Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd

For the year ended December 31, 2024

Auditor’s Report

Reference PageAuditor’s reportFinancial statements

Consolidated balance sheet

Balance sheet of parent company

1-23-4

Consolidated income statement

Income statement of parent company

Consolidated cash flow statement

Cash flow statement of parent company

Consolidated statements of changes in equity

9-10

Statements of changes in equity of parent company 11-12

Notes to financial statement 13-151

Auditors’ 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 December2024, and the consolidated and company’s income statements, the consolidated andcompany’s cash flow statements, the consolidated and company’s statements ofchanges in equity for the year then ended, and notes to these financial statements.In our opinion, the accompanying financial statements have been prepared inaccordance with the requirements of Accounting Standards for Business Enterprises,in all material respects and present fairly the consolidated and the financial position ofBingshan Refrigeration & Heat Company as at 31 December 2024, and of theirconsolidated and the company’s financial performance and cash flows for the yearthen ended.

2. Basis for Opinion

We conducted our audit in accordance with China Standards on Auditing for ChineseCertified Public Accountants. Our responsibilities under those standards are furtherdescribed in the “Auditor’s Responsibilities for the Audit of the Financial Statements”section of our report. We are independent of Bingshan Refrigeration & Heat Companyin accordance with the Code of Ethics for Chinese Certified Public Accountants, andwe have fulfilled our other ethical responsibilities of the code. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis forour 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 asa whole and, in forming our audit opinion thereon, and we do not express a separateopinion on these matters.

As stated in the Note ‘ No.44,V.

Statements’,

consolidated statements for the yearended as of December 31, 2024, is4,531.15 million Yuan.

Bingshan Refrigeration & HeatCompany and its subsidiariesmainly come from sales of productsand installation project. We considerthe revenue as the key audit matter,

risk of revenue manipulation by the

purpose.

T

addressing the key audit matters are as follows:

1. U

design and operation of the management’sinternal control over revenue

2. Carried out analytical

and actual situation of Bingshan Refrigeration &Heat Company.

3. Sampling test the sales contracts, identify the

clause and condition in respect to the contractperformance obligation, consideration and riskand reward transfer of the ownership. Evaluatethe revenue recognition of BingshanRefrigeration & Heat Company whether it

line with the accounting standards.

4. Sampling select product sales revenue

dispatch note, acceptance note; S

installation sales revenue

invoice, installation co

report and E

whether is in line with the accounting standards

5. C

reviewing the contract budget,

and supportive document with signature for theequipment received to evaluate the cost whetherit really incurred.6.

confirmation procedures for key clients

7. Perform cut-off test so to ensure whether the

4. Other Information

The management of Bingshan Refrigeration & Heat Company (hereinafter referred toas the “Management”) is responsible for the other information. The other informationcomprises the information included in the Bingshan Refrigeration & Heat Company2024 annual report, but does not include the financial statements and our auditor’sreport thereon.Our opinion on the financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a materialmisstatement of the other information, we are required to report that fact. We havenothing to report in this regard.

5. Responsibilities of the Management and Those Charged with Governance

for the Financial StatementsThe Management is responsible for the preparation of the financial statements inaccordance with Accounting Standards for Business Enterprises to achieve fairpresentation; and designing, implementing and maintaining internal control which isnecessary 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 assessingBingshan Refrigeration & Heat Company’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless the Management either intends to liquidateBingshan Refrigeration & Heat Company or to cease operations, or have no realisticalternative 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 financialstatements as a whole are free from material misstatement, whether due to fraud or

error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with auditing standards will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are generally consideredmaterial if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financialstatements.During the course of audit in accordance with auditing standards, we exerciseprofessional judgment and maintain professional skepticism. We also carry out thefollowing 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 tothose risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our audit. The risk of not detecting a material misstatement resulting fromfraud 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 ofexpressing an opinion on the effectiveness of its internal control (this sentence wouldbe deleted in circumstance when we are also responsible to issue an opinion on theeffectiveness of internal control in conjunction with the audit of the financialstatements).

(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 materialuncertainty exists related to events or conditions that may cast significant doubt onBingshan Refrigeration & Heat Company’s ability to continue as a going concern. Ifwe conclude that a material uncertainty exists, we are required to draw attention inour auditor’s report to the related disclosures in the financial statements in accordancewith the auditing standards or, if such disclosures are inadequate, we shall modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor’s report. However, future events or conditions may cause BingshanRefrigeration & Heat Company to cease to continue as a going concern.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 DalianRefrigeration Company Limited, was reorganized and reformed from main part of formerDalian Refrigeration Factory. On December 8, 1993, the Company went to the public as alisted company at Shenzhen Stock Exchange Market. On March 20, 1998, the Companysuccessfully went to the public at B share market and listed at Shenzhen Stock ExchangeMarket with total share capital of RMB350,014,975.00Yuan. The registered address is No.106 East Liaohe Road, Dalian Economic and Technological Development Zone, LiaoningProvince, as same as the headquarters’ address. The unified social credit code is912102002423613009 on the business license.According to the 13

th

meeting of the 6

thgeneration of board, extraordinary general meetingfor 2015 fiscal year and ' Restricted share incentive plan (draft)', the Company planned tointroduce an ordinary share to incentive objectives, which was 10,150,000 number of shareswould 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 ofRMB10,150,000.00Yuan.The general meeting for 2015 fiscal year held on April 21, 2016 approved the profitdistribution policy for the year of 2015, which agrees the profit distribution based on the total360,164,975 number of shares as share capital, paid share dividend of 5 common shares forevery 10 shares through capital reserve. The policy stated above was fully implemented onMay 5, 2016, and the registered capital was altered to 540,247,462.00Yuan.The 17

thmeeting of the 6

th generation of board was held on June 4, 2015 and the 2

ndinterimshareholders’ meeting was held on June 24, 2015, meeting deliberated and passed theproposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commissionissued SFC license [2015]3137 on December 30, 2015, approving that new non-publicoffering cannot exceeded 38,821,954 numbers of shares. The company implemented the postmeeting procedures for China’s Securities Regulatory Commission, which is regardingadjustment of bottom price and the number of the shares issued after the implementation ofprofit distribution policy of 2015 in May, 2016, and accordingly revised the upper limit ofnon-public offering of share to58,645,096 number of new ‘A shares’. The company issued thenon-public offering of 58,645,096 number of ‘A shares’ to 7 investors, and as a result, thetotal number of shares of theCompany is changed to 598,892,558 shares, and the par value is1yuan per share and the total share capital is 598,892,558.00Yuan.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 CompanyLimited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meetingauthorized the board of directors to implement the Restricted Share Incentive Plan’ approvedon the 3

rd

provisional general meeting held on September 13, 2016, the 9

th

meeting of the 7

th

generation of board deliberated and passed the ‘Proposal about granting the restricted sharesto incentive targets’ on September 20, 2016 and set September 20

, 2016 as share granted date,and granted 12,884,000 number of restricted shares to 118 incentive targets at granted priceof 5.62Yuan per share. By November 22, 2016, The Company has actually received thenewly subscribed registered share capital of 12,884,000.00Yuan subscribed by incentivetargets.On May 19, 2017, the general meeting for 2016 fiscal year was held and profit appropriationscheme for 2016 FY was approved, which was every 10 shares will be increased by 4 sharesthrough capital reserve based on the total 611,776,558 number of shares. After the profitappropriation scheme, the registered capital was changed to RMB856,487,181.00Yuan.On December 28, 2017, The Company held the 3rd extraordinary shareholders meeting in2017, and reviewed and approved the “Proposal on Repurchasing and Retiring PartiallyRestricted Stocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after TheCompany's repurchase and cancellation, The Company implemented the correspondingcapital reduction procedures according to law. The registered capital of The Company waschanged from 856,487,181.00Yuan to 855,908,981.00 Yuan.On May 4, 2018, The Company held the 21

st meeting of the 7

th

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'srepurchase and cancellation, The Company implemented the corresponding capital reductionprocedures according to law. The registered capital of The Company was changed from855,908,981.00 Yuan to 855,434,087 .00Yuan.On January 17

th, 2019, the 1

st

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 25

th, 2019, The Company has completed therepurchasing and retiring stocks plan, respectively The Company shall perform thecorresponding capital reduction procedures in accordance with the law and the registeredcapital decreased from 855,434,087.00Yuan to 843,212,507.00Yuan.On December 20

th, 2019, The Company held the 7

th

meeting of the 8

thBoard of Directors andapproved to change The Company’s name from Dalian Refrigeration Company Limited to

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 activitiesare the research and development, production and sales of various industrial refrigerationcomponents, as well as the design, production and installation of complete engineeringprojects. 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 ofrefrigeration projects.This financial report is approved by the board of directors on April 22,2025. The financialstatements 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 transactionsand events, and in accordance with ‘Accounting Standards for Business Enterprises’, itsapplication guidelines, interpretations and other relevant provisions promulgated by theMinistry of Finance (collectively referred to as "Accounting Standards for BusinessEnterprises") and " No. 15 of Information Disclosure and Reporting Rules for Publicly ListedCompanies - General Provisions for Financial Reports" (revised in 2023) promulgated by theChina 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 December31, 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 Standardfor Business Enterprise, and truly and fully reflect the relative information of the financialposition for the year ended as of December 31, 2024, operating performance, cash flow of theCompany 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

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 thosematters to be disclosed and need judgement for materiality, materiality criteria set up methodand basis are as follows:

Disclosures involved bymateriality judgement

In the notes tothe financial

Materiality criteria set up method and

basisSignificant r

debts

Note V.3

Single provision is over 10 million Yuan and

provision

significant receivables

Note V.3

Single provision is over 10 million Yuan and

Significant receivables writtenoff

Note V.3

Single provision is over 10 million Yuan and

provision

Note V.16 Single project budget over 30 million Yuan

Significant JV or associates Note VII.3

The book value of long-

investment in a single investee accounts formore than 10% of the group's net assets andthe amount is greater than 100 million Yuan,or the gain or loss on investment under thelong-term equity investment equity method

consolidated net profitSignificant subsidiary

Subsidiary’s net assets are more than10% of

the group asses and its net profit is more than

6. Accounting for business combination under same control and not under same control

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 themerger are controlled by the same party or controlled by parties under same ultimate controlbefore and after merger and the control is not temporary.The group, as an acquirer, the assets and liabilities that the group obtained in a businesscombination under the same control should be measured on the basis of their carrying amountof the acqiree in the ultimate control party’s consolidated financial statements on thecombining date. As for the balance between the carrying amount of the net assets obtained bythe combining party and the carrying amount of the consideration paid by it, the capitalsurplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retainedearnings shall be adjusted.

