中密控股：2025 Environmental, Social and Governance (ESG) Report

2025

Environmental, Social and Governance Report

中密控股OSEALHNS

Craft quality with ingenuity, Pioneer extraordinary through innovation

Contents

About The Report 01 Introduction 01 Management Message 02 About SNS 03 ESG Management 10

Environment

Environmental Compliance Management 16 Energy and Carbon Management 18 Emissions and Waste Management 24 Resource Utilisation 25 Ecological Protection 27

Product Quality and Safety 29 R&D and Innovation 34 Customer Service 42 Employee Rights and Development 45 Occupational Health and Safety 52 Supply Chain Management 57 Information Security and Privacy 60 Community Contribution 62

Governance

Appendix 70 ESG Performance Indicators 70 Indicator Index Table 74 Reader Feedback 75

Corporate Governance 64 Business Ethics 66 Compliance and Risk Control 68

About The Report

Report Description

This is the second Environmental, Social, and Governance report (hereinafter �this Report�) published by Sinoseal Holding Co., Ltd. (Stock Code: 300470.SZ) (hereinafter �SNS,� �the Company,� or �we�), which aims to objectively present SNS�s management, practices, and performance in economic, environmental, social, and corporate governance areas.

Reporting Period

This Report is an annual report, consistent with the reporting period of the financial annual report, covering the time period from 1 January to 31 December 2025. For any content exceeding the above scope, this Report will provide explanations in the relevant sections.

Reporting Scope

Unless otherwise specified, this Report covers SNS and its holding subsidiaries (including second-tier subsidiaries), consistent with the scope of the Company�s annual report. The main entities disclosed are as follows:

Basis of Compilation

This Report has been prepared with reference to documents including the Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial Implementation), the Self-Regulatory Guidance No. 3 for Companies Listed on the ChiNex Market of Shenzhen Stock Exchange—Preparation of Sustainability Report, and the Globa Reporting Initiative Sustainability Reporting Standards (GRI Standards) (2021 Edition).

Data Sources

The data and information used in this Report are derived from sources including SNS�s interna statistics, public reports, and public disclosures. In case of any discrepancy between the financial data cited in this Report and the annual report, the annual report shall prevail. Unless otherwise specified, the monetary unit is RMB.

Reliability Statement

This Report was reviewed and approved for publication by the Board of Directors. The Company afirms that the content disclosed herein is free from any false records, misleading statements or material omissions.

Access to This Report

This Report is published in both Chinese and English. In case of any discrepancy in interpretation, the Chinese version shall prevail

Electronic versions of this Report in both Chinese and English can be read or downloaded from the Company�s oficial website and CNINFO, the information disclosure platform for the ChiNext market designated by the China Securities Regulatory Commission:

https://www.sns-china.com

https://www.cninfo.com.cn

Contact Information

If you have any comments or suggestions on this Report, please contact the Company via phone or in writing through the following information

Address: No. 8, 4th Wuke West Road, Wuhou District, Chengdu City, Sichuan Province

Postcode: 610045

Telephone: 028-8554290

Email: ir@sns-china.com

Management Message

Dear Friends,

We are pleased to present the SNS 2025 ESG Report. On behalf of the Board of Directors and executive management, I would like to extend our sincere gratitude to our long-term supporters, including investors, customers, partners, employees, and all sectors of society!

In 2025, as the global green and low-carbon transition accelerated, we remained committed to our mission of �Ensure safety and protect the environment�. We have deeply integrated ESG principles into our strategy and operations, practicing responsibility through steady growth and pursuing excellence through innovation and breakthroughs.

Deepening ESG Governance and Enhancing Execution

We have established ESG liaisons in each department based on our four-tier governance structure to ensure the eficient implementation of ESG initiatives. During the reporting period, there were zero incidents of business ethics violations, all employees signed the Integrity Commitment Letter, and for the sixth consecutive year, we received an �A� rating for information disclosure from the Shenzhen Stock Exchange, while our ESG ratings reached new heights with an �A� from Wind ESG and �AAA� from Sino-Securities ESG.

Green Manufacturing Implemented, Low-Carbon Transition Yields Tangible Results

Sunny Seal�s 2 MW rooftop distributed photovoltaic system is fully connected to the grid, with annual renewable electricity consumption reaching 1,274,700 kWh. Environmental protection investment totalled RMB2.16 million, a significant increase from the previous year. A total of five of our subsidiary companies have obtained ISO 14001 certification. We systematically identify climate risks, implement special contingency plans for flood and heat prevention, and control our carbon emission intensity through measures such as energy-saving technological upgrades, green electricity procurement, and waste reduction.

Innovation-Driven, Technology-Empowered Safety and Green Development

As one of the first national-level specialised, refined, unique, and innovative �Little Giant� enterprises, we are committed to implementing intelligent and green initiatives. Our product applications have expanded into green sectors such as compressed air energy storage, CCUS, and natural gas pressure diferential power generation, as we actively promote the achievement of the �dual carbon� goals through technological innovation. The intelligent seal monitoring and health management system has been upgraded to version 2.0, assisting clients with predictive maintenance and ensuring the safe operation of on-site equipment.

Employee-Centric, Building a Safe and Nurturing Home

The Company places a high value on employee rights, including career development, occupational health, and safety. We have been honoured with the �Sichuan Extraordinary Employer� award for two consecutive years, with an average employee satisfaction score of 85. In 2025, employee benefit coverage reached 100%, and Sunny Seal added new facilities such as a �staf home�. We conducted 339 training sessions of various types to support employees in advancing their education and qualifications. Throughout the year, there were zero major safety incidents and zero cases of occupational disease.

Giving Back to Society, Fulfilling Our Responsibilities

The Company has always balanced corporate growth with giving back to the community. In 2025, we continued our targeted assistance to Ganluo County in Sichuan, investing over RMB400,000 in consumption-driven aid programmes and industrial cooperation. Over the past three years, our cumulative external donations have reached RMB450,000. We consistently support talent development through university-enterprise partnerships, scholarships, and grants, as well as other community welfare initiatives. Additionally, KS GmbH has donated to local social welfare associations to aid the needy and the elderly.

Looking ahead to 2026, we will further respond to the national �dual carbon� goals and global sustainability initiatives by promoting the use of clean energy, accelerating our layout in smart manufacturing and green technology, and continuously strengthening technology�s role in empowering the low-carbon transition. While working with all stakeholders to build a safe, green, and win-win industrial ecosystem, we wil steadily advance toward our corporate vision of �To be the world-class fluid control equipment provider�. We value every piece of your feedback and look forward to working with you to contribute SNS�s strength to a beautiful and sustainable future.

Hong Chen

General Manager, Sinoseal Holding Co., Ltd.

April 2026

About SNS

Company Profile

Sinoseal Holding Co., Ltd. (Stock Code: 300470.SZ), formerly the Sealing Technology Research Department of Sichuan Provincial Machinery Research & Design Institute established in 1978, was one of the first organisations in China to conduct research on sealing technology and has since become the only A-share listed company in the domestic mechanical seals industry. The Company�s main products include mechanical seals, dry gas seals, sealing auxiliary (control) systems, rotary jet pumps, rubber and plastic seals, special valves, and guide rings. The Company is dedicated to providing customers with customized total solutions for various equipment and operating conditions, with wide applications in fields such as petrochemical, coal chemical, oil and gas transportation, electric power, mining machinery, and water conveyance. It operates nearly 40 ofices and over 10 domestic and international service centres, with several more under construction, creating a product and service network that covers all of China and extends to regions including Southeast Asia, Central Asia, North Africa, and Central Africa. As of the end of 2025, the Company had six controlled subsidiaries (including second-tier subsidiaries): UTEC (Suzhou) Sealing Solutions Co., Ltd., Dalian Sun Seals Ltd., Sichuan Sunny Seal Co., Ltd., Zigong New Dipper Valve Co., Ltd., ZM Investment GmbH, and Krüger & Sohn GmbH. It has also invested in two other enterprises and the Sichuan Zhenxing Zhongmi Equity Investment Centre (Limited Partnership).

Start-up

In 1978, the Company�s predecessor, the Sealing Technology Research Department of Sichuan Provincial Machinery Research & Design Institute, was formally established.

Reform and listing

On 12 June 2015, the Company was listed on the Growth Enterprise Market of the Shenzhen Stock Exchange, becoming the only A-share listed company in China� mechanical seal industry.

Capital investment

In July 2024, the Company gained actua control of KS GmbH, and in February 2025, it acquired all of the Company�s equity. In April 2026, the Board of Directors approved the establishment of an internationa company to accelerate the Company�s international development.

Keep up with the times

In 2018, the Company completed th acquisition of Dalian Sun Seals Ltd

In 2016, the Company completed the acquisition of UTEC (Suzhou) Sealing Solutions Co., Ltd.

Globalisation strategy

Structural reform

In 2009, the Company acquired the share held by Japanese partner, was converted from a limited company into a joint-stock company, and was renamed �Sichuan Sunny Seal Co., Ltd.�

In September 1993, following the national policy of reform and opening up, it jointly invested with Japan�s Nikki Industries Co., Ltd. in Hiroshima Prefecture to form �Sichuan Nikki Seal Co., Ltd.�, becoming the first Sino-foreign joint venture science and technology enterprise in Sichuan Province.

In 2010, the Company was restructured into a diversified joint-stock enterprise controlled by a state-owned company

Strategic renaming

In December 2019, the Company was oficially renamed �Sinoseal Holding Co., Ltd.�.

In January 2021, the subsidiary �Sichuan Sangni Machinery Co., Ltd.� was oficiall renamed �Sichuan Sunny Seal Co., Ltd.�

Strategic integration

In February 2021, the Company completed the acquisition of Zigong New Dipper Valve Co., Ltd., oficially entering the high-end special valves sector.

Corporate Culture

Corporate Mission Ensure safety and protect the environment

Corporate Slogan

Craft quality with ingenuity, Pioneer extraordinary through innovation

Core Values

Create value and pursue excellence

Quality Policy

Integrity, High quality, Service excellence, Continuous improvement

Corporate Vision

To be the world-class fluid control equipment provider

Strategic Goal

Establish a comprehensive sealing industry ecosystem

Corporate Spirit

Responsibility, Innovation, Openness, and Vision

HSE Policy

Environmental Stewardship, Occupational Health, Operational Safety, Regulatory Compliance

Business Philosophy

Technology-Driven Market Leadership, Service-Backed Customer Loyalty, Quality-Defined Brand Excellence

Business Overview

SNS is deeply rooted in the mechanical seal industry, integrating R&D, design, production, and manufacturing. It has established a core product system centred around various mechanical seals and their auxiliary (control) systems, rotary jet pumps, special valves, and rubber and plastic seals. The Company can customize the development of products with reliable performance and stable quality according to customer needs, including various mechanica seals, dry gas seals, sealing auxiliary (control) systems, rubber and plastic seals, rotary jet pumps, special valves, and guide rings. It also provides comprehensive support, from technical consulting and on-site problem solving to techni cal training, continuously creating value for customers

SNS, Sunny Seal, Sun Seals

Providing integrated solutions for mechanical seals, with core products covering mechanical seals, dry gas seals, and sealing auxiliary (control) systems, the Company serves sectors such as the petrochemical, coal chemical, oil and gas transportation, and nuclear power industries; SNS is also engaged in the development and sale of rotary jet pumps.

UTEC

Deeply engaged in the R&D and manufacturing of rubber and plastic seals and specialised mould-free C turning equipment for rubber and plastic seals, the company holds significant advantages in the performance of rubber and plastic sealing materials and mould-free processing technology for large-scale rubber and plastic seals, serving industries such as mining machinery, shield tunnelling, and petrochemicals.

NDIV

Focusing on the R&D and manufacturing of special valves for special operating conditions and applicao tions, its core products include axial flow check valves, forced sealing ball valves, compressor anti-surge valves, and water strike pressure relief valves, primarily serving the oil and gas transportation, petrochemical, and water conveyance sectors.

KS GmbH

Manufactures resin-based laminated materials (including pipes, profiles, rods, and plates) and guide rings, with products widely used in the engineering machinery and electrical fields

Highlights of 2025

SNS and Subsidiaries� Honours and Awards in 2025

2025 SNS ESG Ratings and Honours

2025 SNS ESG Performance Highlights

Environment

By the end of 2025,

SNS, Sun Seals, UTEC, NDIV, and KS GmbH have obtained ISO 14001 environmental management system certification.

In 2025,

Sunny Seal completed the grid connection and power generation of 2 MW rooftop distributed photovoltaic power project.

Total environmental investment for the year was RMB2.16 million.

Renewable electricity consumption was 1,274,746.70 kWh.

Social

By the end of 2025,

SNS, Sun Seals, UTEC, and NDIV have obtained ISO 45001 occupational health and safety management system certification.

SNS, Sun Seals, UTEC, NDIV, and KS GmbH have obtained ISO 9001 quality management system certification.

A cumulative total of 362 national patents have been granted, including 65 invention patents.

In 2025,

A total of 339 training sessions were conducted for all employees, with a total investment of RMB445,900.

0 major safety incidents

0 cases of occupational diseases

Corporate Governance

In 2025,

100% of employees signed the Integrity Commitment Letter.

