the party to be merged before the merger was RMB 0. The net profit realized by the

party to be merged in the previous period was RMB 0.Person in chage of of the Company: Liang Jinli

Person in charge of Accounting: Chen Zhihao

Person in charge of Accounting Organization: Xiao Jingxia

111 / 250Annual Report 2023

Income Statement of the Parent Company

January-December 2023

Unit: Yuan Currency: RMB

Item Notes FY2023 FY2022

I. Operating Revenue 1515434141.27 1205851820.93

Less: Operating costs 1338966817.43 1039711074.27

Taxes and surcharges 4057620.88 3006779.95

Selling expenses 3076194.29 1981006.21

Administrative expenses 38930717.90 43029776.70

R&D expenses 25121209.62 19101658.87

Finance costs -5338139.72 -1787439.33

Of which: Interest expense 153118.72 1494488.49

Interest Income 5636874.72 1844141.45

Add: Other gains 3731552.00 2766188.78

Investment income (loss

denoted by "-") 18594851.65 9000000.00

Of which: Investment income

from associates and joint ventures

Gain on derecognition of

financial assets carried at amortized

cost

Gain on net exposure hedge

(loss denoted by "-")

Gain on changes in fair value

(loss denoted by "-") -119888.89 119888.89

Credit impairment loss (loss

denoted by "-") -3623180.11 -7083121.30

Impairment loss on assets (loss

denoted by "-") 521068.35 5527231.49

Gain on disposal of assets (loss

denoted by "-") 115572.93 224175.66

II. Operating profit (loss denoted by "-") 129839696.80 111363327.78

Add: Non-operating revenue 0.01 1.75

Less: Non-operating expenses 612922.35 820188.78

III. Total profit (total loss denoted by "-

")129226774.46110543140.75

Less: Income tax expense 18645738.73 22934895.19

IV. Net profit (net loss denoted by "-") 110581035.73 87608245.56

(I) Net profit from continuing

operations (net loss denoted by "-") 110581035.73 87608245.56

(II) Net profit from discontinued

operations (net loss denoted by "-")

V. Other comprehensive income net of

tax

(I) Other comprehensive income that

cannot be reclassified to profit or loss

1. Remeasurement of changes in

defined benefit plans

112 / 250Annual Report 2023

2. Other comprehensive income

that cannot be reclassified to profit or

loss under the equity method

3. Changes in fair value of

investments in other equity instruments

4. Change in fair value of own

credit risk

(II) Other comprehensive income to

be reclassified to profit or loss

1. Other comprehensive income

that can be reclassified to profit or loss

under the equity method

2. Changes in fair value of other

debt investments

3. Reclassification of financial

assets to other comprehensive income

4. Provision for credit impairment

of other debt investments

5. Cash flow hedge reserve

6. Translation differences on

foreign currency financial

statements

7. Others

VI. Total comprehensive income 110581035.73 87608245.56

VII. Earnings per share:

(I) Basic earnings per share

(yuan/share)

(II) Diluted earnings per share

(yuan/share)

Person in charge of the Company: Liang Jinli

Person in charge of Accounting: Chen Zhihao

Person in charge of Accounting organization: Xiao Jingxia

113 / 250Annual Report 2023

Consolidated Cash Flow Statement

January-December 2023

Unit: Yuan Currency: RMB

Item Notes FY2023 FY2022

I. Cash flows from operating activities:

Cash received from sales of goods and

rendering of services 2167140386.68 1676483526.48

Net increase in client deposits and

interbank placings

Net increase in borrowings from the

central bank

Net increase in borrowings from other

financial institutions

Cash received from premiums for

primary insurance contracts

Net cash received from reinsurance

business

Net increase in policyholders' deposits

and investment funds

Cash received from interest fees and

commissions

Net increase in funds received

Net increase in buyback transactions

Net cash received from securities trading

Tax rebates received 4870426.57 21093638.18

Cash received from other operating

activities 18560464.10 34436667.12

Subtotal of cash inflow from

operating activities 2190571277.35 1732013831.78

Cash paid for goods and services 1805795893.11 1343472760.93

Net increase in loans and advances to

clients

Net increase in deposits with central

banks and interbanks

Cash paid for original insurance contract

claims

Net increase in funds withdrawn

Cash paid for interest fees and

commissions

Cash paid for policy dividends

Cash paid to and for employees 130630318.35 99870108.89

Taxes paid 76654922.21 77937514.35

Cash paid for other operating activities 43967212.45 49643981.81

Subtotal of cash outflow from

operating activities 2057048346.12 1570924365.98

Net cash flows from operating

activities 133522931.23 161089465.80

II. Cash flows from investing activities:

Cash received from recovery of

investments 371000000.00 202252.61

114 / 250Annual Report 2023

Cash received from investment income 1809868.77

Net cash received from the disposal of

fixed assets intangible assets and other 28000.00 273005.91

long-term assets

Net cash received from the disposal of

subsidiaries and other operating units

Cash received from other investing

activities

Subtotal of cash inflow from investing

activities 372837868.77 475258.52

Cash paid for acquisition and

construction of fixed assets intangible 16998209.64 4783339.58

assets and other long-term assets

Cash paid for investment 249000000.00 122000000.00

Net increase in pledged loans

Net cash paid for acquisition of

subsidiaries and other business units

Cash paid for other investing activities

Subtotal of cash outflow from

investing activities 265998209.64 126783339.58

Net cash flows from investing

activities 106839659.13 -126308081.06

III. Cash flows from financing activities:

Cash received from investment

absorption 2114535.07 504551886.80

Of which: Cash received by subsidiaries

from minority investment

Cash received from loans 6388838.45 233739019.50

Cash received from other financing

activities 22605625.00

Subtotal of cash inflow from

financing activities 31108998.52 738290906.30

Cash paid for debt repayment 37837088.45 317108556.88

Cash paid for distribution of dividends

profits or repayment of interest 66094012.34 33149681.50

Of which: Dividends and profits paid to

minority shareholders by subsidiaries

Cash paid for other financing activities 2180273.09 22871875.08

Subtotal of cash outflow from

financing activities 106111373.88 373130113.46

Net cash flows from financing activities -75002375.36 365160792.84

IV. Impact of exchange rate changes on

cash and cash equivalents 2296409.74 447893.41

V. Net increase in cash and cash

equivalents 167656624.74 400390070.99

Add: Cash and cash equivalents balance

at beginning of period 542340098.29 141950027.30

VI. Cash and cash equivalents at end of

period 709996723.03 542340098.29

Person in charge of the Company: Liang Jinli Person in charge of Accounting: Chen Zhihao Person in charge of Accounting

Organization: Xiao Jingxia

115 / 250Annual Report 2023

Cash flow statement of the parent company

January-December 2023

Unit: Yuan Currency: RMB

Item Notes FY2023 FY2022

I. Cash flows from operating activities:

Cash received from sales of

goods and rendering of services 1647517583.36 1092516773.62

Tax refunds received 3748084.73

Cash received from other

operating activities 14972801.49 7963498.00

Subtotal of cash inflow from

operating activities 1666238469.58 1100480271.62

Cash paid for goods and services 1406939420.43 969724417.70

Cash paid to and for employees 96230925.37 71802528.56

Taxes paid 60761461.48 49226203.45

Cash paid for other operating

activities 27542918.50 27217857.28

Subtotal of cash outflow from

operating activities 1591474725.78 1117971006.99

Net cash flows from operating

activities 74763743.80 -17490735.37

II. Cash flows from investing activities:

Cash received from recovery of

investments 347000000.00

Cash received from investment

income 19008542.74 9000000.00

Net cash recovered from disposal

of fixed assets intangible assets 20000.00 88000.00

and other long-term assets

Net cash received from disposal

of subsidiaries and other business

units

Cash received from other

investing activities

Subtotal of cash inflow from

investing activities 366028542.74 9088000.00

Cash paid for the purchase and

construction of fixed assets

intangible assets and other long- 15334338.59 3625785.24

term assets

Cash paid for investment 225000000.00 122000000.00

Net cash paid for acquisition of

subsidiaries and other operating 4242955.45

units

Cash paid for other investing

activities

Subtotal of cash outflow from

investing activities 244577294.04 125625785.24

Net cash flows from

investing activities 121451248.70 -116537785.24

III. Cash flows from financing activities:

116 / 250Annual Report 2023

Cash flows from financing

activities 504551886.80

Cash received from obtaining

loans 89551555.00

Cash received from other

financing activities 34906384.33 64016599.07

Subtotal of cash inflow from

financing activities 34906384.33 658120040.87

Cash paid for debt repayment 89551555.00

Cash paid for distribution of

dividends profits or interest 65000000.00 31177990.13

repayment

Cash paid for other financing

activities 29198376.93 63272188.69

Subtotal of cash outflow from

financing activities 94198376.93 184001733.82

Net cash flows from

financing activities -59291992.60 474118307.05

IV. Impact of exchange rate

changes on cash and cash 7753.07 125339.27

equivalents

V. Net increase in cash and cash

equivalents 136930752.97 340215125.71

Add: Opening balance of cash

and cash equivalents 425166975.58 84951849.87

VI. Cash and cash equivalents at

end of period 562097728.55 425166975.58

Person in charge of the Company: Liang Jinli Person in charge of Accounting: Chen Zhihao Person in charge of Accounting

Organization: Xiao Jingxia

117 / 250Annual Report 2023

Consolidated Statement of Changes in Owners' Equity

January-December 2023

Unit: Yuan Currency: RMB

Year 2023

Owners' equity attributable to the parent company

Other equity

Item Paid-in instruments Less:

capital (or Preferr Capital Treasu Other Earmarked Surplus

General Undistributed Undistribu Minority interests Total equity

equity) ed Perpetu Oth surplus ry comprehensive reserves reserves

risk

allowance profits ted profit

Subtotal

stock al debt er stock income

I. Closing balance

of the previous 8000000 582632775.0.00 45 3027860.88

45372652.9

3 28443197.81 269871786.54 1009348273.61 4043962.14 1013392235.75 year

Add: change in

accounting policy -177717.08 -177717.08 -3467.80 -181184.88

Correction of

prior-period errors

Others

II. Opening

balance for the 8000000 582632775.0.00 45 3027860.88

45372652.9

3 28443197.81 269694069.46 1009170556.53 4040494.34 1013211050.87 year

III. -

Increases/decrease 20000000.00 20000000.0 290286.73 -793803.41 11058103.57 62532370.85 73086957.74 3667054.05 76754011.79 s during the period 0

Amount (Decrease

denoted by " - ")

(I) Total

comprehensive 290286.73 138590474.42 138880761.15 1552518.98 140433280.13

income

(II) Owners' inputs

and capital 2114535.07 2114535.07

reduction

1. Ordinary shares

invested by owners 2114535.07 2114535.07

2. Contribution of

capital by holders

of other equity

instruments

3. Share-based

payments

recognized in

owners' equity

4. Others

(III) Profit

distribution - - - - - - - - 11058103.57 -

---

76058103.57-65000000.00-65000000.00

1. Withdrawal of

surplus reserves 11058103.57 -11058103.57

2. Provision for

general risks

118 / 250Annual Report 2023

3. Distribution to

owners (or -65000000.00 -65000000.00 -65000000.00

shareholders)

4. Others

(IV) Internal -

transfer of 2000000 20000000.0

ownership interest 0.00 0

1. Capitalization of

capital surplus to 2000000 -

capital (or share 0.00 20000000.0

capital) 0

2. Transfer of

surplus reserves to

capital (or share

capital)

3. Surplus reserves

to cover losses

4. Amount of

changes in defined

benefit plan

carried forward to

retained earnings

5. Other

comprehensive

income Transfer of

other

comprehensive

income to retained

earnings

6. Others

(V) Earmarked

reserves -793803.41 -793803.41 -793803.41

1. Withdrawal

during the period

2. Used during the

period 793803.41 793803.41 793803.41

(VI) Others

IV. Closing

balance of the 100000000.00 - - -

562632775. - 3318147.61 44578849.545 2 39501301.38 - 332226440.31 - 1082257514.27 7707548.39 1089965062.66 period

119 / 250Annual Report 2023

Year 2022

Equity attributable to owners of the parent company

Other equity instruments Less: General

Paid-in Preferre Perpetua Othe Treasu Other risk Undistribu

capital (or d stock l debt r Capital surplus ry comprehensiv Earmarked Surplus allowan Undistributed ted profit

Minority Total owners'

share capital) stock e income reserves reserves ce profits Subtotal interests equity

I. Closing balance

of the previous 60000000.0 110110859.85 999963.34 46731787.48 19682373.25 185764628.31 423289612.23 3808157.00 2 427097769.25 year

Add: change in

accounting policy

Correction of

prior-period errors

Others

II. Opening

balance for the 60000000.00 110110859.85 999963.34 46731787.48 19682373.25 185764628.31 423289612.23

3808157.0

2 427097769.25 year

III.Increases/decrease

s during the period 20000000.00 472521915.60 2027897.54 -1359134.55 8760824.56 84107158.23 586058661.38 235805.12 586294466.50 (Decrease denoted

by " - ")

(I) Total

comprehensive 2027897.54 122867982.79 124895880.33 235805.12 125131685.45

income

(II) Owners' inputs

and capital 20000000.00 472521915.60 492521915.60 492521915.60 reduction

1. Ordinary shares 20000000.0

invested by owners 0 465347160.33 485347160.33 485347160.33

2. Contribution of

capital by holders

of other equity

instruments

3. Share-based

payments

recognized in 7174755.27 7174755.27 7174755.27

owners' equity

4. Others

(III) Profit

distribution 8760824.56 -38760824.56 -30000000.00 -30000000.00

1. Withdrawal of

surplus reserves 8760824.56 -8760824.56

2. Provision for

general risks

3. Distribution to

owners (or -30000000.00 -30000000.00 -30000000.00

shareholders)

4. Others

120 / 250Annual Report 2023

(IV) Internal

transfer of

ownership interest

1. Capitalization of

capital surplus to

capital (or share

capital)

2. Transfer of

surplus reserves to

capital (or share

capital)

3. Surplus reserves

to cover losses

4. Amount of

changes in defined

benefit plan

carried forward to

retained earnings

5. Other

comprehensive

income Transfer of

other

comprehensive

income to retained

earnings

6. Others

(V) Earmarked

reserves -1359134.55 -1359134.55 -1359134.55

1. Withdrawal

during the period

2． Used during

the period 1359134.55 1359134.55 1359134.55

(VI) Others

IV. Closing

balance of the 80000000.00 582632775.45 3027860.88 45372652.93 28443197.81 269871786.54

1009348273.64043962.11013392235.7

period 1 4 5

Person in charge of the Company: Liang Jinli Person in charge of Accounting: Chen Zhihao Person in charge of Accounting

Organization: Xiao Jingxia

121 / 250Annual Report 2023

Statement of changes in equity of the parent company

January-December 2023

Unit: Yuan Currency: RMB

Item Year 2023

Paid-in capital Other equity instruments Other

(or share Capital surplus Less: Treasury comprehensive Earmarked Surplus Undistributed Total owners'

capital) Preferred stock Perpetual debt Others stock income reserves reserves earnings equity

I. Balance at the end of the previous

year 80000000.00 584223330.95 37608529.67 28443197.81 171611642.97 901886701.40

Add: Change in accounting policy 67902.16 67902.16

Correction of prior period errors

Others

II. Opening balance for the year 80000000.00 584223330.95 37608529.67 28443197.81 171679545.13 901954603.56

III. Amount of increase or decrease

during the period (Decrease denoted by 20000000.00 -20000000.00 -793803.41 11058103.57 34522932.16 44787232.32

"-")

(I) Total comprehensive income 110581035.73 110581035.73

(II) Owners' contributions and capital

reduction

1. Ordinary shares invested by owners

2. Capital contributions from holders of

other equity instruments

3. Share-based payments recognized in

owners' equity

IV. Others

(III) Distribution of profits 11058103.57 -76058103.57 -65000000.00

1. Withdrawal of surplus reserves 11058103.57 -11058103.57

2. Distribution to owners (or

shareholders) -65000000.00 -65000000.00

3. Other -

(IV) Internal transfer of owners' equity 20000000.00 -20000000.00

1. Transfer of capital surplus to capital

(or share capital) 20000000.00 -20000000.00

2. Transfer of surplus to capital (or

share capital)

3. Making up of losses from surplus

surplus

4. Carry-over of changes in defined

benefit plans to retained earnings

5. Other comprehensive income carried

forward to retained earnings

6. Others

(V) Earmarked reserves -793803.41 -793803.41

1. Withdrawal during the period -

2. Utilized during the period 793803.41 793803.41

(VI) Others -

IV. Closing balance for the period 100000000.00 564223330.95 36814726.26 39501301.38 206202477.29 946741835.88

122 / 250Annual Report 2023

Year 2022

Paid-in capital Other equity instruments Less: Treasury Other Item (or share Capital surplus comprehensive Earmarked Surplus Undistributed Total owners'

capital) Preferred stock Perpetual debt Other stock income reserves reserves earnings equity

I. Balance at the end of the previous

year 60000000.00 111774134.07 38967664.22 19682373.25 122764221.97 353188393.51

Add: Change in accounting policy

Correction of prior period errors

Others

II. Opening balance for the year 60000000.00 111774134.07 38967664.22 19682373.25 122764221.97 353188393.51

III. Amount of increase or decrease

during the period (Decrease denoted by 20000000.00 472449196.88 -1359134.55 8760824.56 48847421.00 548698307.89

"-")

(I) Total comprehensive income 87608245.56 87608245.56

(II) Owners' contributions and capital

reduction 20000000.00 472449196.88 492449196.88

1. Common shares invested by owners 20000000.00 465347160.33 485347160.33

2. Capital contributions from other

equity instrument holders

3. Share-based payment Share-based

payments recognized in owners' equity 7102036.55 7102036.55

4. Others

(III) Distribution of profits 8760824.56 -38760824.56 -30000000.00

1. Withdrawal of surplus reserves 8760824.56 -8760824.56

2. Distribution to owners (or

shareholders) -30000000.00 -30000000.00

3. Others

(IV) Internal transfer of owners' equity

1. Transfer of capital surplus to capital

(or share capital)

2. Transfer of surplus to capital (or

share capital)

3. Coverage of losses from surplus

surplus

4. Carry-over of changes in defined

benefit plans to retained earnings

5. Other comprehensive income carried

forward to retained earnings

6. Others

(V) Earmarked reserves -1359134.55 -1359134.55

1. Withdrawal during the period

2. Used during the period 1359134.55 1359134.55

(VI) Others

IV. Closing balance for the period 80000000.00 584223330.95 37608529.67 28443197.81 171611.642.97 901886701.40

Person in charge of the Company: Liang Jinli Person in charge of Accounting: Chen Zhihao Person in charge of Accounting

Organization: Xiao Jingxia

123 / 250Annual Report 2023

III. Basic Information of the Company

1. Company profile

√ Applicable □ N/A

Acter Technology Integration Group Co. Ltd. (the “Company”) formerly known as Sheng Huei

(Suzhou) Engineering Co. Ltd. (“Sheng Huei Limited”) was established on September 3 2003 in

Suzhou City Jiangsu Province. At the time of its establishment the Company's initial registered capital

was US$0.45 million. After a series of capital increase as at December 31 2017 the registered capital

of Sheng Huei Limited was US$7.98 million and the sole shareholder of Sheng Huei Limited is SHENG

HUEI INTERNATIONAL CO. Ltd.In January 2018 Sheng Huei International increased the capital of Sheng Huei Limited and the

registered capital was increased from US$7.98 million to US$9.03 million. In May 2018 Acter Group

entered into an equity transfer agreement with Suzhou Songhuei Enterprise Management Consulting

Partnership (Limited Partnership) (“Suzhou Songhuei”) and Suzhou Shengzhan Enterprise

Management Consulting Partnership (Limited Partnership) (“Suzhou Shengzhan”). Pursuant to the

agreement Acter Group agreed to transfer the corresponding registered capital of Sheng Huei Limited

of US$0.977918 million and US$0.226403 million held by Sheng Huei Limited to Suzhou Songhuei

and Suzhou Shengzhan at RMB 14282400.00 and RMB 3306600.00 respectively. After the

completion of the above transactions the registered capital of Sheng Huei Limited is US$9.03 million

and the equity structure is as follows:

No. Shareholder Amount of investment Shareholding (USD Million/100) ratio (%)

1 Sheng Huei International 782.5679 86.6630

2 Suzhou Songhuei 97.7918 10.8300

3 Suzhou Shengzhan 22.6403 2.5070

Total 903.0000 100.0000

In June 2019 all the investors of Sheng Huei Limited entered into a promoter agreement agreeingto change the whole of Sheng Huei Limited into a joint stock limited company and renamed as “ActerTechnology Integration Group Co. Ltd.”. All the investors converted the net assets of Sheng Huei

Limited as of April 30 2019 into 60000000 shares with par value of RMB 1 each. The shareholding

structure after the overall change is as follows:

No. Shareholder Share capital Shareholding (RMB) ratio (%)

1 Sheng Huei International 51997800.00 86.6630

2 Suzhou Songhuei 6498000.00 10.8300

3 Suzhou Shengzhan 1504200.00 2.5070

Total 60000000.00 100.0000

On August 23 2022 the Company applied for the IPO of A shares of not more than 20000000.00shares by CSRC (“Official Reply to the Approval of the IPO of Acter Technology Integration GroupCo. Ltd.”) (CSRC License No. [2022] 1915) which was approved by the CSRC. As at December 31

2022 the Company had received the monetary funds obtained through the public offering of A shares

of which the paid-in capital (share capital) amounted to RMB 20000000.00 (SAY RMB TWENTY

MILLION YUAN ONLY).The shareholding structure after the overall change is as follows:

124 / 250Annual Report 2023

No. Shareholders Share capital Shareholding (RMB) ratio (%)

1 Sheng Huei International 51997800.00 64.9973

2 RMB ordinary shares (A shares) shareholders 20000000.00 25.0000

3 Suzhou Songhuei 6498000.00 8.1225

4 Suzhou Shengzhan 1504200.00 1.8803

Total 80000000.00 100.0000

Pursuant to the resolution of the 2022 annual general meeting held on April 28 2023 the Company

paid a cash dividend of RMB 0.8125 per share (inclusive of tax) to all shareholders on the basis of the

total share capital of 80000000.00 shares as at June 14 2023 and transferred 0.25 shares to all

shareholders by way of capital reserve to increase the share capital by a total of 20000000.00 shares

with par value of RMB 1 per share increasing the share capital by RMB 20000000.00 in total.As at December 31 2023 the shareholding structure after the overall change is as follows:

No. Shareholder Share capital Shareholding (RMB) ratio (%)

1 Sheng Huei International 64997250.00 64.9973

2 RMB ordinary shares (A shares) shareholders 25000000.00 25.0000

3 Suzhou Songhuei 8122500.00 8.1225

4 Suzhou Shengzhan 1880250.00 1.8803

Total 100000000.00 100.0000

The Company's parent company is Sheng Huei International and its ultimate holding company is

Acter Co. Ltd. (Acter (Taiwan)) The Company's business term is from September 3 2003 to an

indefinite period.Scope of Business: Engaged in system integration services; design and related equipment

installation of mechanical and electrical systems HVAC systems aseptic systems and building

equipment management systems: construction of air purification engineering fire engineering building

construction engineering interior and exterior decoration engineering municipal public works pipeline

engineering and provision of related technical consultation and after-sales service; research and

development and manufacturing of industrial switch power converters and components; wholesale

import and export of similar products produced by the company and building materials dust-free

aseptic purification equipment and related equipment and assembly parts (for products involving quotas

and license management applications shall be handled according to relevant national regulations).Category III medical device business; Category II medical device sales; manufacturing of metal

structures; manufacturing of building decoration plumbing parts and other metal products for

construction (the project shall be carried out only after approval by relevant authorities in accordance

with the law).Licensed Projects: Construction engineering design; intelligent building system design (the

specific business projects shall be subject to the approval results and only after approval by relevant

authorities in accordance with the law can the business activities be conducted).The financial statements were approved by the Board of Directors of the Group on March 29 2024

by resolution.

