Grand Ocean-KY Reports on Accounts Receivable Collection Status from Shenzhen Damahua Investment

Grand Ocean Retail Group Holding Limited (Grand Ocean-KY, stock code: 5907) provided the following update on the collection of accounts receivable from Shenzhen Damahua Investment Co., Ltd., concerning an event dated May 20, 2026.

1. Background The current outstanding balance of accounts receivable from Shenzhen Damahua Investment Co., Ltd. (hereafter Damahua) is RMB 61 million (approx. NT$281.41 million). This receivable originates from a RMB 324 million investment claim the company initially held against Quanzhou Fengsheng Group. Fengsheng Group repaid a total of 50% by 2017 as per the contract, but the remaining 50%, amounting to RMB 162 million, needed to be collected. Subsequently, Damahua agreed to assume this debt. Between 2021 and 2022, it made several payments totaling RMB 101 million, but RMB 61 million remains outstanding.

2. Collection Delays and Accounting Treatment On July 8, 2022, the company's Audit Committee and Board of Directors approved a deferred payment plan from Damahua, but payments were not made as scheduled. To secure the debt, the company has obtained a pledge of 100% equity in Quanzhou Feng'an Real Estate Development Co., Ltd. as collateral. An appraisal in July 2022 valued the underlying land's market value at approximately RMB 260.31 million (after estimated taxes). However, due to the uncertainty of collection, a full provision for doubtful accounts of RMB 61 million was recognized as of the second quarter of 2023, based on an audit by KPMG.

3. Future Measures The root cause of this debt issue, the Citong Road land project in Quanzhou, had been stalled for many years. Recently, however, the Quanzhou city government has intervened, deciding to relaunch the project in cooperation with state-owned asset management companies. In light of this development, our company will begin negotiations with Damahua to allocate development profits from the revived project towards repaying our company's receivable. The negotiations will proceed on the premise of defining the respective rights and interests of both parties in the project to maximize our company's interests.

The company will continue to negotiate with Damahua and strive for debt recovery through the project's development.