（2） Business combination not under same control

Business combination not under the same control is the situation where entities participatingthe merger are not controlled by the same party or not controlled by parties under sameultimate 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 theacquisition date. The difference, when combination cost exceeds proportionate share of thefair value of identifiable net assets of acquire should be recognized as goodwill. If thecombination cost is less than proportionate share of the fair value of identifiable net assets ofacquiree, firstly, fair value of identifiable asset, liability or contingent liability shall bereviewed, and so the fair value of non-monetary assets or equity instruments issued in thecombination consideration , after review, still the combination cost is less thanproportionate share of the fair value of identifiable net assets of acquire, the difference shouldbe recognized as non-operating income.If a business consolidation not under common control is finally achieved in stages, whenpreparing the consolidated financial statements, the acquirer shall remeasure its previouslyheld equity interest in the acquiree at its fair value on acquisition date and recognize the gainor loss as investment income for the current period. Other comprehensive income, underequity method accounting rising from the interest held in acquiree in relation to the periodbefore 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 gainor loss for the period in which the acquisition incurs, excluding the other comprehensiveincome from the movement on the remeasurement of ne asset or liability of defined benefit

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

statementsConsolidation scope is determined on the control basis including the Company and allsubsidiaries controlled by the Company. Control criteria is that the group has the power overthe investees, enjoy the variable return by involving the relative activities of the investees andalso 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 theparent company, appropriated adjustments shall be made in accordance with the Companypolicy in preparation of the consolidated financial statements.All significant intergroup transactions, outstanding balances and unrealized profit shall beeliminated in full when preparing the consolidated financial statements. Portion of thesubsidiary’s equity not belonging to the parent, profit, loss for the current period, portion ofother 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 beconsolidated since the beginning of the consolidation period. When preparing the comparativeconsolidated financial statements, adjustments shall be made to relevant items of comparativefigures as regarded that reporting entity established through consolidation has been alwaysexisting 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 shallbe consolidated since the beginning of the consolidation period. In preparation of theconsolidated financial statements, adjustments shall be made to subsidiary’s financialstatements based on the fair value of its all identifiable assets, liability or contingent liabilityon the acquisition date.When the group partially disposes of the long –term equity investment in subsidiary withoutlosing the control over it, in the consolidated financial statements, the difference, betweendisposals price and respective disposed value of share of net assets in the subsidiary since theacquisition 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

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 ofinterest in the subsidiary shall be remeasured on the date of losing control. Sum of the sharedisposal consideration and fair value of remaining portion of shareholding minus the share ofthe net assets in the subsidiary held based on the previous shareholding percentage since theacquisition date or combination date, the balance of above is recognized as investmentgain/loss for the period and goodwill shall be written off accordingly. Other comprehensiveincome relevant to share investment in subsidiary shall be transferred to investment gain /lossfor the period on the date of losing control.When the group partially disposes of the long –term equity investment in subsidiary and losethe control over it by stages, if all disposing transactions are bundled, each individualtransaction shall be seen as a transaction of disposal of a subsidiary by losing control. Thedifference between the disposal price and the share of the net assets in the subsidiary heldbefore the date of losing control, shall be recognize as other comprehensive income until thedate 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 multipletransactions until the control is lost, and it is not a bundled transaction, each transaction shallbe 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 bankdeposit. The cash equivalents refer to short-term (normally with original maturities of threemonths or less) and liquid investments which are readily convertible to known amounts ofcash 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 Bankof China (“PBOC”) on the 1

stday of the month when the transactions are accounted initially.At the balance sheet date, foreign currency monetary items should be converted into reportingcurrency at the balance sheet date’s spot exchange rate. Exchange differences should be takeninto the current profits and losses except special foreign currency borrowings for constructionand producing assets which are qualifying for assets capitalization, should be capitalized.Foreign currency non-monetary items, which are recorded in historical cost, should be stillrecorded at the spot exchange rate when the transaction occurred and no change on reportingcurrency amount. Foreign currency non-monetary items, which are measured at fair value,

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 thedifferences should be recognized as profit and loss from fair value changes and included inthe current profits and losses. Invested capital in foreign currency shall be converted intoreporting currency at FX rate at when the investment is received, and no foreign exchangedifference 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 thecontractual 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 assetexpire, 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 3

rdparty in fullamount in time according to the ‘passing-through’ agreement and the entity substantiallytransfers all the risks and rewards of ownership of the financial asset in nature, or the entityneither transfers nor retains substantially all the risks and rewards of ownership of thefinancial 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 debtinstruments with substantially different terms shall be accounted for as an extinguishment ofthe original financial liability and the recognition of a new financial liability. Similarly, asubstantial modification of the terms an existing financial liability shall be accounted for as anextinguishment of the original financial liability and the recognition of a new financialliability. The difference between the carrying amount of a financial liability extinguished andthe consideration paid, including any non-cash assets transferred or liabilities assumed, shallbe recognized in profit or loss.A regular way purchase or sale of financial assets shall be recognized and derecognized, asapplicable, 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 thebasis of both the group’s business model for managing the financial assets and the contractualcash flow characteristics of the financial asset. Only when the business model for managing

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 thecompany evaluates and reports the performance of financial assets to key managementpersonnel, the risks affecting the performance of financial assets and the way in which theyare managed, and the way in which the relevant business managers are remunerated. Inassessing whether the objective is to collect contract cash flows, the group needs to make ananalytical judgment on the reasons, timing, frequency and value of the sale of the financialassets before the maturity date.In determining the contract cash flow characteristics, the group is required to determinewhether the contract cash flow is only the payment of principal and interest based on theoutstanding principal, (including the assessment of the time value of money correction,judging any significant difference between it and the baseline cash flow/ for financial assetscontaining early repayment characteristics, is required to determine whether the fair value ofearly repayment features is very small).Financial assets are measured at fair value at the initial recognition, but accounts receivable ornotes receivable arising from the sale of goods or provision of services, etc., do not contain asignificant financing component or do not consider the financing component of less than oneyear, the initial measurement is based on the transaction price.For financial assets that are measured at fair value, the related transaction costs are directlyincluded in current profit or loss, and those costs of other categories of financial assets areincluded 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 aremet: ①the financial asset is held within a business model whose objective is to hold financialassets in order to collect contractual cash flows;②the contractual terms of the financial assetgive rise on specified dates to cash flows that are solely payments of principal and interest onthe 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 bothof the following conditions are met: ①the financial asset is held within a business modelwhose objective is achieved by both collecting contractual cash flows and selling financial

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

assets and ②the contractual terms of the financial asset give rise on specified dates to cashflows 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 financialasset measured at fair value through other comprehensive income, which is not part ofhedging relationship shall be recognized in other comprehensive income apart from interestincome, impairment loss and foreign exchange difference. When this type of financial assetsis derecognized, accumulated gain or loss previously in the other comprehensive income shallbe out of it and accounted into retained earnings when the financial asset is derecognized. Thefinancial 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 instrumentsthat it would be measured at fair value through other comprehensive income, but once theelection is made, it is irrevocable. The group only recognizes the dividend (apart from thedividend as investment cost pay back) into profit and loss and fair value movementsubsequently will be recognized into comprehensive income and no need for impairmentprovision. When this type of financial assets is derecognized, accumulated gain or losspreviously in the other comprehensive income shall be out of it and accounted into retainedearnings when the financial asset is derecognized. The financial asset of this category isequity 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 othercomprehensive income financial assets, a financial asset is classified as fair value throughprofit 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 andloss. The financial assets of this category include: tradable financial asset other non-currentfinancial asset.A financial asset shall be classified as fair value through profit or loss if it is recognizedcontingent consideration through business combination, which is not under same controlsituation.

（3） Classification, basis for recognition and measurement of financial liability

Except for the financial guarantee contract, commitments to provide a loan at a below?marketinterest rate and financial liabilities that arise when a transfer of a financial asset does notqualify for derecognition or when the continuing involvement approach applies, the group

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 financialliabilities at fair value through profit or loss. For financial liabilities that are measured at fairvalue, the related transaction costs are directly included in current profit or loss, and thosecosts 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 atamortized 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 financialliability (derivative instrument of financial liability included) and designated as financialliability measured at fair value through profit or loss. Tradeable financial liability (includingderivate instrument of financial liability) are subsequently measured at fair value. The netgain or loss arising from changes in fair value are recorded in profit or loss for the period inwhich they are incurred. Financial liability designated as it measured at fair value throughprofit or loss shall be subsequently measured at fair value, except for changes in fair valuecaused by changes in the group's own credit risk, which are recognized in othercomprehensive income, other changes in fair value are recognized in profit or loss for thecurrent period; The group recognizes all fair value changes (including the amount affected bychanges in its own credit risk) in profit or loss if the inclusion of changes in fair valuecaused by changes in its own credit risk in other comprehensive income would cause orwiden 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 thefollowings: ① a financial asset measured at amortized cost; ② debt investment measuredat fair value and changes in fair value is through other comprehensive income; ③ leasereceivable; ④ a contractual asset and financial guarantee contract.Expected credit loss is the weighted average of credit losses with the respective risks of adefault occurring as the weights. A credit loss herein is referred to as the present value, atoriginal effective rate, of the difference between the contractual cash flows that are due to thegroup under the contract; and the cash flows that the Company expects to receive, that's thepresent value of the total cash shortage. The group shall measure expected credit losses of afinancial instrument in a way that reflects: ①an unbiased and probability?weighted amount

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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; ② the time value of money;and ③reasonable and supportable information that is available without undue cost or effort atthe reporting date about past events, current conditions and forecasts of future economicconditions.Expected credit loss of financial instrument is assessed individually and portfolio. The groupassesses the expected credit loss based on the portfolio in accordance with the commoncharacteristics of credit risk which involves type of financial instrument, credit risk grade, andage of trade receivables.When assessing expected credit losses, the group considers all reasonable and supportableinformation, including that which is forward-looking. In making these judgments andestimates, the group extrapolates the expected changes in the debtor's credit risk based onhistorical repayment data combined with factors such as economic policies, macroeconomicindicators and industry risks. Different estimates may affect the provision for impairment, andthe provision already made may not equal the actual amount of impairment losses in thefuture.

1) Impairment testing method of receivable and contract asset

For receivable, notes receivable and contract asset etc., which don’t contain significantfinancing component and arise from sales of products and service provision, the group adoptssimplified method to account expected credit loss provision at an amount equal to the wholelifetime 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 lossprovision 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 portfolioswith common characteristics of credit risk, which are considered by expected credit lossmeasurement reflection, by reference to historical experience of credit loss and bycomparison of receivable past due days/ receivable age with default risk rate, unless the singlecredit loss is separately recognized for contractual payments that is significant in amount andcredit impaired. If certain client is significant different from others in terms of credit riskcharacteristics, or the client’s credit risk has significantly increased, such as experiencingsevere finance difficulty, its expected credit loss is obviously higher than it to be ataccounting age, the group will make separate credit loss provision for this client’s receivable.

① Portfolio category and recognition basis of receivable ( contract asset)

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 andrelevance of credit risk characteristics based on information such as age, nature of payments,credit risk exposure, historical debt collection, etc. For accounts receivable (and contractassets), the group determines that aging is the primary factor affecting its credit risk andtherefore, the group assesses its expected credit losses on the basis of aging portfolios. Thegroup 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 consolidatedscope as the group assesses its credit risk is relatively low.

