Auditor's Report

China Fangda Group Co. Ltd.RSM [2026] No.510Z0221

RSM China (Special General Partnership)

China · BeijingTable of Contents

Page

No. Content:

number

1 Auditor's Report 1-7

2 Consolidated Balance Sheet 1

3 Consolidated Income Statement 2

4 Consolidated Cash Flow Statement 3

5 Statement of Change in Owners' Equity 4 - 5

6 Balance Sheet of the Parent Company 6

7 Income Statement of the Parent Company 7

8 Cash Flow Statement of the Parent Company 8

Statement of Change in Owners' Equity (Parent

Company)

10 Notes to Financial Statements 11 - 142RSM Thornton (limited liability partnership)

Head office: No.22 Fuchengmenwai Street Xicheng

District Beijing

Unit 1001-1 to 1001-26 10th Floor Building 1 (100037)

Auditors' Report TEL:010-6600 1391 FAX:010-6600 1392

E-mail:bj@rsmchina.com.cn

https://www.rsm.global/china/

RSM [2026] No.510Z0221

To the shareholders of China Fangda Group Co. Ltd.:

1. Auditors' Opinions

We have audited the financial statements of Fangda Group Co. Ltd. (hereinafter

referred to as Fangda group company) including the consolidated and parent

company's balance sheet as of December 31 2025 the consolidated and parent

company's income statement consolidated and parent company's cash flow statement

consolidated and parent company's statement of changes in owner's equity and notes to

relevant financial statements in 2025.We believe that Fangda Group has been following with the Enterprise Accounting

Standard in preparing of the Financial Statements. The Financial Statements is

reflecting in all important aspects the financial situation of Fangda Group as of

December 31 2025 and the business performance and cash flow of year 2025.

2. Basis of the Opinions

We carried out the auditing works with compliance to Chinese CPA Auditing

Standard The "CPA's Responsibility for Auditing Financial Statements" section of the

audit report further elaborated our responsibilities under these guidelines. In

accordance with the Code of Professional Ethics for Chinese Certified Public

Accountants and the Independence Standards for Chinese Certified Public Accountants

we are independent of China Fangda Group Co. Ltd. and have complied with the

provisions of the independence standards applicable to audits of financial statements of

public interest entities while fulfilling our other ethical responsibilities. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

3. Key Audit Matters

The key audit matters are the matters that we believe are most important for the

audit of the current financial statements based on professional judgment. The response

to these matters is based on the overall audit of the financial statements and the

formation of an audit opinion. We do not comment on these matters separately.(I) Income recognition

For related information disclosure please refer to Note III 26 Note V 43 and

Note XV 2 of the financial statements.

1. Description

In 2025 the operating revenue of Fangda Group is RMB3.377 billion of which

the revenue of curtain wall and metro platform screen door accounts for 93.76% of the

total revenue of the Group.Fangda Group's performance obligations related to the construction

subcontracting contract include building curtain wall and metro platform screen door.As the customer can control the commodity under construction in the process of

performance of Fangda group the Company regards it as the performance obligation

within a certain period of time and recognizes the revenue according to the

performance progress. The Company shall determine the performance schedule of

services according to the input method. The performance schedule shall be determined

according to the proportion of the actual contract cost to the estimated total contract

cost. Management needs to make a reasonable estimate of the initial total contract

revenue and total contract costs for the Engineering contracting contract and continue

to assess and revise it during the contract implementation process which involves

significant accounting estimates of the management.Therefore we identify revenue recognition related to construction contracts as

key audit matters.2. Audit response

Our audit procedures for revenue recognition related to construction

subcontracting contracts mainly include:

(1) Understand and evaluate the design of internal control related to management

contract and engineering subcontracting contract budget and revenue recognition and

test the effectiveness of key control implementation.

(2) Obtained a major engineering subcontracting contract verified the contract

revenue and reviewed key contract terms. Check the engineering contracting contract

and cost budget information on which management expects total revenue and

estimated total cost.

(3) Obtain the construction subcontracting contract account and project revenue

and cost summary table carry out analytical review on the gross profit of the project

and recalculate the performance progress and revenue in the construction

subcontracting contract account to verify its accuracy.

(4) Select samples to check the project engineering details of the main project

subcontracted labor approval forms and the owner's production value approval

documents and records to verify the contract costs incurred.

(5) Select samples to check if the relevant contract costs are recorded in the

appropriate accounting period.

(6) Select a sample to conduct a site inspection of the progress of the project

image to verify the reasonableness of the project's performance schedule.(II) Measurement of fair value of investment real estate

For related information disclosure please refer to Note III 17 Note V 15 Note

V 51 and Note XI of the financial statements.

1. Description

As of Wednesday December 31 2025 the book balance of the investment real

estate of Fangda group which adopts the fair value model for subsequent measurementis RMB5.548 billion accounting for 44.12% of the total assets. The income from

changes in fair value realized in the current period is RMB-281000000 which has a

great impact on the financial indicators of the Group's consolidated statements.The management of Fangda Group annually employs a third-party assessment

agency with relevant qualifications to evaluate the fair value of the investment real

estate. The evaluation adopts the market comparison method and the income method to

comprehensively analyze various factors that affect the real estate price of the

appraisal subject. The assessment of the fair value of investment real estate involves

many estimates and assumptions such as the analysis of the economic environment

and future trends of the real estate where the investment real estate is located discount

rates etc. The changes in estimates and assumptions will have big impacts on the fair

value of the investment real estate evaluated. Therefore we identify the measurement

of fair value of investment real estate as a key audit matter.

2. Audit response

Our audit procedures for the measurement of fair value of investment real estate

mainly include:

(1) Assess the competency professional quality independence and objectivity of

third-party assessment agencies employed by the management.

(2) Obtain the assessment report selected major or typical samples and use our

real estate appraisal experts to review and review the assessment methods and

assumptions used in the assessment report and the rationality of the selected key

assessment parameters. Check the accuracy and relevance of the data used by the

management in valuation.

(3) Review the measurement presentation and disclosure of fair value of

investment real estate in the financial statements.(III) Measurement of expected credit loss of accounts receivable and contract

assets

For related information disclosure please refer to Note III 11 Note V 5 Note V10 and Note V 21 of the financial statements.

1. Description

As of December 31 2025 the Company's total accounts receivable amounted to

RMB1.488 billion with an allowance for doubtful accounts of RMB602 million; the

total contract assets amounted to RMB2.340 billion with an impairment provision of

RMB226 million. The combined carrying amount of accounts receivable and contract

assets represented 23.85% of the Company's total assets. Due to the large amount of

accounts receivable and contract assets of Fangda group the management needs to use

important accounting estimation and judgment when determining the expected

recoverable amount of accounts receivable and contract assets and the expected credit

loss of accounts receivable and contract assets is important for financial statements.Therefore we determine the measurement of expected credit loss of accounts

receivable and contract assets as the key audit accounting matters.

2. Audit response

(1) Understand and evaluate the effectiveness of internal control design related to

the provision for bad debts of accounts receivable and provision for impairment of

contract assets of Fangda Group and test the effectiveness of key control operation.

(2) Review the relevant considerations and objective evidence of the

management's credit risk assessment of accounts receivable and contract assets and

evaluate whether the management has properly identified the credit risk characteristics

of various accounts receivable.

(3) We reviewed management's process for calculating the allowance for doubtful

accounts on accounts receivable and the impairment provision on contract assets

including:

* For accounts receivable and contract assets measured for expected credit losses on

a portfolio basis we evaluated the reasonableness of management's grouping by credit

risk characteristics; examined the expected credit loss measurement model andassessed the reasonableness of significant assumptions and key parameters therein;

obtained the aging schedule of accounts receivable and the corresponding table of

expected credit loss rates over the instruments' lifetime prepared by management and

tested the accuracy and completeness of the data used by management as well as the

correctness of the allowance calculation;

* For accounts receivable and contract assets subject to individual expected credit

loss assessment we reviewed the accuracy and reasonableness of the information and

underlying assumptions used by management in its testing process; and verified the

accuracy of impairment provisions recognized for aged accounts receivable and

contract assets as well as those involved in litigation matters.

(4) According to the characteristics and nature of customer transactions select

samples to implement the accounts receivable confirmation procedure and check the

collection after the period and evaluate the rationality of the provision for bad debts of

accounts receivable.

4. Other information

The management of Fangda Group (hereinafter referred to as management) is

responsible for other information. The other information includes the information

covered in Fangda Group's 2025 annual report but does not include the financial

statements and our audit report.Our audit opinions published in the financial statements do not cover other

information and we do not publish any form of assurance conclusion on other

information.In connection with our audit of the financial statements our responsibility is to

read other information. In the process we consider whether there is a material

inconsistency or other material misstatement of other information whether it is in the

financial statements or what we have learned during the audit process.Based on the work we have performed if we determine that there is a materialmisstatement of other information we should report that fact. In this regard we have

nothing to report.

5. Executives' Responsibilities on the Financial Statements

(1) Preparing these financial statements according to the Accounting Standards

for Business Enterprises and presenting them fairly; (2) designing implementing and

maintaining necessary internal control to make sure that these financial statements are

free from material misstatement whether due to fraud or error.In the preparation of the financial statements the management is responsible for

assessing Fangda Group's ability to continue as a going concern disclosing issues

related to going concern (if applicable) and applying the going concern assumption

unless management plans to liquidate Fangda Group terminate operations or there are

no other realistic choices.The management is responsible for overseeing the financial reporting process of

Fangda Group.

6. Auditor's responsibility for auditing financial statements

Our objective is to obtain reasonable assurance as to whether the entire financial

statements are free from material misstatement due to fraud or error and to issue an

audit report containing audit opinions. Reasonable assurance is a high level of

assurance but it does not guarantee that an audit performed in accordance with

auditing standards can always be discovered when a major misstatement exists. The

report may be due to fraud or mistakes and if a reasonable expectation of misstatement

alone or aggregated may affect the economic decision-making made by users of

financial statements based on the financial statements the misstatement is generally

considered to be material.In the process of conducting audit work in accordance with auditing standards we

use professional judgment and maintain professional suspicion. At the same time we

also perform the following tasks:

(1) Identify and assess risks of material misstatement of financial statements dueto fraud or errors design and implement audit procedures to address these risks and

obtain adequate and appropriate audit evidence as a basis for issuing audit opinions. As

fraud may involve collusion forgery willful omission misrepresentation or override

of internal control the risk of not discovering a material misstatement due to fraud is

higher than the risk of not discovering a material misstatement resulting from a

mistake.

(2) Understand audit-related internal controls to design appropriate audit

procedures.

(3) Evaluate the appropriateness of accounting policies adopted by the

management and the reasonableness of accounting estimates and related disclosures.

(4) Conclude on the appropriateness of management's use of continuing

operations assumptions. At the same time based on the audit evidence obtained it

concludes that whether there are major uncertainties in the matters or circumstances

that may cause major doubts about the ability of the Company's continuing operations.If we conclude that there are significant uncertainties the auditing standards require us

to request the users of the report to pay attention to the relevant disclosures in the

financial statements in the audit report; if the disclosure is not sufficient we should

publish non-unqualified opinions. Our conclusions are based on the information

available as of the date of the audit report. However future events or circumstances

may result in Fangda Group's inability to continue operating.

(5) Evaluate the overall presentation structure and content of the financial

statements and evaluate whether the financial statements fairly reflect the relevant

transactions and events.

(6) Obtain sufficient and appropriate audit evidence on the financial information

of entity or business activities in Fangda Group to express opinions on the financial

statements. We are responsible for directing supervising and executing group audits

and assume full responsibility for audit opinions.We communicate with the governance team on planned audit scope timing andmajor audit findings including communication of the internal control deficiencies that

we identified during the audit.We also provide a statement to the management on compliance with ethical

requirements related to independence and communicate with the management on all

relationships and other matters that may reasonably be considered to affect our

independence as well as related preventive measures (if applicable).From the matters passed with the management we determine which items are

most important for the audit of the financial statements of the current period and thus

constitute the key audit matters. We describe these matters in our audit report unless

laws and regulations prohibit the public disclosure of these matters or in rare cases if

it is reasonably expected that the negative consequences of communicating something

in the audit report will outweigh the benefits in the public interest we determine that

such matter should not be communicated in the audit report.(No text follows)

(This page has no text. It is the signature and stamp page of audit report No.[2026]510Z0221 of China Fangda Group Co. Ltd. ）

RSM China CPA:

(limited liability Zhou Junchao (Project

partnership) Partner)

Beijing China CPA:

Yang Yang

April 3 2026Consolidated Balance Sheet

December 312025

Prepared by: China Fangda Group Co. Ltd. In RMB

Item Note December 312025 December 312024 Item Note December 312025 December 312024

Current asset: Current liabilities

Monetary capital V. 1 1401292102.72 1491777341.84 Short-term loans V. 23 1 202846497.03 1663696422.48

Transactional financial assets V. 2 4 10.06 - Transactional financial liabilities - -

Derivative financial assets V. 3 1 459950.00 - Derivative financial liabilities V. 24 - 1520625.00

Notes receivable V. 4 1 21778063.00 7 3887694.24 Notes payable V. 25 4 29110637.53 681188127.97

Account receivable V. 5 885516557.23 1123506196.98 Account payable V. 26 2040691220.16 2 146594890.57

Receivable financing V. 6 - 4 568000.10 Prepayment received V. 27 3517539.83 1 513398.39

Prepayment V. 7 20407968.16 2 3355036.11 Contract liabilities V. 28 350155877.61 2 68594041.26

Other receivables V. 8 120173307.70 168322524.80 Employees' wage payable V. 29 67812846.09 7 6243647.97

Including: interest receivable - - Taxes payable V. 30 40439297.75 48847117.19

Dividend receivable - - Other payables V. 31 125372728.24 120918002.02

Inventory V. 9 685058418.56 705666408.74 Including: interest payable

Among them: data resources - - Dividend payable

Contract assets V. 10 1 998091151.43 2 247698479.96 Liabilities held for sales

Assets held for sales - - Non-current liabilities due in 1 year V. 32 379089194.66 1 31374661.05

Non-current assets due in 1 year - - Other current liabilities V. 33 60918938.51 5 0835559.67

Other current assets V. 11 296646964.92 307777143.14 Total current liabilities 4 699954777.41 5191326493.57

Total current assets 5 530424893.78 6146558825.91 Non-current liabilities:

Non-current assets: Long-term loans V. 34 1 290000000.00 1137000000.00

Debt investment Bond payable -

Other debt investment Including: preferred stock -

Long-term receivables Perpetual bond -

Long-term share equity V. 12 3 2988644.63 56690973.97 Lease liabilities V. 35 8979546.87 1 0652607.48

investment

Investment in other equity tools - Long-term payable -

Other non-current financial V. 13 6516131.63 6 519740.17 Long-term employee benefits -

assets payable

Investment real estate V. 14 5 548371426.50 5835036098.20 Anticipated liabilities V. 36 1 455390.21 1 286391.72

Fixed assets V. 15 9 40980113.90 940894344.39 Deferred earning V. 37 26304277.69 10669612.13

Construction in process V. 16 1 214530.34 7265104.44 Deferred income tax liabilities V. 20 941080689.22 1030341141.92

Productive biological assets - Other non-current liabilities

Gas & petrol - Total of non-current liabilities 2267819903.99 2 189949753.25

Use right assets V. 17 13470006.41 1 5683121.04 Total liabilities 6 967774681.40 7 381276246.82

Intangible assets V. 18 8 2258834.99 1 24052394.79 Owner's equity:

Among them: data resources Share capital V. 38 1073874227.00 1 073874227.00

R&D expense Other equity tools

Among them: data resources Including: preferred stock

Goodwill Perpetual bond

Long-term amortizable expenses V. 19 6 562494.97 4 041025.70 Capital reserves V. 39 4357948.33 4357948.33

Deferred income tax assets V. 20 2 66869033.36 205986926.71 Less: Shares in stock -

Other non-current assets V. 21 1 45743957.24 212658669.89 Other miscellaneous income V. 40 1 61046834.50 1 58405014.52

Total of non-current assets 7044975173.97 7408828399.30 Special reserves -

Surplus reserve V. 41 85368328.00 8 3974716.22

Undistributed profit V. 42 4234637792.91 4 805192000.28

Total of owner's equity belong to 5 559285130.74 6125803906.35

the parent company

Minor shareholders' equity 48340255.61 48307072.04

Total of owners' equity 5607625386.35 6174110978.39

Total of assets 1 2575400067.75 13555387225.21 Total of liabilities and owner's 12575400067.75 1 3555387225.21

interest

Legal representative: CFO: Accounting firm manager:Consolidated Income Statement

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

Item Note 2025 2024

1. Total revenue V. 43 3377303066.44 4424224197.71

Incl. Business income V. 43 3377303066.44 4 424224197.71

2. Total business cost 3405647937.11 4114643580.92

Incl. Business cost V. 43 2 921536952.53 3588142296.48

Taxes and surcharges V. 44 36011342.42 4 3364391.34

Sales expense V. 45 57404021.17 5 5140153.13

Administrative expense V. 46 179347723.55 1 91667435.20

R&D cost V. 47 132814412.12 171031371.73

Financial expenses V. 48 7 8533485.32 65297933.04

Including: interest cost V. 48 7 3451706.21 60377020.35

Interest income V. 48 1 0685216.12 19230549.61

Add: other gains V. 49 10569849.85 19683263.58

Investment gains ("-" for loss) V. 50 -25773481.21 -4547362.60

Incl. Investment gains from affiliates and joint ventures V. 50 -23702329.34 -70043.43

Financial assets derecognized as a result of amortized cost V. 50 - 3565876.31 -2538217.26

Net open hedge gains ("-" for loss) -

Gains from change of fair value ("-" for loss) V. 51 - 280735167.15 - 18394198.42

Credit impairment ("-" for loss) V. 52 - 252544839.46 - 110686852.25

Investment impairment loss ("-" for loss) V. 53 -30626112.52 - 35260579.49

Investment gains ("-" for loss) V. 54 - 3032277.77 -500192.81

3. Operational profit ("-" for loss) -610486898.93 159874694.80

Plus: non-operational income V. 55 582660.42 1 712412.29

Less: non-operational expenditure V. 56 1 8360766.41 2226292.50

4. Gross profit ("-" for loss) -628265004.92 159360814.59

Less: Income tax expenses V. 57 -112831775.11 1 3192524.27

5. Net profit ("-" for net loss) -515433229.81 146168290.32

(1) By operating consistency

1. Net profit from continuous operation ("-" for net loss) -515433229.81 146168290.32

2. Net profit from discontinuous operation ("-" for net loss)

(2) By ownership

1. Net profit attributable to the owners of parent company ("-" for net loss) - 515466884.24 144813705.53

2. Gains and losses of minority shareholders (net losses are shown in "-") 33654.43 1354584.79

6. After-tax net amount of other misc. incomes 2641334.26 113857440.93

(1) After-tax net amount of other misc. incomes attributed to parent's owner 2641819.98 113861211.98

1. Other misc. incomes that cannot be re-classified into gain and loss - -

(1) Re-measure the change in the defined benefit plan

(2) Other comprehensive income that cannot be transferred to profit or loss under the equity method

(3) Fair value change of investment in other equity tools

(4) Fair value change of the company's credit risk

2. Other misc. incomes that cannot be re-classified into gain and loss 2641819.98 113861211.98

(1) Other comprehensive income that can be transferred to profit or

loss under the equity method

(2) Fair value change of other debt investment

(3) Gains and losses from changes in fair value of available-for-sale

financial assets

(4) Other credit investment credit impairment provisions

(5) Cash flow hedge reserve V. 58 2533488.76 - 1440207.76

(6) Translation difference of foreign exchange statement V. 58 295993.10 - 769741.24

7. Others V. 58 - 187661.88 116071160.98

(2) After-tax net of other misc. income attributed to minority -485.72 - 3771.05

shareholders

7. Total of misc. incomes -512791895.55 260025731.25

(1) Total of misc. incomes attributable to the owners of the parent company -512825064.26 258674917.51

(2) Total misc gains attributable to the minor shareholders 33168.71 1350813.74

8. Earnings per share

(1) Basic earnings per share (yuan/share) -0.48 0.13

(2) Diluted earnings per share (yuan/share) - 0.48 0.13

Legal representative: CFO: Accounting firm manager:Consolidated Cash Flow Statement

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

Item Note 2025 2024

1. Net cash flow from business operations:

Cash received from sales of products and providing of services 3736526691.18 4480307796.77

Tax refunded 87812070.80 20223216.89

Other cash received from business operation V. 59 1 53978372.04 1 15024150.76

Sub-total of cash inflow from business operations 3978317134.02 4615555164.42

Cash paid for purchasing products and services 2964314842.23 3476800439.66

Cash paid to and for the staff 483554744.62 500142274.75

Taxes paid 186348404.40 187032846.31

Other cash paid for business activities V. 59 156686242.90 180685510.27

Sub-total of cash outflow from business operations 3790904234.15 4344661070.99

Cash flow generated by business operations net 187412899.87 270894093.43

2. Cash flow generated by investment:

Cash received from investment recovery 1089745926.15 1785649.27

Cash received as investment profit 1426386.60 214188.46

Net cash retrieved from disposal of fixed assets intangible assets and other long-term assets 52154307.71 8161249.68

Net cash received from disposal of subsidiaries or other operational units

Other investment-related cash received

Sub-total of cash inflow generated from investment 1 143326620.46 1 0161087.41

Cash paid for construction of fixed assets intangible assets and other long-term assets 98345774.80 229651090.29

Cash paid as investment 1089326003.52 27416773.30

Net cash paid for acquiring subsidiaries and other operational units

Other cash paid for investment V. 59 1 787676.30

Subtotal of cash outflows 1187671778.32 258855539.89

Cash flow generated by investment activities net -44345157.86 -248694452.48

3. Cash flow generated by financing activities

Cash received from investment 14.86 14873.62

Incl. Cash received from investment attracted by subsidiaries from minority shareholders 14.86 14873.62

Cash received from borrowed loans 2516692628.24 3503675536.37

Other cash received from financing activities V. 59 100842000.00 4 63600944.44

Subtotal of cash inflow from financing activities 2617534643.10 3967291354.43

Cash paid to repay debts 2563323480.12 3451800000.00

Cash paid as dividend profit or interests 126024225.73 167473899.50

Incl. Dividend and profit paid by subsidiaries to minority shareholders 6962732.02

Other cash paid for financing activities V. 59 1 2963429.49 1 19400311.19

Subtotal of cash outflow from financing activities 2702311135.34 3738674210.69

Net cash flow generated by financing activities -84776492.24 228617143.74

4. Influence of exchange rate changes on cash and cash equivalents 949081.78 1247313.23

5. Net increase in cash and cash equivalents 59240331.55 252064097.92

Plus: Balance of cash and cash equivalents at the beginning of term 1031725216.34 779661118.42

6. Balance of cash and cash equivalents at the end of the period 1090965547.89 1031725216.34

Legal representative: CFO: Accounting firm manager:Statement of Change in Owners' Equity

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

2025

Owners' Equity Attributable to the Parent Company

Item Other equity tools Minor Total of owners'

Less: Shares in Other Special Surplus Undistributed shareholders'

Share capital Preferred Perpetual Capital reserves stock miscellaneous

equity

Others reserves reserve profit

Subtotal equity

share bond income

1. Balance at the end of last year 1073874227.00 4 357948.33 158405014.52 83974716.22 4805192000.28 6125803906.35 48307072.04 6 174110978.39

Plus: Changes in accounting policies - -

Correction of previous errors - -

Others - -

2. Balance at the beginning of current year 1073874227.00 - - - 4 357948.33 - 1 58405014.52 - 8 3974716.22 4805192000.28 6125803906.35 48307072.04 6 174110978.39

3. Change amount in the current year ("-" for - - - - - - 2641819.98 - 1393611.78 -570554207.37 -566518775.61 33183.57 - 566485592.04

decrease)

(1) Total of misc. incomes 2641819.98 - 515466884.24 -512825064.26 33168.71 -512791895.55

(2) Investment or decreasing of capital by - - - - - - - - - - - 14.86 14.86

owners

1. Common shares invested by owners - 14.86 14.86

2. Capital contributed by other equity - -

instrument holders

3. Amount of shares paid and accounted as - -

owners' equity

4. Others - -

(3) Profit allotment - - - - - - - - 1393611.78 - 55087323.13 -53693711.35 - -53693711.35

1. Provision of surplus reserves 1393611.78 -1393611.78 - -

2. Distribution to owners (or shareholders) - 53693711.35 -53693711.35 -53693711.35

3. Others - -

(4) Internal carry-over of owners' equity - - - - - - - - - - - - -

1. Capitalizing of capital reserves (or share - -

capital)

2. Capitalizing of surplus reserves (or share - -

capital)

3. Surplus reserves used to cover losses - -

4. Retained gain transferred due to change in set benefit program - -

5. Other comprehensive income carry forward retained earnings - -

6. Others - -

(5) Special reserves - - - - - - - - - - - - -

1. This year's extraction - -

2. Used this year - -

(6) Others - -

IV. Closing balance 1073874227.00 - - - 4357948.33 - 161046834.50 - 8 5368328.00 4234637792.91 5559285130.74 4 8340255.61 5 607625386.35

Legal representative: CFO: Accounting firm manager:Statement of Change in Owners' Equity

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

2024

Owners' Equity Attributable to the Parent Company

Item Minor

Other equity tools Total of owners'Less: Shares in Other Special Surplus Undistributed shareholders'

Share capital Preferred Perpetual Capital reserves stock miscellaneous

equity

Others reserves reserve profit

Subtotal equity

share bond income

1. Balance at the end of last year 1073874227.00 1 1459588.40 23121870.79 79324940.43 4772359940.45 5960140567.07 74655271.20 6 034795838.27

Plus: Changes in accounting policies - -

Correction of previous errors - -

Others - -

2. Balance at the beginning of current year 1073874227.00 - - - 11459588.40 - 23121870.79 - 7 9324940.43 4772359940.45 5960140567.07 74655271.20 6034795838.27

3. Change amount in the current year ("-" for - - - - -7101640.07 - 1 35283143.73 - 4649775.79 32832059.83 165663339.28 -26348199.16 139315140.12

decrease)

(1) Total of misc. incomes 113861211.98 144813705.53 258674917.51 1350813.74 260025731.25

(2) Investment or decreasing of capital by - - - - -7101640.07 - - - - - - 7101640.07 - 20736280.88 -27837920.95

owners

1. Common shares invested by owners - -20736280.88 -20736280.88

2. Capital contributed by other equity - -

instrument holders

3. Amount of shares paid and accounted as - -

owners' equity

4. Others -7101640.07 -7101640.07 -7101640.07

(3) Profit allotment - - - - - - - - 5728420.02 - 91638358.18 -85909938.16 - 6962732.02 -92872670.18

1. Provision of surplus reserves 5728420.02 - 5728420.02 - -

2. Distribution to owners (or shareholders) -85909938.16 -85909938.16 -6962732.02 -92872670.18

3. Others - -

(4) Internal carry-over of owners' equity - - - - - - 21421931.75 - -1078644.23 -20343287.52 - - -

1. Capitalizing of capital reserves (or share - -

capital)

2. Capitalizing of surplus reserves (or share - -

capital)

3. Surplus reserves used to cover losses - -

4. Retained gain transferred due to change in set benefit program - -

5. Other comprehensive income carry forward retained earnings 21421931.75 - 1078644.23 - 20343287.52 - -

6. Others - -

(5) Special reserves - - - - - - - - - - - - -

1. This year's extraction - -

2. Used this year - -

(6) Others - -

IV. Closing balance 1073874227.00 - - - 4 357948.33 - 158405014.52 - 83974716.22 4805192000.28 6125803906.35 48307072.04 6 174110978.39

Legal representative: CFO: Accounting firm manager:Balance Sheet of the Parent Company

December 31 2025

Prepared by: China Fangda Group Co. Ltd. In RMB Currency: RMB

Assets Note December 31 2025 December 31 2024 Liabilities and owner's interest Note December 31 2025 December 31 2024

Current asset: Current liabilities

Monetary capital 20613570.12 45751906.05 Short-term loans

Transactional financial assets Transactional financial liabilities

Derivative financial assets Derivative financial liabilities

Notes receivable Notes payable

Account receivable XVI. 1 5225854.36 2885125.35 Account payable 845545.88 873640.82

Receivable financing Prepayment received 758736.42 749684.15

Prepayment 342719.99 145287.27 Contract liabilities

Other receivables XVI. 2 1 131454187.78 1622103166.85 Employees' wage payable 1883259.98 2834942.51

Including: interest receivable Taxes payable 248881.74 286140.09

Dividend receivable Other payables 1005650528.32 1437682555.06

Inventory Including: interest payable

Among them: data resources Dividend payable

Contract assets Liabilities held for sales

Assets held for sales Non-current liabilities due in 1 2839640.73 3531740.50

year

Non-current assets due in 1 year Other current liabilities 259291.84 164239.72

Other current assets 2482430.99 2081838.29 Total current liabilities 1012485884.91 1446122942.85

Total current assets 1160118763.24 1 672967323.81 Non-current liabilities:

Non-current assets: Long-term loans

Debt investment Bond payable

Other debt investment Including: preferred stock

Long-term receivables Perpetual bond

Long-term share equity XVI. 3 1 706562530.00 1 657062530.00 Lease liabilities 727265.94 4 614693.40

investment

Investment in other equity tools Long-term payable

Other non-current financial 30000001.00 3 0000001.00 Long-term employee benefits

assets payable

Investment real estate 376551400.00 380644350.00 Anticipated liabilities

Fixed assets 44963441.98 46688469.68 Deferred earning -

Construction in process Deferred income tax liabilities 46328991.71 42909713.11

Productive biological assets Other non-current liabilities

Gas & petrol Total of non-current liabilities 47056257.65 47524406.51

Use right assets 3449628.07 8 030919.38 Total liabilities 1059542142.56 1493647349.36

Intangible assets 1 266785.86 1200848.82 Owner's equity:

Among them: data resources Share capital 1 073874227.00 1073874227.00

R&D expense Other equity tools

Among them: data resources Including: preferred stock

Goodwill Perpetual bond

Long-term amortizable expenses 104570.72 285478.52 Capital reserves 360835.52 360835.52

Deferred income tax assets Less: Shares in stock

Other non-current assets Other miscellaneous income 39731740.46 3 9731740.46

Total of non-current assets 2162898357.63 2 123912597.40 Special reserves

Surplus reserve 85368328.00 83974716.22

Undistributed profit 1064139847.33 1105291052.65

Total of owners' equity 2263474978.31 2303232571.85

Total of assets 3323017120.87 3 796879921.21 Total of liabilities and owner's 3323017120.87 3796879921.21

interest

Legal representative: CFO: Accounting firm manager:Income Statement of the Parent Company

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

Item Note 2025 2024

1. Turnover XVI. 4 22995999.62 22532419.32

Less: Operation cost XVI. 4 8 267.66 81137.33

Taxes and surcharges 1265967.33 1 424024.13

Sales expense

Administrative expense 26399191.80 32460638.60

R&D cost

Financial expenses -432824.87 4841621.43

Including: interest cost 2 18784.11 4 405563.35

Interest income 580933.35 260151.97

Add: other gains 58615.83 1 08256.72

Investment gains ("-" for loss) XVI. 5 2 5676162.22 72929550.62

Incl. Investment gains from affiliates and joint ventures

Financial assets derecognized as a result of amortized cost

Net open hedge gains ("-" for loss)

Gains from change of fair value ("-" for loss) -4092950.00 -4092950.00

Credit impairment ("-" for loss) -80044.21 -238257.79

Investment impairment loss ("-" for loss)

Investment gains ("-" for loss) 3 2377.91 1053415.23

2. Operational profit ("-" for loss) 17349559.45 53485012.61

Plus: non-operational income 6681.45 5025.67

Less: non-operational expenditure 8 44.46 2 4170.61

4. Gross profit ("-" for loss) 1 7355396.44 53465867.67

Less: Income tax expenses 3419278.63 -3818332.48

4. Net profit ("-" for net loss) 13936117.81 57284200.15

1. Net profit from continuous operation ("-" for net loss) 13936117.81 5 7284200.15

2. Net profit from discontinuous operation ("-" for net loss)

5. After-tax net amount of other misc. incomes - 28392754.08

(1) Other misc. incomes that cannot be re-classified into gain and loss - -

1. Re-measure the change in the defined benefit plan

2. Other comprehensive income that cannot be transferred to profit or loss under the equity method

3. Fair value change of investment in other equity tools

4. Fair value change of the Company's credit risk

(2) Other misc. incomes that will be re-classified into gain and loss - 2 8392754.08

1. Other comprehensive income that can be transferred to profit or loss

under the equity method

2. Fair value change of other debt investment

3. Gains and losses from changes in fair value of available-for-sale

financial assets

4. Other credit investment credit impairment provisions

5. Cash flow hedge reserve

6. Translation difference of foreign exchange statement

7. Others 28392754.08

6. Total of misc. incomes 13936117.81 85676954.23

Legal representative: CFO: Accounting firm manager:

Note: For companies that prepare consolidated statements of income only basic and diluted earnings per share on a consolidated basis need to be

calculated and presented and basic and diluted earnings per share on a parent company basis need not be calculated and presented.Cash Flow Statement of the Parent Company

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

Item Note 2025 2024

1. Net cash flow from business operations:

Cash received from sales of products and providing of services 14964442.31 23297859.17

Tax refunded

Other cash received from business operation 8 46127900.09 1444921260.13

Sub-total of cash inflow from business operations 861092342.40 1468219119.30

Cash paid for purchasing products and services 3 632374.00 3 898051.28

Cash paid to and for the staff 1 5288292.77 17406198.35

Taxes paid 2276582.56 2 519884.87

Other cash paid for business activities 734330454.16 991774056.35

Sub-total of cash outflow from business operations 755527703.49 1015598190.85

Cash flow generated by business operations net 105564638.91 452620928.45

2. Cash flow generated by investment:

Cash received from investment recovery 3 8000000.00 235323000.00

Cash received as investment profit 25679051.34 7 2929550.62

Net cash retrieved from disposal of fixed assets intangible assets and other long-term assets

Net cash received from disposal of subsidiaries or other operational units

Other investment-related cash received

Sub-total of cash inflow generated from investment 63679051.34 308252550.62

Cash paid for construction of fixed assets intangible assets and other long-term a s s e t s 4 26033.24 508802.14

Cash paid as investment 8 7500000.00 3 65554277.00

Net cash paid for acquiring subsidiaries and other operational units

Other cash paid for investment

Subtotal of cash outflows 87926033.24 366063079.14

Cash flow generated by investment activities net -24246981.90 -57810528.52

3. Cash flow generated by financing activities

Cash received from investment

Cash received from borrowed loans

Other cash received from financing activities -

Subtotal of cash inflow from financing activities - -

Cash paid to repay debts 300000000.00

Cash paid as dividend profit or interests 53693711.35 90940972.34

Other cash paid for financing activities 5 2842009.56 4061076.00

Subtotal of cash outflow from financing activities 106535720.91 3 95002048.34

Net cash flow generated by financing activities -106535720.91 -395002048.34

4. Influence of exchange rate changes on cash and cash equivalents 79727.97 17360.14

5. Net increase in cash and cash equivalents -25138335.93 -174288.27

Plus: Balance of cash and cash equivalents at the beginning of term 4 5501906.05 45676194.32

6. Balance of cash and cash equivalents at the end of the period 20363570.12 4 5501906.05

Legal representative: CFO: Accounting firm manager:Statement of Change in Owners' Equity (Parent Company)

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

2025

Other equity tools

Item Other

Share capital Capital Less: Shares inPreferred miscellaneous Special reserves Surplus reserve Undistributed profit Total of owners' equity

Perpetual bond Others reserves stockshare income

1. Balance at the end of last year 1073874227.00 3 60835.52 39731740.46 83974716.22 1105291052.65 2303232571.85

Add: Changes in accounting policies -

Correction of previous errors -

Others -

2. Balance at the beginning of current year 1073874227.00 - - - 360835.52 - 39731740.46 - 83974716.22 1105291052.65 2 303232571.85

3. Change amount in the current year ("-" for decrease) - - - - - - - - 1 393611.78 -41151205.32 -39757593.54

(1) Total of misc. incomes - 13936117.81 13936117.81

(2) Investment or decreasing of capital by owners - - - - - - - - - - -

1. Common shares invested by owners -

2. Capital contributed by other equity instrument -

h 3o.l dAemrsount of shares paid and accounted as owners' -

equity

4. Others -

(3) Profit allotment - - - - - - - - 1 393611.78 -55087323.13 -53693711.35

1. Provision of surplus reserves 1 393611.78 -1393611.78 -

2. Distribution to owners (or shareholders) -53693711.35 -53693711.35

3. Others -

(4) Internal carry-over of owners' equity - - - - - - - - - - -

1. Capitalizing of capital reserves (or share capital) -

2. Capitalizing of surplus reserves (or share capital) -

3. Surplus reserves used to cover losses -

4. Retained gain transferred due to change in set benefit program -

5. Other comprehensive income carry forward retained earnings -

6. Others -

(5) Special reserves - - - - - - - - - - -

1. This year's extraction -

2. Used this year -

(6) Others -

IV. Closing balance 1073874227.00 - - - 360835.52 - 39731740.46 - 85368328.00 1064139847.33 2263474978.31

Legal representative: CFO: Accounting firm manager:Statement of Change in Owners' Equity (Parent Company)

2025

Prepared by: China Fangda Group Co. Ltd. In RMB

2024

Other equity tools

Item Other

Share capital Capital Less: Shares inPreferred miscellaneous Special reserves Surplus reserve Undistributed profit Total of owners' equity

share Perpetual bond Others

reserves stock income

1. Balance at the end of last year 1073874227.00 360835.52 -10082945.37 79324940.43 1159988498.20 2303465555.78

Add: Changes in accounting policies -

Correction of previous errors -

Others -

2. Balance at the beginning of current year 1073874227.00 - - - 360835.52 - -10082945.37 - 79324940.43 1159988498.20 2303465555.78

3. Change amount in the current year ("-" for decrease) - - - - - - 49814685.83 - 4 649775.79 - 54697445.55 -232983.93

(1) Total of misc. incomes 28392754.08 57284200.15 85676954.23

(2) Investment or decreasing of capital by owners - - - - - - - - - - -

1. Common shares invested by owners -

2. Capital contributed by other equity instrument -

h 3o.l dAemrsount of shares paid and accounted as owners' -

equity

4. Others -

(3) Profit allotment - - - - - - - - 5728420.02 -91638358.18 -85909938.16

1. Provision of surplus reserves 5728420.02 -5728420.02 -

2. Distribution to owners (or shareholders) -85909938.16 -85909938.16

3. Others -

(4) Internal carry-over of owners' equity - - - - - - 2 1421931.75 - -1078644.23 -20343287.52 -

1. Capitalizing of capital reserves (or share capital) -

2. Capitalizing of surplus reserves (or share capital) -

3. Surplus reserves used to cover losses -

4. Retained gain transferred due to change in set benefit program -

5. Other comprehensive income carry forward retained earnings 2 1421931.75 -1078644.23 -20343287.52 -

6. Others -

(5) Special reserves - - - - - - - - - - -

1. This year's extraction -

2. Used this year -

(6) Others -

IV. Closing balance 1073874227.00 - - - 360835.52 - 39731740.46 - 83974716.22 1105291052.65 2303232571.85

Legal representative: CFO: Accounting firm manager:China Fangda Group Co. Ltd. Notes to Financial Statements

China Fangda Group Co. Ltd.Notes to Financial Statements

2025

(Unless otherwise specified)

I. Company's profile

China Fangda Group Co. Ltd. (hereinafter referred to as "the Company" or "the

Company") was restructured and established in October 1995 through a public offering based

on the former "Shenzhen Fangda Building Materials Co. Ltd." pursuant to the approval

document No. Shen Fu Ban Han [1995] No. 194 issued by the General Office of Shenzhen

Municipal People's Government. The unified social credit code is: 91440300192448589C;

registered address: Fangda Technology Building Keji South 12th Road South District

High-tech Industrial Park Nanshan District Shenzhen. Mr. Xiong Jianming is the legal

representative.The Company issued foreign currency shares (B shares) and local currency shares (A

shares) and listed in November 1995 and April 1996 respectively in Shenzhen Stock

Exchange. The Company received the Reply to the Non-public Share Issuance of Fangda

China Group Co. Ltd. (CSRC License [2016] No.825) to allow the Company to conduct

non-public issuance of 32184931 A-shares in June 2016. According to the profit distribution

plan for 2016 approved by the 2016 general shareholders' meeting the Company issued five

shares for every ten shares to all shareholders through surplus capitalization based on the total

789094836 shares on December 31 2016. The registered capital at the end of 2017 was

RMB 1183642254.00. The Company repurchased and cancelled 28160568.00 B shares in

August 2018 32097497.00 B shares in January 2019 35105238.00 B shares in May 2020

14404724.00 B shares in April 2021 and cancelled in April 2021. The existing registered

capital is RMB1073874227.00 yuan.The Company has established the corporate governance structure of the General Meeting

of Shareholders and the Board of Directors. At present it has set up the President's Office the

Administration Department the Human Resources Department the Enterprise Management

Department the Finance Department the Audit and Supervision Department the Securities

Department the Legal Department the Information Management Department the Technology

11China Fangda Group Co. Ltd. Notes to Financial Statements

Innovation Department and other departments and has Shenzhen Fangda Construction

Technology Group Co. Ltd. (hereinafter referred to as Fangda Construction Technology Co.Ltd.) Fangda Zhiyuan Technology Co. Ltd. (hereinafter referred to as Fangda Zhiyuan

Technology Co. Ltd.) Fangda Jiangxi New Materials Co. Ltd. Fangda Real Estate Co. Ltd.Fangda New Energy Co. Ltd. and other subsidiaries.The business nature and main business activities of the Company and its subsidiaries

include: (1) curtain wall division production and sales of curtain wall materials design

production and installation of building curtain walls and curtain wall testing and maintenance

services; (2) Rail transit branch assembly and processing of subway screen doors screen door

detection and maintenance services; (3) The real estate division is engaged in real estate

development operation and property leasing and property management services on the land

that has legally obtained the right to use; (4) New energy division photovoltaic power

generation and sales; R&D installation and sales of photovoltaic equipment design and

installation of photovoltaic power station project.Date of financial statement approval: This financial statement is approved by the Board

of Directors of the Company on April 03 2026.II. Basis for the preparation of financial statements

1. Preparation basis

The Company prepares the financial statements based on continuous operation and

according to actual transactions and events with figures confirmed and measured in

compliance with the Accounting Standards for Business Enterprises and other specific

account standards application guide and interpretations. The Company has also disclosed

related financial information according to the requirement of the Regulations of Information

Disclosure No.15 – General Provisions for Financial Statements (Revised in 2023) issued by

the CSRC.

