/Hengbao Shares: 2026 Semi-Annual Report

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Hengbao Shares: 2026 Semi-Annual Report

Shenzhen Stock Exchange

2026/08/29

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Hengbao Co., Ltd. 2026 Semi-Annual Report

August 2026

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 1 Important Tips, Table of Contents and Definitions

The company's board of directors, directors and senior managers guarantee that the contents of the semi-annual report are true, accurate and complete, and that there are no false records, misleading statements or major omissions, and bear individual and joint legal liability.

Qian Jing, the person in charge of the company, Xu Xiaoling, the person in charge of accounting work, and Liu Chunlian, the person in charge of the accounting department (accounting supervisor), declare that they guarantee the authenticity, accuracy and completeness of the financial report in this semi-annual report. All directors have attended the board meeting to review this semi-annual report.

If this report involves forward-looking statements such as future plans, it does not constitute a substantive commitment by the company to investors. Investors and relevant persons should maintain sufficient awareness of risks and understand the differences between plans, forecasts and commitments.

The company describes in detail the risks and countermeasures that may exist in the company's operations in the "10. Risks faced by the company and countermeasures" in the third section of the "Management Discussion and Analysis" of this report. Investors are advised to pay attention to the relevant content.

The company plans not to distribute cash dividends, give away bonus shares, or convert public reserve funds into share capital.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

1. Company Profile

Stock abbreviation Hengbao Co., Ltd. Stock code 002104 Stock Exchange Shenzhen Stock Exchange

The Chinese name of the company Hengbao Co., Ltd.

The company’s Chinese abbreviation (if any) Hengbao Shares

The company’s foreign name (if any) Hengbao Co.,LTD.

The abbreviation of the company’s foreign name (such as

Hengbao Co.,LTD.

Yes)

The legal representative of the company Qian Jing

2. Contact person and contact information

Secretary of the Board of Directors Name of Securities Affairs Representative Wang Jian

Contact address: Hengtang Industrial Zone, Danyang City, Jiangsu Province Tel: 0511-86644324 Fax: 0511-86644324 Email: [email protected]

3. Other situations

Company contact information

Whether the company's registered address, company office address and its postal code, company website, e-mail address, etc. have changed during the reporting period □Applicable Not applicable

The company's registered address, company office address and its postal code, company website, e-mail address, etc. did not change during the reporting period. For details, please refer to the 2025 annual report.

Information disclosure and preparation location

Whether the location of information disclosure and preparation changes during the reporting period

□Applicable Not applicable

The name and URL of the stock exchange website and media where the company discloses its semi-annual report. The location where the company's semi-annual report is prepared has not changed during the reporting period. For details, please refer to the 2025 annual report.

Other relevant information

Whether other relevant information has changed during the reporting period

□Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

4. Main accounting data and financial indicators

Whether the company needs to retroactively adjust or restate previous years’ accounting data

□Yes No

This reporting period Same period last year This reporting period increased or decreased operating income (yuan) compared with the same period last year 289,081,144.49 430,168,327.97 -32.80% Net profit attributable to shareholders of listed companies

-45,795,110.59 35,354,056.19 -229.53% profit (yuan)

Deductions attributable to shareholders of listed companies

Net profit from non-recurring gains and losses -59,193,506.26 22,581,762.16 -362.13% (yuan)

Net cash flow from operating activities

-149,380,920.16 33,967,708.96 -539.77% (yuan)

Basic earnings per share (yuan/share) -0.0647 0.0499 -229.66% Diluted earnings per share (yuan/share) -0.0647 0.0499 -229.66% Weighted average return on equity -2.15% 1.62% -3.77%

End of the reporting period End of the previous year Increase or decrease in total assets at the end of the reporting period compared with the end of the previous year (yuan) 2,308,634,811.99 2,386,740,321.09 -3.27% Net assets attributable to shareholders of listed companies

2,103,730,848.56 2,159,685,639.42 -2.59% output (yuan)

5. Differences in accounting data under domestic and foreign accounting standards

Differences in net profit and net assets in financial reports disclosed in accordance with both international accounting standards and Chinese accounting standards

□Applicable Not applicable

During the reporting period, there was no difference between the net profit and net assets in the financial reports disclosed in accordance with international accounting standards and Chinese accounting standards.

Differences in net profit and net assets in financial reports disclosed in accordance with both foreign accounting standards and Chinese accounting standards

□Applicable Not applicable

During the reporting period, there was no difference between the net profit and net assets in the financial reports disclosed in accordance with foreign accounting standards and Chinese accounting standards.

6. Non-recurring profit and loss items and amounts

Applicable □Not applicable

Unit: Yuan

Item Amount Description

Government subsidies included in current profits and losses (related to the company’s regular

Closely related to regular business operations and in compliance with national policies

326,348.13

stipulates, enjoys according to determined standards, and treats the company

Except for government subsidies that have a lasting impact on profits and losses)

Except for effective transactions related to the company’s normal business operations,

In addition to futures hedging business, non-financial enterprises hold financial

Changes in fair value of assets and financial liabilities 9,011,289.56

Profit and loss and disposal of financial assets and financial liabilities

profit and loss

Gains and losses from entrusting others to invest or manage assets 4,540,793.50

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Other non-operating income other than the above items and

-122,298.96 expenses

Less: Income tax impact 357,736.56 Total 13,398,395.67 Details of other profit and loss items that meet the definition of non-recurring gains and losses:

□Applicable Not applicable

The company has no other specific circumstances of profit and loss items that meet the definition of non-recurring profits and losses.

Explanation on defining the non-recurring profit and loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies Publicly Offering Securities - Non-recurring Profit and Loss" as recurring profit and loss items

□Applicable Not applicable

The company does not define the non-recurring profit and loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies that Offer Securities to the Public - Non-recurring Profit and Loss" as recurring profit and loss items.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 3 Management Discussion and Analysis

1. The main business of the company during the reporting period

During the reporting period, the company focused on financial technology, Internet of Things, certificate and identity security, access management, intelligent identification and digital and data services, and was committed to providing banks, payment companies, operators, government public service departments, transportation and equipment terminal manufacturers, etc. with overall solutions covering payment solutions and scene construction, mobile device connection security management, identity authentication and privacy protection, access services, digital services and data security. Relying on its strong technology accumulation and many years of deep experience in the fields of financial technology, Internet of Things and digital security, the company helps customers provide stable, reliable and secure connection services for hundreds of millions of users and mobile devices.

In the domestic market, the company has won the trust of the country's top ten ministries and commissions and other government agencies, and has established solid cooperative relationships with more than 100 banks and four major communication operators; in overseas markets, the company actively implements the "Belt and Road" initiative, relying on its rich practical experience in payment and connection security solutions in Southeast Asia, South Asia and Africa, and through strategic cooperation with local manufacturers. It continues to increase its overseas market share and promotes the transformation and upgrading of "Made in China" to a "global brand".

During this reporting period, the company's operating income, gross profit margin and net profit decreased significantly compared with the same period last year, mainly due to the comprehensive impact of the following factors: On the one hand, domestic traditional main business has gradually entered a period of saturation, industry competition has further intensified in the short term, product selling prices have dropped irrationally and significantly, and the number of orders has declined simultaneously; at the same time, driven by market demand such as AI and storage, the external supply of the company's main raw material chips continues to be tight, the purchase unit price has increased to varying degrees, and profit margins have been squeezed in both directions. On the other hand, in order to cope with increasingly severe industry challenges, the company has comprehensively promoted digital transformation, implemented strategic adjustments to existing technical resources and personnel structure, and increased initial investment in overseas business. In addition, historical administrative penalties also had a certain lagging impact on current performance.

Facing the loss situation in the first half of 2026, the company will resolutely promote its global strategic layout and ensure that its products can achieve sustainable, high-value long-term returns on a global scale. This strategy will run through all aspects of the market, products, research and development, supply chain and production, aiming to form synergy and comprehensively reverse the business situation. The following are specific measures: 1. Market side: Continue to increase overseas market expansion, expand business coverage areas and product matrix, and hedge against domestic competitive pressure; 2. Product side: Accelerate the development and promotion of next-generation products, focusing on promoting eSIM and connection management platforms, digital security identity authentication, payment and acquisition scenario construction and acquisition services, etc. services, actively deploying digital issuance and payment-related products and solutions, covering digital cards, virtual cards and smart card life cycle management platforms; 3. Research and development: focusing on cutting-edge technology iterations, continuing to cooperate with digital research institutes and relevant banks to carry out research and promotion of digital renminbi, and deeply exploring innovative fields such as AI payment digital people and quantum security;

Supply chain side: implement strategic stocking and price locking strategies for main raw materials, dynamically optimize share allocation, and strengthen procurement cost control through various means such as process improvement, cost reduction and efficiency improvement; 5. Production side: comprehensively promote production automation and digital upgrades to improve operational efficiency; optimize staffing, improve human efficiency, and strictly control labor costs; strengthen production collaboration and management efficiency, and reduce hidden management costs.

The specific business is as follows:

Financial technology business

During the reporting period, the company relied on its technological accumulation in the fields of payment products, trusted identity authentication, payment terminals and digital payment and business platforms to continue to improve the overall solution of "issuance and acceptance, identity authentication and security, payment and value-added services". The company's business continued to cover bank card issuance, digital wallet issuance, digital payment and collection, merchant value-added services and other full-scenario applications, empowering customers in banks, transportation, campuses, shops, education, etc. in China and the Asia-Pacific, Middle East and Africa regions. (1) Payment and digital distribution products

During the reporting period, the company continued to deepen its global market expansion, with a wide range of customers covering large state-owned commercial banks, joint-stock banks, city commercial banks, rural commercial banks, non-bank payment institutions, overseas banks and financial technology companies, and maintained long-term and stable partnerships with international payment organizations such as UnionPay, VISA, MasterCard, American Express and JCB. At the same time, the company actively researches and promotes digital issuance solutions such as digital card/virtual card issuance and management, digital wallet issuance and full life cycle management, builds a product solution portfolio including payment gateways, aggregated acquiring platforms, acquiring processors and other products around the digital acquiring system, and continues to promote the construction of secure bases including payment tokenization technology, identity authentication and authorization. In the construction of payment terminal products, the company has steadily promoted the integration of traditional three-party payment, digital currency payment and other payment methods, as well as POS terminals, cloud speakers, code tags and other series of products that support QR code payment, NFC contactless payment and other payment methods, and continues to promote the testing and certification of related products. At the same time, it promotes technical docking, product testing and delivery with domestic and foreign banking institutions and non-bank payment institutions. (2) Digital finance and AI platform

With the rapid development of AI technology, Agent Pay has gradually moved from industry proof-of-concept to pilot implementation in the global payment field. During the reporting period, the company increased investment and research in the field of Agent Pay, and actively promoted the planning and construction of the ADUP (AI Driven Universal Platform) platform, covering platform users.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Users, platform merchants, platform operators and other multiple agents work together to build a new smart business ecosystem with agent security as the base and agent payment as the carrier.

In the field of digital platforms, the company continues to deepen product and project cooperation with domestic and foreign banks in the field of digital platforms, providing core software products such as instant card production platforms, DIY self-service card application platforms, order management platforms, and member service platforms, and continues to iterate the data management platform Athena Studio for financial consumption and payment scenarios and the AI Agent platform that integrates multiple large models.

In the field of financial scenarios, the company's independently developed Heng e-payment platform has been expanded to business scenarios such as smart campuses, smart parks, smart canteens, and smart elderly care. It supports one-stop integration with access control systems, monitoring systems, gate systems, facial devices, consumer machines, etc. It fully supports instant payment, recharge payment, point payment, and digital RMB payment, and covers multiple payment channels such as QR codes, swiping cards, and face swiping.

(3) Central bank digital currency products

In order to fully implement the relevant deployment of "steady development of digital renminbi" in the national "15th Five-Year Plan" outline, and implement the work requirements to improve the inclusive service capabilities of digital renminbi and meet the public's safe and efficient digital payment needs, my country's digital renminbi system has completed an important transition from 1.0 digital cash (M0) to 2.0 deposit currency (M1), becoming an institutional milestone in the development of my country's central bank's digital currency. As of the disclosure date of this report, the number of domestic digital renminbi business operating institutions has expanded to 30. Relying on the official cross-border digital renminbi settlement infrastructure CBETS platform, it can achieve one-point access to 26 domestic and foreign contracting institutions, which can effectively support wholesale trade and retail trade multi-scenario settlement business.

During the reporting period, the company continued to increase investment in research and development and large-scale market promotion of the core track of central bank digital currency (CBDC), and built a full-coverage, highly adaptable digital product matrix. Focusing on the core financial track of digital renminbi, the company has built a full-link product system covering issuance (issuance management system, exchange equipment), payment (digital renminbi hard wallet), acquiring (smart collection terminal), and AI smart payment (Agent Pay). During the reporting period, the company successfully won the bid for a digital renminbi hard wallet issuance and management system project for a systemically important bank.

The company focuses on the core demands of digital upgrading of banking financial institutions, provides product support and underlying technical guarantees for the large-scale implementation of various digital renminbi scenarios, continues to deepen business cooperation with major commercial banks, strives to avoid homogeneous competition, and focuses on smart elderly care, smart campuses, overseas visits to China, smart cultural tourism, smart transportation, In the direction of smart contracts and other directions, it outputs scenario-based and customized CBDC overall solutions to accurately match the actual business needs of financial institutions. It can provide efficient and low-cost on-chain settlement services for domestic and overseas digital finance and blockchain-related business scenarios, and is committed to building a domestic first-class digital RMB product and application service system. Given that the digital renminbi is still in the pilot promotion stage, this business only generates a small amount of revenue and has not yet formed a scale.

Communications and IoT connection business

The company's communications business is centered on "security + connection", building a full-chain system of "products + solutions + services", focusing on core areas such as eSIM technology, quantum security, and national secret algorithms, implementing an "independent research and development + collaborative innovation" model, and gradually joining the China Telecom Terminal Industry Alliance eSIM Sub-alliances, Global Smart IoT Alliance eSIM IoT Technical Committee, China Mobile eSIM Terminal Ecological Alliance, China Communications Enterprise Association AI-eSIM Professional Committee and other organizations have become the first batch of member units, actively participating in the formulation of industry standards and consolidating technological leadership. At the same time, relying on large-scale production bases to achieve independent production of core products, relying on rich manufacturing experience and supply chain advantages, we can flexibly adjust production capacity according to orders to ensure timely delivery and quality safety. We have established stable cooperation with the four major communication operators, Internet of Things manufacturers and solution providers in China. In overseas markets, we focus on expanding into Southeast Asia, South Asia, Africa and other markets through strategic cooperation with local manufacturers, and build a global service network to provide full-process services including pre-sales consultation, in-sales adaptation, and after-sales support to quickly respond to customer needs.

(1) Internet of Things connection solution

In terms of communication connection products, the company provides SIM cards, M2M cards, super SIM cards and eSIM products, provides basic cellular communication connection capabilities, supports 4G and 5G authentication, and can be equipped with encryption algorithms such as national secrets and quantum, while ensuring identity authentication and secure data transmission, it is fully adapted to industry applications such as digital currency and digital identity. Among them, eSIM products fully support international and domestic chip platforms, enabling remote network access and flexible code management of mobile phones and IoT devices around the world, and widely empowering application scenarios such as consumer electronics, industrial IoT, Internet of Vehicles, mobile payment, government public services, and digital security.

(2) Platform and services

In terms of platforms and services, the eSIM connection management platform is the core infrastructure for realizing large-scale commercial use of eSIM. It undertakes key functions such as configuration file security management, remote delivery, and terminal life-cycle management and control. It is the core bridge for eSIM hardware to connect to operator networks and industry terminals. The company mainly provides eSIM remote management platform, connection management backend and overall secure communication solutions to global operators, Internet of Things enterprises and vertical industry customers; the company's eSIM hardware products and eSIM management platform have simultaneously obtained GSMA SAS-UP/SAS-SM dual international authoritative certifications, reaching the highest standards of global eSIM industry security and interoperability, and possessing the compliance qualifications to provide eSIM connection subscription management services to global customers. The platform supports domestic and international multi-site distributed deployment and can provide complete connection management for global industry customers.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Management services effectively support functions such as global remote connection management, data monitoring, security protection, testing and verification, and full life cycle management and control, helping customers reduce cross-regional operation and maintenance costs, optimize operational efficiency, and build a secure connection base.

(3) Customized solutions

In terms of customized solutions, the company has built an overall service system of "SIM/eSIM + industry applications + system platform" to accurately match the personalized needs of IoT enterprises, vertical industries and global operators, and achieve deep integration of communication connections, digital security and industry applications. At the same time, the company continues to integrate AI, eSIM and quantum security technologies to build core barriers of "security + connectivity". At the 2026 GSMA World Mobile Communications Conference, the company teamed up with China Telecom and other partners to release a cross-terminal crowd intelligence trusted collaboration solution, and worked with China Unicom to jointly release eSIM smart payment terminal products. Relying on eSIM full-link products that have passed international authoritative certification, we will steadily promote the construction of a global service network. At the same time, we will continue to deepen collaboration with the financial technology business sector and fully empower multi-industry application scenarios.

Transportation and government affairs services

(1) Transportation field

During the reporting period, the company continued to provide transportation ticketing system solutions for urban public transportation, intercity railways, highways and other scenarios, covering bus cards, subway tickets, ETC on-board units and back-end clearing systems. Related products support the interconnection of different standards such as the Ministry of Housing and Urban-Rural Development and the Ministry of Transport, enabling one-card travel across cities and transportation modes.

(2) Digital government field

During the reporting period, the company closely followed the policy guidance of the construction of "one card" for resident services and continued to deepen its social security card-related government service business. For cooperative banks, the company can provide hardware equipment and supporting support for instant issuance of social security cards to support bank branches to quickly complete the issuance of social security cards, shorten the waiting period for people to apply for cards, and further expand the coverage of social and bank integrated convenient service outlets; for cardholders, the company actively promotes social security cards to be combined with diversified people's livelihood applications such as government affairs processing, transportation, cultural tourism, and subsidy issuance. It continues to enrich the supply of one-card scenarios, open up access to people's livelihood services in multiple fields, reduce people's service costs, and effectively improve the convenience of residents' lives. At the same time, the company continues to track the technological evolution direction of the next generation of social security products, studies and determines the development trend of "social security wallet" products that couple software and hardware, pays attention to cutting-edge technical requirements such as post-quantum security and unified online and offline trusted authentication, and does a good job in technical reserves and pre-research work to adapt to the long-term standard plan for future digital iterative upgrades of social security cards, and help build a safe and convenient new ecology of universal social security services.

At the same time, the company is also a designated manufacturer of preferential treatment cards for the Ministry of Veterans Affairs, China Disabled Persons' Federation's third-generation People's Republic of China Disabled Persons' Certificate, urban public transportation IC cards of the Ministry of Transport, road transport electronic certificates of the Ministry of Transport, digital city card interconnection of the Ministry of Housing and Urban-Rural Development, etc., and continues to provide solid support for national digital government affairs and smart city construction.

(3) Digital certificate field

The company has full-process technical capabilities covering high-security card design, biometric data collection and storage, personalized information writing and key management, and can provide digital issuance and physical security production services for various legal licenses. At present, the company's product matrix has fully covered core categories such as identity recognition (such as access control cards, park smart visitor cards), passports, resident ID cards, digital ID cards, and labor cards.

In the field of identity authentication security, the company actively promotes the transformation and upgrading of traditional physical certificates to digital identity certificates, develops and continuously optimizes electronic certificate solutions integrated with mobile terminals, and focuses on trusted identity and secure access. Relying on security hardware and PKI technology, the company provides USB PKI security tokens to provide support for user identity authentication and secure access to achieve secure mutual recognition of online and offline identities. During the reporting period, the company continued to promote pilot verification and scenario adaptation of digital identity and digital token-related products, identity and access management (IAM) platforms, and further expanded its product and service capabilities in the field of identity authentication security.

In the field of high-end anti-counterfeiting and special printing technology, the company has steadily promoted the development and mass production of high-end anti-counterfeiting certificate cards based on advanced materials such as polycarbonate (PC), ensuring that the products maintain industry-leading levels in core indicators such as physical durability, visual aesthetics and multiple anti-counterfeiting security.

Module packaging business

In terms of module packaging business, the company continues to deeply explore market segments, accurately anchors the core demands of customers, provides customized solutions around key indicators such as product quality and performance, and builds a diversified module packaging product matrix. At the same time, the company continues to increase investment in cutting-edge technology research and development, relies on its independent patented technology system to promote product iterative upgrades and continuous optimization of processes, continuously consolidates core competitiveness through technological innovation, and consolidates and enhances its leading position in market segments.

2. Analysis of core competitiveness

Comprehensive service advantages

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

As a leading company in the field of data security in China, the company is committed to providing data security, identity authentication, intelligent modules, platform services, big data and blockchain technology solutions for banking, communications, government public service departments, transportation and other fields, from security equipment to payment security, identity and privacy protection. , mobile payment solutions, cloud authentication access services and the Internet of Things, etc. With its outstanding market capabilities, technical capabilities and service capabilities, the company is the main supplier of products related to important customers such as the four major communication operators, major commercial banks, the Ministry of Housing and Urban-Rural Development, the Ministry of Transport, the Ministry of Health, the State Administration of Taxation, and railway companies. The company is currently one of the companies with the most various qualifications in the domestic smart card industry. These qualifications are necessary conditions for smart card companies to enter important market segments.

Technical advantages

Relying on the company's high-tech enterprises, Jiangsu Province Smart Card Engineering Technology Research and Development Center and other platforms, it has built a strong technology research and development system. The company takes smart cards, security terminals, mobile payments and overall system solutions as its main technical directions, and constantly explores new product markets. As of the end of June 2026, the company and its subsidiaries have applied for 678 patents, 392 software copyrights, 37 registered trademarks, 17 software product registration certificates, 11 products have obtained certificates from the State Cryptozoology Administration, and participated in the formulation of 7 national standards, 8 industry standards, and 1 group standard. It is a national intellectual property demonstration enterprise.

Talent and management advantages

After years of accumulation, the company has established a stable, high-quality, and well-structured management team, and has formulated an assessment mechanism and incentive mechanism in line with the market, laying a good human resource foundation for the company's product research and development, technological innovation, stable production, and fine management; the company has a relatively complete corporate governance structure and a good modern enterprise operating mechanism. The company has established and improved internal controls and continuously deepened the internal management improvement mechanism, so that the company's adaptability and risk resistance capabilities have been continuously strengthened.

Scale advantage

After years of accumulation and accumulation in multiple fields, the company has a complete product line and a leading production capacity in the industry. It has rich manufacturing experience and supply chain advantages, which helps the company to better reduce costs, regulate resources on a larger scale, and improve product market competitiveness. At the same time, the company has established a large marketing network, and its service network covers 26 key strategic provinces and cities across the country, and has established a comprehensive service system in overseas countries and regions such as Singapore, Kenya, Indonesia, and Malaysia. It can provide high-quality pre-sales consultation, in-sales guarantee, and after-sales service, achieve rapid response to customer needs, and promptly meet customer needs for products and services.

Product structure advantages

The company's business covers communications, finance, government public service departments, transportation, taxation, defense and other fields. Its solutions cover financial industry solutions, communications and Internet of Things solutions, automotive industry solutions, mobile payment cloud platforms and other solutions, with a rich product structure.

3. Main business analysis

Overview

Please refer to the relevant content of "1. Main businesses engaged in by the company during the reporting period".

Year-on-year changes in major financial data

Unit: Yuan This reporting period Same period last year Year-on-year increase/decrease The main reason for the change is that the domestic traditional main business has gradually entered a period of saturation.

During the period, industry competition short-term operating income 289,081,144.49 430,168,327.97 -32.80% further intensified, product selling prices dropped irrationally and significantly, and the number of orders fell simultaneously

due to joint influence. Operating costs 234,397,014.39 305,826,102.55 -23.36% No significant changes. Selling expenses 31,875,894.91 26,463,452.93 20.45% No significant changes. Administrative expenses 38,548,686.42 32,834,309.09 17.40% No significant changes. Mainly due to the company’s holdings during the reporting period

Some banks charge financial fees for interest on deposits 5,926,733.77 -712,795.10 931.48%

income decreases and the company’s holdings

Foreign currencies are affected by exchange rate changes

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

This is due to the joint impact that the impact is greater compared with the same period last year.

Mainly due to income tax expenses of subsidiaries during the reporting period 1,522,330.31 594,231.24 156.18% Income tax expenses generated from profits

Caused by increased impact. R&D investment 31,732,495.30 44,936,617.35 -29.38% No significant changes.

It is mainly cash generated from the company’s sales and operating activities during the reporting period, including receipts from selling goods and providing labor services.

-149,380,920.16 33,967,708.96 -539.77%

Net flow was due to the year-on-year decrease in cash received.

Mainly due to the increase in cash received from the recovery of cash generated from investment activities during the reporting period and

99,755,091.61 -24,937,697.14 500.02%

Net Flows Decrease in cash paid for investments

due to joint influence. Cash generated from financing activities was mainly distributed during the same period last year

-2,762,064.12 -52,426,002.76 94.73%

Net flow due to dividend impact. Mainly on the company during the reporting period

Describes net cash flows from operating, investing, financing cash and cash equivalents activities

-62,092,588.57 -44,720,596.47 -38.85%

The increase has changed compared with the same period last year, which jointly affects all

To.

After-tax other comprehensive income is mainly due to exchange rate changes during the reporting period

-10,206,100.27 9,174,409.60 -211.25%

The net amount is due to the impact of changes.

The main reason is that during the reporting period, the company's cash and existing foreign currencies were affected by exchange rate changes.

-9,704,695.90 -1,324,605.53 -632.65%

The impact of gold equivalents is compared with the same period last year.

due to differences.

There are major changes in the company's profit composition or profit sources during the reporting period

□Applicable Not applicable

There were no major changes in the company's profit composition or profit sources during the reporting period.

Operating income composition

Unit: Yuan

This reporting period the same period last year

Year-on-year increase or decrease

Amount % of operating income Amount % of operating income

Total operating income 289,081,144.49 100% 430,168,327.97 100% -32.80%

By industry

Industry 287,707,705.53 99.52% 429,142,420.15 99.76% -32.96% Other business income 1,373,438.96 0.48% 1,025,907.82 0.24% 33.88% By product

Card making category 161,830,151.08 55.98% 336,327,521.38 78.18% -51.88% Module category 120,558,494.58 41.70% 91,489,171.90 21.27% 31.77% Ticket category 5,319,059.87 1.84% 1,325,726.87 0.31% 301.22% Other business income 1,373,438.96 0.48% 1,025,907.82 0.24% 33.88% By region

North China 54,643,145.18 18.90% 108,283,841.48 25.17% -49.54% East China 109,682,503.39 37.94% 121,055,600.08 28.14% -9.39% Southwest China 11,170,747.24 3.86% 21,863,328.84 5.08% -48.91%Northwestern Region 9,244,165.94 3.20% 17,232,587.32 4.01% -46.36%Northeast Region 4,954,228.99 1.71% 9,341,212.17 2.17% -46.96%Overseas regions 66,278,958.00 22.94% 72,872,855.35 16.94% -9.05%Other regions 33,107,395.75 11.45% 79,518,902.73 18.49% -58.37%

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Industries, products or regions accounting for more than 10% of the company's operating revenue or operating profit

Applicable □Not applicable

Unit: Yuan

Operating income compared to the previous year Operating costs compared to the previous year Gross profit margin compared to the previous year’s operating income Operating costs Gross profit margin

Increase/decrease in the same period of the year Increase/decrease in the same period of the year Increase/decrease in the same period by industry

287,707,705. 234,229,514.

Industry 18.59% -32.96% -23.25% -10.30%

53 92

By product

161,830,151. 128,807,464.

Card making 20.41% -51.88% -42.20% -13.33% 08 66

120,558,494. 103,198,500.

Module class 14.40% 31.77% 26.45% 3.60%

58 02

Tickets 5,319,059.77 2,223,550.24 58.20% 301.22% 208.22% 12.62% by region

54,643,145.1 38,979,742.6

North China 28.66% -49.54% -54.86% 8.41% 8 3

109,288,886. 95,375,812.6

East China 12.73% -9.37% 19.53% -21.10% 34 5

11,170,747.2

Southwest region 9,104,717.11 18.50% -48.91% -34.30% -18.11%Northwestern region 9,239,247.13 6,979,584.42 24.46% -46.39% -37.42% -10.82%Northeast region 4,954,228.99 3,655,677.25 26.21% -46.96% -47.14% 0.25%

65,382,108.0 52,437,497.6

Overseas regions 19.80% -9.59% -6.67% -2.51% 0 5

33,029,342.6 27,696,483.2

Other regions 16.15% -58.46% -45.59% -19.83%

5 1

If the statistical caliber of the company's main business data is adjusted during the reporting period, the company's main business data for the most recent period will be adjusted based on the caliber at the end of the reporting period.

□Applicable Not applicable

4. Analysis of non-main business

Applicable □Not applicable

Unit: Yuan

Amount Proportion of total profit Explanation of reasons Whether it has long-term equity accounting with sustainable equity method

Right investment income and entrust him

Investment income 9,069,279.74 -20.49% No

person investing or managing assets

Investment income and other components

Financial products at the end of the period are based on fair

Gains and losses from changes in fair value 4,338,318.20 -9.80% No

value measurement

Provision for inventory decline in value

Asset impairment -2,989,833.19 6.75% No

into

Non-operating income 2,790.48 -0.01% Insurance payments, etc. No

Non-operating expenses 393,787.36 -0.89% Formed by withholding and paying taxes, etc. No

Software product tax rebates can be used for software product tax rebates and scientific research

Sustainability; other income from scientific research projects 754,579.06 -1.70% Project government subsidies and other forms

Government subsidies are not sustainable

continuity

Offsetting receivables for bad debts

Credit impairment 2,007,292.68 -4.53% Yes

ready to form

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

5. Analysis of assets and liabilities

Major changes in asset composition

Unit: Yuan

End of this reporting period End of previous year

Increase or decrease in proportion Amount explained for major changes Proportion to total assets Amount Proportion to total assets

376,600,384. 439,269,700.

Monetary funds 16.31% 18.40% -2.09% No significant changes. 03 39

At the end of the reporting period, accounts receivable increased compared with the end of the previous year

36.87%, and accounts receivable have always been in the middle of the year at 173,526,927. 126,779,750.

Accounts receivable 7.52% 5.31% 2.21% High, low at the end of the year 81 06

Characteristics: The company's main customers are high-end customers such as communications and banks, and the risk of bad debts in accounts receivable is relatively small. Contract Assets Not applicable.

220,773,475. 173,611,234.

Inventory 9.56% 7.27% 2.29% No significant changes. 88 16

Investment properties Not applicable.

69,937,350.6 79,528,055.5

Long-term equity investment 3.03% 3.33% -0.30% No significant changes. 1 8

284,878,900. 291,364,659.

Fixed assets 12.34% 12.21% 0.13% No significant changes. 39 68

At the end of the reporting period, the number of projects under construction increased compared with the end of the previous year.

40.76%, main construction in progress 6,550,215.36 0.28% 4,653,571.67 0.19% 0.09%

It is caused by the increase in decoration costs for the decoration factory of Sun Company in Singapore.

10,260,939.2

Right-of-use assets 8,452,602.42 0.37% 0.43% -0.06% No significant changes.

Short-term borrowings Not applicable.

33,249,297.2 27,913,016.8

Contract liabilities 1.44% 1.17% 0.27% No significant changes. 4 9

Long-term borrowing Not applicable.

Lease liabilities 5,503,193.64 0.24% 7,183,760.09 0.30% -0.06% No significant changes. At the end of the reporting period, bills receivable decreased compared with the end of the previous year.

64.42%, main notes receivable 269,844.00 0.01% 758,374.07 0.03% -0.02% is due to the impact of the maturity collection of commercial acceptance bills provided by customers held at the end of the previous year.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

At the end of the reporting period, prepayments increased compared with the end of the previous year

Prepayments 4,508,397.20 0.20% 3,340,156.32 0.14% 0.06% 34.98%, mainly due to the increase in the company’s bonus amortization compared with the end of the previous year. At the end of the reporting period, other current assets increased by 197.17% compared with the end of the previous year, mainly due to the company's purchase of two-year US dollar other current assets of 117,161,869. 39,425,457.2 5.07% 1.65% 3.42%

29 3 The maturity time of the time deposit certificate is less than one year, due to the impact of reclassification to other current asset accounts.

At the end of the reporting period, bills payable decreased compared with the end of the previous year.

56.85%, mainly 18,647,163.7 43,219,330.5

Notes payable 0.81% 1.81% -1.00% The company adopts silver 3 0

This was due to the decrease in procurement business through bank acceptance bill settlement.

At the end of the reporting period, taxes payable decreased compared with the end of the previous year.

68.55%, mainly taxes payable 2,845,891.93 0.12% 9,049,279.01 0.38% -0.26%

This is due to the decrease in corporate income tax payable by the company compared with the end of the previous year.

At the end of the reporting period, other payables decreased compared with the end of the previous year

41.54%, mainly because the company settled other payables 2,983,199.97 0.13% 5,102,680.93 0.21% -0.08%

This is due to the combined impact of the decrease in expenses payable at the end of the previous year and expenses payable but unpaid in the current period.

At the end of the reporting period, deferred income increased compared with the end of the previous year

Deferred income 1,610,572.85 0.07% 1,181,317.76 0.05% 0.02% 36.34%, mainly due to the impact of project subsidies received by the company.

At the end of the reporting period, other comprehensive income ratio -

Other comprehensive income 12,621,408.0 -0.55% -0.10% -0.45% Decreased by 2,415,307.76 at the end of the previous year

3 422.56%, mainly due to exchange rate changes

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

caused by the impact.

Major overseas assets

□Applicable Not applicable

Assets and liabilities measured at fair value

Applicable □Not applicable

Unit: Yuan included in equity

Fair in this period

Accumulated public accrual for the current period Purchases for the current period Sales for the current period

Item Opening amount Change in value Other changes Closing amount Impairment amount Amount due to change in fair value

Profit and loss

move

financial assets

Transactional

financial assets

857,920,7 6,928,781 1,034,000 1,166,223 732,626,1 (excluding derivatives

95.14 .82,000.00,457.92 19.04Financing

production)

Other rights

3,000,000 3,000,000 Yi Tool Investment

.00 .00 capital

Financial assets 860,920,7 6,928,781 1,034,000 1,166,223 735,626,1 Subtotal 95.14 .82 ,000.00 ,457.92 19.04

860,920,7 6,928,781 1,034,000 1,166,223 735,626,1 Total of the above

95.14 .82,000.00,457.92 19.04Financial liabilities 0.00 0.00Other changes

Whether there are any significant changes in the measurement attributes of the company's main assets during the reporting period

□Yes No

Restrictions on asset rights as of the end of the reporting period

(1) The company pledged its real estate located in Hengtang Industrial Park and Dongmachang, Yunyang Town, Yunyang Town, Danyang City as collateral and deposit, and obtained a credit line of RMB 300 million from the Danyang Branch of Bank of China Co., Ltd. As of the end of the period, the original book value of the above-mentioned collateral was RMB 128,954,515.72, and the book value was RMB 41,012,335.71. Credit lines are used for issuing letters of credit, letters of guarantee and borrowings. At the end of the reporting period, the credit line has been used in RMB

18,657,349.59 yuan.

(2) The company obtained a credit line of RMB 30 million from the Danyang Branch of Agricultural Bank of China Co., Ltd. with its credit. Credit lines are used for issuing letters of credit, letters of guarantee and borrowings. At the end of the reporting period, the credit limit of RMB 400,000.00 had been used.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

6. Investment status analysis

Overall situation

Applicable □Not applicable

Investment amount during the reporting period (yuan) Investment amount during the same period last year (yuan) Change range

475,267,260.59 458,825,102.00 3.58%

Major equity investments obtained during the reporting period

□Applicable Not applicable

Major non-equity investments ongoing during the reporting period

□Applicable Not applicable

Financial asset investment

(1) Securities investment situation

Applicable □Not applicable

Unit: Yuan

credited

Equity in this period

Initial Accounting Beginning of Period Fair Accumulation Current Period Current Period Report End of Period Accounting Securities Securities Securities Funds

Investment Measurement Book Value Accounting Purchase Sale Period Loss Book Accounting Type Code Abbreviation Source Cost Mode Value Change Fair Price Amount Amount Gain Value Account Profit and Loss Value Change

move

first

securities

Chuangning Trading

30,00 Fair 30,77 30,77

No. 4 250,0 Properties Other - 0,000 Value 8,724 8,724 0.00 Self-raised 70.64 Financing

.00 Measurement .68 .68

Asset Management

plan

first

securities

Chuangning Trading

60,00 Fair 61,90 61,90

No. 8 29,52 Sexual Finance Others - 0,000 Value 3,181 3,181 0.00 Self-raised 1.84 Financing

.00 Measurement .73 .73

Asset Management

plan

first

securities

Transaction Chuangning 60,00 Fair 61,81 61,81

210,5 Sex money and others - No. 11 0,000 Value 1,320 1,320 0.00 Self-raised

20.99 Financing Collection .00 Measurement .75 .75

real estate assets

management

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

plan

East China Sea

securities

Long Ying

Transaction gain 5,000 Fair 5,262 5,262

47,27 Property funds and others - voucher ,000. Value ,013. ,013. 0.00 Self-raised

6.09 Financing transferable 00 Measurement 70 70

property transfer

system of ownership

Issue 4

Founder

securities

Gains Transaction

50,00 Fair 51,09 51,09

Certificates 24,81 Properties Other - 0,000 Value 4,178 4,178 0.00 Self-raised funds 1.50 Financing

.00 Measurement .08 .08

Lee produced D497

No.

Founder

securities

Gains Transaction

20,00 Fair 20,22 20,22

Certificates 176,6 Properties Others - 0,000 Value 0,273 0,273 0.00 Self-raised funds 20.47 Financing

.00 Measurement .97 .97

Lee produced D511

No.

Founder

securities

Gains Transaction

50,00 Fair 50,05 50,57

Certificates 515,3 515,3 Properties Others - 0,000 Value 8,972 4,319 Self-raised funds 47.22 47.22 Financing

.00 Measurement .60 .82

Lee produced D545

No.

Founder

securities

Gains Transaction

40,00 Fair 40,00 40,20

Certificates 201,1 201,1 Property funds and others - 0,000 Value 0,000 1,111 Self-raised funds 11.11 11.11 Financing

.00 Measurement .00 .11

Lee produces FD260

No. 20

315,0 281,1 40,00 231,0 1,455 90,77

716,4

Total 00,00 -- 28,66 0.00 0,000 69,69 ,279. 5,430 -- -- 58.33

0.00 5.51 .00 2.91 86 .93

Securities Investment Approval Board of Directors

April 28, 2025

Report disclosure date

(2) Derivatives investment situation

□Applicable Not applicable

The company had no derivative investments during the reporting period.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Usage of raised funds

□Applicable Not applicable

The company has no use of raised funds during the reporting period.