② Portfolio category and recognition basis of notes receivable

Bank acceptance note portfolio

Commercial acceptance noteportfolio

Same as receivables portfolio and provided for excepted

2) Impairment testing method of debt investment, other debt investment, loan commitments

and financial guarantee contractsWith the exception of financial assets (such as debt investments, other debt investments), loancommitments and financial guarantee contracts for which the simplified measurement methodis adopted above, the group adopts the general method (three-stage method) for the provisionof expected credit losses. At each balance sheet date, the group assesses whether its credit riskhas increased significantly since the initial recognition, and if the credit risk has not increasedsignificantly since the initial recognition, in the first stage, the group measures the lossprovision at an amount equivalent to the expected credit loss over the next 12 months andcalculates interest income based on the carrying balance and effective interest rate; If thecredit risk has increased significantly since the initial recognition but no credit impairmenthas occurred, in the second stage, the group measures the loss provision at an amountequivalent to the expected credit loss over the entire duration and calculates interest incomebased on the carrying balance and effective interest rate; If credit impairment occurs afterinitial recognition, in the third stage, the group measures the loss provision at an amountequivalent to the expected credit loss over the entire duration and calculates interest income atamortized costs and effective interest rates. For financial instruments with only low credit riskat the balance sheet date, the group assumes that their credit risk has not increasedsignificantly since initial recognition

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 possibledefault events during the whole expected life of the financial instrument. Expected creditlosses over the next 12 months are expected credit losses resulting from defaults on financialinstruments that may occur within 12 months after the balance sheet date (or if the expectedduration of the financial instrument is less than 12 months) and are part of the overallexpected credit losses over the life of the financial instrument.Criteria of significant increase in credit risk and definition of credit impaired assets aredisclosed 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 withsubstantial all risks and rewards to the transferee. A financial asset can not be derecognizedwhen the substantial all risks and rewards to the financial asset has been retained. When theall risks and rewards of the financial asset are neither transferred nor retained, but the grouphas given up its control of the financial asset, the financial asset shall be derecognized andrecognize the asset and liability originated. Where control of the financial asset is notrelinquished, the relevant financial asset shall be recognized according to the extent to whichit continues to be involved in the transferred financial asset, and the relevant liability shall berecognized accordingly.In the case where the financial asset as a whole qualifies for the derecognition conditions, thedifference between the carrying value of transferred financial asset at the derecognition dateand the sum of the consideration received for transfer and the accumulated amount of changesin fair value in respect of the amount of partial derecognition ( financial assets involved intransfer must qualify the following conditions: ① the financial asset is held within abusiness model whose objective is not only for collecting contractual cash flows but also forsale; ②the contractual terms of the financial asset give rise on specified dates to cash flowsthat 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 orloss for the period.In the case where only part of the financial asset qualifies for derecognition, the carryingamount of financial asset being transferred is allocated between the portions that to bederecognized and the portion that continued to be recognized according to their relative fairvalue. The difference between the amount of consideration received for the transfer and theaccumulated amount of changes in fair value that was previously recorded in othercomprehensive income for the asset partially qualified for derecognition (financial assets

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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:① the financial asset is heldwithin a business model whose objective is not only for collecting contractual cash flows butalso for sale; ; ②the contractual terms of the financial asset give rise on specified dates tocash flows that are solely payments of principal and interest based on the principal amountoutstanding ) and the above-mentioned allocated carrying amount is charged to profit or lossfor the period.Where the assets continue to be involved by providing financial guarantees for the transferredfinancial assets, the assets that continue to be involved in the same form are recognized at thelower 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 willbe 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 thefollowing standards: ① if the group cannot unconditionally avoid paying cash or financialasset to fulfil a contractual obligation, the contractual obligation is qualified or financialliability. For certain financial instrument, although there are no clear terms and conditions toinclude obligation of paying cash or other financial liability, contractual obligation mayindirectly be formed through other terms and conditions. ②the group’s own equityinstrument shall also be considered whether it is the substitute of cash, financial asset or it isthe remaining equity, after the issuer deducts liability, enjoyed by the equity holder , if it mustor can be used to settle a financial asset. If the former, the instrument is a financial liability ofthe issuer, otherwise it is an equity instrument of the issuer. In certain circumstances, financialinstrument contract is classified as financial liability, if financial instrument contract specifiesthe Company must or can use its own equity to settle the financial instrument, the contractualamount of right or obligation equals to that of the numbers of own equity instrument availableor to be paid multiplied by fair value when settling, nevertheless the amount is fixed, orvaried 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, thegroup takes all terms and conditions agreed by the its member and instrument holder intoconsideration. If the group because of the instrument, as a whole, bears settlement obligationby paying cash, other financial asset or other means resulted in financial liability, theinstrument shall be classified as financial liability.

（7） Derivative financial instrument

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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, commodityprice risk and interest rate risk respectively. Derivative financial instruments are initiallymeasured at their fair value on the date the derivative transaction contract is signed, and aresubsequently measured at their fair value. A derivative instrument with a positive fair value isrecognized 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 instrumentshall 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 andcannot be offset, unless the following conditions are all met: ①the Company has the legalright to recognized offset amount and the right is enforceable. ②the Company plans toreceive 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 actualcost on acquisition. Weighted average cost method is taken for measuring the inventorydispatched or used. Low value consumables and packaging materials is recognized in theincome 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 thedecline in the price of the inventory and it is accounted in the current profit or loss. Netrealizable value is the amount of the estimated selling price of inventory in daily activitiesless the estimated costs to be incurred at completion, estimated selling expenses and relatedtaxes.Impairment provision for the group's raw materials/goods in stock/WIP/ cost to fulfil thecontract is made on an individual inventory item, and when determining its net realizablevalue, the inventory of goods in stock and materials used for sale are determined at theestimated 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 priceof the finished goods produced less the estimated costs to be incurred up to completion,estimated selling expenses and

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 theentity has transferred to a customer when that right is conditioned on something other than thepassage of time. For example, the group sold two goods that can be clearly distinguished tothe client, then the group has the right to consideration in exchange of the goods because oneof the goods are delivered, but the consideration’s collection is conditioned on the othergoods 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 forimpairment of financial assets.

(2) Contract liability

An entity’s obligation to transfer goods or services to a customer for which the entity hasreceived consideration (or the amount is due) from the customer. If a customer paysconsideration, or the group has a right to an amount of consideration that is unconditionalbefore the group transfers a good or service to the customer, the group shall present thecontract as a contract liability when the payment is made or the payment is due (whichever isearlier).

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 toobtain a contract. Cost to fulfill the contract is presented under inventory and othernon-current assets. Cost to obtain a contract is presented under other current assets and othernon-current assets.If the costs incurred in fulfilling a contract with a customer are not within the scope ofanother Standard such as inventory , fixed assets or intangible assets , an entity shallrecognize an asset from the costs incurred to fulfill a contract only if those costs meet all ofthe 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 bythe client and any other cost in line with the contract; the costs enhance resources of the groupthat will be used in performance obligations in the future; and the costs are expected to berecovered.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 recognizedif the group expects to recover those costs. The group may recognize the incremental costs ofobtaining a contract as an expense when incurred if the amortization period of the asset t isone year or less. The incremental costs of obtaining a contract are those costs that the groupincurs to obtain a contract with a customer that it would not have incurred if the contract hadnot been obtained (for example, a sales commission).Other expenses incurred in order toobtain a contract rather than the incremental cost, and expected to be recovered (regardless ofwhether the contract is obtained such as travelling expenses) shall be recognized as anexpense 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 basisthat is consistent with the transfer to the customer of the goods or services to which the assetrelates.

(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 thefollowing two differences, the group will make the impairment provision for the excessivepart and recognize the asset impairment loss: ① The remaining consideration that thegroup is expected to obtain due to the transfer of the commodities related to the asset; ②Estimate 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 companyand 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 areinvestments in associates.Significant influence refers to having the power to participate in the decision-making of thefinancial and operational policies of the investee, but not being able to control or jointlycontrol the formulation of these policies with other parties. Significant influence exists whenthe entity directly or indirectly owned 20% or more but less than 50% voting shares in theinvestee, unless there is explicit evidence that the company cannot participate in theproduction and operation decisions of the investee or have control over the investee.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 thefollowings are taken into accounts: representation on the board of directors or equivalentgoverning body of the investee, participation in financial or operating activitiespolicy-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 jointlycontrol over it and have rights to the net assets of the investee. Joint control is thecontractually agreed sharing of control of an arrangement, which exists only when decisionsabout the relevant activities require the unanimous consent of the parties sharing control. Thegroup’s judgement on joint control is based on the joint arrangement that all participants orcombinations of participants collectively control the arrangement and that decisions relatingto the activities of the arrangement must be made with the unanimous consent of thoseparticipants who collectively control the arrangement.

(2) Accounting

The group initially measures the long-term investment in line with the initial cost foracquiring the investment.The initial investment cost for long-term equity investment acquired through businesscombination under common control, is the carrying amount presented in the consolidatedfinancial statements of the share of net assets at the combination date in the acquiredcompany. If the carrying amount of net assets at the combination date in the acquiredcompany is negative, investment shall be recognized at zero.If long-term equity investment is acquired through business combination not under commoncontrol, initial investment cost shall be the combination cost. If the equity investment ofinvestee 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 investmentcost are taken as the initial investment cost.Apart from the long-term equity investments acquired through business combination, the costof investment for the long-term equity investments acquired by cash payment is the amount ofcash paid, relevant direct expense, tax and other necessary expenses for the investment. Forlong-term equity investment acquired by issuing equity instruments, the cost of investment isthe 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.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 byadjusting the fair value of additional investment and relevant transaction expenses. Cashdividend or profit declared by investee shall be recognized as investment gain/loss for theperiod based on the proportion share in the investee.The Company adopts equity method for investment in joint venture and affiliate. Underequity method, if the initial investment cost is greater than the share of fair value of theidentifiable net assets in the investee, the initial investment cost of long-term equityinvestment is no need to be adjusted; If the initial investment cost is less than the share of fairvalue of the identifiable net assets in the investee , the difference shall be recorded into thecurrent profit and loss, and the cost of long-term equity investment shall be adjusted at thesame time.Long-term equity investment subsequently, under equity method, shall be adjusted for itcarrying amount according to the share of equity increase or decrease in the investee. TheCompany shall recognize its share of the investee’s net gain or losses after the investee’s netprofit adjustment, based on the fair value of the investee’s individual identifiable assets atthe acquisition date, after making appropriate adjustments thereto in conformity with theaccounting policies and accounting period, and offsetting the unrealized profit or loss fromthe inter-group transactions, not constituting the business, between the entity and itsassociates and joint ventures according to the shareholding attributable to the group (fullamount of loss shall be recognized if the inter-group transaction is impairment loss). Thegroup recognizes net losses incurred by investee to the extent that the carrying value oflong-term equity investments and other long-term interests substantially constituting netinvestments in investee are written down to zero, except where the group is obliged to bearadditional losses.The difference between the book value of long-term equity investment and actual acquisitioncost shall be recognized in the gain or loss of investment when the long-term equityinvestment is disposed of.For long-term investments accounted under equity method, other comprehensive incomerecorded shall be accounted on the same basis as the investee directly disposing of relatedassets or liability when equity method is not used any longer. The movements ofshareholder’s equity, other than the net profit or loss, other comprehensive income and profitdistribution previously recorded in the shareholder’s equity of the Company are recycled toinvestment income for the period on disposal.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 equitymethod, the relevant other comprehensive income previously recognized under the equitymethod, is treated on the same basis as the direct disposal of the relevant assets or liabilitiesby the investee and is carried forward on a proportional basis, and the owner's equity, whichis apart from net profit and loss, other comprehensive income and profit distribution of theinvestee, shall be recognized and proportionally transfers to current investment income.Where the entity has no longer joint control or significant influence in the investee companyas a result of partially disposal of the investment, the remaining investment will be accountedfor in line with the Recognition and Measurement of Financial Instruments Standard -No 22of Accounting Standards for Business Enterprises(No7 Caikuai [2017]), and the differencebetween the fair value of remaining investment at the date of losing joint control orsignificant influence and its carrying amount shall be recognized in the profit or loss for theyear.Where the entity has no longer control over the investee company as a result of partiallydisposal of the investment, the remaining investment will be changed to be accounted forusing equity method providing remaining joint control or significant influence over theinvestee company. The difference between carrying amount of disposed investment andconsideration 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 modelsince acquisition. Where the entity has on longer joint control or significant influence in theinvestee as a result of disposal, the investment shall be accounted for in accordance with theRecognition and Measurement of Financial Instruments Standard -No 22 of AccountingStandards for Business Enterprises(No7 Caikuai [2017]), and difference between the carryingamount and disposal consideration shall be recognized as investment gain or loss for theperiod, and the difference between the fair value of remaining investment at the date of losingcontrol 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 includesproperty, 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 usefullife, net residual value rate and annual depreciation rate is as follows:

Category

Useful life

Estimated net residual value

Annual

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

16. Fixed assets

Recognition criteria of fixed assets: defined as the tangible assets which are held for thepurpose of producing goods, rendering services, leasing or for operation & management, andhave more than one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the group andits cost can be measured reliably. Fixed assets include: building, machinery, transportationequipment, electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and arestill being used and land is separately measured. Straight-line depreciation method is adoptedby the group. Estimated net residual value rate, useful life, depreciation rate as follows:

No Category

Useful life

Estimated net residual

Annual depreciation

、

、

2.25-4.85

、

、

、

4.09-19.90

、

、

、

6-33.33

、

、

、

6-33.33The group should review the estimated useful life, estimated net residual value anddepreciation method at the end of each year. If any change has occurred, it shall be regardedas a change in the accounting estimates.

