Stock Code: ??????.SH

SUSTAINABILITY REPORT

Jiangsu Hengli Hydraulic Co. Ltd.Postal Code: ??????

Tel.: ????-????????

Website: http://www.henglihydraulic.com

Address: No. ?? Longqian Road Wujin High-tech Zone Changzhou City Jiangsu Province“Heng”—Protecting Mountains and “Heng”—Committed to People’s

Rivers Writing a New Chapter for Well-being Co-building a Better

About This Report PART-? Sustainability Management PART-? Green Development PART-? Homeland Together PART-?

Sustainability Goals and Vision ?? Climate Change Response ?? Protection of Employee Rights and Interests ??

PART-? Sustainability Governance ?? Environmental ManagementChairman’s Message ?? Encouraging Employee Growth and Development ??

Stakeholder Communication ?? Resource Management ?? Employee Health and Safety ??

Management of Material Topics ?? Fulfilling Social Responsibility ??

Welcome to Hengli Hydraulic PART-? “Heng” (Perseverance) as Our

Core in Governance Fortifying “Heng”—Forged Quality: Leading

Company Profile ?? an Impregnable Compliance Line PART-? Development through Innovation PART-? Report Appendices PART-?

Business Layout ?? Corporate Governance ?? Driven by Innovation ?? Index of Indicators ??

Organization Structure ?? Investor Relations Management ?? Product and Service Safety and Quality ?? Feedback and Suggestions ??

Strategy & Culture ?? Compliance and Risk Management ?? Supply Chain Security ??

Development History ?? Standardizing Business Conduct ?? Data Security and Privacy Protection ??

???? Annual Highlights ?? Party Building Leadership ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

About This Report Explanatory Notes

Defined Terms Definition

Report Overview

Hengli Hydraulic the Company We Jiangsu Hengli Hydraulic Co. Ltd.This report is the first Sustainability Report (hereinafter referred to as“ this report” or“ ESG Report”) issued by Jiangsu Hengli

Hydraulic CO. Ltd. (hereinafter referred to as“ Hengli Hydraulic”“ the Company” or“ we”). It systematically discloses our Hengli Technology Jiangsu Hengli Hydraulic Technology Co. Ltd.strategies management practices performance and progress toward goals in the environmental social and governance

(ESG) domains for ????. The report aims to address the expectations and concerns of stakeholders and comprehensively

presents the Company’s vision and initiatives in sustainable development. Hengli Precision Jiangsu Hengli Precision Industry Co. Ltd.Hengli Surface Changzhou Hengli Surface Technology Co. Ltd.Report Scope Shanghai Lixin Shanghai Lixin Hydraulics Co. Ltd.This report uses "Hengli Hydraulic" as the reporting entity covering its subsidiaries and branches. Unless other- Hengli Indonesia PT JIANGSU HENGLI HYDRAULIC INDONESIA

wise specified the scope of this report aligns with that of the Company’s Annual Report.Hengli Mexico HENGLI DE MEXICO S.A. DE C.V.Hengli Brazil Hengli Brazil Co. Ltd.Timeframe

As an annual report the information and data covered in this report span the period from January ? ???? to

December ?? ???? (hereinafter referred to as the "Reporting Period"). To enhance the report’s comparability and

forward-looking perspective certain content may appropriately reach back to prior years or go beyond the stated Confirmation and Approval

period.This report was approved by the Company’s Board of Directors on April ?? ???? and is released concurrently

with the Q? Report. The Board of Directors and management assume responsibility for the authenticity accuracy

and completeness of the contents of this report ensuring there are no false records misleading statements or

Basis of Preparation material omissions.Shanghai Stock Exchange Shanghai Stock Exchange Guideline No. ?? for Self-Regulatory Affairs of Listed

Companies - Sustainability Report (Trial) Access and Feedback

Shanghai Stock Exchange Shanghai Stock Exchange Guidance No. ? for Self-Regulatory Affairs of Listed

Companies - Preparation of Sustainability Reports We welcome oversight and feedback from investors and the public. This report is published in electronic format

and can be accessed and downloaded from Hengli Hydraulic’s official website (http://www.hengli-hydraulic.com)

China of Enterprise Reform and Development Society Guidelines for Chinese Enterprises’ Sustainability or the Shanghai Stock Exchange website (www.sse.com.cn).Reporting (CASS-ESG ?.?)

Global Reporting Initiative (GRI Standards)

United Nations Sustainable Development Goals (SDGs)

Data Notes

The information and data presented in this report are derived from official company documents internal statistical

reports audited financial statements and verified operational data. All financial figures are consistent with the

Company’s financial reports and denominated in Renminbi (RMB). In the event of any discrepancy the financial

reports shall prevail.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Chairman’s Message

The year ???? marks a pivotal moment as we successfully conclude the ??th Five-Year Plan and prepare to embark Nurturing Talent Growth in Fertile Soil

on the ??th Five-Year Plan. Standing at this new starting point we have deeply integrated sustainable develop-

ment principles into our operations. We have intensified our efforts in new product R&D green manufacturing Employees are the core internal engine of our sustainable development. Upholding a people-oriented approach

smart production and talent cultivation forging ahead with determination as we strive to penetrate high-end we have built an integrated talent cultivation system—combining platforms training and projects—to pave a

markets and expand our global footprint endeavoring to write a new chapter in high-quality development. broad path for the career growth of every striver. The "Eagle Plan" and Hengli University operate as dual engines

systematically cultivating managerial and supervisory talent pipelines to continuously supply backbone forces for

our high-quality development. The Practical Training Center is now fully operational establishing a robust foun-

Serving National Needs and Assuming Industrial Responsibilities dation for hands-on skills development and professional growth. At the same time we are deeply committed to safeguarding employee well-being fostering open and democratic communication channels and thoughtfully

Advancing in sync with the nation and the industry we have consistently aligned our growth with the broader organizing diverse cultural and sports activities. Spanning from living support to spiritual care we strive to create

national strategy. In ???? the Company successfully applied for and undertook seven national-level projects a workplace home that is warm inclusive and genuinely fulfilling.and certifications spanning key areas such as smart manufacturing high-end CNC machine tools construc-

tion machinery and agricultural machinery. We played a significant role in the Pinglu Canal project—a centu- Staying True to Our Mission Forging Ahead with Resolve. Looking ahead we will steadfastly pursue our "Interna-

ry-long engineering endeavor—empowering national water resource development with our "Hydraulic Heart". tionalization Diversification and Electrification" strategy steadily advancing the global deployment of production

Through our independently innovated "Hengli Solutions" we have solidified the foundation for national key capacity. We will drive industry advancement through technological innovation and build a solid development

projects and industrial transformation contributing to the building of a strong manufacturing nation through foundation with precision craftsmanship. With unwavering determination we will deepen our commitment to

concrete actions. low-carbon development continuously advancing in smart manufacturing and high-end equipment. Through

concrete actions we will honor our commitments and meet societal expectations contributing a more robust and

dynamic "Hengli Strength" to building a green low-carbon and sustainable future together.Global Footprint Writing a New Chapter Overseas

In ???? Hengli's global expansion advanced with determined strides yielding significant milestones. The inaugu-

ration of our Global R&D Center has opened new frontiers for innovation while the grand opening of our Mexico

plant marks a new chapter in Hengli's globalization strategy. Concurrently we have deepened the application of

our core components across diverse scenarios and sectors. Notable achievements include: the successful rollout

of hydraulic cylinders for the world's largest ??-meter ring rolling mill; the successful implementation of Asia's

largest trailing suction hopper dredger project; and the on-time delivery of over ??? sets of vulcanizer hydraulic

systems and cylinders. These accomplishments powerfully demonstrate the robust capabilities and global com-

petitiveness of Chinese manufacturing amplifying Hengli's voice on the world stage.Scaling Technological Heights Powering the Innovation Engine

Moving forward with innovation we unlock the boundless potential of technology. In ???? the launch of our Jiangsu Hengli Hydraulic Co. Ltd.Smart Design Platform delivered nearly ???? highly efficient and precise design schemes with ???% accuracy Chairman Wang Liping

comprehensively transforming R&D efficiency. For the fourth consecutive year we championed our "Innovation

Unlimited" initiative creating a platform for technical talent to engage in hands-on innovation and continuously

energizing our engineers’ creativity. By actively expanding into diverse new product areas we successfully

launched electronic control piston pumps open-center directional control valves and active heave compensation

servo motors — building a more comprehensive portfolio of serialized hydraulic components and systems and

solidifying our industry leadership through robust innovation.Green Manufacturing Empowering a Low-Carbon Future

Guided by the national "Dual Carbon" goals we actively promote the transition to green and low-carbon develop-

ment. We have established a digital carbon accounting system and initiated third-party professional carbon verifi-

cation continuously enhancing the standardization and scientific rigor of our carbon emission management. In

terms of green production we adhere to the principles of "reduction recyclability and low pollution". We strictly

control pollutant emissions strengthen the recycling of green packaging and vigorously advance the construction

of intelligent production lines. Additionally we are deploying green energy efficiency projects such as photovolta-

ic power generation and waste heat recovery continuously improving resource and energy utilization efficiency

while steadily advancing toward a greener smarter development paradigm.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Welcome to Hengli Hydraulic Linear Motion Technology Technical Components

? Electric Cylinders ? Castings

Company Profile ? Ball Screws ? Seals

Jiangsu Hengli Hydraulic CO. Ltd. (Stock Code: ??????) is a Shanghai Stock Exchange-listed company specializing ? Guide Rails ? Cold-drawn Tubes

in the R&D production and sales of hydraulic components and systems. The Company has been successively rec-

ognized by the Ministry of Industry and Information Technology (MIIT) as a Demonstration Enterprise for Single

Champion Products a "One-Dragon" Application Plan Demonstration Enterprise under MIIT’s Strengthening the

Foundation Project a National High-Tech Enterprise a National Intellectual Property Demonstration Enterprise

and a China Green Foundry Demonstration Enterprise. It is also a drafting unit for national and industry standards.Hengli Hydraulic has built a global footprint with seven R&D centers and twelve manufacturing bases supported

by mature technology and large-scale production capacity. The Company operates one National Demonstration

Smart Factory and three Jiangsu Provincial Smart Workshops outfitted with cutting-edge equipment and

advanced processes to consistently enhance product quality. With operations spanning over ?? countries and As core transmission devices for heavy machinery Hengli’s hydraulic products are widely applied across indus-

regions and serving more than ???? global clients Hengli has established overseas technical service and market- tries and fields including mobile machinery tunnel engineering agricultural machinery industrial engineering

ing centers in multiple locations enabling localized efficient service delivery and steady progress in its global offshore engineering and wind and solar energy. Leveraging our diversified business layout we deliver custom-

market expansion. ized scenario-based professional system solutions and full-range technical services to downstream customers.Business Layout Leveraging our profound market experience both domestically and internationally the Company’s products have earned widespread trust from global clients securing high market shares in sectors including excavator systems

The Company is primarily engaged in the R&D manufacturing sales and service of control equipment and system aerial work platforms shield tunneling machines offshore engineering and new energy equipment. Our excava-

integration in the power transmission sector. Our product portfolio includes high-pressure hydraulic cylinders tor-specific hydraulic cylinders are extensively utilized by renowned domestic and international construction ma-

high-pressure piston pumps hydraulic multi-way valves hydraulic motors industrial valves hydraulic systems chinery enterprises including Caterpillar Hitachi Construction Machinery and XCMG. We have been awarded the

hydraulic test benches high-precision hydraulic castings precision lead screws linear guides and electric cylin- Caterpillar Platinum Medal for multiple consecutive years and recognized as“ Outstanding Supplier of the Year” by

ders—building a diversified product ecosystem under the Hengli Hydraulic brand. Having successfully overcome Sany and XCMG among others. Furthermore our core products have been deployed in numerous national and

technical challenges in core components such as high-pressure hydraulic cylinders and hydraulic pump valves industry key projects: hydraulic actuators were successfully applied in the National Astronomical Observatories’

the Company has established a robust foundation in the domestic hydraulic sector while continuously strengthen- FAST (Five-hundred-meter Aperture Spherical Telescope) project; offshore corrosion- and wear-resistant compos-

ing its competitive edge in the international market. ite coating cylinders were deployed in the“ Wanshan” wave compensation power generation device and the

“Nanhai VIII” oil drilling platform construction; and pile driver cylinders were utilized in the luffing cylinder project

Hengli Hydraulic Product System for the ???-meter offshore piling equipment.Hengli Hydraulic Industry Application Fields

Mobile Hydraulics & Electronic Components

? Hydraulic Cylinders ? Piston Motors

? Hydraulic Pumps ? Orbital Motors

? Hydraulic Multi-way Valves ? Electronic Control Components

? Cartridge Valves

Construction Machinery Agricultural and Hoisting and Offshore Engineering Forestry Machinery Tunnel Boring Equipment Handling Machinery Mining Machinery and Ports

Industrial Hydraulics

? Industrial Cylinders ? Industrial Hydraulic Motors

? Industrial Pumps ? Hydraulic System Integration

? Industrial Valves

Metallurgical Equipment Metal Forming Rubber and Energy and Servo Control Building Materials and Plastic Processing Water Resources and Measurement Municipal Equipment

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Organization Structure Strategy & Culture

Corporate Culture

Hydraulic Cylinder Business Group Core Culture Cultural Values

Hydraulic Technology Business Group Mission Focusing on customer needs we create value for customers shareholders

employees and society in the hydraulic industry.Hengli Precision Industry

Lead the industry through technology shape the future with quality drive

Vision growth through branding empower employees through management and

Hengli Mexico build a century-old enterprise.Corporate Operations Center Strategic Goals Go global lead the industry and become the world’s leading brand in

hydraulic system integration service provision.Hengli Hydraulic

Marketing Center

Value Discover customer needs deliver value to customers and treat them with respect and care.Finance Center Build communication bridges through trust—empowering Trust employees with a sense of security and achieving win-win

Core Values results with customers.Innovation Maintain product advantages market competitiveness and

Securities Department corporate strength through continuous innovation.Talent Cultivation Recruit and cultivate outstanding talent commit to continuous

learning and growth and challenge ourselves to excel together.Audit Department

Business Strategy

Research Institute The company will steadfastly advance its strategy of "Internationalization Diversification and Electrification". In

the future it will continue to consolidate its position in the domestic market enhance its international brand

influence and market share steadily promote global production capacity layout strengthen global operational

capabilities and provide efficient and high-quality services to customers worldwide. The company adheres to an

innovation-driven approach increasing R&D investment to maintain technological leadership enriching its prod-

uct portfolio and continuously expanding into downstream application fields and scenarios. Focusing on the elec-

trification trend in downstream industries the company will strategically develop electric control and actuation

systems seize opportunities arising from electrification in sectors such as construction machinery marine engi-

neering and industrial equipment and strive to become a first-class world-renowned provider of high-end trans-

mission equipment and solutions.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Development History ???? Annual Highlights and Achievements

Honors and Awards

????

Hengli Cylinder Co. Ltd. was founded

and the Xueyan factory commenced production.Jiangsu Hengli High-Pressure Oil Cylinder Co. Ltd. (Stock Code: ??????)

???? was listed on the A-share market.The Wujin High-Tech Zone production base commenced operation.National Level Association Level Association Level Association Level

???? The Hengli Casting Factory was completed and put into production. ???? National Manufacturing Single ???? Top ??? Private ???? Top ??? Private Top ??? Global Construction The company acquired Shanghai Lixin Hydraulics. Champion Enterprise Enterprises in R&D Investment Enterprises in Jiangsu Machinery Component Suppliers

The company established subsidiaries in the United States and Japan.???? The company established Jiangsu Hengli Hydraulic Technology Co. Ltd. through investment.???? ???? Association Level Enterprise Level Enterprise Level Enterprise Level

The company formed a strategic partnership with Chicago Manufacturing Plant (USA) completed ???? Key Large-scale Backbone Globalization Pioneer Award Outstanding Partnership Award Liugong Collaborative

Germany’s HAWE Group and successfully acquired Berlin and commenced operations. Enterprise in the Machinery Industry ?????Sany Group ?????Sany Group United & Co-creation Award

InLine Hydraulik GmbH. It was renamed "Jiangsu Hengli

Hydraulic CO. Ltd". Its main product range gradually

expanded from a single focus on high-pressure cylinder Annual Major Events Record

products to include other products such as hydraulic

pumps valves and hydraulic systems.????

The company acquired Hattori Seiko Co. Ltd.which produces ultra-precision hydraulic machine components.March ???? May ???? June ????

???? Hengli Global R&D Center officially Hengli Indonesia officially completed the Hengli Mexico factory opened.opened for operation. factory acquisition and initiated construction.The company established PT. Hengli Indonesia.The company established Changzhou Hengli Surface Technology Co. Ltd.The company established Jiangsu Hengli Precision Industry Co. Ltd.????

The company established Hengli Brazil (S?o Paulo) Company.In August ???? Hengli Hydraulic and In October ???? the world’s largest ??-meter November ????

Dongfang Honghua jointly signed the ring rolling mill-matched hydraulic cylinder The Pinglu Canal gate hoist project was

Strategic Cooperation Agreement. successfully rolled off the production line. successfully accepted.???? The company opened the Hengli Mexico factory.The Hengli Global R&D Center was fully operational.????

Hengli Precision Industry officially commenced mass production.In December ???? Hengli Hydraulic and December ????

SEW-Eurodrive (China) jointly signed The Africa and Middle East Service

a strategic cooperation agreement. Center was established.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Highlights and Performance Sustainable Development Management

Eco n o m i c Pe r fo r m a n ce

Sustainability Goals and Vision

Operating Revenue: RMB ???.?? hundred million The company actively aligns with the United Nations Sustainable Development Goals (SDGs) and deeply inte-

grates the concept of sustainable development into its production and operational processes. Through concrete

Net Profit Attributable to Listed Company Shareholders: actions it embodies the spirit of the SDGs striving to create sustainable value across economic environmental

RMB??.??hundred million and social dimensions.Total Assets: RMB???.?? hundred million Responding to

the United Nations

Chapter Corporate Actions in ???? Sustainable

Net Assets Attributable to Listed Company Shareholders: RMB???.??hundred million Development Goals

(SDGs)

Improve corporate governance systems optimize the operational mechanisms of sharehold-

“Heng” er meetings and the board of directors and safeguard the legitimate rights and interests of

(Perseverance) minority shareholders.as Our Core in Continuously enhance investor relations management standardize information disclosure

G ove r n a n ce Pe r fo r m a n ce Governance procedures strengthen communication and interaction with investors and achieve an "A"

Fortifying an rating in information disclosure assessments.Impregnable Strictly adhere to business ethics establish anti-corruption oversight and reporting

Compliance Line mechanisms strengthen management of employees and business partners prevent corrupt

Number of Shareholders' Meetings Held: ?times practices and eliminate unfair competition.? Establish a digital greenhouse gas management system conduct annual greenhouse gas Number of Board Meetings Held: times “Heng”— verification and continuously improve the scientific and systematic management level of

Protecting climate change.Proportion of Independent Directors: ??.??% Mountains and Actively carry out clean production audits promote green packaging continuously develop

Number of Roadshows Conducted Both Domestically and Internationally Reached: ???times Rivers Writing green and low-carbon products and fully achieve green and low-carbon production.a New Chapter Adopt an RO membrane reuse system to achieve water resource recycling promote energy

for Green conservation and emissions reduction through photovoltaic power generation waste heat

Development recovery and energy-saving technological upgrades and continuously improve resource

utilization efficiency.Establish R&D platforms such as nationally recognized enterprise technology centers

E n v i ro n m e n ta l Pe r fo r m a n ce actively participate in industry standard-setting and technical exchange and cooperation

“Heng”— and continuously enhance R&D innovation capabilities.???? Forged Quality: Improve quality management and customer service systems enhance product quality Environmental Protection Investment: RMB ten thousand Leading regularly conduct customer satisfaction surveys continuously optimize service experience

?????.?? Development and win customer trust.Total Energy Consumption: tons of standard coal equivalent through Improve the supplier management system strengthen ESG compliance oversight for

Total Environmental Training Hours: ???? hours Innovation suppliers and focus on building a green and responsible supply chain.Total Greenhouse Gas Emissions: ?????.?? Establish a data security and customer privacy protection system strengthen risk identifica-tons of CO? equivalent tion and emergency management and conduct regular data security training.Hazardous Waste Compliant Disposal Rate:???% Adhere to the principle of equal employment strengthen age verification processes in recruitment

and resolutely eliminate any form of harassment discrimination child labor and forced labor.Build a diverse and inclusive workplace ensure equal pay for equal work regardless of gender

establish lactation rooms and actively protect the legitimate rights and interests of female

employees.S o c i a l Pe r fo r m a n ce “Heng”— Provide diverse compensation and welfare packages and establish a comprehensive performance

