Suzhou Dongshan Precision Manufacturing Co. Ltd.Semi-Annual Report 2026

August 22 2026

Section I Important Note Table of Contents and Definitions

The Board of Directors directors and senior executives of the Company

hereby warrant that the information contained in this Semi-Annual Report is

true accurate and complete without any misrepresentation misleading

statement or material omission and agree to assume joint and several

liabilities for this Semi-Annual Report.YUAN Yonggang Chairman of the Company CFO WANG Xu and

Accounting Supervisor ZHU Deguang hereby represent that the financial

report contained in this Semi-Annual Report is true accurate and complete.All directors of the Company attended the meeting of the Board of

Directors reviewing this Semi-Annual Report.Forward-looking statements such as those on future development plans in

this Report do not constitute substantial commitments by the Company to the

investors. Investors and relevant persons shall be sufficiently mindful of risks

and understand the differences between plans predictions and commitments.In this Report the Company has elaborated relevant potential risk factorsand countermeasures as can be referred to in “X. Risk Exposures to theCompany and Countermeasures” under “Section III Management’s Discussionand Analysis” to which the investors should pay attention.The Company has no plan to pay cash dividends distribute bonus shares

or convert any capital reserve to the share capital.Note:

This document is a translated version of the Chinese Semi-Annual Report 2026 (“2026 年半年度报告”).In case of any discrepancies the Semi-Annual Report 2026 published in the Chinese version shall

prevail. The full Chinese Semi-Annual Report 2026 is available at www.cninfo.com.cn.Table of Contents

Section I Important Note Table of Contents and Def... 2

Section II Company Profile and Financial Highlight... 9

Section III Management’s Discussion and Analysis ... 12

Section IV Corporate Governance Environment and So...38

Section V Significant Matters .......................41

Section VI Changes in Shares and Shareholders .......51

Section VII Bonds .................................. 55

Section VIII Financial Report ...................... 56

List of References

I. Financial statements signed and chopped by Mr. YUAN Yonggang legal representative Mr. WANG Xu

CFO and Mr. ZHU Deguang Accounting Supervisor of the Company;

II. Originals of all documents of the Company publicly disclosed during the reporting period and related

announcements;

III. Original of the Semi-Annual Report 2026 stamped with the seal and signed by the legal representative of the

Company; and

IV. Place for keeping such documents for inspection: Securities Department of the Company at Building 12#

Yunhe Town Headquarters Industrial Park No. 99 East Taihu Road Wuzhong District Suzhou.Definitions

Term Means Definition

Company we or

means Suzhou Dongshan Precision Manufacturing Co. Ltd.DSBJ

one of our major business segments including research and development (R&D)

Electronic circuit means

manufacturing and sale of FPCs rigid PCBs and rigid-flexible PCBs.Optical transceiver one of our major business segments including R&D manufacturing and sale of optical

means

business transceivers (including optical chips).Photoelectric one of our major business segments including R&D manufacturing and sale of touch panels

means

display module and LCMs.Precision one of our major business segments including R&D manufacturing and sale of precision

means

components metal structural parts and functional components.Hong Kong HongKong Dongshan Precision Union Opoelectronic Co. Limited a wholly owned

means

Dongshan subsidiary of the Company.Hong Kong

means Hong Kong Dongshan Holding Limited a wholly owned subsidiary of the Company.Dongshan Holding

Dragon Holdings means Dragon Electronix Holdings Inc. a wholly owned subsidiary of Hong Kong Dongshan.MFLEX means Multi-Fineline Electronix Inc. a wholly owned subsidiary of Dragon Holdings.Multek Group (Hong Kong) Limited a wholly owned subsidiary of Hong Kong Dongshan

Multek Group means

Holding.Source Photonics means Source Photonics Holdings (Cayman) Limited a subsidiary of the Company.GMD Group means Groupe Mécanique Découpage a wholly owned subsidiary of the Company.Source Chengdu means Source Photonics (Chengdu) Co. Ltd. a wholly owned subsidiary of Source Photonics.Jiangsu Source Communication Technology Co. Ltd. a wholly owned subsidiary of Source

Source Jiangsu means

Photonics.MFLEX Suzhou means MFLEX Suzhou Co. Ltd. a wholly owned subsidiary of MFLEX.MFLEX Yancheng means MFLEX Yancheng Co. Ltd. a wholly owned subsidiary of MFLEX.Multek China means Multek China Limited a wholly owned subsidiary of Multek Group.Suzhou Dongyue New Energy Technology Co. Ltd. a wholly owned subsidiary of the

Suzhou Dongyue means

Company.Aranda Tooling Inc. AutoTech Production Services Inc. and Autotech Production de

Aranda means

Mexico S. de R.L. de C.V. wholly owned subsidiaries of the Company.Printed Circuit Board which forms conductive circuits with conductive materials on an

insulated substrate according to a pre-designed circuit principle through etching lamination

PCB means

drilling and other processes. It is a core fundamental electronic component providing

mechanical support and electrical interconnection for electronic components.Flexible Printed Circuit a PCB that is made with a flexible insulated film as the substrate

FPC means

having the features of flexible light thin and high-density wiring.AI Data Center an artificial intelligence data center/intelligent computing center which is a

new generation of computing power infrastructure customized for AI large model training

AI DC means

inference and high-concurrency computing. As an “AI-upgraded mode” of conventional

IDCs it is also referred to as an intelligent computing center in the industry.AI Printed Circuit Board a high-performance PCB designed for AI computing

(GPU/TPU/ASIC AI servers super computing). Unlike common consumer electronics

AI PCB means

PCBs it focuses on high speed high density high reliability large current low loss and

strong heat dissipation.High-Density Interconnect PCB a precision PCB with a higher wiring density and requiring

a smaller installation space achieved through laser micro vias blind vias and buried vias fine

lines and thin substrates and other processes. Thanks to the core features of finer wire

HDI PCB means

widths and spacing smaller holes and higher layer utilization it is mainly used in scenarios

with dense chip pins and limited product space as a mainstream solution for smartphones AI

modules optical transceivers and high-end server front-end panels.High Layer Count PCB a thick core structure generally with ≥16 layers developing toward

20 layers 28 layers 30 layers and even more. Being made by laminating multiple cores with

copper foil layers it has multiple power supply layers multiple grounding layers and

multiple sets of high-speed differential lines to mainly meet the requirements for high-current

HLC PCB means

power supply strong anti-interference high-speed signal transmission and complex system

integration in AI servers switch backplanes GPU accelerator cards and large-scale

communication equipment focusing on thick copper high stability and high power handling

capacity.a core chip transmitting modulating and detecting optical signals in an optical transceiver. It

Optical chip means

determines key indicators like the rate distance power consumption etc. of the module.a core device for conversion between optical signals and electrical signals. It consists of

Optical transceiver means optical transmitting and receiving control and structural parts and is mainly intended for

interconnection scenarios like data centers computing power networks communication etc.a highly integrated photoelectric core component. Generally integrating functions of optical

Optical engine means chips optical coupling drivers etc. it is a core integration mode of high-speed optical

transceivers.a collective term for upstream parts of optical transceivers including optical chips electric

Optical device means

chips passive devices and structural parts.Electro-Absorption Modulated Laser a high-performance optical chip achieving monolithic

integration of a DFB continuous wave (CW) laser and an electro-absorption modulator

EML means (EAM). The DFB provides constant continuous light the modulator modulates high-speed

signals by controlling optical absorption through voltage and the laser operating point

remains unchanged.Continuous-Wave Laser a laser outputting continuous stable uninterrupted optical signals

unlike pulsed lasers. In the field of optical communication the CW laser itself does not carry

CW Laser means data signals but provides a continuous light source at a constant power. It has to work with

an external modulator (such as an EAM lithium niobate modulator etc.) for optical

strength/phase modulation to achieve high-speed data transfer.Distributed Feedback Laser a laser with a built-in optical grating structure to achieve output

DFB means at a single stable wavelength. As a direct modulated laser (DML) it switches and modulates

optical signals by varying the injected current.Vertical-Cavity Surface-Emitting Laser a laser emitting laser light perpendicular to the chip

VCSEL means surface. It can be integrated in an array for direct modulation. Thanks to its short cavity and

great process compatibility it can achieve concurrent transmission through multiple channels.Digital Signal Processor for equalization error correction clock recovery and signal shaping

DSP means of high-speed electrical signals. It is a necessary core electric chip for high-speed optical

transceivers at 400G and above.Co-packaged Optics an ultra-high integration solution packaging a high-speed optical

engine switch ASIC/GPU and other main chips on one substrate or middle layer. It reduces

CPO means the electric interconnection distance to millimeters and even sub-millimeters which

minimizes transmission loss of high-speed electrical signals on the PCB to achieve the

extreme bandwidth density and energy efficiency ratio.Near-Packaged Optics a board-level integration solution for placing optical engines in

proximity to switch chips/GPU chips on the same PCB. Instead of being connected to switch

NPO means chips through the long wire routing on the backplane the optical engines are placed at a

distance of millimeters to greatly shorten the electrical signal paths while keeping the optical

engines and main chip physically independent for separate maintenance.Linear Pluggable Optics a technical solution based on the conventional pluggable optical

transceiver architecture where the DSP chip inside the module is removed or greatly

LPO means

simplified and a switch ASIC chip is used to directly output linear electrical signals to drive

the optical transceiver. Retaining the standard pluggable shape (e.g. QSFP OSFP) without

changing the existing hardware architecture it is a light-weight and low-cost transitional

solution for high-speed low-latency low-power consumption requirements.separate architecture consisting of “continuous wave laser + silicon photonic integratedcircuit”. By decoupling the light-emitting and modulation functions to achieve high-

CW silicon integration low-power consumption low-cost and high-speed optical transmission it is a

means

photonics solution core technical solution supporting 400G/800G/1.6T optical transceivers CPO/NPO and

other advanced architectures mainly covering short-distance interconnection scenarios of AI

data centers.TP for short a transparent sensing device installed at the front end of a display panel to sense

external touch positions and output coordinate signals by employing capacitance resistance

Touch panel means optics and other principles. As a core component to achieve human-machine interaction it is

widely used in consumer electronics vehicle-mounted display industrial control equipment

etc.Liquid Crystal Module a complete display module integrating a liquid crystal glass panel

backlight module driver chip circuit board structural parts etc. to directly receive electrical

LCM means

signals and display images. It is a core functional unit to achieve visual output on various

electronic terminal products.CSRC means China Securities Regulatory Commission.SZSE means Shenzhen Stock Exchange

Section II Company Profile and Financial Highlights

I. Company Profile

Stock short name DSBJ Stock code 002384

Original stock short name (if

None

any)

Stock exchange Shenzhen Stock Exchange

Chinese name 苏州东山精密制造股份有限公司

Chinese short name (if any) 东山精密

English name (if any) Suzhou Dongshan Precision Manufacturing Co. Ltd.English short name (if any) DSBJ

Legal representative YUAN Yonggang

II. Contact Person and Contact Information

Board Secretary Securities Affairs Representative

Name MAO Xiaoyan ZHOU Hao

Building 12# Yunhe Town Headquarters Building 12# Yunhe Town Headquarters

Address Industrial Park No. 99 East Taihu Road Industrial Park No. 99 East Taihu Road

Wuzhong District Suzhou Wuzhong District Suzhou

Telephone 0512-80190019 0512-80190019

Facsimile 0512-80190029 0512-80190029

Email maoxy@dsbj.com hao.zhou@dsbj.com

III. Other Information

1. Contact Information of the Company

Whether there is any change in the Company’s registered address office address and corresponding postal code website and

email address etc. during the reporting period

□ Applicable□ N/A

There has been no change in our registered address office address and corresponding postal code website and email address etc.during the reporting period as detailed in the Annual Report 2025.

2. Media for Information Disclosure and Place for Keeping Semi-Annual Report

Whether there is any change in the media for information disclosure and place for keeping the report during the reporting period

□ Applicable□ N/A

The website of the stock exchange and the media and its website disclosing our semi-annual report as well as the place for

keeping our semi-annual report remain unchanged during the reporting period as detailed in the Annual Report 2025.3. Other Related Information

Whether there is any change in other related information during the reporting period

□ Applicable□ N/A

IV. Key Accounting Data and Financial Indicators

Did the Company need to retrospectively adjust or restate any accounting data of prior years

□ Yes□ No

The same period of the Y/Y %

The reporting period

previous year change

Operating revenue (RMB) 27797683972.88 16955163898.89 63.95%

Net profit attributable to owners of the parent company

2956898811.04 758005980.61 290.09%

(RMB)

Net profit attributable to owners of the parent company

2479581522.26 656799943.31 277.52%

after deduction of non-recurring gain or loss (RMB)

Net cash flows from operating activities (RMB) 2383887276.10 2500118021.28 -4.65%

Basic earnings per share (RMB/share) 1.62 0.45 260.00%

Diluted earnings per share (RMB/share) 1.62 0.45 260.00%

Weighted average return on net assets 12.88% 3.95% 8.93%

The end of the reporting The end of the previous

% Change

period year

Total assets (RMB) 69167411001.34 60250537094.98 14.80%

Net assets attributable to owners of the parent company

24366784235.48 21461147972.59 13.54%

(RMB)

V. Differences in Accounting Data under the Chinese Accounting Standards for Business

Enterprises (the “CASBEs”) and Overseas Accounting Standards

1. Differences in net profit and net assets disclosed in the financial report prepared under the

International Financial Reporting Standards (IFRS) and the CASBEs

□Applicable□ N/A

There was no difference in net profit and net assets disclosed in the financial report for the reporting period prepared under the

IFRS and the CASBEs.

2. Differences in net profit and net assets disclosed in the financial report prepared under overseas

accounting standards and the CASBEs

□Applicable□ N/A

There was no difference in net profit and net assets disclosed in the financial report for the reporting period prepared under

overseas accounting standards and the CASBEs.VI. Items and Amounts of Non-recurring Gains or Losses

□Applicable □ N/A

In RMB

Item Amount Remark

Gain or loss on disposal of non-current assets (including allowance for impairment of

assets that has been written off) -6925770.36

Government grants recognized in profit or loss (excluding the government grants that

are closely related to the business of the Company conform to the applicable policies

of the country are provided in accordance with the established standards and have 115191692.39

long-term effects on the Company’s profit or loss)

Gain or loss on changes in fair value of financial assets and financial liabilities held

by non-financial entities and gain or loss on disposal of financial assets and financial 506057632.55

liabilities except for effective hedges held in the ordinary course of business

Other non-operating revenues and expenses -15598890.08

Income from

Other gain or loss within the meaning of non-recurring gain or loss 23143740.00 debt

restructuring

Less: Effect on income tax 144213305.14

Effect on minority interests (after tax) 337810.58

Total 477317288.78

Other items of gain or loss within the meaning of non-recurring gain or loss:

□ Applicable□ N/A

We do not have any other item of gain or loss within the meaning of non-recurring gains or losses.Classification of any item of non-recurring gain or loss defined by the Explanatory Announcement No. 1 on Information

Disclosure by Companies Publicly Offering Securities – Non-recurring Gain or Loss as recurring gain or loss:

□ Applicable□ N/A

We have not classified any item of non-recurring gain or loss defined by the Explanatory Announcement No. 1 on Information

Disclosure by Companies Publicly Offering Securities – Non-recurring Gain or Loss as recurring gain or loss.Section III Management’s Discussion and Analysis

I. Situations of Our Primary Business during the Reporting Period

(I) During the reporting period our primary business has not undergone any material change.We are an innovation-driven company focusing on the field of intelligent manufacturing with a global perspective and layout.Under the mission of “building a better connected world for tomorrow” and the vision of becoming a globally leading solution

provider for intelligent interconnection we are dedicated to providing advanced products and solutions to global leading

technology companies for interconnection among human beings equipment and infrastructure. Our main business covers the

global design production and sale of electronic circuits optical transceivers (including optical chips) precision components and

photoelectric display modules; our products are widely applied in the fields of consumer electronics vehicles data centers

communication equipment industrial control equipment etc. By providing all-round and one-stop comprehensive services and

constantly enhancing customer loyalty for cooperation we have established long-term stable strategic cooperation relationships

with global leading enterprises.Our main products and their applications:

Product Type Product features Mainapplication

The flexible PCB as a printed circuit board uses flexible materials like polyimide or

polyester films as the substrate and implements electric interconnection through a

copper foil layer. Thanks to its unique adaptability it can be bent folded and

twisted repeatedly without affecting the stability of its electric performance. This

flexible characteristic allows flexible PCBs to be seamlessly installed in narrow or

irregular spaces which not only reduces the weight but also achieves greater

freedom of design. With these characteristics flexible PCBs have become an ideal

solution for compact devices and application scenarios requiring portability and

durability.Our flexible PCB product series cover single-layer flexible PCBs multi-layer

flexible PCBs and FPCA which can directly integrate resistors capacitors

inductors and various functional chips onto the circuit. These products are specially

designed to meet the performance requirements of terminal products in various

industries. We can reduce the thickness of flexible PCBs to 0.05 mm at the Smartphones

Flexible PCB minimum; the optimization for ultra-thin and lightweight products helps to provide electric vehicle

compact solutions balancing space efficiency and performance. To ensure durability BMS systems

and reliability we use advanced materials to achieve high-temperature resistance and etc.Electronic keep signal integrity under harsh environments.circuit

Flexible PCBs are widely used in the fields of edge AI devices consumer

electronics and vehicle electronics. In edge AI devices our flexible PCBs are

playing a more and more important role in creating lighter and more advanced

products supporting high-performance functions within a smaller size. Our flexible

PCBs are used in the AI smartphones wearable devices and other smart devices of

multiple globally leading brands. In the vehicle field our flexible PCBs allow

complex wiring within a restricted space to support key vehicle systems like the

battery management systems vehicle-mounted information and entertainment

systems etc. Keeping pace with the constant development of various industries our

flexible PCBs are always at the technology forefront to facilitate the development of

next generation AI devices that are smarter more compact and more effective.Rigid PCBs are printed circuit boards made with rigid substrates that cannot be bent AI servers 5G

or twisted. Our rigid PCB products cover single-layer PCBs multi-layer PCBs and base stations

HDI PCBs which can meet the demands of customers from various industries intelligent

Rigid PCB including AI computing consumer electronics etc. vehicles

AR&VR

Single-layer and double-layer PCBs are designed with a simple structure in which a devices

rigid substrate is used to separate single-layer or double-layer copper foil wiring. wearable

Product Type Product features Mainapplication

Thanks to its cost effectiveness this solution is widely used in electronic systems devices

with intermediate complexity. Multi-layer PCBs containing multiple layers of robots etc.conductive copper separated by insulating materials help to achieve a higher density

of elements and greater electric performance. HDI PCB products help to achieve a

higher wiring density and smaller elements by using advanced through-hole

structures (e.g. blind vias and buried vias) hence further improving integration.In particular in applications with restricted spaces HLC PCBs and HDI PCBs can

be used to achieve a compact layout better signal performance and greater

reliability. Therefore these products are especially suitable for AI computing power

infrastructure where high-frequency and high-speed data transfer play an important

role. Our ELIC technology as a leading technology in the HDI PCB field can

connect any layers to achieve ultra-high-density wiring in extremely compact

designs. Our multi-layer PCBs and HDI PCBs use M8/9 materials with ultra-low

loss to achieve the transmission rate of up to 224Gbps which can meet the high

requirements of GPU AI accelerator cards AI servers and data center switches.Relying on our in-depth technology expertise in HLC PCBs and HDI PCBs we can

ensure high-speed low-loss interconnection with our products under harsh

environments. To meet the heat dissipation requirements of high-power applications

the embedded copper block buried copper column laser copper filling and other

technologies are employed to effectively improve the heat dissipation efficiency and

reliability of PCBs with enhanced heat dissipation.Rigid-flexible PCBs consisting of multiple rigid wiring layers and flexible wiring AI servers

boards achieve connection using electroplating through holes to properly match with data center

the structural design of compact and complex electronic products. They combine the switches

durability of rigid PCBs with the adaptability of flexible PCBs to balance mechanical intelligent

strength and design flexibility. The flexible portion allows movement or folding vehicles

while the rigid portion provides structural support and space for installed smartphones

Rigid-flexible PCB components. and tablet

This unique combination reduces the demands for connectors and wires simplifies computers

assembly efforts and improves reliability by eliminating potential faulty points. Our AR&VR

rigid-flexible PCB products are made with high-performance materials to ensure the devices CT

thermal stability and reliability under harsh environments. Therefore our products scanners

are especially suitable for industries like medical devices and vehicle systems industrial

which require devices having high performance within a small space. devicesrobots etc.On the basis of the subsidiary Source Photonics we are developing an optical chip

product system with high-speed EML chips at the core with the rate covering the

whole matrix from 2.5G to 200G; with whole-process independent development for

IDM and large-scale mass production our products have advantages of high

bandwidth low power consumption low transmission loss high extinction ratio

outstanding yield rate in mass production large temperature range and high

Optical chip reliability. Our main product is 100G/200G PAM4 EML high-end chips; given the Optical

key performance indicators and mass production capacities reaching the international transceiver

top level these products are fully suitable for optical transceiver applications at

800G 1.6T and even higher rates. Meanwhile we are actively making layout of

technologies like 400G EML and high-power CW light sources to meet the strict

application requirements in high-end scenarios of AI data centers and ultra-

Optical computing power high-speed interconnection.transceiver Driven by the rapid development of AI computing and applications our data centeroptical transceivers are specially designed to meet the requirements of AI

infrastructure. We focus on 400G optical transceivers with QSFP-DD QSFP112

and OSFP packages and OSFP and QSFP-DD800G optical transceivers with the

DSP LPO and LRO architecture. Our 1.6T optical transceivers with multiple

technology options including EML and InP PIC achieve ultra-high-speed and low-

Optical transceivers latency connections through OSFP and other compact packages. Our independently Data centers

for data centers developed 100G PAM4 EML chips have been used in 400G and 800G optical etc.transceivers by over ten million; the 200G PAM4 EML chips have reached mass

production to support 1.6T optical transceivers.Meanwhile our 400G PAM4 EML chips under development will empower 3.2T

optical transceivers. In addition we are promoting the co-packaged optics

technology which directly integrates optical engines and switch chips in one

Product Type Product features Mainapplication

package to greatly shorten the signal path and reduce latency making it an ideal

option for AI training and inference.Our data center products are made with low-loss optical materials stable signal

integrity design and adaptive power management technologies to achieve stable

transmission and higher energy efficiency. These innovations not only reduce the

power consumption but also enhance cost advantages and durability empowering

our solutions to meet the high requirements of AI data centers on the rate and

bandwidth.Our telecommunication products mainly include products for optical transmission

wireless transmission and broadband transmission.Our optical transmission products being designed to meet the increasing

requirements of high-speed data transfer for metropolitan area networks access

networks and long-distance networks have the characteristics of high reliability and

long-distance transmission. These products support multiple size specifications and

data rates including SFP SFP+ SFP28 and QSFP-DD and have the transmission

capabilities covering 1G to 800Gb/s.Our wireless transmission modules operate on the physical layer of wireless Enterprise

Telecommunication networks to achieve accurate electrical - optical signal conversion and optical -

dedicated line

optical transceivers electrical signal conversion supporting high-speed data interaction among BBU

businesses

AAU and DU to achieve stable and reliable connection for fronthaul midhaul and core networks

backhaul transmission. These modules are fully compatible with 5G and 5.5G base stations

network deployment. etc.Our broadband products are based on the PON architecture which is a point-to-

multipoint fiber-optical system connecting OLT to ONU/ONT through a passive

optical splitter with no power supply equipment on site. The products covering 10G

PON and 25G/50G PON and meeting the F5G and F5G-A standards are widely

deployed in FTTH enterprise broadband and campus networks to provide high-

speed data services for end users. The solutions equipped with our independently

developed 50G laser chips have been deployed in commercial 50G-PON projects to

empower high-speed broadband and AI data centers.We provide various automotive structural parts and functional module products to

meet the functional requirements of vehicles under continuous upgrade. Our core

products cover battery housings water-cooling boards EV motor housings etc.which play a key role in improving the vehicle dynamic performance operation

safety and energy utilization efficiency.Battery housing

Battery housings are integral structural parts made of light-weight high-strength

aluminum alloy to contain battery modules and internal core elements providing

comprehensive protection for the battery system against external shocks. The

housings are equipped with an integral thermal management channel which can

greatly improve the heat dissipation efficiency; meanwhile the lower battery housing

is integrated with the vehicle chassis to lower the center of gravity of the entire

vehicle thus improving driving stability. We employ 8200-ton integral stamping

Precision Automotive and forming high-precision laser welding and other advanced technologies with a Intelligent

components components supporting automatic CCD visual detection system to ensure the size accuracy and vehicles

consistent quality of products. Thanks to such manufacturing technologies our

products have outstanding safety and reliability to meet the requirements of the

power system for new energy vehicles.Water-cooling board

The water-cooling board is a liquid heat exchanger that rapidly takes away the heat

generated from the operation of high-power electronic components; it can achieve a

cooling system with a compact structure low noise during operation and high use

reliability. Our ECU water-cooling boards can provide accurate temperature control

for the vehicle-mounted controllers of the powertrain vehicle safety and vehicle-

mounted information and entertainment system of new energy vehicles. The

products being manufactured through precision stamping and forming full-

automatic laser welding copper-aluminum reflow welding and other processes can

be closely integrated with PCB components to ensure the optimal operating

Product Type Product features Mainapplication

temperature for core elements under complex conditions and achieve stable

performance output. Meanwhile we have the mass manufacturing capabilities for

traction drive motor cooling boards power battery pack cooling boards and SiC

inverter water-cooling boards.EV motor housing

EV motor housings are external structural protection housings for traction motors

and controllers which can effectively protect against external shocks and reduce the

loss caused by operation vibration. Reaching the protection level of IP54 and above

these products can meet the reliability requirements for long-time operation. The

housings are made through high-pressure vacuum casting and forming for which the

high-precision size tolerance of key holes is guaranteed with the cylinder liner

casting-in technology; meanwhile the full-automatic friction welding process is

employed to create a high-strength and sealed connection structure to achieve

outstanding anti-vibration capabilities and thermal cycling resistance.In addition the technology expertise of GMD Group a subsidiary of the Company

in the body in white chassis structure thermal management system and interior and

exterior trim parts further enriches our product matrix and improves our

comprehensive capabilities for providing one-stop integrated solutions for global

vehicle manufacturers. Relying on the manufacturing experience and technology

accumulation built for a long period of time in the field of vehicle precision

structural components we can meet the strict quality management and control

requirements of mainstream vehicle manufacturers and are qualified suppliers for

multiple global top manufacturers of conventional and new energy vehicles.We can provide products of customized high-performance communication parts to

meet the requirements in the construction and upgrade of global communication

networks. Our core products cover antennas for mobile communication and wave

filters for mobile communication which can optimize the deployment adaptability

inside and outside base stations and improve the stability in signal transmission.Antennas for mobile communication

Antennas for mobile communication as core radio frequency components of base

stations mainly implement signal reception and transmission between a base station

and a mobile terminal to meet the requirements for the construction of a new

generation of communication networks. Being made with technologies like low

passive inter-modulation high-power handling and wide-frequency coverage and

designed with high-gain low-transmission loss and low-wind resistance structure

these products can achieve performance indicators like phase shifter insertion loss of

< 0.7dB antenna gain ≥ 17.5dBi and passive inter-modulation better than -153dBc

Components for so as to effectively improve the operation efficiency of mobile communication

telecommunication networks and ensure the high-quality signal reception and transmission.Base stations

for mobile

equipment Wave filters for mobile communication communication

Wave filters for mobile communication as core frequency-selecting components of

base stations can screen radio frequency signals of the specified frequency band and

filter out noise wave interference to ensure the purity of communication links and

operation stability of devices. These products being made with low passive inter-

modulation design and high-power metal-ceramic structure can achieve the passive

inter-modulation indicator better than -155dBc to achieve stable operation

performance under various working conditions. Meanwhile the volume of individual

products is reduced by 50% which effectively improves the space utilization rate for

the internal layout of base stations and convenience in device integration.Our communication parts are developed and designed with high reliability wide

adaptability and high performance in mind to meet the requirements of the technical

standards and applications for mainstream mobile communication networks around

the world. The table below outlines our main products of telecommunication

equipment and components.Touch panels are widely used in consumer electronics (tablet computers laptop Laptop

Photoelectric computers all-in-one computers) industrial control medical and vehicle (central computers

display Touch panel control display copilot display and entertainment display for back rows) industrial

module applications; they can achieve the touch precision of ±1.0 mm and response time less controlthan 30.0 ms. Thanks to the rapid response and adaptability for various complex equipment

environments they can be used in multiple industries. medical

Product Type Product features Mainapplication

devices etc.Display modules (LCD&OLED) can be used to build “integrated solutions” which

allows in-depth combination of cutting-edge display technologies with high-

reliability structural design and achieves breakthroughs in both performance and

stability.Display modules are widely used in consumer electronics (mobile phones laptop

computers all-in-one computers) industrial control medical and vehicle (dash

boards central control display copilot display entertainment display for back rows Consumer

LCD and OLED electronic rear-view mirrors and HUD). They can achieve the brightness of up to electronics

modules 1000.0 nit to ensure clear visibility even under strong light and can achieve the intelligent

wide gamut of over 96.0% NTSC for consumer modules. vehicles etc.The display modules are integrated with devices seamlessly through the full-

lamination process to enhance durability and improve the optical clarity.Thanks to our automatic manufacturing procedures and strong supply chain we can

provide customized display modules with guaranteed high throughput consistent

quality and reliable delivery to effectively meet the requirements of global

customers from various industries.(II) During the reporting period our main business model has not undergone any material change.We manufacture main products based on market demands and adopt the production mode that determines production

according to sales under which we develop production plans and deliver products by taking into account the purchase orders

placed by customers the product quantities demanded by the customers as well as our production capacity and supply of raw

materials.

1. Purchase mode

Our main businesses covering electronic circuits optical transceivers (including optical chips) precision components

photoelectric display modules etc. require a wide variety of raw materials. Based on the purchase scale our main raw materials

include integrated circuit chips electronic components connectors display devices copper clad laminates cast parts wafers

aluminum parts etc. We make purchase from corresponding suppliers with reference to orders and production plans based on our

information about the lead time and quality of suppliers. Given that our products are mostly customized suppliers should be

qualified by us or our customers and we have to obtain the consent and certification from customers for new alternative suppliers.Generally we request order-based prompt supply from suppliers instead of keeping a large number of surplus raw materials and

parts; under certain circumstances we may also require suppliers to establish a local warehouse to shorten the lead time of raw

materials and reduce our inventory. We purchase a wide variety of raw materials in large quantities. Our Group Purchase

Management Center is responsible for coordinating purchase activities in which we promote green purchase and give full play to

the advantages of large-volume purchase and synergy effects of raw materials. We have established long-lasting stable and

mutually beneficial strategic cooperation relationships with core suppliers to ensure a stable supply chain and reduce purchase

costs.

2. Production mode

We manufacture products based on market demands and adopt the production mode that determines production according to

sales under which we develop production plans and promptly deliver products to customers after passing inspection by taking into

account the purchase orders placed by customers the product quantities demanded by the customers under such purchase orders

as well as our production capacity and supply of raw materials. We implement the ideas of green development and low-carbon

operation and we always give priority to development coordinating a new generation of information technologies with

manufacturing technologies taking intelligent manufacturing as the main direction for the integration of informatization and

industrialization and taking active measures to promote the construction of intelligent factories and digital workshops. On one

hand we make great efforts for automatic production and construction to improve production efficiency; on the other hand we

implement information-based production operation and management to achieve real-time management and control over the whole

production operation process which increases the product yield rates improves capacity utilization rate ensures prompt delivery

of orders and guarantees the quality of products and services in compliance with normative standards and customer requirements.

3. Sales mode

We sell directly to corporate customers. After we pass customers’ system certification and are admitted to their supplier

system customers will directly place orders to us. We implement the strategy of group-based coordinated sales and build dedicated

key-account service teams for various business segments to promptly respond to requests from customers. Focusing on basic core

devices in the field of intelligent interconnection we have built a rich product matrix after years of development. Thanks to the

suitability of our products for a variety of industries and the strong synergy effects we achieved for R&D technology supply chain

product market etc. in different business segments the multi-product synergy advantages allow us to provide customers with all-

round one-stop comprehensive product solutions with leading technologies to meet customization requests of customers to the

largest extent.

4. R&D mode

We have built an efficient R&D system focusing on independent R&D of core technologies and oriented to meeting the

innovation needs of customers and we keep close pace with the strategic layout of industry leading customers and actively

participate in new product development by customers to support customers in product iteration and function innovation.Meanwhile we strive to build platform-based R&D institutions and platform-based core technologies pay close attention to the

development dynamics of new technologies and new processes in the industry and conduct continuous and effective R&D

investment and study of cutting-edge technologies to maintain the leading position of the Company in technologies and processes

and actively promote the implementation update and iteration of downstream terminal products of the industry. With importance

attached to the education of technical talents we provide the talent support for the development of new technologies and new

products by measures of “talent education talent attraction and talent retention” and take active measures to coordinate R&D

resources and encourage cross-department joint development.In addition to the transformation and upgrade of our own technologies in our R&D activities we also pay attention to in-

depth cooperation with customers and the study of future industry trends. By properly combining flexibility coordination and

innovation we have built a R&D ecology system featuring sustainable development and high adaptability to meet the constantly

changing customer needs and market environments and promote coordinated innovation throughout the industry chain.(III) Applications of our products as shown in the figure below:

? HUDs ? Leather parts ? White body parts

? Dash boards and central control displays ? Seat–Framework assemblies

(irregular-shaped displays/multi-

connected displays/curved displays)

? Passenger and rear seat entertainment

displays

? Streaming electronic rearview mirrors

? Armrest displays

? Automotive electronics (EMS OEM:

? On-board computer–heat dissipation battery management/electric

modules (water-cooling boards) control/domain control/radars)

? Electric drive and electronic control–

casings (all-in-one) ? Central control system/GPS–rigid

? Domain control–casings PCBs and rigid-flexible PCBs

? Information & entertainment

systems/Internet of Vehicles–rigid

PCBs and rigid-flexible PCBs

? Camera modules–brackets and assemblies

? Camera modules–rigid PCBs and rigid-

flexible PCBs

? Cell–casings

? Battery pack–Trays/assemblies

? Laser radars/millimeter wave radars– ? Battery pack–flexible PCBs/CCS

casings

? Laser radars/millimeter wave radars–rigid

PCBs and rigid-flexible PCBs

? Advanced driving assistance/central

computing unit - rigid PCBs

? Injection molding parts ? Damper tower

? Fingerprint flexible PCBs

? Flexible PCBs for front cameras

? LCD/OLED displays

? Flexible PCBs for upper antennas

? Flexible PCBs for displays

? Main board PCBs

? Flexible PCBs for lower antennas

? Flexible PCBs for side buttons

? Flexible PCBs for USBs

? Flexible PCBs for rear cameras

? Flexible PCBs for batteries

Computing nodes

? Cabinet sheet metal parts

? Rails

? Tray panels

? Power distribution ? Handles/latches

boards

? Universal substrates

? Air dust brackets

? Main boards ? Shielding covers

? Heat dissipation modules

(liquid cooling)

? EMI masking metal parts

? Front panel metal parts

? Optical ? M.2 carrier boards ? Optical fiber jumpers

transceivers

? Cable clamps

? Cable management metal

Switch nodes parts

? M.2 carrier boards

? Optical transceivers

? Switch main boards

? Dual in-line memory

modules ? PSU control boards/metal

casings

? Substrates

? Substrate management

? Optical transceivers controller

(IV) Situations of our industry

We are primarily engaged in the R&D manufacturing and sale of electronic circuits optical transceivers (including optical

chips) precision components photoelectric display modules etc.

1. Electronic circuit industry

Printed circuit boards (PCBs) as core basic components of electronic devices play a critical role in accurate electric

interconnection low-loss signal transfer and mechanical support and its performance directly determines the operating efficiency

and stability of electronic devices. In terms of the fields of application PCBs are widely used in core scenarios like consumer

electronics vehicles data centers communication etc. making PCBs an indispensable basic link for the electronic information

industry.Thanks to the explosive demands of AI and high-speed network infrastructure the global PCB market experienced rapid

growth. In the long run driven by multiple factors including AI infrastructure construction restructuring of the global supply

chain terminal intelligentization etc. the growth dynamics of the industry will be released for a long period of time. Prismark

predicted that the global PCB market size would reach USD 95.8 billion by 2026; the annual compound growth rate of the industry

value would be about 7% from 2026 to 2029 and may exceed USD 116.0 billion by 2029. From 2025 to 2030 the fastest-growing

fields will still be HLC PCBs (over 18 layers) HDI PCBs etc. The figures above show that AI-driven data communication

infrastructure is becoming the core engine to drive the upgrade and size expansion of the PCB industry.From the perspective of enterprise development the structural transformation of the PCB industry is creating relatively

certain development opportunities for us. On one hand in the field of consumer electronics the innovation for products like AI

terminals foldable screens and other products leads to continuously increasing quantity of FPC in use and value of individual

devices. Relying on the production capacity and technologies of MFLEX a top 2 manufacturer on the world we can provide a

stable cash flow and profit support for conventional businesses. On the other hand in the field of AI computing hardware the

growth center of the industry is transforming to HLC PCBs and HDI PCBs more and more quickly. Thanks to Multek’s

professional manufacturing capabilities of ultra-HLC PCBs together with the decisive investment of resources for expansion of

high-end production capacity we can properly take the historical development opportunities that the value of PCBs for AI servers

is obviously greater than conventional products. The PCB industry is experiencing a fundamental change under the two major

trends of high-end consumer electronics and AI infrastructure which opens a significant window for us to develop from a leading

FPC manufacturer to a supplier of all high-end PCB products.

