长安汽车科技长安

CHANGAN智慧伙伴

Chongqing Changan Automobile Company Limited

2026 Semi-Annual Report

August 2026

Chapter 1 Important Notices, Contents, and Definitions

1. The Board of Directors (or the “Board”), the Supervisory Board as well as the directors, supervisors and senior managers of Chongqing Changan Automobile Co., Ltd. hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein.

2. Zhu Huarong, the Company’s legal representative, Ni Erke, the Company’s Chief Financial Officer and Shi Haifeng, the person-in-charge of the accounting organ hereby guarantee that the financial statements carried in this Report are factual, accurate and complete.

3. Except the following directors, all the directors have attended the board meeting for reviewing this Report.

4. Any prospective description such as future business plans and development strategies in this Report shall not be considered as the Company’s commitment to investors. Investors and relevant persons shall be sufficiently mindful of risks, and undertake the difference in plans, predictions and commitment.

5. Chapter III “Management Discussion and Analysis” of this Report describes the possible risks and countermeasures of the Company, and investors shall pay attention to the relevant content.

6.The company plans not to distribute cash dividends, not to issue bonus shares, and not to increase share capital by capitalizing capital reserves.

This Report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.

CONTENTS

Chapter 1 Important Notices, Contents, and Definitions....1

Chapter 2 Company Profile and Key Financial Indexes....4

Chapter 3 Management Discussion and Analysis....7

Chapter 4 Corporate Governance, Environmental, and Social Responsibility....24

Chapter 5 Important Matters....31

Chapter 6 Share Changes and Shareholder Information....37

Chapter 7 Bonds....43

Chapter 8 Financial Report....46

Directory of Reference Documents

I. Financial statements carrying the signatures and seals of the Company’s legal representative, the Chief Financial Officer, and the person-in-charge of the accounting organ.

Ⅱ. During the reporting period, the original copies of all company documents and announcements publicly disclosed by the Company in China Securities Journal, Securities Times, Securities Daily, Shanghai Securities News, and Hong Kong Commercial Daily.

Definitions

Chapter 2 Company Profile and Key Financial Indexes

I. Company Profile

II. Contact Person and Contact Information

III. Other

1. Contact information

Whether the company's registered address, office address and their postal codes, company website, and email address have changed during the reporting period.

□ Applicable √ Not Applicable

The company's registered address, office address and their postal codes, website, and email address remained unchanged during the reporting period; for details, please refer to the 2025 Annual Report.

2. Information disclosure and preparation place

Whether the information disclosure and designated location for documents have changed during the reporting period.

□ Applicable √ Not Applicable

The website of the stock exchange where the company discloses its semi-annual report, the names and URLs of the media, and the location where the company's semi-annual report is kept remained unchanged during the reporting period; for specific details, please

refer to the 2025 Annual Report.

3. Other relevant materials

Whether there were any changes to other relevant information during the reporting period.

□ Applicable √ Not Applicable

IV. Key Accounting Data and Financial Indexes

Does the company need to retrospectively adjust or restate prior-year accounting data?

□ Yes √ No

V. The Differences between Chinese Accounting Standards and International Financial Reporting Standards

1. Differences in net profit and net asset attributable to shareholders in financial report disclosed in accordance with International Financial Reporting Standards and Chinese Accounting Standards.

□ Applicable √ Not applicable

No difference during the reporting period.

2. Differences of net profit and net assets disclosed in financial reports prepared under Overseas Financial Reporting Standards and Chinese Accounting Standards.

□ Applicable √ Not applicable

No difference during the reporting period.

3. Reasons for differences in accounting data under Chinese Accounting Standards and International Financial Reporting Standards.

□ Applicable √ Not applicable

VI. Items and Amounts of Non-Recurring Gains and Losses

√ Applicable □ Not Applicable

Unit: RMB

Details of other profit and loss items that conform to the definition of non-recurring gains and losses:

√ Applicable □ Not Applicable

In accordance with Interpretive Announcement No. 1 on Information Disclosure by Companies Offering Securities to the Public Regarding Non-recurring Gains and Losses, non-recurring gains and losses of investee units attributable to the Company's share of equity-accounted investment income are recognized.

Explanation of the Circumstances Regarding the Reclassification of Non-recurring Profit and Loss Items Listed in the "Interpretive Announcement No. 1 on Information Disclosure by Companies Offering Securities to the Public" as Recurring Profit and Loss Items. □ Applicable √ Not Applicable

No such cases for the reporting period.

Chapter 3 Management Discussion and Analysis

I. The main business of the Company in the reporting period

1. Business overview

Our company operates within the automotive manufacturing sector, with core business activities encompassing the research, development, manufacturing, and sales of complete vehicles, as well as the research and production of engines. The company is actively developing "three-electric" technologies represented by batteries, motors, and electronic control systems, intelligen technologies such as smart cockpits and autonomous driving, and new businesses including automotive life services, new marketing models, and battery swapping services; it is accelerating exploration into industrial finance and the used car sector, while proactively laying out emerging fields like embodied intelligence and the low-altitude economy to drive the enterprise's transformation into a smart and low-carbon mobility technology company.

Our company remains committed to the mission of "leading automotive civilization and benefiting human life," steadfastly advancing the "Third Entrepreneurship - Innovation and Entrepreneurship Plan," accelerating the transformation into an intelligent low-carbon mobility technology company, and striving to become a world-class automotive brand. The company is actively developing intelligent connected new energy vehicles, establishing three digital intelligence new energy brands: Avatr, Deepal, and Changan NEVO, while simultaneously creating the Changan Automobile and Changan Kaicheng brands to address the needs of global mainstream internal combustion engine vehicle users and commercial markets, and further expanding its portfolio of join venture brands through partnerships such as Changan Ford and Changan Mazda. In the traditional internal combustion engine vehicle sector, the company has launched a series of classic independent brand models including the CS, Eado, and UNI series, while its joint ventures have introduced multiple well-known products such as the all-new Mondeo, all-new Nautilus, CX-5, and Mazda3. In the new energy sector, the company has dedicatedly developed a comprehensive portfolio of new energy vehicles, including the Changan NEVO Q07, Changan NEVO A07, Changan NEVO Q06, Changan NEVO A06, Changan NEVO Q05, Deepal S09, Deepal S07, Deepal L06, Deepal S05, Deepal G318, Avatr 12, Avatr 11, Avatr 07L, Avatr 06, Changan Mazda EZ-60, Changan Kaicheng V919, and Changan Hunter, with a commitment to providing consumers with superior products and services.

The company is resolutely advancing the synergistic development of its independent and joint ventures, leveraging its own-brand automotive businesses including Avatr, Deepal, Changan NEVO, Changan Automobile, and Changan Kaicheng to firmly establish flagship products, while utilizing joint ventures such as Changan Ford and Changan Mazda to continuously deepen mutua trust and cooperation with partners and explore new collaborative opportunities on a global scale

2. Industry situation

In the first half of 2026, the century-old global transformation accelerated, and the strategic competition among major powers became increasingly complex and intense. Faced with a complex situation, China has precisely and effectively implemented more proactive and capable macroeconomic policies and developed new quality productive forces in accordance with local conditions. China's economy has withstood pressure, maintained overall stability, and continued its development trend towards newness and optimization, demonstrating strong resilience and vitality

Year-to-date, the automotive industry has maintained overall stability with a slight contraction in market size; cumulative sales from January to June reached 15.017 million units, representing a year-on-year decline of 4.1%. The market share of new energy vehicles (NEVs) and internal combustion engine (ICE) vehicles has further diverged: NEVs accounted for 51.3% of the domestic market in the first half of the year, an increase of 4.5 percentage points year-on-year, while NEV exports surged by 122.3% year-on-year. Conversely, the domestic market for ICE vehicles shrank by 27.8% year-on-year, with its market share continuing to contract. In the context of a sluggish domestic automotive market, exports have emerged as the industry's most critical "stabilizer"

and "ballast stone." While the top ten automotive groups all recorded year-on-year declines in the domestic market, their export markets maintained high growth rates exceeding 30%. Chinese brands have firmly grasped the two key drivers of new energy vehicles and exports, maintaining a cliff-like market share advantage over joint-venture brands; from January to June, sales of Chinese-brand passenger cars reached 9.138 million units, accounting for 71.8% of the market share, a year-on-year increase of 3.3 percentage points, continuing to lead the industry. It is worth noting that since the beginning of this year, significant increases in the costs of key raw materials and components have forced enterprises to raise prices in response; specifically, lithium carbonate prices have returned to high levels in the first half of the year, while copper prices have remained persistently elevated. Furthermore, the explosive surge in AI computing power demand has encroached upon storage wafer production capacity, resulting in a supply-demand imbalance for automotive-grade storage chips and triggering a sharp price surge

At the policy-driven level, first, in the first half of the year, the phase-out of the new energy vehicle purchase tax exemption (shifting from full exemption to a 50% reduction) led to a certain degree of premature release of market demand, with a significan impact on certain vehicle models (the new energy micro-sedan market, the passenger car segment with the largest decline, fell by 68.3% year-on-year); second, we deepened the implementation of the "two new" policies by optimizing fund allocation, unifying subsidy standards, and balancing fund usage to continuously amplify the policy effectiveness of stabilizing investment, expanding consumption, promoting transformation, and benefiting people's livelihood; third, we focused on industry sectors with prominen issues, deployed a "combination of measures" in price and anti-unfair competition regulation and law enforcement to foster a sound market ecosystem, and drove enterprises to shift from "competing on price" to "competing on quality."

(The above data and information are sourced from the "China Automotive Industry Production and Sales Quick Report" published by the China Association of Automobile Manufacturers, industry information releases, and publicly available channels.)

3. Enterprise market performance

2026 marks the inaugural year of the 15th Five-Year Plan; in the first half of the year, Changan Automobile steadfastly advanced its "Third Entrepreneurship – Innovation and Entrepreneurship Plan 9.0," accelerated the implementation of its "13336" strategic layout, and leveraged the synergistic efforts of three major initiatives to anchor breakthroughs in strategic depth. In the first half o 2026, amid a sector-wide downturn that led to a persistent weakening of market demand, the company fully focused on stabilizing operations and accelerating sales; although the half-year performance fell short of expectations due to the macroeconomic environment, the company successfully maintained its core business foundation, achieving a sales volume of 1.119 million units from January to June, of which overseas exports reached 455,000 units, representing a year-on-year increase of 51.9%, and new energy vehicle sales totaled 414,000 units

The "Shangri-La" initiative is advancing steadily, with Avatr, Deepal, and Changan NEVO, three digital intelligence new energy brands, successively launching multiple refreshed models to further enrich their product matrix and boost sales growth; the "Global Hybrid China Solution" Changan Blue Core Super Engine Hybrid made its global debut, featuring a deep electrification intelligent hybrid system composed of a 500-bar ultra-high-pressure direct-injection hybrid engine, a high-flux high-power hybrid electric drive, a high-performance high-safety battery, and an AI cloud intelligent control system that requires no charging, empowering traditional internal combustion engine vehicles with electric technology to innovate a "balanced oil-electric integration and intelligent fusion" breakthrough hybrid model, redefining the efficient hybrid mobility experience and providing global users with the optimal mobility solution across all scenarios and throughout the entire lifecycle. The first prototype of the WE20TG-AA hybrid-specific engine, jointly developed with Dongan Power, has officially rolled off the production line; as a power product targeting the high-end market, this engine incorporates advanced technologies such as ultra-high-pressure 500bar spray technology, ultra-high compression ratio, and deep Miller cycle, achieving performance metrics that lead the global mass-produced 2.0L turbocharged direct-injection engine segment; meanwhile, the Taihang distributed electric drive technology has officially entered the mass production and popularization phase, and the "Golden Bell" battery has been awarded the Second Prize of the 2025 National Science and Technology Progress Award.

The "Beidou Tianshu" initiative continues to accelerate; following the acquisition of China's first formal license plate for L3-level dedicated autonomous driving in December last year, it was approved this year for an L4-level self-developed Robotax testing license, becoming the only vehicle manufacturer to possess full compliance and full-scenario L4-level unmanned driving tes qualifications; it released the "New Safety" achievements of Tianshu Intelligence, including the Tire Blowout Stability function, with all new and facelifted models equipped with Tianshu Intelligence standardly featuring the Tire Blowout Stability function starting from May 1st; the Item "Key Technology Development for Intelligent Connected Vehicle Driving Operating Systems Oriented to Central Computing," led by the company, passed its final acceptance, establishing a complete innovation chain of "R&D-Verification-Application," breaking through multiple industry technical bottlenecks, and creating an overall solution for a driving operating system with fully independent intellectual property rights. Chang'an Tianshu Intelligent Robotics (Chongqing) Co., Ltd. has been officially established to reshape the mobility ecosystem through embodied intelligence, aiming to create landmark embodied intelligence innovative products and solutions and to become a world-class provider of robotics products and services. Changan's fully independently developed Tianshu large language model has obtained filing and approval from the Cyberspace Administration of China for "generative artificial intelligence services," possessing the compliance capabilities for independent training, independent operation, and providing services to the public, marking a critical step for Changan Automobile as the first vehicle enterprise in Chongqing to pass the national generative AI filing in the field of industrialization and implementation of autonomous and controllable large models.

The "Haina Bai Chuan" initiative has advanced to a higher dimension, with Changan Automobile's factory in Anápolis, Brazil, officially completed and commencing production; the first locally manufactured Changan UNI-T has successfully rolled off the assembly line, and in the future, leveraging the dual-fuel and hybrid power technology foundation, the factory will launch a full range of hybrid and electrified models, further strengthening the local supply chain and R&D capabilities while sharing green development solutions to jointly build a low-carbon and inclusive transportation ecosystem with all sectors of Brazilian society. Avatr has signed cooperation agreements with RSA Group, one of the leading automotive distribution giants in Northern Europe, and DeltaAuto Group, a leading automotive dealer in Eastern Europe, to leverage their extensive experience and mature channels to accelerate the expansion into high-value overseas markets; the 20,000th complete vehicle rolled off the production line at Changan's Rayong plan in Thailand, marking a new milestone in its localized industrial layout in Southeast Asia; the Polish market achieved a critica breakthrough from zero to a thousand orders, with the first batch of vehicles loaded and shipped in the first quarter. The all-new Changan NEVO Q05 has been officially launched in Uzbekistan with great fanfare.

Against the backdrop of rapid iteration in the domestic new energy vehicle market, the continuous contraction of the interna combustion engine vehicle market, and intensifying competition in overseas markets, Changan Automobile has consistently adhered to product innovation and remained committed to building classic products, focusing on new energy vehicles and overseas incremental markets; in March, the company's monthly export volume exceeded 100,000 units for the first time, and its new energ vehicle sales for the first half of the year once again surpassed the 400,000-unit threshold; during the first half of the year, a dense launch of new energy vehicle models occurred, with the Avatr 06T, the all-new Deepal S07 Huawei Qianshun LiDAR Edition, and the Avatr 07L, among others, being successively launched, providing consumers with more high-quality green mobility options. Among them, the Avatr 06T is positioned as an "intelligent, aesthetic, all-scenario sports sedan," featuring the Taihang distributed electric drive system, Huawei Qiankun ADS 4 assisted driving system, and Huawei Qiankun 896-line LiDAR as standard across the entire lineup, powered by the HarmonySpace 5 cockpit to deliver a smarter mobility experience; the Avatr 07L boasts comprehensive increases in body length, height, and width, easily meeting multi-scenario needs such as family travel, long-distance self-driving, and cargo loading. Traditional powertrain products undergo iterative renewal, continuously demonstrating vitality; the fourth-generation CS75 PLUS Blue Whale Super Engine and the fourth-generation Eado Blue Whale Super Engine have officially launched, innovating a class-defining hybrid model that equally prioritizes fuel and electricity with intelligent integration, enabling users to enjoy the reliability of fuel vehicles and the experience of electric vehicles without altering their refueling habits. In terms of produc market performance, in the first half of 2026, the retail sales of the all-new Changan NEVO Q05 ranked second among Chinese-brand compact SUVs (new energy vehicles), while the Changan NEVO A06 and Deepal L06 secured the second and third positions, respectively, in the Chinese-brand mid-size new energy sedan market; the second-generation Changan X5 PLUS and Eado series ranked at the forefront of the Chinese-brand compact traditional powertrain SUV and sedan markets.

Strengthen global communication to continuously enhance brand momentum. Capitalizing on the global spotlight of the World Cup, we established a global IP partnership with the Portuguese National Football Team (FPF), becoming its Global Official Partner; Changan Automobile, alongside Changan NEVO, shone on the CCTV Spring Festival Gala, with models such as the NEVO A06, Q05, and Q07 featured at the Harbin sub-venue of the Central Radio and Television Station's Spring Festival Gala; the Changan Brand Experience Center was selected for the inaugural "Travel with Brands" recommended list, standing as the sole national-leve brand tourism experience site in Chongqing, enabling tens of thousands of visitors to comprehend Changan's brand narrative and experience the unique charm of "Made in China" and "Chinese Service" through their journey; centered on Changan's "Tianshu Intelligence," global "Car Refining Season" events were conducted across seven countries and regions, including Saudi Arabia, Italy, Mexico, and Thailand; simultaneously, leveraging peak traffic periods like the 618 Shopping Festival, we executed targeted marketing campaigns, utilizing trending topics to create immersive atmospheric marketing, and have consecutively ranked among the top 50 Chinese Globalized Brands in the Kantar BrandZ for three years.

II. Analysis of Core Competitiveness

1. AI-driven intelligent transformation capabilities. The company adheres to the "One Core, Two Wings" AI strategy to build core AI competitiveness and foster new quality productive forces for technology enterprises. The company positions intelligent driving and intelligent cockpits as its "wing A," new quality productive forces driven by AI as its "wing B," and integrates AI base frameworks and toolchains with computing power and base platforms as a unified support system to advance technological iteration and efficiency upgrades in phased stages, actively promoting intelligent transformation. AI applications in office and business scenarios have achieved scaled implementation, with 11 transformation Item teams established to continuously advance intelligent operations, realizing AI-enabled functions such as 3C certificate verification, AI-driven smart channel site selection, AI-assisted intelligent software development, and AI-powered stress relief tape inspection. Launch the Star Intelligence Platform to cover core capabilities such as knowledge services and model development, achieving unified operation and monitoring of B-wing AI assets The 18 AI Master Items have cumulatively deployed 160 scenarios, with employees making over 3.11 million cumulative uses and AI autonomously executing more than 13 million tasks. Subsequently, the company will advance the launch of the Tianshu workbench and the full-scale deployment of AI scenarios to support the entire online data workflow and accelerate the company's digital and intelligent transformation.