?.?? Total employee training investment:

Committed to appraisal and grievance mechanism.R&D Investment Amount: RMB hundred million RMB ?.???? million People’s Strengthen democratic management streamline employee communication and complaint

???? Well-being channels and broadly solicit employees' opinions and suggestions.Number of R&D Personnel: Total Employee Training Hours: Co-building a Establish a tiered employee training system provide employees with training platforms such as

New Valid Authorized Patents: ??? items ?????.?? hours Better Homeland "Hengli University" and "Cloud Classroom" and improve career development pathways for

Together employees.Total Cumulative Authorized Patents:???? items Work Safety Liability Insurance Personnel Promote digital management of workplace safety enhance occupational health protection regularly

? Coverage Rate: ???%

conduct occupational disease screenings and comprehensively ensure employees' health and

Product Recalls: units safety.Rural Revitalization Investment :

??.? Actively engage in social public welfare activities contribute to rural revitalization fulfill corporate Customer Satisfaction Rate: % RMB????.??ten thousand responsibility through action and promote harmonious social development.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Sustainable Development Governance Stakeholder Communication

ESG Governance Framework The company actively maintains ongoing two-way and transparent communication channels systematically identifying the

The company is committed to a sustainable development-oriented approach. It has formulated the Environmental Social and needs and expectations of stakeholders including regulators investors customers and employees. It continually integrates input and concerns from all parties into decision-making and operational processes fostering mutual success and sustainable

Governance (ESG) Work Management System and built a three-tier ESG governance structure spanning decision-making man- development.agement and implementation. Sustainability requirements are deeply embedded into strategic planning and operational man-

agement decision-making processes driving the standardized efficient and sustained execution of ESG initiatives.ESG Stakeholders Expectations and Demands Communication Channels

Governance Organization Responsibilities

Business Ethics and Compliance Legal and Regulatory Compliance

Review and approve the company’s ESG development strategies objectives material Driving Economic Growth Information Disclosure

issues governance structure and management systems; review and approve the com- and Reporting

Government and Environmental Compliance ManagementBoard of Directors pany’s ESG report. Pollutant MonitoringRegulatory Bodies Climate Change Response Greenhouse Gas Verification

Formulate the company's ESG development strategies objectives key issues and

management systems; identify and control risks associated with daily ESG manage- Investor HotlineCompliant and Prudent Operations

ment and guide the ongoing implementation of ESG work; review and submit the Shareholders' Meeting

Strategy Committee Safeguard Shareholder Interestscompany’s ESG report to the Board of Directors. On-site Survey

Shareholders Ensure Transparent Disclosure Periodic Reports

Implement the company’s ESG development strategies and objectives and drive the imple- and Investors

mentation of ESG initiatives across relevant executing departments; develop ESG policies

and documents and establish phased work plans and implementation roadmaps; organize

ESG-related training sessions monitor regulatory requirements and industry trends; assess Phone and Email

ESG Working Group and summarize ESG performance and challenges report regularly on progress to the Strate- Data Security and Privacy Protection

gy Committee and provide actionable recommendations. Customer Engagement Visits

Provision of Quality Products and Services

Customer Satisfaction Surveys

Based on the company’s ESG development strategies and objectives establish and Customers Safeguarding Customer Rights and Interests

enhance the ESG management framework formulate relevant metrics management

targets and specific work plans; execute day-to-day ESG management operations

Functional Departments report regularly on implementation progress and submit ESG-related information in a

and Subsidiaries timely manner. Supply Chain Management Supplier Evaluation

and Assessment

ESG Risk Management Transparent and Fair Procurement On-site Assessments

The company has established an ESG risk management framework incorporating ESG responsibilities into the internal control Suppliers and Mutual Success and Shared Value TIndustry Exchange Conference

evaluation system. The Strategy Committee conducts identification assessment and ongoing oversight of ESG-related risks Partners

and provides timely recommendations for enhancement. All departments and subsidiaries implement corrective actions as

required continuously strengthening the company’s capabilities in ESG risk prevention and control.ESG Training Uphold Employee Rights Performance Review and Appeal

To further enhance ESG governance the company regularly organizes specialized ESG training sessions and exter- Career Development Programs Labor Union and Staff

nal exchanges. This enables the timely uptake of the latest ESG policies and management practices driving the Employee Well-being & Benefits Representative Assembly

continuous improvement of ESG management. Employees General Manager's Mailbox

Case Study

In February ???? Hengli Hydraulic took part in a specialized ESG train- Support Community Initiatives Charitable Donations

ing program which included in-depth learning on ESG compliance strat- Promote Energy Conservation and Emission Reduction Green Production

egies for global enterprises and comparisons of international standards Communities

frameworks. The session provided valuable insights for enhancing the and the Public

company’s ESG governance system.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Management of Material Topics Dimensions Issues

Evaluation Process and Methods ? Environmental Compliance ? Circular Economy ? Waste Management

Management

In accordance with the requirements of the Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies No. ?? ? ? Water Resource ? Ecosystem and

Sustainability Reporting (Trial) and with reference to the assessment methodologies outlined in both domestic and internation- E ? Energy Utilization Management Biodiversity Conservation

al disclosure standards—including the Shanghai Stock Exchange Self-Regulatory Guide for Listed Companies No. ? ? Sustainabil- ? Climate Change Response ? Pollutant Emissions

ity Reporting Preparation and the GRI Standards: GRI ?: Material Topics—the company has introduced the analytical perspectives

of impact materiality and financial materiality to identify and assess its material topics. The specific implementation steps are as

follows: ? Protection of Employees' ? Technology Ethics ? Equal Treatment of Small Legitimate Rights and Interests

S ? Product and Service and Medium-sized Enterprises? Employee Training and Safety and Quality Development ? Social ContributionIssue Assessment Process Analysis Methods ? Information Security * Occupational Health and Safety and Privacy Protection ? Rural Revitalization

* Innovation-driven Development ? Supply Chain Security

Based on the analysis of global megatrends and the macro-environmental

? analysis of China's industrial development trends;

? Anti-Commercial Bribery and Anti-Corruption ? Due Diligence

Based on industry analysis; G ? Anti-Unfair Competition ? Stakeholder Communication

Review Company Background Based on the analysis of the company’s business model;

Identify the company’s stakeholders and the impacts risks and opportu-

nities the company faces. Hengli Hydraulic Materiality Matrix:

? Environmental Compliance Management

? Energy Utilization

? A sustainability issue library was developed by referencing the SSE Guidelines ? Climate Change Responseon Sustainability Reporting relevant regulatory requirements of the Ministry ? ? Circular Economy

Preliminary Topic Screening of Finance and the CASS-ESG ?.? Guidelines and by incorporating issues of ? Water Resource Managementconcern to industry peers. ? ? Pollutant Emissions

?? ?? ?? ? ? Waste Management

?? ? Ecosystem and Biodiversity Conservation

??

Impact Materiality Assessment: ?? ?? ?? ? Protection of Employees' Legitimate Rights and Interests

Review the potential or actual positive or negative impacts of each issue ??Importance ? ? Employee Training and Development

on the external environment society and economy. Conduct stakeholder to the ? ? ?

Economy ?? * Occupational Health and Safetysurvey analysis through questionnaires.? Society and

? * Innovation-Driven Development

Financial Materiality Assessment: Environment ?? ?? ? Technology Ethics

Materiality Assessment Through analysis of impacts dependencies and other factors combined ?? ? ? Product and Service Safety and Quality

with professional judgment and based on internal questionnaire surveys ? Information Security and Privacy Protection

across company departments regarding the likelihood of occurrence and ? Supply Chain Security

the potential magnitude of financial impact identify and assess risks and ?? ? Equal Treatment of Small and Medium-sized Enterprises

opportunities associated with relevant issues thereby evaluating finan- ? Social Contribution

cially material topics.? Rural Revitalization

? Anti-Commercial Bribery and Anti-Corruption

? Anti-Unfair Competition

? ? Due DiligenceFormulate a list of issues that are material in terms of both impact and finan-

cial significance and ensure that these topics are disclosed transparently Financial Importance to the Company Critical ? Stakeholder Communication

Topic Confirmation impartially and completely in the report.Material to Material to Both Material to Neither Material to

Impacts Only Financials Only

Notes: ?. The company’s production and operating activities do not have a significant impact on ecosystems and biodiversity. Its core

Materiality Issues Assessment Results business does not involve scientific research or technology development in fields such as life sciences or artificial intelligence ethics.Additionally there are no instances of late payments to or unfair treatment of small and medium-sized enterprises. Therefore the compa-

Based on the collected questionnaires the company analyzed the issues from the two dimensions of "Impact Materiality" and ny has not separately disclosed content on ecosystem and biodiversity conservation technology ethics and equal treatment of small and

medium-sized enterprises is not disclosed."Financial Materiality" and formed a materiality issues matrix.?. Financially material issues are disclosed in accordance with exchange requirements following the framework of "Governance" "Strate-

gy" "Impact Risk and Opportunity Management" and "Metrics and Targets". Among them environmental compliance management

pollutant emissions and waste management are disclosed on a consolidated basis using the four-element framework.????

Critical“Heng” (Perseverance) as Our Core in Governance

Fortifying an Impregnable Compliance Line

Governance as the foundation ensures steady and enduring progress. Hengli Hydraulic consistently upholds the

baseline of compliance in operations adheres to the guiding principles of Party building continuously improves

governance structures optimizes decision-making mechanisms and comprehensively strengthens internal control

and risk management. By standardizing information disclosure safeguarding investment returns and earnestly

protecting investors' rights and interests the company actively practices business ethics establishing a high-quality

governance system that solidifies the foundation for its long-term development.SDGs Addressed Corporate Governance

Investor Relations Management

Compliance and Risk Management

Standardized Business Conduct

Party Building LeadershipJiangsu Hengli Hydraulic CO. Ltd. ????年度可持续发展报告 SUSTAINABILITY REPORT ????

Corporate Governance Key Performance

During the reporting period the company held?meetings of the Board of Directors which collectively

Governance Structure reviewed and approved??proposals.Hengli Hydraulic strictly complies with laws regulations and regulatory requirements such as the Company Law of the People's

Republic of China the Securities Law of the People's Republic of China and the Governance Guidelines for Listed Companies.The company has established a series of corporate governance systems including the Articles of Association and formed a gov- Board Special Committees

ernance architecture centered on the Shareholders’ Meeting and the Board of Directors. This structure creates a governance The company’s Board of Directors has established four specialized committees: the Strategy Committee the Nomination Com-

system with clear delineation of powers and responsibilities effective checks and balances and efficient coordination ensuring mittee the Compensation and Appraisal Committee and the Audit Committee. Each committee strictly performs its duties in

the company’s standardized and stable operation. accordance with its respective rules of procedure providing professional support for the scientific decision-making of the Board.This further enhances the scientific rigor standardization and efficiency of the company’s decision-making processes.Shareholders’

Meeting Key Performance

During the reporting period the company convened ? meetings of the Strategy Committee

reviewing and approving a total of ? proposals; ? meetings of the Nomination Committee

Board of Directors reviewing and approving a total of ? proposals; ? meetings of the Compensation and Appraisal

Committee reviewing and approving a total of ? proposals; and ? meetings of the Audit

Committee reviewing and approving a total of ?? proposals.Board Diversity

Strategy Committee Nomination Compensation and The company places high importance on the diversity of its Board of Directors. When selecting and appointing directors it gives Committee Audit Committee Appraisal Committee full consideration to their educational backgrounds age structures professional skills and industry experience continuously

optimizing the composition of the Board. Currently the company has ? directors who possess professional backgrounds and

Hengli Hydraulic Governance Structure Diagram practical experience in diverse fields such as law finance and mechanical engineering providing a solid foundation for the

scientific decision-making of the Board.Shareholders’ Meeting Name Position Gender Age Educational Professional Background

The company strictly complies with relevant regulations including the Articles of Association and the Rules of Procedure for Background

Shareholders’ Meetings to standardize the convening and conduct of its meetings. Legal counsel is engaged to provide on-site

witness and issue legal opinions. Voting is conducted through a combination of on-site and online methods. Related sharehold- Wang Liping Chairman of Male ?? Junior Senior Economist

ers recuse themselves from voting on matters involving their interests as required by law and on significant issues affecting the the Board College

interests of minority investors a separate vote count for minority investors is implemented. This ensures that all shareholders

especially minority shareholders enjoy equal rights and can fully exercise their voting rights.Qiu Yongning Director Male ?? Bachelor's Engineer

Degree

关Ke键y 绩Pe效rformance

Xu Jin Director Male ?? Master's Engineer

Degree

During the reporting period the company held?Shareholders’ Meetings including?Annual General

Meeting and?Extraordinary General Meeting collectively reviewing and passing ??proposals. Employee Wang Bin Representative Male ?? Master's Engineer MBA

Director Degree

Qiu Shi Distinguished Professor Zhejiang University;

Zhejiang Provincial Distinguished Expert; Deputy Director

Board of Directors Fang Youtong Independent Male ?? Doctoral Director Degree National Engineering and Technology Research Center for Intelligent Railway Rolling Stock

The company strictly complies with relevant regulations such as the Articles of Association and the Rules of Pro-

cedure for the Board of Directors in convening and conducting Board meetings. It standardizes the methods of Wang Xuehao Independent Male ?? Bachelor's Certified Public Accountant (China) Certified Tax

deliberation and decision-making procedures to ensure the Board fulfills its duties in accordance with the law. The Director Degree Agent (China) Legal Professional Qualification

Board of Directors reviews significant matters related to the company’s business activities makes decisions law-

fully or submits matters to the Shareholders’ Meeting for deliberation as per procedure thereby fully leveraging Professor College of Mechanical Engineering Taiyuan Quan Long Independent Male ?? Doctoral University of Technology; High-Level Leading Talent

the role of the Board in scientific decision-making and ensuring the stable development of the company. Director Degree Shanxi Province "Sanjin Talent" Program

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Independence of the Board of Directors Investor Relations Management

The company has formulated the Independent Director Work System and in strict accordance with regulations appointed ?

qualified professionals as independent directors who constitute approximately ??.??% of the Board membership. The indepen-

dent directors diligently fulfill their duties actively participating in decision-making providing oversight and checks and balanc- Information Disclosure

es and offering professional advice within the Board's operations. They provide professional support for the company's strategic

planning and scientific decision-making and strive to safeguard the overall interests of the company and the legitimate rights The company strictly adheres to relevant laws and regulations such as the Measures for the Administration of Information

and interests of minority shareholders. Disclosure by Listed Companies and the Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies No. ?-Infor-

mation Disclosure Affairs Management. It has established systems including the Information Disclosure Management System

Compensation Management for Directors and Senior Management and the Information Disclosure Error Accountability Management Measures to standardize the information disclosure process strengthen disclosure affairs management and continuously improve the quality and transparency of information disclosure

The company has formulated the Senior Management Compensation Management System. Adhering to the principles of distri- ensuring its authenticity accuracy completeness and timeliness. During the reporting period the company received an "A"

bution according to work fairness and transparency the system is based on the value of the position and guided by perfor- rating in the Shanghai Stock Exchange's information disclosure assessment.mance. It establishes a sound incentive and restraint mechanism for the compensation of directors and senior management

ensuring the compliance and fairness of compensation management. To enhance the confidentiality management of inside information and uphold the principles of fairness and impartiality in infor-

mation disclosure the company formulated the Registry System for Persons with Knowledge of Inside Information standardiz-

ing the registration and filing of such persons. This ensures the fair dissemination of company information to all shareholders

and fully safeguards the right of all investors to access information equally.Director Compensation Plan

The specific distribution plan for director remuneration is researched and formulated by the Board Key Performance

of Directors' Compensation Committee. After review and approval by the Board of Directors it is

submitted to the Shareholders’ Meeting for final deliberation and decision. During the reporting period the company disclosed ?? interim reports and ? periodic reports with

no penalties incurred for violations of information disclosure regulations.Senior Management Compensation Plan

Senior management compensation consists of an annual salary performance bonuses welfare

subsidies and mid-to long-term incentives.Public Opinion Management

The annual salary comprises two parts: a base salary and a performance-linked salary. In principle

the proportion of performance-based pay shall not be less than ??% of the total of base salary and To effectively prevent control and properly handle public opinion emergencies the company has formulated the Public Opin-

ion Management System and established a rapid response and emergency handling mechanism. A leading group for public opin-

performance-based pay. The base salary is linked to the value of the position individual competence ion management has also been established to provide unified leadership in handling various types of public opinion incidents.and the industry compensation level. The performance-linked salary is linked to the company's All functional departments implement tiered responses and categorized management of public opinion aiming to promptly mit-

igate the impact of public sentiment on the company's stock price and normal production and operational activities thereby

operational performance and the efficiency and quality of achieving individual performance targets. maintaining a healthy and stable public opinion environment.In the event of a significant public opinion incident the company will as directed by the leading group for public opinion man-

agement immediately convene a working group meeting to swiftly verify the facts proactively communicate with stakeholders

such as the media and investors clarify misinformation in a timely manner prevent the escalation of the incident and fully safe-

Key Performance guard the legitimate rights and interests of the company and its investors.During the reporting period the company paid a total of RMB ???.?? ten thousand in remunera- Investor Communication

tion to directors and senior management.Hengli Hydraulic places high importance on investor relations management. The company has formulated the Investor Relations

Management Measures with the Board Secretary being responsible for managing investor relations. The company maintains

regular communication and interaction with investors through various channels including earnings briefings investor hotlines

on-site research visits email correspondence and online exchanges. This approach facilitates the communication of company

value fostering mutual trust fully protecting investors' right to information and participation and continuously enhancing the

level of investor relations management.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Key Performance Compliance and Risk Management

During the reporting period the company received ?? on-site investor survey visits with a total of Compliance in Operations

??? attendees conducted ??? roadshows both domestically and internationally and answered Hengli Hydraulic adheres to compliant operations formulating compliance management documents such as the Compliance

?? investor phone calls. Evaluation Procedure the Intellectual Property Compliance Obligation Control Procedure and the Internal Audit Control Proce-dure establishing a compliance management system covering the entire business process. The company comprehensively iden-

tifies key compliance management points develops targeted control measures and regularly conducts compliance training

continuously enhancing the level of compliance management to ensure that all operational activities are carried out lawfully

compliantly and in an orderly manner.Shareholder Returns To ensure the lawful and compliant conduct of international trade activities the company has formulated systems such as the

Import Business Management System and the Export Business Management System standardizing the operational procedures

The company prioritizes providing reasonable returns to investors. While balancing its own stage of development and long-term for import and export businesses clarifying the standards and review requirements for documentation preparation and verifica-

growth needs it is committed to sharing development dividends with all shareholders and strives to maximize both corporate tion by international logistics specialists. This effectively prevents compliance risks in cross-border operations and promotes the

value and shareholder interests. The company strictly implements the profit distribution policy stipulated in the Articles of Asso- efficient and compliant execution of import and export business.ciation and the Shareholder Return Plan for the Next Three Years (????-????) maintaining a high proportion of cash dividends

building a sound shareholder value-return mechanism and enabling the broad base of investors to fully share in the outcomes

of the company’s high-quality development.Cash Dividend Distribution in Recent Three Years

Percentage of Net Profit

Year Cash Dividend per Share

Total Cash Dividend Attributable to Shareholders of

(RMB/share) (including tax) the Company in Consolidated (RMB ten thousand) Financial Statements (%)

???? ?.?? ?????.?? ??.?? Legal and Security Exchange

Risk Management

?????.???????.????.??

