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
Standardized Governance 27 Energy Utilization 53
Innovation — Swan Cotton
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 88
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
the Company.
Reporting Period
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
Shanghai Stock Exchange (http://www.sse.com.cn).
UN Sustainable Development Goals (SDGs)
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, China
Fax: 0531-58675810 Email: swan@sdmj.com.cn
report shall prevail.
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
machinery equipment to emerging markets such as Central Asia, South America, and Africa, empowering global
agricultural modernization with diverse equipment made in China.
Report. As the only listed company in China’s cotton machinery industry, we consistently uphold the values of “virtue to fly
loftily—establish a responsible and ambitious company with faith and virtues; and good to dance across the sky—strive for
excellence 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 Independent
Innovation.Swan Cotton Machinery resolutely implements the three major strategies of “strengthening the core cotton
machinery 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.
”
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:
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
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 major
strategies of “strengthening the core cotton machinery business, achieving breakthroughs in cotton pickers, and expanding into To provide customers with the most valuable system solutions
agricultural 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
Milestones Initiated IPO; completed and commissioned Wujiaqu Industrial Park
in Xinjiang and the U.S. subsidiary, and implemented the localization
Began the construction of a smart manufacturing
strategy.
production line with an annual capacity of 200
Undertook a national aid project for Africa, established a world-class 2013
Established the predecessor — “Jinan Sanxingyuan ginning production line in Zambia, marking the beginning of the
Iron Works” Company’s products entering the global market. Put Jinan Yaoshan Industrial Park into operation. 2022
Underwent profound changes in business structure,
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
industry quality management with international standards.
Began the construction of the comprehensive smart
Renamed “Machinery Factory of Shandong Supply agriculture service centers in Southern and Northern
Upgraded information systems, and promoted the Company’s
and Marketing Cooperatives”
digital transformation in operations.
Company’s service system.
Established the service philosophy of “regional quantification,
Undertook the task of “digesting and absorbing one Embarked on a new journey of “re-entrepreneurship”, and
of 150 Key Technologies” as per China’s reform and 2002 established three strategic goals: “strengthening the core cotton Successfully developed tomato harvesters, realizing
opening-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 overseas
equipment from Continental Eagle Corporation in the Machinery Stock Co., Ltd.” Officially implemented the brand strategy. markets for the first time.
USA.
Embarked on a new journey of “re-entrepreneurship”, and
Cooperated with Continental Eagle Corporation in the USA, Advanced the “123” strategy for foreign trade
machinery business, achieving breakthroughs in cotton pickers, and breakthroughs, and achieved historic breakthroughs
Renamed “Shandong Cotton and Jute Machinery accelerated the implementation of the internationalization strategy.
expanding into agricultural machinery”. in overseas business.
Factory.”
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.
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
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
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 Quancheng
Competition (XPCC Division) Innovation in the 2025 Jinan “Presentation All-Employee Innovation Competition
& Competition” Event
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 the
Swan Cotton Machinery has firmly implemented three major strategies of “strengthening the core cotton machinery Technological Gaps in China
business, achieving breakthroughs in cotton pickers, and expanding into agricultural machinery”. Through sustained
Forging New Quality Productive Forces in the Industry Through Independent
Innovation — Swan Cotton Machinery’s Technological Breakthroughs and Global Layout
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 6,496.75 ten thousand, accounting for 6.78% of operating revenue,with
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 by
mechanical engineering, electrical engineering, hydraulics, agronomy, intelligent systems, etc. Leveraging provincial
launching the “intergrated intelligent solution for 60 bales/hour
innovation 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, drying,
cotton harvesting and processing equipment manufacturing, the Company has strengthened talent introduction and
ginning, baling, to stacking. Through intelligent “matching of
cultivation, 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 and
advanced algorithms, the content of “three types of foreign
Cotton 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
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
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 27,125.61
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
Application Scenario of Four-Row Basket-Type Cotton
adopted a “going global” model by collaborating with leading
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
machinery into the global agricultural value chain.
Tomato Harvester High-end Grain Drying Towers
Governance
Sustainable Development Governance Compliant Operation
Party Building Leadership Investor Relations Management
Standardized Governance Business Conduct
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.
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
[Case] Training on ESG Reporting Project
managing ESG-related matters. The ESG Management Committee has established an office to organize and oversee the ESG Execution
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
but also effectively promoted the top-down transmission of ESG
ESG Management Committee
Supervision and management concepts.
Management Level
On-site Photos of the Training on ESG Report Project
ESG Execution Group
Key Performance
Execution and Corporate Safety and Environmental Social Responsibility
Implementation Level Industry Value Group
Governance 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.
