Financial Statements/ESG Information - 2025 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 8128

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Technology and Resources Links

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ABOUT THIS REPORT 2

CHAIRMAN'S STATEMENT 4

ESG GOVERNANCE 7

STAKEHOLDERS' PARTICIPATION 9

MATERIALITY ASSESSMENT 11

ESG WORK 13

AWARDS AND RECOGNITION 16

ENVIRONMENTAL RESPONSIBILITY 17

SOCIAL RESPONSIBILITY 40

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REPORT DISCLOSURE INDEX

OPERATION MANAGEMENT 50

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ABOUT THIS REPORT

CHYY Development Group LIMITED (the "Company") together with its subsidiaries (collectively referred to as the "Group" or "we") is pleased to present its tenth Environmental, Social and Governance (ESG) Report (the "ESG Report") for the year ended 31 December 2025 (the "Year 2025"). This ESG Report outlines the Group's management approaches, strategies, objectives, and performance in relation to ESG. The information disclosed in this ESG Report has been collected and compiled through various channels, including the Group's internal policy documents and data, feedback on the implementation of ESG practices, and stakeholders' surveys regarding the Group's sustainability initiatives. This ESG Report is prepared in both Chinese and English and has been uploaded to the website of The Stock Exchange of Hong Kong Limited (the "HKEx") (www.hkexnews.hk) and the Company's website (www.chyy.com.hk). In case of any discrepancies between the Chinese and English versions, the Chinese version shall prevail.

Scope Covered

In defining the scope of this ESG Report, we carefully selected the entities to be included in the disclosures, taking into account the materiality of each entity's revenue as a proportion of the Group's total revenue for the Year 2025. This ESG Report covers entities whose combined revenue represented over 90% of the Group's total revenue for the Year 2025. Additionally, employee-related data disclosed in this report is based on the Group's total workforce as at the end of the Year 2025.

Compilation Basis

The content of this report is prepared in compliance with the Environmental, Social and Governance Reporting Guide (the "ESG Reporting Guide") set out in Appendix C2 to the GEM Listing Rules of The Stock Exchange of Hong Kong Limited, while also taking into account the key concerns of the Company's stakeholders and the unique characteristics of its business operations.

Reporting Principles

This report has been prepared in accordance with the following fundamental principles:

Materiality Principle: The Company has identified key sustainability and ESG issues through a materiality assessment process that incorporated feedback from stakeholders regarding their concerns, interests, and expectations for sustainable development. The final materiality matrix results guided our focus on significant ESG topics, which are addressed in this report through disclosure of relevant policies, initiatives and performance.

Quantitative Principle: In compliance with the ESG Reporting Guide issued by the HKEx, we have disclosed environmental and social data with measurable key performance indicators. The standards, methodologies, and assumptions used in the report have been clearly stated to ensure transparency.

Balance Principle: This report presents the Group's environmental, social and governance performance in an unbiased manner. We have avoided selective disclosures, omissions, or presentation formats that might unduly influence readers' decisions or judgments.

Consistency Principle: Unless otherwise stated, the statistical disclosure methodologies employed in this report are consistent with those used in the year 2024, ensuring comparability of data.

Approval and Release

This report has been approved by the Board of Directors of the Company and will be released in April 2026.

Feedback

The Company is committed to listening to our stakeholders' voices. Should you have any comments or inquiries regarding this ESG Report, please feel free to contact us through the following channels:

Address: 8/F., Chung Hing Commercial Building,

62-63 Connaught Road Central, Central, Hong Kong

Tel: +852 3753 9800

Email: info@chyy.com.hk

CHAIRMAN'S STATEMENT

Dear Respected Shareholders and Stakeholders,

Against the backdrop of China's deepening "dual-carbon" goals and the launch of the 15th Five-Year Plan in 2026, the Group remains committed to advancing the application of shallow geothermal energy as a replacement for traditional fossil fuels. In northern regions of China where winter heating is essential, the Group actively promotes its "non-combustion, high-efficiency geothermal heat pump heating" technology and accelerates the development of an integrated heating-and-cooling green industry.

Policy Momentum Driving High-Quality Development

In 2025, national ministries and commissions introduced a series of supportive policies. The National Development and Reform Commission and the National Energy Administration jointly issued the Action Plan for Promoting High-Quality Development of the Heat Pump Industry (Fagai Huanzi [2025] No. 313), setting clear requirements and objectives for advancing the sector. The Beijing Municipal Finance Bureau, Taxation Bureau and Water Authority jointly released the Implementation Measures for the Pilot Reform of Water Resource Tax in Beijing (Jingcai Shui [2025] No. 66), granting preferential water resource tax treatment to the Group's "single-well circulation heat exchange with 100% groundwater reinjection" geothermal collection technology, injecting strong momentum into the development of geothermal heat pump industry.

"Three Substitutions" Leading the Energy Revolution

The "non-combustion, high-efficiency geothermal heat pump heating" used in northern China during winter is regarded as a third-generation heating technology and has, in the new era, achieved three major substitutions:

1. Energy substitution - Shallow geothermal energy (low-temperature thermal energy from underground constant-temperature zones below 25º C) replaces traditional fossil fuels.

2. Product substitution - Safe and efficient heat pumps replace conventional boilers.

3. Heat-acquisition substitution - Electrically driven heat pumps "transfer" shallow geothermal energy, replacing the high-temperature combustion of fossil fuels in boilers, thereby enabling the scientific classification of energy by grade and responsible use of energy aligned with appropriate heating temperatures.

Building on the "three substitutions," the Group has independently developed an environmentally friendly and highly efficient geothermal energy collection technology. Using this proprietary innovation as the core, and integrating internationally adopted geothermal collection and heat pump technologies, the Group has created three integrated heating systems that fully meet the winter heating needs of northern China in the new era and support the national goals of "transforming energy production and consumption and modernizing rural lifestyles".

Original Innovation - Zhongguancun-originated breakthrough technology - an environmentally friendly and efficient geothermal energy collection method featuring "100% reinjection of groundwater and single-well circulation heat exchange".

Integrated Innovations - Using its proprietary technology as the foundation, the Group has integrated international geothermal and heat pump technologies to develop three heating systems:

1. Geothermal heat pump environmental system, designed for centralized heating in urban and rural areas.

2. Geothermal "Heat-Treasure" system, designed for rural households with independent metering and room-by-room heating.

3. Distributed geothermal heating and cooling source-station system, suitable for unified planning and phased investment according to demand.