Risk Management System

The company has formulated the Risk Assessment and Control Management System establishing a standardized risk assess-

???? ?.?? ??????.?? ??.?? ment and control framework clarifying risk management responsibilities and processes and implementing the Three Lines of

(Proposed) Defense for risk prevention and control. This ensures that all operational activities are conducted in a lawful and compliant

manner continuously enhancing the level of business management and risk prevention capabilities.Three Lines of Defense for Risk Prevention and Control

All functional departments and business units serve as the first line of defense for risk management

First Line of

Defense systematically carrying out the analysis identification measurement management and monitoring

of business risks.The Audit Committee and the Audit Department serve as the second line of defense for risk manage-

Second Line ment specifically responsible for the establishment and operation of the risk management system

of Defense providing professional opinions and recommendations for risk-related decisions.Third Line of The Board of Directors and the Shareholders’ Meeting serve as the third line of defense for risk manage-

Defense ment. Operating independently of the business units they provide oversight of the company’s internal

controls and other matters and are ultimately accountable for the effectiveness of risk management.Risk Identification and Assessment

The company conducts annual risk assessment exercises to comprehensively identify various risks in its operations and

management. Based on the assessment results it formulates risk response plans to achieve precise control throughout the risk

management cycle. At the same time the Audit Department oversees and inspects the risk management work of all functional

departments regularly submitting supervision and evaluation reports as well as the annual comprehensive risk management

work report to the Board of Directors thereby continuously promoting the optimization and enhancement of the risk manage-

ment system.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Risk Management Process Standardized Business Conduct

A Risk Assessment and Management Team is established. Operating on a foundation of

defined risk management principles and risk appetite the team identifies risks by analyzing

internal and external environments alongside business operations. All identified risks are then Anti-Commercial Bribery and Anti-Corruption

Risk Identification categorized and documented according to their level.To promote the company’s lawful operation and encourage employees to uphold integrity in their work the company has

formulated systems such as the Employee Integrity System and the Anti-Corruption and Anti-Bribery Control Procedure incor-

porating integrity requirements into the Employee Handbook clarifying conduct standards for all staff and strictly implement-

ing anti-corruption and anti-commercial bribery management requirements thereby effectively safeguarding the company’s

Risks are analyzed using both qualitative and quantitative methods assessed across two interests and the legitimate rights and interests of employees.dimensions: probability of occurrence and impact on corporate objectives. This process The company regards employees’ integrity performance as a key basis for performance evaluation appointment promotion

distinguishes between material risks and routine risks to inform the formulation of risk dismissal and rewards or penalties. The General Manager’s Office and the Audit Department are responsible for supervising and

response strategies. inspecting employee integrity management while heads of all departments bear responsibility for integrity education and daily

Risk Assessment management of their departmental staff ensuring that the entire operational management process is conducted with integrity

compliance transparency and openness. During the reporting period the company did not encounter any litigation or adminis-

trative penalties related to commercial bribery or corruption.Based on the analysis and root causes response plans are formulated and implemented.These may involve avoiding accepting controlling or transferring risks with the aim of turn- Anti-Corruption Supervision

ing potential threats into development opportunities. The company actively builds a clean and compliant supervision system encouraging employees suppliers and other business

Risk Control partners to jointly participate in reporting improper or fraudulent activities such as harming the company’s interests misappro-

priating company assets and accepting bribes. Upon receiving instructions from higher authorities or relevant reports the Audit

Department evaluates leads related to corruption and fraud and promptly conducts special anti-corruption and anti-fraud

A risk early-warning and monitoring framework is established at each management level audits for valid reports.which is centrally overseen by the Audit Department to closely track risk exposure. The The company explicitly requires all newly hired employees to sign the Integrity and Self-Discipline Commitment Letter and

early-warning mechanism is triggered promptly when risk indicators approach pre-defined enters into the Supplier Integrity and Self-Discipline Agreement with Cooperative Suppliers jointly fostering a fair impartial and

Risk Monitoring and thresholds. transparent professional atmosphere and cooperative environment. During the reporting period the signing rates for the

Early Warning employee Integrity and Self-Discipline Commitment Letter and the supplier Supplier Integrity and Self-Discipline Agreement

both reached ???% achieving full coverage of integrity commitments.Internal Control Reporting Mechanism

The company strictly adheres to relevant laws regulations and requirements such as the Basic Standards for Enterprise Internal

Control conducting regular annual inspections of the operation of its internal control system. It comprehensively evaluates the The company has formulated the Reporting Management Measures to standardize the acceptance investigation and handling

effectiveness of the internal control system and issues the Internal Control Evaluation Report. During the reporting period the procedures for reported matters ensuring the independence and fairness of the investigation process and outcomes. The com-

company’s internal control system operated effectively with no material weaknesses identified. pany maintains open internal and external complaint and reporting channels establishing official reporting avenues such as an integrity hotline and an integrity email supporting employees and external stakeholders in exercising supervision and reporting

through designated platforms. For reports verified to be true the company will provide rewards to employees strictly imple-

Internal Audit ment confidentiality mechanisms for whistleblowers resolutely prevent retaliatory actions and fully protect the legitimate

The company has formulated the Internal Audit System and the Management Audit Project Closed-Loop Management Measures rights and interests of whistleblowers.clarifying the duties and authority of internal audit standardizing audit processes and conduct and establishing the Audit

Department as the executive body for internal audit work. The Audit Department is responsible for organizing and implementing

all internal audit activities fully leveraging the role of internal audit in supervision checks and balances risk prevention and Integrity Education

other areas thereby safeguarding the company’s asset security and stable operations. The company promotes a culture of integrity and self-discipline resolutely resists commercial bribery and all forms of corrup-

Based on the company’s strategy annual operational objectives and previous audit results and taking into account factors tion and regularly organizes integrity and self-discipline training for all departments. By analyzing typical cases to illustrate the

such as organizational risks management needs and audit resources the Audit Department scientifically prepares the annual legal responsibilities and severe consequences of illegal acts the company strengthens warning education continuously

audit plan. The plan is submitted to the company’s Board of Directors and the Corporate Operations Center for approval in enhances employees’ awareness of integrity in professional conduct and anti-corruption compliance and solidifies the ideolog-

accordance with established procedures. The company has established a comprehensive internal audit system covering the ical defense line of all staff.entire process from audit initiation pre-audit preparation audit implementation report issuance to follow-up tracking.Through a standardized and efficient operational mechanism the company continuously strengthens its internal control and

risk management defenses. Anti-Unfair Competition

The company strictly complies with laws and regulations such as the Anti-Monopoly Law of the People’s Republic of China and

Tax Management the Anti-Unfair Competition Law of the People’s Republic of China and has formulated the Fair Trade Advertising and Competi-tion Management System. The General Manager’s Office is responsible for investigating and collecting evidence of unfair compe-

tition practices while the Marketing Center is responsible for promoting and training on fair trade advertising compliance and

The company strictly complies with relevant laws and regulations such as the Corporate Income Tax Law of the People's Repub- the concept of fair competition ensuring that the company participates in industry competition on a fair and standardized

lic of China and the Tax Collection and Administration Law of the People's Republic of China fulfilling its tax obligations in accor- market platform. During the reporting period the company did not encounter any litigation cases or significant administrative

dance with the law and carrying out tax filing activities in a standardized manner. The company’s Finance Department is fully penalties arising from unfair competition practices.responsible for tax management accurately completing tax accounting and filing ensuring taxes are paid on time and in full The company consistently adheres to the principle of not engaging in unfair competition explicitly prohibits the use of improper

effectively preventing tax compliance risks and ensuring that the company’s tax management activities are lawful and compli- means in market transactions harming the interests of competitors or infringing on trade secrets and encourages employees to

ant. During the reporting period the company paid taxes amounting to ??? million Yuan in accordance with the law and no question report and request verification of any violations. Relevant leads are assigned for investigation by the General Manag-er’s Office with investigation results disclosed in accordance with regulations and legal procedures are pursued when neces-

significant tax violations occurred. sary to protect the company’s legitimate rights and interests. Employees found to have violated fair competition regulations will

be dealt with strictly in accordance with the Employee Handbook.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Party Building Leadership Party Building Honors

The Company has pioneered the“ Pioneer Hengli” Party building brand and established the Hengli Party-Mass Activity Center. It

regularly selects“ Outstanding Party Members” develops distinctive Party branch profiles and documents cases that demon-

Organizational Building strate how Party building drives business growth. These efforts set a benchmark for high-quality corporate development under

Party leadership. The Company’s Party organization was named an“ Advanced Grassroots Party Organization” in the Wujin

The Company is guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era prioritizing its study and

implementation as our foremost political task. This strengthens the“ Four Consciousnesses” reinforces the“ Four-sphere Confi- National Hi-Tech Zone for three consecutive years. It has since received multiple honors including the“ Wujin District Advanceddence” and ensures the“ Two Upholds” driving the Company’s high-quality development through high-quality Party building. Grassroots Party Organization” and the“ Changzhou City Advanced Grassroots Party Organization” reflecting the notable effec-

During the reporting period the Company’s Party Committee convened the ???? Party Members’ Congress. The Congress tiveness of its Party building work.further optimized the Party’s organizational structure by establishing three General Party Branches: for the Group for Technolo-

gy and for the Cylinder Division. It also realigned the scope of Party branches based on business relevance. These steps are

designed to deepen the integration of Party building with business operations using standardization to enable comprehensive Party Building Practices

high-quality growth.As of the end of the reporting period the company has established ? Party Committee ? General Party Branches and ?? Party The company’s Party Committee consistently adheres to the philosophy of“ promoting Party building around development andBranches with a total of ??? Party members. Throughout the year ?? meetings of the Party Committee were held. using Party building to advance development”. Staying true to its original mission and igniting the red engine the committee

innovatively developed the“ Three Heng Three Li” working method. By regularly organizing theoretical study standardizing

organizational activities and advancing six“ Party building plus” projects it strives to build a win-win pattern where Party build-

Group First Party Branch ing leads enterprise development and deeply integrates with business operations.Group Second Party Branch

Group Third Party Branch

Group General Party Branch Group Fourth Party Branch

Group Fifth Party Branch

Group Sixth Party Branch

Party Member Training General Party Branch Party Member Training General Party Branch

Organizational Casting Party Branch

Structure

Diagram of

the Party

Committee Business Division Party Branch

of Hengli

Hydraulic Hydraulic Cylinder Business Technology Center Party Branch

Group General Party Branch

Marketing Center Party Branch

Cylinder Integrated Party Branch

Technology Pump & Valve Party Branch Film Screening: Seeking the Ford July ? Celebration Activities

Hydraulic Technology

General Party Branch Research Institute General Party Branch

Technology General Party Branch

Organizational Structure Diagram of the Party Committee of Hengli Hydraulic

????

Organizational Structure Diagram of the

Party Committee of Hengli Hydraulic“Heng”—Protecting Mountains and Rivers

Writing a New Chapter for Green Development

Hengli Hydraulic strictly adheres to the bottom line of environmental compliance continuously improves its environ-

mental management system actively promotes the application of low-carbon technologies and steadfastly advances

carbon emission reduction pollutant treatment and efficient resource utilization. The company actively fulfills its

environmental responsibilities supports the achievement of the national "Dual Carbon" goals and drives its own

sustainable high-quality development through green growth.SDGs Addressed Climate Change Response

Environmental Management

Resource ManagementJiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Addressing Climate Change Likelihood Magnitude Time Affected Value Priority Potential Risk Category Risk Description of of Impact Horizon Chain Segment Ranking Financial Response MeasuresOccurrence of Impact Impact

The occurrence of Develop and improve

In the face of increasingly severe global climate change challenges Hengli Hydraulic strictly complies with the core requirements extreme weather events emergency response plans to such as heavy rain mitigate the impact of extreme

of the Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies No. ???Sustainability Reports (Trial). The com- blizzards and typhoons Decrease weather on production and

pany systematically carries out climate management from the four dimensions of governance strategy risk management and may affect the normal operations.production and Upstream in

metrics and targets continuously strengthens carbon emission control and steadily advances its transformation toward sustain- Acute operation of factories operating Dynamically track supplier

able development. and logistics transporta- Low Medium

Short- Operations Medium revenue

material preparation and

Risks tion efficiency leading term production progress and increase

to disruptions in raw Downstream regularly assess the rationality

material supply or in of procurement cycles.Governance Phy- delays in product operating Reduce dependence on single delivery thereby causing costs suppliers and regions to

sical property damage. enhance supply chain stability.The company continues to improve its climate change management system establishing a greenhouse gas management policy Risks Continuously advance energy-sav-

of "dual-carbon empowerment circular economy sustainable development and commitment to neutrality". It has formulated Global warming may ing and consumption reduction increase the company's management adopt measures

the Greenhouse Gas (GHG) Emission Management and Control Procedure to implement standardized full-process control over Chronic energy demand for Mid-

Increase such as rooftop distributed

photovoltaic power generation

greenhouse gas emissions. The company designates the Environmental Protection Section of the Equipment Department to lead cooling temperature Low Medium term Operations Medium in

Risks control etc. thereby operat-

centralized control of air

and oversee key tasks such as setting emission reduction targets and carbon emission accounting taking concrete actions to raising operational Long- conditioning systems and ing costs recycled water reuse to improve

respond to the national "Dual Carbon" goals and fully support the achievement of the United Nations Sustainable Development costs. term resource utilization efficiency and reduce energy consumption.Goals. Governments worldwide

To enhance internal climate management capabilities and professional expertise in carbon accounting during the reporting are increasingly stringent in their requirements for

period the company actively organized relevant personnel to participate in specialized training on carbon verification carbon Policy greenhouse gas source Strengthen internal carbon

footprint and carbon emission management offered by external institutions. It also conducted internal low-carbon knowledge identification accounting and and emission regulation. Mid- Increase inventory and emission

promotion activities effectively strengthening awareness and voluntary action toward low-carbon practices among all employ- The company needs to Low High term Operations High in reduction management to

Legal continuously strengthen Long- operat- ensure compliance with ees. carbon emission control term national accounting statistical Risks and compliance ing costs and verification requirements

management which may for greenhouse gas emissions.lead to increased

operational costs.Driven by national policies

demand is increasing for

energy-saving and Continuously improve the

low-carbon technologies technology R&D system

as well as new-energy

Techn- Mid- strengthen the construction of construction machinery. In Increase

response the Company is term scientific research talent

ology ramping up investment in Medium Medium Operations Medium in teams and enhance innova-

green technology R&D and Long- operat- tion capabilities and technical

Risks new-energy product term ing costs expertise in energy conserva-development. This may tion and carbon reduction.however create upward

pressure on operational

Trans- costs.ition The shift in consumer

preferences toward

Risks green and low-carbon Continuously strengthen products coupled with

intensified market Mid- Decrease

market research to understand

competition may exert term market demand.Market

pressure on the sales of Medium High Downstream High in Flexibly adjust product

Risks the company's Long- operat- structure and market traditional construction term ing positioning expand the market

Carbon Verification Training CBAM Training machinery products leading to risks of revenue share of green products and

inventory overstock and optimize industrial layout.slow sales.The expectations of the Enhance public opinion

public and various

Strategy monitoring establish a crisis stakeholders regarding the company's implementation management plan for negative

of the "Dual Carbon" goals publicity and protect corporate

and its commitment to reputation.In light of industry trends and regulatory policies and in line with its business profile the Company identifies and assesses sustainable development Establish transparent and efficient

are continuously rising. If Decrease

climate-related risks and opportunities and formulates targeted measures to mitigate potential risks and capitalize on develop- Reput- Short-the company's performance term communication mechanisms with in stakeholders actively communi-

ment opportunities. ational in green and low-carbon Low Low Downstream Lowtransition and climate Mid- operat- cating the company's actions and change response falls short ing progress in sustainable Risks of expectations it may face term

risks such as reputational revenue

development.damage and declining Improve the quality of ESG

investor confidence which information disclosure to enhance

could consequently affect external recognition and trust in

its market competitiveness. the company.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Opportunity Opportunity Likelihood Magnitude

Time Potential

of of Horizon

Affected Metrics and Targets

Type Description of Value Chain

Priority

Ranking Financial Response MeasuresOccurrence Impact Impact Segment Impact To actively respond to the national "Dual Carbon" strategic goals and implement the industry's green transition pathway the

company based on its operational characteristics scientifically sets phased carbon emission reduction targets. By implement-

Increasing the Install rooftop solar PV ing a series of energy-saving technological transformation projects it continuously improves energy utilization efficiency and

proportion of renew- systems to raise the share of climate resilience steadily advancing the low-carbon development process.able energy used and clean energy.Energy adopting clean energy

Mid- Decrease

such as green power in term Introduce a digital carbon High Medium Operations High in accounting platform to Metrics Unit Year ???? Year ???? Year ????

Substitution production processes Operating

can effectively reduce Long- monitor carbon emissions

carbon emissions and term

Costs and energy usage in real Total Greenhouse

time improving energy Metric Tonnes of energy consumption Gas Emissions CO Equivalent ?????.?? ?????.?? ?????.??

lowering energy costs. efficiency management. (Scope ? + Scope ?) ?

The company Scope ? Greenhouse

Metric Tonnes of

Gas Emissions CO Equivalent

?????.???????.???????.??

launches low-carbon ?

products compatible

Products with new energy Boost R&D investment

equipment providing Increase strengthen low-carbon Stationary Metric Tonnes of ?????.?? ?????.?? ?????.??

and customers with High High Long- in Downstream High technology and product Source Emissions CO? Equivalent

environmentally term Operating innovation and drive the Services friendly and efficient Revenue green transformation of our

solutions which can product portfolio. Mobile Metric Tonnes of ????.?? ????.?? ????.??

enhance market Source Emissions CO? Equivalent

competitiveness.Fugitive Emissions Metric Tonnes of

Explanation CO? Equivalent

????.??????.??????.??

Likelihood of Occurrence: Refers to the frequency/interval or possibility of a risk/opportunity occurring. It is primarily assessed

based on historical occurrence probability external scenarios progress of policy implementation and expert forecasts. Likeli- Scope ? Greenhouse Metric Tonnes of

hood is rated from "Low" to "High". Gas Emissions CO Equivalent ?????.?? ?????.?? ?????.???

Magnitude of Impact: Refers to the severity of the impact determined by considering the shock level and the likelihood of the

risk/opportunity occurring. It comprehensively accounts for factors such as effects on the business model value chain and Greenhouse gas

Metric Tonnes of

emissions per unit

financial implications. Impact magnitude is rated from "Low" to "High". CO? Equivalent/

??.????.????.??

of output million yuan

Time Horizon of Impact: Different risks and opportunities affect the company over varying timeframes. The company classifies

the time horizon as Short-term (?-? year) Mid-term (?-? years) and Long-term (over ? years). Note： ?.The statistical scope of greenhouse gas (GHG) emission data covers the Hydraulic Cylinder Plant of Jiangsu Hengli

Affected Value Chain Segment: Refers to the stage(s) of the value chain impacted categorized as Upstream (involving raw materi- Hydraulic Co. Ltd.al suppliers procurement logistics etc.) Operations (involving production manufacturing internal processes etc.) and Down- ?. Hengli Hydraulic uses an SGS-certified organizational carbon accounting software applying unified emission factors and

stream (involving distribution sales customer service etc.). accounting standards to digitally manage and archive carbon emission data. During the reporting period Hengli Hydraulic

Priority Ranking: Comprehensively considers factors such as likelihood of occurrence magnitude of impact and time horizon conducted greenhouse gas verification in accordance with ISO ?????-?:???? and has obtained certification from TüV NORD

combined with the company's actual situation. Priority is ranked as "Low" "Medium" or "High". Germany.Note: Definitions for likelihood of occurrence magnitude of impact time horizon of impact affected value

chain segment and priority ranking in other chapters of the report are consistent with the above and will not

be reiterated. Greenhouse Gas Emission Management

Impact Risk and Opportunity Management Greenhouse Gas Verification

The company has established an internal greenhouse gas verification mechanism introduced carbon emission accounting

software and conducts precise accounting and digital management analysis of organizational carbon emissions and product

The company continuously improves its climate risk management processes develops scientifically sound and reasonable risk carbon footprints. This enables dynamic monitoring and precise control of carbon emissions providing strong data support for

response measures and promptly adjusts and updates relevant measures based on changes in external policies and market con- advancing carbon reduction efforts.ditions ensuring the effectiveness of risk management.Risk In accordance with the Exchange's Sustainability Reporting Guidelines and supporting guides and based on the company's business and operational realities the company identifies climate-related risks and

Identification opportunities from three dimensions: physical risks transition risks and opportunities. A list of risks and

opportunities is thereby developed.Risk Systematically assess the identified risks and opportunities focusing on analyzing their financial impacts

Assessment timeframes and severity.Risk Based on the results of risk identification and assessment develop targeted management measures and

Response action plans to ensure the company possesses sufficient capabilities and resources to address climate risks and seize development opportunities.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

During the reporting period based on the ISO ?????-?:???? international standard and using the cylinder plant and cold draw- To solidly advance energy conservation emission reduction and lower carbon emission intensity the company actively explores

ing workshop as the accounting boundary the company conducted the ???? greenhouse gas emission verification. The verifica- low-carbon production models. Through measures such as green energy substitution and energy-saving equipment upgrades it

tion was successfully certified by German TüV NORD providing credible data support for the company's carbon management continuously strengthens the effectiveness of energy conservation and emission reduction steadily promotes green and low--

decisions and external information disclosure. carbon transformation and supports the achievement of the "Dual Carbon" goals with concrete actions.Case

Study Photovoltaic Power Generation Project

Over the past two years Hengli Hydraulic has successively

completed the construction of rooftop distributed photo-

voltaic power stations with capacities of ?.? MW and ?.?