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’ Expectations
Congress
and Demands · Return on Investment · Strengthen compliant information · Financial Reports: Quarterly
· Offer employee training disclosure and attach importance to
Employees
· Factory Affairs Disclosure Channels Investors As Needed
· Compensation and Benefit · Ensure smooth career advancement investor returns
· Sustained Profitability
channels · Earns Briefings, Investor Open Day,
Investor Roadshows, Public
· Occupational Health · Organize diverse employee activities
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
Government and · Accept government supervision
mechanisms · Technological Innovation · Carry out R&D and innovation
Customers
· Improve service satisfaction · Product Technical Support and Regulatory
· Product Innovation 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 · Support for Community · Support rural revitalization As Needed
promote industrial
· Uphold the bottom line of integrity in
chain coordination operations and build long-term · Offer training for suppliers · Party-building Collaboration, Public
Supply Chain partnership relationships Community
· Social Welfare · Organize public welfare activities Welfare Activities
Business Partners · Mutual Benefit and
Win-Win Cooperation
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 10 19
development topics that are material to both the Company and stakeholders. In 2025, a total of 577 questionnaires were collected. Seven 15 22 17
topics with financial materiality and 25 topics with impact materiality were identified and addressed in the Report.
Materiality Assessment Process Assessment Method
Impact Materiality
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
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,
develop a list of ESG topics aligned with the Company’s business operations and Financial Materiality
Preliminary Identification of Topics
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
with impact materiality by evaluating three dimensions—scale (the magnitude of 10 Employee Training and Development 21 Standardization of Corporate
impact), scope (the breadth of impact), and irremediability (the difficulty of Governance
offsetting or remedying harm).
factors (such as climate risk exposure and regulatory changes addressing systemic 14 Contribution to Society 24 Tax Compliance
Step 3 risks), identify the risks and opportunities the Company faces, the likelihood of 6 Ecosystem and Biodiversity
Assess the materiality of topics occurrence 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. 8 Water Resource Utilization
Services 28 ESG Governance
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 and other agricultural machinery, the Company’s business operations have no direct connection to cutting-edge technology fields such as artificial
double materiality matrix.
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.
Party Building Leadership [Case] Party Lecture
In June 2025, the Secretary of the CPC Committee of Swan Cotton Machinery delivered a Party lecture titled “Solidly Conducting
Education 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.
Standardized Governance General Meeting of Shareholders
In strict compliance with the Company Law of the People’s Republic of China (the “Company Law”), the Rules for General Meeting of
Swan Cotton Machinery has established a corporate governance structure consisting of the General Meeting of Shareholders, the Board
Shareholders of Listed Companies, and the Rules of Procedure of the General Meeting of Shareholders, the Company ensures
of Directors and its specialized committees, as well as the senior management team, and operates in strict compliance with the
compliance with legal requirements regarding the convening procedures, participant qualifications, and voting processes of General
requirements of applicable laws and regulations. The Company has formulated a series of corporate governance regulations, including
Meeting of Shareholders. The Company adopts a combination of on-site voting and online voting for the resolution of proposals at the
the Articles of Association of Shandong Swan Cotton Industrial Machinery Stock Co., Ltd. (the “Articles of Association” ), the Rules of
General Meeting of Shareholders. To effectively safeguard the legitimate rights and interests of minority investors, separate vote counting
Procedure for General Meeting of Shareholders, and the Rules of Procedure for Board of Directors. These regulations clearly delineate
is conducted for major matters involving the interests of minority investors to ensure fairness in voting.
the boundaries of authority and responsibility among the governance bodies, ensuring clear division of labor, mutual checks and
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
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.
International Marketing Department
Domestic Marketing Department
Xinjiang Technical Service Center
Shihezi Technical Service Center
Korla Technical Service Center
Human Resources Department
Aksu Technical Service Center
Technology R&D Department
Quality Control Department
Safety and Environmental
Engineering Department
Production Department
Protection Department
Agricultural Machinery
Securities Department
Finance Departmen
Key Performance
Audit Department
R&D Center
Office
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 30 proposals 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,
Digital Transformation Office
General Assembly Workshop
Comprehensive Workshop
Science and Technology
Spare Parts Workshop
Machining Workshop
Supply Chain Center
and the Remuneration and Appraisal Committee reviewed and approved proposals.
Project Office
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
Tax Management
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.
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 Best
compliance 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.
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
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%
engaged with investors 14 times via SSE E-Interactive Platform, and answered 17 phone calls
of the Company’s new employees signed the Commitment to Integrity, the Commitment to Business Ethics, and other commitments, and
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 10,000 2,087.08
Proportion to Net Profit Attributable to Shareholders of the
% 30.11
Listed Company in Consolidated Financial Statements
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.
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
confidentiality safeguards, and reinforce the storage and safeguarding of financial data.
Mailing Address and Department: Audit Department, Swan Cotton Machinery,
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.
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 1,414
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.