0 incidents of business ethics violations

ESG Management

ESG Governance Structure

SNS continuously optimises its ESG governance system. During the year, building upon its existing four-tier governance structure, the Company appointed ESG liaisons in each department and subsidiary to implement and coordinate specific ESG tasks. These ESG liaisons operate under a �dual-reporting mechanism, reporting directly to their respective department heads and also to the ESG coordination personnel in the Board of Directors Ofice. This framework allows the Company�s headquarters to stay informed of the latest ESG management developments, monitor the progress of various ESG initiatives, and further promote the eficient implementation of ESG work across all departments and subsidiaries. This provides a solid guarantee for the Company�s sustainable development and the execution of its ESG strategy.

Board of Directors (highest decision-making body)

Responsible for reviewing the Company�s sustainable development strategy

Supervising the implementation of the ESG strategy

Leading the coordination of ESG work and summarising its results

Strategic Development and ESG Committee

Formulating ESG strategic recommendations and implementation plans

Management

Developing specific sustainable development implementation plans

Supervising the implementation of ESG work by departments

Departments and Subsidiaries

Board of Directors Ofice

Responsible for implementing ESG work in daily business operations

Responsible for the daily coordination and management of ESG work

Organising the integration and reporting of ESG information and work progress

Coordinates specific departmental ESG work

Reports to the head of the department

ESG Liaison Oficer

Stakeholder Communication

SNS values communication and engagement with its various Stakeholders, identifying key Stakeholders and their areas of focus, considering their feedback and opinions in the Company's decision-making and management processes, and responding to their concerns.

Stakeholders	Government and Regulatory Authorities	Shareholders and Investors	Customers	Employees	Partners (Suppliers, etc.)	Industry Associations/Chambers of Commerce	Media
Topics of Concern	Responding to Climate ChangeEnvironmental Compliance ManagementEnergy ManagementInformation DisclosureCompliant Operations	Compliant OperationsMarket Value Management and Capital Operations	Product Quality and SafetyTechnological InnovationCustomer Service and Communication	Occupational Health and SafetyEmployee Employment and RightsEmployee Training and Development	Supplier ManagementBusiness Ethics	Technological InnovationCircular EconomyCommunity Welfare	Community WelfareCompliant OperationsInformation Disclosure
Communication Methods	News ReportsCompany WebsiteSupervision and Inspection	Shareholders' MeetingsResults BriefingsInformation DisclosureConference CallsEmailOnline Communication PlatformsInvestor Surveys	Customer VisitsConference CallsEmailCustomer Satisfaction Surveys	Employee Representative CongressEmployee Satisfaction SurveysEmployee ForumsExecutive Reception Days	Supplier ConferencesCompany WebsiteRoutine Visits	Industry ExhibitionsTechnology Sharing Sessions	Company WebsitePress Conferences

Double Materiality Assessment

In 2025, SNS conducted a double materiality analysis to systematically identify and assess its key sustainable development issues by considering industry policy trends, market changes, and its own development stage; soliciting extensive feedback from internal and external stakeholders on �impact materiality� and �financial materiality� through online questionnaires; conducting a comprehensive analysis and prioritisation of these issues to clarify its ESG management priorities; and thus responding more efectively to stakeholder concerns and expectations.

Step 1: Issue Identification

The Company comprehensively considered disclosure standards, macroeconomic policies, industry development trends, and its own operationa characteristics to systematically review and screen potential sustainable development issues, ultimately identifying 20 ESG materiality issues closely related to its operations. The main standards and frameworks referenced include:

Global Reporting Initiative (GRI) Standards

Sustainable Development Goals of the United Nations (UN SDGs)

Shenzhen Stock Exchange Self-Regulatory Guidance No. 17 For Listed Companies—Sustainable Development Reports (Trial)

Step 2: Stakeholder Engagement

Through online questionnaires, numerous stakeholders—including government and regulatory agencies, customers, employees, partners industry associations/chambers of commerce, and the media—were invited to participate in the assessment:

Impact materiality: Based on the potential positive or negative impacts of relevant issues on the economic, social, and environmenta aspects of SNS, a comprehensive evaluation of issue importance was conducted using a quantitative scoring method

Financial materiality: The Company's management team provided decision-making support for subsequent issue screening and prioritisation by scoring issues from the two dimensions of their degree of financial impact on the Company and their likelihood of occurrence, based on actual operating conditions and professional judgment

Step 3: Double Materiality Assessment

The Company conducted a statistical and comprehensive analysis of the assessment results for impact and financial materiality, calculating the scores for each issue in both dimensions to construct the double materiality matrix.

Financially Material Issues

Double Materiality Issues

Based on an analysis of the survey results, the materiality of each sustainable development issue has been identified as follows:

For financially material issues, the Company conducts a detailed analysis of the related impacts, risks, and opportunities. Please see the table below for details:

Environment

0

SNS integrates the concept of green sustainability into development strategy, continuously advancing energy conservation, carbon reduction, and the intensive use of resources, while strengthening the emissions and waste management. As the Company pursues steady growth, it also fulfils environmental responsibilities, promoting the synergistic advancement of high-quality development and ecological environmental protection.

SDGs Addressed in This Chapter

Material issues covered in this chapter

•Environmental Compliance Management

•Pollutant Emissions and Waste Management

•Energy Management

•Water Resource Utilisation

•Circular Economy

•Addressing Climate Change

•Biodiversity Protection

Environmental Compliance Management

Environmental Management System

SNS has established a standardised environmental management system based on the ISO 14001 standard and operational realities. The Company has formulated internal regulations such as the Environmental Management System, Environmental Pollution Emergency Response Plan, and Environmental and Occupational Health and Safety Operational Control Procedures, establishing a three-tiered institutional framework for EHS assurance. This framework ensures strict implementation of environmental compliance requirements throughout the entire process from production to operation. During the reporting period, the Company introduced the ‘Four New’ HSE Management System to further strengthen standardised control measures for various environmental risks across the full life cycle of new equipment, processes, materials, and technologies. Additionally, SNS updated multiple work instructions for waste gas treatment facilities—including those for casting, particulate matter, and rubber—thereby enhancing environmental management system.

Establishes the overall environmental management policy and responsibilities

Specifies the operational procedures for the Company�s environmental management work, ensuring that the entire operational process strictly complies with relevant environmental protection laws and regulations

Details operating procedures and work instructions, clarifies the operational standards and requirements for each department, and efectively prevents environmental accident risks at the source

Each holding subsidiary has established an environmental management organisational structure led by general manager. This structure operates under a management model where a dedicated department leads implementation and supervision, with all departments collaborating to fulfil their respective responsibilities, thereby ensuring system implementation. The efectiveness of the system is verified through internal and external audits. During the reporting period, SNS and each of its holding subsidiaries conducted at least one environmenta management system audit, formulating and implementing corrective actions for any non-conformities found, resulting in a 100% rectification rate.

Key Performance

By the end of 2025, SNS, Sun Seals, UTEC, NDIV, and KS GmbH have obtained ISO 14001 environmental management system certification.

Environmental Risk Management

In accordance with the Environmental Factor Identification, Hazard Assessment, and Risk Control Procedures, the Company assesses the environmental risks in all business processes of production and operations. It formulates and implements special environmental control measures, standardises environmental testing and monitoring, and continuously improves emergency plans and drill mechanisms to ensure that environmental risks are efectively prevented and controlled.

Environmental Factor Identification and Management

Based on an analytical framework of �3 timelines, 3 operational states, 12 sources, and 5 impact categories�, environmental impact factors are identified and evaluated annually to form an �Environmental Factors List�, which specifies significant environmental factors, pollution targets, relevant operational activities, and locations.

For the identified risk points, control measures and management plans are developed, including emergency preparedness plans and drills, and control responsibilities are assigned by department.

Environmental Testing and Monitoring

The Company organises and conducts environmental monitoring, implementing standardised testing of major pollution sources and relevant environmental elements. This covers key areas such as waste gas, wastewater, and noise, providing data support for environmental management and risk prevention and control.

Monitoring frequency, methods, and results are strictly aligned with environmental impact assessment approvals and pollutant discharge permit requirements to ensure compliance with relevant national regulations.

Environmental Emergency Response Plan

The Company formulates and updates the Environmental Pollution Incident Emergency Plan. For potential environmental risks such as chemical spills and hazardous waste accidents, the plan specifies emergency response procedures, division of responsibilities, and material supply requirements. Regular environmental risk assessments and emergency supply inventories are conducted to ensure that sudden environmental incidents are handled promptly and efectively.

Environmental Emergency Drills

Focusing on key environmental risk scenarios such as chemical and hazardous waste spills, the Company organises emergency drills and training in conjunction with filed environmental emergency plan. This continuously improves employees� emergency response capabilities and their ability to handle sudden environmental incidents.

Key Performance

In 2025, SNS

Invested RMB2.16 million in environmental protection

No major sudden environmental incidents, violations of environmental protection regulations, or administrative penalties occurred.

Energy and Carbon Management

Energy Management System

The Company strictly adheres to laws and regulations such as the Energy Conservation Law of the People’s Republic of China and improves energy management system with reference to standards like ISO 50001. During the reporting period, the Company successfully completed annual external audit for the ISO 50001 energy management system and has integrated the standard into comprehensive management system. This integration forms the Company�s overall framework and mechanism for energy management. Leveraging the comprehensive system, the Company provides overarching guidance for managing environmental, energy, quality, occupational health and safety, and other issues throughout the manufacturing process. The Company revised and updated the Energy Conservation and Emission Reduction Management System, clarifying each department�s responsibilities in energy management and establishing supervision, management, and incentive/penalty mechanisms for water, electricity, and gas consumption in production, daily life, and ofice activities.

The Company conducts supervision and inspections for energy conservation and emission reduction. Each department carries out monthly supervision and self-inspections of energy-saving eforts. Led by the Safety and Equipment Management Department, periodic and ad-hoc joint inspections are organised with various departments, and records are maintained. For any issues identified, the responsible department is required to promptly formulate a rectification plan, defining the responsible person and a completion deadline. Beyond assessments, the Company actively encourages innovative technologies and initiatives. Departments and individuals making significant contributions to energy conservation and emission reduction are recognised or rewarded accordingly to enhance the engagement of all employees in energy-saving activities.

Key Performance

By the end of 2025, SNS has obtained ISO 50001 energy management system certification.

Addressing Climate Change

The Company continuously advances work on climate change mitigation and adaptation. It systematically identifies and assesses climate-related risks, and formulates and implements response measures to reduce the potential impact of climate risks on production and business activities

SNS Climate Risk and Opportunity Analysis - Physical Risks

SNS Climate Risk and Opportunity Analysis - Transition Risks

SNS Climate Risk and Opportunity Analysis - Transition Opportunities

Energy Conservation and Consumption Reduction Initiatives

The Company�s energy consumption in production and operations is primarily electricity, supplemented by natural gas and liquefied gas. We are also actively promoting self-generated photovoltaic power and green electricity procurement to increase the proportion of green energy usage. By focusing on both technology and management, we implement energy-saving technical modifications, control energy use in production and ofices, improve energy eficiency, and reduce greenhouse gas emissions.

Green Energy Use

Installing photovoltaic panels on factory rooftops and replacing traditional streetlights with solar-powered ones to enhance solar energy utilisation

Procuring renewable energy (e.g., UTEC purchases photovoltaic green electricity, and KS GmbH purchases 100% carbon-neutral natural gas).

Equipment Operation Management

Formulated and implemented air conditioning temperature control standards (set no lower than 26°C in summer and no higher than 20°C in winter; not turned on if the room temperature is below 26°C in summer or above 16°C in winter). In ofice areas, air conditioners must be turned of if no one is present for more than 30 minutes.

In ofice areas, ensure that all electrical equipment, including computers, water dispensers, air conditioners, and printers, is turned of before leaving work. We also enforce a �lights-of when leaving� policy to eliminate the phenomenon of lights being left on.

On the production site, if equipment and lighting are to be inactive for an extended period due to breaks or other reasons, their power switches should be turned of promptly.

Energy-Saving Technological Upgrades

Sunny Seal: Retrofitted compressed air pipelines and replaced valves to reduce the frequency of gas leaks.

UTEC: Customised a new 4-meter vertical lathe to replace old equipment, improving work eficiency and reducing safety hazards; purchased a new 4.5-meter oven, enabling multiple large-sized products to be baked in the same furnace and boosting production eficiency.

SNS�s Energy Conservation and Emission Reduction Measures

In 2025, Sunny Seal constructed a new 2-megawatt rooftop distributed photovoltaic project. As of 31 December 2025, the project had generated a cumulative total of 1,158,531 kWh of electricity, equivalent to 142.38 tonnes of standard coal.

Panoramic view of Sunny Seal�s rooftop distributed photovoltaic installation

In 2025,

SNS and all holding subsidiaries set a target for �electricity consumption per RMB10,000 of output value not to exceed the 2024 level�. With the exception of UTEC, which slightly exceeded the target, all other companies achieved this goal.

SNS invested RMB 3,713,761.84 in energy conservation and emission reduction measures1.

Energy Consumption

In 2025,

Direct energy consumption totaled 84.52 tonnes of standard coal.

Purchased electricity amounted to 8,785,700.70 kWh, while self-generated and self-consumed photovoltaic electricit was 787,931 kWh.

Carbon Emissions

In 2025,

Scope 1 carbon emissions were 157.26 tonnes of CO equivalent.

Scope 2 carbon emissions were 4,403.22 tonnes of CO equivalent.

