The Group Company held its 2025 Mid-Year Work Conference.

　　On July 24, 2025, the Group held its Mid-Year Work Conference for 2025. Qu Sichiu, Secretary of the Party Committee and Chairman of the Board of Directors of the Group, delivered an important speech titled “Leverage Strengths, Address Weaknesses, Deepen Our Efforts to Break Through Bottlenecks, and Achieve This Year’s Business Goals with High Performance.” Feng Yiyuan, President of the Group, presented the “President’s Work Report for the First Half of 2025.” The conference comprehensively summarized the achievements made in the first half of the year, conducted an in-depth analysis of the current economic situation, and laid out key tasks for the second half of the year, thereby building consensus and providing clear direction for achieving the year’s overall goals.

　　In his speech, Qu Dong affirmed the achievements made by the entire group in the first half of the year through unity and hard work. He pointed out that behind the company’s successful integration, stable operations, and profitable performance lies the arduous effort of all employees. Regarding the current economic situation, he conducted an in-depth analysis and noted that the global economy is in a downturn, and the U.S.-China trade tensions are bringing uncertainty. Meanwhile, China’s chemical industry is facing overcapacity and intense internal competition. Therefore, everyone in the company needs to make long-term preparations to adapt to the new situation. The more complex the situation becomes, the more firmly we must maintain our confidence—neither being blindly optimistic nor falling into negative pessimism.

　　Director Qu shared his insights from visiting advanced technology companies such as Huawei, DJI, and Han’s Laser. He urged everyone to deeply understand the changes that the AI era is bringing to various industries, proactively embrace these changes, and firmly believe that innovation is the key to corporate development. Director Qu praised the Group’s achievements in the first half of the year, including the implementation of comprehensive budget management, learning from Nuo’ao Chemical in terms of management practices, the smooth transition of leadership at subsidiaries, the successful advancement of the isooctanoic acid project, and the orderly progress of projects in the engineering sector. He emphasized that the company’s development must squarely face its shortcomings and focus on cultivating its core competencies. Once again, he analyzed the company’s core competencies and pointed out that the company currently faces challenges such as a shortage of talent, inadequate intellectual property protection, insufficient investment in science and technology, and lagging digital and intelligent transformation.

　　Regarding the work for the second half of the year, Director Qu put forward nine requirements:

　　We need to make great efforts in operations. Each manufacturing enterprise needs to devote more energy to its business operations and achieve lean management. We must seek opportunities to go global and, when such opportunities arise, do everything possible to seize them.

　　Focus on addressing shortcomings in areas such as talent, technology, and materials, and take targeted measures to strengthen weak links and build on strengths.

　　We must remain vigilant in risk prevention to ensure the safety bottom line and compliant business operations.

　　Strengthen risk prevention and control, strike the right balance in group management and oversight, and earnestly implement comprehensive budget management. The management activities aimed at learning from Nuo'ao Chemical must yield tangible results.

　　Increase investment in science and technology and establish new mechanisms. For the butyric cellulose acetate project, it is essential to set up both a development team and an R&D team to ensure smooth completion. Furthermore, we must strengthen the protection of intellectual property rights.

　　Seeking new breakthroughs in joint ventures and cooperation;

　　Further optimize management and business processes, enhance efficiency, and boost morale and vitality.

　　Based on the principles of advocating harmony in diversity, upholding integrity while fostering innovation, and pursuing shared success and mutual benefit, we have distilled the cultural values of the group company.

　　Guided by Party building, we must give full play to the exemplary and leading role of Party members as well as the fighting fortress role of Party committees and Party branches.

　　Based on the specific characteristics of each subsidiary’s work, Director Qu put forward targeted requirements. Director Qu encouraged all employees to move forward with the determination to “build on strengths, address weaknesses, and deeply cultivate breakthroughs,” steadily advancing all tasks and ensuring that the annual goals are achieved with high quality.

　　In his work report, General Manager Feng pointed out that in the first half of 2025, despite multiple challenges—including weak global economic growth, volatile international trade, and intensifying internal competition within the industry—our group company closely adhered to the development keywords of “empowerment, synergy, supply chain extension, and value creation,” focusing on the guiding principle of “optimizing costs, improving quality, enhancing efficiency, and achieving coordinated innovation and development.” As a result, we have made positive progress in all key areas of work.

