三花智控:Zhejiang Sanhua Intelligent Controls Co., Ltd.2021 Annual Report

Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Zhejiang Sanhua Intelligent Controls Co. Ltd.2021 Annual Report
March 2022
1Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section I Important Notes Contents and Definitions
The Board of Directors Board of Supervisors Directors Supervisors and Senior Management
of Zhejiang Sanhua Intelligent Controls Co. Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report shall be authentic accurate complete and
free from material misstatement whether due to false record misleading statement or significant
omission and they will bear both individual and joint legal liabilities.Zhang Yabo the Company's legal representative Yu Yingkui the person in charge of the
accounting work and Sheng Xiaofeng the person in charge of accounting department (Accounting
Officer) hereby declare and warrant that the financial statements in this report are authent ic
accurate and complete.All directors attended the board meeting to review this report.This annual report involves forward-looking statements such as future plans and does not
constitute the Company's substantive commitment to investors. Investors are recommended to pay
attention to investment risks.The Company describes in detail concerning the possible risks and countermeasures in Section
XI “Outlook for the Future Development of the Company” under Section III “Management’sDiscussion and Analysis of Operations”. Please pay particular attention to relevant contents.The profit distribution proposal approved by the board of directors is as follows: Based on
provisional 3569927512 shares of capital stock as of March 18 2022 [note] cash dividend of
RMB 1.50 (including tax) will be distributed to all shareholders for every 10 shares. The Company
will not distribute bonus shares or convert capital reserves to share capital.If the total share capital of the Company changes due to the conversion of convertible bonds
share repurchase exercise of equity incentive scheme refinancing and listing of new shares before
the implementation of the distribution plan the total distribution amount shall be adjusted
accordingly based on the principle of unchanged distribution proportion.
2Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Note: As of March 18 2022 the share capital of the Company was 3591098972 shares of which the number of repurchased
shares is 21171460. According to the provisions of the Company Law the shares held by the listed company through the repurchase
account do not enjoy the right to participate in profit distribution or the conversion of capital reserve into share capital.
3Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
CONTENTS
Section I Important Notes Contents and Definitions... 2
Section II Corporate Profile and Key Financial Ind... 7
Section III Management’s Discussion and Analysis o.. 13
Section IV Corporate Governance .................... 45
Section V Environmental and Social Responsibility .. 77
Section VI Significant Events ...................... 85
Section VII Changes in Shares and Information abou. 109
Section VIII Information of Preferred Shares ...... 123
Section IX Bonds .................................. 124
Section X Financial Report ........................ 128
4Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Documents Available for Inspection
1. The 2021 annual report signed by the chairman of the board.
2. The financial report signed and sealed by the Company's legal representative chief finance officer and
person in charge of accounting department.
3. Articles of Association.
4. Original copy of all the Company's documents and announcements published on the newspapers
designated by CSRC within the reporting period.
