Table of Contents

Question 1........................................................................ pp. 1-20

Q2 ..................................................................... pp. 20-26

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Explanation of financial matters related to the implementation letter of the opinions of the audit center on the issuance of convertible corporate bonds by Jiangsu Huachen Transformer Co., Ltd. to unspecified objects

Tianjian Letter [2025] No. 42

Shanghai Stock Exchange:

The

"Implementation Letter of the Review Center on the Issuance of Convertible Corporate Bonds by Jiangsu Huachen Transformer Co., Ltd. to Unspecified Objects" (SSE Shangshen (Refinancing) [2025] No. 16, hereinafter referred to as the "Opinions Implementation Letter" transferred by Yongxing Securities Co., Ltd. was reported. We have prudently verified the financial matters of Jiangsu Huachen Transformer Co., Ltd. (hereinafter referred to as Jiangsu Huachen Company or the Company) mentioned in the implementation letter, and hereby report as follows.

Question one

The issuer is requested to further explain the main customers, amounts, overdue age, and reasons for overdue accounts receivable in combination with the payment settlement policy, and whether there is a risk of payment collection, whether there is a need to make a separate provision for bad debts, and whether the provision for bad debts of relevant accounts is sufficient.

Ask the sponsor and the reporting accountant to check and give a clear opinion.

1. Further combined with the payment settlement policy, explain the main customers, amount, overdue age, overdue reasons of overdue accounts receivable, and explain whether there is a risk of payment collection in combination with the credit status of the main receivable objects

(1) The company's payment settlement policy and actual implementation

During the reporting period, the company agreed on different payment settlement policies for different customers when signing contracts according to factors such as customer cooperation, order scale, customer commercial credit and settlement needs, negotiation between the two parties and industry characteristics, and based on the company's management system for accounts receivable.

Affected by the characteristics of the industry, the company has inconsistencies between the actual collection time and the settlement time agreed in the contract in the actual contract execution, mainly because the company's main customers are large state-owned enterprises

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and large-scale power facility construction units or contractors, such customers are affected by factors such as budget management or internal fund payment arrangements, and there are many fund payment approval links and a long settlement cycle; On the other hand, the company's products are mainly used for power engineering projects, and the return of funds from construction customers or distribution customers mainly depends on the progress of the project and the payment efficiency of the end owner, so the actual payment cycle is longer.

Based on the above-mentioned industry characteristics, it is a common situation in the industry that there are long-aged accounts receivable in the power transmission and distribution and control equipment industry, and the proportion of long-aged accounts receivable of the company is generally lower than the average of comparable listed companies. The details are as follows:

As of June 30, 2024, the aging ratio of accounts receivable between the company and companies in the same industry is as follows:

7-2-2-2 aging

Account age: less than 1 year, 1-2 years, 2-3 years, 3-4 years, 4-5 years, more than 5 years, of which more than 2 years, the total age of Telide 66.92%, 17.03%, 7.57%, 3.28%, 2.23%, 2.96%, 16.04%, Jinpan Technology, 82.30%, 12.63%, 2.87%, 1.07%, 0.29%, 0.83%, 5.06%, Kelin Electric68.34%, 14.93%, 8.16%, 4.21%, 1.21%, 3.16%, 16.74% Shun Na shares: 72.76%, 8.24%, 4.51%, 2.75%, 1.44%, 10.30%, 19.00%, average: 72.58%, 13.21%, 5.78%, 2.83%, 1.29%, 4.31%, 14.21%, the company: 82.18%, 11.26%, 3.88%, 1.43%, 0.71%, 0.54%, 6.56%.

As can be seen from the above table, except for Jinpan Technology and the company, the accounts receivable of other companies with an age of more than 2 years account for more than 15%, and long-aged accounts receivable are a common situation. As of June 30, 2024, the proportion of aged accounts receivable within 1 year and 2 years was 82.18% and 93.44% respectively, both higher than the average of 72.58% and 85.79% of comparable listed companies in the same industry. The company's management of accounts receivable is generally better than the average of comparable listed companies in the same industry.

(2) Explain the main customers, amounts, overdue aging, and overdue reasons for overdue accounts receivable, and explain whether there is a risk of repayment in combination with the credit status of the main receivables

1. The overall situation of the company's accounts receivable overdue

At the end of each period of the reporting period, the overall situation of the company's overdue accounts receivable is as follows:

Unit: 10,000 yuan

TimeClosing balanceOverdue amountOverdue accounts receivable after the periodOverdue within 12 monthsOverdue for more than 12 monthsOverdue for more than 12 monthsProportion of accounts receivableProportion of receivableProportion of collection amount2024.06.3088,869.0037,022.838,829.199.94%22,441.3048.94%2023.12.3188,130.4919,948.167,640.838.67% 17,957.1065.09%

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Time

Time: Balance at the end of the period, overdue amount, overdue accounts receivable, overdue after the period, overdue within 12 months, overdue for more than 12 months, proportion of accounts receivable, proportion of receivables, 2022.12.3156,148.0718,805.976,290.3311.20%21,537.3685.82%2021.12.3141,301.3515,890.613,734.149.04% 17,420.3288.77%

Note: The amount of overdue accounts receivable after the period is counted until January 17, 2025, the same below

As can be seen from the above table, at the end of the reporting period, the proportion of overdue accounts receivable after the company's overdue accounts receivable to overdue accounts receivable was 88.77%, 85.82%, 65.09% and 48.94% respectively, which was relatively high overall, and the proportion of accounts receivable balance overdue for more than 12 months at the end of each reporting period was only respectively

9.04%, 11.20%, 8.67% and 9.94%, with a lower proportion of the overdue amount to the closing balance of accounts receivable.

2. The company's overdue accounts receivable main customers, amount, overdue aging and overdue reasons

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(1) As of June 30, 2024, the company's top ten overdue accounts receivable specific units: 10,000 yuan, %

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Serial numberCustomer nameThe main terms of the settlement agreed in the contractThe proportion of the overdue amount in the total overdue amountThe proportion of the overdue age, the bad debt preparation, the customer credit situation, the reason for the overdue, the proportion of the payment after the period, the proportion of the payment within 1 year, and the proportion of the accrual method: 10% of the advance payment of Xiamen Kehua Digital Energy Technology Co., Ltd., 40% on the 60th day of the goods, 40% on the 180th day of the goods, and 10% of the warranty 3,268.147.133,268.14-5.00 The holding subsidiary of Kehua Data (002335), a A-share listed company, is currently operating normally, and the customer has disagreements due to some product issues after the confirmation of receipt, and the payment has been delayed due to a long communication time, and the two parties have reached an agreement as of November 2024, and the payment will be collected from the same month. 54.502 State Grid Zhilian E-commerce Co., Ltd. usually pays the full amount 15 days to 3 months after confirming the receipt and completing the approval process (different credit policies are determined according to different demand subjects) 2,561.625.591,580.21981.406.59 The combination of a wholly-owned subsidiary of the State Grid of a large state-owned enterprise is currently operating normally The procurement platform of the tertiary production company under the State Grid is currently operating normally, and the company is overdue due to the long internal fund payment process of the State Grid. 73.093 China Petroleum & Chemical Corporation Material and Equipment Department arrived and provided 10% of the quality guarantee within 45 working days after the full payment of 2,544.715.552,544.71-5.00 The combination of Sinopec (600028) Branch, a state-owned listed company, is currently operating normally, and the customer payment approval process is long and the payment rhythm is slow, resulting in its overdue debt to the company. 100.004 Xuzhou Zhonghe Electrical Equipment Sales Co., Ltd. signed a contract to pay 10% in advance as a production deposit, 30% of the total contract price within 30 days of the arrival of the goods on site, 30% of the total contract price in February 2024, 20% of the total contract price before the end of 2024, 10% of the warranty in 2,353.595.132,353.59-5.00 Combination of accrual was established in 2012, mainly engaged in the sales of power equipment and other private enterprises, At present, the customer's purchase of the company's products is mainly used for the government projects of downstream customers, and the terminal payment was not received in time due to the progress of the project audit, resulting in its overdue arrears to the company. 25.49

