Hangzhou High-tech: Financial report and audit report for the most recent year and financial report for the most recent period

Hangzhou High-tech Materials Technology Co., Ltd.

Notes to Financial Statements

2025

Amount unit: RMB

1. Basic situation of the company

Hangzhou Hi-Tech Materials Technology Co., Ltd. (hereinafter referred to as the company or the company) was formerly Hangzhou Hi-Tech Insulation Materials Co., Ltd. (hereinafter referred to as Hi-Tech Insulation Materials Company). High-tech Insulation Materials Company is a Sino-foreign joint venture jointly invested and established by Hangzhou High-tech Plastics Factory and China Shuangfan Investment Holding Group (Hong Kong) Co., Ltd., approved by Yuhang Foreign Trade and Economic Cooperation Document No. 88 [2004] of the Foreign Trade and Economic Cooperation Bureau of Yuhang District, Hangzhou City. It was registered with the Hangzhou Administration for Industry and Commerce on November 26, 2004. With December 31, 2010 as the base date, High-tech Insulation Materials Company was changed into a joint-stock company as a whole. It was registered with the Hangzhou Administration for Industry and Commerce on December 6, 2011, and is headquartered in Hangzhou, Zhejiang Province. The company currently holds a business license with a unified social credit code of 913300007682195527, a registered capital of 126,673,000.00 yuan, and a total of 126,673,000 shares (face value 1 yuan per share). Among them, there are 126,673,000 A shares that are not subject to selling conditions. The company's shares were listed for trading on the Shenzhen Stock Exchange on June 10, 2015.

The company belongs to the polymer rubber and plastic cable material manufacturing industry. The main business activities are the research and development, production and sales of polymer rubber and plastic materials.

This financial statement has been approved for external reporting by the 21st meeting of the fifth session of the board of directors of the company on April 9, 2026.

2. Basis for preparation of financial statements

(1) Basis for compilation

The company's financial statements are prepared on a going concern basis.

(2) Evaluation of sustainable operating capabilities

The Company has no events or circumstances that would cause significant doubts about its ability to continue operating within 12 months from the end of the reporting period.

3. Important accounting policies and accounting estimates

Important note: The Company has formulated specific accounting policies and accounting estimates based on the actual production and operation characteristics for transactions or matters such as impairment of financial instruments, inventory, depreciation of fixed assets, construction in progress, intangible assets, revenue recognition, etc.

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(1) Statement on compliance with accounting standards for enterprises

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 financial status, operating results, cash flow and other relevant information.

(2) Accounting period

The fiscal year begins on January 1 and ends on December 31 of the Gregorian calendar.

(3) Business cycle

The company's operating business has a short operating cycle, and 12 months is used as the liquidity classification standard for assets and liabilities.

(4) Accounting standard currency

RMB is adopted as the standard accounting currency.

(5) Determination method and selection basis of materiality standards

The company prepares and discloses financial statements in compliance with the principle of materiality. The matters disclosed in the notes to these financial statements involve the judgment of materiality standards and the determination methods and selection basis of the materiality standards are as follows:

Judgments involving importance criteria

Materiality criteria determination method and selection basis

Disclosure matters

Important accounts receivable with individual provision for bad debts exceeding 0.3% of total assets. Important other receivables with individual provision for bad debts exceeding total assets The total amount of investment in a single project exceeds the total assets × 0.3%, important accounts payable with an aging of more than 1 year. The individual amount exceeds the total assets × 0.3%, the important accounts payable with an age exceeding 1 year. The individual amount exceeds the total assets × 0.3%, the important contract liabilities with an age exceeding 1 year. The individual amount exceeds the total assets × 0.3%, important cash flow from investing activities. The individual amount exceeds the total assets × 5%, important subsidiaries and non-wholly owned subsidiaries, the total assets exceed 15% of the total assets of the group.

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

1. Accounting treatment for business combinations under common control

The assets and liabilities acquired by the company in a business merger are measured according to the book value of the merged party in the consolidated financial statements of the ultimate controlling party on the merger date. The company adjusts the capital reserve based on the difference between the book value share of the owner's equity of the merged party in the final controlling party's consolidated financial statements and the book value of the merger consideration paid or the total face value of the shares issued; if the capital reserve is insufficient for offset, the company adjusts the retained earnings.

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2. Accounting treatment for business combinations not under common control

On the acquisition date, the company recognizes the difference between the merger cost and the fair value share of the acquiree's identifiable net assets acquired in the merger as goodwill; if the merger cost is less than the fair value share of the acquiree's identifiable net assets acquired in the merger, the difference is first recognized as goodwill. The fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of merger costs are reviewed. After review, if the merger cost is still less than the fair value share of the acquiree's identifiable net assets obtained in the merger, the difference is included in the current profit and loss.

(7) Judgment standards for control and preparation methods of consolidated financial statements

1. Judgment of control

If it has power over the investee, enjoys variable returns by participating in the relevant activities of the investee, and has the ability to use its power over the investee to affect the amount of its variable returns, it is deemed to be control.

2. Preparation method of consolidated financial statements

The parent company includes all subsidiaries it controls in the consolidated financial statements. The consolidated financial statements are based on the financial statements of the parent company and its subsidiaries, and based on other relevant information, are prepared by the parent company in accordance with the "Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements".

(8) Classification of joint arrangements and accounting treatment of joint operations

1. Joint arrangements are divided into joint operations and joint ventures.

2. When the company is a joint venture party, the following items related to the interest share in the joint operation are recognized:

(1) Recognize assets held individually, and recognize assets held jointly based on holding shares;

(2) Recognize liabilities borne individually and liabilities borne jointly based on holding shares;

(3) Recognize the income generated from the sale of the company’s share of joint operating output;

(4) The income generated by the joint operation from the sale of assets is recognized based on the company’s share;

(5) Recognize the expenses incurred individually, and recognize the expenses incurred by joint operations based on the company’s share.

(9) Determination standards for cash and cash equivalents

The cash shown in the cash flow statement refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to investments held by an enterprise that have short maturities, are highly liquid, are easily convertible into known amounts of cash, and have little risk of changes in value.

(10) Foreign currency business conversion

When foreign currency transactions are initially recognized, they are converted into RMB amounts using the approximate exchange rate of the spot exchange rate on the date of the transaction. On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The exchange differences arising from different exchange rates, except for the exchange differences on the principal and interest of foreign currency special loans related to the acquisition and construction of assets that qualify for capitalization, are included in the current profits and losses; foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the date of the transaction, and their RMB balance does not change. Page 17 of 95

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Amount; foreign currency non-monetary items measured at fair value are converted using the spot exchange rate on the date when the fair value is determined, and the difference is included in the current profit and loss or other comprehensive income.

(11) Financial instruments

1. Classification of financial assets and financial liabilities

Financial assets are divided into the following three categories upon initial recognition: (1) Financial assets measured at amortized cost; (2) Financial assets measured at fair value with changes included in other comprehensive income; (3) Financial assets measured at fair value with changes included in current profits and losses.

Financial liabilities are divided into the following four categories upon initial recognition: (1) Financial liabilities measured at fair value and whose changes are included in current profits and losses; (2) Financial liabilities formed when the transfer of financial assets does not meet the conditions for derecognition or continued involvement in the transferred financial assets; (3) Financial guarantee contracts that do not belong to the above (1) or (2), and loan commitments that do not belong to the above (1) and provide loans at lower than market interest rates; (4) Financial liabilities measured at amortized cost.

2. Recognition basis, measurement method and derecognition conditions of financial assets and financial liabilities

(1) Recognition basis and initial measurement method of financial assets and financial liabilities

When a company becomes a party to a financial instrument contract, it recognizes a financial asset or financial liability. When initially recognizing financial assets or financial liabilities, they are measured at fair value; for financial assets and financial liabilities measured at fair value and whose changes are included in current profits and losses, relevant transaction costs are directly included in current profits and losses; for other types of financial assets or financial liabilities, relevant transaction costs are included in the initial recognition amount. However, if the company's initial recognition of accounts receivable does not contain a significant financing component or the company does not consider the financing component in a contract that does not exceed one year, the initial measurement will be based on the transaction price defined in "Accounting Standards for Business Enterprises No. 14 - Revenue".

(2) Subsequent measurement method of financial assets

1. Financial assets measured at amortized cost

The actual interest rate method is adopted and subsequent measurement is carried out based on amortized cost. Gains or losses arising from financial assets that are measured at amortized cost and are not part of any hedging relationship are included in the current profit and loss when derecognized, reclassified, amortized according to the effective interest method, or impairment is recognized.

2. Debt instrument investments measured at fair value and changes included in other comprehensive income

Fair value is used for subsequent measurement. Interest, impairment losses or gains and exchange gains and losses calculated using the effective interest rate method are included in the current profit and loss, and other gains or losses are included in other comprehensive income. When derecognition is terminated, the accumulated gains or losses previously included in other comprehensive income will be transferred out of other comprehensive income and included in the current profit and loss.

3. Equity instrument investments measured at fair value and changes included in other comprehensive income

Fair value is used for subsequent measurement. Dividends received (except those that are part of the recovery of investment costs) are included in the current loss. Page 18 of 95

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Other gains or losses are included in other comprehensive income. Upon derecognition, the accumulated gains or losses previously included in other comprehensive income will be transferred out of other comprehensive income and included in retained earnings.

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

Subsequent measurement is carried out at fair value, and the resulting gains or losses (including interest and dividend income) are included in the current profits and losses, unless the financial asset is part of a hedging relationship.

(3) Subsequent measurement method of financial liabilities

1. Financial liabilities measured at fair value and changes included in current profits and losses

Such financial liabilities include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as measured at fair value with changes included in current profits and losses. Such financial liabilities are subsequently measured at fair value. The amount of changes in the fair value of financial liabilities designated as at fair value through profit or loss due to changes in the company's own credit risk is included in other comprehensive income, unless such treatment would cause or expand accounting mismatches in profit or loss. Other gains or losses arising from such financial liabilities (including interest expenses, excluding changes in fair value caused by changes in the company's own credit risk) are included in the current profits and losses, unless the financial liabilities are part of a hedging relationship. Upon derecognition, the accumulated gains or losses previously included in other comprehensive income will be transferred out of other comprehensive income and included in retained earnings.

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 shall be measured in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets".

3. Financial guarantee contracts that do not fall under 1) or 2) above, and loan commitments that do not fall under 1) above and provide loans at lower than market interest rates

After initial recognition, subsequent measurement shall be carried out according to the higher of the following two amounts: ① The amount of loss provision determined in accordance with the impairment regulations of financial instruments; ② The balance after the initial recognition amount deducts the accumulated amortization amount determined in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

4. Financial liabilities measured at amortized cost

Measured at amortized cost using the effective interest method. Gains or losses arising from financial liabilities that are measured at amortized cost and are not part of any hedging relationship are included in the current profits and losses when they are derecognized and amortized according to the effective interest method.

(4) Derecognition of financial assets and financial liabilities

1. Financial assets are derecognised when one of the following conditions is met:

① The contractual right to receive cash flows from financial assets has terminated;

② The financial assets have been transferred, and the transfer meets the provisions of "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets" regarding the derecognition of financial assets.

2. When the current obligation of a financial liability (or part thereof) has been discharged, the financial liability (or Page 19 of 95) shall be derecognised accordingly.

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this part of financial liabilities).

3. Recognition basis and measurement method of financial asset transfer

If the company transfers almost all the risks and rewards of ownership of a financial asset, it shall terminate the recognition of the financial asset, and separately recognize the rights and obligations arising or retained in the transfer as assets or liabilities; if it retains almost all the risks and rewards of ownership of the financial asset, it shall continue to recognize the transferred financial assets. If the company neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, the following situations will apply: (1) If it does not retain control over the financial asset, the financial asset will be derecognised, and the rights and obligations arising or retained in the transfer will be separately recognized as assets or liabilities; (2) If it retains control over the financial asset, the relevant financial assets will be recognized to the extent of its continued involvement in the transferred financial assets, and the relevant liabilities will be recognized accordingly.

If the overall transfer of a financial asset meets the conditions for derecognition, the difference between the following two amounts will be included in the current profit and loss: (1) The book value of the transferred financial asset on the date of derecognition; (2) The sum of the consideration received for the transfer of the financial asset and the amount corresponding to the derecognition part of the cumulative amount of changes in fair value that was originally directly included in other comprehensive income (the financial assets involved are debt instrument investments measured at fair value and their changes are included in other comprehensive income). If a part of a financial asset is transferred, and the transferred part as a whole meets the conditions for derecognition, the entire book value of the financial asset before transfer will be apportioned between the derecognized part and the continued recognition part according to their respective relative fair values on the date of transfer, and the difference between the following two amounts shall be included in the current profit and loss: (1) The book value of the derecognized part; (2) The consideration for the derecognition part is the sum of the amount corresponding to the derecognition part of the cumulative amount of changes in fair value that was originally directly included in other comprehensive income (the financial assets involved in the transfer are debt instrument investments that are measured at fair value and their changes are included in other comprehensive income).

4. Determination method of fair value of financial assets and financial liabilities

The company determines the fair value of relevant financial assets and financial liabilities using valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information. The company divides the input values used in valuation technology into the following levels and uses them in sequence:

(1) The first level input value is the unadjusted quoted price in an active market for the same asset or liability that can be obtained on the measurement date;

(2) The second level input value is the directly or indirectly observable input value of the relevant assets or liabilities in addition to the first level input value, including: quotations of similar assets or liabilities in active markets; quotations of the same or similar assets or liabilities in inactive markets; other observable input values other than quotations, such as interest rates and yield curves that are observable during normal quotation intervals; market verification input values, etc.;

(3) The third level input value is the unobservable input value of the relevant assets or liabilities, including interest rates that cannot be directly observed or cannot be verified by observable market data, stock volatility, future cash flows of abandonment obligations assumed in business combinations, financial forecasts made using its own data, etc.

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5. Impairment of financial instruments

Based on expected credit losses, the company calculates financial assets measured at amortized cost, debt instrument investments measured at fair value with changes included in other comprehensive income, contract assets, lease receivables, and financial liabilities classified as measured at fair value with changes included in current profits and losses. Other than loan commitments, financial liabilities that are not measured at fair value through profit or loss for the current period, or financial guarantee contracts that are not financial liabilities arising from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets, they are subject to impairment treatment and loss provisions are recognized.

Expected credit losses refer to the weighted average of the credit losses of financial instruments with the risk of default as the weight. Credit loss refers to the difference between all contractual cash flows receivable under the contract and all cash flows expected to be received by the company, discounted at the original effective interest rate, that is, the present value of all cash shortfalls. Among them, credit-impaired financial assets purchased or originated by the company are discounted according to the credit-adjusted actual interest rate of the financial assets.

For purchased or originated financial assets that have suffered credit impairment, the company will only recognize the cumulative change in expected credit losses during the entire duration since initial recognition as loss provisions on the balance sheet date.

For lease receivables, receivables and contract assets formed by transactions regulated by "Accounting Standards for Business Enterprises No. 14 - Revenue", the company uses simplified measurement methods and measures loss provisions based on an amount equivalent to the expected credit losses during the entire duration.

For financial assets other than the above measurement methods, the company evaluates at each balance sheet date whether its credit risk has increased significantly since initial recognition. If the credit risk has increased significantly since the initial recognition, the company will measure the loss provision based on the amount of expected credit losses during the entire duration; if the credit risk has not increased significantly since the initial recognition, the company will measure the loss provisions based on the amount of expected credit losses of the financial instrument in the next 12 months.

The Company uses reasonable and evidence-based information available, including forward-looking information, to determine whether the credit risk of a financial instrument has increased significantly since initial recognition by comparing the risk of default on the financial instrument on the balance sheet date with the risk of default on the initial recognition date.

On the balance sheet date, if the company determines that a financial instrument has only low credit risk, it is assumed that the credit risk of the financial instrument has not increased significantly since initial recognition.

The company assesses expected credit risk and measures expected credit losses on the basis of a single financial instrument or a combination of financial instruments. When based on a portfolio of financial instruments, the company divides financial instruments into different portfolios based on common risk characteristics.

The company remeasures expected credit losses on each balance sheet date, and the resulting increase or reversal of loss provisions is included in the current profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss provision is deducted from the book value of the financial asset listed in the balance sheet; for debt investments measured at fair value with changes included in other comprehensive income, the company recognizes its loss provision in other comprehensive income and does not deduct the book value of the financial asset. Page 21 of 95

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6. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are presented separately in the balance sheet and do not offset each other. However, if the following conditions are met at the same time, the company will present the net amount after offsetting each other in the balance sheet: (1) The company has the legal right to offset the recognized amount, and the legal right is currently enforceable; (2) The company plans to settle on a net basis, or realize the financial assets and pay off the financial liabilities at the same time.

For transfers of financial assets that do not meet the conditions for derecognition, the company will not offset the transferred financial assets and related liabilities.

(12) Recognition standards and accrual methods for expected credit losses on accounts receivable and contract assets

1. Accounts receivable and contract assets with expected credit losses based on combinations of credit risk characteristics

Portfolio category Basis for determining portfolio Method for measuring expected credit losses

bank acceptance bill receivable

Refer to historical credit loss experience and combine the current situation with commercial acceptance bills receivable

and forecasts of future economic conditions, through default risk note types

Acceptance bills receivable from the financial company Exposure and expected credit loss rate throughout the duration, calculation of expected credit losses

Receivables Financing – Debt Receivables

Rights certificate combination

With reference to historical credit loss experience, combined with the current situation, accounts receivable - within the consolidation scope and predictions of future economic conditions, we use default risk to consolidate related parties within the scope

Related party portfolio exposure and lifetime expected credit loss rate, calculation of expected credit losses

With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, prepare accounts receivable - aging portfolio Aging

Comparison table of aging and expected credit loss rate to calculate expected credit losses

With reference to historical credit loss experience, combined with the current situation, other receivables - consolidation scope and predictions of future economic conditions, related parties within the consolidation scope are consolidated through default risk

Calculate expected credit losses based on internal related party portfolio exposures and expected credit loss rate within the next 12 months or the entire duration.

