/Huhua Shares: Special report on the storage and use of funds raised in the first half of 2026

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Huhua Shares: Special report on the storage and use of funds raised in the first half of 2026

Shenzhen Stock Exchange

2026/08/29

Securities code: 003002 Securities abbreviation: Huhua Shares Announcement number: 2026-032

Shanxi Huhua Group Co., Ltd.

Special report on the storage and use of raised funds in the first half of 2026

The Company and the Board of Directors guarantee that the information disclosed is true, accurate and complete and contains no false records, misleading statements or major omissions.

1. Basic information on raising funds

(1) Amount of funds raised and time to receive them

According to the China Securities Regulatory Commission's "Zhengjian Xu [2020] No. 1966" "China Securities Regulatory Commission's Approval of the Initial Public Offering of Shanxi Huhua Group Co., Ltd.", Shanxi Huhua Group Co., Ltd. (hereinafter referred to as the "Company") made an initial public offering of no more than 50 million RMB ordinary shares (A shares), with a face value of 1 yuan per share, an issue price of RMB 8.22, and a total of 411,000,000.00 raised funds. After deducting the issuance fee of RMB 70,400,964.78 (excluding tax), the actual net amount of funds raised was RMB 340,599,035.22. The above funds were all in place on September 14, 2020, and have been verified by ShineWing Accounting Firm (Special General Partnership) report No. "XYZH/2020BJGX0807" on September 14, 2020.

(2) Amount of raised funds used in previous years

Unit: Yuan Use of raised funds in 2025

Interest income on December 31, 2024 December 31, 2025

Balance Self-raised balance in the early stage of replacement

Expenditure for this period Handling fee

capital investment

141,785,110.48 570,208.07 130,403,045.63 1,891.54 11,950,381.38

(3) Amount of raised funds used during the year and year-end balance

Unit: Yuan Use of funds raised in the first half of 2026

Interest income from December 31, 2025 to June 30, 2026

Balance Self-raised balance in the early stage of replacement

Expenditure for this period Handling fee

capital investment

11,950,381.38 41,987.54 603,075.04 173.94 11,389,119.94

2. Storage and management of raised funds

(1) Management of raised funds

In order to standardize the company's management of raised funds, improve the efficiency of the use of raised funds, and effectively protect the interests of investors, the Company has formulated the "Raised Funds Management System" in accordance with the relevant provisions of laws, regulations and normative documents such as the "Company Law", "Securities Law", "Initial Public Offering Registration and Management Measures", "Listed Companies' Securities Issuance Registration and Management Measures", "Supervisory Rules for Listed Companies' Raised Funds", "Shenzhen Stock Exchange Stock Listing Rules", "Shenzhen Stock Exchange Listed Companies Self-Regulatory Guidelines No. 1 - Standardized Operation of Main Board Listed Companies" and other laws, regulations and normative documents.

In accordance with the provisions of the "Raised Funds Management System", the Company manages the storage and use of raised funds in a special account and strictly performs the use approval procedures in order to supervise the management and use of raised funds and ensure that the funds are used exclusively.

In October 2020, the Company signed the "Tripartite Supervision Agreement on Raised Funds" with the sponsor Guodu Securities Co., Ltd. (hereinafter referred to as "Guodu Securities"), Changzhi South Street Branch of China Construction Bank Co., Ltd., Taiyuan Branch of China Merchants Bank Co., Ltd., and Changzhi Branch of Bank of Communications Co., Ltd. respectively.

In June 2022, the company's continuous supervision agency was changed from Guodu Securities to GF Securities Co., Ltd. (hereinafter referred to as "GF Securities"). In the same month, the company and Guodu Securities respectively signed the "Termination Agreement of the Tripartite Supervision Agreement for Raised Funds" with the bank that opened the account for raised funds; at the same time, the company and GF Securities re-signed the "Tripartite Supervision Agreement for Raised Funds" with the bank that opened the account for raised funds.