Key ESG Achievements for the Year 2025

The Group actively supported regional agents for geothermal energy collection, exclusive agents for geothermal heat pump projects, and regional development partners, through standardized proprietary technology cooperation and turnkey system leasing, building a professional operation and maintenance platform to ensure reliable heating for thousands of households. In the Year 2025, the Group continued to enhance green operations, quality management and workplace safety, successfully renewing ISO 9001, ISO 14001 and ISO 45001 certifications, maintaining the 5A Clean Heating Service Certification, and obtaining the Hong Kong Green Organisation Certification - Waste Reduction (Excellent Level). During the year, the Group achieved 21.55 million square meters of renewable-energy-based heating and cooling coverage, reducing approximately 40,000 tonnes of carbon dioxide equivalent emissions.

The Group remained committed to a people-oriented approach, delivering 57 training sessions covering 1,651 participants, with steady improvements in employee satisfaction and safety performance. Investments in community welfare, heating assurance and emergency repair services increased significantly. In operations management, the supply chain system was further strengthened, customer satisfaction reached 99.9%, and the Group recorded zero product recalls and zero corruption cases, demonstrating solid governance effectiveness and compliance performance.

Outlook

China's 15th Five-Year Plan for National Economic and Social Development calls for "accelerating the green and low-carbon transformation of heating systems, and promoting the utilisation of waste heat resources and non-fossil energy for heating in accordance with local conditions." Standing at this new starting point of the 15th Five-Year Plan, and as a recipient of the "Outstanding Energy-Saving and Carbon-Reduction Action Award," the Group is firmly committed to leading the heating industry's transition from the "combustion era" to the "non-combustion era." By promoting high-efficiency, non-combustion geothermal heat pump heating as a replacement for fossil fuels, the Group is advancing the development of an integrated heating-and-cooling green industry, strengthening its ESG governance framework, and fulfilling its corporate social responsibilities, thereby contributing green momentum to China's dual-carbon goals and the vision of harmonious coexistence between humanity and nature.

Xu Shengheng & Liao Yuan

Co-Chairmen of the Board

Statement of Board of Directors

As a responsible corporation, the Group is fully committed to addressing sustainability challenges and leveraging our influence to advance sustainable development agendas encompassing environmental and social issues. Regarding our Environmental, Social and Governance (ESG) performance, we firmly believe that establishing a robust governance framework is paramount. To ensure effective management, we have implemented a comprehensive management system across all business operations to identify, manage, and respond to sustainability-related risks and opportunities.

The Board of Directors assumes full responsibility for the Group's ESG strategy and reporting. The Board oversee the formulation of ESG policies and targets and conduct annual reviews of ESG performance. To strengthen day-to-day management and implementation, we have established an ESG Working Team, which engages with stakeholders to identify material ESG issues for the Group. The team analyzes and evaluates feedback to assist in developing relevant policies and measures while monitoring their execution. Each department is responsible for integrating these policies and targets into daily operations to ensure alignment with our ESG commitments. Through this structured approach, we strive to uphold accountability, transparency, and continuous improvement in our sustainability journey.

ESG Governance Framework

Board of Directors

• To oversee the Group's environmental, social and governance management policies and strategies.

• Regularly review the Group's environmental, social and governance performance and progress to assess and manage risks and opportunities.

  ESG Working Team

• To assist in the formulation and review of the Group's sustainable development goals, priorities and targets.

• To assist in the formulation of policies and measures to promote goals and targets.

• Monitor, review and evaluate the implementation of ESG related policies and practices.

• Evaluate the progress and performance of the Company's ESG work and the effectiveness of its improvement plans.

• Report to the Board on ESG performance.

  Management

• To implement the environmental, social and governance measures established by the Company in the departments under its management and in its day-to-day operations.

• To promote environmental, social and governance awareness in the departments under their management.

STAKEHOLDERS' PARTICIPATION

The Company firmly believes that the fundamental premise of an Environment, Social and Governance (ESG) report lies in disclosing information that is both relevant and material to our stakeholders. As such, we actively seek engagement opportunities with both internal and external stakeholders to foster ongoing collaborative dialogue. Through diversified communication channels, we maintain multi-directional, consistent, and transparent exchanges with stakeholders to identify and understand their key ESG concerns. The Company remains committed to ensuring effective communication and nurturing strong relationships with each stakeholder group. We will continue to refine our stakeholder engagement approach to better address evolving expectations and sustain mutual trust in our ESG journey.

MATERIALITY ASSESSMENT

In order to identify the issues that stakeholders are most concerned about and to allow stakeholders to provide their opinions on our performance in sustainable development, we conducted a materiality assessment in the form of a questionnaire survey. We invited both internal and external stakeholders to express their views on the importance of ESG issues to the Group's operations, as well as to stakeholders' evaluations and decision-making. These important or relevant issues often change with the evolution of the business environment and stakeholders' expectations. Therefore, we regularly understand the demands of various stakeholders through multiple channels such as special questionnaire surveys, so as to identify the ESG issues that are important to both the Company and stakeholders in the current business environment.

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The following is the detailed procedure for us to determine the material issues and the content of the report:

Step 1: Identification

Review ESG issues and identify a list of relevant potential ESG issues based on the importance of social, economic, and environmental issues to the industry in which the Company operates and the opinions of various departments within the Company.

Step 2: Assessment

Collect the opinions and concerns of internal and external stakeholders regarding the importance of each issue, and understand the impact of each issue on the stakeholders themselves and its significance for the sustainable development of the Group.

Step 3: Confirmation

The ESG Working Team takes into account the results of stakeholder surveys and analyses, identifies substantive ESG issues, confirms them with the Group's management, ensures that the assessment results are in line with the Group's business characteristics and development status, and develops an action plan for more effective ESG management.

The Group collected and analyzed the feedback from stakeholders and listed them in the following materiality matrix to reflect their importance.

