I. Overview

At the beginning of 2020, the new crown epidemic spread globally, and the domestic and international economic situation is facing severe challenges, on the one hand, the company has brought difficulties and uncertainty, and the need for the company to carefully analyze the epidemic brought about by the changes in the trend and tempo, and timely adjustment of the On the other hand, the epidemic is also giving rise to changes and new demands in various industries, bringing new opportunities to the Company. During the reporting period, the Company continued to maintain its strategic strength, adapt to the negative and positive aspects of strategic development, strengthen risk management and control, deepen refined management, and steadily improve the Company's overall operational efficiency and profitability. in the first half of 2020, total operating revenue of RMB1,338,805,400 was realized, representing an increase of 0.6% compared with the same period of the previous year; operating profit of RMB202,769,200 was recorded, representing an increase of 19.56%; net profit attributable to shareholders of the listed company amounted to RMB192,276,600,000, representing an increase of 20.19% over the same period of the previous year.

During the reporting period, the main operating conditions are reviewed as follows:

1. Adjusting strategies to actively respond to the epidemic, and continuously improving the company's operational efficiency

2. Successfully completing strategic mergers and acquisitions, and steadily advancing the process of internationalization

The company focuses on improving its operational efficiency and consolidating the foundation of endogenous growth, and also adheres to strategic investments and mergers and acquisitions, and promotes internationalization, in order to develop into a competitive international testing and inspection center, and to become a global leader in the field of food safety. We are committed to developing into a competitive international testing organization.

During the reporting period, the Company signed a memorandum of strategic cooperation with Tianjin Eco-city Investment and Development Co., Ltd, Tianjin Nankai University Education Foundation, and Nankai University School of Environmental Science and Engineering in Tianjin Eco-city Service Center, and the Company became the largest shareholder of Tianjin Eco-city Environmental Technology Co. This cooperation at the level of mixed reform of state-owned enterprises is of strategic significance as it can form resources to complement each other and give full play to the advantages of both sides.

During the reporting period, the Company acquired 100% equity interest in MaritecPteLtd with cash of SGD54.86 million. As an important part of the Company's large transportation strategy, this merger and acquisition can generate strong synergies with the Company's existing services for ships, and promote synergistic growth in the operating income, net profit and cash flow of the ship product line and Maritec. The successful completion of the merger and acquisition announced that the company formally took a solid step towards internationalization.

3, strengthen the service ability, customer expansion effect is remarkable

Reporting period, the company undertook the General Administration of Market Supervision and Administration of the 2020 national inspection and testing organizations capacity verification work; undertake the capacity verification of drug manufacturers in Yunnan Province; the subsidiary of the Beijing Huatei become the electronic bidding system trading platform testing organizations; subsidiary Huatei certification successful bidding shortlisted for the 2020 energy-saving diagnostic service provider selection list. The successful bidding is the recognition and trust of the bid evaluation committee on the rich experience of Sinotest Certification in the field of energy-saving services. During the reporting period, we won several government bidding projects, successfully winning the 2020 quantitative testing sampling project for edible agricultural products with a winning bid amount of 16 million; successfully winning the bidding for the operation and maintenance project of Henan Provincial Environmental Air Monitoring Center - 2020-2022 Provincial Environmental Air Monitoring Direct Monitoring Stations in Henan Province (Package E), with a winning bid amount of 12,481,200; successfully winning the bidding for the sampling analysis of the land distribution points of key industry enterprises of the Ecology and Environment Bureau of Nanyang City, Nanyang City. Industry Enterprises Land Sampling and Analysis and Quality Control Service Project (Package I), with a winning bid amount of 10.044 million. As for corporate clients, the company successfully signed service contracts with excellent enterprises such as Rainbow, Aeon, Sinopec, Tsingtao Brewery (600600), Haidilao, and Daily Fresh.