　　In terms of production and operations, the Group as a whole is running smoothly and in an orderly manner. The technology sector has successfully applied for a provincial key R&D project; the engineering company is steadily advancing key projects such as Beihua Jin and Tianjin Sulfur, while the coverage of framework agreement partners continues to expand. Nuo’ao Company has responded flexibly to market fluctuations and maintained its profitability resilience by capitalizing on opportunities in the propanol market. Lianxin Company has achieved breakthroughs in newly signed orders. The construction of the 3D Longbang isooctanoic acid plant is progressing smoothly, which will further enhance the “aldehyde-alcohol-ester” industrial chain. Management improvements are being advanced in parallel with deepened reforms. The Group has fully implemented budget management, establishing a closed-loop system encompassing “pre-event planning—during-event control—post-event analysis.” We have completed business adjustments and governance optimizations at our subsidiaries, and Qingdao Lianxin has smoothly carried out the rotation of directors, supervisors, and senior executives. The Group’s performance in the capital market has been impressive, with its market capitalization rising by 18.71% compared to the beginning of the year, significantly boosting investor attention and market recognition. In addition, the special initiative “Management Studies Nuo’ao” is steadily progressing, with stringent controls over safe production and standardized operations, laying a solid foundation for the Group’s steady development.

　　General Manager Feng frankly admitted that during the first half of the year, there were still issues such as environmental protection safety hazards, deviations in budget execution, and room for improvement in the quality of certain products—issues that need to be addressed with particular emphasis in the second half of the year. General Manager Feng clearly outlined seven key areas of focus for the second half of the year:

　　I. Go with the flow and seize development opportunities.

　　Closely following the structural opportunities driven by accelerated investment in “Lu Oil & Lu Refining” and “coal-to-chemicals” projects, we will focus on our core technological strengths—such as sulfur recovery and shift conversion processes—and precisely align with key projects. We will expedite the completion and commissioning of the isooctanoic acid plant, proactively plan for upstream and downstream supporting needs of Lu Oil & Lu Refining, and seize the initiative in development.

　　II. Go against the tide and bravely confront involution.

　　Deeply engage in benchmarking management and operational analysis, leveraging “accounting mindset” to enhance the return on resource investment. Through process reengineering, adjustment of authority levels, and digital empowerment, build a flexible and efficient “fast company,” and shift from “high-investment competition” to “high-efficiency competition.”

　　III. Pool resources to break through development bottlenecks.

　　Coordinate and integrate internal resources, promote synergy among subsidiaries in terms of business, management, and strategy, and forge “group-wide synergies.” Make good use of external resources by linking university research, industry leaders, and financial capital, and strategically plan upstream-downstream collaborative arrangements in key areas to unblock the “Ren and Du meridians” of development.

　　IV. Empowering with Technology, Exploring Development Opportunities

　　Reform the R&D mechanism, establish a cross-departmental collaborative R&D system oriented toward market demand, and promote a two-way synergy between "technology seeking demand" and "the market driving technology." Accelerate the deep integration of science and technology with production, management, and marketing, and create new growth poles driven by technological innovation.

　　V. Capital Support to Enhance Corporate Value

　　Strengthen the coordinated capacity for investment and financing, seize opportunities to integrate industrial chain resources, and enhance corporate valuation management. Intensify communication with capital markets, tell compelling three-dimensional stories, establish mechanisms in areas such as transparent governance and stable dividend distributions, and promote “dual-wheel drive” of industry and capital.

　　6. Simplify complexity and optimize organizational effectiveness.

　　With the goals of “slimming down and strengthening the body, enhancing efficiency and focusing efforts,” we will streamline hierarchical levels, integrate functions, and reduce ineffective processes. We will establish a goal-oriented, project-based operational mechanism to drive the organization’s capabilities from a “management-oriented” to a “combat-oriented” mode, thereby improving execution effectiveness and penetration.

　　7. Prevent risks and safeguard the company’s development.

　　Build a risk prevention and control system that features “horizontal coverage and vertical penetration,” strengthening risk identification and response in areas such as policy, environmental protection, safety, and finance. Promote the coordinated development of information systems and risk control processes, firmly uphold compliance standards, and achieve “prudent progress.”

　　At the conclusion of the meeting, the company called on all employees to build consensus and achieve synchronized alignment. Taking this meeting as an opportunity, we should translate the spirit of the speech into concrete actions, strive vigorously to meet the second-half-year targets, and contribute to the group’s sustained and healthy development.

　　All members of the group company, as well as mid-level and senior staff from the engineering company and all its subsidiaries, attended the meeting.