The company held the third meeting of the fourth board of directors and the third meeting of the fourth board of supervisors on December 23, 2022, and held the 2023 meeting on January 9, 2023. The first extraordinary shareholders meeting of the year reviewed and approved the "Proposal on terminating the "blasting engineering integrated service project" and using the remaining raised funds to implement new projects and providing loans to subsidiaries to implement new projects. After the change of the investment project of the raised funds, the company will use the remaining raised funds and interest to implement the "electronic detonator automated production line construction project" and "electronic detonator leg line, chip module, packaging production line project". At the same time, the company has opened a raised fund account at the Changzhi Branch of Bank of Communications Co., Ltd. and signed the "Tripartite Supervision Agreement on Raised Funds" with the account opening bank and the ongoing supervision agency GF Securities Co., Ltd.; its subsidiaries Shanxi Huhua Kailida Technology Co., Ltd. and Shanxi Huhua Group Tuanjinxing Chemical Co., Ltd. has opened raised fund accounts at Taiyuan Pingyang Road Branch of China Merchants Bank Co., Ltd. and Changzhi South Street Branch of China Construction Bank Co., Ltd., and has signed a "Tripartite Supervision Agreement on Raised Funds" with the company, the account-opening bank and the continuing supervision agency. The contents of the three-party supervision agreement are drawn up with reference to the Shenzhen Stock Exchange template, and there are no major differences. In accordance with the agreement, the Company has opened a special account for raised funds in the above-mentioned commercial bank to centrally store the funds raised from the initial public offering. If the raised funds are deposited in the form of deposit certificates, they will be promptly transferred to the specified special account for raised funds for management or renewed in the form of deposit certificates upon expiration of the deposit certificates.

The company held the 18th meeting of the fourth board of directors and the 15th meeting of the fourth board of supervisors on January 23, 2025, and held the first extraordinary shareholders' meeting of 2025 on February 14, 2025, to consider and adopt the "Proposal on Changing the Use of Part of the Raised Funds for the Acquisition of Equity Interests in Hebei Tianning Chemical". The company plans to change the direction and investment amount of part of the raised funds in the "Electronic Detonator Automated Production Line Construction Project" and "Electronic Detonator Leg Line, Chip Module, Packaging Production Line Project" to acquire Hebei Tianning Chemical Co., Ltd.

(2) Storage status of raised funds in special account

As of June 30, 2026, the specific deposit status of the raised funds is as follows:

Unit: yuan balance

Opening bank bank account number

Raised funds Interest income Total

1431437890130001829

Business Department of Bank of Communications Changzhi Branch 9,801,183.85 1,587,936.09 11,389,119.94

Total — 9,801,183.85 1,587,936.09 11,389,119.94

3. Actual use of funds raised during the reporting period

Unit: Ten thousand yuan of total raised funds 34,059.90 Total raised funds invested during the reporting period 60.31 Total raised funds changed in use during the reporting period

The cumulative total amount of raised funds that have been changed in use 22,423.50 The cumulative total amount of raised funds that have been invested 34,572.11 The cumulative proportion of total raised funds that have been changed in use 65.84%

Whether the feasibility of the project has changed. As of the end of the period, the amount of investment invested as of the end of the period has reached the forecast. This reporting period

The investment amount of the raised funds after adjustment. Whether the investment in this report period has achieved the predicted performance and whether the promised investment projects and the investment projects of the excess raised funds (including part of the planned investment amount (%) (3) = guaranteed usable status have been achieved.

Total investment (1) Amount of investment (Major variation change) (2) (2)/(1) Status date

commitment investment projects

Integrated blasting engineering service project Terminated 13,947.83 Terminated Not applicable Not applicable Yes 2. Engineering technology research center construction project Terminated 4,984.00 Terminated Not applicable Not applicable Yes 3. Expanded ammonium nitrate explosive production line capacity expansion technical transformation project No 3,152.72 2,487.40 2,487.40 100.00 Completed Not applicable Not applicable No

Not applicable, the benefit of this project is 4. Colloidal emulsion explosive production line technical transformation project No 695.35 601.86 601.86 100.00 Project completed No

Improve automation and safety 5. The powdered emulsion explosive production line is intelligent and informatized

Capacity expansion transformation and 14,000 tons/year on-site mixing of porous granules Terminated 3,280.00 547.15 547.15 100.00 Terminated Not applicable Not applicable This is an ammonium fuel oil production system transformation project

Supplementary working capital project No 8,000.00 8,000.00 8,000.00 100.00 Closed project Not applicable Not applicable No Not applicable, 202

June 2025

Electronic detonator automated production line construction project No 3,451.59 2,342.35 67.86 Not applicable Construction in June of 5 years No Construction completed

Complete

Not applicable, the

The third phase of the electronic detonator pin line, chip module, and packaging production project

Yes 8,784.22 60.31 8,784.1 100.00 Completed project Not applicable No Line project not yet completed

into

Acquisition of 98.69963% of Hebei Tianning Chemical Co., Ltd.

