Feasibility Analysis Report on the Company's Foreign Exchange Derivative Hedging Business

Shandong Guoci Functional Materials Co., Ltd.

Feasibility Analysis Report on the Company's Foreign Exchange Derivative Hedging Business

I. Background of the Company's Foreign Exchange Derivative Hedging Business

Shandong Guoci Functional Materials Co., Ltd. (hereinafter referred to as the "Company") convened the eighth meeting of the sixth board of directors on February 27, 2026, and approved the "Proposal on the Company's Overseas Investment to Acquire 100% Equity of an Australian Company." The Company intends to acquire 100.00% of the equity of Australian listed company SDI Limited and its subsidiaries (hereinafter referred to as "SDI" or the "Target Company") at a price of AUD 1.40 per share using its own funds or self-raised funds. To effectively prevent and mitigate the operational risks brought by market exchange rate and interest rate fluctuations during the acquisition of SDI, the Company convened the thirteenth meeting of the sixth board of directors on June 14, 2026, and approved the "Proposal on the Company's Foreign Exchange Derivative Hedging Business for the SDI Investment Project." The Company intends to engage in foreign exchange derivative hedging business to actively manage the market exchange rate and interest rate fluctuation risks faced by the Company during the acquisition of SDI.

II. Overview of the Company's Foreign Exchange Derivative Hedging Business

The foreign exchange derivative transactions intended by the Company aim to lock in costs and hedge against exchange rate and interest rate risks. The types of foreign exchange derivative transactions undertaken by the Company are closely related to actual business operations, adhering to the Company's prudent and stable risk management principles.

III. Necessity and Feasibility of the Company's Foreign Exchange Derivative Hedging Business

The foreign exchange derivative hedging business undertaken by the Company this time is closely related to the demand for acquiring SDI. Based on the Company's foreign currency asset and liability status and actual foreign exchange income and expenditure business, it can enhance the Company's ability to actively respond to foreign exchange fluctuation risks, better hedge against the foreign exchange rate and interest rate risks faced by the Company, and enhance the Company's financial stability.