Bingshan Refrigeration & Heat Transfer Technologies Co. Ltd For the year ended December 31 2024 Auditor’s Report Reference Page Auditor’s report Financial statements — Consolidated balance sheet 1-2 — Balance sheet of parent company 3-4 — Consolidated income statement 5 — Income statement of parent company 6 — Consolidated cash flow statement 7 — Cash flow statement of parent company 8 — Consolidated statements of changes in equity 9-10 — Statements of changes in equity of parent company 11-12 — Notes to financial statement 13-151Auditors’ Report (English Translation for Reference Only) To the shareholders of Bingshan Refrigeration & Heat Transfer Technologies Co. Ltd 1. Opinion We have audited the accompanying financial statements of Bingshan Refrigeration & Heat Transfer Technologies Co. Ltd (“Bingshan Refrigeration & Heat Company”) which comprise the consolidated and company’s balance sheets as at 31 December 2024 and the consolidated and company’s income statements the consolidated and company’s cash flow statements the consolidated and company’s statements of changes in equity for the year then ended and notes to these financial statements.In our opinion the accompanying financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises in all material respects and present fairly the consolidated and the financial position of Bingshan Refrigeration & Heat Company as at 31 December 2024 and of their consolidated and the company’s financial performance and cash flows for the year then ended. 2. Basis for Opinion We conducted our audit in accordance with China Standards on Auditing for Chinese Certified Public Accountants. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report. We are independent of Bingshan Refrigeration & Heat Company in accordance with the Code of Ethics for Chinese Certified Public Accountants and we have fulfilled our other ethical responsibilities of the code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit. 3. Key Audit Matters Key audit matters are those matters that we consider in our professional judgment were of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as a whole and in forming our audit opinion thereon and we do not express a separate opinion on these matters.Revenue Recognition Key Audit Matter How the matter was addressed in the audit As stated in the Note ‘ No.44V. The main audit procedures carried out for Notes to Consolidated Financial addressing the key audit matters are as follows: Statements’ revenue on the 1. Understand and evaluate effectiveness of consolidated statements for the year design and operation of the management’s internal control over revenue ended as of December 31 2024 is 2. Carried out analytical review and evaluate 4531.15 million Yuan. Revenue of the reasonableness of sales income and gross Bingshan Refrigeration & Heat profit margin by segmenting the business and Company and its subsidiaries sales in conjunction with industry development mainly come from sales of products and actual situation of Bingshan Refrigeration & and installation project. We consider Heat Company.the revenue as the key audit matter 3. Sampling test the sales contracts identify the because of the significance of clause and condition in respect to the contract performance obligation consideration and risk revenue to the overall financial and reward transfer of the ownership. Evaluate statements and also the inherent the revenue recognition of Bingshan risk of revenue manipulation by the Refrigeration & Heat Company whether it is in management so for the special line with the accounting standards.purpose. 4. Sampling select product sales revenue record reconcile to sales invoice contracts dispatch note acceptance note; Sampling select installation sales revenue record reconcile to invoice installation contracts and completion report and Evaluate the recognition of revenue whether is in line with the accounting standards 5. Checking actual installation cost by reviewing the contract budget contract invoice and supportive document with signature for the equipment received to evaluate the cost whether it really incurred. 6. Combined with receivable audit perform confirmation procedures for key clients 7. Perform cut-off test so to ensure whether the transaction is recorded into the appropriate accounting period. 4. Other InformationThe management of Bingshan Refrigeration & Heat Company (hereinafter referred to as the “Management”) is responsible for the other information. The other information comprises the information included in the Bingshan Refrigeration & Heat Company 2024 annual report but does not include the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of the other information we are required to report that fact. We have nothing to report in this regard. 5. Responsibilities of the Management and Those Charged with Governance for the Financial Statements The Management is responsible for the preparation of the financial statements in accordance with Accounting Standards for Business Enterprises to achieve fair presentation; and designing implementing and maintaining internal control which is necessary to enable that the financial statements are free from material misstatement whether due to fraud or error.In preparing the financial statements the Management is responsible for assessing Bingshan Refrigeration & Heat Company’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate Bingshan Refrigeration & Heat Company or to cease operations or have no realistic alternative but to do so.Those charged with governance are responsible to overseeing Bingshan Refrigeration & Heat Company’s financial reporting process. 6. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud orerror and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are generally considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.During the course of audit in accordance with auditing standards we exercise professional judgment and maintain professional skepticism. We also carry out the following works: (1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control. (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of its internal control (this sentence would be deleted in circumstance when we are also responsible to issue an opinion on the effectiveness of internal control in conjunction with the audit of the financial statements). (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management. (4) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on Bingshan Refrigeration & Heat Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the financial statements in accordance with the auditing standards or if such disclosures are inadequate we shall modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause Bingshan Refrigeration & Heat Company to cease to continue as a going concern.BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD.Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) I. General Information Bingshan Refrigeration & Heat Transfer Technologies Co. Ltd (hereinafter referred to as the “the Company” or “the group” if subsidiaries included ) previously named as Dalian Refrigeration Company Limited was reorganized and reformed from main part of former Dalian Refrigeration Factory. On December 8 1993 the Company went to the public as a listed company at Shenzhen Stock Exchange Market. On March 20 1998 the Company successfully went to the public at B share market and listed at Shenzhen Stock Exchange Market with total share capital of RMB350014975.00Yuan. The registered address is No. 106 East Liaohe Road Dalian Economic and Technological Development Zone Liaoning Province as same as the headquarters’ address. The unified social credit code is 912102002423613009 on the business license. According to the 13th meeting of the 6th generation of board extraordinary general meeting for 2015 fiscal year and ' Restricted share incentive plan (draft)' the Company planned to introduce an ordinary share to incentive objectives which was 10150000 number of shares would be granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share.Up to March 12 2015 the Company received new added share capital of RMB10150000.00Yuan.The general meeting for 2015 fiscal year held on April 21 2016 approved the profit distribution policy for the year of 2015 which agrees the profit distribution based on the total 360164975 number of shares as share capital paid share dividend of 5 common shares for every 10 shares through capital reserve. The policy stated above was fully implemented on May 5 2016 and the registered capital was altered to 540247462.00Yuan.The 17thmeeting of the 6th generation of board was held on June 4 2015 and the 2nd interim shareholders’ meeting was held on June 24 2015 meeting deliberated and passed the proposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFC license [2015]3137 on December 30 2015 approving that new non-public offering cannot exceeded 38821954 numbers of shares. The company implemented the post meeting procedures for China’s Securities Regulatory Commission which is regarding adjustment of bottom price and the number of the shares issued after the implementation of profit distribution policy of 2015 in May 2016 and accordingly revised the upper limit of non-public offering of share to58645096 number of new ‘A shares’. The company issued the non-public offering of 58645096 number of ‘A shares’ to 7 investors and as a result the total number of shares of the Company is changed to 598892558 shares and the par value is 1yuan per share and the total share capital is 598892558.00Yuan. 13BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company Limited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized the board of directors to implement the Restricted Share Incentive Plan’ approved on the 3rd provisional general meeting held on September 13 2016 the 9th meeting of the 7th generation of board deliberated and passed the ‘Proposal about granting the restricted shares to incentive targets’ on September 20 2016 and set September 20 2016 as share granted date and granted 12884000 number of restricted shares to 118 incentive targets at granted price of 5.62Yuan per share. By November 22 2016 The Company has actually received the newly subscribed registered share capital of 12884000.00Yuan subscribed by incentive targets.On May 19 2017 the general meeting for 2016 fiscal year was held and profit appropriation scheme for 2016 FY was approved which was every 10 shares will be increased by 4 shares through capital reserve based on the total 611776558 number of shares. After the profit appropriation scheme the registered capital was changed to RMB856487181.00Yuan.On December 28 2017 The Company held the 3rd extraordinary shareholders meeting in 2017 and reviewed and approved the “Proposal on Repurchasing and Retiring PartiallyRestricted Stocks of the 2016 Restricted Stock Incentive Plan”. On March 8 2018 after The Company's repurchase and cancellation The Company implemented the corresponding capital reduction procedures according to law. The registered capital of The Company was changed from 856487181.00Yuan to 855908981.00 Yuan.On May 4 2018 The Company held the 21st meeting of the 7th Board of Directors andreviewed and approved the “Proposal on Repurchasing and Retiring Partially RestrictedStocks of the 2015 Restricted Stock Incentive Plan". On June 29 2018 after The Company's repurchase and cancellation The Company implemented the corresponding capital reduction procedures according to law. The registered capital of The Company was changed from 855908981.00 Yuan to 855434087 .00Yuan. On January 17th 2019 the 1st interim shareholders’ meeting was held and approved for“Proposal on Termination of the 2016 Restricted Stock Incentive Plan and Repurchasing andRetiring Restricted Stocks Plan”. Up to February 25th 2019 The Company has completed the repurchasing and retiring stocks plan respectively The Company shall perform the corresponding capital reduction procedures in accordance with the law and the registered capital decreased from 855434087.00Yuan to 843212507.00Yuan.On December 20th 2019 The Company held the 7th meeting of the 8th Board of Directors and approved to change The Company’s name from Dalian Refrigeration Company Limited to 14BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Bingshan Refrigeration & Heat Transfer Technologies Co. Ltd.The company is in general equipment manufacturing industry. The main business activities are the research and development production and sales of various industrial refrigeration components as well as the design production and installation of complete engineering projects. The main products include: scroll type piston type screw type compressor units cold water machine and other refrigeration equipment and all kinds of complete sets of refrigeration projects.This financial report is approved by the board of directors on April 222025. The financial statements will be reviewed at general meeting.II. Financial Statements Preparation Basis （1） Preparing basis The group’s financial statements are prepared according to the actual occurred transactions and events and in accordance with ‘Accounting Standards for Business Enterprises’ its application guidelines interpretations and other relevant provisions promulgated by the Ministry of Finance (collectively referred to as "Accounting Standards for Business Enterprises") and " No. 15 of Information Disclosure and Reporting Rules for Publicly Listed Companies - General Provisions for Financial Reports" (revised in 2023) promulgated by the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"). （2） Going concern The group has assessed the capacity to continually operate within 12 months since December 31 2024 and hasn’t found the major issues impacting on the sustainable operation ability. The Company’s financial statements are prepared on the basis of going concern assumption.III. Significant Accounting Policies and Accounting Estimates 1. Declaration for compliance with accounting standards for business enterprises The financial statements are prepared in line with the requirements of Accounting Standard for Business Enterprise and truly and fully reflect the relative information of the financial position for the year ended as of December 31 2024 operating performance cash flow of the Company and the group for the year then ended. 2. Accounting period The group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31. 3. Operating cycle 15BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) The group sets twelve months for one operating cycle. 4. Functional currency The group adopts RMB as functional currency. 5. Materiality criteria set up method and basis The financial statements preparation and disclosure are in line with materiality. For those matters to be disclosed and need judgement for materiality materiality criteria set up method and basis are as follows: In the notes to Disclosures involved by Materiality criteria set up method and the financial materiality judgement basis statem ents Significant receivables with Single provision is over 10 million Yuan and individual provision for bad Note V.3 represents more than 10% of the total debts provision Single provision is over 10 million Yuan and Collection or reverse of Note V.3 represents more than 10% of the total significant receivables provision Single provision is over 10 million Yuan and Significant receivables written Note V.3 represents more than 10% of the total off provision Significant construction in Note V.16 Single project budget over 30 million Yuan progress The book value of long-term equity investment in a single investee accounts for more than 10% of the group's net assets and the amount is greater than 100 million Yuan Significant JV or associates Note VII.3 or the gain or loss on investment under the long-term equity investment equity method accounts for more than 10% of the group's consolidated net profit Subsidiary’s net assets are more than10% of Significant subsidiary the group asses and its net profit is more than 10% of consolidated profit 6. Accounting for business combination under same control and not under same control 16BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) （1） Business combination under the same control Business combination under the same control is the situation where entities participating the merger are controlled by the same party or controlled by parties under same ultimate control before and after merger and the control is not temporary.The group as an acquirer the assets and liabilities that the group obtained in a business combination under the same control should be measured on the basis of their carrying amount of the acqiree in the ultimate control party’s consolidated financial statements on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it the capital surplus shall be adjusted. If the capital surplus is not sufficient to be offset the retained earnings shall be adjusted. （2） Business combination not under same control Business combination not under the same control is the situation where entities participating the merger are not controlled by the same party or not controlled by parties under same ultimate control before and after merger.When the group is an acquirer for a business combination not under same control the asset liability and contingent liability obtained shall be measured at the fair value on the acquisition date. The difference when combination cost exceeds proportionate share of the fair value of identifiable net assets of acquire should be recognized as goodwill. If the combination cost is less than proportionate share of the fair value of identifiable net assets of acquiree firstly fair value of identifiable asset liability or contingent liability shall be reviewed and so the fair value of non-monetary assets or equity instruments issued in the combination consideration after review still the combination cost is less than proportionate share of the fair value of identifiable net assets of acquire the difference should be recognized as non-operating income.If a business consolidation not under common control is finally achieved in stages when preparing the consolidated financial statements the acquirer shall remeasure its previously held equity interest in the acquiree at its fair value on acquisition date and recognize the gain or loss as investment income for the current period. Other comprehensive income under equity method accounting rising from the interest held in acquiree in relation to the period before the acquisition and changes in the value of its other equity other than net profit or loss other comprehensive income and profit appropriation shall be transferred to investment gain or loss for the period in which the acquisition incurs excluding the other comprehensive income from the movement on the remeasurement of ne asset or liability of defined benefit 17BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) plan. 7. Criteria of control judgment and method of preparation of consolidated financial statements Consolidation scope is determined on the control basis including the Company and all subsidiaries controlled by the Company. Control criteria is that the group has the power over the investees enjoy the variable return by involving the relative activities of the investees and also has the impact on the return amount through the power over the investees.If subsidiaries adopt different accounting policy or have different accounting period from the parent company appropriated adjustments shall be made in accordance with the Company policy in preparation of the consolidated financial statements.All significant intergroup transactions outstanding balances and unrealized profit shall be eliminated in full when preparing the consolidated financial statements. Portion of the subsidiary’s equity not belonging to the parent profit loss for the current period portion of other comprehensive income and total comprehensive belonging to minority interest shall bepresented separately in the consolidated financial statements under “minority interest ofequity” minority interest of profit and loss” “other comprehensive income attributed tominority interest” and “total comprehensive income attributed to minority interest” title.If a subsidiary is acquired under common control its operation results and cash flow shall be consolidated since the beginning of the consolidation period. When preparing the comparative consolidated financial statements adjustments shall be made to relevant items of comparative figures as regarded that reporting entity established through consolidation has been always existing since the point when the ultimate controlling party starts to have the control.If a subsidiary is acquired not under common control its operation results and cash flow shall be consolidated since the beginning of the consolidation period. In preparation of the consolidated financial statements adjustments shall be made to subsidiary’s financial statements based on the fair value of its all identifiable assets liability or contingent liability on the acquisition date.When the group partially disposes of the long –term equity investment in subsidiary without losing the control over it in the consolidated financial statements the difference between disposals price and respective disposed value of share of net assets in the subsidiary since the acquisition date or combination date shall be adjusted for capital surplus or share premium no enough capital surplus then adjusted for retained earnings.When the group partially disposes of the long –term equity investment in subsidiary and lose 18BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) the control over it in preparation of consolidated financial statements remaining share of interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share disposal consideration and fair value of remaining portion of shareholding minus the share of the net assets in the subsidiary held based on the previous shareholding percentage since the acquisition date or combination date the balance of above is recognized as investment gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive income relevant to share investment in subsidiary shall be transferred to investment gain /loss for the period on the date of losing control.When the group partially disposes of the long –term equity investment in subsidiary and lose the control over it by stages if all disposing transactions are bundled each individual transaction shall be seen as a transaction of disposal of a subsidiary by losing control. The difference between the disposal price and the share of the net assets in the subsidiary held before the date of losing control shall be recognize as other comprehensive income until the date of losing control where it is transferred into investment gain/ loss for the current period.If the equity investment in the subsidiary is disposed of by stages through multiple transactions until the control is lost and it is not a bundled transaction each transaction shall be accounted for separately according to whether the control is lost. 8. Cash and cash equivalent The cash listed on the cash flow statements of the Company refers to cash on hand and bank deposit. The cash equivalents refer to short-term (normally with original maturities of three months or less) and liquid investments which are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. 9. Translation of foreign currency （1） Foreign currency transaction Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank of China (“PBOC”) on the 1st day of the month when the transactions are accounted initially.At the balance sheet date foreign currency monetary items should be converted into reporting currency at the balance sheet date’s spot exchange rate. Exchange differences should be taken into the current profits and losses except special foreign currency borrowings for construction and producing assets which are qualifying for assets capitalization should be capitalized.Foreign currency non-monetary items which are recorded in historical cost should be still recorded at the spot exchange rate when the transaction occurred and no change on reporting currency amount. Foreign currency non-monetary items which are measured at fair value 19BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) should be recorded in the spot exchange rate at the date measuring the fair value and the differences should be recognized as profit and loss from fair value changes and included in the current profits and losses. Invested capital in foreign currency shall be converted into reporting currency at FX rate at when the investment is received and no foreign exchange difference arises between capital received and monetary items. 10. Financial instruments （1） Recognition and derecognition of financial instruments The group shall recognize a financial asset or a financial liability when becoming party to the contractual provisions of the instrument.An entity shall derecognize a financial asset(or a part of it or a group of similar financial asset) when and only when: 1) the contractual rights to the cash flows from the financial asset expire or 2) the entity transfers contractual rights to receive the cash flows of a financial asset or assumes a contractual obligation to pay those cash flows received to the 3rd party in full amount in time according to the ‘passing-through’ agreement and the entity substantially transfers all the risks and rewards of ownership of the financial asset in nature or the entity neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but the entity has not retained control.Financial liabilities shall be derecognized if the obligation of the liability is fulfilled cancelled or expired. An exchange between an existing borrower and lender of debt instruments with substantially different terms shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly a substantial modification of the terms an existing financial liability shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of a financial liability extinguished and the consideration paid including any non-cash assets transferred or liabilities assumed shall be recognized in profit or loss.A regular way purchase or sale of financial assets shall be recognized and derecognized as applicable using trade date accounting or settlement date accounting. （2） Classification and measurement of financial assets At initial recognition the group shall classify financial assets as measured at amortized cost fair value through other comprehensive income or fair value through profit or loss on the basis of both the group’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. Only when the business model for managing 20BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) the financial assets is changed the affected financial assets shall be reclassified.In determining the business model the group considers among others the way in which the company evaluates and reports the performance of financial assets to key management personnel the risks affecting the performance of financial assets and the way in which they are managed and the way in which the relevant business managers are remunerated. In assessing whether the objective is to collect contract cash flows the group needs to make an analytical judgment on the reasons timing frequency and value of the sale of the financial assets before the maturity date.In determining the contract cash flow characteristics the group is required to determine whether the contract cash flow is only the payment of principal and interest based on the outstanding principal (including the assessment of the time value of money correction judging any significant difference between it and the baseline cash flow/ for financial assets containing early repayment characteristics is required to determine whether the fair value of early repayment features is very small).Financial assets are measured at fair value at the initial recognition but accounts receivable or notes receivable arising from the sale of goods or provision of services etc. do not contain a significant financing component or do not consider the financing component of less than one year the initial measurement is based on the transaction price.For financial assets that are measured at fair value the related transaction costs are directly included in current profit or loss and those costs of other categories of financial assets are included in their initial recognized amounts.Financial assets subsequent measurement based on the classification 1) A financial asset measured at amortized cost A financial asset shall be measured at amortized cost if both of the following conditions are met: * the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;* the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets of this category include: monetary fund receivable notes receivable and other receivables. 