Importance to the Stakeholders

Materiality Matrix

Low Importance

20 27

10

5

15 26

Moderate Importance

25 17

8

16 7 4 19

13 11

18

14 12 3

2 22 6 24

23

9

High Importance

21 1

27

Importance to the Group

1

Company operation and financial status

2

Corporate governance mechanism

3

Sustainable development vision and strategy

Diversity and equal employment opportunity

4

5

Employment relationship and staff communication

6

Occupational safety and health

7

Staff training and development

8

Talented person retention

9

10

Staff salary Staff welfare/

recreational activity

12

11

Employment compliance

Emissions (including wastewater, greenhouse gases, and exhaust gases)

12

13

Management of hazardous and

non-hazardous waste

14

Energy and water conservation

15

Climate change response

16

Environmental compliance

17

Environmental protection policies

Supplier management

18

19

Anti-fraud and anti-corruption

20

Emergency response and disaster preparedness

21

Product quality and safety

22

Product development and innovation

23

24

After-sales service

25

Customer feedback and complaints handling

26

Patents and technological innovation Customer data privacy protection

Community engagement and public welfare activities

ESG WORK

ESG Work Summary and Highlights for the Year 2025

• The Group completed the renewal of ISO 9001, ISO 14001 and ISO 45001 certifications, and maintained the 5A Clean Heating Service Certification, further strengthening its quality, safety and environmental management systems.

• Through energy-saving, water-saving, energy substitution and resource management measures, the Group significantly improved waste-reduction performance. Its Hong Kong Green Organisation Certification for Waste Reduction was elevated from "Basic Level" to "Excellent Level," demonstrating enhanced green operational capability.

• During the year, the Group achieved 21.55 million square meters of renewable-energy-based heating and cooling coverage across 29 operating projects, reducing approximately 40,000 tonnes of CO2e emissions, and continued to promote clean energy applications.

• The workforce remained stable. A total of 57 training sessions were conducted, covering 1,651 participants, effectively enhancing professional skills, safety awareness and job competency.

• Safety performance remained strong, with zero fatal accidents recorded during the year. Lost workdays due to injuries decreased compared with previous years, and the implementation of the ISO 45001 system continued to strengthen.

• Investment in community welfare and livelihood protection increased, with active responses to community needs in heating assurance, emergency repairs and clean-energy promotion.

• The supply chain management system was further enhanced, with the number of qualified suppliers increasing to 113. Quality audits, environmental responsibility and compliance requirements continued to be strengthened.

• Customer service performance remained excellent, achieving a customer satisfaction rate of 99.9% with no product recalls or corruption cases, demonstrating solid governance effectiveness and a strong compliance culture.

  ESG Targets for the Year 2026

• Using the Year 2025 as the baseline, a 2% reduction in Scope 1 and Scope 2 greenhouse gas emissions is targeted for the year 2026.

• Using the Year 2025 as the baseline, a 2% reduction in electricity consumption is targeted for the year 2026.

• Using the Year 2025 as the baseline, a 2% reduction in water consumption is targeted for the year 2026.

• Using the Year 2025 as the baseline, a 2% reduction in gasoline consumption is targeted for the year 2026.

• Paper recycling efforts will be strengthened, with a recycling rate of over 85% targeted for the year 2026.

  Key ESG Actions and Measures for the Year 2026

• Deepen green operations by promoting fully enclosed geothermal collectors and expanding the application of geothermal heat pumps to enhance system efficiency and accelerate renewable-energy deployment across more project scenarios.

• Advance digital management by upgrading BIM management and the operation-maintenance big-data platform to achieve refined, visualized and intelligent project design, construction and operations, thereby improving energy efficiency.

• Strengthen full-cycle refrigerant management by establishing a comprehensive ledger system, promoting environmentally friendly alternatives and achieving 100% refrigerant recovery to reduce greenhouse gas emission intensity.

• Increase the proportion of green electricity procurement and promote the electrification and upgrading of construction machinery to further reduce reliance on fossil fuels and enhance the level of low-carbon operations.

• Continue improving employee capabilities and safety management by optimizing training systems, strengthening occupational health and safety education, and enhancing site inspections and hazard-rectification mechanisms to reduce safety risks.

• Strengthen green and compliant supply chain management by deepening environmental and social responsibility audits and encouraging key suppliers to adopt eco-friendly materials and green transportation methods.

• Enhance customer service quality by strengthening after-sales response mechanisms and equipment inspection systems to improve system stability and user experience, maintaining high satisfaction and a zero-complaint target.

• Consolidate the integrity governance system by deepening anti-corruption training and internal controls, strengthening supervision of key processes and improving whistleblowing mechanisms to enhance governance transparency and compliance.

AWARDS AND RECOGNITION

The Company has obtained the Wastewi$e Certificate (Excellent Level) of the Hong Kong Green Organization Certification

Ever Source Science and Technology Development Group Co., Ltd., a subsidiary of the Group, has obtained the Quality Management System Certification Certificate

Ever Source Science and Technology Development Group Co., Ltd., a subsidiary of the Group, has obtained the Work Safety Standardization Certificate (Level 3)

Ever Source Science and Technology Development Group Co., Ltd., a subsidiary of the Group, has obtained the Environmental Management System Certification Certificate

Ever Source Science and Technology Development Group Co., Ltd., a subsidiary of the Group, has been awarded a 5A-level certificate in the rating of clean heating enterprises organized and certified by the Clean Heating Industry Committee

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Ever Source Science and Technology Development Group Co., Ltd., a subsidiary of the Group, has obtained the Occupational Health and Safety (OH&S) Management System Certification Certificate

Green Enterprises

As a green enterprise, we remain steadfast in our responsibility toward environmental protection. We are dedicated to promoting shallow geothermal energy as a clean alternative for heating and cooling, utilizing this renewable resource to achieve combustion-free and zero-emission operations in our service areas. By replacing traditional coal or electric heating systems, we significantly reduce associated emissions. Our mission is to advance this eco-friendly initiative, actively advocate for clean heating solutions, and contribute to pollution reduction, smog elimination, and the restoration of blue skies - all while promoting rational and efficient energy use. We persistently strive toward these goals to safeguard planetary health and improve quality of life.

To date, the Group has achieved good results in the promotion and operation of renewable energy alternative heating and cooling projects, including the promotion of renewable energy alternative heating and cooling projects totaling 21.55 million square meters, including central heating and cooling projects, household ground-source heating and cooling projects and household air-source heating projects. For the Year 2025, 29 projects were in operation, covering an area of 1.26 million square meters, and annual carbon dioxide equivalent ("CO2e") emission reductions of 40,000 tonnes achieved through clean heating.

