In relation to our e-ink terminal device project, we did not adhere to the “Three Simultaneities” requirement for safe production.
Business · 第 190 页
based on (i) the confirmation from the relevant authority that in the absence of complaints, the authority would not proactively initiate investigations or impose administrative penalties and (ii) as of the Latest Practicable Date, we have not been subject to any administrative penalties in relation to work safety matters
Business · 第 190 页
our PRC Legal Advisor is of the view that, under the premise that the existing policies and regulations, as well as the current regulatory situation and practical practices of the competent safety production department, have not changed and there are no complaints, the risk of material administrative penalty in connection with it is low.
On April 20, 2023, the local emergency management bureau imposed an administrative penalty of RMB10,000 on the subsidiary for its failure to install safety warning signs in one of the hydrochloric acid tank areas within its production zone, in violation of Article 35 of the Work Safety Law of the PRC (2021 Edition) (the "2023 Incident").
Business · 第 214 页
Our subsidiary has fulfilled these administrative penalties in full in accordance with the requirements set forth in the penalty decisions, and took the following remedial measures to improve its compliance with work safety requirements, including (i) installing safety warning signs in relevant areas, (ii) accelerating the construction of the fire pump room (which was completed in December 2025), and (iii) engaging a qualified third-party service provider to inspect its fire protection facilities, who confirmed that based on inspection, the automatic sprinkler system had met applicable standards.
Business · 第 214 页
As advised by our PRC Legal Advisor, the administrative penalties imposed on the two incidents described above were not material in nature under the applicable laws and regulations.
On August 15, 2025, the local fire and rescue authority imposed an administrative penalty of RMB31,000 on the subsidiary for its failure to maintain fire protection facilities, including fire hydrants without water supply in the first and second floors of its quality inspection center, in good working order, in violation of Article 16 of the Fire Protection Law of the PRC (the "2025 Incident").
Business · 第 214 页
Our subsidiary has fulfilled these administrative penalties in full in accordance with the requirements set forth in the penalty decisions, and took the following remedial measures to improve its compliance with work safety requirements, including (i) installing safety warning signs in relevant areas, (ii) accelerating the construction of the fire pump room (which was completed in December 2025), and (iii) engaging a qualified third-party service provider to inspect its fire protection facilities, who confirmed that based on inspection, the automatic sprinkler system had met applicable standards.
Business · 第 214 页
As advised by our PRC Legal Advisor, the administrative penalties imposed on the two incidents described above were not material in nature under the applicable laws and regulations.
In light of these, our PRC Legal Advisor is of the view that we have complied in all material respects with the PRC laws and regulations on production and fire safety as of the Latest Practicable Date.
The Emergency Management Bureau of Tongguan District, Tongling City fined Anhui Hailiang RMB30,000 in March 2025 for deficiencies in the cooling water system of a shaft furnace.