7. Sale of major assets and equity

Sale of major assets

□Applicable Not applicable

The company did not sell any major assets during the reporting period.

Sale of major equity interests

□Applicable Not applicable

Analysis of major holding and joint-stock companies

Applicable □Not applicable

Information about major subsidiaries and joint-stock companies that affect the company's net profit by more than 10%

Unit: Yuan

Company name Company type Main business Registered capital Total assets Net assets Operating income Operating profit Net profit R&D, production, sales and services of electronic tags, reading and writing machines, and terminal products; industry solutions, software development and system integration of electronic tags; computer software and hardware Jiangsu Hengbao

Software development - Intelligent system 35,000.00 370,046,3 369,319,9 Subsidiary Development; Computing 0.00 3,198,215 3,623,300 Technology Co., Ltd. 10,000 yuan 96.86 41.09 Computer system integration .09 .87 Company

Services; development, sales, installation, and maintenance of communication equipment, electronic equipment, mobile smart equipment, and Internet of Things products; information consulting services for the above-mentioned related industries;

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Magnetic card, IC

card, culture

supplies, letters

sealed

for sale.

Singapore dollar

R&D, delivery

Hengbao International 1,980,000

Supply of smart cards 411,633,9 284,534,3 58,656,43 1,592,564 900,189.0 Limited Liability Subsidiary USD .00

and related solutions 92.26 01.98 6.59 .28 4Company 37,283,52

solution

7.00

Acquisition and disposal of subsidiaries during the reporting period

Applicable □Not applicable

Company name Method of acquiring and disposing of subsidiaries during the reporting period Impact on overall production operations and performance HENGBAO FINTECH LIMITED Newly established None

Description of major holding and joint-stock companies

9. Structured entities controlled by the company

□Applicable Not applicable

10. Risks faced by the company and countermeasures

(1) Operational risks brought about by market expansion of new products and new businesses

The company is actively adjusting its product structure and business model, and its industrial strategic layout has achieved preliminary results. Transform from pure hardware products to system platform services, digital solutions and service operation models. Due to changes in product structure and business model, the initial competitiveness of the product may still be limited by the company's initial business support capabilities, market expansion capabilities, implementation of business models and other factors that are not perfect, and there will be certain objective difficulties in opening new markets.

Countermeasures:

Timely adjust market strategies and action plans based on market development dynamics, seize key opportunities to implement breakthroughs, seize the market window period, and form a typical demonstration effect. We will continue to strengthen the construction of the talent team, build a talent highland, continue to improve corporate competitiveness, accelerate the ice-breaking ability of new business and the launch speed of new products, and reduce the risks caused by the expansion of new business and new markets; at the same time, the company will improve the construction of the salary management system to ensure the effective implementation of the talent strategy.

Maintain close cooperation with strategic partners in the industry chain, adopt the method of resource sharing and complementary advantages, make full use of the opportunities of business model transformation and strategic layout, develop a variety of related new businesses, enhance competitiveness and voice, and reduce the market risk of a single new business through the overall business, laying the foundation for the company's sustainable and stable development.

(2) Risks that intensified market competition brings to the company’s main business and profits

At present, the competitiveness of the company's main business is mainly reflected in the company's financial strength, design and development capabilities, product quality levels, product cost control capabilities, overall solution capabilities and after-sales service capabilities. Especially in recent years, companies within the industrial chain have penetrated each other, and there have been more and more investments, mergers, acquisitions, and cooperative developments in the industry, which have intensified the degree of market competition in the industry. Product price has become the most direct means of competition for backward companies, sometimes leading to vicious competition in the market.

Countermeasures:

Through technological innovation, supply chain optimization improves production efficiency, reduces product costs, and maintains product price competitiveness. Avoid the risk of homogeneous competition through differentiated products and solutions, enrich and expand product families, and use the platform of listed companies to actively and flexibly integrate industry resources. Improve the company's team management level and comprehensively enhance the company's core competitiveness. Utilize the company's advantages in marketing capabilities to ensure that the company's key profitable products lead the mainstream market and ensure the overall profitability level.

11. Formulation and implementation of market value management system and valuation improvement plan

Whether the company has formulated a market value management system.

Full text of Hengbao Co., Ltd.’s 2026 semi-annual report Yes  No

Whether the company has disclosed plans to increase its valuation.

□Yes No

Implementation of the “Double Improvement of Quality and Return” action plan. Whether the company has disclosed an announcement of the “Dual Improvement of Quality and Return” action plan. □Yes No

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 4 Corporate Governance, Environment and Society

1. Changes in directors and senior managers of the company

□Applicable Not applicable

There were no changes in the company's directors and senior managers during the reporting period. For details, please refer to the 2025 annual report.

2. Profit distribution and conversion of capital reserve funds into share capital during the reporting period

□Applicable Not applicable

The company plans not to distribute cash dividends, give away bonus shares, or convert public reserve funds into share capital in the first half of the year.

3. Implementation of the company’s equity incentive plan, employee stock ownership plan or other employee incentive measures

Applicable □Not applicable

Equity incentives

(1) The third exercise period for the reserved grant portion of the 2021 stock option incentive plan

On March 25, 2025, the company held the 14th extraordinary meeting of the 8th board of directors and the 13th extraordinary meeting of the 8th board of supervisors, and reviewed and approved the "Proposal on the Achievements of the Exercise Conditions for the Third Exercise Period of the Reserved Grant Part of the Company's 2021 Stock Option Incentive Plan". According to the relevant provisions of the "Equity Incentive Management Measures for Listed Companies" and the company's "2021 Stock Option Incentive Plan (Draft)", the number of incentive objects that meet the exercisable conditions is 7 people, the number of exercisable stock options is 168,000, and the exercise price is 4.30 yuan/share. For details, please refer to the "Announcement on the Achievement of Exercise Conditions for the Third Exercise Period of the Reserved Grant Part of the Company's 2021 Stock Option Incentive Plan" (Announcement Number: 2025-004).

On May 30, 2025, the company disclosed the "Informative Announcement on the Adoption of the Independent Exercise Model for the Third Exercise Period of the Reserved Grant Part of the Company's 2021 Stock Option Incentive Plan" (Announcement Number: 2025-022), which meets the requirements of this Incentive objects subject to the secondary exercise conditions can exercise their rights in the third exercise period through independent exercise. The actual exercise period is from the date when the relevant procedures of China Securities Depository and Clearing Co., Ltd. Shenzhen Branch are completed to January 23, 2026. As of January 23, 2026, the third exercise period of the reserved grant portion of the company's 2021 stock option incentive plan has ended. The incentive objects of the reserved grant portion have exercised a total of 168,000 shares during the third exercise period, of which 11,000 shares were exercised during this reporting period.

Implementation of employee stock ownership plan

□Applicable Not applicable

Other employee incentives

□Applicable Not applicable

4. Environmental information disclosure

Whether listed companies and their major subsidiaries are included in the list of companies that disclose environmental information in accordance with the law

□Yes No

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

5. Social Responsibility

(1) Responsibility to protect the rights and interests of shareholders, especially small and medium-sized shareholders: standardize the operation of the company's "three meetings" and disclose relevant information in a timely, accurate and complete manner; establish an investor relations platform to promptly answer investors' questions; do a good job in investor research and reception, truly and completely introduce the company's operating status and development strategy, and ensure that investors can openly and fairly obtain company information and understand the company's operating conditions.

(2) Responsibility to protect the legitimate rights and interests of employees: establish employee employment systems and security systems in strict accordance with relevant national laws and regulations, pay attention to the transformation and optimization of employees' working environment, special types of work enjoy special subsidies, and the company has passed the ISO45001:2018 occupational health and safety management system; actively play the role of labor unions to safeguard the legitimate rights and interests of employees; establish employee training and continuous education systems, focus on the cultivation and improvement of employee quality, and establish talent growth channels; attach great importance to the construction of corporate culture and build an environment for the common development of the company and employees.

(3) Responsibility for protecting the legitimate rights and interests of creditors and consumers: The company is an "AAA credit rating" unit and has passed the ISO9001:2015 quality management system and ISO28000:2022 supply chain safety management system. It focuses on exchanges and communication with suppliers, and develops together on the premise of mutual benefit and quality priority; it attaches great importance to the improvement of product quality and the optimization of services, and protects the legitimate rights and interests of consumers.

(4) Social responsibility to protect the environment: As a high-tech enterprise focusing on high-end smart cards and solutions, the company has passed ISO14001:2015 environmental management system certification, strictly abides by environmental regulations, comprehensively promotes clean production, reduces pollution from the source, and achieves emission standards. The company actively conserves energy resources, improves resource recycling rate, properly handles "three wastes", and proactively discloses carbon emission data to promote the construction of a green supply chain. At the same time, the company actively participates in social actions such as ecological restoration, public welfare and environmental protection, and practices corporate social responsibility. In terms of factory construction, the company plans and layouts in accordance with garden-style standards to comprehensively promote green production and operations. In accordance with the goals set in the "Green Production Plan", the company deeply integrates green ecological concepts with corporate culture to continue to promote the process of sustainable development.

(5) Other social responsibilities: Pay attention to community social responsibilities, provide funding and services to schools, nursing homes, etc. in the community every year, and build a harmonious community culture. Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 5 Important Matters

Commitments made by the company’s actual controller, shareholders, related parties, acquirers, the company and other relevant parties that have been fulfilled during the reporting period and have been overdue as of the end of the reporting period.

Applicable □Not applicable

Reason for commitment Commitment party Commitment type Commitment content Commitment time Commitment period Performance status

(1) First public release

Before issuing shares

Holding more than 5% of the company

shareholders of shares

Commitment: in action

Hengbao Co., Ltd.

Company shareholder period

time, not in

within or outside the country

Except, in any way

formula (including but not

Limited to single experience

operating, through joint venture

Operate or own another

a company or enterprise

shares and other

equity) directly or

First public indirect participation in any

Before the issuance of shares, the shares held by Hengbao

There are companies with a limit of more than 5% that constitute competition

Shareholders of shares in any business in which they compete

As Hengbao shares or activities, nor

Qian Jing, Qian Ping, About the initial public offering of shareholders of Hengbao Co., Ltd.

Jiang Haoran, Hu Sanzheng, related parties. During January 2007; 2. During the period of guarantee or refinancing, Long, Pan Meifang, Pan Meifang, Transaction, capital occupation, 10 days, served as directors of the company, made commitments, and competed with the company.

Cao Zhixin’s commitments Supervisor, senior management or appointment within the organization

shareholders’ duties of managers. As of report

Qian Jing, Qian Ping, end of period, not found

The competition between Jiang Haoran and Cao Zhi in the same industry

New situation during his term of office. (2) Public

Qian, the controlling shareholder of Jiansi

Jing’s promise: self-discipline

The company's stock is listed on the

thirty-six

Within the month, no transfer

or entrust others to

manage its holdings

issuer shares,

nor by the issuer

repurchase its holdings

shares. As of reporting

At the end of the reporting period, the undertaking

The promise has been fulfilled

Complete. (3) Public

Money from other shareholders of the company

Ping, Jiang Haoran,

Hu Sanlong, Pan Mei

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Fang and Cao Zhixin promised that among the shares they hold that were increased due to the profit distribution in 2005 (a total of 8.64 million shares), they will not be transferred within thirty-six months from the date of industrial and commercial change (April 20, 2006); the other shares (a total of 43.2 million shares) will not be transferred within one year from the date of listing of the company's stocks. As of the end of the reporting period, this commitment has been fulfilled.

(4) Qian Jing, Qian Ping, Jiang Haoran and Cao Zhixin, shareholders who serve as directors, supervisors and senior managers of the company, also promised that, in addition to the aforementioned lock-up period, the shares transferred each year during their term of office shall not exceed 25% of the total number of shares of the company held by them at the end of the previous year; they will not transfer the shares of the company held by them within six months after their resignation. This commitment is being fulfilled.

According to the "Measures for the Management of Qualifications for Printing and Printing of State Secret Carriers": "The unit that applies for the qualification of printing and printing of state secret carriers (hereinafter referred to as the applicant)

The company (the company that holds the national application) shall have other basic provisions printed on the company's confidential carriers. The commitments made by the small shareholders in December 2019 Qian Jing Other commitments Class A confidentiality protection Strict performance documents: (1) Commitment on the 20th The forged bill certificate will be used to fund the People's Republic of China

Enterprise legal persons or public institution legal persons registered in China during the period of pledge; (2) Personnel involved in the printing business of state secret carriers are Chinese nationals

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Citizens within the territory of the People's Republic of China, unless otherwise specified by the state." "Those who have overseas (including Hong Kong, Macau, and Taiwan) organizations, institutions, and personnel holding a controlling stake or participating in operation and management shall not be granted the qualification to print national unified examination papers or secret-related anti-counterfeiting certificates." In order to ensure that the actual controller of the company will always be the Chinese side while the company holds the secret-related qualification, Mr. Qian Jing promised as follows: While Hengbao Co., Ltd. holds the qualification for printing Class A secret-related anti-counterfeiting bills on a state secret carrier, it will not sell stocks to natural persons or institutions that affect confidentiality clauses.

Is the promise on time?

Yes

fulfill

If the promise is overdue

The performance is completed,

should be explained in detail

Not applicable if performance has not been completed

The specific reasons are as follows

one step work plan

row

Non-operating capital occupation of listed companies by controlling shareholders and other related parties

□Applicable Not applicable

During the company's reporting period, there was no non-operational occupation of funds by the controlling shareholder or other related parties of the listed company.

3. Illegal external guarantees

□Applicable Not applicable

The company had no illegal external guarantees during the reporting period.

4. Appointment and dismissal of accounting firms

Has the semi-annual financial report been audited?

Full text of Hengbao Co., Ltd.’s 2026 semi-annual report Yes  No

The company's semi-annual report has not been audited.

The board of directors’ explanation of the accounting firm’s “non-standard audit report” for this reporting period □ Applicable  Not applicable
Explanation of the Board of Directors on the “Non-standard Audit Report” of the previous year □ Applicable  Not applicable

7. Matters related to bankruptcy and reorganization

□Applicable Not applicable

The company had no bankruptcy or reorganization related matters during the reporting period.

8. Litigation matters

Major litigation and arbitration matters

□Applicable Not applicable

The Company had no major litigation or arbitration matters during the reporting period.

Other litigation matters

Applicable □Not applicable

Litigation (Arbitration) Litigation (Arbitration) Litigation (Arbitration) Amount involved Whether a pre-litigation (arbitration) trial result and judgment execution disclosure date Basic information on the disclosure index (10,000 yuan) Calculated liabilities Progress

Impact on small and medium investors

v. Corporate Securities

11.64 No The lawsuit has been withdrawn. The trial has been concluded and there is no liability for false statements.

Ren dispute case

9. Punishment and Rectification

□Applicable Not applicable

There were no penalties or rectifications during the company's reporting period.

Integrity status of the company, its controlling shareholders and actual controllers Applicable □Not applicable

During the reporting period, the integrity of the company, its controlling shareholders, and actual controllers was in good condition, and there was no failure to perform effective court judgments or large amounts of debts that were due and unpaid.

11. Major related transactions

Related transactions related to daily operations

□Applicable Not applicable

Full text of the 2026 Semi-annual Report of Hengbao Co., Ltd. The company had no related transactions related to daily operations during the reporting period.

Related transactions arising from the acquisition and sale of assets or equity □Applicable Not applicable

The company had no related transactions related to asset or equity acquisition or sale during the reporting period.

Related transactions related to joint external investment

□Applicable Not applicable

The company had no related transactions related to joint external investments during the reporting period.

Related credit and debt transactions

□Applicable Not applicable

The company had no related creditor's rights or debts during the reporting period.

Dealings with related financial companies □Applicable Not applicable

There are no deposits, loans, credit or other financial business between the company and its related financial companies and related parties.

Dealings between financial companies controlled by the company and related parties □Applicable Not applicable

There are no deposits, loans, credit or other financial business between the financial companies controlled by the company and related parties.

Other major related transactions

□Applicable Not applicable

The company had no other major related transactions during the reporting period.

12. Major contracts and their performance

Custody, contracting and leasing matters

(1) Custody situation

□Applicable Not applicable

There was no custody situation during the company's reporting period.

(2) Contracting situation

□Applicable Not applicable

There was no contracting situation during the reporting period of the company.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(3) Leasing situation

Applicable □Not applicable

Rental situation description

For details of the company's leasing situation during the reporting period, please refer to "Section 8 Financial Report", "VII. Notes on Consolidated Financial Statement Items" and "82 Leasing".

Projects that bring profits and losses to the company exceeding 10% of the company's total profit during the reporting period

□Applicable Not applicable

During the company's reporting period, there were no leasing projects that brought profits or losses to the company that accounted for more than 10% of the company's total profits during the reporting period.

Major guarantee

□Applicable Not applicable

The company had no major guarantees during the reporting period.

Entrusted financial management

Applicable □Not applicable

Unit: RMB 10,000 Product Category Risk Characteristics Balance of entrusted financial management during the reporting period Overdue amount of unrecovered bank financial management products Low risk, medium-low risk 64,185.07 0 Other categories Low risk, medium-low risk 35,708.79 0 The company entrusts a financial institution to carry out asset management as a single client, or invests in high-risk entrusted financial management with low security and poor liquidity. Specific circumstances □Applicable Not applicable

Other major contracts

□Applicable Not applicable

The company had no other major contracts during the reporting period.

13. Registration form for reception of research, communication, interviews and other activities during the reporting period

Applicable □Not applicable

The main topic of discussion

Basic information of the survey: reception time, reception location, reception method, type of reception object, reception object, content and information index provided.

Network platform line

Shenzhen Securities Exchange

2025 annual performance formula, the company's "interactive and easy to understand"

The briefing session adopts the 2025 annual main website Juchao Information Network May 2026 "http://i network platform online

Other network remote methods require information on business conditions (www.cninfo 20th rm.cninfo.co communication)

Bank, open to all Banks to interpret and vote on .com.cn) m.cn "Cloud visit

Investors "Investors' Questions and Answers" column

interactive discussion

flow.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Explanation of other significant matters □Applicable Not applicable

There are no other significant matters that need to be explained during the company's reporting period.

Major events of the company’s subsidiaries □Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 6 Share changes and shareholder status

1. Changes in shares

Changes in shares

Unit: Before the change in share capital Increase or decrease in this change (+, -) After this change, transfer of reserve fund

Quantity Proportion Issuance of new shares Bonus shares Others Subtotal Quantity Proportion

1. Limited - -

108,648, 100,728, conditional shares 15.34% 7,920,06 7,920,06 14.22%

572 508 copies 4 4

Country

Home holdings

Country

A legal person holds

Its - -

108,648, 100,728, other domestic holdings 15.34% 7,920,06 7,920,06 14.22%

572 508 shares 4 4

its

Middle: within the territory

Legal person holdings

Domestic - -

108,648, 100,728, held by natural persons 15.34% 7,920,06 7,920,06 14.22%

572 508 shares 4 4

Outside

Capital holdings

its

Chinese: overseas

Legal person holdings

overseas

natural person

2. Unlimited

599,690, 7,931,06 7,931,06 607,621, conditional shares 84.66% 85.78%

582 4 4 646 copies

People

599,690, 7,931,06 7,931,06 607,621, RMB ordinary 84.66% 85.78%

582 4 4 646 shares

Environment

listed within

foreign stocks

Environment

Off the market

foreign stocks

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

him

3. Shares 708,339, 708,350,

100.00% 11,000 11,000 100.00%Total 154 154

Reasons for share changes

Applicable □Not applicable

(1) The exercise of equity incentives in this period increased the number of shares without selling conditions by 11,000 shares.

①The third exercise period for the reserved grant portion of the 2021 stock option incentive plan

(2) Executive locked shares (shares with sales restrictions) decreased by 7,920,064 shares

On the first trading day of this year, China Securities Depository and Clearing Co., Ltd. Shenzhen Branch recalculated the legal limit of transferable shares of the company's directors and senior managers at 25% based on the company's shares registered in their names on the last trading day of the previous year. At the same time, some of the company's senior managers left office for more than 6 months, which resulted in a reduction of 7,920,064 shares locked by senior managers and an increase of 7,920,064 shares without sales restrictions.

Approval status of share changes

Applicable □Not applicable

(1) The third exercise period for the reserved grant portion of the 2021 stock option incentive plan

Transfer status of changes in shares

□Applicable Not applicable

Implementation progress of share buybacks

□Applicable Not applicable

Implementation progress of using centralized bidding method to reduce and repurchase shares

□Applicable Not applicable

The impact of changes in shares on financial indicators such as basic earnings per share and diluted earnings per share in the most recent year and period, net assets per share attributable to the company's common shareholders □Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Other content that the company deems necessary or required to be disclosed by securities regulatory authorities

□Applicable Not applicable

Changes in restricted shares

Applicable □Not applicable

Unit: Share

Sales restrictions are lifted in this period. Sales restrictions are increased in this period.

Name of shareholder Number of restricted shares at the beginning of the period Number of restricted shares at the end of the period Reason for selling restrictions Number of shares on the date of lifting the restrictions Number of shares

March 2026 Qian Ling 1,687 1,687 0 0 Executive locked shares

15th

January 8, 2026 Zhu Jinshan 3,525 3,525 0 0 Executive locked shares

day

March 2026 Jiang Xianneng 32,000 32,000 0 0 Executive locked shares

15th

March 2026 Cai Zhenghua 7,500 7,500 0 0 Executive locked shares

15th

April 2026 Gaoqiang 592,500 592,500 0 0 Executive locked shares

28th

Total 637,212 637,212 0 0 -- --

2. Securities issuance and listing

□Applicable Not applicable

3. Number of shareholders and shareholding status of the company

Unit: Share

Total number of common shareholders at the end of the reporting period Total number of preferred shareholders with restored voting rights at the end of the reporting period

136,831 0 Number Number (if any) (see Note 8)

Shareholding status of shareholders holding more than 5% of the shares or the top 10 shareholders (excluding shares lent through refinancing)

During the reporting period Limited holdings Unlimited holdings Pledge, marking or freezing situation End of the reporting period

Name of shareholder Nature of shareholder Shareholding ratio Increase or decrease Conditions for sale Conditions for sale

Number of shares held Share status Quantity situation Number of shares Number of shares

Domestic nature 127,139,1 - 100,661,0 26,478,17

Qian Jing 17.95% Not applicable 0 people 78 7,075,500 08 0

china industry and commerce

bank shares

Ltd.

Cathay Pacific

Securities Index 13,344,68 13,344,68

Others 1.88% 8,211,100 0 Not applicable 0 Letter of equipment delivery 4 4

Easy to open

index certificate

Securities investment fund

gold

Hong Kong Central

11,471,73 11,471,73

Limited settlement Overseas legal person 1.62% 2,493,560 0 Not applicable 0 9 9

company

China Construction -

Others 1.23% 8,686,055 0 8,686,055 Not applicable 0 Bank shares 1,517,469

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Ltd.

Huabaozhong

Securities and Finance Branch

Technical topic communication

Easy to open

index certificate

Securities investment fund

gold

china international

Finance Hong Kong

Asset management

Overseas legal person 0.43% 3,023,957 2,877,363 0 3,023,957 Not applicable 0 Co., Ltd.

-CICCFT3

(R)

Nature within the territory

Yuan Diyun 0.28% 2,000,000 2,000,000 0 2,000,000 Not applicable 0 people

Nature within the territory

Shi Jianhong 0.26% 1,853,608 182,508 0 1,853,608 Not applicable 0

people

UBS AG Overseas legal person 0.25% 1,786,243 804,388 0 1,786,243 Not applicable 0

Nature within the territory

Liu Dongjie 0.24% 1,711,200 1,711,200 0 1,711,200 Not applicable 0

people

China Construction

bank shares

Ltd.

Bo Shizhong

Securities and Finance Branch

Others 0.24% 1,683,500 -478,000 0 1,683,500 Not applicable 0 Technical theme exchange

Easy to open

index certificate

Securities investment fund

gold

Strategic investors or general legal persons

Became top 10 due to placement of new shares

None

The situation of shareholders (if any) (see

See note 3)

Qian Jing, the company's largest shareholder, does not have any related relationship with other shareholders or the above-mentioned shareholder related relationship or any of the above-mentioned shareholder related relationships as stipulated in the "Administrative Measures for the Acquisition of Listed Companies".

The situation of the action person; the company does not know whether there is a related relationship between other shareholders or the explanation of the compliance action in the "Administrative Measures for the Acquisition of Listed Companies"

Certain persons acting in concert.

The above shareholders are involved in entrustment/trusteeship

Voting rights and waiver of voting rights None

explanation of the situation

Buybacks exist among the top 10 shareholders

Special instructions for special accounts (if any) None

(See note 11)

Shareholdings of the top 10 shareholders without sales restrictions (excluding shares lent through refinancing and shares locked by executives)

Type of shares Name of shareholder Number of shares without selling restrictions held at the end of the reporting period

Share Type Quantity

RMB Popular 26,478,17 Qian Jing 26,478,170

Common shares 0Industrial and Commercial Bank of China Co., Ltd.

Company-Cathay CSI All Index RMB 13,344,68

13,344,684 Information Equipment Trading Open-End Index Common Stock 4-digit Securities Investment Fund

RMB General 11,471,73 Hong Kong Securities Clearing Company Limited 11,471,739

Common stock 9

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

China Construction Bank Co., Ltd.

Company - Huabao CSI Financial Branch RMB General

8,686,055 8,686,055Technology-themed trading open-end index

Digital securities investment funds

China International Capital Corporation Hong Kong Assets

RMB general

Management Co., Ltd.-CICCFT3 3,023,957 3,023,957

common stock

(R)

RMB general

Yuan Diyun 2,000,000 2,000,000 shares

RMB general

Shi Jianhong 1,853,608 1,853,608 shares

RMB general

UBS AG 1,786,243 1,786,243 common shares

RMB general

Liu Dongjie 1,711,200 1,711,200

common stock

China Construction Bank Co., Ltd.

Company - Bosera CSI Financial Services Co., Ltd.

1,683,500 1,683,500 Technology-themed trading open-end index

Digital securities investment funds

Top 10 shareholders with no sales limit

Qian Jing, the company’s largest shareholder among the top 10 unlimited shareholders, does not have any related relationship with other shareholders or the shareholders and the top 10 shareholders who act in concert as stipulated in the "Administrative Measures for the Acquisition of Listed Companies".

description of action

Among the top ten shareholders, Yuan Diyun holds 2,000,000 shares of the company's common stock through the customer credit transaction guaranteed securities account of Cathay Haitong Securities Co., Ltd.; Shi Jianhong holds the company's margin financing and securities lending business through the customer credit transaction guaranteed securities account of China Merchants Securities Co., Ltd. 878,008 shares, 975,600 shares of the company are held through ordinary accounts, and a total of 1,853,608 shares of the company are held (if any) (see Note 4); Liu Dongjie holds 1,711,200 shares of the company through the customer credit transaction guaranteed securities account of China Merchants Securities Co., Ltd.

shares.

The situation of shareholders holding more than 5% of the shares, the top 10 shareholders and the top 10 shareholders of unrestricted tradable shares participating in the refinancing business and lending shares

□Applicable Not applicable

The top 10 shareholders and the top 10 shareholders of unrestricted tradable shares have changed from the previous period due to refinancing lending/returning.

□Applicable Not applicable

Whether the company's top 10 ordinary shareholders and the top 10 unrestricted ordinary shareholders conducted agreed repurchase transactions during the reporting period

□Yes No

The company's top 10 common shareholders and the top 10 common shareholders without selling restrictions did not conduct agreed repurchase transactions during the reporting period.

4. Changes in shareholdings of directors and senior managers

Applicable □Not applicable

Granted at the beginning of the period Granted in the current period Granted at the end of the period Increase in holdings in this period Decrease in holdings in this period

Shareholdings at the beginning of the period Shareholdings at the end of the period Restrictions on you Restrictions on you Restrictions on you Name Position Position status Number of shares Number of shares

Number (shares) Number (shares) Number of shares Number of shares Number of shares (shares) (shares)

Volume (shares) Volume (shares) Volume (shares)

Chairman, 134,214, 7,075,50 127,139,

Qian Jing Current 0 0 0 0 President 678 0 178

134,214, 7,075,50 127,139,

Total -- -- 0 0 0 0

678 0 178

5. Changes in controlling shareholders or actual controllers

If the company has previously disclosed that the actual controller is planning a change of control but has not yet completed it, please explain the progress of the change of control.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

□Applicable Not applicable

Changes in controlling shareholders during the reporting period

□Applicable Not applicable

The company's controlling shareholder did not change during the reporting period. Changes in actual controller during the reporting period

□Applicable Not applicable

The actual controller of the company did not change during the reporting period.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Relevant information on preference shares □Applicable Not applicable

There were no preferred shares in the company during the reporting period.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 7 Bond-related situations □Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Section 8 Financial Report

1. Audit report

Has the semi-annual report been audited?

□Yes No

The company's semi-annual financial report has not been audited.

2. Financial statements

The unit of statements in the financial notes is: Yuan

Consolidated balance sheet

Prepared by: Hengbao Co., Ltd.

June 30, 2026

Unit: Yuan

Item Ending balance Beginning balance

Current assets:

Monetary funds 376,600,384.03 439,269,700.39 Settlement reserves

Loan funds

Trading financial assets 732,626,119.04 857,920,795.14 Derivative financial assets

Notes receivable 269,844.00 758,374.07 Accounts receivable 173,526,927.81 126,779,750.06 Accounts receivable financing

Prepayments 4,508,397.20 3,340,156.32 Premiums receivable

Reinsurance accounts receivable

Receivable reinsurance contract reserves

Other receivables 54,810,223.27 55,772,620.60 Including: interest receivable

Dividends receivable

Buy financial assets under resale agreements

Inventory 220,773,475.88 173,611,234.16

Among them: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 117,161,869.29 39,425,457.23 Total current assets 1,680,277,240.52 1,696,878,087.97

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Non-current assets:

Grant loans and advances

debt investment

Other debt investments

long-term receivables

Long-term equity investment 69,937,350.61 79,528,055.58 Other equity instrument investment 3,000,000.00 3,000,000.00 Other non-current financial assets

investment real estate

Fixed assets 284,878,900.39 291,364,659.68 Construction in progress 6,550,215.36 4,653,571.67 Productive biological assets

oil and gas assets

Right-of-use assets 8,452,602.42 10,260,939.28 Intangible assets 22,336,283.86 23,734,383.68

Among them: data resources

development expenditure

Among them: data resources

goodwill

Long-term deferred expenses 11,572,726.88 14,505,357.44 Deferred income tax assets 7,554,435.55 7,964,041.74 Other non-current assets 214,075,056.40 254,851,224.05 Total non-current assets 628,357,571.47 689,862,233.12 Total assets 2,308,634,811.99 2,386,740,321.09 Current liabilities:

short term borrowing

Borrow from the central bank

borrowing funds

Trading financial liabilities

Derivative financial liabilities

Notes payable 18,647,163.73 43,219,330.50 Accounts payable 127,912,088.93 118,826,120.32 Advance receipts

Contract liabilities 33,249,297.24 27,913,016.89 Financial assets sold and repurchased

Taking deposits and placing deposits with other banks

Agent for buying and selling securities

Agent underwriting securities funds

Employee benefits payable 2,926,671.07 3,733,716.75 Taxes payable 2,845,891.93 9,049,279.01 Other payables 2,983,199.97 5,102,680.93

Among them: interest payable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Dividends payable

Handling fees and commissions payable

Reinsurance accounts payable

Liabilities held for sale

Non-current liabilities due within one year 2,960,712.32 3,176,382.69 Other current liabilities 2,835,552.60 3,255,285.30 Total current liabilities 194,360,577.79 214,275,812.39 Non-current liabilities:

insurance contract reserves

long term borrowing

bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities 5,503,193.64 7,183,760.09 Long-term payables

Long-term employee benefits payable

Estimated liabilities

Deferred income 1,610,572.85 1,181,317.76 Deferred income tax liabilities 3,429,619.15 4,413,791.43 Other non-current liabilities

Total non-current liabilities 10,543,385.64 12,778,869.28 Total liabilities 204,903,963.43 227,054,681.67 Owners’ equity:

Share capital 708,350,154.00 708,339,154.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 60,778,823.86 60,743,403.86 Less: treasury shares

Other comprehensive income -12,621,408.03 -2,415,307.76Special reserves

Surplus reserve 255,244,574.91 255,244,574.91 General risk reserve

Undistributed profits 1,091,978,703.82 1,137,773,814.41 Total owners’ equity attributable to the parent company 2,103,730,848.56 2,159,685,639.42 Minority shareholders’ equity

Total owners’ equity 2,103,730,848.56 2,159,685,639.42 Total liabilities and owners’ equity 2,308,634,811.99 2,386,740,321.09 Legal representative: Qian Jing Person in charge of accounting work: Xu Xiaoling Person in charge of accounting department: Liu Chunlian

Balance sheet of the parent company

Unit: Yuan

Item Ending balance Beginning balance

Current assets:

Monetary funds 55,257,380.38 111,741,352.34

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Trading financial assets 682,179,756.11 744,971,969.74 Derivative financial assets

Notes receivable 269,844.00 758,374.07 Accounts receivable 259,751,189.24 192,093,403.40 Accounts receivable financing

Prepayments 2,330,730.73 2,057,896.78 Other receivables 70,680,831.53 71,016,954.01 Including: interest receivable

Dividends receivable

Inventory 212,396,161.53 172,238,159.14

Among them: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 110,467,521.42 35,237,370.37 Total current assets 1,393,333,414.94 1,330,115,479.85 Non-current assets:

debt investment

Other debt investments

long-term receivables

Long-term equity investment 917,508,078.28 925,458,438.77 Other equity instrument investment 3,000,000.00 3,000,000.00 Other non-current financial assets

investment real estate

Fixed assets 120,231,706.54 125,169,565.42 Construction in progress

productive biological assets

oil and gas assets

right-of-use assets

Intangible assets 11,135,841.21 12,340,276.33

Among them: data resources

development expenditure

Among them: data resources

goodwill

Long-term deferred expenses 11,572,726.88 14,505,357.44 Deferred income tax assets 7,141,111.19 6,499,212.75 Other non-current assets 161,653,338.15 216,256,738.47 Total non-current assets 1,232,242,802.25 1,303,229,589.18 Total assets 2,625,576,217.19 2,633,345,069.03 Current liabilities:

short term borrowing

Trading financial liabilities

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Derivative financial liabilities

Notes payable 18,647,163.73 43,219,330.50 Accounts payable 125,620,151.84 117,994,769.50 Advance payments

Contract liabilities 21,811,944.38 25,196,634.86 Employee benefits payable 51,300.00 50,160.00 Taxes payable 1,493,074.00 6,161,733.59 Other payables 309,958,156.34 251,227,958.32 of which: interest payable

Dividends payable

Liabilities held for sale

Non-current liabilities due within one year

Other current liabilities 2,835,552.60 3,255,285.30 Total current liabilities 480,417,342.89 447,105,872.07 Non-current liabilities:

long term borrowing

bonds payable

Among them: preferred shares

perpetual bond

Lease liability

long-term payables

Long-term employee benefits payable

Estimated liabilities

Deferred income 1,610,572.85 1,181,317.76 Deferred income tax liabilities 3,393,831.65 3,751,585.08 Other non-current liabilities

Total non-current liabilities 5,004,404.50 4,932,902.84 Total liabilities 485,421,747.39 452,038,774.91 Owners’ equity:

Share capital 708,350,154.00 708,339,154.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 75,581,744.61 75,546,324.61 Less: treasury shares

other comprehensive income

special reserve

Surplus reserve 255,244,574.91 255,244,574.91 Undistributed profits 1,100,977,996.28 1,142,176,240.60 Total owners’ equity 2,140,154,469.80 2,181,306,294.12 Total liabilities and owners’ equity 2,625,576,217.19 2,633,345,069.03

Consolidated income statement

Unit: Yuan

Project Half-year 2026 Half-year 2025

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Total operating income 289,081,144.49 430,168,327.97 Including: operating income 289,081,144.49 430,168,327.97 Interest income

Premiums earned

Fee and commission income

Total operating costs 346,142,564.38 413,636,805.42 Including: operating costs 234,397,014.39 305,826,102.55 Interest expenses

Handling fees and commission expenses

surrender deposit

Net compensation expenses

Net withdrawal of insurance liability reserves

policy dividend payout

Reinsurance cost

Taxes and surcharges 3,661,739.59 4,289,118.60 Sales expenses 31,875,894.91 26,463,452.93 Management expenses 38,548,686.42 32,834,309.09 Research and development expenses 31,732,495.30 44,936,617.35Financial expenses 5,926,733.77 -712,795.10Including: Interest expenses 207,345.73 9,951.67

Interest income 4,570,760.63 9,340,535.74 Plus: other income 754,579.06 2,323,773.81 Investment income (losses are filled in with "-"

9,069,279.74 7,173,810.31 columns)

Of which: for associates and joint ventures

-144,485.12 -6,517.18 Enterprise investment income

Measured at amortized cost

Income from derecognition of financial assets

Exchange gains (losses are filled in with "-"

column)

Net exposure hedging gains (losses expressed as “—

"Fill in the column)

Gains from changes in fair value (losses calculated as

4,338,318.20 6,984,214.72 (Fill in “—”)

Credit impairment losses (losses are preceded by “—”

2,007,292.68 2,030,015.89 (please fill in the list)

Asset impairment losses (losses are represented by “—”

-2,989,833.19 1,338,064.16 (please fill in the list)

Gains from asset disposals (losses are marked with “—”

(Fill in the number)

3. Operating profit (loss should be filled in with “—”

-43,881,783.40 36,381,401.44 columns)

Add: Non-operating income 2,790.48 557,474.49 Less: Non-operating expenses 393,787.36 990,588.50

Total profits (total losses are represented by “—” -44,272,780.28 35,948,287.43

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Fill in the column)

Less: Income tax expenses 1,522,330.31 594,231.24

5. Net profit (net loss is filled in with "-"

-45,795,110.59 35,354,056.19 columns)

(1) Classification by business continuity

Net profit from continuing operations (net loss divided by

-45,795,110.59 35,354,056.19 (Fill in “—”)

Net profit from discontinued operations (net loss equal to

Fill in the column with "—" sign)

(2) Classification according to ownership ownership

Net profit attributable to shareholders of the parent company

-45,795,110.59 35,354,056.19 (Net loss is listed with "—")

Profit and loss of minority shareholders (net loss is represented by “—

"Fill in the column)

Net after-tax amount of other comprehensive income -10,206,100.27 9,174,409.60 Other comprehensive income attributable to owners of the parent company

-10,206,100.27 9,174,409.60 net amount after tax

(1) Others that cannot be reclassified into profit or loss

Comprehensive income

Remeasure changes in defined benefit plans

Others that cannot be transferred to profit or loss under the equity method

Comprehensive income

Fair value of other equity instrument investments

change

Fair value of the company’s own credit risk

change

5.Others

(2) Other comprehensive items that will be reclassified into profit or loss

-10,206,100.27 9,174,409.60 combined income

Other comprehensive items that can be transferred to profits and losses under the equity method

combined income

Changes in fair value of other debt investments
Financial assets are reclassified into other comprehensive

Amount of combined income

Credit impairment provisions for other debt investments
Cash flow hedging reserve
Translation difference of foreign currency financial statements -10,206,100.27 9,174,409.60 7. Others

Other comprehensive income attributable to minority shareholders

net of tax

Total comprehensive income -56,001,210.86 44,528,465.79 Total comprehensive income attributable to owners of the parent company

-56,001,210.86 44,528,465.79 amount

Total comprehensive income attributable to minority shareholders

8. Earnings per share:

(1) Basic earnings per share -0.0647 0.0499

(2) Diluted earnings per share -0.0647 0.0499

If a business merger under the same control occurs in this period, the net profit realized by the merged party before the merger is: 0.00 yuan, and the net profit realized by the merged party in the previous period is: 0.00 yuan.

