CHENGZHI CO., LTD. Stock Code: 000990 Stock Abbreviation: CHENGZHI CO., LTD. Announcement No.: 2025-038 CHENGZHI CO., LTD. Announcement on Provision for Asset Impairment for the First Half of 2025 The Company and all members of the Board of Directors guarantee that the information disclosed is true, accurate, and complete, and that there are no false records, misleading statements, or significant omissions. Chengzhi Co., Ltd. (hereinafter referred to as the "Company") deliberated and approved the "Proposal on the Company's Provision for Asset Impairment for the First Half of 2025" at the 13th meeting of the 8th Board of Directors and the 13th meeting of the 8th Supervisory Board held on August 6, 2025. The aforementioned matter does not require submission to the Company's general meeting of shareholders for deliberation. The details of the Company's provision for asset impairment for the first half of 2025 are hereby announced as follows: I. Overview of Asset Impairment Loss for This Period In accordance with the requirements of the "Accounting Standards for Business Enterprises" and the "Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange," to more truthfully and accurately reflect the Company's asset status and financial status as of June 30, 2025, the Company conducted a comprehensive inventory of various assets. Based on the principle of prudence, and at the proposal of the Company's management, the specific details of the provision for impairment of certain assets are as follows: Unit: RMB 10,000 Item Provision for Impairment of Receivables Provision for Impairment of Assets Total (I) Receivables Of which: Accounts Receivable -722.73 -782.42 -722.73 -782.42 Other Receivables 59.69 59.69 (II) Inventory -3.91 -3.91 Total -722.73 -3.91 -726.64 (I) Provision for Impairment of Receivables During the reporting period, the Company provided for an impairment loss on receivables amounting to RMB 722.73 million. Of this, RMB 782.42 million was for accounts receivable, mainly due to changes in the aging structure. A reversal of RMB 59.69 million for impairment loss on other receivables was recognized, mainly due to the recovery of part of the land acquisition funds from Cangzhou Chengzhi Yonghua Technology Co., Ltd.
- As of the end of the reporting period, the Company's accounts receivable and provision for bad debts are as follows: Unit: RMB 10,000 Category Accounts Receivable Balance Provision for Bad Debts Provision Ratio (%) Book Value Accounts Receivable for Individual Provision 31,891.40 31,397.25 98.45 494.15 Accounts Receivable for Group Provision 128,354.81 20,524.69 15.99 107,830.12 Total 160,246.21 51,921.94 32.40 108,324.27
- As of the end of the reporting period, the Company's other receivables and provision for bad debts are as follows: Unit: RMB 10,000 Category Accounts Receivable Balance Provision for Bad Debts Provision Ratio (%) Book Value Amounts for Individual Provision 25,833.47 18,440.76 71.38 7,392.71 Amounts for Group Provision 21,540.38 16,118.21 74.83 5,422.17 Total 47,373.85 34,558.97 72.95 12,814.88 (II) Provision for Inventory Price Decline During the reporting period, the Company recognized an impairment loss on inventory of RMB 3.91 million, mainly due to the impairment of some inventory goods.
- Method for Provision for Inventory Price Decline: The Company provides for inventory price decline based on individual inventory items (or categories). As of the balance sheet date, inventory is measured at the lower of cost and net realizable value. If the inventory cost is higher than its net realizable value, a provision for inventory price decline is recognized and included in current profit or loss. If the factors causing the previous reduction in inventory value have disappeared, the reduced amount is reversed, and the reversal is made within the previously recognized provision for inventory price decline, with the reversed amount included in current profit or loss.
- Specifics of Inventory Impairment Loss Recognized in This Reporting Period: During the reporting period, the inventory impairment loss recognized by the Company was mainly due to the impairment provision for returned LCD blackboard products from Qingdao Chengzhi Optoelectronics Technology Co., Ltd. II. Impact of Impairment Loss During the Reporting Period on the Company's Financial Position The Company recognized a total asset impairment loss of RMB 726.64 million during the reporting period. The impairment loss events reduced the net profit attributable to shareholders of the parent company by RMB 408.55 million and reduced the owner's equity attributable to shareholders of the parent company by RMB 408.55 million. III. Statement on the Reasonableness of the Company's Provision for Asset Impairment by the Board of Directors The Company's provision for asset impairment during the reporting period was made in accordance with the principle of accounting prudence, in compliance with the "Accounting Standards for Business Enterprises" and relevant regulations and the Company's actual situation. This helps provide investors with more truthful and reliable accounting information and more fairly reflects the Company's assets and financial position. IV. Opinion of the Supervisory Board The Supervisory Board is of the opinion that the Company's provision for impairment this time is based on the principle of prudence, complies with the "Accounting Standards for Business Enterprises" and the Company's relevant accounting policies, and is consistent with the Company's actual situation. It more fairly reflects the Company's financial position and asset value, and does not harm the interests of the Company and all shareholders, especially small shareholders. The review procedures for this proposal are legal and compliant, and the Supervisory Board agrees to the provision for asset impairment this time. V. Opinion of the Audit Committee The Audit Committee is of the opinion that, in accordance with the "Accounting Standards for Business Enterprises," the "Guiding Opinions on the Regulation of Listed Companies on the Main Board of the Shenzhen Stock Exchange No. 1," and other relevant regulations, to more truthfully and accurately reflect the asset value and financial position of the Company in the first half of 2025, the Company conducted a comprehensive inventory of all assets within the scope of consolidation. Based on the principle of prudence, it agrees to the provision for asset impairment totaling RMB 726.64 million for the first half of 2025. VI. Documents for Reference
- Resolution of the 13th meeting of the 8th Board of Directors;
- Resolution of the 13th meeting of the 8th Supervisory Board;
- Resolution of the 3rd meeting of the Audit Committee in 2025. Hereby announced. CHENGZHI CO., LTD. Board of Directors August 8, 2025