2) Debt instruments measured at fair value through other comprehensive income A financial asset shall be measured at fair value through other comprehensive income if both of the following conditions are met: * the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial 21BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) assets and * the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.The effective interest rate is applied to interest income. A gain or loss arising from a financial asset measured at fair value through other comprehensive income which is not part of hedging relationship shall be recognized in other comprehensive income apart from interest income impairment loss and foreign exchange difference. When this type of financial assets is derecognized accumulated gain or loss previously in the other comprehensive income shall be out of it and accounted into retained earnings when the financial asset is derecognized. The financial assets of this category include: receivable financing. 3) Equity instruments measured at fair value through other comprehensive income The group may make an irrevocable election for particular investments in equity instruments that it would be measured at fair value through other comprehensive income but once the election is made it is irrevocable. The group only recognizes the dividend (apart from the dividend as investment cost pay back) into profit and loss and fair value movement subsequently will be recognized into comprehensive income and no need for impairment provision. When this type of financial assets is derecognized accumulated gain or loss previously in the other comprehensive income shall be out of it and accounted into retained earnings when the financial asset is derecognized. The financial asset of this category is equity instruments. 4) A financial asset measured as fair value through profit or loss Apart from classified as the amortized cost financial assets and as fair value through other comprehensive income financial assets a financial asset is classified as fair value through profit or loss. The group shall subsequently measure this financial asset at its fair value except for hedging accounting any gain or loss on FVTPL shall be accounted into profit and loss. The financial assets of this category include: tradable financial asset other non-current financial asset.A financial asset shall be classified as fair value through profit or loss if it is recognized contingent consideration through business combination which is not under same control situation. （3） Classification basis for recognition and measurement of financial liability Except for the financial guarantee contract commitments to provide a loan at a below?market interest rate and financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies the group 22BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) shall initially classify all financial liabilities as it measured at amortized cost or financial liabilities at fair value through profit or loss. For financial liabilities that are measured at fair value the related transaction costs are directly included in current profit or loss and those costs of other categories of financial assets are included in their initial recognized amounts.Financial liabilities subsequent measurement based on the classification 1) Financial liabilities as it subsequently measured at amortized cost Effective interest method is applied to financial liabilities as subsequently measured at amortized cost 2) Financial liability as it measured at fair value through profit or loss Financial liability measured at fair value through profit or loss including tradable financial liability (derivative instrument of financial liability included) and designated as financial liability measured at fair value through profit or loss. Tradeable financial liability (including derivate instrument of financial liability) are subsequently measured at fair value. The net gain or loss arising from changes in fair value are recorded in profit or loss for the period in which they are incurred. Financial liability designated as it measured at fair value through profit or loss shall be subsequently measured at fair value except for changes in fair value caused by changes in the group's own credit risk which are recognized in other comprehensive income other changes in fair value are recognized in profit or loss for the current period; The group recognizes all fair value changes (including the amount affected by changes in its own credit risk) in profit or loss if the inclusion of changes in fair value caused by changes in its own credit risk in other comprehensive income would cause or widen the accounting mismatch in profit or loss for the current period. （4） Financial instrument impairment Based on expected credit loss the group shall apply the impairment requirements for the followings: * a financial asset measured at amortized cost; * debt investment measured at fair value and changes in fair value is through other comprehensive income; * lease receivable; * a contractual asset and financial guarantee contract.Expected credit loss is the weighted average of credit losses with the respective risks of a default occurring as the weights. A credit loss herein is referred to as the present value at original effective rate of the difference between the contractual cash flows that are due to the group under the contract; and the cash flows that the Company expects to receive that's the present value of the total cash shortage. The group shall measure expected credit losses of a financial instrument in a way that reflects: * an unbiased and probability?weighted amount 23BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) that is determined by evaluating a range of possible outcomes; * the time value of money; and * reasonable and supportable information that is available without undue cost or effort at the reporting date about past events current conditions and forecasts of future economic conditions.Expected credit loss of financial instrument is assessed individually and portfolio. The group assesses the expected credit loss based on the portfolio in accordance with the common characteristics of credit risk which involves type of financial instrument credit risk grade and age of trade receivables.When assessing expected credit losses the group considers all reasonable and supportable information including that which is forward-looking. In making these judgments and estimates the group extrapolates the expected changes in the debtor's credit risk based on historical repayment data combined with factors such as economic policies macroeconomic indicators and industry risks. Different estimates may affect the provision for impairment and the provision already made may not equal the actual amount of impairment losses in the future. 1) Impairment testing method of receivable and contract asset For receivable notes receivable and contract asset etc. which don’t contain significant financing component and arise from sales of products and service provision the group adopts simplified method to account expected credit loss provision at an amount equal to the whole lifetime expected credit losses.For lease premium receivable trade receivable containing significant financing component and contract asset the group adopts simplified method to account expected credit loss provision at an amount equal to the whole lifetime expected credit losses.The group determines the expected credit loss of trade receivable on the basis of portfolios with common characteristics of credit risk which are considered by expected credit loss measurement reflection by reference to historical experience of credit loss and by comparison of receivable past due days/ receivable age with default risk rate unless the single credit loss is separately recognized for contractual payments that is significant in amount and credit impaired. If certain client is significant different from others in terms of credit risk characteristics or the client’s credit risk has significantly increased such as experiencing severe finance difficulty its expected credit loss is obviously higher than it to be at accounting age the group will make separate credit loss provision for this client’s receivable.* Portfolio category and recognition basis of receivable ( contract asset) 24BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) The group classifies accounts receivable (and contract assets) according to the similarity and relevance of credit risk characteristics based on information such as age nature of payments credit risk exposure historical debt collection etc. For accounts receivable (and contract assets) the group determines that aging is the primary factor affecting its credit risk and therefore the group assesses its expected credit losses on the basis of aging portfolios. The group calculates the overdue age based on the payment date agreed in the contract.No expected credit loss is recognized for receivables from related party within consolidated scope as the group assesses its credit risk is relatively low.* Portfolio category and recognition basis of notes receivable Portfolio category Expected credit loss accounting estimate policy Bank acceptance note portfolio Lower credit risk assessed by the management no expected credit loss recognition Commercial acceptance note Same as receivables portfolio and provided for excepted portfolio credit loss allowance based on expected credit loss rate 2) Impairment testing method of debt investment other debt investment loan commitments and financial guarantee contracts With the exception of financial assets (such as debt investments other debt investments) loan commitments and financial guarantee contracts for which the simplified measurement method is adopted above the group adopts the general method (three-stage method) for the provision of expected credit losses. At each balance sheet date the group assesses whether its credit risk has increased significantly since the initial recognition and if the credit risk has not increased significantly since the initial recognition in the first stage the group measures the loss provision at an amount equivalent to the expected credit loss over the next 12 months and calculates interest income based on the carrying balance and effective interest rate; If the credit risk has increased significantly since the initial recognition but no credit impairment has occurred in the second stage the group measures the loss provision at an amount equivalent to the expected credit loss over the entire duration and calculates interest income based on the carrying balance and effective interest rate; If credit impairment occurs after initial recognition in the third stage the group measures the loss provision at an amount equivalent to the expected credit loss over the entire duration and calculates interest income at amortized costs and effective interest rates. For financial instruments with only low credit risk at the balance sheet date the group assumes that their credit risk has not increased significantly since initial recognition 25BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) The whole life expected credit loss refers to the expected credit loss caused by all possible default events during the whole expected life of the financial instrument. Expected credit losses over the next 12 months are expected credit losses resulting from defaults on financial instruments that may occur within 12 months after the balance sheet date (or if the expected duration of the financial instrument is less than 12 months) and are part of the overall expected credit losses over the life of the financial instrument.Criteria of significant increase in credit risk and definition of credit impaired assets are disclosed on Note X.1 （5） Recognition and measurement of transfer of financial assets A financial asset is derecognized when the financial asset has been transferred together with substantial all risks and rewards to the transferee. A financial asset can not be derecognized when the substantial all risks and rewards to the financial asset has been retained. When the all risks and rewards of the financial asset are neither transferred nor retained but the group has given up its control of the financial asset the financial asset shall be derecognized and recognize the asset and liability originated. Where control of the financial asset is not relinquished the relevant financial asset shall be recognized according to the extent to which it continues to be involved in the transferred financial asset and the relevant liability shall be recognized accordingly.In the case where the financial asset as a whole qualifies for the derecognition conditions the difference between the carrying value of transferred financial asset at the derecognition date and the sum of the consideration received for transfer and the accumulated amount of changes in fair value in respect of the amount of partial derecognition ( financial assets involved in transfer must qualify the following conditions: * the financial asset is held within a business model whose objective is not only for collecting contractual cash flows but also for sale; * the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest based on the principal amount outstanding) that was previously recorded under other comprehensive income is transferred into profit or loss for the period.In the case where only part of the financial asset qualifies for derecognition the carrying amount of financial asset being transferred is allocated between the portions that to be derecognized and the portion that continued to be recognized according to their relative fair value. The difference between the amount of consideration received for the transfer and the accumulated amount of changes in fair value that was previously recorded in other comprehensive income for the asset partially qualified for derecognition (financial assets 26BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) involved in transfer must qualify the following conditions:* the financial asset is held within a business model whose objective is not only for collecting contractual cash flows but also for sale; ; * the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest based on the principal amount outstanding ) and the above-mentioned allocated carrying amount is charged to profit or loss for the period.Where the assets continue to be involved by providing financial guarantees for the transferred financial assets the assets that continue to be involved in the same form are recognized at the lower of the carrying value of the financial assets and the amount of the financial guarantees.Financial guarantee amount means the maximum amount of consideration received that will be required to be repaid. （6） Distinguish between financial liability and equity instrument and accounting Financial liability and equity instrument shall be distinguished in accordance with the following standards: * if the group cannot unconditionally avoid paying cash or financial asset to fulfil a contractual obligation the contractual obligation is qualified or financial liability. For certain financial instrument although there are no clear terms and conditions to include obligation of paying cash or other financial liability contractual obligation may indirectly be formed through other terms and conditions. * the group’s own equity instrument shall also be considered whether it is the substitute of cash financial asset or it is the remaining equity after the issuer deducts liability enjoyed by the equity holder if it must or can be used to settle a financial asset. If the former the instrument is a financial liability of the issuer otherwise it is an equity instrument of the issuer. In certain circumstances financial instrument contract is classified as financial liability if financial instrument contract specifies the Company must or can use its own equity to settle the financial instrument the contractual amount of right or obligation equals to that of the numbers of own equity instrument available or to be paid multiplied by fair value when settling nevertheless the amount is fixed or varied partially or fully based on the its own equity’s market price(such as interest rate certain commodity’s or financial instrument’s price variance).When classifying a financial instrument (or its component) in the consolidated statements the group takes all terms and conditions agreed by the its member and instrument holder into consideration. If the group because of the instrument as a whole bears settlement obligation by paying cash other financial asset or other means resulted in financial liability the instrument shall be classified as financial liability. （7） Derivative financial instrument 27BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) The group uses derivative financial instruments such as foreign exchange forward contracts commodity forward contracts and interest rate swaps to hedge exchange rate risk commodity price risk and interest rate risk respectively. Derivative financial instruments are initially measured at their fair value on the date the derivative transaction contract is signed and are subsequently measured at their fair value. A derivative instrument with a positive fair value is recognized as an asset and a negative fair value is recognized as a liability.Except hedging accounting all gain or loss from the FV movement of derivative instrument shall be recognized in the income statement. （8） Financial asset and financial liability offset Financial asset and financial liability shall be presented in the balance sheet separately and cannot be offset unless the following conditions are all met: * the Company has the legal right to recognized offset amount and the right is enforceable. * the Company plans to receive or a legal obligation to pay cash at net amount. 11. Inventories Inventories are raw material low-valuable consumable goods on transit working-in-progress finished goods and cost to fulfil the contract etc.The inventories are processed on perpetual inventory system and are measured at their actual cost on acquisition. Weighted average cost method is taken for measuring the inventory dispatched or used. Low value consumables and packaging materials is recognized in the income statement by one-off method.At the balance sheet date inventory is measured at the lower of cost and net realizable value.If the cost of the inventory is higher than its net realizable value a provision is made for the decline in the price of the inventory and it is accounted in the current profit or loss. Net realizable value is the amount of the estimated selling price of inventory in daily activities less the estimated costs to be incurred at completion estimated selling expenses and related taxes.Impairment provision for the group's raw materials/goods in stock/WIP/ cost to fulfil the contract is made on an individual inventory item and when determining its net realizable value the inventory of goods in stock and materials used for sale are determined at the estimated selling price of the inventory less estimated selling expenses and related taxes; Inventory of materials held for use in production is determined at the estimated selling price of the finished goods produced less the estimated costs to be incurred up to completion estimated selling expenses and 28BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 12. Contract asset and contact liability (1) Contract asset Contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. For example the group sold two goods that can be clearly distinguished to the client then the group has the right to consideration in exchange of the goods because one of the goods are delivered but the consideration’s collection is conditioned on the other goods delivery in this case the right to consideration shall be recognized as contract asset.Expected credit loss recognition of contract asset is referred to the Note III、10 Provision for impairment of financial assets. (2) Contract liability An entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. If a customer pays consideration or the group has a right to an amount of consideration that is unconditional before the group transfers a good or service to the customer the group shall present the contract as a contract liability when the payment is made or the payment is due (whichever is earlier). 13. Assets relevant to contract cost (1) Assets recognition methods in relation to contract cost Assets relevant to contract cost in the group include cost to fulfill the contract and cost to obtain a contract. Cost to fulfill the contract is presented under inventory and other non-current assets. Cost to obtain a contract is presented under other current assets and other non-current assets.If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard such as inventory fixed assets or intangible assets an entity shall recognize an asset from the costs incurred to fulfill a contract only if those costs meet all of the following criteria: the costs relate directly to a contract or to an anticipated contract including direct labor direct materials and overheads which is clearly stated to be borne by the client and any other cost in line with the contract; the costs enhance resources of the group that will be used in performance obligations in the future; and the costs are expected to be recovered. 29BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) An asset as the incremental costs of obtaining a contract with a customer shall be recognized if the group expects to recover those costs. The group may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset t is one year or less. The incremental costs of obtaining a contract are those costs that the group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example a sales commission). Other expenses incurred in order to obtain a contract rather than the incremental cost and expected to be recovered (regardless of whether the contract is obtained such as travelling expenses) shall be recognized as an expense when incurred unless those costs are explicitly chargeable to the customer. (2) Amortization of asset relevant to contract cost An asset recognized in accordance with contract cost shall be amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. (3) Impairment of asset relevant to contract cost If the carrying value of the group's assets related to the contract cost is higher than the following two differences the group will make the impairment provision for the excessive part and recognize the asset impairment loss: * The remaining consideration that the group is expected to obtain due to the transfer of the commodities related to the asset; * Estimate the costs to be incurred for the transfer of the relevant goods 14. Long-term equity investment Long term equity investments are the equity investment in subsidiary in associated company and in joint venture. (1) Judgement on control joint control and significant influence Equity investments in which the group has a significant impact on the investee are investments in associates.Significant influence refers to having the power to participate in the decision-making of the financial and operational policies of the investee but not being able to control or jointly control the formulation of these policies with other parties. Significant influence exists when the entity directly or indirectly owned 20% or more but less than 50% voting shares in the investee unless there is explicit evidence that the company cannot participate in the production and operation decisions of the investee or have control over the investee. 30BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) When having less than 20% voting shares the group’s significant influence still exists if the followings are taken into accounts: representation on the board of directors or equivalent governing body of the investee participation in financial or operating activities policy-making processes material transactions between the investor and the investee interchange of managerial personnel or provision of essential technical information etc.The group’s joint venture investment is an equity investment whereby the parties have jointly control over it and have rights to the net assets of the investee. Joint control is the contractually agreed sharing of control of an arrangement which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The group’s judgement on joint control is based on the joint arrangement that all participants or combinations of participants collectively control the arrangement and that decisions relating to the activities of the arrangement must be made with the unanimous consent of those participants who collectively control the arrangement. (2) Accounting The group initially measures the long-term investment in line with the initial cost for acquiring the investment.The initial investment cost for long-term equity investment acquired through business combination under common control is the carrying amount presented in the consolidated financial statements of the share of net assets at the combination date in the acquired company. If the carrying amount of net assets at the combination date in the acquired company is negative investment shall be recognized at zero.If long-term equity investment is acquired through business combination not under common control initial investment cost shall be the combination cost. If the equity investment of investee not under common control is acquired by stages and it’s not a bundled transaction the carrying amount of the equity investment held previously plus newly increased investment cost are taken as the initial investment cost.Apart from the long-term equity investments acquired through business combination the cost of investment for the long-term equity investments acquired by cash payment is the amount of cash paid relevant direct expense tax and other necessary expenses for the investment. For long-term equity investment acquired by issuing equity instruments the cost of investment is the fair value of the equity instrument issued.The Company adopts cost model for investment in subsidiary on separate financial statement.Under cost model the long-term equity investment is measured at initial investment cost. 31BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) When more investment is added it shall increase the carrying amount of investment by adjusting the fair value of additional investment and relevant transaction expenses. Cash dividend or profit declared by investee shall be recognized as investment gain/loss for the period based on the proportion share in the investee.The Company adopts equity method for investment in joint venture and affiliate. Under equity method if the initial investment cost is greater than the share of fair value of the identifiable net assets in the investee the initial investment cost of long-term equity investment is no need to be adjusted; If the initial investment cost is less than the share of fair value of the identifiable net assets in the investee the difference shall be recorded into the current profit and loss and the cost of long-term equity investment shall be adjusted at the same time.Long-term equity investment subsequently under equity method shall be adjusted for it carrying amount according to the share of equity increase or decrease in the investee. The Company shall recognize its share of the investee’s net gain or losses after the investee’s net profit adjustment based on the fair value of the investee’s individual identifiable assets at the acquisition date after making appropriate adjustments thereto in conformity with the accounting policies and accounting period and offsetting the unrealized profit or loss from the inter-group transactions not constituting the business between the entity and its associates and joint ventures according to the shareholding attributable to the group (full amount of loss shall be recognized if the inter-group transaction is impairment loss). The group recognizes net losses incurred by investee to the extent that the carrying value of long-term equity investments and other long-term interests substantially constituting net investments in investee are written down to zero except where the group is obliged to bear additional losses.The difference between the book value of long-term equity investment and actual acquisition cost shall be recognized in the gain or loss of investment when the long-term equity investment is disposed of.For long-term investments accounted under equity method other comprehensive income recorded shall be accounted on the same basis as the investee directly disposing of related assets or liability when equity method is not used any longer. The movements of shareholder’s equity other than the net profit or loss other comprehensive income and profit distribution previously recorded in the shareholder’s equity of the Company are recycled to investment income for the period on disposal. 32BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) If the remaining equity after the partially disposal is still accounted for under the equity method the relevant other comprehensive income previously recognized under the equity method is treated on the same basis as the direct disposal of the relevant assets or liabilities by the investee and is carried forward on a proportional basis and the owner's equity which is apart from net profit and loss other comprehensive income and profit distribution of the investee shall be recognized and proportionally transfers to current investment income.Where the entity has no longer joint control or significant influence in the investee company as a result of partially disposal of the investment the remaining investment will be accounted for in line with the Recognition and Measurement of Financial Instruments Standard -No 22 of Accounting Standards for Business Enterprises(No7 Caikuai [2017]) and the difference between the fair value of remaining investment at the date of losing joint control or significant influence and its carrying amount shall be recognized in the profit or loss for the year.Where the entity has no longer control over the investee company as a result of partially disposal of the investment the remaining investment will be changed to be accounted for using equity method providing remaining joint control or significant influence over the investee company. The difference between carrying amount of disposed investment and consideration received actually shall be recognized as investment gain or loss for the period and investment shall be adjusted accordingly as if it was accounted for under equity model since acquisition. Where the entity has on longer joint control or significant influence in the investee as a result of disposal the investment shall be accounted for in accordance with the Recognition and Measurement of Financial Instruments Standard -No 22 of Accounting Standards for Business Enterprises(No7 Caikuai [2017]) and difference between the carrying amount and disposal consideration shall be recognized as investment gain or loss for the period and the difference between the fair value of remaining investment at the date of losing control and its carrying amount shall be recognized in the profit or loss for the year. 15. Investment property Investment property is held to earn rentals or for capital appreciation or both and includes property building and use right of land. They are measured at cost model.Investment property is depreciated or amortized on straight line basis and its expected useful life net residual value rate and annual depreciation rate is as follows: Useful life Estimated net residual value Annual Category (years) rate (%) depreciation rate 33BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Use right of land 50 0 2 Property and Buildings 40 3/10 2.25-2.43 16. Fixed assets Recognition criteria of fixed assets: defined as the tangible assets which are held for the purpose of producing goods rendering services leasing or for operation & management and have more than one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the group and its cost can be measured reliably. Fixed assets include: building machinery transportation equipment electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are still being used and land is separately measured. Straight-line depreciation method is adopted by the group. Estimated net residual value rate useful life depreciation rate as follows: Useful life Estimated net residual Annual depreciation No Category (years) value rate (%) rate (%) 1 Property and Buildings 20-40 3、5、10 2.25-4.85 2 Machinery equipment 5-22 0.5-1、3、5、10 4.09-19.90 3 Transportation equipment 3-15 1、3、5、10 6-33.33 4 Electronic equipment &others 3-15 0-1、3、5、10 6-33.33 The group should review the estimated useful life estimated net residual value and depreciation method at the end of each year. If any change has occurred it shall be regarded as a change in the accounting estimates. 17. Construction in progress The cost of construction in progress is determined according to the actual construction expenditure including the necessary construction expenditure incurred during the construction period the capitalized borrowing cost and other related expenses before the construction reaches the condition expected for use.Constructions in progress are transferred to fixed assets based on the construction budget and actual costs on the date when completing and achieving estimated usable status and the fixed assets should be depreciated in the next month. Adjustment will be made upon confirmation of their actual values after implementing the completion and settlement procedures.The construction in progress shall be transferred to fixed assets when it reaches the expected usable state and the criteria are as follows: 34BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Items Criteria of transferring to FA Property and Buildings Earlier of actual starting of use and completion of inspection Machinery equipment Earlier of actual starting of use and completion of installation / inspection 18. Intangible asset The group’s intangible assets include use right of land patents non-patented technologies and others. They are measured at actual cost at acquisition day. For acquired assets the actual cost is measured at actual price paid and relevant other expenses. Invested intangible asset shall be measured at actual cost as contracted or agreed value however fair value will be taken if the contracted or agreed value is not fair. (1) Useful life and the basis for recognition estimation amortization method or review procedure Use right of land shall be amortized evenly within the amortization period since the remised date. Patents technologies and other intangible assets are amortized over the shortest of their estimated useful life contractual beneficial period and useful life specified in the law.Amortization charge is included in the cost of assets or expenses as appropriate for the period according to the usage of the assets. At the end of the year for definite life of intangible assets their estimated useful life and amortization method shall be assessed. Any change shall be treated as change on accounting estimate. (2) The scope and accounting of research and development The group separates the expenditure on internal research and development projects into research phase expenditure and development phase expenditure. At research phase expenditure are expenses directly relevant to research activity including R&D employee’s salary materials depreciation technology cooperation cost and assessment testing fees. At development phase expenses can be capitalized only when meeting the following conditions: (a)the technical feasibility of completing the intangible asset so that it will be available for use or sale.(b)its intention to complete the intangible asset and use or sell it.(c)how the intangible asset will generate probable future economic benefits. Among other things the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or if it is to be used internally the usefulness of the intangible asset.(d)the availability of adequate technical financial and other resources to complete the 35BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) development and to use or sell the intangible asset.(e)its ability to measure reliably the expenditure attributable to the intangible asset during its development.Any expenditure not qualifying for the above conditions shall be accounted into profit and loss account.The projects expenditure will go to the development stage and start to be capitalized after meeting the above conditions and passing the technical feasibility and economic feasibility studies and being approved after evaluation. 19. Impairment of long-term assets The group assesses whether there is any indication that long-term equity investment investment property under cost model fixed assets construction in progress right-of-use asset and intangible assets with definite useful life may be impaired. If there is any indication that an asset may be impaired the asset will be tested for impairment. Goodwill and intangible asset with infinite useful life and development cost not reaching available for use status are tested for impairment annually no matter there is any indication of impairment or not. (1) Non-current asset impairment excluding financial asset (expect goodwill) When testing the impairment the group recognized the recoverable amount of an asset which the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. After impairment test any difference of carrying amount over its recoverable amount shall be recognized as impairment loss.The group estimates recoverable amount based on an individual asset. If it is not possible to estimate the recoverable amount of an individual asset the recoverable amount is determined on the basis of the asset groups or asset portfolio to which the asset belongs. Asset portfolio is determined based on whether the major cash inflow generated by the asset group is independent from the cash inflow of other assets or the asset portfolio.Net amount which FV less disposal cost is reference to the agreed sale price or observable market price for similar asset within the arm length transaction. When estimating the present value of future cash flows management must estimate the expected future cash flows of the asset or group of assets and select an appropriate discount rate to determine the present value of future cash flows. (2) Goodwill impairment 36BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) The group allocates the carrying value of the goodwill generated from the business combination to the relevant asset group or to the relevant asset group combination which is difficult to allocate to the relevant asset group，in a reasonable way from the date of purchase.When conducting impairment tests on goodwill contained within the related asset group or asset group combination if there are signs of impairment in the asset group or asset group combination related to goodwill the impairment test shall firstly be conducted on the asset group or asset group combination excluding goodwill and the recoverable amount shall be calculated and compared with the relevant carrying value so to recognize the corresponding impairment loss; Then an impairment test is conducted on the asset group or asset group combination containing goodwill to compare the carrying value with the recoverable amount.If the recoverable amount is lower than the carrying value the impairment loss amount is first offset against the carrying value of goodwill allocated to the asset group or asset group combination and then offset the carrying value of the asset group and asset group combination based on the proportion of the carrying value of other assets in the asset group or asset group combination without goodwill.The methodology parameters and assumptions of the goodwill impairment test are referred in Notes VI.19.Once the impairment loss on the assets is recognized it can not be reversed in a subsequent period. 20. Long-term prepaid expense The group's long-term prepaid expense refers to landscape fees renovation &decoration expenses and other expenses paid and should be allocated over 1year.It will be amortized evenly within its beneficial period. The remaining unamortized expense should be charged into income statement if long-term prepaid expense can not bring the beneficial inflows.Landscape fees will be amortized for 10 years and renovation& decoration fees will be amortized for 5-10 years. 21. Employee benefits Employee’s benefit comprises short-term benefit post-employment benefit termination benefit and other long-term employee’s benefit.Short-term benefit includes salary bonus allowance welfare social insurance housing funds labor union expense staff training expense during the period in which the service rendered by the employees the actually incurred short term employee benefits shall be recognized as liability and shall be recognized in P&L or related cost of assets based on benefit objective 37BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) allocated from the service rendered by employees.Post-employment benefits include the basic pension scheme and unemployment insurance etc.Based on the risk and obligation borne by the Company post-employment benefits are classified into defined contribution plan and defined benefit plan. For defined contribution plan liability shall be recognized based on the contributed amount made by the Company to separate entity at the balance sheet date in exchange of employee service for the period and it shall be recorded into current profit and loss account or relevant cost of assets in accordance with beneficial objective.Termination benefits are employee benefits payable as a result of either the group’s decision to terminate an employee’s employment before the contract due date or an employee’s decision to accept voluntary redundancy in exchange for those benefits. The group shall recognize the termination benefits as a liability and an expense on the earlier date (1) when the group cannot unilateral withdraw the termination benefits due to employment termination plan or due to redundancy suggestion or (2) when the group can recognize the restricting cost or expense arising from paying termination benefits.Other long-term employee’s benefit refers to all other employee benefits other than short-term benefit post-employment benefit and termination benefit. 22. Provision When the Company has transactions such as commitment to externals discounting the trade acceptance note unsettled litigation or arbitration which meets the following criterion provision should be recognized: It is the Company's present obligation; carrying out the obligation will probably cause the Company's economic benefit outflow; the obligation can be reliably measured.Provision is originally measured on the best estimate of outflow for paying off the present obligations. When determining the best estimate need to consider the risk uncertainty time value of monetary relevant to contingent items. The group needs to review the present best estimate and accordingly adjust the carrying value of the provision account. 23. Revenue recognition and measurement The group recognizes revenue when it has fulfilled its contractual performance obligations i.e.when the customer has obtained control of the relevant goods or services. Control right of goods or services refers to the ability to direct the use of and obtain substantially all of the remaining benefits from the asset.If the contract between the group and the customer meets the following five conditions at the 38BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) same time the group has fulfilled the performance obligation when the customer obtains the control of the relevant goods or services and the revenue is recognized: 1) the parties to the contract have approved the contract and promised to fulfill their own obligations; 2) the contract specifies the rights and obligations of parties related to the transferred commodities; 3) the contract has explicit payment terms related to the transferred goods; 4) the contract has commercial substance where the performance of the contract will change the company's future cash flow risk time distribution or amount; 5) the consideration to which the company is entitled as a result of the transfer of goods to the customer is likely to be recovered.When the group transfers control of a good or service over time it satisfies a performance obligation and recognizes revenue over time only if one of the following criteria is met otherwise it shall be the performance obligation at a point in time. 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs 2) the group’s performance creates or enhances an asset (for example work in progress) that the customer controls as the asset is created or enhanced 3) the group’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date (1) Revenue policy from sales The group’s revenue mainly includes income from sale of goods and installation of the whole set of refrigeration engineering project.Based on the actual situation the group recognizes the revenue as the followings； 1) Domestic sales: the sales contract with customers generally includes the performance of obligation of transferring goods. The group recognizes the revenue at the time when the arrival acceptance is completed by customers having taken all followings into consideration: present debt collection right entitled to the sales of goods the transfer of the main risks and rewards in the ownership of the goods the transfer of the legal ownership entitled to the goods the transfer of physical assets the acceptance of goods by customers. 2) Export sales: the group will recognize the sales revenue after completing the customs 39BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) declaration and export procedures.Revenue from installation of the whole set of refrigeration engineering project. In the refrigeration installation contract between the group and the customer since the equipment sales and installation services cannot be distinguished separately the entire project contract is regarded as a single performance obligation and the revenue of the single performance obligation is recognized at the completion of the customer acceptance. when a performance obligation over time is satisfied revenue shall be recognized within the contract term according to the performance progress which is determined by the percentage of the cumulative actual cost to expected total contract cost. When the performance progress can not be estimated reasonably the group recognizes the revenue to the extent where the already incurred cost can be compensated until the performance progress can be decided. (2) Determining and allocating the transaction price If the contract includes two or more performance obligations at the inception date of contract the group shall allocate the transaction price to each performance obligation identified in the contract on a relative standalone selling price ratio basis and measure the revenue at the allocated transaction price to each performance. If any solid evidence indicates that contract discount is only relevant to one or some (not all) performance obligations the discount shall be allocated into the one or these performance obligations.An amount of consideration can vary because of cash discounts price guarantee. The group determines the best estimate of the variable consideration in line with the expectation or the amount that most probably incurred but includes in the transaction price the variable consideration not exceeding the amount that is highly unlikely to result in a material reversal of cumulative revenue recognized when the relevant uncertainty is eliminated.The group accounts for consideration payable to a customer as a reduction of the transaction price and therefore of revenue unless the payment to the customer is in exchange for a distinct good or service. Accordingly the revenue shall be recognized at the later of the revenue recognition and the consideration paid to a customer.For sales with a right of return the group recognizes the revenue for the consideration expected to have the right to receive arising from transferring the goods to customers when the customer receives the control right over the relevant goods and recognizes the expected refund amount as provision. At the same time receivable of return cost as an asset shall be recognized for the carrying value of the returned goods when it is expected to be transferred less expected cost for getting it back (including decline in value) and net amount of the above asset cost shall be carried over to the cost. At every balance sheet date the group will reassess 40BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) the future sales returns and remeasure the above assets and liabilities.Where a significant financing component exists in the contract the transaction price shall be measured at the assumed price that the payment is made by cash when the client receives the control right of goods or services. The difference between the promised consideration and the determined transaction price shall be amortized within the contract period using effective interest rate and it is the discounting rate at which the dominated price of the contract consideration is discounted to the cash price.According to the agreement or the regulation etc. the group provide warranty for the goods sold and it is the quality assurance for promising the goods are in commodity with the agreed standards and shall be accounted for as Note III、22 provision. 24. Government grants Government grant shall be recognized only when all attached conditions are met and the grant is possibly received. Where a government grant is in the form of a transfer of monetary asset it is measured at the amount received. Where a government grant is made on the basis of fixed amount or conclusive evidence indicates relevant conditions for financial support are met and expect to probably receive the fund it is measured at the amount receivable. Where a government grant is in the form of a transfer of non-monetary asset it is measured at fair value. If fair value cannot be determined reliably it is measured at a nominal amount of RMB1 Yuan.Assets-related government grant is the government fund obtained by the group for the purpose of long-term assets purchase and construction or establishment in the other forms.Income-related grants are the grant given by the government apart from the assets-related grants. If no grant objective indicated clearly in the government documents the group shall judge it according to the principle mentioned above. If the grant is difficult to be separated it shall be considered as income-related grant as a whole.Assets-related government grants are recognized as deferred income which shall be evenly amortized to profit or loss over the useful life of the related asset. Any assets are sold transferred disposed of or impaired earlier than their useful life expired date the remaining balance of deferred income which hasn’t been allocated shall be carried forward to the income statement when the assets are disposed of.Income-related government grants that is a compensation for related expenses or losses to be incurred in subsequent periods are recognized as deferred income and credited to the relevant period when the related expenses are incurred. Government grants relating to compensation 41BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) for related expenses or losses already incurred are charged directly to the profit or loss for the period. Government grants related to daily business shall be recognized as other income in accordance with business nature or offsetting related expenses otherwise shall be recognized as non-operating income or expenses. 25. Deferred tax assets and deferred tax liabilities The deferred income tax assets or the deferred income tax liabilities should be recognized according to the differences (temporary difference) between the carrying amount of the assets or liabilities and its tax base and the difference between the carrying amount of tax base item and its tax base.Deferred tax liability shall be recognized for all taxable temporary difference apart from the followings : (1) temporary differences arise from the initial recognition of goodwill or the initial recognition of assets or liabilities arising from non-business combinations that do not affect accounting profits or taxable income (or deductible losses); (2) The group is able to control the timing of the reversal of taxable temporary differences related to investments in subsidiaries associates and joint ventures and such temporary differences are likely not to be reversed in the foreseeable future.The group recognizes deferred income tax assets for deductible temporary differences deductible losses and tax deductions that are likely to be obtained to offset future taxable income except for the following situations: (1) the initial recognition of assets or liabilities arising from non-business combination transactions where temporary differences do not affect accounting profits or taxable income (or deductible losses); (2) Deductible temporary differences related to investments in subsidiaries associates and joint ventures that cannot simultaneously meet the following conditions: temporary differences are likely to be reversed in the foreseeable future and taxable income is likely to be obtained in the future to offset deductible temporary differences.The group recognizes deferred income tax assets for all unused deductible losses to the extent that there is likely to be sufficient taxable income to offset the deductible losses. The management uses plenty of judgment to estimate the timing and amount of future taxable income combined with tax planning strategies to determine the amount of deferred income tax assets which results in uncertainty.On the balance sheet date deferred income tax assets and deferred income tax liabilities are measured at the applicable tax rate during the expected period of asset recovery or liability settlement. 42BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) When the following conditions are met simultaneously the group shall present the deferred income tax assets and deferred income tax liabilities at the net amount after offsetting: The group has the legal right to settle the current income tax assets and deferred income tax liabilities at the net amount; Deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax collection and management authority on the same taxpayer or on different taxpayers. However in the future within the term when each significant deferred income tax asset and deferred income tax liability to be reversed the involved taxpayers intend to settle the current income tax assets and liabilities on a net basis or acquire assets and settle debts simultaneously. 