Company Profile of Hubei Kailong Chemical Industry Group Co., Ltd.

Hubei Kailong Chemical Industry Group Co., Ltd. (hereinafter referred to as "the Company") was established in 1994 through the restructuring of the state-owned military enterprise Xiangsha Chemical Plant (Code No. 9615). After more than 50 years of development, the Company has grown from a single local military enterprise into a diversified enterprise group. It is the leading civil explosives enterprise in Hubei Province and a key backbone enterprise in China's civil explosives industry. The Company was listed on the Shenzhen Stock Exchange on December 9, 2015.

The Company has a registered capital of RMB 499 million, over 4,000 employees, 3 branches, and 63 holding (subsidiary) companies. Its branches and subsidiaries are distributed across Xinjiang, Ningxia, Shandong, Guizhou, Liaoning, Guangdong, and various cities within Hubei Province including Wuhan, Jingmen, Xiaogan, Huanggang, and Shiyan.

The Company is one of the few enterprises in China's civil explosives industry with a complete industrial chain. It has developed a full-industry-chain development model encompassing synthetic ammonia, ammonium nitrate and compound fertilizers, civil explosives equipment, blasting services, mining operations, and hazardous chemicals transportation. Its current business operations mainly comprise five segments: the Civil Explosives Equipment Segment, the Modern Chemical Industry Segment, the Green Mining Segment, the Blasting Services Segment, and the New Materials Segment.

In the Civil Explosives Equipment Segment, the Company holds production licenses for industrial explosives with an annual capacity of over 280,000 tons (including 92,050 tons of emulsion explosives), covering four major varieties: emulsion explosives, expanded explosives, modified ammonium nitrate fuel oil (ANFO) explosives, and seismic charge columns. It holds production licenses for digital electronic detonators with an annual capacity of 42.76 million units, non-electric detonators (export only) with an annual capacity of 5 million units, plastic detonating tubes with an annual capacity of 370 million meters, industrial detonating cords with an annual capacity of 20 million meters, and relay boosters with an annual capacity of 4,500 tons.

In the Modern Chemical Industry Segment, the Company has a combined annual production capacity of 800,000 tons for ammonium nitrate and compound fertilizers, and an annual production capacity of 200,000 tons for synthetic ammonia.

In the Green Mining Segment, the Company has an annual production capacity of 14 million tons for construction stone materials, 1 million tons for calcium oxide (lime), and 50,000 tons for nano calcium carbonate.

In the Blasting Services Segment, the Company operates 12 blasting companies with various qualification levels, including 3 companies with first-class qualifications.

In the New Materials Segment, the Company has 2 new materials companies, one of which is listed on the NEEQ (New Third Board), mainly producing PE films, PE and PET protective films, light-shielding tapes, plastic hollow containers, explosives-specific packaging films, and paper packaging products.

The Company possesses outstanding R&D capabilities and strong technical expertise, with over 400 professional technical personnel, including 62 with senior professional titles. It has established four major R&D institutions: Kailong Wuhan Research Institute, Wuhan Smart Agriculture Research Institute, Calcium Carbonate Products Research Institute, and Blasting Technology Research Institute. The Company has also built five major technology platforms: a provincial-level technical center, Hubei Provincial Civil Explosives Equipment Engineering Technology Research Center, Hubei Provincial Postdoctoral Kailong Industrial Base, Kailong Chuxing Academician and Expert Workstation, and Hubei Provincial Nitrogen-based Compound Fertilizer Enterprise-University Joint Innovation Center.

Through independent R&D, the Company has developed numerous new products and technologies, obtaining 461 patents, including 46 invention patents. It has undertaken national-level torch plan projects for the research of expanded ammonium nitrate seismic charge columns and emulsion series seismic charge columns. In collaboration with Nanjing University of Science and Technology, it pioneered the development of expanded ammonium nitrate seismic charge columns, which were rated as national-level new products. The JK-type emulsion explosives process technology and equipment jointly developed with Shenzhen Jin Aobo Company filled domestic and international gaps, reaching domestic leading and internationally advanced levels. The independently developed intelligent low-manpower emulsion explosives and seismic charge column production process technology and equipment reached domestic leading levels. The industrial internet + civil explosives production and warehousing intelligent safety monitoring system jointly developed with Jianghan University reached internationally advanced levels.