2. Continuous operation

The Company assessed the continuing operations capability of the Company for the 12

months from the end of the reporting period. No matters were found that would affect the

Company's ability to continue as a going concern. It is reasonable for the Company to prepare

financial statements based on continuing operations.III. Significant Account Policies and Estimates

12China Fangda Group Co. Ltd. Notes to Financial Statements

The following major accounting policies and accounting estimates shall be formulated in

accordance with the accounting standards of the enterprise. Unmentioned operations are

carried out in accordance with the relevant accounting policies in the enterprise accounting

standards.

1. Statement of Compliance to the Enterprise Accounting Standard

These financial statements meet the requirements of the Accounting Standards for

Business Enterprises and truly and fully reflect the Company's financial status performance

result changes in shareholders' equity and cash flows.

2. Fiscal Period

The accounting period of the Company is from January 1 to December 31 of each

calendar year.

3. Operation Period

Our normal business cycle is one year

4. Bookkeeping Standard Money

The Company's bookkeeping standard currency is Renminbi and overseas subsidiaries

are based on the currency of the main economic environment in which they operate.

5. Method for determining importance criteria and selection criteria

Item Importance criteria

Amount of bad debt reserves recovered or Amount greater than 5% of the total consolidated

reversed for important accounts receivable in the profit and greater than RMB5 million

current period; important accounts receivable (If the data is negative its absolute value shall be

write off used.)

Important ongoing projects Amount greater than 1% of total consolidated netassets

Important payables with an aging of over 1 year A single project is greater than 0.1% of the combinedtotal assets

Major non wholly-owned subsidiaries Individual net assets greater than 1% of the totalconsolidated net assets

Investment income exceeding 5% of the consolidated

Important joint ventures and associates total profit and greater than RMB5 million (if the

amount is negative its absolute value is used)

6. Accounting Treatment of the Entities under Common and Different Control

(1) Consolidation of entities under common control

The assets and liabilities acquired by the Company in a business combination are

measured at the book value of the combined party in the consolidated financial statements of

13China Fangda Group Co. Ltd. Notes to Financial Statements

the ultimate controlling party on the date of combination. Where the combined party applied

different accounting policies and accounting periods from those of the Company prior to the

business combination such policies and periods have been harmonized based on the

materiality principle—specifically the carrying amounts of the combined party's assets and

liabilities have been adjusted in accordance with the Company's accounting policies and

accounting periods. If there is a difference between the book value of the net assets acquired

by the Company in the business combination and the book value of the consideration paid

first adjust the balance of the capital reserve (capital premium or equity premium) the balance

of the capital reserve (capital premium or equity premium) If it is insufficient to offset the

surplus reserve and undistributed profits will be offset in sequence.See Note 3 7 (6) for the accounting treatment method of business combination under the

same control through step-by-step transaction.

(2) Consolidation of entities under different control

All identifiable assets and liabilities acquired by the Company during the merger shall be

measured at its fair value on the date of purchase. Where the acquiree applied different

accounting policies and accounting periods from those of the Company prior to the business

combination such policies and periods have been harmonized based on the materiality

principle—specifically the carrying amounts of the acquiree's assets and liabilities have been

adjusted in accordance with the Company's accounting policies and accounting periods. The

merger cost of the Company on the date of purchase is greater than the fair value of the assets

and liabilities recognized by the purchaser in the merger and is recognized as goodwill. If the

merger cost is less than the difference between the identifiable assets and the fair value of the

liabilities obtained by the purchaser in the enterprise merger the merger cost and the fair

value of the identifiable assets and the liabilities obtained by the purchaser in the enterprise

merger are reviewed and the merger cost is still less than the fair value of the identifiable

assets and liabilities obtained by the purchaser after the review the difference is considered as

the profit and loss of the current period of the merger.See Note 3 7 (6) for the accounting treatment method of business combination under the

same control through step-by-step transaction.

(3) Treatment of related transaction fee in enterprise merger

Agency expenses and other administrative expenses such as auditing legal consulting or

14China Fangda Group Co. Ltd. Notes to Financial Statements

appraisal services occurred relating to the merger of entities are accounted into current income

account when occurred. The transaction fees of equity certificates or liability certificates

issued by the purchaser for payment for the acquisition are accounted at the initial amount of

the certificates.

7. Judgment criteria for control and preparation methods for consolidated

financial statements

(1) Determination of control criteria and consolidation scope

Control means the power possessed by the Company on invested entities to share

variable returns by participating in related activities of the invested entities and to impact the

amount of the returns by using the power. The definition of control includes three basic

elements: first the investor has the power over the investee; second enjoys variable returns

due to participation in the investee's related activities; and third has the ability to use the

power over the investee to influence its return amount. When the Company's investment in

the invested party meets the above three elements it indicates that the Company can control

the invested party.The consolidated scope of the consolidated financial statements is determined on a

control basis and includes not only subsidiaries determined on the basis of voting rights (or

similar voting rights) themselves or in conjunction with other arrangements but also

structured subjects determined on the basis of one or more contractual arrangements.The subsidiary company is the subject controlled by the Company (including the

enterprise the divisible part of the invested unit and the structured subject controlled by the

enterprise etc.). The structured subject is the subject which is not designed to determine the

controlling party by taking the voting right or similar right as the decisive factor.

(2) Special provisions regarding the parent company being an investment entity

If the parent company is an investment entity only those subsidiary companies that

provide services related to investment activities of the investment entity shall be included in

the consolidation scope. Other subsidiary companies shall not be consolidated and their equity

investments shall be recognized as financial assets measured at fair value with changes in fair

value recognized in profit or loss.The parent company qualifies as an investment entity when it simultaneously meets the

15China Fangda Group Co. Ltd. Notes to Financial Statements

following conditions:

* The company obtains funds from one or more investors with the purpose of

providing investment management services to the investors.* The sole purpose of the company's operations is to generate returns for the investors

through capital appreciation investment income or both.* The company evaluates and assesses the performance of almost all of its investments

based on fair value.When the parent company changes from a non-investment entity to an investment entity

it shall only include those subsidiary companies that provide relevant services for its

investment activities in the preparation of consolidated financial statements. Other subsidiary

companies shall no longer be consolidated and the principle of recognizing partially disposed

subsidiary companies' equity while retaining control shall be applied.When the parent company changes from an investment entity to a non-investment entity

the subsidiary companies that were previously not included in the consolidation financial

statements shall be included as of the date of the change. The fair value of these subsidiary

companies on the date of the change shall be regarded as the transaction price of the

acquisition and accounted for using the accounting treatment for business combinations under

common control.

(3) Preparation of Consolidated Financial Statements

The Company prepares consolidated financial statements based on the financial

statements of itself and its subsidiaries and based on other relevant information.The Company compiles consolidated financial statements regards the whole enterprise

group as an accounting entity reflects the overall financial status operating results and cash

flow of the enterprise group according to the confirmation measurement and presentation

requirements of the relevant enterprise accounting standards and the unified accounting

policy and accounting period.* Merge the assets liabilities owner's rights and interests income expenses and cash

flow of parent company and subsidiary company.* Offset the long-term equity investment of the parent company to the subsidiary

16China Fangda Group Co. Ltd. Notes to Financial Statements

company and the share of the parent company in the ownership rights of the subsidiary

company.* Offset the influence of internal transaction between parent company subsidiary

company and subsidiary company. If an internal transaction indicates that the relevant asset

has suffered an impairment loss the part of the loss shall be confirmed in full.* adjust the special transaction from the angle of enterprise group.

(4) Processing of subsidiaries during the reporting period

* Increase of subsidiaries or business

A. Subsidiary or business increased by business combination under the same control

(A) When preparing the consolidated balance sheet adjust the opening number of the

consolidated balance sheet and adjust the related items of the comparative statement. The

same report entity as the consolidated balance sheet will exist from the time of the final

control party.

(B) When preparing the consolidated cash flow statement the cash flows of the

subsidiary and the business combination from the beginning of the current period to the end

of the reporting period are included in the consolidated cash flow statement and the related

items of the comparative statement are adjusted which is regarded as the combined report

body since the final The controller has been there since the beginning of control.

(C) When preparing the consolidated cash flow statement the cash flows of the

subsidiary and the business combination from the beginning of the current period to the end

of the reporting period are included in the consolidated cash flow statement and the related

items of the comparative statement are adjusted which is regarded as the combined report

body since the final The controller has been there since the beginning of control.B. Subsidiary or business increased by business combination under the same control

(A) When preparing the consolidated balance sheet the opening number of the

consolidated balance sheet is not adjusted.

(B) When preparing the consolidated profit statement the income expense and profit of

the subsidiary company and the business Purchase date and Closing balance shall be included

in the consolidated profit statement.

17China Fangda Group Co. Ltd. Notes to Financial Statements

(C) When the consolidated cash flow statement is prepared the cash flow from the

purchase date of the subsidiary to the end of the reporting period is included in the

consolidated cash flow statement.* Disposal of subsidiaries or business

A. When preparing the consolidated balance sheet the opening number of the

consolidated balance sheet is not adjusted.B. When preparing the consolidated profit statement the income expense and profit of

the subsidiary company and the business opening and disposal date shall be included in the

consolidated profit statement.C. When the consolidated cash flow statement is prepared the cash flow from the

Beginning of the period of the subsidiary to the end of the reporting period is included in the

consolidated cash flow statement.

(5) Special considerations in consolidation offsets

* The long-term equity investment held by a subsidiary company shall be regarded as

the inventory shares of the company as a subtraction of the owner's rights and interests which

shall be listed under the item of "subtraction: Stock shares" under the item of owner's rights

and interests in the consolidated balance sheet.The long-term equity investments held by the subsidiaries are offset by the shares of the

shareholders of the subsidiaries.* The "special reserve" and "general risk preparation" projects because they are

neither real capital (or share capital) nor capital reserve but also different from the retained

income and undistributed profits are restored according to the ownership of the parent

company after the long-term equity investment is offset by the ownership rights and interests

of the subsidiary company.* If there is a temporary difference between the book value of assets and liabilities in

the consolidated balance sheet and the taxable basis of the taxpayer due to the offset of the

unrealized internal sales gain or loss the deferred income tax asset or the deferred income tax

liability is confirmed in the consolidated balance sheet and the income tax expense in the

consolidated profit statement is adjusted with the exception of the deferred income tax related

to the transaction or event directly included in the owner's equity and the merger of the

18China Fangda Group Co. Ltd. Notes to Financial Statements

enterprise.* The unrealized internal transaction gains and losses incurred by the company from

selling assets to subsidiaries shall be fully offset against the "net profit attributable to the

owners of the parent company". The unrealized internal transaction gains and losses arising

from the sale of assets by the subsidiary to the Company shall be offset between the "net

profit attributable to the owners of the parent company" and the "minority shareholder gains

and losses" in accordance with the Company's distribution ratio to the subsidiary. The

unrealized internal transaction gains and losses arising from the sale of assets between

subsidiaries shall be offset between the "net profit attributable to the owners of the parent

company" and the "minority shareholders' gains and losses" in accordance with the

Company's distribution ratio to the seller's subsidiary .* If the current loss shared by the minority shareholders of the subsidiary exceeds the

share of the minority shareholders in the owner 's equity of the subsidiary at the beginning of

the period the balance should still be offset against the minority shareholders 'equity.

(6) Accounting treatment of special transactions

* Purchase minority shareholders' equity

The Company purchases the shares of the subsidiaries owned by the minority

shareholders of the subsidiaries. In the individual financial statements the investment costs of

the newly acquired long-term investments of the minority shares shall be measured at the fair

value of the price paid. In the consolidated financial statements the difference between the

newly acquired long-term equity investment due to the purchase of minority equity and the

share of net assets that should be continuously calculated by the subsidiary since the purchase

date or the merger date should be adjusted according to the new shareholding ratio. The

product (capital premium or equity premium) if the capital reserve is insufficient to offset the

surplus reserve and undistributed profits are offset in turn.* Step-by-step acquisition of control of the subsidiary through multiple transactions

A. Enterprise merger under common control through multiple transactions

On the date of the merger the Company determines the initial investment cost of the

long-term equity investment in the individual financial statements based on the share of the

subsidiary 's net assets that should be enjoyed after the merger in the final controller 's

19China Fangda Group Co. Ltd. Notes to Financial Statements

consolidated financial statements; the initial investment cost and the The difference between

the book value of the long-term equity investment before the merger plus the book value of

the consideration paid for new shares acquired on the merger date the capital reserve (capital

premium or equity premium) is adjusted and the capital reserve (capital premium or equity

premium) is insufficient to offset Reduced in turn offset the surplus reserve and undistributed

profits.In consolidated financial statements assets and liabilities obtained by the merging party

from the merged party should be measured at the book value in the final controlling party's

consolidated financial statements other than the adjustment made due to differences in

accounting policies; adjust the capital surplus (share premium) according to the difference

between the initial investment cost and the book value of the held investment before merger

plus the book value of the consideration paid on the merger date. Where the capital surplus

falls short the retained income should be adjusted.Before the acquirer obtains control of the acquiree any recognized gains and losses

other comprehensive income and changes in other owners' equity related to the equity

investment held by the acquirer from the later of the date when the original equity was

obtained or the date when both the acquirer and the acquiree were under the control of the

same party until the acquisition date should be adjusted against the beginning retained

earnings or the current profits and losses of the comparative statements separately.A. Enterprise merger under common control through multiple transactions

On the merger day in individual financial statements the initial investment cost of the

long-term equity investment on the merger day is based on the book value of the long-term

equity investment previously held plus the sum of the additional investment costs on the

merger day.In the consolidated financial statements the equity held in the acquiree before the

acquisition date is remeasured at its fair value on the acquisition date. If the equity held before

the acquisition date is designated as a financial asset measured at fair value through other

comprehensive income the difference between the fair value and its book value is included in

retained earnings and the cumulative fair value changes previously included in other

comprehensive income are transferred to retained earnings. If the equity held before the

acquisition date is designated as a financial asset measured at fair value through profit or loss

20China Fangda Group Co. Ltd. Notes to Financial Statements

or as a long-term equity investment accounted for by the equity method the difference

between the fair value and its book value is included in the current period's investment

income. For other comprehensive income and other changes in owners' equity under the

equity method related to the equity held before the acquisition date the related other

comprehensive income is accounted for on the same basis as if the investee had directly

disposed of the related assets or liabilities on the acquisition date and the related other

changes in owners' equity are transferred to the current period's investment income on the

acquisition date.

(3) The Company disposes of long-term equity investment in subsidiaries without losing

control

The parent company partially disposes of the long-term equity investment in the

subsidiary company without losing control. In the consolidated financial statements the

disposal price corresponds to the disposal of the long-term equity investment. The difference

between the shares is adjusted for the capital reserve (capital premium or equity premium). If

the capital reserve is insufficient to offset the retained earnings are adjusted.* The company disposes of long-term equity investment in subsidiaries and loses

control

A. One transaction disposition

If the Company loses control over the Invested Party due to the disposal of part of the

equity investment it shall remeasure the remaining equity according to its fair value at the

date of loss of control when compiling the consolidated financial statement. The consideration

received from the disposal of equity plus the fair value of the remaining equity minus the

share of net assets and goodwill calculated based on the original shareholding ratio from the

acquisition date or combination date to the disposal date is included in the investment income

for the period in which control is lost.Other comprehensive income related to equity investments in former subsidiaries is

accounted for upon loss of control on the same basis as if the related assets or liabilities of

the former subsidiary were directly disposed of. Other changes in owners' equity related to

former subsidiaries that were previously recognized under the equity method are reclassified

to profit or loss in the period in which control is lost.B. Multi-transaction step-by-step disposition

21China Fangda Group Co. Ltd. Notes to Financial Statements

In consolidated financial statements you should first determine whether a step-by-step

transaction is a "blanket transaction".If the step-by-step transaction does not belong to a "package deal" in the individual

financial statements for each transaction before the loss of control of the subsidiary the book

value of the long-term equity investment corresponding to each disposal of equity is carried

forward the price received and the disposal The difference between the book value of the

long-term equity investment is included in the current investment income; in the consolidated

financial statements it should be handled in accordance with the relevant provisions of "the

parent company disposes of the long-term equity investment in the subsidiary without losing

control."

If a step-by-step transaction belongs to a "blanket transaction" the transaction shall be

treated as a transaction that disposes of the subsidiary and loses control; In individual

financial statements the difference between each disposal price before the loss of control and

the book value of the long-term equity investment corresponding to the equity being disposed

of is first recognized as other consolidated gains and then converted to the current loss of

control at the time of the loss of control; In the consolidated financial statements for each

transaction prior to the loss of control the difference between the disposition of the price and

the disposition of the investment corresponding to the share in the net assets of the subsidiary

shall be recognized as other consolidated gains and shall at the time of the loss of control be

transferred to the loss of control for the current period.Where the terms conditions and economic impact of each transaction meet one or more

of the following conditions usually multiple transactions are treated as a "package deal":

(a) These transactions were concluded at the same time or in consideration of mutual

influence.(b) These transactions can only achieve the business result as a whole;

(c) The effectiveness of one transaction depends the occurrence of at least another

transaction;

(d) A single transaction is not economic and is economic when considered together with

other transactions.

(5) Proportion of minority shareholders in factor companies who increase capital and

22China Fangda Group Co. Ltd. Notes to Financial Statements

dilute ownership of parent companies

Proportion of Others ( minority shareholders in factor companies who increase capital

dilute Subsidiaries of parent companies. In the consolidated financial statements the share of

the parent company in the net book assets of the former subsidiary of the capital increase is

calculated according to the share ratio of the parent company before the capital increase the

difference between the share and the net book assets of the latter subsidiary after the capital

increase is calculated according to the share ratio of the parent company the capital reserve

(capital premium or capital premium) the capital reserve (capital premium or capital premium)

is not offset and the retained income is adjusted.

8. Classification of Joint Arrangements and Accounting Policies for Joint

Operations

A joint arrangement is an arrangement jointly controlled by two or more participants.The Company classifies its joint arrangements into joint operations and joint ventures.

(1) Joint Operations

A joint operation is a joint arrangement whereby the Company has rights to the related

assets and obligations for the related liabilities of the arrangement.The Company recognizes the following items relating to its interest in a joint operation

and accounts for them in accordance with the relevant enterprise accounting standards:

* Recognizes assets held separately as well as its share of jointly held assets;

* Recognizes liabilities borne separately as well as its share of jointly borne liabilities;

* Recognizes revenue from the sale of its share of output from the joint operation;

* Recognizes its share of revenue generated by the joint operation from the sale of

output;

* Recognizes expenses incurred separately as well as its share of expenses incurred by

the joint operation.

(2) Joint Ventures

A joint venture is a joint arrangement whereby the Company has rights only to the net

assets of the arrangement.

23China Fangda Group Co. Ltd. Notes to Financial Statements

The Company accounts for its investment in joint ventures using the equity method in

accordance with the relevant provisions on long-term equity investments.

9. Recognition of cash and cash equivalents

Cash refers to cash in stock and deposits that can be used for payment at any time. Cash

equivalents refer to investments with a short holding period (generally referring to expiry

within three months from the date of purchase) strong liquidity easy to convert to a known

amount of cash and little risk of value change.

10. Foreign exchange business and foreign exchange statement translation

(1) Methods for determining conversion rates in foreign currency transactions

The Company translates foreign currency transactions into the functional currency at the

initial recognition using the spot exchange rate on the transaction date or an approximate

exchange rate that is determined according to a reasonable method and is close to the spot

exchange rate on the transaction date. The resulting amount is recorded in the accounting

currency.

(2) Methods of conversion of foreign currency currency currency items on balance

sheet days

At the balance sheet date foreign currency items are translated on the spot exchange rate

of the balance sheet date. The exchange differences caused by the difference in exchange rates

on the balance sheet date and initial recognizing date or previous balance sheet date are

included in the current profits and losses. For non-monetary items measured at historical cost

in foreign currencies they are translated using the spot exchange rate on the transaction date.For inventories measured at the lower of cost and net realizable value if the inventories were

purchased in foreign currencies and their net realizable value is reflected in foreign currencies

as of the balance sheet date the net realizable value is first translated into the functional

currency at the spot exchange rate on the balance sheet date and then compared with the

inventory cost reflected in the functional currency to determine the ending value of the

inventories. Non-monetary items measured at fair value in foreign currencies are translated

using the spot exchange rate on the date the fair value is determined. For financial assets

measured at fair value with changes recognized in the current period's profit or loss the

difference between the translated amount in the functional currency and the original amount

in the functional currency is recognized in the current period's profit or loss. For non-trading

24China Fangda Group Co. Ltd. Notes to Financial Statements

equity investments designated to be measured at fair value with changes recognized in other

comprehensive income the difference between the translated amount in the functional

currency and the original amount in the functional currency is recognized in other

comprehensive income.

(3) Translation of foreign exchange statements

Prior to the conversion of the financial statements of an enterprise's overseas operations

the accounting period and policy of the overseas operations should be adjusted to conform to

the accounting period and policy of the enterprise. The financial statements of the

corresponding currency (other than the functional currency) should be prepared according to

the adjusted accounting policy and the accounting period. The financial statements of the

overseas operations should be converted according to the following methods:

* The assets and liabilities items in the balance sheet are translated at the spot

exchange rate on the balance sheet date. Except for the "undistributed profits" items the

owner's equity items are translated at the spot exchange rate when they occur.* The income and expense items in the profit statement are converted at the spot

exchange rate on the transaction date or the approximate exchange rate of the spot exchange

rate.* The foreign currency cash flow and the foreign subsidiary's cash flow are converted

using the immediate exchange rate or the approximate exchange rate at the date of the cash

flow. The impact of exchange rate changes on cash should be used as an adjustment item and

presented separately in the cash flow statement.* The foreign currency translation differences arising are presented under the "Other

Comprehensive Income" item in the shareholders' equity section of the consolidated balance

sheet when preparing the consolidated financial statements.When foreign operations are disposed of and the control rights are lost the difference in

foreign currency statements related to the overseas operations that are listed in the

shareholders' equity items in the balance sheet is transferred to the profit or loss for the

current period either in whole or in proportion to the disposal of the foreign operations.

11. Financial instrument

Financial instrument refers to a company's financial assets and contracts that form other

25China Fangda Group Co. Ltd. Notes to Financial Statements

units of financial liabilities or equity instruments.

(1) Recognition and de-recognition of financial instrument

The Company recognizes a financial asset or liability when it becomes one party in the

financial instrument contract.Financial asset is derecognized when:

* The contractual right to receive the cash flows of the financial assets is terminated;

* The financial asset is transferred and meets the following derecognization condition.If the current obligation of a financial liability (or part of it) has been discharged the

Company derecognises the financial liability (or part of the financial liability). When the

Company (borrower) and lender enter into an agreement to replace the original financial

liabilities by undertaking new financial liabilities and the contract terms for the new financial

liabilities are essentially different from those for the original one the original financial

liabilities will be derecognized and new financial liabilities will be recognized. Where the

Company makes substantial amendments to the contract terms of the original financial

liability (or part thereof) it shall terminate the original financial liability and confirm a new

financial liability in accordance with the amended terms.Financial asset transactions in regular ways are recognized and de-recognized on the

transaction date. The conventional sale of financial assets means the delivery of financial

assets in accordance with the contractual terms and conditions at the time set out in the

regulations or market practices. Transaction date refers to the date when the Company

promises to buy or sell financial assets.

(2) Classification and subsequent measurement of financial assets

At initial recognition the Company classifies financial assets into the following three

categories based on the business model of managing financial assets and the contractual cash

flow characteristics of financial assets: financial assets measured at amortized cost are

measured at fair value and their changes are included in other financial assets with current

profit and loss and financial assets measured at fair value through profit or loss. Unless the

Company changes the business model for managing financial assets in this case all affected

financial assets are reclassified on the first day of the first reporting period after the business

model changes otherwise the financial assets may not be initially confirmed.

26China Fangda Group Co. Ltd. Notes to Financial Statements

Financial assets are measured at the fair value at the initial recognition. For financial

assets measured at fair value with variations accounted into current income account related

transaction expenses are accounted into the current income. For other financial assets the

related transaction expenses are accounted into the initial recognized amounts. Bills

receivable and accounts receivable arising from the sale of commodities or the provision of

labor services that do not contain or do not consider significant financing components the

Company performs initial measurement according to the transaction price defined by the

income standard.The subsequent measurement of financial assets depends on their classification:

* Financial assets measured at amortized cost

Financial assets that meet the following conditions at the same time are classified as

financial assets measured at amortized cost: The Company 's business model for managing

this financial asset is to collect contractual cash flows as its goal; the contract terms of the

financial asset stipulate that Cash flow is only the payment of principal and interest based on

the outstanding principal amount. For such financial assets the actual interest rate method is

used for subsequent measurement according to the amortized cost. The gains or losses arising

from the termination of recognition amortization or impairment based on the actual interest

rate method are included in the current profit and loss.* Financial assets measured at fair value and whose changes are included in other

comprehensive income

Financial assets that meet the following conditions at the same time are classified as

financial assets measured at fair value and their changes are included in other comprehensive

income: The Company's business model for managing this financial asset is to both target the

collection of contractual cash flows and the sale of financial assets. Objective; The contractual

terms of the financial asset stipulate that the cash flow generated on a specific date is only for

the payment of principal and interest based on the outstanding principal amount. For such

financial assets fair value is used for subsequent measurement. Except for impairment losses

or gains and exchange gains and losses recognized as current gains and losses changes in the

fair value of such financial assets are recognized as other comprehensive income. Until the

financial asset is derecognized its accumulated gains or losses are transferred to current gains

and losses. However the relevant interest income of the financial asset calculated by the

27China Fangda Group Co. Ltd. Notes to Financial Statements

actual interest rate method is included in the current profit and loss.The Company irrevocably chooses to designate a portion of non-tradable equity

instrument investment as a financial asset measured at fair value and whose variation is

included in other consolidated income. Only the relevant dividend income is included in the

current profit and loss and the variation of fair value is recognized as other consolidated

income.* Financial assets measured at fair value with variations accounted into current income

account

The above financial assets measured at amortized cost and other financial assets

measured at fair value and whose changes are included in other comprehensive income are

classified as financial assets measured at fair value and whose changes are included in the

current profit and loss. For such financial assets fair value is used for subsequent

measurement and all changes in fair value are included in current profit and loss.

(3) Classification and measurement of financial liabilities

The Company classifies financial liabilities into financial liabilities measured at fair

value and their changes included in the current profit and loss loan commitments and

financial guarantee contract liabilities for loans below market interest rates and financial

liabilities measured at amortized cost.The subsequent measurement of financial liabilities depends on their classification:

* Financial liabilities measured at fair value with variations accounted into current

income account

Such financial liabilities include transactional financial liabilities (including derivatives

that are financial liabilities) and financial liabilities designated as at fair value through profit

or loss. After the initial recognition the financial liabilities are subsequently measured at fair

value. Except for the hedge accounting the gains or losses (including interest expenses) are

recognized in profit or loss. However for the financial liabilities designated as fair value and

whose variations are included in the profits and losses of the current period the variable

amount of the fair value of the financial liability due to the variation of credit risk of the

financial liability shall be included in the other consolidated income. When the financial

liability is terminated the cumulative gains and losses previously included in the other

28China Fangda Group Co. Ltd. Notes to Financial Statements

consolidated income shall be transferred out of the other consolidated income and shall be

included in the retained income.* Loan commitments and financial security contractual liabilities

A loan commitment is a promise that the Company provides to customers to issue loans

to customers with established contract terms within the commitment period. Loan

commitments are provided for impairment losses based on the expected credit loss model.A financial guarantee contract refers to a contract that requires the Company to pay a

specific amount of compensation to the contract holder who suffered a loss when a specific

debtor is unable to repay the debt in accordance with the original or modified debt instrument

terms. Financial guarantee contract liabilities are subsequently measured based on the higher

of the loss reserve amount determined in accordance with the principle of impairment of

financial instruments and the initial recognition amount after deducting the accumulated

amortization amount determined in accordance with the revenue recognition principle.* Financial liabilities measured at amortized cost

After initial recognition other financial liabilities are measured at amortized cost using

the effective interest method.Except in special circumstances financial liabilities and equity instruments are

distinguished according to the following principles:

* If the Company cannot unconditionally avoid delivering cash or other financial assets

to fulfill a contractual obligation the contractual obligation meets the definition of financial

liability. While some financial instruments do not explicitly contain terms and conditions for

the delivery of cash or other financial assets they may indirectly form contractual obligations

through other terms and conditions.If a financial instrument is required to be settled with or can be settled with the

Company's own equity instruments the Company's own equity instrument used to settle the

instrument needs to be considered as a substitute for cash or other financial assets or for the

holder of the instrument to enjoy the remaining equity in the assets after all liabilities are

deducted. If it is the former the instrument is the financial liabilities of the issuer; if it is the

latter the instrument is the equity instrument of the issuer. In some cases a financial

instrument contract provides that the Company shall or may use its own instrument of interest

29China Fangda Group Co. Ltd. Notes to Financial Statements

in which the amount of a contractual right or obligation is equal to the amount of the

instrument of its own interest which may be acquired or delivered multiplied by its fair value

at the time of settlement whether the amount of the contractual right or obligation is fixed or

is based entirely or in part on a variation of a variable other than the market price of the

instrument of its own interest such as the rate of interest the price of a commodity or the

price of a financial instrument the contract is classified as a financial liability.

(4) Derivative financial instruments and embedded derivatives

Derivative financial instruments are initially measured at the fair value of the day when

the derivative transaction contract is signed and are subsequently measured at their fair

values. Derivative financial instruments with a positive fair value are recognized as asset and

instruments with a negative fair value are recognized as liabilities.The gains and losses arising from the change in fair value of derivatives are directly

included in the profits and losses of the current period except that the part of the cash flow

that is valid in the hedge is included in the other consolidated income and transferred out

when the hedged item affects the gain and loss of the current period.For a hybrid instrument containing an embedded derivative instrument if the principal

contract is a financial asset the hybrid instrument as a whole applies the relevant provisions

of the financial asset classification. If the main contract is not a financial asset and the hybrid

instrument is not measured at fair value and its changes are included in the current profit and

loss for accounting the embedded derivative does not have a close relationship with the main

contract in terms of economic characteristics and risks and it is If the instruments with the

same conditions and exist separately meet the definition of derivative instruments the

embedded derivative instruments are separated from the mixed instruments and treated as

separate derivative financial instruments. If the fair value of the embedded derivative on the

acquisition date or the subsequent balance sheet date cannot be measured separately the

hybrid instrument as a whole is designated as a financial asset or financial liability measured

at fair value and whose changes are included in the current profit or loss.