2. Strategic layout and high-efficiency execution capability. The company adheres to strategic guidance, advances its three major plans in depth, upholds the principle of "no efficiency, no Changan," continuously enhances total factor productivity, and drives the implementation of its strategy to deeper and more substantive levels. The company, in coordination with the Group, released the "1445" strategy of China Changan Automobile Group, providing strategic guidance on the company's vision, core businesses, key transformations, and operational objectives to ensure the continuous refinement of the company's strategic system Establish the "1542" global management system, leveraging system construction as support and business transformation as the driving force to promote digital and intelligent empowerment, achieve efficiency improvements across all elements of people, finance, assets, and data, establish efficiency as a core competitive advantage, and efficiently advance the three major initiatives. In the new energy sector, mass production of the next-generation electric drive and battery management systems will reduce end-of-line charging time by 30%. Deepen cooperation with CATL, initiate the sodium-ion battery swapping technology Item, and jointly develop new battery systems. Conduct validation of 20Ah oxygen-polymer composite solid-state batteries, establish the Chenzhi Anqi retired battery crushing production line, and complete the strategic layout for the full battery lifecycle. Launching the globa hybrid China solution, Blue Whale Super Engine, to propel light-duty family sedans into the "2-liter" fuel consumption era in urban areas. In terms of intelligence, the "Beidou Tianshu 2.0" initiative is advancing steadily to establish a central ring network SDA platform, extending security into a proactive, multi-dimensional "pan-security" encompassing driving, health, psychologica well-being, and privacy. End-to-end intelligent driving achieves full-scenario coverage. Urban NOA (Navigation Assisted Driving), equipped with a fully self-developed distributed electric drive system, achieves stability control even during a tire blowout at speeds up to 225 km/h, thereby eliminating safety anxiety under extreme operating conditions. Granted an L4-level Robotaxi testing license to accelerate the commercialization of autonomous driving in shared mobility. The establishment of the Chang'an Tianshu Intelligen Robotics Company further expands the boundaries of the future ecosystem. In terms of globalization, the "Inclusive Plan 2.0" was launched, expanding the global sales network to 129 countries and regions, with a reserve of 485 local overseas suppliers, a category coverage rate of 43%, and a local demand satisfaction rate reaching 99%. Implement a "one zone, one policy" staffing model, strengthen the KD director team, and promote the localization of operations in quality and logistics. Refine the mechanisms fo overseas incentives, performance evaluation, and job rotation, and improve the localized employment system. The globa manufacturing system continues to improve, overseas production capacity is expanding rapidly, and mass production has commenced for 17 KD Items across eight countries including Brazil. Global brand building has yielded substantial results, including the organization of global partner conferences and the launch event for the Changan NEVO Q05 in Thailand, alongside globa communication campaigns leveraging the FIFA World Cup IP. "The "Three Major Plans" are being advanced efficiently, with an unwavering commitment to transforming into an intelligent and low-carbon mobility technology company and progressing toward becoming a world-class automotive brand.

3. Cultural leadership capability. The company continuously deepens its historical and cultural genes and spiritual core of "seeking innovation through change, embracing openness and inclusivity, adhering to scientific rationality, and demonstrating unyielding resilience," while constantly strengthening the guiding role of its corporate culture. Establishing its foundation in the automotive sector from scratch in 1981; launching a second entrepreneurial phase in 2003, successfully expanding its independent passenger vehicle market and accelerating its global layout to achieve dual leaps in scale and technology; Launched its third entrepreneurial drive in 2017 to transform into a smart, low-carbon mobility technology company, successively unveiled the "Shangri-La," "Beidou Tianshu," and "Haina Baichuan" initiatives, established the Avatr, Deepal, and Changan NEVO intelligent digital new energy brands, and steadily advanced toward becoming a world-class automotive brand. At the same time, the company continues to build a globally leading cultural system characterized by "global integration and respect for differences," deeply integrating cultural concepts and core values into management standards, processes, performance evaluation, and other key areas to establish a replicable, adaptable, and sustainable global cultural operation mechanism; it constructs a management specification system encompassing "institutional processes, management principles, and leading culture," dynamically revises the leading cultural concepts in accordance with the principle of "annual review and triennial iteration," continuously inherits and promotes Changan Automobile's leading culture, and effectively transforms culture into a core competitive advantage.

4. Talent and organizational capability. The company adheres to internal synergy to solidify endogenous momentum, achieves value co-creation through external ecosystem collaboration, systematically advances the global talent system construction, and stimulates organizational innovation vitality. The company's indirect controlling shareholder, China Changan, covers the entire automotive industry chain including the research and development, manufacturing, trading, logistics, and ecosystem of automobiles and parts, possessing strong capabilities in providing full-stack automotive professional solutions. Changan Automobile of China adheres to optimizing its industrial layout, collaboratively cultivating new business formats, models, and scenarios, and accelerating its transition from a manufacturing-oriented entity to an integrated manufacturing and service provider. Deepen strategic cooperation with core partners such as Huawei, CATL, Tencent, and Baidu to cross-industry build an integrated "Vehicle-Energy-Road-Cloud-Network-Satellite" large-scale industry and ecosystem. Focusing on the user's full lifecycle scenarios, we will engage in deep collaboration with leading domestic AI, ICT enterprises, and IoT ecosystem companies to achieve comprehensive integration of the "human-vehicle-home-office" digital intelligence ecosystem, thereby assisting Changan Automobile in integrating superior industrial resources and embedding itself into the broader ecosystem. Furthermore, the company continues to ensure robust human resource support, vigorously optimize its organizational structure, and invigorate the vitality of its talent workforce. Strengthen the selection, cultivation, utilization, and training of composite talents, continuously improve the training system for overseas expansion talents, persistently carry out international talent development, and simultaneously recruit mid-to-senior level professionals. Continuously implement the "New Horizon Plan" to facilitate the transformation of outstanding domestic core personnel into overseas roles across various sectors. Strengthen incentives and constraints, optimize the hierarchica incentive assessment mechanism, and cover multiple indicators including sales volume, revenue, profit, and expenses. Formulate an incentive scheme for achieving special performance targets in overseas markets for 2026, adhering to the principle of balancing volume and profitability to advance the overseas doubling plan. Optimize the systems and frameworks related to compensation management and year-end incentives.

5. Technological R&D capabilities. The company adheres to R&D innovation, steadily advancing core technologies and product Items while achieving breakthroughs in key core technologies across multiple fronts. Regarding the vehicle and platform, 13 cross-domain new functions including predictive anti-skid, rear-end collision injury reduction, and active wheel lifting have been completed, while 5 safety-inclusive functions such as blowout stability control and slippery road assistance are being advanced fo implementation. In the new energy sector, a newly developed second-generation fuel cell system achieves a volumetric power density of ≥650 W/L and an efficiency of ≥60%, enabling high-power, high-efficiency, and high-reliability operation across all scenarios while reducing costs by 70% to achieve price parity between hydrogen and electricity. Successfully overcame key technica challenges in novel electrolytes, lithium metal anodes, and interface regulation, achieving a novel electrolyte conductivity exceeding 4.5 mS/cm, a solid-state battery energy density surpassing 350 Wh/kg, and thermal stability up to 250°C. Sodium-ion batteries achieve a breakthrough in single-point technology for high-power electrodes, enhancing driving range experience under extreme temperature conditions. In terms of intelligence, the offline mode for mobile phone-based vehicle control without network or cloud connectivity has been launched and implemented as a first-in-vehicle feature, enabling core driving operations such as unlocking, locking, and starting the vehicle even in network-free environments. Complete the development of the central-plus-regiona hierarchical architecture and achieve mass production deployment. Successfully completed the development and application of three new safety redundancy strategies, thereby enhancing vehicle architecture-level safety. The self-developed end-to-end large model for urban pilot-assisted driving will be exclusively launched on new vehicle models, while the parking assistance functionality achieves industry-leading standards. The self-developed L4 Robotaxi system solution has been awarded the first L4 testing license for road tests with passengers in Chongqing. In the realm of forward-looking technologies, we have completed the development of over ten technical prototypes, including satellite communication and geographic information compliance platforms; achieved breakthroughs in battery sequence large models and multimodal emotion recognition; independently mastered core technologies such as scene generation models, formal verification toolchains, and closed-loop data systems for dynamic bottom data; and jointly led the publication of one ITU international standard. In terms of scientific and technological achievement awards, the company has received one Second Prize of the National Science and Technology Progress Award, eleven Chongqing Science and Technology Awards, including one First Prize in Science and Technology Progress as the lead entity, one First Prize in Science and Technology Progress and one First Prize in Technical Invention as a participating entity, and has also been honored with the Enterprise Technologica Innovation Award, thereby demonstrating the company's strength in scientific and technological innovation. As of June 30, 2026, the Company holds 14,092 valid patents, including 6,186 invention patents.

III. Analysis of Main Business

Overview

Whether it is consistent with the disclosure of the company's principal business activities during the reporting period.

Please refer to the relevant content under "I. The main business of the Company in the reporting period ".

Year-on-year changes in key financial data

Unit: RMB

During the reporting period, the change in "Taxes and Surcharges" was primarily driven by a decline in vehicle sales; the change in "Financial Expenses" was mainly due to exchange losses and a reduction in interest income; the change in "Income Tax Expense" was primarily attributable to a decrease in the total profit of subsidiaries; the change in "Net Profit Attributable to Shareholders of the Listed Company" was mainly caused by a decline in sales volume and a reduction in exchange gains (excluding the impact of exchange gains, net profit attributable to shareholders of the listed company increased by 12% year-on-year); the change in "Ne Cash Flow from Operating Activities" was primarily due to a decrease in cash collections from maturing sales; the change in "Ne Cash Flow from Financing Activities" was mainly influenced by share repurchase expenditures in the current period; and the change in "Net Increase in Cash and Cash Equivalents" was primarily due to the reduction in net cash flow from operating activities in the current period.

Major changes on profit composition or profit resources in reporting period

□ Applicable √ Not Applicable

There have been no significant changes in the composition or sources of the company's profits during the reporting period. Composition of Operating Revenue

Unit: RMB

Information on industries, products, or regions accounting for more than 10% of the company's operating revenue or operating profit.

√ Applicable □ Not Applicable

Unit: RMB

Statistical scope of the company's core business operations. In the event of adjustments occurring during the reporting period, the adjusted main business data for the most recent reporting period based on the reporting period-end basis

□ Applicable √ Not Applicable

IV. Analysis of Non-Core Business

√ Applicable □ Not Applicable

Unit: RMB

V. Analysis of Asset and Liability Status

1. Major Changes in Asset Composition

Unit: RMB

At the end of the reporting period, the change in "Accounts Receivable" was primarily driven by intensified market competition and the increased support provided to distributors.

2. Major Overseas Assets

□ Applicable √ Not Applicable

3. Assets and liabilities measured at fair value

√ Applicable □ Not Applicable

Unit: RMB

Note: The details of financial assets held for trading and other equity instrument investments are provided separately in Note VII (II) "Financial Assets Held for Trading" and Note VII (XIII) "Other Equity Instrument Investments" of the financial report.

Whether there were any significant changes in the measurement attributes of the Company's major assets during the reporting period. □ Yes √ No

4. Status of restricted asset rights as of the end of the reporting period

Unit: RMB

VI. Analysis of Investment

1. Overall situation

√ Applicable □ Not Applicable

2. Major equity investment activities acquired during the reporting period.

□ Applicable √ Not Applicable

3. Major non-equity investments in progress during the reporting period.

□ Applicable √ Not Applicable

4. Investment in financial assets

(1) Securities Investment Status

√ Applicable □ Not Applicable

Unit: RMB

(2) Derivative Investment Status

√ Applicable □ Not Applicable

1) Derivative investments held for hedging purposes during the reporting period.

√ Applicable □ Not Applicable

During the reporting period, the Company did not engage in derivative investments for hedging purposes.

Unit: 10,000 RMB

2) Derivative investments held for speculative purposes during the reporting period.

□ Applicable √ Not Applicable

The Company had no derivative investments for speculative purposes during the reporting period.

5. Use of Raised Funds

□ Applicable √ Not Applicable

During the reporting period, the Company had no utilization of raised funds.

VII. Sale of significant Assets and Equity

1. Sale of significant assets

□ Applicable √ Not applicable

2. Sale of significant equity

□ Applicable √ Not applicable

VIII. Analysis of Major Holding and Joint Stock Companies

√ Applicable □ Not Applicable

Status of major subsidiaries and associated companies whose impact on net profit exceeds 10%

Unit: 10,000 RMB

Status of acquisitions and disposals of subsidiaries during the reporting period

√ Applicable □ Not Applicable

Description of Major Holding and Participating Companies

During the reporting period, Chongqing Xingzhi Technology Co., Ltd. and Chongqing Changan International Auto Sales Service Co., Ltd. were responsible for export operations; impacted by intense market competition, they increased resource investment, resulting in a year-over-year decline in overall profits. Hefei Changan Automobile Co., Ltd. and Changan Ford Automobile Co., Ltd. primarily experienced a year-on-year decline in profits due to a drop in sales volume, while Changan Automobile Finance Co., Ltd. saw a year-on-year decrease in interest income mainly attributable to a reduction in the average loan scale

IX. Structure of Structured Entities Controlled by the Company

□ Applicable √ Not Applicable

X. Possible risks and corresponding measures

Currently, the automotive industry faces dual challenges of pressure in the domestic market and a complex, volatile internationa situation. The domestic automotive market has entered a stabilization phase characterized by fluctuating demand and intensifying competition. Although export markets have maintained high growth, intensified geopolitical competition among major powers, the resurgence of protectionism, and frequent regional geopolitical conflicts have introduced significant uncertainties for enterprises in trade, investment, procurement, and logistics

1. Market risk

Regarding the domestic market, with the phase-out of previous subsidy policies and intensifying consumer wait-and-see sentiment, the growth rate of domestic demand has significantly slowed; the industry has entered a stage of stock-game competition, with profit margins falling to historical lows. Regarding overseas markets, exports continue to grow rapidly, serving as a key growth engine for the automotive industry, yet they face numerous potential risks: certain countries are researching and enacting tariffs and restrictive regulations, thereby continuously raising institutional compliance thresholds, while market access in some regiona markets is becoming increasingly difficult.

Response Strategy: In the face of intensifying market competition, the company adheres to the business principles of value orientation and a balance between volume and profitability, proactively avoids vicious price competition, and focuses on building differentiated competitiveness through product and service excellence. Adhere to long-termism, pursue brand elevation, and remain steadfast in high-end upgrading, technological innovation, ecosystem integration, and global development. On the product side, we will steadfastly advance the flagship product strategy and lean management by integrating the supply chain, ecosystem, and produc platform to comprehensively enhance product competitiveness across the entire value chain; on the service side, centered on customer value, we will construct an integrated "product-plus-service" value-added ecosystem, establish a manufacturer-collaborative smart butler operation system, reshape customer service processes, and improve systematic problem-solving capabilities. Regarding overseas markets, we will accelerate the transition from "product export" to "system export" by establishing local manufacturing facilities, assembling KD kits, and engaging in cross-border technical cooperation to deeply integrate into the global market and build a resilient global operational system

2. Risks associated with material procurement and cost control

On the one hand, geopolitical conflicts and localized wars have, to a certain extent, driven up prices of bulk commodities and resource products, and may obstruct key maritime shipping routes, thereby increasing transportation costs. On the other hand, agains the backdrop of great power competition, the proliferation of technological blockades, export controls, and investment reviews has disrupted the stability of global trade and supply chains, potentially causing price volatility and supply shortages of critica components such as automotive chips, thereby further squeezing automakers' profit margins and intensifying operational pressures.

Mitigation Strategy: The company is continuously building a diversified logistics and supply chain resilience system. To mitigate risks associated with blocked sea lanes and rising costs, implement multimodal transport solutions combining sea and land freight, open alternative routes, bypass conflict zones, and ensure uninterrupted logistics flow. In terms of ensuring the supply of critical materials, priority is given to strengthening the autonomy of core technologies and diversifying supply channels. On one hand, increase investment in underlying technology research and development to accelerate the independent innovation and industria synergy of key core components; on the other hand, expedite the construction of a globalized and diversified matrix of raw material and component suppliers to avoid excessive reliance on any single region or supplier, thereby mitigating the risk of supply disruptions.

XI. Implementation of Market Value Management System and Valuation Improvement Plan

Whether the company has established the market value management system.

√ Yes □ No

Whether the company has disclosed the valuation improvement plan.

□ Yes √ No

On April 9, 2025, the 40th meeting of the 9th Board of Directors of the Company deliberated and approved the proposal entitled "On Formulating the Market Value Management System." To strengthen the company's market value management, furthe standardize its market value management practices, and effectively enhance the company's investment value and ability to return value to shareholders, in accordance with relevant provisions of the "Company Law of the People's Republic of China," "Securities Law of the People's Republic of China," "Several Opinions of the State Council on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Capital Market," "Several Opinions on Improving and Strengthening the Market Value Management of Central Enterprise Holding Listed Companies," "Regulatory Guideline No. 10 for Listed Companies—Market Value Management," and other laws, regulations, normative documents, as well as the "Articles of Association," the Company has formulated the "Chongqing Changan Automobile Co., Ltd. Market Value Management System."

XII. Implementation of the “Parallel Improvement of Quality and Return” Initiative

Whether the company has disclosed the announcement of the action plan of “Parallel Improvement of Quality and Return” .

To implement the guiding principle of "vitalizing the capital market and boosting investor confidence" proposed at the meeting of the Political Bureau of the CPC Central Committee, to better fulfill the "three roles" of central enterprises in technologica innovation, industrial control, and security support, to safeguard the interests of all shareholders, enhance investor confidence, and promote the company's long-term, healthy, and sustainable development, the company has formulated a "Dual Improvement in Quality and Returns" action plan, with specific measures including firmly adhering to strategic guidance to accelerate the transformation into an intelligent low-carbon mobility technology company, improving the standards of corporate governance and operational compliance, strengthening information disclosure to enhance corporate transparency, and prioritizing shareholder returns to increase investor satisfaction. For specific details, please refer to the Company's Announcement on the "Quality and Return Dual Improvement" Action Plan, disclosed on the CNINFO website (www.cninfo.com.cn) on March 7, 2024 (Announcement No. 2024-13). Furthermore, the company disclosed the "Progress Announcement on the 'Quality and Return Dual Improvement' Action Plan" (Announcement No. 2024-26) on April 18, 2024.

Based on firm confidence in the company's strategic development prospects and intrinsic value, and to effectively safeguard the legitimate rights and interests of all shareholders, the Company convened its 54th meeting of the 9th Board of Directors on February 28, 2026, and its 2nd Extraordinary General Meeting of Shareholders for 2026 on March 19, 2026, to approve the "Proposal on the Share Repurchase Plan via Centralized Bidding Trading," thereby authorizing the Company to use its own funds to repurchase its ordinary shares (Class A shares) and domestic listed foreign shares (Class B shares) via centralized bidding for the purpose of reducing registered capital. As of July 31, 2026, the Company has repurchased 176,272,521 shares of its own stock through its dedicated securities account for share repurchases via centralized bidding transactions, representing 1.78% of the Company's current total share capital.

The company actively carries out investor relations management in strict adherence to the principles of openness, fairness, and impartiality, and strives to maintain a positive relationship between the company and its investors by establishing a multi-level mechanism for constructive interaction. First, we will enhance investors' understanding and recognition of the company's key strategic areas, including new energy, intelligence, and globalization, through diverse online and offline interaction channels such as on-site receptions, site visits, research surveys, telephone conferences, and the "Interactive Easy" platform of the Shenzhen Stock Exchange. Secondly, by integrating with the company's major brand activities, we organize investors to participate in thematic exchanges and exclusive test drive experiences, thereby helping them understand the company's long-term investment value. Third, we will hold regular performance briefing sessions; the company will convene the "2026 Semi-Annual Performance Briefing" via remote online platform on Monday, August 31, 2026, from 15:00 to 16:00, and warmly invites all investors to actively participate.