4. Implementation of talent development and incentives to enhance the company's sustained competitiveness

During the reporting period, the company continued to enhance the competitiveness of its core team through a variety of channels, including internal training and external introduction. In terms of internal training, in order to strengthen the training of all employees, the Group launched the E-Learning online learning platform to expand the coverage of training, so that more employees can be more convenient to get the professional ability to improve; the Company tailored the "Sunshine Plan" program for campus freshmen, which is a strategic plan of the Company to enhance the competitiveness of its core team. The "Sunshine Plan" is an important part of the company's strategic talent development program. Through face-to-face teaching, E-Learning, live broadcasting, mentor-led teaching and other learning modes, 9 departmental general counselors, 103 mentors, 12 internal lecturers, 22 tutors and 4 class teachers are arranged for fresh graduates to escort their learning and growth in an all-round way. The company launched the second phase of "Guanghua LAP Leadership Enhancement Training Program" to systematically improve the comprehensive management capabilities of middle and senior managers, such as "strategy execution capability, problem analysis and solution capability, subordinate cultivation capability, and self-leadership capability". In terms of the introduction of external talents, the Company has appointed four experts from the expert group of the Urban Railway Transportation Research Institute of Southwest Jiaotong University, and the Company will establish close cooperation with the expert group of the Urban Railway Transportation Research Institute of Southwest Jiaotong University in the later stage, and the two sides will strengthen the learning and exchange, and strive to bring more breakthroughs in professional technology for the Company.

During the reporting period, the company's two-phase equity incentive plan the first exercise period exercise conditions are met, the 2018 equity incentive plan 38 incentive targets to independent exercise, the total number of viable options 6,195,000, the 2019 equity incentive plan 9 incentive targets to independent exercise, the total number of viable options 1,410,000.

The successful implementation of the Stock Option Incentive Plan can attract and retain outstanding management talents and business backbones, mobilize the enthusiasm and creativity of employees, and help the Company's sustainable and efficient development.

5, for the "war" to help energy, practice social responsibility

In the face of the sudden new coronavirus epidemic, the company to take advantage of its own professional advantages, the courage to assume social responsibility. After the outbreak of the company's first time to develop and epidemic prevention related testing services such as new coronavirus nucleic acid testing, mask testing, protective clothing testing, thermometer testing, disinfection and epidemic prevention of public **** places and offices and other services. During the epidemic, the company assisted the market supervision departments to do a good job in rapid food testing, food and beverage inspection, rapid assessment and other services, to farmers markets, supermarkets, shopping malls and other business places to carry out food safety sampling work, to defend the safety of people's tongues; commissioned by the Shenzhen Metro, Shenzhen Environmental Laboratory is actively involved in the metro station air quality testing, sampling of respirable particulate matter in the air, total bacteria and other items During the epidemic, the company launched the "Battle Epidemic" help program, nucleic acid testing to help small and medium-sized enterprises through the difficult times, the public welfare training courses, in the scientific prevention and control, production links and equipment, product compliance and quality control to help enterprises resume production and work. After the Beijing Xinfadi new crown outbreak, the subsidiary company Huaxue Aipu, together with Huaxue Food Laboratory, provided customers with new crown virus nucleic acid screening and testing services for food and food-related products to provide effective control measures for animal food manufacturers and large supermarkets, fresh food chains and catering enterprises in the purchase of raw materials, processing and production, food service utensil cleaning and disinfection, and to proactively check the risk of the customer, and to identify problems and trace them back to the source. The company's products and services have been widely recognized by the public.