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Serial number: customer name, the main terms of settlement agreed in the contract, the proportion of the overdue amount to the total amount overdue, the overdue age, the provision for bad debts, the customer's credit status, the reason for the overdue, the proportion of the payment after the period, the proportion of the accrual within 1 year, the proportion of the accrual method: to be paid before the end of June 2025; 10% of the contract is signed in advance as a production deposit, 30% of the total contract price is paid within 30 days of the arrival of the goods on site, 30% of the total contract price is paid in August 2024, 20% of the total contract price is paid before the end of 2024, and 10% of the warranty is paid before the end of June 2025 5 Shenzhen Crestec New Energy Co., Ltd. 10% of the advance payment, 40% of the arrival payment, 40% of the acceptance payment, and 10% of the warranty money; 20% advance payment, 70% payment on arrival, 10% warranty money1,918.614.181,918.61-6.49 The holding subsidiary of Keshida (002518), a A-share listed company, is currently operating normally, and is affected by the customer's internal fund payment arrangement, resulting in failure to pay the company in time. 47.486 After the goods arrive at the site, Party A will issue an invoice for the full amount, and the monthly settlement will be 90 days from the date of issuance of the invoice; Arrival payment: the buyer pays 50% of the total contract price from the date of receipt of the goods and invoices 60 days, acceptance payment: the buyer pays 40% of the total contract price from the date of receipt of the goods and invoices 120 days, and the warranty money: the warranty money is 1,809.853.951,809.85-6.01 002184 of the total contract price. 36.39

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Serial numberCustomer nameThe main terms of the settlement agreed in the contractThe proportion of the overdue amount in the total amount of overdueOverdue aging bad debt preparationCustomer credit situationOverdue reasonThe proportion of payment after the period of 1 year and more than 1 year Proportional accrual method10%, the buyer pays off in a lump sum within 7 days after the expiration of the warranty period7Wuhan Huachen Haobang Electric Co., Ltd. pays off the full amount within two months after the arrival of the goods1,395.973.041,395.97-5.00Combination of accrualPrivate power equipment dealers established in 2019, Long-term cooperation with the company, currently operating normally, the customer's downstream customers are mainly local power supply companies, and its downstream customers are slow to pay, resulting in overdue arrears to the company. 54.358 Inner Mongolia Xinhua Semiconductor Technology Co., Ltd. seller delivers goods to the buyer, and at the same time submits the full amount of VAT invoice, within 30 days after the payment of the full amount of the order price, pay 40% of the total price of the order, 50% of the total price of the order within 2 weeks after the issuance of the acceptance certificate, 10% of the total price of the order as a product quality deposit; The seller issues a 10% bank guarantee, the buyer pays 10% advance payment within 15 days after receipt, the seller delivers the goods to the buyer, the seller issues a 100% invoice, pays 40% after the buyer's audit is correct, pays 40% after the installation and commissioning is qualified, and pays the remaining 10% as a warranty within 2 years 1,303.022.841,303.02-5.00 The customer's registered capital is 1.8 billion yuan. The direct or indirect major shareholders of the parent company include state-owned funds such as GCL Photovoltaic Power Technology Holdings Co., Ltd. and National Integrated Circuit Industry Investment Fund Co., Ltd., and the company is currently operating normally. 0.679 Chongqing Kangtie Trading Co., Ltd. prepaid, delivery 20%, 30% on arrival, 40% for acceptance, 10% of the warranty money for 5 months 1,268.272.771,268.27-5.00 The combination of the customer's current business is normal, and the company's purchase of goods is mainly for the customer's downstream customer, and the payment of PowerChina is slow, and it did not receive the terminal 39.42 in time

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7-2-2-7 serial number

Serial number, customer name, the main terms of the settlement agreed in the contract, the proportion of the overdue amount to the total amount overdue, the overdue age, the provision for bad debts, the customer's credit situation, the reason for the overdue, the proportion of the payment after the period, the proportion of the accrual within 1 year, the proportion of the accrual method, the payment to PowerChina, the end customer credit is good, the customer payment, resulting in the delay in payment to the company. 10. Zhuzhou CRRC Times Electric Co., Ltd. 60% of the arrival payment, 30% of the acceptance payment, and 10% of the warranty money; 30% advance payment, 30% arrival payment, 30% acceptance payment, 10% warranty money; 30% advance payment, 30% arrival payment, 35% acceptance payment, 5% warranty money; 90% of the payment on arrival, 10% of the warranty1,133.412.471,133.41-5.00 The combination of state-owned listed company Times Electric (688187), which is currently operating normally, the payment approval process of state-owned enterprises is longer, and the payment rhythm is slow, resulting in delays. 22.06 Total 19,557.1942.6518,575.79981.405.4050.54

Note: 1. The customers in the above table are based on a single company as the statistical caliber, the same below

2. State Grid Zhilian E-commerce Co., Ltd., as a procurement service provider and settlement platform for tertiary production companies under the State Grid in various cities, the company conducts procurement according to the needs of various companies under the State Grid, and the credit policy agreed between the company is different due to the different demand subjects, the same below

3. The company and some customers use a single negotiation method to determine the payment settlement policy, so some of the customers listed in the above table have a variety of settlement policies, this table only lists the main payment settlement policies, the same below

4. Accounts receivable data as of June 30, 2024 is unaudited

(2) The specific situation of the company's top 10 overdue accounts receivable as of December 31, 2023