1The amount for energy conservation and emission reduction primarily covers investments in photovoltaic projects and does not include all related inputs, representing incomplete statistics

Emissions and Waste Management

Pollutant Emissions

SNS strictly complies with laws, regulations, and emission standards such as the Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the People’s Repub lic of China on the Prevention and Control of Water Pollution, the Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste, and the Law of the People’s Republic of China on Prevention and Control of Environmental Noise Pollution. Through process innovation and technological upgrades, we reduce the impact of our production and operations on the natura environment. During the reporting period, UTEC revised and updated the operating procedures for treatment facilities for four types of waste gas—casting exhaust, particulate matter exhaust, rubber exhaust, and CNC machining exhaust—based on actual on-site production conditions. These updates provide detailed operational step-by-step guidance and diagrams, and clarify inspection and maintenance requirements to ensure the efective operation of the disposal facilities.

We commission professional third-party organisations annually to conduct environmental monitoring, testing emissions such as waste gas (VOCs, particulate matter, cooking fumes) and wastewater to ensure all indicators meet standard requirements. We are also subject to unscheduled supervisory inspections by regulatory authorities to strictly control our environmental emission levels. In 2025, all environmental monitoring results for SNS and holding subsidiaries complied with regulatory requirements, and all had achieved the HSE goal of �compliant wastewater, waste gas, and noise emissions�.

Waste Gas

Sunny Seal: Replaced the secondary activated carbon in the waste gas treatment system to ensure adsorption eficiency and compliant emissions.

UTEC: Connected the new oven in the casting workshop to the waste gas disposal facility to ensure compliant emissions

Sun Seals, NDIV: Added and updated dust collection equipment to centrally collect and treat welding fumes and grinding dust generated during production.

SNS: Collects and disposes of dust and particulate matter emitted during production using equipment such as bag filters, pulse dust collectors, and cartridge dust collectors.

Wastewater

Strictly implements the Integrated Wastewater Discharge Standard (GB 8978-1996) and the stipulations of pollutant discharge permit to ensure full compliance in wastewater treatment and discharge.

Noise

Sun Seals: Added sound-absorbing cotton to the test bench in the production department to reduce workshop noise.

UTEC: Built a soundproof wall in the grinding workshop to improve the working environment

SNS�s Pollutant Treatment Measure

Waste Management

The Company categorises, collects, stores, and disposes of all types of solid waste in accordance with relevant national laws and regulations. It complies with the Standard for Pollution Control on Hazardous Waste Storage, and has formulated and continues to update the Hazardous Waste Management System. This system regulates the entire process of hazardous waste management, from generation and collection to storage and transfer, clarifying the responsibilities of departments that generate hazardous waste and refining the management requirements for hazardous waste entering and leaving storage. At the same time, we reduce waste generation at the source and entrust qualified third parties for collection and transport to ensure the compliant disposal of hazardous waste. During the reporting period, SNS and holding subsidiaries all achieved the management goal of �lawful disposal of hazardous waste as required�.

Processing casting start-up discharge materials into bufer pads, reducing the amount of hazardous waste outsourced for disposal.

Improving the utilisation eficiency of activated carbon in the exhaust gas disposal process to reduce the generation of waste activated carbon.

Equipping CNC machines with oil-water separators to recycle cutting fluid by separating floating oil, thereby reducing the generation of liquid hazardous waste.

Implementing the recovery and reuse of various components based on the principle of minimising the environmental footprint.

Resource Utilisation

SNS adheres to the concept of sustainable development, emphasising resource conservation and recycling. The Company focuses on material reduction and circulation by promoting the conservation and recycling of raw materials, packaging materials, and ofice and process consumables across procurement, production, packaging, and after-sales processes. It implements measures such as process optimisation, material substitution, and reuse of consumables to continuously enhance resource utilisation eficiency.

Paperless Production	Material Substitution	Consumables Recycling	Recycling of Transport Equipment and Packaging Materials
• Strengthen employees' awareness of resource conservation, promote paperless office and digital management measures, reduce paper usage, and streamline work processes.	• Improve process routes for high-cost raw materials and optimise the structure and formula design of low-cost materials to reduce raw material consumption.• Use flushing and cotton cloths instead of disposable paper towels to wipe polished products, reducing paper consumption.	• Recycle and reuse protective consumables such as workshop safety nets, rubber mats, and foam pads.• Recycle the outer packaging boxes of purchased parts for secondary use in the transport of outsourced and special products.	• Implement centralized packaging of goods according to customer requirements to reduce the amount of packaging material used per unit of product.• Adopt customized, reusable transport pallets in place of disposable packaging materials to reduce packaging material consumption.

SNS Material Conservation Measures

Sun Seals—Auxiliary Material Conservation and Reuse Measures

Sun Seals actively explores the potential for resource conservation and utilisation. By equipping CNC machines with oil-water separators, it separates oil from the surface of cutting fluid, enabling the fluid to be reused and doubling the service life of the coolant.

Key Performance

In 2025, SNS

Consumed 106,096.58 square meters of wooden packaging materials and 15 metric tonnes of plastic packaging materials.

Additionally, we actively promote water resource management at our headquarters and subsid iaries, encouraging water conservation. Given that we are not in a high-water-consumption industry, the Company primarily focuses on water control in processes such as testing and cleaning, identifying and implementing recycling measures. At the same time, we conduct routine inspections of our entire production and operational environment to prevent leakage and waste, and we promote a culture of water conservation.

NDIV—Oil Separation Treatment and Recycling of Pressure Testing Water

During the valve pressure testing process, oil enters the test water reservoir along with the pressure testing water, which can easily lead to the accumulation and emulsification of floating oil, afecting the continuous use of the test water. By configuring a float ball device, a water pump, and a three-stage oil separation and filtration tank, NDIV implements periodic pumping and oil separation treatment of the test water. This efectively reduces the amount of floating oil in the reservoir and improves the reuse level of pressure testing water.

Sun Seals has built a wastewater treatment system in maintenance area to perform harmless treatment of the cleaning wastewater generated during maintenance processes. The entire operation is standardised to ensure the wastewater meets standards for recycling and reuse, achieving both environmental and energy-saving benefits.

Ecological Protection

We place a high value on operational compliance and biodiversity protection. In accordance with regulations such as the Environmental Impact Assessment Law of the People’s Republic of China, we conduc ecological impact assessments to avoid or mitigate impacts on the ecological environment and biodiversity, control the ecological footprint from production and construction activities to the greatest extent possible, and maintain the ecological balance of project sites. The Company�s production and operational sites are mostly located in industrial parks and do not involve statutory ecological protection areas important habitats, or other ecologically sensitive areas.

During the planning, development, and construction of the new SNS ofice building, the Company followed basic principles of adapting to local conditions, prioritising ecology, and ensuring landscape harmony, in accordance with requirements such as the Evaluation Standard for Green Building and the Technical Guide for Sponge City Construction—Low-Impact Development of Stormwater Systems (for Tria Implementation).

During the design phase of the new SNS ofice building, we aimed to reduce, purify, and utilise rainwater at source. We integrated sponge city concepts and ecological protection requirements into the construction plan, prioritising the use of green rainwater facilities and reducing the use of gray infrastructure. The Company selected technical measures and materials that were reasonable in construction cost, convenient for operation and maintenance, and conducive to water conservation. We also optimised the structure, function, and layout of facilities based on local climate and hydrogeological conditions to reduce construction and subsequent operational dificulties, thereby earnestly fulfilling our ecological protection responsibilities.

Social

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SNS integrates the concept of social responsibility into its corporate operations and business development, and is committed to creating a fair, mutually trusting, and healthy development environment for its employees, partners, and all social stakeholders. Through systematic management and measures, the Company continuously deepens its social responsibility practices, contributing long-term value to high-quality corporate development and social progress.

SDGs Addressed in This Chapter:

INDUSTRY, INNOVATION AND INERASTRUCTURE

PARTNERSHIPS FOR THE GOALS

Material topics covered in this chapter:

•Product Quality and Safety

•Technological Innovation

•Employee Employment and Rights

•Employee Training and Development

•Occupational Health and Safety

•Customer Service and Communication

•Supplier Management

•Network and Data Security

•Community Welfare

Product Quality and Safety

SNS has established a product quality management system based on high standards, integrating quality risk control throughout the entire product lifecycle. This ensures consistency from product R&D and manufacturing to after-sales service, fully embeds quality control requirements into operational practices, and continuously promotes dual improvements in product qualit and customer service.

Governance

SNS has built a scientific and standardised quality management system in accordance with authoritative domestic and international quality management standards, clarifying uniform basic requirements for quality management. It has established a quantifiable quality objective system centred on core indicators such as produc qualification rate, test qualification rate, on-time order delivery rate, failure rate, and quality cost loss rate. Each subsidiary, based on its specific business and production processes, has formulated and continuously revised procedural documents such as the Integrated Management Manual, the Management System for Product Certificates of Conformity, and the Control Procedure for Product Identification and Traceability. This creates a systematic and implementable system of management documents, ensuring that quality requirements are integrated into all stages, including R&D, procurement, production, inspection, and service.

At the holding subsidiary level, the Company has clearly defined the division of responsibilities for qualit management. The general manager of each holding subsidiary is responsible for quality management and appoints a deputy general manager as the management representative to ensure the efective operation of the management system. A dedicated quality assurance department has been established to promote and implement the Company�s quality objectives and to supervise relevant departments or personnel in technical procurement, inspection, and assembly to carry out their daily work in accordance with quality standards

As of the end of 2025, SNS has obtained ISO 9001 Quality Management System Certification, API Spec Q1 Certification, and ASME (American Society of Mechanical Engineers) Certification. It also holds the National Special Equipment Production License. The Company ensures the efective operation and continuous improvement of its quality management system through internal audits, management reviews, and third-party certifications.

Strategy

The Company�s quality policy is �Integrity, high quality, service, and improvement�, emphasising both proactive prevention and post-event management of quality risks. The Company compiles and analyses core quality indicators monthly to identify actual or potential quality issues. It prepares a risk assessment table annually, quantitatively scoring the frequency and severity of risks, and dynamically updates and optimises it quarterly to achieve systematic screening. Through internal self-inspection mechanisms, as well as quality-themed meetings at subsidiaries, customer feedback analysis, and pre-process discussions, we research and determine targeted measures for quality risk control to ensure product quality.

Product quality risks and countermeasures

Impact, Risk, and Opportunity Management

SNS focuses on quality risk control throughout the entire product lifecycle by revising institutional documents, unifying product standards, and embedding quality requirements into information systems like ERP and OA to prevent quality issues through standardised management; simultaneously, departments such as quality, technology, and manufacturing collaborate to develop improvement measures, enhancing the eficiency of quality risk response. The Company continuously improves its quality management level through internal special training, introducing external experts, and learning from advanced manufacturers, and it strictly implements closed-loop management for any quality issue—from analysis and correction to prevention—to promote the continuous improvement of its quality management system

Quality Management Process

The Company has formulated detailed interna operating specifications and procedural documents for each stage, including design and development, production and manufacturing, testing and inspection, and assembly and delivery, clarifying the key points of quality control at each step. For example, to ensure accuracy in the product inspection stage, the Company strictly implements the Inspection and Test Control Procedure, equipping itself with numerous precision instruments, measuring tools, and testing equipment to monitor and control key parameters in real-time. The Company has established a daily management and periodic calibration mechanism for inspection, which is handled by company-level and department-level metrologists, supplemented by outsourced testing, unified quarterly inspections, and regular monthly physical and chemical tests, to ensure all instruments and equipment are in good working condition.

During the design stage, the Company organises special meetings to unify key quality standards and establishes special management groups to track the entire process, ensuring the precise implementation of customer requirements. The respective responsible departments control quality in the subsequent stages of manufacturing, testing and inspection, and assembly and delivery, which includes optimising supplier management, product identification, order tracking, and the handling of non-conforming products, thereby providing end-to-end product quality assurance through quality training and the application of information technology.

Quality management process

Design Planning: The technical department is responsible for design and development planning, determining design stages and control measures, including design review, verification, and validation activities.

Design Input: Clearly define design requirements, including customer needs, legal and regulatory requirements, and applicable standards.

Design Output: Ensure design outputs meet input requirements, including product specifications, drawings, and process documents.

Design Review and Verification: Ensure the design meets specified requirements through internal reviews and verification.

In-Process Inspection: Conduct inspections and tests during the production process to ensure products conform to design and process requirements.

Final Inspection: After production is complete, conduct final inspections and tests to confirm that the product meets acceptance criteria.

Non-Conforming Product Control: Identify, segregate, and review non-conforming products, and take corrective actions.

Design Stage

Testing and Inspection Stage

Production Planning: Plan the production process, including resource requirements, process documents, and inspection and testing requirements.

Production and Manufacturing Stage

Production Control: Strictly follow process documents and work instructions during production to ensure the process is under control.

Identification and Traceability: Establish a product identification and traceability system to ensure product uniqueness and traceability throughout the production process.

Preventive Maintenance: Perform preventive maintenance on production equipment to ensure its normal operation.

Assembly and Delivery Stage

Assembly Control: Control the assembly process to ensure assembly quality meets requirements.

Product Protection: Protect products before delivery, including packaging, handling, and storage, to ensure they are not damaged.

Post-Delivery Activities: Provide necessary after-sales services, including product installation, commissioning, and repairs.