125 / 250Annual Report 2023

IV. Basis of Preparation of the Financial Statements

1. Basis of preparation

The financial statements of the Company are prepared in accordance with the "Accounting

Standards for Business Enterprises" issued by the Ministry of Finance (hereinafter collectively referred

to as the "ASBE") and its application guidance interpretations and other relevant regulations as well

as the disclosure requirements of the China Securities Regulatory Commission's (hereinafter

collectively referred to as the "CSRC") "General Provisions of Financial Reports - No. 15 - Rules on

the Information Disclosure of Companies Issuing Securities" (Revised in 2023) based on the actual

transactions and events.

2. Going concern

√ Applicable □ N/A

The Group evaluated its ability to continue as a going concern for the twelve months ended

December 31 2023 and found no matters or circumstances that cast significant doubt on its ability to

continue as a going concern. The financial statements are presented on a going concern basis.V. Significant Accounting Policies and Accounting Estimates

Specific accounting policies and accounting estimates

√ Applicable □ N/A

The preparation of financial statements requires the management of the Group to make estimates

and assumptions that affect the application of accounting policies and the amounts of assets liabilities

income and expenses. Actual results may differ from these estimates. The Group's management

continually evaluates its judgment regarding critical assumptions and uncertainties involved in making

estimates. The effects of changes in accounting estimates are recognized in the period in which the

estimate is changed and in future periods.The following accounting estimates and critical assumptions have a significant risk of causing a

material adjustment to the carrying amount of assets and liabilities in future periods.

(1) Revenue recognition

Under the new revenue standard the Group recognizes revenue from construction contracts over

a period of time. The recognition of revenue and profit from construction depends on the Group's

estimation of the outcome of the contract and the progress of performance. If the actual amount of total

revenues and total costs incurred is higher or lower than management's estimates it will affect the

amount of revenue and profit recognized by the Group in future periods;

(2) Impairment of receivables and contract assets

Effective January 1 2019 the Group uses the expected credit loss model to assess the impairment

of financial instruments. The application of the expected credit loss model requires significant

judgments and estimates that take into account all reasonable and supportable information including

forward-looking information. In making such judgments and estimates the Group extrapolates the

expected changes in the credit risk of debtors based on historical repayment data and factors such as

economic policies macroeconomic indicators and industry risks. Therefore the amount of provision

for impairment of receivables and contract assets may change in accordance with the changes in the

above estimates and the adjustments to the provision for impairment of receivables and contract assets

will affect the profit or loss in the period in which the estimates are changed.

(3) Accounting estimates for provision for impairment of fixed assets and investment properties

The Group performs impairment tests on fixed assets such as buildings machinery and equipment

and investment properties at the balance sheet date if there is any indication of impairment. The

recoverable amount of property plant and equipment and investment properties is the higher of the

126 / 250Annual Report 2023

present value of estimated future cash flows and the fair value of the assets less costs of disposal which

requires the use of accounting estimates.If management revises the gross margins used in the calculation of future cash flows for asset

groups and portfolios of asset groups and the revised gross margins are lower than the currently used

gross margins the Group is required to increase the provision for impairment for property plant and

equipment and investment properties.If the pre-tax discount rate used for discounting cash flows is revised by the management and the

revised pre-tax discount rate is higher than the current rate the Group is required to make additional

provision for impairment of fixed assets and investment properties.If the actual gross profit margin or pre-tax discount rate is higher or lower than the management's

estimate the Group cannot reverse the provision for impairment of fixed assets and investment

properties.

(4) Useful lives of fixed assets and investment properties

The Group reviews the estimated useful lives of fixed assets and investment properties at least

annually at the end of each year. The estimated useful lives are determined by the management based

on historical experience of similar assets reference to estimates generally used in the industry and

expected technological updates. Depreciation and amortization expenses for future periods are adjusted

accordingly when there is a significant change in the previous estimates.

(5) Income tax expense

The Group recognizes current and deferred taxes in profit or loss except for those arising from

business combinations and transactions or events directly attributable to owners' equity (including other

comprehensive income).Current income tax is the expected income tax payable calculated on the basis of the taxable

income for the year at the rates specified in the tax law plus adjustments to prior years' income tax

payable. At the balance sheet date if the Group has a legal right to settle on a net basis and intends to

settle on a net basis or to acquire assets and settle liabilities simultaneously current income tax assets

and current income tax liabilities are shown net of tax. Deferred tax assets and deferred tax liabilities

are recognized for deductible temporary differences and taxable temporary differences respectively. A

temporary difference is the difference between the carrying amount of an asset or liability and its tax

basis including deductible losses and tax credits that can be carried forward to future years. Deferred

tax assets are recognized to the extent that it is probable that taxable income will be available against

which the deductible temporary differences can be utilized. Deferred tax is not recognized for temporary

differences arising from transactions that are not part of a business combination and that at the time of

the transaction affect neither the accounting profit nor taxable income (or deductible losses). At the

balance sheet date the Group measures the carrying amount of deferred tax assets and liabilities based

on the expected manner of recovering or settling those assets and liabilities in accordance with enacted

tax laws at the tax rates that are expected to apply to the period when the assets are recovered or the

liabilities are settled. The carrying amount of deferred tax assets is reviewed at the balance sheet date.The carrying amount of deferred tax assets is written down to the extent that it is more likely than not

that sufficient taxable income will not be available to allow the benefit of the deferred tax assets to be

realized in future periods. When it is more likely than not that sufficient taxable income will be available

to offset the deferred tax assets the amount written down is reversed.On the balance sheet date deferred tax assets and liabilities are netted out when the following

conditions are met:

A taxable entity has a legal right to settle current income tax assets and current income tax liabilities

on a net basis;

Deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax

authority on the same taxable entity or on different taxable entities provided that in each future period

in which significant deferred tax assets and liabilities reverse the taxable entity intends to settle the

127 / 250Annual Report 2023

current tax assets and liabilities on a net basis or to realize the assets and settle the liabilities

simultaneously.

1. Statement of Compliance with ASBE

The financial statements prepared by the Company comply with the requirements of the ASBE and

give a true and complete account of the Company's financial position results of operations changes in

shareholders' equity cash flows and other relevant information.

2. Accounting period

The Company's fiscal year begins on January 1 and ends on December 31 of the Gregorian calendar.

3. Business cycle

√ Applicable □ N/A

The Group uses 12 months as the business cycle and the criteria for classifying the liquidity of

assets and liabilities.

4. Currency of accounts

The Group and its Chinese subsidiaries use Renminbi ("RMB") as the local currency of account;

Acter International Limited ("Acter (Hong Kong)") uses United States dollars ("USD") as the local

currency of account; Acter Technology Singapore Pte. Ltd ("Acter (Singapore)") is denominated in

Singapore dollars; PT Acter Technology Indonesia ("Acter (Indonesia)") and PT Acter Integration

Technology Indonesia ("Indonesia Joint Venture") are denominated in Indonesian Rupiah; Acter

Technology Malaysia Sdn. Bhd ("Acter (Malaysia)") is denominated in Malaysian Ringgit and Sheng Huei

Engineering Technology Company Limited ("Sheng Huei (Vietnam)") is denominated in Vietnamese Dong;

Acter Technology Company Limited ("Acter (Thailand)") uses Thai Baht as its local currency. The Group

and its subsidiaries have selected the local currency of accounts based on the currency of valuation and

settlement of major business receipts and expenditures. Some subsidiaries of the Group have adopted

currencies other than the Group's local currency as their local currency and the foreign currency financial

statements of these subsidiaries have been translated in accordance with this Section V.10 in the preparation

of these financial statements.

5. Method of determining materiality criteria and basis of selection

√ Applicable □ N/A

Item Materiality Criteria

Significant accounts payable with an age of more

than one year Individual amount exceeding RMB 3 million

Important prepaid accounts with an age of more

than one year Individual amount exceeding RMB 1 million

6. Accounting treatment of business combinations under the same control and non-same control

√ Applicable □ N/A

(1) Business combination under the same control

Assets and liabilities acquired by the Group as a consolidated party in a business combination under the

same control are measured at the carrying amount of the party being consolidated in the consolidated

statements of the party ultimately in control at the date of consolidation. The difference between the carrying

amount of net assets acquired and the carrying amount of the consideration paid for the merger is adjusted

to capital surplus; if the capital surplus is not sufficient to cover the difference it is adjusted to retained

earnings.

(2) Business combination not under common control

A business combination under non-identical control occurs when the parties involved in the

combination are not under the ultimate control of the same party or parties before and after the combination.Identifiable assets liabilities and contingent liabilities of the acquiree acquired in a business combination

not under common control are measured at fair value at the acquisition date. The cost of consolidation is the

128 / 250Annual Report 2023

sum of the fair values of cash or non-cash assets paid liabilities issued or assumed and equity securities

issued by the Group at the date of acquisition for the purpose of obtaining control over the acquiree as well

as all directly related expenses incurred in the business combination (for business combinations effected in

stages through multiple transactions the cost of consolidation is the sum of the costs of each individual

transaction). If the cost of combination is greater than the fair value of the acquiree's identifiable net assets

goodwill is recognized. If the cost of combination is less than the fair value of the acquiree's identifiable net

assets the fair value of the identifiable assets liabilities and contingent liabilities acquired in the combination

as well as the fair value of the non-cash assets or equity securities issued as consideration for the combination

are first reviewed. If after the review the cost of consolidation is still less than the fair value of the net

identifiable assets of the acquiree the difference is recognized as non-operating revenue in the current period

of consolidation.

7. Criteria for judging control and method of preparing consolidated financial statements

√ Applicable □ N/A

The scope of consolidation of the Group's consolidated financial statements is determined on the basis

of control which includes the Company and all subsidiaries controlled by the Company (including

enterprises divisible parts of invested entities and structured entities controlled by enterprises etc.). The

Group determines control on the basis of the Group's power over an investee the Group's ability to earn

variable returns from participating in the investee's activities and the Group's ability to exercise its power

over the investee to affect the amount of the investee's returns.In the preparation of consolidated financial statements if the subsidiaries adopt accounting policies or

accounting periods that are different from those of the Company the subsidiaries' financial statements shall

be adjusted as necessary in accordance with the Company's accounting policies or accounting periods.The effects on the consolidated financial statements of internal transactions between the Company and

its subsidiaries and between subsidiaries are eliminated on consolidation. The share of ownership interest of

subsidiaries that is not attributable to the parent company and the share of net profit or loss other

comprehensive income and total comprehensive income that is attributable to minority interests are presented

in the consolidated financial statements under the headings of "Minority interests minority interests in profit

or loss other comprehensive income attributable to minorities and total comprehensive income attributable

to minorities" respectively.The results of operations and cash flows of subsidiaries acquired in a business combination under the

same control are included in the consolidated financial statements from the beginning of the period in which

the combination occurs. In preparing the comparative consolidated financial statements adjustments are

made to the relevant items in the prior year's financial statements and the consolidated entity is deemed to

have been in existence since the point in time when the ultimate controlling party began to exercise control.For subsidiaries acquired in a business combination not under common control the results of operations

and cash flows are included in the consolidated financial statements from the date the Group obtains control.In preparing the consolidated financial statements the financial statements of subsidiaries are adjusted on

the basis of the fair value of each identifiable asset liability and contingent liability determined at the date

of purchase.

8. Classification of joint arrangements and accounting treatment of joint operations

√ Applicable □ N/A

The Group's joint venture arrangements include joint operations and joint ventures. Joint operation

refers to a joint arrangement in which the parties to the arrangement are entitled to the assets and bear the

liabilities related to the arrangement. A joint venture is a joint arrangement in which the joint venturers have

rights only to the net assets of the arrangement.For joint ventures the Group recognizes assets held and liabilities assumed individually or in proportion

to the assets held and liabilities assumed by the Group as a joint venturer and recognizes revenues and

expenses individually or in proportion to the relevant agreements. When a joint venture enters into a

transaction for the purchase or sale of an asset that does not constitute part of the business only the portion

of the gain or loss arising from the transaction that is attributable to the other participants in the joint venture

is recognized.

9. Criteria for determining cash and cash equivalents

129 / 250Annual Report 2023

Cash equivalents are investments held by an enterprise that have a short maturity (generally maturing

within three months from the date of purchase) are highly liquid are readily convertible to known amounts

of cash and are subject to an insignificant risk of changes in value.

10. Foreign currency operations and translation of foreign currency statements

√ Applicable □N/A

(1) Foreign currency transactions

The Group's foreign currency transactions are translated into RMB at the spot exchange rate on the date

of the transaction. At the balance sheet date foreign currency monetary items are translated into RMB using

the spot exchange rate at the balance sheet date and the resulting translation differences are recognized

directly in profit or loss for the current period except for exchange differences arising from special loans in

foreign currencies for the purpose of purchasing constructing or producing assets eligible for capitalization

which are dealt with in accordance with the principle of capitalization. Non-monetary items carried at fair

value that are denominated in foreign currencies are translated using spot exchange rates at the date when

the fair value is determined and the difference between the translated amount in the local currency of the

account and the original amount in the local currency of the account is treated as a change in fair value

(including exchange rate changes) and recognized in profit or loss for the period. Capital received from

investors in foreign currencies is translated using the spot exchange rate on the date when the transaction

occurs and the difference in the translated amount between the invested capital in foreign currencies and the

corresponding local currency of the monetary items does not result in a difference between the foreign-

currency capital and the corresponding local currency of the monetary items.

(2) Translation of foreign currency financial statements

Assets and liabilities in the foreign currency balance sheet are translated at the spot exchange rate at the

balance sheet date; owners' equity items except for "undistributed profits" are translated at the spot

exchange rate at the time of occurrence of the business; and income and expenses in the income statement

are translated at the spot exchange rate at the date of occurrence of the transaction. Translation differences

arising from the above translations are recognized in other comprehensive income. Cash flows in foreign

currencies are translated using the spot exchange rate on the date of cash flows. The effect of exchange rate

changes on cash is shown separately in the statement of cash flows.

11. Financial Instruments

√ Applicable □ N/A

The Group recognizes a financial asset or a financial liability when it becomes a party to a financial

instrument contract.The effective interest method is a method of calculating the amortized cost of a financial asset or a

financial liability and of allocating interest income or interest expense over the accounting period.The effective interest rate is the rate that exactly discounts estimated future cash flows through the

expected life of the financial asset or financial liability to the book balance of the financial asset or the

amortized cost of the financial liability. In determining the effective interest rate the expected cash flows

are estimated by taking into account all contractual terms of the financial assets or liabilities (e.g. early

repayment rollover call option or other similar options etc.) but not the expected credit losses.The amortized cost of a financial asset or a financial liability is the initial recognized amount of the

financial asset or the financial liability less the principal repaid plus or minus the cumulative amortization

using the effective interest rate method to amortize the difference between the initial recognized amount and

the maturity amount and less the cumulative loss allowance (only applicable to financial assets).

(1). Classification recognition and measurement of financial assets

The Group classifies financial assets into the following three categories based on the business model of

the financial assets under management and the contractual cash flow characteristics of the financial assets:

1) Financial assets measured at amortized cost

2) Financial assets at fair value through other comprehensive income.

3) Financial assets at fair value through profit or loss.

Financial assets are measured at fair value on initial recognition except for accounts receivable or bills

receivable arising from the sale of goods or provision of services etc. which do not contain significant

financing components or do not take into account the financing components that are not more than one year

old which are measured initially at the transaction price.For financial assets at fair value through profit or loss transaction costs are recognized directly in profit

or loss while transaction costs related to other types of financial assets are recognized in their initial

recognition amounts.

130 / 250Annual Report 2023

Subsequent measurement of financial assets depends on their classification. All affected financial assets

are reclassified when and only when the Group changes its business model for managing financial assets.

1) Financial assets classified as at amortized cost

The Group classifies a financial asset as amortized cost if the contractual terms of the financial asset

stipulate that the only cash flows to be generated at a specific date will be payments of principal and interest

based on the amount of principal outstanding and the business model for managing the financial asset is to

collect the contractual cash flows. The Group recognizes interest income on these financial assets using the

effective interest method partially measured at amortized cost bills receivable accounts receivable other

receivables investments in debt securities and long-term receivables.The Group uses the effective interest rate method to recognize interest income on these financial assets

which are subsequently measured at amortized cost. Gains or losses arising from impairment or

derecognition or modification of such financial assets are recognized in profit or loss for the current period.The Group determines interest income by multiplying the book balance of the financial assets by the effective

interest rate except in the following cases.a. For financial assets acquired or originated that are impaired the Group determines interest income

on the basis of the amortized cost of the financial assets and the effective interest rate adjusted for

creditworthiness from the initial recognition of the financial assets.b. For financial assets acquired or originated without credit impairment that become impaired in a

subsequent period the Group determines interest income in the subsequent period based on the amortized

cost of the financial assets and the effective interest rate. If in a subsequent period the credit risk of a

financial instrument has improved and the financial instrument is no longer impaired the Group calculates

interest income by multiplying the effective interest rate by the carrying amount of the financial asset.

2) Financial assets at fair value through other comprehensive income

If the contractual terms of a financial asset stipulate that the cash flows to be generated at a specific

date will consist solely of payments of principal and interest based on the outstanding principal amount and

the business model for managing the financial asset is based on the objective of collecting the contractual

cash flows as well as the objective of selling the financial asset the Group classifies the financial asset as a

financial asset at fair value through other comprehensive income.The Group recognizes interest income on such financial assets using the effective interest method.Changes in fair value are recognized in other comprehensive income except for interest income impairment

losses and exchange differences which are recognized in profit or loss. When the financial assets are

derecognized the cumulative gain or loss previously recognized in other comprehensive income is

transferred from other comprehensive income and recognized in profit or loss.Notes and accounts receivable at fair value through other comprehensive income are presented as

receivables financing and other financial assets are presented as other debt investments of which. Other

debt investments maturing within one year from the balance sheet date are presented as non-current assets

with maturity of less than one year and other debt investments with original maturity of less than one year

are presented as other current assets.