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Unit: 10,000 yuan, %

7-2-2-8 serial number

Serial number, customer name, the main terms of the settlement agreed in the contract, the proportion of the overdue amount in the total amount overdue, the overdue age, the provision for bad debts, the customer's credit status, the reason for the overdue, the proportion of the payment after the period, within 1 year, the proportion of more than 1 year, the proportion of the accrual, the method of withdrawing 1, State Grid Zhilian E-commerce Co., Ltd. usually confirms the receipt and completes the approval process, and pays the full amount within 15 days to 3 months (different credit policies are determined according to different demand subjects)2, 078.997.542,041.6337.366.23 The combination of a wholly-owned subsidiary of the State Grid of a large state-owned enterprise, currently operating the procurement platform of the three production companies under the State Grid, due to the long payment process of the internal funds of the State Grid, resulting in its overdue to the company. 100.002 Wuhan Huachen Haobang Electric Co., Ltd. paid off the full amount within two months after the arrival of the goods 1,140.264.131,140.26-5.00 The combination of private power equipment dealers established in 2019 has long-term cooperation with the company, and the current operation is normal. 100.003 Weidianyun New Energy (Shanghai) Co., Ltd. paid in full within three months of delivery; Arrange delivery after the full amount of advance payment is received; The full amount of 1,072.133.891,072.13-6.50 was paid within two months of the arrival of the goods, and the private power equipment dealers established in 2016 are currently operating normally due to the market environment, and the customer's downstream customers are under greater financial pressure, resulting in their tight funds and failure to pay the company in time. 43.334 Xuzhou Yurun Electric Co., Ltd. prepaid 30% for the production deposit, 30% of the total contract price within two months of the arrival of the goods at the site, 30% of the total price within one month of passing the power acceptance or 90 days after the arrival of the goods at the site (whichever comes first), the remaining 10% as a warranty, 12 months after the final acceptance, no quality problems of the equipment, Party B paid 10% of the balance within 7 days 1,043.293.78-1,043.2930.00 combination of accrual was established in 2006 private power installation companyAt present, the customer's downstream customers are slow to pay, resulting in greater financial pressure on the company. 100.00

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7-2-2-9 serial number

Serial number, customer name, the main terms of the contract settlement, the proportion of the overdue amount to the total amount of overdue, the proportion of overdue age, bad debt preparation, customer credit situation, the reason for overdue, the proportion of payment after the period, within 1 year More than 1 year of the proportion of accrual, accrual method 5, Jiangsu Dongyu Electric Power Engineering Co., Ltd. prepay 30% for the production deposit, all the equipment arrived at the site within one month, Party A to Party B to pay 60% of the total contract price of the equipment, The project commissioning is completed and delivered, and the experience is qualified or the goods arrive at the site within 70 days (whichever comes first) to pay 90% of the total contract price, and the remaining 10% is the warranty 1,018.003.69516.79501.2110.00 The combination of the private power engineering company established in 2019 was included in the list of executors in January 2025, involving a total amount of 21.965 million yuan, and the projects undertaken by the customer are mainly government engineering projects. Affected by the slow speed of government audit, the overall payment collection speed of the customer is slow, and the financial pressure is greater, resulting in overdue payment for the company. As of the date of signing the reply to the implementation letter of this opinion, the parent company of the customer has paid the arrears of 5 million yuan on its behalf, and after comprehensive evaluation by the company's management, the remaining 3.18 million yuan has been fully provided for bad debts. 19.656 Pinggao Group Energy Storage Technology Co., Ltd. 10% advance payment, 60% delivery payment, 25% acceptance payment, 5% settlement payment; 10% advance payment, 50% payment on arrival, 35% inspection payment, 5% warranty money; The payment ratio of advance payment, arrival payment, acceptance payment, operation payment and warranty money is as follows: 10%: 60%: 10%: 10%: 10%; 973.313.53973.31-10.00 A wholly-owned subsidiary of China Electric Equipment Group Co., Ltd., a large state-owned enterprise, is currently operating normally, and the customer has disagreements due to some product problems after the confirmation of receipt, and the payment has been delayed due to a long communication time, as of October 2024, the two parties have reached an agreement, and the customer plans to arrange payment from February 2025. -

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7-2-2-10 serial number

Serial numberCustomer nameThe main terms of the settlement agreed in the contractThe proportion of the overdue amount in the total overdue amountThe proportion of overdue accounts for bad debtsCustomer credit situationThe reason for the overdue periodThe proportion of the payment after the period is less than 1 year The proportion of the accrual is more than 1 yearThe accrual method: advance payment, arrival payment, operation payment, warranty money: 10%, 30%, 50%, 10%7Kehua Data Co., Ltd. advance payment 10%, 40% on 60 days of delivery, 40% on 180 days of delivery, 10% warranty 810.572.94810.57-5.73 Kehua Data (002335), an A-share listed company, is currently operating normally due to the impact of customer fund payment arrangements, etc., and has not paid to the company as agreed. 100.008 Subei Mongolian Autonomous County Tengda Wind Power Co., Ltd. 10% advance payment, 50% acceptance payment, 30% operation qualified payment, 10% warranty money; 30% on 60 days of delivery, 30% for acceptance, 30% for operation, 10% for warranty 716.002.60716.00-7.86 The combination of a wholly-owned subsidiary of Three Gorges Energy (600905), a large state-owned A-share listed company, is currently operating normally, and the payment approval process of state-owned enterprises is long, resulting in its overdue payment to the company, and it is expected to start payment from February 2025. 20.329 China Petroleum & Chemical Corporation Material and Equipment Department arrived and provided 10% of the quality guarantee within 45 working days after the full payment of 657.892.38657.89-5.00 The combination of state-owned listed company Sinopec (600028) Branch's customer payment approval process is long, and the payment rhythm is slow, resulting in its overdue debt to the company. 100.0010 Wuhan Huachen Dingfeng Electric Co., Ltd. paid off the full amount within two months after the arrival of the goods 605.972.20605.97-5.00 The combination of private power equipment dealers established in 2012 has long-term cooperation with the company, and the current operation is normal The downstream customers of the customer are mainly local power supply companies, and the downstream customers are slow to pay, resulting in their overdue arrears to the company. 100.00 Total 10,116.4036.678,534.541,581.868.0470.65

(3) The details of the company's top ten overdue accounts receivable as of December 31, 2022

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Unit: 10,000 yuan, %

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Serial number, customer name, the main terms of the settlement agreed in the contract, the proportion of the overdue amount in the total amount overdue, the overdue age (10,000 yuan), the provision of bad debts, the customer's credit situation, the reason for the overdue, the proportion of the payment after the period of 1 year, within 1 year, the proportion of the accrual method: 1, State Grid Zhilian E-commerce Co., Ltd. usually confirms the receipt and completes the approval process, and pays the full amount within 15 days to 3 months (different credit policies are determined according to different demand subjects)1, 506.026.001, 506.02-5.00 The combination of a wholly-owned subsidiary of the State Grid of the State Grid, a large state-owned enterprise, is currently operating normally on the procurement platform of the tertiary production company under the State Grid, due to the long internal fund payment process of the State Grid, resulting in its overdue to the company. 100.002 Wuhan Huachen Haobang Electric Co., Ltd. paid off the full amount within two months after the arrival of the goods 1,247.184.971,247.18-5.00 The combination of private power equipment dealers established in 2019 has long-term cooperation with the company, and the customer's downstream customers are mainly local power supply companies, and their downstream customers are slow to pay, resulting in overdue arrears to the company. 100.003 Xuzhou Yurun Electric Co., Ltd. prepay 30% for the production deposit, 30% of the total contract price within two months of the arrival of the goods at the site, 30% of the total price within one month of passing the power acceptance or within 90 days of the arrival of the goods at the site (whichever comes first), the remaining 10% as the quality guarantee, 12 months after the final acceptance, the equipment has no quality problems, Party B pays 10% of the balance within 7 days 1, 143.294.56176.72966.5810.00 Combination of accrual was established in 2006 of the private power installation company, the current operation is normal, the customer's downstream customers pay slowly, resulting in greater financial pressure on the company overdue. 100.004 Weidianyun New Energy (Shanghai) Co., Ltd. paid the full amount within three months after the arrival of the goods; Arrange delivery after the full amount of advance payment is received; The full amount of 865.993.45865.99-5.35 was paid within two months of the arrival of the goods, and the private power equipment dealers established in 2016 are currently operating normally due to the market environment, and the customer's downstream customers are under greater financial pressure, resulting in their tight funds and failure to pay the company in a timely manner. 100.00