17. Construction in progress

The cost of construction in progress is determined according to the actual constructionexpenditure, including the necessary construction expenditure incurred during theconstruction period, the capitalized borrowing cost and other related expenses before theconstruction reaches the condition expected for use.Constructions in progress are transferred to fixed assets based on the construction budget andactual costs on the date when completing and achieving estimated usable status, and the fixedassets should be depreciated in the next month. Adjustment will be made upon confirmationof their actual values after implementing the completion and settlement procedures.The construction in progress shall be transferred to fixed assets when it reaches the expectedusable state, and the criteria are as follows:

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

Criteria of transferring to FA

18. Intangible asset

The group’s intangible assets include use right of land, patents, non-patented technologies andothers. They are measured at actual cost at acquisition day. For acquired assets, the actual costis measured at actual price paid and relevant other expenses. Invested intangible asset shall bemeasured at actual cost as contracted or agreed value, however fair value will be taken if thecontracted or agreed value is not fair.

(1) Useful life and the basis for recognition, estimation, amortization method or review

procedureUse right of land shall be amortized evenly within the amortization period since the remiseddate. Patents, technologies and other intangible assets are amortized over the shortest of theirestimated 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 theperiod according to the usage of the assets. At the end of the year, for definite life ofintangible assets, their estimated useful life and amortization method shall be assessed. Anychange 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 intoresearch phase expenditure and development phase expenditure. At research phase,expenditure are expenses directly relevant to research activity, including R&D employee’ssalary, materials, depreciation, technology cooperation cost and assessment testing fees. Atdevelopment 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 foruse 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 otherthings, the entity can demonstrate the existence of a market for the output of the intangibleasset or the intangible asset itself or, if it is to be used internally, the usefulness of theintangible asset.(d)the availability of adequate technical, financial and other resources to complete the

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 itsdevelopment.Any expenditure not qualifying for the above conditions shall be accounted into profit andloss account.The projects expenditure will go to the development stage and start to be capitalized aftermeeting the above conditions, and passing the technical feasibility and economic feasibilitystudies, 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-useasset and intangible assets with definite useful life may be impaired. If there is any indicationthat an asset may be impaired, the asset will be tested for impairment. Goodwill andintangible asset with infinite useful life and development cost not reaching available for usestatus, are tested for impairment annually no matter there is any indication of impairment ornot.

(1) Non-current asset impairment excluding financial asset (expect goodwill)

When testing the impairment, the group recognized therecoverable amount of an asset, whichthe higher of its fair value less costs to sell and the present value of the future cash flowsexpected to be derived from the asset. After impairment test, any difference of carryingamount 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 toestimate the recoverable amount of an individual asset, the recoverable amount is determinedon the basis of the asset groups or asset portfolio to which the asset belongs. Asset portfolio isdetermined based on whether the major cash inflow generated by the asset group isindependent 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 observablemarket price for similar asset within the arm length transaction. When estimating the presentvalue of future cash flows, management must estimate the expected future cash flows of theasset or group of assets and select an appropriate discount rate to determine the present valueof future cash flows.

(2) Goodwill impairment

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 businesscombination to the relevant asset group or to the relevant asset group combination which isdifficult 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 orasset group combination, if there are signs of impairment in the asset group or asset groupcombination related to goodwill, the impairment test shall firstly be conducted on the assetgroup or asset group combination excluding goodwill, and the recoverable amount shall becalculated and compared with the relevant carrying value so to recognize the correspondingimpairment loss; Then, an impairment test is conducted on the asset group or asset groupcombination 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 firstoffset against the carrying value of goodwill allocated to the asset group or asset groupcombination, and then offset the carrying value of the asset group and asset groupcombination based on the proportion of the carrying value of other assets in the asset group orasset group combination without goodwill.The methodology, parameters and assumptions of the goodwill impairment test are referred inNotes VI.19.Once the impairment loss on the assets is recognized, it can not be reversed in a subsequentperiod.

20. Long-term prepaid expense

The group's long-term prepaid expense refers to landscape fees, renovation &decorationexpenses and other expenses paid and should be allocated over 1year.It will be amortizedevenly within its beneficial period. The remaining unamortized expense should be chargedinto 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 beamortized for 5-10 years.

21. Employee benefits

Employee’s benefit comprises short-term benefit, post-employment benefit, terminationbenefit 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 renderedby the employees, the actually incurred short term employee benefits shall be recognized asliability and shall be recognized in P&L or related cost of assets based on benefit objective

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 areclassified into defined contribution plan and defined benefit plan. For defined contributionplan, liability shall be recognized based on the contributed amount made by the Company toseparate entity at the balance sheet date in exchange of employee service for the period and itshall be recorded into current profit and loss account or relevant cost of assets in accordancewith beneficial objective.Termination benefits are employee benefits payable as a result of either the group’s decisionto terminate an employee’s employment before the contract due date or an employee’sdecision to accept voluntary redundancy in exchange for those benefits. The group shallrecognize the termination benefits as a liability and an expense on the earlier date (1) whenthe group cannot unilateral withdraw the termination benefits due to employment terminationplan or due to redundancy suggestion, or (2) when the group can recognize the restricting costor expense arising from paying termination benefits.Other long-term employee’s benefit refers to all other employee benefits other than short-termbenefit, post-employment benefit and termination benefit.

22. Provision

When the Company has transactions such as commitment to externals, discounting the tradeacceptance note, unsettled litigation or arbitration which meets the following criterion,provision should be recognized: It is the Company's present obligation; carrying out theobligation will probably cause the Company's economic benefit outflow; the obligation canbe reliably measured.Provision is originally measured on the best estimate of outflow for paying off the presentobligations. When determining the best estimate, need to consider the risk, uncertainty, timevalue of monetary relevant to contingent items. The group needs to review the present bestestimate 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 ofgoods or services refers to the ability to direct the use of, and obtain substantially all of theremaining benefits from, the asset.If the contract between the group and the customer meets the following five conditions at the

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 thecontrol 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 performanceobligation 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 wholeset 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 thearrival 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 andrewards in the ownership of the goods, the transfer of the legal ownership entitled to thegoods, 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

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 therefrigeration installation contract between the group and the customer, since the equipmentsales and installation services cannot be distinguished separately, the entire project contract isregarded as a single performance obligation, and the revenue of the single performanceobligation is recognized at the completion of the customer acceptance. when a performanceobligation over time is satisfied, revenue shall be recognized within the contract termaccording to the performance progress, which is determined by the percentage of thecumulative actual cost to expected total contract cost. When the performance progress can notbe estimated reasonably, the group recognizes the revenue to the extent where the alreadyincurred 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 thecontract on a relative standalone selling price ratio basis and measure the revenue at theallocated transaction price to each performance. If any solid evidence indicates that contractdiscount is only relevant to one or some (not all) performance obligations, the discount shallbe allocated into the one or these performance obligations.An amount of consideration can vary because of cash discounts, price guarantee. The groupdetermines the best estimate of the variable consideration in line with the expectation or theamount that most probably incurred, but includes, in the transaction price, the variableconsideration not exceeding the amount that is highly unlikely to result in a material reversalof cumulative revenue recognized when the relevant uncertainty is eliminated.The group accounts for consideration payable to a customer as a reduction of the transactionprice and, therefore, of revenue unless the payment to the customer is in exchange for adistinct good or service. Accordingly, the revenue shall be recognized at the later of therevenue recognition and the consideration paid to a customer.For sales with a right of return, the group recognizes the revenue for the considerationexpected to have the right to receive arising from transferring the goods to customers whenthe customer receives the control right over the relevant goods, and recognizes the expectedrefund amount as provision. At the same time, receivable of return cost, as an asset, shall berecognized for the carrying value of the returned goods when it is expected to be transferredless expected cost for getting it back (including decline in value) and net amount of the aboveasset cost shall be carried over to the cost. At every balance sheet date, the group will reassess

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 bemeasured at the assumed price that the payment is made by cash when the client receives thecontrol right of goods or services. The difference between the promised consideration and thedetermined transaction price shall be amortized within the contract period using effectiveinterest rate, and it is the discounting rate at which the dominated price of the contractconsideration is discounted to the cash price.According to the agreement or the regulation etc., the group provide warranty for the goodssold and it is the quality assurance for promising the goods are in commodity with the agreedstandards 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 grantis 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 offixed amount or conclusive evidence indicates relevant conditions for financial support aremet and expect to probably receive the fund, it is measured at the amount receivable. Where agovernment grant is in the form of a transfer of non-monetary asset, it is measured at fairvalue. If fair value cannot be determined reliably, it is measured at a nominal amount ofRMB1 Yuan.Assets-related government grant is the government fund obtained by the group for thepurpose 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-relatedgrants. If no grant objective indicated clearly in the government documents, the group shalljudge it according to the principle mentioned above. If the grant is difficult to be separated, itshall be considered as income-related grant as a whole.Assets-related government grants are recognized as deferred income, which shall be evenlyamortized 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 remainingbalance of deferred income which hasn’t been allocated shall be carried forward to theincome statement when the assets are disposed of.Income-related government grants that is a compensation for related expenses or losses to beincurred in subsequent periods are recognized as deferred income and credited to the relevantperiod when the related expenses are incurred. Government grants relating to compensation

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 theperiod. Government grants related to daily business, shall be recognized as other income inaccordance with business nature or offsetting related expenses, otherwise, shall be recognizedas 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 recognizedaccording to the differences (temporary difference) between the carrying amount of the assetsor liabilities and its tax base and the difference between the carrying amount of tax base itemand its tax base.Deferred tax liability shall be recognized for all taxable temporary difference apart from thefollowings : (1) temporary differences arise from the initial recognition of goodwill or theinitial recognition of assets or liabilities arising from non-business combinations that do notaffect accounting profits or taxable income (or deductible losses); (2) The group is able tocontrol the timing of the reversal of taxable temporary differences related to investments insubsidiaries, associates, and joint ventures, and such temporary differences are likely not to bereversed 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 taxableincome, except for the following situations: (1) the initial recognition of assets or liabilitiesarising from non-business combination transactions where temporary differences do not affectaccounting profits or taxable income (or deductible losses); (2) Deductible temporarydifferences related to investments in subsidiaries, associates, and joint ventures that cannotsimultaneously meet the following conditions: temporary differences are likely to be reversedin the foreseeable future, and taxable income is likely to be obtained in the future to offsetdeductible temporary differences.The group recognizes deferred income tax assets for all unused deductible losses to the extentthat there is likely to be sufficient taxable income to offset the deductible losses. Themanagement uses plenty of judgment to estimate the timing and amount of future taxableincome, combined with tax planning strategies, to determine the amount of deferred incometax assets, which results in uncertainty.On the balance sheet date, deferred income tax assets and deferred income tax liabilities aremeasured at the applicable tax rate during the expected period of asset recovery or liabilitysettlement.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 deferredincome tax assets and deferred income tax liabilities at the net amount after offsetting: Thegroup has the legal right to settle the current income tax assets and deferred income taxliabilities at the net amount; Deferred income tax assets and deferred income tax liabilities arerelated to the income tax levied by the same tax collection and management authority on thesame taxpayer or on different taxpayers. However, in the future, within the term when eachsignificant deferred income tax asset and deferred income tax liability to be reversed, theinvolved taxpayers intend to settle the current income tax assets and liabilities on a net basisor 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 underlyingasset) 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 ormany 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 andaccount each lease separately. The group shall account for each lease component separatelyfrom non-lease components of the contract if the contract contains lease and non-leasecomponents.Each leasing part is accounted for according to the leasing standards, while thenon-leasing part is accounted for according to other applicable accounting standards. If thecontract includes both leasing and non-leasing parts, the group, as the lessor, will split theleasing and non-leasing parts and conduct accounting treatment separately. Each leasing partwill be accounted for according to the leasing standards, while the non-leasing part will beaccounted for according to other applicable accounting standards. As the lessee, the groupchooses not to separate the lease and non-lease, and joins each leased part and its non- leasedparts separately into a lease, accounting treatment shall be carried out in accordance withleasing standards; However, if the contract includes embedded derivative instruments thatshould be split, the group will not merge them with the leasing portion for accountingtreatment.

