Core Points - The company has been informed of restrictive measures imposed by the UK government on Lukoil on October 15, 2025, and by the US Treasury's Office of Foreign Assets Control (OFAC) on October 22, 2025, which includes Lukoil and any entity that owns 50% or more of it [1] - In response to the sanctions, the company has initiated an internal assessment of any potential impacts and will ensure compliance with applicable laws and regulations [1] - The existing procurement and construction contracts with Lukoil's indirect wholly-owned subsidiary will be terminated by November 21, 2025, with a total receivable amount of approximately RMB 8.3 billion [1] - The revenue and gross profit generated from this contract account for about 4% and 7.5% of the company's revenue and gross profit for the six months ending June 30, 2025, respectively [1] - The company’s preliminary assessment indicates that the termination of the contract will not have a significant adverse impact on its business operations, financial condition, or overall shareholder interests [1] - Other business operations of the company remain normal and unaffected [1] - The company will continue to monitor and follow up on the developments and potential impacts of this matter, implementing response measures as feasible [2]

Core Viewpoint - The company is responding to sanctions imposed by the UK government and the US Treasury Department on Lukoil, indicating a proactive approach to compliance and risk management [1][2]. Group 1: Sanctions and Compliance - On October 15, 2025, the UK government imposed restrictive measures on Lukoil [1]. - On October 22, 2025, the US Treasury's Office of Foreign Assets Control listed Lukoil and entities owning 50% or more of it on the Specially Designated Nationals list [1]. - The company has initiated an internal assessment to evaluate any potential impacts from these sanctions [1]. Group 2: Contractual Implications - Existing procurement and construction contracts with Lukoil's wholly-owned subsidiary will be terminated by November 21, 2025 [1]. - The total receivables from these contracts amount to approximately RMB 8.3 billion [1]. - Revenue and gross profit from these contracts accounted for about 4% and 7.5% of the company's revenue and gross profit for the six months ending June 30, 2025, respectively [1]. Group 3: Business Operations - The company anticipates that the termination of the contract will not have a significant adverse impact on its business operations or financial condition [1]. - Other business operations remain normal and unaffected by the sanctions [1]. Group 4: Ongoing Monitoring - The company will continue to monitor and follow up on the developments related to the sanctions and assess their potential impact [2].