Legal representative: Qian Jing Person in charge of accounting work: Xu Xiaoling Person in charge of accounting department: Liu Chunlian

Income statement of the parent company

Unit: Yuan

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Project Half-year 2026 Half-year 2025

Operating income 267,374,856.69 407,439,322.34 Less: Operating costs 230,406,101.72 296,356,324.44 Taxes and surcharges 2,693,551.78 3,579,537.51 Sales expenses 17,396,155.17 17,595,910.76Administrative expenses 26,379,520.51 24,593,923.29R&D expenses 31,661,761.02 41,937,321.70Financial expenses 10,456,812.29 -2,361,254.31Including: Interest expenses 9,951.67

Interest income 235,968.12 3,549,036.05 plus: other income 720,632.77 2,312,257.36 investment income (losses are filled in with "-"

8,310,011.08 6,799,365.68 columns)

Of which: for associates and joint ventures

-144,485.12 -6,517.18 Industry investment income

Money measured at amortized cost

Gains from derecognition of financial assets (losses are represented by “—”

(Fill in the number)

Net exposure hedging gains (losses expressed as “—

"Fill in the column)

Gains from changes in fair value (losses calculated as

4,193,298.86 5,546,727.84 (Fill in “—”)

Credit impairment losses (losses are preceded by “—”

-715,771.90 1,948,904.58 (please fill in the list)

Asset impairment losses (losses are represented by “—”

-2,989,810.82 1,338,064.16 (please fill in the list)

Gains from asset disposals (losses are marked with “—”

296,430.10

(Fill in the number)

2. Operating profit (loss should be filled in with “—”

-41,804,255.71 43,682,878.57 columns)

Add: Non-operating income 79.40 557,473.77 Less: Non-operating expenses 393,719.88 990,588.50

3. Total profit (total loss is marked with “—”

-42,197,896.19 43,249,763.84 fill in the column)

Less: Income tax expense -999,651.87 -471,092.77

4. Net profit (net loss is filled in with "—"

-41,198,244.32 43,720,856.61 columns)

(1) Net profit from continuing operations (net loss divided by

-41,198,244.32 43,720,856.61 (Fill in “—”)

(2) Net profit from discontinued operations (net loss equal to

Fill in the column with "—" sign)

5. Net amount of other comprehensive income after tax

(1) Others that cannot be reclassified into profit or loss

Comprehensive income

Remeasure changes in defined benefit plans

Others that cannot be transferred to profit or loss under the equity method

Comprehensive income

Fair value of other equity instrument investments

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

change

Fair value of the company’s own credit risk

change

5.Others

(2) Other comprehensive items that will be reclassified into profit or loss

combined income

Other comprehensive items that can be transferred to profits and losses under the equity method

combined income

Changes in fair value of other debt investments
Financial assets are reclassified into other comprehensive

Amount of combined income

Credit impairment provisions for other debt investments
Cash flow hedging reserve
Translation differences of foreign currency financial statements

7.Others

Total comprehensive income -41,198,244.32 43,720,856.61

7. Earnings per share:

(1) Basic earnings per share

(2) Diluted earnings per share

Consolidated cash flow statement

Unit: Yuan

Project Half-year 2026 Half-year 2025

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 266,027,640.02 440,533,257.35 Net increase in customer deposits and interbank deposits

Net increase in borrowing from the central bank

Net increase in borrowing funds from other financial institutions

Cash received from premiums from the original insurance contract

Net cash received from reinsurance business

Net increase in policyholders’ savings and investment funds

Cash collected from interest, fees and commissions

Net increase in borrowing funds

Net increase in repurchase business funds

Net cash received from buying and selling securities on behalf of agents

Tax returns received 1,308,873.06 11,163,972.36 Other cash received related to operating activities 10,115,836.51 35,596,950.62 Subtotal of cash inflows from operating activities 277,452,349.59 487,294,180.33 Cash paid for purchasing goods and receiving services 288,293,866.35 289,287,850.36 Net increase in customer loans and advances

Net increase in deposits with central banks and inter-banks

Cash used to pay compensation from the original insurance contract

Net increase in lending funds

Cash payments for interest, fees and commissions

Cash payment for policy dividends

Cash paid to and for employees 90,059,181.28 95,634,589.05 Various taxes and fees paid 21,006,550.92 29,211,457.57 Cash paid for other operating activities 27,473,671.20 39,192,574.39 Subtotal of cash outflows from operating activities 426,833,269.75 453,326,471.37 Net cash flow generated from operating activities -149,380,920.16 33,967,708.96

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

2. Cash flow generated from investing activities:

Cash received from recovery of investment 1,163,903,472.39 1,120,589,507.17 Cash received from investment income 13,833,357.45 14,834,139.19 Disposal of fixed assets, intangible assets and other long-term assets

Net cash amount recovered from period 7,000.00 assets

Received from disposal of subsidiaries and other business units

net cash

Other cash received related to investing activities

Subtotal of cash inflows from investing activities 1,177,736,829.84 1,135,430,646.36 Purchase and construction of fixed assets, intangible assets and other long-term assets

23,385,538.23 11,270,843.50 Cash paid for assets

Cash paid for investment 1,054,596,200.00 1,149,097,500.00 Net increase in pledged loans

Obtain payment from subsidiaries and other business units

net cash

Other cash payments related to investing activities

Subtotal of cash outflows from investing activities 1,077,981,738.23 1,160,368,343.50 Net cash flow generated from investing activities 99,755,091.61 -24,937,697.14

3. Cash flow generated from financing activities:

Cash received from investment 46,420.00 5,554,525.00 Including: Income from investment by subsidiaries from minority shareholders

Cash arrived

Obtain cash received from borrowing money

Other cash received related to financing activities

Subtotal of cash inflows from financing activities 46,420.00 5,554,525.00 Cash paid to repay debts 100,000.00

Distribution of dividends, profits or repayment of interest payments

57,008,356.90 cash

Including: shares paid by subsidiaries to minority shareholders

Profit, profit

Payment of other cash related to financing activities 2,808,484.12 872,170.86 Subtotal of cash outflows from financing activities 2,808,484.12 57,980,527.76 Net cash flow generated from financing activities -2,762,064.12 -52,426,002.76

4. The impact of exchange rate changes on cash and cash equivalents

-9,704,695.90 -1,324,605.53 impact

Net increase in cash and cash equivalents -62,092,588.57 -44,720,596.47 plus: opening balance of cash and cash equivalents 423,952,580.48 602,844,661.05
Balance of cash and cash equivalents at the end of the period 361,859,991.91 558,124,064.58
Cash flow statement of the parent company

Unit: Yuan

Project Half-year 2026 Half-year 2025

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 221,856,543.02 384,699,192.55 Tax refunds received 159,533.01 11,163,972.36 Cash received from other operating activities 105,639,007.37 80,329,312.54 Subtotal of cash inflows from operating activities 327,655,083.40 476,192,477.45 Cash paid for purchasing goods and receiving services 287,924,980.87 288,290,505.54 Cash paid to and for employees 72,216,500.18 82,123,616.69 Various taxes and fees paid 16,866,028.49 27,757,088.99 Other cash payments related to operating activities 62,956,864.49 105,696,057.10 Subtotal of cash outflows from operating activities 439,964,374.03 503,867,268.32 Net cash flow generated from operating activities -112,309,290.63 -27,674,790.87

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

2. Cash flow generated from investing activities:

Cash received from recovery of investment 943,903,472.39 1,018,689,507.17 Cash received from investment income 10,413,096.51 12,910,485.45 Disposal of fixed assets, intangible assets and other long-term assets

Net cash amount recovered from period 7,000.00 assets

Received from disposal of subsidiaries and other business units

net cash

Other cash received related to investing activities

Subtotal of cash inflows from investing activities 954,316,568.90 1,031,606,992.62 Purchase and construction of fixed assets, intangible assets and other long-term assets

3,201,037.00 2,445,741.50 Cash paid for assets

Cash paid for investment 894,596,200.00 1,039,797,500.00

Obtain payment from subsidiaries and other business units

net cash

Other cash payments related to investing activities

Subtotal of cash outflows from investing activities 897,797,237.00 1,042,243,241.50 Net cash flow generated from investing activities 56,519,331.90 -10,636,248.88

3. Cash flow generated from financing activities:

Cash received from investment 46,420.00 5,554,525.00 Cash received from borrowing

Other cash received related to financing activities

Subtotal of cash inflows from financing activities 46,420.00 5,554,525.00 Cash paid to repay debts 100,000.00 Paid to distribute dividends, profits or pay interest

57,008,356.90 cash

Other cash payments related to financing activities

Subtotal of cash outflows from financing activities 57,108,356.90 Net cash flow generated from financing activities 46,420.00 -51,553,831.90

4. The impact of exchange rate changes on cash and cash equivalents

-305,340.44 -336,518.11 impact

Net increase in cash and cash equivalents -56,048,879.17 -90,201,389.76

Add: Balance of cash and cash equivalents at the beginning of the period 100,993,952.43 326,583,560.64

Closing balance of cash and cash equivalents 44,945,073.26 236,382,170.88
Consolidated statement of changes in owners’ equity

Amount of current period

Unit: Yuan

2026 half year

Less equity attributable to owners of the parent company

Other equity instruments Part 1 There is a decrease and there is no amount

Project capital: Other shareholders' equity, priority, perpetual, other company's treasury, comprehensive items, reserves, surplus, company risk allocation, other subtotals, shareholders' equity, debt, other's reserves, reserves, reserves, joint profits

Provision 1,1 2,1 2,1 708 60, - 255

37, 59, 59,

,33 743 2,4 ,24

Previous year period 773 685 685

9,1 ,40 15, 4,5

Closing balance ,81 ,63 ,63

3.8 307 74.

4.4 9.4 9.4 00 6 .76 91

1 2 2

Add: yes

Changes in accounting policies

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

before

period error correction

its

him

1,1 2,1 2,1 708 60, - 255

37, 59, 59,

,33 743 2,4 ,24

Current period 773 685 685

9,1 ,40 15, 4,5

Initial balance ,81 ,63 ,63

3.8 307 74.

4.4 9.4 9.4 00 6 .76 91

1 2 2

3. Added in this issue

10, 45, 55, 55, less changes in amount 11, 35,

206 795 954 954 (reduced to 000 420

,10 ,11 ,79 ,79 Fill in “—” .00 .00

0.2 0.5 0.8 0.8 columns)

7 9 6 6 - - - -

10, 45, 56, 56,

(1) Comprehensive 206 795 001 001 total income,10,11,21,21 0.2 0.5 0.8 0.8

7 9 6 6

(2) All 11, 35, 46, 46 investors invested and reduced capital 000 420 420 420 .00 .00 .00 .00

1． Owners 11, 35, 46, 46, invested common 000 420 420 420 shares .00 .00 .00 .00

Other rights

beneficial instruments held

investors invest capital

Share branch

Payment is included in all

owner's equity

Others

(3) Profit

allocate

1． Withdraw profit

surplus public space

Extract one

General risk preparation

to all

person (or share

East) distribution

Others

(4) All

Inside the investor’s rights

carry forward

1． capital company

Convert accumulated assets to capital

(or equity)

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

surplus public

Convert accumulated assets to capital

(or equity)

surplus public

Accumulate to make up for losses

Settings subject to

Changes in benefit plan

Amount carried forward and retained

income

Other comprehensive

Consolidated income carried forward

retained earnings

Others

(5) Special projects

reserve

1． This issue mentions

take

This issue makes

use

(6) Others

1,0 2,1 2,1 708 60, 255

12, 91, 03, 03,

,35 778 ,24

This period 621 978 730 730

0,1 ,82 4,5

Closing balance ,40 ,70 ,84 ,84

3.8 74.

8.0 3.8 8.5 8.5 00 6 91

3 2 6 6 Previous year’s amount

Unit: Yuan

2025 half year

Less equity attributable to owners of the parent company

Other equity instruments Part 1 There is a decrease and there is no amount

Project capital: Other shareholders’ equity, preferred shares, perpetual bonds, other capital reserves, treasury shares, comprehensive income, reserves, reserves, risk reserves, profits, other subtotal, shareholders’ equity, equity, joint profit reserves, 1,1 2,1 2,1 706 57, - 248

40, 48, 48,

,96 034 4,6 ,65

Previous year period 948 940 940

8,1 ,22 68, 8,6

Ending balance ,40 ,90 ,90

6.3 497 08.

9.7 1.0 1.0 00 6 .89 88

2 7 7

Add: yes

Changes in accounting policies

before

period error correction

its

him

706 57, - 248 1,1 2,1 2,1

2. Current year

,96 034 4,6 ,65 40, 48, 48,beginning balance

8,1,22 68, 8,6 948 940 940Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

6.3 497 08. ,40 ,90 ,90 00 6 .89 88 9.7 1.0 1.0 2 7 7

Increase in this period - - 1,3 4,2 9,1 21,

Less changes 6,9 6,9 52, 02, 74, 653

(Reduced to 24, 24, 000 525 409 ,71

Fill in "—" 778 778 .00 .00 .60 2.9

column) .32 .32

35, 44, 44, 9,1

354 528 528

(1) Comprehensive 74,

,05 ,46 ,46Total income 409

6.1 5.7 5.7 .60

9 9 9 1,3 4,2 5,5 5,5

(2) All

52, 02, 54, 54, input and reduction

000 525 525 525 less capital

.00 .00 .00 .00 1,3 4,2 5,5 5,5 1. owner

52, 02, 54, 54, ordinary investment

000 525 525 525 shares

.00 .00 .00 .00 2. Other rights

beneficial instruments held

investors invest capital

Share branch

Payment is included in all

owner's equity

Others

- - 57, 57, 57,

(3) Profit 007 007 007 Distribution ,76 ,76 ,76 9.1 9.1 9.1

1 1 1 1． Withdraw profit

surplus public space

Extract one

General risk preparation

- - 57, 57, 57, 3. to all

007 007 007 (or shares

,76,76,76 East) distribution

9.1 9.1 9.1

1 1 1 4. Others

(4) All

Inside the investor’s rights

carry forward

1． capital company

Convert accumulated assets to capital

(or equity)

surplus public

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Convert accumulated assets to capital

(or equity)

surplus public

Accumulate to make up for losses

Settings subject to

Changes in benefit plan

Amount carried forward and retained

income

Other comprehensive

Consolidated income carried forward

retained earnings

Others

(5) Special projects

reserve

1． This issue mentions

take

This issue makes

use

(6) Others

1,1 2,1 2,1 708 61, 248

4,5 19, 42, 42,

,32 236 ,65

This issue 05, 294 016 016

0,1 ,75 8,6

Ending balance 911,69,12,12

1.3 08.

.71 6.8 2.7 2.7 00 6 88

0 5 5

Statement of changes in owner’s equity of the parent company

Amount of current period

Unit: Yuan

2026 half year

Other equity instruments All less: Others Undivided

Project Capital Special Surplus Owner's Equity Priority Perpetual Inventory Comprehensive Distribution Others

Other public reserves, reserves, equity joint ventures, bonds, shares, profits

Total 1,142 2,181

708,3 75,54 255,2

Previous year period ,176, ,306,

39,15 6,324 44,57

Closing balance 240.6 294.1 4.00 .61 4.91

0 2

Add: yes

Changes in accounting policies

before

period error correction

its

him

1,142 2,181

708,3 75,54 255,2

This year ,176, ,306,

39,15 6,324 44,57

Initial balance 240.6 294.1 4.00 .61 4.91

0 2

Increase in the current period 11,00 35,42 - - Less change amount 0.00 0.00 41,19 41,15

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(Reduced to 8,244 1,824 "-" to fill in the .32 .32 column)

(1) Comprehensive 41,19 41,19Total income 8,244 8,244

.32 .32

(2) All

11,00 35,42 46,42 Investment and deduction

0.00 0.00 0.00 Less capital

1． owner

11,00 35,42 46,42Input ordinary

0.00 0.00 0.00 shares

Capital invested by other equity instrument holders
The amount of share-based payment included in owners’ equity
Others

(3) Profit distribution

1． Withdrawal from surplus reserve

Distributions to owners (or shareholders)
Others

(4) Internal carryover of owners’ equity

1． Conversion of capital reserves to capital (or share capital)

Conversion of surplus reserves into capital (or share capital)
Surplus reserve to cover losses
Changes in defined benefit plans are carried forward to retained earnings
Other comprehensive income carried forward to retained earnings
Others

(5) Special reserves

1． This issue mentions

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

take

This issue makes

use

(6) Others

1,100 2,140

708,3 75,58 255,2

This period ,977, ,154,

50,15 1,744 44,57

Closing balance 996.2 469.8 4.00 .61 4.91

8 0 Amount from previous year

Unit: Yuan

2025 half year

Other equity instruments All less: Others Undivided

Project Capital Special Surplus Owner's Equity Priority Perpetual Inventory Comprehensive Distribution Others

Other public reserves, reserves, equity joint ventures, bonds, shares, profits

Total 1,139 2,167

706,9 71,83 248,6

Previous year period ,910, ,374,

68,15 7,147 58,60

Closing balance 315.5 225.5 4.00 .11 8.88

4 3

Add: yes

Changes in accounting policies

before

period error correction

its

him

1,139 2,167

706,9 71,83 248,6

This year ,910, ,374,

68,15 7,147 58,60

Initial balance 315.5 225.5 4.00 .11 8.88

4 3

3. Added in this issue

- Less changes 1,352 4,202

13,28 7,732 (reduced by ,000. ,525.

6,912,387. Fill in “—” with 00 00

.50 50 columns)

43,72 43,72

(1) Comprehensive

0,856 0,856Total income

.61 .61

(2) All 1,352 4,202 5,554 investors invested and reduced ,000. ,525. ,525. Less capital 00 00 00 1. Owner 1,352 4,202 5,554 Ordinary ,000. ,525. ,525. shares invested 00 00 00 2. Other rights

beneficial instruments held

investors invest capital

Share branch

Payment is included in all

owner's equity

Others

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(3) Profit 57,00 57,00 Distribution 7,769 7,769

.11 .11 1. Withdraw profit

surplus public space

- 2． to all

57,00 57,00 (or shares

7,769 7,769 East) allocation

.11 .11 3. Others

(4) All

Inside the investor’s rights

carry forward

1． capital company

Convert accumulated assets to capital

(or equity)

surplus public

Convert accumulated assets to capital

(or equity)

surplus public

Accumulate to make up for losses

Settings subject to

Changes in benefit plan

Amount carried forward and retained

income

Other comprehensive

Consolidated income carried forward

retained earnings

Others

(5) Special projects

reserve

1． This issue mentions

take

This issue makes

use

(6) Others

1,126 2,159

708,3 76,03 248,6

This period ,623, ,641,

20,15 9,672 58,60

Closing balance 403.0 838.0 4.00 .11 8.88

4 3

3. Basic situation of the company

Company registration place, organizational form and headquarters address

Hengbao Co., Ltd. (hereinafter referred to as "Hengbao Co., Ltd." or the "Company") was formerly Jiangsu Hengbao Industrial Development Co., Ltd., which was approved by the Jiangsu Provincial People's Government on September 28, 2000 with Su Zhengfu [2000] No. 187 and legally renamed Jiangsu Hengbao Co., Ltd. with a share capital of RMB 40 million at the time of establishment. It was jointly initiated by seven natural persons including Qian Yunbao. In 2007, the company was renamed Hengbao Co., Ltd.; on January 10, 2007, the company was listed on the Shenzhen Stock Exchange, stock code: 002104.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

According to the resolution of the company's first extraordinary general meeting of shareholders in 2004 on July 9, 2004, original shareholders Zhang Yirong, Xu Qinhong, Qian Kewen and Chen Yutao transferred part of their shares in the company to Jiang Haoran, Pan Meifang and Cao Zhixin. After the equity transfer, the company's registered capital remains RMB 40 million, and Qian Yunbao and other six natural persons are shareholders.

According to the resolutions of the company's 2004 Annual General Meeting of Shareholders and the provisions of the revised Articles of Association, and approved by the Jiangsu Provincial People's Government on June 24, 2005, Su Zhengfu

[2005] No. 45 "Approval of the Capital Increase and Share Expansion of Jiangsu Hengbao Co., Ltd." agreed that the company will convert the actual undistributed profit in 2004 into a capital increase of RMB 32 million based on the share capital of RMB 40 million at the end of 2004 at the rate of 8 shares for every 10 shares. The registered capital after the change is RMB 72 million. The shareholders are still Qian Yunbao and 6 other natural persons.

According to the resolution of the company's 2005 Annual General Meeting of Shareholders and the provisions of the revised Articles of Association, the company will convert the actual undistributed profits in 2005 into a registered capital of RMB 14.4 million based on the share capital of RMB 72 million at the end of 2005 and bonus 2 shares for every 10 shares. The registered capital after the change is RMB 86.4 million. The shareholders are still Qian Yunbao and 6 other natural persons.

According to the resolution of the company's 2005 Annual General Meeting of Shareholders and approved by the China Securities Regulatory Commission's Zhengjianfazi [2006] No. 157 document, the company publicly issued 28.80 million RMB ordinary shares (A shares) to the public on December 25, 2006. The registered capital after the change was RMB 115.20 million.

According to the resolution of the company's 2006 shareholders' meeting and the revised articles of association, the company transferred its capital reserve to increase its share capital at a rate of 7 shares for every 10 shares. The base date for the transfer was December 31, 2006, and the registered capital after the change was RMB 195.84 million.

According to the company's 2007 shareholders' meeting resolution and the revised articles of association, the company transferred its capital reserve to increase its share capital at the rate of 5 shares for every 10 shares. The base date for the transfer was December 31, 2007, and the registered capital after the change was RMB 293.76 million.

According to the resolution of the company's 2009 Annual General Meeting of Shareholders and the provisions of the revised Articles of Association, the company's registered capital was increased by RMB 146.88 million based on the share capital of RMB 293.76 million at the end of 2009 at the rate of 5 shares for every 10 shares. The company applied to increase the registered capital by RMB 146.88 million. After the change, the registered capital was RMB 146.88 million.

440.64 million yuan.

According to the resolution of the company's 2013 Annual General Meeting of Shareholders and the provisions of the revised Articles of Association, the company's registered capital was increased by RMB 264.384 million based on the share capital of RMB 440.64 million at the end of 2013 at the rate of 6 shares for every 10 shares. The company applied to increase the registered capital by RMB 264.384 million, and the registered capital after the change was RMB 705.024 million.

According to the resolution of the company's first extraordinary general meeting of shareholders in 2014 and the provisions of the stock option and restricted stock incentive plan, the company issued restricted tradable shares to the incentive targets, increasing the registered capital by RMB 8.176 million, and the registered capital after the change was RMB 713.2 million.

In August 2015, the company increased its share capital by 344,000 shares due to the first exercise of stock options, and the total share capital after the change was 713,544,000 shares.

In April 2016, due to the resignation of some employees, the company repurchased and canceled 40,000 restricted shares; in August 2016, the company increased the number of shares by 144,000 shares due to the second exercise of stock options, and the total number of shares after the change was 713.648 million shares.

On April 12, 2017, the company's original actual controller, Mr. Qian Yunbao, passed away due to ineffective treatment. His corresponding shares were inherited by his son, Mr. Qian Jing, in accordance with the law. At this point, Mr. Qian Jing holds 143,925,147 shares of the company, accounting for 20.17% of the company's total share capital, and has become the actual controller of the company.

In September 2017, because the 2016 annual performance appraisal results did not meet the conditions for unlocking the third phase of restricted stocks granted under the stock options and restricted stock incentive plans, the company repurchased and canceled 1.6192 million restricted stocks, and the total share capital after the change was 712.0288 million shares.

From September 2018 to July 2019, the company repurchased a total of 15,107,446 outstanding RMB-denominated shares through centralized bidding. The company completed the cancellation procedures for the above-mentioned 15,107,446 repurchased shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. on July 26, 2019, and the total share capital after the change was 696,921,354 shares.

As of June 30, 2026, the company's 2021 stock option incentive objects have exercised a total of 11.4288 million shares, and the company's total share capital has changed to

708,350,154 shares.

The company's unified social credit code: 91320000253710940L, registered address and headquarters address: Hengtang Industrial Zone, Danyang City, Jiangsu Province, legal representative: Qian Jing.

The company’s business nature and main operating activities

The company's industry is computer, communications and other electronic equipment manufacturing. The company's main business is to provide high-end intelligent products and digital security solutions and other services for banking, communications, government public service departments, defense, transportation and other industries. Specifically, it includes: communications and IoT connections, security products, system platforms, identity authentication and recognition, data security, mobile payment solutions, smart terminals, smart cards, smart card module packaging, and financial technology services.

Full text of Hengbao Co., Ltd.'s 2026 Semi-annual Report The company's main products include: the research and development, production and sales of card products such as magnetic stripe cards, password cards and IC cards, as well as related operating system software (COS) and ticket products.

Approval and issuance of financial reports

This financial statement was approved for issuance by the company's board of directors on August 27, 2026.

Consolidated report scope

The Company has a total of 19 subsidiaries included in the scope of consolidation in 2026. Please see Note 10 "Equity in Other Entities" for details. For details of the Company’s scope of consolidation, please refer to Note 9 “Changes in the Scope of Consolidation”.

4. Basis for preparation of financial statements

Basics of preparation

The company's financial statements are based on the going concern assumption, based on actual transactions and events, in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" issued by the Ministry of Finance (issued by Ministry of Finance Order No. 33 and revised by Ministry of Finance Order No. 76) and 42 specific accounting standards promulgated and revised on or after February 15, 2006. The disclosure provisions of the Rules, Guidelines for the Application of Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant provisions (hereinafter collectively referred to as the "Accounting Standards for Business Enterprises"), as well as the China Securities Regulatory Commission's "Information Disclosure and Preparation Rules No. 15 for Companies that Offer Securities to the Public - General Provisions on Financial Reports" (revised in 2023). In accordance with the relevant provisions of the Accounting Standards for Business Enterprises, the Company's accounting is based on the accrual basis. Except for certain financial instruments, these financial statements are measured on the basis of historical cost. If an asset is impaired, corresponding impairment provisions will be made in accordance with relevant regulations.

Continued operations

The financial statements are presented on a going concern basis. The company has the ability to continue operating for at least 12 months from the end of the reporting period.

5. Important accounting policies and accounting estimates

Specific accounting policies and accounting estimation tips:

The Company and its subsidiaries have formulated a number of specific accounting policies and accounting estimates for transactions and events such as revenue recognition based on actual production and operation characteristics and in accordance with relevant accounting standards for enterprises. For details, please see the description of "Revenue" in Note 5.37. For an explanation of the significant accounting judgments and estimates made by management, please refer to Note V. 44 “Other Significant Accounting Judgments and Estimates”.

Statement on compliance with corporate accounting standards

The financial statements prepared by the company comply with the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the company's consolidated and parent company's financial status as of June 30, 2026, as well as the consolidated and parent company's operating results and consolidated and parent company's cash flow and other relevant information in the first half of 2026. In addition, the company's financial statements comply in all material respects with the disclosure requirements for financial statements and their notes in the "Information Disclosure and Preparation Rules No. 15 - General Provisions on Financial Reports for Companies Offering Securities to the Public" revised by the China Securities Regulatory Commission in 2023.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Accounting period

The company's accounting period is divided into annual and interim periods. Accounting interim period refers to the reporting period shorter than a complete accounting year. The company's fiscal year adopts the Gregorian calendar year, that is, from January 1 to December 31 each year.

Business cycle

The normal operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cash equivalents. The company uses 12 months as an operating cycle and uses it as the liquidity classification standard for assets and liabilities.

Accounting standard currency

RMB is the currency of the main economic environment in which the Company and its domestic subsidiaries operate. The Company and its domestic subsidiaries use RMB as the functional currency for accounting. The Company's overseas subsidiaries determine their recording currency based on the currency of the main economic environment in which they operate. The currency used by the Company in preparing these financial statements is RMB.

Determination method and selection basis of importance standards

Applicable □Not applicable

Project Materiality Criteria

The company will account for the important single provision for bad debt provision for accounts receivable in the total amount of bad debt provision for accounts receivable in the consolidated statement.

More than 10% and the amount exceeds 10 million yuan are deemed important.

The company accounts for 10% of the balance of individual prepayments in the consolidated statement. Important prepayments aged more than 1 year.

The above and the amount is greater than 10 million yuan are considered important.

The company accounts for the amount of individual projects under construction in the total assets in the consolidated statement

Important construction projects under construction

More than 1% are considered important.

The company accounts for 10% of the balance of accounts payable in the consolidated statement. Important accounts payable that are aged more than 1 year

The above and the amount is greater than 10 million yuan are considered important.

The company accounts for 10% of the balance of contract liabilities in the consolidated statements as important contract liabilities with an aging of more than one year.

The above and the amount is greater than 10 million yuan are considered important.

The company will account for the single amount of other accounts payable in the balance of other accounts payable in the consolidated statement and include important other accounts payable with an aging of more than 1 year.

More than 10% of the total amount and the amount is greater than 10 million yuan are deemed important.

The company accounts for the total assets or total profits of the non-wholly owned subsidiary companies that are significant in the total assets or total profits of the consolidated statements.

More than 10% of the total is considered important.

The company accounts for 5% of the cash flow of a single investment activity to the total assets in the consolidated statement. The cash flow of important investment activities

The above are deemed important.

The company considers long-term equity investments in joint ventures or associates whose book value accounts for more than 5% of the total assets reported, or whose book value is greater than 50 million yuan to be considered important.

Important post-balance sheet events The company considers profit distribution after the balance sheet date to be important.

Accounting treatment methods for business combinations under the same control and those not under the same control

(1) In a business merger under the same control, the company, as the purchaser, obtains control over other participating enterprises, such as paying cash, transferring non-cash assets or assuming debts as the merger consideration. On the merger date, the share of the book value of the owner's equity of the merged party in the consolidated financial statements of the final controlling party will be used as the initial investment cost of the long-term equity investment. The difference between the initial investment cost of the long-term equity investment and the cash paid, the non-cash assets transferred and the book value of the debt assumed If the capital reserve is insufficient to offset, the retained earnings will be adjusted; if the issuance of equity securities is used as the merger consideration, the share of the book value of the owner's equity of the merged party in the final controlling party's consolidated financial statements on the merger date will be used as the initial investment cost of the long-term equity investment, and the total face value of the shares issued will be used as share capital. The difference between the initial investment cost of the long-term equity investment and the total face value of the shares issued will be adjusted to the capital reserve. If the capital reserve is insufficient to offset, the retained earnings will be adjusted. Intermediary fees such as auditing, legal services, evaluation consulting and other related management fees incurred for business mergers,

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

It is included in the current profit and loss when it occurs. The handling fees, commissions, etc. paid for bonds issued for business mergers or for the assumption of other debts shall be included in the initial measurement amount of the bonds issued and other debts. The handling fees, commissions and other expenses incurred during the issuance of equity securities during a business merger shall be offset against the premium income of the equity securities. If the premium income is insufficient to offset the amount, it shall be offset against the retained earnings.

(2) If the company's external merger is a business merger not under the same control, the initial investment cost of the long-term equity investment shall be determined according to the following conditions:

① For a business combination achieved through an exchange transaction, the initial investment cost of a long-term equity investment shall be the assets paid by the purchaser, liabilities incurred or assumed, and the fair value of equity securities issued by the purchaser on the purchase date to obtain control of the purchased party;

②For business mergers realized step by step through multiple exchange transactions, the initial investment cost of long-term equity investment is the sum of the costs of each individual transaction;

③ Intermediary fees such as auditing, legal services, evaluation consulting and other related management fees incurred for the business merger shall be included in the current profit and loss when incurred; the transaction costs of equity securities or debt securities issued as consideration for the merger shall be included in the initial recognition amount of the equity securities or debt securities;

④ If future events that may affect the merger costs are stipulated in the merger contract or agreement, if it is estimated that the future events are likely to occur on the purchase date and the amount of the impact on the merger costs can be measured reliably, they will be included in the initial investment cost of the long-term equity investment.

(3) If the company's external merger is a business merger not under common control, the difference between the initial investment cost of the long-term equity investment and the fair value share of the acquiree's identifiable net assets obtained in the merger shall be recognized as goodwill.

The difference between the initial investment cost of a long-term equity investment and the fair value share of the acquiree's identifiable net assets acquired in the merger shall be handled in accordance with the following methods: ① Review the fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of the merger costs;

② If the merger cost is still less than the fair value share of the acquiree's identifiable net assets obtained in the merger after review, the difference shall be included in the current profit and loss.

Judgment standards for control and preparation methods of consolidated financial statements

(1) Judgment criteria for control

The scope of consolidation in consolidated financial statements is determined based on control. Control means that the company has power over the investee, enjoys variable returns by participating in the investee's relevant activities, and has the ability to use its power over the investee to affect the amount of returns. This usually includes an investee in which the parent company owns more than half of the voting rights and a company that holds less than half of the voting rights but has more than half of the voting rights in the invested unit through an agreement with other investors of the invested unit; has the right to decide the financial and operating decisions of the invested unit according to the company's articles of association or agreement; has the right to appoint and remove a majority of the members of the board of directors of the invested unit; and holds a majority of the voting rights in the board of directors of the invested unit.

(2) Method of preparing consolidated financial statements

The Company begins to include the subsidiary in the scope of consolidation from the date it obtains actual control over the net assets and production and operation decisions of the subsidiary; it ceases to be included in the scope of consolidation from the date it loses actual control. For subsidiaries disposed of, the operating results and cash flows before the date of disposal have been appropriately included in the consolidated income statement and consolidated cash flow statement; for subsidiaries disposed of in the current period, the opening balance of the consolidated balance sheet will not be adjusted. For subsidiaries added through business combinations not under common control, their operating results and cash flows after the acquisition date have been appropriately included in the consolidated income statement and consolidated cash flow statement, and the opening numbers and comparative numbers of the consolidated financial statements will not be adjusted. For subsidiaries added through a business combination under common control, their operating results and cash flows from the beginning of the current period to the date of merger have been appropriately included in the consolidated income statement and consolidated cash flow statement, and the comparative figures of the consolidated financial statements have been adjusted at the same time.

When preparing consolidated financial statements, if the accounting policies or accounting periods adopted by a subsidiary and the Company are inconsistent, necessary adjustments will be made to the financial statements of the subsidiary in accordance with the Company's accounting policies and accounting periods. For subsidiaries acquired through business combinations not under common control, their financial statements will be adjusted based on the fair value of the identifiable net assets on the date of acquisition.

All significant intra-company balances, transactions and unrealized profits are eliminated when preparing consolidated financial statements.

The portion of the subsidiary's shareholders' equity and net profit and loss for the current period that is not owned by the company is separately presented as minority shareholders' equity and minority shareholders' profit and loss in the consolidated financial statements under shareholders' equity and net profit. The share of minority shareholders' equity in the current period's net profit and loss of a subsidiary is listed as the "minority shareholders' profit and loss" item under the net profit item in the consolidated income statement. If the losses of a subsidiary shared by minority shareholders exceed the minority shareholders' share of the subsidiary's opening shareholders' equity, the minority shareholders' equity will still be offset.

When the control over the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, the remaining equity is remeasured according to its fair value on the date of loss of control. The sum of the consideration obtained from the disposal of the equity and the fair value of the remaining equity, minus the rights to the original subsidiary calculated based on the original shareholding ratio since the date of purchase.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

The difference between the shares of net assets calculated continuously from the beginning shall be included in the investment income in the period when control is lost. Other comprehensive income related to the equity investment of the original subsidiary will be accounted for on the same basis as the acquiree's direct disposal of relevant assets or liabilities when control is lost (that is, except for the changes caused by the remeasurement of the net liabilities or net assets of the defined benefit plan in the original subsidiary, the rest will be converted into investment income for the current period). Subsequently, the remaining equity will be subsequently measured in accordance with relevant regulations such as "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment" or "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

If the company disposes of its equity investment in a subsidiary step by step through multiple transactions until it loses control, it needs to distinguish whether each transaction in which it disposes its equity investment in the subsidiary until it loses control is a package deal. The terms, conditions and economic impact of various transactions for the disposal of equity investments in subsidiaries meet one or more of the following circumstances, which usually indicate that multiple transactions should be accounted for as a package deal: ① These transactions are entered into at the same time or with consideration of each other's influence; ② Only these transactions as a whole can achieve a complete business result; ③ The occurrence of a transaction depends on the occurrence of at least one other transaction; ④ A transaction is uneconomical when viewed alone, but it is economical when considered together with other transactions. If it does not belong to a package deal, each transaction will be accounted for in accordance with the applicable principles of "partial disposal of long-term equity investment in a subsidiary without losing control" and "loss of control of the original subsidiary due to disposal of part of the equity investment or other reasons" as appropriate. If the various transactions involving the disposal of equity investments in a subsidiary until the loss of control belong to a package transaction, each transaction will be accounted for as a transaction in which the subsidiary is disposed of and control is lost; however, the difference between the price of each disposal and the share of the net assets of the subsidiary corresponding to the disposal investment before the loss of control is recognized as other comprehensive income in the consolidated financial statements, and is transferred to the profit and loss of the current period when control is lost.

Classification of joint arrangements and accounting treatment methods for joint operations

Joint arrangements are divided into joint operations and joint ventures.

A joint operation refers to a joint arrangement in which the joint venture party enjoys the relevant assets of the arrangement and assumes the relevant liabilities of the arrangement. The company confirms the following items related to its share of interests in joint operations, and conducts accounting treatments in accordance with the relevant accounting standards for enterprises:

(1) Recognize the assets held individually, and recognize the assets held jointly according to their shares;

(2) Recognize the liabilities borne individually and recognize the liabilities borne jointly according to their shares;

(3) Recognize the income generated from the sale of its share of joint operating output;

(4) Recognize the income generated by the joint operation from the sale of output according to its share;

(5) Recognize the expenses incurred individually, and recognize the expenses incurred by joint operations according to their share.

A joint venture refers to a joint arrangement in which the joint venture party only has rights to the net assets of the arrangement. The Company accounts for investments in joint ventures in accordance with the equity method.

