Company code: 688295 Company abbreviation: Zhongfu Shenying

Zhongfu Shenying Carbon Fiber Co., Ltd

2024 Internal Control Evaluation Report

All shareholders of Zhongfu Shenying Carbon Fiber Co., Ltd.:

In accordance with the provisions of the Basic Standards for Enterprise Internal Control and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the "Enterprise Internal Control Specification System"), combined with the Company's (hereinafter referred to as the Company's) internal control system and evaluation methods, and on the basis of daily supervision and special supervision of internal control, we evaluated the effectiveness of the Company's internal control as of December 31, 2024 (the reference date of the internal control evaluation report). I. Important Notices

It is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, evaluate its effectiveness, and truthfully disclose the internal control evaluation report in accordance with the provisions of the enterprise's internal control system. The Supervisory Board supervises the establishment and implementation of internal controls by the Board of Directors. Managers are responsible for organizing and leading the day-to-day operation of the company's internal controls. The Board of Directors, the Board of Supervisors, the directors, supervisors and senior management of the Company guarantee that there are no false records, misleading statements or material omissions in the content of this report, and assume individual and joint legal liability for the authenticity, accuracy and completeness of the content of the report.

The goal of the company's internal control is to reasonably ensure the legal compliance of operation and management, asset security, true and complete financial reports and related information, improve operational efficiency and effectiveness, and promote the realization of development strategy. Due to the inherent limitations of internal controls, it can only provide reasonable assurance that the above objectives will be achieved. In addition, there is a risk that the effectiveness of future internal controls will be inferred based on the results of internal control evaluations because changes in circumstances may lead to inappropriate internal controls or reduced compliance with control policies and procedures.

Conclusions of the internal control evaluation

1. Whether the company has any material deficiencies in the internal control over financial reporting on the reference date of the internal control evaluation report

□ Yes √ No

2. Conclusion of the evaluation of internal control over financial reporting

√ valid □ invalid

According to the identification of material deficiencies in the Company's internal control over financial reporting, there were no material deficiencies in the internal control over financial reporting as of the reference date of the internal control evaluation report, and the Board of Directors believes that the Company has maintained effective internal control over financial reporting in all material respects in accordance with the requirements of the standard system of internal control of the Company and relevant regulations.

3. Whether material deficiencies in internal control over non-financial reporting were found

□ Yes √ No

According to the identification of material deficiencies in the Company's internal control over non-financial reporting, the Company did not find any material deficiencies in the internal control over non-financial reporting as of the reference date of the internal control evaluation report.

4. Factors influencing the conclusion of the internal control effectiveness evaluation between the benchmark date of the internal control evaluation report and the date of issuance of the internal control evaluation report

□ Applicable √ Not applicable

There were no factors affecting the conclusion of the internal control effectiveness evaluation between the benchmark date of the internal control evaluation report and the date of issuance of the internal control evaluation report.

5. Whether the internal control audit opinion is consistent with the company's evaluation conclusion on the effectiveness of internal control over financial reporting

√ Yes □ No

6. Whether the disclosure of material deficiencies in the internal control audit report of non-financial reporting is consistent with the disclosure in the company's internal control evaluation report

√ Yes □ No

Evaluation of internal control

(1) Scope of internal control evaluation

In accordance with the risk-oriented principle, the company determines the main units, businesses and matters included in the evaluation scope, as well as high-risk areas.

1. The main units included in the evaluation scope include: Zhongfu Shenying Carbon Fiber Co., Ltd., Zhongfu Shenying Carbon Fiber Xining Co., Ltd., Zhongfu Shenying (Shanghai) Technology Co., Ltd., Zhongfu Shenying Carbon Fiber Lianyungang Co., Ltd., and Jiangsu Zhongfu Shenying Carbon Fiber Engineering Center Co., Ltd

2. Proportion of units included in the scope of evaluation:

Indicator Proportion (%)

The ratio of the total assets of the units included in the evaluation scope to the total assets of the company's consolidated financial statements is 100

The ratio of the total operating income of the units included in the evaluation scope to the total operating income of the company's consolidated financial statements is 100

3. The main operations and matters to be included in the scope of the evaluation include:

Corporate level and business level:

(1) The scope of company-level evaluation includes organizational structure, development strategy, human resource policy, social responsibility, corporate culture, information communication and supervision.

(2) The scope of business-level evaluation includes project construction progress, contract implementation, expense reimbursement management, technical transformation and maintenance, fixed asset management, procurement and payment management, internal control supervision, sales and collection management, etc.

4. High-risk areas to focus on include:

Project construction, fixed asset management, internal control system construction and implementation, procurement and payment, sales and collection, etc.

5. Whether the above-mentioned units, businesses and matters included in the scope of evaluation, as well as high-risk areas, cover the main aspects of the company's operation and management, and whether they exist

in major omissions

□ Yes √ No

6. Whether there is a statutory exemption

□ Yes √ No

7. Other Notes

not

(2) The basis for internal control evaluation and the criteria for identifying internal control deficiencies

The company organizes and carries out internal control evaluation in accordance with the internal control standard system of the enterprise and the internal control evaluation system of Zhongfu Shenying Carbon Fiber Co., Ltd.

1. Whether the specific criteria for identifying internal control deficiencies have been adjusted from previous years

□ Yes √ No

The Board of Directors of the Company distinguishes between internal control over financial reporting and non-financial reporting internal control in accordance with the requirements for the identification of material, important and general deficiencies in the internal control system of the enterprise, combined with factors such as the company's size, industry characteristics, risk appetite and risk tolerance, and researches and determines the specific identification standards for internal control deficiencies applicable to the Company, which are consistent with those of previous years.