26. Lease (1) Lease identification Lease: A contract or part of a contract that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.At inception of a contract the group shall assess whether the contract is or contains a lease.A contract is or contains a lease if the contract conveys the right to control the use of an or many identified assets for a period of time in exchange for consideration.For a contract that is or contains several leases the group shall separate the contract and account each lease separately. The group shall account for each lease component separately from non-lease components of the contract if the contract contains lease and non-lease components. Each leasing part is accounted for according to the leasing standards while the non-leasing part is accounted for according to other applicable accounting standards. If the contract includes both leasing and non-leasing parts the group as the lessor will split the leasing and non-leasing parts and conduct accounting treatment separately. Each leasing part will be accounted for according to the leasing standards while the non-leasing part will be accounted for according to other applicable accounting standards. As the lessee the group chooses not to separate the lease and non-lease and joins each leased part and its non- leased parts separately into a lease accounting treatment shall be carried out in accordance with leasing standards; However if the contract includes embedded derivative instruments that should be split the group will not merge them with the leasing portion for accounting treatment. (2) As a leasee 1) Recognition At the commencement date the group as a lessee shall recognize a right-of-use asset and a 43BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) lease obligation except short-term lease and low value asset lease.Right-of-use assets represents a lessee’s right to use an underlying asset for the lease term and is initially measured at cost.The cost of the right-of-use asset shall comprise: * the amount of the initial measurement of the lease liability * any lease payments made at or before the commencement date less any lease incentives received which is the incremental cost for the lease * any initial direct costs incurred by the lessee which is the incremental cost * an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease unless those costs are incurred to produce inventories. Where the group remeasures the lease liability in accordance with the relevant provisions of the leasing standard the carrying value of right-of-use asset is adjusted accordingly.The group shall follow the following principles when determining the depreciation life of the right-of-use asset: if the ownership of the leased asset can be reasonably determined at the end of the lease term depreciation shall be calculated and deducted during the remaining service life of the leased asset; Where it is not certain that the ownership of the leased asset can be acquired at the end of the lease term depreciation shall be calculated at the shorter of the lease term and the remaining service life of the leased asset. The depreciation amount shall be accounted into cost of assets or profit and loss account.At the commencement date a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date.The lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date: * fixed payments (including in-substance fixed payments) less any lease incentives receivable;* variable lease payments that depend on an index or a rate initially measured using the index or rate as at the commencement date;* the exercise price of a purchase option if the lessee is reasonably certain to exercise that option * payments of penalties for terminating the lease if the lessee will certainly exercise an option to terminate the lease during the lease term.* amounts expected to be payable by the lessee under residual value guarantees; 44BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) When calculating the present value of the lease payments interest rate implicit in the lease shall be used. If the rate cannot be readily determined the group shall use the lessee’s incremental borrowing rate. Interest on the lease liability in each period during the lease term shall be calculated based on a constant periodic rate of interest and be recognized as in profit or loss unless its capitalization.After the lease commencement date the group increases the carrying amount of lease liability when recognizing the interest on lease liability and; decreases the carrying amount of lease liability when making lease payment. The group remeasures the lease liability in accordance with the present value of revised lease payment when the followings incur: * change of in-substance fixed payments (subject to original discounting rate) * change of amounts expected to be payable under residual value guarantees(subject to original discounting rate) * change of an index or a rate used for future lease payments(subject to revised discounting rate) * change in assessment of a buy option(subject to revised discounting rate) * change in assessment of a renew option or termination option or actual situation(subject to revised discounting rate). 2) Short-term lease and low value asset lease The group has chosen not to recognize the right-of-use asset and lease liability for short-term lease (lease term less than 12 months) and low value asset (30000 Yuan) when it is single leased new asset. In this case lease payment will be accounted directly in profit or loss or on the straight-line basis in profit or loss. 3) Sales and lease back The group as a seller and a lease within the sales and lease back transaction assesses whether the transfer of the asset is a sale. If the transfer of assets is not a sale the group shall continue to recognize the transferred assets and at the same time recognize a financial liability equal to the transfer income (Note VI. 34 lease). If the transfer of assets is a sale the group shall measure the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained by the group. Accordingly the group shall recognize only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. (3) As a lessor The group as a lessor classified it as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset unless an operating lease. 1) Financing lease 45BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) At the commencement date the group shall recognize the lease payment receivable and derecognize of finance lease asset. When initially measuring the lease payment receivable net lease investment value shall be used for the lease payment receivable.Net lease investment value equals to the any residual value guarantees plus the PV of undue lease receivable discounted at the interest rate implicit in the lease. The group shall recognize interest income over the lease term based on a constant periodic rate. The variable lease payment obtained by the group related to operating leases which are not included in the net lease investment shall be accounted for in the current profit and loss when actually incurred 2) Operating lease Lease payment received shall be recognized as lease income on a straight-line basis within the period.The initial direct expenses incurred by the group in relation to operating leases are capitalized to the cost of leasing the underlying asset and are recognized in profit or loss by instalments over the lease period on the same basis as rental income. Variable lease payments made by the group in relation to operating leases that are not included in lease collections are recognized in profit or loss for the period when they are actually incurred.The group shall account for a modification to an operating lease as a new lease from the effective date of the modification considering any received in advance or lease payments receivable relating to the original lease as part of the lease payments receivable for the new lease 27. Fair value measurement The group measures investment property derivative financial instruments and equity instruments at fair value at each balance sheet date. Fair value refers to the price that market participants can receive by selling an asset or can pay for transferring a liability in an orderly transaction that takes place on the measurement date.Assets and liabilities measured or disclosed at fair value in the financial statements are determined to belong to the different fair value level based on the lowest level of input values that are significant to the fair value measurement as a whole: level 1 input is the unadjusted quoted price for identical asset or liability available at the active market on the measurement date; level 2 input is the directly or indirectly observable input for relevant asset or liability apart from level 1 input; level 3 input is the unobservable input for relevant asset or liability. (For levels 1 and 2) For financial instruments traded in an active market the group determines their fair value by their active market quotes; For financial instruments that are not traded in 46BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) an active market the group uses valuation techniques to determine their fair value and the valuation model used is mainly the discounted cash flow model. The input of valuation techniques mainly includes: risk-free interest rate of debt credit premium and liquidity premium; estimator coefficient. and liquidity discount of equity. (For level 3) The fair value of level 3 is determined on the basis of the group's valuation models such as the discounted cash flow model. The group also considers the initial transaction price recent transactions of the same or similar financial instruments or full third-party transactions of comparable financial instruments. As at 31 December 2024 level 3 financial assets measured at fair value are valued by using significant unobserved inputs such as discount rates but their fair value is not materially sensitive to reasonable changes in these significant unobserved inputs.The group uses the market approach to determine the fair value of unlisted equity investments.This requires the group to determine comparable listed companies select market coefficient estimate liquidity discounts etc. and is therefore subject to uncertainty. 28. Changes in Accounting Policies Accounting Estimates (1) Change in significant accounting policies In November 2023 the Ministry of Finance issued Interpretation of Accounting Standards for Business Enterprises No. 17 (Finance and Accounting [2023] No. 21) (hereinafter referred to as "Interpretation No. 17") which includes "I. Division of current liabilities and non-current liabilities; Disclosure of supplier financing arrangements; Accounting for sales and leaseback transactions " and comes into effect from January 1 2024. The implementation of the relevant provisions of Interpretation No. 17 has no effect on the financial statements of the Group during the reporting period.In December 2024 the Ministry of Finance issued Interpretation of Accounting Standards for Business Enterprises No. 18 (Finance and Accounting (2024) No. 24) (hereinafter referred to as "Interpretation No. 18") which came into effect as of the date of issuance. "I. Subsequent measurement of investment premises held as an infrastructure project under the floating fee method"; "II. Accounting for quality assurance in the category of assurance that is not part of a single performance obligation". The implementation of the relevant provisions of Interpretation No. 18 has no impact on the financial statements of the Group during the reporting period. (2) Changes in significant accounting estimates 47BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) No.IV. Taxation 1. The main applicable tax and rate to the Company as follows: Tax Tax base Tax rate Value-added tax (VAT) Revenue of sales goods or services 5%、6%、9%、13%、 City construction tax Actual VAT paid 5%、7% Education surcharge Actual VAT paid 3% Local education surcharge Actual VAT paid 2% Enterprise income tax (EIT) Current period taxable profit 15% or 25% 70% of cost of own property or Real estate tax 1.2% or 12% revenue from leasing property Land use tax Land using right area Fixed amount per square meter According to the relevant Other tax provisions of the state and local Notes for tax entities with different EIT rate Tax entities EIT rate Bingshan Refrigeration & Heat Transfer Technologies Co. Ltd 15% Dalian Bingshan Group Engineering Co. Ltd. 25% Dalian Bingshan Group Sales Co. Ltd. 25% Dalian Bingshan Air-conditioning Equipment Co. Ltd. 15% Dalian Bingshan Guardian Automation Co. Ltd. 15% Dalian Bingshan-RYOSETSU Quick Freezing Equipment Co. Ltd. 25% Wuhan New World Refrigeration Industrial Co. Ltd. 15% Dalian Bingshan Engineering & Trading Co. Ltd 25% Dalian Universe Thermal Technology Co.Ltd. 15% Chengdu Bingshan Refrigeration Engineering Co. Ltd. 25% Wuhan New World Air-conditioning Refrigeration Engineering Co. Ltd 25% Wuhan Lanning Energy Technology Co. Ltd 25% Sonyo Compressor (Dalian)Co.Ltd. 15% Sonyo Refrigeration System (Dalian) Co. Ltd. 15% Sonyo Refrigeration (Dalian) Co. Ltd. 15% 2. Tax preference 48BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (1) The Company obtained the qualification of high and new technology enterprises in December 2023. The Certificate No. is GR202321201041. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2023 to FY2025.The Company’s subsidiary Dalian Bingshan Air-conditioning Equipment Co. Ltd. obtained the qualification of high and new technology enterprises in December 2023. The Certificate No. is GR202321201161. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2023 to FY2025.The Company’s subsidiary Dalian Bingshan Guardian Automation Co. Ltd. obtained the qualification of high and new technology enterprises in December 2024 The Certificate No. is GR202421200978. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2024 to FY2026.The Company’s subsidiary Wuhan New World Refrigeration Industrial Co. Ltd obtained the qualification of high and new technology enterprises in November 2024. The Certificate No.is GR202442000336. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2024 to FY2026.The Company’s subsidiary Dalian Universe Thermal Technology Co.Ltd. obtained the qualification of high and new technology enterprises in December 2023. The Certificate No. is GR202321200114. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2023 to FY2025.The Company’s subsidiary Sonyo Compressor (Dalian)Co.Ltd.(hereinafter referred to as “Sonyo Compressor” obtained the qualification of high and new technology enterprises in December 2024. The Certificate No. is GR202421200617. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2024 to FY2026.The Company’s subsidiary Sonyo Refrigeration System (Dalian) Co. Ltd.(hereinafter referred to as “Sonyo Refrigeration System” obtained the qualification of high and new technology enterprises in December 2023. The Certificate No. is GR202321201152. According to the tax bureau approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2023 to FY2025.The Company’s subsidiary Sonyo Refrigeration (Dalian) Co. Ltd.(hereinafter referred to as “Sonyo Refrigeration” obtained the qualification of high and new technology enterprises in December 2024. The Certificate No. is GR202421200850. According to the tax bureau 49BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) approval the Company can be granted for the preferential tax policy of enterprise income tax rate of 15% from FY2024 to FY2026. (2) According to the Announcement of the Ministry of Finance and Tax Administration on the accelerate VAT Deduction for advanced manufacturing enterprise (Announcement No. 43 2023) within the period from January 1st 2023 to December 31st2027 the advance enterprises are allowed for input VAT deduction at 5% acceleration rate during the current period. The Company and its subsidiaries Dalian Bingshan Air-conditioning Equipment Dalian Bingshan Guardian Automation Wuhan New World Refrigeration Dalian Universe Thermal Sonyo Compressor Sonyo Refrigeration and Sonyo Refrigeration System enjoy the tax preference.V. Notes to Consolidated Financial Statements The following disclosure date on this financial statement without special indication “opening” refers to January 1 2024; “closing” refers to December 31 2024; “current period” refers to the period from January 1 2024 to December 31 2024; and “last period” refers to the period from January 1 2023 to December 31 2023; with the currency unit RMB. 1. Monetary fund Item Closing Balance Opening Balance Cash on hand 28585.88 70750.93 Cash in bank 1011911100.49 863950616.72 Other cash and cash equivalents 30204058.30 87018202.46 Total 1042143744.67 951039570.11 Including: sum of deposits overseas Note1: within the bank deposits 50406111.11 Yuan was time deposits and interest income; frozen fund of 6512838.08 Yuan guarantee deposit for migrant worker of 251006.12 Yuan and restricted fund for migrant worker salary of 3190047.46 Yuan.Note2: Other monetary funds are bank acceptance deposit 15278927.28 Yuan deposit for letter of guarantee is 14925131.02 Yuan. 50BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 2. Notes receivable (1) Category of notes receivable Items Closing Balance Opening Balance Bank acceptance notes 331617161.92 335914443.51 Trade acceptance notes 21237701.56 17514478.91 Total 352854863.48 353428922.42 (2) Categories according to bad debts provision method Closing Balance Items Booking balance Provision Booking value Amount % Amount % Bad debts provision based on 354276459.03 1 00.00 1421595.55 0.40 352854863.48 group Including: bank 331617161.9293.60--331617161.92 acceptance notes Trade acceptance 22659297.116.401421595.556.2721237701.56 notes Total 354276459.03 1 00.00 1421595.55 0.40 352854863.48 (Continued) Opening balance Items Booking balance Provision Booking value Amount % Amount % Bad debts provision based on 354313722.61 100.00 884800.19 0.25 353428922.42 group Including: bank 335914443.5194.81--335914443.51 acceptance notes Trade acceptance 18399279.105.19884800.194.8117514478.91 notes Total 354313722.61 100.00 884800.19 0.25 353428922.42 51BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Categories based on group Closing Balance Items Booking balance Provision Provision（%） Bank acceptance notes 331617161.92 - - Trade acceptance notes 22659297.11 1421595.55 6.27 Total 354276459.03 1421595.55 — (3) Bad debt provision of notes receivable accrued collected and reversed Change during the year Opening Category Collected/ Closing Balance balance Accrued Written-off reversed Bad debt 884800.19626722.1189926.75-1421595.55 provision Total 884800.19 626722.11 89926.75 - 1421595.55 (4) Pledged notes receivable up to the end of year. Items Closing pledged amount Bank acceptance notes 8555115.03 Total 8555115.03 (5) Notes receivable endorsed or discounted but not mature at the end of year Item Closing amount Closing amount still derecognized recognized Bank acceptance notes 144157056.07 Trade acceptance notes 1681364.49 Total 145838420.56 (6) Notes receivable written off: none 3. Accounts receivable (1) Aging of accounts receivable Account Age Closing Balance Opening Balance Within 1 year（incl 1 year） 995252568.14 1075007175.23 1-2 years 360274915.33 406082608.66 52BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Account Age Closing Balance Opening Balance 2-3 years 231407610.78 207201791.50 Over 3 years 484919878.50 453345639.16 Of which: 3-4years 113036063.46 140135046.24 4-5years 125797609.62 48619109.18 Over 5 years 246086205.42 264591483.74 Total 2071854972.75 2141637214.55 (2) Category of accounts receivable based on bad debt provision method Closing Balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 13071940.810.6310264390.3578.522807550.46 on individual basis Bad debt provision 2058783031.9499.37569356233.5027.651489426798.44 on group Including: aging as characteristics of 2058783031.94 99.37 569356233.50 27.65 1489426798.44 credit risk Total 2071854972.75 100.00 579620623.85 27.98 1492234348.90 (Continued) Opening balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 14372020.850.6711564470.3980.472807550.46 on individual basis Bad debt provision 2127265193.7099.33553638820.0026.031573626373.70 on group Including: aging as characteristics of 2127265193.70 99.33 553638820.00 26.03 1573626373.70 credit risk Total 2141637214.55 100.00 565203290.39 26.39 1576433924.16 53BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 1) Bad debt provisions on individual basis Opening balance Closing Balance Name Accounts Provision for Accounts Provision for Proportion Reason receivable bad debts receivable bad debts (%) Full Company recovery 6496000.005244096.206496000.005244096.2080.73 1 is not expected Other Recovery company 7876020.85 6320374.19 6575940.81 5020294.15 76.34 is not 1 expected Total 14372020.85 11564470.39 13071940.81 10264390.35 — 2) Bad debt provisions on group basis Closing Balance Aging Accounts Provision for Drawing proportion receivable bad debts (%) Within 1 year 995252568.14 56084512.67 5.64 1 to 2 years 360274915.33 59855315.02 16.61 2 to 3 years 229848838.06 70601786.26 30.72 3 to 4 years 107977806.57 52580990.59 48.70 4 to 5years 124882698.42 89687423.54 71.82 Over 5 years 240546205.42 240546205.42 100.00 Total 2058783031.94 569356233.50 — (3) Bad debt provision of current period Change during the year Opening Closing Category Collected/ balance Accrued Written-off Others Balance reversed Bad debt 565203290.3937834982.0022044663.664992404.373619419.49579620623.85 provision Total 565203290.39 37834982.00 22044663.66 4992404.37 3619419.49 579620623.85 54BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (4) Accounts receivable written off in current period Item Written off amount Receivable actually written off 4992404.37 (5) Top 5 receivables and contract assets The sum of top 5 of receivables and contract assets is 262076417.63Yuan represents 11.46% of closing balance of receivables and contract assets and bad debt provision of 61059997.71Yuan shall be made. 4. Contract asset (1) contract asset Closing Balance Items Booking balance Provision Carrying amount Undue warranty 198615784.30 21724512.68 176891271.62 Unsettled receivable of revenue 16623886.648754217.947869668.70 recognized over time Total 215239670.94 30478730.62 184760940.32 (continued) Opening balance Items Booking balance Provision Carrying amount Undue warranty 265440261.85 37369046.20 228071215.65 Unsettled receivable of revenue 18840435.979834772.919005663.06 recognized over time Total 284280697.82 47203819.11 237076878.71 (2) Significant change of the account Items Amount Reason Undue warranty -66824477.55 Change of consolidation scope Unsettled receivable of revenue -2216549.33 Settled during the year recognized over time Total -69041026.88 55BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (3) Category of contract asset based on bad debt provision method Closing Balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 1709948.800.791709948.80100.00- on individual basis Bad debt provision 213529722.1499.2128768781.8213.47184760940.32 on group Including: aging as characteristics of 213529722.14 99.21 28768781.82 13.47 184760940.32 credit risk Total 215239670.94 100.00 30478730.62 14.16 184760940.32 (continued) Opening Balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 1709948.800.601709948.80100.00- on individual basis Bad debt provision 282570749.0299.4045493870.3116.10237076878.71 on group Including: aging as characteristics of 282570749.02 99.40 45493870.31 16.10 237076878.71 credit risk Total 284280697.82 100.00 47203819.11 16.60 237076878.71 1) Bad debt provisions on individual basis Opening balance Closing Balance Name Accounts Provision for Accounts Provision for Proportion Reason receivable bad debts receivable bad debts (%) Recovery is not Other companie2 1709948.80 1709948.80 1709948.80 1709948.80 100.00 expected Total 1709948.80 1709948.80 1709948.80 1709948.80 — 56BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 2) Bad debt provisions on group basis Closing Balance Aging Accounts Provision for Drawing proportion receivable bad debts (%) Within 1 year 130206254.23 8187690.23 6.29 1 to 2 years 59666466.96 9087331.73 15.23 2 to 3 years 13388704.45 4091459.94 30.56 3 to 4 years 3289473.18 1613907.81 49.06 4 to 5years 4274438.84 3084007.63 72.15 Over 5 years 2704384.48 2704384.48 100.00 Total 213529722.14 28768781.82 —— (4) Bad debt provision of current period Change during the year Opening Closing Category Collected/ balance Accrued Written-off Others Balance reversed Undue warranty 37369046.20 - 15936503.20 - - 2 1432543.00 Unsettled receivable of revenue 9834772.91 - 788585.29 - - 9046187.62 recognized over time Total 47203819.11 - 16725088.49 - - 3 0478730.62 (5) Contract asset actually written off None 5. Finance receivable (1) Category of finance receivable Items Closing Balance Opening Balance Bank acceptance notes 382073283.27 303585218.53 Total 382073283.27 303585218.53 57BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Category of accounts receivable based on bad debt provision method Closing Balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 382073283.27100.00--382073283.27 on group Including: bank 382073283.27100.00--382073283.27 acceptance notes Total 382073283.27 100.00 - - 3 82073283.27 (Continued) Opening balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 303585218.53100.00--303585218.53 on group Including: aging as characteristics of 303585218.53 100.00 - - 303585218.53 credit risk Total 303585218.53 100.00 - - 303585218.53 (3) Pledged notes receivable up to the end of year. Items Closing pledged amount Bank acceptance notes 129115879.46 Total 129115879.46 6. Other receivables Items Closing Balance Opening Balance Dividend receivable 11150.00 14495.00 Other receivables 45748416.06 41381728.27 Total 45759566.06 41396223.27 58BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 6.1. Dividends receivable (1) Classification Company Closing Balance Opening Balance Wuhan Steel and Electricity Co. Ltd. 11150.00 14495.00 Total 11150.00 14495.00 6.2. Other receivables (1) The categories of other receivable according to nature Items Closing Balance Opening Balance Receivables and payables 31791903.41 33092423.14 Security deposit 30974881.78 30103093.46 Petty cash 3488045.56 3669152.52 Others 17138048.40 11397105.01 Total 83392879.15 78261774.13 (2) Aging of other receivable Account Age Closing Balance Opening Balance Within 1 year（incl 1 year） 33984236.78 23517039.35 1-2 years 2933743.71 8134653.15 2-3 years 4459628.80 9354562.84 Over 3 years 42015269.86 37255518.79 Of which: 3-4years 6493865.77 24151505.82 4-5years 23958940.09 6300480.70 Over 5 years 11562464.00 6803532.27 Total 83392879.15 78261774.13 (3) Category of other receivable based on bad debt provision method Closing Balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 24816580.9429.7624816580.94100.00- on individual basis Bad debt provision 58576298.21 70.24 12827882.15 21.90 45748416.06 59BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Balance Items Booking balance Provision Booking value Amount % Amount % on group Including: aging as characteristics of 58576298.21 70.24 12827882.15 21.90 45748416.06 credit risk Total 83392879.15 100.00 37644463.09 45.14 45748416.06 (Continued) Opening balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 24935080.9431.8624935080.94100.00- on individual basis Bad debt provision 53326693.1968.1411944964.9222.4041381728.27 on group Including: aging as characteristics of 53326693.19 68.14 11944964.92 22.40 41381728.27 credit risk Total 78261774.13 100.00 36880045.86 47.12 41381728.27 1) Bad debt provisions on individual basis Opening balance Closing Balance Name Accounts Provision for bad Accounts Provision for bad Proportion Reason receivable debts receivable debts (%) Transfer of debt Recovery is not 20132963.7920132963.7920132963.7920132963.79100.00 receivables expected Dalian Shengda Recovery is not Construction 3878617.15 3878617.15 3878617.15 3878617.15 100.00 expected Engineering Co. Ltd QINGDAO FREE applied for enforcement TRADE PORT 500000.00 500000.00 500000.00 500000.00 100.00 and is not expected to be ZONE recovered in full INTERNATIONAL 60BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Opening balance Closing Balance Name Accounts Provision for bad Accounts Provision for bad Proportion Reason receivable debts receivable debts (%) COLD CHAIN LOGISTICS TRADE CENTER CO.LTD.Mudanjiang Preserved in litigation Zhongnongpi Cold and not expected to be 300000.00300000.00300000.00300000.00100.00 Chain Logistics Co. recovered Ltd Wuhan Xinlian Technology 118500.00118500.00--- Development Co.Ltd Recovery is not Chen xiujuan 2000.00 2000.00 2000.00 2000.00 100.00 expected Recovery is not Chen yanhao 1600.00 1600.00 1600.00 1600.00 100.00 expected Recovery is not Zheng Jinlian 1400.00 1400.00 1400.00 1400.00 100.00 expected Total 24935080.94 24935080.94 24816580.94 24816580.94 — 2) Bad debt provisions on group basis Closing Balance Aging Accounts Provision for Drawing proportion receivable bad debts (%) Within 1 year 33984236.78 1232619.56 3.63 1 to 2 years 2933743.71 157057.23 5.35 2 to 3 years 4459628.80 667033.45 14.96 3 to 4 years 5666505.77 2046836.21 36.12 4 to 5years 2439947.50 1499593.16 61.46 Over 5 years 9092235.65 7224742.54 79.46 Total 58576298.21 12827882.15 — 61BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 3) The bad debt provision of other receivables 1st stage 2nd stage 3rd stage Total Expected credit Bad debt Expected credit Expected credit loss loss within the provision loss within 12 within the whole period whole period (no months (impairment incurred) impairment) Opening 2343658.22-34536387.6436880045.86 balance Opening balance during — — — — the year --transfer to the 2nd stage --transfer to the -10980.00-10980.00- 3rd stage --reverse to the ---- 2nd stage ----reverse to ---- the 1st stage Accrued 421712.21 - 2537193.32 2958905.53 Reverse 776184.56 - 1299803.74 2075988.30 Cancelation - - - - Written off - - 118500.00 118500.00 Other ---- movement Closing 1978205.87-35666257.2237644463.09 balance 62BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (4) Provision for bad debt Change during the year Opening Closing Category Accrued Collected/ balance Written-off Others Balance reversed Bad debt 36880045.862958905.532075988.30118500.00-37644463.09 provision Total 36880045.86 2958905.53 2075988.30 118500.00 - 3 7644463.09 (5) Other receivables written off in current period: none. Item Amount to be written off Other receivables written off actually 118500.00 (6) Other receivables from the top 5 debtors based on closing balance Closing Closing % of Name Category Aging Balance of Balance total Provision State tax office Tax refund 7783496.66 Within 1 year 9.33 284875.98 Wuhan Xinlian Technology Rental 3284533.27 Within 1 year 3.94 120213.92 Development Co. Ltd Moyu County Agricultural Bureau Deposit 2548847.50 4-5years Over 5 years 3.06 2348040.21 Hangzhou Zhonghong New Energy Deposit 2476894.20 3-4years 2.97 1297644.87 Technology Co. Ltd Chengdu BOE Optoelectronics Deposit 2000000.00 Within 1 year 2.40 73200.00 Technology Co. Ltd Total 18093771.63 - 21.70 4123974.98 7. Prepayments (1) Aging of prepayments Closing Balance Opening Balance Items Amount Percentage Amount Percentage (%)(%) Within 1 year 140193253.25 85.46 133068644.50 86.75 1 to 2 years 15625104.20 9.53 12010696.67 7.83 2 to 3 years 3927719.36 2.39 2578747.06 1.68 63BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Balance Opening Balance Items Amount Percentage Amount Percentage (%)(%) Over 3 years 4296563.25 2.62 5730572.25 3.74 Total 164042640.06 100.00 153388660.48 100.00 (2) Prepayments from the top 5 debtors based on closing balance The sum of top 5 of prepayment is 79026004.94Yuan represents 48.17% of closing balance of prepayment. 