Securities Code: 001312 Securities Abbreviation: Fuen Shares Announcement No.: 2026-009 Hangzhou Fuen Co., Ltd. Announcement on Using Raised Funds to Provide Loans to Wholly-Owned Subsidiary for Implementation of Investment Projects 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 major omissions. Hangzhou Fuen Co., Ltd. (hereinafter referred to as the "Company") held the 18th meeting of the First Board of Directors on April 27, 2026, and deliberated and passed the "Proposal on Using Raised Funds to Provide Loans to Wholly-Owned Subsidiary for Implementation of Investment Projects." Based on the actual situation of the Company's investment projects and future development plans, and considering that the wholly-owned subsidiary Hangzhou Furen New Material Co., Ltd. (hereinafter referred to as "Furen New Material") is the implementing entity for the Company's investment project "High-end Eco-friendly Recycled Material Research Institute and Green Intelligent Manufacturing Project," the Company intends to provide an interest-free loan of no more than RMB 35,000.00 million from the raised funds to Furen New Material to implement the investment project. The loan period will be from the date of actual borrowing until the completion of the investment project. The funds can be used in a revolving manner and can be repaid in advance. Upon maturity, if neither party has any objection, the loan can be automatically extended. The progress of the loan will be advanced according to the actual needs of the investment project. The details are as follows: I. Basic Situation of Raised Funds As approved by the China Securities Regulatory Commission's "Approval on the Registration of Hangzhou Fuen Co., Ltd.'s Initial Public Offering of Shares" (Zhengjian Permit [2026] No. 70) and agreed by the Shenzhen Stock Exchange, the Company issued 58,333,334 shares of RMB common stock (A shares) at an issuance price of RMB 18.38 per share. The total amount of raised funds from this issuance was RMB 107,216.67 million. After deducting issuance expenses of RMB 8,953.10 million (excluding value-added tax), the net amount of raised funds is RMB 98,263.57 million. The aforementioned raised funds have been transferred to the Company's designated account. Tianjian Certified Public Accountants (Special General Partnership) has audited the receipt of the raised funds for this issuance on April 16, 2026, and issued the Tianjian Audit Certificate [2026] No. 113. The Company manages the raised funds through a special account in accordance with regulations. Upon receipt of the funds, they have all been deposited into the special account for raised funds. The Company, its subsidiaries, the sponsor CITIC Securities Co., Ltd., and the commercial banks holding the raised funds have signed a custody agreement for the special account of raised funds. II. Situation of Raised Funds Investment Projects Given that the net amount of raised funds from the Company's initial public offering of shares is lower than the total amount of raised funds intended to be invested in the "Hangzhou Fuen Co., Ltd. Initial Public Offering of Shares and Listing on the Main Board Prospectus," in order to ensure the smooth implementation of the raised funds investment projects (hereinafter referred to as "investment projects") and improve the efficiency of fund utilization, considering the Company's actual situation, and without changing the intended use of the raised funds, it is proposed to adjust the amount of raised funds to be used for each investment project. The adjusted plan for the use of raised funds is as follows:
| No. | Project Name | Implementing Entity | Total Investment | Planned Investment | Adjusted Investment |
|---|---|---|---|---|---|
| 1 | Xiaozheng Industry Development (2023) No. 82 Recycled Eco-friendly Woolen Yarn Fabric Integrated Project | Hangzhou Fuen Co., Ltd. | 81,649.00 | 80,000.00 | 63,263.57 |
| 2 | High-end Eco-friendly Recycled Material Research Institute and Green Intelligent Manufacturing Project | Hangzhou Furen New Material Co., Ltd. | 45,618.00 | 45,000.00 | 35,000.00 |
| Total | 127,267.00 | 125,000.00 | 98,263.57 | ||
| III. Situation of Using Raised Funds to Provide Loans to Wholly-Owned Subsidiary | |||||
| Based on the actual situation of the Company's investment projects and future development plans, and considering that the wholly-owned subsidiary Furen New Material is the implementing entity for the Company's investment project "High-end Eco-friendly Recycled Material Research Institute and Green Intelligent Manufacturing Project," the Company intends to provide an interest-free loan of no more than RMB 35,000.00 million from the raised funds to Furen New Material to implement the investment project. The loan period will be from the date of actual borrowing until the completion of the investment project. The funds can be used in a revolving manner and can be repaid in advance. Upon maturity, if neither party has any objection, the loan can be automatically extended. The progress of the loan will be advanced according to the actual needs of the investment project. The Company will sign a "Loan Agreement" with Furen New Material regarding the specific matters of the loan and authorize the Company's management to implement the specific matters of the loan within the aforementioned limit. | |||||
| IV. Basic Information of the Loan Recipient | |||||
| (I) Basic Information of Furen New Material | |||||
| Company Name: Hangzhou Furen New Material Co., Ltd. | |||||
| Unified Social Credit Code: 91330109MAECBPPC9A | |||||
| Establishment Date: March 12, 2025 | |||||
| Registered Capital: RMB 5,000 million | |||||
| Paid-in Capital: RMB 5,000 million | |||||
| Legal Representative: Wang Xu Lin | |||||
| Registered Address and Principal Place of Business: Building 18, Fuen Road, Yinan Village, Jingjiang Street, Xiaoshan District, Hangzhou City, Zhejiang Province, China | |||||
| Business Scope: General items: New material technology research and development; textile and apparel processing; import and export of goods; knitting or crochet knitting and product manufacturing; knitting and apparel sales; knitting and apparel sales; yarn processing; household textile product manufacturing; industrial textile product manufacturing; industrial textile product manufacturing; fabric printing and dyeing; garment manufacturing; Internet sales (excluding sales of goods requiring licenses); domestic trade agency; wholesale of clothing and accessories; apparel manufacturing; apparel research and development; bio-based material manufacturing; bio-based material sales; leasing services (excluding licensed leasing services); sales of textile testing instruments; sales of textile machinery; technology import and export; import and export agency; sales of chemical products (excluding licensed chemical products); sales of specialty chemical products (excluding hazardous chemicals); sales agency (business activities can be independently carried out according to law with the business license, except for projects subject to approval according to law). | |||||