(5) Financial instrument Less

The Company shall confirm the preparation for loss on the basis of expected credit loss

for financial assets measured at amortization costs creditor's rights investments measured at

fair value contractual assets leasing receivables loan commitments and financial guarantee

30China Fangda Group Co. Ltd. Notes to Financial Statements

contracts etc.* Measurement of expected credit losses of accounts receivable

The expected credit loss refers to the weighted average of the credit losses of financial

instruments that are weighted by the risk of default. Credit loss refers to the difference

between all contractual cash flows receivable from the contract and all cash flows expected to

be received by the Company at the original actual interest rate that is the present value of all

cash shortages. Among them the financial assets which have been purchased or born by the

Company shall be discounted according to the actual rate of credit adjustment of the financial

assets.The expected lifetime credit loss is the expected credit loss due to all possible default

events during the entire expected life of the financial instrument.Expected credit losses in the next 12 months are expected to result from possible defaults

in financial instruments within 12 months after the balance sheet date (or estimated duration

of financial instruments if the expected duration is less than 12 months) Credit losses are part

of the expected lifetime credit loss.On each balance sheet day the Company measures the expected credit losses of financial

instruments at different stages. Where the credit risk has not increased significantly since the

initial confirmation of the financial instrument it is in the first stage. The Company measures

the preparation for loss according to the expected credit loss in the next 12 months. Where the

credit risk has increased significantly since the initial confirmation but the credit impairment

has not occurred the financial instrument is in the second stage. Where a credit impairment

has occurred since the initial confirmation of the financial instrument it shall be in the third

stage and the Company shall prepare for measuring the expected credit loss of the whole

survival period of the instrument.For financial instruments with low credit risk on the balance sheet date the Company

assumes that the credit risk has not increased significantly since the initial recognition and

measures the loss provision based on the expected credit losses in the next 12 months.For financial instruments that are in the first and second stages and with lower credit risk

the Company calculates interest income based on their book balances and actual interest rates

without deduction for impairment provision. For financial instruments in the third stage

interest income is calculated based on the amortized cost and the actual interest rate after the

31China Fangda Group Co. Ltd. Notes to Financial Statements

book balance minus the provision for impairment.Regarding bills receivable accounts receivable and financing receivables regardless of

whether there is a significant financing component the Company measures the loss provision

based on the expected credit losses throughout the duration.Accounts receivable/contract assets

Applicable from December 1 2025

Where there is objective evidence of impairment as well as other receivable instruments

receivables other receivables receivables financing and long-term receivables applicable to

individual assessments separate impairment tests are performed to confirm expected credit

losses and prepare individual impairment. For notes receivable accounts receivable other

receivables financing of receivables long-term receivables and contract assets for which

there is no objective evidence of impairment or when individual financial assets cannot be

assessed at a reasonable cost the Company divides bills receivable accounts receivable other

receivables receivable financing long-term receivables and contract assets into several

combinations based on credit risk characteristics and calculates expected credit losses on the

basis of the combination. The basis for determining the combination is as follows:

The basis for determining the combination of notes receivable is as follows:

The basis for determining the combination of notes receivable is as follows:

Notes Receivable Combination 1 Commercial Acceptance Bill

Notes Receivable Combination 2 Bank Acceptance Bill

For Notes receivable divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.The basis for determining the combination of accounts receivable is as follows:

Accounts Receivable Portfolio 1: Receivables from curtain wall business

Accounts Receivable Portfolio 2: Receivables from platform screen door business

Accounts Receivable Portfolio 3: Receivables from new materials business

Accounts Receivable Portfolio 4: Receivables from new energy business

32China Fangda Group Co. Ltd. Notes to Financial Statements

Accounts Receivable Portfolio 5: Receivables from commercial real estate and others

Other receivable portfolio 6 Receivables from related parties within the scope of

consolidation

For the accounts receivable divided into a combination the Company refers to the

historical credit loss experience combined with the current situation and the forecast of the

future economic situation compiles the account receivable age and the whole expected credit

loss rate table and calculates the expected credit loss.The basis for determining the combination of other receivables is as follows:

Other receivable portfolio 1 Interest receivable

Portfolio of other receivables 2 Dividends receivable

Other combinations of receivables 3 Deposit and margin receivable

Other receivable portfolio 4 Receivable advances

Combination of other receivables 5 Value-added tax receivable is increased and refunded

Other receivable portfolio 6 Receivables from related parties within the scope of

consolidation

Other receivables portfolio 7 Other receivables

For other receivables divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.The basis for determining the combination of receivables financing is as follows:

Receivables financing portfolio 1 bank acceptance bill

For Notes receivable divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.The basis for determining the portfolio of contract assets is as follows:

Contract assets portfolio 1 conditional collection right of sales

33China Fangda Group Co. Ltd. Notes to Financial Statements

Contract assets portfolio 2 Completed and unsettled project not meeting collection

conditions

Contract assets portfolio 3 Quality guarantee deposit not meeting collection conditions

For contract assets divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.Applicable on and before November 30 2025

Where there is objective evidence of impairment as well as other receivable instruments

receivables other receivables receivables financing and long-term receivables applicable to

individual assessments separate impairment tests are performed to confirm expected credit

losses and prepare individual impairment. For notes receivable accounts receivable other

receivables financing of receivables long-term receivables and contract assets for which

there is no objective evidence of impairment or when individual financial assets cannot be

assessed at a reasonable cost the Company divides bills receivable accounts receivable other

receivables receivable financing long-term receivables and contract assets into several

combinations based on credit risk characteristics and calculates expected credit losses on the

basis of the combination. The basis for determining the combination is as follows:

The basis for determining the combination of notes receivable is as follows:

Notes Receivable Combination 1 Commercial Acceptance Bill

Notes Receivable Combination 2 Bank Acceptance Bill

For Notes receivable divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.The basis for determining the combination of accounts receivable is as follows:

Accounts receivable combination 1 Accounts receivable business

Accounts receivable combination 2 Real estate receivable business

Accounts receivable combination 3 Others receivable business

34China Fangda Group Co. Ltd. Notes to Financial Statements

Other receivable portfolio 4 Receivables from related parties within the scope of

consolidation

For the accounts receivable divided into a combination the Company refers to the

historical credit loss experience combined with the current situation and the forecast of the

future economic situation compiles the account receivable age and the whole expected credit

loss rate table and calculates the expected credit loss.The basis for determining the combination of other receivables is as follows:

Other receivable portfolio 1 Interest receivable

Portfolio of other receivables 2 Dividends receivable

Other combinations of receivables 3 Deposit and margin receivable

Other receivable portfolio 4 Receivable advances

Combination of other receivables 5 Value-added tax receivable is increased and refunded

Other receivable portfolio 6 Receivables from related parties within the scope of

consolidation

Other receivables portfolio 7 Other receivables

For other receivables divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.The basis for determining the combination of receivables financing is as follows:

Receivables financing portfolio 1 bank acceptance bill

For Notes receivable divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.The basis for determining the portfolio of contract assets is as follows:

Contract assets portfolio 1 conditional collection right of sales

Contract assets portfolio 2 Completed and unsettled project not meeting collection

35China Fangda Group Co. Ltd. Notes to Financial Statements

conditions

Contract assets portfolio 3 Quality guarantee deposit not meeting collection conditions

For contract assets divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.Other debt investment

For other receivables divided into portfolios the Company refers to historical credit loss

experience combined with current conditions and predictions of future economic conditions

and calculates through default risk exposure and expected credit loss rate within the next 12

months or the entire duration Expected credit losses.* Lower credit risk

If the risk of default on financial instruments is low the borrower's ability to meet its

contractual cash flow obligations in the short term is strong and even if the economic

situation and operating environment are adversely changed over a long period of time it may

not necessarily reduce the receivables' performance of their contractual cash. The ability of

the flow obligation the financial instrument is considered to have a lower credit risk.* Significant increase in credit risk

The Company compares the default probability of the financial instrument during the

expected lifetime determined by the balance sheet date with the default probability of the

expected lifetime during the initial confirmation to determine the relative probability of the

default probability of the financial instrument during the expected lifetime Changes to assess

whether the credit risk of financial instruments has increased significantly since initial

recognition.In determining whether the credit risk has increased significantly since the initial

recognition the Company considers reasonable and evidenced information including

forward-looking information that can be obtained without unnecessary additional costs or

effort. The information considered by the Company includes:

A. Significant changes in internal price indicators resulting from changes in credit risk;

36China Fangda Group Co. Ltd. Notes to Financial Statements

B. Adverse changes in business financial or economic conditions that are expected to

cause significant changes in the debtor's ability to perform its debt service obligations;

C. Whether the actual or expected operating results of the debtor have changed

significantly; whether the regulatory economic or technical environment of the debtor has

undergone significant adverse changes;

D. Whether there is a significant change in the value of the collateral used as debt

collateral or the guarantee provided by a third party or the quality of credit enhancement.These changes are expected to reduce the debtor's economic motivation for repayment within

the time limit specified in the contract or affect the probability of default;

E. Whether there is a significant change in the economic motivation that is expected to

reduce the debtor's repayment according to the contractual deadline;

F. Anticipated changes to the loan contract including whether the expected violation of

the contract may result in the exemption or revision of contract obligations granting

interest-free periods rising interest rates requiring additional collateral or guarantees or

making other changes to the contractual framework of financial instruments change;

G. Whether the expected performance and repayment behavior of the debtor has changed

significantly;

H. Whether the contract payment is overdue for more than (including) 30 days.Based on the nature of financial instruments the Company assesses whether credit risk

has increased significantly on the basis of a single financial instrument or combination of

financial instruments. When conducting an assessment based on a combination of financial

instruments the Company can classify financial instruments based on common credit risk

characteristics such as overdue information and credit risk ratings.If the overdue period exceeds 30 days the Company has determined that the credit risk

of financial instruments has increased significantly. Unless the Company does not have to pay

excessive costs or efforts to obtain reasonable and warranted information it proves that

although it has exceeded the time limit of 30 days agreed upon in the Contract credit risks

have not increased significantly since the initial confirmation.* Financial assets with credit impairment

The Company assesses on the balance sheet date whether financial assets measured at

37China Fangda Group Co. Ltd. Notes to Financial Statements

amortized cost and credit investments measured at fair value and whose changes are included

in other comprehensive income have undergone credit impairment. When one or more events

that adversely affect the expected future cash flows of a financial asset occur the financial

asset becomes a financial asset that has suffered a credit impairment. Evidence that credit

impairment has occurred in financial assets includes the following observable information:

Major financial difficulties have occurred to the issuer or the debtor; Breach of contract

by the debtor such as payment of interest or default or overdue of principal; (B) The

concession that the debtor would not make under any other circumstances for economic or

contractual considerations relating to the financial difficulties of the debtor; The debtor is

likely to be bankrupt or undertake other financial restructuring; The financial difficulties of

the issuer or debtor lead to the disappearance of the active market for the financial asset; To

purchase or generate a financial asset at a substantial discount which reflects the fact that a

credit loss has occurred.* Presentation of expected credit loss measurement

In order to reflect the changes in the credit risk of financial instruments since the initial

recognition the Company re-measures the expected credit losses on each balance sheet date

and the increase or reversal of the loss provision resulting therefrom is included as an

impairment loss or gain. Current profit and loss. For financial assets measured at amortized

cost the loss allowance offsets the book value of the financial asset listed on the balance sheet;

for debt investments measured at fair value and whose changes are included in other

comprehensive income the Company Recognition of its loss provisions in gains does not

offset the book value of the financial asset.* Cancellation

If it is no longer reasonably expected that the contract cash flow of the financial assets

will be fully or partially recovered the book balance of the financial assets will be directly

reduced. Such write-off constitute the derecognization of related financial assets. This usually

occurs when the Company determines that the debtor has no assets or sources of income that

generate sufficient cash flow to cover the amount that will be written down.If the financial assets that have been written down are recovered in the future the

reversal of the impairment loss is included in the profit or loss of the current period.

38China Fangda Group Co. Ltd. Notes to Financial Statements

(6) Transfer of financial assets

The transfer of financial assets refers to the following two situations:

A. Transfer the contractual right to receive cash flow of financial assets to another party;

B. Transfers the financial assets to the other party in whole or in part but reserves the

contractual right to collect the cash flow of the financial assets and undertakes the contractual

obligation to pay the collected cash flow to one or more recipients.* De-identification of transferred financial assets

Those who have transferred almost all risks and rewards in the ownership of financial

assets to the transferee or have neither transferred nor retained almost all the risks and

rewards in the ownership of financial assets but have given up control of the financial assets

terminate the confirmation The financial asset.In determining whether control over the transferred financial asset has been waived the

actual capacity of the transferor to sell the financial asset is determined. If the transferor is

able to sell the transferred financial assets wholly to a third party that does not have a

relationship with them and has no additional conditions to limit the sale it indicates the

Company has waived control over the financial assets.The Company pays attention to the essence of financial asset transfer when judging

whether financial asset transfer meets the condition of financial asset termination.If the overall transfer of financial assets meets the conditions for termination of

confirmation the difference between the following two amounts is included in the current

profit and loss:

A. Continuing identification of transferred Book value；

B. The sum of the amount received as a result of the transfer and the amount accrued as a

result of the change in the fair value of the transfer in respect of the termination recognized

portion of the amount previously charged directly to the other consolidated proceeds (the

financial assets involved in the transfer are those classified in accordance with Article 18 of

Enterprise Accounting Standard No. 22 - Financial Instruments Recognition and

Measurement as measured by the fair value and whose change is charged to the other

consolidated proceeds).

39China Fangda Group Co. Ltd. Notes to Financial Statements

If the partial transfer of financial assets meets the conditions for derecognization the

book value of the entire transferred financial assets will be included in the derecognized part

and the unterminated part (in this case the retained service assets are regarded as part of the

continued recognition of financial assets) Between them they are apportioned according to

their respective relative fair values on the transfer date and the difference between the

following two amounts is included in the current profit and loss:

A. Termination of the book value of the recognized portion on the date of

derecognization;

B. The sum of the amount received as a result of the transfer and the amount accrued as a

result of the change in the fair value of the transfer in respect of the termination recognized

portion of the amount previously charged to the other consolidated proceeds (the financial

assets involved in the transfer are those classified in accordance with Article 18 of Enterprise

Accounting Standard No. 22 - Financial Instruments Recognition and Measurement as

measured by the fair value and whose change is charged to the other consolidated proceeds).* Continue to be involved in the transferred financial assets

If neither transfer nor retain almost all the risks and rewards of the ownership of financial

assets and have not given up control of the financial assets the relevant financial assets

should be confirmed according to the extent of their continued involvement in the transferred

financial assets and the relevant liabilities should be recognized accordingly.The extent to which the transferred financial assets continue to be involved refers to the

extent to which the enterprise undertakes the risk or compensation of the value change of the

transferred financial assets.* Continuing identification of transferred financial assets

Where almost all risks and remuneration in relation to ownership of the transferred

financial assets are retained the whole of the transferred financial assets shall continue to be

recognized and the consideration received shall be recognized as a financial liability.The financial asset and the recognized related financial liabilities shall not offset each

other. In the subsequent accounting period the enterprise shall continue to recognize the

income (or gain) generated by the financial asset and the costs (or losses) incurred by the

financial liability.

40China Fangda Group Co. Ltd. Notes to Financial Statements

(7) Deduction of financial assets and liabilities

Financial assets and financial liabilities should be listed separately in the balance sheet

and cannot be offset against each other. However if the following conditions are met the net

amount offset by each other is listed in the balance sheet:

The Company has a statutory right to offset the confirmed amount and such legal right is

currently enforceable;

The Company plans to settle the net assets or realize the financial assets and liquidate the

financial liabilities at the same time.The transferring party shall not offset the transferred financial assets and related

liabilities if it does not meet the conditions for terminating the recognition.

(8) Recognition of fair value of Finance instruments

See Note III. 12 for the recognition of fair value of financial assets and liabilities.

12. Measurement at fair value

Fair value refers to the amount of asset exchange or liabilities settlement by both

transaction parties familiar with the situation in a fair deal on a voluntary basis.The Company measures the fair value of related assets or liabilities at the prices in the

main market. If there is no major market the Company measures the fair value of the relevant

assets or liabilities at the most favorable market prices. The Group uses assumptions that

market participants use to maximize their economic benefits when pricing the asset or

liability.The main market refers to the market with the highest transaction volume and activity of

the related assets or liabilities. The most favorable market means the market that can sell the

related assets at the highest amount or transfer the related liabilities at the lowest amount after

considering the transaction cost and transportation cost.For financial assets or liabilities in an active market The Company determines their fair

value based on quotations in the active market. If there is no active market the Company uses

evaluation techniques to determine the fair value.For the measurement of non-financial assets at fair value the ability of market

participants to use the assets for optimal purposes to generate economic benefits or the ability

41China Fangda Group Co. Ltd. Notes to Financial Statements

to sell the assets to other market participants that can be used for optimal purposes to generate

economic benefits.* Evaluation techniques

The Company adopts valuation techniques that are applicable in the current period and

are supported by sufficient data and other information. The valuation techniques used mainly

include market method income method and cost method. The Company uses a method

consistent with one or more of the valuation techniques to measure fair value. If multiple

valuation techniques are used to measure fair value the reasonableness of each valuation

result shall be considered and the fair value shall be selected as the most representative of fair

value under the current circumstances. The amount of value is regarded as fair value.The The Company equipment are applicable in the current circumstances and have

sufficient available data and other information to support the use of the relevant observable

input values prioritized. Unobservable input values are used only when the observable input

value cannot be obtained or is not feasible. Observable input values are input values that can

be obtained from market data. The Group uses assumptions that market participants use to

maximize their economic benefits when pricing the asset or liability. Non-observable input

values are input values that cannot be obtained from market data. The input value is obtained

based on the best information available on assumptions used by market participants in pricing

the relevant asset or liability.* Fair value hierarchy

This company divides the input value used in fair value measurement into three levels

and first uses the first level input value then uses the second level input value and finally

uses the third level input value. First level: quotation of same assets or liabilities in an active

market (unadjusted) The second level input value is a directly or indirectly observable input

value of the asset or liability in addition to the first level input value. The input value of the

third level is the unobservable input value of the related asset or liability.

13. Inventory

(1) Classification of inventories

Inventories refer to finished goods or merchandise held for sale in the ordinary course of

business work-in-process and materials and supplies consumed in the production process or

42China Fangda Group Co. Ltd. Notes to Financial Statements

during the rendering of services including raw materials work-in-process semi-finished

goods finished goods merchandise inventories and reusable materials.

(2) Pricing of delivering inventory

The Company measures inventories issued using the weighted average cost method.The inventory of real estate business mainly includes inventory materials development

costs development products etc. The actual costs of development products include land

transfer payment infrastructure and facility costs installation engineering costs borrows

before completion of the development and other costs during the development process. The

special maintenance funds collected in the first period are included in the development

overheads. When the control right of development products is transferred the individual

valuation method is used to determine its actual cost.

(3) Inventory system

The Company inventory adopts the perpetual inventory system counting at least once a

year the inventory profit and loss amount is included in the current year's profit and loss.

(4) Criteria for recognizing and providing for provision for decline in value of

inventories

On the balance sheet date inventories are accounted depending on which is lower

between the cost and the net realizable value. If the cost is higher than the net realizable value

the impairment provision will be made.The realizable net value of inventory should be recognized based on solid evidence with

the purpose of the inventory and after-balance-sheet-date events taken into consideration.

(1) In the course of normal production and operation the net realizable value of finished

goods commodities and materials directly used for sale shall be determined by the estimated

price of the inventory minus the estimated cost of sale and related taxes. The inventory held

for the execution of a sales contract or a labor contract shall be measured on the basis of the

contract price as its net realizable value; If the quantity held is greater than the quantity

ordered under the sales contract the net realizable value of the excess inventory is measured

on the basis of the general sales price. For materials used for sale the market price shall be

used as the measurement basis for the net realizable value.* In the normal production and operation process the inventory of materials that need to

43China Fangda Group Co. Ltd. Notes to Financial Statements

be processed is determined by the amount of the estimated selling price of the finished

product minus the estimated cost to be incurred at the time of completion estimated sales

expenses and related taxes Realize the net value. If the net realizable value of the finished

product produced by it is higher than the cost the material is measured at cost; If the decrease

in the price of the material indicates that the net realizable value of the finished product is

lower than the cost the material is measured as the net realizable value and the inventory is

prepared for a decrease based on its difference.* If the factors affecting the previous write-down of inventory value have disappeared

on the balance sheet date the amount of the write-down will be restored and transferred back

within the amount of inventory depreciation reserve that has been accrued and the amount

returned will be included in the current profit and loss.

(5) Methods of amortization of swing materials

* Low-value consumables are amortized on on-off amortization basis at using.* Packages are amortized on on-off amortization basis at using.

14. Contract assets and contract liabilities

The Company presents contract assets or liabilities in the balance sheet according to the

relationship between performance obligation and customer payment. The consideration for

which the Company is entitled to receive (subject to factors other than the passage of time) for

the transfer of goods or the provision of services to customers is listed as contract assets. The

Company's obligation to transfer goods or provide services to customers for consideration

received or receivable from customers is listed as contractual liabilities.The Company's determination method and accounting treatment method for the expected

credit loss of contract assets are detailed in Note III 11.Contract assets and contract liabilities are listed separately in the balance sheet. Contract

assets and contract liabilities under the same contract are listed in net amount. If the net

amount is the debit balance it shall be listed in "contract assets" or "other non current assets"

according to its liquidity; if the net amount is the credit balance it shall be listed in "contract

liabilities" or "other non current liabilities" according to its liquidity. Contract assets and

contract liabilities under different contracts cannot offset each other.

15. Contract costs

44China Fangda Group Co. Ltd. Notes to Financial Statements

Contract cost is divided into contract performance cost and contract acquisition cost.The cost incurred by the Company in performing the contract shall be recognized as an

asset when the following conditions are met simultaneously:

* The cost is directly related to a current or expected contract including direct labor

direct materials manufacturing expenses (or similar expenses) clearly borne by the customer

and other costs incurred only due to the contract;

* This cost increases the Company's future resources for fulfilling its performance

obligations.* The cost is expected to be recovered.If the incremental cost incurred by the Company to obtain the contract is expected to be

recovered it shall be recognized as an asset as the contract acquisition cost.The assets related to the contract cost shall be amortized on the same basis as the income

from goods or services related to the assets; however if the amortization period of the

contract acquisition cost is less than one year the Company shall include it in the current

profit and loss when it occurs.If the book value of the assets related to the contract cost is higher than the difference

between the following two items the Company will make provision for impairment for the

excess part and recognize it as the loss of asset impairment and further consider whether the

estimated liabilities related to the loss contract should be made:

* The residual consideration expected to be obtained due to the transfer of goods or

services related to the asset;

* The estimated cost to be incurred for the transfer of the relevant goods or services.If the above provision for impairment of assets is subsequently reversed the book value

of the asset after reversal shall not exceed the book value of the asset on the reversal date

without provision for impairment.The contract performance cost recognized as an asset with an amortization period of no

more than one year or one normal business cycle at the time of initial recognition shall be

listed in the "inventory" item and the amortization period of no more than one year or one

normal business cycle at the time of initial recognition shall be listed in the "other non current

45China Fangda Group Co. Ltd. Notes to Financial Statements

assets" item.The contract acquisition cost recognized as an asset shall be listed in the item of "other

current assets" when the amortization period does not exceed one year or one normal business

cycle at the time of initial recognition and listed in the item of "other non current assets"

when the amortization period exceeds one year or one normal business cycle at the time of

initial recognition.

16. Long-term share equity investment

The Group's long-term equity investment includes control on invested entities and

significant impacts on equity investment. Invested entities on which the Group has significant

impacts are associates of the Group.

(1) Basis for recognition of common control and major influence on invested entities

Common control refers to the common control of an arrangement in accordance with the

relevant agreement and the relevant activities of the arrangement must be agreed upon by the

participants who share control. In determining whether there is common control the first step

is to determine whether all or a group of participants collectively control the arrangement

which is considered collective control by all or a group of participants if all or a group of

participants must act together to determine the activities associated with the arrangement.Secondly it is judged whether the decision on related activities of the arrangement must be

agreed by the participants who collectively control the arrangement. If there is a combination

of two or more parties that can collectively control an arrangement it does not constitute joint

control. When judging whether there is joint control the protective rights enjoyed are not

considered.Major influence refers to the power to participate in decision-making of financial and

operation policies of a company but cannot control or jointly control the making of the

policies. When considering whether the Company can impose significant impacts on the

invested entity impacts of conversion of shares with voting rights held directly or indirectly

by the investor and voting rights that can be executed in this period held by the investor and

other party into shares of the invested entity should be considered.If the Company directly or through subsidiaries holds more than 20% (inclusive) but less

than 50% of the shares with voting rights of the invested entity unless there is clear evidence

46China Fangda Group Co. Ltd. Notes to Financial Statements

proving that the Company cannot participate the decision-making of production and operation

of the invested entity the Company has major influence on the invested entity.

(2) Recognition of initial investment costs

* For long-term equity investments formed through business combinations the

investment cost is determined in accordance with the following provisions:

A. In the case of an enterprise merger under the same control where the merging party

makes a valuation of the merger by payment of cash transfer of non-cash assets or

undertaking liabilities the share of the book value of the owner's interest in the final

controlling party's consolidated financial statements as the initial investment cost of the

long-term equity investment at the date of the merger. The difference between the initial

investment cost of long-term equity investment and the cash paid the transferred non-cash

assets and the book value of the debt assumed shall be adjusted to the capital reserve; if the

capital reserve is insufficient to offset the retained earnings shall be adjusted;

Long-term equity investment generated by enterprise merger: for long-term equity

investment obtained by merger of enterprises under common control the obtained share of

book value of the interests of the merged party's owner in the consolidate financial statements

on the merger date is costs; for long-term equity investment obtained by merger of enterprises

not under common control the merger cost is the investment cost. Adjust the capital reserve

according to the difference between the initial investment cost of long-term equity investment

and the total face value of the issued shares. If the capital reserve is insufficient to offset or

reduce the retained income shall be adjusted;

For merger of entities under different control the merger cost is the fair value of the asset

paid liability undertaken and equity securities issued for exchanging of control power over

the entities at the day of acquisition. Agency expenses and other administrative expenses such

as auditing legal consulting or appraisal services occurred relating to the merger of entities

are accounted into current income account when occurred.* For long-term equity investments acquired through means other than business

combinations the investment cost is determined in accordance with the following provisions:

For long-term equity investment obtained by cash the actually paid consideration is the

initial investment cost. Initial investment costs include expenses taxes and other necessary

47China Fangda Group Co. Ltd. Notes to Financial Statements

expenditures directly related to the acquisition of long-term equity investments;

B. Long-term equity investments acquired from the issuance of interest securities are the

initial investment costs based on the fair value of the issue interest securities;

C. For long-term equity investments obtained through non-monetary asset exchanges if

the exchange has commercial substance and the fair value of the exchanged assets or

exchanged assets can be reliably measured the fair value of the exchanged assets and relevant

taxes shall be used as the initial Investment cost the difference between the fair value and

book value of the swapped-out asset is included in the current profit and loss; if the

non-monetary asset exchange does not meet the above two conditions at the same time the

book value of the swapped-out asset and relevant taxes will be used as the initial investment

cost.D. Long-term equity investments acquired through debt restructuring determine their

recorded value at the fair value of the waived claims and other costs such as taxes directly

attributable to the assets and account for the difference between the fair value and the book

value of the waived claims.

(3) Subsequent measurement and recognition of gain/loss

The Company uses the cost method to measure long-term share equity investment in

which the Company can control the invested entity; and uses the equity method to measure

long-term share equity investment in which the Company has substantial influence on the

invested entity.* Cost method

For the long-term equity investment measured on the cost basis except for the

announced cash dividend or profit included in the practical cost or price when the investment

was made the cash dividends or profit distributed by the invested entity are recognized as

investment gains in the current gain/loss account.* Equitymethod

Gains from long-term equity investment measured by equity

When the equity method is used to measure long-term equity investment the investment

cost will not be adjusted if the investment cost of the long-term equity investment is larger

than the share of fair value of the recognizable assets of the invested entity. When it is smaller

48China Fangda Group Co. Ltd. Notes to Financial Statements

than the share of fair value of the recognizable assets of the invested entity the book value

will be adjusted and the difference is included in the current gains of the investment.When the equity method is used the current investment gain is the share of the net gain

realized in the current year that can be shared or borne recognized as investment gain and

other misc. income. The book value of the long-term equity investment is adjusted

accordingly. The book value of the long-term equity investment should be accordingly

decreased based on the share of profit or cash dividend announced by the invested entity;

according to other changes in the owner's equity except for net profit and loss other misc

income and profit distribution of the invested entity adjust the book value of the long-term

equity investment and record it in the capital surplus (other capital surplus). When the share

of the net gains that can be enjoyed is recognized it is recognized after the net profit of the

invested entity is adjusted based on the fair value of the recognizable assets of the invested

entity according to the Company's accounting policies and accounting period. Where the

accounting policy and accounting period adopted by the Invested unit are inconsistent with

the Company the financial statements of the Invested unit shall be adjusted in accordance

with the accounting policy and accounting period of the Company and the investment income

and other consolidated income shall be recognized. Internal transaction gain not realized

between the Company and affiliates is measured according to the shareholding proportion and

the investment gains is recognized after deduction. The unrealized internal transaction loss

between the Company and the invested entity is the impairment loss of transferred assets and

should not be written off.Where substantial influence on invested entities is imposed or joint control is

implemented due to increase in investment the sum of the fair value of the original equity and

increased investment on the conversion date is the initial investment cost under the equity

method. If the equity investment originally held is classified as other equity instrument

investment the difference between the fair value and the book value as well as the

accumulated gains or losses originally included in other comprehensive income shall be

transferred out of other comprehensive income and included in retained income in the current

period when the equity method is adopted.Where joint control or substantial influence on invested entities is lost due to disposal of

part of investment the remaining equity after the disposal should be treated according to the

Enterprise Accounting Standard No.22 – Recognition and Measurement of Financial

49China Fangda Group Co. Ltd. Notes to Financial Statements

Instruments from the date of losing the joint control or substantial influence. The difference

between the fair value and book value should be accounted the profit and loss of the current

period. For other misc. incomes of original share equity investment determined using the

equity method when the equity method is no longer used it should be treated based on the

same basis of the treatment of related assets or liability of the invested entities; the other

owners' interests related to the original share equity investment should be transferred to

gain/loss of the current period.

(4) Equity investment held for sale

For the remaining equity investments not classified as assets held for sale the equity

method is adopted for accounting treatment.Equity investments classified as held for sale to associates that are no longer eligible to

hold classified assets for sale are retrospectively adjusted using the equity method starting

from the date that they are classified as held for sale. The classification is adjusted to hold the

financial statements for the period to be sold.

(5) Impairment examination and providing of impairment provision

See Note III. 22 for the assets impairment provision method for investment in

subsidiaries and joint ventures.

17. Investment real estate

(1) Classification of investment real estate

Investment real estates are held for rent or capital appreciation or both. These include

inter alia:

* Leased land using right

* the right to use the land that is transferred after holding and preparing for the

increment.* Leased building

(2) Measurement of investment real estate

For investment real estates with an active real estate transaction market and the Company

can obtain market price and other information of same or similar real estates to reasonably

estimate the investment real estates' fair value the Company will use the fair value mode to

50China Fangda Group Co. Ltd. Notes to Financial Statements

measure the investment real estates subsequently. Variations in fair value are accounted into

the current gain/loss account.The fair value of investment real estate is determined with reference to the current

market prices of same or similar real estates in active markets; when no such price is available

with reference to the recent transaction prices and consideration of factors including

transaction background date and district to reasonably estimate the fair value; or based on the

estimated lease gains and present value of related cash flows.For investment real estate under construction (including investment real estate under

construction for the first time) if the fair value cannot be reliably determined but the expected

fair value of the real estate after completion is continuously and reliably obtained the

investment real estate under construction is measured by cost. When the fair value can be

measured reliably or after completion (the earlier one) it is measured at fair value. For an

investment real estate whose fair value is proven unable to be obtained continuously and

reliably by objective evidence the real estate will be measured at cost basis until it is disposed

and no residual value remains as assumed.

18. Fixed assets

Fixed assets is defined as the tangible assets which are held for the purpose of producing

goods providing services lease or for operation & management and have more than one

accounting year of service life.

(1) Recognition conditions

Fixed assets are recognized at the actual cost of acquisition when the following

conditions are met: (1) The economic benefits associated with the fixed assets are likely to

flow into the enterprise.Fixed assets are recognized at the actual cost of acquisition when the following

conditions are met: (1) The economic benefits associated with the fixed assets are likely to

flow into the enterprise.* The cost of the fixed assets can be measured reliably.Overhaul cost generated by regular examination on fixed assets is recognized as fixed

assets costs when there is evidence proving that it meets fix assets recognition conditions. If

not it will be accounted into the current gain/loss account.

51China Fangda Group Co. Ltd. Notes to Financial Statements

(2) Depreciation of fixed assets

The types of investment real estate estimated economic useful life and estimated net

residual value rate are determined as follows:

Type Depreciation Service year Residual rate % Annual depreciationmethod (year) rate %

Houses & buildings Average age 20-50 10.00 1.80-4.50

Mechanical equipment Average age 10.00 10.00 9.00

Transportation facilities Average age 5.00 10.00 18.00

Electronics and other

Average age 5.00 10.00 18.00

devices

PV power plants Average age 20.00 5.00 4.75

For fixed assets for which depreciation provision is made the depreciation rate will be

determined after the accumulative depreciation provision amount is deducted.At end of each fiscal year verification will be made on the useful life predicted retained

value and depreciation basis. The useful life will be adjusted if the useful life is different

from the predicted one; the net residual value will be adjusted if the net residual value is

different from the predicted one.

19. Construction in process

(1) Construction in progress is accounted for by project classification.

(2) Standard and timing for transferring construction in process into fixed assets

The full expenditure incurred on the construction-in-progress project as a fixed asset is

recorded as the value of the asset before the asset is constructed to the intended usable state.This includes construction costs the original cost of equipment other necessary expenditures

incurred in order to enable the construction works to reach the intended usable status and the

borrowing costs incurred for the specific borrowing of the project and the general borrowing

expenses incurred before the assets reach the intended usable status. Construction in process

will be transferred to fixed assets when it reaches the preset service condition. The fixed

assets that have reached the intended usable state but have not been completed shall be

transferred to the fixed assets according to the estimated value according to the estimated

value according to the estimated value according to the project budget cost or actual project

cost etc. The depreciation of the fixed assets shall be accrued according to the Company's

fixed assets depreciation policy. The original estimated value shall be adjusted according to

52China Fangda Group Co. Ltd. Notes to Financial Statements

the actual cost after the completion.

20. Borrowing expenses

(1) Recognition principles for capitalization of borrowing expenses

Borrowing expenses occurred to the Company that can be accounted as purchasing or

production of asset satisfying the conditions of capitalizing are capitalized and accounted as

cost of related asset.* Asset expenditure has occurred;

* Borrowing costs have occurred;

* Purchasing or production activity which is necessary for the asset to reach the useful

status has already started.Other interest on loans discounts or premiums and exchange differences are included in

the income and loss incurred in the current period.If the construction or production of assets satisfying the capitalizing conditions is

suspended abnormally for over 3 months capitalizing of borrowing expenses shall be

suspended. During the normal suspension period borrowing expenses will be capitalized

continuously.When the asset satisfying the capitalizing conditions has reached its usable or sellable

status capitalizing of borrowing expenses shall be terminated.

(2) Calculation of the capitalization amount of borrowing expense

Interest expenses generated by special borrowings less the interests income obtained

from the deposit of unused borrowings or investment gains from temporary investment is

capitalized; the capitalization amount for general borrowing is determined based on the

capitalization rate which is the exceeding part of the accumulative assets expense over

weighted average of the assets expense of the special borrowing/used general borrowing.If the assets that are constructed or produced under the condition of capitalization occupy

the general borrowing the interest amount to be capitalized in the general borrowing shall be

calculated and determined by multiplying the capital rate of the general borrowing by the

weighted average of the asset expenditure of the accumulated assets whose expenditure

exceeds that of the specialized borrowing. The capitalization ratio is the weighted average

53China Fangda Group Co. Ltd. Notes to Financial Statements

interest rate of general borrowings.

21. Intangible assets

(1) Pricing of intangible assets

Recorded at the actual cost of acquisition.

(2) Amortization of intangible assets

* Useful life of intangible assets with limited useful life

Item Estimated usefullife Basis

Land using right Term Use right assets

Trademarks and patents 10 years Reference to determine the lifetime of a company forwhich it can bring economic benefits

Proprietary technology 10 years Reference to determine the lifetime of a company forwhich it can bring economic benefits

Software 5. 10 years Reference to determine the lifetime of a company forwhich it can bring economic benefits

At the end of each year the Company will reexamine the useful life and amortization

basis of intangible assets with limited useful life. Upon review the service life and

amortization methods of intangible assets at the end of the period are not different from those

previously estimated.

(2) Intangible assets which cannot be foreseeable to bring economic benefits to

enterprises shall be regarded as intangible assets whose useful life is uncertain. For intangible

assets with uncertain service life the Company reviews the service life of intangible assets

with uncertain service life at the end of each year. If it is still uncertain after rechecking it

shall conduct an impairment test on the balance sheet date.* Amortization of intangible assets

For intangible assets with finite useful lives the Company determines their useful life

upon acquisition and systematically amortizes them using the straight-line method over their

useful life. The amortization amount is included in the current profit or loss of the benefiting

project or added to the cost of the related asset. The specific amortization amount is the

amount after the cost is deducted from the estimated residual value. For fixed assets for which

depreciation provision is made the depreciation rate will be determined after the

accumulative depreciation provision amount is deducted. The residual value of an intangible

asset with limited useful life is treated as zero except where a third party undertakes to

54China Fangda Group Co. Ltd. Notes to Financial Statements

purchase the intangible asset at the end of its useful life or to obtain expected residual value

information based on the active market which is likely to exist at the end of its useful life.Intangible assets with uncertain service life will not be amortized. At the end of each year

the useful life of intangible assets with uncertain useful life is reviewed and if there is

evidence that the useful life of intangible assets is limited the useful life is estimated and the

system is reasonably amortized within the expected useful life.Specific standard for distinguish between research and development stage

The company takes the information and related preparatory activities for further

development activities as the research stage and the intangible assets expenditure in the

research stage is included in the current profit and loss period.

(2) The development activities carried out after the company has completed the research

stage as the development stage.

(4) Specific conditions for capitalization of expenditures in the development phase

Expenditures in the development phase can be recognized as intangible assets only when

the following conditions are met:

A. It is technically feasible to complete the intangible asset so that it can be used or sold;

B. Have the intention to complete the intangible asset and use or sell it;

C. The way intangible assets generate economic benefits including the ability to prove

that the products produced by the intangible assets exist in the market or the intangible assets

themselves exist in the market and the intangible assets will be used internally which can

prove their usefulness;

D. Have sufficient technical financial and other resource support to complete the

development of the intangible asset and have the ability to use or sell the intangible asset;

E. The expenditure attributable to the development stage of the intangible asset can be

reliably measured.

22. Assets impairment

The Group uses the cost mode to continue measuring the assets impairment to

investment real estate fixed assets construction in progress intangible assets and goodwill

(except for the inventories investment real estate measured by the fair value mode deferred

55China Fangda Group Co. Ltd. Notes to Financial Statements

income tax assets and financial assets). The method is determined as follows:

The Company judges whether there is a sign of impairment to assets on the balance sheet

day. If such sign exists the Company estimates the recoverable amount and conducts the

impairment test. Impairment test is conducted annually for goodwill generated by mergers and

intangible assets that have not reached the useful condition no matter whether the impairment

sign exists.The recoverable amount is determined by the higher of the net of fair value minus

disposal expense and the present value of the predicted future cash flow. The Company

estimates the recoverable amount on the individual asset item basis; whether it is hard to

estimate the recoverable amount on the individual asset item basis determine the recoverable

amount based on the asset group that the assets belong to. The assets group is determined by

whether the main cash flow generated by the Group is independent from those generated by

other assets or assets groups.When the recoverable amount of the assets or assets group is lower than its book value

the Company writes down the book value to the recoverable amount the write-down amount

is accounted into the current income account and the assets impairment provision is made.For goodwill impairment test the book value of goodwill generated by mergers is

amortized through reasonable measures since the purchase day to related asset groups; those

cannot be amortized to related assets groups are amortized to related combination of asset

groups. The related asset groups or combination of asset groups refer to those that can benefit

from the synergistic effect of mergers and must not exceed to the reporting range determined

by the Company.When the impairment test is conducted if there is sign of impairment to the asset group

or combination of asset groups related to goodwill first perform impair test for asset group or

combination of asset groups without goodwill and calculate the recoverable amount and

recognize the related impairment loss. Then conduct impairment test on those with goodwill

compare the book value with recoverable amount. If the recoverable amount is lower than the

book value recognize the impairment loss of the goodwill.Once recognized the asset impairment loss cannot be written back in subsequent

accounting period.

23. Long-term amortizable expenses

56China Fangda Group Co. Ltd. Notes to Financial Statements

The long-term deferred expenses shall be used to calculate the expenses that have

occurred but should be borne by the Company in the current and subsequent periods with a

amortization period of more than one year. The Company's long-term deferred expenses are

amortized averagely during the benefit period.