Environmental Protection
Response to Climate Change Water Resource Utilization
Environmental Management Material Utilization
Energy Utilization
Response to Climate Change
Risk/Opp Impact Impact Likelihood of
Category Description of Risk/Opportunity Financial Impact Countermeasures
ortunity Duration Level Occurrence
Technological innovation
Increase R&D investment in green
Government policies are driving the green agricultural machinery
Swan Cotton Machinery attaches great importance to the impact of climate change on the agricultural machinery sector, incorporating transformation 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? technological innovation can be leveraged to long-term returns
intelligent technologies
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
Market Expansion
domestic agricultural industry, demand for agricultural machinery markets
Growth in medium-
Opportunities
low-carbon intelligent agricultural machinery is
and long-term sales Medium Promote cooperation with
increasing. Recognition of green agricultural High Medium
revenue; optimization term agricultural cooperatives and
Swan Cotton Machinery has established a clearly structured climate change governance framework, with the Board of Directors and the machinery in international markets is improving,
of profit structure large-scale farms
and combined with cross-regional operation
Strategy and ESG Committee serving as the highest decision-making bodies to coordinate climate-related strategic planning and major 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 The national ?carbon peaking and carbon
Actively apply for green agricultural
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
Policy Support
Building Up Strength in Agriculture clarify the Increase in subsidy
and overseeing their implementation; the ESG Management Committee leads the formulation of short- and medium-term action plans; direction of green transformation for agricultural income; reduction in Long Medium Adjust product structure in line with
High
and the Execution Group implement specific measures such as low-carbon production and technology R&D. Furthermore, by machinery. and agricultural machinery purchase tax burden; sharing of term to high policy developments
subsidies are being directed toward low-carbon R&D costs
establishing an ESG reporting and risk monitoring mechanism, the Company regularly tracks progress toward climate-related goals, to models, and tax incentives and R&D subsidies
Participate in the formulation of
green agricultural machinery
ensure that governance measures align with regulatory requirements and industry trends, thereby providing a solid governance are being provided
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 Impact Impact Likelihood of
Category Description of Risk/Opportunity Financial Impact Countermeasures
ortunity Duration Level Occurrence
Existing emission standards and energy Increase dedicated investment in Risk Risk Risk
Technology Risks
Increase in R&D costs, low-carbon technology R&D
consumption levels of current agricultural Identification Assessment Response
delay in technology Medium
machinery products have not fully met Medium Achieve breakthroughs in core
upgrades, and to long Medium
low-carbon requirements; investment in to high technologies through
increasing pressure on term
lightweight and intelligent control technology industry-university-research
revenue
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,
Conduct market demand research
demand for low-emission and intelligent Climate-related Financial Disclosures (TCFD) Company further identifies the primary the Company formulates corresponding
Decline in sales and accelerate R&D of intelligent
agricultural machinery is growing. If product
Market Risk
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
Risk
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
Physical Risk
Production losses; Short
shutdowns and disruptions in component bases and international sustainable development
increase in and
supply. Agricultural machinery operations may Medium Medium
maintenance and medium Optimize weather-resistant design trends, and the Company?s actual conditions.
be affected by natural disasters, increasing
scrapping costs term of agricultural machinery
after-sales maintenance and scrapping costs
Purchase insurance against natural
disasters
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 tCO₂e 4,692.08
Control of Environmental Pollution by Solid Wastes. The Company has established a full-process environmental management
Direct greenhouse gas emissions (Scope 1) tCO₂e 1,589.43 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) tCO₂e 3,102.65 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 tCO₂e/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
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
Category Description of Risk/Opportunity Financial Impact Countermeasures
ISO14001 Environmental Management System certification. In addition, Yetian Tieniu was included in the list of ?2025 Regional Green ortunity Duration Level Occurrence
Manufacturing Demonstration Units of Inner Mongolia Autonomous Region? and obtained Green Factory certification, and Xinjiang Swan
holds the ?Green Factory of XPCC? certification.
Technological innovation
Increase investment in new material
The iteration of smart, efficient pollution control applications and focus on the
Reduction in energy
technologies and hazardous waste resource resource utilization of solid waste
consumption and Medium
recovery technologies is accelerating; digital
disposal costs; capture to long High High Deepen industry–university–research
monitoring systems can improve compliance
of green product term cooperation and adopt advanced
management efficiency, and technological
premium environmental protection
barriers continue to be established
technologies
Promote environmentally friendly
As international ESG compliance requirements
Market Expansion
agricultural machinery that meets
Opportunities
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
High High
demand for the environmental retrofitting of overseas market 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
Policy Support
environmental protection industry; standards to seize compliance
ISO14001 Environmental Management System Certification Certificate Green Factory of XPCC energy-saving retrofits can obtain special
Increase in subsidy Medium advantages and align with policy
income; and reduction to long High High orientation
subsidies; upgrading industry environmental
in 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
Swan Cotton Machinery actively promotes the implementation of environmental risk management measures and has established a
Strategy 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
established to conduct hazard inspections in areas where risks may exist (such as production workshops,
Identification
Risk/Opp Impact Impact Likelihood of waste discharge outlets, and pollutant treatment facilities).
Category Description of Risk/Opportunity Financial Impact Countermeasures
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
Technology Risks
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
Assessment
Medium
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
Risk
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
Short Optimize the supply chain for
Market Risk
dynamics and policy changes; procurement and procurement
costs for environmental protection materials are costs; loss of
and
Medium High
environmentally friendly raw 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 ecological environment. During the Reporting Period, the Company conducted an internal environmental
trust Management
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.