5. Other documents available for inspection.
5Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Definitions
Items Refers to Definition
The Company Company Refers to Zhejiang Sanhua Intelligent Controls Co. Ltd.The Articles of Associations Refers to Articles of Associations for Zhejiang Sanhua Intelligent Controls Co. Ltd.The CSRC Refers to China Securities Regulatory Commission
SZSE Refers to Shenzhen Stock Exchange
Zhejiang Securities Regulatory Bureau of China Securities Regulatory
Zhejiang Securities Regulatory Bureau Refers to
Commission
General Meeting Refers to General Meeting of Zhejiang Sanhua Intelligent Controls Co. Ltd.Board of Directors Refers to The Board of Directors of Zhejiang Sanhua Intelligent Controls Co. Ltd.Board of Supervisors Refers to The Board of Supervisors of Zhejiang Sanhua Intelligent Controls Co. Ltd.Yuan Refers to RMB
6Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section II Corporate Profile and Key Financial Indicators
I. Corporate Information
Stock abbreviation Sanhua Intelligent Controls Stock code 002050
Stock Exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in浙江三花智能控制股份有限公司
Chinese
Abbr. of the Company name三花智控
in Chinese (if any)
Name of the Company in
ZHEJIANG SANHUA INTELLIGENT CONTROLS CO. LTD.English (if any)
Abbr. of the Company name
SANHUA
in English (if any)
Legal representative Zhang Yabo
Registered Address Xialiquan Qixing Street Xinchang Zhejiang
Post Code of Registered
312500
Address
Historical changes of the
N/A
Company's registered address
Office Address No. 219 Woxi Avenue Meizhu Xinchang Zhejiang China
Post Code of Office Address 312532
Website http://www.zjshc.com
E-mail shc@zjshc.com
II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name Hu Kaicheng Wang Yutong
No. 12 Baiyang Street Qiantang New No. 219 Woxi Avenue Meizhu Xinchang
Address
District Hangzhou Zhejiang China County Zhejiang China.Tel. 0571-28020008 0575-86255360
Fax 0571-28876605 0575-86563888-8288
E-mail shc@zjshc.com shc@zjshc.com
7Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
III. Information Disclosure and Place of the Report
The website of the stock exchange where the
Shenzhen Stock Exchange : http://www.szse.cn
Company discloses the annual report
Media and website designated by the Company for China Securities Journal Securities Times
release of the Annual Report CNINFO (http://www.cninfo.com.cn)
Place where the Annual Report is available for
Office of the Board of Directors of the Company
inspection
IV. Company Registration and Alteration
Organization code 913300006096907427
Changes in principle business activities
No change
since the Company was listed (if any)
Changes of controlling shareholders of the
No change
Company (if any)
V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm Pan-China Certified Public Accountants LLP
Business address of the accounting Building B China Resources Building 1366 Qianjiang Road Shangcheng District Hangzhou
firm City Zhejiang Province China
Name of accountants for writing
Luo Xunchao Zhang Xin
signature
Sponsor institution engaged by the Company to continuously perform its supervisory function during the
Reporting Period
√Applicable □ Not applicable
Name of sponsor institution Office address Name of sponsor representative Supervision period
No. 201 Wuxing Road June 30 2021 to December 31
Zheshang Securities Co. Ltd Wang Yiming Pan Xun
Hangzhou Zhejiang 2022
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reporting
period
□ Applicable √ Not applicable
VI. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
2021 2020 YoY Change (%) 2019
Operating Revenue (RMB) 16020809805.52 12109833368.44 32.30% 11287489442.23
8Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Net Profit Attributable to
Shareholders of the Listed 1684044407.47 1462158821.57 15.18% 1421204236.13
Company (RMB)
Net Profit Attributable to
Shareholders of the Listed
Company after Deducting 1487491274.21 1270609746.53 17.07% 1351335040.19
Non-recurring Gains and Losses
(RMB)
Net Cash Flow Generated by
1555819103.292087343783.11-25.46%1900163604.60
Operational Activities (RMB)
Basic Earnings per Share
0.470.4114.63%0.40
(RMB/Share)
Diluted Earnings per Share
0.470.4114.63%0.40
(RMB/Share)
Weighted Average ROE 15.98% 15.04% 0.94% 16.08%
At the End of 2021 At the End of 2020 YoY Change (%) At the End of 2019
Total Assets (RMB) 23619966759.91 17032530730.18 38.68% 14790190170.64
Net Assets Attributable to
Shareholders of the Listed 11150308271.43 10064794519.57 10.79% 9291632928.45
Company (RMB)
The Company's net profit before and after deducting non-recurring profit and loss in the last three fiscal years
whichever is lower is negative and the audit report of the last year shows that the Company's ability to continue as a
going concern is uncertain
□ Yes √ No
The lower of the net profit before and after deducting the non-recurring profit and loss is negative
□ Yes √ No
VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assets according to the disclosure of
International Financial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.