No 11,809.25 11,809.25 100.00 Acquisition completed Not applicable Not applicable No equity

Subtotal of committed investment projects 34,059.90 35,681.47 60.31 34,572.11

Investment direction of super-raised funds

Subtotal of investment of excess raised funds

Total 34,059.90 35,681.47 60.31 34,572.11

Situations and reasons for failure to achieve planned progress or expected benefits (divided into specific projects)

Reasons for the termination of the blasting engineering integrated service project:

Due to the country's implementation of the "Three-Year Action Plan to Win the Blue Sky Defense War" and related policy adjustments, the approval of the blasting engineering integrated service project has been delayed. Based on the current actual situation of the company and the development opportunities for the comprehensive promotion and application of digital electronic detonators, in line with the attitude of being responsible to shareholders and after comprehensive consideration, the project has been terminated.

Reasons for termination of the Engineering Technology Research Center construction project:

According to the Ministry of Industry and Information Technology's "Opinions on Promoting the High-Quality Development of the Civil Explosives Industry" and In March 2021, the "14th Five-Year Plan" Development Plan for the Civilian Explosives Industry (Draft for Comments) issued by the Department of Safety Production of the Ministry of Industry and Information Technology required that ordinary industrial detonators will be completely eliminated by 2022, and the use of digital electronic detonators will be fully promoted. Based on the above reasons, the corresponding research on high-strength and high-precision detonator automatic assembly production lines and high-precision delay charge R&D and automated production equipment will have little impact on the company's technological development, and there is no need to explain major changes in the feasibility of the project.

Increase investment.

Reasons for the termination of the intelligent and informatized capacity expansion and transformation project of the powdery emulsion explosives production line and the 14,000 tons/year on-site mixed porous granular ammonium fuel oil production system transformation project:

The intelligent and information-based capacity expansion transformation of the powdered emulsion explosives production line in this raised investment project has been completed. The other 14,000 tons/year on-site mixed granular ammonium explosives production system transformation project has not been completed. The reason is that when the company investigated the surrounding markets of Yangcheng County in 2017, the local government expected to build 1 20,000 square meters large quarry. This project is suitable for on-site mixed blasting operations. This quarry project was later included in the "2+26" urban air pollution due to the "Announcement on the Implementation of Special Emission Limits of Air Pollutants in Cities in the Beijing-Tianjin-Hebei Air Pollution Transmission Channel" issued by the Ministry of Environmental Protection in 2018. The key regulatory scope has not been approved; the local government of Yangcheng County originally planned to invest approximately 2 billion yuan to build an open-pit coal mining project with an annual output of 8 million tons and is expected to be able to produce 7,500 tons of on-site mixed explosives per year. However, the open-pit coal mining project was not approved due to many reasons such as land ownership and environmental pollution control.

Amount, purpose and progress of use of over-raised funds No over-raised funds

Changes in implementation locations of investment projects with raised funds None

Adjustments to the implementation methods of investment projects with raised funds None

The company pre-invested RMB 35.3921 million in the investment project with self-raised funds, and paid RMB 8.7882 million in issuance expenses with self-raised funds in advance. The preliminary investment and replacement of the pre-raised funds investment project The investment and payment of funds have been reviewed by ShineWing Certified Public Accountants LLP (Special General Partnership) (XYZH/2020BJGX0821), approved by the 11th meeting of the third session of the Board of Directors of the company, and announced on October 22, 2020.

Use of idle raised funds to temporarily supplement working capital None

Use of idle raised funds for cash management During the reporting period, the use of idle raised funds for cash management resulted in a profit of RMB 41,987.54.