8. Inventories (1) Categories of inventories Closing Balance Item Book value Provision for decline Net book value Cost to fulfill the contract 544464520.45 12895734.89 531568785.56 Finished goods 453823794.09 41658999.95 412164794.14 Raw materials 264329161.20 33708343.75 230620817.45 Working in progress 172761094.92 19583788.41 153177306.51 Self-manufactured semi-finished products 52174151.33 - 52174151.33 Goods on transit 11060053.54 - 11060053.54 Materials on consignment for further processing 2674187.81 - 2674187.81 Low-value consumable 213692.47 - 213692.47 Total 1501500655.81 107846867.00 1393653788.81 64BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (Continued) Opening Balance Item Book value Provision for decline Net book value Cost to fulfill the contract 657703661.17 15425401.03 642278260.14 Finished goods 524399789.91 47832216.91 476567573.00 Raw materials 282868685.78 31011520.30 251857165.48 Working in progress 211744888.60 10130805.54 201614083.06 Self-manufactured semi-finished products 35347357.53 - 35347357.53 Materials on consignment for further processing 21317653.86 60394.18 21257259.68 Goods on transit 8313813.04 821759.89 7492053.15 Properties written off debtors 2708646.00 1149186.00 1559460.00 Low-value consumable 166267.10 - 166267.10 Total 1744570762.99 106431283.85 1638139479.14 65BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Provision for decline in the value of inventories and contract fulfillment costs Increase Decrease Item Opening Balance Reverse/ Closing Balance Accrual Others transferred Others transferred Written- off Raw materials 31011520.30 4481212.92 1784389.47 33708343.75 WIP 10130805.54 10084266.95 631284.08 19583788.41 Finished goods 47832216.91 14429151.40 20602368.36 41658999.95 Cost to fulfill the contract 15425401.03 219548.10 2749214.24 12895734.89 Materials on consignment 60394.18-60394.18-- for further processing Goods on transit 821759.89 - 821759.89 - Properties written off 1149186.00-1149186.00- debtors Total 106431283.85 29153785.19 27738202.04 107846867.00 66BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Accrual for provision for decline in the value of inventories Basis for net realizable value Reasons for Item recognition reverse/write-off Raw materials The amount deducting the expected Sold WIP cost to product completion selling Sold Finished goods expense and relative tax from the Sold Cost to fulfill the contract estimated selling price. Sold 9. Non-current asset due within one year Item Closing Balance Opening Balance Long term receivable due within 1 year 57550.43 - Total 57550.43 - 10. Other current assets Item Closing Balance Opening Balance Input VAT to be deducted 23990929.71 18112002.39 Prepaid income tax 2123365.65 3216096.82 Contract acquisition cost 1267914.24 4532291.00 Prepaid VAT 139723.58 198895.83 Prepaid expenses 114445.28 15056.29 Total 27636378.46 26074342.33 11. Long term receivable (1) Details Item Closing Balance Discounted rate Carrying Provision Book value amount Lease premium 150589.20 10571.36 140017.84 ---Unrealized financing income -22010.37 - - 22010.37 Total 150589.20 10571.36 140017.84 67BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Category of long-term receivable based on bad debt provision method Closing Balance Items Booking balance Provision Booking value Amount % Amount % Bad debt provision 150589.2010010571.367.02140017.84 on group Including: bank 150589.2010010571.367.02140017.84 acceptance notes Total 150589.20 100 10571.36 7.02 140017.84 1) The bad debt provision based on group of long-term receivables Closing Balance Aging Accounts Provision for Drawing proportion receivable bad debts (%) Within 1 year 150589.20 10571.36 7.02 Total 150589.20 10571.36 —— 68BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD. Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 2) The bad debt provision under expected credit loss model 1st stage 2nd stage 3rd stage Bad debt Expected credit Expected credit loss Expected credit loss Total provision loss within 12 within the whole period within the whole period months (no impairment) (impairment incurred) Opening ---- balance Opening balance during — — — — the year --transfer to the ---- 2nd stage --transfer to the ---- 3rd stage --reverse to the ---- 2nd stage ----reverse to ---- the 1st stage Accrued 10571.36 - - 10571.36 Reverse - - - - Cancelation - - - - Written off - - - - Other ---- movement Closing balance 10571.36 - - 10571.36 (3) Bad debt provision of long-term receivable for the year Change during the year Opening Closing Category Accrued Collected/ balance Written-off Others Balance reversed Bad debt -10571.36---10571.36 provision Total - 10571.36 - - - 10571.36 69BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 12.Long-term equity investments Increase/Decrease Gains and Provision Investee Beginning losses Adjustment of Cash bonus for Ending balance Provision for balance Increased Decreased recognized other Change of or profits impairment impairment under the comprehensive other equity announced to of the Others equity income issue current method period Associates Dalian Honjo Chemical Co. Ltd 9892253.52 - - 356820.48 10249074.00 - Keihin-Grand Ocean Thermal Technology 57579975.00 - - -4257688.27 53322286.73 - (Dalian)Co.Ltd. Dalian Fuji Bingshan Vending 67610418.09 - - -514319.31 67096098.78 - Machine Co. Ltd.MHI Bingshan Refrigeration 16543655.54 - - 202819.43 16746474.97 - (Dalian) Co.Ltd. Dalian Fuji Bingshan Vending Machine Sales Co. - - - - - Ltd Jiangsu Jingxue Insulation Technology Co.Ltd 144354903.91 - - 4400840.64 3220344.00 145535400.55 - (N4) Dalian Bingshan Metal Technology 173250850.13 - 34931610.00 28344672.03 30759188.94 135904723.22 - Co.Ltd. 70BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Increase/Decrease Gains and Provision Beginning losses Adjustment of Cash bonus for Investee Provision for balance Increased Decreased recognized other Change of or profits impairment Ending balance impairment under the comprehensive other equity announced to of the Others equity income issue current method period Dalian Bingshan Group Huahuida Financial Leasing 46050456.55 - 1218624.64 636409.95 46632671.24 - Co. Ltd Wuhan Sikafu Power Control 5992434.76 - 494251.11 6486685.87 - Equipment Co. Ltd Total 521274947.50 - 34931610.00 30246020.75 34615942.89 481973415.36 - 71BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 13.Other non-current financial assets Item Closing Balance Opening Balance Financial assets classified as FVTPL 1683852.59 164024771.63 Including: equity instruments 1683852.59 164024771.63 Total 1683852.59 164024771.63 14. Investment property (1) Investment property measured as cost model Item Property& building Land-use-rights Total I. Initial cost 1. opening balance 246173617.85 26094438.38 272268056.23 2. addition 4838025.49 - 4838025.49 (1) FA\transferred from CIP 4838025.49 - 4838025.49 3. decrease 4749095.10 - 4749095.10 (1) disposal 2708646.00 - 2708646.00 (2) others 2040449.10 - 2040449.10 4. closing balance 246262548.24 26094438.38 272356986.62 II. Accumulated depreciation — — — 1. opening balance 135327893.16 13350481.57 148678374.73 2. addition 6315185.06 521888.76 6837073.82 (1) accrued/amortization 5663731.15 521888.76 6185619.91 (2) FA\transferred from CIP 651453.91 - 651453.91 3. decrease 1090182.17 - 1090182.17 (1) disposal 8743.66 8743.66 (2) others 1081438.51 1081438.51 4. closing balance 140552896.05 13872370.33 154425266.38 III. Impairment reserve — — — 1. opening balance - - - 2. addition - - - 3. decrease - - - 4. closing balance - - - 72BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Item Property& building Land-use-rights Total IV. Book value — — — 1. Closing book value 105709652.19 12222068.05 117931720.24 2. Opening book value 110845724.69 12743956.81 123589681.50 (2) Investment property without ownership certificate Item Book value Reason Because the land use right and the plant’s ownership Plant belong to different person the deed of the plant was 11756581.06 not obtained. In 2023 the land use right is obtained the certificate of the plant ownership is in progress Rihang Apartment 918201.57 The documents are not ready in full the certificate of the building ownership can not be obtained 15. Fixed assets Items Closing Book Value Opening Book Value Fixed asset 1211794069.63 1291851402.46 Fixed asset disposal - - Total 1211794069.63 1291851402.46 (1) Fixed assets detail Property& Machinery Transportation Other Item equipment Total buildings equipment equipment I. Initial cost 1.Opening 984762292.941860863124.5126414272.96248448105.423120487795.83 balance 2. Increase 12183574.51 56432801.76 1566348.74 18736019.07 88918744.08 (1) Purchase - 5903608.99 1264136.35 2824527.38 9992272.72 (2) Transferred from 10143125.4150529192.77302212.3915911491.6976886022.26 construction-in- progress (3) financial lease - - - - - (4) investment 2040449.10 - - - 2040449.10 3. Decrease 4608045.19 152361604.74 4524956.89 26296697.90 187791304.72 73BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Property& Machinery Transportation Other Item equipment Total buildings equipment equipment (1) Disposal 2478665.70 152361604.74 4524956.89 26296697.90 185661925.23 (2) transferred to investment 2129379.49 - - - 2129379.49 property 4.Closing balance 992337822.26 1764934321.53 23455664.81 240887426.59 3021615235.19 II. Accumulated depreciation 1.Opening 343048484.831281264893.7718926836.54169991538.161813231753.30 balance 2. Increase 30542895.37 91310418.67 1541494.28 14020350.18 137415158.50 (1) Accrued 29461456.86 91310418.67 1541494.28 14020350.18 136333719.99 (2) Investment 1081438.51 - - - 1081438.51 3. Decrease 1497964.76 125312442.36 3554272.85 21350238.08 151714918.05 (1) Disposal 846510.85 125312442.36 3554272.85 21350238.08 151063464.14 (2) transferred to 651453.91---651453.91 investment 4.Closing balance 372093415.44 1247262870.08 16914057.97 162661650.26 1798931993.75 III. Impairment reserve 1.Opening 1125906.8710009682.05286519.263982531.8915404640.07 balance 2. Increase 3. Decrease - 3173153.83 - 1342314.43 4515468.26 (1) Disposal - 3173153.83 - 1342314.43 4515468.26 4.Closing balance 1125906.87 6836528.22 286519.26 2640217.46 10889171.81 IV.Book value 1.Closing book 619118499.95510834923.236255087.5875585558.871211794069.63 value 2.Opening book 640587901.24569588548.697200917.1674474035.371291851402.46 value 74BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2)Fixed assets without ownership certificate Item Book value Reason Self -constructed Self-constructed buildings of Sonyo Compressor and buildings 29824686.02 Sonyo Refrigeration without the land use right the certificate of the plant ownership can not be obtained.Rihang Apartment 918201.63 The documents are not ready in full the certificate of the building ownership can not be obtained. 16. Construction-in-progress Item Closing book value Opening book value Construction-in-progress 86221660.80 114801351.21 Construction materials - - Total 86221660.80 114801351.21 (1) Construction-in-progress details Closing balance Opening balance Item Book balance Provision Book Value Book balance Provision Book value Buildings & reconstruction 29766943.79 - 29766943.79 26282803.78 - 26282803.78 Improvement of machinery 69390477.81 15064649.38 54325828.43 83833793.88 - 83833793.88 Software of intelligent 2128888.58 - 2128888.58 4684753.55 - 4684753.55 manufacture Total 101286310.18 15064649.38 86221660.80 114801351.21 - 114801351.21 75BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Change in the significant construction in progress Decrease Opening Transfer to Closing Name Increase Other balance FA/ Intangible balance decrease assets Improvement of machinery 59648413.52 11465158.30 20731436.25 - 50382135.57 Buildings & reconstruction 24020836.00 5588447.11 2784054.04 - 26825229.07 Total 83669249.52 17053605.41 23515490.29 - 77207364.64 (Continued) Including: Interest Percent of Progress Accumulated accumulated capitaliza investment of Source Name Budget capitalized capitalized tion against constructi of funds interest interest of the Rate budget (%) on year (%) Improvement Self- of machinery 66438917.61 81.77 81.77 - financing Buildings & Self- reconstruction 31404649.19 94.79 94.79 - financing Total 97843566.80 — — — — — (3) Impairment provision Opening Closing Item Increase Decrease Reason balance balance Buildings & reconstruction - 15064649.38 - 15064649.38 Suspended Total - 15064649.38 - 15064649.38 — 76BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 17. Right-of-use assets Property/ Item Machinery Transportation Electronic buildings equipment equipment Land use right Software Total I. Initial cost 1.Opening balance 22301098.69 1500407.13 - 996991.93 15403548.97 40202046.72 2. Increase 1268280.29 - 172876.63 - - 350368.74 1791525.66 (1) lease in 1268280.29 - 172876.63 - - 350368.74 1791525.66 3. Decrease 6624187.74 - - 194322.66 2543304.56 - 9361814.96 (1) Disposal 6624187.74 - - 194322.66 2543304.56 - 9361814.96 4.Closing balance 16945191.24 1500407.13 172876.63 802669.27 12860244.41 350368.74 32631757.42 II. Accumulated amortization 1.Opening balance 5090415.92 637746.67 - 162220.54 3763606.51 - 9653989.64 2. Increase 3949530.98 333057.15 89895.91 206013.70 1066142.53 43796.06 5688436.33 (1) Accrued 3949530.98 333057.15 89895.91 206013.70 1066142.53 43796.06 5688436.33 3. Decrease 3291773.87 - - 194322.58 2543304.56 - 6029401.01 (1) Disposal 3291773.87 - - 194322.58 2543304.56 - 6029401.01 4.Closing balance 5748173.03 970803.82 89895.91 173911.66 2286444.48 43796.06 9313024.96 III. Impairment reserve — — — — — - — 77BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Property/ Item Machinery Transportation Electronic buildings equipment equipment Land use right Software Total 1. Opening balance - - - - - - - 2. Increase - - - - - - - 3. Decrease - - - - - - - 4.Closing balance - - - - - - - IV. Book value — — — — — - — 1. Closing book value 11197018.21 529603.31 82980.72 628757.61 10573799.93 306572.68 23318732.46 2. Opening book value 17210682.77 862660.46 - 834771.39 11639942.46 - 30548057.08 78BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 18. Intangible assets Non- Item Land use right Patent Patent Others Total I. Initial cost 1.Opening balance 240905737.40 17630188.82 5773680.00 74249345.48 338558951.70 2. Increase - - - 8427931.79 8427931.79 (1) Purchase - - - 6858843.13 6858843.13 (2) Transferred from ---1569088.661569088.66 construction-in-progress (3) increase via merge 3. Decrease - - - 2013910.38 2013910.38 (1) Disposal - - - 2013910.38 2013910.38 4.Closing balance 240905737.40 17630188.82 5773680.00 80663366.89 344972973.11 II. Accumulated amortization 1.Opening balance 71901377.46 10470188.25 4773708.00 40847535.60 127992809.31 2. Increase 5987097.94 1429516.20 500004.00 7043398.68 14960016.82 (1) Accrued 5987097.94 1429516.20 500004.00 7043398.68 14960016.82 3. Decrease - - - 1990910.38 1990910.38 (1) Disposal - - - 1990910.38 1990910.38 4.Closing balance 77888475.40 11899704.45 5273712.00 45900023.90 140961915.75 III. Impairment provision 1. Opening balance - - - 11981.17 11981.17 2. Increase - - - - - (1) Accrued - - - - - 3. Decrease - - - - - (1) Disposal - - - - - 4.Closing balance - - - 11981.17 11981.17 IV. Book value 1. Closing book value 163017262.00 5730484.37 499968.00 34751361.82 203999076.19 2. Opening book value 169004359.94 7160000.57 999972.00 33389828.71 210554161.22 79BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 19. Goodwill (1) Original cost of goodwill Name Opening Increased Decreased Closing Balance Balance Sonyo Compressor (Dalian)Co.Ltd 240922872.80 - - 240922872.80 Sonyo Refrigeration (Dalian) Co. Ltd. 38056663.52 - - 38056663.52 Sonyo Refrigeration System (Dalian) - Co. Ltd. 5671836.12 - 5671836.12 Dalian Universe Thermal Technology - Co.Ltd. 1440347.92 - 1440347.92 Dalian Bingshan Group Engineering - Co. Ltd 310451.57 - 310451.57 Total 286402171.93 - - 286402171.93 (2) Goodwill impairment provision In the year 2015 the book value of equity investment of Dalian Universe Thermal Technology Co.Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset. The difference between the book value of equity investment of 48 287589.78 Yuan and the identifiable net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co. Ltd of 46847241.86 Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of 1440347.92 Yuan on The Company consolidated financial report at the end of the year.In the year 2016 Dalian Bingshan Group Engineering Co. Ltd purchases shares of Dalian Bingshan Baoan Leisure Industry Co. Ltd and gains control. The transferred price is based on the net asset of Dalian BingshanBaoan Leisure Industry Co. Ltd on June 30th 2016. Negotiated with Dalian Bingshan Baoan Leisure Industry Co. Ltd’s shareholder Baoan Water Project (China) Limited Company the transfer price is the combination cost on the purchasing date which is 5359548.42 Yuan the fair value of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiable net asset is 5049096.85 Yuan on the purchasing day therefore goodwill is 310451.57Yuan on the purchasing date. Dalian Bingshan Group Engineering Co. Ltd absorbed Dalian Bingshan Baoan Leisure Industry Co. Ltd in 2019.In 2022 the Company purchased 60% of the shareholdings of Sonyo Compressor (Dalian)Co.Ltd from Sanyo Electric (China)Co.Ltd and negotiated with Sanyo Electric (China)Co.Ltd to determine the share transfer consideration of 929148000.00 Yuan. After the transaction Sonyo Compressor (Dalian)Co.Ltd became a subsidiary. This transaction is a business combination not under same control cost of combination is the FV of previous shareholdings on 80BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) acquisition date plus 60% shareholdings acquisition consideration which is 1548580000Yuan in total. Goodwill of 240922872.80 Yuan is recognized for the difference between the share of FV of net identifiable asset of acquiree 1307657127.20Yuan and cost of combination on acquisition date.In 2022 the Company purchased 30% of the shareholdings of Sonyo Refrigeration System (Dalian) Co. Ltd. from Panasonic Corporation of china Co. LTD and 25% shareholdings of Sonyo Refrigeration System (Dalian) Co. Ltd from Panasonic Appliances cold Chain (Dalian)Co.Ltd. The negotiated share transfer consideration of 81735060.00 Yuan. After the transaction Sonyo Compressor (Dalian)Co.Ltd became a subsidiary. This transaction is a business combination not under same control cost of combination is the FV of previous shareholdings on acquisition date plus 55% shareholdings acquisition consideration which is 111456900.00Yuan in total. Goodwill of 5671836.12 Yuan is recognized for the difference between the share of FV of net identifiable asset of acquire 105785063.87Yuan and cost of combination on acquisition date.In 2023 the Company purchased 40% of the shareholdings of Sonyo Refrigeration (Dalian) Co.Ltd. from Panasonic Corporation of China Co. LTD and 60% shareholdings of Sonyo Refrigeration (Dalian) Co. Ltd from Sanyo Electric (China)Co.Ltd. This transaction is a business combination not under same control cost of combination is the consideration of 145285500.00 Yuan for share transfer. Goodwill of 38056663.52Yuan is recognized for the difference between the share of FV of net identifiable asset of acquire. 107228836.48Yuan and cost of combination on acquisition date.The book value of goodwill from business combination shall be allocated into the relevant asset group using the reasonable method since acquisition date and be tested for impairment on related asset groups containing goodwill by professional appraisal companies or use evaluation models to predict the recoverable amount of related asset groups containing goodwill in accordance with the present value of future cash flows including gross profit rate sales growth rate (4.04%-5.21%) discount rate(10.12%-11.33%) and other parameters in the next 5 years. No goodwill impairment has been found when the recoverable amount of asset group for testing is higher than its book value. 81BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 20. Long-term unamortized expense Item Opening Other Closing Increase Amortization Balance Decrease balance Greenland of new factory 3048061.06 - 892115.52 - 2155945.54 Employee’s dormitory use 1458257.10 right - 138478.35 - 1319778.75 Membership fee for golf 374000.00 - 16500.00 - 357500.00 Renovation and rebuilding 142091.33 2140100.03 547708.41 - 1734482.95 Amortization of instruments 315236.61 34159.28 237916.44 - 111479.45 Software maintenance 8675.50 43362.83 11621.76 - 40416.57 Total 5346321.60 2217622.14 1844340.48 - 5719603.26 21. Deferred tax assets and deferred tax liabilities (1) Deferred tax assets without offsetting Item Closing balance Opening balance Deductible Deferred tax Deductible Deferred tax assets temporary difference assets temporary difference Provision for credit impairment 435919173.38 7 5919841.22 445951688.75 81048834.24 Provision for impairment of 134581459.34 2 0319705.43 153519850.70 23185410.37 assets FA depreciation 54071935.80 8110790.37 48341817.47 7251272.60 Accrued sales discount 16775734.14 2516360.12 17125319.07 2568797.86 Unrealized profit from intra-group 13034503.47 1955175.52 13034503.47 1955175.52 Unrealized revenue 12912057.50 3228014.38 11170890.18 2792722.55 Government grant 12244929.32 1836739.40 Lease liability 9109228.24 1470613.49 52799814.74 8006670.79 Deductible loss 7223987.87 1083598.18 Provision 2301229.56 378294.47 4544802.83 714830.47 Safety cost 449375.00 67406.25 Others 1460577.94 219086.69 1138175.07 170726.26 Total 699634816.56 117038219.27 748076237.28 127761846.91 82BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Deferred tax liabilities without offsetting Item Closing balance Opening balance Taxable Deferred tax Taxable Deferred tax temporary liabilities temporary liabilities difference difference Revaluation increase in business combination asst not under same 216909045.47 32536356.82 253978835.91 38096825.39 control Change on FV of other non-current financial - - 151430911.13 22714636.67 assets FA depreciation 40073339.62 6011000.94 44655750.06 6698362.51 Use right of asset 8262320.31 1339915.36 48864566.94 7414624.88 Total 265244705.40 39887273.12 498930064.04 74924449.45 (3) Net deferred tax asset or liability Offset Offset amount at Closing balance of amount at the Opening balance of Item the year-end net of DTA/DTL beginning of net of DTA/DTL the year Deferred tax 13285391.56103752827.7114112987.38113648859.53 assets Deferred tax 13285391.5626601881.5614112987.3860811462.07 liabilities (4) Unrecognized deferred tax assets details Item Closing balance Opening balance Deductible temporary difference 77793766.46 227656543.59 Deductible loss 518523346.16 553968553.34 Total 596317112.62 781625096.93 83BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (5) Unrecognized deductible loss of deferred tax assets expired years Year Closing balance Opening balance Notes 2024-7735166.14- 20259324721.568950922.50- 202654629003.3754629003.37- 202765263403.9067364986.52- 202855941615.5755969301.70- 202937412135.4039791411.14- 20308559346.097689545.97- 203199102467.44126221649.87- 203220100936.1544819905.64- 2033117623814.71140796660.49- 203450565901.97-- Total 518523346.16 553968553.34 - 22. Other non-current asset Closing Balance Opening balance Category Carrying Carrying Book value Provision Book value Provision amount amount Debt offset 21770721.00 1609486.12 20161234.88 21770721.00 1527371.56 20243349.44 housing Total 21770721.00 1609486.12 20161234.88 21770721.00 1527371.56 20243349.44 84BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 23. Assets with restricted ownership or use rights Item At the year end Book value Carrying amount Type Restriction Guarantee Monetary fund 40157949.96 40157949.96 Frozen deposit/ frozen bank account Notes receivable 8555115.03 8555115.03 Pledged Pledged Financing of receivable 129115879.46 129115879.46 Pledged Pledged FA 89706820.32 58150963.78 Mortgage Mortgage Intangible asset 8266573.44 5120297.71 Mortgage Mortgage Investment property 38955728.90 31214402.83 Mortgage Mortgage Total 314758067.11 272314608.77 (continued) Item At the beginning of the year Book value Carrying amount Type Restriction Guarantee Monetary fund 110277531.37 110277531.37 Frozen deposit/ frozen bank account Notes receivable 4939655.20 4939655.20 Pledged Pledged Financing of receivable 99078000.87 99078000.87 Pledged Pledged FA 89720897.99 60540912.88 Mortgage Mortgage Intangible asset 8266573.44 5421865.27 Mortgage Mortgage Investment property 38955728.90 32097825.31 Mortgage Mortgage Total 351238387.77 312355790.90 85BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 24. Short-term borrowing (1) Category of short-term borrowing Loan category Closing balance Opening balance Credit loan 149334095.56 256686746.70 Factoring loan 15271202.33 2976345.47 Mortgage loan 2000000.00 2624692.21 Pledged loan 678109.37 - Total 167283407.26 262287784.38 25. Notes payable Notes Category Closing balance Opening balance Bank acceptance notes 569117426.19 670720999.48 Total 569117426.19 670720999.48 26. Accounts payable Item Closing balance Opening balance Material payments 860628492.89 931983444.51 Project payments 696387654.58 675076736.92 Equipment payments 38362719.82 43234911.60 Others 6002923.51 5540269.98 Total 1601381790.80 1655835363.01 27. Other accounts payable Item Closing balance Opening balance Dividend payable 533156.00 533156.00 Other accounts payable 226828051.96 278270996.17 Total 227361207.96 278804152.17 27.1 Dividend payable Item Closing balance Opening balance Ordinary share dividend 533156.00 533156.00 Total 533156.00 533156.00 86BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 27.2 Other accounts payable (1) Other payables categorized by payments nature Payments nature Closing balance Opening balance Supplier platform 138427047.31 179737197.47 Cash pledge and security deposit 17352388.67 14448796.02 Apply for reimbursement and unpaid 17093300.41 24617613.80 Payable 13486275.11 22407941.90 Agency fees 6811472.88 5317884.69 Repair 3173010.34 4676404.47 Trade mark and royalty 2403064.87 2531401.13 Others 28081492.37 24533756.69 Total 226828051.96 278270996.17 28. Contract liability (1) Contract liability Item Closing balance Opening balance Received in advance due from unrealized revenue 645711808.53 787685294.53 Total 645711808.53 787685294.53 29. Employee’s payable (1) Category of employee’s payable Opening Item Increase Decrease Closing balance balance Short-term employee’s 149352510.11675208893.85678023805.11146537598.85 payable Post-employment benefit –defined contribution 11203.35 73583788.19 73397894.37 197097.17 plan Termination benefits 133400.00 6774379.53 6907779.53 - Total 149497113.46 755567061.57 758329479.01 146734696.02 87BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Short-term employee’s payables Opening Item Increase Decrease Closing balance balance Salaries bonus 136231457.30532862205.86534488750.79134604912.37 allowance and subsidy Welfare - 30904645.77 30904645.77 - Social insurance 6925.69 46424681.15 46309727.64 121879.20 Include: Medical 6654.1137078780.2836986878.1898556.21 insurance Supplemental -40806.5840806.58- insurance On-duty injury 271.584853413.974840989.3912696.16 insurance Maternity insurance - 4451680.32 4441053.49 10626.83 Housing funds 178155.98 50495763.15 50591746.13 82173.00 Labor union and training 4008680.4010910703.8011299956.603619427.60 expenses Reward bonus and welfare 8927290.74-818084.068109206.68 fund Others - 3610894.12 3610894.12 - Total 149352510.11 675208893.85 678023805.11 146537598.85 (3) Defined contribution plan Opening Closing Item Increase Decrease balance balance Pension 10863.84 71341405.46 71161150.30 191119.00 Unemployment insurance 339.51 2242382.73 2236744.07 5978.17 Total 11203.35 73583788.19 73397894.37 197097.17 30. Tax payable Item Closing balance Opening balance Enterprise income tax 15275100.75 10958503.00 Value-added tax 8385659.83 5013411.92 Real estate tax 2658712.33 2589711.66 Land use tax 1313359.14 1313078.49 88BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Item Closing balance Opening balance City maintenance and construction tax 833824.30 551839.60 Stamp duty 711220.14 879269.28 Education surcharge 595588.79 514426.82 Individual income tax 501446.30 394171.13 River toll fee 1669.18 2080.36 Total 30276580.76 22216492.26 31. Non-current liabilities due within one year Item Closing balance Opening balance Long-term borrowings due within one year 139783355.56 119400000.00 Long-term payable due within one year 15006026.71 24636926.13 Lease obligation due within one year 6631690.45 6608421.51 Total 161421072.72 150645347.64 32. Other current liabilities Item Closing balance Opening balance Notes payable endorsed not derecognized 145160311.19 148957983.15 Output Vat to be carried forward 45849215.48 54357881.28 Total 191009526.67 203315864.43 33. Long-term borrowing (1) Category of long-term borrowing Category Closing Balance Opening Balance Pledged loan 501031874.58 609700000.00 Mortgage loan 6300000.00 - Guarantee loan 40014666.67 70000000.00 Total 547346541.25 679700000.00 Note 1: Pledged loan of 0.6 billion Yuan is for business combination in 2022 which comprises 0.3 billion Yuan from Dalian Zhoushuizi Branch of China Construction Bank Corporation 5years with 2.75% borrowing rate. 50% shareholdings of Sonyo Compressor (Dalian)Co.Ltd and 37.5% shareholdings of Sonyo Refrigeration System (Dalian) Co. Ltd. were pledged. China Construction Bank Corporation will complete the guarantee in February 2023. 