3) Financial assets designated as at fair value through other comprehensive income

On initial recognition the Group may irrevocably designate investments in non-trading equity

instruments as financial assets at fair value through other comprehensive income on an individual financial

asset basis.Changes in the fair value of such financial assets are recognized in other comprehensive income and no

provision for impairment is required. Upon derecognition of the financial assets the cumulative gain or loss

previously recognized in other comprehensive income is transferred from other comprehensive income to

retained earnings.The Group recognizes dividend income and recognizes it in profit or loss when the Group's right to

receive dividends has been established it is probable that the economic benefits associated with the dividends

will flow to the Group and the amount of dividends can be measured reliably during the period in which the

Group holds the investment in the equity instrument. The Group reports such financial assets under

investments in other equity instruments.Investments in equity instruments are classified as financial assets at fair value through profit or loss if

they meet one of the following conditions: the financial asset is acquired principally for the purpose of selling

in the near future; it is part of a centrally managed portfolio of identifiable financial assets at initial

recognition and there is objective evidence that a pattern of short-term profit-taking actually exists in the

near future; and It is a derivative (except for derivatives that meet the definition of a financial guarantee

contract and are designated as effective hedging instruments).

4) Financial assets classified at fair value through profit or loss

131 / 250Annual Report 2023

Financial assets that do not meet the criteria for classification as financial assets at amortized cost or at

fair value through other comprehensive income and are not designated as at fair value through other

comprehensive income are classified as financial assets at fair value through profit or loss.The Group uses fair value for subsequent measurement of these financial assets and recognizes gains

or losses arising from changes in fair value as well as dividend and interest income related to these financial

assets in profit or loss for the current period.The Group reports these financial assets under the items of trading financial assets and other non-current

financial assets according to their liquidity.

5) Financial assets designated as at fair value through profit or loss

At initial recognition the Group may irrevocably designate financial assets as financial assets at fair

value through profit or loss on an individual basis in order to eliminate or significantly reduce accounting

mismatches.If a hybrid contract contains one or more embedded derivatives and the host contract is not one of the

above financial assets the Group may designate the entire contract as a financial instrument at fair value

through profit or loss. However except for the following situations: a. The embedded derivatives will not

a. The embedded derivatives will not materially alter the cash flows of the hybrid contract.b. When determining for the first time whether a similar hybrid contract needs to be unbundled little

analysis is required to clarify that the embedded derivatives it contains shall not be unbundled. For example

if the embedded loan has an early repayment right that allows the holder to repay the loan early at an amount

close to amortized cost the early repayment right does not need to be spun off.The Group uses fair value for subsequent measurement of these financial assets and recognizes gains

or losses arising from changes in fair value as well as dividend and interest income related to these financial

assets in profit or loss.The Group reports such financial assets under the items of trading financial assets and other non-current

financial assets according to their liquidity.

(2). Classification recognition and measurement of financial liabilities

The Group classifies a financial instrument or its component parts as a financial liability or an equity

instrument upon initial recognition based on the contractual terms of the financial instrument issued and the

economic substance reflected therein rather than in legal form only taking into account the definitions of

financial liabilities and equity instruments. Financial liabilities are classified on initial recognition as

financial liabilities at fair value through profit or loss other financial liabilities and derivatives designated

as effective hedging instruments.Financial liabilities are measured at fair value on initial recognition. For financial liabilities at fair value

through profit or loss transaction costs are recognized directly in profit or loss; for other types of financial

liabilities transaction costs are recognized in the initial recognition amount.The subsequent measurement of financial liabilities depends on their classification.

1) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading

(including derivatives that are financial liabilities) and financial liabilities designated at fair value through

profit or loss on initial recognition.Financial liabilities are classified as trading liabilities if they meet one of the following conditions: they

are assumed principally for the purpose of selling or repurchasing in the near future; they are part of a

centrally managed portfolio of identifiable financial instruments and there is objective evidence that the

enterprise has recently adopted a short-term profit-taking model; they are derivatives except for those

designated as effective hedging instruments and those subject to financial guarantee contracts. Financial

liabilities held for trading (including derivatives that are financial liabilities) are subsequently measured at

fair value with all changes in fair value recognized in profit or loss except for those related to hedge

accounting.At initial recognition in order to provide more relevant accounting information the Group irrevocably

designates financial liabilities as financial liabilities at fair value through profit or loss if they meet one of

the following conditions:

a. Eliminating or significantly reducing accounting mismatches.b. Managing and evaluating the performance of a portfolio of financial liabilities or a portfolio of

financial assets and financial liabilities on a fair value basis in accordance with an enterprise risk

management or investment strategy as set out in a formal written document and reporting to key

management personnel within the enterprise on this basis.The Group subsequently measures such financial liabilities at fair value with changes in fair value

recognized in profit or loss except for changes in fair value arising from changes in the Group's own credit

132 / 250Annual Report 2023

risk which are recognized in other comprehensive income. The Group recognizes all fair value changes

(including the effect of changes in the Group's own credit risk) in profit or loss unless the recognition of fair

value changes in other comprehensive income caused by changes in the Group's own credit risk would result

in an accounting mismatch in profit or loss or would magnify the accounting mismatch in profit or loss.

(2) Other financial liabilities

Except for the following items the Company classifies its financial liabilities as financial liabilities

measured at amortized cost which are subsequently measured at amortized cost using the effective interest

method with gains or losses arising from derecognition or amortization recognized in profit or loss for the

current period.a. Financial liabilities at fair value through profit or loss.b. Financial liabilities resulting from transfers of financial assets that do not meet the conditions for

derecognition or from continuing involvement in the transferred financial assets.c. Financial guarantee contracts that do not fall into the first two categories of this article and loan

commitments to lend at below-market interest rates that do not fall into category 1) of this article.A financial guarantee contract is a contract that requires the issuer to pay a specified amount of money

to the holder of the contract who suffers a loss when a specified debtor fails to make payments when due in

accordance with the terms of the original or modified debt instrument. Financial guarantee contracts that are

not financial liabilities designated as at fair value through profit or loss are measured at the higher of the

amount of the allowance for losses and the amount initially recognized net of accumulated amortization over

the guarantee period after initial recognition.

(3). Derecognition of financial assets and financial liabilities

1) A financial asset is derecognized i.e. removed from the accounts and balance sheet when one of

the following conditions is met

a. The contractual right to receive cash flows from the financial asset is terminated.b. The financial asset is transferred and the transfer meets the requirements for derecognition of

financial assets.

2) Conditions for derecognition of financial liabilities

A financial liability (or a portion of a financial liability) is derecognized when the present obligation of

the financial liability (or the portion of the financial liability) has been discharged. If the Group enters into

an agreement with the lender to replace the original financial liability by assuming a new financial liability

and the contractual terms of the new financial liability are substantially different from those of the original

financial liability or the contractual terms of the original financial liability (or a portion thereof) are

substantially modified the original financial liability is derecognized and a new financial liability is

recognized at the same time. The difference between the carrying amount and the consideration paid

(including non-cash assets transferred or liabilities assumed) is recognized in profit or loss.When the Group repurchases a portion of a financial liability the Group allocates the carrying amount

of the financial liability as a whole according to the proportion that the fair value of the continuing portion

and the derecognized portion of the financial liability bears to the fair value of the financial liability as a

whole at the date of buyback. The difference between the carrying amount allocated to the derecognized

portion and the consideration paid (including non-cash assets transferred or liabilities assumed) shall be

recognized in profit or loss.

(4). Basis of recognition and measurement of transfer of financial assets

The Group assesses the extent to which it retains the risks and rewards of ownership of a financial asset

when a transfer of a financial asset occurs and handles the transfer in each of the following situations:

1) If substantially all the risks and rewards of ownership of a financial asset are transferred the financial

asset is derecognized and the rights and obligations arising from or retained in the transfer are separately

recognized as assets or liabilities.

2) If substantially all the risks and rewards of ownership of the financial asset are retained the financial

asset continues to be recognized.

3) If neither the transfer nor substantially all the risks and rewards of ownership of the financial asset

are retained (i.e. in cases other than those in 1) and 2)) the financial asset is recognized and treated as

follows depending on whether or not control over the financial asset is retained:

a. If control over the financial asset is not retained the financial asset is derecognized and the rights and

obligations arising from or retained in the transfer are recognized separately as assets or liabilities.b. If control over the financial asset is retained the financial asset continues to be recognized to the

extent of its continuing involvement in the transferred financial asset and the related liability is recognized

133 / 250Annual Report 2023

accordingly. The extent to which the Group continues to be involved in the transferred financial asset is the

extent to which it bears the risk or rewards of changes in the value of the transferred financial asset.In determining whether a transfer of financial assets meets the above conditions for derecognition of

financial assets the principle of substance over form is applied.The Company distinguishes between transfers of financial assets as a whole and partial transfers of

financial assets:

1) If the transfer of financial assets as a whole meets the conditions for derecognition the difference

between the following two amounts is recognized in profit or loss:

a. The carrying amount of the transferred financial asset at the date of derecognition.b. The sum of the consideration received for the transfer of the financial asset and the amount of the

derecognized portion of the cumulative change in the fair value of the transferred financial asset that is

recognized in other comprehensive income (the transferred financial asset is a financial asset at fair value

through other comprehensive income).

2) If part of a financial asset is transferred and the transferred part meets the conditions for derecognition

the carrying amount of the financial asset as a whole before the transfer is apportioned between the

derecognized part and the derecognized part (in which case the retained service asset shall be regarded as a

part of the derecognized financial asset) in accordance with their respective relative fair values at the date of

transfer and the difference between the following amounts is recognized in the profit or loss for the current

period:

a. The carrying amount of the derecognized portion at the date of derecognition.b. The sum of the consideration received for the derecognized portion and the amount corresponding to

the derecognized portion of the cumulative changes in fair value previously recognized in other

comprehensive income (involving transfers of financial assets at fair value through other comprehensive

income).and

If the transfer of a financial asset does not meet the conditions for derecognition the financial asset

continues to be recognized and the consideration received is recognized as a financial liability.

(5). Methods of determining the fair value of financial assets and liabilities

The fair value of a financial asset or a financial liability for which there is an active market is determined

using quoted prices in an active market unless there is a period of restriction on the sale of the financial

asset. The fair value of a financial asset that is subject to a sales restriction on the asset itself is determined

based on quoted prices in an active market less the amount of compensation that a market participant would

require to assume the risk of not being able to sell the financial asset in the open market within a specified

period of time. Quoted prices in active markets include quoted prices for the relevant assets or liabilities that

are readily and regularly available from exchanges dealers brokers industry groups pricing agencies or

regulatory bodies etc. and that are representative of actual and regularly occurring market transactions on

an arm's length basis.The fair value of financial assets or liabilities that are initially acquired or derived from financial assets

or liabilities assumed is determined on the basis of quoted market prices.The fair value of financial assets or financial liabilities for which no active market exists is determined

using valuation techniques. In valuing financial assets or financial liabilities the Group uses valuation

techniques that are appropriate in the circumstances and supported by sufficient available data and other

information and selects inputs that are consistent with the characteristics of the assets or liabilities that would

be considered by a market participant in a transaction for the relevant assets or liabilities giving priority to

the use of relevant observable inputs where possible. Unobservable inputs are used where relevant observable

inputs are not available or practicable to obtain.

(6). Impairment of financial instruments

The Group applies impairment accounting for financial assets carried at amortized cost financial assets

classified as at fair value through other comprehensive income lease receivables contract assets loan

commitments that are not financial liabilities at fair value through profit or loss financial liabilities that are

not financial liabilities at fair value through profit or loss and financial guarantee contracts that do not meet

the conditions for derecognition due to the transfer of financial assets or financial liabilities arising from

continued involvement in the transferred financial assets based on expected credit losses and recognizes a

loss provision.Expected credit losses are the weighted average of credit losses on financial instruments that are

weighted by the risk of default. Credit loss is the difference between all contractual cash flows receivable

and all cash flows expected to be received by the Group under the contract discounted at the original

134 / 250Annual Report 2023

effective interest rate i.e. the present value of all cash shortfalls. Financial assets purchased or originated by

the Group that are credit-impaired are discounted at the financial asset's credit-adjusted effective interest rate.For receivables contract assets and lease receivables arising from transactions governed by the Income

Standards the Group applies a simplified measurement approach and measures the allowance for losses as

an amount equal to the expected credit losses over the life of the asset.For purchased or originated financial assets that are impaired only the cumulative change in expected

credit losses over the life of the asset since initial recognition is recognized as a loss allowance at the balance

sheet date. At each balance sheet date the amount of the change in expected credit losses for the entire

duration of the asset is recognized as an impairment loss or gain in profit or loss. Even if the expected credit

losses determined at that balance sheet date are less than the amount of expected credit losses reflected in

the estimated cash flows at the time of initial recognition the favorable change in expected credit losses is

recognized as an impairment gain.For financial assets other than the above simplified measurement method and purchased or originated

financial assets that have been impaired the Group assesses at each balance sheet date whether the credit

risk of the relevant financial instruments has increased significantly since the initial recognition and

measures the allowance for losses recognizes expected credit losses and the changes in expected credit losses

in accordance with the following scenarios:

1) If the credit risk of the financial instrument has not increased significantly since initial recognition

and is in the first stage the allowance for losses is measured at an amount equal to the expected credit losses

of the financial instrument in the next 12 months and interest income is calculated on the basis of the book

balance and the effective interest rate.

2) If the credit risk of the financial instrument has increased significantly since initial recognition but

credit impairment has not yet occurred in the second stage the Group measures the allowance for losses at

an amount equal to the expected credit losses for the entire duration of the financial instrument and calculates

interest income based on the carrying amount and the effective interest rate.

3) If the financial instrument has been impaired since initial recognition in the third stage the Group

measures the allowance for credit losses at an amount equal to the expected credit losses over the life of the

financial instrument and calculates interest income at amortized cost and effective interest rate.Any increase or reversal of the allowance for credit losses on financial instruments is recognized as an

impairment loss or gain in profit or loss. The allowance for credit losses is offset against the carrying amount

of the financial asset except for financial assets classified as at fair value through other comprehensive

income. For financial assets classified as at fair value through other comprehensive income the Group

recognizes the allowance for credit losses in other comprehensive income which does not reduce the

carrying amount of the financial assets in the balance sheet.If the Group has measured the allowance for losses in a previous accounting period at an amount equal

to the expected credit losses over the entire life of the financial instrument but at the current balance sheet

date the financial instrument no longer represents a significant increase in credit risk since initial recognition

the Group measures the allowance for losses for the financial instrument at an amount equal to the expected

credit losses over the next 12 months at the current balance sheet date. The reversal of the resulting loss

provision is recognized as an impairment loss.

1) Significant increase in credit risk

The Group uses available reasonable and reliable forward-looking information to determine whether

there has been a significant increase in the credit risk of a financial instrument since initial recognition by

comparing the risk of default at the balance sheet date with the risk of default at the date of initial recognition.For financial guarantee contracts the Group applies the provisions for impairment of financial instruments

by considering the date on which the Group became a party to the irrevocable commitment as the initial

recognition date.The Group considers the following factors when assessing whether there has been a significant increase

in credit risk:

a. Whether there has been a significant change in the debtor's operating results actual or expected.b. Whether there has been a significant adverse change in the regulatory economic or technological

environment in which the debtor operates.c. Whether there has been a significant change in the value of the collateral pledged as security for the

debt or in the quality of guarantees or credit enhancements provided by third parties which is expected to

reduce the debtor's financial incentive to repay the debtor within the contractual timeframe or affect the

probability of default; and

d. Whether there has been a significant change in the debtor's expected performance and repayment

behavior

135 / 250Annual Report 2023

e. Changes in the Group's approach to credit management of financial instruments.At the balance sheet date if the Group determines that a financial instrument has only low credit risk

the Group assumes that there has been no significant increase in the credit risk of the financial instrument

since initial recognition. A financial instrument is considered to have low credit risk if the risk of default is

low the borrower's ability to meet its contractual cash flow obligations in the short term is high and the

borrower's ability to meet its contractual cash flow obligations may not necessarily be reduced by

unfavorable changes in the economic situation and business environment in the long term.

2) Financial assets that have suffered credit impairment

A financial asset is impaired when one or more events that have an adverse effect on the expected future

cash flows of the financial asset occur. Evidence that a financial asset is impaired includes observable

information such as

a. Significant financial difficulty of the issuer or debtor; or

b. A breach of contract by the debtor such as a default or delinquency in interest or principal payments;

or

c. The creditor has made concessions to the debtor that the debtor would not have made otherwise

because of economic or contractual considerations related to the debtor's financial difficulties.d. The debtor is likely to enter into bankruptcy or other financial reorganization.e. The disappearance of an active market for the financial asset as a result of financial difficulties of the

issuer or the debtor; or

f. A financial asset is purchased or acquired at a significant discount that reflects the fact that a credit

loss has been incurred.The occurrence of a credit impairment of a financial asset may be the result of a combination of events

and not necessarily the result of separately identifiable events.

3) Determination of expected credit losses

The Group assesses expected credit losses on financial instruments on an individual and portfolio basis.In assessing expected credit losses the Group takes into account reasonable and supportable information

about past events current conditions and forecasts of future economic conditions.The Group categorizes financial instruments into different portfolios based on common credit risk

characteristics. The common credit risk characteristics adopted by the Group include: ageing portfolio

construction bidding deposit receivables within the scope of consolidation etc. The individual evaluation

criteria and portfolio credit risk characteristics of related financial instruments are described in the

accounting policies of related financial instruments. The individual evaluation criteria and portfolio credit

risk characteristics of the related financial instruments are described in the accounting policies of the related

financial instruments.The Group determines the expected credit losses of related financial instruments in accordance with the

following methods.a. For financial assets credit losses represent the present value of the difference between the contractual

cash flows to be received by the Group and the cash flows expected to be received.b. For lease receivables the credit loss is the present value of the difference between the contractual

cash flows to be received by the Group and the cash flows expected to be received.c. For financial guarantee contracts the credit loss is the present value of the difference between the

amount the Group expects to pay to the holder of the contract in respect of credit losses incurred by the

holder of the contract less the amount the Group expects to collect from the holder of the contract the debtor

or any other party.d. For financial assets that are impaired at the balance sheet date but not purchased or originated the

credit loss is the difference between the book balance of the financial asset and the present value of the

estimated future cash flows discounted at the original effective interest rate.The Group's method of measuring expected credit losses on financial instruments reflects factors such

as: an unbiased probability-weighted average amount determined by evaluating a range of possible

outcomes; the time value of money; and reasonable and substantiated information about past events current

conditions and projections of future economic conditions that is available at the balance sheet date without

undue additional cost or effort.

4) Write-down of financial assets

When the Group no longer has a reasonable expectation that the contractual cash flows of a financial

asset will be recovered in whole or in part the book value of the financial asset is written down directly.Such write-downs constitute derecognition of the related financial assets.

(7). Offsetting financial assets and financial liabilities

136 / 250Annual Report 2023

Financial assets and financial liabilities are presented separately in the balance sheet and are not offset.However if the following conditions are met they are presented in the balance sheet as net amounts after

offsetting.

1) The Group has a legal right to offset the recognized amounts and the legal right is currently

enforceable; and

2) The Group intends to settle the net amount or to realize the financial asset and settle the financial

liability at the same time.

12. Bills receivable

√ Applicable □ N/A

Method of determining expected credit losses and accounting treatment of bills receivable

√ Applicable □ N/A

For bills receivable regardless of whether they contain significant financing elements or not the Group

always measures the loss provision at an amount equal to the expected credit losses over the entire duration

and the resulting increase or reversal of the loss provision is recognized as an impairment loss or gain in

profit or loss for the current period.For details of the Group's method of determining expected credit losses on bills receivable and its

accounting treatment please refer to Section V.11. (6) Impairment of financial instruments.Categories of bad debt provision according to credit risk characteristics and the basis of determination

√ Applicable □ N/A

When sufficient evidence of expected credit losses cannot be assessed at a reasonable cost at the level

of individual instruments the Group classifies bills receivable into certain portfolios based on credit risk

characteristics with reference to historical credit loss experience current conditions and judgment of future

economic conditions and calculates expected credit losses on a portfolio basis. The basis for determining

the portfolio is as follows:

Portfolio name Basis for determining portfolios Method of calculation

The risk characteristics of

Commercial acceptances commercial acceptances are Expected credit losses are

(portfolio 1) substantially the same as those of accrued by reference to accounts receivable for similar accounts receivable.contracts.The acceptors have high credit Expected credit losses are

ratings no historical defaults very measured based on historical

low risk of credit loss and strong credit loss experience

Bank acceptance portfolio ability to fulfill their obligations to current conditions and

(portfolio 2) pay contractual cash flows in the expectations of future

short term. economic conditions.Ageing method for recognizing a portfolio of credit risk characteristics based on the age of the

accounts.√ Applicable □ N/A

For commercial paper receivables the expected credit loss accrual method is based on the bad debt

policy for accounts receivable and the aging point of commercial paper receivables is retroactively adjusted

to the aging point of the corresponding accounts receivable.Judgmental criteria for individual provisioning according to individual provisioning for bad debts

√ Applicable □ N/A

If there is objective evidence that an item is impaired the Group makes a provision for bad debts and

recognizes expected credit losses for that item.