MW. The projects adopt a "prioritize self-consumption

surplus electricity fed into the grid" model generating

approximately ?? million kWh of green electricity annually

and reducing carbon emissions by about ???? tons per

year. This further increases the proportion of green energy

used and advances the company towards its low-carbon

TüV NORD Certification and sustainable development goals.Energy Conservation and Emission Reduction Actions

The greenhouse gases generated during the company's production and operations are primarily Scope ? (direct emissions) and

Scope ? (indirect emissions) with specific emission sources as follows:

Category Classification Facility Emission Source Case

Study Steam Condensate Heat Recovery

Boiler Natural Gas Combustion

Hengli Hydraulic successfully achieves the recovery and

Drying Oven Natural Gas Combustion reuse of heat from steam condensate by installing heat

exchange units reducing carbon dioxide emissions by ???

Stationary Cooking Appliances Natural Gas Combustion tons annually. This initiative not only improves energy utili-

Combustion zation efficiency and effectively reduces thermal pollution

Emissions Welding Equipment Acetylene Combustion in the production process but also creates a synergistic

win-win outcome for both economic and environmental

Welding Equipment Propane Combustion benefits.Scope ?

Mobile Forklifts Trucks Shuttle Buses Diesel Combustion

Combustion Diesel Generators

Emissions Forklifts Commercial Vehicles Gasoline Combustion

Refrigeration System Refrigerant Leakage

Fire Extinguishers Carbon Dioxide

Fugitive Emissions

Welding Carbon Dioxide

Septic Tank Methane Fugitive Emissions

Scope ? Energy Indirect Emissions Purchased Electricity

Production and Office

Electricity Consumption

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Environmental Management Strategy

The company comprehensively identifies and scientifically assesses the environmental risks and opportunities that may arise

The company strictly complies with national laws and regulations such as the Environmental Protection Law of the People's

Republic of China the Air Pollution Prevention and Control Law of the People's Republic of China the Water Pollution Preven- during production and operations promptly takes targeted control measures and effectively prevents and mitigates environ-

tion and Control Law of the People's Republic of China and the Law of the People's Republic of China on the Prevention and mental risks.Control of Environmental Pollution by Solid Waste. It fully implements the environmental regulations and standards applicable

to its operational locations strictly controls pollutant and waste emissions throughout the production process and firmly Risk Likelihood Magnitude Time Affected Priority Potential

adheres to the bottom line of environmental compliance. During the reporting period the company did not incur any significant Category Risk Description of of Horizon Value Chain Financial Response Measures

administrative penalties from environmental or other relevant authorities due to environmental incidents. Occurrence Impact of Impact Segment

Ranking Impact

As national environmental Closely monitor and strictly

Governance laws regulations and regulatory standards comply with national and

become increasingly local environmental laws

Adhering to the environmental principle of "prioritizing environmental protection for the benefit of future generations" the com- Policy stringent the company Increase and regulations.pany has formulated environmental management systems including the QES Management Manual the Waste Gas Management must continuously invest and funds in technology in Strengthen environmental Regulations the Wastewater Management Regulations the Solid Waste Management Regulations and the Noise Management upgrades and equipment Short- operat- monitoring efforts imple-

Regulations. It has established a standardized environmental management system overseen by the General Manager to ensure Legal retrofitting to meet rising ing costs Low High term Operations Med- and ment standardized disposal

the effective operation of the management system. During the reporting period the company obtained ISO ????? Environmen- environmental compliance decrease of emissions and waste.tal Management System certification. Risks requirements. In the event iumof pollutant emission Mid- in operat- Actively implement clean exceedances or similar term production technology

issues the company may ing

face risks such as lawsuits revenue upgrades to reduce

administrative penalties pollutant emissions at the

and reputational damage. source.Opportunity Opportunity Likelihood Magnitude Time Affected Priority

Potential

of of Horizon Value Chain Financial Response Measures

Type Description Occurrence Impact of Impact Segment Ranking Impact

By continuously advancing Strengthen equipment

technological innovation upgrades and green

and adopting more process improvements

environmentally friendly fully implement a low-car-

Technol- and efficient treatment

technologies in production Decrease bon and clean production ogical model and build a green processes it is possible to High High Mid- Operations High in manufacturing system.Opport- reduce pollutant and waste term Operating

unities emissions at the source. This

not only meets higher Costs

Continuously upgrade

pollutant treatment

compliance standards but technologies to improve

also effectively enhances the pollution control capabili-

Hengli Hydraulic Environmental Management System Certification level of clean production. ties.Hengli Hydraulic has established an Environmental Protection Section within the Equipment Department responsible for super-

vising the disposal of "three wastes" (waste gas wastewater and solid waste) conducting statistical analysis of environmental Impact Risk and Opportunity Management

data identifying and evaluating environmental aspects and formulating environmental emergency plans. Environmental safety

officers conduct regular supervision and inspections according to their duties to ensure the effective implementation of all envi- Risk Management Process

ronmental management tasks.The company has established the Environmental Aspects Management Procedure which defines the methods and processes for

Furthermore the company incorporates the achievement of environmental protection objectives into employees' performance identifying and assessing environmental risks. This enables the comprehensive and precise identification and evaluation of envi-

evaluations regularly inspects the environmental production and pollutant treatment status of each department ensures that ronmental aspects arising from production and operational activities thereby driving the continuous optimization and improve-

environmental responsibilities are assigned to individuals and motivates all staff to actively implement green production con- ment of the environmental management system.cepts jointly maintaining a sound ecological environment.Risk Use methods such as surveys on-site observations and inspections to systematically identify

Identification potential environmental aspects and their potential impacts in production and service processes.Key Performance

Employ methods such as expert judgment yes/no judgment and comparative analysis combined

During the reporting period the company's total investment in environmental protection amounted to Risk with factors like frequency of occurrence scope of impact and severity of harm to conduct a

???? Assessment comprehensive evaluation of identified environmental aspects. Results are recorded in the Environ-RMB ten thousand. mental Aspect Identification and Evaluation Form.Risk For assessed risks implement controls through various means such as operational controls emergen-

Response cy preparedness and response setting targets and indicators and formulating management pro-

grams to effectively reduce environmental impacts.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Environmental Monitoring Indicators and Targets

The company has established the Environmental Safety Monitoring Procedure which stipulates the annual commissioning of The company has established the Environmental Protection Target Management System which defines the overall environmen-

qualified third-party testing agencies to monitor emissions of exhaust gases wastewater and noise. This ensures continuous tal protection objectives and breaks them down into specific goals for each department. The company insists on assessing the

compliance of all discharge indicators with national and local environmental protection regulations. During the reporting completion status of these departmental targets on a monthly basis and conducts an annual evaluation and adjustment of the

period the pollutant monitoring compliance rate reached ???% with no cases of exceeding emission standards thereby caus- objectives achieved in the previous year at the beginning of each year. This comprehensive approach aims to prevent major

ing no adverse effects on employee health or the surrounding community environment. environmental pollution incidents and effectively safeguard employee safety as well as the company's interests.Environmental Impact Assessment Environmental Protection Targets Achievement Status for ????

The company strictly adheres to laws and regulations such as the Environmental Impact Assessment Law of the People’s Repub-

lic of China and the Regulations on the Environmental Protection Management of Construction Projects conducting comprehen- “Zero” major environmental pollution incidents Achieved

sive environmental impact assessments for all types of projects and obtaining corresponding approvals. Upon project comple-

tion the company organizes environmental protection-specific acceptance inspections and engages third-party institutions to

monitor the operational effectiveness of environmental protection facilities. This ensures full lifecycle compliance with environ- Effective centralized wastewater treatment rate: ???% Achieved

mental standards for all projects effectively reducing the impact of pollutants on the ecological environment.Effective exhaust gas treatment rate: ???% Achieved

Hazard Identification

The company conducts regular inspections of environmental safety hazards in key areas such as production processes and envi- Legal collection and treatment rate of hazardous waste: ???% Achieved

ronmental protection facilities. Any identified issues are documented in a registry and strictly rectified effectively mitigating the

risk of environmental incidents. In addition the company has established the Infrastructure and Working Environment Manage-

ment Procedure and the Equipment Management Procedure to strengthen performance testing and routine maintenance of

environmental treatment equipment promptly identifying and eliminating potential equipment failures. Pollutant Emissions and Waste Management

Emergency Plans and Drills

Exhaust Gas Management

Adhering to the principle of "prevention first combined with control" the company has formulated the Hazardous Waste Leak

Emergency Response Plan and the Wastewater Treatment Emergency Response Plan. It has built a comprehensive emergency Exhaust gas generated in the company's production processes mainly includes welding fumes electroplating exhaust boiler flue

rescue team system regularly organizing emergency training and practical drills to continuously enhance the rapid response gas coating emissions and sandblasting dust. To effectively control pollution the company has equipped corresponding

and handling capabilities for sudden environmental incidents. exhaust gas treatment facilities. Based on the characteristics of different pollutants various technologies are applied such as

filtration activated carbon adsorption and bag-type dust removal ensuring that treated emissions comply with national and

local environmental standards. During the reporting period the company achieved ???% compliance in exhaust gas treatment

and discharge.Case

Study Emergency Drill for Environmental Safety Incidents

In order to enhance the emergency response capability of water treatment staff in handling wastewater incidents

and improve the efficiency of responding to environmental safety accidents Hengli Hydraulic organized an emergen-

cy drill for environmental safety incidents. During the drill all participants strictly followed instructions and carried

out operations in accordance with standard procedures successfully achieving the expected outcomes.Exhaust Gas Treatment Facilities

Wastewater Management

Wastewater generated by the company primarily originates from production processes (such as electroplating and coating)

employees' daily activities as well as other processes including testing and exhaust gas scrubbing. The company implements

classified collection and segregated treatment of different types of wastewater to mitigate the environmental impact of waste-

water discharge.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Noise Management

Wastewater Type Treatment Measures

The company strictly complies with the noise emission limits for Class ? acoustic environment functional zones as specified in

the Environmental Noise Emission Standards for Industrial Enterprises at Boundary (GB ?????-????). Through measures such as

After being collected in a wastewater transfer area it is pumped to the water vibration reduction and noise control for high-noise equipment comprehensive evaluation of noise parameters during the pro-

Production Wastewater curement of new equipment and shielding of noise sources during equipment installation and maintenance the company con-treatment plant for processing. Part is recycled for production use and part is tinuously manages boundary noise to ensure compliance with national and local environmental regulations.discharged into the municipal sewage network after meeting standards.Additionally the company conducts boundary noise monitoring according to the frequency specified in the pollutant discharge

permit and issues corresponding test reports. If monitoring data shows abnormalities or approaches the limits timely corrective

and preventive measures are implemented to ensure stable and compliant noise emissions. During the reporting period the

Domestic Wastewater After pretreatment (such as filtration oil separation and sedimentation) to company’s boundary noise monitoring results consistently met national standards.bring it up to standard it is discharged into the municipal sewage network.Other Industrial Wastewater containing heavy metals waste oil organic compounds etc. is

Practicing Green Operations

Wastewater treated as hazardous waste in accordance with national regulations and safely disposed of by qualified professional units. Green Office

The company actively promotes green and low-carbon work and lifestyle practices continuously raising employees' awareness

The company conducts daily testing of key water quality indicators for discharged water through the water treatment workshop of energy conservation and resource efficiency in the office environment and fostering a green office atmosphere characterized

continuously monitoring and ensuring that all discharged water meets national and local discharge standards. During the by full participation and proactive action.reporting period the company achieved ???% compliant treatment and discharge of wastewater.Key Performance Indicators Green Office Measures

Comprehensively adopting LED lighting to reduce energy consumption for office area illumination.During the reporting period the company's total wastewater discharge amounted to ??????.? tons. Setting up waste paper recycling points in office areas with confidential documents shredded and uniformly

recycled.Promoting the use of online office systems such as OA SAP and remote meeting systems to reduce paper con-

Waste Management sumption.Posting water-saving reminders in restrooms and displaying promotional banners in the staff canteen to

The general industrial solid waste generated during the company's production processes mainly includes scrap materials iron enhance water conservation awareness among all employees.scraps shot blasting and sandblasting dust etc. Hazardous waste primarily consists of waste oil electroplating wastewater

waste chemical containers spent filter elements and waste cutting fluids. Adhering to the principles of "reduction resource

utilization and harmless treatment" the company strictly implements classified collection zoned storage and standardized

disposal of waste to ensure that all solid waste is properly handled. Environmental Protection Training

The company regularly conducts specialized training sessions on energy conservation and environmental regulations standard-

ized disposal of the "three wastes" (waste gas wastewater and solid waste) environmental emergency response and cleaner

Solid Waste Treatment Measures production. Monthly environmental protection meetings are also organized for team leaders. Additionally the company carries

out environmental education and awareness campaigns through multiple channels such as bulletin boards electronic displays

General industrial solid waste that can be sold externally or handed over to sanitation departments for removal and dedicated posts on the corporate WeChat official account continuously enhancing employees' environmental awareness

is regularly managed by the Administration Department with accurate records maintained in the Solid Waste and actively promoting low-carbon green production and lifestyle practices.Treatment Ledger.For waste and hazardous solid waste that cannot be handled in-house the company engages qualified profes-

sional units with appropriate environmental certifications for compliant disposal and maintains a complete

Hazardous Waste Treatment Ledger.Key Performance Indicators

During the reporting periodhazardous waste generated: ????.? tons hazardous waste disposed:

????.? tons; compliant disposal rate: ???%.Specialized Environmental Training

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Metrics Unit Year ???? Year ???? Year ????

Number of environmental V??G??? Closed-Circuit Pump?Applied in the Hydrogen Compression Industry

training sessions times ?? ?? ??

Number of participants in

environmental protection person-time ???? ???? ????

training

Duration of Environmental

Protection Training hours

????????????

Green Production

The company actively promotes green manufacturing aiming to minimize the environmental impact across the entire produc-

tion process—from product design green procurement and efficient production to recycling and disposal. Simultaneously the

company vigorously advances the construction of intelligent production lines continuously optimizes production processes

and improves the efficiency of resource and energy utilization thereby decreasing energy consumption waste generation and

pollutant emissions during production.The company has obtained national-level "Green Factory" certification and actively carries out clean production audits success-

fully passing the clean production audit acceptance in ????. In the future the company will continue to deepen the integration

of clean production and intelligent manufacturing driving the enterprise toward a higher-quality more sustainable and

low-carbon development model.V??E?? Closed-Circuit Pump and M??VE?? Motor?Applied in the Solar Panel Mounting Industry

Green Factory

Green Packaging

The company consistently adheres to the core principles of "reduction recyclability and low pollution" to continuously opti-

mize product packaging materials and structural design. To promote the green upgrade of packaging materials the company is

progressively replacing traditional wooden frames with reusable iron frames for certain products. This initiative aims to reduce

timber consumption and the generation of single-use packaging waste at the source embodying the company's commitment to

environmental protection and resource conservation.Green Products and Services

In active response to the national low-carbon development strategy the company deeply implements the concept of green man-

ufacturing and continuously drives innovation and upgrades of its products toward higher performance and lower energy con-

sumption. Currently some of the company's products are already applied in fields such as new energy wind power providing

reliable and efficient component support for clean energy equipment like wind turbine units. This effort contributes to enhanc-

ing the operational stability and overall economic efficiency of the new energy industry jointly promoting the optimization of

the energy structure and advancing low-carbon sustainable development.Pitch Hydraulic Cylinder and Accumulator?Applied in Wind Turbine Units

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Resource Management Strategy

The company systematically identifies and assesses risks and opportunities associated with energy consumption in its produc-

tion and operations. Based on these findings it formulates corresponding measures to further optimize the direction and focus

Energy Management of its energy management.The company strictly complies with relevant laws and regulations such as the Energy Conservation Law of the People’s Republic Likelihood Magnitude Time Affected Potential

of China and actively promotes the efficient utilization of energy. In production and operational processes the company primar- Risk Risk Description of of Horizon Value

Priority

Ranking Financial Response Measures

ily uses conventional energy sources such as electricity diesel and gasoline while gradually increasing the proportion of clean Type Occurrence Impact of Chain Impact Segment Impact

energy applications such as solar power. The company continuously engages in waste heat recovery and energy-saving techno- The prices of Replace traditional energy

logical upgrades advancing low-carbon production through energy conservation and consumption reduction and driving the traditional energy sources with clean energy such

green transformation of its energy structure. sources such as as photovoltaic power

diesel and gasoline generation and natural gas to

are prone to market Short- reduce reliance on fluctuations Governance Market Risk in the external energy market.fluctuations which term Increased Med- Med- Med- opera- Optimize the energy usage

The company adheres to the energy management policy of "complying with laws and regulations conserving energy reducing can directly impact Operationsthe company's ium ium ium tional structure by adopting measures

consumption and emissions and promoting clean production; tapping potential for efficiency improving energy efficiency Mid- like replacing energy-saving production and term costs equipment and improving

reducing costs and pursuing continuous improvement". It has formulated the Energy Management Manual and established a operational costs production processes to

scientific and standardized energy management system committed to continuously reducing energy consumption enhancing thus squeezing profit continuously enhance energy margins. utilization efficiency.energy utilization efficiency and achieving sustainable development goals. As of the end of the reporting period the company

has obtained ISO ????? Energy Management System certification.Likelihood Magnitude Time Affected Opportunity Opportunity Value Priority Potential of of Horizon Financial Response Measures

Type Description Occurrence Impact of Chain RankingImpact Segment Impact

Through technological

upgrades and ener- Continuously advance

gy-saving practices such energy-saving technological

Operational as steam waste heat Mid- Reduc- renovations strengthen the

recovery the company Med- term tion in construction of waste heat Opportunity has significantly reduced High Operations High opera- recovery systems and

energy loss and waste in ium Long- consistently reduce energy

production processes term tional costs consumption and energy costs effectively lowering per unit of product.energy costs.Impact Risk and Opportunity Management

The company has formulated the Risk and Opportunity Assessment and Management Procedure to comprehensively identify

and assess risks and opportunities related to energy management. By standardizing management processes the company

Hengli Hydraulic Energy Management System Certification ensures that potential risks are effectively controlled and development opportunities are promptly seized.Led by the General Manager's Office all departments systematically identify potential risks and

The company has established a comprehensive energy management organizational structure with the General Manager clearly Risk opportunities that may affect the achievement of energy management objectives across the entire

designated as the primary responsible person providing overall leadership and driving the establishment and implementation Identification process of the energy management system.of the energy management system. The Equipment Department serves as the main responsible unit for energy management

overseeing the operation and daily management of the energy management system. All business departments actively partici- Each department according to its functional responsibilities assesses the identified risks and Risk

pate in energy management within their respective areas collaboratively implementing various energy-saving measures to opportunities in various aspects of production and operations determining the risk levels and Assessment

ensure that energy conservation efforts are carried out effectively at all levels. prioritizing the opportunities.General Manager Risk Based on the assessment results corresponding control measures are formulated and implemented.Response The General Manager's Office summarizes and evaluates the effectiveness of these measures.Management Representative

Indicators and Objectives

Marketing Center Enterprise Operations Center Finance Department EachBusiness Division To ensure the effective operation of the energy management system the company has formulated the Energy Objectives Indica-

tors and Management Plan Control Procedure. Each year specific energy indicators and targets are established in alignment

with the business plan. The achievement of these targets is incorporated into the performance evaluation system. Key energy

Energy Management System Organizational Chart indicators are regularly monitored to drive the effective implementation and continuous improvement of energy management

efforts.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Energy Type Unit Year ???? Year ???? Year ???? Cultivation of Energy Conservation Awareness

The company places high importance on building a culture of energy conservation among all employees. Through various initia-

Natural Gas ????? m3 ????.?? ????.?? ????.?? tives such as energy-saving promotions experience sharing knowledge competitions and skills training the company continu-

ously enhances employees' awareness and practical capabilities in energy conservation ensuring the effective implementation

of all energy-saving and consumption-reduction measures.Gasoline Ton ???.?? ???.?? ???.??