(2) As a leasee

1) Recognition

At the commencement date, the group as a lessee shall recognize a right-of-use asset and a

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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:

① the amount of the initial measurement of the lease liability,

② any lease payments made at or before the commencement date, less any lease incentives

received, which is the incremental cost for the lease

③ any initial direct costs incurred by the lessee which is the incremental cost

④ 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 tothe condition required by the terms and conditions of the lease, unless those costs are incurredto produce inventories. Where the group remeasures the lease liability in accordance with therelevant provisions of the leasing standard, the carrying value of right-of-use asset is adjustedaccordingly.The group shall follow the following principles when determining the depreciation life of theright-of-use asset: if the ownership of the leased asset can be reasonably determined at theend of the lease term, depreciation shall be calculated and deducted during the remainingservice life of the leased asset; Where it is not certain that the ownership of the leased assetcan be acquired at the end of the lease term, depreciation shall be calculated at the shorter ofthe lease term and the remaining service life of the leased asset. The depreciation amountshall 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 ofthe lease payments that are not paid at that date.The lease payments included in the measurement of the lease liability comprise the followingpayments for the right to use the underlying asset during the lease term that are not paid at thecommencement date: ① fixed payments (including in-substance fixed payments) less anylease incentives receivable;② variable lease payments that depend on an index or a rate,initially measured using the index or rate as at the commencement date;③ the exercise priceof a purchase option if the lessee is reasonably certain to exercise that option ④ payments ofpenalties for terminating the lease, if the lessee will certainly exercise an option to terminatethe lease during the lease term.⑤ amounts expected to be payable by the lessee underresidual value guarantees;

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 leaseshall be used. If the rate cannot be readily determined, the group shall use the lessee’sincremental borrowing rate. Interest on the lease liability in each period during the lease termshall be calculated based on a constant periodic rate of interest, and be recognized as in profitor loss unless its capitalization.After the lease commencement date, the group increases the carrying amount of lease liabilitywhen recognizing the interest on lease liability and; decreases the carrying amount of leaseliability when making lease payment. The group remeasures the lease liability in accordancewith the present value of revised lease payment, when the followings incur: ①change ofin-substance fixed payments (subject to original discounting rate) ② change of amountsexpected to be payable under residual value guarantees(subject to original discounting rate)

③ change of an index or a rate used for future lease payments(subject to revised discounting

rate) ④ change in assessment of a buy option(subject to revised discounting rate) ⑤change in assessment of a renew option or termination option or actual situation(subject torevised 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-termlease (lease term less than 12 months) and low value asset (30,000 Yuan) when it is singleleased new asset. In this case, lease payment will be accounted directly in profit or loss or onthe 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 whetherthe transfer of the asset is a sale. If the transfer of assets is not a sale, the group shall continueto recognize the transferred assets and at the same time recognize a financial liability equal tothe transfer income (Note VI. 34 lease). If the transfer of assets is a sale, the group shallmeasure the right-of-use asset arising from the leaseback at the proportion of the previouscarrying 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 rightstransferred 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 risksand rewards incidental to ownership of an underlying asset unless an operating lease.

1) Financing lease

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 andderecognize of finance lease asset. When initially measuring the lease payment receivable, netlease 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 unduelease receivable discounted at the interest rate implicit in the lease. The group shall recognizeinterest income over the lease term based on a constant periodic rate. The variable leasepayment obtained by the group related to operating leases, which are not included in the netlease 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 theperiod.The initial direct expenses incurred by the group in relation to operating leases are capitalizedto the cost of leasing the underlying asset and are recognized in profit or loss by instalmentsover the lease period on the same basis as rental income. Variable lease payments made by thegroup in relation to operating leases that are not included in lease collections are recognizedin 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 theeffective date of the modification, considering any received in advance or lease paymentsreceivable relating to the original lease as part of the lease payments receivable for the newlease

27. Fair value measurement

The group measures investment property, derivative financial instruments and equityinstruments at fair value at each balance sheet date. Fair value refers to the price that marketparticipants can receive by selling an asset or can pay for transferring a liability in an orderlytransaction that takes place on the measurement date.Assets and liabilities measured or disclosed at fair value in the financial statements aredetermined to belong to the different fair value level based on the lowest level of input valuesthat are significant to the fair value measurement as a whole: level 1 input is the unadjustedquoted price for identical asset or liability available at the active market on the measurementdate; level 2 input is the directly or indirectly observable input for relevant asset or liabilityapart 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 determinestheir fair value by their active market quotes; For financial instruments that are not traded in

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 thevaluation model used is mainly the discounted cash flow model. The input of valuationtechniques mainly includes: risk-free interest rate of debt, credit premium and liquiditypremium; 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 valuationmodels, such as the discounted cash flow model. The group also considers the initialtransaction price, recent transactions of the same or similar financial instruments, or fullthird-party transactions of comparable financial instruments. As at 31 December 2024, level 3financial assets measured at fair value are valued by using significant unobserved inputs suchas discount rates, but their fair value is not materially sensitive to reasonable changes in thesesignificant 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 forBusiness Enterprises No. 17 (Finance and Accounting [2023] No. 21) (hereinafter referred toas "Interpretation No. 17"), which includes "I. Division of current liabilities and non-currentliabilities; Disclosure of supplier financing arrangements; Accounting for sales and leasebacktransactions ", and comes into effect from January 1, 2024. The implementation of therelevant provisions of Interpretation No. 17 has no effect on the financial statements of theGroup during the reporting period.In December 2024, the Ministry of Finance issued Interpretation of Accounting Standards forBusiness Enterprises No. 18 (Finance and Accounting (2024) No. 24) (hereinafter referred toas "Interpretation No. 18"), which came into effect as of the date of issuance. "I. Subsequentmeasurement of investment premises held as an infrastructure project under the floating feemethod"; "II. Accounting for quality assurance in the category of assurance that is not part ofa single performance obligation". The implementation of the relevant provisions ofInterpretation No. 18 has no impact on the financial statements of the Group during thereporting period.

(2) Changes in significant accounting estimates

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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:

、

、

、

、

、

Real estate tax

70% of cost of own property or

1.2% or 12%

Other tax

According to the relevant

Notes for tax entities with different EIT rate

provisions of the state and localTax entities

15%

25%

15%

25%

15%

25%

25%

25%

15%

15%

15%

2. Tax preference

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 bureauapproval, the Company can be granted for the preferential tax policy of enterprise income taxrate of 15% from FY2023 to FY2025.The Company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtainedthe qualification of high and new technology enterprises in December, 2023. The CertificateNo. is GR202321201161. According to the tax bureau approval, the Company can be grantedfor 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 thequalification of high and new technology enterprises in December, 2024 The Certificate No. isGR202421200978. According to the tax bureau approval, the Company can be granted for thepreferential 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 thequalification 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 forthe 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 thequalification of high and new technology enterprises in December, 2023. The Certificate No. isGR202321200114. According to the tax bureau approval, the Company can be granted for thepreferential 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 inDecember, 2024. The Certificate No. is GR202421200617. According to the tax bureauapproval, the Company can be granted for the preferential tax policy of enterprise income taxrate of 15% from FY2024 to FY2026.The Company’s subsidiary, Sonyo Refrigeration System (Dalian) Co., Ltd.(hereinafter referredto as “Sonyo Refrigeration System” obtained the qualification of high and new technologyenterprises in December, 2023. The Certificate No. is GR202321201152. According to the taxbureau approval, the Company can be granted for the preferential tax policy of enterpriseincome 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 inDecember, 2024. The Certificate No. is GR202421200850. According to the tax bureau

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 taxrate 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 1

st

, 2023 to December 31

st,2027, the advance enterprisesare allowed for input VAT deduction at 5% acceleration rate during the current period. TheCompany and its subsidiaries, Dalian Bingshan Air-conditioning Equipment,Dalian Bingshan Guardian Automation, Wuhan New World Refrigeration, Dalian UniverseThermal, Sonyo Compressor, Sonyo Refrigeration and Sonyo Refrigeration System enjoy thetax preference.V. Notes to Consolidated Financial StatementsThe 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 theperiod from January 1, 2024 to December 31, 2024; and “last period” refers to the period fromJanuary 1, 2023 to December 31, 2023; with the currency unit RMB.

1. Monetary fund

28,585.88

1,042,143,744.67

951,039,570.11

Note1: within the bank deposits, 50,406,111.11 Yuan was time deposits and interest income;frozen fund of 6,512,838.08 Yuan, guarantee deposit for migrant worker of 251,006.12Yuan and restricted fund for migrant worker salary of 3,190,047.46 Yuan.Note2: Other monetary funds are bank acceptance deposit 15,278,927.28 Yuan, deposit forletter of guarantee is 14,925,131.02 Yuan.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Total

353,428,922.42

(2) Categories according to bad debts provision method

Items

352,854,863.48

Closing Balance

Booking balance

Booking value

%Bad debtsprovision based on

100.00

1,421,595.55 0.40

Including: bankacceptance notes

93.60

-

-

331,617,161.92

Trade acceptance

6.40

1,421,595.55

6.27

100.00

1,421,595.55

0.40

(Continued)

Items

Booking value

Bad debtsprovision based on

354,313,722.61 100.00 884,800.19 0.25 353,428,922.42Including: bankacceptance notes

335,914,443.51 94.81 - - 335,914,443.51Trade acceptance

groupnotes

18,399,279.10 5.19 884,800.19 4.81 17,514,478.91

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

Categories based on groupItems

Booking balance Provision Provision

331,617,161.92

(3) Bad debt provision of notes receivable accrued, collected and reversed

Category

Openingbalance

Closing BalanceAccrued

Collected/

Written-offBad debt

884,800.19

626,722.11

89,926.75

-

1,421,595.55

884,800.19 626,722.11

89,926.75

-

1,421,595.55

(4) Pledged notes receivable up to the end of year.

