Additional investment in Tond Chemical's BDO-PBAT integrated project

According to the announcement on August 26, the 14th meeting of the 8th Board of Directors of Tond Chemical Co., Ltd. reviewed and approved the "Proposal on Additional Investment in the PBAT New Material Industry Chain Integrated Project", agreeing to increase the investment in the PBAT New Material Industry Chain Integrated Project. The adjusted total investment of the project is RMB 3.479 billion.

As of the end of 2024, the investment in the construction-in-progress of the PBAT New Material Industry Chain Integrated Project has reached RMB 3.049 billion, with details available in the company's 2024 annual audit report. After calculation and statistics by the project team, the total investment required to complete the PBAT New Material Industry Chain Integrated Project is approximately RMB 3.479 billion. The specific details are as follows:

Reasons for additional investment in the project

During the construction of the PBAT New Material Industry Chain Integrated Project, the investment amount has been increased due to the following construction needs, with specific details as follows:

a.The on-site conditions of the PBAT New Material Industry Chain Integrated Project have changed significantly. Due to geological factors, the project adopts a stepped construction method, which has led to an increase in the amount of on-site civil engineering work, higher investment in the construction of external pipe racks, and increased general layout costs. Correspondingly, the lighting and water supply and drainage systems have also been expanded. Additionally, the stepped construction method requires separate planning and construction of the power transformation and distribution facilities, cabinet rooms, etc., which were originally planned to be built jointly in the feasibility study, resulting in increased investment in power transformation and distribution as well as instrumentation and control systems.

b.In the early stage of the project construction, the park promised to provide relatively complete supporting facilities. However, during the project construction, the construction of the park's supporting facilities progressed slowly and failed to meet the project construction schedule requirements. Therefore, the project has built some additional safety and environmental protection facilities. Moreover, the PBAT project requires a large number of supporting facilities, which has led to an increase in construction costs.

c. During the bidding process for project subcontracting, there was a significant price increase in construction materials, especially for steel bars, concrete, and section steel, resulting in higher costs. At the same time, some high-grade imported equipment has been used in the project, leading to a significant increase in costs compared with the estimated amount during the preliminary estimation stage.