24. Staff remuneration

Staff remuneration is the compensation paid by the employer to the staff for the services

they provide or for termination of the working relationship. Staff remuneration includes

short-term remuneration and post-employment welfare. The benefits provided by the

Company to the spouses children dependants survivors and other beneficiaries of the staff

are also the remuneration of the staff.According to liquidity employee compensation is listed in the "employee compensation

payable" and "long-term employee compensation payable" items of the balance sheet

respectively.

(1) Accounting of operational leasing

* Basic salary of employees (salary bonus allowance subsidy)

In the accounting period for which the staff and workers provide services the Company

shall confirm the actual short-term remuneration as liabilities and shall account for the current

income and loss except as required or permitted by other accounting standards.* Employee welfare

The employee benefits incurred by the Company shall be included in the current profit

and loss or related asset costs according to the actual amount incurred. Where the employee's

benefit is non-monetary it shall be measured on the basis of fair value.* Social insurance premiums and housing accumulation funds such as health insurance

premiums work injury premiums birth insurance premiums trade union funds and staff and

education funds

The Company pays the medical insurance premiums work injury insurance premiums

birth insurance premiums etc. social insurance premiums and housing accumulation funds for

the staff and workers as well as the union funds and the staff and workers education funds

according to the regulations in the accounting period for which the staff and workers provide

57China Fangda Group Co. Ltd. Notes to Financial Statements

services the corresponding salary amount of the staff and workers and confirms the

corresponding liabilities which are included in the current profit and loss or related asset

costs.* Short-term paid leave

The Company accumulates the salary of the employees who are absent from work with

pay when the employees provide service thus increasing their future right of absence with pay.The Company confirms the salary of the employee related to the absence of non-cumulative

salary during the actual absence accounting period.* Short-term profit share program

If the profit-sharing plan meets the following conditions at the same time the Company

shall confirm the salary payable to the staff and workers:

A. The legal or presumptive obligation of the enterprise to pay the remuneration of its

employees as a result of past matters;

B. The amount of employee compensation obligations due to the profit sharing plan can

be reliably estimated.

(2) Accounting of post-employment welfare

The Company's post-employment benefit plan is defined contribution plan. Defined

contribution plans include basic endowment insurance unemployment insurance etc. During

the accounting period when employees provide services for them the Company shall

recognize the deposit amount calculated according to the defined deposit plan as liabilities

and include it in the current profits and losses or related asset costs.

(3) Accounting of dismiss welfare

If the Company provides termination benefits to employees the employee compensation

liabilities arising from the termination benefits shall be recognized at the earliest of the

following two and shall be included in the current profit and loss:

(1) An enterprise may not unilaterally withdraw the resignation benefits provided for by

the dismissal plan or reduction proposal;

(2) When the enterprise recognizes the costs or expenses related to the reorganization

involving the payment of resignation benefits.

58China Fangda Group Co. Ltd. Notes to Financial Statements

25. Anticipated liabilities

(1) Recognition standards of anticipated liabilities

When responsibilities occurred in connection to contingent issues and all of the

following conditions are satisfied they are recognized as expectable liability in the balance

sheet:

* This responsibility is a current responsibility undertaken by the Company;

* Execution of this responsibility may cause financial benefit outflow from the

Company;

* Amount of the liability can be reliably measured.

(2) Measurement of anticipated liabilities

Expected liabilities are initially measured at the best estimation on the expenses to

exercise the current responsibility and with considerations to the relative risks uncertainty

and periodic value of currency. On each balance sheet date review the book value of the

estimated liabilities. Where there is conclusive evidence that the book value does not reflect

the current best estimate the book value is adjusted to the current best estimate.

26. Revenue the principle of revenue recognition and measurement methods

(1) General principles

Income is the total inflow of economic benefits formed in the daily activities of the

Company which will lead to the increase of shareholders' equity and has nothing to do with

the capital invested by shareholders.The Company has fulfilled the performance obligation in the contract that is the

revenue is recognized when the customer obtains the control right of relevant goods. To

obtain the control right of the relevant commodity means to be able to dominate the use of the

commodity and obtain almost all the economic benefits from it.If there are two or more performance obligations in the contract the Company will

allocate the transaction price to each single performance obligation according to the relative

proportion of the separate selling price of the goods or services promised by each single

performance obligation on the start date of the contract and measure the income according to

the transaction price allocated to each single performance obligation.

59China Fangda Group Co. Ltd. Notes to Financial Statements

The transaction price refers to the amount of consideration that the Company is expected

to be entitled to receive due to the transfer of goods or services to customers excluding the

amount collected on behalf of a third party. When determining the contract transaction price

if there is a variable consideration the Company shall determine the best estimate of the

variable consideration according to the expected value or the most likely amount and include

it in the transaction price with the amount not exceeding the accumulated recognized income

when the relevant uncertainty is eliminated which is most likely not to have a significant

reversal. If there is a significant financing component in the contract the Company will

determine the transaction price according to the amount payable in cash when the customer

obtains the control right of the commodity. The difference between the transaction price and

the contract consideration will be amortized by the effective interest method during the

contract period. If the interval between the control right transfer and the customer's payment

is less than one year the Company will not consider the financing component Points.If one of the following conditions is met the performance obligation shall be performed

within a certain period of time; otherwise the performance obligation shall be performed at a

certain point of time:

* When the customer performs the contract in the Company he obtains and consumes

the economic benefits brought by the Company's performance;

* Customers can control the goods under construction during the performance of the

contract;

* The goods produced by the Company in the process of performance have

irreplaceable uses and the Company has the right to collect money for the performance part

that has been completed so far during the whole contract period.For the performance obligations performed within a certain period of time the Company

shall recognize the revenue according to the performance progress within that period except

that the performance progress cannot be reasonably determined. The Company determines the

progress of performance for the provision of services on the basis of the input (or output)

method. When the progress of performance cannot be reasonably determined if the cost

incurred by the Company is expected to be compensated the revenue shall be recognized

according to the amount of cost incurred until the progress of performance can be reasonably

determined.

60China Fangda Group Co. Ltd. Notes to Financial Statements

For the performance obligation performed at a certain time point the Company

recognizes the revenue at the time point when the customer obtains the control right of

relevant goods. In determining whether a customer has acquired control of goods or services

the Company will consider the following signs:

* The Company has the right to receive payment for the goods or services that is the

customer has the obligation to pay for the goods;

* The Company has transferred the legal ownership of the goods to the customer that

is the customer has the legal ownership of the goods;

* The Company has transferred the goods in kind to the customer that is the customer

has possessed the goods in kind;

* The Company has transferred the main risks and rewards of the ownership of the

goods to the customer that is the customer has obtained the main risks and rewards of the

ownership of the goods;

* The product has been accepted by the customer.Sales return clause

For the sales with sales return clauses when the customer obtains the control right of the

relevant goods the Company shall recognize the revenue according to the amount of

consideration it is entitled to obtain due to the transfer of the goods to the customer and

recognize the amount expected to be returned due to the sales return as the estimated liability;

at the same time the Company shall deduct the estimated cost of recovering the goods

according to the book value of the expected returned goods at the time of transfer( The

balance after deducting the value of the returned goods is recognized as an asset that is the

cost of return receivable which is carried forward by deducting the net cost of the above

assets according to the book value of the transferred goods at the time of transfer. On each

balance sheet date the Company re estimates the return of future sales and re measures the

above assets and liabilities.Warranty obligations

According to the contract and legal provisions the Company provides quality assurance

for the goods sold and the projects constructed. For the guarantee quality assurance to ensure

61China Fangda Group Co. Ltd. Notes to Financial Statements

that the goods sold meet the established standards the Company conducts accounting

treatment in accordance with the accounting standards for Business Enterprises No. 13 -

contingencies. For the service quality assurance which provides a separate service in addition

to guaranteeing that the goods sold meet the established standards the Company takes it as a

single performance obligation allocates part of the transaction price to the service quality

assurance according to the relative proportion of the separate selling price of the goods and

service quality assurance and recognizes the revenue when the customer obtains the service

control right. When evaluating whether the quality assurance provides a separate service in

addition to assuring customers that the goods sold meet the established standards the

Company considers whether the quality assurance is a statutory requirement the quality

assurance period and the nature of the Company's commitment to perform the task.Customer consideration payable

If there is consideration payable to the customer in the contract unless the consideration

is to obtain other clearly distinguishable goods or services from the customer the Company

will offset the transaction price with the consideration payable and offset the current income

at the later time of confirming the relevant income or paying (or promising to pay) the

customer's consideration.Contractual rights not exercised by customers

If the Company advances sales of goods or services to customers the amount shall be

recognized as liabilities first and then converted into income when relevant performance

obligations are fulfilled. When the Company does not need to return the advance payment and

the customer may give up all or part of the contract rights if the Company expects to have the

right to obtain the amount related to the contract rights given up by the customer the above

amount shall be recognized as income in proportion according to the mode of the customer

exercising the contract rights; otherwise the Company only has the very low possibility of the

customer requiring to perform the remaining performance obligations The relevant balance of

the above liabilities is converted into income.Contract change

When the construction contract between the Company and the customer is changed:

* If the contract change increases the clearly distinguishable construction service and

contract price and the new contract price reflects the separate price of the new construction

62China Fangda Group Co. Ltd. Notes to Financial Statements

service the Company will treat the contract change as a separate contract for accounting;

* If the contract change does not belong to the above-mentioned situation (1) and there

is a clear distinction between the transferred construction service and the non transferred

construction service on the date of contract change the Company will regard it as the

termination of the original contract and at the same time combine the non performance part

of the original contract and the contract change part into a new contract for accounting

treatment;

* If the contract change does not belong to the above situation (1) and there is no clear distinction

between the transferred construction services and the non transferred construction services on the date of

contract change the Company will take the contract change part as an integral part of the original contract

for accounting treatment and the resulting impact on the recognized income will be adjusted to the current

income on the date of contract change.

(2) Specific methods

The specific methods of revenue recognition of the Company are as follows:

* Commodity sales contract

The commodity sales contract between the company and the customer includes the

performance obligation of transferring curtain wall materials screen door materials electric

energy etc. which belongs to the performance obligation at a certain time point.Revenue from domestic sales of products is recognized at the time when the customer

obtains the right of control of the goods on the basis of comprehensive consideration of the

following factors: the Company has delivered the products to the customer according to the

contract the customer has accepted the goods the payment for goods has been recovered or

the receipt has been obtained and the relevant economic benefits are likely to flow in the

main risks and rewards of the ownership of the goods have been transferred the legal

ownership has been transferred;

The following conditions should be met for the recognition of export product revenue:

the Company has declared the product according to the contract obtained the bill of lading

collected the payment for goods or obtained the receipt certificate and the relevant economic

benefits are likely to flow in the main risks and rewards of the ownership of goods have been

transferred and the legal ownership of goods has been transferred.

63China Fangda Group Co. Ltd. Notes to Financial Statements

* Service contract

The service contract between the Company and its customers includes the performance

obligations of metro platform screen door operation maintenance curtain wall maintenance

and property services. As the Company's performance at the same time the customers obtain

and consume the economic benefits brought by the Company's performance the Company

takes it as the performance obligation within a certain period of time and allocates it equally

during the service provision period.* Engineering contract

The project contract between the Company and the customer includes the performance

obligations of curtain wall project and metro platform screen door project construction. As the

customer can control the goods under construction in the process of the Company's

performance the Company takes them as the performance obligations within a certain period

of time and recognizes the income according to the performance progress except that the

performance progress cannot be reasonably determined. The Company determines the

performance schedule of providing construction services according to the input method. The

performance schedule shall be determined according to the proportion of the actual contract

cost to the estimated total contract cost.* Real estate sales contract

The income of the Company's real estate development business is recognized when the

control of the property is transferred to the customer. The income is recognized when the

customer obtains the physical ownership or legal ownership of the completed property and the

Company has obtained the current right of collection and is likely to recover the consideration.When confirming the contract transaction price if the financing component is significant the

Company will adjust the contract commitment consideration according to the financing

component of the contract.

27. Government subsidy

(1) Government subsidy

Government subsidies are recognized when the following conditions are met:

* Requirements attached to government subsidies;

64China Fangda Group Co. Ltd. Notes to Financial Statements

* The company can receive government subsidies.

(2) Government subsidy

When a government subsidy is monetary capital it is measured at the received or

receivable amount. None monetary capital are measured at fair value; if no reliable fair value

available recognized at RMB1.

(3) Recognition of government subsidies

* Assets-related

Government subsidies related to assets are obtained by the Company to purchase build

or formulate in other manners long-term assets; or subsidies related to benefits. If the

asset-related government subsidy is recognized as deferred gain should be recorded in gain

and loss in the service life. Government subsidy measured at the nominal amount is accounted

into current income account. If the relevant assets are sold transferred scrapped or damaged

before the end of their useful life the unallocated relevant deferred income balance shall be

transferred to the profit and loss of the current period of disposition of the assets.* Gain-related government subsidy should be accounted as follows:

The Company divides government subsidies into assets-related and earnings-related

government subsidies. Gain-related government subsidy should be accounted as follows:

Subsidy that will be used to compensate related future costs or losses should be

recognized as deferred gain and recorded in the gain and loss of the current report and offset

related cost;

Subsidy that is used to compensate existing cost or loss should be recorded in the gain

and loss of the current period or offset related cost.For government subsidies that include both asset-related and income-related parts

separate different parts for accounting treatment; It is difficult to distinguish between the

overall classification of government subsidies related to benefits.Government subsidy related to routine operations should be recorded in other gains or

offset related cost. Government subsidy not related to routine operations should be recorded

in non-operating income or expense.* Policy preferential loan discount

65China Fangda Group Co. Ltd. Notes to Financial Statements

The policy-based preferential loan obtained has interest subsidy. If the government

allocates the interest-subsidy funds to the lending bank the loan amount actually received will

be used as the entry value of the loan and the borrowing cost will be calculated based on the

loan principal and policy-based preferential interest rate.If the government allocates the interest-bearing funds directly to the Group discount

interest will offset the borrowing costs.* Government subsidy refund

When a confirmed government subsidy needs to be returned the book value of the asset

is adjusted against the book value of the relevant asset at initial recognition. If there is a

related deferred income balance the book balance of the related deferred income is written off

and the excess is credited to the current profit or loss; In other cases it is directly included in

the current profit and loss.

28. Differed income tax assets and differed income tax liabilities

The Company uses the temporary difference between the book value of the assets and

liabilities on the balance sheet day and the tax base and the liabilities method to recognize the

deferred income tax. 26. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets

For deductible temporary discrepancies deductible losses and tax offsets that can be

carried forward for future years the impact on income tax is calculated at the estimated

income tax rate for the transfer-back period and the impact is recognized as deferred income

tax assets provided that the Company is likely to obtain future taxable income for deductible

temporary discrepancies deductible losses and tax offsets.At the same time the impact on income tax of deductible temporary discrepancies

resulting from the initial recognition of assets or liabilities in transactions or matters with the

following characteristics is inconclusive as deferred income tax assets:

A. The transaction is not a business combination;

B. the transaction is not a merger and the transaction does not affect the accounting profit

or taxable proceeds;

However for individual transactions that simultaneously meet the above two conditions

66China Fangda Group Co. Ltd. Notes to Financial Statements

and result in equal taxable temporary differences and deductible temporary differences upon

initial recognition of assets and liabilities the exemption from initial recognition of deferred

tax liabilities and deferred tax assets does not apply. For taxable temporary differences and

deductible temporary differences arising from the initial recognition of assets and liabilities in

such transactions the Company recognizes the corresponding deferred tax liabilities and

deferred tax assets at the time of the transaction.In the event of temporary discrepancy of deductible investment related to subsidiaries

joint ventures and joint ventures and meeting the following two conditions the amount of

impact (talent) on income tax shall be deemed as deferred income tax assets:

A. Temporary discrepancies are likely to be reversed in the foreseeable future;

B. In the future it is likely to obtain taxable income that can be used to offset the

deductible temporary differences;

On the balance sheet date if there is conclusive evidence that sufficient taxable income

is likely to be obtained in the future to offset the deductible temporary differences the

deferred income tax assets that have not been recognized in the previous period are

recognized.On the balance sheet day the Company re-examines the book value of the deferred

income tax assets. If it is unlikely to have adequate taxable proceeds to reduce the benefits of

the deferred income tax assets less the deferred income tax assets' book value. When there is

adequate taxable proceeds the lessened amount will be reversed.

(2) Deferred income tax assets

All provisional differences in taxable income of the Company shall be measured on the

basis of the estimated income tax rate for the period of transfer-back and shall be recognized

as deferred income tax liabilities except that:

At the same time the impact on income tax of deductible temporary discrepancies

resulting the initial recognition of assets or liabilities in transactions or matters with the

following characteristics is inconclusive as deferred income tax Liabilities:

A. Initial recognition of goodwill;

B. Initial recognition of goodwill or of assets or liabilities generated in transactions with

the following features: the transaction is not a merger and the transaction does not affect the

67China Fangda Group Co. Ltd. Notes to Financial Statements

accounting profit or taxable proceeds;

* In the event of temporary discrepancy of deductible investment related to subsidiaries

Joint venture joint ventures and meeting the two conditions the amount of impact (talent) on

income tax shall be deemed as deferred income tax assets:

A. The Company is able to control the time of temporary discrepancy transfers;

B Temporary discrepancies are likely to be reversed in the foreseeable future;

(3) Deferred income tax assets

(1) Deferred income tax liabilities or assets associated with enterprise consolidation

Temporary difference of taxable tax or deductible temporary difference generated by

enterprise merger under non-same control. When deferred income tax liability or deferred

income tax asset is recognized related deferred income tax expense (or income) is usually

adjusted as recognized goodwill in enterprise merger.* Amount of shares paid and accounted as owners' equity

Except for the adjustment goodwill generated by mergers or deferred income tax related

to transactions or events directly accounted into the owners' equity income tax is accounted

as income tax expense into the current gain/loss account. The effects of temporary

discrepancy on income tax include the following: Other integrated benefits such as fair value

change of financial assets available for sale retroactive adjustment of accounting policy

changes or retroactive restatement of accounting error correction discrepancy to adjust the

initial retained income and mixed financial instruments including liabilities and equity.

(3) Compensation for losses and tax deductions

A. Compensable losses and tax deductions from the Company's own operations

Deductible losses refer to the losses calculated and determined in accordance with the

provisions of the tax law that are allowed to be made up with the taxable income of

subsequent years. The uncovered losses (deductible losses) and tax deductions that can be

carried forward in accordance with the tax law are treated as deductible temporary differences.When it is expected that sufficient taxable income is likely to be obtained in the future period

when it is expected to be available to make up for losses or tax deductions the corresponding

deferred income tax assets are recognized within the limit of the taxable income that is likely

68China Fangda Group Co. Ltd. Notes to Financial Statements

to be obtained while reducing the current period Income tax expense in the income statement.B. Compensable uncovered losses of the merged company due to business merger

In a business combination if the Company obtains the deductible temporary difference

of the purchased party and does not meet the deferred income tax asset recognition conditions

on the purchase date it shall not be recognized. Within 12 months after the purchase date if

new or further information is obtained indicating that the relevant conditions on the purchase

date already exist and the economic benefits brought about by the temporary difference are

expected to be deducted on the purchase date confirm the relevant delivery. Deferred income

tax assets while reducing goodwill if the goodwill is not enough to offset the difference is

recognized as the current profit and loss; except for the above circumstances the deferred tax

assets related to the business combination are recognized and included in the current profit

and loss.* Temporary difference caused by merger offset

If there is a temporary difference between the book value of assets and liabilities in the

consolidated balance sheet and the taxable basis of the taxpayer due to the offset of the

unrealized internal sales gain or loss the deferred income tax asset or the deferred income tax

liability is confirmed in the consolidated balance sheet and the income tax expense in the

consolidated profit statement is adjusted with the exception of the deferred income tax related

to the transaction or event directly included in the owner's equity and the merger of the

enterprise.* Share payment settled by equity

If the tax law provides for allowable per-tax deduction of expenses related to share

payment within the period for which the cost and expense are recognized in accordance with

the accounting standards the Company shall calculate the tax basis and temporary

discrepancy based on the estimated per-tax deduction amount at the end of the accounting

period and confirm the relevant deferred income tax if it meets the conditions for

confirmation. Of these the amount that can be deducted before tax in the future exceeds the

cost related to share payment recognized in accordance with the accounting standards and the

excess income tax shall be directly included in the owner's equity.* Dividends related to financial instruments classified as equity instruments

69China Fangda Group Co. Ltd. Notes to Financial Statements

For financial instruments classified as equity instruments where the Company is the

issuer any dividend expenditure that is deductible for corporate income tax purposes

according to tax policy is recognized for its income tax impact when the dividends payable

are recognized. If the distributed profits originate from transactions or events previously

affecting profit or loss the income tax impact of such dividends is included in the current

profit or loss. If the distributed profits originate from transactions or events previously

recognized in equity the income tax impact of such dividends is included in equity items.

(4) Basis for presentation of deferred tax assets and deferred tax liabilities on a net

basis

The deferred income tax assets and deferred income tax liabilities of the company are

presented as a net amount after offsetting when the following conditions are met

simultaneously:

* The Company has a legal right to offset current income tax assets against current

income tax liabilities on a net basis;

* Deferred income tax assets and deferred income tax liabilities relate either to income

taxes levied by the same tax authority on the same taxable entity or to different taxable

entities provided that in each material future period when these deferred tax assets and

liabilities are expected to reverse the entities involved intend either to settle current income

tax assets and liabilities on a net basis or to realize the assets and settle the liabilities

simultaneously.

29. Lease

(1) Identification of lease

On the commencement date of the contract the company evaluates whether the contract

is a lease or includes a lease. If one party in the contract transfers the right to control the use

of one or more identified assets within a certain period in exchange for consideration the

contract is a lease or includes a lease. In order to determine whether the contract transfers the

right to control the use of the identified assets within a certain period the company evaluates

whether the customers in the contract have the right to obtain almost all the economic benefits

arising from the use of the identified assets during the use period and have the right to

dominate the use of the identified assets during the use period.

70China Fangda Group Co. Ltd. Notes to Financial Statements

(2) Separate identification of lease

If the contract includes multiple separate leases at the same time the company will split

the contract and conduct accounting treatment for each separate lease. If the following

conditions are met at the same time the right to use the identified asset constitutes a separate

lease in the contract: * the lessee can profit from using the asset alone or together with

other easily available resources; * The asset is not highly dependent or highly related to

other assets in the contract.

(3) Accounting treatment method of the Company as lessee

On the beginning date of the lease term the Company recognizes the lease with a lease

term of no more than 12 months and excluding the purchase option as a short-term lease;

When a single leased asset is a brand-new asset the lease with lower value is recognized as a

low value asset lease. If the Company sublets or expects to sublet the leased assets the

original lease is not recognized as a low value asset lease.For all short-term leases and low value asset leases the Company will record the lease

payment amount into the relevant asset cost or current profit and loss according to the

straight-line method (or other systematic and reasonable methods) in each period of the lease

term.In addition to the above short-term leases and low value asset leases with simplified

treatment the Company recognizes the right to use assets and lease liabilities for the lease on

the beginning date of the lease term.* Use right assets

The term "right to use assets" refers to the right of the lessee to use the leased assets

during the lease term.At the beginning of the lease term the right of use assets are initially measured at cost.This cost includes:

* The initial measurement amount of lease liabilities;

* For the lease payment paid on or before the beginning of the lease term if there is

lease incentive the relevant amount of lease incentive enjoyed shall be deducted;

* Initial direct expenses incurred by the lessee;

71China Fangda Group Co. Ltd. Notes to Financial Statements

* The estimated cost incurred by the lessee for dismantling and removing the leased

assets restoring the site where the leased assets are located or restoring the leased

assets to the state agreed in the lease terms. The Company recognizes and measures

the cost according to the recognition standard and measurement method of estimated

liabilities. See Note III 25 for details. If the above costs are incurred for the

production of inventories they will be included in the cost of inventories.Depreciation of right of use assets is accrued by using the straight-line method. If it can

be reasonably determined that the ownership of the leased asset will be obtained at the

expiration of the lease term the depreciation rate shall be determined according to the asset

category of the right to use and the estimated net residual value rate within the expected

remaining service life of the leased asset; If it is impossible to reasonably determine that the

ownership of the leased asset will be obtained at the expiration of the lease term the

depreciation rate shall be determined according to the asset category of the right of use within

the shorter of the lease term and the remaining service life of the leased asset.* Lease liabilities

The lease liabilities are initially measured Company shall according to the present value

of the unpaid lease payments at the beginning of the lease term. The lease payment includes

the following five items:

* Fixed payment amount and substantial fixed payment amount. If there is lease

incentive the relevant amount of lease incentive shall be deducted;

* Variable lease payments depending on index or ratio;

* The exercise price of the purchase option provided that the lessee reasonably

determines that the option will be exercised;

* The amount to be paid for exercising the option to terminate the lease provided that

the lease term reflects that the lessee will exercise the option to terminate the lease;

* The amount expected to be paid according to the residual value of the guarantee

provided by the lessee.When calculating the present value of lease payments the implicit interest rate of the

lease is used as the discount rate. If the implicit interest rate of the lease cannot be determined

72China Fangda Group Co. Ltd. Notes to Financial Statements

the incremental borrowing interest rate of the company is used as the discount rate. The

difference between the lease payment amount and its present value is regarded as

unrecognized financing expenses and the interest expenses are recognized according to the

discount rate of the present value of the lease payment amount during each period of the lease

term and included in the current profit and loss. The amount of variable lease payments not

included in the measurement of lease liabilities shall be included in the current profit and loss

when actually incurred.After the beginning date of the lease term when the actual fixed payment amount

changes the expected payable amount of the guaranteed residual value changes the index or

ratio used to determine the lease payment amount changes the evaluation results or actual

exercise of the purchase option renewal option or termination option changes the Company

remeasures the lease liability according to the present value of the changed lease payment

amount And adjust the book value of the right to use assets accordingly.

(4) Accounting treatment method of the Company as lessor

On the lease commencement date the Company classifies leases that have substantially

transferred almost all the risks and rewards related to the ownership of the leased assets as

financial leases and all other leases are operating leases.Operating lease

During each period of the lease term the Company recognizes the lease receipts as rental

income according to the straight-line method and the initial direct expenses incurred are

capitalized amortized on the same basis as the recognition of rental income and included in

the current profit and loss by stages. The variable lease payments obtained by the Company

related to operating leases that are not included in the lease receipts are included in the current

profits and losses when actually incurred.Finance lease

On the lease beginning date the Company recognizes the financial lease receivables

according to the net amount of the lease investment (the sum of the unsecured residual value

and the present value of the lease receipts not received on the lease beginning date discounted

according to the lease embedded interest rate) and terminates the recognition of the financial

lease assets. During each period of the lease term the Company calculates and recognizes the

interest income according to the interest rate embedded in the lease.

73China Fangda Group Co. Ltd. Notes to Financial Statements

The amount of variable lease payments obtained by the Company that are not included in

the measurement of net lease investment shall be included in the current profit and loss when

actually incurred.

(5) Accounting treatment of lease change

* Change of lease as a separate lease

If the lease changes and meets the following conditions at the same time the Company

will treat the lease change as a separate lease for accounting: a. the lease change expands the

lease scope by increasing the use right of one or more leased assets; B. The increased

consideration is equivalent to the amount adjusted according to the conditions of the contract

at the separate price for most of the expansion of the lease scope.* The lease change is not treated as a separate lease

A. The Company as lessee

On the effective date of the lease change the Company reconfirmed the lease term and

discounted the changed lease payment at the revised discount rate to re-measure the lease

liability. When calculating the present value of the lease payment after the change the implicit

interest rate of the lease during the remaining lease period shall be used as the discount rate; If

it is impossible to determine the implicit interest rate of the lease for the remaining lease

period the incremental loan interest rate on the effective date of the lease change shall be

used as the discount rate.The impact of the above lease liability adjustment shall be accounted for according to the

following circumstances:

* If the lease scope is reduced or the lease term is shortened due to the lease change

the book value of the right to use assets shall be reduced and the relevant gains or

losses of partial or complete termination of the lease shall be included in the current

profits and losses;

* For other lease changes the book value of the right to use assets shall be adjusted

accordingly.The Company as leasor

If the operating lease is changed the Company will treat it as a new lease for accounting

74China Fangda Group Co. Ltd. Notes to Financial Statements

from the effective date of the change and the amount of lease receipts received in advance or

receivable related to the lease before the change is regarded as the amount of new lease

receipts.If the change of financial lease is not accounted for as a separate lease the Company will

deal with the changed lease under the following circumstances: if the change of lease takes

effect on the lease commencement date and the lease will be classified as an operating lease

the Company will account for it as a new lease from the effective date of lease change and

take the net lease investment before the effective date of lease change as the book value of

leased assets; If the lease change takes effect on the lease commencement date the lease will

be classified as a financial lease and the Company will conduct accounting treatment in

accordance with the provisions on modifying or renegotiating the contract.

(6) Sale and lease-back

The company evaluates and determines whether the asset transfer in the sale and

leaseback transaction is a sale in accordance with the provisions of Note III 26.* The Company as seller (lessee)

If the asset transfer in the sale and leaseback transaction does not belong to sales the

Company will continue to recognize the transferred asset recognize a financial liability equal

to the transfer income and conduct accounting treatment for the financial liability in

accordance with Note III 11. If the asset transfer belongs to sales the Company measures the

right to use assets formed by sale and leaseback according to the part of the book value of the

original assets related to the right to use obtained by leaseback and only recognizes the

relevant gains or losses on the rights transferred to the lessor.* The Company as buyer (lessor)

If the asset transfer in the sale and leaseback transaction is not sales the company does

not recognize the transferred asset but recognizes a financial asset equal to the transfer

income and carries out accounting treatment for the financial asset in accordance with Note

III 11. If the asset transfer belongs to sales the Company shall conduct accounting treatment

for asset purchase and asset lease in accordance with other applicable accounting standards

for business enterprises.

30. Accounting of hedging

75China Fangda Group Co. Ltd. Notes to Financial Statements

(1) Classification of inventories

The Company divides its hedging strategies into fair value hedges cash flow hedges and

net investment hedges.* Fair value hedge. It refers to hedging activities conducted to mitigate the risk of

changes in the fair value of recognized assets or liabilities unrecognized firm commitments

or components of the aforementioned items. The fair value changes are caused by specific

risks that will impact the Company's profit or other comprehensive income.* Cash flow hedging refers to the hedging of cash flow risk. The change in cash flow is

derived from specific risks associated with recognized assets or liabilities expected

transactions that are likely to occur or with respect to the components of the above-mentioned

project and will affect the profits and losses of the enterprise.* Net investment hedge for overseas operations refers to hedging activities conducted

to mitigate the foreign exchange risk exposure of the net investment in overseas operations.The hedged risk in the net investment hedge is the translation difference between the

functional currency of the overseas operations and the reporting currency of the parent

company.

(2) Hedging tools and hedged projects

Hedging means a financial instrument designated by the Company for the purpose of

hedging whose fair value or cash flow variation is expected to offset the fair value or cash

flow variation of the hedged item including:

* Financial liabilities measured at fair value with variations accounted into current

income account Check-out options can only be used as a hedging tool if the option is hedged

including those embedded in a hybrid contract. Derivatives embedded in a hybrid contract but

not split cannot be used as separate hedging tools.* Non-derivative financial assets or non-derivative financial liabilities that are

measured at fair value and whose changes are included in the current profit and loss but

designated as fair value and whose changes are included in the current profit and loss and

their own credit risk changes caused by changes in fair value except for financial liabilities

included in other comprehensive income.

76China Fangda Group Co. Ltd. Notes to Financial Statements

Own equity instruments are not financial assets or financial liabilities and cannot be used

as hedging instruments.A hedged item refers to an item that exposes the Company to the risk of changes in fair

value or cash flow and is designated as the hedged object and can be reliably measured. The

Company designates the following individual projects project portfolios or their components

as hedged projects:

* Confirmed assets or liabilities.* Confirmed commitments that have not yet been confirmed. Confirmed commitment

refers to a legally binding agreement to exchange a specific amount of resources at an agreed

price on a specific date or period in the future.* Expected transactions that are likely to occur. Anticipated transactions refer to

transactions that have not yet been committed but are expected to occur.* Net investment in overseas operations.The above-mentioned project components refer to the parts that are less than the overall

fair value or cash flow changes of the project. The Company designates the following project

components or their combinations as hedged items:

* The part of the change in fair value or cash flow (risk component) that is only caused

by one or more specific risks in the overall fair value or cash flow changes of the project.According to the assessment in a specific market environment the risk component should be

able to be individually identified and reliably measured. The risk component also includes the

part where the fair value or cash flow of the hedged item changes only above or below a

specific price or other variables.* One or more selected contractual cash flows.* The component of the nominal amount of the project that is the specific part of the

whole amount or quantity of the project may be a certain proportion of the whole project or

may be a certain level of the whole project. If a certain level includes early repayment rights

and the fair value of the early repayment rights is affected by changes in the risk of the hedge

the level shall not be designated as the hedged item of the fair value hedge but in the

measurement of the hedged item except when the fair value has included the influence of the

77China Fangda Group Co. Ltd. Notes to Financial Statements

prepayment right.

(3) Evaluation of hedging relationship

When the hedging relationship is initially specified the Group officially specifies the

related hedging relationships with official documents recording the hedging relationships risk

management targets and hedging strategies. This document sets out the hedging tools hedged

items the nature of hedged risks and the Company's assessment of hedged effectiveness.Hedging means a financial instrument designated by the Company for the purpose of hedging

whose fair value or cash flow variation is offset the fair value or cash flow variation of the

hedged item including: Such hedges are continuously evaluated on and after the initial

specified date to meet the requirements for hedging validity.If the hedging instrument has expired been sold the contract is terminated or exercised

(but the extension or replacement as part of the hedging strategy is not treated as expired or

contract termination) or the risk management objective changes resulting in hedging The

relationship no longer meets the risk management objectives or the economic relationship

between the hedged item and the hedging instrument no longer exists or the impact of credit

risk begins to dominate in the value changes caused by the economic relationship between the

hedged item and the hedging instrument or when the hedge no longer meets the other

conditions of the hedge accounting method the Company terminates the use of hedge

accounting.If the hedging relationship no longer meets the requirements for hedging effectiveness

due to the hedging ratio but the risk management objective of the designated hedging

relationship has not changed the Company shall rebalance the hedging relationship.

(4) Revenue the of revenue recognition and measurement

If the conditions for applying hedge accounting method are met it shall be handled

according to the following methods:

* Fair value hedging

Gains or losses arising from hedging instruments are recognized in the current period's

income statement. If the hedging is conducted for specified non-derivative equity investments

(or components thereof) measured at fair value with changes in fair value recognized in other

comprehensive income gains or losses from the hedging instruments are recognized in other

78China Fangda Group Co. Ltd. Notes to Financial Statements

comprehensive income. Gains or losses arising from the hedged items due to the hedging risk

exposure are recognized in the income statement. At the same time the carrying amount of

the designated hedged items that are not measured at fair value is adjusted. If the hedged item

is a specified non-derivative equity investment (or component thereof) measured at fair value

with changes in fair value recognized in other comprehensive income gains or losses

resulting from the hedging risk exposure are recognized in other comprehensive income and

the carrying amount of the hedged item has already been measured at fair value and does not

require adjustment.Regarding fair value hedges related to financial instruments (or components thereof)

measured at amortized cost any adjustments made to the carrying amount of the hedged item

are amortized using the effective interest rate recalculated from the date of the

commencement of amortization and recognized in the income statement. The amortization

date for adjustments should begin from the adjustment date and should not be later than the

point at which hedging gains and losses are adjusted upon termination of the hedged item. For

hedged items that are financial assets (or components thereof) measured at fair value with

changes in fair value recognized in other comprehensive income the accumulated hedging

gains or losses should be amortized in the same manner and recognized in the income

statement. However the carrying amount of the financial assets (or components thereof)

should not be adjusted.For hedged items that are unrecognized firm commitments (or components thereof) the

cumulative fair value changes caused by the hedging risk after the hedging relationship is

designated should be recognized as an asset or liability. The related gains or losses should be

recognized in the income statement. When fulfilling a firm commitment and acquiring an

asset or assuming a liability the initial recognized amount of the asset or liability should be

adjusted to include the cumulative fair value changes of the designated hedged item that have

been recognized.* Cash flow hedging

The part of hedging tool gains or losses that is valid for hedging is recognized as other

comprehensive income as a cash flow hedging reserve and the part that is invalid for hedging

(that is other gains or losses after deducting other comprehensive income) are counted Into

the current profit and loss. The amount of cash flow hedging reserve is determined according

79China Fangda Group Co. Ltd. Notes to Financial Statements

to the lower of the absolute amounts of the following two items: * accumulated gains or

losses of hedging instruments since the hedging. The amount in the effective arbitrage is

recognized by the accumulative gains or losses from the starting of arbitrage and

accumulative changes to the current value of future forecast cash flows from the start of

arbitrage.If the expected transaction of the hedged asset is subsequently recognized as a

non-financial asset or non-financial liability or if the expected transaction of the non-financial

asset or non-financial liability forms a defined commitment to the applicable fair value hedge

accounting the amount of the cash flow hedge reserve originally recognized in the other

consolidated income is transferred out to account for the initial recognized amount of the asset

or liability. For the remaining cash flow hedges during the same period when the expected

cash flow to be hedged affects the profit and loss if the expected sales occur the cash flow

hedge reserve recognized in other comprehensive income is transferred out and included in

the current profit and loss.* Net investment in overseas operations hedge

For hedging of foreign operation net investments the portion of gains or losses from the

hedging instruments that qualify as effective hedges is directly recognized in other

comprehensive income. The portion of gains or losses from the hedging instruments that do

not qualify as effective hedges is recognized in the income statement. Upon disposal of the

foreign operation the previously recognized gains or losses from the hedging instruments

reflected in other comprehensive income are reclassified to the income statement.

31. Significant accounting judgment and estimate

The Company continuously reviews significant accounting judgment and estimate

adopted for the reasonable forecast of future events based on its historical experience and

other factors. Significant accounting judgment and assumptions that may lead to major

adjustment of the book value of assets and liabilities in the next accounting year are listed as

follows:

Classification of financial assets

The major judgments involved in the classification of financial assets include the

analysis of business model and contract cash flow characteristics.

