股票代码：002562 股票简称：兄弟科技 公告编号：2025-056 兄弟科技股份有限公司 2025 年前三季度业绩预告 本公司及董事会全体成员保证信息披露的内容真实、准确、完整，没有 虚假记载、误导性陈述或重大遗漏。 一、本期业绩预计情况 1、业绩预告期间：2025 年 1 月 1 日-2025 年 9 月 30 日 2、业绩预告情况：扭亏为盈 同向上升 同向下降 （1）2025 年前三季度预计业绩情况 | 项目 | 2025年1月1日-2025年9月30日 | | 上年同期 | | --- | --- | --- | --- | | 归属于上市公司股 东的净利润 | 盈利：10,000.00 万元 | 万元–11,500.00 | 盈利：3,253.91万元 | | | 比上年同期增长：207.32%-253.42% | | | | 扣除非经常性损益 后的净利润 | 盈利：9,700.00 万元 | 万元–11,200.00 | 盈利：2,475.83 万元 | | | 比上年同期增长：291.79%-352.37% | | | | 基本每股收益 | 盈利：0.0940元/股–0.1081元/股 | | ...

Important Notice, Table of Contents, and Definitions [Important Notice](index=2&type=section&id=Important%20Notice) The board and management guarantee report accuracy, noting 2022 revenue growth of 2.13% but expanded losses due to ESOP expenses and R&D, with no dividend distribution planned - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the annual report[4](index=4&type=chunk) - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital[11](index=11&type=chunk) 2022 Key Financial Performance | Indicator | Amount (10,000 RMB) | YoY Growth | Notes | | :--- | :--- | :--- | :--- | | Operating Revenue | 190,661.41 | 2.13% | Benefited from increased digital economy market demand, enhanced core capabilities, and market influence | | Employee Stock Ownership Plan Expense Amortization | 4,611.63 | - | New expense | | Database and 5G Business | - | - | Revenue significantly increased but losses expanded due to substantial R&D investment | [Risk Factors](index=2&type=section&id=Risk%20Factors) The company faces operational risks like seasonal performance and service stability, technology risks from rapid iteration and insufficient R&D, and accounts receivable bad debt risks, with measures taken to enhance risk management - The company exhibits significant seasonal sales, with annual performance concentrated in the second half, particularly the fourth quarter, serving major clients like telecom operators, large enterprises, government agencies, and State Grid subsidiaries[5](index=5&type=chunk) - The information industry experiences rapid technological upgrades and product iterations, and the company, while deepening research in big data, next-generation mobile communication, IoT, cloud computing, and AI, faces risks of reduced competitiveness due to insufficient R&D investment or technology deviating from industry trends[8](index=8&type=chunk) - The company's major clients are financially strong large enterprises and government entities, resulting in relatively low bad debt risk, but macroeconomic fluctuations may affect timely payment collection, prompting stricter credit approval and accounts receivable management measures[9](index=9&type=chunk)[10](index=10&type=chunk) [Table of Contents](index=5&type=section&id=Table%20of%20Contents) The report's table of contents clearly lists ten main chapters, covering all statutory disclosure items of the annual report, including company profile, management discussion and analysis, corporate governance, and financial reports [Reference Documents](index=6&type=section&id=Reference%20Documents) Reference documents include financial reports signed by the legal representative, head of accounting, and accounting manager, original audit reports stamped by the accounting firm and signed by certified public accountants, and the original annual report signed by the legal representative - Reference documents include the financial report text signed by the legal representative, the person in charge of accounting work, and the head of the accounting department[15](index=15&type=chunk) - Reference documents include the original audit report stamped by the accounting firm and signed by certified public accountants[15](index=15&type=chunk) - Reference documents include the original 2022 annual report document signed by the company's legal representative[15](index=15&type=chunk) [Definitions](index=7&type=section&id=Definitions) This section defines common terms used in the report, including company name, organizational structure, laws, reporting period, currency units, and names of major subsidiaries and related parties, ensuring accurate understanding of the report content - Definitions cover basic concepts such as the company, board of directors, supervisory board, articles of association, and relevant laws and regulations[16](index=16&type=chunk) - Lists names of major subsidiaries, such as Sichuan Chuangyi Technology Co., Ltd., Beijing Chuangyi Yunzhi Data Technology Co., Ltd., and Shanghai Geti Electric Technology Co., Ltd[16](index=16&type=chunk) - Includes abbreviations for major clients and partners, such as China Mobile, Huawei, and State Grid[16](index=16&type=chunk)[17](index=17&type=chunk) Company Profile and Key Financial Indicators [I. Company Information](index=9&type=section&id=I.%20Company%20Information) The company's stock abbreviation is "Chuangyi Information," stock code 300366, legal representative Lu Wenbin, with registered and office addresses in Chengdu, and its official website and email provided Basic Company Information | Indicator | Content | | :--- | :--- | | Stock Abbreviation | Chuangyi Information | | Stock Code | 300366 | | Chinese Name | Chuangyi Information Technology Co., Ltd. | | Legal Representative | Lu Wenbin | | Registered Address | Room 7-9, Liyang Tianxia, No. 99 Wanhe Road, Qingyang District, Chengdu | | Office Address | No. 28 Xixin Avenue, High-tech West Zone, Chengdu | | International Website | https://www.troy.cn/ | | Email | zq@troy.cn | [II. Contact Persons and Information](index=9&type=section&id=II.%20Contact%20Persons%20and%20Information) The company disclosed contact information for Board Secretary Huang Jianrong and Securities Affairs Representative Luo Qun, including addresses, phone numbers, faxes, and emails, to facilitate investor communication Contact Person Information | Position | Name | Contact Address | Phone | Fax | Email | | :--- | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Huang Jianrong | No. 28 Xixin Avenue, High-tech West Zone, Chengdu | 028-87827800 | 028-87825625 | zq@troy.cn | | Securities Affairs Representative | Luo Qun | No. 28 Xixin Avenue, High-tech West Zone, Chengdu | 028-87827800 | 028-87825625 | zq@troy.cn | [III. Information Disclosure and Document Storage Location](index=9&type=section&id=III.%20Information%20Disclosure%20and%20Document%20Storage%20Location) The company designates the Shenzhen Stock Exchange website and Cninfo as annual report disclosure platforms, selects media like Securities Times for information disclosure, and stores annual reports at the company's board office - The company's designated stock exchange website for annual report disclosure is the Shenzhen Stock Exchange (http://www.szse.cn)[21](index=21&type=chunk) - Media names and websites for the company's annual report disclosure include Securities Times, Shanghai Securities News, Securities Daily, China Securities Journal, and Cninfo (http://www.cninfo.com.cn)[21](index=21&type=chunk) - The company's annual report is available at the Board of Directors' Office[21](index=21&type=chunk) [IV. Other Relevant Information](index=9&type=section&id=IV.%20Other%20Relevant%20Information) The company appointed ShineWing Certified Public Accountants (Special General Partnership) for auditing, with signing accountants Song Chaoxue and Chen Mingkun, CITIC Securities Co., Ltd. as sponsor, and China Merchants Securities Co., Ltd. as financial advisor Accounting Firm Information | Name | Office Address | Signing Accountant Names | | :--- | :--- | :--- | | ShineWing Certified Public Accountants (Special General Partnership) | 8th Floor, Block A, Fuhua Building, No. 8 Chaoyangmen North Street, Dongcheng District, Beijing | Song Chaoxue, Chen Mingkun | Sponsor Information | Name | Office Address | Sponsor Representative Names | Continuous Supervision Period | | :--- | :--- | :--- | :--- | | CITIC Securities Co., Ltd. | 10th Floor, South Tower, Building 11, Tianfu International Financial Center, No. 966 North Tianfu Avenue, High-tech Zone, Chengdu | Ye Jianzhong, Guo Hao | October 28, 2021, to December 31, 2023, and during the period of raised funds utilization | Financial Advisor Information | Name | Office Address | Financial Advisor Principal Names | Continuous Supervision Period | | :--- | :--- | :--- | :--- | | China Merchants Securities Co., Ltd. | 26th Floor, China Merchants Securities Tower, No. 111 Fuhua First Road, Futian District, Shenzhen, Guangdong Province | Fu Cheng, Wang Zhiwei | December 2016 - December 2017 and during the period of raised funds utilization | [V. Key Accounting Data and Financial Indicators](index=10&type=section&id=V.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) In 2022, the company's operating revenue grew by 2.13% to **RMB 1.907 billion**, but net profit attributable to shareholders decreased by 161.37% to **RMB -56.79 million**, and net cash flow from operating activities significantly dropped by 916.63% to **RMB -596 million**, while total assets and net assets attributable to shareholders showed slight changes 2022 Key Accounting Data and Financial Indicators | Indicator | 2022 (RMB) | 2021 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,906,614,057.81 | 1,866,876,728.44 | 2.13% | | Net Profit Attributable to Shareholders of Listed Company | -56,788,821.46 | -21,727,373.90 | -161.37% | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | -97,806,412.36 | -37,471,940.21 | -161.01% | | Net Cash Flow from Operating Activities | -596,312,207.21 | 73,021,262.12 | -916.63% | | Basic Earnings Per Share (RMB/share) | -0.0952 | -0.0411 | -131.63% | | Diluted Earnings Per Share (RMB/share) | -0.0952 | -0.0411 | -131.63% | | Weighted Average Return on Net Assets | -2.45% | -1.43% | -1.02% | | Total Assets | 3,881,898,706.00 | 3,773,590,558.03 | 2.87% | | Net Assets Attributable

Company Profile and Key Financial Indicators This section provides an overview of the company's fundamental information, key financial performance, and non-recurring items, highlighting strong profit growth despite a decrease in operating cash flow [Company Basic Information](index=6&type=section&id=%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) Shanghai Bide Pharmaceutical Technology Co., Ltd. (Bide Pharma) is a company listed on the STAR Market of the Shanghai Stock Exchange, stock code 688073, primarily engaged in pharmaceutical technology with Dai Lan as its legal representative Company Basic Information | Item | Content | | :--- | :--- | | Chinese Name | Shanghai Bide Pharmaceutical Technology Co., Ltd. | | Chinese Abbreviation | Bide Pharma | | Stock Code | 688073 | | Listing Exchange | Shanghai Stock Exchange STAR Market | | Legal Representative | Dai Lan | [Key Accounting Data and Financial Indicators](index=7&type=section&id=%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) During the reporting period, the company achieved strong performance growth, with operating revenue increasing by 17.91% year-on-year and net profit attributable to shareholders surging by 41.60%, primarily due to increased revenue and effective cost control, though operating cash flow decreased significantly due to business expansion Key Accounting Data (Jan-Jun 2025) | Key Accounting Data | Current Period (Yuan) | Prior Year Period (Yuan) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 627,526,589.12 | 532,207,309.99 | 17.91 | | Net Profit Attributable to Shareholders | 73,406,059.54 | 51,839,064.55 | 41.60 | | Net Profit Attributable to Shareholders (Excl. Non-recurring Items) | 59,163,606.01 | 48,256,312.13 | 22.60 | | Net Cash Flow from Operating Activities | 16,112,188.59 | 89,677,429.18 | -82.03 | | **Asset Status** | **Period-End (Yuan)** | **Prior Year-End (Yuan)** | **Period-End vs. Prior Year-End Change (%)** | | Total Assets | 2,530,189,768.10 | 2,418,035,118.40 | 4.64 | | Net Assets Attributable to Shareholders | 1,948,725,654.19 | 2,027,122,463.64 | -3.87 | Key Financial Indicators (Jan-Jun 2025) | Key Financial Indicators | Current Period | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Yuan/share) | 0.84 | 0.58 | 44.83 | | Weighted Average Return on Net Assets (%) | 3.60 | 2.52 | Increased by 1.08 percentage points | | R&D Investment as % of Operating Revenue | 4.78 | 5.65 | Decreased by 0.87 percentage points | [Non-recurring Gains and Losses Items and Amounts](index=9&type=section&id=%E9%9D%9E%E5%B8%B8%E8%A7%84%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%92%8C%E9%87%91%E9%A2%9D) During the reporting period, the company's total non-recurring gains and losses amounted to **14.24 million yuan**, primarily comprising government subsidies recognized in current profit and loss and fair value changes from holding and disposing of financial assets Details of Non-recurring Gains and Losses | Non-recurring Gains and Losses Item | Amount (Yuan) | | :--- | :--- | | Government subsidies recognized in current profit and loss | 9,655,087.56 | | Gains/losses from holding and disposing of financial assets/liabilities | 7,265,175.10 | | Gains/losses from disposal of non-current assets | 330,567.88 | | Other non-operating income and expenses | 226,535.89 | | **Total** | **17,477,366.43** | | Less: Income tax impact | 3,234,912.90 | | **Total after tax** | **14,242,453.53** | [Net Profit Excluding Share-based Payment Impact](index=10&type=section&id=%E6%89%A3%E9%99%A4%E8%82%A1%E4%BB%BD%E6%94%AF%E4%BB%98%E5%BD%B1%E5%93%8D%E5%90%8E%E7%9A%84%E5%87%80%E5%88%A9%E6%B6%A6) Excluding the impact of share-based payment expenses, the company's net profit for the reporting period was **89.68 million yuan**, a significant increase of **70.60%** from the prior year, better reflecting core business profitability Net Profit Comparison Excluding Share-based Payment Impact | Period | Net Profit Excluding Share-based Payment Impact (Yuan) | YoY Change (%) | | :--- | :--- | :--- | | Current Period (Jan-Jun) | 89,679,870.74 | 70.60 | | Prior Year Period | 52,566,039.57 | - | Management Discussion and Analysis This section details the company's industry, main business operations, operating performance, core competencies, R&D progress, and key risk factors, providing a comprehensive overview of its strategic positioning and operational dynamics [Explanation of the Company's Industry and Main Business Operations During the Reporting Period](index=10&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E6%89%80%E5%B1%9E%E8%A1%8C%E4%B8%9A%E5%8F%8A%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E6%83%85%E5%86%B5%E8%AF%B4%E6%98%8E) The company is a high-tech enterprise focused on the upstream of the new drug R&D value chain, specializing in the R&D, production, and sales of drug molecular building blocks and scientific reagents, serving global new drug R&D institutions with a vast product portfolio - Company's core business involves drug molecular building blocks and scientific reagents, serving critical stages of new drug R&D, with clients including multinational pharmaceutical companies like Roche, Merck, Pfizer, and CROs like Wuxi AppTec[31](index=31&type=chunk)[33](index=33&type=chunk) Global Drug R&D and Molecular Building Blocks Market Forecast | Market | 2024 Market Size | Annual Growth Rate | 2028/2029 Forecast | | :--- | :--- | :--- | :--- | | Global Drug R&D Investment | 147.7 billion USD | 7.9% | > 200 billion USD (2028) | | Global Molecular Building Blocks | 51.5 billion USD | 3.4% | > 60 billion USD (2029) | [Explanation of Main Business Operations](index=10&type=section&id=%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E6%83%85%E5%86%B5%E8%AF%B4%E6%98%8E) The company's main business is divided into molecular building blocks and scientific reagents, offering a comprehensive "basic material library" for drug R&D with extensive inventory and custom synthesis capabilities, alongside specialized reagents for target validation and synthesis optimization - Molecular building blocks business offers nearly a million products, with over **140,000 items in stock**, meeting customer demands for "massive screening, rapid supply, and customized empowerment"[32](index=32&type=chunk)[36](index=36&type=chunk) - Scientific reagents business features active small molecule compounds for target validation and catalysts/ligands for precise control in drug synthesis[37](index=37&type=chunk)[39](index=39&type=chunk) [Company's Industry Overview](index=12&type=section&id=%E5%85%AC%E5%8F%B8%E6%89%80%E5%B1%9E%E8%A1%8C%E4%B8%9A%E6%83%85%E5%86%B5) The company operates in the molecular building blocks and scientific reagents industry, closely tied to global drug R&D investment, with significant market sizes projected for both segments and increasing market share for Chinese enterprises amidst stratified competition Related Industry Market Size and Forecast | Industry Segment | 2024/2025 Market Size | CAGR | | :--- | :--- | :--- | | Global Molecular Building Blocks | 51.5 billion USD (2024) | 3.4% | | Global Chemical Reagents | >180 billion USD (2025) | 6.4% | | Global Life Science Reagents | 68.74 billion USD (2025) | 6.51% | | Global Active Small Molecule Compounds | 8 billion USD (2024) | 9.3% | [Discussion and Analysis of Operating Performance](index=13&type=section&id=%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5%E7%9A%84%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) During the reporting period, the company achieved steady growth with operating revenue of **628 million yuan** (up 17.91%) and net profit attributable to shareholders of **73.41 million yuan** (up 41.60%), driven by global expansion, diversified products, and R&D innovation, with gross margin improving to **44.25%** 2025H1 Operating Performance Highlights | Indicator | Amount/Ratio | YoY Change | | :--- | :--- | :--- | | Operating Revenue | 628 million Yuan | +17.91% | | Net Profit Attributable to Shareholders | 73.41 million Yuan | +41.60% | | Net Profit Excluding Share-based Payment | 89.68 million Yuan | +70.60% | | Gross Margin | 44.25% | +4.74 percentage points | | Overseas Sales Revenue | - | +21.33% | - The company continuously expands its product range, covering hot R&D areas such as PROTAC, GLP-1, and XDC, with a product library of nearly a million items and over **140,000 items in stock**[47](index=47&type=chunk) [Analysis of Core Competencies During the Reporting Period](index=14&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E6%A0%B8%E5%BF%83%E7%AB%9E%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competencies are built on a vast product catalog, efficient customized synthesis, digital and intelligent operations, a high-margin product structure, and a strong global service network, collectively driving its competitive advantage in new drug R&D - The company has built a product catalog of nearly a million items, covering cutting-edge fields like PROTAC, ADC, and GLP-1, establishing itself as one of the global suppliers with the most extensive product lines for drug discovery reagents[49](index=49&type=chunk) - Leveraging advanced synthesis platforms and intelligent evaluation systems, the company provides end-to-end customized services, capable of completing specified structure synthesis and delivery within **2-4 weeks**[50](index=50&type=chunk) - Through its digital platform and e-commerce development, the company offers intelligent product search, one-click ordering, automatic COA/SDS generation, and full logistics tracking, enhancing customer experience and order conversion efficiency[51](index=51&type=chunk) [Core Technologies and R&D Progress](index=15&type=section&id=%E6%A0%B8%E5%BF%83%E6%8A%80%E6%9C%AF%E4%B8%8E%E7%A0%94%E5%8F%91%E8%BF%9B%E5%B1%95) The company possesses a comprehensive core technology system spanning product design, synthesis, production, and purification & detection, with significant R&D investment and a growing patent portfolio, demonstrating its commitment to innovation - The company's core technology platforms include: industry-leading molecular building block design and screening capabilities, rich and efficient organic synthesis technologies (e.g., C-H activation, chiral compound technology), and product purification and structural confirmation techniques[56](index=56&type=chunk)[60](index=60&type=chunk)[64](index=64&type=chunk) R&D Investment and Achievements | Indicator | Current Period | Prior Year Period | Change | | :--- | :--- | :--- | :--- | | Total R&D Investment (Yuan) | 29,996,679.58 | 30,050,598.68 | -0.18% | | R&D Investment as % of Revenue | 4.78 | 5.65 | Decreased by 0.87 percentage points | | **Intellectual Property** | **Newly Acquired in Current Period** | **Cumulatively Acquired** | - | | Invention Patents (units) | 3 | 54 | - | [Risk Factors](index=30&type=section&id=%E9%A3%8E%E9%99%A9%E5%9B%A0%E7%B4%A0) The company faces significant risks from intensifying market competition, potential intellectual property disputes, uncertainties in R&D commercialization, macroeconomic volatility, and financial challenges related to large inventory balances and exchange rate fluctuations - Market competition is intensifying, with product homogenization and price competition in mid-to-low-end segments posing major challenges[84](index=84&type=chunk) - Intellectual property risks include potential infringement disputes arising from customers' unauthorized use and the threat of imitation of the company's core compound database[85](index=85&type=chunk)[86](index=86&type=chunk) - Financial risks primarily involve a substantial inventory balance (book value of **851 million yuan** at period-end, accounting for **33.62%** of total assets) and exchange losses due to currency fluctuations (**2.78 million yuan** in exchange losses during the reporting period)[89](index=89&type=chunk) [Key Operating Performance During the Reporting Period](index=31&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E4%B8%BB%E8%A6%81%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5) During the reporting period, the company's main business achieved steady growth, with drug molecular building blocks revenue up 14.35% and scientific reagents revenue up 38.95%, while financial expenses increased significantly due to reduced interest income and exchange losses, and investment in wealth management products led to a substantial increase in trading financial assets Main Business Revenue Composition | Business Segment | Current Period Revenue (Million Yuan) | YoY Growth (%) | | :--- | :--- | :--- | | Drug Molecular Building Blocks | 520.46 | 14.35 | | Scientific Reagents | 107.07 | 38.95 | | **Total** | **627.53** | **17.91** | Key Financial Statement Item Changes | Item | Current Period Amount (Yuan) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | | Financial Expenses | 4,178,143.31 | N/A | Reduced interest income from wealth management and exchange losses | | Net Cash Flow from Operating Activities | 16,112,188.59 | -82.03 | Business expansion, increased product procurement expenses | | Trading Financial Assets | 460,896,808.21 | 510.28 | Increased allocation to bank wealth management products | | Short-term Borrowings | 203,152,860.14 | 573.08 | Increase in bank short-term borrowings | Corporate Governance, Environment, and Society This section outlines significant changes in the company's leadership and core technical personnel, as well as the implementation details of its equity incentive plans, reflecting ongoing efforts in talent management and employee motivation [Changes in Directors, Senior Management, and Core Technical Personnel](index=40&type=section&id=%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%92%8C%E6%A0%B8%E5%BF%83%E6%8A%80%E6%9C%AF%E4%BA%BA%E5%91%98%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) During the reporting period, the company experienced several changes in senior management and core technical personnel, including the resignation of Li Tao and Mao Yonghao, and the appointment of new CFO and Board Secretary, along with the addition of seven new core technical personnel to maintain R&D stability - Key personnel changes include the departure of Li Tao (Director, Board Secretary, CFO), and the appointment of Wang Kun as CFO and Wang Xuan as Board Secretary[111](index=111&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Core technical personnel Mao Yonghao resigned, and the company newly identified Zhang Ruihao and 6 others as core technical personnel to maintain R&D team stability[111](index=111&type=chunk)[112](index=112&type=chunk)[116](index=116&type=chunk) [Status and Impact of Company's Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=41&type=section&id=%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%83%E6%BF%80%E5%8A%B1%E8%AE%A1%E5%88%92%E3%80%81%E5%91%98%E5%B7%A5%E6%8C%81%E8%82%A1%E8%AE%A1%E5%88%92%E6%88%96%E5%85%B6%E4%BB%96%E5%91%98%E5%B7%A5%E6%BF%80%E5%8A%B1%E6%8E%AA%E6%96%BD%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%85%B6%E5%BD%B1%E5%93%8D) During the reporting period, the company implemented the grant of its 2024 restricted stock incentive plan, initially granting **2.06 million shares** to 65 recipients and later **0.494 million reserved shares** to 18 recipients, both at a price of **24.96 yuan per share** - On January 8, 2025, the company initially granted **2.06 million restricted shares** to 65 incentive recipients at a price of **24.96 yuan per share**[118](index=118&type=chunk) - On April 18, 2025, the company granted **0.494 million reserved restricted shares** to 18 incentive recipients at a price of **24.96 yuan per share**[118](index=118&type=chunk) Significant Matters This section covers the company's fulfillment of commitments, significant related party transactions, major contracts, and the progress of raised funds utilization, providing insight into its operational integrity and strategic financial management [Fulfillment of Commitments](index=43&type=section&id=%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) During the reporting period, the company's actual controllers, shareholders, related parties, and the company itself strictly fulfilled all commitments made during the initial public offering, including share lock-up, share price stabilization, avoidance of horizontal competition, and regulation of related party transactions, with no breaches observed - The company's controlling shareholders and actual controllers, Dai Lan and Dai Long, committed not to transfer pre-IPO shares for **36 months** from the listing date, with extended lock-up periods and reduced share price commitments linked to the offering price[122](index=122&type=chunk)[126](index=126&type=chunk) - The company, its controlling shareholders, directors, and senior management committed to initiating share price stabilization measures, including company buybacks, controlling shareholder增持, and director/senior management增持, if the share price falls below net asset value per share for **20 consecutive trading days** within three years of listing[124](index=124&type=chunk)[158](index=158&type=chunk) [Significant Related Party Transactions](index=65&type=section&id=%E9%87%8D%E5%A4%A7%E5%85%B3%E8%81%94%E4%BA%A4%E6%98%93) During the reporting period, the company planned a major asset restructuring to acquire control of Combi-Blocks, Inc. through a share issuance, a matter that progressed from January 2025 but was subsequently terminated by a board resolution on April 14, 2025 - The company had planned to issue shares to acquire a portion of Zhuhai Weibao's equity to gain control of Combi-Blocks, Inc., and raise supporting funds[186](index=186&type=chunk) - This major asset restructuring was terminated by a resolution of the company's board of directors on April 14, 2025[187](index=187&type=chunk) [Significant Contracts and Their Fulfillment](index=67&type=section&id=%E9%87%8D%E5%A4%A7%E5%90%88%E5%90%8C%E5%8F%8A%E5%85%B6%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) During the reporting period, the company provided guarantees totaling **210 million yuan** to its wholly-owned subsidiary, Shanghai Bilude Pharmaceutical Technology Co., Ltd., to support bank credit lines, with a remaining guarantee balance of **110 million yuan** at period-end Guarantees to Subsidiaries | Guarantor | Guaranteed Party | Guarantee Amount (Million Yuan) | Guarantee Type | | :--- | :--- | :--- | :--- | | Bide Pharma | Shanghai Bilude | 200.00 | Joint and several liability guarantee | | Bide Pharma | Shanghai Bilude | 10.00 | Joint and several liability guarantee | - As of the end of the reporting period, the company's total guarantee balance for its subsidiaries was **110 million yuan**, accounting for **5.64%** of the company's net assets[192](index=192&type=chunk) [Explanation of Progress in Use of Raised Funds](index=70&type=section&id=%E5%8B%9F%E9%9B%86%E8%B5%84%E9%87%91%E4%BD%BF%E7%94%A8%E8%BF%9B%E5%B1%95%E8%AF%B4%E6%98%8E) The company's net proceeds from its initial public offering amounted to **1.309 billion yuan**, with **1.271 billion yuan** cumulatively invested, representing a **97.10%** progress, and all over-raised funds have been fully utilized for repaying bank loans, supplementing working capital, and share repurchases Overall Use of Raised Funds (As of Period End) | Item | Amount (Million Yuan) | | :--- | :--- | | Net Proceeds from Raised Funds | 1,309.00 | | Total Committed Investment | 434.36 | | Total Over-raised Funds | 874.64 | | Total Cumulative Raised Funds Invested | 1,271.07 | | Overall Investment Progress | 97.10% | Details of Over-raised Funds Usage | Purpose | Planned Investment (Million Yuan) | Cumulative Investment (Million Yuan) | Investment Progress (%) | | :--- | :--- | :--- | :--- | | Repayment of Bank Loans and Permanent Working Capital Supplement | 774.64 | 774.64 | 100.00 | | Share Repurchase | 100.00 | 100.00 | 100.00 | | **Total** | **874.64** | **874.64** | **100.00** | Share Changes and Shareholder Information This section details the company's shareholder structure, including the total number of common shareholders and the shareholdings of its top ten shareholders, highlighting the control held by actual controllers and the presence of institutional investors [Shareholder Information](index=77&type=section&id=%E8%82%A1%E4%B8%9C%E6%83%85%E5%86%B5) As of the end of the reporting period, the company had **3,782** common shareholders, with actual controllers Dai Lan and Dai Long holding significant stakes, and institutional investors like China Universal Medical & Health Hybrid Securities Investment Fund also among the top ten shareholders Top Ten Shareholders' Shareholding | Shareholder Name | Number of Shares Held | Proportion (%) | | :--- | :--- | :--- | | Dai Lan | 29,664,719 | 32.64 | | Dai Long | 13,106,289 | 14.42 | | Zhoushan Xinxin Enterprise Management Partnership | 5,019,806 | 5.52 | | Ningbo Landan Venture Capital Partnership | 4,305,076 | 4.74 | | China Universal Medical & Health Hybrid Securities Investment Fund | 4,252,561 | 4.68 | - Actual controllers Dai Lan and Dai Long are siblings and have signed a concerted action agreement; Zhoushan Xinxin, Ningbo Landan, and Wu Bo are concerted parties; Nanxu Investment, Lanyun Wanchi, and Xuqing Investment are employee stock ownership platforms controlled by Dai Long[212](index=212&type=chunk) Bond-Related Information This section confirms the absence of any corporate bonds or non-financial enterprise debt financing instruments issued by the company during the reporting period [Corporate Bonds and Non-Financial Enterprise Debt Financing Instruments](index=82&type=section&id=%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E5%92%8C%E9%9D%9E%E9%87%91%E8%9E%8D%E4%BC%81%E4%B8%9A%E5%80%BA%E5%8A%A1%E8%9E%8D%E8%B5%84%E5%B7%A5%E5%85%B7) During the reporting period, the company did not issue any corporate bonds, enterprise bonds, or non-financial enterprise debt financing instruments - The company has no outstanding corporate bonds or convertible corporate bonds[220](index=220&type=chunk) Financial Report This section provides a summary of the company's financial statements, including balance sheet, income statement, and cash flow statement, along with detailed notes explaining key accounting items and their changes [Financial Statement Summary](index=83&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E6%91%98%E8%A6%81) The financial statements indicate a growth in total assets to **2.53 billion yuan** and total liabilities to **581 million yuan**, with the asset-liability ratio rising to **22.98%**, while operating revenue increased by 17.91% to **628 million yuan** and net profit by 41.60% to **73.41 million yuan**, though operating cash flow significantly decreased and investing cash outflow expanded due to wealth management product purchases Consolidated Balance Sheet Summary (Jun 30, 2025) | Item | Period-End Balance (Yuan) | Period-Beginning Balance (Yuan) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 726,936,059.28 | 1,105,333,099.80 | | Trading Financial Assets | 460,896,808.21 | 75,522,082.20 | | Inventories | 850,716,686.81 | 760,217,457.80 | | **Total Assets** | **2,530,189,768.10** | **2,418,035,118.40** | | Short-term Borrowings | 203,152,860.14 | 30,182,470.22 | | **Total Liabilities** | **581,464,113.91** | **390,912,654.76** | | **Equity Attributable to Parent Company Shareholders** | **1,948,725,654.19** | **2,027,122,463.64** | Consolidated Income Statement Summary (Jan-Jun 2025) | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Total Operating Revenue | 627,526,589.12 | 532,207,309.99 | | Total Operating Costs | 522,427,598.32 | 456,333,477.22 | | Total Profit | 100,843,826.91 | 64,254,167.56 | | Net Profit | 73,406,059.54 | 51,839,064.55 | | Net Profit Attributable to Parent Company Shareholders | 73,406,059.54 | 51,839,064.55 | Consolidated Cash Flow Statement Summary (Jan-Jun 2025) | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 16,112,188.59 | 89,677,429.18 | | Net Cash Flow from Investing Activities | -398,576,339.49 | -266,685,771.14 | | Net Cash Flow from Financing Activities | -7,417,835.52 | -140,764,364.22 | | Period-End Cash and Cash Equivalents Balance | 710,089,200.40 | 947,195,599.76 | [Notes to Consolidated Financial Statements](index=142&type=section&id=%E5%90%88%E5%B9%B6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%A1%B9%E7%9B%AE%E6%B3%A8%E9%87%8A) The notes to the financial statements provide detailed explanations of accounting item compositions and changes, highlighting a significant increase in trading financial assets due to wealth management product purchases, low customer concentration in accounts receivable, high inventory proportions, and a substantial rise in short-term borrowings, with revenue broken down by product and channel - Trading financial assets at period-end amounted to **461 million yuan**, a significant increase from **76 million yuan** at the beginning of the period, entirely comprising bank wealth management products[401](index=401&type=chunk) Main Business Revenue by Product Type | Product Type | Operating Revenue (Yuan) | Operating Cost (Yuan) | | :--- | :--- | :--- | | Molecular Building Blocks - Heterocyclic Compounds | 271,473,211.84 | 142,520,031.85 | | Molecular Building Blocks - Benzene Ring Compounds | 146,310,956.15 | 83,918,851.19 | | Molecular Building Blocks - Aliphatic Compounds | 102,671,564.31 | 57,761,085.82 | | Catalysts and Ligands | 66,343,913.92 | 44,956,312.69 | | Life Science Reagents | 40,726,942.90 | 20,684,205.21 | Main Business Revenue by Sales Channel | Sales Channel | Operating Revenue (Yuan) | Operating Cost (Yuan) | | :--- | :--- | :--- | | Direct Sales | 598,706,766.85 | 330,880,293.08 | | Distribution | 28,819,822.27 | 18,960,193.68 |

中基健康产业股份有限公司 CHALKISHEALTHINDUSTRYCO.,LTD 二〇二五年半年度报告全文 中基健康产业股份有限公司 2025 年半年度报告全文 二〇二五年八月 中基健康产业股份有限公司 2025 年半年度报告全文 第一节重要提示、目录和释义 公司董事会、监事会及董事、监事、高级管理人员保证半年度报告内容的真实、准确、完整，不存在 虚假记载、误导性陈述或者重大遗漏，并承担个别和连带的法律责任。 公司负责人王长江、主管会计工作负责人常姗姗及会计机构负责人(会计主管人员)李红声明：保证本 半年度报告中财务报告的真实、准确、完整。 所有董事均已出席了审议本次半年报的董事会会议。 公司 2024 年度利润总额、净利润、扣除非经常性损益后的净利润三者均为负值，且扣除后的营业收 入低于 3 亿元，同时，归属于上市公司股东的净资产为负。上述财务数据触及《深圳证券交易所股票上市 规则（2024 年修订）》第 9.3.1 条"（一）最近一个会计年度经审计的利润总额、净利润、扣除非经常性 损益后的净利润三者孰低为负值，且扣除后的营业收入低于 3 亿元。（二）最近一个会计年度经审计的期 末净资产为负值。"规定的情 ...