Determination standards for cash and cash equivalents

Cash refers to the company's cash on hand and deposits that can be used for payment at any time; cash equivalents refers to investments held by the company that have short maturities, are highly liquid, are easily convertible into known amounts of cash, and have little risk of value changes.

Foreign currency business and foreign currency statement conversion

(1) When a foreign currency transaction is initially recognized, the foreign currency amount is converted into the RMB amount using the central parity rate of the RMB foreign exchange rate announced by the People's Bank of China on the day of the transaction.

(2) On the balance sheet date, foreign currency monetary items and foreign currency non-monetary items are processed according to the following methods:

① Foreign currency monetary items are converted using the central parity rate of the RMB and foreign exchange rates announced by the People's Bank of China on the balance sheet date. Exchange differences arising from differences between the spot exchange rate on the balance sheet date and the spot exchange rate on initial recognition or the previous balance sheet date shall be included in the current profit and loss.

② Foreign currency non-monetary items measured at historical cost are still converted at the spot exchange rate on the date of the transaction, without changing the accounting functional currency amount; foreign currency non-monetary items measured at fair value are converted at the spot exchange rate on the date when the fair value is determined. The difference between the converted accounting functional currency amount and the original accounting functional currency amount is treated as a change in fair value (including exchange rate changes), and is included in the current profit and loss or other comprehensive income according to the nature of the non-monetary item.

Monetary items refer to the monetary funds held by the company and the assets to be collected or liabilities to be paid in fixed or determinable amounts.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Non-monetary items refer to items other than monetary items.

(3) Conversion method for foreign currency financial statements of overseas operating entities:

① The assets and liability items in the balance sheet are translated using the spot exchange rate on the balance sheet date. Except for the "undistributed profits" item, owners' equity items are translated using the spot exchange rate at the time of occurrence;

② The income and expense items in the income statement are converted using an exchange rate determined in accordance with a systematic and reasonable method and approximate to the spot exchange rate on the date of the transaction;

③ The translation difference of foreign currency financial statements resulting from the above ① and ② conversion shall be presented separately under the owner's equity item in the balance sheet.

(4) The company converts the financial statements of overseas operations in a hyperinflationary economy according to the following methods:

Balance sheet items are restated using the general price index, income statement items are restated using changes in the general price index, and then converted according to the spot exchange rate on the most recent balance sheet date.

When overseas operations are no longer in a hyperinflationary economy, the restatement will cease and the restated financial statements will be converted at the price level on the date of cessation.

(5) When the company disposes of an overseas operation, the translation difference of the foreign currency financial statements listed under the owner's equity item in the balance sheet and related to the overseas operation will be transferred from the owner's equity item to the profit and loss of the current period of disposal; if the overseas operation is partially disposed of, the translation difference of the foreign currency financial statement of the disposal part will be calculated based on the proportion of disposal and transferred to the profit and loss of the current period of disposal.

Financial instruments

A financial instrument refers to a contract that forms a financial asset of one party and a financial liability or equity instrument of another party. When the company becomes a party to a financial instrument contract, the relevant financial assets or financial liabilities are recognized.

(1) Financial assets

①Classification and initial measurement

Based on the business model of managing financial assets and the contractual cash flow characteristics of financial assets, the company divides financial assets into:

Financial assets measured at amortized cost;

Financial assets measured at fair value through other comprehensive income;

Financial assets measured at fair value with changes included in current profits and losses.

Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss; for other types of financial assets, the relevant transaction costs are included in the initial recognition amount. For accounts receivable or notes receivable arising from the sale of products or provision of services that do not contain or take into account significant financing components, the amount of consideration that the company is expected to be entitled to receive shall be regarded as the initial recognition amount.

Debt instruments

Debt instruments held by the company refer to instruments that meet the definition of financial liabilities from the perspective of the issuer, and are measured in the following three ways:

<1> Measured at amortized cost:

The company's business model for managing such financial assets aims to collect contractual cash flows, and the contractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements, that is, the cash flows generated on a specific date are only payments of principal and interest based on the outstanding principal amount. The company recognizes interest income on such financial assets based on the effective interest rate method. Such financial assets mainly include monetary funds, notes and accounts receivable, other receivables, debt investments and long-term receivables, etc. The company lists debt investments and long-term receivables that mature within one year (including one year) from the balance sheet date as non-current assets that mature within one year; debt investments that mature within one year (including one year) when acquired are listed as other current assets.

<2> Measured at fair value with changes included in other comprehensive income:

The company's business model for managing such financial assets aims at both collecting contractual cash flows and selling them, and the contractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements. Such financial assets are measured at fair value and changes in them are included in other comprehensive income, but impairment losses or gains, exchange gains and losses and interest income calculated according to the effective interest method are included in the current profit and loss. Such financial assets are listed as other debt investments. Other debt investments that mature within one year (including one year) from the balance sheet date are listed as non-current assets that mature within one year. Other debt investments that mature within one year (including one year) when acquired are listed as other current assets.

<3> Measured at fair value and its changes included in the current profit and loss:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

The company will hold debt instruments that are not divided into measured at amortized cost and measured at fair value and its changes are included in other comprehensive income. They are measured at fair value and their changes are included in the current profit and loss, and listed as trading financial assets. Assets that mature more than one year from the balance sheet date and are expected to be held for more than one year are listed as other non-current financial assets.

Equity instruments

The company will measure equity instrument investments over which it has no control, joint control or significant influence at fair value and account its changes into current profits and losses, and list them as trading financial assets; if they are expected to be held for more than one year from the balance sheet date, they will be listed as other non-current financial assets.

In addition, the company designated some non-trading equity instrument investments as financial assets measured at fair value and whose changes are included in other comprehensive income, and listed them as other equity instrument investments. Dividend income related to this type of financial assets is included in the current profit and loss.

②Impairment

The company recognizes loss provisions based on expected credit losses for financial assets measured at amortized cost, debt instrument investments and financial guarantee contracts measured at fair value with changes included in other comprehensive income. The company considers reasonable and well-founded information about past events, current conditions and predictions of future economic conditions, weights the risk of default, calculates the probability-weighted amount of the present value of the difference between the cash flow receivable in the contract and the cash flow expected to be received, and recognizes expected credit losses.

On each balance sheet date, the company measures the expected credit losses of financial instruments at different stages. If the credit risk of a financial instrument has not increased significantly since initial recognition, it is in the first stage, and the company will measure loss provisions based on the expected credit losses within the next 12 months; if the credit risk of a financial instrument has increased significantly since initial recognition but has not yet incurred credit impairment, it is in the second stage, and the company will measure loss provisions based on the expected credit losses throughout the entire duration of the instrument; if a financial instrument has experienced credit impairment since initial recognition, it is in the third stage, and the company will measure loss provisions based on the expected credit losses throughout the entire duration of the instrument. For financial instruments with low credit risk on the balance sheet date, the company assumes that its credit risk has not increased significantly since initial recognition, and measures loss provisions based on expected credit losses within the next 12 months.

For financial instruments in the first and second stages and with lower credit risk, the company calculates interest income based on its book balance before impairment provisions and actual interest rate. For financial instruments in the third stage, interest income is calculated based on its book balance minus the amortized cost and actual interest rate after impairment provisions have been made.

For bills receivable, accounts receivable, contract assets and receivable financing resulting from daily operating activities such as selling goods and providing services, the company can measure loss provisions based on expected credit losses throughout the entire duration, regardless of whether there is a significant financing component.

Because the prepayment cannot recover other receivables transferred in, the company, as a financial instrument in the third stage, measures loss provisions based on the expected credit losses throughout the duration.

When a single financial asset cannot assess expected credit losses at a reasonable cost, the company divides the receivables into several combinations based on credit risk characteristics, and calculates expected credit losses on the basis of the combinations. The basis for determining the combinations is as follows:

Combination 1 Bank Acceptance Bill and Commercial Acceptance Bill

Portfolio 2 Amounts receivable from companies within the scope of consolidation

Portfolio 3 Customers classified by industry type and customer credit rating combination

Group 4 Other receivables

For accounts receivable divided into portfolios, the company refers to historical credit loss experience, combined with current conditions and predictions of future economic conditions, prepares a comparison table between the customer credit rating of accounts receivable and the entire lifetime expected credit loss rate, and calculates expected credit losses.

For the notes receivable and accounts receivable financing that are divided into portfolios due to daily operating activities such as selling goods and providing services, the company refers to historical credit loss experience, combined with current conditions and predictions of future economic conditions, and calculates expected credit losses through default risk exposure and the expected credit loss rate throughout the duration. In addition to notes receivable, receivable financing and 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 expected credit losses through default risk exposure and expected credit loss rate within the next 12 months or the entire duration.

The company will include the accrued or reversed loss provisions into the current profits and losses.

③Termination confirmation

Financial assets shall be derecognized if they meet one of the following conditions:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

The contractual right to receive cash flows from the financial asset terminates;
The financial asset has been transferred, and the company transfers almost all risks and rewards of ownership of the financial asset to the transferee;
The financial asset has been transferred. Although the company neither transfers nor retains substantially all risks and rewards of ownership of the financial asset, it has given up control of the financial asset.

When other equity instrument investments are derecognised, the difference between their book value and the sum of the consideration received and the cumulative amount of changes in fair value that were originally directly included in other comprehensive income is included in retained earnings; when the remaining financial assets are derecognised, the difference between their book value and the sum of the consideration received and the cumulative amount of changes in fair value that was originally directly included in other comprehensive income is included in the current profit and loss.

④Write-off of financial assets

If the company and its subsidiaries no longer reasonably expect that the contractual cash flows of a financial asset can be fully or partially recovered, the book balance of the financial asset will be directly written down. Such a write-down constitutes the derecognition of the relevant financial asset. This situation typically occurs when a company and its subsidiaries determine that the debtor does not have the assets or sources of income to generate sufficient cash flow to repay the amount that will be written down. However, financial assets that are written down may still be affected by enforcement activities in accordance with the company's and its subsidiaries' procedures for recovering amounts due.

If a financial asset that has been written down is later recovered, the reversal of the impairment loss will be included in the profit and loss of the current period of recovery.

(2) Financial liabilities

Upon initial recognition, financial liabilities are classified into financial liabilities measured at amortized cost and financial liabilities measured at fair value through profit or loss for the current period. The Company classifies financial liabilities as financial liabilities measured at amortized cost except for the following:

① Financial liabilities measured at fair value with changes included in current profit and loss, including trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as measured at fair value with changes included in current profit or loss.

② Financial liabilities arising from the transfer of financial assets that do not meet the conditions for derecognition or continued involvement in the transferred financial assets.

③Financial guarantee contracts that do not fall under the circumstances of item ① or ② of this article, and loan commitments at lower than market interest rates that do not fall under the circumstances of item ① of this article. In a business combination not under common control, if the contingent consideration recognized by the company as the purchaser forms a financial liability, the financial liability shall be accounted for at fair value with changes included in current profits and losses.

At the time of initial recognition, in order to provide more relevant accounting information, the company can designate financial liabilities as financial liabilities measured at fair value with changes included in current profits and losses, and this designation meets one of the following conditions:

Ability to eliminate or significantly reduce accounting mismatches.
According to the enterprise risk management or investment strategy stated in formal written documents, manage and perform performance evaluation on the financial liability portfolio or financial assets and financial liability portfolio on the basis of fair value, and report to key management personnel on this basis within the company. This designation, once made, cannot be revoked.

The company's financial liabilities are mainly financial liabilities measured at amortized cost, including notes and accounts payable, other payables, loans and bonds payable, etc. Such financial liabilities are initially measured based on their fair value minus transaction costs, and are subsequently measured using the effective interest method. Those with a maturity of less than one year (including one year) are listed as current liabilities; those with a maturity of more than one year but due within one year (including one year) from the balance sheet date are listed as non-current liabilities due within one year; the rest are listed as non-current liabilities.

When the current obligation of a financial liability has been discharged in whole or in part, the company shall terminate the recognition of the financial liability or the discharged part of the obligation. The difference between the book value of the derecognized part and the consideration paid shall be included in the current profit and loss.

If the current obligation of a financial liability (or part thereof) has been discharged, the company shall terminate the recognition of the financial liability (or part thereof).

(3) Determination of fair value of financial instruments

For financial instruments with an active market, their fair value is determined based on the quoted price in the active market. For financial instruments that do not have an active market, valuation techniques are used to determine their fair value. When valuing, the company adopts valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information, selects input values that are consistent with the characteristics of the assets or liabilities considered by market participants in transactions of related assets or liabilities, and gives priority to the use of relevant observable input values whenever possible. Unobservable input values are used when relevant observable input values cannot be obtained or are impracticable to obtain.

(4) Subsequent measurement

After initial recognition, the company conducts subsequent measurement of different types of financial assets at amortized cost, at fair value with changes included in other comprehensive income, or at fair value with changes included in current profits and losses.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

After initial recognition, the company will measure different types of financial liabilities at amortized cost, at fair value with changes included in current profits and losses, or by other appropriate methods for subsequent measurement.

The amortized cost of a financial asset or financial liability is determined by adjusting the initial recognition amount of the financial asset or financial liability as follows:

①Deduct the repaid principal.

② Add or subtract the accumulated amortization amount formed by amortizing the difference between the initial recognition amount and the maturity amount using the effective interest method.

③ Deduction of accumulated loss provisions (only applicable to financial assets).

The company recognizes interest income based on the effective interest rate method. Interest income is calculated and determined based on the book balance of the financial asset multiplied by the actual interest rate, except for the following circumstances: 1) For purchased or originated financial assets that have suffered credit impairment, the company will determine its interest income based on the amortized cost of the financial asset and the credit-adjusted actual interest rate from the initial recognition.

For purchased or originated financial assets that have not been credit-impaired but have become credit-impaired in subsequent periods, the company will calculate and determine its interest income based on the amortized cost and actual interest rate of the financial assets in subsequent periods. If the company uses the actual interest rate method to calculate interest income on the amortized cost of financial assets in accordance with the above policies, if the financial instrument no longer has credit impairment due to its credit risk improvement in the subsequent period, and this improvement can be objectively linked to an event that occurs after the application of the above policies (such as the credit rating of the debtor being raised), the company will calculate and determine interest income based on the actual interest rate multiplied by the book balance of the financial asset.

Notes receivable

For details, please refer to Important Accounting Policies and Accounting Estimates 11. Financial Instruments.

Accounts receivable

For details, please refer to Important Accounting Policies and Accounting Estimates 11. Financial Instruments.

Accounts receivable financing

For details, please refer to Important Accounting Policies and Accounting Estimates 11. Financial Instruments.

Other receivables

Determination method and accounting treatment method of expected credit losses of other receivables

For details, please refer to Important Accounting Policies and Accounting Estimates 11. Financial Instruments.

Contract assets

The Company lists the rights of the customer that have not paid the contract consideration but that have fulfilled the performance obligations under the contract and are not unconditional (that is, only dependent on the passage of time) to receive payment from the customer as contract assets in the balance sheet. Contract assets and contract liabilities under the same contract are presented on a net basis, and contract assets and contract liabilities under different contracts are not offset.

For details on the determination method and accounting treatment method of expected credit losses of contract assets, please refer to Important Accounting Policies and Accounting Estimates 11. "Financial Instruments".

Inventory

(1) Inventories refer to finished products or commodities held for sale in daily activities, products in process of production, and materials and supplies consumed in the production process and the provision of labor services. Inventories shall be recognized if they meet the following conditions at the same time:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

① The economic benefits related to the inventory are likely to flow into the enterprise;

②The cost of the inventory can be measured reliably.

(2) Classification of inventory

Inventories include raw materials, work-in-progress, semi-finished products, stored goods and rotating materials.

(3) Valuation method for issued inventory

Inventories are valued based on the weighted average method at the end of the month when shipped.

(4) Basis for determining net realizable value of inventories and method of accruing inventory depreciation reserves

On the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the cost of the inventory is higher than its net realizable value, a provision for inventory depreciation should be made and included in the current profit and loss. Net realizable value refers to the estimated selling price of inventory in daily activities minus the estimated costs to be incurred upon completion, estimated sales expenses and related taxes.

The basis for determining the net realizable value of various types of inventories is as follows:

① For commodity inventories such as finished products, commodities and materials for sale that are directly for sale, in the normal production and operation process, the net realizable value is determined by the estimated selling price of the inventory minus the estimated sales expenses and related taxes.

② For materials inventories that need to be processed, in the normal production and operation process, the net realizable value is determined based on the estimated selling price of the finished products minus the estimated costs to be incurred upon completion, estimated sales expenses and related taxes.

③ On the balance sheet date, if part of the same inventory has a contract price and other parts do not have a contract price, its net realizable value shall be determined separately and compared with its corresponding cost to determine the amount of provision or reversal of inventory depreciation reserves.

Inventory depreciation provisions are accrued on a single inventory item. For inventories that are related to product series produced and sold in the same region, have the same or similar end use or purpose, and are difficult to measure separately from other items, inventory depreciation provisions are made on a consolidated basis.

(5) Inventory inventory system

Adopt a perpetual inventory system.

(6) Amortization method for low-value consumables and packaging materials

Low-value consumables and packaging materials are amortized using the one-time write-off method.

Assets held for sale

(1) Recognition standards for non-current assets and disposal groups held for sale

If a company recovers its book value mainly through sale (including non-monetary asset exchange with commercial substance, the same below) rather than continuing to use a non-current asset or disposal group, it will be classified as held for sale. The specific standard is to meet the following conditions at the same time:

① According to the practice of selling such assets or disposal groups in similar transactions, they can be sold immediately under the current conditions;

② The sale is very likely to occur, that is, the company has made a resolution on a sale plan and obtained a firm purchase commitment, and the sale is expected to be completed within one year. Among them, a disposal group refers to a group of assets that are disposed of as a whole in a transaction through sale or other means, as well as the liabilities directly related to these assets transferred in the transaction. If the asset group or asset group combination to which the disposal group belongs has allocated the goodwill acquired in the business combination in accordance with the "Accounting Standards for Business Enterprises No. 8 - Asset Impairment", the disposal group shall include the goodwill allocated to the disposal group.

If the control over the subsidiary is lost due to the sale of investment in a subsidiary or other reasons, regardless of whether part of the equity investment is retained after the sale, when the investment in the subsidiary to be sold meets the conditions for classification as held for sale, the entire investment in the subsidiary will be classified as held for sale in the parent company's individual financial statements, and all assets and liabilities of the subsidiary will be classified as held for sale in the consolidated financial statements.

(2) Accounting treatment method

When initially measured or re-measured and divided into non-current assets and disposal groups held for sale on the balance sheet date, if the book value is higher than the net amount of fair value minus selling expenses, the book value will be written down to the net amount of fair value minus selling expenses. The amount of the write-down is recognized as asset impairment loss and included in the current profit and loss, and an impairment provision for assets held for sale is made at the same time. For the disposal group, the recognized asset impairment loss is first deducted from the book value of the goodwill in the disposal group, and then deducted in proportion to the applicable "Enterprise Accounting Standards No. 42 - Non-current Assets Held for Sale, Disposal Groups and Discontinued Operations" (hereinafter referred to as the "Hold for Sale Standards") in the disposal group.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

The book value of various non-current assets specified in the measurement requirements. If the net amount of the fair value of the disposal group held for sale less the selling expenses increases on the subsequent balance sheet date, the previously written-down amount shall be restored and reversed within the amount of asset impairment loss recognized for non-current assets after being classified as held-for-sale and subject to the measurement provisions of the held-for-sale standards. The reversed amount shall be included in the current profit and loss, and According to the proportion of the book value of each non-current asset in the disposal group that is subject to the measurement requirements of the held-for-sale standards, except for goodwill, the book value is increased proportionally; the book value of goodwill that has been deducted, and the asset impairment losses recognized before the non-current assets are classified as held-for-sale categories cannot be reversed.

No depreciation or amortization is provided for non-current assets held for sale or non-current assets in the disposal group, and interest and other expenses on liabilities in the disposal group held for sale continue to be recognized.

When a non-current asset or disposal group no longer meets the classification conditions for the held-for-sale category, it will no longer be classified as a held-for-sale category or the non-current assets will be removed from the held-for-sale disposal group, and shall be measured according to the lower of the following two:

① The book value before being classified as held for sale, adjusted for the depreciation, amortization or impairment that would have been recognized if it had not been classified as held for sale;

②Recoverable amount.

Debt investment

Not applicable

Other debt investments

Not applicable

Long-term receivables

Not applicable

Long-term equity investment

Long-term equity investment refers to the equity investment in which the company controls and has significant influence on the invested unit, as well as the investment in its joint ventures.

(1) Determination of initial investment cost

Except for long-term equity investments formed through external mergers, the initial investment cost of long-term equity investments acquired through other means shall be determined in accordance with the following provisions:

① For long-term equity investments obtained by paying cash, the initial investment cost shall be the actual purchase price paid. Initial investment costs include fees, taxes and other necessary expenses directly related to obtaining long-term equity investment;

② For long-term equity investments obtained by issuing equity securities, the initial investment cost shall be based on the fair value of the equity securities issued;

③ For long-term equity investments obtained through non-monetary asset exchange, the initial investment cost shall be determined in accordance with the "Accounting Standards for Business Enterprises No. 7 - Non-monetary Asset Exchange";

④ For long-term equity investments obtained through debt restructuring, the initial investment cost shall be determined in accordance with the "Accounting Standards for Business Enterprises No. 12 - Debt Restructuring".

(2) Subsequent measurement and profit and loss recognition methods

①The following long-term equity investments are accounted for using the cost method:

Long-term equity investment in which the company can exercise control over the invested unit.

Long-term equity investments accounted for using the cost method are valued at the initial investment cost. Additional or withdrawn investments should adjust the cost of long-term equity investments. Cash dividends or profits declared by the investee to be distributed shall be recognized as investment income for the current period.

② Long-term equity investments that have joint control (referred to as joint ventures) or significant influence on the invested unit shall be accounted for using the equity method.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

When the long-term equity investment is accounted for using the equity method, if the investment cost of the long-term equity investment is greater than the fair value share of the investee's identifiable net assets at the time of investment, the investment cost of the long-term equity investment will not be adjusted; if the investment cost of the long-term equity investment is less than the fair value share of the investee's identifiable net assets at the time of investment, the book value of the long-term equity investment will be adjusted, and the difference will be included in the current profit and loss of the investment.

In equity method accounting, when a long-term equity investment is obtained, the investment gains and losses and other comprehensive income are recognized respectively according to the share of the net profit or loss and other comprehensive income realized by the investee that should be enjoyed or shared, and the book value of the long-term equity investment is adjusted. The investing enterprise calculates its portion based on the profits or cash dividends declared by the investee to be distributed, and accordingly reduces the book value of the long-term equity investment. For other changes in the owner's equity of the invested unit other than net profits and losses, other comprehensive income and profit distribution, the investor shall adjust the book value of the long-term equity investment and include it in the owner's equity.

The recognition of net losses incurred by the invested unit shall be limited to the reduction of the book value of the long-term equity investment and other long-term equities that essentially constitute the net investment in the invested unit to zero, except where the company has the obligation to bear additional losses to the invested enterprise. If the invested unit realizes net profits in the future, the investing enterprise will resume recognizing the income sharing amount after its income sharing amount makes up for the unrecognized loss sharing amount.

For other changes in the owner's equity of the invested unit other than net profit and loss, other comprehensive income and profit distribution, the book value of the long-term equity investment is adjusted and included in the owner's equity.

When long-term equity investments are accounted for according to the equity method and investment profits and losses are recognized, the net profits of the invested unit are first adjusted in terms of the fair value, accounting policies and accounting period of the investee's identifiable assets at the time of investment, and then the current investment profits and losses are recognized based on the share of the invested unit's net profits and losses that should be enjoyed or shared.

Unrealized gains and losses from internal transactions with associates and joint ventures are calculated based on the shareholding ratio attributable to the company, and investment gains and losses are recognized on an offsetting basis.

(3) Basis for determining joint control and significant influence on the invested unit

Joint control refers to the shared control over an arrangement in accordance with relevant agreements, and the relevant activities of the arrangement must be decided only with the unanimous consent of the parties sharing control rights. When determining whether joint control exists, first determine whether all participants or a combination of participants collectively control the arrangement. If all participants or a group of participants must act in concert to decide on the relevant activities of an arrangement, then all participants or a group of participants are deemed to collectively control the arrangement. Next, determine whether decisions on activities related to the arrangement must be unanimously agreed upon by the participants who collectively control the arrangement. If a combination of two or more parties can collectively control an arrangement, it does not constitute joint control. When determining whether joint control exists, the protective rights enjoyed are not taken into account.

Significant influence refers to having the power to participate in decision-making on an enterprise's financial and operating policies, but not being able to control or jointly control the formulation of these policies with other parties. When determining whether it can exert significant influence on the invested unit, the investor's direct or indirect holding of voting shares of the invested unit and the impact of the current executable potential voting rights held by the investor and other parties are assumed to be converted into equity in the invested unit, including the impact of current convertible warrants, share options and convertible corporate bonds issued by the invested unit.

Investment real estate

Investment real estate measurement model

Not applicable

Fixed assets

(1) Confirmation conditions

Fixed assets refer to tangible assets held for the purpose of producing goods, providing labor services, leasing or operating management, and whose useful life exceeds one accounting year. Fixed assets can only be recognized if they meet the following conditions at the same time:

① The economic benefits related to the fixed asset are likely to flow into the enterprise;

②The cost of the fixed asset can be measured reliably.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Depreciation method

Category Depreciation method Depreciation life Salvage value rate Annual depreciation rate Houses and buildings Average life method 20 years to 50 years 5.00% 1.90%-4.75% General equipment Average life method 5 years 5.00% 19.00%

Special equipment Average life method 10 years 5.00% 9.50%

Transportation equipment Average age method 5 years 5.00% 19.00%

The estimated net residual value refers to the amount currently obtained by the company from the disposal of the asset after deducting the estimated disposal expenses, assuming that the fixed asset has reached its expected useful life and is in its expected state at the end of its useful life.

(3) Impairment testing method and impairment provision accrual method for fixed assets

Please refer to Note V. 30 "Impairment of Long-term Assets" for details on the impairment testing method and impairment provision accrual method of fixed assets.

(4) Other instructions

Subsequent expenditures related to a fixed asset, if the economic benefits related to the fixed asset are likely to flow in and its cost can be measured reliably, will be included in the cost of the fixed asset, and the book value of the replaced part will be derecognized. Other subsequent expenditures other than these shall be included in the current profits and losses when incurred.

When a fixed asset is in a state of disposal or no economic benefits are expected to be generated through use or disposal, the fixed asset is derecognised. The difference between the disposal income from the sale, transfer, scrapping or damage of fixed assets after deducting their book value and relevant taxes is included in the current profit and loss.

The company will review the service life, estimated net residual value and depreciation method of fixed assets at least at the end of the year. If any changes occur, they will be treated as changes in accounting estimates.

Projects under construction

The company's projects under construction are divided into two types: self-operated construction and outsourcing construction. Construction in progress will be transferred to fixed assets when the project is completed and reaches the intended usable state. The criteria for judging the intended usable state should meet one of the following conditions: the physical construction (including installation) of the fixed assets has been completed or substantially completed; trial production or trial operation has been carried out, and the results show that the asset can operate normally or can stably produce qualified products, or the trial operation results show that it can operate normally or do business; the amount of expenditure on the fixed assets constructed is very small or almost no longer occurs; the fixed assets purchased and constructed have met the design or contract requirements, or are basically consistent with the design or contract requirements.

When the project under construction reaches the intended usable state, it will be transferred to fixed assets according to the actual cost of the project. If the asset has reached its intended usable state but has not yet completed the final settlement, the estimated value will be transferred to fixed assets first. After the final settlement has been processed, the original estimated value will be adjusted based on the actual cost, but the originally accrued depreciation will not be adjusted.

Please refer to Note V. 30 "Impairment of Long-term Assets" for details on the impairment testing method and impairment provision accrual method for projects under construction.

Borrowing costs

(1) If the borrowing costs incurred by the company can be directly attributed to the purchase, construction or production of assets that meet the capitalization conditions, they shall be capitalized and included in the cost of the relevant assets. Assets that meet the conditions for capitalization refer to fixed assets, investment real estate, inventories and other assets that require a considerable period of time (usually one year or more) to reach the intended usable and salable state through acquisition, construction or production activities. Other borrowing costs shall be recognized as expenses based on the amount incurred when incurred and included in the current profits and losses. Borrowing costs include borrowing interest, amortization of discounts or premiums, auxiliary expenses, and exchange differences arising from foreign currency borrowings.

(2) Borrowing costs will begin to be capitalized if they meet the following conditions at the same time:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

① Asset expenditures have occurred. Asset expenditures include cash paid for the acquisition, construction or production of assets that meet capitalization conditions, expenditures in the form of transfers of non-cash assets or the assumption of interest-bearing debts;

②The borrowing costs have been incurred;

③The necessary purchase, construction or production activities to bring the assets to the intended usable or salable state have begun.

When the acquisition, construction or production of assets that meet the capitalization conditions reaches the intended usable or salable state, the capitalization of borrowing costs ceases.

If an asset that meets the capitalization conditions is abnormally interrupted during the acquisition, construction or production process, and the interruption lasts for more than 3 months, the capitalization of borrowing costs will be suspended. Borrowing costs incurred during the interruption period are recognized as expenses and included in the current profit and loss until the acquisition, construction or production activities of the assets restart. If the interruption is a necessary procedure for the acquired, constructed or produced assets that qualify for capitalization to reach the intended usable or salable state, the capitalization of borrowing costs will continue. (3) During the capitalization period, the capitalized amount of interest (including amortization of discounts or premiums) for each accounting period shall be determined in accordance with the following provisions:

① If a special loan is borrowed for the purpose of purchasing, constructing or producing assets that meet the capitalization conditions, the amount shall be determined based on the actual interest expense incurred on the special loan in the current period, minus the interest income obtained from unused borrowed funds deposited in the bank or the investment income obtained from temporary investment.

② If general borrowings are occupied for the purpose of purchasing, constructing or producing assets that meet the capitalization conditions, the amount of interest that should be capitalized on the general borrowings shall be calculated and determined based on the weighted average of the asset disbursements of the accumulated asset disbursements exceeding the special borrowings multiplied by the capitalization rate of the general borrowings occupied. The capitalization rate is determined based on the weighted average interest rate on general borrowings.

If there is a discount or premium on the loan, the amount of the corresponding amortization of the discount or premium for each accounting period shall be determined according to the actual interest rate method, and the interest amount of each period shall be adjusted. During the capitalization period, the amount of interest capitalized in each accounting period shall not exceed the actual amount of interest incurred on the relevant borrowings in the current period.

(4) Ancillary expenses incurred by special borrowings, which occur before the assets that are purchased, constructed or produced that meet the capitalization conditions reach the intended usable or salable state, shall be capitalized according to the amount incurred when incurred and included in the cost of the assets that qualify for capitalization; if the auxiliary expenses incurred after the assets that meet the capitalization conditions that are purchased, constructed or produced reach the intended usable or salable state, shall be recognized as expenses based on the amount incurred when incurred and included in the current profits and losses. Ancillary expenses incurred for general borrowings are recognized as expenses based on the amount incurred when incurred and included in the current profit and loss.

Biological assets

Not applicable

Oil and gas assets

Not applicable

Intangible assets

(1) Useful life and its basis for determination, estimation, amortization method or review procedure

① Intangible assets refer to identifiable non-monetary assets without physical form owned or controlled by an enterprise. Intangible assets are initially measured based on cost, and their service life is analyzed and judged when acquiring the intangible assets.

② Factors that companies usually consider when determining the useful life of intangible assets:

The usual life cycle of the products produced using the asset and the available information on the service life of similar assets;
The current situation of technology, process, etc. and estimates of future development trends;
Market demand for products or services produced with the asset;
Anticipated actions by current or potential competitors;
Expected maintenance expenditures to maintain the asset’s ability to bring economic benefits, and the company’s expected ability to pay related expenditures;
Relevant legal provisions or similar restrictions on the control period of the asset, such as franchise period, lease period, etc.;
Correlation with the service life of other assets held by the enterprise, etc.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

If the period during which an intangible asset can bring economic benefits to the company cannot be foreseen, it is regarded as an intangible asset with an indefinite useful life.

③ For intangible assets with limited service life, they are amortized according to the straight-line method over the service life. At the end of each year, the company reviews the service life and amortization method of intangible assets with limited service life. If the useful life and amortization method of intangible assets are different from previous estimates, the amortization period and amortization method will be changed. Intangible assets with indefinite useful lives are not amortized.

④The useful life and amortization method of intangible assets with limited service life are as follows:

Item Useful life Amortization method

Land use rights 50 years Straight-line method

Know-how 10 years Straight line method

Trademark use rights 5 years Straight line method

Computer software 5-10 years Straight line method

(2) Scope of aggregation of R&D expenditures and related accounting treatment methods

①Expenditures on internal research and development projects, including research phase expenditures and development phase expenditures, including:

Research refers to original and planned investigation conducted to obtain and understand new scientific or technical knowledge.
Development refers to the application of research results or other knowledge to a plan or design before commercial production or use to produce new or substantially improved materials, devices, products, etc.

② Expenditures on internal research and development projects in the research phase are included in the current profits and losses when incurred; expenditures in the development phase are recognized as intangible assets if they meet the following conditions at the same time:

It is technically feasible to complete the intangible asset so that it can be used or sold;
Have the intention to complete the intangible asset and use or sell it;
The way intangible assets generate economic benefits, including being able to prove that there is a market for the products produced using the intangible assets or that the intangible assets themselves have a market. If the intangible assets will be used internally, their usefulness should be proven;
Have sufficient technical, financial and other resource support to complete the development of the intangible assets, and have the ability to use or sell the intangible assets;
Expenditures attributable to the development stage of the intangible asset can be measured reliably.

Impairment of long-term assets

For non-current non-financial assets such as fixed assets, construction in progress, intangible assets with limited useful lives, right-of-use assets, investment real estate measured using the cost model, and long-term equity investments in subsidiaries, joint ventures, and associates, the company determines whether there are signs of impairment on the balance sheet date. If there is any indication of impairment, the recoverable amount is estimated and an impairment test is performed. Goodwill, intangible assets with indefinite useful lives and intangible assets that have not yet reached a usable state are subject to impairment testing every year regardless of whether there are signs of impairment.

If the impairment test results show that the recoverable amount of the asset is lower than its book value, impairment provisions will be made based on the difference and included in the impairment loss. The recoverable amount is the higher of the asset's fair value less disposal costs and the present value of the asset's expected future cash flows. The fair value of an asset is determined based on the sales agreement price in an arm's length transaction; if there is no sales agreement but there is an active market for the asset, the fair value is determined based on the buyer's bid for the asset; if there is no sales agreement and there is an active market for the asset, the fair value of the asset is estimated based on the best information available. Disposal costs include legal fees, related taxes, transportation fees and direct costs incurred in bringing the assets to a salable condition. The present value of the estimated future cash flows of an asset is determined by selecting an appropriate discount rate to discount the estimated future cash flows generated during the continued use and final disposal of the asset. Asset impairment provisions are calculated and recognized on the basis of individual assets. If it is difficult to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs is determined. An asset group is the smallest combination of assets that can independently generate cash inflows.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

As far as the impairment test of goodwill is concerned, the book value of goodwill formed due to a business combination shall be allocated to the relevant asset groups in a reasonable manner from the date of purchase; if it is difficult to allocate it to the relevant asset groups, it shall be allocated to the relevant asset group combinations. The relevant asset group or combination of asset groups is an asset group or combination of asset groups that can benefit from the synergistic effects of the business combination, and is no larger than the reporting segment determined by the company.

When conducting an impairment test on a relevant asset group or combination of asset groups that contains goodwill, if there are signs of impairment in the asset group or combination of asset groups that are related to goodwill, first conduct an impairment test on the asset group or combination of asset groups that does not contain goodwill, calculate the recoverable amount, and recognize the corresponding impairment loss. Then conduct an impairment test on the asset group or asset group combination containing goodwill, and compare its book value with the recoverable amount. If the recoverable amount is lower than the book value, the impairment loss amount will first be deducted from the book value of the goodwill allocated to the asset group or asset group combination, and then based on other assets other than goodwill in the asset group or asset group combination. The book value of the asset shall be deducted from the book value of other assets in proportion, but the book value of each asset after deduction shall not be lower than the net amount of the asset's fair value minus disposal costs (if it can be determined) and the present value of the asset's expected future cash flow (if it can be determined), whichever is higher, and shall not be lower than zero.

Once the above-mentioned asset impairment losses are recognized, the portion whose value has been restored will not be reversed in subsequent periods.

Long-term deferred expenses

Long-term deferred expenses are various expenses that have been incurred by the company but should be borne by the current and subsequent periods with an amortization period of more than 1 year (excluding 1 year). The company's long-term deferred expenses mainly include decoration fees, prepaid rent and service fees, product promotion fees, etc. Long-term deferred expenses are amortized on a straight-line basis within the expected benefit period. If the long-term deferred expenses cannot benefit subsequent accounting periods, all the unamortized amortized value will be transferred to the current profit and loss.

Contract liabilities

Contract liabilities refer to the company's obligation to transfer goods to customers for consideration it has received or receivable from customers. If the customer has paid the contract consideration or the company has obtained the unconditional right to receive payment before the company transfers the goods to the customer, the company will list the amount received or receivable as a contract liability at the earlier of the customer's actual payment and the due payment. Contract assets and contract liabilities under the same contract are presented on a net basis, and contract assets and contract liabilities under different contracts are not offset.

Employee compensation

(1) Accounting treatment method for short-term compensation

Short-term compensation refers to the employee compensation that the company needs to pay in full within twelve months after the end of the annual reporting period in which employees provide relevant services.

Short-term compensation includes employee wages, bonuses, allowances and subsidies, social insurance premiums such as employee welfare fees, medical insurance premiums, work-related injury insurance premiums and maternity insurance premiums, housing provident funds, labor union funds and employee education funds, short-term paid absences, short-term profit sharing plans, non-monetary benefits and other short-term compensation.

Short-term compensation During the accounting period when employees provide services to the company, actual short-term compensation is recognized as a liability and included in the current profit and loss or related asset costs.

(2) Accounting treatment of post-employment benefits

Post-employment benefits refer to various forms of remuneration and benefits provided by the company in order to obtain the services provided by employees after the employee retires or terminates the labor relationship with the company, excluding short-term salary and dismissal benefits.

Post-employment benefit plans include defined contribution plans and defined benefit plans. Among them, a defined contribution plan refers to a post-employment benefit plan in which the company no longer bears further payment obligations after paying a fixed fee to an independent fund; a defined benefit plan refers to a post-employment benefit plan other than a defined contribution plan.

Defined contribution plans include basic pension insurance, unemployment insurance, etc. During the accounting period when employees provide services, the deposit amount payable calculated according to the defined contribution plan is recognized as a liability and included in the current profit and loss or related asset costs.