Diesel Ton ???.?? ???.?? ???.?? Case Study Energy Conservation Awareness Week Activities

Total Purchased Electricity ????? kWh ?????.?? ?????.?? ?????.?? In June ???? to celebrate the "National Low-Carbon Day" the company organized an Energy Conservation Aware-

ness Week. Through channels such as display boards multimedia presentations and dedicated posts on the official

Photovoltaic (PV) ????? kWh WeChat account the company promoted knowledge on energy conservation and carbon reduction to employees

Power Generation ??.?? ???.?? ???.?? actively fostering a culture of green and low-carbon development.Total Energy Consumption Ton of Standard Coal Equivalent (tce) ?????.?? ?????.?? ?????.??

Energy Consumption tce per RMB ? million

Intensity of operating revenue ?.?? ?.?? ?.??

Total Non-renewable Ton of Standard

Energy Consumption Coal Equivalent (tce) ?????.?? ?????.?? ?????.??

Total Renewable Ton of Standard

Energy Consumption Coal Equivalent (tce) ??.?? ???.?? ????.??

Proportion of Renewable

Energy Consumption % ?.?? ?.?? ?.??

Total Clean Ton of Standard

Energy Consumption Coal Equivalent (tce) ??.?? ???.?? ????.?? Water Resource Management

The company strictly adheres to the requirements of laws and regulations such as the Water Law of the People’s Republic of

Energy Conservation and Consumption Reduction Management China comprehensively integrating the concept of water conservation into all aspects of production and operations. It actively

implements various water-saving measures and employs an RO membrane reuse system to achieve the recycling of water

The company actively promotes energy-saving technological upgrades in its plant areas introduces high-efficiency and ener- resources continuously improving water utilization efficiency. Currently the company’s production and domestic water supply

gy-saving equipment promptly phases out high-energy-consuming equipment and constructs photovoltaic power stations. By is sourced from the municipal centralized water system ensuring stable water sources with no risk of water scarcity.implementing a series of energy conservation and consumption reduction measures the company has effectively reduced com-

prehensive energy costs improved energy utilization efficiency and provided strong support for building a low-consumption RO Membrane Treatment System

green and sustainable production model.Partial Energy Conservation and Emission Reduction Projects of Hengli Hydraulic

Project Name Energy-Saving Effect

Boiler Blowdown The recovered thermal energy from boiler blowdown water is used to preheat

Water Heat Recovery soft water makeup which translates to an annual saving of approximately ?????? cubic meters of natural gas.Photovoltaic panels were installed on the roofs of Building ? and Building ?A

Photovoltaic Power with a total installed capacity of ?.????? MW achieving an annual power gen-

Generation Project eration of about ? million kWh. This has significantly reduced the cost of pur-

chased electricity.The layout and routing of the steam pipeline network were redesigned with

Underground Steam Pipeline buried pipelines replaced by above-ground overhead pipelines. This elimi-

Renovation in Cylinder Plant Area nates heat loss and energy waste caused by damage to underground steam

pipes or insulation sleeves.Energy-saving renovations were carried out on equipment such as rectifiers The company regularly conducts water conservation publicity and education activities disseminating water-saving knowledge

Equipment Energy-Saving and central air conditioning systems. Additionally fluorescent lamps in the through bulletin boards and posting water-saving labels in key water consumption zones. This ongoing effort aims to strengthen

Renovation plant buildings were replaced with LED lights effectively reducing electricity employees' awareness of water conservation and regulate daily water usage behavior.load and improving energy utilization efficiency.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

China Water Week Awareness Campaign Material Management

The company has established systems such as the Material Storage and Protection Management System and the Warehouse

Inventory Management System to implement full-process control over material receipt dispatch storage and protection.Through rational planning of storage space and standardized inventory operations the company ensures that materials meet

production quality and environmental management requirements.Material Control Measures

Material The first-in first-out (FIFO) principle is strictly implemented. Inventory Cards are used to record mate-

Receipt rial receipt and dispatch clearly documenting details such as the date supplier and quantity. During

and Dispatch issuance materials are retrieved in a standardized top-to-bottom order according to the sequence of

Management receipt.Materials are stored in designated zones based on their characteristics. Warehouses are kept well-ven-

Material tilated and protected from direct light. Perishable items are sealed and stored in airtight conditions.Storage Hazardous chemicals as well as flammable and explosive materials are stored in designated restrict-

Indicator Unit Year ???? Year ???? Year ???? Management ed areas with strict adherence to fire prevention electrical safety explosion-proof requirements and regular Hazard Identification.Total Freshwater Intake ????? tonnes ??.?? ???.?? ???.?? Inventory A combination of cycle counting and annual physical inventory is adopted to ensure the accuracy of

Of which: Municipal Counting material stock data. Corrective and preventive measures are promptly implemented for any issues

Water Purchased ????? tonnes ??.?? ???.?? ???.?? identified during the counting process.Freshwater Consumption ????? tonnes ??.?? ???.?? ???.??

?? ??“Heng”—Forged Quality:

Leading Development through Innovation

Hengli Hydraulic takes innovation as its core driving force deepening industry-university-research collaboration

and industry exchanges to promote technological innovation and the transformation of achievements. The compa-

ny has built a full-process quality control system strictly adheres to the baseline of product and service safety and

quality continuously improves the construction of a sustainable supply chain and strengthens data security and

privacy protection. Through comprehensive responsible practices it empowers the sustainable development of

the industry.SDGs Addressed Innovation-Driven Development

Product and Service Safety and Quality

Supply Chain Security

Data Security and Privacy ProtectionJiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Innovation-Driven Development Innovation Incentive Mechanism

To effectively stimulate innovation vitality the company has established incentive systems such as the Intellectual Property

Reward and Penalty Regulations offering special bonuses for invention patents software copyrights and published research

Hengli Hydraulic is committed to innovation-driven development. The company continuously increases R&D investment refines papers. Indicators such as patent applications are incorporated into the performance evaluation system for technical personnel

its technological innovation system and fully leverages the strengths of its R&D platforms to enhance technological break- with assessment results serving as key references for promotions position adjustments and performance bonus allocations

throughs and new product development. Actively building a collaborative ecosystem that integrates industry academia thereby building a results-oriented innovation incentive mechanism.research and application Hengli Hydraulic participates deeply in setting industry standards. Through extensive technical

exchanges and collaborative innovation it accelerates the localization of high-end hydraulic components and systems thereby Simultaneously the company regularly organizes special commendation activities such as the "Innovation Without Limits"

continuously strengthening its core technological capabilities and global market competitiveness. event and annual award ceremonies where teams and individuals who have demonstrated outstanding performance in the

creation and application of intellectual property are collectively recognized and honored. This fully motivates employees to

actively and proactively engage in innovation practices.Governance Strategy

The company has established the Science and Technology Project Management System which defines the classification stan-

dards and management processes for technology projects. The Science and Technology Innovation Development Department is The company proactively identifies potential risks and opportunities in the R&D and innovation processes and formulates scien-

set up to oversee project supervision and management. Each applying unit strictly follows the system requirements to carry out tific response measures based on the identification results. This ensures effective risk mitigation and the seizing of development

project planning application and implementation in an orderly manner forming a clear well-structured and efficiently imple- opportunities continuously strengthening core technological competitiveness.mented technology project management mechanism. During the reporting period the company's R&D investment amounted to Likelihood Magnitude Time Affected Risk Potential RMB ??? million accounting for ?.??% of its operating revenue. Risk Description of of Horizon Value

Priority

of Chain Ranking Financial Response MeasuresType Occurrence Impact Impact Segment Impact

The hydraulic component

industry is undergoing rapid

R&D Team Development technological iteration with

downstream sectors such as To continuously monitor

mobile machinery wind industry trends and market

The company continuously recruits innovative R&D talents and strives to build a high-quality professional R&D team. In the power and photovoltaics Increase demands foster collaboration

meantime the company regularly organizes various technical training programs for employees in different positions to compre- increasingly demanding in within the sector and swiftly higher product precision and Short-

hensively improve their professional competence and innovation capabilities and provide talent support for breakthroughs in energy efficiency. If the term operating adopt emerging technologies.core technologies and the enhancement of core competitiveness. During the reporting period the company had a total of ???? Technical company lacks sufficient Low

Med-

ium Operations

Med-

ium costs and To enhance the recruitment core technical talent or fails decrease and development of core

R&D personnel accounting for ??.??% of the company's total headcount. Risk Mid-to keep pace with technolog- term in technological talent building a ical updates in a timely operating robust R&D team through manner it may face risks

such as lagging product revenue university partnerships and Indicators Number of Employees (????) technological upgrades and specialized training programs.weakened market competi-

tiveness.Doctorate ? If intellectual property review To implement an IP Dispute

is not conducted prior to the Resolution Procedure that

public release of the

Master's Degree ??? company’s R&D patents it

incorporates patent searches

Increase

may infringe upon third-party and ongoing IP monitoring into in

By Education Level Intellectual rights leading to intellectual the R&D process to avoid

Property property disputes. Addition- operating Med- Short- Med- infringement risks.Bachelor's Degree ??? ally if core R&D achieve-Compliance Lowments are not promptly ium term

Operations ium costs and To formalize procedures for decrease

protected through patent patent and trademark applica-Risk in applications they are tions ensuring timely filings

College Diploma ??? vulnerable to imitation by

operating upon completion with core

competitors which could revenue technical staff required to enter

undermine the company’s into confidentiality agreements

Under ?? years old market competitiveness. to prevent IP misappropriation.???

(excluding ??)

Time Affected

??-?? years old Opportunity Opportunity

Likelihood Magnitude Priority Potential

??? of of Horizon Value Financial Response Measures

(including ?? excluding ??) Type Description Occurrence Impact of Chain RankingImpact Segment Impact

By researching and To foster a culture of

By Age Group ??-?? years old (including ?? excluding ??) ??? developing new materials

innovation by implementing

processes and design an incentive system that

concepts the company rewards and encourages

??-?? years old Market continuously enhances the Mid- Operating employees for technological

(including ?? excluding ??) ?? performance and quality of

term innovation.Opportunity Operationshydraulic components and High Med- High Incomeium Long- To deepen collaboration with systems thereby Downstream Increase research institutions and

strengthening product term

?? years old and above ? universities leveraging their market competitiveness advanced expertise to

and increasing operating continuously enhance product

income. performance and quality.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Impact Risk and Opportunity Management

The company has established a comprehensive R&D risk management process conducting thorough identification scientific

assessment and graded control of potential risks at each stage of projects. This ensures the efficient allocation of R&D resources

and provides stable support for technological innovation.Risk Throughout the entire R&D process and considering both customer and market dimensions the company comprehensively identifies specific risks in the R&D phase by integrating the characteristics of R&D and

Identification manufacturing as well as the needs of core customers. The sources and features of these risks are clarified

resulting in a risk identification checklist.Risk For the identified risks a graded assessment is conducted based on dimensions such as likelihood of Jiangsu Provincial High-Precision Intelligent Hydraulic Jiangsu Provincial High-Precision Transmission and

Assessment occurrence impact severity and timeframe determining the priority for risk control. This provides a basis for formulating subsequent risk control measures. Components Engineering Technology Research Center Hydraulic Control Technology Key Laboratory

Differentiated response plans are developed for risks of varying priorities clearly defining responsible Key Performance Indicators

Risk parties timelines and resource commitments. A dynamic monitoring mechanism is established to

Response regularly review changes in risks and strategies are optimized and adjusted in line with R&D progress and

market demands. As of the end of the reporting period the company possesses ? National Enterprise Technology Center ?

Manufacturing Industry Single Champion certifications and ? National High-Tech Enterprise certifications.Indicators and Targets

The company establishes clear scientific and technological innovation indicators and targets strengthens the research on key Industry-Academia Collaboration

core technologies and quantitative management of innovation achievements and continuously enhances its independent inno-

vation capabilities and core competitiveness. Leveraging collaborative R&D platforms such as the Jiangsu Postdoctoral Workstation the Jiangsu Graduate Workstation and

the Jiangsu Foreign Expert Studio the company actively undertakes major scientific research projects including national key

Targets Achievement Status of ???? Targets R&D programs and Jiangsu Provincial scientific and technological achievement transformation initiatives. In partnership with

industry experts and enterprises both domestically and internationally the company jointly advances the localization process of

high-end hydraulic components.Patent Applications Filed: ??? Annual Patent Applications Filed: ??? Furthermore the company fully utilizes the scientific research and educational resources of universities focusing on break-

throughs in core hydraulic technologies and joint talent cultivation. It has established in-depth Industry-Academia Collabora-

tions with institutions such as Tsinghua University Yanshan University and Zhejiang University working together to promote

Patent Commercialization Rate: ??% Patent Implementation Conversion Rate: ??% the transformation of scientific research achievements and achieve mutual benefit and win-win outcomes through complemen-tary strengths.R&D and Innovation Measures

R&D Platform Development

The company has established seven R&D centers globally continuously strengthening its R&D capabilities and accelerating the

efficient transformation and application of R&D achievements. The company operates multiple national and provincial-level

R&D platforms including the National Enterprise Technology Center the Jiangsu Provincial High-Precision Intelligent Hydraulic

Components Engineering Technology Research Center the Jiangsu Provincial High-Pressure Hydraulic Cylinder Engineering

Center the Jiangsu Provincial High-Precision Transmission and Hydraulic Control Technology Key Laboratory and the Chang-

zhou High-Pressure Hydraulic Pump and Valve Engineering Research Center. These platforms form a comprehensive high-quali- Technical Exchange with Chang'an University Technical Exchange with China University of

ty technological innovation ecosystem continuously enhancing product advantages and technological competitiveness. Mining and Technology

National Enterprise Technology Center National High-Tech Enterprise Technical Exchange with Dalian Maritime University Inauguration of the Joint Graduate Training Base with Yanshan University

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Promoting Industry Development Case The ??th International Conference on Advances in Construction Machinery and Vehicle Engineering

The company actively participates in various external exchange activities such as industry associations and academic societies. Study

By establishing communication platforms and deepening multi-party collaborations it facilitates the sharing of technological

resources and discussions on industry frontier trends. Through these efforts the company works collaboratively to address

common technical challenges in the industry continuously infusing innovation momentum into industrial upgrading. On August ?? ???? Hengli Hydraulic participated in the

Hengli Hydraulic’s Industry Association Involvement ??th International Conference on Advances in Construction

Machinery and Vehicle Engineering. The company engaged

Association Name Association Level Role in technical exchanges on cutting-edge topics such as the

development pathways of new energy engines.China Hydraulics Pneumatics & Seals Association National Level Vice Chairman Unit

China Construction Machinery Association National Level Standing Council Member

China Agricultural Machinery Industry Association National Level Council Member

Jiangsu Enterprise Technological Transformation Association Provincial Level Standing Council Member Showcase of R&D Achievements

The company consistently regards technological innovation as its core competitiveness adhering to a combination of indepen-

Jiangsu Trademark Association Provincial Level Member dent R&D and collaborative innovation and continuously overcoming the domestic technological bottlenecks of high-end

hydraulic components and systems. Through sustained R&D investment and technological breakthroughs the company has

Changzhou Vocational and Technical Education Society Municipal Level Council Member accumulated numerous core R&D patents and industry honors making positive contributions to enhancing the international

competitiveness of China's hydraulic industry.Case During the reporting period ??? new valid authorized patents were added including ?? invention patents ??? utility model pat-

Study The ?nd Hengli Hydraulic Science and Technology Innovation Conference ents and ?? design patents. A patent matrix centered on hydraulic transmission electronic control systems and intelligent equip-

ment was built enhancing IP layout and competitiveness in high-end hydraulics.On April ?? ???? Hengli Hydraulic convened its Second Science and Technology Innovation Conference inviting ???? Selected R恒&立D 液Aw压a?rd??s ?a年nd度 P部at分en研t 发Ce奖rt项ifi与ca专tio利n证s: 书Hydraulic Sectorover ?? external industry experts. Under the theme“ Embracing the Future with Technological Innovation GatheringMomentum for New Drivers of Development” the conference fostered in-depth discussions on innovation-driven

development. Participants jointly explored implementation pathways for technological innovation within the indus-

try effectively facilitating technical exchange and experience sharing.China Outstanding Patent Award Ministry o教f E育du部ca科ti学on研 Ou究tstanding Slide改r S善tru滚ct柱ur运e f行or 的Im滑pr块ov结ed构 Roller

中国专利优秀奖 Scienti优fic秀 Re成se果arc奖h Achievement Operation and Linear Guide Award (First一 Pr等ize奖) Rai及l In具co有rp其or的ati直ng线 th导e S轨ame

Case

Study ICFP???? Conference

On April ?? ???? Hengli Hydraulic attended the ICFP Con-

ference. Through participation in thematic seminars labo-

ratory visits industrial exhibitions and other activities the

company engaged in exchanges and discussions with

industry experts learning about cutting-edge technologies

and concepts.Active a主nd、 P被as动siv升e 沉He补av偿e C系om统p及ensation 具El有ect电ro信nic号al流ly 量Co控nt制rol功led能 Swing Cylinder with

Syste其m控 a制nd方 Co法nt和ro装l M置ethod Swashp的la斜te盘 Ax式ial柱 P塞isto泵n Pump 带Int角eg度rat传ed感 A器ng摆le 动Se油ns缸or

and Apparatus Therefor

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

The company actively participates in the formulation and revision of national industrial and association standards deeply inte-

grating its long-accumulated core technologies and innovative practices into the industry standard system. This continuously

drives the overall improvement of industry technology quality and management levels. Hengli External Flushing Valve

Some Standards Developed or Revised with Participation by Hengli Hydraulic and Its Subsidiaries The Hengli series flushing valve diverts high-tempera-ture oil from the main circuit to a bypass circuit. After

cooling through a cooler and purification via a filter the

Standard Name Level Participating Enterprise oil is returned to the system. This not only enables

rapid heat dissipation but also continuously removes

ISO ???-?:???? International Standard—Method for contaminants through circulation effectively address-International Standard Hengli Hydraulic ing the "overheating" and "contamination" challenges

evaluating the nodularity of ductile iron in closed-loop systems. The product features a built-in

high-performance holding valve with a maximum

Self-Propelled Tire-Type Flatbed Transporter Industry Standard Hengli Hydraulic flushing flow of ?? L/min and a maximum working pres-

sure of ??? bar meeting stringent cooling and cleaning

Technical Conditions for Hydraulic Transmission Iron Castings Industry Standard Hengli Hydraulic requirements in demanding operating conditions. It is widely used in fields such as road engineering and agri-

cultural operations.Hydraulic Transmission—Test Method for Association Standard Hengli Technology

Deep-Sea Steady-State Performance of Hydraulic Pumps

Hydraulic Transmission—Test Method for Deep-Sea Steady-State Association Standard Hengli Technology HVSH??D Open-Center Directional Control Valve

Performance of Solenoid-Operated Directional Control Valves

The product adopts CAN bus motor control allowing

Hydraulic Transmission—Test Method for Deep-Sea Steady- Association Standard Hengli Technology the electric lifting system to be integrated into the vehi-

State Performance of One-Way Flow Control Valves cle's overall control strategy. It features advantages

Hydraulic Transmission—Test Method for Deep-Sea Steady- such as low pressure loss precise control and fault Association Standard Hengli Hydraulic

State Performance of Hydraulic Cylinders Hengli Surface

alarms. In tractor applications it enables one-touch

lifting and tilting functions providing convenient and

comfortable operation significantly reducing operator

workload and improving operational efficiency. This

Showcase of Key R&D Products in ???? provides strong support for high-precision electronic control and unmanned agricultural machinery opera-

tions.V??G Heavy-Duty Axial Piston Variable Pump

The product inherits the ??-year mature R&D and man-

ufacturing technology of Germany's InLine heavy-duty Intellectual Property Protection

piston pumps. The entire pump has undergone thou-

sands of hours of durability testing demonstrating Intellectual Property Management System

advantages such as high reliability efficiency and fast

response. With a maximum pressure of up to ??? bar it The company adheres to the intellectual property policy of "standardized management encouraging innovation legal protec-

can easily meet higher load requirements providing tion and rational development." It has established systems such as the Intellectual Property Management Regulations and the

strong support for the efficient and stable operation of Intellectual Property Management Manual forming a comprehensive compliance management system for intellectual property

equipment such as concrete pump trucks cranes and that covers acquisition application and maintenance. The company has set up an Intellectual Property Department responsible

coal mining machinery. for daily management and system supervision with part-time intellectual property personnel assigned to each department to strictly implement responsibilities. This creates a clear and well-defined organizational structure for intellectual property man-

agement with distinct roles and responsibilities.HCL-W Cycloidal Hydraulic Motor General Manager

The product adopts an internal spline design Hengli's Management Representative

patented three-segment design and an optimized

transmission shaft and port plate design ensuring the

motor's reliability and high-pressure resistance. It Finance Center Technology Department Enterprise Operations Center Quality Department General Product Application Department Purchasing Department Marketing Center

achieves high power output within a smaller footprint

effectively saving installation space. With outstanding

advantages such as high efficiency energy savings

easy installation and high cost-effectiveness it is now Intellectual Property Department Human Resources Department Information Center

widely used in the drive systems of various mechanical

attachments significantly improving construction

efficiency. Intellectual Property Compliance Management Organizational Chart

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

As of the end of the reporting period Hengli Hydraulic Hengli Technology and Hengli Precision have been certified to the Intel-

lectual Property Compliance Management System standard.Intellectual Property Compliance Training Overseas Patent Application Training

Hengli Hydraulic Intellectual Property Hengli Precision Intellectual Property

Compliance Management System Certification Compliance Management System Certification

Intellectual Property Management Measures Key Metrics Year ???? Year ???? Year ????

