Contents

Foreword

About this Report 01

Message from the Chairman 03

About Swan Cotton Machinery 05

Governance Environmental Protection

Special Feature Sustainable Development Governance 17 Response to Climate Change 41

Forging New Quality Productive Forces 11 Party Building Leadership 25 Environmental Management 44

in the Industry Through Independent

Innovation — Swan Cotton Standardized Governance 27 Energy Utilization 53

Machinery’s Technological Compliant Operation 29 Water Resource Utilization 57

Breakthroughs and Global Layout

Investor Relations Management 32 Material Utilization 59

Business Conduct 34

Afterword to the Report Industry Value Good Life

Key Performance Form 113

Responsible Supply Chain 63 Contribution to Society 91

Indexes 126

Innovation-driven Development 68 Occupational Health and Safety 93

Feedback Form 128

Safety and Quality of Products and Services 79 Employee's Rights and Interests 101

Data Security and Customer Privacy Protection 882025 Environmental Social and Governance (ESG) Report Foreword

Foreword

About this Report

This is the first Environmental Social and Governance (ESG) Report (the “ESG Report”) released by Shandong Swan Cotton Industrial

Machinery Stock Co. Ltd. (“Swan Cotton Machinery” the “Company” or “we”). In the principles of objectivity standardization

transparency and comprehensiveness the Report provides detailed disclosure of the Company’s practices and performance in

environmental social and governance for the year 2025.Reporting Scope Quality Assurance for the Report

The Report covers Swan Cotton Machinery and its subsidiaries. Unless otherwise stated the scope of the Report is consistent with The Company strives to ensure the completeness materiality balance and comparability of the Report and systematically

that of the Company’s Annual Report. elaborates on the philosophies systems actions and performance results of the Company in pursuing development across

economy environment and society. The Company guarantees that the content of the Report is objective accurate and complete

without any false records misleading statements or material omissions. Through the release of the Report we aim to improve

social responsibility management strengthen communication with stakeholders and promote the sustainable development of

Reporting Period the Company.The Report covers the period from January 1 2025 to December 31 2025 (the “Reporting Period”). To improve perspectives Appellation Description

some sections of the Report may contain forward-looking statements. The Report is released on an annual basis consistent with

the financial year.Term Definition

Swan Cotton Machinery SDMJ the Company or we Shandong Swan Cotton Industrial Machinery Stock Co. Ltd.Preparation Basis

Xinjiang Swan Xinjiang Swan Modern Agricultural Machinery Equipment Co. Ltd.Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies on Shanghai Stock Exchange No. 14 -

Preparation of Sustainability Reports (for Trial Implementation) Yetian Tieniu Inner Mongolia Yetian Tieniu Agricultural Equipment Co. Ltd.Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies on Shanghai Stock Exchange No. 4 - Preparation Huyanghe Swan Huyanghe Swan Smart Agriculture Technology Co. Ltd.of Sustainability Reports

Global Reporting Initiative Sustainability Reporting Standards (GRI Standards)

Access to this Report

Chinese Academy of Social Sciences (CASS) Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises

(CASS-ESG6.0) The Report is available for review and download on the official websites of the Company (https://www.sdmj.com.cn/) and

UN Sustainable Development Goals (SDGs) Shanghai Stock Exchange (http://www.sse.com.cn).Sustainability Accounting Standards Board (SASB) Standards

Feedback

Data Source If you have any comments or suggestions concerning the Company’s sustainability efforts please feel free to provide feedback

via the contact information below to help us continuously improve this Report.Data sources used in the Report include public data from government agencies actual operational data annual financial data

internal statistical reports of the Company third-party questionnaire surveys third-party evaluations or interviews etc. The Tel.: 0531-58675810 Website: www.sdmj.com.cn Address: No. 99 East Road of Dawei Village Tianqiao District Jinan

financial data in the Report is expressed in RMB. For any discrepancy between the Report and the annual report the annual City ChinaFax: 0531-58675810 Email: swan@sdmj.com.cn

report shall prevail.

01 022025 Environmental Social and Governance (ESG) Report Foreword

Message from the Chairman“Enhancing Corporate Governance to Solidify the Foundation for Sustainable Growth.Mainly guided

by Party building Swan Cotton Machinery integrates the leadership of the Party into governance structure. We have

systematically established a three-tier ESG governance system where our ESG efforts are coordinated by the Strategy and

ESG Committee executed by the ESG Management Committee and implemented by various functional departments

under the unified leadership of the Board of Directors. In addition we have formulated and implemented dedicated

systems concerning ESG management communication with stakeholders etc. In areas such as compliance business ethics

and investor relations we consistently adhere to the principles of transparency fairness and integrity and safeguard the

steady and long-term development of the Company through standardized governance.Advancing Green Transformation to Fulfill Eco-Friendly Commitments.Swan Cotton Machinery strictly

complies with laws and regulations related to environmental protection and continuously promotes clean production

energy conservation and carbon reduction. Our main production bases are recognized as Green Factories and Green

Manufacturing Demonstration Units and have obtained international certifications for environmental and energy

management systems. Through measures such as the upgrading of high-energy-consuming equipment we have

effectively reduced the environmental footprint of our production and operations and achieved the compliant disposal

and recycling of waste. We have also extended our green philosophy to the supply chain and worked with environmentally

compliant partners to jointly build a low-carbon high-efficiency industrial ecosystem.Fostering Shared Prosperity to Deliver Industrial Warmth and Social Value.To protect employees’

rights and interests we uphold equal employment opportunities and oppose all forms of discrimination. The Trade Union

represents all employees across our major business units to ensure harmonious and stable labor relations. We implement

an effective occupational health and safety management system and fully meet all work safety requirements. Safety

training and health checkups are routinely conducted for all employees. Through smart agriculture projects high-end

equipment innovation technical training and charitable donations we actively practice the philosophy of shared

responsibility and symbiosis. We also actively respond to the Belt and Road Initiative by promoting high-end agricultural

2025 marks the inaugural year for Swan Cotton Machinery to release its first Environmental Social and Governance (ESG) machinery equipment to emerging markets such as Central Asia South America and Africa empowering globalReport. As the only listed company in China’s cotton machinery industry we consistently uphold the values of “virtue to fly agricultural modernization with diverse equipment made in China.loftily—establish a responsible and ambitious company with faith and virtues; and good to dance across the sky—strive forexcellence through persistent innovation and improvement”. Integrating the philosophy of sustainable development into The release of our first ESG report marks a significant milestone in Swan Cotton Machinery’s commitment to sustainable

our corporate strategy and daily operations we are committed to driving industrial upgrading through technological development. Looking ahead we will with technological innovation as the driving force and responsible governance as the

innovation and repaying our stakeholders through the fulfilment of our responsibilities. cornerstone work hand in hand with stakeholders to create more sustainable business and social value on the journey

toward building a “century-old international Swan”.Prioritizing Core Businesses to Forge New Quality Productive Forces with IndependentInnovation.Swan Cotton Machinery resolutely implements the three major strategies of “strengthening the core cottonmachinery business achieving breakthroughs in cotton pickers and expanding into agricultural machinery”. With

high-intensity investment in R&D we have achieved key breakthroughs in fields of high-end cotton pickers intelligent

machine-picked cotton processing line and large-scale tomato harvesters with multiple core equipment successfully Signature by Chairman：

replacing imported alternatives. With our four major technology centers and multiple provincial innovation platforms we

are driving the continuous accumulation of intellectual property achievements and providing solid support for the security

of the national agricultural equipment industry chain and supply chain.”

03 042025 Environmental Social and Governance (ESG) Report Foreword

About Swan Cotton Machinery

Company Profile Corporate Culture

Established in 2002 Swan Cotton Machinery went public on the Main Board of the Shanghai Stock Exchange in 2016 (Stock Code:

603029) and is a listed company controlled by the Shandong Supply and Marketing Cooperatives. The predecessor of Swan Cotton Our Vision

Machinery was founded in 1946. With a legacy of over 80 years of manufacturing expertise and craftsmanship the Company is now

a high-tech enterprise integrating scientific research and development precision manufacturing marketing services and capital To go towards high-end equipment manufacturing industry and

operations and specializes in providing one-stop supply and services for full-process mechanized intelligent and information-based to create a century-old international Swan

equipment for the cotton industry.As a national single champion manufacturing enterprise and a specialized and sophisticated “Little Giant” enterprise Swan Cotton Our Values

Machinery has always upheld responsibility and commitment to serving the country through industry and driving the high-quality

development of the cotton industry through technological innovation. Now the Company’s industrial footprint has expanded globally. Virtue to fly loftily—establish a responsible and ambitious

18 subsidiaries and four major technology centers and production bases both at home and abroad have formed a global network company with faith and virtues; and good to dance across the

integrating R&D production sales and service. Swan Cotton Machinery’s main products hold a leading market share domestically sky—strive for excellence through persistent innovation and

and are exported to 37 countries and regions. The Company has been awarded two Second Prizes of the National Science and improvement.Technology Progress Award (the highest honor in the industry to date) and over 30 other provincial and ministerial awards.Looking ahead we will stay true to our original mission of serving the agriculture industry anchor our development in the high-end Our Mission

equipment manufacturing sector continuously strengthen technological innovation and steadfastly advance the three majorstrategies of “strengthening the core cotton machinery business achieving breakthroughs in cotton pickers and expanding into To provide customers with the most valuable system solutionsagricultural machinery”. In addition we will actively build a “one body two engines three wings” development framework vigorously

cultivate and develop new quality productive forces empower agricultural modernization with high-end intelligent agricultural

machinery and continue to contribute to building China into an agricultural powerhouse and ensuring national food and cotton Our Family Culture

supply security.One family one heart one spirit

05 062025 Environmental Social and Governance (ESG) Report Foreword

2010

Milestones Initiated IPO; completed and commissioned Wujiaqu Industrial Park 2021

in Xinjiang and the U.S. subsidiary and implemented the localization

Began the construction of a smart manufacturing

strategy.

1996 production line with an annual capacity of 200

1946 high-end cotton pickers in Wujiaqu.

Undertook a national aid project for Africa established a world-class 2013Established the predecessor — “Jinan Sanxingyuan ginning production line in Zambia marking the beginning of theIron Works” Company’s products entering the global market. Put Jinan Yaoshan Industrial Park into operation. 2022

Underwent profound changes in business structure

1955 20161997 and achieved substantial progress in transformation and upgrading.

Listed on the Shanghai Stock Exchange A-share Main Board marking

Adopted a joint state-private ownership. Took the lead in the industry in passing ISO9001 international quality the beginning of a new chapter in the Company’s history.management system certification and pioneered the integration of 2023

1961 industry quality management with international standards. 2017

Began the construction of the comprehensive smartRenamed “Machinery Factory of Shandong Supply 1998 Upgraded information systems and promoted the Company’sagriculture service centers in Southern and Northernand Marketing Cooperatives” digital transformation in operations. Xinjiang and comprehensively upgraded the

Company’s service system.Established the service philosophy of “regional quantification

1986 seamless cutting and comprehensive lifetime service”. 2019

2024

Undertook the task of “digesting and absorbing one Embarked on a new journey of “re-entrepreneurship” andof 150 Key Technologies” as per China’s reform and 2002 established three strategic goals: “strengthening the core cotton Successfully developed tomato harvesters realizingopening-up policy - specifically the digestion and machinery business achieving breakthroughs in cotton pickers and the substitution of imported machinery; and sold

absorption of the complete cotton ginning Reorganized and established “Shandong Swan Cotton Industrial expanding into agricultural machinery”. cotton pickers and grain harvesters to overseasequipment from Continental Eagle Corporation in the Machinery Stock Co. Ltd.” Officially implemented the brand strategy. markets for the first time.USA. 2020

20052025

1987 Embarked on a new journey of “re-entrepreneurship” and established three strategic goals: “strengthening the core cotton

Cooperated with Continental Eagle Corporation in the USA Advanced the “123” strategy for foreign trade

machinery business achieving breakthroughs in cotton pickers andRenamed “Shandong Cotton and Jute Machinery accelerated the implementation of the internationalization strategy. breakthroughs and achieved historic breakthroughsexpanding into agricultural machinery”.Factory.” in overseas business.

2008

1990

Conducted digital upgrading of production equipment.Witnessed a landmark achievement of the second

technological revolution in China’s cotton processing

industry — MY121 New Cotton Ginning Process and

Complete Sets of Equipment— passed national

inspection and acceptance.

07 082025 Environmental Social and Governance (ESG) Report Foreword

Honors in 2025

List of Key Leading Enterprises Cultivated Key Industrial “Chain Leader” Enterprise Innovation Demonstration Enterprise of Outstanding Standard Setting Unit for National

by the Supply and Marketing in Xinjiang Production and Construction Shandong Equipment Manufacturing Cotton Processing Standardization

Cooperatives Corps (XPCC) Industry

5G Smart Factory Enterprise in XPCC

Green Manufacturing Demonstration Unit 2025 Key Leading Agricultural First Prize of Science and Technology

in Inner Mongolia Autonomous Region Industrialization Enterprises in Jinan City Award in Shandong Machinery Industry

First Prize of Science and Technology Progress

Gold Award of Industrial Design First Prize of Science and Technology Second Prize for the Enterprise Award in XPCC

Competition in XPCC Progress Award in Shandong Category of the 10th “Maker China”

Equipment Manufacturing Industry SME Innovation and Entrepreneurship

Competition (XPCC) and the 2025

“Maker XPCC” Competition

2025 SSE Eagle · Golden Quality Corporate

Governance Award

First Prize in the Growth Group of the 14th First Second and Third Prizes for First Prize for Employee Innovation

China Innovation and Entrepreneurship Outstanding Scientific and Technological Achievements in the QuanchengCompetition (XPCC Division) Innovation in the 2025 Jinan “Presentation All-Employee Innovation Competition& Competition” Event

09 102025 Environmental Social and Governance (ESG) Report Special Feature

Special

Feature As a National-level Specialized and Sophisticated “Little Giant” Enterprise and a National Manufacturing Single-Champion Enterprise in the field of complete sets of equipment for cotton picking and processing in China Leading a New Intelligent Transformation in Cotton Processing Technology and Filling theSwan Cotton Machinery has firmly implemented three major strategies of “strengthening the core cotton machinery Technological Gaps in Chinabusiness achieving breakthroughs in cotton pickers and expanding into agricultural machinery”. Through sustained

high-intensity R&D investment the Company has realized comprehensive upgrading of technological system and With more than 30 years of dedicated efforts in the field of cotton

breakthroughs in core technologies while simultaneously advancing global market layout. In 2025 the Company’s processing machinery and equipment Swan Cotton Machinery

cumulative R&D investment reached RMB 6496.75 ten thousand accounting for 6.78% of operating revenuewith has consistently led the advancement of China’s cotton

R&D investment intensity ranking among the leading levels in the domestic industry. The Company has established processing technology. In the face of the wave of digital and

four major R&D centers and assembled a multidisciplinary R&D team of over 100 members with expertise in intelligent transformation the Company took the lead in China bymechanical engineering electrical engineering hydraulics agronomy intelligent systems etc. Leveraging provincial launching the “intergrated intelligent solution for 60 bales/hourinnovation platforms such as the Shandong Provincial Enterprise Technology Center and the XPCC Cotton machine-picked cotton processing line” achieving full-process

Machinery Processing Engineering Technology Research Center as well as the provincial pilot testing platform for intelligent control from bale opening and feeding dryingcotton harvesting and processing equipment manufacturing the Company has strengthened talent introduction and ginning baling to stacking. Through intelligent “matching ofcultivation and continuously driven high-quality development through technological innovation. As of the end of the machinery to cotton type” the processing efficiency has

Reporting Period the Company had obtained a total of 266 authorized valid patents including 63 invention patents increased by 2–3 times and labor requirements at ginning mills

accounting for more than 20% continuously enhancing the quantifiable accumulation of R&D achievements. have been significantly reduced. Simultaneously by integrating

artificial intelligence technologies the Company has achieved

Breaking Through “Bottleneck” Technologies of High-End Cotton Pickers and key breakthroughs in intelligent identification and removal of

Ending the Era of Foreign Monopolies foreign fibers. Through high-resolution image recognition andadvanced algorithms the content of “three types of foreignCotton pickers are regarded as the “crown” of agricultural equipment. Their core technologies had long been firmly fibers” (plastic film plastic filaments animal hair and other

monopolized by Western developed countries and retained a critical “bottleneck” restricting the development of heterogeneous fibers) in lint cotton is precisely controlled within

China’s cotton industry. Since establishing the cotton picker R&D team in 2009 Swan Cotton Machinery has firmly 2.5 grams per ton enabling cotton quality to reach

adhered to the path of “independent controllability”. Starting from conventional basket-type cotton pickers the internationally advanced levels enhancing the competitiveness

Company successively overcame key technologies such as high-speed picking systems and variable-chamber baling of cotton enterprises and supporting the textile industry in

systems and in 2019 developed the first domestically produced six-row bale-type cotton picker. Subsequently the reducing reliance on imported high-end raw materials.Company continued iterative upgrades Focusing on green and intelligent development completed the Furthermore the innovative application of an air-powered

technological upgrade to meet China IV emission standards and launched range-extended bale-type cotton pickers internal circulation process and a high-efficiency pulse dust

forming a serialized product matrix covering three-row four-row and six-row configurations as well as two collection system enables high-purity dust removal while

operating modes: basket-type and bale-type. In 2021 the Company established a domestically leading intelligent recovering waste heat. This significantly raises indoor workshop

manufacturing production line for high-end cotton pickers in Xinjiang China’s core cotton-producing region temperatures markedly improves the working environment and

realizing stable mass production of high-end cotton pickers. Compared with imported products the purchase cost safeguards the occupational health of workers in cotton Application Scenario of the 60 Bales/Hour Machine-picked

of the Company’s bale-type cotton pickers is reduced by more than one-third helping cotton farmers save RMB processing plants. This solution has become a benchmark for the Cotton Processing Line

9000-12000 per hectare in harvesting costs compared with manual picking enabling farmers to use domestically high-quality green and intelligent development of China’s

produced cotton pickers that are “reliable affordable and efficient”. During the 14th Five-Year Plan Period cotton processing industry. It provides robust technical support

domestically produced cotton pickers represented by that of Swan Cotton Machinery achieved large-scale for building a modern cotton industrial chain and drives the

application increasing the proportion of domestic cotton pickers in operation to over 70% fundamentally rewriting sector toward “innovation-driven” and “green” development.the history of “imported machines” harvesting “Chinese cotton” and breaking the monopoly of international brands.The Company’s six-row bale-type cotton picker was also showcased at the China Manufacturing Achievements

Exhibition of the 14th Five-Year Plan Period as one of the landmark achievements in China’s high-end agricultural

equipment manufacturing demonstrating the strategic outcomes of national scientific and technological

self-reliance and strength.Six-Row Bale-type Cotton Picker

1112

Innovation — Swan Cotton Machinery’s Technological Breakthroughs and Global Layout

Forging New Quality Productive Forces in the Industry Through Independent2025 Environmental Social and Governance (ESG) Report Special Feature

Expanding High-End Agricultural Machinery Equipment and Proactively Planning for Future “Seed Businesses” Deepening Overseas Market Expansion and Accelerating the Globalization of Technological Achievements

Rooted in core cotton machinery businesses and mindful of the trend toward diversification in agricultural equipment Swan Cotton Machinery proactively Swan Cotton Machinery actively responds to the "Belt and Road"

addresses industry cycle fluctuations by incorporating “agricultural machinery expansion” into the Company’s three core strategies. The Company focuses initiative implements a "foreign trade breakthrough" strategy

on addressing “bottleneck” issues in niche sectors and domestic technological shortcomings pursuing a path of differentiated and high-end development. proactively expands overseas accelerates the development of the

In recent years the Company has successfully developed new equipment such as large-scale grain combine harvesters negative-pressure intelligent grain Company’s overseas market presence and achieves breakthrough

drying towers and large-scale tomato harvesters. Although the Company’s new agricultural machinery segment is still in a development phase and growth in international business. Exported products have expanded

contributes to a relatively small portion of revenue the strategic layout for agricultural machinery has taken initial shape. The Company is transforming from from a single category of cotton processing equipment to multiple

a single “cotton machinery specialist” into a comprehensive agricultural machinery provider covering multiple sectors and offering robust domestic categories including cotton pickers and grain combine harvesters with

equipment support for modern agricultural production. the structure of international markets continuously optimized. In 2025

the Company achieved overseas operating revenue of RMB 27125.61

ten thousand up by 746.61% year on year. In particular to meet the

market demand in Uzbekistan Central Asia the Company customized

and developed a 4-row basket-type cotton picker achieving a

transition from small-batch trial sales to large-scale exports. Bale-type

cotton pickers have also successfully entered emerging markets such as

Central Asia South America and Africa. In addition the Company

adopted a “going global” model by collaborating with leading Application Scenario of Four-Row Basket-Type Cotton

enterprises in China’s cotton industry chain to expand overseas Picker in Cotton Fields in Uzbekistan

markets. The 60 Bales/Hour Machine-picked Cotton Processing Line

and bale-type cotton pickers have been successfully deployed in

Central Asia and have become typical demonstration cases of Chinese

high-end agricultural machinery “going global”. Simultaneously to

strengthen local service capabilities the Company established two

wholly-owned subsidiaries in Kazakhstan and Uzbekistan in 2025.These subsidiaries are comprehensively advancing the development of

localized overseas operations technical services and market response

systems thereby facilitating the deep integration of Chinese agricultural

High-end Grain Drying Towers machinery into the global agricultural value chain.Tomato Harvester

13 142025 Environmental Social and Governance (ESG) Report Governance

Governance

Sustainable Development Governance Compliant Operation

Party Building Leadership Investor Relations Management

Standardized Governance Business Conduct

15 162025 Environmental Social and Governance (ESG) Report Governance

Sustainable Development Governance

Sustainable Development Goal and Vision

Swan Cotton Machinery fully integrates ESG commitments into strategy formulation and daily operations. By deeply embedding ESG into

corporate governance and business processes the Company continuously optimizes management and enhances resource efficiency

striving to drive coordinated growth in both commercial value and social value. In active response to the 2030 Agenda for Sustainable SDGs Our Actions Chapters and Sections

Development the Company focuses on 13 Sustainable Development Goals closely related to daily operations and continuously

improves internal ESG management mechanisms to provide sustained momentum for long-term growth. Guided by ESG principles the

Company is accelerating the transition toward high-quality development and a sustainable future and strives to build a benchmark for

green transformation and contribute to sustainable development.Provide employees with broad development opportunities. Employees’ Rights and Interests

SDGs Our Actions Chapters and Sections

Support rural revitalization and actively engage in social Develop smart agricultural machinery and promote the

Contribution to Society Innovation-driven Development

welfare initiatives. digital transformation of agriculture.Develop and manufacture intelligent agricultural

Eliminate discrimination based on religion nationality

machinery to serve agricultural modernization and

Innovation-driven Development marital status gender or disability and embrace and Employees’ Rights and Interests

support the safe and stable supply of agricultural

accept employee diversity.products and sustainable agricultural development.Optimize green manufacturing processes and

Enforce strict occupational health and safety management

Occupational Health and Safety systematically enhance the resource and environmental Material Utilization

to foster a sound working environment.benefits of agricultural machinery production.Provide customers with training on machinery operation

Employees’ Rights and Interests Vigorously promote energy conservation and carbon

maintenance and sustainable agricultural technologies;

and Safety and Quality of reduction drive the green and low-carbon transformation Response to Climate Change

and offer the training on professional vocational skills and

Products and Services of the industry and implement climate action.personalized career development planning for employees.Safeguard the legitimate rights and interests of female Adhere to strict codes of business ethics oppose

employees and adhere to the principle of equal pay for Employees’ Rights and Interests corruption and ensure transparent and responsible Business Conduct

equal work. procurement.Establish close cooperative relationships with domestic

Develop range-extended agricultural machinery and

Energy Utilization and international partners and jointly promote Innovation-driven Development

promote the development of green agriculture.sustainable development of the industry.