2. Optical transceiver industry

The optical transceiver technology employing the mechanism of electrical - optical - electrical signal conversion has

developed generational advantages in terms of the bandwidth capacity transfer distance anti-interference performance energy

efficiency and density etc. on the basis of the transfer characteristics of optical fiber which systematically solves the core

transmission challenge of large-traffic interaction and interconnection of wide area networks making it a key technology

supporting the upgrade of communication networks and empowering computing infrastructure. The continuously increasing

downstream bandwidth demands lead to the gradual iteration and upgrade of optical chip rates to 100G 200G and more which

directly determines the transfer rate and application scenario positioning of optical transceivers.On the background of the continuously increasing global investment in computing power AI has become the core growth

engine for the market of optical transceiver data communication. Lightcounting predicted that the global market size of data

communication optical transceivers would reach USD 22.8 billion by 2026 where the total market size of 800G and 1.6T optical

transceivers would reach USD 14.6 billion in 2026 accounting for about 64% of the total market size of all data communication

optical transceivers. Meanwhile it’s predicted that the global market size of telecommunication optical transceivers would be USD

5.3 billion by 2026. Generally speaking thanks to the rapid development of AI data centers the data communication market

growing at an obviously faster rate than the conventional telecommunication market has become the core driver for the growth of

the optical transceiver industry. Lightcounting predicted that in the next three years high-speed optical transceivers of 800G 1.6T

etc. would dominate the market demands while the quantity of 3.2T modules would increase gradually from 2028. It is quite

probable that the annual sales volume of optical interconnects used in AI clusters would reach USD 100.0 billion by 2030.As for the Company Source Photonics’ core competitive advantages will be more and more prominent under the trend of

rapid industry development. Source as one of the few global enterprises having an integral layout of EML optical chips + optical

transceivers employs the IDM mode to maintain independence at core stages; it is one of the few enterprises with mass production

capacities of 100G and 200G EML optical chips in China. Under the industry environment of supply shortage for high-end EML

optical chips and high dependence on others Source has prominent advantages in production capacity allocation and delivery

response thanks to its capabilities above. Meanwhile we are making active efforts to develop optical transceivers with two parallel

technology routes namely the silicon photonics solution and the independently developed EML to respond to the iteration of

optical interconnect technologies with our diversified layout and building a technology basis for the next generation of high-speed

product upgrade. In terms of production capacity expansion Source is accelerating the pace of building EML optical chip and

optical transceiver production capacities to effectively match with the pace of increasing quantity of downstream customers and

the demand growth trend of the industry. In addition our comprehensive advantages in key account services supply chain

management delivery guarantee customer qualifications etc. can also effectively support the further customer development for

Source.

3. Precision component industry

The precision component industry is an industry where precision processing fast forming automatic control and other

relevant technologies are employed to design manufacture process assemble and sell structural parts functional modules and

complete devices with a complex structure and high precision. With the obvious characteristics of technology intensity high

precision requirements high-efficiency production high automation strong non-standard customization capabilities etc. this

industry has strict requirements on product consistency reliability and lead time. In terms of the industry chain structure the

upstream industry chain of the precision component industry is the supply of raw materials and manufacturing equipment mainly

including raw materials like metal materials and production equipment like cutting and forming equipment processing equipment

test and inspection equipment etc. The midstream of the industry chain is the precision processing and manufacturing stages that

is the processing of high-precision parts and functional modules and the assembly of complete devices by manufacturers. The

downstream of the industry chain is the application field of precision component products mainly including vehicles

telecommunication equipment etc. Given the constant upgrade of the downstream manufacturing industry and the faster and faster

emerging fields like AI new energy vehicles etc. the global application demands for precision component products are increasing

which creates a broad growth space for the development of the global precision component industry.We have profound technology expertise and core competitiveness in the field of precision components and have built a

mature and standard process system covering the stages of precision metal processing module-based integration precision

assembly etc. which can meet the strict requirements of vehicle customers for structural parts with high precision high

consistency and high reliability. In terms of production capacity and layout we have built a global supply network including

production bases located in Mexico the United States and Suzhou and Yancheng in China; moreover we have successfully built

production capacities in Europe and North Africa through the acquisition of GMD Group in France which further improves our

capabilities of local services in the field of global automotive components. All our customers of the precision component business

are domestic and foreign leading automotive manufacturers; this outstanding customer structure not only provides stable orders for

us but also consistently promotes the introduction of new products and technology iteration. Generally speaking we expect that

our precision component business will achieve continuous and stable growth thanks to the growth period of the industry.

4. Photoelectric display industry

Photoelectric display products as core devices for converting electrical signals into visual images are core parts for

electronic devices to present visual content and implement information and sensing interaction. Under the background of the

extensive spread of consumer electronics development of Internet communication technologies and accelerated penetration of AI

terminals the demands for information interaction are continuously increasing where photoelectric display products as an

important carrier are widely used in fields like vehicles consumer electronics etc. Driven by the technological innovation

application and extension and the increasing penetration of smart devices the global photoelectric display industry has been

developing stably where the mainstream technology routes mainly include LCD and OLED.Our photoelectric display products with touch panels and LCMs at the core are widely used in the fields of vehicles and

consumer electronics. In the field of vehicles the continuously increasing penetration of intelligent cockpits leads to the evolution

towards vehicle-mounted displays featuring larger sizes multiple displays and high definition and the vehicle-mounted display

devices are upgrading from conventional information presentation carriers to the core medium for human-vehicle interaction to

achieve human-vehicle interconnection. Relying on our technology accumulation and mass production capacity for touch panels

and display modules we can provide customers with integral display solutions and have been admitted to the supply chain of

multiple leading vehicle manufacturers. In the field of consumer electronics given the higher requirements of AI terminal devices

on display interaction touch panels and LCMs as the core components for human-machine interface are experiencing stably

increasing demands. Thanks to our large-scale production capacities and stable delivery capabilities we can promptly respond to

the demands of downstream brand customers. In general we expect continuous and stable growth of our photoelectric display

business driven by the upgrade of vehicle-mounted displays and interaction innovation of consumer electronics.II. Core Competencies of DSBJ

(I) Strategic advantage: AI end-to-end deployment to take early opportunities in a high-growth racetrack

Our strategy focuses on an end-to-end AI deployment from the edge side to data centers. As an innovation-driven enterprise

we are dedicated to providing global top technology companies with advanced products and solutions by accurately taking the

growth opportunities for global high-speed interconnection and data transfer. Relying on the clear strategic positioning we have

become the top 3 global PCB supplier the top 2 global FPC supplier and the top 10 global optical transceiver supplier

demonstrating our leading position in multiple fields and industries; meanwhile we are the only enterprise having the whole-

process capabilities covering AI PCBs and optical transceivers (including optical chips) from R&D designing and mass

production on the world fully covering all scenario requirements from edge AI devices to large-scale data centers which

establishes our long-lasting competitive advantages. By providing AI PCBs and high-speed optical transceiver products for AI DC

we can help customers achieve data transfer with lower latency higher transmission rate and better energy efficiency; meanwhile

we engage in in-depth design cooperation with customers to shorten product development cycles and improve system performance

of terminal products. In general relying on the end-to-end whole-process capabilities in AI and our coordinated and integrated

technology system we can fully take the opportunities of business growth driven by AI for the future and make use of the

forward-looking layout of advanced processes and production capacities under the background of accelerated AI penetration on the

edge side and data center to progressively improve market shares.(II) Product advantage: Achieve horizontal synergy among multiple product categories and leading vertical integration

making optical transceivers and optical chips as the core highlights

By combining external acquisition with endogenous growth we have built a comprehensive product system featuring full

horizontal coverage and vertical integration covering core businesses of electronic circuits optical transceivers (including optical

chips) precision components photoelectric display modules etc. which can provide whole-life cycle core device solutions for

customers in the fields of cloud service providers consumer electronics intelligent vehicles etc. to achieve closed-loop valuegrowth. Based on the opportunities of industry development created by AI technologies “optical transceivers (including opticalchips) + AI PCB” have become our core product highlights and a critical factor in differential competition. Relying on Source

Photonics we are capable of whole-process independent development and mass production of EML optical chip IDM making us

one of the few domestic and even international players achieving mass production of high-end EML optical chips. With a full

product matrix covering the rates of 2.5G to 200G our main products are 100G/200G EML high-end series with key product

performance indicators and mass production capacities leading in the industry. In the field of optical transceivers we have a layout

covering the whole industry chain with products for all rates from 10G to 1.6T; moreover we make continuous efforts to promote

the R&D of next generation optical transceivers at 3.2T and above to build a new core growth driver for the Company. Meanwhile

we are making active efforts to develop optical transceivers with two parallel technology routes namely the silicon photonics

solution and the independently developed EML to respond to the iteration of optical interconnect technologies with our diversified

layout and building a technology basis for the next generation of high-speed product upgrade. In the field of PCBs we maintain

our leading position in the industry as one of the top players and have professional manufacturing capabilities of ultra-HLC and

high-density thick HDI PCBs. In the field of precision components we have the capabilities of one-stop supply for core parts of

vehicles making us the only supplier in the industry that can concurrently supply multiple core parts for top vehicle manufacturers.(III) Technology advantage: Drive innovation with leading product R&D capabilities in the industry

We always put technological innovation at the core strategic position for corporate development. We deeply participate in

preliminary development conducted by leading industry customers accurately understand the trend of cutting-edge technologies

build an efficient coordinated R&D mechanism and actively engage in industry-university-research cooperation with top

universities research institutions and industry organizations to accelerate cutting-edge technology innovation and research results

conversion to inject endless dynamics for high-quality development of the Company. With continuous efforts for R&D acquisition

and integration we have built unique technical advantages in electronic circuits optical transceivers (including optical chips)

precision components and photoelectric display modules. In the field of high-end PCBs we make great efforts in the R&D and

manufacturing of circuit boards for AI servers and constantly iterate and upgrade high-density HDI and ultra-HLC high-speed

board technologies to meet the high-density wiring requirements for the new generation of AI computing hardware which lays a

solid technology foundation for the Company in the field of high-end computing circuit boards. In the field of optical

communication operating in the industry for many years Source Photonics has independently developed multiple key core

technologies and built independent core technologies for EML optical chips under its control; meanwhile with its independently

developed chip package and reliability verification system it stays at the industry forefront in the R&D and commercial operation

of ultra-high-speed optical transceivers. Relying on Source Photonics we have built a whole-process technology system covering

the manufacturing of EML optical chips to optical transceivers which provides a core support for the Company to compete on the

global optical communication market. At present we are making active efforts for the R&D of optical transceivers at 3.2T and

above which can fully meet the requirements of AI data centers and other scenarios for ultra-large bandwidth interconnection and

prepare for the next generation core technologies to provide solid technology guarantee for the iteration and upgrade of ultra-high-

speed optical transceivers and help the Company maintain its leading position on the high-end racetrack of optical communication.Meanwhile relying on our technology accumulation in electronic circuits precision components and photoelectric display

modules we will consistently consolidate our leading position in the industry to facilitate the high-quality development of the

Company in all of our business segments.(IV) Scale advantage: Globally leading production capacity and outstanding ability for rapid production capacity expansion

Based on years of operation and forward-looking strategic layout we have built a globally leading and modern production

capacity platform with prominent scale effects and comprehensive support systems making us capable of large-scale

manufacturing whole-process quality management and control and efficient and stable delivery which is leading in the industry.Thanks to our mature production line replication system and capabilities for process standardization we can increase our

production capacity rapidly and expand production capacity flexibly during the window of explosive demands in the industry

allowing us to respond to additional demands of major downstream customers. Our new production capacity is planned in close

alignment with the pace of industry technology iteration and the medium- to long-term development requirements of key

downstream customers; by progressively improving the production capacity structure and improving the efficiency of resource

allocation we can constantly maximize operating benefits consolidate our leading position in the industry and build a solid

foundation for long-lasting core competitiveness. In terms of core products in the fields of electronic circuits and precision

structural components we have built prominent production capacity barriers on the basis of large-scale manufacturing advantages

fine management systems and capabilities of rapid response which puts us in a leading position in terms of product yield rate

delivery efficiency and comprehensive cost control and facilities stable and reliable supply of core components for downstream

customers. In the field of AI core hardware we have built a comprehensive product matrix and production capacity expansion

layout focusing on high added-value products like optical transceivers (including optical chips) AI PCB etc. At present our

production capacity expansion projects are progressing in order as planned capacity ramping is under implementation smoothly

and the capability of large-scale supply is improving progressively to fully match with the increasing purchase demands of both

domestic and overseas mainstream cloud service providers to provide a strong support for the construction of global computing

infrastructure.(V) Customer advantage: Serving globally leading customers in various fields while continuously deepening in-depth

cooperation

Relying on outstanding product quality technology strength and delivery capabilities we have accumulated global

outstanding customer resources and built a customer base consisting of top global consumer electronics brands pure electric

vehicle manufacturers and cloud service providers with businesses covering multiple high-growth industries like consumer

electronics vehicles data centers telecommunication equipment etc. which can defend against the seasonal fluctuation and

periodical risks of individual industries with the diversified industry layout. We establish long-term and in-depth strategic

cooperation relationship with core customers participate in product definition at the early stage of customers’ product

development closely follow the trends of technology routes and accelerate product iteration through coordinated designing; after

being admitted to customers’ supply chain we make use of our rich product portfolio technology expertise and large-scale

production capacity for extension to orders of associated products thereby increasing sales to customers. For example since the

acquisition of MFLEX we have been providing flexible PCB products for global leading consumer electronics manufacturers

extending the application scope from smartphones to all consumer electronics product categories and new energy vehicles; in the

vehicle field we are providing integration solutions for global leading manufacturers to sustain and improve customer loyalty.Relying on the manufacturing capabilities of vertical integration of EML optical chips and optical transceivers Source Photonics

a subsidiary of the Company has become one of the core suppliers of global optical transceivers which creates a bigger growth

space for the Company in the field of AI computing hardware.(VI) Globalization and operation advantage: Global layout of production capacities to empower intelligent manufacturing and

build a resilient supply chain

We are deeply participating in the global supply chain system to build a global network for R&D production and sale in all

aspects. In this aspect we have established R&D teams in multiple countries and regions including Chinese mainland Taiwan

Region the United States Singapore France etc. to attract local high-end professionals; meanwhile we have production bases in

14 countries and regions covering Asia North America Europe and Africa which builds an efficient operation layout featuring

“global R&D local production and integrated services” to rapidly respond to customer needs throughout the world and flexibly

address the complex and volatile international trade environment. In the field of intelligent manufacturing we have built an

industry leading intelligent manufacturing system with AI empowering and data driver as the core in which advanced technologies

like machine visual AI detection and SMT automatic production line are widely used; moreover we have built a production central

control center to implement whole-process coordinated management and control. Many of our production bases won many honors

including the National Intelligent Manufacturing Demonstration Factory granted by the Ministry of Industry and Information

Technology and Jiangsu Provincial Industrial Internet Benchmark Factory which significantly improves the scale of production

capacities product yield rates and production efficiency effectively reduces manufacturing costs and ensures product quality

consistency and stability. Relying on the global network of production capacities and preference for local procurement we can

implement local rapid delivery close to the end market which reduces logistics costs improves response speed and enhances the

anti-risk capabilities for the supply chain to provide a solid support for the continuous and stable development of global businesses.(VII) Management and synergy advantage: Efficient management to empower whole-process synergy

We have a management team with international understanding and forward-looking perspectives which can make accuratestrategic judgment and conduct efficient strategy implementation. Advocating the corporate spirit of “breakthrough diversitysimplicity journey” we have built a scientific and efficient modern management system and made continuous efforts to build the

digital and intelligent management system construct a uniform operation and management platform to standardize procedures and

accumulate experience in aspects of production and manufacturing quality management and control R&D projects and supply

chain scheduling and empower subsidiaries and business segments to improve operating efficiency. Having owned mature

experience in cross-border acquisition and resource integration we can rapidly promote cultural integration with the acquired

target company implement our management system and achieve performance improvement. By completing multiple benchmark

acquisition transactions in the industry we have successfully entered a high-growth racetrack; we make continuous efforts to

improve our product matrix and global layout of production capacities build strict and regulated acquisition selecting and post-

investment integration systems to output our mature and successful experience in manufacturing management digital operation

talent incentives to the acquired companies and to efficiently achieve in-depth integration with acquired assets and release value

by means of customer expansion organizational structure optimization supply chain synergy and integration incentive

mechanism improvement etc.In addition we have achieved prominent synergy effects among various business segments: in terms of customer synergy we

achieved resource sharing and complementary cooperation in a diversified business matrix covering AI PCBs optical transceivers

(including optical chips) precision components photoelectric display modules etc. and deeply incorporated our products and

businesses into the core supply chain of global leading cloud service providers and AI computing power customers which

effectively improves customer loyalty and overall shares; and in terms of supply chain synergy we further optimized resource

allocation on the ground of our global layout of production capacities and centralized purchase system which effectively enhances

resilience of the supply chain against risks reduces costs improves efficiency and builds solid competitive advantages in costs as

a strong support for the long-lasting high-quality and sustainable development of the Company.III. Analysis of Primary Business

In the first half of 2026 on the background of the accelerated global industry restructuring and a new development stage ofthe AI computing power industry chain we made continuous efforts to deepen the top-level development idea with both “offensiveand defensive characteristics” and moved to in-depth industry operation and value creation on the basis of the business layout and

acquisition achieved in 2025. We focused on quality and efficiency improvement for conventional businesses and on release of

new products development of new customers and expansion of new production capacities for emerging businesses. With

continuous iteration for global coordination technological innovation organization governance and financial risk control system

we are moving from layout implementation to result realization for various strategies. During the reporting period we achieved

stable and improving operation as a whole and further enhanced organic drivers for high-quality development. In the first half of

2026 we achieved the operating revenue of RMB 27.798 billion a year-on-year increase by 63.95% and the net profit of RMB

2.957 billion a year-on-year increase by 290.09%. The overall operation during the reporting period is summarized as follows:

(I) Improved quality and efficiency for conventional businesses and built a resilient operating system with balanced new and

old businesses

During the reporting period we moved from scale expansion to the improvement of profit quality and counter-cyclical

capabilities for our basic businesses including core devices for consumer electronics and core parts for vehicles. Relying on

mature product lines for electronic circuits precision structural components photoelectric display modules etc. we made use of

our global manufacturing network and outstanding customer resources to improve our product and customer structures constantly

in an effort to respond to the periodical fluctuation pressure from the downstream industry maintain stable profitability and

achieve stable operating cash flows. Our conventional businesses provided a continuous resource basis for the technology R&D

production capacity investment and global expansion of emerging racetracks while the growth of emerging businesses leads to

future revenues and profits for the company which makes a virtuous cycle supporting each other. By maintaining the existing core

business and expanding future growth drivers we can effectively protect against cross-industry and cross-cycle fluctuations and

promote our strategic transformation from scale-driven growth to quality-and-efficiency-first improvement to further enhance our

overall operating resilience and risk resistance.(II) Took the opportunities of the AI computing power industry to move from capacity building to value release for “opticaltransceivers (including optical chips) + AI PCBs”

The reporting period witnessed the shift from scale expansion to product iteration and capability improvement in the global

AI computing power building while downstream customers raised higher requirements in product performance stable delivery

comprehensive supporting capabilities etc. for core devices. Relying on the industry layout completed in 2025 we made great

efforts to make use of our unique industry synergy to build one-stop product solution capabilities covering optical transceivers

(including optical chips) + AI PCBs. In the field of optical communication Source Photonics after completing preliminary

production capacity building focused on deepening product technology iteration supply chain improvement and customer

development. It accumulated technologies and achieved breakthroughs around the next generation of high-speed products made

continuous efforts to integrate internal R&D manufacturing marketing to accelerate customer qualification and batch delivery of

high-end products progressively developed global mainstream customers and improved market position and added value for

products. For the AI PCB business based on the technologies of Multek we made active efforts for AI server iteration to match

with product upgrade. Having formed a synergistic resonance in technology customers and supply chain the two business

segments facilitate the continuous consolidation of our differentiated competitive advantages in the field of core devices for AI

data centers.(III) Deepened the competence of global operation to move from construction of production capacities to local-based value

creation in overseas layout

Following the acquisition of GMD Group in France in 2025 we shifted from acquisition closing to deep integration and value

realization in our globalization efforts. We fully released the synergistic potential of the GMD Group to leverage its established

manufacturing bases and complete vehicle customer resources in Europe and North Africa which further deepened our regional

layout and enhanced our overseas production capacity and customer matrix in the vehicle business. We always optimized our

global manufacturing network covering Asia the Americas Europe and Africa and moved from mere capacity coverage to

actively promoting global resource allocation technology sharing and experience exchange to enhance cross-regional

collaborative operations. We made continuous efforts to build international talent pipeline and empower overseas teams to extend

their roles from execution to market development and technology iteration. Thanks to our local layout that is close to customers

we can accurately capture the differential demands of customers from various regions respond rapidly and make delivery

efficiently thereby transforming our global hardware layout to core soft capacities for market development and risk diversification

and expanding the growth boundaries for the long-lasting development of the Company.(IV) Strengthened technological innovation to upgrade product competitiveness by means of both technology and

manufacturing

Insisting on development driven by innovation we further improved the innovation system for the AI hardware racetrack on

the basis of our forward-looking layout. We focused on key fields including high-speed EML optical chips high-speed optical

transceivers and AI PCBs balanced preliminary research of cutting-edge technologies and mass production technologies to build

a technology base in advance with customer demands for the next generation of products in mind and progressively iterated and

optimized our product matrix to build product advantages toward the future. To empower innovation results with intelligent

manufacturing we made continuous efforts for in-depth integration of intelligentization and informatization. We established data

links among global bases relying on the Internet platform empowered the whole production process with data and progressively

optimized the production scheduling system process level and yield rate performance to efficiently adapt to global customers’

orders requiring customization various specifications and short lead time. We insisted on promoting the engineer culture to fully

motivate the innovation potential of R&D and technology talents and building a channel for industry-university-research

cooperation to create long-lasting competition barriers with hard technologies.(V) Improved governance competence to build organic drivers in the organization and talents to match with diversified cross-

border businesses

On the background of our continuous business expansion and the successive integration of acquired entities our organization

building is moving from architecture building to governance competence upgrade. Focusing on the overall strategy we deepened

the management mechanism featuring “coordination and empowering by the group and professional operation by business units”

to break business segment and regional barriers and promote efficient coordination among R&D supply chain and sales resources

aiming to improve our integrated capabilities for providing comprehensive services to customers in all aspects. In terms of talent

building we attracted suitable high-profile talents for key fields like optical communication global operation etc. improved the

internal channel for talent development strengthened efforts for professional competence building and built a talent team with

both professional expertise and international perspectives. We optimized the appraisal and incentive mechanism to promote

simultaneous advancement of personal value and corporate development. We promoted intercultural integration under the

corporate culture of “openness inclusion pragmatism and enterprising”. Meanwhile we made iteration for the internal control

compliance and risk control systems to adapt to complex scenarios of cross-border operation in multiple business segments.Lifting the integration of acquired targets to the core level of corporate governance we promoted the in-depth integration of

Source Photonics and GMD Group in France in aspects of businesses organization regulations and culture to truly transform

acquisition advantages into the Company’s core competence and to shift “assets from acquisition” to “value creation driven byacquisition” hence supporting the Company’s stable and long-lasting organization efforts.(VI) Upheld active and prudent financial strategies to achieve dynamic balance between strategic investments and

safeguarding against risks

In response to the capital expenditure demands from industry upgrade and the complex external market environment we

adhered to the active and prudent financial strategy to further strengthen the financial management model with balanced strategic

orientation and risk bottom lines. We planned resource allocation scientifically with capital resources prioritized to support

strategic production building in key areas like optical communication and AI PCBs managed capital expenditure paces in a

reasonable manner and actively met the funding needs of globalization and industry upgrade through diversified financing

instruments while making continued optimization of our capital and debt structure. We insisted on the idea of “cash priority”

taking the quality of operating cash flows as a key factor in operation to improve liquidity management and comprehensive budget

and final account system firmly holding the safety bottom line for funds. We always optimized hedging mechanisms against

fluctuations in exchange rates and commodity prices and implemented detailed and practical whole-process financial risk

management controls. We deepened the integration of business and finance promoted the embedding of financial management

into the entire business chain and empowered cost reduction efficiency improvement and profitability structure optimization from

a financial perspective. We made continuous efforts to iterate our global financial management and control system strengthen the

financial management capabilities of overseas subsidiaries and ensure that all acquired entities can be smoothly and efficiently

integrated into our financial system. The systematic financial governance and the balance between expansion and risk prevention

help to build a solid and reliable financial foundation to support the sustained execution of our strategies.Year-on-year changes in key financial data

In RMB

The same period of Y/Y %

The reporting period Reason for change

the previous year change

Primarily due to the continuous

development of new customers and

new products in optical transceiver

Operating revenue 27797683972.88 16955163898.89 63.95% businesses during the reporting

period in addition to the acquisition

of Source and GMD leading to

great growth in the revenue.Primarily due to the increase in the

operating revenue which leads to

Operating cost 22196075162.56 14650499235.90 51.50%

the corresponding increase in the

cost.In addition to the revenue increase

above primarily due to the increase

Selling expenses 268145700.67 157942605.07 69.77%

in selling expenses from our active

efforts to develop new products.In addition to the revenue increase

Administrative expenses 897460520.37 547561939.49 63.90%

above primarily due to the increase

The same period of Y/Y %

The reporting period Reason for change

the previous year change

in employee remuneration under the

2026 employee stock ownership

plan.Primarily due to the strategic

acquisition of Source Photonics and

GMD Group and the active

expansion of production capacity for

optical transceivers (including

Financial expenses 545788419.37 29546958.47 1747.19% optical chips) and AI PCB productswhich leads to the increase in capital

expenditures increase in the

financial scale increase in financial

interests; and due to the increase in

exchange losses due to exchange

rate changes in the current period.Primarily due to the expected profits

Income tax expenses 503842570.02 201934636.13 149.51% achieved for various businesseswhich leads to great increase in

taxes payable in the current period.Net cash flows from operating

2383887276.10 2500118021.28 -4.65%

activities

Primarily due to the active efforts

for increasing the production

Net cash flows from investing capacities of optical transceivers

-5482528738.38 -1986314848.75 -176.02%

activities (including optical chips) and AI

PCB products which leads to the

increase in capital expenditures.Primarily due to the increase in debt

financing to support the strategic

Net cash flows from financing

4139667280.73 1523390849.48 171.74% layout for optical transceivers

activities

(including optical chips) and AI

PCBs.Primarily due to the increase in

Net increase in cash and cash

842802984.33 2072977324.38 -59.34% capital expenditures in the current

equivalents

period.Whether there is a significant change in the components or sources of profits during the reporting period of the Company

□ Applicable□ N/A

There have been no significant changes in the components or sources of profits during the reporting period of the Company.Components of operating revenue

In RMB

The reporting period The same period of the previous year

Y/Y %

% of operating % of operating

Amount Amount change

revenue revenue

Total operating revenue 27797683972.88 100% 16955163898.89 100% 63.95%

By segment

Computer communication and

27347867868.08 98.38% 16756004204.58 98.83% 63.21%

other electronics

Others 449816104.80 1.62% 199159694.31 1.17% 125.86%

By product

Electronic circuits 12529627775.53 45.07% 11059315884.89 65.23% 13.29%

Precision components 6580692901.95 23.67% 2361835859.44 13.93% 178.63%

Optical transceiver 5350999299.05 19.25%

Photoelectric display module 2723476776.77 9.80% 3048999533.55 17.98% -10.68%

Others 612887219.58 2.20% 485012621.01 2.86% 26.37%

By region

Domestic market 4669148407.96 16.80% 3787323865.50 22.34% 23.28%

Overseas market 23128535564.92 83.20% 13167840033.39 77.66% 75.64%

Segments products or regions representing more than 10% of operating revenue or profit of the Company

□Applicable □ N/A

In RMB

Y/Y % change

Gross Y/Y % change in Y/Y % change

Operating revenue Operating cost in gross

margin operating revenue in operating cost

margin

By segment

Computer

communication

27347867868.08 21929134042.30 19.81% 63.21% 51.01% 6.48%

and other

electronics

By product

Electronic circuits 12529627775.53 10174431182.90 18.80% 13.29% 11.58% 1.25%

Precision

6580692901.95 5782359541.79 12.13% 178.63% 166.89% 3.86%

components

Optical

5350999299.05 3246496191.23 39.33%

transceiver

Photoelectric

2723476776.77 2563023488.98 5.89% -10.68% -11.53% 0.90%

display module

By region

Domestic market 4669148407.96 4213470923.64 9.76% 23.28% 15.42% 6.15%

Overseas market 23128535564.92 17982604238.92 22.25% 75.64% 63.48% 5.79%

In case of any adjustment to the statistic scale for primary business data the primary business data of the most recent reporting

period as adjusted according to the statistic scale applied at the end of the reporting period

□ Applicable□ N/A

IV. Analysis of Non-primary Business

□Applicable□ N/A

V. Analysis of Assets and Liabilities

1. Material changes in the components of assets

In RMB

The end of the reporting period The end of the previous year

% of Reason for material

% of total Change %

Amount Amount total changes

assets

assets

Cash and bank

8792751795.06 12.71% 7650283509.10 12.70% 0.01%

balances

Accounts

10598328021.04 15.32% 9792745060.06 16.25% -0.93%

receivable

Inventories 11417997322.49 16.51% 8928944182.01 14.82% 1.69%

Investment 140008997.75 0.20% 142555461.11 0.24% -0.04%

properties

Long-term

equity 121094948.36 0.18% 126566432.55 0.21% -0.03%

investment

Fixed assets 17187713941.47 24.85% 16586762231.15 27.53% -2.68%

Primarily due to the active

efforts for increasing the

production capacities of

optical transceivers

(including optical chips)

Construction

4514260841.57 6.53% 2345985416.22 3.89% 2.64% and AI PCB products

in progress

which leads to the increase

in capital expenditures;

partial production

capacities are under

development.Right-of-use

2104086075.30 3.04% 2209353814.61 3.67% -0.63%

assets

Short-term

9630387148.70 13.92% 8011474049.03 13.30% 0.62%

borrowings

Contract

459685401.30 0.66% 474660658.17 0.79% -0.13%

liabilities

Primarily due to the

Long-term

9440527185.37 13.65% 6375079464.54 10.58% 3.07% increase in project loans in

borrowings

the current period.Lease

1916654495.75 2.77% 1790064820.73 2.97% -0.20%

liabilities

2. Main overseas assets

□Applicable □ N/A

In RMB

Whether it

Controls for Proportion involves

Method of Mode of guaranteeing of overseas risk of

Assets Amount Location Income

acquisition operation the security of assets to net material

assets assets impairment

loss

Its

manufacturing

Hong Kong Hong KongR&D and entity is

Established 25913982869.03 603870107.03 46.23%No

Dongshan China sales located in

Chinese

mainland

Its

manufacturing

Hong KongR&D and entity is

Multek Group Established 24198145848.87 1078632211.11 23.80%No

China sales located in

Chinese

mainland

3. Assets and liabilities measured at fair value

□Applicable □ N/A

In RMB

Impairment

Aggregate

Gain or loss Amount Amount

changes in

Opening loss on recognized acquired in sold in the Other Closing

Item fair value

balance changes in in the the current current changes balance

recorded in

fair value current period period

equity

period

Financial assets

1. Financial assets held

for trading (excluding 11515317. 15500000 11500000. 15500000

-15317.92

derivative financial 92 0.00 00 0.00

assets)

2. Derivative financial 65126316. 51695741. 31141123. 99267093. 48689065.

-7022.58

assets 01 21 84 05 43

3. Other debt

investments

4. Investment in other 12491222 48913646 32622282. 53000000. - 59293351

equity instruments 6.68 8.09 76 00 737463.75 3.78

5. Other non-current

financial assets

Subtotal of financial 20155386 54083220 31141123. 18762228 16376709 - 79662257

assets 0.61 9.30 84 2.76 3.05 759804.25 9.21

Investment properties

Productive biological

assets

Others

20155386 54083220 31141123. 18762228 16376709 - 79662257

Total

0.61 9.30 84 2.76 3.05 759804.25 9.21

46545937. 50141237. 11133593 25704022. - 18158062

Financial liabilities

17 39 8.25 68 738462.86 7.27

4. Encumbrances on assets as of the end of the reporting period

In RMB

Item Closing book Closing book Type of

Reason Opening book Opening book Type of Reason

balance value restriction forrestriction balance value restriction

for

restriction

Cash and Security Security

bank 1845226184.58 1845226184.58 Pledge deposit deposit

balances for notes

1545560882.95 1545560882.95 Pledge for notes

etc. etc.Accounts

receivable 859452468.45 855155206.20 Pledge Factoring 981561847.06 981561847.06 Pledge Factoring

Accounts

receivable 9050787.13 9050787.13 Pledge Pledge ofnotes 73295416.52 73295416.52 Pledge

Pledge of

financing notes

Fixed

assets 159907169.80 151552245.09 Mortgage

Loan

mortgage

Right-of- 2721779536.43 2104086075.30 Mortgage Finance 2708474287.07 2209353814.61 Mortgage Finance

use assets lease lease

Total 5435508976.59 4813518253.21 5468799603.40 4961324206.23

VI. Analysis of Investments

1. Overview

□Applicable □ N/A

Amount of investment in the reporting Amount of investment in the previous

Y/Y % change

period (RMB) period (RMB)

1070435602.00 584356090.00 83.18%

2. Major equity investments acquired during the reporting period

□Applicable□ N/A

3. Major non-equity investments that have not yet been completed in the current period

□Applicable□ N/A

4. Investment in financial assets

(1) Investment in securities

□Applicable □ N/A

In RMB

Aggregate Amount Amount soldProfit or loss

Initial Gain or loss on

Type of Code of Accounting Opening book changes in fair acquired in in the in the Closing Accounting Source of

Short name investment changes in fair

securities securities mode value value recorded the current current reporting book value title funds

costs value

in equity period period period

Domestic and Financial

19999926.9Measurement 19999926.9 462162576.482162502. Self-owned

overseas 688808 Semight 462162576.03 assets held

2by fair value 2 03 95 funds

stocks for trading

Investments

Domestic and

28800000.0Measurement 253942326.in other Self-owned

overseas 920125 Hostar 34885400.00 219056926.33

0by fair value 33equity funds

stocks

instruments

Domestic and Financial

Ruixiang Measurement 25074000.033915000.0 Self-owned

overseas 920178 8841000.00 25074000.00 8841000.00 assets held

Intelligent by fair value 0 0 funds

stocks for trading

57640926.9 28840926.9 487236576.770019829.

Total -- 34885400.00487236576.03 219056926.33 0.00 -- --

2 2 03 28

(2) Investment in derivatives

□Applicable □ N/A

1) Investment in derivatives for hedging purposes during the reporting period

□Applicable □ N/A

In RMB 0’000

Aggregate % of net

Gain or Amount Amount

changes assets at

Initial loss on acquired sold in

Type of investment in Opening in fair Closing the end

investment changes in the the

derivatives balance value balance of the

amount in fair current current

recorded reporting

value period period

in equity period

Commodity futures 15639.18 19782.96 2879.16 0 72740.74 44617.38 50785.48 2.08%

Total 15639.18 19782.96 2879.16 0 72740.74 44617.38 50785.48 2.08%

Hedge accounting policies

and principles adopted for the

reporting period and

significant changes in such N/A

policies and principles

compared to the previous

reporting period

Actual profit or loss for the

The commodity futures transactions recorded in profit or loss were RMB 28791600.reporting period

We conduct hedging transactions for the purpose of leveraging the hedging function of futures

mitigating the effect of market price fluctuations of raw materials and products on our production

Effect of hedging

and operating costs and prices of our main products enhancing our overall risk resistance capacity

and improving our financial soundness.Source of funds for

Self-owned funds

investment in derivatives

Analysis of risks associated

with the derivatives held in

the current period (including

without limitation market Refer to the Announcement of Commodity Futures Hedging Transactions disclosed by us for the

risk liquidity risk credit risk relevant risk analysis and controls.operational risk and legal

risk) and related risk control

measures

Changes in the market price

or fair value of the

derivatives invested in the

current period (in the analysis We are mainly engaged in hedging transactions with mainstream products on major domestic futures

of the fair value of markets. The derivatives traded by us have a transparent and active market and their transaction

derivatives the specific prices and settlement prices can fully reflect their fair value.approaches assumptions and

parameters used shall be

disclosed)

Litigations involved (if

N/A

applicable)

Disclosure date of the

announcement of the board December 12 2025

of directors approving the

investment in derivatives (if

any)

2) Investment in derivatives for speculative purposes during the reporting period

□Applicable□ N/A

The Company did not have any derivative investment for speculative purposes during the reporting period.

5. Use of offering proceeds

□Applicable□ N/A

There was no use of offering proceeds by the Company during the reporting period.VII. Sale of Material Assets and Equities

1. Sale of material assets

□Applicable□ N/A

No material asset has been sold during the reporting period.

2. Sale of material equities

□Applicable□ N/A

VIII. Analysis of Major Subsidiaries and Associates

□Applicable □ N/A

Major subsidiaries and associates representing more than 10% of the net profit of the Company

In RMB

Company Type of Primary Registered Operating Operating

name company business capital Total assets Net assets revenue profit Net profit

R&D sale and

after-sale

Hong services in

Kong Subsidiary respect of HKD 25913982 11349729 18650973 64188957 60387010

Dongshan electronic 10000000 869.03 752.86 983.02 8.48 7.03circuits;

investment

holding

R&D sale and

after-sale

services in

Multek Subsidiary respect of

USD

21824836 24198145 58436330 88014774 13320655 10786322Group electronic

circuits; 0.27

848.87 95.76 05.44 38.79 11.11

investment

holding

Subsidiaries acquired or disposed of during the reporting period

□ Applicable□ N/A

IX. Structured Entities Controlled by the Company

□Applicable□ N/A

X. Risk Exposures to the Company and Countermeasures

1. Risk of concentration of customers

We have good customer resources. Our major customers are well-known domestic and international companies in the relevant

industries that are of sound credit and have established stable cooperation relationships with us. However our top 5 customers

constitute a large proportion of our total sales revenue which may further increase in the future. Any material adverse change in

the business situation of such major customers could have an adverse effect on our business. We will pay close attention to the

industry development dynamics of key customers and customer credit and take active measures for new product and new customer

development to reduce the adverse effects of high concentration of customers on the Company.

2. Risks brought by rapid technology upgrading of the industry

Our business covers electronic circuits optical transceivers (including optical chips) precision components photoelectric

display modules and other technology-intensive industries and our products are widely applied in AI data centers consumer

electronics vehicles communication equipment and other fields all of which are characterized by rapid technology upgrading. If

our R&D and manufacturing capabilities fail to keep pace with the rapid technology upgrading of downstream products our

products and technologies may become obsolete. We will closely follow the trend of cutting-edge technologies in relevant

industries and maintain in-depth communication with key customers to ensure advanced technologies for our products. Meanwhile

we will keep close cooperation with influential universities and research institutions in the industry to maintain our advantages in

technologies and processes.

3. Risk of changes in the global trade environment

Our major customers include some well-known international companies and our export sales have grown steadily for years.Though China has established good economic and trade cooperation relationships with major countries in the world the

increasingly fierce regional frictions in recent years may cause uncertainties in the applicable trade policies which could affect our

international trade. Facing the complex and volatile international trade conditions we will pay close attention to changes in

geopolitical trade policies progressively optimize the global industry layout consolidate capabilities for local operation and

support deepen normal communication with customers strengthen study on relevant international trade rules and compliance

management and take systematic measures to protect against operating risks from changes in the external environment.