2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
9Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Accounting Standards and China Accounting Standards in the reporting period.VIII. Key Quarterly Financial Indicators
Unit: RMB
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Total revenue 3408216862.74 4265864898.95 4045798609.62 4300929434.21
Net profit attributable to
360076304.91463804916.79469290292.27390872893.50
shareholders of the Company
Net profit attributable to
shareholders of the Company
321171217.99398600437.79446694527.91321025090.52
excluding non-recurring gains
and losses
Net cash flows from operating
189951485.75635265137.51335389549.66395212930.37
activities
Whether there is significant difference between the above individual or aggregate financial indicators and that of
what disclosed in the quarterly report half-year report
□ Yes √ No
IX. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2021 2020 2019 Note
Profit or loss from disposal of non-current
assets (including the write-off for the -7164158.61 -14770607.27 -6087268.05
impairment provision of assets)
The government subsidies included in the
current profits and losses (excluding the
government subsidy closely related to
regular course of business of the Company
101910018.36134101082.0086311151.49
and government subsidy based on
standard quota or quantitative continuous
application according to the state
industrial policy.)
Capital occupation fees charged to
non-financial enterprises included in 61191.86
current profits and losses
Profits and losses attributed to change in In order to avoid the
fair value for held-for-trading financial price risk of raw
123439358.5491394679.61563966.95
assets derivative financial assets materials and
held-for-trading financial liabilities and prevent exchange
10Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
derivative financial liabilities; and rate risk the
investment income from disposal of Company and its
held-for-trading financial assets subsidiaries have
derivative financial assets carried out
held-for-trading financial liabilities derivatives business
derivative financial liabilities and other including futures
debt investments excluding the effective contracts and
hedging business related to the regular foreign exchange
business operation of the Company. forward contracts.In 2021 the futures
income was 31.4482
million yuan and the
foreign exchange
income was 91.9912
million yuan. In
2020 the futures
income was 36.3784
million yuan and the
foreign exchange
income was 55.0162
million yuan.Meanwhile the
exchange loss was
95.9901 million
yuan in 2021 and
112.6759 million
yuan in 2020.According to the
No. 1 explanatory
announcement on
information
disclosure of public
companies-
Non-recurring gains
and losses
exchange gains and
losses are recurring
gains and losses
and Futures and
forward gains and
losses are
non-recurring gains
and losses.Other non-operating income and -3359134.55 620065.25 5445213.46
11Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
expenditures except the items mentioned
above
Other gains and losses items that fit the
definition of non-recurring gains and 765674.33 1246912.65 92329.55
losses
Less: Impact of income tax 17841108.54 19272109.42 13966646.08
Impact of the minority interests (after
1197516.271770947.782550743.24
tax)
Total 196553133.26 191549075.04 69869195.94 --
Details of other gains and losses items that meet the definition of non-recurring gains and losses:
□Applicable √ Not applicable
The reasons for the non-recurring gains and losses items defined or listed in the Explanatory Announcement No. 1
of Information Disclosure of Listed Companies – Non-recurring Gains and Losses are defined as recurring gains
and losses items
□Applicable √ Not applicable
In the reporting period the Company did not define any non-recurring gains and losses items defined and listed in
the Explanatory Announcement No. 1 of Information Disclosure of Listed Companies – Non-recurring Gains and
Losses as recurring gains and losses items.
12Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section III Management’s Discussion and Analysis of Operations
I. Industry of the Company during the reporting period
The Company shall comply with the disclosure requirements of automobile manufacturing related industries listed
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.
1. Industry development
(1) Refrigeration and air conditioning electrical components industry
China is the largest manufacturing base of A/C and refrigerators in the world and its production and sales volume
ranks first globally. In line with the trend of environmental protection in the world energy-saving inverter and
intelligent technology have become the trend which puts forward a series of new requirements for the market of
control components and also brings new development opportunities. As a leading enterprise in the refrigeration
control components industry the Company will follow the trend firmly seize this opportunity and develop
steadily.