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
Classified Collection and Disposal Rate of Solid Waste:
Total Environmental Investment RMB 10,000 77.4 Classified Collection and Disposal of Solid Waste Quarterly
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 10,000 m? 23,067.98
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 10,000 m?/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
Communication & Liaison Team
Waste Activated Carbon (HW49) Ton 5.83
Emergency Monitoring Team
Aftermath Handling Team
Emergency Rescue Team
Materials & Supply Team
Emergency Expert Team
Security & Cordon Team
Medical Rescue Team
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.
During the Reporting Period, the Company conducted several emergency drills and training sessions focused on sudden environmental
incidents, simulating scenarios such as fires caused by unexpected hazardous waste leaks. These activities helped raise awareness and
Green Office
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
the entire organization.
personnel from relevant departments to
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
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 Safety and Environmental
Director of Production Department
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
Environmental Protection and
Director of General Assembly
Hazardous Waste Manager
Management, the Company actively manages the generation and treatment of wastewater to minimize pollution of water bodies. The
Director of Comprehensive
Environmental Protection
Director of Machining
Equipment Manager
primary wastewater produced is domestic sewage, which is discharged into the municipal sewage system for centralized treatment.
Director of Parts
Additionally, septic tanks are installed in both the production and office areas, with regular pumping and cleaning, and the sewage
Workshop
Workshop
Workshop
Workshop
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.
Energy Utilization Risk/Opp
ortunity
Type Description of Risk/Opportunity Financial Impact
Impact
Duration
Impact
Level
Likelihood of
Occurrence
Countermeasures
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
Technology Risks
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
energy-saving technologies faces stability for energy-saving Medium
focuses on energy-saving improvements and the integration of renewable energy at the production end. By introducing issues, and challenges arise in equipment IoT transformation and and long Medium
energy consumption monitoring.
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
digital transformation of energy management. energy enhance the stability of waste heat
energy consumption, the Company continuously improves energy efficiency and the proportion of clean energy, supporting the recovery and forced air internal
energy structure transformation of the agricultural equipment industry. circulation technologies.
Governance Sign long-term energy procurement
Risk
agreements to lock in core energy
consumption costs and optimize
Fluctuations in energy prices, such as electricity
Our energy consumption spans key operational areas such as production, offices, logistics, warehousing, and transportation. Electricity costs, increase production energy consumption Rising energy
procurement channels.
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
Market Risk
equipment is subject to cost-performance and increased and evaluation system for energy-saving
use diesel and batteries. To streamline energy management, reduce consumption, and ensure a steady energy supply for production and volatility, and maintaining green factory investment in medium
Medium High
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.
Moreover, competition within the industry is equipment
Management System, and the Water and Electricity Use Management System. The R&D Center and the Production Department are becoming increasingly intense.
Integrate green manufacturing
resources from multiple bases to
responsible for incorporating energy-saving concepts into product development and overseeing energy conservation across the entire
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
Technological innovation
removal.
During the Reporting Period, Xinjiang Swan and Yetian Tieniu successfully Energy-saving technologies, such as waste heat
recovery and forced air internal circulation in Reduced energy Integrate digital twins and dynamic
achieved ISO 50001 Energy Management System certification. production lines, have been widely implemented, consumption costs
Medium
energy consumption optimization
and long High High
and there is significant potential for adopting and improved green technologies, and upgrade the
term
digital energy and carbon management production efficiency 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
Opportunities
processing equipment.
Global Expansion
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. High High
income from green medium 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
Policy Support
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.
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 m? 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
Total Purchased Electricity kWh 5847428
potential risks that could impact the stability of energy supply, cost-effectiveness, and environmental compliance. These
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 CO₂-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
the equipment.
technological upgrades, strengthening green transportation management, and raising employees' awareness of energy
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.
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 Conservation Measures
Water Resource Utilization
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
Raising Water Conservation We place prominent water-saving signs and educational materials at all public
protection and supporting the green and sustainable development of the agricultural equipment industry.
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
Material Utilization Management Measures
Focusing on the entire material flow in the production process, SDMJ has established a material conservation system that aligns with
SDMJ integrates the principles of efficient material use and recycling into every stage of agricultural machinery manufacturing and
actual operations. By combining precise demand-side regulation, on-site lean management, and adaptive technical optimization, the
product design, and continuously optimizes its material management system. By refining usage methods and improving production
Company drives reductions in waste and boosts efficiency at every stage of material use—from requisition and storage to final usage.
processes, SDMJ achieves the cascading use of materials. The Company practices the principles of the circular economy through precise
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
Collaborative Material Conservation Across the Entire Production Loss Reduction through On-Site Lean Management: The Company
To make efficient and rational use of material resources and minimize waste, the Company has established the Control Procedures for
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
Industry Value
Responsible Supply Chain
Innovation-driven Development
Safety and Quality of Products and Services
Data Security and Customer Privacy Protection
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
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 Countermeasures
External Environment
Comprehensive Quality Control Across the Supply Chain
Monitor price trends from multiple dimensions,
dynamically adjust ordering rhythm, and
Risk: Undermines supply chain
For key suppliers, the Company assigns dedicated personnel to regularly oversee quality, conduct both scheduled and 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
Risk: Technical changes may
risks by decentralizing procurement, and enhances the supply chain resilience, ensuring long-term operational
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
in supply chain information. personnel to improve information processing
The Procurement Department collaborates with R&D, production, technology, and other departments to provide business
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 Risk
Change 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.
collaboration and supply chain
long-term collaboration between supply and demand. This collaborative approach helps build a stable, sustainable
resilience is improved.
supply chain ecosystem.