4. Risk of market exploitation

Our business covers the R&D production and sale of electronic circuits optical transceivers (including optical chips)

precision components and photoelectric display modules; our products are widely applied in consumer electronics vehicles data

centers AI computing infrastructure and other fields; and our customers are mostly leading enterprises in the industry. Our

industry has the characteristics of fast technology iteration short product life cycle and intense market competition. If we cannot

closely follow the technology development trend of the industry cannot make sufficient investment in R&D cannot promptly

meet the constantly improving product and technical requirements of existing core customers and downstream industries or under

the impact of strict qualifications of downstream industry suppliers and long verification period we cannot promptly develop high-

quality core customers and smoothly enter their supply chain system we may experience insufficient orders and decreasing market

shares resulting in adverse effects on the sale of our products operating revenue profitability and operating performance. We

will increase investment in R&D and strengthen technological innovation and product iteration for continuous improvement of our

core competitiveness. We will take active measures to build a reserve mechanism of multiple customers optimize our customer

structure and build a diversified customer base. We will take early measures intended for the qualification system of target

customers and build a dedicated working team to effectively promote qualification evaluation and admission procedures.Meanwhile we will make continuous efforts to enhance whole-process quality management and control and guarantee production

capacity and improve the comprehensive delivery capabilities in all aspects to provide a solid support for the Company to promote

stable market expansion and achieve sustainable operation.

5. Environmental risk

The production process of our products involves critical steps like epitaxial growth etching passivation photolithography

development cleaning and electroplating which generates wastewater exhaust gases solid waste and various toxic and

hazardous substances. Therefore we are subject to high management and control requirements for environmental protection.Despite our correspondingly established management measures for environmental protection they cannot fully eliminate the risks

of environment accidents caused by management defects equipment failures force majeure or other factors. In the event of a

pollution accident or violation of relevant environmental protection laws and regulations we may face punishment be required to

make rectification and suffer reputation damages which may cause adverse effects on our production and operation. In addition

given the continuous implementation of green and low-carbon development throughout China and stricter supervision over

environmental protection if the environmental protection standard is further enhanced in the future we need to continuously

increase investment in environmental protection and strengthen transformation which may correspondingly increase the operatingcosts of environmental protection and affect our operating performance. We have set “building of an environment-friendlyenterprise” as a key goal of our sustainable development strategy actively implemented the requirements of relevant latest

environmental protection laws and regulations improved the environmental management system enhanced training and

employees’ awareness taken control measures at source and implemented the requirements related to environmental safety in all

of our key business activities to reduce the environmental risks.

6. Foreign exchange risk

Export sales constitute a large proportion of our total sales revenue. Because our day-to-day operation involves transactions in

USD and other foreign currencies and our consolidated accounts are presented in RMB the changes in the exchange rate between

RMB and USD may cause foreign exchange risk to our future operations. We will keep a close watch on the changes in the

relevant foreign exchange rates strive to control the exposure to foreign exchange risk at a reasonable level and hedge or

otherwise reduce exposure to such risk.XI. Formulation and Implementation of Market Value Management System and Valuation

Improvement Plan

Whether the Company has formulated a market value management system

□Yes □ No

Whether the Company has disclosed a valuation improvement plan

□ Yes□ No

For details refer to the Market Value Management System disclosed on www.cninfo.com.cn.XII. Implementation of the Action Plan to Improve the Quality and Returns

Whether the Company has disclosed its action plan announcement to improve the quality and returns

□ Yes□ No

Section IV Corporate Governance Environment and Society

I. Changes in Directors and Senior Executives

□Applicable □ N/A

Name Position Type Date Reason

Left office on term

WANG Zhangzhong Independent director May 15 2026 Re-election

expiry

Left office on term

SONG Liguo Independent director May 15 2026 Re-election

expiry

Left office on term

GAO Yongru Independent director May 15 2026 Re-election

expiry

WANG Leigang Independent director Elected May 15 2026 Re-election

PAN Yongcheng Independent director Elected May 15 2026 Re-election

CAI Weihua Independent director Elected May 15 2026 Re-election

Deputy General

Li Ting Wei Appointment March 25 2026 Appointment

Manager

II. Particulars of Profit Distribution and Transfer of Capital Reserve to the Share Capital

for the Reporting Period

□Applicable□ N/A

The Company has no plan to pay cash dividends distribute bonus shares or convert any capital reserve to the share capital for the

first half of this year.III. Share Incentive Plans Employee Stock Ownership Plans or Other Employee Incentives

□Applicable □ N/A

1. Share incentives: None

2. Employee stock ownership plans (ESOPs)

□Applicable □ N/A

Effective ESOPs in the current period

Total % of total

No. of

Scope of employees shares Changes share Source of funds

employees

held capital

Legal remunerations of the

Key employees for core technologies

employees self-raised funds or

(businesses) of the Company and its 304870

150 None 0.17% otherwise permitted by the

subsidiaries (excluding the Company’s 1

applicable laws and administrative

directors or senior executives)

regulations

Changes in asset manager during the reporting period:

□ Applicable□ N/A

Changes in equity due to disposal of shares by the holders or otherwise during the reporting period:

□ Applicable□ N/A

Exercise of shareholder rights during the reporting period: N/A

Other information related to the ESOPs during the reporting period and the relevant explanation

□ Applicable□ N/A

Changes in the members of the ESOP management committee during the reporting period

□ Applicable□ N/A

The financial effect of the ESOPs on the Listed Company during the reporting period and the relevant accounting treatment

□ Applicable□ N/A

Termination of the ESOPs during the reporting period:

□ Applicable□ N/A

3. Other employee incentive measures

□Applicable□ N/A

IV. Disclosure of Environmental Information

Whether the Listed Company and its major subsidiaries are included in the list of enterprises to disclose environmental information

in accordance with law

□Yes □ No

Number of enterprises included in the list of enterprises

to disclose environmental information in accordance 9

with law

Index for query of environmental information reports disclosed in

No. Enterprise name

accordance with law

Jiangsu Source Communication Technology

Co. Ltd.

2 MFLEX Suzhou Co. Ltd.

3 MFLEX Yancheng Co. Ltd. Official website of the Department of Ecology and Environment ofChaowei Microelectronics (Yancheng) Co. Jiangsu Province (http://sthjt.jiangsu.gov.cn/) - “Environmental

4Ltd. Protection Faces” Information Disclosure Platform - Lawful

Yancheng Dongshan Precision Enterprise Information Disclosure

5

Manufacturing Co. Ltd.Yancheng Dongchuang Precision

6

Manufacturing Co. Ltd.

7 Multek Technology (Zhuhai) Co. Ltd. The Department of Ecology and Environment of Guangdong

Province - Guangdong Enterprise Environmental Information

8 Multek Industries Limited

Disclosure System According to Law

9 Multek China Limited (https://gdee.gd.gov.cn/gdeepub/front/dal/dal/newindex)

V. Social Responsibility

Upholding the idea of “integration of enterprise development with social responsibility” and under the mission of “building abetter connected world for tomorrow” we have progressively improved the governance system to include the concerns of

stakeholders the creation of social value and the environment sustainable development into our core decision-making in an effort

to seriously fulfill the responsibilities as a corporate citizen and promote the economic and social high-quality development.In the first half of 2026 we made continuous efforts to deepen ESG management practices while insisting on “customer-centric” and incorporating customers’ requirements and high quality standards into the full life cycle of products to ensure rapid

response and efficient handling of requests and sustained supply of high-quality products and satisfactory services. On the basis of

our business strategy we strove to create a fair and transparent purchase environment optimize the whole-life cycle supplier

management and made continuous efforts to build a competitive resilient and sustainable supply chain system. We strictly abided

by laws regulations and policies by establishing and improving the labor and human rights management system progressively

improving the talent training and development system and constantly improving the sense of belonging and value of employees.We made active efforts to develop the regional economy and continuous efforts for public welfare and charity activities in order to

fulfill our corporate social responsibility and promote social development with our practical acts.Section V Significant Matters

I. Covenants made by the actual controllers shareholders affiliates and acquirer of the

Company the Company itself and other related parties that have been fulfilled during the

reporting period or that fail to be fulfilled on time as of the end of the reporting period

□Applicable □ N/A

Validity

Background Type of Time of period of Status of

Covenantor Content of covenant

of covenant covenant covenant the fulfillment

covenant

Each of the shareholders YUAN Yonggang and YUAN

Yongfeng as director and senior executive of the As of the

Company covenants that so long as I remain a director end of the

Covenants and senior executive of the Company I will not transfer reporting

YUAN

related to more than 25% of the total shares held by me in the period the

Yonggang April 9 Permanently

restrictions Company each year; and if I cease to be a director and covenantors

and YUAN 2010 binding

on the sale senior executive of the Company I will not transfer any have

Yongfeng

of shares shares held by me in the Company within half a year and complied

will not transfer more than 50% of the total shares held with such

by me in the Company through the stock exchange covenants.within 12 months thereafter.Covenants

As of the

related to

end of the

YUAN horizontal

Covenants related to horizontal competition: Each of the reporting

Yonggang competition

shareholders YUAN Yonggang YUANYongfeng and period the

YUAN related- April 9 Permanently

YUAN Fugen covenants that I do not directly or covenantors

Yongfeng party 2010 binding

indirectly engage in any business in competition with the have

and YUAN transactions

Covenant business actually conducted by the Company. compliedFugen and

relating to with suchoccupation

initial covenants.of funds

public

offering or Covenants related to horizontal competition: Each of the

subsequent shareholders YUAN Yonggang YUANYongfeng and

fundraisings YUAN Fugen covenants that after the completion of this

material asset restructuring I will not directly or through

any affiliate participate or engage in any business that

Covenants substantially competes or might compete with the

As of the

related to business of the Company; and if any product

end of the

YUAN horizontal manufactured or business conducted by any entity wholly

reporting

Yonggang competition owned controlled or invested by me in the future

period the

YUAN related- competes or might compete with the Company at the June 11 Permanently

covenantors

Yongfeng party request of the Company I will transfer all of the 2018 binding

have

and YUAN transactions investment or shares held by me in such entity give

complied

Fugen and priority to the Company or its wholly owned subsidiary

with such

occupation in the acquisition of such investment or shares subject to

covenants.of funds the applicable laws and regulations and use my best

efforts to procure that the transfer price will be

determined on an arm’s length basis; and if I or any of

my affiliates breaches any covenant set forth above I

will indemnify the Company and other shareholders for

the damages arising therefrom according to law.YUAN Covenants Covenants related to the regulation and reduction of June 11 Permanently As of the

Yonggang related to related-party transactions: Each of the shareholders 2018 binding end of the

YUAN horizontal YUAN Yonggang YUANYongfeng and YUAN Fugen reporting

Yongfeng competition covenants that (1) I and my affiliates will avoid or reduce period the

and YUAN related- related-party transactions with the Company to the covenantors

Fugen party maximum extent practicable; (2) with respect to the have

transactions related-party transactions that are unavoidable or complied

and necessary I will abide by the principle of justice fairness with such

occupation and openness enter into the relevant agreements covenants.of funds according to law perform the legal procedures pursuant

to the applicable laws regulations normative documents

the Articles of Association and other relevant provisions

of the Company ensure that such related-party

transactions are fair comply with the regulations and

will not damage the legitimate rights and interests of the

Company and other shareholders and make the relevant

information disclosures promptly in accordance with the

requirements of the applicable laws regulations and

normative documents; and (3) I will exercise the

shareholder rights in strict accordance with the Company

Law and other applicable laws and regulations and the

relevant provisions of the Articles of Association of the

Company and abstain from the voting on the related-

party transactions involving me and other entities

controlled by me at the general meeting of the Company

in accordance with the relevant provisions.I. Within six months from the base date for pricing

(March 13 2024) for the private placement of shares I

and the affiliates under my control have not sold the

shares of DSBJ; II. From the base date for pricing to the

expiration of eighteen months after the private placement As of the

Covenant

of DSBJ is completed I and the affiliates under my end of the

not to sell

control will neither sell DSBJ’s shares in any form nor reporting

YUAN the

have any plan of selling DSBJ’s shares; and III. My period the

Yonggang Company’s December Permanently

covenant is an irrevocable covenant which shall be covenantors

and YUAN shares 18 2024 binding

binding on me and the affiliates under my control from have

Yongfeng during a

the execution date of this covenant and the transferee complied

specific

under the share transfer described above shall inherit this with such

period

covenant; if I and the affiliates under my control sell covenants.shares in violation of this covenant all the proceeds from

selling such shares shall be owned by DSBJ and I shall

be fully responsible for all the legal liabilities arising

therefrom.Covenant regarding the remedial measures against

dilution of current earnings caused by the private

YUAN

placement: Each of the directors and senior executives of

Yonggang

the Company covenants that: (1) I will not transfer

YUAN As of the

benefits to any other entity or individual without

Yongfeng end of the

compensation or on unfair terms or otherwise damage

ZHAO reporting

the interests of the Company; (2) I will exercise self-

Xiutian period the

Other Other discipline in consumption in performing my duties; (3) I October Permanently

SHAN covenantors

covenants covenants will not use the assets of the Company to engage in any 10 2019 binding

Jianbin have

investment or consumption activities not in connection

WANG complied

with my duties; (4) I will link the compensation system

Xu MAO with such

adopted by the Board of Directors or the Compensation

Xiaoyan covenants.Committee with the implementation of the Company’s

and MA

remedial measures against dilution of current earnings;

Liqiang

(5) if the Company implements any share incentive plan

in the future I will link the vesting conditions under such

share incentive plan with the implementation of the

Company’s remedial measures against dilution of current

earnings; and (6) I will seriously implement the

Company’s remedial measures against dilution of current

earnings and abide by the relevant covenants made by

me; and if I breach any covenant set forth above I will

indemnify the Company or the investors for the losses

arising therefrom according to law and accept the

punishments that the competent regulatory authorities

may impose on me.Covenant regarding the remedial measures against

dilution of current earnings caused by the private As of the

placement: Each of the controlling shareholders and end of the

YUAN

actual controllers of the Company covenants that I will reporting

Yonggang

not interfere with the management and operation of the period the

YUAN Other October Permanently

Company beyond my powers or infringe on the interests covenantors

Yongfeng covenants 17 2019 binding

of the Company; and as the person responsible for the have

and YUAN

serious implementation of the remedial measures against complied

Fugen

dilution of current earnings if I breach or refuse to fulfill with such

any covenant set forth above I will assume the relevant covenants.liabilities according to law.To ensure the effective implementation of the remedial

measures against dilution of earnings to be taken by the

Company each of the controlling shareholders and actualcontrollers of the Company covenants that: “(1) I will notinterfere with the management and operation of the

Company beyond my powers or infringe on the interests

of the Company; (2) from the date of this Letter of

Undertaking till the completion of this offering in case As of the

of any new regulatory provisions promulgated by the end of the

YUAN

CSRC or the SZSE regarding the remedial measures reporting

Yonggang

against dilution of earnings and related covenants as a period the

YUAN Other March 12 Permanently

result of which the covenants set forth above no longer covenantors

Yongfeng covenants 2024 binding

comply with such new provisions I will make additional have

and YUAN

covenants in accordance with such new provisions; and complied

Fugen

(3) I will seriously implement the remedial measures with such

against dilution of earnings adopted by the Company and covenants.fulfill my covenants in connection therewith and if I

breach or refuse to fulfill any covenant set forth above

accept the penalties or other regulatory actions that may

be imposed or taken by the CSRC the SZSE or other

competent securities authorities against me and

indemnify the Company or the investors for the lossesarising therefrom according to law.”

To ensure the effective implementation of the remedial

YUAN measures against dilution of earnings to be taken by the

Yonggang Company each of the directors and senior executives of

As of theYUAN the Company covenants that: “(1) I will not transferend of the

Yongfeng benefits to any other entity or individual without

reporting

ZHAO compensation or on unfair terms or otherwise damage

period the

Other Xiutian Other the interests of the Company; (2) I will exercise self- March 12 Permanently

covenantors

covenants SHAN covenants discipline in consumption in performing my duties; (3) I 2024 binding

have

Jianbin will not use the assets of the Company to engage in any

complied

WANG investment or consumption activities not in connection

with such

Xu and with my duties; (4) I will link the compensation system

covenants.MAO adopted by the Board of Directors or the Compensation

Xiaoyan Committee with the implementation of the Company’s

remedial measures against dilution of earnings; (5) if the

Company implements any share incentive plan in the

future I will link the vesting conditions under such share

incentive plan with the implementation of the Company’s

remedial measures against dilution of earnings; (6) from

the date of this Letter of Undertaking till the completion

of this offering in case of any new regulatory provisions

promulgated by the CSRC or the SZSE regarding the

remedial measures against dilution of earnings and

related covenants as a result of which the covenants set

forth above no longer comply with such new provisions

I will make additional covenants in accordance with such

new provisions; and (7) I will seriously implement the

remedial measures against dilution of current earnings

adopted by the Company and fulfill my covenants in

connection therewith and if I breach any covenant set

forth above indemnify the Company or the investors forthe losses arising therefrom according to law.”

Whether the

covenants

have been Yes

fulfilled on

time

If any

covenant

fails to be

fulfilled on

time please

explain the N/A

reason and

the relevant

actions to

be taken in

detail

II. Occupation by the Controlling Shareholders and their Affiliates of the Funds of the

Listed Company for Non-operating Purpose

□Applicable□ N/A

Our controlling shareholders and their affiliates have not occupied our funds for non-operating purposes during the reporting

period.III. External Guarantees in Violation of the Regulations

□Applicable□ N/A

We have not provided any external guarantee in violation of the applicable regulations during the reporting period.IV. Engagement and Termination of Engagement of Accounting Firm

Has the semi-annual financial report been audited

□ Yes□ No

The semi-annual report has not been audited.V. Explanation by the Board of Directors about the Modified Auditor’s Report Issued by the

Accounting Firm for the Reporting Period

□Applicable□ N/A

VI. Explanation by the Board of Directors about the Modified Auditor’s Report of the

Previous Year

□Applicable□ N/A

VII. Matters Relating to Bankruptcy and Reorganization

□Applicable□ N/A

We have not been involved in any bankruptcy or reorganization proceedings during the reporting period.VIII. Litigation

Material litigation and arbitration proceedings

□ Applicable□ N/A

We have not been involved in any material litigation or arbitration proceedings during the reporting period.Other litigation proceedings

□ Applicable□ N/A

IX. Punishments and Rectifications

□Applicable□ N/A

We have not been involved in any punishment and rectification during the reporting period.X. Credit Standing of the Company and its Controlling Shareholders and Actual Controllers

□Applicable□ N/A

XI. Material Related-party Transactions

1. Related-party transactions relating to day-to-day operation

□Applicable□ N/A

There has been no related-party transaction relating to day-to-day operation during the reporting period.

2. Related-party transactions involving the acquisition or sale of assets or equities

□Applicable□ N/A

There has been no related-party transaction involving the acquisition or sale of assets or equities during the reporting period.3. Related-party transactions involving joint external investment

□Applicable□ N/A

There has been no related-party transaction involving joint external investment during the reporting period.

4. Debts owed by and to related parties

□Applicable□ N/A

There has been no debt owed by or to related parties during the reporting period.

5. Dealings with affiliated financial companies

□Applicable□ N/A

There has been no deposit loan facility or other financial businesses between us and any of our affiliated financial companies.

6. Dealings between financial companies controlled by the Company and its affiliates

□Applicable□ N/A

There has been no deposit loan facility or other financial businesses between any of our controlled financial companies and

affiliates.

7. Other material related-party transactions

□Applicable□ N/A

There has been no other material related-party transaction during the reporting period.XII. Particulars and Performance of Material Contracts

1. Trusteeship contracting and leases

(1) Trusteeship

□Applicable□ N/A

No such case during the reporting period.

(2) Contracting

□Applicable□ N/A

No such case during the reporting period.

(3) Leases

□Applicable□ N/A

No such case during the reporting period.2. Material guarantees

□Applicable □ N/A

In RMB 0’000

External guarantees provided by the Company and its subsidiaries (excluding those provided for the subsidiaries)

Disclosure date of Whether or

Maximum Effective Counter Whether

announcement of the Actual amount Type of Collateral (if Term of not provided

Obligor amount date of guarantee (if or not

maximum amount guaranteed guarantee applicable) guarantee for a related

guaranteed guarantee applicable) expired

guaranteed party

Suzhou Toprun Electric

3000 1521.80

Equipment Co. Ltd.Total amount of external guarantee

Total amount of external guarantee approved

3000 actually provided during the 3100.80

during the reporting period (A1)

reporting period (A2)

Total amount of external guarantee

Total amount of external guarantee approved as at

3000 provided as at the end of the 1521.80

the end of the reporting period (A3)

reporting period (A4)

Guarantees provided by the Company for its subsidiaries

Disclosure date of Whether or

Maximum Effective Counter Whether

announcement of the Actual amount Type of Collateral (if Term of not provided

Obligor amount date of guarantee (if or not

maximum amount guaranteed guarantee applicable) guarantee for a related

guaranteed guarantee applicable) expired

guaranteed party

Dragon Electronix

Holdings Inc. and its 200000 126600.00

subsidiaries

Hong Kong Dongshan

Holding Limited and its 127000 63748.02

subsidiaries

Multek Group (Hong

Kong) Limited and its 1000000 368971.17

subsidiaries

Source Photonics

Holdings (Cayman) 100000 51743.07

Limited and its

subsidiaries

Chaowei

Microelectronics 20000 0

(Yancheng) Co. Ltd.Suzhou Dongshan

20000 14700.00

Display Inc.Mutto Optronics

50000 43899.45

Technology Co. Ltd.Suzhou RF Top

Electronic

5000 843.55

Communication Co.Ltd.Suzhou Chengjia

Precision Manufacturing 5000 0

Co. Ltd.Suzhou Yongchuang

Communication 20000 4350.20

Technology Co. Ltd.Yancheng Dongchuang

Precision Manufacturing 140000 85395.73

Co. Ltd.Yancheng Dongshan

Precision Manufacturing 60000 31850.00

Co. Ltd.Groupe Mecanique

Decoupage S.A. and its 50000 0

subsidiaries

Total amount of guarantee actually

Total amount of guarantee approved to be provided

1797000 provided for subsidiaries during 1014754.30

for subsidiaries during the reporting period (B1)

the reporting period (B2)

Total amount of guarantee approved to be provided Total amount of guarantee

for subsidiaries as at the end of the reporting 1797000 provided for subsidiaries as at the 792101.19

period (B3) end of the reporting period (B4)

Guarantees provided by subsidiaries for each other

Obligor Disclosure date of Maximum Effective

Actual amount Type of Collateral (if Counter Term of Whether Whether or

announcement of the amount date of guaranteed guarantee applicable) guarantee (if guarantee or not not provided

maximum amount guaranteed guarantee applicable) expired for a related

guaranteed party

Total amount of guarantee actually

Total amount of guarantee approved to be provided

0 provided for subsidiaries during 0

for subsidiaries during the reporting period (C1)

the reporting period (C2)

Total amount of guarantee approved to be provided Total amount of guarantee

for subsidiaries as at the end of the reporting 0 provided for subsidiaries as at the 0

period (C3) end of the reporting period (C4)

Total amount of guarantee provided by the Company

Total amount of guarantee actually

Total amount of guarantee approved during the

1800000 provided during the reporting 1017855.10

reporting period (A1+B1+C1)

period (A2+B2+C2)

Total amount of guarantee

Total amount of guarantee approved as at the end

1800000 provided as at the end of the 793622.99

of the reporting period (A3+B3+C3)

reporting period (A4+B4+C4)

Ratio of the total amount of guarantee (A4+B4+C4) to the net assets of the

32.57%

Company

Incl.:

Outstanding guarantees provided for shareholders actual controllers and their

0

affiliates (D)

Outstanding guarantees directly or indirectly provided for obligors whose debt-to-

647129.24

assets ratio exceeds 70% (E)

Portion of the total amount of guarantee in excess of 50% of the net assets (F) 0

Total (D+E+F) 647129.24

Explanation about the joint and several liabilities that have been or might be

N/A

incurred in respect of outstanding guarantees during the reporting period (if any)

Explanation about external guarantees provided in contravention of the established

N/A

procedures (if any)

3. Entrusted wealth management

□Applicable □ N/A

In RMB 0’000

Balance of entrusted wealth

Type of product Risk characteristics management during the Overdue amount

reporting period

Low-risk or principal-

Bank wealth management

guaranteed with floating 15500 0

product

incomes

4. Other material contracts

□Applicable□ N/A

XIII. Record Forms for Investigation Research Communication Interview and Other

Activities during the Reporting Period

□Applicable □ N/A

Method of Particulars of the

Type of Main topics of discussion and

Date Place communic Guests investigation and research

guests information provided

ation activity available at

Online Interpretation of our annual

2026-4-28 Online communic Others Investors report and first quarter report

ation etc.Instituti

Communi

onal Optical communication

2026-6-2 Online cation by E-Fund etc.

investor business etc. www.cninfo.com.cn

telephone

s

Instituti

On-site

Conferen onal JPMorgan Optical communication

2026-6-17 investigati

ce room investor etc. business etc.on

s

XIV. Other Significant Matters

□Applicable□ N/A

There’s no other significant matter needing to be explained for the reporting period.XV. Significant Matters of Subsidiaries

□Applicable□ N/A

Section VI Changes in Shares and Shareholders

I. Changes in Shares

1. Changes in shares

In Shares

Before the change +/- After the change

Capitalization

New Bonus

Number % of capital Others Subtotal Number %

shares shares

reserves

I. Non-tradable shares 445285809 24.31% 445285809 24.31%

1. Shares held by the State

2. Shares held by State-

owned corporations

3. Shares held by other

445285809 24.31% 445285809 24.31%

domestic investors

Incl.: Shares held by

domestic non-State-owned

corporations

Shares held by domestic

445285809 24.31% 445285809 24.31%

natural persons

4. Shares held by foreign

investors

Incl.: Shares held by

foreign corporations

Shares held by foreign

natural persons

II. Tradable shares 1386321723 75.69% 1386321723 75.69%

1. RMB-denominated

1386321723 75.69% 1386321723 75.69%

ordinary shares

2. Foreign currency-

denominated shares listed

domestically

3. Foreign currency-

denominated shares listed

overseas

4. Others

III. Total shares 1831607532 100.00% 1831607532 100.00%

Cause of change

□ Applicable□ N/A

Approval of changes in shares

□ Applicable□ N/A

Registration of changes in shares

□ Applicable□ N/A

Progress of share repurchases

□ Applicable□ N/A

Progress of sale or repurchase of shares by call auction

□ Applicable□ N/A

Effect of changes in shares on financial indicators including the basic earnings per share diluted earnings per share net assets per

share attributable to ordinary shareholders of the Company etc. in the last year and the last period

□ Applicable□ N/A

Other information that should be disclosed at the discretion of the Company or at the request of the securities regulatory authorities

□ Applicable□ N/A

2. Changes in non-tradable shares

□Applicable□ N/A

II. Offering and Listing of Securities

□Applicable□ N/A

III. Number of Shareholders and Shareholding Structure of the Company

In Shares

Total number of preferred shareholders whose voting

Total number of ordinary shareholders at the end

389315 rights had been restituted at the end of the reporting 0

of the reporting period

period (if any) (Note 8)

Shareholding by shareholders holding more than 5% of the shares or the top 10 shareholders (excluding the shares lent via refinancing)

No. of shares Changes in Pledge attachment or freeze

No. of non-

Status of Shareholding held at the end shareholding No. of tradable

Name of shareholder tradable shares

shareholder percentage of the reporting during the shares held

held Status of shares Number

period reporting period

Domestic natural

YUAN Yonggang 16.53% 302781254 252224705 50556549 Pledge 104828000

person

Domestic natural

YUAN Yongfeng 13.51% 247526917 191929879 55597038 Pledge 46583800

person

Hong Kong Securities Foreign

3.77% 69090247 69090247 N/A

Clearing Company Limited corporation

Domestic natural

YUAN Fugen 3.21% 58796052 58796052 N/A

person

China Life Insurance

Company Ltd. –

Traditional – General Others 0.58% 10675141 10675141 N/A

Insurance Product – 005L

– CT001 Shanghai

China Merchants Bank

Co. Ltd. – Ruiyuan

Others 0.40% 7414800 7414800 N/A

Growth Value Hybrid

Securities Investment Fund

Reform (Shanghai) Private

Fund Management Co.Ltd. – Reform Red Coast Others 0.40% 7236854 7236854 N/A

No. 3 Private Securities

Investment Fund

Industrial and Commercial

Bank of China Limited –

Fullgoal Innovative Others 0.38% 7000000 7000000 N/A

Technology Commingled

Securities Investment Fund

China Construction Bank

Corporation – Huatai-

PineBridge Quality Others 0.38% 6872604 6872604 N/A

Growth Commingled

Securities Investment Fund

Bank of China – Morgan

Stanley China Digital

Others 0.34% 6194686 6194686 N/A

Economy Hybrid

Securities Investment Fund

Strategic investors or general corporations

becoming the top 10 shareholders as a result of N/A

rights issue (if any) (Note 3)

Among the shareholders listed above YUAN Yonggang and YUAN Yongfeng are sons of YUAN Fugen and YUAN Yongfeng is the elder

Affiliates or concert parties among the brother of YUAN Yonggang. YUAN Fugen YUAN Yongfeng and YUAN Yonggang are our actual controllers. We are not aware whether

shareholders listed above there are affiliates or concert parties within the meaning of the Administrative Measures for the Takeover of Listed Companies among other

shareholders listed above.Delegation or waiver of voting rights or

ownership of voting rights by or to the N/A

shareholders listed above

Special explanation about any dedicated account

for repurchase opened by any top 10 shareholder N/A

(if any) (Note 11)

Shareholding by the top 10 holders of tradable shares (excluding the shares lent via refinancing or under executive lock-up)

Type and number of shares

Name of shareholder No. of tradable shares held at the end of the reporting period

Type of shares Number

RMB-

Hong Kong Securities Clearing Company Limited 69090247 denominated 69090247

ordinary share

RMB-

YUAN Fugen 58796052 denominated 58796052

ordinary share

RMB-

YUAN Yongfeng 55597038 denominated 55597038

ordinary share

RMB-

YUAN Yonggang 50556549 denominated 50556549

ordinary share

China Life Insurance Company Ltd. – Traditional RMB-

– General Insurance Product – 005L – CT001 10675141 denominated 10675141

Shanghai ordinary share

RMB-

China Merchants Bank Co. Ltd. – Ruiyuan

7414800 denominated 7414800

Growth Value Hybrid Securities Investment Fund

ordinary share

Reform (Shanghai) Private Fund Management RMB-

Co. Ltd. – Reform Red Coast No. 3 Private 7236854 denominated 7236854

Securities Investment Fund ordinary share

Industrial and Commercial Bank of China Limited RMB-

– Fullgoal Innovative Technology Commingled 7000000 denominated 7000000

Securities Investment Fund ordinary share

China Construction Bank Corporation – Huatai- 6872604 RMB- 6872604

PineBridge Quality Growth Commingled denominated

Securities Investment Fund ordinary share

RMB-

Bank of China – Morgan Stanley China Digital

6194686 denominated 6194686

Economy Hybrid Securities Investment Fund

ordinary share

Among the shareholders listed above YUAN Yonggang and YUAN Yongfeng are sons of YUAN Fugen and YUAN Yongfeng is the elder

Affiliates or concert parties among the top 10

brother of YUAN Yonggang. YUAN Fugen YUAN Yongfeng and YUAN Yonggang are our actual controllers. We are not aware whether

holders of tradable shares and among the top 10

there are affiliates or concert parties within the meaning of the Administrative Measures for the Takeover of Listed Companies among other

holders of tradable shares and top 10 shareholders

shareholders listed above.Securities margin trading conducted by the top 10

N/A

ordinary shareholders (if any) (Note 4)

IV. Changes in Shareholding of Directors and Senior Executives

□Applicable□ N/A

There has been no change in the shareholding of our directors and senior executives during the reporting period as detailed in the

Annual Report 2025.V. Changes in Controlling Shareholders and Actual Controllers

Describe the progress of change of control if the Company has previously disclosed a planned change of control by the actual

controllers but not completed

□ Applicable□ N/A

Change in the controlling shareholders during the reporting period

□ Applicable□ N/A

There has been no change in our controlling shareholders during the reporting period.Change in the actual controllers during the reporting period

□ Applicable□ N/A

There has been no change in our actual controllers during the reporting period.VI. Preferred Shares

□Applicable□ N/A

We did not have any preferred share during the reporting period.Section VII Bonds

□Applicable□ N/A

Section VIII Financial Report

I. Auditor’s Report

Has the semi-annual report been audited

□ Yes□ No

This semi-annual financial report has not been audited.II. Financial Statements

The amounts in the statements contained in the notes to the financial statements are presented in RMB

1. Consolidated balance sheet

Prepared by: Suzhou Dongshan Precision Manufacturing Co. Ltd.June 30 2026

In RMB

Item Closing balance Opening balance

Current assets:

Cash and bank balances 8792751795.06 7650283509.10

Settlement deposit

Loans to banks and other financial institutions

Financial assets held for trading 796622579.21 201553860.61

Derivative financial assets

Notes receivable 84355.48

Accounts receivable 10598328021.04 9792745060.06

Accounts receivable financing 263570165.06 285277607.54

Advances to suppliers 720298190.03 274265688.35

Premiums receivable

Reinsurance accounts receivable

Reinsurance contract reserves receivable

Other receivables 199189721.60 165859090.82

Incl.: Interest receivable

Dividends receivable

Financial assets held under resale agreements

Inventories 11417997322.49 8928944182.01

Incl.: Data resources

Contract assets

Assets held for sale

Non-current assets due within one year 96551847.52

Other current assets 1624243297.69 1328586793.26

Total current assets 34509637295.18 28627515791.75

Non-current assets:

Loans and advances to clients

Debt investments

Other debt investments

Long-term receivables 200461581.81 356797043.79

Long-term equity investment 121094948.36 126566432.55

Investments in other equity instruments 753350370.10 442976297.74

Other non-current financial assets

Investment properties 140008997.75 142555461.11

Fixed assets 17187713941.47 16586762231.15

Construction in progress 4514260841.57 2345985416.22

Productive biological assets

Oil and gas assets

Right-of-use assets 2104086075.30 2209353814.61

Intangible assets 1337819327.31 1321067216.43

Incl.: Data resources

Development expenses 45633398.23 41694639.16

Incl.: Data resources

Goodwill 4682691033.43 4769259362.01

Long-term deferred expenses 1024532488.90 990698521.69

Deferred tax assets 815482511.41 829762594.06

Other non-current assets 1730638190.52 1459542272.71

Total non-current assets 34657773706.16 31623021303.23

Total assets 69167411001.34 60250537094.98

Current liabilities:

Short-term borrowings 9630387148.70 8011474049.03

Borrowings from the Central Bank

Borrowings from banks and other financial institutions

Financial liabilities held for trading 181580627.27 46545937.17

Derivative financial liabilities

Notes payable 616705866.60 1002812950.68

Accounts payable 15735505650.92 13043136687.34

Advances from clients

Contract liabilities 459685401.30 474660658.17

Financial assets sold under repurchase agreements

Deposits from clients and other banks

Funds received as stock broker

Funds received as underwriter of securities

Employee benefits payable 884144727.12 995231432.74

Taxes payable 644261153.86 641337262.33

Other payables 154547241.39 705336813.22

Incl.: Interest payable

Dividends payable

Fees and commissions payable

Reinsurance accounts payable

Liabilities held for sale

Non-current liabilities due within one year 2975457863.36 3488303627.95

Other current liabilities 65198657.61 43838129.08

Total current liabilities 31347474338.13 28452677547.71

Non-current liabilities:

Provision for insurance contracts

Long-term borrowings 9440527185.37 6375079464.54

Bonds payable

Incl.: Preferred shares

Perpetual bonds

Lease liabilities 1916654495.75 1790064820.73

Long-term payables

Long-term employee benefits payable 133338235.43 142470448.33

Provisions 221976523.02 263756502.85

Deferred income 870657651.65 889843133.49

Deferred tax liabilities 687709601.19 634806937.54

Other non-current liabilities

Total non-current liabilities 13270863692.41 10096021307.48

Total liabilities 44618338030.54 38548698855.19

Owners’ equity:

Share capital 1831607532.00 1831607532.00

Other equity instruments

Incl.: Preferred shares

Perpetual bonds

Capital reserve 9364904944.65 9257892537.77

Less: Treasury shares 125085277.62 175076133.79

Other comprehensive income -351692077.71 -240832682.74

Special reserve

Surplus reserve 249150887.74 249150887.74

General risk reserve

Retained profits 13397898226.42 10538405831.61

Total owners’ equity attributable to the parent company 24366784235.48 21461147972.59

Minority interests 182288735.32 240690267.20

Total owners’ equity 24549072970.80 21701838239.79

Total liabilities and owners’ equity 69167411001.34 60250537094.98

Legal Representative: YUAN Yonggang CFO: WANG Xu Accounting Supervisor: ZHU Deguang

2. Standalone balance sheet

In RMB

Item Closing balance Opening balance

Current assets:

Cash and bank balances 1797027600.68 1160294626.93

Financial assets held for trading 482600.00 219600.00

Derivative financial assets

Notes receivable 84355.48

Accounts receivable 2830979403.55 2968231046.34

Accounts receivable financing 133700423.68 97221485.41

Advances to suppliers 29646722.08 31232780.09

Other receivables 7045107579.69 6264171897.96

Incl.: Interest receivable

Dividends receivable 1399081471.06 1430532996.21

Inventories 663935500.53 674472213.11

Incl.: Data resources

Contract assets

Assets held for sale

Non-current assets due within one year 30697260.09

Other current assets 68164879.44 63612410.64

Total current assets 12599826325.22 11259456060.48

Non-current assets:

Debt investments

Other debt investments

Long-term receivables 8772612.88 76509581.77

Long-term equity investment 10325701433.27 10272197298.16

Investments in other equity instruments 299091154.78 233620897.88

Other non-current financial assets 1422215467.07 725589519.73

Investment properties

Fixed assets 756711567.17 746080950.55

Construction in progress 84081493.54 116200639.43

Productive biological assets

Oil and gas assets

Right-of-use assets 4036637.47 652300.04

Intangible assets 27350524.17 29117476.28

Incl.: Data resources

Development expenses

Incl.: Data resources

Goodwill

Long-term deferred expenses 65433565.46 62191879.79

Deferred tax assets 284745.88 90067212.74

Other non-current assets 53100176.54 470817876.53

Total non-current assets 13046779378.23 12823045632.90

Total assets 25646605703.45 24082501693.38

Current liabilities:

Short-term borrowings 1970561804.40 1891299933.33

Financial liabilities held for trading 138600.00

Derivative financial liabilities

Notes payable 224613823.66 794515542.20

Accounts payable 2031403348.28 1713486270.10

Advances from clients

Contract liabilities 29778023.74 24694026.25

Employee benefits payable 21123524.59 21209233.64

Taxes payable 2468409.52 2981563.32

Other payables 5120898953.12 5522584357.60

Incl.: Interest payable

Dividends payable

Liabilities held for sale

Non-current liabilities due within one year 1398138479.76 1491016892.43

Other current liabilities 4647129.88 4002965.31

Total current liabilities 10803772096.95 11465790784.18

Non-current liabilities:

Long-term borrowings 3062596213.05 1356851593.72

Bonds payable

Incl.: Preferred shares

Perpetual bonds

Lease liabilities 2271314.25

Long-term payables

Long-term employee benefits payable

Provisions 1284160.56 1284160.56

Deferred income 19192706.08 16537828.64

Deferred tax liabilities

Other non-current liabilities

Total non-current liabilities 3085344393.94 1374673582.92

Total liabilities 13889116490.89 12840464367.10

Owners’ equity:

Share capital 1831607532.00 1831607532.00

Other equity instruments

Incl.: Preferred shares

Perpetual bonds

Capital reserve 9255763392.77 9156573425.73

Less: Treasury shares 125085277.62 175076133.79

Other comprehensive income 68240906.24 12485447.88

Special reserve

Surplus reserve 249150887.74 249150887.74

Retained profits 477811771.43 167296166.72

Total owners’ equity 11757489212.56 11242037326.28

Total liabilities and owners’ equity 25646605703.45 24082501693.38

3. Consolidated income statement

In RMB

Item First half of 2026 First half of 2025

I. Total operating revenue 27797683972.88 16955163898.89

Incl.: Operating revenue 27797683972.88 16955163898.89

Interest income

Premiums earned

Fee and commission income

II. Total operating costs 24770727041.86 16030744161.86

Incl.: Operating cost 22196075162.56 14650499235.90

Interest expenses

Fee and commission expenses

Surrenders

Net payments for insurance claims

Net insurance reserves

Policyholder dividends

Reinsurance expenses

Taxes and surcharges 78955921.37 63725956.00

Selling expenses 268145700.67 157942605.07

Administrative expenses 897460520.37 547561939.49

R&D expenses 784301317.52 581467466.93

Financial expenses 545788419.37 29546958.47

Incl.: Interest expenses 296149334.39 198585725.04

Interest income 86441618.15 113967483.54

Add: Other income 171583827.69 141318212.63

Investment income (loss expressed with “-”) 33671781.46 -6702003.08

Incl.: Investment income from associates and joint ventures -3664609.04 -4073896.56

Gain on derecognition of financial assets at amortized cost

Exchange gain (loss expressed with “-”)

Net exposure hedging income (loss expressed with “-”)

Gain on changes in fair value (loss expressed with “-”) 490690971.91 2536226.77

Credit impairment loss (loss expressed with “-”) -13777349.90 3764627.53

Impairment loss on assets (loss expressed with “-”) -198128450.05 -89174069.11

Gain on disposal of assets (loss expressed with “-”) -7633381.80 -14963024.24

III. Operating profit (loss expressed with “-”) 3503364330.33 961199707.53

Add: Non-operating revenue 2634397.34 5619440.36

Less: Non-operating expenses 17525675.98 6326490.28

IV. Profit before tax (loss expressed with “-”) 3488473051.69 960492657.61

Less: Income tax expenses 503842570.02 201934636.13

V. Net profit (loss expressed with “-”) 2984630481.67 758558021.48

(I) Classified by continuity of operation

1. Net profit from continuing operations (loss expressed with “-”) 2984630481.67 758558021.48

2. Net profit from discontinued operations (loss expressed with “-”)

(II) Classified by attribution

1. Net profit attributable to owners of the parent company (loss expressed

2956898811.04 758005980.61

with “-”)

2. Profit attributable to minority interests (loss expressed with “-”) 27731670.63 552040.87

VI. Other comprehensive income net after tax -110859394.97 112697346.88

Other comprehensive income attributable to owners of the parent company net

-110859394.97 112697346.88

after tax

(I) Other comprehensive income that cannot be reclassified to profit or loss 230132936.38

1. Changes arising from remeasurement of defined benefit plans -1935528.34

2. Other comprehensive income that cannot be reclassified to profit or loss

under the equity method

3. Change in fair value of investments in other equity instruments 232068464.72

4. Change in fair value of the corporation’s credit risk

5. Others

(II) Other comprehensive income that will be reclassified to profit or loss -340992331.35 112697346.88

1. Other comprehensive income that can be reclassified to profit or loss

under the equity method

2. Change in fair value of other debt investments

3. Financial assets reclassified to other comprehensive income

4. Provision for credit impairment of other debt investments

5. Reserves for cash flow hedge -145268153.81 20553395.38

6. Differences in translation of foreign currency financial statements -195724177.54 92143951.50

7. Others

Other comprehensive income attributable to minority interests net after tax

VII. Total comprehensive income 2873771086.70 871255368.36

Total comprehensive income attributable to owners of the parent company 2846039416.07 870703327.49

Total comprehensive income attributable to minority interests 27731670.63 552040.87

VIII. Earnings per share:

(I) Basic earnings per share 1.62 0.45

(II) Diluted earnings per share 1.62 0.45

Legal Representative: YUAN Yonggang CFO: WANG Xu Accounting Supervisor: ZHU Deguang

4. Standalone income statement

In RMB

Item First half of 2026 First half of 2025

I. Operating revenue 2414068467.47 2035279637.55

Less: Operating cost 2207124036.79 1923255924.16

Taxes and surcharges 4906867.73 7304339.14

Selling expenses 17103875.58 11700519.31

Administrative expenses 146860064.96 95512928.90

R&D expenses 106098469.66 95862762.28

Financial expenses 132849843.89 97559230.35

Incl.: Interest expenses 124442157.10 127405110.13

Interest income 30602265.37 27296685.73

Add: Other income 2694745.05 5531714.64

Investment income (loss expressed with “-”) -2357494.42 -3285156.20

Incl.: Investment income from associates and joint ventures -2997694.42 -3445956.20

Gain on derecognition of financial assets at amortized cost (loss

expressed with “-”)

Net exposure hedging income (loss expressed with “-”)

Gain on changes in fair value (loss expressed with “-”) 596625947.34

Credit impairment loss (loss expressed with “-”) -2898756.73 -8328750.96

Impairment loss on assets (loss expressed with “-”) 467044.22 -1685402.36

Gain on disposal of assets (loss expressed with “-”) 224528.71 41991.25

II. Operating profit (loss expressed with “-”) 393881323.03 -203641670.22

Add: Non-operating revenue 435385.53

Less: Non-operating expenses 3422450.00 4403421.43

III. Profit before tax (loss expressed with “-”) 390458873.03 -207609706.12

Less: Income tax expenses 79943268.32 -43609661.73

IV. Net profit (loss expressed with “-”) 310515604.71 -164000044.39

(I) Net profit from continuing operations (loss expressed with “-”) 310515604.71 -164000044.39

(II) Net profit from discontinued operations (loss expressed with “-”)

V. Other comprehensive income net after tax 55755458.36

(I) Other comprehensive income that cannot be reclassified to profit or loss 55649718.36

1. Changes arising from remeasurement of defined benefit plans

2. Other comprehensive income that cannot be reclassified to profit or loss under

the equity method

3. Change in fair value of investments in other equity instruments 55649718.36

4. Change in fair value of the corporation’s credit risk

5. Others

(II) Other comprehensive income that will be reclassified to profit or loss 105740.00

1. Other comprehensive income that can be reclassified to profit or loss under the

equity method

2. Change in fair value of other debt investments

3. Financial assets reclassified to other comprehensive income

4. Provision for credit impairment of other debt investments

5. Reserves for cash flow hedge 105740.00

6. Differences in translation of foreign currency financial statements

7. Others

VI. Total comprehensive income 366271063.07 -164000044.39

VII. Earnings per share:

(I) Basic earnings per share 0.17 -0.10

(II) Diluted earnings per share 0.17 -0.10

5. Consolidated cash flow statement

In RMB

Item First half of 2026 First half of 2025

I. Cash flows from operating activities:

Proceeds from sale of goods and rendering of services 27318459552.92 17905726279.90

Net increase in deposits from clients and other banks

Net increase in borrowings from the Central Bank

Net increase in borrowings from other financial institutions

Proceeds from premiums under prior insurance contracts

Net proceeds from reinsurance business

Net increase in insured’s deposits and investments

Proceeds from interest fees and commissions

Net increase in borrowings from banks and other financial institutions

Net increase in receipts under repurchase transactions

Net cash received as stock broker

Tax refunds received 883368416.74 669998774.36

Other cash receipts related to operating activities 616807778.90 648888660.75

Cash provided by operating activities 28818635748.56 19224613715.01

Payments for purchase of goods and receipt of services 20581660977.77 13120444976.67

Net increase in loans and advances from clients

Net increase in deposits in the Central Bank and other banks

Payment of claims under prior insurance contracts

Net increase in loans to banks and other financial institutions

Payment of interest fees and commissions

Payment of policyholder dividends

Payments to and for employees 3895884417.98 2542398872.87

Taxes paid 625095887.15 360545772.47

Other cash payments related to operating activities 1332107189.56 701106071.72

Cash used in operating activities 26434748472.46 16724495693.73

Net cash flows from operating activities 2383887276.10 2500118021.28

II. Cash flows from investing activities:

Proceeds from disposal of investments 413710855.22 38814660.00

Proceeds from return on investments 27621900.29 4378625.51

Net proceeds from the disposal of fixed assets intangible assets and other

19124239.12 77684733.24

long-term assets

Net proceeds from the disposal of subsidiaries and other business entities

Other cash receipts related to investing activities 2361600623.62 793654284.84

Cash provided by investing activities 2822057618.25 914532303.59

Payments for the acquisition of fixed assets intangible assets and other long-

5253357960.45 2148254435.73

term assets

Payments for investments 533616983.13 168236626.52

Net increase in mortgage loans

Net payments for the acquisition of subsidiaries and other business entities 536818618.87

Other cash payments related to investing activities 1980792794.18 584356090.09

Cash used in investing activities 8304586356.63 2900847152.34

Net cash flows from investing activities -5482528738.38 -1986314848.75

III. Cash flows from financing activities:

Proceeds from investors 119661514.25 1391512544.73

Incl.: Proceeds of subsidiaries from minority shareholders’ investments

Cash receipts from borrowings 10932032706.62 4365837875.26

Other cash receipts related to financing activities 3587827793.27 730151717.04

Cash provided by financing activities 14639522014.14 6487502137.03

Repayment of borrowings 6402581138.02 4240821985.76

Payment of distribution of dividends and profits or for interest 246477649.48 269883548.61

Incl.: Dividends and profits distributed by subsidiaries to minority

shareholders

Other cash payments related to financing activities 3850795945.91 453405753.18

Cash used in financing activities 10499854733.41 4964111287.55

Net cash flows from financing activities 4139667280.73 1523390849.48

IV. Effect of exchange rate changes on cash and cash equivalents -198222834.12 35783302.37

V. Net increase in cash and cash equivalents 842802984.33 2072977324.38

Add: Opening balance of cash and cash equivalents 6104722626.15 5343600382.37

VI. Closing balance of cash and cash equivalents 6947525610.48 7416577706.75

6. Standalone cash flow statement

In RMB

Item First half of 2026 First half of 2025

I. Cash flows from operating activities:

Proceeds from sale of goods and rendering of services 2199184571.79 1848570248.41

Tax refunds received 32807394.51 55983401.38

Other cash receipts related to operating activities 1939828648.02 706540414.22

Cash provided by operating activities 4171820614.32 2611094064.01

Payments for purchase of goods and receipt of services 1751065173.99 1625050615.30

Payments to and for employees 154337883.04 152271297.86

Taxes paid 83049.68 7912874.45

Other cash payments related to operating activities 1947235221.24 755309050.54

Cash used in operating activities 3852721327.95 2540543838.15

Net cash flows from operating activities 319099286.37 70550225.86

II. Cash flows from investing activities:

Proceeds from disposal of investments 1674130.44

Proceeds from return on investments 772944.71 203172800.00

Net proceeds from the disposal of fixed assets intangible assets and other long-

5933863.00 133574.11

term assets

Net proceeds from the disposal of subsidiaries and other business entities

Other cash receipts related to investing activities 1565215656.77 679130328.77

Cash provided by investing activities 1573596594.92 882436702.88

Payments for the acquisition of fixed assets intangible assets and other long-

70436333.79 30663769.49

term assets

Payments for investments 129990000.00

Net payments for the acquisition of subsidiaries and other business entities

Other cash payments related to investing activities 1825602180.16 888354407.83

Cash used in investing activities 2026028513.95 919018177.32

Net cash flows from investing activities -452431919.03 -36581474.44

III. Cash flows from financing activities:

Proceeds from investors 119661514.25 1391512544.73

Cash receipts from borrowings 3577513513.05 1360000000.00

Other cash receipts related to financing activities 250000000.00 1353041000.00

Cash provided by financing activities 3947175027.30 4104553544.73

Repayment of borrowings 1888510000.00 2233501340.00

Payment of distribution of dividends and profits or for interest 65936018.37 187206039.04

Other cash payments related to financing activities 1119643547.07 661026890.77

Cash used in financing activities 3074089565.44 3081734269.81

Net cash flows from financing activities 873085461.86 1022819274.92

IV. Effect of exchange rate changes on cash and cash equivalents -4863112.02 5841710.55

V. Net increase in cash and cash equivalents 734889717.18 1062629736.89

Add: Opening balance of cash and cash equivalents 717793422.39 538870203.05

VI. Closing balance of cash and cash equivalents 1452683139.57 1601499939.94

7. Consolidated statement of changes in owners’ equity

Amount of the current period

In RMB

First half of 2026

Owners’ equity attributable to the parent

Item TotalOther equity instruments Less: Other General Minority

Share Capital Special Surplus Retained owners’

capital Preferred Perpetual

Treasury comprehensive risk Others Subtotal interests

Others reserve reserve reserve profits equity

shares bonds shares income reserve

I. Balance at the end of 1831607 925789253 175076133. 24915088 105384058 214611472406902621701838

-240832682.74

the previous year 532.00 7.77 79 7.74 31.61 972.59 7.20 239.79

Add: Changes in

accounting policies

Correction of

previous period errors

Others

II. Balance at the

1831607 925789253 175076133. 24915088 105384058 214611472406902621701838

beginning of the current -240832682.74

532.00 7.77 79 7.74 31.61 972.59 7.20 239.79

year

III. Increase/(decrease)

- -

in the current period 107012406. 285949239 29056362 2847234

49990856.1 -110859394.97 58401531

(decrease expressed 88 4.81 62.89 731.01

7 .88

with “-”)

(I) Total comprehensive 295689881 2846039427731670 2873771

-110859394.97

income 1.04 16.07 .63 086.70

(II) - - - -

107012406. 59596846.

Investment/(divestment) 49990856.1 97406416.2 8613320226536355

88 82

by shareholders 7 3 .51 .69

1. Contributions from -

69670658.0 11966151 11966151

holders of ordinary 49990856.1

8 4.25 4.25

shares 7

2. Contributions from

holders of other equity

instruments

3. Share-based

37341748.8 37341748. 37341748

payments recorded in

0 80 .80

owners’ equity

- - - -

4. Others 97406416.2 97406416.8613320218353961

3 23 .51 8.74

(III) Distribution of

profits

1. Surplus reserve

2. General risk reserve

3. Distributions to

owners (shareholders)

4. Others

(IV) Internal transfer of

owners’ equity

1. Transfer of capital

reserve to (share)

capital

2. Transfer of surplus

reserve to (share)

capital

3. Make-up of losses by

surplus reserve

4. Transfer of changes

in defined benefit plans

to retained earnings

5. Transfer of other

comprehensive income

to retained earnings

6. Others

(V) Special reserve

1. Appropriated in the

current period

2. Used in the current

period

(VI) Others

IV. Balance at the end 1831607 936490494 125085277. 24915088 133978982 243667841822887324549072

-351692077.71

of the current period 532.00 4.65 62 7.74 26.42 235.48 5.32 970.80

The same period of the previous year

In RMB

First half of 2025

Owners’ equity attributable to the parent

Item TotalOther equity instruments Less: Other General Minority

Share Capital Special Surplus Retained owners’

capital Preferred Perpetual

Treasury comprehensive risk Others Subtotal interests

Others reserve reserve reserve profits equity

shares bonds shares income reserve

188861

I. Balance at the end of 17059137 799228443 74991696.7 23224121 928804397 18826387 59715963

-317104374.08 03233.2

the previous year 10.00 5.83 9 6.54 7.88 269.38 .85

3

Add: Changes in

accounting policies

Correction of

previous period errors

Others

II. Balance at the 188861

17059137 799228443 74991696.7 23224121 928804397 18826387 59715963

beginning of the current -317104374.08 03233.2

10.00 5.83 9 6.54 7.88 269.38 .85

year 3

III. Increase/(decrease)

in the current period 125693822 126581872 100084437. 639210799. 2043336 204388

112697346.88 552040.87

(decrease expressed .00 2.73 00 98 254.59 8295.46

with “-”)

(I) Total comprehensive 758005980. 87070332 871255

112697346.88 552040.87

income 61 7.49 368.36

(II)

125693822 126581872 100084437. 1291428 129142

Investment/(divestment).00 2.73 00 107.73 8107.73

by shareholders

1. Contributions from

125693822 126581872 1391512 139151

holders of ordinary.00 2.73 544.73 2544.73

shares

2. Contributions from

holders of other equity

instruments

3. Share-based

payments recorded in

owners’ equity

- -

100084437.

4. Others 10008443 100084

00

7.00 437.00

- - -

(III) Distribution of

118795180. 11879518 118795

profits

63 0.63 180.63

1. Surplus reserve 0.00

2. General risk reserve 0.00

- - -

3. Distributions to

118795180. 11879518 118795

owners (shareholders)

63 0.63 180.63

4. Others

(IV) Internal transfer of

owners’ equity

1. Transfer of capital

reserve to (share)

capital

2. Transfer of surplus

reserve to (share)

capital

3. Make-up of losses by

surplus reserve

4. Transfer of changes

in defined benefit plans

to retained earnings

5. Transfer of other

comprehensive income

to retained earnings

6. Others

(V) Special reserve

1. Appropriated in the

current period

2. Used in the current

period

(VI) Others

209299

IV. Balance at the end 18316075 925810315 175076133. 23224121 992725477 20869723 60268004

-204407027.20 91528.6

of the current period 32.00 8.56 79 6.54 7.86 523.97 .72

9

8. Standalone statement of changes in owners’ equity

Amount of the current period

In RMB

First half of 2026

Other equity instruments

Item OtherShare Capital Less: Treasury Special Surplus Retained Total owners’

Preferred Perpetual comprehensive Otherscapital Others reserve shares reserve reserve profits equity

shares bonds income

I. Balance at the end 1831607 915657 175076133.7 24915088 16729616 1124203732

12485447.88

of the previous year 532.00 3425.73 9 7.74 6.72 6.28

Add: Changes

in accounting

policies

Correction

of previous period

errors

Others

II. Balance at the

1831607 915657 175076133.7 24915088 16729616 1124203732

beginning of the 12485447.88

532.00 3425.73 9 7.74 6.72 6.28

current year

III.Increase/(decrease)

991899 - 31051560 515451886.2

in the current period 55755458.36

67.04 49990856.17 4.71 8

(decrease expressed

with “-”)

(I) Total

31051560 366271063.0

comprehensive 55755458.36

4.71 7

income

(II)

991899 - 149180823.2

Investment/(divestm

67.04 49990856.17 1

ent) by shareholders

1. Contributions

696706 - 119661514.2

from holders of

58.08 49990856.17 5

ordinary shares

2. Contributions

from holders of other

equity instruments

3. Share-based

295193

payments recorded 29519308.96

08.96

in owners’ equity

4. Others

(III) Distribution of

profits

1. Surplus reserve

2. Distributions to

owners

(shareholders)

3. Others

(IV) Internal transfer

of owners’ equity

1. Transfer of capital

reserve to (share)

capital

2. Transfer of surplus

reserve to (share)

capital

3. Make-up of losses

by surplus reserve

4. Transfer of

changes in defined

benefit plans to

retained earnings

5. Transfer of other

comprehensive

income to retained

earnings

6. Others

(V) Special reserve

1. Appropriated in

the current period

2. Used in the

current period

(VI) Others

IV. Balance at the

1831607 925576 125085277.6 24915088 47781177 1175748921

end of the current 68240906.24

532.00 3392.77 2 7.74 1.43 2.56

period

The same period of the previous year

In RMB

First half of 2025

Item

Share Other equity instruments Capital Less: Treasury Other Special Surplus Retained Others Total owners’

capital Preferred Perpetual reserve shares comprehensive reserve reserve profits equity

Others

shares bonds income

I. Balance at the end 1705913 789075 23224121 13390430 9887822239

74991696.79

of the previous year 710.00 4703.00 6.54 6.56 .31

Add: Changes

in accounting

policies

Correction

of previous period

errors

Others

II. Balance at the

1705913 789075 23224121 13390430 9887822239

beginning of the 74991696.79

710.00 4703.00 6.54 6.56 .31

current year

III.Increase/(decrease) -

12569382 126581 100084437.0 1008632882

in the current period 28279522

2.00 8722.73 0 .71

(decrease expressed 5.02

with “-”)

(I) Total - -

comprehensive 16400004 164000044.3

income 4.39 9

(II)

12569382 126581 100084437.0 1291428107

Investment/(divestm

2.00 8722.73 0 .73

ent) by shareholders

1. Contributions

12569382 126581 1391512544

from holders of

2.00 8722.73 .73

ordinary shares

2. Contributions

from holders of other

equity instruments

3. Share-based

payments recorded

in owners’ equity

-

100084437.0

4. Others 100084437.0

0

0

- -

(III) Distribution of

11879518 118795180.6

profits

0.63 3

1. Surplus reserve

2. Distributions to - -

owners 11879518 118795180.6

(shareholders) 0.63 3

3. Others

(IV) Internal transfer

of owners’ equity

1. Transfer of capital

reserve to (share)

capital

2. Transfer of surplus

reserve to (share)

capital

3. Make-up of losses

by surplus reserve

4. Transfer of

changes in defined

benefit plans to

retained earnings

5. Transfer of other

comprehensive

income to retained

earnings

6. Others

(V) Special reserve

1. Appropriated in

the current period

2. Used in the

current period

(VI) Others

IV. Balance at the -

1831607 915657 175076133.7 23224121 1089645512

end of the current 0.00 14889091

532.00 3425.73 9 6.54 2.02

period 8.46

III. General Information of the Company

Suzhou Dongshan Precision Manufacturing Co. Ltd. (the “Company”) is a company limited by shares converted from

Suzhou Dongshan Sheet Metal Co. Ltd. and registered with the Suzhou Municipal Administration for Industry and Commerce of

Jiangsu on December 24 2007 and is headquartered in Suzhou Jiangsu holds a business license with the unified social credit

code of 91320500703719732P and has a registered capital of RMB 1831607532 divided into 1831607532 shares with a par

value of RMB 1 each share of which 445285809 shares are non-tradable A-shares and 1386321723 shares are tradable A-

shares. The Company’s shares have been listed and traded on the Shenzhen Stock Exchange since April 9 2010. The Company

belongs to the computer communication and other electronic equipment manufacturing industry and is primarily engaged in the

provision of core devices for intelligent interconnection including electronic circuits optical transceivers (including optical chips)

photoelectric display modules precision components etc.These financial statements are published with the approval of the 4th meeting of the 7th Board of Directors of the Company

on August 20 2026.IV. Basis for Preparation of the Financial Statements

1. Basis for preparation

These financial statements have been prepared on the assumption that the Company is a going concern.

2. Going concern

No event or fact may cast significant doubts on the Company’s ability to remain a going concern within 12 months after the

end of the reporting period.V. Significant Accounting Policies and Accounting Estimates

Note about specific accounting policies and accounting estimates:

The Company has established specific accounting policies and made specific accounting estimates with respect to the

impairment of financial instruments inventories depreciation of fixed assets construction in progress intangible assets

recognition of revenues and other transactions or events according to its actual production and operational characteristics.

1. Statement of compliance with the Accounting Standards for Business Enterprises (“ASBE”)

The financial statements prepared by the Company conform to the requirements of the ASBE and truly and completely

reflect the Company’s financial condition operating results cash flows and other related information.2. Accounting period

The Company’s accounting year is from January 1 to December 31 of each calendar year.

3. Operating cycle

The Company has a relatively short operating cycle and determines the liquidity of assets and liabilities on the basis of 12

months.

4. Functional currency

The parent company and domestic subsidiaries adopt RMB as their functional currency. Overseas subsidiaries determine their

functional currencies according to the main economic environment where they conduct operating activities mainly including USD

EUR THB MXN etc. These consolidated financial statements are presented in RMB.

5. Determination and basis for selection of materiality criteria

□Applicable □ N/A

Item Materiality criteria

Disclosure item involving judgment in

Determination and basis for selection of materiality criteria

materiality criteria

Significant dividends receivable aged

Individual amount accounting for over 0.3% of the total assets

over one year

Significant constructions in progress Total investment in an individual project accounting for over 0.3% of the total assets

Significant accounts payable aged over

Individual amount accounting for over 0.3% of the total assets

one year

Significant other payables aged over

Individual amount accounting for over 0.3% of the total assets

one year

Significant contract liabilities aged

Individual amount accounting for over 0.3% of the total assets

over one year

Significant cash flows from investing

Individual amount accounting for over 5% of the total assets

activities

Total assets/total revenue/total profit accounting for over 10% of the group’s total

Significant overseas operating entities

assets/total revenue/total profit

Significant subsidiaries and non-wholly Total assets/total revenue/total profit accounting for over 10% of the group’s total

owned subsidiaries assets/total revenue/total profit

The book value of an individual long-term equity investment accounting for over

Significant joint ventures or associates 15% of the group’s net assets/the individual investment income accounted for using

the equity method accounting for over 15% of the group’s total profit

6. Accounting treatment of business combinations involving entities under common control and not under

common control

1. Accounting treatment of business combinations involving entities under common control

Assets and liabilities acquired from a business combination by the Company are measured at the carrying value of the assets

and liabilities of the acquiree in the consolidated financial statements of the ultimate controller at the combination date. The

difference between the carrying value of the owners’ equity of the acquiree as stated in the consolidated financial statements of the

ultimate controller and the carrying value of the total consideration paid or total par value of the shares issued in connection with

the combination is treated as an adjustment to the capital reserve. In case the capital reserve is not sufficient to absorb the

difference the remaining balance is charged against the retained earnings.2. Accounting treatment of business combinations involving entities not under common control

Where the cost of the combination exceeds the Company’s share of the fair value of the acquiree’s net identifiable assets the

difference is recognized as goodwill at the acquisition date. Where the cost of combination is lower than the Company’s share of

the fair value of the acquiree’s net identifiable assets the Company reviews the measurement of the fair value of each of the

identifiable assets liabilities and contingent liabilities acquired from the acquiree and the cost of combination and if the cost of

combination as reviewed is still lower than the Company’s share of the fair value of the acquiree’s net identifiable assets the

difference is recognized in profit or loss.

7. Determination of control and method of preparation of consolidated financial statements

1. Determination of control

Control means that the Company has power over the investee exposure or rights to variable returns from its involvement with

the investee and the ability to use its power to affect the amount of those returns.

2. Method of preparation of consolidated financial statements

(1) The parent includes all of its controlled subsidiaries in its consolidated financial statements. The consolidated financial

statements are prepared by the parent in accordance with ASBE 33 “Consolidated Financial Statements” on the basis of the

respective financial statements of the parent and its subsidiaries by reference to other relevant data.

8. Classification of joint arrangements and accounting treatment of joint operations

9. Recognition of cash and cash equivalents

For the purpose of the cash flow statement cash comprises cash on hand and demand deposits and cash equivalents comprise

short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an

insignificant risk of changes in value.

10. Translation of foreign currency transactions and foreign currency financial statements

1. Translation of foreign currency transactions

Upon initial recognition foreign currency transactions are translated into RMB using the approximate exchange rates of spot

exchange rates at the transaction dates. At the balance sheet date monetary items denominated in foreign currencies are translated

into RMB using the spot exchange rates then prevailing. Exchange differences arising from such translations are recognized in

profit or loss except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition

or construction of qualifying assets and accrued interest. Non-monetary items denominated in foreign currencies that are measured

at historical cost are translated using the approximate exchange rates of spot exchange rates at the transaction dates without

adjusting the amounts in RMB. Non-monetary items denominated in foreign currencies that are measured at fair value are

translated using the spot exchange rates prevailing at the dates when the fair value was determined with the exchange differences

arising from such translations recognized in profit or loss or other comprehensive income.

2. Translation of foreign currency financial statements

The asset and liability items in the balance sheet are translated at the spot exchange rates prevailing at the balance sheet date.The owners’ equity items other than “retained profits” are translated at the spot exchange rates prevailing at the transaction dates.The income and expense items in the income statement are translated at the approximate exchange rates of spot exchange rates at

the transaction dates. The differences arising from such translation of foreign currency financial statements are recognized in other

comprehensive income.

11. Financial instruments

1. Classification of financial assets and financial liabilities

Upon initial recognition financial assets are classified as: (i) financial assets at amortized cost; (ii) financial assets at fair

value through other comprehensive income; and (iii) financial assets at fair value through profit or loss.Upon initial recognition financial liabilities are classified as: (i) financial liabilities at fair value through profit or loss; (ii)

financial liabilities arising as a result of the transfer of financial assets not meeting the criteria for derecognition or continuing

involvement in the financial assets transferred; (iii) financial guarantee contracts not falling under items (i) or (ii) and loan

commitments not falling under item (i) and below market interest rate; and (iv) financial liabilities at amortized cost.

2. Recognition measurement and derecognition of financial assets and financial liabilities

(1) Recognition and initial measurement of financial assets and financial liabilities

When the Company becomes a party to a financial instrument contract a financial asset or liability is recognized. Financial

assets or liabilities are initially measured at fair value. Transaction costs relating to financial assets and liabilities at fair value

through profit or loss are directly recognized in profit or loss. Transaction costs relating to other kinds of financial assets or

liabilities are included in their initially recognized amount. However the accounts receivable that do not contain any significant

financing component or are recognized by the Company without taking into consideration the significant financing components

under the contracts with a term of less than one year upon initial recognition are initially measured at transaction price as defined

in ASBE 14 “Revenue”.

(2) Subsequent measurement of financial assets

1) Financial assets at amortized cost

Financial assets at amortized cost are subsequently measured at amortized cost using the effective interest method. Gains or

losses on financial assets at amortized cost that do not belong to any hedging relationship are recognized in profit or loss upon

derecognition reclassification amortization using the effective interest method or recognition of impairment.

2) Investments in debt instruments at fair value through other comprehensive income

Investments in debt instruments at fair value through other comprehensive income are subsequently measured at fair value.Interest impairment losses or gains and exchange gains or losses calculated using the effective interest method are recognized in

profit or loss while other gains or losses are recognized in other comprehensive income. Upon derecognition the aggregate gains

or losses previously recognized in other comprehensive income are transferred to profit or loss.

3) Investments in equity instruments at fair value through other comprehensive income

Investments in equity instruments at fair value through other comprehensive income are subsequently measured at fair value.Dividends received (other than those received as recovery of investment cost) are recognized in profit or loss while other gains or

losses are recognized in other comprehensive income. Upon derecognition the aggregate gains or losses previously recognized in

other comprehensive income are transferred to retained earnings.

4) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are subsequently measured at fair value. Gains or losses thereon including

interest and dividend income are recognized in profit or loss except the financial assets belonging to any hedging relationship.

(3) Subsequent measurement of financial liabilities

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

classified as financial liabilities) and financial liabilities designated as at fair value through profit or loss. Such financial liabilities

are subsequently measured at fair value. Changes in the fair value of financial liabilities designated as at fair value through profit

or loss arising out of changes in the Company’s credit risk are recognized in other comprehensive income unless such treatment

will result in or increase any accounting mismatch in profit or loss. Other gains or losses on such financial liabilities including

interest expenses and changes in fair value not arising out of changes in the Company’s credit risk are recognized in profit or loss

except the financial liabilities belonging to any hedging relationship. Upon derecognition the aggregate gains or losses previously

recognized in other comprehensive income are transferred to retained earnings.

2) Financial liabilities arising as a result of the transfer of financial assets not meeting the criteria for derecognition or

continuing involvement in the financial assets transferred

Such financial liabilities are measured in accordance with ASBE 23 “Transfer of Financial Assets”.

3) Financial guarantee contracts not falling under items 1) or 2) and loan commitments not falling under item 1) and below

the market interest rate

Upon initial recognition such financial liabilities are subsequently measured at the higher of (i) allowance for impairment

losses determined according to the policy for impairment of financial instruments; and (ii) balance of the initially recognized

amount after deduction of the accumulated amortization determined in accordance with ASBE 14 “Revenue”.

4) Financial liabilities at amortized cost

Financial liabilities at amortized cost are subsequently measured at amortized cost using the effective interest method. Gains

or losses on financial liabilities at amortized cost that do not belong to any hedging relationship are recognized in profit or loss

upon derecognition or amortization using the effective interest method.

(4) Derecognition of financial assets and financial liabilities

1) Financial assets are derecognized when:

* the contractual right to receive cash flows from the financial assets has expired; or

* the financial assets have been transferred and such transfer meets the criteria for derecognition of financial assets as set

forth in ASBE 23 “Transfer of Financial Assets”.

2) A financial liability (or part thereof) is derecognized when all or part of the outstanding obligations thereunder have been

discharged.

3. Determination and measurement of financial assets transferred

When a financial asset of the Company is transferred if substantially all the risks and rewards incidental to the ownership of

the financial asset have been transferred the financial asset is derecognized and the rights and obligations incurred or retained in

such transfer are separately recognized as assets or liabilities (as the case may be); if the Company has retained substantially all the

risks and rewards incidental to the ownership of the financial asset the Company continues to recognize the financial asset

transferred. If the Company neither transferred nor retained a substantial portion of all risks and rewards incidental to the

ownership of the financial asset then: (i) if the Company does not retain control over the financial asset the financial asset is

derecognized and the rights and obligations incurred or retained in such transfer are separately recognized as assets or liabilities

(as the case may be); or (ii) if the Company retains control over the financial asset the financial asset continues to be recognized to

the extent of the Company’s continuing involvement in the financial asset transferred and a corresponding liability is recognized.If an entire transfer of a financial asset meets the criteria for derecognition the difference between (i) the carrying value of the

financial asset transferred at the date of derecognition; and (ii) the sum of the consideration received from the transfer and the

portion of the cumulative amount of changes in fair value directly recorded as other comprehensive income originally that

corresponds to the part derecognized (where the financial asset transferred is an investment in debt instruments at fair value

through other comprehensive income) is recognized in profit or loss. If part of a financial asset is transferred and the part

transferred entirely meets the criteria for derecognition the total carrying value of the financial asset immediately prior to the

transfer is allocated between the part derecognized and the part not derecognized in proportion to their relative fair value at the

date of transfer and the difference between (i) the carrying value of the part derecognized; and (ii) the sum of the consideration

received from the transfer of the part derecognized and the portion of the cumulative amount of changes in fair value directly

recorded as other comprehensive income originally that corresponds to the part derecognized (where the financial asset transferred

is an investment in debt instruments at fair value through other comprehensive income) is recognized in profit or loss.4. Determination of fair value of financial assets and financial liabilities

The Company adopts the valuation techniques applicable to the current situations and with sufficient data available and

support of other information to determine the fair value of financial assets and financial liabilities. The Company classifies the

inputs used by the valuation techniques in the following levels and uses them in turn:

(1) Level 1 inputs: quoted market price (unadjusted) in an active market for an identical asset or liability available at the date

of measurement;

(2) Level 2 inputs: inputs other than inputs included within Level 1 that are observable directly or indirectly. This category

includes quoted prices for similar assets or liabilities in active markets quoted prices for identical or similar assets or liabilities in

inactive markets observable inputs other than quoted prices (such as interest rate and yield curves observable during regular

intervals of quotation) and inputs validated by the market;

(3) Level 3 inputs: inputs that are unobservable. This category includes interest rate or stock volatility that cannot be directly

observed or validated by observable market data future cash flows from retirement obligations incurred in business combinations

and financial forecasts made using own data.

5. Impairment of financial instruments

The Company determines the impairment and assesses allowance for impairment of financial assets at amortized cost

investments in debt instruments at fair value through other comprehensive income contract assets lease payments receivable loan

commitments other than financial liabilities designated at fair value through profit or loss and financial guarantee contracts other

than financial liabilities designated at fair value through profit or loss and financial liabilities arising as a result of the transfer of

financial assets not meeting the criteria for derecognition or continuing involvement in the financial assets transferred on the basis

of expected credit losses.Expected credit loss is the weighted average of credit losses on financial instruments taking into account the possibility of

default. Credit loss is the present value of the difference between all contractual cash flows receivable under the contract and

estimated future cash flows discounted at the original effective interest rate i.e. the present value of all cash shortages where the

Company’s purchased or originated financial assets that have become credit impaired are discounted at their credit-adjusted

effective interest rate.With respect to purchased or originated financial assets that have become credit impaired at the balance sheet date the

Company recognizes an impairment loss equal to the cumulative amount of changes in lifetime expected credit losses since initial

recognition.With respect to lease payments receivable accounts receivable arising from transactions within the meaning of ASBE 14

“Revenue” and contract assets the Company uses the simplified measurement method and recognizes an impairment loss equal to

the lifetime expected credit losses.With respect to financial assets not using the measurement methods stated above at each balance sheet date the Company

assesses whether the credit risk has increased significantly since initial recognition and recognizes an impairment loss equal to the

lifetime expected credit losses if the credit risk has increased significantly since initial recognition or to the expected credit losses

within the next 12 months if the credit risk has not increased significantly since initial recognition.The Company uses reasonable and supportable information including forward-looking information and compares the

possibility of default at the balance sheet date with the possibility of default upon initial recognition to determine whether the

credit risk of the financial instruments has increased significantly since initial recognition.At the balance sheet date if the Company determines that a financial instrument has low credit risk the Company assumes

that its credit risk has not increased significantly since initial recognition.The Company assesses expected credit risk and measures expected credit losses of financial instruments individually or

collectively. When assessing the financial instruments collectively the Company includes the financial instruments in different

groups according to their common risk characteristics.At each balance sheet date the Company re-assesses the expected credit losses with the amount of increase in or reversal of

impairment loss recognized in profit or loss as impairment losses or gains. With respect to a financial asset at amortized cost its

carrying value recorded in the balance sheet is written off against the impairment loss. With respect to an investment in debt

instruments at fair value through other comprehensive income the Company recognizes the impairment loss in other

comprehensive income without reducing its carrying value.

6. Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are presented in the balance sheet separately without offsetting each other. Financial

assets and financial liabilities are offset and presented on a net basis in the balance sheet only if: (i) the Company has a currently

enforceable legal right to offset the recognized amounts; and (ii) the Company has an intention to settle on a net basis or realize

the assets and settle the liabilities simultaneously.With respect to the transfer of financial assets not meeting the criteria for derecognition the Company does not offset the

financial assets transferred against the relevant liabilities.