The company has formulated documents such as the Intellectual Property Acquisition and Maintenance Control Procedure the Cumulative Number of Authorized Patents (Items) ??? ??? ????

Intellectual Property Application Control Procedure and the Intellectual Property Risk Control Procedure. These documents

strictly standardize processes including patent applications and intellectual property utilization effectively safeguarding the Cumulative Number of ??? ??? ???

company's proprietary intellectual property and R&D achievements while mitigating infringement risks. Invention Patents (Items)

Including Cumulative Number of

Intellectual Property Management Measures Utility Model Patents (Items)

?????????

Cumulative Number of ?? ?? ??

Intellectual Timely patent applications trademark registrations and copyright registrations are carried out for Design Patents (Items)

Property service inventions in areas such as R&D and production development. A pre-application review

Acquisition and mechanism for intellectual property is established to ensure compliant acquisition. A classified Cumulative Number of Software Copyrights (Items) ? ? ?

Maintenance intellectual property archive is created to properly protect related intellectual property materials.???????

Intellectual When engaging in activities such as intellectual property licensing and transfer or external invest-

Cumulative Number of Trademarks (Items)

Property ments all departments—either independently or through third parties—conduct due diligence risk

Application analysis and valuation. They also sign confidentiality agreements with counterparties to mitigate Cumulative Number of Published Papers (Articles)

????

risks of unauthorized IP use.Intellectual Through means such as market research and technical exchanges daily monitoring of intellectual

Property property is conducted. In the event of detected infringement incidents investigations and evidence

Monitoring collection are promptly initiated and judicial channels are used to protect the company’s rights and interests.Intellectual During the new product initiation paper publication and other stages intellectual property searches

Property Risk analyses and risk monitoring are carried out to assess intellectual property risks and formulate

Management preventive measures thereby avoiding infringement risks.To strengthen employees' awareness of intellectual property protection the company regularly conducts specialized intellectual

property training sessions continuously enhancing employees' professional capabilities in areas such as patent applications

and actively fostering a culture of full participation and respect for innovation.Case

Study Special Training on Patent Search Interpretation and System Usage

On December ? ???? Hengli Hydraulic organized a special

training session for the R&D department on patent search

interpretation and system operation. The training system-

atically covered patent search analysis and application

processes and guided employees on the proper use of

intellectual property databases such as Zhihuiya and Qizhi-

dao. This further enhanced employees' practical skills in

patent-related operations.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Product and Service Safety and Quality Strategy

The company comprehensively identifies potential risks and development opportunities related to product quality and services

Hengli Hydraulic strictly complies with laws and regulations such as the Product Quality Law of the People’s Republic of China across all departments and business processes. Specialized response plans and refined management measures are formulated

establishing a quality management system that covers the entire product lifecycle. The company has improved its after-sales to ensure the continuous and efficient operation of the quality management system.service and customer complaint response mechanisms to fully protect the legitimate rights and interests of domestic and inter-

national customers continuously enhancing customer satisfaction. With high-quality products and professional services the Risk Likelihood Magnitude Time Affected Priority Potential

company has gained customer trust and market recognition. During the reporting period the company did not experience any Type Risk Description of of Horizon Value Chain Ranking Financial Response Measures

major safety or quality liability incidents related to its products or services. Occurrence Impact of Impact Segment Impact

If the company encounters Perform regular equipment

Governance issues such as supply inspection and mainte-

delays or equipment nance and enhance training

The company adheres to the quality policy of "Zero Defects at the Customer Site Zero Failures for ????? Hours in the Customer failures during raw Increase for inspectors and operators

Market". It has formulated systems such as the QES Management Manual and established a quality management system led by material procurement or in on equipment operation.the General Manager with collaborative efforts from multiple departments including the Quality Department and the Quality production processes it operating Perform on-site audits and

may lead to delivery Short- Med- costs and periodic evaluations of key

Audit Department. This system standardizes the quality control processes throughout the product lifecycle ensuring long-term Operational Low Med- Operationsdelays affect customer term iumium decrease raw material suppliers and stability in product quality and consistently meeting customer requirements. Risk production schedules and Mid- Downstream in establish dynamic safety

consequently reduce term operating stock to ensure stable

customer satisfaction. revenue supply of critical raw

Quality Management System Organization and Functions materials and core

components.To establish quality policies and objectives that align with the organization’s strategic direction

General ensuring that quality requirements are integrated into all business processes; to coordinate resource

Manager allocation define the responsibilities and authorities of each department and to be accountable for The hydraulic components Establish a comprehensive

the effectiveness and expected results of the Quality Management System. and systems produced by quality control system the company serve as core covering raw material

transmission devices for inspection production

Quality This position is responsible for controlling incoming materials production processes finished prod- large machinery. If quality process monitoring and

Department ucts and non-conforming products; conducting analysis and improvement of quality monitoring issues such as perfor- Short- Med-

Decrease finished product testing to

data; overseeing the operation of special processes; and participating in process evaluations. mance instability arise Low Med- term Operations ium in ensure that product quality

Market they may affect the normal ium operating Downstream consistently meets

Key responsibilities include managing comprehensive supplier evaluation and audits; conducting operation of the main Mid- income requirements.Quality Audit quality inspections and tests on raw materials and new products; developing and maintaining Risk equipment triggering term Hold regular quality

Department day-to-day quality management system documentation; organizing regular internal quality audits; customer complaints meetings to analyze issues returns claims and other

and tracking the implementation of the system across all departments. and optimize production risks ultimately leading to processes and product

a decline in market share. testing methods.During the reporting period the company was certified to the ISO ???? standard.Potential

Opportunity Opportunity Likelihood Magnitude Time Affected

Type Description of of Horizon Value Chain

Priority Financial Response Measures

Occurrence Impact of Impact Segment Ranking Impact

Establish internal audit and

By establishing a compre- monitoring mechanisms to

hensive quality manage- regularly evaluate the

ment system and providing effectiveness of the quality Mid- Increase management system.Reputation customers with responsive high-quality after-sales termHigh High Operations High in Build multiple customer

service the company can Operating communication channels Opportunity enhance customer loyalty Long- Downstream Income conduct regular customer

and improve the brand’s term satisfaction surveys promptly

reputation and visibility gather feedback and

within the industry. improvement suggestions

and continuously optimize

after-sales service processes.Impact Risk and Opportunity Management

ISO ???? Quality Management System Certification-Hengli Hydraulic The company has established a full-cycle quality risk management process encompassing risk identification assessment and

response. This enables a comprehensive scrutiny of all potential quality risks the formulation of effective countermeasures and

a steady enhancement of overall quality control.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

By integrating internal and external information such as industry key success factors and stakeholder Product Recall

Risk

Identification needs the company comprehensively identifies risks and opportunities related to product quality and customer service forming a list of risks and opportunities. The company has established the Non-conforming Product Control Procedure and the Corrective and Preventive Action Control

Procedure creating a product quality traceability and recall mechanism. For products with potential quality risks identified

Using tools such as SWOT analysis the company assesses the identified risks. The results are recorded during production or through customer feedback the Customer Service Department initiates a recall after assessment followed

Risk in the Risk and Opportunity Assessment Analysis Form preliminarily clarifying strategic directions by rework or disposal of the recalled products. After the recall is completed the Quality Department organizes confirmation of

Assessment and resource allocation to support the formulation of response measures. product defects root-cause analysis implementation of corrective actions and tracks the effectiveness of improvements con-

tinuously optimizing the quality control process.Risk Based on the risk classification results targeted measures such as risk acceptance risk reduction risk

Response avoidance and risk transfer are implemented to achieve effective control and mitigation of risks. Key Performance Indicators

During the reporting periodproduct recalls: ? recall rate: ?%. No product recalls occurred due to health

Risk An annual review mechanism is established to regularly evaluate risks and opportunities enabling

Review timely adjustments to response strategies and ensuring continuous effectiveness of risk management. and safety reasons.Quality Culture Development

Indicators and Targets

The company regularly organizes diverse quality activities such as skill competitions and specialized training providing a plat-

The company cascades quality and service management objectives to each department clarifying specific indicators and form for employees to exchange experiences. This continuously enhances employees' operational skills and quality control

responsibility requirements. Monthly assessments are conducted to track the achievement of these objectives continuously capabilities fostering a quality culture of striving for excellence. During the reporting period?? quality training sessions held

strengthening comprehensive quality control throughout the entire process. ???? participants total duration: ???? hours.Targets ???? Completion Status

Annual Customer Satisfaction ≥ ??% Completed

Monthly Total Customer Complaint Rate ≤ ?.?% Completed

Monthly Customer Complaint Quality Loss Rate ≤ ?.?% Completed

Monthly Internal Quality Loss Rate ≤ ?.??% Completed

Product Inspection Competition Lean Management Lecture Series

Product Quality Management Customer Service Management

Full Lifecycle Quality Management The company has established the After-Sales Service Management System and the After-Sales Service Control Procedure desig-

nating the Customer Service Department as the unified unit responsible for collecting customer feedback and handling com-

The company has formulated documents such as the Incoming Inspection Control Procedure Process Inspection Control Proce- plaints. Departments such as the Quality Department and Business Divisions cooperate in fulfilling requirements such as repairs

dure and Production Process Control Procedure to implement strict monitoring of raw material procurement process control and rework forming a clear and well-defined service management system. This continuously optimizes service processes and

and finished product inspection ensuring product reliability and stability. enhances service quality and customer satisfaction.Regular quality management audits and evaluations are conducted on suppliers to ensure that

Source Customer Complaint Responseservice providers meet quality requirements. Procurement products are verified through methods

Quality such as raw material inspection measurement and the provision of qualified certificates to guarantee The company has established customer complaint channels such as phone and email to promptly gather customer feedback and

Management the quality of raw materials. suggestions. Upon receiving a complaint the Customer Service Department responds quickly and communicates proactively

offering three types of solutions based on customer needs: on-site service return-to-factory repair or product replacement.The performance requirements of production equipment are strictly controlled. Operators are only Additionally the company holds regular quality complaint meetings to analyze root causes and implement improvements con-

Production allowed to work after passing skill assessments or professional knowledge examinations. Equipment tinuously enhancing the quality of complaint handling.Process maintenance is carried out regularly. Production strictly follows process specifications with each

Management process monitored. Key production steps undergo product inspection to promptly identify non-con-forming products. Customer Satisfaction

Finished Based on the product inspection status the area is divided into four zones: Pending Inspection The company has formulated the Customer Satisfaction Control Procedure conducting regular annual satisfaction surveys. By

Product Pending Handling Qualified and Non-conforming ensuring clear zoning and labeling of products. sending the Customer Satisfaction Survey Form to clients the company gains a comprehensive understanding of customer satis-

Quality Strict quality control is applied during the handling packaging and storage of finished products to faction regarding product quality after-sales service delivery timeliness and product and service professionalism. Survey data is

Management prevent any damage. statistically analyzed and improvement plans are developed based on customer feedback to continuously enhance satisfaction.During the reporting period??? valid customer satisfaction questionnaires collected; customer satisfaction rate: ??.?%.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Supply Chain Security Strategy

The company systematically identifies potential risks and development opportunities at each stage of the supply chain and

Hengli Hydraulic strictly complies with laws and regulations such as the Bidding and Tendering Law of the People’s Republic of formulates targeted response strategies based on the identification results comprehensively ensuring the compliant operation

China continuously improving its supplier management system. The company deeply integrates ESG (Environmental Social and stable development of the supply chain.and Governance) management into all aspects of the supply chain rigorously evaluating suppliers' performance in environmen-

tal social and governance responsibilities. It actively practices green and sustainable procurement principles striving to build a Risk Likelihood Magnitude Time Affected Priority Potential

compliant sustainable and responsible modern supply chain ecosystem. Type Risk Description of of Horizon Value Chain Financial Response MeasuresOccurrence Impact of Impact Segment Ranking Impact

Governance The procurement costs Establish long-term

of key raw materials partnerships with multiple

suppliers to reduce reliance

The company has established systems such as the Supplier Qualification and Removal Process Management Regulations and the such as steel and castings are susceptible on a single region or a

Supplier Selection and Evaluation Control Procedure forming a comprehensive life-cycle supply chain management system. By Raw to factors like market limited number of suppliers

strictly standardizing the processes and evaluation criteria for supplier selection auditing assessment and removal compli- Material supply and demand as Upstream Increase thereby diversifying supply Med- Short- in risks.ance control is reinforced at the source continuously ensuring the quality and stability of the supply chain. Procure- well as price fluctua- Low

ment tions. If the prices of ium term

Low

Operations operating Optimize procurement price

The company categorizes suppliers into seven major types including production material procurement outsourcing and logis- raw materials rise or costsRisk management procurement the supply quantity is processes and negotiation

tics transportation implementing classified evaluation and control. The Commerce Department is designated as the lead unit insufficient the strategies and improve

for supply chain management responsible for organizing and coordinating the end-to-end management of suppliers across company may face risks inventory turnover

departments. The Purchasing Department Quality Audit Department and other units manage the daily operations of their of increased costs or efficiency to lower supply disruptions. procurement costs.respective supplier categories based on their responsibilities establishing a clear well-defined organizational structure for

supply chain management.If suppliers have Prioritize cooperation with

compliance issues in suppliers demonstrating

This function is responsible for coordinating all departments in the implementation of sup- areas such as labor Decrease strong ESG performance rights production

Commerce plier full life-cycle management including consolidating and archiving supplier evaluation in

and organize the signing of

safety or environmen- the Supplier Assurance

Department documents in the SRM system. It also collaborates with the Procurement Committee to make Opera- tal protection it may operating

decisions and exercise control over procurement pricing and strategies. tional not only lead to Short- Upstream Med- income

Agreement.production disruptions Low Med- term ium increase Strengthen the qualification Risk and affect the stability ium in and evaluation processes

Purchasing Mid- Operations for suppliers in areas such

Department This function is responsible for processing purchase requisitions contract administration

of supply but also operating

expose the company to term as environmental protection costs

procurement execution and settlement. It also manages the full process for production pro- risks of legal litigation and occupational health Outsourcing and promptly remove

Department curement and outsourcing suppliers covering their qualification audit and removal.and reputational

damage. non-compliant suppliers.Quality Audit This function is responsible for inspecting the quality of samples and goods from production

Department and outsourcing suppliers to qualify them. It also conducts monthly and annual evaluations of Likelihood Magnitude Time Affected Potential

supplier quality performance and monitors their corrective actions. Opportunity Opportunity of of Horizon Value Chain Priority Type Description Ranking Financial Response MeasuresOccurrence Impact of Impact Segment Impact

The company has Introduce a Supplier

Logistics This function is responsible for managing the entire lifecycle of logistics and transportation implemented digital Relationship Management

Department suppliers including their qualification auditing and removal. It also tracks and resolves daily intelligent procurement (SRM) system to achieve replacing the traditional end-to-end digital control

supplier-related issues. covering processes from

Techno- offline engagement model. This transforma- Mid- Decrease supplier qualification to audit

logical tion enables online termHigh High Upstream High in and evaluation.Oppor- visual and standardized Operating procurement processes Long- Operations

Continuously monitor

tunity term Income industry digitalization trends significantly enhancing and the application of new

the precision of supplier technologies actively adopt

management and advanced tools and enhance

overall operational the efficiency of digital

efficiency. procurement.Impact Risk and Opportunity Management

The company has established a systematic supply chain risk management process. By accurately identifying risks and develop-

ment opportunities at each stage of the supply chain it dynamically adjusts and optimizes response strategies ensuring the

long-term stability of supply chain operations.?? ??Jiangsu Hengli Hydraulic CO. Ltd. ????年度可持续发展报告 SUSTAINABILITY REPORT ????

By considering factors such as industry dynamics domestic and international policies and regula-

Risk tions the company conducts supplier investigations and verification to systematically examine risks Suppliers are identified through various channels. New suppliers undergo preliminary review and

Identification and opportunities including upstream suppliers' ESG compliance and raw material supply stability Supplier Qualification on-site visits to assess their qualifications pricing levels and registration information. Those that pass forming a list of identified risks and opportunities. the review are designated as potential suppliers.Identified risks are assessed against criteria including probability impact severity timeframe and

Risk

Assessment affected segments of the value chain. Their financial implications are factored in to prioritize risks Supplier The Quality Audit Department organizes an audit team to conduct on-site audits of potential suppli-thereby informing subsequent response decisions.Audit ers covering aspects such as quality systems supply capabilities and trade security. A Supplier Audit

Report is issued and suppliers that pass the audit are included in the Annual Qualified Supplier List.Based on the risk assessment results differentiated response strategies are formulated for high-

Risk medium- and low-priority issues. Changes in risks and opportunities are dynamically monitored the

Response effectiveness of implemented measures is regularly reviewed and timely optimizations and adjust-

ments are made to continuously improve the risk management process. Supplier In accordance with the Supplier Performance Evaluation Management Measures suppliers are subject

Evaluation to monthly performance evaluations and annual reviews. Comprehensive scoring is conducted based

on dimensions such as quality compliance rate delivery timeliness pricing and service quality.Indicators and Targets

The company establishes phased management objectives for the supply chain conducts regular supervision and follow-up on Based on performance scores suppliers are classified into four levels: A B C and D. A-level suppliers

the implementation of these objectives continuously improves the supply chain risk prevention and control mechanism and Supplier receive increased order volumes as an incentive while D-level suppliers are disqualified from the

enhances the sustainable operation and management capabilities of the supply chain. Classification qualified supplier list. All suppliers are required to address any non-conformities identified during

audits within a specified timeframe.Targets ???? Completion Status

For suppliers rated as D-level those rated C-level for two consecutive months with unresolved issues

Supplier or those encountering major quality problems the company immediately initiates a freeze process

Removal

The total number of suppliers is ???? and revokes their supply qualification.Continuously optimize supplier structure to improve

the overall quality of the supply chain. including: domestic suppliers ???? and

overseas suppliers ???.New suppliers are invited to register in the SRM system where they upload relevant documents such

Digital as qualification certificates and basic information survey forms. Processes including qualification

Management audit and removal are completed through the system achieving end-to-end digital control of supplier

management.Enhance supply chain risk management to No incidents with significant risks or

prevent major risks. impacts occurred in the supply chain.The number of suppliers with quality management Supplier Communication

system certification is ??? the number of suppliers The company fosters open communication and collaboration with its suppliers utilizing multiple channels such as phone and

Strengthen the certification and audit of with environmental management system certifica- email to promptly resolve issues within the supply process. For critical technical quality or process matters it regularly organiz-

the supplier system. tion is ??? and the number of suppliers with occupa- es experts to support suppliers through specialized meetings and on-site guidance. This approach continuously improves supply

tional health and safety management system chain stability and product quality helps enhance suppliers' operational capabilities and creates a mutually beneficial partner-

certification is ??. ship.Supplier Management Measures Building a Sustainable Supply Chain

Supplier Full-Lifecycle Management Supplier ESG Management

The company has formulated documents such as the Supplier Development Certification and Classification Adjustment Rules

and established a full-lifecycle management mechanism covering qualification audit performance evaluation and removal. The company attaches high importance to supplier ESG compliance management organizing all suppliers to sign the Supplier