With reference to historical credit loss experience, combined with current conditions and predictions of future economic conditions, prepare other receivables - aging portfolio Aging

Comparison table of loan aging and expected credit loss rate to calculate expected credit losses

2. Comparison table of aging portfolio and expected credit loss rate

Accounts receivable Other receivables

Account age

Expected credit loss rate (%) Expected credit loss rate (%)

Within 1 year (inclusive, the same below) 5.00 5.00

1-2 years 10.00 10.00

2-3 years 30.00 30.00

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Accounts receivable Other receivables

Account age

Expected credit loss rate (%) Expected credit loss rate (%) more than 3 years 100.00 100.00

The aging of accounts receivable and other receivables is calculated from the date of initial recognition.

3. Recognition standards for accounts receivable and contract assets for which expected credit losses are to be calculated individually

For receivables and contract assets whose credit risk is significantly different from the combined credit risk, the company accrues expected credit losses on an individual basis.

(13) Inventory

1. Classification of inventory

Inventories include finished products or commodities held for sale in daily activities, work-in-progress in the production process, materials and supplies consumed in the production process or in the process of providing services, etc.

2. Valuation method for issued inventory

Inventories are issued using the weighted average method at the end of the month.

3. Inventory inventory system

The inventory system of inventories is the perpetual inventory system.

4. Amortization method for low-value consumables and packaging materials

(1) Low value consumables

Amortization is carried out according to the one-time write-off method.

(2) Packaging

Amortization is carried out according to the one-time write-off method.

5. Provision for inventory decline

On the balance sheet date, inventories are measured at the lower of cost and net realizable value, and inventory depreciation provisions are made based on the difference between cost and net realizable value. For inventories that are directly used for sale, the net realizable value is determined by the estimated selling price of the inventory minus the estimated sales expenses and related taxes in the normal production and operation process; for inventories that need to be processed, the estimated selling price of the finished products produced during the normal production and operation process is deducted by the estimated costs to be incurred upon completion. The amount after the estimated sales expenses and related taxes is determined to determine its net realizable value; 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 is determined separately and compared with its corresponding cost to determine the amount of provision or reversal of inventory depreciation provisions.

(14) Long-term equity investment

1. Judgment of joint control and significant influence

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If there is shared control over an arrangement in accordance with the relevant agreement, and the relevant activities of the arrangement must be decided with the unanimous consent of the parties sharing control rights, it is deemed to be joint control. Having the power to participate in decision-making on the financial and operating policies of the investee, but not being able to control or jointly control the formulation of these policies with other parties, is deemed to have significant influence.

2. Determination of investment costs

(1) Formed by a merger of enterprises under common control, if the merging party pays cash, transfers non-cash assets, assumes debts or issues equity securities as the merger consideration, the initial investment cost shall be the share of the book value of the owner's equity of the merged party in the consolidated financial statements of the ultimate controlling party on the merger date. The difference between the initial investment cost of the long-term equity investment and the book value of the merger consideration paid or the total face value of the shares issued is adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings are adjusted.

The company realizes the long-term equity investment formed by the merger of enterprises under the same control step by step through multiple transactions to determine whether it is a "package transaction". If it belongs to a "package transaction", each transaction shall be accounted for as a transaction that obtains control. If it does not belong to a "package deal", on the merger date, the initial investment cost will be determined based on the share of the book value of the combined party's net assets in the ultimate controlling party's consolidated financial statements that should be enjoyed after the merger. The difference between the initial investment cost of the long-term equity investment on the merger date and the book value of the long-term equity investment before the merger plus the book value of the new payment for further shares acquired on the merger date is adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings are adjusted.

(2) If it is formed by a business combination not under the same control, the fair value of the merger consideration paid on the purchase date shall be regarded as its initial investment cost.

The company realizes the long-term equity investment formed by the merger of enterprises not under common control step by step through multiple transactions, and distinguishes individual financial statements and consolidated financial statements for relevant accounting treatment:

1. In individual financial statements, the sum of the book value of the original equity investment plus the new investment cost is regarded as the initial investment cost that is calculated according to the cost method.

2. In the consolidated financial statements, determine whether it is a "package deal". If it belongs to a "package transaction", each transaction shall be accounted for as a transaction that obtains control. If it does not belong to a "package transaction", the equity of the purchased party held before the purchase date will be remeasured according to the fair value of the equity on the purchase date, and the difference between the fair value and its book value will be included in the investment income of the current period; if the equity of the purchased party held before the purchase date involves other comprehensive income under equity method accounting, the other comprehensive income related to it will be converted into the current period income on the purchase date. However, other comprehensive income arising from changes in the net liabilities or net assets of the defined benefit plan due to the remeasurement of the investee is excluded.

(3) Except for business mergers: if it is obtained by paying cash, the actual purchase price paid will be used as its initial investment cost; if it is obtained by issuing equity securities, the fair value of the equity securities issued will be used as its initial investment cost; if it is obtained by debt restructuring, its initial investment cost will be determined according to "Accounting Standards for Business Enterprises No. 12 - Debt Restructuring"; Page 24 of 95

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If it is obtained in exchange for non-monetary assets, the initial investment cost shall be determined according to "Accounting Standards for Business Enterprises No. 7 - Exchange of Non-monetary Assets".

3. Subsequent measurement and profit and loss recognition methods

Long-term equity investments that control the invested unit are accounted for using the cost method; long-term equity investments in associates and joint ventures are accounted for using the equity method.

4. Methods of disposing of investments in subsidiaries step by step through multiple transactions until loss of control

(1) Principles for judging whether it is a “package deal”

If the equity investment in a subsidiary is disposed of in stages through multiple transactions until it loses control, the company shall determine whether the step-by-step transaction is a "package transaction" based on the transaction agreement terms of each step of the step-by-step transaction, the disposal consideration obtained respectively, the object of the equity sale, the disposal method, the time of disposal, and other information. If the terms, conditions and economic impact of each transaction meet one or more of the following conditions, it usually indicates that multiple transactions are a "package deal":

1. These transactions are entered into at the same time or with consideration of mutual effects;

2. These transactions as a whole can achieve a complete business result;

3. The occurrence of one transaction depends on the occurrence of at least one other transaction;

4. A transaction is uneconomical on its own but is economical when considered together with other transactions.

(2) Accounting treatment that does not belong to “package deal”

1. Individual financial statements

For the equity disposed of, the difference between its book value and the actual price obtained shall be included in the current profit and loss. For the remaining equity, if it still has a significant influence on the invested unit or exercises joint control with other parties, it will be converted to equity method accounting; if it can no longer exercise control, joint control or significant influence on the invested unit, it will be accounted for in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

2. Consolidated financial statements

Before the loss of control, the difference between the disposal price and the share of the subsidiary's net assets corresponding to the disposal of the long-term equity investment continuously calculated from the date of purchase or merger will be adjusted to the capital reserve (capital premium). If the capital premium is insufficient to offset, the retained earnings will be offset.

When control over the atomic company is lost, the remaining equity will be remeasured according to its fair value on the date of loss of control. The difference between the sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the share of the original subsidiary's net assets calculated continuously from the date of purchase or merger based on the original shareholding ratio, shall be included in the investment income for the period when control is lost, and goodwill shall be offset at the same time. Other comprehensive income related to the equity investment in the original subsidiary shall be converted into investment income for the current period when control is lost.

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(3) Accounting treatment for “package transactions”

1. Individual financial statements

Each transaction is accounted for as a transaction in which a subsidiary is disposed of and control is lost. However, the difference between the price of each disposal before the loss of control and the book value of the long-term equity investment corresponding to the disposal investment is recognized as other comprehensive income in individual financial statements, and is transferred to the profit and loss of the current period when control is lost.

2. Consolidated financial statements

Each transaction is accounted for as a transaction in which a subsidiary is disposed of and control is lost. However, before the loss of control, the difference between the price of each disposal and the share of the subsidiary's net assets corresponding to the disposal investment is recognized as other comprehensive income in the consolidated financial statements, and is transferred to the profits and losses of the current period when the control is lost.

(15) Investment real estate

1. Investment real estate includes leased land use rights, land use rights held and prepared to be transferred after appreciation, and leased buildings.

2. Investment real estate is initially measured according to cost, and subsequently measured using the cost model, and depreciation or amortization is calculated using the same methods as fixed assets and intangible assets.

(16) Fixed assets

1. Recognition conditions for fixed assets

Fixed assets refer to tangible assets held for the production of goods, provision of labor services, leasing or operation and management, and with a useful life of more than one accounting year. Fixed assets are recognized when it is likely that economic benefits will flow in and the cost can be measured reliably.

2. Depreciation methods for various types of fixed assets

Category Depreciation method Depreciation life (years) Salvage value rate (%) Annual depreciation rate (%) Houses and buildings Average age method 10-20 5 9.50-4.75 General equipment Average age method 3-5 5 31.67-19.00 Special equipment Average age method 3-10 5 31.67-9.50 Transportation tools Average age method 3-5 5 31.67-19.00

(17) Construction in progress

1. Construction in progress is recognized when it is likely that economic benefits will flow in and the cost can be measured reliably. Construction in progress is measured based on the actual costs incurred before the asset reaches its intended usable condition.

2. 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 it has reached the intended usable state but the final settlement of completion has not yet been processed, the estimated value will be transferred to fixed assets first, and the actual cost will be calculated after the final settlement of completion has been processed. Page 26 of 95

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This adjustment is to the original provisional value, but no adjustment to the originally accrued depreciation will be made.

Category Standards and timing for transferring construction in progress to fixed assets

The main construction project and supporting projects have been substantially completed, have met the predetermined design requirements, and have been approved by the Houses and Buildings

Acceptance

After installation and commissioning, the machinery and equipment meet the design requirements or standards stipulated in the contract.

(18) Borrowing costs

1. Recognition principles for capitalization of borrowing costs

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; other borrowing costs shall be recognized as expenses when incurred and included in the current profits and losses.

2. Borrowing cost capitalization period

(1) Capitalization begins when borrowing costs meet the following conditions at the same time: 1) Asset expenditures have occurred; 2) Borrowing costs have been incurred; 3) The purchase, construction or production activities necessary to bring the asset to its intended usable or salable state have begun.

(2) 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 is suspended; the borrowing costs incurred during the interruption are recognized as current expenses until the acquisition, construction or production activities of the asset are restarted.

(3) When the assets purchased, constructed or produced that meet the capitalization conditions reach the intended usable or salable state, the capitalization of borrowing costs ceases.

3. Capitalization rate and capitalization amount of borrowing costs

If a special loan is borrowed for the purpose of purchasing, constructing or producing assets that meet the capitalization conditions, the interest expense actually incurred on the special loan in the current period (including the amortization of the discount or premium determined according to the actual interest rate method) shall be deducted from the interest income obtained from depositing the unused borrowed funds in the bank or the investment income obtained from temporary investment. The amount of interest that should be capitalized is determined based on the amount after profit; if general borrowings are occupied for the purchase, construction or production of assets that meet the capitalization conditions, the amount of interest that should be capitalized on the general borrowings is calculated and determined based on the weighted average of the cumulative asset expenditures exceeding the special borrowings multiplied by the capitalization rate of the general borrowings occupied.

(19) Intangible assets

1. Intangible assets include land use rights, software, etc., which are initially measured at cost.

2. Intangible assets with limited service life shall be amortized systematically and reasonably within the service life according to the expected realization method of the economic benefits related to the intangible asset. If the expected realization method cannot be reliably determined, the straight-line method shall be used for amortization. The details are as follows: Project service life and basis for its determination Amortization method

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Item Service life and basis for determination Amortization method Land use rights The service life is determined to be 50 years based on the property rights registration period Straight-line method

Software The useful life is determined as 5 years based on the expected benefit period. Straight-line method

3. Scope of aggregation of R&D expenditures

(1) Personnel labor costs

Personnel labor expenses include the wages and salaries of the company's R&D personnel, basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, work-related injury insurance premiums and housing provident funds.

If R&D personnel serve multiple R&D projects at the same time, labor costs will be recognized based on the working hours records of R&D personnel for each R&D project provided by the company's management department, and will be allocated proportionally among different R&D projects.

If those who are directly engaged in R&D activities or external R&D personnel are also engaged in non-R&D activities, the company will allocate the actual labor costs incurred by the R&D personnel between R&D expenses and production and operating expenses based on reasonable methods such as the proportion of actual working hours based on the R&D personnel’s working time records in different positions.

(2) Direct investment costs

Direct investment expenses refer to the actual expenditures incurred by the company to implement research and development activities. Including: 1) Direct consumption of materials, fuel and power costs; 2) Development and manufacturing costs of molds and process equipment used for intermediate testing and product trial production, purchase costs for samples, prototypes and general testing methods that do not constitute fixed assets, and inspection fees for trial products; 3) Operation and maintenance, adjustment, inspection, detection, repair and other costs of instruments and equipment used for research and development activities.

(3) Depreciation expense

Depreciation expenses refer to the depreciation expenses of instruments, equipment and buildings in use used for research and development activities.

If instruments, equipment, and buildings in use are used for R&D activities and are also used for non-R&D activities, necessary records shall be made of the use of such instruments, equipment, and buildings in use, and the actual depreciation expenses incurred shall be allocated between R&D expenses and production and operating expenses in a reasonable manner based on factors such as actual working hours and usage area.

(4) Other expenses

Other expenses refer to other expenses directly related to research and development activities in addition to the above expenses, including technical book materials fees, data translation fees, expert consultation fees, high-tech R&D insurance fees, retrieval, demonstration, review, identification, and acceptance fees for R&D results, application fees, registration fees, agency fees for intellectual property rights, conference fees, travel expenses, communication fees, etc.

4. Expenditures in the research phase of internal research and development projects are included in the current profits and losses when incurred. Expenditures in the development phase of internal research and development projects are recognized as intangible assets if they meet the following conditions: (1) It is technically feasible to complete the intangible asset so that it can be used or sold; (2) There is the intention to complete the intangible asset and use or sell it; (3) The way in which the intangible asset generates economic benefits includes being able to prove that there is a market for the products produced using the intangible asset or the intangible asset itself Page 28 of 95

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There is a market, and if the intangible asset will be used internally, its usefulness can be proven; (4) There is sufficient technical, financial and other resource support to complete the development of the intangible asset, and the ability to use or sell the intangible asset; (5) Expenditures attributable to the development stage of the intangible asset can be measured reliably.

(20) Impairment of some long-term assets

For long-term assets such as long-term equity investments, fixed assets, projects under construction, right-of-use assets, and intangible assets with limited useful lives, if there are signs of impairment on the balance sheet date, the recoverable amount is estimated. Goodwill and intangible assets with indefinite useful lives formed due to business combinations are subject to impairment testing every year regardless of whether there are signs of impairment. Goodwill is tested for impairment in combination with its related asset groups or combinations of asset groups.

If the recoverable amount of the above-mentioned long-term assets is lower than its book value, the asset impairment provision shall be recognized based on the difference and included in the current profit and loss.

(21) Employee compensation

1. Employee compensation includes short-term compensation, post-employment benefits, termination benefits and other long-term employee benefits.

2. Accounting treatment of short-term compensation

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

3. Accounting treatment of post-employment benefits

Post-employment benefits are divided into defined contribution plans and defined benefit plans.

(1) During the accounting period when employees provide services to the company, 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.

(2) The accounting treatment of defined benefit plans usually includes the following steps:

1. Based on the expected cumulative benefit unit method, use unbiased and mutually consistent actuarial assumptions to estimate relevant demographic variables and financial variables, measure the obligations arising from the defined benefit plan, and determine the period to which the relevant obligations belong. At the same time, the obligations arising from the defined benefit plan are discounted to determine the present value of the defined benefit plan obligations and the current service cost;

2. If there are assets in the defined benefit plan, the deficit or surplus formed by subtracting the present value of the defined benefit plan obligations from the fair value of the defined benefit plan assets is recognized as a net liability or net asset of the defined benefit plan. If a defined benefit plan has a surplus, the net assets of the defined benefit plan shall be measured at the lower of the surplus of the defined benefit plan and the asset upper limit;

3. At the end of the period, the employee compensation costs incurred by the defined benefit plan are recognized as three parts: service costs, net interest on the net liabilities or net assets of the defined benefit plan, and changes resulting from remeasurement of the net liabilities or net assets of the defined benefit plan. Among them, service costs and net interest on the net liabilities or net assets of the defined benefit plan are included in the current profit and loss or related asset costs. Changes resulting from the remeasurement of the net liabilities or net assets of the defined benefit plan are included in other comprehensive income, and will not be included in subsequent accounting periods. Page 29 of 95

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Reversals to profit or loss are allowed, but these amounts recognized in other comprehensive income can be transferred within equity.

4. Accounting treatment of dismissal benefits

For dismissal benefits provided to employees, the employee compensation liabilities arising from the dismissal benefits are recognized at the earliest of the following two times and included in the current profit and loss: (1) When the company cannot unilaterally withdraw the dismissal benefits provided due to the labor relationship termination plan or layoff proposal;

(2) When a company recognizes costs or expenses related to a restructuring involving the payment of termination benefits.

