Lao Feng Xiang subsidiary completes capital reduction, internal ownership shifts

Lao Feng Xiang Co., Ltd. (Lao Feng Xiang) has finalized the capital reduction for its wholly-owned subsidiary, China First Pencil Co., Ltd. (First Pencil), as approved by board and supervisory board meetings on January 17, 2025. This involved the internal transfer of First Pencil’s 20.50% equity in Shanghai Lao Feng Xiang Co., Ltd. (Lao Feng Xiang Limited) to Lao Feng Xiang. Following this transfer, First Pencil no longer holds equity in Lao Feng Xiang Limited. Lao Feng Xiang's direct stake in Lao Feng Xiang Limited increased from 57.51% to 78.01%.

The capital reduction has been officially registered with the Shanghai Songjiang District Market Supervision Administration. First Pencil's registered capital decreased from RMB 46.1125 million to RMB 20 million. Despite the changes, Lao Feng Xiang's ownership of First Pencil remains at 100%, ensuring no alteration to the consolidated financial statement scope.

The internal equity transfer was treated as a recovery of investment for the parent company and a reduction in paid-in capital for First Pencil, as no consideration was received by First Pencil. The official business license for First Pencil, reflecting these changes, was issued on December 25, 2025.