Internal Control Evaluation Report of China Machinery Huanyu Certification and Inspection Co., Ltd. for 2025

Important Statement

According to the provisions 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 Normative System"), we have evaluated the effectiveness of the internal controls of China Machinery Huanyu Certification and Inspection Co., Ltd. (hereinafter referred to as "the Company" or "Huanyu Certification") based on daily supervision and special supervision of internal controls as of December 31, 2025 (the benchmark date for the internal control evaluation report).

The establishment, improvement, and effective implementation of internal controls, as well as the truthful disclosure of 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. The management is responsible for organizing and leading the daily operation of internal controls. The board of directors, audit committee, and directors and senior management ensure that the content of this report does not contain any false records, misleading statements, or significant omissions, and bear individual and joint legal responsibility for the truthfulness, accuracy, and completeness of the report's content.

The goal of the Company's internal controls is to reasonably ensure that management is legal and compliant, assets are secure, financial reports and related information are true and complete, operational efficiency and effectiveness are improved, and the realization of development strategies is promoted. Due to inherent limitations in internal controls, they can only provide reasonable assurance of achieving the above objectives. Furthermore, changes in circumstances may render internal controls inappropriate or reduce adherence to control policies and procedures, making it risky to infer the future effectiveness of internal controls based on evaluation results.

Internal Control Evaluation Conclusion

Based on the identification of significant deficiencies in internal controls over financial reporting, as of the benchmark date for the internal control evaluation report, there are no significant deficiencies in financial reporting internal controls. The board 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 Normative System and related regulations.

Based on the identification of significant deficiencies in non-financial reporting internal controls, as of the benchmark date for the internal control evaluation report, the Company has not identified any significant deficiencies in non-financial reporting internal controls. No factors affecting the evaluation conclusion of internal control effectiveness have occurred between the benchmark date and the issuance date of the internal control evaluation report.

Internal Control Evaluation Work Situation

During the reporting period, the Company carried out internal control evaluation work in accordance with the requirements of the Enterprise Internal Control Normative System, continuously optimizing the internal control system and further enhancing the Company's risk prevention capabilities to adapt to the ever-changing internal and external environments.

Scope of Internal Control Evaluation

The Company determined the main units, businesses, and matters included in the evaluation scope based on a risk-oriented principle.

1. Main Units Included in the Evaluation Scope
   The coverage of units included in this internal control evaluation is 100%, encompassing Huanyu Certification and its subsidiaries, including 5 second-level subsidiaries and 2 third-level subsidiaries. The details of the Company are shown in Figure 1.

The total assets of the units included in the evaluation scope account for 100% of the total assets in the consolidated financial statements, and the total operating income accounts for 100% of the total operating income in the consolidated financial statements.