80China Fangda Group Co. Ltd. Notes to Financial Statements

The company determines the business mode of managing financial assets at the level of

financial asset portfolio taking into account such factors as how to evaluate and report

financial asset performance to key managers the risks that affect financial asset performance

and how to manage it and how to obtain remuneration for related business managers.When the company assesses whether the contractual cash flow of financial assets is

consistent with the basic borrowing arrangement there are the following main judgments:

whether the principal may change due to early repayment and other reasons during the

duration of the period or the amount of change; whether the interest Including the time value

of money credit risk other basic borrowing risks and consideration of costs and profits. For

example does the amount paid in advance reflect only the unpaid principal and the interest

based on the unpaid principal as well as the reasonable compensation paid for early

termination of the contract.Measurement of expected credit losses of accounts receivable

The Company calculates the expected credit loss of accounts receivable through the risk

exposure of accounts receivable default and the expected credit loss rate and determines the

expected credit loss rate based on the default probability and the default loss rate. When

determining the expected credit loss rate the Company uses internal historical credit loss

experience and other data combined with current conditions and forward-looking information

to adjust the historical data. When considering forward-looking information the indicators

used by the Company include the risks of economic downturn changes in the external market

environment technological environment and customer conditions. The Company regularly

monitors and reviews assumptions related to the calculation of expected credit losses.Deferred income tax assets

If there is adequate taxable profit to deduct the loss the deferred income tax assets

should be recognized by all the unused tax loss. This requires the management to make a lot

of judgment to forecast the time and amount of future taxable profit and determine the amount

of the deferred tax assets based on the taxation strategy.Income recognition

The Company's revenue from providing curtain wall construction and metro platform

screen door installation services is recognized over a period of time. The recognition of the

income and profit of such engineering installation services depends on the Company's

81China Fangda Group Co. Ltd. Notes to Financial Statements

estimation of the contract results and performance progress. If the actual amount of total

revenue and total cost is higher or lower than the estimated value of the management it will

affect the amount of revenue and profit recognition of the Company in the future.Engineering contract

The management shall make relevant judgment to confirm the income and expenses of

project contracting business according to the performance progress. If losses are expected to

occur in the project contract such losses shall be recognized as current expenses. The

management of the Company estimates the possible losses according to the budget of the

project contract. The Company determines the transaction price according to the terms of the

contract and in combination with previous customary practices and considers the influence of

variable consideration major financing components in the contract and other factors. During

the performance of the contract the Company continuously reviews the estimated total

contract revenue and the estimated total contract cost. When the initial estimate changes such

as contract changes claims and awards the estimated total contract revenue and the estimated

total contract cost are revised. When the estimated total contract cost exceeds the total

contract revenue the main business cost and estimated liabilities shall be recognized

according to the loss contract to be executed.Estimate of fair value

The Company uses fair value to measure investment real estate and needs to estimate the

fair value of investment real estate at least quarterly. This requires the management to

reasonably estimate the fair value of the investment real estate with the help of valuation

experts.Development cost

For property that has been handed over with income recognized but whose public

facilities have not been constructed or not been completed the management will estimate the

development cost for the part that has not been started according to the budget to reflect the

operation result of the property sales.

32. Major changes in accounting policies and estimates

(1) Changes in accounting policies

During the current reporting period the Company did not effect any significant changes

82China Fangda Group Co. Ltd. Notes to Financial Statements

in accounting policies.

(2) Changes in major accounting estimates

Account policy changes and reasons Effective Statement item Affectedtime materially affected amount

With the development of businesses across Account receivable -12480875.74

various industries the Company has

continuously refined its customer risk Contract assets

management for different sectors and (including the portion

reclassified to other -10411746.48enhanced its management capabilities.Based on a comprehensive assessment of non-current assets)

the composition of receivables (including Notes receivable -12572159.65

notes receivable accounts receivable

contract assets and other receivables) Other receivables -3311535.99

related to curtain wall platform screen Credit impairment ("-"

door new materials new energy and for loss) -28364571.38

commercial real estate businesses as well

as differences in customer risk profiles and Investment impairment

historical credit loss experience the December loss ("-" for loss) -10411746.48

Company has changed its accounting 01 2025

estimates. This change is made prudently

in accordance with Accounting Standards

for Business Enterprises No.

22—Recognition and Measurement of

Financial Instruments No. 28—Changes in

Accounting Policies Changes in

Accounting Estimates and Correction of Total profit -38776317.86

Errors and other relevant provisions and is

aligned with the actual business

characteristics and operating conditions in

order to present the Company's financial

position and operating results more

objectively and fairly.Note: On April 3 2026 the Company convened the 14th meeting of the Audit

Committee of the 10th Board of Directors and the 16th meeting of the 10th Board of Directors

which reviewed and approved the proposal regarding the current change in accounting

estimate and resolved to implement the change effective December 1 2025.IV. Taxation

1. Major taxes and tax rates

Tax Tax basis Tax rate %

VAT Taxable income 1 3 5 6 9 and 13

City maintenance

and construction Taxable turnover 1 5 7

tax

Education surtax Taxable turnover 3

Local education

surtax Taxable turnover 2

83China Fangda Group Co. Ltd. Notes to Financial Statements

Tax Tax basis Tax rate %

For ad valorem assessment the tax is levied at 1.2% of

Property tax the residual value after a one-time deduction of 30% fromthe original value of the property; for rental-based 1.2 12

assessment the tax is levied at 12% of rental income.Enterprise income

tax Taxable income See the following table

Existence of different corporate income tax rates for the Company's subsidiaries

Tax payer Income taxrate

The Company 25%

Shenzhen Fangda Construction Technology Co. Ltd. (hereinafter Fangda Construction

Technology) 15%

Fangda Zhiyuan Technology Co. Ltd. (hereinafter Fangda Zhiyuan) 15%

Fangda New Material (Jiangxi) Co. Ltd. (hereinafter Fangda Jiangxi New Material) 25%

Jiangxi Fangda Intelligent Manufacturing Technology Co. Ltd. (hereinafter referred to

as Fangda Intelligent Manufacturing Company) 15%

Chengdu Fangda Construction Technology Co. Ltd. (hereinafter Fangda Chengdu

Technology) 15%

Shanghai Fangda Zhijian Technology Co. Ltd. (hereinafter referred to as Fangda

Shanghai Zhijian company) 15%

Shenzhen Fangda Yunzhu Technology Co. Ltd. (hereinafter Fangda Yunzhu) 15%

Dongguan Fangda New Material Co. Ltd. (hereinafter Fangda Dongguan New

Material) 25%

Shanghai Fangda Jianzhi Technology Co. Ltd. (hereinafter Fangda Shanghai Jianzhi) 25%

Shenzhen Fangda Property Development Co. Ltd. (hereinafter Fangda Property

Development) 25%

Shenzhen Fangda New Energy Co. Ltd. (hereinafter Fangda New Energy) 25%

Shenzhen Fangda Property Development Co. Ltd. (hereinafter Fangda Property

Development) 25%

Jiangxi Fangda Property Development Co. Ltd. (hereinafter Fangda Jiangxi Property

Development) 25%

Pingxiang Fangda Luxin New Energy Co. Ltd. (hereinafter Fangda Luxin New

Energy) 25%

Nanchang Xinjian Fangda New Energy Co. Ltd. (hereinafter Fangda Xinjian New

Energy) 20%

Dongguan Fangda New Energy Co. Ltd. (hereinafter Fangda Dongguan New Energy) 20%

Shenzhen Qianhai Kechuangyuan Software Co. Lt.d (hereinafter Kechuangyuan

Software) 15%

Fangda Zhiyuan Technology (Hong Kong) Co. Ltd (Fangda Zhiyuan Hong Kong) 16.50%

Fangda Zhiyuan Technology (Wuhan) Co. Ltd (Fangda Wuhan Zhiyuan) 25%

Fangda Zhiyuan Technology (Nanchang) Co. Ltd (Fangda Nanchang Zhiyuan) 25%

Fangda Zhiyuan Railway Transportation Equipment (Dongguan) Co. Ltd. (hereinafter

referred to as Fangda Zhiyuan Dongguan) 20%

General Rail Technology Private Limited 17%

Shihui International Holding Co. Ltd. (hereinafter Fangda Shihui International) 0.00%

84China Fangda Group Co. Ltd. Notes to Financial Statements

Tax payer Income taxrate

Shenzhen Fangda Investment & Holding Co. Ltd. (hereinafter referred to as "Fangda

Investment & Holding") 25%

Fangda Australia Pty Ltd 30%

Shenzhen Fangda Yunzhi Technology Co. Ltd. (hereinafter Fangda Yunzhi) 25%

Shenzhen Zhongrong Litai Investment Co. Ltd. (hereinafter referred to as "Zhongrong

Litai") 25%

Chengdu Fangda Curtain Wall Technology Co. Ltd. (hereinafter Fangda Chengdu

Curtain Wall) 20%

Fangda Southeast Asia Co. Ltd. (hereinafter Fangda Southeast Asia) 20%

Fangda Construction Technology (Hong Kong) Co. Ltd. (hereinafter Fangda

Construction Technology Hong Kong) 16.50%

Shenzhen Yunzhu Testing Technology Co. Ltd. (Hereinafter Fangda Yunzhu Testing) 20%

Shenzhen Fangda Jianchuang Technology Co. Ltd. (hereinafter Fangda Jianchuang) 25%

Shenzhen Fangda Construction Technology Co. Ltd. (hereinafter referred to as Fangda

Construction Technology Company) 20%

Fangda Facade Singapore Pte Ltd (hereinafter referred to as Curtain Wall Singapore

Company) 17%

FANGDA FACADE PHILIPPINES INC. (hereinafter referred to as Curtain Wall

Philippines Company) 20%

GENERAL RAIL TECHNOLOGY PHILIPPINES INC.(hereinafter referred to as Zhiyuan Philippines Company) 25%

FANGDA GULF DMCC (hereinafter referred to as Curtain Wall Gulf Company) 9%

FANGDA FACADE CONTRACTING L.L.C (hereinafter referred to as "Fangda

Facade UAE") 9%

Fangda Facade (NSW) Pty Ltd (hereinafter referred to as "Fangda Facade Sydney") 30%

GLOBAL MEGA INTERNATIONAL HOLDINGS LIMITED

(hereinafter referred to as GLOBAL MEGA INTERNATIONAL) 20%

2. Tax preference

(1) On December 26 2024 the subsidiary Fangda Construction Technology obtained the

certificate of high-tech enterprise jointly issued by the Industry and Information Technology

Bureau of Shenzhen Municipality Shenzhen Finance Bureau State Administration of

Taxation and Shenzhen Taxation Bureau. The certificate number is GR202444207062. Within

three years after obtaining the qualification of high-tech enterprise (from 2024 to 2026) the

income tax will be levied at 15%.

(2) On December 26 2024 the subsidiary Fangda Zhiyuan Technology Co. Ltd.

obtained the certificate of high tech enterprise jointly issued by the Industry and Information

Technology Bureau of Shenzhen Municipality Shenzhen Finance Bureau State

Administration of Taxation and Shenzhen Taxation Bureau. The certificate number is

GR202444201506. Within three years after obtaining the qualification of high tech enterprise

85China Fangda Group Co. Ltd. Notes to Financial Statements

(from 2024 to 2026) the income tax will be levied at 15%.

(3) On October 16 2023 the subsidiary Fangda Chengdu Technology obtained the

certificate of high tech enterprise No. GR202351000927 jointly issued by the Department of

Science and Technology of Sichuan Province the Department of Finance of Sichuan Province

the State Administration of Taxation and the Sichuan Provincial Taxation Bureau. Within

three years after obtaining the qualification of high tech enterprise (2023-2025) the income

tax will continue to be levied at 15%.

(4) On November 15 2023 the subsidiary Fangda Shanghai Zhijian obtained the

certificate of high tech enterprise GR202331002267 jointly issued by Shanghai Science and

Technology Commission Shanghai Finance Bureau and Shanghai Taxation Bureau. Within

three years (from 2023 to 2025) after obtaining the qualification of high tech enterprise the

income tax will continue to be charged at 15%.

(5) On November 15 2023 the subsidiary Fangda Yunzhu Co. Ltd. obtained the

certificate of high tech enterprise jointly issued by Shenzhen Science and Technology

Innovation Commission Shenzhen Finance Bureau State Administration of Taxation and

Shenzhen Taxation Bureau. The certificate number is GR202344205791. Within three years

after obtaining the qualification of high tech enterprise (from 2023 to 2025) the income tax

will be levied at 15%.

(6) The subsidiary Kechuangyuan Software is an enterprise located in Qianhai Shenzhen

Hong Kong Modern Service Industry Cooperation Zone. Its main business meets the

conditions of Preferential Catalogue of Enterprise Income Tax in Qianhai Shenzhen Hong

Kong Modern Service Industry Cooperation Zone (2021)(the Regulation shall be

implemented from January 1 2021 to December 31 2026) and the income tax is levied at

15%.

(7) Pursuant to the "Announcement of the Ministry of Finance and the State Taxation

Administration on Further Implementation of Income Tax Preferential Policies for Small and

Micro-sized Enterprises" (Announcement No. 13 of 2022) the "Announcement on Income

Tax Preferential Policies for Small and Micro-sized Enterprises and Self-employed

Businesses" (Announcement No. 6 of 2023) and the "Announcement of the Ministry of

Finance and the State Taxation Administration on Further Supporting the Development of

Small and Micro-sized Enterprises and Self-employed Businesses with Respect to Relevant

86China Fangda Group Co. Ltd. Notes to Financial Statements

Tax Policies" (Announcement No. 12 of 2023) certain subsidiaries qualified as small and

micro-sized enterprises in 2025 and are subject to enterprise income tax in accordance with

the aforementioned announcements.V. Notes to the consolidated financial statements

1. Monetary capital

Item December 31 2025 December 31 2024

Inventory cash: 697.90 148.01

Bank deposits 1122843849.53 1052461034.10

Other monetary capital 278447555.29 439316159.73

Total 1401292102.72 1491777341.84

Including: total amount deposited

in overseas 53171687.00 76232428.11

Note: (1) Of the closing balance of bank deposits RMB44021919.51 was restricted in

use comprising judicially frozen funds of RMB10494858.12 interest on time deposits of

RMB58081.29 regulated funds designated for specific purposes amounting to

RMB29840625.90 and other restricted funds totaling RMB3628354.20. Of the closing

balance of other monetary funds RMB266304635.32 was restricted in use primarily

consisting of bankers' acceptance deposit guarantees interim guarantee deposits letter of

guarantee issuance deposits and funds in transit. In the preparation of the cash flow statement

the above-mentioned deposits and other restricted deposits are not used as cash and cash

equivalents.

(2) In addition there are no other funds in the monetary funds at the end of the period

that have restrictions on use and potential recovery risks due to mortgages pledges or

freezing.

2. Transactional financial assets

Item December 31 2025 December 31 2024

Financial assets measured at fair

value with variations accounted into 410.06

current income account

Of which: Wealth management

products 410.06

Total 410.06

3. Derivative financial assets

Item December 31 2025 December 31 2024

87China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 31 2025 December 31 2024

Futures contracts 1459950.00

Total 1459950.00

4. Notes receivable

(1) Classification of notes receivable

December 31 2025 December 31 2024

Type Remaining Bad debt Book value Remaining Bad debtbook value provision book value provision Book value

Bank

acceptance 57188013.94 57188013.94 39584331.31 39584331.31

Commercial

acceptance 78591702.16 14001653.10 64590049.06 34946619.68 643256.75 34303362.93

Total 135779716.10 14001653.10 121778063.00 74530950.99 643256.75 73887694.24

(2) The Company has no endorsed or discounted unmature receivable notes at the end of

the period.Item De-recognized amount Amount not derecognized

Bank acceptance 30948234.15

Commercial acceptance 9833296.73

Total 40781530.88

Note: The bank-accepted bills discounted or endorsed are accepted by banks with lower

credit ratings. Discounting or endorsement does not affect the right of recourse and the

related credit risk and deferred payment risk of the bills have not been transferred; therefore

derecognition has not been made.

(3) Disclosure by bad debt accrual method

December 31 2025

Type Remaining book value Bad debt provision

Book value

Amount Proportion(%) Amount

Provision

rate %

Provision for bad debts

by combination

Bank acceptance 57188013.94 42.12 57188013.94

Commercial acceptance 78591702.16 57.88 14001653.10 17.82 64590049.06

Total 135779716.10 100.00 14001653.10 10.31 121778063.00

(Continued)

December 31 2024

Type

Remaining book value Bad debt provision Book value

88China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2024

Type Remaining book value Bad debt provision

Book value

Amount Proportion(%) Amount

Provision

rate %

Provision for bad debts by

combination

Bank acceptance 39584331.31 53.11 39584331.31

Commercial acceptance 34946619.68 46.89 643256.75 1.84 34303362.93

Total 74530950.99 100.00 643256.75 0.86 73887694.24

(4) Changes in bad debt provision

Change in the period

Written-

Type December 31 December 312024 Provision back or Write-off Other 2025recovere change

d

Commercial

acceptance 643256.75 13358396.35 14001653.10

5. Account receivable

(1) Account age

Age December 31 2025 December 31 2024

Less than 1 year 376385477.08 535457065.77

1-2 years 227631352.53 197202489.75

2-3 years 157587249.50 196353916.70

3-4 years 155218151.25 173116205.07

4-5 years 120919200.03 134492519.77

5-6 years 246826836.71

6-7 years 85242705.07 261192804.06

Over 7 years 118155447.36

Subtotal 1487966419.53 1497815001.12

Less : Bad debt provision 602449862.30 374308804.14

Total 885516557.23 1123506196.98

(2) Disclosure by bad debt accrual method

December 31 2025

Type Remaining book value Bad debt provision

Amount Proportion Amount Provision

Book value

(%) rate %

Separate bad debt

provision 194500400.69 13.07 172387766.73 88.63 22112633.96

Provision for bad debts 1293466018.84 86.93 430062095.57 33.25 863403923.27

89China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2025

Type Remaining book value Bad debt provision

Book value

Amount Proportion Amount Provision(%) rate %

by combination

1. Portfolio 1: Curtain 929090693.39 62.44 382281446.58 41.15 546809246.81

wall business receivables

2. Portfolio 2: Platform

screen door business 177576351.40 11.93 38295527.37 21.57 139280824.03

receivables

3. Portfolio 3: New

materials business 108037986.27 7.26 4269005.77 3.95 103768980.50

receivables

4. Portfolio 4: New

energy business 26263129.43 1.77 1313156.47 5.00 24949972.96

receivables

5. Portfolio 5:

Commercial real estate 52497858.35 3.53 3902959.38 7.43 48594898.97

and other receivables

Total 1487966419.53 100.00 602449862.30 40.49 885516557.23

(Continued)

December 31 2024

Type Remaining book value Bad debt provision

Amount Proportion Amount Provision

Book value

(%) rate %

Separate bad debt

provision 127640916.83 8.51 97987987.52 76.77 29652929.31

Provision for bad debts

by combination 1370174084.29 91.49 276320816.62 20.17 1093853267.67

1. Portfolio 1:

Engineering operations 1201581352.19 80.23 270560899.59 22.52 931020452.60

section

2. Portfolio 2: Real estate

business payments 87166812.19 5.82 2181218.43 2.50 84985593.76

3. Portfolio 3: Other

business models 81425919.91 5.44 3578698.60 4.40 77847221.31

Total 1497815001.12 100.00 374308804.14 24.99 1123506196.98

Method of bad debt provision：

* As of December 31 2025 explanation for allowance for doubtful accounts provided on an

individual basis:

December 31 2025

Name

Remaining book value Bad debt provision Providing rate (%)

Customer 1 54873223.21 54873223.21 100.00

90China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2025

Name

Remaining book value Bad debt provision Providing rate (%)

Customer 2 45507085.02 42914882.44 94.30

Customer 6 38886078.45 23331647.07 60.00

Customer 5 19722254.14 19722254.14 100.00

Customer 3 13461834.96 13461834.96 100.00

Customer 7 9915000.00 5949000.00 60.00

Customer 4 7096421.00 7096421.00 100.00

Other customers 5038503.91 5038503.91 100.00

Total 194500400.69 172387766.73 88.63

As of December 31 2024 explanation for allowance for doubtful accounts provided on

an individual basis:

Name

December 31 2024

Name

Remaining book value Bad debt provision Provision rate %

Customer 1 54873223.21 54873223.21 100.00

Customer 2 47210577.56 23605288.79 50.00

Customer 3 13461834.96 13461834.96 100.00

Customer 4 7096421.00 3548210.50 50.00

Customer 5 4998860.10 2499430.06 50.00

Total 127640916.83 97987987.52 76.77

Note: Due to certain customers experiencing prolonged non-payment material debt defaults

bankruptcy reorganization or similar circumstances the Company has determined that full recovery of

receivables from these customers is uncertain. In accordance with the prudence principle the Company has

individually provided for impairment losses on these accounts receivable.* As of December 31 2025 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 1 – Curtain Wall Business Receivables

December 31 2025

Age

Remaining book value Bad debt provision Providing rate(%)

Less than 1 year 193396954.28 9669847.69 5.00

1-2 years 142488723.59 28497744.72 20.00

2-3 years 105103593.43 26275898.36 25.00

3-4 years 96348934.35 33722127.02 35.00

91China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2025

Age

Remaining book value Bad debt provision Providing rate(%)

4-5 years 93402372.04 42031067.42 45.00

5-6 years 108866523.21 65319913.93 60.00

6-7 years 84791633.64 72072888.59 85.00

Over 7 years 104691958.85 104691958.85 100.00

Total 929090693.39 382281446.58 41.15

As of December 31 2025 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 2 – Platform Screen Door Business Receivables

December 31 2025

Age

Remaining book value Bad debt provision Providing rate (%)

Less than 1 year 67079150.77 670791.51 1.00

1-2 years 41821251.41 3345700.11 8.00

2-3 years 17858570.89 3571714.18 20.00

3-4 years 30471497.81 12188599.12 40.00

4-5 years 6090526.91 4263368.84 70.00

Over 5 years 14255353.61 14255353.61 100.00

Total 177576351.40 38295527.37 21.57

As of December 31 2024 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 1 – Engineering Business Receivables

December 31 2024

Age

Remaining book value Bad debt provision Providing rate(%)

Less than 1 year 434542505.23 8518488.97 1.96

1-2 years 153324126.70 8678145.58 5.66

2-3 years 169472582.50 21624701.52 12.76

3-4 years 170186095.94 33628772.56 19.76

4-5 years 133612334.38 57667083.52 43.16

Over 5 years 140443707.44 140443707.44 100.00

Total 1201581352.19 270560899.59 22.52

* As of December 31 2025 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 3 – New Materials Business Receivables

Age December 31 2025

92China Fangda Group Co. Ltd. Notes to Financial Statements

Remaining book value Bad debt provision Providing rate (%)

Less than 1 year 68862940.96 688629.38 1.00

1-2 years 26702188.50 1335109.43 5.00

2-3 years 9566410.63 956641.06 10.00

3-4 years 1982076.04 396415.21 20.00

4-5 years 64318.91 32159.46 50.00

Over 5 years 860051.23 860051.23 100.00

Total 108037986.27 4269005.77 3.95

As of December 31 2025 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 4 – New Energy Business Receivables

December 31 2025

Age

Remaining book value Bad debt provision Providing rate (%)

Less than 1 year 12303649.40 615182.47 5.00

1-2 years 9805984.58 490299.23 5.00

2-3 years 4153495.45 207674.77 5.00

Total 26263129.43 1313156.47 5.00

As of December 31 2024 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 3 – Other Business Receivables

December 31 2024

Age

Remaining book value Bad debt provision Providing rate(%)

Less than 1 year 44731417.29 326523.94 0.73

1-2 years 23798443.43 499767.31 2.10

2-3 years 8896019.47 749044.84 8.42

3-4 years 2496128.86 618540.73 24.78

4-5 years 880185.39 761096.31 86.47

Over 5 years 623725.47 623725.47 100.00

Total 81425919.91 3578698.60 4.40

* As of December 31 2025 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 5 – Commercial Real Estate and Other Receivables

December 31 2025

Age

Remaining book value Bad debt provision Providing rate (%)

Less than 1 year 33050286.15 330502.85 1.00

1-2 years 3817774.69 190888.73 5.00

93China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2025

Age

Remaining book value Bad debt provision Providing rate (%)

2-3 years 10394417.17 1559162.58 15.00

3-4 years 4874916.49 1462474.95 30.00

4-5 years 1333.96 800.38 60.00

Over 5 years 359129.89 359129.89 100.00

Total 52497858.35 3902959.38 7.43

As of December 31 2024 accounts receivable for which allowance for doubtful

accounts is provided based on Portfolio 2 – Real Estate Business Receivables

December 31 2024

Age

Remaining book value Bad debt provision Providing rate(%)

Less than 1 year 54413740.54 543431.46 1.00

1-2 years 16671818.48 833590.92 5.00

2-3 years 16079919.21 803995.96 5.00

3-4 years 1333.96 200.09 15.00

Total 87166812.19 2181218.43 2.50

Provision for bad debts by combination: 11.

(3) Changes in bad debt provision

Type December 31

Change in the period December 31

2024 Provision Written-back Other 2025or recovered Write-off change

Separate

bad debt 97987987.52 74399779.21 172387766.73

provision

Provision

for bad

debts by 276320816.62 160605310.49 6869566.78 -5535.24 430062095.57

combination

Total 374308804.14 235005089.70 6869566.78 -5535.24 602449862.30

(4) Written-off account receivable during the period

Item Amount

Account receivable written off 6869566.78

(5) Accounts receivable and contract assets with the five largest outstanding balances by

debtor as of the reporting date

The aggregate amount of the five largest accounts receivable (including contract assets)

by debtor as of the reporting date in the current period is RMB460203390.85 representing

94China Fangda Group Co. Ltd. Notes to Financial Statements

12.02% of the total accounts receivable (including contract assets) as of the reporting date.

The corresponding aggregate allowance for doubtful accounts as of the reporting date

amounts to RMB118166624.28.

6. Receivable financing

(1) Classification of notes receivable

Item Fair Value on Wednesday Fair Value on TuesdayDecember 31 2025 December 31 2024

Notes receivable 4568000.10

(2) Trade receivables financing that have been endorsed or discounted but not yet

matured as of the reporting date

Item De-recognized amount Amount not derecognized

Bank acceptance 33761787.71

7. Prepayment

(1) Account age of prepayments

December 31 2025 December 31 2024

Age

Amount Proportion (%) Amount Proportion (%)

Less than 1 year 15477666.96 75.85 17938392.45 76.81

1-2 years 527430.05 2.58 1949630.86 8.35

2-3 years 1346844.99 6.60 1404616.03 6.01

Over 3 years 3056026.16 14.97 2062396.77 8.83

Total 20407968.16 100.00 23355036.11 100.00

Note: At the end of the period there is no significant prepayment with an aging of more

than one year.

(2) Balance of top 5 prepayments at the end of the period

The total of top5 prepayments in terms of the prepaid entities in the period is

RMB5261681.15 accounting for 25.78% of the total prepayments at the end of the period.

8. Other receivables

(1) Classification of notes receivable

Item December 31 2025 December 31 2024

Other receivables 120173307.70 168322524.80

Total 120173307.70 168322524.80

95China Fangda Group Co. Ltd. Notes to Financial Statements

(2) Other receivables

(1) Disclosure by age

Age December 31 2025 December 31 2024

Less than 1 year 17089433.93 45432663.12

1-2 years 7682149.15 11015466.34

2-3 years 10634476.62 4495902.18

3-4 years 2289785.12 3882310.18

4-5 years 3229224.11 9518614.26

Over 5 years 91455364.51 102013397.33

Subtotal 132380433.44 176358353.41

Less : Bad debt provision 12207125.74 8035828.61

Total 120173307.70 168322524.80

(2) Classification by nature of funds

By nature December 31 2025 December 31 2024

Deposit and pledge paid 78067608.63 101364611.15

Construction borrowing and

advanced payment 37322734.05 39950652.16

Staff borrowing and petty cash 2942771.01 3221577.94

VAT refund receivable 527217.36 642493.02

Refundable advance payments 2713230.50 18884265.12

Others 10806871.89 12294754.02

Subtotal 132380433.44 176358353.41

Less : Bad debt provision 12207125.74 8035828.61

Total 120173307.70 168322524.80

* Method of bad debt Disclosed

A. The provision for bad debts as at Wednesday December 31 2025 is based on the

three-phase model as follows:

Step segment Remaining bookvalue Bad debt provision Book value

First stage 114617240.74 1928103.44 112689137.30

Second stage 9603537.62 3379335.58 6224202.04

Third stage 8159655.08 6899686.72 1259968.36

Total 132380433.44 12207125.74 120173307.70

As at Wednesday December 31 2025 the first phase of the provision for bad debts:

96China Fangda Group Co. Ltd. Notes to Financial Statements

Type Remaining book Providing rate Bad debtvalue (%) provision Book value

Separate bad debt provision

Provision for bad debts by 114617240.74 1.68 1928103.44 112689137.30

combination

Portfolio 3: deposit and margin 74212037.53 1.47 1089166.39 73122871.14

receivable

Combination 4: Advances 33834318.73 1.75 593422.94 33240895.79

receivable

Portfolio 5: VAT refund 527217.36 1.00 5272.17 521945.19

receivable

Portfolio 7: Other receivables 6043667.12 3.98 240241.94 5803425.18

Total 114617240.74 1.68 1928103.44 112689137.30

As at Wednesday December 31 2025 the second phase of the provision for bad debts:

Type Remaining book Providing rate Bad debtvalue (%) provision Book value

Separate bad debt provision

Provision for bad debts by 9603537.62 35.19 3379335.58 6224202.04

combination

Portfolio 3: deposit and margin 2129187.67 41.30 879423.91 1249763.76

receivable

Combination 4: Advances 3463081.82 41.43 1434706.36 2028375.46

receivable

Portfolio 7: Other receivables 4011268.13 26.56 1065205.31 2946062.82

Total 9603537.62 35.19 3379335.58 6224202.04

As at Wednesday December 31 2025 the third phase of the provision for bad debts:

Type Remaining book Providing rate Bad debtvalue (%) provision Book value

Separate bad debt provision

Provision for bad debts by 8159655.08 84.56 6899686.72 1259968.36

combination

Portfolio 3: Receivables from 1726383.43 100.00 1726383.43

deposits and guarantees

Combination 4: Advances 25333.50 100.00 25333.50

receivable

Portfolio 7: Other receivables 6407938.15 80.34 5147969.79 1259968.36

Total 8159655.08 84.56 6899686.72 1259968.36

B. The provision for bad debts as at December 31 2024 is based on the three-phase

model as follows:

Step segment Remaining bookvalue Bad debt provision Book value

97China Fangda Group Co. Ltd. Notes to Financial Statements

Step segment Remaining bookvalue Bad debt provision Book value

First stage 167771508.00 2498265.50 165273242.50

Second stage 3143590.00 94307.70 3049282.30

Third stage 5443255.41 5443255.41 -

Total 176358353.41 8035828.61 168322524.80

As at Tuesday December 31 2024 the first phase of the provision for bad debts:

Type Remaining book Providing rate Bad debtvalue (%) provision Book value

Separate bad debt provision

Provision for bad debts by

combination 167771508.00 1.49 2498265.50 165273242.50

Portfolio 3: deposit and margin

receivable 98762459.86 1.49 1467815.07 97294644.79

Combination 4: Advances

receivable 59510857.52 1.49 888914.26 58621943.26

Portfolio 5: VAT refund

receivable 642493.02 1.49 9573.15 632919.87

Portfolio 7: Other receivables 8855697.60 1.49 131963.02 8723734.58

Total 167771508.00 1.49 2498265.50 165273242.50

As at Tuesday December 31 2024 the second phase of the provision for bad debts:

Type Remaining book Providing rate Bad debtvalue (%) provision Book value

Separate bad debt provision

Provision for bad debts by

combination 3143590.00 3.00 94307.70 3049282.30

Portfolio 3: deposit and margin

receivable 1060000.00 3.00 31800.00 1028200.00

Combination 4: Advances

receivable 1645090.00 3.00 49352.70 1595737.30

Portfolio 7: Other receivables 438500.00 3.00 13155.00 425345.00

Total 3143590.00 3.00 94307.70 3049282.30

As at Tuesday December 31 2024 the third phase of the provision for bad debts:

Type Remaining book Providing rate Bad debtvalue (%) provision Book value

Separate bad debt provision

Provision for bad debts by

combination 5443255.41 100.00 5443255.41

Portfolio 3: Receivables from

deposits and guarantees 1542151.29 100.00 1542151.29

Combination 4: Advances

receivable 900547.70 100.00 900547.70

Portfolio 7: Other receivables 3000556.42 100.00 3000556.42

Total 5443255.41 100.00 5443255.41

98China Fangda Group Co. Ltd. Notes to Financial Statements

The amount of the bad debt provision is Basis：

Provision for bad debts by combination: 11.* Changes in bad debt provision

Change in the period

Type December 31 Written-ba December 312024 Provision ck or Write-off Other 2025

recovered change

Separate bad

debt

provision

Provision for

bad debts by 8035828.61 4181353.42 9825.48 230.81 12207125.74

combination

Total 8035828.61 4181353.42 9825.48 230.81 12207125.74

* Other receivables actually written off in the current period

Item Amount

Other receivable written off 9825.48

* Balance of top 5 other receivables at the end of the period

Balance on

Entity By nature Wednesday Bad debtDecember 31 Age Percentage (%) provision

2025

Shenzhen Yikang Margin and

6000000.00 2-3 years 60000.00

Real Estate Co. Ltd. current 70062675.83 57.46account Over 5 years 700626.76

Shenzhen Dakang

Joint-Stock Deposit 8000000.00 Over 5 years 6.04 80000.00Cooperative

Company

Shenzhen Ganshang

Joint Investment Investment 3791089.25 2531120.89

Co. Ltd. payment

Over 5 years 2.86

Bangshen

Electronics 3000000.00

(Shenzhen) Co. Deposit Over 5 years 2.27

30000.00

Ltd.Shenzhen 939115.00 1-2 years 0.71 187823.00

Tongmeng

Decoration Reimbursab

Technology Co. le expenses 1534115.50 2-3 years 1.16 383528.88

Ltd.Total 93326995.58 70.50 3973099.53

9. Inventory

99China Fangda Group Co. Ltd. Notes to Financial Statements

(1) Classification of inventories

December 31 2025 December 31 2024

Provision

Provision for for

inventory inventory

depreciation depreciatio

Item Remaining or contract Remaining n or

book value performance Book value book value contract Book value

cost performanc

impairment e cost

provision impairment

provision

Raw 111622459.0 111622459.0 111139470.3 111139470.3

materials 0 0 7 7

Product in 100255413.9 100255413.9

process 0 0 91796788.96 91796788.96

Finished

goods in 41225785.96 41225785.96 8694704.45 8694704.45

stock

Developmen 202021658.9 202021658.9 230990938.0 230990938.0

t cost 4 4 9 9

Developmen 116643162.6 23306214.7

t products 8 4 93336947.94

124380755.9124380755.9

11

OEM

materials 19692260.21 19692260.21 13483327.00 13483327.00

Contract

performance 81997883.89 81997883.89 102358825.0 102358825.0

costs 7 7

Goods

delivered 27530506.85 27530506.85 20251212.30 20251212.30

Materials in

transit 7375501.87 7375501.87 2570386.59 2570386.59

Total 708364633.3 23306214.7 685058418.5 705666408.7 705666408.70 4 6 4 4

(2) Provision for inventory depreciation or contract performance cost impairment

provision

December Increase in this period Decrease in this periodItem December 3131 2024 Provision Others Recover or 2025write-off Others

Development

products 23306214.74 23306214.74

(3) Description of ending inventory balance including capitalization amount of

borrowing costs:

As of December 31 2025 the capitalized borrowing costs included in inventory balances

amounted to RMB4470824.99. The calculation basis and criteria for borrowing costs are

disclosed in Note III.20.

100China Fangda Group Co. Ltd. Notes to Financial Statements

(4) Development cost

Estimated

Item Starting Estimated total December 31 December 31

Closing

time finish time investment 2025 2024 depreciation

Investment provision

Dakang

Village December December RMB3.6 202021658.94

Project in 1 2028 201016423.0931 2034 billion

Shenzhen

Fangda

Bangshen

Industry 29974515.00

Park

RMB3.6 202021658.94

Total 230990938.09

billion

Note: On November 6 2017 Fangda Property Co. Ltd. a subsidiary of the Company

entered into the "Co-Development Agreement for the Fangda Bangshen Industrial Park

(provisional name) Urban Renewal Project" with Bangshen Electronics (Shenzhen) Co. Ltd.agreeing to jointly advance this "industrial-to-industrial" urban renewal project under a

co-development model. During project implementation objective factors—including policy

adjustments related to the "Lixin Lake Area Integrated Planning" in Bao'an District Shenzhen

and changes in the market environment—continuously impeded progress making it

impossible to proceed as originally planned. After amicable negotiations both parties

formally signed a termination agreement on November 10 2025 mutually agreeing to

terminate the aforementioned co-development agreement. Effective from the date of

effectiveness of the termination agreement Fangda Property Co. Ltd. will no longer

participate in the subsequent development or related operations of the Fangda Bangshen

Industrial Park project.