2. Criteria for identifying deficiencies in internal control over financial reporting

The quantitative criteria for the evaluation of internal control deficiencies in financial reporting determined by the Company are as follows:

Indicator Name Quantitative Standard for Major Defects Quantitative Standard for Important Defects Quantitative Standard for General Defects

Gross Profit Misstated ≥ Gross Profit 5% Gross Profit 3% ≤ Misstated < Gross Profit 5% Misstated < Gross Profit 3%

Total Assets Misstatement ≥ Total Assets 1% Total Assets 0.5% ≤ Misstatement < Total Assets 1% Misstatement < Total Assets 0.5%

Illustrate:

not

The qualitative criteria for the evaluation of internal control deficiencies in financial reporting determined by the Company are as follows:

Nature of the defect Qualitative criteria

1. Directors, supervisors and senior management personnel commit fraud, causing significant losses and serious negative impacts to the company;

2. The company's supervision of internal control over financial reporting is ineffective;

3. Material misstatements and omissions in the current financial reports discovered by the certified public accountants but not identified by the company's internal controls

Report;

4. Be able to reasonably demonstrate that the significant loss incurred was due to one or more control deficiencies.

Important defects There are major defects that are described, but the degree of impact is not as wide, important and influential

If the degree is high, it is determined to be an important defect.

General deficiencies do not constitute deficiencies in internal control over non-financial reporting other than material deficiencies and material deficiencies.

Illustrate:

not

3. Criteria for identifying deficiencies in internal control over non-financial reporting

The quantitative criteria for the evaluation of internal control deficiencies in non-financial reporting determined by the Company are as follows:

Indicator Name Quantitative Standard for Major Defects Quantitative Standard for Important Defects Quantitative Standard for General Defects

Direct property loss of more than 30 million yuan 5 million yuan - 30 million yuan 5 million yuan (including 5 million yuan)

(including 30 million yuan).

Illustrate:

not

The qualitative criteria for the evaluation of internal control deficiencies in non-financial reporting determined by the Company are as follows:

Nature of the defect Qualitative criteria

the company's lack of scientific decision-making procedures; Serious violations of national laws and regulations and penalties; Personnel flow in key positions

Major defects are serious, affecting the normal development of business; Negative news in the media is frequent; Lack of institutional control or systems for important businesses

system failure; Significant deficiencies in internal control were not rectified.

The company's decision-making process exists but is inadequate; Serious violation of the company's internal rules and regulations and causing losses; People in key positions

The loss of important defects is more serious; Negative news in the media with local spillovers; The existence of important business systems or systems

Flaw; Significant deficiencies in internal control were not rectified.

General deficiencies are contrary to the principles of best practice, lead to inefficiency, and generally do not directly cause operational and management risks.

Illustrate:

not

(3) Identification and rectification of internal control deficiencies

1. Identification and rectification of deficiencies in internal control over financial reporting

1.1. Material Defects

Whether the company had any material deficiencies in internal control over financial reporting during the reporting period

□ Yes √ No

1.2. Important Defects

Whether the company had any significant deficiencies in internal control over financial reporting during the reporting period

□ Yes √ No

1.3. General Defects

not

1.4. After the above-mentioned rectification, on the base date of the internal control evaluation report, whether the company has any material internal control over financial reporting that has not completed the rectification

flaw

□ Yes √ No

1.5. After the above-mentioned rectification, it is important that the Company has no internal control over financial reporting that has not been rectified as of the reference date of the internal control evaluation report

flaw

□ Yes √ No

2. Identification and rectification of internal control deficiencies in non-financial reporting

2.1. Material Defects

Whether the company found any material deficiencies in internal control over non-financial reporting during the reporting period

□ Yes √ No

2.2. Material Defects

Whether the Company found any material deficiencies in internal control over non-financial reporting during the reporting period

□ Yes √ No

2.3. General Defects

not

2.4. After the above-mentioned rectification, on the base date of the internal control evaluation report, whether the company found that the internal control over non-financial reporting that had not completed the rectification was heavy

Big flaws

□ Yes √ No

2.5. After the above-mentioned rectification, on the reference date of the internal control evaluation report, whether the company found that the internal control over non-financial reporting that had not completed the rectification was heavy

To be defective

□ Yes √ No

4. Explanation of other major matters related to internal control

1. Rectification of internal control deficiencies in the previous year

□ Applicable √ Not applicable

2. The operation of internal control in the current year and the direction of improvement in the next year

√ Applicable □ Not applicable

In 2024, the company will improve the construction of the internal control system, and further promote the establishment of an internal control system with "consistent rights and responsibilities, effective checks and balances, smooth operation, strong implementation, and scientific management", so as to provide guarantees for the legal compliance of the company's operation and management and the safety of assets, and effectively promote the steady implementation of the company's strategy.

In 2025, the company will further strengthen risk management and prevention, and ensure that it can respond quickly when risks occur by establishing a sound risk identification, assessment and response mechanism. The company will continue to strengthen the construction of internal control, improve the effectiveness and adaptability of internal control, and provide a strong guarantee for the steady development of the enterprise.

3. Explanation of other major matters

□ Applicable √ Not applicable

Chairman (authorized by the board of directors): Zhang Jian

Zhongfu Shenying Carbon Fiber Co., Ltd

March 26, 2025