17 182025 Environmental Social and Governance (ESG) Report Governance

Governance System for Sustainable Development

The Company attaches great importance to building employees’ ESG capabilities and awareness and regularly organizes

Swan Cotton Machinery integrates sustainable development into overall governance structure and continuously optimizes the ESG-themed training sessions to comprehensively enhance employees’ understanding of sustainable development concepts and

sustainable development governance system. In accordance with applicable laws and regulations such as the Company Law of the practical capabilities strengthen internal ESG governance and integration awareness and consolidate the talent foundation for

People’s Republic of China the Code of Corporate Governance for Listed Companies the Self-Regulatory Guidelines for Listed advancing ESG management and achieving long-term high-quality development.Companies on Shanghai Stock Exchange No. 14 - Preparation of Sustainability Reports (for Trial Implementation) as well as normative

documents and the Articles of Association the Company has formulated the ESG Management Measures the ESG Work Manual and

the Working Rules of the Strategy and the ESG Committee under the Board of Directors. These documents clarify that the Strategy and

ESG Committee is the highest governance body for ESG-related matters of the Company. The ESG Management Committee chaired by

the General Manager has also been established to provide support and professional assistance to the Strategy and ESG Committee in

managing ESG-related matters. The ESG Management Committee has established an office to organize and oversee the ESG Execution [Case] Training on ESG Reporting Project

Group and all executing units in carrying out ESG-related work.In June 2025 the Company organized and offered a training on

ESG Governance System ESG report project. This training covered senior management at

headquarters responsible personnel from various departments

Board of Directors and subsidiaries and key business staff achieving full coverage of

key management positions. It focused on ESG information

Strategic collection and management practices and provided in-depth

Decision-making Level Strategy and ESG Committee explanations of the importance and urgency of ESG management

for the Company’s long-term development. This training not only

enhanced participants’ professional knowledge and practical skills

ESG Management Committee but also effectively promoted the top-down transmission of ESG

Supervision and management concepts.Management Level On-site Photos of the Training on ESG Report Project

ESG Execution Group

Execution and Key PerformanceCorporate Safety and Environmental Social Responsibility

Implementation Level Industry Value GroupGovernance Group Protection Group Group

During the Reporting Period the Company offered a total of 2 ESG capability training sessions and

Board of Directors Strategy and ESG Committee held 6 meetings to discuss ESG-related matters.Formulate the Company’s ESG management policies vision Study and propose recommendations on the Company’s

strategies management systems and indicator framework; review ESG-related vision objectives and strategic plans; research decide

major ESG-related matters of the Company and determine major and oversee the implementation progress of major ESG-related

ESG risk management plans; review the Company’s annual ESG matters; review and submit the Company’s ESG report to the Board

report and confirm the completion status of ESG-related work. of Directors; and guide and supervise the ESG Management

Committee in research analysis identification assessment and To deepen the philosophy of sustainable development and strengthen the foundation of ESG management Swan Cotton

response to ESG-related risk matters. Machinery formulated and implemented the ESG Information Management System which prioritizes the full lifecycle

management of sustainability information and systematically standardizes key processes such as information collection analysis

and internal reporting. Through multiple channels including regular research external institutional reports internal system

records and cooperative exchanges the Company collects data to ensure comprehensive accurate and timely access to

sustainable development-related information. This provides a reliable basis for strategic decision-making and steadily advances

ESG Management Committee ESG Execution Group Departments and Subsidiaries

the sustainability process.Formulate ESG policies and strategies systems and assessment Serve as the execution units for ESG work and formulate ESG

and incentive mechanisms as the management center of the indicators management objectives and specific work plans related

Company’s ESG matters; establish the indicator framework and to their respective units based on the work plan of the ESG

annual plans and coordinate their implementation; identify and Management Committee and regularly report implementation

manage ESG risks and set and track targets; identify material progress; periodically identify and analyze the Company’s ESG risks

issues and coordinate data management and annual report; and and opportunities and collect ESG-related information and data;

optimize capital market ratings and communications. prepare the Company’s annual ESG report and submit it to the ESG

Management Committee for review; and conduct stakeholder

engagement to address their ESG-related needs.

19 202025 Environmental Social and Governance (ESG) Report Governance

Communications with Stakeholders

Swan Cotton Machinery’s operations and development are closely intertwined with numerous stakeholders. To ensure that the content

of the Report is precisely focused enables efficient communication and fully responds to the concerns of all parties the Company has

formulated the Stakeholder Communication Management System and established a normalized communication mechanism. The

Company continuously strengthens communication with both internal and external stakeholders including employees customers

supply chain partners investors government and regulatory authorities and communities. Through diversified platforms and channels

we conduct in-depth dialogue to accurately understand stakeholder expectations. On this basis the Company in the principles of

openness and transparency responds to stakeholder concerns in a timely and comprehensive manner promotes a mutually beneficial

and win-win development pattern and jointly draws a blueprint for sustainable development.Stakeholders Expectations and Demands Our Action Response Modes Stakeholders Expectations and Demands Our Action Response Modes

· Protection of · Optimize the compensation and benefits Regularly · Governance · Improve internal control systems Regularly

Employees’ Rights and system

· Employee Satisfaction Survey ·General Meetings of Shareholders Interests · Continuously enhance employee benefits · Information Disclosure · Enhance internal control levels Annual Reports Sustainability

· Improve democratic management and · Performance Appraisal and Feedback Reports: Annually· Career Development employee participation mechanisms

Opportunities · Employees’ ECxopnegcrteastisons and Demands · Return on Investment · Strengthen compliant information · Financial Reports: Quarterly

· Offer employee training · Factory Affairs Disclosure Channels disclosure and attach importance to Employees · Compensation and Benefit · Investors As NeededEnsure smooth career advancement investor returns· Sustained Profitability

channels · Earns Briefings Investor Open Day

· Occupational Health ·Organize diverse employee activities Investor Roadshows Public

and Safety Announcements and SSE · Create a sound working environment

E-Interactive Platform

· Product Quality · Improve the quality management system Regularly · Compliant Operation · Compliance with laws and regulations As Needed

· Quality control ·Customer satisfaction surveys ·Accept inspections by regulatory · Lawful Tax Payment · Proactively comply with tax obligations authorities

· Service Quality · Enhance customer rights protection As Needed Accept government supervision

mechanisms Government and ·· Technological Innovation · Carry out R&D and innovation

Customers · Product Technical Support and Regulatory

· Product Innovation · Improve service satisfaction Usage Guidance Agencies

· R&D and innovation · Energy Conservation and · Adhere to green and low-carbon development

Emission Reduction

· Fulfill contractual · Adhere to business ethics Regularly

obligations and

Supplier Conference

promote industrial · · Support for Community · Support rural revitalization· Uphold the bottom line of integrity in As Needed

chain coordination operations and build long-term ·Offer training for suppliers · Party-building Collaboration Public

Supply Chain partnership relationships Social Welfare Organize public welfare activitiesCommunity · · Welfare Activities

Business Partners · Mutual Benefit and

Win-Win Cooperation

21 222025 Environmental Social and Governance (ESG) Report Governance

Management of Material Topics Matrix of Material Topics

Swan Cotton Machinery has formulated the Materiality Assessment Management System under which the working group of the ESG 24 1

Management Committee conducts an annual materiality assessment of sustainable development topics to identify the sustainable 210 19

20

development topics that are material to both the Company and stakeholders. In 2025 a total of 577 questionnaires were collected. Seven 415 22 17

topics with financial materiality and 25 topics with impact materiality were identified and addressed in the Report.

3

23217

2514

26

Materiality Assessment Process Assessment Method

28

11912

8

Using value chain analysis we identified ESG-related impacts risks and 13 27 18

opportunities across various links of our operations and with reference to AA1000

Step 1

identified stakeholders’ concerns and expectations.Learn about the background

of the Company

5

16

With reference to the Self-Regulatory Guidelines for Listed Companies on Shanghai 6

Stock Exchange No. 14 - Preparation of Sustainability Reports (for Trial

Implementation) the Sustainability Accounting Standards Board (SASB)

Materiality Map the MSCI ESG Rating Standards the Task Force on Climate-related

Financial Disclosures (TCFD) Recommendations and the Global Reporting Initiative

Step 2 (GRI) Sustainability Reporting Standards among other guidelines and standards

Preliminary Identification of Topics develop a list of ESG topics aligned with the Company’s business operations and Financial Materiality

strategic objectives taking into account domestic and international sustainability

trends regulatory requirements best practices in the industry and the unique

business characteristics of the Company.环境社会治理

1 Management of Environmental 9 Protection of Employees' Legal 20 Protection of shareholders’ rights

1. Impact materiality assessment: Based on management interviews identify topics Compliance Rights and Interests and interests

with impact materiality by evaluating three dimensions—scale (the magnitude of

2 Pollutant Emissions 10 Employee Training and Development 21 Standardization of Corporate

impact) scope (the breadth of impact) and irremediability (the difficulty of

3 Governance

offsetting or remedying harm). Energy Utilization

11 Occupational Health and Safety

4 Waste Disposal 12 Innovation-driven Development

22 Risk Management

2. Financial Materiality Assessment:Analyze impacts dependencies and other 13 Rural Revitalization 23 Anti-Unfair Competition

factors (such as climate risk exposure and regulatory changes addressing systemic 5 Response to Climate Change 14 Contribution to Society 24 Tax ComplianceStep 3 risks) identify the risks and opportunities the Company faces the likelihood of 6 Ecosystem and Biodiversity Anti-Commercial Bribery and

Assess the materiality of topics 15 Equal Treatment of Small and 25occurrence and the extent of the financial impact of these risks and opportunities Protection

Medium-Sized Enterprises Anti-Corruption

by considering revenue costs assets and liabilities as well as the cost of capital 7 Circular Economy

and establish a reasonable monetary threshold for financial materiality. 16 Science and Technology Ethics

26 Due Diligence

8 Water Resource Utilization

17 Safety and Quality of Products and 27 Communications with Stakeholders

Services 28 ESG Governance

18 Data Security and Privacy Protection

19 Supply Chain Security

Based on the results of the impact materiality and financial materiality assessments

compile a list of topics based on impact and financial materiality and construct a Note: As Swan Cotton Machinery’s core business involves the research development production and sale of cotton harvesting and processing machinery

Step 4 double materiality matrix. and other agricultural machinery the Company’s business operations have no direct connection to cutting-edge technology fields such as artificial

Confirm topics and draw a intelligence or life sciences. Furthermore the production and operational sites of the Company do not involve ecologically sensitive or fragile areas such as

Double Materiality Matrix key terrestrial or marine ecological functional zones ecological protection red lines or nature reserves. None of the products impact ecosystems species

habitats or biodiversity throughout their entire lifecycle; therefore issues related to technology ethics ecosystem conservation and biodiversity protection

do not apply.

2324

Impact Materiality2025 Environmental Social and Governance (ESG) Report Governance

Party Building Leadership

[Case] Party LectureIn June 2025 the Secretary of the CPC Committee of Swan Cotton Machinery delivered a Party lecture titled “Solidly ConductingEducation and Learning and Continuously Strengthening Work Style” to all Party members prospective members active

applicants for Party membership and department heads to lead them in renewing their Party admission oath and jointly

Swan Cotton Machinery upholds the leadership of the Party as a core principle of corporate governance and considers it as the foundation celebrate the upcoming 104th anniversary of the founding of the Communist Party of China.for the Company’s stable development and a solid political guarantee for deepening reforms. Guided by Xi Jinping Thought on Socialism

with Chinese Characteristics for a New Era the Company fully implements the guiding principles of the 20th National Congress of the

Communist Party of China and all plenary sessions of the 20th Central Committee. We prioritize the Party’s political development ground

our work in firm ideals convictions and purposes and focus on mobilizing the enthusiasm initiative and creativity of all Party branches and

Party members. Through these efforts the Company comprehensively advances Party building to drive high-quality corporate

development.In accordance with the Constitution of the Communist Party of China and applicable laws and regulations such as the Company Law of the

People's Republic of China Swan Cotton Machinery has established the Party Committee of Shandong Swan Cotton Industrial Machinery

Stock Co. Ltd. and formulated the Rules of Procedure of the Party Committee of Shandong Swan Cotton Industrial Machinery Stock Co. Ltd.By integrating Party leadership into every aspect of corporate governance the Company ensures that the Party Committee effectively fulfills

its leadership role in "setting the direction overseeing the overall development and ensuring implementation".Party Organization Structure

CPC Committee of Shandong Swan Cotton Industrial Machinery Stock Co. Ltd.Renewal of the Party Admission Oath

First Party Branch Second Party Branch Third Party Branch Fourth Party Branch Fifth Party Branch Sixth Party Branch Seventh Party Branch Key Performance

As of the end of the Reporting Period the CPC Committee of the Company had established 7 Party

[Case] General Meeting of Party Members

branches with a total of 80 Party members and had convened 37 committee meetings.In December 2025 the General Meeting of

Party Members of the CPC Committee of

Shandong Swan Cotton Industrial Machinery

Stock Co. Ltd. was successfully convened.The meeting heard deliberated and

approved the Work Report of the CPC

Committee of Shandong Swan Cotton

Industrial Machinery Stock Co. Ltd. and the

Work Report of the CPC Discipline Inspection

Commission of Shandong Swan Cotton

Industrial Machinery Stock Co. Ltd. and

elected the new members of the CPC

Committee and the Discipline Inspection General Meeting of Party Members

Commission.

25 262025 Environmental Social and Governance (ESG) Report Governance

Standardized Governance General Meeting of Shareholders

Swan Cotton Machinery has established a corporate governance structure consisting of the General Meeting of Shareholders the Board In strict compliance with the Company Law of the People’s Republic of China (the “Company Law”) the Rules for General Meeting of

of Directors and its specialized committees as well as the senior management team and operates in strict compliance with the Shareholders of Listed Companies and the Rules of Procedure of the General Meeting of Shareholders the Company ensures

requirements of applicable laws and regulations. The Company has formulated a series of corporate governance regulations including compliance with legal requirements regarding the convening procedures participant qualifications and voting processes of General

the Articles of Association of Shandong Swan Cotton Industrial Machinery Stock Co. Ltd. (the “Articles of Association” ) the Rules of Meeting of Shareholders. The Company adopts a combination of on-site voting and online voting for the resolution of proposals at the

Procedure for General Meeting of Shareholders and the Rules of Procedure for Board of Directors. These regulations clearly delineate General Meeting of Shareholders. To effectively safeguard the legitimate rights and interests of minority investors separate vote counting

the boundaries of authority and responsibility among the governance bodies ensuring clear division of labor mutual checks and is conducted for major matters involving the interests of minority investors to ensure fairness in voting.balances and coordinated operations thereby providing a solid foundation for the Company’s standardized governance and efficient

decision-making. Key Performance

Organizational Structure of Swan Cotton Machinery

During the Reporting Period the Company convened 4 General Meeting of Shareholders at which

General Meeting of Shareholders 24 proposals were reviewed and approved.Audit Committee

Nomination Committee

Board of Directors Board of Directors

Remuneration and Appraisal Committee

Strategy and ESG Committee Board Secretary The Board of Directors is accountable to the General Meeting of Shareholders. It reviews and makes decisions on major operational

matters of the Company or submits such matters to the General Meeting of Shareholders for review and approval in accordance with

relevant regulations. In accordance with the Company Law the Articles of Association and the Rules of Procedure of the Board of

General Manager Directors the Company clearly defines the scope of authority and responsibilities of the Board of Directors and standardizes its

operating procedures in convening meetings deliberation voting and resolution-making thereby effectively giving full play to the core

role of the Board of Directors in business decision-making.Deputy General Manager CFO

To enhance the scientific basis of decision-making improve the corporate governance structure and strengthen the assessment and

compensation management of directors and officers the Board of Directors has established four specialized committees in accordance

with applicable laws and regulations: the Strategy and ESG Committee the Nomination Committee the Audit Committee and the

Remuneration and Appraisal Committee. These committees are designed to assist the Board of Directors in fulfilling its decision-making

and supervisory functions and their operations strictly adhere to the relevant rules of procedure.Key Performance

The Board of Directors consists of 9 members including 1 employee representative director. During

the Reporting Period the Board of Directors held a total of 6 meetings at which 30proposals were

reviewed and approved. The Audit Committee reviewed and approved 25 proposals while the

Strategy and ESG Committee and the Nomination Committee each reviewed and approved 1 proposal

and the Remuneration and Appraisal Committee reviewed and approved 2 proposals.

2728

Securities Department

International Marketing Department

Domestic Marketing Department

Finance Departmen

Xinjiang Technical Service Center

Aksu Technical Service Center

Korla Technical Service Center

Shihezi Technical Service Center

Agricultural Machinery

Technology R&D Department

R&D Center Science and Technology Project Office

Engineering Department Spare Parts Workshop

Quality Control Department Comprehensive Workshop

Production Department Machining Workshop

Safety and Environmental

Protection Department General Assembly Workshop

Human Resources Department Supply Chain Center

Office Digital Transformation Office

Audit Department2025 Environmental Social and Governance (ESG) Report Governance

Board Diversity Risk Management

The Board of Directors attaches importance to diversity in its composition. Based on the Company’s actual conditions it actively includes To manage and evaluate the effectiveness and completeness of various internal control systems ensure compliant operations and

directors with diverse backgrounds professional expertise and practical experience promoting the integration of diverse perspectives safeguard the security of Company assets Swan Cotton Machinery has formulated the Working System for Reporting Major Operational

and innovative thinking into the decision-making process in order to enhance corporate governance standards and the quality of Risks so as to ensure the rapid reporting of major operational risk matters and enable timely response measures thereby effectively

strategic decision-making. preventing and mitigating major operational risks.Indicator Unit 2025

[Case] Training on Risk Management

Number of Members of the Board of Directors Person 9

In February 2025 the Company organized training on legal practice and risk prevention for employees in key departments such

By Gender as sales finance and audit further enhancing the legal awareness and risk prevention capabilities of personnel in critical

positions.Male Person 6

Female Person 3

By Type

Independent Directors Person 3

Non-Independent Directors Person 6

Remuneration Management for Directors and Officers

In strict accordance with the relevant provisions of the Company Law and the Articles of Association Swan Cotton Machinery has

formulated systems such as the Measures for the Administration of the Remuneration of Directors and Officers clarifying that the

Remuneration and Appraisal Committee serves as the remuneration assessment body for the Company’s directors and officers. In

alignment with current operating strategies and businesses the Company dynamically adjusts its remuneration system and ensures

adequate disclosure thereby closely linking the personal interests of members of the management team with the Company’s long-term

sound development. This approach enhances the motivation of senior management improves operational efficiency and quality and

ensures the achievement of the Company’s strategic and operational objectives.Training on Risk Management

Compliant Operation

Swan Cotton Machinery attaches great importance to the development of a compliance management system continuously strengthens

internal controls and compliance management and actively promotes the cultivation of a compliance culture to lay a solid foundation

for the high-quality development of the Company.Key Performance

During the Reporting Period the Company offered a total of 5 legal-themed training sessions and

17 Tax Management compliance training sessions covering topics such as compliant performance of duties by

Swan Cotton Machinery regards integrity-based operations and tax compliance as fundamental principles strictly complies with

directors and officers legal risk prevention and AI applications. national tax laws and regulations and actively fulfills tax payment obligations. Through standardized declaration procedures and timely

tax payments the Company ensures accurate compliant and timely tax reporting thereby fostering a responsible corporate image.

29 302025 Environmental Social and Governance (ESG) Report Governance

Internal Control Investor Relations Management

In accordance with laws and regulations such as the Basic Norms for the Internal Control of Enterprises Swan Cotton Machinery has Swan Cotton Machinery strictly complies with the requirements of laws and regulations such as the Guidelines for Investor Relations

formulated the Internal Control Management System and established an internal control organizational structure comprising the Board Management of Listed Companies adheres to the core principles of compliance equality proactivity and integrity and continuously

of Directors the Audit Committee the Management the Internal Audit Department various functional departments and subsidiaries to deepens the development of the investor relations management system. By leveraging diverse communication channels the Company

promote the standardized operations of the Company. actively engages with and responds to investor concerns thereby effectively enhancing investor confidence in the Company.Department Responsibility

Communication with Investors

Determine the internal control organizational structure formulate basic policies ensure the Swan Cotton Machinery has established the Investor Relations Management System which standardizes communication and interaction

Board of Directors effective establishment and implementation of the internal control system and approve the with investors as well as the process for responding to their requests and designates the Securities Department as the functional

annual internal control self-assessment report. department responsible for investor relations management.Swan Cotton Machinery actively expands diversified investor communication channels and is committed to establishing communication

platforms with investors through performance briefings cash dividend briefings and major event briefings General Meetings of

Supervise the effective implementation and evaluation of internal controls review the Shareholders roadshows analyst meetings visit reception and discussion sessions. In addition the Company systematically carries out

Audit Committee annual evaluation report and submit it to the Board of Directors for approval and organize investor relations management through both online and offline channels such as the official website new media platforms telephone

and coordinate internal control audits. fax email and investor reception activities. Through continuous communication across multiple platforms and channels the Company

conveys corporate value information to the market in a timely and transparent manner effectively safeguards investors’ legitimate rights

and interests and actively builds transparent long-term stable and mutually beneficial strategic partnerships with investors.Establish and improve the internal control system promote the implementation of the

Management Level system inspect implementation status and resolve implementation issues and approve

overall objectives and work plans for risk management. [Case] Highlights of Investor Relations Management

The Company attaches great importance to investor relations management and systematically establishes and continuously

improves the investor relations management system in the principles of “efficiency transparency and win-win cooperation”. The

Draft internal control-related regulations formulate annual evaluation plans and conduct

Internal Audit Company strictly implements the information disclosure system to ensure that disclosures are truthful accurate complete timely

evaluations prepare annual self-assessment reports supervise the rectification of internal

Department and fair. Through multiple channels we communicate updates on our operations and development to the market effectively

control deficiencies and report to the Audit Committee and the Management.safeguarding investors’ right to be informed. In terms of communication and interaction we have established sound

multi-channel communication mechanisms and normalized performance briefing mechanisms and innovatively adopted a

“digital human” video interaction format and utilized AI technologies to present the Company’s value in an intuitive manner.Build the internal control system within the scope of responsibility formulate and Concurrently we also strictly implement a shareholder return policy maintain a stable level of cash dividends and earnestly fulfill

Functional implement corresponding regulations conduct self-inspections cooperate with internal our commitments. In recognition of outstanding performance in investor relations management and digital innovation the

Departments and external inspections promptly rectify deficiencies and organize internal control Company received the “2025 Award for Excellence in Investor Relations Development for Listed Companies” and the “2025 Bestcompliance training. Practice Award for Digital Innovation of Board Secretary Offices” presented by Shenzhen Valueonline.Subsidiaries Establish and improve their own internal control systems identify and rectify internal

Controlled control deficiencies and promptly report significant deficiencies.Internal Audit

The Internal Audit Department of Swan Cotton Machinery strictly follows the Internal Control Management System and relevant internal 2025 Best Practice Award for Digital Innovation of Board 2025 Award for Excellence in Investor Relations

audit working standards actively fulfills audit supervision responsibilities and focuses on conducting audit supervision over major asset Secretary Offices Development for Listed Companies

security major investment projects and Company-level systems and procedures.

