Explanation from the Board of Directors on the Dilution of Immediate Returns and Compensation Measures for This Transaction
Tianshui Huati Technology Co., Ltd. (hereinafter referred to as "the Company" or "the Listed Company") intends to acquire 100% of Huayi Microelectronics Co., Ltd. (hereinafter referred to as "the Target Company") held by 27 counterparties, including Tianshui Huayi Electronics Group Co., Ltd., Xi'an Houyi Investment Management Partnership (Limited Partnership), and Xi'an Xintianyu Platinum Enterprise Management Partnership (Limited Partnership), through the issuance of shares and cash payment, and to raise supporting funds (hereinafter referred to as "this transaction").
According to relevant regulations such as the "Opinions of the General Office of the State Council on Further Strengthening the Protection of the Legal Rights and Interests of Small and Medium Investors in the Capital Market" (Guo Ban Fa [2013] No. 110), "Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market" (Guo Fa [2014] No. 17), and "Guidance on Matters Related to the Dilution of Immediate Returns in Initial Public Offerings, Refinancing, and Major Asset Restructuring" (CSRC Announcement [2015] No. 31), the Company has conducted a prudent analysis of the impact of this transaction on its immediate returns and has formulated compensation measures, as detailed below:
1. Impact of This Transaction on the Company's Immediate Returns
This transaction will help the listed company and the target company maximize the value of customer resources, as both have related and synergistic customer structures, meeting customers' comprehensive needs and providing more comprehensive products and services, thereby enhancing customer loyalty. Through this transaction, the listed company will acquire high-quality target assets, which will help optimize its industrial layout and improve its core competitiveness. The comparison of the main financial data and indicators of the listed company before and after the transaction is as follows:
| Project | Before Transaction (as of September 30, 2025) | After Transaction (Pro Forma) | Before Transaction (as of December 31, 2024) | After Transaction (Pro Forma) |
|---|---|---|---|---|
| Total Assets | 4,295,970.58 | 4,542,125.76 | 3,823,594.86 | 4,043,535.99 |
| Total Liabilities | 2,178,140.36 | 2,347,499.91 | 1,792,157.62 | 1,940,844.97 |
| Equity Attributable to Shareholders of the Parent Company | 1,751,947.62 | 1,828,834.71 | 1,665,859.47 | 1,737,113.26 |
| Operating Revenue | 1,237,978.95 | 1,357,904.74 | 1,446,161.71 | 1,581,175.82 |
| Total Profit | 63,024.60 | 68,091.31 | 69,205.60 | 70,112.01 |
| Net Profit Attributable to Shareholders of the Parent Company | 54,263.70 | 59,528.66 | 61,625.10 | 63,170.49 |
| Project | Before Transaction (as of September 30, 2025) | After Transaction (Pro Forma) | Before Transaction (as of December 31, 2024) | After Transaction (Pro Forma) |
|---|---|---|---|---|
| Gross Margin (%) | 12.34 | 12.56 | 12.07 | 11.94 |
| Debt-to-Asset Ratio (Consolidated) (%) | 50.70 | 51.68 | 46.87 | 48.00 |
| Basic Earnings Per Share (CNY/share) | 0.17 | 0.17 | 0.19 | 0.18 |