(5) Notes receivable endorsed or discounted but not mature at the end of year

ItemClosing amount

Closing amount still

1,681,364.49

(6) Notes receivable written off: none

3. Accounts receivable

(1) Aging of accounts receivable

Account Age Closing Balance Opening BalanceWithin 1 year（incl 1 year）

145,838,420.56995,252,568.14

1-2 years

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 Balance2-3 years

Over 3 years

Of which: 3-4years

4-5years

Over 5 years

(2) Category of accounts receivable based on bad debt provision method

Items

Booking balance

Booking value

%Bad debt provision

13,071,940.81

0.63

10,264,390.35

78.52

2,807,550.46

Bad debt provision

99.37

27.65

Including: aging ascharacteristics of

99.37

27.65

100.00

27.98

(Continued)Items

Booking value

Bad debt provision

14,372,020.85 0.67 11,564,470.39 80.47 2,807,550.46Bad debt provision

2,127,265,193.70 99.33 553,638,820.00 26.03 1,573,626,373.70Including: aging ascharacteristics of

2,127,265,193.70 99.33 553,638,820.00 26.03 1,573,626,373.70

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Name

Accounts

Provision for

Accounts

Provision for

Reason

Company

6,496,000.00

5,244,096.20

6,496,000.00

5,244,096.20

80.73

Fullrecovery

is not

Othercompany

7,876,020.85 6,320,374.19 6,575,940.81

5,020,294.15

Recovery

is not

14,372,020.85

11,564,470.39

13,071,940.81

10,264,390.35

—

2) Bad debt provisions on group basis

Aging

Closing Balance

Accounts

Provision for

Drawing proportion

5.64

360,274,915.33

59,855,315.02

16.61

229,848,838.06

70,601,786.26

30.72

107,977,806.57

52,580,990.59

48.70

124,882,698.42

89,687,423.54

71.82

240,546,205.42

240,546,205.42

100.00

(3) Bad debt provision of current period

Category

Openingbalance

ClosingBalanceAccrued

Collected/

Written-off OthersBad debtprovision

565,203,290.39

22,044,663.66

4,992,404.37

3,619,419.49

565,203,290.39

22,044,663.66

4,992,404.37

3,619,419.49

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

(5) Top 5 receivables and contract assets

The sum of top 5 of receivables and contract assets is 262,076,417.63Yuan, represents 11.46%of closing balance of receivables and contract assets and bad debt provision of61,059,997.71Yuan shall be made.

4. Contract asset

(1) contract asset

Items

Unsettled receivable of revenue

16,623,886.64

8,754,217.94

7,869,668.70

(continued)Items

184,760,940.32

Booking balance Provision Carrying amount

Unsettled receivable of revenue

18,840,435.97 9,834,772.91 9,005,663.06

(2) Significant change of the account

Items Amount Reason

-66,824,477.55

Unsettled receivable of revenue

-

Settled during the year

-

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Items

Booking balance

Booking value

%Bad debt provision

1,709,948.80

0.79

1,709,948.80

100.00

-

Bad debt provision

99.21

13.47

Including: aging ascharacteristics of

99.21

13.47

100.00

14.16

(continued)

Items

Booking balance

Booking value

%Bad debt provision

1,709,948.80 0.60 1,709,948.80 100.00 -Bad debt provision

282,570,749.02 99.40 45,493,870.31 16.10 237,076,878.71Including: aging ascharacteristics of

282,570,749.02 99.40 45,493,870.31 16.10 237,076,878.71

1) Bad debt provisions on individual basis

Name

Accounts

Provision for

Accounts

Provision for

P

Reason

Other companie2 1,709,948.80 1,709,948.80 1,709,948.80 1,709,948.80 100.00

Recovery is not

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Aging

Accounts

Provision for

Drawing proportion

6.29

59,666,466.96

9,087,331.73

15.23

13,388,704.45

4,091,459.94

30.56

3,289,473.18

1,613,907.81

49.06

4,274,438.84

3,084,007.63

72.15

2,704,384.48

2,704,384.48

100.00

213,529,722.14

——

(4) Bad debt provision of current period

Category

Openingbalance

28,768,781.82Change during the year

ClosingBalanceAccrued

Collected/

Written-off Others

Undue warranty 37,369,046.20

-

-

-

Unsettledreceivable ofrevenuerecognized over

9,834,772.91

-

788,585.29

-

-

9,046,187.

47,203,819.11 -

-

-

30,478,730.62

(5) Contract asset actually written off

None

5. Finance receivable

(1) Category of finance receivable

Items

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Items

Booking balance

Booking value

%Bad debt provision

382,073,283.27

100.00

-

-

382,073,283.27

Including: bank

382,073,283.27

100.00

-

-

382,073,283.27

382,073,283.27

100.00

-

-

382,073,283.27

(Continued)

Items

Booking value

Bad debt provision

303,585,218.53 100.00 - - 303,585,218.53Including: aging ascharacteristics of

303,585,218.53 100.00 - - 303,585,218.53

303,585,218.53 100.00 - - 303,585,218.53

(3) Pledged notes receivable up to the end of year.

TotalItems

129,115,879.46

129,115,879.46

6. Other receivables

Items Closing Balance Opening BalanceDividend receivable

11,150.00

Other receivables

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

6.2. Other receivables

(1) The categories of other receivable according to nature

(2) Aging of other receivable

Account Age Closing Balance Opening BalanceWithin 1 year（incl 1 year）

1-2 years

2-3 years

Over 3 years

Of which: 3-4years

4-5years

Over 5 years

(3) Category of other receivable based on bad debt provision method

Items

Booking balance

Booking value

%Bad debt provision

24,816,580.94

29.76

24,816,580.94

100.00

-

58,576,298.21

70.24

12,827,882.15

21.90

45,748,416.06

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)

(English translation for reference only)

Items

Booking balance

Booking value

%

Including: aging ascharacteristics of

58,576,298.21

70.24

12,827,882.15

21.90

45,748,416.06

83,392,879.15

100.00

37,644,463.09

45.14

45,748,416.06

(Continued)

Items

Opening balance

Booking value

Bad debt provision

24,935,080.94

31.86

24,935,080.94

100.00

-

Bad debt provision

53,326,693.19

68.14

11,944,964.92

22.40

41,381,728.27

Including: aging ascharacteristics of

53,326,693.19

68.14

11,944,964.92

22.40

41,381,728.27

78,261,774.13

100.00

36,880,045.86

47.12

41,381,728.27

1) Bad debt provisions on individual basis

Name

Opening balance

Accountsreceivable

Provision for bad

debts

Accountsreceivable

Provision for bad

debts

Proportion

(%)

ReasonTransfer of debt

20,132,963.79

20,132,963.79

20,132,963.79

20,132,963.79

100.00

Recovery is not

Dalian ShengdaConstructionEngineering Co., Ltd

3,878,617.15

3,878,617.15

3,878,617.15

3,878,617.15

100.00

Recovery is notexpectedQINGDAO FREETRADE PORTZONE

500,000.00

500,000.00

500,000.00

500,000.00

100.00

applied for enforcementand is not expected to be

recovered in full

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

Name

Opening balance Closing BalanceAccounts

Provision for bad

Accounts

Provision for bad

Proportion

ReasonCOLD CHAINLOGISTICSTRADE CENTERCO.,LTD.MudanjiangZhongnongpi ColdChain Logistics Co.,

(%)Ltd

300,000.00

300,000.00

300,000.00

300,000.00

100.00

Preserved in litigationand not expected to berecoveredWuhan XinlianTechnologyDevelopment Co.,Ltd

118,500.00

118,500.00

- - -

Chen xiujuan

2,000.00

2,000.00

2,000.00

2,000.00

100.00

Recovery is not

Chen yanhao

1,600.00

1,600.00

1,600.00

1,600.00

100.00

Recovery is not

expectedZheng Jinlian

1,400.00

1,400.00

1,400.00

1,400.00

100.00

Recovery is not

Total

24,935,080.94

24,935,080.94

24,816,580.94 24,816,580.94

—

2) Bad debt provisions on group basis

Aging

Closing Balance

Accounts

Provision for

Drawing proportion

33,984,236.78

1,232,619.56

3.63

2,933,743.71

157,057.23

5.35

4,459,628.80

667,033.45

14.96

5,666,505.77

2,046,836.21

36.12

2,439,947.50

1,499,593.16

61.46

9,092,235.65

7,224,742.54

79.46

Total58,576,298.21

12,827,882.15

—

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Bad debtprovision

st

nd

rd

Expected creditloss within 12months

Expected creditloss within thewhole period (no

Expected credit losswithin the whole period(impairment incurred)

Openingbalance

2,343,658.22

-

34,536,387.64

36,880,045.86

Openingbalance during

— — — —

--transfer to the

nd

stage

--transfer to the

rd

-10,980.00

-

10,980.00

-

--reverse to the

nd

stage

-

-

-

-

----

st

-

-

-

-

Accrued421,712.21

-

2,537,193.32

2,958,905.53

776,184.56

-

1,299,803.74

2,075,988.30

Cancelation -

-

-

-

-

-

118,500.00

118,500.00

Othermovement

-

-

-

-

Closing

1,978,205.87

-

35,666,257.22

37,644,463.09

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Category

Openingbalance

ClosingBalanceAccrued Collected/

Written-off Others

Bad debt

36,880,045.86

2,958,905.53

2,075,988.30

118,500.00

-

37,644,463.09

36,880,045.86 2,958,905.53

2,075,988.30

118,500.00

-

37,644,463.09

(5) Other receivables written off in current period: none.

Item

Other receivables written off actually

(6) Other receivables from the top 5 debtors based on closing balance

Name Category

ClosingBalance

Aging

% oftotal

118,500.00

ClosingBalance of

State tax office Tax refund

7,783,496.66 Within 1 year 9.33 284,875.98

Technology

Rental 3,284,533.27 Within 1 year 3.94 120,213.92

Deposit 2,548,847.50

3.06 2,348,040.21

New Energy

Deposit 2,476,894.20 3-4years 2.97 1,297,644.87

Optoelectronics

Deposit 2,000,000.00 Within 1 year 2.40 73,200.00

18,093,771.63

21.70 4,123,974.98

7. Prepayments

(1) Aging of prepayments

Items

Amount Percentage

Amount Percentage

85.46

133,068,644.50

86.75

9.53

12,010,696.67

7.83

3,927,719.36

2.39

2,578,747.06

1.68

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

Items

Amount Percentage

Amount Percentage

4,296,563.25

2.62

5,730,572.25

3.74

164,042,640.06

100.00 153,388,660.48 100.00

(2) Prepayments from the top 5 debtors based on closing balance

The sum of top 5 of prepayment is 79,026,004.94Yuan, represents 48.17% of closingbalance of prepayment.

8. Inventories

(1) Categories of inventories

Item

Book value Provision for decline Net book valueCost to fulfill the contract544,464,520.45

Closing Balance

12,895,734.89

531,568,785.56

Finished goods

Raw materials

Working in progress172,761,094.92

52,174,151.33

-

52,174,151.33

Goods on transit11,060,053.54

-

2,674,187.81

-

2,674,187.81

Low-value consumable213,692.47

-

213,692.47

Total

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)

(English translation for reference only)

(Continued)

Item

Cost to fulfill the contract657,703,661.17 15,425,401.03 642,278,260.14Finished goods524,399,789.91 47,832,216.91 476,567,573.00Raw materials282,868,685.78 31,011,520.30 251,857,165.48Working in progress211,744,888.60 10,130,805.54 201,614,083.06

35,347,357.53 - 35,347,357.53

21,317,653.86 60,394.18 21,257,259.68Goods on transit8,313,813.04 821,759.89 7,492,053.15Properties written off debtors2,708,646.00 1,149,186.00 1,559,460.00Low-value consumable166,267.10 - 166,267.10Total1,744,570,762.99 106,431,283.85 1,638,139,479.14

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Item Opening Balance

Closing BalanceAccrual Others transferred

Reverse/

Others transferred

WIP 10,130,805.54 10,084,266.95

631,284.08

19,583,788.41

Cost to fulfill the contract 15,425,401.03 219,548.10

2,749,214.24

12,895,734.89

Materials on consignment

60,394.18 -60,394.18

-

-

Goods on transit 821,759.89 - 821,759.89

-

Properties written off

1,149,186.00 - 1,149,186.00 -

106,431,283.85 29,153,785.19 27,738,202.04 107,846,867.00

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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 inventoriesItem