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.
Risk/Opp Type of
ortunity Risk/Opportunity
Description of Risk/Opportunity
Impact Likelihood of Impact Potential Financial
Duration Occurrence Materiality Impact
Countermeasures Impact, Risk, and Opportunity Management
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
in expiring patents, identify new
Some of our patents will become expired. Once 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
every quarter, ensuring they remain
becoming outdated, which poses a risk to the Sunk R&D
Technology relevant and effective.
relevance and advancement of product R&D. investments,
and 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 Identification may arise throughout the entire cycle of technological innovation, product development, and the
cycles for core technologies, and
demands. improve the efficiency of transforming transformation of research achievements.
research achievements into practical
applications.
Risk
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
personnel or the insufficient reserve of such Medium High based on project success, so as to
Risk 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 Assessment
designers, and prioritize orders with provide a solid foundation for decision-making and resource allocation.
making it difficult to secure bulk orders. This strong reusability and high potential
Increased
leads to challenges such as: 1. Difficulties in for promotion.
production costs,
maintaining R&D quality under tight deadlines;
Medium higher unit costs, Establish a demand prediction and
Market Risk and long High Medium decreased profits, customer segmentation system. Utilize
products, restricting large-scale promotion and
term and cash flow industry data and customer demand
reuse; 3. High unit costs in small-batch
impact due to analysis to anticipate future batch
production, limiting profit margins; and 4. Low
capital occupation demand, helping sales personnel stay
reuse rates of customized designs leading to
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 Company's unified innovation management process. A robust tracking mechanism is put in place to
Actively engage with relevant
new quality productive forces, and the
Policy subsidies, government departments through regularly monitor changes in these risks and opportunities. The R&D Center is responsible for tracking
Opportunities low-carbon transformation of agricultural
Medium tax reductions and various channels, and monitor and
from Favorable machinery. Favorable policies for high-end Medium High
term 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.
Opportunities
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 increased demand, full-industrial-chain equipment
Demand deepen innovations in full-industrial-chain term
High High
and increased system to meet the demand for For the significant risks and opportunities, specific action plans are developed and executed. These
large-scale upgrades in the cotton
Opportunity equipment, aligning with industry trends like operating income 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.
Metrics and Targets
Metrics Unit 2025
Investment in R&D RMB 10,000 6,496.75
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.
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
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
energy consumption and fiber damage, driving the industry toward green and intensive
development strategy, achieving multi-party resource complementarity and fostering mutual empowerment in both R&D and
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
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
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
infringing or damaging the Company's intellectual property rights. In terms of rights protection and risk management, the Company
Industry Standard Discussion Meeting and Technical Seminar
proactively takes legal action against intellectual property infringements related to core products.
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
At the organizational governance level, the Company has established a hierarchical management structure with the General Manager as
improve the awareness of intellectual property protection and the risk prevention capabilities of the Company's scientific and
the primary responsible person for the Quality Management System, overseeing system operations and coordinating quality
technological personnel.
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
Deputy General Manager
Production Director
Safety Management
Manager of Sales
Deputy General
Board Secretary
Quality Director
of Technology
Director
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
Safety and Environmental
Engineering Department
Production Department
International Marketing
Protection Department
Agricultural Machinery
"Strengthening quality awareness, ensuring full participation, pursuing continuous improvement and excellence, and building the world's
Domestic Marketing
Quality Department
HR Department
General Office
leading brand in cotton industry machinery". We continuously enhance our quality management system to ensure the safety and high
Department
Department
Department
R&D Center
quality of our products and services.
Machining Workshop
Supply Chain Center
General Assembly
Parts Workshop
Comprehensive
Workshop
Workshop
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
During the Reporting Period, the Company has passed certifications
that lead to quality incidents or major impacts, thereby embedding quality responsibilities into specific positions and individuals. The
such as the ISO 9001 Quality Management System Certification.
Company maintains the continuous and effective operation of quality management requirements through rigorous control of quality
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.
Likelihood
Risk/Opp Financial Impact Impact
Type Description of Risk/Opportunity of Countermeasures
ortunity Impact Duration Materiality
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 Medium Medium
term and monitor equipment precision and
Quality Risk product quality risk. quality loss costs
quality outcomes.
Risk
Institutionalize and standardize
Inadequate maintenance of infrastructure may Increased
Infrastructure Medium maintenance procedures, conduct
compromise production stability and product downtime and Medium Medium
Operation Risk term regular inspections, and implement
compliance. maintenance costs
continuous improvements.
Risk/Opp
ortunity
Type Description of Risk/Opportunity
Financial
Impact
Impact
Duration
Impact
Materiality
Likelihood
of Countermeasures
Impact, Risk, and Opportunity Management
Occurrence
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.