Third, the core competitiveness analysis 1, brand and credibility advantages As an independent third-party testing organizations, brand and credibility is the key to business survival and development, the company based on China's local, global scope, is committed to building a globally competitive Chinese testing brand. The company has established laboratory management system according to ISO/IEC17025, inspection agency management system according to ISO/IEC17020, CNAS accreditation by China National Accreditation Service for Conformity Assessment (CNAS) and CMA metrological qualification, and has obtained authorization from China Quality Certification Center (CQC), which is fully qualified to issue third-party inspection reports. In addition, it has also been accredited by UKAS, CPSC, SPRING, Nadcap and many other international certification bodies, and the full range of qualification recognition to ensure that the company's test reports have more international credibility. 2, excellent management team and professional talent advantage The sustainable development of enterprises depends on the growth of the team, the company's core team in the testing industry has accumulated a wealth of experience, and can quickly grasp the industry development trend, develop strategies to adapt to changes in policy and industry. The company insists on creating a highly educated, high percentage, high-quality oriented scientific research-oriented business atmosphere, and establish a sound scientific promotion system, this advantage allows the company to continue to attract talents from all walks of life who are interested in the testing industry. The company attaches great importance to the growth of each employee, and is committed to becoming a platform suitable for the career development of employees, in the form of dual-channel career development, advocating that employees according to their own actual situation, to become an expert in their field or to become a professional manager, in-depth excavation of each employee's potential to give each employee full adaptation and try to realize the dynamic balance between their own development and the development of the enterprise. In terms of talent training system, the company has invested in the construction of a series of courses and enhancement programs for new employees, general employees, professional skills, leadership development, etc., which provides a strong guarantee for the sustainable development of the company. The Company launched the "Guanghua LAP Leadership Enhancement Program" to systematically cultivate high-potential management talents, focusing on the development of leadership, cultivation of strategic thinking and training of efficient management skills for high-potential talents, and fully empowering high-potential management talents, with remarkable results. During the reporting period, the Company carried out the "Sunshine Plan" program tailored for campus fresh graduates, which is an important part of the strategic talent development program of Sinotest Group. Meanwhile, in order to maintain the stability of the core team and attract more talents, the company has implemented the full performance appraisal program, employee stock ownership plan and equity incentive plan and other incentives to stimulate the enthusiasm of the company's core team and lead the team to achieve the company's strategic goals, laying the foundation for the company's efficient, high-quality and sustainable development. 3、One-stop service and big data support advantages The company's laboratory network has spread across the country's major cities, making full use of its geographic location, radiation in the surrounding areas. The company provides a comprehensive coverage of the types of services set testing, inspection, accreditation, certification, metrology calibration and other technical services, the scope of services widely involved in many industry sectors and product objects. The company's perfect laboratory network and one-stop service capability have become an important advantage in the competition. The company has been y cultivated in the testing industry for many years, with a wide distribution of industries and many testing projects. Each year, the laboratory can generate millions of reports and accumulate a large amount of testing data, which is highly reliable, rich in data dimensions, sufficient in data depth and more widely used. The company can provide enterprises with risk-based testing programs, risk-based internal and supply chain management programs, quality and cost control basis, supplier evaluation basis, etc.; for the government to provide sampling risk prediction and prevention and control basis, policy and regulatory decision-making basis, to provide decision-making efficiency and decision-making science and other support; for consumers to understand the quality of the product and the safety of the basis for decision-making. Big data analysis and application can improve customer experience and provide more valuable services for customers. 4, technical advantages and perfect service guarantee system The company is one of the earliest and most invested professional research institutions set up by private testing organizations in China, and has set up a group research institute, relying on the technical support of the research institute, and constantly improve the core competitiveness of the company in the field of testing technology, the R & D team of industry experts as the core of the research and development team dedicated to studying the industry's cutting-edge technology, to provide strong technical support for the business expansion of the major divisions, to Obtaining full technical preparation. The company actively participates in scientific research projects at national, provincial and municipal levels, and undertakes a number of national projects such as the National 973 Program, Science and Technology Support Program, and Public Welfare Industry Scientific Research Special Projects, etc.; takes the lead in the National Key R&D Program of the Ministry of Science and Technology, "Research, Development and Application of Integrated Inspection and Testing Service Vouchers for Emerging Industries"; maintains close cooperation with scientific research institutes and higher education institutions such as Chinese Academy of Sciences (CAS) and China Academy of Standards (CAAS). Research institutes and institutions of higher learning to maintain a wide range of close and active cooperation; is a number of local public **** testing services platform and other government public service projects undertaken by the unit; the company actively participated in the drafting of the domestic and international standards, become a member of more than 40 national standardization technical committees, sub-committee members, participated in the preparation and revision of international, national, industry standards more than 500, including four international standards, more than 300 national standards, more than 10 mandatory standards, and more than 10 national standards. More than 300 national standards and more than 10 mandatory standards. Many of the company's R&D achievements have been recognized by the market, government departments and industry associations, and its leading R&D capability provides an important guarantee for the company's development. The company has established its quality management system in accordance with the requirements of ISO/IEC17025, ISO/IEC17020, Accreditation Guidelines for Laboratory Accreditation and Accreditation of Food Inspection Organizations, etc. The laboratories have been continuously improving their quality under the guidance of the company's quality policy and quality objectives, so as to enhance the quality level. In terms of quality requirement assurance, the quality officer of the branch, QHSE department/personnel of the branch and QA of each laboratory constitute the QA team of the branch, which implements the quality management requirements of the company through quality review, special audit, internal audit, management review and other means. In terms of laboratory technical capability assurance, the laboratory appoints a group of experienced technicians as quality supervisors, who regularly supervise the testing/calibration capability of laboratory technicians to ensure that the personnel capability meets the requirements of method standards. The company uses the international top laboratory information management system (LIMS) to manage the laboratory personnel, equipment, materials, test methods used and customer samples, which realizes the systematic management of each link in the flow of customer samples in the laboratory testing process. At the same time can realize the informationization of the experimental process, the laboratory office paperless, the organization of experimental data, analysis, processing, query and experimental quality activities in the process of control and comprehensive management, to ensure the authenticity and reliability of the report issued.