5. Accounting treatment methods for other long-term employee benefits

Other long-term benefits provided to employees that meet the conditions of the defined contribution plan shall be accounted for in accordance with the relevant provisions of the defined contribution plan; other long-term benefits shall be accounted for in accordance with the relevant provisions of the defined benefit plan. In order to simplify the relevant accounting treatment, the employee compensation costs incurred are recognized as service costs, net interest on other long-term employee benefit net liabilities or net assets, and the total net amount of the changes resulting from the remeasurement of other long-term employee benefit net liabilities or net assets shall be included in the current profit and loss or related asset costs.

(22) Estimated liabilities

1. Obligations resulting from contingencies such as external guarantees, litigation matters, product quality guarantees, loss-making contracts, etc., become current obligations borne by the company. When the performance of this obligation is likely to cause economic benefits to flow out of the company, and the amount of the obligation can be reliably measured, the company will recognize the obligation as an estimated liability.

2. The company initially measures estimated liabilities based on the best estimate of the expenditure required to fulfill relevant current obligations, and reviews the book value of estimated liabilities on the balance sheet date.

(23) Share-based payment

1. Types of share-based payment

Including equity-settled share-based payments and cash-settled share-based payments.

2. Accounting treatments related to the implementation, modification, and termination of share-based payment plans

(1) Equity-settled share-based payment

Equity-settled share-based payments that become exercisable immediately after grant in exchange for employee services will be included in relevant costs or expenses based on the fair value of the equity instrument on the date of grant, and the capital reserve will be adjusted accordingly. For equity-settled share-based payments in exchange for employee services that are vested upon completion of services within the waiting period or upon meeting specified performance conditions, on each balance sheet date during the waiting period, based on the best estimate of the number of exercisable equity instruments and the fair value on the date of grant of the equity instrument, the services obtained in the current period are included in the relevant costs or expenses, 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 according to 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 according to the fair value of the equity instrument on the date of service acquisition, and included in the relevant Page 30 of 95

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Costs or expenses, with a corresponding increase in owner's equity.

(2) Cash-settled share-based payment

Cash-settled share-based payments that are exercisable immediately after grant in exchange for employee services will be included in relevant costs or expenses based on the fair value of the company's liabilities on the date of grant, with corresponding increases in liabilities. For cash-settled share-based payments in exchange for employee services that are vested upon completion of services within the waiting period or upon meeting specified performance conditions, on each balance sheet date during the waiting period, based on the best estimate of the vesting situation and the fair value of the liabilities borne by the company, the services obtained in the current period are included in the relevant costs or expenses and corresponding liabilities.

(3) Modification and termination of share-based payment plan

If the modification increases the fair value of the equity instruments granted, the company will recognize the increase in the services obtained according to the increase in the fair value of the equity instruments; if the modification increases the number of equity instruments granted, the company will recognize the increased fair value of the equity instruments as an increase in the services obtained accordingly; if the company modifies the vesting conditions in a way that is beneficial to employees, the company will consider the modified vesting conditions when processing the vesting conditions.

If the modification reduces the fair value of the equity instruments granted, the company will continue to recognize the amount of services obtained based on the fair value of the equity instruments on the date of grant, regardless of the decrease in the fair value of the equity instruments; if the modification reduces the number of equity instruments granted, the company will treat the reduction as the cancellation of the equity instruments granted; if the vesting conditions are modified in a way that is unfavorable to employees, the modified vesting conditions will not be considered when processing the vesting conditions.

If the company cancels the granted equity instruments or settles the granted equity instruments during the waiting period (except for cancellation due to failure to meet vesting conditions), the cancellation or settlement will be treated as accelerated vesting, and the amount originally recognized during the remaining waiting period will be immediately recognized.

(24) Income

1. Revenue recognition principles

On the contract commencement date, the company evaluates the contract, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation is to be performed within a certain period of time or at a certain point in time.

When one of the following conditions is met, the performance obligation is fulfilled within a certain period of time; otherwise, the performance obligation is fulfilled at a certain point in time: (1) The customer obtains and consumes the economic benefits brought by the company's performance while the company performs the contract; (2) The customer is able to control the goods under construction during the company's performance; (3) The goods produced during the company's performance 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.

For performance obligations performed within a certain period of time, the company recognizes revenue based on the performance progress within that period of time. When the progress of contract performance cannot be reasonably determined, if the costs incurred are expected to be compensated, revenue shall be recognized based on the amount of costs incurred until the progress of contract performance can be reasonably determined. For performance obligations that are performed at a certain point in time, the customer obtains relevant information from the relevant parties. Page 31 of 95

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Revenue is recognized when the company has control over the product or service. When judging whether the customer has obtained control of the goods, the company considers the following signs:

(1) The company has a current right to receive payment for the commodity, that is, the customer has a current payment obligation for the commodity; (2) The company has transferred the legal ownership of the commodity to the customer, that is, the customer has legal ownership of the commodity; (3) The company has physically transferred the commodity to the customer, that is, the customer has physically taken possession of the commodity; (4) The company has transferred the major risks and rewards of ownership of the commodity to the customer, that is, the customer has obtained the major risks and rewards of ownership of the commodity; (5) The customer has accepted the product; (6) Other signs indicating that the customer has obtained control of the product.

2. Income measurement principles

(1) The company measures revenue based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration that the company expects to be entitled to receive for the transfer of goods or services to the customer, excluding amounts collected on behalf of third parties and amounts expected to be returned to the customer.

(2) If there is variable consideration in the contract, the company determines the best estimate of the variable consideration based on the expected value or the most likely amount, but the transaction price including the variable consideration shall not exceed the amount at which a significant reversal of the accumulated recognized revenue is unlikely to occur when the relevant uncertainty is eliminated.

(3) If there is a significant financing component in the contract, the company determines the transaction price based on the amount payable in cash when the customer obtains control of the goods or services. The difference between the transaction price and the contract consideration is amortized using the effective interest method during the contract period.

(4) If the contract contains two or more performance obligations, the company will allocate the transaction price to each individual performance obligation based on the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation on the contract commencement date.

3. Specific methods of revenue recognition

The company mainly sells polymer materials for wires and cables, which is a performance obligation to be fulfilled at a certain point in time. The company recognizes revenue when the product is shipped to the delivery location agreed in the contract and the customer confirms acceptance, the price has been collected or the right to receive payment has been obtained, and the relevant economic benefits are likely to flow in.

(25) Contract assets and contract liabilities

Companies present contract assets or contract liabilities on their balance sheets based on the relationship between the fulfillment of performance obligations and payments from customers. The company will present the net amount after offsetting the contract assets and contract liabilities under the same contract.

The Company presents the right to receive consideration from customers that is unconditional (i.e., dependent only on the passage of time) as receivables and the right to receive consideration for goods transferred to the customer (that right is dependent on factors other than the passage of time) as a contract asset.

The Company presents obligations to transfer goods to customers for consideration received or receivable from customers as contract liabilities.

(26) Government subsidies

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1. Government subsidies are recognized when the following conditions are met at the same time: (1) the company is able to meet the conditions attached to the government subsidy;

(2) The company can receive government subsidies. If government subsidies are monetary assets, they shall be measured based on the amount received or receivable. If the government subsidy is a non-monetary asset, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at the nominal amount.

2. Judgment basis and accounting treatment method for government subsidies related to assets

Government documents stipulate that government subsidies used to purchase, construct or otherwise form long-term assets are classified as asset-related government subsidies. If the government documents are unclear, the judgment will be based on the basic conditions that must be met to obtain the subsidy. If the basic condition is the acquisition, construction or other means of forming long-term assets, it will be regarded as an asset-related government subsidy. Government subsidies related to assets are offset against the book value of the relevant assets or 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 will be transferred to the profit and loss of the current period of asset disposal.

3. Basis for judgment and accounting treatment of government subsidies related to income

Government subsidies other than asset-related government subsidies are classified as income-related government subsidies. For government subsidies that contain both asset-related parts and income-related parts, it is difficult to distinguish whether they are asset-related or income-related, and are generally classified as income-related government subsidies. If government subsidies related to income are used to compensate for relevant costs, expenses or losses in the future period, they are recognized as deferred income. During the period when the relevant costs, expenses or losses are recognized, they are included in the current profits and losses or offset the relevant costs; if they are used to compensate for the relevant costs, expenses or losses that have already occurred, they are directly included in the current profits and losses or offset the relevant costs.

4. Government subsidies related to the company's daily operating activities shall be included in other income or offset related costs and expenses according to the economic business essence. Government subsidies that have nothing to do with the company's daily activities are included in non-operating income and expenses.

(27) Deferred income tax assets and deferred income tax liabilities

1. 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.

2. Deferred income tax assets are recognized to the extent that it is probable that the taxable income will be available to offset the deductible temporary differences. On the balance sheet date, if there is conclusive evidence that sufficient taxable income is likely to be obtained in the future period to offset the deductible temporary differences, deferred income tax assets that have not been recognized in previous accounting periods will be recognized.

3. 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.

4. 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 the following Page 33 of 95

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Income tax arising from: (1) business combination; (2) transactions or events directly recognized in owner's equity.

5. When the following conditions are met at the same time, the company will present the deferred income tax assets and deferred income tax liabilities as the net amount after offsetting: (1) It has the legal right to settle the current income tax assets and current income tax liabilities on a net basis; (2) Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same tax collection and administration department on the same taxable entity or to different taxable entities. However, in each future period when important deferred income tax assets and deferred income tax liabilities are reversed, the taxable entity involved intends to settle the current income tax assets and current income tax liabilities on a net basis or to obtain assets and pay off debts at the same time.

(28) Leasing

1. The company as lessee

On the start date of the lease period, the company identifies leases with a lease period of no more than 12 months and that do not include a purchase option as short-term leases; leases with a low value when a single leased asset is a new asset are identified as low-value asset leases. If a company subleases or anticipates subletting a leased asset, the original lease will not be deemed a low-value asset lease.

For all short-term leases and low-value asset leases, the company includes the lease payments into the relevant asset cost or current profit and loss on a straight-line basis throughout the lease term.

In addition to the above-mentioned short-term leases and low-value asset leases that adopt simplified treatment, the company recognizes right-of-use assets and lease liabilities for leases on the start date of the lease period.

(1) Right-of-use assets

The right-of-use assets are initially measured at cost, which includes: 1) the initial measurement amount of the lease liability; 2) the lease payment amount paid on or before the start date of the lease period, if there is a lease incentive, the amount related to the lease incentive that has been enjoyed will be deducted;

3. The initial direct costs incurred by the lessee; 4) The costs that the lessee expects to incur to dismantle and remove the leased assets, restore the site where the leased assets are located, or restore the leased assets to the state agreed upon in the lease terms.

The company depreciates right-of-use assets on a straight-line basis. If it is reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, the company will accrue depreciation over the remaining useful life of the leased asset. If it is not reasonably certain that the company will be able to obtain ownership of the leased asset 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.

(2) Lease liabilities

At the beginning of the lease period, the company recognizes the present value of the unpaid lease payments as lease liabilities. When calculating the present value of lease payments, the interest rate implicit in the lease is used as the discount rate. If the interest rate implicit in the lease cannot be determined, the company's incremental borrowing rate is used as the discount rate. The difference between the lease payment and its present value is regarded as an unrecognized financing expense, and the interest expense is recognized at the discount rate used to confirm the present value of the lease payment during each period of the lease term, and is included in the current profit and loss. Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss when actually incurred.

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After the start date of the lease period, when the actual fixed payment amount changes, the estimated 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, When a change occurs, the company remeasures the lease liability based on the present value of the changed lease payment, 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 remaining amount will be included in the current profit and loss.

2. The company acts as lessor

On the lease commencement date, the Company classifies leases that substantially transfer almost all risks and rewards related to the ownership of the leased assets as finance leases, and other leases as operating leases.

(1) Operating lease

The company recognizes the lease receipts as rental income according to the straight-line method in each period during the lease period. The initial direct expenses incurred are capitalized and apportioned on the same basis as the rental income recognition, and included in the current profit and loss in installments. Variable lease payments obtained by the company related to operating leases that are not included in the lease receipts are included in the current profit and loss when they actually occur.

(2) Finance lease

On the start date of the lease period, the company recognizes financial lease receivables based on the net lease investment (the sum of the unguaranteed residual value and the present value of the lease payments not yet received on the start date of the lease discounted at the interest rate implicit in the lease), and terminates the recognition of financial lease assets. During each period of the lease term, the company calculates and recognizes interest income based on the interest rate implicit in the lease.

Variable lease payments obtained by the company that are not included in the measurement of the net lease investment are included in the current profit and loss when actually incurred.

3. Sale and leaseback

(1) The company as lessee

The company evaluates and determines whether the asset transfer in the sale and leaseback transaction is a sale in accordance with the provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

If the asset transfer in a sale and leaseback transaction is a sale, the company measures the right-of-use assets formed by the sale and leaseback based on the portion of the original asset's book value related to the right of use obtained through the leaseback, and only recognizes relevant gains or losses for the rights transferred to the lessor.

If the asset transfer in a sale and leaseback transaction does not constitute a sale, the company will continue to recognize the transferred assets, and at the same time recognize a financial liability equal to the transfer income, and perform accounting treatment on the financial liability in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

(2) The company acts as lessor

The company evaluates and determines whether the asset transfer in the sale and leaseback transaction is a sale in accordance with the provisions of "Accounting Standards for Business Enterprises No. 14 - Revenue".

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If the asset transfer in a sale and leaseback transaction is a sale, the company will account for the asset purchase in accordance with other applicable accounting standards for enterprises, and account for the asset leasing in accordance with "Accounting Standards for Business Enterprises No. 21 - Lease".

If the asset transfer in a sale and leaseback transaction does not constitute a sale, the company does not recognize the transferred asset, but recognizes a financial asset equal to the transfer income, and performs accounting treatment on the financial asset in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

(29) Segment report

The company determines its operating segments based on its internal organizational structure, management requirements, internal reporting system, etc. A company's operating segments refer to components that simultaneously meet the following conditions:

1. This component can generate income and incur expenses in daily activities;

2. The management can regularly evaluate the operating results of the component to decide to allocate resources to it and evaluate its performance;

3. Be able to obtain relevant accounting information such as the financial status, operating results and cash flow of the component through analysis.

4. Taxes

(1) Main tax types and tax rates

Tax Type Tax Calculation Basis Tax Rate

Revenue from sales of goods and taxable services calculated in accordance with tax laws

The output tax is calculated based on the value-added tax. After deducting the 13% input tax allowed for the current period, the difference is the value-added tax payable.

If the tax is assessed on an ad valorem basis, the remaining value after deducting 30% of the original value of the property at one time

Property tax 1.2%, 12%

1.2% is calculated and paid; if the tax is calculated based on rent, it is calculated and paid at 12% of the rental income.

Urban maintenance and construction tax Actual turnover tax paid 5%, 1% education surcharge Actual turnover tax paid 3% local education surcharge Actual turnover tax paid 2% Corporate income tax Taxable income 15%, 20%, 25% Taxpayers with different tax rates Description of corporate income tax rates

Name of tax payer Income tax rate The company 15%

Hangzhou Rongzhu Trading Co., Ltd. (hereinafter referred to as Hangzhou Rongzhu Company) 20%

Fujian Nanping Sun High-tech Cable Materials Co., Ltd. (hereinafter referred to as Sun High-tech Company) 25%

(2) Tax incentives

1. Corporate income tax

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(1) According to the "High-tech Enterprise Certificate" (Certificate No.: GR202533004927) issued by the Zhejiang Provincial Department of Economy and Information Technology, the Zhejiang Provincial Department of Finance, and the Zhejiang Provincial Taxation Bureau of the State Administration of Taxation, the company is recognized as a high-tech enterprise, and the certification period is from 2025 to 2027. According to the preferential income tax policy for high-tech enterprises, the company's current corporate income tax is calculated and paid at a reduced rate of 15%.

(2) According to the Ministry of Finance and the State Administration of Taxation’s “Announcement on Relevant Tax Policies to Further Support the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households” (Ministry of Finance and State Administration of Taxation Announcement No. 12, 2023), from January 1, 2023 to December 31, 2027, small and low-profit enterprises will be calculated at a reduced rate of 25% to calculate taxable income, and pay corporate income tax at a rate of 20%. This policy applies to the subsidiary Hangzhou Rongzhu Company.

2. Value-added tax

According to the provisions of the Ministry of Finance and the State Administration of Taxation's "Announcement on the Additional Deduction Policy for Value-Added Tax for Advanced Manufacturing Enterprises" (Ministry of Finance and State Administration of Taxation Announcement No. 43 of 2023), the company is an advanced manufacturing enterprise. From January 1, 2023 to December 31, 2027, an additional 5% of the deductible input tax for the current period will be deducted from the value-added tax payable.

3. “Six taxes and two fees” reduction policy

According to the Ministry of Finance and the State Administration of Taxation's "Announcement on Relevant Tax Policies to Further Support the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households" (Ministry of Finance and State Administration of Taxation Announcement No. 12 of 2023), from January 1, 2023 to December 31, 2027, urban maintenance and construction tax, stamp duty (excluding securities transaction stamp tax), education surcharge, and local education surcharge will be halved for small and low-profit enterprises. This policy applies to the subsidiary Hangzhou Rongzhu Company.

4. Property tax

According to the "Provisional Regulations of the People's Republic of China on Real Estate Tax" (Article 6 of Guofa [1986] No. 90), the company meets the conditions for enjoying the property tax reduction and exemption policy for difficulties, and enjoys the preferential policy of 50% reduction in property tax for this period.

5. Urban land use tax

According to Article 7 of Order No. 483 of the State Council of the People's Republic of China on the "Decision of the State Council on Amending the Interim Regulations of the People's Republic of China on Urban Land Use Tax", the Company meets the conditions for enjoying the urban land use tax difficulty reduction and exemption policy and enjoys a 50% reduction in urban land use tax for this period.