[Important Notice](index=2&type=section&id=Important%20Notice) This section emphasizes the board and senior management's assurance of the semi-annual report's accuracy, advises reviewing risk factors, and notes the report is unaudited with no profit distribution plan - The company's board of directors and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report content and assume legal responsibility[4](index=4&type=chunk) - This semi-annual report is unaudited[5](index=5&type=chunk) - No profit distribution plan or capital reserve to share capital increase plan was approved by the board of directors for this reporting period[6](index=6&type=chunk) [Section I Definitions](index=4&type=section&id=Section%20I%20Definitions) This section defines key terms used in the report, including company names, related parties, product types, industry terms, and the reporting period, ensuring clarity - "Company", "the Company", and "Group Company" all refer to Shanghai Sanyou Medical Device Co., Ltd. (including its subsidiaries within the consolidated financial statements)[11](index=11&type=chunk) - Actual controllers refer to Xu Nong, Michael Mingyan Liu, and David Fan[11](index=11&type=chunk) - The reporting period is from January 1, 2025, to June 30, 2025[13](index=13&type=chunk) [Section II Company Profile and Key Financial Indicators](index=7&type=section&id=Section%20II%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section outlines the company's basic information, contact details, and stock overview, detailing H1 2025 financial indicators, showing significant revenue and net profit growth, and disclosing non-recurring gains and losses [I. Basic Company Information](index=7&type=section&id=I.%20Basic%20Company%20Information) Basic company information includes its Chinese name, legal representative, and registered address, with no changes in registered address during the reporting period - The company's Chinese name is Shanghai Sanyou Medical Device Co., Ltd., abbreviated as Sanyou Medical[15](index=15&type=chunk) - The legal representative is Xu Nong, and the registered and office address is at No. 385 Huirong Road, Jiading Industrial Zone, Jiading District, Shanghai[15](index=15&type=chunk) [II. Contact Persons and Information](index=7&type=section&id=II.%20Contact%20Persons%20and%20Information) This section provides contact details for the company's Board Secretary and Securities Affairs Representative - The Board Secretary is David Fan, and the Securities Affairs Representative is Wang Qian[16](index=16&type=chunk) - Contact address for both is No. 385 Huirong Road, Jiading Industrial Zone, Jiading District, Shanghai, with the email address ir@sanyou-medical.com[16](index=16&type=chunk) [III. Overview of Changes in Information Disclosure and Document Custody Locations](index=7&type=section&id=III.%20Overview%20of%20Changes%20in%20Information%20Disclosure%20and%20Document%20Custody%20Locations) The company designates "China Securities Journal" and "Shanghai Securities News" for information disclosure, with reports published on www.sse.com.cn and documents available at the Board Secretary's office - The company's designated information disclosure newspapers are "China Securities Journal" and "Shanghai Securities News"[17](index=17&type=chunk) - The website address for publishing the semi-annual report is www.sse.com.cn[17](index=17&type=chunk) [IV. Brief Introduction to Company Shares/Depositary Receipts](index=7&type=section&id=IV.%20Brief%20Introduction%20to%20Company%20Shares%2FDepositary%20Receipts) The company's A-shares are listed on the STAR Market of the Shanghai Stock Exchange, with stock abbreviation Sanyou Medical and code 688085 - The company's stock type is A-shares, listed on the STAR Market of the Shanghai Stock Exchange[18](index=18&type=chunk) - The stock abbreviation is Sanyou Medical, and the stock code is 688085[18](index=18&type=chunk) [VI. Key Accounting Data and Financial Indicators](index=8&type=section&id=VI.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) In H1 2025, the company's operating revenue increased by 17.77% YoY, and net profit attributable to shareholders increased by 2,083.64% YoY, with non-recurring net profit turning profitable 2025 H1 Key Accounting Data | Item | Current Period (Jan-Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 249,760,157.28 | 212,076,101.08 | 17.77 | | Total Profit | 40,424,190.71 | 5,403,015.11 | 648.18 | | Net Profit Attributable to Shareholders of Listed Company | 36,600,784.63 | 1,676,137.43 | 2,083.64 | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | 26,024,141.93 | -1,816,185.53 | Not Applicable | | Net Cash Flow from Operating Activities | -8,070,534.49 | -15,431,761.97 | Not Applicable | | Net Assets Attributable to Shareholders of Listed Company (End of Reporting Period) | 2,053,935,862.99 | 1,911,797,444.29 | 7.43 | | Total Assets (End of Reporting Period) | 2,314,136,752.55 | 2,306,660,250.83 | 0.32 | 2025 H1 Key Financial Indicators | Item | Current Period (Jan-Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | 0.11 | 0.01 | 1,000.00 | | Diluted Earnings Per Share (CNY/share) | 0.11 | 0.01 | 1,000.00 | | Basic Earnings Per Share After Deducting Non-Recurring Gains and Losses (CNY/share) | 0.08 | -0.01 | Not Applicable | | Weighted Average Return on Net Assets (%) | 1.86 | 0.09 | Increase 1.77 percentage points | | Weighted Average Return on Net Assets After Deducting Non-Recurring Gains and Losses (%) | 1.32 | -0.09 | Not Applicable | | R&D Expenditure as Percentage of Operating Revenue (%) | 15.02 | 20.69 | Decrease 5.67 percentage points | - As of June 30, 2025, the company's total share capital increased from 248,453,535 shares to 277,885,415 shares; after the 2024 equity distribution in July 2025, the total share capital changed to 333,462,498 shares[21](index=21&type=chunk) [VIII. Non-Recurring Gains and Losses Items and Amounts](index=9&type=section&id=VIII.%20Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) This section details the composition of non-recurring gains and losses for H1 2025, totaling **CNY 10,576,642.70**, primarily from government subsidies and financial asset fair value changes 2025 H1 Non-Recurring Gains and Losses Items | Non-Recurring Gains and Losses Item | Amount (CNY) | | :--- | :--- | | Gains and losses from disposal of non-current assets | -43,011.37 | | Government subsidies recognized in current profit or loss | 10,972,835.61 | | Gains and losses from changes in fair value of financial assets and liabilities held by non-financial enterprises, and gains and losses from disposal of financial assets and liabilities, excluding effective hedge accounting related to the company's normal business operations | 1,220,572.66 | | Other non-operating income and expenses apart from the above | 18,762.11 | | Other profit and loss items that meet the definition of non-recurring gains and losses | 132,008.73 | | Less: Income tax impact | 1,730,641.14 | | Impact on minority interests (after tax) | -6,116.10 | | **Total** | **10,576,642.70** | [Section III Management Discussion and Analysis](index=10&type=section&id=Section%20III%20Management%20Discussion%20and%20Analysis) This section analyzes the company's H1 2025 operations, covering industry, business development, performance, core competitiveness, R&D, and risk factors, highlighting growth despite challenges and innovation breakthroughs [I. Description of the Company's Industry and Main Business During the Reporting Period](index=10&type=section&id=I.%20Description%20of%20the%20Company%27s%20Industry%20and%20Main%20Business%20During%20the%20Reporting%20Period) The company specializes in orthopedic medical devices, with products including spinal and trauma implants and ultrasonic osteotomes, benefiting from market growth and actively pursuing innovation and international expansion - The company belongs to "Special Purpose Equipment Manufacturing (C35)" and "Implantable Biomedical Materials and Equipment Manufacturing" within the "Biomedical Engineering Industry", identified as a "High-end Medical Equipment and Devices and Related Services" enterprise recommended by the STAR Market[25](index=25&type=chunk) - China's orthopedic implant medical device market sales revenue is expected to grow to approximately **CNY 60.7 billion** in 2024, with a CAGR of about **14.51%** from 2019-2024[26](index=26&type=chunk) - The company's main products include orthopedic spinal implants, ultrasonic osteotomes, ultrasonic hemostatic knives, ultrasonic surgical equipment, and trauma implants[27](index=27&type=chunk) - The company is strengthening R&D and strategic layout in orthopedic-related fields such as sports medicine, new material applications, biomaterial surface modification, and 3D printing, and is focusing on the development of new-generation intelligent surgical robots[30](index=30&type=chunk) - While maintaining a leading position in the domestic orthopedic market, the company is strengthening its international business team and market promotion, vigorously developing international markets, especially mainstream markets in Europe, the United States, and Australia[30](index=30&type=chunk) [II. Discussion and Analysis of Operating Performance](index=12&type=section&id=II.%20Discussion%20and%20Analysis%20of%20Operating%20Performance) In H1 2025, the company achieved **CNY 249.8 million** in operating revenue and **CNY 36.60 million** in net profit, driven by new products, business expansion, and strong international growth, despite spinal volume-based procurement pressures - During the reporting period, the company achieved operating revenue of **CNY 249,760,157.28**, a **17.77%** YoY increase; net profit attributable to shareholders was **CNY 36,600,784.63**, a **2,083.64%** YoY increase[32](index=32&type=chunk) - The company completed the acquisition of the remaining minority equity in Shuimutiangpeng, making it a wholly-owned subsidiary; Shuimutiangpeng achieved operating revenue of **CNY 73.9949 million**, a **64.80%** YoY increase, and net profit attributable to shareholders of **CNY 38.9146 million**, a **359.05%** YoY increase[33](index=33&type=chunk) - The company jointly invested with Seegene Bio Co., Ltd. of Korea to establish a new joint venture, Litian (Taicang) Biotechnology Co., Ltd., focusing on innovative cell biomaterials and other regenerative medicine fields, with the company holding a **66%** controlling stake[34](index=34&type=chunk) - Suzhou Yunhejingcong, a controlled subsidiary, had its "Surface Porous PEEK Interbody Fusion Device" pass the National Medical Products Administration's special review procedure for innovative medical devices[35](index=35&type=chunk) - France's Implanet's innovative product, JAZZ Band System, received registration approval from China's NMPA, further enriching the company's non-fusion spinal product line[36](index=36&type=chunk) - Implanet achieved revenue of **EUR 5.809 million**, a **41.10%** YoY increase, with its US market business growing by **444%** in Q2[37](index=37&type=chunk) [III. Analysis of Core Competitiveness During the Reporting Period](index=14&type=section&id=III.%20Analysis%20of%20Core%20Competitiveness%20During%20the%20Reporting%20Period) The company's core competitiveness stems from its independent innovation, strong R&D, strict quality control, experienced management, and efficient logistics, supporting its leading position in orthopedic medical devices - Independent R&D innovation capability, particularly therapy innovation, is the company's core competitiveness, continuously establishing new therapies and improving existing ones through medical-engineering collaboration[40](index=40&type=chunk)[41](index=41&type=chunk) - The company's R&D team, led by Dr. Michael Mingyan Liu, comprises multidisciplinary high-end talents, establishing a mature project evaluation and R&D system, with the Tuoteng Laboratory accredited by CNAS[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - The company maintains strict product quality control, utilizes advanced production equipment, implements lean production and information-based management, and has most products certified by EU CE and US FDA[49](index=49&type=chunk)[50](index=50&type=chunk) - The company's middle and senior management team is stable, possessing rich experience in leading multinational teams, market development, and company management[52](index=52&type=chunk) - The company developed the "Yijie Cloud System," a mobile internet-based SaaS system for orthopedic high-value consumable warehousing management and sales operations, significantly improving operational efficiency and product traceability[53](index=53&type=chunk)[54](index=54&type=chunk) [1. Independent Innovation Advantage](index=14&type=section&id=1.%20Independent%20Innovation%20Advantage) The company's core competitiveness is therapy innovation, developing advanced spinal products and achieving ultrasonic surgical breakthroughs through medical collaboration, continuously expanding its product line - The company has established high brand recognition and a leading market position in the spinal implant sub-segment, with breakthroughs in complex spinal deformity correction and minimally invasive treatment of spinal degeneration[42](index=42&type=chunk) - Shuimutiangpeng possesses deep R&D accumulation and core technologies in ultrasonic osteotomes and ultrasonic hemostatic knives, being a leader in domestic ultrasonic energy surgical tools, developing innovative techniques such as inside-out osteotomy[43](index=43&type=chunk) - The company actively expands its product line, entering the field of active devices like ultrasonic osteotomes, and exploring the organic combination of passive high-value consumables and active surgical equipment in therapies[44](index=44&type=chunk) [2. R&D Team and System Advantage](index=15&type=section&id=2.%20R%26D%20Team%20and%20System%20Advantage) The company's R&D team, led by Dr. Michael Mingyan Liu, comprises multidisciplinary high-end talents, establishing a mature project evaluation and R&D system, with the Tuoteng Laboratory accredited by CNAS - The company's R&D team is led by Dr. Michael Mingyan Liu, Chairman and Chief Scientist, with team members including PhDs, master's graduates, and senior design engineers, covering disciplines such as mechanical engineering, engineering mechanics, and materials science[45](index=45&type=chunk) - The company has established a mature project evaluation and R&D system, with the R&D center comprising basic R&D, technology, development, engineering, process, and registration departments, collaborating with marketing, sales, and production process departments[46](index=46&type=chunk) - In April 2022, Shanghai Sanyou Medical Device Co., Ltd.'s Tuoteng Laboratory obtained CNAS accreditation, becoming the first enterprise medical orthopedic implant consumable testing laboratory in Shanghai to receive CNAS accreditation[47](index=47&type=chunk) - Dr. Cao Qun, Chairman of Shuimutiangpeng, has over 20 years of experience in ultrasonic surgical product R&D, leading the team to establish a mature project evaluation and R&D system[48](index=48&type=chunk) [3. Quality Advantage](index=16&type=section&id=3.%20Quality%20Advantage) The company prioritizes quality control for implantable medical consumables, using advanced equipment and a traceable quality management system, achieving ISO, CE, and FDA certifications - The company highly values product quality control, using advanced high-precision imported production and testing equipment to ensure product accuracy and stability[49](index=49&type=chunk) - The company has established standardized and traceable process documentation covering market demand acquisition, design, testing, production, sales, and post-operative follow-up, strictly adhering to the latest medical device supervision and administration regulations for quality control[50](index=50&type=chunk) - Most products have passed EU CE certification and US FDA registration, laying a solid foundation for the company to expand domestic and international markets[50](index=50&type=chunk) - Shuimutiangpeng has established a quality management system in accordance with regulations such as the "Medical Device Supervision and Administration Regulations" and obtained ISO 13485:2016 certification[51](index=51&type=chunk) [4. Management Advantage](index=17&type=section&id=4.%20Management%20Advantage) The company boasts a stable, creative, and enterprising middle and senior management team with extensive experience in multinational leadership and market development, establishing advanced management processes and fostering talent development - The company's middle and senior management team has remained stable for a long time, possessing rich experience in leading multinational teams, market development, and company management, establishing advanced management processes and systems[52](index=52&type=chunk) - The company's sales team leaders have many years of frontline sales and management experience in the medical device industry, capable of actively responding to industry changes and competitive environments[52](index=52&type=chunk) - The company builds clear job competency models and different career ladders to support employees' dual-channel growth and development, comprehensively building a high-performance team[52](index=52&type=chunk) [5. Logistics and Sales Operation Management Advantage](index=17&type=section&id=5.%20Logistics%20and%20Sales%20Operation%20Management%20Advantage) The company's "Yijie Cloud System" for orthopedic high-value consumables significantly enhances warehousing and sales efficiency, operational safety, and product traceability, while optimizing production and reducing logistics costs - The company collaborated with an external internet company to develop the "Yijie Cloud System," a SaaS system for orthopedic high-value consumable warehousing management and sales operations, significantly improving picking and distribution efficiency[53](index=53&type=chunk)[54](index=54&type=chunk) - The system is a networked, information-sharing platform that integrates all data from manufacturers, logistics providers, distributors, sales personnel, doctors, and patients, enabling full-process tracking and management of products[54](index=54&type=chunk) - The system can effectively allocate resources, improve operational efficiency for the company and its distributors at all levels, reduce logistics costs, standardize credit management for downstream customers, and enhance product traceability[54](index=54&type=chunk) [(III) Core Technologies and R&D Progress](index=19&type=section&id=(III)%20Core%20Technologies%20and%20R%26D%20Progress) The company possesses multiple core technologies in orthopedic implants and ultrasonic surgical equipment, continuously achieving R&D results, participating in national projects, and holding numerous patents with ongoing R&D investment - The company possesses core technologies such as multi-planar adjustable, multi-axial extension, and bone-matching pedicle screw technology, flexible extension arm percutaneous screw technology, and endoscopic-assisted percutaneous interbody fusion technology[57](index=57&type=chunk) - Wholly-owned subsidiary Suzhou Tuoteng possesses core technologies such as multi-section medical high-strength suture design and implementation, biomimetic pre-locked looped titanium plates, and knotless anchor design and winding[57](index=57&type=chunk) - Wholly-owned subsidiary Shuimutiangpeng possesses core technologies for ultrasonic bone power systems, ultrasonic hemostatic knife systems, and ultrasonic surgical equipment[57](index=57&type=chunk) - During the reporting period, the company had 1 product receive customized medical device filing approval, 1 product receive Class II medical device registration, 1 product pass the innovative medical device special review procedure, and 1 product receive market approval for Class III medical device registration through agency application[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The company continuously participates in national key R&D programs, Ministry of Industry and Information Technology "Unveiling and Leading" projects, Shanghai key projects, and university-enterprise cooperation innovation center projects[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - As of the end of the reporting period, the company holds 40 Class III medical device product registration certificates, 592 valid patents (including 237 invention patents), and 4 software copyrights[69](index=69&type=chunk) [1. Core Technologies, Their Advanced Nature, and Changes During the Reporting Period](index=19&type=section&id=1.%20Core%20Technologies%2C%20Their%20Advanced%20Nature%2C%20and%20Changes%20During%20the%20Reporting%20Period) The company holds multiple industry-leading core technologies in spinal implants, bone and soft tissue repair, and ultrasonic surgical equipment, continuously innovating and protecting intellectual property - The company possesses core technologies such as multi-planar adjustable, multi-axial extension, and bone-matching pedicle screw technology, flexible extension arm percutaneous screw technology, and endoscopic-assisted percutaneous interbody fusion technology, which are at an industry-leading level[57](index=57&type=chunk) - Suzhou Tuoteng possesses core technologies such as multi-section medical high-strength suture design and implementation, biomimetic pre-locked looped titanium plates, and knotless anchor design and winding[57](index=57&type=chunk)[60](index=60&type=chunk) - Shuimutiangpeng possesses core technologies for ultrasonic surgical equipment, such as inside-out ultrasonic blade design, V-groove ultrasonic blade design, and transverse/longitudinal curved osteotomy ultrasonic blade design[57](index=57&type=chunk)[61](index=61&type=chunk) - The company is a national-level specialized and sophisticated "Little Giant" enterprise, with products primarily in spinal implants[62](index=62&type=chunk) [2. R&D Achievements During the Reporting Period](index=24&type=section&id=2.%20R%26D%20Achievements%20During%20the%20Reporting%20Period) During the reporting period, the company achieved multiple R&D results, including customized medical device filings, product registrations, and special review approvals, while actively participating in national R&D projects and increasing intellectual property - The "Novel Lamina Fixation Plate System (Customized)" received filing approval from the Shanghai Medical Products Administration for customized medical devices, meeting personalized patient needs[63](index=63&type=chunk) - Beijing Shuimu Equipment's "Ultrasonic Bone Power Equipment Blade" received registration approval from the Beijing Medical Products Administration, allowing for reusability and reducing patient medical costs[64](index=64&type=chunk) - Yunhejingcong's product, "Surface Porous PEEK Interbody Fusion Device," passed the National Medical Products Administration's special review procedure for innovative medical devices, expected to be approved by year-end or H1 next year[64](index=64&type=chunk) - The company's agency application for Implanet's Class III medical device, "Spinal Internal Fixation Connector System JAZZ System," received market approval, enriching the non-fusion spinal product line[65](index=65&type=chunk) - The company, as a drafting unit, participated in drafting multiple industry standards, including "Special Requirements for Quality Management System for Metal Additive Manufacturing Medical Devices"[68](index=68&type=chunk) Intellectual Property Acquired During the Reporting Period | | New Applications in Current Period (items) | New Acquisitions in Current Period (items) | Cumulative Applications (items) | Cumulative Acquisitions (items) | | :--- | :--- | :--- | :--- | :--- | | Invention Patents | 7 | 23 | 274 | 256 | | Utility Model Patents | 6 | 1 | 289 | 281 | | Design Patents | 1 | 8 | 170 | 156 | | Software Copyrights | 0 | 0 | 4 | 4 | | Total | 14 | 32 | 737 | 697 | [3. R&D Expenditure Table](index=26&type=section&id=3.%20R%26D%20Expenditure%20Table) In H1 2025, the company's total R&D expenditure was **CNY 37.5205 million**, a 14.49% YoY decrease, primarily due to a one-time share-based payment expense recognized for R&D personnel equity incentives at wholly-owned subsidiary Shuimutiangpeng in the prior year R&D Expenditure | Indicator | Current Period | Prior Year Period | Change (%) | | :--- | :--- | :--- | :--- | | Expensed R&D Expenditure | 37,520,482.42 | 43,879,618.93 | -14.49 | | Total R&D Expenditure | 37,520,482.42 | 43,879,618.93 | -14.49 | | Total R&D Expenditure as Percentage of Operating Revenue (%) | 15.02 | 20.69 | Decrease 5.67 percentage points | - Total R&D expenditure decreased by **CNY 6.3591 million**, a **14.49%** decrease YoY, mainly due to a one-time share-based payment expense of **CNY 7.2385 million** recognized for R&D personnel equity incentives at the company's wholly-owned subsidiary Shuimutiangpeng in the prior year, with no such expense this year[73](index=73&type=chunk) [4. R&D Project Status](index=27&type=section&id=4.%20R%26D%20Project%20Status) The company has 11 R&D projects with a total estimated investment of **CNY 239.2195 million**, focusing on innovative orthopedic and ultrasonic surgical solutions to address clinical needs and enhance market competitiveness R&D Project Status | No. | Project Name | Estimated Total Investment (CNY million) | Investment in Current Period (CNY million) | Cumulative Investment (CNY million) | Progress or Phased Achievements | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | Novel Cervical Disc Prosthesis | 1,281.76 | 50.49 | 468.97 | Sample performance and functional testing in progress | | 2 | Universal Trauma Fixation System Upgrade | 2,637.30 | 286.85 | 2,511.12 | Metal bone pins registered and in mass production; titanium alloy locking plate system accepted for review | | 3 | Minimally Invasive Spinal Interbody Fusion System | 3,001.00 | 551.93 | 3,606.46 | Product in mass production, positive clinical feedback, further optimization and updates in progress | | 4 | Degenerative Spinal Deformity Correction and Fixation System | 3,006.40 | 435.47 | 2,726.23 | Various products currently in design and development | | 5 | Cervical Decompression and Correction Fixation System | 1,510.49 | 31.98 | 1,440.40 | Product obtained registration; clinical trials currently underway | | 6 | Novel Bone and Soft Tissue Repair System Project Phase II | 2,985.00 | 456.28 | 456.28 | Project launched, preliminary planning, preparation, and selection in progress | | 7 | Ultrasonic Electrosurgical System | 2,000.00 | 265.32 | 1,118.19 | Project design and development largely completed | | 8 | Ultrasonic Surgical Equipment Blade | 1,500.00 | 188.51 | 625.13 | R&D completed, registration initiated | | 9 | Ultrasonic Surgical Equipment Upgrade and Improvement | 2,000.00 | 435.43 | 839.57 | Project design and development completed | | 10 | Internationalization of Ultrasonic Surgical Equipment | 1,500.00 | 128.89 | 623.56 | Registrations in multiple countries underway | | 11 | Ultrasonic Soft Tissue Cutting and Hemostasis System (Coagulation of 5-7mm Vessels) | 2,500.00 | 52.56 | 2,192.48 | Product prototype completed, testing completed | | **Total** | **23,921.95** | **2,883.71** | **16,608.39** | / | [5. R&D Personnel Information](index=32&type=section&id=5.%20R%26D%20Personnel%20Information) The company employs 110 R&D personnel, representing 21.07% of its total workforce, with an average compensation of **CNY 203,411.91**, primarily holding bachelor's and master's degrees and aged 30-40 Basic Information of R&D Personnel | Basic Information | Current Period | Prior Year Period | | :--- | :--- | :--- | | Number of R&D personnel (persons) | 110 | 107 | | R&D personnel as percentage of total company headcount (%) | 21.07 | 21.31 | | Total R&D personnel compensation | 22,375,301.27 | 20,234,260.83 | | Average R&D personnel compensation | 203,411.91 | 189,105.24 | Educational Background of R&D Personnel | Educational Background | Number (persons) | Percentage (%) | | :--- | :--- | :--- | | PhD | 4 | 3.64 | | Master's Degree | 31 | 28.18 | | Bachelor's Degree | 44 | 40.00 | | Associate Degree | 23 | 20.91 | | High School and Below | 8 | 7.27 | | Total | 110 | 100.00 | Age Structure of R&D Personnel | Age Range | Number (persons) | Percentage (%) | | :--- | :--- | :--- | | Under 30 (excluding 30) | 25 | 22.73 | | 30-40 (including 30, excluding 40) | 49 | 44.55 | | 40-50 (including 40, excluding 50) | 29 | 26.36 | | 50-60 (including 50, excluding 60) | 5 | 4.55 | | 60 and above | 2 | 1.82 | | Total | 110 | 100.00 | [IV. Risk Factors](index=32&type=section&id=IV.%20Risk%20Factors) The company faces core competitiveness risks like R&D failure and talent loss, operational risks including accounts receivable and inventory, and industry policy risks from deepening medical reforms and volume-based procurement - Core competitiveness risks include new product R&D failure or inability to gain market acceptance, core technology leakage, loss of key technical personnel, and intellectual property protection risks[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Operating risks include accounts receivable recovery risk (period-end net amount of **CNY 86.0157 million**, a **17.60%** increase from period-start), large inventory balance risk (period-end book value of **CNY 275.8328 million**, a **12.08%** increase from period-start), product quality and potential liability risks, single product structure and trauma product market expansion risks, and fundraising project risks ("Medical High-Strength Suture and Related Orthopedic Soft Tissue Repair and Reconstruction Medical Device Project" extended to December 31, 2027)[88](index=88&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - Industry risks are mainly reflected in increasingly strict national regulation of medical devices, with policies such as medical insurance catalogs, "two-invoice system," and volume-based procurement now fully covering the four major categories of orthopedic high-value medical consumables[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) [V. Key Operating Performance During the Reporting Period](index=35&type=section&id=V.%20Key%20Operating%20Performance%20During%20the%20Reporting%20Period) In H1 2025, the company achieved **CNY 249.8 million** in revenue and **CNY 36.60 million** in net profit, driven by spinal and ultrasonic osteotome growth and Implanet's revenue, with stable asset-liability structure and increased receivables and inventory - During the reporting period, the company achieved operating revenue of **CNY 249.7602 million**, a **17.77%** YoY increase; net profit attributable to shareholders was **CNY 36.6008 million**, a **2,083.64%** YoY increase[98](index=98&type=chunk) - Operating revenue growth was mainly due to increased spinal business and ultrasonic osteotome business from terminal hospital and channel expansion, as well as increased revenue from France's Implanet[99](index=99&type=chunk) - Selling expenses increased by **16.33%** YoY, mainly due to increased personnel costs for sales staff and business service fees resulting from operating revenue growth[99](index=99&type=chunk) - R&D expenses decreased by **14.49%** YoY, mainly due to the one-time share-based payment expense recognized for Shuimutiangpeng R&D personnel equity incentives in the prior year[99](index=99&type=chunk) - Net cash flow from operating activities was **-CNY 8.0705 million**, an increase of **CNY 7.3612 million** from the previous period, mainly due to increased collections from higher revenue[99](index=99&type=chunk) - Net profit attributable to parent company shareholders significantly increased, mainly due to increased net profit and Shuimutiangpeng becoming a **100%** wholly-owned subsidiary in February 2025, up from **51.8154%**[100](index=100&type=chunk) Changes in Assets and Liabilities (Period-end vs. Period-start) | Item Name | Period-end Amount (CNY million) | Prior Year-end Amount (CNY million) | Period-end vs. Prior Year-end Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | | Accounts Receivable | 8,601.57 | 7,314.04 | 17.60 | Increase in revenue | | Inventory | 27,583.28 | 24,611.28 | 12.08 | Product stocking due to anticipated future market growth | | Short-term Borrowings | 1,995.00 | 1,525.33 | 30.79 | Bank borrowings | | Contract Liabilities | 96.68 | 622.73 | -84.48 | Decrease in customer prepayments | | Prepayments | 1,570.41 | 920.26 | 70.65 | Increase in prepayments to suppliers | | Non-current Assets Due Within One Year | 13,058.98 | 9,710.15 | 34.49 | Reclassification of large-denomination certificates of deposit due within one year | | Other Non-current Liabilities | 1,136.01 | 809.16 | 40.40 | Primarily accounts receivable factoring | - Overseas assets amounted to **CNY 133.4312 million**, accounting for **5.77%** of total assets[105](index=105&type=chunk) Overall Analysis of External Equity Investments | Name of Investee Company | Main Business | Investment Method | Investment Amount (CNY million) | Shareholding Ratio | Progress as of End of Reporting Period | Investment Gains/Losses for Current Period | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Taifu Huaijin | Venture capital, enterprise consulting management, etc. | Capital increase | 20,000.00 | 9.1268% | Cumulative investment of **CNY 202.40 million** paid, **CNY 1.8636 million** of investment principal recovered | 0 | | Hangzhou Renxu | Fund investment | Fund investment | 1,500.00 | 4.00% | **CNY 4.50 million** invested | -0.0854 million | Key Holding and Participating Companies | Company Name | Company Type | Main Business | Operating Revenue (CNY million) | Net Profit (CNY million) | | :--- | :--- | :--- | :--- | :--- | | Beijing Shuimutiangpeng Medical Technology Co., Ltd. | Subsidiary | Medical device sales, technology development, etc. | 7,399.49 | 3,903.98 | | Implanet | Subsidiary | Design, manufacture, and sale of various implants, etc. | 4,626.14 | -1,774.42 | [Section IV Corporate Governance, Environment, and Society](index=44&type=section&id=Section%20IV%20Corporate%20Governance%2C%20Environment%2C%20and%20Society) This section details significant changes in the company's governance, including the abolition of the supervisory board and the re-election of the fourth board of directors, with no profit distribution or equity incentive plans during the period [I. Changes in Directors, Senior Management, and Core Technical Personnel](index=44&type=section&id=I.%20Changes%20in%20Directors%2C%20Senior%20Management%2C%20and%20Core%20Technical%20Personnel) The company abolished its supervisory board in June 2025, with its functions now exercised by the board's audit committee, and completed the re-election of its fourth board of directors - The company abolished the supervisory board, with its functions now exercised by the board's audit committee as stipulated by the "Company Law"[118](index=118&type=chunk) - The company elected Michael Mingyan Liu, Xu Nong, David Fan, Hu Xubo, and Zheng Xiaoyi as non-independent directors for the fourth board of directors[119](index=119&type=chunk) - Li Mochou, Cheng Fang, and Gu Shaoyu were elected as independent directors for the fourth board of directors, and Ren Chongjun as an employee representative director[119](index=119&type=chunk) [II. Profit Distribution or Capital Reserve to Share Capital Increase Plan](index=44&type=section&id=II.%20Profit%20Distribution%20or%20Capital%20Reserve%20to%20Share%20Capital%20Increase%20Plan) This semi-annual report contains no proposed profit distribution or capital reserve to share capital increase plan - This semi-annual report has no profit distribution or capital reserve to share capital increase plan[119](index=119&type=chunk) [III. Status and Impact of Company Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=44&type=section&id=III.%20Status%20and%20Impact%20of%20Company%20Equity%20Incentive%20Plans%2C%20Employee%20Stock%20Ownership%20Plans%2C%20or%20Other%20Employee%20Incentive%20Measures) During the reporting period, there was no subsequent progress or change in the company's equity incentive plans, employee stock ownership plans, or other employee incentive measures - Relevant equity incentive matters have been disclosed in temporary announcements, with no subsequent progress or changes in implementation[120](index=120&type=chunk) [Section V Significant Matters](index=46&type=section&id=Section%20V%20Significant%20Matters) This section details the company's fulfillment of commitments, absence of major litigation, related party transactions, guarantees for Implanet, and the use of raised funds, including cash management and temporary working capital supplementation [I. Fulfillment of Commitments](index=46&type=section&id=I.%20Fulfillment%20of%20Commitments) The company, its actual controllers, shareholders, and related parties have timely and strictly fulfilled all commitments regarding asset restructuring, share lock-up, avoiding competition, related party transactions, independence, and compensating for diluted returns - The company and all its directors, supervisors, senior management, actual controllers and their concerted parties, restructuring counterparties, Shuimutiangpeng, Shanghai Hanzhan, and their directors, supervisors, senior management/key management personnel have all timely and strictly fulfilled their commitments regarding the truthfulness, accuracy, and completeness of information provided[123](index=123&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk)[132](index=132&type=chunk)[135](index=135&type=chunk) - The company's actual controllers and their concerted parties, and restructuring counterparties have all timely and strictly fulfilled their share lock-up commitments, including 36-month and 12-month lock-up periods[123](index=123&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The company's actual controllers have timely and strictly fulfilled their commitments to avoid horizontal competition, standardize related party transactions, and maintain the independence of the listed company[123](index=123&type=chunk)[179](index=179&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk) - The company and its actual controllers, and all directors, supervisors, and senior management have timely and strictly fulfilled their commitments and measures to compensate for diluted immediate returns[123](index=123&type=chunk)[218](index=218&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) [VII. Significant Litigation and Arbitration Matters](index=66&type=section&id=VII.%20Significant%20Litigation%20and%20Arbitration%20Matters) During the reporting period, the company had no significant litigation or arbitration matters - The company had no significant litigation or arbitration matters during this reporting period[234](index=234&type=chunk) [X. Significant Related Party Transactions](index=67&type=section&id=X.%20Significant%20Related%20Party%20Transactions) During the reporting period, the company engaged in routine related party transactions with its associate Chunfeng Huayu, and completed an asset acquisition and fundraising through related party transactions, with Shuimutiangpeng's performance commitment period set for 2025-2027 Related Party Transactions Related to Routine Operations | Related Party | Relationship | Type of Related Party Transaction | Content of Related Party Transaction | Amount of Related Party Transaction (CNY) | Percentage of Similar Transactions (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Chunfeng Huayu | Associate | Sales of goods | Sales of products | 225,732.18 | 0.09 | | Chunfeng Huayu | Associate | Lease in/out | Property lease | 300,110.88 | 100.00 | | Total | / | / | / | 525,843.06 | / | - The company has completed the acquisition of assets by issuing shares and paying cash, and raising supporting funds through related party transactions; the target assets have been transferred, and new shares have been registered[237](index=237&type=chunk)[238](index=238&type=chunk) - The performance commitment period for this restructuring transaction is the three fiscal years of 2025, 2026, and 2027[239](index=239&type=chunk) [XI. Significant Contracts and Their Fulfillment](index=69&type=section&id=XI.%20Significant%20Contracts%20and%20Their%20Fulfillment) During the reporting period, the company's main significant contract was a guarantee provided to its controlled subsidiary Implanet, totaling **CNY 19.95 million**, representing 0.96% of the company's net assets Guarantees Provided by the Company and its Subsidiaries to Subsidiaries | Guarantor | Guaranteed Party | Guarantee Amount (CNY million) | Guarantee Start Date | Guarantee End Date | Guarantee Type | | :--- | :--- | :--- | :--- | :--- | :--- | | Sanyou Medical | Implanet | 1,520.00 | 2024-11-26 | 2025-11-26 | General Guarantee | | Sanyou Medical | Implanet | 475.00 | 2025-04-22 | 2026-04-22 | General Guarantee | | **Total Guarantee Balance for Subsidiaries at Period-end (B)** | | **1,995.00** | | | | | **Total Guarantee Amount (A+B)** | | **1,995.00** | | | | | **Total Guarantee Amount as Percentage of Company's Net Assets (%)** | | **0.96** | | | | [XII. Explanation of Progress in Use of Raised Funds](index=72&type=section&id=XII.