(2) Automotive components industry
The global automobile industry has been developing rapidly which also drives the market demand of automotive
thermal management products to continue to grow substantially. In recent years the development of new energy
vehicles has become a certain trend which puts forward higher and more updated requirements for thermal
management products no matter in hybrid pure electric or hydrogen energy vehicles. The Company is positioned
in the field of new energy vehicle thermal management system gradually expands from components to module
and subsystems and has become the supplier of Valeo Volkswagen Mercedes Benz BMW Volvo Toyota GM
Geely BYD SAIC NIO and other cooperative partners.
2. Industry status
The Company is the world's largest manufacturer of refrigeration control components and the world's leading
manufacturer of automotive thermal management system control components. "Sanhua" refrigeration intelligent
control components have become a world-famous brand and a strategic partner of many automobile enterprises
and air-conditioning refrigeration appliance manufacturers in the world. After more than 30 years of development
the Company has established a leading position in the global market of refrigeration and automotive thermal
management. The market share of the Company's Electronic Expansion Valve Four-way Reversing Valve
Solenoid Valve Microchannel Heat Exchanger Automotive Electronic Expansion Valve Thermal Management
Integrated Module for new energy vehicle Omega Pump ranks first globally. The market share of the Company's
Service Valve Vehicle Thermal Expansion Valve and Receiver Drier is in the leading position in the world.II. The Principal Business of the Company during the Reporting Period
The Company shall comply with the disclosure requirements of automobile manufacturing related industries listed
13Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.The Company adheres to the "Focus on Leading Innovation and Transcendence" business path concentrating on
the research and application of heat pump technology and thermal management system products focusing on the
development of environmental thermal management solutions for heat exchange and temperature intelligent
control. According to the different stages and characteristics of strategic business and their development the
Company's business is mainly divided into refrigeration and air conditioning electrical components business and
automotive components business. Refrigeration and air conditioning electrical parts business is committed to the
professional operation of building HVAC and electrical equipment. Its main products include Four-way Reversing
Valve Electronic Expansion Valve Solenoid Valve Microchannel Heat Exchanger Omega Pump etc. which are
widely used in A/C refrigerator cold chain logistics dishwasher and other fields. The automotive components
business focuses on in-depth research in the field of automotive thermal management. Its main products include
Thermal Expansion Valve Electronic Expansion Valve Electronic Water Pump and Thermal Management
Integrated Module for new energy vehicle etc. which are widely used in both new energy vehicles and traditional
fuel vehicles.During the reporting period the Company's main business and its business model have not changed.Manufacturing production and operation of vehicles during the reporting period
□Applicable √ Not applicable
Manufacturing production and operation of vehicle components during the reporting period
√Applicable □ Not applicable
Production output Sales volume
2021 2020 YoY Change (%) 2021 2020 YoY Change (%)
Classified by Components and Parts (Unit: million PCs)
New energy vehicle
thermal management 19.4666 7.7423 151.43% 18.8118 7.0355 167.39%
products
Tranditional fuel
vehicle thermal
109.190585.378727.89%108.249184.639127.89%
management
products
Classified by Regions (Unit: million PCs)
Domestic 84.2232 56.8080 48.26% 83.1957 55.9441 48.71%
Overseas 44.4339 36.3129 22.36% 43.8652 35.7305 22.77%
Explanation on why the related data varied by more than 30% on a YOY basis
√ Applicable □ Not applicable
This is mainly due to the continuous upsurge of the new energy vehicle market which drives the rapid growth of
the production and sales of new energy vehicle thermal management products.
14Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Sale model of vehicle components
The Company's customers are mainly domestic and foreign vehicle manufacturers and tier 1 suppliers. The sale
mode is mainly direct sale.Whether the Company carries out auto finance business
□Applicable √ Not applicable
Whether the Company carries out business related to new energy vehicles
√Applicable □ Not applicable
Production and operation of new energy vehicles parts
Unit: million PCs
Product category Production capacity Production volume Sales volume Revenue (RMB)
New energy vehicle
thermal management 26.00 19.4666 18.8118 4003834979.86
products
Subsidy income of new energy vehicles
Not applicable
III. Core Competitiveness Analysis
The Company shall comply with the disclosure requirements of automobile manufacturing related industries listed
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.