Risk and Opportunity Identification
Increased system
Quality Data & Unstable data systems or insecure hardware may Establish robust data backup and stakeholders based on business realities, to identify risks and opportunities that could affect the safety and quality
recovery and Medium
Traceability lead to loss of quality records, impacting Medium Low disaster recovery mechanisms and
management term of products and services.
Risk traceability and continuous improvement. verify their effectiveness regularly.
costs
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
Medium Medium
Adaptation customer expectations for performance and and higher term performance improvements after
Risk safety. after-sales costs implementation.
Risk
Risk and Opportunity Assessment
Insufficient
Low standardization in design or components Higher inventory,
Streamline product types, enhance occurrence, to clarify the key areas that need to be addressed.
Product Medium design and component
increases quality variability and management maintenance, and Medium Medium
Standardization term standardization, and continuously
Risk
complexity. procurement costs
evaluate suitability.
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.
Risk and Opportunity Monitoring
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
Production Reduced rework Institutionalize equipment upgrades
Equipment renewal and process improvements Medium
Technology and increased as a quality improvement measure
can enhance quality stability and processing and long High Medium
Upgrade product added and continuously monitor
precision. term
Risk and Opportunity Management
Opportunity value effectiveness.
Opportunities
responsibilities and resources clearly defined.
Digitalization Reduced quality Promote digital quality management
Implementing digital management systems can Medium 2. The effectiveness of these measures is regularly evaluated, effective actions are reinforced, and improvements are
of Quality losses and systems and regularly evaluate their
improve operational efficiency, traceability, and term Medium Medium
Management improved performance. made to address any deficiencies.
service responsiveness.
Opportunity management
efficiency
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 Inbound
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
design and trial production stage
Number of Product Recalls Case 0 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
Ensure the quality of product finalization and technical of suppliers with quality issues
Product Recall Ratio % 0
documentation
Quality Training Attendance Person-times 157
Strictly enforce process discipline Outsourced parts can only be warehoused after being
Total Hours of Quality Training Hour 2,411 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
Implement key quality control measures for critical processes Implement isolation, rework, scrapping, or concession acceptance
Number of Customer Complaints Resolved Case 6 for non-conforming products
Use calibrated measuring instruments for inspection and
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
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
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
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
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
management, and defines management responsibilities and work divisions in a structured, institutionalized manner. We have established
Product Quality Issue Management and Recall Management and enforced the Regulations on the Management of Computer Data Security, which standardizes activities such as data input, output,
storage, transmission, and backup across computer systems, network systems, storage media, and information materials. The Digital
At the product delivery and use stage, SDMJ considers service quality an integral part of product quality management and incorporates
Transformation Office is responsible for developing data security policies, implementing technical measures, conducting safety
it into the unified quality management and assessment system. In accordance with the Quality Management System and the Quality Veto
inspections, and handling emergency incidents. Department heads are tasked with overseeing the implementation of data security
System, the Company clearly defines customer service quality responsibilities throughout the entire product lifecycle, and implements
measures within their respective departments, while all employees are required to uphold their data security protection duties in
traceability and performance accountability for customer complaints or adverse effects resulting from inadequate service, non-standard
accordance with established regulations, creating a data security management system with clearly defined roles and responsibilities.
commissioning, or delayed responses, promoting the coordinated operation of product quality management and service quality
During the Reporting Period, no data security incidents or customer information leaks occurred.
management.
Furthermore, the Company standardizes product recall and rework management processes in line with the Product Rework Provisions
and the Provisions for the Management of Non-conforming Products, preventing non-conforming products from entering the market
Data Security Risk Management
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
data security management and internal control systems. In accordance with the Regulations on the Management of Computer
Through product design optimization and service support, SDMJ continuously enhances the accessibility and usability of products across
Information Security, the Company enforces a unified approach to the management of key activities, including the collection, storage,
various application scenarios. During the product design and manufacturing stages, the Company evaluates the product structure,
transmission, use, and backup of computer systems, network systems, and data materials. This includes clear requirements for account
process design, and operational adaptability, aligning them with actual usage requirements. This improves the product's ability to adapt
authority control, data encryption, physical isolation, and access approval. These measures help prevent the risks of data leakage,
to diverse environments and working conditions, while also lowering the entry barriers for customers.
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.
Good Life
Contribution to Society
Occupational Health and Safety
Employee's Rights and Interests
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.
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 17,680 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.
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, Strengthen post responsibility systems and clarify on-site safety management requirements.
Process Safety
Leadership by the Safety and Environmental Protection Department, Responsibility by Each Department, and Hierarchical Control". This Special operation personnel must hold valid certificates and strictly follow operating procedures.
Management
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.
Management
obtained ISO 45001 Occupational Health and Safety Management System certification.
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.
Identify occupational disease risks for each position; develop and implement employee health
Occupational Health
checkup plans; provide necessary personal protective equipment and monitor its proper use.
Monitoring
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.
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
techniques, enhancing their ability to respond to emergencies and strengthening the workshop's fire safety defenses.
Safety Risk Notification Board
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.
Communication & Liaison Team
Accident Investigation Team
Aftermath Handling Team
Emergency Rescue Team
Security & Cordon Team
Logistics Support Team
Drill Site
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
In June 2025, the Company's Work Safety
workplace injuries and accidents, supporting the safe and sustainable development of the organization.