Chapter 4 Corporate Governance, Environmental, and Social

Responsibility

I. Changes in the Company's Directors and Senior Management Personnel

√ Applicable □ Not Applicable

II. Preplan for Company common stock profit distribution and capital reserves converting into share capital in the reporting period

□ Applicable √ Not Applicable

The company plans to distribute no cash dividends, issue no bonus shares, and make no capitalization of reserves into share capital for the half-year period.

III. Implementation status of the company's equity incentive plan, employee stock ownership plan, or other employee incentive measures.

√ Applicable □ Not Applicable

1. Equity incentive plan

On July 13, 2020, the Company's 8th Board of Directors 2nd Meeting and the 8th Board of Supervisors 2nd Meeting deliberated and approved resolutions including "Proposal on Reviewing the <Draft of the Company's A-Share Restricted Stock Incentive Plan> and its Summary" and "Proposal on Reviewing the <Implementation and Assessment Management Measures for the Company's A-Share Restricted Stock Incentive Plan>." The company's independent directors issued a favorable independent opinion on the incentive plan.

On February 1, 2021, the Company's 8th Board of Directors 11th Meeting and the 8th Supervisory Board 7th Meeting deliberated and approved resolutions including the "Proposal on Deliberating the <Company A-Share Restricted Stock Incentive Plan (Revised Draft)> and its Summary" and the "Proposal on Deliberating the <Company A-Share Restricted Stock Incentive Plan Implementation Assessment Management Measures (Revised Draft)>." The company's independent directors issued a favorable independent opinion on the revision of the incentive plan

On February 18, 2021, the Company convened its first extraordinary general meeting of shareholders for 2021, at which the following resolutions were adopted: "Proposal on Reviewing the <Draft (Revised) Plan for Restricted Stock Incentive of the Company's A-Share> and its Summary," "Proposal on Reviewing the <Implementation and Assessment Management Measures fo the Company's A-Share Restricted Stock Incentive Plan (Revised Draft)>" and "Proposal to Request the Shareholders' Genera Meeting to Authorize the Board of Directors to Handle All Matters Related to the Equity Incentive Plan in Full."

On February 22, 2021, the Company convened the 12th meeting of the 8th Board of Directors and the 8th meeting of the 8th Board of Supervisors, at which resolutions were adopted regarding the proposal to adjust the list of initial grant recipients and the number of restricted shares under the A-share restricted share incentive plan, as well as the proposal to grant restricted shares to the initial grant recipients of the A-share restricted share incentive plan, among other proposals. The company's independent directors issued their independent opinions expressing concurrence.

On March 3, 2021, the Company disclosed the Announcement on the Completion of Registration for the Initial Grant of the A-Share Restricted Stock Incentive Plan. A total of 1,247 actual recipients were granted 76.1954 million restricted shares, with the listing date of the restricted shares set for March 5, 2021.

On August 30, 2021, the Company convened the 25th meeting of the 8th Board of Directors and the 12th meeting of the 8th Board of Supervisors, at which the resolutions on the "Proposal to Adjust the Repurchase Price of the A-Share Restricted Stock Incentive Plan" and the "Proposal to Repurchase and Cancel the Restricted Stocks Granted to Certain Incentive Objects but Not Ye Released from Lock-up" were deliberated and approved. The company's independent directors issued their independent opinions expressing concurrence.

On September 17, 2021, the Company convened its second extraordinary general meeting of shareholders for 2021, at which the proposal regarding the repurchase and cancellation of restricted shares granted to certain incentive recipients but not yet released from lock-up was deliberated and approved.

On November 19, 2021, the Company convened the 29th meeting of the 8th Board of Directors and the 15th meeting of the 8th Board of Supervisors, at which the resolutions on the "Proposal to Adjust the Number of Reserved Restricted Shares under the A-Share Restricted Share Incentive Plan" and the "Proposal to Grant Reserved Restricted Shares to the Incentive Objects under the A-Share Restricted Share Incentive Plan" were deliberated and approved. The company's independent directors issued thei independent opinions expressing concurrence.

On December 21, 2021, the Company completed the repurchase and cancellation of all restricted shares totaling 1.036 million shares that had been granted to certain original incentive recipients but had not yet met the unlocking conditions.

On December 30, 2021, the Company disclosed the Announcement on the Completion of the Grant of the Reserved Portion of the A-Share Restricted Stock Incentive Plan. A total of 356 actual recipients were granted awards, with 17.7612 million restricted shares allocated to the reserved portion, which commenced trading on December 31, 2021.

On August 2, 2022, the Company convened the 43rd meeting of the 8th Board of Directors and the 18th meeting of the 8th Board of Supervisors, at which the proposal titled "Regarding the Adjustment of the Repurchase Price for Restricted Shares under the A-Share Restricted Share Incentive Plan and the Repurchase and Cancellation of Certain Restricted Shares" was deliberated and approved. The company's independent directors issued their independent opinions expressing concurrence.

On August 18, 2022, the Company convened its 2022 Third Extraordinary General Meeting of Shareholders, which deliberated and approved the proposal titled "Regarding the Adjustment of the Repurchase Price for A-Share Restricted Stock Incentive Plan and the Repurchase and Cancellation of Certain Restricted Stocks."

On February 17, 2023, the Company convened the 52nd meeting of the 8th Board of Directors and the 21st meeting of the 8th Board of Supervisors, at which the proposal regarding the achievement of unlocking conditions for the first unlocking period of the initial grant portion of the A-share restricted stock incentive plan was deliberated and approved. The company's independent directors issued their independent opinions expressing concurrence.

On March 3, 2023, the Company disclosed the "Notice on the Listing and Circulation of Restricted Shares in the First Unlocking Period of the Initial Grant of the A-Share Restricted Stock Incentive Plan," with the listing and circulation date of the unlocked shares set for March 6, 2023.

On June 20, 2023, the Company completed the repurchase and cancellation of a total of 2.476422 million restricted shares that had been granted to certain original incentive recipients but had not yet met the unlocking conditions.

On July 27, 2023, the Company convened the first meetings of the Ninth Board of Directors and the Ninth Board of Supervisors, at which the proposal entitled "Regarding the Revision of the Company's A-Share Restricted Stock Incentive Plan" was deliberated and approved. The company's independent directors issued their independent opinions expressing concurrence.

On August 30, 2023, the Company convened the Third Meeting of the Ninth Board of Directors and the Second Meeting of the Ninth Board of Supervisors, at which the proposal titled "Regarding the Adjustment of the Repurchase Price and the Repurchase and Cancellation of Certain Restricted Shares under the A-Share Restricted Share Incentive Plan" was deliberated and approved. The company's independent directors issued their independent opinions expressing concurrence.

On September 15, 2023, the Company convened its second extraordinary general meeting of shareholders for 2023, at which the resolutions on the "Proposal to Amend the A-Share Restricted Stock Incentive Plan" and the "Proposal to Adjust the Repurchase Price of the A-Share Restricted Stock Incentive Plan and to Repurchase and Cancel Certain Restricted Stocks" were deliberated and approved.

On December 5, 2023, the Company completed the repurchase and cancellation of 2.033967 million restricted shares that had been granted to certain original incentive recipients but had not yet met the vesting conditions.

On December 8, 2023, the Company convened the 12th meeting of the 9th Board of Directors and the 4th meeting of the 9th Board of Supervisors, at which the proposal regarding the achievement of conditions for unlocking restricted stock under the A-share restricted stock incentive plan was deliberated and approved. The Nomination and Remuneration Committee of the Company has expressed its consent.

On December 27, 2023, the Company disclosed the "Announcement on the Listing and Circulation of Restricted Shares Subject to the A-Share Restricted Stock Incentive Plan," with the date for the listing and circulation of the unlocked shares set for January 2, 2024.

On February 22, 2024, the Company convened the 17th meeting of the 9th Board of Directors and the 5th meeting of the 9th Board of Supervisors, at which the proposal entitled "Regarding the Achievement of Unlocking Conditions for the Second Tranche of the A-Share Restricted Stock Incentive Plan" was deliberated and approved. The Nomination and Remuneration Committee of the Company has expressed its consent.

On March 2, 2024, the Company disclosed the "Notice on the Listing and Circulation of Restricted Shares in the Second Unlocking Period of the Initial Grant of the A-Share Restricted Stock Incentive Plan," with the listing and circulation date of the unlocked shares set for March 5, 2024.

On August 30, 2024, the Company convened the 26th meeting of the 9th Board of Directors and the 8th meeting of the 9th Board of Supervisors, at which the proposal titled "Regarding the Adjustment of the Repurchase Price and the Repurchase and Cancellation of Certain Restricted Shares under the A-Share Restricted Share Incentive Plan" was deliberated and approved. The Nomination and Remuneration Committee of the Company has expressed its consent.

On September 19, 2024, the Company convened its 2024 Third Extraordinary General Meeting of Shareholders, which deliberated and approved the proposal titled "Regarding the Adjustment of the Repurchase Price for A-Share Restricted Stock Incentive Plan and the Repurchase and Cancellation of Certain Restricted Stocks."

On December 20, 2024, the Company completed the repurchase and cancellation of 3.202973 million restricted shares that had been granted to certain original incentive recipients but had not yet met the vesting conditions.

On December 26, 2024, the Company disclosed the "Announcement on the Listing and Circulation of Restricted Shares in the Second Unlocking Period of the Reserved Portion of the A-Share Restricted Stock Incentive Plan," with the listing and circulation date of the unlocked shares set for December 31, 2024.

On February 21, 2025, the Company convened the 38th meeting of the 9th Board of Directors and the 11th meeting of the 9th Board of Supervisors, at which the proposal regarding the achievement of unlocking conditions for the third unlocking period of the A-share restricted stock incentive plan was deliberated and approved. The Nomination and Remuneration Committee of the Company has expressed its consent.

On March 4, 2025, the Company disclosed the "Notice on the Listing and Circulation of Restricted Shares in the Third Unlocking Period of the Initial Grant of the A-Share Restricted Stock Incentive Plan," with the listing and circulation date of the unlocked shares set for March 5, 2025.

On September 26, 2025, the Company convened its 45th meeting of the 9th Board of Directors, at which the proposal entitled "Regarding the Adjustment of the Repurchase Price for the A-Share Restricted Stock Incentive Plan and the Repurchase and Cancellation of Certain Restricted Stocks" was deliberated and approved. The Nomination and Remuneration Committee of the Company has expressed its consent.

On October 24, 2025, the Company convened its first extraordinary general meeting of shareholders for 2025, at which the proposal titled "Regarding the Adjustment of the Repurchase Price for Restricted Shares under the A-Share Restricted Share Incentive Plan and the Repurchase and Cancellation of Certain Restricted Shares" was deliberated and approved.

On November 28, 2025, the Company convened its 48th meeting of the 9th Board of Directors, at which the proposal titled "Regarding the Adjustment of the Repurchase Price for the A-Share Restricted Stock Incentive Plan" was deliberated and approved The Nomination and Remuneration Committee of the Company has expressed its consent.

On December 30, 2025, the Company disclosed the "Announcement on the Listing and Circulation of Restricted Shares Subject to Unlocking under the A-Share Restricted Stock Incentive Plan," with the listing and circulation date for the unlocked shares set for January 5, 2026.

On January 15, 2026, the Company completed the repurchase and cancellation of 1.161948 million restricted shares that had been granted to certain original incentive recipients but had not yet met the unlocking conditions.

On February 28, 2026, the Company convened its 54th meeting of the 9th Board of Directors, at which the proposal entitled "Regarding the Repurchase and Cancellation of Certain Restricted Shares" was deliberated and approved. The Nomination and Remuneration Committee of the Company has expressed its consent.

On March 19, 2026, the Company convened its second extraordinary general meeting of shareholders for 2026, at which the proposal regarding the repurchase and cancellation of certain restricted shares was deliberated and approved.

On June 12, 2026, the Company completed the repurchase and cancellation of 18,564 restricted shares that had been granted to certain original incentive recipients but had not yet met the vesting conditions.

2. Implementation status of the employee stock ownership plan

□ Applicable √ Not Applicable

3. Other Employee Incentive Measures

□ Applicable √ Not Applicable

IV. Disclosure of Environmental Information

Whether the listed company and its major subsidiaries are included in the list of enterprises required to disclose environmenta information in accordance with the law.

√ Yes □ No

V. Social Responsibility Situation

Changan Automobile adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implements the spirit of the 20th National Congress of the Communist Party of China and all plenary sessions of the 20th

Central Committee, fully executes the State-owned Assets Supervision and Administration Commission's "Guidance on Centra Enterprises High-Standardly Fulfilling Social Responsibilities in the New Era," as well as the work requirements from the Ministry of Agriculture and Rural Affairs and the SASAC regarding central enterprises' assistance in comprehensive rural revitalization and targeted poverty alleviation, deeply integrates social responsibility and ESG concepts into the entire process of corporate strategy, governance, and operations, high-standardly fulfills political, economic, and social responsibilities, accelerates the transformation into an intelligent low-carbon mobility technology company, and achieves high-quality development.

1. Effectively strengthen environmental, social, and governance (ESG) initiatives.

Establish and improve the ESG organizational structure by constructing a four-tier governance architecture spanning the board of directors, specialized committees, coordinating departments, and working groups, encompassing a "decision-making management-execution support" framework. Integrate ESG principles into corporate strategy by establishing a "1165" strategic framework, centering on the development vision of "Making the Earth Greener and Travel More Beautiful," fully leveraging the coordinating role of the ESG special working group, and efficiently advancing the implementation of the ESG development strategy. Firmly fulfill the disclosure obligations of listed companies, strengthen high-level ESG information disclosure, and publish the Chinese and English versions of the "Changan Automobile 2025 Environmental, Social, and Governance (ESG) Report" on schedule, systematically disclosing over 10 specialized policies and statements on sustainable development, including supply chain management and human rights policies, thereby achieving an AA rating in both Wind and China Index ESG assessments

2. Actively carry out social public welfare activities.

Adhering to the user-centric "Partner+" brand as the core, we organized Changan Avatr, Deepal, Changan NEVO, Changan Automobile, and Changan Kaicheng to implement "Partner+ Public Welfare," deeply engaging in the major national strategy of ecological protection in the Yellow River Basin, and establishing the "withU Yellow River Protection Season" central enterprise public welfare brand; we successively launched three thematic campaigns—tree planting and greening, wetland bird conservation, and riverbank cleanup—in TaiRMB, Bayannur, and Dongying; furthermore, we swiftly initiated emergency care and service guarantee actions in response to the rainstorm and flooding in Guangxi, fully ensuring user travel safety and minimizing property losses. In the first half of the year, the company focused on low-carbon environmental protection, educational assistance through compassion, and social care, actively carrying out social responsibility practices and mobilizing over 130,000 users to participate

Avatr has effectively integrated its brand's technological advantages with public welfare initiatives by collaborating with One Foundation to launch the 2026 "Joy for Self, Joy for Others · Public Welfare Campaign," supporting the "One Foundation · One Paradise Science and Technology Innovation Classroom" Item through charity market sales, with over 5,000 employees and users participating to jointly empower rural education.

Marking its fourth anniversary, Deep Blue Automobile launched the "Return of Migratory Birds, Trust with Promise" bird conservation public welfare initiative at the Wuliangsu National Nature Reserve in Inner Mongolia, organizing users nationwide to participate in nest construction, migratory bird observation, and shoreline litter cleanup to support ecological protection in the Yellow River Basin. During the User Service Month, Deep Blue car owners coordinated with local car clubs across the nation to jointly participate in wetland ecological protection activities in one hundred cities throughout China. During the Spring Festival travel rush, a special public welfare service titled "Warm Journey Home" is launched to provide travel safety assurance and emergency support for returning residents.

Changan NEVO, in collaboration with Qingsuo Public Welfare, has launched the "Oasis NEVO Initiative" and implemented the "Desert Border Locking Action" to reinforce the ecological security barrier of the Hexi Corridor, thereby contributing to desertification control and biodiversity conservation. Mobilizing national dealers, car owner clubs, and a vast community of compassionate vehicle owners, we launched a public welfare initiative to provide free exam transportation, issued a "silent escort" appeal, and pledged to safeguard the dreams of youth.

Changan Automobile is committed to building the "Love with Partner Support Group" public welfare IP, focusing on four key areas: education assistance, elderly care, poverty alleviation, and ecological protection; in the first half of the year, it collaborated with the Changan car owner community to organize 15 public welfare events, with over 500 car owners participating offline. In the realm of educational assistance and dream-building, we visited primary schools in multiple locations across Chongqing, Shandong, and Sichuan to deliver learning supplies and growth-oriented care to students; regarding elderly care and poverty alleviation, we conducted donation and visitation activities at the Foshan Disabled Children and Orphan Rescue Center and the Liaoning SOS Rescue Center, launched a search operation for missing elderly persons in Shandong, and interpreted Changan Automobile's socia responsibility and brand warmth through sustained action; in terms of ecological protection, Chongqing car owners ventured dee into the mountains to carry out public welfare tree planting, while Shijiazhuang car owners initiated the "Guarding the Mother River" beach cleanup campaign, safeguarding green waters and lush mountains through concrete actions

Changan Kaicheng has established a strategic partnership with the International Exchange Center of the Ministry of Emergenc Management to actively explore international cooperation mechanisms and solutions for natural disaster prevention and emergency management under the "Belt and Road" Initiative. Focusing on the entrepreneurial needs of returning new-generation farmers, we leverage the agricultural drone industry as a strategic entry point to provide technical support and industrial empowerment to returning entrepreneurs, thereby driving improvements in agricultural production efficiency.

3. Give full support to the comprehensive revitalization of rural areas.

Actively integrate advantageous resources, innovate and improve industrial assistance measures, deepen comprehensive support for the entire camellia oil industry chain in Youyang, and continuously drive an average annual income increase of approximately 4,000 RMB per household for over 50,000 tea farmers across the county; donate ten years' supply of Youyang camellia oil to Xiaogang Village, Xiaohe Town, Youyang, accompanied by the delivery of Changan NEVO A06 commuter vehicles to solidif age-friendly rural livelihood security; leverage the full-domain sales channel to broaden the marketing of Youyang camellia oil, achieving a camellia oil sales revenue of 6.824 million RMB for Youzhou Camellia Oil Technology Company in the first half of the year and facilitating the sale of 21,500 RMB worth of Youyang "800 RMB" mineral water, thereby empowering industria development to drive the sustainable growth of local characteristic industries.

We vigorously promoted consumption-based assistance to consolidate and expand the achievements of poverty alleviation in designated assistance areas, organized the "Walking Together with 30 Million People: A New Chang'an for the New Year" spring festival theme event, released promotional posters for consumption assistance, and established a direct bridge between high-quality agricultural products from Luchixi and Yanshan counties in Yunnan Province, which are under paired assistance, and the genera workforce through product promotion and interactive experiences; the total amount of consumption assistance in the first half of the year reached 216,312 RMB, effectively contributing to consolidating the achievements of poverty alleviation and enhancing the quality and efficiency of rural industries in former poverty-stricken areas through concrete actions.

Chapter 5 Important Matters

I. The actual controller, shareholders, related parties, acquirers and other relevant parties of the Company have fulfilled the commitments during the reporting period and have not been fulfilled by the end of the reporting period

□ Applicable √ Not Applicable

During the reporting period, there were no commitments made by the actual controllers, shareholders, related parties, acquirers, and other relevant parties of the company that were fully fulfilled during the reporting period or remained unfulfilled beyond the deadline as of the end of the reporting period.