0.3 billion Yuan from Dalian Branch of Bank of Communications Co.Ltd. 7 years with 2.75% borrowing rate. 89BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 50% shareholdings of Sonyo Compressor (Dalian)Co.Ltd and 37.5% shareholdings of Sonyo Refrigeration System (Dalian) Co. Ltd. were pledged. Dalian Branch of Bank of Communications Co.Ltd will complete the guarantee in February 2023. In 2025 50 million Yuan loan is planned to pay back to Construction bank and 46 million Yuan loan to Communications bank.Note 2: Pledged loan includes a new loan of 87 million Yuan in 2023 for acquisition of Sonyo Refrigeration (Dalian) Co. Ltd. held by Panasonic Corporation of China Co. LTD and Sanyo Electric (China)Co.Ltd. The loan is expired by 7 years with 2.75% borrowing rate. Up to December 31 2024 the closing balance is 74million Yuan and will be repaid 13 million Yuan in 2025.Note 3: In year 2016 the Development Fund from China Development Bank gave support to the Company’s intelligent and green equipment of cold chain and service industry base project and provided special fund to the Company’s holding shareholder Bingshan Group. The fund is160 million Yuan with 10year’s expiration at 1.2% rate. Once the fund arrived Bingshan Group gave it to the Company at the same rate of 1.2% in lump sum. The above fund needed to be warranted by the Company. The guarantee seems to be given for the holding shareholder but it is for the Company itself in fact. Up to December 31 2024 the closing balance is 70 million Yuan and will be repaid 30 million Yuan in 2025. 34. Lease obligation (1) Details of lease obligation Category Closing balance Opening balance Lease payment 44764698.58 38276477.18 Less: unrecognized finance expense 19061162.35 7533068.70 Non-current liability due within 1 year 6631690.45 6608421.51 Net lease liability 19071845.78 24134986.97 35. Long term accounts payable Item Closing Balance Opening Balance Long term accounts payable 12451396.59 10331937.30 Total 12451396.59 10331937.30 90BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 35.1Category by nature Nature Closing Balance Opening Balance Financial lease borrowings 12451396.59 10331937.30 Total 12451396.59 10331937.30 36. Provision Nature Closing Balance Opening Balance Reason Warranty 2301229.53 4544802.88 — Others 402140.00 - — Total 2703369.53 4544802.88 — 37. Deferred income (1) Category of deferred income Item Opening Balance Increase Decrease Closing Balance Government subsidy 98274267.80 684168.00 8224955.51 90733480.29 Total 98274267.80 684168.00 8224955.51 90733480.29 91BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) Government subsidy To non- Government subsidy item Opening Increase operating To other The value offset cost Related Balance income and expense this year Others Closing Balance with asset/ income income Application of NH3 and CO2 instead of R22 screw refrigerating machine combined 18573486.16 - - 1928452.02 - - 16645034.14 Asset condensing unit Related Compressor IC system 2800820.83 - - 368769.72 - - 2432051.11 Asset related Ultrasonic intelligent defrost technology 2449028.62 - - 384824.40 - - 2064204.22 Asset related R290 replacement of R22 large industrial screw unit 16258329.00 - - 1223666.04 - - 15034662.96 Asset related R290 replacement of R22 industrial double stage screw unit 5934600.00 - - 621393.00 - - 5313207.00 Asset related Ultrasonic defrost sample project 142500.00 - - 30000.00 - - 112500.00 Asset related Contribution to subsidiary company relocation 36762000.00 - - 1114000.00 - - 35648000.00 Asset related 92BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) To non- Related Government subsidy item Opening Balance Increase operating To other The value offset cost income income and expense this year Others Closing Balance with asset/ income Asset Eco Compressor project 14867771.19 - - 2553850.33 - - 12313920.86 / Income related Asset Meat storage technology and equipment 485732.00 684168.00 - - - - 1169900.00 / Income related Total 98274267.80 684168.00 - 8224955.51 90733480.29 — 93BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 38.Share capital Increase/decrease（+/-） Transfer Opening New Closing Item Share from balance share Others Subtotal balance dividend capital issued reserve Total share capital 843212507.00 - - - - - 843212507.00 39.Capital reserves Opening Items Increase Decrease Closing Balance Balance Share premium 669193413.27 - - 669193413.27 Other capital reserves 47903685.11 - - 47903685.11 Total 717097098.38 - - 717097098.38 94BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 40.Other comprehensive income Current year Items Opening Balance Amount for the Less：Previously recognized Less： After-tax After-tax attribute Closing Balance period before in profit or loss into other income attribute to the to minority income tax comprehensive income tax parent company shareholder I.Later can’t reclassified into profit and loss of other - - - - - - - comprehensive income II. Later reclassified into profit and loss of other 2208669.73 - - - - - 2208669.73 comprehensive income Other comprehensive income that can be transferred to profit 2208669.73 - - - - - 2208669.73 or loss under the equity method Other comprehensive income total 2208669.73 - - - - - 2208669.73 95BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 41. Special reserve Item Opening Balance Increase Decrease Closing Balance Manufacturing safety 449374.96 9641589.11 10090964.07 - Total 449374.96 9641589.11 10090964.07 - 42.Surplus reserves Item Opening Closing Increase Decrease Balance Balance Statutory surplus reserve 373398755.92 7606012.47 381004768.39 Discretionary surplus reserve 493760683.42 20853061.88 514613745.30 Total 867159439.34 28459074.35 895618513.69 Note: The Company made profit distribution during the reporting period. According to the resolution of the 2023 annual General meeting of shareholders the discretionary surplus reserve of RMB20853061.88 will be appropriated based on 20% of the net profit of the statutory financial report for FY2023; Statutory surplus reserve of 7606012.47 Yuan shall be appropriated based on 10% of the net profit of the parent company this year. 43.Undistributed profits Item Current year Last year Closing balance of last year 617386488.34 618445922.58 Add: Adjustments to the opening balance of --65810.05 undistributed profits Including: additional retrospective adjustments --65810.05 according to the new accounting standards Opening balance of current year 617386488.34 618380112.53 Add: net profit attributable to shareholders of 110335139.0649375900.83 parent company in the year Less: Provision for statutory surplus reserves 7606012.47 10426530.94 Provision for discretionary surplus reserves 20853061.88 31510869.01 Dividends payable for common shares 25296375.21 8432125.07 Closing balance of current year 673966177.84 617386488.34 96BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 44.Operating revenue and cost (1) Details Items Current year Last year Sales revenue Cost of sales Sales revenue Cost of sales Revenue from principle operation 4435315179.34 3715591847.99 4708789817.06 3931870621.80 Revenue from other operation 95832029.64 48216368.20 107151650.64 73726836.39 Total 4531147208.98 3763808216.19 4815941467.70 4005597458.19 (2) Main revenue and COS details Contract classification Northeast China Central China Total Sales revenue Cost of sales Sales revenue Cost of sales Sales revenue Cost of sales Classified by products 4377863106.52 3 648054729.45 1 5 3 284102.46 115753486.74 4531147208.98 3763808216.19 Manufacture products 3205706578.00 2567700529.27 117286263.50 91479352.86 3322992841.50 2659179882.13 Project installation 1090071347.44 1039457365.52 19657337.89 16151351.23 1109728685.33 1055608716.75 Other products and service 82085181.08 40896834.66 16340501.07 8122782.65 98425682.15 49019617.31 Classified by geography location 4377863106.52 3 648054729.45 1 5 3284102.46 115753486.74 4531147208.98 3763808216.19 domestic 3761872931.25 3170994675.32 153284102.46 115753486.74 3915157033.71 3286748162.06 overseas 615990175.27 477060054.13 - - 615990175.27 477060054.13 Timing of goods transferred 4377863106.52 3 648054729.45 1 5 3284102.46 115753486.74 4531147208.98 3763808216.19 At a point 4324319033.35 3 598191853.05 153284102.46 115753486.74 4477603135.81 3713945339.79 Over the time 53544073.17 49862876.40 - - 53544073.17 49862876.40 Total 4377863106.52 3 648054729.45 1 5 3284102.46 115753486.74 4531147208.98 3763808216.19 97BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 45.Taxes and surcharges Items Current year Last year Property tax 10687349.62 10073731.86 City construction tax 9022845.50 9012910.60 Education surcharge 6471029.87 6439924.63 Land use tax 5427544.54 5015774.62 Stamp duty 2988502.65 3354441.63 Vehicle and vessel tax 48080.08 48250.80 Others 18497.60 23642.94 Total 34663849.86 33968677.08 46.Selling expenses Items Current year Last year Employee benefit 152109707.56 141519344.86 Business travel expense 24263543.79 25719851.30 Official business expense 24204767.58 25483586.78 Business entertaining expense 16792673.00 15227636.78 Maintenance and repair expense 13375783.32 17803113.38 Advertisement and bids expense 4689987.05 4936902.38 Depreciation expense 2411651.93 2257182.91 Other expense 2862415.72 914408.09 Total 240710529.95 233862026.48 47. Administrative expenses Items Current year Last year Employee benefit 160039888.99 127272720.89 Official expense 29418682.12 28493919.83 Depreciation expense 21417108.80 25264201.98 Long-term assets amortization 14348155.12 11646085.10 Design consultant and test service expense 13245807.87 8075373.29 Maintenance and repair expense 11254680.61 16475833.99 Patent trade mark use 10685467.52 9372566.10 Business travel expense 7654226.60 6514713.45 Other taxes and fee 3924000.03 3686510.53 Safety production cost 3880395.28 3062462.68 98BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Items Current year Last year Business entertaining expense 3557038.72 2738569.12 Insurance expense 2645035.92 1435356.69 Advertisement expense 583431.31 814999.22 Other expense 2710495.81 5714932.63 Total 285364414.70 250568245.50 48.Technology development expense Items Current year Last year Employee benefit 91123015.98 102598481.06 Raw material 33426263.16 20934040.54 Depreciation and amortization expense 17272044.93 14685194.95 Other expense 13704991.50 25968001.16 Total 155526315.57 164185717.71 49.Financial expenses Items Current year Last year Interest expenses 33022192.73 37918133.57 Less: interest income 9280290.94 10558433.14 Add: exchange loss -3407833.33 -299066.17 Add: others expenditure 2667787.47 3097443.21 Total 23001855.93 30158077.47 50.Other income Items Current year Last year Government subsidy 18269439.71 12002208.32 Input VAT accelerated deduction 15785855.84 17504090.47 Insurance premium refund 2137900.00 367800.00 Job stability subsidy 1221189.00 111468.81 Personal income tax handling fee refund 403935.18 180238.52 VAT deduction for recruiting poor people - 12350.00 Gain on debt restructuring - 1512.39 Total 37818319.73 30179668.51 99BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 51.Gain on fair value change Source of gain on FV change Current year Last year Other non-current financial assets 27205532.40 14073910.32 Total 27205532.40 14073910.32 52.Investment income Items Current year Last year Long-term equity investment gain under equity method 30246020.75 -4884731.99 Gain from holding of other non-current financial assets 5411654.40 5796799.24 Gain from disposal of other non-current financial assets 33277105.94 - Gain on debt restructuring 2154769.80 1790089.90 Discounting fees for bank acceptance note -737835.68 -1595528.43 Total 70351715.21 1106628.72 53.Credit impairment loss (loss listed as “-”) Items Current year Last year Bad debt loss on receivable -15790318.34 -68147779.35 Bad debt loss on other receivable -882917.23 -1885950.98 Bad debt loss on notes receivable -536795.36 91074.58 Bad debt loss on long term receivable -10571.36 210600.00 Total -17220602.29 -69732055.75 54.Assets impairment losses (loss listed as “-”) Items Current year Last year Loss on impairment of inventory and cost to -29153785.19-17646037.59 fulfill the contract obligation Loss of contract asset impairment 16725088.49 4767716.49 Impairment on other non-current asset -82114.56 -1527371.56 Impairment on construction in progress -15064649.38 - Total -27575460.64 -14405692.66 100BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 55.Gain on assets disposal (loss listed as “-”) Item Current year Last year Gain on non-current assets disposal 5010221.27 -1184930.14 Including: gain on non-current assets 5010221.27 -1184930.14 disposal not classified as held for sale Including: gain on fixed assets disposal 5185071.48 -689706.84 gain on intangible assets disposal - -433100.00 gain on early derecognition of use -174850.21 -62123.30 right asset Total 5010221.27 -1184930.14 56. Non-operating income （1） Non-operating income list Amounts recognized into Item Current year Last year non-recurring profit or loss for the year Payable written-off 6083744.04 1895792.78 6083744.04 Penalty received 3117992.73 2021941.14 3117992.73 Loss claimed reverse 1186292.67 10206786.86 1186292.67 Gain on donation 128800.00 - 128800.00 Gain on disposal of 41493.05 39884.14 41493.05 non-current asset Other items 923931.55 369517.17 923931.55 Total 11482254.04 14533922.09 11482254.04 57.Non-operating expenses Amounts recognized into Item Current year Last year non-recurring profit or loss for the year Non-current assets scrap loss 5809971.12 5511195.40 5809971.12 Compensation 2322513.96 952429.15 2322513.96 Expected loss on pending litigation 241996.39 - 241996.39 Outward donation 60000.00 360000.00 60000.00 Others 1066222.01 142852.98 1066222.01 Total 9500703.48 6966477.53 9500703.48 101BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 58. Income tax expenses (1) Income tax expenses Items Current year Last year Current income tax expenses 36274871.93 25126696.59 Deferred income tax expenses -24313548.68 -14094997.51 Total 11961323.25 11031699.08 (2) Adjustment process of accounting profit and income tax expense Items Current year Consolidated total profit this year 125643303.02 Income tax expenses at applicable tax rate 18846495.45 Effect on subsidiary applied to different tax rate 3738359.93 Effect on prior period income tax adjustment 3220667.98 Effect on non-taxable income -5210951.26 Effect on non-deductible cost expense and loss 2146835.15 Effect on use of deductible loss from unrecognized deferred tax assets in the prior period -8839865.32 Deferred tax assets recognized for prior period temporary difference -1959289.59 Effect on temporary difference or deductible loss from unrecognized deferred tax assets this year 19449340.23 R&D expenditure accelerated deduction -19430269.32 Income tax expense 11961323.25 102BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 59. Notes to cash flow statement (1) Cash relevant to operating activities 1) Cash received relevant to operating activities Items Current year Last year Deposit returned 41482792.46 56211426.27 Lease premium received 25014316.79 34669117.40 Government grants 12106148.33 15077248.10 Interest income 11356266.86 8914720.67 Receivable from the 3rd party 6651943.84 3001285.07 Compensation 2246739.02 2497389.05 Received travel expense refund 2155963.19 1834601.94 Frozen money refund 20924320.43 550487.90 Others 3048070.46 4072381.79 Total 124986561.38 126828658.19 2) Cash paid relevant to operating activities Items Current year Last year Expenditure 173808996.79 202530612.54 Deposit paid 37902779.65 50899935.96 Business travel borrowing 7894695.20 8978717.58 Frozen accounts 6236821.19 21363555.30 Bank handling charges 2901472.22 3533466.20 Unsettled AR/AP among non-related party 3439560.21 181386.21 Others 2841796.69 2935250.16 Total 235026121.95 290422923.95 (2) Cash relevant to investing activities 1) Significant cash received relevant to investing activities Items Current year Last year Cash dividend 40030942.29 44342521.09 Investment recoup 45841618.00 - Gain on disposal of equity investment 212428461.60 - Total 298301021.89 44342521.09 103BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 2) Cash received relevant to investing activities Items Current year Last year Fixed-term deposit -principle 268000000.00 - Total 268000000.00 - 3) Significant cash paid relevant to investing activities Items Current year Last year Purchase of long-term asset 78719169.31 89321945.50 Fixed-term deposit -principle 150000000.00 - Total 228719169.31 89321945.50 4) Other cash paid relevant to investing activities Items Current year Last year Fixed-term deposit 150000000.00 168000000.00 Total 150000000.00 168000000.00 (3) Cash relevant to financing activities 1) Other cash received relevant to financing activities Items Current year Last year Notes payable to supplier 9964739.15 55956005.87 Sale leaseback and financial lease 2000000.00 6600000.00 Notes discounted 1598937.32 3119926.93 Others 11480935.05 Total 25044611.52 65675932.80 2) Others cash paid relevant to financing activities Items Current year Last year Payment of guarantee money 20338159.55 39502750.62 Notes payable to supplier 47750000.00 13629318.00 Sale& leaseback and financial lease 18074898.60 10891978.68 Lease premium payable 3879173.06 6585497.64 Others 660706.34 80863.54 Total 90702937.55 70690408.48 104BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 60. Supplementary information of consolidated cash flow statement (1) Information Items Current year Last year 1. Adjusting net profit into cash flows of operating —— —— activities: Net profit 113681979.77 54174539.75 Add: Provision for impairment of assets 27575460.64 14405692.66 Provision for impairment of credit 17220602.29 69732055.75 Depreciation of fixed assets Amortization of 142519339.90135625135.60 mineral resources and biological assets Depreciation of right-of-use assets 5688436.33 11340839.21 Amortization of intangible assets 14960016.82 13570693.11 Amortization of long-term deferred expenses 1844340.48 1545642.28 Losses on disposal of fixed assets intangible assets -5010221.271184930.14and long-term assets (income listed with”-”) Losses on scrap of fixed assets (income listed 5768478.075471311.26with”-”) Change of fair value profit or loss -27205532.40 -14073910.32Financial expense (income listed with”-”) 33022192.73 37918133.57Investment loss (income listed with”-”) -70351715.21 -1106628.72 Decrease of deferred tax assets (increase listed 9896031.82-21471717.58with”-”) Increase of deferred tax liabilities (decrease listed -34209580.51864530.06with”-”)Decrease of inventories (increase listed with”-”) 243070107.18 -257408322.60 Decrease of operating receivables (increase listed 45124178.28-500972621.69with”-”) Increase of operating payables (decrease listed -286439840.48424759029.78with”-”) Others - - Net cash flows arising from operating activities 237154274.44 -24440667.74 2. Significant investment and financing activities — unrelated to cash income and expenses Liabilities transferred to capital - Convertible bonds within 1 year - 105BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Items Current year Last year Financing leased fixed assets - 3. Net increase (decrease) of cash and cash — equivalent Closing balance of cash 951579683.60 670440335.98 Less: Opening balance of cash 670440335.98 921661803.17 Add: Closing balance of cash equivalent - Less: Opening balance of cash equivalent - Net increase of cash and cash equivalent 281139347.62 -251221467.19 (2) Cash and cash equivalents Items Current year Last year Cash 951579683.60 670440335.98 Including: Cash on hand 28585.88 70750.93 Bank deposit used for paying at any moment 951551097.72 670303450.55 Other monetary fund for paying at any moment 66134.50 Deposit fund in central bank available for payment - Cash equivalent - Including: bonds investment with maturity in 3 months - Closing balance of cash and cash equivalents 951579683.60 670440335.98 (3) Monetary fund not belonging to cash and cash equivalent Items Current year Last year Reasons Fixed term deposit 50000000.00 168000000.00 Held to maturity Guarantee money for bank acceptance note 15278927.28 44200486.65 Guarantee money Guarantee money for guarantee letter 14925131.02 41547977.10 Guarantee money Frozen 6512838.08 21578536.32 Frozen Interest receivable 406111.11 2321702.76 Held to maturity Rural workers’ salary account restriction 3190047.46 1731234.30 Special account Rural workers guarantee fund 251006.12 1219297.00 Guarantee money Total 90564061.07 280599234.13 — 61. Change of shareholder’s equity None 106BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 62. Monetary category of foreign currency (1) Monetary category of foreign currency Closing Balance Exchange Item Closing Balance (RMB) (foreign currency) Rate Cash Including：USD 1654811.64 7.1884 11895447.99 JPY 410505789.00 0.046233 18978914.14 Euro 17077.82 7.5257 128522.55 Accounts receivable — — Including: USD 7240050.99 7.1884 52044382.54 JPY 172489988.00 0.046233 7974729.62 Euro 650363.00 7.5257 4894436.83 GBP 140443.58 9.0765 1274736.15 Accounts payable Including: USD 344524.99 7.1884 2476583.44 JPY 71058586.00 0.046233 3285251.61 Other accounts payable — — Including: USD 120594.09 7.1884 866878.56 JPY 34222156.10 0.046233 1582192.94 63. Lease (1) As a lessee Items Current year Last year Interest expense on lease liabilities 1545658.27 1043053.19 Short-term lease expense recognized in income statement 2052986.01 4114059.87 Low-value asset lease expense recognized in income statement (excl short-term lease) - - Income from the sublease of the right-of-use the assets - - Sum of cash outflows related to leases 5240197.61 8453910.59 Cash inflow from sale and leaseback transactions 2000000.00 6600000.00 Cash outflow from sale and leaseback transactions 3330252.62 10891978.68 107BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) As a lessor Operating lease Include: income related to variable lease Items Lease income payments not included in lease payment receivable Office and plant 11230884.64 Total 11230884.64 - VI. Research and development expense Items Current year Last year Labor cost 91123015.98 102598481.06 Material cost 33426263.16 20934040.54 Depreciation and amortization 17272044.93 14685194.95 Others 13704991.50 25968001.16 Total 155526315.57 164185717.71 Expensed R&D 155526315.57 164185717.71 Capitalized R&D 108BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) VII. Change of Consolidation Scope None VIII. Interest in other entity 1.Equity of subsidiaries （1） Organization structure of group company Registered capital Main Shareholding (%) Name of subsidiaries business Registered (million address Business nature Obtainingaddress Direct Indirect method Yuan） Dalian Bingshan Group 300.00 Dalian Dalian Installation 100 - Establish Engineering Co. Ltd.Chengdu Bingshan Refrigeration 10.00 Chengdu Chengdu Service - 51 Establish Engineering Co. Ltd.Dalian Bingshan Group 18.00 Dalian Dalian Trading 100 - Establish Sales Co. Ltd.Dalian Bingshan Air-conditioning 82.54 Dalian Dalian Manufacturing 100 - Establish Equipment Co. Ltd.Dalian Bingshan Guardian Automation 50.70 Dalian Dalian Manufacturing 100 - Establish Co. Ltd.Dalian Bingshan-RYOSETSU 57.58 Dalian Dalian Manufacturing 100 - Establish Quick Freezing Equipment Co. Ltd.Wuhan New World Refrigeration Industrial 200.00 Wuhan Wuhan Manufacturing 100 - Acquisition Co. Ltd.Wuhan New World Air-conditioning 35.00 Wuhan Wuhan Installation - 100 Establish Refrigeration Engineering Co. Ltd 109BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Registered Shareholding (%) Name of subsidiaries capital Main business Registered Obtaining (million address address Business nature Direct Indirect methodYuan） Wuhan Lanning Energy 22.00 Wuhan Wuhan Trading - 100 Acquisition Technology Co. Ltd.Dalian Universe Thermal 80.00 Dalian Dalian Manufacturing 55 - Acquisition Technology Co.Ltd.Dalian Bingshan Engineering & Trading 30.00 Dalian Dalian Service 100 - Acquisition Co. Ltd Sonyo Compressor 442.40 Dalian Dalian Manufacturing 100 - Acquisition (Dalian)Co.Ltd. Sonyo Refrigeration 105.00 Dalian Dalian Manufacturing 100 - Acquisition System (Dalian) Co. Ltd.Sonyo Refrigeration 212.08 Dalian Dalian Manufacturing 100 - Acquisition (Dalian) Co. Ltd. 1) All the proportion of shareholding in subsidiaries were the same with voting right. 2) The Company held over 50% voting right in subsidiaries and could control these subsidiaries with over 50% voting right. （2） There are no significant non-subsidiaries. 2.Change of equity share in subsidiary which is still under control There is no change of equity share in subsidiary 110BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 3.Equity in joint venture arrangement or associated enterprise （1） The important affiliated companies Shareholding (%) Name of joint ventures or Main business Registered Business Accounting affiliated companies address address nature methods Direct Indirect Dalian Bingshan Metal Equity Technology Co. Ltd. Dalian Dalian Manufacturing 49.00 - method 1) The Company has the same percentage of shareholding and voting right in joint-venture or affiliated company. 2) The Company doesn’t have joint venture or affiliated companies which have no significant influence although being held 20% or more voting rights. 111BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) （2） The key financial information of affiliated companies Closing balance/Current year Items Closing balance/Current year Dalian Bingshan Metal Technology Co. Ltd.Current assets 256248904.13 Including: Cash and cash equivalents 80025332.42 Non-current assets 42099190.29 Total assets 298348094.42 Current liabilities 60317579.55 Non-current liabilities - Total liabilities 60317579.55 Total net asset 238030514.87 Minority interests - Equity to the parent company 238030514.87 Share of net assets according to the shareholding proportions 116634952.28 Adjusting events - —Goodwill 19269770.94 —Unrealized profits of insider trading - --Others - Book value of equity investment of affiliated companies 135904723.22 Fair value of equity investment with public offer - Operating income 432254731.20 Financial expense -2035716.59 Income tax expense 9817260.94 Net profit 58136954.23 Net profit of discontinuing operation - Other comprehensive income - Total comprehensive income 58136954.23 The current dividends received from joint ventures 30759188.94 112BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (Continued) Opening balance/Last year Items Dalian Fuji Bingshan Vending Jiangsu Jingxue Insulation Dalian Bingshan Metal Machine Co. Ltd Technology Co.Ltd Technology Co. Ltd.Current assets 279515256.77 1513841724.68 334413727.30 Including: Cash and cash equivalents 18195178.30 151387053.19 163.052.296.71 Non-current assets 190659275.57 301638618.76 38148931.23 Total assets 470174532.34 1815480343.44 372562658.53 Current liabilities 300289317.09 943431015.22 58315558.14 Non-current liabilities 32367401.38 40353776.15 - Total liabilities 332656718.47 983784791.37 58315558.14 Total net asset 137517813.87 831695552.07 314247100.39 Minority interests - 274736.66 - Equity to the parent company 137517813.87 831420815.41 314247100.39 Share of net assets according to the shareholding proportions 67383728.80 123964843.58 153981079.19 Adjusting events - - - —Goodwill 226689.29 20390060.33 19269770.94 —Unrealized profits of insider trading - - - --Others - - - 113BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Opening balance/Last year Items Dalian Fuji Bingshan Vending Jiangsu Jingxue Insulation Dalian Bingshan Metal Machine Co. Ltd Technology Co.Ltd Technology Co. Ltd.Book value of equity investment of affiliated companies 67610418.09 144354903.91 173250850.13 Fair value of equity investment with public offer - - - Operating income 209845287.10 1152098034.96 464881380.24 Financial expense 11084822.85 1934530.46 -2682355.04 Income tax expense -353797.35 4996495.33 10449723.61 Net profit -85684074.85 38019504.83 63729802.01 Net profit of discontinuing operation - - - Other comprehensive income - - - Total comprehensive income -85684074.85 38019504.83 63729802.01 The current dividends received from joint ventures - 1610172.00 33134422.30 114BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) （3） Summary financial information of insignificant affiliated companies Items Current year Last year Affiliated company — — Total book value of investment of affiliated companies 346068692.14 136058775.37 The total of following items according to the shareholding proportions — — Net profit -7939529.15 3826157.59 Other comprehensive income - - Total comprehensive income -7939529.15 3826157.59 （4） Significant restrictions of the ability of affiliated companies transferring funds to the Company.No. （5） Contingency related to joint venture or affiliated company need to be disclosed. No.IX. Government Grant 1. Liability item involved in government grant Opening Into non- The value Items Balance Increase operating Into other Closing Related to income income offset cost and expense Balance asset/income Deferred asset income 82920764.61 - - 5671105.18 - 77249659.43 Deferred income 15353503.19 684168.00 - 2553850.33 - 13483820.86 asset/income 98274267.80684168.00-8224955.51-90733480.29— 2. Recognized in income statement Items Current year Last year Other income 19798839.71 12002208.32 115BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) X. Risk Related to Financial Instruments The main financial instruments held by the group are borrowings accounts receivable accounts payable other non-current financial asset etc. The detailed explanation is referred to the note No.V. The related risks of these financial instruments and the risk management policy conducted to reduce these risks by the group are introduced as below. The group management conducts to manage and monitor these risks exposure and control these risks under certain risk level. 1. Objectives and policies of each risk management The objectives of risk management conducted by the Company are to reach the balance between risk and profit return by reducing the negative influence to operating performance to the minimum level as well as maximizing the shareholders’ and other investors’ profits. Based on these objectives the basic risk management policy is to recognize and analyze all sorts of risk that the Company faced with to set up the proper risk tolerance bottom line conducting risk management as well as to monitor these risks in a timely and effective manner and to ensure these risks under the limit level. (1) Market risk 1) Exchange rate risk Most of the Company’s business is located in China and settled with RMB. But the Company defined exchange rate risk of assets liabilities dominated in foreign currency and future transaction dominated in foreign currency (mainly including USD JPY EUROHKD and GBP).The financial department of the Company monitors the Company’s foreign currency transaction and the scale of foreign assets and liabilities and decreases exchange rate risk. During the current year the Company did not agree any forward foreign exchange contract or currency swap contract .As at 31st December 2024 the Company’s assets and liabilities dominated in foreign currency are listed in RMB as following： 116BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Items December 31 2024 January 1 2024 Monetary fund-USD 11895447.99 5900837.69 Monetary fund-JPY 18978914.14 5352282.10 Monetary fund- EURO 128522.55 346986.51 Monetary fund- HKD - 84495.39 Receivable -USD 52044382.54 50158313.38 Receivable -GBP 1282811.66 - Receivable -JPY 7974729.62 3847098.27 Receivable - EURO 4894436.83 5426571.06 Payables -USD 2476583.44 7966726.35 Payables -JPY 3285251.61 1794696.33 Other payables - JPY 1582192.94 - The group paid close attention to the effect on FX risk. 2) Interest rate risk The interest risk of the group incurred from bank loan risk of a floating interest rate of financial liabilities that lead to the group facing cash flow interest rate risk financial liabilities with a fixed interest rate lead to the group facing cash flow interest rate risk. The company determined the proportion of fixed interest rate and floating interest rate according the current market circumstance. The group’s interest-bearing debt is borrowings of RMB 686000000.00 at fixed interest rate as of December 312024(borrowings of RMB 799100000.00 in2023). The financial department of the group continuously monitors the interest rates level and the management would make some adjustment to lower the interest rate risk according to the latest market situation. Climbing interest rate will increase the cost of newly increased interest-bearing liability and interest expense for unsettled interest-bearing liability at floating rate and have adverse effect on the business performance. 3) Price risk The price risk of the Company is mainly commodity price risk. The Company sells products at market prices. As the national economy enters the "new normal" the manufacturing industry is under great economic downward pressure and the drastic fluctuations of bulk material prices have a certain impact on the group 's operations. (2) Credit risk 117BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) The credit risk of the group comes from monetary fund notes receivable accounts receivable and other accounts receivable etc. The management made credit policies and monitored changes of this credit exposure.The group 's monetary fund was in bank with higher credit rating so there was no significant credit risk nor significant losses due to the default of other entity. Upper limit policy is adopted to avoid any credit risk from financial institution.The group made relevant policy to control credit risk exposure from receivable other receivable and notes receivable. The group assesses the client’s credit background according to the client’s financial performance possibility of obtaining guarantee from the 3rd party credit record and other factors such as current market. The group will periodically monitor the credit situation of the client and will take measures such as prompt letter shorten credit period or cancel the credit to ensure the overall credit risk within the controllable scope.As at 31st December 2024 the top five customers of receivable accounts balance are 262076417.63Yuan representing 11.46% of sum of receivable and contract assets. (3) Liquidity risk Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfills the obligation of settlement by cash or other financial assets. The way to manage the liquidity risk is to ensure enough fund available to fulfill the liability by due date in prevention from unacceptable loss of or reputation damage to the group. The group periodically analyze the liability structure and expiry date and the financial department of the group continued to monitors the short term or long-term capital needs to ensure maintain plenty of cash flow. And the same time they also monitor the condition of bank loan agreements and obtain commitments from banks to reduce liquidity risks.The fund mainly comes from bank loan. By December 31st 2024 the credit limit still available is 711.87 million Yuan(618.30 million Yuan 2023) and short-term credit limit available is 711.87 million Yuan(618.30 million Yuan 2023).As at 31st December 2024 the group’s financial assets and financial liabilities in line with non-discounted cash flow of the contracts as following： 118BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Currency unity:10kYuan Within 1 Items 1-2 years 2-5 years Over 5 years Total year Financial Assets Cash and cash in bank 104214.37 104214.37 Notes receivable 35285.49 35285.49 Accounts receivable 149223.43 149223.43 Financing receivable 38207.33 38207.33 Other Receivable 4574.84 4574.84 Contract asset 18476.09 18476.09 Other current asset 2763.64 2763.64 Other non-current 168.39168.39 financial asset Long-term receivable 5.93 7.59 0.48 14.00 Financial Liabilities Short-term loan 16728.34 16728.34 Notes Payable 56911.74 56911.74 Accounts payable 160138.18 160138.18 Other payable 22682.81 22682.81 Employee’s payable 14673.47 14673.47 Tax payable 3027.66 3027.66 Non-current liability 16142.1116142.11 due within 1 year Long-term loan 44134.65 4000.00 6600.00 54734.65 Lease obligation 346.79 637.44 922.96 1907.19 Long-term payable 554.87 690.27 1245.14 119BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 2. Financial asset transfer (1) Classified by transfer method Transfer Nature Amount Derecognition Basis for derecognition method Bank acceptance Endorsement All risk and reward bill with high credit 386371303.27 Y of a bill have been transferred rating Bank acceptance Discounting All risk and reward bill with high credit 33231779.38 Y a bill have been transferred rating Bank/trade Endorsement Retain mostly risk and acceptance bill with /discounting 174902890.29 N reward including non-high credit of a bill default risk rating All risk and reward Factoring Receivable 13478950.00 Y have been transferred Total — 607984922.94 — — (2) Derecognized financial asset due to transfer Derecognized Gain/loss from Item Transfer method Amount derecognition Bank acceptance bill with Endorsement of a bill 386371303.27 - high credit rating Bank acceptance bill with Discounting a bill 33231779.38 -89454.91 high credit rating Factoring without Receivable 13478950.00 - recourse Total — 433082032.65 -89454.91 120BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) XI. Disclosure of Fair Value 1. Amount and measurement level of the assets and liabilities measured at fair value at the year end Fair value at the year end st nd rd Items 1 level 2 level 3 level measurement of measurement of measurement of Total FV FV FV Financial assets Continuously — — — — measured at FV Receivable financing - 382073283.27 382073283.27 Other non-current -1683852.591683852.59 financial asset Total - 382073283.27 1683852.59 383757135.86 2. Basis for Market price of first level measurement of fair value None. 3. For continuous and discontinuous 2nd level of FV valuation technique adopted and key parameter quantitive and qualitive information.Bank acceptance notes (receivable financing) as measured at fair value through other comprehensive income is within this scope. Bank acceptance notes held by the group mainly are high credit grading from the large commercial bank. As the remaining maturity is short and credit risk is very low on the balance sheet date the book value of bank acceptance notes receivable is similar to fair value. 4. For continuous and discontinuous 3rd level of FV valuation technique adopted and key parameter quantitive and qualitive information.As of December 31 2024 the book value of the share investment in Guotai Junan Investment Management Co.Ltd and Wuhan Steel and Power Co.Ltd is 1683852.59 Yuan. It is presented as other non-current financial asset in accordance with No.22- financial instrument recognition and measurement of Accounting Standards for Business Enterprises. Having considered there is neither active market for invested company’s share nor market price is 121BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) available for reference and it is not feasible to obtain the relevant observable input value. FV of the investment is measured at cost by taking influence factor of FV into consideration. 5. For continuous 3rd level of FV adjusted information of opening and closing balance and sensitivity analysis of unobservable parameter.None. 6. Assets continuously measured at fair value have switched among different level during the year.None. 7. Changes of valuation technique and reasons for changes None. 8. Assets and liability are disclosed at FV rather than measured at FV None.XII. Related Parties Relationship and Transactions i. Related parties’ relationship 1. Controlling shareholder and ultimate controller (1) Controlling shareholder and ultimate controller Parent Registered Business Registered Shareholding Voting company address nature capital percentage power (%) percentage (%) Dalian Bingshan Group Co. Dalian Manufacture 158580000.00 20.27 20.27 Ltd.Note: Dalian Bingshan Group Co. Ltd. is a Sino –foreign joint venture located No.106 Liaohe East Road DDZ Dalian China. The legal representative of Dalian Bingshan Group Co. Ltd. is Mr. Ji Zhijian and the registered capital is RMB158.58 million. The registered business operation period is from 3rd July 1985 to 2nd July 2035. The business scope includes research development manufacture sales service and installment of refrigeration equipment cooling 122BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) and freezing equipment different size of air-conditioners petrochemical equipment electronic and electronic- control products home electronic appliance environment protect equipment and etc. (unless the licenses needed) 2. Subsidiaries Referrer to the content in the Note “VIII. 1. (1) Organization structure of group company”. 3. Affiliated company and joint ventureThe information of the affiliated company and joint venture please refers to the note “VIII. 3.(1)The significant affiliated company and joint venture’. The Company had transactions with related parties during the current period or last period including: Names of the joint ventures or affiliated company Relationships with the Company Dalian Fuji Bingshan Vending Machine Co. Ltd. Affiliated company of the Company Dalian Fuji Bingshan Vending Machine Sales Co.Ltd. Affiliated company of the Company Jiangsu Jingxue Insulation Technology Co.Ltd. Affiliated company of the Company MHI Bingshan Refrigeration (Dalian) Co.Ltd. Affiliated company of the Company Dalian Honjo Chemical Co. Ltd. Affiliated company of the Company Dalian Bingshan Metal Technology Co.Ltd. Affiliated company of the Company Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd. Affiliated company of the Company SONGZ -Grand Ocean Thermal Technology (Dalian) Co. Ltd. Affiliated company of the Company Dalian Bingshan Group Huayida Financial Leasing Co. Ltd. Subsidiary of its affiliated company Dalian Jingxue Freezing Equipment Co. Ltd. Subsidiary of its affiliated company Shanghai Jingxue Freezing Equipment Co. Ltd. Subsidiary of its affiliated company Jiangsu Jingxue Insulation Environmental Engineering Co.Ltd. Subsidiary of its affiliated company SONGZ -Grand Ocean New Energy Vehicle Spare Part (Changchun) .Ltd. Subsidiary of its affiliated company Wuhan Sikafu Power Control Equipment Co. Ltd. Affiliate of its subsidiary 4. Other related parties 123BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Name of related party Related party relationship Company under direct/indirect Control of Panasonic under control of or significant influence by the Co.Ltd same party Sanyo Corporation under control of or significant influence by the same party Dalian Spindle Environmental Facilities Co. Ltd. under control of or significant influence by the same party LINDE HYDROGEN FUELTECH (DALIAN) CO. under control of or significant influence by the LTD. same party Dalian Shentong Electric Co. Ltd. under control of or significant influence by the same party Dalian Fuji Bingshan Control System Co. Ltd. under control of or significant influence by the same party BAC Dalian Co. Ltd. under control of or significant influence by the same party Dalian Bingshan Wisdom Park Co. Ltd under control of or significant influence by the same party Dalian Bingshan Part Technology Co.LTD. Under control of the same ultimate controlling party Alphavita Bio-scientific (Dalian) Co. Ltd. Under control of the same ultimate controlling party Bingshan Technology Service （Dalian） Co. Ltd. Under control of the same ultimate controlling party Sonyo Cold Chain(Dalian) Co. Ltd. Under control of the same ultimate controlling party Sonyo Cold Chain Equipment (Wuhan) Co. Ltd. Under control of the same ultimate controlling party’s subsidiary Directors and senior officers of the Company Dalian Health and Wellness Industry Group Co. Ltd serve as directors and senior officers in Dalian Zhonghuida Refrigeration Technology Co. Ltd Company Dalian State-owned Assets Investment and An associated natural person serves as a director of Management Group Co.Ltd. the company Note: Companies under direct/indirect Control of Panasonic Co.Ltd are: Panasonic Electric Taiwan Co.Ltd. Wanbao(Guangzhou) Compressor Co.Ltd Panasonic Electronic Devices(Jiangmen)Co.Ltd. Panasonic R&D Center Suzhou Co.Ltd Dalian Branch Panasonic Corporation Panasonic Industry (China) Co. Ltd. Shanghai Branch Appliances Microwave Oven(Shanghai) Co.Ltd. Panasonic Motor(Hangzhou)Co.Ltd. PanasonicElectric Equipment (China）Co.Ltd. Panasonic Appliances Air-Conditioning and Refrigeration Corporation Panasonic Home Appliances (China) Co.Ltd. Panasonic Procurement(CHINA)Co.Ltd. Panasonic Industry (China) Co. Ltd. Panasonic Home Appliances(Hangzhou)Co.Ltd. Singapore Panasonic Cold Chain Asia Panasonic Sales Taiwan Co Ltd..Panasonic Appliances Air-Conditioning Malaysia Sdn.Bhd.、Panasonic Cold Chain Poland Sp.Z O.O.、Panasonic Connect Co.Ltd.Media Entertainment Business Division、Panasonic Corporation、Panasonic Corporation Appliances Company Heating＆Cooling Solutions Bd 124BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Commercial Air-Conditionin 、 Panasonic Corporation Appliances Company 、 Panasonic Corporation Heating & Ventilation A/C Company Heating And Cooling Devices Business Division、Panasonic Corporation Heating & Ventilation Ac Company Commercial Equipment Solutions Business Division、Panasonic Do Brasil Limitada Miami Branch、Panasonic Heating And Ventilation Air-Conditioning CzechS.R.O.、Panasonic Hong Kong Co.Ltd.、Panasonic India Pvt Ltd (Apin)、Panasonic Industrial Devices Sales Company Of America、Panasonic Industrial Devices Sales Taiwan Co.Ltd.、Panasonic Industrial Devices Sales(M)Sdn Bhd、 Panasonic Industry Europe Gmbh、Panasonic Industry Sales Asia Pacific、Panasonic Life Solutions India Private Limited、Panasonic Operational Excellence Co.Ltd.、Panasonic Operational Excellence Co.Ltd.（Pex）、Panasonic Taiwan Co.Ltd.、Panasonic A.P.Sales (Thailand)Co.Ltd、Panasonic Corporation、Panasonic Corporation Appliances Company.ii. Related Party transactions 1. Purchase of goods offer and receive labour services etc inter-group transactions (1) Purchase of goods/receive labour services Related party Content Current year Last year Dalian Bingshan Metal Technology Co.Ltd. Purchases of goods 62734659.74 63809032.17 Sonyo Cold Chain (Dalian)Co.Ltd Purchases of goods 58961755.22 40499927.26 Jiangsu Jingxue Insulation Technology Co.Ltd. Purchases of goods 35868159.33 28067092.90 Company under direct/indirect Control of Panasonic Co.Ltd Purchases of goods 26696668.01 13763555.55 Bingshan Technology Service （Dalian） Co. Ltd. Purchases of goods 21254763.30 5575811.09 Dalian Honjo Chemical Co. Ltd Purchases of goods 14418121.76 10305185.60 Dalian Bingshan Part Technology Co.LTD. Purchases of goods 14257101.84 10775437.38 Dalian Shentong Electric Co. Ltd. Purchases of goods 10593486.97 1680077.95 BAC Dalian Co. Ltd. Purchases of goods 9499080.31 18579088.19 Dalian Spindle Environmental Facilities Co. Ltd Purchases of goods 1168153.45 780949.56 Dalian Fuji Bingshan Control System Co. Ltd. Purchases of goods 970858.76 5029475.45 Dalian Bingshan Wisdom Park Co.Ltd Purchases of goods 161184.48 80441.60 Alphavita Bio-scientific (Dalian) Co.Ltd. Purchases of goods 93428.30 4466987.61 Sanyo Corporation Receive labor services 79389.43 1621316.09 Dalian Fuji Bingshan Vending Machine Sales Co. Ltd Purchases of goods 68141.59 35398.23 125BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Related party Content Current year Last year Sonyo Cold Chain (Dalian)Co.Ltd Receive labor services 59669.09 Shanghai Jingxue Freezing Equipment Co. Ltd Purchases of goods 53008.85 Dalian Jingxue Freezing Equipment Co. Ltd. Purchases of goods 28300.88 Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd. Purchases of goods 15337.41 Dalian Fuji Bingshan Vending Machine Co. Ltd Purchases of goods 9597.63 505497.50 Dalian Bingshan Group Co. Ltd. Purchases of goods 943.40 Bingshan Technology Service Receive labor （Dalian） Co. Ltd. services - 2011933.16 Dalian Bingshan Wisdom Park Co. Receive labor Ltd services - 47169.81 Dalian Bingshan Group Co. Ltd. Receive labor services - 24452.83 Total 256991809.75 207658829.93 (2) Sales of goods/ labour services provision Related party Content Current year Last year Company under direct/indirect Control Sales of goods 294094000.19 285292151.76 of Panasonic Co.Ltd Sonyo Cold Chain(Dalian)Co.Ltd Sales of goods 124892254.77 138639729.84 BAC Dalian Co. Ltd Sales of goods 102516304.77 69977098.57 Bingshan Technology Service （Dalian） Sales of goods 53199272.20 32203558.67 Co. Ltd.Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd. Sales of goods 13053097.35 - Sonyo Cold Chain Equipment (Wuhan) Co. Ltd. Sales of goods 12938062.52 - Dalian Fuji Bingshan Vending Machine Co. Ltd Sales of goods 9294419.14 16843047.06 Dalian Health and Wellness Industry Group Co. Ltd Sales of goods 6653136.22 - MHI Bingshan Refrigeration (Dalian) Sales of goods 5359262.29 7181290.12 Co.Ltd.Alphavita Bio-scientific (Dalian) Co.Sales of goods 3226307.14 4522436.41 Ltd.Dalian Honjo Chemical Co. Ltd Sales of goods 2416987.78 1863564.01 Dalian Bingshan Part Technology Sales of goods 2306804.62 1742813.23 Co.LTD 126BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Related party Content Current year Last year Dalian Spindle Environmental Facilities Sales of goods 1256946.19 3665307.02 Co. Ltd Dalian Bingshan Wisdom Park Co. Ltd Sales of goods 531283.99 13402551.72 Dalian Fuji Bingshan Control System Sales of services 417570.36 414608.77 Co. Ltd.Dalian Shentong Electric Co. Ltd Sales of goods 412111.48 120092.03 Dalian Fuji Bingshan Control System Sales of goods 209722.13 153752.97 Co. Ltd.Bingshan Technology Service （Dalian） Sales of goods 163716.81 - Co. Ltd.Dalian Jingxue Freezing Equipment Co.Sales of goods 85702.88 96698.39 Ltd Linde Hydrogen Fueltech (Dalian) Co.Sales of goods 67265.46 794939.42 Ltd Dalian Bingshan Wisdom Park Co. Ltd Sales of services - 141509.43 Dalian Bingshan Group Co. Ltd. Sales of service - 43018.86 Dalian Bingshan Group Co. Ltd. Sales of goods - 26445.02 Total 633094228.29 577124613.30 (3) Assets Lease 1) Assets rent out Lessee Category of Current year Last year Lease assets rent out Lease Income Income Dalian Bingshan Wisdom Park Co. Ltd Land/property 9013347.56 9013347.56 MHI Bingshan Refrigeration (Dalian) Co.Ltd. Plant 3809523.80 3809523.80 Linde Hydrogen Fueltech (Dalian) Co. Ltd Plant 2792899.62 2360040.71 Sonyo Cold Chain Plant /Employee (Dalian)Co.Ltd dormitory 1760363.32 2160513.31 Company under direct/indirect Plant/ office / Control of Panasonic Co.Ltd dormitory 763337.16 1483508.26 Dalian Bingshan Part Technology Co.Ltd. Plant and office 846330.36 194954.13 127BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Category of Current year Last year Lease Lessee assets rent out Lease Income Income Dalian Jingxue Freezing Equipment Co. Ltd. Plant and office 784927.88 784927.88 Wuhan Sikafu Power Control Equipment Co. Ltd Plant 721045.88 721045.88 Bingshan Technology Service Dalian Co. Ltd. Plant and office （ ） 310725.81 355081.77 Dalian Bingshan Group Co.Ltd. Office 66055.05 66055.05 Dalian Spindle Environmental Facilities Co. Ltd. Office 5284.40 20069.72 2) Assets under lease Category of Lease premium paid Lessor assets rent in Current year Last year Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd Fixed asset 573090.24 25173657.70 Sonyo Cold Chain(Dalian)Co.Ltd Plant 2456952.29 - (Continued) Interests on lease liabilities Increased right-of-use assets Lessor Current year Last year Current year Last year Dalian Bingshan Group Huahuida Financial Leasing Co. 69055.29 2067080.20 - - Ltd Sonyo Cold 378902.66 Chain(Dalian)Co.Ltd (4) Lease under short term Category of Current year Last year Lease Lessee assets rent out Lease Income Income Dalian State-owned Assets Investment and Management Land 873740.74 873740.74 Group Co.Ltd. 128BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (5) Warranty provided by Related Parties The national development fund planned to support the Company’s intelligent and green equipment of cold chain and service industry base project and provide the special fund to thecontrolling shareholder of the Company Bingshan Group. Please refer to the “ Note V. 33 longterm borrowings”. (6) Funds borrow from /lent to related party Name of the related party Amount Starting Ending date date Explanation Funds in Dalian Bingshan Group Project fund Co. Ltd. 160000000.00 2016.03.14 2026.03.13 investment Dalian Bingshan Group Huahuida Financial Sale and 13805309.73 2021.11.10 2026.11.09 Leasing Co.Ltd leaseback Dalian Bingshan Group Huahuida Financial Sale and 6600000.00 2023.02.24 2025.02.23 Leasing Co.Ltd leaseback Dalian Bingshan Group Huahuida Financial Sale and 2000000.00 2024.01.24 2026.01.23 Leasing Co.Ltd leaseback Dalian Bingshan Group Huahuida Financial Sale and 8600000.00 2024.07.26 2026.07.25 Leasing Co.Ltd leaseback Dalian Bingshan Group Huayida Commercial 8000000.00 2024.01.19 2026.01.18 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 1000000.00 2024.06.19 2026.06.18 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 6400000.00 2024.07.31 2028.07.30 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 1000000.00 2024.07.26 2026.07.25 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 1200000.00 2024.08.26 2026.08.25 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 3000000.00 2024.09.14 2025.09.13 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 2564370.38 2024.10.23 2025.10.22 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 1800000.00 2024.10.31 2026.10.30 Factoring 129BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Name of the related party Amount Starting Ending date date Explanation Funds in Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 3000000.00 2024.11.15 2025.11.14 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 6000000.00 2024.12.15 2025.11.15 Factoring Factoring Co. Ltd Dalian Bingshan Group Huayida Commercial 4000000.00 2024.12.27 2025.12.26 Factoring Factoring Co. Ltd (7) Asset transfer and debt restructuring among the related parties Transaction Current year Last year Item Purchase shareholdings of Sanyo Corporation - 87171300.00 affiliated company Panasonic Corporation of Purchase shareholdings of -58114200.00 China Co. Ltd affiliated company Total - 145285500.00 (8) Management Remuneration Item Current year Last year Total remuneration 5140400.00 5033700.00 (9) Other transactions with related party None iii. Balances with Related party 1.Accounts receivable due from related parties Closing Balance Item Related party Bad debt Book Balance Provision Accounts receivable Sonyo Cold Chain (Dalian)Co.Ltd 70233768.67 5769841.07 Accounts receivable BAC Dalian Co. Ltd 29726955.86 2086832.30 130BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Balance Item Related party Bad debt Book Balance Provision Accounts receivable Company under