13. Accounts receivable

√ Applicable □ N/A

137 / 250Annual Report 2023

Method of determining expected credit losses and accounting treatment of accounts receivable

√ Applicable □ N/A

For details of the Group's method of determining expected credit losses on accounts receivable and

accounting treatment please refer to this Section V.11. (6) Impairment of financial instruments.Categories of portfolio and basis of determination of bad debt provision according to credit risk

profile portfolio

√ Applicable □ N/A

The Group provides for expected credit losses on an individual basis for accounts receivable with

significantly different credit risks from those of the portfolio. The Group determines credit losses separately

for receivables for which sufficient evidence of expected credit losses can be assessed at a reasonable cost

at the level of individual instruments.When sufficient evidence of expected credit losses cannot be assessed at a reasonable cost for an

individual instrument the Group divides accounts receivable into portfolios based on credit risk

characteristics by reference to historical credit loss experience current conditions and judgment of future

economic conditions and calculates expected credit losses on the basis of the portfolios. The basis for

determining the portfolios is as follows:

Risk portfolio Segmentation of portfolio by credit risk characteristics based on ageing of receivables

Portfolio of related transactions The relationship between the receivable and the counterparty is

within the scope of consolidation used to characterize the credit risk.Provisioning method for bad debt provisioning by portfolio

Risk portfolio (portfolio 1) Provision for bad debts by ageing analysis method

Portfolio of related transactions

within the scope of consolidation Unless there is evidence of impairment no provision for bad

(portfolio 2) debts is generally made.Calculation of ageing method for recognizing credit risk characteristics based on the age of the

portfolio

√ Applicable □ N/A

The Group combines accounts receivable classified as risky portfolios with similar credit risk

characteristics (aging) and estimates the percentage of bad debt provision for such accounts receivable based

on all reasonable and supportable information including forward-looking information.The following is a table comparing the aging of the accounts receivable - credit risk characteristics

portfolio with the expected credit loss rate over the entire life of the portfolio:

Ageing Expected credit loss rate of accounts receivable (%)

1-6 months (including 6 months) 3.00

7-12 months (including 12 months) 5.00

1-2 years (including 2 years) 10.00

2 to 3 years (including 3 years) 20.00

3 to 4 years (including 4 years) 50.00

4 to 5 years (including 5 years) 80.00

More than 5 years 100.00

138 / 250Annual Report 2023

Determination of bad debt provisioning according to individual items Individual item provisioning

judgment criteria

√ Applicable □ N/A

If there is objective evidence that a receivable is impaired the Group makes a separate provision for

bad debts and recognizes expected credit losses on that receivable.

14. Receivables financing

√ Applicable □ N/A

Method of determining expected credit losses and accounting treatment of receivables financing

√ Applicable □ N/A

For notes and accounts receivable with contractual cash flow characteristics that are consistent with

the underlying lending arrangements and for which the Company's business model for managing such

financial assets is to collect the contractual cash flows with the objective of both collection and sale the

Group classifies them as accounts receivable financing which are measured at fair value with changes

recognized in other comprehensive income. Interest income impairment losses and exchange differences

recognized using the effective interest rate method on receivables financing are recognized in profit or loss

while the remaining changes in fair value are recognized in other comprehensive income. Upon

derecognition the cumulative gain or loss previously recognized in other comprehensive income is

removed from other comprehensive income and recognized in profit or loss.Categories of portfolios and basis of determination of bad debt provisioning according to credit risk

characteristic portfolios

√ Applicable □ N/A

For details of the Group's method of determining expected credit losses on receivables financing and

accounting treatment please refer to this Section V.11. (6) Impairment of financial instruments.Aging calculation method for recognizing a portfolio of credit risk characteristics based on aging

√ Applicable □ N/A

For receivable financing classified as a portfolio the Group calculates the expected credit losses by

referring to the historical credit loss experience taking into account the current situation and the forecast

of the future economic situation through the default risk exposure and the expected credit loss rate for the

entire duration.Judgmental criteria for individual provisioning of bad debt according to individual items

□ Applicable √ N/A

15. Other receivables

√ Applicable □ N/A

Method of determining expected credit losses and accounting treatment of other receivables

√ Applicable □ N/A

The Group measures the provision for losses on other receivables in accordance with the following

circumstances:

* For financial assets with no significant increase in credit risk since initial recognition the Group

measures the allowance for losses based on the amount of expected credit losses in the next 12 months;

* For financial assets whose credit risk has significantly increased since initial recognition the Group

measures the allowance for losses at an amount equal to the expected credit losses over the entire life of

the financial instrument;

* For purchased or originated financial assets that are impaired the Group measures the allowance

for loss at an amount equal to the expected credit loss over the entire life of the financial instrument.Categories of bad debt provision according to the portfolio of credit risk characteristics and the

basis of determination

√ Applicable □ N/A

For other receivables the Group is unable to obtain sufficient evidence of significant increase in credit

risk at a reasonable cost at the level of individual instruments and it is feasible to assess whether there is a

significant increase in credit risk on a portfolio basis. Therefore the Group groups other receivables

according to the type of financial instruments credit risk ratings initial recognition dates and remaining

139 / 250Annual Report 2023

contractual maturities as the common risk characteristics and considers them on a portfolio basis. The Group

assesses whether there is a significant increase in credit risk.To measure expected credit losses on a portfolio basis the Group groups the expected credit loss

accrual percentage according to the corresponding ageing credit risk characteristics.Basis of portfolio determination

Risk portfolio The ageing of other receivables is used as the credit risk characteristic to classify the portfolio.Portfolio of related transactions

within the scope of The credit risk characteristics of other receivables are based on the

consolidation relationship between the receivables and the counterparties.Portfolio of risk-free receivables

such as social security The credit risk characteristics of other receivables are based on the

receivables nature of the receivables.Provisioning method for bad debt by portfolio

Risk portfolio Provision for bad debts is based on the aging analysis method.Portfolio of risk-free receivables

such as social security Unless there is evidence of impairment no provision for bad debts is

receivables generally made.Portfolio of related transactions

within the scope of Unless there is evidence of impairment no provision for bad debts is

consolidation generally made.Aging method for recognizing credit risk characteristics based on the age of the portfolio

√ Applicable □ N/A

The Group combines other receivables classified as risky portfolios with similar credit risk

characteristics (ageing) and estimates the percentage of bad debt provision for such other receivables based

on all reasonable and supportable information including forward-looking information.A table comparing the aging of the other receivables - credit risk characteristics portfolio with the

expected credit loss rate over the entire duration is shown below:

Ageing Expected credit loss rate of other receivables (%)

Within 1 year (including 1 year) 5.00

1 to 2 years (including 2 years) 10.00

2 to 3 years (including 3 years) 30.00

3 to 4 years (including 4 years) 50.00

4 to 5 years (including 5 years) 80.00

More than 5 years 100.00

Judgmental criteria for individual provisioning according to individual provisioning for bad debts

√ Applicable □ N/A

Other receivables arising from non-operating low-risk businesses are individually impaired according

to the nature of the business.For other receivables secured by mortgage the original value less the recoverable value of the collateral

is recognized as the risk exposure for credit losses.

16. Inventories

√ Applicable □ N/A

140 / 250Annual Report 2023

Categories of inventories issue valuation method inventory system amortization method of low-

value consumables and packages

√ Applicable □ N/A

The actual cost of inventories issued is measured using the individual valuation method.Recognition criteria and accrual method for provision for decline in value of inventories

√ Applicable □ N/A

Net realizable value is the estimated selling price of inventories in the ordinary course of business less

estimated costs to be incurred to completion estimated selling expenses and related taxes. The net realizable

value of inventories held for the purpose of executing sales or service contracts is calculated on the basis of

the contract price.Categories and basis for determining the provision for decline in value of inventories based on

portfolios and basis for determining the net realizable value of different categories of inventories

√ Applicable □ N/A

The net realizable value of inventories is determined on the basis of reliable evidence obtained taking

into account the purpose of holding the inventories the impact of events after the balance sheet date and

other factors.* The net realizable value of inventories held for sale such as finished goods merchandise and

materials for sale is determined as the estimated selling price of the inventories in the ordinary course of

production and operation less estimated selling expenses and related taxes. The net realizable value of

inventories held for the purpose of executing sales contracts or labor contracts is measured at the contract

price; if the quantity of inventories held exceeds the quantity ordered under the sales contract the net

realizable value of the excess quantity is measured at the normal selling price. The net realizable value of

materials for sale is measured at market price.* The net realizable value of inventories of materials requiring processing is determined in the normal

course of production and operation by the estimated selling price of finished goods produced less estimated

costs to be incurred until completion estimated selling expenses and related taxes. If the net realizable value

of finished goods produced from the materials is higher than the cost the materials are measured at cost; if

the decrease in the price of the materials indicates that the net realizable value of the finished goods is lower

than the cost the materials are measured at the net realizable value and a provision for decline in value of

inventories is made for the difference.* Provision for decline in value of inventories is generally made on the basis of individual inventory

items; for large quantities of inventories with low unit prices provision is made on the basis of categories of

inventories.* If the factors affecting the write-down of inventories have disappeared as of the balance sheet date

the amount of the write-down is restored and reversed to the extent of the provision for decline in value of

inventories and the amount of the reversal is recognized in profit or loss.Calculation method and basis for determining the net realizable value of each age group of inventories

for which the net realizable value of inventories is recognized based on the age of the inventories

□ Applicable √ N/A

17. Contract assets

√ Applicable □ N/A

Methods and criteria for recognizing contract assets

√ Applicable □ N/A

A contract asset is a right to receive consideration for merchandise that the Group has transferred to a

client and which depends on factors other than the passage of time. If the Group sells two clearly

distinguishable commodities to a client and has the right to receive payment because one of the commodities

has been delivered but the receipt of such payment is also dependent on the delivery of the other commodity

the Group recognizes the right to receive payment as a contract asset.Method of determining expected credit losses on contract assets and accounting treatment

√ Applicable □ N/A

The methods of determining expected credit losses on contract assets and the accounting treatment are

described in detail in this Section V.11. (6) Impairment of financial instruments.

141 / 250Annual Report 2023

Categories of portfolios and basis of determination of bad debt provision according to portfolios of

credit risk characteristics

√ Applicable □ N/A

The Group classifies contract assets into portfolios based on credit risk characteristics by reference to

historical credit loss experience current conditions and judgment of future economic conditions and

calculates expected credit losses on the basis of the portfolios. The basis for determining the portfolios is as

follows:

Portfolio name Portfolio name basis for determining portfolios Provision method

The risk characteristics of outstanding Provision for expected

Outstanding guarantee warranties are substantially the same as credit losses is made by

deposits (portfolio 1) those of accounts receivable for similar reference to accounts

contracts. receivable.Completed unsettled assets resulting

from construction contracts do not result Expected credit losses are

in true accounts receivable; therefore the measured by reference to

Completed unsettled assets expected credit loss rate for completed historical credit loss

arising from construction unsettled assets is generally no higher experience taking into

contracts (portfolio 2) than the expected credit loss rate for account current conditions

accounts receivable within one year and and expectations of future

0.5% is used as the expected credit loss economic conditions.

rate for the contracted assets

Aging calculation method for recognizing credit risk characteristics based on the age of the

accounts.√ Applicable □ N/A

For details please refer to Section V.13. Accounts receivable

Determination of bad debt provisioning according to individual items Individual provisioning

judgment criteria

□ Applicable √ N/A

18. Non-current assets held for sale or disposal groups

□ Applicable √ N/A

Recognition criteria and accounting treatment for non-current assets or disposal groups classified as

held for sale

□ Applicable √ N/A

Recognition criteria and presentation of discontinued operations

√ Applicable □ N/A

Discontinued operation means a separately distinguishable component of the Group that has been

disposed of or classified as held for sale if one of the following conditions is met: (1) the component

represents a separate principal business or a separate principal operating region; (2) the component is part

of an associated plan to dispose of a separate principal business or a separate principal operating region; and

(3) the component is a subsidiary acquired exclusively for resale.

In the income statement the Group has added the items "Net profit from continuing operations" and"Net profit from discontinued operations" to the item "Net profit” reflecting the profit or loss from

continuing operations and the profit or loss from discontinued operations respectively on a net after-tax

basis. Gains and losses related to discontinued operations shall be reported as discontinued operations and

the discontinued operations gains and losses shall be reported for the entire reporting period not only for

the reporting period after it is recognized as discontinued operations.

142 / 250Annual Report 2023

19. Long-term equity investments

√ Applicable □ N/A

The Group's long-term equity investments are mainly investments in subsidiaries investments in

associates and investments in joint ventures.The Group judges joint control on the basis that all participants or a portfolio of participants collectively

control the arrangement and that the policies governing the activities of the arrangement must be agreed

upon by those participants who collectively control the arrangement.The Group is generally considered to have significant influence over an investee when it owns directly

or indirectly through subsidiaries more than 20% but less than 50% of the investee's voting rights. If the

Group owns less than 20% of the voting power of an investee it is necessary to consider the facts and

circumstances such as having representatives on the board of directors or similar authority of the investee

or participating in the process of formulating the financial and operating policies of the investee or engaging

in significant transactions with the investee or dispatching management personnel to the investee or

providing key technological information to the investee etc. and determine that the Group has significant

influence on the investee.The investee is a subsidiary of the Group if the investor exercises control over the investee. Long-term

equity investments acquired through a business combination under the same control are initially recognized

at cost based on the share of the carrying amount of the net assets of the party being consolidated in the

consolidated statements of the party ultimately in control at the date of consolidation. If the carrying amount

of the net assets of the party being consolidated is negative at the date of consolidation the cost of long-term

equity investment is determined as zero.Long-term equity investments acquired through a business combination not under common control are

recognized at the cost of the combination.Except for the long-term equity investments acquired through business combination mentioned above

the cost of long-term equity investments acquired by cash payment is based on the actual purchase price

paid; the cost of long-term equity investments acquired by issuance of equity securities is based on the fair

value of the equity securities issued; and the cost of long-term equity investments invested by investors is

based on the value agreed in the investment contract or agreement.The Group's investments in subsidiaries are accounted for using the cost method and investments in

joint ventures and associates are accounted for using the equity method.The carrying amount of long-term equity investments accounted for under the cost method is increased

by the fair value of additional investment and related transaction costs incurred when additional investment

is made. Cash dividends or profits declared by the investee are recognized as investment income at the

amount to which they are attributable.The carrying amount of long-term equity investments accounted for under the equity method shall be

increased or decreased accordingly to the changes in the ownership interest of the investee. In recognizing

the share of net profit or loss of an investee the fair value of the identifiable assets of the investee at the time

of investment acquisition is used as the basis for recognizing the net profit of the investee in accordance with

the Group's accounting policies and accounting periods after offsetting the portion of gains or losses on

internal transactions with associates and joint ventures that are attributable to the investor based on the

Group's proportionate interest in the investor's net assets and liabilities.On disposal of long-term equity investments the difference between the carrying amount and the actual

acquisition price is recognized as investment income. For long-term equity investments accounted for under

the equity method other comprehensive income accounted for under the equity method shall be accounted

for on the same basis as the direct disposal of the related assets or liabilities by the investee upon termination

of the equity method and any changes in the equity of the investee due to changes in the equity of the

investee other than net profit or loss other comprehensive income and profit distribution shall be fully

transferred to current investment income upon termination of the equity method. The entire amount shall be

transferred to investment income when the equity method of accounting is discontinued.If an investee loses joint control or significant influence over the investee due to the disposal of a portion

of the equity investment the remaining equity interest after disposal shall be accounted for in accordance

with the relevant provisions of the Guidelines on the Recognition and Measurement of Financial Instruments

and the difference between the fair value of the remaining equity interest and its carrying amount at the date

of the loss of joint control or significant influence shall be recognized as profit or loss for the current period.Other comprehensive income recognized as a result of the adoption of the equity method shall be accounted

for on the same basis as the direct disposal of the related assets or liabilities by the investee and carried

143 / 250Annual Report 2023

forward on a pro rata basis upon the termination of the adoption of the equity method and all other changes

in equity recognized as a result of changes in the investee's ownership interest other than net profit or loss

other comprehensive income and distribution of profits shall be transferred to investment income on a pro

rata basis for the current period.If the investee loses control of a portion of the long-term equity investment due to disposal and the

remaining equity interest after disposal is capable of exercising joint control or significant influence over

the investee it shall be accounted for under the equity method instead and the difference between the

carrying amount of the equity interest disposed of and the disposal consideration shall be recognized in

investment income and the remaining equity interest shall be adjusted as if it were equity-method accounted

for from the time of acquisition; if the remaining equity interest after disposal is not capable of exercising

joint control or significant influence over the investee it shall be accounted for under the equity method

instead. If the remaining equity interest after disposal cannot exercise joint control or significant influence

over the investee the accounting shall be conducted in accordance with the relevant provisions of the

Guidelines on Recognition and Measurement of Financial Instruments and the difference between the

carrying amount of the equity interest disposed of and the consideration for disposal shall be recognized as

investment income while the difference between the fair value of the remaining equity interest at the date

of the loss of control and its carrying amount shall be recognized as profit or loss for the current period.

20. Investment properties

(1). If the cost measurement model is used:

Depreciation or amortization method

The Group classifies real estate held to earn rentals or for capital appreciation or both as investment

property. The Group uses the cost model to measure investment properties. The Group depreciates the cost

of investment properties net of estimated net salvage value and accumulated impairment allowances over

their useful lives using the average annualized method. For details of the impairment test method and the

method of making provision for impairment please refer to Section V.11. (6) Impairment of financial

instruments. The useful lives residual values and annual depreciation rates for each type of investment

properties were as follows.No. Category Depreciable life Estimated

Annual

(years) salvage value (%) depreciation rate (%)

1 House buildings 20 5-10 4.5-4.75

2 Land use rights 36.75 2.72

21 Fixed assets

(1). Recognition conditions

√ Applicable □ N/A

The Group's fixed assets are tangible assets with the following characteristics i.e. held for use in the

production of goods provision of services leasing or business management and with a useful life of more

than one year.Fixed assets are recognized when it is probable that the economic benefits associated with them will

flow to the Group and their costs can be measured reliably. The Group's fixed assets include buildings

transportation equipment office and electronic equipment.

(2). Depreciation method

√ Applicable □ N/A

Category Depreciation method Depreciable life Annual (years) Residual value rate depreciation rate

Buildings Average life method 10-20 5%-10% 4.50%-9.50%

Transportation

equipment Average life method 4 5% 23.75%

144 / 250Annual Report 2023

Office and

electronic Average age method 3 5% 31.67%

equipment

The Group depreciates all fixed assets except for fully depreciated fixed assets that are still in use and

land that is separately accounted for.

22. Construction in progress

√ Applicable □ N/A

(1) Construction in progress is categorized and accounted for by standing items.

(2) Criteria and point in time for carrying forward construction in progress to fixed assets

Construction in progress is recognized as a fixed asset on the basis of all expenditures incurred before

the asset is constructed and brought to its intended state of use. This includes construction costs the original

cost of machinery and equipment other necessary expenses incurred to bring the construction in progress to

its intended state of use as well as borrowing costs incurred before the asset reaches its intended state of use

for borrowing specifically for the project and borrowing costs incurred for general borrowing used for the

project. The Group transfers construction in progress to property plant and equipment when the project has

been installed or constructed to its intended state of use. Fixed assets that have reached the intended state of

use but for which final accounts have not yet been finalized are transferred to fixed assets from the date they

reach the intended state of use at their estimated value based on the project budget construction cost or

actual cost of the project and depreciation is provided for in accordance with the Group's policy on

depreciation of fixed assets and after final accounts have been finalized the original provisional value is

adjusted according to the actual cost but the amount of depreciation provided for is not adjusted. The original

provisional value will be adjusted according to the actual cost after the completion of the final accounts

without adjusting the depreciation originally provided.

23. Borrowing costs

√ Applicable □ N/A

(1) Recognition principles and capitalization period for capitalization of borrowing costs

Borrowing costs incurred by the Group for the acquisition construction or production of assets directly

attributable to the assets eligible for capitalization shall be capitalized to the cost of the relevant assets when

the following conditions are simultaneously met:

* Expenditures on assets have been incurred;

* Borrowing costs have been incurred;

* The construction or production activities necessary to bring the asset to its intended state of use have

begun.Other borrowing interests discounts or premiums and exchange differences are recognized in profit or

loss in the period in which they are incurred.The capitalization of borrowing costs is suspended when there is an abnormal interruption in the

construction or production of assets eligible for capitalization for more than three consecutive months.The capitalization of borrowing costs ceases when the assets eligible for capitalization have reached

their intended use or saleable condition; any subsequent borrowing costs are recognized as expenses in the

period in which they are incurred.

(2) Calculation of the capitalization rate and amount of capitalized borrowing costs

If a special loan is borrowed for the purpose of purchasing constructing or producing an asset eligible

for capitalization the capitalized amount of interest expense on the special loan shall be determined by the

actual interest expense incurred on the special loan during the period less the interest income from depositing

the unused borrowed funds in a bank or the investment income from making a temporary investment.If general borrowings are used for the acquisition construction or production of assets eligible for

capitalization the amount of interest to be capitalized on general borrowings shall be calculated by

multiplying the weighted average amount of cumulative asset expenditures in excess of the portion of

special-purpose borrowings by the capitalization rate of the general borrowings used to calculate the amount

of interest to be capitalized on general borrowings. The capitalization rate is based on the weighted average

interest rate of general borrowings.