31 322025 Environmental Social and Governance (ESG) Report Governance

Key Performance Business Conduct

During the Reporting Period the Company held 3 performance briefings participated in one regional Swan Cotton Machinery strictly complies with laws and regulations such as the Anti-Unfair Competition Law of the People's Republic of

11 China and the Anti-Monopoly Law of the People's Republic of China. The Company has deeply integrated the upholding of business investor collective reception day event hosted one on-site investor visit received investor visits ethics the implementation of anti-commercial bribery and anti-corruption policies and the promotion of fair competition into its

operational practices and is committed to becoming a benchmark for business ethics in the industry. During the Reporting Period 100%

14 17 of the Company’s new employees signed the Commitment to Integrity the Commitment to Business Ethics and other commitments and engaged with investors times via SSE E-Interactive Platform and answered phone calls

no incidents of corruption or unfair competition occurred in the Company.from investors. Anti-Commercial Bribery and Anti-Corruption System

The Company actively implements anti-commercial bribery and anti-corruption policies and has formulated the Anti-Corruption and

Anti-Bribery System. The Discipline Inspection and Audit Department has been designated to oversee matters related to business ethics

and ensure the effective implementation of anti-corruption and anti-bribery efforts. By strengthening supervision and management of

Returns to Shareholders key positions the Company ensures that institutional requirements are implemented at specific positions and operational processes.Swan Cotton Machinery has established a scientific and transparent decision-making and adjustment mechanism for profit distribution

to ensure process transparency thereby fully safeguarding the rights of minority shareholders to information participation and other [Case] Training on Party Conduct and Integrity Education

legitimate interests. We have elevated shareholder returns to a strategic priority for the Company. Through the formulation of the

Three-Year Shareholder Return Plan (2024–2026) we have made clear arrangements regarding distribution policies which not only

In August 2025 the Company organized Party members cadres and key personnel to visit Qizhou Prison for a warning education

maintain policy continuity and stability but also enhance the investment confidence and satisfaction of minority shareholders. During the

activity. This initiative aimed to guide Party members and cadres in strengthening their awareness of integrity and self-discipline

Reporting Period the Company implemented the 2024 annual equity distribution.as well as their ability to resist corruption and prevent moral decline thereby providing a strong disciplinary guarantee for the

Company’s high-quality development.Indicator Unit 2025

Cash Dividend per Share Yuan/Share 0.172

Total Cash Dividend (Including Tax) RMB 10000 2087.08

Proportion to Net Profit Attributable to Shareholders of the

%

Listed Company in Consolidated Financial Statements 30.11

Information Disclosure

Swan Cotton Machinery has established the Information Disclosure Management System to further standardize information disclosure

practices. This system clarifies the responsibilities of disclosure officers the scope of disclosure procedures confidentiality requirements

and related liabilities. By systematically standardizing disclosure practices and strengthening administrative management the Company Training on Party Conduct and Integrity Education

has effectively ensured the compliance and effectiveness of information disclosure. During the Reporting Period the Company did not

face any penalties due to noncompliance with information disclosure regulations.The Company adheres to the principles of openness fairness and impartiality and conducts timely and accurate information disclosure

through statutory channels such as the website of the Shanghai Stock Exchange ensuring that all investors have equal access to

In accordance with the Anti-Corruption and Anti-Bribery System the Company has prepared the Commitment to Anti-Corruption and

information and effectively safeguarding their right to be informed.Anti-Bribery for employees and incorporated the implementation of the commitment into important bases for evaluation assessment

and appointment decisions to ensure that anti-commercial bribery and anti-corruption requirements are embedded into the evaluation

of personnel in key positions. In business ethics assessments the Company’s work extends beyond compliance reviews and focuses on

proactively identifying potential issues and risks.

33 342025 Environmental Social and Governance (ESG) Report Governance

Anti-Commercial Bribery and Anti-Corruption Measures

Chief Accountant

The Company designates the Discipline Inspection and Audit Department as the supervisory and management body for anti-corruption

anti-bribery and other business ethics-related matters to promote the normalization of anti-bribery efforts. The Company encourages Description of Risk

employees and all relevant parties to report and expose all types of corrupt practices by establishing dedicated whistleblowing hotline

and mailing and strictly keeps the information of whistleblowers confidential. For verified corruption-related activities penalties will be Risks of inaccurate accounting of costs and expenses due to under-recording omission or misstatement; risks of concealing

imposed according to the severity of the circumstances. In serious cases labor contracts will be terminated compensation will be corporate assets; risks of data leakage in financial and operational data security control.pursued in accordance with applicable laws and regulations and cases will be transferred to judicial authorities.Reporting Channels Whistleblowing Channels Countermeasures

Online Whistleblowing by Phone Whistleblowing Hotline: 0531—58675815 Truthfully record all economic activities improve the quality of accounting information; strengthen asset management

accounting inventory verification and reconciliation; strictly fulfill confidentiality responsibilities strengthen financial

Mailing Address and Department: Audit Department Swan Cotton Machinery confidentiality safeguards and reinforce the storage and safeguarding of financial data.Offline Reporting by Mail

No. 99 East Road of Dawei Village Tianqiao District Jinan City China

Head of Finance Department

Description of Risk

￥ Preparation of false financial statements; false declarations for government project funds; risks of improper benefit transfer in

financing activities; risks of misappropriation of funds during fund utilization; risks of data leakage in financial and operational

data security control; risks of concealment of risk information and insider trading during information disclosure.￥ Countermeasures

Strictly implement laws regulations and institutional provisions to improve the quality of accounting information and ensure the

To prevent and strengthen our integrity defenses Swan Cotton Machinery has conducted integrity risk identification and assessment authenticity and accuracy of accounting reports; standardize declarations for government funds and establish strict review

evaluated the risk levels of each risk point and formulated targeted countermeasures. The Company regularly compiles and updates the mechanisms; improve financing management systems; strengthen financial internal control systems and enhance auditing and

integrity risk list to ensure dynamic accurate and comprehensive risk identification. supervision to ensure the security of fund utilization; strengthen internal departmental management and strictly fulfill

confidentiality responsibilities and obligations.Examples of Integrity Risk Points

Accounting CFO

Description of Risk Description of Risk

Risks of under-recording omission delay or misstatement in financial accounting resulting in discrepancies in the accounting of Misrepresentation of financial information fraud and improper fund management; misinterpretation of regulations and lack of

revenue costs expenses taxes and receivables/payables;Intentional delays in tax declaration underpayment omission or late risk warnings; violations of expense control regulations and information leaks.payment of taxes in tax administration; risks of leakage of financial and operational data.Countermeasures

Countermeasures

Strengthen learning become familiar with and correctly understand applicable laws regulations and systems; strictly prepare

Strictly record the Company’s economic activities in accordance with the requirements of the Accounting Standards for Business corporate financial reports in accordance with national financial laws and regulations departmental rules and other normative

Enterprises to improve the quality of accounting information; strengthen professional competence and analytical capabilities; documents; analyze and report on the Company’s financial position and operating results identify and prevent major risk points

declare and pay all taxes as required and actively fulfill tax obligations; maintain sound tax enterprise relations and ensure and establish institutional constraints; consciously strengthen the defense against corruption and promote integrity; enhance the

compliance in tax-related matters; strictly fulfill confidentiality responsibilities establish internal control mechanisms identification and prevention of major risk points; strengthen confidentiality awareness and strictly implement information

conscientiously perform confidentiality obligations of insiders and strengthen the storage and safeguarding of financial data. security requirements.

35 362025 Environmental Social and Governance (ESG) Report Governance

Swan Cotton Machinery actively provides anti-commercial bribery and anti-corruption training to directors management and

employees. Through continuous education and communication the Company ensures that compliance awareness does not remain

merely at the institutional level but is truly internalized in mindset and externalized in practice taking root across all levels and

throughout all processes of the Company.Indicator Unit 2025

Number of Directors Participating in the Training on Anti-commercial Bribery and Anti-Corruption Person 6

Percentage of Directors Participating in Training on Anti-commercial Bribery and Anti-Corruption % 66.67

Total Duration of Training on Anti-commercial Bribery and Anti-Corruption for Directors Hour 112

Average Duration of Training on Anti-commercial Bribery and Anti-Corruption for Directors Hour/Person 18.67

Number of the Management Participating in Training on Anti-commercial Bribery and Anti-Corruption Person 6

Percentage of the Management Participating in Training on Anti-commercial Bribery and Anti-Corruption % 100

Total Duration of Training on Anti-commercial Bribery and Anti-Corruption for the Management Hour 112

Average Duration of Training on Anti-commercial Bribery and Anti-Corruption for Management Hour/Person 18.67

Number of Employees Participating in Training on Anti-commercial Bribery and Anti-Corruption Person 91

Percentage of Employees Participating in Training on Anti-commercial Bribery and Anti-Corruption % 10.2

Total Duration of Training on Anti-commercial Bribery and Anti-Corruption for Employees Hour 1414

Average Duration of Employee Training on Anti-Commercial Bribery and Anti-Corruption Hour/Person 15.54

Anti-Unfair Competition

Swan Cotton Machinery strictly complies with applicable laws and regulations such as Anti-Unfair Competition Law of the People's

Republic of China and the Anti-Monopoly Law of the People's Republic of China and rigorously regulates market conduct through

continuous system optimization and process control. The Company is committed to eliminating all forms of unfair competition and

ensuring that all business activities are conducted fairly and transparently within the legal framework. During the Reporting Period the

Company was not involved in any litigation or major administrative penalties related to unfair competition.Key Performance

As of the end of the Reporting Period the Company offered one training session on anti-monopoly and

fair competition with a total of 16 participants and a total training duration of 48 hours.

37 382025 Environmental Social and Governance (ESG) Report Environmental Protection

Environmental Protection

Response to Climate Change Water Resource Utilization

Environmental Management Material Utilization

Energy Utilization

39 402025 Environmental Social and Governance (ESG) Report Environmental Protection

Risk/Opp

Response to Climate Change Category Description of Risk/Opportunity Financial Impact Impact Impact Likelihood ofortunity Duration Level CountermeasuresOccurrence

Increase R&D investment in green

Government policies are driving the green

Swan Cotton Machinery attaches great importance to the impact of climate change on the agricultural machinery sector incorporating agricultural machinerytransformation of agricultural machinery leading Short-term increase in

Focus on technological

climate risk management and green transformation into the core ESG strategy to systematically address multiple challenges at the policy to a surge in demand for lightweight designs R&D investment; Long High Medium breakthroughs in green and and smart precision operation technologies; significant increase in term

technological and market levels. The Company actively seizes opportunities presented by the ?carbon peaking and carbon neutrality? intelligent technologiestechnological innovation can be leveraged to long-term returns

policy and the green development of agriculture. By focusing on R&D of new energy agricultural machinery technologies and optimizing build product competitive barriers Pilot and promote modularized and

lightweight products

low-carbon production processes we drive sustainable growth through compliance and solidifies our green competitive advantage in

the industry. Deepen development of domestic

With the scaling-up development of the and overseas low-carbon intelligent

Governance domestic agricultural industry demand for agricultural machinery marketsGrowth in medium- low-carbon intelligent agricultural machinery is

and long-term sales Medium Promote cooperation with

increasing. Recognition of green agricultural High Medium

Swan Cotton Machinery has established a clearly structured climate change governance framework with the Board of Directors and the revenue; optimization term agricultural cooperatives and machinery in international markets is improving of profit structure large-scale farms

Strategy and ESG Committee serving as the highest decision-making bodies to coordinate climate-related strategic planning and major and combined with cross-regional operation demand market space is expanding Expand promotion of green

decisions. Under these bodies are the ESG Management Committee and executive task forces from various business departments agricultural machinery services

forming a three-tiered "decision-coordination-execution" mechanism. With the ESG Work Manual as the core the Company has clarified

full-process requirements for climate change risk identification target setting and implementation supervision. The responsibilities of Actively apply for green agricultural The national ?carbon peaking and carbon machinery policy subsidies and R&D

each governance body are clearly defined: the Strategy and ESG Committee is responsible for reviewing major climate-related matters neutrality? policy and the Plan to Accelerate funding support

and overseeing their implementation; the ESG Management Committee leads the formulation of short- and medium-term action plans; Building Up Strength in Agriculture clarify the Increase in subsidy direction of green transformation for agricultural income; reduction in Long Medium Adjust product structure in line with

and the Execution Group implement specific measures such as low-carbon production and technology R&D. Furthermore by Highmachinery. and agricultural machinery purchase tax burden; sharing of term to high policy developments

establishing an ESG reporting and risk monitoring mechanism the Company regularly tracks progress toward climate-related goals to subsidies are being directed toward low-carbon R&D costsmodels and tax incentives and R&D subsidies Participate in the formulation of

ensure that governance measures align with regulatory requirements and industry trends thereby providing a solid governance are being provided green agricultural machinery

standards

foundation for green transformation.Strategy Notes: We define the short-term medium-term and long-term impact duration as 1-3 years 3-5 years and over 5 years respectively; the high medium and low impact materiality refers to severe moderate and minor impact on the Company's production and operations respectively; and the high medium

and low likelihood of occurrence mean that relevant risks are very likely likely and unlikely to occur respectively.Swan Cotton Machinery fully recognizes the systemic interconnections between climate change risks and opportunities where

challenges such as extreme weather and policy upgrades coexist with opportunities for green transformation and technological

innovation. The Company assesses their impacts on business and finance over the short medium and long term clarifies strategic

directions and response strategies and dynamically adjusts relevant approaches to transform challenges into opportunities and Impact Risk and Opportunity Management

consolidate the foundation for sustainable development.Swan Cotton Machinery has established standardized procedures to identify assess and manage climate change risks and regularly

reviews the effectiveness of their implementation to ensure timely and effective risk response strategies.Risk/Opp Category Description of Risk/Opportunity Financial Impact Impact Impact Likelihood of

ortunity Duration Level CountermeasuresOccurrence

Existing emission standards and energy Increase dedicated investment in Risk Risk RiskIncrease in R&D costs

consumption levels of current agricultural low-carbon technology R&Ddelay in technology Medium Identification Assessment Response

machinery products have not fully met upgrades and Medium to long

low-carbon requirements; investment in to high Medium

Achieve breakthroughs in core

increasing pressure on term technologies through

lightweight and intelligent control technology revenue industry-university-research

R&D is substantial and involves long cycles cooperation

Industry competition is intensifying and user With reference to the Task Force on For each identified risk and opportunity the Based on identification and assessment results

demand for low-emission and intelligent Conduct market demand research Climate-related Financial Disclosures (TCFD) Company further identifies the primary the Company formulates corresponding

agricultural machinery is growing. If product Decline in sales and accelerate R&D of intelligent

transformation lags behind market share may revenue and Medium Medium to low-carbon agricultural machinery Recommendations the Company identifies climate-related drivers as well as the potential response measures to ensure sufficient

Medium

be lost; the ?high-quality machinery with high contraction of market term high Launch a differentiated portfolio of types of risks and opportunities across three major financial impacts time horizons and capabilities and resources to address climate

subsidy? policy has led to reduced subsidies for share low-carbon products

traditional models affecting product major categories—physical risks transition levels of impact they may bring. change risks and seize climate change Optimize cost control to enhance

cost-effectiveness risks and opportunities—and defines and opportunities thereby forming a closed-loop

describes climate change-related risks and management mechanism for climate change

Strengthen flood prevention opportunities based on national laws and risks.moisture protection and other

Extreme weather may cause production base protective facilities at production regulations and policy requirements domestic

Production losses; Short

shutdowns and disruptions in component bases

increase in and and international sustainable development

supply. Agricultural machinery operations may

maintenance and Medium Mediummedium Optimize weather-resistant design

be affected by natural disasters increasing trends and the Company?s actual conditions.scrapping costs term of agricultural machinery

after-sales maintenance and scrapping costs

Purchase insurance against natural

disasters

4142

Technological innovation Market Expansion Policy Support

Opportunities

Technology Risks Market Risk Physical Risk

Risk2025 Environmental Social and Governance (ESG) Report Environmental Protection

Metrics and Targets Environmental Management

In strict accordance with laws and regulations such as the Marine Environment Protection Law of the People's Republic of China

Indicator Unit 2025

the Law of the People's Republic of China on the Prevention and Control of Water Pollution the Law of the People's Republic of

China on the Prevention and Control of Atmospheric Pollution and the Law of the People's Republic of China on Prevention and

Total GHG Emissions tCO?e 4692.08

Control of Environmental Pollution by Solid Wastes. The Company has established a full-process environmental management

Direct greenhouse gas emissions (Scope 1) tCO?e 1589.43 mechanism covering production R&D and the supply chain with clearly defined core targets for pollutant emission reduction.Through measures such as the application of cleaner production technologies classified recycling of waste and green product

Indirect greenhouse gas emissions (Scope 2) tCO?e 3102.65 design we continuously reduce the environmental footprint of our production and operations and fulfil our responsibility for green

and low-carbon development in the agricultural equipment industry.GHG Emissions Intensity tCO?e/1 million yuan 4.89

Note: The GHG emission data cover Swan Cotton Machinery Xinjiang Swan Yetian Tieniu and Huyanghe Swan. Governance

Swan Cotton Machinery has formulated systems such as the Environmental Protection Management System and the Environmental

Operation Management Provisions and has established an environmental protection management department to coordinate

environmental management work and implement the environmental protection target responsibility system. The Company strictly

implements regulatory requirements such as the ?three simultaneities? system and pollutant discharge permit management focusing on

During the Reporting Period the Company plans to establish exhaust gas purification zero discharge of wastewater standardized disposal of solid waste and noise control to ensure that pollutant

greenhouse gas (GHG) emission reduction targets to reflect the emissions meet standards. The Company strengthens the synchronized operation and dedicated management of environmental

response to climate change. By monitoring these targets the Company protection facilities improves operation records enhances environmental awareness among all employees through publicity and training

evaluates the effectiveness of the climate change response policies and promotes cleaner production and the construction of ?garden-style? factories in the principle of ?focusing on prevention efforts and

and promotes supervision and governance of climate change response combining control measures?.efforts.In 2025 Swan Cotton Machinery adopted a variety of training methods and conducted multiple environmental protection-related

training sessions covering topics such as standardized management of hazardous waste and environmental emergency response drills.These efforts helped enhance theoretical knowledge and practical skills laying a solid talent foundation for the efficient implementation

of the Company?s environmental protection initiatives.[Case] Training on Standardized Management of Hazardous Waste

In October 2025 the Company organized training on standardized hazardous waste management for relevant personnel from

various workshops and departments. The training covered laws and regulations related to hazardous waste local environmental

protection documents and standards for storage and transfer as well as practical procedures for the classification collection

transportation and temporary storage of hazardous waste. This effectively enhanced employees? legal awareness and practical

skills in hazardous waste management establishing a solid foundation for the Company?s safe disposal of hazardous waste and

environmental emergency management.Training Site Training Contents

43 442025 Environmental Social and Governance (ESG) Report Environmental Protection

During the Reporting Period the Company together with Xinjiang Swan and Yetian Tieniu (both are subsidiaries of the Company) passed

Risk/Opp Impact Impact Likelihood of

ISO14001 Environmental Management System certification. In addition Yetian Tieniu was included in the list of ?2025 Regional Green Category Description of Risk/Opportunity Financial Impactortunity Duration Level CountermeasuresOccurrence

Manufacturing Demonstration Units of Inner Mongolia Autonomous Region? and obtained Green Factory certification and Xinjiang Swan

holds the ?Green Factory of XPCC? certification. Increase investment in new material

The iteration of smart efficient pollution control Reduction in energy applications and focus on the

technologies and hazardous waste resource consumption and Medium resource utilization of solid waste

recovery technologies is accelerating; digital disposal costs; capture to long High High

monitoring systems can improve compliance Deepen industry–university–research of green product term

management efficiency and technological cooperation and adopt advanced premium

barriers continue to be established environmental protection

technologies

Promote environmentally friendly

As international ESG compliance requirements agricultural machinery that meets

tighten environmental advantages have become Revenue growth; Short international standards to adapt to

key to accessing overseas markets; domestic increase in gains from and overseas compliance requirements

demand for the environmental retrofitting of overseas market

High High

medium

agricultural machinery is growing and compliant expansion term Strengthen green brand promotion

companies are increasing their market share and respond to domestic

environmental upgrade demands

The ?carbon peaking and carbon neutrality? Participate in the formulation of

policy promotes the development of the industry environmental protection

environmental protection industry; standards to seize compliance

ISO14001 Environmental Management System Certification Certificate Green Factory of XPCC Increase in subsidy Medium energy-saving retrofits can obtain special advantages and align with policy income; and reduction to long High High

subsidies; upgrading industry environmental orientationin policy-oriented cost term

protection standards eliminates outdated Promote green production

capacity enabling compliant enterprises to transformation and enjoy tax

benefit from policy dividends incentives

Impact Risk and Opportunity Management

Strategy Swan Cotton Machinery actively promotes the implementation of environmental risk management measures and has established a comprehensive and multi-level environmental risk management system. By introducing advanced environmental risk assessment

technologies and tools the Company conducts real-time monitoring and precise assessment of potential environmental risks in

Swan Cotton Machinery has fully identified and assessed environment-related risks and opportunities formulated forward-looking production and operations.strategic plans actively responded to risks and firmly seized opportunities to support the achievement of sustainable development.Based on the risk types defined in the management strategy a risk identification checklist has been

Risk

Identification established to conduct hazard inspections in areas where risks may exist (such as production workshops

Risk/Opp Category Description of Risk/Opportunity Financial Impact Impact Impact Likelihood of Countermeasures waste discharge outlets and pollutant treatment facilities).ortunity Duration Level Occurrence

Entrust qualified third-party Risks are assessed based on their impact severity magnitude and probability of occurrence and a risk matrix

Increase in investment organizations with hazardous waste Risk

Existing pollutant control technologies are in technological Medium treatment is created to prioritize them.insufficiently adaptable and hazardous waste upgrades and rising to long Medium Medium Assessment

disposal technologies require upgrading risk of compliance term Upgrade exhaust gas treatment

penalties equipment to ensure emissions

consistently meet standards

The Company has established a dedicated risk monitoring team that utilizes IoT and big data technologies to

Risk effectively monitor pollutant emissions. Environmental monitoring results are promptly disclosed to the public

Monitoring

and are subject to review by regulatory authorities and public oversight.Sign long-term agreements with

compliant disposal enterprises to

Hazardous waste disposal prices fluctuate lock in disposal prices

significantly due to supply and demand Increase in disposal

Optimize the supply chain for

dynamics and policy changes; procurement and procurement

Short

and environmentally friendly raw

costs for environmental protection materials are costs; loss of Medium High Using a risk-based management approach the Company implements differentiated management for

medium materials and expand diversified

rising; downstream customers? heightened cooperation

term procurement channels pollutants and waste of different types hazards and risk levels to improve resource recovery rates and

requirements for compliance credentials are opportunities

raising the bar for collaboration Strengthen compliance certification minimize the impact of pollutants and waste generated by production and business operations on the Risk

and disclosure to enhance customer

Management ecological environment. During the Reporting Period the Company conducted an internal environmental trust self-inspection covering the implementation of basic environmental protection systems compliance at

discharge points and the use of alternative materials at the source. The self-inspection results were

satisfactory with no serious issues identified and corrective measures were taken for any issues discovered.