Differentiated standards and requirements are applied to different types of suppliers continuously optimizing the supply chain Assurance Agreement. This agreement clarifies suppliers' sustainable responsibilities in areas such as environmental gover-

structure and overall management level. nance production safety business ethics and labor rights. By implementing high-standard controls the company drives sus-

tainable development across the supply chain.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Hengli Hydraulic Supplier Code of Conduct (Excerpt) Data Security and Privacy Protection

Suppliers shall uphold the basic principles outlined in the United Nations Global Compact and the

United Nations Universal Declaration of Human Rights. They are prohibited from engaging in human

Labor Rights rights violations such as discrimination in recruitment the use of child labor and forced labor.Suppliers must strictly comply with local laws and regulations providing employees with reasonable Data Security System

working hours wages and benefits. The company strictly complies with laws and regulations such as the Data Security Law of the People’s Republic of China and

Suppliers shall establish a production safety responsibility system adhere to safety measures for has established systems including the Data Security Management Regulations and the Information System Operation Security

Safety hazardous operations regularly conduct risk inspections and carry out safety production education Management Regulations. These form a comprehensive data security protection system with the Information Center designated

Production and training. They must develop emergency response plans for production safety incidents and to organize and coordinate data security management. Internal data access and operational procedures are further standard-

promptly eliminate potential production safety hazards. ized continuously strengthening data security protection capabilities. During the reporting period the company experienced no

Suppliers shall strictly comply with laws and regulations such as the Environmental Protection Law of data security incidents or customer privacy breaches.Environmental the People’s Republic of China providing products that meet national safety and environmental

Protection standards. Waste (including wastewater exhaust gases solid waste and hazardous waste) generated

during construction processes must be collected stored or treated in accordance with requirements. Data Security Risk Management

Integrity Suppliers shall adhere to national and local anti-corruption and anti-bribery guidelines. They shall 质 Risk Identification and AssessmentMan量ag稽e核me部nt not provide company employees with products gifts or other forms of benefits nor shall they exert

influence over the actions of employee representatives. The company has formulated the Information Security Risk Assessment Management Regulations to standardize risk assess-

ment processes and methods establishing a comprehensive management system covering data security risk identification

Responsible Supply Chain assessment and control. By regularly conducting security assessments of core information technology components such as fire-walls switches and databases the company promptly identifies potential data security risks ensuring the security of its infor-

To strengthen supply chain transparency management and ensure the legality and compliance of raw material sources the com- mation assets and the stable operation of its business.pany requires suppliers to sign the Commitment on Not Using Conflict Minerals and the Commitment on Not Using Hazardous During the reporting period the company engaged a third-party information testing organization to perform an in-depth assess-

and Prohibited Substances. The company resolutely prohibits the use of minerals from conflict areas and implements strict test- ment of data security risks. Based on the assessment results a technical report was generated and identified data security

ing and monitoring of supplier raw materials to ensure that products are free from any hazardous or prohibited substances. By vulnerabilities were repaired and reinforced significantly enhancing the company’s overall data security protection and risk

fulfilling environmental and safety commitments at the source the company systematically builds a green and responsible resilience capabilities.supply chain system earnestly fulfilling corporate social responsibility.Green Supply Chain Data Security Emergency Management

The company has established the Cybersecurity Incident Emergency Response Management Regulations forming an emergency

The company continues to advance the development of a green supply chain prioritizing the procurement of renewable

response team composed of information security managers IT technical personnel and representatives from business depart-

low-energy and low-pollution environmentally friendly materials. Environmental protection and pollution control performance

ments. The regulations standardize the emergency response procedures for information security incidents such as hacker

are incorporated into supplier evaluation criteria guiding suppliers to actively fulfill their environmental protection responsibili-

attacks virus infections and data breaches striving to prevent data security risks and minimize the losses and impacts caused

ties and achieve green collaboration and sustainable development across the supply chain.by various data security incidents.At the same time the company regularly conducts specialized training on green procurement to promote awareness of environ- To enhance employees' capability in handling data security emergencies the company regularly conducts data security emer-

mental procurement standards and low-carbon management requirements comprehensively enhancing employees' under- gency drills. Through practical exercises the emergency response process is continuously optimized strengthening the practical

standing of green procurement and integrating the concept of green development deeply into procurement practices. emergency skills and collaborative response efficiency of all employees.Case Case

Study Study Special Emergency Drill for Information Security Incidents

In March ???? Hengli Hydraulic organized a specialized training session on green procurement for employees in the Pro-

On June ? ???? the company's Infrastructure Department collaborated with an external security consulting

curement Department. The training focused on supply chain compliance and the circular economy strengthening

agency to conduct an information security emergency drill simulating a scenario where servers were subjected

employees' awareness of low-carbon procurement and their practical capabilities further advancing the green and sus-

to a virus attack. Upon initiation of the drill relevant personnel responded swiftly and efficiently completed

tainable development of the supply chain.critical operations such as server traceability investigation vulnerability identification and remediation. This

significantly enhanced the team’s practical capabilities in emergency response handling.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Data Security Practices Customer Privacy Protection

Data Security Protection The company strictly complies with laws and regulations such as the Personal Information Protection Law of the People’s

Republic of China and has formulated the Trade Secrets Management Regulations. These documents strictly regulate the man-

The company has established a comprehensive data security protection system. By standardizing information system operation agement requirements for the storage use and other processes involving customer personal information. The company

procedures and strictly controlling data access permissions the company consistently safeguards against risks such as data strengthens information classification control and access permission management to rigorously prevent the risk of customer

leakage tampering and loss ensuring the stable and continuous operation of its business. information leakage ensuring the secure and compliant handling of customer information.To enhance the management of customer privacy incident risks the company has established the Information Security and

Based on the importance of the data it is categorized into four levels: Public Internal Privacy Incident Management Regulations which clarify the investigation and handling procedures for privacy incidents. By con-

Data Classification and Confidential and Top Secret. Non-public data is uniformly labeled according to its classifica- ducting routine monitoring and detection of information systems the company accurately identifies potential customer privacy

Grading Management tion. Graded security controls covering the entire lifecycle—storage usage transmission and incidents continuously improves network security monitoring and early warning capabilities and is committed to building a

disposal—are implemented for different types of data. secure and reliable data environment for customers.Data access follows the principle of least privilege. Employees must be specifically authorized

Data Access and to access the network and user permissions are reviewed and updated quarterly. All internal

Permission Management application system access is conducted using company accounts with strict regulations on

password and cr依ed据en公tia司l m整an体ag发em展e目nt标. 制定的全年培训方案

Operations personnel perform regular data backups in accordance with RPO requirements.Data Backup and Recovery Backup data is subject to necessary permission controls. Regular recovery tests and drills are

conducted to verify the availability and integrity of the backed-up data.Regular security audits such as penetration testing and vulnerability scanning are carried out.System vulnerabilities are promptly assessed and rectified. The installation of pirated or

Network Security Protection high-risk software is prohibited on office terminals and non-official software must be reviewed

and approved by the Information Center before installation.Data Security Training

The company regularly conducts specialized data security training sessions. Through case-based learning and hands-on exercis-

es employees' awareness of data security and their ability to perform compliant operations are strengthened continuously

enhancing the entire organization's capability to identify and prevent data-related risks.Case

Study Information Security and Anti-Fraud Awareness Training

On December ?? ???? during the Information Security Month the company conducted specialized training on

information security and anti-fraud for all employees. By interpreting relevant laws and policies and presenting

typical cases the training guided employees to standardize their use of information systems strengthen data

security awareness and enhance their ability to guard against telecom and online fraud in both work and daily life.?? ??“Heng”—Committed to People’s Well-being

Co-building a Better Homeland Together

Hengli Hydraulic consistently upholds a people-oriented development philosophy earnestly safeguards the legiti-

mate rights and interests of employees establishes a systematic training system to support employees' professional

growth and improves occupational health and safety mechanisms to protect employees' physical and mental

well-being. At the same time the company actively fulfills its corporate social responsibilities demonstrates social

commitment through practical actions and is dedicated to achieving coordinated development and shared benefits

among the enterprise its employees and society.SDGs Addressed Protection of Employee Rights and Interests

Employee Growth Motivation

Employee Health & Safety

Practice of Social ResponsibilityJiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Protection of Employee Rights and Interests Anti-Child Labor and Anti-Forced Labor

During the recruitment process the company strictly verifies the identity information of applicants to ensure that all hired indi-

Recruitment Management viduals meet the legal working age requirements firmly prohibiting the employment of child labor. At the same time the com-pany strictly prohibits forcing employees to work through violence threats restriction of personal freedom or other coercive

Hengli Hydraulic adheres to a people-oriented approach strictly complies with laws and regulations such as the Labor Law of means safeguarding employees' right to independently choose their positions and voluntarily fulfill their labor obligations. The

the People’s Republic of China and the Labor Contract Law of the People’s Republic of China and has established human company resolutely prohibits illegal employment practices such as forced overtime.resources management systems including the Employee Relations Management Regulations and the Recruitment Management

Regulations to effectively safeguard the legitimate rights and interests of employees. The company adopts a talent selection

model that combines internal and external recruitment establishes a diversified talent introduction mechanism broadens

talent screening channels and enhances the company’s talent competitive advantage.During the reporting period the number Key Performance Indicators

of newly hired employees was ???? persons.During the reporting period the company achieved a ???% labor contract signing rate. No incidents

of child labor forced labor workplace harassment or discrimination occurred throughout the year.On-site Recruitment Employee Diversity

Recruitment Process As of the end of the reporting period the company had a total of ???? employees including ??? employees from ethnic minori-

Job Posting Initial Interview/ Written Test/Practical

ties accounting for ?.??% and ? employee with a disability. The specific distribution is as follows:

Qualification Verification Test Professional Interview

Onboarding Procedures Entry Training Offer Issuance General Manager Review HR Manager Review

????????

???? persons persons

persons ???? ??% ??%

???? New Hire Demographics ??% persons ???By ??? By ???? ??% By Age persons persons

Gender persons Group ???? Education

???? ?% Level

?%

persons

???? persons ??% ????persons ??% persons

??? persons ??% ??% ??%

By ??% ??? By Age ?? persons By

???? persons ???Gender Group ?% ???? Region persons Female Male Under ?? years old (excluding ??) Master's Degree or Higherpersons ?% persons ??%

??% ???? persons ??% ????? years old (including ?? excluding ??) Bachelor's Degree

??% ????? years old (including ?? excluding ??) College or Vocational School

?? years old and above

Female Male Below Vocational School LevelUnder ?? years old (excluding ??)

Chinese Mainland

????? years old (including ?? excluding ??) ??? persons

????? years old (including ?? excluding ??) Foreign Countries ?% ??? persons

By ???

???? ?? persons

?? years old and above ???? persons persons By

??%

?%

persons Region ??% Function?% ???? persons

??% ??? persons ??%

Diversity and Equality ?%

Equal Employment and Anti-Discrimination Chinese Mainland Foreign Countries

Production Technical Administration

Sales Finance Other

The company consistently adheres to the core principles of equal employment and equal pay for equal work ensuring that

employees in the same positions with equivalent contributions receive consistent compensation and benefits. Throughout the

entire process—from recruitment and hiring training and promotion salary assessment to labor relationship management—

the company resolutely prohibits any discriminatory practices based on ethnicity race gender age religious belief physical

disability marital status household registration or geographical origin. The company is committed to providing all employees

with equal employment opportunities and a fair just development platform.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Protection of Women's Rights and Interests

Performance Feedback and Appeals

The company strictly complies with relevant laws and regulations such as the Law of the People’s Republic of China on the

Protection of Women’s Rights and Interests and the Special Regulations on Labor Protection for Female Employees earnestly The company actively builds performance communication channels. During the performance evaluation process evaluators

safeguarding the legitimate rights and interests of female employees. The company fully implements all special protection rights provide timely feedback on assessment results to employees. Through performance review meetings open communication is

for female employees during pregnancy maternity leave and breastfeeding periods and provides dedicated service facilities such conducted with employees to thoroughly discuss work-related issues and improvement measures clarifying future develop-

as nursing rooms. During the reporting period the company organized exclusive themed activities for female employees and ment directions.distributed special benefits for Women’s Day continuously enhancing the sense of belonging and well-being of female employees.If an employee disagrees with the performance evaluation result they may first communicate with their direct supervisor. If con-

sensus cannot be reached the employee may submit a written appeal to the Human Resources Department. The Human

Resources Department will respond within fifteen working days. Matters beyond its authority will be promptly escalated to the

relevant Vice President or General Manager and the final decision will be communicated to the employee. This ensures stan-

dardized and structured handling of performance feedback and appeals.Benefits System

The company has established a comprehensive multi-level benefits and security system that fully covers employees' core needs

in areas such as living health and career development. In accordance with the law the company provides employees with the

statutory "Five Social Insurances and One Housing Fund". Additionally it offers supplementary commercial insurance and vari-

ous other benefits such as holiday and birthday allowances thereby enhancing employees' sense of belonging and well-being

through a robust benefits framework. During the reporting period the company achieved ???% social insurance coverage for its

employees.International Women’s Day Activities

Key Performance Indicators Benefit Category Benefit Content

Statutory Benefits Five Social Insurances and One Housing Fund Paid Annual Leave

During the reporting period the number of female employees in management positions was ??

persons accounting for ??.? % of the total. Supplementary medical insurance annual health check-ups an on-site clinic

Health Benefits occasional health lectures and consultations and the provision of mental health

training courses; an employee activity center featuring exercise areas and fitness

equipment.Compensation and Benefits Meal Benefits An employee cafeteria that provides complimentary work meals.To effectively attract and retain core key talent and continuously enhance talent competitiveness the company has formulated

the Compensation Management Regulations Performance Management Regulations and Employee Incentive Management Reg- Transportation Benefits Commuter shuttle service

ulations. It has established a diversified benefits system and a scientific compensation management framework improving the

incentive mechanisms for all employees to fully stimulate their vitality and work potential creating a positive and proactive High-temperature allowance comprehensive allowance transportation

corporate atmosphere. Employee Subsidies allowance housing allowance communication allowance special position

allowance mid-night shift allowance marriage congratulatory gift.Compensation and Assessment Free childcare services for employees’ preschool-age children (including during winter and summer vacations); a university entrance scholarship for employees’

Adhering to the principles of "fairness competitiveness motivation development and cost-effectiveness" the company pro- Family Support children; education advisory services for employees’ children; mother-and-child

vides employees with market-competitive compensation and benefits. The compensation structure includes position-based rooms; and organized family day events.salary performance bonuses seniority allowances overtime pay and various company-defined benefits effectively motivating

employees' work enthusiasm and creativity. Festival benefits for Chinese New Year Dragon Boat Festival and Mid-Autumn

Festival; work anniversary gifts; Women’s Day gifts; birthday gifts; high-tem-

The company has established a comprehensive performance appraisal mechanism closely linking the distribution of perfor- Festival Benefits

mance bonuses to the overall business performance of the enterprise departmental achievements and individual employee perature season care gifts.performance. For different types of positions differentiated assessment methods such as point-based systems and KPI evalua- Provision of labor protection supplies shower facilities laundry service

tions are employed. The appraisal results serve as an important basis for personnel decisions such as salary adjustments and Other Benefits

role changes effectively leveraging the role of performance dynamic management and incentive constraints. reimbursement of travel tickets for family visits during Chinese New Year.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Working Hours and Leave Employee Assistance

The company strictly complies with laws and regulations such as the Labor Law of the People’s Republic of China and the Regu- The company has established a robust support mechanism for employees facing difficulties. For employees and their families

lations on Paid Annual Leave for Employees adheres to standard working hours and legally guarantees employees' entitlement affected by serious illnesses or major accidents the company not only provides timely care and concern but also offers various

to various types of paid leave including annual leave sick leave marriage leave and maternity leave. It reasonably plans and forms of material assistance based on actual circumstances effectively helping employees overcome difficulties and enhancing

schedules employees' working hours prioritizes their physical and mental well-being and continuously enhances their sense of their sense of belonging and cohesion. During the reporting period the company assisted ? employees in need with a total sup-

belonging and happiness. port amount of RMB ?????.?.Democratic Management

Employee Care

The company continuously improves its democratic management mechanisms legally establishes a labor union and regularly

convenes union meetings and employee representative assemblies. It actively listens to employees' demands coordinates labor

Employee Engagement relations promotes transparency in management processes and fosters a harmonious and stable employment environment. At

the same time the company provides diverse communication channels such as a General Manager’s mailbox and open-dia-

The company continuously enhances its employee care infrastructure and regularly organizes diverse cultural sports and logue forums extensively gathering employees' opinions and suggestions creating an open inclusive smooth and efficient

team-building activities. These initiatives enrich employees' lives beyond work and are dedicated to fostering an efficient internal communication atmosphere. This forms a positive pattern of joint construction sharing and common development

collaborative and supportive work environment. This ongoing effort significantly strengthens team cohesion unity and opera- between the enterprise and its employees.tional effectiveness.The company also attaches great importance to employees' mental health. Within feasible limits it deploys dedicated staff and Chairperson of

organizes psychological counseling sessions and mental health training on an as-needed basis. These initiatives effectively help the Labor Union

alleviate psychological distress arising from workplace stress and family conflicts thereby safeguarding employees' mental

well-being. Vice Chairperson of

the Labor Union

Fund Review Labor Union Female Employees Labor Dispute Labor Law Labor Protection

Committee Committee Committee Committee Supervision Inspection and Committee Supervision Committee

Hengli Hydraulic Labor Union Organizational Chart

Employee Fitness Center Employee Cafeteria Sports Day

Skills Competition Family Day Internal Trainer Recognition

???? Employee Representative Congress

Employee Appeals

The company has established a comprehensive employee appeals management mechanism. If employees disagree with assess-

ment results supervisors' decisions or other matters they may submit an appeal through formal channels. This allows for the

timely resolution of any adverse impacts that may arise from unfair or inappropriate handling in the workplace safeguarding

Summer Care Package New Employee Welcome Session employees' legitimate rights and interests and ensuring fairness in internal management.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Employee Complaint Process Encouraging Employee Growth and Development

Issue Person in Charge Complaint Method

Employee Training

Minor violation of To enhance employees' professional skills and overall competence the company has established the Training Management Reg-

company regulations Handled by Supervisor / Direct Superior Verbal complaint ulations and developed a comprehensive employee training system. By combining internal and external training methods a

systematic training platform is built to accelerate talent growth and team development.New Employee Employee Handbook Company Introduction Human Resources and Administrative

Dissatisfaction with criticism or In-person complaint with Onboarding Training Regulations Organizational Structure ?S Management Safety etc.handling decision Handled by Department Head written statement Internal Company-Level

Training Annual Training Annual training plan formulated based on the company’s overall development goals

Department-Level

Monthly Training Monthly training arranged by each business department according to its own needsDissatisfaction with department

head’s handling decision or issues In-person complaint with Handled by Executive Office

related to salary/benefits written statement External Trainer In-house

External Training Inviting external experts or trainers to conduct professional training at the company

Training

Employee Off-site Training Selecting internal employees to attend training at external institutions or locations

Dissatisfaction with the Executive

Office's decision or issues that must Handled by General Manager Written report

be escalated to top management

Tiered and Classified Training

The company has built a tiered and classified training system covering areas such as new employee orientation vocational skills

professional competence and leadership. Tailored training content is designed for different positions including management

Labor Relations Management technical and operational roles effectively enhancing the relevance and effectiveness of training.Leadership Training

Labor Dispute Management

The company explicitly requires that labor disputes arising between employees and the company regarding labor rights and

obligations must be resolved through legal channels. Employees may seek internal resolution through the pathway of "direct

supervisor communication ? coordination by Human Resources Department/Labor Union ? interview with the Administrative

Vice President". If consultation or mediation fails employees may lawfully apply for arbitration with the Labor Dispute Arbitra-

tion Commission or report the matter to the labor inspection authorities ensuring the protection of the legitimate rights and

interests of both parties and maintaining stable employment order. During the reporting period the company experienced no

labor dispute cases and received no employee complaints.Separation Management Deepseek-Empowered Presentation Skills Training Human Resource Management Training

New Employee Training

The company has formulated the Implementation Rules for Employee Separation and Suspension Management strictly regulat-

ing processes such as resignation application exit interviews work handover and procedure completion. This safeguards the

legitimate rights and interests of both the company and employees and maintains normal operational order. Employees are

required to submit a written resignation application in accordance with regulations. The company simultaneously conducts exit

interviews to gain in-depth understanding of resignation reasons and gather feedback and suggestions providing reference for

management improvement. During the handover process requirements for the transfer of work tasks assets materials docu-

ments system access etc. are clearly defined. The Work Handover Form for Separation must be completed in accordance with

standards to ensure a complete and seamless handover and the labor relationship is terminated lawfully and in compliance

with regulations.New Employee Onboarding Safety Education Training Hengli Eaglet Program

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Professional Skills Training Metrics Year ????