The Company's technological innovation achievements have been remarkable. It is a national high-tech enterprise and an integration of informatization and industrialization demonstration enterprise. Seven subsidiaries have been successively recognized as high-tech enterprises, 7 subsidiaries have been selected as provincial-level specialized, refined, distinctive, and innovative "Little Giant" enterprises and provincial-level specialized, refined, distinctive, and innovative SMEs, 1 subsidiary has been designated as a national integration of informatization and industrialization demonstration enterprise, and 1 subsidiary has been designated as a Hubei Provincial integration of informatization and industrialization demonstration enterprise. The Company has repeatedly won first and second prizes for science and technology from the China Explosives and Blasting Equipment Industry Association, second and third prizes for provincial-level scientific and technological progress, and first and second prizes for municipal-level scientific and technological progress.

The Company has established a sound quality management system and passed ISO 9001:2015 quality system certification. The "Kailong" brand explosives produced by the Company have won the honorary titles of "Hubei Famous Brand Product" and "Hubei High-tech Product Quality Award for the 60th Anniversary of New China." The "Kailong" trademark has won the titles of "Hubei Famous Trademark" and "China Well-known Trademark." The "Kailong" brand seismic charge columns have won the title of "National Customer Satisfaction Product."

The Company firmly establishes the safety philosophy that "safety is the foundation of survival for both the enterprise and its employees." It strengthens safety through people-oriented approaches, safeguards safety through sound systems, ensures safety through strict inspection and assessment, and enhances safety through increased investment, striving to build a "safety subconscious" safety value system. This value system has successfully applied for a management patent. The Company has been awarded the Hubei Provincial Safety Production Red Banner Unit for nine consecutive terms by the Hubei Provincial Government, and has won honorary titles such as the first Hubei Provincial "Top Ten Safety Production Demonstration Enterprises." It has been recognized by the former State Administration of Work Safety as a "National Safety Culture Construction Demonstration Enterprise."

The Company continuously improves its environmental management level and actively assumes corporate social responsibility. It practices clean and civilized production and has passed ISO 14001:2015 environmental management system certification.

The Company continuously strengthens corporate culture construction around reform and development. Building upon the military industry's qualities of unity, dedication, and perseverance, it promotes positive themes and shapes new images. With the corporate vision of becoming a "Century-old Enterprise, Flagship of Civil Explosives," it has refined the core values of "Responsibility, Dedication, Innovation, and Progress." It has established a "Community of Values" among leaders at the department head level and above, and formed "Shared Values" within this community. It has established the work principle of "Pursuing Excellence Every Day, Everyone Striving Upward" among all employees, making Kailong culture a powerful spiritual pillar for the Company's extraordinary development.

The Company has achieved rapid economic growth and excellent operating performance. It has won honors such as the "China Listed Company Golden Bull Award," "China Listed Company Outstanding Industrial Chain Innovation Award," "Hubei Provincial Enterprise Outstanding Contribution Unit for the 30th Anniversary of Reform and Opening-up," "Hubei Provincial Yangtze River Quality Award," "Hubei Provincial Economic Efficiency Advanced Unit," "Hubei Provincial Best-selling Gold Award for Similar Products," "Hubei Top 100 Manufacturing Enterprises," and "Jingmen High-Quality Development Outstanding Contribution Enterprise."

The Company maintains good social credit. It has been awarded titles such as "China Listed Company Integrity Enterprise Top 100 Award," "National Contract-abiding and Credit-worthy Enterprise," "National May 1st Labor Certificate," "Hubei Provincial First Top 100 Integrity Taxpayers," "National Market Quality Credit Customer Satisfaction Enterprise," "Hubei Provincial Excellent Credit and Integrity Customer," "Hubei Provincial Consumer Satisfaction Unit," "Hubei Provincial Outstanding Integrity Enterprise," "Hubei Provincial Labor and Social Security Integrity Unit," and "Hubei Provincial Civilized Integrity Demonstration Enterprise."

The Company is willing to join hands with friends from both domestic and international markets to seek common development, and to repay customers and society with better products and services.