1. Clear strategic layoutThe Company adheres to the "Focus on Leading Innovation and Transcendence” business path takes the
research and application of heat pump technology and thermal management system products as the core firmly
grasps the development theme of energy conservation environmental protection and intelligent control upgrades
from "mechanical parts development" to "system control technology solution development of electronic control
integration". The Company’s products series are expanded from household A/C and refrigerator components to the
field of commercial A/C and commercial refrigeration and extending to the direction of inverter control
technology and system integration and upgrading. Meanwhile after the injection of automotive business it gives
full play to the synergy effect with the original business continues to deepen the research and development of new
energy vehicle thermal management system components and actively explores the deeper application of thermal
management components and subsystems in the automotive field so as to provide global customers with
competitive environmental intelligent control solutions.
2. Technology leading customer oriented
As a national high-tech enterprise the Company has always adhered to the technological route of independent
development and innovation. For decades it has focused on the field of intelligent control and vigorously
cultivated core technologies with independent intellectual property rights. It has been authorized with 2802
patents both domestic and abroad including 1366 invention patents. All products services and quality of the
15Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Company take meeting the needs of customers as the first priority.
3. Quality assurance scale economy effect
The Company's products cover refrigeration A/C electrical components and automotive components industry. The
market share of the Company's Electronic Expansion Valve Four-way Reversing Valve Solenoid Valve
Microchannel Heat Exchanger Automotive Electronic Expansion Valve Thermal Management Integrated Module
for new energy vehicle Omega Pump ranks first globally. The market share of Service Valve Vehicle Thermal
Expansion Valve and Receiver Drier is in the leading position in the world. The Company has established a
complete and strict quality assurance system achieved ISO9001 IATF16949 QC080000 quality system
certification. The Company won the National Quality Award Zhejiang Quality Award and won the high
comments from JCI Daikin Carrier Midea Gree Haier Toyota Benz Volkswagen Valeo and other well-known
enterprises at home and abroad.
4. Advantages of global marketing network and production base
Since the 1990s the Company has focused on expanding the international market and has established overseas
subsidiaries in Japan South Korea Singapore the United States Mexico Germany and other places to build a
global marketing network. At the same time it has established overseas production bases in the United States
Poland Mexico Vietnam India and other places and gradually it has ability to cope with globalization. And in
practice we have trained a number of management talents who can meet the needs of business development in
different countries and regions.IV. Main Business Analysis
1. Overview
In 2021 under the background of the continuous impact of the overseas epidemic the sharp rise in international
shipping prices the continuous rise in the price of bulk raw materials the appreciation of the RMB exchange rate
against the US dollar and other factors the challenges of economic development are unprecedented. However in
the medium and long term the upgrading of industrial structure consumption diversification the guidance of
national policies on the development of green and intelligent industries and the upgrading of product standards in
the household appliance industry will bring new opportunities and growth engine. Specific to the industry in
which the Company operates the refrigeration and air conditioning electrical parts business is driven by the
upgrading of household appliance consumption concept and it still maintains sustained and stable growth. The
automotive parts business has driven the rapid growth of performance due to the upsurge of the new energy
vehicle market.During the reporting period the total revenue is RMB 16.02 billion a year-on-year increase of 32.30%; the net
income is RMB 1.99 billion a year-on-year increase of 16.74%; the net profit attributable to shareholders of the
listed Company is RMB 1.68 billion a year-on-year increase of 15.18%. The revenue of refrigeration and air
conditioning electrical components business is RMB 11.22 billion a year-on-year increase of 16.36%; the revenue
of automotive components business is RMB 4.80 billion a year-on-year increase of 94.50%.
