[Main Financial Data](index=1&type=section&id=%E4%B8%80%E3%80%81%20%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) The company experienced significant declines in revenue and net profit in Q3 and YTD 2022 due to policy changes and pandemic impacts, while increasing R&D investment and optimizing cash flow management [Key Accounting Data and Financial Indicators](index=1&type=page&id=%E4%B8%80%E3%80%81%28%E4%B8%80%29%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) In Q3 and the first three quarters of 2022, the company faced performance pressure with a 17.61% decrease in Q3 operating revenue and a 59.30% decline in net profit attributable to parent company shareholders, while year-to-date operating revenue decreased by 6.11% and net profit by 32.02% Key Financial Indicators for Q1-Q3 2022 | Indicator | Current Period (Q3) (Billion yuan) | Year-to-Date (YTD) (Billion yuan) | YTD YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 4.09 | 13.29 | -6.11% | | Net Profit Attributable to Shareholders | 0.069 | 0.360 | -32.02% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 0.175 | 0.547 | -32.06% | | Net Cash Flow from Operating Activities | N/A | -0.512 | 49.41% | | Basic Earnings Per Share (yuan/share) | 0.0370 | 0.1944 | -32.03% | | Weighted Average Return on Net Assets (%) | 0.51% | 2.70% | Decreased by 1.45 percentage points | Key Balance Sheet Indicators at Period End | Indicator | End of Current Period (Billion yuan) | End of Last Year (Billion yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 22.16 | 22.80 | -2.84% | | Owners' Equity Attributable to Shareholders | 13.44 | 13.35 | 0.67% | [Non-recurring Gains and Losses Items and Amounts](index=2&type=page&id=%E4%B8%80%E3%80%81%28%E4%BA%8C%29%E9%9D%9E%E7%BB%8F%E5%B8%B8%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%92%8C%E9%87%91%E9%A2%9D) In the first three quarters of 2022, the company's non-recurring gains and losses totaled **-186.62 million yuan**, negatively impacting net profit, primarily due to fair value change losses from trading financial assets, partially offset by government grants Details of Non-recurring Gains and Losses for Q1-Q3 2022 | Item | Year-to-Date Amount (Million yuan) | | :--- | :--- | | Fair Value Change Gains/Losses from Trading Financial Assets, etc. | -226.70 | | Government Grants Included in Current Profit/Loss | 63.42 | | Gains/Losses from Disposal of Non-current Assets | 1.77 | | Other Gains/Losses Meeting the Definition of Non-recurring Items | 2.20 | | Other Non-operating Income and Expenses | -0.33 | | **Total** | **-186.62** | [Analysis of Changes in Key Financial Indicators](index=2&type=page&id=%E4%B8%80%E3%80%81%28%E4%B8%89%29%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E5%8F%91%E7%94%9F%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E3%80%81%E5%8E%9F%E5%9B%A0) The company's net profit decline is primarily attributed to policy changes affecting core tax control products and project delays due to the pandemic, while increased R&D investment and optimized procurement settlement methods aim to accelerate transformation and improve cash flow - Net profit attributable to shareholders decreased by **32.02%** year-on-year, mainly due to changes in national anti-counterfeiting tax control policies impacting sales and service fees for Golden Tax Disk devices, and project slowdowns in smart and cybersecurity industries due to the pandemic[8](index=8&type=chunk) Explanation of Significant Changes in Certain Financial Indicators | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Development Expenditures | 353.65% | The company accelerated transformation and upgrading, continuously increasing R&D investment | | Notes Payable | 144.87% | More procurement transactions utilized bill settlements | | Short-term Borrowings | -84.11% | Reduced credit borrowings by the parent company and subsidiaries | | Financial Expenses | -114.39% | The prior year included convertible bond interest payments, which are absent in the current period | | Net Cash Flow from Operating Activities | 49.41% | Increased use of notes payable for settlements reduced cash outflow from procurement activities | [Shareholder Information](index=3&type=section&id=%E4%BA%8C%E3%80%81%20%E8%82%A1%E4%B8%9C%E4%BF%A1%E6%81%AF) As of the reporting period end, the company had 88,753 shareholders with a highly concentrated ownership structure, dominated by state-owned entities led by China Aerospace Science and Industry Corporation [Total Number of Common Shareholders, Preferred Shareholders with Restored Voting Rights, and Top Ten Shareholders' Holdings](index=3&type=page&id=%E4%BA%8C%E3%80%81%28%E4%B8%80%29%E6%99%AE%E9%80%9A%E8%82%A1%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%92%8C%E8%A1%A8%E5%86%B3%E6%9D%83%E6%81%A2%E5%A4%8D%E7%9A%84%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%95%B0%E9%87%8F%E5%8F%8A%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) As of the reporting period end, the company had 88,753 shareholders, with a highly concentrated equity structure where the largest shareholder, China Aerospace Science and Industry Corporation, held 40.02% of shares, and most top ten shareholders were state-owned entities - As of the end of the reporting period, the company had **88,753** common shareholders[10](index=10&type=chunk) Top Ten Shareholders' Holdings | Shareholder Name | Shareholder Nature | Number of Shares Held | Shareholding Ratio (%) | | :--- | :--- | :--- | :--- | | China Aerospace Science and Industry Corporation | State-owned Legal Person | 741,448,172 | 40.02 | | China Aerospace Science and Industry Flight Technology Research Institute | State-owned Legal Person | 61,816,878 | 3.34 | | Beijing Aerospace AVIC Electronic Technology Co., Ltd. | State-owned Legal Person | 51,495,024 | 2.78 | | China Securities Finance Corporation Limited | Other | 39,598,918 | 2.14 | | Beijing Electromechanical Engineering General Design Department | State-owned Legal Person | 16,516,320 | 0.89 | | China Great Wall Industry Corporation | State-owned Legal Person | 14,817,400 | 0.80 | | Dacheng Fund - Agricultural Bank of China - Dacheng CSI Financial Asset Management Plan | Other | 14,794,566 | 0.80 | | GF Fund - Agricultural Bank of China - GF CSI Financial Asset Management Plan | Other | 14,794,566 | 0.80 | | Southern Fund - Agricultural Bank of China - Southern CSI Financial Asset Management Plan | Other | 14,794,566 | 0.80 | | Yinhua Fund - Agricultural Bank of China - Yinhua CSI Financial Asset Management Plan | Other | 14,792,906 | 0.80 | [Quarterly Financial Statements](index=4&type=section&id=%E5%9B%9B%E3%80%81%20%E5%AD%A3%E5%BA%A6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) The company's Q3 2022 financial statements show a slight decrease in total assets, a decline in revenue and net profit, and an improved operating cash flow despite overall net outflows [Consolidated Balance Sheet](index=5&type=page&id=%E5%9B%9B%E3%80%81%28%E4%BA%8C%29%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8-%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of September 30, 2022, the company's total assets were **22.16 billion yuan**, a slight decrease of 2.84% from the end of the previous year, with significant increases in inventories and prepayments, a decrease in monetary funds, and notable shifts in short-term borrowings and notes payable on the liability side Consolidated Balance Sheet Key Items (Unit: Billion yuan) | Item | Sep 30, 2022 (Billion yuan) | Dec 31, 2021 (Billion yuan) | Change (Billion yuan) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Monetary Funds | 5.57 | 7.96 | -2.39 | | Inventories | 2.32 | 1.24 | +1.08 | | Accounts Receivable | 3.23 | 3.15 | +0.08 | | **Total Assets** | **22.16** | **22.80** | **-0.64** | | **Liabilities** | | | | | Short-term Borrowings | 0.15 | 0.91 | -0.76 | | Notes Payable | 0.70 | 0.29 | +0.41 | | Accounts Payable | 2.08 | 2.21 | -0.13 | | **Total Liabilities** | **5.51** | **6.04** | **-0.53** | | **Owners' Equity** | | | | | Owners' Equity Attributable to Parent Company | 13.44 | 13.35 | +0.09 | | **Total Owners' Equity** | **16.65** | **16.77** | **-0.12** | [Consolidated Income Statement](index=8&type=page&id=%E5%9B%9B%E3%80%81%28%E4%BA%8C%29%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8-%E5%90%88%E5%B9%B6%E5%88%A9%E6%B6%A6%E8%A1%A8) In