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7-2-2-12 serial number

Serial number: customer name, the main terms of settlement agreed in the contract, the proportion of the overdue amount to the total amount overdue, the overdue age (10,000 yuan), the provision for bad debts, the customer's credit status, the reason for overdue, the proportion of payment after the period, and the proportion of payment after the period of less than 1 year Proportional accrual method 5 Wuhan Huachen Dingfeng Electric Co., Ltd. within two months after the arrival of the goods to pay off the full amount of 767.653.06767.65-5.00 combination of accrual was established in 2012 of the private power equipment dealers, long-term cooperation with the company, the current normal operation of the customer's downstream customers are mainly local power supply companies, and its downstream customers pay slowly, resulting in its overdue debt to the company. 100.006 Zhejiang Dayou Industrial Co., Ltd. project acceptance and operation within 2 months after the full payment of 617.502.46617.50-5.22 combination of large state-owned enterprises State Grid wholly-owned subsidiary, currently operating normal State Grid Zhejiang tertiary production company, the internal payment approval process is longer, the payment rhythm is slow. 100.007 State Grid E-commerce Technology Co., Ltd. usually pays the full amount for 3 months after confirming the receipt of the receipt and completing the approval process (different credit policies are determined according to different demand subjects) 579.412.31177.21402.209.97 The combination of a wholly-owned subsidiary of the State Grid of a large state-owned enterprise is currently operating normally The procurement platform of the tertiary production company under the State Grid is currently operating normally, and the internal fund payment process of the State Grid is long, resulting in its overdue to the company. 96.708 Sichuan Jingkai Guangda Construction Engineering Co., Ltd. will pay 80% within 60 days of the arrival of the goods at the site, and pay 97% within 120 days of the acceptance of the product or the arrival of the goods at the site (whichever comes first), and the remaining 3% As a guarantee gold, it will be calculated in 2 years after the operation of the power supply to pay off 558.252.2298.76459.5010.00 The combination of accrual was established in 2017 A private engineering company established in 2017, it was applied for compulsory enforcement by Jiangsu Huachen in September 2024. After a comprehensive assessment, the company's management has planned to make a provision for bad debts according to about 70% of it in 2024. 35.839 Huanan Longyuan delivery payment 70%, acceptance payment 494.241.97494.24-8.61 Combination of state-owned A-share listed public photovoltaic power station subject to project inspection 39.02

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7-2-2-13 serial number

Serial number, customer name, the main terms of the settlement agreed in the contract, the proportion of the overdue amount in the total amount of overdue, the overdue age (10,000 yuan), the provision of bad debts, the customer's credit situation, the reason for the overdue, the proportion of the payment after the period, within 1 year, more than 1 year, the proportion of the accrual, the new energy Co., Ltd. 25%, the warranty is 5%, the warranty period is three years, the warranty period is one year after the expiration of the quality guarantee letter of 2 years, the wholly-owned subsidiary of Silongyuan Power (001289), the current normal operation is affected by the progress of the collection, and the customer delays payment to the company. 10 Jiangsu Xugang Iron and Steel Group Co., Ltd. prepay 30%, pay 30% before delivery, within three months after the goods arrive at the site acceptance of the buyer with the full VAT invoice to pay to 95%, the remaining 5% of the warranty, the warranty period of 24 months without quality problems within 10 days to pay off 481.301.92481.30-5.00 combination of accrual was established in 2003 private iron and steel company, the current operation is normal, the customer is affected by the steel industry and faces certain financial pressure, resulting in payment delay. 100.00 Total 8,260.8432.926,432.571,828.276.2591.78

Note: State Grid E-commerce Technology Co., Ltd. as a procurement service provider and settlement platform for the three production companies under the State Grid in various cities, the company recruits according to the needs of various companies under the State Grid, and the credit policy agreed between the company is different due to the different demand subjects, the same below

(4) The specific situation of the company's top 10 overdue accounts receivable as of December 31, 2021

Unit: 10,000 yuan, %

Serial numberCustomer nameThe main terms of the settlement agreed in the contractThe overdue amount accounts for the proportion of the total overdue amount, the overdue aging bad debt preparation, the customer's credit situation, the reason for the overdue, the proportion of the payment after the period, within 1 year, the proportion of the accrual Method 1, Xuzhou Yurun Electric Co., Ltd., prepay 30% for the production deposit, pay 30% of the total contract price within two months of the arrival of the goods at the site, and pass the power acceptance within one month or 1, 064.445.421,064.44-5.00 Combination of accrual of a private power installation company established in 2006, the current operation is normal, the customer's downstream customers are slow to pay, resulting in greater financial pressure on the company. 100.00

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7-2-2-14 serial number

Serial numberCustomer nameThe main terms of the settlement agreed in the contractThe overdue amount accounts for the proportion of the total overdue amount, the overdue aging bad debt preparation, the customer credit situation, the reason for the overdue period, the proportion of the payment after the period, within 1 year, the proportion of the accrual, the method of goods to the site within 90 days to pay 30% of the total price (whichever comes first), the remaining 10% as the warranty, after 12 months of final acceptance, the equipment has no quality problems, Party B pays 10% within 7 days The balance of 2 Wuhan Huachen Dingfeng Electric Co., Ltd. within two months after the arrival of the full amount of 673.093.43673.09-5.00 combination of private power equipment dealers established in 2012, long-term cooperation with the company, the current normal operation of the customer's downstream customers are mainly local power supply companies, and its downstream customers pay slowly, resulting in its overdue arrears to the company. 100.003 State Grid E-commerce Technology Co., Ltd. usually pays the full amount 3 months after confirming the receipt of the completion of the approval process to the confirmation of the receipt of the approval process (according to the different demand subjects to determine different credit policies) 629.573.21629.57-5.00 The combination of large state-owned enterprises The wholly-owned subsidiary of the State Grid is currently operating the procurement platform of the tertiary production company under the State Grid, and the company is overdue due to the long internal capital payment process of the State Grid. 100.004 Sichuan Jingkai Guangda Construction Engineering Co., Ltd. will pay 80% within 60 days of the arrival of the goods at the site, 97% will be paid within 120 days of the acceptance of the product or the goods to the site (whichever comes first), and the remaining 3% will be paid in 2 years after the operation of the warranty 459.502.34459.50-5.00 The combination of accrual was established in 2017 A private engineering company that was established in September 2024 was applied for compulsory enforcement by Jiangsu Huachen and is in the process of implementation