Going forward, the Group will continue to build on its inherent strengths, uphold an innovation-focused mindset, and take proactive action within the industry. It is committed to promoting the replacement of traditional polluting, emission-intensive heating energy sources with clean energy, to deliver clean heating solutions for buildings.

Green operation

The Group has consistently embedded the philosophy of green development throughout the full lifecycle of its projects. Centred on the three core pillars of "compliance management and control, technology-driven carbon reduction, and refined operation and maintenance", it implements systematic environmental protection measures across all stages of project design, construction and operation, to realise the coordinated development of economic benefits and ecological benefits. The Group completed the renewal of its ISO 14001 Environmental Management System certification, and maintained its 5A Grade Clean Heating Service Certification in the Year 2025.

With respect to project construction, the Group strictly complies with all relevant construction regulations and standard requirements throughout the construction process, in full accordance with the requirements set out in the Regulations on the Environmental Protection Management of Construction Projects, Assessment Standard for Green Construction of Building and Municipal Engineering, Guidelines for Green Construction, dust emission standards for construction sites promulgated by local authorities, and Environmental and Sanitation Standard for Construction Sites, among other applicable rules and standards. The project team holds regular work meetings on "civilized construction and environmental protection", implements the construction site environmental protection management inspection system, and strictly controls various emissions. At the same time, the Group formulates environmental protection policies, objectives and indicators to achieve harmony between construction and the environment and meet the requirements of environmental management standards.

In the course of our operations, we inevitably generate some direct or indirect air emissions. Direct air emissions mainly come from diesel fuel combustion of generators, drilling rigs and other equipment used in the construction process, as well as refrigerants used in project maintenance services. Most of the refrigerants we use are environmentally friendly models, but some customers' equipment is still old models and cannot use environmentally friendly refrigerants, so non-environmentally friendly refrigerants are still used when providing maintenance services for them. In response to this situation, when we contact these customers, we will actively recommend and encourage them to change to environmentally friendly equipment to reduce the impact on the environment.

Green Office

The Group has always been committed to operating in a more environmentally friendly and energy-efficient manner, and advocates the 6R Environmental Protection Principles: Reduce, Reuse, Recycle, Replace, Repair and Refuse. The main resources consumed in the Group's daily office operations include electricity, water, gasoline, natural gas and paper.

The Group continuously encourages and promotes various measures to achieve energy conservation, resource recycling and waste reduction, including the following:

1. Strengthen HVAC energy efficiency management, conduct behavioural energy-saving assessments for zoned heating/cooling equipment; optimize air conditioning use per weather, avoid extreme temperature settings, prioritise natural ventilation in non-hot periods to cut energy waste via daily controls.

2. Regulate office electrical and lighting use, reduce electronic and electrical equipment standby time, power off long-idle devices; use lighting on demand, ensure lights off when personnel leave, eliminate permanent lighting in unoccupied areas.

3. Implement water conservation measures, conduct staff water-saving education, urge taps to be closed when idle; uniformly adopt water-saving appliances, and timely repair all water leakage defects.

4. Roll out paper-saving initiatives, minimise printing frequency, adopt double-sided printing; set up a dedicated supervised recyclable paper point to encourage secondary reuse of non-confidential waste paper.

5. Accelerate energy-saving equipment upgrading, prioritise procurement of energy-saving certified products, gradually phase out low-efficiency equipment, and replace with new energy and energy-efficient products.

6. Enhance resource recycling, conduct classified disposal of recyclables; prioritise repair of damaged appliances/items to reduce arbitrary disposal; promote durable tableware and prohibit disposable tableware.

7. Advocate green travel and ecological emission reduction, encourage staff to commute via public transport; carry out large-scale tree planting in the office park, guide staff to grow indoor potted plants to cut emissions and improve air quality.

A1. Emissions

The Group has always placed environmental protection at the core of its corporate development and firmly practiced the concept of green development. The Group strictly complies with the Environmental Protection Law of the People's Republic of China, the Air Pollution Prevention and Control Law of the People's Republic of China, the Water Pollution Prevention and Control Law of the People's Republic of China, the Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste, and other applicable national laws and regulations. In the meantime, it diligently implements the Regulations of Beijing Municipality on the Prevention and Control of Air Pollution, Regulations of Beijing Municipality on the Prevention and Control of Environmental Pollution by Hazardous Waste, Regulations of Beijing Municipality on the Prevention and Control of Water Pollution, and other relevant local regulations, and embeds environmental protection responsibilities into every aspect of the Group's business operations. Guided by the principle of green development, we fulfill our ecological responsibilities with practical actions, are committed to protecting the clear waters and blue skies, contribute solidly to building a better homeland, and promote the harmonious coexistence between humanity and nature.

The air pollutants generated by the Group were mainly attributable to two sources in the Year 2025: vehicle use in the course of business development, and the combustion of diesel fuel by equipment including generators used during construction works. These emissions cover nitrogen oxides ("NOX"), sulphur oxides ("SOX") and particulate matter ("PM"). Details of the relevant emissions data are summarised in Table 1 below:

Table 1: Summary of the Groupʼs Air Pollutant Emissions Data

Notes:

1. In 2025, the Group's vehicles recorded a total mileage of 90,048 kilometres, consuming 14,635 litres (10.84 tonnes) of gasoline. In addition, equipment operations consumed 1,932 litres (1.63 tonnes) of diesel.

2. In accordance with the Technical Guidelines for Compiling Atmospheric Pollutant Emission Inventory for Road Motor Vehicles (Trial), the Group obtained the applicable emission factors for NOXand PM generated by the Group's vehicles, which are

   0.017 g/km and 0.003 g/km respectively.

3. Pursuant to Gasoline for Motor Vehicles (GB 17930-2016), the Group has adopted the sulphur content standard of ≤10 mg/kg for SOXgenerated by the Group's vehicles, with the calculation formula as follows: SOXEmissions (kg) = Gasoline Consumption

   (t) × Sulphur Content (mg/kg) × 0.002.