II. Non-operating funds the listed company occupied by controlling shareholders and their related parties

□ Applicable √ Not Applicable

During the reporting period, the Company had no non-operating misappropriation of funds by the controlling shareholder or other related parties.

III. Irregular external guarantee

□ Applicable √ Not Applicable

During the reporting period, the company had no instances of non-compliant external guarantees.

IV. Appointment and Dismissal of Accounting Firms

Has the semi-annual financial report been audited?

□ Yes √ No

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

V. Explanation by the Board of Directors Regarding the "Non-Standard Audit Report" Issued by the Accounting Firm for the Current Reporting Period

□ Applicable √ Not Applicable

VI. Explanation by the Board of Directors Regarding the Circumstances Related to the "Non-Standard Audit Report" on the Previous Year's Financial Statements

□ Applicable √ Not Applicable

VII. Bankruptcy and restructuring

□ Applicable √ Not Applicable

No bankruptcy reorganization-related matters occurred during the reporting period of the company.

VIII. Crucial litigation events

Significant Litigation and Arbitration Matters

□ Applicable √ Not Applicable

During this reporting period, the Company had no significant litigation or arbitration matters.

Other litigation matters

□ Applicable √ Not Applicable

IX. Disciplinary Actions and Rectification Measures

□ Applicable √ Not Applicable

During the reporting period, the company was not subject to any penalties or rectification measures.

X. Integrity Status of the Company, Its Controlling Shareholder, and Actual Controller

□ Applicable √ Not Applicable

XI. Material Related-Party Transactions

1. Related-party transactions related to daily operations.

√ Applicable □ Not Applicable

For details, please refer to Note 14 "Related Parties and Related Party Transactions" in the Notes to the Financial Statements of the Financial Report.

2. Related-party transactions arising from the acquisition or disposal of assets or equity interests.

□ Applicable √ Not Applicable

During the reporting period, the Company did not engage in any related-party transactions involving the acquisition or disposal of assets or equity interests.

3. Related-party transactions arising from joint external investments.

□ Applicable √ Not Applicable

4. Related creditor and debtor balances

√ Applicable □ Not Applicable

For details, please refer to Note 14 "Related Parties and Related Party Transactions" in the Notes to the Financial Statements of the Financial Report.

Are there any non-operating related-party creditor-debtor relationships?

□ Yes √ No

During the reporting period, the Company had no non-operating related-party creditor's or debtor's relationships.

5. Transactions with associated financial companies

√ Applicable □ Not Applicable

Deposit business

Loan business

Credit granting or other financial services

6. Transactions between the company's controlled finance company and related parties

□ Applicable √ Not Applicable

7. Other Significant Related-Party Transactions

□ Applicable √ Not Applicable

XII. Major Contracts and Their Performance

1. Status of entrusted management, contracting, and leasing matters.

(1) Custody Status

□ Applicable √ Not Applicable

The company had no entrustment arrangements during the reporting period.

(2) Contracting Status

□ Applicable √ Not Applicable

The Company had no contracting arrangements during the reporting period.

(3) Leasing Status

√ Applicable □ Not Applicable

Details regarding related party leases are provided in Note 14 "Related Parties and Related Party Transactions," Item 5(2), of the financial statement notes.

Items whose profit or loss impact on the company exceeds 10% of the company's total profit for the reporting period.

□ Applicable √ Not Applicable

During the reporting period, the Company had no lease Items that contributed to profit or loss exceeding 10% of the Company's total profit for the period.

2. Major Guarantees

□ Applicable √ Not Applicable

During the reporting period, the Company had no significant guarantee arrangements.

3. Entrusted Asset Management

□ Applicable √ Not Applicable

The company reported no entrusted wealth management activities during the reporting period.

4. Other material contracts

□ Applicable √ Not Applicable

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

XIII. Registration Form for Activities Including Research, Communication, and Interviews Conducted During the Reporting Period

√ Applicable □ Not Applicable

XIV. Explanation of Other Significant Matters

□ Applicable √ Not Applicable

There are no other significant matters requiring explanation during the reporting period of the company.

XV. Important matters of the Company's subsidiary

□ Applicable √ Not Applicable

Chapter 6 Share Changes and Shareholder Information

I. Changes in Share Capital

1. Changes in shareholding structure

Unit: Shares

Reasons for changes in shareholding

√ Applicable □ Not Applicable

(1) Partial repurchase and cancellation of restricted shares of certain A-share listed companies.

The company completed the repurchase and cancellation of 1,161,948 restricted shares and 18,564 restricted shares, respectively, which had been granted to certain original incentive recipients but were not yet eligible for unlocking, on January 15, 2026, and June 12, 2026, respectively, reducing the company's total share capital from 9,914,086,060 shares to 9,912,905,548 shares.

(2) Other causes of changes

The company's shares without lock-up restrictions. Other changes were caused by fluctuations in shares held by senior executives subject to trading restrictions.

Approval status of share changes

√ Applicable □ Not Applicable

The matters regarding the repurchase and cancellation of restricted A-share stocks were approved by the Company's 9th Board of Directors at its 45th meeting on September 26, 2025, the 1st Extraordinary General Meeting of Shareholders in 2025, the 9th Board of Directors at its 54th meeting on October 24, 2025, and the 2nd Extraordinary General Meeting of Shareholders in 2026 on February 28, 2026, and March 19, 2026.

Transfer details regarding changes in shareholding.

√ Applicable □ Not Applicable

For details, please refer to Chapter 6, I, Item 1, "Changes in shareholdings ".

Progress on the implementation of share repurchase

√ Applicable □ Not Applicable

As of the end of the reporting period, the Company repurchased 146,762,341 shares of its own stock through its dedicated securities account for share repurchases via centralized bidding transactions, representing 1.48052% of the Company's total share capital at that time, with a total amount paid of RMB 812,001,538.43 (excluding transaction fees, converted at the mid-exchange rate of 1 HKD to 0.86855 RMB as of June 30, 2026); the specific details are as follows:

Repurchased 66,392,392 A-shares, representing 0.66976% of the company's current total share capital. Among them, the highes transaction price was 10.32 RMB per share, the lowest transaction price was 6.84 RMB per share, and the total transaction amount was 561,419,716.04 RMB (excluding transaction fees).

Repurchased 80,369,949 B-shares, representing 0.81076% of the company's current total share capital. Among these, the highes transaction price was HKD 4.03 per share, the lowest was HKD 3.16 per share, and the total transaction amount was HKD 288,505,926.42 (excluding transaction fees), equivalent to RMB 250,581,822.39 (converted at the mid-rate of 1:0.86855 between the Hong Kong dollar and the Renminbi on June 30, 2026)

Implementation progress regarding the reduction of repurchased shares through centralized bidding.

□ Applicable √ Not Applicable

The impact of changes in share capital on financial indicators such as basic and diluted earnings per share for the most recent year and the most recent reporting period, as well as net assets per share attributable to ordinary shareholders of the company.

√ Applicable □ Not Applicable

The changes in share capital have no significant impact on financial indicators such as basic and diluted earnings per share for the most recent year and the most recent period, as well as net assets per share attributable to ordinary shareholders of the company. Other matters that the company deems necessary to disclose or that are required to be disclosed by securities regulatory authorities.

□ Applicable √ Not Applicable

2. Changes in Restricted Shares

√ Applicable □ Not Applicable

Unit: Shares

II. Securities Issuance and Listing Status

□ Applicable √ Not Applicable

III. Shareholding and shareholders of the company

Unit: Shares

Status of shares lent by shareholders holding more than 5%, the top 10 shareholders, and the top 10 shareholders of tradable non-restricted shares participating in the securities lending business via the securities financing transaction platform.

□ Applicable √ Not Applicable

Changes in the top 10 shareholders and the top 10 shareholders of tradable shares without lock-up restrictions occurred due to securities lending and borrowing transactions under the securities financing mechanism.

□ Applicable √ Not Applicable

The top ten ordinary shareholders and the top ten shareholders with unrestricted tradable shares of the company. Did common shareholders engage in agreed repurchase transactions during the reporting period?

□ Yes √ No

No agreed repurchase transactions were conducted by the top ten ordinary shareholders or the top ten ordinary shareholders with unrestricted tradable shares during the reporting period.

IV. Changes in Shareholdings by Directors and Senior Management Personnel

□ Applicable √ Not Applicable

There were no changes in the shareholding of the company's directors and senior management personnel during the reporting period; for details, please refer to the 2025 Annual Report.

V. Changes in the Controlling Shareholder or Actual Controller

Change in the controlling shareholder during the reporting period.

□ Applicable √ Not Applicable

During the reporting period, there was no change in the controlling shareholder of the company.

Change in the actual controller during the reporting period.

□ Applicable √ Not Applicable

The actual controller of the Company has not changed during the reporting period.

VI. Relevant Information on Preferred Shares

□ Applicable √ Not Applicable

During the reporting period, the Company had no outstanding preferred shares.

Chapter 7 Bonds

√ Applicable □ Not Applicable

I. Corporate Bonds

□ Applicable √ Not Applicable

During the reporting period, the company did not issue any corporate bonds.

II. Corporate Bonds

√ Applicable □ Not Applicable

1. Basic Information on Corporate Bonds

Unit: 10,000 RMB

Overdue bonds that have not been repaid

□ Applicable √ Not Applicable

2. Triggering and implementation status of issuer or investor option clauses and investor protection clauses.

□ Applicable √ Not Applicable

3. Adjustments to credit rating results during the reporting period

□ Applicable √ Not Applicable

4. Execution and changes in the implementation of guarantee arrangements, debt repayment plans, and other debt repayment safeguard measures during the reporting period, and their impact on the rights and interests of bond investors.

□ Applicable √ Not Applicable

III. Debt Financing Instruments of Non-Financial Enterprises

□ Applicable √ Not Applicable

During the reporting period, the Company held no debt financing instruments for non-financial enterprises.

IV. Convertible Corporate Bonds

□ Applicable √ Not Applicable

During the reporting period, the Company had no outstanding convertible corporate bonds.

V. Losses of Scope of Consolidated Financial Statements during the Reporting Period Exceeding 10% of Net Assets up the Period-end of Last Year

□ Applicable √ Not Applicable

VI. The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the Company up the Period-end

Unit: 10,000 RMB

Chapter 8 Financial Report

I. Audit Report

The company's semi-annual financial report is unaudited.

II. Financial Statements

The unit of measurement for the financial statements in the notes to the financial statements is: Renminbi RMB.

1. Consolidated Balance Sheet

Prepared by: Chongqing Changan Automobile Co., Ltd.

Unit: RMB

Legal Representative: Zhu Huarong; Person in Charge of Accounting Work: Ni Erke; Head of Accounting Institution: Shi Haifeng

2. Consolidated Balance Sheet of the Parent Company

Unit: RMB

3. Consolidated Income Statement

Unit: RMB

Legal Representative: Zhu Huarong; Person in Charge of Accounting Work: Ni Erke; Head of Accounting Institution: Shi Haifeng

4. Consolidated Statement of Profit or Loss of the Parent Company

Unit: RMB

5. Consolidated Statement of Cash Flows

Unit: RMB

6. Cash flow statement

Unit: RMB

7. Consolidated Statement of Changes in Equity

Amount for this period

Unit: RMB

Unit: RMB

8. Statement of Changes in Equity Attributable to the Parent Company

Amount for this period

Unit: RMB

Amount of last year

Unit: RMB

III. Basic Company Information

Chongqing Changan Automobile Co., Ltd. (hereinafter referred to as the "Company" or "our Company") is a joint-stock company registered in Chongqing in October 1996. It was listed on the Shenzhen Stock Exchange in June 1997. As of June 30, 2026, the Company's total issued share capital amounted to 9,912,905,548 shares. Registered Address: No. 260 Xinjian East Road, Jiangbei District, Chongqing, China; Office Address: No. 61 Dongshengmen Road, Jiangbei District, Chongqing, China, Financial City No. 2, Building T2.

The Company's principal actual business activities include the manufacturing and sales of automobiles (including sedans), automobile engine series products, and supporting components.

The Company's parent company is Chenzhi Automotive Technology Group Co., Ltd., and its ultimate controlling party is China Changan Automobile Group Co., Ltd.

IV. Basis for Preparation of Financial Statements

1.Preparation Basis

These financial statements have been prepared in accordance with the Basic Standard of Enterprise Accounting Standards and various specific accounting standards, application guidelines for enterprise accounting standards, interpretations of enterprise accounting standards, and other relevant regulations promulgated by the Ministry of Finance (hereinafter collectively referred to as "Enterprise Accounting Standards"), as well as the relevant provisions of Rule No. 15 of the "Reporting Rules for Information Disclosure of Companies Offering Securities to the Public" issued by the China Securities Regulatory Commission.

2.Going concern

These financial statements have been prepared on a going concern basis.

V. Significant Accounting Policies and Accounting Estimates

1. Statement on Compliance with Enterprise Accounting Standards

This set of financial statements has been prepared in compliance with the requirements of the Accounting Standards for Enterprises promulgated by the Ministry of Finance of the People's Republic of China, and truly and completely reflects the consolidated and parent company financial position of the Company as of June 30, 2026, as well as the consolidated and parent company operating results and cash flows for the period from January 1 to June 30, 2026.

2. Accounting period

The fiscal year runs from January 1 to December 31 of the Gregorian calendar.

3. Operating cycle

The company's operating cycle is 12 months.

4. Functional currency

The functional currency of the Company and the currency used in the preparation of these financial statements are both the Renminbi. Unless otherwise specified, all amounts are expressed in Renminbi (RMB) RMB. The subsidiaries, joint ventures, and associates of the Company determine their functional currencies based on the primary economic environments in which they operate, and their financial statements are translated into RMB when preparing consolidated financial reports.

5. Accounting treatment methods for business combinations under common control and those not under common control.

Business combinations under common control: Assets and liabilities acquired by the combining party in the business combination (including goodwill arising from the acquisition of the combined party by the ultimate controlling party) are measured based on the carrying amounts of the combined party's assets and liabilities in the consolidated financial statements of the ultimate controlling party as of the combination date. The difference between the book value of net assets acquired in the merger and the book value of the merger consideration paid (or the total par value of shares issued) shall be adjusted against the share premium in capital reserve; if the share premium in capital reserve is insufficient to offset the difference, the retained earnings shall be adjusted.

Business combinations not under common control: The cost of combination is the fair value of assets paid, liabilities incurred or assumed, and equity securities issued by the acquirer on the acquisition date to obtain control over the acquiree. The excess of the cost of the combination over the acquirer's share of the fair value of the acquiree's identifiable net assets is recognized as goodwill; the excess of the acquirer's share of the fair value of the acquiree's identifiable net assets over the cost of the combination is recognized in profit or loss for the current period. In a business combination, the identifiable assets, liabilities, and contingent liabilities of the acquiree that meet the recognition criteria are measured at fair value on the acquisition date.

Directly attributable costs incurred for a business combination are recognized in profit or loss in the period in which they are incurred; transaction costs incurred for issuing equity or debt securities for a business combination are included in the initial carrying amount of the equity or debt securities.

6. Criteria for determining control and the method for preparing consolidated financial statements

(1) Criteria for judging control

The scope of consolidation for the consolidated financial statements is determined based on control and includes the Company and all of its subsidiaries. Control refers to the situation where an entity has power over an investee, is exposed, or has rights, to variable returns from its involvement with the investee, and has the ability to use its power over the investee to affect the amount of the entity's returns.

(2) Merge program

The Company regards the entire corporate group as a single accounting entity and prepares consolidated financial statements in accordance with uniform accounting policies to reflect the group's overall financial position, results of operations, and cash flows. The effects of intragroup transactions between the Company and its subsidiaries, and among the subsidiaries themselves, are eliminated. In the event that internal transactions indicate an impairment loss on the relevant assets, the full amount of such loss shall be recognized. If the accounting policies or accounting periods adopted by a subsidiary differ from those of the Company, necessary adjustments shall be made to align them with the Company's accounting policies and accounting periods when preparing the consolidated financial statements.

The share of the subsidiary's equity, current net profit or loss, and current total comprehensive income attributable to non-controlling interests are presented separately under the equity Chapter of the consolidated balance sheet, under the net profit line item of the consolidated income statement, and under the total comprehensive income line item, respectively. The current period loss borne by the non-controlling interests of a subsidiary that exceeds the non-controlling interests share of the subsidiary's opening equity is offset against the non-controlling interests.

(1) Increase the number of subsidiaries or business units.

During the reporting period, for subsidiaries or businesses acquired through business combinations under common control, their operating results and cash flows from the beginning of the period of consolidation to the end of the reporting period are included in the consolidated financial statements, and the opening balances of the consolidated financial statements and relevant items in the comparative statements are adjusted accordingly, as if the consolidated reporting entity had existed since the date when the ultimate controlling party obtained control.

Where control over an investee under common control is achieved due to additional investments or other reasons, the recognized gains or losses, other comprehensive income, and other changes in net assets related to equity interests held prior to obtaining control over the combined party from the later of the date of the original equity acquisition or the date when the combining party and the combined party came under common control, up to the date of the combination, shall be offset against the opening retained earnings for the comparative reporting period or current period profit or loss, respectively.

During the reporting period, for subsidiaries or businesses acquired through business combinations not under common control, the fair values of all identifiable assets, liabilities, and contingent liabilities determined as of the acquisition date shall serve as the basis. Included in the consolidated financial statements from the date of acquisition.

Where control over an investee not under common control is achieved due to additional investment or other reasons, the equity interest in the acquiree held prior to the acquisition date shall be remeasured at its fair value on the acquisition date, and the difference between the fair value and its carrying amount shall be recognized as investment income for the current period. Other comprehensive income previously recognized under the equity method that is subsequently reclassifiable to profit or loss, as well as other changes in equity accounted for under the equity method, related to the equity interest in the acquiree held prior to the acquisition date shall be reclassified to investment income for the current period to which the acquisition date belongs.

(2) Disposal of subsidiaries

① General processing methods

When control over an investee is lost due to the disposal of a portion of equity interests or other reasons, the remaining equity interest in the investee after the disposal shall be remeasured at its fair value on the date control is lost. The difference between the sum of the consideration received for the disposal of equity interests and the fair value of the remaining equity interests, and the sum of the share of the net assets of the original subsidiary calculated continuously from the acquisition date or the date of combination based on the original shareholding ratio and goodwill, shall be recognized as investment income in the current period when control is lost. Other comprehensive income that is subsequently reclassified into profit or loss related to equity investments in existing subsidiaries, as well as other changes in owners' equity accounted for under the equity method, are reclassified to current investment income upon loss of control.

② Step-by-step disposal of subsidiaries

When an investment in a subsidiary is disposed of in stages through multiple transactions until control is lost, the terms, conditions, and economic implications of the various transactions regarding the disposal of the investment in the subsidiary typically indicate that such multiple transactions constitute a single package arrangement if they meet one or more of the following circumstances:

i. These transactions were concluded simultaneously or with due regard to their mutual interdependence.

II. Only when these transactions are integrated can a complete commercial outcome be achieved;

ⅲ. The occurrence of a transaction depends on the occurrence of at least one other transaction.