Committee conducted a series of Work Safety
Type of Month activities under the theme: "Everyone
Detailed Requirements Risk Level Core Management Measures Pays Attention to Safety, Everyone Can
Risk/Opportunity
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 initiatives effectively improved employees'
Risk of electric leakage from office
General Risk regular safety inspections of equipment, and strengthen sense of safety responsibility and emergency
Risk electrical appliances
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
[Case] Occupational Disease Prevention Knowledge Training during the Publicity Week of Occupational Disease
Insufficient collection and Strengthen the collection and updating of regulations,
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
Direct the responsible department to address prevention and emphasize the importance of mental health. Through these activities, employees were equipped with essential
Non-conformities identified during
General Risk occupational health protection skills and encouraged to prioritize both their physical and mental well-being. This initiative further
ISO 45001 system audit non-conformities identified in the audit.
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
Occupational Health Checkups Metrics Unit 2025
During the Reporting Period, the Company organized comprehensive occupational health check-ups for all employees. These included
Number of Participants in Safety Training Person-times 2,566
routine health check-ups as well as specialized screenings focused on occupational hazards such as dust and noise exposure. An
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 14,745.5
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 10,000 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 10,000 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
Investment in Safety Production CNY 100,000 RMB 10,000 219.28
Ratio of Safety Production Investment to Operating Revenue % 0.23
Total Investment in Safety Training RMB 10,000 3.3
Number of Safety Training Sessions Session 29
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.
Recruitment Management
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.
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 Resigned Employees by Gender
Number of Employees with Disabilities Person 3
Female Person 5
Number of Employees (by Gender)
Male Person 60
Female Person 127
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
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
Arbitration or litigation
[Case] "Grace & Vitality in Motion" – Women's Sports Event coordination
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
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
performance capabilities and collaborative
Compensation Structure
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
Pe rformance S e ni ority a llowa nce, Socia l insura nce (pension, Supplementary In August 2025, the Company's Human Resources Department, in collaboration with the Production Department, organized
Base Pay
b onus e s , e nterprise subsidy, medica l ca re, work injury, incentive bo n u se s, special production and operation training for new employees. Guided by the principle of "Rapid Integration, Solid
float ing b e ne fit s , t ran sport ation unemploy ment , maternity a djusted a cco rd i n g Foundation", the training systematically introduced the Company's production and operation system, core product features,
re s p o ns ib ilit y s ub sidy, insura nce), housing to the Compa ny's
and production processes through theoretical instruction, workshop observation, and interactive Q&A sessions, helping
allowance s , me al a llowa nce, provident fund, enterprise performa nce a n d
s p e c ial b onus e s one -child a nnuity, heating fee, employee s' a n n u a l
new employees quickly gain a comprehensive understanding of the Company's business, shorten their adaptation period,
allowa nce, etc . summer heat fee, a nd 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.
Metrics Unit 2025
Total Number of Persons Trained Person-times 3,460
Training System Development Planning Coverage of Employee Training % 85.57
Training Ratio by Gender
Training Needs Analysis Training Goal Setting Female % 81.51
Male % 86.21
Employee Competency Evaluation Job Demand Research Short-Term Goal Planning Long-Term Goal Outlook
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 % 97.17
General Course Structure Professional Course Arrangement Online Training Mode Offline Training Format
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 On-site Inspections and Practical Others % 27.03
Teamwork Skills Development Live Online Real-Time Interaction
Cutting-edge Industry Knowledge Operations
Training Duration
Establishment of the Training Faculty Evaluation of Training Effectiveness Total Hours of Training: Hour 22,731.8
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
Middle Management Hour/Person 52.18
To enhance the flexibility and accessibility of training, the Company has adopted an online and offline learning model, providing
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 10,000 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
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
Social Insurance Coverage Rate % 100
positive, healthy, and harmonious working environment. To support this, the Company provides a variety of cultural and sports facilities,
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 10,000 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.
Four Systems
[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,
This system ensures that major decisions, production and operation management, employees' interests, and
visits by the leading group, and dynamic assessments of health needs, the Company promptly identified and addressed the
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.
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.