%20Explanation%20of%20Progress%20in%20Use%20of%20Raised%20Funds) The company's use of raised funds is progressing smoothly, with high cumulative investment rates for both IPO and private placement funds, and idle funds utilized for cash management and temporary working capital Overall Use of Raised Funds | Source of Raised Funds | Total Raised Funds (CNY million) | Net Raised Funds (CNY million) | Cumulative Investment of Raised Funds as of Period-end (CNY million) | Cumulative Investment Progress of Raised Funds as of Period-end (%) | | :--- | :--- | :--- | :--- | :--- | | Initial Public Offering | 107,595.02 | 97,805.74 | 89,883.02 | 91.90 | | Private Placement | 21,400.00 | 21,400.00 | 21,089.87 | 98.55 | | **Total** | **128,995.01** | **119,205.74** | **110,972.89** | / | - The "Medical High-Strength Suture and Related Orthopedic Soft Tissue Repair and Reconstruction Medical Device Project" has been extended to December 31, 2027[249](index=249&type=chunk) - The company used a portion of idle raised funds to temporarily supplement working capital, with **CNY 74.75 million** returned in the current period, and plans to continue using no more than **CNY 90.00 million**[257](index=257&type=chunk)[258](index=258&type=chunk) - The company uses a portion of temporarily idle raised funds for cash management, with a maximum limit of **CNY 100 million**[261](index=261&type=chunk) [Section VI Share Changes and Shareholder Information](index=78&type=section&id=Section%20VI%20Share%20Changes%20and%20Shareholder%20Information) This section details the company's share capital changes due to new issuances and capital reserve conversions, along with shareholder information and changes in holdings of directors and senior management [I. Share Capital Changes](index=78&type=section&id=I.%20Share%20Capital%20Changes) During the reporting period, the company's total share capital increased by 29,431,880 shares due to asset acquisition and fundraising, reaching 277,885,415 shares, further changing to 333,462,498 shares after a post-period equity distribution Share Change Table | | Number before this change | Percentage before this change (%) | Increase/Decrease in this change (+,-) New share issuance | Number after this change | Percentage after this change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 0 | 0 | 29,431,880 | 29,431,880 | 10.59 | | II. Unrestricted Tradable Shares | 248,453,535 | 100.00 | 0 | 248,453,535 | 89.41 | | III. Total Shares | 248,453,535 | 100.00 | 29,431,880 | 277,885,415 | 100.00 | - On February 17, 2025, the company completed the registration of new shares issued for asset acquisition, increasing total share capital to 264,852,529 shares[265](index=265&type=chunk) - On March 13, 2025, the company completed the registration of new shares issued for raising supporting funds, increasing total share capital to 277,885,415 shares[266](index=266&type=chunk) - On July 11, 2025, the company implemented its 2024 equity distribution, converting capital reserves into 2 shares for every 10 shares held by all shareholders, changing the total share capital to 333,462,498 shares[267](index=267&type=chunk) Changes in Restricted Shares (Partial Shareholders) | Shareholder Name | Restricted shares at period-start | Restricted shares increased during reporting period | Restricted shares at period-end | Reason for restriction | Date of lifting restriction | | :--- | :--- | :--- | :--- | :--- | :--- | | Cao Qun | 0 | 5,904,304 | 5,904,304 | Lock-up commitment from asset acquisition counterparty, restricted for 36 months | 2028-02-18 | | Xu Nong | 0 | 4,233,896 | 4,233,896 | Lock-up commitment from asset acquisition counterparty, restricted for 36 months | 2028-02-18 | | Dacheng Fund Management Co., Ltd. | 0 | 2,588,310 | 2,588,310 | Lock-up commitment from private placement subscriber, restricted for 6 months | 2025-09-14 | [II. Shareholder Information](index=82&type=section&id=II.%20Shareholder%20Information) As of the reporting period end, the company had 7,108 common shareholders, with QM5 LIMITED, Xu Nong, and Michael Mingyan Liu as the top three, and actual controllers holding a significant combined stake - As of the end of the reporting period, the total number of common shareholders was **7,108**[273](index=273&type=chunk) Top Ten Shareholders' Holdings as of End of Reporting Period | Shareholder Name (Full Name) | Number of Shares Held at Period-end | Percentage (%) | Number of Restricted Shares Held | Shareholder Nature | | :--- | :--- | :--- | :--- | :--- | | QM5 LIMITED | 40,955,470 | 14.74 | 0 | Overseas Legal Person | | Xu Nong | 32,748,313 | 11.78 | 4,233,896 | Domestic Natural Person | | Michael Mingyan Liu | 25,284,935 | 9.10 | 0 | Overseas Natural Person | | David Fan | 14,779,262 | 5.32 | 0 | Overseas Natural Person | | Industrial and Commercial Bank of China Co., Ltd. - Rongtong Health Industry Flexible Allocation Mixed Securities Investment Fund | 9,984,618 | 3.59 | 0 | Other | | Hundun Tiancheng Asset Management - Xu Nong - Hundun Tiancheng Selected Strategy No. 18 Single Asset Management Plan | 7,401,170 | 2.66 | 0 | Other | | Shanghai Hongshang Asset Management Center (Limited Partnership) - Hongshang Asset Hongli No. 2 Private Securities Investment Fund | 7,000,000 | 2.52 | 0 | Other | | China Construction Bank Co., Ltd. - Southern Medical and Healthcare Flexible Allocation Mixed Securities Investment Fund | 6,721,423 | 2.42 | 0 | Other | | Cao Qun | 5,904,304 | 2.12 | 5,904,304 | Domestic Natural Person | | Shanghai Benniu Investment Management Co., Ltd. - Benniu Jinqu No. 2 Private Securities Investment Fund | 4,815,950 | 1.73 | 0 | Other | - Shareholders Xu Nong, Michael Mingyan Liu, and David Fan constitute a concerted action group through the signing of a "Concerted Action Agreement," serving as the company's actual controllers[276](index=276&type=chunk) [III. Information on Directors, Senior Management, and Core Technical Personnel](index=85&type=section&id=III.%20Information%20on%20Directors%2C%20Senior%20Management%2C%20and%20Core%20Technical%20Personnel) During the reporting period, Director and President Xu Nong increased his shareholding by 4,233,896 shares due to an asset acquisition, while Director, Vice President, and Board Secretary David Fan reduced his shareholding by 2,600,000 shares through block trades - Xu Nong, one of the company's actual controllers, director, and president, increased his shareholding by **4,233,896** shares due to the asset acquisition and restructuring transaction involving share issuance[281](index=281&type=chunk) - David Fan, the company's director, vice president, and board secretary, reduced his shareholding by **2,600,000** shares through block trades[282](index=282&type=chunk) [Section VII Bond-Related Information](index=87&type=section&id=Section%20VII%20Bond-Related%20Information) This section confirms the company had no corporate bonds, non-financial enterprise debt financing instruments, or convertible corporate bonds during the reporting period - The company has no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments[284](index=284&type=chunk) - The company has no convertible corporate bonds[284](index=284&type=chunk) [Section VIII Financial Report](index=88&type=section&id=Section%20VIII%20Financial%20Report) This section presents the company's unaudited consolidated and parent company financial statements, including balance sheets, income statements, cash flow statements, and detailed notes on accounting policies, taxes, and related party transactions [I. Audit Report](index=88&type=section&id=I.%20Audit%20Report) This semi-annual report is unaudited - This semi-annual report is unaudited[286](index=286&type=chunk) [II. Financial Statements](index=88&type=section&id=II.%20Financial%20Statements) This section presents the company's consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity for H1 2025, showcasing its financial position and operating results Consolidated Balance Sheet (June 30, 2025) | Item | Amount (CNY) | | :--- | :--- | | Total Assets | 2,314,136,752.55 | | Total Liabilities | 235,865,485.31 | | Total Owners' Equity (or Shareholders' Equity) | 2,078,271,267.24 | Consolidated Income Statement (January-June 2025) | Item | Amount (CNY) | | :--- | :--- | | Total Operating Revenue | 249,760,157.28 | | Total Profit | 40,424,190.71 | | Net Profit | 31,869,393.17 | | Net Profit Attributable to Parent Company Shareholders | 36,600,784.63 | Consolidated Cash Flow Statement (January-June 2025) | Item | Amount (CNY) | | :--- | :--- | | Net Cash Flow from Operating Activities | -8,070,534.49 | | Net Cash Flow from Investing Activities | -18,708,267.12 | | Net Cash Flow from Financing Activities | 465,316.03 | | Net Increase in Cash and Cash Equivalents | -25,160,796.90 | [III. Basic Company Information](index=112&type=section&id=III.%20Basic%20Company%20Information) Established in 2005, the company's registered capital was **CNY 277.885415 million** as of June 30, 2025, with its main business in orthopedic implants and ultrasonic equipment, controlled by Xu Nong, Michael Mingyan Liu, and David Fan - The company's predecessor was Shanghai Sanyou Medical Device Co., Ltd., established on April 19, 2005[321](index=321&type=chunk) - As of June 30, 2025, the company's total issued share capital was **277.885415 million** shares, and its registered capital was **CNY 277.885415 million**[326](index=326&type=chunk) - The company's business scope includes the production, sales, and technical services of Class I, II, and III medical devices[327](index=327&type=chunk) - The company's actual controllers are Xu Nong, Michael Mingyan Liu, and David Fan, who form a concerted action group through the signing of a "Concerted Action Agreement"[327](index=327&type=chunk) [IV. Basis of Financial Statement Preparation](index=113&type=section&id=IV.%20Basis%20of%20Financial%20Statement%20Preparation) These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and relevant CSRC regulations, based on the going concern assumption - These financial statements are prepared in accordance with the "Accounting Standards for Business Enterprises" issued by the Ministry of Finance and relevant provisions of the China Securities Regulatory Commission's "Information Disclosure Rules for Companies Issuing Securities No. 15 - General Provisions for Financial Reports"[328](index=328&type=chunk) - These financial statements are prepared on a going concern basis[329](index=329&type=chunk) [V. Significant Accounting Policies and Accounting Estimates](index=113&type=section&id=V.%20Significant%20Accounting%20Policies%20and%20Accounting%20Estimates) This section details the company's specific accounting policies and estimates for financial instruments, revenue, inventory, fixed assets, intangible assets, R&D, employee compensation, provisions, share-based payments, and government grants, ensuring accurate financial reporting - Financial assets are classified at initial recognition as: financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income, and financial assets measured at fair value through profit or loss[344](index=344&type=chunk) - For accounts receivable, regardless of whether they contain a significant financing component, the company always measures loss provisions at an amount equal to the expected credit losses over the entire lifetime[353](index=353&type=chunk) - Inventories are valued using the weighted average method when issued, and measured at the lower of cost and net realizable value at the balance sheet date[362](index=362&type=chunk)[363](index=363&type=chunk) - Fixed assets are depreciated using the straight-line method, with buildings and structures depreciated over 48 years, and specialized equipment over 5-10 years[374](index=374&type=chunk) - R&D expenditures are divided into research and development phases; research phase expenditures are recognized in current profit or loss, while development phase expenditures are recognized as intangible assets when specific conditions are met[381](index=381&type=chunk) - The company recognizes revenue when customers obtain control of the related goods or services, with main sales models including distributor buy-out, consignment sales, and direct sales and distributor models[396](index=396&type=chunk)[401](index=401&type=chunk) - Government grants are classified as asset-related or income-related, and recognized when the attached conditions are met and received[403](index=403&type=chunk)[406](index=406&type=chunk) [VI. Taxes](index=131&type=section&id=VI.%20Taxes) This section lists the company's main tax categories and rates, including VAT, urban maintenance and construction tax, and corporate income tax, with preferential rates for high-tech and small/micro-profit enterprises Main Tax Categories and Rates | Tax Category | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax | Calculated as sales output tax less input tax on goods and taxable services | 20%, 13%, 6%, 5.5% | | Urban Maintenance and Construction Tax | Amount of turnover tax payable | 7%, 5% | | Corporate Income Tax | Calculated based on taxable income | See table below | Taxable Entities with Different Corporate Income Tax Rates | Taxable Entity Name | Income Tax Rate (%) | | :--- | :--- | | Shanghai Sanyou Medical Device Co., Ltd. | 15.00% | | Beijing Shuimutiangpeng Medical Technology Co., Ltd. | 15.00% | | Beijing Shuimutiangpeng Medical Equipment Co., Ltd. | 15.00% | | Tuoteng (Suzhou) Medical Technology Co., Ltd. | 25.00% | | Implanet | 25.00% | | Implanet America, Inc. | 28.90% | - The company, Beijing Shuimutiangpeng Medical Technology Co., Ltd., and Beijing Shuimutiangpeng Medical Equipment Co., Ltd. have all obtained high-tech enterprise certificates and enjoy a **15%** corporate income tax preferential rate[412](index=412&type=chunk) - Some subsidiaries meet the criteria for small and micro-profit enterprises, enjoying a preferential policy where the portion of annual taxable income not exceeding **CNY 3 million** is reduced by **25%** and taxed at a **20%** rate[413](index=413&type=chunk) [VII. Notes to Consolidated Financial Statement Items](index=132&type=section&id=VII.%20Notes%20to%20Consolidated%20Financial%20Statement%20Items) This section provides detailed notes for each item in the consolidated financial statements, explaining changes in monetary funds, receivables, inventory, investments, fixed assets, goodwill, borrowings, and various income and expense categories Monetary Funds (June 30, 2025) | Item | Period-end Balance (CNY) | | :--- | :--- | | Cash on hand | 7,472.02 | | Bank deposits | 377,921,102.21 | | **Total** | **377,928,574.23** | | Of which: Funds deposited overseas | 4,387,674.41 | Trading Financial Assets (June 30, 2025) | Item | Period-end Balance (CNY) | | :--- | :--- | | Bank wealth management products, broker's income certificates, and structured deposits | 36,064,208.22 | | **Total** | **36,064,208.22** | Accounts Receivable Aging Disclosure (June 30, 2025) | Aging | Period-end Book Balance (CNY) | | :--- | :--- | | Within 1 year (inclusive) | 87,219,743.92 | | 1 to 2 years | 2,799,523.34 | | 2 to 3 years | 1,834,591.84 | | Over 3 years | 5,916,683.63 | | Subtotal | 97,770,542.73 | | Less: Impairment provision | 11,754,871.47 | | **Total** | **86,015,671.26** | Inventory Classification (June 30, 2025) | Item | Book Balance (CNY) | Inventory Impairment Provision/Contract Performance Cost Impairment Provision (CNY) | Book Value (CNY) | | :--- | :--- | :--- | :--- | | Raw materials | 42,321,469.27 | 449,282.19 | 41,872,187.08 | | Work in progress | 59,676,713.08 | 0 | 59,676,713.08 | | Finished goods | 183,460,458.58 | 40,804,521.64 | 142,655,936.94 | | Revolving materials | 2,432,942.16 | 0 | 2,432,942.16 | | Consignment goods | 38,689,551.99 | 9,882,664.06 | 28,806,887.93 | | Goods in process for external processing | 388,122.04 | 0 | 388,122.04 | | **Total** | **326,969,257.12** | **51,136,467.89** | **275,832,789.23** | Long-term Equity Investments (June 30, 2025) | Investee | Period-end Balance (Book Value, CNY) | | :--- | :--- | | Chunfeng Huayu (Suzhou) Intelligent Medical Technology Co., Ltd. | 11,650,101.43 | | **Total** | **11,650,101.43** | Book Value of Fixed Assets (June 30, 2025) | Item | Period-end Book Value (CNY) | | :--- | :--- | | Buildings and structures | 236,637,038.53 | | Specialized equipment | 60,787,758.55 | | Transportation vehicles | 1,737,417.95 | | General equipment | 4,290,603.81 | | Fixed asset improvements | 14,878,273.70 | | **Total** | **318,331,092.54** | Book Value of Goodwill (June 30, 2025) | Name of Investee or Event Leading to Goodwill | Period-end Balance (CNY) | | :--- | :--- | | Beijing Shuimutiangpeng Medical Technology Co., Ltd. | 315,229,980.61 | | Implanet | 30,637,069.55 | | **Total** | **345,867,050.16** | Short-term Borrowings Classification (June 30, 2025) | Item | Period-end Balance (CNY) | | :--- | :--- | | Secured borrowings | 19,950,000.00 | | **Total** | **19,950,000.00** | Operating Revenue and Operating Costs (January-June 2025) | Item | Revenue (CNY) | Cost (CNY) | | :--- | :--- | :--- | | Main business | 249,396,052.82 | 67,871,774.45 | | Other businesses | 364,104.46 | 148,821.98 | | **Total** | **249,760,157.28** | **68,020,596.43** | R&D Expenses (January-June 2025) | Item | Amount Incurred in Current Period (CNY) | | :--- | :--- | | Employee compensation | 22,375,301.27 | | Technical development fees | 2,635,983.33 | | Depreciation and amortization expenses | 4,938,420.99 | | Share-based payments | 13,225.10 | | Consulting fees | 3,049,969.83 | | Service fees | 564,557.06 | | Material costs | 1,859,555.65 | | Other | 2,083,469.19 | | **Total** | **37,520,482.42** | Other Income (January-June 2025) | Classified by Nature | Amount Incurred in Current Period (CNY) | | :--- | :--- | | Government grants - other | 7,694,835.61 | | Input VAT additional deduction | 404,323.20 | | Withholding individual income tax handling fees | 113,999.04 | | **Total** | **8,213,157.85** | Investment Income (January-June 2025) | Item | Amount Incurred in Current Period (CNY) | | :--- | :--- | | Investment income from long-term equity investments accounted for using the equity method | -1,653,617.90 | | Investment income from bank wealth management products, broker's income certificates, and structured deposits | 1,386,090.47 | | **Total** | **-267,527.43** | [VIII. R&D Expenditures](index=185&type=section&id=VIII.%20R%26D%20Expenditures) This section details the company's H1 2025 R&D expenditures, totaling **CNY 37.5205 million**, primarily comprising employee compensation, technical development fees, depreciation, and material costs, all of which were expensed R&D Expenditures by Nature of Expense (January-June 2025) | Item | Amount Incurred in Current Period (CNY) | | :--- | :--- | | Employee compensation | 22,375,301.27 | | Technical development fees | 2,635,983.33 | | Depreciation and amortization expenses | 4,938,420.99 | | Material costs | 1,859,555.65 | | Consulting fees | 3,049,969.83 | | Service fees | 564,557.06 | | Share-based payments | 13,225.10 | | Other | 2,083,469.19 | | **Total** | **37,520,482.42** | | Of which: Expensed R&D expenditure | 37,520,482.42 | [IX. Changes in Consolidation Scope](index=186&type=section&id=IX.%20Changes%20in%20Consolidation%20Scope) During the reporting period, the company's consolidation scope changed due to the establishment of two new subsidiaries, the acquisition of remaining equity in Shuimutiangpeng, and the disposal of Shenzhen Huabao Biomaterials Technology Co., Ltd - The company established new subsidiaries Litian (Taicang) Biotechnology Co., Ltd. and Sanyou Yunlan Trading Co., Ltd[565](index=565&type=chunk) - The company acquired the remaining equity of Beijing Shuimutiangpeng Medical Technology Co., Ltd. (Shuimutiangpeng) through share issuance and cash payment, making it a **100%** wholly-owned subsidiary[566](index=566&type=chunk)[567](index=567&type=chunk) - The company disposed of Shenzhen Huabao Biomaterials Technology Co., Ltd., losing control[564](index=564&type=chunk) [X. Interests in Other Entities](index=189&type=section&id=X.%20Interests%20in%20Other%20Entities) This section lists the company's enterprise group, including major subsidiaries and the associate Chunfeng Huayu, detailing their operating locations, registered capital, business nature, and shareholding ratios Composition of Enterprise Group (Partial Subsidiaries) | Subsidiary Name | Main Operating Location | Registered Capital (CNY million) | Business Nature | Shareholding Ratio (%) Direct | | :--- | :--- | :--- | :--- | :--- | | Tuoteng (Suzhou) Medical Technology Co., Ltd. | Suzhou | 15,000.00 | Medical device production, operation, etc. | 100.00 | | Beijing Shuimutiangpeng Medical Technology Co., Ltd. | Beijing | 1,354.17 | Medical device sales, technology development, etc. | 100.00 | | Implanet | France | EUR124.968484 | Medical device R&D, production, and sales | 74.56 | | Litian (Taicang) Biotechnology Co., Ltd. | Jiangsu | 6,000.00 | Medical device operation, technology service development, etc. | 66.00 | Important Joint Ventures or Associates | Name of Joint Venture or Associate | Main Operating Location | Registered Location | Business Nature | Shareholding Ratio (%) Direct | Accounting Method | | :--- | :--- | :--- | :--- | :--- | :--- | | Chunfeng Huayu (Suzhou) Intelligent Medical Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 33.15 | Equity Method | Key Financial Information of Important Associate (Chunfeng Huayu) | Item | Period-end Balance/Amount Incurred in Current Period (CNY) | | :--- | :--- | | Total Assets | 158,512,686.99 | | Total Liabilities | 1,188,394.85 | | Equity Attributable to Parent Company Shareholders | 157,324,292.14 | | Book Value of Equity Investment in Associate | 11,650,101.43 | | Net Profit | -4,988,289.30 | [XI. Government Grants](index=195&type=section&id=XI.%20Government%20Grants) This section discloses that the company received total government grants of **CNY 11.37715881 million** in H1 2025, with **CNY 444,235.61** being asset-related and **CNY 10.93292320 million** income-related Liability Items Involving Government Grants (Deferred Income) | Financial Statement Item | Period-start Balance (CNY) | Transferred to Other Income in Current Period (CNY) | Period-end Balance (CNY) | Asset-related/Incom

[Definitions](index=5&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8A%E4%B9%89) [Definitions of Common Terms](index=5&type=section&id=%E5%B8%B8%E7%94%A8%E8%AF%8D%E8%AF%AD%E9%87%8A%E4%B9%89) This chapter defines common terms and abbreviations used in the report, including company entities, key related parties, business models (EPC, EOD), and financial units, ensuring accurate report interpretation - The reporting period is from **January 1, 2025, to June 30, 2025**[15](index=15&type=chunk) - Defines the company and its various subsidiaries and affiliates, such as Beijing Xinxin, Zhuozhuo Yongye, and Dingrun Jiade[14](index=14&type=chunk) - Explains business models such as **EPC (Engineering, Procurement, and Construction)** and **EOD (Ecological-Oriented Development)**[14](index=14&type=chunk) [Company Profile and Key Financial Indicators](index=6&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B%E5%92%8C%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) [I. Company Information](index=6&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) This section provides the company's basic registration information, including its Chinese name, abbreviation, foreign name, and legal representative, confirming the full name as Shanghai Taihe Water Technology Development Co., Ltd - The company's Chinese name is Shanghai Taihe Water Technology Development Co., Ltd., abbreviated as **Taihe Water**[16](index=16&type=chunk) - The legal representative is **He Xin**[16](index=16&type=chunk) [II. Contact Person and Information](index=6&type=section&id=%E4%BA%8C%E3%80%81%E8%81%94%E7%B3%BB%E4%BA%BA%E5%92%8C%E8%81%94%E7%B3%BB%E6%96%B9%E5%BC%8F) This section lists the name, contact address, phone, fax, and email of the company's Board Secretary for investor and stakeholder communication - The Board Secretary is **He Yufei**, with the contact address at Lanyun Cultural Center, Lane 899, Panlong Road, Qingpu District, Shanghai[17](index=17&type=chunk) [III. Overview of Basic Information Changes](index=6&type=section&id=%E4%B8%89%E3%80%81%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5%E5%8F%98%E6%9B%B4%E7%AE%80%E4%BB%8B) This section details the company's basic information, including registered address, office address, website, and email, noting no changes during the reporting period - The company's registered address is Room 1957, No. 19, Lane 38, Caoli Road, Fengjing Town, Jinshan District, Shanghai, and its office address is Lanyun Cultural Center, Lane 899, Panlong Road, Qingpu District, Shanghai[18](index=18&type=chunk) - There were **no changes** to the company's basic information during the reporting period[18](index=18&type=chunk) [IV. Overview of Information Disclosure and Document Storage Location Changes](index=6&type=section&id=%E5%9B%9B%E3%80%81%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E5%8F%8A%E5%A4%87%E7%BD%AE%E5%9C%B0%E7%82%B9%E5%8F%98%E6%9B%B4%E6%83%85%E5%86%B5%E7%AE%80%E4%BB%8B) This section discloses the company's selected information disclosure newspapers, the website for semi-annual reports, and the report storage location, confirming no changes during the reporting period - The company's information disclosure newspapers include **"China Securities Journal"** and **"Shanghai Securities News"**, with reports published on **http://www.sse.com.cn**[19](index=19&type=chunk) - There were **no changes** to information disclosure and document storage locations during the reporting period[19](index=19&type=chunk) [V. Company Stock Overview](index=6&type=section&id=%E4%BA%94%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E7%A5%A8%E7%AE%80%E5%86%B5) This section provides the company's stock exchange, stock abbreviation, stock code, and previous abbreviation, clarifying that the company's stock has been subject to delisting risk warning - The company's stock type is **A-shares**, listed on the **Shanghai Stock Exchange**, with stock abbreviation **"*ST Taihe"** and stock code **605081**, previously **"Taihe Water"**[20](index=20&type=chunk) [VII. Key Accounting Data and Financial Indicators](index=7&type=section&id=%E4%B8%83%E3%80%81%E5%85%AC%E5%8F%B8%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) This section presents the company's key accounting data and financial indicators for H1 2025, showing significant year-on-year declines in operating revenue and net profit, and reductions in total assets and net assets, primarily due to macroeconomic factors and bad debt provisions Key Accounting Data (H1 2025 vs. Prior Year Period) | Key Accounting Data | Current Period (Jan-Jun) (CNY) | Prior Year Period (CNY) | Change from Prior Year Period (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 33,050,870.88 | 75,145,432.78 | -56.02 | | Total Profit | -55,935,657.19 | -19,780,222.02 | -182.79 | | Net Profit Attributable to Shareholders of Listed Company | -57,076,621.40 | -19,964,410.37 | -185.89 | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Items) | -53,098,238.89 | -18,299,209.09 | -190.17 | | Net Cash Flow from Operating Activities | -39,341,583.81 | -39,187,976.49 | -0.39 | | **Current Period End vs. Prior Year End** | | | | | Net Assets Attributable to Shareholders of Listed Company | 917,491,743.73 | 974,568,365.13 | -5.86 | | Total Assets | 1,342,393,178.73 | 1,525,768,444.25 | -12.02 | Key Financial Indicators (H1 2025 vs. Prior Year Period) | Key Financial Indicators | Current Period (Jan-Jun) | Prior Year Period | Change from Prior Year Period (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Yuan/share) | -0.50 | -0.18 | -177.78 | | Diluted Earnings Per Share (Yuan/share) | -0.50 | -0.18 | -177.78 | | Basic Earnings Per Share (Excluding Non-Recurring Items) (Yuan/share) | -0.47 | -0.16 | -193.75 | | Weighted Average Return on Net Assets (%) | -6.03 | -1.54 | Decrease by 4.49 percentage points | | Weighted Average Return on Net Assets (Excluding Non-Recurring Items) (%) | -5.61 | -1.41 | Decrease by 4.2 percentage points | - Operating revenue **decreased by 56.02% year-on-year**, primarily due to macroeconomic environment impacts and fewer new engineering projects[23](index=23&type=chunk) - Net profit attributable to shareholders of the listed company and net profit excluding non-recurring items **declined**, mainly due to decreased revenue and bad debt provisions for credit losses[23](index=23&type=chunk) [(I) Key Accounting Data](index=7&type=section&id=(I).%20Key%20Accounting%20Data) This section details the company's H1 2025 key accounting data, including operating revenue, total profit, net profit, net cash flow from operating activities, net assets, and total assets, comparing them to the prior year, revealing significant financial deterioration Key Accounting Data (H1 2025 vs. Prior Year Period) | Key Accounting Data | Current Period (Jan-Jun) (CNY) | Prior Year Period (CNY) | Change from Prior Year Period (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 33,050,870.88 | 75,145,432.78 | -56.02 | | Total Profit | -55,935,657.19 | -19,780,222.02 | -182.79 | | Net Profit Attributable to Shareholders of Listed Company | -57,076,621.40 | -19,964,410.37 | -185.89 | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Items) | -53,098,238.89 | -18,299,209.09 | -190.17 | | Net Cash Flow from Operating Activities | -39,341,583.81 | -39,187,976.49 | -0.39 | | **Current Period End vs. Prior Year End** | | | | | Net Assets Attributable to Shareholders of Listed Company | 917,491,743.73 | 974,568,365.13 | -5.86 | | Total Assets | 1,342,393,178.73 | 1,525,768,444.25 | -12.02 | [(II) Key Financial Indicators](index=7&type=section&id=(II).%20Key%20Financial%20Indicators) This section lists the company's H1 2025 key financial indicators, including basic EPS, diluted EPS, basic EPS excluding non-recurring items, and weighted average ROE, all showing a deteriorating trend, reflecting a severe decline in profitability Key Financial Indicators (H1 2025 vs. Prior Year Period) | Key Financial Indicators | Current Period (Jan-Jun) | Prior Year Period | Change from Prior Year Period (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Yuan/share) | -0.50 | -0.18 | -177.78 | | Diluted Earnings Per Share (Yuan/share) | -0.50 | -0.18 | -177.78 | | Basic Earnings Per Share (Excluding Non-Recurring Items) (Yuan/share) | -0.47 | -0.16 | -193.75 | | Weighted Average Return on Net Assets (%) | -6.03 | -1.54 | Decrease by 4.49 percentage points | | Weighted Average Return on Net Assets (Excluding Non-Recurring Items) (%) | -5.61 | -1.41 | Decrease by 4.2 percentage points | - Basic earnings per share and basic earnings per share excluding non-recurring items **decreased**, primarily due to lower revenue and bad debt provisions for credit losses[24](index=24&type=chunk) [IX. Non-Recurring Gains and Losses Items and Amounts](index=7&type=section&id=IX.%20Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) This section lists the company's H1 2025 non-recurring gains and losses items and their amounts, totaling **-3,978,382.51 Yuan**, primarily including non-current asset disposal gains/losses, government subsidies, fair value change gains/losses, and other non-operating income/expenses Non-Recurring Gains and Losses Items and Amounts (H1 2025) | Non-Recurring Gains and Losses Items | Amount (CNY) | | :--- | :--- | | Gains or losses from disposal of non-current assets | -38,510.83 | | Government grants recognized in current profit or loss | 504,039.92 | | Gains or losses from changes in fair value of financial assets and liabilities held by non-financial enterprises, and gains or losses from disposal of financial assets and liabilities | -2,765,457.78 | | Reversal of impairment provisions for accounts receivable subject to separate impairment testing | 795,433.74 | | Other non-operating income and expenses apart from the above | -2,497,069.79 | | Other gains and losses that meet the definition of non-recurring items | 47,573.51 | | Less: Income tax impact | -8,870.86 | | Minority interest impact (after tax) | 33,262.14 | | Total | -3,978,382.51 | [Management Discussion and Analysis](index=9&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [I. Industry and Main Business Overview During the Reporting Period](index=9&type=section&id=I.%20Industry%20and%20Main%20Business%20Overview%20During%20the%20Reporting%20Period) This section details the opportunities and challenges in the water environment governance industry, along with the company's operational strategies and development in its core water ecological restoration and drinking water businesses. The industry benefits from national policy support but faces macroeconomic downturn and intensified market competition. The company adheres to a "preserve existing, increase new, seek change" strategy, deepening technology in water ecological restoration and expanding products and channels in drinking water - The water environment governance industry is supported by national ecological civilization policies but faces multiple challenges, including global economic uncertainty, domestic economic restructuring, local fiscal pressure, and intensified market competition[30](index=30&type=chunk)[31](index=31&type=chunk) - The company adheres to a **"preserve existing, increase new, seek change"** development strategy, focusing on water ecological restoration and the big health consumer sector[32](index=32&type=chunk) - The company's core technology for water ecological restoration is the **"algae-eating insect-guided eutrophic water ecological restoration method"**, building a stable ecosystem through algae-eating insects, submerged plants, and aquatic animals[33](index=33&type=chunk) - The drinking water business centers on **Heilongjiang Baiquan natural soda water**, offering products like **390ml, 520ml, 4.5L, and pH 8.8**, expanding online sales via Taobao, Douyin, Pinduoduo, WeChat mini-programs, and JD.com, while actively pursuing OEM collaborations and unmanned retail cabinet locations[35](index=35&type=chunk)[37](index=37&type=chunk) [(I) Industry Situation During the Reporting Period](index=9&type=section&id=(I).%20Industry%20Situation%20During%20the%20Reporting%20Period) The water environment governance industry receives policy support under national ecological civilization initiatives, but macroeconomic uncertainty, local fiscal pressures, and intensifying market competition pose challenges, requiring continuous technological innovation to meet demand - National policies such as the **"14th Five-Year Plan"** and **"Opinions on Comprehensively Promoting the Construction of Beautiful China"** provide development opportunities for the water environment governance industry[30](index=30&type=chunk) - The industry faces challenges including global economic growth uncertainty, domestic economic restructuring, local government fiscal pressure, and intensified market competition[31](index=31&type=chunk) - **Technological innovation** is key to industry development, with urgent market demand for efficient, green, and sustainable governance technologies[31](index=31&type=chunk) [(II) Company's Business Operations During the Reporting Period](index=9&type=section&id=(II).%20Company's%20Business%20Operations%20During%20the%20Reporting%20Period) The company's business is divided into water environment ecological construction and maintenance, and drinking water sales. The water environment business centers on "algae-eating insect" technology to build stable underwater ecosystems. The drinking water business features natural soda water, expanding market reach through multiple online and offline channels, and plans to focus on customized water and unmanned retail - The company's water environment ecological construction and maintenance business focuses on improving eutrophic water environments through bio-ecological synergy technology, covering lakes, urban rivers, and landscape waters[33](index=33&type=chunk) - The core technical route is the **"algae-eating insect-guided eutrophic water ecological restoration method"**, utilizing algae-eating insects to consume algae and detritus, and building a stable underwater forest system with submerged plants and photosynthetic bacteria[33](index=33&type=chunk) - The main product of the drinking water business is **"TAIHESHUI" natural soda water**, sourced from the Heilongjiang Baiquan Natural Soda Water Protection Area, characterized by its natural weak alkalinity with a **pH value ≥ 8.5**[35](index=35&type=chunk)[37](index=37&type=chunk) - Online channels for drinking water have been strengthened on Taobao, Douyin, and Pinduoduo, with new additions including WeChat mini-programs and JD.com's self-operated platform; offline channels are expanding through OEM collaborations and market promotion[37](index=37&type=chunk) [1. Water Environment Ecological Construction and Maintenance Business](index=9&type=section&id=1.%20Water%20Environment%20Ecological%20Construction%20and%20Maintenance%20Business) The company is an innovative practitioner in water environment ecological restoration, improving water bodies through the "algae-eating insect-guided eutrophic water ecological restoration method" to build stable insect-plant symbiotic aquatic ecosystems, achieving water self-purification - The company specializes in improving eutrophic water environments through bio-ecological synergy technology, with business covering lakes, urban rivers, and landscape waters[33](index=33&type=chunk) - The core technology uses **"algae-eating insects"** as a pioneer species, effectively reducing algae and detritus, and improving water transparency[33](index=33&type=chunk) - By planting submerged plants, introducing photosynthetic bacteria, and other aquatic animals, a stable underwater forest system centered on submerged plants is built, forming an **insect-plant symbiotic aquatic ecosystem**[33](index=33&type=chunk) [2. Drinking Water Business](index=10&type=section&id=2.%20Drinking%20Water%20Business) The company's drinking water business centers on Heilongjiang Baiquan natural soda water, with a rich product line, expanding market reach through multiple online platforms and offline OEM collaborations, and plans to focus on customized water and unmanned retail in the future - Natural soda water produced by wholly-owned subsidiary Heilongjiang Haihe Beverage Co., Ltd. originates from the **natural soda water protection area in western Baiquan County, Qiqihar City, Heilongjiang Province**, featuring pure and transparent water quality rich in various beneficial trace elements[35](index=35&type=chunk) - The **"TAIHESHUI"** brand currently offers four classic products: **390ml, 520ml, 4.5L, and pH 8.8**, meeting diverse consumption needs[37](index=37&type=chunk) - Online channels have expanded to **Taobao Tmall flagship store, Douyin enterprise store, Pinduoduo store**, and newly added **WeChat mini-programs and JD.com's self-operated platform**, while offline channels engage in OEM collaborations with multiple enterprises[37](index=37&type=chunk) - Future strategy will focus on **customized water services** and actively expand into emerging channels such as **unmanned retail cabinet locations**[37](index=37&type=chunk) [II. Discussion and Analysis of Operations](index=12&type=section&id=II.%20Discussion%20and%20Analysis%20of%20Operations) During the reporting period, the company's operating performance was affected by macroeconomic conditions, industrial policies, market competition, and local fiscal factors, leading to a significant decline in new orders and operating revenue, and an expanded net loss. The company will continue to focus on its core water ecological governance business, strengthening technology R&D and operational management to address challenges - The company's operating revenue was **CNY 33.05 million**, a **56.02% year-on-year decrease**; net profit attributable to shareholders of the listed company was **-CNY 57.08 million**, a **185.89% year-on-year decrease**[38](index=38&type=chunk) - The decline in performance was primarily due to complex macroeconomic conditions, industry policy adjustments, intense market competition, and poor local fiscal conditions, resulting in lower-than-expected new orders and extended collection cycles[38](index=38&type=chunk) - The company's core customers are mostly local governments and large private enterprise groups, and the economic downturn has led to difficulties in customer capital turnover and increased collection challenges[38](index=38&type=chunk) - The company will adhere to its core business positioning in water ecological governance, strengthen technology R&D and service capability building, optimize business layout, and enhance operational management[38](index=38&type=chunk) [III. Analysis of Core Competitiveness During the Reporting Period](index=12&type=section&id=III.%20Analysis%20of%20Core%20Competitiveness%20During%20the%20Reporting%20Period) The company's core competitiveness lies in its unique technological advantages, industry brand recognition, independent cultivation capabilities for core materials, and natural soda water source advantages. Specifically, the "eutrophic water ecological restoration method" and improved Vallisneria spiralis technology have been recognized by institutions such as the Ministry of Water Resources, providing stable support for business expansion - The company possesses a core technology system based on its independently developed **"eutrophic water ecological restoration method"**, including **8 water ecological element construction methods (12 domestic invention patents)** and **72 utility model patents**[39](index=39&type=chunk) - Domesticated algae-eating insects effectively consume algae and detritus, improving water transparency; improved submerged plants (evergreen dwarf Vallisneria spiralis and improved spiny Vallisneria spiralis) offer advantages such as **non-flowering, low/high temperature resistance, efficient nitrogen and phosphorus absorption**, and asexual reproduction[39](index=39&type=chunk)[40](index=40&type=chunk) - The company's established **insect-plant symbiotic system** offers advantages such as ecological energy saving, significant effects, lower costs, long-lasting action, and wide applicability[41](index=41&type=chunk) - The company has gained recognition from institutions such as the Ministry of Water Resources for its technological advantages, including being selected for the **"Xiong'an New Area Water Resource Guarantee Capacity Technical Support Recommended Shortlist"** as both **Category A and Category B technologies**[42](index=42&type=chunk) - Core materials (algae-eating insects, Vallisneria spiralis, and microorganisms) are cultivated independently, with standardized breeding bases established in multiple regions nationwide to ensure material quality and supply[43](index=43&type=chunk) - The soda water business relies on the **Heilongjiang Baiquan County Natural Soda Water Protection Area**, where the water source is weakly alkaline small-molecule cluster water, rich in various trace elements[44](index=44&type=chunk) [1. Technological Advantages](index=12&type=section&id=1.