The customer's purchase of the company's products is mainly used for the Winter Olympics project, and the slow progress of the owner's fund payment has led to the delay of the customer's payment, and the company's management has planned to make a single provision for it according to about 70% in 2024 after a comprehensive assessment

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7-2-2-15 serial number

Serial number: customer name, the main terms of settlement agreed in the contract, the proportion of the overdue amount to the total amount overdue, the overdue age, the provision for bad debts, the customer's credit status, the reason for the overdue, the proportion of the payment after the period, the proportion of the accrual within 1 year, the proportion of the accrual, the method of account provision. 5. Jinglan Muhe Water-saving Equipment Co., Ltd. Party A prepays 20% of the total amount of the contract as a deposit, and delivers and pays in batches, and pays 70% of the payment for the batch of materials after passing the acceptance of each batch of goods and receiving the full invoice, and Party A retains 10% of the warranty. The warranty period is interest-free payment 349.351.78137.44211.91100.00 after one year of acceptance by the owner. The company has made a provision for bad debts in full. -6D Dianyun New Energy (Shanghai) Co., Ltd. paid the full amount within three months after the goods arrived; Arrange delivery after the full amount of advance payment is received; The full amount of 336.531.71336.53-5.00 was paid within two months of the arrival of the goods, and the combination of accrual was established in 2016 as a private power equipment dealer, which is currently operating normally due to the market environment, and the customer's downstream customers are under greater financial pressure, resulting in a shortage of funds and failure to pay the company in time. 100.007 Qingdao Teruide Electric Co., Ltd. prepaid 20%, cash on delivery 60%, 15% after power transmission acceptance, the remaining 5% warranty paid off after one year prepaid 10% production, 30% within 30 days of delivery, 95% within 90 days of delivery, the remaining 5% warranty, paid 312.331.59312.33-10.00 after one year of the combination of A-share listed companies (300001), normal operation of the customer's own payment arrangements resulting in deferred payment. 100.008 Inner Mongolia Jingtai Power Generation Co., Ltd. prepaid 10% of production, 60% within 30 days of delivery, 20% within 30 days of acceptance, warranty 299.551.53299.55-5.00 Combination of A-share state-owned listed company Jingneng Power (600578) Holding State-owned enterprises The internal payment approval process is longer and the payment rhythm is slower, and more than 100.00

　　7-2-2-16

7-2-2-16 serial number

Serial number, customer name, the main terms of the contract, the main terms of the settlement, the overdue amount accounts for the proportion of the total amount overdue, the overdue age, the bad debt provision, the customer's credit situation, the reason for the overdue, the proportion of the payment after the period, the proportion of the accrual, the proportion of the accrual, the method of the division of the gold 10%, after one year, no quality problems, the subsidiary is paid within 30 days, and the current business is in normal period. 9. Guangxi Dinghang Electric Power Equipment Co., Ltd. pays the full amount after the arrival of the goods; 30% deposit in advance, pay off the full amount after the arrival of the ticket 292.861.49292.86-5.00 Combination provision was established in 2020 for private power equipment dealers, currently operating normally affected by the market environment, the customer's downstream customers are under greater financial pressure, resulting in their tight funds and failure to pay the company in time. 100.0010 Shenzhen Evergrande Material Equipment Co., Ltd

20% of the payment in advance, 60% after the goods are signed on site, 15% after the equipment installation is completed and accepted, and the remaining 5% of the warranty is paid after the expiration of the warranty period of 1 year

277.901.42277.90-50.00 A subsidiary of Evergrande Real Estate Group Co., Ltd. has been included in the list of dishonest judgment debtors Affected by the real estate industry, the company's shortage of funds has led to overdue payment, and the company has accrued bad debts according to 50% in 2021. 100.00 Total 4,695.1023.924,483.19211.9116.5187.03

To sum up, the company's top 10 overdue accounts receivable at the end of each period of the reporting period as of January 17, 2025 and the overall situation of bad debt accrual methods are as follows

Project2024.6.302023.12.312022.12.312021.12.31 The number of customers who have been fully repaid after the period (home)1678The number of customers who have not been fully repaid after the period (home)9432 of which: during the reporting period, the number of bad debt provisions made by the aging combination (home) 9320The company has adopted a single provision for bad debts (home) 0112 when determining the high recovery risk according to the comprehensive assessment

　　7-2-2-17

At the end of each period of the reporting period, the top 10 customers of the company's overdue accounts receivable were mainly state-owned enterprises, A-share listed companies or their subsidiaries or dealers with the company who have long-term cooperation with the company, and the end customers of such dealers were mainly state-owned enterprises. Therefore, the company's top 10 overdue accounts receivable customers except for individual customers, the overall risk of bad debts is small. According to the degree of recovery risk, the company makes a separate provision for bad debts according to the aging portfolio and individual accrual, and if the overdue accounts receivable are jointly confirmed by the company's sales center, financial center and legal department to have a high recovery risk, the company will make a separate provision for bad debts for such overdue payments; If it is judged that although it is overdue, the recovery risk is low, the company will compile a comparison table between the aging of accounts receivable and the expected credit loss rate of the entire duration with reference to the historical credit loss experience, combined with the current situation and the forecast of future economic conditions, and calculate the expected credit loss to accrue bad debts.

As can be seen from the above table, the overdue amount of the company's accounts receivable is mainly within 1 year, and at the end of each period of the reporting period, the accounts receivable amount of the top ten overdue accounts receivable customers overdue for less than 1 year accounts receivable accounted for the proportion of overdue respectively

95.49%, 77.87%, 84.36% and 94.98%. At the end of 2022, the top ten customers accounted for a relatively high proportion of overdue for more than 1 year, mainly due to the impact of public health events, which led to the slowdown in the project progress of downstream customers of some of the company's customers, and the delay in payment from their downstream customers to the company's customers, resulting in a long overdue debt from the company's customers to the company; At the end of 2023, the company's top ten overdue accounts receivable customers overdue for more than one year amounted to 15.8186 million yuan, accounting for 15.64%, mainly due to Xuzhou Yurun Electric Co., Ltd. overdue for more than one year The amount is 10.4329 million yuan, the company is affected by the acceptance of project construction by downstream customers, and the payment is affected by the shortage of funds, and then arrears to the company, the company has actively collected it, as of the date of signing the reply to the implementation letter of this opinion, the overdue arrears of the customer have been fully recovered, No bad debts were incurred. For overdue receivable customers, the company mainly adopts various methods such as tracking customer credit status and sending statements, actively communicating with both parties on disputes, increasing collection efforts, litigation and arbitration, etc., to recover overdue accounts receivable and control the risk of bad debts of the company's accounts receivable.

To sum up, the proportion of the company's accounts receivable overdue for a long time to the closing balance of accounts receivable is low, and the proportion of the company's post-period collection accounts for overdue accounts receivable is high. Except for individual enterprises, the company's main overdue accounts receivable customers have a small risk of bad debts and a higher possibility of collection.

