IRC Limited — Legal Proceedings Report 2022

Apr 19, 2022

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Incorporated in Hong Kong with limited liability)

(Stock code: 1029)

ADMINISTRATIVE OFFENCE PROCEEDING AGAINST K&S

Tuesday, 19 April 2022: This announcement is made by IRC Limited (“ IRC ” or the “ Company ”, together with its subsidiaries, the “ Group ”; Stock code 1029). Reference is made to the announcements made by the Company dated 3 June 2021 (the “ First Announcement ”), 23 June 2021 (the “ Second Announcements ”) and 13 July 2021 (the “ Third Announcement ”). Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the First Announcement, the Second Announcement and the Third Announcement.

As disclosed in the First Announcement, construction of K&S was carried out based on the original project design, which received the necessary approvals of the Russian authorities before the construction works began. However, for various reasons, including improvement of technology, production efficiency, cost saving considerations and correction of the construction deficiencies of the main contractor, some equipment and machinery were replaced and/or added. As a result, some of the actual production facilities deviated from the approved project design. The Company believes that this is not an uncommon occurrence when a relatively complex production facility is put into operation. Thus, the design documentation should have been updated and submitted to the Russian State authorities for approval.

While K&S was in the process of updating the design documents and preparing the application for approvals, RTN made an inspection of K&S during which it determined the deviations from the approved design as non-compliant. As disclosed in the Second Announcement, an administrative offence proceeding (the “ First Proceeding ”) was brought against K&S by RTN in the Court for not registering the K&S facility as hazardous (the “ Non-Registration ”). This registration is not possible without completion of the above-mentioned design documents update and application for approvals. The Court deemed the case to be outside its jurisdiction and the matter was returned to RTN. As disclosed in the Third Announcement, RTN made a ruling to impose an administrative penalty on K&S of RUB200,000 (equivalent to approximately US$3,000) in respect of the Non-Registration. K&S had paid the administrative penalty and continues to operate as usual.

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RTN requested K&S to resolve the Non-Registration by 31 December 2021. While the Group has tried to resolve the matter as quickly as practicable, due to the COVID-19 pandemic and the fact that it is an extensive process, the required works were not completed by the due date. In early December 2021, K&S requested RTN to extend the deadline but the request was not accepted.

Given that the Non-Registration was not resolved by the deadline, in February 2022, RTN conducted an unscheduled inspection of K&S. Two administrative offence proceedings were issued to K&S in late March 2022, being:

• a) the K&S project is operating without the proper operating permit. Similar to the NonRegistration, the operating permit cannot be obtained without completion of the abovementioned design documents update, which K&S is working on. RTN imposed an administrative penalty on K&S of RUB500,000 (equivalent to approximately US$6,000).

• b) K&S failed to comply with the legal orders issued by RTN on time. As with the First Proceeding, RTN has brought this offence at the local court (the “ Second Proceeding ”). The date of the court hearing will be on 17 May 2022 and in the intervening period, K&S will continue to operate to the highest possible standard as usual.

The potential outcome of the Second Proceeding is unclear. The Board understands that if K&S is found to have committed an offence, a fine may be imposed by the court. K&S may also be required to suspend its operations for up to 90 days, although the Company understands that RTN has not requested this penalty.

At the end of March 2022, a meeting was held between K&S, RTN, and the local and federal authorities. In the meeting, in addition to explaining the reasons for the delay in updating the design documents, K&S also presented the progress that had been made in preparing the required documents and the necessary procedures for the application of the operating permit. The Company considers that the meeting was constructive, and K&S will continue to work closely with the local and federal authorities to resolve the matter promptly.

The Company considers that the underlying reason for the First Proceeding and the Second Proceeding is K&S’s inability to complete the updating of the design documents within the tight timeframe prescribed by RTN, mainly due to COVID-19 and other practical reasons. RTN refused to grant an extension of the deadline even though K&S has been acting in good faith and endeavouring to resolve the matter as soon as practicable. The Company will defend its position in the court hearing and will keep shareholders and potential investors informed of any further material developments in this matter as and when appropriate.

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Shareholders of the Company and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

By Order of the Board IRC Limited Yury Makarov Chief Executive Officer

Hong Kong, People’s Republic of China Tuesday, 19 April 2022

As at the date of this announcement, the Executive Directors of the Company are Mr Yury Makarov and Mr Danila Kotlyarov. The Non-Executive Directors are Mr Peter Hambro and Mr Nikolai Levitskii. The Independent Non-Executive Directors are Mr Daniel Bradshaw, Mr Jonathan Martin Smith, Mr Raymond Kar Tung Woo, Mr Martin Davison and Mr Dmitry Dobryak.

IRC Limited

6H, 9 Queen’s Road Central Hong Kong Telephone: +852 2772 0007 Fax: +852 2772 0329 Email: ir@ircgroup.com.hk Website: www.ircgroup.com.hk

For further information, please visit www.ircgroup.com.hk or contact:

Kent Lo

Manager – Communications & Investor Relations Telephone: +852 2772 0007 Mobile: +852 9688 8293 Email: kl@ircgroup.com.hk

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