%20Technological%20Advantages) The company possesses a core technology system in water environment ecological governance, including the "eutrophic water ecological restoration method" and multiple patents, building efficient and stable insect-plant symbiotic aquatic ecosystems through domesticated algae-eating insects and improved submerged plants (e.g., Vallisneria spiralis) to achieve water self-purification - The company has built a full-chain technology system centered on its independently developed **"eutrophic water ecological restoration method"**, covering biological regulation, ecological restoration, and long-term maintenance, holding **8 water ecological element construction methods (12 domestic invention patents)** and **72 utility model patents**[39](index=39&type=chunk) - Domesticated algae-eating insects feed on blue-green algae, detritus, suspended particles, and harmful bacteria, effectively reducing algae in water bodies and improving water transparency[39](index=39&type=chunk) - The improved Vallisneria spiralis has advantages such as **non-flowering, seedless, dwarf, low/high temperature resistance, salt tolerance, and evergreen throughout the seasons**, efficiently absorbing nitrogen and phosphorus nutrients, producing nascent oxygen, and achieving asexual reproduction[40](index=40&type=chunk) - By introducing, adjusting, and perfecting algae-eating insects, submerged plants, and other aquatic organisms, a stable **insect-plant symbiotic aquatic ecosystem** is formed, enabling self-purification of eutrophic water bodies[41](index=41&type=chunk) [2. Brand Advantages](index=13&type=section&id=2.%20Brand%20Advantages) The company has established a professional advantage in water ecological restoration and construction through its core technology system, gaining recognition from institutions such as the Ministry of Water Resources, thereby enhancing its market reputation National Institutional Recognition | No. | Recognition Status | Year of Recognition | Evaluating Unit | Content of Recognition | | :--- | :--- | :--- | :--- | :--- | | 1 | "Water Ecological Field" Category A (Cutting-edge Leading) Technology in "Xiong'an New Area Water Resource Guarantee Capacity Technical Support Recommended Shortlist" | 2019 | Science and Technology Promotion Center of Ministry of Water Resources, Haihe River Water Conservancy Commission of Ministry of Water Resources, China Water Resources and Hydropower Planning and Design General Institute of Ministry of Water Resources, China International Engineering Consulting Corporation | Lake and reservoir governance technology solutions combined with wetland governance and industrial adjustment models | | 2 | "Water Ecological Field" Category B (Mature and Practical) Technology in "Xiong'an New Area Water Resource Guarantee Capacity Technical Support Recommended Shortlist" | 2019 | Science and Technology Promotion Center of Ministry of Water Resources, Haihe River Water Conservancy Commission of Ministry of Water Resources, China Water Resources and Hydropower Planning and Design General Institute of Ministry of Water Resources, China International Engineering Consulting Corporation | Algae-eating insect-guided water body ecological restoration technology | [3. Advantages of Independent Cultivation of Core Materials](index=13&type=section&id=3.%20Advantages%20of%20Independent%20Cultivation%20of%20Core%20Materials) The company acquires core materials (algae-eating insects, Vallisneria spiralis, microorganisms, etc.) through independent cultivation, establishing standardized breeding bases in multiple regions nationwide to ensure stable material quality and meet project demands, thereby supporting rapid business expansion - The core materials required for the company's business (algae-eating insects, Vallisneria spiralis, and microorganisms) are obtained through **independent cultivation**[43](index=43&type=chunk) - Standardized breeding bases are established in multiple regions nationwide to ensure stable material quality and meet project demands in different areas[43](index=43&type=chunk) [4. Soda Water Source Advantages](index=13&type=section&id=4.%20Soda%20Water%20Source%20Advantages) The core advantage of the company's drinking water business lies in its natural soda water source, originating from the Heilongjiang Baiquan County Natural Soda Water Protection Area, featuring pure water quality, rich in trace elements, and characterized by weakly alkaline small-molecule cluster water - The company relies on the **Heilongjiang Baiquan County Natural Soda Water Protection Area** to build its core barrier[44](index=44&type=chunk) - The water source is naturally filtered through deep rock layers, forming **weakly alkaline small-molecule cluster water**, rich in various trace elements, which helps neutralize the body's acidic environment and promote metabolism and absorption[44](index=44&type=chunk) [IV. Major Operating Conditions During the Reporting Period](index=14&type=section&id=IV.%20Major%20Operating%20Conditions%20During%20the%20Reporting%20Period) During the reporting period, the company's operations were affected by multiple unfavorable factors, leading to significant declines in operating revenue and profit. The asset and liability structure changed significantly, with decreases in cash, accounts receivable, and accounts payable, and increases in prepayments and other receivables. Investment-wise, the amount of investment increased substantially, mainly due to equity acquisitions, while financial assets measured at fair value decreased. The company also established and deregistered several subsidiaries - Operating revenue **decreased by 56.02% year-on-year**, primarily due to the macroeconomic environment and declining demand in the water environment governance industry, leading to fewer new orders[46](index=46&type=chunk) - Total profit and net profit attributable to shareholders of the listed company **declined significantly**, mainly due to decreased revenue and bad debt provisions for credit losses[22](index=22&type=chunk)[23](index=23&type=chunk) - Cash and bank balances at period-end **decreased by 42.89%** compared to the beginning of the period, primarily due to payments for goods and services in the current period[50](index=50&type=chunk) - Prepayments at period-end **increased by 194.42%** compared to the beginning of the period, primarily due to increased prepayments to suppliers in the current period[51](index=51&type=chunk) - Investment amount during the reporting period was **CNY 25.755 million**, a **100.00% year-on-year increase**, mainly for equity investments[55](index=55&type=chunk) - Financial assets measured at fair value had a period-end balance of **CNY 71,862,242.22**, a **3.71% decrease** from the beginning of the period, mainly due to fair value change losses of **-CNY 2,765,457.78** on stock investments[57](index=57&type=chunk) - During the reporting period, **Shanghai Yunlan Technology Development Co., Ltd.** and **Beijing Ranjing Technology Co., Ltd.** were newly established, while **Guangdong Taihe Water Environment Technology Co., Ltd., Jiangxi Taihe Water Environment Technology Development Co., Ltd., and Chongren County Bahe Ecological Technology Co., Ltd.** were deregistered[63](index=63&type=chunk) [(I) Main Business Analysis](index=14&type=section&id=(I).%20Main%20Business%20Analysis) This section analyzes changes in the company's main business financial statement items, showing decreases in both operating revenue and cost, reduced selling and R&D expenses, and increased administrative and financial expenses, reflecting declining market demand, intensified competition, and shifts in internal cost structure Financial Statement Items Change Analysis Table (H1 2025 vs. Prior Year Period) | Item | Current Period (CNY) | Prior Year Period (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 33,050,870.88 | 75,145,432.78 | -56.02 | | Operating Cost | 35,165,993.27 | 43,611,747.23 | -19.37 | | Selling Expenses | 6,970,422.56 | 10,201,714.87 | -31.67 | | Administrative Expenses | 42,322,641.77 | 36,681,849.10 | 15.38 | | Financial Expenses | 1,799,019.82 | -858,514.64 | 309.55 | | R&D Expenses | 3,317,885.57 | 4,543,507.27 | -26.98 | | Net Cash Flow from Operating Activities | -39,341,583.81 | -39,187,976.49 | -0.39 | | Net Cash Flow from Investing Activities | -37,680,495.68 | 32,473,149.23 | -216.04 | | Net Cash Flow from Financing Activities | -2,982,059.85 | -3,102,795.35 | 3.89 | - Operating revenue **decreased by 56.02%**, primarily due to the macroeconomic environment and declining demand in the water environment governance industry, leading to fewer new orders[46](index=46&type=chunk) - Administrative expenses **increased by 15.38%**, mainly due to higher depreciation expenses and employee compensation[47](index=47&type=chunk) - Financial expenses **increased by 309.55%**, primarily due to decreased interest income and increased amortization of unrecognized financing expenses[47](index=47&type=chunk) [1. Analysis Table of Changes in Financial Statement Items](index=14&type=section&id=1.%20Analysis%20Table%20of%20Changes%20in%20Financial%20Statement%20Items) This section presents a detailed table of the company's main financial statement items, including current period figures, prior year figures, and change percentages, with explanations for each variation, revealing significant shifts in revenue, profit, expenses, and cash flow Financial Statement Items Change Analysis Table (H1 2025 vs. Prior Year Period) | Item | Current Period (CNY) | Prior Year Period (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 33,050,870.88 | 75,145,432.78 | -56.02 | | Operating Cost | 35,165,993.27 | 43,611,747.23 | -19.37 | | Selling Expenses | 6,970,422.56 | 10,201,714.87 | -31.67 | | Administrative Expenses | 42,322,641.77 | 36,681,849.10 | 15.38 | | Financial Expenses | 1,799,019.82 | -858,514.64 | 309.55 | | R&D Expenses | 3,317,885.57 | 4,543,507.27 | -26.98 | | Net Cash Flow from Operating Activities | -39,341,583.81 | -39,187,976.49 | -0.39 | | Net Cash Flow from Investing Activities | -37,680,495.68 | 32,473,149.23 | -216.04 | | Net Cash Flow from Financing Activities | -2,982,059.85 | -3,102,795.35 | 3.89 | - Net cash flow from investing activities **changed by -216.04%**, primarily due to the recovery of time deposits and investment income in the prior year period[47](index=47&type=chunk) [(III) Analysis of Assets and Liabilities](index=14&type=section&id=(III).%20Analysis%20of%20Assets%20and%20Liabilities) This section analyzes changes in the company's period-end assets and liabilities. Cash, accounts receivable, and accounts payable significantly decreased, while prepayments, other receivables, productive biological assets, and right-of-use assets substantially increased, reflecting adjustments in the company's procurement, capital turnover, and asset structure Changes in Assets and Liabilities (Period-End vs. Prior Year-End) | Item Name | Current Period End (CNY) | % of Total Assets (Current Period End) | Prior Year End (CNY) | % of Total Assets (Prior Year End) | Change from Prior Year End (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 107,488,785.91 | 8.01 | 188,229,802.82 | 12.34 | -42.89 | | Accounts Receivable | 415,508,074.27 | 30.95 | 585,085,036.52 | 38.35 | -28.98 | | Prepayments | 2,083,763.42 | 0.16 | 707,761.69 | 0.05 | 194.42 | | Other Receivables | 23,083,335.51 | 1.72 | 7,786,713.79 | 0.51 | 196.45 | | Productive Biological Assets | 6,073,504.79 | 0.45 | 3,916,475.31 | 0.26 | 55.08 | | Right-of-Use Assets | 71,041,102.60 | 5.29 | 51,399,407.48 | 3.37 | 38.21 | | Accounts Payable | 155,052,038.53 | 11.55 | 277,668,105.29 | 18.20 | -44.16 | | Other Payables | 20,040,427.02 | 1.49 | 9,493,117.66 | 0.62 | 111.10 | - Cash and bank balances at period-end **decreased by 42.89%** compared to the beginning of the period, primarily due to payments for goods and services in the current period[50](index=50&type=chunk) - Prepayments at period-end **increased by 194.42%** compared to the beginning of the period, primarily due to increased prepayments to suppliers in the current period[51](index=51&type=chunk) - Other receivables at period-end **increased by 196.45%** compared to the beginning of the period, primarily due to employee advances for petty cash in the current period[53](index=53&type=chunk) - Accounts payable at period-end **decreased by 44.16%** compared to the beginning of the period, primarily due to payments for materials in the current period[53](index=53&type=chunk) [1. Asset and Liability Status](index=15&type=section&id=1.%20Asset%20and%20Liability%20Status) This section details the company's period-end asset and liability book values, their proportion of total assets, and their change percentages from the prior year-end, with explanations for major variations, reflecting dynamic shifts in the company's asset and liability structure Changes in Assets and Liabilities (Period-End vs. Prior Year-End) | Item Name | Current Period End (CNY) | % of Total Assets (Current Period End) | Prior Year End (CNY) | % of Total Assets (Prior Year End) | Change from Prior Year End (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 107,488,785.91 | 8.01 | 188,229,802.82 | 12.34 | -42.89 | | Notes Receivable | 3,490,938.26 | 0.26 | 3,849,746.48 | 0.25 | -9.32 | | Accounts Receivable | 415,508,074.27 | 30.95 | 585,085,036.52 | 38.35 | -28.98 | | Prepayments | 2,083,763.42 | 0.16 | 707,761.69 | 0.05 | 194.42 | | Other Receivables | 23,083,335.51 | 1.72 | 7,786,713.79 | 0.51 | 196.45 | | Inventories | 123,083,275.34 | 9.17 | 104,224,698.45 | 6.83 | 18.09 | | Contract Assets | 113,664,887.14 | 8.47 | 127,825,409.74 | 8.38 | -11.08 | | Non-current Assets Due Within One Year | 1,411,373.71 | 0.11 | 1,758,936.40 | 0.12 | -19.76 | | Other Current Assets | 14,210,384.95 | 1.06 | 9,736,514.47 | 0.64 | 45.95 | | Long-term Receivables | 1,457,302.55 | 0.11 | 1,400,180.21 | 0.09 | 4.08 | | Other Non-current Financial Assets | 71,862,242.22 | 5.35 | 74,627,700.00 | 4.89 | -3.71 | | Fixed Assets | 292,372,132.50 | 21.78 | 243,741,087.57 | 15.97 | 19.95 | | Construction in Progress | 34,545,424.30 | 2.57 | 56,275,764.61 | 3.69 | -38.61 | | Productive Biological Assets | 6,073,504.79 | 0.45 | 3,916,475.31 | 0.26 | 55.08 | | Right-of-Use Assets | 71,041,102.60 | 5.29 | 51,399,407.48 | 3.37 | 38.21 | | Intangible Assets | 25,890,690.71 | 1.93 | 26,296,096.63 | 1.72 | -1.54 | | Goodwill | 12,999,819.89 | 0.97 | 11,379,373.17 | 0.75 | 14.24 | | Long-term Deferred Expenses | 12,573,822.03 | 0.94 | 15,018,712.14 | 0.98 | -16.28 | | Deferred Income Tax Assets | 8,601,412.63 | 0.64 | 10,297,766.77 | 0.67 | -16.47 | | Other Non-current Assets | 950,906.00 | 0.07 | 2,211,260.00 | 0.14 | -57.00 | | Short-term Borrowings | 26,204,055.56 | 1.95 | 28,958,277.78 | 1.90 | -9.51 | | Accounts Payable | 155,052,038.53 | 11.55 | 277,668,105.29 | 18.20 | -44.16 | | Contract Liabilities | 24,314,107.25 | 1.81 | 31,870,270.64 | 2.09 | -23.71 | | Employee Benefits Payable | 5,382,611.20 | 0.40 | 13,728,625.70 | 0.90 | -60.79 | | Taxes Payable | 72,723,803.15 | 5.42 | 75,071,570.26 | 4.92 | -3.13 | | Other Payables | 20,040,427.02 | 1.49 | 9,493,117.66 | 0.62 | 111.10 | | Non-current Liabilities Due Within One Year | 22,689,227.92 | 1.69 | 20,382,488.41 | 1.34 | 11.32 | | Other Current Liabilities | 14,822,881.08 | 1.10 | 18,578,821.21 | 1.22 | -20.22 | | Lease Liabilities | 54,373,502.41 | 4.05 | 49,283,431.31 | 3.23 | 10.33 | | Provisions | 10,221,588.59 | 0.76 | 10,949,283.27 | 0.72 | -6.65 | | Deferred Income Tax Liabilities | 11,492,295.72 | 0.86 | 10,446,434.41 | 0.68 | 10.01 | | Other Non-current Liabilities | 6,895,734.51 | 0.51 | 6,895,734.51 | 0.45 | 0.00 | [(IV) Analysis of Investment Status](index=16&type=section&id=(IV).%20Analysis%20of%20Investment%20Status) During the reporting period, the company's external equity investment amount significantly increased, primarily through acquisitions, including Beijing Zhongke Yanyun Technology Co., Ltd., Heilongjiang Haihe Beverage Co., Ltd., and Nanchang Zhongchun Agricultural Technology Co., Ltd. Concurrently, the period-end balance of financial assets measured at fair value (stocks and private equity funds) decreased, with stock investments incurring fair value change losses Changes in Investment Amount During the Reporting Period | Investment Amount During Reporting Period (CNY 10,000) | Investment Amount in Prior Year Period (CNY 10,000) | Change (%) | | :--- | :--- | :--- | | 2,575.50 | 0.00 | 100.00% | - Significant equity investments during the reporting period included the acquisition of **55% equity in Beijing Zhongke Yanyun Technology Co., Ltd. (CNY 22 million)**, **100% equity in Heilongjiang Haihe Beverage Co., Ltd. (CNY 66 million)**, and **85% equity in Nanchang Zhongchun Agricultural Technology Co., Ltd. (CNY 25.755 million)**[56](index=56&type=chunk) Financial Assets Measured at Fair Value (Period-End vs. Period-Beginning) | Asset Category | Period-Beginning Balance (CNY) | Fair Value Change Gains/Losses for Current Period (CNY) | Period-End Balance (CNY) | | :--- | :--- | :--- | :--- | | Stocks | 23,189,700.00 | -2,765,457.78 | 20,424,242.22 | | Private Equity Funds | 51,438,000.00 | | 51,438,000.00 | | Total | 74,627,700.00 | -2,765,457.78 | 71,862,242.22 | - The company holds **4.83% equity in Guoyue Jun'an No. 4 (Taizhou) Equity Investment Partnership (Limited Partnership)**, **21.28% equity in Jiaxing Xiaoxiang Equity Investment Partnership (Limited Partnership)**, and shares in the **Ziyang Airport Economic Zone Industrial New City PPP Private Equity Investment Fund**[59](index=59&type=chunk) [1. Overall Analysis of External Equity Investments](index=16&type=section&id=1.%20Overall%20Analysis%20of%20External%20Equity%20Investments) During the reporting period, the company's external equity investment amount significantly increased, reaching **CNY 25.755 million**, a **100% increase** from the prior year, indicating a notable rise in the company's investment and M&A activity Changes in Investment Amount During the Reporting Period | Investment Amount During Reporting Period (CNY 10,000) | Investment Amount in Prior Year Period (CNY 10,000) | Change (%) | | :--- | :--- | :--- | | 2,575.50 | 0.00 | 100.00% | [(1). Significant Equity Investments](index=17&type=section&id=(1).%20Significant%20Equity%20Investments) The company made several significant equity investments during the reporting period, including acquiring **55% equity in Beijing Zhongke Yanyun Technology Co., Ltd.**, **100% equity in Heilongjiang Haihe Beverage Co., Ltd.**, and **85% equity in Nanchang Zhongchun Agricultural

Important Notices, Table of Contents, and Definitions [Important Notices](index=2&type=section&id=%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) The company's management guarantees the truthfulness, accuracy, and completeness of the semi-annual report and assumes legal responsibility - The company's Board of Directors, Supervisory Committee, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report and assume legal responsibility[4](index=4&type=chunk) - The company's person in charge, He Guoying, the person in charge of accounting, Liu Suxia, and the head of the accounting department, Sun Yanping, declare that the financial report in this semi-annual report is true, accurate, and complete[4](index=4&type=chunk) - The company **does not plan to distribute cash dividends, issue bonus shares, or convert capital reserves into share capital**[5](index=5&type=chunk) [Table of Contents](index=3&type=section&id=%E7%9B%AE%E5%BD%95) This section lists the overall structure of the report, including major chapters and their starting page numbers [List of Documents for Inspection](index=4&type=section&id=%E5%A4%87%E6%9F%A5%E6%96%87%E4%BB%B6%E7%9B%AE%E5%BD%95) This section specifies the types and locations of the company's reference documents during the reporting period - The reference documents include financial statements signed and sealed by the legal representative, the person in charge of accounting, and the head of the accounting department[9](index=9&type=chunk) - The reference documents include the original audit report sealed by the accounting firm and signed and sealed by the certified public accountants[10](index=10&type=chunk) - The location for the above documents is the company's Securities Affairs Department[12](index=12&type=chunk) [Definitions](index=4&type=section&id=%E9%87%8A%E4%B9%89) This section provides definitions of frequently used terms in the report to ensure accurate understanding - "Company, This Company, Parent Company, Huasi Shares" refers to Huasi Holdings Co, Ltd[14](index=14&type=chunk) - "Reporting Period" refers to the period from January 1, 2025, to June 30, 2025[14](index=14&type=chunk) - Definitions for multiple subsidiaries and affiliated companies are listed, such as Beijing Garment Company, Jingnan Fur City, and Ruiling Group Co, Ltd[14](index=14&type=chunk) Company Profile and Key Financial Indicators [Company Profile](index=6&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B) Huasi Holdings Co, Ltd, stock code 002494, is listed on the Shenzhen Stock Exchange with He Guoying as the legal representative Company Basic Information | Indicator | Content | | :--- | :--- | | Stock Abbreviation | Huasi Shares | | Stock Code | 002494 | | Listing Stock Exchange | Shenzhen Stock Exchange | | Chinese Name | 华斯控股股份有限公司 | | Legal Representative | He Guoying | [Contact Persons and Methods](index=6&type=section&id=%E4%BA%8C%E3%80%81%E8%81%94%E7%B3%BB%E4%BA%BA%E5%92%8C%E8%81%94%E7%B3%BB%E6%96%B9%E5%BC%8F) The company's Board Secretary is Xi Huining and the Securities Affairs Representative is Xu Yaping Contact Information | Position | Name | Contact Address | Phone | Fax | Email | | :--- | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Xi Huining | Shangcun Town, Suning County, Hebei Province | 03175090055 | 03175115789 | huasi@huasigufen.com | | Securities Affairs Representative | Xu Yaping | Shangcun Town, Suning County, Hebei Province | 03175090055 | 03175115789 | huasi@huasigufen.com | [Other Information](index=6&type=section&id=%E4%B8%89%E3%80%81%E5%85%B6%E4%BB%96%E6%83%85%E5%86%B5) There were no changes to the company's contact information, information disclosure, or document storage locations during the reporting period - The company's registered address, office address, postal code, website, and email address remained unchanged during the reporting period[18](index=18&type=chunk) - The stock exchange website and media names for disclosing the semi-annual report, as well as the location for the report, remained unchanged during the reporting period[19](index=19&type=chunk) [Key Accounting Data and Financial Indicators](index=7&type=section&id=%E5%9B%9B%E3%80%81%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) The company's operating revenue decreased, net profit turned from a gain to a loss, while net cash flow from operating activities improved significantly Key Accounting Data and Financial Indicators (Year-on-Year Change) | Indicator | Current Reporting Period (Yuan) | Same Period Last Year (Yuan) | Change from Same Period Last Year | | :--- | :--- | :--- | :--- | | Operating Revenue | 154,943,770.15 | 256,192,735.41 | -39.52% | | Net Profit Attributable to Shareholders | -9,270,402.10 | 6,853,684.99 | -235.26% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | -10,153,523.18 | 6,475,512.18 | -256.80% | | Net Cash Flow from Operating Activities | -10,681,884.52 | -46,436,804.36 | 77.00% | | Basic Earnings Per Share (Yuan/share) | -0.0248 | 0.0183 | -235.52% | | Diluted Earnings Per Share (Yuan/share) | -0.0248 | 0.0183 | -235.52% | | Weighted Average Return on Equity | -0.76% | 0.56% | -1.32% | | **End-of-Period Indicators** | **End of Current Period (Yuan)** | **End of Last Year (Yuan)** | **Change from End of Last Year** | | Total Assets | 1,544,133,186.05 | 1,619,327,993.17 | -4.64% | | Net Assets Attributable to Shareholders | 1,219,640,101.94 | 1,229,567,781.24 | -0.81% | [Differences in Accounting Data under Domestic and Foreign Accounting Standards](index=7&type=section&id=%E4%BA%94%E3%80%81%E5%A2%83%E5%86%85%E5%A4%96%E4%BC%9A%E8%AE%A1%E5%87%86%E5%88%99%E4%B8%8B%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%B7%AE%E5%BC%82) There were no discrepancies in net profit or net assets between financial reports prepared under Chinese and international/foreign accounting standards - The company had no discrepancies in net profit and net assets between financial reports disclosed under international accounting standards and Chinese accounting standards during the reporting period[22](index=22&type=chunk) - The company had no discrepancies in net profit and net assets between financial reports disclosed under foreign accounting standards and Chinese accounting standards during the reporting period[23](index=23&type=chunk) [Non-recurring Profit and Loss Items and Amounts](index=7&type=section&id=%E5%85%AD%E3%80%81%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%8F%8A%E9%87%91%E9%A2%9D) Non-recurring profit and loss for the period totaled 883,121.08 Yuan, mainly from asset disposals and government grants Non-recurring Profit and Loss Items and Amounts | Item | Amount (Yuan) | | :--- | :--- | | Gain/Loss on Disposal of Non-current Assets | 9,761.16 | | Government Grants Included in Current Profit or Loss | 1,199,727.17 | | Other Non-operating Income and Expenses | -149,193.40 | | Less: Income Tax Effect | 177,171.99 | | Minority Interest Effect (After Tax) | 1.86 | | Total | 883,121.08 | - Income from withholding individual income tax handling fees of 7,521.44 Yuan was classified as a recurring item because it complies with national policies and occurs continuously[26](index=26&type=chunk) Management Discussion and Analysis [Principal Business Activities During the Reporting Period](index=9&type=section&id=%E4%B8%80%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E4%BB%8E%E4%BA%8B%E7%9A%84%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1) The company engages in the fur industry value chain and is actively expanding into new markets and sales channels to address industry challenges - The company's industry is classified under "C19 Leather, Fur, Feather and Its Products Manufacturing," specifically "C393 Fur Tanning and Products Manufacturing," commonly known as the fur industry[29](index=29&type=chunk) - The company's main business includes the production and sale of fur clothing, accessories, fabrics, and pelts, as well as management services for the fur raw material market, property, and commercial complexes[30](index=30&type=chunk) - In the first half of 2025, China's fur clothing export value was **199 million USD**, a decrease of **79.03%** from the same period in 2024, but the export unit price rose by **3.92%**[31](index=31&type=chunk) [Industry Overview](index=9&type=section&id=%E8%A1%8C%E4%B8%9A%E6%A6%82%E5%86%B5) The textile and apparel industry showed stable growth in H1 2025, with steady domestic demand and resilient foreign trade - In the first half of 2025, the textile and apparel industry maintained a stable and positive trend, with steady growth in domestic consumption and resilience in foreign trade[28](index=28&type=chunk) - In the first half of the year, China's textile and apparel exports totaled **143.98 billion USD**, a year-on-year increase of **0.8%**; textile exports were **70.52 billion USD** (+1.8%), while apparel exports were **73.46 billion USD** (-0.2%)[29](index=29&type=chunk) - In the first half of the year, the operating revenue of large-scale textile enterprises decreased by **3%** year-on-year, total profit decreased by **9.4%**, and the operating profit margin was **3%**, down 0.2 percentage points from the same period last year[29](index=29&type=chunk) [Company's Main Business and Products](index=10&type=section&id=%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1%E5%8F%8A%E4%BA%A7%E5%93%81) The company focuses on the fur fashion industry, with a complete value chain and a diverse business system - The company focuses on the fur fashion industry, forming a diversified business system that integrates fur product design, R&D, manufacturing, sales, and the development of upstream and downstream industry platforms and property management[32](index=32&type=chunk) - The company is actively exploring new markets by establishing a wholly-owned subsidiary in Xinjiang to open up the fur clothing sales market there[33](index=33&type=chunk) - The company is re-planning its e-commerce and brand live-streaming platforms, leveraging the live-streaming sales model to enhance brand influence and product sales[33](index=33&type=chunk) - Main products include clothing (whole-pelt, fur-fabric, woven, fashion), fur accessories, fur pelts, fur fabrics, as well as processing fees and other business income[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Company's Main Business Models](index=11&type=section&id=%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E7%BB%8F%E8%90%A5%E6%A8%A1%E5%BC%8F) The company's business model integrates R&D, global procurement, order-driven production, and multi-channel sales under its proprietary brands - As a national high-tech enterprise, the company has an independent R&D center, the "Hebei Provincial Fur Engineering Technology Research Center"[35](index=35&type=chunk) - The company has established stable global procurement channels, combining a "company-base-farmer" model domestically with international auctions to allocate resources[36](index=36&type=chunk) - The company's production is primarily order-driven, adopting a make-to-order model with a process that includes R&D, tanning, dyeing, and garment production[36](index=36&type=chunk) - Sales models include OBM (Original Brand Manufacturer), OEM (Original Equipment Manufacturer), and ODM (Original Design Manufacturer), with the OBM model utilizing offline direct stores and online e-commerce channels[38](index=38&type=chunk) - The company's own brands, such as "Huasi" and "Yijiaqi," are themed "luxury, elegance, uniqueness, and fashion," with "Yijiaqi" having received honors like "China Famous Trademark"[38](index=38&type=chunk) [Core Competitiveness Analysis](index=13&type=section&id=%E4%BA%8C%E3%80%81%E6%A0%B8%E5%BF%83%E7%AB%9E%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competitiveness lies in its complete industry chain, resource procurement, R&D capabilities, and regional advantages - The company has built a complete industry chain from fur trading and processing to apparel design and sales, forming core competitive advantages in upstream resources, R&D, technology, production scale, sales channels, and product quality[40](index=40&type=chunk) - The company has professional experience in raw pelt inspection and strong capabilities in comprehensive utilization and development, establishing a five-level classification standard to homogenize non-standard raw materials[40](index=40&type=chunk)[41](index=41&type=chunk) - The company's "Hebei Provincial Fur Engineering Technology Research Center" is a leader in fur R&D and design, having developed internationally advanced processes like "multi-color dyeing on a single pelt" and new fur fabric products[42](index=42&type=chunk) - The company is located in Suning County, Hebei Province, known as the "Fur Capital of China," which is a major fur trade hub and price formation center with abundant labor resources[43](index=43&type=chunk) [Analysis of Main Business Operations](index=14&type=section&id=%E4%B8%89%E3%80%81%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) Revenue declined due to reduced income from investment property sales, while OBM business and domestic sales showed significant growth Year-on-Year Changes in Key Financial Data | Indicator | Current Reporting Period (Yuan) | Same Period Last Year (Yuan) | YoY Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 154,943,770.15 | 256,192,735.41 | -39.52% | Primarily due to a decrease in income from the transfer of investment properties compared to the same period last year | | Operating Costs | 107,998,288.31 | 188,040,872.57 | -42.57% | Primarily due to the decrease in operating revenue, leading to a reduction in costs | | Selling Expenses | 32,903,623.29 | 25,343,781.58 | 29.83% | Primarily due to the addition of the Xinjiang subsidiary in Q4 last year, resulting in increased advertising and store expenses | | Finance Costs | 1,439,140.08 | 1,226,915.24 | 17.30% | Primarily due to an increase in foreign exchange gains and losses caused by currency fluctuations | | Net Cash Flow from Operating Activities | -10,681,884.52 | -46,436,804.36 | 77.00% | Primarily due to a decrease in payments for goods and services, various taxes, and other operating expenses | | Net Cash Flow from Investing Activities | 33,027,701.18 | -22,280,079.73 | -248.24% | Primarily due to an increase from matured time deposits during the reporting period | | Net Cash Flow from Financing Activities | -42,956,686.30 | -10,092,058.76 | 325.65% | Primarily due to a decrease in the net amount of bank borrowings compared to the same period last year | Operating Revenue Breakdown (by Industry) | Industry | Current Period Amount (Yuan) | % of Operating Revenue | Prior Period Amount (Yuan) | % of Operating Revenue | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | OBM | 119,117,508.49 | 76.88% | 100,340,400.91 | 39.17% | 18.71% | | ODM | 19,185,011.86 | 12.38% | 26,316,285.85 | 10.27% | -27.10% | | OEM | 1,342,089.54 | 0.87% | 1,169,440.31 | 0.46% | 14.76% | | Other Business Income | 15,299,160.26 | 9.87% | 128,366,608.34 | 50.10% | -88.08% | Operating Revenue Breakdown (by Product) | Product | Current Period Amount (Yuan) | % of Operating Revenue | Prior Period Amount (Yuan) | % of Operating Revenue | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Fur Pelts | 16,693,016.81 | 10.77% | 13,815,773.59 | 5.39% | 20.83% | | Fur Clothing | 71,500,523.41 | 46.15% | 49,696,002.32 | 19.40% | 43.88% | | Commercial Complex Business | 30,010,304.16 | 19.37% | 35,637,295.84 | 13.91% | -15.79% | | Other Business Income | 15,299,160.26 | 9.87% | 128,366,608.34 | 50.10% | -88.08% | Operating Revenue Breakdown (by Region) | Region | Current Period Amount (Yuan) | % of Operating Revenue | Prior Period Amount (Yuan) | % of Operating Revenue | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Export Sales | 15,944,023.33 | 10.29% | 18,208,090.84 | 7.11% | -12.43% | | Domestic Sales | 123,700,586.56 | 79.84% | 109,618,036.23 | 42.79% | 12.85% | | Other Business Income | 15,299,160.26 | 9.87% | 128,366,608.34 | 50.10% | -88.08% | - The company has **12 directly-operated stores** with a total area of 8,439 square meters, with no new openings or closures during the reporting period[50](index=50&type=chunk) [Other Information Required by the Textile and Apparel Industry Information Disclosure Guidelines](index=17&type=section&id=%E5%9B%9B%E3%80%81%E7%BA%BA%E7%BB%87%E6%9C%8D%E8%A3%85%E7%9B%B8%E5%85%B3%E8%A1%8C%E4%B8%9A%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E6%8C%87%E5%BC%95%E8%A6%81%E6%B1%82%E7%9A%84%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) Online sales revenue surged, while inventory turnover days remained high, and inventory balance increased Capacity Information | Indicator | Current Reporting Period | Same Period Last Year | | :--- | :--- | :--- | | Total Capacity | 50000 | 50000 | | Capacity Utilization Rate | 14.01% | 13.71% | YoY Change in Operating Revenue by Sales Channel | Sales Channel | YoY Change in Operating Revenue (%) | | :--- | :--- | | Online Sales | 2,236.69% | | Direct Sales | 46.39% | | Distribution Sales | -30.56% | Breakdown of Selling Expenses | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Salaries and Related Expenses | 13,612,761.09 | 12,883,837.64 | | Store Expenses | 9,652,045.48 | 5,284,999.97 | | Total | 32,903,623.29 | 25,343,781.58 | - The company collaborates with the third-party sales platform Douyin (TikTok), with a transaction amount of **3,827,125.61 Yuan** and a return rate of **67.51%** during the reporting period[56](index=56&type=chunk) Inventory Information | Main Product | Inventory Turnover Days | Inventory Quantity | Inventory Age | YoY Change in Inventory Balance | | :--- | :--- | :--- | :--- | :--- | | Fur Clothing | 939 | 26,046 | 1 | 39.67% | - The company's own brands include "Yijiaqi," "Yishangdi," and "Huasi Maisha," with main products being apparel sold primarily in North China, Northeast China, and Russia[57](index=57&type=chunk) [Analysis of Non-Core Business](index=19&type=section&id=%E4%BA%94%E3%80%81%E9%9D%9E%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) Non-core business activities had a minor impact on total profit and are not considered sustainable Impact of Non-Core Business on Total Profit | Item | Amount (Yuan) | % of Total Profit | Reason for Formation & Sustainability | | :--- | :--- | :--- | :--- | | Non-operating Income | 58,759.01 | -0.53% | Not sustainable | | Non-operating Expenses | 207,952.41 | -1.87% | Not sustainable | | Credit Impairment Loss | 506,437.37 | -4.57% | Not sustainable | [Analysis of Assets and Liabilities](index=19&type=section&id=%E5%85%AD%E3%80%81%E8%B5%84%E4%BA%A7%E5%8F%8A%E8%B4%9F%E5%80%BA%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) The company reduced short-term borrowings and increased long-term borrowings, while a portion of its cash and assets are restricted Significant Changes in Asset Composition | Item | End of Current Period (Yuan) | % of Total Assets | End of Last Year (Yuan) | % of Total Assets | Change in Proportion | Reason for Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Inventory | 458,017,886.71 | 29.66% | 436,686,623.73 | 26.97% | 2.69% | | | Short-term Borrowings | 57,039,900.00 | 3.69% | 180,145,000.00 | 11.12% | -7.43% | Primarily due to a reduction in short-term borrowings during the reporting period | | Long-term Borrowings | 83,058,100.00 | 5.38% | | | 5.38% | Primarily due to an increase in long-term borrowings during the reporting period | - At the end of the period, **11,769,751.00 Yuan** of cash and cash equivalents were frozen by the court[62](index=62&type=chunk) - Fixed assets of **52,782,140.65 Yuan** and investment properties of **279,110,013.35 Yuan** were pledged as collateral for a maximum mortgage guarantee of **401.85 million Yuan** to the Agricultural Bank of China[62](index=62&type=chunk) [Investment Analysis](index=20&type=section&id=%E4%B8%83%E3%80%81%E6%8A%95%E8%B5%84%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) The company did not engage in any significant investment activities during the reporting period - The company had no securities investments during the reporting period[64](index=64&type=chunk) - The company had no derivative investments during the reporting period[65](index=65&type=chunk) - The company had no use of raised funds during the reporting period[66](index=66&type=chunk) [Sale of Major Assets and Equity](index=21&type=section&id=%E5%85%AB%E3%80%81%E9%87%8D%E5%A4%A7%E8%B5%84%E4%BA%A7%E5%92%8C%E8%82%A1%E6%9D%83%E5%87%BA%E5%94%AE) No major assets or equity were sold during the reporting period - The company did not sell any major assets during the reporting period[67](index=67&type=chunk) - The company did not sell any major equity during the reporting period[68](index=68&type=chunk) [Analysis of Major Subsidiaries and Investees](index=21&type=section&id=%E4%B9%9D%E3%80%81%E4%B8%BB%E8%A6%81%E6%8E%A7%E8%82%A1%E5%8F%82%E8%82%A1%E5%85%AC%E5%8F%B8%E5%88%86%E6%9E%90) There was no information on significant subsidiaries or investees to be disclosed for the reporting period - There was no information on significant subsidiaries or investees to be disclosed for the reporting period[68](index=68&type=chunk) [Structured Entities Controlled by the Company](index=21&type=section&id=%E5%8D%81%E3%80%81%E5%85%AC%E5%8F%B8%E6%8E%A7%E5%88%B6%E7%9A%84%E7%BB%93%E6%9E%84%E5%8C%96%E4%B8%BB%E4%BD%93%E6%83%85%E5%86%B5) The company did not control any structured entities during the reporting period - The company did not control any structured entities during the reporting period[69](index=69&type=chunk) [Risks and Countermeasures](index=21&type=section&id=%E5%8D%81%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E9%9D%A2%E4%B8%B4%E7%9A%84%E9%A3%8E%E9%99%A9%E5%92%8C%E5%BA%94%E5%AF%B9%E6%8E%AA%E6%96%BD) The company faces macroeconomic, exchange rate, and raw material price risks, which it addresses through market expansion and financial hedging - The company faces **macroeconomic risks** from geopolitical factors and global economic uncertainty, which could lead to a decline in domestic textile and apparel export orders[70](index=70&type=chunk) - The company's export sales are mainly settled in USD, exposing