(5) Development products

Item Completion December 31 Current Closing

Name time 2024 period Decrease

December 31

2025 depreciationIncrease provision

Phase I of 29

Fangda December 15532505.97 15532505.97

Town 2016

Nanchang

Fangda April 272021 108848249.94 7737593.23 101110656.71 23306214.74Center

Total 124380755.91 7737593.23 116643162.68 23306214.74

10. Contract assets

101China Fangda Group Co. Ltd. Notes to Financial Statements

(1) Contract assets

December 31 2025 December 31 2024

Item Remaining book Impairment Remaining Impairment

value provision Book value book value provision Book value

Completed and

unsettled project

funds that fail to

meet the 2007031514.79 197762492.62 1809269022.17 2303529715.41 196836354.61 2106693360.80

collection

conditions

Quality guarantee

deposit that fails

to meet the 332521906.40 27924265.40 304597641.00 262289726.50 24254807.14 238034919.36

collection

conditions

Sales funds with

conditional 52852539.43 727775.89 52124763.54

collection right

Subtotal 2339553421.19 225686758.02 2113866663.17 2618671981.34 221818937.64 2396853043.70

Less: Contract

assets shown in

other non-current 125214302.34 9438790.60 115775511.74 160412051.45 11257487.71 149154563.74

assets

Total 2214339118.85 216247967.42 1998091151.43 2458259929.89 210561449.93 2247698479.96

(2) Disclosure by impairment method

December 31 2025

Type Remaining book value Impairment provision

Amount Proportion Amount Provision

Book value

(%) rate %

Provision for impairment 8992352.88 0.41 8992352.88 100.00

by single item

Provision for impairment 2205346765.97 99.59 207255614.54 9.40 1998091151.43

by portfolio

Portfolio 2: Completed and

unsettled project not 1998039161.91 90.23 188770139.73 9.45 1809269022.18

meeting collection

conditions

Portfolio 3: Quality

guarantee deposit not 207307604.06 9.36 18485474.81 8.92 188822129.25

meeting collection

conditions

Total 2214339118.85 100.00 216247967.42 9.77 1998091151.43

(Continued)

December 31 2024

Type

Remaining book value Impairment provision Book value

102China Fangda Group Co. Ltd. Notes to Financial Statements

Amount Proportion(%) Amount

Provision

rate %

Provision for impairment

by single item 16288576.53 0.66 9033247.20 55.46 7255329.33

Provision for impairment

by portfolio 2441971353.36 99.34 201528202.73 8.25 2240443150.63

Combination 1: sales

payment with conditional 52852539.43 2.15 727775.89 1.38 52124763.54

collection right

Portfolio 2: Completed

and unsettled project not

meeting collection 2286329426.34 93.01 187097333.23 8.18 2099232093.11

conditions

Portfolio 3: Quality

guarantee deposit not

meeting collection 102789387.59 4.18 13703093.61 13.33 89086293.98

conditions

Total 2458259929.89 100.00 210561449.93 8.57 2247698479.96

Note: Due to certain customers' prolonged non-payment material debt defaults and

bankruptcy reorganization proceedings the Company has determined that there is uncertainty

regarding the full recovery of receivables from these customers. In accordance with the

prudence principle the Company has individually recognized impairment allowances on

contract assets related to these customers.

(3) Change in provision for impairment

Change in the period

Transferred

Item December 31 Written off in December 312024 Provision back in the the current Other 2025current

period period

change

Separate bad

debt 9033247.20 7214435.01 7255329.33 8992352.88

provision

Provision for

bad debts by 201528202.73 6530406.95 802995.14 207255614.54

combination

Total 210561449.93 13744841.96 802995.14 7255329.33 216247967.42

Note: The "Other changes" in the current period primarily result from the reclassification

of contract assets previously subject to individual impairment assessments into accounts

receivable for accounting purposes.

11. Other current assets

Item December 31 2025 December 31 2024

Reclassification of VAT debit balance 280607689.94 292626079.84

Overpayment and prepayment of 13030950.36 11197246.58

103China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 31 2025 December 31 2024

income tax

Other prepaid taxes 4482.73 949974.83

Payment to be collected on behalf of

suppliers 3003841.89 3003841.89

Total 296646964.92 307777143.14

12. Long-term share equity investment

(1) Long-term share equity investment

Change (+-)

Book value Investment

Invested entity on December Increased Decreased gain and loss

Other

recognized miscellaneous

Other

31 2024 investment investment using the income

equity

equity method adjustment

change

1. Joint venture

2. Associate

Shenzhen

Ganshang Joint

Investment Co. 2402841.50 410.96

Ltd.Jiangxi Business

Innovative

Property Joint 54288132.47 -23702740.30

Stock Co. Ltd.Total 56690973.97 -23702329.34

(Continued)

Change (+-) Balance of

Book value on provision for

Invested entity Cash dividend December 31 impairment

or profit Impairment Others 2025 on December

announced provision 31 2025

1. Joint venture

2. Associate

Shenzhen

Ganshang Joint

Investment Co. 2403252.46

Ltd.Jiangxi Business

Innovative

Property Joint 30585392.17

Stock Co. Ltd.Total 32988644.63

13. Other non-current financial assets

Item December 31 2025 December 31 2024

104China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 31 2025 December 31 2024

Financial assets measured at fair

value with variations accounted 6516131.63 6519740.17

into current income account

Total 6516131.63 6519740.17

14. Investment real estate

(1) Investment real estate measured at fair value

Item Houses & buildings Total

1. December 31 2024 5835036098.20 5835036098.20

2. Increase in this period 24075324.78 24075324.78

(1) Purchased 24075324.78 24075324.78

3. Decrease in this period 310739996.48 310739996.48

(1) Disposal 30008027.81 30008027.81

(3) Change in fair value Change in fair value 280731968.67 280731968.67

4. December 31 2025 5548371426.50 5548371426.50

Notes:

* The primary basis for determining the fair value of investment properties is the "Real

Estate Appraisal Reports" issued by Shenzhen Guoyu Appraisal Co. Ltd. Real Estate and

Land Valuation Consultants with report numbers "Shen Guoyu Ping Zi (2026) No. 01017-1"

"Shen Guoyu Ping Zi (2026) No. 01017-2" "Shen Guoyu Ping Zi (2026) No. 01015" "Shen

Guoyu Ping Zi (2026) No. 01016" "Shen Guoyu Ping Zi (2026) No. 01017-3" "Shen Guoyu

Ping Zi (2026) No. 01014" "Shen Guoyu Ping Zi (2026) No. 01017-4" "Shen Guoyu Ping Zi

(2026) No. 01017-5" and "Shen Guoyu Ping Zi (2026) No. 01017-6".

* As of December 31 2025 certain real estate properties within Fangda Town have

been pledged to China Post Savings Bank Co. Ltd. as collateral for loans. These loans have

not yet matured and the pledge has not been released. The fair value of these pledged

properties amounts to RMB33494907000.

(2) Investment real estate without ownership certificate

Item Book value Reason

3 units at Lanzhou Railway - City

Dawn 2606238.53

The developer is completing the

relevant procedures

15. Fixed assets

(1) Classification of notes receivable

105China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 31 2025 December 31 2024

Fixed assets 940980113.90 939548074.59

Disposal of fixed assets 1346269.80

Total 940980113.90 940894344.39

(2) Fixed assets

(1) Fixed assets

Item Houses & Mechanical Transportation

Electronics PV power

buildings equipment facilities and otherdevices plants

Total

I. Original book

value:

1. December 31

2024856161214.35128885604.1221320277.1951360255.80129754129.461187481480.92

2. Increase in

this period 23945388.81 11434828.35 348518.21 5802795.91 997411.91 42528943.19

(1) Purchase 441598.49 11434828.35 348518.21 5801200.18 997411.91 19023557.14

(2) Transfer-in of

construction in 23503790.32 23503790.32

progress

(3) Other

increases 1595.73 1595.73

3. Decrease in

this period 66049.00 1107225.01 980448.08 1532083.91 1184005.13 4869811.13

(1) Disposal or

retirement 66049.00 1107225.01 972075.11 1530164.75 1184005.13 4859519.00

(2) Other

decrease 8372.97 1919.16 10292.13

4. December 31

2025880040554.16139213207.4620688347.3255630967.80129567536.241225140612.98

II. Accumulative

depreciation

1. December 31

202487653570.3059286500.0815592743.4232441506.8452954004.49247928325.13

2. Increase in

this period 19456697.12 7814507.94 864757.85 2858954.95 6181413.13 37176330.99

(1) Provision 19456697.12 7814507.94 864757.85 2858836.91 6181413.13 37176212.95

(2) Other

increases 118.04 118.04

3. Decrease in

this period 27856.84 891857.61 883240.57 1290121.03 506162.19 3599238.24

(1) Disposal or

retirement 27856.84 891857.61 874867.60 1288201.87 506162.19 3588946.11

(2) Other

decrease 8372.97 1919.16 10292.13

4. December 31

2025107082410.5866209150.4115574260.7034010340.7658629255.43281505417.88

III. Impairment

provision

1. December 31 5081.20 5081.20

106China Fangda Group Co. Ltd. Notes to Financial Statements

Item Houses & Mechanical Transportation

Electronics PV power

buildings equipment facilities and otherdevices plants

Total

2024

2. Increase in

this period 2650000.00 2650000.00

(1) Provision 2650000.00 2650000.00

3. Decrease in

this period

(1) Disposal or

retirement

4. December 31

20252655081.202655081.20

IV. Book value

of fixed assets

1. Book value as

at December 31 772958143.58 70348975.85 5114086.62 21620627.04 70938280.81 940980113.90

2025

2. Book value as

at December 31 768507644.05 69594022.84 5727533.77 18918748.96 76800124.97 939548074.59

2024

Note: The "Other increases and decreases" are primarily due to exchange rate

fluctuations.* Fixed assets without ownership certificate

Item Book value on December 312025 Reason

Yuehai Office Building C 502 94206.21 Historical reasons

16. Construction in process

(1) Classification of notes receivable

Item December 31 2025 December 31 2024

Construction in process 1214530.34 7265104.44

Total 1214530.34 7265104.44

2. Construction in process

(1) Construction in progress

December 31 2025 December 31 2024

Item Remaining Impairment Book value Remaining Impairmentbook value provision book value provision Book value

Fangda (Ganzhou)

Low-Carbon

Intelligent

Manufacturing 133381.74 133381.74 7018372.92 7018372.92

Base – Phase I

Exhibition Hall

107China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2025 December 31 2024

Item Remaining Impairment Remaining Impairment

book value provision Book value book value provision Book value

and Installed

Equipment

Songshan lake

production base

exhibition hall 583502.56 583502.56 246731.52 246731.52

renovation

Software and other

information

technology 497646.04 497646.04

projects

Total 1214530.34 1214530.34 7265104.44 7265104.44

Explanation: As of December 31 2025 the Company's construction in progress showed

no indication of impairment.

17. Use right assets

(1) Right-to-use assets

Item Houses & buildings Transportationfacilities Total

I. Original book value:

1. December 31 2024 17835398.71 9285061.69 27120460.40

2. Increase in this period 3811719.28 3811719.28

3. Decrease in this period 2356058.01 2139970.72 4496028.73

4. December 31 2025 19291059.98 7145090.97 26436150.95

II. Accumulative depreciation

1. December 31 2024 9589374.43 1847964.93 11437339.36

2. Increase in this period 3153312.19 1236213.69 4389525.88

(1) Provision 3153312.19 1236213.69 4389525.88

3. Decrease in this period 1743811.77 1116908.93 2860720.70

(1) Disposal 1743811.77 1116908.93 2860720.70

4. December 31 2025 10998874.85 1967269.69 12966144.54

III. Impairment provision

1. December 31 2024

2. Increase in this period

3. Decrease in this period

4. December 31 2025

IV. Book value

1. Book value as at December 31

20258292185.135177821.2813470006.41

108China Fangda Group Co. Ltd. Notes to Financial Statements

Item Houses & buildings Transportationfacilities Total

2. Book value as at December 31

20248246024.287437096.7615683121.04

(2) Impairment testing of right-of-use assets

As of December 31 2025 there was no indication of impairment of the Company's

right-of-use assets.

18. Intangible assets

(1) Intangible assets

Item Land usingright Patent Software Others Total

I. Book value

1. December 31 2024 142009721.92 9059872.37 24267321.82 720000.00 176056916.11

2. Increase in this period 426186.52 4242674.77 4668861.29

(1) Purchase 426186.52 4242674.77 4668861.29

3. Decrease in this

period 48330450.00 2012338.04 243323.66 50586111.70

(1) Disposal 48330450.00 2012338.04 243323.66 50586111.70

4. December 31 2025 93679271.92 7473720.85 28266672.93 720000.00 130139665.70

II. Accumulative

amortization

1. December 31 2024 24105634.24 8946369.49 15108511.74 48160515.47

2. Increase in this period 2546293.68 417108.04 2011794.37 180000.00 5155196.09

(1) Provision 2546293.68 417108.04 2011794.37 180000.00 5155196.09

3. Decrease in this

period 3179444.15 2012113.04 243323.66 5434880.85

(1) Disposal 3179444.15 2012113.04 243323.66 5434880.85

4. December 31 2025 23472483.77 7351364.49 16876982.45 180000.00 47880830.71

III. Impairment

provision

1. December 31 2024 3844005.85 3844005.85

2. Increase in this period

3. Decrease in this

period 3844005.85 3844005.85

(1) Disposal 3844005.85 3844005.85

4. December 31 2025

IV. Book value

1. Book value as at

December 31 2025 70206788.15 122356.36 11389690.48 540000.00 82258834.99

2. Book value as at

December 31 2024 114060081.83 113502.88 9158810.08 720000.00 124052394.79

109China Fangda Group Co. Ltd. Notes to Financial Statements

(2) Failure to obtain the land use right certificates

At the end of the period the Company had no land use right without the property right

certificate.

19. Long-term amortizable expenses

Item December 31

Decrease

Increase December 312024 Amortized Other decrease 2025

Expenditures

on

modifications

to property 4041025.70 6933834.00 4393633.54 18731.19 6562494.97

plant and

equipment etc.

20. Differed income tax assets and differed income tax liabilities

(1) Non-deducted deferred income tax assets

December 31 2025 December 31 2024

Item Deductible temporary Deferred income Deductible Deferred

difference tax assets temporary income taxdifference assets

Assets impairment

provision 251624427.59 40453268.46 227880793.93 35025619.90

Credit impairment

provision 626126565.76 100493765.98 382932070.72 60483324.52

Unrealizable gross profit 122552188.00 28685612.51 108593435.66 26573799.68

Deductible loss 486268366.84 91973864.74 286565331.75 67193424.59

Anticipated liabilities 7214622.24 1082193.35 4191535.03 628730.25

Unrealized investment

income 281712399.15 55842834.35 281712399.15 55842834.35

Deferred earning 21913458.18 3518841.84 5946064.06 1041584.25

Change in fair value 10239089.49 1535863.42 8623065.19 1303042.83

Lease liabilities 13623096.04 2469342.96 15352065.96 2788081.55

Accrued and unpaid land

tax 15043321.06 3760830.27 16012293.28 4003073.33

Reserved expense 36589539.42 5488430.92 36589539.42 5488430.92

Tax and accounting

differences for overseas 7121041.73 2136312.52 8617276.57 2585182.97

subsidiaries

Total 1880028115.50 337441161.32 1383015870.72 262957129.14

(2) Non-deducted deferred income tax liabilities

December 31 2025 December 31 2024

Item Taxable temporary Deferred income Taxable temporary Deferred income

difference tax liabilities difference tax liabilities

110China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2025 December 31 2024

Item Taxable temporary Deferred income Taxable temporary Deferred income

difference tax liabilities difference tax liabilities

Change in fair value 4014727945.14 1000546168.91 4296974960.10 1071313064.75

Acquire premium to

form inventory 1535605.48 383901.37 1535605.48 383901.37

Use right assets 13470006.41 2564776.55 15683121.04 2901986.66

Estimated gross

margin when

Fangda Town

records income but 8000812.74 2000203.19 24131708.41 6032927.10

does not reach the

taxable income level

Rental income 24631068.63 6157767.16 26717859.03 6679464.47

Total 4062365438.40 1011652817.18 4365043254.06 1087311344.35

(3) Net deferred income tax assets or liabilities listed

Offset balance of

Deferred income tax Offset balance of Deferred income deferred income

assets and liabilities deferred income tax tax assets and tax assets orItem on December 31 assets or liabilities liabilities on liabilities after

2025 after offsetting on December 31 offsetting onDecember 31 2025 2024 December 31

2024

Deferred income

tax assets 70572127.96 266869033.36 56970202.43 205986926.71

Deferred income

tax liabilities 70572127.96 941080689.22 56970202.43 1030341141.92

(4) Details of unrecognized deferred income tax assets

Item December 31 2025 December 31 2024

Deductible temporary difference 2555701.75 434437.85

Deductible loss 20249356.74 383366.61

Total 22805058.49 817804.46

(5) Deductible losses of the un-recognized deferred income tax asset will expire in the

following years

Year December 31 2025 December 31 2024

20252679.34

202636426.09449.91

2027566465.76125759.62

2028196742.94122872.18

202919136478.27131605.56

2030 and later 313243.68

111China Fangda Group Co. Ltd. Notes to Financial Statements

Year December 31 2025 December 31 2024

Total 20249356.74 383366.61

21. Other non-current assets

December 31 2025 December 31 2024

Item Remaining Impairment Book value Remaining Impairmentbook value provision book value provision Book value

Prepaid house

and equipment 29968445.50 29968445.50 63504106.15 63504106.15

amount

Contract assets 125214302.34 9438790.60 115775511.74 160412051.45 11257487.71 149154563.74

Subtotal 155182747.84 9438790.60 145743957.24 223916157.60 11257487.71 212658669.89

Less: others

non-current

assets due in 1

year

Total 155182747.84 9438790.60 145743957.24 223916157.60 11257487.71 212658669.89

22. Assets with restricted ownership or use rights

December 31 2025

Item

Book value Restricted situation

Monetary capital 299831696.71 Various deposits

Monetary capital 10494858.12 Judicial freeze

Notes receivable 39012200.04 Bills endorsed or discounted but not yet due

Account receivable 17261724.13 Loan by pledge

Fixed assets 192954910.15 Loan by pledge

Intangible assets 22728870.63 Loan by pledge

Investment real estate 3349490698.00 Loan by pledge

Long-term Equity

Investments (Parent —— 100% stake in Fangda Property Development

Company) held by the Company

Total 3931774957.78 -

(Continued)

December 31 2024

Item

Book value Restricted situation

Monetary capital 460052125.50 Various deposits

Notes receivable 34490806.03 Bills endorsed or discounted but not yet due

Account receivable 33851277.04 Loan by pledge

Fixed assets 355978425.04 Loan by pledge

Intangible assets 23212463.67 Loan by pledge

112China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2024

Item

Book value Restricted situation

Investment real estate 1822483172.10 Loan by pledge

Long-term Equity

Investments (Parent —— 100% stake in Fangda Property Development

Company) held by the Company

Total 2730068269.38 -

23. Short-term loans

(1) Classification of short-term borrowings

Item December 31 2025 December 31 2024

Guarantee loan 674220527.58 720642744.49

Guarantee and pledge loan 528625969.45 943053677.99

Total 1202846497.03 1663696422.48

Notes:

* As of the reporting date among guaranteed borrowings:

RMB62045333.34 and RMB605125916.77 were guaranteed by the Company for its subsidiaries Fangda

Zhiyuan Technology Co. Ltd. and Shenzhen Fangda Construction Technology Group Co. Ltd.respectively;

RMB6019002.78 was guaranteed by the Company for its subsidiary Shenzhen Fangda Yunchu

Technology Co. Ltd.;

RMB1030274.69 was guaranteed by the Company for its subsidiary Fangda New Materials (Jiangxi) Co.Ltd.RMB1030274.69 was guaranteed by the Company for its subsidiary Fangda New Materials (Jiangxi)

Co. Ltd. Among guaranteed borrowings internal factoring loans amounted to

RMB194900000.* At the end of the period among the guaranteed and pledged borrowings:

RMB49047775.00 was guaranteed by the Company for its subsidiary Shenzhen Fangda Construction

Technology Group Co. Ltd. with the subsidiary further providing a pledge of intellectual property rights

over its patents for an "Automatic Sensing Curtain Wall Energy-Saving Window System" and an

"Intelligent Shading System";

RMB40027777.78 was guaranteed by the Company for its subsidiary Shenzhen Fangda Construction

113China Fangda Group Co. Ltd. Notes to Financial Statements

Technology Group Co. Ltd. with the subsidiary additionally pledging its patent for a "Modular Frame

Curtain Wall System" as intellectual property collateral;

RMB50038194.45 was guaranteed by the Company for Shenzhen Fangda Construction Technology Group

Co. Ltd. with the subsidiary pledging its patents for a "Connecting Structure for a

Through-Ventilation-Type Box Curtain Wall" and a "Copper-Aluminum Composite Panel Energy-Saving

Curtain Wall Structure" as intellectual property collateral;

RMB342580000.00 was guaranteed and pledged by the Company for its subsidiary Shenzhen Fangda

Construction Technology Group Co. Ltd. Among guaranteed and pledged borrowings internal

factoring loans amounted to RMB40580000.00.

24. Derivative financial liabilities

Item December 31 2025 December 31 2024

Futures contracts 1520625.00

Total 1520625.00

25. Notes payable

Type December 31 2025 December 31 2024

Bank acceptance 428511829.11 672229721.56

Commercial acceptance 598808.42 8958406.41

Total 429110637.53 681188127.97

26. Account payable

(1) By nature

Item December 31 2025 December 31 2024

Account repayable and engineering repayable 1456091905.06 1528510873.88

Payable installation and implementation fees 540158310.89 558215149.23

Construction payable 17642579.41 27062009.47

Others 26798424.80 32806857.99

Total 2040691220.16 2146594890.57

(2) There were no material accounts payable aged over one year as of the period end.

27. Prepayment received

Item December 31 2025 December 31 2024

Rent received in advance 3517539.83 1513398.39

Total 3517539.83 1513398.39

114China Fangda Group Co. Ltd. Notes to Financial Statements

28. Contract liabilities

(1) Contract liabilities status

Item December 31 2025 December 31 2024

Project funds collected in

advance 347809670.83 259315011.77

Material loan 979539.70 8934838.06

Others 1366667.08 344191.43

Total 350155877.61 268594041.26

29. Employees' wage payable

(1) Employees' wage payable

Item December 312024 Increase Decrease

December 31

2025

1. Short-term remuneration 69946623.12 430502785.23 438781419.33 61667989.02

2. Retirement pension

program-defined contribution 762569.73 31667690.80 31717595.58 712664.95

plan

3. Dismiss compensation 5534455.12 12853198.93 12955461.93 5432192.12

Total 76243647.97 475023674.96 483454476.84 67812846.09

(2) Short-term remuneration

Item December 31 Increase Decrease December 312024 2025

1. Wage bonus allowance and

subsidies 68590093.96 398581088.05 406848495.18 60322686.83

2. Employee welfare 227864.06 9870012.56 10095803.26 2073.36

3. Social insurance 187229.50 10254180.58 10306309.16 135100.92

Including: medical insurance 170309.99 8429936.21 8478678.37 121567.83

Labor injury insurance 10483.12 1101060.84 1103883.37 7660.59

Breeding insurance 6436.39 723183.53 723747.42 5872.50

4. Housing fund 73372.23 10728412.28 10714303.31 87481.20

V. Labor union and staff

education budget 329829.09 934796.35 816508.42 448117.02

VI. Short-term paid leave 538234.28 134295.41 - 672529.69

Total 69946623.12 430502785.23 438781419.33 61667989.02

(3) Defined contribution plan

Item December 312024 Increase Decrease

December 31

2025

After-retirement welfare:

1. Basic pension 750906.10 30441686.74 30486994.92 705597.92

115China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 312024 Increase Decrease

December 31

2025

2. Unemployment insurance 11663.63 1226004.06 1230600.66 7067.03

Total 762569.73 31667690.80 31717595.58 712664.95

30. Taxes payable

Item December 31 2025 December 31 2024

Enterprise income tax 12238129.74 22749953.33

VAT 6404428.28 5014443.15

Personal income tax 1465819.45 1436564.89

City maintenance and

construction tax 701639.13 442894.30

Land using tax 427736.41 342015.86

Property tax 1608807.88 1433309.14

Education surtax 306278.00 194329.75

Local education surtax 204185.33 129553.00

Consumption service tax 1469363.12 237874.41

Land VAT 15043321.06 16012293.28

Others 569589.35 853886.08

Total 40439297.75 48847117.19

31. Other payables

(1) Classification of notes receivable

Item December 31 2025 December 31 2024

Other payables 125372728.24 120918002.02

Total 125372728.24 120918002.02

(2) Other payables

* Other payables presented by nature

Item December 31 2025 December 31 2024

Performance and quality deposit 39447699.46 42955873.85

Deposit 23547532.18 22843813.76

Reserved expense 3689432.93 5336051.21

Others 58688063.67 49782263.20

Total 125372728.24 120918002.02

* Other important accounts payable with an aging of more than one year at the end of

the period

116China Fangda Group Co. Ltd. Notes to Financial Statements

Item Balance on WednesdayDecember 31 2025 Reason

Shenzhen Yikang Real Estate Co. 26159711.72 Payment paid as agreed in theLtd. contract

32. Non-current liabilities due in 1 year

Item December 31 2025 December 31 2024

Long-term loans due within 1

year 368687783.34 123355127.55

Lease liabilities due within one

year 4642179.29 5114390.19

Provisions expected to mature

within one year 5759232.03 2905143.31

Total 379089194.66 131374661.05

33. Other current liabilities

Item December 31 2025 December 31 2024

Notes receivable endorsed but

not derecognized 40781530.88 21426278.75

Substituted money on VAT 20137407.63 29409280.92

Total 60918938.51 50835559.67

34. Long-term loans

(1) Classification of long-term borrowings

Item December 31 2025 December 31 2024 2025 interest raterange

Guarantee mortgage and pledge

loan 1658687783.34 1260355127.55 2.1%-3.65%

Subtotal 1658687783.34 1260355127.55

Less: Long-term loans due within

1 year 368687783.34 123355127.55

Total 1290000000.00 1137000000.00

Note:Among the aforementioned guaranteed mortgaged and pledged borrowings:

Borrowings of RMB1081171500.00 were secured by pledges of 100% equity interests in the Company's

subsidiary Fangda Property Holdings Company (held directly and indirectly by China Fangda Group Co.Ltd.) and receivable rental income from the Company's self-held Fangda City leased properties;

Borrowings of RMB280247333.34 were guaranteed by China Fangda Group Co. Ltd. for its subsidiary

Fangda Intelligent Manufacturing Company with additional collateral provided by the subsidiary in the

form of its property plant and equipment and industrial land use rights;

Borrowings of RMB297268950.00 were guaranteed by China Fangda Group Co. Ltd. for its subsidiary

117China Fangda Group Co. Ltd. Notes to Financial Statements

Fangda Construction Technology Company.

35. Lease liabilities

Item December 31 2025 December 31 2024

Lease payments 15229706.15 18828149.71

Less: unrecognized financing

expenses 1607979.99 3061152.04

Subtotal 13621726.16 15766997.67

Less: lease liabilities due within

one year 4642179.29 5114390.19

Total 8979546.87 10652607.48

36. Anticipated liabilities

Item December 31 2025 December 31 2024

Maintenance fee 1175044.50 917063.27

Loss contract to be executed 280345.71 369328.45

Total 1455390.21 1286391.72

37. Deferred earning

Item December 31 Increase Decrease December 312024 2025 Reason

Government Assets-related

subsidy 10669612.13 17776306.00 2141640.44 26304277.69 governmentsubsidy

38. Share capital

Change (+-)

Item December 31 Issued Bonus Transferred

December 31

2024 new shares from Others Subtotal

2025

shares reserves

Total of

capital 1073874227.00 1073874227.00

shares

39. Capital reserves

Item December 31 2024 Increase Decrease December 31 2025

Capital premium

(share capital 2903850.98 2903850.98

premium)

Other capital

reserves 1454097.35 1454097.35

Total 4357948.33 4357948.33

40. Other miscellaneous income

Item December 31 Amount occurred in the current period December 31

20242025

118China Fangda Group Co. Ltd. Notes to Financial Statements

Less:

amount

written Less:

into amount After-tax

other written into

Amount gains other gains Less: After-tax

amount

and amount attributedbefore and Income tax

income tax transfer transferred expenses attributed to the

to

into parent minorityred into

gain/los gain/loss in

sharehold

previous erss in

previou terms

s terms

I. Other

comprehensive

income that

cannot be -3779277.52 -3779277.52

reclassified into

profit or loss

Including: Fair

value change of

investment in -3779277.52 -3779277.52

other equity

tools

2. Other misc.

incomes that

will be

re-classified 162184292.04 3038109.97 396775.71 2641819.98 -485.72 164826112.02

into gain and

loss

Including:

Investment real

estate measured 163986655.48 -237972.41 -50310.54 -187661.87 163798993.61

at fair value

Cash flow

hedge reserve -1269329.14 2980575.00 447086.25 2533488.75 1264159.61

Translatio

n difference of

foreign -533034.30 295507.38 295993.10 -485.72 -237041.20

exchange

statement

Other

miscellaneous 158405014.52 3038109.97 396775.71 2641819.98 -485.72 161046834.50

income

41. Surplus reserve

Item December 31 2024 Increase Decrease December 31 2025

Statutory surplus

reserves 83974716.22 1393611.78 85368328.00

42. Undistributed profit

Item 2025 2024

Adjustment on retained profit of previous period 4805192000.28 4772359940.45

Total of retained profit at beginning of year adjusted

(+ for increase - for decrease)

Retained profit adjusted at beginning of year 4805192000.28 4772359940.45

Plus: Net profit attributable to owners of the parent -515466884.24 144813705.53

Less: Statutory surplus reserves 1393611.78 5728420.02

119China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Common share dividend payable 53693711.35 85909938.16

Others 20343287.52

Closing retained profit 4234637792.91 4805192000.28

43. Operational revenue and costs

20252024

Item

Income Cost Income Cost

Main business 3327948583.52 2881219133.19 4373119434.75 3545394888.31

Other

businesses 49354482.92 40317819.34 51104762.96

42747408.17

Total 3377303066.44 2921536952.53 4424224197.71 3588142296.48

(1) Revenue disaggregation information

In 2025 the information of operating revenue broken down by revenue recognition time

is as follows:

Item 2025 2024

Revenue recognition time

Revenue recognized at a certain point in time 533955293.94 545412251.88

Revenue recognized over a period of time 2843347772.50 3878811945.83

Total 3377303066.44 4424224197.71

(2) Performance obligation

For curtain wall materials real estate and other commodity sales transactions the

Company completes the performance obligations when the customer obtains the control of the

relevant commodities; for providing building curtain wall Metro screen door design

production and installation and other service transactions the Company confirms the

completed performance obligations according to the performance progress during the whole

service period. The contract price of the Company is usually due within one year and there is

no significant financing component.

(3) Information related to remaining performance obligations

As of December 31 2025 the Company's remaining contractual obligations are mainly

related to the Company's engineering contracts and the remaining contractual obligations are

expected to be recognized as revenue according to the performance progress in the future

performance period of the corresponding engineering contracts.

120China Fangda Group Co. Ltd. Notes to Financial Statements

44. Taxes and surcharges

Item 2025 2024

Property tax 21128884.70 20235700.43

City maintenance and

construction tax 5507073.14 6526296.57

Education surcharge and local

education surcharge 4097235.46 4894545.68

Stamp tax 2646316.83 5125991.22

Urban land use tax 2148696.57 1967709.57

Land VAT 162267.96 4535890.32

Others 320867.76 78257.55

Total 36011342.42 43364391.34

45. Sales expense

Item 2025 2024

Labor costs 35157320.22 30449690.40

Entertainment expense 6378943.30 8485462.87

Travel expense 4614410.83 2955271.55

Advertisement and promotion fee 2317559.63 2144452.78

Rental 1005536.52 629569.36

Depreciation and amortization 1886120.08 2269054.34

Material consumption 1011161.01 1352405.66

Sales agency fee 970571.54 1595221.91

Office costs 731950.25 895531.77

Others 3330447.79 4363492.49

Total 57404021.17 55140153.13

46. Administrative expense

Item 2025 2024

Labor costs 129569222.27 137729076.22

Depreciation and amortization 15295989.89 17246520.96

Agencies 9092377.02 6918578.15

Entertainment expense 5941257.55 7993709.32

Office expense 4113166.63 5648928.52

Travel expense 2852779.56 4337710.40

Rental 2795359.88 2254738.54

Water and electricity 1764753.20 1204391.67

Property management fee 1221908.37 1102485.41

121China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Lawsuit 1194968.95 296491.06

Others 5505940.23 6934804.95

Total 179347723.55 191667435.20

47. R&D cost

Item 2025 2024

Labor costs 87229245.50 100670006.36

Material costs 29787750.26 50544384.90

Testing fees 9776489.95 11574101.52

Depreciation and amortization 3651149.36 4730697.11

Others 2369777.05 3512181.84

Total 132814412.12 171031371.73

48. Financial expenses

Item 2025 2024

Interest expense 73451706.21 60377020.35

Including: interest expense of

lease liabilities 587402.86 1270121.44

Less: discount government

subsidies 1639000.00 2616200.00

Less: Interest income 10685216.12 19230549.61

Net interest expenditure 61127490.09 38530270.74

Exchange net loss 3446327.54 -3073376.55

Discount expense 10151618.08 23766144.18

Commission charges and others 3808049.61 6074894.67

Total 78533485.32 65297933.04

49. Other gains

Item 2025 2024

Government subsidy 9734296.68 14027285.85

Individual income tax withholding

handling fee 272580.44 282947.24

Additional deduction of input tax 562972.73 5373030.49

Total 10569849.85 19683263.58

50. Investment income

Item 2025 2024

Gains from long-term equity investment measured

by equity -23702329.34 -70043.43

122China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Investment income from disposal of trading

financial assets 1494724.44 -1666256.28

Financial assets derecognized as a result of

amortized cost -3565876.31 -2538217.26

Income from derecognition of other financial assets

measured at fair value -154143.85

Debt restructuring gains -118701.78

Total -25773481.21 -4547362.60

51. Gain caused by changes in fair value

Source of income from fluctuation of fair value 2025 2024

Investment real estate measured at fair value -280731968.67 -18397296.67

Other non-current financial assets -3608.54 3098.25

Transactional financial assets 410.06

Total -280735167.15 -18394198.42

52. Credit impairment loss

Item 2025 2024

Bad debt loss of notes receivable -13358396.35 -237783.09

Bad debt loss of account receivable -235005089.69 -109795711.27

Bad debt loss of other receivables -4181353.42 -653357.89

Total -252544839.46 -110686852.25

53. Asset impairment loss

Item 2025 2024

Inventory impairment loss -23306214.74

Contract asset impairment loss -4669897.78 -28916573.64

Impairment losses on property plant and

equipment -2650000.00 -2500000.00

Impairment losses on intangible assets -3844005.85

Total -30626112.52 -35260579.49

54. Assets disposal gains

Item 2025 2024

Disposition not classified as possession of fixed

assets to be sold construction in progress and -2097446.78 -571500.30

intangible assets

Including: Fixed assets -690446.78 -571500.30

Intangible assets -1407000.00

Disposal of other non-current assets -1129425.81

123China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Disposal of use right assets 194594.82 71307.49

Total -3032277.77 -500192.81

55. Non-operating revenue

Amount accounted

Item 2025 2024 into the current

accidental gain/loss

Penalty income 147421.94 169756.38 147421.94

Compensation received 84950.00 110450.67 84950.00

Payable account not able to be paid 1105933.49

Gains on disposal of non-current

assets 8061.54 34565.79 8061.54

Others 342226.94 291705.96 342226.94

Total 582660.42 1712412.29 582660.42

56. Non-business expenses

Amount accounted

Item 2025 2024 into the current

accidental gain/loss

Donation 530000.00 50000.00 530000.00

Loss from retirement of damaged

non-current assets 890363.69 636096.88 890363.69

Penalty and overdue fine 906136.85 724692.03 906136.85

Others 16034265.87 815503.59 16034265.87

Total 18360766.41 2226292.50 18360766.41

Note: "Other" includes a loss of RMB16000000.00 arising from the termination of the Bangshen

project; see Note V.9—Inventories for details.

57. Income tax expenses

(1) Composition of income tax expenses

Item 2025 2024

Income tax expenses in this period 37186918.12 31496973.61

Deferred income tax expenses -150018693.23 -18304449.34

Total -112831775.11 13192524.27

(2) Adjustment process of accounting profit and income tax expense

Item 2025 2024

Total profit -628265004.92 159360814.59

Income tax expenses calculated based on the legal

(or applicable) tax rates -157066251.23 39840203.65

124China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Impacts of different tax rates applicable for some

subsidiaries 32144912.45 -8294886.53

Impacts of income tax before adjustment 1224027.11 3211604.88

Impact of non-taxable income -44361.26 -76932.15

Impacts of non-deductible cost expense and loss 5703572.23 4712097.88

Impact of deductible temporary differences or

deductible losses of unrecognized deferred income -1309161.43

tax assets in the prior period of use

Deductible temporary difference and deductible

loss of unrecognized deferred income tax assets 4953429.05 21524.27

Additional deduction of R&D expense -18869349.63 -25192633.13

Profit and loss of associates and joint ventures

calculated using the equity method 5925582.34 17510.86

Effect of tax rate change on deferred income tax -787559.90 -910541.83

Impact of deductible losses of deferred income tax

assets recognized in the previous period exceeding 13984223.73 1173737.80

the recoverable period

Income tax expenses -112831775.11 13192524.27

58. Other miscellaneous income

See Note V. 40 Other comprehensive income for details of each item of other

comprehensive income and its income tax effect and transfer to profit or loss as well as a

reconciliation of each item of other comprehensive income.