4546

Technological innovation Market Expansion Policy Support

Opportunities

Technology Risks Market Risk

Risk2025 Environmental Social and Governance (ESG) Report Environmental Protection

Metrics and Targets Swan Cotton Machinery has established environmental management targets regarding waste treatment and pollutant emissions and these targets are incorporated into the performance evaluation metrics for department heads. All environmental management targets

were achieved during the Reporting Period.Indicator Unit 2025 Targets Indicator Assessment Frequency

Total Environmental Investment RMB 10000 77.4 Classified Collection and Disposal Rate of Solid Waste: Classified Collection and Disposal of Solid Waste Quarterly

100%

Proportion of Environmental Protection Investment to Operating Revenue % 0.081 Compliant Disposal of Hazardous Waste Compliant Disposal Rate of Hazardous Waste: 100% Quarterly

Training on Environmental Protection Case 2

Compliance with Noise Emission Standards Compliance with Noise Emission Standards Annually

Number of Participants in Training on Environmental Protection Person-times 17 Compliance with Wastewater Discharge

Compliance with Wastewater Discharge Standards Annually

Standards

Duration of Training on Environmental Protection Hour 34

Compliance with Dust and Waste Gas Emission Compliance with Dust and Waste Gas Emission Annually

Standards Standards

Waste Gas Emission 10000 m3 23067.98

Use of Environmental Protection Funds Rate of Use of Environmental Protection Funds Quarterly

Compliant with Relevant Plans Compliant with Relevant Plans: 100%

Air Emission Intensity 10000 m3/1 million yuan 24.06

Volatile Organic Compounds (VOC) Ton 0.54 Emergency Response Plans and Drills

Volume of non-hazardous waste generated Ton 47.17 To ensure timely control of sudden environmental incidents and prevent the escalation of major accidents and pollution SDMJ has

developed the Emergency Response Plans for Sudden Environmental Incidents and has established an Environmental Safety

generation intensity of non-hazardous waste Tons/Million Yuan 0.049 Management Committee to oversee environmental emergency management. In the event of an incident the committee will serve as the

emergency command center. Additionally in line with the functional responsibilities of each department an emergency response team

led by the unit's primary person-in-charge has been established. The team's responsibilities include implementing environmental risk

Volume of non-hazardous waste disposed of Ton 47.17

prevention measures executing emergency response procedures and ensuring necessary support and resources are in place.Volume of Hazardous Waste Generated Ton 10.95 Emergency Response Organization Chart

Generation intensity of hazardous waste Tons/Million Yuan 0.011 Emergency Command Center

Volume of Hazardous Waste Disposal Ton 11.10

Emergency Command Office

Waste Disposal Compliance Rate % 100

Waste Paint Residue (HW12 substances) Ton 3.48

Waste Activated Carbon (HW49) Ton 5.83

Waste oil drums (HW08) Ton 1.64

Note: Air emissions data is based solely on Swan Cotton Machinery?s online monitoring data; waste data includes only Swan Cotton Machinery; and during

the Reporting Period the volume of hazardous waste disposed of exceeded the volume of hazardous waste generated as the disposal scope for this period

included the backlog of hazardous waste generated in previous periods.

4748

Aftermath Handling Team

Medical Rescue Team

Security & Cordon Team

Communication & Liaison Team

Emergency Expert Team

Materials & Supply Team

Emergency Monitoring Team

Emergency Rescue Team2025 Environmental Social and Governance (ESG) Report Environmental Protection

During the Reporting Period the Company conducted several emergency drills and training sessions focused on sudden environmental Green Office

incidents simulating scenarios such as fires caused by unexpected hazardous waste leaks. These activities helped raise awareness and

enhance operational skills related to hazardous waste pollution prevention and control improved the emergency response SDMJ incorporates green office practices throughout our operations demonstrating our commitment to low-carbon development

self-protection and self-rescue capabilities of both operators and emergency response teams while strengthening the Company's through tangible actions. Through systematic initiatives we raise employees' awareness of low-carbon practices and implement concrete

overall ability to manage hazardous waste pollution. measures in areas such as commuting office equipment and resource management driving the sustainable transformation of workplace

operations.[Case] Emergency Drill for Sudden Hazardous Waste Pollution Incident Concept Promotion & Empowerment

The Company encourages energy conservation and emission reduction through various channels helping employees adopt habits such

In October 2025 the Company organized as saving water and electricity and reducing waste. This initiative aims to build a shared commitment to low-carbon development across

personnel from relevant departments to the entire organization.conduct an emergency drill addressing sudden

hazardous waste leaks and fire incidents. The Green Commuting

training covered key areas such as hazardous

The Company strategically manages the use of official vehicles and encourages employees to prioritize shuttle buses or

waste containment personal safety protection

public transportation helping to reduce carbon emissions from commuting.and proper use of emergency equipment. This

drill effectively enhanced the team's emergency

response skills and their ability to coordinate Paperless Office

the management and control of hazardous

waste providing a practical foundation for By leveraging digital office tools the Company reduces paper consumption implements a system for tracking office

handling real-life risk scenarios. supply requests and enforces strict controls on the use of disposable products.Drill Site Resource Recycling

The Company promotes practices like paper reuse to manage resource consumption in every aspect of office operations

supporting the principle of low-carbon operations.Whole-chain Coordinated Carbon Reduction

[Case] Emergency Drill for Sudden Environmental Leakage Incident

The Company integrates process optimization and smart equipment upgrades at the production end embedding green

In October 2025 the Company organized personnel from multiple departments to conduct an emergency drill focusing on principles into the coordination between office and production while continuously enhancing the green office system.flammable solvent leaks and fires as well as hazardous waste management during the painting process. The training covered key

areas such as initial fire response hazardous waste transfer procedures and personnel evacuation. The drill verified the

practicality of the emergency response procedures identified gaps in the coordination of fire response and hazardous waste

management and further enhanced the Company's environmental safety capabilities.Electricity Conservation Publicity Water Conservation Publicity

Drill Site Energy-Efficient Lighting at Workstations Solar Lighting in the Factory Premises

49 502025 Environmental Social and Governance (ESG) Report Environmental Protection

Clean Production Waste Management

SDMJ fully embraces the principles of green manufacturing viewing clean production as a key strategy for achieving sustainable To ensure that the handling of solid waste aligns with the Company's environmental policy and legal requirements and to prevent and

development. By optimizing production processes upgrading environmental protection facilities and strengthening resource recycling control pollution from hazardous waste the Company has established several systems including the Waste Management System Solid

the Company reduces pollutants at the source and effectively lowers resource and energy consumption as well as emissions of the "three Waste Control Procedures and Hazardous Waste Pollution Prevention and Control Responsibility System. The Environmental Protection

wastes" (wastewater waste gas and solid waste). Additionally we have established a robust environmental management system Department is responsible for overall waste management and a hazardous waste pollution prevention and control leading group has

enhanced employee training and integrated clean production principles into all aspects of daily operations thereby achieving goals of been set up led by the general manager and composed of heads of various departments. These systems define the procedures for the

energy conservation reduced consumption pollution control and improved efficiency. classification collection storage and disposal of waste as well as the rules governing the generation collection storage transfer and

other activities related to hazardous waste.Waste Gas Management Organization Chart for Hazardous Waste Management

SDMJ has developed the Control Procedures for Wastewater Noise and Waste Gas to prevent and manage emissions generated during Leader in Charge of Environmental

Protection

operations product supply and service activities. The primary waste gas is Volatile Organic Compounds (VOCs) produced during the

painting process which are identified in accordance with the Control Procedures for Identification and Evaluation of Environmental

Factors. These organic emissions are collected centrally through negative-pressure painting booths treated sequentially via oil curtain

purification and activated carbon adsorption and finally discharged through a 15-meter-high exhaust stack in full compliance with

regulatory standards. The Production Department is responsible for the daily management and control of waste gas emissions ensuring

Director of Production Department Director of Safety and Environmental

the treatment facilities operate smoothly and that emissions consistently meet regulatory requirements. Protection Department

Wastewater Management

In line with the Control Procedures for Wastewater Noise and Waste Gas and the Regulations on Environmental Operation

Management the Company actively manages the generation and treatment of wastewater to minimize pollution of water bodies. The

primary wastewater produced is domestic sewage which is discharged into the municipal sewage system for centralized treatment.Additionally septic tanks are installed in both the production and office areas with regular pumping and cleaning and the sewage

discharge control system is routinely inspected. All departments are required to follow standardized cleaning practices in offices and work

areas to prevent the improper discharge of domestic sewage.For hazardous waste including waste oil waste activated carbon waste paint buckets and other categories the Company partners with

qualified third-party institutions that hold hazardous waste handling licenses to ensure compliant disposal. The entire process follows the

national hazardous waste transfer manifest system ensuring full traceability compliance and control throughout the process.For non-hazardous waste the disposal of general industrial solid waste and domestic waste is managed according to principles of

classification and resource recovery. Domestic waste is regularly collected and disposed of by local sanitation authorities while general

packaging waste and industrial solid waste are recycled to promote resource circulation. This approach effectively supports the

Company's environmental goals of waste reduction and resource utilization in line with the principles of green development.Noise Management

To effectively manage environmental noise and ensure a healthy working environment for employees SDMJ has implemented the Noise

Management System that defines the responsibilities of each department and external monitoring agencies. The Company controls noise

from sources like cutting machines and welding equipment ensuring that all machinery operates without producing excessive noise.Employees working in high-noise areas are provided with protective earplugs. Annual noise monitoring is conducted at both the factory

boundaries and individual workstations. Any areas exceeding the noise limit are addressed with improvements and appropriate labor

protection measures are implemented for employees. Horn use by motor vehicles within the factory premises is strictly prohibited.Additionally a system for monitoring and analyzing abnormal noise has been established to quickly address issues and continuously

improve noise management practices.

5152

Environmental Protection and

Hazardous Waste Manager

Environmental Protection

Equipment Manager

Director of Parts

Workshop

Director of Comprehensive

Workshop

Director of Machining

Workshop

Director of General Assembly

Workshop2025 Environmental Social and Governance (ESG) Report Environmental Protection

Energy Utilization Risk/Opp Type Description of Risk/Opportunity Financial Impact Impact Impact Likelihood ofortunity Duration Level CountermeasuresOccurrence

SDMJ strictly complies with relevant laws and regulations including the Energy Conservation Law of the People's Republic of China Promote phased construction of the

digital base for energy and carbon

and the Renewable Energy Law of the People's Republic of China and maintains full compliance in its energy use. The Company The large-scale deployment of existing Increased rework costs dual control prioritizing core process

focuses on energy-saving improvements and the integration of renewable energy at the production end. By introducing energy-saving technologies faces stability for energy-saving Medium energy consumption monitoring.issues and challenges arise in equipment IoT transformation and and long Medium Medium

high-efficiency energy-saving equipment and optimizing the design of agricultural machinery power systems to reduce product connection and system integration during the waste of production term Collaborate with the technical team to

energy consumption the Company continuously improves energy efficiency and the proportion of clean energy supporting the digital transformation of energy management. energy

enhance the stability of waste heat

recovery and forced air internal

energy structure transformation of the agricultural equipment industry. circulation technologies.Governance Sign long-term energy procurement

agreements to lock in core energy

consumption costs and optimize

Our energy consumption spans key operational areas such as production offices logistics warehousing and transportation. Electricity Fluctuations in energy prices such as electricity procurement channels.costs increase production energy consumption Rising energy

is the primary energy source for production workshops and office buildings while forklifts in the warehousing and transportation areas expenses. The procurement of energy-saving consumption costs Short Establish a cost-performance

use diesel and batteries. To streamline energy management reduce consumption and ensure a steady energy supply for production and equipment is subject to cost-performance and increased and evaluation system for energy-saving Medium Highvolatility and maintaining green factory investment in medium equipment prioritizing mature

daily operations we have developed systems like the Control Procedures for Energy and Resource Conservation the Electricity Use certification requires continuous investment. certification and term compatible technologies.Management System and the Water and Electricity Use Management System. The R&D Center and the Production Department are Moreover competition within the industry is equipmentbecoming increasingly intense. Integrate green manufacturing

responsible for incorporating energy-saving concepts into product development and overseeing energy conservation across the entire resources from multiple bases to

share certification and maintenance

production process and daily operations. Additionally the Production Department and General Office are responsible for electricity costs.management ensuring that energy-saving protocols are followed in both production and daily activities.Increase investment in R&D for

energy-saving technologies and

expand applications for waste heat

recovery and high-efficiency dust

During the Reporting Period Xinjiang Swan and Yetian Tieniu successfully removal.Energy-saving technologies such as waste heat

achieved ISO 50001 Energy Management System certification. recovery and forced air internal circulation in Reduced energy Integrate digital twins and dynamic production lines have been widely implemented consumption costs Medium

High High energy consumption optimization

and there is significant potential for adopting and improved green and long technologies and upgrade the

digital energy and carbon management production efficiency term energy management system.technologies.Optimize energy-saving processes

for key processes such as drying

and processing to enhance the

effectiveness of energy conservation

efforts.Leverage green factory certification

to promote energy-saving

agricultural machinery and

processing equipment.Green factory certification boosts industry Revenue growth and Short Align with the growing demand for

recognition and downstream demand for increased premium and agricultural green transformation

low-energy agricultural machinery is rising. medium High Highincome from green and boost the market promotion of

Moreover the market share of energy-saving products term low-energy-consumption products.processing equipment continues to grow.Expand the output of energy-saving

technical services and broaden

related energy management

businesses.Actively apply for subsidies related

to energy-saving transformation

and green manufacturing.Energy management system certification

benefits from policy incentives while Strengthen engagement with Increased subsidy

energy-saving transformation projects are Medium industry departments and income and improved

eligible for special subsidies. In addition the and long High High participate in the development of policy-oriented

"Dual Carbon" policies drive the development of term energy-saving agricultural benefits

energy-saving equipment in the agricultural machinery standards.Xinjiang Swan ISO 50001 Energy Management System Certificate Yetian Tieniu ISO 50001 Energy Management System Certificate sector.Use policy orientation to expand

green energy management

technology applications.

5354

Technology Risks Market Risk Technological innovation Global Expansion Policy Support

Risk Opportunities2025 Environmental Social and Governance (ESG) Report Environmental Protection

Impact Risk and Opportunity Management Metrics and Targets

SDMJ continuously refines our energy risk management process establishing clear guidelines for identifying assessing and responding

to energy-related risks. This ensures full traceability and control throughout the entire energy usage process.Metrics Unit 2025

Natural Gas m3 370172.06

Risk Identification Gasoline Ton 61.98

Diesel Ton 196.31

By thoroughly analyzing the external policy landscape market trends and internal operations the Company identifies

potential risks that could impact the stability of energy supply cost-effectiveness and environmental compliance. These Total Purchased Electricity kWh 5847428

risks include but are not limited to fluctuations in energy prices policy changes technological advancements and Total Energy Consumption tce 1588.22

inefficiencies in energy utilization.Energy Consumption Intensity tce/ RMB 1 million 1.66

Note: Energy data covers SDMJ and its subsidiaries including Xinjiang Swan Yetian Tieniu and Huyanghe Swan.Risk Assessment Energy-saving Measures

SDMJ has established an electricity quota management and control system in the production link conducts monthly assessments of

After identifying risks the Company uses a combination of qualitative and quantitative methods to evaluate them. By electricity consumption through the Monthly Electricity Metering Report and carries out detailed energy consumption statistics analysis

considering the likelihood of each risk potential impact and duration the Company prioritizes risks and determines and recording. In addition targeted electricity management measures are applied across multiple scenarios: Designated personnel at

appropriate response strategies providing a solid evidence-based foundation for subsequent management actions. production sites are responsible for measuring and recording power loads; a duty system has been put in place at power distribution

rooms to clarify responsibilities; electricity consumption is strictly controlled in accordance with allocated quotas; lighting and power

supply in each area are controlled by separate switches; the principle of "switch off equipment and lights when not in use" is strictly

enforced; the use of high-power equipment is restricted in temporary living quarters; high-power devices may only be connected via

dedicated power lines upon approval; priority is given to low-energy-consumption products for equipment upgrades; and

electricity-saving inspections and energy conservation awareness campaigns are strengthened in office areas. Each department

develops electricity-saving management measures tailored to its power consumption patterns and aligns with the Control Procedures

Risk Monitoring for Identification and Evaluation of Environmental Factors ensuring systematic compliant electricity management and continuously

improving energy efficiency.To ensure the effective implementation of energy management processes the Company has established a In addition the Company prioritizes upgrading high-energy-consuming equipment and optimizing production processes implementing

comprehensive energy monitoring system. Leveraging advanced technologies such as the IoT and big data we can a series of energy-saving and carbon-reduction initiatives:

perform real-time monitoring and analysis of energy use. This enables timely detection of energy waste and abnormal

consumption while also providing a reliable basis for evaluating the effectiveness of energy-saving measures. Equipment efficiency upgrades in the Energy-saving transformation of core Energy-saving optimization in the General

Parts Workshop components in the Machining Workshop Assembly Workshop

Outdated and high-energy-consuming High-energy-consuming machine tools High-energy-consuming welding

production equipment has been phased have been replaced with machines have been replaced with

out and fully replaced with CNC machines low-energy-consuming models that meet low-energy-consuming CO?-shielded

that meet national energy efficiency levels national standards. Core components of welding machines. Additionally two

Risk Management 2 to 3. This upgrade significantly reduces single-arm planers and gantry planers automated robotic welding production

energy consumption intensity in the have also been upgraded with original lines have been introduced enhancing

production process. motors and electrical cabinets replaced by production automation while further

Based on the results of risk identification and assessment as well as feedback from monitoring data the Company national standard low-energy-consuming reducing energy consumption

develops and implements a range of targeted energy management measures. These include but are not limited to motors and electronic components throughout the assembly process.optimizing the energy use structure promoting the adoption of clean energy implementing energy-saving improving energy efficiency at the core of

technological upgrades strengthening green transportation management and raising employees' awareness of energy the equipment.conservation and emission reduction. Additionally the Company has established a continuous improvement system to

regularly review and assess the effectiveness of energy management. This allows for timely adjustments to

management strategies ensuring the ongoing optimization and enhancement of energy practices.

55 562025 Environmental Social and Governance (ESG) Report Environmental Protection

Metrics Unit 2025

Municipal Water Purchased Ton 42200

Fresh Water Usage Ton 42200

Total Water Consumption Ton 42200

Water Consumption Intensity Tons/Million Yuan 44.02

CNC Equipment in the Parts Low-Energy-Consuming Machine Automated Robotic Welding Note: Water resource data covers SDMJ and its subsidiaries including Xinjiang Swan Yetian Tieniu and Huyanghe Swan.Workshop Tools in the Machining Workshop Production Lines

Water Resource Utilization Water Conservation Measures

SDMJ views the efficient use of water resources as a key aspect of our environmental responsibility. We promote water conservation

SDMJ complies with relevant laws and regulations including the Water Law of the People's Republic of China and the Regulation on consumption reduction and the efficient utilization of resources through a comprehensive approach that combines "awareness-building

Water Conservation and integrates the efficient and economical use of water into the core of our production and operations. The operational optimization and full-process management and control".Company has established a comprehensive water resource management and control system enhancing water use efficiency through

initiatives such as water conservation awareness campaigns and process optimization. Moreover we promote water-saving

technological upgrades and proactive maintenance of water-using equipment effectively fulfilling the responsibility for water resource

protection and supporting the green and sustainable development of the agricultural equipment industry. Raising Water Conservation We place prominent water-saving signs and educational materials at all public

Awareness water points to foster a water-conscious environment that involves all employees.This helps strengthen their awareness of water conservation on a cognitive level.Management System

To standardize water use management meet the needs of daily life and production and ensure water safety the Company has

established the Water and Electricity Use Management System and the Control Procedures for Energy and Resource Conservation. The In our factory's landscaping we have replaced traditional flood irrigation with a precise

General Office is designated as the lead department for water resource management with clearly defined operational procedures. Yetian Improving Water Use Efficiency sprinkler irrigation system adjusting water delivery based on soil moisture content

Tieniu has implemented a series of systems including the Water Use Management System Water Conservation Statistics System Water which enhances the efficiency of water resource usage.Quota Management System and Water Conservation Assessment System which clarify the processes for water consumption statistics

quota management and assessment mechanisms. Additionally Yetian Tieniu has set up a water conservation leading group quantified

management and assessment indicators and regularly conducts water conservation awareness campaigns and training. These initiatives

help integrate water-saving practices into employees' daily routines and foster long-term water conservation awareness across the

company.Preventing Water Leakage at We prioritize regular maintenance and inspection of water supply pipelines

the Source and equipment. Any issues such as leaks drips or inefficiencies are

promptly identified and repaired minimizing water wastage from the source.Enhancing Efficiency through We've strengthened collaboration with the water supply company to

Dynamic Management implement real-time monitoring of water use within the factory. This

allows us to fine-tune and improve our water-saving management

practices with greater precision.Water Conservation Training

57 582025 Environmental Social and Governance (ESG) Report Environmental Protection

Material Utilization Management Measures

SDMJ integrates the principles of efficient material use and recycling into every stage of agricultural machinery manufacturing and Focusing on the entire material flow in the production process SDMJ has established a material conservation system that aligns with

product design and continuously optimizes its material management system. By refining usage methods and improving production actual operations. By combining precise demand-side regulation on-site lean management and adaptive technical optimization the

processes SDMJ achieves the cascading use of materials. The Company practices the principles of the circular economy through precise Company drives reductions in waste and boosts efficiency at every stage of material use—from requisition and storage to final usage.material management and production technology upgrades reducing resource consumption while maintaining product performance.This approach positions the Company as a leader in material circulation and resource conservation within the industry.Management System

To make efficient and rational use of material resources and minimize waste the Company has established the Control Procedures for Collaborative Material Conservation Across the Entire Production Loss Reduction through On-Site Lean Management: The Company

Cycle: The Company ensures precise alignment between material strengthens full-process tracking of material usage to minimize

Energy and Resource Conservation. This procedure designates the Production Department as responsible for managing and utilizing demand planning and requisition optimizing material allocation in damage and loss. We also implement standardized storage and

materials outlining specific measures for material conservation and promoting refined material management practices to continually sync with production scheduling thus minimizing idle or excess stacking to prevent material damage. Additionally a reward system

improve material efficiency. Additionally SDMJ has implemented systems such as the Purchasing Management System for Incoming consumption caused by supply-demand mismatches and ensuring for conservation and penalties for excess consumption help

Materials and the Incoming Inspection Management System. These systems standardize purchasing inspection procedures to ensure efficient resource allocation right from the start. eliminate unnecessary waste at the operational level.that all raw materials auxiliary materials and purchased parts meet the required quality standards.Metrics Unit 2025

Total Use of Packaging Materials Ton 292.6

Metal Packaging Materials Ton 280.8 Targeted Optimization of Key Materials: For key materials such as Efficiency Improvement Through Technology and Process

steel profiles and wood the Company optimizes usage methods Optimization: The Company further enhances material efficiency

Paper Packaging Materials Ton 7.5 and reallocates surplus resources. This reduces process losses from by adapting and optimizing production processes. Technical

single-material types and enhances the effective utilization of improvements are used to strengthen conservation efforts

Plastic Packaging Materials Ton 2.6 materials per unit. supporting the intensive use of material resources.Glass Packaging Materials Ton 1.7

59 602025 Environmental Social and Governance (ESG) Report Industry Value

Industry Value

Responsible Supply Chain

Innovation-driven Development

Safety and Quality of Products and Services

Data Security and Customer Privacy Protection

61 622025 Environmental Social and Governance (ESG) Report Industry Value

Responsible Supply Chain Offer training for suppliers

SDMJ places great emphasis on communication and collaboration with suppliers. We regularly provide specialized training on topics such

SDMJ incorporates the concept of a responsible supply chain throughout our entire production process. Focusing on core agricultural as quality control and process improvement. By offering targeted support the Company helps suppliers enhance their core capabilities

machinery products the Company has established an integrated management system that covers supplier admission procurement fosters mutual trust and jointly promotes the high-quality development of the cooperation ecosystem.control and collaborative engagement. By implementing comprehensive supplier evaluation criteria including compliance quality and

other key dimensions we promote the development of a responsible supply chain through shared industrial-chain accountability

supporting the sustainable growth of both upstream and downstream partners.[Case] Supplier Conference

Management System In January 2025 the Company hosted a Supplier Conference. During the event suppliers received feedback on common issues

new development requirements were communicated and outstanding suppliers were recognized. This strengthened