4. In accordance with the Technical Guidelines for Compiling Atmospheric Pollutant Emission Inventory for Non-road Mobile Sources (Trial), the Group obtained the emission factors for NOXand PM generated by diesel-fuelled equipment, which are

   32.79 g/kg and 2.09 g/kg respectively.

5. Pursuant to Diesel Fuel for Motor Vehicles (GB 19147-2016), the Group has adopted the sulphur content standard of ≤10 mg/kg for SOXgenerated by the Group's equipment including diesel generators, with the calculation formula as follows: SOXEmissions (kg) = Diesel Consumption (t) × Sulphur Content (mg/kg) × 0.002.

6. The figures set out in this column represent the air emissions data presented by the Group in its 2024 ESG Report, which were prepared in accordance with the Guidance on Reporting of Environmental Key Performance Indicators in Appendix II to How to Prepare ESG Reports issued by the HKEx.

The Group's greenhouse gas ("GHG") emissions were primarily derived from fossil fuel combustion and electricity consumption in the Year 2025. Scope 1 GHG emissions mainly originate from two sources: first, fugitive emissions of refrigerants (including HCFC-22, R410A and HFC-134A) resulting from intentional or unintentional leaks; and second, mobile combustion sources (gasoline and diesel consumption). Scope 2 GHG emissions are indirect emissions arising from the consumption of purchased electricity, which were mainly generated by the Group's heating and cooling systems as well as electricity consumption for daily office operations. Details of the relevant emissions data are summarised in Table 2 below:

Table 2: Overview of GHG Emissions for the Year 2025

Notes:

1. The Scope 1 CO2e data presented by the Group in its 2024 ESG Report was calculated in accordance with the China Energy Consumption GHG Protocol Tool. The reported Scope 1 CO2e was 14 tonnes, with refrigerants excluded from the calculation scope.

2. The Scope 2 CO2e data presented by the Group in its 2024 ESG Report was calculated in accordance with the China Energy Consumption GHG Protocol Tool.

The calculation of the Group's Scope 1 and Scope 2 GHG emissions for the Year 2025 is summarised in Table 3 below.

Table 3: Overview of Scope 1 GHG Emissions Calculation

Notes:

1. Pursuant to the cross-industry tool under the GHG Protocol, the Group has obtained the emission factors per litre of gasoline for CO2, CH4and N2O, which are 2.288 kg CO2/L, 0.00033 kg CH4/L and 0.00002 kg N2O/L respectively.

2. Pursuant to the cross-industry tool under the GHG Protocol, the Group has obtained the emission factors per litre of diesel for CO2, CH4and N2O, which are 2.910 kg CO2/L, 0.00039 kg CH4/L and 0.00002 kg N2O/L respectively.

3. In accordance with the IPCC Fifth Assessment Report (AR5) 2013, the Group has adopted the following GWP values: CH4= 28, N2O = 265, HCFC-22 = 1,760, HFC-134A = 1,300.

4. Pursuant to the cross-industry tool under the GHG Protocol, the Group has obtained the GWP value of 1,725 for R-410A.

5. For the Beijing office premises, the carbon footprint factor adopted is 0.5777 kg CO2e/kWh, sourced from the 2024 National Power Carbon Footprint Factors issued by the Ministry of Ecology and Environment of the People's Republic of China. For the Hong Kong office premises, the CO2e emission factor adopted is 0.6 kg CO2e/kWh, sourced from the 2024 Sustainable Development Report published by the HK Electric.

The hazardous waste generated by the Group mainly includes waste batteries, waste fluorescent tubes and waste ink cartridges, while the non-hazardous waste mainly consists of general solid waste (sent to landfills) and paper. Details of the relevant emission data are summarised in Table 4 below.

Table 4: Overview of Hazardous and Non-hazardous Waste

Notes:

1. The above contents have been prepared in accordance with the Guidance on Reporting of Environmental Key Performance Indicators in Appendix II to How to Prepare ESG Reports issued by the HKEx.

2. The data presented by the Group in its 2024 ESG Report includes 60 batteries (recycled), 60 fluorescent tubes and 10 used toner cartridges (recycled).

A1.5 Emission Targets and Implementation Steps

1. Target Completion Status for the Year 2025

   In the year 2024, the emission reduction target for the Year 2025 was set at 2%-5% below the year 2024 level. Among them, the air emissions target was not achieved, while the GHG emissions target was met. The specific completion status is set out below:

   1. Air Emissions: Compared with the year 2024, the Group's total air emissions increased by 94.12%, of which SOXemissions rose by 93.93%, NOXemissions increased by 140.00%, and PM emissions went up by 95.74%. In the Year 2025, along with the expansion of the Group's business scale, the usage frequency of official and operational vehicles increased, driving a 174.43% year-on-year rise in gasoline consumption, which directly contributed to the growth of air emissions.

   2. GHG Emissions: The Group's total GHG emissions reached 3,399 tonnes of CO2e. Scope 1 emissions stood at 3,016 tonnes of CO2e, representing a 10.98% decrease from the year 2024. This was attributable to the higher application ratio of environmentally friendly refrigerants and strengthened refrigerant recovery efforts. Specifically, combined emissions from the three types of refrigerants (HCFC-22, R410A and HFC-134A) totaled 2,976.43 tonnes of CO2e (accounting for 98.69% of Scope 1 emissions), coupled with 39.35 tonnes of CO2e from mobile combustion sources (gasoline and diesel consumption). Scope 2 emissions were 383 tonnes of CO2e, with purchased electricity consumption up by 4.38%. Despite the slight growth in electricity usage, the Group scaled up green electricity procurement, optimized its power consumption structure, combined with the rising share of renewable energy in the power supply of the regional grids where the Group operates, which effectively controlled the carbon emission intensity per unit of electricity.

2. Steps Taken to Achieve the Year 2025 Targets

   Step 1: Compile an emission source inventory, identify core links, including mobile combustion sources, electricity consumption and refrigerant usage, establish classified ledgers, and define key control priorities.

   Step 2: Implement the established measures, promote green business travel, and pilot the electrification replacement of construction machinery.

   Step 3: optimize the existing ledgers and tracking mechanisms, integrate data on fuel and electricity consumption as well as emissions, and strengthen the early warning and rapid response to abnormal emissions through regular comparative data analysis.