IV. A transaction is uneconomical when considered in isolation but becomes economical when evaluated in conjunction with other transactions.

Where multiple transactions constitute a single package, they shall be accounted for as a single transaction involving the disposal of a subsidiary and the loss of control; prior to the loss of control, any difference between the disposal proceeds for each transaction and the corresponding share of the net assets of the subsidiary shall be recognized as other comprehensive income in the consolidated financial statements and transferred to profit or loss in the period when control is lost.

If the transactions do not constitute a package deal, the equity investment in the subsidiary shall be accounted for prior to the loss of control in accordance with the method for partial disposal of an equity investment in a subsidiary without loss of control, and upon the loss of control, it shall be accounted for in accordance with the general method for disposal of a subsidiary.

(3) Acquisition of minority equity interests in a subsidiary.

The difference between the long-term equity investment newly acquired through the purchase of a minority interest and the share of the net assets of the subsidiary calculated based on the incremental shareholding percentage, which has been continuously calculated from the acquisition date or the merger date, shall be used to adjust the share premium in the capital reserve in the consolidated balance sheet; if the share premium in the capital reserve is insufficient to offset the difference, the retained earnings shall be adjusted accordingly.

(4) Partial disposal of equity investment in a subsidiary without loss of control

The difference between the disposal proceeds and the share of the net assets of the subsidiary calculated continuously from the acquisition date or the date of combination that corresponds to the long-term equity investment disposed of shall be used to adjust the share premium within capital reserve in the consolidated balance sheet; if the share premium within capital reserve is insufficient to offset the difference, retained earnings shall be adjusted.

7. Criteria for the determination of cash and cash equivalents.

Cash refers to the company's cash on hand and demand deposits that are available for immediate payment. Cash equivalents refer to investments held by the Company that are short-term, highly liquid, readily convertible to known amounts of cash, and subject to an insignificant risk of changes in value.

8. Foreign currency transactions and translation of foreign currency financial statements (1) Foreign currency transactions

Foreign currency transactions are recorded in RMB by translating the foreign currency amounts using the spot exchange rate prevailing on the transaction date. At the balance sheet date, the balances of foreign currency monetary items are translated at the spot exchange rate prevailing on that date, and the resulting exchange differences, except for those arising from foreign currency borrowings specifically related to the acquisition or construction of qualifying assets that are capitalized in accordance with the principles for capitalization of borrowing costs, are recognized in profit or loss for the current period.

(2) Translation of Foreign Currency Financial Statements

Assets and liabilities in the balance sheet are translated using the spot exchange rate on the balance sheet date, while equity items, except for "retained earnings," are translated using the spot exchange rate at the time of occurrence. Revenue and expense items in the income statement are translated using the spot exchange rate on the date of the transaction.

Upon disposal of a foreign operation, the exchange differences arising from the translation of the foreign entity's financial statements, which are included in other comprehensive income under equity, shall be reclassified from equity to profit or loss for the current period.

9. Financial instruments

The Company recognizes a financial asset, a financial liability, or an equity instrument when it becomes a party to the provisions of a financial instrument contract.

(1) Classification of financial instruments

Based on the Company's business model for managing financial assets and the contractual cash flow characteristics of the financial assets, 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.

The Company shall classify financial assets as measured at amortized cost only if they meet both of the following conditions and are not designated as financial assets at fair value through profit or loss:

The business model is to hold contractual cash flows.

The contractual cash flows are solely payments of principal and interest on the principal amount outstanding.

The Company shall classify financial assets as financial assets measured at fair value through other comprehensive income (debt instruments) if they meet both of the following conditions and are not designated as financial assets measured at fair value through profit or loss:

The business model is to hold the financial asset in order to collect contractual cash flows and to sell the financial asset.

The contractual cash flows are solely payments of principal and interest on the principal amount outstanding.

For equity instrument investments that are not held for trading, the Company may irrevocably designate them at initial recognition as financial assets measured at fair value through other comprehensive income (equity instruments). This designation shall be made on an instrument-by-instrument basis, and the relevant investments must meet the definition of an equity instrument from the issuer's perspective.

Except for financial assets measured at amortized cost and those measured at fair value through other comprehensive income, the Company classifies all remaining financial assets as financial assets measured at fair value through profit or loss.

Financial liabilities are classified at initial recognition as either financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost.

(2) Basis for recognition and measurement methods of financial instruments Financial assets measured at amortized cost

Financial assets measured at amortized cost include notes receivable, accounts receivable, other receivables, long-term receivables, and debt investments, which are initially recognized at fair value with related transaction costs included in the initial carrying amount; however, accounts receivable that do not contain a significant financing component, as well as those for which the Company has decided not to consider a financing component of one year or less, are initially recognized at the transaction price specified in the contract.

Interest calculated using the effective interest method during the holding period is recognized in the current period's profit or loss.

Upon recovery or disposal, the difference between the proceeds received and the carrying amount of the financial asset shall be recognized in the current period's profit or loss.

(2) Financial assets measured at fair value with changes recognized in other comprehensive income (debt instruments)

Financial assets measured at fair value through other comprehensive income (debt instruments), including receivables financing and other debt investments, are initially recognized at fair value, with related transaction costs included in the initial carrying amount. Subsequent measurement of the financial asset is performed at fair value, with changes in fair value recognized in other comprehensive income, except for interest calculated using the effective interest method, impairment losses or gains, and exchange differences.

Upon derecognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from other comprehensive income to profit or loss for the current period.

(3) Financial assets measured at fair value with changes recognized in other comprehensive income (equity instruments)

Financial assets measured at fair value through other comprehensive income (equity instruments), including investments in other equity instruments, are initially recognized at fair value, with related transaction costs included in the initial carrying amount. The financial asset is subsequently measured at fair value, with changes in fair value recognized in other comprehensive income. Dividends received are recognized in the current period's profit or loss.

Upon derecognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from other comprehensive income to retained earnings.

Financial assets measured at fair value with changes recognized in profit or loss. Financial assets measured at fair value through profit or loss include trading financial assets, derivative financial assets, and other non-current financial assets, which are initially recognized at fair value with related transaction expenses charged to profit or loss for the current period. The financial asset is subsequently measured at fair value, with changes in fair value recognized in the current period's profit or loss.

(5) Financial liabilities measured at fair value with changes recognized in profit or loss

Financial liabilities measured at fair value through profit or loss include trading financial liabilities and derivative financial liabilities, which are initially recognized at fair value, with related transaction expenses charged to profit or loss in the current period. Such financial liabilities are subsequently measured at fair value, with changes in fair value recognized in profit or loss for the current period. Upon derecognition, the difference between its carrying amount and the consideration paid is recognized in profit or loss for the current period.

(6) Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include short-term borrowings, notes payable, accounts payable, other payables, long-term borrowings, bonds payable, and long-term payables, which are initially recognized at fair value with related transaction costs included in the initial carrying amount.

Interest calculated using the effective interest method during the holding period is recognized in the current period's profit or loss.

Upon derecognition, the difference between the consideration paid and the carrying amount of the financial liability shall be recognized in profit or loss for the current period.

(3) Basis for derecognition of financial assets and recognition of transfers of financial assets, along with their measurement methods.

The Company derecognizes a financial asset when one of the following conditions is met:

The contractual right to collect cash flows from a financial asset has terminated;

The financial asset has been transferred, and substantially all risks and rewards incidental to ownership of the financial asset have been transferred to the transferee.

The financial asset has been transferred; although the Company has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset, it has not retained control over the financial asset.

If the Company modifies or renegotiates a contract with the counterparty and such modification constitutes a substantial modification, the original financial asset shall be derecognized, and a new financial asset shall be recognized in accordance with the modified terms.

When a financial asset is transferred, if the transferor retains substantially all the risks and rewards incidental to the ownership of the financial asset, the financial asset shall not be derecognized.

When assessing whether the transfer of financial assets meets the aforementioned derecognition criteria for financial assets, the principle of substance over form is applied.

The company classifies transfers of financial assets into full transfers and partial transfers. When the transfer of a financial asset in its entirety meets the conditions for derecognition, the difference between the following two amounts shall be recognized in profit or loss for the current period:

(1) The carrying amount of the financial assets transferred.

(2) The sum of the consideration received due to the transfer and the cumulative amount of fair value changes originally recognized directly in equity (applicable when the transferred financial asset is a debt instrument measured at fair value through other comprehensive income).

When a partial transfer of a financial asset meets the criteria for derecognition, the carrying amount of the entire transferred financial asset shall be allocated between the portion derecognized and the portion retained based on their relative fair values, and the difference between the following two amounts shall be recognized in profit or loss for the current period:

(1) The carrying amount of the derecognized portion;

(2) The sum of the consideration for the derecognized portion and the amount corresponding to the derecognized portion within the cumulative amount of fair value changes originally recognized directly in equity, applicable when the transferred financial asset is a debt instrument measured at fair value through other comprehensive income.

If the transfer of financial assets does not meet the conditions for derecognition, the financial assets shall continue to be recognized, and the consideration received shall be recognized as a financial liability.

(4) Derecognition of financial liabilities

A financial liability or a part thereof shall be derecognized when its present obligation has been discharged, in whole or in part, except when cash settlement is made using an electronic payment system.

When a financial liability (or a part thereof) is settled in cash through an electronic payment system, the Company shall derecognize it only when the payment instruction has been initiated and the following conditions are simultaneously met:

1. The Company lacks the actual capability to recall, stop, or cancel payment instructions.

2. The Company lacks the actual capability to draw down the cash designated for settlement pursuant to payment instructions;

Settlement risks associated with electronic payment systems are not material.

If the Company enters into an agreement with creditors to replace an existing financial liability with a new financial liability, and the contractual terms of the new financial liability are substantially different from those of the existing financia liability, the existing financial liability shall be derecognized, and the new financial liability shall be recognized simultaneously.

If substantive modifications are made to all or part of the contractual terms of an existing financial liability, the existing financial liability or a portion thereof shall be derecognized, and the financial liability with the modified terms shall be

recognized as a new financial liability.

When a financial liability is derecognized in whole or in part, the difference between the carrying amount of the derecognized financial liability and the consideration paid (including non-cash assets transferred or new financial liabilities assumed) is recognized in profit or loss for the current period.

If the Company repurchases a portion of a financial liability, on the repurchase date it allocates the carrying amount of the entire financial liability between the portion that continues to be recognized and the portion that is derecognized based on their relative fair values. The difference between the carrying amount allocated to the derecognized portion and the consideration paid (including non-cash assets transferred or new financial liabilities assumed) is recognized in profit or loss for the current period.

(5) Methodology for determining the fair value of financial assets and financial liabilities.

Financial instruments with an active market shall have their fair value determined based on quoted prices in that active market. For financial instruments lacking an active market, valuation techniques are employed to determine their fair value. In valuation, the Company employs valuation techniques that are appropriate under the circumstances and supported by sufficient available data and other information, selects input values consistent with the characteristics of the assets or liabilities considered by market participants in transactions for the relevant assets or liabilities, and prioritizes the use of relevant observable inputs. Unobservable inputs shall be used only when relevant observable inputs are not available or obtaining them is not practicable.

(6) Testing methodologies and accounting treatment methods for impairment of financial instruments.

The Company applies impairment accounting based on expected credit losses to financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income (debt instruments), and financial guarantee contracts.

The Company considers reasonable and supportable information regarding past events, current conditions, and forecasts of future economic conditions to calculate the probability-weighted amount of the present value of the difference between the contractual cash flows due and the expected cash flows to be received, weighted by the risk of default, thereby recognizing expected credit losses.

For receivables and contract assets arising from transactions governed by Accounting Standards for Business Enterprises No. 14 — Revenue, the Company consistently measures the allowance for expected credit losses at an amount equivalent to the lifetime expected credit losses, regardless of whether a significant financing component exists.

For lease receivables arising from transactions governed by Accounting Standards for Business Enterprises No. 21 — Leases, the Company has elected to consistently measure the allowance for expected credit losses at an amount equivalent to the lifetime expected credit losses.

For other financial instruments, the Company assesses changes in the credit risk of the relevant financial instruments since initial recognition at each reporting date.

The Company determines the relative change in the probability of default of a financial instrument over its expected life by comparing the risk of default occurring on the reporting date with the risk of default occurring on the initial recognition date, in order to assess whether the credit risk of the financial instrument has increased significantly since initial recognition. Generally, the Company considers that the credit risk of a financial instrument has increased significantly if it is more than 30 days past due, unless there is convincing evidence to the contrary that the credit risk of the financial instrument has not increased

significantly since initial recognition.

The Company considers that the credit risk of a financial instrument has not increased significantly since initial recognition if the financial instrument has low credit risk at the reporting date.

If the credit risk of a financial instrument has increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to the lifetime expected credit losses; if the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to the expected credit losses over the next 12 months. The increase or reversal of the provision for losses thus formed shall be recognized as an impairment loss or gain in the current period's profit or loss. For financial assets measured at fair value through other comprehensive income (debt instruments), the allowance for credit losses is recognized in other comprehensive income, while impairment losses or gains are recognized in profit or loss, without reducing the carrying amount of the financial asset presented in the balance sheet.

10. Inventory

(1) Classification and Cost of Inventory

Inventory is classified into: goods in transit, raw materials, consumable tools and spare parts, finished goods, work-in-process, goods dispatched, and materials entrusted for processing, among others.

Inventories are initially measured at cost, which comprises purchase costs, conversion costs, and other costs incurred to bring the inventories to their present location and condition.

(2) Inventory stocktaking system

Adopt the perpetual inventory system.

(3) Amortization methods for low-value consumables and packaging materials. (1) Low-value consumables are expensed in full upon issuance using the one-time write-off method.

(2) Packaging materials are expensed in full upon their first use.

(4) Recognition criteria and accrual methods for inventory provision for decline in value

At the balance sheet date, inventories shall be measured at the lower of cost and net realizable value. When the cost of inventory exceeds its net realizable value, an allowance for inventory obsolescence shall be recognized. Net realizable value refers to the estimated selling price of inventory in the ordinary course of business, less the estimated costs to complete and the estimated costs of sale and related taxes.

Finished goods, merchandise held for sale, and raw materials intended for sale are inventory items held directly for sale; their net realizable value is determined by deducting estimated selling expenses and related taxes from the estimated selling price in the ordinary course of business; for inventory items that require further processing, the net realizable value is determined by deducting the estimated costs to complete, estimated selling expenses, and related taxes from the estimated selling price of the finished goods to be produced in the ordinary course of business; for inventory held to fulfill sales or service contracts, the net realizable value is calculated based on the contract price, and if the quantity of inventory held exceeds the quantity ordered under the sales contract, the net realizable value of the excess portion is calculated based on the general selling price.

After the provision for inventory decline in value has been accrued, if the factors that previously caused the reduction in inventory value have disappeared, resulting in the net realizable value of the inventory exceeding its carrying amount, the provision shall be reversed within the amount originally accrued, and the amount of the reversal shall be recognized in the current period's profit or loss.

11. Contract assets

(1) Recognition methods and criteria for contract assets.

The Company presents contract assets or contract liabilities on the balance sheet based on the relationship between the fulfillment of performance obligations and customer payments. Contract assets are presented for the right to consideration to which the Company is entitled in exchange for transferring goods or providing services to customers, where such right is conditional on factors other than the passage of time. Contract assets and contract liabilities under the same contract shall be presented on a net basis. The entity's unconditional right (dependent solely on the passage of time) to receive consideration from customers is presented separately as a receivable.

(2) Determination methods for expected credit losses on contract assets and related accounting treatment methods.

The methodology for determining the expected credit losses on contract assets and the corresponding accounting treatment are detailed in Note V(9)6, "Testing Methodology and Accounting Treatment for Financial Instrument Impairment."

12. Held for sale and discontinued operations

(1) Held for sale

An item of non-current asset or a disposal group is classified as held for sale if its carrying amount is recovered principally through a sale transaction rather than through continuing use, which includes non-monetary asset exchanges that have commercial substance.

The Company classifies non-current assets or disposal groups as held for sale only when they meet all of the following conditions:

(1) It is available for immediate sale in its current condition in accordance with the customary practices for selling such assets or disposal groups in similar transactions;

(2) Highly probable sale, meaning the Company has approved a disposal plan and obtained a firm purchase commitment, with the disposal expected to be completed within one year. Where applicable regulations require approval from the Company's relevant competent authorities or regulatory bodies prior to sale, such approval has already been obtained.

Non-current assets (excluding financial assets, deferred tax assets, and assets arising from employee benefits) or disposal groups classified as held for sale shall have their carrying amounts reduced to the fair value less costs to sell if the carrying amount exceeds that amount; the reduction shall be recognized as an impairment loss in profit or loss for the current period, and a provision for impairment of assets held for sale shall be established simultaneously.

13. Long-term equity investment

(1) Criteria for determining joint control and significant influence.

Joint control refers to the shared control over an arrangement pursuant to contractual agreements, whereby decisions regarding the relevant activities of the arrangement require the unanimous consent of the parties sharing control. The investee is classified as a joint venture of the Company when the Company, together with other joint operators, exercises joint control over the investee and holds rights to the net assets of the investee.

Significant influence refers to the power to participate in the financial and operating policy decisions of an investee without having control or joint control over those policies. The investee is classified as an associate of the Company when the Company is able to exercise significant influence over it.

(2) Determination of the initial investment cost

Long-term equity investments arising from business combinations.

For long-term equity investments in subsidiaries formed through business combinations under common control, the initial investment cost shall be determined on the combination date as the investor's share of the carrying amount of the acquiree's net assets in the consolidated financial statements of the ultimate controlling party. The difference between the initial investment cost of long-term equity investments and the book value of the consideration paid shall be adjusted against the share premium in capital reserve; if the share premium in capital reserve is insufficient to offset the difference, the retained earnings shall be adjusted. Where control over an investee under common control is achieved due to additional investments or other reasons, the difference between the initial investment cost of the long-term equity investment recognized in accordance with the aforementioned principles and the sum of the carrying amount of the long-term equity investment held prior to the combination and the carrying amount of the additional consideration paid for the shares acquired on the combination date shall be adjusted against capital reserve; if the capital reserve is insufficient to absorb the adjustment, the deficit shall be charged against retained earnings.

For long-term equity investments in subsidiaries formed through business combinations not under common control, the initial investment cost shall be determined based on the acquisition cost ascertained on the acquisition date. If control over an investee that is not under common control can be achieved through additional investments or other reasons, the initial investment cost shall be determined as the sum of the carrying amount of the originally held equity investment and the cost of the newly added investment.

(2) Long-term equity investments acquired by means other than business combinations.

Long-term equity investments acquired through cash payment shall have their initial investment cost measured at the actual purchase price paid.

Long-term equity investments acquired by issuing equity securities shall be initially measured at the fair value of the equity securities issued.

(3) Subsequent measurement and methods for recognizing gains and losses.

Long-term equity investments accounted for using the cost method.

Long-term equity investments in subsidiaries are accounted for using the cost method, unless the investment meets the criteria for classification as held for sale. Except for cash dividends or profits declared but not yet distributed included in the actual consideration paid at the time of investment, the Company recognizes current investment income based on the cash dividends or profits declared by the investee that it is entitled to receive.

Long-term equity investments accounted for using the equity method.

