Chlor-Alkali Chemical participates in the capital increase of Huayi Group's finance company, doubling its capital to 2 billion.

Shanghai Chlor-Alkali Chemical Co., Ltd. announced a related-party transaction. The Company, together with its controlling shareholder Shanghai Huayi Holding Group and Shanghai Huayi Group Co., Ltd., will simultaneously implement a pro-rata capital increase in its associate platform, Shanghai Huayi Group Finance Co., Ltd., to replenish the finance company's capital and improve its integrated financial service capabilities for the chemical industry chain.

I. Complete Capital Increase Plan

The total newly registered capital for Huayi Finance Company this time is 1 billion yuan. Upon completion, the registered capital will increase from the original 1 billion yuan to 2 billion yuan. The capital increase funds consist of two parts: capitalization of undistributed profits and contribution of own cash, each accounting for 500 million yuan:

Capitalization portion: Utilize 500 million yuan of existing retained earnings of the finance company to increase share capital;

Paid-in portion: The three shareholders will contribute a total of 500 million yuan in cash according to their existing shareholding ratios.

The shareholding and contribution details of all parties remain unchanged: Huayi Group holds 64%, Shanghai Huayi holds 30%, and Chlor-Alkali Chemical holds 6%.

Chlor-Alkali Chemical's total investment is 60 million yuan: 30 million yuan from capitalization of undistributed profits, and 30 million yuan from own cash capital increase;

Huayi Group's total investment is 640 million yuan: 320 million yuan from capitalization of undistributed profits, and 320 million yuan from own cash capital increase;

Shanghai Huayi's total investment is 300 million yuan: 150 million yuan from capitalization of undistributed profits, and 150 million yuan from own cash capital increase.

After the capital increase is implemented, the shareholding structure of the three shareholders remains unchanged. Huayi Finance Company remains an associate enterprise of Chlor-Alkali Chemical and will not be included in the listed company's consolidated financial statements.

II. Core Strategic Motives for Capital Increase

Meet the mandatory threshold for financial regulatory business access

According to the "Implementation Measures for Administrative Licensing Matters of Non-banking Financial Institutions" by the National Financial Regulatory Administration, for a finance company to conduct innovative businesses such as bill acceptance for member units and fixed-income securities investment, the minimum registered capital requirement is 2 billion yuan. Upon completion of this capital increase, Huayi Finance Company can obtain the corresponding business operation qualifications and broaden its financial service categories.

Optimize capital adequacy ratio and strengthen risk resistance capability

As of the end of 2025, Huayi Finance Company's capital adequacy ratio was 15.41%. Although this is higher than the 10.5% regulatory bottom line, it has not reached the 15.75% optimal standard for regulatory rating. After the capital increase, the capital buffer will be thicker, and the risk resistance level will improve simultaneously, aligning with industry regulatory guidance.

Reduce comprehensive financial costs for chemical enterprises and match medium-to-long-term development

Relying on the group's financial fund coordination platform, Chlor-Alkali Chemical can broaden low-cost financing channels, improve the efficiency of fund collection and turnover for the entire group, and provide stable financial support for the enterprise's "15th Five-Year Plan" industrial layout.

III. Approval Process and Operational Impact

This capital increase matter has been reviewed by the Chlor-Alkali Chemical Board of Directors, the meeting of independent directors, and the Audit Committee. The transaction scale does not reach the 5% net asset materiality standard, so it does not need to be submitted to the General Meeting of Shareholders for a vote.

Subsequently, the project still needs to complete two key approvals: first, the capital increase resolution at the shareholders' meeting of Huayi Finance Company; second, the approval for the change of registered capital by the Shanghai Bureau of the National Financial Regulatory Administration.

The Company stated that the funding for this investment is entirely from own funds and will not impact daily production and operation or operational independence. After the capital increase, there will be no new related parties or issues of horizontal competition, and the overall risk is controllable. With the expansion of the finance company's business and the improvement of profitability, the listed company is expected to continuously obtain stable equity investment income.