601718: Jihua Group Corporation Limited(601718) announcement on the progress of subsidiary litigation

Securities code: 601718 securities abbreviation: Jihua Group Corporation Limited(601718) Announcement No.: pro 2022-001 Jihua Group Corporation Limited(601718)

Announcement on litigation progress of subsidiaries

The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.

Important content tips:

● litigation stage of the case: ruling of the second instance.

● party status of subsidiaries of listed companies: appellant (plaintiff of first instance)

● amount involved: 480528300 yuan

● impact on the company: because the case is suspected of economic crime, it will be transferred to the public security organ for investigation and handling. The relevant results of the case are uncertain, and the impact on the current and future profits and losses of the company is uncertain.

Xinxing Jihua International Trade Co., Ltd., a subsidiary of the company’s consolidated statements (hereinafter referred to as “ITC”, with 49% equity held by the company), recently received a civil ruling served by the higher people’s Court of Hubei Province. The details are as follows: I. Basic information of the lawsuit

1. Case prosecution

The company disclosed the Jihua Group Corporation Limited(601718) risk warning announcement on economic contract disputes involving subsidiaries on the website of Shanghai Stock Exchange on September 28, 2019. ITC had a maritime dispute with Zhangjiagang Free Trade Zone Changjiang International Port Co., Ltd. (hereinafter referred to as “Changjiang international”), and ITC filed a lawsuit with Wuhan Maritime court as the plaintiff. The litigation claims of ITC are: (1) request the court to order the defendant to return 110608 tons of ethylene glycol (worth RMB 480528300); (2) If the defendant is unable to return 110608 tons of ethylene glycol to the plaintiff, request the court to order the defendant to compensate the plaintiff for the corresponding loss of 480528300 yuan according to law; (3) The litigation costs of this case shall be borne by the defendant. ITC also applied to the court for property preservation, and the court ruled that the property with the international value of RMB 480528300 has been sealed up, detained and frozen.

2. First instance ruling and appeal

The company disclosed Jihua Group Corporation Limited(601718) announcement on the progress of subsidiary litigation on the website of Shanghai Stock Exchange on August 27, 2021. After examination, Wuhan Maritime Court considered that the case was not an economic dispute but suspected of economic crime, and should transfer the relevant materials to Zhangjiagang Public Security Bureau of Jiangsu Province. After hearing, Wuhan Maritime Court made the following ruling: rejecting the lawsuit of ITC; The case acceptance fee shall be returned to ITC; If you refuse to accept the ruling, you can appeal to the Hubei Higher People’s court within 10 days from the date of service of the ruling.

ITC refused to accept the ruling of first instance and appealed to the higher people’s Court of Hubei Province, requesting that the civil ruling of Wuhan maritime court be revoked, and ordered the court of first instance to conduct a substantive trial of the case. The litigation costs of this case shall be borne by Changjiang international company.

2、 Ruling result of second instance

ITC recently received a civil ruling from the higher people’s Court of Hubei Province. After examination, the higher people’s Court of Hubei province believes that the civil legal facts involved in the case are related and identical with the facts of the criminal case investigated by the public security organ. Therefore, this case is suspected of economic crime and is the same legal fact as the criminal case being investigated by Zhangjiagang Public Security Bureau of Jiangsu Province. The court of first instance held that it was appropriate to transfer the relevant materials to Zhangjiagang Public Security Bureau of Jiangsu Province and the Court maintained them according to law.

The higher people’s Court of Hubei Province made the following ruling: reject the appeal and uphold the original ruling. This ruling is final. 3、 Impact on the company

Because the dispute between ITC and Changjiang international is suspected of economic crime, it will be transferred to the public security organ for investigation and handling. ITC may lift the property preservation measures implemented by Changjiang international in the early stage. Due to the uncertainty of the relevant results of the case, the impact on the current and future profits and losses of the company is uncertain.

The company will disclose the progress of this matter in a timely manner. Please pay attention to it.

It is hereby announced.

Jihua Group Corporation Limited(601718) board of directors January 17, 2002

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