2. Whether there is a need to make a separate provision for bad debts, and whether the provision for bad debts of relevant accounts is sufficient

The company comprehensively evaluates the credit status and operating conditions of relevant customers, the overdue time of accounts receivable and other factors, and makes a single provision for the receivables that need to be separately accrued.

For the provision for bad debts based on the aging portfolio, the Company calculates the expected credit loss ratio of the Company's aging portfolio through the migration rate method, and makes forward-looking adjustments, which have taken into account the current and future economic conditions

Page 18 of 26 7-2-2-18

forecasts, credit losses for different groups of customers and national economic policies, etc. The provision ratio for bad debts of the aging portfolio determined by the Company based on the forward-looking adjusted expected credit loss ratio and with reference to the provision of comparable listed companies in the same industry, and the provision ratio of the aging portfolio finally determined by the Company has reasonably and fully reflected the expected credit loss of the Company's accounts receivable.

(1) The expected credit loss rate measured by the migration rate method and the expected credit loss rate actually implemented by the companyThe company simulated and measured the expected credit loss rate of the company in the reporting period through the migration rate method and the expected credit loss rate currently implemented by the company is compared as follows

7-2-2-18 years old

Expected Credit Loss RateProspective Adjustment FactorProspectively Adjusted Theoretical Expected Credit Loss RateThe Company's Current Expected Credit Loss Ratio Within 1 Year0.07%10.00%0.08%5.00%1-2 Years0.36%10.00%0.39%10.00%2-3 Years1.20%10.00%1.32%30.00%3-4 Years5.49%10.00%6.03%50.00% 4-5 years: 15.84%, 10.00%, 17.42%, 80.00%, more than 5 years: 100.00%, 10.00%, 100.00%, 100.00%.

After adjusting for the expected loss ratio and forward-looking information, the theoretical expected credit loss ratio is lower than the company's actual bad debt provision ratio.

(2) The comparison between the proportion of accounts receivable of the company in the reporting period and that of comparable companies in the same industry

Age: Trui Deshun Sodium Co., Ltd., Kelin Electric, Jinpan Technology, Jiangsu Huachen, within 1 year5.00%2.00%5.00%5.00%5.00%1-2 years10.00%10.00%10.00%10.00%2-3 years30.00%20.00%20.00%30.00%3-4 years50.00%50.00%50.00%50.00%4-5 years70.00% 50.00% 80.00% 80.00% 80.00% More than 5 years 100.00% 90.00% 100.00% 100.00% 100.00%

There is no material difference between the expected credit loss ratio of the company's accounts receivable and that of comparable companies in the same industry. Therefore, the company's accounts receivable bad debt provision ratio is in line with the company's actual situation and prudent.

(3) At the end of each period of the reporting period, the actual provision for bad debts of the company's accounts receivable is compared with that of the same industry

At the end of each period of the reporting period, the proportion of the provision for bad debts of accounts receivable between the company and listed companies in the same industry to the balance of accounts receivable at the end of the period and the proportion of the amount of individual provisions to the balance of accounts receivable are as follows

　　7-2-2-19

7-2-2-19 company name

Company name: 2024.06.302023.12.312022.12.312021.12.31 Accrual Proportion: Individual Accrual Proportion: Single Accrual Accrual Proportion: Mono Accrual Proportion: Mono Accrual Accrual Proportion: Mono Accrual 13.52% 0.19% 13.19% 0.22% 12.34% 0.11% 11.66% 0.16% Cis-Na Shares 14.98% 1.16% 14.76% 1.19% 16.91%1.61%19.70%1.95%Kelin Electric14.09%3.09%13.46%3.03%15.47%4.48%12.45%2.18%Jinpan Technology8.24%1.57%8.38%1.88%8.79%1.68%10.95%3.63%Average12.71%1.50%12.45%1.58%13.38%1.97%13.69%1.98% Jiangsu Huachen 8.67%, 1.75%, 8.44%, 1.91%, 8.90%, 2.77%, 10.74%, 4.25%.

As can be seen from the above table, at the end of the reporting period, the proportion of the company's accounts receivable bad debt provision to the accounts receivable balance is not significantly different from that of Kinpan Technology, but it is lower than the average value of the bad debt provision of comparable companies in the same industry, mainly because the company's accounts receivable aging portfolio accounts receivable account for a low proportion of the accounts receivable balance, reflecting that the company's accounts receivable aging is better than the average level of comparable companies in the same industry; From the perspective of the proportion of individual provisions, the proportion of the company's single provision for bad debts to the balance of accounts receivable is slightly higher than that of the same industry. Therefore, there is no material difference between the company and the listed companies in the same industry accounts receivable bad debt provision policy, and the accounts receivable bad debt provision is sufficient.

3. Verification procedures and verification opinions

(1) Verification procedures

In response to the above, we have implemented the following verification procedures:

1. Check the company's accounts receivable bad debt accrual policy to understand the division standards of individual accrual and portfolio accrual;

2. Interview the person in charge of finance of the company to understand the basic principles of the company's payment settlement policy for customers, the accounts receivable management system, the main reasons for the formation of overdue receivables and follow-up treatment methods;

3. Check the sales contracts signed with major overdue customers during the reporting period to understand the company's main payment settlement terms;

4. Obtain the company's accounts receivable aging ledger, post-period collection statistics table and overdue accounts receivable schedule, understand the aging, overdue and post-payment collection of accounts receivable, and analyze the reasonableness of overdue reasons and the reasonableness of bad debt provision;

5. Inquire about the relevant information of the company's main overdue customers through online public channels to understand their credit status and current business status;

6. Consulted the regular reports of comparable companies in the same industry, and conducted comparative analysis with companies in the same industry to understand the company

　　7-2-2-20

Whether there are any material differences in the company's bad debt provision policy, and whether the bad debt provision is sufficient.

(2) Verification opinions

After verification, we believe that:

1. The top 10 customers of the company's overdue accounts receivable are mainly state-owned enterprises, A-share listed companies or their subsidiaries and dealers who have long-term cooperation with the company, and the end customers of such dealers are mainly state-owned enterprises. Therefore, the company's top 10 overdue accounts receivable customers are less likely to have a better overall bad debt risk except for individual customers;

2. According to the degree of recovery risk, the company is based on the aging portfolio and individual accrual, if the overdue accounts receivable are jointly confirmed by the company's sales center, financial center and legal department to recover the risk is high, the company makes a separate provision for bad debts for such overdue payments; If it is judged that although it is overdue, the recovery risk is low, the company will compile a comparison table between the aging of accounts receivable and the expected credit loss rate of the entire duration with reference to the historical credit loss experience, combined with the current situation and the forecast of future economic conditions, and calculate the expected credit loss to accrue bad debts;

3. At the end of the reporting period, the company's accounts receivable provision policy and provision ratio are not significantly different from those of comparable companies in the same industry, and the company's accounts receivable bad debt provision ratio is lower than that of comparable companies in the same industry, but the proportion of single provision for bad debts is higher than that of listed companies in the same industry, which reflects that the company's accounts receivable aging is better than the average level of comparable companies in the same industry, and the single provision is more cautious, therefore, the company's accounts receivable bad debt provision is sufficient.