Building a Quality Culture

The Company builds an all-employee quality culture through regular quality training and awareness-raising activities. In 2025, we continued to organise special training sessions to enhance quality management capabilities, covering topics such as zero-defect quality management, changes to the API Q1 10th edition standard and key audit points, and quality leadership. Concurrently, the Company conducted professional training activities, including annual inspector training, a company-wide quality knowledge competition, quality inspection skills competition, and CMM inspection skills training, to strengthen employees� understanding of specific quality processes and skill levels, transforming product qualit requirements into vivid, scenario-based experiences and efectively raising employee quality awareness.

The Company also extends its quality training to supply chain partners. By organising special supplier training events, it provides guidance on suppliers� product dimensional control, appearance standards and on-site management to ensure quality requirements are unified. Through regular quality-themed meetings and sharing sessions on international project experiences, the Company not only continuously enhances the reliability of its products but also efectively promotes the deepening of its all-employ ee quality culture.

SNS �Quality Month� campaign drives an upgrade in the all-employee quality culture

To deepen the concept of product quality, SNS successfully held a 45-day �Quality Month� campaign from September to October 2025. This campaign, themed �Promoting Improvement Through Full Participation, Focusing on Pain Points for Radical Cures, and Co-creating an Ecosystem of Excellence,� was guided by the core principles of �setting goals, setting plans, and assigning personnel� and followed an implementation path of �training, competing, inspecting, and summarising,� featuring a variety of activities such as an online quality knowledge quiz, special training sessions, improvement seminars, �Lateral Thinking� case simulations, quality-themed micro-video creation, and keynote speeches to foster a strong quality culture atmosphere.

SNS organised a quality communication meeting to jointly build a supply chain of excellence

To solidify the quality foundation of the supply chain, SNS and Sunny Seal held a quality communication meeting for machined parts in September 2025, attended by representatives from over ten core suppliers. This meeting, centred on being data-driven and unifying standards, aimed to deeply integrate the Company�s quality requirements into the upstream supply chain.

The communication meeting analysed the specific quality data and typical defect cases of each supplier over the past two years, shifting the focus of quality from post-inspection to pre-prevention. It also facilitated face-to-face discussions on details such as product drawings, technical standards, process flows, and quality control points, thereby clarifying the direction and goals for quality improvement.

Product Recall Management

The Company has formulated management systems such as the Non-Conforming Product Control Procedure and the Defective Product Traceability and Recall System to build a closed-loop management system that covers defect identification, recall initiation, defective product handling, and recall prevention, thereby maximising the protection of customer safety and rights, controlling product quality risks, and continuously improving its recall contingency plans to strengthen response capabilities

Identification

The Sales/After-Sales Department is responsible for receiving and promptly reporting customer feedback on defective products.

The Quality Assurance Department organises relevant departments to analyse the cause of the feedback, assess the issue, implement improvement measures, and determine whether a recall is necessary.

Initiation and Implementation

For products confirmed to have defects and requiring a recall, the Quality Assurance Department is responsible for formulating a defective product recall plan, which is then implemented by the relevant departments upon approval.

Handling of Defective Products

The responsible department formulates a handling plan for the recalled products which is implemented after approval. The Quality Assurance Department supervises the handling process of the defective products

Recording and Prevention

Records of the recall and handling process will be fully retained, including the reason for the recall, the measures taken, and the results

Preventive measures are taken to avoid the recurrence of similar issues, ensuring customer satisfaction and product safety.

Indicators and Targets

The Company sets multi-level, quantifiable annual quality and safety targets to drive continuous improvement in product quality and safety. Among these, SNS has established 11 company-level targets related to product quality and service, which the Company then breaks down and assigns to various departments, forming the quality targets for which each department is responsible. Each holding subsidiary formulates its own relevant quality targets based on its functions and business characteristics, referencing the requirements of SNS These quality targets include key performance indicators such as customer satisfaction, first-pass yield, and on-time order completion rate. The setting of product quality targets follows the principle of annual signing and monthl tracking to ensure continuity in target management. In 2025, SNS and Sun Seals achieved their company-level quality targets for the year, while other holding subsidiaries substantially met their respective annual company-level quality targets.

Relying on its outstanding product quality, reliable services, and leading manufacturing capabilities, the Company has earned high recognition from customers, the industry, and the government. In 2025, it was honoured with the Sichuan Province �Tianfu Famous Brand� certification, showcasing the Company�s strength in digital and intelligent manufacturing.

R&D and Innovation

SNS systematically plans its R&D and innovation path—from basic materials research to cutting-edge application scenarios and from single products to smart services—based on four dimensions: vertical technological deepening, horizontal system integration, intelligent digital empowerment, and a green ecosystem layout. The Company has established an R&D and innovation management system covering the entire project lifecycle. Through systematic technological breakthroughs and an intellectual property strategy, it continuously promotes industrial technological progress and enhances its innovation capabilities.

Governance

SNS has established an enterprise technology centre within the Company, with a Technology Centre Committee composed of technical experts from its headquarters and various holding subsidiaries. This committee implements full lifecycle management for R&D projects, from feasibility assessments for project initiation to key technological breakthroughs and final acceptance reviews. Leveraging multiple specialised R&D teams, the Company�s scientific research activities broadly cover basic theoretical research and cutting-edge product applications, constantly seeking industry breakthroughs.

The Company has established an R&D assessment and incentive system to enhance R&D eficiency, protect innovative achievements, and stimulate the long-term potential of technical talent. We conduct performance evaluations for internal R&D projects, providing rewards to project teams with outstanding results, and have set up special achievement awards for projects and teams that obtain nationally authorised patents. In 2025, the Company formulated the Administrative Measures for Talent Project and Scientific and Technological Progress Award Incentive Funds to further clarify the incentive conditions and standards for scientific research achievements. This move aims to motivate employees to participate in talent project applications and science and technology innovation activities, thereby promoting talent development and technological innovation

The Company places great importance on protecting innovative achievements and managing intellectual property. It employs full-time IP management personnel to monitor the latest developments in policies, regulations, industry trends, and peer enterprises to prevent internal and externa infringement risks. During the reporting period, we optimised policy documents such as the Intellectual Property Management Policy and the Administrative Measures for Patents and Software Copyrights to enhance the refinement of approval and management processes.

Strategy

SNS adheres to a core product value of �Reliable + Advanced�. Through lean research on common technical details, interdisciplinary integration, and AI-powered intelligent empowerment, the Company drives product upgrades with technological innovation and collaboratively leads industry technology

Vertical Deepening

Product and service innovation strategy

Lean Research on Common Technical Details and Breakthroughs in Extreme Operating Conditions

Horizontal Expansion

Intelligent Empowerment

Interdisciplinary Integration and Construction of All-Scenario Solutions

Upgrading Products and Services Driven by AI and Digital Technologies

Coordinated Development of Internationalisation and Green Initiatives

Focusing on in-depth research into common technologies such as basic materials, mechanical seal mechanisms, controllable deformation design, and diamond coating preparation, we are dedicated to further improving lifespan and reliability of seals, reducing energy consumption, minimising leakage, and overcoming technical challenges under extreme conditions like ultra-high temperature (>500°C), ultra-high pressure (>40MPa), and high speed (>180m/s).

Promoting the integration of mechanical seal technology with multiple disciplines such as materials science, fluid dynamics, smart sensing, and electronics, we are transitioning from supplying single seal products to providing system solutions that include intelligent seals with embedded sensors, as well as seal condition monitoring and maintenance.

By implementing the �Smart SNS 123� digital transformation strategy, we deeply embed artificial intelligence and big data technologies into product R&D and lifecycle management. At the R&D end, AI technology is introduced to assist in design and interpret complex project documents; on the product side, the SIMS intelligent monitoring system is iterated to achieve real-time monitoring of seal status and early fault warnings; and at the service end, a predictive maintenance platform is built to forecast health status through data analysis.

With the goal of becoming a �world-class fluid control equipment provider�, we are strengthening international business collaboration and closely following the �dual carbon� strategy, with a key focus on developing sealing technologies for green industries such as CCUS, energy storage, nuclear power, and supercritical carbon dioxide power generation.

Impact, Risk, and Opportunity Management

R&D Management Process

SNS has formulated the Scientific Research Project Management System to manage the quality of the entire R&D process through project initiation reviews, project execution progress tracking, and project completion acceptance reviews. During the initiation and acceptance phases, all members of the Technology Committee participate in the review to ensure that feasibility is fully demonstrated at the project�s outset and that research outcomes are substantively verified upon completion, thereby controlling the quality standards and compliance boundaries of R&D activities. In 2025, the Company successfully implemented the online management of its R&D process, incorporating key stages—from project initiation, mid-term inspections, and record evaluation to final acceptance—into a digital management platform. This enables real-time monitoring and traceability management of R&D progress, resource allocation, and key decision-making points.

R&D management process

Green Technology R&D

The Company actively responds to the national �dual carbon strategy and integrates sustainable development concepts into its core technology and product innovation practices. It focuses on two aspects: developing products and service solutions, and expanding applications in green, low-carbon industries to support the green transformation of the chemical and energy sectors.

Green Products and Service Solutions

Design Optimisation: Independently researching and preparing diamond seal coatings to enhance product anti-friction performance through material innovation; applying precision design technology to sealing faces to finely control the performance of friction pairs and reduce frictional heat; applying advanced groove design technology to mechanical seal faces to significantly reduce operational energy consumption

Technological Breakthroughs: Successfully developed high-parameter dry gas seals capable of withstanding pressures of up to 40MPa, speeds of up to 40,000rpm, and diameters of up to 400mm; upgraded mechanical seal solutions for 12MPa pipeline oil pumps and high-temperature, high-pressure boiler feed water pumps in ultra-supercritical power plants; and continued research on high-pressure, low-power consumption sealing technology to reduce equipment energy consumption and media leakage.

Intelligent Technology: Completed the upgraded development of the SIMS intelligent monitoring system and launched the SIMS 2.0 product solution to enable predictive maintenance, ensuring safety and environmental protection requirements are met during the product use phase.

Low-Carbon Industry Application Scenarios

Applying sealing technology to emerging green and low-carbon fields such as nuclear power, energy storage, and natural gas pressure diferential power generation

The seal intelligent monitoring system (SIMS) 2.0, independently developed by SNS, is a prime example of the Company�s green innovation, driven by digital and artificial intelligence technologies to promote industrial energy conservation and source emission reduction. This system aims to address the industry pain point in process industries where the status of rotating equipment seals is unknown, and sudden failures lead to media leakage and energy waste. It achieves full lifecycle health management and smart operation and maintenance for seals. The system�s core technical indicators have reached a leading level in the industry, and it is currently supplied to enterprises such as PetroChina, Sinopec, CNOOC, and PipeChina

The successful application of SIMS 2.0 marks a key transformation for SNS from a parts supplie to an intelligent and green integrated service provider, ofering a practical technological path for the industrial sector to achieve the �dual carbon� goals.

Natural gas pressure diferential power generation technology support cascaded energy utilisation and low-carbon transformation

In active response to the national �dual carbon� strategy and to promote comprehensive energy utilisation, SNS has successfully developed and applied a high-speed, high-parameter dry gas seal solution for expansion turbines since 2023, targeting the energy-saving technology of pressure diferential power generation in natural gas transmission and distribution.

Leveraging its technological expertise in the field of dry gas seals, SNS has developed sealing products that meet extreme operating conditions. To date, the Company has provided core sealing solutions for several key national pressure diferential power generation projects, including the Naxi Station of PetroChina Southwest Oil & Gasfield Company, Jiangsu Rudong Haimen Station, Chongqing Tongluoxia Station, and the CNOOC Fujian LNG project. The successful application of this solution directl supports the safe commissioning and stable power generation of these projects, converting previously wasted pressure energy into clean electricity. This efectively enhances comprehensive energy utilisation eficiency and provides solid technical support for achieving significant �low-carbon benefits�, serving as a model of the Company�s commitment to the national green energy strategy.

Intellectual Property Protection

The Company values intellectual property protection and patent lifecycle management. During the early stages of R&D project initiation or new product development, it conducts thorough market research and patent searches to avoid infringing on the intellectual property of others. In the patent application and maintenance phases, professional external agencies are engaged to provide guidance and protect the Company�s intangible assets. During the reporting period, the Company conducted multiple specialised training sessions on domestic and international invention patent applications to improve the quality of filings, protect core technological achievements, and enhance awareness and capabilities in intellectual property protection.

Exploratory Research on Forward-Looking Technologies

Signing non-disclosure agreements with R&D personnel to strictly protect technical information and prevent the premature leakage or misuse of technological achievements.

Undisclosed Reserve Technological Achievements

We adopt a dual protection method of �patents + technical isolation� to ensure the uniqueness and competitiveness of our technologies in future applications.

SNS conducts training on invention patent applications to strengthen its global IP layout

In September 2025, SNS conducted the �Specialised Training on Domestic and International Invention Patent Applications�. This training focused on core topics such as domestic and international invention patent application procedures, PCT international layout, and claims drafting. It combined these with the technical characteristics of the mechanical seals industry to efectively enhance the capabilities of R&D personnel in patent mining and layout, supporting the global protection of the Company's core technologies.

Industry Technical Exchange

SNS is deeply involved in and actively leads the development of the industry ecosystem, engaging in exchanges and sharing with partners such as academic institutions, upstream and downstream enterprises, and industry organisations to jointly promote industry innovation and development. The Company has established industry-university-research partnerships with universities including Tsinghua University, Xi�an Jiaotong University, and Xihua University. Leveraging research platforms like the national postdoctoral research workstation and the Chengdu Academician (Expert) Innovation Workstation, it achieves high-level resource sharing and co-creation of technology. The Company is also active in authoritative domestic and international industry exhibitions and academic conferences, conducting extensive dialogues with industry experts, peers, and upstream/downstream partners to grasp the frontiers of R&D and application trends and share its innovative practices with an open attitude.