it to **exchange rate fluctuation risks**[70](index=70&type=chunk) - The company's main raw materials are special fur animal pelts, and **fluctuations in raw material prices** will significantly impact product costs[70](index=70&type=chunk) - The company will mitigate risks by strengthening brand building, diversifying market layout, using forward foreign exchange contracts, enhancing inventory management, and increasing R&D efforts[71](index=71&type=chunk) [Development and Implementation of Market Value Management System and Valuation Enhancement Plan](index=22&type=section&id=%E5%8D%81%E4%BA%8C%E3%80%81%E5%B8%82%E5%80%BC%E7%AE%A1%E7%90%86%E5%88%B6%E5%BA%A6%E5%92%8C%E4%BC%B0%E5%80%BC%E6%8F%90%E5%8D%87%E8%AE%A1%E5%88%92%E7%9A%84%E5%88%B6%E5%AE%9A%E8%90%BD%E5%AE%9E%E6%83%85%E5%86%B5) The company has established a market value management system but has not disclosed a valuation enhancement plan - The company approved the "Huasi Holdings Co, Ltd Market Value Management System" at the third meeting of the sixth Board of Directors on April 15, 2025[72](index=72&type=chunk) - The company has not disclosed a valuation enhancement plan[72](index=72&type=chunk) [Implementation of the "Dual Improvement in Quality and Returns" Action Plan](index=22&type=section&id=%E5%8D%81%E4%B8%89%E3%80%81%22%E8%B4%A8%E9%87%8F%E5%9B%9E%E6%8A%A5%E5%8F%8C%E6%8F%90%E5%8D%87%22%E8%A1%8C%E5%8A%A8%E6%96%B9%E6%A1%88%E8%B4%AF%E5%BD%BB%E8%90%BD%E5%AE%9E%E6%83%85%E5%86%B5) The company has not disclosed an announcement regarding the "Dual Improvement in Quality and Returns" action plan - The company has not disclosed an announcement regarding the "Dual Improvement in Quality and Returns" action plan[73](index=73&type=chunk) Corporate Governance, Environment, and Society [Changes in Directors, Supervisors, and Senior Management](index=22&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) Supervisor Han Xiaobo resigned for personal reasons during the reporting period - Supervisor Han Xiaobo resigned for personal reasons on April 15, 2025[74](index=74&type=chunk) [Profit Distribution and Capitalization of Capital Reserve for the Reporting Period](index=23&type=section&id=%E4%BA%8C%E3%80%81%E6%9C%AC%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%88%A9%E6%B6%A6%E5%88%86%E9%85%8D%E5%8F%8A%E8%B5%84%E6%9C%AC%E5%85%AC%E7%A7%AF%E9%87%91%E8%BD%AC%E5%A2%9E%E8%82%A1%E6%9C%AC%E6%83%85%E5%86%B5) The company does not plan to distribute profits or increase share capital for the semi-annual period - The company plans **not to distribute cash dividends, issue bonus shares, or convert capital reserves into share capital** for the semi-annual period[75](index=75&type=chunk) [Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=23&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%83%E6%BF%80%E5%8A%B1%E8%AE%A1%E5%88%92%E3%80%81%E5%91%98%E5%B7%A5%E6%8C%81%E8%82%A1%E8%AE%A1%E5%88%92%E6%88%96%E5%85%B6%E4%BB%96%E5%91%98%E5%B7%A5%E6%BF%80%E5%8A%B1%E6%8E%AA%E6%96%BD%E7%9A%84%E5%AE%9E%E6%96%BD%E6%83%85%E5%86%B5) The company had no equity incentive plans or other employee incentive measures during the reporting period - The company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures and their implementation during the reporting period[76](index=76&type=chunk) [Environmental Information Disclosure](index=23&type=section&id=%E5%9B%9B%E3%80%81%E7%8E%AF%E5%A2%83%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E6%83%85%E5%86%B5) The company is not on the list of enterprises required to disclose environmental information and is committed to clean production - The listed company and its main subsidiaries are not included in the list of enterprises required to disclose environmental information by law[77](index=77&type=chunk) - The company adheres to the principle of "safety first, environmental protection priority" and achieves clean emissions through energy conservation and emission reduction to build an efficient and environmentally friendly clean production enterprise[78](index=78&type=chunk) [Social Responsibility](index=23&type=section&id=%E4%BA%94%E3%80%81%E7%A4%BE%E4%BC%9A%E8%B4%A3%E4%BB%BB%E6%83%85%E5%86%B5) The company fulfills its social responsibilities by protecting stakeholder interests, valuing human resources, and prioritizing environmental protection - The company considers protecting the interests of shareholders, especially minority shareholders, and safeguarding the legal rights of creditors as its most fundamental social responsibility[77](index=77&type=chunk) - The company has formulated human resource policies conducive to sustainable development and emphasizes employee quality and subsequent training and education[77](index=77&type=chunk) - The company believes that creating a "first-class service" model is the foundation of its business and survival[77](index=77&type=chunk) Important Matters [Commitments by the Company's Actual Controller, Shareholders, Related Parties, Acquirers, and the Company that were Fulfilled During the Reporting Period or Remained Unfulfilled by the End of the Reporting Period](index=24&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E3%80%81%E8%82%A1%E4%B8%9C%E3%80%81%E5%85%B3%E8%81%94%E6%96%B9%E3%80%81%E6%94%B6%E8%B4%AD%E4%BA%BA%E4%BB%A5%E5%8F%8A%E5%85%AC%E5%8F%B8%E7%AD%89%E6%89%BF%E8%AF%BA%E7%9B%B8%E5%85%B3%E6%96%B9%E5%9C%A8%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%B1%A5%E8%A1%8C%E5%AE%8C%E6%AF%95%E5%8F%8A%E6%88%AA%E8%87%B3%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E8%B6%85%E6%9C%9F%E6%9C%AA%E5%B1%A5%E8%A1%8C%E5%AE%8C%E6%AF%95%E7%9A%84%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9) The controlling shareholder has strictly fulfilled all commitments regarding share sale restrictions and avoidance of competition - The controlling shareholder, actual controller, and chairman, He Guoying, committed during the initial public offering not to transfer or entrust others to manage his directly or indirectly held shares within 36 months of the stock listing, and not to transfer more than 25% of his total shares annually while serving as a director, supervisor, or senior manager[80](index=80&type=chunk) - He Guoying committed that the non-publicly offered shares he subscribed to would be locked for 36 months from the listing date after the issuance[80](index=80&type=chunk) - Mr He Guoying issued a "Letter of Commitment to Avoid Competition" to the company, promising not to engage in businesses or activities that constitute or could potentially constitute competition with the company, and to strive to reduce related-party transactions[80](index=80&type=chunk) - **All commitments were fulfilled on time**[80](index=80&type=chunk) [Non-operational Fund Occupation by the Controlling Shareholder and Other Related Parties](index=25&type=section&id=%E4%BA%8C%E3%80%81%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%B3%E8%81%94%E6%96%B9%E5%AF%B9%E4%B8%8A%E5%B8%82%E5%85%AC%E5%8F%B8%E7%9A%84%E9%9D%9E%E7%BB%8F%E8%90%A5%E6%80%A7%E5%8D%A0%E7%94%A8%E8%B5%84%E9%87%91%E6%83%85%E5%86%B5) There was no non-operational fund occupation by the controlling shareholder or other related parties during the reporting period - The company had no non-operational fund occupation by the controlling shareholder and other related parties during the reporting period[81](index=81&type=chunk) [Irregular External Guarantees](index=25&type=section&id=%E4%B8%89%E3%80%81%E8%BF%9D%E8%A7%84%E5%AF%B9%E5%A4%96%E6%8B%85%E4%BF%9D%E6%83%85%E5%86%B5) The company had no irregular external guarantees during the reporting period - The company had no irregular external guarantees during the reporting period[82](index=82&type=chunk) [Appointment and Dismissal of Accounting Firms](index=25&type=section&id=%E5%9B%9B%E3%80%81%E8%81%98%E4%BB%BB%E3%80%81%E8%A7%A3%E8%81%98%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E6%83%85%E5%86%B5) The company's semi-annual financial report was not audited - The company's semi-annual report was not audited[83](index=83&type=chunk) [Explanation by the Board of Directors and Supervisory Committee on the "Non-standard Audit Report" for the Current Period](index=25&type=section&id=%E4%BA%94%E3%80%81%E8%91%A3%E4%BA%8B%E4%BC%9A%E3%80%81%E7%9B%91%E4%BA%8B%E4%BC%9A%E5%AF%B9%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E6%9C%AC%E6%8A%A5%E5%91%8A%E6%9C%9F%22%E9%9D%9E%E6%A0%87%E5%87%86%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A%22%E7%9A%84%E8%AF%B4%E6%98%8E) There was no non-standard audit report for the current reporting period - There was no non-standard audit report for the current reporting period[84](index=84&type=chunk) [Explanation by the Board of Directors on the "Non-standard Audit Report" from the Previous Year](index=25&type=section&id=%E5%85%AD%E3%80%81%E8%91%A3%E4%BA%8B%E4%BC%9A%E5%AF%B9%E4%B8%8A%E5%B9%B4%E5%BA%A6%22%E9%9D%9E%E6%A0%87%E5%87%86%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A%22%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5%E7%9A%84%E8%AF%B4%E6%98%8E) There was no non-standard audit report for the current reporting period - There was no non-standard audit report for the current reporting period[84](index=84&type=chunk) [Bankruptcy and Reorganization Matters](index=25&type=section&id=%E4%B8%83%E3%80%81%E7%A0%B4%E4%BA%A7%E9%87%8D%E6%95%B4%E7%9B%B8%E5%85%B3%E4%BA%8B%E9%A1%B9) No bankruptcy or reorganization matters occurred during the reporting period - No bankruptcy or reorganization matters occurred during the reporting period[84](index=84&type=chunk) [Litigation Matters](index=25&type=section&id=%E5%85%AB%E3%80%81%E8%AF%89%E8%AE%BC%E4%BA%8B%E9%A1%B9) The company had no major litigation or arbitration matters during the reporting period - The company had no major litigation or arbitration matters during this reporting period[85](index=85&type=chunk) [Penalties and Rectifications](index=25&type=section&id=%E4%B9%9D%E3%80%81%E5%A4%84%E7%BD%9A%E5%8F%8A%E6%95%B4%E6%94%B9%E6%83%85%E5%86%B5) There were no penalties or rectifications during the reporting period - There were no penalties or rectifications during the reporting period[85](index=85&type=chunk) [Integrity Status of the Company, its Controlling Shareholder, and Actual Controller](index=25&type=section&id=%E5%8D%81%E3%80%81%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%85%B6%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E3%80%81%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E7%9A%84%E8%AF%9A%E4%BF%A1%E7%8A%B6%E5%86%B5) There were no integrity issues concerning the company, its controlling shareholder, or actual controller during the reporting period - There were no integrity issues concerning the company, its controlling shareholder, or actual controller during the reporting period[86](index=86&type=chunk) [Major Related-Party Transactions](index=26&type=section&id=%E5%8D%81%E4%B8%80%E3%80%81%E9%87%8D%E5%A4%A7%E5%85%B3%E8%81%94%E4%BA%A4%E6%98%93) No major related-party transactions occurred during the reporting period - The company had no related-party transactions related to daily operations during the reporting period[87](index=87&type=chunk) - The company had no related-party transactions involving the acquisition or sale of assets or equity during the reporting period[88](index=88&type=chunk) - There were no related-party credit or debt transactions during the reporting period[90](index=90&type=chunk) - The company had no other major related-party transactions during the reporting period[93](index=93&type=chunk) [Major Contracts and Their Performance](index=26&type=section&id=%E5%8D%81%E4%BA%8C%E3%80%81%E9%87%8D%E5%A4%A7%E5%90%88%E5%90%8C%E5%8F%8A%E5%85%B6%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) The company had no major contracts, guarantees, or wealth management activities during the reporting period - The company had no custody arrangements during the reporting period[94](index=94&type=chunk) - The company had no major guarantees during the reporting period[97](index=97&type=chunk) - The company had no entrusted wealth management during the reporting period[98](index=98&type=chunk) - The company had no other major contracts during the reporting period[99](index=99&type=chunk) [Explanation of Other Major Matters](index=27&type=section&id=%E5%8D%81%E4%B8%89%E3%80%81%E5%85%B6%E4%BB%96%E9%87%8D%E5%A4%A7%E4%BA%8B%E9%A1%B9%E7%9A%84%E8%AF%B4%E6%98%8E) There were no other major matters requiring explanation during the reporting period - There were no other major matters requiring explanation during the reporting period[100](index=100&type=chunk) [Major Matters Concerning Company Subsidiaries](index=27&type=section&id=%E5%8D%81%E5%9B%9B%E3%80%81%E5%85%AC%E5%8F%B8%E5%AD%90%E5%85%AC%E5%8F%B8%E9%87%8D%E5%A4%A7%E4%BA%8B%E9%A1%B9) There were no major matters concerning company subsidiaries during the reporting period - There were no major matters concerning company subsidiaries during the reporting period[101](index=101&type=chunk) Share Capital Changes and Shareholder Information [Share Capital Changes](index=28&type=section&id=%E4%B8%80%E3%80%81%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) The company's total share capital and the structure of restricted and unrestricted shares remained unchanged during the reporting period Share Capital Changes | Item | Pre-change Quantity (shares) | Pre-change Ratio | Change (+, -) | Post-change Quantity (shares) | Post-change Ratio | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 90,540,280 | 24.00% | 0 | 90,540,280 | 24.00% | | II. Unrestricted Shares | 286,770,438 | 76.00% | 0 | 286,770,438 | 76.00% | | III. Total Shares | 377,310,718 | 100.00% | 0 | 377,310,718 | 100.00% | - During the reporting period, the company's total share count, restricted shares, and unrestricted shares remained unchanged[103](index=103&type=chunk) [Securities Issuance and Listing](index=29&type=section&id=%E4%BA%8C%E3%80%81%E8%AF%81%E5%88%B8%E5%8F%91%E8%A1%8C%E4%B8%8E%E4%B8%8A%E5%B8%82%E6%83%85%E5%86%B5) The company had no securities issuance or listing activities during the reporting period - The company had no securities issuance or listing activities during the reporting period[104](index=104&type=chunk) [Number of Shareholders and Shareholding Information](index=29&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E4%B8%9C%E6%95%B0%E9%87%8F%E5%8F%8A%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5) At the end of the period, the company had 26,217 common shareholders, with the controlling shareholder holding a 31.99% stake - At the end of the reporting period, the total number of common shareholders was **26,217**[105](index=105&type=chunk) Shareholding of Shareholders with over 5% or Top 10 Shareholders | Shareholder Name | Shareholder Type | Shareholding Ratio | Shares Held at Period End (shares) | Number of Restricted Shares (shares) | Number of Unrestricted Shares (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | | He Guoying | Domestic Natural Person | 31.99% | 120,720,374 | 90,540,280 | 30,180,094 | | Nomura Orient International Securities - Shanghai Textile (Group) Co, Ltd - Nomura Orient International Sunrise No. 1 Single Asset Management Plan | Other | 1.74% | 6,581,354 | 0 | 6,581,354 | | BARCLAYS BANK PLC | Foreign Legal Entity | 0.90% | 3,398,553 | 0 | 3,398,553 | | Xuanyuan Private Equity Investment Management (Guangdong) Co, Ltd - Xuanyuan Kexin No. 122 Private Securities Investment Fund | Other | 0.87% | 3,267,800 | 0 | 3,267,800 | | Wu Yiming | Domestic Natural Person | 0.61% | 2,300,000 | 0 | 2,300,000 | | China Construction Bank Co, Ltd - Nuoan Multi-Strategy Equity Securities Investment Fund | Other | 0.57% | 2,146,300 | 0 | 2,146,300 | | CITIC Securities Asset Management (Hong Kong) Limited - Client Funds | Foreign Legal Entity | 0.52% | 1,964,397 | 0 | 1,964,397 | | Shanghai Zhuchi Asset Management Co, Ltd - Zhuchi New Income Private Securities Investment Fund Phase 10 | Other | 0.51% | 1,926,600 | 0 | 1,926,600 | | Shanghai Yingshui Investment Management Co, Ltd - Yingshui Changfeng No. 19 Private Securities Investment Fund | Other | 0.50% | 1,887,800 | 0 | 1,887,800 | | Teng Rongsong | Domestic Natural Person | 0.46% | 1,740,800 | 0 | 1,740,800 | - As of the end of the reporting period, the company's special securities account for share repurchase held **4,227,600 shares**, accounting for **1.12%** of the total share capital[106](index=106&type=chunk) [Changes in Shareholdings of Directors, Supervisors, and Senior Management](index=32&type=section&id=%E5%9B%9B%E3%80%81%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E5%92%8C%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E6%8C%81%E8%82%A1%E5%8F%98%E5%8A%A8) There were no changes in the shareholdings of directors, supervisors, and senior management during the reporting period - There were no changes in the shareholdings of the company's directors, supervisors, and senior management during the reporting period[108](index=108&type=chunk) [Changes in Controlling Shareholder or Actual Controller](index=32&type=section&id=%E4%BA%94%E3%80%81%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E6%88%96%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E5%8F%98%E6%9B%B4%E6%83%85%E5%86%B5) The company's controlling shareholder and actual controller remained unchanged during the reporting period - The company's controlling shareholder did not change during the reporting period[109](index=109&type=chunk) - The company's actual controller did not change during the reporting period[109](index=109&type=chunk) [Preferred Stock Information](index=33&type=section&id=%E5%85%AD%E3%80%81%E4%BC%98%E5%85%88%E8%82%A1%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) The company had no preferred stock during the reporting period - The company had no preferred stock during the reporting period[110](index=110&type=chunk) Bond-related Matters [Bond-related Matters](index=34&type=section&id=%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) The company had no bond-related matters during the reporting period - The company had no bond-related matters during the reporting period[112](index=112&type=chunk) Financial Report [Audit Report](index=35&type=section&id=%E4%B8%80%E3%80%81%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) The company's semi-annual financial report was not audited - The company's semi-annual financial report was not audited[114](index=114&type=chunk) [Financial Statements](index=35&type=section&id=%E4%BA%8C%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section provides the company's consolidated and parent company financial statements for the first half of 2025 Key Data from Consolidated Balance Sheet (End of Period) | Item | Closing Balance (Yuan) | | :--- | :--- | | Total Assets | 1,544,133,186.05 | | Total Liabilities | 345,757,322.15 | | Total Equity Attributable to Parent Company | 1,219,640,101.94 | | Total Equity | 1,198,375,863.90 | Key Data from Consolidated Income Statement (Current Period) | Item | Current Period Amount (Yuan) | | :--- | :--- | | Total Operating Revenue | 154,943,770.15 | | Operating Profit | -10,942,913.22 | | Total Profit | -11,092,106.62 | | Net Profit | -9,270,692.33 | | Net Profit Attributable to Parent Company Shareholders | -9,270,402.10 | | Basic Earnings Per Share (Yuan/share) | -0.0248 | Key Data from Consolidated Cash Flow Statement (Current Period) | Item | Current Period Amount (Yuan) | | :--- | :--- | | Net Cash Flow from Operating Activities | -10,681,884.52 | | Net Cash Flow from Investing Activities | 33,027,701.18 | | Net Cash Flow from Financing Activities | -42,956,686.30 | | Net Increase in Cash and Cash Equivalents | -17,269,114.85 | [Company's Basic Information](index=52&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) Huasi Holdings Co, Ltd is a fur industry company controlled by He Guoying, with 18 subsidiaries included in its consolidation scope - Huasi Holdings Co, Ltd, formerly Hebei Huatong Industrial Co, Ltd, had a total share capital and registered capital of **377,310,718.00 Yuan** as of June 30, 2025, after several capital changes[155](index=155&type=chunk) - The company's registered and head office addresses are both in Shangcun Town, Suning County, Hebei Province, and the actual controller is He Guoying[155](index=155&type=chunk) - The company operates in the fur industry, with main products and services including apparel manufacturing, R&D, sales, fur tanning, import/export, park management, brand management, and property management[156](index=156&type=chunk) - A total of **18 subsidiaries** were included in the consolidation scope for the current period, and the financial statements were approved for issuance by the Board of Directors on August 27, 2025[157](index=157&type=chunk)[158](index=158&type=chunk) [Basis of Preparation of Financial Statements](index=56&type=section&id=%E5%9B%9B%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E7%9A%84%E7%BC%96%E5%88%B6%E5%9F%BA%E7%A1%80) The financial statements are prepared in accordance with Chinese accounting standards and on a going concern basis - The company prepares its financial statements based on actual transactions and events, in accordance with the "Enterprise Accounting Standards" issued by the Ministry of Finance and the CSRC's "Information Disclosure and Compilation Rules for Companies Offering Securities to the Public No 15 - General Provisions on Financial Reports" (2023 Revision)[159](index=159&type=chunk) - The company has assessed its ability to continue as a going concern for the 12 months from the end of the reporting period and found no material uncertainties, thus preparing the financial statements on a going concern basis[160](index=160&type=chunk) [Significant Accounting Policies and Estimates](index=56&type=section&id=%E4%BA%94%E3%80%81%E9%87%8D%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%8F%8A%E4%BC%9A%E8%AE%A1%E4%BC%B0%E8%AE%A1) This section details the key accounting policies and estimates used, which comply with enterprise accounting standards - The company determines specific accounting policies and estimates based on its production and operation characteristics, mainly reflected in inventory valuation, bad debt provision for receivables, depreciation of fixed assets, amortization of intangible assets, measurement of investment properties, and revenue recognition[161](index=161&type=chunk) - The financial statements prepared by the company comply with the requirements of the Enterprise Accounting Standards and provide a true and complete view of the company's financial position, operating results, and cash flows for the reporting period[162](index=162&type=chunk) - The company has implemented "Interpretation No 17 of the Enterprise Accounting Standards," "Interim Provisions on Accounting for Enterprise Data Resources," and "Interpretation No 18 of the Enterprise Accounting Standards," but their adoption had no material impact on the financial statements for this reporting period[103](index=103&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) [Taxes](index=104&type=section&id=%E5%85%AD%E3%80%81%E7%A8%8E%E9%A1%B9) The company is subject to various taxes, including VAT and corporate income tax, with a preferential 15% income tax rate as a high-tech enterprise Main Taxes and Tax Rates | Tax Type | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Domestic sales of goods, processing, repair services, general trade imports, tangible movable property leasing | 13% | | Value-Added Tax (VAT) | Sales of real estate, transfer of land use rights, import of raw hides, sales of goods | 9% | | Value-Added Tax (VAT) | Provision of modern taxable services, financial loan services | 6% | | Value-Added Tax (VAT) | Provision of real estate operating lease services (simplified taxation) | 5% | | Value-Added Tax (VAT) | Sales of used fixed assets | 9% | | Urban Maintenance and Construction Tax | Actual paid turnover tax | 7%, 5% | | Corporate Income Tax | Taxable income | Varies by entity | | Education Surcharge | Actual paid turnover tax | 3% | | Local Education Surcharge | Actual paid turnover tax | 2% | - Huasi Holdings Co, Ltd has been qualified as a high-tech enterprise for a three-year period, entitling it to a preferential national income tax rate of **15%**[341](index=341&type=chunk) [Notes to Consolidated Financial Statements](index=105&type=section&id=%E4%B8%83%E3%80%81%E5%90%88%E5%B9%B6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%A1%B9%E7%9B%AE%E6%B3%A8%E9%87%8A) This section provides detailed notes on the items in the consolidated financial statements, highlighting key balances and changes Cash and Cash Equivalents | Item | Closing Balance (Yuan) | Opening Balance (Yuan) | | :--- | :--- | :--- | | Cash on Hand | 954,065.39 | 576,916.09 | | Bank Deposits | 134,471,689.25 | 152,280,277.95 | | Other Cash Equivalents | 16,572,559.40 | 17,446,734.85 | | Total | 151,998,314.04 | 170,303,928.89 | | Of which: Total funds held overseas | 2,673,644.78 | 12,816,146.15 | | Of which: Frozen bank deposits | 11,769,751.00 | 11,769,751.00 | Accounts Receivable | Item | Closing Book Balance (Yuan) | Closing Bad Debt Provision (Yuan) | Closing Book Value (Yuan) | | :--- | :--- | :--- | :--- | | Total | 59,339,975.20 | 26,220,040.11 | 33,119,935.09 | Inventory | Item | Closing Book Balance (Yuan) | Closing Inventory Write-down (Yuan) | Closing Book Value (Yuan) | | :--- | :--- | :--- | :--- | | Raw Materials | 2,599,559.95 | 404,641.95 | 2,194,918.00 | | Finished Goods | 130,241,496.63 | 5,129,395.69 | 125,112,100.94 | | Work in Progress | 380,157,459.92 | 49,446,592.15 | 330,710,867.77 | | Total | 512,998,516.50 | 54,980,629.79 | 458,017,886.71 | Short-term Borrowings | Item | Closing Balance (Yuan) | Opening Balance (Yuan) | | :--- | :--- | :--- | | Secured Loans | 57,000,000.00 | 140,000,000.00 | | Accrued Interest Payable | 39,900.00 | 145,000.00 | | Total | 57,039,900.00 | 180,145,000.00 | Long-term Borrowings | Item | Closing Balance (Yuan) | Opening Balance (Yuan) | | :--- | :--- | :--- | | Secured Loans | 83,000,000.00 | | | Accrued Interest Payable | 58,100.00 | | | Total | 83,058,100.00 | | Operating Revenue and Costs | Item | Current Period Revenue (Yuan) | Current Period Costs (Yuan) | Prior Period Revenue (Yuan) | Prior Period Costs (Yuan) | | :--- | :--- | :--- | :--- | :--- | | Main Business | 139,644,609.89 | 94,548,567.98 | 127,826,127.07 | 95,821,266.35 | | Other Business | 15,299,160.26 | 13,449,720.33 | 128,366,608.34 | 92,219,606.22 | | Total | 154,943,770.15 | 107,998,288.31 | 256,192,735.41 | 188,040,872.57 | R&D Expenditure [R&D Expenditure](index=145&type=section&id=%E7%A0%94%E5%8F%91%E6%94%AF%E5%87%BA) The company's R&D expenditure for the period was 4,088,159.98 Yuan, all of which was expensed R&D Expenditure Breakdown | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Personnel Costs | 1,336,739.00 | 1,171,406.00 | | Raw Materials, Fuel, and Others | 2,751,420.98 | 2,650,929.24 | | Total | 4,088,159.98 | 3,822,335.24 | | Of which: Expensed R&D Expenditure | 4,088,159.98 | 3,822,335.24 | Changes in the Scope of Consolidation [Changes in Consolidation Scope for Other Reasons](index=145&type=section&id=1%E3%80%81%E5%85%B6%E4%BB%96%E5%8E%9F%E5%9B%A0%E7%9A%84%E5%90%88%E5%B9%B6%E8%8C%83%E5%9B%B4%E5%8F%98%E5%8A%A8) The company's scope of consolidation did not change during the reporting period - The company's scope of consolidation did not change during the reporting period[547](index=547&type=chunk) Interests in Other Entities [Interests in Subsidiaries](index=145&type=section&id=1%E3%80%81%E5%9C%A8%E5%AD%90%E5%85%AC%E5%8F%B8%E4%B8%AD%E7%9A%84%E6%9D%83%E7%9B%8A) The company has 18 subsidiaries engaged in various businesses, with most being wholly-owned - The company has **18 subsidiaries**, including Suning County Jingnan Fur City Co, Ltd, Beijing Huasi Garment Co, Ltd, and Hebei Huasi Life Shopping Plaza Trading Co, Ltd[549](index=549&type=chunk)[550](index=550&type=chunk) - The subsidiaries' business activities are diverse, covering leather market development, trade services, shopping mall management, auctions, breeding, technology development, and internet sales[549](index=549&type=chunk)[550](index=550&type=chunk) - Most subsidiaries are **100% directly owned**, while some are indirectly held or acquired through business combinations not under common control[549](index=549&type=chunk)[550](index=550&type=chunk) Government Grants [Liability Items Involving Government Grants](index=147&type=section&id=2%E3%80%81%E6%B6%89%E5%8F%8A%E6%94%BF%E5%BA%9C%E8%A1%A5%E5%8A%A9%E7%9A%84%E8%B4%9F%E5%80%BA%E9%A1%B9%E7%9B%AE) The closing balance of deferred income related to government grants was 15,740,707.61 Yuan Liability Items Involving Government Grants | Account | Opening Balance (Yuan) | New Grants (Yuan) | Recognized in Non-operating Income (Yuan) | Transferred to Other Income (Yuan) | Other Changes (Yuan) | Closing Balance (Yuan) | Asset/Income Related | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Deferred Income | 9,630,765.61 | 7,000,000.00 | | 890,058.00 | | 15,740,707.61 | Asset-related | [Government Grants Recognized in Current Profit or Loss](index=147&type=section&id=3%E3%80%81%E8%AE%A1%E5%85%A5%E5%BD%93%E6%9C%9F%E6%8D%9F%E7%9B%8A%E7%9A%84%E6%94%BF%E5%BA%9C%E8%A1%A5%E5%8A%A9) Government grants recognized in other income for the current period amounted to 309,669.17 Yuan Government Grants Recognized in Current Profit or Loss | Account | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Other Income | 309,669.17 | 735,971.21 | Risks Related to Financial Instruments [Risks Arising from Financial Instruments](index=147&type=section&id=1%E3%80%81%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E4%BA%A7%E7%94%9F%E7%9A%84%E5%90%84%E7%B1%BB%E9%A3%8E%E9%99%A9) The company manages credit, liquidity, and market risks through established policies and monitoring procedures - The company's main financial instruments include cash, equity investments, borrowings, receivables, and payables, exposing it to **credit risk, liquidity risk, and market risk** (exchange rate and interest rate risk)[552](index=552&type=chunk) - The company manages credit risk by establishing credit policies, continuously monitoring receivables, and diversifying bank deposits[554](index=554&type=chunk)[555](index=555&type=chunk) Book Balance and Expected Credit Loss of Relevant Assets | Item | Book Balance (Yuan) | Impairment Provision (Yuan) | | :--- | :--- | :--- | | Receivables Financing | 1,687,737.30 | | | Accounts Receivable | 59,339,975.20 | 26,220,040.11 | | Other Receivables | 5,846,803.44 | 3,925,439.22 | | Long-term Receivables (including current portion) | 1,866,885.00 | 1,866,885.00 | | Total | 68,741,400.94 | 32,012,364.33 | Undiscounted Contractual Cash Flows of Financial Liabilities and Off-Balance Sheet Guarantees by Remaining Maturity | Item | Within 1 Year (Yuan) | 1-5 Years (Yuan) | Over 5 Years (Yuan) | Total (Yuan) | | :--- | :--- | :--- | :--- | :--- | | Short-term Borrowings | 57,039,900.00 | | | 57,039,900.00 | | Accounts Payable | 54,259,232.41 | | | 54,259,232.41 | | Other Payables | 65,585,277.94 | | | 65,585,277.94 | | Other Current Liabilities | 1,711,163.30 | | | 1,711,163.30 | | Lease Liabilities (including current portion) | 4,126,430.64 | 9,344,313.85 | | 13,470,744.49 | | Long-term Borrowings | | 83,058,100.00 | | 83,058,100.00 | | Total | 182,722,004.29 | 92,402,413.85 | | 275,124,418.14 | - The company is exposed to exchange rate risk mainly related to USD, HKD, DKK, and EUR, but the risk is not significant due to the low proportion of foreign currency business in its asset, liability, and revenue structure[558](index=558&type=chunk)[559](index=559&type=chunk) - The company's interest rate risk mainly arises from bank borrowings and is managed by continuously monitoring interest rate levels and adjusting the ratio of fixed to floating rate contracts[560](index=560&type=chunk)[561](index=561&type=chunk) Disclosure of Fair Value [Fair Value of Assets and Liabilities Measured at Fair Value at Period End](index=150&type=section&id=1%E3%80%81%E4%BB%A5%E5%85%AC%E5%85%81%E4%BB%B7%E5%80%BC%E8%AE%A1%E9%87%8F%E7%9A%84%E8%B5%84%E4%BA%A7%E5%92%8C%E8%B4%9F%E5%80%BA%E7%9A%84%E6%9C%9F%E6%9C%AB%E5%85%AC%E5%85%81%E4%BB%B7%E5%80%BC) The total fair value of assets measured on a recurring basis was 1,687,737.30 Yuan, all classified as Level 3 Fair Value of Assets and Liabilities Measured at Fair Value at Period End | Item | Level 1 Fair Value (Yuan) | Level 2 Fair Value (Yuan) | Level 3 Fair Value (Yuan) | Total (Yuan) | | :--- | :--- | :--- | :--- | :--- | | I. Recurring Fair Value Measurements | | | | | | (III) Other Equity Instrument Investments | | | 1,687,737.30 | 1,687,737.30 | | Total Assets Measured at Fair Value on a Recurring Basis | | | 1,687,737.30 | 1,687,737.30 | Related Parties and Related Party Transactions [Information on the Company's Subsidiaries](index=151&type=section&id=1%E3%80%81%E6%9C%AC%E4%BC%81%E4%B8%9A%E7%9A%84%E5%AD%90%E5%85%AC%E5%8F%B8%E6%83%85%E5%86%B5) Details of the company's subsidiaries are provided in Note VIII (I) Interests in Subsidiaries - Details of the company's subsidiaries are provided in Note VIII (I) Interests in Subsidiaries[565](index=565&type=chunk) [Information on the Company's Joint Ventures and Associates](index=151&type=section&id=2%E3%80%81%E6%9C%AC%E4%BC%81%E4%B8%9A%E5%90%88%E8%90%A5%E5%92%8C%E8%81%94%E8%90%A5%E4%BC%81%E4%B8%9A%E6%83%85%E5%86%B5) Details of the company's significant joint ventures or associates are provided in Note VIII (II) Interests in Joint Arrangements or Associates - Details of the company's significant joint ventures or associates are provided in Note VIII (II) Interests in Joint Arrangements or Associates[566](index=566&type=chunk) [Other Related Parties](index=151&type=section&id=3%E3%80%81%E5%85%B6%E4%BB%96%E5%85%B3%E8%81%94%E6%96%B9%E6%83%85%E5%86%B5) The company's actual controller, He Guoying, is an other related party with a 31.99% shareholding Information on the Company's Parent Company | Related Party Name | Relationship | Shareholding Amount (10,000 Yuan) | Shareholding Ratio | Ultimate Controlling Party | | :--- | :--- | :--- | :--- | :--- | | He Guoying | Actual Controller | 12,072.0374 | 31.99% | Yes | [Related Party Transactions](index=151&type=section&id=4%E3%80%81%E5%85%B3%E8%81%94%E4%BA%A4%E6%98%93%E6%83%85%E5%86%B5) Remuneration for key management personnel totaled 866,700.00 Yuan during the reporting period Key Management Personnel Remuneration | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Key Management Personnel Compensation | 866,700.00 | 880,300.00 | Commitments and Contingencies [Significant Commitments](index=151&type=section&id=1%E3%80%81%E9%87%8D%E8%A6%81%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9) The company has no significant commitments to disclose - The company has no significant commitments to disclose[569](index=569&type=chunk) [Contingencies](index=152&type=section&id=2%E3%80%81%E6%88%96%E6%9C%89%E4%BA%8B%E9%A1%B9) The company is involved in a pending lawsuit regarding a dispute over processing fees and has provisioned for potential liabilities - The company is involved in a pending lawsuit with Hebei Xitang Garment Co, Ltd, concerning a dispute over garment processing fees[570](index=570&type=chunk) - The first-instance judgment ordered Huasi Shares to pay the plaintiff **11,566,881.56 Yuan** plus interest; the company has appealed, and the case is pending a final verdict[571](index=571&type=chunk) - As of the period end, the company has prudently provisioned **5,690,877.49 Yuan** as an estimated liability for the pending litigation in accordance with accounting standards[571](index=571&type=chunk) - The company has no other significant contingencies to disclose[572](index=572&type=chunk) Post-Balance Sheet Events [Explanation of Other Post-Balance Sheet Events](index=152&type=section&id=1%E3%80%81%E5%85%B6%E4%BB%96%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8%E6%97%A5%E5%90%8E%E4%BA%8B%E9%A1%B9%E8%AF%B4%E6%98%8E) The company has no significant post-balance sheet events to disclose - As of the approval date of the financial report, the company has no significant undisclosed post-balance sheet events[573](index=573&type=chunk) Other Important Matters [Other](index=152&type=section&id=1%E3%80%81%E5%85%B6%E4%BB%96) The company has no other important matters to disclose - As of the approval date of the financial report, the company has no other important undisclosed matters to explain[574](index=574&type=chunk) Notes to the Parent Company's Financial Statements [Accounts Receivable](index=153&type=section&id=1%E3%80%81%E5%BA%94%E6%94%B6%E8%B4%A6%E6%AC%BE) The parent company's accounts receivable had a book value of 97,293,496.05 Yuan at the period end Parent Company Accounts Receivable by Bad Debt Provision Method | Category | Closing Book Balance (Yuan) | Closing Bad Debt Provision (Yuan) | Closing Book Value (Yuan) | | :--- | :--- | :--- | :--- | | Individually Assessed for Bad Debt | 20,937,908.44 | 20,937,908.44 | | | Collectively Assessed for Bad Debt | 100,687,291.46 | 3,393,795.41 | 97,293,496.05 | | Total | 121,625,199.90 | 24,331,703.85 | 97,293,496.05 | - The amount of accounts receivable actually written off during the reporting period was **73,554.93 Yuan**[586](index=586&type=chunk)[587](index=587&type=chunk) [Other Receivables](index=155&type=section&id=2%E3%80%81%E5%85%B6%E4%BB%96%E5%BA%94%E6%94%B6%E6%AC%BE) The parent company's other receivables are primarily composed of funds due from related parties Parent Company Other Receivables by Nature | Nature of Funds | Closing Book Balance (Yuan) | Opening Book Balance (Yuan) | | :--- | :--- | :--- | | Related Party Funds | 302,740,405.19 | 306,139,481.44 | | Deposits and Guarantees | 253,800.00 | 309,600.00 | | Third-party Transactions and Others | 3,014,041.38 | 2,478,416.62 | | Less: Bad Debt Provision | -2,140,994.53 | -2,154,502.98 | | Total | 303,867,252.04 | 306,772,995.08 | Parent Company Other Receivables by Aging | Aging | Closing Book Balance (Yuan) | | :--- | :--- | | Within 1 year (inclusive) | 6,437,678.56 | | 1 to 2 years | 143,599,960.00 | | 2 to 3 years | 141,529,991.39 | | Over 3 years | 14,440,616.62 | | Total | 306,008,246.57 | Top Five Debtors of Parent Company Other Receivables | Debtor Name | Nature of Funds | Closing Balance (Yuan) | % of Total Other Receivables | Closing Bad Debt Provision (Yuan) | | :--- | :--- | :--- | :--- | :--- | | First | Intra-group related party | 199,000,090.24 | 65.03% | | | Second | Intra-group related party | 56,867,642.15 | 18.58% | | | Third | Intra-group related party | 46,869,019.00 | 15.32% | | | Fourth | Court-frozen funds | 2,448,416.62 | 0.80% | 1,958,733.30 | | Fifth | Petty cash | 300,000.00 | 0.10% | | | Total | | 305,485,168.01 | 99.83% | 1,958,733.30 | [Long-term Equity Investments](index=158&type=section&id=3%E3%80%81%E9%95%BF%E6%9C%9F%E8%82%A1%E6%9D%83%E6%8A%95%E8%B5%84) The parent company's long-term equity investments consist entirely of investments in subsidiaries and remained unchanged Parent Company Long-term Equity Investments | Item | Closing Book Balance (Yuan) | Closing Impairment Provision (Yuan) | Closing Book Value (Yuan) | | :--- | :--- | :--- | :--- | | Investments in Subsidiaries | 426,668,313.50 | | 426,668,313.50 | | Total | 426,668,313.50 | | 426,668,313.50 | - The closing balance of the parent company's investments in subsidiaries was **426,668,313.50 Yuan**, with no change during the reporting period[609](index=609&type=chunk)[610](index=610&type=chunk) [Operating Revenue and Costs](index=159&type=section&id=4%E3%80%81%E8%90%A5%E4%B8%9A%E6%94%B6%E5%85%A5%E5%92%8C%E8%90%A5%E4%B8%9A%E6%88%90%E6%9C%AC) The parent company's operating revenue was 111,616,627.97 Yuan, primarily driven by fur clothing and pelt sales Parent Company Operating Revenue and Costs | Item | Current Period Revenue (Yuan) | Current Period Costs (Yuan) | Prior Period Revenue (Yuan) | Prior Period Costs (Yuan) | | :--- | :--- | :--- | :--- | :--- | | Main Business | 96,583,515.21 | 71,429,368.43 | 66,166,251.85 | 51,340,596.15 | | Other Business | 15,033,112.76 | 13,361,628.70 | 121,354,767.14 | 87,523,947.09 | | Total | 111,616,627.97 | 84,790,997.13 | 187,521,018.99 | 138,864,543.24 | Parent Company Operating Revenue Breakdown (by Business Type) | Business Type | Operating Revenue (Yuan) | | :--- | :--- | | Fur Pelts | 29,761,680.60 | | Fur Fabrics | 85,725.83 | | Fur Accessories | 1,036,871.92 | | Fur Clothing | 49,601,616.06 | | Fashion Apparel | 569,026.60 | | Commercial Complex Business (excluding leasing) | 6,564,940.70 | | Processing Income | 2,345,895.76 | | Other Income | 1,002,346.56 | Parent Company Operating Revenue Breakdown (by Region) | Region | Operating Revenue (Yuan) | | :--- | :--- | | Domestic | 79,481,813.02 | | International | 11,486,291.01 | [Investment Income](index=160&type=section&id=5%E3%80%81%E6%8A%95%E8%B5%84%E6%94%B6%E7%9B%8A) The parent company had no investment income in the current period, compared to 16,680,000.00 Yuan in the prior period Parent Company Investment Income | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Long-term Equity Investment Income under Cost Method | | 16,680,000.00 | | Total | | 16,680,000.00 | Supplementary Information [Details of Current Non-recurring Profit and Loss](index=161&type=section&id=1%E3%80%81%E5%BD%93%E6%9C%9F%E9%9D%9E%E7%BB%8F%E5%B8%B8%E6%80%A7%E6%8D%9F%E7%9B%8A%E6%98%8E%E7%BB%86%E8%A1%A8) Non-recurring profit and loss for the period totaled 883,121.08 Yuan, mainly from asset disposals and government grants Details of Current Non-recurring Profit and Loss | Item | Amount (Yuan) | | :--- | :--- | | Gain/Loss on Disposal of Non-current Assets | 9,761.16 | | Government Grants Included in Current Profit or Loss | 1,199,727.17 | | Other Non-operating In