Long-term equity investments in associates and joint ventures are accounted for using the equity method. When the initial investment cost exceeds the investor's share of the fair value of the investee's identifiable net assets at the time of investment, the difference shall not adjust the initial investment cost of the long-term equity investment; conversely, when the initial investment cost is less than the investor's share of the fair value of the investee's identifiable net assets at the time of investment, the difference shall be recognized in current profit or loss, and the cost of the long-term equity investment shall be adjusted accordingly.

The Company recognizes its share of the net profit or loss and other comprehensive income of the investee, which it is entitled to or obligated to share, as investment income and other comprehensive income respectively, while simultaneously adjusting the carrying amount of the long-term equity investment. The share of profit or cash dividends declared by the investee shall be calculated and recognized, with a corresponding reduction in the carrying amount of the long-term equity investment; for other changes in the investee's equity other than net profit or loss, other comprehensive income, and profit distribution (hereinafter referred to as "other changes in equity"), the carrying amount of the long-term equity investment shall be adjusted and the amount shall be recognized in equity.

When confirming the share of net profit or loss, other comprehensive income, and other changes in equity of the investee, the share is determined based on the fair value of the investee's identifiable net assets at the date of acquisition, with adjustments made to the investee's net profit and other comprehensive income in accordance with the company's accounting policies and accounting periods.

Unrealized internal transaction gains or losses between the Company and its associates or joint ventures are eliminated based on the Company's share of such amounts to recognize investment income, except where the assets contributed or sold constitute a business. Unrealized internal transaction losses incurred with investees that constitute asset impairment losses shall be recognized in full.

Regarding net losses incurred by joint ventures or associates, the Company's share is limited to the carrying amount of the long-term equity investment and other long-term interests that, in substance, constitute the net investment in the joint venture or associate, reduced to zero, unless the Company has an obligation to assume additional losses. When a joint venture or an associate subsequently generates net profit, the Company shall resume recognizing its share of profit after offsetting the share of losses that were previously unconfirmed against the amount of profit sharing.

(3) Disposal of long-term equity investments

Upon disposal of long-term equity investments, the difference between the carrying amount and the actual proceeds received shall be recognized in the current period's profit or loss.

In the event of a partial disposal of long-term equity investments accounted for under the equity method where the remaining equity interest continues to be accounted for using the equity method, the other comprehensive income previously recognized under the equity method shall be transferred on a basis consistent with that used by the investee for the direct disposal of relevant assets or liabilities, proportionate to the portion disposed, while other changes in equity shall be transferred to current profit or loss on a proportional basis.

When joint control or significant influence over an investee is lost due to the disposal of equity investments or other reasons, other comprehensive income recognized for the original equity investment under the equity method shall be accounted for at the same basis as the direct disposal of related assets or liabilities by the investee upon discontinuation of the equity method, and all other changes in owners' equity shall be transferred to current profit or loss upon discontinuation of the equity method.

When control over an investee is lost due to the disposal of a portion of equity investments or similar reasons, and the remaining equity interest is capable of exercising joint control or significant influence over the investee, the remaining interest shall be accounted for using the equity method, with retrospective adjustment as if the equity method had been applied since the date of acquisition; other comprehensive income recognized prior to obtaining control shall be reclassified on the same basis as if the investee had directly disposed of the related assets or liabilities, proportionally, and other changes in equity recognized under the equity method shall be reclassified proportionally to current profit or loss; if the remaining equity interest is incapable of exercising joint control or significant influence, it shall be classified as a financial asset, with the difference between its fair value and carrying amount at the date control was lost recognized in current profit or loss, and all other comprehensive income and other changes in equity recognized prior to obtaining control shall be fully reclassified.

Where a subsidiary's equity investment is disposed of in stages through multiple transactions until control is lost, and such transactions constitute a package deal, they shall be accounted for as a single transaction involving the disposal of the subsidiary's equity investment and the loss of control; prior to the loss of control, the difference between the disposal proceeds for each transaction and the corresponding carrying amount of the long-term equity investment disposed of shall, in the separate financial statements, initially be recognized as other comprehensive income and subsequently transferred to the current period's profit or loss upon the loss of control. Transactions that do not constitute a package deal

shall be accounted for separately.

14. Investment property

Investment property refers to land or buildings held to earn rentals or for capital appreciation or both, including land held for leased use, land held for capital appreciation and later transferred, and buildings held for leased use (including buildings completed from self-construction or development activities for leased use, and buildings under construction or development that are intended for leased use in the future).

Subsequent expenditures related to investment property shall be capitalized into the cost of the investment property if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably; otherwise, such expenditures shall be recognized as an expense in the period in which they are incurred.

The Company measures its existing investment properties using the cost model. Investment properties measured under the cost model, specifically buildings held for lease, are depreciated using the same policy as the company's fixed assets, while land use rights held for lease are amortized in accordance with the policy applied to intangible assets.

15. Fixed assets

(1) Recognition and Initial Measurement of Fixed Assets

Fixed assets refer to tangible assets held for the purpose of producing goods, providing services, renting out, or for administrative management, which have a useful life exceeding one accounting year. Fixed assets are recognized only when the following conditions are simultaneously met:

(1) It is probable that the economic benefits associated with the fixed asset will flow into the enterprise;

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

Fixed assets are initially measured at cost, taking into account the impact of estimated dismantling and removal costs.

Subsequent expenditures related to fixed assets are capitalized into the cost of fixed assets when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably; the carrying amount of any replaced part is derecognized; and all other subsequent expenditures are recognized as expenses in the period in which they are incurred.

(2) Depreciation methods

Depreciation of fixed assets is calculated using the straight-line method by category, with the depreciation rate determined based on the asset category, estimated useful life, and estimated net residual value rate. For fixed assets with impairment provisions recognized, depreciation expense in future periods shall be determined based on the carrying amount after deducting the impairment provision and the estimated remaining useful life. If the components of a fixed asset have different useful lives or provide economic benefits to the enterprise in different ways, different depreciation rates or depreciation methods shall be selected to calculate depreciation separately.

The depreciation methods, useful lives, residual value rates, and annual depreciation rates for various categories of fixed assets are as follows:

Note: Depreciation for molds in machinery and equipment is calculated using the

units-of-production method.

(3) Disposal of fixed assets

A fixed asset shall be derecognized upon its disposal or when it is expected that no future economic benefits will be derived from its use or disposal. The disposal proceeds from the sale, transfer, scrapping, or damage of fixed assets, after deducting their book value and related taxes and fees, shall be recognized as current period profit or loss.

16. Construction in progress

Construction in progress is measured at the actual costs incurred. Actual costs encompass construction costs, installation costs, borrowing costs eligible for capitalization, and other necessary expenditures incurred prior to bringing the construction in progress to its intended usable condition. Construction in progress is transferred to fixed assets upon reaching the intended usable state, and depreciation commences from the following month.

17. Borrowing costs

(1) Recognition principles for capitalization of borrowing costs

Borrowing costs directly attributable to the acquisition, construction, or production of qualifying assets shall be capitalized and included in the cost of the relevant assets; other borrowing costs shall be recognized as expenses in the period in which they are incurred and charged to the current period's profit or loss.

Assets qualifying for capitalization refer to fixed assets, investment properties, and inventories, among others, that require a substantial period of construction or production activities to reach their intended usable or salable condition.

(2) Capitalization period of borrowing costs

The capitalization period refers to the period from the commencement of capitalization of borrowing costs to the cessation of capitalization, excluding any period during which capitalization of borrowing costs is suspended.

Borrowing costs shall commence when all of the following conditions are simultaneously met. Capitalization:

(1) Capital expenditures have been incurred, which include expenditures incurred in the form of cash payments, transfers of non-cash assets, or assumption of interest-bearing debts for the purpose of constructing or producing assets that qualify for capitalization;

(2) Borrowing costs have been incurred;

(3) Activities necessary to bring the asset to its intended usable or saleable condition have commenced.

Borrowing costs shall cease to be capitalized when the qualifying assets under construction or production reach their intended usable or saleable status.

(3) During the period of capitalization suspension

Borrowing costs shall be suspended from capitalization for assets that meet the capitalization criteria if an abnormal interruption occurs during their acquisition, construction, or production and the interruption lasts continuously for more than three months; If the borrowing costs are incurred as a necessary procedure for the acquisition, construction, or production of a qualifying asset to reach its intended usable or salable condition, such borrowing costs shall continue to be capitalized. Borrowing costs incurred during an interruption are recognized as expenses in the current period until the borrowing costs resume capitalization after the acquisition, construction, or production activities of the asset recommence.

(4) Calculation methods for the capitalization rate of borrowing costs and the amount of capitalized costs.

For special borrowings incurred specifically for the construction or production of qualifying assets, the amount of borrowing costs to be capitalized shall be determined by deducting from the actual borrowing costs incurred during the period any interest income earned from depositing the undrawn portion of the borrowing funds in a bank or any investment income earned from temporary investments.

For general borrowings utilized in the acquisition or construction of qualifying assets, the amount of borrowing costs to be capitalized is determined by multiplying the weighted average of accumulated asset expenditures exceeding the specific borrowings by the capitalization rate applicable to the general borrowings utilized. The capitalization rate is determined based on the weighted average actual interest rate of general borrowings.

During the capitalization period, exchange differences arising from the principal and interest of foreign currency borrowings specifically for qualifying assets shall be capitalized and included in the cost of those assets. Exchange differences arising from the principal and interest of foreign currency borrowings other than those specifically borrowed for foreign currency purposes shall be recognized in the current period's profit or loss.

18. Intangible assets

(1) Valuation methods for intangible assets

(1) Upon acquisition, intangible assets are initially measured at cost;

The cost of purchased intangible assets includes the purchase price, related taxes and fees, and other expenditures directly attributable to bringing the asset to the condition and location necessary for its intended use.

(2) Subsequent Measurement

Analyze and determine the useful life of intangible assets upon their acquisition. Intangible assets with finite useful lives are amortized over the period during which they are expected to generate economic benefits for the enterprise; if the period over which an intangible asset is expected to generate economic benefits cannot be foreseen, it is classified as an intangible asset with an indefinite useful life and is not amortized.

(2) Estimation of the useful lives of intangible assets with finite useful lives.

(3) Specific criteria for delineating the research phase and the development phase.

Expenditures for internal company research and development Items are classified into research phase expenditures and development phase expenditures.

Research Phase: The stage involving original, planned investigations and research activities conducted to acquire and comprehend new scientific or technological knowledge.

Development Phase: The stage involving the application of research findings or other knowledge to a specific plan or design prior to commercial production or use, aimed at producing new materials, devices, products, or other items with substantive improvements.

(4) Specific conditions for capitalizing development phase expenditures

Expenditures incurred during the research phase shall be recognized as expenses in the current period when incurred. Expenditures incurred during the development phase shall be recognized as intangible assets only if they satisfy all of the following conditions; otherwise, such expenditures shall be charged to the current period's profit or loss.

(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale.

(2) The intention to complete the intangible asset and use or sell it;

(3) The manner in which an intangible asset generates future economic benefits, including demonstrating the existence of a market for the products produced using the intangible asset or for the intangible asset itself, and, if the intangible asset is to be used internally, demonstrating its utility.

(4) Sufficient technical, financial, and other resources are available to complete the development of the intangible asset and to use or sell it;

(5) Expenditures incurred during the development phase of the intangible asset can be measured reliably.

If research phase expenditures and development phase expenditures cannot be distinguished, all incurred research and development expenditures shall be recognized as expenses in the current period.

19. Long-term asset impairment

Long-term equity investments, investment properties measured under the cost model, fixed assets, construction in progress, right-of-use assets, and intangible assets with finite useful lives are subject to impairment testing if there are indications of impairment as of the balance sheet date. If the impairment test indicates that the recoverable amount of an asset is lower than its carrying amount, an impairment provision shall be accrued for the difference and recognized as an impairment loss. The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use, which is the present value of the estimated future cash flows expected to be derived from the asset. Impairment provisions for assets are calculated and recognized on an individual asset basis; however, if it is difficult to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs shall be determined. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Goodwill arising from business combinations, intangible assets with indefinite useful lives, and intangible assets not yet available for use shall be tested for impairment at least annually at the end of each fiscal year, regardless of whether there is any indication of impairment.

The Company conducts impairment tests for goodwill; the carrying amount of goodwill arising from business combinations is allocated to relevant asset groups from the acquisition date using a reasonable method, and if it is difficult to allocate to a specific asset group, it is allocated to the relevant asset group combination. A relevant asset group or combination of asset groups is an asset group or combination of asset groups that can benefit from the synergies arising from a business combination.

When performing impairment tests on asset groups or combinations of asset groups that include goodwill, if there are indications of impairment in the asset group or combination of asset groups related to goodwill, an impairment test shall first be conducted on the asset group or combination of asset groups excluding goodwill to calculate the recoverable amount, compare it with the relevant carrying amount, and recognize the corresponding impairment loss. Subsequently, an impairment test is performed on the asset group or group of asset groups containing goodwill by comparing its carrying amount with its recoverable amount; if the recoverable amount is lower than the carrying amount, the impairment loss is first allocated to reduce the carrying amount of goodwill allocated to the asset group or group of asset groups, and then, in proportion to the carrying amounts of the other assets within the asset group or group of asset groups excluding goodwill, the carrying amounts of those other assets are reduced accordingly.

Once recognized, the impairment loss on the aforementioned assets shall not be reversed in subsequent accounting periods.

20. Long-term deferred expenses

Long-term deferred expenses refer to various costs that have been incurred but are to be amortized over a period exceeding one year, borne by the current period and subsequent periods.

21. Contract liabilities

The Company presents contract assets or contract liabilities on the balance sheet based on the relationship between the fulfillment of performance obligations and customer payments. Contract liabilities are presented as the Company's obligations to transfer goods or provide services to customers in exchange for consideration received or receivable from such customers. Contract assets and contract liabilities under the same contract shall be presented on a net basis.

22. Employee compensation

(1) Accounting treatment methods for short-term employee benefits.

The Company recognizes short-term compensation as a liability and charges it to current profit or loss or to the cost of relevant assets during the accounting periods in which employees provide services to the Company.

The social insurance premiums and housing provident fund contributions paid by the Company for its employees, along with the trade union funds and employee education funds accrued in accordance with regulations, are determined as corresponding employee compensation amounts for the accounting periods during which employees provide services to the Company, calculated based on the prescribed accrual bases and accrual ratios.

Employee welfare expenses incurred by the Company are recognized in the current period's profit or loss or in the cost of relevant assets based on the actual amounts incurred at the time of occurrence, with non-monetary welfare measured at fair value.

(2) Accounting treatment methods for post-employment benefits

(1) Defined contribution plan

The Company contributes to basic endowment insurance and unemployment insurance for its employees in accordance with relevant regulations of the local government; during the accounting periods in which employees provide services to the Company, the amount payable is calculated based on the contribution base and rate prescribed by local regulations, recognized as a liability, and charged to current period profit or loss or included in the cost of relevant assets.

(2) Defined benefit plan

The Company attributes the benefit obligations arising from the defined benefit plan to the periods during which employees provide services, based on the formula determined by the Itemed unit credit method, and recognizes them in the current profit or loss or as part of the cost of relevant assets.

The deficit or surplus arising from the present value of the defined benefit obligation less the fair value of the defined benefit plan assets is recognized as a net defined benefit liability or a net defined benefit asset. Where a defined benefit plan has a surplus, the Company measures the net asset of the defined benefit plan at the lower of the surplus in the plan and the asset ceiling.

All obligations under defined benefit plans, including those expected to be settled within twelve months after the end of the annual reporting period in which employee services are rendered, are discounted using the market yield at the balance sheet date on government bonds or high-quality corporate bonds in an active market that match the term and currency of the defined benefit plan obligations.

Service costs arising from defined benefit plans and the net interest on the net defined benefit liability or asset are recognized in profit or loss or included in the cost of relevant assets; changes resulting from remeasuring the net defined benefit liability or asset are recognized in other comprehensive income and shall not be reclassified to profit or loss in subsequent accounting periods, and upon termination of the original defined benefit plan, the amount previously recognized in other comprehensive income shall be fully transferred within equity to retained earnings.

Upon settlement of a defined benefit plan, a gain or loss on settlement is recognized based on the difference between the present value of the defined benefit obligation determined at the settlement date and the settlement price.

(3) Accounting treatment methods for termination benefits

When the Company provides termination benefits to employees, it recognizes the liability for employee benefits arising from termination benefits at the earlier of the following dates: when the Company can no longer unilaterally withdraw the termination benefits offered due to a plan to terminate employment relationships or a proposal for workforce reductions; or when the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits, and such amounts are included in current period profit or loss.

23. Provision for liabilities

The Company recognizes a provision for contingent liabilities when the related obligation meets all of the following conditions:

(1) This obligation represents a present obligation assumed by the Company;

(2) It is probable that fulfilling this obligation will result in an outflow of economic benefits from the Company;

(3) The amount of the obligation can be measured reliably.

Provisions are initially measured at the best estimate of the expenditure required to settle the present obligation.

When determining the best estimate, factors such as risks, uncertainties, and the time value of money related to contingent events are comprehensively considered. For items where the time value of money has a material effect, the best estimate is determined by discounting the relevant future cash outflows.

When the expenditure required to settle a provision is expected to be reimbursed wholly or partially by a third party, the compensation amount is recognized as a separate asset only when it is virtually certain to be received, and the recognized compensation amount shall not exceed the carrying amount of the provision.

The Company reviews the carrying amount of provisions at the balance sheet date and adjusts the carrying amount to the current best estimate if there is conclusive evidence that the carrying amount no longer reflects the current best estimate.

24. Share-based payment

The share-based payment transactions of the Company are transactions in which equity instruments are granted or liabilities are incurred based on equity instruments in exchange for services received from employees or other parties. The Company's share-based payments are classified into equity-settled share-based payments and cash-settled share-based payments.

(1) Equity-settled share-based payments and equity instruments

Share-based payments settled by equity instruments in exchange for employee services shall be measured at the fair value of the equity instruments granted to employees. For share-based payment transactions that are exercisable immediately upon grant, the fair value of the equity instruments is recognized as relevant costs or expenses on the grant date, with a corresponding increase in capital reserve. For share-based payment transactions where vesting is contingent upon the completion of service during the vesting period or the achievement of specified performance conditions, the Company, on each balance sheet date during the vesting period, recognizes the services received in the current period as relevant costs or expenses and correspondingly increases capital reserve, based on the best estimate of the number of equity instruments expected to vest and measured at the fair value as of the grant date.

If the terms of an equity-settled share-based payment arrangement are modified, at least the services received shall be recognized as if the terms had not been modified. Furthermore, any modification that increases the fair value of the equity instruments granted, or any change favorable to employees on the modification date, shall result in the recognition of an increase in the services obtained.

During the vesting period, if the granted equity instruments are cancelled, the Company shall treat the cancellation as an accelerated vesting event, immediately recognizing the amount that would have been recognized over the remaining vesting period in the current period's profit or loss, while simultaneously recognizing additional paid-in capital. However, if new equity instruments are granted and it is determined on the grant date of the new equity instruments that they are granted in replacement of the cancelled equity instruments, the replacement equity instruments shall be accounted for in the same manner as the modification of the terms and conditions of the original equity instruments.

