Zhitong Finance App News, Xinchao Energy (600777.SH) announced that the company received the “Audit Progress Statement” from ZTE Certified Public Accountants (Special General Partnership) (“ZTE”) on April 18, 2024. The main contents are as follows:

Shandong Xinchao Energy Co., Ltd. (“Xinchao Energy”)'s 2023 financial statements and internal control audits are ongoing. In 2023, Xinchao Energy will establish a new wholly-owned subsidiary in Nevada, USA. Yantai Yangfan Investment Co., Ltd., a subsidiary of Xinchao Energy, reorganized its 0.01% partnership share of Ningbo Dingliang Enterprise Management Partnership (Limited Partnership), another subsidiary of Xinchao Energy, within Xinchao Energy and transferred it to Seewave Energy Holdings Company, a newly established subsidiary in the US, and also transformed the executive partner of Ningbo Dingliang Enterprise Management Partnership (Limited Partnership) into Seewave Energy Holdings Company.

In the course of the audit, we carried out audit procedures for Xinchao Energy's newly established subsidiaries and internal controls in the process of restructuring the subsidiary's management structure, including inspection of documents, interviews with managers, spot checks of documents, etc., and communicated with the Xinchao Energy Audit Committee. Up to now, the audit procedures we have implemented have not been able to resolve concerns that there are no major flaws in the relevant business and processes, nor have they formed a conclusive opinion. After implementing further audit procedures for newly established subsidiaries and internal control in the management structure restructuring process of subsidiaries, failure to obtain sufficient and appropriate audit evidence to dispel our concerns about the effectiveness of the company's internal controls in all significant aspects will raise concerns about the effectiveness of the company's internal controls on foreign investment and subsidiary management. We will prepare an internal control audit report with no unqualified opinions (not unqualified opinions, including negative opinions and inability to express opinions).

According to the instructions issued by the accountant and the relevant provisions of section 9.8.1 of the “Shanghai Stock Exchange Stock Listing Rules”, if the relevant doubts cannot be resolved, the company's shares will be subject to other risk warnings after the disclosure of the 2023 annual report. As of the disclosure date of this announcement, the audit of the company's 2023 annual report has not been completed. The final type of internal control audit opinion is based on the internal control audit report issued by ZTE.