   Step 4: Conduct an assessment of emission reduction effectiveness at the end of the year, analyse the reasons for failure to meet the targets, inspect key issues such as refrigerant leaks, and provide a basis for subsequent adjustments.

3. Targets and Measures for the Year 2026

   The target for the year 2026 is set at a 2% reduction compared with the Year 2025 level. The specific implementation measures are set out below:

   1. Promote the application of fully enclosed geothermal energy collectors and expand the deployment of ground source heat pump systems;

   2. Roll out BIM (Building Information Modelling) digital management, upgrade the Weiyun (Beijing) Big Data Platform, and improve system energy efficiency;

   3. Establish a full-process ledger for refrigerants, promote the use of environmentally friendly alternative refrigerants, and standardise the 100% recovery of refrigerants;

   4. Procure municipal grid green electricity, and further advance the electrification upgrade of construction machinery.

A1.6 Handling of Hazardous and Non-hazardous Waste

1. Waste Handling Methods

   The Group delivered solid performance in the handling of hazardous and non-hazardous waste in the Year 2025, the, with the key measures implemented as follows:

   1. Closed-loop management and control, plus source reduction for hazardous waste: The Group has established a "centralised procurement - standardised issuance and usage - designated recycling" mechanism, with all hazardous waste disposed of by professionally qualified institutions. It prioritises the procurement of environmentally friendly alternative products, and has improved its management ledger to ensure full traceability and verifiability of relevant data;

   2. Sorted recycling and circular utilisation for non-hazardous waste: The Group has deepened the rollout of paperless office operations, promoted duplex printing for informal documents, and expanded the application of electronic approval and digital documentation. It has also optimized the sorting of construction waste and the circular utilisation of recyclable materials, to achieve steady management and control of waste generation intensity per unit of revenue.

2. Waste Reduction Target Completion Status for the Year 2025

   In the year 2024, the Group set a waste reduction target for the Year 2025 to optimize waste management through measures including energy and water conservation, energy substitution and other relevant initiatives. The Group delivered remarkable overall waste reduction performance in the Year 2025, and successfully upgraded its Wastewi$e certification from the Basic Level to the Excellent Level. The specific data is set out below:

   1. Hazardous Waste: For the Year 2025, the Group's total hazardous waste generated amounted to 7,016 grams, representing a significant 33.69% decrease compared with the year 2024. Among this, waste batteries generation fell by 30%, waste fluorescent tubes generation dropped by 38.33%, achieving notable volume reduction, while the growth of waste toner cartridges generation was well controlled;

   2. Non-hazardous Waste: For the Year 2025, the Group's total non-hazardous waste generated amounted to 22.600 tonnes, representing an increase of approximately 21.20% compared with the year 2024. Among this, general solid waste generation rose by 22.22%, which was in line with the expansion of the Group's business scale; paper waste generation stood at 0.600 tonnes, down by 8.26%, achieving effective volume reduction.

3. Steps Taken to Achieve the Year 2025 Waste Reduction Targets

   Step 1: Compile a waste inventory, clarify the categories of hazardous waste (including waste refrigerants, waste batteries, waste fluorescent tubes, waste ink cartridges, and construction oily waste) and non-hazardous waste (including general solid waste and paper), and establish a classified management ledger.

   Step 2: Implement the established measures set for the year 2024. For office areas, promote the reduction of non-essential printing and strengthen staff awareness campaigns on consumption reduction; for construction sites, install sedimentation tanks and recharge systems, and optimize the control of groundwater circulation for shallow geothermal energy utilisation.

   Step 3: Upgrade the existing ledgers and tracking mechanisms, integrate data on waste generation, circulation and disposal, conduct regular comparative analysis, and enhance traceability management and response to abnormal conditions.

   Step 4: Conduct an assessment of management and control effectiveness at the end of the year, review the performance against waste reduction certification standards, identify weak links in management, and provide a basis for the optimisation of subsequent measures.

4. Waste Reduction Targets and Measures for the Year 2026

   The target for the year 2026 is set to keep the total volume of hazardous and non-hazardous waste under incremental control, achieve continuous reduction in paper waste, and maintain the Excellent Level of Wastewi$e certification. The specific implementation measures are set out below:

   1. Further advance closed-loop management and control, optimize the "centralised procurement -standardised issuance and usage - designated recycling" mechanism, and expand the scope of procurement of environmentally friendly alternative products;

   2. Strengthen the compliance of hazardous waste disposal, ensure all hazardous waste is disposed of by professionally qualified institutions, and improve the full-process traceability ledger;

   3. Promote the sorted recycling and circular utilisation of construction solid waste, and raise the reuse rate of recyclable materials;

   4. Deepen the implementation of paperless office operations, expand the application of electronic approval systems, and reduce paper consumption;

   5. Continuously optimize geothermal energy utilisation systems, improve the integrated management and control of water resources, and enhance the efficiency of energy and resource utilisation.

A2. Use of Resources

The main resources consumed by the Group include electricity, gasoline, diesel and water. The Beijing office premises adopt the Group's single-well circulating heat exchange geothermal energy collection technology to provide heating and cooling for the office building, with only electricity consumed and no consumption of indirectly purchased energy such as central heating or air conditioning services involved. Upholding the resource management philosophy of Conservation First, Circular utilisation, Technology-driven, the Group has formulated a full-process policy for the efficient utilisation of resources, with the specific measures set out below:

Step 1: Drive the rational utilisation of resources through the green transformation of the Group's core businesses.

Step 2: Strengthen the circular utilisation of water resources, promote water-saving technologies and equipment, and ensure the safety and efficiency of water use.

Step 3: Enhance publicity efforts, and provide employees with education on resource conservation awareness and training on consumption control methods.

Step 4: Establish a digital supervision system, improve the utilisation efficiency of various resources through refined operation and maintenance and standardised management, and support the Group's green and low-carbon transformation.

The Group's total direct and indirect energy consumption by type for the Year 2025 is summarised in Table 5 below.

Table 5: Overview of Total Direct and Indirect Energy Consumption by Type

Note: The above contents have been prepared in accordance with the Guidance on Reporting of Environmental Key Performance Indicators in Appendix II to How to Prepare ESG Reports issued by the HKEx.

The Group's calculation of total direct and indirect energy consumption by type for the Year 2025 is summarised in Table 6 below.