1. Focus on operation and deepen industrial layout
16Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
(1). Refrigeration and air conditioning electrical components business
The refrigeration and air conditioning electrical parts business seizes the development opportunities of energy
efficiency upgrading refrigerant switching consumption upgrading VRF and other related business products
continue to expand customers strengthen the acquisition and transformation of business opportunities and
improve product sales. At the same time it actively expands to kitchen electrical parts further broaden the
Company's potential development fields and continuously improve its sustainable profitability and market
competitiveness. Relying on the increasing of domestic dishwasher penetration rate and the transformation of
internal supply chain Aweco business has achieved continuous positive profitability in 2021. After the relocation
of the new plant in Sanhua Vietnam it has been recognized by important customers in the United States and the
cost of some products has been lower than that in China. In addition the construction of the plant in Daming city
will be accelerated which lays a solid foundation for the development of commercial fields brought by the
consumption upgrading and industrial upgrading of the Chinese market in the future.
(2). Automotive components business
The automotive components business adheres to positioning strategic customers orderly promotes the production
line construction of the Mexican factory and Shaoxing Binhai factory so as to meet the increasing capacity
requirements of customers. By the end of 2021 all the projects from raised funds investment have been tested and
put into operation. On the premise of meeting the projects promotion of current customers the Company actively
develops competitive products and techniques. During the reporting period the Company continued to expand
new customers and achieved comprehensive business cooperation with domestic emerging vehicle makers
traditional fuel vehicle makers and joint venture vehicle enterprises which laid the foundation for the subsequent
sustained rapid growth. In terms of internal management take first-class enterprises as benchmarks sort out and
establish a global quality management system and improve the quality management of factories at home and
abroad. Under the challenge of rising raw material prices and freight charges we will spare no effort to promote
the cost reduction and efficiency increase of all employees and gradually promote the linkage of product prices
with downstream customers.
2. Continue to promote investment and construction and improve the profitability of the Company
The Company's convertible bonds were listed and traded in Shenzhen Stock Exchange on June 30 2021 raising
RMB 3 billion which is mainly used for "Construction project of 65 million sets of commercial refrigeration and
air conditioning intelligent control components per year" and "Technical transformation project of 50.5 million
sets of high-efficiency and energy-saving refrigeration and air conditioning control components per year". The
implementation of these projects will help promote the development of the Company's products towards a more
efficient and energy-saving direction further improve the Company's business scale and competitive advantage
optimize the business structure improve the Company's sustainable profitability and lay a foundation for the
Company to achieve the medium and long-term strategic development goals.
3. Strengthen the creation of product strength and improve the patent layout of strategic products
During the reporting period the Company invested 751 million yuan in R & D an increase of 44.9% year-on-year.This continuous R & D investment was used to build the product strength. And the Company participated in
market competition with new products and new technologies through continuous optimization iteration. In terms
of patent layout we will continue to implement "high-quality patents and high-value patents" through specialized
promotion of the patent layout of key products. By the end of the report period 2802 patents have been
authorized at home and abroad including 1366 invention patents.
17Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
4. Pay attention to the construction of talent team and establish sustained and long-term incentive mechanism
The Company continued to deepen the work of "strengthening the talents streamlining and high efficiency"
promote each business unit to optimize the talent development and elimination mechanism and comprehensively
apply the results of talent review. At the same time during the reporting period the Company carried out
Scientific and Technological Achievement Award and Operation and Management Achievement Award
encouraged outstanding talents to create greater value in the future and further established and improved the
Company's long-term incentive mechanism.
5. Attach great importance to the maintenance of investor relations strengthen the awareness of service and return to
shareholders
During the reporting period in order to safeguard the interests of shareholders and enhance the confidence of
investors the Company carried out share repurchase with its own funds to protect the long-term interests of the
Company and shareholders. Meanwhile the Company strengthened and improved the construction of internal
control system standardized the operation of the three committees improved the Company's information disclosure
investor relationship management and other aspects. And ensured smooth communication between investors and
listed company through interactive platform investor call answering on-site reception and other means.