SDMJ has established a comprehensive supplier management framework including the Supplier Management Measures Supplier collaboration across the supply chain supporting improved product quality and reliable supplier relationships.Management System and Supplier Control Procedures. Supplier management is led by the Procurement Department which regularly

screens and evaluates suppliers based on criteria such as quality delivery capability and pricing and applies differentiated management

according to credit ratings. High-credit suppliers may receive incentives such as material inspection exemptions while unqualified

suppliers are phased out. This approach standardizes management across the entire supplier lifecycle ensuring product quality at the

source and supporting the sustainable supply of raw materials. During the Reporting Period the Company had a total of 827 suppliers

and no supply chain incidents with significant risks or impacts were reported.During the Reporting Period the Company conducted specialized training for procurement personnel to strengthen professional

procurement skills providing crucial support for our ongoing business development.[Case] Training on Communication & Negotiation Marketing Skills and Bidding Techniques

In February 2025 the Company organized training sessions on communication and negotiation marketing skills and bidding

techniques for supply chain procurement personnel and sales professionals. The program focused on practical sales strategies

and negotiation skills and included case studies and simulation exercises. These initiatives helped employees strengthen their Training Site

capabilities in business negotiations and bidding processes deepened their understanding of relevant workflows and laid a solid

foundation for future business development.Training Site

63 642025 Environmental Social and Governance (ESG) Report Industry Value

Management Measures Risk Management

In the field of supply chain management the Company focuses on quality control risk resilience compliant collaboration and the CDMT accurately identifies and evaluates potential risks and opportunities within the supply chain and develops targeted response

co-construction of long-term value. To this end a series of management initiatives have been implemented: strategies to ensure safety and sustainable development of the supply chain.Internal and Description Type Risk and Opportunity

External Environment Countermeasures

Comprehensive Quality Control Across the Supply Chain

Monitor price trends from multiple dimensions

dynamically adjust ordering rhythm and

For key suppliers the Company assigns dedicated personnel to regularly oversee quality conduct both scheduled and Risk: Undermines supply chain strengthen green cost control.delivery stability and increases

unscheduled product quality testing and perform on-site inspections. This helps establish a multi-level upstream cost control pressure.supply quality assurance system. Continuous Risk Deepen supplier price comparison and Price Fluctuation

fluctuations in raw / negotiation mechanisms to improve supply chain

of Raw Materials Opportunity: Enables dynamic

material prices Opportunity collaboration efficiency.optimization of procurement

strategies and improves cost

Synchronize market information to promote

sustainability.transparency in cross-departmental supply chain

decisions.Building Supply Chain Resilience

The Company optimizes the supplier structure to reduce over-reliance on individual suppliers mitigates single-point

risks by decentralizing procurement and enhances the supply chain resilience ensuring long-term operational Risk: Technical changes may

cause material stagnation and

sustainability. increase resource waste.Updates and Jointly evaluate inventory disposal plans before

Iteration of iterations of Risk technical changes to reduce resource idleness.Opportunity: Technical

Technical technical /

iterations drive product

Requirements drawings and Opportunity Utilize stagnant inventory to improve resource

innovation and enhance

requirements circulation efficiency.sustainable competitiveness of

Compliant and Standardized Supply Chain Management the supply chain at the product

end.The Company has established unified acceptance standards for purchased parts and supplier handover procedures

clarifying quality responsibilities and operational guidelines. This ensures consistent compliant and standardized

collaboration across the supply chain. Promote cross-departmental synchronization of

Risk: Insufficient procurement standardized procurement data (drawings

accuracy affects delivery and technical requirements etc.).Unclear demand

increases supply chain

Ambiguous information such

Risk redundancy. Standardize procurement demand information and

Procurement as codes and

/ require cross-departmental collaborative review for

Demand models in

Opportunity Opportunity: Promotes special procurement requests.Compliance and Capacity Empowerment Information procurement standardization of procurement

plans/notices

data and improves transparency Strengthen professional training for procurement

The Procurement Department collaborates with R&D production technology and other departments to provide business in supply chain information. personnel to improve information processing

efficiency.guidance and capacity-building training for suppliers. Moreover we maintain strict compliance boundaries to protect our

intellectual property while balancing the improvement of supply chain capacity.Risk: Stocking rhythm mismatch

increases inventory backlog and

Establish a dynamic synchronization mechanism

resource occupation.Changes in the for production plans to adjust stocking rhythm.Developing Long-Term Value-Oriented Supply Chain Partnerships RiskChange to actual execution

/ Opportunity: Inventory

Production Plans time of Strengthen cross-departmental collaboration to

Opportunity management is optimized

production plans improve flexibility of supply-demand matching and

The Company fosters strategic partnerships with key suppliers that align with our development goals deepening through supply-demand reduce inventory backlog risk.long-term collaboration between supply and demand. This collaborative approach helps build a stable sustainable collaboration and supply chain

resilience is improved.supply chain ecosystem.

65 662025 Environmental Social and Governance (ESG) Report Industry Value

Green Supply Chain Innovation-driven Development

SDMJ integrates green development principles throughout our supply chain management. We have established a green supplier

evaluation system prioritizing partners that meet environmental protection standards and adopt low-carbon operations. By focusing on SDMJ places innovation at the heart of our development strategy focusing on the intelligent and green transformation of agricultural

green procurement the Company favors eco-friendly materials and energy-efficient products to minimize the environmental impact from machinery. The Company continuously increases R&D investment strengthens core business in cotton machinery and expands into

the source. Moreover we work closely with both upstream and downstream partners to optimize logistics promote low-carbon emerging sectors of agricultural machinery. By leveraging patent strategies and converting technological achievements into practical

production and enhance environmental control across the entire process. This collaborative effort aims to build a low-carbon efficient applications SDMJ promotes the domestic replacement of high-end equipment enhances both industrial production efficiency and

supply chain ecosystem driving the enterprise's sustainable growth and supporting the green transformation of the industry. environmental performance and provides strong technical support for the modernization of agriculture.Governance

Transparent Procurement

Innovation is our core driving force and a fundamental engine for the sustainable development of both the enterprise and society. To

ensure the efficient operation of our R&D system and a systematic innovation process the Company has established and implemented

SDMJ places integrity and compliance at the core of our procurement management establishing an open transparent fair and honest a series of governance measures including Measures for the Administration of Scientific Research Funds Measures for the

procurement management system. We sign integrity agreements with suppliers to define clear behavioral boundaries throughout the Administration of Technological Innovation Projects Qualifications and Achievement Declaration Regulations for the Issuance of

procurement process strictly prohibiting improper competitive practices such as commercial bribery interest transfers and collusive Technical Standards Regulations for the Administration of Product Drawings and Technical Documents and System for the

bidding. These agreements also outline confidentiality obligations and conflict-of-interest reporting requirements thereby establishing Administration of Enterprise R&D Funds. These policies together form a comprehensive and effective R&D and innovation governance

a solid integrity defense from the very start of our cooperation. In addition we have implemented a comprehensive supervision and framework. The R&D Center oversees the Company's entire R&D process including the development and management of R&D policies

accountability mechanism standardizing the management of key procurement activities such as bidding and performance acceptance. product design and standards control full lifecycle management of drawings and technical documents management of technical

This ensures that procurement information is transparent processes are traceable and results are verifiable. Through these measures standards and materials and handling violations related to technical documentation. The center issues guidance according to

the Company effectively mitigates integrity risks in procurement and upholds a fair and competitive market environment. regulations and implements necessary penalties when required.In addition the Company employs a "three one-thirds" R&D approach: each year R&D personnel spend one-third of their time on

technological breakthroughs and product design one-third working directly in the workshop to engage in production practice and

Metrics and Targets one-third in the market and field to understand user needs. This approach enables R&D personnel to deeply integrate technological R&D

production implementation with market demand and ensures that technological innovation is closely aligned with industrial realities

SDMJ has set clear quantitative supply chain management targets covering key metrics such as the price of bulk purchased parts the and user pain points creating a strong connection between innovative achievements and market demand.decline rate of production variable costs and the decline rate of slow-moving inventory. During the Reporting Period these targets have

been fully achieved.Strategy

Indicator Name Target value Through a systematic analysis SDMJ has identified key risks and opportunities in innovation-driven development and has developed the

Environmental Analysis and Risk and Opportunity Response Framework as well as the Stakeholder Needs and Risk and Opportunity

Price of Bulk Purchased Parts ≤ Market Price of the Same Period Response Framework enabling us to mitigate risks and capitalize on development opportunities. Building on industry trends and

customer needs and supported by a robust technological R&D system and platform the Company actively monitors technological

advancements across the entire industrial chain. By using data forecasting expert discussions and other tools the Company thoroughly

Decline Rate of Production Variable Costs ≥1% evaluates the potential impacts of risks and opportunities related to innovation-driven development.Decline Rate of Slow-moving Inventory ≥5%

Acceptance Rate of Supplier Products 100%

Equal Treatment of Small and Medium-Sized Enterprises

SDMJ upholds the principles of fairness impartiality openness and inclusiveness in all our operations ensuring that all small and

medium-sized enterprises (SMEs) are treated equally throughout the entire process of business cooperation procurement bidding and

resource integration. By continuously optimizing the cooperation access mechanism the Company guarantees that SMEs have equal

opportunities to cooperate and a fair competitive environment. We are committed to building a mutually beneficial win-win and

sustainable business ecosystem that fosters collaboration among all partners.

67 682025 Environmental Social and Governance (ESG) Report Industry Value

Risk/Opp Type of Impact Likelihood of Impact Potential FinancialDescription of Risk/Opportunity Impact Risk and Opportunity Management

ortunity Risk/Opportunity Duration Materiality Impact CountermeasuresOccurrence

To effectively manage the uncertainties in the innovation process the Company has integrated innovation-driven risks and opportunities

Organize R&D personnel to

thoroughly explore core technologies into our risk management framework and has established a comprehensive management system that covers the full process—from

Some of our patents will become expired. Once in expiring patents identify new identification to assessment monitoring and management.the patent rights expire there is an increased innovation points and file for new

risk of core technologies being copied by patents.competitors. Assign dedicated personnel to update

the Company's technical standards

The Company's technical standards are

Sunk R&D every quarter ensuring they remain

Technology becoming outdated which poses a risk to the

investments relevant and effective.and relevance and advancement of product R&D. Medium

Medium High market share loss Optimize the R&D project

Intellectual The R&D transformation is falling short of term management process by fostering Led by the R&D Center the Company regularly brings together departments such as Finance to hold and decreased

Property Risks expectations especially in high-end agricultural operating income collaboration between industry discussion meetings. These sessions use methods like competitive analysis policy research and

machinery and equipment which require large universities and research institutions.investments and long cycles. If core This approach will enhance the stakeholder opinion evaluation. Through brainstorming expert exchanges and benchmarking

technological breakthroughs are delayed or the sharing of technical resources and against industry peers the Company systematically identifies potential risks and opportunities that

conversion rate of research achievements is low scientific expertise shorten R&D

product iterations may lag behind market Identificationcycles for core technologies and may arise throughout the entire cycle of technological innovation product development and the

demands. improve the efficiency of transforming transformation of research achievements.research achievements into practical

applications.There is a growing need for multi-disciplinary For key R&D talents implement Loss of talent

technical talent in the field of agricultural medium- and long-term incentive reduced core

intelligent equipment. The loss of core R&D measures such as profit-sharing Talent Turnover Long innovation

Risk personnel or the insufficient reserve of such

Medium High based on project success so as to

term capabilities and

talents will hinder our continuous innovation align individual interests with the decreased

capacity and the progress of technological Company's long-term development operating income

breakthroughs. goals.For the risks and opportunities identified the Company conducts thorough analysis and

qualitative evaluation taking into account both internal and external factors. Risk assessment

Sporadic market demand is highly unpredictable Enhance the technical capabilities of indicators—such as changes in market demand and R&D progress—are established to

often requiring urgent product deliveries and designers and prioritize orders with Assessment provide a solid foundation for decision-making and resource allocation.making it difficult to secure bulk orders. This Increased strong reusability and high potential

leads to challenges such as: 1. Difficulties in production costs for promotion.maintaining R&D quality under tight deadlines; Medium higher unit costs Establish a demand prediction and

Market Risk 2. Limited adaptability of some customized and long High decreased profits

products restricting large-scale promotion and Medium customer segmentation system. Utilize term and cash flow

reuse; 3. High unit costs in small-batch industry data and customer demand impact due to

production limiting profit margins; and 4. Low analysis to anticipate future batch capital occupation

reuse rates of customized designs leading to demand helping sales personnel stay

underutilized resources and increased aligned with market trends and

complexity in managing technical data. improve forecasting.The government is actively promoting The key risks and high-value opportunities that have been assessed are incorporated into the

agricultural modernization the development of

Actively engage with relevant Company's unified innovation management process. A robust tracking mechanism is put in place to

new quality productive forces and the Policy subsidies government departments through

Opportunities low-carbon transformation of agricultural regularly monitor changes in these risks and opportunities. The R&D Center is responsible for tracking Medium tax reductions and various channels and monitor and

from Favorable machinery. Favorable policies for high-end Medium Highterm exemptions and follow up on application timelines and the status of these risks and the execution of response measures providing regular progress reports

Policy intelligent agricultural machinery (such as increased profits the requirements for scientific and Monitoring

subsidies and specialized technical research to management.technological funding projects.projects) provide both policy backing and

market opportunities for our innovative R&D.Focus on addressing key challenges in

the cotton processing sector

accelerate the domestication of

harvesting machinery and improve

Industries like cotton and grain processing are the localization of critical components.facing urgent needs for intelligent large-scale

Industry and low-damage agricultural equipment. We Industry upgrades Develop a comprehensive

Upgrade can leverage our existing technical expertise to Medium full-industrial-chain equipment High High

increased demand

Demand deepen innovations in full-industrial-chain term and increased system to meet the demand for For the significant risks and opportunities specific action plans are developed and executed. These

Opportunity equipment aligning with industry trends like operating income large-scale upgrades in the cotton plans include but are not limited to adjusting technical strategies forming cooperative alliances

high-quality cotton processing and low-carbon industry and enhance the

agricultural machinery. "harvesting-processing-storage" reallocating resources or applying for policy support. Meanwhile the suitability of the external

equipment matrix aiming to create a Management environment and the effectiveness of the response measures are evaluated correspondingly.closed-loop system for mechanized

equipment throughout the cotton

production chain.

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Risk Opportunities2025 Environmental Social and Governance (ESG) Report Industry Value

Metrics and Targets

Metrics Unit 2025

Investment in R&D RMB 10000 6496.75

Percentage of R&D Investment In Operating Revenue % 6.78

Achievement

R&D Team

Total Number of R&D Team Members Person 106

In 2025 guided by the innovation principles of "quality improvement and cost reduction

Ratio of R&D Personnel to Total Employees % 11.88 green and low-carbon development and automation and intelligence" the Company

benchmarked itself against world-class standards advanced product iterations and

By Educational Background pursued a forward-looking technology roadmap. We have successfully completed a

number of R&D projects including 70-bale cotton hydraulic bale press extended-range

Below Bachelor's Degree Person 13

bale-type cotton pickers 500T/1000T negative-pressure intelligent grain drying towers

Bachelor's Degree Person 88 and 12-row grain harvesters. During the Reporting Period the R&D goal achievement

rate exceeded 95%. Looking ahead SDMJ will continue to be market-driven accelerate

Master's Degree Person 5 the transformation of new technological achievements into practical applications and

foster new high-quality productive capabilities in agriculture through core innovation.By Gender

Male Person 96

Female Person 10

Innovation Achievements

Innovation Incentive Mechanism

Cumulative Number of Software Copyrights Case 21

Total Number of Trademarks Case 24 SDMJ has implemented an incentive system based on institutionalized management and performance evaluation for scientific research

and technological innovation projects. This system ensures robust organizational resource and incentive support for innovation efforts.Number of Software Copyrights per Million Yuan of Operating Revenue Case 0.022 In line with the Measures for the Administration of Technological Innovation Projects Qualifications and Achievement Declaration the

Company has clearly defined responsibility divisions at all levels and offers incentives to key personnel throughout the project lifecycle.Cumulative Number of Published Papers Article 31 The Company implements incentive and assessment mechanisms for project application teams using project quality progress policy

communication and acceptance results as key evaluation criteria. This links innovation inputs and outputs directly to personnel

Cumulative Number of Authorized Patents Case 266

performance fostering initiative and accountability among relevant employees. Additionally we reinforce resource allocation by

Number of Valid Patents per Million Yuan of Operating Revenue Case 0.28 establishing innovation project budgets and ensuring the timely provision of necessary funds personnel and materials. By aligning the

incentive mechanism with resource support the Company enhances the efficiency and effectiveness of technological innovation project

Number of Patent Applications Case 63 implementation.By Patent Type

Cumulative Number of Authorized Invention Patents Case 63 Innovation Platform Construction

Cumulative Number of Authorized Utility Model Patents Case 169

SDMJ has established a comprehensive R&D system anchored by enterprise technology centers engineering research centers and

Cumulative Number of Authorized Design Patents Case 34 provincial-level innovation platforms. At present we own a provincial-level enterprise technology center multiple provincial-level

engineering technology research centers and a variety of provincial-level innovation platform resources. In addition the Company and

Innovation Capability Certification its subsidiaries have been recognized as "Specialized Sophisticated Unique and Novel" enterprises. Specifically SDMJ is designated as a

Shandong Provincial Specialized Refined Unique and Novel Small and Medium-sized Enterprise. Our subsidiaries Xinjiang Swan has

Specialized Sophisticated Unique and Novel Enterprise Piece 3 been recognized as a National Key "Little Giant" Specialized Refined Unique and Novel Enterprise and Yetian Tieniu is recognized as an

Inner Mongolia Autonomous Region Specialized Refined Unique and Novel Small and Medium-sized Enterprise. Leveraging a robust

National High-tech Enterprise Piece 3

R&D system and strong qualifications the Company has developed numerous advanced technological innovations with independent

intellectual property rights. These achievements have been successfully transformed into new high-quality productive forces

continuously driving the high-quality development of the industry.

71 722025 Environmental Social and Governance (ESG) Report Industry Value

National High-Tech Enterprise National Manufacturing Single Xinjiang Uygur Autonomous Region Enterprise XPCC Engineering Research Center of Cotton

Champion Enterprise Technology Center Machinery Processing

National Key "Little Giant" Enterprise of Unique and Novel Technologies National XPCC Innovation Center for Agricultural XPCC Technology Innovation Center for

Specialized Sophisticated Intellectual Property Advantage Enterprise Machinery Equipment Manufacturing Agricultural Machinery Equipment

Manufacturing Single Champion Enterprise of Specialized Sophisticated Unique and XPCC Manufacturing Pilot Test Platform Specialized Sophisticated Unique and

Shandong Province Novel Small and Medium-sized Enterprise Novel Small and Medium-sized

of Shandong Province Enterprise of Inner Mongolia

Autonomous Region

Shandong Provincial Enterprise Technology Center Shandong Provincial Engineering Inner Mongolia Autonomous Region Inner Mongolia Autonomous Region

Laboratory of Intelligent Equipment for Enterprise Research and Development Center Industrial Design Center

Cotton Processing

Shandong Provincial Engineering Research Leading Enterprise in Key Industrial Chains of XPCC Jinan Municipal Key Laboratory "One Enterprise One Technology"

Center of Cotton Machinery Center

73 742025 Environmental Social and Governance (ESG) Report Industry Value

Industry-University-Research Cooperation R&D Achievements and Awards

SDMJ attaches great importance to industry-university-research cooperation with prestigious universities and research institutes aiming In response to the global trend toward intelligent and green transformation of agricultural equipment SDMJ places scientific and

to transform cutting-edge scientific and technological achievements into practical productive forces and promote technological progress technological innovation at the core of our development strategy. The Company maintains substantial R&D investment actively tackles

across the industry. The Company has engaged in joint research with institutions such as Shandong University Shihezi University and key core technologies and accelerates the construction of a "high-end intelligent green" agricultural equipment system. Through these

other scientific research organizations effectively integrating multi-party technical resources and establishing a seamless cooperation efforts SDMJ empowers modern agriculture with advanced productive capabilities and drives sustainable development across the

and exchange mechanism. By focusing on pressing technical challenges and research projects essential for development the Company industry.conducts systematic joint research to address the technical needs of product upgrades and low-carbon transformation thereby

enhancing our core competitiveness.Cotton Processing Machinery Sector

[Case] Joint Establishment of an Industry-University-Research Cooperation Innovation Base

The Company has continuously optimized the 60-bale/hour intelligent machine-picked cotton

In May 2025 the industry-university-research cooperation innovation base jointly established by the Company the University of processing line and innovatively developed an automatic labeling machine achieving full-process

Jinan and the Shandong Particle Society was included in the Shandong Association for Science and Technology automation from baling to labeling. This advancement significantly reduces labor costs and

Innovation-Driven Development Project. The Company successfully signed agreements with partners and co-built multiple operational risks. In addition we have launched new products and technologies including the

industry-university-research cooperation bases. This collaboration represents a key practice in our innovation-driven 70-bale hydraulic bale press and MY208 cotton gin which improve processing efficiency reduce

development strategy achieving multi-party resource complementarity and fostering mutual empowerment in both R&D and energy consumption and fiber damage driving the industry toward green and intensive

transformation.talent development. Moving forward the Company will leverage this base as a platform to deepen collaborative innovation

contributing to sustainable development and the upgrading of regional industries.Cotton Picker Sector

In response to the national "Dual Carbon" goals the Company has developed an extended-range

cotton picker that effectively reduces fuel consumption and emissions addressing the high energy

consumption challenge of traditional high-horsepower cotton pickers. This product is currently in the

testing phase. Moreover the four-row baling cotton picker has successfully entered the promotion

and application stage providing a strong foundation for iterative upgrades and market expansion of

domestic cotton pickers.Grain Harvesting Machinery Sector

The Company has developed the 5500 and 7500 series grain harvesters achieving technological

breakthroughs in critical performance indicators such as threshing and cleaning efficiency grain

breakage rate and impurity content. With excellent results in field tests and a significant reduction in

mechanical harvesting loss rate these harvesters support the national food security strategy of "loss

reduction is yield increase" by providing advanced efficient harvesting solutions.Grain Drying Sector

To tackle post-harvest grain loss the Company has developed and launched the 500T/D and

1000T/D negative-pressure intelligent grain drying towers. These innovative systems have been

successfully demonstrated and are now being actively promoted for wider application. By utilizing

precise temperature control and negative-pressure drying technology the equipment significantly

reduces energy consumption enhances grain quality and accommodates diverse operational

demands. This advancement also improves the overall layout and efficiency of post-harvest

processing.Industry-University-Research Cooperation

75 762025 Environmental Social and Governance (ESG) Report Industry Value

During the Reporting Period the Company and its subsidiaries received several Promotion of the Development of New Quality Productive Forces

prestigious awards for scientific research and innovation including: First Prize for

Scientific and Technological Progress Award from the Xinjiang Production and Focused on the needs of agricultural modernization the Company is driving the transformation of agricultural production toward

Construction Corps First Prize of the Shandong Provincial Machinery Industry Science intelligence and large-scale operations through the independent R&D of high-end intelligent agricultural machinery. We have

and Technology Award and First Prize of the Shandong Provincial Equipment successfully developed a comprehensive range of agricultural equipment for key crops including cotton grains and tomatoes. Core

Manufacturing Industry Science and Technology Innovation Award. Notably the project products include the 60-bale/hour intelligent machine-picked cotton processing line self-propelled bale-type cotton picker

"Development and Industrialization of Key Technical Equipment for Efficient Mechanical multi-functional grain combine harvester negative-pressure intelligent grain drying tower and self-propelled tomato harvester with

Picking and Processing of Cotton" led by us was awarded the Certificate of Scientific and several innovations filling domestic technical gaps. By continuously advancing technological innovation the Company is accelerating the

Technological Achievement Evaluation by the China Agricultural Machinery Industry adoption of new high-quality productive forces in the agricultural sector.Association. It has been highly recognized in the industry as "internationally advanced in

overall performance and internationally leading in some aspects".Intellectual Property Protection System

SDMJ places great importance on intellectual property protection strictly complying with relevant laws and regulations including the

First Prize of the Shandong Provincial First Prize of the Shandong Provincial First Prize for Scientific and Patent Law Copyright Law and Trademark Law. We have also established institutional documents such as the Measures for Intellectual

Machinery Industry Science and Equipment Manufacturing Industry Technological Progress Award from Property Protection to continuously strengthen and improve our internal IP management system promoting the institutionalization and

Technology Award Science and Technology Innovation the Xinjiang Production and

Award Construction Corps systematization of intellectual property protection. A Science and Technology Project Office has been established to coordinate

intellectual property management. This office oversees system formulation file management application processing dispute resolution

and training and awareness activities. These functions are carried out in collaboration with relevant departments such as the R&D Center

and are supervised by the Company's head of technology. By the end of the Reporting Period the Company had obtained

Participation in the Formulation of Standards GB/T29490-2023 Intellectual Property Compliance Management System certification and received honors such as National Intellectual

Property Advantage Enterprise.SDMJ takes a proactive role in advancing industry standards by organizing internal experts to conduct comprehensive research on

industry development trends and technical requirements and collaborating closely with peer enterprises research institutions and

standardization bodies. The Company has led and contributed to the development of 18 national standards and 16 industry standards

in key areas such as cotton processing machinery harvesting machinery and primary agricultural product processing. By translating our

innovative practices into industry-wide standards we not only strengthen our own competitive edge but also drive the industry toward

greater standardization and normalization.[Case] Seminar on the Industry Standard Seed Cotton Foreign Fiber Cleaner

In June 2025 the Seminar on the Industry Standard Seed Cotton Foreign Fiber Cleaner was held in Qingdao City Shandong

Province. The event was hosted by the National Technical Committee for Cotton Processing Standardization and organized by

SDMJ. Experts from the National Technical Committee 407 on Cotton Processing of Standardization Administration of China the

China National Institute of Standardization and other institutions and enterprise representatives attended the seminar. The

seminar focused on the industry standard Seed Cotton Foreign Fiber Cleaner drafted by the Company. Discussions helped to

further standardize the technical parameters and performance requirements of image-type cleaners. This initiative not only

supports the standardization of seed cotton foreign fiber cleaning technology but also contributes to industrial upgrading across GB/T29490-2023 Intellectual Property Compliance National Intellectual Property Advantage Enterprise

the sector. Management System Certification Certificate

Measures for Intellectual Property Protection

Throughout the R&D process our project teams can file patent applications at any stage which are then processed by the Science and

Technology Project Office. Once completed technical data will be systematically filed. The protection of technical and commercial secrets

is further reinforced by confidentiality agreements and all external R&D collaborations and activities are governed by contracts that

include intellectual property protection clauses. Additionally the Company has established a reward and penalty system offering

rewards to individuals who apply for and are granted service invention patents while holding accountable those responsible for

Industry Standard Discussion Meeting and Technical Seminar infringing or damaging the Company's intellectual property rights. In terms of rights protection and risk management the Company

proactively takes legal action against intellectual property infringements related to core products.