direct/indirect Control of Panasonic Co.Ltd 23124134.38 692390.83 Accounts receivable Sonyo Cold Chain Equipment (Wuhan) Co. Ltd. 9290724.88 653141.38 Accounts receivable Bingshan Technology Service （Dalian） Co. Ltd. 8120883.28 570086.01 Accounts receivable Dalian Bingshan Wisdom Park Co. Ltd 7476477.33 1390028.46 Accounts receivable Dalian Fuji Bingshan Vending Machine Co. Ltd 5051832.96 354638.67 Accounts receivable Dalian Bingshan Group Huahuida Financial Leasing Co.Ltd 4224312.50 296546.74 Accounts receivable MHI Bingshan Refrigeration (Dalian) Co.Ltd. 3105512.32 218006.97 Accounts receivable Alphavita Bio-scientific (Dalian) Co. Ltd. 2265320.79 246626.01 Accounts receivable Dalian Health and Wellness Industry Group Co. Ltd 1693997.95 118918.66 Accounts receivable Linde Hydrogen Fueltech (Dalian) Co. Ltd 786500.99 223828.69 Accounts receivable Dalian Spindle Environmental Facilities Co. Ltd 765477.31 53736.51 Accounts receivable Dalian Fuji Bingshan Control System Co. Ltd. 54200.00 7850.40 Accounts receivable Dalian Shentong Electric Co. Ltd 50652.00 3555.77 Accounts receivable Jiangsu Jingxue Insulation Technology Co.Ltd. 3570.00 1051.32 Other receivable Bingshan Technology Service （Dalian） Co. Ltd. 400000.00 14640.00 Other receivable Sonyo Cold Chain (Dalian)Co.Ltd 260719.09 18302.48 Contract asset Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd 432562.50 30365.89 Contract asset Dalian Bingshan Metal Technology Co.Ltd 9250.00 649.35 Contract asset Dalian Health and Wellness Industry Group Co. Ltd 1000.00 70.20 Prepayment Dalian Shentong Electric Co. Ltd 11949284.99 - Prepayment Dalian Fuji Bingshan Control System Co. Ltd. 2127955.54 - Prepayment Company under direct/indirect Control of Panasonic Co.Ltd 1632646.65 - Prepayment Bingshan Technology Service （Dalian） Co. Ltd. 1327651.07 - Prepayment BAC Dalian Co. Ltd 216202.86 - 131BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Balance Item Related party Bad debt Book Balance Provision Prepayment Dalian Bingshan Wisdom Park Co. Ltd 23888.59 - (Continued) Opening Balance Item Related party Bad debt Book Balance Provision Accounts receivable Sonyo Cold Chain (Dalian)Co.Ltd 84045272.25 4997695.76 Accounts receivable BAC Dalian Co. Ltd 28426981.24 1995574.08 Accounts receivable Company under direct/indirect Control of Panasonic Co.Ltd 12595875.91 174589.96 Accounts receivable Dalian Bingshan Wisdom Park Co. Ltd 10199546.41 807170.38 Accounts receivable Dalian Fuji Bingshan Vending Machine Co. Ltd 6270661.55 440200.44 Accounts receivable MHI Bingshan Refrigeration (Dalian) Co.Ltd. 3390197.07 237991.83 Accounts receivable Alphavita Bio-scientific (Dalian) Co. Ltd. 2791425.71 200691.99 Accounts receivable Dalian Bingshan Part Technology Co.LTD 1606085.44 52796.80 Accounts receivable Dalian Spindle Environmental Facilities Co. Ltd 1072064.56 75258.93 Accounts receivable Bingshan Technology Service （Dalian） Co. Ltd. 965375.22 67769.34 Accounts receivable Linde Hydrogen Fueltech (Dalian) Co. Ltd 909470.99 139380.02 Accounts receivable Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd 138450.00 9719.19 Accounts receivable Dalian Fuji Bingshan Control System Co. Ltd. 54200.00 6410.69 Other receivable Bingshan Technology Service （Dalian） Co. Ltd. 100000.00 100000.00 Dalian Fuji Bingshan Vending Other receivable Machine Co. Ltd 48000.00 7608.00 Wuhan Sikafu Power Control Other receivable Equipment Co. Ltd. 4287.61 156.93 Prepayment Jiangsu Jingxue Insulation Technology Co.Ltd. 4088975.80 - Prepayment Company under direct/indirect Control of Panasonic Co.Ltd 1152192.68 - Prepayment Sonyo Cold Chain (Dalian)Co.Ltd 636235.00 - 132BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Opening Balance Item Related party Bad debt Book Balance Provision Prepayment BAC Dalian Co. Ltd 216191.11 - Dalian Fuji Bingshan Vending Prepayment Machine Co. Ltd 176869.45 - Dalian Fuji Bingshan Vending Prepayment Machine Sales Co. Ltd. 77000.00 - Bingshan Technology Service Prepayment （Dalian） Co. Ltd. 74297.11 - Prepayment Dalian Bingshan Part Technology Co.LTD 13806.00 - Contract asset Dalian Bingshan Wisdom Park Co. Ltd 550000.00 38610.00 2. Accounts Payable due from Related Party Closing Opening Item Related party Balance Balance Accounts Jiangsu Jingxue Insulation Payable Technology Co.Ltd 51228592.31 65052640.75 Accounts Payable Sonyo Cold Chain (Dalian)Co.Ltd 18271180.03 10067451.24 Accounts Payable BAC Dalian Co. Ltd 14755585.47 21731458.82 Accounts Dalian Bingshan Metal Technology Payable Co.Ltd 11802602.36 9745165.83 Accounts Payable Dalian Honjo Chemical Co. Ltd. 7135583.64 6672533.86 Accounts Dalian Bingshan Part Technology Payable Co.LTD 4717413.12 6266070.43 Accounts Jiangsu Jingxue Insulation Payable Environmental Engineering Co.Ltd 2026200.00 2896300.00 Accounts Payable Dalian Shentong Electric Co. Ltd 1758722.25 Accounts Company under direct/indirect Payable Control of Panasonic Co.Ltd 1167608.32 864418.25 Accounts Bingshan Technology Service Payable （Dalian） Co. Ltd. 742017.35 126241.74 Accounts Dalian Spindle Environmental Payable Facilities Co. Ltd 498527.44 794006.00 Accounts Dalian Fuji Bingshan Control Payable System Co. Ltd. 322272.97 502571.47 Accounts Jiangsu Jingxue Insulation Payable Environmental Engineering Co.Ltd 207616.60 Accounts Dalian Fuji Bingshan Vending Payable Machine Co. Ltd 5907.73 133BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Opening Item Related party Balance Balance Other payable Dalian Bingshan Group Huayida Commercial Factoring Co. Ltd. 7986275.11 15000000.00 Other payable Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd. 5500000.00 7407941.90 Other payable Company under direct/indirect Control of Panasonic Co.Ltd 3416919.14 3273305.50 Dalian State-owned Assets Other payable Investment and Management Group 434356.75 Co.Ltd.Other payable Dalian Jingxue Freezing Equipment Co. Ltd. 70000.00 Other payable Sanyo Corporation 63232.42 Other payable Bingshan Technology Service （Dalian） Co. Ltd. 14946.50 104625.50 Other payable Sonyo Cold Chain (Dalian)Co.Ltd - 91779.71 Other payable Jiangsu Jingxue Insulation Environmental Engineering Co.Ltd - 70000.00 Non-current liability due Dalian Bingshan Group Huayida within 1 year Commercial Factoring Co. Ltd. 9107732.23 Non-current liability due Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd 5898294.48 25140961.04 within 1 year Long-term Dalian Bingshan Group Huahuida payable Financial Leasing Co. Ltd 2649273.56 10331937.30 Long-term Dalian Bingshan Group Huayida payable Commercial Factoring Co. Ltd. 1557654.53 Short-term Dalian Bingshan Group Huayida borrowing Commercial Factoring Co. Ltd. 3790267.28 2976345.47 Contract liability Company under direct/indirect Control of Panasonic Co.Ltd 132587.77 313952.83 Dalian Fuji Bingshan Control Contract liability 38509.12 System Co. Ltd.Contract liability Sonyo Cold Chain (Dalian)Co.Ltd 15258.81 35605.27 Contract liability Dalian Honjo Chemical Co. Ltd. 10626.23 Contract liability Bingshan Technology Service （Dalian） Co. Ltd. - 2337426.58 Contract liability Linde Hydrogen Fueltech (Dalian) Co. Ltd - 2138974.27 Other current Company under direct/indirect liability Control of Panasonic Co.Ltd 12003.20 35021.95 Other current Dalian Fuji Bingshan Control liability 5006.18 System Co. Ltd. 134BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Opening Item Related party Balance Balance Other current liability Sonyo Cold Chain (Dalian)Co.Ltd 1983.64 4628.68 Other current liability Dalian Honjo Chemical Co. Ltd. 1381.41 Other current Linde Hydrogen Fueltech (Dalian) liability Co. Ltd - 319616.84 Other current Bingshan Technology Service liability （Dalian） Co. Ltd. - 303865.45 Lease payable Dalian Bingshan Group Huahuida Financial Leasing Co. Ltd - 656980.83 iv. Related Party Commitment None v. Others None XIII. Share-Based Payment None XIV. Contingency & commitment 1. Commitment None 2. Contingency The Company sold water chiller and heat pump to Shangdong Jiechuang Energy Technology Co.Ltd (“Shandong Jiechuang”) in the form of financial lease. The Company as a seller singed finance lease contract with Huahuida as both a buyer and a lessor and Shandong Jiechuang as a lessee. The contract price is 6.998million Yuan. Shandong Jiechuang had made 10% down payment and remaining 6.2982million Yuan is underlined the leasing contract amount. In case the lease premium is delayed by the lessee the Company needs to pay lease premium on behalf of the lessee and be obliged to the buy back responsibility. Shandong Jiechuang issued an unconditional irrevocable and joint liability counter guarantee and the Company is the beneficiary. Guarantee scope covers the full liability because of the sales in the form of financial lease. As at 31 December 2024 the balance of the guarantee obligation of the financial lease is 135BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) RMB2011900.00 Yuan.The Company sold refrigerating house equipment to Liuyang Zhongjie Technology Investment Co.Ltd (“Liuyang Zhongjie”) in the form of financial lease. The Company as a seller singed finance lease contract with Huahuida as both a buyer and a lessor and Liuyang Zhongjie as a lessee. The contract price is 9.831million Yuan. In case the lease premium is delayed by the lessee the Company needs to pay lease premium on behalf of the lessee and be obliged to the buy back responsibility. Liuyang Zhongjie issued an unconditional irrevocable and joint liability counter guarantee and the Company is the beneficiary.Guarantee scope covers the full liability because of the sales in the form of financial lease.As at 31 December 2024 the balance of the guarantee obligation of the financial lease is RMB2129000.00 Yuan.The Company sold refrigeration equipment air conditioning and production line equipment to Shanxi Yiming Food Co. Ltd (‘Shanxi Yiming’) in the form of financial lease. The Company as a seller singed finance lease contract with Huahuida as both a buyer and a lessor and Shanxi Yiming as a lessee. The contract price is 28.2311million Yuan. In case the lease premium is delayed by the lessee the Company needs to pay lease premium on behalf of the lessee and be obliged to the buy back responsibility. Shareholders Shanxi Yiming and nature person issued an unconditional irrevocable and joint liability counter guarantee and the Company is the beneficiary. Guarantee scope covers the full liability because of the sales in the form of financial lease. As at 31 December 2024 the balance of the guarantee obligation of the financial lease is RMB 8.135million Yuan.Dalian Bingshan-RYOSETSU Quick Freezing Equipment Co.Ltd (‘Bingshan- RYOSETSU’) the subsidiary of the Company sold refrigeration equipment to Jilin Fuyu Agricultural Technology Co. Ltd (‘Jinlin Fuyu’) in the form of financial lease. Bingshan- RYOSETSU as a seller singed finance lease contract with Huahuida as both a buyer and a lessor and Jinlin Fuyu as a lessee. The contract price is 20.50million Yuan. In case the lease premium is delayed by the lessee Bingshan- RYOSETSU needs to pay lease premium on behalf of the lessee and be obliged to the buy back responsibility. Shareholders Jinlin Fuyu and nature person issued an unconditional irrevocable and joint liability counter guarantee and Bingshan- RYOSETSU is the beneficiary. Guarantee scope covers the full liability because of the sales in the form of financial lease. As at 31 December 2024 the balance of the guarantee obligation of the financial lease is RMB 10.7512million Yuan.Until 31 December 2024 the balance of all guarantee obligation of the financial lease is 136BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) RMB 23.0271 million Yuan. There is no situation where the Company needs to undertake the liability as the lessees’ default.There are no other significant or contingent matters to be disclosed until December 2024 XV. Events after the Balance Sheet Date 1. Unadjusted significant events None 2. Information about profit distribution Item Content Planned profit/ dividend distribution 42160625.35 The 3rd meeting of the 10th generation of board approved the profit appropriation policy for the year Profit/dividend approved for of 2024 based on 843212507.00 numbers of share distribution declaration in total paying out cash dividend of 0.5Yuan for every 10 shares (before tax) and cash dividend of B shares are paid in Hong Kong dollars. 3. Sales Return There is no significant sales return after the balance sheet date. 4. Others Except the subsequent event disclosed above the Company has no other significant subsequent event.XVI. Other Significant Events 1. Error correction and effect in previous period None. 2. Debt Restructuring None. 3. Asset exchange (1) The exchange of non-monetary assets None. 137BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) The exchange of other assets None. 4. Annuity Plan None. 5. Operation termination None. 6. Segment Information The management of the group divided the business into 2 segments based on the geographic area: Northeast China and Central China. The Northeast is the Company’s general headquarters and the subsidiaries registered in Dalian. The Central includes Chengdu Bingshan Refrigeration Engineering Co. Ltd Wuhan New World Refrigeration Industrial Co. Ltd and its subsidiary Wuhan Lanning Energy Technology Co. Ltd. and Wuhan New World Air-conditioning Refrigeration Engineering Co. Ltd. (1) The basis and accounting policies of reporting segments The internal organization structure management requirements and internal report scheme are the determination basis for the Company to set the operating segments. The segments are those satisfied the following requirements. 1). The segment can generate revenue and incur expenses. 2). The management personnel can regularly evaluate the operation results of segments and allocate resource assess its performance. 3). The financial situation operation results cash flow and other accounting information of segments can be acquired.The group confirms the report segments based on the operating segments. The transfer price among segments is set base on the market price. The assets and related expenses in common use are allocated to different segments based on their proportion of revenue. 138BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (2) The financial information of reporting segments： Items Northeast China Central China Offset Total 1 Operating income 4844889579.60 223444799.45 -537187170.07 4531147208.98 2 Cost 4076891799.35 212571959.31 -525655542.47 3763808216.19 Impairment loss on assets -19229984.12 -8707129.61 361653.09 -27575460.64 Impairment loss on credit -17221525.83 -4450358.42 4451281.96 -17220602.29 Depreciation and amortization 136361622.94 10017634.57 -149150.00 146230107.51 3 Investment income from associates and - - - - joint venture 4 Operating profits(loss) 247351049.26 -15817862.84 -105889883.40 125643303.02 5 Income tax 9975816.20 627028.44 1358478.61 11961323.25 6 Net profit(loss) 237375233.06 -16444891.28 -107248362.01 113681979.77 7 Total assets 10087183612.11 443956681.39 -2902824806.15 7628315487.35 8 Total liabilities 4751720458.28 373083443.78 -685597870.15 4439206031.91 (3) Others None 7. Other important transactions and matters affect the investor's decision The group hasn’t had other important transactions and matters affect the investor's decision in this period. 139BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) XVII. Notes to the Main Items of the Financial Statements of Parent Company 1. Accounts receivable (1) Bad debt provisions under accounting aging analysis method: Aging Closing Balance Opening Balance Within 1 year 252493482.65 457075717.70 1-2 years 168666036.29 124339052.45 2-3 years 55975990.70 58073083.27 Over 3 years 148746595.23 109679441.52 3-4 years 38330982.87 49782646.14 4-5 years 55105024.02 2186288.76 Over 5 years 55310588.34 57710506.62 Total 625882104.87 749167294.94 (2) Accounts receivable category Closing Balance Item Booking balance Provision Booking value Amount % Amount % Bad debt provision on group 625882104.87 100.00 158917243.15 25.39 466964861.72 (1) Accounting age as characters 474142917.60 75.76 158917243.15 33.52 315225674.45 (2) Related party within consolidation 151739187.27 24.24 - - 151739187.27 scope Total 625882104.87 100.00 158917243.15 25.39 466964861.72 (Continued) Opening Balance Item Booking balance Provision Booking Amount % Amount % balance Bad debt provision 749167294.94100.00136234112.0318.18612933182.91 on group (1) Accounting age as characters 492240628.86 65.71 136234112.03 27.68 356006516.83 140BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Opening Balance Item Booking balance Provision Booking Amount % Amount % balance (2) Related party within consolidation 256926666.08 34.29 - - 256926666.08 scope Total 749167294.94 100.00 136234112.03 18.18 612933182.91 1) Bad debt provisions on group basis Closing Balance Aging Provision for bad Drawing Proportion Accounts receivable debts (%) Within 1 year 179204272.90 12580139.96 7.02 1-2 years 90216058.77 15102168.24 16.74 2-3 years 55975990.70 17257397.93 30.83 3-4 years 38330982.87 18908673.85 49.33 4-5 years 55105024.02 39758274.83 72.15 Over 5 years 55310588.34 55310588.34 100.00 Total 474142917.60 158917243.15 —— (3) Bad debt provision Change during the year Category Opening balance Accrued Collected/ Closing Balance Written-off Other reversed Bad debt 136234112.0322667304.12--15827.00158917243.15 provision Total 136234112.03 22667304.12 - - 15827.00 158917243.15 (4) Top 5 receivable and contract assets Based on closing balance ranking sum of the top five significant receivable and contract asset are 267902529.92Yuan representing 42.80% of total receivables and contract asset at the year end 42061046.61Yuan bad debt provision is provided respectively. 141BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 2. Other Receivables Item Closing Balance Opening Balance Dividend receivable 100000000.00 110000000.00 Other receivable 28957016.22 28883665.74 Total 128957016.22 138883665.74 2.1 Dividend receivable Item Closing Balance Opening Balance Sonyo Compressor (Dalian)Co.Ltd. 100000000.00 110000000.00 Total 100000000.00 110000000.00 2.2 Other receivable (1) The category of other receivables Items Closing Balance Opening Balance Receivables and payables 20032160.00 20260866.63 Deposits 7181055.11 8478407.11 Petty cash 904835.68 580451.46 Others 1306589.74 - Total 29424640.53 29319725.20 (2) Other receivable listed by account aging Aging Closing Balance Opening Balance Within 1 year 4758618.79 3049940.86 1-2 years 1177004.63 3316384.23 2-3 years 1805617.00 1315000.00 Over 3 years 21683400.11 21638400.11 3-4 years 115000.00 20210000.00 4-5 years 20210000.00 229835.11 Over 5 years 1358400.11 1198565.00 Total 29424640.53 29319725.20 142BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (3) Other receivable classified by provision method Closing Balance Item Booking balance Provision Booking value Amount % Amount % Bad debt provision on individual - - - - - Bad debt provision on group 29424640.53 100.00 467624.31 1.59 28957016.22 (1) Accounting age as characters 9392480.53 31.92 467624.31 4.98 8924856.22 (2) Related party within consolidation 20032160.00 68.08 - - 20032160.00 scope Total 29424640.53 100.00 467624.31 1.59 28957016.22 (continued) Opening Balance Item Booking balance Provision Booking value Amount % Amount % Bad debt provision on individual - - - - - Bad debt provision on group 29319725.20 100.00 436059.46 1.49 28883665.74 (3) Accounting age as characters 9319725.20 31.79 436059.46 4.68 8883665.74 (4) Related party within consolidation 20000000.00 68.21 - - 20000000.00 scope Total 29319725.20 100.00 436059.46 1.49 28883665.74 1) Bad debt provisions on group basis Closing Balance Aging Provision for bad Drawing Proportion Accounts receivable debts (%) Within 1 year 4726458.79 172988.39 3.66 1-2 years 1177004.63 43078.37 3.66 143BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Closing Balance Aging Provision for bad Drawing Proportion Accounts receivable debts (%) 2-3 years 1805617.00 66085.58 3.66 3-4 years 115000.00 4209.00 3.66 4-5 years 210000.00 7686.00 3.66 Over 5 years 1358400.11 173576.97 12.78 Total 9392480.53 467624.31 —— 2) The bad debt provision of other receivable 1st stage 2nd stage 3rd stage Expected Expected credit Expected credit loss bad debt credit loss loss within the within the whole Total provision within 12 whole period(no period(impairment months impairment) incurred) Opening balance 287321.36 - 148738.10 436059.46 Opening balance ———— during the year --transfer to the 2nd stage --transfer to the rd 3 stage --reverse to the nd 2 stage ----reverse to the 1st stage Accrued 51737.95 51737.95 Reverse 20173.10 20173.10 Cancelation Written off Other movement Closing balance 339059.31 128 565.00. 467624.31 144BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) (4) Bad debt provision details Change during the year Opening Closing Category Accrued Collected/ balance Written-off Others Balance reversed Bad debt 436059.4651737.9520173.10--467624.31 provision Total 436059.46 51737.95 20173.10 - - 467624.31 (5) Other receivables from the top 5 debtors Closing Closing % of Name Category Aging Balance of Balance the total Provision Wuhan New World Refrigeration Receivable 20000000.00 4-5 years 67.97 - Industrial Co.Ltd Deta Town Gas Other deposit 1100000.00 Over5 years 3.74 40260.00 Xinjiang Jinghui New Materials Co. Bid deposit 800000.00 1-2 years 2.72 29280.00 Ltd Inner Mongolia Daquan New Bid deposit 800000.00 2-3 years 2.72 29280.00 Energy Co.Ltd Dalian Yongsheng Hardware and Others 680400.00 Within 1 year 2.31 24902.64 Electrical Co.Ltd Total — 23380400.00 — 79.46 123722.64 145BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 3. Long-term equity investments (1) Category of long-term equity investments Closing Balance Opening Balance Item Closing Balance Provision Book Value Opening Balance Provision Book Value Investment of subsidiaries 2432830861.29 - 2432830861.29 2416830861.29 - 2416830861.29 Investment of affiliates 473699761.22-473699761.22513550283.58-513550283.58 and JV Total 2906530622.51 - 2906530622.51 2930381144.87 - 2930381144.87 (2) Investments of subsidiaries Provision for Increase/Decrease Provision for Investee Beginning balance impairment at beginning of Increased Decreased Provision for Others Ending balance impairment year impairment at year end Dalian Bingshan Group Engineering Co.Ltd 293749675.77 - - - - - 293749675.77 - Dalian Bingshan Group Sales Co. Ltd 20722428.15 - - - - - 20722428.15 - Dalian Bingshan Air-Conditioning Equipment Co. Ltd 53272185.00 - 16000000.00 - - - 69272185.00 - Dalian Bingshan Guardian Automation Co. Ltd 50638361.52 - - - - - 50638361.52 - Dalian Bingshan-RYOSETSU Quick Freezing Equipment Co. Ltd 59356051.19 - - - - - 59356051.19 - 146BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Provision for Increase/Decrease Provision for Investee Beginning balance impairment at beginning of Increased Decreased Provision for impairment Others Ending balance impairment year at year end Dalian Universe Thermal Technology Co.Ltd 48287589.78 - - - - - 48287589.78 - Wuhan New World Refrigeration Industrial Co. Ltd 184674910.81 - - - - - 184674910.81 - Dalian Bingshan Engineering & Trading Co. Ltd 71537064.86 - - - - - 71537064.86 - Sonyo Compressor (Dalian)Co.Ltd 1380455603.23 - - - - - 1380455603.23 - Sonyo Refrigeration System (Dalian) Co. Ltd 108851490.98 - - - - - 108851490.98 - Sonyo Refrigeration (Dalian) Co. Ltd 145285500.00 - - - - - 145285500.00 - Total 2416830861.29 - 16000000.00 - - - 2432830861.29 - (3) Joint ventures& affiliated companies Provision Increase/Decrease Ending balance for impairment Investee Beginning at year end balance Provision for Gains and losses Adjustment impairment Increased Decreased recognized under of other Changes Cash bonus or Provision at beginning the equity comprehensi of other profits for Others of year method ve income equity announced impairment 1. Affiliated company Dalian Honjo Chemical Co. Ltd 8160024.36 - - - 302081.37-----8462105.73- 147BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Provision Increase/Decrease Ending balance for impairment Investee Beginning at year end balance Provision for Gains and losses Adjustment impairment Changes Cash bonus or Provision at beginning Increased Decreased recognized under of other the equity comprehensi of other profits for Others of year method ve income equity announced impairment Keinin-Grand Ocean Thermal Technology 57579975.00 - - - -4257688.27 - - - - - 53322286.73 - (Dalian) Co. Ltd Dalian Fuji Bingshan Vending 67610418.09 - - - -514319.31 - - - - - 67096098.78 - Machine Co. Ltd MHI Bingshan Refrigeration 16543655.54 - - - 202819.43 - - - - - 16746474.97 - (Dalian) Co. Ltd. Dalian Fuji Bingshan Vending Machine Sales Co. - - - - - - - - - - - - Ltd Jiangsu Jingxue Insulation 144354903.91 - - - 4400840.64 - - 3220344.00 - - 145535400.55 - Technology Co.Ltd Bingshan Metal Technical Service （Dalian） Co. 173250850.13 - - 34931610.00 28344672.03 - - 30759188.94 - - 135904723.22 - Ltd.Dalian Bingshan Group Huahuida Financial Leasing 46050456.55 - - - 1218624.64 - - 636409.95 - - 46632671.24 - Co. Ltd Total 513550283.58 - - 34931610.00 29697030.53 - 34615942.89 - - 473788407.15 - 148BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) 4. Operating revenue and cost Item Current year Last year Revenue Cost Revenue Cost Revenue from main 659943953.87583283354.161075630556.46894335541.56 operation Revenue from other 36515698.2021115829.8771936541.2455064727.51 operation Total 696459652.07 604399184.03 1147567097.70 949400269.07 5. Investment income Items Current year Last year Long-term equity investment gain under cost method 106062894.23 137049291.85 Long-term equity investment gain under equity method 29697030.53 -5506787.08 Gain from holding of other non-current financial assets 5400504.40 5782304.24 Gain from disposal of other non-current financial assets 33277105.94 - Discounting fees for bank acceptance note -159492.41 -159560.15 Gain on debt restructuring -130005.76 - Total 174148036.93 137165248.86 6. Others None XVIII. Supplementary Information to the Financial Statements 1. Non-operating profit or loss Items Current year Notes Gain or loss from disposal of non-current assets (including written -758256.80 off part of the impairment provision) Government grants recorded into profit or loss 19490628.71 The gain or loss of fair value changes arising from the holding of financial assets and financial liabilities by non-financial enterprises 60482638.34 and the loss or profit arising from the disposal of them apart from the effective hedging for the normal business operation.Expenses for using funds from non-financial institution recognized - in current profit/loss 149BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO. LTD Notes to financial statements January 1 2024 to December 31 2024 (The currency is in RMB Yuan except otherwise indicated) (English translation for reference only) Items Current year Notes Profits/loss from investments or management of assets entrusted by - others Investment income on entrusted loan - Assets impairment provision accrued due to force majeure e.g.: - suffering natural disasters Reversal of impairment provision of accounts receivable separately 4324906.64 tested for impairment Gains from acquisition of subsidiary or associates when initial cost is less than the fair value of identifiable net asset of invested - company Net gain/loss of subsidiary from combination under same control - between the beginning of year and consolidation date.Profits/loss from non-monetary assets exchange - Profit or loss from debts restructuring 2154769.80 One-off expenses incurred for discontinued operation activities such -6774379.53 as the expense of relocating employees Effects of gain/loss from one-off adjustments of gain/loss based on - laws and regulations of taxation and accounting.Share payment arising from the cancellation or modification of - share incentive plans For cash settled share payment gains and losses arising from - changes in the fair value of employee payable after the exercise date The profits/gains from changes of fair value for investment property - subsequently measured at fair value model Gain/loss on excessive part from the transaction where the trading - price is obviously unfair.Gains/ loss from contingencies beyond the normal business -402140.00 Custodian fees obtained from entrusted operations - Non-operating revenue and expense besides the above items 8152168.63 Other profit or loss - Subtotal 86670335.79 Effect on income tax 10575731.10 Attributable to minority shareholders’ equity (after tax) 27843.47 Total 76066761.22 150