Dongjiang Environmental (00895) Receives Decision on Regulatory Interview Measures from the Shenzhen Securities Regulatory Bureau

Dongjiang Environmental (00895) announced that the company recently received the "Decision on Regulatory Talking Measures for Dongjiang Environmental Co., Ltd. by the Shenzhen Regulatory Bureau of the China Securities Regulatory Commission" (No. 2025) 261, with the following main points: (1) Non-standard financial accounting "The company's individual project revenues involve non-standard recognition of income from the high-value metal recycling and utilization business and landfill gas power generation business with cross-period and spot price transactions, insufficient grounds for accounting policy changes and non-standard cost accounting for anode mud sales, insufficient basis for the amortization period of certain franchise operating licenses, and non-standard capitalization of interest on loans for heavy metal sludge workshops. In addition, the company also has issues with incomplete internal controls related to income and inconsistency in the recognition criteria and annual report disclosure of goodwill-related assets in the 2022 financial statements. The above situations do not comply with the provisions of Accounting Standard for Business Enterprises No. 14 - Revenue, Article 4(1), Article 34, Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Article 9, Accounting Standard for Business Enterprises No. 6 - Intangible Assets, Article 17(2), Accounting Standard for Business Enterprises No. 17 - Borrowing Costs, Article 11." (2) Non-standard corporate governance "The operation of the company's "three meetings" (i.e. shareholder meeting, board of directors, and supervisory board) is non-standard, and the management of insider information informants files is non-standard. The above situations do not comply with the provisions of the Rules of the Shareholders' Meeting of Listed Companies (No. 2025) 7, Articles 38(1), 39(1), 42(1)(2) and (6), 42(2), the Guidelines for Corporate Governance of Listed Companies (CSRC Announcement [2018] No. 29) Article 42(1), and the Guidelines for Supervision of Listed Companies No. 5 - Management System for Registration of Insiders (CSRC Announcement [2022] No. 17) Article 10(1). The above situations reflect issues in your company's financial accounting, internal control, and corporate governance. Related issues in financial accounting have led to non-standard information disclosure by the company. In accordance with the provisions of the Regulations on Information Disclosure by Listed Companies (CSRC Order No. 182), our bureau has decided to take regulatory talking measures against your company. The Shenzhen Regulatory Bureau requires the Chairman, CEO, CFO, and Secretary of the Board of Directors of the company to comply with the requirements of the Shenzhen Regulatory Bureau and to bring valid identification documents to the Shenzhen Regulatory Bureau for regulatory discussions. If you are dissatisfied with the above regulatory measures, the company can apply for administrative reconsideration with the China Securities Regulatory Commission within 60 days from the date of receiving the decision (the application for administrative reconsideration can be sent by postal express to the Legal Affairs Department of the China Securities Regulatory Commission), or file a lawsuit with the competent People's Court within six months from the date of receiving the decision. During the period of reconsideration and litigation, the above regulatory measures shall not be suspended." After receiving the decision, the company attached great importance to the mentioned issues and will organize relevant personnel to study relevant laws and regulations in depth, effectively improve the company's corporate governance level, promote the healthy and stable development of the company, and safeguard the interests of the company and all shareholders. The above administrative regulatory measures will not affect the company's normal production and operation activities, please pay attention to the investment risks.