59. Notes to cash flow statement items

(1) Cash inflow related to operation

Other cash received from business operations

Item 2025 2024

Interest income 10824216.12 13149043.03

Subsidy income 21354321.72 14815630.09

Retrieving of bidding deposits 41527537.45 32822259.64

Other operating accounts 31388726.08 26028503.64

Net amount of receipts from bills

and other deposits 48883570.67 28208714.36

Total 153978372.04 115024150.76

Other cash paid for business operations

Item 2025 2024

Pocket expenses 130505709.21 127740024.89

Bidding deposit paid 21368944.98 35416621.23

125China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Other trades 4811588.71 17528864.15

Total 156686242.90 180685510.27

(2) Cash related to investment activities

Significant cash payments related to investing activities

Item 2025 2024

Acquisition of non-controlling

interests in Fangda Zhiyuan 26616725.71

Company

Other cash paid for investment

Item 2025 2024

Foreign exchange investment

losses 1787676.30

(3) Cash related to financing

Other cash received from financing activities

Item 2025 2024

Recovery of loan deposits 100842000.00 133000000.00

Recovery of time deposits 330600944.44

Total 100842000.00 463600944.44

Other cash paid related to financing activities

Item 2025 2024

Financing fee 2825971.65 3078784.45

Principal and interest of lease

liabilities 7588118.52 16984180.17

Payment for repurchase of equity

interest in Fangda Zhiyuan 98116151.32

Payments to non-controlling

shareholders due to subsidiary 2549339.32 1221195.25

liquidation

Total 12963429.49 119400311.19

Changes in liabilities arising from financing activities

Item December 31

Increase Decrease December

2024 Change in Non-cash Change in Non-cash 31 2025

cash change cash change

Short-term loans 1663696422.48 1416692628.24 17355048.96 1881823195.75 13074406.90 1202846497.03

Dividend

payable 53693711.35 53693711.35

Non-current

liabilities due in 128469517.74 406279362.16 161418917.27 373329962.63

126China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 31

Increase Decrease December

2024 Change in Non-cash Change in Non-cash 31 2025

cash change cash change

1 year

Long-term loans 1137000000.00 1100000000.00 600000000.00 347000000.00 1290000000.00

Lease liabilities 10652607.48 5185685.19 6858745.80 8979546.87

Total 2939818547.70 2516692628.24 482513807.66 2696935824.37 366933152.70 2875156006.53

60. Supplementary data of cash flow statement

(1) Supplementary data of cash flow statement

Supplementary information 2025 2024

1. Net profit adjusted to cash flow related to

business operations:

Net profit -515433229.81 146168290.32

Plus: Asset impairment provision 30626112.52 35260579.49

Credit impairment provision 252544839.46 110686852.25

Fixed asset and investment real estate depreciation 37176212.95 32873765.23

Depreciation of right to use assets 4389525.88 15038434.25

Amortization of intangible assets 5155196.09 7362948.39

Amortization of long-term amortizable expenses 4393633.54 3854633.92

Loss from disposal of fixed assets intangible assets

and other long-term assets ("-" for gains) 3032277.77 500192.81

Loss from fixed asset discard ("-" for gains) 882302.15 601531.09

Loss from fair value fluctuation ("-" for gains) 280735167.15 18394198.42

Financial expenses ("-" for gains) 77563351.94 62507793.94

Investment losses ("-" for gains) 25773481.21 1855001.49

Decrease of deferred income tax asset ("-" for

increase) -60882106.65 -34722077.39

Increase of deferred income tax asset ("-" for

increase) -89260452.70 -6409546.15

Decrease of inventory ("-" for increase) -2698224.56 42960388.63

Decrease of operational receivable items ("-" for

increase) 387051651.84 -288233573.56

Increase of operational receivable items ("-" for

decrease) -302520409.58 93985965.94

Others 48883570.67 28208714.36

Cash flow generated by business operations net 187412899.87 270894093.43

2. Major investment and financing activities with

no cash involved:

Debt transferred to assets

Convertible corporate bonds due within one year

127China Fangda Group Co. Ltd. Notes to Financial Statements

Supplementary information 2025 2024

Addition of right-of-use assets 3811719.28 13743381.24

3. Net change in cash and cash equivalents:

Balance of cash at period end 1090965547.89 1031725216.34

Less: Initial balance of cash 1031725216.34 779661118.42

Add: Ending balance of cash equivalents

Less: Ending balance of cash equivalents

Net increase in cash and cash equivalents 59240331.55 252064097.92

Note: During the current period the amount of RMB180124519.21 received from the

endorsement and transfer of receivable notes was included in cash received from sales of

goods and rendering of services.

(2) Composition of cash and cash equivalents

Item December 31 2025 December 31 2024

I. Cash 1090965547.89 1031725216.34

Including: Cash in stock 697.90 148.01

Bank savings can be used at any time 1078821930.02 1024641201.90

Other monetary capital can be used at any time 12142919.97 7083866.43

2. Cash equivalents

Including: bond investment due within three

months

III. Balance of cash and cash equivalents at end of

term 1090965547.89 1031725216.34

Including: restricted cash and cash equivalent used

by parent company or subsidiaries in the Group

(3) Supplier Financing Arrangements

* Terms and Conditions of Supplier Financing Arrangements

Supplier financing arrangement 1: The Company utilizes the "eXintong" supply chain

financial service platform jointly provided by Beijing Yuehan Technology Co. Ltd. and

Shenzhen Branch of China Construction Bank Corporation (hereinafter referred to as "CCB")

to conduct reverse factoring transactions offering services to suppliers holding electronic

receivable instruments on the "eXintong" platform that are payable by the Company upon

maturity. Suppliers transfer their accounts receivable under the Company's electronic debt

certificates to CCB and apply for "e-Xintong" business services from CCB. After analysis and

evaluation CCB provides "e-Xintong" business services to suppliers if conditions are met.The Company's obligation to fulfill payment under the electronic debt certificates is

128China Fangda Group Co. Ltd. Notes to Financial Statements

unconditional and irrevocable unaffected by any commercial disputes among parties involved

in the transfer of the electronic debt certificates. The Company will not claim offsets or

defenses regarding this payment obligation. The Company will transfer an amount equal to

the amount under the electronic debt certificates on the committed payment date according to

the "e-Xintong" platform business rules.Supplier Financing Arrangement 2: The Company handles reverse factoring business

through the "e-Zhangtong" supply chain financial service platform provided by Agricultural

Bank of China Limited Shenzhen Overseas Chinese Town Branch (hereinafter referred to as

"ABC") offering services to suppliers holding electronic debt certificates on the

"e-Zhangtong" platform with payments due from the Company. Suppliers transfer their

accounts receivable under the Company's electronic debt certificates to ABC and apply for

"e-Zhangtong" business services from ABC. After analysis and evaluation ABC provides

"e-Zhangtong" business services to suppliers if conditions are met. The Company's obligation

to fulfill payment under the electronic debt certificates is unconditional and irrevocable

unaffected by any commercial disputes among parties involved in the transfer of the

electronic debt certificates. The Company will not claim offsets or defenses regarding this

payment obligation. The Company will transfer an amount equal to the amount under the

electronic debt certificates on the committed payment date according to the "e-Zhangtong"

platform business rules.Supplier Financing Arrangement 3: The Company has signed a "Payment Agency

Cooperation Agreement" with China Merchants Bank Co. Ltd. Shenzhen Branch authorizing

the bank to deduct payments from the payment account on the dates specified in the "Detailed

Payment Agency List" provided by the Group. When suppliers initiate financing applications

China Merchants Bank Co. Ltd. Shenzhen Branch uses the Company's credit line to handle

domestic factoring for suppliers. After the factoring matures the Company only needs to pay

the factoring financing amount to China Merchants Bank Co. Ltd. Shenzhen Branch without

interest.Supplier Financing Arrangement 4: The Company handles reverse factoring (Easy Credit)

business through the supply chain financial service platform provided by Bank of China

Shenzhen Futian Branch (hereinafter referred to as "BOC") offering services to suppliers

holding electronic debt certificates with payments committed by the Company. Suppliers

transfer their accounts receivable under the Company's electronic debt certificates to BOC and

129China Fangda Group Co. Ltd. Notes to Financial Statements

apply for Easy Credit business services from BOC. After analysis and evaluation BOC

provides Easy Credit business services to suppliers if conditions are met. The Company's

obligation to fulfill payment under the electronic debt certificates is unconditional and

irrevocable unaffected by any commercial disputes among parties involved in the transfer of

the electronic debt certificates. The Company will not claim offsets or defenses regarding this

payment obligation. The Company will transfer an amount equal to the amount under the

electronic debt certificates on the committed payment date according to the supply chain

financial service platform business rules.Supplier financing arrangement 5: The Company has entered into relevant agreements

with Bank of Shanghai Co. Ltd. authorizing Bank of Shanghai to based on financing details

provided by the Company and via the "Shanghang e-Chain" platform allow suppliers to

initiate financing applications and execute factoring transactions against the Company's credit

line with Bank of Shanghai. Upon maturity of the factoring facility the Company is only

required to repay the principal amount of the factoring financing to Bank of Shanghai while

the related interest is borne by the designated party as agreed.* Financial liabilities under supplier financing arrangements presented in the balance

sheet and the carrying amount as well as the amounts received by suppliers from financing

providers

Item December 31 2025 December 31 2024

Account payable 535521368.29 465016938.13

Including: Amounts received by

suppliers 449522342.67 341199057.49

* Payment due date range for financial liabilities under supplier financing

arrangements

Item December 31 2025 December 31 2024

Financial liabilities under

supplier financing arrangements 90-300 days from invoice receipt 90-300 days from invoice receipt

Comparable accounts payable not

under supplier financing 0-180 days from invoice receipt 0-180 days from invoice receipt

arrangements

61. Foreign currency monetary items

(1) Foreign currency monetary items:

Item Foreign currency balance

Balance converted into

on December 31 2025 Exchange rate RMB on December 312025

130China Fangda Group Co. Ltd. Notes to Financial Statements

Foreign currency balance Balance converted intoItem on December 31 2025 Exchange rate RMB on December 312025

Monetary capital 239466025.46

Including: Hong Kong

Dollar 33197100.74 0.9032 29984285.33

Euro 247321.86 8.2355 2036819.18

U.S. Dollar 23572087.83 7.0288 165683490.94

Singapore Dollar 2173283.21 5.4586 11863083.73

Vietnamese

Dong 1498727578.00 0.0003 401075.99

Rupee 18585243.26 0.0783 1455224.55

Australian Dollar 5712726.73 4.6892 26788118.18

Dirham 105189.93 1.9071 200607.72

Philippine Peso 8602278.03 0.1195 1027972.22

Saudi Riyal 13569.10 1.8680 25347.62

Account receivable 42841960.18

Including: Hong

Kong Dollar 13004052.62 0.9032 11745520.41

U.S. Dollar 2825905.87 7.0288 19862727.18

Singapore Dollar 1471623.38 5.4586 8033003.38

Australian Dollar 682570.42 4.6892 3200709.21

Contract assets 88704919.11

Including: Hong

Kong Dollar 53498133.31 0.9032 48320583.97

U.S. Dollar 4031412.60 7.0288 28335992.88

Rupee 11258301.46 0.0783 881525.00

Australian Dollar 2320553.49 4.6892 10881539.43

Dirham 149587.24 1.9071 285277.83

Other receivables 2025531.07

Including: Hong Kong

Dollar 832476.66 0.9032 751909.57

U.S. Dollar 23239.05 7.0288 163342.63

Singapore Dollar 144049.35 5.4586 786307.78

Rupee 620785.33 0.0783 48607.49

Australian Dollar 34599.08 4.6892 162242.01

Dirham 30749.99 1.9071 58643.31

Philippine Peso 221398.00 0.1195 26457.06

Saudi Riyal 15000.33 1.8680 28021.22

Account payable 26163925.16

131China Fangda Group Co. Ltd. Notes to Financial Statements

Foreign currency balance Balance converted intoItem on December 31 2025 Exchange rate RMB on December 312025

Including: USD 1005776.11 7.0288 7069399.12

Singapore Dollar 365446.54 5.4586 1994826.48

Rupee 14804553.01 0.0783 1159196.50

Australian Dollar 3374612.30 4.6892 15824232.00

Philippine Peso 158805.69 0.1195 18977.28

Saudi Riyal 52083.35 1.8680 97293.78

Other payables 2045959.56

Including: USD 273407.62 7.0288 1921727.48

Singapore Dollar 3901.85 5.4586 21298.64

Australian Dollar 21787.84 4.6892 102167.54

Saudi Riyal 410.00 1.8680 765.90

Other non-current assets 166996.84

Including: USD 23758.94 7.0288 166996.84

62. Lease

(1) The Company as leasee

Current gains and losses and cash flows related to leases

Item 2025

Short term lease expenses with simplified treatment included in current

profit and loss 48043619.80

Lease expenses of low value assets with simplified treatment included in

current profit and loss (except short-term lease) 391407.49

Interest expense on lease liabilities 587402.86

Variable lease payments included in current profits and losses but not

included in the measurement of lease liabilities

Income from subletting right to use assets

Total cash outflow related to leasing 48460651.06

(2) The Company is the leasor

Operating lease

A. Rental income

Item 2025

Rental income 120590265.17

Including: income related to variable lease payments not included in the

measurement of lease receipts 369804.65

B. Undiscounted lease receipts to be received in each of the five consecutive fiscal years

132China Fangda Group Co. Ltd. Notes to Financial Statements

after the balance sheet date and the total undiscounted lease receipts to be received in the

remaining years

Year Amount

2026105050316.05

202767773129.84

202843260708.88

202926273854.79

203020185331.81

Total undiscounted lease receipts to be received on and after 2031 65750209.88

VI. R&D expenses

1. By expense nature

Item 2025 2024

Labor costs 87229245.50 100670006.36

Material costs 29787750.26 50544384.90

Testing fees 9776489.95 11574101.52

Depreciation and amortization 3651149.36 4730697.11

Others 2369777.05 3512181.84

Total 132814412.12 171031371.73

Including: Expensed R&D

expenditure 132814412.12 171031371.73

VII. Change to Consolidation Scope

During the current period the scope of consolidation changed with the addition of two

new subsidiaries established by incorporation: Fangda Facade Contracting L.L.C and Fangda

Facade (NSW) Pty Ltd.VIII. Equity in Other Entities

1. Interests in subsidiaries

(1) Group Composition

Company Registered capital Place of Registered

Shareholding (%) Obtaining

business address Business Direct Indirect method

Designing

Fangda Construction

Technology RMB600000000 Shenzhen Shenzhen

manufacturing

and installation 98.66 1.34 Incorporation

of curtain walls

Fangda Zhiyuan Production

Technology RMB105000000 Shenzhen Shenzhen processing and 51.00 49.00 Incorporationinstallation of

133China Fangda Group Co. Ltd. Notes to Financial Statements

Place of Registered Shareholding (%)Company Registered capital Business Obtainingbusiness address Direct Indirect method

subway screen

doors

Production and

Fangda Jiangxi New sales of new

Material USD12000000 Nanchang Nanchang materials and 75.00 25.00 Incorporationcomposite

materials

Real estate

Fangda Property RMB200000000 Shenzhen Shenzhen development and 99.00 1.00 Incorporation

operation

Design and

Fangda New Energy RMB100000000 Shenzhen Shenzhen construction of 99.00 1.00 Incorporation

PV power plants

Trusted

Fangda Chengdu

Technology RMB50000000 Chengdu Chengdu

processing of

building curtain - 100.00 Incorporation

wall materials

Shihui International USD3000000 Virgin VirginIslands Islands Investment 100.00 - Incorporation

Fangda Dongguan Installation and

New Material RMB272800000 Dongguan Dongguan sales of building - 100.00 Incorporationcurtain walls

Fangda Property

Management RMB10000000 Shenzhen Shenzhen

Property

management - 100.00 Incorporation

Fangda Jiangxi Real estate

Property RMB100000000 Nanchang Nanchang development and - 100.00 Incorporation

Development operation

Fangda Luxin New Design and

Energy RMB10000000 Pingxiang Pingxiang construction of - 100.00 IncorporationPV power plants

Fangda Xinjian New Design and

Energy RMB10000000 Nanchang Nanchang construction of - 100.00 IncorporationPV power plants

Fangda Dongguan Design and

New Energy RMB10000000 Dongguan Dongguan construction of - 100.00 IncorporationPV power plants

Kechuangyuan

Software RMB5000000 Shenzhen Shenzhen

Software

development - 100.00 Incorporation

Fangda Zhiyuan

Technology Hong HKD10000 Hong Hong Metro screenKong Kong door - 100.00 IncorporationKong

Fangda Investment

Holding Company RMB100000000 Shenzhen Shenzhen Investment 98.00 2.00 Incorporation

Designing

Fangda Australia AUD600000 Australia Australia manufacturingand installation - 100.00 Incorporation

of curtain walls

Technology

development and

sales; Invest in

industry;

Fangda Yunzhi RMB50000000 Shenzhen Shenzhen Operation - 100.00 Incorporation

management of

science and

technology park

Building

decoration and

Chengda Curtain

RMB50000000 Chengdu Chengdu other - 100.00 Incorporation

Wall Company construction

industry

134China Fangda Group Co. Ltd. Notes to Financial Statements

Place of Registered Shareholding (%)Company Registered capital Obtainingbusiness address Business Direct Indirect method

Designing

Fangda Southeast manufacturing

RMB3000000 Vietnam Vietnam and installation - 100.00 Incorporation

Asia of curtain walls

Intelligent

technology new

Fangda Shanghai

RMB100000000 Shanghai Shanghai energy 30.00 70.00 Incorporation

Zhijian automated

technology

Construction

technology

intelligent

technology

automation

Fangda Shanghai

RMB50000000 Shanghai Shanghai technology 100.00 Incorporation

Jianzhi design

-

production and

installation of

building curtain

walls

Zhongrong Litai RMB121000000 Shenzhen Shenzhen Business service - 55.00 Purchase

Fangda Construction Design sale and

Hong Hong installation of

Technology Hong HKD10000 Kong Kong building curtain 100.00 Incorporation

wall

Kong

Inspection

technical service Consolidation

and consultation of entities

Yunzhu Technology RMB10000000 Shenzhen Shenzhen of building 100.00 undersafety and common

building energy control

saving system

Inspection

technical service Consolidation

and consultation of entities

Fangda Yunzhu

RMB5000000 Shenzhen Shenzhen of building 100.00 under

Testing safety and common

building energy control

saving system

Production

processing and

General Metro

SGD1500000 Singapore Singapore installation of Incorporation

Technology Co. Ltd subway screen

100.00

doors

Production

processing and

Fangda Zhiyuan

RMB10000000 Wuhan Wuhan installation of Incorporation

Technology Wuhan subway screen

100.00

doors

Production

Fangda Zhiyuan processing and

Technology RMB1000000 Nanchang Nanchang installation of Incorporationsubway screen 100.00

Nanchang doors

Production

Fangda Zhiyuan RMB1000000 Dongguan Dongguan processing and Incorporationinstallation of 100.00

135China Fangda Group Co. Ltd. Notes to Financial Statements

Shareholding (%)

Company Registered capital Place of Registeredbusiness address Business

Obtaining

Direct Indirect method

subway screen

Dongguan doors

Production and

sales of new

Fangda Intelligent

RMB2500000000 Ganzhou Ganzhou materials and Incorporation

Manufacturing composite

99.001.00

materials

Installation and

Fangda Jianchuang RMB50000000 Shenzhen Shenzhen sales of building Incorporationcurtain walls 100.00

Fangda Construction Installation and

Technology Shenzhen Shenzhen sales of building 100.00 Non-business

Company RMB50000000 curtain walls combination

Fangda Facade Installation and

Singapore Pte Ltd SGD799611 Singapore Singapore sales of building 100.00 Incorporationcurtain walls

FANGDA FACADE Installation and

PHILIPPINES INC. PHP12000000 Philippine Philippine sales of building 98.999 Incorporationcurtain walls

Zhiyuan Philippines Metro screen

Company PHP12000000 Philippine Philippine door sales and 99.999 Incorporationinstallation

FANGDA GULF Installation and

DMCC AED400000 Dubai Dubai sales of building 100.00 Incorporationcurtain walls

Designing

GLOBAL MEGA Saudi Saudi manufacturing

INTERNATIONAL USD600000 Arabia Arabia and installation 100.00 Incorporation

of curtain walls

FANGDA FACADE Installation and

CONTRACTING AED1000000 Dubai Dubai sales of building 100.00 Incorporation

L.L.C curtain walls

Fangda Facade Installation and

(NSW) Pty Ltd AUD500000 Australia Australia sales of building 100.00 Incorporationcurtain walls

(2) Major non wholly-owned subsidiaries

Shareholding of Profit and loss Dividend to be Interest balance of

Company minority attributed to distributed to minority

shareholders minority minority shareholders in theshareholders shareholders end of the period

Zhongrong Litai 45.00% 35230.12 48343241.08

(3) Financial highlights of major non wholly owned subsidiaries

December 31 2025

Company Current Non-current Total of Current Non-current Total

assets assets assets liabilities liabilities liabilities

Zhongrong Litai 210411282.10 26300.00 210437582.10 103008157.51 103008157.51

(Continued)

December 31 2024

Company Current Non-current Total of Current Non-current Total

assets assets assets liabilities liabilities liabilities

136China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2024

Company Current Non-current Total of Current Non-current Total

assets assets assets liabilities liabilities liabilities

Zhongrong Litai 209711213.30 31600.00 209742813.30 102391677.87 102391677.87

2025

Company

Turnover Net profit Total of misc. Business operationincomes cash flows

Zhongrong Litai 110091.72 78289.16 78289.16 -379966.11

(Continued)

2024

Company

Turnover Net profit Total of misc. Business operationincomes cash flows

Zhongrong Litai 110091.72 19074.18 19074.18 -27370.15

2. Interests in joint ventures or associates

(1) Financial summary of insignificant joint ventures and associates

Item December 31 2025/ December 31 2024/2025 2024

Associate:

Total book value of investment 32988644.63 56690973.97

Total shareholding

——Net profit -23702329.34 -70043.43

——Other miscellaneous income

——Total of misc. incomes -23702329.34 -70043.43

IX. Government subsidy

1. Governmental subsidy recognized as receivable at the end of the period

As of December 31 2025 the balance of government grants receivable is

RMB527217.36.

2. Liabilities involving government subsidies

Items

presented Balance on Balance on

in the Tuesday Amount of new

Other misc.December 31 subsidy gains recorded

Wednesday

balance this period December 31

Assets/earning-related

sheet 2024 2025

Deferred

earning 10669612.13 17776306.00 2141640.44 26304277.69 Assets-related

Total 10669612.13 17776306.00 2141640.44 26304277.69 -

137China Fangda Group Co. Ltd. Notes to Financial Statements

3. Government subsidies accounted into current profit or loss

Item 2025 2024 Assets/earning-related

Other gains 2141640.44 630958.59 Assets-related

Other gains 7592656.24 13396327.26 Earning-related

Financial expenses 1639000.00 2616200.00 Earning-related

Total 11373296.68 16643485.85

X. Risks of Financial Tools

The risks associated with the financial instruments of the Company arise from the

various financial assets and liabilities recognized by the Company in the course of its

operations including credit risks liquidity risks and market risks.The management objectives and policies of various risks related to financial instruments

are governed by the management of the Company. The operating management is responsible

for daily risk management through functional departments (for example the Company's credit

management department reviews the Company's credit sales on a case-by-case basis). The

internal audit department of the Company conducts daily supervision of the implementation

of the Company's risk management policies and procedures and reports relevant findings to

the Company's audit committee in a timely manner.The overall goal of the Company's risk management is to formulate risk management

policies that minimize the risks associated with various financial instruments without

excessively affecting the Company's competitiveness and resilience.

1. Credit risk

Credit risk is caused by the failure of one party of a financial instrument in performing

its obligations causing the risk of financial loss for the other party. The credit risk of the

Company mainly comes from monetary capital notes receivable accounts receivable other

receivables receivables financing contract assets etc. The credit risk of these financial assets

comes from the default of the counterparties and the maximum risk exposure is equal to the

book amount of these instruments.The Company's money and funds are mainly deposited in the commercial banks and

other financial institutions. The Company believes that these commercial banks have higher

reputation and asset status and have lower credit risk.For notes receivable accounts receivable other receivables receivables financing and

138China Fangda Group Co. Ltd. Notes to Financial Statements

contract assets the Company sets relevant policies to control credit risk exposure. The Group

set the credit line and term for debtors according to their financial status external rating and

possibility of getting third-party guarantee credit record and other factors. The Group

regularly monitors debtors' credit record. For those with poor credit record the Group will

send written payment reminders shorten or cancel credit term to lower the general credit risk.

(1) Significant increases in credit risk

The credit risk of the financial instrument has not increased significantly since the initial

confirmation. In determining whether the credit risk has increased significantly since the

initial recognition the Company considers reasonable and evidenced information including

forward-looking information that can be obtained without unnecessary additional costs or

effort. The Company determines the relative risk of default risk of the financial instrument by

comparing the risk of default of the financial instrument on the balance sheet date with the

risk of default on the initial recognition date to assess the credit risk of the financial

instrument from initial recognition.When one or more of the following quantitative and qualitative criteria are triggered the

Company believes that the credit risk of financial instruments has increased significantly: the

quantitative criteria are mainly the probability of default in the remaining life of the reporting

date increased by more than a certain proportion compared with the initial recognition; the

qualitative criteria are the major adverse changes in the operation or financial situation of the

major debtors the early warning of customer list etc.

(2) Definition of assets where credit impairment has occurred

In order to determine whether or not credit impairment occurs the standard adopted by

our company is consistent with the credit risk management target for related financial

instruments and quantitative and qualitative indicators are considered.Major financial difficulties have occurred to the issuer or the debtor; Breach of contract

by the debtor such as payment of interest or default or overdue of principal; (B) The

concession that the debtor would not make under any other circumstances for economic or

contractual considerations relating to the financial difficulties of the debtor; The debtor is

likely to be bankrupt or undertake other financial restructuring; The financial difficulties of

the issuer or debtor lead to the disappearance of the active market for the financial asset; To

purchase or generate a financial asset at a substantial discount which reflects the fact that a

139China Fangda Group Co. Ltd. Notes to Financial Statements

credit loss has occurred.Credit impairment in financial assets may be caused by a combination of multiple events

not necessarily by events that can be identified separately.

(3) Expected credit loss measurement

Depending on whether there is a significant increase in credit risk and whether a credit

impairment has occurred the Company prepares different assets for a 12-month or full

expected credit loss. The key parameters of expected credit loss measurement include default

probability default loss rate and default risk exposure. Taking into account the quantitative

analysis and forward-looking information of historical statistics (such as counterparty ratings

guaranty methods collateral categories repayment methods etc.) the Company establishes

the default probability default loss rate and default risk exposure model.Definition:

The probability of default refers to the possibility that the debtor will not be able to fulfil

its obligation to pay in the next 12 months or throughout the remaining period.Breach Loss Rate means the extent of loss expected by the Company for breach risk

exposure. Depending on the type of counterparty the manner and priority of recourse and the

different collateral the default loss rate is also different. The default loss rate is the percentage

of the risk exposure loss at the time of the default calculated on the basis of the next 12

months or the entire lifetime.Exposure to default is the amount payable to the Company at the time of default in the

next 12 months or throughout the remaining life. The assessment of significant increases in

credit risk and the calculation of expected credit losses both involve forward-looking

information. Through the analysis of historical data the Company has identified the key

economic indexes that affect the credit risk of each business type and the expected credit loss.The largest credit risk facing the Group is the book value of each financial asset on the

balance sheet. The Group makes no guarantee that may cause the Group credit risks. Among

the Company's accounts receivable the accounts receivable (including contract assets) from

the top five customers accounted for 12.02% of the total accounts receivable (prior period:

11.01%). Among the Company's other receivables the other receivables from the top five

counterparties by amount accounted for 70.50% of the total other receivables (prior period:

140China Fangda Group Co. Ltd. Notes to Financial Statements

71.82%).

2. Liquidity risk

Liquidity risk is the risk of capital shortage when the Group needs to pay cash or settled

with other financial assets. The Company is responsible for the cash management of its

subsidiaries including short-term investments in cash surpluses and loans to meet projected

cash requirements. The Company's policy is to regularly monitor short and long-term liquidity

requirements and compliance with borrowing agreements to ensure adequate cash reserves

and readily available securities.As of December 31 2025 the maturity of the Company's financial liabilities is as

follows:

In RMB10000

December 31 2025

Item Less than 1

year Within 1-3 years Over 3 years Total

Short-term loans 120284.65 120284.65

Notes payable 42911.06 42911.06

Account payable 200969.52 1659.43 1440.17 204069.12

Employees' wage payable 6781.28 6781.28

Other payables 5087.03 1622.93 5827.31 12537.27

Non-current liabilities due in 1

year 37908.92 37908.92

Other current liabilities 6091.89 6091.89

Long-term loans 30000.00 99000.00 129000.00

Lease liabilities 739.16 158.79 897.95

Total 420034.35 34021.52 106426.27 560482.14

(Continued)

December 31 2024

Item Less than 1

year Within 1-3 years Over 3 years Total

Short-term loans 166369.64 - - 166369.64

Derivative financial liabilities 152.06 - - 152.06

Notes payable 68118.81 - - 68118.81

Account payable 213195.52 297.46 1166.51 214659.49

Other payables 8013.60 1109.24 2968.96 12091.80

Non-current liabilities due in 1

year 12846.95 - - 12846.95

141China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2024

Item Less than 1

year Within 1-3 years Over 3 years Total

Other current liabilities 5083.56 - - 5083.56

Long-term loans - 96700.00 17000.00 113700.00

Lease liabilities - 923.06 142.20 1065.26

Total 473780.14 99029.76 21277.67 594087.57

3. Market risk

(1) Credit risks

The exchange rate risk of the Company mainly comes from the assets and liabilities of

the Company and its subsidiaries in foreign currency not denominated in its functional

currency. Except for the Company's subsidiaries established in the Hong Kong Special

Administrative Region of the People's Republic of China and other overseas jurisdictions

which use Hong Kong Dollars U.S. Dollars Australian Dollars Vietnamese Dong Euros

Indian Rupees UAE Dirhams or Singapore Dollars for pricing and settlement the

Company's other principal operations are priced and settled in RMB.As of Wednesday December 31 2025 the foreign currency financial assets and foreign currency

financial liabilities of the Company at the end of the period are listed in the description of foreign currency

monetary items in Note V 61.The Company pays close attention to the impact of exchange rate changes on the

Company's exchange rate risk. The Company continuously monitors the scale of foreign

currency transactions and foreign currency assets and liabilities to minimize foreign exchange

risks. To this end the Company may avoid foreign exchange risks by signing forward foreign

exchange contracts or currency swap contracts.

(2) Exchange rate risk

The Group's interest rate risk mainly arises from long-term interest-bearing debts such as

long-term bank loans. Financial liabilities with floating interest rate cause cash flow interest

rate risk for the Group. Financial liabilities with fixed interest rate cause fair value interest

rate risk for the Group. The Group decides the proportion between fixed interest rate and

floating interest rate according to the market environment and regularly reviews and monitors

the combination of fixed and floating interest rate instruments.The Finance Department at the Company's head office monitors the level of the Group's

142China Fangda Group Co. Ltd. Notes to Financial Statements

interest rates on an ongoing basis. The rising interest rate will increase the cost of the new

interest-bearing debt and the interest expenditure on interest-bearing debt which has not yet

been paid by the Company at the floating rate and will have a significant adverse effect on

the Company's financial performance. Management will make adjustments in time according

to the latest market conditions.For the period ended December 31 2025 assuming all other risk variables remain

unchanged if the interest rate on borrowings calculated at floating rates were to increase or

decrease by 50 basis points the Company's net profit for the year would decrease or increase

by RMB6502300 (prior period: RMB4800000).

4. Hedging

(1) Risk management of hedging operations

Economic Effective The impact of

Corresponding risk Qualitative and relationships achievement the

Item management quantitative between hedged of expected

corresponding

strategies and information about the items and related risk hedging

objectives hedged risk hedging management activities on

instruments objectives the riskexposure

The Company uses The Company

aluminum futures to has formulated

Utilizing the hedging hedge aluminum-related

function of futures tools raw materials in its The underlying

relevant internal

variables are managementthe Company carries out prospective procurement systems for its

aluminum futures business. The Company standard aluminumprices and the aluminumhedging business to adopts the strategy of Buy or sell

reasonably avoid the dynamic hedging of values of hedged

futures hedging corresponding

items and hedging and forward

Aluminum risks brought about by commodity price risk

aluminum

foreign

futures fluctuations in the prices exposure by adjusting its

instruments change futures contracts

exchange trading

hedging of relevant raw futures contract position

in opposite to hedge the risk

business and

materials to its according to a certain directions due to exposurecontinuously

operations to enhance percentage of its facing the same existing in theevaluates the

the Company's overall prospective procurement hedged risks and spot businesseffectiveness of

ability to withstand risks exposure and the there is a side.hedging to

and to strengthen the exposure* hedging ratio is relationship of

robustness of its basically the same as the mutual hedging of

ensure that the

risks. hedgingoperating activities. quantity of the commodity relationship is

represented by the futures effective in the

position. designated

Utilizing the hedging The Company uses The underlying accounting

and protection function forward foreign exchange variables are all period and that

of forward foreign contracts to hedge foreign currency the risks of Buy or sell

Forward exchange contracts the expected receivables. The exchange rates. The fluctuations in corresponding

foreign Company carries out the Company employs a exchange rates of raw material forward foreign

exchange business of hedging strategy of dynamic the hedged item and purchasing exchange

contract foreign currency hedging of exchange rate the hedging prices and contracts to

value receivables in order to exposures whereby instrument change exchange rate hedge the risk

preservation reasonably avoid the foreign exchange contract in opposite fluctuations of exposure of

risks brought by positions are adjusted directions due to foreign-currency foreign currency

exchange rate according to a certain exposure to the receivables are receivables.fluctuations to its percentage of the expected same hedged risk controlled within

143China Fangda Group Co. Ltd. Notes to Financial Statements

Economic Effective The impact of

Corresponding risk Qualitative and relationships achievement the

management quantitative between hedged of expected correspondingItem strategies and information about the items and related risk hedging

objectives hedged risk hedging management activities on

instruments objectives the riskexposure

operations enhance the foreign currency and there is a a reasonable

Company's overall receivable exposure and relationship of risk range so as to

ability to withstand the ratio of the exposure* hedging. enhance the

risks and strengthen the hedge is essentially the Company's

soundness of its same as the receivable risk-resistance

operating activities. represented by the ability and

contract position. increase the

robustness of its

operating

activities.

(2) Eligible hedging operations and application of hedge accounting

Carrying value Cumulative fair value hedge

associated with adjustments to hedged items Hedge Impact of hedge

Item hedged items included in the carrying effectiveness and accounting related to

and hedging value of the hedged item sources of hedge the Company's financial

instruments recognized ineffectiveness statements

Types of hedge risk

Derivative financial

assets:

RMB1459950.00

Relevance of

Price risk 1459950.00 Inapplicable hedged items to Other comprehensive

hedging instruments income:

RMB1240957.50

Deferred tax liabilities:

RMB218992.50

Exchange rate Relevance of

risk Inapplicable hedged items to

Finance costs:

hedging instruments RMB97537.72

Type

Derivative financial

assets:

RMB1459950.00

Other comprehensive

Cash flow Relevance of

hedging 1459950.00 Inapplicable hedged items to

income:

hedging instruments RMB1240957.50

Deferred tax liabilities:

RMB218992.50

Finance costs:

RMB97537.72

5. Transfer of financial assets

(1) Classification of financial assets by method of transfer

144China Fangda Group Co. Ltd. Notes to Financial Statements

Transfer

method of Nature of financial Amount of

financial assets transferred financial assets Derecognization Basis for judging derecognization

assets transferred

Promissory notes used for

discounting or endorsement are

accepted by banks or enterprises

Endorsement Outstanding with low credit ratings

or promissory notes 40781530.88 Notderecognized discounting or endorsement doesdiscounting in notes receivable not affect recourse and the credit

risk and deferred payment risk

associated with the notes remain

untransferred

Bankers' acceptances used for

Outstanding discounting or endorsement are

Endorsement bankers' accepted by banks with high

or acceptances in 33761787.71 Derecognization credit ratings and the credit risk

discounting receivables and deferred payment risk

financing associated with the instruments

are low

Outstanding

Factoring receivables inreceivables 105859442.51 Derecognization Non-recourse factoring

financing

Total - 180402761.10 - -

(2) Financial assets derecognized due to transfers

Item Transfer method of Gain or loss related tofinancial assets De-recognized amount the de-recognition

Outstanding bankers'

acceptances in Endorsement or 33761787.71

receivables financing discounting

Account receivable Factoring 105859442.51 -3565876.31

Total - 139621230.22 -3565876.31

XI. Fair Value

The level of fair value measurement results is determined by the lowest level of input

values of importance to the fair value measurement as a whole:

First level: quotation of same assets or liabilities in an active market (unadjusted)

Second level: a directly or indirectly observable input value of the asset or liability in

addition to the first level input value.Third level: unobservable input value of the related asset or liability.

1. On December 31 2025 the fair value of assets and liabilities measured at fair

value

145China Fangda Group Co. Ltd. Notes to Financial Statements

Fair Value on Wednesday December 31 2025

Item First level Second level Third level fair

fair value fair value value Total

1. Continuous fair value

measurement

(I) Transactional financial assets 1460360.06 1460360.06

1. Financial assets measured at fair

value with variations accounted 1460360.06 1460360.06

into current income account

1. Transactional financial assets 410.06 410.06

(1) Derivative financial assets 1459950.00 1459950.00

(II) Investment property 5548371426.50 5548371426.50

1. Leased building 5548371426.50 5548371426.50

(III) Other non-current financial

assets 6516131.63 6516131.63

Total assets measured at fair value

continuously 1460360.06 5554887558.13 5556347918.19

(IV) Transactional financial

liabilities

Total assets measured at fair value

continuously

Total assets measured at fair value

continuously

For the financial instruments traded in the active market the Company determines their

fair value based on their quoted prices in the active market; for the financial instruments not

traded in the active market the Company adopts valuation technology to determine their fair

value. The valuation models are mainly cash flow discount model and market comparable

company model. The input value of valuation technology mainly includes risk-free interest

rate benchmark interest rate exchange rate credit point difference liquidity premium lack of

liquidity discount etc.

2. Valuation technique and qualitative and quantitative information for key

parameters of continuous and discontinuous second level fair value items

For derivative financial assets and derivative financial liabilities with fair value of

forward exchange contracts the fair value is determined based on the market value of

expected earnings at the balance sheet date.Receivables financed at fair value through other comprehensive income are notes

receivable for which the fair value is determined based on the book value due to the short

remaining maturity.

3. Valuation technique and qualitative and quantitative information for key

146China Fangda Group Co. Ltd. Notes to Financial Statements

parameters of continuous and discontinuous third level fair value items

Investment properties measured at fair value are appraised using the comparative and

income approaches. Comparison method: It selects a certain number of comparable examples

compares them with the valuation object and processes the comparable instance transaction

prices according to the difference to obtain the value or price of the valuation object. The

income approach is a method of predicting the future earnings of the object of valuation and

using the rate of compensation or capitalization rate income multiplier to convert the future

earnings into value to get the value or price of the object of valuation.

