[Setting Sail · Shandong Energy 2025] Interpretation of Key Terms from the Annual Work Conference II | Five Relationships

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The 2025 Work Conference of Shandong Energy Group emphasized that to successfully achieve the “three major goals”, it is necessary to employ appropriate methods and approaches, do a good job in overall coordination, with a focus on coordinating the “five key relationships”. “The “five relationships” are as follows: First, the relationship between coordinating overall interests and local interests. Adhere to a systemic approach; with the maximization of the Group’s interests as the fundamental principle, tailor development strategies for each enterprise to enhance the quality and efficiency of its development. Second, it is necessary to balance the development of core businesses with the streamlining of non-core businesses. Focusing on core responsibilities and main businesses is a clear guiding principle for the reform of state-owned enterprises. Investments must be made in strict accordance with the “Measures for the Management of Core Responsibilities and Main Businesses of State-Owned Enterprises in Shandong Province” and the “Measures for the Supervision and Administration of Investments by State-Owned Enterprises”. Third, it is necessary to balance the relationship between revitalizing existing resources and fostering new growth. It is necessary to organically combine optimizing new increments with revitalizing existing resources, adhere to a path of connotative development, and improve the efficiency of resource allocation ； It is necessary to foster new business forms and models to enhance overall strength and asset quality. Fourth, coordinate the relationship between capital investment and return on investment. For existing projects with high quality, great potential, and strong profitability, a series of technological upgrade projects will be carried out, including capacity expansion, value chain extension and supplementation, and equipment upgrades ； For newly proposed projects, strengthen the justification regarding the necessity and feasibility of investment, so as to maximize the effectiveness of limited funds. Fifth, coordinate the relationship between capital operations and the real economy. Support equity and stock investments, while reducing debt and cash investments. Enhance the operational efficiency of the financial investment segment to achieve profitable revenue and cash-flow-positive profits.