77 782025 Environmental Social and Governance (ESG) Report Industry Value

Training on Intellectual Property Protection Governance

To continuously strengthen employees' awareness of intellectual property protection the Company actively fosters an intellectual SDMJ has established the Quality Management System Control Measures for Quality Management System Documents Quality Veto

property culture and conducts specialized training sessions on an irregular basis. These efforts aim to create a corporate environment System Quality Inspection Management Provisions and Non-conforming Product Management Provisions. These measures

that respects and protects intellectual property rights while fully stimulating the innovation potential of all employees. continuously enhance system construction and organizational support covering the full scope of product R&D procurement

manufacturing inspection warehousing delivery and after-sales service. The system sets clear requirements for quality standards

inspection specifications process control non-conforming product management quality assessment and accountability offering

institutionalized and standardized support for quality management.[Case] Training on Intellectual Property

Additionally customer service is integrated into the unified management framework of the quality management system with clearly

In May 2025 the Company hosted the legal and science & technology talent innovation and development activity in celebration defined responsibilities for quality management across the entire product lifecycle. In line with the Quality Management System our

of "National Science and Technology Workers' Day". The event was organized by the Shandong Association for Science and business departments and Quality Department collaborate to drive customer service and quality management initiatives. These include

Technology and undertaken by the Jinan Association for Science and Technology. More than 100 participants attended including unified acceptance classified processing and feedback on customer-reported issues with service quality performance serving as a key

representatives from provincial municipal and district science and technology associations as well as the Company's scientific input for quality management and continuous improvement. This fosters coordinated operations between customer service and product

and technological personnel. Experts conducted specialized training on intellectual property covering basic IP knowledge legal quality management.risk prevention and service inventions. The training was closely aligned with the Company's practical needs and helped further

improve the awareness of intellectual property protection and the risk prevention capabilities of the Company's scientific and At the organizational governance level the Company has established a hierarchical management structure with the General Manager as

technological personnel. the primary responsible person for the Quality Management System overseeing system operations and coordinating quality

management activities. Under the guidance of management roles such as the Quality Director Production Director Safety Management

Director and Technical Deputy General Manager departments like the Engineering Department Quality Department R&D Center

Production Department and Safety and Environmental Protection Department implement quality management requirements according

to their respective responsibilities. This structure ensures a well-organized quality management system with clear roles responsibilities

and task delegation.Quality Management System Structure

General Manager

System Management Officer

Training on Intellectual Property

Safety and Quality of Products and Services

SDMJ strictly complies with relevant laws and regulations including the Product Quality Law. We follow the quality policy of

"Strengthening quality awareness ensuring full participation pursuing continuous improvement and excellence and building the world's

leading brand in cotton industry machinery". We continuously enhance our quality management system to ensure the safety and high

quality of our products and services.

7980

International Marketing

Department

Parts Workshop

Safety Management Safety and Environmental

Director Protection Department Comprehensive

Workshop

Production Director Production Department Machining Workshop

General Assembly

Deputy General Domestic Marketing Workshop

Manager of Sales Department

Supply Chain Center

HR Department

Quality Department

Quality Director

Engineering Department

Agricultural Machinery

Department

Deputy General Manager

of Technology

R&D Center

Board Secretary General Office2025 Environmental Social and Governance (ESG) Report Industry Value

At the operational and supervisory level the Company strengthens the implementation of quality responsibilities through an

institutionalized quality control and restraint mechanism. A quality veto mechanism is in place linking product quality work quality and

service quality performance to performance assessments. The system ensures responsibility traceability and accountability for actions

that lead to quality incidents or major impacts thereby embedding quality responsibilities into specific positions and individuals. The During the Reporting Period the Company has passed certifications

Company maintains the continuous and effective operation of quality management requirements through rigorous control of quality such as the ISO 9001 Quality Management System Certification.management system documents management of quality records and regular quality inspections and assessments. These measures

support the steady enhancement of the safety and quality of products and services. During the Reporting Period no major safety or

quality liability incidents involving products or services occurred.During the Reporting Period the Company also conducted targeted quality and technical service training based on key points of quality

management and the specific needs of different roles. This initiative continuously improves employees' quality awareness and

professional capabilities laying a strong foundation for the long-term stable operation of the quality control mechanism.[Case] Special Training on Total Quality Management

In December 2025 the Company organized a special training session on Total Quality Management (TQM). Senior executives and

key personnel from departments such as Quality Production and R&D participated in the training offline and online. The training

focused on the core aspects of product full-life-cycle quality management incorporating case studies and interactive discussions

to help participants enhance their closed-loop management skills and address challenges in quality control. In the future the

Company is committed to optimizing quality management mechanisms strengthening the foundation for high-quality

development and boosting market competitiveness through exceptional quality standards.ISO 9001 Quality Management Product Certification CE Certification for Cotton Pickers

System Certification Certificate

Strategy

SDMJ has established the Procedure for the Control of Organizational Environment and the Risk and Opportunity Assessment and

Analysis Form systematically reviewing our quality management system identifying potential risks and opportunities and ensuring the

sustainable development of the enterprise.Risk/Opp Impact Likelihood Description of Risk/Opportunity Financial Impact of

ortunity Type Impact Materiality CountermeasuresDuration Occurrence

Training Site

Develop equipment renewal and

Production Aging or low-precision production equipment Increased rework

Medium overhaul plans assign responsibilities

Equipment can hinder product quality objectives posing a maintenance and

term Medium

Medium

and monitor equipment precision and

Quality Risk product quality risk. quality loss costs

quality outcomes.Institutionalize and standardize

Inadequate maintenance of infrastructure may Increased

Infrastructure Medium maintenance procedures conduct

compromise production stability and product downtime and Medium

Operation Risk term Medium regular inspections and implement

compliance. maintenance costs

continuous improvements.

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Risk2025 Environmental Social and Governance (ESG) Report Industry Value

Risk/Opp Financial Impact Impact

Likelihood

Type Description of Risk/Opportunity of Impact Risk and Opportunity Managementortunity Impact Duration Materiality CountermeasuresOccurrence

In line with the quality management system requirements and with a focus on ensuring the safety and quality of products and services

the Company has established a risk and opportunity management framework that includes identification assessment monitoring and

Short Strengthen quality awareness training

Weak control over inspection and release Claims rework

Quality Control and strictly enforce inspection and release management.processes may allow non-conforming products and reputation High Low

Failure Risk medium procedures and evaluate

to reach customers damage

term effectiveness of the measures.

1. Each department analyzes internal and external environmental factors as well as the needs of relevant

Increased system

Quality Data & Unstable data systems or insecure hardware may Establish robust data backup and

recovery and Medium stakeholders based on business realities to identify risks and opportunities that could affect the safety and quality

Traceability lead to loss of quality records impacting Medium Low disaster recovery mechanisms and management term

Risk traceability and continuous improvement. verify their effectiveness regularly. of products and services.costs

2. The results of this analysis are compiled into the Environmental Analysis and Risk and Opportunity Response

Form and the Stakeholder Needs and Risk and Opportunity Response Form which serve as the basis for

management.Product Delayed upgrades or outdated technical Reduced market Plan product upgrades based on

Technology capabilities may fail to meet market and competitiveness Medium market demand and track

Adaptation customer expectations for performance and and higher term Medium

Medium

performance improvements after

Risk safety. after-sales costs implementation.

1. For the identified risks and opportunities an analysis is conducted based on impact level and likelihood of

Insufficient Streamline product types enhance

Low standardization in design or components Higher inventory occurrence to clarify the key areas that need to be addressed.Product Medium design and component

increases quality variability and management maintenance and Medium

Standardization term Medium standardization and continuously

complexity. procurement costs

Risk evaluate suitability. 2. The assessment results from each department are summarized by the Quality Department consolidated into a

company-wide management framework and used as input for management reviews.Delivery & Excessive transit times by third-party logistics Customer claims Clarify logistics responsibilities

Short

Installation may prevent timely delivery affecting service and higher Medium Medium monitor processes and adjust term

Service Risk quality. after-sales costs cooperation modes if necessary.

1. Each department regularly tracks the implementation and effectiveness of response measures.

Supply Chain 2. Relevant risks and opportunities are re-identified and reviewed promptly whenever there are changes in the

Price increases or unstable supply from external Establish long-term supplier

Quality Increase in Medium

suppliers may impact product quality and Medium Medium partnerships and continuously environment or when anomalies in quality and service occur.Collaboration procurement cost term

delivery. evaluate supplier performance.Risk

3. The management of risks and opportunities is integrated into internal audits and management review processes.

Production Reduced rework Institutionalize equipment upgrades

Equipment renewal and process improvements Medium

Technology and increased High as a quality improvement measure can enhance quality stability and processing and long Medium

Upgrade product added and continuously monitor

precision. term

Opportunity value effectiveness.

1. Measures are formulated and implemented for the risks and opportunities that need to be addressed with

responsibilities and resources clearly defined.Digitalization Reduced quality Promote digital quality management

of Quality Implementing digital management systems can

Medium 2. The effectiveness of these measures is regularly evaluated effective actions are reinforced and improvements are

losses and systems and regularly evaluate their

improve operational efficiency traceability and term Medium MediumManagement improved performance. made to address any deficiencies.Opportunity service responsiveness. management

efficiency

8384

Risk and Opportunity Identification Risk and Opportunity Assessment Risk and Opportunity Monitoring Risk and Opportunity Management

Risk Opportunities2025 Environmental Social and Governance (ESG) Report Industry Value

Metrics and Targets Management Measures

SDMJ has established a systematic and standardized product quality

Indicator Name Unit 2025 management mechanism covering the full product life cycle.Product Percent of Pass % 100

Number of Quality Internal Audits Conducted Case 1 02 Supplier Access and Procurement 03 Raw Material Inbound01 Product Design and Development

Implement quality evaluation and Conduct inbound inspection or verification

Conduct quality planning and review during the product hierarchical management for for raw materials and purchased components

Number of Product Recalls Case 0 design and trial production stage procurement suppliers outsourcing Non-conforming materials are not allowed to

Review design schemes process designs and trial production partners and supporting factories be warehoused

verification results Re-evaluate or revoke the qualification

Product Recall Ratio % 0 Ensure the quality of product finalization and technical of suppliers with quality issues

documentation

Quality Training Attendance Person-times 157

05 Production and Manufacturing 04 Outsourcing Processing

Strictly enforce process discipline Outsourced parts can only be warehoused after being

Total Hours of Quality Training Hour 2411 Fulfill the requirements of "self-inspection mutual inspection special inspected and approved by the Quality Department

inspection" and "initial inspection patrol inspection final inspection" Identify responsibilities and handle any quality incidents

Non-conforming products are not allowed to enter production be transferred arising from outsourcing

Training on Quality Case 5 or assembled

Number of Customer Complaints Case 7

06 Key Processes and Metrology 07 Non-conforming Product Disposal

Number of Customer Complaints Resolved Case 6 Implement key quality control measures for critical processes Implement isolation rework scrapping or concession acceptance

Use calibrated measuring instruments for inspection and for non-conforming products

measurement activities Conduct root cause analysis and formulate corrective measures

Number of Customers Participating in the Survey Person 512 Ensure the accuracy and reliability of test results Prevent recurrence of quality problems

Percentage of Customers Participating in the Survey % 33

09 Warehousing and Delivery 08 Finished Product Inspection and Release

Number of Valid Copies of Customer Satisfaction Questionnaires Issued Copy 512 Implement identification and classification management for Conduct final inspection and testing of finished products

stored products Products can only be released and delivered after passing

Take protective measures to maintain product quality during inspection

Customer Satisfaction / Total Satisfaction Score % 97 storage and transport

Maintain records to ensure product traceability

10 Product Use and After-sales Service 11 Product Quality Issue Management Disposition (Including Recalls)

Organize and implement in-sales and after-sales services Promptly analyze and address quality issue detected during product use

Provide installation guidance user training and technical support Take measures such as rework or replacement to control risks

Collect feedback on product usage Conduct product recalls in accordance with applicable laws and

regulations if necessary

14 Continuous Improvement 13 Document and Record Management 12 Service Quality Restraint

Analyze quality records and problem data Implement controlled management of quality Integrate service quality into quality veto processes

Conduct internal audits and management management system documents and performance assessments

reviews Standardize the preservation and use of quality Conduct responsibility tracing for service quality

Promote continuous improvement of product records issues

and service quality Ensure full traceability of quality-related

activities

Lifecycle Stage Management Focus and Measures

85 862025 Environmental Social and Governance (ESG) Report Industry Value

At the production and inspection level the Company strictly enforces quality control measures including "self-inspection mutual

inspection special inspection" and "initial inspection patrol inspection final inspection". We conduct tiered and categorized inspections Data Security and Customer Privacy Protection

of raw materials work-in-progress semi-finished products and finished products with enhanced control over key components and

critical processes. In accordance with the Metrological Standard Management System and Metrology Management Provisions the SDMJ integrates data security and customer privacy protection into our core corporate governance and information management

Company manages inspection equipment with dedicated personnel performing periodic verifications and status checks to ensure the practices. We fully comply with the requirements of laws and regulations including the Cyber Security Law Data Security Law and

authenticity and accuracy of inspection data providing a reliable foundation for product quality assessments. Personal Data Protection Law. The Company consistently enforces relevant regulatory provisions on network and data security and

fosters the standardized and secure operation of our information systems by continuously improving our system management and

For supply chain and outsourcing quality management in line with the Provisions for the Evaluation of Supplier Product Quality and the operational mechanisms.Provisions for Managing Outsourcing Quality Inspections the Company conducts supplier evaluations inbound inspections process

supervision and performance evaluations of procurement materials and outsourced components. For suppliers or outsourcing units with

quality risks corrective actions are taken such as setting deadlines for improvement imposing economic penalties or terminating Data Security Management

cooperation effectively reducing quality risks at the source. Additionally the Company ties quality performance to employee evaluations

through the Quality Veto System ensuring accountability for quality responsibilities. The Company emphasizes data security and customer privacy protection as essential elements of our digital transformation and internal

Product Quality Issue Management and Recall Management management and defines management responsibilities and work divisions in a structured institutionalized manner. We have established and enforced the Regulations on the Management of Computer Data Security which standardizes activities such as data input output

At the product delivery and use stage SDMJ considers service quality an integral part of product quality management and incorporates storage transmission and backup across computer systems network systems storage media and information materials. The Digital

it into the unified quality management and assessment system. In accordance with the Quality Management System and the Quality Veto Transformation Office is responsible for developing data security policies implementing technical measures conducting safety

System the Company clearly defines customer service quality responsibilities throughout the entire product lifecycle and implements inspections and handling emergency incidents. Department heads are tasked with overseeing the implementation of data security

traceability and performance accountability for customer complaints or adverse effects resulting from inadequate service non-standard measures within their respective departments while all employees are required to uphold their data security protection duties in

commissioning or delayed responses promoting the coordinated operation of product quality management and service quality accordance with established regulations creating a data security management system with clearly defined roles and responsibilities.management. During the Reporting Period no data security incidents or customer information leaks occurred.Furthermore the Company standardizes product recall and rework management processes in line with the Product Rework Provisions Data Security Risk Management

and the Provisions for the Management of Non-conforming Products preventing non-conforming products from entering the market

and safeguarding customer rights and interests. This mechanism applies across relevant departments including production sales

storage and transportation covering returned products items with extended storage times or rust and products damaged during In the operation of information systems and business activities the Company actively identifies and monitors data security and privacy

transportation. The Company implements a unified technical evaluation and rework procedure for these cases clearly defining protection risks arising from system attacks virus infections improper access management data leakage or equipment failures. Such

responsibilities and technical standards to ensure that products with quality risks are promptly recalled repaired or otherwise handled. risks could compromise the normal functioning of the Company's computer systems affect the integrity and confidentiality of data and

This system continuously ensures that both ex-factory and in-use products meet quality and safety requirements. potentially impact business continuity and customer data security. To mitigate risks arising from human error or technical defects the

Company defines the scope of classified information and incorporates key processes—including information system development

Customer Satisfaction Management usage networking and external data release—into our management framework.In our quality management efforts the Company emphasizes the continuous improvement of customer satisfaction and systematically

collects and analyzes customer opinions and suggestions. Customer feedback as a key source of quality information is incorporated into Data Security Management Measures

quality records and analyses serving to identify areas for product and service improvement. This feedback also provides a basis for

ongoing quality enhancement and management reviews thereby promoting the continuous optimization of both product quality and To address data security and customer privacy protection risks the Company implements a comprehensive set of measures at both

service levels. institutional and technical levels. In daily operations we implement robust protection of computer systems and data through hierarchical

authority management account password protection system access control data encryption and physical separation between internal

Customer Service and Usage Support and external networks. We also conduct regular backups and off-site storage of critical data alongside standardized procedures for the

secure destruction of classified carriers and electronic media. Additionally a server patrol inspection and emergency response

Focusing on customers' practical usage needs the Company offers essential technical support and usage guidance throughout the mechanism has been established allowing prompt initiation of emergency procedures in the event of system failures virus attacks or

customer service process helping customers standardize equipment operation and maintenance thereby reducing quality risks other incidents. These measures ensure the safe stable and continuous operation of information systems and the protection of data.associated with improper use. In addition the Company integrates service quality into the scope of the Quality Veto System

implementing responsibility traceability and performance constraints for customer complaints or adverse effects resulting from

inadequate service. This approach drives the continuous enhancement of service quality. Customer Privacy Protection

Enhancement of Product Accessibility SDMJ prioritizes the protection of customer and relevant party privacy information integrating personal data security into the core of

Through product design optimization and service support SDMJ continuously enhances the accessibility and usability of products across data security management and internal control systems. In accordance with the Regulations on the Management of Computer

various application scenarios. During the product design and manufacturing stages the Company evaluates the product structure Information Security the Company enforces a unified approach to the management of key activities including the collection storage

process design and operational adaptability aligning them with actual usage requirements. This improves the product's ability to adapt transmission use and backup of computer systems network systems and data materials. This includes clear requirements for account

to diverse environments and working conditions while also lowering the entry barriers for customers. authority control data encryption physical isolation and access approval. These measures help prevent the risks of data leakage

tampering and unauthorized use. Additionally in managing personnel information the Company strengthens full-process control

At the product delivery and usage stages the Company helps customers standardize equipment operation and maintenance by through methods such as standardized approval for file access dedicated personnel custody and management registration and

providing installation guidance user manuals and essential technical support so as to reduce the quality risks associated with improper verification processes and strict confidentiality protocols. Unauthorized access is rigorously restricted to safeguard the privacy rights

use and to enhance overall product usability. and interests of customers and relevant parties effectively.

87 882025 Environmental Social and Governance (ESG) Report Good Life

Good Life

Contribution to Society

Occupational Health and Safety

Employee's Rights and Interests

89 902025 Environmental Social and Governance (ESG) Report Good Life

Contribution to Society

[Case] Construction of the Tumushuke Smart Agriculture Comprehensive Service Center Project

SDMJ is committed to deepening our corporate responsibility by fostering social value across key areas such as public welfare charity To support the high-quality development of the cotton industry in Xinjiang the Company has established a smart agriculture

rural revitalization community development and the Belt and Road Initiative. The Company follows the principle of responsible comprehensive service network across northern and southern Xinjiang. In 2025 the Company completed the construction of the

symbiosis promoting the realization of social value in a structured and meaningful way. SDMJ will continue to generate diverse social first phase of the Tumushuke Smart Agriculture Comprehensive Service Center which is scheduled to commence operations in

benefits ensuring that our development achievements are widely shared and benefit all stakeholders. 2026. The Center serves as a comprehensive agricultural service hub integrating spare parts and whole-machine warehousing

maintenance and overhaul technical training information consulting and field services. It is positioned as the Company's core

Public Welfare service guarantee base in southern Xinjiang. This project strengthens the "bond of heart" between modern agricultural machinery

and cotton farmers ensuring that technological achievements in cotton development reach the fields and translate into tangible

income for farmers. By doing so it injects sustainable momentum into rural revitalization through industrial services.Charitable efforts are embedded in our core values with a focus on integrating employee well-being and addressing social needs. SDMJ

organizes a variety of public welfare initiatives including voluntary blood donation drives the "One Day of Charity" donation activity the

Golden Autumn Student Aid Program and the Winter Warmth Program. These initiatives convey the Company's warmth uphold social

responsibility and contribute to the creation of a harmonious symbiotic social environment.[Case] "One Day of Charity" Donation Activity

In November 2025 the Company organized the "One Day of Charity" donation activity to uphold the traditional virtues of the

Chinese nation foster a culture of universal charity and benevolence and support the growth of charitable initiatives. The event

saw active participation from all employees who demonstrated love and social responsibility through tangible actions. A total of

CNY 17680 was raised during the activity with all donations earmarked for public welfare and charitable causes. This initiative

not only contributes to society but also reflects the positive spirit of the Company's employees—aspiring compassionate and

supportive of one another.Tumushuke Smart Agriculture Comprehensive Service Center Project

The Belt and Road Initiative

During the Reporting Period in active response to the national Belt and Road Initiative the Company launched the "Three-Year Action

for Foreign Trade Breakthrough" as a strategic starting point. Leveraging our advantages in high-end agricultural machinery technology

we continued to strengthen our presence in key international markets including Central Asia South America and Africa through

diversified channels such as exhibitions and online platforms. The Company actively promotes high-quality agricultural machinery

"One Day of Charity" Donation Activity including intelligent cotton processing complete sets large cotton pickers and grain harvesters to global markets. By providing reliable

equipment and service support we contribute to enhancing agricultural production efficiency in countries along the Belt and Road

further consolidating the foundation for international business and demonstrating the overseas responsibility of Chinese agricultural

Rural Revitalization machinery enterprises.Staying true to our original commitment to support agriculture SDMJ actively aligns our development with the national rural Community Construction

revitalization strategy. The Company focuses on modernizing the entire cotton industry value chain driving the green and intelligent

upgrade of agricultural equipment through technological innovation helping cotton farmers reduce costs and improve efficiency and SDMJ continuously strengthens our engagement with local communities through sustained linkage and co-construction initiatives. By

enhancing the quality and upgrading of the cotton industry. In addition SDMJ continually strengthens our localized production and maintaining a regular communication mechanism we provide practical services such as shuttle transportation to support community

service network by establishing factories close to cotton fields and offering doorstep services. This approach ensures that the benefits of needs for events like weddings and funerals. In parallel the Company deepens party-building co-construction preserving the red

science and technology are deeply embedded in rural areas directly benefiting the majority of cotton farmers. heritage uniting collaborative forces and fostering a harmonious mutually supportive community ecology.