5. Notes on Consolidated Financial Statement Items

(1) Notes on consolidated balance sheet items

1. Monetary funds

(1) Details

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Item Ending amount Beginning amount

Cash on hand 8,318.50 14,318.50 Bank deposits 7,165,046.46 7,346,488.75 Other monetary funds 22,307.60 1,011,522.47 Total 7,195,672.56 8,372,329.72 Including: total amount deposited abroad

(2) Other instructions

At the end of the period, other monetary funds include available funds in securities accounts of RMB 1,001.00, ETC deposit of RMB 6,000.00, and Alipay balance of RMB 15,306.60.

2. Notes receivable

(1) Details

Item Ending amount Beginning amount

Commercial acceptance bill 551,728.65 757,202.81 Financial company acceptance bill 104,394.55 540,845.45 Total 656,123.20 1,298,048.26

(2) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts on a group basis 690,656.00 100.00 34,532.80 5.00 656,123.20Including: commercial acceptance bill 580,767.00 84.09 29,038.35 5.00 551,728.65 Finance company acceptance bill 109,889.00 15.91 5,494.45 5.00 104,394.55Total 690,656.00 100.00 34,532.80 5.00 656,123.20 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Provision for bad debts on a group basis 1,366,366.59 100.00 68,318.33 5.00 1,298,048.26

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Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Including: Commercial acceptance bill 797,055.59 58.33 39,852.78 5.00 757,202.81 Finance company acceptance bill 569,311.00 41.67 28,465.55 5.00 540,845.45 Total 1,366,366.59 100.00 68,318.33 5.00 1,298,048.26

2. Notes receivable using combined provision for bad debts

Closing amount

Project

Book balance Bad debt provision Provision ratio (%) Commercial acceptance bill portfolio 580,767.00 29,038.35 5.00 Finance company’s acceptance bill portfolio 109,889.00 5,494.45 5.00 Subtotal 690,656.00 34,532.80 5.00

(3) Changes in bad debt provisions

Amount of changes in the current period

Item Beginning balance Closing balance

Provision Recovery or transfer Write-off Others

Bad individual provision

Account preparation

Provision based on combination

68,318.33 -33,785.53 34,532.80 Bad debt provision

Total 68,318.33 -33,785.53 34,532.80

(4) At the end of the period, the company had no pledged notes receivable.

(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

Termination at the end of the period Projects not terminated at the end of the period

Confirmed amount Confirmed amount commercial acceptance bill 11,456.00 Subtotal 11,456.00

3. Accounts receivable

(1) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 79,361,278.77 131,939,275.03 1-2 years 591,212.77 207,482.26

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Account age Closing balance Opening balance 2-3 years 48,000.70 5,000.00 More than 3 years 993,356.80 1,188,356.80 Total book balance 80,993,849.04 133,340,114.09 Less: bad debt provision 5,034,942.23 7,807,568.78 Total book value 75,958,906.81 125,532,545.31

(2) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type

Proportion Provision Book value amount Amount

(%) Proportion (%)

Single provision for bad debts 988,356.80 1.22 988,356.80 100.00

Provision for bad debts based on combination

80,005,492.24 98.78 4,046,585.43 5.06 75,958,906.81

Total 80,993,849.04 100.00 5,034,942.23 6.22 75,958,906.81 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type of provision

Ratio Book Value Amount Ratio

(%)

(%)

Single provision for bad debts 1,188,356.80 0.89 1,188,356.80 100.00

Provision for bad debts by combination 132,151,757.29 99.11 6,619,211.98 5.01 125,532,545.31 Total 133,340,114.09 100.00 7,807,568.78 5.86 125,532,545.31

2. Important individual accounts receivable with provision for bad debts

Beginning Amount Ending Amount

Unit name Provision ratio

Book balance Bad debt provision Book balance Bad debt provision Basis for accrual

(%)

Fujian Nanping Solar Power is not expected to be able to

1,000,000.00 1,000,000.00 800,000.00 800,000.00 100.00

Cable Co., Ltd. to take back Jiangsu Xinyanghu Cable Co., Ltd. It is expected that it will not be able to

188,356.80 188,356.80 188,356.80 188,356.80 100.00

Co., Ltd. Recovery subtotal 1,188,356.80 1,188,356.80 988,356.80 988,356.80 100.00

3. Accounts receivable using aging combination to accrue bad debt provisions

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Closing amount

Account age

Book balance Bad debt provision Proportion of provision (%) Within 1 year 79,361,278.77 3,968,063.94 5.00 1-2 years 591,212.77 59,121.28 10.00 2-3 years 48,000.70 14,400.21 30.00 More than 3 years 5,000.00 5,000.00 100.00 Subtotal 80,005,492.24 4,046,585.43 5.06

(3) Changes in bad debt provisions

1. Details

Amount of changes in the current period

Item Beginning balance Closing balance

Provision Recovery or transfer Write-off Others

Bad individual provision

1,188,356.80 200,000.00 988,356.80 Account preparation

Provision based on combination

6,619,211.98 -2,572,626.55 4,046,585.43 Bad debt provision

Total 7,807,568.78 -2,572,626.55 200,000.00 5,034,942.23

(4) There are no accounts receivable actually written off in this period

(5) Top 5 accounts receivable amount

The total number of accounts receivable with the top five ending balances is 29,577,624.78 yuan, accounting for 36.52% of the total ending balance of accounts receivable, and the corresponding total bad debt provision for accounts receivable is 2,238,881.24 yuan.

4. Receivables Financing

(1) Details

Item Ending amount Beginning amount

Bank acceptance bill 45,305,789.89 16,567,761.55 Digital certificate of credit for accounts receivable [Note] 4,985,799.74

Total 50,291,589.63 16,567,761.55 [Note] Digital debt certificates for accounts receivable include Meiyidan and Yunxin

(2) Provision for impairment losses

1. Category details

Closing amount

Type Cumulatively recognized credit impairment allowance

Cost Book value provision

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Proportion Provision

Amount Amount

(%) Proportion (%)

Individual provision for impairment

Provision for impairment on a group basis 50,554,000.14 100.00 262,410.51 0.52 50,291,589.63 Including: bank acceptance bills 45,305,789.89 89.62 45,305,789.89 Digital debt certificates for accounts receivable 5,248,210.25 10.38 262,410.51 5.00 4,985,799.74 Total 50,554,000.14 100.00 262,410.51 0.52 50,291,589.63 (continued from the above table)

Beginning balance

Cumulatively recognized credit impairment

cost

Type preparation

Provision for book value

Amount Ratio (%) Amount

Proportion (%)

Individual provision for impairment

Provision for impairment on a group basis 16,567,761.55 100.00 16,567,761.55 Including: bank acceptance bill 16,567,761.55 100.00 16,567,761.55 Digital debt certificates for accounts receivable

Total 16,567,761.55 100.00 16,567,761.55

2. Financing of receivables using collective impairment provision

Closing amount

Project

Cost Cumulatively recognized credit impairment provisions Provision ratio (%) Bank acceptance bill portfolio 45,305,789.89

Portfolio of debt securities receivable 5,248,210.25 262,410.51 5.00 Subtotal 50,554,000.14 262,410.51 0.52

(3) Changes in credit impairment provisions

1. Details

Amount of changes in the current period

Item Beginning balance Closing balance

Provision Recovery or transfer Write-off Others

Provision based on combination

262,410.51 262,410.51 Impairment provision

Total 262,410.51 262,410.51

(4) Financing situation of the company’s pledged receivables at the end of the period

Project Amount pledged at the end of the period

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Project Amount pledged at the end of the period

Digital debt certificate for accounts receivable 500,000.00

Subtotal 500,000.00

(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

Terminate at the end of the period

Project

Confirm amount

Bank acceptance bill 77,200,919.82

Subtotal 77,200,919.82

The acceptor of the bank acceptance bill is a commercial bank with relatively high credit, and the possibility that the bank acceptance bill accepted by it will not be paid when due is low, so the company will derecognize the bank acceptance bill that has been endorsed or discounted. However, if the bills are not paid when due, the company will still be jointly and severally liable to the holders in accordance with the provisions of the Negotiable Instruments Law.

5. Advance payments

(1) Aging analysis

1. Details

Ending amount Beginning amount

Aging Proportion Impairment Proportion Impairment

Book balance Book value Book balance Book value

(%) Prepare (%) Prepare

Within 1 year 9,544,354.29 99.95 9,544,354.29 4,762,791.74 100.00 4,762,791.74 1-2 years 5,000.00 0.05 5,000.00

Total 9,549,354.29 100.00 9,549,354.29 4,762,791.74 100.00 4,762,791.74

(2) Top 5 prepayment amounts

The total of the top five prepayments at the end of the period is 8,527,292.47 yuan, accounting for 89.30% of the total end of prepayments balance.

6. Other receivables

(1) Classification of payment nature

Nature of payment Ending amount Beginning amount

Transfer of prepaid materials 8,000,000.00 8,000,000.00 Transfer of equipment purchase 3,123,752.21 3,123,752.21 Deposit and security deposit 508,000.00 541,000.00

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Nature of payment Ending amount Beginning amount

Temporary payments receivable 68,256.79 66,006.49 Others 146,900.00 146,900.00 Total book balance 11,846,909.00 11,877,658.70 Less: bad debt provision 11,528,565.05 11,512,352.53 Total book value 318,343.95 365,306.17

(2) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 168,256.79 74,006.49 1-2 years 5,000.00 250,000.00 2-3 years 220,000.00 100,000.00 More than 3 years 11,453,652.21 11,453,652.21 Total book balance 11,846,909.00 11,877,658.70 Less: Bad debt provision 11,528,565.05 11,512,352.53 Total book value 318,343.95 365,306.17

(3) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Single provision for bad debts 11,123,752.21 93.90 11,123,752.21 100.00

Provision for bad debts by combination 723,156.79 6.10 404,812.84 55.98 318,343.95 Total 11,846,909.00 100.00 11,528,565.05 97.31 318,343.95 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Single provision for bad debts 11,123,752.21 93.65 11,123,752.21 100.00

Provision for bad debts by combination 753,906.49 6.35 388,600.32 51.54 365,306.17 Total 11,877,658.70 100.00 11,512,352.53 96.92 365,306.17

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2. Other receivables with important individual provision for bad debts

Beginning Amount Ending Amount

Unit name Provision ratio Provision based on book balance Bad debt provision Book balance Bad debt provision

Example (%) According to Gui Shutao 8,000,000.00 8,000,000.00 8,000,000.00 8,000,000.00 100.00 [Note 1] Shanghai Songxing Machinery

Machinery Equipment Co., Ltd. 3,123,752.21 3,123,752.21 3,123,752.21 3,123,752.21 100.00 [Note 2] Company

Subtotal 11,123,752.21 11,123,752.21 11,123,752.21 11,123,752.21 100.00

[Note 1] Hefei Kevit Trading Co., Ltd. (hereinafter referred to as Kevit) owed the company 8 million yuan at the end of 2019, and has made full provision for bad debts. Kevit has implemented the simple cancellation procedure and completed the industrial and commercial cancellation registration procedures on April 27, 2020. The company filed an additional lawsuit against Gui Shutao, the person responsible for Corvit, and after mediation by the People's Court of Yuhang District, Hangzhou City, Gui Shutao should compensate the company for the loss of 8 million yuan in payment of goods and corresponding capital occupation fees. The company has submitted an execution application to the court for enforcement on February 11, 2022. After investigation by the court, Gui Shutao has no property available for enforcement in his name. The company expects that the possibility of recovering the amount is low, so it has made full provision for bad debts.

[Note 2] The company’s equipment supplier Shanghai Songxing Machinery Equipment Co., Ltd. (hereinafter referred to as Shanghai Songxing) has been included in the list of dishonest persons subject to enforcement. The prepaid equipment payment to Shanghai Songxing is not expected to be recovered, so full provision for bad debts has been made

3. Other receivables using collective provision for bad debts

Closing amount

Combination name

Book balance Bad debt provision Provision ratio (%) Aging combination 723,156.79 404,812.84 55.98 Including: Within 1 year 168,256.79 8,412.84 5.00 1-2 years 5,000.00 500.00 10.00 2-3 years 220,000.00 66,000.00 30.00 More than 3 years 329,900.00 329,900.00 100.00 Subtotal 723,156.79 404,812.84 55.98

(4) Changes in bad debt provisions

1. Details

The first stage The second stage The third stage

Lifetime expectations Lifetime forecasts

Item Total credit losses in the next 12 months (has not occurred) Period credit losses (has

expected credit losses

Credit impairment) Credit impairment occurs)

Opening amount 3,700.32 25,000.00 11,483,652.21 11,512,352.53

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The first stage The second stage The third stage

Lifetime expectations Lifetime forecasts

Item Total credit losses in the next 12 months (has not occurred) Period credit losses (has

expected credit losses

Credit impairment) Credit impairment occurs)

The opening balance for the current period is ——————

--Transfer to the second stage -250.00 250.00

--Transfer to the third stage -22,000.00 22,000.00

--Return to the second stage

--Return to the first stage

Provision in this period 4,962.52 -2,750.00 14,000.00 16,212.52 Received or transferred back in this period

Write-off in this period

Other changes

Ending amount 8,412.84 500.00 11,519,652.21 11,528,565.05 Ending bad debt provision calculation

5.00 10.00 98.68 97.31 Proportion of mention (%)

(5) There are no other receivables actually written off in the current period

(6) Top 5 other receivables

Account for the balance of other receivables

Unit name Nature of payment Ending book balance Account age Ending bad debt provision

Proportion of amount (%)

Gui Shutao Transfer of advance payment for materials 8,000,000.00 More than 3 years 67.53 8,000,000.00 Shanghai Songxing Machinery Equipment

Transfer of equipment purchase money 3,123,752.21 More than 3 years 26.37 3,123,752.21 Co., Ltd.

Zhejiang Wanma Co., Ltd.

Deposit security deposit 200,000.00 2-3 years 1.69 60,000.00Company

Fujian Nanping Sun Cable

Others 146,900.00 More than 3 years 1.24 146,900.00 Co., Ltd.

Shandong Wanhai Cable Co., Ltd.

Deposit security deposit 100,000.00 Within 1 year 0.84 5,000.00 Company

Subtotal 11,570,652.21 97.67 11,335,652.21

7. Inventory

(1) Details

Ending amount Beginning amount

Project

Book balance Provision for decline in value Book value Book balance Provision for decline in value Book value

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Ending amount Beginning amount

Project

Book balance Provision for price decline Book value Book balance Provision for price decline Book value Raw materials 29,065,217.32 1,521,951.31 27,543,266.01 16,278,292.78 1,096,209.72 15,182,083.06 Inventory goods 12,941,391.50 768,485.68 12,172,905.82 10,530,133.70 966,209.27 9,563,924.43 Packaging and low

1,480,132.49 34,297.71 1,445,834.78 1,405,151.09 25,581.54 1,379,569.55 Value consumables

Goods shipped 264,901.02 264,901.02 238,475.70 238,475.70 Products in progress 102,686.83 102,686.83 19,814.12 19,814.12Total 43,854,329.16 2,324,734.70 41,529,594.46 28,471,867.39 2,088,000.53 26,383,866.86

(2) Provision for inventory decline

1. Details

Increase in this period Decrease in this period

Item Opening amount Other Provision for closing amount Others Reversal or write-off

him

Raw materials 1,096,209.72 595,089.46 169,347.87 1,521,951.31 Inventory goods 966,209.27 619,981.06 817,704.65 768,485.68 Packaging and low value

25,581.54 9,889.79 1,173.62 34,297.71 Consumables

Total 2,088,000.53 1,224,960.31 988,226.14 2,324,734.70

2. The specific basis for determining the net realizable value and the reasons for the reversal or write-off of inventory depreciation reserves in the current period.

Determine the net realizable value, reverse inventory depreciation items, and write off inventory depreciation items.

Specific basis for preparation Reason for preparation Estimated selling price of relevant finished goods minus

Inventory accrued in previous periods

The estimated costs to be incurred on completion and the inventory variable provision for inventory depreciation of raw materials will be accrued in the current period.

The estimated selling expenses and related tax preparations will increase the net present value of inventory consumption.

The net realizable value is determined by the amount after expenses

Estimated selling price of relevant finished goods minus estimated inventory accrued in previous periods

In this period, the sales expenses and related taxes and related taxes that have been accrued for inventory decline in inventory items will be adjusted. The inventory variable provision for inventory decline will be

The net realizable value is determined based on the amount of inventory prepared for the price after the sale. The current net value increases.

The estimated selling price of the relevant finished goods is reduced to

Inventory accrued in previous periods

The estimated costs to be incurred for packaging materials and low completion, and the inventory variable provision for inventory decline in value will have been accrued in the current period.

Estimated sales expenses and related tax preparation for high-value consumables increase the net present value of inventory consumption.

The net realizable value is determined by the amount after expenses

8. Other current assets

Item Ending amount Beginning amount

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Impairment Impairment

Book balance Book value Book balance Book value

prepare prepare

To be deducted and retained to be added

4,639,561.90 4,639,561.90 1,059,815.06 1,059,815.06 Value tax input tax

Total 4,639,561.90 4,639,561.90 1,059,815.06 1,059,815.06

9. Long-term equity investment

(1) Classification situation

Ending amount Beginning amount

Item Book Book Balance Impairment provision Book balance Impairment provision

Value Value to associates

61,483,397.78 61,483,397.78 61,483,397.78 61,483,397.78 Industrial investment

Total 61,483,397.78 61,483,397.78 61,483,397.78 61,483,397.78

(2) Details

Beginning amount Increase/decrease in current period

Equity method

The investee's book value is additional, reduced investment, other comprehensive impairment provisions, and recognized investment losses.