Table 6: Calculation Overview of Total Direct and Indirect Energy Consumption by Type

Note: The Group has obtained the conversion factors from the Energy Statistics Manual issued by the International Energy Agency (IEA) (Appendix III: Units and Conversion Equivalents).

1 GJ = 277.778 kWh

The Group's water consumption for the Year 2025 is summarised in Table 7 below.

Table 7: Overview of Water Consumption

Note: Water consumption is primarily recorded for the Group's office premises in Beijing. For the office premises in Hong Kong, water consumption is centrally controlled by the building property management company, with no individual water meters installed, and thus relevant water consumption data cannot be provided.

A2.3 Energy Use Efficiency Targets and Steps taken to achieve them

1. Target Completion Status for the Year 2025

   In the year 2024, the target for the Year 2025 was set to optimize energy utilization efficiency and reasonably control the growth of energy consumption, with specific targets of a 3% reduction in electricity consumption and a 2% reduction in gasoline consumption. The Group failed to meet the target, with details as follows:

   1. Direct Energy: Diesel consumption increased by 91.62%, with the energy intensity rising from

      0.155 to 0.432 kWh per HK$1,000 Revenue; gasoline consumption surged by 174.43%, with the energy intensity jumping significantly from 0.742 to 2.965 kWh per HK$1,000 Revenue. The consumption volume and intensity of both energy types rose substantially, failing to meet the preset reduction targets. The core reason is the expansion of the Group's business scale, which has led to a marked increase in the frequency of use of equipment such as diesel generators and official vehicles. Natural gas consumption stood at 0 kWh, remaining unchanged from the year 2024;

   2. Indirect Energy: Purchased electricity consumption increased by 4.38% year-on-year, with the energy intensity rising from 9.108 to 13.838 kWh per HK$1,000 Revenue, thus failing to achieve the 3% reduction target. Notwithstanding this, the growth rate was stable and controllable. Benefiting from the effective implementation of energy-saving measures in office and production processes, the pressure on energy consumption driven by business growth has been effectively offset, and the growth rate of energy consumption is lower than that of business expansion;

   3. Total Energy Consumption: For the Year 2025, the Group's total energy consumption rose by approximately 18.35%, with the overall energy consumption increasing in tandem with business expansion. However, the growth rate of indirect energy consumption was relatively moderate, which reflects the partial effectiveness of the energy-saving measures implemented by the Group.

2. Steps Taken to Achieve the Year 2025 Targets

   Step 1: Compile an energy consumption inventory, clarify the core categories of Direct Energy (Diesel, Gasoline and Natural Gas) and Indirect Energy (Purchased Electricity), establish a classified management ledger, and define key priorities for supervision and control.

   Step 2: Implement the established energy-saving measures, including guiding green official travel, piloting the electrification replacement of construction machinery, optimising the actual usable area of office premises, promoting energy-efficient equipment, and conducting energy-saving publicity campaigns, and further advancing the application of geothermal energy collection technology.

   Step 3: optimize the existing digital supervision system, integrate data on various types of energy consumption, dynamically monitor changes in consumption volume, and enhance the early warning and rapid response to abnormal energy consumption.

   Step 4: Conduct an assessment of energy supervision and control effectiveness at the end of the year, review the performance of energy utilisation, analyse the causes of energy consumption fluctuations, and provide a basis for the optimisation of subsequent measures.

3. Targets and Measures for the Year 2026

   In the Year 2025, the target for the year 2026 is set to achieve a 2% reduction in total direct and indirect energy consumption compared with the Year 2025 level. The specific measures are as follows:

   1. Further advance the optimisation of geothermal energy collection technology, upgrade heat exchange materials and pipeline design, and reduce the energy consumption of core business systems;

   2. Implement Green Office Guidelines, standardise the operation criteria for air conditioners, lighting and other equipment, promote the use of low-power mode, and cut ineffective energy consumption;

   3. Fully replace with LED energy-efficient light fixtures and Class 1 energy efficiency equipment, demarcate energy consumption responsibility zones, and incorporate energy-saving targets into departmental performance assessment;

   4. Standardise the fuel consumption and regular maintenance of official vehicles, and encourage employees to adopt green commuting to reduce fuel consumption;

   5. Carry out specialised energy-saving training and themed activities, solicit rational energy-saving proposals from all employees, and enhance the overall energy-saving awareness and implementation effectiveness.

A2.4 Water Use Efficiency Targets and Related Measures

1. Sourcing of Suitable Water Resources

   1. In terms of project water use, water is sourced from compliant groundwater intake points with a stable water supply, and there are no issues of water shortage or difficulty in water abstraction. The Group adopts the single-well circulating heat exchange geothermal energy collection technology, which uses groundwater as the circulating medium to collect shallow geothermal energy and achieves 100% reinjection, realizing heat extraction without water consumption and no pollution;

   2. In terms of office water use, the Group's water supply is mainly derived from municipal public water supply. Specifically, the office premises and project construction sites in Beijing are all connected to the municipal water supply network, with water intake conducted in accordance with actual demand and set quotas. For the office premises in Hong Kong, due to the centralized property management of the building, no individual water meters have been installed separately, and water supply is allocated and provided uniformly by the property management company, making it temporarily impossible to conduct separate and independent metering.

2. Target Completion Status for the Year 2025

   In the year 2024, the target for the Year 2025 was set to optimize water use efficiency and reduce water resource consumption. For the Year 2025, the Group's water consumption decreased by 2%, exceeding the target with remarkable control performance. The specific data are as follows:

   Total water consumption decreased by 33.40%, far exceeding the preset reduction target, with the details as follows:

   1. In terms of project water use, relying on the 100% reinjection design of the geothermal energy collection technology, the Group has achieved heat extraction without water consumption, effectively controlling groundwater consumption. The Group strictly complies with the Implementation Measures for the Pilot Reform of Water Resource Tax in Beijing, paying the water resource tax at a rate of RMB0.8 per 1,000 cubic metres and enjoying preferential policies, thus ensuring compliant and highly efficient water use;

   2. In terms of office water use, through the popularisation of water-saving equipment, the enhancement of company-wide water-saving publicity, and coupled with the implementation of water-saving measures in construction areas, water consumption has declined steadily and the overall water use efficiency has been substantially improved.

