Beijing Lier High-Temperature Materials Co., Ltd.
Audit Report
Daxin Shen Zi [2026] No. 2-00901
WUYIGE CERTIFIED PUBLIC ACCOUNTANTS LLP
[Chart: Wuyige Certified Public Accountants Logo]
To the Shareholders of Beijing Lier High-Temperature Materials Co., Ltd.:
I. Audit Opinion
We have audited the financial statements of Beijing Lier High-Temperature Materials Co., Ltd. (hereinafter referred to as the "Company"), which comprise the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, the consolidated and parent company cash flow statements, and the consolidated and parent company statements of changes in equity for the year 2025, as well as the notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and parent company financial position of the Company as of December 31, 2025, and its consolidated and parent company financial performance and cash flows for the year 2025 in accordance with the Accounting Standards for Business Enterprises.
II. Basis for Audit Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilities under those standards are further described in the "Certified Public Accountant's Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Ethics for Certified Public Accountants of China and have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Provision for Bad Debts of Accounts Receivable
- Matter Description
As shown in Note III (XI) and V (IV) to the financial statements, as of December 31, 2025, the gross carrying amount of the Company's accounts receivable totaled 3,159,512,518.93 yuan, with a bad debt provision of 332,439,211.64 yuan, resulting in a net book value of 2,827,073,307.29 yuan, accounting for 34.09% of current assets. The Company measures the bad debt provision for accounts receivable based on the expected credit loss over the entire lifetime. Due to the significant amount of accounts receivable and the significant estimates and judgments involved in the Company's determination of the impairment of accounts receivable, we have identified the impairment of accounts receivable as a key audit matter.
- Audit Response
The audit procedures performed for the bad debt provision of accounts receivable mainly include:
(1) Understanding and evaluating the internal controls related to the provision for bad debts of accounts receivable;
(2) Checking whether the data used by the Company for relevant judgments is accurate and reasonable, including the reasonableness of the division of accounts receivable into different credit risk levels, the accuracy of historical loss rate data, and whether the expected credit losses are adjusted appropriately based on current conditions and forward-looking information;
(3) Understanding whether there are any circumstances that have a significant adverse impact on the recoverability of the corresponding accounts receivable;
(4) Evaluating the reasonableness of the provision for bad debts of accounts receivable and recalculating the accuracy of the provision.
(II) Revenue Recognition