Applied Innovative Achievements

We actively apply for patents, using legal means to ensure the exclusivity and market advantage of our innovative technologies and to prevent imitation or infringement by others.

SNS�s Exhibition Attendance in 2025

SNS�s Attendance at Academic Conferences/Technical Exchange Meetings in 2025 (Selected)

UTEC�s technical exchange with Qingdao University of Science and Technology

Case

To overcome technical bottlenecks in high-end rubber and plastic sealing materials, UTEC formally established a industry-academia-research partnership with the College of Polymer Science and Engineering at Qingdao University of Science and Technology in 2024 to jointly conduct project R&D and promote the cultivation of outstanding engineering talent.

On September 5 and November 22, an expert team from the university conducted specialised training for UTEC�s technical personnel on rubber bonding and mixing processes, closely integrating theoretical principles with practical solutions to directly help resolve production pain points. Through this deep integration of industry, academia, and research, UTEC achieved a win-win outcome of key technological breakthroughs and innovative talent cultivation, efectively enhancing the enterprise�s core competitiveness in the high-end sealing materials sector.

SNS and Yangnong Group sign a strategic cooperation agreement to set a new benchmark for safety and technological innovation

In April 2025, SNS and Yangnong Group formally signed a Strategic Cooperation Agree ment, marking the upgrade of their relationship from a traditional supply-demand dynamic to a deep strategic alliance centred on tackling key technologies and co-creating a ecosystem. Based on the principles of �equality and mutual trust, mutual benefit, and common development�, this cooperation involves in-depth collaboration in core areas such as supply chain synergy, localisation initiatives, and integrity building, aiming t create a new model for the integrated development of high-end equipment manufacturing and the chemical industry and provide innovative solutions for the long-term stable operation of facilities.

Both parties are committed to the intelligent and green, low-carbon transformation of the industrial chain, contributing innovative strength to sustainable development in the industrial sector. This collaboration not only provides a new paradigm for building healthy, transparent, and sustainable supply chain relationships in the industry but also, through deep integration of the industrial chain, injects innovative impetus for China�s high-end equipment to break through international barriers and for globa industrial sustainable development.

In 2025, participated in drafting 1 national standard and 3 industry standards

Indicators and Targets

As one of the first batch of specialised, refined, unique, and innovative �Little Giant� enterprises recognised by the Ministry of Industry and Information Technology, the Company continuously invests in independent technological innovation, leveraging platforms such as the national enterprise technology centre and the national postdoctoral research workstation to tackle challenges in major national equipment and constantly consolidate its technological advantages. During the Reporting Period, two major technical achievements in which the Company participated—the Split Dry Gas Seal System for Large-Scale Ethylene Plant Extruder-Pelletizers and the High-Parameter Mechanical Seals for Petrochemical Equipment—received the �Second Prize for Science and Technology Progress of the Sichuan Provincial Machinery Industry� and the �Second Prize for Science and Technology Progress of the China Machinery Industry,� respectively.

Key Performance

In 2025, SNS

R&D investment: RMB 89,791,800

Number of R&D personnel: 262

R&D personnel ratio: 15.01%

Patent applications: 31

Patents granted: 38

Valid patents: 201

Invention patent applications: 14

Invention patents granted: 17

Valid invention patents: 64

Customer Service

SNS adheres to the philosophy of �technology-driven market leadership, service-backed customer loyalty, quality-defined brand excellence�. The Company has established standardised service criteria and processes, and is dedicated to providing customers with satisfactory product delivery and experiences, thereby continuously strengthening its competitiveness.

Governance

SNS has built a customer service management system that spans the entire chain of pre-sales, in-sales, and after-sale services. The Company has established clear cross-departmental collaboration mechanisms, led by the quality department with the joint participation of sales, technical, manufacturing, and other departments, to ensure customer feedback is eficiently identified and resolved in a closed loop. The Company has formulated customer service management policie such as the Quality Feedback Handling System and Service Activity Control Procedures to comprehensively standardise and proceduralize customer service requirements, clarify the feedback and handling processes for quality issues, and regulate the work procedures for service personnel.

Form Completion

The Sales Department creates a Quality Issue Feedback Form in the OA System, describing the issue in detail

Categorisation and Assignment

The Quality Assurance Department categorizes the feedback forms based on the nature of the issue

Analysis and Improvement

Process Archiving

The responsible department analyses the cause of the quality issue and formulate and implements corrective action

All records are archived and the register is updated to ensure the process is searchable and traceable

Verification and Closure

Customer feedback handling process

The Quality Assurance Department verifies and closes out the rectification results for the issue on the scheduled date

Verification and Approval

The Quality Assurance Department periodically assigns responsibility for quality issues and reviews the analysis and corrective actions

Strategy

Adhering to the customer service philosophy of �technology-driven market leadership, service-backed customer loyalty, quality-defined brand excellence�, SNS deeply integrates its service strategy into the entire process from product R&D to after-sales support. The Company has established a comprehensive customer service system, proactively identifies and responds to customer needs, provides technical support ranging from individual products to system solutions, and leverages standardised service processes and digita platforms to continuously optimise the customer service experience, ensuring customer value creation through meticulous management and quality improvement.

Impact, Risk, and Opportunity Management

Customer Follow-Up

For on-site services such as product installation, commissioning, and maintenance, the Company collects customer feedback through two methods: the service activity work order and follow-up calls from sales personnel, covering diferent stages of service delivery and experience tracking to ensure a transparent and controllable service process and provide an institutional guarantee for the continuous optimisation of its service levels.

Service personnel operate in strict accordance with work documents and customer requirements, and comply with the customer�s safety and environmental management standards.

Service personnel immediately record the details in the Service Activity Work Order, which is then given to the customer to fill out the �Customer Feedback� section, and the work order is filed upon return to the Company.

Sales personnel conduct further follow-up calls to gather customer feedback on aspects such as whether the service request has been resolved, the product�s operational status post-service, the skills of the service personnel, and the attitude of the service personnel, and regularly summarize and analyse customer suggestions.

Customer service and follow-up process

Feedback Classification

The Company uses the quality feedback card as a core tool to classify and manage issues based on two dimensions: the nature of the issue (suggestions for improvement or product quality problems) and the source of the feedback (customer or internal). This allows for cause analysis and tracking of subsequent improvement measures, enhancing the eficiency of problem response and resolution.

Class A Customer Feedback Record Card

For quality issues caused by the Company�s own reasons, a detailed description of the fault, along with photos, physical products, etc., is required to facilitate analysis and improvement.

Class A Internal Feedback Record Card

For quality issues or improvement suggestions that arise internally within the Company, including processing, design, or management issues, a detailed description of the problem is required to facilitate analysis and improvement.

Class B Customer Feedback Record Card

For quality issues not caused by the Company�s own reasons, or for special requests and improvement suggestions from customers, no further cause analysis is needed, and the responsible department makes direct corrections.

Class B Internal Feedback Record Card

For minor, non-human errors that occur during the product realisation process within the Company, the internal responsible department must be identified for regular statistical analysis and improvement.

Quality feedback card classification management

Service Capability Training

For customer service personnel, the Company has established a systematic training and qualification certification system and continuously conducts specialised technical training, such as on mechanical seals knowledge, to ensure service personnel master product characteristics and professional problem-solving skills.

SNS held an after-sales experience sharing session to deepen service capability building

In August 2025, SNS held a dedicated experience sharing session on after-sales on-site issues. The Company's service personnel actively shared their on-site service experiences based on their work practices. At the same time, for the technical dificulties encountered by some service personnel, the session organised analyses and centralized discussions to jointly explore solutions, efectively enhancing the professional capabilities and problem-solving skills of the after-sales service team.

Indicators and Targets

The Company systematically evaluates service quality through the annual Customer Satisfaction Survey Form, collecting customer feedback across seven core dimensions: product quality, packaging, label content, timeliness and efectiveness of service, service personnel attitude, delivery timeliness, and completeness of documentation. The Company combines this with daily follow-up records to conduct in-depth analysis of survey data, forming a specialised Customer Satisfaction Analysis Report to inform the development of improvement strategies. In 2025, the Company and its subsidiaries continued to win high recognition from customers and industry partners for their professional, reliable, and timely technical services.

Customer Satisfaction Score 2025 customer satisfaction score results

Key Performance

In 2025,

the customer complaint handling rate was 100%.

Employee Rights and Development

SNS considers respecting and protecting employee rights as the foundation of its sustainable development. The Company continuously improves its employment management, employee benefits, and career development systems to efectively safeguard the legitimate rights and interests of its employees, stimulate their professional capabilities and innovative vitality, and create a caring, respectful, fair, and enterprising work environment.

Employee Employment and Rights

Protecting Employee Rights

SNS abides by national labour laws and regulations such as the Labour Law of the People’s Republic of China and the Labour Contract Law of the People’s Republic of China, standardising institutional documents related to recruitment and dismissal, working hours, and leave, and adhering to legal employment practices. The Company strictly implements all human rights management systems, prohibiting child labour and any form of forced labour, discrimination, harassment, or abuse to protect the basic rights and dignity of every employee. At the same time, it conducts annual compliance assessments of laws and regulations on equal pay for equal work and special protections for female employees, and reviews and updates its list of labour and human rights risks to efectively control such risks.

In 2025, the Company revised the Employee Recruitment Management System, improving the approval processes for employee hiring, pre-employment physical examinations, and probation-to-permanent conversion. It also actively promoted digitalisation by moving the recruitment process online and continuously refining it to enhance the eficiency and transparency of probation-to-permanent conversion approvals. Furthermore, the Company amended the Leave and Attendance Management System in accordance with national and Sichuan provincial regulations, adding elder care leave and pure breastfeeding leave, extending the duration of maternity, marriage, and paternity leave, and optimising the calculation period for parental leave to protect the legitimate rights and interests of employees. We maintain a zero-tolerance attitude toward workplace harassment and any form of discrimination, and all departments strictly implement preventive mechanisms to build and maintain a work environment that is respectful of rights, diverse and inclusive, and equal and friendly.

International Women�s Day themed activities convey respect and care for women

Case

During International Women�s Day on March 8, SNS and its holding subsidiaries organised diverse and enriching themed activities, including themed movie screenings, floral art experiences, and makeup classes, to convey care and respect to female employees. The Company�s management delivered on-site speeches, acknowledging the positive contributions of female employees in R&D, production, management, and other positions. These activities provided a space for female employees to relax and interact, and also enabled the concepts of respecting women�s value and supporting their growth to be more directly communicated and imple mented within the Company.

Employee Composition

The Company has established diverse communication channels for employees, using their opinions as a key reference for improving rights protection. Through regular employee representative congresses, executive reception days, and departmental forums, the Company encourages employees to ofer suggestions on the work environment, management systems, and welfare benefits, thereby participating in corporate governance and operational optimisation. This year, one employee representative director was added to the Board of Directors, creating a clear channel between the Company�s decision-makers and its employees and improving the eficiency of information communication and feedback.

During the reporting period, to systematically assess employees� overall feelings about rights protection and the workplace environment, the Company organised the 2025 annual employee satisfaction survey for all employees of the Company and its domestic controlled subsidiaries, achieving an average satisfaction score of 85. In addition, UTEC concurrently conducted a special survey on canteen satisfaction and promptly optimised its services based on the feedback to further enhance the employee experience.

Employee Welfare and Care

SNS is committed to building a comprehensive, multi-level employee care system. In 2025, on th foundation of fully implementing statutory benefits such as the six social insurances and one housing fund and paid leave, the Company expanded the dimensions of its care initiatives and continued to provide special support in areas including maternal and infant care, health protection, and labour protection, comprehensively covering employees� work, health, and family needs to help them achieve a better work-life balance.

Statutory Benefits

Supplementary Benefits

Six social insurances and one housing fund

Paid leave

medical insurance

supplementary medical insurance statutory holidays

endowment insurance

work-related injury insuranc

unemployment insurance

annual leave

maternity insurance

housing provident fund

marriage leave

maternity leave

breastfeeding leave

parental leave

nursing leave, etc.

Comprehensive benefits

holiday benefits

birthday benefits

home visit leave

parent-teache conference leave

cooling and heating subsidies

funeral subsidies

nursing rooms

fitness centres, etc.

Health protection

general health check-ups

commercial insurance2

mutual aid medica insurance from th trade union

Free work meals in the cafeteria

Employee dormitories

SNS employee benefits system

2The Company and its holding subsidiaries provide diferent categories of commercial insurance based on their specific circumstances, such as group accident insurance, employer liability insurance, and trafic accident insurance

The Company regularly organises various themed activities, such as Women�s Day, Youth Day, Children�s Day, New Year�s garden party, and the annual sports day, to enhance employees� sense of belonging, cohesion, and happiness, fostering a warm and vibrant corporate atmosphere.

Key Performance

In 2025,

Employee benefit coverage rate: 100%3

Investment in employee benefits4: RMB 62.53 million.

SNS�s trade union event themed �Decade of Glory, Journey Renewed�

Case

In July 2025, SNS held a series of trade union activities to celebrate its tenth anniversary of listing, under the theme �A Decade of Glory, Charting the Future�. Through diverse formats including sports competitions, fun challenges, and employee story sharing, the events allowed employees to reflect on their journey of hard work and share stories of personal and corporate growth. More than 1,000 employees actively participated, which further strengthened team identity and cohesion, inspiring confidence and motivation to face new stages of development together.