Value investment income adjustment

benefit

Associates 61,483,397.78

Xiamen Kuaiyou Network

Technology Co., Ltd. 61,483,397.78

[Note]

Total 61,483,397.78

(Continued from above table)

Increases and decreases in the current period Ending amount

Others announce cash issuance

Invested unit’s provision minus book

Equity, cash dividends or profits, others, provision for impairment losses, value

change profit

Associates 61,483,397.78 Xiamen Kuaiyou.com

Network Technology Co., Ltd. 61,483,397.78

Total 61,483,397.78

[Note] The company signed an "Equity Transfer Agreement" with Xiamen Jingyu Investment Partnership (Limited Partnership) (hereinafter referred to as Jingyu Enterprise) on June 9, 2019. The agreement stipulates that 2019 to 2021 is the performance commitment period. If Kuaiyou Technology fails to achieve 65% of the performance commitment indicators during the profit commitment period, the company has the right to terminate the contract, and Jingyu Enterprise shall pay an annual interest rate of 6% to

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The company pays a fee for the use of the funds. The company has filed a lawsuit with the Intermediate People's Court of Hangzhou City, Zhejiang Province in July 2021. The case

The case was decided on January 14, 2022. The court ruled that Jing Entertainment Enterprises must pay the company shares within ten days from the date of the judgment.

The right transfer fee is 77,000,000.00 yuan, and the fund usage fee is 8,604,526.00 yuan (tentatively calculated until June 24, 2021,

From June 25, 2021 to the date of actual settlement, the calculation will continue based on RMB 77,000,000.00 and an annual interest rate of 6%). The company applied to the Hangzhou Intermediate People's Court on July 21, 2022 to enforce Jingyu Enterprise's repayment obligations. According to the enforcement

Running Script (2022) Zhejiang 01 Zhi No. 956, Jingyu Enterprise failed to perform the payment obligations specified in the effective legal document within the specified period,

has been listed as a person subject to execution for breach of trust, and Jingyu Enterprise and its legal representative Lin Xiaobin have been subject to consumption restriction measures; enforced by the court

According to the investigation, Jingyu Enterprise has no property in its name that can be enforced, and the company cannot provide clues about the property that can be enforced. The court and the public

After consultation, the company ruled on September 20, 2022 to terminate the enforcement procedures against Jing Entertainment Enterprises.

10. Fixed assets

(1) Details

Items Houses and buildings General equipment Special equipment Transportation Total original book value

Beginning amount 122,461,491.04 8,381,326.82 102,131,358.89 1,235,696.17 234,209,872.92 Increase in current period 287,285.53 18,560,062.48 209,557.53 19,056,905.54

1. Purchase 287,285.53 16,904,823.70 209,557.53 17,401,666.76

2. Transfer of construction in progress 1,655,238.78 1,655,238.78 Reduction in current period 42,795.13 4,744,609.89 4,787,405.02

3. Disposal or scrapping 42,795.13 4,744,609.89 4,787,405.02 Ending amount 122,461,491.04 8,625,817.22 115,946,811.48 1,445,253.70 248,479,373.44 Accumulated depreciation

Beginning amount 38,879,000.22 7,705,972.22 53,139,014.90 1,032,247.25 100,756,234.59 Increase in the current period 5,816,828.46 226,727.46 9,643,827.49 195,350.17 15,882,733.58

1. Provision 5,816,828.46 226,727.46 9,643,827.49 195,350.17 15,882,733.58 Decrease amount in this period 40,655.37 4,083,479.31 4,124,134.68

2. Disposal or scrapping 40,655.37 4,083,479.31 4,124,134.68 Closing amount 44,695,828.68 7,892,044.31 58,699,363.08 1,227,597.42 112,514,833.49 Impairment provision

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Items Houses and buildings General equipment Special equipment Transportation tools Total opening amount 12,485,101.82 12,485,101.82 Increase in this period 2,047,103.10 2,047,103.10

1. Provision 2,047,103.10 2,047,103.10 Reduction in current period 313,730.23 313,730.23

2. Disposal or scrapping 313,730.23 313,730.23 Closing amount 14,218,474.69 14,218,474.69 Book value

Book value at the end of the period 77,765,662.36 733,772.91 43,028,973.71 217,656.28 121,746,065.26 Book value at the beginning of the period 83,582,490.82 675,354.60 36,507,242.17 203,448.92 120,968,536.51

(2) Temporarily idle fixed assets

Item Original book value Accumulated depreciation Impairment provision Book value Remarks Special equipment 24,634,749.83 10,348,203.98 9,298,860.13 4,987,685.72

Subtotal 24,634,749.83 10,348,203.98 9,298,860.13 4,987,685.72

(3) At the end of the period, all fixed assets have obtained title certificates.

(4) Impairment test of fixed assets

The recoverable amount is determined as the net amount after fair value minus disposal costs.

Item Book value Recoverable amount Special equipment for impairment in the current period 18,239,613.10 16,192,510.00 2,047,103.10 Subtotal 18,239,613.10 16,192,510.00 2,047,103.10 (continued from the above table)

Fair value and disposal

Project key parameters and basis for their determination

How fees are determined

The correction coefficient includes the correction coefficient for factors such as transaction method, transaction situation, usage status, newness, external environment and other factors. Correction coefficient = transaction factor correction coefficient × condition correction coefficient × condition correction coefficient × external environment correction coefficient. Transaction factor correction refers to the transaction method, transaction motivation, fair value = market

The impact of trading background and transaction size on market price; usage status is revised based on

Valence×Correction coefficient

Special equipment The technical status of the equipment at the time of the on-site investigation, the technical status of the relevant assets, and the estimated disposal costs

Adjustment of utilization rate, workload, working environment, maintenance and other factors; determination of disposal expense rate

The correction of the newness of the assets is based on the adjustment of the newness of the assets based on the age method, and is corrected through the survey of the newness rate. The observed newness rate of the equipment is comprehensively judged through on-site inspection of the equipment's working environment, appearance, operation, maintenance, integrity rate, etc.; the external environment correction is mainly considered. Page 50 of 95

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Fair value and disposal

Project key parameters and basis for their determination

How fees are determined

Adjustments for production decline, shortened service life, etc. caused by external economic factors.

small plan

Note: The company entrusted the external appraisal agency Northern Asia Asset Appraisal Co., Ltd. to evaluate the special equipment, and issued an "Asset Appraisal Report" (Northern Asia Pingbao Zi [2026] No. 01-0322). Fixed asset impairment provisions were made based on the difference between the book value and the recoverable amount of the special equipment in the evaluation report.

11. Construction in progress

(1) Details

Ending amount Beginning amount

Project

Book balance Impairment provision Book value Book balance Impairment provision Book value at the time of installation

2,153,557.54 1,857,685.95 295,871.59 2,268,556.24 1,857,685.95 410,870.29

Total 2,153,557.54 1,857,685.95 295,871.59 2,268,556.24 1,857,685.95 410,870.29

(2) Changes in important projects under construction during the current period

transfer in

Project name Budget amount Beginning amount Increase in the current period Other decreases Ending amount

fixed assets

Equipment under installation 2,268,556.24 1,540,240.08 1,655,238.78 2,153,557.54 Subtotal 2,268,556.24 1,540,240.08 1,655,238.78 2,153,557.54 (continued from the above table)

Cumulative project investment Project Interest capitalization Interest for the current period Interest capital for the current period

Project name Funding source

Proportion of budget (%) Progress (%) Cumulative amount Capitalized amount Capitalization rate (%)

Self-financing when installing equipment

(3) Changes in impairment provision for construction in progress

Increase in this period Decrease in this period

Item Beginning balance Closing balance

Provision Other Disposal or Scraping Other

Equipment being installed 1,857,685.95 1,857,685.95 Subtotal 1,857,685.95 1,857,685.95

12. Right-of-use assets

Project Houses and Buildings Total

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Project Houses and Buildings Total

original book value

Beginning balance

Increase in current period 11,147,602.29 11,147,602.29

1. Rental 11,147,602.29 11,147,602.29 Reduction amount in this period

Ending amount 11,147,602.29 11,147,602.29 Accumulated depreciation

Beginning balance

Increase in current period 3,284,027.10 3,284,027.10

1. Provision 3,284,027.10 3,284,027.10 Reduction in current period

Closing amount 3,284,027.10 3,284,027.10 Book value

Book value at the end of the period 7,863,575.19 7,863,575.19 Book value at the beginning of the period

13. Intangible assets

(1) Details

Item Land use rights Software Total original book value

Beginning amount 29,523,825.00 312,581.13 29,836,406.13 Increase in this period

Decrease amount in this period

Closing amount 29,523,825.00 312,581.13 29,836,406.13 Accumulated amortization

Beginning amount 6,095,765.03 312,581.13 6,408,346.16 Increase in current period 590,476.56 590,476.56

1. Provision 590,476.56 590,476.56 Decrease amount in this period

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Project Land use rights Software Total closing amount 6,686,241.59 312,581.13 6,998,822.72 Book value

Book value at the end of the period 22,837,583.41 22,837,583.41 Book value at the beginning of the period 23,428,059.97 23,428,059.97

(2) At the end of the period, all intangible assets have obtained title certificates.

14. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets without offset

Ending amount Beginning amount

Item deductible deferred deductible deferred

Temporary differences Income tax assets Temporary differences Income tax assets Lease liabilities 7,863,575.19 1,965,893.80

Total 7,863,575.19 1,965,893.80

(2) Deferred income tax liabilities without offset

Ending amount Beginning amount

Item taxable deferred taxable deferred

Temporary differences Income tax liabilities Temporary differences Income tax liabilities Right-of-use assets 7,863,575.19 1,965,893.80

Total 7,863,575.19 1,965,893.80

(3) Deferred income tax assets or liabilities presented on a net basis after offsetting

Ending amount Beginning amount

After offset Items after offset Deferred income tax assets Deferred income tax assets

Deferred income tax assets The amount of deferred income tax assets and liabilities set off each other The amount of deferred income tax assets and liabilities set off each other

Or liability balance Or liability balance Deferred income tax assets 1,965,893.80

Deferred income tax liabilities 1,965,893.80

(4) Details of deferred income tax assets not recognized

Item Ending amount Opening amount Deductible temporary differences 97,825,432.45 98,070,108.60 Deductible losses 514,198,826.89 469,137,247.08 Total 612,024,259.34 567,207,355.68

(5) Deductible losses that have not been recognized as deferred income tax assets will expire in the following years

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Year Ending amount Beginning amount Note 2027 389,588.94 389,588.94

2028 8,339,362.83 8,339,362.83

2029 111,755,017.38 111,755,017.38

2030 135,698,417.36 128,847,577.17

2031 88,806,684.32 88,806,684.32

2032 39,639,520.08 39,639,520.08

2033 50,656,800.41 50,656,800.41

2034 40,702,695.95 40,702,695.95

2035 38,210,739.62

Total 514,198,826.89 469,137,247.08

15. Other non-current assets

Closing Amount Beginning Amount Items

Book balance Impairment provision Book value Book balance Impairment provision Book value Long-term asset advance payment 45,132.74 45,132.74

Total 45,132.74 45,132.74

16. Assets with restricted ownership or rights of use

(1) Asset restrictions at the end of the period

Item Book balance at the end of the period Book value at the end of the period Restriction type Reason for restriction Monetary funds 6,000.00 6,000.00 Margin ETC margin 6,000.00 yuan

Digital accounts receivable claims are financed by receivables 500,000.00 475,000.00 Pledge

Fixed assets for pledged loans 104,889,840.32 66,941,689.83 Intangible assets for pledged loans 29,523,825.00 22,837,583.41 Total mortgaged pledged loans 134,919,665.32 90,260,273.24

(2) Asset restrictions at the beginning of the period

Item Opening book balance Opening book value Restriction type Reason for restriction

Bank acceptance bill margin monetary funds 726,677.43 726,677.43 Margin 100,084.43 yuan, ETC margin 6,000.00 yuan and futures guarantee Page 54 of 95

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Item Opening book balance Opening book value Restriction type Reason for restriction

Securities deposit of RMB 620,593.00 Notes receivable 524,311.00 524,311.00 Pledge Pledge to issue bank acceptance bill Receivables financing 1,406,900.00 1,406,900.00 Pledge Pledge to issue bank acceptance bill Fixed assets 104,889,840.32 71,928,561.15 Mortgage Mortgage borrowing

Intangible assets 29,523,825.00 23,428,059.97 Mortgage Mortgage loan

Total 137,071,553.75 98,014,509.55

17. Short-term borrowings

Item Ending amount Beginning amount Guaranteed borrowings 64,056,481.94 15,014,666.67 Credit borrowings 24,021,220.84 5,004,888.89 Mortgage and guaranteed borrowings 170,145,444.44 200,216,944.44 Letter of credit financing 4,106,000.00

Discount of commercial bills with recourse 491,600.00

Total 262,820,747.22 220,236,500.00

18. Trading financial liabilities

Item Opening amount Increase in the current period Decrease in the current period Ending amount Trading financial liabilities 130,495.00 130,495.00

Including: Derivative financial liabilities 130,495.00 130,495.00

Total 130,495.00 130,495.00

19. Notes payable

(1) Details

Item Closing balance Opening balance Bank acceptance bill 1,499,060.00 Total 1,499,060.00

(2) There are no due and unpaid notes payable at the end of the period

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20. Accounts payable

Item Ending amount Beginning amount

Payment for goods 11,674,427.51 19,297,806.45 Freight fee 1,285,649.82 2,814,991.50 Engineering equipment payment 188,180.09 413,035.01 Others 465,401.78 105,142.83 Total 13,613,659.20 22,630,975.79

21. Contract liabilities

Item Ending amount Beginning amount

Payment 678,195.30 485,796.41 Total 678,195.30 485,796.41

22. Employee benefits payable

(1) Details

Item Beginning amount Increase in the current period Decrease in the current period Ending amount Short-term compensation 3,170,296.09 24,000,099.56 24,105,534.46 3,064,861.19 Post-employment benefits—defined withdrawals

108,895.56 1,933,339.68 1,921,107.90 121,127.34 plan

Dismissal benefits 231,191.30 739,550.73 970,742.03

Total 3,510,382.95 26,672,989.97 26,997,384.39 3,185,988.53

(2) Details of short-term remuneration

Item Beginning amount for the current period Increase for the current period Decrease for the current period Closing amount Wages, bonuses, allowances and subsidies 3,071,316.11 20,985,455.00 21,093,198.10 2,963,573.01 Employee welfare fees 852,769.33 852,769.33

Social insurance premiums 73,979.98 1,179,490.26 1,180,580.33 72,889.91 Including: medical insurance premiums 67,656.72 1,074,406.66 1,071,376.05 70,687.33

Work injury insurance premium 6,323.26 105,083.60 109,204.28 2,202.58 Housing provident fund 805,361.00 805,361.00

Trade union funds and employee education funds 25,000.00 177,023.97 173,625.70 28,398.27

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Item Opening amount Increase in the current period Decrease in the current period Subtotal of the closing amount 3,170,296.09 24,000,099.56 24,105,534.46 3,064,861.19

(3) Set up the details of the contribution plan

Item Beginning amount Increase in the current period Decrease in the current period Ending amount Basic pension insurance 105,382.80 1,874,767.06 1,862,693.06 117,456.80 Unemployment insurance premium 3,512.76 58,572.62 58,414.84 3,670.54 Subtotal 108,895.56 1,933,339.68 1,921,107.90 121,127.34

23. Taxes payable

Item Ending amount Beginning amount

Real estate tax 432,802.66 432,802.66 Land use tax 123,881.50 123,881.50 Personal income tax withheld 44,249.13 53,483.27 Stamp tax 40,825.22 39,403.86 Environmental protection tax 143.28

Total 641,901.79 649,571.29

24. Other payables

Item Ending amount Beginning amount

Fund loan 10,036,666.67 Deposit and margin 1,032,100.12 922,950.00 Others 55,741.03 281,276.32 Total 1,087,841.15 11,240,892.99

25. Non-current liabilities due within one year

Item Ending amount Beginning amount

Lease liabilities due within one year 3,970,793.53

Total 3,970,793.53

26. Other current liabilities

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Item Ending amount Opening amount Tax amount to be reversed 88,165.36 63,153.52 Notes receivable that have not been terminated 11,456.00

Total 99,621.36 63,153.52

27. Lease liabilities

Item Closing balance Opening balance Unpaid lease payments 4,230,218.63

Less: Unrecognized financing expenses 140,739.45

Total 4,089,479.18

28. Deferred income

Item Beginning balance Increase in the current period Decrease in the current period Closing balance Reason for formation

Asset-related government subsidies received 767,682.88 403,200.00 90,194.14 1,080,688.74

Total government subsidies 767,682.88 403,200.00 90,194.14 1,080,688.74

29. Share capital

Increases and decreases in the current period (decreases are represented by “-”)

Item Opening amount Issued Provident Fund Ending amount Bonus shares Others Subtotal

New shares Conversion

Total number of shares 126,673,000 126,673,000

30. Capital reserve

Item Opening amount Increase in the current period Decrease in the current period Ending amount Equity premium 188,916,814.63 188,916,814.63 Total 188,916,814.63 188,916,814.63

31. Surplus reserve

Item Beginning amount Increase in the current period Decrease in the current period Ending amount Statutory surplus reserve 30,107,549.59 30,107,549.59

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Item Opening amount Increase in the current period Decrease in the current period Closing amount Discretionary surplus reserve 12,930,553.92 12,930,553.92 Total 43,038,103.51 43,038,103.51

32. Undistributed profits

Item Number for the current period Number for the same period last year Undistributed profit at the beginning of the period -290,692,497.53 -266,357,071.70

Add: Net profit attributable to owners of the parent company for the period -27,354,269.44 -24,335,425.83 Undistributed profit at the end of the period -318,046,766.97 -290,692,497.53

(2) Notes on consolidated income statement items

1. Operating income/operating costs

(1) Details

Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Main business income 389,000,374.08 380,832,962.10 381,356,854.27 367,091,459.02 Other business income 2,751,628.10 274,574.82 2,409,595.06 486,135.96

Total 391,752,002.18 381,107,536.92 383,766,449.33 367,577,594.98 of which: with customers

Income generated from contracts between

(2) Revenue breakdown information

1. Revenue generated from contracts with customers broken down by type of goods or services

Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Special polyethylene and cross

262,880,294.80 257,726,959.44 278,788,995.36 272,450,666.57 polyethylene cable materials

Special PVC Electric

27,935,066.71 26,980,044.91 34,699,199.81 30,562,193.64 Cable materials

General PVC Electric

66,708,376.27 68,491,102.88 41,033,700.27 41,046,340.02 Cable materials

Halogen-free low smoke flame retardant electricity

31,476,636.30 27,634,854.87 26,834,958.83 23,032,258.79 Cable materials

Others 2,751,628.10 274,574.82 2,409,595.06 486,135.96

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Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Subtotal 391,752,002.18 381,107,536.92 383,766,449.33 367,577,594.98

2. Revenue generated from contracts with customers broken down by operating region

Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Domestic 391,314,210.99 380,756,405.02 383,766,449.33 367,577,594.98 Overseas 437,791.19 351,131.90

Subtotal 391,752,002.18 381,107,536.92 383,766,449.33 367,577,594.98

3. Revenue generated from contracts with customers is broken down by the time of transfer of goods or services

Item Number for the current period Number for the same period last year Recognized income at a certain point in time 391,752,002.18 383,766,449.33 Subtotal 391,752,002.18 383,766,449.33

(3) The income recognized in the current period and included in the opening book value of contract liabilities was RMB 465,660.91.

