Recently, Shenma Co., Ltd. launched a comprehensive financial audit for the nylon business segment covering the 2026 fiscal year, examining all units within the segment for the period from January to August 2026. Institutional development, Key financial management tasks, including fund control, financial administration, and personnel management, were subject to inspection. Through comprehensive audits and thorough corrective measures, the financial operating procedures of grassroots units were standardized across the board, thereby enhancing the enterprise’s overall compliance in financial management.

Shenma Shares has formulated an inspection plan in strict compliance with the Accounting Law, the Enterprise Accounting Standards, the Basic Accounting Work Standards, and other relevant laws and regulations, as well as the Group’s financial management system and the company’s financial accounting guidelines. The inspection is divided into three phases. The first phase, from August 17 to August 31, is the self‑inspection and self‑correction stage, during which finance personnel at each production unit conduct a self‑assessment against the prescribed checklist, identify issues item by item, proactively implement corrective measures, and submit a written report on the outcomes to the Company’s Operations and Finance Department. The second phase, from September 1 to October 31, is the on‑site inspection stage. The Operations and Finance Department of Shenma Shares establishes an inspection team that conducts field audits of each unit through document review, account verification, physical inventory counts, and interviews with relevant personnel. The third phase, from November 1 to December 31, is the rectification and improvement stage. During this phase, each unit is required to develop specific remediation plans for identified issues, designate responsible individuals and set clear deadlines, and ensure the implementation of corrective actions on a case‑by‑case basis. Finally, Shenma Shares will carry out follow‑up reviews to verify the status of implementation across all units, thereby ensuring that all corrective measures are fully and effectively executed.

At present, we are in the self-inspection and self-correction phase of the financial audit. Each unit within the nylon business segment is systematically reviewing its fixed assets, construction-in-progress, inventory accounting, leasing activities, long-term equity investments, intercompany balances, revenue recognition, cost and expense management, R&D expenditures, government subsidies, taxes payable, safety‑related expenses, and other key areas against the official self‑inspection checklist. By proactively identifying gaps and addressing deficiencies, and implementing immediate corrective measures to drive continuous improvement, we are laying a solid foundation for the next phase of the audit.

This special financial management inspection is a key initiative for Shenma Shares to strengthen its internal control system and mitigate business risks, carrying significant practical necessity and strategic importance. As a large publicly listed company whose core businesses are chemicals and synthetic fibers, Shenma Shares’ standardized, meticulous management of its financial affairs directly impacts its financial planning and operational decision-making. Conducting effective financial audits enables the precise identification and timely rectification of weaknesses and vulnerabilities in daily financial operations, thereby effectively guarding against financial compliance and cash‑management risks, eliminating non‑compliant accounting practices, and addressing potential operational hazards at their source—thus helping the company resolve a wide range of financial‑control challenges.

Shenma Shares will implement robust measures to ensure the smooth progress of this special financial management inspection, adhering to the principles of driving reform through inspection and enhancing efficiency via oversight, and continuously strengthening… Enhance the professional competence and履职 capabilities of frontline financial personnel, elevate the enterprise’s standardized and refined financial management, and support Shenma Shares’ high-quality, sustainable development.