Question two

Issuers are requested to explain: the reasons for the significant increase in the company's inventory in the first half of 2024; The main composition of inventories with an inventory age of more than 1 year, combined with the situation of customized products of long-aged inventory, future disposal methods and calculation of recoverable amounts, etc., indicate whether the provision for price decline is sufficient.

Ask the sponsor and the reporting accountant to check and give a clear opinion.

1. The reasons for the significant increase in the company's inventory in the first half of 2024

The composition and changes of the company's inventory at the end of June 2024 compared with the end of 2023 are as follows:

Unit: 10,000 yuan

　　7-2-2-20

project

ItemJune 30, 2024Dec 31, 2023Change RateRate of ChangeGoods in Stock19,170.9515,551.783,619.1723.27%Raw Materials11,772.478,409.023,363.4540.00%In Goods6,286.634,115.962,170.6752.74%Goods Issued983.43704.57278.8639.58%

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project

Item as at June 30, 2024 December 31, 2023 Change Ratio Total Book Balance 38,213.4828,781.339,432.1532.77% Less: Inventory Decline Provision 822.61583.64238.9740.94% Book Value 37,390.8728,197.699,193.1832.60

At the end of June 2024, the company's inventory book balance increased by 94.3215 million yuan compared with the end of December 2023, an increase of 32.77%, mainly due to the increase in inventory commodities, raw materials and products in progress, and the total increase of the above three items accounted for 97.04% of the inventory increase. The increase in the company's inventory at the end of June 2024 compared with the end of 2023 was mainly due to the large increase in the company's orders in hand at the end of June 2024 compared with the end of 2023.

1. The company's inventory and orders in hand at the end of June 2024 and the end of 2023

As the company continues to increase the depth of cultivation in the domestic market and the development of foreign markets, as of the end of June 2024, the company's orders in hand have increased rapidly compared with the end of 2023. At the end of 2023 and the end of June 2024, the ratio of the company's inventory to the amount of orders in hand is as follows:

Unit: 10,000 yuan

Item: June 30, 2024, December 31, 2023, Change Ratio: Inventory Book Value (A) 37,390.8728,197.6932.60% Orders in hand, including tax (B) (Note) 101,348.8165,716.0354.22% (C=A/B) 36.89%42.91%/

Note: The order in hand includes the purchase order placed by the customer, the sales/bidding/framework contract signed with the customer, and the outbound plan of the company to prepare or produce in advance through the form of a stocking notice or production notice

As can be seen from the above table, at the end of 2023 and the end of June 2024, the company's inventory amount and order in hand accounted for 42.91% and 36.89% respectively, showing a slight decline.

2. At the end of June 2024, the main reason for the increase in the company's raw material book balance compared with the end of 2023

In addition to the need to reserve more raw materials as the company's orders in hand increase, the company also adjusts the company's raw material inventory reserves according to the market price fluctuations of major raw materials and future price trend expectations. In the first half of 2024, the market price of copper showed a unilateral upward trend, resulting in an increase of 8.72% in the average purchase price of copper from January to June 2024 compared with 2023.

At the end of 2023 and the end of June 2024, the changes in the company's main raw materials are as follows:

Unit: tons, 10,000 yuan

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7-2-2-22 category

Category: June 30, 2024GrowthQuantityAmountQuantityAmountQuantityQuantityQuantityQuantityQuantity 334.086,887.041,710.014,133.1936.50%66.63%Raw material book balance/11,772.47/8,409.02/40.00%.

As can be seen from the above table, the reason for the sharp increase in the company's raw materials is mainly due to the large increase in copper. The amount of copper at the end of June 2024 increased by 290.77 tons compared with the end of 2023, an increase of 69.69%, and the balance of copper inventory at the end of 2024 increased by 24.375 million yuan compared with the end of 2023, an increase of 91.82%, due to factors such as rising copper prices.

3. The main reason for the increase in the balance at the end of June 2024 compared to the end of 2023

On the one hand, affected by the increase in orders in hand, coupled with the company's peak sales season in the second half of the year, the company schedules production according to sales orders and produces in advance; On the other hand, due to the increase in raw material prices, the unit cost of products has also risen.

To sum up, the main reason for the significant increase in the company's inventory in 2024 compared with the end of 2023 is the large increase in the amount of orders in hand compared with the end of 2023 and the increase in the price of copper, the main raw material, which is reasonable.

2. The main composition of inventories with an inventory age of more than 1 year, combined with the customized products of long-aged inventories, future disposal methods and the calculation of recoverable amounts, etc., indicate whether the provision for price decline is sufficient.

(1) The main composition of inventory with an inventory age of more than 1 year

As of the end of June 2024, the company's inventory with an inventory age of more than 1 year is mainly inventory goods, and the balance of inventory goods with an inventory age of more than 1 year accounts for 84.61% of the company's inventory balance with an inventory age of more than 1 year, and its specific composition is as follows:

Unit: 10,000 yuan

The proportion of the inventory amount of the project is 3,241.5684.61% of the inventory of goods in stock, 456.0211.90% of the raw materials, 133.413.48% of the products in progress, the total of 3,830.99100.00%, the book balance of inventory at the end of the period is 38,213.48 / the proportion of inventory aged more than 1 year to the book balance at the end of the period is 10.03% /

(2) The situation of customized products with long-aged inventory, future disposal methods, and recoverable amounts

At the end of June 2024, the company's long-aged inventory was mainly inventory goods, accounting for more than 1 year of total inventory

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The proportion of goods is 84.61%, and its specific composition and customization are as follows

Unit: 10,000 yuan

7-2-2-23 Classification of inventory goods with an inventory age of more than 1 year

Inventory age of more than 1 yearInventory commodity classification2024.6.30Customized productsStandard productsThere are ordersNo ordersSubtotalThere are ordersNo ordersSubtotalOil-immersed transformers1, 302.94630.4382.95713.38266.07323.49589.56 Dry-type transformer 995.52236.50153.32389.82288.36317.35605.71 box-type substation 674.61326.91246.11573.02-101.58101.58 Electrical complete equipment 267.80-267.80267.80--- other 0.69----0.690.69 Total 3,241.561,193.84750.181,944.02554.43743.111,297.54

The company mainly adopts the principle of "determining production by sales, and setting safety stock for standardized products" to organize production. As can be seen from the above table, the company's long-term inventory inventory is mainly customized products, with an amount of 19.4402 million yuan, accounting for 59.97%. Customized products without orders in hand are mainly formed due to factors such as customer cancellations or model changes, sales prototypes trial-produced to obtain orders, spare inventory reserved for specific projects, and a small number of non-conforming products. In the future, the company will sell or modify it according to new orders or customer needs, and a small number of those that are not expected to be sold will be dismantled and reused or directly scrapped; Among them, the complete sets of electrical equipment in the above table are formed due to the cancellation of orders by the company's real estate customers in 2024, and due to the high versatility of this batch of products in real estate and industrial plant construction and other scenarios, the company plans to use them in the new plant of the company's fundraising project in the future. The long-aged inventory goods with orders are mainly scheduled by the company according to the requirements of the order and contract, but the delivery date of the products is delayed due to the long delivery time of the project itself or the delay of the customer's power project, and the future will be supplied according to the implementation of the project and the customer's delivery instructions.