12. Notes receivable

13. Accounts receivable

Standard for identifying and making provision of expected credit losses for accounts receivable and contract assets

1. Accounts receivable and contract assets for which the allowance for expected credit losses is recognized collectively

according to credit risk characteristics

Group type Basis for grouping Method for measuring expected credit losses

Banker’s acceptance bills receivable

By reference to historical credit loss experience and taking into

Commercial acceptance bills receivable account the current situations and prediction of future economicType of bills conditions calculate the expected credit losses according to the

Financial company acceptance bills default risk exposure and rate of lifetime expected credit loss.receivable

By reference to historical credit loss experience and taking into

account the current situations and prediction of future economic

Accounts receivable – aging group Age conditions prepare a comparison table of the age of accounts

receivable and rate of expected credit loss and calculate the

expected credit losses.Accounts receivable – optical By reference to historical credit loss experience and taking into

Business segment

communication business group account the current situations and prediction of future economic

conditions calculate the expected credit losses according to the

Accounts receivable – conventional

Business segment default risk exposure and rate of 12-month or lifetime expected

vehicle business group credit loss.By reference to historical credit loss experience and taking into

account the current situations and prediction of future economic

Other receivables – aging group Age conditions prepare a comparison table of the age of other

receivables and rate of expected credit loss and calculate the

expected credit losses.Other receivables – conventional

Business segment By reference to historical credit loss experience and taking intovehicle business group account the current situations and prediction of future economic

Group type Basis for grouping Method for measuring expected credit losses

conditions calculate the expected credit losses according to the

Other receivables – Optical

communication business group Business segment default risk exposure and rate of 12-month or lifetime expected

credit loss.By reference to historical credit loss experience and taking into

account the current situations and prediction of future economic

Long-term receivables – conventional

Business segment conditions calculate the expected credit losses according to the

vehicle business group

default risk exposure and rate of 12-month or lifetime expected

credit loss.

2. Comparison table of the age and rate of expected credit loss

Accounts receivable Other receivables

Age

Expected credit loss rate(%) Expected credit loss rate(%)

Within 6 months (inclusive the same below) 0.5 5

7-12 months 5 5

1-2 years 20 10

2-3 years 60 50

Over 3 years 100 100

The age of accounts receivable/other receivables is calculated from the date of initial recognition.

3. Determination of accounts receivable and contract assets for which the allowance for expected credit losses is recognized

individually

With respect to the accounts receivable and contract assets whose credit risk is significantly different from that of the relevant

group an allowance for expected credit losses is recognized individually.

14. Accounts receivable financing

15. Other receivables

Methods for recognition and accounting of expected credit losses of other receivables

16. Contract assets

Contract assets or contract liabilities are presented in the balance sheet according to the relationship between the relevant

performance obligations and payment by the customer. Contract assets and contract liabilities under the same contract are

presented on a net basis.The right of the Company to payment that is unconditional except for the passage of time is presented as an account

receivable. The right of the Company to payment for goods already transferred to a customer is presented as a contract asset if that

right to payment is conditional on something other than the passage of time.The Company’s obligation to transfer goods to a customer in exchange for the consideration paid or payable by the customer

is presented as a contract liability.

17. Inventories

1. Classification of inventories

Inventories include finished products or goods held for sale in the ordinary course of business work in progress and materials

and goods consumed in the process of production or rendering of services.

2. Valuation of inventories dispatched

The value of inventories dispatched is determined using the weighted average method at the end of the month in which they

were dispatched.

3. Inventory system

The perpetual inventory system is adopted.

4. Amortization of low-value consumables and packing materials

(1) Low-value consumables

Low-value consumables are amortized using the immediate write-off method.

(2) Packing materials

Packing materials are amortized using the immediate write-off method.

5. Inventory provision

(1) Recognition standard and method for provision of impairment for inventory

At the balance sheet date inventories are measured at the lower of cost and net realizable value. An amount equal to the cost

of an inventory in excess of its net realizable value is recognized as an inventory provision. The net realizable value of inventories

held directly for sale is the estimated selling price of such inventories less the estimated selling expenses and related taxes in the

ordinary course of business. The net realizable value of inventories to be further processed is the estimated selling price of finished

goods less the estimated cost of completion estimated selling expenses and related taxes in the ordinary course of business. At the

balance sheet date if part of an inventory has a contract price while the remaining part thereof does not have a contract price the

net realizable value is determined separately which is compared with their cost to determine the amount of the inventory

provision recognized or reversed (as applicable).18. Assets held for sale

19. Debt investments

20. Other debt investments

21. Long-term receivables

22. Long-term equity investments

1. Determination of joint control and significant influence

Joint control is the contractually agreed sharing of control of an arrangement which exists only when decisions about the

relevant activities require unanimous consent of the parties sharing control. Significant influence is the power to participate in the

financial and operating policy-making of an entity but is not control or joint control over those policies.

2. Determination of investment cost

(1) For an equity investment acquired through a business combination involving entities under common control if the

acquirer pays consideration for the business combination by cash transfer of non-monetary assets assumption of liabilities or

issuance of equity securities the initial investment cost of the long-term equity investment is the Company’s share of the carrying

value of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controller at the combination

date. The difference between: (i) the initial investment cost of the long-term equity investment; and (ii) the carrying value of the

consideration paid for the combination or the total par value of the shares issued (as applicable) is treated as an adjustment to the

capital reserve. In case the capital reserve is not sufficient to absorb the difference the remaining balance is charged against the

retained earnings.If a business combination is effected through multiple transactions by steps that constitute a package deal the Company

accounts for such transactions as one deal to gain control. If such transactions constitute a package deal the Company accounts for

such transactions as one transaction to acquire control. If such transactions do not constitute a package deal the initial investment

cost is the Company’s share of the carrying value of the owners’ equity of the acquiree in the consolidated financial statements of

the ultimate controller at the combination date; and the difference between: (i) the initial investment cost of the long-term equity

investment at the combination date; and (ii) the sum of the carrying value of long-term equity investment before the combination

and the carrying value of the consideration paid for acquisition of the additional shares at the combination date is treated as an

adjustment to the capital reserve. In case the capital reserve is not sufficient to absorb the difference the remaining balance is

charged against the retained earnings.

(2) For an equity investment acquired through a business combination involving entities not under common control the initial

investment cost is the fair value of the aggregate consideration paid at the date of acquisition.With respect to a long-term equity investment acquired through a business combination involving entities not under common

control that is effected through multiple transactions by steps the accounting thereof in the standalone financial statements is

different from that in the consolidated financial statements as stated below:

1) In the standalone financial statements the sum of the carrying value of the equity investment originally held in the acquiree

and the additional investment cost incurred is recorded as the initial investment cost of the equity investment changed into the cost

method.

2) In the consolidated financial statements it is required to judge whether such transactions constitute a package deal. If such

transactions constitute a package deal the Company accounts for such transactions as one transaction to acquire control. If such

transactions do not constitute a package deal the equity held in the acquiree prior to the acquisition date is remeasured at its fair

value at the acquisition date with the difference between its fair value and carrying value recognized as an investment income for

the current period; if the equity held in the acquiree prior to the acquisition date involves other comprehensive income under the

equity method such other comprehensive income is transferred to the income for the period in which the acquisition date falls

except for other comprehensive income arising from remeasurement of changes in net liabilities or net assets of defined benefit

plans.

(3) For an equity investment not acquired through business combination the initial investment cost is the purchase price

actually paid if it is acquired by cash or the fair value of the equity securities issued if it is acquired through issuance of equity

securities or in accordance with ASBE 12 “Debt Restructuring” if it is acquired through debt restructuring or ASBE 7 “Exchangeof Non-monetary Assets” if it is acquired through exchange of non-monetary assets.

3. Subsequent measurement and recognition of profit or loss

Long-term equity investments in investees over which the Company exercises control are accounted for using the cost method.Long-term equity investments in associates and joint ventures are accounted for using the equity method.

4. Disposal of investment in a subsidiary through multiple transactions by steps until loss of control over the subsidiary

(1) Criteria for determining a package deal

Where the Company loses control over a subsidiary due to the disposal of equity investment in the subsidiary through

multiple transactions by steps the Company determines whether such transactions constitute a package deal taking into account

the transaction contract terms consideration received the transferee of the equity sold method of disposal time of disposal and

other information in respect of each step. If the terms conditions and financial effect of such transactions fall under one or more of

the circumstances set forth below such transactions are accounted for as a package deal generally:

1) such transactions are concluded simultaneously or in consideration of their mutual effect;

2) such transactions will achieve a complete business result only as a whole;

3) the occurrence of a transaction depends on the occurrence of at least another transaction; and/or

4) a transaction may be uneconomical when considered individually but is economical when considered together with other

transactions.

(2) Accounting treatment of transactions not constituting a package deal

1) Standalone financial statements

The difference between the carrying value of the equity disposed of and the disposal proceeds actually received is recognized

in profit or loss. If the remaining equity empowers the Company to exercise significant influence or joint control over the investee

the remaining equity is accounted for using the equity method; if the remaining equity does not empower the Company to exercise

control joint control or significant influence over the investee the remaining equity is accounted for in accordance with ASBE 22

“Recognition and Measurement of Financial Instruments”.

2) Consolidated financial statements

Before the loss of control the difference between the disposal proceeds and the Company’s share of the net assets of the

subsidiary corresponding to the long-term equity investment disposed of as calculated continuously from the acquisition date or

combination date is treated as an adjustment to the capital reserve (capital premium). In case the capital premium is not sufficient

to absorb the difference the remaining balance is charged against the retained earnings.Upon loss of control the remaining equity is remeasured at its fair value at the date of loss of control. The sum of the

consideration received from the disposal of the equity and the fair value of the remaining equity net of the Company’s share of the

net assets of the subsidiary as calculated continuously from the acquisition date or combination date according to the original

shareholding ratio is included in the investment income for the period during which the control was lost and charged against

goodwill. Other comprehensive income related to the equity investment in the subsidiary is transferred to the investment income

for the period during which the control was lost.

(3) Accounting treatment of transactions constituting a package deal

1) Standalone financial statements

The Company accounts for such transactions as one deal to dispose of and lose control over the subsidiary; however in the

standalone financial statements the difference between the proceeds from each disposal before loss of control and the carrying

value of the long-term equity investment corresponding to the investment disposed of is recognized in other comprehensive

income which is wholly transferred to profit or loss in the period during which the control was lost.

2) Consolidated financial statements

The Company accounts for such transactions as one deal to dispose of and lose control over the subsidiary; however in the

consolidated financial statements the difference between the proceeds from each disposal before loss of control and the

Company’s share of the net assets of the subsidiary corresponding to the investment disposed of is recognized in other

comprehensive income which is wholly transferred to profit or loss in the period during which the control was lost.

23. Investment property

Measurement model for investment property

Measured at cost

Method of depreciation or amortization

1. Investment properties include land use rights leased out or held for appreciation and buildings and structures leased out.

2. An investment property is measured initially at cost and subsequently using the cost model and depreciated or amortized

using the same method as fixed assets and intangible assets.24. Fixed assets

(1) Criteria for recognition

Fixed assets are tangible assets held for the production of goods rendering of service lease or operation and management

with a service life of more than one accounting year. A fixed asset is recognized if the economic benefits relating to it are very

likely to flow to the Company and its cost can be reliably measured.

(2) Depreciation

Annual rate of

Type Method of depreciation Estimated service life Rate of residual value

depreciation

Buildings and

Straight line method 15-30 0-5 3.33-6.67%

structures

Machinery and

Straight line method 5-20 0-5 5.00-20.00%

equipment

Transportation

Straight line method 5-10 0-5 10.00-20.00%

equipment

Office equipment and

Straight line method 3-12 0-5 8.33-33.33%

others

25. Construction in progress

1. A construction in progress is recognized if the economic benefits relating to it are very likely to flow to the Company and

its cost can be reliably measured. Construction in progress is measured at the actual cost incurred before it is completed and ready

for the intended use.

2. When a construction in progress is ready for intended use it is transferred to fixed assets at its actual construction cost. A

construction in progress that is ready for intended use but the final settlement of which has not yet been completed is transferred to

fixed assets at estimated value first and after the completion of the final settlement the estimated value is adjusted according to

the actual cost without adjusting the accumulated depreciation.Category Criteria and time for transfer of construction in progress to fixed assets

Buildings and The main construction project and supporting project have been substantially completed reached the

structures predefined design requirements and inspected and accepted

Machinery and

equipment Meet the design requirements or agreed standards after installation and commissioning

26. Borrowing costs

1. Recognition of capitalization of borrowing costs

Borrowing costs that are directly attributable to the acquisition construction or production of a qualifying asset are capitalized

as part of the cost of the asset when they meet the condition for capitalization. Other borrowing costs are expensed when they are

incurred and recognized in profit or loss.

2. Period of capitalization of borrowing costs

(1) A borrowing cost is capitalized when all of the following conditions are satisfied: (i) the expenditures on the asset have

already been incurred; (ii) the borrowing cost has already been incurred; and (iii) the acquisition construction or production

activities necessary to prepare the asset for its intended use or sale have already commenced.

(2) Capitalization of borrowing costs is suspended during the period of abnormal interruption of acquisition construction or

production of a qualifying asset which lasts for more than three consecutive months. The borrowing costs incurred during the

period of suspension are recognized as expenses for the current period. The capitalization of borrowing costs is suspended until the

resumption of acquisition construction or production activities.

(3) Capitalization of borrowing costs ceases when a qualifying asset acquired constructed or produced gets ready for its

intended use or sale.

3. Rate and amount of capitalization of borrowing costs

For borrowings obtained specially for the acquisition construction or production of a qualifying asset the amount of

capitalization of the borrowing costs is the cost of the borrowings actually incurred in the current period (including amortized

discount or premium determined using the effective interest method) less the interest income from the part of borrowings that has

not yet been utilized and is deposited in banks or investment income from temporary investment of the borrowings. For general

borrowings occupied for the acquisition construction or production of a qualifying asset the amount of borrowing costs eligible

for capitalization is determined by multiplying the weighted average of the excess of cumulative expenditures on the asset over the

special-purpose borrowings by the capitalization rate of the general borrowings occupied.

27. Biological assets

28. Oil and gas assets

29. Intangible assets

(1) Service life and basis for determination of service life estimates method of amortization or review

procedure

1. Intangible assets including land use right patents non-patent technologies etc. are initially measured at cost.

2. An intangible asset with a finite service life is amortized in a systematic and reasonable manner according to the pattern in

which the economic benefits related to the intangible asset are expected to be realized or if that pattern cannot be determined

reliably using the straight line method as follows:

Item Service life and basis for determination of service life Method of amortization

Land use right Determine the service life to be 50 years according tothe period for title registration Straight line method

Software use right Determine the service life to be 2-5 years accordingto the expected beneficial period Straight line method

Unpatented technology Determine the service life to be 3-5 years accordingto the expected beneficial period Straight line method

Trademarks and patents Determine the service life to be 10 years according tothe expected beneficial period Straight line method

Customer resources Determine the service life to be 10 years according tothe expected beneficial period Straight line method

Intangible asset with indefinite service life is not amortized but its service life is reviewed annually.

(2) Scope and accounting treatment of research and development (R&D) expenses

(1) Labor costs

Labor costs comprise the wages salaries basic pension insurance basic medical insurance unemployment insurance

worker’s compensation insurance maternity insurance and housing provident fund contributions paid to or for the R&D personnel

and service fees of the outsourced R&D personnel.With respect to the R&D personnel serving a number of R&D projects concurrently their labor costs are allocated to the

relevant R&D projects on a pro-rata basis according to the record of working hours spent by them in such R&D projects as

provided by the administrative department.With respect to the Company’s own R&D personnel and outsourced R&D personnel who are directly engaged in R&D

activities and also engaged in non-R&D activities their labor costs actually incurred are allocated between R&D expenses and

production and business expenses on a pro-rata basis in proportion to the percentage of working hours spent by them on different

posts as recorded or otherwise reasonably.

(2) Direct costs

Direct costs refer to the costs actually incurred by the Company in connection with R&D activities including (i) costs of

materials fuels and powers directly consumed; (ii) costs of development and fabrication of molds and process equipment used in

pilot trials and trial production purchasing costs of samples prototypes and general testing methods not classified as fixed assets

and inspection costs of trial products; and (iii) operation maintenance calibration inspection testing repair and other costs of

instruments and equipment used in R&D activities.

(3) Depreciation expenses and long-term deferred expenses

Depreciation expenses refer to the depreciation expenses of instruments equipment and buildings used in R&D activities.With respect to the instruments equipment and buildings used in both R&D activities and non-R&D activities the

depreciation expenses actually incurred are allocated between R&D expenses and production and business expenses according to

the actual working hours and area used as recorded or otherwise reasonably.Long-term deferred expenses refer to the long-term deferred expenses incurred in the alteration modification renovation and

repair of R&D facilities which are recorded according to the amounts actually spent and amortized on a straight line basis over

the defined period.

(4) Amortization expenses of intangible assets

Amortization expenses of intangible assets refer to the amortization expenses of software intellectual properties and non-

patented technologies (know-how licenses designs computing methods etc.) used in R&D activities.

(5) Design costs

Design costs refer to the costs incurred in the design of processes technical specifications rules of operation and operating

features in connection with the concept development and manufacturing of new products and new processes including the costs

of creative design activities conducted for the purpose of developing innovative creative and breakthrough products.

(6) Equipment commissioning costs and testing costs

Equipment commissioning costs refer to the costs incurred during the equipment preparation phase of R&D activities

including the costs of developing special-purpose production machines changing production and quality control procedures

developing new approaches and standards etc.The costs incurred for general equipment preparation and industrial engineering in connection with large-scale mass and

commercial production are excluded from the scope of aggregation.Testing costs include clinical trial costs for the development of new drugs field trial costs for exploration and development

technologies field experiment costs etc.

(7) Outsourced R&D expenses

Outsourced R&D expenses refer to the expenses of R&D activities that the Company engages external entities or individuals

at home or abroad to conduct provided that the results of such R&D activities will be owned by the Company and such R&D

activities are closely related to the primary business of the Company.

(8) Other expenses

Other expenses refer to the expenses that are not set forth above and directly related to R&D activities including the expenses

of technical documents and data material translation advisors and consultants high and new technology R&D insurance retrieval

verification evaluation appraisal and acceptance inspection of R&D achievements application registration and agency service in

respect of intellectual properties meetings travel communication etc.

4. Expenditures on an internal R&D project at the research phase are recognized in profit or loss in the period in which they

are incurred. Expenditures on an internal R&D project at the development phase are recognized as an intangible asset if: (i) it is

technically feasible to complete the intangible asset so that it will be available for use or sale; (ii) it is intended to complete the

intangible asset so that it will be available for use or sale; (iii) the pattern in which the intangible asset will generate economic

results can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or if it is to be

used internally the usefulness of the intangible asset; (iv) there are sufficient technical financial and other resources available to

complete the development activities and to use or sell the intangible asset; and (v) the expenditures attributable to the development

of the intangible asset can be reliably measured.

30. Impairment of long-term assets

With respect to long-term equity investments investment properties at cost fixed assets construction in progress right-of-use

assets intangible assets with a finite service life and other long-term assets if there’s an indication of impairment at the balance

sheet date the Company assesses their recoverable amount. Goodwill arising from business combinations and intangible assets

with an infinite service life are tested for impairment every year regardless of whether there’s an indication of impairment.Goodwill is tested for impairment together with the relevant groups of assets or combinations of groups of assets.If the recoverable amount of a long-term asset is less than its carrying value the difference is measured as impairment loss on

the asset and recognized in profit or loss.

31. Long-term deferred expenses

Long-term deferred expenses are expenses that have already been incurred but should be amortized over a period of more

than one year. Long-term deferred expenses are stated as the amount actually incurred and equally amortized over the benefit

period or established period. If an item of long-term deferred expenses will not benefit the subsequent periods the remaining

unamortized balance of the item is wholly transferred to profit or loss.

32. Contract liabilities

33. Employee benefits

(1) Accounting treatment of short-term employee benefits

The short-term employee benefits actually incurred are recognized as liabilities in the accounting period during which

employee services are rendered and included in profit or loss or the cost of related assets.

(2) Accounting treatment of post-employment benefits

Post-employment benefits are classified as defined contribution plans and defined benefit plans.

(1) In the accounting period during which employee services are rendered the amount contributable as calculated according

to the defined contribution plan is recognized as liabilities and included in profit or loss or the costs of related assets.

(2) The accounting treatment of a defined benefit plan generally involves the following steps:

1) According to the projected unit credit method use unbiased and consistent actuarial assumptions to estimate demographic

variables and financial variables measure the obligation arising from the defined benefit plan and determine the period to which

the relevant obligation belongs. Meanwhile discount the obligation arising from the defined benefit plan in order to determine the

present value of the defined benefit plan obligation and the current service cost;

2) If the defined benefit plan has assets the deficit or surplus resulting after reducing the present value of the defined benefit

plan obligation by the fair value of the assets of the defined benefit plan is recognized as a net liability or asset of the defined

benefit plan. If the defined benefit plan has a surplus the net assets of the defined benefit plan are measured at the lower of surplus

in the defined benefit plan and asset ceiling;

3) At the end of the current period the cost of employee benefits arising from the defined benefit plan is recorded as service

cost net interest on the net liabilities or net assets of the defined benefit plan and changes arising from remeasurement of the net

liabilities or net assets of the defined benefit plan where the service cost and the net interest on the net liabilities or net assets of

the defined benefit plan are included in profit or loss or the cost of related assets and the changes arising from remeasurement of

the net liabilities or net assets of the defined benefit plan are included in other comprehensive income which will not be reversed

to profit or loss in subsequent periods but may be transferred within the scope of equity.

(3) Accounting treatment of termination benefits

(1) When the Company can no longer withdraw the offer of termination benefits as a result of termination of employment or

redundancy; or (2) the Company recognizes the restructuring costs or expenses relating to payment of termination benefits

whichever the earlier the employee benefit liabilities arising from recognition of termination benefits are recognized in profit or

loss.

(4) Accounting treatment of other long-term employee benefits

Other long-term employee benefits are accounted for in accordance with the provisions applicable to defined contribution

plans if they are qualified as defined contribution plans otherwise are accounted for in accordance with the provisions applicable

to defined benefit plans. In order to simplify the accounting the total net amount of the cost of employee benefits arising from the

defined benefit plans that is recorded as service cost net interest on the net liabilities or net assets of the other long-term employee

benefits changes arising from remeasurement of the net liabilities or net assets of the other long-term employee benefits and other

components is included in profit or loss or the cost of related assets.

34. Provisions

1. Provisions are recognized when the Company has a present obligation as a result of any external guarantee litigations

product quality warranty onerous contract or other contingencies and it is probable that an outflow of resources embodying

economic benefits will be required to settle the obligation and the amount of the obligation can be reliably measured.

2. Provisions are initially measured according to the best estimates of the expenditures required to settle the related present

obligations. The carrying value of provisions is reviewed at the balance sheet date.

35. Share-based payments

1. Types of share-based payments

Share-based payments include equity-settled share-based payment and cash-settled share-based payment.

2. Accounting treatment of implementation amendment and termination of share-based payment plans

(1) Equity-settled share-based payment

With respect to an equity-settled share-based payment that is granted in exchange for the services of employees if the right

can be immediately exercised after the grant at the date of the grant the fair value of the equity instruments is included in the

relevant costs or expenses and the capital reserve is adjusted accordingly; if the right may not be exercised until the vesting period

comes to an end or until the specified performance conditions are met at each balance sheet date within the vesting period the

services received in the current period are based on the best estimate of the exercisable equity included in the relevant costs or

expenses at the fair value of the equity instruments at the date of grant and the capital reserve is adjusted accordingly.An equity-settled share-based payment that is granted in exchange for the services of any other party is measured at fair value

at the date of receipt of such services if the fair value of such services can be reliably measured or at the fair value of the equity

instruments at the date of receipt of such services if the fair value of such services cannot be reliably measured but the fair value of

the equity instruments can be reliably measured. The services are included in the relevant costs or expenses and the owners’

equity is increased accordingly.

(2) Cash-settled share-based payment

With respect to a cash-settled share-based payment that is granted in exchange for the services of employees if the right can

be immediately exercised after the grant at the date of grant the fair value of the liability undertaken by the Company is included

in the relevant costs or expenses and the liabilities are increased accordingly; if the right may not be exercised until the vesting

period comes to an end or until the specified performance conditions are met at each balance sheet date within the vesting period

the services received in the current period are based on the best estimate about the exercisable right included in the relevant costs

or expenses and the corresponding liabilities at the fair value of the liability undertaken by the Company.

(3) Amendment and termination of share-based payment plans

If such amendment results in an increase in the fair value of the equity instruments granted the Company recognizes a

corresponding increase in the services received according to the increase in the fair value of the equity instruments. If such

amendment results in an increase in the number of the equity instruments granted the Company recognizes a corresponding

increase in the services received according to the fair value of the additional equity instruments granted. If the Company amends

the vesting conditions in a manner favorable to the employees the Company will take into account the vesting conditions as

amended in the accounting thereof.If such amendment results in a decrease in the fair value of the equity instruments granted the Company continues to

recognize the services received based on the fair value of the equity instruments at the date of grant without taking into account

the decrease in the fair value of the equity instruments. If such amendment results in a decrease in the number of the equity

instruments granted the portion of the equity instruments reduced is deemed canceled. If the Company amends the vesting

conditions in a manner unfavorable to the employees the Company will not take into account the vesting conditions as amended in

the accounting thereof.If during the vesting period the Company cancels or settles any equity instruments granted (except for those canceled due to

failure to satisfy the vesting conditions) such cancellation or settlement is treated as an acceleration of vesting and the amount

that would have been recognized in the remaining vesting period is recognized immediately.

36. Preferred shares perpetual bonds and other financial instruments

37. Revenue

Accounting policies for recognition and measurement of revenue disclosed by business type

1. Revenue recognition principle

At the contract commencement date the Company assesses a contract to identify each single performance obligation included

in the contract and whether such performance obligation shall be satisfied over time or at a point in time.A performance obligation shall be satisfied over time if it meets one of the following conditions otherwise it shall be

satisfied at a point in time: (i) the customer simultaneously receives and consumes the economic benefits provided by the

Company’s performance; (ii) the customer can control the work in process created during the Company’s performance; or (iii) the

Company’s performance does not create the goods with an alternative use and the Company has an enforceable right to payment

for performance completed to date.With respect to a performance obligation satisfied over time the Company recognizes revenue over time by measuring the

progress toward complete satisfaction of that performance obligation. If the Company is unable to reasonably measure the progress

of a performance obligation but expects to recover the costs incurred in satisfying the performance obligation the Company

recognizes revenue only to the extent of the costs incurred until such time that it can reasonably measure the progress of the

performance obligation. With respect to a performance obligation satisfied at a point in time the Company recognizes revenue

when the customer obtains control of the relevant goods or services. In determining whether the customer has obtained control of

any goods the Company considers the following indicators: (i) the Company has a present right to payment for the goods i.e. the

customer presently is obliged to pay for the goods; (ii) the Company has transferred the legal title to the goods to the customer i.e.the customer has the legal title to the goods; (iii) the Company has transferred physical possession of the goods to the customer i.e.the customer physically possesses the goods; (iv) the Company has passed the significant risks and rewards of ownership of the

goods to the customer i.e. the customer has the significant risks and rewards of ownership of the goods; (v) the customer has

accepted the goods; and (vi) other indicators showing that the customer has obtained control of the goods.

2. Revenue measurement principle

(1) The Company measures revenue according to the transaction price allocated to each performance obligation. Transaction

price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the relevant goods or

services to a customer excluding the amounts collected on behalf of third parties or expected to be returned to the customer.

(2) If a contract has any variable consideration the Company determines the best estimate of the variable consideration

according to the expected value or the most likely amount but the Company shall include in the transaction price some or all of an

amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative

revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

(3) If a contract contains a significant financing component the Company determines the transaction price according to the

amount that the customer would have paid for the goods or services if it had paid cash when it obtained control of the goods or

services. The difference between such transaction price and the contract consideration is amortized over the term of the contract

using the effective interest method.

(4) If a contract includes two or more performance obligations at the contract commencement date the Company allocates

the transaction price to each performance obligation on a relative standalone selling price basis.Different methods of revenue recognition and measurement for the same business type that adopts different business models

The Company is primarily engaged in the sale of electronic circuit products optical transceivers (including optical chips)

photoelectric display modules precision components and other products the revenues from which constitute performance

obligations to be satisfied at a point in time. Revenue from sale of products on the domestic market is recognized when the

Company has delivered the products to the agreed place of delivery which has been accepted by the customer has received or has

a present right to payment for the products and it is probable that the economic benefits associated with the transaction will flow

to the Company. Revenue from sale of products on the overseas market is recognized when the products delivered by the

Company pursuant to the contract have been cleared through customs and the Company has received the relevant export

declaration form and bill of lading has received or has a present right to payment for the products and it is probable that the

economic benefits associated with the transaction will flow to the Company.38. Contract costs

39. Government grants

1. Government grants are recognized if (i) the Company meets the conditions attached to the government grants; and (ii) the

Company will receive the government grants. Government grants in the form of monetary assets are measured at the amount

received or receivable. Government grants in the form of non-monetary assets are measured at fair value or if their fair value is

unavailable at a nominal amount.

2. Determination and accounting treatment of government grants related to assets

Government grants related to assets are government grants which are offered for purchasing constructing or otherwise

acquiring long-term assets as provided by the applicable government documents or in the absence of such express provision in the

applicable government documents whose primary condition is that the Company should purchase construct or otherwise acquire

long-term assets. Government grants related to assets are offset against the carrying value of the relevant assets or recognized as

deferred income. Government grants related to assets recognized as deferred income are included in profit or loss over the service

life of the relevant assets on a reasonable and systemic basis. Government grants measured at nominal amount are directly

recognized in profit or loss. In case of a sale transfer retirement or damage of the relevant assets before the end of the intended

service life the balance of the unallocated deferred income is transferred to profit or loss for the period in which the assets are

disposed of.

3. Determination and accounting treatment of government grants related to income

Government grants related to income are government grants other than those related to assets. Government grants related to

both assets and income where it is difficult to make a distinction between the portion related to assets and the portion related to

income are wholly classified as government grants related to income. Government grants related to income as compensation for

costs expenses or losses to be incurred in subsequent periods are recognized as deferred income and in the period for recognizing

the relevant costs expenses or losses included in profit or loss or offset against the relevant costs. Government grants related to

income as compensation for costs expenses or losses already incurred are directly included in profit or loss or offset against the

relevant costs.

4. Government grants related to day-to-day operations of the Company are recognized in other income or offset against the

relevant costs and expenses depending on the nature of economic business. Government grants not related to day-to-day operations

of the Company are recognized in non-operating revenues or expenses.

5. Accounting treatment of policy loan interest subsidy

If the financial authority directly appropriates any interest subsidy to the Company the interest subsidy is recognized as a

reduction in the borrowing cost.

40. Deferred tax assets and deferred tax liabilities

1. The difference between the tax base of an asset or liability and its carrying value or in case of an item not recognized as an

asset or liability whose tax base can be determined according to the applicable tax law the difference between its tax base and

carrying value is recognized as a deferred tax asset or deferred tax liability according to the tax rate applicable to the period in

which the asset or liability is expected to be recovered or settled.

2. Deferred tax assets are recognized to the extent of the amount of income tax payable that will be available in future periods

against which deductible temporary differences are deductible. At the balance sheet date deferred tax assets not recognized in

previous periods are recognized if there’s conclusive evidence that it is probable that sufficient taxable income will be available in

future periods against which the deductible temporary differences are deductible.

3. At the balance sheet date the carrying value of deferred tax assets is reviewed and written down to the extent that it is no

longer probable that sufficient taxable income will be available in future periods to allow the benefit of the deferred tax assets to be

utilized. If it is probable that sufficient taxable income will be available the amount of write-down is reversed.

4. The income taxes and deferred income taxes are included in profit or loss as income tax expenses or gains except the

income taxes arising from any: (i) business combination; or (ii) transaction or event directly recognized in owners’ equity.

5. Deferred income tax assets and deferred income tax liabilities are offset and presented on a net basis if: (i) the Company

has a legal right to settle current tax assets and current tax liabilities on a net basis; and (ii) the deferred tax assets and deferred tax

liabilities relate to income taxes levied by the same tax authority on either the same taxable entity or different taxable entities

which intend either to settle current tax assets and current tax liabilities on a net basis or to realize the assets and liabilities

simultaneously in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed.

41. Leases

(1) Accounting treatment of leases under which the Company is lessee

At the lease commencement date a lease that has a lease term of 12 months or less and does not contain a purchase option is a

short-term lease. A lease of an asset with a low value when new is a lease of a low-value asset. Where the Company subleases or

expects to sublease a leased asset the original lease is not classified as a lease of a low-value asset.Except short-term leases and leases of low-value assets at the lease commencement date the Company recognizes right-of-

use assets and lease liabilities for the lease.

(1) Right-of-use assets

Right-of-use assets are initially measured at cost which cost includes: (i) the amount of the lease liability initially measured;

(ii) any lease payments made at or before the commencement date less any lease incentives received; (iii) any initial direct costs

incurred by the lessee; and (iv) estimated costs to be incurred by the lessee in dismantling and removing the lease asset restoring

the site on which it is located or restoring the lease asset to the condition required by the terms and conditions of the lease.The Company depreciates the right-of-use assets using the straight-line method. If it is reasonable to be certain that the

ownership of a lease asset can be acquired by the end of the lease term the Company depreciates the right-of-use asset over its

remaining service life. Otherwise the Company depreciates the right-of-use asset over the shorter of the lease term and its

remaining service life.

(2) Lease liabilities

At the lease commencement date the Company measures a lease liability at the present value of the lease payments that have

not been paid at that date. The present value of lease payments is determined using the interest rate implicit in the lease as the

discount rate. If that rate cannot be readily determined the lessee’s incremental borrowing rate is used. The difference between the

lease payments and their present value is unrecognized financing costs. Interest expenses are measured for each period within the

lease term using the discount rate for determining the present value of lease payments and recognized in profit or loss. Variable

lease payments not included in the measurement of lease liabilities are recognized in profit or loss in the period during which they

are incurred.At the lease commencement date if there are changes in the in-substance fixed lease payments amounts expected to be

payable under residual value guarantee the index or rate used to determine the lease payments the result of an assessment of

purchase option renewal option or termination option or the actual exercise of such options the Company re-measures the lease

liability based on the present value of lease payments as adjusted and adjusts the carrying value of the right-of-use assets

accordingly. If the carrying value of the right-of-use asset is reduced to zero but the lease liability needs to be further reduced the

balance is recognized in profit or loss.

(3) Sale and leaseback

In accordance with ASBE 14 “Revenue” the Company assesses and determines whether the transfer of any asset in a sale and

leaseback transaction should be accounted for as a sale of that asset.If the transfer of an asset is accounted for as a sale of the asset the Company measures the right-of-use asset arising from the

leaseback at the proportion of the original carrying value of the asset that relates to the right of use retained by the Company.Accordingly the Company recognizes only the amount of any gain or loss that relates to the rights transferred to the lessor.Otherwise the Company continues the recognition of the transferred asset and recognizes a financial liability equal to the

amount of transfer proceeds in accordance with ASBE 22 “Financial Instruments: Recognition and Measurement” at the same time.

(2) Accounting treatment of leases under which the Company is lessor

At the lease commencement date the Company classifies a lease that transfers substantially all the risks and rewards

incidental to ownership of a lease asset to the lessee as a finance lease and all other leases as operating leases.

(1) Operating lease

Lease receipts are recognized as lease income using the straight-line method over the lease term. Initial direct costs incurred

are capitalized amortized on the same basis as the recognition of lease income and recognized in profit or loss by installments.Variable lease payments related to the operating lease which are not included in the lease receipts are recognized in profit or loss in

the period during which they are incurred.

(2) Finance lease

At the lease commencement date the Company recognizes the finance lease payments receivable based on the net investment

in the lease (equal to the sum of unguaranteed residual value and the present value of lease receipts that are not received at the

lease commencement date and discounted using interest rate under the lease) and derecognizes the assets held under the finance

lease. The Company calculates and recognizes interest income using the interest rate implicit in the lease over the lease term.Variable lease payments that are not included in the measurement of the net investment in a lease are recognized in profit or

loss when they are incurred.

(3) Sale and leaseback

In accordance with ASBE 14 “Revenue” the Company assesses and determines whether the transfer of any asset in a sale and

leaseback transaction should be accounted for as a sale of that asset.If the transfer of an asset is accounted for as a sale of the asset the Company accounts for the purchase of assets in

accordance with other applicable standards and accounts for the lease of assets in accordance with ASBE 21 “ Leases”.Otherwise the Company does not recognize the transferred asset instead recognizes a financial asset equal to the amount of

transfer proceeds in accordance with ASBE 22 “Financial Instruments: Recognition and Measurement”.

42. Other significant accounting policies and accounting estimates

1. Basis for the adoption of hedge accounting and its accounting treatment

(1) A hedge includes a fair value hedge/cash flow hedge/hedge of a net investment in a foreign operation.

(2) A hedging relationship qualifies for hedge accounting if all of the following conditions are met: 1) the hedging

relationship consists only of eligible hedging instruments and eligible hedged instruments; 2) at the commencement of the hedge

there is formal designation of hedging instruments and hedged item and documentation of the hedging relationship and the

Company’s risk management objective and strategy for undertaking the hedge; and 3) the hedging relationship meets the hedging

effectiveness requirements.The Company recognizes that the hedging relationship meets effectiveness requirements if all of the following conditions are

met: 1) there is an economic relationship between the hedged item and the hedging instruments; 2) the effect of credit risk does not

dominate the value changes that result from the economic relationship between the hedged item and the hedging instruments; and

3) the hedge ratio of the hedging relationship is the same as the ratio of the quantity of the hedged item that the Company actually

hedges to the number of hedging instruments that the Company actually uses to hedge such hedged item but does not reflect an

imbalance between the weightings of the hedged item and the hedging instrument.The Company assesses whether a hedging relationship meets the hedge effectiveness requirements at commencement and on

an ongoing basis. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the

risk management objective for that designated hedging relationship remains the same the hedging relationship will be rebalanced.

(3) Hedge accounting treatment

1) Fair value hedge

* The gain or loss on a hedging instrument is recognized in profit or loss (or other comprehensive income if the hedging

instrument hedges a non-trading equity instrument (or a component thereof) at fair value through other comprehensive income).* The gain or loss on a hedged item arising from risk exposure is recognized in profit or loss with a corresponding

adjustment to the book balance of the hedged item not measured at fair value. If the hedged item is a financial asset (or a

component thereof) that is measured at fair value through other comprehensive income in accordance with Article XVIII of ASBE

22 “Financial Instruments: Recognition and Measurement” the gain or loss arising from the risk exposure on the hedged item is

recognized in profit or loss without adjusting its book balance which has already been measured at fair value; if the hedged item is

a non-trading equity instrument (or a component thereof) for which the Company has elected to present changes at fair value

through other comprehensive income the gain or loss arising from the risk exposure on the hedged item is recognized in other

comprehensive income without adjusting its book balance which has already been measured at fair value.When a hedged item is an unrecognized firm commitment (or a component thereof) the cumulative change in fair value of

the hedged item subsequent to its designation is recognized as an asset or a liability with a corresponding gain or loss recognized in

profit or loss. When a firm commitment is performed to acquire an asset or assume a liability the initial book balance of the asset

or the liability is adjusted to include the cumulative change in fair value of the hedged item that was previously recognized.For a hedged item that is a financial instrument (or a component thereof) measured at amortized cost any adjustment on the

book balance of the hedged item is amortized to profit or loss based on a recalculated effective interest rate at the date that

amortization begins. For a financial asset (or a component thereof) that is a hedged item and measured at fair value through other

comprehensive income in accordance with Article XVIII of ASBE 22 “Financial Instruments: Recognition and Measurement” the

cumulative gain or loss previously recognized thereon is amortized in the same manner and recognized in profit or loss without

adjusting its book balance.

