Audit Report
Audit Opinion Type: Standard Unqualified Opinion
Audit Report Signing Date: April 14, 2026
Audit Institution Name: Lixin Certified Public Accountants (Special General Partnership)
Audit Report Number: Xinhui CPA Report [2026] No. ZE10109
Registered Accountants: Wang Tianping, Tang Fangming
Audit Report Body
To all shareholders of Hubei Heyuan Gas Co., Ltd.:
Audit Opinion
We have audited the financial statements of Hubei Heyuan Gas Co., Ltd. (hereinafter referred to as "Heyuan Gas"), including the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, consolidated and parent company cash flow statements, consolidated and parent company statements of changes in equity, and related notes to the financial statements. We believe that the attached financial statements have been prepared in accordance with the provisions of the Accounting Standards for Business Enterprises in all material respects and fairly present the financial position of Heyuan Gas as of December 31, 2025, as well as the operating results and cash flows for the year 2025.
Basis for Audit Opinion
We conducted our audit in accordance with the auditing standards for certified public accountants in China. The section of the audit report titled "Responsibilities of the Certified Public Accountants for the Audit of the Financial Statements" further elaborates on our responsibilities under these standards. In accordance with the "Independence Standards for Certified Public Accountants No. 1 - Requirements for Independence in Financial Statement Audits and Reviews" and the Code of Ethics for Certified Public Accountants in China, we are independent of Heyuan Gas and have fulfilled our other ethical responsibilities. We adhered to the independence requirements for audits of public interest entities during our audit. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinion.
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 for the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our audit opinion, and we do not provide a separate opinion on these matters. The key audit matters identified in our audit are summarized as follows:
- Revenue Recognition
For details on the accounting policy for revenue recognition, please refer to Note 5, (28); for details on revenue classification and amounts for the current year, please refer to Note 7, (41). In 2025, the main business revenue in the consolidated financial report of Heyuan Gas was CNY 1,571,978,700, primarily from sales of gas products. Heyuan Gas has three main settlement methods for sales: (i) sales settled based on flow meter readings; (ii) sales settled based on delivery quantities; (iii) sales settled based on pickup quantities. Due to the large number of customers and diverse settlement methods, the risk of misstatement is high, and revenue is one of the main indicators for evaluating Heyuan Gas's performance; therefore, we identified revenue recognition as a key audit matter. Our audit procedures regarding revenue recognition primarily included: (i) understanding, evaluating, and testing the effectiveness of key internal controls related to revenue recognition; (ii) selecting samples to inspect sales contracts, identifying contract terms and conditions related to the transfer of control of goods, and evaluating whether the timing of revenue recognition complies with the requirements of the Accounting Standards for Business Enterprises; (iii) performing analytical review procedures on sales revenue to assess the reasonableness of changes in sales revenue and gross margin; (iv) performing detail testing by sampling delivery notes, sales contracts, customer weight tickets, or flow meter readings to evaluate whether the related revenue recognition complies with the company's accounting policy for revenue recognition; (v) selecting samples for revenue transactions recorded before and after the balance sheet date, verifying delivery notes and other supporting documents, and evaluating whether revenue was recorded in the appropriate accounting period.