Basis for net realizable value

Reasons for

The amount deducting the expectedcost to product completion, selling

expense and relative tax from the

9. Non-current asset due within one year

57,550.43

57,550.43

10. Other current assets

23,990,929.71

1,267,914.24

139,723.58

114,445.28

26,074,342.33

11. Long term receivable

(1) Details

Item Closing BalanceDiscounted

27,636,378.46rate

Carrying

Provision Book value

150,589.20

10,571.36

140,017.84

-22,010.37

-

-22,010.37

150,589.20

10,571.36

140,017.84

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Items

Booking balance

Booking value

%Bad debt provision

150,589.20

10,571.36

7.02

140,017.84

Including: bank

150,589.20

10,571.36

7.02

140,017.84

150,589.20

100 10,571.36

7.02

140,017.84

1) The bad debt provision based on group of long-term receivables

Aging

Accounts

Provision for

Drawing proportion

150,589.20

10,571.36

7.02

Total

150,589.20

10,571.36

——

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.Notes to financial statementsJanuary 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

Bad debtprovision

st

nd

rd

TotalExpected credit

loss within 12

Expected credit losswithin the whole period

Expected credit losswithin the whole period

Openingbalance

- - - -

Openingbalance during

— — — —

--transfer to the

nd

stage

- - - ---transfer to the

the year

rd

- - - -

--

nd

stage

- - - -

----

st

- - - -

Accrued10,571.36

-

-

10,571.36

Cancelation

Othermovement

- - - -

10,571.36

-

-

10,571.36

(3) Bad debt provision of long-term receivable for the year

Category

Openingbalance

Change during the year

ClosingBalanceAccrued Collected/

Written-off OthersBad debt

- 10,571.36

-

- -

10,571.36

-10,571.36

-

10,571.36

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

Investee

Beginningbalance

Increase/Decrease

Ending balance

Provision forimpairmentIncreased Decreased

lossesrecognizedunder theequity

Adjustment of

other

income

Change ofother equity

Cash bonus

or profitsannounced to

issue

forimpairment

of thecurrent

OthersAssociates

9,892,253.52 - -

10,249,074.00 -

Thermal Technology

57,579,975.00 - --4,257,688.27

53,322,286.73

-

Bingshan Vending

67,610,418.09 - --514,319.31

67,096,098.78

-

Refrigeration

16,543,655.54 - -202,819.43

16,746,474.97

-

Bingshan VendingMachine Sales Co.,

- - ---

InsulationTechnology Co.,Ltd

144,354,903.91 - -

3,220,344.00

-

Metal Technology

173,250,850.13 -34,931,610.00

28,344,672.03

30,759,188.94

135,904,723.22

-

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)

(English translation for reference only)

Investee

Beginning

balance

Increase/Decrease

Ending balance

Provision forimpairmentIncreased Decreased

lossesrecognizedunder the

equity

Adjustment of

other

income

Change ofother equity

Cash bonus

or profitsannounced to

issue

forimpairment

of thecurrent

Others

Group HuahuidaFinancial Leasing

46,050,456.55 -

636,409.95

-

Power Control

5,992,434.76 -

494,251.11

6,486,685.87

-

Total521,274,947.50 - 34,931,610.00

30,246,020.75

34,615,942.89

481,973,415.36

-

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

14. Investment property

(1) Investment property measured as cost model

Item

Property&building

Land-use-rights TotalI. Initial cost

1. opening balance

246,173,617.85 26,094,438.38 272,268,056.23

2. addition

4,838,025.49

-

4,838,025.49

(1) FA\transferred from CIP

4,838,025.49

-

4,838,025.49

3. decrease

4,749,095.10

-

4,749,095.10

(1) disposal

2,708,646.00 - 2,708,646.00

(2) others

2,040,449.10 - 2,040,449.10

4. closing balance

246,262,548.24

26,094,438.38

272,356,986.62

II. Accumulated depreciation— — —

1. opening balance

135,327,893.16 13,350,481.57 148,678,374.73

2. addition

6,315,185.06

521,888.76

6,837,073.82

(1) accrued/amortization

5,663,731.15

521,888.76

6,185,619.91

(2) FA\transferred from CIP

651,453.91

-

651,453.91

3. decrease

1,090,182.17

-

1,090,182.17

(1) disposal

8,743.66 8,743.66

(2) others

1,081,438.51 1,081,438.51

4. closing balance

140,552,896.05

13,872,370.33

154,425,266.38

III. Impairment reserve— — —

1. opening balance

- - -

2. addition

-

-

-

3. decrease

-

--

4. closing balance

- - -

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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 TotalIV. Book value

— — —

1. Closing book value

105,709,652.19

12,222,068.05

117,931,720.24

2. Opening book value

110,845,724.69 12,743,956.81 123,589,681.50

(2) Investment property without ownership certificate

Item Book value ReasonPlant

11,756,581.06

Because the land use right and the plant’s ownershipbelong to different person, the deed of the plant wasnot obtained. In 2023, the land use right is obtained,the certificate of the plant ownership is in progressRihang Apartment918,201.57

the building ownership can not be obtained

15. Fixed assets

Items Closing Book Value Opening Book ValueFixed asset

Fixed asset disposal

(1) Fixed assets detail

Item

Property&

buildings

Machineryequipment

equipment

Otherequipment

TotalI. Initial cost

1.Opening

balance

984,762,292.94 1,860,863,124.51 26,414,272.96 248,448,105.42 3,120,487,795.83

2. Increase

12,183,574.51

Transportation

56,432,801.76

1,566,348.74

18,736,019.07

88,918,744.08

(1) Purchase

-

5,903,608.99

1,264,136.35

2,824,527.38

9,992,272.72

(2) Transferred

fromconstruction-in-progress

10,143,125.41

50,529,192.77

302,212.39

15,911,491.69

76,886,022.26

(3) financial lease

- - - -

-

(4) investment

2,040,449.10

-

-

-

2,040,449.10

3. Decrease

4,608,045.19

152,361,604.74

4,524,956.89

26,296,697.90

187,791,304.72

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)

(English translation for reference only)

Item

Property&buildings

Machineryequipment

equipment

Otherequipment

Total

(1) Disposal

2,478,665.70

152,361,604.74

4,524,956.89

26,296,697.90

185,661,925.23

(2) transferred to

investmentproperty

2,129,379.49

-

-

-

2,129,379.49

4.Closing balance

992,337,822.26

1,764,934,321.53

23,455,664.81

240,887,426.59

3,021,615,235.19

II. Accumulateddepreciation

1.Opening

balance

343,048,484.83 1,281,264,893.77 18,926,836.54 169,991,538.16 1,813,231,753.30

2. Increase

30,542,895.37

91,310,418.67

1,541,494.28

14,020,350.18

137,415,158.50

(1) Accrued

29,461,456.86

91,310,418.67

1,541,494.28

14,020,350.18

136,333,719.99

(2)

Investment

1,081,438.51

-

-

-

1,081,438.51

3. Decrease

1,497,964.76

125,312,442.36

3,554,272.85

21,350,238.08

151,714,918.05

(1) Disposal

846,510.85

125,312,442.36

3,554,272.85

21,350,238.08

151,063,464.14

(2) transferred to

investment

651,453.91

-

-

-

651,453.91

4.Closing balance

372,093,415.44

1,247,262,870.08

16,914,057.97

162,661,650.26

1,798,931,993.75

III. Impairmentreserve

1.Opening

balance

1,125,906.87 10,009,682.05 286,519.26 3,982,531.89 15,404,640.07

2. Increase

3. Decrease

-

3,173,153.83

-

1,342,314.43

4,515,468.26

(1) Disposal

-

3,173,153.83

-

1,342,314.43

4,515,468.26

4.Closing balance

1,125,906.87

6,836,528.22

286,519.26

2,640,217.46

10,889,171.81

IV.Book value

1.Closing book

value

619,118,499.95

510,834,923.23

6,255,087.58

75,585,558.87

1,211,794,069.63

2.Opening book

value

640,587,901.24 569,588,548.69 7,200,917.16 74,474,035.37 1,291,851,402.46

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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 ReasonSelf -constructedbuildings

29,824,686.02

Self-

Sonyo Refrigeration without

certificate of the plant ownership can not be obtained.

Rihang Apartment918,201.63

The documents are not ready in full, the certificate of thebuilding ownership can not be obtained.

16. Construction-in-progress

Item Closing book value Opening book value

Construction materials

Total

86,221,660.80 114,801,351.21

(1) Construction-in-progress details

Item

Book balance Provision Book Value Book balance Provision Book value

29,766,943.79

-29,766,943.79

26,282,803.78 - 26,282,803.78

69,390,477.81

83,833,793.88 - 83,833,793.88

intelligent

2,128,888.58

-2,128,888.58

4,684,753.55 - 4,684,753.55

Total101,286,310.18

86,221,660.80 114,801,351.21 - 114,801,351.21

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

Name

Openingbalance

Increase

ClosingbalanceTransfer toFA/ Intangible

Otherdecrease

59,648,413.52 11,465,158.30

20,731,436.25

-

24,020,836.00 5,588,447.11

2,784,054.04

- 26,825,229.07

(Continued)

NameBudget

Percent ofinvestment

againstbudget (%)

Progress

ofconstructi

on

Accumulated

capitalized

interest

accumulated

capitalizedinterest of the

capitaliza

tionRate

Sourceof fundsImprovementof machinery

66,438,917.61 81.77 81.77 -

Self-

Buildings &reconstruction

31,404,649.19 94.79 94.79 -

(3) Impairment provision

Item

Opening

Increase Decrease

Closing

Reason

Buildings & reconstruction

- 15,064,649.38 - 15,064,649.38 Suspended

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

Item

Property/

Machinery

Transportationequipment

Electronicequipment

Land use right Software TotalI. Initial cost

2. Increase

1,268,280.29

-

172,876.63

-

-

350,368.74 1,791,525.66

1,268,280.29

-

172,876.63 -

-

350,368.74 1,791,525.66

3. Decrease

6,624,187.74

-

-

194,322.66

2,543,304.56

- 9,361,814.96

6,624,187.74

-

-

194,322.66

2,543,304.56

- 9,361,814.96

4.Closing balance

16,945,191.24

1,500,407.13

172,876.63

802,669.27

12,860,244.41

350,368.74 32,631,757.42

II. Accumulated

1.Opening balance 5,090,415.92 637,746.67 - 162,220.54 3,763,606.51 - 9,653,989.64

amortization

2. Increase

333,057.15

89,895.91

206,013.70

1,066,142.53

43,796.06 5,688,436.33

(1) Accrued

333,057.15

89,895.91

206,013.70

1,066,142.53

43,796.06 5,688,436.33

3. Decrease

-

-

194,322.58

2,543,304.56

- 6,029,401.01

-

-

194,322.58

2,543,304.56

- 6,029,401.01

4.Closing balance

5,748,173.03

970,803.82

89,895.91

173,911.66

2,286,444.48

43,796.06 9,313,024.96

III. Impairment reserve — — — — — - —

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)

(English translation for reference only)

Item

Property/

Machinery

Transportation

equipment

Electronicequipment

Land use right Software Total

1. Opening balance - - - - - - -

buildings

2. Increase

IV. Book value — — — — — - —

1. Closing book value

11,197,018.21

529,603.31

82,980.72

628,757.61

10,573,799.93

306,572.68 23,318,732.46

2. Opening book value 17,210,682.77 862,660.46 - 834,771.39 11,639,942.46 - 30,548,057.08

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 1, 2024 to December 31, 2024(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

18. Intangible assets

Item Land use right

Patent

Others TotalI. Initial cost

1.Opening balance 240,905,737.40 17,630,188.82 5,773,680.00 74,249,345.48 338,558,951.70

2. Increase - - -

8,427,931.79

Non-Patent

8,427,931.79

(1) Purchase - - -

6,858,843.13

6,858,843.13

(2) Transferred from

construction-in-progress

- - -

1,569,088.66

1,569,088.66

(3) increase via merge

3. Decrease - - -

2,013,910.38

2,013,910.38

(1) Disposal - - -

2,013,910.38

2,013,910.38

4.Closing balance

240,905,737.40

17,630,188.82

5,773,680.00

80,663,366.89

344,972,973.11

II. Accumulatedamortization

1.Opening balance 71,901,377.46 10,470,188.25 4,773,708.00 40,847,535.60 127,992,809.31

2. Increase

5,987,097.94

1,429,516.20

500,004.00

7,043,398.68

14,960,016.82

(1) Accrued

5,987,097.94

1,429,516.20

500,004.00

7,043,398.68

14,960,016.82

3. Decrease - - -

1,990,910.38

1,990,910.38

1,990,910.38

1,990,910.38

4.Closing balance

77,888,475.40

11,899,704.45

5,273,712.00

45,900,023.90

140,961,915.75

III. Impairmentprovision

1. Opening balance - - - 11,981.17 11,981.17

2. Increase - - - - -

(1) Accrued - - - - -

3. Decrease - - - - -

(1) Disposal - - - - -

4.Closing balance - - -

11,981.17

11,981.17

1. Closing book value

163,017,262.00

5,730,484.37

499,968.00

34,751,361.82

203,999,076.19

2. Opening book value 169,004,359.94 7,160,000.57 999,972.00 33,389,828.71 210,554,161.22

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

OpeningBalance

Increased Decreased

ClosingBalanceSonyo Compressor (Dalian)Co.,Ltd

240,922,872.80 - - 240,922,872.80

Sonyo Refrigeration (Dalian) Co., Ltd.