4. Fair value of financial assets and liabilities not measured at fair value

Financial assets and liabilities measured at amortized cost include: monetary capital bills

receivable accounts receivable other receivables short-term borrowings notes payable

accounts payables other payables and long-term payables.XII. Related Parties and Transactions

Criteria for identifying related parties: Parties are considered related if one party controls

jointly controls or exercises significant influence over another party or if two or more parties

are subject to common control or joint control by the same party.

1. Information on the Company's Parent Company

Major shareholder Relationship Ownership type Registered Legaladdress representative Business

Shenzhen Banglin

Technologies Affiliated Limited liability Shenzhen Chen Jinwu Industrial

Development Co. Ltd. party company investment

Shengjiu Investment Ltd. Affiliated Limited liability Hong Xiong Industrialparty company Kong Jianming investment

Major shareholders (Continued):

Major shareholder Registered capital (in Shareholding in the Voting rights in theRMB10000) Company (%) Company (%)

Shenzhen Banglin Technologies

Development Co. Ltd. 3000.00 11.11 11.11

Shengjiu Investment Ltd. HKD100.00 10.73 10.73

Notes:

* The major shareholder of the Company Shenzhen Banglin Technology Development

Co. Ltd. is wholly owned by natural persons among whom Mr. Xiong Jianming Chairman

of the Company holds 85% of the shares and Mr. Xiong Xi Vice Chairman of the Company

147China Fangda Group Co. Ltd. Notes to Financial Statements

holds 15% of the shares.* Among the top 10 shareholders Shenzhen Banglin Technology Development Co.Ltd. and Shengjiu Investment Co. Ltd. are acting in concert.* The final controller of the Company is Xiong Jianming.

2. Profiles of the subsidiaries

For details of subsidiaries of the enterprise please refer to Note VIII rights and interests

in other entities.

3. Joint ventures and associates

(1) Important joint ventures and associates of the Company

The Company's significant joint ventures or associates are disclosed in Note 8 "Interests

in Other Entities."

(2) During the reporting period the related party transactions with the Company and

other joint ventures or joint ventures with the balance formed by the related party transactions

with the Company are as follows:

Joint venture or associate Relationship with the Company

Shenzhen Ganshang Joint Investment Co. Ltd. Affiliates of the Company

4. Other related parties

Other related parties Relationship with the Company

Shenzhen Yikang Real Estate Co. Ltd. Controlled subsidiaries

Shenzhen Skylot Technology Co. Ltd. Common actual controller

Director manager and secretary of the Board Key management

5. Related transactions

(1) Related transactions for purchase and sale of goods provision and acceptance of

services

Sales of goods and services

Associated party Related transaction 2025 2024

Shenzhen Skylot Property service and

Technology Co. Ltd. sales of goods 34773.14 17392.00

(2) Related leasing

The Company is the leasor:

148China Fangda Group Co. Ltd. Notes to Financial Statements

Name of the leasee Category of asset for Recognized in 2025 Recognized in 2024lease Rental income Rental income

Shenzhen Skylot

Technology Co. Ltd. Houses & buildings 86857.14 86857.15

(3) Related guarantees

The Company is the guarantor:

Amount Whether the

Beneficiary party guaranteed Start date Due date guarantee has been

(RMB10000) fully performed

Fangda

Construction 93000.00 December 28 2023 Three years after the expiration date Yes

Technology of debt performance

Fangda

Construction 24000.00 May 27 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 4000.00 June 20 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 39000.00 January 24 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 30000.00 October 20 2023 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 30000.00 December 21 2023 Three years after the expiration date

Technology of debt performance

Yes

Fangda Zhiyuan 36000.00 June 27 2024 Three years after the expiration date

of debt performance Yes

Fangda Zhiyuan 15000.00 May 30 2024 Three years after the expiration date

of debt performance Yes

Fangda Zhiyuan 10000.00 September 25 2023 Three years after the expiration date

of debt performance Yes

Fangda Zhiyuan 10000.00 December 21 2023 Three years after the expiration date

of debt performance Yes

Fangda Property 135000.00 February 25 2020 Three years after the expiration date

of debt performance Yes

Fangda New

Material 10000.00 July 08 2024

Three years after the expiration date

of debt performance Yes

Fangda New 8500.00 November 02 2023 Three years after the expiration dateMaterial of debt performance Yes

Fangda Zhijian 7000.00 May 08 2024 Three years after the expiration date

of debt performance Yes

Fangda Yunzhu 1000.00 May 07 2024 Three years after the expiration date

of debt performance Yes

Fangda Yunzhu 1000.00 June 28 2024 Three years after the expiration date

of debt performance Yes

Fangda Yunzhu 600.00 June 03 2024 Three years after the expiration date

of debt performance Yes

Fangda Dongguan

New Material 5000.00 August 26 2024

Three years after the expiration date

of debt performance Yes

Fangda

Construction 103000.00 January 17 2025 Three years after the expiration date Yes

149China Fangda Group Co. Ltd. Notes to Financial Statements

Amount Whether the

Beneficiary party guaranteed Start date Due date guarantee has been

(RMB10000) fully performed

Technology of debt performance

Fangda

Construction 15000.00 May 11 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 50000.00 September 04 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 30000.00 November 11 2024 Three years after the expiration date

of debt performance YesTechnology

Fangda

Construction 60000.00 June 27 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 20000.00 December 27 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda

Construction 60000.00 December 19 2024 Three years after the expiration date

Technology of debt performance

Yes

Fangda Zhiyuan 35800.00 June 27 2024 Three years after the expiration date

of debt performance Yes

Fangda Zhiyuan 20000.00 November 11 2024 Three years after the expiration date

of debt performance Yes

Fangda Zhiyuan 15000.00 September 04 2024 Three years after the expiration date

of debt performance Yes

Fangda Zhiyuan 10000.00 May 11 2024 Three years after the expiration date

of debt performance Yes

Total amount of

guarantee fulfilled 877900.00

Fangda

Construction 101000.00 December 21 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 39000.00 January 14 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 15000.00 July 01 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 48000.00 December 15 2024 Three years after the expiration date

of debt performance NoTechnology

Fangda

Construction 11150.00 August 16 2023 Three years after the expiration date No

Technology of debt performance

Fangda

Construction 50000.00 July 16 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 20000.00 December 09 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 25000.00 January 10 2025 Three years after the expiration date No

Technology of debt performance

Fangda

Construction 4900.00 April 28 2025 Three years after the expiration date

Technology of debt performance

No

Fangda 20000.00 November 04 2024 Three years after the expiration date No

150China Fangda Group Co. Ltd. Notes to Financial Statements

Amount Whether the

Beneficiary party guaranteed Start date Due date guarantee has been

(RMB10000) fully performed

Construction of debt performance

Technology

Fangda

Construction 40000.00 August 07 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 35000.00 April 21 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 30000.00 March 27 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 25000.00 December 23 2025 Three years after the expiration date

Technology of debt performance

No

Fangda

Construction 60000.00 December 12 2025 Three years after the expiration date

Technology of debt performance

No

Fangda Zhijian 7000.00 June 30 2025 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 18000.00 December 15 2024 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 35800.00 July 22 2025 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 20000.00 April 21 2025 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 10000.00 December 09 2025 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 15000.00 July 16 2025 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 10000.00 July 01 2025 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 15475.00 November 21 2023 Three years after the expiration date

of debt performance No

Fangda Zhiyuan 15000.00 January 13 2025 Three years after the expiration date

of debt performance No

Fangda Yunzhu 1000.00 March 25 2025 Three years after the expiration date

of debt performance No

Fangda Yunzhu 700.00 April 21 2025 Three years after the expiration date

of debt performance No

Fangda New

Material 8500.00 February 27 2025

Three years after the expiration date

of debt performance No

Fangda Property 110000.00 April 02 2025 Three years after the expiration date

of debt performance No

Fangda Intelligent 30000.00 February 22 2024 Three years after the expiration dateManufacturing of debt performance No

Fangda Zhiyuan 31896.02 February 17 2024 Date of project contract completion No

Fangda Zhiyuan 24885.16 February 17 2024 Date of project contract completion No

Dongguan New Three years after the expiration date

Materials 5000.00 July 01 2025 of debt performance No

151China Fangda Group Co. Ltd. Notes to Financial Statements

Amount Whether the

Beneficiary party guaranteed Start date Due date guarantee has been

(RMB10000) fully performed

Total amount of

guarantee being 882306.18

performed

Description of related party guarantee: The above-mentioned guarantees are all

associated guarantees within interested entities of the Company.

6. Receivable and payables due with related parties

(1) Receivable interest

December 31 2025 December 31 2024

Item Affiliated party Remaining book Bad debt Remaining Bad debt

value provision book value provision

Account Shenzhen Skylot

receivable Technology Co. 10048.39 100.48 85792.00 857.92Ltd.Shenzhen

Other Ganshang Joint

receivables Investment Co. 3791089.25 2531120.89 3791089.25 56487.23

Ltd.Other Shenzhen Yikang

receivables Real Estate Co. 76062675.83 760626.76 76062675.83 1133333.87Ltd.

(2) Receivable interest

Item Affiliated party December 31 2025 December 31 2024

Other payables Shenzhen Yikang RealEstate Co. Ltd. 26159711.72 26159711.72

Other payables Shenzhen SkylotTechnology Co. Ltd. 19760.00 19760.00

Shenzhen Ganshang

Other payables Joint Investment Co. 3355.36 3355.36

Ltd.XIII. Contingent events

1. Major commitments

In July 2018 the Company's subsidiary Fangda Real Estate Co. Ltd. (Party A) signed a

contract with Shenzhen Yikang Real Estate Co. Ltd. (Party B1) and Shenzhen Qianhai

Zhongzheng Dingfeng No. 6 Investment Enterprise (Limited Partnership) (Party B2)

"Shenzhen Henggang Dakang Village Project Cooperation Agreement". Party B agrees to

transfer the entire equity of the project company it holds and the entire development interest

of the project to Party A. Party A shall pay Party B a total of RMB600 million for the

cooperation price. As of December 31 2025 Fangda Property has paid Party B and the

152China Fangda Group Co. Ltd. Notes to Financial Statements

project company RMB50 million of security deposit RMB20 million of service fee

RMB61937200 of equity transfer and RMB81862200 of other related payments.The Company has no other commitments that should be disclosed by December 31

2025.

2. Contingencies

Significant contingencies on the balance sheet date:

(1) Litigation Matters

Case Type InitiationDate Plaintiff Defendant/Respondent

Project Litigation/Arbitration Case Status as of

Involved Claims December 31 2025

1. Termination of the

construction contract;

2. Compensation for

liquidated damages

related to delay and

quality defects

amounting to

RMB13721315.00;

3. Double refund of the

Langfang contract price totalingRMB6000000;

June 19 Aomei JiyehReal Estate Fangda Construction Langhefang 4. Additional claims

As of the disclosure date of

2019 Technology Project filed subsequently for this report the case is stillDevelopment

Co. Ltd. repair works

under trial.amounting to

RMB22935269.98;

Counterclaim by

Fangda Construction

Technology Co. Ltd.for payment of

outstanding contract

sums and other

Unresolved Major amounts totaling

Litigation/Arbitration RMB13939863.27

1. Deductions

rectification rework

and repair costs arising

Jinan Kerry from quality issues

Integrated amounting to As of the date of this

Development RMB8995672.29; 2. report's disclosure the

Project Scaffolding arbitration tribunal has

(Phase I and dismantling costs of issued a partial award on the

II) – RMB4000; 3. Quality undisputed portion of the

Xiangheng Specialist inspection and testing counterclaim (requiring

March Property Fangda Construction Subcontract fees of Xiangheng Property to pay

2022 (Jinan) Co. Technology for Supply RMB323271.91; 4. RMB5073672.92 plus

Ltd. and Legal fees of interest in advance) and

Installation RMB690000.00; Fangda Construction

of Aluminum Counter-arbitration Technology has applied for

Windows claim by Fangda enforcement. The remaining

Louvers and Construction issues in the case are under

Curtain Wall Technology Co. Ltd. consolidated hearing.Systems for payment of contract

sums and related

expenses totaling

RMB18062462.28

153China Fangda Group Co. Ltd. Notes to Financial Statements

Case Type Initiation Plaintiff Defendant/Respondent Project Litigation/Arbitration Case Status as ofDate Involved Claims December 31 2025

In February 2026 the court

of first instance ruled that

Chengdu Wenjiang Yufu

1. Payment of contract Wansheng Rail Transit

Chengdu Wenjiang sums and interest Urban Development Co.Yufu Wansheng Rail totaling Ltd. shall pay

Transit Urban RMB17238120.44; 2. RMB17222549.37 in

Fangda Development Co. Ltd. Chengdu Joint and several

contract sums and

August Construction and Chengdu Wenjiang liability borne by

recognized Fangda

2025 Xinghuangfei R&F Center Chengdu Xinghuangfei Construction Technology'sTechnology Enterprise Management Project Enterprise priority right over the

Co. Ltd. (a Management Co. Ltd.; curtain wall works of the

single-shareholder 3. Assertion of priority tower and podium of the

company) right over the project project. As of the date of

proceeds this report's disclosure thedefendant has appealed

against the first-instance

judgment and the case

remains under adjudication.South China Payment of principal

South China International contract sums interest

Fangda International Industrial

Electronic and other amounts

August Industrial totaling As of the disclosure date of

2024 Construction

Materials City

Technology (Shenzhen) Co. Ltd.Raw RMB46004481.42 this report the case is still

and South China City Materials along with assertion of under trial.Holdings Limited Logistics priority right over theZone (Phase construction project

I) Project proceeds.Shenzhen Claim against Fangda

December Jinshunyuan Jinshun

Construction As of the disclosure date of

Industrial Fangda Construction Mingju Technology Co. Ltd. this report the court has2025 Group Co. Technology Project for liquidated damages filed and accepted the case

Ltd. for delay amounting to and is awaiting a hearing.RMB9250070.Payment of principal

contract sums and

interest totaling As of the disclosure date of

December Fangda WestConstruction Shanghai Lianhong Hongqiao RMB26269434.95 this report the court has2025 Technology Property Co. Ltd. Project along with assertion of filed and accepted the casepriority right over the and is awaiting a hearing.construction project

proceeds.The court of first instance

ruled that Hongtao

1. Claim for payment Company shall pay the

of principal purchase purchase price of

price and interest RMB40127678.19 and

totaling overdue interest

RMB56527427.01; 2. (RMB8418135.54 as of

Counterclaim by June 30 2022 with

Shenzhen Hongtao Fangda Town Hongtao Company for subsequent interestMajor Litigation Not September Fangda rescission of the calculated at the LPR rate

Yet Fully Enforced 2022 Property Group Co. Ltd. Building No.(Hongtao Company) 3 "Supplementary until full payment). TheAgreement on Real court dismissed all of

Estate Sale" and Hongtao Company's

payment of liquidated counterclaims. Both parties

damages for delayed appealed and the appellate

title registration court upheld the original

amounting to judgment. As of the date of

RMB44046859.04 this report's disclosure the

case has entered the

enforcement stage.

154China Fangda Group Co. Ltd. Notes to Financial Statements

Case Type Initiation Plaintiff Defendant/Respondent Project Litigation/Arbitration Case Status as ofDate Involved Claims December 31 2025

The court of first instance

ruled that Kaidaer Company

1. Termination of the shall pay the principal

construction contract; contract sums and

2. Payment of principal corresponding interest andconfirmed that Fangda

April Fangda Guangzhou Kaidaer Kaidaer Hub

contract sums of

Construction Investment Co. Ltd. International RMB113529244.60

Construction Technology

2023 Co. Ltd. holds a priorityTechnology (Kaidaer Company) Plaza Project and interest; 3.Assertion of priority right over the discounted or

right over the auction proceeds of the

construction project project's curtain wall works.proceeds As of the date of thisreport's disclosure the case

has entered the enforcement

stage.

1. Parcel 05: The court of

first instance ruled that

Logan Company shall pay

contract sums of

RMB7709679.55 quality

retention of

RMB6033911.38 and

corresponding interest and

recognized Fangda

Construction Technology's

priority right over the

project proceeds. The

appellate court upheld the

original judgment and

additionally ruled that the

owner bears joint and

Logan Construction several liability for

Engineering Co. Ltd. Logan Claim for payment of repayment. The case has

September FangdaConstruction and Shenzhen Logan

Jiuzuan entered the enforcement

2022 Junjing Real Estate Project –

principal contract sums

and interest totaling stage. 2. Parcel 09: TheTechnology Development Co. Ltd. Parcel 05 andParcel 09 RMB33197543.00

court of first instance ruled

(Owner) that Logan Company shallpay contract sums of

RMB9166924.08 quality

retention of

RMB4875762.96 and

corresponding interest and

recognized Fangda

Construction Technology's

priority right over the

project proceeds. The

appellate court upheld the

original judgment and

additionally ruled that the

owner bears joint and

several liability for

repayment. The case has

entered the enforcement

stage.

155China Fangda Group Co. Ltd. Notes to Financial Statements

Case Type InitiationDate Plaintiff Defendant/Respondent

Project Litigation/Arbitration Case Status as of

Involved Claims December 31 2025

The court of first instance

ruled that Huilian Property

shall pay

RMB38800206.53 and

interest and that Boneng

Industrial bears joint and

1. Payment of contract several liability for

sums and interest RMB37563144.42 of thatJiangxi Huilian

Fangda Property Co. Ltd. and Nanchang totaling

amount and corresponding

November interest. The court did not

2023 Construction Jiangxi Boneng

Shanglian RMB45309399.07; 2.Technology Industrial Group Co. Center Assertion of priority

support acceleration of the

Project right over the quality retention orLtd. construction project recognition of the priority

proceeds right. On appeal by FangdaConstruction Technology

the appellate court

recognized the priority

right. As of the date of this

report's disclosure the case

has entered the enforcement

stage.In August 2025 the court of

first instance ruled that

Suhao Company shall pay

RMB18171796.03 and

overdue interest (calculated

at 0.03% per day on a base

amount of

1. Payment of principal RMB17814305.41 from

contract sums interest November 1 2024;

Fangda Shenzhen Suhao Ziyuanyuan

and other amounts RMB110000 already paid

December Investment Co. Ltd. Building totaling has been offset against

2024 ConstructionTechnology (Suhao Company) and Curtain Wall

RMB18600899.46; 2. interest) Zhang Shengjie

Zhang Shengjie Project Assertion of priority bears joint and severalright over the liability and Fangda

construction project Construction Technology's

proceeds priority right was

confirmed. In September

2025 Fangda Construction

Technology applied for

enforcement. As of the date

of this report's disclosure

the case is under

enforcement.In January 2026 the court

of first instance ruled that

1. Payment of principal both defendants shall jointly

Zhejiang R&F Real contract sums and

pay contract sums of

RMB9915000 and interest

August Fangda Estate Development

interest totaling

R&F Center RMB10102081.10; 2. and confirmed the priority

2025 Construction Co. Ltd. and Hangzhou right. Neither partyTechnology Lianfu Real Estate Project Assertion of priorityright over the appealed and the judgmentDevelopment Co. Ltd. construction project has taken effect. As of the

proceeds date of this report'sdisclosure the case has

entered the enforcement

stage.

156China Fangda Group Co. Ltd. Notes to Financial Statements

Case Type InitiationDate Plaintiff Defendant/Respondent

Project Litigation/Arbitration Case Status as of

Involved Claims December 31 2025

In January 2025 the parties

reached a settlement and

the court issued a judicial

confirmation order

(defendants to pay

RMB55418127.73 with

the legal representative

providing additional

personal guarantee). In May

Shenzhen Roland Sibao 2025 Fangda Construction

Property Development Technology applied for

Co. Ltd. Shenzhen enforcement due to

Hanking Group Co. Hanking defendants' breach of the

March Fangda Ltd. Shenzhen Financial

Claim for payment of

Construction Hairunde Petrochemical Project and principal contract sums

settlement terms. In July

2024 Technology Technology Co. Ltd. Hanking Era and interest totaling

2025 an enforcement

Wu Shaojie and Huang Project RMB59126328.21

settlement was reached but

the defendants breached

Jianwen (Legal again. In November 2025

Representative and Fangda Construction

Guarantor) Technology re-applied for

enforcement (claiming

unpaid principal and interest

amounting to

RMB42490699.70). As of

the date of this report's

disclosure the court has

accepted the case and

enforcement proceedings

are ongoing.

(2) Contingent liabilities and their financial impact arising from providing debt

guarantees for other entities.By December 31 2025 the Company has provided loan guarantees for the following

entities:

Name of guaranteed

entity Guarantee

Amount (in

RMB10000) Term

Fangda Property Guarantee andmortgage guarantee 108000.00 2025.04.02-2040.03.28

Fangda Intelligent

Manufacturing Guarantee 28000.00 2024.03.15-2030.03.14

Fangda Construction

Technology Guarantee 10500.00 2025.03.19-2026.03.18

Fangda Construction

Technology Guarantee 4000.00 2025.03.21-2026.03.21

Fangda Construction

Technology Guarantee 5000.00 2025.06.17-2026.06.16

Fangda Construction

Technology Guarantee 4900.00 2025.05.23-2026.05.18

Fangda Construction

Technology Guarantee 29700.00 2024.06.26-2026.06.25

Fangda Construction Guarantee 4000.00 2025.06.30-2026.06.17

157China Fangda Group Co. Ltd. Notes to Financial Statements

Name of guaranteed Amount (in

entity Guarantee RMB10000) Term

Technology

Fangda Yunzhu Guarantee 600.00 2025.03.25-2026.03.24

Fangda Zhiyuan Guarantee 1200.00 2025.03.31-2026.03.30

Fangda Zhiyuan Guarantee 4000.00 2025.06.20-2026.06.19

Total 199900.00

Note 1: Contingent liabilities caused by guarantees provided for other entities are all

related guarantees between interested entities in the Company.Notes 2: The Company's property business provides periodic mortgage guarantee for

property purchasers. The term of the periodic guarantee lasts from the effectiveness of

guarantee contracts to the completion of mortgage registration and transfer of housing

ownership certificates to banks. As of December 31 2025 the Company's outstanding

contingent guarantee liability related to the above matters amounted to RMB4890000.

(3) Other contingent liabilities and their influences

As of December 31 2025 the Company has no significant contingencies that need to be

disclosed.

3. Others

Status of Undischarged Guarantees as of December 31 2025

Cash deposits as

Currency Guarantee balance security

Utilized credit facilities

(original currency)

(Equivalent in RMB) (Equivalent in RMB)

CNY 780950867.53 31931.14 780950867.53

Hong Kong dollars (HKD) 22259665.45 15000000.00 20105375.03

United States dollars (USD) 5739305.43 1962466.66 38377963.35

SGD 18396338.00 100418250.61

AUD 14124550.00 66232839.86

EUR 1257254.67 10354120.83

Total 16994397.80 1016439417.21

XIV. Post-balance-sheet events

1. Profit distribution

On April 3 2026 the sixteenth meeting of the tenth session of the Company's Board of

Directors deliberated and approved the full text and summary of the 2025 Annual Report and

158China Fangda Group Co. Ltd. Notes to Financial Statements

the "2025 Profit Distribution Proposal." The Company will not distribute cash dividends

issue bonus shares or convert capital reserves into share capital for the year 2025.

2. Notes to other issues in post balance sheet period

The Company has no other issues in post balance sheet period that need to be disclosed

on April 03 2026 (report date approved by the Board of Directors).XV. Other material events

1. Segment information

(1) Recognition basis and accounting policy for segment report

The Group divides its businesses into five reporting segments. The reporting segments

are determined based on financial information required by routine internal management. The

Company's management regularly evaluates the operating results of these reporting segments

to decide on the allocation of resources and to assess their performance.The reporting segments are:

* Curtain wall division: production and sales of curtain wall materials design

production and installation of building curtain walls curtain wall testing and maintenance

services;

* Rail transit branch: assembly and processing of subway screen doors screen door

detection and maintenance services;

* Real Estate Segment: Engaging in real estate development and operations property

leasing and property management services on land for which lawful use rights have been

obtained.

(4) New energy segment: photovoltaic power generation photovoltaic power plant sales

photovoltaic equipment R & D installation and sales and photovoltaic power plant

engineering design and installation

(5) Others

The segment report information is disclosed based on the accounting policies and

measurement standards used by the segments when reporting to the management. The policies

and standards should be consistent with those used in preparing the financial statement.

159China Fangda Group Co. Ltd. Notes to Financial Statements

(2) Segment profit or loss assets and liabilities

2025/

December Curtain wall Rail transport Real estate New energy Others Offset Total

312025

Turnover 2582489536.60 596770482.60 185100036.04 19396434.57 22995999.62 29449422.99 3377303066.44

Including:

external

transaction 2569944686.00 596770482.60 176038964.94 18558764.40 15990168.50 3377303066.44

income

Inter-segment

transaction 12544850.60 - 9061071.10 837670.17 7005831.12 29449422.99

income

Including:

major

business 2548180137.18 586079070.27 184943757.90 19396434.57 15990168.50 24569535.92 3330020032.50

turnover

Operating

cost 2425206394.27 425418439.30 79275284.65 7968831.22 8267.66 16340264.57 2921536952.53

Including:

major 2395869372.69 414437641.54 54017532.42 7968831.22 8267.66 16340264.57 2855961380.96

business cost

Operation

cost 511878426.79 70735133.33 390636076.52 2899.22 32765653.12 -60234823.86 1066253012.84

Operating

profit/(loss) -354595284.46 100616909.97 -284811325.13 11424704.13 -9777921.16 73343982.28 -610486898.93

Total assets 6880323000.07 977857042.55 5751277252.87 130227209.06 3493828343.18 4658112779.98 12575400067.75

Total

liabilities 4587040203.14 548307670.17 3140426669.50 4155436.68 1177066961.10 2489222259.19 6967774681.40

(Continued)

2024/

December Curtain wall Rail transport Real estate New energy Others Offset Total

312024

Turnover 3561702648.49 612820581.01 230469222.06 19026115.66 22532419.32 22326788.83 4424224197.71

Including:

external

transaction 3555996915.26 612820581.01 222272168.63 18259004.01 14875528.80 4424224197.71

income

Inter-segment

transaction 5705733.23 - 8197053.43 767111.65 7656890.52 22326788.83

income

Including:

major

business 3507442041.54 612264588.95 229870892.86 19026115.66 22532419.32 18016623.58 4373119434.75

turnover

Operating

cost 3091539824.79 438654376.83 61531185.13 8032304.65 81137.33 11696532.25 3588142296.48

Including:

major 3047951367.08 438554056.89 61531185.13 8032304.65 81137.33 10755162.77 3545394888.31

business cost

Operation

cost 429824307.98 78706103.75 106801017.62 611754.43 -32044875.40 -92308898.05 676207206.43

Operating

profit/(loss) 40338515.72 95460100.43 62137019.31 10382056.58 54496157.39 102939154.63 159874694.80

Total assets 7532568590.72 1032310791.63 6175077185.56 135707679.69 3854072616.26 5174349638.65 13555387225.21

Total

liabilities 5019209775.53 637907745.67 3341408537.22 4400541.98 1564868771.71 3186519125.29 7381276246.82

(3) Others

* External revenue from principal products and services

Item 2025 2024

Metal production 2549499511.03 3506046473.56

160China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025 2024

Railroad industry 586079070.27 612264588.95

New energy industry 18558764.40 18259004.01

Real estate 175882686.80 236549368.23

Total 3330020032.50 4373119434.75

* Geographic breakdown of operating revenue

Item 2025 2024

In China 2995104526.33 4027988850.55

Out of China 382198540.11 396235347.16

Total 3377303066.44 4424224197.71

XVI. Notes to Financial Statements of the Parent

1. Account receivable

(1) Account age

Age December 31 2025 December 31 2024

Less than 1 year 5278640.77 2857394.06

4-5 years 359129.89

Over 5 years 359129.89

Subtotal 5637770.66 3216523.95

Less : Bad debt provision 411916.30 331398.60

Total 5225854.36 2885125.35

(2) Disclosure by bad debt accrual method

December 31 2025

Type Remaining book value Bad debt provision

Book value

Amount Proportion(%) Amount

Provision

rate %

Separate bad debt

provision

Provision for bad debts by

combination 5637770.66 100.00 411916.30 7.31 5225854.36

Combination 3: Other

business models 5637770.66 100.00 411916.30 7.31 5225854.36

Total 5637770.66 100.00 411916.30 7.31 5225854.36

(Continued)

December 31 2024

Type

Remaining book value Bad debt provision Book value

161China Fangda Group Co. Ltd. Notes to Financial Statements

Amount Proportion(%) Amount

Provision

rate %

Separate bad debt

provision

Provision for bad debts by

combination 3216523.95 100.00 331398.60 10.30 2885125.35

Combination 3: Other

business models 3216523.95 100.00 331398.60 10.30 2885125.35

Total 3216523.95 100.00 331398.60 10.30 2885125.35

Method of bad debt provision：

* Accounts receivable for which allowance for doubtful accounts is provided under

Portfolio 3: Other Category

December 31 2025 December 31 2024

Age Remaining Bad debt Providing Remaining Bad debt Providing

book value provision rate (%) book value provision rate (%)

Less than 1 year 5278640.77 52786.41 1.00 2857394.06 20858.98 0.73

4-5 years 359129.89 310539.62 86.47

Over 5 years 359129.89 359129.89 100.00

Total 5637770.66 411916.30 7.31 3216523.95 331398.60 10.30

Provision for bad debts by combination: 11.

(3) Changes in bad debt provision

December 31 Change in the periodType December2024 Provision Written-backor recovered Write-off

Other 31 2025

change

Portfolio 3.Others 331398.60 80517.70 411916.30

(4) No written-off account receivable during the report period

(5) Accounts receivable and contract assets with the top-5 ending balances grouped by

party owed

The aggregate amount of the top five accounts receivable by debtor at period-end totaled

RMB5282959.37 representing 93.71% of the total accounts receivable balance with a

corresponding aggregate allowance for doubtful accounts of RMB408368.19.

2. Other receivables

(1) Classification of notes receivable

Item December 31 2025 December 31 2024

Other receivables 1131454187.78 1622103166.85

162China Fangda Group Co. Ltd. Notes to Financial Statements

Item December 31 2025 December 31 2024

Total 1131454187.78 1622103166.85

(2) Other receivables

(1) Disclosure by age

Age December 31 2025 December 31 2024

Less than 1 year 3425432.76 53408271.79

1-2 years 53345434.89 642978380.00

2-3 years 632978380.00 92577980.00

3-4 years 92577980.00 680897404.79

4-5 years 318667629.82 152242066.54

Over 5 years 30459793.09 -

Subtotal 1131454650.56 1622104103.12

Less : Bad debt provision 462.78 936.27

Total 1131454187.78 1622103166.85

(2) Classification by nature of funds

By nature December 31 2025 December 31 2024

Accounts between related parties

within the scope of consolidation 1131408372.96 1622041266.22

Others 46277.60 62836.90

Subtotal 1131454650.56 1622104103.12

Less : Bad debt provision 462.78 936.27

Total 1131454187.78 1622103166.85

* Method of bad debt Disclosed

A. The provision for bad debts as at Wednesday December 31 2025 is based on the

three-phase model as follows:

Step segment Remaining book value Bad debt provision Book value

First stage 1131454650.56 462.78 1131454187.78

Total 1131454650.56 462.78 1131454187.78

As at Wednesday December 31 2025 the first phase of the provision for bad debts:

Type Remaining book Providing Bad debtvalue rate (%) provision Book value

Separate bad debt provision

Provision for bad debts by

combination 1131454650.56 0.00 462.78 1131454187.78

Portfolio 3: deposit and margin

163China Fangda Group Co. Ltd. Notes to Financial Statements

Type Remaining book Providing Bad debtvalue rate (%) provision Book value

receivable

Portfolio 7: Other receivables 46277.60 1.00 462.78 45814.82

Portfolio 6: related party funds

within the scope of 1131408372.96 1131408372.96

consolidation

Total 1131454650.56 0.00 462.78 1131454187.78

B. The provision for bad debts as at December 31 2024 is based on the three-phase

model as follows:

Step segment Remaining book value Bad debt provision Book value

First stage 1622104103.12 936.27 1622103166.85

Total 1622104103.12 936.27 1622103166.85

As at Tuesday December 31 2024 the first phase of the provision for bad debts:

Type Remaining book Providing Bad debtvalue rate (%) provision Book value

Separate bad debt provision

Provision for bad debts by

combination 1622104103.12 0.00 936.27 1622103166.85

Portfolio 3: deposit and

margin receivable

Portfolio 7: Other receivables 62836.90 1.49 936.27 61900.63

Portfolio 6: related party funds

within the scope of 1622041266.22 1622041266.22

consolidation

Total 1622104103.12 0.00 936.27 1622103166.85

The amount of the bad debt provision is Basis：

Provision for bad debts by combination: 11.* Changes in bad debt provision

December 31 Change in the periodType December2024 Provision Written-back orrecovered Write-off

Other 31 2025

change

Other

receivables

and bad debt 936.27 -473.49 462.78

provision

Total 936.27 -473.49 462.78

5 No other receivables were actually written off during the current period.

* Balance of top 5 other receivables at the end of the period

164China Fangda Group Co. Ltd. Notes to Financial Statements

Balance on

Entity By nature Wednesday Age Percentage (%) Bad debtDecember 31 provision

2025

Shenzhen 3379155.16

Less than

Fangda Related party

1 year

funds within the 12706314.89 1-2 yearsProperty

Development scope of

615478380.00 2-3 years 82.16

Co. Ltd. consolidation 72577980.00 3-4 years

225409345.03 4-5 years

Fangda Related party 40639120.00 1-2 years(Jiangxi) 17500000.00 2-3 years

Property funds within the

Development scope of 20000000.00 3-4 years

15.15

Co. Ltd. consolidation 93258284.79 4-5 years

Shihui Related party

International funds within the Over 5

Holding Co. scope of 30459793.09 years 2.69

Ltd. consolidation

Housing Non-related Less than

provident fund parties 23311.00 1 year 0.00 233.11

Social

insurance Non-related 20070.95 Less than

contributions parties 1 year

0.00200.71

Total 1131451754.91 100.00 433.82

3. Long-term share equity investment

(1) Long-term share equity investment

December 31 2025 December 31 2024

Item Remaining book Impairmen Book value Remaining book Impairmenvalue t provision value t provision Book value

Investment

in 1706562530.0 1706562530.0 1657062530.0 1657062530.0

subsidiarie 0 0 0 0

s

(2) Investment in subsidiaries

December 31 2024 Change (+-) December 31 2025

Balan Balan

Invested ce of Decre Impair ce of

entity Book value impai Increased ased ment Oth impairrment investment invest provisi ers Book value ment

provi ment on provis

sion ion

Fangda

Construction 751950000.00 751950000.00

Technology

Fangda

Jiangxi New 74496600.00 74496600.00

Material

Fangda

Property 198000000.00 198000000.00

165China Fangda Group Co. Ltd. Notes to Financial Statements

December 31 2024 Change (+-) December 31 2025

Balan Balan

Invested ce of Decre Impair ce of

entity Book value impai Increased ased ment Oth impairrment investment invest provisi ers Book value ment

provi ment on provis

sion ion

Shihui

International 61653.00 61653.00

Fangda New

Energy 99000000.00 99000000.00

Fangda

Investment

Holding 98000000.00 98000000.00

Company

Fangda

Intelligent

Manufacturin 198000000.00 49500000.00 247500000.00

g

Fangda

Zhiyuan 237554277.00 237554277.00

Total 1657062530.00 49500000.00 1706562530.00

4. Operational revenue and costs

20252024

Item Income Cost Income Cost

Main business 22995999.62 8267.66 22532419.32 81137.33

Total 22995999.62 8267.66 22532419.32 81137.33

5. Investment income

Item 2025 2024

Dividends distributed by subsidiaries 25500000.00 72929550.62

Investment income of trading financial assets during

obtained the holding period 176162.22 -

Total 25676162.22 72929550.62

XVII. Supplementary Materials

1. 1. Detailed accidental gain/loss

Item 2025

Non-current asset disposal gain/loss (including the write-off part for which assets

impairment provision is made) -3032277.77

Government grants recognized in the current period's profit or loss (except for

government grants that are closely related to the Company's normal business

operations in line with national policies and in accordance with defined criteria and 7081782.93

have a continuous impact on the Company's profit or loss)

Gains and losses from changes in the fair value of financial assets and liabilities held

by non-financial corporations and gains and losses from the disposal of financial assets

and liabilities except for effective hedging operations related to the Company's normal 1491525.97

business operations

166China Fangda Group Co. Ltd. Notes to Financial Statements

Item 2025

One-time expenses incurred by the enterprise due to the discontinuation of related

business activities such as expenditures for employee placement. -1145361.48

Gain/loss from change of fair value of investment property measured at fair value in

follow-up measurement -280731968.67

Other non-business income and expenditures other than the above -17778105.99

Other gain/loss items satisfying the definition of non-recurring gain/loss account

Total non-recurring gain and loss -294114405.01

Less: Influence of non-recurring gain and loss on income tax -73720330.38

Net non-recurring gain and loss -220394074.63

Less: Net non recurring profit and loss attributable to minority shareholders -38.58

Net non recurring profit and loss attributable to common shareholders of the company -220394036.05

2. Net income on asset ratio and earning per share

*2025

Weighted average Earning per share

Profit of the report period net income/asset Basic earnings per Diluted earnings

ratio (%) share per share

Net profit attributable to common

shareholders of the Company -8.75 -0.48 -0.48

Net profit attributable to the common

owners of the PLC after deducting of -4.98 -0.27 -0.27

non-recurring gains/losses

*2024

Weighted average Earning per share

Profit of the report period net income/asset Basic earnings per Diluted earnings

ratio (%) share per share

Net profit attributable to common

shareholders of the Company 2.41 0.13 0.13

Net profit attributable to the common

owners of the PLC after deducting of 2.66 0.15 0.15

167China Fangda Group Co. Ltd. Notes to Financial Statements

Weighted average Earning per share

Profit of the report period net income/asset Basic earnings per Diluted earnings

ratio (%) share per share

non-recurring gains/losses

Company's name: China Fangda Group Co. Ltd.Date: April 03 2026

168