Jilin Province Chuncheng Heating Company Limited provided group earnings guidance for the six months ended June 30, 2022. For the period, the company expected that a net profit of approximately RMB 63 million will be recorded for the 2022 Interim Period, representing a decrease of approximately 50% as compared with the net profit for the corresponding period in 2021. The expected decrease is mainly attributable to (among others) the following factors: there was a sudden outbreak of novel coronavirus in Changchun City from early March to early May 2022. During the prevention and control period of the COVID-19 Epidemic, the government required an extension of heat supply for seven days, the Company's heat supply to customers increased accordingly, which resulted in a significant increase in the cost of heat supply in the first half of 2022; due to the rising coal prices, certain cogeneration plants reduced the output of heat transfer, and the duration for heat supply using coal-fired boilers by Jilin Province Xixing Energy
Limited, a subsidiary of the Company, in the 2022 Interim Period increased as compared with the corresponding period in the last year, which resulted in an increase in the cost of heat supply; and an increase in the ageing of contract assets of Jilin Province Changre Maintenance Service Company Limited and Changchun Runfeng Construction Installation Engineering Company Limited, subsidiaries of the Company, which resulted in an increase in impairment loss provided for contract assets.