Amount and reasons for savings in raised funds during project implementation None

As of June 30, 2026, the unused raised funds were 11,389,119.94 yuan (including the accumulated realized interest income, the purpose and destination of the unused raised funds collected by cash management

interest), are deposited as demand deposits in a special account for raised funds, and the deposit interest rate is based on the deposit interest rate agreed with the bank where the raised funds account is opened. Problems or other situations in the use and disclosure of raised funds None

4. Change the use of funds raised for investment projects

Changes in the status of investment projects with raised funds

Unit: 10,000 yuan

After the change, the project is planned to be invested. Actual as of the end of the period. As of the end of the period, the investment project has reached the target. The changed project can be actual in this reporting period. Actual in this reporting period. Is it achieved?

Changed project Corresponding original committed project Total amount of raised funds Cumulative investment amount Amount (%) (3)=(2)/usable status date Whether reinvestment occurs Current benefits Estimated benefits

(1) (2) (1) Big changes in period

Not applicable,

Blasting engineering integrated service projects,

Automated production of electronic detonators Built in June 2025 June 2025

Engineering Technology Research Center Construction Project 3,451.59 2,342.35 67.86 Not applicable No

Line construction project, installation completed, construction completed in one month

Project, powdery emulsion explosive production line intelligent

into

Energy, informatization, capacity expansion and transformation and 1

Electronic detonator pins and chips are not applicable.

4,000 tons/year on-site mixing of porous granules

Module and packaging production line item This project three

Ammonium fuel oil production system renovation project 8,784.22 60.31 8,784.1 100.00 Project completed Not applicable No

The first phase of project and supporting comprehensive building construction is yet to be completed.

Head

Project construction completed

Acquisition of Hebei Tianning Chemical Co., Ltd. Construction of electronic detonator automated production line

Co., Ltd.'s 98.69963% project" and "Electronic detonator pin line, 11,809.25 11,809.25 100.00 Acquisition completed Not applicable Not applicable No

Equity chip module, packaging production line project

Total — 24,045.06 60.31 22,935.7 — — — — —

The company held the 22nd meeting of the third board of directors, the 15th meeting of the third board of supervisors and the third extraordinary general meeting of shareholders in 2021 on September 22, 2021 and October 13, 2021 respectively, and reviewed and approved the "Part About Termination" Proposal for Investment Projects", which agreed to the company's termination of the "intelligent and informatized capacity expansion and transformation project of the powdered emulsion explosives production line and the 14,000 tons/year on-site mixed porous granular ammonium oil explosives production system transformation project" and the "engineering technology research center construction project."

Description of reasons for change, decision-making procedures and information disclosure (divided into specific projects)

The company held the third meeting of the fourth board of directors and the third meeting of the fourth board of supervisors on December 23, 2022, and held the first extraordinary shareholders meeting of 2023 on January 9, 2023, to review and approve the "About Terminating the "Explosive Engineering Integrated Service Project" and using the remaining proceeds "Proposal to fund the implementation of new projects and provide loans to subsidiaries to implement new projects", agreeing that the company will terminate the "blasting engineering integrated service project" and use all remaining raised funds to implement the "electronic detonator automated production line construction project" and "electronic detonator leg line, chip module, packaging production line project".

Case". The company plans to change the direction and investment amount of part of the raised funds in the "Electronic Detonator Automated Production Line Construction Project" and "Electronic Detonator Leg Line, Chip Module, Packaging Production Line Project" to acquire Hebei Tianning Chemical Co., Ltd.

Situations and reasons for failure to achieve planned progress or expected benefits (by specific projects) None

Description of significant changes in project feasibility after change None

5. Problems in the use and disclosure of raised funds

The Company uses the raised funds in accordance with the China Securities Regulatory Commission's "Supervisory Rules for Funds Raised by Listed Companies", "Shenzhen Stock Exchange Stock Listing Rules", "Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operations of Main Board Listed Companies", the company's "Raised Funds Management System" and other regulations, and performs relevant information disclosures in a timely, truthful, accurate and complete manner. There is no illegal use of raised funds.

Board of Directors of Shanxi Huhua Group Co., Ltd.

August 29, 2026