At the end of the reporting period, the employee compensation costs generated by the defined benefit plan are recognized as the following components:

① Service costs, including current service costs, past service costs and settlement gains or losses;

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

② The net interest amount of the net liabilities or net assets of the defined benefit plan, including the interest income of the plan assets, the interest expenses of the defined benefit plan obligations and the interest affected by the asset ceiling;

③ Changes caused by re-measurement of net liabilities or net assets of defined benefit plans.

Unless other accounting standards require or allow employee benefit costs to be included in asset costs, items ① and ② above should be included in current profits and losses; item ③ should be included in other comprehensive income and are not allowed to be transferred back to profit or loss in subsequent accounting periods, but these amounts recognized in other comprehensive income can be transferred within the scope of equity. Under a defined benefit plan, past service costs are recognized as current expenses on the earliest of the following dates:

When modifying the defined benefit plan;
When the enterprise confirms relevant restructuring expenses or dismissal benefits.

When a defined benefit plan is settled, a settlement gain or loss is recognized.

(3) Accounting treatment method for dismissal benefits

Dismissal benefits refer to the compensation given to employees by a company to terminate the labor relationship with employees before their labor contracts expire, or to encourage employees to voluntarily accept layoffs.

If the company provides dismissal benefits to employees, the employee compensation liabilities arising from the dismissal benefits will be recognized and included in the current profit and loss at the earliest of the following two situations: when the company cannot unilaterally withdraw the dismissal benefits provided due to the termination of labor relations plan or layoff proposal; when the company recognizes the costs or expenses related to the restructuring involving the payment of dismissal benefits.

(4) Accounting treatment methods for other long-term employee benefits

Other long-term employee benefits refer to all employee benefits except short-term salary, post-employment benefits, and termination benefits, including long-term paid absences, long-term disability benefits, long-term profit sharing plans, etc.

Other long-term employee benefits provided by the enterprise to employees that meet the conditions of the defined contribution plan shall be processed according to the relevant provisions of the above defined contribution plan. Except for situations where the conditions for a defined contribution plan are met, other long-term employee benefit net liabilities or net assets are recognized and measured in accordance with the relevant provisions of the defined benefit plan. At the end of the reporting period, the enterprise shall recognize the employee compensation costs generated by other long-term employee benefits as the following components:

①Service cost;

②Net interest on other long-term employee welfare net liabilities or net assets;

③ Changes caused by re-measurement of other long-term employee benefit net liabilities or net assets.

In order to simplify the relevant accounting treatment, the total net amount of the above items is included in the current profit and loss or related asset costs.

Estimated liabilities

If obligations related to contingencies meet the following conditions at the same time, they are recognized as estimated liabilities:

(1) The obligation is a current obligation borne by the enterprise;

(2) Fulfilling this obligation is likely to cause economic benefits to flow out of the enterprise;

(3) The amount of the obligation can be measured reliably.

Estimated liabilities should be initially measured based on the best estimate of the expenditure required to fulfill the relevant current obligations.

Share-based payment

(1) Accounting treatment method for share-based payment

Share-based payment is a transaction in which equity instruments are granted or liabilities determined based on equity instruments are granted in order to obtain services from employees or other parties. Share-based payment is divided into equity-settled share-based payment and cash-settled share-based payment.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

① Equity-settled share-based payment

Equity-settled share-based payments in exchange for services provided by employees are measured at the fair value of the equity instruments granted to employees on the date of grant. If the amount of the fair value becomes exercisable after completing the services within the waiting period or meeting the specified performance conditions, the amount of the fair value will be calculated and included in the relevant costs or expenses on a straight-line basis during the waiting period based on the best estimate of the number of exercisable equity instruments. If the right is vested immediately after the grant, the relevant costs or expenses will be included in the grant date, and the capital reserve will be increased accordingly. On each balance sheet date during the waiting period, the Company makes its best estimate based on the latest changes in the number of vested employees and other subsequent information, and corrects the number of equity instruments expected to be vested. The impact of the above estimates is included in the relevant costs or expenses of the current period, and the capital reserve is adjusted accordingly.

For equity-settled share-based payments in exchange for services from other parties, if the fair value of the other party's services can be reliably measured, it will be measured based on the fair value of the other party's services on the date of acquisition. If the fair value of the other party's services cannot be reliably measured, but the fair value of the equity instrument can be reliably measured, it will be measured based on the fair value of the equity instrument on the date of service acquisition, and will be included in relevant costs or expenses, and shareholders' equity will be increased accordingly.

② Cash-settled share-based payment

Cash-settled share-based payments are measured based on the fair value of the company's liabilities determined based on shares or other equity instruments. If the rights are exercisable immediately after grant, the relevant costs or expenses will be included on the date of grant, and liabilities will be increased accordingly; if the rights must be completed after services during the waiting period or specified performance conditions are met before the rights are exercisable, on each balance sheet date of the waiting period, based on the best estimate of the vesting situation and the fair value of the liability borne by the company, the services obtained in the current period will be included in costs or expenses, and liabilities will be increased accordingly.

On each balance sheet date and settlement date before the settlement of relevant liabilities, the fair value of the liability is remeasured, and its changes are included in the current profit and loss.

(2) Relevant accounting treatment for modifying and terminating share-based payment plans

When the company modifies the share-based payment plan, if the modification increases the fair value of the equity instruments granted, the increase in services obtained shall be recognized accordingly based on the increase in the fair value of the equity instruments. The increase in the fair value of equity instruments refers to the difference between the fair values of the equity instruments before and after the modification on the modification date. If the modification reduces the total fair value of share-based payment or adopts other methods that are unfavorable to employees, the accounting treatment for the services obtained will continue, and it will be deemed that the change has never occurred, unless the company cancels some or all of the equity instruments that have been granted.

During the waiting period, if the granted equity instruments are canceled, the company will treat the cancellation of the granted equity instruments as accelerated exercise, and the amount that should be recognized during the remaining waiting period will be immediately included in the current profit and loss, and the capital reserve will be recognized at the same time. If employees or other parties can choose to meet the non-vesting conditions but fail to do so within the waiting period, the company will treat it as the cancellation of the equity instruments granted.

(3) Accounting treatment involving share-based payment transactions between the company and its shareholders or actual controllers

Involving share-based payment transactions between the company and its shareholders or actual controllers, if one of the settlement enterprise and the service-receiving enterprise is within the scope of the company's consolidation and the other is outside the company's scope of consolidation, accounting treatment will be carried out in the company's consolidated financial statements in accordance with the following provisions:

① If the settlement enterprise settles the transaction with its own equity instruments, the share-based payment transaction will be treated as equity-settled share-based payment; otherwise, the share-based payment transaction will be treated as cash-settled share-based payment.

If the settlement enterprise is an investor in the enterprise that receives the service, it shall be recognized as a long-term equity investment in the enterprise that receives the service based on the fair value of the equity instrument or the fair value of the liability on the date of grant, and the capital reserve (other capital reserve) or liability shall be recognized at the same time.

② If the service-receiving enterprise has no settlement obligation or the enterprise's employees are granted equity instruments of its own, the share-based payment transaction shall be treated as equity-settled share-based payment; if the service-receiving enterprise has settlement obligations and the enterprise's employees are granted equity instruments other than its own equity instruments, the share-based payment transaction shall be treated as cash-settled share-based payment.

For share-based payment transactions that occur between enterprises within the scope of the company's consolidation, if the service-receiving enterprise and the settlement enterprise are not the same enterprise, the recognition and measurement of the share-based payment transaction in the respective financial statements of the service-receiving enterprise and the settlement enterprise shall be handled in accordance with the above principles.

Preferred shares, perpetual bonds and other financial instruments

Not applicable

Income

Disclose accounting policies adopted for revenue recognition and measurement by business type

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(1) General principles of revenue recognition

When the contract between the company and the customer meets the following conditions at the same time, revenue is recognized when the customer obtains control of the relevant goods: the parties to the contract have approved the contract and promised to perform their respective obligations; the contract clarifies the rights and obligations of the parties to the contract related to the transferred goods or the provision of labor services; the contract has clear payment terms related to the transferred goods; the contract has commercial substance, that is, the performance of the contract will change the risk, time distribution or amount of the company's future cash flows; the consideration that the company is entitled to receive for transferring goods to the customer is likely to be recovered.

On the contract inception date, the Company identifies each individual performance obligation that exists in the contract, and allocates the transaction price to each individual performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation. When determining the transaction price, the impact of variable consideration, significant financing components in the contract, non-cash consideration, consideration payable to customers and other factors was considered.

For each individual performance obligation in the contract, if one of the following conditions is met, the company will recognize the transaction price allocated to the individual performance obligation as revenue according to the performance progress during the relevant performance period: the customer obtains and consumes the company at the same time that the company performs the contract. The economic benefits brought by the performance of the contract; the customer can control the goods under construction during the company's performance of the contract; the goods produced by the company during the performance of the contract have irreplaceable uses, and the company has the right to collect payment for the cumulative performance part that has been completed so far during the entire contract period. The progress of contract performance is determined using the input method or the output method according to the nature of the transferred goods. When the progress of contract performance cannot be reasonably determined and the costs incurred by the company are expected to be compensated, revenue will be recognized based on the amount of costs incurred until the progress of contract performance can be reasonably determined.

If one of the above conditions is not met, the company will recognize revenue at the transaction price allocated to the individual performance obligation at the point when the customer obtains control of the relevant goods. When judging whether the customer has obtained control of the goods, the company considers the following signs: the company has the current right to receive payment for the goods, that is, the customer has current payment obligations for the goods; the company has transferred the legal ownership of the goods to the customer, that is, the customer already has the legal ownership of the goods; the company has The commodity is physically transferred to the customer, which means that the customer has physically taken possession of the commodity; the enterprise has transferred the main risks and rewards of ownership of the commodity to the customer, that is, the customer has obtained the main risks and rewards of ownership of the commodity; the customer has accepted the commodity; and other signs indicate that the customer has obtained control of the commodity.

(2) Specific method of revenue recognition:

The sales contract between the Company and the customer includes the performance obligation to transfer the goods, which is a performance obligation to be performed at a certain point in time.

The company is mainly engaged in the research and development, production and sales of card products such as magnetic stripe cards, password cards and IC cards, as well as related operating system software (COS) and ticket products. The products are sold to both domestic and foreign markets. Based on the company's business characteristics, the company has formulated the following specific standards for revenue recognition from product sales:

The specific principles for the recognition of the company's domestic product sales revenue are: the company delivers the product to the customer in accordance with the contract and the customer has accepted it, the legal ownership of the product has been transferred, the physical object has been transferred, the main risk in the ownership of the product has been transferred, the payment has been recovered or the right to receive payment has been obtained and the relevant economic benefits are likely to flow in.

The specific principles for recognizing the sales revenue of the company's export commodities are as follows: the company declares the product to customs in accordance with the contract, and after commodity inspection and customs declaration confirms customs clearance, the legal ownership of the commodity has been transferred, the physical object has been transferred, and the main risk of ownership of the commodity has been transferred. The company has the current right to receive payment for the commodity.

Similar business adopts different business models and involves different revenue recognition methods and measurement methods.

Contract costs

Contract costs are divided into contract performance costs and contract acquisition costs.

If the costs incurred by the company to fulfill the contract meet the following conditions at the same time, they will be recognized as an asset as the contract performance cost:

(1) The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing overhead (or similar expenses), costs clearly borne by the customer, and other costs incurred solely because of the contract;

(2) This cost increases the company’s resources for fulfilling its performance obligations in the future;

(3) The cost is expected to be recovered.

If the incremental costs incurred by the company to obtain the contract are expected to be recovered, they are recognized as an asset as the contract acquisition cost; however, if the amortization of the asset does not exceed one year, it can be included in the current profit and loss when incurred.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Assets related to contract costs are amortized on the same basis as revenue from goods or services related to the asset is recognized.

If the book value of assets related to contract costs is higher than the difference between the following two items, the company will make impairment provisions for the excess and recognize it as asset impairment losses:

(1) The remaining consideration expected to be obtained from the transfer of goods or services related to the asset;

(2) The estimated cost to be incurred in transferring the relevant goods or services.

If the above-mentioned asset impairment provision is subsequently reversed, the book value of the asset after the reversal shall not exceed the book value of the asset on the date of reversal if no impairment provision was made.

Government subsidies

Government subsidies are monetary assets or non-monetary assets that a company obtains free of charge from the government. It is divided into asset-related government subsidies and income-related government subsidies.

(1) Judgment basis and accounting treatment method for government subsidies related to assets

Asset-related government subsidies refer to government subsidies obtained by enterprises and used to purchase, construct or otherwise form long-term assets.

Government subsidies related to assets should be recognized as deferred income. If government subsidies related to assets are recognized as deferred income, they shall be included in profits and losses in installments according to a reasonable and systematic method within the useful life of the relevant assets. Government subsidies measured according to the nominal amount are directly included in the current profit and loss.

If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, the undistributed balance of relevant deferred income shall be transferred to the profits and losses of the current period of asset disposal.

Government subsidies related to the company's daily activities should be included in other income based on the economic and business essence. Government subsidies that have nothing to do with the company's daily activities should be included in non-operating income and expenses.

(2) Judgment basis and accounting treatment method for government subsidies related to income

Government subsidies related to income refer to government subsidies other than government subsidies related to assets.

For government subsidies for comprehensive projects, enterprises need to decompose them into asset-related parts and income-related parts, and conduct accounting treatment separately; if it is difficult to distinguish, they should be classified as a whole as income-related government subsidies.

If government subsidies related to income are used to compensate the enterprise for relevant expenses or losses in the future period, they are recognized as deferred income when they are obtained, and are included in the current profit and loss during the period when the relevant costs, expenses or losses are recognized; if they are used to compensate the enterprise for relevant expenses or losses that have already occurred, they are directly included in the current profits and losses.

Government subsidies related to the company's daily activities should be included in other income based on the economic and business substance. Government subsidies that have nothing to do with the company's daily activities should be included in non-operating income and expenses.

(3) Confirmation time of government subsidies

If the government subsidy is a monetary asset, it shall be measured according to the amount received. Government subsidies measured according to the amount receivable shall be recognized at the end of the period when there is conclusive evidence that the relevant conditions stipulated in the fiscal support policy can be met and fiscal support funds are expected to be received; if the government subsidy is a non-monetary asset, the realization of the government subsidy shall be recognized when the risks and rewards of ownership of the non-monetary asset are transferred. Among them, non-monetary assets are measured at fair value; if the fair value cannot be obtained reliably, they are measured at nominal amount.

When confirmed government subsidies need to be returned, if there is a relevant deferred income balance, the book balance of the relevant deferred income will be offset, and the excess will be included in the current profit and loss; if there is no relevant deferred income, it will be directly included in the current profit and loss.

Deferred income tax assets/deferred income tax liabilities

Based on the difference between the book value of assets and liabilities and their tax basis (if the tax basis of items not recognized as assets and liabilities can be determined in accordance with tax laws, the difference between the tax basis and their book amount), deferred income tax assets or deferred income tax liabilities are calculated and recognized according to the applicable tax rate during the period when the asset is expected to be recovered or the liability is settled.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Deferred income tax assets are recognized to the extent that it is probable that taxable income will be available against which the deductible temporary differences can be utilised. On the balance sheet date, if there is conclusive evidence that sufficient taxable income is likely to be obtained in the future period to offset the deductible temporary differences, deferred income tax assets that have not been recognized in previous accounting periods will be recognized. On the balance sheet date, the book value of the deferred tax assets is reviewed. If it is likely that sufficient taxable income will not be available in the future period to offset the benefits of the deferred tax assets, the book value of the deferred tax assets will be written down. The amount of the write-down is reversed when it is probable that sufficient taxable income will be obtained. The company's current income tax and deferred income tax are included in the current profit and loss as income tax expenses or income, but do not include income tax arising from the following situations: business mergers; transactions or events directly recognized in owner's equity.

When the company has the legal right to settle on a net basis and intends to settle on a net basis or acquire assets and pay off liabilities at the same time, the company's current income tax assets and current income tax liabilities are presented at the net amount after offsetting.

Leasing

(1) Accounting treatment method for leasing as lessee

A lease is a contract in which the Company transfers or acquires the right to control the use of one or more identified assets for a certain period of time in exchange for or payment of consideration. At the inception date of a contract, the Company evaluates whether the contract is a lease or contains a lease.

The company's leased assets mainly include houses and buildings.

①Initial measurement

On the start date of the lease period, the Company recognizes the right to use the leased asset during the lease period as a right-of-use asset, and recognizes the present value of the unpaid lease payments as a lease liability (except for short-term leases and low-value asset leases). When calculating the present value of lease payments, the company uses the interest rate implicit in the lease as the discount rate; if the interest rate implicit in the lease cannot be determined, the lessee's incremental borrowing rate is used as the discount rate.

②Subsequent measurement

The Company accrues depreciation on the right-of-use assets from the month when the lease term begins. If it is reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the Company accrues depreciation over the remaining useful life of the leased asset. If it is not reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the Company will accrue depreciation during the shorter of the lease term and the remaining useful life of the leased asset.

For lease liabilities, the company calculates the interest expense for each period during the lease term based on a fixed periodic interest rate, and includes it in the current profit and loss or in the cost of related assets. Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss or related asset costs when actually incurred.

After the start date of the lease period, when the actual fixed payment amount changes, the expected amount payable 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, lease renewal option or termination option change, the company remeasures the lease liability according to the present value of the changed lease payment amount, and adjusts the book value of the right-of-use asset accordingly. If the book value of the right-of-use asset has been reduced to zero, but the lease liability still needs to be further reduced, the company will include the remaining amount in the current profit and loss.

③Short-term leasing and low-value asset leasing

For short-term leases (leases with a lease period of no more than 12 months on the lease commencement date) and low-value asset leases, the Company adopts a simplified approach and does not recognize right-of-use assets and lease liabilities. Instead, the lease payments are included in the cost of relevant assets or current profits and losses in each period of the lease term using the straight-line method or other systematic and reasonable methods.

④ Change of lease

If a lease changes and the following conditions are met at the same time, the company will account for the lease change as a separate lease:

• The lease modification expands the scope of the lease by adding the right to use one or more leased assets;

• The increased consideration is equivalent to the stand-alone price of the expanded portion of the lease, adjusted for the circumstances of the contract.

If the lease change is not accounted for as a separate lease, on the effective date of the lease change, the company re-allocates the consideration of the contract after the change, re-determines the lease term, and re-measures the lease liability based on the present value of the lease payment after the change and the revised discount rate.

If the change in the lease results in a reduction in the scope of the lease or a shortening of the lease period, the company will reduce the book value of the right-of-use assets accordingly, and include the gains or losses related to the partial or complete termination of the lease into the current profits and losses. If other lease changes result in the remeasurement of lease liabilities, the company will adjust the book value of the right-of-use assets accordingly.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Accounting treatment method for leasing as lessor

On the lease commencement date, the Company divides leases into finance leases and operating leases based on the nature of the transaction. A finance lease is a lease that substantially transfers substantially all the risks and rewards associated with ownership of the leased asset. Operating leases refer to leases other than finance leases.

①Operating lease

The Company uses the straight-line method to recognize lease receipts from operating leases as rental income for each period during the lease term. Variable lease payments related to operating leases that are not included in lease receipts are included in the current profit and loss when they actually occur.

②Financial lease

On the start date of the lease period, the Company recognizes the finance lease receivable and derecognizes the finance lease assets. Financing lease receivables are initially measured based on the net lease investment (the sum of the unguaranteed residual value and the present value of the lease payments not yet received at the start of the lease period discounted at the interest rate implicit in the lease), and interest income during the lease period is calculated and recognized based on a fixed periodic interest rate. Variable lease payments obtained by the Company that are not included in the measurement of net lease investment are included in the current profit and loss when actually incurred.

③Lease change

If an operating lease changes, the Company will account for it as a new lease 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 receipts from the new lease.

If a financial lease changes and the following conditions are met at the same time, the company will account for the change as a separate lease:

• The change expands the scope of the lease by adding the right to use one or more leased assets;

• The increased consideration is equivalent to the stand-alone price of the expanded portion of the lease, adjusted for the circumstances of the contract.

If the change in the financial lease is not accounted for as a separate lease, the company will handle the changed lease under the following circumstances:

• If the change takes effect on the lease commencement date, the lease will be classified as an operating lease, and the Company will account for it as a new lease from the effective date of the lease change, and use the net investment in the lease before the effective date of the lease change as the book value of the leased asset;

• If the change takes effect on the lease commencement date, the lease will be classified as a finance lease, and the company will conduct accounting treatment in accordance with the provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments" regarding modification or renegotiation of contracts.

Other important accounting policies and accounting estimates

(1) Segment report

The company determines operating segments based on its internal organizational structure, management requirements, and internal reporting systems, and determines reporting segments based on operating segments. And disclose the financial information of each reporting segment in the notes to the financial statements, including operating income, operating costs, total assets, total liabilities, etc.

Operating segments refer to components within a company that simultaneously meet the following conditions:

① This component can generate income and incur expenses in daily activities;

② The enterprise management can regularly evaluate the operating results of this component to decide to allocate resources to it and evaluate its performance;

③The enterprise can obtain relevant accounting information such as the financial status, operating results and cash flow of the component.

(2) Share buyback

Before the shares repurchased by the company are canceled or transferred, they are managed as treasury shares, and all expenditures for repurchasing the shares are converted into the cost of the treasury shares. The consideration and transaction costs paid in share repurchases reduce owners' equity, and no gain or loss is recognized when the company's shares are repurchased, transferred or canceled.

When treasury shares are transferred, the difference between the actual amount received and the book amount of the treasury shares will be offset against the capital reserve. If the capital reserve is insufficient for offset, the surplus reserve and undistributed profits will be offset against. When treasury shares are canceled, the share capital is reduced according to the face value of the stock and the number of canceled shares. The difference between the book balance of the canceled treasury shares and the face value is used to offset the capital reserve. If the capital reserve is insufficient for offset, the surplus reserve and undistributed profits are offset.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Changes in important accounting policies and accounting estimates

(1) Changes in important accounting policies

□Applicable Not applicable

(2) Changes in important accounting estimates

□Applicable Not applicable

(3) Adjustments to relevant items in the financial statements at the beginning of the year when the new accounting standards are implemented for the first time in 2026.

□Applicable Not applicable

Others

Significant accounting judgments and estimates

In the process of applying accounting policies, due to the inherent uncertainty in operating activities, the company needs to make judgments, estimates and assumptions on the book values of statement items that cannot be accurately measured. These judgments, estimates and assumptions are based on the past historical experience of the company's management and taking into account other relevant factors. These judgments, estimates and assumptions affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the balance sheet date. However, actual results resulting from the uncertainty in these estimates may differ from the company's management's current estimates, resulting in significant adjustments to the carrying amounts of the assets or liabilities affected in the future.

The company conducts regular reviews of the aforementioned judgments, estimates and assumptions on a going concern basis. If a change in accounting estimates only affects the current period of the change, the impact will be recognized in the current period of the change; if it affects both the current period of the change and future periods, the impact will be recognized in the current period of the change and future periods.

On the balance sheet date, the important areas where the company needs to make judgments, estimates and assumptions on the amounts of financial statement items are as follows:

(1) Revenue recognition

As stated in Note 5.37, "Revenue", the Company's revenue recognition involves the following significant accounting judgments and estimates: identifying customer contracts; estimating the recoverability of the consideration to which it is entitled for transferring goods to customers; identifying performance obligations in the contract; estimating the variable consideration existing in the contract and The amount of accumulated recognized revenue that is unlikely to be significantly reversed when the relevant uncertainty is eliminated; whether there is a significant financing component in the contract; estimating the stand-alone selling price of a single performance obligation in the contract; determining whether the performance obligation will be performed within a certain period of time or at a certain point in time; determination of the performance progress, etc.

The Company mainly relies on past experience and work to make judgments. These major judgments and changes in estimates may have an impact on the operating income, operating costs, and profits and losses of the period in the current or subsequent periods, and may have a significant impact.

(2) Impairment of financial instruments

The company uses the expected credit loss model to assess the impairment of financial instruments. Applying the expected credit loss model requires significant judgments and estimates, and all reasonable and evidence-based information, including forward-looking information, must be considered. When making such judgments and estimates, the company infers the expected changes in the debtor's credit risk based on historical repayment data combined with economic policies, macroeconomic indicators, industry risks and other factors.

(3) Provision for inventory decline

According to the inventory accounting policy, the company measures the inventory at the lower of cost and net realizable value, and makes provision for inventory depreciation for inventory that has a cost higher than net realizable value and is obsolete and slow-moving. The impairment of inventories to net realizable value is based on an assessment of the inventory's salability and its net realizable value. Identification of inventory impairment requires management to make judgments and estimates based on obtaining conclusive evidence and considering factors such as the purpose of holding inventory and the impact of events after the balance sheet date. The difference between the actual results and the original estimate will affect the book value of inventories and the provision or reversal of inventory depreciation provisions in the period when the estimate is changed.

(4) Classification of leases

Identification of leases

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

When the company identifies whether a contract is a lease or contains a lease, it needs to evaluate whether there is an identified asset and the customer controls the right to use the asset within a certain period. When evaluating, consideration needs to be given to the nature of the asset, substantial substitution rights, and whether the customer has the right to receive substantially all of the economic benefits arising from the use of the asset during the period and to be able to direct the use of the asset.

Classification of rentals

When the Company acts as a lessor, it classifies leases into operating leases and finance leases. When classifying, management needs to make analysis and judgment on whether all risks and rewards related to the ownership of the leased assets have been substantially transferred to the lessee.

Lease liability

When the Company acts as a lessee, lease liabilities are initially measured based on the present value of the unpaid lease payments at the beginning of the lease term. When measuring the present value of lease payments, the Company estimates the discount rate used and the lease term of the lease contract with renewal options or termination options. When evaluating the lease term, the Company comprehensively considers all relevant facts and circumstances that will bring about economic benefits from the exercise of the option, including expected changes in facts and circumstances from the start of the lease term to the date of exercise of the option. Different judgments and estimates may affect the recognition of lease liabilities and right-of-use assets, and will affect profits and losses in subsequent periods. (5) Provision for impairment of long-term assets

On the balance sheet date, the company determines whether there are signs of possible impairment of non-current assets other than financial assets. For intangible assets with indefinite useful lives, in addition to annual impairment testing, impairment testing is also conducted when there are signs of impairment. Other non-current assets other than financial assets are tested for impairment when there are signs that their carrying amounts are irrecoverable.

Impairment has occurred when the carrying value of an asset or asset group is greater than its recoverable amount, which is the higher of fair value less disposal costs and the present value of expected future cash flows.

The net amount of fair value less disposal expenses is determined by referring to the sales agreement price or observable market price of similar assets in an arm's length transaction, less the incremental costs directly attributable to the disposal of the asset.

When estimating the present value of future cash flows, significant judgments need to be made on the output, selling price, related operating costs, and the discount rate used in calculating the present value of the asset (or asset group). The company will use all relevant information available when estimating the recoverable amount, including forecasts of output, selling price and related operating costs based on reasonable and supportable assumptions.

(6) Goodwill impairment provision

When conducting an impairment test on goodwill, it is necessary to estimate the recoverable amount of the relevant asset group or combination of asset groups containing goodwill, which is determined based on the higher of the net amount of its fair value minus disposal costs and the present value of the expected future net cash flow. When calculating the present value of future cash flows, it is necessary to estimate the future cash flows of the asset group or asset group combination containing goodwill, and at the same time determine a pre-tax discount rate that appropriately reflects the current market time value of money and asset-specific risks.

(7) Depreciation and amortization

The company depreciates and amortizes investment real estate, fixed assets and intangible assets using the straight-line method over their useful lives after taking into account their residual values. The Company periodically reviews useful lives to determine the amount of depreciation and amortization expenses to be included in each reporting period. Useful lives are determined by the Company based on past experience with similar assets, combined with anticipated technological updates. If there are material changes to previous estimates, depreciation and amortization expenses will be adjusted in future periods.

(8) Deferred income tax assets

The Company recognizes deferred income tax assets for all unused tax losses to the extent that it is probable that sufficient taxable profits will be available against which the losses can be utilised. This requires the company's management to use a lot of judgment to estimate the time and amount of future taxable profits, combined with tax planning strategies, to determine the amount of deferred income tax assets that should be recognized.

(9) Income tax

In the company's normal business activities, there are certain uncertainties in the final tax treatment and calculation of some transactions. Whether some items can be deducted before tax requires the approval of the tax authorities. If the final determination of these tax matters is different from the initially estimated amount, the difference will have an impact on current income tax and deferred income tax during the period of final determination.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

6. Taxes

Main tax types and tax rates

Type of tax Tax calculation basis Tax rate

After deducting the deductible input tax from the output tax

Value-added tax 13%, 6%

The difference is calculated and paid

Urban maintenance and construction tax is calculated and paid according to the value-added tax payable. 7% corporate income tax. The taxable income is calculated according to the tax rate. See the table below for details. Education fee surcharge is calculated and paid according to the value-added tax payable. The 3% local education fee surcharge is calculated and paid based on the value-added tax payable. 2%

If there are taxpayers with different corporate income tax rates, a description of the disclosure

Name of tax payer Income tax rate Hengbao Co., Ltd. 15%

Jiangsu Hengbao Intelligent System Technology Co., Ltd. (referred to as "Hengbao Intelligent") 25%

Hengbao Oriental Digital Technology (Beijing) Co., Ltd. (referred to as "Oriental Digital"

25%

word")

Hengbao International Co., Ltd. (referred to as "Hengbao International") 17%

Modularsoft Sdn.Bhd (“MOD”) 24%

Asia Smart Cards Center(M)Sdn.Bhd. ("ASCC") 24%

Chipstone Technologies Pte Ltd 17%

Chipstone Electronics Pte Ltd 17%

Keyfort Pte.Ltd 17%

Rainbow Financial Services (Beijing) Technology Co., Ltd. (referred to as "Yinbao Financial Services") 25%

Yunyue Technology (Shanghai) Co., Ltd. 25%

Hengbao (Middle East and Africa) Co., Ltd. 30%

PT.Chipstone Technologies Indonesia 22%

Hainan Hengbao Digital Technology Co., Ltd. 25%

Hengbao Internet of Things Co., Ltd. 25%

Hengbao Runxin Digital Technology Co., Ltd. (referred to as "Hengbao Runxin") 25%

Shanghai Yangming Shouren Technology Co., Ltd. 25%

Jiangsu Zhenjiang Yunbao Technology Industry Development Co., Ltd. 25%

HENGBAO GLOBAL TECHNOLOGIES LIMITED 16.5%Note 1

HENGBAO FINTECH LIMITED 16.5%Note 1

Note: Note 1 According to the Inland Revenue (Amendment) (No. 3) Ordinance 2018 of the Hong Kong Special Administrative Region Government (effective from gazettal on March 29, 2018), April 1, 2018 Starting from the tax year starting on or after 2020, Hong Kong companies (corporations) will implement a two-tiered profits tax system: the portion of assessable profits not exceeding HK$2 million is levied at 8.25%, and the portion exceeding HK$2 million is levied at 16.5%; only one company within the same group (related entity) can enjoy this preferential treatment.

Tax incentives

(1) According to the relevant provisions of the Notice of the Ministry of Finance and the State Administration of Taxation on Value-Added Tax Policies for Software Products (Caishui [2011] No. 100), after software products are levied VAT at the statutory rate, the portion of the actual VAT tax burden exceeding 3% will enjoy an immediate refund policy.

(2) On November 6, 2023, the company obtained the high-tech enterprise certificate approved by the Jiangsu Provincial Department of Science and Technology, the Jiangsu Provincial Department of Finance, and the Jiangsu Provincial Taxation Bureau of the State Administration of Taxation. The certificate number is: GR202332000096 and is valid for three years. In 2026, the company will apply a corporate income tax rate of 15%.

Others

None

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

7. Notes on Consolidated Financial Statement Items

Monetary funds

Unit: Yuan

Item Ending balance Beginning balance

Cash on hand 10,184.45 18,616.53 Bank deposits 370,079,914.32 431,597,807.30 Other monetary funds 6,510,285.26 7,653,276.56 Total 376,600,384.03 439,269,700.39

Including: Total amount deposited abroad 312,760,411.48 323,065,605.06Other instructions

Item Closing balance

Letter of guarantee and performance bond 6,429,908.95 Pledge of time deposit certificate 8,307,608.00 Frozen/immovable account, payment supervision, non-receipt and non-payment account funds 2,875.17

Total 14,740,392.12

Trading financial assets

Unit: Yuan

Item Ending balance Beginning balance

Measured at fair value with changes included in current profit and loss

732,626,119.04 857,920,795.14 beneficial financial assets

Among them:

Bank financial management products 641,850,688.11 576,792,129.63 Securities investment and financial management products 90,775,430.93 281,128,665.51

Among them:

Total 732,626,119.04 857,920,795.14Other instructions

Derivative financial assets

Unit: Yuan

Item Ending balance Beginning balance

Other instructions

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Notes receivable

(1) Classified presentation of notes receivable

Unit: Yuan

Item Ending balance Beginning balance

Commercial acceptance notes 269,844.00 758,374.07 Total 269,844.00 758,374.07

(2) Classified disclosure according to bad debt accrual method

Unit: Yuan Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

its

Medium:

by combination

bad provision

271,200 1,356.0 269,844 762,185 3,810.9 758,374 Account provision 100.00% 0.50% 100.00% 0.50%

.00 0 .00 .00 3 .07 receivables

bill

its

Medium:

Commercial contracts 271,200 1,356.0 269,844 762,185 3,810.9 758,374

100.00% 0.50% 100.00% 0.50%

Exchange draft .00 0 .00 .00 3 .07

271,200 1,356.0 269,844 762,185 3,810.9 758,374Total 100.00% 0.50% 100.00% 0.50%

.00 0 .00 .00 3 .07 Category name of bad debt provision by combination:

Unit: Yuan ending balance

Name

Book balance Bad debt provision Provision ratio

Commercial acceptance bill 271,200.00 1,356.00 0.50% Explanation on the basis for determining this combination:

If bad debt provisions for notes receivable are made according to the general expected credit loss model:

□Applicable Not applicable

(3) Bad debt provisions accrued, recovered or reversed in the current period

Bad debt provisions for the current period:

Unit: Yuan Amount of changes in the current period

Category Beginning Balance Ending Balance

Provision Recovery or transfer Write-off Others

Commercial acceptance bill 3,810.93 2,454.93 1,356.00

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Total 3,810.93 2,454.93 1,356.00Among them, the amount of bad debt provision recovery or reversal in the current period is important:

□Applicable Not applicable

(4) Notes receivable pledged by the company at the end of the period

Unit: Yuan

Project Amount pledged at the end of the period

(5) Notes receivable that have been endorsed or discounted by the company at the end of the period and have not yet matured on the balance sheet date

Unit: Yuan

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period

(6) Notes receivable actually written off in the current period

Unit: Yuan

Item Write-off Amount

Among them, the important write-off of bills receivable:

Unit: Whether the Yuan amount is paid by the related unit, nature of the note receivable, write-off amount, reason for write-off, write-off procedures performed

Instructions for writing off notes receivable resulting from transactions:

Accounts receivable

(1) Disclosure based on aging

Unit: Yuan

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 172,417,212.17 125,749,544.62 1 to 2 years 4,706,456.71 3,251,855.22 2 to 3 years 602,683.16 1,125,533.27 More than 3 years 4,025,526.06 6,907,406.11

3 to 4 years 4,025,526.06 6,907,406.11 Total 181,751,878.10 137,034,339.22

(2) Classified disclosure according to bad debt accrual method

Unit: Yuan Ending balance Beginning balance

Category Book balance Bad debt provision Book price Book balance Bad debt provision Book price

Amount Proportion Amount Provision Ratio Value Amount Proportion Amount Provision Ratio Value

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Example Example

its

Medium:

by combination

bad provision

181,751 8,224,9 173,526 137,034 10,254, 126,779Account provision 4.53% 100.00% 7.48%

,878.10 50.29 ,927.81 ,339.22 589.16 ,750.06 receivables

Accounts

its

Medium:

Industry category

model and passenger

181,751 8,224,9 173,526 137,034 10,254, 126,779 household credit 4.53% 100.00% 7.48%

,878.10 50.29 ,927.81 ,339.22 589.16 ,750.06 level group

combine

181,751 8,224,9 173,526 137,034 10,254, 126,779Total 4.53% 100.00% 7.48%

,878.10 50.29 ,927.81 ,339.22 589.16 ,750.06 Category name of bad debt provision by combination:

Unit: Yuan

Ending balance

Name

Book balance Bad debt provision Provision ratio

Financial card customer I 30,196,393.64 1,878,662.11 6.22% Financial card customer II 14,960,755.69 912,786.87 6.10% Communication card customer I 33,387,442.47 594,517.71 1.78% Communication card customer II 4,811,319.95 3,304,654.67 68.68% Module packaging customers 76,175,332.56 773,367.69 1.02% Others 22,220,633.79 760,961.24 3.42% Total 181,751,878.10 8,224,950.29

Description of what this combination is based on:

If bad debt provisions for accounts receivable are made according to the general expected credit loss model:

□Applicable Not applicable

(3) Bad debt provisions accrued, recovered or reversed in the current period

Bad debt provisions for the current period:

Unit: Yuan

Amount of changes in the current period

Category Beginning Balance Ending Balance

Provision Recovery or transfer Write-off Others

Bad provision based on combination

10,254,589.1

Accounts receivable for account preparation 591,106.30 2,455,420.29 -165,324.88 8,224,950.29 Accounts

10,254,589.1

Total 591,106.30 2,455,420.29 -165,324.88 8,224,950.29

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

Unit: Yuan

Determine the name of the original bad debt provision accrual unit, the amount recovered or reversed, the reason for the reverse, the method of recovery

The basis for the proportion and its reasonableness

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

sex

(4) Accounts receivable actually written off in the current period

Unit: Yuan

Item Write-off Amount

Important write-offs of accounts receivable:

Unit: Yuan Whether the amount is paid by the name of the related unit Nature of accounts receivable Write-off amount Reason for write-off Performed write-off procedures

Instructions for writing off accounts receivable arising from transactions:

(5) Accounts receivable and contract assets with the top five closing balances collected by debtors

Unit: Yuan accounts receivable and combined accounts receivable, bad debts, quasi-accounts receivable, ending balance, contract assets, ending balance, accounts receivable and contracts

Unit name Closing balance of same assets Provision and contract asset reduction amount Closing balance of assets

Proportion of the total number of value reserves at the end of the period No. 1 35,836,472.26 35,836,472.26 19.72% 358,364.72 No. 2 26,973,703.77 26,973,703.77 14.84% 269,737.04 No. 3 9,620,967.35 9,620,967.35 5.29% 96,209.67 Fourth place 6,414,969.09 6,414,969.09 3.53% 32,074.85 Fifth place 5,988,570.73 5,988,570.73 3.29% 59,885.71Total 84,834,683.20 84,834,683.20 46.67% 816,271.99

Contract assets

(1) Contract assets

Unit: Yuan Ending balance Beginning balance

Project

Book balance Bad debt provision Book value Book balance Bad debt provision Total book value 0.00

(2) Amount and reasons of major changes in book value during the reporting period

Unit: Yuan

Item Amount of change Reason for change

(3) Classified disclosure according to bad debt accrual method

Unit: Full text of 2026 semi-annual report of Yuanhengbao Co., Ltd.

Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

Among them:

Provision for bad debts based on the general expected credit loss model

□Applicable Not applicable

(4) Bad debt provisions accrued, recovered or reversed in the current period

Unit: Yuan Item Provision in the current period Recovery or transfer in the current period Write-off/write-off in the current period Reasons

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

Unit: Yuan Determine the name of the original bad debt provision accrual unit, the amount recovered or reversed, the reason for the reverse, the method of recovery, the basis for the ratio and its rationality

Other instructions

(5) Contract assets actually written off in the current period

Unit: yuan item write-off amount

Among them, the important write-off of contract assets

Unit: Whether the yuan amount is paid by the name of the related unit, nature of the amount, write-off amount, write-off reason, write-off procedures performed

transaction generated

Instructions for write-off of contract assets:

Other notes:

Accounts receivable financing

(1) Classified presentation of financing receivables

Unit: Yuan Item Ending balance Beginning balance

(2) Classified disclosure according to bad debt accrual method

Unit: Full text of 2026 semi-annual report of Yuanhengbao Co., Ltd.

Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

Among them:

Provision for bad debts based on the general expected credit loss model

Unit: Yuan Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Provision for bad debts Expected credit in the next 12 months Total

Loss (no credit deduction has occurred Loss (credit deduction has occurred)

loss

value) value)

Balance as of January 1, 2026

In this issue

Basis for division of each stage and provision ratio for bad debts

Explanation of significant changes in the book balance of accounts receivable financing that have experienced changes in loss provisions in the current period:

(3) Bad debt provisions accrued, recovered or reversed in the current period

Unit: Yuan Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Other changes

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

Other notes:

(4) Financing of the company’s pledged receivables at the end of the period

Unit: Yuan Project Amount pledged at the end of the period

(5) Financing of receivables that have been endorsed or discounted by the company at the end of the period and have not yet matured on the balance sheet date

Unit: Yuan Item Amount derecognized at the end of the period Amount not derecognized at the end of the period

(6) Financing of receivables actually written off in the current period

Unit: Yuanhengbao Co., Ltd. 2026 Semi-annual Report Full Text Project Write-off Amount

Important financing write-offs of receivables

Unit: Whether the yuan amount is paid by the name of the related unit, nature of the amount, write-off amount, write-off reason, write-off procedures performed

transaction generated

Write-off instructions:

(7) Increases and decreases in receivables financing during the current period and changes in fair value

(8) Other instructions

Other receivables

Unit: Yuan Item Ending balance Beginning balance

Other receivables 54,810,223.27 55,772,620.60 Total 54,810,223.27 55,772,620.60 (1) Interest receivable

Classification of interest receivable

Unit: Yuan Item Ending balance Beginning balance

Important overdue interest

Unit: Yuan Whether impairment occurs and the borrowing unit is judged. Ending balance Overdue time Reason for overdue

Judgment basis

Other notes:

Classified disclosure according to bad debt accrual method

□Applicable Not applicable

Bad debt provisions accrued, recovered or reversed in the current period

Unit: Full text of 2026 semi-annual report of Yuanhengbao Co., Ltd.

Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Other changes

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

Other notes:

Interest receivable actually written off in the current period

Unit: yuan item write-off amount

Among them, the important write-off of interest receivable

Unit: Whether the yuan amount is paid by the name of the related unit, nature of the amount, write-off amount, write-off reason, write-off procedures performed

transaction generated

Write-off instructions:

Other notes:

(2) Dividends receivable

Classification of dividends receivable

Unit: yuan project (or invested unit) Closing balance Opening balance

Important dividends receivable aged more than 1 year

Unit: Yuan project (or invested unit) Whether impairment has occurred and its balance at the end of the judgment period Aging Reason for non-recovery

bit) Breaking basis

Classified disclosure according to bad debt accrual method

□Applicable Not applicable

Bad debt provisions accrued, recovered or reversed in the current period

Unit: Yuan Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Other changes

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

sex

Other notes:

Dividends receivable actually written off in the current period

Unit: Yuan

Item Write-off Amount

Among them, the important write-off of dividends receivable

Unit: Whether the yuan amount is paid by the name of the related unit, nature of the amount, write-off amount, write-off reason, write-off procedures performed

Instructions for writing off transactions:

Other notes:

(3) Other receivables

Classification of other receivables according to nature of payment

Unit: Yuan

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

Deposit and security deposit 57,076,925.63 55,809,764.06 Advance payment and reserve fund 758,098.23 3,151,058.56 Total 57,835,023.86 58,960,822.62

Disclosure based on aging

Unit: Yuan

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 4,139,070.77 5,311,055.77 1 to 2 years 1,233,240.71 765,153.80 2 to 3 years 319,742.86 440,312.07 More than 3 years 52,142,969.52 52,444,300.98

3 to 4 years 52,142,969.52 52,444,300.98 Total 57,835,023.86 58,960,822.62

Classified disclosure according to bad debt accrual method

Applicable □Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Unit: Yuan Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

Among them:

Provision for bad debts is made based on the general expected credit loss model:

Unit: Yuan Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Provision for bad debts Expected credit in the next 12 months Total

Loss (no credit deduction has occurred Loss (credit deduction has occurred)

loss

value) value)

Balance on January 1, 2026 743,901.04 2,444,300.98 3,188,202.02 Balance on January 1, 2026

In this issue

Provision for the current period 231,451.13 231,451.13 Transfer for the current period 86,808.69 285,166.20 371,974.89 Other changes -6,712.41 -16,165.26 -22,877.67 Remainder of June 30, 2026

881,831.07 2,142,969.52 3,024,800.59 amount

Basis for division of each stage and provision ratio for bad debts

Changes in book balances with significant changes in loss provision during the period

□Applicable Not applicable

Bad debt provisions accrued, recovered or reversed in the current period

Bad debt provisions for the current period:

Unit: Yuan Amount of changes in the current period

Category Beginning Balance Ending Balance

Provision Recovery or transfer Write-off or write-off Others

Other receivables are bad

3,188,202.02 230,320.57 370,844.33 -22,877.67 3,024,800.59 Account preparation

Total 3,188,202.02 230,320.57 370,844.33 -22,877.67 3,024,800.59

Among them, the amount of bad debt provision for the current period that is reversed or recovered is important:

sex

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Other receivables actually written off in the current period

Unit: Yuan

Item Write-off Amount

Important write-offs of other receivables:

Unit: Whether the Yuan amount is paid by the related unit. Nature of other receivables. Write-off amount. Reason for write-off. Write-off procedures performed.

Instructions for writing off other receivables arising from transactions:

Other receivables with the top five closing balances based on debtors

Unit: Yuan accounted for other receivable period

Name of the unit with the ending balance of bad debt provision Nature of the payment Ending balance Aging Total ending balance

Proportion

First Place Margin 30,000,000.00 More than 3 years 51.87%

Second place Margin 20,000,000.00 More than 3 years 34.58%

Third place deposit 777,600.00 More than 3 years 1.34% 777,600.00 Fourth place deposit 455,584.71 Within 1 year 0.79% 4,555.85 Fifth place deposit 453,421.98 Within 1 year 0.78% 4,534.22Total 51,686,606.69 89.36% 786,690.07

Presented in other receivables due to centralized management of funds

Unit: Yuan Other instructions:

Advance payment

(1) Prepayments are listed based on aging

Unit: Yuan Ending balance Beginning balance

Aging

Amount Ratio Amount Ratio

Within 1 year 4,431,034.64 98.28% 3,310,301.35 99.11% 1 to 2 years 47,507.59 1.05% 29,854.97 0.89% 2 to 3 years 29,854.97 0.67%

Total 4,508,397.20 3,340,156.32

Explanation of the reasons why prepayments with an aging of more than 1 year and significant amounts are not settled in a timely manner:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Prepayments with the top five ending balances by prepayment objects

Unit name Closing balance First place in proportion to the total closing balance of prepayments 1,452,099.68 32.21%

Second place 254,324.94 5.64%

Third place 182,070.07 4.04%

Fourth place 169,220.00 3.75%

Fifth place 167,140.04 3.71%

Total 2,224,854.73 49.35%

Other notes:

Inventory

Whether the company needs to comply with the real estate industry’s disclosure requirements

(1) Inventory classification

Unit: Yuan Ending balance Beginning balance

Provision for inventory decline Provision for inventory decline

Project

Book balance or contract performance costs Book value Book balance or contract performance costs Book value

This impairment provision This impairment provision

115,638,588. 107,054,134. 64,438,996.8 55,459,916.8 Raw materials 8,584,453.36 8,979,080.03

10 74 9 6

10,689,436.7 10,689,436.7 Work in progress 7,718,666.02 7,718,666.02

0 0 114,031,232. 105,865,993. 112,241,751. 107,377,669. Inventory goods 8,165,238.90 4,864,082.48

38 48 60 12 Turnover materials 134,681.64 134,681.64 84,211.48 84,211.48 237,523,168. 16,749,692.2 220,773,475. 187,454,396. 13,843,162.5 173,611,234.Total

14 6 88 67 1 16

(2) Data resources confirmed as inventory

Unit: Yuan

Self-processed data resources Data obtained through other means

Item Outsourced data resource inventory Total

Inventory Resource Inventory

(3) Provision for inventory depreciation and provision for impairment of contract performance costs

Unit: Yuan Item Opening balance Increase amount in the current period Decrease amount in the current period Ending balance Hengbao Co., Ltd. 2026 Semi-annual Report Full text Provision Others Reversal or write-off Others

Raw materials 8,979,080.03 -83,281.07 311,345.60 8,584,453.36 Inventory goods 4,864,082.48 3,301,156.42 8,165,238.90 13,843,162.5 16,749,692.2 Total 3,301,156.42 -83,281.07 311,345.60

1 6 Provision for inventory decline in value based on portfolio

Unit: End of Yuan period Beginning of period

Portfolio name Provision for price decline Provision for decline in price Closing balance of provision for decline in price Provision for decline in price Opening balance Provision for decline in price

Proportion Proportion

Standards for accruing inventory depreciation provisions on a group basis

(4) Explanation that the closing balance of inventory includes the capitalized amount of borrowing costs

(5) Explanation of the amortization amount of contract performance costs for the current period

Assets held for sale

Unit: Yuan Item Book balance at the end of the period Impairment provision Book value at the end of the period Fair value Estimated disposal costs Estimated disposal time Other instructions

Non-current assets due within one year

Unit: Yuan Item Ending balance Beginning balance

(1) Debt investments due within one year

□Applicable Not applicable

(2) Other debt investments due within one year

□Applicable Not applicable

Other current assets

Unit: Yuan

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Item Ending balance Beginning balance

Prepaid corporate income tax 240.14 Amount of input VAT to be deducted 8,432,952.53 1,273,134.13 Amount of input tax to be certified 2,914,712.59 2,914,712.59 Time deposit certificates 105,814,204.17 35,237,370.37 Total 117,161,869.29 39,425,457.23 Information related to compensatory assets

Other notes:

Debt investment

(1) Situation of debt investment

Unit: Yuan Ending balance Beginning balance

Project

Book balance Impairment provision Book value Book balance Impairment provision Changes in book value Debt investment impairment provision for the period

Unit: Yuan

Item Opening balance Increase in the current period Decrease in the current period Ending balance

(2) Important debt investments at the end of the period

Unit: Yuan

Ending balance Beginning balance

claims

Coupon interest Actual interest Overdue principal Coupon interest Actual interest Overdue principal Face value Maturity date Face value Maturity date

rate rate gold rate rate gold

(3) Provision of impairment provisions

Unit: Yuan Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Provision for bad debts Expected credit in the next 12 months Total

Loss (no credit deduction has occurred Loss (credit deduction has occurred)

loss

value) value)

Balance as of January 1, 2026

In this issue

Basis for division of each stage and provision ratio for bad debts

(4) Debt investment actually written off in this period

Unit: Full text of 2026 semi-annual report of Yuanhengbao Co., Ltd.

Item Write-off Amount

Among them, the important write-off of debt investment

Debt investment write-off instructions:

Changes in book balances with significant changes in loss provision during the period

□Applicable Not applicable

Other notes:

Other debt investments

(1) Situation of other debt investments

Unit: Yuan Accumulative fair in other comprehensive income for the period Accumulative fair

Item Opening balance Accrued interest Interest adjustment Closing balance Cost Recognition in profit Remarks Value changes Value changes

provision for impairment

Changes in impairment provisions for other debt investments during the current period

Unit: Yuan Item Beginning balance Increase in the current period Decrease in the current period Ending balance

(2) Other important debt investments at the end of the period

Unit: Yuan Ending balance Beginning balance

Other debts

Coupon interest Actual interest Overdue principal Coupon interest Actual interest Overdue principal item Par value Maturity date Par value Maturity date Rate Rate Gold Rate Rate Gold

(3) Provision of impairment provisions

Unit: Yuan Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Bad debt provision Expected total credit losses in the next 12 months (no credit deductions have occurred Losses (credit deductions have occurred)

loss

value) value)

Balance as of January 1, 2026

In this issue

Basis for division of each stage and provision ratio for bad debts

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(4) Other debt investments actually written off in the current period

Unit: Yuan

Item Write-off Amount

Among them, the write-off of other important debt investments

Instructions for write-off of other debt investments:

Changes in book balances with significant changes in loss provision during the period

□Applicable Not applicable

Other notes:

Investment in other equity instruments

Unit: Yuan

Designated as fair value included in the current period Included in the current period Accumulated in the current period Accumulated in the current period

Recognized and measured in the current period and its other comprehensive Other comprehensive accounting is included in its Other comprehensive accounting is included in its

Item name Dividend income at the beginning of the period Dividend income at the end of the period Changes included in income Loss of income Other comprehensive income Other comprehensive income

Income Other comprehensive gains and losses Gains and losses

original income

Because the investment is an equity investment and the company’s investment purpose is non-trading investment, the company designated it as Jiangsu Danyang

For fair rural business 3,000,000 3,000,000

Value Measurement Bank Shares .00 .00

and its changes ltd.

For financial assets included in other comprehensive income, subsequent changes in their fair value are included in other comprehensive income.

3,000,000 3,000,000

total

.00 .00

There is termination confirmation in this period

Unit: Yuan

Project name Accumulated gains transferred to retained earnings Accumulated losses transferred to retained earnings Reasons for derecognition

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Disclosure of non-trading equity instrument investments in the current period by items

Unit: Yuan designated as fair

Other comprehensive income Dividend income measured in value and recognized in other comprehensive income

Project name Accumulated profits Accumulated losses Transfer to retained earnings Changes are included in other Transfer to retained earnings

The amount of comprehensive income is due to

Other notes:

Long-term receivables

(1) Long-term receivables

Unit: Yuan Ending balance Beginning balance

Item Discount rate range Book balance Bad debt provision Book value Book balance Bad debt provision Book value

(2) Classified disclosure according to bad debt accrual method

Unit: Yuan Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

Among them:

Provision for bad debts based on the general expected credit loss model

Unit: Yuan Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Provision for bad debts Expected credit in the next 12 months Total

Loss (no credit deduction has occurred Loss (credit deduction has occurred)

loss

value) value)

Balance as of January 1, 2026

In this issue

Basis for division of each stage and provision ratio for bad debts

(3) Bad debt provisions accrued, recovered or reversed in the current period

Unit: Yuan Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Others

Among them, the amount of bad debt provision for the current period that is reversed or recovered is important:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Unit: Yuan

Determine the name of the original bad debt provision accrual unit, the amount recovered or reversed, the reason for the reverse, the method of recovery, the basis for the ratio and its reasonableness

Other descriptions of sex:

(4) Long-term receivables actually written off in the current period

Unit: Yuan

Item Write-off Amount

Among them, the important write-off situation of long-term receivables:

Unit: Yuan

Whether the payment is made by the related entity, the nature of the payment, the write-off amount, the reason for the write-off, the write-off procedures performed

Instructions for writing off long-term receivables arising from transactions:

Long-term equity investment

Unit: Yuan

Increases and decreases in the current period

Beginning of period Equity declaration End of period

Impairment Impairment investment balance Other disbursement balance under the law

Preparation Other Provisions Provision Notes (Account Addition Decrease Confirmation Comprehensive Cash (Account

Equity Impairment at the Beginning of the Period Others Ending of the Period Face Price Investment Investment Income from Investment Dividends Face Price

Balance Change Provision Balance Value) Capital Loss Adjustment or Profit Value)

profit

1. Joint ventures

2. Joint ventures

Shanghai

Heng Yu

Investment 79,52 9,446 - 69,93 Center 8,055 ,219. 144,4 7,350 (with .58 85 85.12 .61 limited

Guy)

79,52 9,446 - 69,93Subtotal 8,055 ,219. 144,4 7,350 .58 85 85.12 .61 79,52 9,446 - 69,93Total 8,055 ,219. 144,4 7,350 .58 85 85.12.61 The recoverable amount is determined based on the net amount of fair value minus disposal costs.

□Applicable Not applicable

The recoverable amount is determined based on the present value of expected future cash flows.

□Applicable Not applicable

Reasons for the obvious inconsistency between the aforementioned information in the full text of Hengbao Co., Ltd.'s 2026 semi-annual report and the information used in impairment testing in previous years or external information

Reasons for the discrepancy between the information used in the company's impairment testing in previous years and the actual situation of that year.

Other instructions

Other non-current financial assets

Unit: Yuan Item Ending balance Beginning balance

Other notes:

Investment real estate

(1) Investment real estate using cost measurement model

□Applicable Not applicable

(2) Investment real estate using fair value measurement model

□Applicable Not applicable

(3) Converted to investment real estate and measured at fair value

Unit: Accounting Section before yuan conversion Amount of other comprehensive income items Reason for conversion Approval procedure Impact on profit and loss

Influence of the purpose (4) Investment real estate with uncompleted title certificates

Unit: Yuan Item Book value Reasons for not completing the property rights certificate

Other instructions

Fixed assets

Unit: Yuan Item Ending balance Beginning balance

Fixed assets 284,878,900.39 291,364,659.68 Total 284,878,900.39 291,364,659.68

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(1) Fixed assets

Unit: Yuan

Items Houses and buildings Special equipment Transportation equipment General equipment Total

1. Original book value:

Opening balance 392,363,238.32 389,937,219.50 14,897,347.68 29,697,910.02 826,895,715.52 2. Increase in this period

2,831,313.48 -2,952.86 1,082,279.19 3,910,639.81 Amount

(1) Purchase

3,356,868.68 1,145,622.08 4,502,490.76

(2) in

Construction project transfer

(3) Enterprise

Increase in business mergers

(4) Foreign currency statement discount

-525,555.20 -2,952.86 -63,342.89 -591,850.95

Reduction in this period

Amount

(1) place

dispose or scrap

Closing balance 392,363,238.32 392,768,532.98 14,894,394.82 30,780,189.21 830,806,355.33

2. Accumulated depreciation

Opening balance 154,678,943.89 342,604,702.97 13,912,309.53 24,335,099.45 535,531,055.84 2. Increase in this period

7,043,327.89 2,622,685.58 45,078.23 685,307.40 10,396,399.10Amount

(1) Count

7,043,327.89 3,093,768.90 48,220.20 733,893.82 10,919,210.81

(2) Foreign currency statement discount

-471,083.32 -3,141.97 -48,586.42 -522,811.71 Calculate

Reduction in this period

Amount

(1) place

dispose or scrap

Closing balance 161,722,271.78 345,227,388.55 13,957,387.76 25,020,406.85 545,927,454.94

3. Impairment provision

Opening balance

2.Increase in this issue

Amount

(1) Count

mention

Reduction in this period

Amount

(1) place

dispose or scrap

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Ending balance

4. Book value

Closing accounts

230,640,966.54 47,541,144.43 937,007.06 5,759,782.36 284,878,900.39 Value

Opening accounts

237,684,294.43 47,332,516.53 985,038.15 5,362,810.57 291,364,659.68 Value

(2) Temporarily idle fixed assets

Unit: Yuan Item Original book value Accumulated depreciation Impairment provision Book value Remarks

(3) Fixed assets leased through operating leases

Unit: Yuan Item Closing book value

Special equipment 2,883,415.88

(4) Fixed assets whose property rights certificates have not been obtained

Unit: Yuan Item Book value Reasons for not completing the property rights certificate

Houses and buildings 32,013,735.36 Not yet meet the contract conditions

Other instructions

(5) Impairment testing of fixed assets

□Applicable Not applicable

(6) Fixed assets liquidation

Unit: Yuan Item Ending balance Beginning balance

Other notes:

Projects under construction

Unit: Yuan Item Ending balance Beginning balance

Construction in progress 6,550,215.36 4,653,571.67 Total 6,550,215.36 4,653,571.67 Full text of the 2026 Semi-annual Report of Hengbao Co., Ltd.

(1) Projects under construction

Unit: Yuan Ending balance Beginning balance

Project

Book balance Impairment provision Book value Book balance Impairment provision Book value Decoration and renovation project 6,550,215.36 6,550,215.36 4,653,571.67 4,653,571.67 Total 6,550,215.36 6,550,215.36 4,653,571.67 4,653,571.67

(2) Changes in important projects under construction during the current period

Unit: Yuanqi

Engineering

Interest in this period:

Current period Cumulative Current period

Capital transferred in this period This period

Project Budget Beginning of Period Others End of Period Investment Project Interest Increase in Funds Fixed Accumulated Interest

Name Number Balance Decrease Balance Accounting for Advance Progress Capital Source Amount Asset Accounting Capital

Amount calculation ratio

Amount Amount Funding

Example

Decoration 7,755 4,653 1,896 6,550

84.45 95.00

Transformation ,952. ,571. ,643. ,215. Others% %

Engineering 33 67 69 36

7,755 4,653 1,896 6,550

Total ,952. ,571. ,643. ,215.

33 67 69 36

(3) Provision for impairment of projects under construction in the current period

Unit: Yuan Item Beginning balance Increase in the current period Decrease in the current period Closing balance Other explanations for the reasons for provision

(4) Impairment testing of projects under construction

□Applicable Not applicable

(5) Engineering materials

Unit: Yuan Ending balance Beginning balance

Project

Book balance Impairment provision Book value Book balance Impairment provision Other instructions for book value:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Productive biological assets

(1) Productive biological assets using cost measurement model

□Applicable Not applicable

(2) Impairment testing of productive biological assets using the cost measurement model

□Applicable Not applicable

(3) Productive biological assets using fair value measurement model

□Applicable Not applicable

Oil and gas assets

□Applicable Not applicable

Right-of-use assets

(1) Right-of-use assets

Unit: Yuan

Project Houses and Buildings Total

1. Original book value

Balance at the beginning of the period 16,579,705.79 16,579,705.79 2. Increase in the current period 276,819.19 276,819.19 (1) New leases this year 794,036.11 794,036.11 (2) Foreign currency translation difference -517,216.92 -517,216.92 3. Decrease amount in this period 1,953,967.59 1,953,967.59
Closing balance 14,902,557.39 14,902,557.39

2. Accumulated depreciation

Balance at the beginning of the period 6,318,766.51 6,318,766.51 2. Increase in the current period 1,307,227.27 1,307,227.27

(1) Provision 1,553,240.88 1,553,240.88 (2) Foreign currency translation difference -246,013.61 -246,013.61 3. Decrease amount in the current period 1,176,038.81 1,176,038.81

(1) Disposal

Closing balance 6,449,954.97 6,449,954.97

3. Impairment provision

Opening balance
Increase amount in this period

(1) Provision

Reduction amount in this period

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(1) Disposal

Ending balance

4. Book value

Book value at the end of the period 8,452,602.42 8,452,602.42 2. Book value at the beginning of the period 10,260,939.28 10,260,939.28

(2) Impairment testing of right-of-use assets

□Applicable Not applicable

Other notes:

Intangible assets

(1) Intangible assets

Unit: Yuan

Item Land use rights Patent rights Non-patented technology Computer software Total

1. Original book value

Opening balance 30,525,565.74 80,716,869.97 111,242,435.71 2. Increase in this period

168,803.16 -1,176.22 167,626.94 Amount

(1) Purchase

168,803.16 168,803.16

(2) within

Ministry of R&D

(3) Enterprise

Increase in business mergers

(4) Foreign currency statement discount

-1,176.22 -1,176.22 is calculated

Reduction in this period

Amount

(1) place

set

Closing balance 30,694,368.90 80,715,693.75 111,410,062.65

2. Accumulated amortization

Opening balance 11,190,710.71 48,318,353.32 59,509,064.03 2. Increase in this period

312,311.52 1,253,415.24 1,565,726.76 Amount

(1) Count

312,311.52 1,254,591.46 1,566,902.98

(2) Foreign currency statement discount

-1,176.22 -1,176.22 is calculated

Reduction in this period

Amount

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(1) place

set

Closing balance 11,503,022.23 49,571,768.56 61,074,790.79

3. Impairment provision

Opening balance 27,998,988.00 27,998,988.00 2. Increase in this period

Amount

(1) Count

mention

Reduction in this period

Amount

(1) place

set

Closing balance 27,998,988.00 27,998,988.00

4. Book value

Closing accounts

19,191,346.67 3,144,937.19 22,336,283.86 value

Opening accounts

19,334,855.03 4,399,528.65 23,734,383.68 value

The proportion of intangible assets formed through the company's internal R&D to the balance of intangible assets at the end of the period

(2) Data resources recognized as intangible assets

Unit: Yuan Outsourced data resources are intangible Self-developed data resources Data obtained through other means

Item Total

Assets Intangible Assets Resources Intangible Assets

(3) Land use rights for which property rights certificates have not been obtained

Unit: Yuan

Item Book value Other reasons for failure to obtain property rights certificate

(4) Impairment testing of intangible assets

□Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Goodwill

(1) Original book value of goodwill

Unit: yuan Name of invested unit Increase in this period Decrease in this period

Goodwill is called or formed. Opening balance formed by business combination. Closing balance

Dispose

matters of

Hublot Oriental Digital

11,137,414.6 11,137,414.6 Technology (Beijing)

7 7 Limited Note 1

within malaysia

4,425,017.47 4,425,017.47 Two subsidiaries Note 2

15,562,432.1 15,562,432.1Total

4 4 Note: Note 1 The company acquired 100% equity of Oriental Digital for RMB 26,000,000.00 in 2010. The difference between the acquisition price and the fair value share of identifiable net assets of RMB 11,137,414.67 was recognized as goodwill.

Note 2: Hengbao International Co., Ltd., a subsidiary of the company, acquired 100% equity of MOD and ASCC in Malaysia in a package deal in 2019, with a purchase price of US$455,498.65 (equivalent to RMB 3,052,979.70). The difference between the acquisition price and the fair value of the identifiable net assets is US$634,301.98 (equivalent to RMB 4,425,017.47) and is recognized as goodwill.

(2) Goodwill impairment provision

Unit: yuan Name of invested unit Increase in this period Decrease in this period

Goodwill is called or formed. Balance at the beginning of the period. Balance at the end of the period.

Provision Disposal

matters

Hublot Oriental Digital

11,137,414.6 11,137,414.6 Technology (Beijing)

7 7 Limited Note 3

within malaysia

4,425,017.47 4,425,017.47 Two subsidiaries Note 4

15,562,432.1 15,562,432.1Total

4 4Note: Note 3 Based on the results of previous tests on Eastern Digital's overall asset group, the company made full provision for impairment of the goodwill generated by the acquisition of Eastern Digital in 2012.

Note 4: Based on the results of previous tests on the overall asset group composed of two subsidiary companies in Malaysia, the company made full provision for impairment of the goodwill generated by the acquisition of the two subsidiary companies in Malaysia in 2021.

(3) Relevant information about the asset group or asset group combination where the goodwill is located

The composition of the asset group or portfolio to which it belongs and

Name, operating segment and basis. Is it consistent with previous years?

Basis

Changes in asset group or asset group combination

Name Composition before change Composition after change Objective facts and basis leading to change

Other instructions

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(4) Specific determination method of recoverable amount

The recoverable amount is determined as the net amount after fair value minus disposal costs.

□Applicable Not applicable

The recoverable amount is determined based on the present value of expected future cash flows.

□Applicable Not applicable

Reasons for the obvious inconsistency between the aforementioned information and the information used in impairment testing in previous years or external information

Reasons for the discrepancy between the information used in the company's impairment testing in previous years and the actual situation of that year.

(5) Completion of performance commitments and corresponding impairment of goodwill

There is a performance commitment when goodwill is formed and the reporting period or the previous period of the reporting period is within the performance commitment period

□Applicable Not applicable

Other instructions

Long-term deferred expenses

Unit: Yuan

Item Beginning balance Increase in the current period Amortization amount in the current period Other decreases Closing balance Decoration fee 2,044,603.34 630,645.79 1,413,957.55Service fee 12,460,754.10 150,787.61 2,452,772.38 10,158,769.33Total 14,505,357.44 150,787.61 3,083,418.17 11,572,726.88Other instructions

Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets without offset

Unit: Yuan Ending balance Beginning balance

Project

Deductible temporary differences Deferred income tax assets Deductible temporary differences Deferred income tax assets Asset impairment provision 21,232,872.10 3,184,930.81 17,527,289.38 2,629,093.41 Deductible losses 1,653,297.44 413,324.36 5,859,315.96 1,464,828.99Deferred income 1,610,572.85 241,585.93 1,181,317.76 177,197.66Accrued expenses 1,153,939.01 173,090.85 1,153,939.01 173,090.85 Investment income calculated using equity method

23,610,023.99 3,541,503.60 23,465,538.87 3,519,830.83 profit

Total 49,260,705.39 7,554,435.55 49,187,400.98 7,964,041.74

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Deferred income tax liabilities without offset

Unit: Yuan Ending balance Beginning balance

Project

Taxable temporary differences Deferred income tax liabilities Taxable temporary differences Deferred income tax liabilities Fixed assets depreciation difference 17,988,535.68 2,698,280.35 17,988,535.68 2,698,280.35 Fair trading financial assets

4,780,158.67 731,338.80 9,670,856.90 1,715,511.08 Value changes

Total 22,768,694.35 3,429,619.15 27,659,392.58 4,413,791.43

(3) Deferred income tax assets or liabilities presented on a net basis after offsetting

Unit: Yuan Deferred income tax assets and liabilities Deferred income tax assets after offset Deferred income tax assets and liabilities Deferred income tax items after offset

Offset amount at the end of the debt period Ending balance of assets or liabilities Offsetting amount at the beginning of the debt period Deferred income tax assets 7,554,435.55 7,964,041.74 Deferred income tax liabilities 3,429,619.15 4,413,791.43

(4) Details of deferred income tax assets not recognized

Unit: Yuan

Item Ending balance Beginning balance

Deductible temporary differences 34,408,650.32 37,761,463.24 Deductible losses 123,831,613.40 71,950,319.91 Total 158,240,263.72 109,711,783.15

(5) Deductible losses that have not been recognized as deferred income tax assets will expire in the following years

Unit: Yuan

Year Ending amount Beginning amount Remarks

2026 10,038,795.46 10,807,956.37

2027 11,114,901.09 11,533,404.78

2028 6,665,921.68 6,665,921.68

2029 12,458,130.48 12,465,133.00

2030 22,068,911.50 22,449,983.77

2031 13,507,755.79 3,767,957.08

2032 2,814,837.39 2,814,837.39

2033 1,177,766.34

2036 41,198,244.32

Unlimited 2,786,349.35 1,445,125.84

Total 123,831,613.40 71,950,319.91

Other instructions

Other non-current assets

Unit: Yuan

Item Ending balance Beginning balance

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Book balance Impairment provision Book value Book balance Impairment provision Book value Long-term asset prepayment 53,576,718.2 53,576,718.2 41,127,901.9 41,127,901.9 5 5 6 6 Fixed term for more than one year 160,498,338. 160,498,338. 213,723,322. 213,723,322. Deposits 15 15 09 09

214,075,056. 214,075,056. 254,851,224. 254,851,224.Total

40 40 05 05 Information related to compensating assets

Other notes:

Assets whose ownership or use rights are restricted

Unit: End of Yuan period Beginning of period

Project

Book balance Book value Restriction type Restriction situation Book balance Book value Restriction type Restriction situation

122,409,7 37,123,51 122,409,7 38,890,52

Fixed assets Mortgage loans Mortgage loans 13.98 1.99 13.98 7.17

6,544,801 3,888,823 6,544,801 3,957,474

Intangible assets Mortgage loans Mortgage loans.74 .72 .74 .38

Letter of Guarantee and Performance Letter of Guarantee and Performance

14,737,51 14,737,51 Approximately guaranteed 15,297,30 15,297,30 Approximately guaranteed monetary funds

6.95 6.95 Gold, time-term 8.25 8.25 Gold, time-deposit certificate pledge Pledge of deposit certificate frozen/no change Freeze/no change

Account, payment account, payment of monetary funds 2,875.17 2,875.17 Supervision, no 19,811.66 19,811.66 Supervision, no collection or payment 19,811.66 No collection or payment of account funds Account funds

143,694,9 55,752,72 144,271,6 58,165,12

total

07.84 7.83 35.63 1.46

Other notes:

Short-term borrowing

(1) Classification of short-term loans

Unit: Yuan

Item Ending balance Beginning balance

Description of short-term loan classification:

(2) Overdue short-term borrowings that have not been repaid

The total amount of overdue and unpaid short-term borrowings at the end of the period was RMB, among which the important overdue and unpaid short-term borrowings are as follows:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Unit: yuan borrowing unit Ending balance Borrowing interest rate Overdue time Overdue interest rate

Other instructions

Trading financial liabilities

Unit: Yuan Item Ending balance Beginning balance

Among them:

Other notes:

Derivative financial liabilities

Unit: Yuan Item Ending balance Beginning balance

Other notes:

Notes payable

Unit: Yuan Type Ending balance Beginning balance

Bank acceptance bill 18,647,163.73 43,219,330.50 Total 18,647,163.73 43,219,330.50 The total amount of bills payable that has expired but not been paid at the end of this period is 0.00 yuan, and the reason for unpaid due is.

Accounts payable

(1) Presentation of accounts payable

Unit: Yuan Item Ending balance Beginning balance

Payments for materials and services 127,326,088.93 115,593,592.03 Payments for equipment 586,000.00 3,232,528.29 Total 127,912,088.93 118,826,120.32

(2) Important accounts payable that are aged more than 1 year or are overdue

Unit: Yuan Item Closing balance Reason for outstanding or carry-forward

Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Other payables

Unit: Yuan Item Ending balance Beginning balance

Other payables 2,983,199.97 5,102,680.93 Total 2,983,199.97 5,102,680.93

(1) Interest payable

Unit: Yuan Item Ending balance Beginning balance

Important overdue and unpaid interest information:

Unit: Yuan Borrowing Unit Overdue Amount Reason for Overdue

Other notes:

(2) Dividends payable

Unit: Yuan Item Ending balance Beginning balance

Other explanations, including important dividends payable that have not been paid for more than 1 year, should disclose the reasons for non-payment:

(3) Other payables

List other payables according to the nature of the payment

Unit: Yuan Item Ending balance Beginning balance

Amounts for accrued costs and expenses 2,983,199.97 5,102,680.93 Total 2,983,199.97 5,102,680.93

Important other payables aged more than 1 year or overdue

Unit: Yuan Item Closing balance Reason for outstanding or carry-forward

Other instructions

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Advance payments

(1) Presentation of advance receipts

Unit: Yuan Item Ending balance Beginning balance

(2) Important advances from customers aged more than 1 year or overdue

Unit: Yuan Item Closing balance Reason for outstanding or carry-forward

Unit: Yuan Item Amount of change Reason for change

Other notes:

Contract liabilities

Unit: Yuan Item Ending balance Beginning balance

Advance payments 36,084,849.84 31,168,302.19 Included in other current liabilities (Note 7, 44) -2,835,552.60 -3,255,285.30 Total 33,249,297.24 27,913,016.89 Important contract liabilities aged more than 1 year

Unit: Yuan Item Closing balance Reason for outstanding or carry-forward

Amount and reasons for significant changes in book value during the reporting period

Unit: yuan change fee

Item Reason for change

Employee compensation payable

(1) Presentation of employee benefits payable

Unit: Yuan Item Beginning balance Increase in the current period Decrease in the current period Ending balance

Short-term salary 3,650,279.62 78,664,117.14 79,591,019.06 2,723,377.70

2. Post-employment benefits-settings

83,437.13 7,703,479.93 7,583,623.69 203,293.37 Withdrawal plan

3. Dismissal benefits 60,000.00 60,000.00

Total 3,733,716.75 86,427,597.07 87,234,642.75 2,926,671.07

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Presentation of short-term remuneration

Unit: Yuan

Item Opening balance Increase in the current period Decrease in the current period Ending balance

Salary, bonus, allowance

3,498,217.54 68,917,223.95 69,743,363.79 2,672,077.70 and subsidies

Employee welfare fees 61,409.87 944,983.59 1,006,393.46
Social insurance premiums 3,818,716.17 3,818,716.17

Among them: medical insurance

3,553,984.59 3,553,984.59

fee

Work injury insurance

127,050.01 127,050.01

fee

maternity insurance

137,681.57 137,681.57

fee

Housing provident fund 40,492.21 4,800,542.11 4,841,034.32
Trade union funds and employee education

50,160.00 182,651.32 181,511.32 51,300.00 Education funds

Total 3,650,279.62 78,664,117.14 79,591,019.06 2,723,377.70

(3) Display of defined contribution plan

Unit: Yuan

Item Opening balance Increase in the current period Decrease in the current period Ending balance

Basic pension insurance 83,437.13 7,499,544.20 7,379,687.96 203,293.37
Unemployment insurance premium 203,935.73 203,935.73

Total 83,437.13 7,703,479.93 7,583,623.69 203,293.37Other instructions

Taxes payable

Unit: Yuan

Item Ending balance Beginning balance

Value-added tax 963,664.66 2,126,845.05Corporate income tax 559,001.56 5,335,160.70Personal income tax 158,167.42 344,384.22Urban maintenance and construction tax 160,291.68 202,934.07Education surcharge 114,494.05 144,915.22 Property tax 713,948.97 657,087.61 Land use tax 80,139.71 117,473.41 Stamp tax 96,183.88 120,478.73 Total 2,845,891.93 9,049,279.01Other instructions

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Liabilities held for sale

Unit: Yuan Item Ending balance Beginning balance

Other instructions

Non-current liabilities due within one year

Unit: Yuan Item Ending balance Beginning balance

Lease liabilities due within one year 2,960,712.32 3,176,382.69 Total 2,960,712.32 3,176,382.69Other notes:

Other current liabilities

Unit: Yuan Item Ending balance Beginning balance

Output tax to be written off 2,835,552.60 3,255,285.30 Total 2,835,552.60 3,255,285.30 Increase or decrease in short-term bonds payable:

Unit: yuan per face

Overflow discount

Bond par value issuance Bond issuance Beginning of period Current period Value calculation Current period End of period Whether par value Price amortization

Name Interest Rate Date Term Amount Balance Issuance Profit Repayment Balance Default Cancellation

information

total

Other notes:

Long-term borrowing

(1) Classification of long-term loans

Unit: Yuan Item Ending balance Beginning balance

Description of long-term loan classification:

Other instructions, including interest rate ranges:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Bonds payable

(1) Bonds payable

Unit: Yuan Item Ending balance Beginning balance

(2) Increases and decreases in bonds payable (excluding preference shares, perpetual bonds and other financial instruments classified as financial liabilities)

Unit: yuan per face

Overflow discount

Bond par value issuance Bond issuance Beginning of period Current period Value calculation Current period End of period Whether par value Price amortization

Name Interest Rate Date Term Amount Balance Issuance Profit Repayment Balance Default Cancellation

information

total

(3) Description of convertible corporate bonds

(4) Description of other financial instruments classified as financial liabilities

Basic information on preferred shares, perpetual bonds and other financial instruments outstanding at the end of the period

Statement of changes in outstanding preferred stocks, perpetual bonds and other financial instruments at the end of the period

Unit: yuan outstanding. Beginning of the period. Increase in the current period. Decrease in the current period. End of the period.

financial engineering

Quantity Book value Quantity Book value Quantity Book value Quantity Book value instrument

Explanation of the basis for classifying other financial instruments as financial liabilities

Other instructions

Lease liabilities

Unit: Yuan Item Ending balance Beginning balance

Long-term lease liabilities 8,463,905.96 10,360,142.78 Lease liabilities due within one year -2,960,712.32 -3,176,382.69 Total 5,503,193.64 7,183,760.09Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Long-term payables

Unit: Yuan Item Ending balance Beginning balance

(1) List long-term payables according to the nature of the payment

Unit: Yuan Item Ending balance Beginning balance

Other notes:

(2) Special accounts payable

Unit: Yuan Item Beginning balance Increase in the current period Decrease in the current period Ending balance Reasons for formation

Other notes:

Long-term employee benefits payable

(1) Long-term employee salary payable table

Unit: Yuan Item Ending balance Beginning balance

(2) Changes in defined benefit plans

Present value of defined benefit plan obligations:

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Plan assets:

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Net liabilities (net assets) of defined benefit plans

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Description of the content of the defined benefit plan and the risks associated with it, as well as the impact on the company's future cash flows, timing and uncertainty:

Explanation of significant actuarial assumptions and sensitivity analysis results of defined benefit plans:

Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Estimated liabilities

Unit: Yuan Item Ending balance Beginning balance Other explanations of reasons, including important assumptions and estimation instructions for important estimated liabilities:

Deferred income

Unit: Yuan Item Beginning balance Increase in the current period Decrease in the current period Ending balance Reasons for formation

Special project subsidy government subsidy 1,181,317.76 684,000.00 254,744.91 1,610,572.85

gold

Total 1,181,317.76 684,000.00 254,744.91 1,610,572.85

Other notes:

Among them, projects involving government subsidies:

New additions in this period are included in the business in this period. This period is included in other assets/subsidy items. Balance at the beginning of the period. Balance at the end of the period.

