CAPITAL ENV(03989)Accounting estimate changes

CAPITAL ENV (03989) announced that on March 12, 2026, the board of directors approved a change in accounting estimate regarding the default status in the expected credit loss model for trade receivables. The previous policy of recognizing impairment for trade receivables aged over three years and not subject to mandatory enforcement activities, has been changed to applying a 100% loss rate for trade receivables aged over five years (excluding receivables from the Ministry of Finance of the People's Republic of China), effective from December 31, 2025. This accounting estimate change is applied prospectively and does not impact the group's past earnings or cash flows, nor does it affect the group's financial position and operating performance for prior years. Based on preliminary calculations made by the company using available information, the impairment loss on trade receivables for the year ended December 31, 2025 is reduced by approximately RMB 391 million, resulting in an increase in after-tax profit of approximately RMB 293 million, total assets and net assets both increasing by approximately RMB 293 million. As the audited financial statements for the year ended December 31, 2025 are not finalized yet, details will be disclosed in the annual performance announcement for the year ended December 31, 2025, expected to be published around March 18, 2026. The company's auditor, Deloitte Touche Tohmatsu Limited, will audit the consolidated financial statements for the year ended 2025 including this accounting estimate change during the audit of the 2025 financial statements.