2. Operating incomes and operating costs
(1) Operating income structure
Unit: RMB
2021 2020 YoY Change (%)
Amount Proportion to Amount Proportion to
operating revenue operating revenue
Total Revenue 16020809805.52 100% 12109833368.44 100% 32.30%
Classified by Industry
General Equipment
Manufacturing 16020809805.52 100.00% 12109833368.44 100.00% 32.30%
Industry
Classified by Products
Refrigeration A/C
Electrical 11218320924.79 70.02% 9640647193.31 79.61% 16.36%
Components
Automotive
4802488880.7329.98%2469186175.1320.39%94.50%
Components
Classified by Region
Domestic 8112471456.27 50.64% 5864589812.78 48.43% 38.33%
Overseas 7908338349.25 49.36% 6245243555.66 51.57% 26.63%
Classified by Sales Model
18Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Direct Sale 16020809805.52 100.00% 12109833368.44 100.00% 32.30%
(2) Industries products regions or sale models accounting for more than 10% of the Company’s operating
income or operating profit
√ Applicable □ Not applicable
Unit: RMB
YoY Change
YoY Change YoY Change
Operating (%) of
Operating cost Gross margin (%) of (%) of gross
revenue operating
operating cost margin
income
Classified by Industry
General
Equipment 16020809805 11907350969
25.68%32.30%36.27%-2.16%
Manufacturing .52 .11
Industry
Classified by Products
Refrigeration
112183209248250209698.
A/C Electrical 26.46% 16.36% 18.84% -1.53%.7967
Components
Automotive 4802488880. 3657141270.
23.85%94.50%103.63%-3.41%
Components 73 44
Classified by Region
8112471456.6153997773.
Domestic 24.14% 38.33% 41.95% -1.93%
2709
7908338349.5753353196.
Overseas 27.25% 26.63% 30.68% -2.25%
2502
Classified by Sales Model
1602080980511907350969
Direct Sale 25.68% 32.30% 36.27% -2.16%.52.11
Adjusted statistics of principal business are based on the caliber at the end of the reporting period of last year if
the statistics caliber of principal business has been changed during the reporting period
□ Applicable √ Not applicable
(3) If revenue from physical products sales greater than revenue from providing services
√ Yes □ No
Industry Item Unit 2021 2020 YoY Change (%)
General Sales Yuan 16020809805.52 12109833368.44 32.30%
19Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Equipment Production Yuan 17250026781.56 12170122424.44 41.74%
Manufacturing
Inventory Yuan 3718213579.16 2402338998.74 54.77%
Industry
Explanation on why the related data varied by more than 30% on a YOY basis
√ Applicable □ Not applicable
It is mainly due to the increase of production and inventories in warehouse driven by the growth of sales.
(4) Fulfillment of signed significant sales and procurement contracts by the reporting period
□ Applicable √ Not applicable
(5) Operating cost structure
Classification based on industry and products
Unit: RMB
20212020
YoY Change
Industry Item Proportion to Proportion to
Amount Amount (%)
operating cost operating cost
General
Equipment 8798731493. 6445946206.Material 73.89% 73.77% 36.50%
Manufacturing 26 35
Industry
General
Equipment 1645068024. 1274879076.Labor 13.82% 14.59% 29.04%
Manufacturing 73 04
Industry
General
Equipment
Depreciation 344128341.18 2.89% 254799059.70 2.92% 35.06%
Manufacturing
Industry
General
Equipment
Freight 514826171.07 4.32% 284652271.01 3.26% 80.86%
Manufacturing
Industry
General
Equipment
Energy Source 264446475.24 2.22% 188350845.76 2.16% 40.40%
Manufacturing
Industry
General
Equipment
Other 340150463.63 2.86% 289593579.50 3.30% 17.46%
Manufacturing
Industry
20Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Unit: RMB
20212020
YoY Change
Product Item Proportion to Proportion to
Amount Amount (%)
operating cost operating cost
Refrigeration
6057972672.5186890211.