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 10,000 95,869.80
Number of Investor Calls Answered Case 17
Overseas Operating Revenue RMB 10,000 27,125.61
Performance Briefings Convened Case 3
Net Profits RMB 10,000 7,463.07
Cash Dividend per Share Yuan/Share 0.172
Number of Compliance Training Sessions Conducted Case 17 Total Cash Dividend (Including Tax) RMB 10,000 2,087.08
Training on Laws and Regulations (Session) Case 5 Proportion to Net Profit Attributable to Shareholders of the Listed
% 30.11
Company in Consolidated Financial Statements (%)
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
% 100
Ethics Agreements with New Employees
Number of Party Members Person 80 Total Number of Anti-corruption and Anti-bribery Incidents Reported Case 0
Number of Directors Participating in the Training on Anti-commercial
Governance through the General Meeting of Shareholders and Board of Directors Person 6
Bribery and Anti-Corruption
Total Sessions of General Meetings of Shareholders Held Case 4 Percentage of Directors Participating in Training on Anti-commercial
% 66.67
Bribery and Anti-Corruption
Proposals Approved Case 24
Total Duration of Training on Anti-commercial Bribery and
Hour 112
Anti-Corruption for Directors
Number of Members of the Board of Directors Person 9
Average Duration of Training on Anti-commercial Bribery and
Hour/Person 18.67
Anti-Corruption for Directors
Male Directors Person 6
Number of the Management Participating in Training on
Person 6
Anti-commercial Bribery and Anti-Corruption
Female Directors Person 3
Percentage of the Management Participating in Training on
% 100
Independent Directors Person 3 Anti-commercial Bribery and Anti-Corruption
Total Duration of Training on Anti-commercial Bribery and
Non-Independent Directors Person 6 小时 112
Anti-Corruption for the Management
Indicator Unit 2025 Indicator Unit 2025
Average Duration of Training on Anti-commercial Bribery and Energy Consumption Intensity tce/ RMB 1 million 1.66
Hour/Person 18.67
Anti-Corruption for Management
Number of Employees Participating in Training on Anti-commercial Water Resource Utilization
Person 91
Bribery and Anti-Corruption
Percentage of Employees Participating in Training on Anti-commercial Municipal Water Purchased Ton 42,200
% 10.20
Bribery and Anti-Corruption
Total Duration of Training on Anti-commercial Bribery and Fresh Water Usage Ton 42,200
Hour 1,414
Anti-Corruption for Employees
Total Water Consumption Ton 42,200
Average Duration of Employee Training on Anti-Commercial Bribery
Hour/Person 15.54
and Anti-Corruption
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
Person 16
Competition
Total Training Hours of Training on Anti-Monopoly and Fair Total Use of Packaging Materials Ton 292.6
Hour 48
Competition
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 tCO₂e 4,692.08
Glass Packaging Materials Ton 1.7
Direct greenhouse gas emissions (Scope 1) tCO₂e 1,589.43
Environmental management
Indirect greenhouse gas emissions (Scope 2) tCO₂e 3,102.65
Total Environmental Investment RMB 10,000 77.4
GHG Emissions Intensity tCO₂e/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 m? 370,172.06 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 10,000 m? 23,067.98
Total Purchased Electricity kWh 5,847,428 Air Emission Intensity 10,000 m?/1 Million Yuan 24.06
Total Energy Consumption tce 1,588.22 Volatile Organic Compounds (VOC) Ton 0.54
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 10,000 6,496.75
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
Number of Industry Standards Participated Case 16
Ratio of R&D Personnel to Total Employees % 11.88
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
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 2,411
Number of Security Emergency Drills Sessions 12
Sessions of Quality Training Case 5
Investment in Safety Production RMB 10,000 219.28
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 10,000 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 Participants in Safety Training (Person-time) Person-times 2,566
Number of Valid Copies of Customer Satisfaction Questionnaires Issued Copy 512
Customer Satisfaction / Total Satisfaction Score % 97 Total Training Duration Hour 14,745.5
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 10,000 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 10,000 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
Qualification Rate in Detection of Occupational Hazard Factors % 100
Work-related Injury Rate % 0.90
Working Day Lost due to Work-related Injury Working Days 877 Number of New Occupational Diseases Case 0
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
Indicator Unit 2025 Indicator Unit 2025
Number of Resigned Employees by Gender Employee Training and Development
Female Person 5
Investment in Employee Training RMB 10,000 18.92
Male Person 60
Number of Employee Training Sessions Sessions 88
Number of Resigned Employees by Age
Person Total Number of Persons Trained (Person) Person 747
Under 30 years old 28
Coverage Rate of Employee Training (Training Ratio of Employee) % 85.57
Training Ratio by Gender
Diversity, Equality and Inclusion
Proportion of Female Employees in Management % Female % 81.51
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 % 85
Grassroots Employees
Number of Employees Receiving Assistance Person 12
Ratio of Trained Employees by Function
Amount of Assistance for Employees in Difficulty RMB 10,000 3
Manufacturing % 85.61
Democratic Governance
Number of Projects Approved by the Employee Congress Case Technology % 97.17
Number of Projects Approved by the Trade Union Case 10 93.22
Sales %
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 Others % 27.03
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 22,731.8 (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
Development G1.1/G1.3
Technology Hour/Person 41.64 -47/103-1
Governance
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
Global Reporting Initiative
Sustainability Reporting Standards
Guide to Corporate Social
Responsibility Reporting in China
Feedback Form
Level 1 Headline Level 2 Headline
(GRI Standards) (CASS-CSR 6.0)
Environmental
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
Utilization
Material Utilization 301-1/301-2/301-3 E3.3
□ Very Good □ Good □ Average □ Below Average □ Poor
Responsible Supply
Chain
Innovation-driven
Development
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
Customer Privacy /
Protection
□ Very Good □ Good □ Average □ Below Average □ Poor
Contribution to
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
Employees? Rights
and Interests
-2/404-3 □ Very Good □ Good □ Average □ Below Average □ Poor
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
Appendix
Indexes 102-55 A3
Feedback Form / A6
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