3During the reporting period, SNS and its holding subsidiaries all provided employee benefits, including statutory and supplementary benefits. Specific benefit items vary among diferent subsidiaries

4The statistical scope includes statutory benefits, commercial insurance, and supplementary benefits such as cooling and heating allowances.

Sunny Seal�s �Employee Home� oficially opens, establishing a new foundation for a happy workplace

On 25 December 2025, the �Employee Home� at Sunny Seal, which took three months to build, successfully passed provincial inspection and was awarded an honorary plaque for the �Sichuan Province Grassroots Trade Union Employee Home Construction Project�. The space, with a total area of approximately 764 square meters, integrates nine major functions, including Party-building activi ties, a staf library, fitness and sports, skills training, maternal and infant care and areas for rest and relaxation. It is equipped with various fitness, reading and training facilities to comprehensively meet the learning, leisure, and health needs of employees, providing a warm and secure space for their growth and relaxation.

2025 Sichuan extraordinary employer award

In recognition of its continuous eforts in building a diverse and inclusive workplace culture and employee care system, the Company has been honoured as a �Sichuan Extraordinary Employer� for two consecutive years.

Employee Training and Development

Talent Attraction and Cultivation

In line with industrial development needs, SNS broadens its channels for talent acquisition and promotes the two-way flow and precise matching of university-enterprise resources, continuously deepening its interaction with universities and local communities. In 2025, the Company hosted visits from teachers and students from several universities, including the College of Chemical Engineering of Sichuan University, the School of Mechanical Engineering of Chengdu University of Technology, and the School of Mechanical and Electrical Engineering of Lanzhou University of Technology, engaging in in-depth discussions on professional practice, technological applications, and career development. UTEC also advanced its joint programme for training outstanding engineers with Qingdao University of Science and Technology, holding detailed discussions on customized training plans that align with industry trends and corporate needs.

Furthermore, the Company actively responds to local employment and talent attraction policies by participating in various recruitment events and setting up career guidance zones to provide job seekers with resume optimisation and interview advice. These eforts help improve the quality of employment and demonstrate the Company�s sense of responsibility in fostering talent and stabilising employment.

Teachers and students from the College of Chemical Engineering of Sichuan University visit the Company for an industry-academia-research exchange event

In December 2025, a delegation of teachers and students from the College of Chemical Engineering of Sichuan University visited SNS for an industry-academia-research exchange event. The Company�s management accompanied the visitors on a tour of the Sunny Seal production base, providing a detailed introduction to the Company�s achievements in domestic substitution, high-end product R&D, and intelligent manufacturing. During the subsequent symposium, both parties discussed topics such as talent cultivation, research collaboration, and internship employment. They agreed to leverage their respective regional and resource advantages to deepen industry-education integration by co-building internship platforms and advancing cooperation on research projects, thereby promoting the efective alignment of university research resources with industrial needs and continuously supplying high-quality engineering and technical talent to the industry

Talent Development and Promotion

SNS continuously improves its career development paths to enhance the competitiveness of its talent teams. The Company has formulated policies such as the Employee Training Management System to establish a multi-level training system that includes new employee training, cadre training, professional skills enhancement, and general knowledge training, ensuring that employees receive comprehensive competency development. In 2025, the Company optimised the professional knowledge courses for new employee training, ofering more detailed instruction on core products and business areas. For technical positions, it conducted specialised training in operational skills, management capabilities, and safe production, and verified the efectiveness of the training through exams, practical exercises, and interactive assessments, providing a guarantee for employees� job competency and professional growth.

In terms of career development, the Company implements the Compensation Management System and Position and Level Evaluation Guidelines. It assesses employee performance through regular evaluations and makes salary adjustments and promotions based on the results, ofering clear growth pathways and comprehensive development support for employees in diferent positions.

�Embark on growth, achieve excellence through craftsmanship� special training for new employees

Case

In July 2025, UTEC conducted a special training programme for 20 new employees. Through systematic courses and hands-on workshop practice, the training covered sealing product processing technologies, production procedures, and quality control. This approach promoted the integration of theory and practice, helping new employees rapidly acquire professional skills, develop professional qualities, and enhance their teamwork abilities, laying a solid foundation for their career advancement.

SNS �Enhancing management, empowering leadership, and promoting development� mid-to-senior level leadership training

Case

To enhance the team empowerment and inspirational leadership capabilities of its mid-to-senior level management, SNS held a special training session in December 2025 o coaching and inspirational leadership for mid- and senior-level managers. Through case study analysis, group discussions, and scenario-based exercises, the training focused on core topics such as transitioning to a coaching-style of management, team empowerment, and communication skills, helping the Company�s mid-to-senior level managers master ke methods for empowering teams and cultivating talent, thereby facilitating their transformation from �controllers� to �enablers� and providing leadership support for the Company�s high-quality development

Key Performance

In 2025, ofered 339 training sessions for all employees

with a total investment of RMB 445,465.29

Employee Support and Incentives

The Company values the improvement of employee capabilities and career growth, encouraging employees to participate in various skill competitions by providing support such as paid leave for competitions and subsidies for transportation, food, and accommodation, while also rewarding employees who achieve outstanding results with honours and salary adjustments. At the same time, the Company has established a diversified incentive mechanism that supports employees in achieving professional development through further education and enhancing professiona skills, assists employees in applying for subsidies for master�s degree studies, and provides support for examination fees for those obtaining professional qualification certificates, aiming to stimulate employees� motivation for self-improvement and promote their professional growth and work enthusiasm.

Key Performance

In 2025, support for educational and qualification enhancement was provided to 97 employees, with a total investment of RMB 220,903.50.

Eight SNS employees honoured as �Wuhou District outstanding professional and technical talents

In February 2025, eight employees of SNS were awarded the title of �2024 Outstanding Professional and Technical Talent� of Wuhou District, Chengdu, in recognition of their exceptional professional capabilities and solid work performance. This selection aims to implement the talent-first development strategy and foster a talent development environment that respects professionalism and encourages innovation. The award-winning employees have long been dedicated to front-line work and have demonstrated outstanding performance in technical research and development and practical application, fully reflecting the Company�s achievements in cultivating professional and technical talent and building their capabilities. The Company will further deepen its �strengthening the enterprise with talent� philosophy, enhance the cultivation of and support for professional and technical personnel, and continue to expand growth opportunities and development platforms for its employees

Occupational Health and Safety

SNS values the health and safety of its employees and relevant stakeholders, complies with national laws and regulations such as the Law of the People's Republic of China on Work Safety and the Law of the People's Republic of China on the Prevention and Control of Occupational Diseases, consolidates and enhances its occupational health and safety management system, and i committed to preventing risks at their source to solidify long-term safety mechanisms.

Occupational Health and Safety Management System

SNS continuously improves its occupational health and safety management system, which covers the Company and its controlled subsidiaries. It has established a multi-level work safety management structure to promote the efective top-down implementation of safety responsibilities within the organisation and continually enhances the occupational health and safety management standards for key operational processes and front-line positions.

As of the end of the reporting period, the Company has obtained ISO 45001 Occupational Health and Safety Management System Certification and ensures its continued compliance with standard requirements and efective operation through a regular audit mechanism. Each subsidiary conducts annual internal audits and regularly commissions external professional institutions for third-party audits to promptly identify and rectify non-conformities, thereby promoting the continuous optimisation of safety management.

Company level (Work Safety Management Committee)

Coordinates the establishment of safety systems, oversees system operation, and promotes continuous improvement

Subsidiary Level (Work Safety Management Committees of Holding Subsidiaries)

Implements the Company�s safety policies in line with business-specific characteristics

Optimises management processes focusing on high-risk operations and occupational health protection

Refines requirements for incident management, fire safety management, safety training, and labour protection

Department Level (Departmental Safety Oficers)

Organises and implements specific safety management measures

Conducts daily supervision, inspections, and hazard identification

Defines and supervises the fulfilment of safety responsibilities by personnel at all levels

Front-Line Employee Level

Participates in safety management and supervision

Proposes safety improvement suggestions based on on-the-job experience

Implements on-the-job safety operation requirements

Safety Risk Management and Hazard Identification

In 2025, the Company continued to advance its dual prevention mechanism of hierarchical safety risk control and hazard identification and governance. In response to business needs arising from the increased application of new equipment, new processes, new materials, and new technologies (the �Four News�), the Company formulated the HSE Management System for the Four News. This system focuses on identifying the potential impacts of the �Four News� on employee health, safety, and the work environment, and establishes corresponding protective measures and safe operating requirements to prevent potential new risks and hazards.

In daily management, the Company combines regular production with �Four News� application scenarios to conduct various forms of safety supervision, including comprehensive inspections, special inspections, daily patrols, and employee self-checks. It also organises all employees to participate in hazard source identification and hazard investigation activities, covering key aspects such as production activities, products, and equipment, to establish a dynamic risk inventory and implement specific control measures. Simultaneously, through regular inspections and a �look back� mechanism, the Company continuously reviews the status of identified occupational hazards and risks, and promptly supplements or reinforces safety training, personal protective equipment, and engineering control measures to systematically manage risks at every stage.

Control Dimension

Key Measures

	Uses the LEC method to evaluate and classify risks of identified hazardsUpdates the hazard identification and evaluation form; develops and implements targeted control measures for major hazardsRegularly organises hazard identification tests to strengthen employees’ risk awareness
	Conducts multi-tiered hazard inspections at company, department, and team levelsThe Company has implemented an incentive system for employee self-inspection, encouraging and rewarding frontline staff for proactively identifying and reporting hazards

Safety upgrades to the vertical lathe operating platform

In 2025, to address the safety risks of working at heights during vertica lathe operations, NDIV implemented systematic safety upgrades to the lathe platform�s access facilities, adding protective railings, guards, and other safety installations, and posting prominent safety warning signs in the work area, which efectively reduced the risk of falls from height and operational errors while enhancing on-site operational safety.

Occupational Health Assurance

In 2025, SNS focused on improving the working environment and preventing occupational hazards, strengthening employee occupational health and safety through multiple measures. The Company implements the Labour Protection Equipment Safety Management System, allocates and updates labour protection equipment based on the risk characteristics of diferent positions, and regularly inspects and replaces equipment such as safety helmets, protective footwear, and face shields to ensure their protective performance is reliable and matches job requirements. Concurrently, the Company strictly enforces pre-employment, in-service, and pre-departure occupational health examinations for employees in hazardous positions to monitor and manage health risks in a timely manner. During the reporting period, the Company had a zero incidence rate of occupational diseases

For key scenarios such as manufacturing workshops, high-temperature work, and operations at heights, the Company has added or optimised safety protections, cooling devices, and protective facilities in certain production areas, efectively improving working conditions and reducing occupational health risks. The Company is also actively exploring the application of digital tools in safety management. Its subsidiary, NDIV, has achieved online monitoring and real-time viewing of confined space operations and oxygen concentrations, providing data support for on-site management and further improving the timeliness and visualisation of safety controls.

In addition to occupational disease hazards, the Company responds to public health and safety concerns by installing Automatic External Defibrillators (AEDs) and implementing tobacco control measures to safeguard employee health and well-being, continuously improving the safety and comfort of the work environment.

Strengthening tobacco control to safeguard workplace health

In November 2025, upholding the philosophy of �people-oriented, safety first�, Sunny Seal installed smoke detectors in workshop restrooms and other areas where tobacco control was weak. This move strengthened governance over smoking in public areas, reduced the risk of respiratory and cardiovascu lar diseases for non-smoking employees, and efectively controlled fire hazards. Following implementation, violations of smoking regulations decreased by over 90%, the air quality significantly improved, and employees were encouraged to adopt healthy workplace habits, fostering a positive atmosphere where �everyone abides by smoking rules and jointly safeguards health and safety�.

Building a Safety Culture

SNS actively builds its safety culture by enhancing employee safety awareness and emergency response capabilities through safety training and emergency drills. The Company strengthens its team-level safety management mechanisms, organising department managers and safety oficers to regularly participate in pre-shift and post-shift meetings, where they conduct safety briefings tailored to specific operational scenarios to guide employees in preventing safety risks during actual operations. At the same time, the Company continuously diversifies its methods of safety culture communication, conveying safety concepts to employees in more intuitive and engaging ways by filming short safety awareness films, conducting specialised safety training, and organising study sessions on work safety laws and regulations.

In emergency management, the Company organises multiple practical emergency drills centred on typical scenarios such as fires, heatstroke, and personal injuries. These drills translate training outcomes into on-site response capabilities, strengthening employees� abilities for coordinated response and self-protection during unforeseen events.

Sun Seals management personnel safety capability enhancement training

In 2025, Sun Seals conducted a four-phase systematic safety training programme for management personnel at all levels, from team leaders to department managers, focusing on risk prevention and control, laws and regulations, and technica safety standards. The training used real accident cases as a starting point to analyse key technical safety points and management measures. Each phase included in-class quizzes, and a closed-book examination with a randomized question bank was administered at the end of the training. This series of training sessions encouraged managers to proactively identify risks, implement safety responsibilities, and strengthen on-site control capabilities, fostering a learning atmosphere where �leaders take the lead in learning, key staf learn in depth, and learning is connected to practice�. This efectively improved the Company�s overall safety management level and its capacity to ensure occupational health and safety

Key Performance

In 2025,

A total of 5,605 participants attended occupational health and safety training

accumulating11,607.50 training hours

A total of 28 emergency safety drills were conducted

with a cumulative participation of 938 person-times.