145 / 250Annual Report 2023

24. Biological assets

□ Applicable √ N/A

25. Oil and gas assets

□ Applicable √ N/A

26. Intangible assets

(1). Useful life basis for determining useful life estimation amortization method or review

procedure

√ Applicable □ N/A

Intangible assets including land use rights and software are measured at cost and amortized equally

over their estimated useful lives.

(1) Land use rights

Land use rights are amortized equally over their useful lives of 50 years. If it is difficult to allocate the

purchase price of land and buildings between land use rights and buildings all of them are recognized as

fixed assets.

(2) Computer software

Acquired computer software is capitalized on the basis of the costs incurred to acquire and put into use

the specific software. The related costs are amortized on a straight-line basis over the estimated useful lives

of 2 to 10 years. Costs related to the maintenance of computer software programs are recognized as expenses

as they are incurred.

(3) Periodic review of useful lives and amortization methods

The estimated useful lives and amortization methods of intangible assets with finite useful lives are

reviewed and appropriately adjusted at the end of each year. The Group considers intangible assets for which

the duration of future economic benefits is not foreseeable as intangible assets with indefinite useful lives

and does not amortize such intangible assets. As at the end of the reporting period the Group had no

intangible assets with indefinite useful lives. Expenditures on the Group's internal research and development

projects are recognized in profit or loss as incurred.

(4) Impairment of intangible assets

When the recoverable amount of an intangible asset is less than its carrying amount the carrying amount

is written down to the recoverable amount.

(2). Scope of attribution of R&D expenditures and related accounting treatment

□ Applicable √ N/A

27. Impairment of long-lived assets

√ Applicable □ N/A

The Group examines items such as long-term equity investments property and equipment construction

in progress right-of-use assets and intangible assets with finite useful lives at each balance sheet date and

performs impairment tests when there are indications of impairment. Goodwill and intangible assets with

indefinite useful lives are tested for impairment at the end of each year regardless of whether there is any

indication of impairment.The recoverable amount is determined as the higher of the asset's fair value less costs of disposal and

the present value of the asset's estimated future cash flows. The Group estimates the recoverable amount of

an asset on an individual basis; if it is difficult to estimate the recoverable amount of an individual asset the

recoverable amount of an asset group is determined on the basis of the asset group to which the asset belongs.An asset group is identified on the basis of whether the major cash inflows from the asset group are

independent of those from other assets or groups of assets.When the recoverable amount of an asset or an asset group is less than its carrying amount the Group

writes down its carrying amount to its recoverable amount and the amount of the write-down is recognized

in profit or loss and a corresponding provision for asset impairment is made.For the purpose of impairment testing of goodwill the carrying amount of goodwill arising from a

business combination is allocated to the relevant asset group on a reasonable basis from the date of purchase;

if it is difficult to be allocated to the relevant asset group the carrying amount is allocated to a portfolio of

146 / 250Annual Report 2023

the relevant asset groups. The relevant asset group or portfolio of asset groups is one that can benefit from

the synergies of the business combination and is not larger than the Group's reportable segments.When testing for impairment of the relevant asset group or portfolio of asset groups containing goodwill

if there is any indication of impairment for the asset group or portfolio of asset groups related to goodwill

the asset group or portfolio of asset groups that does not contain goodwill is first tested for impairment the

recoverable amount is calculated and the corresponding impairment loss is recognized. If the recoverable

amount is lower than the carrying amount the amount of the impairment loss shall first be offset against the

carrying amount of the goodwill allocated to the asset group or portfolio of assets and then against the

carrying amount of the other assets proportionally according to the proportion of the carrying amount of the

other assets excluded from the asset group or portfolio of assets.If the carrying amount of an asset exceeds its recoverable amount after an impairment test the difference

is recognized as an impairment loss which is not reversed in subsequent periods.

28. Long-term amortized expenses

√ Applicable □ N/A

Long-term amortized expenses are expenses incurred by the Group but shall be borne by the Group in

the current and future periods with an amortization period of more than one year.Long-term amortization

expenses These expenses are amortized equally over the period of benefit. If a long-term amortized expense

item does not benefit a future accounting period the amortized value of the item that has not been amortized

is transferred to profit or loss for the current period.

29. Contract liabilities

√ Applicable □ N/A

Contract liabilities reflect the Group's obligations to transfer goods to clients for consideration received

or receivable from clients. If the client has paid the contractual consideration or the Group has obtained the

unconditional right to receive the contractual consideration before the Group transfers the goods to the client

contract liabilities are recognized for the amount received or receivable at the earlier of the actual payment

made by the client and the amount due.

30. Employee remuneration

(1). Accounting treatment of short-term remuneration

√ Applicable □ N/A

The Group's employee remuneration includes short-term remuneration post-employment benefits and

termination benefits.Short-term remuneration mainly includes employees' salaries welfare fees and housing fund. Short-

term remuneration actually incurred during the accounting period in which the employees render services is

recognized as a liability and charged to current profit or loss or the cost of the relevant assets according to

the beneficiary.

(2). Accounting treatment of post-employment benefits

√ Applicable □ N/A

Post-employment benefits mainly include basic pension insurance premiums unemployment insurance

etc. which are categorized as defined contribution plans in accordance with the risks and obligations

assumed by the Company. Contributions to a defined contribution plan are recognized as a liability at the

balance sheet date on the basis of contributions made to a separate entity in exchange for services rendered

by employees during the accounting period and are recognized in profit or loss or at the cost of the related

assets depending on the beneficiary.

(3). Accounting treatment of termination benefits

□ Applicable √ N/A

(4). Accounting treatment of other long-term employee benefits

□ Applicable √ N/A

147 / 250Annual Report 2023

31. Projected liabilities

√ Applicable □ N/A

The Group recognizes a projected liability when the obligation relating to the contingency is a present

obligation incurred by the Group it is probable that the performance of the obligation will result in an outflow

of economic benefits to the Group and the amount can be measured reliably. A projected liability is initially

measured at the best estimate of the expenditure required to settle the present obligation. Where the effect of

the time value of money is material the projected liability is determined on the basis of the discounted

amount of the expected future cash flows. In determining the best estimate the Group considers a portfolio

of factors such as the risks and uncertainties associated with the contingency and the time value of money.Where there is a continuous range of required expenditures and the likelihood of each outcome within that

range is equal the best estimate is determined at the midpoint of the range; in other cases the best estimate

is treated as follows:

- Where the contingency relates to a single item it is determined on the basis of the most probable

amount to be incurred.- Where a contingency relates to more than one item it is determined on the basis of various possible

outcomes and related probabilities.The Group reviews the carrying amount of the estimated liability at the balance sheet date and adjusts

the carrying amount to the current best estimate.

32. Share-based payment

√ Applicable □ N/A

(1) Types of share-based payment and accounting treatment

Share-based payment is a transaction in which a company grants an equity instrument or assumes a

liability determined on the basis of an equity instrument in order to obtain services from employees. Share-

based payment is categorized into equity-settled share-based payment and cash-settled share-based payment.

1) Equity-settled share-based payment

Stock option plans are equity-settled share-based payments in exchange for services rendered by

employees and are measured at the fair value of the equity instruments granted to employees at the grant

date. Options may be exercised only upon completion of services or fulfillment of specified performance

conditions during the waiting period. During the waiting period based on the best estimate of the number of

equity instruments that can be exercised the services acquired during the period are recognized in the related

costs or expenses at the fair value of the equity instruments on the grant date and the capital surplus is

increased accordingly.

2) Cash-settled share-based payment

The stock appreciation rights plan is a cash-settled share-based payment which is measured at the fair

value of the liability assumed by the Company based on the number of shares of the Company. The cash-

settled share-based payment is subject to the completion of services or the fulfillment of performance

conditions during the waiting period. At each balance sheet date during the waiting period based on the best

estimate of the feasibility of the rights the services acquired during the period are recognized as a cost or

expense at the amount of the fair value of the liabilities assumed by the Company and the liabilities are

increased accordingly. The fair value of the liability is remeasured at each balance sheet date until the

liability is settled and at the date of settlement with the change recognized in profit or loss.

(2) Method of determining the fair value of equity instruments

The fair value of shares granted to employees is measured at the market price of the Company's shares

adjusted to take into account the terms and conditions under which the shares were granted (excluding the

conditions for exercising the rights other than market conditions).For stock options granted to employees the fair value of the options granted is estimated using an option

pricing model.

(3) Basis for recognizing the best estimate of feasible equity instruments

At each balance sheet date during the waiting period the number of equity instruments expected to

become exercisable is revised by making a best estimate based on the latest available subsequent information

such as changes in the number of employees with exercisable rights.

(4) Handling of modification and termination of the share-based payment plan

148 / 250Annual Report 2023

If the modification of a share-based payment plan increases the fair value of the equity instruments

granted the increase in services received shall be recognized accordingly to the increase in the fair value of

the equity instruments.If a modification of a share-based payment plan increases the number of equity instruments granted

the increase in the fair value of the equity instruments shall be recognized as an increase in services received

accordingly.If the conditions for exercising rights are modified in a way that is favorable to the employee such as

shortening the waiting period or changing or eliminating performance conditions (instead of market

conditions) the company takes the modified conditions into account when dealing with the conditions for

exercising rights.If the terms and conditions are modified in a manner that reduces the total fair value of the share-based

payment or is otherwise unfavorable to the employee the services received continue to be accounted for as

if the change had never occurred unless some or all of the equity instruments granted are canceled.If the granted equity instruments are canceled during the waiting period the canceled equity instruments

are treated as accelerated exercise and the remaining amount to be recognized during the waiting period is

immediately recognized in profit or loss and capital surplus is recognized. If the employees or other parties

can choose to meet the non-optional conditions but fail to do so within the waiting period the cancellation

is treated as a cancellation of the granted equity instruments.

33. Preferred stock perpetual bonds and other financial instruments

□ Applicable √ N/A

34. Revenues

(1). Disclosure of accounting policies adopted for revenue recognition and measurement by type of

business

√ Applicable □ N/A

The Ministry of Finance ("MOF") issued ASBE No. 14 - Revenue (Revised) ("New Revenue Standard")

in 2017. The New Revenue Standard replaces "ASBE No. 14 - Revenue" and "ASBE No. 15 - Construction

Contracts" ("Previous Revenue Standard") issued in 2006. From January 1 2020 the Group has

implemented the new revenue standards. Revenue is the total inflow of economic benefits arising from the

Group's ordinary activities that results in an increase in shareholders' equity and does not relate to the

contribution of capital by shareholders.The Group recognizes revenue when it has fulfilled its performance obligations under a contract i.e.when the client obtains control of the related goods or services.If a contract contains two or more performance obligations the Group allocates the transaction price to

each individual performance obligation on the basis of the relative proportion of the individual selling price

of the goods or services promised under each individual performance obligation at the inception date of the

contract and measures revenue on the basis of the transaction price allocated to each individual performance

obligation. For contracts with quality assurance clauses the Group analyzes the nature of the warranty

provided and treats the warranty as a separate performance obligation if the warranty provides a separate

service from guaranteeing to the client that the goods sold meet the established standards. Otherwise the

Group accounts for them in accordance with the provisions of "ASBE No. 13 - Contingencies".The transaction price is the amount of consideration that the Group expects to be entitled to receive for

the transfer of goods or services to the client excluding amounts received on behalf of third parties. The

Group recognizes a transaction price that does not exceed the amount by which it is more likely than not that

a material reversal of the cumulative revenue recognized will not occur when the related uncertainty is

removed. Amounts expected to be returned to clients are recognized as a liability for returns and are not

included in the transaction price.The Group has a performance obligation at a point in time when one of the following conditions is met;

otherwise the Group has a performance obligation at a point in time:

- The client acquires and consumes the economic benefits arising from the Group's performance at the

same time as the Group's performance;

- The client is able to control the goods under construction in the course of the Group's performance;

149 / 250Annual Report 2023

- The goods produced in the course of the Group's performance have a non-substitutable use and the

Group is entitled to receive payment for the cumulative portion of performance completed to date throughout

the term of the contract.The Group recognizes revenue on the basis of the progress of performance over a period of time for

performance obligations that are to be fulfilled within that period. When the progress of performance is not

reasonably determinable the Group recognizes revenue on the basis of the amount of costs incurred until

the progress of performance is reasonably determinable provided that the costs incurred by the Group are

expected to be reimbursed.For performance obligations fulfilled at a certain point in time the Group recognizes revenue at the

point in time when the client obtains control of the related goods or services. In determining whether a client

has obtained control of goods or services the Group considers the following indications:

- The Group has a present right to receive payment for the good or service;

- The Group has physically transferred the good to the client;

- The Group has transferred legal title or the principal risks and rewards of ownership of the good to the

client;

- The client has accepted the goods or services etc.The Group accounts for changes in the scope or price of a contract that have been approved by the

parties to the contract separately under the following circumstances:

- If a contract change adds clearly distinguishable goods and contract prices and the new contract price

reflects the separate selling price of the new goods the changed part of the contract is accounted for as a

separate contract;

- If a contract change does not fall into the above category and if the goods transferred or services

provided are clearly distinguishable from those not transferred or provided at the date of the contract change

the original contract is deemed to be terminated and the unperformed portion of the original contract and

the changed portion of the contract are combined and accounted for as part of a new contract;

- If a contract change does not fall under the above circumstances i.e. if there is no clear distinction

between goods transferred or services provided and goods not transferred or services not provided at the date

of the contract change the changed portion of the contract is accounted for as an integral part of the original

contract and the resulting impact on the recognized revenue is adjusted to current revenue at the date of the

contract change.The right to receive consideration for goods or services that the Group has transferred to a client (and

which is dependent on factors other than the passage of time) is recognized as a contract asset which is

impaired on the basis of expected credit losses. The Group's unconditional right to receive consideration

from clients which is dependent only on the passage of time is presented as receivables. The Group's

obligations to transfer goods or services to clients for which the Group has received or shall receive

consideration from the clients are presented as contractual liabilities.

1) Revenue from sales of goods

Revenue is recognized when the Group transfers control of goods to the client upon delivery to the

purchaser and obtains a signed receipt or when the goods are shipped on board a vessel.

2) Revenue from construction

The client controls the merchandise during the construction of the project. Under this type of contract

the relevant goods are constructed in accordance with the client's specifications and if the client terminates

the contract the Group is entitled to receive an amount that compensates it for the costs incurred and a

reasonable profit for the portion of the performance that has been performed to date. Accordingly the Group

recognizes revenues and costs associated with the construction of the works over time. The Group determines

the progress of performance based on the proportion of the cumulative actual contract costs incurred to the

estimated total contract costs and recognizes revenue in accordance with the progress of performance. If

revenue is recognized but not yet billed the Group recognizes it as a contract asset.

(2). The adoption of different operating models for the same type of business involves different

revenue recognition and measurement methods

□ Applicable √ N/A

35. Contract costs

□ Applicable √ N/A

150 / 250Annual Report 2023

36. Government subsidies

√ Applicable □ N/A

(1) Recognition of government grants

Government grants are recognized only when the following conditions are simultaneously met:

1) The Group is able to fulfill the conditions attached to the government grants;

2) The Group is able to receive government grants.

(2) Measurement of government grants

If government grants are monetary assets they are measured at the amount received or receivable. If

the government grants are non-monetary assets they are measured at fair value; if the fair value cannot be

reliably obtained they are measured at a nominal amount of RMB 1.

(3) Accounting treatment of government grants

1) Asset-related government grants

Government grants obtained by the Company for the purpose of purchasing constructing or otherwise

forming long-term assets are classified as asset-related government grants. Asset-related government grants

are recognized as deferred income and recognized in profit or loss in a reasonable and systematic manner

over the useful lives of the related assets. Government grants that are measured at nominal amounts are

recognized directly in profit or loss. If an asset is sold transferred retired or destroyed before the end of its

useful life the unallocated balance of the deferred income is transferred to profit or loss in the period in

which the asset is disposed of.

2) Government grants related to income

Government grants other than those related to assets are classified as revenue-related government grants.Government grants related to income are accounted for as follows:

Government grants used to compensate the Group for costs or losses incurred in future periods are

recognized as deferred income and recognized in profit or loss in the period in which the costs or losses are

recognized;

For the purpose of compensating the Group for the related costs or losses already incurred they are

recognized directly in profit or loss for the current period.Government grants that contain both asset-related and revenue-related components are accounted for

separately; if it is difficult to distinguish between the two they are categorized as revenue-related

government grants as a whole.Government grants related to the Group's daily activities are recognized in other income in accordance

with the substance of the economic operations. Government grants that are not related to the Group's daily

activities are recognized as non-operating revenue and expenses.

3) Policy-based preferential loan subsidies

If the finance disburses the subsidized interest rate funds to a lending bank and the lending bank

provides loans to the Group at a preferential interest rate the actual amount of the loan received shall be

regarded as the recorded value of the loan and the related borrowing costs shall be calculated on the basis

of the principal amount of the loan and the preferential interest rate of the policy.When the subsidized interest rate funds are directly allocated to the Group by the financial authorities

the Group will offset the corresponding subsidized interest rate against the relevant borrowing costs.

4) Return of government grants

When recognized government grants are to be returned the carrying amount of the assets shall be

adjusted if the carrying amount of the assets is reduced upon initial recognition; if there is a balance of

deferred income the balance of deferred income shall be reduced and the excess shall be recognized in

profit or loss for the current period; otherwise the balance of deferred income shall be recognized in profit

or loss for the current period directly.

37. Deferred tax assets/deferred tax liabilities

√ Applicable □ N/A

Deferred tax assets and deferred tax liabilities are recognized for differences between the tax bases of

assets and liabilities and their carrying amounts (temporary differences). At the balance sheet date deferred

151 / 250Annual Report 2023

tax assets and liabilities are measured at the tax rates that are expected to apply in the periods when the assets

are realized or the liabilities are settled.

(1) Basis for recognizing deferred tax assets

Deferred tax assets arising from deductible temporary differences are recognized to the extent that it is

probable that taxable income will be available against which the deductible temporary differences can be

utilized and deductible losses and tax credits can be carried forward to future years. However deferred tax

assets arising from the initial recognition of assets or liabilities are not recognized if: 1) the transaction is

not a business combination; and 2) the transaction affects neither the accounting profit nor taxable income

or deductible losses at the time of the transaction.Deferred tax assets are recognized for deductible temporary differences associated with investments in

associates if the following conditions are met: it is probable that the temporary differences will reverse in

the foreseeable future and it is probable that taxable income will be available against which the deductible

temporary differences can be utilized in the future.

(2) Basis for recognizing deferred tax liabilities

The Company recognizes deferred tax liabilities for taxable temporary differences between current and

prior periods. However it does not include:

1) Temporary differences arising from the initial recognition of goodwill;

2) Temporary differences arising from transactions or events that are not part of a business combination

and that at the time of their occurrence affect neither accounting profit nor taxable income (or deductible

losses);

3) For taxable temporary differences related to investments in subsidiaries and associates the timing of

the reversal of the temporary differences can be controlled and it is probable that the temporary differences

will not be reversed in the foreseeable future.

(3) Deferred tax assets and deferred tax liabilities are stated at the net amount after offsetting when the

following conditions are simultaneously met

1) The enterprise has the legal right to settle current income tax assets and current income tax liabilities

on a net basis;

2) Deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority

on the same taxable entity or on different taxable entities but in each future period in which deferred tax

assets and deferred tax liabilities of significance are reversed the taxable entities involved intend to settle

the current income tax assets and current income tax liabilities on a net basis or to realize the assets at the

same time The taxable entity intends to settle current income tax assets and current income tax liabilities on

a net basis or acquire assets and settle liabilities simultaneously.

38. Leases

√ Applicable □ N/A

At the inception date of a contract the Group assesses whether the contract is a lease or contains a lease.A contract is a lease or contains a lease if one of the parties to the contract transfers the right to control the

use of one or more identified assets for a period of time in exchange for consideration.

(1) Separation of Lease Contracts

When a contract contains several individual leases the Group splits the contract and accounts for each

individual lease separately. When a contract contains both leases and non-leases the Group splits the leases

and non-leases and the leases are accounted for in accordance with the leasing standards while the non-

leases are accounted for in accordance with other applicable accounting standards.

(2) Consolidation of lease contracts

Two or more contracts containing leases entered into by the Group with the same counterparty or its

affiliates at the same or similar times shall be consolidated into one contract for accounting purposes when

one of the following conditions is met.a. The two or more contracts are entered into for an overall business purpose and constitute a package

transaction the overall business purpose of which cannot be understood unless considered as a whole.b. The amount of consideration for one of the two or more contracts is dependent on the pricing or

performance of the other contracts.c. The right to use the asset granted by the two or more contracts together constitute a single lease.

152 / 250Annual Report 2023

Basis of judgment and accounting treatment for simplified treatment of short-term leases and leases

of low-value assets as a lessee

√ Applicable □ N/A

Short-term leases are leases that do not include an option to purchase and have a lease term of less than

12 months. Low-value asset leases are leases with a lower value when the individual leased asset is a brand

new asset.The Group does not recognize right-of-use assets and lease liabilities for the following short-term leases

and low-value asset leases and the related lease payments are charged to the cost of the related assets or to

current profit or loss on a straight-line basis over the lease term. The Group recognizes right-of-use assets

and lease liabilities for leases other than short-term leases and leases of low-value assets.Lease classification criteria and accounting treatment as lessor

√ Applicable □ N/A

The Company classifies leases as finance leases and operating leases at the inception date of the lease.A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of the

leased asset which may or may not ultimately be transferred. Operating leases refer to leases other than

finance leases.During the reporting period the Company's leases were all operating leases and lease payments under

operating leases were recognized as rental income using the straight-line method or other systematic and

reasonable methods in each period of the lease term: initial direct costs incurred in connection with the

operating leases were capitalized and apportioned over the lease term on the same basis as the rental income

and were charged to current profit or loss; and variable lease payments relating to operating leases that were

not included in the lease payments were charged to current profit or loss when they were actually incurred.Variable lease payments relating to operating leases that are not recognized as lease receipts are recognized

in profit or loss when they are actually incurred.