the first three quarters of 2022, the company's total operating revenue decreased by 6.11% to **13.29 billion yuan**, leading to a 21.26% decline in operating profit and a 32.02% drop in net profit attributable to parent company shareholders despite controlled expenses Consolidated Income Statement Key Items (Unit: Billion yuan) | Item | Q1-Q3 2022 (Billion yuan) | Q1-Q3 2021 (Billion yuan) | YoY Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 13.29 | 14.16 | -6.11% | | Total Operating Cost | 11.98 | 12.40 | -3.36% | | Operating Cost | 9.87 | 10.26 | -3.75% | | R&D Expenses | 0.70 | 0.60 | +17.14% | | Financial Expenses | -0.02 | 0.11 | -114.68% | | Operating Profit | 1.19 | 1.51 | -21.26% | | Total Profit | 1.18 | 1.53 | -22.46% | | Net Profit Attributable to Parent Company Shareholders | 0.36 | 0.53 | -32.08% | [Consolidated Cash Flow Statement](index=11&type=page&id=%E5%9B%9B%E3%80%81%28%E4%BA%8C%29%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8-%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In the first three quarters of 2022, the company's cash flow showed mixed trends, with operating cash flow improving to **-0.51 billion yuan** despite being a net outflow, while investment and financing activities also resulted in net outflows, ending the period with **5.39 billion yuan** in cash and cash equivalents Consolidated Cash Flow Statement Key Items (Unit: Billion yuan) | Item | Q1-Q3 2022 (Billion yuan) | Q1-Q3 2021 (Billion yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -0.51 | -1.01 | | Net Cash Flow from Investing Activities | -0.14 | -0.33 | | Net Cash Flow from Financing Activities | -1.74 | -3.32 | | Net Increase in Cash and Cash Equivalents | -2.38 | -4.66 | | Cash and Cash Equivalents at Period End | 5.39 | 5.40 |

Financial Performance - The company's operating revenue for the first half of 2022 was CNY 919,828.11 million, a slight increase of 0.11% compared to CNY 918,789.04 million in the same period last year[19]. - The net profit attributable to shareholders for the first half of 2022 was CNY 29,163.28 million, representing a decrease of 19.30% from CNY 36,138.00 million in the previous year[19]. - The basic earnings per share for the first half of 2022 was CNY 0.1574, down 19.28% from CNY 0.1950 in the same period last year[19]. - The weighted average return on net assets for the first half of 2022 was 2.19%, down 0.64 percentage points from 2.83% in the same period last year[19]. - The net profit after deducting non-recurring gains and losses was CNY 37,170.51 million, a decrease of 22.23% from CNY 47,798.10 million in the previous year[19]. - The company achieved operating revenue of 919,828.11 million yuan in the first half of 2022, a year-on-year increase of 0.11%[32]. - The net profit attributable to shareholders was 29,163.28 million yuan, a decrease of 19.30% compared to the same period last year[32]. - The company reported a significant reduction of 49.17% in taxes payable, totaling 24,329.39 million, primarily due to the payment of last year's VAT and corporate income tax[41]. - The company reported a total comprehensive income of CNY 718,897,403.94, down from CNY 877,021,252.58 in the first half of 2021[112]. Cash Flow and Assets - The company reported a net cash flow from operating activities of CNY -59,252.68 million, an improvement of 4.22% compared to CNY -61,865.71 million in the previous year[19]. - Cash and cash equivalents decreased by 24% to 605,060.59 million, accounting for 26.98% of total assets, primarily due to dividend distribution and loan repayments[41]. - Total assets at the end of the reporting period were CNY 2,242,267.94 million, a decrease of 1.67% from CNY 2,280,442.13 million at the end of the previous year[19]. - The company's cash and cash equivalents decreased from CNY 2,264,232,939.65 to CNY 2,003,692,682.23, a decline of about 11.53%[106]. - The total cash and cash equivalents at the end of the first half of 2022 stood at 1,967,160,975.87 RMB, down from 2,449,013,774.08 RMB at the end of the first half of 2021, reflecting a decrease of approximately 19.6%[123]. Business Strategy and Development - The company has restructured