Amount of subsidy Amount of external income Amount of other income The stakes are based on domestic chips and

Internet of Things with National Secret Algorithm

Network security certification 231,489.37 40,851.06 190,638.31 Research and development of asset-related ESIM and

Industrialization subsidy funds

5G mobile communication network

network identity module

71,126.26 13,105.80 58,020.46 Asset-related R&D and industrialization subsidies

funding

Digital asset security

software and management system

178,764.46 108,512.13 70,252.33 Asset-related R&D and industrialization

Project

Based on digital RMB

safe and trustworthy payment

699,937.67 49,525.92 650,411.75 Asset-related system research and development and industry

ization

Safe and trustworthy intelligence

684,000.00 42,750.00 641,250.00 Research on communication technology related to income

The full text of Hengbao Co., Ltd.'s 2026 semi-annual report is newly added during the period. This period is included in the business. This period is included in its assets/subsidy collection items. Balance at the beginning of the period. Balance at the end of the period.

Amount of subsidy Amount of external income Amount of other income Total interests 1,181,317.76 684,000.00 254,744.91 1,610,572.85

Other non-current liabilities

Unit: Yuan Item Ending balance Beginning balance

Other notes:

Share capital

Unit: Yuan Increase or decrease in this change (+, -)

Balance at the beginning of the period Balance at the end of the period Issuance of new shares Bonus shares Conversion of public reserve funds Others Subtotal

708,339,15 708,350,15Total number of shares 11,000.00 11,000.00

4.00 4.00Other instructions:

In 2026, the company's equity incentive objects will exercise a total of 11,000.00 shares, with an additional registered capital (share capital) of RMB 11,000.00 and an increase in capital reserve of RMB 35,420.00.

Other equity instruments

(1) Basic information on preferred shares, perpetual bonds and other financial instruments outstanding at the end of the period

(2) Statement of changes in outstanding preferred stocks, perpetual bonds and other financial instruments at the end of the period

Unit: yuan outstanding. Beginning of the period. Increase in the current period. Decrease in the current period. End of the period.

financial engineering

Quantity Book value Quantity Book value Quantity Book value Quantity Book value instrument

Changes in other equity instruments during the current period, explanations of the reasons for the changes, and the basis for relevant accounting treatments:

Other notes:

Capital reserve

Unit: Yuan

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Item Opening balance Increase in the current period Decrease in the current period Ending balance Capital premium (equity premium

59,874,791.79 70,840.00 59,945,631.79 price)

Other capital reserves 868,612.07 35,420.00 833,192.07Total 60,743,403.86 70,840.00 35,420.00 60,778,823.86Other explanations, including changes in increases and decreases in the current period and reasons for changes:

① The capital reserve (equity premium) increased by RMB 35,420.00 in the current period because the stock options granted to the company’s incentive recipients met the exercise conditions, and the equity premium increased due to exercise.

② The capital reserve (other capital reserve) decreased by RMB 35,420.00 in the current period because the granted stock options held by the company's incentive recipients met the exercise conditions, and the equity incentive expenses corresponding to the exercised shares were transferred from capital reserve (other capital reserve) to capital reserve (equity premium).

Treasury stocks

Unit: Yuan

Item Beginning balance Increase in the current period Decrease in the current period Other explanations of the closing balance, including changes in increases and decreases in the current period and explanation of reasons for changes:

Other comprehensive income

Unit: Yuan Amount incurred in the current period

Less: previous period Less: previous period

Income for the current period is included in other items and is included in others. Attribution after tax

Item Opening balance Less: Income Attribution after tax Closing balance before tax Comprehensive income Comprehensive income Attributable to minority shares

Tax expenses at the parent company

Amount transferred in the current period Transferred in in the current period

Profit and loss Retained earnings

2. Will be heavy

- - -Classification entry loss

2,415,307 10,206,10 10,206,10 12,621,40 Others

.76 0.27 0.27 8.03 Comprehensive income

Foreign currency - - - -Financial statements 2,415,307 10,206,10 10,206,10 12,621,40 Translation difference .76 0.27 0.27 8.03

- - -Other comprehensive

2,415,307 10,206,10 10,206,10 12,621,40Total income

.76 0.27 0.27 8.03 Other explanations, including adjustments to the initial recognition amount of the effective portion of cash flow hedging gains and losses converted into hedged items:

Special reserves

Unit: Yuan

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Surplus reserve

Unit: Yuan

Item Opening balance Increase in the current period Decrease in the current period Ending balance Statutory surplus reserve 255,244,574.91 255,244,574.91 Total 255,244,574.91 255,244,574.91 Description of surplus reserve, including changes in increases and decreases in the current period and explanation of reasons for changes:

Undistributed profits

Unit: Yuan

Projects in this issue Previous issue

Undistributed profit at the end of the previous period before adjustment 1,137,773,814.41 1,140,948,409.72 Undistributed profit at the beginning of the period after adjustment 1,137,773,814.41 1,140,948,409.72 Add: Net profit attributable to owners of the parent company for the current period

-45,795,110.59 35,354,056.19 profit

Dividends payable on ordinary shares 57,007,769.11 Undistributed profits at the end of the period 1,091,978,703.82 1,119,294,696.80 Details of adjustments to undistributed profits at the beginning of the period:

1). Due to the retrospective adjustment of the Accounting Standards for Business Enterprises and its related new regulations, the undistributed profit at the beginning of the period was affected by RMB 0.00.

Due to changes in accounting policies, the undistributed profit at the beginning of the period was affected by RMB 0.00.
Due to the correction of major accounting errors, the undistributed profit at the beginning of the period was affected by RMB 0.00.

4). Changes in the scope of consolidation due to the same control affect the undistributed profit at the beginning of the period by RMB 0.00.

The total impact of other adjustments on the undistributed profit at the beginning of the period is RMB 0.00.

Detailed instructions on using capital reserves to cover losses:

Operating income and operating costs

Unit: Yuan Amount of current period Amount of previous period

Project

revenue cost revenue cost

Main business 287,707,705.53 234,229,514.92 429,142,420.15 305,167,266.42 Other businesses 1,373,438.96 167,499.47 1,025,907.82 658,836.13Total 289,081,144.49 234,397,014.39 430,168,327.97 305,826,102.55 Decomposition information of operating income and operating costs:

Unit: Yuan

Segment 1 Segment 2 Amount for the current period Amount for the previous period Total contract points

Operating income Operating income Operating income Operating income Operating income Operating income Operating income Operating income Operating income Operating income Category

Enter this business enter this business category

Type

Among them:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

161,830 128,807 336,327 222,836Card printing type

,151.08 ,464.66 ,521.38 ,651.36 120,558 103,198 91,489, 81,609,Module class

,494.58 ,500.02 171.90 201.78 5,319,0 2,223,5 1,325,7 721,413 Ticket type

59.87 50.24 26.87 .28 1,373,4 167,499 1,025,9 658,836 Others

38.96 .47 07.82 .13 289,081 234,397 430,168 305,826Total

,144.49 ,014.39 ,327.97 ,102.55 based on operating

Regional distinction

class

its

Medium:

222,802 181,959 357,295 249,643Domestic sales

,186.49 ,516.74 ,472.62 ,360.03 66,278, 52,437, 72,872, 56,182,export

958.00 497.65 855.35 742.52 289,081 234,397 430,168 305,826Total

,144.49 ,014.39 ,327.97 ,102.55 market or

Customer type

Type

its

Medium:

Contract type

Type

its

Medium:

by product

transferable

time minutes

class

its

Medium:

in a certain

289,081 234,397 430,168 305,826 Exact at time

,144.49,014.39,327.97,102.55 recognized income

289,081 234,397 430,168 305,826Total

,144.49 ,014.39 ,327.97 ,102.55 according to the contract

Deadline points

class

its

Medium:

by sales

Channel points

class

its

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Medium:

289,081 234,397 430,168 305,826

direct selling

,144.49 ,014.39 ,327.97 ,102.55

289,081 234,397 430,168 305,826

total

,144.49 ,014.39 ,327.97 ,102.55

Information related to performance obligations:

The company's pre-payments, the company's performance obligations, and the important payment terms. The company's commitment to transfer is the main responsibility.

The item will be refunded to the customer during the period. The type and time of the quantity guarantee. The nature of the goods. Anyone.

Account’s money and other explanations of related obligations

Information related to the transaction price allocated to the remaining performance obligations:

At the end of the reporting period, the amount of income corresponding to the performance obligations that have been signed but have not been performed or have not been completed is 33,249,297.24 yuan, of which,

Revenue of RMB 33,249,297.24 is expected to be recognized in 2026, RMB 0.00 is expected to be recognized in 2027, and RMB 0.00 is expected to be recognized in 2028.

Information related to variable consideration in the contract:

Major contract changes or major transaction price adjustments

Unit: Yuan

Item Accounting treatment method Amount of impact on income

Other instructions

Taxes and surcharges

Unit: Yuan

Item Amount for the current period Amount for the previous period

Urban maintenance and construction tax 936,842.38 1,357,460.98 Education surcharge 673,814.07 969,608.96 Property tax 1,652,595.53 1,529,481.77 Land use tax 203,947.52 240,717.92 Stamp tax 194,540.09 191,848.97Total 3,661,739.59 4,289,118.60Other instructions:

Management expenses

Unit: Yuan

Item Amount for the current period Amount for the previous period

Employee compensation 19,999,631.14 14,090,936.72 Depreciation and amortization expenses 8,576,834.40 7,466,537.24 Office expenses 2,052,136.13 2,112,452.07 Third-party agency service fees 2,122,227.01 1,670,083.46 Lease and property fees 1,749,350.50 2,107,604.11

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Business entertainment expenses 926,126.02 2,120,509.49 Travel expenses 770,352.52 1,224,192.81 Others 2,352,028.70 2,041,993.19 Total 38,548,686.42 32,834,309.09

Other instructions

Sales expenses

Unit: Yuan

Item Amount for the current period Amount for the previous period

Employee compensation 22,646,973.98 16,262,102.41 Office expenses 233,264.25 163,951.42 Depreciation and amortization expenses 362,487.18 284,449.39 Business entertainment expenses 2,622,618.68 4,332,623.63 Travel expenses 2,021,198.20 1,475,035.12 Advertising fees 337,311.82 275,289.69 Leasing and property fees 847,432.47 753,523.03 Sales commission 1,381,954.78 1,446,402.08 Third-party agency service fees 894,995.75 940,412.47 After-sales maintenance fee 353,990.80 67,685.23 Others 173,667.00 461,978.46 Total 31,875,894.91 26,463,452.93

Other notes:

Research and development expenses

Unit: Yuan

Item Amount for the current period Amount for the previous period

Employee compensation 21,676,965.12 33,013,697.45 Testing and service fees 4,976,219.78 4,427,860.14 Material and power fees 147,975.54 1,477,803.80 Travel expenses 180,903.32 545,958.44 Depreciation and amortization expenses 4,713,498.33 5,419,533.07 Others 36,933.21 51,764.45 Total 31,732,495.30 44,936,617.35

Other instructions

Financial expenses

Unit: Yuan

Item Amount for the current period Amount for the previous period

Interest expense 587.79Interest income -4,570,760.63 -9,340,535.74 Exchange gains and losses 10,246,463.66 8,528,574.24 Handling fees 55,873.01 89,214.73 Interest expense on lease liabilities 207,345.73 9,363.88

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Cash discount -12,188.00

Total 5,926,733.77 -712,795.10Other instructions

Other income

Unit: Yuan

Sources of other income Amount incurred in the current period Amount incurred in the previous period

VAT refund upon collection 159,533.01 1,350,758.80 Government subsidy 326,348.13 798,447.71 Personal income tax fee refund 268,697.92 174,567.30 Total 754,579.06 2,323,773.81

Net exposure hedging income

Unit: Yuan

Item Amount for the current period Amount for the previous period

Other instructions

Gains from changes in fair value

Unit: Yuan

Sources of income from changes in fair value Amount incurred in the current period Amount incurred in the previous period

Trading financial assets 4,338,318.20 6,984,214.72Total 4,338,318.20 6,984,214.72Other notes:

Investment income

Unit: Yuan

Item Amount for the current period Amount for the previous period

Long-term equity investment income calculated using the equity method -144,485.12 -6,517.18 Investment income from entrusting others to invest or manage assets 4,540,793.50 5,559,983.89 Interest income from time deposit certificates 4,672,971.36 1,620,343.60 Total 9,069,279.74 7,173,810.31Other instructions

Credit impairment losses

Unit: Yuan

Item Amount for the current period Amount for the previous period

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Bad debt losses on notes receivable 2,454.93 19,729.52 Bad debt losses on accounts receivable 1,864,313.99 1,638,636.81 Bad debt losses on other receivables 140,523.76 371,649.56 Total 2,007,292.68 2,030,015.89Other instructions

Asset impairment losses

Unit: Yuan

Item Amount for the current period Amount for the previous period

1. Inventory depreciation losses and contract performance cost deductions

-2,989,833.19 1,338,064.16 value loss

Total -2,989,833.19 1,338,064.16Other notes:

Income from asset disposal

Unit: Yuan

Source of asset disposal income Amount incurred in the current period Amount incurred in the previous period

Non-operating income

Unit: Yuan Financial items included in non-recurring gains and losses for the current period Amount incurred in the current period Amount incurred in the previous period

Profit from disposal of non-current assets 938.28

Others 2,790.48 556,536.21 2,790.48Total 2,790.48 557,474.49 2,790.48Other instructions:

Non-operating expenses

Unit: Yuan Financial items included in non-recurring gains and losses for the current period Amount incurred in the current period Amount incurred in the previous period

External donations 9,725.00 30,705.00 9,725.00Others 384,062.36 959,883.50 384,062.36Total 393,787.36 990,588.50 393,787.36Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Income tax expenses

(1) Income tax expense schedule

Unit: Yuan

Item Amount for the current period Amount for the previous period

Current income tax expense 2,096,896.40 -35,560.43 Deferred income tax expense -574,566.09 629,791.67 Total 1,522,330.31 594,231.24

(2) Adjustment process of accounting profits and income tax expenses

Unit: Yuan

Item Amount incurred in this period

Total profit -44,272,780.28 Income tax expenses calculated according to statutory/applicable tax rates -6,640,917.04 The impact of different tax rates applicable to subsidiaries -143,879.18 The impact of adjusting income taxes in previous periods -15,963.05 Deductible temporary differences or deductible temporary differences that have not been recognized as deferred income tax assets in the current period

8,323,089.58 Impact of loss

Income tax expenses 1,522,330.31Other instructions

Other comprehensive income

See Note 7, 57 for details.

Cash flow statement items

(1) Cash related to operating activities

Other cash received related to operating activities

Unit: Yuan

Item Amount for the current period Amount for the previous period

Deposits and security deposits 3,722,579.16 17,270,614.65 Government subsidies 755,603.22 922,400.00 Interest income 4,570,760.63 9,340,535.74 Collection of guarantee deposits due for more than 3 months 407,180.80 5,460,800.00 Refund of excess value-added tax 1,350,758.80 Collection and payment of share-based payments Employees’ exercise of rights and social welfare

8,138.23 886,435.23 Individual income tax on dividends distributed by shareholders

Current accounts 101,637.62 187,236.74 Others 549,936.85 178,169.46 Total 10,115,836.51 35,596,950.62 Description of other cash received related to operating activities:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Other cash paid related to operating activities

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Cash payment 19,359,220.36 29,152,234.58 Payment of guarantee deposit due for more than 3 months 100,000.00 5,442,180.80 Deposit and security deposit 3,536,157.00 2,457,836.00 Collection and payment of shares to pay employee exercise rights and social welfare

8,138.23 886,435.23 Individual income tax on dividends distributed by shareholders

Current accounts 4,460,430.61 1,223,182.78 Donation and sponsorship expenses 9,725.00 30,705.00 Total 27,473,671.20 39,192,574.39 Description of other cash paid related to operating activities:

(2) Cash related to investing activities

Other cash received related to investing activities

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Significant cash received related to investing activities

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Description of other cash received related to investing activities:

Other cash paid related to investing activities

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Significant cash payments related to investing activities

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Description of other cash paid related to investment activities:

(3) Cash related to financing activities

Other cash received related to financing activities

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Description of other cash received related to financing activities:

Other cash payments related to financing activities

Unit: Yuan

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Item Amount for the current period Amount for the previous period

Repayment of principal and interest on lease liabilities 2,808,484.12 872,170.86 Total 2,808,484.12 872,170.86 Description of other cash payments related to financing activities:

Changes in various liabilities arising from financing activities

Applicable □Not applicable

Unit: Yuan Increase in this period Decrease in this period

Item Beginning balance Closing balance

Cash changes Non-cash changes Cash changes Non-cash changes

Lease liabilities (including

10,360,142.7

912,247.30 2,808,484.12 8,463,905.96 Lease liabilities due within one year)

10,360,142.7

Total 912,247.30 2,808,484.12 8,463,905.96

(4) Explanation on presenting cash flow in net amount

Item Relevant facts and circumstances Basis for net presentation Financial impact

(5) Major activities and financial impacts that do not involve current cash receipts and payments but affect the company's financial status or may affect the company's cash flow in the future

Supplementary information for cash flow statement

(1) Supplementary information for cash flow statement

Unit: Yuan

Supplementary information Amount for the current period Amount for the previous period

1． Adjust net profit to cash flow from operating activities

Quantity:

Net profit -45,795,110.59 35,354,056.19 plus: asset impairment provision 982,540.51 -3,368,080.05 Depreciation of fixed assets, depreciation of oil and gas assets

10,919,210.81 12,745,220.42 Depreciation of consumption and productive biological assets

Depreciation of right-of-use assets 1,553,240.88 118,624.87 Amortization of intangible assets 1,566,902.98 1,964,570.81 Amortization of long-term prepaid expenses 3,083,418.17 2,287,367.86

Disposal of fixed assets, intangible assets and other

The loss of his long-term assets (the income is marked with a "-"

Fill in the column)

Loss on scrapping of fixed assets (income based on

-938.28 “-” (fill in the column)

Loss from changes in fair value (income based on -4,338,318.20 -6,984,214.72

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Fill in the column with "-" sign)

Financial expenses (revenues are filled in with "-"

8,007,262.17 8,420,510.73 columns)

Investment losses (income is filled in with "-"

-9,069,279.74 -7,173,810.31 columns)

Deferred tax assets decreased (increased by

409,606.19 951,966.70 (Fill in “-”)

Deferred tax liabilities increased (decreased by

-984,172.28 -322,175.03 (Fill in “-”)

Decrease in inventory (increase marked with "-"

-50,068,771.47 63,289,355.64 fill in the column)

Decrease in operating receivables (increase in

-46,377,140.45 -35,451,135.50 (please fill in the list with "-")

Increase (decrease) in operating payables

-19,270,309.14 -37,863,610.37 (please fill in the list with "-")

Others

Net cash flow generated from operating activities -149,380,920.16 33,967,708.96 2. Major investments and financing that do not involve cash receipts or payments

Activities:

debt to capital

Convertible corporate bonds due within one year

Financing leased fixed assets

Net changes in cash and cash equivalents:

Closing balance of cash 361,859,991.91 558,124,064.58 Less: Opening balance of cash 423,952,580.48 602,844,661.05 Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents -62,092,588.57 -44,720,596.47

(2) Net cash paid in the current period to acquire subsidiaries

Unit: Yuan

Amount

Among them:

Other notes:

(3) Net cash received from disposal of subsidiaries in the current period

Unit: Yuan

Amount

Among them:

The full text of Hengbao Co., Ltd.'s 2026 semi-annual report includes:

Other notes:

(4) Composition of cash and cash equivalents

Unit: Yuan Item Ending balance Beginning balance

Cash 361,859,991.91 423,952,580.48 Including: Cash on hand 10,184.45 18,616.53 Bank deposits that can be used for payment at any time 361,769,431.15 423,159,332.64 Other monetary resources that can be used for payment at any time

80,376.31 774,631.31 gold

Balance of cash and cash equivalents at the end of the period 361,859,991.91 423,952,580.48 (5) Situations in which the scope of use is restricted but still classified as cash and cash equivalents

Unit: Yuan Items that are still cash and cash equivalents Amount for the current period Amount for the previous period

Reason

(6) Monetary funds that are not cash and cash equivalents

Unit: Yuan Items that are not cash and cash equivalents Amount for the current period Amount for the previous period

Reason

Other notes:

(7) Description of other major activities

Notes on items in the statement of changes in owners’ equity

Explain the names of "other" items and the amount of adjustments that were made to the closing balance of the previous year:

Foreign currency monetary items

(1) Foreign currency monetary items

Unit: Yuan Item Foreign currency balance at the end of the period Conversion exchange rate Monetary funds converted into RMB at the end of the period

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Among them: US dollars 19,026,136.48 6.8109 129,585,112.95 Euros 23,820.67 7.7671 185,017.53

Hong Kong dollar

Singapore dollars 511,247.10 5.2605 2,689,415.37 Accounts receivable

Of which: US dollars

Euro 32.55 7.7671 252.82

Hong Kong dollar

long term borrowing

Of which: US dollars

Euro

Hong Kong dollar

Other current assets

Including: USD 15,536,009.07 6.8109 105,814,204.17

Other non-current assets

Including: USD 23,564,923.60 6.8109 160,498,338.15

Other receivables

Including: Singapore dollars 100,330.11 5.2605 527,786.54 Euros 22,031.43 7.7671 171,120.32

Accounts payable

Including: USD 1,939,105.03 6.8109 13,207,050.45

Other payables

Among them: Singapore dollars 2,879.82 5.2605 15,149.29 ringgit 1,300.00 1.6734 2,175.42 Other instructions:

(2) The nature of the lack of currency convertibility and its financial impact, the spot exchange rate used and its estimation process, and the risks faced by the enterprise due to the lack of currency convertibility

□Applicable Not applicable

(3) Description of overseas operating entities, including for important overseas operating entities, their main overseas business location, accounting standard currency and basis for selection should be disclosed. If the accounting standard currency changes, the reasons should also be disclosed.

Applicable □Not applicable

Company name Business address Accounting currency

Hengbao International Co., Ltd. Singapore USD

Hengbao (Middle East and Africa) Co., Ltd. Kenya Kenyan Shillings

ModularsoftSdn.Bhd. Malaysia Ringgit

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Company name Business address Accounting currency Asia Smart Cards Center (M) Sdn. Bhd. Malaysia Ringgit Chipstone Technologies Pte Ltd. Singapore Singapore dollar Chipstone Electronics Pte Ltd Singapore Singapore dollar Keyfort Pte. Ltd. Singapore Singapore dollar PT. Chipstone Technologies Indonesia Indonesia Indonesian rupiah HENGBAO GLOBAL TECHNOLOGIES

Hong Kong, China Hong Kong Dollar LIMITED

HENGBAO FINTECH LIMITED Hong Kong, China Hong Kong Dollar

(4) Lack of convertibility between the accounting standard currency of overseas operations and the enterprise’s presentation currency

□Applicable Not applicable

Leasing

(1) The company serves as the lessee

Applicable □Not applicable

Variable lease payments not included in the measurement of lease liabilities

□Applicable Not applicable

Simplified treatment of short-term leases or lease payments for low-value assets

Applicable □Not applicable

①For information on right-of-use assets and lease liabilities, please refer to Notes 7.25 and 47.

② Simplified treatment of short-term leases or lease fees for low-value assets

Item Amount for the current period Amount for the previous period Short-term lease expenses and low-value asset lease expenses 681,419.46 595,780.71 ③ Included in the current year’s profit and loss

Unit: Yuan

Item Amount for the current period Amount for the previous period Short-term lease expenses and low-value asset lease expenses 681,419.46

595,780.71

Interest on lease liabilities 207,345.73 9,363.88 ④ Cash flow outflows related to leases

Unit: Yuan

Item Cash flow category Amount for the current period Amount for the previous period

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Cash paid to repay principal and interest on lease liabilities Cash outflows from financing activities

2,808,484.12 872,170.86

Payments made on short-term leases and low-value assets (applicable to

cash outflow from operating activities

689,910.98 617,871.30 Simplified processing)

Total——

3,498,395.10 1,490,042.16

Situations involving sale and leaseback transactions

None

(2) The company as the lessor

Operating lease as lessor

Applicable □Not applicable

Unit: Yuan Including: Variable lease items not included in lease receipts Lease income

Payment related revenue

Special equipment rental income 283,185.84

Total 283,185.84

Finance lease as lessor

□Applicable Not applicable

Undiscounted lease payments for each of the next five years

Applicable □Not applicable

Unit: Yuan Annual undiscounted lease receipts

Project

Ending amount Beginning amount

First year 240,000.00 480,000.00 Second year 480,000.00 480,000.00 Third year 360,000.00 360,000.00 Fourth year 80,000.00 80,000.00 Reconciliation statement between undiscounted lease receipts and net lease investment

(3) Recognizing financial lease sales profits and losses as a manufacturer or distributor

□Applicable Not applicable

Data resources
Others

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

8. R&D expenditures

Unit: Yuan

Item Amount for the current period Amount for the previous period

Employee compensation 21,676,965.12 33,013,697.45 Testing and service fees 4,976,219.78 4,427,860.14 Material and power fees 147,975.54 1,477,803.80 Travel expenses 180,903.32 545,958.44 Depreciation and amortization expenses 4,181,398.01 5,419,533.07 Others 569,033.53 51,764.45 Total 31,732,495.30 44,936,617.35 Of which: expensed R&D expenses 31,732,495.30 44,936,617.35

R&D projects that meet capitalization conditions

Unit: Yuan Increase amount in this period Decrease amount in this period

Item Opening balance Internal development Confirmed as N/A Transferred to current period Closing balance Others

Expenditure tangible assets Profit and loss

total

Significant Capitalized R&D Projects

Estimated economic benefits when capitalization begins Specific projects to begin capitalization R&D progress Estimated completion time

Production method Point entity based on development expenditure impairment provision

Unit: Yuan

Item Opening balance Increase in the current period Decrease in the current period Ending balance Impairment test situation

Important outsourced research projects

The criteria for judging capitalization or expense and the specific way in which economic benefits are expected to be generated based on the name of the project.

According to

Other notes:

9. Changes in consolidation scope

Business merger not under common control

(1) Business mergers not under common control that occurred during the current period

Unit: Yuan

Purchase date to Purchase date to Purchase date to the purchased party Equity acquisition Equity acquisition Equity acquisition Equity acquisition Equity acquisition Purchased at the end of the period Acquired at the end of the period Acquired at the end of the period Purchase date

Name Time Point Cost Proportion Method Determination basis Buyer’s receipt Buyer’s net Buyer’s cash

Income profit cash flow

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Other notes:

(2) Merger costs and goodwill

Unit: Yuan

Combined cost--cash

--Fair value of non-cash assets

--The fair value of debt issued or assumed --The fair value of equity securities issued --The fair value of contingent consideration

--The fair value of the equity held before the purchase date on the purchase date--Others

Total combined costs

Less: The amount by which the goodwill/merger cost of the fair value share of identifiable net assets acquired is less than the fair value share of identifiable net assets acquired

Method for determining the fair value of merger costs:

Description of contingent consideration and its changes

The main reasons for the formation of large amounts of goodwill:

Other notes:

(3) The identifiable assets and liabilities of the purchased party on the purchase date

Unit: Yuan

Fair value on acquisition date Book value assets on acquisition date:

Monetary funds

Accounts receivable

Inventory

fixed assets

intangible assets

Liabilities:

borrow money

Accounts payable

Deferred income tax liability

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

net worth

Less: Minority interests

Net assets acquired

Method for determining the fair value of identifiable assets and liabilities:

Contingent liabilities of the purchased party assumed in a business combination:

Other notes:

(4) Gains or losses arising from the remeasurement of equity held before the purchase date at fair value

Is there any transaction that realizes the business combination step by step through multiple transactions and obtains control during the reporting period?

□Yes No

(5) Relevant explanation that the merger consideration or the fair value of the identifiable assets and liabilities of the acquiree cannot be reasonably determined on the acquisition date or at the end of the current period of merger.

(6) Other instructions

Merger of enterprises under common control

(1) Business mergers under the same control that occurred in the current period

Unit: yuan Consolidated current period Consolidated current period

constitute the same

Business combination from the beginning of the period to the merger period from the beginning to the merger period Comparative period Comparative period Enterprises under the control of the merged party on the merger date

Obtained from Merger Date Merger Date Merger Date Merger Merged Party Name of Merged Party Determination basis for business merger

Equity ratio, merger’s acquisition, merger’s net income, basis of net profit

Other instructions for profit:

(2) Merger cost

Unit: Yuan

Merger costs

--cash

--Book value of non-cash assets

--The book value of debt issued or assumed

--The face value of the equity securities issued

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

--Contingent consideration

Description of contingent consideration and its changes:

Other notes:

(3) Book value of the assets and liabilities of the merged party on the date of merger

Unit: Yuan

Merger date Closing assets of the previous period:

Monetary funds

Accounts receivable

Inventory

fixed assets

intangible assets

Liabilities:

borrow money

Accounts payable

net worth

Less: Minority interests

Net assets acquired

Contingent liabilities of the merged party assumed in a business merger:

Other notes:

Reverse purchase

Basic information of the transaction, the basis for the transaction constituting a reverse purchase, whether the assets and liabilities retained by the listed company constitute a business and their basis, the determination of the merger cost, the amount of equity adjustment when dealing with equity transactions and its calculation:

Disposal of subsidiaries

Is there any transaction or event that resulted in the loss of control of a subsidiary during this period Yes  No

Is there any situation where investments in subsidiaries are disposed of step by step through multiple transactions and control is lost in the current period Yes  No

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Changes in the scope of consolidation due to other reasons

Explain the changes in the scope of consolidation caused by other reasons (such as the establishment of new subsidiaries, liquidation of subsidiaries, etc.) and their related circumstances:

Serial number of the party acquiring the equity, full name of the company, time of establishment, shareholding ratio, registered capital

formula

1 HENGBAO FINTECH LIMITED January 2, 2026 100.00% US$1 million Newly established

Others

10. Interests in other entities

Interests in subsidiaries

(1) Composition of enterprise groups

Unit: Yuan

Shareholding ratio

Subsidiary name Registered capital Main place of business Registration place Nature of business Acquisition method Direct Indirect

Jiangsu Hengbaozhi

350,000,00

Energy System Technology Nanjing, Jiangsu Nanjing, Jiangsu Manufacturing 100.00% Establishment 0.00

Ltd.

Hublot Oriental Number

Non-identical control word technology (North 50,000,000

Beijing Beijing Trading 100.00% Under Business Merger Beijing) Co., Ltd. .00

Obtain Division

Hengbao International has 38,826,303

Singapore Singapore Trading 100.00% Establishment of limited liability company .00 Note 1

Non-identical control Modularsof 1,496,003.

Malaysia Malaysia Trading 100.00% Business combination under Sdn. Bhd 00 Note 2

Get Asia Smart

Cards not under the same control 3,500,000.

Malaysia Malaysia Manufacturing 100.00% Under business combination Centre(M) 00Note 3

Acquired Sdn.Bhd.

Chipstone

22,499,202

Technologi Singapore Singapore Trading 100.00% Establishment.00 Note 4

es Pte.Ltd

Keyfort

100.00 Note 5 Singapore Singapore Trading 100.00% Establishment of Pte.Ltd

Chipstone

800,100.00

Electronic Singapore Singapore Manufacturing 100.00% Establishment Note 6

s Pte Ltd

Rainbow Dash

50,000,000

(Beijing) Branch Beijing Beijing Financial Services 100.00% Establishment.00

Technology Co., Ltd.

Yunyue Technology

10,000,000

(Shanghai) Yes Shanghai Shanghai Financial Services 100.00% Established.00

Ltd.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Hublot (Middle East

15,300,000

Africa) Limited Kenya Kenya Trade 100.00% Establishment

.00 Note 7

Responsible company

PT.Chipsto

4,219,800,

Technologi Indonesia Indonesia Trading 99.00% Establishment

000.00 Note 8

Indonesia

Hainan Province Hengbao

10,000,000 Software and Information Digital Technology Hainan Chengmai Hainan Chengmai 100.00% established

.00 Technical Services Co., Ltd.