| Main Business and Relationship with the Issuer's Main Business: Primarily engaged in expanding knitted fabric related businesses. | |||||
| Shareholder Structure and Shareholding Ratio: The Company holds 100% of the shares. | |||||
| (II) Main Financial Data of Furen New Material | |||||
| Unit: RMB million | |||||
| Item | 2025/12/31 | 2025 Fiscal Year | |||
| -------------- | ------------ | ------------------ | |||
| Total Assets | 5,219.38 | ||||
| Net Assets | 4,918.84 | ||||
| Operating Revenue | - | ||||
| Net Profit | -81.16 | ||||
| Note: The above data has been audited. | |||||
| V. Impact of This Loan on the Company | |||||
| The purpose of the Company using raised funds to provide a loan to its wholly-owned subsidiary Furen New Material is to implement the investment project "High-end Eco-friendly Recycled Material Research Institute and Green Intelligent Manufacturing Project." This loan will be beneficial for the smooth implementation of the investment project, the improvement of raised fund utilization efficiency, and the full realization of benefits. It will help enhance the Company's profitability, is in line with the raised fund utilization plan and the Company's development strategy and long-term plan, and is in the interest of the Company and all shareholders. It will not have an adverse impact on the Company's normal production and operation. | |||||
| VI. Use and Management of Raised Funds After This Loan | |||||
| To ensure the safe use of raised funds, the Company has opened a special account for raised funds and signed a custody agreement with the sponsor and the commercial banks holding the raised funds. This special account for raised funds is exclusively for the storage and use of the investment project "High-end Eco-friendly Recycled Material Research Institute and Green Intelligent Manufacturing Project" from the Company's initial public offering of shares and listing, and shall not be used for other purposes. | |||||
| To ensure the safe use of raised funds, the raised funds for this loan will be deposited in the special account for raised funds. The Company and its wholly-owned subsidiary Furen New Material will strictly comply with the requirements of the China Securities Regulatory Commission and the Shenzhen Stock Exchange to regulate the use of raised funds, ensuring the legality and effectiveness of their use. | |||||
| VII. Review Procedures and Related Opinions | |||||
| (I) Opinion of the Board of Directors' Audit Committee | |||||
| On April 22, 2026, the fifth meeting of the First Board of Directors' Audit Committee was held, and the "Proposal on Using Raised Funds to Provide Loans to Wholly-Owned Subsidiary for Implementation of Investment Projects" was deliberated and passed. After review, the Audit Committee believes that the Company's use of raised funds to provide loans to its wholly-owned subsidiary is based on the construction needs of the investment project, which is conducive to ensuring the smooth implementation of the investment project, conforms to the raised fund utilization plan, does not involve disguised changes in the use of raised funds, and is in line with the Company's long-term plan and development strategy. It is agreed that this matter be submitted to the Company's Board of Directors for deliberation. | |||||
| (II) Opinion of the Board of Directors | |||||
| On April 27, 2026, the 18th meeting of the First Board of Directors was held, and the "Proposal on Using Raised Funds to Provide Loans to Wholly-Owned Subsidiary for Implementation of Investment Projects" was deliberated and passed. After deliberation, based on the actual situation of the Company's investment projects and future development plans, and considering that the wholly-owned subsidiary Furen New Material is the implementing entity for the Company's investment project "High-end Eco-friendly Recycled Material Research Institute and Green Intelligent Manufacturing Project," the Company intends to provide an interest-free loan of no more than RMB 35,000.00 million from the raised funds to Furen New Material to implement the investment project. The loan period will be from the date of actual borrowing until the completion of the investment project. The funds can be used in a revolving manner and can be repaid in advance. Upon maturity, if neither party has any objection, the loan can be automatically extended. The progress of the loan will be advanced according to the actual needs of the investment project. The Company will sign a "Loan Agreement" with Furen New Material regarding the specific matters of the loan and authorize the Company's management to implement the specific matters of the loan within the aforementioned limit. | |||||
| VIII. Sponsor's Verification Opinion | |||||
| After verification, the sponsor believes that Hangzhou Fuen Co., Ltd.'s use of raised funds to provide loans to its wholly-owned subsidiary for the implementation of investment projects has undergone the necessary decision-making procedures, and the relevant proposal has been deliberated and passed by the Board of Directors. This is in compliance with the "Regulatory Rules for the Management of Raised Funds of Listed Companies" and the "Shenzhen Stock Exchange Stock Listing Rules No. 1 - Operation of Main Board Listed Companies" and other relevant laws, regulations, and normative documents. There is no disguised change in the use of raised funds or infringement of shareholder interests. | |||||
| In summary, the sponsor has no objection to the Company's use of raised funds to provide loans to its wholly-owned subsidiary for the implementation of investment projects. | |||||
| IX. Documents for Reference |
- Resolution of the 18th meeting of the First Board of Directors;
- Fifth meeting of the First Board of Directors' Audit Committee;
- Verification Opinion of CITIC Securities Co., Ltd. on Hangzhou Fuen Co., Ltd.'s Use of Raised Funds to Provide Loans to Wholly-Owned Subsidiary for Implementation of Investment Projects. Hereby announced. Board of Directors of Hangzhou Fuen Co., Ltd. April 29, 2026