91 922025 Environmental Social and Governance (ESG) Report Good Life

Occupational Health and Safety Preventive Measures for Occupational Health and Safety

SDMJ prevents safety accidents protects employees' health and promotes continuous improvement in occupational health and safety

SDMJ prioritizes the occupational health and safety of employees. Adhering to the principle of "Safety First Prevention Foremost Full management through a variety of measures including hazard identification process safety supervision specialized safety protection

Participation Health Focus" the Company has established a comprehensive governance system that includes system development and health monitoring.responsibility implementation and risk prevention and control. By maintaining strict compliance with operational standards SDMJ has

built a solid safety framework. By improving special management systems strengthening hierarchical control supervision and inspection

we continuously optimize the operational safety environment and protective guarantees and make every effort to safeguard the life Measure Categories Detailed Requirements

health and safety of employees.System Construction

Identify and summarize hazards across the Company evaluate major risks include them in the

Risk Control Unacceptable Risk List and implement targeted control measures.To strengthen supervision and management of production safety prevent and control occupational disease hazards and reduce

accidents the Company has developed a series of safety and occupational health management systems. These include the Control

Procedures for Occupational Health and Safety Operation Quality Environment and Occupational Health Management Manual Safety

Management Regulations and Occupational Disease Protection Equipment Management System covering key areas such as safety

education special operations equipment maintenance protection equipment management and employee health check-ups. We have

also established an occupational health and safety governance structure based on "Overall Coordination by the Work Safety Committee Process Safety Strengthen post responsibility systems and clarify on-site safety management requirements.Leadership by the Safety and Environmental Protection Department Responsibility by Each Department and Hierarchical Control". This Management Special operation personnel must hold valid certificates and strictly follow operating procedures.structure clarifies the supervisory responsibilities of in-charge leaders and the main responsibility of each department head for regional

safety ensuring comprehensive protection of employees' health and operational safety.Vehicle Safety Regularly inspect vehicles and special equipment; provide traffic safety training for drivers; assess During the Reporting Period the Company and its subsidiaries Xinjiang Swan and Yetian Tieniu all traffic risks from climate and geographical conditions and reinforce education accordingly.obtained ISO 45001 Occupational Health and Safety Management System certification. Management

Conduct regular inspections of fire and electrical equipment evacuation routes and fire-fighting

Fire Safety Assurance facilities; organize fire safety training and emergency drills; establish a mechanism to track and

rectify hidden hazards.Occupational Health Identify occupational disease risks for each position; develop and implement employee health

Monitoring checkup plans; provide necessary personal protective equipment and monitor its proper use.Require suppliers and visitors to complete registration and filing and clearly inform them of safety

Outsider Management precautions.ISO 45001 Occupational Health and ISO 45001 Occupational Health and ISO 45001 Occupational Health and

Safety Management System Safety Management System Safety Management System

Certification (SDMJ) Certification (Yetian Tieniu) Certification (Xinjiang Swan)

Promote safety knowledge and the Company's occupational health and safety policies; install clear

Safety Awareness

safety signs in high-risk areas; provide measures for heatstroke prevention heating food hygiene

and Protection

and other related protections.

93 942025 Environmental Social and Governance (ESG) Report Good Life

During the Reporting Period the Company conducted regular comprehensive emergency drills and special scenario-specific drills

involving all employees and focused on strengthening practical response skills. Through a continuous cycle of "Training – Drills – Review"

the Company continuously refines emergency plans and enhances the ability to respond quickly to unexpected safety incidents.[Case] Fire Evacuation Drill

In March 2025 a subsidiary of the Company conducted a fire evacuation drill simulating a workshop fire scenario. The drill

included evacuation and escape procedures practical fire fighting using dry powder fire extinguishers and simulated emergency

calls to 119 (fire emergency) and 120 (first aid). The exercise helped employees master self-rescue escape and initial fire fighting

Safety Risk Notification Board techniques enhancing their ability to respond to emergencies and strengthening the workshop's fire safety defenses.Emergency Response Plans and Drills

SDMJ has developed the Production Safety Accident Emergency Plan and established a three-tier "Comprehensive + Special + On-site

Disposal" emergency response system. This system covers 11 types of common accidents including mechanical injury electric shock fire

and container explosions as well as two special scenarios: special equipment and confined spaces. It also defines the classification

standards for emergency responses and follows the full process flow of "Alarm – Disposal – Rescue – Follow-up". Additionally the

Company has set up an emergency command center with the General Manager serving as the Chief Commander. This command center

acts as the highest authority for emergency management and an emergency office under its authority is responsible for the daily

operations and coordination of emergency management.Emergency Response Organization Structure Chart

Drill Site

Emergency Command Center

[Case] Comprehensive Emergency Rescue Drill

Emergency Command Office

In June 2025 the Company organized a comprehensive emergency rescue drill focusing on scenarios such as mechanical injuries

electric shocks and falls from heights. The drill also included training in first aid skills such as cardiopulmonary resuscitation (CPR)

and airway management. This exercise tested the feasibility and effectiveness of the emergency response plan improved

On-site Command Center coordination and cooperation between departments and provided valuable practical experience in handling various production

safety incidents.Drill Site

9596

Accident Investigation Team

Aftermath Handling Team

Logistics Support Team

Security & Cordon Team

Emergency Rescue Team

Communication & Liaison Team2025 Environmental Social and Governance (ESG) Report Good Life

Inspection of Potential Hazards Training on Occupational Health and Safety

During the Reporting Period the Company and its subsidiaries conducted a comprehensive investigation of potential hazards focusing SDMJ has established the Safety Education and Training Management System and the Occupational Disease Prevention and Control

on areas such as electrical safety fire-fighting equipment machinery protection hazardous materials storage safe operating practices Education and Training System regularly organizing all production line employees to participate in training programs. These programs

emergency preparedness and the use of access channels. All identified hazards were promptly addressed and fully rectified ensuring cover production safety-related rules and regulations typical accident case studies as well as occupational disease prevention and

that there were no blind spots or gaps in production safety. control including fundamental knowledge of occupational hazard prevention and post-specific occupational health procedures. These

initiatives aim to strengthen employees' safety awareness and enhance their occupational health protection capabilities.Security Risk Management

[Case] Work Safety Month

The Company conducts thorough analyses of occupational health and safety risks and opportunities and develops strategies to prevent

workplace injuries and accidents supporting the safe and sustainable development of the organization. In June 2025 the Company's Work Safety

Committee conducted a series of Work Safety

Type of Month activities under the theme: "Everyone

Detailed Requirements Risk Level Core Management MeasuresRisk/Opportunity Pays Attention to Safety Everyone Can

Respond to Emergencies – Identify Hidden

Dangers Around You". The activities included a

Potential fire hazards threatening Equip effective fire-fighting facilities establish a fire mobilization meeting full-staff safety and fire

Severe Risk

personnel and property emergency plan and conduct regular drills. protection training comprehensive emergency

drills simulating fire scenarios and a hidden

danger reporting reward program. These

Safety Install electric leakage protection devices conduct Risk of electric leakage from office initiatives effectively improved employees'

General Risk regular safety inspections of equipment and strengthen

electrical appliances sense of safety responsibility and emergency Risk electric shock prevention training. response skills laying a solid foundation for

the Company's production safety

management. Training Site

Inconsistent employee competency Develop procedural documents and organize

General Risk

and low safety awareness safety factor identification and post safety training

Insufficient collection and Strengthen the collection and updating of regulations [Case] Occupational Disease Prevention Knowledge Training during the Publicity Week of Occupational Disease

Prevention Law

communication of regulations and Severe Risk and conduct training on key clauses or integrate them

weak employee compliance awareness into the system.Compliance From April to May 2025 Yetian Tieniu organized occupational disease prevention knowledge training during the Publicity Week

of Occupational Disease Prevention Law. The training aimed to raise awareness among employees about occupational disease

Risk

Non-conformities identified during Direct the responsible department to address prevention and emphasize the importance of mental health. Through these activities employees were equipped with essential

General Risk

ISO 45001 system audit non-conformities identified in the audit. occupational health protection skills and encouraged to prioritize both their physical and mental well-being. This initiative further

strengthened the foundation of the Company's occupational health and safety management system.Full allocation of safety production Establish a dedicated safety management fund to

/

funds secure safety investments.Regularly review regulations and stakeholder

Development Full compliance with regulations / requirements and conduct an annual compliance

no penalties good reputation

Opportunities evaluation.Customer demand for establishing Continuously maintain and operate the safety

and operating a safety management / management system and undergo third-party

system certification audits. Training Site

97 982025 Environmental Social and Governance (ESG) Report Good Life

Occupational Health Checkups Metrics Unit 2025

During the Reporting Period the Company organized comprehensive occupational health check-ups for all employees. These included

routine health check-ups as well as specialized screenings focused on occupational hazards such as dust and noise exposure. An Number of Participants in Safety Training Person-times 2566

exclusive health file was established for each employee where detailed results of their health check-ups were recorded. Abnormal

indicators were closely monitored and timely intervention suggestions were made when necessary. By maintaining a consistent and Total Training Duration Hour 14745.5

targeted health check-up system the Company is able to promptly identify occupational health risks safeguard employees' physical and

mental well-being and reinforce the foundation of occupational health management practices. Average Duration of Safety Training Hour 16.53

Contractor Safety Management

Permit Holding Rate for Personnel Engaged in Special Operations % 100

We have established a comprehensive full-process safety management system for contractors and have signed the Safety Management

Agreement with contractors to clearly define the safety responsibilities and operational standards of both parties. Contractor operations Investment in Work-Related Injury Insurance RMB 10000 69.38

are strictly regulated through an approval process which includes verification of production safety qualifications and personnel

certification status. Before entering company sites contractors undergo specialized safety training and technical disclosures to ensure

they are fully prepared. Through daily on-site supervision special operation permit control and closed-loop rectification of identified Coverage Rate of Work-Related Injury Insurance % 100

hazards the Company ensures that contractor safety management aligns fully with the our internal standards.Investment in Production Safety Liability Insurance RMB 10000 0.86

Metrics and Targets

Coverage Rate of Health Checkups Among Employees % 100

Metrics Unit 2025

Detection Rate of Occupational Hazard Factors % 100

Number of Work Safety Liability Accidents Case 0 Unit

Qualification Rate in Detection of Occupational Hazard Factors % 100

Number of work-related deaths Person 0

Number of New Occupational Diseases Case 0

Number of Work-Related Deaths per 100 Million Yuan of Operating Revenue Person 0

To further enhance safety production management prevent major and extraordinarily serious accidents and achieve the safety objective

Rate of Work-Related Deaths % 0 of "zero deaths" the Company has established clear occupational health and safety targets in the Quality Environment and

Occupational Health Management Manual. During the Reporting Period all set targets were successfully met reflecting our commitment

Work-related Injury Rate % 0.90 to a safe and healthy working environment. During the Reporting Period all targets were fully met.Working Day Lost due to Work-related Injury Working Days 877

Eliminate fatal accidents due to Intact rate of safety facilities and Incidence Rate of Occupational

Working Day Lost due to Work-related Injury per Million Yuan of Operating Revenue Working Days 0.91 production safety liability equipment Diseases

Injury Rate per Million Hours % 5.65 0 100% 0

Identification and Rectification Rate of Potential Hazards: % 100

No serious injury liability accidents Rectification Rate of Potential Safety

such as fire and poisoning Hazards

Number of Security Emergency Drills Sessions 12

0100%

Investment in Safety Production CNY 100000 RMB 10000 219.28

Ratio of Safety Production Investment to Operating Revenue % 0.23

Total Investment in Safety Training RMB 10000 3.3

Number of Safety Training Sessions Session 29

99 1002025 Environmental Social and Governance (ESG) Report Good Life

Employee's Rights and Interests Metrics Unit 2025

Number of Employees (by Age)

SDMJ places employee rights and interests as a top priority fully complying with applicable laws and regulations including the Labor

Law Labor Contract Law and Social Insurance Law. This commitment provides a solid foundation for protecting employee rights and Under 30 years old Person 193

creating a fair safe and sustainable working environment.

30-40 Years Old Person 358

40-50 years old Person 181

Recruitment Management 50 years old or above Person 160

Number of Employees by Region

Adhering to the principles of legality fairness and transparency the Company has established a standardized employee management Chinese Mainland Person 884

system covering recruitment induction probation on-the-job management and resignation.Overseas Person 8

Recruitment: In line with the Employee Recruitment Management Regulations recruitment plans are formulated centrally with clear post

Composition of New Employees

requirements selection criteria and approval authority. Talent is sourced through a combination of internal promotions and external

recruitment to ensure an open transparent and traceable process. Child labor and forced labor are strictly prohibited ensuring Number of New Employees Person 99

compliance with legal employment requirements.Percentage of New Employees by Gender

Induction and Probation: Following the New Employee Induction and Probation Management Measures the Company standardizes

Female Person 18

labor contract signing system orientation safety training post induction and probation assessment. A regular assessment and appeal

mechanism safeguards new employees' rights during the probation period and supports their rapid adaptation to their roles and the Male Person 81

organizational environment.Number of New Employees by Age

On-the-Job and Resignation Management: Through the Labor Discipline Management Regulations and Resignation Management

Under 30 years old Person 64

System the Company clarifies employee conduct reward and punishment standards resignation approval exit interview and work

handover procedures. This approach maintains normal production and operational order while collecting employee feedback through 30-40 Years Old Person 24

structured communication channels to continuously improve employment management practices.

40-50 years old Person 5

50 years old or above Person 6

New employees by region

Metrics Unit 2025

Chinese Mainland Person 96

Employment Contract Signing Rate % 100

Outside China Person 3

Labor Dispatch Workers Person 16

Employee resignation

Employee Composition

Number of Employees Resigned Person 65

Number of Employees Person 892

Number of voluntary resignations Person 54

Number of Employees of Minority Nationalities Person 63

Employee Turnover Rate % 7.29

Percentage of Employees of Minority Nationalities % 7.06

Number of Employees with Disabilities Number of Resigned Employees by GenderPerson 3

Number of Employees (by Gender) Female Person 5

Female Person 127 Male Person 60

Male Person 765 Number of Resigned Employees by Age

Number of Employees (by Academic Qualification) Under 30 years old Person 28

Master's Degree Person 20 30-40 Years Old Person 19

Bachelor's Degree Person 231 40-50 years old Person 4

Below bachelor's degree Person 641 50 years old or above Person 14

101 1022025 Environmental Social and Governance (ESG) Report Good Life

Diversity Equality and Inclusion Labor Relations Management

SDMJ is committed to equal treatment throughout recruitment employment training assessment and career development SDMJ has established and maintained labor relations in full compliance with the law emphasizing the prevention and proper handling of

ensuring that no employee faces discrimination based on gender ethnicity religious beliefs or marital status and that employees' labor disputes through structured and procedural approaches. Following the principle of "Prevention First Negotiation Priority Legal

rights to equal employment and career development are legally protected. Equality and anti-discrimination policies are embedded Handling Continuous Improvement" the Company mitigates the risk of disputes by standardizing attendance compensation leave and

within recruitment and human resource management systems ensuring fair development opportunities for all employees under performance management before issues arise. When a dispute occurs the employer department human resources trade union and

identical conditions. legal affairs collaborate to prioritize internal negotiation or mediation. If necessary labor arbitration or judicial procedures are initiated in

accordance with the law ensuring that employees' legitimate rights and interests are fully protected.Regarding the protection of female employees' rights the Company implements all legally mandated benefits including maternity

check-up leave maternity leave breastfeeding leave and maternity insurance. Additionally the Company addresses the unique Labor Dispute Handling Process

needs of female employees at different life stages—such as health childbirth and career progression—by offering special physical

exams and festive care fostering an inclusive and supportive work environment for female employees.Internal Negotiation Legal Procedures

Timely communication and

[Case] "Grace & Vitality in Motion" – Women's Sports Event coordination Arbitration or litigation

Responsible EntityL? Responsible EntityL?

Employer department Legal Affairs Department

To celebrate the 115th International Working Women's Day the Company's trade union organized a themed fun sports event titled

"Grace & Vitality in Motion" on March 7 2025. The event featured a variety of engaging and collaborative activities enriching the

cultural and recreational life of female employees. It enhanced communication and interaction among colleagues fostered a

positive team spirit and demonstrated the Company's care for the physical and mental well-being and career development of

female employees.Prevention Management Collaborative Handling Post-improvement

Legal employment and standardized Joint verification by human resources trade union Cause analysis and system

system implementation and legal affairs departments optimization

Event Site Responsible EntityL? Responsible Entity? Responsible Entity?

All departments Human Resources Department Human Resources Department

Metrics Unit 2025

Proportion of Female Employees in Management % 33

Number of Employees on Maternity Leave Person 1

Return Rate of Employees on Maternity Leave % 100

Number of Employees on Parental Leave Person 2

Return Rate of Employees on Parental Leave % 100

103 1042025 Environmental Social and Governance (ESG) Report Good Life

Compensation and Benefits

[Case] Special Training for the Improvement of Middle and Senior Management Capabilities

The Company has developed a structured standardized and market-competitive remuneration management system. In line with the

Remuneration Management System and Performance Appraisal System and adhering to the principles of legality fairness In August 2025 SDMJ held the 2025 Special

incentivization stability and competitiveness SDMJ has established a remuneration distribution mechanism that aligns with our Training for the Improvement of Middle and Senior

development strategy and operational performance clearly defining the remuneration structure payment rules and adjustment Management Capabilities actively attended by

procedures. The remuneration for the Company's directors and senior managers follows the Remuneration Management Measures for middle and senior managers as well as key

Directors and Senior Managers. business personnel. The program invited three

experts to deliver lectures on topics including

The employee remuneration structure includes fixed wages performance-based wages allowances subsidies employee benefits and managers' sense of responsibility management

supplementary performance bonuses. Among these performance wages are directly tied to the Company's profits individual innovation in the AI era theoretical literacy and

performance and job responsibilities promoting the principle of "more pay for more work better pay for better performance". leadership empowerment. The training

incorporated practical drills to reinforce learning

effectively addressing gaps in management

knowledge. We also established an efficient

cross-departmental communication and exchange

platform further enhancing the comprehensive

Compensation Structure performance capabilities and collaborative

effectiveness of the management team. Training Site

Supplementary

Performance Allowances

Fixed Salary + + + Employee Benefits + Performance

Wages and Subsidies

Bonuses

[Case] Orientation Training for New Employees

Base Pay Performance Senior ity al lowance Social insurance (pension Supplementary In August 2025 the Company's Human Resources Department in collaboration with the Production Department organized

bonuses enterpr ise subsidy medical care work in jury incentive bonuses special production and operation training for new employees. Guided by the principle of "Rapid Integration Solid

floating benefits transportation unemployment maternity adjusted according Foundation" the training systematically introduced the Company's production and operation system core product features

responsibi l i ty subsidy insurance) housing to the Company's and production processes through theoretical instruction workshop observation and interactive Q&A sessions helping

al lowances meal a l lowance provident fund enterpr ise performance and

special bonuses one-chi ld annuity heat ing fee employees' annual new employees quickly gain a comprehensive understanding of the Company's business shorten their adaptation period

al lowance etc . summer heat fee and income and strengthen their sense of belonging.other benefits

The Company has established an Appraisal Committee that collectively reviews matters such as performance appraisal results and bonus

coefficient adjustments in accordance with the Rules of Procedure for the Appraisal Committee. This ensures that the remuneration

distribution process is standardized fair and incentivizing for employees.In terms of welfare protection we have developed a multi-level system covering social security health care life support and festival

condolences. The Company ensures compliance with legal requirements by paying social insurance housing provident funds and

enterprise annuities for employees. Additionally a range of diversified benefits are provided such as health check-ups meal subsidies

and festival benefits. For several consecutive years the Company has issued festival benefits during the Spring Festival and Mid-Autumn

Festival which helps enhance employees' sense of satisfaction and belonging.Employee Training and Development

We place a strong emphasis on employee capacity building and career development. To support this a hierarchical and classified training

system has been established which includes induction training on-the-job training management capacity improvement and

specialized training in accordance with the Training Management System and the New Employee Induction and Probation Management

Measures. During the Reporting Period the Company has organized various training programs including new employee training safety

training skill development training technical training and management training for middle and senior staff consistently improving the Training Site

coverage and relevance of its training programs.