Part I Important Notice, Table of Contents, and Definitions [Important Notice](index=2&type=section&id=Important%20Notice) The board, supervisory board, and senior management guarantee the annual report's truthfulness and completeness, with the company planning no cash dividends or bonus shares - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the annual report content[4](index=4&type=chunk) - Company head Guo Shaozeng, chief accountant Gao Hong, and accounting department head Gao Hong declare the financial report is true, accurate, and complete[4](index=4&type=chunk) - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital[6](index=6&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section outlines the annual report's ten main chapters, covering company operations, finance, governance, and social responsibility, along with reference documents - The report's table of contents includes ten main chapters, covering various aspects of the company's operations, finance, governance, and social responsibility[8](index=8&type=chunk) - Reference documents include signed and sealed financial statements, original audit reports, and publicly disclosed documents[10](index=10&type=chunk) [Definitions](index=5&type=section&id=Definitions) This section defines key terms used in the report, including regulatory bodies, company entities, financial units, and the reporting period, for clarity - Definitions cover regulatory bodies, exchanges, the company and its main subsidiaries, controlling shareholders, and key transaction parties[12](index=12&type=chunk) - The reporting period is defined as January 1, 2021, to December 31, 2021[12](index=12&type=chunk) Part II Company Profile and Key Financial Indicators [I. Company Information](index=6&type=section&id=I.%20Company%20Information) Kingland Technology Co., Ltd. (stock code 000711) is legally represented by Guo Shaozeng, with its registered office in Harbin and main office in Beijing Company Basic Information | Indicator | Content | | :--- | :--- | | Stock Abbreviation | Kingland Technology | | Stock Code | 000711 | | Listing Exchange | Shenzhen Stock Exchange | | Chinese Name | 京蓝科技股份有限公司 | | Legal Representative | Guo Shaozeng | | Registered Address | Nangang Economic and Technological Development Zone, Harbin, Heilongjiang Province | | Office Address | 4th Floor, Building B, Hongyuan Headquarters Plaza, Fengtai District, Beijing | | Company Website | http://www.kinglandgroup.com | | Email | securities@kinglandgroup.com | [II. Contact Person and Contact Information](index=6&type=section&id=II.%20Contact%20Person%20and%20Contact%20Information) Guo Shaozeng serves as the company's board secretary, sharing the same contact details as the company's main office Board Secretary Contact Information | Name | Guo Shaozeng | | :--- | :--- | | Contact Address | 4th Floor, Building B, Hongyuan Headquarters Plaza, Fengtai District, Beijing | | Phone | 010-64700268 | | Fax | 010-64700268 | | Email | securities@kinglandgroup.com | [III. Information Disclosure and Document Availability](index=6&type=section&id=III.%20Information%20Disclosure%20and%20Document%20Availability) The annual report is disclosed on Juchao Information Network and major securities newspapers, with physical copies available at the Board Secretary's Office - The company's annual report disclosure website is Juchao Information Network (http://www.cninfo.com.cn)[16](index=16&type=chunk) - Disclosure media include China Securities Journal, Securities Times, and Shanghai Securities News[16](index=16&type=chunk) - The company's annual report is available at the Board Secretary's Office[16](index=16&type=chunk) [IV. Registration Change Status](index=7&type=section&id=IV.%20Registration%20Change%20Status) The company's main business has diversified from high-tech to ecological environmental protection and soil remediation, with its controlling shareholder, Beijing Yangshu Lantian Investment Center, holding 16.68% of shares - The company's main business has undergone multiple transformations, from high-tech, tourism, real estate, and information technology, finally shifting to ecological environmental protection in 2016-2017, and expanding to soil remediation in 2018[17](index=17&type=chunk) - The controlling shareholder has changed multiple times; as of the end of the reporting period, Beijing Yangshu Lantian Investment Center (Limited Partnership) holds **16.68%** of the company's shares[17](index=17&type=chunk) [V. Other Relevant Information](index=7&type=section&id=V.%20Other%20Relevant%20Information) Zhongxingcai Guanghua Certified Public Accountants audited the company, with Huatai United Securities Co., Ltd. serving as financial advisor until December 31, 2021 Accounting Firm Information | Indicator | Content | | :--- | :--- | | Name | Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership) | | Office Address | 24th Floor, Block A, Wantong Building, No. 2 Fuchengmenwai Street, Xicheng District, Beijing | | Signing Accountants | Li Xiaofei, Gao Tao | - The company appointed Huatai United Securities Co., Ltd. as its financial advisor, with the continuous supervision period ending on December 31, 2021[18](index=18&type=chunk) [VI. Key Accounting Data and Financial Indicators](index=8&type=section&id=VI.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) In 2021, the company reported 901 million yuan in revenue, a **9.49% decrease**, and a net loss of **1.483 billion yuan**, a **38.18% reduction** in loss, with total assets and net assets declining 2021 Key Accounting Data and Financial Indicators | Indicator | 2021 | 2020 (Adjusted) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 900,915,302.39 | 995,410,211.62 | -9.49% | | Net Profit Attributable to Listed Company Shareholders (Yuan) | -1,483,433,591.44 | -2,399,698,095.52 | 38.18% | | Net Profit Attributable to Listed Company Shareholders Excluding Non-Recurring Gains and Losses (Yuan) | -1,500,866,940.58 | -2,440,142,895.01 | 38.49% | | Net Cash Flow from Operating Activities (Yuan) | 57,336,149.76 | 60,169,476.13 | -4.71% | | Basic Earnings Per Share (Yuan/Share) | -1.45 | -2.34 | 38.03% | | Diluted Earnings Per Share (Yuan/Share) | -1.45 | -2.34 | 38.03% | | Weighted Average Return on Net Assets | -102.25% | -69.79% | -45.85% | | Total Assets (Yuan) | 8,736,630,706.68 | 9,671,022,194.26 | -9.66% | | Net Assets Attributable to Listed Company Shareholders (Yuan) | 671,442,154.41 | 2,229,544,945.43 | -69.88% | - In 2020, Zhongke Dingzhi inflated operating revenue by **163 million yuan** and total profit by **66.3637 million yuan**, leading to retrospective adjustments for 2020 and 2021 related accounts[19](index=19&type=chunk) [VII. Differences in Accounting Data Under Domestic and International Accounting Standards](index=8&type=section&id=VII.%20Differences%20in%20Accounting%20Data%20Under%20Domestic%20and%20International%20Accounting%20Standards) The company reported no differences in net profit or net assets between domestic and international accounting standards during the period - The company's financial reports for the reporting period show no differences in net profit and net assets when disclosed under International Accounting Standards versus Chinese Accounting Standards[21](index=21&type=chunk) - The company's financial reports for the reporting period show no differences in net profit and net assets when disclosed under overseas accounting standards versus Chinese Accounting Standards[22](index=22&type=chunk) [VIII. Key Quarterly Financial Indicators](index=9&type=section&id=VIII.%20Key%20Quarterly%20Financial%20Indicators) The company's Q4 2021 operating revenue was 296 million yuan, with a significant net loss of **1.14 billion yuan** attributable to shareholders 2021 Key Quarterly Financial Indicators (Unit: Yuan) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 123,776,572.64 | 308,991,006.78 | 172,621,917.30 | 295,525,805.67 | | Net Profit Attributable to Listed Company Shareholders | -89,977,974.67 | -129,955,623.36 | -123,619,631.80 | -1,139,880,361.61 | | Net Profit Attributable to Listed Company Shareholders Excluding Non-Recurring Gains and Losses | -92,192,480.65 | -133,323,575.79 | -100,528,419.47 | -1,174,822,464.67 | | Net Cash Flow from Operating Activities | -30,124,848.00 | 45,560,641.93 | 42,843,299.49 | -942,943.66 | - In the fourth quarter, net profit attributable to listed company shareholders and net profit after deducting non-recurring gains and losses both showed significant losses, at **-1.14 billion yuan** and **-1.175 billion yuan**, respectively[24](index=24&type=chunk) [IX. Non-Recurring Gains and Losses Items and Amounts](index=9&type=section&id=IX.%20Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) Total non-recurring gains and losses in 2021 were **17.4333 million yuan**, mainly from asset disposal, government subsidies, and fair value changes 2021 Non-Recurring Gains and Losses Items and Amounts (Unit: Yuan) | Item | 2021 Amount | | :--- | :--- | | Disposal Gains and Losses on Non-Current Assets | 985,974.70 | | Government Subsidies Included in Current Profit and Loss | 3,789,662.23 | | Capital Occupation Fees Received from Non-Financial Enterprises Included in Current Profit and Loss | 14,209,351.44 | | Debt Restructuring Gains and Losses | 2,539,422.52 | | Reversal of Impairment Provisions for Receivables Subject to Individual Impairment Testing | 402,453.51 | | Fair Value Change Gains and Losses | 26,641,195.32 | | Other Non-Operating Income and Expenses Apart from the Above | -30,783,028.08 | | Less: Income Tax Impact | 31,162.13 | | Impact on Minority Interests (After Tax) | 320,520.37 | | Total | 17,433,349.14 | - Total non-recurring gains and losses in 2021 amounted to **17.4333 million yuan**, with fair value change gains and losses at **26.6412 million yuan**[25](index=25&type=chunk)[26](index=26&type=chunk) Part III Management Discussion and Analysis [I. Industry Overview During the Reporting Period](index=11&type=section&id=I.%20Industry%20Overview%20During%20the%20Reporting%20Period) The company operates in soil remediation, ecological water conservancy, and landscape environment sectors, all benefiting from policy support and market growth, despite facing various industry barriers [I. Soil Remediation Industry Analysis](index=11&type=section&id=I.%20Soil%20Remediation%20Industry%20Analysis) The soil remediation industry, driven by environmental policies, offers significant market potential but is characterized by high technical, qualification, funding, and management barriers - The soil remediation industry reduces soil pollutant concentrations to acceptable levels using physical, chemical, or biological methods[28](index=28&type=chunk) - The 'Soil Pollution Prevention and Control Law of the People's Republic of China,' effective January 1, 2019, clarifies responsibilities and promotes industry development[29](index=29&type=chunk) - Industry barriers include high technical thresholds, stringent multi-domain qualification requirements, large project capital investment with long payback periods, and a shortage of professional management talent[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [II. Ecological Water Conservancy Industry Analysis](index=12&type=section&id=II.%20Ecological%20Water%20Conservancy%20Industry%20Analysis) The ecological water conservancy industry, a growing interdisciplinary field, benefits from increasing national investment and social capital, with water-saving irrigation poised for a trillion-yuan market during the '14th Five-Year Plan' - The ecological water conservancy industry is an interdisciplinary field combining water conservancy engineering and ecological protection, studying water cycles, ecological carrying capacity, engineering ecological effects, and system management[37](index=37&type=chunk)[38](index=38&type=chunk) - The state highly values water conservancy construction, continuously expanding investment and introducing social capital for quasi-public and commercial water conservancy projects[40](index=40&type=chunk)[41](index=41&type=chunk)[44](index=44&type=chunk) - China's agricultural water use efficiency is low, creating vast market space for water-saving irrigation, with the ecological water conservancy industry market size projected to reach **trillions of yuan** during the '14th Five-Year Plan' period[45](index=45&type=chunk)[46](index=46&type=chunk) [III. Landscape Environment Industry Analysis](index=13&type=section&id=III.%20Landscape%20Environment%20Industry%20Analysis) The landscape environment industry, encompassing design, construction, and maintenance, is moving towards integrated, cross-regional, and resource-efficient ecological landscaping to enhance environmental quality - The landscape environment industry integrates design, planning, construction, and management art to create beneficial environments, primarily including landscape design, engineering construction, and greening maintenance[47](index=47&type=chunk) - Industry trends include integrated operations and cross-regional competition, with leading enterprises gaining larger market shares and increasing industry concentration[49](index=49&type=chunk) - Resource-efficient ecological landscaping is a future development direction, emphasizing ecological principles and the concepts of 'water saving, energy saving, and consumption reduction' to improve the ecological environment[50](index=50&type=chunk) - Soil remediation industry benefits from 'Soil Pollution Prevention and Control Law' policies, clarifying responsibilities, but faces technical, qualification, funding, and management barriers[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - Ecological water conservancy industry sees expanding investment and social capital participation due to national emphasis, with urgent water-saving irrigation demand and a projected trillion-yuan market during the '14th Five-Year Plan'[40](index=40&type=chunk)[41](index=41&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Landscape environment industry is evolving towards integrated operations, cross-regional competition, and resource-efficient ecological landscaping, leading to increased industry concentration[49](index=49&type=chunk)[50](index=50&type=chunk) [II. Company's Main Businesses During the Reporting Period](index=14&type=section&id=II.%20Company's%20Main%20Businesses%20During%20the%20Reporting%20Period) The company focuses on comprehensive soil environmental governance, ecological water conservancy, ecological environment, and smart ecology, primarily operating through general contracting and EPC project models - The company's business segments include comprehensive soil environmental governance, ecological water conservancy, ecological environment, and smart ecology, forming a positive synergy[51](index=51&type=chunk) - Comprehensive soil environmental governance is undertaken by Zhongke Dingzhi, providing full-process system services such as contaminated soil and groundwater remediation[51](index=51&type=chunk) - Ecological water conservancy business is undertaken by Kingland Muhe, offering integrated solutions for watershed ecological restoration, irrigation district water-saving systems, and wastewater treatment[52](index=52&type=chunk) - Ecological environment business is undertaken by Northern Landscape and others, providing services such as landscape engineering construction, landscape design, greening maintenance, and seedling cultivation and sales[53](index=53&type=chunk) - The company's primary operating models are general contracting and EPC projects, generating profits through progress payments and final settlements[53](index=53&type=chunk) [III. Core Competitiveness Analysis](index=15&type=section&id=III.%20Core%20Competitiveness%20Analysis) The company's core competitiveness stems from its mission, values, and strategy to be a leading ecological environment service provider, supported by over 300 patents, high-value qualifications, strategic alignment, and an experienced management team - The company's mission is 'Green Mountains, Clear Waters, Blue Skies, and a Century-Long Chinese Dream,' with 'Benevolence Like Water, Perseverance, and Virtue' as its core values[54](index=54&type=chunk) - The company's development strategy is to become a leading international 'ecological environment planning, investment, construction, and operation service provider'[54](index=54&type=chunk) - The company possesses core technologies in soil remediation, water treatment, and agricultural waste recycling, with over **300 national patents** and high-value qualifications such as Environmental Engineering Professional Contracting Grade A and Landscape Architecture Engineering Design Grade A[54](index=54&type=chunk) - The company's main businesses are in national strategic investment areas, with vast market potential in soil remediation and smart water conservancy, where the company holds leading advantages and competitive barriers[55](index=55&type=chunk) - The company's management and core team have over **10 years of experience** in ecological and information technology fields, possessing strong industry resource integration capabilities[55](index=55&type=chunk) [IV. Main Business Analysis](index=16&type=section&id=IV.%20Main%20Business%20Analysis) The company's diversified strategy focuses on four ecological business segments; 2021 revenue was 901 million yuan, down **9.49%**, with soil remediation growing **14.90%**, while expenses decreased and R&D increased [1. Overview](index=16&type=section&id=1.%20Overview) The company pursues a diversified strategy, combining organic growth and external expansion across four ecological business segments, with subsidiaries specializing in soil remediation, ecological water conservancy, and environmental services - The company combines organic growth with external expansion, focusing on four major business segments: industrial ecology, ecological water conservancy, ecological environment, and smart ecology[57](index=57&type=chunk) - Zhongke Dingzhi primarily engages in soil and groundwater remediation, offering 'water-soil co-governance' one-stop environmental remediation solutions, and actively participates in national/provincial-level scientific research projects[57](index=57&type=chunk)[58](index=58&type=chunk) - Kingland Muhe, positioned as an agricultural steward and ecological expert, provides integrated water ecosystem solutions for projects such as efficient water saving and water source construction[58](index=58&type=chunk) - The ecological environment segment, undertaken by Northern Landscape and Kingland Environmental Technology, provides services such as landscape engineering construction and design, and increases investment in core soil remediation technology development[59](index=59&type=chunk) [2. Revenue and Costs](index=17&type=section&id=2.%20Revenue%20and%20Costs) In 2021, total operating revenue was 901 million yuan, down **9.49%**, with soil remediation revenue up **14.90%** to 791 million yuan, while total operating costs decreased by **35.06%** 2021 Operating Revenue Composition (Unit: Yuan) | By Industry | 2021 Amount | Proportion of Operating Revenue | 2020 Amount | Proportion of Operating Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | 900,915,302.39 | 100% | 995,410,211.62 | 100% | -9.49% | | Ecological Water-Saving Operation Services | 88,541,888.21 | 9.83% | 225,519,519.92 | 22.66% | -60.74% | | Soil Remediation Operation Services | 791,257,202.15 | 87.83% | 688,652,906.71 | 69.18% | 14.90% | 2021 Operating Cost Composition (Unit: Yuan) | Industry Category | 2021 Amount | Proportion of Operating Cost | 2020 Amount | Proportion of Operating Cost | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Ecological Water-Saving Operation Services | 135,452,726.34 | 19.48% | 421,206,683.23 | 39.33% | -67.84% | | Soil Remediation Operation Services | 542,801,138.58 | 78.05% | 452,829,189.52 | 42.29% | 19.87% | - Operating revenue in East China increased by **67.32%** year-on-year, South China by **151.65%**, and Southwest China by **237.57%**[61](index=61&type=chunk) - During the reporting period, the company deregistered Zhongke Dingzhi (Yichun) Environmental Sanitation Services Co., Ltd., reducing the scope of consolidation by one entity[67](index=67&type=chunk) [3. Expenses](index=20&type=section&id=3.%20Expenses) In 2021, selling and administrative expenses decreased by **52.06%** and **44.89%** respectively due to efficiency, while R&D expenses increased by **39.74%** 2021 Major Expense Changes (Unit: Yuan) | Item | 2021 | 2020 | Year-on-Year Change | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 44,718,420.30 | 93,275,196.77 | -52.06% | Due to company's staff reduction and efficiency improvement, and cost cutting | | Administrative Expenses | 171,502,359.42 | 311,186,989.24 | -44.89% | Due to company's staff reduction and efficiency improvement, and cost cutting | | Financial Expenses | 654,528,411.97 | 638,639,261.89 | 2.49% | | | R&D Expenses | 38,967,224.02 | 27,886,486.05 | 39.74% | Due to increased R&D investment by the company | [4. R&D Investment](index=21&type=section&id=4.%20R%26D%20Investment) R&D investment in 2021 reached **38.9672 million yuan**, a **39.74% increase**, focusing on soil remediation and water-saving irrigation technologies, despite a decrease in R&D personnel 2021 R&D Investment Status | Indicator | 2021 | 2020 | Change Ratio | | :--- | :--- | :--- | :--- | | R&D Investment Amount (Yuan) | 38,967,224.02 | 27,886,486.05 | 39.74% | | R&D Investment as % of Operating Revenue | 4.33% | 2.80% | 1.53% | | Number of R&D Personnel (Persons) | 73 | 120 | -39.17% | - The company undertakes multiple national-level scientific research projects in soil remediation, such as coking site pollution control, pesticide industry site odor removal, complex organic pollution site remediation, and heavy metal pollution control in old industrial bases in Northeast China[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - In water-saving irrigation, the company develops solar-powered automatic control gates, nano-modified PE pipes, and drip irrigation tape application formulas to enhance product performance and market competitiveness[75](index=75&type=chunk)[76](index=76&type=chunk) [5. Cash Flow](index=26&type=section&id=5.%20Cash%20Flow) In 2021, net cash flow from operating activities was **57.3361 million yuan**, down **4.71%**, while investing activities turned positive, and financing activities significantly decreased due to loan repayments 2021 Cash Flow Status (Unit: Yuan) | Item | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Subtotal Cash Inflow from Operating Activities | 1,040,045,451.03 | 1,567,203,809.99 | -33.64% | | Subtotal Cash Outflow from Operating Activities | 982,709,301.27 | 1,507,034,333.86 | -34.79% | | Net Cash Flow from Operating Activities | 57,336,149.76 | 60,169,476.13 | -4.71% | | Subtotal Cash Inflow from Investing Activities | 40,325,008.46 | 37,246,064.01 | 8.27% | | Subtotal Cash Outflow from Investing Activities | 25,279,772.27 | 171,942,435.63 | -85.30% | | Net Cash Flow from Investing Activities | 15,045,236.19 | -134,696,371.62 | 111.17% | | Subtotal Cash Inflow from Financing Activities | 1,038,385,972.18 | 1,944,661,089.67 | -46.60% | | Subtotal Cash Outflow from Financing Activities | 1,245,022,604.40 | 1,848,043,526.36 | -32.63% | | Net Cash Flow from Financing Activities | -206,636,632.22 | 96,617,563.31 | -313.87% | | Net Increase in Cash and Cash Equivalents | -134,255,246.27 | 22,090,667.82 | -707.75% | - The decrease in net cash flow from operating activities was mainly due to a significant decline in operating revenue, but the company intensified collection efforts[78](index=78&type=chunk) - The positive shift in net cash flow from investing activities was primarily due to reduced purchases of fixed assets, intangible assets, other long-term assets, and investments[79](index=79&type=chunk) - The significant decrease in net cash flow from financing activities was mainly due to the repayment of some matured loans during the period[79](index=79&type=chunk) - The company's core business focuses on industrial ecology, ecological water conservancy, ecological environment, and smart ecology, providing full project cycle integrated solutions[57](index=57&type=chunk) 2021 Operating Revenue Composition (Unit: Yuan) | By Industry | 2021 Amount | Proportion of Operating Revenue | 2020 Amount | Proportion of Operating Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | 900,915,302.39 | 100% | 995,410,211.62 | 100% | -9.49% | | Ecological Water-Saving Operation Services | 88,541,888.21 | 9.83% | 225,519,519.92 | 22.66% | -60.74% | | Landscape Environmental Technology Services | 7,486,261.81 | 0.83% | 60,328,661.70 | 6.06% | -87.59% | | Soil Remediation Operation Services | 791,257,202.15 | 87.83% | 688,652,906.71 | 69.18% | 14.90% | | Other Industries | 13,629,950.22 | 1.51% | 20,909,123.29 | 2.10% | -34.81% | 2021 Major Expenses (Unit: Yuan) | Item | 2021 | 2020 | Year-on-Year Change | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 44,718,420.30 | 93,275,196.77 | -52.06% | Due to company's staff reduction and efficiency improvement, and cost cutting | | Administrative Expenses | 171,502,359.42 | 311,186,989.24 | -44.89% | Due to company's staff reduction and efficiency improvement, and cost cutting | | R&D Expenses | 38,967,224.02 | 27,886,486.05 | 39.74% | Due to increased R&D investment by the company | 2021 Cash Flow Status (Unit: Yuan) | Item | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 57,336,149.76 | 60,169,476.13 | -4.71% | | Net Cash Flow from Investing Activities | 15,045,236.19 | -134,696,371.62 | 111.17% | | Net Cash Flow from Financing Activities | -206,636,632.22 | 96,617,563.31 | -313.87% | [V. Non-Core Business Analysis](index=27&type=section&id=V.%20Non-Core%20Business%20Analysis) Non-core businesses significantly impacted 2021 profit, with **921 million yuan** in asset impairment losses, representing **56.55%** of total profit, and **26.6412 million yuan** from fair value changes, both unsustainable 2021 Impact of Non-Core Business on Total Profit (Unit: Yuan) | Item | Amount | Proportion of Total Profit | Explanation of Cause | Sustainability | | :--- | :--- | :--- | :--- | :--- | | Investment Income | -1,162,294.80 | 0.07% | Investment in associates | Yes | | Fair Value Change Gains and Losses | 26,641,195.32 | -1.64% | Performance guarantee share settlement | No | | Asset Impairment | -921,022,485.07 | 56.55% | Impairment of goodwill, inventories, and accounts receivable | No | | Non-Operating Income | 839,215.89 | -0.05% | | No | | Non-Operating Expenses | 31,019,382.66 | -1.90% | | No | - Asset impairment losses amounted to **921 million yuan**, accounting for **56.55%** of total profit, primarily due to impairment of goodwill, inventories, and accounts receivable, which is not sustainable[81](index=81&type=chunk) - Fair value change gains and losses amounted to **26.6412 million yuan**, resulting from performance guarantee share settlement, which is not sustainable[81](index=81&type=chunk) [VI. Analysis of Assets and Liabilities](index=27&type=section&id=VI.%20Analysis%20of%20Assets%20and%20Liabilities) At year-end 2021, total assets were **8.737 billion yuan**, down **9.66%**, with notable changes in cash, fixed assets, and debt, and **1.32 billion yuan** in fair value financial assets, while some assets are restricted 2021 Year-End Significant Changes in Asset Composition (Unit: Yuan) | Item | 2021 Year-End Amount | Proportion of Total Assets | 2021 Beginning-of-Year Amount | Proportion of Total Assets | Proportion Change | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 98,575,149.66 | 1.13% | 321,412,946.15 | 3.31% | -2.18% | Due to the combined impact of cash flows from operating, investing, and financing activities | | Contract Assets | 2,763,992,124.37 | 31.64% | 2,940,657,649.19 | 30.25% | 1.39% | Mainly due to impairment of contract assets | | Fixed Assets | 349,982,970.32 | 4.01% | 414,091,713.16 | 4.26% | -0.25% | Mainly due to the combined impact of fixed asset purchases and depreciation | | Short-Term Borrowings | 1,598,093,696.74 | 18.29% | 1,649,970,966.15 | 16.97% | 1.32% | Mainly due to changes in financing structure | | Contract Liabilities | 660,637,343.91 | 7.56% | 613,379,042.15 | 6.31% | 1.25% | Mainly due to an increase in advance payments for project progress | | Bonds Payable | 136,050,000.00 | 1.56% | 260,772,000.00 | 2.68% | -1.12% | Repayment of matured bonds | 2021 Year-End Assets and Liabilities Measured at Fair Value (Unit: Yuan) | Item | Beginning Balance | Fair Value Change Gains and Losses for the Period | Accumulated Fair Value Changes Recognized in Equity | Ending Balance | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | | 26,641,195.32 | | 26,641,195.32 | | Other Equity Instrument Investments | 1,367,480,064.70 | | -74,101,043.89 | 1,293,379,020.81 | | Subtotal Financial Assets | 1,367,480,064.70 | 26,641,195.32 | -74,101,043.89 | 1,320,020,216.13 | - The company's assets are subject to restrictions such as mortgages, pledges, and freezes; details are provided in the financial report notes[87](index=87&type=chunk) [VII. Investment Analysis](index=29&type=section&id=VII.%20Investment%20Analysis) The company's 2021 investment was **390,000 yuan**, a **99.69% decrease**, with no major new investments, and some previously funded projects failing to meet expectations or being closed 2021 Investment Amount Changes | Indicator | Investment Amount for the Reporting Period (Yuan) | Investment Amount for the Same Period Last Year (Yuan) | Change Rate | | :--- | :--- | :--- | :--- | | Investment Amount | 390,000.00 | 127,424,300.00 | -99.69% | - The company's raised funds were primarily used for transaction consideration, intermediary fees, smart ecological cloud platform, smart sprinkler production, efficient water-saving new material R&D, smart efficient agricultural water-saving projects, and supplementing Muhe's working capital[93](index=93&type=chunk) - The project for annual production of **600 large smart sprinklers** and the smart efficient agricultural water-saving project did not achieve planned progress or expected returns[93](index=93&type=chunk) - The efficient water-saving new material R&D and pilot production project was closed due to market demand and actual investment indicating difficulty in achieving expected benefits[94](index=94&type=chunk) - The company previously used idle raised funds to temporarily supplement working capital, which has since been fully repaid or permanently converted to working capital[94](index=94&type=chunk)[95](index=95&type=chunk) [VIII. Significant Asset and Equity Sales](index=32&type=section&id=VIII.%20Significant%20Asset%20and%20Equity%20Sales) The company did not engage in any significant asset or equity sales during the reporting period - The company did not sell any significant assets during the reporting period[98](index=98&type=chunk) - The company did not sell any significant equity during the reporting period[99](index=99&type=chunk) [IX. Analysis of Major Holding and Participating Companies](index=33&type=section&id=IX.%20Analysis%20of%20Major%20Holding%20and%20Participating%20Companies) Major subsidiaries Kingland Muhe and Northern Landscape reported net losses of **668 million yuan** and **229 million yuan** respectively in 2021, while the deregistration of Zhongke Dingzhi (Yichun) had minimal impact Financial Status of Major Holding Subsidiaries (Unit: Yuan) | Company Name | Company Type | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Kingland Muhe Water-Saving Equipment Co., Ltd. | Subsidiary | 1.04 billion | 4,741,488,425.91 | 1,205,257,530.63 | 101,857,502.55 | -668,307,044.59 | -667,923,142.91 | | Kingland Northern Landscape (Tianjin) Co., Ltd. | Subsidiary | 109 million | 1,951,077,172.20 | -609,730,443.67 | 7,486,261.81 | -220,258,579.49 | -228,586,246.03 | - During the reporting period, the company deregistered Zhongke Dingzhi (Yichun) Environmental Sanitation Services Co., Ltd., which did not significantly impact production, operations, or performance[102](index=102&type=chunk) [X. Information on Structured Entities Controlled by the Company](index=35&type=section&id=X.%20Information%20on%20Structured%20Entities%20Controlled%20by%20the%20Company) The company did not control any structured entities during the reporting period - The company did not control any structured entities during the reporting period[103](index=103&type=chunk) [XI. Outlook on the Company's Future Development](index=35&type=section&id=XI.%20Outlook%20on%20the%20Company's%20Future%20Development) Facing external challenges, the company leverages core technologies and a diversified 'solution + investment and operation' strategy across four ecological business segments, with plans for rural revitalization, market expansion, and strategic partnerships, while addressing organizational and financial risks - The company faces external challenges such as economic development pressure from international and domestic uncertainties, rising construction costs, and order disruptions[103](index=103&type=chunk) - The company's internal strengths include core technologies, over **300 national patents**, multiple high-value qualifications, and an 'industry-university-research' collaboration model[104](index=104&type=chunk) - The company's development strategy is to maintain diversification, adopting a 'solution + investment and operation' model, focusing on four major business segments, aiming to become a leading international ecological environment service provider[105](index=105&type=chunk) - Operating plans include developing rural revitalization industries (e.g., soil remediation, water-saving irrigation), strengthening management, expanding markets, and introducing strategic investors (e.g., Xinjiang Water Conservancy Investment Holding Co., Ltd.)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - The company faces risks from organizational adjustments, intensified industry competition, and funding, with countermeasures including improving the industrial chain, resource integration, accounts receivable collection, industrial fund cooperation, and capital market refinancing[108](index=108&type=chunk) [XII. Activities such as Research, Communication, and Interviews During the Reporting Period](index=36&type=section&id=XII.%20Activities%20such%20as%20Research,%20Communication,%20and%20Interviews%20During%20the%20Reporting%20Period) The company did not engage in any research, communication, or interview activities during the reporting period - The company did not engage in any activities such as research, communication, or interviews during the reporting period[109](index=109&type=chunk) Part IV Corporate Governance [I. Basic Status of Corporate Governance](index=37&type=section&id=I.%20Basic%20Status%20of%20Corporate%20Governance) The company strictly adheres to laws and regulations, continuously improving its corporate governance and internal control systems to ensure standardized operations and protect shareholder rights, with no significant discrepancies from regulatory requirements - The company strictly adheres to laws and regulations such as the 'Company Law' and 'Securities Law,' continuously improving its corporate governance structure and internal control system[111](index=111&type=chunk) - The company strengthens the responsibilities of the general meeting of shareholders, board of directors, supervisory board, and management, ensuring the right to know, participate, and vote for all shareholders[111](index=111&type=chunk) - The company strictly implements information disclosure rules, ensuring truthfulness, accuracy, completeness, timeliness, and fairness, and actively enhances communication with investors[112](index=112&type=chunk) - The actual state of corporate governance has no significant discrepancies with laws and regulations[112](index=112&type=chunk) [II. Company's Independence from Controlling Shareholder and Actual Controller in Terms of Assets, Personnel, Finance, Organization, and Business](index=37&type=section&id=II.%20Company's%20Independence%20from%20Controlling%20Shareholder%20and%20Actual%20Controller%20in%20Terms%20of%20Assets,%20Personnel,%20Finance,%20Organization,%20and%20Business) The company maintains full independence from its controlling shareholder and actual controller across business, personnel, assets, finance, and organization, ensuring autonomous operations and no horizontal competition - The company's business is completely independent of the controlling shareholder, actual controller, and their affiliates, operating autonomously with no horizontal competition[113](index=113&type=chunk) - The company's personnel are independent, and senior management does not hold positions other than director in the controlling shareholder's entities[113](index=113&type=chunk) - The company's assets are independent, complete, and clearly owned, not being gratuitously occupied or controlled by the controlling shareholder, actual controller, or their affiliates[113](index=113&type=chunk) - The company's finances are independent, with a sound and independent financial accounting system, independent taxation, and accounting personnel not holding concurrent positions in the controlling shareholder's entities[113](index=113&type=chunk)[114](index=114&type=chunk) - The company's organizations are independent, with the board of directors, supervisory board, and other internal organizations operating independently and exercising management rights autonomously[114](index=114&type=chunk) [III. Horizontal Competition](index=38&type=section&id=III.%20Horizontal%20Competition) The company did not experience any horizontal competition during the reporting period - The company did not experience any horizontal competition during the reporting period[115](index=115&type=chunk) [IV. Information on Annual General Meetings and Extraordinary General Meetings Held During the Reporting Period](index=38&type=section&id=IV.%20Information%20on%20Annual%20General%20Meetings%20and%20Extraordinary%20General%20Meetings%20Held%20During%20the%20Reporting%20Period) In 2021, the company held 11 extraordinary and 1 annual general meeting, deliberating on articles of association, board elections, and related party transactions, with all resolutions promptly disclosed - During the 2021 reporting period, the company held **11 extraordinary general meetings** and **1 annual general meeting**[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Meeting deliberations included revisions to the articles of association, re-election of the board of directors, and related party transactions; all meetings were convened according to prescribed procedures and resolutions were disclosed[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [V. Information on Directors, Supervisors, and Senior Management](index=40&type=section&id=V.%20Information%20on%20Directors,%20Supervisors,%20and%20Senior%20Management) The company's board, supervisory board, and senior management saw multiple changes, with current leadership including Chairman Guo Shaozeng, and total remuneration for the period amounting to **4.9949 million yuan** - During the reporting period, there were multiple changes among the company's directors, supervisors, and senior management, including the departure of directors Jiang Lizhe, Liu Xin, Chen Fangqing, Zhu Jiang; supervisors Meng Chen, Yang Dehui; and the termination of senior management Guo Yuanyuan, Liu Xin, Tian Xiaonan[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - The current Chairman and President is Guo Shaozeng, Executive Vice President is Han Zhiquan, Vice Presidents include Han Shiying, Wang Haidong, Feng Yulu, Li Guirong, Dong Chunyu, and the Chief Financial Officer is Gao Hong[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Some directors, supervisors, and senior management hold concurrent positions in other entities, such as Guo Shaozeng at Rongtong Capital and Qingshanghui, and Yan Tao at Wanhui Investment[130](index=130&type=chunk)[131](index=131&type=chunk) 2021 Remuneration of Directors, Supervisors, and Senior Management (Unit: 10,000 Yuan) | Name | Position | Employment Status | Total Pre-Tax Remuneration from the Company | | :--- | :--- | :--- | :--- | | Yang Rengui | Chairman | Departed | 60 | | Yan Tao | Director | Appointed/Dismissed | 0 | | Jiang Lizhe | Director, Executive President | Departed | 11.11 | | Han Zhiquan | Director, Executive Vice President | Current | 62.88 | | Liu Xin | Director, Vice President, Board Secretary | Departed | 27.56 | | Hao Xin | Director, President | Departed | 96.55 | | Chen Fangqing | Independent Director | Departed | 0 | | Nie Xingkai | Independent Director | Departed | 12 | | Zhu Jiang | Independent Director | Departed | 12 | | Zhou Jianmin | Independent Director | Current | 0 | | Yin Zhoucheng | Chairman of Supervisory Board | Departed | 6 | | Meng Chen | Supervisor | Departed | 0 | | Yang Dehui | Employee Representative Supervisor | Departed | 24.68 | | Wang Yue | Employee Representative Supervisor | Current | 14.57 | | Zhang Haiyan | Supervisor | Current | 1 | | Guo Yuanyuan | Vice President | Departed | 23.2 | | Feng Yulu | Vice President | Current | 55.17 | | Wuliji | Vice President | Departed | 0 | | Yin Xiaodong | Vice President | Departed | 0 | | Li Guirong | Vice President | Current | 0 | | Liang Jin | Chief Financial Officer | Departed | 56.56 | | Tian Xiaonan | Board Secretary | Departed | 36.21 | | Total | -- | -- | 499.49 | [VI. Performance of Directors' Duties During the Reporting Period](index=49&type=section&id=VI.