Relevant Party Safety Management

The Company continuously improves its occupational health and safety management mechanism for related parties. Building on the Relevant Party HSE Management System, it has refined management processes and tools, implementing strict site-entry safety training for external and outsourced personnel. Through measures such as safety technical briefings, distribution of protective equipment, and operational process inspections, the Company ensures the efective implementation of safety management requirements for related parties, optimising the standardisation and controllability of collaborative work.

Health and Safety Targets

SNS and its subsidiaries set annual health and safety management targets based on their actual production and operational conditions. They systematically advance related work to ensure the stable operation of the health and safety management system. All established targets for the year were achieved.

Supply Chain Management

Supply chain management is a key pillar supporting SNS�s steady operations and long-term value creation. We establish sound management systems and collaborative mechanisms, continuously optimise the full lifecycle management of our suppliers, persistently enhance the overall resilience of our supply chain, and promote a collective transition toward green and sustainabl development across the upstream and downstream industry chain.

Governance

SNS places great importance on the stability and reliability of its supply chain, continuously building and improving its supplier management system and optimising full lifecycle management. The Company has established a Procurement Department, which determines the overall requirements for supplier management for the Company and its holding subsidiaries. It also formulated a series of documents, including the Procurement Control Procedure and the Supplier Management System. Each holding subsidiary revises and adjusts these documents based on their actua business conditions and in accordance with the Company�s system requirements.

Strategy

The Company closely monitors domestic and international market changes, promptly assesses potential supply chain risks, and updates its procurement strategies accordingly. By promoting domestic substitution, developing local suppliers, and implementing a �dual-supplier� strategy for key materials, we ensure the controllability and resilience of our supply chain. We conduc systematic reviews and in-depth analyses of risk nodes throughout the entire chain, from procurement to delivery, and have built a �risk-impact-response� risk management framework cover ing dimensions such as laws and regulations, market fluctuations, quality defects, and environment, health, and safety.

Impact, Risk, and Opportunity Management

Supplier Lifecycle Management

The Company implements strict controls over all stages of the supplier lifecycle, from admission and evaluation to exit, to standardise supplier conduct and efectively prevent potential supply chain risks. In 2025, we revised management systems such as the Supplier Management System and the Procurement Control Procedure, refining the supplier management processes and procedures based on actual conditions and clarifying aspects like supplier review stages and scoring criteria.

Admission

We collect supplier qualification information through various channels (including quality management system, occupational health and safety management system, energy management system, and product certifications), complete the Supplier Admission Process in the OA system, and upload the relevant supplier qualification documents.

A specialised supplier evaluation team, composed of cross-departmental members from quality, safety, and procurement, conducts an internal review and scoring of the supplier�s qualification information. Suppliers deemed qualified are included in the List of Qualified Suppliers.

We establish scoring criteria based on dimensions such as production processes, technical capabilities, and product testing. We conduct regular supplier assessments, periodically update the Supplier Assessment Record Form, and classify suppliers into four tiers—A, B, C, and D—based on their scores.

Suppliers rated as tier D are deemed unqualified. Their qualification is revoked and supply is suspended, and they are required to make timely rectifications.

We conduct annual supplier evaluations and terminate cooperation with unqualified suppliers who fail to complete rectifications in a timely manner or meet other exit criteria.

Supplier Capacity Building

The Company is committed to building an open, collaborative, and trust-based supplier cooperation mechanism, upgrading the unidirectiona procurement relationship to a mutually empowering value partnership to enhance the supply chain�s comprehensive capabilities in technologica innovation, quality standards, and risk prevention and control. Through specialised exchange and training sessions covering key areas like cutting-edge product technology, quality improvement initiatives, and production processes, the Company provides analyses of quality issues and interpretations of documents and policies, significantly strengthening suppliers� overall capacity for technological innovation response, quality assurance, and compliance collaboration. During the Reporting Period, the Company conducted approximately 20 supplier exchange and training activities, working closely with suppliers to advance improvements in production and management.

Responsible Sourcing

The Company incorporates ESG factors into its supplier management. During the screening, evaluation, and cooperation processes, we focus on basic compliance in areas such as quality, business ethics, environment, health, and safety. We give priority to suppliers that have obtained third-party certifications in environmental management, occupational health and safety management, or green products, and explicitly require suppliers to use environmentally friendly packaging materials.

We stipulate suppliers� environmental and social responsibilities through contracts, agreements, clauses, and letters of commitment. In 2025, the Company refined the breach of contract clauses in the Supplier Integrity Agreement to reinforce the baseline for business ethics and compliance. We also conducted special anti-bribery interviews with 40 key suppliers to deepen our joint eforts in building a clean supply chain.

In 2025, SNS and its subsidiaries signed environmental and safety responsibility documents, such as the HSE Management Agreement, with all on-site contractors. Concurrently, we provide safety and environmental training for suppliers working on the Company�s premises and maintain records of the HSE Training for On-site Relevant Parties.

Indicators and Targets

Supply Chain Management Targets

Supplier Integrity Management

Target Setting

To conduct special interviews with 40 key suppliers in 2025 to deepen joint eforts in building a responsible supply chain.

2025 Progress

Achieved

Key Performance

In 2025, SNS reported 1,111 domestic suppliers

240 suppliers underwent on-site assessments

20 overseas suppliers

555 suppliers underwent of-site assessments

Information Security and Privacy

Information Security Management System

SNS adheres to the information security and privacy protection management philosophy of �safe, controllable, compliant, and eficient,� strictly complies with relevant laws and regula tions such as the Cybersecurity Law of the People’s Republic of China, and continuously improves its data protection and information security system across all business areas to ensure the security of information and data privacy for employees, customers, suppliers, and other stakeholders. The Information Department is uniformly responsible for the permission management of application systems and network infrastructure throughout the Company, regularly reviews and confirms authorised personnel, and strictly controls access to critica data and information.

The Company has formulated and implemented documents such as the Information System Security Management Policy, the Network Infrastructure Security Standards, and the Software Management System, building a defence line against information security risks at the institutional level. During the reporting period, the Company added the Emergency Response Plan for Network Equipment Failures and the Emergency Response Plan for Server Failures to enhance the stability of its business operations.

Information Security Management Measures

The SNS Network Security Technical Document specifies basic security policy requirements, including prohibiting cross-departmental computer access, forbidding the installation of non-work-related software, separating ofice and personal network environments, and establishing a critical data backup mechanism; it standardises the execution of business processes in all departments, provides robust and reliable information security infrastructure, and audits and supervises the efectiveness of security measures through daily inspections, cybersecurity training, and emergency drills.

Disaster Recovery Mechanism

A �Two Locations, Three Centres� disaster recovery architecture has been established to efectively respond to emergencies such as natural disasters, hardware failures, and cyberattacks, providing support for data integrity and business continuity.

Internal and External Monitoring

Internal inspections and quarterly reviews are conducted on system performance, security vulnerabilities, and data backup integrity to ensure that equipment and systems are in good operating condition and to assess the efectiveness of management processes and regulations

The Company continuously commissions third-party professional security agencies to conduct external threat monitoring and penetration testing, establishes standardised response procedures for identified risks, and ensures that all identified vulnerabilities are promptly remediated within the stipulated time frame

Emergency Drills

Quarterly specialised and annual comprehensive emergency drill plans are formulated based on the criticality of each system.

Attack and defence drills are organised annually to identify potential security vulnerabilities and propose targeted improvement recommendations.

Cybersecurity Training

Cybersecurity training is organised annually to enhance the cybersecurity awareness of all employees.

Information Security Culture

In 2025, the Company conducted several training activities focused on information security and privacy protection to enhance employees� cognitive abilities and awareness of network and data security, covering aspects from cutting-edge technical knowledge to daily operational applications. The �Huawei Cloud Certification� training covered technical content including servers, storage, networking, operating systems, and visualisation, improving employees technical and security operation and maintenance capabilities. The �Email Security� themed cybersecurity training reinforced employee security awareness through case studies.

Key Performance

In 2025, SNS had no incidents of data security incidents or customer privacy breaches.

SNS data backup and recovery drill

To continuously strengthen its data security protection system and business continuity capabilities, the Company organised two comprehensive data backup and recovery drills covering all business systems in June and December 2025. The drills simulated various risk scenarios, including external malicious attacks and sudden system failures, to thoroughly test the integrity and availability of backup data and the efectiveness of recovery procedures.

Through these practical drills, the Company not only verified the feasibility of its existing backup strategies and emergency plans but also simultaneously optimised recovery processes and enhanced the emergency response and collaborative handling capabilities of its technical team, thereby systematically strengthening its data recovery resilience and business continuity in real-world emergencies.

Digital Transformation

SNS actively responds to the digital transformation trend, proposing the �Smart SNS 123� and �155 Plan� as core strategies for its digital transformation and development, focusing on intelligent manufacturing, system integration, data governance, and AI empowerment to promote digital upgrades in all aspects of production, management, and services. The Company has introduced multiple electronic information systems in key areas such as collaborative management, R&D innovation, and intelligent manufacturing, and through the implementation of key projects like the SNS iSeal knowledge base and after-sales service system and the Sunny Seal FMS flexible manufacturing system, it continues to enhance production automation, knowledge management, and service intelligence, steadily advancing the construction of a data middle platform and key system integration to comprehensively boost operational eficiency and market competitiveness.

Community Contribution

While pursuing corporate development, SNS has always been committed to fulfilling its socia responsibilities and giving back to the community. The Company engages with the community through various means, including supporting rural revitalisation, participating in charitable activities, and promoting educational development, contributing to coordinated regiona development and social harmony.

SNS supports rural industrial development

In 2025, the Company provided targeted assistance to Ganluo County, Sichuan Province, with a total investment of over RMB 400,000, which included:

Consumption-driven aid programmes

Invested RMB 178,100 in purchasing agricultural products such as rice and oil from the Ganluo area to support farmers� income and agricultural development;

Promoting local industry

Collaborated with a garment manufacturing enterprise in Liangshan Prefecture to custom-purchase 1,200 sets of protective workwear, investing RMB 222,000 to boost the local manufacturing industry and support local employment.

SNS establishes university scholarships

The Company strengthens its industry-academia integration by jointly training postgraduate students with universities, opening up corporate internship opportunities to partner universities, and establishing scholarships.

The Company and UTEC have separately donated scholarships to the College of New Energy at China University of Petroleum (East China) and the College of Polymer Science and Engineering at Qingdao University of Science and Technology, with a cumulative donation of RMB 450,000 over the past three years.

Governance

03

SNS has built a corporate governance system with clear responsibilities and efective checks and balances, adhering to the bottom line of compliant operations and practicing ethical business conduct. The Company has established robust reporting and protection mechanisms, diligently fulfils its information disclosure obligations, communicates with all stakeholders with integrity, fairness, and transparency, protects investor rights, and shares the value of its sustainable development.

Material topics covered in this chapter

•Corporate Governance

•Business Ethics

•Compliance and Risk Management

•Stakeholder Communication

Corporate Governance

Governance Structure

SNS has established a governance structure comprising the Meeting of Shareholders, the Board of Directors and its specialised committees, and management, ensuring that responsibilities are clearly defined and functions are distinct among the organs of power, decision-making, supervision, and management. In 2025, in accordance with the requirements of laws and regulations such as the Company Law and the Guidelines for the Articles of Association of Listed Companies, the Company transitioned away from the Board of Supervisors, with the Audit Committee assuming its statutory duties, and correspondingly updated corporate governance documents to improve internal management mechanisms.

The Company�s Board of Directors has four specialised committees: the Audit Committee, the Remuneration and Appraisal Committee, the Nomination Committee, and the Strategic Development and ESG Committee, which provide professional support for scientific decision-making. Each committee strictly adheres to the Articles of Association and its own working rules, efectively fulfilling its duties and ensuring the soundness of corporate governance and the stability of operations.

Meeting of Shareholders

Audit Committee

Board of Directors

Nomination Committee

Management

Strategic Development and ESG Committee

Remuneration and Appraisal Committee

The Company�s organisational structure

SNS values the diverse backgrounds and independence of its Board of Directors members. In the director selection process, the Company comprehensively considers candidates� educational backgrounds, professional fields, capabilities, and practical experience to ensure the Nomination Committee provides fair review opinions and that the governance level makes comprehensive, scientific, and efective decisions. In 2025, the Company�s Board of Directors converted a non-independent director seat into a seat for an employee representative director, who will be elected by the employee representative congress, thereby optimising the composition of the Board of Directors.

Key Performance

As of the end of this reporting period, the Board of Directors of SNS comprised a total of 9 members,

including 1 female director, 3 independent directors, and 1 employee representative director.

During the reporting period, the Company held meetings of the Board of Directors, meetings of the Board of Supervisors, and special committee meetings.

Director Remuneration

The Board of Directors� Remuneration and Appraisal Committee is responsible for drafting remuneration plans and incentive programmes for the Company�s directors and senior management, and for supervising the implementation of these plans. During the reporting period, the Company formulated the Director and Senior Management Compensation Management System, which sets out the remuneration for directors and senior management and establishes a scientific and efective incentive and restraint mechanism.