2. Taxes and surcharges

Item Number for this period Number for the same period last year Property tax 432,802.65 432,802.66 Stamp tax 191,687.37 111,755.00 Land use tax 123,881.50 123,881.50 Urban maintenance and construction tax 1,644.53 189.32 Education fee surcharge 986.71 113.60 Vehicle and vessel tax 720.00

Local education surcharge 657.81 75.72 Environmental protection tax 533.64 344.76 Total 752,914.21 669,162.56

3. Selling expenses

Item Amount for the current period Amount for the same period last year Wages and compensation 2,506,730.33 2,984,827.77

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Item Number for the current period Number for the same period last year Business entertainment expenses 1,110,996.57 484,430.76 Sales and service expenses 285,625.61 255,471.70 Travel expenses 77,941.57 95,597.78 Others 531,485.58 318,078.80 Total 4,512,779.66 4,138,406.81

4. Administrative expenses

Item Amount for the current period Amount for the same period last year Wages and compensation 8,160,365.68 5,708,001.65 Depreciation expenses 1,214,257.67 1,201,430.94 Intermediary consulting fees 1,179,031.11 1,114,641.51 Business entertainment expenses 806,919.08 522,590.68 Amortization of intangible assets 590,476.56 590,476.56 Office expenses 414,715.62 293,487.09 Others 729,722.13 685,137.91 Total 13,095,487.85 10,115,766.34

5. Research and development expenses

Item Amount for the current period Amount for the same period last year Direct investment 10,721,539.71 12,385,512.82 Salary 3,891,019.69 4,333,275.96 Depreciation expense 1,302,175.44 1,294,648.50 Others 579,126.72 627,690.08 Total 16,493,861.56 18,641,127.36

6. Financial charges

Item Number for the current period Number for the same period last year Interest expense 8,116,309.00 8,194,999.97

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Item Number for the current period Number for the same period last year Interest income -41,514.62 -52,478.28 Exchange gains and losses 3,281.79

Others 42,784.10 5,630.17 Total 8,120,860.27 8,148,151.86

7. Other income

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of personal gains and losses and asset-related government subsidies 90,194.14 112,317.12

Government subsidies related to income 1,251,506.48 1,973,027.44 1,251,506.48 Refund of personal income tax withholding fees 12,501.54 22,075.94

Additional value-added tax deduction 3,174,738.53 3,283,022.61

Total 4,528,940.69 5,390,443.11 1,251,506.48

8. Investment income

Item Number for the current period Number for the same period last year Financing discount loss on receivables -1,028,276.33 -1,284,930.36 Investment income from disposal of trading financial assets -1,619,725.37 -496,532.58 Total -2,648,001.70 -1,781,462.94

9. Gains from changes in fair value

Item Number for the current period Number for the same period last year Trading financial liabilities -110,060.00 Including: Gains from changes in fair value of derivative financial instruments -110,060.00 Total -110,060.00

10. Credit impairment losses

Item Number for the current period Number for the same period last year Bad debt losses 2,527,789.05 -234,421.05

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Item Amount for this period Total amount for the same period last year 2,527,789.05 -234,421.05

11. Asset impairment losses

Item Number for the current period Number for the same period last year Loss on inventory depreciation -1,224,960.31 -1,087,546.88 Impairment loss on fixed assets -2,047,103.10 -502,618.34 Total -3,272,063.41 -1,590,165.22

12. Income from asset disposals

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of profit and loss Fixed asset disposal income -61,179.08 -275,850.10 -61,179.08 Total -61,179.08 -275,850.10 -61,179.08

13. Non-operating income

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of profit and loss Others 301,970.18 164,505.06 301,970.18 Total 301,970.18 164,505.06 301,970.18

14. Non-operating expenses

Included in non-recurring items for the current period Amount for the current period Amount for the same period last year

Amount of profit and loss

External donation 15,000.00 15,000.00 Loss from damage and scrapping of non-current assets 2,592.11

Fine for work-related accidents 370,000.00

Others 7,979.06 2,062.00 7,979.06 Total 22,979.06 374,654.11 22,979.06

15. Income tax expenses

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(1) Adjustment process of accounting profits and income tax expenses

Item Number for the current period Total profit for the same period last year -30,976,961.62 -24,335,425.83 Income tax expense calculated according to the parent company’s applicable tax rate -4,646,544.24 -3,650,313.87 Impact of different tax rates applicable to subsidiaries -617,592.43 60,927.66 Impact of non-deductible costs, expenses and losses 118,802.51 118,079.56 No deductible temporary differences of deferred income tax assets recognized in the current period

7,336,845.04 6,061,796.45 Perhaps the impact of deductible losses

The impact of super deductions for R&D expenses and other expenses -2,191,510.88 -2,590,489.80 Income tax expenses

(3) Notes on Consolidated Cash Flow Statement Items

1. Cash received or paid in connection with important investment activities

(1) Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets

Item Amount for this period Amount for the same period last year Payment for engineering equipment 20,187,007.85 1,755,764.29 Total 20,187,007.85 1,755,764.29

2. Other cash received or paid related to operating activities, investing activities and financing activities

(1) Other cash received related to operating activities

Item Number for this period Number for the same period last year Government subsidies received 1,654,706.48 2,853,027.44 Deposit received 243,150.12 181,500.00 Deposit for bill recovery 100,084.43

Bank interest income 41,514.62 52,478.28 Recovery of debt transfer money 1,330,000.00 Recovery of equipment purchase money 1,300,000.00 Others 319,891.20 1,385,053.89 Total 2,359,346.85 7,102,059.61

(2) Other cash payments related to operating activities

Item Amount for the current period Amount for the same period last year

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Item Number for the current period Number for the same period last year Operating period expenses 18,585,486.70 22,062,804.20 Other current accounts 233,115.07 102,494.66 Deposit payment 101,000.00 108,000.00 Others 23,069.06 372,062.00 Total 18,942,670.83 22,645,360.86

(3) Receive other cash related to investment activities

Item Number of this period Number of same period last year Recovery of futures trading margin 620,593.00 119,509.60 Total 620,593.00 119,509.60

(4) Cash payments related to other investment activities

Item Amount for this period Amount for the same period last year Payment of futures trading margin 620,593.00 Total 620,593.00

(5) Other cash received related to financing activities

Item Number of this period Number of funds received for the same period of last year 245,000,000.00 210,000,000.00 Total 245,000,000.00 210,000,000.00

(6) Payment of other cash related to financing activities

Item Amount for this period Amount for the same period last year Payment of principal and interest of capital loan 255,214,166.67 200,089,999.99 Payment of lease payments related to right-of-use assets 3,722,076.12

Total 258,936,242.79 200,089,999.99

3. Supplementary information to the cash flow statement

Supplementary information Number for the current period Number for the same period last year

(1) Adjust net profit to cash flow from operating activities:

Net profit -30,976,961.62 -24,335,425.83 Plus: asset impairment provision 3,272,063.41 1,590,165.22 Credit impairment provision -2,527,789.05 234,421.05

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Supplementary information Numbers for the current period Numbers for the same period last year Depreciation of fixed assets, depreciation of right-of-use assets, depreciation of oil and gas assets

19,166,760.68 13,969,989.20 Depreciation of consumption and productive biological assets

Amortization of intangible assets 590,476.56 590,476.56 Amortization of long-term deferred expenses

Disposal of fixed assets, intangible assets and other long-term assets

61,179.08 275,850.10 loss (income is listed with "-")

Loss from scrapping of fixed assets (income is listed with "-") 2,592.11 Loss from changes in fair value (income is listed with "-") 110,060.00 Financial expenses (income is listed with "-") 8,119,590.79 8,194,999.97 Investment losses (income is listed with "-") 1,619,725.37 496,532.58 Decrease in deferred income tax assets (increases are indicated with "-")

Increase in deferred income tax liabilities (decreases are indicated with "-")

Decrease in inventory (increases are indicated by "-") -16,370,687.91 -7,509,824.83 Decrease in operating receivables (increases are indicated by "-") -5,356,558.21 6,358,658.87 Increase in operating payables (decreases are indicated by "-") 7,202,618.58 -1,148,279.09Others

Net cash flow from operating activities -15,199,582.32 -1,169,784.09

(2) Major investment and financing activities that do not involve cash receipts and payments:

debt to capital

Convertible corporate bonds due within one year

Add a new right-of-use asset

(3) Net changes in cash and cash equivalents:

Closing balance of cash 7,189,672.56 7,645,652.29 Less: Opening balance of cash 7,645,652.29 4,009,044.98 Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents -455,979.73 3,636,607.31

4. Composition of cash and cash equivalents

(1) Details

Item Ending amount Beginning amount

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Item Ending amount Beginning amount

1. Cash 7,189,672.56 7,645,652.29 Of which: Cash on hand 8,318.50 14,318.50 Bank deposits that can be used for payment at any time 7,165,046.46 7,346,488.75 Other monetary funds that can be used for payment at any time 16,307.60 284,845.04 available for payment of funds deposited with the central bank

Deposit funds from other banks

Funds placed with other banks

2. Cash equivalents

Including: Bond investments due within three months

3. Closing balance of cash and cash equivalents 7,189,672.56 7,645,652.29 Including: restricted cash and cash used by the parent company or subsidiaries within the group

cash equivalents

(2) Monetary funds other than cash and cash equivalents

Items other than cash and cash equivalents Closing balance Opening balance

Reason

Bank acceptance bill margin 100,084.43 Cannot be used to pay ETC margin at any time 6,000.00 6,000.00 Cannot be used to pay futures margin at any time 620,593.00 Cannot be used to pay subtotal 6,000.00 726,677.43

5. Changes in liabilities related to financing activities

Increase in this period Decrease in this period

Item Opening amount Non-cash Closing amount Cash change Non-cash change Cash change

Variable short-term borrowings 220,236,500.00 468,884,605.10 7,610,332.79 433,910,690.67 262,820,747.22 Other payables

Loan-fund disbursement 10,036,666.67 245,000,000.00 177,500.00 255,214,166.67

borrow money

Lease liability

(including one year

11,476,078.50 3,415,805.79 8,060,272.71 due within

lease liabilities)

Subtotal 230,273,166.67 713,884,605.10 19,263,911.29 692,540,663.13 270,881,019.93

6. Major activities that do not involve cash receipts and payments

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(1) Amount of endorsement and transfer of commercial bills not involving cash receipts or payments

Item Number for this period Number for the same period last year Amount of commercial bills endorsed and transferred 134,722,693.03 104,512,069.14 Including: Payment for goods 131,940,847.74 103,403,003.77 Payment for the purchase of long-term assets such as fixed assets 1,464,466.29 386,815.37 Payment of various expenses 1,317,379.00 722,250.00

(4) Others

1. Foreign currency monetary items

Item Foreign currency balance at the end of the period Conversion exchange rate Converted into RMB balance at the end of the period Monetary funds 15,205.79 106,878.46 Including: US dollars 15,205.79 7.0288 106,878.46 Accounts receivable 46,579.13 327,395.39 Including: US dollars 46,579.13 7.0288 327,395.39

2. Leasing

(1) The company as lessee

1. For details on the right-of-use assets, please refer to Note 5 (1) 12 of this financial statement.

2. Current profits and losses and cash flow related to leasing

Item Number for the current period Number for the same period last year Interest expense on lease liabilities 328,476.21

Total cash outflow related to leasing 3,722,076.12

3. For details on the maturity analysis of lease liabilities and corresponding liquidity risk management, please refer to Note 9 (2) of this financial statement.

3. Supplier Financing Arrangements

(1) Terms and conditions of supplier financing arrangements

Supplier Financing Arrangement Types Terms and Conditions

The company applies for domestic letters of credit through banks, and the performance of the company's payment obligations under the domestic letters of credit is unconditional and irrevocable. The bank receives the letter of credit in compliance with the terms

Based on the original creditor's (our company's supplier) application and the issuing bank's letter of credit financing negotiation authorization, funds will be advanced to the supplier. The company will pay the full amount to the bank on the payment date according to the domestic letter of credit. The payment term of the letter of credit is 364 days after sighting the order, and Hu Baoquan will provide a guarantee of a maximum balance of 20 million yuan from April 21, 2025 to April 20, 2028.

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(2) Liabilities related to supplier financing arrangements

1. Book value of related liabilities

Item Ending amount Beginning amount Short-term borrowings 4,106,000.00

Including: Supplier has received payment 4,106,000.00

Subtotal 4,106,000.00

2. Relevant liability payment maturity range

Items: Ending payment due date range. Beginning payment due date range. Liabilities belonging to financing arrangements. 364 days after order placement.

3. Non-cash changes in related liabilities

Type of non-cash changes Number for the current period Number for the same period last year transferred from accounts payable to short-term borrowings 4,106,000.00

6. R&D expenditures

(1) R&D expenditures

Item Amount for the current period Amount for the same period last year Direct investment 10,721,539.71 12,385,512.82 Salary 3,891,019.69 4,333,275.96 Depreciation expense 1,302,175.44 1,294,648.50 Others 579,126.72 627,690.08

Total 16,493,861.56 18,641,127.36 Including: Expenditure R&D expenditure 16,493,861.56 18,641,127.36

7. Interests in other entities

(1) Composition of enterprise groups

1. The company includes two subsidiaries, Hangzhou Rongzhu Company and Sun High-tech Company, into the scope of consolidated financial statements.

2. Basic information of subsidiaries

Main business shareholding ratio (%)

Subsidiary name Registered capital Place and registration Nature of business Acquisition method Direct Indirect

land

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Main business shareholding ratio (%)

Subsidiary name Registered capital Place and registration Nature of business Acquisition method Direct Indirect

land

Hangzhou Rongzhu Company 30,000,000.00 Hangzhou, Zhejiang Wholesale industry 100.00 Establishment of Sun High-tech Company 30,000,000.00 Nanping, Fujian Manufacturing 51.00 Establishment

(2) Changes in consolidation scope due to other reasons

1. Increase in consolidation scope

Company name Equity acquisition method Time of equity acquisition Capital contribution Capital contribution ratio Sun High-tech Company was established March 13, 2025 15,300,000.00 51.00%

(3) Important non-wholly owned subsidiaries

1. Details

Minority shareholders are attributable to minority shareholders in this period. Name of subsidiary of minority shareholders at the end of the period.

Shareholding ratio Profit and loss of several shareholders Dividends declared Equity balance Sun High-tech Company 49.00% -3,622,692.18 11,077,307.82

2. Main financial information of important non-wholly owned subsidiaries

(1) Assets and liabilities

Closing amount

Subsidiary name

Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Sun High-tech Company 34,729,348.18 22,069,900.57 56,799,248.75 30,103,018.91 4,089,479.18 34,192,498.09

(2) Profit and loss and cash flow situation

Number for the current period Number for the same period last year Number of subsidiaries

Cash flow from operating activities Operating net profit Comprehensive income Name of operating activities Operating income Net profit Total comprehensive income

Amount Revenue Total Profit Cash Flow Sun High

75,933,201.19 -7,393,249.34 -7,393,249.34 -23,344,061.38

new company

(4) Interests in joint ventures

1. Associates

Joint venture or associated enterprise Main shareholding ratio (%) Place of registration of the joint venture or associated enterprise Nature of business

Company name Business location Direct Indirect Accounting treatment method for investment

information transmission,

Xiamen Kuaiyou Network

Xiamen, Fujian Xiamen, Fujian Software and Information 35.00 Equity Method Accounting Technology Co., Ltd.

Technical services industry

2. Main financial information of important associates

As of December 31, 2025, the company has made full provision for impairment of its long-term equity investment of 35% equity in Xiamen Kuaiyou Network Technology Co., Ltd.