%20Performance%20of%20Directors'%20Duties%20During%20the%20Reporting%20Period) The board held 18 meetings, diligently deliberating key proposals, actively monitoring operations, and ensuring decisions considered minority shareholder interests, with no objections raised by directors - During the reporting period, the company's board of directors held **18 meetings**, deliberating on important proposals such as annual report auditing, re-appointment of accounting firms, and internal control self-evaluation reports[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - All directors diligently performed their duties, actively monitored the company's operations and financial status, attended meetings on time, and offered advice for the company's business development[140](index=140&type=chunk) - Board decisions fully considered the interests of minority shareholders, enhancing decision-making scientificity and promoting the company's continuous healthy development[140](index=140&type=chunk) - No objections were raised by directors regarding company matters during the reporting period[139](index=139&type=chunk) [VII. Status of Board's Special Committees During the Reporting Period](index=52&type=section&id=VII.%20Status%20of%20Board's%20Special%20Committees%20During%20the%20Reporting%20Period) The board's Strategy, Audit, Nomination, and Remuneration Committees all fulfilled their duties, holding meetings to deliberate on strategic plans, financial reports, personnel appointments, and remuneration policies, with all proposals approved - The Strategy Committee held **1 meeting** to deliberate on the company's annual development strategy and operating plan[141](index=141&type=chunk) - The Audit Committee held **3 meetings** to deliberate on the 2020 annual report audit, re-appointment of accounting firms, internal control self-evaluation report, and 2020 financial report[141](index=141&type=chunk) - The Nomination Committee held **2 meetings** to deliberate on the appointment of the board secretary and the election of independent directors[141](index=141&type=chunk)[142](index=142&type=chunk) - The Remuneration and Appraisal Committee held **1 meeting** to deliberate on the company's 2021 remuneration policy[142](index=142&type=chunk) - All important opinions and suggestions put forward by the special committees were approved, with no dissenting matters[141](index=141&type=chunk)[142](index=142&type=chunk) [VIII. Work of the Supervisory Board](index=53&type=section&id=VIII.%20Work%20of%20the%20Supervisory%20Board) The supervisory board found no risks during its supervision activities and raised no objections to the supervised matters - The supervisory board found no risks in the company's supervision activities during the reporting period[143](index=143&type=chunk) - The supervisory board raised no objections to the supervised matters during the reporting period[143](index=143&type=chunk) [IX. Company Employee Information](index=53&type=section&id=IX.%20Company%20Employee%20Information) As of year-end, the company had **591 employees**, primarily administrative, with **73 R&D personnel**, and a majority holding bachelor's or master's degrees, supported by a remuneration policy and continuous training 2021 Year-End Employee Count and Composition | Indicator | Number (Persons) | | :--- | :--- | | Total Number of Employees at Period-End | 591 | | Production Personnel | 49 | | Sales Personnel | 56 | | Technical Personnel | 55 | | Financial Personnel | 40 | | Administrative Personnel | 233 | | Other | 158 | | Doctorate | 14 | | Master's | 113 | | Bachelor's | 227 | | Associate Degree | 137 | | Other Education Levels | 100 | - The company's remuneration policy consists of position-based salaries and performance-based wages, determined by employee attendance, work completion, and appraisal results[146](index=146&type=chunk) - In 2021, the company conducted micro-classroom training to enhance employees' professional skills and comprehensive quality[147](index=147&type=chunk) [X. Company Profit Distribution and Capital Reserve to Share Capital Conversion](index=54&type=section&id=X.%20Company%20Profit%20Distribution%20and%20Capital%20Reserve%20to%20Share%20Capital%20Conversion) The company did not adjust its profit distribution policy and plans no cash dividends, bonus shares, or capital reserve conversions for the year - The company did not formulate, implement, or adjust its profit distribution policy during the reporting period[148](index=148&type=chunk) - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the year[148](index=148&type=chunk) [XI. Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=54&type=section&id=XI.%20Implementation%20of%20Equity%20Incentive%20Plans,%20Employee%20Stock%20Ownership%20Plans,%20or%20Other%20Employee%20Incentive%20Measures) The company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures during the reporting period - The company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures and their implementation during the reporting period[149](index=149&type=chunk) [XII. Construction and Implementation of Internal Control System During the Reporting Period](index=54&type=section&id=XII.%20Construction%20and%20Implementation%20of%20Internal%20Control%20System%20During%20the%20Reporting%20Period) The company established an effective internal control structure, revising key systems, standardizing transactions, and providing training, with no significant internal control deficiencies found during the reporting period - The company established an internal control organizational structure comprising the general meeting of shareholders, board of directors, supervisory board, management, and various holding subsidiaries[151](index=151&type=chunk) - During the reporting period, the 'Articles of Association' and other systems were revised to standardize related party transactions, external guarantees, asset disposals, and ensure timely information disclosure[151](index=151&type=chunk) - The company organized regulatory training for directors, supervisors, and senior management to enhance their awareness of standardized operations[151](index=151&type=chunk) - No significant internal control deficiencies were found during the reporting period[152](index=152&type=chunk) [XIII. Management and Control of Subsidiaries During the Reporting Period](index=55&type=section&id=XIII.%20Management%20and%20Control%20of%20Subsidiaries%20During%20the%20Reporting%20Period) The company had no special remarks regarding subsidiary management and control during the reporting period and encountered no integration issues - The company had no special remarks regarding the management and control of its subsidiaries during the reporting period and encountered no integration issues[152](index=152&type=chunk) [XIV. Internal Control Self-Evaluation Report or Internal Control Audit Report](index=55&type=section&id=XIV.%20Internal%20Control%20Self-Evaluation%20Report%20or%20Internal%20Control%20Audit%20Report) The company's internal control evaluation report, covering 100% of assets and revenue, was disclosed on April 28, 2022, with the auditor issuing an unqualified opinion, consistent with the board's self-evaluation - The company's internal control evaluation report was disclosed on April 28, 2022, covering **100%** of the company's total assets and operating revenue[153](index=153&type=chunk) - Internal control deficiency identification standards include qualitative and quantitative criteria for financial and non-financial reporting[153](index=153&type=chunk)[154](index=154&type=chunk) - Zhongxingcai Guanghua Certified Public Accountants issued a standard unqualified internal control audit report, stating that the company maintained effective internal controls over financial reporting in all material respects[155](index=155&type=chunk) - The internal control audit report was consistent with the board's self-evaluation report, finding no significant non-financial reporting deficiencies[155](index=155&type=chunk) [XV. Rectification of Self-Inspected Issues from Special Action on Listed Company Governance](index=57&type=section&id=XV.%20Rectification%20of%20Self-Inspected%20Issues%20from%20Special%20Action%20on%20Listed%20Company%20Governance) The company had no rectification of self-inspected issues from special action on listed company governance during the reporting period - The company had no rectification of self-inspected issues from special action on listed company governance during the reporting period[156](index=156&type=chunk) Part V Environmental and Social Responsibility [I. Significant Environmental Issues](index=58&type=section&id=I.%20Significant%20Environmental%20Issues) The company and its subsidiaries are not key polluting units, received no environmental penalties, and did not disclose carbon reduction measures during the reporting period - The company and its subsidiaries are not classified as key polluting units by environmental protection authorities[158](index=158&type=chunk) - No administrative penalties for environmental issues were received during the reporting period[158](index=158&type=chunk) - Measures taken to reduce carbon emissions and their effects were not disclosed[158](index=158&type=chunk) [II. Social Responsibility](index=58&type=section&id=II.%20Social%20Responsibility) The company protects shareholder rights through robust governance and disclosure, safeguards employee rights with legal compliance and training, and upholds business ethics to foster win-win relationships with customers and suppliers - The company effectively protects the legitimate rights and interests of all shareholders, especially minority investors, by improving governance structure, providing diverse voting methods, and separate vote counting[158](index=158&type=chunk) - The company safeguards employees' legitimate rights and interests in accordance with laws and regulations such as the 'Labor Law,' emphasizing employee training to enhance professional literacy and comprehensive quality[159](index=159&type=chunk) - The company strictly adheres to business ethics, acts with integrity, protects customer and supplier interests, actively resolves project issues, and seeks win-win development for both parties[159](index=159&type=chunk) [III. Consolidation and Expansion of Poverty Alleviation Achievements and Rural Revitalization](index=58&type=section&id=III.%20Consolidation%20and%20Expansion%20of%20Poverty%20Alleviation%20Achievements%20and%20Rural%20Revitalization) The company has not yet undertaken poverty alleviation or rural revitalization initiatives during the reporting period - The company has not yet carried out poverty alleviation and rural revitalization work during the reporting period[160](index=160&type=chunk) Part VI Significant Events [I. Fulfillment of Commitments](index=59&type=section&id=I.%20Fulfillment%20of%20Commitments) Most commitments made during share reform and asset restructuring, covering independence, competition, and related party transactions, are ongoing, with some fulfilled, but an overdue performance compensation commitment exists - Multiple commitments were made by the company's actual controller, shareholders, related parties, and the company during share reform, acquisition reports, and asset restructuring, covering independence, avoiding horizontal competition, standardizing and reducing related party transactions, and avoiding fund occupation[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - Most commitments are long-term and ongoing, while some share lock-up and information truthfulness commitments have been fulfilled[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - There is an overdue performance compensation commitment, such as the performance compensation for Northern Landscape by Northern Group and Beikong Consulting[165](index=165&type=chunk) - Whether the company's commitments were fulfilled on time: No[173](index=173&type=chunk) [II. Non-Operating Fund Occupation by Controlling Shareholder and Other Related Parties](index=70&type=section&id=II.%20Non-Operating%20Fund%20Occupation%20by%20Controlling%20Shareholder%20and%20Other%20Related%20Parties) The company had no non-operating fund occupation by its controlling shareholder or other related parties during the reporting period - The company had no non-operating fund occupation by its controlling shareholder or other related parties during the reporting period[174](index=174&type=chunk) [III. Irregular External Guarantees](index=70&type=section&id=III.%20Irregular%20External%20Guarantees) The company had no irregular external guarantees during the reporting period - The company had no irregular external guarantees during the reporting period[175](index=175&type=chunk) [IV. Board of Directors' Explanation on the Latest 'Non-Standard Audit Report'](index=70&type=section&id=IV.%20Board%20of%20Directors'%20Explanation%20on%20the%20Latest%20%22Non-Standard%20Audit%20Report%22) The company had no board of directors' explanation on the latest 'non-standard audit report' during the reporting period - The company had no board of directors' explanation on the latest 'non-standard audit report' during the reporting period[176](index=176&type=chunk) [V. Explanations by the Board of Directors, Supervisory Board, and Independent Directors (if any) on the Accounting Firm's 'Non-Standard Audit Report' for the Current Period](index=70&type=section&id=V.%20Explanations%20by%20the%20Board%20of%20Directors,%20Supervisory%20Board,%20and%20Independent%20Directors%20(if%20any)%20on%20the%20Accounting%20Firm's%20%22Non-Standard%20Audit%20Report%22%20for%20the%20Current%20Period) The company had no explanations from the board, supervisory board, or independent directors regarding the accounting firm's 'non-standard audit report' for the current period - The company had no explanations from the board of directors, supervisory board, or independent directors regarding the accounting firm's 'non-standard audit report' for the current period[176](index=176&type=chunk) [VI. Explanation of Changes in Accounting Policies, Accounting Estimates, or Significant Accounting Error Corrections Compared to the Previous Year's Financial Report](index=70&type=section&id=VI.%20Explanation%20of%20Changes%20in%20Accounting%20Policies,%20Accounting%20Estimates,%20or%20Significant%20Accounting%20Error%20Corrections%20Compared%20to%20the%20Previous%20Year's%20Financial%20Report) Effective January 1, 2021, the company adopted new leasing standards, retrospectively adjusting opening consolidated financial statements, impacting right-of-use assets, lease liabilities, and other related accounts - Effective January 1, 2021, the company adopted new leasing standards, adjusting relevant items in the opening financial statements based on the cumulative impact of initial application[176](index=176&type=chunk) Impact of Adopting New Leasing Standards on 2021 Opening Consolidated Statement Items (Unit: Yuan) | Statement Item | December 31, 2020 | January 1, 2021 | Impact Amount | | :--- | :--- | :--- | :--- | | Right-of-Use Assets | | 68,997,200.85 | 68,997,200.85 | | Fixed Assets | 432,297,833.39 | 414,091,713.16 | -18,206,120.23 | | Long-Term Deferred Expenses | 3,697,800.00 | 3,334,400.00 | -363,400.00 | | Lease Liabilities | | 53,944,842.64 | 53,944,842.64 | | Long-Term Payables | 60,745,941.35 | 58,000,000.00 | -2,745,941.35 | | Retained Earnings | -2,992,645,533.44 | -2,993,244,889.13 | -599,355.69 | | Minority Interests | 393,605,930.27 | 393,434,065.29 | -171,864.98 | [VII. Explanation of Changes in Consolidation Scope Compared to the Previous Year's Financial Report](index=71&type=section&id=VII.%20Explanation%20of%20Changes%20in%20Consolidation%20Scope%20Compared%20to%20the%20Previous%20Year's%20Financial%20Report) In 2021, the company's consolidation scope decreased by one entity to 46 subsidiaries, primarily due to the deregistration of Zhongke Dingzhi (Yichun) Environmental Sanitation Services Co., Ltd - The company's consolidation scope for 2021 included **46 subsidiaries**, a decrease of **1** from the previous period[178](index=178&type=chunk) - The subsidiary deregistered in this period was Zhongke Dingzhi (Yichun) Environmental Sanitation Services Co., Ltd[178](index=178&type=chunk) [VIII. Appointment and Dismissal of Accounting Firms](index=71&type=section&id=VIII.%20Appointment%20and%20Dismissal%20of%20Accounting%20Firms) Zhongxingcai Guanghua Certified Public Accountants serves as the company's domestic accounting firm for the seventh consecutive year, with a remuneration of **1.05 million yuan**, and was also appointed for the 2021 internal control audit Current Accounting Firm Information | Indicator | Content | | :--- | :--- | | Name of Domestic Accounting Firm | Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership) | | Remuneration of Domestic Accounting Firm (10,000 Yuan) | 105 | | Consecutive Years of Audit Service by Domestic Accounting Firm | 7 Years | | Names of Certified Public Accountants at Domestic Accounting Firm | Li Xiaofei, Gao Tao | - The company did not change its accounting firm during the reporting period[179](index=179&type=chunk) - The company appointed Zhongxingcai Guanghua Certified Public Accountants as its internal control audit firm for 2021, with a fee of **600,000 yuan**[179](index=179&type=chunk) [IX. Delisting Risk After Annual Report Disclosure](index=71&type=section&id=IX.%20Delisting%20Risk%20After%20Annual%20Report%20Disclosure) The company did not face delisting risk after the annual report disclosure during the reporting period - The company did not face delisting risk after the annual report disclosure during the reporting period[180](index=180&type=chunk) [X. Bankruptcy and Reorganization Matters](index=72&type=section&id=X.%20Bankruptcy%20and%20Reorganization%20Matters) The company had no bankruptcy and reorganization matters during the reporting period - The company had no bankruptcy and reorganization matters during the reporting period[181](index=181&type=chunk) [XI. Significant Litigation and Arbitration Matters](index=72&type=section&id=XI.%20Significant%20Litigation%20and%20Arbitration%20Matters) The company is involved in multiple significant litigations, including a **72.0878 million yuan** performance compensation lawsuit for Northern Landscape and **97 pending lawsuits** as a defendant totaling **746 million yuan** - Due to the failure to meet performance commitments for the acquisition of Northern Landscape, the company sued Northern Municipal, Gao Xuegang, and others, with the court ruling that the defendants fulfill compensation obligations, involving **72.0878 million yuan**[182](index=182&type=chunk) - This performance compensation lawsuit impacted 2021 total profit and net profit by **26.6412 million yuan**, and 2022 Q1 total profit and net profit by **5.2124 million yuan**[182](index=182&type=chunk) - Northern Landscape was sued by Tianjin Binhai Rural Commercial Bank for failing to repay a loan, involving **23.4 million yuan**, and has received a civil judgment[184](index=184&type=chunk) - The company is a defendant in **97 pending lawsuits**, with a total amount of **745.53015834 million yuan**[185](index=185&type=chunk) - The company is actively resolving various litigation matters, but the specific impact of some matters on subsequent period profits cannot yet be determined[185](index=185&type=chunk) [XII. Penalties and Rectification](index=75&type=section&id=XII.%20Penalties%20and%20Rectification) The company had no penalties or rectification during the reporting period - The company had no penalties or rectification during the reporting period[186](index=186&type=chunk) [XIII. Integrity Status of the Company, its Controlling Shareholder, and Actual Controller](index=75&type=section&id=XIII.%20Integrity%20Status%20of%20the%20Company,%20its%20Controlling%20Shareholder,%20and%20Actual%20Controller) The company and its actual controller, Guo Shaozeng, are listed as dishonest judgment debtors in multiple cases for failing to fulfill legal obligations, which may negatively impact the company's image but has not substantially affected operations Company and Actual Controller Listed as Dishonest Judgment Debtors | Debtor | Enforcement Court | Case Filing Date | Case Number | Fulfillment Status | Specific Circumstances of Dishonest Debtor Behavior | | :--- | :--- | :--- | :--- | :--- | :--- | | Kingland Technology, Kingland Northern, Guo Shaozeng | Tianjin Third Intermediate People's Court | January 27, 2021 | (2021) Jin 03 Zhi 134 Hao | All Unfulfilled | Violation of property reporting system | | Kingland Technology, Guo Shaozeng | Nanjing Gulou District People's Court | July 27, 2021 | (2021) Su 0106 Zhi 6057 Hao | All Unfulfilled | Ability to fulfill but refused to fulfill oblig

[Part I Important Notice, Table of Contents, and Definitions](index=2&type=section&id=Part%20I%20Important%20Notice%2C%20Table%20of%20Contents%2C%20and%20Definitions) This section provides crucial disclaimers, the report's comprehensive table of contents, and definitions of key terms for clarity [Important Notice](index=2&type=section&id=Important%20Notice) The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the annual report, noting risks in competition, funding, and talent development, and no dividend distribution plan - The company's board of directors, supervisory board, and senior management guarantee the **truthfulness, accuracy, and completeness** of the annual report content[3](index=3&type=chunk) - The company plans **not to distribute cash dividends, bonus shares, or convert capital reserves into share capital**[5](index=5&type=chunk) - Key risks include **intensified industry competition**, **significant capital demand and long operating cycles** in the ecological environment industry, and **rapidly increasing demand for core talent** with diverse backgrounds[4](index=4&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section presents the complete directory structure of the annual report, covering all chapters from important notices to financial reports and reference documents, providing readers with the overall framework of the report - The report's table of contents comprises **thirteen sections**, covering core content such as company profile, business overview, operational analysis, significant events, and financial reports[8](index=8&type=chunk) [Definitions](index=4&type=section&id=Definitions) This section provides definitions for common terms and company-related entities used in the report, ensuring accurate understanding of the content - The report clearly defines key entities such as the **China Securities Regulatory Commission (CSRC), Shenzhen Stock Exchange, Jinglan Technology, controlling shareholder Yangshu Lantian, Jinglan Holdings, and its main subsidiaries**[10](index=10&type=chunk) [Part II Company Profile and Key Financial Indicators](index=5&type=section&id=Part%20II%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section outlines the company's fundamental information, historical business changes, and a comprehensive overview of its key financial performance and position over recent periods [I. Company Information](index=5&type=section&id=I.%20Company%20Information) This section provides the company's basic registration information, stock code, listing exchange, legal representative, registered and office addresses, company website, and email contact details - The company's stock abbreviation is **'Jinglan Technology'**, stock code **000711**, listed on the **Shenzhen Stock Exchange**[12](index=12&type=chunk) - The legal representative is **Yang Rengui**, with the registered address in Harbin, Heilongjiang Province, and the office address in Chaoyang District, Beijing[12](index=12&type=chunk) [II. Contact Persons and Information](index=5&type=section&id=II.%20Contact%20Persons%20and%20Information) This section lists the names, contact addresses, telephone numbers, fax numbers, and email addresses of the company's board secretary and securities affairs representative, facilitating communication for investors and relevant parties - The Board Secretary is **Liu Xin**, and the Securities Affairs Representative is **Tian Xiaonan**, both with contact information at the Beijing office address[13](index=13&type=chunk) [III. Information Disclosure and Document Availability](index=5&type=section&id=III.%20Information%20Disclosure%20and%20Document%20Availability) This section specifies the company's designated information disclosure media, the CSRC-designated website, and the location where the annual report is available for inspection - The company's designated information disclosure media are **China Securities Journal, Securities Times, and Shanghai Securities News**, with the designated website being **Juchao Information Network (http://www.cninfo.com.cn)**[14](index=14&type=chunk) [IV. Registration Changes](index=6&type=section&id=IV.%20Registration%20Changes) This section reviews the company's significant business adjustments and changes in controlling shareholders since its listing, reflecting its strategic transformation history - The company's main business has undergone multiple adjustments, from high-tech products and real estate to information system integration, eventually transitioning to focus on **ecological and environmental protection businesses (ecological water saving, landscape environment, soil remediation)** between 2016 and 2018[15](index=15&type=chunk) - Controlling shareholders have changed multiple times, with **Yangshu Lantian becoming the largest shareholder in 2016**, holding **16.68%** of shares at the end of the reporting period[15](index=15&type=chunk) [V. Other Relevant Information](index=6&type=section&id=V.%20Other%20Relevant%20Information) This section discloses information about the accounting firm engaged by the company, the names of its signing accountants, and the financial advisor responsible for continuous supervision during the reporting period - The company engaged **Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership)** for auditing, with **Wang Fengqi and Zhang Mengyong** as the signing accountants[16](index=16&type=chunk) - During the reporting period, **Huatai United Securities Co., Ltd.** served as the financial advisor, fulfilling continuous supervision duties[16](index=16&type=chunk) [VI. Key Accounting Data and Financial Indicators](index=6&type=section&id=VI.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) This section presents the company's key accounting data and financial indicators for the past three years (2018-2020), showing a significant decline in operating revenue and net profit in 2020, but a positive net cash flow from operating activities 2018-2020 Key Accounting Data and Financial Indicators | Indicator | 2020 | 2019 | YoY Change | 2018 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 995,410,211.62 | 1,901,408,713.75 | -47.65% | 2,490,857,777.77 | | Net Profit Attributable to Listed Company Shareholders (RMB) | -2,399,698,095.52 | -1,036,745,832.56 | -131.46% | 102,535,975.63 | | Net Cash Flow from Operating Activities (RMB) | 60,169,476.13 | -88,641,195.85 | 167.88% | -843,379,277.69 | | Basic Earnings Per Share (RMB/share) | -2.34 | -1.03 | -127.18% | 0.12 | | Weighted Average Return on Net Assets | -69.79% | -22.11% | -47.68% | 2.39% | | Total Assets (RMB) | 9,671,022,194.26 | 12,118,205,650.23 | -20.19% | 10,994,938,944.75 | | Net Assets Attributable to Listed Company Shareholders (RMB) | 2,229,544,945.43 | 4,635,903,674.91 | -51.91% | 4,343,418,610.61 | - The company's net profit, whichever is lower before and after deducting non-recurring gains and losses, has been **negative for the past three fiscal years**[19](index=19&type=chunk) [VII. Differences in Accounting Data Under Domestic and International Accounting Standards](index=7&type=section&id=VII.%20Differences%20in%20Accounting%20Data%20Under%20Domestic%20and%20International%20Accounting%20Standards) This section states that during the reporting period, there were no differences in net profit and net assets between financial reports disclosed under International Accounting Standards or overseas accounting standards and Chinese Accounting Standards - During the reporting period, the company had **no differences in net profit and net assets** between financial reports disclosed under International Accounting Standards and Chinese Accounting Standards[20](index=20&type=chunk) - During the reporting period, the company had **no differences in net profit and net assets** between financial reports disclosed under overseas accounting standards and Chinese Accounting Standards[21](index=21&type=chunk) [VIII. Quarterly Key Financial Indicators](index=8&type=section&id=VIII.%20Quarterly%20Key%20Financial%20Indicators) This section presents the company's 2020 quarterly operating revenue, net profit attributable to listed company shareholders, net profit after deducting non-recurring gains and losses, and net cash flow from operating activities, showing a significant net loss in the fourth quarter 2020 Quarterly Key Financial Indicators | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 158,573,159.16 | 143,222,311.86 | 259,655,768.26 | 433,958,972.34 | | Net Profit Attributable to Listed Company Shareholders (RMB) | -49,845,783.85 | -243,664,863.58 | -143,622,647.95 | -1,962,564,800.14 | | Net Cash Flow from Operating Activities (RMB) | -75,736,894.26 | -112,978,694.35 | 182,154,744.59 | 66,730,320.15 | [IX. Non-Recurring Gains and Losses Items and Amounts](index=8&type=section&id=IX.%20Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) This section details the company's non-recurring gains and losses items and amounts for the past three years (2018-2020), with a total of 40.44 million RMB in non-recurring gains and losses in 2020 2018-2020 Non-Recurring Gains and Losses Items and Amounts | Item | 2020 Amount (RMB) | 2019 Amount (RMB) | 2018 Amount (RMB) | | :--- | :--- | :--- | :--- | | Non-current asset disposal gains and losses | 79,144.33 | 18,792,269.73 | 14,984,143.92 | | Government grants recognized in current profit or loss | 3,966,846.03 | 8,681,570.64 | 6,120,463.44 | | Fund occupation fees received from non-financial enterprises recognized in current profit or loss | 15,836,442.08 | 25,288,811.71 | 15,087,337.48 | | Reversal of impairment provisions for accounts receivable and contract assets subject to individual impairment testing | 34,106,598.96 | 0.00 | 0.00 | | Other non-operating income and expenses apart from the above | 4,897,346.67 | -16,856,444.28 | -1,958,642.37 | | Less: Income tax impact | 6,236,347.98 | 4,321,541.56 | 4,970,883.34 | | Minority interest impact (after tax) | 12,205,230.60 | 4,555,633.09 | 1,257,471.61 | | Total | 40,444,799.49 | 27,029,033.15 | 28,070,417.04 | [Part III Company Business Overview](index=9&type=section&id=Part%20III%20Company%20Business%20Overview) This section outlines the company's core business segments, significant asset changes, and key competitive advantages, highlighting its strategic focus and market position [I. Main Businesses During the Reporting Period](index=9&type=section&id=I.%20Main%20Businesses%20During%20the%20Reporting%20Period) During the reporting period, the company's main businesses covered four segments: industrial ecology, ecological water conservancy, ecological environment, and smart ecology, with soil remediation being the primary revenue source, accounting for 69.18% of total revenue, utilizing various operating models such as general contracting, EPC, and PPP - The company's main business segments include **industrial ecology, ecological water conservancy, ecological environment, and smart ecology**, forming a virtuous complementary relationship[27](index=27&type=chunk) - In 2020, operating revenue was **995.41 million RMB**, primarily from **soil remediation business**, which generated **688.65 million RMB**, accounting for **69.18% of total revenue**[27](index=27&type=chunk)[28](index=28&type=chunk) - Ecological water conservancy operation services generated **225.52 million RMB** (22.66% of total revenue), while other business segments (e.g., landscape engineering) generated **60.33 million RMB** (6.06% of total revenue)[29](index=29&type=chunk)[30](index=30&type=chunk) - The company's operating models primarily include **general contracting, EPC projects, and PPP projects**[31](index=31&type=chunk) [II. Significant Changes in Major Assets](index=10&type=section&id=II.%20Significant%20Changes%20in%20Major%20Assets) This section explains significant changes in the company's major assets during the reporting period, including the reasons for variations in equity investments, fixed assets, and intangible assets - The increase in equity investments was primarily due to the **combined effect of increased investments in equity-accounted companies and decreased net profit/loss of investees**[33](index=33&type=chunk) - Changes in fixed assets were mainly due to the **combined effect of former subsidiary Jinglan Yunzhi IoT Technology Co., Ltd. no longer being consolidated, new fixed asset purchases, and depreciation accruals**[33](index=33&type=chunk) - The increase in intangible assets was primarily due to **more project companies having concession rights with uncertain revenue amounts**[33](index=33&type=chunk) [III. Analysis of Core Competitiveness](index=10&type=section&id=III.%20Analysis%20of%20Core%20Competitiveness) The company's core competitiveness lies in its long-term corporate mission, positive core values, clear development strategy, comprehensive functional division, excellent financial and industrial integration capabilities, strong management team and industry resource integration, robust R&D and independent innovation capabilities, and promising market outlook - The company's mission is **'Green Mountains, Clear Waters, Blue Skies, Enduring China Dream,'** aiming to become a leading international **'ecological environment planning, investment, construction, and operation service provider'**[34](index=34&type=chunk) - The company enhances its smart ecological industry chain through **mergers and acquisitions**, achieving resource integration and improving risk resistance and operational efficiency[35](index=35&type=chunk) - The company possesses multiple **core technologies (soil remediation, water body treatment, agricultural waste recycling)**, **232 invention and utility model patents**, **68 software copyrights**, and operates **academician and postdoctoral workstations**[36](index=36&type=chunk) - The company's main business is in a **national strategic investment priority area**, with **huge market potential in soil remediation and smart water conservancy**, giving it a leading industry advantage and competitive barriers[37](index=37&type=chunk) [Part IV Management Discussion and Analysis](index=12&type=section&id=Part%20IV%20Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operational performance, financial position, and investment activities, highlighting key business segments, asset and liability changes, and future development strategies [I. Overview](index=12&type=section&id=I.%20Overview) During the reporting period, the company pursued a diversified development strategy, combining organic growth with external expansion, focusing on four business segments: industrial ecology, ecological water conservancy, ecological environment, and smart ecology; in 2020, operating revenue and net profit significantly declined due to the pandemic and macroeconomic factors, total assets decreased mainly due to goodwill impairment, and total liabilities increased primarily due to financing needs - The company's core business focuses on **four major segments: industrial ecology, ecological water conservancy, ecological environment, and smart ecology**, providing integrated solutions[39](index=39&type=chunk) - The industrial ecology segment (**Zhongke Dingshi**) enhanced its ecological environment layout through acquisitions, gaining **'water and soil co-governance' capabilities** and winning bids for multiple soil and groundwater remediation projects[40](index=40&type=chunk) - The ecological water conservancy segment (**Jinglan Muhe**) deepened its positioning as an **'agricultural steward, ecological expert,'** providing comprehensive solutions for efficient water saving and water source construction, and signing strategic cooperation agreements[41](index=41&type=chunk) - The ecological environment segment (**Beifang Yuanlin, Jinglan Environmental Technology, etc.**) increased soil remediation technology development, won rural revitalization projects, and signed strategic cooperation agreements[42](index=42&type=chunk) 2020 Operating Performance and Asset Status | Indicator | 2020 Amount (RMB 10,000) | YoY Change (RMB 10,000) | Change Ratio | | :--- | :--- | :--- | :--- | | Operating Revenue | 99,541.02 | -90,599.85 | -47.65% | | Net Profit Attributable to Listed Company Shareholders | -239,969.81 | -136,295.23 | -131.46% | | Total Assets (Year-End 2020) | 967,102.22 | -244,718.35 | -20.19% | | Total Liabilities (Year-End 2020) | 704,787.13 | 20,304.42 | 2.97% | - The significant decline in performance was mainly due to the **COVID-19 pandemic, macroeconomic conditions, and changes in the financial environment**, leading to slower project progress, reduced operating revenue, and decreased profit; the decrease in total assets was primarily due to **goodwill impairment**; the increase in total liabilities was mainly due to **increased external financing to meet operating capital needs**[44](index=44&type=chunk) [II. Main Business Analysis](index=13&type=section&id=II.%20Main%20Business%20Analysis) This section details the company's main business revenue and cost structure, including operating revenue and gross profit margins by industry, product, and region; in 2020, ecological water saving and landscape environment business revenues significantly declined, while soil remediation revenue slightly increased; R&D investment decreased year-on-year, but the company still possesses multiple core technologies and research platforms in environmental remediation 2020 Operating Revenue Composition (by Industry) | Industry | 2020 Amount (RMB) | Proportion of Operating Revenue | 2019 Amount (RMB) | Proportion of Operating Revenue | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Ecological Water-Saving Operation Services | 225,519,519.92 | 22.66% | 1,058,342,650.57 | 55.66% | -78.69% | | Landscape Environmental Technology Services | 60,328,661.70 | 6.06% | 153,724,453.24 | 8.08% | -60.76% | | Soil Remediation Operation Services | 688,652,906.71 | 69.18% | 671,511,136.75 | 35.32% | 2.55% | | Other Industries | 20,909,123.29 | 2.10% | 17,830,473.19 | 0.94% | 17.27% | 2020 Operating Revenue and Cost (by Industry) | Industry | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Profit Margin | YoY Change in Operating Revenue | YoY Change in Operating Cost | YoY Change in Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ecological Water-Saving Operation Services | 225,519,519.92 | 421,206,683.23 | -86.77% | -78.69% | -47.18% | -111.43% | | Soil Remediation Operation Services | 688,652,906.71 | 452,829,189.52 | 34.24% | 2.55% | 4.13% | -1.00% | 2020 Expense Situation | Item | 2020 (RMB) | 2019 (RMB) | YoY Change | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 93,275,196.77 | 69,806,287.96 | 33.62% | Due to increased efforts in collections, higher personnel salaries from sales collection policies, and increased agency service fees | | Administrative Expenses | 311,186,989.24 | 289,921,906.39 | 7.33% | Due to controlled expense outlays and increased agency service fees | | Financial Expenses | 638,639,261.89 | 340,587,187.43 | 87.51% | Primarily due to increased interest from changes in financing structure | | R&D Expenses | 27,886,486.05 | 45,572,033.90 | -38.81% | Due to reduced R&D investment | - The company's subsidiary **Zhongke Dingshi possesses core soil remediation technologies** such as thermal desorption, ambient temperature desorption, and solidification/stabilization, and participates in multiple national/provincial-level scientific research projects[57](index=57&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) 2020 R&D Investment | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Number of R&D Personnel (people) | 120 | 159 | -24.53% | | R&D Investment Amount (RMB) | 27,886,486.05 | 45,572,033.90 | -38.81% | | R&D Investment as % of Operating Revenue | 2.80% | 2.40% | 0.40% | 2020 Cash Flow | Item | 2020 (RMB) | 2019 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 60,169,476.13 | -88,641,195.85 | 167.88% | | Net Cash Flow from Investing Activities | -134,696,371.62 | -131,707,822.40 | -2.27% | | Net Cash Flow from Financing Activities | 96,617,563.31 | 25,110,334.27 | 284.77% | | Net Increase in Cash and Cash Equivalents | 22,090,667.82 | -195,238,683.98 | 111.31% | [III. Non-Core Business Analysis](index=19&type=section&id=III.%20Non-Core%20Business%20Analysis) This section analyzes the impact of non-core businesses on total profit, with asset impairment being the primary factor, accounting for 52.36% of total profit, mainly due to goodwill, long-term assets, and inventory impairment 2020 Impact of Non-Core Businesses on Total Profit | Item | Amount (RMB) | Proportion of Total Profit | Explanation of Cause | Sustainability | | :--- | :--- | :--- | :--- | :--- | | Investment Income | -1,176,371.29 | 0.05% | | Yes | | Asset Impairment | -1,334,086,677.94 | 52.36% | Goodwill, long-term assets, and inventory impairment | No | | Non-operating Income | 7,622,908.40 | -0.30% | | No | | Non-operating Expenses | 2,163,047.76 | -0.08% | | No | [IV. Analysis of Assets and Liabilities](index=20&type=section&id=IV.