(2) Share-based payments settled in cash and equity instruments

Share-based payments settled in cash are measured at the fair value of the liability incurred by the Company, which is determined based on shares or other equity instruments. For share-based payment transactions that are vested immediately upon grant, the Company recognizes the fair value of the liability incurred on the grant date as relevant costs or expenses and correspondingly increases the liability. For share-based payment transactions that require service to be completed within a vesting period or the achievement of specified performance conditions before vesting, the Company shall, on each balance sheet date during the vesting period, recognize the services received in the current period in the relevant costs or expenses and correspondingly in liabilities, based on the best estimate of the number of instruments expected to vest and measured at the fair value of the liability assumed by the Company. At each balance sheet date prior to the settlement of the relevant liability and on the settlement date, the fair value of the liability is remeasured, with any changes recognized in profit or loss for the current period.

When the Company modifies the terms and conditions of a cash-settled share-based payment arrangement to convert it into an equity-settled share-based payment arrangement, it shall measure the equity-settled share-based payment arrangement at the fair value of the equity instruments granted on the modification date, regardless of whether the modification occurs during or after the vesting period; the services received to date shall be recognized in equity (capital reserve), the liability recognized for the cash-settled share-based payment arrangement as of the modification date shall be derecognized, and the difference between the two amounts shall be recognized in profit or loss for the current period. If the waiting period is extended or shortened due to modifications, the Company shall account for the modification based on the revised waiting period.

25. Income

1、 Accounting policies adopted for the recognition and measurement of revenue.

The Company recognizes revenue when it satisfies its performance obligations under the contract, which occurs when the customer obtains control of the relevant goods or services. Obtaining control over relevant goods or services refers to the ability to direct the use of such goods or services and obtain substantially all of the remaining economic benefits from them.

When a contract includes two or more performance obligations, the Company allocates the transaction price to each performance obligation on the contract inception date based on the relative standalone selling prices of the goods or services promised in each performance obligation. The Company recognizes revenue based on the transaction price allocated to each distinct performance

obligation.

Transaction price refers to the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties and amounts expected to be refunded to customers. The Company determines the transaction price based on the contract terms and its past customary practices, considering the effects of variable consideration, significant financing components, non-cash consideration, and consideration payable to the customer when establishing the transaction price. The Company determines the transaction price, which includes variable consideration, as the amount of revenue recognized to date that is highly probable will not result in a significant reversal when the related uncertainties are resolved. Where a contract contains a significant financing component, the Company determines the transaction price as the amount of cash that would be payable by the customer at the time the customer obtains control of the goods or services, and amortizes the difference between the transaction price and the contract consideration over the contract period using the effective interest method.

An entity satisfies a performance obligation over a period of time if any of the following conditions are met; otherwise, the performance obligation is satisfied at a point in time:

• The customer simultaneously obtains and consumes the economic benefits derived from the Company's performance as the Company performs.

• The customer has the ability to control the work-in-progress asset during the company's performance.

• The goods produced during the Company's performance of the contract have no alternative use, and the Company has an enforceable right to payment for performance completed to date throughout the entire contract period.

For performance obligations satisfied over time, the Company recognizes revenue over that period based on the progress of performance, except where the progress cannot be reasonably determined. The Company determines the progress of performance obligations using the output method or the input method, considering the nature of the goods or services. When the progress of fulfillment cannot be reasonably determined, if the costs incurred are expected to be recoverable, the Company recognizes revenue equal to the amount of costs incurred until the progress of fulfillment can be reasonably determined.

For performance obligations satisfied at a point in time, the Company recognizes revenue when the customer obtains control of the relevant goods or services. In determining whether a customer has obtained control of goods or services, the Company considers the following indicators:

• The Company has a present right to consideration for the goods or services, meaning the customer has a present obligation to pay for the goods or services.

• The Company has transferred the legal title of the product to the customer, meaning the customer now holds the legal title to the product.

• The Company has transferred physical possession of the product to the customer, meaning the customer now has physical control of the product.

• The Company has transferred the significant risks and rewards of ownership of the goods to the customer, meaning that the customer has obtained the significant risks and rewards of ownership of the goods.

• The customer has accepted the goods or services.

The Company determines whether it acts as a principal or an agent in a transaction based on whether it controls the specified good or service before that good or service is transferred to the customer. The Company is the principal and recognizes revenue based on the total amount of consideration received or receivable if it controls the goods or services before transferring them to the customer; otherwise, the Company is an agent and recognizes revenue based on the amount of commission or fees it expects to be entitled to receive.

2、 Disclose the specific revenue recognition methods and measurement approaches according to business type.

The Company recognizes revenue when it satisfies its performance obligations under the contract, which occurs when the customer obtains control of the relevant goods or services. Obtaining control over relevant goods or services refers to the ability to direct the use of such goods or the provision of such services and to obtain substantially all of the remaining economic benefits therefrom.

(1) Sales contract for goods

Sales contracts between the Company and its customers typically include performance obligations, such as the transfer of goods. The Company typically recognizes revenue at the point in time when each performance obligation is satisfied, based on a comprehensive assessment of the following factors: the existence of a present right to payment for the goods, the transfer of significant risks and rewards of ownership of the goods, the transfer of legal title to the goods, the transfer of physical possession of the goods, and the customer's acceptance of the goods.

(2) Provide a service contract.

The performance obligations under service contracts between the Company and its customers are recognized as satisfied over a period of time because the customer simultaneously receives and consumes the economic benefits derived from the Company's performance, and the Company has an enforceable right to payment for performance completed to date throughout the contract period; accordingly, revenue is recognized based on the progress of performance, except where the progress cannot be reasonably determined. The Company determines the progress of performance of service obligations using the output method based on completed or delivered products. When the progress of performance cannot be reasonably determined, if the costs incurred by the Company are expected to be recoverable, revenue shall be recognized based on the amount of costs incurred until the progress of performance can be reasonably determined.

(3) Variable consideration

Certain contracts between the Company and its customers include sales rebate arrangements, resulting in variable consideration. The Company determines the best estimate of variable consideration based on either the expected value or the most likely amount, provided that the transaction price including variable consideration does not exceed the amount for which it is highly probable that a significant reversal of cumulative revenue recognized will not occur when the related uncertainty is resolved.

(4) Warranty Obligations

In accordance with the contract agreement and applicable laws, the Company provides a quality assurance for the products sold. For product warranties that provide a service in addition to assuring customers that the sold products comply with agreed-upon standards, the Company treats such service-type warranties as a separate performance obligation, allocates a portion of the transaction price to the service-type warranty based on the relative standalone selling prices of the products and the service-type warranty, and recognizes revenue when the customer obtains control of the service. When assessing whether a quality assurance provides a separate service to the customer beyond assuring that the products sold comply with agreed-upon specifications, the Company considers factors such as whether the quality assurance is legally required, the duration of the quality assurance, and the nature of the tasks the Company commits to performing.

(5) Reward Points Program

The Company grants reward points to customers when selling products or providing services, which customers can redeem for free or discounted products or services. The rewards points program grants customers a material right, which the

Company accounts for as a separate performance obligation; accordingly, a portion of the transaction price is allocated to the rewards points based on the relative standalone selling prices of the goods or services provided and the rewards points, and revenue is recognized when the customer obtains control of the goods or services to be redeemed for the points or when the points expire.

(6) Principal Responsible Person / Agent

Regarding the Company's ability to direct third-party representatives to provide services to customers on its behalf, the Company has the autonomy to determine the prices of the goods or services transacted; specifically, the Company controls the relevant goods prior to their transfer to customers, thereby establishing the Company as the principal, and revenue is recognized based on the total amount of consideration received or receivable. Otherwise, the Company acts as an agent and recognizes revenue based on the commission or fee amount it expects to be entitled to receive, which shall be determined as the net amount after deducting payments to be made to other relevant parties from the total consideration received or receivable, or based on the agreed commission amount or percentage.

26. Contract costs

Contract costs comprise contract fulfillment costs and contract acquisition costs.

Costs incurred by the Company to fulfill a contract that fall outside the scope of relevant accounting standards governing inventories, property, plant and equipment, or intangible assets shall be recognized as an asset as contract fulfillment costs if the following conditions are met:

• This cost is directly attributable to a contract that is either current or expected to be obtained.

• This cost increases the resources the Company will use to fulfill its performance obligations in the future.

• This cost is expected to be recoverable.

Incremental costs incurred by the Company to obtain a contract are recognized as an asset as contract acquisition costs if they are expected to be recoverable.

Assets related to contract costs are amortized on the same basis as the recognition of revenue for the goods or services associated with such assets; however, for contract acquisition costs with an amortization period not exceeding one year, the Company recognizes them in current profit or loss when incurred.

For assets related to contract costs, if their carrying amount exceeds the difference between the following two items, the Company shall recognize an impairment provision for the excess amount and confirm it as an asset impairment loss:

1. The remaining consideration expected to be received from the transfer of goods or services related to the asset;

2. The estimated costs expected to be incurred to transfer the related goods or services.

If factors that previously caused an impairment change, resulting in the aforementioned difference exceeding the asset's carrying amount, the Company shall reverse the previously recognized impairment provision and recognize it in current profit or loss, provided that the asset's carrying amount after reversal does not exceed the carrying amount that would have been determined had no impairment provision been recognized on the date of reversal.

26. Contract costs Contract costs comprise contract fulfillment costs and contract acquisition costs. Costs incurred by the Company to fulfill a contract that fall outside the scope of relevant accounting standards governing inventories, property, plant and equipment, or intangible assets shall be recognized as an asset as contract fulfillment costs if the following conditions are met: • This cost is directly attributable to a contract that is either current or expected to be obtained. • This cost increases the resources the Company will use to fulfill its performance obligations in the future. • This cost is expected to be recoverable. Incremental costs incurred by the Company to obtain a contract are recognized as an asset as contract acquisition costs if they are expected to be recoverable. Assets related to contract costs are amortized on the same basis as the recognition of revenue for the goods or services associated with such assets; however, for contract acquisition costs with an amortization period not exceeding one year, the Company recognizes them in current profit or loss when incurred. For assets related to contract costs, if their carrying amount exceeds the difference between the following two items, the Company shall recognize an impairment provision for the excess amount and confirm it as an asset impairment loss:

27. Government subsidies

(1) Type

Government grants are monetary or non-monetary assets received by the Company from the government without charge, classified into grants related to assets and grants related to income.

Government grants related to assets refer to those grants received by the Company that are intended for the acquisition, construction, or other forms of creation of long-term assets. Government grants related to income refer to government grants other than those related to assets.

(2) Confirmation point

Government grants are recognized when the company meets the conditions attached to them and when the grants are receivable.

(3) Accounting treatment

The Company accounts for government grants using the net method.

Government grants related to assets are either deducted from the carrying amount of the relevant assets or recognized as deferred income. Deferred income recognized shall be allocated to current profit or loss in installments over the useful life of the related asset using a reasonable and systematic method;

Government grants related to income that compensate for relevant costs, expenses, or losses to be incurred by the Company in future periods are recognized as deferred income and are included in the current period's profit or loss or offset against relevant costs, expenses, or losses in the period when the related costs, expenses, or losses are recognized; government grants that compensate for relevant costs, expenses, or losses already incurred by the Company are recognized directly in the current period's profit or loss or offset against relevant costs, expenses, or losses.

The interest subsidy on policy-based preferential loans obtained by the Company shall be accounted for separately according to the following two scenarios:

(1) When the government allocates interest subsidy funds to the lending bank, which then provides loans to the Company at a preferential policy rate, the Company shall recognize the loan at the amount actually received and calculate the related borrowing costs based on the loan principal and the preferential policy rate.

(2) Where the government directly disburses interest subsidy funds to the Company, the Company shall offset the corresponding interest subsidy against the relevant borrowing costs.

28. Deferred tax assets and deferred tax liabilities

Income tax comprises current income tax and deferred income tax. Except for income taxes arising from business combinations and transactions or events recognized directly in equity (including other comprehensive income), the Company recognizes current and deferred income taxes in the current period's profit or loss.

Deferred tax assets and deferred tax liabilities are recognized based on the differences (temporary differences) between the tax bases of assets and liabilities and their carrying amounts.

Deferred tax assets arising from deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available in future periods against which the deductible temporary differences can be utilized. Deferred tax assets are recognized for deductible losses and tax credits carried forward to future years to the extent that it is probable that future taxable profit will be available against which the deductible losses and tax credits can be utilized.

Deferred tax liabilities are recognized for all taxable temporary differences, except in specific circumstances.

Special circumstances in which deferred tax assets or deferred tax liabilities are not recognized include:

• Initial recognition of goodwill.

• Transactions or events that are not business combinations, do not affect accounting profit or taxable income (or deductible losses) at the time of occurrence, and where the initial recognition of assets and liabilities does not give rise to equal amounts of taxable temporary differences and deductible temporary differences.

Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in subsidiaries, associates, and joint ventures, except where the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized for deductible temporary differences associated with investments in subsidiaries, associates, and joint ventures when it is probable that the temporary differences will reverse in the foreseeable future and that taxable profit will be available against which the deductible temporary differences can be utilized.

At the balance sheet date, deferred tax assets and deferred tax liabilities are measured using the tax rates that are expected to apply in the periods when the related assets are recovered or the related liabilities are settled, in accordance with tax laws.

At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is not probable that sufficient taxable profits will be available in the future to utilize the benefits of deferred tax assets, the carrying amount of deferred tax assets is reduced. The amount of the reduction is reversed when it is probable that sufficient taxable profit will be available to utilize the deductible temporary differences.

Current income tax assets and current income tax liabilities are presented on a net basis when there is a legally enforceable right to set off the recognized amounts and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously.

On the balance sheet date, deferred tax assets and deferred tax liabilities are presented on a net basis only when the following conditions are simultaneously met:

• The taxpayer has a legally enforceable right to offset current income tax assets against current income tax liabilities on a net basis.

• Deferred tax assets and deferred tax liabilities are recognized as a net amount if they relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities that intend to settle current tax assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously in each future period in which significant deferred tax assets and liabilities are expected to reverse.

29. Leasing

Leasing refers to a contract whereby the lessor transfers the right to use an asset to the lessee for a specified period in exchange for consideration. On the commencement date of the contract, the Company assesses whether the contract is, or contains, a lease. A contract is a lease or contains a lease if it conveys the right to control the use of one or more identified assets for a period of time in exchange for consideration.

When a contract contains multiple separate leases, the Company shall separate the contract and account for each separate lease individually. When a contract contains both lease and non-lease components, the lessee and the lessor shall allocate the lease and non-lease components separately.

(1) The Company, as the lessee,

(1) Right-of-use assets

On the commencement date of the lease term, the Company recognizes a right-of-use asset for all leases except for short-term leases and leases of low-value assets. Right-of-use assets are initially measured at cost. This cost includes:

 The initial measurement amount of lease liabilities;

Lease payments made at or before the commencement date of the lease, net of any lease incentives received.

Initial direct costs incurred by the Company;

The Company recognizes provisions for the estimated costs of dismantling and removing leased assets, restoring the site on which the leased assets are located, or restoring the leased assets to the condition stipulated in the lease terms, excluding costs incurred for the production of inventory.

The Company will subsequently depreciate the right-of-use assets using the straight-line method. For leases where it is reasonably certain that the Company will obtain ownership of the leased asset at the end of the lease term, depreciation is charged over the remaining useful life of the leased asset; otherwise, depreciation is charged over the shorter of the lease term and the remaining useful life of the

leased asset.

(2) Lease liabilities

On the commencement date of the lease term, the Company recognizes a lease liability for all leases except for short-term leases and leases of low-value assets. Lease liabilities are initially measured at the present value of the lease payments that are not yet paid. Lease payments include:

Fixed payments (including substantive fixed payments), less any lease incentives received.

 Variable lease payments that depend on an index or a rate;

The estimated amount payable based on the guaranteed residual value provided by the company.

The exercise price of the purchase option, provided that the company reasonably determines it will exercise such option;

Amounts payable for exercising a termination option, provided that the lease term reflects the company's intention to exercise that termination option.

The Company utilizes the implicit rate of the lease as the discount rate; however, if the implicit rate of the lease cannot be determined reasonably, the Company's incremental borrowing rate is used as the discount rate.

The Company calculates interest expenses on lease liabilities for each period during the lease term based on a fixed periodic interest rate and recognizes them in current profit or loss or as part of the cost of relevant assets.

Variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss for the current period or as part of the cost of the related asset when they occur.

Subsequent to the commencement date of the lease, the Company remeasures the lease liability and adjusts the corresponding right-of-use asset in the event of the following circumstances; if the carrying amount of the right-of-use asset has been reduced to zero but the lease liability still requires further reduction, the difference shall be recognized in profit or loss for the current period.

When the assessment results of purchase options, renewal options, or termination options change, or when the actual exercise of such options differs from the original assessment, the Company remeasures the lease liability based on the present value of the revised lease payments calculated using the revised discount rate.

When the amount of substantive fixed lease payments changes, the estimated amount payable under the guaranteed residual value changes, or the index or rate used to determine lease payments changes, the Company remeasures the lease liability based on the present value of the revised lease payments discounted at the original discount rate. However, if changes in lease payments arise from changes in a floating interest rate, the present value shall be recalculated using a revised discount rate.

(3) Short-term leases and leases of low-value asset

The Company elects not to recognize right-of-use assets and lease liabilities for short-term leases and leases of low-value assets, and instead recognizes the related lease payments as an expense on a straight-line basis over the lease term in the current period's profit or loss or in the cost of the relevant asset. A short-term lease is defined as a lease that, at the commencement date, has a lease term of no more than 12 months and does not include a purchase option. A low-value asset lease refers to a lease where the underlying asset, when new, has a low value. If a company subleases or expects to sublease a leased asset, the original lease shall not be classified as a low-value asset lease.

(4) Lease modification

A lease modification is accounted for as a separate lease if the modification increases the scope of the lease by adding the right to use one or more underlying assets and the consideration for the lease modification increases by an amount commensurate with the stand-alone price for the increase in scope adjusted for the specific circumstances of the contract.

The lease modification expands the scope of the lease by adding one or more underlying assets.

The additional consideration is commensurate with the stand-alone selling price of the expanded scope of the lease, adjusted for the circumstances of the contract.

If a lease modification is not accounted for as a separate lease, on the effective date of the modification, the Company shall reallocate the consideration of the modified contract, reassess the lease term, and remeasure the lease liability based on the present value of the modified lease payments discounted at the revised discount rate.

In the event that a lease modification results in a reduction in the scope of the lease or a shortening of the lease term, the Company shall correspondingly reduce the carrying amount of the right-of-use asset and recognize any related gain or loss from the partial or full termination of the lease in the current period's profit or loss. For other lease modifications that result in the remeasurement of the lease liability, the Company correspondingly adjusts the carrying amount of the right-of-use asset.

(2) The Company, acting as the lessor,

On the commencement date of the lease, the Company classifies leases as either finance leases or operating leases. Financial leasing refers to a lease arrangement in which, regardless of whether ownership is ultimately transferred, substantially all risks and rewards incidental to ownership of the leased asset are transferred. Operating lease refers to any lease other than a finance lease. When the Company acts as a sublessor, it classifies the sublease based on the right-of-use asset arising from the head lease.

(1) Accounting treatment for operating leases

The lease payments under an operating lease are recognized as rental income on a straight-line basis over the lease term. The company capitalizes initial direct costs incurred in connection with operating leases and allocates them to current profit or loss over the lease term on a basis consistent with that used to recognize rental income. Variable lease payments that are not included in the measurement of the lease receivable are recognized in profit or loss in the period in which the event or condition on which they depend occurs. In the event of a modification to an operating lease, the Company shall account for the modified lease as a new lease effective from the modification date, and any lease payments received or receivable prior to the modification shall be treated as payments for the new lease.