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8. Government subsidies

(1) New government subsidies in this period

Project New subsidy amount in this period

Asset-related government subsidies 403,200.00

Including: included in deferred income 403,200.00

Government subsidies related to income 1,251,506.48

Including: included in other income 1,251,506.48

Total 1,654,706.48

(2) Liability items involving government subsidies

New items added in this period Included in this period Included in this period Items presented in the financial statements Opening amount

Subsidy amount Other income amount Non-operating income amount Deferred income 767,682.88 403,200.00 90,194.14

Subtotal 767,682.88 403,200.00 90,194.14

(Continued from above table)

Offset costs for the current period Other items presented in financial statements with assets/income Closing balance for the current period

Amount of costs Change in asset amount Related deferred income 1,080,688.74 Subtotal related to assets 1,080,688.74

(3) Amount of government subsidies included in current profits and losses

Item Current period Amount of government subsidies included in other income for the same period last year 1,341,700.62 2,085,344.56 Total 1,341,700.62 2,085,344.56

9. Risks related to financial instruments

The company's goal in risk management is to strike a balance between risks and returns, minimize the negative impact of risks on the company's operating performance, and maximize the interests of shareholders and other equity investors. Based on this risk management objective, the company's basic risk management strategy is to confirm and analyze the various risks faced by the company, 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.

The Company faces various risks related to financial instruments in its daily activities, mainly including credit risk, liquidity risk and market risk. Management has reviewed and approved policies for managing these risks, which are summarized below.

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(1) Credit risk

Credit risk refers to the risk that one party to a financial instrument cannot fulfill its obligations, causing financial losses to the other party.

1. Credit risk management practices

(1) Credit risk evaluation methods

The Company assesses at each balance sheet date whether the credit risk of relevant financial instruments has increased significantly since initial recognition. When determining whether credit risk has increased significantly since initial recognition, the Company considers reasonable and evidence-based information that is available without unnecessary additional cost or effort, including qualitative and quantitative analysis based on historical data, external credit risk ratings, and forward-looking information. Based on a single financial instrument or a combination of financial instruments with similar credit risk characteristics, the company determines the changes in default risk during the expected duration of the financial instrument by comparing the risk of default of the financial instrument on the balance sheet date with the risk of default on the initial recognition date.

When one or more of the following quantitative and qualitative criteria are triggered, the company believes that the credit risk of financial instruments has increased significantly:

1. The quantitative standard is mainly that the default probability of the remaining duration on the balance sheet date has increased by more than a certain percentage compared with the initial recognition;

2. Qualitative standards mainly include significant adverse changes in the debtor's operating or financial conditions, existing or expected changes in technology, market, economic or legal environment, which will have a significant adverse impact on the debtor's ability to repay the company, etc.

(2) Definition of defaulted and credit-impaired assets

When a financial instrument meets one or more of the following conditions, the company defines the financial asset as having defaulted, and its standards are consistent with the definition of credit impairment:

1. The debtor encounters major financial difficulties;

2. The debtor violates the binding clauses on the debtor in the contract;

3. The debtor is likely to go bankrupt or undergo other financial reorganization;

4. The creditor grants the debtor concessions that the debtor would not have made under any other circumstances due to economic or contractual considerations related to the debtor's financial difficulty.

2. Measurement of expected credit losses

Key parameters for measuring expected credit losses include probability of default, loss given default rate and exposure to default risk. The company considers quantitative analysis and forward-looking information of historical statistical data (such as counterparty ratings, guarantee methods and collateral types, repayment methods, etc.) to establish default probability, default loss rate and default risk exposure models.

3. For the reconciliation statement between the opening balance and the closing balance of financial instrument loss provisions, please refer to Notes 5 (1) 2 and 5 of this financial statement for details.

Explanation of (1) 3, 5 (1) 4, and 5 (1) 6.

4. Credit risk exposure and credit risk concentration

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The company's credit risk mainly comes from monetary funds and accounts receivable. In order to control the above-mentioned related risks, the Company has taken the following measures.

(1) Monetary funds

The Company places bank deposits and other monetary funds in financial institutions with higher credit ratings, so its credit risk is lower.

(2) Accounts receivable

The company continues to conduct credit assessments on customers who trade on credit. Based on the credit assessment results, the Company chooses to conduct transactions with approved customers with good credit and monitors their receivable balances to ensure that the Company does not face significant bad debt risks.

Since the company's accounts receivable risk points are distributed among multiple partners and customers, as of December 31, 2025, 36.52% of the company's accounts receivable (December 31, 2024: 26.02%) originated from the top five customers with balances, and the company does not have significant credit concentration risk.

The Company's maximum exposure to credit risk is the carrying value of each financial asset on the balance sheet.

(2) Liquidity risk

Liquidity risk refers to the risk of a shortage of funds when the company fulfills its obligations to settle by delivering cash or other financial assets. Liquidity risk may arise from the inability to sell financial assets at fair value as quickly as possible; or from the counterparty's inability to repay its contractual debts; or from debts that mature prematurely; or from the inability to generate expected cash flows.

In order to control this risk, the Company comprehensively uses various financing methods such as bill settlement and bank borrowing, and adopts an appropriate combination of long-term and short-term financing methods to optimize the financing structure and maintain a balance between financing continuity and flexibility. The Company has obtained bank credit lines from a number of commercial banks to meet its working capital requirements and capital expenditures.

Financial liabilities are classified by remaining maturity

Closing amount

Item 3-year book value Undiscounted contract amount Within 1 year 1-3 years

The above bank borrowings 262,820,747.22 267,163,801.61 267,163,801.61

Accounts payable 13,613,659.20 13,613,659.20 13,613,659.20

Other payables 1,087,841.15 1,087,841.15 1,087,841.15

Other current negative

11,456.00 11,456.00 11,456.00

debt

Lease liabilities (including

Due within one year

8,060,272.71 8,479,157.26 4,248,938.63 4,230,218.63 non-current liabilities

debt)

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Closing amount

Item 3-year book value Undiscounted contract amount Within 1 year 1-3 years

The above subtotal 285,593,976.28 290,355,915.22 286,125,696.59 4,230,218.63 (continued from the above table)

End of last year

Project

Book value Undiscounted contract amount Within 1 year 1-3 years Bank borrowings over 3 years 220,236,500.00 222,359,076.39 222,359,076.39

transactional finance

130,495.00 130,495.00 130,495.00

Liabilities

Notes payable 1,499,060.00 1,499,060.00 1,499,060.00

Accounts payable 22,630,975.79 22,630,975.79 22,630,975.79

Other payables 11,240,892.99 11,275,892.99 11,275,892.99

Subtotal 255,737,923.78 257,895,500.17 257,895,500.17

(3) Market risk

Market risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market prices. Market risks mainly include interest rate risk and foreign exchange risk.

1. Interest rate risk

Interest rate risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market interest rates. Fixed-rate interest-bearing financial instruments expose the Company to fair value interest rate risk, while floating-rate interest-bearing financial instruments expose the Company to cash flow interest rate risk. The Company determines the proportion of fixed-rate and floating-rate financial instruments based on market conditions, and maintains an appropriate portfolio of financial instruments through regular review and monitoring.

2. Foreign exchange risk

Foreign exchange risk refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in foreign exchange rates. The risk of exchange rate changes faced by the Company is mainly related to the Company's foreign currency monetary assets and liabilities. The Company operates in Mainland China and its main activities are denominated in RMB. Therefore, the market risk of foreign exchange changes borne by the Company is not significant. For details of the Company’s foreign currency monetary assets and liabilities at the end of the period, please refer to Note 5 (4) 1 of this financial statement.

(4) Transfer of financial assets

1. Basic information on transfer of financial assets

Transferred Financial Financing Transferred Financial Financing Derecognition is judged based on the transfer method and derecognition.

Nature of product Amount of product Data

Has transferred almost all of its bill discount receivables financing 62,933,517.38 Derecognized

risks and rewards

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Transferred Financial Financing Transferred Financial Financing Derecognition is judged based on the transfer method and derecognition.

Nature of product Amount of product Data

Has transferred substantially all of its note endorsements Receivables Financing 14,267,402.44 Derecognized

risks and rewards

Digital accounts receivable

Retained almost all of its creditor's rights on wind accounts. Receivable financing 500,000.00 Not derecognized

risks and rewards

certificate discount

Retained substantially all of its wind note endorsements Notes receivable 11,456.00 Not derecognized

risks and rewards

Subtotal 77,712,375.82

2. Financial assets derecognized due to transfer

Financial assets transfer party Financial assets derecognized Gain items related to derecognition

formula amount or loss

Accounts receivable financing discount 62,933,517.38 196,063.64 Accounts receivable financing endorsement 14,267,402.44

Subtotal 77,200,919.82 196,063.64

3. The amount of assets and liabilities resulting from the transfer of financial assets and continued involvement

Assets formed by continued involvement Liabilities formed by continued involvement Method of asset transfer

Amount Amount

Notes receivable Endorsement 11,456.00 11,456.00 Receivables financing Discount 500,000.00 491,600.00 Subtotal 511,456.00 503,056.00

10. Disclosure of fair value

(1) Details of the period-end fair value of assets and liabilities measured at fair value

Closing fair value

Item First level fairness Second level fairness Third level fairness

Total

value measurement value measurement value measurement

Ongoing fair value measurement

1. Receivables financing 50,291,589.63 50,291,589.63 Total assets continuously measured at fair value 50,291,589.63 50,291,589.63

(2) Continuous and non-continuous third-level fair value measurement items, valuation techniques used and qualitative and quantitative information on important parameters

The financing of receivables measured at the third level of fair value held by the Company is discounted bank acceptance bills receivable and digital credit certificates of accounts receivable. The credit risk is small and the remaining period is short. The Company deducts the expected credit from its par amount. Page 75 of 95

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The net amount of the loss determines its fair value.

11. Related parties and related transactions

(1) Related party situation

1. The company’s largest shareholder

(1) The largest shareholder of the company

Parent company The name of the largest shareholder of the parent company The name of the largest shareholder Registration place Nature of business Registered capital The company’s shareholding ratio The company’s shareholding ratio Voting rights ratio (%) Example (%) Beijing Jurong Weiye Energy Technology Co., Ltd.

Company (hereinafter referred to as Jurong Weiye Company Beijing Business Services Industry 300,000,000.00 19.03 19.03 Company)

Explanation of the company’s largest shareholder

Jurong Weiye Company was registered with the Market Supervision and Administration Bureau of Fengtai District, Beijing on January 23, 2017. It has a registered capital of 300 million yuan and is a wholly-owned subsidiary of Jurong (Beijing) New Energy Co., Ltd.

(2) The actual controller of the company is Lin Rongsheng.

2. For details of the company’s subsidiaries, please refer to Note 7 of this financial statement.

3. For details of the Company’s associates, please refer to Note 7 of this financial statement.

4. Information about other related parties of the company

Names of other related parties Relationship between other related parties and the Company Zhejiang Donghang Holding Group Co., Ltd. (hereinafter referred to as Donghang

The company’s original controlling shareholder

Group company)

Fujian Nanping Sun Cable Co., Ltd. [Note] Shareholder of an important subsidiary of the company

Hu Baoquan, Deputy General Manager of the Company

[Note] Fujian Nanping Sun Cable Co., Ltd. has become a related party of the company since March 13, 2025. The following related party transactions only disclose transactions from March 13, 2025 to the end of 2025. Data outside the duration of the related relationship will not be disclosed.

(2) Related transactions

1. Related transactions related to the purchase and sale of goods, provision and receipt of services

(1) Details

1. Related transactions related to the sale of goods and provision of services

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Related parties Contents of related transactions Numbers for this period Numbers for the same period last year Fujian Nanping Sun Cable Co., Ltd.

Sales of goods 85,229,042.23

Co., Ltd.

2. Related leasing situation

(1) Company leasing situation

Number of current period

Simplified processing of short-term rentals

Leases and leases of low-value assets Recognize leases of right-of-use assets

Lessor’s name Type of leased assets

rental costs and

Not included in the calculation of lease liabilities Rent paid (excluding unpaid

The increased lease liability and the amount of variable lease payments recognized as interest are included in the variable lease liability measurement.

Debt principal amount Expenditure

Amount of lease payment)

Fujian Nanping Sun

Cable Co., Ltd. Houses and buildings 3,415,805.79 11,894,963.05 328,476.21 Company

(Continued from above table)

Same period last year

Short-term rentals with simplified processing

Recognizing leases on right-of-use assets

lease assets

and low-value asset leasing

Lessor name

Category Rent Paid (excluding Increased Lease

Rental expenses and not included

The recognized interest is not included in the measurement of lease liabilities. The principal amount of the liability

Variability in lease liability measurement

variable lease payments (variable lease payments)

Lease payment

3. Related guarantees

(1) The company and its subsidiaries serve as guaranteed parties

Guarantee Guarantee Whether the guarantee has been guaranteed by the guarantor Amount of guarantee

Start date Maturity date After completion Hu Baoquan 170,000,000.00 March 10, 2023 March 10, 2028 No Hu Baoquan 4,106,000.00 April 21, 2025 April 20, 2028 No Donghang Group Company 15,000,000.00 September 19, 2024 September 18, 2026 No Donghang Group Company 49,000,000.00 January 16, 2025 January 14, 2028 No

4. Related party lending

Related parties Borrowing amount Start date Maturity date Description of borrowing

Donghang Group Company 10,000,000.00 December 9, 2024 January 21, 2025 [Note]

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Related party Borrowing amount Start date Maturity date Description 20,000,000.00 March 3, 2025 March 5, 2025 20,000,000.00 March 3, 2025 March 5, 2025 30,000,000.00 March 3, 2025 March 11, 2025 5,000,000.00 March 6, 2025 March 11, 2025 170,000,000.00 August 29, 2025 September 1, 2025

[Note] In this period, the company borrowed 245,000,000.00 yuan from Donghang Group Company, and the new capital occupation fee in this period was 177,500.00 yuan. In this period, it returned the loan principal of 255,000,000.00 yuan and paid it 214,166.67 yuan in capital occupation fees. As of December 31, 2025, there is no loan principal and capital occupation fee payable at the end of the period

5. Asset transfer and debt restructuring of related parties

Related parties Contents of related transactions Numbers for this period Numbers for the same period last year Fujian Nanping Sun Cable Co., Ltd.

Purchase of fixed assets 17,072,775.22

Co., Ltd.

6. Remuneration of key management personnel

Item Number for the current period Number for the same period last year Remuneration of key management personnel 2.1937 million yuan 2.580 million yuan

(3) Accounts receivable and payable from related parties

1. Amounts receivable from related parties

Closing Amount Opening Amount Item Name Related Party

Book balance Bad debt provision Book balance Bad debt provision Accounts receivable

Fujian Nanping Sun Cable

13,385,287.15 1,429,264.36

Co., Ltd.

Subtotal 13,385,287.15 1,429,264.36

Receivables Financing

Fujian Nanping Sun Cable

6,851,346.67

Co., Ltd.

Subtotal 6,851,346.67

Other receivables

Fujian Nanping Sun Cable

146,900.00 146,900.00

Co., Ltd.

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Closing Amount Opening Amount Item Name Related Party

Book balance Bad debt provision Book balance Bad debt provision subtotal 146,900.00 146,900.00

2. Amounts payable to related parties

Project name Related party Ending amount Beginning amount Other payables

Donghang Group Company 10,036,666.67

Subtotal 10,036,666.67 Lease liabilities (including

Due within one year

non-current liabilities)

Fujian Nanping Sun Cable Stocks

8,060,272.71

Co., Ltd.

Subtotal 8,060,272.71

12. Commitments and contingencies

(1) Important commitments

As of December 31, 2025, the Company has no important commitments that need to be disclosed.

(2) Contingencies

As of December 31, 2025, the company has no important contingencies that need to be disclosed.

13. Events after the balance sheet date

(1) Profit distribution after the balance sheet date

According to the 21st meeting of the fifth session of the Board of Directors held on April 9, 2026, the company's profit distribution plan for 2025 is: no cash dividends, no bonus shares, and no capitalization of public reserve funds.

14. Other important matters

(1) Segment information

The company's main business activities are the research and development, production and sales of polymer rubber and plastic materials. The main products include: special PVC cable materials, special polyethylene and cross-linked polyethylene cable materials, halogen-free low-smoke flame retardant cable materials, general PVC cable materials and chemical cross-linked cable materials. The company regards this business as a whole to implement management and evaluate operating results. Therefore, the Company is not required to disclose segment information. For detailed information on the company's revenue breakdown, please refer to Note 5 (2) 1 of this financial statement. Page 79 of 95

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(2) Other important transactions and matters that have an impact on investors’ decision-making

On September 2, 2025, the company’s controlling shareholder was changed from Donghang Group Company to Jurong Weiye Company. Donghang Group Company has committed to the performance of the company's original business segments, and the commitment periods are 2025, 2026, and 2027 (hereinafter referred to as the performance commitment period). The specific performance indicators during the performance commitment period are the operating income and net profit realized by the original business segment operations. The operating income realized by the original business segment operations in each year during the performance commitment period shall not be less than 300 million yuan (hereinafter referred to as the committed operating income), and the net profit realized in each year (the lower before and after deduction) (hereinafter referred to as the actual net profit) is positive (hereinafter referred to as the committed net profit). If the actual net profit in a certain year does not reach the promised net profit, Donghang Group Company shall calculate and pay compensation to the company based on the difference between the promised net profit and the actual net profit realized in that year. The specific calculation method of compensation is: the difference between the actual net profit and the promised net profit of the company's original business segment confirmed by the audit agency.

The operating income realized by the company's original business segment in 2025 was 391,752,002.18 yuan, exceeding the promised operating income. The company's net profit attributable to the parent company in 2025 after non-deductions was -27,403,862.59 yuan, and the actual net profit after deducting expenses not belonging to the original business segment was -26,412,113.49 yuan. If the promised net profit was not reached, Donghang Group Company should pay the company a compensation of 26,412,113.49 yuan.

