Yantai Zhenghai Magnetic Materials Co., Ltd. 2025 Internal Control Self-Evaluation Report
To all shareholders of Yantai Zhenghai Magnetic Materials Co., Ltd.:
In accordance with the requirements of the "Basic Norms for Enterprise Internal Control" and its supporting guidelines, as well as other internal control regulatory requirements (hereinafter referred to as the "Enterprise Internal Control Norms System"), and based on the internal control system and evaluation methods of Yantai Zhenghai Magnetic Materials Co., Ltd. (hereinafter referred to as the "Company"), and on the basis of daily supervision and special supervision of internal controls, we have evaluated the effectiveness of the Company's internal controls as of December 31, 2025 (the "Internal Control Evaluation Reporting Period").
I. Important Statement
In accordance with the requirements of the Enterprise Internal Control Norms System, establishing and effectively implementing internal controls, evaluating their effectiveness, and truthfully disclosing the internal control evaluation report are the responsibilities of the Company's Board of Directors. The Audit Committee supervises the establishment and implementation of internal controls by the Board of Directors; the management is responsible for organizing and leading the daily operations of the Company's internal controls. The Company's Board of Directors and all directors guarantee that the content of this report contains no false records, misleading statements, or significant omissions, and assume individual and joint liability for the truthfulness, accuracy, and completeness of the report's content.
The objective of the Company's internal controls is to reasonably ensure that business management is legal and compliant, assets are safe, financial reports and related information are true and complete, and to improve operational efficiency and effectiveness, thereby promoting the achievement of development strategies. Due to the inherent limitations of internal controls, they can only provide reasonable assurance for the achievement of these objectives. Furthermore, due to changes in circumstances, internal controls may become inappropriate, or the degree of compliance with control policies and procedures may decrease. Therefore, there is a certain risk in inferring the future effectiveness of internal controls based on the results of the internal control evaluation.
II. Conclusion of the Company's Internal Control Evaluation
Based on the identification of material weaknesses in the Company's financial reporting internal controls, as of the Internal Control Evaluation Reporting Period, no material weaknesses in financial reporting internal controls were found. The Board of Directors believes that the Company has maintained effective financial reporting internal controls in all material aspects in accordance with the requirements of the Enterprise Internal Control Norms System and relevant regulations.
Based on the identification of material weaknesses in the Company's non-financial reporting internal controls, as of the Internal Control Evaluation Reporting Period, no material weaknesses in non-financial reporting internal controls were found.
No factors have occurred between the Internal Control Evaluation Reporting Period and the date of issuance of this Internal Control Evaluation Report that affect the conclusion on the effectiveness of internal controls.
III. Internal Control Evaluation Work of the Company
(I) Scope of Internal Control Evaluation