(2) Accounting treatment for financial leasing

On the commencement date of the lease, the Company recognizes a receivable for the finance lease and derecognizes the leased asset. When initially measuring receivables from finance leases, the Company recognizes the net investment in the lease as the carrying amount of the receivables from finance leases. The net investment in the lease is the sum of the present value of the unguaranteed residual value and the lease payments receivable that are not yet received at the commencement date of the lease term, discounted at the interest rate implicit in the lease.

The Company calculates and recognizes interest income for each period during the lease term based on a fixed periodic interest rate. The derecognition and impairment of finance lease receivables are accounted for in accordance with Note V(9) "Financial Instruments" of these Notes.

Variable lease payments that are not included in the measurement of the net investment in the lease are recognized in profit or loss when they occur.

If a modification to a finance lease occurs and simultaneously meets the following conditions, the Company shall account for such modification as a separate lease:

This change expands the scope of the lease by adding one or more right-of-use assets.

The additional consideration is commensurate with the stand-alone selling price of the expanded scope of the lease, adjusted for the circumstances of that contract.

If the modification of a finance lease is not accounted for as a separate lease, the Company shall account for the modified lease in accordance with the following circumstances:

If a modification would have resulted in the lease being classified as an operating lease had it been effective at the commencement date, the Company accounts for the modification as a new lease from the effective date of the modification, with the carrying amount of the leased asset being the net investment in the lease immediately prior to the effective date of the modification;

If the modification were effective at the commencement date of the lease and the lease would have been classified as a finance lease, the Company accounts for the modification in accordance with the policy on modification or renegotiation of contracts set forth in Note V(IX) "Financial Instruments".

(3) Sale and leaseback transaction

The Company assesses and determines whether the transfer of assets in a sale and leaseback transaction constitutes a sale in accordance with the principles set forth in Note V (25) Revenue.

(1) As a lessee

Where the transfer of an asset in a sale and leaseback transaction qualifies as a sale, the lessee measures the right-of-use asset arising from the leaseback at the proportion of the carrying amount of the original asset that relates to the right of use retained, and recognizes only the gain or loss relating to the rights transferred to the lessor.

In a sale and leaseback transaction, if the transfer of the asset does not qualify as a sale, the company, acting as the lessee, shall continue to recognize the transferred asset and simultaneously recognize a financial liability equal to the proceeds received from the transfer. The accounting treatment of financial liabilities is detailed in Note V(IX) "Financial Instruments".

(2) As a lessor

If the asset transfer in a sale and leaseback transaction constitutes a sale, the Company, as the lessor, accounts for the asset acquisition and accounts for the asset lease in accordance with the policy set forth in "2. The Company as the Lessor"; if the asset transfer in a sale and leaseback transaction does not constitute a sale, the Company, as the lessor, does not recognize the transferred asset but recognizes a financial asset equal to the proceeds from the transfer. The accounting treatment of financial assets is detailed in Note V (IX) "Financial Instruments".

30. Methodology for determining importance criteria and basis for selection.

31. Changes in significant accounting policies and accounting estimates

(1) Significant changes in accounting policies None.

(2) Significant changes in accounting estimates None.

VI. Taxes

1. Major tax types and tax rates

2. Tax incentives

1. In accordance with the relevant regulations for the recognition of national high-tech enterprises and the applicable tax incentive policies, the Company and its subsidiaries below have been recognized as high-tech enterprises and are entitled to a preferential corporate income tax rate of 15% within the prescribed period: This company (2024–2026), its subsidiary Beijing Changan Automobile Engineering Research Co., Ltd. (2024–2026), Hebei Changan Automobile Co., Ltd. (2026–2028), and Deepal Automobile Technology Co., Ltd. (2026–2028).

2. In accordance with the "Announcement on Continuing the Corporate Income Tax Policies for the Western Region" jointly issued by the Ministry of Finance, the State Taxation Administration, and the National Development and Reform Commission (Announcement No. 23 of 2020 by the Ministry of Finance, the State Taxation Administration, and the National Development and Reform Commission), from January 1, 2021, to December 31, 2030, corporate income tax shall be levied at a reduced rate of 15% for enterprises engaged in encouraged industries located in the western region. Our company's subsidiaries include Chongqing Changan International Sales Service Co., Ltd., Chongqing Changan Special Purpose Vehicle Co., Ltd., Chongqing Changan Customer

Service Co., Ltd., Chongqing Changan Software Technology Co., Ltd., Chongqing Changan Technology Co., Ltd., Chongqing Xingzhi Technology Co., Ltd., Chongqing Lingyao Automobile Co., Ltd., and Chongqing Chehe Mei Technology Co., Ltd. In compliance with the aforementioned requirements, the corporate income tax payable shall be calculated at the 15% tax rate.

3. In accordance with the "Announcement of the Ministry of Finance and the State Taxation Administration on Further Supporting the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households Regarding Relevant Tax and Fee Policies" (Announcement No. 12 of 2023 of the Ministry of Finance and the State Taxation Administration), the taxable income of small and low-profit enterprises shall be calculated at 25% of the actual amount, and corporate income tax shall be levied at a rate of 20%. Our subsidiaries, Shanghai Changan Zhixing Technology Co., Ltd., Xiamen Changan New Energy Automobile Sales and Service Co., Ltd., Deepal Automobile Nanjing Research Institute Co., Ltd., and Deepal Automobile Marketing and Service (Shenzhen) Co., Ltd., have been recognized as small and low-profit enterprises and are eligible for the corresponding tax preferential policies.

4. In accordance with the "Announcement of the Ministry of Finance and the State Taxation Administration on the Policy of Additional Deduction for Value-Added Tax by Advanced Manufacturing Enterprises" (Announcement No. 43 of the Ministry of Finance and the State Taxation Administration, 2023), advanced manufacturing enterprises are permitted to deduct an additional 5% of the current period's deductible input VAT from their payable VAT amount for the period from January 1, 2023, to December 31, 2027. This additional deduction policy applies to our company, Hebei Changan Automobile Co., Ltd., and Deepal Automobile Technology Co., Ltd.

VII. Notes to Consolidated Financial Statement Items

1. Cash and cash equivalents

Note 1: As of June 30, 2026, the amount of funds held overseas by the Company that are restricted from remittance back to China, specifically in the form of a security deposit, totaled RMB 21,673,168.44.

Note 2: Details of monetary funds held by the Company in related-party financial institutions are provided in Note XIV, Chapter (V).

2. Trading financial assets

3. Notes Receivable

1、 Notes receivable shall be presented in separate categories.

2、 Notes receivable are disclosed by classification according to the method for provision of bad debts.

Notes receivable for which provision for bad debts is accrued based on a combination of credit risk characteristics:

3、 Notes receivable pledged by the company at the end of the fiscal period.

4、 Notes receivable endorsed or discounted by the company at the end of the term that have not yet matured as of the balance sheet date.

1、 Accounts receivable are disclosed by aging. Aging Balance at end of period Balance at beginning of prior year 1Within one year (including1years) 7,476,612,928.04 4,229,226,208.97 1to2years (including2years) 29,216,375.55 18,615,201.37 2to3years (including3years) 1,116,962.40 699,218.40 3years and above 185,072,236.79 185,165,040.70 Subtotal 7,692,018,502.78 4,433,705,669.44 Less: bad debt provision 191,885,926.53 236,861,022.29 Total 7,500,132,576.25 4,196,844,647.15

3、 Notes receivable pledged by the company at the end of the fiscal period. Item Pledged at end of periodDeposit amount Bank acceptance bills 3,708,173,268.45 Commercial acceptance bills 1,109,431,639.00 Total 4,817,604,907.45

4. Accounts Receivable

1、 Accounts receivable are disclosed by aging.

2、 Disclosure of accounts receivable classified by the method of provision for bad debts.

Accounts receivable for which bad debt provisions are accrued based on a combination of credit risk characteristics:

2、 Details of the top five prepayments by payee at the end of the reporting period. As of June 30, 2026, the combined balance of the top five prepayments amounted to RMB 606,524,376.51, representing 65.26% of the total prepayments.

3、 Details of the provision for bad debts accrued, reversed, or recovered in the current period.

4、 Details of accounts receivable and contract assets aggregated by the top five debtors at the end of the reporting period.

As of June 30, 2026, the aggregate balance of the top five accounts receivable amounted to RMB 4,913,350,089.41, representing 57.72% of the total ending balance of accounts receivable and contract assets.

5. Prepayments

1、 Prepayments are presented by aging.

2、 Details of the top five prepayments by payee at the end of the reporting period.

As of June 30, 2026, the combined balance of the top five prepayments amounted to RMB 606,524,376.51, representing 65.26% of the total prepayments.

3、 Details of the provision for bad debts accrued, reversed, or recovered in the current period. Category Balance at beginning of prior year Current periodChange in amount Balance at end of period Provision Recovery or reversal ReversalOrWrite-off Other changes Bad debt provision made individually 117,520,250.03 2,966,196.52 37,621,636.56 76,932,416.95 By credit riskBad debt provision provided by characteristic portfolio 119,340,772.26 3,292,602.97 7,679,865.65 114,953,509.58 Total 236,861,022.29 3,292,602.97 10,646,062.17 37,621,636.56 191,885,926.53

4、 Details of accounts receivable and contract assets aggregated by the top five debtors at the end of the reporting period. As of June 30, 2026, the aggregate balance of the top five accounts receivable amounted to RMB 4,913,350,089.41, representing 57.72% of the total ending balance of accounts receivable and contract assets.

5. Prepayments

6. Other receivables

1、 Other receivables are disclosed by aging.

2、 Other receivables are disclosed by classification according to the impairment provision method.

Other receivables for which provision for bad debts is accrued based on combinations of credit risk characteristics:

3、 Provision for Bad Debts Accrual Status

4、 Details of the bad debt provision accrued, reversed, or recovered in the current period.

5、 Classification by nature of funds

6、 Details of the top five other receivables by debtor as of the end of the period. As of June 30, 2026, the combined ending balance of the top five other receivables amounted to 678,544,890.27 RMB. This amount represents 60.45% of the total ending balance of other receivables.

7. Inventory

1、 Inventory classification

2、 Provision for decline in inventory value and provision for impairment of contract fulfillment costs

The Company bases its provision for inventory obsolescence on whether the cost of inventory exceeds its net realizable value. Net realizable value refers to the estimated selling price in the ordinary course of business less the estimated costs of completion, estimated selling expenses, and related taxes. The reversal or write-off of the inventory provision for decline in value this year is due to the increase in the net realizable value of inventor previously provided for in prior years or the sale of such inventory during the current year.

2、 The amounts and reasons for significant changes in book value during the reporting period. Item Change in amount Reason for change New energy subsidies 3,414,582.00 Recovery of partial amounts, reversal of impairment provision Total 3,414,582.00

7. Inventory

8. Contract Assets

1、 Status of Contract Assets

2、 The amounts and reasons for significant changes in book value during the reporting period.

3、 Contract assets are disclosed by classification according to the impairment accrual method.

4、 Provision for impairment of contract assets for the current period

9. Non-current assets due within one year

10. Other current assets

11. Long-term receivables

1、 Status of long-term receivables

2. Joint venture Chongqing Changan Kuayue Vehicle Co., Ltd. 258,998,406.22 -11,954,505.83 247,043,900.39 Chongqing Chang'an Kuayue Vehicle Marketing Co., Ltd. 1,239,482.34 -1,239,482.34 Changan Automobile Finance Co., Ltd. 5,603,721,114.14 188,068,528.00 5,791,789,642.14 Nanjing Chelai Travel Technology Co., Ltd. 326,831.47 14.86 326,846.33 Hunan Guoxin Semiconductor Technology Co., Ltd. 28,211,161.19 -455,662.26 27,755,498.93 Nanjing Lingxing Equity Investment Partnership (Limited Partnership) 3,123,552,090.24 -29,504.04 3,123,522,586.20 Nanjing Lingxing Equity Investment Management Co., Ltd. 1,094,810.00 -6,382.78 1,088,427.22 CATARC Intelligent Driving Technology Co., Ltd. 420,296,556.11 -1,746,697.00 418,549,859.11 Chongqing Changxin Zhiji Private Equity Investment Fund Partnership (Limited Partnership) 264,750,946.49

11. Long-term receivables

12. Long-term equity investment

1、 Status of long-term equity investments

2. Joint venture Chongqing Changan Kuayue Vehicle Co., Ltd. 258,998,406.22 -11,954,505.83 247,043,900.39 Chongqing Chang'an Kuayue Vehicle Marketing Co., Ltd. 1,239,482.34 -1,239,482.34 Changan Automobile Finance Co., Ltd. 5,603,721,114.14 188,068,528.00 5,791,789,642.14 Nanjing Chelai Travel Technology Co., Ltd. 326,831.47 14.86 326,846.33 Hunan Guoxin Semiconductor Technology Co., Ltd. 28,211,161.19 -455,662.26 27,755,498.93 Nanjing Lingxing Equity Investment Partnership (Limited Partnership) 3,123,552,090.24 -29,504.04 3,123,522,586.20 Nanjing Lingxing Equity Investment Management Co., Ltd. 1,094,810.00 -6,382.78 1,088,427.22 CATARC Intelligent Driving Technology Co., Ltd. 420,296,556.11 -1,746,697.00 418,549,859.11 Chongqing Changxin Zhiji Private Equity Investment Fund Partnership (Limited Partnership) 264,750,946.49

12. Long-term equity investment

13. Investments in other equity instruments

1、 Status of investments in other equity instruments

13. Investments in other equity instruments

14. Investment property

1、 Investment property measured using the cost model.

14. Investment property

15. Fixed assets

1、 Fixed Assets and Disposal of Fixed Assets

2、 Status of Fixed Assets

3、 Fixed assets temporarily idle as of June 30, 2026, had a book value of RMB 20,625,406.47 (as of December 2025).

Fixed assets amounting to RMB 165,186,236.58 as of the 31st. Temporarily idle due to product upgrades and replacements.

4、 Status of fixed assets leased out under operating leases.

5、 Status of fixed assets for which property ownership certificates have not been obtained. As of June 30, 2026, the Company holds no fixed assets lacking title certificates.

16. Construction in progress

1、 Construction in progress and engineering materials

2、 Status of ongoing construction Items

3、 Changes in significant construction Items in progress during the current period.

4、 Details of the impairment provision accrued for construction in progress in the current period.

17. Right-of-use asset

1、 Status of right-of-use assets

4、 Details of the impairment provision accrued for construction in progress in the current period. Item Balance at beginning of prior year Changes during the current period Balance at end of period Reason for provision Provision Transferred out Other Engine technical transformation project 20,921,684.06 20,921,684.06 OtherItem 6,939,668.81 1,310,363.23 5,629,305.58 Total 27,861,352.87 1,310,363.23 26,550,989.64

17. Right-of-use asset

18. Intangible assets

1、 Status of Intangible Assets

As of June 30, 2026, the Company holds no land use rights for which the title certificates have not been finalized.

18. Intangible assets

19. Goodwill

1、 Changes in Goodwill

19. Goodwill

20. Long-term deferred expenses

21. Deferred tax assets and deferred tax liabilities

1、 Unoffset deferred tax assets

2、 Unoffset deferred tax liabilities

3、 Deferred tax assets or liabilities presented on a net basis after offsetting.

4、 Details of unrecognized deferred tax assets

5、 The deductible losses of unrecognized deferred tax assets will expire in the following years.

22. Other non-current assets

23. Assets subject to restrictions on ownership or usage rights.

24. Short-term borrowings

1、 Classification of Short-term Borrowings

Note: As of June 30, 2026, the annual interest rate for the aforementioned loan is 2.11%. As of June 30, 2026, there were no overdue short-term borrowings.

24. Short-term borrowings

25. Notes Payable

26. Accounts Payable

1、 Accounts Payable Listing

Note: As of June 30, 2026, there were no significant accounts payable with an aging period exceeding one year.

24. Short-term borrowings

25. Notes Payable Type Balance at end of period Balance at beginning of prior year Bank acceptance bills 36,691,069,572.39 43,111,562,471.54 Commercial acceptance bills 923,621,889.02 867,961,309.25 Total 37,614,691,461.41 43,979,523,780.79

26. Accounts Payable

27. Deferred revenue

1、 Presentation of advance receipts

24. Short-term borrowings

25. Notes Payable Type Balance at end of period Balance at beginning of prior year Bank acceptance bills 36,691,069,572.39 43,111,562,471.54 Commercial acceptance bills 923,621,889.02 867,961,309.25 Total 37,614,691,461.41 43,979,523,780.79

26. Accounts Payable

27. Deferred revenue

28. Contract liabilities

1、 Status of Contract Liabilities

24. Short-term borrowings

25. Notes Payable Type Balance at end of period Balance at beginning of prior year Bank acceptance bills 36,691,069,572.39 43,111,562,471.54 Commercial acceptance bills 923,621,889.02 867,961,309.25 Total 37,614,691,461.41 43,979,523,780.79

26. Accounts Payable

27. Deferred revenue

28. Contract liabilities

29. Employee benefits payable

1、 Presentation of Employee Benefits Payable

2、 Disclosure of short-term employee benefits

3、 Disclosure of defined contribution plans

30. Taxes payable

31. Other payables

1、 Dividends Payable

2、 Other payables

(1) Presented by nature of payment

31. Other payables Item Balance at end of period Balance at beginning of prior year Dividends payable 1,138,608,888.49 Other payables 6,133,178,223.55 5,871,006,412.33 Total 7,271,787,112.04 5,871,006,412.33

32. Non-current liabilities due within one year

33. Other current liabilities

34. Long-term borrowings

35. Bonds payable

1、 Details of Bonds Payable

2、 Changes in bonds payable (excluding other financial instruments classified as financial liabilities, such as preferred shares and perpetual bonds).

2、 Special Payables Item Balance at beginning of prior year Increases for the period Decreases for the period Balance at end of period Formation reason Smart manufacturing special project 411,476,467.65 114,321,443.97 74,098,708.47 451,699,203.15 Automobile structural lightweight design 2,745,046.71 290,800.00 18,730.70 3,017,116.01 Other 76,842,962.80 48,743,500.00 26,092,040.77 99,494,422.03 Total 491,064,477.16 163,355,743.97 100,209,479.94 554,210,741.19

34. Long-term borrowings Item Balance at end of period Balance at beginning of prior year Credit loans 41,502,388.14 Total 41,502,388.14

35. Bonds payable

36. Lease liabilities

37. Long-term payables

1、 Long-term payables

2、 Special Payables

36. Lease liabilities Item Balance at end of period Balance at beginning of prior year Lease liabilities 406,601,034.99 460,625,265.61 Less: reclassified to non-current liabilities due within one year 187,310,267.79 161,478,036.89 Total 219,290,767.20 299,147,228.72

37. Long-term payables Item Balance at end of period Balance at beginning of prior year Long-term payables 2,066,174,873.12 2,053,422,868.05 Special payables 554,210,741.19 491,064,477.16 Total 2,620,385,614.31 2,544,487,345.21

38. Long-term employee benefits payable

39. Provision for liabilities