15. Notes on main items of the parent company’s financial statements

(1) Notes on parent company’s balance sheet items

1. Accounts receivable

(1) Aging status

Aging of accounts Closing balance Opening balance

Within 1 year 75,269,590.31 131,939,275.03 1-2 years 591,212.77 207,482.26 2-3 years 48,000.70 5,000.00 More than 3 years 993,356.80 1,188,356.80 Total book balance 76,902,160.58 133,340,114.09 Less: bad debt provision 4,385,873.23 7,807,568.78 Total book value 72,516,287.35 125,532,545.31

(2) Bad debt provision accrual

1. Category details

Closing amount

Type

Book balance Bad debt provision Book value

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Provision

Proportion

Amount Amount Ratio

(%)

(%)

Single provision for bad debts 988,356.80 1.29 988,356.80 100.00

Provision for bad debts by combination 75,913,803.78 98.71 3,397,516.43 4.48 72,516,287.35 Total 76,902,160.58 100.00 4,385,873.23 5.70 72,516,287.35 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type of provision

Ratio Book Value Amount Ratio

(%)

(%)

Single provision for bad debts 1,188,356.80 0.89 1,188,356.80 100.00

Provision for bad debts by combination 132,151,757.29 99.11 6,619,211.98 5.01 125,532,545.31 Total 133,340,114.09 100.00 7,807,568.78 5.86 125,532,545.31

2. Important individual accounts receivable with provision for bad debts

Beginning Amount Ending Amount

Unit name Provision ratio

Book balance Bad debt provision Book balance Bad debt provision Basis for accrual

(%)

Fujian Nanping Solar Power is not expected to be able to

1,000,000.00 1,000,000.00 800,000.00 800,000.00 100.00

Cable Co., Ltd. to take back Jiangsu Xinyanghu Cable Co., Ltd. It is expected that it will not be able to

188,356.80 188,356.80 188,356.80 188,356.80 100.00

Co., Ltd. Recovery subtotal 1,188,356.80 1,188,356.80 988,356.80 988,356.80 100.00

3. Accounts receivable using combined provision for bad debts

Closing amount

Project

Book balance Bad debt provision Provision ratio (%) Related parties within the scope of consolidation

8,889,691.57

combination

Aging combination 67,024,112.21 3,397,516.43 5.07 Subtotal 75,913,803.78 3,397,516.43 4.48

4. Accounts receivable using aging combination to accrue bad debt provisions

Closing amount

Account age

Book balance Bad debt provision Proportion of provision (%) Within 1 year 66,379,898.74 3,318,994.94 5.00 1-2 years 591,212.77 59,121.28 10.00

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Closing amount

Account age

Book balance Bad debt provision Proportion of provision (%) 2-3 years 48,000.70 14,400.21 30.00 More than 3 years 5,000.00 5,000.00 100.00 Subtotal 67,024,112.21 3,397,516.43 5.07

(3) Changes in bad debt provisions

1. Details

Amount of changes in the current period

Item Beginning balance Closing balance

Provision Recovery or transfer Write-off Others

Individual provision

1,188,356.80 200,000.00 988,356.80 Bad debt provision

Total by group

Provision for bad debts 6,619,211.98 -3,221,695.55 3,397,516.43 Provision

Total 7,807,568.78 -3,221,695.55 200,000.00 4,385,873.23

(4) Top 5 accounts receivable amount

The total number of accounts receivable with the top five ending balances is 24,057,110.83 yuan, accounting for 31.29% of the total ending balance of accounts receivable, and the corresponding total bad debt provision for accounts receivable is 809,616.88 yuan.

2. Other receivables

(1) Classification of payment nature

Nature of payment Ending amount Beginning amount

Transfer of prepaid materials 8,000,000.00 8,000,000.00 Transfer of equipment purchase funds 3,123,752.21 3,123,752.21 Current accounts of subsidiaries 2,785,570.63 2,085,570.63 Deposit and security deposit 508,000.00 541,000.00 Temporary payment receivable 67,968.81 66,006.49 Others 146,900.00 146,900.00 Total book balance 14,632,191.65 13,963,229.33 Less: bad debt provision 11,528,550.65 11,512,352.53 Total book value 3,103,641.00 2,450,876.80

(2) Aging status

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Aging of accounts Closing balance Opening balance

Within 1 year 2,953,539.44 1,574,006.49 1-2 years 5,000.00 835,570.63 2-3 years 220,000.00 100,000.00 More than 3 years 11,453,652.21 11,453,652.21 Total book balance 14,632,191.65 13,963,229.33 Less: Bad debt provision 11,528,550.65 11,512,352.53 Total book value 3,103,641.00 2,450,876.80

(3) Bad debt provision accrual

1. Category details

Closing amount

Book balance Bad debt provision

Type of provision

Book Value Amount Proportion (%) Amount Proportion

(%)

Single provision for bad debts 11,123,752.21 76.02 11,123,752.21 100.00

Provision for bad debts by combination 3,508,439.44 23.98 404,798.44 11.54 3,103,641.00 Total 14,632,191.65 100.00 11,528,550.65 78.79 3,103,641.00 (continued from the above table)

Beginning balance

Book balance Bad debt provision

Type

Provision Book value amount Proportion (%) Amount

Proportion (%)

Single provision for bad debts 11,123,752.21 79.66 11,123,752.21 100.00

Provision for bad debts by combination 2,839,477.12 20.34 388,600.32 13.69 2,450,876.80 Total 13,963,229.33 100.00 11,512,352.53 82.45 2,450,876.80

2. Other receivables with important individual provision for bad debts

Beginning Amount Ending Amount

Unit name Provision ratio Provision based on book balance Bad debt provision Book balance Bad debt provision

Example (%) According to Gui Shutao 8,000,000.00 8,000,000.00 8,000,000.00 8,000,000.00 100.00 [Note] Shanghai Songxing Machinery

Machinery Equipment Co., Ltd. 3,123,752.21 3,123,752.21 3,123,752.21 3,123,752.21 100.00 [Note] Company

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Beginning Amount Ending Amount

Unit name Provision ratio Provision based on book balance Bad debt provision Book balance Bad debt provision

Example (%) According to subtotal 11,123,752.21 11,123,752.21 11,123,752.21 11,123,752.21 100.00

[Note] For details, please refer to the explanation in Note 5(1)6(3)2) of this financial statement

3. Other receivables using collective provision for bad debts

Closing amount

Combination name

Book balance Bad debt provision Provision ratio (%) Related party combination within the consolidation scope 2,785,570.63

Aging combination 722,868.81 404,798.44 56.00 Of which: Within 1 year 167,968.81 8,398.44 5.00 1-2 years 5,000.00 500.00 10.00 2-3 years 220,000.00 66,000.00 30.00 More than 3 years 329,900.00 329,900.00 100.00 Subtotal 3,508,439.44 404,798.44 11.54

(4) Changes in bad debt provisions

1. Details

The first stage The second stage The third stage

Lifetime expectations Lifetime forecasts

Item Total credit losses in the next 12 months (has not occurred) Period credit losses (has

expected credit losses

Credit impairment) Credit impairment occurs)

Opening amount 3,700.32 25,000.00 11,483,652.21 11,512,352.53 Opening amount in the current period —— —— ——

--Transfer to the second stage -250.00 250.00

--Transfer to the third stage -22,000.00 22,000.00

--Return to the second stage

--Return to the first stage

Provision in this period 4,948.12 -2,750.00 14,000.00 16,198.12 Received or transferred back in this period

Write-off in this period

Other changes

Closing amount 8,398.44 500.00 11,519,652.21 11,528,550.65

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The first stage The second stage The third stage

Lifetime expectations Lifetime forecasts

Item Total credit losses in the next 12 months (has not occurred) Period credit losses (has

expected credit losses

Credit impairment) Credit impairment occurs)

Ending bad debt provision calculation

5.00 10.00 98.68 78.79Proportion (%)

(5) There are no other receivables actually written off in the current period

(6) Top 5 other receivables

Accounting for other receivables

Unit name Nature of payment Ending book balance Account age Proportion of ending bad debt provision balance (%)

Prepayment for materials

Gui Shutao 8,000,000.00 More than 3 years 54.67 8,000,000.00

transfer column

Shanghai Songxing Machinery Equipment Purchase Payment

3,123,752.21 More than 3 years 21.35 3,123,752.21 Co., Ltd. Transferred

Subsidiary transactions

Hangzhou Rongzhu Company 2,785,570.63 Within 1 year 19.04

money

Zhejiang Wanma Co., Ltd.

Deposit security deposit 200,000.00 2-3 years 1.37 60,000.00 Co., Ltd.

Fujian Nanping Solar Power

Others 146,900.00 More than 3 years 1.00 146,900.00 Cable Co., Ltd.

Subtotal 14,256,222.84 97.43 11,330,652.21

3. Long-term equity investment

(1) Details

Closing Amount Beginning Amount Items

Book balance Impairment provision Book value Book balance Impairment provision Book value to subsidiaries

15,300,000.00 15,300,000.00

investment

to joint ventures

61,483,397.78 61,483,397.78 61,483,397.78 61,483,397.78 Industrial investment

Total 76,783,397.78 61,483,397.78 15,300,000.00 61,483,397.78 61,483,397.78

(2) Investment in subsidiaries

Amount at the beginning of the period Increase or decrease in the current period Amount at the end of the period Investee Book Impairment Addition Decrease Provision Less Book Impairment Others

Value Preparation Investment Investment Value Preparation Value Preparation Hangzhou Rongzhu Company

[Note]

Sun High-tech Company 15,300,000.00 15,300,000.00

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Subtotal 15,300,000.00 15,300,000.00 [Note] As of December 31, 2025, the company has not yet paid in capital contribution

(3) Investment in joint ventures

Beginning amount Increase/decrease in current period

Adjustment of investment loss value recognized under the equity method for additional investments, decreases in investments, and other comprehensive impairment provisions in the investee's books, capital income

benefit

Associates

Xiamen Kuaiyou.com

Network Technology Co., Ltd. 61,483,397.78

Division

Total 61,483,397.78

(Continued from above table)

Increases and decreases in the current period Ending amount of invested units Other rights Announcement of cash distribution Provision decrease

Others Book value Impairment provision

Changes in earnings Dividends or profits Value provision

Associates

Xiamen Kuaiyou.com

Network Technology Co., Ltd. 61,483,397.78

Total 61,483,397.78

(2) Notes on parent company’s income statement items

1. Operating income/operating costs

(1) Details

Items for the current period and the same period last year

Revenue Cost Revenue Cost Main business income 340,943,754.81 330,992,667.28 381,356,854.27 367,091,459.02 Other business income 2,705,955.53 240,465.20 2,409,595.06 486,135.96

Total 343,649,710.34 331,233,132.48 383,766,449.33 367,577,594.98 Among them: with customers

Income generated from contracts between

(2) Revenue breakdown information

1. Revenue generated from contracts with customers broken down by type of goods or services

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Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Special polyethylene and cross

249,966,573.37 243,740,293.08 278,788,995.36 272,450,666.57 polyethylene cable materials

Special PVC Electric

28,440,408.47 27,403,439.79 34,699,199.81 30,562,193.64 Cable materials

General PVC Electric

39,371,812.01 39,157,630.26 41,033,700.27 41,046,340.02 Cable materials

Halogen-free low smoke flame retardant electricity

23,164,960.96 20,691,304.15 26,834,958.83 23,032,258.79 Cable materials

Others 2,705,955.53 240,465.20 2,409,595.06 486,135.96 Subtotal 343,649,710.34 331,233,132.48 383,766,449.33 367,577,594.98

2. Revenue generated from contracts with customers broken down by operating region

Amount for the current period Amount for the same period last year

Project

revenue cost revenue cost

Domestic 343,211,919.15 330,882,000.58 383,766,449.33 367,577,594.98 Overseas 437,791.19 351,131.90

Subtotal 343,649,710.34 331,233,132.48 383,766,449.33 367,577,594.98

3. Revenue generated from contracts with customers is broken down by the time of transfer of goods or services

Item Number for the current period Number for the same period last year Recognized income at a certain point in time 343,649,710.34 383,766,449.33 Subtotal 343,649,710.34 383,766,449.33

(3) The income recognized in the current period and included in the opening book value of contract liabilities was RMB 465,660.91.

2. Research and development expenses

Item Amount for the current period Amount for the same period last year Direct investment 10,721,539.71 12,385,512.82 Salary 3,891,019.69 4,333,275.96 Depreciation expense 1,302,175.44 1,294,648.50 Others 579,126.72 627,690.08 Total 16,493,861.56 18,641,127.36

3. Investment income

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Item Amount for the current period Amount for the same period last year Financing discount loss on receivables -814,652.97 -1,284,930.36 Total -814,652.97 -1,284,930.36

16. Other supplementary information

(1) Non-recurring gains and losses

1. Detailed statement of non-recurring gains and losses

(1) Details

Item Amount Description of gains and losses from disposal of non-current assets, including write-off of provision for asset impairment

-Part 61,179.08

Government subsidies included in the current profit and loss, except for government subsidies that are closely related to the company's normal business operations, comply with national policies and regulations, are enjoyed in accordance with determined standards, and have a continuing impact on the company's profit and loss 1,251,506.48

In addition to the effective hedging business related to the company's normal operating business, non-financial enterprises have -1,619,725.37 losses from changes in fair value arising from the holding of financial assets and financial liabilities and gains and losses from the disposal of financial assets and financial liabilities.

Fund occupation fees charged to non-financial enterprises included in current profits and losses

Gains and losses from entrusting others to invest or manage assets

Profit and loss from external entrusted loans

The impairment provision for receivables shall be reversed when impairment tests are carried out separately for various asset losses caused by force majeure factors, such as natural disasters. 200,000.00 The investment cost of the enterprise in acquiring subsidiaries, associates and joint ventures is less than the income generated from the fair value of the identifiable net assets of the investee that it should enjoy when acquiring the investment.

Net profit and loss for the current period from the beginning of the period to the date of merger of subsidiaries resulting from business combinations under common control

Gains and losses on non-monetary asset exchanges

Debt restructuring gains and losses

One-time expenses incurred by the enterprise due to the cessation of relevant business activities, such as expenses for relocating employees, etc.

One-time impact on current profits and losses due to adjustments to tax, accounting and other laws and regulations

The one-time confirmation of share-based payment expenses due to the cancellation or modification of the equity incentive plan. For cash-settled share-based payment, the gains and losses arising from changes in the fair value of employee compensation payable after the vesting date

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6-1-89 Fair value of investment real estate using fair value model for subsequent measurement

Gains and losses arising from changes in value

Gains from transactions where the transaction price appears to be unfair

Profit and loss arising from contingencies unrelated to the company's normal business operations

Custody fee income from entrusted operations

Other non-operating income and expenses other than the above items 278,991.12

Other profit and loss items that meet the definition of non-recurring profits and losses

Subtotal 49,593.15

Less: Impact of corporate income tax (reduced income tax is represented by “-”)

Amount of impact on minority shareholders’ equity (after tax)

Net non-recurring gains and losses attributable to owners of the parent company 49,593.15

(2) Return on net assets and earnings per share

1. Details

Weighted average net assets Earnings per share (yuan/share) Profit for the reporting period

Yield (%) Basic earnings per share Diluted earnings per share Net profit attributable to the company's ordinary shareholders -50.41 -0.22 -0.22 Attributable to the company after deducting non-recurring gains and losses

-50.51 -0.22 -0.22Net profit for ordinary shareholders

2. Calculation process of weighted average return on equity

Item Serial Number Net profit attributable to the company's common shareholders in this period A -27,354,269.44 Non-recurring gains and losses B 49,593.15 Net profit attributable to the company's common shareholders after deducting non-recurring gains and losses C=A-B -27,403,862.59 Opening net assets attributable to the company's common shareholders D 67,935,420.61 Issuance of new shares or debt-for-equity swaps and other newly added assets attributable to the company’s ordinary shareholders

E

net worth

Cumulative number of months from the next month of new net assets to the end of the reporting period F

Repurchases or cash dividends, etc. reduce the net amount attributable to the company’s ordinary shareholders.

G

assets

The cumulative number of months from the next month when net assets are reduced to the end of the reporting period H

Number of months in the reporting period K 12 Weighted average net assets L= D+A/2+ E×F/K-G× 54,258,285.89 Page 89 of 95

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Item Serial Number Current Issue Number

H/K±I×J/K

Weighted average return on equity M=A/L -50.41% Excluding extraordinary gains and losses Weighted average return on equity N=C/L -50.51%

3. Calculation process of basic earnings per share and diluted earnings per share

(1) Calculation process of basic earnings per share

Item Serial Number Current Issue Number

Net profit attributable to the company's common shareholders A -27,354,269.44 Non-recurring gains and losses B 49,593.15 Net profit attributable to the company's common shareholders after deducting non-recurring gains and losses C=A-B -27,403,862.59 Total number of shares at the beginning of the period D 126,673,000 Increase in the number of shares due to transfer of public reserve funds to share capital or distribution of stock dividends E

Issuance of new shares or debt-to-equity swap to increase the number of shares F

Cumulative number of months from the month following the increase in shares to the end of the reporting period G

Reduction in the number of shares due to repurchases, etc. H

Cumulative number of months from the next month when shares are reduced to the end of the reporting period I

Number of shares shrunk during the reporting period J

Number of months in the reporting period K 12

L=D+E+F×G/K-H×

Weighted average number of common shares outstanding 126,673,000

I/K-J

Basic earnings per share M=A/L -0.22 Excluding non-recurring gains and losses Basic earnings per share N=C/L -0.22

(2) Calculation process of diluted earnings per share

The calculation process for diluted earnings per share is the same as the calculation process for basic earnings per share.

Hangzhou High-tech Materials Technology Co., Ltd. April 9, 2026

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