The Company has established a performance-oriented remuneration and incentive system, formulating senior management�s remuneration plans based on their primary responsibilities, job competency, past annual compensation, and the Company�s operating performance to incentivise management to create long-term, stable value for shareholders.

Shareholder Rights Protection

SNS places great importance on the protection of shareholder rights. The Company has formulated and continuously improves policies such as the Investor Relations Management Policy and the Information Disclosure Policy to provide fundamental institutional support for safeguarding investors� rights to know and participate in decision-making, while consistently conducting transparent and eficient investor communication and information disclosure. During the reporting period, the Company formulated the Public Opinion Management Policy to specify response measures for various potential instances of false or negative public opinion, preventing inaccurate information from interfering with investor judgment and decision-making and ensuring timely, professional, and accurate communication with investors.

The Company maintains smooth and timely information exchange with small and medium-sized shareholders and institutional investors; in 2025, we held 3 Meetings of Shareholders, convened 2 performance briefings, organised multiple research activities, and responded to 235 questions on the �Easy Interaction� investor relations platform, achieving a 100% response rate. Concurrently, the Company participated in 15 training sessions organised by entities such as the Sichuan Securities Regulatory Bureau, the Shenzhen Stock Exchange, the China Association for Public Companies, and the Sichuan Association for Public Companies to enhance its investor relations management capabilities.

Diverse communication platforms

The Company communicates with various types of investors through multiple channels including Meetings of Shareholders, institutional research, the �Easy Interaction� platform and an investor hotline. Dedicated personnel are responsible for the investor hotline and email to ensure that questions from investors, including small and medium-sized shareholders, receive professional and timely responses.

Standardised information disclosure

All publicly disclosed information is strictly governed by internal policies to ensure it is detailed, truthful, complete, and accurate

Investor rights protection

Key Performance

In 2025,

SNS received an A rating in the information disclosure evaluation among ChiNext-listed Companies of the Shenzhen Stock Exchange for the sixth consecutive year.

Business Ethics

Business Ethics Management System

SNS adheres to operating with integrity and fair competition. Through a combination of institutional regulations, process controls, cultural promotion, and company-wide oversight, it ensures that ethical principles are integrated into all business activities and employee conduct, prohibiting any form of corruption, bribery, monopolistic behaviour, or improper transfer of benefits.

The Company has formulated the Employee Integrity System, which clarifies the basic requirements and code of conduct for employees to work with integrity, and requires all employees to sign an Integrity Commitment Letter, pledging to conduct fair and transparent business activities based on four principles: �complying with laws and regulations, fulfilling duties responsibly, maintaining integrity and self-discipline, and cultivating personal virtue�, and to prohibit and resolutely oppose any form of corruption, such as bribery and fraud. In key business areas such as procurement, sales, and partnerships, the Company deeply embeds the requirements of honesty and integrity throughout the entire business chain by signing policy documents like the Procurement Integrity Agreement and the Procurement Integrity Commitment Letter, continuously strengthening the Company�s ethical and compliance defences

Integrity Risk Prevention and Control

The Company conducts an annual, company-wide special assessment of integrity risks. By examining multiple dimensions — including job responsibilities, business processes, institutiona mechanisms, the external environment, and historical cases — through methods such as departmental self-inspections, interviews, and data analysis, it systematically identifies potential risk points and corresponding control responsibilities for each position and business segment, resulting in a dynamic Integrity Risk Prevention and Control List. The Company requires personnel in important, critical, and sensitive positions to sign and acknowledge the Integrity Risk Prevention and Control List, understand potential risks and key control measures, and thereby enhance their risk awareness and self-discipline.

In 2025, focusing on key areas such as procurement, sales, and project cooperation, the Company identified two Level-1 integrity risk positions, seven Level-2 integrity risk positions, and twenty-six Level-3 integrity risk positions, and implemented control measures including refining institutional constraints, strengthening process reviews, signing special commitments, and conducting targeted interviews and training, placing personnel in these positions under key supervision and education

To prevent integrity risks in the procurement process, the Company has established a dual-constraint mechanism with internal and external coordination. On one hand, the Company signs a Procurement Integrity Agreement with key suppliers, which explicitly prohibits improper practices such as commercial bribery. The Supervision and Audit Department also organises annua integrity-themed meetings for new major suppliers to emphasize the Company�s procurement code of conduct. On the other hand, the Company requires all procurement personnel to sign a Procurement Integrity Commitment Letter to regulate and supervise procurement activities and promote fair and honest business transactions. In 2025, the Company conducted separate integrity interviews with procurement staf and suppliers to strengthen its integrity promotion eforts.

Business Ethics Training

Through a combination of regular publicity and education, case studies, and institutional constraints, the Company works to internalize the ethical principle of integrity and self-discipline from an external regulation into a conscious value shared by al employees, ensuring it is genuinely followed in daily decision-making and business operations.

SNS deepens warning education to fortify its integrity culture

In October 2025, in accordance with its annual learning plan, SNS organised a special educational session for its managers and employees to watch warning education films, integrating integrity education into routine learning management to advance the construction of a corporate integrity culture. This session used typical cases as warnings, analysing typical problems of disciplinary and regulatory violations, to help managers and employees deeply understand the importance and necessity of strictly observing discipline and rules, and to guide them in establishing a fine work style of being pragmatic, realistic, and working with integrity, thereby solidifying the ideological foundation of integrity for the Company�s high-quality development.

Whistleblower Protection Mechanism

The Company has established accessible reporting channels and a supervisory mechanism with internal and external coordination, encouraging employees, suppliers, and other partners to report improper business conduct, either by name or anonymously, through various channels such as the OA system, a dedicated reporting email, and executive reception days. All report are handled centrally by the Supervision and Audit Department, which completes its investigation, verification, and feedback within 5 working days of receiving a report. The Company adheres to the principles of objectivity, fairness, and suficien evidence, and handles verified reports in accordance with laws and regulations.

The Company places high importance on protecting the rights of whistleblowers and strictly enforces a confidentiality policy regarding their identities and the content of their reports. For reports verified to be true, the Company will provide corresponding rewards based on the circumstances and impact, efectively protecting the legal rights of whistleblowers and encouraging all personnel to participate in integrity oversight. As of the end of the reporting period, the Company had not received any reports or complaints regarding business ethics, nor had any negative incidents related to business ethics occurred.

Whistleblowing Emai

Supervision and Audit Department: ics@sns-China.com

Disciplinary inspection: liuxiaoqiang@sns-China.com

Key Performance

In 2025, SNS

Organised 12 integrity warning education activities, special anti-commercial bribery training sessions, and compliance culture presentations

Achieved a 100% signing rate for the employee Integrity Commitment Letter

Compliance and Risk Control

SNS is committed to lawful and compliant operations. It continuously builds and improves a comprehensive risk management system to systematically identify, assess, and respond to various potential risks. By strengthening internal controls, the Company solidifies its foundation for development, safeguarding its sustainable and high-quality development

Governance

The Company adheres to the core principles of �business-led, supervised and balanced, and full participation� to build a compliance management mechanism with clear responsibilities and eficient operation, deeply embedding compliance requirements and risk control into all operational segments, including research and development, procurement, production, and sales, and implementing efective oversight and checks and balances on key processes and decisions through independent audit, supervision, and risk management functions, thereby efectively enhancing its level of compliant operation and risk resilience

Division of Responsibilities

Each business department is responsible for implementing business standards and conducting preliminary identification and control of potential risks in daily business processes.

The Supervision and Audit Department tracks, oversees, and inspects the implementation by business departments to ensure all control measures are in place, and conducts special audits and risk assessments on key links and critical processes.

Company leadership and department heads fulfil overall management and supervision responsibilities, conducting oversight and inspections of key orders and critical processes.

Control Model

Focusing on key business orders and critical process links, the Company has established a dynamic risk prevention and control mechanism primarily based on �pre-event prevention and in-process control�, supplemented by �post-event response�.

Supervision and Audit

The Supervision and Audit Department regularly conducts company-wide internal audits to systematically check the implementation of compliance and internal controls.

Each subsidiary undergoes an internal audit biannually, where independent supervision and inspection promptly identify issues and urge rectification.

The Company is committed to continuously improving its compliance and risk management system, promoting the concept of compliant operations and building a culture of compliance across the entire organi sation. Compliance requirements are treated as a necessary agenda item for regular work meetings, and employee compliance awareness is strengthened through consistent emphasis and communication. The Company�s Supervision and Audit Department regularly conducts internal audits to review the Company�s overall compliance status, driving the integration of a compliance culture into daily management and providing a solid guarantee for sustainable operations.

Impact, Risk, and Opportunity Management

In accordance with departmental systems and procedural documents such as the Integrated Management Manual, the Company�s various functional departments regularly conduct risk identification, measure assessment, and execution monitoring in key areas including environment, quality, health, and safety, ensuring that risks are controlled and processes are optimised at every stage.

The Company has established a dedicated internal audit team, with team members and department heads jointly participating in audits. They use methods such as face-to-face interviews, record sampling, and document reviews to monitor the implementation of risk response measures, evaluate their efectiveness, and enhance the eficacy and responsiveness of the internal control system. In 2025, the Company conducted special internal audits for functional departments such as safety, R&D, procurement, and information management, as well as for each subsidiary. The audits covered aspects including system implementation, process compliance, and risk management, aiming to promptl identify risk points and propose suggestions for improvement. During the reporting period, the Company did not identify any material risks or compliance violations.

In November 2025, the SNS internal audit team visited UTEC to conduct a special supervisory audit and compliance exchange. This audit closely followed the main theme of �identifying problems, clarifying direction, and promoting rectification�, proceeding systematically through three key stages: report issuance, rectification recommendations, and management discussions. It also innovatively adopted an integrated �supervision & audit + training� model to strategically guide UTEC�s operational management.

Through this supervisory audit and exchange, UTEC strictly implemented all rectification recommendations upgrading its internal management to be more refined and standardised. This initiative not only helped UTEC take a solid step forward in standardised management and compliant operations but also provided strong support for the development of SNS�s overall risk prevention and control system

Indicators and Targets

Key Performance

In 2025, SNS held

12 internal audit communication meetings and compliance culture training sessions.

ESG Performance Indicators5

Economic Performance

Governance Performance6

Environmental Performance8

5For data not otherwise specified, the statistical scope is the Company’s consolidated financial statement scope 6The statistical scope covers SNS and its domestic controlled subsidiaries, excluding KS GmbH. 7The statistical scope includes the number of suppliers with whom the Company conducted awareness campaigns through supplier integrity agreements 8The statistical scope for 2023 and 2024 data covers SNS and its domestic controlled subsidiaries, excluding KS GmbH. 9Due to a change in the statistical scope of Sunny Seal, the data for recycled water consumption and the recycled wate consumption ratio for 2023 and 2024 have been adjusted accordingly 10Due to a change in the statistical scope of Sunny Seal, the industrial wastewater discharge data for 2023 and 2024 have been adjusted accordingly.

11The statistical subjects are primarily recycled iron filings 12The standard coal conversion factor used refers to the General Principles for Calculation of Comprehensive Energy Consump tion (GB/T 2589-2020) 13Direct emissions (Scope 1) refer to greenhouse gas emissions generated from the consumption of natural gas, diesel, and gasoline, while indirect emissions (Scope 2) refer to greenhouse gas emissions generated from the consumption of purchased electricity. The selection of greenhouse gas emission factors is based on the relevant requirements of technical document such as the 2006 IPCC Guidelines for National Greenhouse Gas Inventories (2019 Refinement), the national average grid emission factor of 0.5306 kgCO₂/kWh for 2023 as stated in the Announcement on the Release of the 2023 Power Sector Carbo Dioxide Emission Factors issued by the Ministry of Ecology and Environment and the National Bureau of Statistics, and th direct carbon dioxide emission coefficient for electricity consumption in 2024 published by the German Federal Environmen Agency (UBA).

Social Performance14

14The statistical scope for the 2023 and 2024 data is consistent with the Company’s 2024 Environmental, Social and Governanc Report. 15The statistical scope for 2025 data covers SNS and its domestic controlled subsidiaries, excluding KS GmbH. 16Lost Time Injury Frequency Rate (LTIFR) = (Number of lost time injuries / Total hours worked) x 1,000,000

17Fatality Rate (FAR) = (Number of employee fatalities / Total hours worked) x 1,000,000 18The statistical methodology for the 2023 data was inconsistent; therefore, it has not been disclosed. 19The statistical scope for 2025 data covers SNS and its domestic controlled subsidiaries, excluding KS GmbH. 20In 2025, the Company optimised statistical methodology for suppliers (by eliminating duplicate supplier counts); therefore, supplier data for 2023 and 2024 has been adjusted accordingly 21Same as footnote 19. 22Same as footnote 19. 23Same as footnote 19. 24Same as footnote 19.

Indicator Index Table

Index to the Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial Implementation)

Chapter III: Environmental Information Disclosure

Chapter Ⅳ: Social Information Disclosure

Chapter V: Disclosure of Information on Sustainability-Related Governance

Reader Feedback

Thank you for reading the 2025 SNS Environmental, Social and Governance (ESG) Report. To provide you and other stakeholders with more valuable information and to help SNS enhance ESG management capabilities and standards, the Company sincerely welcomes your comments and suggestions on the report. Please provide your feedback through the following channels:

Address: No. 8 Wuke West 4th Road, Wuhou District, Chengdu, Sichuan Province Postcode: 610045

Telephone: 028-85542909

Email: ir@sns-china.com

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