2) Cash flow hedges

* The portion of the gain or loss on a hedging instrument that is determined to be an effective hedge is recognized in other

comprehensive income as cash flow hedge reserve while the ineffective portion is recognized in profit or loss. The cash flow

hedge reserve is recognized at the lower of the following (in absolute amount): A. the cumulative gain or loss on the hedging

instrument from the commencement of the hedge; B. the cumulative change in the present value of the estimated future cash flows

of the hedged item from the commencement of the hedge.* If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability or

a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value

hedge accounting is applied the Company transfers out the amount of cash flow hedge reserve previously recognized in other

comprehensive income and includes it in the initial cost of the asset or the liability.* For other cash flow hedges the amount of cash flow hedge reserve previously recognized in other comprehensive income

is transferred to profit or loss in the same period the hedged forecast transaction affects profit or loss.

3) Hedges of a net investment in a foreign operation

The portion of the gain or loss on a hedging instrument that is determined to be an effective hedge is recognized in other

comprehensive income and reclassified from other comprehensive income into profit or loss on the disposal of the foreign

operation while the ineffective portion is recognized in profit or loss.

2. Accounting treatment related to share repurchase

When the Company repurchases its shares for the purpose of reducing its registered capital rewarding its employees or

otherwise if the purchased shares are to be held as treasury shares the treasury shares are recorded at the amount actually paid and

the relevant filing procedures are performed; if the repurchased shares are to be retired the difference between the total book value

of the shares retired and the amount actually paid therefore is recognized as a reduction in capital reserve and if the capital reserve

is not sufficient to absorb the difference the remaining balance is charged against the retained earnings. If the repurchased shares

are granted to the employees as equity-settled share-based payments the purchase price paid by the employees upon exercise of

their rights is recognized as a reduction in the cost of the relevant treasury shares vested in the employees and capital reserve (other

capital reserve) accumulated within the vesting period with a corresponding adjustment to capital reserve (share premium).

43. Changes in significant accounting policies and accounting estimates

(1) Changes in significant accounting policies

□Applicable□ N/A

(2) Changes in significant accounting estimates

□Applicable□ N/A

(3) Adjustment of the opening balance of related financial statement items due to the initial adoption of new accounting

standards since 2026

□Applicable□ N/A

VI. Taxation

1. Main categories of taxes and tax rates

Category of tax Tax base Tax rate

The output tax is calculated based on

revenue from sales of goods or rendering

13% 6% 5% 7%-25% for VAT for the

Value-added tax of services in accordance with the tax

Company’s overseas subsidiaries

law net of the input tax deductible in the

current period

Urban maintenance and construction tax Amount of turnover tax actually paid 5% or 7% (China)

9% 15% 16.50% 25% 0 21.75%-

Enterprise income tax Amount of taxable income

29.84% 17% 10% 20% 20.6% 24%

Category of tax Tax base Tax rate

30% 12% 16% 21.5%

If levied on the basis of price 1.2% *

70% of the original value of the property;

Property tax 1.2% or 12% (China)

if levied on the basis of rental 12% of

the lease income

Education surcharge Amount of turnover tax actually paid 3% (China)

Local education surcharge Amount of turnover tax actually paid 2% (China)

Different rates of enterprise income tax applicable to the taxpayers:

Taxpayer Income tax rate

The Company Mutto Optronics Technology Co. Ltd. MFLEX Yancheng Co.Ltd. Yancheng Dongshan Precision Manufacturing Co. Ltd. Suzhou RF Top

Electronic Communication Co. Ltd. Suzhou Dongdai Electronic Technology

Co. Ltd. Suzhou Yongchuang Communication Technology Co. Ltd. Suzhou

Jebson Intelligent Technology Co. Ltd. Suzhou Dongyue New Energy 15.00%

Technology Co. Ltd. Yancheng Dongchuang Precision Manufacturing Co.Ltd. Suzhou Dongshan Display Inc. Source Photonics (Chengdu) Co. Ltd.Jiangsu Source Communication Technology Co. Ltd. and Dongguan Dongshan

Precision Manufacturing Co. Ltd.HongKong Dongshan Precision Union Opoelectronic Co. Limited and other

16.50%

companies incorporated in Hong Kong

Mutto Optronics Group Limited The Dii Group (BVI) Co. Limited Source

0

Photonics Holdings (Cayman) Limited

MFLEX Delaware Inc. Multi-Fineline Electronix Inc. (hereinafter referred to Federal corporate income tax rate 21%; state

as MFLEX) and other companies incorporated in the United States corporate income tax rate 0.75%-8.84%

Multi-Fineline Electronix Singapore Pte. Ltd. and other companies incorporated

17% (Singapore)

in Singapore

Multek Technologies Limited 15% (enjoying an 80% tax exemption)

Multek Technology Sweden AB 20.6% (Sweden)

Multek Technology Malaysia SDN.BHD 24% (Malaysia)

DSBJ Mexico S.DER.L.DEC.V. and other companies in Mexico 30.00%

Multi-Fineline Electronic (Thailand) Co. Ltd. Source Photonics Co. Ltd. 20.00%

Source Photonics (Macau) Commercial Offshore Limited 12.00%

Companies incorporated in Hungary 9.00%

Companies incorporated in Germany 30.88%

Companies incorporated in Portugal 21.50%

Companies incorporated in Morocco 21.50%

Companies incorporated in Slovakia 24.00%

Companies incorporated in Czech Republic 21.00%

Companies incorporated in Romania 16.00%

Other taxpayers not listed above 25.00%

2. Tax preferences

1. Pursuant to the Administrative Measures on Certification and Management of High and New Technology Enterprises (Guo

Ke Fa Huo (2016) No. 32) and Guidelines for the Accreditation of High and New Technology Enterprises (Guo Ke Fa Huo (2016)

No. 195) Suzhou Dongdai Electronic Technology Co. Ltd. Suzhou Yongchuang Communication Technology Co. Ltd. Suzhou

Jebson Intelligent Technology Co. Ltd. Source Photonics (Chengdu) Co. Ltd. and Jiangsu Source Communication Technology

Co. Ltd. passed the qualification review of high and new technology enterprises with a term of three years from 2023 to 2026 and

therefore are subject to an enterprise income tax rate of 15% for the current period.

2. Pursuant to the Administrative Measures on Certification and Management of High and New Technology Enterprises (Guo

Ke Fa Huo (2016) No. 32) and Guidelines for the Accreditation of High and New Technology Enterprises (Guo Ke Fa Huo (2016)

No. 195) Suzhou Dongyue New Energy Technology Co. Ltd. and Yancheng Dongchuang Precision Manufacturing Co. Ltd.passed the qualification review of high and new technology enterprises with a term of three years from 2024 to 2027 and therefore

are subject to an enterprise income tax rate of 15% for the current period.

3. Pursuant to the Administrative Measures on Certification and Management of High and New Technology Enterprises (Guo

Ke Fa Huo (2016) No. 32) and Guidelines for the Accreditation of High and New Technology Enterprises (Guo Ke Fa Huo (2016)

No. 195) the Company and its subsidiaries including Mutto Optronics Technology Co. Ltd. Yancheng Dongshan Precision

Manufacturing Co. Ltd. MFLEX Yancheng Co. Ltd. Suzhou Dongshan Display Inc. Suzhou RF Top Electronic

Communication Co. Ltd. and Dongguan Dongshan Precision Manufacturing Co. Ltd. passed the qualification review of high and

new technology enterprises with a term of three years from 2025 to 2028 and therefore are subject to an enterprise income tax rate

of 15% for the current period.

4. Multek Technologies Limited is subject to a corporate income tax rate of 15% under the Mauritius Corporate Income Tax

Act and as a global Class I company incorporated in Mauritius but operating abroad enjoys an 80% tax exemption so its effective

corporate income tax rate is 3%. From July 1 2025 to June 30 2028 enterprises entitled to the preferential tax rate and achieving

annual taxable income of over MUR 24.00 million shall pay an additional fair share contribution tax at 2%.

5. Pursuant to the Announcement of the Ministry of Finance and State Taxation Administration on Further Improvement to

the Policy on the Additional Pre-tax Deduction of Research and Development Expenses (Announcement No. 7 of 2023 by the

Ministry of Finance and State Taxation Administration) if an enterprise’s R&D expenses actually incurred during R&D activities

are not recognized in profit or loss for creation of intangible assets on the basis of actual deduction as specified from January 1

2023 there is an additional pre-tax deduction at 100% of the incurred amount; if intangible assets are created from January 1

2023 the R&D expenses may be allocated at 200% of the costs of such intangible assets prior to tax payment.

6. Pursuant to Article 244quaterB of the General Tax Code of France Eurostyle Systems Tech Center France GMD Eurocast

Eurocast Delle Eurocast Chateauroux and Eurocast Reyrieux located in France are entitled to the policy of offsetting taxes against

R&D expenditures. R&D expenditures that may be offset include: salaries of R&D personnel and technicians depreciation of

assets related to R&D expenses for R&D outsourcing patent-related expenditures etc. The tax credit is calculated as follows: the

eligible R&D expenditures in the year may be offset at 30% for the portion within EUR 10.00 million and at 5% for the portion

over EUR 10.00 million; the tax not fully offset in the year may be carried over during the effective period of the policy.

7. Pursuant to the Announcement of the Ministry of Finance and the State Taxation Administration on Additional Deductions

for Value-added Taxes of Advanced Manufacturing Enterprises (Announcement No. 43 of 2023) from January 1 2023 to

December 31 2027 advanced manufacturing enterprises are allowed to deduct an additional 5% of the deductible input tax

amount from the payable VAT amount.

8. Export rebates for VAT

Pursuant to the Notice on Allowing Tax Rebate for Water Electricity and Gas Consumption in Export Processing Areas (Guo

Shui Fa [2002] No. 116) released by the State Taxation Administration Source Photonics (Chengdu) Co. Ltd. is entitled to the tax

rebate policy at 13% for the water electricity and gas consumption in the export processing area.Pursuant to the Value-added and Non-value-added Business Tax Act of Taiwan China Source Photonics Co. Ltd. is subject

to value-added business tax for the excess of the output tax over the input tax where the input tax may offset against the output tax.The prevailing value-added business tax rate is 5% while goods sold overseas (exported) are entitled to the tax rate of zero.Meanwhile for the over payment of business taxes for goods or services entitled to zero tax rate for acquisition of fixed assets

and for acquisition transfer dissolution or request for de-registration the tax payer may request tax rebate and the tax will be

refunded after being verified by the competent tax authority.Pursuant to the Implementation Measures for the Interim Regulations of the People’s Republic of China on Value-added Tax

where the goods manufactured by a domestic (foreign) manufacturing enterprise holding an export license are exported by itself or

through a foreign trade agency such goods are entitled to tax exemption and tax rebate unless otherwise provided.VII. Notes to items of the consolidated financial statements

1. Cash and bank balances

In RMB

Item Closing balance Opening balance

Cash on hand 785509.81 620829.32

Bank deposits 7042092700.67 6104101796.83

Other cash and bank balances 1749873584.58 1545560882.95

Total 8792751795.06 7650283509.10

Incl.: Total amounts deposited

2542897798.99 2753243996.70

abroad

2. Financial assets held for trading

In RMB

Item Closing balance Opening balance

Financial assets at fair value through profit or loss 796622579.21 201553860.61

Incl.:

Investments in equity instruments 592933513.78 124912226.68

Derivatives 48689065.43 65126316.01

Wealth management products 155000000.00 11515317.92

Incl.:

Total 796622579.21 201553860.61

3. Derivative financial assets

4. Notes receivable

(1) Notes receivable by category

In RMB

Item Closing balance Opening balance

Commercial acceptance bills 84355.48

Total 84355.48

(2) Accounts receivable by method of recognition of allowance for doubtful accounts

In RMB

Closing balance Opening balance

Allowance for doubtful Allowance for doubtful

Book balance Book balance

Type accounts Carrying accounts Carrying

Ratio of value Ratio of value

Amount % Amount Amount % Amount

provision provision

Incl.:

Allowance

recognized 84779.38 100.00% 423.90 0.50% 84355.48

collectively

Incl.:

Incl.:

Commercia

l 84779.38 100.00% 423.90 0.50% 84355.48

acceptance

bills

Total 84779.38 100.00% 423.90 0.50% 84355.48

Recognition of allowance for doubtful accounts in accordance with the general model of expected credit losses:

□ Applicable□ N/A

(3) Allowance for doubtful accounts recognized recovered or reversed in the current period

Allowance for doubtful accounts recognized in the current period:

In RMB

Changes in the current period

Opening

Type Recovered or Closing balancebalance Recognized Written off Others

reversed

Allowance

recognized 423.90 423.90

collectively

Total 423.90 423.90

5. Accounts receivable

(1) Accounts receivable by age

In RMB

Age Closing book balance Opening book balance

Within 1 year (inclusive) 10626070374.61 9821142620.45

Within 6 months 10500199854.98 9694632577.94

7-12 months 125870519.63 126510042.51

1-2 years 56121841.84 94823755.62

2-3 years 47310462.84 26996591.42

Over 3 years 119968455.79 257853544.65

3-4 years 38902974.56 36572094.64

4-5 years 14012504.49 32577185.82

Over 5 years 67052976.74 188704264.19

Total 10849471135.08 10200816512.14

(2) Accounts receivable by method of recognition of allowance for doubtful accounts

In RMB

Type Closing balance Opening balance

Allowance for Allowance for

Book balance Book balance

doubtful accounts doubtful accounts

Carrying Carrying

Ratio of value Ratio of value

Amount % Amount provisio Amount % Amount provisio

n n

Allowan

ce

recogniz 160523 159550 972408. 176594 163612 129817

1.48% 99.39% 1.73% 92.65%

ed 258.79 850.33 46 186.18 411.89 74.29

individu

ally

Allowan

ce

106889 105973 100242

recogniz 915922 244459 977976

47876.2 98.52% 0.86% 55612.5 22325.9 98.27% 2.44%

ed 63.71 040.19 3285.77

9 8 6

collectiv

ely

108494 105983 102008

251143 408071 979274

Total 71135.0 100.00% 2.31% 28021.0 16512.1 100.00% 4.00%

114.04 452.08 5060.06

8 4 4

Accounts receivable with allowance for doubtful accounts recognized collectively by category name: aging group conventional

vehicle business group and optical communication business group

In RMB

Closing balance

Item Allowance for doubtful

Book balance Ratio of provision

accounts

Aging group 6220637966.07 64467821.61 1.04%

Conventional vehicle business

1484317315.51 11762261.05 0.79%

group

Optical communication

2983992594.71 15362181.05 0.51%

business group

Total 10688947876.29 91592263.71

Accounts receivable with allowance for doubtful accounts recognized collectively by category name: Aging group

In RMB

Closing balance

Item Allowance for doubtful

Book balance Ratio of provision

accounts

Within 6 months 6104992318.67 30524961.68 0.50%

7-12 months 69151575.95 3457578.80 5.00%

1-2 years 19597336.12 3919467.22 20.00%

2-3 years 827303.54 496382.12 60.00%

Over 3 years 26069431.79 26069431.79 100.00%

Total 6220637966.07 64467821.61

(3) Allowance for doubtful accounts recognized recovered or reversed in the current period

Allowance for doubtful accounts recognized in the current period:

In RMB

Changes in the current period

Opening

Type Recovered or Closing balancebalance Recognized Written off Others

reversed

Allowance

recognized 163612411.89 -6918.07 235836.62 -3818806.87 159550850.33

individually

Allowance

recognized 244459040.19 -2968317.72 148237747.51 -1660711.25 91592263.71

collectively

Total 408071452.08 -2975235.79 235836.62 148237747.51 -5479518.12 251143114.04

(4) Accounts receivable actually written off in the current period

In RMB

Item Amount written off

Accounts receivable actually written off 148237747.51

(5) The top 5 debtors in terms of closing balance of accounts receivable and contract assets

In RMB

Closing % of total closing Closing balance of

Company Closing balance of balance of Total closing balance ofaccounts receivable and balance of accounts

allowance for doubtful

name accounts receivable contract accounts receivable and

assets contract assets

receivable and

contract assets impairment of contractassets

Top 1 1204599301.16 1204599301.16 11.10% 3928102.78

Top 2 640703438.78 640703438.78 5.91% 15256239.49

Top 3 606669029.86 606669029.86 5.59% 3197456.86

Top 4 518494572.86 518494572.86 4.78% 2584412.72

Top 5 510893684.90 510893684.90 4.71% 2709112.78

Total 3481360027.56 3481360027.56 32.09% 27675324.63

7. Accounts receivable financing

(1) Accounts receivable financing by category

In RMB

Item Closing balance Opening balance

Banker’s acceptance bills 263570165.06 285277607.54

Total 263570165.06 285277607.54

(2) Accounts receivable by method of recognition of allowance for doubtful accounts

In RMB

Closing balance Opening balance

Allowance for doubtful Allowance for doubtful

Book balance Book balance

Type accounts Carrying accounts Carrying

Ratio of value Ratio of value

Amount % Amount Amount % Amount

provision provision

Incl.:

Allowance

26357016 26357016 28527760 28527760

recognized 100.00% 100.00%

5.06 5.06 7.54 7.54

collectively

Incl.:

Banker’s

26357016 26357016 28527760 28527760

acceptance 100.00% 100.00%

5.06 5.06 7.54 7.54

bills

26357016 26357016 28527760 28527760

Total 100.00% 100.00%

5.06 5.06 7.54 7.54

(4) Accounts receivable financing pledged at the end of the current period

In RMB

Item Amount pledged at the end of the period

Banker’s acceptance bills 9050787.13

Total 9050787.13

(5) Accounts receivable financing already endorsed or discounted but not yet become due at the balance

sheet date

In RMB

Amount derecognized at the end of the Amount not derecognized at the end of

Item

period the period

Banker’s acceptance bills 1099579224.79

Total 1099579224.79

(8) Other information

As the acceptors of banker’s acceptance bills are commercial banks that have high credit ratings banker’s acceptance bills are

less likely to be dishonored when they become due. Therefore the Company derecognizes the banker’s acceptance bills already

endorsed or discounted. However if such bills fail to be paid when they become due the Company will assume joint and several

liability to the holders thereof pursuant to the Law on Negotiable Instruments.

8. Other receivables

In RMB

Item Closing balance Opening balance

Interest receivable

Dividends receivable

Other receivables 199189721.60 165859090.82

Total 199189721.60 165859090.82

1) Other receivables by nature

In RMB

Nature of accounts Closing book balance Opening book balance

Loan and reserve fund 38285176.67 25105050.07

Security deposit 110104544.57 123410363.54

Temporary payment receivable and

157306086.95 114240978.49

others

Total 305695808.19 262756392.10

2) Other receivables by age

In RMB

Age Closing book balance Opening book balance

Within 1 year (inclusive) 172171673.08 116532010.22

1-2 years 26033320.86 28817442.05

2-3 years 29745048.67 41699919.12

Over 3 years 77745765.58 75707020.71

3-4 years 34414209.22 36405825.94

4-5 years 6504436.24 2176276.43

Over 5 years 36827120.12 37124918.34

Total 305695808.19 262756392.10

3) Other receivables by the method of recognition of allowance for doubtful accounts

□Applicable □ N/A

In RMB

Closing balance Opening balance

Allowance for doubtful Allowance for doubtful

Book balance Book balance

Type accounts Carrying accounts Carrying

Ratio of value Ratio of value

Amount % Amount Amount % Amount

provision provision

Allowance

12416352. 12416352. 2340704.9 2340704.9

recognized 4.06% 100.00% 0.89% 100.00%

49 49 1 1

individually

Incl.:

Allowance

29327945 94089734. 19918972 26041568 94556596. 16585909

recognized 95.94% 32.08% 99.11% 36.31%

5.70 10 1.60 7.19 37 0.82

collectively

Incl.:

30569580 10650608 19918972 26275639 96897301. 16585909

Total 100.00% 34.84% 100.00% 36.88%

8.19 6.59 1.60 2.10 28 0.82

Other receivables with allowance for doubtful accounts recognized collectively by category name:

In RMB

Closing balance

Item Allowance for doubtful

Book balance Ratio of provision

accounts

Conventional vehicle business

118061482.35 77501478.77 65.65%

group

Optical communication

88841073.85 605403.89 0.68%

business group

Aging group 86376899.50 15982851.44 18.50%

Incl.: Within 1 year 64850206.94 3242510.32 5.00%

1-2 years 7400760.07 740076.01 10.00%

2-3 years 4251334.77 2125667.39 50.00%

Over 3 years 9874597.72 9874597.72 100.00%

Total 293279455.70 94089734.10

Recognition of allowance for doubtful accounts in accordance with the general model of expected credit losses:

In RMB

Stage I Stage II Stage III

Allowance for doubtful Lifetime expected Lifetime expected

accounts 12-month expected

Total

credit loss (not credit credit loss (credit

credit loss

impaired) impaired)

Balance as at January

3510740.42 2196759.22 91189801.64 96897301.28

1 2026

In the current period

the balance as at

January 1 2026

- Transferred to stage II -950851.57 950851.57

- Transferred to stage

-2824538.21 2824538.21

III

Recognized 1838612.65 1701416.56 10992715.97 14532745.18

Transferred 296088.75 296088.75

Other changes -52983.75 -122786.00 -4452101.37 -4627871.12

Balance as at June 30

4345517.75 1901703.14 100258865.70 106506086.59

2026

Significant changes in the book balance of allowance for doubtful accounts in the current period

□ Applicable□ N/A

6) The top 5 debtors in terms of closing balance of other receivables

In RMB

Company % of total closing Closing balance of

name Nature of account Closing balance Age balance of other allowance forreceivables doubtful accounts

Top 1 Temporary paymentreceivable and others 69867882.50 Within 1 year 22.86%

Top 2 Loan and reserve fund 17932362.03 3-4 years 5.87% 17932362.03

Top 3 Security deposit 16642170.76 2-5 years 5.44% 14469916.46

Top 4 Security deposit 14923923.42 1-5 years 4.88% 10567789.19

Top 5 Temporary paymentreceivable and others 13625205.44 Within 1 year 4.46% 681260.27

Total 132991544.15 43.51% 43651327.95

9. Advances to suppliers

(1) Advances to suppliers by age

In RMB

Closing balance Opening balance

Age

Amount % Amount %

Within 1 year 701971502.08 97.46% 254266212.51 92.72%

1-2 years 13173786.80 1.83% 10599327.43 3.86%

2-3 years 2401304.99 0.33% 4918838.84 1.79%

Over 3 years 2751596.16 0.38% 4481309.57 1.63%

Total 720298190.03 274265688.35

(2) The top 5 suppliers in terms of closing balance of advances to suppliers

In RMB

Company name Book balance % of the total balance of advances

Top 1 280009576.05 38.87

Top 2 90000000.00 12.49

Top 3 46512000.00 6.46

Top 4 34076000.00 4.73

Top 5 29700000.00 4.12

Subtotal 480297576.05 66.68

10. Inventories

Does the Company need to comply with the disclosure requirements for the real estate industry: No

(1) Categories of inventories

In RMB

Closing balance Opening balance

Inventory Inventory

provision or provision or

Item allowance for allowance for

Book balance Carrying value Book balance Carrying value

impairment of impairment of

contract contract

fulfilling costs fulfilling costs

4074063350. 3758441765. 2758783839. 2442171147.

Raw materials 315621584.87 316612692.03

60 73 14 11

Work in 3478745448. 3296897541. 2247197239. 2044703693.

181847907.62 202493545.70

progress 64 02 03 33

4860642991. 4132945911. 4985685219. 4268835040.

Goods on hand 727697080.42 716850179.36

61 19 60 24

Circulating

97688494.40 13313329.80 84375164.60 100291581.34 13639898.89 86651682.45

materials

Materials for

consigned 145336939.95 145336939.95 86582618.88 86582618.88

processing

12656477225 1238479902. 11417997322 10178540497 1249596315. 8928944182.

Total.20 71 .49 .99 98 01

(3) Inventory provision or allowance for impairment of contract fulfilling costs

In RMB

Increase in the current period Decrease in the current period

Opening

Item Reversed or Closing balancebalance Recognized Others Others

written off

Raw materials 316612692.03 41333117.08 37399411.62 4924812.62 315621584.87

Work in

202493545.70 3329295.25 20855576.40 3119356.93 181847907.62

progress

Goods on hand 716850179.36 153053554.32 138624060.80 3582592.46 727697080.42

Circulating

13639898.89 412483.40 739052.49 13313329.80

materials

1249596315. 1238479902.

Total 198128450.05 196879048.82 12365814.50

98 71

Basis for determining the net realizable value and reason for reversing or writing off the provisions for decline in value of

inventories in the current period

Item Basis for determining the net Reason for reversing the inventory Reason for writing off the

realizable value provision inventory provision

Raw

materials

The net realizable value is the

Work in estimated selling price of finished

progress goods less the estimated cost of The circumstances that previously caused The Company has sold or used

Other completion estimated selling the inventory to be written down no the inventories for which a

circulating expenses and related taxes longer exist resulting in that the net provision for impairment of

materials realizable value of the inventory is greater inventory has been made duringthan its carrying amount the current period

The net realizable value is the

Goods on estimated selling price of finished

hand goods less the estimated selling

expenses and related taxes

12. Non-current assets due within one year

In RMB

Item Closing balance Opening balance

Long-term receivables due with one year 96551847.52

Total 96551847.52

13. Other current assets

In RMB

Item Closing balance Opening balance

Cost of returned goods receivable 16203894.73 25696670.02

Deductible input tax 948795401.29 784368551.60

Prepaid enterprise income tax 77831699.39 128996242.65

Deferred expenses and others 485673924.25 389525328.99

Inventories pending compensation 95738378.03

Total 1624243297.69 1328586793.26

16. Investment in other equity instruments

In RMB

Changes in the current period Dividend Aggregate gain

Opening Closing

Item Gain and loss income and loss

balance Additional Reduced recognized in Others balance recognized recognized ininvestment investment

other in the other

comprehensive current comprehensive

income in the period income at the

current period end of the

current period

Jiangsu Bohua

Equity

Investment 207737297.88 65376356.90 273113654.78 73113654.78

Partnership

(L.P.)

Hai Dixin

Semiconductor

25883600.00 93900.00 25977500.00 4655390.00

(Nantong) Co.Ltd.Kunshan

Hostar

Intelligence 34885400.00 219056926.33 253942326.33 225142326.33

Technology

Co. Ltd.Dyness Digital

Energy

73898800.00 8413369.08 82312169.08 32312169.08

Technology

Co. Ltd.Shanghai

Wuwen

Xinqiong

50000000.00 16515933.07 66515933.07 16515933.07

Intelligent

Technology

Co. Ltd.Shinwu

Optronics

21770800.00 1711300.00 23482100.00 1447100.00

(Suzhou) Co.Ltd.Other -

28800399.86 28006686.84 1697600.00

companies 793713.02

Total 442976297.74 311167785.38 -793713.02 753350370.10 354884173.26

(2) Reason for designation as an investment in equity instruments at fair value through other comprehensive income

1) Jiangsu Bohua Equity Investment Partnership (L.P.) was established on September 27 2021 with a registered capital of

RMB3.3 billion and is primarily engaged in equity investments and venture capital investment (in non-listed companies only). In

consideration that this investment will bring a good return to the Company and provide the Company with opportunities to invest

in premium fields and assets and is not held for trading the Company designated this investment as a financial asset at fair value

through other comprehensive income.

2) Hai Dixin Semiconductor (Nantong) Co. Ltd. was established on April 6 2012 with a registered capital of

RMB36152329.00 in which the Company holds 10.2345% shares. In consideration that the Company has a close business

relationship with Hai Dixin Semiconductor (Nantong) Co. Ltd. the shares held by the Company in it will help the Company

improve its business competencies and the investment is not held for trading the Company designated this investment as a

financial asset at fair value through other comprehensive income on January 1 2019.

3) Hostar Intelligence Technology Co. Ltd. was established on April 2 2011 with a registered capital of RMB 42660000

in which the Company holds 3.038% shares. In consideration that the shares held by the Company in it will help the Company

improve its business competencies including supporting business scale expansion procuring raw materials/equipment and

developing and strengthening market and sales teams and the investment is not held for trading the Company designated this

investment as a financial asset at fair value through other comprehensive income in February 2023.

4) Dyness Digital Energy Technology Co. Ltd. was established on August 17 2017 with a registered capital of

RMB112023809 in which the Company holds 1.4716% shares. In consideration that the shares held by the Company in it will

help the Company improve its business competencies and the investment is not held for trading the Company designated this

investment as a financial asset at fair value through other comprehensive income in March 2023.

5) Shanghai Wuwen Xinqiong Intelligent Technology Co. Ltd. was established on May 31 2023 with a registered capital

of RMB 2191215 in which the Company holds 1.7697% shares. In consideration that the shares held by the Company in it will

help the Company improve its business competencies and the investment is not held for trading the Company designated this

investment as a financial asset at fair value through other comprehensive income in November 2025.

6) Shinwu Optronics (Suzhou) Co. Ltd. was established on October 19 2006 with a registered capital of RMB57754000

in which the Company holds 1.7169% shares. In consideration that the shares held by the Company in it will help the Company

improve its business competencies and the investment is not held for trading the Company designated this investment as a

financial asset at fair value through other comprehensive income in May 2023.

17. Long-term receivables

(1) Particulars of long-term receivables

In RMB

Closing balance Opening balance

Item Allowance Allowance

Range of

Carrying Carrying

Book balance for doubtful Book balance for doubtful discount rate

value value

accounts accounts

Amount of 30000000.0 30000000.0

finance lease 0 0

Labor service

by 192773710. 191688968. 281695941. 280287462.

1084741.69 1408479.76 3-8%

installment 62 93 78 02

receivable

Sale of long- 49035581.7 46509581.7

9784612.88 1012000.00 8772612.88 2526000.00 3.38%

term assets 7 7

by

installment

receivable

202558323. 200461581. 360731523. 356797043.

Total 2096741.69 3934479.76

50 81 55 79

18. Long-term equity investments

In RMB

Opening Changes in the current period Closing

Opening Closing

balance of Investment Adjustment to Declared cash Allowance balance ofbalance balance

Investee allowance for Other

(carrying Additional Reduced income or loss other dividends or for

allowance for

impairment changes in Others

(carrying

value) investment investment under the equity comprehensive profit impairment

impairment

equity value)loss method income distribution loss loss

I. Joint ventures

II. Associates

Suzhou Toprun

Electric Equipment 19510321.00 51487204.05 -432671.46 19077649.54 51487204.05

Co. Ltd.Shenzhen Nanfang

Blog Technology

17507056.47 17507056.47

Development Co.Ltd.Suzhou LEGATE

Intelligent Equipment 21402031.08 -998948.96 20403082.12

Corp. Ltd.Suzhou Dongcan

Optoelectronics 2693102.45 -152739.16 2540363.29

Technology Co. Ltd.Jiangsu Nangao

Intelligent Equipment

2602994.36 -377744.00 2225250.36

Innovation Center

Co. Ltd.Jiaozuo Songyang

Photoelectric 22181612.25 -1143544.82 21038067.43

Technology Co. Ltd.Suzhou Yongxin

Jingshang Venture 1674130.

41197773.88 107953.98 132744.71 39498852.71

Capital Partnership 44

(L.P.)

Isotek Microwave

8539424.61 8539424.61

Limited

Shanghai Xinhuarui

Semiconductor 16978597.53 -666914.62 16311682.91

Technology Co. Ltd.

126566432.5 1674130.

Subtotal 77533685.13 -3664609.04 132744.71 121094948.36 77533685.13

5 44

126566432.5 1674130.

Total 77533685.13 -3664609.04 132744.71 121094948.36 77533685.13

5 44

20. Investment properties

(1) Investment properties at cost

□Applicable □ N/A

In RMB

Buildings and Construction

Item Land use right Total

structures in progress

I. Original value

1. Opening balance 5309132.17 148423000.00 153732132.17

2. Increase

(1) Acquired

(2) Transferred from inventories/ fixed

assets/ construction in progress

(3) Increased due to business combinations

3. Decrease 5309132.17 5309132.17

(1) Disposed 5309132.17 5309132.17

(2) Other transfer-out

4. Closing balance 148423000.00 148423000.00

II. Accumulated depreciation and amortization

1. Opening balance 4782029.35 6394641.71 11176671.06

2. Increase 84061.28 2019360.54 2103421.82

(1) Recognized or amortized 84061.28 2019360.54 2103421.82

3. Decrease 4866090.63 4866090.63

(1) Disposed 4866090.63 4866090.63

(2) Other transfer-out

4. Closing balance 8414002.25 8414002.25

III. Allowance for impairment loss

1. Opening balance

2. Increase

(1) Recognized

3. Decrease

(1) Disposed

(2) Other transfer-out

4. Closing balance

IV. Carrying value

1. Closing balance 140008997.75 140008997.75

2. Opening balance 527102.82 142028358.29 142555461.11

21. Fixed assets

In RMB

Item Closing balance Opening balance

Fixed assets 17187713941.47 16586762231.15

Total 17187713941.47 16586762231.15

(1) Particulars of fixed assets

In RMB

Buildings and Machinery and Transportation Office equipment

Item Total

structures equipment equipment and others

I. Original value

1. Opening balance 7361327947.15 24139026612.69 84325559.96 1024270880.02 32608950999.82

2. Increase 177080161.73 1798175993.29 6212271.12 109747508.94 2091215935.08

(1) Acquired 9708840.67 58196003.12 1111570.13 28587240.17 97603654.09

(2) Transferred from

263000620.67 1809964132.69 5234843.07 88295106.50 2166494702.93

construction in progress

(3) Increased due to

business combinations

(4) Translation of

foreign currency -95629299.61 -69984142.52 -134142.08 -7134837.73 -172882421.94

financial statements

3. Decrease 5030722.82 320080244.06 9625136.74 6281534.60 341017638.22

(1) Disposed or retired 5030722.82 320080244.06 9625136.74 6281534.60 341017638.22

4. Closing balance 7533377386.06 25617122361.92 80912694.34 1127736854.36 34359149296.68

II. Accumulated

depreciation

1. Opening balance 2546386637.32 12410440426.51 58444806.71 695804281.52 15711076152.06

2. Increase 209218975.12 1147625843.59 4059986.08 52493353.20 1413398157.99

(1)

209432713.67 1162145535.59 4932138.11 54264177.26 1430774564.63

Recognized

(2) Translation of

foreign currency -213738.55 -14519692.00 -872152.03 -1770824.06 -17376406.64

financial statements

3. Decrease 3505561.87 245162525.33 9128523.50 6029885.96 263826496.66

(1) Disposed or retired 3505561.87 245162525.33 9128523.50 6029885.96 263826496.66

(2) Transfer of

construction in progress

4. Closing balance 2752100050.57 13312903744.77 53376269.29 742267748.76 16860647813.39

III. Allowance for

impairment loss

1. Opening balance 4395043.80 305850837.23 866735.58 311112616.61

2. Increase

(1) Recognized

3. Decrease 325074.79 325074.79

(1) Disposed or retired 325074.79 325074.79

Buildings and Machinery and Transportation Office equipment

Item Total

structures equipment equipment and others

4. Closing balance 4395043.80 305525762.44 866735.58 310787541.82

IV. Carrying value

1. Closing balance 4776882291.69 11998692854.71 27536425.05 384602370.02 17187713941.47

2. Opening balance 4810546266.03 11422735348.95 25880753.25 327599862.92 16586762231.15

(2) Fixed assets whose property title certificates have not yet been obtained

In RMB

Reason for not obtaining the property title

Item Carrying value

certificate

Factory buildings of Multek 44116758.48 Pending review

Subtotal 44116758.48

22. Construction in progress

In RMB

Item Closing balance Opening balance

Construction in progress 4514260841.57 2345985416.22

Total 4514260841.57 2345985416.22

(1) Particulars of construction in progress

In RMB

Closing balance Opening balance

Allowance Allowance

Item for for

Book balance Carrying value Book balance Carrying value

impairment impairment

loss loss

Project of supporting

construction for

production expansion 1013186446.80 1013186446.80

of PCBs and optical

transceivers in Thailand

Plant infrastructure

project of Multilayer

767805258.88 767805258.88

Board (Thailand) Co.Ltd.Kunshan new energy

manufacturing base 269865330.68 269865330.68

project

High-end AI PCB

1493077239.65 1493077239.65 228037607.94 228037607.94

construction project

Automatic production

line of vehicle-mounted 217686538.92 217686538.92 212383174.42 212383174.42

LCMs

MFLEX Suzhou

Guoxiang Phase II and

71598368.58 71598368.58 52462660.56 52462660.56

other production

expansion projects

IC substrate project of

Chaowei

38454188.23 38454188.23 43527285.88 43527285.88

Microelectronics

(Yancheng) Co. Ltd.MFLEX Yancheng

109744874.52 109744874.52 39243185.50 39243185.50

Phase II project

Construction project of

optical transceiver 974414793.99 974414793.99 265534507.25 265534507.25

manufacturing line

Installation equipment

596098390.88 596098390.88 467126405.11 467126405.11

in progress and others

Total 4514260841.57 4514260841.57 2345985416.22 2345985416.22

(2) Changes in significant constructions in progress in the current period

In RMB

Aggregate Incl.: Rate ofBudget (100 Opening Increase in Amount Other Closing % of project amount of Capitalized interestItem million

RMB) balance

the current transferred to costs to the Progress

period fixed assets decreases balance budget capitalized

interest in thecapitalization Source of funds

interest current in the currentperiod period

Own funds +

High-end AI PCB 70.00 228037607. 164446382 376525280. 149307723 loans fromconstruction project 94 3.32 84 2898910.77 9.65 27.02%27.02% financial

institutions

Kunshan new energy 269865330. 58132804.1 327998134. Loans frommanufacturing base 18.00 68 0 78 100.00%100.00% 7229036.37 financialproject institutions

Infrastructure construction

of the factory for Multi- 767805258. 33264006.8 796584478. Loans from

layer Circuit Board Co. 18.75 88 2 84 4484786.86 100.00%100.00% 2139604.52 financial

Ltd. institutions

Construction project of Own funds +

optical transceiver 18.00 265534507. 119045646 455375037. 26201140.4 974414793.25 4.71 57 0 99 82.61%82.61%

loans from

manufacturing line financialinstitutions

Project of supporting

construction for Own funds +

production expansion of 13.12 115937524 70199195.3 75989598.6 101318644 88.37%88.37% loans from

PCBs and optical 0.83 8 5 6.80 financial

transceivers in Thailand institutions

Total 137.87 153124270 408569233 202668212 109574436. 3480678484.75 9.78 7.41 68 0.44 9368640.89

24. Oil and gas assets

□Applicable□ N/A

25. Right-of-use assets

(1) Particulars of right-of-use assets

In RMB

Buildings and Machinery and

Item Land Total

structures equipment

I. Original value

1. Opening

2467654171.34 147367063.77 93453051.96 2708474287.07

balance

2. Increase 29794460.73 -6880564.79 14343.46 22928239.40

1) Lease in 34036293.98 25450.96 34061744.94

2) Increased due to

combination

3) Translation of

foreign currency -4241833.25 -6880564.79 -11107.50 -11133505.54

financial statements

3. Decrease 5099012.78 4523977.26 9622990.04

1) Disposal 5099012.78 4523977.26 9622990.04

4. Closing balance 2492349619.29 135962521.72 93467395.42 2721779536.43

II. Accumulated

depreciation

1. Opening

475491820.99 9667019.01 13961632.46 499120472.46

balance

2. Increase 106954893.04 8285910.96 8431197.45 123672001.45

(1)

112671571.03 11744816.34 8431197.45 132847584.82

Recognized

2) Increased due to

combination

3) Translation of

foreign currency -5716677.99 -3458905.38 -9175583.37

financial statements

3. Decrease 5099012.78 5099012.78

(1) Disposed 5099012.78 5099012.78

4. Closing balance 577347701.25 17952929.97 22392829.91 617693461.13

III. Allowance for

impairment loss

1. Opening

balance

2. Increase

(1)

Recognized

3. Decrease

(1) Disposed

4. Closing balance

IV. Carrying value

1. Closing balance 1915001918.04 118009591.75 71074565.51 2104086075.30

2. Opening

1992162350.35 137700044.76 79491419.50 2209353814.61

balance

26. Intangible assets

(1) Particulars of intangible assets

In RMB

Unpatented Trademarks and Customer

Item Land use right Patent Software Total

technology patents resources

I. Original value

1. Opening balance 635749739.40 35398552.24 462780980.20 828184544.08 178057914.12 2140171730.04

2. Increase 82591256.08 -1628684.02 17625516.75 3217409.23 101805498.04

(1) Acquired 96240975.59 18788487.92 1746009.34 116775472.85

(2) Internal R&D 6351794.43 6351794.43

(3) Increased due to business

combinations

4) Translation of foreign

-13649719.51 -1628684.02 -1162971.17 -4880394.54 -21321769.24

currency financial statements

3. Decrease 510779.21 510779.21

(1) Disposed 510779.21 510779.21

4. Closing balance 718340995.48 33769868.22 479895717.74 831401953.31 178057914.12 2241466448.87

II. Accumulated amortization

1. Opening balance 105972054.33 26476480.84 374262840.20 230518435.31 61448232.60 798678043.28

2. Increase 12619768.22 3022415.72 22659134.15 40087892.86 12271084.53 90660295.48

(1) Recognized 12592654.90 3227902.23 23628192.57 37591601.44 12271084.53 89311435.67

(2) Increased due to

combination

(3) Translation of foreign

27113.32 -205486.51 -969058.42 2496291.42 1348859.81

currency financial statements

3. Decrease 441962.96 441962.96

(1) Disposed 441962.96 441962.96

4. Closing balance 118591822.55 29498896.56 396480011.39 270606328.17 73719317.13 888896375.80

III. Allowance for impairment

loss

1. Opening balance 20426470.33 20426470.33

2. Increase -5675724.57 -5675724.57

(1) Recognized

(2) Increased due to

combination

(3) Translation of foreign

-5675724.57 -5675724.57

currency financial statements

3. Decrease

(1) Disposed

4. Closing balance 14750745.76 14750745.76

IV. Carrying value

1. Closing balance 599749172.93 4270971.66 83415706.35 546044879.38 104338596.99 1337819327.31

2. Opening balance 529777685.07 8922071.40 88518140.00 577239638.44 116609681.52 1321067216.43

27. Goodwill

(1) Original value of goodwill

In RMB

Increase Decrease

Investee or event giving rise to Arising Translation of

Opening balance

goodwill from foreign currency

Closing balance

Disposed

business financial

combination statements

MFLEX 1770752915.84 1770752915.84

Multek 179329062.90 179329062.90

Mutto Optronics Technology Co.