5,671,836.12

- 5,671,836.12

1,440,347.92

- 1,440,347.92

310,451.57

- 310,451.57Total

(2) Goodwill impairment provision

In the year 2015, the book value of equity investment of Dalian Universe Thermal TechnologyCo.,Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset. Thedifference between the book value of equity investment of 48, 287,589.78 Yuan and the identifiablenet asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of 46,847,241.86Yuan on the acquisition date of July 31

st,2015 is recognized as goodwill of 1,440,347.92 Yuan onThe Company consolidated financial report at the end of the year.

In the year 2016, Dalian Bingshan Group Engineering Co., Ltd purchases shares of DalianBingshan Baoan Leisure Industry Co., Ltd and gains control. The transferred price is based on thenet asset of Dalian BingshanBaoan Leisure Industry Co., Ltd on June 30

th, 2016. Negotiated withDalian 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 is5,359,548.42 Yuan, the fair value of proportion of Dalian BingshanBaoan Leisure IndustryCompany’s identifiable net asset is 5,049,096.85 Yuan on the purchasing day, therefore, goodwill is310,451.57Yuan on the purchasing date. Dalian Bingshan Group Engineering Co., Ltd absorbedDalian 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 929,148,000.00 Yuan. After thetransaction, Sonyo Compressor (Dalian)Co.,Ltd became a subsidiary. This transaction is a businesscombination not under same control, cost of combination is the FV of previous shareholdings on

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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 1,548,580,000Yuan intotal. Goodwill of 240,922,872.80 Yuan is recognized for the difference between the share of FV ofnet identifiable asset of acquiree, 1,307,657,127.20Yuan 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 SonyoRefrigeration System (Dalian) Co., Ltd from Panasonic Appliances cold Chain (Dalian)Co.Ltd. Thenegotiated share transfer consideration of 81,735,060.00 Yuan. After the transaction, SonyoCompressor (Dalian)Co.,Ltd became a subsidiary. This transaction is a business combination notunder same control, cost of combination is the FV of previous shareholdings on acquisition date plus55% shareholdings acquisition consideration, which is 111,456,900.00Yuan in total. Goodwill of5,671,836.12 Yuan is recognized for the difference between the share of FV of net identifiable assetof acquire, 105,785,063.87Yuan 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 notunder same control, cost of combination is the consideration of 145,285,500.00 Yuan for sharetransfer. Goodwill of 38,056,663.52Yuan is recognized for the difference between the share of FV ofnet identifiable asset of acquire. 107,228,836.48Yuan and cost of combination on acquisition date.

The book value of goodwill from business combination shall be allocated into the relevant assetgroup using the reasonable method since acquisition date, and be tested for impairment on relatedasset groups containing goodwill by professional appraisal companies or use evaluation models topredict the recoverable amount of related asset groups containing goodwill in accordance with thepresent 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 hasbeen found when the recoverable amount of asset group for testing is higher than its book value.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

IncreaseAmortization

Other

Closing

3,048,061.06

Employee’s dormitory use

1,458,257.10

- 138,478.35 - 1,319,778.75

374,000.00

Renovation and rebuilding142,091.33

Amortization of instruments315,236.61

8,675.50

43,362.83 11,621.76 - 40,416.57Total5,346,321.602,217,622.14

1,844,340.48

-

5,719,603.26

21. Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets without offsetting

Item

445,951,688.75 81,048,834.24

impairment of

134,581,459.3

153,519,850.70 23,185,410.37

54,071,935.80

8,110,790.37

16,775,734.14 2,516,360.1217,125,319.07 2,568,797.86

13,034,503.

1,955,175.52

13,034,503.47 1,955,175.52

12,912,057.50 3,228,014.38

11,170,890.18 2,792,722.55

12,244,929.32

1,836,739.40

Lease liability

52,799,814.74 8,006,670.79

Deductible loss

Provision2,301,229.56

378,294.47

4,544,802.83 714,830.47

Safety cost

1,138,175.07 170,726.26

Total

699,634,816.56

748,076,237.28 127,761,846.91

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

temporary

liabilities

temporary

liabilities

business combinationasst not under same

216,909,045.47

32,536,356.82

253,978,835.91 38,096,825.39

non-current financial

- - 151,430,911.13 22,714,636.67

40,073,339.62

6,011,000.94

8,262,320.31

(3) Net deferred tax asset or liability

Item

Offset amount at

the year-end

Closing balance of

net of DTA/DTL

Offsetamount at the

beginning of

Opening balance ofnet of DTA/DTL

14,112,987.38 113,648,859.53

13,285,391.56

14,112,987.38 60,811,462.07

(4) Unrecognized deferred tax assets details

26,601,881.56Item

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

-

-

-

-

-

-

-

-

-

-

22. Other non-current asset

Category

Book value Provision

Carrying

Book value Provision

Carrying

Debtoffsethousing

21,770,721.00 1,609,486.12 20,161,234.88 21,770,721.00 1,527,371.56

20,243,349.44

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

Monetary fund40,157,949.96

40,157,949.96

Frozen

Guaranteedeposit/ frozen

8,555,115.03

8,555,115.03

129,115,879.46 129,115,879.46

89,706,820.32

58,150,963.78

8,266,573.44

5,120,297.71

38,955,728.90

31,214,402.83

(continued)Item

Monetary fund110,277,531.37 110,277,531.37Frozen

Guaranteedeposit/ frozen

4,939,655.20 4,939,655.20

99,078,000.87 99,078,000.87

89,720,897.99 60,540,912.88

8,266,573.44 5,421,865.27

38,955,728.90 32,097,825.31

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

149,334,095.56

256,686,746.70

2,976,345.47

2,624,692.21

678,109.37

-

167,283,407.26

262,287,784.38

25. Notes payable

26. Accounts payable

Material payments 860,628,492.89

931,983,444.51Project payments 696,387,654.58

675,076,736.92Equipment payments 38,362,719.82

43,234,911.60Others 6,002,923.51

5,540,269.98

27. Other accounts payable

27.1 Dividend payable

Item Closing balance Opening balanceOrdinary share dividend 533,156.00 533,156.00Total533,156.00 533,156.00

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

Supplier platform

179,737,197.47Cash pledge and security deposit

14,448,796.02

17,093,300.41

24,617,613.80Payable

22,407,941.90Agency fees

5,317,884.69Repair

4,676,404.47Trade mark and royalty

2,531,401.13Others

24,533,756.69

28. Contract liability

(1) Contract liability

Received in advance due from unrealized revenue 645,711,808.53 787,685,294.53

29. Employee’s payable

(1) Category of employee’s payable

Item

Opening

Increase Decrease Closing balanceShort-term employee’spayable

149,352,510.11 675,208,893.85

678,023,805.11

146,537,598.85

Post-employment benefit–defined contribution

11,203.35 73,583,788.19

73,397,894.37

197,097.17

Termination benefits133,400.00 6,774,379.53

6,907,779.53

-

149,497,113.46 755,567,061.57

758,329,479.01

146,734,696.02

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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

Item

Opening

Increase Decrease Closing balanceSalaries, bonus,

136,231,457.30 532,862,205.86

534,488,750.79

134,604,912.37

Include: Medical

6,654.11 37,078,780.28

36,986,878.18

98,556.21

Supplemental

- 40,806.58

40,806.58

-

On-duty injuryinsurance

271.58

4,853,413.97

4,840,989.39

12,696.16

Labor union and training

4,008,680.40 10,910,703.80

11,299,956.60

3,619,427.60

Reward bonus and welfare

8,927,290.74 -

818,084.06

8,109,206.68

(3) Defined contribution plan

Item

Opening

Increase Decrease

Closing

Pension

10,863.8471,341,405.46

71,161,150.30

191,119.00

339.51 2,242,382.73

2,236,744.07

5,978.17

11,203.35 73,583,788.19

73,397,894.37

197,097.17

30. Tax payable

Item

Enterprise income tax

Value-added tax

Real estate tax

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

City maintenance and construction tax

Education surcharge

River toll fee

31. Non-current liabilities due within one year

32. Other current liabilities

33. Long-term borrowing

(1) Category of long-term borrowing

Note 1: Pledged loan of 0.6 billion Yuan is for business combination in 2022, whichcomprises

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.,Ltdand 37.5% shareholdings of Sonyo Refrigeration System (Dalian) Co., Ltd. were pledged. ChinaConstruction Bank Corporation will complete the guarantee in February 2023. 0.3 billion Yuanfrom Dalian Branch of Bank of Communications Co.,Ltd., 7 years with 2.75% borrowing rate.

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 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 SonyoRefrigeration System (Dalian) Co., Ltd. were pledged. Dalian Branch of Bank ofCommunications Co.,Ltd will complete the guarantee in February 2023. In 2025, 50 millionYuan loan is planned to pay back to Construction bank and 46 million Yuan loan toCommunications bank.

Note 2: Pledged loan includes a new loan of 87 million Yuan in 2023 for acquisition ofSonyo Refrigeration (Dalian) Co., Ltd. held by Panasonic Corporation of China Co., LTD andSanyo Electric (China)Co.,Ltd. The loan is expired by 7 years with 2.75% borrowing rate. Up toDecember 31, 2024, the closing balance is 74million Yuan and will be repaid 13 million Yuanin 2025.Note 3: In year 2016, the Development Fund from China Development Bank gave supportto the Company’s intelligent and green equipment of cold chain and service industry baseproject and provided special fund to the Company’s holding shareholder, Bingshan Group. Thefund is160 million Yuan with 10year’s expiration at 1.2% rate. Once the fund arrived, BingshanGroup gave it to the Company at the same rate of 1.2% in lump sum. The above fund needed tobe warranted by the Company. The guarantee seems to be given for the holding shareholder, butit is for the Company itself in fact. Up to December 31, 2024, the closing balance is 70 millionYuan and will be repaid 30 million Yuan in 2025.

34. Lease obligation

(1) Details of lease obligation

35. Long term accounts payable

BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTDNotes to financial statementsJanuary 1, 2024 to December 31, 2024

(The currency is in RMB Yuan except otherwise indicated)(English translation for reference only)

35.1Category by nature

36. Provision

37. Deferred income

(1) Category of deferred income