39. Other significant accounting policies and accounting estimates

□ Applicable √ N/A

40. Changes in significant accounting policies and accounting estimates

(1). Changes in significant accounting policies

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Contents of and reasons for the Name of statement items

changes in accounting policies materially affected Amount of impact

On November 30 2022 the

Ministry of Finance issued ASBE Deferred tax assets 1135468.71

Interpretation No. 16 (C.K.[2022]

31 hereinafter referred to as

"Interpretation No. 16") Deferred tax liabilities 1316653.59

"Accounting for Deferred Taxes

on Assets and Liabilities Arising

from Individual Transactions for Undistributed profits -177717.08

Which the Initial Recognition

Exemption Does Not Apply"

which will take effect on January

1 2023 and enterprises are Minority interests -3467.80

allowed to implement this

interpretation in advance of the

year of issue;

Other Notes

None

153 / 250Annual Report 2023

(2). Changes in significant accounting estimates

□ Applicable √ N/A

(3). Adjustments to the financial statements as of the beginning of the year of first-time

implementation of new accounting standards or interpretations of accounting standards for the first-

time implementation of new accounting standards or interpretations of accounting standards from

2023 onwards

√ Applicable □ N/A

Explanation of reasons for adjusting the financial statements as of the beginning of the year of initial

implementation

From January 1 2023 the Company will implement the provisions of "ASBE Interpretation No. 16"

issued by the Ministry of Finance "Accounting for Deferred Taxes on Assets and Liabilities Arising from

Individual Transactions for Which the Initial Recognition Exemption Does Not Apply". For lease liabilities

and right-of-use assets recognized at the beginning of the earliest period for the presentation of financial

statements in which this Interpretation is applied for the first time as well as projected liabilities related to

abandonment obligations and the corresponding related assets which give rise to taxable temporary

differences and deductible temporary differences the enterprise shall adjust the cumulative effect to opening

retained earnings and other relevant financial statement items in the earliest period for which the financial

statements are presented in accordance with this Interpretation and "ASBE 18 - Income Taxes".Consolidated Balance Sheet

Unit: Yuan Currency: RMB

Item December 31 2022 January 1 2023 Adjustments

Current assets

Monetary funds 550235202.99 550235202.99

Settlement Provision

Counterparty funds

Financial assets held for trading 122119888.89 122119888.89

Derivative financial assets

Bills receivable 20790441.73 20790441.73

Accounts receivable 484443368.28 484443368.28

Receivables financing 729937.36 729937.36

Prepayments 50995260.16 50995260.16

Premiums receivable

Reinsurance receivables

Reserve for reinsurance

contracts receivable

Other receivables 13057575.31 13057575.31

Of which: Interest receivable

Dividends receivable

Financial assets purchased for

resale

Inventories 66824.45 66824.45

Contract assets 389293108.13 389293108.13

Assets held for sale

Non-current assets due within

one year

Other current assets 58265105.32 58265105.32

Total current assets 1689996712.62 1689996712.62

Non-current assets:

154 / 250Annual Report 2023

Loans and advances issued

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments 2314172.96 2314172.96

Investments in other equity

instruments

Other non-current financial

assets

Investment properties 713065.68 713065.68

Fixed assets 40095530.47 40095530.47

Construction in progress

Producing biological assets

Oil and gas assets

Utilization rights assets 4672377.60 4672377.60

Intangible assets 7426847.54 7426847.54

Development expenditure

Goodwill

Long-term amortization

Deferred tax assets 14578928.51 15714397.22 1135468.71

Other non-current assets 17348658.87 17348658.87

Total non-current assets 87149581.63 88285050.34 1135468.71

Total assets 1777146294.25 1778281762.96 1135468.71

Current liabilities:

Short-term borrowings 31249307.82 31249307.82

Borrowings from the Central

Bank

Demand for funds

Financial liabilities for trading

Derivative financial liabilities

Notes payable

Accounts payable 589919678.26 589919678.26

Advance receipts

Contract liabilities 74584070.11 74584070.11

Sale and buyback of financial

assets

Deposit-taking and interbank

deposits

Securities trading agency

Underwriting of securities

Employee remuneration payable 39456513.03 39456513.03

Taxes payable 7330079.22 7330079.22

Other payables 1611097.74 1611097.74

Of which: Interest payable

Dividends payable

Fees and commissions payable

Sub-insurance payable

Liabilities held for sale

Non-current liabilities due

within one year 1710381.30 1710381.30

Other current liabilities

155 / 250Annual Report 2023

Total current liabilities 745861127.48 745861127.48

Non-current liabilities:

Reserves for insurance contracts

Long-term borrowings

Bonds payable

Of which: Preferred stock

perpetual bonds

Lease liabilities 3151902.66 3151902.66

Long-term accounts payable

Long-term employee

remuneration payable 610379.24 610379.24

Projected liabilities 9238016.80 9238016.80

Deferred income

Deferred tax liabilities 4892632.32 6209285.91 1316653.59

Other non-current liabilities

Total non-current liabilities 17892931.02 19209584.61 1316653.59

Total liabilities 763754058.50 765070712.09 1316653.59

Owners' equity (or shareholders' equity):

Paid-in capital (or share capital) 80000000.00 80000000.00

Other equity instruments

Of which: Preferred stock

Perpetual bonds

Capital surplus 582632775.45 582632775.45

Less: Treasury stock

Other comprehensive income 3027860.88 3027860.88

Earmarked reserves 45372652.93 45372652.93

Surplus reserves 28443197.81 28443197.81

Provision for general risks

Undistributed profits 269871786.54 269694069.46 -177717.08

Total owners' equity (or

shareholders' equity) attributable 1009348273.61 1009170556.53 -177717.08

to the parent company

Minority interests 4043962.14 4040494.34 -3467.80

Total owners' equity (or

shareholders' equity) 1013392235.75 1013211050.87 -181184.88

Total liabilities and owners'

equity (or shareholders' equity) 1777146294.25 1778281762.96 1135468.71

156 / 250Annual Report 2023

Parent Company Balance Sheet

Unit: Yuan Currency: RMB

Item December 31 2022 January 1 2023 Adjustments

Current assets:

Monetary funds 426921105.55 426921105.55

Financial assets for trading 122119888.89 122119888.89

Derivative financial assets

Bills receivable 3741507.00 3741507.00

Accounts receivable 389406545.69 389406545.69

Receivables financing 350000.00 350000.00

Prepayment 30190351.40 30190351.40

Other receivables 39103210.81 39103210.81

Of which: Interest receivable

Dividends receivable

Inventories 62842.15 62842.15

Contract assets 307849835.96 307849835.96

Assets held for sale

Non-current assets due within

one year

Other current assets 21837642.67 21837642.67

Total current assets 1341582930.12 1341582930.12

Non-current assets:

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments 84542333.88 84542333.88

Investments in other equity

instruments

Other non-current financial

assets

Investment properties 713065.68 713065.68

Fixed assets 38986702.82 38986702.82

Construction in progress

Producing biological assets

Oil and gas assets

Utilization right assets 2760402.11 2760402.11

Intangible assets 7379278.80 7379278.80

Development expenditure

Goodwill

Long-term amortization

Deferred tax assets 11724393.96 12482396.65 758002.69

Other non-current assets 3168562.17 3168562.17

Total non-current assets 149274739.42 150032742.11 758002.69

Total assets 1490857669.54 1491615672.23 758002.69

Current liabilities:

Short-term borrowings

Transaction financial liabilities

157 / 250Annual Report 2023

Derivative financial liabilities

Notes payable

Accounts payable 504944256.04 504944256.04

Receipts in advance

Contract liabilities 38253734.48 38253734.48

Employee remuneration

payable 32483986.99 32483986.99

Taxes payable 3265740.36 3265740.36

Other accounts payable 1278644.31 1278644.31

Of which: Interest payable

Dividends payable

Liabilities held for sale

Non-current liabilities due

within one year 902393.93 902393.93

Other current liabilities

Total current liabilities 581128756.11 581128756.11

Non-current liabilities:

Long-term loans

Bonds payable

Of which: Preferred stock

Perpetual bonds

Lease liabilities 2118253.78 2118253.78

Long-term accounts payable

Long-term employee

remuneration payable

Projected liabilities 5723958.25 5723958.25

Deferred income

Deferred tax liabilities 690100.53 690100.53

Other non-current liabilities

Total non-current liabilities 7842212.03 8532312.56 690100.53

Total liabilities 588970968.14 589661068.67 690100.53

Owners' equity (or shareholders' equity):

Paid-in capital (or share capital) 80000000.00 80000000.00

Other equity instruments

Of which: Preferred stock

Perpetual bonds

Capital surplus 584223330.95 584223330.95

Less: Treasury stock

Other comprehensive income

Earmarked reserves 37608529.67 37608529.67

Surplus reserves 28443197.81 28443197.81

Undistributed profits 171611642.97 171679545.13 67902.16

Total owner's equity (or

shareholders' equity) 901886701.40 901954603.56 67902.16

Total liabilities and

owners' equity (or shareholders' 1490857669.54 1491615672.23 758002.69

equity)

158 / 250Annual Report 2023

41. Others

√ Applicable □ N/A

(1) Earmarked reserves

The Group's production safety fees which are extracted in accordance with national regulations are

recognized as the cost of the relevant products or current profit or loss and at the same time are included in

the earmarked reserve. When the Group utilizes the earmarked reserve the expenses belonging to expenses

are directly deducted from the earmarked reserve. If a fixed asset is formed it is recognized as a fixed asset

when the relevant asset reaches its intended useable state and the cost of forming the fixed asset is deducted

from the earmarked reserve and accumulated depreciation of the same amount is recognized. No

depreciation will be provided for the fixed assets in future periods.

(2) Segment reporting

The Group determines its operating segments based on its internal organizational structure

management requirements and internal reporting system. Two or more operating segments may be

consolidated into one if they have similar economic characteristics and at the same time are identical or

similar in terms of the nature of the individual products the nature of the production process the types of

clients for the products the manner of selling the products and the impact of laws and administrative

regulations on the products produced. The Group determines its reportable segments on the basis of operating

segments taking into account the principle of materiality.In preparing segment reports the Group measures revenue from inter-segment transactions on the basis

of actual transaction prices. The accounting policies used in the preparation of segment reports are consistent

with those used in the preparation of the Group's financial statements.VI. Taxation

1. Major types and rates of tax

Major types of taxes and tax rates

√ Applicable □ N/A

Type of tax Tax basis Tax rate (%)

Value-added tax (VAT) Based on the provision of technical services sale of goods etc. 3.00-13.00

Urban maintenance and

construction tax Levied on the taxable turnover amount 5.00 7.00

Education surcharge Levied on the taxable turnover amount 3.00 2.00

Enterprise income tax Levied on the taxable income amount Varies by taxing entity

Property tax is calculated based on the residual

Property tax value of the property after deducting 30% of 1.20 12.00

the original value of the property.Disclosure of taxable entities with different corporate income tax rates

√ Applicable □ N/A

Name of taxable entity Income tax rate (%)

The Company 15

Acter Engineering Technology (Shenzhen) Co. Ltd. 25

Shenzhen Dingmao Trading Co. Ltd. 25

Acter International Limited 16.5

Acter Technology Singapore Pte. Ltd. 17

PT. Acter Technology Indonesia 22

PT Acter Integration Technology Indonesia 22

Acter Technology Malaysia Sdn. Bhd. 24

Sheng Huei Engineering Technology Company Limited 20

Acter Technology Co. Ltd. 20

159 / 250Annual Report 2023

2. Tax incentives

√ Applicable □ N/A

On November 6 2023 the Company obtained the Certificate of High and New Technology Enterprise

(Certificate No. GR202332006213 valid for three years from 2023 to 2025) jointly issued by Jiangsu

Provincial Department of Science and Technology Jiangsu Provincial Department of Finance and Jiangsu

Provincial Taxation Bureau of the State Administration of Taxation. During the reporting period the

Company enjoyed a preferential enterprise income tax rate of 15% for high-tech enterprises.

3. Others

□ Applicable √ N/A

VII. Notes to the Consolidated Financial Statements

1. Currency funds

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Cash on hand 1054977.35 2510187.35

Bank deposits 708941745.68 539829910.94

Other currency funds 12499607.35 7895104.70

Deposits with finance companies

Total 722496330.38 550235202.99

Of which: Total amount deposited

abroad 75264850.68 79294798.84

Other Notes

Cash on hand contains RMB 1044790.00 in digital form.Of which: Total amount deposited abroad

Item Balance at the end of the year Balance at the beginning of the year

Total amount deposited abroad 75264850.68 79294798.84

Total 75264850.68 79294798.84

Of which: Currency funds whose use is restricted

Item Balance at the end of the year Balance at the beginning of the year

Guarantee deposits 12499607.35 7895104.70

Total 12499607.35 7895104.70

2. Trading financial assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Reasons and

Item Closing balance Opening balance justifications for

designation

Financial assets at fair value

through profit or loss 122119888.89 /

Of which:

Structured deposits 122119888.89 /

Financial assets at fair value

through profit or loss

Of which:

160 / 250Annual Report 2023

Total 122119888.89 /

Other Notes:

□ Applicable √ N/A

3. Derivative financial assets

□ Applicable √ N/A

4. Bills receivable

(1). Classification of bills receivable

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Bank acceptance bills 7877956.66 20790441.73

Commercial acceptance 36371094.45

Less: Provision for bad debts 1091132.83

Total 43157918.28 20790441.73

(2). Bills receivable pledged by the Company at the end of the period

□ Applicable √ N/A

(3). Bills receivable endorsed or discounted by the Company at the end of the period and not yet due

at the balance sheet date

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Amount derecognized at the end Amount not derecognized at the of the period end of the period

Bank acceptance bills 35385000.00

Commercial acceptances

Total 35385000.00

(4). Disclosure by bad debt accrual method

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Provisio

Book balance Provision for bad n for

Categ debts

Book balance bad

ory Carrying debts Carrying

Propo Prov amount Propo A Pro amount

Amount rtion Amount ision Amount rtion m visi

(%) (%) (%) ou on nt (%)

Provis

ion for

bad

debts

by

indivi

dual

item

Of which:

Provis

ion for 442490 100.0 1091132.851.11 0 3 2.47

43157918.20790441.100.020790441.

bad 28 73 0

73

161 / 250Annual Report 2023

debts

by

portfo

lio

Of which:

1. 363710 82.20 1091132.8Portfo 94.45 3 3.00

35279961.

62

lio 1

2. 787795 17.80 7877956.6 20790441. 100.0 20790441.Portfo 6.66 6 73 0 73

lio 2

Total 442490 100.0 1091132.8 2.47 43157918. 20790441. 100.0 20790441.51.11 0 3 28 73 0 73

Individual provision for bad-debt reserves:

□ Applicable √ N/A

Provision for bad debts by portfolio:

√ Applicable □ N/A

Items provided for by portfolio: Commercial acceptances

Unit: Yuan Currency: RMB

Name Closing balance

Bills receivable Provision for bad debts Provision ratio (%)

Within 1 year 36371094.45 1091132.83 3.00

Total 36371094.45 1091132.83 3.00

Explanation of provision for bad debts by portfolio

□ Applicable √ N/A

Provision for bad debts is made on a portfolio basis:

√ Applicable □ N/A

Items provided for by portfolio: Bank acceptance bills

Unit: Yuan Currency: RMB

Name Closing balance

Bills receivable Provision for bad debts Provision ratio (%)

Within 1 year 7877956.66

Total 7877956.66

Explanation of provision for bad debts by portfolio

□ Applicable √ N/A

Provision for bad debts based on the general model of expected credit losses

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Phase I Phase II Phase III

Expected credit Expected credit

Expected credit losses for the

losses for the

entire duration entire duration Provision for bad debts losses for the (no credit (credit Total next 12 months impairment) impairment incurred)

Balance at January 1 2023

Balance at January 1 2023 in

the current period

162 / 250Annual Report 2023

--Reversed to Phase II

--Reversed to Phase III

--Reversed to Phase II

--Reversed to Phase I

Provision during the period 1091132.83 1091132.83

Reversal during the period

Write-offs during the period

Cancellations during the

period

Other changes

Balance at December 31 1091132.83 1091132.83

2023

The basis for the classification of each stage and the percentage of provision for bad debts are shown in

this section V.12. Bills receivable

Explanation of significant changes in the book balance of bills receivable for which changes in the

allowance for losses occurred during the period:

□ Applicable √ N/A

(5). Provision for bad debts

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Change during the period

Category Opening Recovery or Write-offs or Other Closing balance Provision reversal cancellations changes balance

Commercial

acceptances 1091132.83 1091132.83

Total 1091132.83 1091132.83

Of which the amount of bad debt provision recovered or reversed during the period is significant:

□ Applicable √ N/A

Other Notes:

None

(6). Actual write-off of bills receivable during the period

□ Applicable √ N/A

Write-off bills receivable of which significant:

□ Applicable √ N/A

Description of bills receivable written off:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

5. Accounts receivable

(1). Disclosure by ageing

163 / 250Annual Report 2023

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Ageing Closing book balance Opening book balance

Within 1 year

Of which: Within 1 year

1-6 months (including 6

months) 338478217.57 451698928.45

6 months to 1 year (including 1

year) 34754229.34 19393631.72

Subtotal within 1 year 373232446.91 471092560.17

1 to 2 years 13065254.41 12552067.19

2 to 3 years 21927201.89 21111026.57

3 to 4 years 14496556.70 11730732.71

4 to 5 years 8927092.98

More than 5 years 650753.62 650753.62

Total 432299306.51 517137140.26

(2). Disclosure by bad debt accrual method

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Categ Book balance

Provision for Provision for

bad debts Book balance bad debts

ory Propor Provi Propor Provi

tion sion Carrying tion sion Carrying

Amount (%) Amount (%) amount Amount (%) Amount (%) amount

Provisi

on for

bad

debts 1099416 2.54 109941 100.0 0 1157669by 7.99 67.99 0 2.27 2.24

115766100.0

92.270

individ

ual

item

Of which:

Provi

sion

for

bad 4213051 97.46 244158 3968892 5055604 211170 4844433debts 38.52 66.26 5.80 72.26 47.99 97.76 79.71 4.18 68.28

by

portfo

lio

Of which:

Total 4322993 100.00 354100 3968892 5171371 326937 484443306.51 34.25 / 72.26 40.26 100.00 71.98 / 68.28

Individual provision for bad-debt reserves:

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance

Name Carrying Provision for

amount bad debts Provision (%)

Reason for

provision

Qinghua Group Xinjiang Coal

Chemical Industry Co. Ltd. 6570214.37 6570214.37 100.00

Debtor's financial

difficulties

164 / 250Annual Report 2023

Suzhou Mingqiao Municipal

Engineering Co. Ltd. 2158200.00 2158200.00 100.00 Debtor bankruptcy

Fujian Fuchen Technology Co.Ltd. 1615000.00 1615000.00 100.00

Debtor's financial

difficulties

Debtor's

Suzhou Hyperion Geocrystal bankruptcy

Co. Ltd. 650753.62 650753.62 100.00 payment is expected to be

difficult to recover

Total 10994167.99 10994167.99 100.00 /

Explanation of bad debt provision by individual item:

□ Applicable √ N/A

Provision for bad debts by portfolio:

√ Applicable □ N/A

Items provided for by portfolio: Ageing portfolio

Unit: Yuan Currency: RMB

Closing balance

Name Accounts receivable Provision for bad debts Provision ratio (%)

1-6 months (including 6

months) 338478217.57 10154346.63 3.00

6 months to 1 year (including

1 year) 34754229.34 1737711.47 5.00

1-2 years (including 2 years) 13065254.41 1306525.44 10.00

2-3 years (including 3 years) 21927201.89 4385440.38 20.00

3-4 years (including 4 years) 12107819.70 6053909.85 50.00

4-5 years (including 5 years) 972415.61 777932.49 80.00

Total 421305138.52 24415866.26

Explanation of provision for bad debts by portfolio:

□ Applicable √ N/A

Provision for bad debts based on the general model of expected credit losses

□ Applicable √ N/A

The basis for the classification of each stage and the percentage of provision for bad debts are shown in

this section V. 13. Accounts receivable

Explanation of significant changes in the book balance of accounts receivable for which changes in the

allowance for losses occurred during the period:

□ Applicable √ N/A

(3). Provision for bad debts

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Change during the period

Recovered Write-offs

Category Opening balance or Provision or Other Closing balance

reversed cancellatio changes ns

165 / 250Annual Report 2023

Provision for

bad debts 32693771.98 2711649.69 4612.58 35410034.25

Total 32693771.98 2711649.69 4612.58 35410034.25

Of which the amount of bad debt provision recovered or reversed during the period is significant:

□ Applicable √ N/A

Other Notes:

None

(4). Accounts receivable actually written off during the period

□ Applicable √ N/A

Significant accounts receivable written off among them

□ Applicable √ N/A

Description of accounts receivable written off:

□ Applicable √ N/A

(5). Accounts receivable and contract assets with top five closing balances summarized by party

owed to the Company

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Percentage

of

combined

Closing balance of accounts

Unit Name Closing balance of Closing balance of accounts

receivable Closing balance

accounts receivable contract assets receivable and and of provision for

contract assets contract bad debts assets

closing

balance

(%)

Client 1 35204113.72 55230371.74 90434485.46 10.51 1332275.27

Client 2 64025641.40 7614263.45 71639904.85 8.33 3520635.64

Client 3 60617976.68 10161956.75 70779933.43 8.23 1987558.51

Client 4 69801621.75 69801621.75 8.11 355720.96

Client 5 3732285.60 62663590.03 66395875.63 7.72 752682.98

Total 163580017.40 205471803.72 369051821.12 42.90 7948873.36

Other Notes

None

Other Notes:

□ Applicable √ N/A

6. Contract assets

(1). Status of contract assets

166 / 250Annual Report 2023

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Item Book Provision Carrying Book Provision Carrying

balance for bad debts amount balance

for bad

debts amount

Unexpired

warranty 17784023.33 997257.82 16786765.51 33157769.56 2953903.77 30203865.79

deposits

Completed

unliquidated

assets arising

from 410161246.32 2050806.23 408110440.09 360893710.88 1804468.54 359089242.34

construction

contracts

Total 427945269.65 3048064.05 424897205.60 394051480.44 4758372.31 389293108.13

(2). Amounts and reasons for significant changes in carrying amount during the reporting period

□ Applicable √ N/A

(3). Disclosure by bad debt accrual method

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Categor Closing balance Opening balance

y Book balance Provision for bad Carrying debts amount Book balance

Provision for bad

debts

Propor Prop Carrying

Amount tion Amount

Provisi ortio Provisi amount

(%) on (%)

Amount n Amount on (%)

(%)

Provisi

on for

bad

debts

by

individ

ual

item

Of which:

Provisi

on for 4279 100.0 30480 0.71 424897 394051 100. 475837 1.21 389293

bad 4526 0 64.05 205.60 480.44 00 2.31 108.13

debts 9.65

by

portfoli

o

Of which:

Outstan

ding

warrant 1778

y 4023 4.16

9972575.6116786733157729539030203.33.8265.5169.56

8.413.778.91865.79

deposit

s

167 / 250Annual Report 2023

Comple

ted

unliqui

dated

assets 41016

1246. 95.84 205080 0.50 4081104 3608937 91.59 1804468. 0.50 359089resulting

32 6.23 40.09 10.88 54 242.34 from

construct

ion

contract

s

42794

Total 5269. 100.00 304806 / 4248972 3940514 100.0 4758372. 389293

654.0505.6080.44031

/108.13

Individual provision for bad-debt reserves:

□ Applicable √ N/A

Explanation of individual provision for bad-debt reserves:

□ Applicable √ N/A

Provision for bad debts by portfolio:

√ Applicable □ N/A

Items provided for by portfolio: Provision by portfolio

Unit: Yuan Currency: RMB

Closing balance

Name

Contract assets Provision for bad debts Provision ratio (%)

Unexpired warranty deposits 17784023.33 997257.82 5.61

Completed and unliquidated

assets arising from 410161246.32 2050806.23 0.50

construction contracts

Total 427945269.65 3048064.05

Explanation of provision for bad debts by portfolio

□ Applicable √ N/A

Provision for bad debts based on the general model of expected credit losses

□ Applicable √ N/A

The basis for the classification of each stage and the percentage of provision for bad debts are shown in this

Section V.17. Contract assets

Explanation of significant changes in the book balance of contract assets for which changes in the provision

for losses occurred during the period:

□ Applicable √ N/A

(4). Provision for bad debts on contract assets during the period

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Write-

Item Provision for the

Recovered or

off/cancellation

current period reversed during Reason the period during the period

Provision for bad debts -1710308.26

Total -1710308.26 /

168 / 250Annual Report 2023

Of which the amount of bad debt provision recovered or reversed during the period is significant:

□ Applicable √ N/A

Other Notes:

None

(5). Contract assets actually written off during the period

□ Applicable √ N/A

Significant contract assets written off

□ Applicable √ N/A

Description of contract assets written off:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

7. Receivables financing

(1). Classification of receivables financing

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Bank acceptance bills 3572953.18 729937.36

Total 3572953.18 729937.36

(2). Receivable financing pledged by the Company at the end of the period

□ Applicable √ N/A

(3). Receivable financing endorsed or discounted by the Company at the end of the period and not

yet due at the balance sheet date

□ Applicable √ N/A

(4). Disclosure by bad debt accrual method

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Provision Provision

Book balance for bad Book balance for bad

Category debts Carrying debts Prop Prop Carrying

ortio Am Provis amount ortio Am Prov amount Amount n oun ion Amount n oun ision

(%) t (%) (%) t (%)

Provision

for bad

debts by

individual

item

of which:

Provision

for bad

debts by

group

169 / 250Annual Report 2023

Of which:

Portfolio 2 3572953.18 3572953.18 729937.36 729937.36

Total 3572953.18 / / 3572953.18 729937.36 / / 729937.36

Individual provision for bad-debt reserves:

□ Applicable √ N/A

Explanation of provision for bad debts by individual item:

□ Applicable √ N/A

Provision for bad debts by portfolio:

□ Applicable √ N/A

Provision for bad debts based on general model of expected credit losses.□ Applicable √ N/A

Basis of classification of each stage and percentage of bad debt provisioning

None

Description of significant changes in the book balance of receivables financing for which changes in the

allowance for losses occurred during the period:

□ Applicable √ N/A

(5). Provision for bad debts

□ Applicable √ N/A

Of which the amount of bad debt provision recovered or reversed during the period is significant:

□ Applicable √ N/A

Other Notes:

None

(6). Receivables financing actually written off during the period

□ Applicable √ N/A

Write-off of receivables financing of which significant amount

□ Applicable √ N/A

Description of write-offs:

□ Applicable √ N/A

(7). Increase/decrease and change in fair value of receivables financing during the period:

□ Applicable √ N/A

(8). Other Notes:

□ Applicable √ N/A

8. Prepayments

(1). Prepayments by ageing

170 / 250Annual Report 2023

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Ageing Closing balance Opening balance

Amount Proportion (%) Amount Proportion (%)

Within 1 year 88690301.43 99.62 50995260.16 100.00

1 to 2 years 334311.90 0.38

2 to 3 years

More than 3 years

Total 89024613.33 100.00 50995260.16 100.00

Explanation of the reasons for the delayed settlement of prepayments aged over 1 year and with significant

amount:

None

(2). Prepayments with the top five closing balances grouped by prepayment recipients

√ Applicable □ N/A

Percentage of total closing

Name of organization Closing balance balance of prepayments (%)

Supplier 1 23403311.09 26.29

Supplier 2 8460761.10 9.50

Supplier 3 3400000.00 3.82

Supplier 4 2486153.59 2.79

Supplier 5 2226000.00 2.50

Total 39976225.78 44.90

Other notes

None

Other notes

□ Applicable √ N/A

9. Other receivables

Item presentation

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Interest receivable

Dividends receivable

Other receivables 13378598.48 13057575.31

Total 13378598.48 13057575.31

Other Notes:

□ Applicable √ N/A

Interest receivable

(1). Classification of interest receivable

□ Applicable √ N/A

(2). Significant overdue interest

□ Applicable √ N/A

171 / 250Annual Report 2023

(3). Disclosure by bad debt provision method

□ Applicable √ N/A

Individual provision for bad-debt reserves:

□ Applicable √ N/A

Explanation of individual provision for bad-debt reserves:

□ Applicable √ N/A

Provision for bad debts by portfolio:

□ Applicable √ N/A

(4). Provision for bad debts based on general model of expected credit losses.

□ Applicable √ N/A

The basis of classification of each stage and the percentage of provision for bad debts are shown in this

Section V. 15. Other receivables

Explanation of significant changes in the book balance of interest receivables for which changes in the

allowance for losses occurred during the period:

□ Applicable √ N/A

(5). Provision for bad debts

□ Applicable √ N/A

Of which the amount of bad debt provision recovered or reversed during the period is significant:

□ Applicable √ N/A

Other Notes:

None

(6). Actual write-off of interest receivable during the period

□ Applicable √ N/A

Write-off of significant interest receivables

□ Applicable √ N/A

Description of write-offs:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

Dividends receivable

(1). Dividends receivable

□ Applicable √ N/A

(2). Significant dividends receivable with an age of more than 1 year

□ Applicable √ N/A

(3). Disclosure by bad debt accrual method

172 / 250Annual Report 2023

□ Applicable √ N/A

Individual provision for bad-debt reserves:

□ Applicable √ N/A

Explanation of individual provision for bad-debt reserves:

□ Applicable √ N/A

Provision for bad debts by portfolio:

□ Applicable √ N/A

(4). Provision for bad debts based on general model of expected credit losses.

□ Applicable √ N/A

The basis of classification of each stage and the percentage of provision for bad debts are shown in this

Section V. 15. Other receivables

Explanation of significant changes in the book balance of dividend receivables for which changes in the

allowance for losses occurred during the period:

□ Applicable √ N/A

(5). Provision for bad debts

□ Applicable √ N/A

Of which the amount of bad debt provision recovered or reversed during the period is significant:

□ Applicable √ N/A

Other Notes:

None

(6). Dividends receivable actually written off during the period

□ Applicable √ N/A

Write-off of dividends receivable of which the significant ones are

□ Applicable √ N/A

Description of write-offs:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

Other receivables

(1). Disclosure by ageing

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Ageing Closing book balance Opening book balance

Within 1 year

Of which: Within 1 year

Within 1 year 5788181.03 7908967.45

Subtotal within 1 year 5788181.03 7908967.45

1 to 2 years 3137206.61 5269487.75

2 to 3 years 4906449.40 305682.15

173 / 250Annual Report 2023

3 to 4 years 275070.44 178337.96

4 to 5 years 63105.92 132205.22

More than 5 years 157762.22 154776.00

Total 14327775.62 13949456.53

(2). Breakdown by nature of payment

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Nature of payment Closing book balance Opening book balance

Guarantee and deposit 11538986.51 11855149.63

Reserve 1489165.57 1303034.72

Others 1299623.54 791272.18

Subtotal 14327775.62 13949456.53

Provision for bad debts 949177.14 891881.22

Total 13378598.48 13057575.31

(3). Provision for bad debts

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Phase I Phase II Phase III

Expected credit Expected credit Expected credit losses

Bad Debt Provision losses for the losses for the entire for the entire duration Total

next 12 months duration (no credit (credit impairment impairment) incurred)

Balance as of January

12023891881.22891881.22

Balance as of January

12023

-- Ransferred to Phase

II

--Reversed to Phase

III

--Reversed to Phase II

--Reversed to Phase I

Provision during the

period 57851.33 57851.33

Reversal during the

period

Write-offs during the

period

Cancellations during

the period

Other changes -555.41 -555.41

Balance as of

December 31 2023 949177.14 949177.14

The basis of classification of each stage and the percentage of provision for bad debts are shown in this

Section V. Other receivables

Explanation of significant changes in the book balance of other receivables for which changes in provision

for losses occurred during the period:

□ Applicable √ N/A

174 / 250Annual Report 2023

The amount of provision for bad debts for the current period and the basis adopted for assessing whether

there is a significant increase in the credit risk of financial instruments:

□ Applicable √ N/A

(4). Provision for bad debts

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Change during the period

Write-offs

Category Opening Closing balance Provision

Recovery or or Other

reversal cancellation changes balance

s

Provision for

bad debts 891881.22 57851.33 -555.41 949177.14

Total 891881.22 57851.33 -555.41 949177.14

Of which the amount of provision for bad debts reversed or recovered during the period is significant:

□ Applicable √ N/A

Other Notes

None

(5). Other receivables actually written off during the period

□ Applicable √ N/A

Significant other receivables written off during the period:

□ Applicable √ N/A

Description of other receivables written off:

□ Applicable √ N/A

(6). Other receivables with the top five closing balances grouped by party owed

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Percentage of total

Unit Closing balance closing balance of Nature of

Provision for

Name other receivables amount Ageing bad debts

(%) Closing balance

Less than 1

Unit I 5585535.63 38.98 Guarantee deposits year 1-2 years 279276.78 2-3 years

Less than 1

Unit II 1493000.00 10.42 Guarantee year 1-2 years deposits 2-3 years 3-4 74650.00

years

Unit III 800000.00 5.58 Guarantee deposits Within 1 year 40000.00

Unit IV 432600.00 3.03 Guarantee deposits Within 1 year 21630.00

Unit V 400000.00 2.79 Guarantee deposits 1-2 years 20000.00

Unit VI 400000.00 2.79 Guarantee deposits Within 1 year 20000.00

Total 9111135.63 63.59 / / 455556.78

Presented in other receivables due to centralized management of funds

175 / 250Annual Report 2023

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

10. Inventories

(1). Classification of inventories

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Provision for Provision for

decline in value decline in

of value of

Item Book inventories/imp Carrying Book inventories/im Carrying

balance airment of amount balance pairment of amount

contractual contractual

performance performance

costs costs

Construction

materials 66824.45 66824.45

Products in

process

Inventory goods

Turnover

materials

Expendable

biological assets

Contract

performance costs

Total 66824.45 66824.45

(2). Provision for decline in value of inventories and provision for impairment of contract

performance costs

□ Applicable √ N/A

Reasons for reversal or write-off of provision for decline in value of inventories during the period

□ Applicable √ N/A

Provision for decline in value of inventories by portfolio

□ Applicable √ N/A

Provisioning criteria for provision for inventory valuation by portfolio

□ Applicable √ N/A

(3). Amount of borrowing costs capitalized in the closing balance of inventories and the criteria and

basis for calculating such capitalized costs

□ Applicable √ N/A

(4). Explanation of the amount of amortization of contract performance costs for the current period

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

176 / 250Annual Report 2023

11. Assets held for sale

□ Applicable √ N/A

12. Non-current assets due within one year

□ Applicable √ N/A

Debt investments due within one year

□ Applicable √ N/A

Other debt investments maturing within one year

□ Applicable √ N/A

Other non-current assets due within one year

None

13. Other current assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Prepaid VAT and inputs to be

deducted 77101647.54 49268224.68

Other taxes paid in advance 16755843.81 5942658.92

Amortized expenses 2522667.65 2458318.52

Others 1224007.69 595903.20

Total 97604166.69 58265105.32

Other notes

None

14. Debt Investments

(1). Debt investments

□ Applicable √ N/A

Changes in provision for impairment of debt investments during the period

□ Applicable √ N/A

(2). Significant debt investments at the end of the period

□ Applicable √ N/A

(3). Provision for impairment

□ Applicable √ N/A

The basis for classification of each stage and the percentage of provision for impairment:

None

Explanation of significant changes in the book balance of debt investments for which changes in provision

for losses occurred during the period:

□ Applicable √ N/A

Amount of provision for impairment for the current period and the basis adopted for assessing whether

there is a significant increase in credit risk of financial instruments: □ Applicable √ Applicable

□ Applicable √ N/A

177 / 250Annual Report 2023

(4). Actual write-off of debt investments during the period

□ Applicable √ N/A

Write-off of significant debt investments

□ Applicable √ N/A

Description of write-off of debt investments:

□ Applicable √ N/A

Other Notes: □ Applicable √ N/A

□ Applicable √ N/A

15. Other debt investments

(1). Other debt investments

□ Applicable √ N/A

Changes in provision for impairment of other debt investments during the period

□ Applicable √ N/A

(2). Significant other debt investments at the end of the period

□ Applicable √ N/A

(3). Provision for impairment

□ Applicable √ N/A

The basis for classification of each stage and the percentage of provision for impairment:

None

Explanation of significant changes in the book balance of other debt investments for which changes in

provision for losses occurred during the period:

□ Applicable √ N/A

Amount of provision for impairment for the current period and the basis adopted for assessing whether

there is a significant increase in credit risk of financial instruments: □ Applicable √ Applicable

□ Applicable √ N/A

(4). Other debt investments actually written off during the period

□ Applicable √ N/A

Write-off of significant other debt investments during the period

□ Applicable √ N/A

Write-off description of other debt investments:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

16. Long-term receivables

(1). Long-term receivables

□ Applicable √ N/A

178 / 250Annual Report 2023

(2). Disclosure by bad debt accrual method

□ Applicable √ N/A

Individual provision for bad-debt reserves:

□ Applicable √ N/A

Explanation of individual provision for bad-debt reserves:

□ Applicable √ N/A

Provision for bad debts by portfolio:

□ Applicable √ N/A

(3). Provision for bad debts based on general model of expected credit losses.

□ Applicable √ N/A

Basis of classification of each stage and percentage of provision for bad debts

None

Explanation of significant changes in the book balance of long-term receivables for which changes in the

allowance for losses occurred during the period:

□ Applicable √ N/A

Amount of provision for bad debts for the current period and the basis adopted for assessing whether there

is a significant increase in the credit risk of financial instruments: □ Applicable √ Applicable

□ Applicable √ N/A

(4). Provision for bad debts

□ Applicable √ N/A

Of which the amount of bad debt provision recovery or reversal for the current period is significant:

□ Applicable √ N/A

Other Notes:

None

(5). Long-term receivables actually written off during the period

□ Applicable √ N/A

Write-off of significant long-term receivables

□ Applicable √ N/A

Description of long-term receivables written off:

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

17. Long-term equity investments

(1). Long-term equity investments

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Increase/decrease during the period

179 / 250Annual Report 2023

Gains

and

losses Other

on compr Declara Closin

Additio Decre investm ehensi tion of Provisi

g

Investe Openin ns to ase in ents ve

Chang cash on for balance

d units g invest invest recogni incom

e in dividen impair Others Closing of

balance ments ments zed e equity ds or ment balance provisi

under adjust profits on for

the ments impair

equity ment

method

I. Joint ventures

Subtotal

II. Associated enterprises

Space

Enginee -

ring 14006 25391 14081

Co. 78.86

17876.

38.7794.25

Ltd.Daejin

Road

(Thaila 45520 -6576 16576 46520

nd) Co. 2.28 .44 .61

2.45

Ltd.DJR

(Thaila 45829 - 9930.4 10264 45862nd) Co. 1.82 .29 5.70

Ltd. 1

-

Subtotal 2314172.96 34383.

5223223320

24.67

22.40

Total 23141

-

72.9634383.