Employee Training Investment (RMB ten thousand) ???.??

Number of Employee Training Sessions (sessions) ????

Total Trainee Attendances (person-times) ?????

Total Number of Employees Trained (persons) ????

Cylinder Fundamentals and Processing Technology Training Hydraulic Fundamentals Training Employee Training Coverage Rate (%) ??

Total Employee Training Duration (hours) ?????.??

Teaching Faculty Development

Average Training Duration per Employee per Year

The company focuses on building an internal trainer team continuously strengthening the development of teaching resources ?.??(hours/person)

and integrating high-quality internal and external training resources. It has established a blended instructor team consisting of

internal technical experts management elites and external industry specialists. Each internal trainer designs specialized train-

ing content based on their expertise and role characteristics providing employees with multi-dimensional training covering

information security engineering technology production safety and more. This fully meets the diverse training needs of

employees and provides solid support for high-quality training implementation.Employee Career Development

Training Platform Development The company closely aligns with employees' career development and growth needs with the near-term goal of establishing a

systematic training system the medium-term goal of achieving tangible and effective talent cultivation results and the

The company has established the "Hengli University" specialized talent cultivation platform which includes a School of Manage- long-term goal of building a scientific and standardized talent development academy. The company continuously opens up

ment and a School of Engineering Technology. Through systematic theoretical learning and professional skill development over career development pathways for employees improves growth trajectories and strives to build a "triple-high" composite talent

several years the platform continuously cultivates reserve managers reserve supervisors and other potential talents injecting team characterized by high political awareness advanced technical skills and strong management capabilities providing solid

a steady stream of talent momentum into the company's development. In ???? the third session of "Hengli University" was suc- talent support for the high-quality development of the enterprise.cessfully launched and the fourth session began enrollment. To date it has trained over ?? reserve candidates at the managerial

level continuously supplying outstanding talent for core positions. Manager Development Program

Management Technical Sales On-Site On-Site T

Leadership Track Expert Track Excellence Track Management Track echnical Track

?-?? Vice General Manager Chief Engineer Sales Vice President Manager and Above Senior Engineer

years

Hengli University Student Recognition ?-? Manager Senior Engineer Regional Manageryears

Workshop Supervisor Engineer

Leveraging the "Liangjian·Cloud Classroom" online training system the company has built a digital training platform that pro-

vides employees with high-quality online learning resources covering industry-leading technologies job-specific practical skills ?-? Supervisor Area Manager

and professional competency enhancement. The platform supports multi-dimensional management analysis such as learning years

progress tracking and course completion rate statistics enabling training management departments to monitor employees' Project Team Leader Team Leader Core Technical Employee

learning dynamics in a timely manner optimize training content and plans and comprehensively enhance employees' overall

competence and job performance capabilities. ?-? Senior Specialist Business Manageryears

?-? Specialist Technical Engineer Sales Engineer Regular Employee Regular Employee

years

Undergraduate Reserve Trainee College Intern

Liangjian·Cloud Classroom Training Platform

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Employee Health and Safety Occupational Safety Risk Management

Risk Management Mechanism

Occupational Health and Safety Management System

To standardize the safety risk control process the company has formulated the Safety Risk Identification and Control Manage-

The company prioritizes employee safety and health adhering to the occu- ment Regulations specifying requirements for risk identification assessment and control in order to prevent reduce and elim-

pational safety principle of "Safety First Prevention-Focused and Integrat- inate safety risks at the source. The company adopts the Job Hazard Analysis (LEC) method to conduct comprehensive risk iden-

ed Management". It strictly complies with laws and regulations including tification and assessment of production facilities and work sites. Based on the assessment results graded control and targeted

the Work Safety Law of the People's Republic of China and the Law on Pre- preventive measures are implemented and the Safety Risk Classification and Graded Control List is completed in accordance

vention and Control of Occupational Diseases. The company has imple- with regulations. Regular reviews of the effectiveness of risk controls are conducted to ensure the ongoing effectiveness of all

mented a suite of occupational health and safety management systems control measures.such as the Work Safety Responsibility System Work Safety Objectives

Management Regulations and Occupational Disease Prevention and Con- Safety Risk Management Process

trol Management Regulations. The Work Safety Management Section

under the General Manager's Office is responsible for coordinating occupa-

tional safety management disease prevention and performance evalua-

tion. This ensures the effective implementation of all safety measures

fostering a safe orderly and stable production environment. Establish Working Group

As of the end of the reporting period the company is certified to the ISO

????? Occupational Health and Safety Management System standard.Planning and Preparation

Hengli Hydraulic Occupational Health and

Safety Management System Certification

Supervision and Assessment Mechanism

Personnel Training

The company has established an occupational safety assessment mechanism. Using monthly assessment data from the Work

Safety Management Section of the General Manager’s Office the Human Resources Performance Unit conducts specialized

occupational safety performance evaluations for relevant departments. Any serious occupational safety violations identified Safety Risk Identification

during the assessment that constitute criminal offenses will be referred to judicial authorities in accordance with the law. This

rigorous process of assessment and accountability strengthens safety supervision and ensures the full implementation of all

occupational safety requirements.Safety Risk Assessment

The company strictly implements the main responsibility for work safety establishes an all-employee work safety responsibility

system integrates safety responsibilities throughout the entire production and operation process clarifies safety duties and per-

formance requirements at all levels and positions and ensures that all safety responsibilities are effectively carried out at every

level. Formulate Control Measures

Safety Management Objectives

Develop Safety Risk Control List

To further standardize the company’s occupational safety management and prevent the occurrence of serious or fatal produc-

tion accidents the company has established clear safety management objectives. Core assessment indicators include hazard

rectification near-miss reporting and work-related injury control. Monthly assessments are conducted on the completion of

safety objectives for each department and the results are communicated during safety meetings along with improvement Graded Control of Safety Risks Safety Risk

requirements effectively ensuring the safety of employees’ lives and the company’s property. Announcement

Establish Graded Safety Risk and Warning

Control Operating Mechanism

Overall Occupational Safety Objectives

Prevent fatalities and serious injuries reduce the occurrence of minor injuries and aim fo“r zero” accidents. Evaluation of Safety Risk Control Operation

Key Performance Indicators Continuous Improvement

During the reporting period there were ?occupational safety incidents and ? work-related fatalities.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Hazard Identification Case

Electric Shock Emergency Drill

The company conducts regular Hazard Identification annually carrying out comprehensive checks on various potential risks Study

including fire safety. For any issues identified a Hazard Identification ledger is established concurrently with continuous track-

ing of rectification progress and strict verification of the effectiveness of corrective actions effectively preventing the escalation On March ?? ???? Company carried out a specialized electric shock emergency drill. The on-site participants

of hazards into safety incidents. During the reporting period the company identified ??? safety hazards achieving a ???% recti- strictly followed the emergency plan requirements properly executed procedures such as cutting off tempo-

fication completion rate. rary circuit power and providing first aid to the injured effectively enhancing employees' ability to handle elec-

tric shock emergencies and their skills in self-rescue and mutual assistance.Occupational Safety Management Measures

Stakeholder Safety Management

The company has established the Related Party Safety Management Regulations to strengthen oversight of suppliers contrac-

tors and other third parties ensuring the effective operation of its safety management system. For external construction person-

nel the company executes a Supplier Safety Agreement that clearly outlines safety precautions and mutual responsibilities.Contractors are subject to a dual verification of their safety compliance records and workforce qualifications. On-site safety

Emergency Plans and Drills supervision is intensified to effectively mitigate safety risks arising from third-party operations.In accordance with laws and regulations such as the Basic Standards for Production Safety Emergency Drills and the Regulations To strengthen the safety awareness of related parties the company organizes safety training for stakeholders before project con-

on Production Safety Emergency Response the company has formulated the Production Safety Emergency Response Plan. This struction or hazardous operations clarifying on-site safety operating standards and personal protection requirements. Safety

plan covers various types of sudden safety incidents including fire and explosion accidents special equipment accidents and management requirements are fully integrated into the end-to-end management of related parties.hazardous chemical leakage incidents. It clarifies emergency response procedures division of responsibilities and response

mechanisms. An emergency rescue command center has also been established to provide unified leadership and organization of

emergency rescue efforts minimizing accident losses and ensuring personnel safety to the greatest extent.The company conducts annual emergency response drills evaluates their outcomes and continuously improves its overall

emergency preparedness and incident management capabilities. During the reporting period a total of ?? safety and emergency

drills were conducted.Case

Study Fire Emergency Response Drill Stakeholder Safety Training

On February ?? ???? Company conducted a specialized fire emergency drill using simulated flame props to Digital Management

recreate a fire scenario. During the drill employees promptly donned gas masks and correctly operated fire

extinguishers and fire hoses to suppress the simulated fire further strengthening employees' fire safety aware-

ness and emergency response capabilities. The company has implemented the "Hengli

Micro-Form" digital platform. The system features

modules for safety inspections during holidays hazard

identification and remediation and on-site inspection

workflows. It enables end-to-end online management of

safety checks and issue resolution significantly

enhancing the speed and efficiency of risk response.This provides robust digital assurance for the company's

safe production and stable operations.Hazard Identification Collection Form

????

Before Rectification After RectificationJiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Hazardous Chemical Safety Management Occupational Health Protection

The company has developed the Hazardous Chemical Safety Management Regulations in compliance with relevant laws and

regulations including the Regulations on the Safety Management of Hazardous Chemicals. These regulations specify compre-

hensive management requirements covering the entire lifecycle of hazardous chemicals—from procurement transportation Occupational Hazard Factor Monitoring

and warehousing to storage use and disposal. They detail operational standards and accountability for each stage strengthen

procedural implementation and enforce full life-cycle control. This effectively mitigates risks of personal injury and property The company attaches high importance to the prevention and control of occupational disease hazards. It regularly engages

loss thereby elevating the company's overall level of occupational safety management. legally qualified professional testing agencies to monitor chemical and physical harmful factors in the workplace. This enables

timely tracking of indicators such as hazard concentration and intensity levels accurate identification of occupational disease

risk points and continuous optimization of occupational health protection measures based on the monitoring results effectively

Safety Education and Training safeguarding employees' occupational health and safety. During the reporting period the company commissioned a third-party

professional agency to complete the monitoring of occupational hazard factors and obtained the Inspection Report.The company consistently prioritizes fostering strong safety awareness among its employees. Through diverse safety education

and training initiatives it guides employees to develop a robust safety mindset continuously enhance their safety competen-

cies and safeguard their health and well-being. Occupational Health Examinations

The company routinely conducts occupational health examinations for employees providing in-service staff with occupational

health check-up services and truthfully informing them of the results. For employees identified with occupational contraindica-

tions during the examinations the company promptly transfers them away from relevant job positions. For employees suspect-

ed of having occupational diseases the company strictly follows the recommendations of the medical institution to arrange

medical observation or occupational disease diagnosis continuously monitoring the physical and mental health of employees.During the reporting period the company achieved ???% coverage of employee health examinations.Occupational Health Protection

First Aid Training Employee Safety Training To effectively prevent control and eliminate occupational hazards the company has implemented a series of preventive mea-

sures. This comprehensive approach fully safeguards employees' health safety and associated rights.When signing labor contracts with new employees truthfully inform them of the potential

Notification of Occupational occupational disease hazards and their consequences associated with their positions.Disease Hazards Post notice boards in prominent locations within production areas to prominently display the

monitoring and evaluation results of occupational hazards in the workplace.Workplace Hazard Warnings Place standardized warning signs and instructions in Chinese at prominent locations in work

公司级年度培训 positions whe依re 据oc公cu司pa整tio体na发l h展az目ard标s e制xi定st.的全年培训方案

Team Leader Safety Training AED (Automated External Defibrillator) Training Provision of Personal

Protective Equipment Against Provide employees with qualified personal protective equipment such as dust masks and

Occupational Hazards earplugs against occupational hazards and guide them in their proper use.Metrics Year ???? Conduct regular publicity and education on occupational disease hazard prevention through

Occupational Disease various channels including notice boards the Hengli News meetings training sessions

Prevention Awareness posted slogans and the official WeChat account to enhance employees' awareness and

Number of Safety Training Sessions (sessions) ??? capabilities in protection.Total Trainee Attendances for Safety Training ????

(person-times) Key Performance Indicators

Total Number of Employees Participating in ????

Safety Training (persons) During the reporting period the company achieved a???%， certification rate for special-operation person-nel???%， coverage of work-related injury insurance an investment of RMB ?????? in productionTotal Duration of Safety Training (hours) ??? safety liability insurance and???% personnel coverage under production safety liability insurance.?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Practicing Social Responsibility Report Appendix

Social Welfare Indicator Index

Guided by the principle of "contributing to society and operating sustainably" the company actively fulfills its social responsibili-

ties through philanthropy and public welfare initiatives. It regularly organizes activities such as visits to special-needs schools Shanghai Stock Exchange Self-Regulatory Guidelines for Listed 《China Corporate Sustainability 《GRI Sustainability Reporting Standards》and community blood drives translating its commitment into tangible actions that foster social harmony. During the reporting Report Sections Companies No. 14 – Sustainability Reporting Guide (CASS-ESG 6.0)》 （GRI Standards）

periodtotal public welfare investment: RMB ??????; volunteer hours: ??; volunteer participants: ???. Reporting (for Trial Implementation)

About This Report Article 4 / Article 6 P1.1/P1.2 2-1/2-2/2-3

Chairman’s Message / P2.1 2-22

Welcome to

Hengli Hydraulic / A2/P3.1/P3.2/P3.3/P3.4 2-1/2-6/2-9/201-1

Sustainability

Goals and Article 19 G1.1.11 2-22

Vision

Sustainability Article 12 / Article 51 G1.1.1/G1.1.2/G1.1.3/Sustainability Governance G1.1.4/G1.1.6 2-12/2-13/2-14/2-17

Support for Special-Needs Schools Voluntary Blood Donation Management

Stakeholder

Communication Article 9 / Article 53 G1.3.2 2-16/2-26/2-29

Rural Revitalization Management of Material Article 5 / Article 7 / G1.1.9 3-1/3-2/3-3

Topics Article 9

The company actively responds to the national rural revitalization strategy proactively fulfills its corporate social responsibili-

Corporate / / 2-9/2-12/2-13/2-17/2-19/ties leverages its resource advantages and continuously invests funds in employment support and other initiatives. With a Governance 2-20/2-27/405-1

strong sense of social responsibility it supports rural construction and helps improve the development landscape of rural areas

demonstrating the company’s commitment and public welfare spirit in promoting balanced urban-rural development and “Heng” Investor

achieving common prosperity. During the reporting periodrural revitalization investment: RMB ??.???? million. (Persever- Relations / / 2-16/2-27/201-1

ance) as Our Management

Core in

Governance Compliance

Fortifying an and Risk / / 2-27/207-2

Impregnable Management

Compliance Standardizing

Line Business Article 54 / Article 55 / G2.1.1/G2.1.2/G2.1.3/G2.1.8/ 2-23/2-27/205-2/205-3/206-1

Conduct Article 56 G2.2.1/G2.2.2/G2.2.3

Party Building

Leadership / / /

Article 20 / Article 21 /

Climate Article 22 / Article 23 / E1.1.1/E1.1.2/E1.1.3/E1.1.4/

Change E1.1.6/E1.1.7/E1.1.8/E1.1.12/ 2-27/201-2/305-1/305-2/

“Heng”—Prot Response

Article 24 / E1.1.14/E1.1.15/E1.1.16 305-4/305-5

Article 27 / Article 28

ecting

Mountains

and Rivers Article 29 / Article 30 / E2.1.1/E2.1.2/E2.1.3/E2.1.5/E

Writing a Environmental Article 31 / Article 33 / 2.1.6/E2.1.7/E2.1.8/E2.1.9/E2. 2-27/303-2/303-4/

New Chapter Management 2.1/E2.2.5/E2.2.6/E2.4.1/ 306-1/306-2/306-3/306-5

for Green Article 37 E2.4.2/E2.4.3/E3.3.4

Development

Article 34 / Article 35/ E3.1.1/E3.1.2/E3.1.3/E3.1.4/ 2-27/302-1/302-2/302-3/Resource E3.1.5/E3.2.1/E3.2.3/E3.2.4/ 302-4/302-5/303-1/

Management Article 36 / Article 37 E3.3.2/E3.3.3/E3.3.4/E3.3.6 303-3/303-5

?? ??Jiangsu Hengli Hydraulic CO. Ltd. SUSTAINABILITY REPORT ????

Shanghai Stock Exchange Feedback and Suggestions

《China Corporate Sustainability 《GRI Sustainability Reporting Standards》Report Sections Self-Regulatory Guidelines for Listed Companies No. 14 – Sustainability Reporting Guide (CASS-ESG 6.0)》 （GRI Standards）

Reporting (for Trial Implementation)

Dear Reader

S2.1.1/S2.1.2/S2.1.3/S2.1.4/

Driven by Article 41 / Article 42 S2.1.5/S2.1.6/S2.1.7/S2.1.9/ / Thank you for reading our report. We value your feedback as your insights and suggestions are essential to

Innovation S2.1.10/S2.1.11/S2.1.12/S2.1.13 our ongoing efforts to enhance our sustainability governance management and performance. Please take a

moment to share your thoughts by completing the brief feedback form via the channels below. We appreci-

ate your support for our sustainability journey.“Heng”—For Product and S3.3.1/S3.3.2/S3.3.3/

ged Quality: Service Safety

Article 44 / Article 47 S3.3.4/S3.3.5/S3.3.6 2-26/2-27/416-1/416-2

Leading and Quality ?.What is your overall assessment of our performance in sustainable development governance

Development

through Excellent Good Average Poor Very Poor

Innovation

Supply Chain

Security Article 44 / Article 45 S3.1.1/S3.1.2/S3.1.3/S3.1.4

2-27/308-1/308-2/

414-1/414-2 ?.What is your overall assessment of this year’s sustainable development report

Excellent Good Average Poor Very Poor

Data Security

and Privacy Article 44 / Article 48 S3.4.1/S3.4.2/S3.4.3/S3.4.4 2-27/418-1 ?.How do you think we are doing in stakeholder communication

Protection

Excellent Good Average Poor Very Poor

Protection of 2-7/2-23/2-27/401-1/

Employee Article 49 / Article 50 S4.1.1/S4.1.3/S4.1.4/S4.1.5/ 401-2/405-1/406-1/ ?.How do you think we are performing in product quality and customer service

Rights and S4.1.6/S4.1.9/S4.1.11/S4.1.12 407-1/408-1/409-1

Interests Excellent Good Average Poor Very Poor

Encouraging ?.How do you think we are performing in environmental safety and occupational health aspects

“Heng”—Co Employee

mmitted to Growth and Article 49 / Article 50

S4.3.1/S4.3.2/S4.3.3/

S4.3.4/S4.3.5/S4.3.6 404-1/404-2

Development Excellent Good Average Poor Very PoorPeople’s

Well-being

Co-building

a Better ?.How do you think we are performing in employee responsibility

Homeland Employee

Together Health and Article 49 / Article 50 S4.2.1/S4.2.2/S4.2.3/

2-27/403-1/403-2/403-3/

S4.2.4/S4.2.5/S4.2.6 403-4/403-5/403-6/403-7/

Excellent Good Average Poor Very Poor

Safety 403-8/403-9/403-10

?.Do you think this report adequately reflects the company’s significant impacts on the economy society and the environment

Fulfilling Excellent Good Average Poor Very PoorArticle 38 /Article 39 / S1.1.2/S1.1.3/S1.2.1/

Social

Article 40 S1.2.2/S1.2.3/S1.2.4

Responsibility

?.What comments or suggestions do you have regarding our ESG report ESG work or sustainable development management

Index of Article 57 A3 /

Indicators

Report

Appendices You can contact us through the following channels:

Feedback and

Suggestions Article 9 A6 / Phone: ????-????????

Email: hlzqb@hengli.net

Address: No. ?? Longqian Road Wujin High-Tech Zone Changzhou City Jiangsu Province China

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