%20Analysis%20of%20Assets%20and%20Liabilities) This section analyzes the composition and significant changes in the company's assets and liabilities; at the end of 2020, both total assets and net assets attributable to listed company shareholders decreased, the liability structure changed, and both short-term and long-term borrowings increased Significant Changes in Asset Composition at Year-End 2020 | Major Asset | 2020 Year-End Amount (RMB) | Proportion of Total Assets | 2020 Year-Beginning Amount (RMB) | Proportion of Total Assets | Change in Proportion | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 321,412,946.15 | 3.32% | 383,372,540.97 | 3.16% | 0.16% | Due to the combined impact of cash flows from operating, investing, and financing activities | | Accounts Receivable | 1,279,570,429.23 | 13.23% | 1,966,154,875.23 | 16.22% | -2.99% | Primarily due to enhanced collection efforts for engineering projects across business segments and impairment of receivables | | Inventories | 789,118,010.73 | 8.16% | 680,900,264.45 | 5.62% | 2.54% | Primarily due to increased contract performance costs and decreased raw materials and inventory goods | | Long-Term Equity Investments | 7,860,758.11 | 0.08% | 5,514,569.40 | 0.05% | 0.03% | Due to the combined impact of increased investments in equity-accounted companies and decreased net profit/loss of investees | | Fixed Assets | 432,297,833.39 | 4.47% | 406,028,004.92 | 3.35% | 1.12% | Primarily due to former subsidiary Jinglan Yunzhi IoT Technology Co., Ltd. no longer being consolidated, new fixed asset purchases, and depreciation accruals | | Short-Term Borrowings | 1,649,970,966.15 | 17.06% | 1,728,798,522.72 | 14.27% | 2.79% | Primarily due to changes in financing structure | | Long-Term Borrowings | 586,600,000.00 | 6.07% | 149,771,608.59 | 1.24% | 4.83% | Primarily due to changes in financing structure | | Contract Assets | 2,940,657,649.19 | 30.41% | 3,203,726,524.07 | 26.44% | 3.97% | Primarily due to contract asset impairment | - As of the end of the reporting period, the company's major assets were **not subject to seizure or detention**, with detailed information on asset mortgages, pledges, and freezes provided in the financial report notes[73](index=73&type=chunk) [V. Investment Status](index=21&type=section&id=V.%20Investment%20Status) This section outlines the company's investment activities during the reporting period, showing a significant year-on-year decrease in total investment; it discloses major equity investments, including in Hangzhou Zhenfu Investment Management Partnership, and details the use of raised funds, noting that some projects did not meet planned progress or expected returns, but the company has taken measures for adjustment and closure Investment Amount During Reporting Period | Indicator | Investment Amount During Reporting Period (RMB) | Investment Amount in Prior Period (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Total Investment Amount | 127,424,300.00 | 1,338,943,169.88 | -90.48% | - During the reporting period, the company made an equity investment of **113.32 million RMB** in **Hangzhou Zhenfu Investment Management Partnership (Limited Partnership)**, holding a **74.71% stake**[75](index=75&type=chunk) Status of Committed Projects Funded by Raised Capital (Partial) | Committed Investment Project | Adjusted Total Investment (RMB 10,000) | Cumulative Investment at Period-End (RMB 10,000) | Investment Progress at Period-End | Project Achieved Expected Benefits | | :--- | :--- | :--- | :--- | :--- | | Cash consideration for this transaction | 47,300 | 47,300 | 100.00% | Not applicable | | Jinglan Smart Ecological Cloud Platform Project | 10,232 | 5,204.7 | 50.87% | Not applicable | | Annual production of 600 large intelligent sprinkler irrigation machines project | 5,920.71 | 5,864.65 | 99.05% | No | | Smart high-efficiency agricultural water-saving project | 65,000 | 65,028.7 | 100.04% | No | - The **annual production of 600 large intelligent sprinkler irrigation machines project** and the **smart high-efficiency agricultural water-saving project** did not meet planned progress or expected returns, primarily due to **market environment changes, design modifications, stricter environmental policies, and insufficient construction time**[80](index=80&type=chunk) - The **Jinglan Smart Ecological Cloud Platform project**, through cooperation with Alibaba Cloud, significantly **reduced costs and accelerated R&D speed**, achieving expected implementation results and project closure[81](index=81&type=chunk) [VI. Significant Asset and Equity Sales](index=25&type=section&id=VI.%20Significant%20Asset%20and%20Equity%20Sales) This section states that the company did not have any significant asset or equity sales during the reporting period - The company **did not sell significant assets** during the reporting period[83](index=83&type=chunk) - The company **did not sell significant equity** during the reporting period[84](index=84&type=chunk) [VII. Analysis of Major Holding and Participating Companies](index=26&type=section&id=VII.%20Analysis%20of%20Major%20Holding%20and%20Participating%20Companies) This section analyzes the financial status and operating results of the company's major subsidiaries, Jinglan Muhe Water-Saving Equipment Co., Ltd. and Jinglan Beifang Yuanlin (Tianjin) Co., Ltd., and discloses the acquisition and disposal of subsidiaries during the reporting period Major Holding Subsidiary Financial Data (2020) | Company Name | Total Assets (RMB) | Net Assets (RMB) | Operating Revenue (RMB) | Operating Profit (RMB) | Net Profit (RMB) | | :--- | :--- | :--- | :--- | :--- | :--- | | Jinglan Muhe Water-Saving Equipment Co., Ltd. | 5,371,396,025.40 | 1,873,180,673.54 | 222,229,887.71 | -753,057,707.68 | -762,846,136.42 | | Jinglan Beifang Yuanlin (Tianjin) Co., Ltd. | 2,035,922,583.73 | -382,059,965.67 | 60,328,661.70 | -407,295,725.06 | -398,719,029.48 | - During the reporting period, the company **established Jinglan Environmental Technology (Chengdu) Co., Ltd. and Chifeng Muhe Hotel Co., Ltd.**, and **deregistered 3 subsidiaries**, including Jinglan Muhe Julu Tiantiantong Agricultural Water Supply Co., Ltd.[87](index=87&type=chunk) [VIII. Structured Entities Controlled by the Company](index=28&type=section&id=VIII.%20Structured%20Entities%20Controlled%20by%20the%20Company) This section states that the company did not control any structured entities during the reporting period - The company **did not control any structured entities** during the reporting period[88](index=88&type=chunk) [IX. Outlook on Company's Future Development](index=28&type=section&id=IX.%20Outlook%20on%20Company%27s%20Future%20Development) The company's future outlook analyzes external factors (pandemic impact and 'new infrastructure' opportunities) and internal strengths (R&D, qualifications, strategic partnerships); it will adhere to a diversified development strategy, focusing on comprehensive ecological environment governance through organic growth and external expansion, with detailed operational plans for synergistic development across business segments and strengthened internal management to address competition, funding, and talent risks - The **COVID-19 pandemic in 2020 significantly impacted the progress and collection of the company's engineering projects**, but domestic epidemic prevention and control achieved remarkable results, with the central government introducing multiple financial support policies and **'new infrastructure' development opportunities**[87](index=87&type=chunk)[88](index=88&type=chunk) - The company's internal strengths include **R&D capabilities** through cooperation with research institutes and universities (**core technologies in soil remediation, water body treatment**), **multiple high-value qualifications**, and **strategic partnerships with enterprises and institutions**[89](index=89&type=chunk) - The company's development strategy is to adhere to **diversification**, leverage capital market advantages, combine organic growth with external expansion, build a **'solution + investment and operation' business model**, and become a leading international ecological environment service provider[91](index=91&type=chunk) - Operational plans include: **Jinglan Muhe** strengthening market development, risk control, refined management, and talent cultivation; **Zhongke Dingshi** promoting qualification upgrades, market expansion, financial compliance, and technology R&D; **Jinglan Environmental** deepening market expansion, comprehensive budget management, and business contract management; **Jinglan Yuanlin** establishing regional marketing and production models, and implementing project manager contracting[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - The management headquarters will **enhance internal control compliance**, **improve capital and budget management**, **strengthen human resource development**, **perfect management systems**, and actively **explore domestic and international markets**[95](index=95&type=chunk) - Potential risks and countermeasures: **competition risk** (improving industry chain, external growth), **funding risk** (refinancing, industrial funds, strengthening management), **core talent cultivation risk** (detailed HR system, optimizing structure, improving incentives)[96](index=96&type=chunk) [X. Reception of Research, Communication, Interview, and Other Activities](index=30&type=section&id=X.%20Reception%20of%20Research%2C%20Communication%2C%20Interview%2C%20and%20Other%20Activities) This section discloses the company's reception of investor research and communication activities during the reporting period, including 36 phone communications with individual investors, primarily discussing company operations, project progress, fulfillment of compensation obligations, and future development plans, without disclosing undisclosed material information Reception of Research, Communication, Interview, and Other Activities During Reporting Period | Reception Date | Reception Method | Type of Recipient | Recipient | Main Topics Discussed and Materials Provided | Number of Receptions | Number of Individuals Received | Undisclosed Material Information Disclosed, Revealed, or Leaked | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | November 20, 2020 | Phone Communication | Individual | Investor | Company operations, project progress, fulfillment of compensation obligations, future development plans, etc.; no materials provided | 36 | 36 | No | [Part V Significant Events](index=31&type=section&id=Part%20V%20Significant%20Events) This section details the company's profit distribution plans, fulfillment of commitments, major litigation, and other significant events, providing insights into corporate governance and material developments [I. Profit Distribution of Ordinary Shares and Capital Reserve Conversion to Share Capital](index=31&type=section&id=I.%20Profit%20Distribution%20of%20Ordinary%20Shares%20and%20Capital%20Reserve%20Conversion%20to%20Share%20Capital) This section discloses the company's ordinary share dividend distribution plans for the past three years (2018-2020), all of which involve no cash dividends, bonus shares, or conversion of capital reserves into share capital - The company planned **no cash dividends, bonus shares, or conversion of capital reserves into share capital** for the 2018, 2019, and 2020 fiscal years[99](index=99&type=chunk) Company's Cash Dividend Distribution for Ordinary Shares in the Past Three Years | Dividend Year | Cash Dividend Amount (incl. tax) (RMB) | Net Profit Attributable to Ordinary Shareholders of Listed Company (RMB) | Ratio of Cash Dividend Amount to Net Profit Attributable to Ordinary Shareholders of Listed Company in Consolidated Statements | | :--- | :--- | :--- | :--- | | 2020 | 0.00 | -2,354,850,607.11 | 0.00% | | 2019 | 0.00 | -1,036,745,832.56 | 0.00% | | 2018 | 0.00 | 102,535,975.63 | 0.00% | [II. Profit Distribution and Capital Reserve Conversion to Share Capital for the Current Reporting Period](index=31&type=section&id=II.%20Profit%20Distribution%20and%20Capital%20Reserve%20Conversion%20to%20Share%20Capital%20for%20the%20Current%20Reporting%20Period) This section reiterates the company's plan for the year to not distribute cash dividends, bonus shares, or convert capital reserves into share capital - The company plans **no cash dividends, bonus shares, or conversion of capital reserves into share capital** for the year[102](index=102&type=chunk) [III. Fulfillment of Commitments](index=32&type=section&id=III.%20Fulfillment%20of%20Commitments) This section details the fulfillment status of commitments by the company's actual controller, shareholders, related parties, and the company itself during the reporting period, including independence, avoidance of horizontal competition, regulation of related-party transactions, share lock-up, and performance commitments; notably, Beifang Yuanlin's performance commitment was not met, and the company has filed a lawsuit and obtained a judgment - Multiple commitments are ongoing, including **long-term commitments from the controlling shareholder and actual controller regarding independence, avoidance of horizontal competition, and regulation and reduction of related-party transactions**[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Beifang Yuanlin's performance commitment was **overdue and unfulfilled**, primarily due to **macroeconomic conditions and changes in the financial environment**, leading to reduced operating revenue and decreased profit; the company has filed a lawsuit and obtained a judgment, requiring the compensation obligors to fulfill their compensation obligations[114](index=114&type=chunk) Zhongke Dingshi Environmental Engineering Co., Ltd. 2020 Performance Commitment Fulfillment | Indicator | Committed Performance (RMB 10,000) | Actual Performance for Current Period (RMB 10,000) | Performance Commitment Ratio | | :--- | :--- | :--- | :--- | | Net profit attributable to parent company after deducting non-recurring gains and losses | 40,000 (three-year cumulative) | 11,685.96 (2020) | N/A | | Net cash flow from operating activities | 15,000 (three-year cumulative) | N/A | N/A | - Zhongke Dingshi's 2020 performance commitment fulfillment **exceeded profit forecast expectations**, and **no goodwill impairment was recognized** during the reporting period[117](index=117&type=chunk) [IV. Non-Operating Fund Occupation by Controlling Shareholder and Its Related Parties](index=44&type=section&id=IV.%20Non-Operating%20Fund%20Occupation%20by%20Controlling%20Shareholder%20and%20Its%20Related%20Parties) This section states that during the reporting period, there was no non-operating fund occupation by the controlling shareholder and its related parties of the listed company - The company **had no non-operating fund occupation by its controlling shareholder or related parties** during the reporting period[117](index=117&type=chunk) [V. Explanations by the Board of Directors, Supervisory Board, and Independent Directors (if any) on the Accounting Firm's 'Non-Standard Audit Report' for the Current Period](index=44&type=section&id=V.%20Explanations%20by%20the%20Board%20of%20Directors%2C%20Supervisory%20Board%2C%20and%20Independent%20Directors%20(if%20any)%20on%20the%20Accounting%20Firm%27s%20%27Non-Standard%20Audit%20Report%27%20for%20the%20Current%20Period) This section states that the accounting firm did not issue a non-standard audit report for the company during the reporting period - The company **did not receive a non-standard audit report** from the accounting firm during the reporting period[118](index=118&type=chunk) [VI. Explanation of Changes in Accounting Policies, Accounting Estimates, and Accounting Methods Compared to the Previous Year's Financial Report](index=44&type=section&id=VI.%20Explanation%20of%20Changes%20in%20Accounting%20Policies%2C%20Accounting%20Estimates%2C%20and%20Accounting%20Methods%20Compared%20to%20the%20Previous%20Year%27s%20Financial%20Report) This section explains that the company adopted new revenue standards from January 1, 2020, and retrospectively adjusted relevant items in the opening consolidated financial statements, detailing the impact on consolidated balance sheet and income statement items under both new and old standards - The company adopted the Ministry of Finance's revised **'Enterprise Accounting Standard No. 14—Revenue' (New Revenue Standard)** starting **January 1, 2020**[118](index=118&type=chunk)[119](index=119&type=chunk) Impact of Adopting New Revenue Standard on Opening Consolidated Statement Items for 2020 | Statement Item | December 31, 2019 (RMB) | January 1, 2020 (RMB) | | :--- | :--- | :--- | | Contract Assets | 0.00 | 3,203,726,524.07 | | Inventories | 4,354,696,634.50 | 680,900,264.45 | | Advances from Customers | 905,195,208.15 | 0.00 | | Contract Liabilities | 0.00 | 412,191,529.29 | | Undistributed Profits | -581,857,220.20 | -592,947,437.92 | | Owners' Equity Attributable to Parent Company | 4,635,903,674.91 | 4,624,813,457.19 | Impact of Adopting New Revenue Standard on 2020 Consolidated Income Statement Items | Statement Item | Current Period Amount Under New Standard (RMB) | Current Period Amount Under Original Standard (RMB) | | :--- | :--- | :--- | | Asset Impairment Losses | -1,334,086,677.94 | -1,338,171,195.42 | | Total Profit | -2,481,562,301.71 | -2,485,646,819.19 | | Net Profit | -2,531,322,158.15 | -2,534,655,123.93 | [VII. Explanation of Significant Accounting Error Corrections Requiring Retrospective Restatement During the Reporting Period](index=45&type=section&id=VII.%20Explanation%20of%20Significant%20Accounting%20Error%20Corrections%20Requiring%20Retrospective%20Restatement%20During%20the%20Reporting%20Period) This section states that the company had no significant accounting error corrections requiring retrospective restatement during the reporting period - The company **had no significant accounting error corrections requiring retrospective restatement** during the reporting period[121](index=121&type=chunk) [VIII. Explanation of Changes in Consolidation Scope Compared to the Previous Year's Financial Report](index=45&type=section&id=VIII.%20Explanation%20of%20Changes%20in%20Consolidation%20Scope%20Compared%20to%20the%20Previous%20Year%27s%20Financial%20Report) This section explains that the company's consolidation scope changed in 2020, with 2 new subsidiaries added and 3 deregistered, reducing the total number of consolidated subsidiaries from 48 to 47 - In 2020, the company consolidated **47 subsidiaries**, an increase of **2** and a decrease of **3** compared to the previous period[122](index=122&type=chunk) - Newly consolidated subsidiaries established in the current period are **Jinglan Environmental Technology (Chengdu) Co., Ltd. and Chifeng Muhe Hotel Co., Ltd.**[123](index=123&type=chunk) - Subsidiaries deregistered in the current period are **Jinglan Muhe Julu Tiantiantong Agricultural Water Supply Co., Ltd., Tianjin Landscape Water Environment Restoration Technology Co., Ltd., and Tianjin Beifang Kechuang Environmental Testing Co., Ltd.**[123](index=123&type=chunk) [IX. Appointment and Dismissal of Accounting Firms](index=46&type=section&id=IX.%20Appointment%20and%20Dismissal%20of%20Accounting%20Firms) This section discloses that the company appointed Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership) as its 2020 audit firm and states that no change in accounting firms occurred during the reporting period - The company engaged **Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership)** as its domestic accounting firm, with **6 consecutive years of audit services** and a remuneration of **1.05 million RMB**[124](index=124&type=chunk) - During the reporting period, the company **did not change its accounting firm**[124](index=124&type=chunk) - The company engaged **Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership)** as its 2020 internal control audit firm, with a fee of **600,000 RMB**[124](index=124&type=chunk) [X. Delisting Risk After Annual Report Disclosure](index=46&type=section&id=X.%20Delisting%20Risk%20After%20Annual%20Report%20Disclosure) This section states that the company does not face delisting after the annual report disclosure - The company **did not face delisting** during the reporting period[125](index=125&type=chunk) [XI. Bankruptcy and Reorganization Matters](index=46&type=section&id=XI.%20Bankruptcy%20and%20Reorganization%20Matters) This section states that the company had no bankruptcy and reorganization matters during the reporting period - The company **had no bankruptcy and reorganization matters** during the reporting period[125](index=125&type=chunk) [XII. Major Litigation and Arbitration Matters](index=46&type=section&id=XII.%20Major%20Litigation%20and%20Arbitration%20Matters) This section discloses the company's major litigation and arbitration matters, primarily including lawsuits filed against relevant parties due to Beifang Yuanlin's unfulfilled performance commitment, for which the court has issued a first-instance judgment requiring compensation; it also discloses other litigation and arbitration cases not meeting the materiality threshold - Due to **Beifang Yuanlin's unfulfilled performance commitment**, the company filed a lawsuit against **Beikong Engineering, Gao Xuegang, and other related parties**, involving an amount of **720.88 million RMB**[126](index=126&type=chunk) - The court has issued a **first-instance judgment** regarding the Beifang Yuanlin performance commitment lawsuit, requiring the defendants to fulfill their compensation obligations, with the judgment result **not impacting the company's 2020 net profit**[126](index=126&type=chunk) Major Litigation and Arbitration Matters During Reporting Period | Basic Information of Litigation (Arbitration) | Amount Involved (RMB 10,000) | Provision for Liabilities Formed | Litigation (Arbitration) Progress | Execution Status of Litigation (Arbitration) Judgment | | :--- | :--- | :--- | :--- | :--- | | Beifang Yuanlin performance commitment unfulfilled lawsuit | 72,087.85 | No | Court has issued a first-instance judgment | Not yet started execution | | Litigation/arbitration not meeting major disclosure standards - Company (incl. subsidiaries) suing others | 3,383.36 | No | Some have been concluded with judgments, some are not yet heard or withdrawn/settled | Some executed, some not yet in execution phase | | Litigation/arbitration not meeting major disclosure standards - Others suing the company (incl. subsidiaries) | 26,097 | No | Some have been concluded with judgments, some are not yet heard or withdrawn/settled | Some executed, some not yet in execution phase | [XIII. Penalties and Rectification](index=48&type=section&id=XIII.%20Penalties%20and%20Rectification) This section states that the company had no penalties or rectification situations during the reporting period - The company **had no penalties or rectification situations** during the reporting period[129](index=129&type=chunk) [XIV. Integrity Status of the Company, Its Controlling Shareholder, and Actual Controller](index=49&type=section&id=XIV.%20Integrity%20Status%20of%20the%20Company%2C%20Its%20Controlling%20Shareholder%2C%20and%20Actual%20Controller) This section states that the company, its controlling shareholder, and actual controller maintain good integrity, with no unfulfilled court judgments or overdue unpaid debts - The company, its controlling shareholder, and actual controller maintain **good integrity**, with **no unfulfilled court judgments or large overdue unpaid debts**[130](index=130&type=chunk) [XV. Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=49&type=section&id=XV.%20Implementation%20of%20Equity%20Incentive%20Plans%2C%20Employee%20Stock%20Ownership%20Plans%2C%20or%20Other%20Employee%20Incentive%20Measures) This section states that the company had no implementation of equity incentive plans, employee stock ownership plans, or other employee incentive measures during the reporting period - The company **had no equity incentive plans, employee stock ownership plans, or other employee incentive measures** or their implementation during the reporting period[131](index=131&type=chunk) [XVI. Major Related-Party Transactions](index=49&type=section&id=XVI.%20Major%20Related-Party%20Transactions) This section states that during the reporting period, the company had no related-party transactions related to daily operations, asset or equity acquisitions/disposals, joint external investments, or non-operating related-party receivables/payables - The company **had no related-party transactions related to daily operations** during the reporting period[132](index=132&type=chunk) - The company **had no related-party transactions involving asset or equity acquisitions/disposals** during the reporting period[133](index=133&type=chunk) - The company **had no related-party transactions involving joint external investments** during the reporting period[134](index=134&type=chunk) - The company **had no non-operating related-party receivables or payables** during the reporting period[135](index=135&type=chunk) [XVII. Major Contracts and Their Fulfillment](index=50&type=section&id=XVII.%20Major%20Contracts%20and%20Their%20Fulfillment) This section discloses the company's major contract fulfillment during the reporting period, including leasing matters, significant guarantees, and major ordinary course contracts; the company has office leases and provided multiple guarantees for subsidiaries, with total guarantees accounting for 149.83% of net assets; it also lists several ongoing major ordinary course contracts - To meet office needs, the company leased **part of the second floor of Poly International Plaza T2, Wangjing Dongyuan 7th District, Chaoyang District, Beijing**[139](index=139&type=chunk) External Guarantees by the Company and Its Subsidiaries (Excluding Guarantees to Subsidiaries) | Guaranteed Party Name | Guaranteed Amount (RMB 10,000) | Actual External Guarantee Balance at Period-End (RMB 10,000) | | :--- | :--- | :--- | | Jiaozuo Runhua Chemical Industry Co., Ltd. | 10,000 | 5,000 | | Ulanqab Jinglan Ecological Technology Co., Ltd. | 40,000 | 25,000 | - At the end of the reporting period, the company's **total guarantees amounted to 3.34 billion RMB**, accounting for **149.83% of the company's net assets**[150](index=150&type=chunk) - The company provided multiple guarantees for subsidiaries, including **Jinglan Muhe, Beifang Yuanlin, Jinglan Ecological, Jinglan Nengke, Jinglan Environmental Technology, Jinglan Environmental Construction, Jinglan Resource Technology, and Zhongke Dingshi**, with guarantee methods including **joint and several liability guarantees, mortgage guarantees, and pledge guarantees**[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - The company signed multiple major ordinary course contracts, including the **Gaotang County Rural Revitalization Demonstration Project, Tianjin Beichen District Chemical Hazardous Goods Trade and Storage Company Site Remediation Project, and Shandong Dacheng Agricultural Chemical Co., Ltd. Phase II Soil Remediation Project**, with some projects completed and others in construction or design phases[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [XVIII. Social Responsibility](index=61&type=section&id=XVIII.%20Social%20Responsibility) This section describes the company's fulfillment of social responsibilities, including upholding its corporate mission, developing core businesses, strictly adhering to environmental responsibilities, engaging in public welfare activities, and technological innovation; the company actively participates in targeted poverty alleviation through donations, educational support, elderly care, disability assistance, and medical aid, and implements industry-based poverty alleviation aligned with its main business - The company upholds its mission of **'Green Mountains, Clear Waters, Blue Skies, Enduring China Dream,'** focusing on the ecological environment sector and striving to become a leading international **'ecological environment planning, investment, construction, and operation service provider'**[161](index=161&type=chunk) - The company actively responded to targeted poverty alleviation initiatives, with **Jinglan Yuanlin donating to 7 assisted villages in Lintan County, Gansu Province**, and **Jinglan Muhe donating supplies to students in Shaburitai Village, Chifeng City**, and participating in poverty alleviation and warmth-giving activities[163](index=163&type=chunk) 2020 Targeted Poverty Alleviation Achievements | Indicator | Unit | Quantity/Status | | :--- | :--- | :--- | | Overall situation: Funds | RMB 10,000 | 7.1 | | Overall situation: Material equivalent | RMB 10,000 | 1.01 | | Other projects: Number of projects | projects | 9 | | Other projects: Investment amount | RMB 10,000 | 8.11 | - The company's subsequent targeted poverty alleviation plan will involve **job creation, placement of disabled individuals, and industry-based poverty alleviation** leveraging its main business[165](index=165&type=chunk) - The company and its subsidiaries are **not classified as key polluting units** by environmental protection authorities[166](index=166&type=chunk) [XIX. Explanation of Other Significant Matters](index=63&type=section&id=XIX.%20Explanation%20of%20Other%20Significant%20Matters) This section states that the company had no other significant matters requiring explanation during the reporting period - The company **had no other significant matters requiring explanation** during the reporting period[166](index=166&type=chunk) [XX. Significant Matters of Company Subsidiaries](index=63&type=section&id=XX.%20Significant%20Matters%20of%20Company%20Subsidiaries) This section states that the company had no significant matters concerning its subsidiaries during the reporting period - The company **had no significant matters concerning its subsidiaries** during the reporting period[167](index=167&type=chunk) [Part VI Share Changes and Shareholder Information](index=64&type=section&id=Part%20VI%20Share%20Changes%20and%20Shareholder%20Information) This section details the company's share capital changes, securities issuance, and the status of its shareholders and actual controller, including major shareholding structures and any pledges or freezes [I. Share Change Status](index=64&type=section&id=I.%20Share%20Change%20Status) This section details the changes in the company's total shares, restricted shares, and unrestricted shares during the reporting period, primarily due to the lifting of restrictions on some shareholders' shares Share Change Status (2020) | Share Class | Number Before Change (shares) | Proportion Before Change | Change (Increase/Decrease) (shares) | Number After Change (shares) | Proportion After Change | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 290,697,495 | 28.40% | -88,894,705 | 201,802,790 | 19.71% | | II. Unrestricted Shares | 732,970,321 | 71.60% | 88,894,705 | 821,865,026 | 80.29% | | III. Total Shares | 1,023,667,816 | 100.00% | 0 | 1,023,667,816 | 100.00% | - The main reason for share changes was the company processing the **lifting of restrictions on 82,281,059 shares** for 9 shareholders, including **Yin Xiaodong and Banding Asset Management**[170](index=170&type=chunk) Changes in Restricted Shares (Partial Shareholders) | Shareholder Name | Restricted Shares at Beginning of Period (shares) | Restricted Shares Released in Current Period (shares) | Restricted Shares at End of Period (shares) | Reason for Restriction | | :--- | :--- | :--- | :--- | :--- | | Yin Xiaodong | 113,842,569 | 28,460,642 | 85,381,927 | Additional Issuance | | Banding Asset Management | 48,141,732 | 48,141,732 | 0 | Additional Issuance | | Gu'an Yichang | 5,078,092 | 5,078,092 | 0 | Additional Issuance | [II. Securities Issuance and Listing](index=66&type=section&id=II.%20Securities%20Issuance%20and%20Listing) This section states that the company had no securities issuance during the reporting period, no explanations for changes in total shares, shareholder structure, or asset and liability structure, and no existing internal employee shares - The company **had no securities issuance (excluding preferred shares)** during the reporting period[173](index=173&type=chunk) - The company **had no explanations for changes in total shares and shareholder structure, or changes in the company's asset and liability structure** during the reporting period[173](index=173&type=chunk) - The company **had no existing internal employee shares** during the reporting period[173](index=173&type=chunk) [III. Shareholders and Actual Controller](index=66&type=section&id=III.%20Shareholders%20and%20Actual%20Controller) This section discloses the company's shareholder count and shareholding, including the top 10 shareholders' proportions, quantities, and pledge/freeze status; the controlling shareholder is Beijing Yangshu Lantian Investment Center (Limited Partnership), and the actual controller is Guo Shaozeng, with no changes during the reporting period - At the end of the reporting period, the total number of ordinary shareholders was **32,277**[174](index=174&type=chunk) Top 5 Shareholders' Shareholding (Year-End 2020) | Shareholder Name | Shareholder Nature | Shareholding Proportion | Shares Held at Period-End (shares) | Pledge or Freeze Status (shares) | | :--- | :--- | :--- | :--- | :--- | | Beijing Yangshu Lantian Investment Center (Limited Partnership) | Domestic Non-State-Owned Legal Person | 16.68% | 170,763,781 | Pledged: 170,735,328 | | Yin Xiaodong | Domestic Natural Person | 11.12% | 113,842,569 | N/A | | Beijing Yangshu Jiaye Investment Center (Limited Partnership) | Domestic Non-State-Owned Legal Person | 9.21% | 94,316,806 | Pledged: 94,316,806 | | Wuliji | Domestic Natural Person | 5.65% | 57,814,766 | Pledged: 57,799,998 | | Jinglan Holdings Co., Ltd. | Domestic Non-State-Owned Legal Person | 5.10% | 52,200,000 | Pledged: 50,026,701 | - The controlling shareholder is **Beijing Yangshu Lantian Investment Center (Limited Partnership)**, and the actual controller is **Guo Shaozeng**, with **no changes** during the reporting period[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [Part VII Preferred Shares Related Information](index=70&type=section&id=Part%20VII%20Preferred%20Shares%20Related%20Information) This section confirms that the company had no preferred shares during the reporting period [Preferred Shares Related Information](index=70&type=section&id=Preferred%20Shares%20Related%20Information) This section states that the company had no preferred shares during the reporting period - The company **had no preferred shares** during the reporting period[184](index=184&type=chunk) [Part VIII Convertible Corporate Bonds Related Information](index=71&type=section&id=Part%20VIII%20Convertible%20Corporate%20Bonds%20Related%20Information) This section confirms that the company had no convertible corporate bonds during the reporting period [Convertible Corporate Bonds Related Information](index=71&type=section&id=Convertible%20Corporate%20Bonds%20Related%20Information) This section states that the company had no convertible corporate bonds during the reporting period - The company **had no convertible corporate bonds** during the reporting period[186](index=186&type=chunk) [Part IX Directors, Supervisors, Senior Management, and Employees](index=72&type=section&id=Part%20IX%20Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20and%20Employees) This section provides details on the shareholdings, changes, professional backgrounds, and compensation of the company's directors, supervisors, and senior management, along with an overview of the employee structure and related policies [I. Shareholding Changes of Directors, Supervisors, and Senior Management](index=72&type=section&id=I.%20Shareholding%20Changes%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section lists the shareholdings of the company's directors, supervisors, and senior management, including opening and closing share counts and changes during the period, noting that some executives, such as Liu Xin, Guo Yuanyuan, Li Guirong, Wuliji, and Yin Xiaodong, hold company shares Shareholding Changes of Directors, Supervisors, and Senior Management (Partial) | Name | Position | Shares Held at Beginning of Period (shares) | Shares Held at End of Period (shares) | | :--- | :--- | :--- | :--- | | Liu Xin | Director, Vice President, Board Secretary | 124,799 | 124,799 | | Guo Yuanyuan | Vice President | 497,400 | 497,400 | | Li Guirong | Vice President | 72,780 | 72,780 | | Wuliji | Vice President | 57,814,766 | 57,814,766 | | Yin Xiaodong | Vice President | 113,842,569 | 113,842,569 | [II. Changes in Company Directors, Supervisors, and Senior Management](index=74&type=section&id=II.%20Changes%20in%20Company%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section discloses changes in the company's directors, supervisors, and senior management during the reporting period, including Jiang Lizhe's resignation as Executive President, position adjustments for Yang Rengui and Hao Xin, and the departures of Wu Chunjun and Li Wenming - Jiang Lizhe resigned as Executive President on **April 13, 2021**, due to personal reasons[190](index=190&type=chunk) - Yang Rengui and Hao Xin's positions were adjusted, with **Yang Rengui appointed President and Hao Xin appointed Executive President**[190](index=190&type=chunk) - Wu Chunjun resigned as Vice Chairman and President, and Li Wenming resigned as Vice President[190](index=190&type=chunk) [III. Employment Status](index=74&type=section&id=III.%20Employment%20Status) This section details the professional backgrounds, key work experiences, and internal and external appointments of the company's current directors, supervisors, and senior management, including positions in shareholder entities and other organizations, and states no securities regulatory penalties in the past three years - Chairman **Yang Rengui holds a Ph.D. in Finance** and previously served as Chairman and President of Boya Software Group[191](index=191&type=chunk) - President **Hao Xin previously served as Director, Party Secretary, and Executive Deputy General Manager of Beijing Urban Construction Environmental Remediation Co., Ltd.**[192](index=192&type=chunk) - Board Secretary **Liu Xin holds a master's degree and a Tsinghua EMBA background**[194](index=194&type=chunk) - Supervisory Board Chairman **Yin Zhoucheng is a Senior Economist** and previously served as Vice President and Chairman of Jilin Pan-Asia Trust and Investment Co., Ltd.[196](index=196&type=chunk) - Vice President **Yin Xiaodong currently serves as Chairman of Zhongke Dingshi**[198](index=198&type=chunk) - The company's current and departed directors, supervisors, and senior management **had no securities regulatory penalties in the past three years**[200](index=200&type=chunk) [IV. Compensation of Directors, Supervisors, and Senior Management](index=78&type=section&id=IV.%20Compensation%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section discloses the decision-making process, determination basis, and actual payment of compensation for the company's directors, supervisors, and senior management; in 2020, the total pre-tax compensation paid to directors, supervisors, and senior management was 5.54 million RMB - Compensation for directors, supervisors, and senior management is determined by the **company's board of directors and general meeting of shareholders**, based on **job responsibilities, performance appraisals, and industry compensation levels**[201](index=201&type=chunk) 2020 Compensation of Directors, Supervisors, and Senior Management (Partial) | Name | Position | Total Pre-Tax Compensation from Company (RMB 10,000) | Received Compensation from Company's Related Parties | | :--- | :--- | :--- | :--- | | Yang Rengui | Chairman | 60 | No | | Hao Xin | Director, President | 82.98 | No | | Jiang Lizhe | Director, Executive President | 66.8 | No | | Liu Xin | Director, Vice President, Board Secretary | 50.17 | No | | Nie Xingkai | Independent Director | 12 | No | | Zhu Jiang | Independent Director | 12 | No | | Meng Chen | Supervisor | 0 | Yes | | Total | -- | 554 | -- | [V. Company Employee Information](index=79&type=section&id=V.%20Company%20Employee%20Information) This section details the company's employee count, professional composition, and education levels, and outlines its compensation policies and training plans; as of the end of the reporting period, the company had a total of 1,078 active employees, with a higher proportion of engineering and technical personnel 2020 Employee Count and Professional Composition | Indicator | Quantity (people) | | :--- | :--- | | Total number of active employees | 1,078 | | Production personnel | 143 | | Sales personnel | 95 | | Technical personnel | 120 | | Financial personnel | 69 | | Administrative personnel | 53 | | Engineering personnel | 345 | | Other | 253 | 2020 Employee Education Level | Education Level Category | Quantity (people) | | :--- | :--- | | Postgraduate (Doctorate and above) | 15 | | Postgraduate (Master's) | 158 | | Undergraduate | 387 | | Junior College | 229 | | High School and below | 289 | - The company's compensation policy is divided into **position-based salary and performance-based salary**, determined by **employee attendance, work completion, and appraisal results**[207](index=207&type=chunk) - In 2020, **new employee training coverage reached 100%**, and online vocational skills training was conducted; in 2021, micro-classroom training will continue to enhance employees' comprehensive quality[208](index=208&type=chunk) [Part X Corporate Governance](index=81&type=section&id=Part%20X%20Corporate%20Governance) This section details the company's corporate governance structure, its independence from the controlling shareholder, the functioning of its board committees and supervisory board, and the internal control system [I. Basic Status of Corporate Governance](index=81&type=section&id=I.%20Basic%20Status%20of%20Corporate%20Governance) This section outlines the basic status of corporate governance, emphasizing the company's strict adherence to rele

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