When determining the recoverable amount of long-aged inventory, the company mainly determines it comprehensively based on factors such as whether the long-aged inventory is qualified, the future planned disposal method, whether there are orders and the length of the inventory. The future disposal method of long-aged inventory, the method of determining the recoverable amount and the provision for price decline are as follows

Unit: 10,000 yuan

Determination of the recoverable amount of the future disposal method of the combination categoryAt the end of June 2024, the amount and proportion of the provision for the decline in the price of long-aged inventory The proportion of the inventory of raw materials in the subtotal inventory balance of the product The proportion of the combination of nonconforming products is scrapped/decomposed According to historical experience, the estimated net residual value rate of nonconforming products is about 45.00%, so the company makes a provision for price decline at 55.00% of the book balance 31.56--31.5657.3855.00%.

　　7-2-2-24

　　7-2-2-24

Combination Classes

Don't

Combination categoryFuture disposal methodDetermination of recoverable amountAt the end of June 2024, the amount of provision for the decline in value of long-aged inventory and the proportion of accrualOrder product portfolio will continue to sell products to customers in the future according to customer delivery instructionsDetermine the net realizable value of inventory based on the selling price of the product order21.05--21.051,737.671.21%Inventory ageFor long-aged inventory without orders, it is mainly through external promotion, modification, sales or dismantling, The way to determine the recoverable amount of long-aged inventory such as scrap disposal according to the inventory age: 1-2 years combined with the historical migration rate of the product and the residual value rate of the waste, the net recovery rate is determined according to the principle of prudence 75.00% to determine the recoverable amount, that is, the reserve for price decline is made according to 25.00% of the book balance22.4444.1924.78291.421, 165.6725.00% 2-3 years combined with the historical migration rate of the product and the residual value rate of the waste, In accordance with the principle of prudence, the net recovery rate is determined to be 50.00%, and the recoverable amount is determined, that is, the net recovery rate is determined according to the principle of prudence, and the recyclable amount is determined according to 50.00% of the book balance, and the recyclable amount is determined according to 50.00% of the book balance, and the recoverable amount is determined according to the book balance of 55.00% Provision for price decline is 131.2820.87-152.16276.6555.00%, totaling 565.37185.7141.92792.993,830.9920.70

(3) Provision for inventory decline and carry-over after the period

At the end of June 2024, the company's inventory with an inventory age of more than 1 year is provided for price decline and carry-over after the period as follows

Unit: 10,000 yuan

Proportion of the amount carried

forward after the provision period for the decline in the book balance of the project, the proportion of the amount of the amount of the provision for the amount of the inventory 3,241.5684.61%565.3717.44%1,063.46 Raw materials 456.0211.90%185.7140.72%71.80 in products 133.413.48% 41.9231.42% 26.19 Total 3,830.99100.00% 792.9920.70% 1,161.44

Note: The carry-over amount after the period is unaudited as of December 31, 2024

As can be seen from the above table, the company's inventory age of more than 1 year is 20.70%, on the one hand, the company's long-aged inventory is mainly inventory commodities with orders in hand, and the possibility of impairment based on the net realizable value determined based on the selling price of the order is small; On the other hand, the company's long-term inventory is mainly dry and oil, and its direct materials (copper and oriented silicon steel) account for a relatively high proportion, and copper and oriented silicon steel have a long shelf life and a high recovery price, so they have a high reuse value. In addition, judging from the carry-over situation after the inventory period of the company's long inventory age

Page 25 of 26 7-2-2-25

As of December 31, 2024, 11.6144 million yuan has been carried forward, and the carry-over after the period is good. Therefore, the provision for the decline in the price of long-aged inventories is sufficient. At the same time, after retrieving public information, there is no significant difference between the company's inventory decline provision policy and that of comparable companies in the same industry. The comparison of the provision ratio of inventory decline between the company and comparable companies in the same industry is as follows:

　　7-2-2-25

Company name

Company name2024.6.302023.12.312022.12.312021.12.31Truide4.07%4.34%2.62%1.36%Jinpan Technology1.20%1.09%1.12%1.24%Kelin Electric0.59%1.63%1.19%1.31%Shun Sodium Shares8.71%10.44%11.29%14.21%Average3.64%4.38%4.05%4.53% The average value (excluding Shun Na shares) 1.95%, 2.35%, 1.64%, 1.30%, Jiangsu Huachen, 2.15%, 2.03%, 1.54%, 3.02%.

As can be seen from the above table, the comparability is poor because the proportion of provision for inventory decline of Shunna shares is much higher than that of other comparable companies in the same industry. Therefore, after excluding Shunna shares, the average proportion of provision for inventory decline of comparable companies in the same industry at the end of each period of the reporting period was 1.30%, 1.64%, 2.35% and 1.95% respectively, which was not significantly different from the proportion of provision for inventory decline of the company. To sum up, the company's long-aged inventory is relatively low, and there is a high proportion of inventory corresponding to orders in hand, and the future will be shipped according to the progress of the project and customer demand, and the long-aged inventory is carried forward well after the inventory period, so the provision for inventory decline is sufficient.

3. Verification procedures and verification opinions

(1) Verification procedures

In response to the above, we have implemented the following verification procedures:

1. Interview the company's management to understand the reasons for the company's inventory growth at the end of June 2024, the reasons for the formation of long-aged inventory, the future disposal method and the method of provision for price decline;

2. Check the company's inventory age details, price decline provisions and orders in hand at the end of 2023 and the end of June 2024, understand the composition of long-aged inventory, customization and corresponding orders in hand, and analyze whether the company's long-aged inventory provision ratio is sufficient;

3. Check the policy of provision for inventory decline of listed companies in the same industry, and analyze whether there is a significant difference between the provision ratio of the company and listed companies in the same industry.

(2) Verification opinions

After verification, we believe that:

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1. Thanks to the company's increase in the deep cultivation of the domestic market in 2024 and the development of foreign markets, the increase in orders in hand, the company has increased the stock of raw materials and finished products accordingly, and the purchase price of the main raw material copper market has increased in the first half of 2024, resulting in a significant increase in the inventory amount at the end of June 2024;

2. The company's inventory of more than 1 year old is mainly inventory goods, of which the proportion of long-aged customized products in long-aged inventory is 59.97%. In general, the company's long-aged inventory commodities are mainly products with orders in hand, and the certainty of future digestion is strong; For long-aged inventory without orders, the company has formulated digestion measures such as continuing to sell or re-selling after repairing according to customer requirements according to the age of the inventory and product status. The company's long-aged inventory is carried forward well after the inventory period, and the company's inventory decline provision ratio is not significantly different from that of comparable companies in the same industry, and the provision for inventory decline is sufficient.

Please check this statement.

Tianjian Certified Public Accountants (Special General Partnership) Chinese Certified Public Accountants:

Hangzhou, China Chinese Certified Public Accountants:

February

21, 2025

Attachment: The original text of the announcement