5223223320

24.6722.40

(2). Impairment testing of long-term equity investments

□ Applicable √ N/A

180 / 250Annual Report 2023

18. Investments in other equity instruments

(1). Investments in other equity instruments

□ Applicable √ N/A

(2). Description of derecognition during the period

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

181 / 250Annual Report 2023

19. Other non-current financial assets

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

20. Investment properties

Measurement model of investment properties

(1). Investment properties measured at cost

Unit: Yuan Currency: RMB

Item House and buildings Land use rights

Construction

in progress Total

I. Original carrying amount

1. Opening balance 2100240.00 727500.00 2827740.00

2. Increase during the period

(1) Purchases

(2) Transfer from

inventories/fixed

assets/construction in progress

(3) Increase from business

combination

3. Decrease during the period

(1) Disposals

(2) Other transfers out

4. Closing balance 2100240.00 727500.00 2827740.00

II. Accumulated depreciation and accumulated amortization

1. Opening balance 1748449.80 366224.52 2114674.32

2. Increase during the period 94510.80 19795.92 114306.72

(1) Provision or amortization 94510.80 19795.92 114306.72

3. Decrease during the period

(1) Disposals

(2) Other transfers out

4. Closing balance 1842960.60 386020.44 2228981.04

III. Provision for impairment

1. Opening balance

2. Increase during the period

(1) Provision

3. Decrease during the period

(1) Disposals

(2) Other transfers out

4. Closing balance

IV. Carrying amount

1. Closing book balance 257279.40 341479.56 598758.96

2. Opening book balance 351790.20 361275.48 713065.68

(2). Status of investment properties for which title certificates have not been completed

□ Applicable √ N/A

(3). Impairment testing of investment properties using the cost measurement model

□ Applicable √ N/A

182 / 250Annual Report 2023

Other Notes

□ Applicable √ N/A

21. Fixed assets

Item presentation

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Fixed assets 38895511.08 40095530.47

Fixed assets liquidation

Total 38895511.08 40095530.47

Other Notes:

□ Applicable √ N/A

Fixed assets

(1). Status of fixed assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Machiner Office and

Item Houses and

y and Transportation electronic

buildings equipme tools Total

nt equipment

I. Original carrying amount:

1. Opening balance 50876894.86 3933377.70 3239548.25 58049820.81

2. Increase during

the period -481.64 1731906.74 946719.99 2678145.09

(1) Acquisitions 1728175.61 931372.74 2659548.35

(2) Transfer from

construction in

progress

(3) Increase from

business

combination

(4) Effect of changes

in exchange rates -481.64 3731.13 15347.25 18596.74

3. Decrease during

the period 470995.17 131157.31 602152.48

(1) Disposal or

retirement 470995.17 131157.31 602152.48

4. Closing balance 50876413.22 5194289.27 4055110.93 60125813.42

II. Accumulated depreciation

1. Opening balance 13010625.62 2905711.60 2037953.12 17954290.34

2. Increase during

the period 3110908.98 355573.33 382887.58 3849369.89

(1) Provision 3111237.37 347698.94 371622.41 3830558.72

(2) Exchange rate

changes -328.39 7874.39 11265.17 18811.17

3. Decrease during

the period 447445.45 125912.44 573357.89

183 / 250Annual Report 2023

(1) Disposal or

retirement 447445.45 125912.44 573357.89

4. Closing balance 16121534.60 2813839.48 2294928.26 21230302.34

III. Provision for impairment

1. Opening balance

2. Increase during

the period

(1) Provision

3. Decrease during

the period

(1) Disposal or

retirement

4. Closing balance

IV.Carrying amount

1. Closing carrying

amount 34754878.62 2380449.79 1760182.67 38895511.08

2. Opening carrying

amount 37866269.24 1027666.10 1201595.13 40095530.47

(2). Temporarily idle fixed assets

□ Applicable √ N/A

(3). Fixed assets leased out under operating leases

□ Applicable √ N/A

(4). Fixed assets for which title certificates have not been issued

□ Applicable √ N/A

(5). Impairment test of fixed assets

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

Liquidation of fixed assets

□ Applicable √ N/A

22. Construction in progress

Project presentation

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Project Closing balance Opening balance

Building renovation 13103863.94

Project materials

Total 13103863.94

Other Notes:

□ Applicable √ N/A

Construction in progress

184 / 250Annual Report 2023

(1). Status of construction in progress

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Impairme Impairme

Item Book balance nt Carrying amount Book Carrying

allowance balance

nt

allowance amount

Building

renovation 13103863.94 13103863.94

Total 13103863.94 13103863.94

(2). Changes in significant construction-in-progress items during the period

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Amo CumuOthe Of unt lative Bu transf r invest Acc

which Curr

dg Op decr ment Prog umu Amou ent

ete eni erred to ease

in ress lated nt of inter Sou

Item d ng Increase during s constrfixed Closing balance uction of inter

intere est rce

name a bal the period duri cons est st capit of

m anc assets

as a

durin ng truct capit

capita aliza fun

percen

ou e the ion aliza lized tion ds g the tage nt perio peri

of tion for rate

od budget the (%) d (%) period

Buildi

ng

renova 13103863.94 13103863.94

tion

Total 13103863.94 13103863.94 / / / /

(3). Provision for impairment of construction in progress for the current period

□ Applicable √ N/A

(4). Impairment test of construction in progress

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

Construction materials

(1). Construction materials

□ Applicable √ N/A

23. Productive biological assets

(1). Productive biological assets measured at cost

□ Applicable √ N/A

(2). Impairment testing of producing biological assets measured at cost

□ Applicable √ N/A

(3). Adoption of the fair value measurement model for productive biological assets

185 / 250Annual Report 2023

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

24. Oil and gas assets

(1) Oil and gas assets

□ Applicable √ N/A

(2) Impairment testing of oil and gas assets

□ Applicable √ N/A

Other Notes:

None

25. Right-of-use assets

(1) Right-of-use assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Lease of buildings Means of transportation Total

I. Original carrying amount

1. Opening balance 3060288.15 3832970.27 6893258.42

2. Increase during the period 689649.57 766626.42 1456275.99

(1) Leased-in 908625.63 766626.42 1675252.05

(2) Effect of exchange rate

changes -218976.06 -218976.06

3. Decrease during the period 1048619.28 332268.40 1380887.68

(1) Disposals 1048619.28 332268.40 1380887.68

4. Closing balance 2701318.44 4267328.29 6968646.73

II. Accumulated depreciation

1. Opening balance 1148312.66 1072568.16 2220880.82

2. Increase during the period 1117792.92 1050032.47 2167825.39

(1)Provision expenses 1109254.39 1050032.47 2159286.86

(2) Effect of exchange rate

changes 8538.53 8538.53

3. Decrease during the period 953568.24 306723.64 1260291.88

(1) Disposal 953568.24 306723.64 1260291.88

4. Closing balance 1312537.34 1815876.99 3128414.33

III. Provision for impairment

1. Opening balance

2. Increase during the period

(1)Provision

3. Decrease during the period

(1)Disposal

4. Closing balance

IV.Carrying amount

1. Closing carrying amount 1388781.10 2451451.30 3840232.40

2. Opening carrying amount 1911975.49 2760402.11 4672377.60

186 / 250Annual Report 2023

26. Intangible assets

(1). Intangible assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Land use right Patents Non-patented Computer technology Software Total

I. Original carrying amount

1. Opening balance 8240016.48 3295603.49 11535619.97

2. Increase during

the period 232329.31 232329.31

(1) Acquisition 232901.11 232901.11

(2) Internal R&D

(3) Increase in

business

combination

(4) Effect of

exchange rate -571.80 -571.80

changes

3. Decrease during

the period 420501.75 420501.75

(1) Disposal 420501.75 420501.75

4. Closing balance 8240016.48 3107431.05 11347447.53

II. Accumulated amortization

1. Opening balance 1977603.83 2131168.60 4108772.43

2. Increase during

the period 164800.32 201973.94 366774.26

(1) Provision 164800.32 202337.39 367137.71

(2) Effect of

exchange rate -363.45 -363.45

changes

3. Decrease during

the period Amount 372575.10 372575.10

(1) Disposal 372575.10 372575.10

4. Closing balance 2142404.15 1960567.44 4102971.59

III. Provision for impairment

1. Opening balance

2. Increase during

the period

(1) Provision

3. Decrease during

the period

(1) Disposal

4. Closing balance

IV.Carrying amount

1. Closing carrying

amount 6097612.33 1146863.61 7244475.94

187 / 250Annual Report 2023

2. Opening carrying

amount 6262412.65 1164434.89 7426847.54

The proportion of intangible assets formed through in-house R&D to the balance of intangible assets at the

end of the period was 0

(2). Land use rights for which title certificates have not been issued

□ Applicable √ N/A

(3). Impairment testing of intangible assets

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

27. Goodwill

(1). Original carrying amount of goodwill

□ Applicable √ N/A

(2). Provision for impairment of goodwill

□ Applicable √ N/A

(3). Information about the asset group or portfolio of asset groups in which goodwill is located

□ Applicable √ N/A

Changes in the asset group or portfolio of asset groups

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

(4). Specific method of determining recoverable amount

Recoverable amount is determined as the net fair value less disposal costs.□ Applicable √ N/A

The recoverable amount is determined by the present value of estimated future cash flows.□ Applicable √ N/A

Reasons for the differences between the aforementioned information and the information used in the

impairment test in previous years or external information that is obviously inconsistent

□ Applicable √ N/A

Reasons for differences between the information used in the Company's impairment tests in previous years

and the actual situation in the current year that are clearly inconsistent with each other

□ Applicable √ N/A

(5). Performance commitments and corresponding goodwill impairment

Performance commitments existed at the time of the formation of goodwill and the reporting period or the

previous period of the reporting period was within the performance commitment period.□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

188 / 250Annual Report 2023

28. Long-term amortized expenses

□ Applicable √ N/A

29. Deferred tax assets/deferred tax liabilities

(1). Deferred tax assets not offset

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Deductible Deductible

Item temporary Deferred tax Deferred tax

differences assets

temporary

differences assets

Impairment of inventories

and contract assets 3000261.88 496879.59 4758372.31 1175996.87

Provision for bad debts 34632148.22 5400864.80 34172067.71 8495456.50

Temporary estimates

payable 22714306.71 3609868.30 8417815.53 2005783.48

Projected liabilities 9958724.77 1684113.93 9238016.80 2257312.81

Other 7837194.08 1290890.19 2688636.11 1779847.56

Total 78142635.66 12482616.81 59274908.46 15714397.22

(2). Deferred tax liabilities without offset

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Taxable Taxable

Item temporary Deferred tax temporary Deferred tax

differences liabilities differences liabilities

Withholding tax on

available-for-distribution

dividends from foreign 105783050.10 10578305.01 48926323.23 4892632.32

subsidiaries (10%)

Impact of right-of-use

assets 3622303.82 601888.20 5266614.36 1316653.59

Others 16582944.76 3316588.94

Total 125988298.68 14496782.15 54192937.59 6209285.91

(3). Deferred tax assets or liabilities presented at net amount after offsetting

□ Applicable √ N/A

(4). Details of unrecognized deferred tax assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Deductible loss 7336823.06 5528691.16

Provision for bad debts 3964844.58 3126.73

Others 1471221.79

Total 12772889.43 5531817.89

(5). The deductible losses for which no deferred tax assets have been recognized will expire in the

following years

□ Applicable √ N/A

189 / 250Annual Report 2023

Other Notes:

√ Applicable □ N/A

Details of unrecognized deferred tax liabilities

Unit: Yuan Currency: RMB

Item Balance at the end of the year Balance at the beginning of the year

Effect of right-of-use assets 44373.87

Total 44373.87

30. Other non-current assets

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Closing balance Opening balance

Item Provision

Provision

Book balance for Carrying Book balance for Carrying

impairment amount impairmen amount t

Warranty

receivable 35990599.2 1146648.5 34843950.7 17938200.1 589541.2 17348658.8

s 9 8 1 1 4 7

Total 35990599.2 1146648.5 34843950.7 17938200.1 589541.2 17348658.89 8 1 1 4 7

Other Notes: None

31. Assets with restricted ownership or right to use

√ Applicable □ N/A

Unit: Yuan Currency: RMB

End of period Beginning of the period

Type

Item Rest

Type

Book balance Carrying amount of restri ricte Book balance

Carrying of Restr

amount restri icted

ction d ction

Curren Marg Marg

cy 12499607.35 12499607.35 Other in 7895104.70 7895104.70 Other in

funds Restr s Restricted icted

Bills

receiv

able

Invent

ories

Fixed

assets

Intang

ible

assets

Total 12499607.35 12499607.35 / / 7895104.70 7895104.70 / /

Other Notes: None

32. Short-term loans

(1). Classification of short-term loans

190 / 250Annual Report 2023

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Pledged loans

Mortgage loans

Guarantee

Credit loans 31249307.82

Total 31249307.82

Note on classification of short-term borrowings:

As at December 31 2022 the credit borrowings were from the Group's subsidiary Acter

(Thailand) which obtained a loan of RMB 6042660.00 from Mega Bank with a term of December 14

2022 to June 12 2023 and an interest rate of 3.34%; from the Group's subsidiary Acter (Hong Kong)

which obtained a loan of RMB 11143360.00 from Standard Chartered Bank with a term of December

5 2022 to March 31 2023 with a borrowing rate of 5.71%; a loan of RMB 13929200.00 obtained

from Taishin Bank by Acter (Hong Kong) a subsidiary of the Group with a borrowing period from

November 25 2022 to February 24 2023 with a borrowing rate of 5.93%; and interest payable on the

borrowings of RMB 134087.82.

(2). Overdue short-term loans

□ Applicable √ N/A

Significant overdue short-term loans are summarized as follows:

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

33. Financial liabilities held for trading

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

34. Derivative financial liabilities

□ Applicable √ N/A

35. Notes payable

(1). Presentation of notes payable

□ Applicable √ N/A

36. Accounts payable

(1). Presentation of accounts payable

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Project payment 363178797.70 358206456.14

Retention money 266678519.63 231347025.54

Other 366196.58

Total 629857317.33 589919678.26

(2). Significant accounts payable aged over 1 year or overdue

□ Applicable √ N/A

191 / 250Annual Report 2023

Other notes

□ Applicable √ N/A

37. Receipts in advance

(1). Presentation of accounts receivable in advance

□ Applicable √ N/A

(2). Significant receipts in advance with an age of more than 1 year

□ Applicable √ N/A

(3). Amounts and reasons for significant changes in carrying amount during the reporting period

□ Applicable √ N/A

Other Notes

□ Applicable √ N/A

38. Contract liabilities

(1). Contract liabilities

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Settled uncompleted works 73351891.04 74584070.11

Total 73351891.04 74584070.11

(2). Significant contract liabilities aged over 1 year

□ Applicable √ N/A

(3). Amounts and reasons for significant changes in carrying amount during the reporting period

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

39. Remuneration payable to employees

(1). Presentation of remuneration payable to employees

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Opening

Increase Decrease

balance during the during the

Exchange rate Closing

period period change balance

I. Short-term 39456513 13051256 12254619 47459670

remuneration .03 8.47 6.01 36785.38 .87

II. Post-employment

benefits - defined 7784980. 74 7784980. 74

contribution plan

III. Severance benefits

IV. Other benefits due

within one year

39456513138297541303311747459670

Total .03 9.21 6.75 36785.38 .87

192 / 250Annual Report 2023

(2). Presentation of short-term remuneration

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Opening

Increase Decrease Exchange

balance during the during the rate

Closing

period period change balance

I. Salaries bonuses

allowances and 39274134.14 118821168.83 110868746.33 36785.38 47263342.02

subsidies

II. Employee benefit

expenses 3945749.79 3945749.79

Social insurance

premiums 3291802.84 3291802.84

Of which: Medical

insurance premiums 2822875.14 2822875.14

Workers'

remuneration

insurance 186691.33 186691.33

premiums

Maternity

insurance 282236.37 282236.37

premiums

IV. Housing provident

fund 3274142.08 3274142.08

V. Labor Union Funds

and Employee 182378.89 1179704.93 1165754.97 196328.85

Education Funds

VI. Short-term

compensated absences

VII. Short-term profit-

sharing plan

Total 39456513.03 130512568.47 122546196.01 36785.38 47459670.87

(3). Presentation of defined contribution plan

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Opening balance Increase during Decrease during the period the period Closing balance

1. Basic pension insurance 7439902.65 7439902.65

2. Unemployment insurance

premiums 345078.09 345078.09

3. Contributions to enterprise

annuities

Total 7784980.74 7784980.74

Other Notes:

□ Applicable √ N/A

40. Taxes payable

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Value-added tax 270840.93 1119487.19

Consumption tax

193 / 250Annual Report 2023

Business tax

Enterprise income tax 6389822.94 4562991.40

Individual income tax 655878.76 460166.81

Urban maintenance and

construction tax

Land use tax and property tax 267327.15 88658.49

Stamp duty 228144.04 415197.13

Other 168735.21 683578.20

Total 7980749.03 7330079.22

Other Notes:

None

41. Other payables

(1). Item presentation

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Interest payable

Dividend payable

Other payables 25427208.65 1611097.74

Total 25427208.65 1611097.74

Other Notes:

□ Applicable √ N/A

(2). Interest payable

Presented by category

□ Applicable √ N/A

Significant overdue interest payable:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

(3). Dividends payable

Classification

□ Applicable √ N/A

(4). Other payables

Other payables by nature

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Current account 22861444.25

Intermediary service fee 1958733.39 1225440.51

Provisions and deposits 48370.56 94815.84

Others 558660.45 290841.39

Total 25427208.65 1611097.74

194 / 250Annual Report 2023

Significant other payables aged over 1 year or overdue

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

42. Liabilities held for sale

□ Applicable √ N/A

43. Non-current liabilities due within 1 year

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Long-term loans due within 1 year

Bonds payable due within 1 year

Long-term payables due within 1 year

Lease liabilities due within 1 year 1748003.79 1710381.30

Total 1748003.79 1710381.30

Other Notes:

None

44. Other current liabilities

Other current liabilities

□ Applicable √ N/A

Increase or decrease in short-term bonds payable:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

45. Long-term loans

(1). Classification of long-term loans

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

46. Bonds payable

(1). Bonds payable

□ Applicable √ N/A

(2). Details of bonds payable: (excluding other financial instruments such as preferred stock and

perpetual bonds classified as financial liabilities)

□ Applicable √ N/A

(3). Description of convertible corporate bonds

□ Applicable √ N/A

195 / 250Annual Report 2023

Accounting treatment and judgmental basis for conversion

□ Applicable √ N/A

(4). Description of other financial instruments classified as financial liabilities

Basic information on other financial instruments such as preferred stock and perpetual bonds issued at the

end of the period

□ Applicable √ N/A

Statement of changes in preferred stock perpetual bonds and other financial instruments issued and

outstanding at the end of the period

□ Applicable √ N/A

Explanation of the basis for classifying other financial instruments as financial liabilities:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

47. Lease liabilities

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

Lease liabilities 2150631.55 3151902.66

Total 2150631.55 3151902.66

Other Notes: None

48. Long-term accounts payable

Item presentation

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

Long-term accounts payable

(1). Presentation of long-term payables by nature of payment

□ Applicable √ N/A

Specialized payables

(1). Specialized payables by nature of payment

□ Applicable √ N/A

49. Long-term employee remuneration payable

√ Applicable □ N/A

(1). Table of long-term employee remuneration payable

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Closing balance Opening balance

I. Post-employment benefits - net liability

for defined benefit plans 632325.46 610379.24

196 / 250Annual Report 2023

II. Termination benefits

III. Other long-term benefits

Total 632325.46 610379.24

(2). Changes in defined benefit plans

Present value of defined benefit plan obligations:

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Amount in the current period Amount in the prior period

I. Opening balance 610379.24 612161.00

II. Defined benefit costs recognized in

profit or loss for the period

1. Current service cost

2. Past service costs

3. Settlement gain (loss expressed as "-")

4. Net interest

Defined benefit cost charged to other

comprehensive income

1. Actuarial gain (loss expressed as "-")

IV. Other changes 21946.22 -1781.76

1.Consideration paid upon settlement

2.Benefits paid

3.Translation differences on foreign

currency statements 21946.22 -1781.76

V. Closing balance 632325.46 610379.24

Plan assets:

□ Applicable √ N/A

Net liabilities (net assets) of defined benefit plans

□ Applicable √ N/A

Description of the content of the defined benefit plan and the risks associated with it the impact on the

company's future cash flows timing and uncertainty:

□ Applicable √ N/A

Description of significant actuarial assumptions and sensitivity analysis results for defined benefit plans

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

50. Projected liabilities

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Opening balance Closing balance Reason

Guarantees provided to

external parties

Pending litigation

197 / 250Annual Report 2023

Provision for quality costs

related to the possibility of

Product quality guarantee 9067741.80 11090966.30 quality problems during

the warranty period of the

project

Restructuring obligations

Loss-making contracts

pending execution 170275.00 201881.61

Returns payable

Other

Total 9238016.80 11292847.91 /

Other notes including notes on significant assumptions estimates related to significant projected liabilities:

None

51. Deferred income

Deferred income

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

52. Other non-current liabilities

□ Applicable √ N/A

53. Share capital

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Increase/decrease of the current change (+ -)

Issue

Opening balance of Sent

new Shar Conversion Other

shar es s

Subtotal Closing balance

es

Total

numbe

r of 80000000.00 20000000.00 20000000.00 100000000.00

shares

Other Notes:

Pursuant to the resolution of the 2022 annual general meeting held on April 28 2023 the Company

paid a cash dividend of RMB 0.8125 per share (inclusive of tax) to all shareholders on the basis of the total

share capital of 80000000.00 shares as at June 14 2023 and transferred 0.25 shares to all shareholders by

way of capital reserve to increase the share capital by a total of 20000000.00 shares with par value of RMB

1 per share increasing the share capital by RMB 20000000.00 in total.

54. Other equity instruments

(1). Basic information on other financial instruments such as preferred stock and perpetual bonds

issued and outstanding at the end of the period

□ Applicable √ N/A

198 / 250Annual Report 2023

(2). Statement of changes in preferred stock perpetual bonds and other financial instruments issued

and outstanding at the end of the period

□ Applicable √ N/A

Changes in other equity instruments during the period explanation of the reasons for such changes and the

basis for related accounting treatment:

□ Applicable √ N/A

Other Notes:

□ Applicable √ N/A

55. Capital surplus

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Item Opening balance Increase during Decrease during the period the period Closing balance

Capital premium (equity

premium) 550250969.12 20000000.00 530250969.12

Other capital surplus 32381806.33 32381806.33

Total 582632775.45 20000000.00 562632775.45

Other notes including the increase or decrease of changes during the period and the reasons for the changes:

None

56. Treasury stock

□ Applicable √ N/A

57. Other comprehensive income

√ Applicable □ N/A

Unit: Yuan Currency: RMB

Amount in the current period

Less:

Less: Prior

Transfe period

r to charge Attrib

profit or to other utable

loss for compre

Current Less: to Opening the hensive Incom Attributable Item balance income tax

minori

period income to parent Closing balance

incurred from Current e tax ty

before prior period expen

company

se after tax

shareh

period transfer olders

to other to after

compre retaine tax

hensive d

income earning

s

I.Other

comprehensive

income not -151009.79 -151009.79

reclassifiable to

profit or loss

Of which:

Remeasurement

of changes in -151009.79 -151009.79

defined benefit

plans

199 / 250Annual Report 2023

Other

comprehensive

income not

transferable to

profit or loss

under the equity

method

Changes in fair

value of

investments in

other equity

instruments