153957647.78 153957647.78

Ltd.Suzhou RF Top Electronic

135001580.53 135001580.53

Communication Co. Ltd.Source Photonics 2799030096.91 -86568328.58 2712461768.33

Total 5038071303.96 -86568328.58 4951502975.38

(2) Allowance for impairment of goodwill

In RMB

Increase Decrease

Investee or event giving rise to goodwill Opening balance Closing balance

Recognized Disposed

Mutto Optronics Technology Co. Ltd. 153957647.78 153957647.78

Suzhou RF Top Electronic Communication

114854294.17 114854294.17

Co. Ltd.Total 268811941.95 268811941.95

(3) Information of asset group or combination of asset groups to which the goodwill belongs

Composition of asset group or

Business segment and basis Whether or not the same

Item combination of asset group and basis

for classification as prior years

for grouping

All of its assets and liabilities when PCB manufacturing circuit

MFLEX Yes

acquired by the Company boards

All of its assets and liabilities when PCB manufacturing circuit

Multek Yes

acquired by the Company boards

Mutto Optronics Technology Co. Photoelectric display

All of its assets and liabilities Yes

Ltd. module

Precision components

Suzhou RF Top Electronic

All of its assets and liabilities manufacturing ceramic Yes

Communication Co. Ltd.filters

Source Photonics All the assets and liabilities of Optical transceivers Yes

Composition of asset group or

Business segment and basis Whether or not the same

Item combination of asset group and basis

for classification as prior years

for grouping

Source Photonics when it was (including optical chips)

acquired by the Company

28. Long-term deferred expenses

In RMB

Increase in the Other

Item Opening balance Amortization Closing balance

current period decreases

Decoration costs of fixed

990698521.69 151401394.71 114556432.79 3010994.71 1024532488.90

assets and others

Total 990698521.69 151401394.71 114556432.79 3010994.71 1024532488.90

29. Deferred tax assets/deferred tax liabilities

(1) Deferred tax assets not offset

In RMB

Closing balance Opening balance

Item Deductible temporary Deductible temporary

Deferred tax assets Deferred tax assets

differences differences

Allowance for

1148894397.73 191135414.52 1203661558.00 205547687.65

impairment of assets

Deductible losses 4166353404.01 634310135.67 3596361870.04 559296768.10

Difference in

depreciation of fixed 111932557.23 19787186.14 105783341.60 20675023.55

assets

Lease liabilities 2062956022.57 325179991.71 2500101261.08 394720970.92

Unrealized gains/losses

from inter-company 246285935.90 46483977.04 329741349.28 62919533.24

transactions

Change in the fair

value of financial 66457201.26 12478708.36 1261168.56 189175.28

instruments

Deferred income 698947642.54 122255848.40 676768326.83 118169047.33

Accrued expenses 534740281.18 110688552.45 364698570.53 80596959.76

Total 9036567442.42 1462319814.29 8778377445.92 1442115165.83

(2) Deferred tax liabilities not offset

In RMB

Closing balance Opening balance

Item Taxable temporary Taxable temporary

Deferred tax liabilities Deferred tax liabilities

differences differences

One-off deduction of

depreciation of fixed 2884850823.38 594071974.65 3155071803.47 635400278.98

assets

Accrued interest

1030539039.02 239832946.67 265058358.96 54405181.91

income and others

Right-of-use assets 2049203415.72 332855415.19 2304688646.71 375918561.89

Income tax payable

due to increase in 821926333.86 167786567.56 842218446.34 181435486.53

appraised value

Total 6786519611.98 1334546904.07 6567037255.48 1247159509.31

(3) Deferred tax assets and deferred tax liabilities presented on a netting basis

In RMB

Closing offset amount Closing balance of Opening offset amount Opening balance of

Item of deferred tax assets deferred tax assets or of deferred tax assets deferred tax assets or

and liabilities liabilities after offset and liabilities liabilities after offset

Deferred tax assets 646837302.88 815482511.41 612352571.77 829762594.06

Deferred tax liabilities 646837302.88 687709601.19 612352571.77 634806937.54

(4) Unrecognized deferred tax assets

In RMB

Item Closing balance Opening balance

Deductible temporary differences 1393544108.02 1451854757.71

Deductible losses 2015388427.72 2267692018.60

Total 3408932535.74 3719546776.31

(5) Deductible losses on unrecognized deferred tax assets that will expire in the following years

In RMB

Year Closing balance Opening balance Remark

2026 71698267.97 87657744.95

2027 76005786.98 80267559.23

2028 107454228.74 112994295.34

2029 296946825.71 309477948.41

2030 367858815.90 441672949.09

2031 94629716.72 98860507.10

2032 151711268.06 152321739.97

2033 80665216.09 80858597.99

2034 190604360.91 190605087.39

2035 509643603.94 703967351.66

2036 59069238.12 171689.82

2037 267667.11 267667.11

2038 432662.81 432662.81

2039 326995.38 326995.38

2040 273691.85 273691.85

2041 253903.25 253903.25

2042 337668.69 337668.69

2043 469911.63

Indefinite 6738597.86 6943958.56

Total 2015388427.72 2267692018.60

30. Other non-current assets

In RMB

Closing balance Opening balance

Allowance Allowance

Item for for

Book balance Carrying value Book balance Carrying value

impairment impairment

loss loss

Deferred income

– unrealized gain

5859048.10 5859048.10 7711421.32 7711421.32

or loss on sale

and leaseback

Performance

guarantee for 434405903.95 434405903.95

acquisition

Prepayment for

projects and 1713002388.14 1713002388.14 1014414674.53 1014414674.53

equipment

Amounts for

8898712.10 8898712.10

share repurchase

Others 2878042.18 2878042.18 3010272.91 3010272.91

Total 1730638190.52 1730638190.52 1459542272.71 1459542272.71

31. Assets subject to restrictions on ownership or right of use

In RMB

Closing balance Opening balance

Item Book Carrying Type of Reason for Book Carrying Type of Reason for

balance value restriction restriction balance value restriction restriction

Cash and Security Security

18452261 18452261 15455608 15455608

bank Pledge deposit for Pledge deposit for

84.58 84.58 82.95 82.95

balances notes etc. notes etc.Accounts 85945246 85515520 98156184 98156184

Pledge Factoring Pledge Factoring

receivable 8.45 6.20 7.06 7.06

Accounts

9050787.1 9050787.1 Pledge of 73295416. 73295416. Pledge of

receivable Pledge Pledge

3 3 notes 52 52 notes

financing

Fixed 15990716 15155224 Loan

Mortgage

assets 9.80 5.09 mortgage

Right-of- 27217795 21040860 Finance 27084742 22093538 Finance

Mortgage Mortgage

use assets 36.43 75.30 lease 87.07 14.61 lease

54355089 48135182 54687996 49613242

Total

76.59 53.21 03.40 06.23

32. Short-term borrowings

(1) Short-term borrowings by category

In RMB

Item Closing balance Opening balance

Pledge loans 96812958.50

Credit loans 7983179536.87 6689912201.97

Discounting and factoring financing of

notes letters of credit and accounts 1550394653.33 1321561847.06

receivable

Total 9630387148.70 8011474049.03

33. Financial liabilities held for trading

In RMB

Item Closing balance Opening balance

Financial liabilities held for trading 181580627.27 46545937.17

Incl.:

Derivative financial liabilities 181580627.27 46545937.17

Incl.:

Total 181580627.27 46545937.17

35. Notes payable

In RMB

Category Closing balance Opening balance

Commercial acceptance bills 30000000.00

Banker’s acceptance bills 616705866.60 972812950.68

Total 616705866.60 1002812950.68

36. Accounts payable

(1) Breakdown of accounts payable

In RMB

Item Closing balance Opening balance

Payment for materials 11695336074.42 10007113113.42

Payment for projects and equipment 3130744124.46 2493239585.68

Others 909425452.04 542783988.24

Total 15735505650.92 13043136687.34

37. Other payables

In RMB

Item Closing balance Opening balance

Other payables 154547241.39 705336813.22

Total 154547241.39 705336813.22

(3) Other payables

1) Other payables by nature

In RMB

Item Closing balance Opening balance

Share purchase price 535923369.94

Temporary receipts payable 75805048.38 77244154.65

Others 78742193.01 92169288.63

Total 154547241.39 705336813.22

39. Contract liabilities

In RMB

Item Closing balance Opening balance

Trade receivable 459685401.30 474660658.17

Total 459685401.30 474660658.17

40. Employee benefits payable

(1) Employee benefits payable

In RMB

Item Opening balance Increase Decrease Closing balance

I. Short-term benefits 907081503.02 3473570502.50 3576987212.21 803664793.31

II. Post-employment

benefits – defined 79270561.17 341444903.91 345261326.34 75454138.74

contribution plans

III. Termination

7452120.49 5644236.63 10063578.78 3032778.34

benefits

IV. Other benefits due

1427248.06 741275.03 175506.36 1993016.73

within one year

Total 995231432.74 3821400918.07 3932487623.69 884144727.12

(2) Short-term employee benefits

In RMB

Item Opening balance Increase Decrease Closing balance

1. Wages bonuses

allowances and 839903470.98 3042047724.09 3136391912.34 745559282.73

subsidies

2. Staff welfare 125955009.10 125955009.10

3. Social insurance

53227398.30 199417209.07 202341126.32 50303481.05

contributions

Workers’ compensation

5698377.15 18474249.64 18681425.41 5491201.38

insurance

Medical and maternity

47529021.15 180942959.43 183659700.91 44812279.67

insurance

4. Housing provident

3232786.72 97123076.61 97555856.12 2800007.21

fund

5. Trade union fund

and employee 5926145.44 8941421.41 14166331.79 701235.06

education fund

6. Short-term paid

4791701.58 86062.22 576976.54 4300787.26

absence

Total 907081503.02 3473570502.50 3576987212.21 803664793.31

(3) Defined contribution plans

In RMB

Item Opening balance Increase Decrease Closing balance

1. Basic pension

68264250.69 317079478.48 320380090.78 64963638.39

insurance

2. Unemployment

11006310.48 24365425.43 24881235.56 10490500.35

insurance

Total 79270561.17 341444903.91 345261326.34 75454138.74

41. Taxes payable

In RMB

Item Closing balance Opening balance

Value-added tax 79411074.25 35923797.22

Enterprise income tax 506640245.94 513181003.94

Individual income tax 15379067.31 46215837.22

Urban maintenance and construction tax 5504914.63 7436675.11

Property tax 10792737.03 9916289.44

Stamp duty 7715818.11 7572566.44

Education surcharge 2381675.90 3010002.58

Land use tax 479786.57 480526.20

Local education surcharge 1581221.88 1983592.32

Other taxes 14374612.24 15616971.86

Total 644261153.86 641337262.33

43. Non-current liabilities due within one year

In RMB

Item Closing balance Opening balance

Long-term borrowings due within one

2696859669.92 2959297257.02

year

Long-term payables due within one year 28115200.00

Lease liabilities due within one year 278598193.44 500891170.93

Total 2975457863.36 3488303627.95

44. Other current liabilities

In RMB

Item Closing balance Opening balance

Output tax to be recognized 47028274.12 26024795.18

Accrued maintenance expenses 18170383.49 17813333.90

Total 65198657.61 43838129.08

45. Long-term borrowings

(1) Long-term borrowings by category

In RMB

Item Closing balance Opening balance

Pledge loans 333839386.56 333791638.89

Mortgage loans 52980858.25

Credit loans 9106687798.81 5988306967.40

Total 9440527185.37 6375079464.54

47. Lease liabilities

In RMB

Item Closing balance Opening balance

Lease obligations payable 2127321241.72 1916709641.58

Less: Unrecognized financing costs -210666745.97 -126644820.85

Total 1916654495.75 1790064820.73

49. Long-term employee benefits payable

(1) Long-term employee benefits payable

In RMB

Item Closing balance Opening balance

I. Post-employment benefits - net

133338235.43 142470448.33

liabilities under defined benefit plans

Total 133338235.43 142470448.33

50. Provisions

In RMB

Item Closing balance Opening balance Method of acquisition

Business restructuring

124034938.47 134344496.21

expenditures

Provision for commercial

56546944.19 81477617.62

risks

Provision for sales return 20418721.70 26523128.06

Product warranty 20975918.66 21411260.96

Total 221976523.02 263756502.85

51. Deferred income

In RMB

Method of

Item Opening balance Increase Decrease Closing balance

acquisition

Government grants 889843133.49 125675649.65 144861131.49 870657651.65

Total 889843133.49 125675649.65 144861131.49 870657651.65

53. Share capital

In RMB

Change (+/-)

Opening balance CapitalizationBonus Closing balance

New shares of capital Others Subtotal

shares

reserves

Total shares 1831607532.00 1831607532.00

55. Capital reserve

In RMB

Item Opening balance Increase Decrease Closing balance

Capital premium (share

9116395284.34 69670658.08 9186065942.42

premium)

Other capital reserve 141497253.43 37341748.80 178839002.23

Total 9257892537.77 107012406.88 9364904944.65

56. Treasury shares

In RMB

Item Opening balance Increase Decrease Closing balance

Treasury

175076133.79 49990856.17 125085277.62

shares

Total 175076133.79 49990856.17 125085277.62

Other information including the explanation about increase/decrease in the current period and the reasons of such change: On

March 9 2026 the Company transferred 3048701 shares from the repurchase securities account to the 2026 employee stock

ownership plan securities account by means of non-trading transfer.

57. Other comprehensive income

In RMB

Amount of the current period

Less: Other Less: Other

comprehen comprehen Amount Amount

Opening

Item sive sive Less: attributable attributable

Closing

balance Amount income income Income tax to the to minority balance

before tax

reclassified reclassified expenses parent after shareholder

to profit or to retained tax s after tax

loss earnings

I. Other

comprehensive income

45801392. 30858708 78454144. 23013293 27593432

that cannot be

07 0.93 55 6.38 8.44

reclassified to profit or

loss

Incl.: Changes from - -

2085004.1 -

remeasurement of 2580704.4 1935528.3 149475.85

9 645176.11

defined benefit plans 5 4

Change in fair

value of investments 43716387. 31116778 79099320. 23206846 27578485

in other equity 88 5.38 66 4.72 2.60

instruments

II. Other

comprehensive income - - - - -

46762107.

that will be 28663407 31292188 18691661. 34099233 62762640

06

reclassified to profit or 4.81 6.24 95 1.35 6.15

loss

- - - -

Reserves for cash 36545134. 46762107.

11719770 18691661. 14526815 10872301

flow hedge 30 06

8.70 95 3.81 9.51

Differences in

- - - -

translation of foreign

32317920 19572417 19572417 51890338

currency financial

9.11 7.54 7.54 6.66

statements

- - - - -

Total other 12521625

24083268 4334805.3 18691661. 11085939 35169207

comprehensive income 1.61

2.74 1 95 4.97 7.71

58. Special reserve

59. Surplus reserve

In RMB

Item Opening balance Increase Decrease Closing balance

Statutory surplus

249150887.74 249150887.74

reserve

Total 249150887.74 249150887.74

60. Retained profits

In RMB

Item Current period Previous period

Balance of retained profits at the end of the previous period

10538405831.61 9288043977.88

before adjustment

Opening balance of retained profits after adjustment 10538405831.61 9288043977.88

Add: Net profit attributable to owners of the parent company 2956898811.04 1386066705.56

Less: Appropriation to statutory surplus reserve 16909671.20

Dividends payable to the ordinary shareholders 118795180.63

Acquisition of minority interests 97406416.23

Closing balance of retained profits 13397898226.42 10538405831.61

61. Operating revenue and operating costs

In RMB

Amount of the current period Amount of the previous period

Item

Revenue Cost Revenue Cost

Primary business 27347867868.08 21929134042.30 16756004204.58 14521655805.67

Other businesses 449816104.80 266941120.26 199159694.31 128843430.23

Total 27797683972.88 22196075162.56 16955163898.89 14650499235.90

62. Taxes and surcharges

In RMB

Item Amount of the current period Amount of the previous period

Urban maintenance and construction tax 17247219.44 18294832.19

Education surcharge 7605970.07 8129157.99

Property tax 27979632.45 19592855.42

Land use tax 903972.02 809767.30

Vehicle and vessel tax 894149.41 911806.51

Stamp duty 16242701.28 10463237.65

Local education surcharge 5064084.62 5419438.62

Environmental protection tax 147514.38 104860.32

Others 2870677.70

Total 78955921.37 63725956.00

63. Administrative expenses

In RMB

Item Amount of the current period Amount of the previous period

Employee benefits 394173595.03 279943684.74

Depreciation and amortization 130948581.47 85690889.77

Consulting service fees 207819393.69 54212094.87

Office expenses 26479229.22 12439068.14

Business entertainment expenses 28384301.19 24124672.26

Travel expenses 21250141.56 11634664.08

Rents 7527691.67 4656698.12

Repair costs 11236446.43 14159167.98

Taxes 842865.60 1390536.14

Others 68798274.51 59310463.39

Total 897460520.37 547561939.49

64. Selling expenses

In RMB

Item Amount of the current period Amount of the previous period

Employee benefits 149609868.81 101851337.61

Sales service fees 72959268.69 26670103.77

Export charges 7417620.83 10789463.58

Travel expenses 8542201.33 6471965.00

Business entertainment expenses 15162383.66 10534099.66

Others 14454357.35 1625635.45

Total 268145700.67 157942605.07

65. R&D expenses

In RMB

Item Amount of the current period Amount of the previous period

Direct costs 263769180.91 250520190.78

Labor costs 365891741.44 261695815.23

Depreciation and amortization 59175441.79 45720954.81

Others 95464953.38 23530506.11

Total 784301317.52 581467466.93

66. Financial expenses

In RMB

Item Amount of the current period Amount of the previous period

Interest expenses 256552474.41 159944331.53

Interest on leases and financing service

39596859.98 38641393.51

fees

Less: Interest income 86441618.15 113967483.54

Add: Exchange loss 303193121.04 -64646445.89

Bank charges and others 32887582.09 9575162.86

Total 545788419.37 29546958.47

67. Other income

In RMB

Sources of other income Amount of the current period Amount of the previous period

Government grants related to assets 144861131.49 107132163.18

Government grants related to income 18379346.55 29188043.87

Additional deduction of VAT 5300546.73

Tax preferences 931982.92 3613741.39

Refund of individual income tax

2110820.00 1384264.19

withholding service fees

Total 171583827.69 141318212.63

69. Gain on changes in fair value

In RMB

Source of gain on changes in fair value Amount of the current period Amount of the previous period

Financial assets held for trading 490690971.91 2536226.77

Incl.: Incomes from changes in the

fair value of derivative financial 1554503.82 2536226.77

instruments

Total 490690971.91 2536226.77

70. Investment income

In RMB

Item Amount of the current period Amount of the previous period

Income from long-term equity -3664609.04 -4073896.56

investments under the equity method

Investment income from the disposal of

-4851794.93

long-term equity investments

Investment income from the disposal of

15366660.64 3056572.49

financial assets held for trading

Income from debt restructuring 23143740.00

Discount loss on accounts receivable

-1174010.14 -832884.08

financing

Total 33671781.46 -6702003.08

71. Credit impairment loss

In RMB

Item Amount of the current period Amount of the previous period

Loss from doubtful accounts -13777349.90 3764627.53

Total -13777349.90 3764627.53

72. Impairment loss on assets

In RMB

Item Amount of the current period Amount of the previous period

I. Impairment of inventories and contract

-198128450.05 -86992131.00

fulfilling costs

X. Impairment of goodwill -2181938.11

Total -198128450.05 -89174069.11

73. Gain on disposal of assets

In RMB

Source of gain on disposal of assets Amount of the current period Amount of the previous period

Gain on disposal of fixed assets -7633381.80 -14963024.24

Gain on disposal of intangible assets

Total -7633381.80 -14963024.24

74. Non-operating revenue

In RMB

Amount of the previous Amount recognized in non-

Item Amount of the current period

period recurring gain or loss

Penalties 607587.78 3293920.92 607587.78

Amounts that cannot be paid 241686.87 340357.93 241686.87

Others 1785122.69 1985161.51 1785122.69

Total 2634397.34 5619440.36 2634397.34

75. Non-operating expenses

In RMB

Item Amount of the current period Amount of the previous Amount recognized in non-

period recurring gain or loss

Donations 5786821.77 3915500.00 5786821.77

Loss on destruction and

retirement of non-current 189379.80 2052158.56 189379.80

assets

Penalties overdue fines and

9146294.91 9146294.91

liquidated damages

Others 2403179.50 358831.72 2403179.50

Total 17525675.98 6326490.28 17525675.98

76. Income tax expenses

(1) Statement of income tax expenses

In RMB

Item Amount of the current period Amount of the previous period

Income tax expense 501447967.89 198134719.03

Deferred income tax expenses 2394602.13 3799917.10

Total 503842570.02 201934636.13

(2) Reconciliation of income tax expenses to accounting profit

In RMB

Item Amount of the current period

Total profit 3488473051.69

Income tax expenses calculated based on statutory/applicable

523270957.75

tax rate

Effect of different tax rates applicable to subsidiaries -57313503.26

Effect of adjustment of income taxes for prior years -32106.83

Effect of non-taxable incomes -1729883.20

Effect of non-deductible costs expenses and losses 12799163.24

Effect of using the deductible losses for which the deferred

-7172830.75

income tax assets were not recognized in previous periods

Effect of deductible temporary differences or deductible losses

115125112.84

not recognized for deferred tax assets for the current period

Effect of super deduction of R&D expenses -31832475.97

Others -49271863.80

Income tax expenses 503842570.02

77. Other comprehensive income

See the description in Notes V(I)43 for details

78. Items of the cash flow statement

(1) Cash flows related to operating activities

Other cash receipts related to operating activities:

In RMB

Item Amount of the current period Amount of the previous period

Security deposits 348476633.09 212576032.68

Government grants 133730643.44 300850136.02

Interest income 86441618.15 113967483.54

Temporary receipts payable and others 48158884.22 21495008.51

Total 616807778.90 648888660.75

Other cash payments related to operating activities

In RMB

Item Amount of the current period Amount of the previous period

Payment of period expenses in cash 583086546.82 331549138.55

Security deposits 661671859.37 339221569.24

Bank charges 15392544.26 9575162.86

Temporary payment receivable and

71956239.11 20760201.07

others

Total 1332107189.56 701106071.72

(2) Cash flows related to investing activities

Other cash receipts related to investing activities

In RMB

Item Amount of the current period Amount of the previous period

Recovery of term deposits 1861831543.20 777215212.80

Security deposit for the acquisition 435380725.87

Reversal of security deposit for

32426360.23

investments

Other security deposits 31961994.32 16439072.04

Total 2361600623.62 793654284.84

Other cash payments related to investing activities

In RMB

Item Amount of the current period Amount of the previous period

Term deposits 1915015928.00 300592706.53

Security deposit for investments 33407708.70

Security deposit for the acquisition 237313781.32

Other security deposits 32369157.48 46449602.24

Total 1980792794.18 584356090.09

(3) Cash flows related to financing activities

Other cash receipts related to financing activities

In RMB

Item Amount of the current period Amount of the previous period

Various security deposits and term

35618800.00

deposits pledged

Proceeds from discounts on acceptance

502064916.58 730151717.04

bills and letters of credit

Factoring receivable 3050144076.69

Total 3587827793.27 730151717.04

Other cash payments related to financing activities

In RMB

Item Amount of the current period Amount of the previous period

Security deposits 28957494.58 900000.00

Payment of rents 105829320.42 11405753.18

Expenditures for repurchase of shares 100100000.00

Amounts related to the ESOP 27333109.90

Payment of expenses for listing in Hong

9801473.55

Kong

Payments under bill financing 504650000.35 341000000.00

Factoring receivable 2987831825.37

Repurchase of minority interests 186392721.74

Total 3850795945.91 453405753.18

Changes in liabilities arising from financing activities

□Applicable □ N/A

In RMB

Increase Decrease

Opening

Item Closing balance

balance Non-cash Non-cashCash change Cash change

change change

Short-term 8011474049. 10026644734 8352128050. 9630387148.

55603584.15

borrowings 03 .56 74 70

Long-term

borrowings

(including

9334376721. 4457596965. 1542934913. 12137386855

long-term 111651918.60

56 33 00 .29

borrowings due

within one

year)

Lease liabilities

(including lease 2290955991. 2195252689.

10126017.95 105829320.42

liabilities due 66 19

with one year)

19636806762 14484241699 10000892284 23963026693

Total 10126017.95 167255502.75.25 .89 .16 .18

79. Supplementary information to the cash flow statement

(1) Supplementary information to the cash flow statement

In RMB

Amount of the previous

Supplementary information Amount of the current period

period

1. Reconciliation of net profit to cash flows from operating

activities:

Net profit 2984630481.67 758558021.48

Add: Allowance for impairment of assets 211905799.95 85409441.58

Depreciation of fixed assets oil and gas assets and

1432877986.45 1149385803.77

productive biological assets

Depreciation of right-of-use assets 132847584.82 40262371.85

Amortization of intangible assets 89311435.67 53908071.35

Amortization of long-term deferred expenses 114556432.79 137179890.99

Loss on disposal of fixed assets intangible assets and

7633381.80 14963024.24

other long-term assets (gain expressed with “-”)Loss on retirement of fixed assets (gain expressed with “--707611.44 2052158.56

”)

Loss on changes in fair value (gain expressed with “-”) -490690971.91 -2536226.77

Financial expenses (income expressed with “-”) 616837493.26 133939279.15

Investment loss (income expressed with “-”) -34845791.60 5869119.00Decrease in deferred tax assets (increase expressed with “-

4459544.11 6970787.54

”)

Increase in deferred tax liabilities (decrease expressed

-2064941.98 -3170870.44

with “-”)

Decrease in inventories (increase expressed with “-”) -2687181590.55 -342665102.19Decrease in trade receivables (increase expressed with “--1455615091.07 659746673.69

”)

Increase in trade payables (decrease expressed with “-”) 1430413825.17 -199754422.52

Others 29519308.96

Net cash flows from operating activities 2383887276.10 2500118021.28

2. Significant investing and financing activities not involving

cash receipts and payments:

Debt-to-capital swap

Convertible corporate bonds due within one year

Fixed assets acquired under finance leases

3. Net changes in cash and cash equivalents:

Closing balance of cash 6947525610.48 7416577706.75

Less: Opening balance of cash 6104722626.15 5343600382.37

Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents 842802984.33 2072977324.38

(4) Components of cash and cash equivalents

In RMB

Item Closing balance Opening balance

I. Cash 6947525610.48 6104722626.15

Incl.: Cash on hand 785509.81 620829.32

Bank deposits immediately

6946740100.67 6104101796.83

available for withdrawal

III. Closing balance of cash and cash

6947525610.48 6104722626.15

equivalents

(6) Cash and bank balances not classified as cash and cash equivalents

In RMB

Amount of the previous Reason for not classified as

Item Amount of the current period

period cash and cash equivalents

Term deposits and interest 612144715.02 596283232.70

Security deposit for bills 240547081.05 426049076.84

Security deposit for factoring 301767307.06 295079875.64

Security deposit for letters of

104050947.50 14892991.95

credit May be unavailable for

Security deposit for letters of withdrawal due to pledge

217611441.59 52679614.69

guarantee freeze or otherwise

Security deposit for futures 120204809.28 43403710.89

Security deposit for foreign

132755098.61 250472.25

exchange hedging

Other security deposits 116144784.47 116921907.99

Total 1845226184.58 1545560882.95

80. Notes to items of the statement of changes in owners’ equity

81. Monetary items denominated in foreign currencies

(1) Monetary items denominated in foreign currencies

In RMB

Closing balance in foreign

Item Exchange rate Closing balance in RMB

currency

Cash and bank balances 4734651913.59

Incl.: USD 490854948.08 6.8109 3343163965.91

EUR 157643503.87 7.7671 1224432858.89

HKD 5005920.24 0.86855 4347892.02

THB 123481257.60 0.2042 25214872.80

SGD 2727625.30 5.2605 14348672.89

NTD 115424745.00 0.2133 24620098.11

MXN 30545575.94 0.3897 11903610.94

MAD 5076377.87 0.7249 3679866.32

JPY 19760792.54 0.042045 830842.52

KRW 62914489.00 0.004403 277012.50

MYR 26452.32 1.6734 44265.31

GBP 744.54 9.0145 6711.66

MOP 290626.52 0.84324 245067.91

INR 3383577.49 0.07186 243143.88

HUF 3571140681.67 0.02196 78422249.37

CZK 4659295.52 0.3198 1490042.71

RON 121173.95 1.4807 179422.27

TRY 8239489.61 0.1458 1201317.59

Accounts receivable 7478261282.57

Incl.: USD 867089832.05 6.8109 5905662137.11

EUR 192783127.36 7.7671 1497365828.52

HKD

NTD 298915363.00 0.2133 63758646.93

CZK 1508721.78 0.3198 482489.23

MXN 22099562.79 0.3897 8612199.62

THB 186725.89 0.2042 38129.43

TRY 16062083.32 0.1458 2341851.75

Long-term borrowings 2992380232.87

Incl.: USD

EUR

HKD 3445259608.39 0.86855 2992380232.87

Other receivables 248447131.09

Incl.: EUR 14008480.65 7.7671 108805270.06

NTD 348214240.00 0.2133 74274097.39

USD 6990051.03 6.8109 47608538.56

MXN 23347348.11 0.3897 9098461.56

THB 33838670.27 0.2042 6909856.47

MAD 2344512.33 0.7249 1699536.99

TRY 352332.37 0.1458 51370.06

Short-term borrowings 1655338164.06

Incl.: EUR 112224743.34 7.7671 871660804.00

USD 92553283.86 6.8109 630371161.05

THB 750764931.51 0.2042 153306199.01

Accounts payable 4545101180.52

Incl.: USD 317420303.14 6.8109 2161917942.69

EUR 172516019.04 7.7671 1339949171.52

THB 2365140596.01 0.2042 482961709.71

NTD 2191517459.00 0.2133 467450674.00

MXN 64603044.27 0.3897 25175806.35

MAD 33054154.78 0.7249 23960956.80

JPY 786249776.22 0.042045 33057871.84

CZK 8592375.94 0.3198 2747841.83

HUF 233386549.23 0.02196 5125168.62

HKD 1816170.19 0.86855 1577434.62

SEK 2650.00 0.7003 1855.80

SGD 11930.05 5.2605 62758.03

TRY 7626808.71 0.1458 1111988.71

Other payables 33569833.65

Incl.: EUR 514977.00 7.7671 3999877.86

USD 3154586.42 6.8109 21485572.65

THB 25731423.52 0.2042 5254356.68

NTD 12477727.00 0.2133 2661499.17

JPY 688073.00 0.042045 28930.03

MXN 358217.25 0.3897 139597.26

Non-current liabilities due

119701756.64

within one year

Incl.: EUR 13476563.93 7.7671 104673819.70

USD 1913712.17 6.8109 13034102.22

HKD 2295590.03 0.86855 1993834.72

(2) The nature of the lack of convertibility of a currency and its financial impact the spot exchange rate

adopted and its estimation process and the risks faced by the Company due to the lack of convertibility

of the currency

□Applicable□ N/A

(3) Information about overseas operating entities including main places of business and functional

currencies of major overseas operating entities basis for the choice of functional currencies and reasons

for changes in functional currencies.□Applicable□ N/A

(4) Description of the lack of convertibility between the functional currency for overseas operations and

the reporting currency of the Company

□Applicable□ N/A

82. Leases

(1) The Company as the lessee

□Applicable □ N/A

Variable lease payments not included in lease liabilities

□ Applicable□ N/A

Lease expenses under short-term leases and leases of low-value assets using the simplified approach

□ Applicable□ N/A

Sale and leaseback transactions

1) The Company as the lessee

Item Current period (RMB) The same period of the previous year (RMB)

Short-term lease expenses 46706827.56 24215000.85

Total 46706827.56 24215000.85

2) Profit/loss and cash flow related to leases in the current period

Item Current period (RMB) The same period of the previous year (RMB)

Interest expense on lease

liabilities 39596859.99 38641393.51

Total cash outflow for leases 165199262.79 35621000.00

(2) The Company as the lessor

The Company as lessor under operating leases

□Applicable □ N/A

In RMB

Incl.: Income related to variable lease

Item Rental income

payments not included in lease receipts

Rental income 1334936.47

The Company as lessor under finance leases

□ Applicable□ N/A

Annual undiscounted lease receipts in the following five years

□Applicable □ N/A

In RMB

Annual undiscounted lease receipts

Item

Closing balance Opening balance

Year 1 884263.00 943144.17

Year 2 711342.00 948715.60

Year 3 276952.60

VIII. Research and Development Expenses

In RMB

Item Amount of the current period Amount of the previous period

Direct costs 263769180.91 250520190.78

Labor costs 376441301.33 261695815.23

Depreciation and amortization 59175441.79 45720954.81

Others 96602406.31 23530506.11

Total 795988330.34 581467466.93

Incl.: Expensed R&D expenses 784301317.52

Capitalized R&D expenses 11687012.82

IX. Changes in the Scope of Consolidation

1. Business combination involving entities not under common control

2. Business combination involving entities under common control

3. Reverse acquisition

4. Disposal of subsidiaries

Whether the control over any subsidiary was lost as a result of disposal of investment in such subsidiary through a single

transaction

□ Yes□ No

Whether the control over any subsidiary was lost during the current period as a result of the disposal of investment in such

subsidiary through multiple transactions by steps

□ Yes□ No

5. Changes in the scope of consolidation due to other reasons

Subsidiaries newly included in the scope of consolidation

Company name Method of Date of acquisition of Percentage of capitalContribution amount

acquisition of shares contribution

shares

Suzhou Dongshan Xinchen

Industry Investment Newly established 2026/3/31 Registered capital of 100.00%

Partnership (L.P.) RMB 100000

Sunny Residential Property

LLC Newly established 2026/2/6 USD 35000100 100.00%

Source Photonics

Organization Inc. Newly established 2026/1/1 USD 10 100.00%

Source Photonics USA

Management Inc. Newly established 2026/3/12 USD 10 100.00%

Source Photonics United

States Inc. Newly established 2026/1/1 USD 10 100.00%

Source Photonics (Thailand)

Co. Ltd. Newly established 2026/2/13 THB 2 million 100.00%

Zhuhai Hengqin Ancong

Information Consulting Acquisition 2026/6/16 RMB 1 million 100.00%

Partnership (L.P.)

6. Others

X. Interests in Other Entities

1. Interests in subsidiaries

(1) Composition of the enterprise group

1. The Company incorporated 132 subsidiaries including Multi-Fineline Electronix Inc Multek Group (Hong Kong)

Limited Groupe Mécanique Découpage (GMD Group) Source Photonics Holdings (Cayman) Limited Suzhou Dongshan Display

Inc. etc. into the scope of consolidated financial statements.