3. Steps Taken to Achieve the Year 2025 Targets

   Step 1: Compile a water consumption inventory, clarify the two core categories of Project Water Use (Groundwater) and Office Water Use (Municipal Water Supply), establish a classified management ledger, and define key supervision and control priorities, including circulating water for geothermal energy collection and daily office water use.

   Step 2: Implement the established water-saving measures, including standardising the processes for groundwater circulation and reinjection at the project level; promoting environment-friendly water-using equipment and enhancing water-saving publicity among employees at the office level; and installing sedimentation tanks and reinjection systems in construction areas.

   Step 3: optimize the existing digital supervision system, integrate data on project groundwater circulation volume and office water consumption volume, dynamically monitor changes in water consumption, and enhance the early warning and rapid response to abnormal water use.

   Step 4: Conduct an assessment of water supervision and control effectiveness at the end of the year, review the performance of water resource utilisation, analyse the causes of fluctuations in water consumption, and provide a basis for the optimisation of subsequent measures.

4. Targets and Measures for the Year 2026

   The target for the year 2026 is set to achieve a 2% reduction in water consumption compared with the Year 2025 level. The specific measures are as follows:

   1. Project Water Use: optimize the control of groundwater circulation volume by adopting intermittent operation on holidays and timed operation at night to reduce the circulation volume; continue to ensure 100% groundwater reinjection and further tap the water-saving potential of geothermal energy collection technology;

   2. Office Water Use: Upgrade water-saving equipment in office areas and standardise water use procedures; demarcate water use responsibility zones to cut ineffective water consumption;

   3. Compliance Supervision and Control: Strictly comply with the laws and regulations related to water resource protection to ensure the compliance of the entire water use process;

   4. Publicity and Training: Conduct specialised water-saving training and themed activities to enhance the overall water-saving awareness of the staff and promote the sustainable use of water resources.

A2.5 Total Packaging Materials Used for Finished Products

The Group is a professional system service provider in the field of clean and intelligent heating, integrating scientific research and development, planning and design, shallow geothermal energy collection, heat pump manufacturing, system engineering installation, system operation services and operation and maintenance support. The Group's business focuses on core technology R&D, system integration and brand services. Heat pump manufacturing is entrusted to two joint ventures (Beijing Yongyuan Heat Pump Co., Ltd. and Hongyuan Ground Energy Heat Pump Technology Co., Ltd.) for OEM production (the business of the joint ventures is not within the scope of this report), and the Group is not involved in any specific product packaging process.

A3. The Environment and Natural Resources

The Group focuses on utilizing shallow geothermal energy to provide heating for buildings. By applying shallow geothermal energy extraction and heat-exchange technologies, we convert low-grade renewable shallow geothermal resources into an alternative source of heating energy. In northern heating regions, the Group has achieved combustion-free and zero-emission heating solutions, with no pollution or adverse impact on the environment or groundwater resources. The Group has achieved combustion-free and zero-emission operations in the heating regions of northern China, with no pollution or environmental damage to the environment and groundwater resources. The Group's "air-source heat pump + solar thermal" technology has realised multi-energy complementation. Its main feature is that it makes full use of solar thermal energy for heating during the daytime, and adopts air-source heat pumps to guarantee heating supply at night, thereby greatly saving heating operation costs and reducing energy consumption.

Projects using the Group's system products will greatly reduce the consumption of natural resources such as coal and natural gas during use, while reducing the emission of related waste and reducing the impact on the environment during the operation of the project.

The Group's business promotion process and related project implementation activities will produce a certain amount of domestic sewage and waste gas emissions, but only during the construction process of related projects, and the related emissions are relatively small. Although the amount of discharge is small, we also implement the relevant strict discharge regulations. For the relevant sewage, the Group requires that the sewage must be treated timely by facilities such as secondary sedimentation tanks on site, and then discharged to the municipal sewage network through the compliant sewage discharge facilities. For the relevant exhaust gases, the Group requires the use of equipment with low emissions that meet environmental protection requirements, and the purification treatment of exhaust gases to meet the emission standards stipulated by the state before discharge. In addition, the Group gradually increases the use of electric and gas equipment for construction machinery and equipment, and tries not to use fuel equipment to avoid exhaust emissions and further reduce the impact on the environment.

A4. Climate Change

The Group regards climate change response as a key environmental priority, and mitigates the climate impact of its operational activities through measures including renewable energy substitution, energy conservation and emission reduction, and energy efficiency improvement. As a fundamental environmental pillar for human survival, the climate and its changes exert far-reaching impacts on both natural ecosystems and socioeconomic systems, with global warming having already caused ecological

disruptions across multiple regions. The Group closely monitors the impacts of climate change on the heating industry, and dynamically adjusts its industry layout and business development strategy in a timely manner with reference to scientific analysis and research from domestic and international experts. Meanwhile, the Group applies the "climate compensation" theory, and leverages weather forecast data to adjust the operational parameters of its equipment, so as to improve unit efficiency and achieve energy and consumption reduction.

1. Physical Risks: The frequency and intensity of extreme weather events such as typhoons and heavy rains are increasing.

   1. It may lead to damage to equipment and buildings, increasing maintenance costs;

   2. It may disrupt the supply of electricity and water resources, affecting business operations;

   3. It may interfere with transportation services, resulting in unstable material supply and price fluctuations.

2. Transition Risks: Tighter environmental regulations and standards.

   1. Higher upfront costs for eco-friendly materials in new projects, and equipment upgrades may require additional investment;

   2. Additional costs may arise if legacy equipment cannot use environmentally friendly refrigerants during the renovation of existing projects.

3. Market & Competitive Risks.

   1. Shifting customer preferences toward green solutions;

   2. Policy-driven market uncertainties.

The Group recognises the long-term risks of climate change and is committed to analysing and identifying these risks and their potential impacts. To enhance our resilience, we will conduct climate scenario analysis, identify physical and transition risks, and adapt strategies. We have taken actions to address transformation risks, including regularly monitoring the environment and product markets, ensuring compliance with customer and regulatory requirements, implementing resource conservation measures, exceeding compliance standards, and enhancing investor and stakeholder confidence. While extreme weather, environmental regulatory changes and customer preferences are not expected to have a material adverse impact on our operations, we will continue to monitor climate-related risks and take steps to mitigate potential physical and transition risks.