SINOPEC KANTONS (00934) announced that its joint venture, Rizhao Shihua, has initiated liquidation procedures. As part of the liquidation arrangement, the liquidation committee of Rizhao Shihua will finalize an asset transfer agreement for the sale of certain operational assets and related supporting facilities held by Rizhao Shihua. These assets will be sold to an independent third-party buyer for a total transaction value of approximately RMB 2.41 billion. Given the uncertainties surrounding Rizhao Shihua's related business, the board believes that proceeding with the liquidation and asset disposal in accordance with the law will help protect the overall interests of the company and its shareholders. Based on a preliminary assessment, following the liquidation of Rizhao Shihua, the group expects to recover cash roughly equivalent to the book value of its investment in Rizhao Shihua under the equity method. However, in compliance with relevant accounting standards, cumulative foreign currency translation differences (approximately a loss of HKD 132 million) recorded in other comprehensive income during the period of holding the investment in Rizhao Shihua must be reclassified to the income statement upon liquidation. As a result, the group anticipates recognizing a loss of approximately HKD 127 million (unaudited) in 2026 due to the liquidation of Rizhao Shihua. The aforementioned financial impact is based on a preliminary assessment, and the actual recognized amount will be determined upon final settlement and completion of relevant accounting procedures.