2. Basic information of significant subsidiaries

Principal place Shareholding

of business Nature of percentage (%) Method of

Subsidiary Registered capital

and place of business acquisition

Direct Indirect

registration

Business

Multi-Fineline Electronix combinations

Singapore Pte. Ltd. USD 1 Singapore

Business &

investment 100.00 involving entities notunder common

control

Business

combinations

MFLEX Suzhou Co. Ltd. USD 268.80 million Suzhou Manufacturing 100.00 involving entities not

under common

control

MFLEX Yancheng Co. Ltd. USD 264.99 million Yancheng Manufacturing 100.00 Established

DSBJ PTE. LTD. SGD 15000 Singapore Business &investment 100.00 Established

XI. Government Grants

1. Government grants recognized at the amount receivable at the end of the reporting period

□Applicable□ N/A

Reason for failure to receive expected government grants at the expected time

□ Applicable□ N/A

2. Liabilities related to government grants

□Applicable □ N/A

In RMB

Amount of non- Amount

New grants

Opening operating revenue transferred to other Other changes in Closing Related to

Item received in the

balance recognized in the income in the the current period balance assets/income

current period

current period current period

Deferred Related to

889843133.49 130876623.04 144861131.49 -5200973.39 870657651.65

income assets

Subtotal 889843133.49 130876623.04 144861131.49 -5200973.39 870657651.65

3. Government grants recognized in profit or loss

□Applicable □ N/A

In RMB

Item Amount of the current period Amount of the previous period

Government grants recognized in other

163240478.04 136320207.08

income

Effect of financial interest subsidy on

total profit

Total 163240478.04 136320207.08

XII. Risks Associated with Financial Instruments

1. Risks arising from financial instruments

The Company’s objectives of risk management are to maintain a balance between risk and income minimize the negative

effect of risks on the operating results of the Company and maximize the interests of the shareholders and other equity investors.On the basis of such objectives of risk management the Company’s basic risk management policy is designed to identify and

analyze all kinds of risks facing by the Company set appropriate risk thresholds in risk management and monitor risks and

adherence to limits in a timely and reliable manner.The Company faces a variety of risks associated with financial instruments in its daily activities mainly including credit

risk liquidity risk and market risk. Below is a summary of the policies for managing such risks considered and approved by the

management.(I) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to

discharge an obligation.

1. Credit risk management practice

(1) Assessment of credit risk

At each balance sheet date the Company assesses whether the credit risk of a financial instrument has increased

significantly since initial recognition. In assessing whether the credit risk has increased significantly since initial recognition the

Company takes into account reasonable and supportable information which is available without undue cost or effort including

qualitative and quantitative analysis based on historical data external credit risk rating and forward-looking information. The

Company determines the changes in default risk of financial instruments during their estimated lifetime through a comparison of

the default risk at the balance sheet date and the initial recognition date on an individual or collective basis.The Company determines that the credit risk of a financial instrument has increased significantly when one or more of the

following qualitative and quantitative standards are met:

1) Quantitative standard mainly relates to the scenario in which at the balance sheet date the probability of default in the

remaining lifetime has risen by more than a certain percentage compared with the initial recognition; and/or

2) Qualitative standard mainly relates to significant adverse changes in the debtor’s business situation or financial position

and present or expected changes in technology market economy or legal environment that will have a material adverse effect on

the debtor’s ability to repay.

(2) Definition of default and credit-impaired assets

A financial instrument is in default or credit impaired when one or more of the following conditions are met:

1) significant financial difficulty of the debtor;

2) any breach by the debtor of contract terms binding on it;

3) it becomes probable that the debtor will enter bankruptcy or other financial reorganization;

4) the creditors of the debtor for economic or contractual reasons relating to the debtor’s financial difficulty having granted

to the debtor a concession that the creditors would not otherwise consider.

2. Measurement of expected credit losses

The key factors in the measurement of expected credit losses include the probability of default loss given default and

exposure to default risk. The Company has developed a model of the probability of default loss given default and exposure to

default risk on the basis of quantitative analysis of historical data (e.g. counterparty rating guarantee measures and collateral type

repayment method etc.) and forward-looking information.

3. See Notes V(I)3 V(I)4 V(I)7 and V(I)10 for the conciliation table of opening balances and closing balances of allowance

for impairment loss on financial instruments.

4. Credit risk exposure and credit risk concentration

The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In order to control such risks

the Company has taken the following measures:

(1) Cash and bank balances

The Company deposits its bank balances and other monetary capital in financial institutions with relatively high credit

ratings so its credit risk is relatively low.

(2) Accounts receivable

The Company performs credit assessments on customers using credit settlement on an ongoing basis. The Company selects

approved and creditworthy customers based on the result of credit assessment and monitors the balance of accounts receivable

from them on an ongoing basis to avoid significant risk of doubtful accounts.As the Company only deals with approved and creditworthy third parties no collateral is required. The concentration of

credit risks are managed customer by customer. As of June 30 2026 the Company faced certain credit concentration risks. In

particular 32.09% (December 31 2025: 35.67%) of the Company’s accounts receivable came from the top 5 customers without

any collateral or other credit enhancement.The Company’s maximum exposure to credit risk is the carrying value of each financial asset in the balance sheet.(II) Liquidity risk

Liquidity risk is the risk that the Company may not have enough cash to satisfy its obligation to deliver cash or other

financial assets due to the inability to liquidate financial assets at fair value in a timely manner or failure of counterparties to

discharge their contract liabilities acceleration of debts failure to generate expected cash flows or otherwise.In order to control such risk the Company utilizes a variety of financing tools such as settlement by means of notes bank

loans etc. combines long-term and short-term financing to optimize financing structure and maintains a balance between

financing sustainability and flexibility. The Company has obtained lines of credit from many commercial banks to satisfy its

working capital requirements and capital expenditures.Financial liabilities classified by remaining maturity

In RMB

Closing balance

Item

Carrying value Undiscounted contractamount Within 1 year 1-3 years Over 3 years

Bank loans 21767774003.99 23020899836.06 12678000867.70 5512821414.47 4830077553.90

Financial

liabilities held 181580627.27 181580627.27 181580627.27

for trading

Notes payable 616705866.60 616705866.60 616705866.60

Accounts

payable 15735505650.92 15735505650.92 15735505650.92

Other payables 154547241.39 154547241.39 154547241.39

Lease liabilities

(including non-

current 2195252689.19 2437933627.14 310612385.42 867105733.99 1260215507.73

liabilities due

within one year)

Long-term

payables

(including non-

current

liabilities due

within one year)

Subtotal 40651366079.36 42147172849.38 29676952639.30 6379927148.46 6090293061.63

(Continued)

In RMB

Balance at the end of the previous year

Item

Carrying value Undiscounted contractamount Within 1 year 1-3 years Over 3 years

Bank loans 17345850770.59 18447118979.42 11256575000.94 2692839996.18 4497703982.29

Financial

liabilities held 46545937.17 46545937.17 46545937.17

for trading

Notes payable 1002812950.68 1002812950.68 1002812950.68

Accounts

payable 13043136687.34 13043136687.34 13043136687.34

Other

payables 705336813.22 705336813.22 705336813.22

Lease

liabilities

(including

non-current 2290955991.66 2507799521.86 591089880.28 1237264337.10 679445304.48

liabilities due

within one

year)

Long-term

payables

(including

non-current 28115200.00 28115200.00 28115200.00

liabilities due

within one

year)

Subtotal 34462754350.66 35780866089.69 26673612469.63 3930104333.28 5177149286.77

(III) Market Risk

Market risk is the risk of fluctuation in the fair value or future cash flows of financial instruments due to changes in market

prices. Market risk mainly includes interest risk and foreign exchange risk.

1. Interest risk

Interest risk is the risk of fluctuation in the fair value or future cash flows of financial instruments due to changes in market

interest rates. Interest-bearing financial instruments with fixed interest rates expose the Company to fair value interest rate risk

while interest-bearing financial instruments with floating interest rates expose the Company to cash flow interest rate risk. The

Company determines the proportion of fixed-rate financial instruments and floating-rate financial instruments based on the market

environment and reviews and monitors the appropriateness of its portfolio of financial instruments on a regular basis. The cash

flow interest rate risk that the Company faces is primarily associated with the floating-rate bank loans owed by the Company.As of June 30 2026 the Company had bank loans of RMB 7178928639.23 (December 31 2025: RMB 6241579337.64)

on which the interests were calculated on a floating interest rate. Supposing the interest rate changes by 50 basic points while other

variables remain unchanged the Company’s total profit and shareholders’ interest will not be materially affected.

2. Foreign exchange risk

Foreign exchange risk is the risk of fluctuation in the fair value or future cash flows of financial instruments due to changes

in exchange rates. The Company’s foreign exchange risk relates mainly to foreign currency denominated monetary assets and

liabilities. When a short-term imbalance occurs on foreign currency denominated assets and liabilities the Company may trade

foreign currencies at market exchange rates when necessary in order to maintain the net risk exposure at an acceptable level.See Note V(V)1 to the Financial Statements for details of foreign currency denominated monetary assets and liabilities as of

the end of the reporting period.

2. Hedging

(1) The Company has hedging businesses for risk management

□Applicable □ N/A

Qualitative and Economic Effective Effect of the

Corresponding risk

quantitative relationship realization of the corresponding

Item management

information of between the expected risk hedging activity on

policy and target

hedged risks hedged item and management target the risk exposure

the hedging

instrument

To avoid potential

risks against the The

Company’s implementation of

expected the hedging

production and businesses gives

operation due to full play to the

the fluctuation in The hedged risk is The Company has hedging and value

The future

the prices of the risk of price set up relevant preservation

contracts change in

copper aluminum fluctuation of internal control features of the

the reverse

and gold and copper and measures for futures and

direction due to

reduce the aluminum. See the hedging to for derivative market

Cash flow hedging the same risks of

fluctuation in the description in ongoing tracing of thereby avoiding

– future contracts price fluctuation of

operating cash Notes V.43 to the hedging businesses the risks of price

copper and

flow caused by the Financial and ensuring the fluctuation due to

aluminum

fluctuation in the Statements for realization of the the price

expected to be

prices of copper quantitative expected risk fluctuation in

purchased and sold

aluminum and information. management target commodities and

gold the Company foreign exchange

had hedging and reducing the

businesses of effect on the

copper and normal operation

aluminum of the Company

commodities.The

implementation of

the hedging

The expected sales businesses gives

to be settled in full play to the

The expected sales USD are in the The Company has hedging and value

Manage the to be settled in same foreign set up relevant preservation

Company’s risks USD are subject to currency internal control features of the

exposure of foreign exchange corresponding to measures for futures and

Cash flow hedging expected sales of risk exposure. See the future foreign hedging to for derivative market

– foreign exchange foreign exchange the description in exchange ongoing tracing of thereby avoiding

future contracts to be settled in Notes V.43 to the contracts where hedging businesses the risks of price

USD by using Financial the basic variable and ensuring the fluctuation due to

future foreign Statements for of the hedging realization of the the price

exchange contracts quantitative instrument and the expected risk fluctuation in

information. hedged item is the management target commodities and

exchange rate of foreign exchange

USD and reducing the

effect on the

normal operation

of the Company

3. Financial assets

(1) Categories of transfer types

□Applicable □ N/A

In RMB

Nature of transferred Amount of transferred Basis for determining

Types of transfer Derecognition

financial assets financial assets derecognition

Note discounting Accounts receivable 319544462.73 Derecognized All most all the risks

financing and returns have been

transferred

All most all the risks

Note endorsement Notes receivable 4659832.99 Derecognized and returns have been

transferred

All most all the risks

Accounts receivable

Note endorsement 780034762.06 Derecognized and returns have been

financing

transferred

All most all the risks

Factoring of accounts

Accounts receivable 275862379.42 Derecognized and returns have been

receivable

transferred

All most all the risks

Factoring of accounts

Accounts receivable 859452468.45 Not derecognized and returns have been

receivable

reserved

Total 2239553905.65

(2) Financial assets derecognized due to transfer

□Applicable □ N/A

In RMB

Method of transferring Amount of the financial assets Gains or losses related to the

Item

financial assets derecognized derecognition

Accounts receivable financing Endorsement/discounting 1099579224.79 164414.06

Notes receivable Endorsement 4659832.99

Accounts receivable Factoring 275862379.42 458275.83

Total 1380101437.20 622689.89

(3) Financial assets transferred with assets with continuous involvement

□Applicable □ N/A

In RMB

Amount of assets arising from Amount of liabilities arising

Item Method of assets transfer

continuous involvement from continuous involvement

Accounts receivable Factoring 859452468.45 859452468.45

Total 859452468.45 859452468.45

XIII. Fair Value Disclosures

1. Closing balance of the fair value of assets and liabilities measured at fair value

In RMB

Closing balance of fair value

Item Level 1 fair value Level 2 fair value Level 3 fair value

Total

measurement measurement measurement

I. Recurring fair value

-- -- -- --

measurement

1. Financial assets at 516077502.95 155000000.00 125545076.26 796622579.21

fair value through

profit or loss

(2) Investment in

516077502.95 76856010.83 592933513.78

equity instruments

(3) Derivative financial

48689065.43 48689065.43

assets

Bank wealth

155000000.00 155000000.00

management product

2. Accounts receivable

263570165.06 263570165.06

financing

3. Investments in other

253942326.33 499408043.77 753350370.10

equity instruments

Total assets measured

at fair value on a 770019829.28 155000000.00 888523285.09 1813543114.37

recurring basis

(VI) Financial

liabilities held for 181580627.27 181580627.27

trading

Total liabilities

measured at fair value 181580627.27 181580627.27

on a recurring basis

II. Fair value

measurement on a non- -- -- -- --

recurring basis

2. Basis for determining the market prices of items subject to recurring and non-recurring fair value

measurements within Level 1

1. The fair value of forward exchange settlement and sale transactions already authorized but not yet settled is determined

based on the forward exchange rates as confirmed with the transaction bank at the end of the reporting period.

2. The Company estimates the fair value by using the market method the method of discounting future cash flows etc. for

other equity instrument investments not listed. In the absence of a material change in the operating environment operating

conditions and financial conditions of the investee the Company uses the investment costs as the reasonable estimate of the fair

value.

3. The fair value of a note receivable is determined based on its face amount.

4. The fair value of an investment in equity instruments is determined based on the initial investment amount.

XIV. Related Parties and Related-party Transactions

1. Parent company of the Company

The ultimate controllers of the Company are YUAN Yonggang YUAN Yongfeng and YUAN Fugen.Name of shareholder Relationship with the Percentage of ownership Percentage of voting rights heldCompany interest in the Company (%) in the Company (%)

YUAN Yonggang YUAN Actual controllers 33.26 33.26

Yongfeng and YUAN Fugen

2. Subsidiaries of the Company

See the description in Notes VII for details about the Company’s subsidiaries.

3. Joint ventures and associates of the Company

See the description in Notes VII for details about significant joint ventures or associates of the Company.Other joint ventures or associates that have carried out related-party transactions with the Company in the current period or the

previous periods with balances recorded in the current period:

Name of joint venture or associate Relationship with the Company

Suzhou Toprun Electric Equipment Co. Ltd. Associate

Suzhou Dongcan Optoelectronics Technology Co. Ltd. Associate

Multek International Development Limited Associate

4. Other related parties

Name of other related party Relationship with the Company

Hai Dixin Semiconductor (Nantong) Co. Ltd. Invested company

Haidike (Nantong) Photoelectric Technology Co. Ltd. Invested company

Anhui Landun Photoelectron Co. Ltd. A company controlled by the actual controllers of the Company

Shanghai Corkuna New Material Technologies Co. Ltd. A company controlled by the actual controllers of the Company

Suzhou Corkuna New Material Technologies Co. Ltd. A company controlled by the actual controllers of the Company

Hefei Anhui Software Co. Ltd. A company controlled by the actual controllers of the Company

5. Related-party transactions

(1) Related-party commodity and service transactions

Purchase of goods and receipt of services from related parties

In RMB

Transaction Whether or not

Subject Amount of the Amount of the

Related party quota exceed the

matter current period previous period

approved transaction quota

Suzhou Dongcan Optoelectronics Purchase

160052.15 7964.55

Technology Co. Ltd. of goods

Shanghai Corkuna New Material Purchase

596661.55 936457.17

Technologies Co. Ltd. of goods

Suzhou Corkuna New Material Purchase

37831742.31 11214138.95

Technologies Co. Ltd. of goods

Haidike (Nantong) Photoelectric Purchase

1394606.33

Technology Co. Ltd. of goods

Purchase

Hefei Anhui Software Co. Ltd. of 1752212.40

detectors

Sale of goods and rendering of services to related parties

In RMB

Amount of the previous

Related party Subject matter Amount of the current period

period

Suzhou Toprun Electric Equipment

Sale of goods 61415.93

Co. Ltd.Suzhou Toprun Electric Equipment

Software and services 102358.49 24637.14

Co. Ltd.Suzhou Dongcan Optoelectronics

Sale of goods 1504.42 22188.29

Technology Co. Ltd.Suzhou Dongcan Optoelectronics

Rendering of services 8906.18

Technology Co. Ltd.Anhui Landun Photoelectron Co.Sale of goods 11806.50 75600.00

Ltd.Haidike (Nantong) Photoelectric

Sale of goods 3443286.21

Technology Co. Ltd.

(4) Related-party guarantees

In RMB

Whether the obligation

Amount Effective date of Expiry date of

Obligor guaranteed has been

guaranteed guarantee guarantee

discharged

Suzhou Toprun Electric Equipment

2000000.00 January 27 2026 January 27 2027 No

Co. Ltd.Suzhou Toprun Electric Equipment

5217971.96 September 15 2025 July 15 2026 No

Co. Ltd.Suzhou Toprun Electric Equipment

8000000.00 January 1 2026 July 19 2026 No

Co. Ltd.

(7) Remunerations of key officers

In RMB

Item Amount of the current period Amount of the previous period

Remunerations of key officers 14861400.00 11563600.00

6. Amounts receivable from/payable to related parties

(1) Amounts receivable from related parties

In RMB

Closing balance Opening balance

Item Related party Allowance for Allowance for

Book balance Book balance

doubtful accounts doubtful accounts

Accounts Suzhou Dongcan Optoelectronics

380469.59 233182.93 370742.71 150802.90

receivable Technology Co. Ltd.Accounts Suzhou Toprun Electric

162100.00 810.50 124120.00 620.60

receivable Equipment Co. Ltd.Accounts Hai Dixin Semiconductor

1607132.92 1607132.92 1607132.92 1607132.92

receivable (Nantong) Co. Ltd.Accounts Anhui Landun Photoelectron Co.

85428.00 427.14 90498.90 4296.75

receivable Ltd.Accounts Haidike (Nantong) Photoelectric

3890913.39 19454.57

receivable Technology Co. Ltd.Other Hai Dixin Semiconductor

1790748.55 1790748.55 1790748.55 1790748.55

receivables (Nantong) Co. Ltd.Other Multek International 13625205.44 681260.27 13625205.44 681260.27

receivables Development Limited

(2) Amounts payable to related parties

In RMB

Item Related party Closing book balance Opening book balance

Accounts Suzhou Dongcan Optoelectronics Technology Co.

66532.07 229916.81

payable Ltd.Accounts Shanghai Corkuna New Material Technologies Co.

194565.53 282921.53

payable Ltd.Accounts

Suzhou Corkuna New Material Technologies Co. Ltd. 23852264.17 27479253.79

payable

Accounts

Hefei Anhui Software Co. Ltd. 1980000.00

payable

XV. Share-based Payments

1. Summary of share-based payments

□Applicable □ N/A

In RMB

Exercised in the Vested in the Expired in the

Granted in the current period

Type of grantees current period current period current period

Number Amount Number Amount Number Amount Number Amount

Management staff 2715456.00 106581514.25

R&D personnel 159236.00 6250000.00

Sales staff 174009.00 6830000.00

Total 3048701.00 119661514.25

Outstanding share options or other equity instruments at the end of the current period:

□ Applicable□ N/A

2. Equity-settled share-based payments

□Applicable □ N/A

In RMB

Method for determining the fair value of equity Closing price of the Company’s stock at the date the employee stock

instruments at the grant date ownership plan was approved by the general meeting – transfer price

Important parameters for determining the fair value of Closing price of the Company’s stock at the date the employee stock

equity instruments at the grant date ownership plan was approved by the general meeting – transfer price

Basis for determining the number of exercisable equity Confirmation of Securities Transfer Registration issued by China

instruments Securities Depository and Clearing Co. Ltd. Shenzhen Branch

Reason of significant differences between the current

N/A

estimates and previous estimates

Aggregate amount of equity-settled share-based payments

29519308.96

recorded in capital reserve

Total amount of equity-settled share-based payments

29519308.96

recognized in expenses in the current period

3. Cash-settled share-based payments

□Applicable□ N/A

4. Share-based payments in the current period

□Applicable □ N/A

In RMB

Type of grantees Equity-settled share-based payments Cash-settled share-based payments

Management staff 26292602.67

R&D personnel 1541813.02

Sales staff 1684893.27

Total 29519308.96

XVI. Commitments and Contingencies

1. Significant commitments

As of the balance sheet date the Company did not have any significant commitment needing to be disclosed.

2. Contingencies

(1) Significant contingencies as of the balance sheet date

As of the balance sheet date the Company did not have any contingency needing to be disclosed.

(2) Whether the Company does not have any significant contingency needing to be disclosed

The Company does not have any significant contingency needing to be disclosed.XVII. Subsequent Events

XVIII. Other Significant Information

The Company mainly engages in the sale of electronic circuit products optical transceivers (including optical chips)

photoelectric display modules precision components and other products and manages and assesses its operating results by taking

such businesses as a whole. Therefore the Company has no segment information to be disclosed. For breakdown information

about the Company’s revenue see the description in Notes V(II)1 to the Financial Statements.XIX. Notes to Key Items of the Standalone Financial Statements

1. Accounts receivable

(1) Accounts receivable by age

In RMB

Age Closing book balance Opening book balance

Within 1 year (inclusive) 1567856574.77 1662114718.95

Within 6 months 1329632648.57 1546087059.15

7-12 months 238223926.20 116027659.80

1-2 years 1182470188.77 1279507925.29

2-3 years 72839881.75 43980168.50

Over 3 years 90175486.67 87344953.06

3-4 years 46563284.19 19637039.23

4-5 years 503872.57 11406818.31

Over 5 years 43108329.91 56301095.52

Total 2913342131.96 3072947765.80

(2) Accounts receivable by method of recognition of allowance for doubtful accounts

In RMB

Closing balance Opening balance

Allowance for doubtful Allowance for doubtful

Book balance Book balance

Type accounts Carrying accounts Carrying

Ratio of value Ratio of value

Amount % Amount Amount % Amount

provision provision

Allowance

35578461. 35578461. 35578461. 35578461.

recognized 1.22% 100.00% 1.16% 100.00%

54 54 54 54

individually

Incl.:

Allowance

28777636 46784266. 2830979430373693 69138257. 29682310

recognized 98.78% 1.63% 98.84% 2.28%

70.42 87 03.55 04.26 92 46.34

collectively

Incl.:

29133421 82362728. 2830979430729477 10471671 29682310

Total 100.00% 2.83% 100.00% 3.41%

31.96 41 03.55 65.80 9.46 46.34

Accounts receivable with allowance for doubtful accounts recognized collectively by category name: group of related parties

within the scope of consolidation and aging group

In RMB

Closing balance

Item Allowance for doubtful

Book balance Ratio of provision

accounts

Group of related parties

within the scope of 1668636658.80

consolidation

Aging group 1209127011.62 46784266.87 3.87%

Total 2877763670.42 46784266.87

Accounts receivable with allowance for doubtful accounts recognized collectively by category name: age

In RMB

Closing balance

Item Allowance for doubtful

Book balance Ratio of provision

accounts

Age

Within 6 months 1136687775.28 5683438.88 0.50%

7-12 months 18025570.79 901278.54 5.00%

1-2 years 17167801.20 3433560.24 20.00%

2-3 years 1199687.85 719812.71 60.00%

Over 3 years 36046176.50 36046176.50 100.00%

Total 1209127011.62 46784266.87

Recognition of allowance for doubtful accounts in accordance with the general model of expected credit losses:

□ Applicable□ N/A

(3) Allowance for doubtful accounts recognized recovered or reversed in the current period

Allowance for doubtful accounts recognized in the current period:

In RMB

Changes in the current period

Opening

Type Recovered or Closing balancebalance Recognized Written off Others

reversed

Allowance

recognized 35578461.54 35578461.54

individually

Allowance

recognized 69138257.92 484439.95 22838431.00 46784266.87

collectively

Total 104716719.46 484439.95 22838431.00 82362728.41

(4) Accounts receivable actually written off in the current period

(5) The top 5 debtors in terms of closing balance of accounts receivable and contract assets

In RMB

Closing balance of

Closing Total closing % of total closing allowance for

Company name Closing balance of balance of balance of accounts

balance of

accounts receivable contract receivable and accounts

doubtful accounts

receivable and

assets contract assets receivable andcontract assets impairment ofcontract assets

Mutto Optronics Technology

Co. Ltd. 861868353.04 861868353.04 29.58%

Top 2 450193441.27 450193441.27 15.45% 2250967.21

MFLEX Yancheng Co. Ltd. 309398965.63 309398965.63 10.62%

DSBJ PTE. Ltd. 288698159.61 288698159.61 9.91%

Top 5 148524287.83 148524287.83 5.10% 743605.38

Total 2058683207.38 2058683207.38 70.66% 2994572.59

2. Other receivables

In RMB

Item Closing balance Opening balance

Dividends receivable 1399081471.06 1430532996.21

Other receivables 5646026108.63 4833638901.75

Total 7045107579.69 6264171897.96

(2) Dividends receivable

1) Dividends receivable by category

In RMB

Item (or investee) Closing balance Opening balance

Hong Kong Dongshan Holding Limited 983081471.06 1014532996.21

Yancheng Dongshan Precision Manufacturing Co. Ltd. 266000000.00 266000000.00

Suzhou Dongshan Display Inc. 80000000.00 80000000.00

Suzhou Dongyue New Energy Technology Co. Ltd. 70000000.00 70000000.00

Total 1399081471.06 1430532996.21

2) Significant dividends receivable aged over one year

In RMB

Whether or not

Item (or investee) Closing balance Age Reason for failure impaired and theto collect basis for

determination

To support the

Hong Kong Dongshan Holding Limited 887728871.06 Over 1 year development of

the subsidiary

Yancheng Dongshan Precision Manufacturing To support the

Co. Ltd. 266000000.00 Over 3 years development ofthe subsidiary

Total 1153728871.06

3) Other receivables by the method of recognition of allowance for doubtful accounts

□Applicable□ N/A

(3) Other receivables

1) Other receivables by nature

In RMB

Nature of accounts Closing book balance Opening book balance

Current accounts 5636770873.16 4829937651.06

Security deposit 905000.00 5000.00

Loan and reserve fund 8005948.23 1947026.93

Temporary payment receivable 5360739.25 6377782.89

Total 5651042560.64 4838267460.88

2) Other receivables by age

In RMB

Age Closing book balance Opening book balance

Within 1 year (inclusive) 2935005809.15 4699261104.15

1-2 years 2711233176.89 134572600.27

2-3 years 369818.14

Over 3 years 4433756.46 4433756.46

3-4 years 414350.00 1765000.00

4-5 years 1350650.00 1250649.25

Over 5 years 2668756.46 1418107.21

Total 5651042560.64 4838267460.88

3) Other receivables by the method of recognition of allowance for doubtful accounts

In RMB

Closing balance Opening balance

Allowance for doubtful Allowance for doubtful

Book balance Book balance

Type accounts Carrying accounts Carrying

Ratio of value Ratio of value

Amount % Amount Amount % Amount

provision provision

Incl.:

Allowance 56510425 5016452.0 5646026148382674 4628559.1 48336389

recognized 60.64 100.00% 1 0.09% 08.63 100.00% 0.10%60.88 3 01.75

collectively

Incl.:

56510425 5016452.0 5646026148382674 4628559.1 48336389

Total 60.64 100.00% 1 0.09% 08.63 100.00% 0.10%60.88 3 01.75

Other receivables with allowance for doubtful accounts recognized collectively by category name: group of related parties within

the scope of consolidation and aging group

In RMB

Closing balance

Item

Book balance Allowance for doubtfulaccounts Ratio of provision

Group of related parties

within the scope of

consolidation 5636770873.16

Aging group 14271687.48 5016452.01 35.15%

Incl.: Within 1 year 8021950.88 401097.54 5.00%

1-2 years 1815980.14 181598.01 10.00%

2-3 years 50.00%

Over 3 years 4433756.46 4433756.46 100.00%

Total 5651042560.64 5016452.01

Recognition of allowance for doubtful accounts in accordance with the general model of expected credit losses:

In RMB

Allowance for doubtful Stage I Stage II Stage III

accounts 12-month expected Lifetime expected credit Lifetime expected credit loss Total

credit loss loss (not credit impaired) (credit impaired)

Balance as at January 1 2026 194802.67 4433756.46 4628559.13

In the current period the

balance as at January 1 2026

- Transferred to stage II -144616.20 144616.20

Recognized 350911.07 36981.81 387892.88

Balance as at June 30 2026 401097.54 181598.01 4433756.46 5016452.01

Significant changes in the book balance of allowance for doubtful accounts in the current period

□ Applicable□ N/A

4) Allowance for doubtful accounts recognized recovered or reversed in the current period

5) Other receivables actually written off in the current period

6) The top 5 debtors in terms of closing balance of other receivables

In RMB

Closing

Company name Nature of

% of total closing balance of

account Closing balance Age balance of other allowance forreceivables doubtful

accounts

Yancheng Dongshan Precision Current

Manufacturing Co. Ltd. accounts 767597046.58

Within 1

year 13.58%

Yancheng Dongshan Precision Current

Manufacturing Co. Ltd. accounts 906881008.02 1-2 years 16.05%

Mutto Optronics Technology Current Within 1

Co. Ltd. accounts 5300239.48 year 0.09%

Mutto Optronics Technology Current

Co. Ltd. accounts 628842502.71 1-2 years 11.13%

Suzhou Dongyue New Energy Current Within 1

Technology Co. Ltd. accounts 590949399.95 year 10.46%

Suzhou Yongchuang

Communication Technology Current 109656305.94 Within 1accounts year 1.94%Co. Ltd.Suzhou Yongchuang

Communication Technology Currentaccounts 347919477.77 1-2 years 6.16%Co. Ltd.Dongguan Dongshan Precision Current

Manufacturing Co. Ltd. accounts 180000000.00

Within 1

year 3.19%

Dongguan Dongshan Precision Current

Manufacturing Co. Ltd. accounts 304142051.89 1-2 years 5.38%

Total 3841288032.34 67.98%

3. Long-term equity investments

In RMB

Closing balance Opening balance

Item Allowance for Allowance for

Book balance Carrying value Book balance Carrying value

impairment loss impairment loss

Investments in 10373456278 10239766278 10315147573 10181457573

133690000.00 133690000.00

subsidiaries .08 .08 .40 .40

Investments in

associates and 103442211.66 17507056.47 85935155.19 108246781.23 17507056.47 90739724.76

joint ventures

10476898489 10325701433 10423394354 10272197298

Total 151197056.47 151197056.47.74 .27 .63 .16

(1) Investments in subsidiaries

In RMB

Opening Changes in the current period Closing

Opening balance of Closing balance of

balance allowance Allowance balance allowance

Investee

(carrying for Additional Reduced for Others (carrying for

value) impairment investment investment impairment value) impairment

loss loss loss

Dongguan

Dongshan

34200000 34207894

Precision 78944.64

0.00 4.64

Manufacturing Co.Ltd.MFLEX Shanghai 2023777.3 2023777.3

Co. Ltd. 0 0

Shenzhen Qindao

Dongchuang 10000000 10000000

Investment 0.00 0.00

Partnership (L.P.)

Suzhou RF Top

Electronic 37285808 37286302

4938.08

Communication 3.14 1.22

Co. Ltd.Suzhou Chengjia

Precision 80109368. 80109368.Manufacturing Co. 24 24

Ltd.Suzhou Dongdai

Electronic 1530000.0 1530000.0

Technology Co. 0 0

Ltd.Suzhou Dongke

Enterprise 15238909 15238909

Management Co. 6.00 6.00

Ltd.Suzhou Dongkui 12100000. 12100000.Lighting Co. Ltd. 00 00

Suzhou Jebson

Intelligent

255000.00 255000.00

Technology Co.Ltd.Suzhou

Yongchuang

45158271 45158271

Communication

0.63 0.63

Technology Co.Ltd.HongKong

Dongshan

37445651 13369000 37445651 13369000

Precision Union

50.00 0.00 50.00 0.00

Opoelectronic Co.Limited

Hong Kong

10965830 10965830

Dongshan Holding

00.00 00.00

Limited

Yancheng 10936196 10936196

Dongshan 10.92 10.92

Precision

Manufacturing Co.Ltd.Yancheng

Dongshan Business 3067267.2 3109192.4

41925.24

Management Co. 0 4

Ltd.Yancheng

Dongshan

28040140 28040140

Communication

3.77 3.77

Technology Co.Ltd.Suzhou Dongshan 13826840 13829602

276286.92

Display Inc. 03.83 90.75

Suzhou Dongshan

Industrial 20010000. 29990000. 50000000.Investment Co. 00 00 00

Ltd.Shanghai Dongxin

New Energy 80000000. 80000000.Technology Co. 00 00

Ltd.Yancheng

Dongchuang

45000000 45009867

Precision 98677.56

0.00 7.56

Manufacturing Co.Ltd.Suzhou Dongyue

New Energy 50000000 50064635

646358.56

Technology Co. 0.00 8.56

Ltd.Multek China

71324.52 259026.20 330350.72

Limited

Mutto Optronics

1303371.5

Technology Co. 824778.48 478593.08

6

Ltd.MFLEX Suzhou 7193259.6 6744564.9 13937824.Co. Ltd. 0 2 52

Yancheng Mutto

Optronics

47549.64 47549.64

Technology Co.Ltd.MFLEX Yancheng 4175696.8 4274380.9

98684.08

Co. Ltd. 9 7

Multek Industries 2425059.7 3239157.8

814098.08

Limited 2 0

Dongwei Smart

14216.26 14216.26

Suzhou Co. Ltd.Multek Zhuhai

Enterprise 18031597. 18958814.

927217.26

Management Co. 04 30

Ltd.Yancheng

Dongshan

69074.96 69074.96

Optoelectronics

Technology Co.Ltd.Suzhou Dongchen

Ecological

39478.76 39478.76

Technology Co.Ltd.Chaowei

Microelectronics

636456.56 636456.56

(Yancheng) Co.Ltd.

10181457 13369000 29990000. 28318704. 10239766 13369000

Total

573.40 0.00 00 68 278.08 0.00

(2) Investments in associates and joint ventures

In RMB

Opening Changes in the current period Closing

Opening Closing

balance of balance of

balance Investment Adjustment to Declared cash AllowanceOther balanceInvestee allowance for

(carrying Additional Reduced income or loss other dividends or for

allowance for

changes in Others (carryingimpairment

value) investment investment under the equity comprehensive profit impairment

impairment

equity value)loss method income distribution loss loss

I. Joint ventures

II. Associates

Suzhou Toprun Electric

11817069.93 -432671.46 11384398.47

Equipment Co. Ltd.Shenzhen Nanfang

Blog Technology 17507056.47 17507056.47

Development Co. Ltd.Suzhou LEGATE

Intelligent Equipment 10247171.89 -998948.96 9248222.93

Corp. Ltd.Suzhou Dongcan

Optoelectronics 2693102.45 -152739.16 2540363.29

Technology Co. Ltd.Jiangsu Nangao

Intelligent Equipment

2602994.36 -377744.00 2225250.36

Innovation Center Co.Ltd.Jiaozuo Songyang

Photoelectric 22181612.25 -1143544.82 21038067.43

Technology Co. Ltd.Suzhou Yongxin

Jingshang Venture

41197773.88 1674130.44 132744.71 39498852.71

Capital Partnership 107953.98

(L.P.)

Subtotal 90739724.76 17507056.47 1674130.44 -2997694.42 - 132744.71 85935155.19 17507056.47

Total 90739724.76 17507056.47 1674130.44 -2997694.42 - 132744.71 85935155.19 17507056.47

4. Operating revenue and operating costs

In RMB

Amount of the current period Amount of the previous period

Item

Revenue Cost Revenue Cost

Primary business 2362015750.86 2197011699.38 2007552995.18 1910964376.03

Other businesses 52052716.61 10112337.41 27726642.37 12291548.13

Total 2414068467.47 2207124036.79 2035279637.55 1923255924.16

5. Investment income

In RMB

Item Amount of the current period Amount of the previous period

Income from long-term equity

-2997694.42 -3445956.20

investments under the equity method

Bank wealth management product 640200.00 160800.00

Total -2357494.42 -3285156.20

XX. Supplementary Information

1. Statement of non-recurring gain or loss for the current period

□Applicable □ N/A

In RMB

Item Amount Remark

Gain or loss from disposal of non-current assets -6925770.36

Government grants recognized in profit or loss (excluding the government grants that

are closely related to the business of the Company conform to the applicable policies

115191692.39

of the country are provided in accordance with the established standards and have

long-term effects on the Company’s profit or loss)

Gain or loss on changes in fair value of financial assets and financial liabilities held by

non-financial entities and gain or loss on disposal of financial assets and financial 506057632.55

liabilities except for effective hedges held in the ordinary course of business

Other non-operating revenues and expenses -15598890.08

Income from

Other gain or loss within the meaning of non-recurring gain or loss 23143740.00 debt

restructuring

Less: Effect on income tax 144213305.14

Effect on minority interests (after tax) 337810.58

Total 477317288.78 --

Other items of gain or loss within the meaning of non-recurring gain or loss:

□ Applicable□ N/A

We do not have any other item of gain or loss within the meaning of non-recurring gains or losses.Classification of any item of non-recurring gain or loss defined by the Explanatory Announcement No. 1 on Information

Disclosure by Companies Publicly Offering Securities – Non-recurring Gain or Loss as recurring gain or loss:

□ Applicable□ N/A

2. Return on equity and earnings per share

Weighted Earnings per share

Profit for the reporting period average return Basic earnings per share Diluted earnings per share

on net assets (RMB/share) (RMB/share)

Net profit attributable to ordinary shareholders

12.88% 1.62 1.62

of the Company

Net profit attributable to ordinary shareholders

of the Company after deduction of non- 10.80% 1.36 1.36

recurring gain or loss

3. Differences in accounting data under the CASBEs and overseas accounting standards

(1) Differences in net profit and net assets disclosed in the financial report prepared under the CASBEs

and the IFRS

□Applicable□ N/A

(2) Differences in net profit and net assets disclosed in the financial report prepared under the CASBEs

and overseas accounting standards

□Applicable□ N/A