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As follows: The caprolactam and related facilities of Shandong Hualu Hengsheng Chemical Co., Ltd. (hereinafter referred to as the “Company”)’s new amide and nylon materials project (with an annual production capacity of 300,000 tons) have completed the process flow, are capable of producing qualified products, and have entered the trial production stage. Production facilities such as those for 200,000 tons of nylon 6 chips are currently under construction, with commissioning expected in the first half of next year. I. Approval Status of the Project 1. On March 15, 2019, the company held the fourth meeting of its seventh board of directors, during which the resolution regarding the company’s project to produce amide and nylon new materials on a scale of 300,000 tons per year was approved. For more details, please refer to the announcement published by the company on the Shanghai Stock Exchange website (www.sse.com.cn) as well as in various media, under the title “Hualu Hengsheng’s Investment in the Production of Amide and Nylon New Materials (300,000 tons per year)” (Announcement No.: Lin2019-011). 2. On May 15, 2019, the company held its annual general meeting for 2018, during which the resolution regarding the company’s new amide and nylon material project (with an annual production capacity of 300,000 tons) was approved. II. Basic Information on the Project: The amide and nylon new materials project (with an annual production capacity of 300,000 tons) uses benzene and hydrogen as raw materials, and employs advanced processing technologies. It involves the construction of units for producing cyclohexanol, **, and caprolactam, along with supporting facilities for producing hydrogen peroxide and sulfuric acid. According to the feasibility study report, the total investment for this project is estimated at 4.98 billion yuan, with the construction funds to be covered by the company’s own capital and bank loans. III. Impact of the project on the company: Once the caprolactam production facility and related equipment are in operation, it will be possible to produce 300,000 tons of caprolactam and 480,000 tons of ammonium sulfate per year. This will help strengthen the company’s chemical materials business segment, improve the product portfolio, and enhance the company’s profitability.