105 1062025 Environmental Social and Governance (ESG) Report Good Life

Metrics Unit 2025

Total Number of Persons Trained Person-times 3460

Training System Development Planning Coverage of Employee Training % 85.57

Training Ratio by Gender

Training Needs Analysis Training Goal Setting Female % 81.51

Employee Competency Evaluation Job Demand Research Short-Term Goal Planning Long-Term Goal Outlook Male % 86.21

Ratio of Trained Employees by Employee Type

Senior Management % 100

Comprehensive Evaluation of Core Skill Requirements for Each Rapid Improvement of Basic Business Develop High-level Professional Middle Management % 90.91

Professional Skills Position Skills Talent

Accurate Assessment of Requirements for Positions at Solve Practical Issues in Current Work Advance the Achievement of the Grassroots Employees % 85

Comprehensive Competence Different Levels Company's Strategic Goals

Ratio of Trained Employees by Function

Training Content Design Selection of Training Methods Manufacturing % 85.61

Technology

General Course Structure Professional Course Arrangement Online Training Mode Offline Training Format % 97.17

Sales % 93.22

Finance % 73.33

Workplace Communication Skills In-depth Instruction on Core Self-paced Learning of Online Concentrated Teaching and Administration % 95

Training Business Skills Courses Systematic Learning

Thematic Presentations on

Teamwork Skills Development On-site Inspections and Practical

Others % 27.03

Cutting-edge Industry Knowledge Live Online Real-Time Interaction Operations

Training Duration

Establishment of the Training Faculty Evaluation of Training Effectiveness Total Hours of Training: Hour 22731.8

Average Training Duration per Employee per Year Hour/Person 30.43

Selection of Internal Lecturers Hiring of External Experts Process Evaluation Methods Outcome Evaluation Metrics

Average Training Duration by Gender

Female Hour/Person 29.9

Experience Sharing by Key Professional Guidance by Real-time Monitoring of Classroom Significant Improvement in Job Male Hour/Person 30.51

Employees Industry Experts Performance Performance

Case Sharing by Outstanding Cutting-edge Insights from Analysis of Test Results at Each Comprehensive Evaluation of Average Training Duration by Employee Type

Employees Renowned Scholars Stage Employee Satisfaction

Senior Management Hour/Person 61.1

To enhance the flexibility and accessibility of training the Company has adopted an online and offline learning model providing Middle Management Hour/Person 52.18

employees in relevant positions with accounts on the internal online learning platform and continuous access to learning resources. Grassroots Employees Hour/Person 28.2

In parallel the Company has implemented a Management Trainee Program to develop and reserve future management talent. This

program combines job rotation mentor guidance and phased assessments to systematically cultivate the skills and leadership Average Training Duration by Function

potential of participants. Manufacturing Hour/Person 21.76

Technology Hour/Person 41.64

Metrics Unit 2025 Sales Hour/Person 48.8

Investment in Employee Training RMB 10000 18.92 Finance Hour/Person 26.95

Number of Employee Training Sessions Sessions 88 Administration Hour/Person 57.37

Total Number of Persons Trained Person 747 Others Hour/Person 20.7

107 1082025 Environmental Social and Governance (ESG) Report Good Life

Employee Activities Metrics Unit 2025

SDMJ attaches great importance to the spiritual and cultural needs as well as the physical and mental health of employees fostering a

positive healthy and harmonious working environment. To support this the Company provides a variety of cultural and sports facilities Social Insurance Coverage Rate % 100

including basketball courts table tennis tables staff activity rooms and gyms offering employees a comfortable space to balance work

and life. During the Reporting Period the Company organized a range of cultural and sports events such as badminton competitions Number of employees receiving assistance for difficulties Person 12

singing contests and literary performances. These activities promoted communication and interaction between employees from

different departments and positions enhancing their sense of happiness and fulfillment. We continue to embrace our family-oriented

culture of "One Family One Heart One Goal" reinforcing a strong spiritual motivation that drives the Company's high-quality Amount of assistance for employees in difficulty RMB 10000 3

development.Democratic Management

SDMJ considers democratic management a core element for fostering harmonious labor relations and driving employee vitality. A

comprehensive democratic management system has been established built on "four systems as the foundation two activities as the

carrier and employee representatives as the core". This system creates a closed-loop management mechanism that encompasses

participation in decision-making protection of rights and interests supervision channels and response to demands.Employee Congress System

As the cornerstone of the Company's democratic management the four systems grant employee

representatives five essential functions: the rights to review and propose to adopt to decide to democratically

elect and to supervise. These rights cover crucial issues such as the Company's major decisions and matters of

vital interest to employees.Employee Care

Democratic Consultation System

We continuously strengthen employee care and communication through multiple channels actively listening to employees' voices and

responding to their needs. In terms of employee welfare the Company relies on the trade union and follows the Trade Union Welfare A collective consultation mechanism is established to normalize discussions on key issues such as

Management Guidelines to carry out a variety of care initiatives. These include holiday greetings and gifts assistance for employees in remuneration benefits working conditions and company rules. This system promotes an equal

need and seasonal programs such as "Coolness in Summer Warmth in Winter" ensuring timely support and care for employees. communication platform between the Company and employees fostering stable and harmonious labor

relations.[Case] Care for Retired Employees

During the Reporting Period under the overall leadership of the Company's Party Committee a care mechanism for retired cadres

featuring "Party Committee leadership and departmental coordination" was established. Regular home visits and condolences Factory Affairs Publicity System

were conducted at key times such as the Spring Festival and Mid-Autumn Festival. Through the distribution of festival benefits

visits by the leading group and dynamic assessments of health needs the Company promptly identified and addressed the This system ensures that major decisions production and operation management employees' interests and

practical difficulties faced by retired employees while keeping them informed about the Company's development. By combining leadership group changes are transparently communicated. Employees' right to know and supervise is

institutionalized and humanized care the Company continues the tradition of respecting the elderly enhancing organizational protected through internal websites bulletin boards and special meetings.cohesion and employee recognition.[Case] "Warmth for All Families · Unite as One" Warmth in Winter Activity

Employee Director System

The Company's trade union organized the "Warmth for All Families · Unite as One" Warmth in Winter Activity providing assistance

to seven employees in need in accordance with established selection criteria. This initiative effectively reduced the financial Employee representatives are appointed to the board of directors to participate in decision-making and

burden on these employees strengthened their sense of belonging and enhanced overall enterprise cohesion. The activity laid supervision of the Company's key issues. This ensures that employee views are represented and their rights

a solid foundation for fostering harmonious labor relations and promoting the Company's sustainable development. are safeguarded from the outset.

109110

Four Systems2025 Environmental Social and Governance (ESG) Report Good Life

Two Activities Employee Satisfaction

SDMJ places great emphasis on employee communication

and satisfaction management regularly collecting feedback

through employee satisfaction surveys and other channels.Employee Representative Proposal Activity Employee Representative Evaluation Activity For example in terms of canteen services we conduct

satisfaction surveys and develops special rectification plans.By continuously improving food quality service standards

For each session of the Employee Representative Congress a Employee representatives are regularly invited to offer feedback

special theme is selected and proposals from employee on the Company's operations management practices and and operational management we enhance employee

representatives are actively collected. These proposals are leadership. The feedback is gathered through opinion solicitation satisfaction through a closed-loop mechanism of "Survey →

reviewed and evaluated by a dedicated team after which forms and used as an essential reference for enhancing company Rectification → Tracking". During the Reporting Period the

responsible departments and deadlines are assigned. This operations and systems. Company recorded no labor disputes and received no

ensures that employees' ideas and contributions are transformed employee complaints.into actions that drive company growth.The Company's trade union plays a crucial role as an organizational body through which employees can exercise their democratic

management rights in accordance with the law. The union establishes and refines its organizational system based on the principle

of democratic centralism. In line with the principle of "Voluntary Participation Full Participation" the Company continually works to

expand the union's coverage ensuring effective protection of employees' legitimate rights and interests.During the Reporting Period the Company held the Employee Representative Congress in strict compliance with the Regulations

on Enterprise Democratic Management. Employee representatives were democratically elected by the workforce ensuring

representation across various departments positions and levels. This process guarantees that the Employee Representative

Congress reflects the diversity and universality of the employee body. The Employee Representative Congress plays a vital role in

reviewing and voting on important matters that impact employees' interests and corporate governance. Key issues discussed and

voted upon include social insurance and welfare enterprise annuity and the election of employee directors among other matters.During the Reporting Period all resolutions passed by the Employee Representative Congress have been fully implemented and

transparently disclosed to employees through factory affairs publicity channels. This ensures that employees' democratic rights are

consistently upheld and their interests effectively protected.Metrics Unit 2025

Number of Projects Approved by the Employee Congress Item 6

Number of Projects Approved by the Trade Union Item 10

Proportion of Trade Labor Members in Existing Employees % 100

Note: Democratic management data covers SDMJ and its subsidiaries including Xinjiang Swan and Yetian Tieniu.

111 1122025 Environmental Social and Governance (ESG) Report Afterword to the Report

Afterword to the Report Indicator Unit 2025

Meetings of the Board of Directors Convened Case 6

Key Performance Form

Proposals Approved Case 30

Investor Relations Management

Governance Dimension Number of On-Site Investor Surveys Received Case 1

Number of On-Site Investor Surveys Received Person-times 11

Indicator Unit 2025

Interactions with Investors on SSE E-Interactive Case 14

Operating Revenue RMB 10000 95869.80

Number of Investor Calls Answered Case 17

Overseas Operating Revenue RMB 10000 27125.61

Performance Briefings Convened Case 3

Net Profits RMB 10000 7463.07

Cash Dividend per Share Yuan/Share 0.172

Number of Compliance Training Sessions Conducted Case 17 Total Cash Dividend (Including Tax) RMB 10000 2087.08

Training on Laws and Regulations (Session) Case 5 Proportion to Net Profit Attributable to Shareholders of the Listed

Company in Consolidated Financial Statements (%) % 30.11

Number of Party Branches Piece 7 Business Conduct

Meetings of Party Committee Held Case 37 Signing Rate of Commitment to Integrity and Other Related Business

Ethics Agreements with New Employees % 100

Number of Party Members Person 80 Total Number of Anti-corruption and Anti-bribery Incidents Reported Case 0

Governance through the General Meeting of Shareholders and Board of Directors Number of Directors Participating in the Training on Anti-commercial

Bribery and Anti-Corruption Person 6

Total Sessions of General Meetings of Shareholders Held Case 4 Percentage of Directors Participating in Training on Anti-commercial

Bribery and Anti-Corruption % 66.67

Proposals Approved Case 24 Total Duration of Training on Anti-commercial Bribery and

Anti-Corruption for Directors Hour 112

Number of Members of the Board of Directors Person 9

Average Duration of Training on Anti-commercial Bribery and

Anti-Corruption for Directors Hour/Person 18.67

Male Directors Person 6

Number of the Management Participating in Training on

Anti-commercial Bribery and Anti-Corruption Person 6

Female Directors Person 3

Percentage of the Management Participating in Training on

Independent Directors Person 3 Anti-commercial Bribery and Anti-Corruption

%100

Total Duration of Training on Anti-commercial Bribery and

Non-Independent Directors Person 6 Anti-Corruption for the Management 小时 112

113 1142025 Environmental Social and Governance (ESG) Report Afterword to the Report

Indicator Unit 2025 Indicator Unit 2025

Average Duration of Training on Anti-commercial Bribery and

Hour/Person 18.67 Energy Consumption Intensity tce/ RMB 1 million 1.66Anti-Corruption for Management

Number of Employees Participating in Training on Anti-commercial

Person 91 Water Resource UtilizationBribery and Anti-Corruption

Percentage of Employees Participating in Training on Anti-commercial Municipal Water Purchased Ton 42200

Bribery and Anti-Corruption % 10.20

Total Duration of Training on Anti-commercial Bribery and Fresh Water Usage Ton 42200

Anti-Corruption for Employees Hour 1414

Average Duration of Employee Training on Anti-Commercial Bribery Total Water Consumption Ton 42200

and Anti-Corruption Hour/Person 15.54

Water Consumption Intensity Tons/Million Yuan 44.02

Number of Training on Anti-Monopoly and Fair Competition Case 1

Number of Participants in Training on Anti-Monopoly and Fair Material Utilization

Competition Person 16

Total Training Hours of Training on Anti-Monopoly and Fair Total Use of Packaging Materials Ton 292.6

Competition Hour 48

Metal Packaging Materials Ton 280.8

Environmental Dimension

Paper Packaging Materials Ton 7.5

Indicator Unit 2025 Plastic Packaging Materials Ton 2.6

Total GHG Emissions tCO?e 4692.08

Glass Packaging Materials Ton 1.7

Direct greenhouse gas emissions (Scope 1) tCO?e 1589.43

Environmental management

Indirect greenhouse gas emissions (Scope 2) tCO?e 3102.65 Total Environmental Investment RMB 10000 77.4

GHG Emissions Intensity tCO?e/1 Million Yuan 4.89 Proportion of Environmental Protection Investment to Operating Revenue % 0.081

Energy Utilization Training on Environmental Protection Case 2

Natural Gas m3 370172.06 Number of Participants in Training on Environmental Protection Person-times 17

Gasoline Ton 61.98 Duration of Training on Environmental Protection Hour 34

Diesel Ton 196.31 Waste Gas Emission 10000 m3 23067.98

Total Purchased Electricity kWh 5847428 Air Emission Intensity 10000 m3/1 Million Yuan 24.06

Total Energy Consumption tce 1588.22 Volatile Organic Compounds (VOC) Ton 0.54

115 1162025 Environmental Social and Governance (ESG) Report Afterword to the Report

Indicator Unit 2025 Indicator Unit 2025

Volume of non-hazardous waste generated Ton 47.17 Number of R&D Team Members By Gender

generation intensity of non-hazardous waste Tons/Million Yuan 0.049 Male Person 96

Female Person 10

Volume of non-hazardous waste disposed of Ton 47.17

Innovation Achievements

Volume of Hazardous Waste Generated Ton 10.95

Cumulative Number of Software Copyrights Case 21

Generation intensity of hazardous waste Tons/Million Yuan 0.011

Total Number of Trademarks Case 24

Volume of Hazardous Waste Disposal Ton 11.10 Number of Software Copyrights per Million Yuan of Operating Revenue Case 0.022

Waste Disposal Compliance Rate % 100 Cumulative Number of Published Papers Article 31

Waste Paint Residue (HW12 substances) Ton 3.48 Cumulative Number of Authorized Patents Case 266

Number of Valid Patents per Million Yuan of Operating Revenue Case 0.28

Waste Activated Carbon (HW49) Ton 5.83

Number of Patent Applications Case 63

Waste oil drums (HW08) Ton 1.64

By Patent Type

Cumulative Number of Authorized Invention Patents Case 63

Industry Value Dimension

Cumulative Number of Authorized Utility Model Patents Case 169

Cumulative Number of Authorized Design Patents Case 34

Indicator Unit 2025

Innovation Capability Certification

Investment in R&D RMB 10000 6496.75

Specialized and Sophisticated Enterprise that Produces Novel and Unique Products Piece 3

Percentage of R&D Investment In Operating Revenue % 6.78

National High-tech Enterprise Piece 3

R&D Team Participate in the preparation of standards

Total Number of R&D Team Members Person 106 Number of National Standards Participated Case 18

Ratio of R&D Personnel to Total Employees % 11.88 Number of Industry Standards Participated Case 16

Supply Chain

Number of R&D Team Members by Educational Background

Total Number of Suppliers Piece 827

Below Bachelor?s Degree Person 13

Safety and Quality of Products and Services

Bachelor?s Degree Person 88

Product Percent of Pass % 100

Master?s Degree Person 5 Number of Internal Quality Audits Conducted Case 1

117 1182025 Environmental Social and Governance (ESG) Report Afterword to the Report

Indicator Unit 2025 Indicator Unit 2025

Number of Product Recalls Case 0 Working Day Lost due to Work-related Injury per Million Yuan of Working Days 0.91

Operating Revenue

Product Recall Ratio % 0 Injury Rate per Million Working Hours % 5.65

Number of Participants in Quality Training Person-times 157

Identification and Rectification Rate of Potential Hazards: % 100

Total Hours of Quality Training Hour 2411

Number of Security Emergency Drills Sessions 12

Sessions of Quality Training Case 5

Investment in Safety Production RMB 10000 219.28

Number of Customer Complaints Case 7

Proportion of Work Safety Investment to Operating Revenue % 0.23

Number of Customer Complaints Resolved Case 6

Total Investment in Safety Training RMB 10000 3.3

Number of Customers Participating in the Survey Person 512

Number of Safety Training Sessions Session 29

Percentage of Customers Participating in the Survey % 33

Number of Valid Copies of Customer Satisfaction Questionnaires Issued Copy 512 Number of Participants in Safety Training (Person-time) Person-times 2566

Customer Satisfaction / Total Satisfaction Score % 97 Total Training Duration Hour 14745.5

Average Duration of Safety Training Hour 16.53

Social Dimension

Permit Holding Rate for Personnel Engaged in Special Operations % 100

Indicator Unit 2025 Investment in Work-Related Injury Insurance RMB 10000 69.38

Occupational Health and Safety

Coverage Rate of Work-Related Injury Insurance % 100

Number of Work Safety Accidents Case 0

Investment in Production Safety Liability Insurance RMB 10000 0.86

Number of Work-Related Deaths Person 0

Coverage Rate of Health Checkups among Employees % 100

Number of Work-Related Deaths per 100 Million Yuan of Operating Revenue Person 0

Detection Rate of Occupational Hazard Factors % 100

Rate of Work-Related Deaths % 0

Work-related Injury Rate % 0.90 Qualification Rate in Detection of Occupational Hazard Factors % 100

Working Day Lost due to Work-related Injury Working Days 877 Number of New Occupational Diseases Case 0

119 1202025 Environmental Social and Governance (ESG) Report Afterword to the Report

Indicator Unit 2025 Indicator Unit 2025

Employees Number of Employees by Region

Signing Rate of Employment Contract % 100 Chinese Mainland Person 884

Labor Dispatch Workers Person 16 Overseas Person 8

Employee Composition Composition of New Employees

Number of Employees Person 892 Number of New Employees Person 99

Number of Employees of Minority Nationalities Person 63 Number of New Employees by Gender

Percentage of Employees of Minority Nationalities % 7.06 Female Person 18

Number of Employees with Disabilities Person 3 Male Person 81

Number of Employees by Gender Number of New Employees by Age

Female Person 127 Under 30 years old Person 64

Male Person 765 30-40 Years Old Person 24

Number of Employees by Education Background 40-50 Years Old Person 5

Master?s Degree Person 20 50 years old or above Person 6

Bachelor?s Degree Person 231 Number of New Employees by Region

Below Bachelor?s Degree Person 641 Chinese Mainland Person 96

Number of Employees by Age Overseas Person 3

Under 30 years old Person 193 Employee Offboarding

30-40 Years Old Person 358 Number of Employees Resigned Person 65

40-50 Years Old Person 181 Number of Voluntary Resignations Person 54

50 years old or above Person 160 Employee Turnover Rate % 7.29

121 1222025 Environmental Social and Governance (ESG) Report Afterword to the Report

Indicator Unit 2025 Indicator Unit 2025

Number of Resigned Employees by Gender Employee Training and Development

Female Person 5

Investment in Employee Training RMB 10000 18.92

Male Person 60

Number of Employee Training Sessions Sessions 88

Number of Resigned Employees by Age

Under 30 years old Person Total Number of Persons Trained (Person) Person 74728

30-40 Years Old Person 19 Total Number of Persons Trained (Person-time) Person-times 3460

40-50 Years Old Person 4

Coverage Rate of Employee Training (Training Ratio of Employee) % 85.57

50 years old or above Person 14

Training Ratio by Gender

Diversity Equality and Inclusion

Proportion of Female Employees in Management % Female % 81.5133

Number of Employees on Maternity Leave Person 1 Male % 86.21

Return Rate of Employees on Maternity Leave % 100

Ratio of Trained Employees by Employee Type

Number of Employees on Parental Leave Person 2

Senior management % 100

Return Rate of Employees on Parental Leave % 100

Employee Care Middle management % 90.91

Coverage Rate of Social Insurance % 100 Grassroots Employees % 85

Number of Employees Receiving Assistance Person 12

Ratio of Trained Employees by Function

Amount of Assistance for Employees in Difficulty RMB 10000 3

Manufacturing % 85.61

Democratic Governance

Number of Projects Approved by the Employee Congress Case Technology % 97.176

Number of Projects Approved by the Trade Union Case 10 Sales % 93.22

Proportion of Trade Labor Members in Existing Employees % 100

Finance % 73.33

Employee Satisfaction

Administration % 95

Number of Labor Dispute Cases Case 0

Number of Employee Complaints Received Case 0 Others %

27.03

123 1242025 Environmental Social and Governance (ESG) Report Afterword to the Report

Indicator Unit 2025 Indexes

Training Duration

Global Reporting Initiative Guide to Corporate Social

Level 1 Headline Level 2 Headline Sustainability Reporting Standards Responsibility Reporting in China

Total Training Duration Hour 22731.8 (GRI Standards) (CASS-CSR 6.0)

Average Training Duration per Employee per Year Hour/Person 30.43 102-46/102-50/102-52/102-53/102

About this Report / P1.1/P1.2-54

Average Training Duration by Gender

Letter from the Chairman / 102-14 P2.1

Female Hour/Person 29.9

Company Profile 102-1/102-3/102-6 P3.1/P3.3

Male Hour/Person 30.51

Average Training Duration by Employee Type Corporate Culture 102-16 P3.2

About Swan Cotton

Senior management Hour/Person 61.1 Machinery Milestones 102-10 /

Middle management Hour/Person 52.18

Honorary Awards / /

Grassroots Employees Hour/Person 28.2

Special Feature: Prioritizing

Core Businesses to Industry

Average Training Duration by Function Forge New Quality / 203-2 S2.1

Productive Forces with

Independent Innovation

Manufacturing Hour/Person 21.76

Sustainable

102-21/102-40/102-42/102-44/102

Development G1.1/G1.3

Technology Hour/Person 41.64 -47/103-1Governance

Sales Hour/Person 48.8 Party Leadership / /

Finance Hour/Person 26.95

Standardized 102-18/102-19/102-20/102-22/102 /

Governance -23/102-24/102-28

Administration Hour/Person 57.37 Governance

Compliant

Others Hour/Person 20.7 102-11/102-15/102-30 /Operation

Investor Relations

//

Management

Business Conduct 205-1/205-2/205-3 G2.1/G2.2

Environmental Response to Climate 201-2/305-1/305-2/305-3/305-4/30 E1.1

Protection Change 5-5

125 1262025 Environmental Social and Governance (ESG) Report Afterword to the Report

Global Reporting Initiative Guide to Corporate Social Feedback Form

Level 1 Headline Level 2 Headline Sustainability Reporting Standards Responsibility Reporting in China

(GRI Standards) (CASS-CSR 6.0)

Environmental

306-1/306-2/306-4 E2.1/E2.2/E2.4 Dear Readers

management

Thank you for reading this report. We highly value and look forward to hearing your feedback on this report.Energy Utilization 302-1/302-3/302-4/302-5 E3.1 Your opinions and suggestions are crucial for us to continuously improve our ESG information disclosure

Environmental management and practices. We sincerely welcome and thank you for your valuable feedback!

Protection Water Resource

303-1/303-3/303-4/303-5 E3.2

Utilization

1. Your overall assessment of Swan Cotton Machinery?s ESG performance:

Material Utilization 301-1/301-2/301-3 E3.3

□ Very Good □ Good □ Average □ Below Average □ Poor

Responsible Supply

102-9/204-1/414-1 S3.1

Chain 2. Your overall assessment of this Report:

Innovation-driven

203-2 S2.1

Development □ Very Good □ Good □ Average □ Below Average □ Poor

Industry Value Safety and Quality 3. How do you think Swan Cotton Machinery has performed in terms of communications with stakeholders

of Products and 417-1 S3.3

Services □ Very Good □ Good □ Average □ Below Average □ Poor

Data Security and

S3.4 4. How do you think Swan Cotton Machinery has performed in terms of product responsibilitiesCustomer Privacy /

Protection

□ Very Good □ Good □ Average □ Below Average □ Poor

Contribution to

415-1 S1.2

Society 5. How do you think Swan Cotton Machinery has performed in terms of environment protection safety and

occupational health

Occupational Health 403-1/403-2/403-3/403-4/403-5/40 S4.2

and Safety 3-6/403-7/403-8

Good Life □ Very Good □ Good □ Average □ Below Average □ Poor

102-7/102-8/102-35/401-1/401-2/4 6. How do you think Swan Cotton Machinery has performed in terms of employee responsibilities

Employees? Rights

01-3/402-1/405-1/406-1/404-1/404 S4.1/S4.3

and Interests

-2/404-3 □ Very Good □ Good □ Average □ Below Average □ Poor

7. How do you think Swan Cotton Machinery has performed in terms of ESG

201-1/301-1/301-2/302-1/302-2/30

Key Performance 3-3/303-4/303-5/305-1/305-2/305- A2

Form 5/306-3/401-1/401-3/403-5/403-9/ □ Very Good □ Good □ Average □ Below Average □ Poor

8. What are your opinions and suggestions on Swan Cotton Machinery?s ESG performance and this report

Appendix

Indexes 102-55 A3

Feedback Form / A6

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