its business divisions into three major sectors: Golden Tax Industry, Smart Industry, and Cybersecurity Industry, to enhance operational efficiency and adapt to macro policy changes[23]. - The company is a key player in the national "Golden Tax Project," focusing on the development, production, and sales of anti-counterfeiting tax control systems and related services[23]. - The company aims to cover over 5 million enterprises with its service platform, promoting digital transformation and carbon neutrality initiatives[33]. - The company is actively expanding its international business, with a significant increase of over 200% in overseas sales of tax POS machines[35]. - The company secured nearly 2 billion RMB in new industry innovation projects during the first half of the year, accelerating its transformation towards an integrated service model[34]. - The company is focusing on digital government construction and has successfully launched a trusted identity system for tax services in several pilot regions[34]. Research and Development - Research and development expenses increased by 28.57% to approximately 49.85 million RMB, reflecting the company's commitment to enhancing competitiveness through innovation[39]. - Research and development investments are set at 3,000.00 million, focusing on software and hardware integration services[53]. - New product development includes advancements in information security technology and industrial automation control technology, with a focus on market expansion[49]. Market Position and Competition - The competitive landscape is intensifying with over 100 providers in the electronic invoicing market, increasing pressure on the company's market position[57]. - Emerging technologies such as 5G and AI present both opportunities and challenges, necessitating increased investment in R&D to maintain competitiveness[57]. - The company plans to enhance its market presence through strategic acquisitions and partnerships, aiming for a 34.00% increase in market share[51]. Environmental and Social Responsibility - The company actively participated in poverty alleviation efforts, purchasing over 4,000 agricultural products from targeted poverty alleviation areas, totaling 579,000 yuan[71]. - The company emphasized energy-saving measures, including setting air conditioning temperatures and reducing electricity consumption, to promote a low-carbon office environment[69]. - The company implemented environmentally friendly practices, using biodegradable materials for printing and ensuring compliance with environmental standards in production processes[70]. Related Party Transactions - Total sales to related parties amounted to ¥7,286,153.93 from Beijing Aerospace Lianzhizhi Technology Co., Ltd., representing a significant portion of the company's revenue[76]. - The company engaged in various transactions with subsidiaries, with amounts ranging from ¥35,044.25 to ¥994,556.30, all priced at market rates[76][78]. - The financial transactions with related parties were settled via wire transfer, ensuring transparency and efficiency in financial dealings[76][78]. Management and Governance - The company appointed two new directors, Wang Dawei and Wang Qingyin, and appointed a new CFO, Gao Yuming, while one director, E Shengguo, and the previous CFO, Zhang Fengqiang, resigned[64]. - The company did not propose any profit distribution or capital reserve transfer plans for the half-year period, with no dividends or stock bonuses declared[64]. - The company has not reported any changes in the status of its major shareholders or any new strategic investors during the reporting period[98]. Financial Reporting and Compliance - The financial statements are prepared based on the going concern principle, with no significant doubts about the company's ability to continue operations for the next 12 months[146]. - The company adheres to the accounting standards for enterprises, ensuring that financial statements reflect its financial position and operating results accurately[148]. - The company has not reported any significant events that would impact its financial stability or operational capacity[146].