Securities Code: 002396 Securities Abbreviation: Star-Net Communication Announcement No.: Lin 2026-09 Fujian Star-Net Communication Co., Ltd. Announcement on Provision for Asset Impairment in 2025 The Company and all members of its board of directors guarantee the truthfulness, accuracy, and completeness of the information disclosed in this announcement, and that there are no false representations, misleading statements, or material omissions. Fujian Star-Net Communication Co., Ltd. (hereinafter referred to as the "Company") held its 19th meeting of the 7th Board of Directors on March 26, 2026, and reviewed and approved the "Proposal on Provision for Asset Impairment in 2025". To accurately reflect the Company's financial position and operating results in 2025, in accordance with the "Accounting Standards for Business Enterprises" and relevant regulations, companies within the scope of the Company's consolidated financial statements conducted impairment tests on their respective assets. Impairment provisions were made for assets showing signs of impairment, with details as follows: I. Overview of Provision for Asset Impairment in the Current Period In accordance with the "Accounting Standards for Business Enterprises", "Shenzhen Stock Exchange Listed Company Self-Regulatory Management Guidelines No. 1 - Main Board Listed Company Standardized Operation", "Shenzhen Stock Exchange Stock Listing Rules", and the Company's relevant accounting policies, to more accurately and truthfully reflect the Company's asset position and operating results as of December 31, 2025, the Company and its subsidiaries conducted a comprehensive review of various inventories, notes receivable, accounts receivable, other receivables, contract assets, long-term receivables, fixed assets, investment properties, intangible assets, long-term equity investments, goodwill, and other non-current assets at the end of 2025. Based on this review and adhering to the prudence principle, the Company made provisions for assets showing signs of impairment. After a comprehensive review and impairment test of various assets at the end of 2025, the Company and its subsidiaries have made provisions for asset impairment totaling RMB 13,890.32 million, as detailed in the table below: Unit: Million RMB Item Amount of Provision for Current Period Impact on Net Profit Attributable to Shareholders in 2025 Credit impairment loss 1, 204.99 -802.52 Asset impairment loss 12, 685.33 -6, 754.84 Total 13, 890. 32 -7, 557.36 II. Impact of Provision for Asset Impairment in the Current Period on the Company The provision for asset impairment in the current period will enable the balances of various assets on the Company's balance sheet to better reflect their fair value. The provision for asset impairment is directly recognized in current period profit or loss. After considering the impact of income tax and minority shareholders' equity, it will affect the net profit attributable to shareholders in 2025 by RMB -7,557.36 million, accounting for 18.48% of the absolute value of the net profit attributable to shareholders audited for 2025. -1- III. Explanation of Provision for Asset Impairment in the Current Period (I) Specifics of Provision for Credit Impairment Loss (1) Provision for Impairment of Financial Assets: Item Amount of Provision for Asset Impairment in the Current Period (Unit: Million RMB) ("- " indicates reversal) Provision for Notes Receivable Bad Debts Provision for Accounts Receivable Bad Debts Provision for Other Receivables Bad Debts Provision for Long-term Receivables Bad Debts Total Provision for Credit Impairment Loss 1.44 1, 041.36 -9.03 171.23 1, 204.99 (2) Recognition Standards and Methods for Provision for Impairment of Financial Assets
- For notes receivable and accounts receivable, the Company consistently measures its loss provision at an amount equal to the expected credit loss over the entire contract period, regardless of whether there is a significant financing component. Except for notes receivable assessed individually for credit risk, the Company classifies notes receivable into different portfolios based on the credit risk of the acceptor as a common risk characteristic. The expected credit loss is calculated based on the portfolio, and the basis for determining the portfolio is as follows: Portfolio Name Basis for Determining Portfolio Notes Receivable with Bank Acceptance Notes Receivable with Commercial Acceptance Portfolios are classified the same as "Accounts Receivable" Management assesses that the credit risk is low, and generally no expected credit loss is recognized. Except for accounts receivable assessed individually for credit risk, the Company classifies accounts receivable into different portfolios based on customer category, aging, and other factors as common risk characteristics. The expected credit loss is calculated based on the portfolio, and the basis for determining the portfolio is as follows: Portfolio Name Basis for Determining Portfolio Related Party Customers General Customers Accounts receivable from related parties within the consolidated scope Accounts receivable from general customers For accounts receivable classified as general customers, the Company refers to historical credit loss experience, combined with the current situation and forecasts of future economic conditions, to compile a table of accounts receivable aging and expected credit loss rates over the entire contract period to calculate expected credit losses. For accounts receivable classified as related party customers and other portfolios, the Company refers to historical credit loss experience, combined with the current situation and forecasts of future economic conditions, to calculate expected credit losses through default risk exposure and expected credit loss rates over the entire contract period. For other receivables and long-term receivables from installment payments classified into portfolios, the Company measures the impairment loss based on the amount of expected credit loss over the next 12 months or the entire contract period, depending on whether the credit risk of other receivables/long-term receivables has increased significantly since initial recognition. -2- Except for other receivables assessed individually for credit risk, the Company classifies other receivables into different portfolios based on common risk characteristics such as the relationship with the counterparty and the nature of the transaction. The expected credit loss is calculated based on the portfolio, and the basis for determining the portfolio is as follows: Portfolio Name Basis for Determining Portfolio Other Receivables Portfolio 1 Receivable Interest Other Receivables Portfolio 2 Receivable Dividends Other Receivables Portfolio 3 Performance Guarantee Deposits Receivable Other Receivables Portfolio 4 Contingency Funds Receivable Other Receivables Portfolio 5 Other Receivables from Related Parties within the Consolidated Scope Other Receivables Portfolio 6 Other Receivables Except for long-term receivables assessed individually for credit risk, long-term receivables from installment payment sales are classified into different portfolios based on their credit risk characteristics: Portfolio Name Basis for Determining Portfolio Normal Class Long-term Receivables Overdue Long-term Receivables This portfolio represents long-term receivables that are not overdue and have normal risk. This portfolio represents long-term receivables with a high risk of overdue. The Company conducts individual impairment tests for receivables where there is objective evidence of impairment, as well as for notes receivable/accounts receivable/other receivables/long-term receivables that are applicable to individual assessment (e.g., receivables involved in disputes or litigation/arbitration; receivables for which there is clear evidence that the debtor is highly likely to be unable to fulfill its repayment obligations, etc.), to confirm expected credit losses and calculate individual impairment provisions. (II) Specifics of Provision for Asset Impairment Loss (1) Specifics of Provision for Asset Impairment Loss: Item Amount of Provision for Asset Impairment in the Current Period (Unit: Million RMB) ("- " indicates reversal) Provision for Inventory Price Decline Provision for Contract Asset Bad Debts Provision for Long-term Equity Investment Impairment Provision for Investment Property, Fixed Assets, and Other Non-current Assets Impairment (Property) Total Provision for Asset Impairment Loss 11, 942. 11 -23.30 592.52 174.00 12, 685. 33 (2) Recognition Standards and Methods for Provision for Inventory Price Decline: As of the balance sheet date, inventories are measured at the lower of cost and net realizable value. For inventories where cost exceeds net realizable value, -3-