Hengbao Internet of Things 50,000,000 software and information

Jiangsu Zhenjiang Jiangsu Zhenjiang 100.00% Establishment of a limited company .00 Technical service industry Hengbao Runxin Number

200,000,00 Technology Promotion Hezi Technology Co., Ltd. Shanghai Shanghai 100.00% established

0.00 Application Services Company

Shanghai Yangmingshou

20,000,000 Software and Information Technology Co., Ltd. Shanghai Shanghai 100.00% established

.00 Technical service companies

Jiangsu Zhenjiang Cloud

Bao Technology Industry 11,000,000 Software and Information

Zhenjiang, Jiangsu Zhenjiang, Jiangsu 100.00% Established and developed a technical service industry Co., Ltd. with .00 shares

HENGBAO

GLOBAL 20,000,000 Software and Information

Hong Kong, China Hong Kong, China 100.00% Establishment of TECHNOLOGI.00 Note 9 Technical Service Industry ES LIMITED

HENGBAO

1,000,000. Software and Information FINTECH Hong Kong, China Hong Kong, China 100.00% Established

00Note 10 Technical service industry LIMITED

Note: Note 1 Currency: USD

Note 2 Currency: Ringgit

Note 3 Currency: Ringgit

Note 4 Currency: USD

Note 5 Currency: USD

Note 6 Currency: Singapore Dollar

Note 7 Currency: Kenyan shilling

Note 8 Currency: Indonesian Rupiah

Note 9 Currency: USD

Note 10 Currency: USD

Explanation on the difference between the proportion of shareholding in subsidiaries and the proportion of voting rights:

Basis for holding half or less of the voting rights but still controlling the invested unit, and holding more than half of the voting rights but not controlling the invested unit:

For important structured entities included in the scope of consolidation, the basis for control is:

Basis for determining whether a company is agent or principal:

Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Important non-wholly owned subsidiaries

Unit: Yuan Attributed to minority shareholders in the current period Announcement to minority shareholders in this period Remaining equity of minority shareholders at the end of the period Name of the company Shareholding ratio of minority shareholders

Profit and loss Amount of dividends distributed

Explanation on the difference between the shareholding ratio of minority shareholders of subsidiaries and the voting rights ratio:

Other notes:

(3) Main financial information of important non-wholly owned subsidiaries

Unit: Yuan Ending balance Beginning balance

Zigong

non-flow non-flow non-flow non-flow

Company name Current assets Current liabilities Current assets Current liabilities Liquid capital Current liabilities Liquid capital Liquid liabilities

Total Assets Liabilities Total Assets Total Liabilities Total Assets Debt Assets Debt

Unit: Yuan Amount of current period Amount of previous period

Subsidiary name

Comprehensive Income Operating Activities Comprehensive Income Operating Activities Operating Income Net Profit Operating Income Net Profit

Total Cash Flow Total Cash Flow Other instructions:

(4) Significant restrictions on the use of enterprise group assets and repayment of enterprise group debts

(5) Financial support or other support provided to structured entities included in the scope of consolidated financial statements

Other notes:

Transactions in which the owner’s equity share in the subsidiary changes and the subsidiary still controls the subsidiary

(1) Description of changes in owner’s equity shares of subsidiaries

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) The impact of the transaction on minority shareholders’ equity and owner’s equity attributable to the parent company

Unit: Yuan

Purchase cost/disposal consideration

--cash

--Fair value of non-cash assets

Total purchase cost/disposal consideration

Less: Share of net assets of subsidiaries calculated based on the proportion of equity acquired/disposed of

difference

Including: Adjustment of capital reserve

Adjust the surplus reserve

Adjust undistributed profits

Other instructions

Interests in joint ventures or associated enterprises

(1) Important joint ventures or associates

Shareholding ratio Investment in joint ventures or joint ventures or associates Main place of business Registration place Nature of business

Name of operating enterprise Direct indirect accounting treatment method

Shanghai Hengyu Investment

Center (Limited Partnership Shanghai Shanghai Investment 39.40% Equity Partner)

Explanation on the difference between the proportion of shareholdings in joint ventures or associates and the proportion of voting rights:

Basis for holding less than 20% of the voting rights but having significant influence, or holding 20% or more of the voting rights but not having significant influence:

(2) Main financial information of important joint ventures

Unit: Yuan Closing balance/amount of the current period Opening balance/amount of the previous period

current assets

Of which: cash and cash equivalents

non-current assets

Total assets

current liabilities

non-current liabilities

Total liabilities

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

minority interests

Equity attributable to shareholders of the parent company

Share of net assets calculated based on shareholding ratio

Adjustments

--Goodwill

--Unrealized profits from internal transactions

--Others

Book value of equity investments in joint ventures

There are publicly quoted equity investments in joint ventures

fair value

operating income

financial charges

income tax expense

net profit

Net profit from discontinued operations

other comprehensive income

Total comprehensive income

Dividends received from joint ventures during the year

Other instructions

(3) Main financial information of important associates

Unit: Yuan Closing balance/amount of the current period Opening balance/amount of the previous period

Shanghai Hengyu Investment Center (Limited Partnership) Shanghai Hengyu Investment Center (Limited Partnership) Current assets 12,075,394.85 29,849,446.74 Non-current assets 215,646,834.45 224,331,174.45 Total assets 227,722,229.30 254,180,621.19 Current liabilities 2,000,000.00 2,000,000.00 Non-current liabilities

Total liabilities 2,000,000.00 2,000,000.00

minority interests

Equity attributable to shareholders of the parent company 225,722,229.30 252,180,621.19 Share of net assets calculated based on shareholding ratio 81,919,456.36 92,307,941.49 Adjustment matters

--Goodwill

--Unrealized profits from internal transactions

--Others

Book value of equity investments in associates 69,937,350.61 79,528,055.58 Equity investments in associates with publicly quoted prices

fair value

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

operating income

Net profit -458,391.89 -20,676.32Net profit from discontinued operations

other comprehensive income

Total comprehensive income -458,391.89 -20,676.32

Dividends received from associates during the year

Other instructions

(4) Summary financial information of unimportant joint ventures and associates

Unit: Yuan

Ending balance/Amount incurred in the current period Opening balance/Amount incurred in the previous period Joint ventures:

The total of the following items calculated based on shareholding ratio

Associates:

The total of the following items calculated based on shareholding ratio

Other instructions

(5) Explanation of significant restrictions on the ability of joint ventures or associates to transfer funds to the company

(6) Excess losses incurred by joint ventures or associates

Unit: Yuan

Unrecognized losses in the current period (or

Name of joint venture or associated enterprise Accumulated unrecognized losses in previous periods Accumulated unrecognized losses at the end of the period

shared net profit)

Other instructions

(7) Unconfirmed commitments related to investment in joint ventures

(8) Contingent liabilities related to investments in joint ventures or associates

Important joint operations

Joint business name Main place of business Registration place Nature of business Shareholding ratio/share enjoyed

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Explanation on whether the direct or indirect shareholding ratio or share in a joint operation is different from the voting right ratio:

If the joint operation is a separate entity, the basis for classifying it as a joint operation is:

Other instructions

Equity in structured entities not included in the scope of consolidated financial statements

Relevant instructions for structured entities not included in the scope of consolidated financial statements:

Others

11. Government subsidies

Government subsidies recognized according to the amount receivable at the end of the reporting period

□Applicable Not applicable

Reasons for failure to receive the estimated amount of government subsidy at the estimated time

□Applicable Not applicable

Liability items involving government subsidies

Applicable □Not applicable

Unit: Yuan Included in the current period

New additions in this period are transferred to other changes and assets/receipts in this period. Beginning balance of the period. Non-professional income. Ending balance of the period.

Amount of subsidy Amount of other income Motivation Amount of beneficiary

1,181,317.

Deferred income 211,994.91 969,322.85 Deferred income related to assets 684,000.00 42,750.00 641,250.00 Related to income

1,181,317. 1,610,572.

Total 684,000.00 254,744.91

76 85

Government subsidies included in current profits and losses

Applicable □Not applicable

Unit: Yuan

Accounting accounts Amount for the current period Amount for the previous period Other income 326,348.13 798,447.71Total 326,348.13 798,447.71Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

12. Risks related to financial instruments

Various risks arising from financial instruments

The company faces various financial risks during its operations: market risk, credit risk and liquidity risk.

The basic strategy of a company's risk management is to identify and analyze the various risks faced, establish an appropriate risk tolerance bottom line and conduct risk management, and supervise various risks in a timely and reliable manner to control risks within a limited range.

(1) Market risk

①Exchange rate risk

The exchange rate risk faced by the company mainly comes from the assets and liabilities denominated in foreign currencies of the company's overseas subsidiaries and the company's procurement and sales business conducted in foreign currencies. The company's other main business activities are denominated and settled in RMB. As of June 30, 2026, except for the foreign currency balances of assets and liabilities mentioned in Note 7.81 of this report, the company's other assets and liabilities are all RMB balances. The exchange rate risk arising from the above-mentioned assets and liabilities with foreign currency balances may have an impact on the company's operating results.

②Interest rate risk

The company's interest rate risk arises from interest-bearing debt such as bank borrowings. Fixed-rate financial liabilities expose the Company to fair value interest rate risk.

③Other price risks

For investments in other financial assets held by the company, management believes that the market price risks faced by these investment activities are acceptable.

Other financial asset investments held by the company are listed below:

Item Closing Amount Balance at the end of the previous year

Trading financial assets 732,626,119.04 857,920,795.14 Other equity instrument investments 3,000,000.00 3,000,000.00 Total 735,626,119.04 860,920,795.14 (2) Credit risk

The company manages credit risks by portfolio classification. Credit risk mainly arises from bank deposits, accounts receivable, other receivables and notes receivable.

The company's bank deposits are mainly deposited in state-owned banks and other banks with higher credit ratings. The company believes that there are no significant credit risks and will not cause any major losses due to defaults by counterparties.

For accounts receivable, other receivables and notes receivable, the company sets relevant policies to control credit risk exposure. The company evaluates the customer's credit qualifications and sets corresponding credit periods based on the customer's financial status, the possibility of obtaining guarantees from third parties, credit records and other factors such as current market conditions. Customer credit records are regularly monitored. For customers with poor credit records, the company will use written reminders, shorten the credit period or cancel the credit period to ensure that the company's overall credit risk is within a controllable range. In addition, the company reviews the recovery status of each individual receivable on each balance sheet date to ensure that sufficient bad debt provisions are made for unrecoverable amounts. Therefore, the company's management believes that the credit risk assumed has been significantly reduced.

(3) Liquidity risk

Liquidity risk is the risk that a company will be unable to meet its financial obligations on due dates. The company's approach to managing liquidity risk is to ensure that there is sufficient liquidity to meet maturing obligations without causing unacceptable losses or damage to corporate reputation. The company regularly analyzes the structure and maturity of its liabilities to ensure sufficient funds. Company management monitors the use of bank borrowings and ensures compliance with borrowing agreements. At the same time, we conduct financing negotiations with financial institutions to maintain a certain credit limit and reduce liquidity risks.

Financial liabilities are classified by remaining maturity:

Item Closing balance

Item name Book value Undiscounted contract amount Within 1 year 1-2 years 2-3 years Notes payable over 3 years 18,647,163.73 18,647,163.73 18,647,163.73

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Item Closing balance

Item name Book value Undiscounted contract amount Within 1 year 1-2 years 2-3 years More than 3 years

Accounts payable

127,912,088.93 127,912,088.93 121,446,968.23 164,644.38 2,219,796.71 4,080,679.61

Other should

2,983,199.97 2,983,199.97 1,054,736.96 728,714.85 357,903.91 841,844.25Payment

within one year

due

2,960,712.32 2,960,712.32 2,960,712.32

illiquid

Liabilities

Total 152,503,164.95 152,503,164.95 144,109,581.24 893,359.23 2,577,700.62 4,922,523.86 (continued)

Item Last year's end balance

Name Book value Undiscounted contract amount Within 1 year 1-2 years 2-3 years Notes payable over 3 years 43,219,330.50 43,219,330.50 43,219,330.50

Accounts payable 118,826,120.32 118,826,120.32 112,667,146.90 2,060,436.07 2,169,768.86 1,928,768.49 Other payables 5,102,680.93 5,102,680.93 3,048,289.48 737,798.06 358,924.01 957,669.38 Due within one year

Non-current negative 3,176,382.69 3,176,382.69 3,176,382.69

debt

Total 170,324,514.44 170,324,514.44 162,111,149.57 2,798,234.13 2,528,692.87 2,886,437.87

Hedging

(1) The company carries out hedging business for risk management

□Applicable Not applicable

(2) The company carries out qualified hedging business and applies hedging accounting

Unit: Yuan Confirmed hedged items

The effectiveness of the hedge and the absence of a hedge are included in the hedged item and the carrying value of the hedge. Hedge accounting has a negative impact on the company's financial items.

Related book value of period instruments Partial source of cumulative fair effect of hedged items Hedging adjustment related to impact on financial statements

Hedging risk type

Hedging category

Other instructions

(3) The company carries out hedging business for risk management and expects to achieve risk management objectives but does not apply hedging accounting

□Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Financial assets

(1) Classification of transfer methods

□Applicable Not applicable

(2) Financial assets derecognized due to transfer

□Applicable Not applicable

(3) Asset transfer financial assets that continue to be involved

□Applicable Not applicable

Other instructions

13. Disclosure of fair value

Closing fair value of assets and liabilities measured at fair value

Unit: Yuan Ending Fair Value

Item Level 1 fair value measurement Second level fair value measurement Third level fair value measurement

total

quantity quantity quantity

1. Sustained fair value

Measurement

(1) Trading finance

732,626,119.04 732,626,119.04 produced

Measured at fair value and

The changes are included in the current profit and loss 732,626,119.04 732,626,119.04 financial assets

Including: financial products 732,626,119.04 732,626,119.04

(3) Other equity instruments

3,000,000.00 3,000,000.00 Investment

Measured at fair value on an ongoing basis

Total assets of 732,626,119.04 3,000,000.00 735,626,119.04

2. Non-sustainable fair price

value measurement

Basis for determining the market price of continuous and non-continuous first-level fair value measurement items

None

Continuous and non-continuous second-level fair value measurement items, valuation techniques used and qualitative and quantitative information on important parameters

(1) The fair value of bank financial products and securities investments held by the company is determined based on the principal plus the expected income as of the balance sheet date;

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) For the bank acceptance bills held, the remaining period is short and they are expected to be sold by endorsement, so the face value is used to determine their fair value.

Continuous and non-continuous third-level fair value measurement projects, valuation techniques used and qualitative and quantitative information on important parameters

The Company uses valuation techniques to determine fair value for financial instruments that are not traded in an active market. Since the operating environment, operating conditions and financial status of the invested enterprise Jiangdan Yang Rural Commercial Bank Co., Ltd. have not changed significantly, the company measures the investment cost as a reasonable estimate of fair value.

Continuous third-level fair value measurement items, reconciliation information between the opening and closing book values and sensitivity analysis of unobservable parameters
For ongoing fair value measurement items, if there is a conversion between various levels during the current period, the reasons for the conversion and the policy for determining the time of conversion
Valuation technology changes that occurred during the current period and reasons for the changes
Fair value of financial assets and financial liabilities not measured at fair value
Others

14. Related parties and related transactions

Information about the parent company of this enterprise

Parent company to this enterprise Parent company to this enterprise Parent company name Place of registration Nature of business Registered capital

The proportion of shareholding and the proportion of voting rights. Explanation of the parent company of the enterprise.

The ultimate controller of this enterprise is Qian Jing.

Other notes:

As of June 30, 2026, Mr. Qian Jing's shareholding ratio and voting rights ratio in the company are both 17.95%.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Information about the company’s subsidiaries

For details of the company's subsidiaries, please refer to Note "10. Equity in Other Entities-1".

Information on joint ventures and associated enterprises of the enterprise

For details of the company's important joint ventures or associates, please refer to Note "10. Interests in Other Entities-3".

The situation of other joint ventures or associates that have related party transactions with the company in the current period, or related party transactions with the company in previous periods that resulted in balances is as follows:

Name of joint venture or associated enterprise Relationship with this enterprise

Other instructions

Other related parties

Names of other related parties Relationship between other related parties and the company

Other instructions

Related transactions

(1) Related transactions related to the purchase and sale of goods, provision and receipt of services

Procurement of goods/service acceptance form

Unit: Yuan Whether it exceeds the transaction amount

Related parties Related party transaction content Amount incurred in the current period Approved transaction quota Amount incurred in the previous period

List of goods sold/services provided

Unit: Yuan Related party Contents of related transactions Amount incurred in the current period Amount incurred in the previous period

Description of related transactions for purchasing and selling goods, providing and receiving services

(2) Related entrusted management/contracting and entrusted management/outsourcing situation

The company's entrusted management/contracting status table:

Unit: yuan trusteeship income/contract entrusted party/contractor confirmed in the current period trustee/contractor entrusted/contracting capital entrusted/contracted from entrusted/contracted end

Package revenue pricing is based on managed revenue/contractor name party name product type start date end date

According to the income-related custody/contracting situation

The company’s entrusted management/outsourcing status table:

Unit: Full text of 2026 semi-annual report of Yuanhengbao Co., Ltd.

Entrusting party/outsourcing Entrusted party/contracting Entrusting/outsourcing capital Starting from entrusting/outsourcing End of entrusting/outsourcing Escrow fee/outsourcing Name of the entruster confirmed in this period Name of the contractor Product type Start date End date Fee pricing basis Management fee/outsourcing fee related management/outsourcing situation description

(3) Related leasing situation

As a lessor, our company:

Unit: Yuan Name of the lessee Type of leased assets Lease income recognized in the current period Lease income recognized in the previous period The company, as the lessee:

Unit: Yuan Short-term simplified treatment not included in lease liabilities

Leases and low-value assets Variable leases measured Lease liabilities assumed Increased rent paid for right-of-use assets

Lessor Lease asset Rental payment (if appropriate) Interest expense Asset

Name Product Category Use (if applicable)

Issued in this period Issued in the previous period Issued in this period Issued in the previous period Issued in this period Issued in the previous period Issued in this period Issued in the previous period Issued in this period

(4) Related guarantees

The company acts as a guarantor

Unit: Yuan guarantee has been fulfilled by the guaranteed party. Guarantee amount. Guarantee start date. Guarantee expiry date.

Complete

The company as the guaranteed party

Unit: Yuan guarantee has been fulfilled by the guarantor. Guarantee amount. Guarantee starting date. Guarantee expiry date.

Complete

Description of related guarantees

(5) Fund lending from related parties

Unit: Yuan Related Party Lending Amount Start Date Maturity Date Description

dismantle

take out

Full text of the 2026 semi-annual report of Hengbao Co., Ltd. (6) Asset transfer and debt restructuring of related parties

Unit: Yuan Related party Contents of related transactions Amount incurred in the current period Amount incurred in the previous period

(7) Remuneration of key management personnel

Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period

Remuneration of key management personnel 1,460,288.50 2,680,497.00 (8) Other related transactions

Accounts receivable and payable from related parties

(1) Items receivable

Unit: Yuan Ending balance Beginning balance

Project name Related parties

Book balance Bad debt provision Book balance Bad debt provision (2) Payable items

Unit: yuan Project name Related party Book balance at the end of the period Book balance at the beginning of the period

Related party commitments
Others

15. Share-based payment

Overall situation of share-based payment

Applicable □Not applicable

Unit: Yuan Grant object Granted in this period Exercise in this period Unlocked in this period Expired in this period

Category Quantity Amount Quantity Amount Quantity Amount Quantity Amount Manager 11,000.00 46,420.00

Total 11,000.00 46,420.00

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Stock options or other equity instruments outstanding at the end of the period

Applicable □Not applicable

Stock options outstanding at the end of the period Other equity instruments outstanding at the end of the period Grant object categories

Range of exercise price Remaining term of the contract Range of exercise price The first authorization registration time of the remaining term of the contract is

April 15, 2021

Validity period starts from the beginning of the stock option

Date of completion of sub-authorization registration

From 4.22 onwards to the incentive objects awarded by management personnel

The stock options are fully exercised or

Until the date of cancellation, the longest

exceed

60 months.

Other instructions

(1) The third exercise period for the reserved grant portion of the 2021 stock option incentive plan

Equity-settled share-based payment

Applicable □Not applicable

Unit: Yuan Determination method of fair value of equity instruments on grant date Black-Sceholes option pricing model

Important parameters for the fair value of equity instruments on the grant date: underlying stock price, validity period, historical volatility, risk-free interest rate, dividend rate

On each balance sheet date of the waiting period, the estimated vesting is revised based on the latest changes in the number of vested equity instruments, completion of performance indicators and other follow-up information.

number of stock options.

Reasons for significant differences between the current period’s estimate and the previous period’s estimate None

The cumulative amount of equity-settled share-based payments included in capital reserves 0.00 Total expenses recognized for equity-settled share-based payments in the current period 0.00 Other notes

Share-based payment settled in cash

□Applicable Not applicable

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Share-based payment expenses for this period

□Applicable Not applicable

Modification and termination of share-based payment
Others

16. Commitments and contingencies

Important commitments

Important commitments existing at the balance sheet date

(1) Unsettled letter of guarantee

At the end of the reporting period, the amount of bank guarantees issued but not yet settled by the company domestically was RMB 2,009,578.00, and the corresponding deposit amount was RMB 2,009,578.00; the amount of bank guarantees issued but not yet settled overseas was USD 650,000.00, and the corresponding deposit amount was USD 650,000.00. (2) Credit limit and usage

The company pledged its real estate located in Hengtang Industrial Park and Dongmachang, Yunyang Town, Yunyang Town, Danyang City as collateral and deposit, and obtained a credit line of RMB 300 million from the Danyang Branch of Bank of China Co., Ltd. As of the end of the period, the original book value of the above-mentioned collateral was RMB 128,954,515.72, and the book value was RMB 41,012,335.71. Credit lines are used for issuing letters of credit, letters of guarantee and borrowings. At the end of the reporting period, the credit line has been used in RMB

18,657,349.59 yuan.

The company used its credit to obtain a credit line of RMB 30 million from the Danyang Branch of Agricultural Bank of China Co., Ltd. Credit lines are used for issuing letters of credit, letters of guarantee and borrowings. At the end of the reporting period, the credit limit of RMB 400,000.00 had been used.

Contingent matters

(1) Important contingencies existing on the balance sheet date

On December 14, 2023, the company received the "Administrative Penalty Decision" ([2023] No. 147) issued by the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"). Due to the company's liability for securities misrepresentation, the company received two investor lawsuit materials from the Nanjing Intermediate People's Court. The total subject amount of the two cases was approximately 116,400 yuan. As of the disclosure date of this report, the plaintiff in the aforementioned case has withdrawn the lawsuit.

Full text of the 2026 semi-annual report of Hengbao Co., Ltd. (2) The company has no important contingencies that need to be disclosed, and they should also be explained.

The company has no important contingencies that need to be disclosed.

Others

17. Events after the balance sheet date

Important non-adjustment matters

Unit: Yuan Impact on financial condition and results of operations

Item Contents Reasons why the impact cannot be estimated

number of rings

Profit distribution

The number of dividends to be distributed per 10 shares (yuan) 0.00 The number of dividend shares to be distributed per 10 shares (shares) 0.00 The number of dividend shares to be distributed per 10 shares (shares) 0.00 The number of dividends to be distributed per 10 shares (yuan) after review and approval 0.00 The number of dividend shares (shares) per 10 shares to be distributed after review and approval 0.00 The number of dividends to be distributed per 10 shares (shares) 0.00 profit distribution plan not applicable

Sales return
Description of other post-balance sheet events

On July 28, 2026, the wholly-owned subsidiary Hengbao (Middle East and Africa) Co., Ltd. completed its deregistration.

18. Other important matters

Correction of accounting errors in the previous period

(1) Retrospective restatement method

Unit: Yuan Report for each affected comparison period

Contents of accounting error correction Processing procedures Cumulative impact number

Project name

Full text of 2026 Semi-annual Report of Hengbao Co., Ltd. (2) Future Applicable Law

Contents of correction of accounting errors Approval process Reasons for adopting prospective application method

Debt restructuring
Asset replacement

(1) Non-monetary asset exchange

(2) Other asset swaps

Annuity plan
Termination of operations

Unit: Yuan

Items Attributable to Parent Revenue Expenses Total Profit Income Tax Expense Net Profit Termination of Owner

Other explanations of operating profit

Branch information

(1) Determination basis and accounting policies of reporting segments

According to "Accounting Standards for Business Enterprises No. 35 - Segment Reporting", enterprises should distinguish between business segments and regional segments when disclosing segment information. The segment information in this report is determined by product category.

(2) Financial information of reporting segments

Unit: yuan item Card making module module ticket type other business inter-segment offset Total 161,830,151. 120,558,494. 289,081,144. Operating income 5,319,059.87 1,373,438.96

08 58 49 128,807,464. 103,198,500. 234,397,014. Operating costs 2,223,550.24 167,499.47

66 02 39

Full text of the 2026 Semi-annual Report of Hengbao Co., Ltd. (3) If the company has no reporting segments, or cannot disclose the total assets and total liabilities of each reporting segment, the reasons should be explained

(4) Other instructions

Other important transactions and matters that have an impact on investors’ decision-making
Others

The company held the fifth meeting of the eighth board of directors and the fourth meeting of the eighth board of supervisors on August 27, 2024, and reviewed and approved the "Proposal on Capital Reduction of Wholly-Owned Subsidiaries". The company plans to reduce the registered capital of the company's wholly-owned subsidiaries Hengbao Runxin Digital Technology Co., Ltd. (hereinafter referred to as "Hengbao Runxin") and Yunbao Financial Services (Beijing) Technology Co., Ltd. (hereinafter referred to as "Yinbao Financial Services"). The specific details are as follows:

Unit: RMB 10,000 Company name Registered capital Reduced registered capital Post-reduced registered capital Hengbao Runxin 20,000.00 5,882.50 14,117.50

Rainbow Financial Services 5,000.00 1,994.00 3,006.00

As of the reporting date, the capital reduction of the above-mentioned companies has not yet been completed.

19. Notes on main items of the parent company’s financial statements

Accounts receivable

(1) Disclosure based on aging

Unit: Yuan

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 258,454,443.79 191,017,011.30 1 to 2 years 3,991,312.21 3,039,530.67 2 to 3 years 602,683.16 1,125,238.06 More than 3 years 1,011,848.90 629,615.89

3 to 4 years 1,011,848.90 629,615.89 Total 264,060,288.06 195,811,395.92

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Classified disclosure according to bad debt accrual method

Unit: Yuan Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

its

Medium:

by combination

bad provision

264,060 4,309,0 259,751 195,811 3,717,9 192,093Account provision 100.00% 1.63% 100.00% 1.90%

,288.06 98.82 ,189.24 ,395.92 92.52 ,403.40 receivables

Accounts

its

Medium:

Industry category

model and passenger

123,534 4,309,0 119,225 115,300 3,717,9 111,582 households credit 46.78% 3.49% 58.88% 3.22%

,888.45 98.82 ,789.63 ,181.20 92.52 ,188.68 level group

combine

Accounts receivable

And range 140,525 140,525 80,511, 80,511,

53.22% 41.12%

Internal company ,399.61 ,399.61 214.72 214.72 amount

264,060 4,309,0 259,751 195,811 3,717,9 192,093Total 100.00% 1.63% 100.00% 1.90%

,288.06 98.82 ,189.24 ,395.92 92.52 ,403.40 Category name of bad debt provisions accrued by combination:

Unit: Yuan

Ending balance

Name

Book balance Bad debt provision Provision ratio

Financial card customer I 30,196,393.64 1,878,662.11 6.22% Financial card customer II 13,129,492.65 828,948.44 6.31% Communication card customer I 33,387,442.47 594,517.71 1.78% Module packaging customer 29,899,007.22 298,990.07 1.00% Others 16,922,552.47 707,980.49 4.18% Total 123,534,888.45 4,309,098.82

Description of what this combination is based on:

If bad debt provisions for accounts receivable are made according to the general expected credit loss model:

□Applicable Not applicable

(3) Bad debt provisions accrued, recovered or reversed in the current period

Bad debt provisions for the current period:

Unit: Yuan

Amount of changes in the current period

Category Beginning Balance Ending Balance

Provision Recovery or transfer Write-off Others

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Bad provision based on combination

Accounts receivable for account preparation 3,717,992.52 591,106.30 4,309,098.82 Accounts

Total 3,717,992.52 591,106.30 4,309,098.82 Among them, the amount of bad debt provision recovery or reversal in the current period is important:

sex

(4) Accounts receivable actually written off in the current period

Unit: Yuan

Item Write-off Amount

Important write-offs of accounts receivable:

Unit: Yuan Whether the amount is paid by the name of the related unit Nature of accounts receivable Write-off amount Reason for write-off Performed write-off procedures

Instructions for writing off accounts receivable arising from transactions:

(5) Accounts receivable and contract assets with the top five closing balances collected by debtors

Unit: Yuan accounts receivable and combined accounts receivable, bad debts, quasi-accounts receivable, ending balance, contract assets, ending balance, accounts receivable and contracts

Unit name Closing balance of same assets Provision and contract asset reduction amount Closing balance of assets

Proportion of total number No. 1 in the closing balance of value preparation 95,861,190.47 95,861,190.47 36.30%

Second place 41,993,309.80 41,993,309.80 15.90%

Third place 35,836,472.26 35,836,472.26 13.57% 358,364.72 Fourth place 26,973,703.77 26,973,703.77 10.22% 269,737.04 Fifth place 6,952,459.39 6,952,459.39 2.63% 69,524.59 Total 207,617,135.69 207,617,135.69 78.62% 697,626.35

Other receivables

Unit: Yuan

Item Ending balance Beginning balance

Other receivables 70,680,831.53 71,016,954.01 Total 70,680,831.53 71,016,954.01 Full text of Hengbao Co., Ltd.’s 2026 Semi-annual Report

(1) Interest receivable

Classification of interest receivable

Unit: Yuan Item Ending balance Beginning balance

Important overdue interest

Unit: Yuan Whether impairment occurs and the borrowing unit is judged. Ending balance Overdue time Reason for overdue

Judgment basis

Other notes:

Classified disclosure according to bad debt accrual method

□Applicable Not applicable

Bad debt provisions accrued, recovered or reversed in the current period

Unit: Yuan Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Other changes

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

Other notes:

Interest receivable actually written off in the current period

Unit: yuan item write-off amount

Among them, the important write-off of interest receivable

Unit: Whether the yuan amount is paid by the name of the related unit, nature of the amount, write-off amount, write-off reason, write-off procedures performed

transaction generated

Write-off instructions:

Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(2) Dividends receivable

Classification of dividends receivable

Unit: yuan project (or invested unit) Ending balance Beginning balance

Important dividends receivable aged more than 1 year

Unit: Yuan Whether impairment occurs and the judgment item (or invested unit) Closing balance Aging Reason for non-recovery

Judgment basis

Classified disclosure according to bad debt accrual method

□Applicable Not applicable

Bad debt provisions accrued, recovered or reversed in the current period

Unit: Yuan Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Other changes

Among them, the amount of recovery or reversal of bad debt provisions for the current period is important:

Other notes:

Dividends receivable actually written off in the current period

Unit: yuan item write-off amount

Among them, the important write-off of dividends receivable

Unit: Whether the yuan amount is paid by the name of the related unit, nature of the amount, write-off amount, write-off reason, write-off procedures performed

transaction generated

Write-off instructions:

Other notes:

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

(3) Other receivables

Classification of other receivables according to nature of payment

Unit: Yuan

Nature of payment Book balance at the end of the period Book balance at the beginning of the period

Current accounts within the scope of consolidation 17,767,415.57 16,700,000.00 Deposits and guarantees 55,290,352.25 55,319,103.91 Advances and reserves 179,812.70 1,427,478.56 Total 73,237,580.52 73,446,582.47

Disclosure based on aging

Unit: Yuan

Aging Book balance at the end of the period Book balance at the beginning of the period

Within 1 year (including 1 year) 14,042,996.62 11,152,126.27 1 to 2 years 7,179,516.30 10,183,598.00 2 to 3 years 217,040.00 208,500.00 More than 3 years 51,798,027.60 51,902,358.20

3 to 4 years 51,798,027.60 51,902,358.20 Total 73,237,580.52 73,446,582.47

Classified disclosure according to bad debt accrual method

Unit: Yuan Ending balance Beginning balance

Book balance Provision for bad debts Book balance Provision for bad debts

Category Book price Book price provision ratio Provision ratio

Amount Ratio Amount Value Amount Ratio Amount Value Example

its

Medium:

its

Medium:

Provision for bad debts is made based on the general expected credit loss model:

Unit: Yuan Phase 1 Phase 2 Phase 3

Expected credit throughout the lifetime Credit expected throughout the lifetime

Provision for bad debts Expected credit in the next 12 months Total

Loss (no credit deduction has occurred Loss (credit deduction has occurred)

loss

value) value)

Balance on January 1, 2026 527,270.26 1,902,358.20 2,429,628.46 Balance on January 1, 2026

In this issue

Provision in this period 231,451.13 231,451.13 Transfer in this period 104,330.60 104,330.60 Remainder on June 30, 2026

758,721.39 1,798,027.60 2,556,748.99

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Basis for division of each stage and provision ratio for bad debts

Changes in book balances with significant changes in loss provision during the period

□Applicable Not applicable

Bad debt provisions accrued, recovered or reversed in the current period

Bad debt provisions for the current period:

Unit: Yuan Amount of changes in the current period

Category Opening balance Ending balance Provision Recovery or reversal Write-off or write-off Others

Other receivables are bad

2,429,628.46 231,451.13 104,330.60 2,556,748.99Account preparation

Total 2,429,628.46 231,451.13 104,330.60 2,556,748.99

Among them, the amount of bad debt provision for the current period that is reversed or recovered is important:

Unit: Yuan Determine the name of the original bad debt provision accrual unit, the reversal or recovery amount, the reason for the reversal, the recovery method, the basis for the ratio and its rationality

Other receivables actually written off in the current period

Unit: yuan item write-off amount

Important write-offs of other receivables:

Unit: Whether the Yuan amount is paid by the related unit. Nature of other receivables. Write-off amount. Reason for write-off. Write-off procedures performed.

transaction generated

Instructions for writing off other receivables:

Other receivables with the top five closing balances based on debtors

Unit: Yuan accounted for other receivable period

Name of the unit with the ending balance of bad debt provision Nature of the payment Ending balance Aging Total ending balance

Proportion

First Place Margin 30,000,000.00 More than 3 years 40.96%

Second place Margin 20,000,000.00 More than 3 years 27.31%

Within 1 year

11,500,000.00,

Third place Related party transactions 16,967,415.57 23.17%

1-2 years

5,467,415.57

Fourth place Related party transactions 800,000.00 Within 1 year 1.09%

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Fifth place Margin 777,600.00 More than 3 years 1.06% 777,600.00 Total 68,545,015.57 93.59% 777,600.00

Presented in other receivables due to centralized management of funds

Unit: Yuan

Other notes:

Long-term equity investment

Unit: Yuan

Ending balance Beginning balance

Project

Book balance Impairment provision Book value Book balance Impairment provision Book value

858,708,142. 11,137,414.6 847,570,727. 857,067,797. 11,137,414.6 845,930,383. Investment in subsidiaries

34 7 67 86 7 19 pairs of associates and joint ventures 69,937,350.6 69,937,350.6 79,528,055.5 79,528,055.5 Enterprise investment 1 1 8 8

928,645,492. 11,137,414.6 917,508,078. 936,595,853. 11,137,414.6 925,458,438.Total

95 7 28 44 7 77

(1) Investment in subsidiaries

Unit: Yuan

Balance at the beginning of the period Increase or decrease during the period Balance at the end of the period

Invested entity Impairment provision Impairment provision (book price Impairment provision (book price

Position Opening balance Additional investment Decrease investment Others Closing balance

value) prepare value)

Jiangsu Hengbao

Intelligent system 348,747,4 348,747,4

Technology limited 05.40 05.40

company

Hublot Oriental

Digital Technology 14,862,58 11,137,41 14,862,58 11,137,41 (Beijing) 5.33 4.67 5.33 4.67 Co., Ltd.

Hengbao International

278,109,2 278,109,2

limited liability

20.00 20.00

company

Rainbow Dash

(Beijing) 30,060,00 30,060,00

Technology Limited 0.00 0.00

company

Hengbao(Chinese)

East Africa) 1,033,620 1,033,620

Limited Liability .00 .00

company

Hengbao Runxin

141,175,0 141,175,0

digital technology

00.00 00.00

Ltd.

Shanghai Yangming

20,000,00 20,000,00

Shouren Technology

0.00 0.00

Ltd.

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Zhenjiang, Jiangsu

Yunbao Technology

11,942,55 1,640,344 13,582,89Industrial development

2.46 .48 6.94 Co., Ltd.

company

845,930,3 11,137,41 1,640,344 847,570,7 11,137,41Total

83.19 4.67 .48 27.67 4.67

(2) Investment in associates and joint ventures

Unit: Yuan

Increases and decreases in the current period

Beginning of period Equity declaration End of period

Impairment Impairment Balance Other Disbursement Balance Investment Provision Other Disbursement Provision (Account Addition Decrease Confirmation Comprehensive Cash (Billing Unit Beginning Equity Impairment Others Ending Face Price Investment Income from Investment Dividend Face Price

Balance Change Provision Balance Value) Capital Loss Adjustment or Profit Value)

profit

1. Joint ventures

2. Joint ventures

Shanghai

Heng Yu

Investment 79,52 9,446 - 69,93 Center 8,055 ,219. 144,4 7,350 (with .58 85 85.12 .61 limited

Guy)

79,52 9,446 - 69,93 Subtotal 8,055 ,219. 144,4 7,350

.58 85 85.12 .61 79,52 9,446 - 69,93Total 8,055 ,219. 144,4 7,350

.58 85 85.12 .61 The recoverable amount is determined as the net amount after fair value minus disposal costs.

□Applicable Not applicable

The recoverable amount is determined based on the present value of expected future cash flows.

□Applicable Not applicable

Reasons for the obvious inconsistency between the aforementioned information and the information used in impairment testing in previous years or external information

Reasons for the discrepancy between the information used in the company's impairment testing in previous years and the actual situation of that year.

(3) Other instructions

Operating income and operating costs

Unit: Yuan

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Amount for the current period Amount for the previous period

Project

Revenue Cost Revenue Cost Main business 265,477,462.25 228,793,050.39 406,972,152.94 295,697,488.31 Other business 1,897,394.44 1,613,051.33 467,169.40 658,836.13 Total 267,374,856.69 230,406,101.72 407,439,322.34 296,356,324.44 Decomposition information of operating income and operating costs:

Unit: Yuan

Division 1 Division 2 Total Contract Classification

Operating income Operating cost Operating income Operating cost Operating income Operating cost Operating income Operating cost Business type

Among them:

According to place of business

Distinguish classification

Among them:

market or customer

Household type

Among them:

Contract type

Among them:

Transfer by product

give time

Classification

Among them:

According to contract period

Limited classification

Among them:

According to sales channel

Road classification

Among them:

total

Information related to performance obligations:

The company's pre-payments, the company's performance obligations, and the important payment terms. The company's commitment to transfer is the main responsibility.

The item will be refunded to the customer during the period. The type and time of the quantity guarantee. The nature of the goods. Anyone.

Account’s money and other explanations of related obligations

Information related to the transaction price allocated to the remaining performance obligations:

At the end of the reporting period, the amount of revenue corresponding to the performance obligations that have been signed but have not been performed or have not been completed is 21,811,944.38 yuan, of which,

Full text of Hengbao Co., Ltd.'s 2026 semi-annual report

Revenue of RMB 21,811,944.38 is expected to be recognized in 2026, RMB 0.00 is expected to be recognized in 2027, and RMB 0.00 is expected to be recognized in 2028.

Major contract changes or major transaction price adjustments

Unit: Yuan

Item Accounting treatment method Impact amount on income Other explanations:

Investment income

Unit: Yuan

Item Amount incurred in the current period Amount incurred in the previous period Long-term equity investment income calculated by equity method -144,485.12 -6,517.18 Gains and losses from entrusting others to invest or manage assets 3,781,524.84 5,185,539.26 Interest income from time deposit certificates 4,672,971.36 1,620,343.60 Total 8,310,011.08 6,799,365.68

Others

20. Supplementary information

Detailed statement of non-recurring profits and losses for the current period

Applicable □Not applicable

Unit: Yuan

Item Amount Description

Government subsidies included in current profits and losses (related to the company’s regular

Closely related to regular business operations and in compliance with national policies

326,348.13

stipulates, enjoys according to determined standards, and treats the company

Except for government subsidies that have a lasting impact on profits and losses)

Except for effective transactions related to the company’s normal business operations,

In addition to futures hedging business, non-financial enterprises hold financial

Changes in fair value of assets and financial liabilities 9,011,289.56

Profit and loss and disposal of financial assets and financial liabilities

profit and loss

Gains and losses from entrusting others to invest or manage assets 4,540,793.50

Other non-operating income other than the above items and

-122,298.96

expenditure

Less: Income tax impact 357,736.56

Total 13,398,395.67 --

Details of other profit and loss items that meet the definition of non-recurring profits and losses:

□Applicable Not applicable

The company has no other specific circumstances of profit and loss items that meet the definition of non-recurring profits and losses.

Define the non-recurring profit and loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies that Offer Securities to the Public - Non-recurring Profit and Loss" as recurring profit and loss

Description of the full text of the 2026 semi-annual report of Hengbao Co., Ltd.

□Applicable Not applicable

Return on net assets and earnings per share

earnings per share

Profit for the reporting period Weighted average return on equity

Basic earnings per share (yuan/share) Diluted earnings per share (yuan/share) Net income attributable to the company’s ordinary shareholders

-2.15% -0.0647 -0.0647Profit

After deducting non-recurring gains and losses, attributable to

-2.78% -0.0836 -0.0836 Net profit of the company’s common shareholders

Differences in accounting data under domestic and foreign accounting standards

(1) Differences in net profit and net assets in financial reports disclosed in accordance with both international accounting standards and Chinese accounting standards □ Applicable  Not applicable

(2) Differences in net profit and net assets in financial reports disclosed in accordance with both foreign accounting standards and Chinese accounting standards □Applicable Not applicable

(3) Explanation of the reasons for the differences in accounting data under domestic and foreign accounting standards. If differences are adjusted for data that have been audited by an overseas audit institution, the name of the overseas institution should be indicated.

Others