A/C Electrical Material 50.88% 59.36% 16.79%
7238
Components
Refrigeration
1229719787.1059871851.
A/C Electrical Labor 10.33% 12.13% 16.03%
7173
Components
Refrigeration
A/C Electrical Depreciation 241554717.50 2.03% 201479294.12 2.31% 19.89%
Components
Refrigeration
A/C Electrical Freight 381394362.19 3.20% 224442230.91 2.57% 69.93%
Components
Refrigeration
A/C Electrical Energy Source 170046647.87 1.43% 140848963.04 1.61% 20.73%
Components
Refrigeration
A/C Electrical Other 169521510.68 1.42% 128686216.03 1.47% 31.73%
Components
Automotive 2740758820. 1259055994.Material 23.02% 14.41% 117.68%
Components 54 97
Automotive
Labor 415348237.02 3.49% 215007224.31 2.46% 93.18%
Components
Automotive
Depreciation 102573623.68 0.86% 53319765.58 0.61% 92.37%
Components
Automotive
Freight 133431808.88 1.12% 60210040.10 0.69% 121.61%
Components
Automotive
Energy Source 94399827.37 0.79% 47501882.72 0.54% 98.73%
Components
Automotive
Other 170628952.95 1.43% 160907363.47 1.84% 6.04%
Components
(6) Any change in consolidation scope during the reporting period
√Yes □ No
(I). Business combination under different control
21Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
1. Business combination under different control in this reporting period
(1) Basic information
Date of equity Cost of equity
Name of the acquiree Proportion of equity acquisition Equity acquisition method
acquisition acquisition
Zhejiang Sanhua Plate
RMB 28.00 milli
Exchange Technology Co. 2021-12-14 70% Equity transfer agreement
on
Ltd
(Continued)
Determination Revenue of the acquiree from Net profit of the acquiree
Date of equity
Name of the acquiree basis of purchase the acquisition date to the end from the acquisition date to
acquisition
date of the period the end of the period
Zhejiang Sanhua Plate Complete the
Exchange Technology Co. 2021-12-14 equity transfer and 0.00 0.00
Ltd make payment
(2) Other instructions
In December 2021 the Company acquired 70% equity of Zhejiang Sanhua Plate Exchange Technology Co. Ltd.(hereinafter referred to as Sanhua Plate Exchange) from Su Jun. The pricing of this equity transaction is based on
the assessed value the basic transfer price is 28 million yuan and the assessment payment of consideration is 7
million yuan.If the net profit of the Sanhua Plate Exchange in 2022 realize 6.4 million yuan the Company will pay another 3.5
million yuan. Otherwise the Company will not need to pay any more. If the net profit of Sanhua Plate Exchange
in 2023 realize 8 million yuan the Company will pay another 3.5 million yuan. Otherwise the Company will not
need to pay any more.According to the profit forecast data and the judgment of the Company's management it is difficult for Sanhua
Plate Exchange to achieve the assessment net profit and the assessment payment of consideration is estimated at
zero yuan.
2. Cost of M&A and goodwill
Items Amount
Cost of M&A 28000000.00
Cash 28000000.00
Less: fair value of identifiable net assets obtained 20408169.39
Goodwill 7591830.61
3. Identifiable assets and liabilities of the acquiree on the acquisition date
(1) Details
Item Sanhua Plate Exchange
Fair value on the purchase date Book value on purchase date
Assets 41750357.62 25060423.80
Accounts receivable 2456829.86 2456829.86
Inventory 7730397.40 7730397.40
Other current assets 1769614.51 1769614.51
Fixed assets 6672716.01 4214515.28
22Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Assets with right of use 4019018.35 4019018.35
Intangible assets 12917600.00
Long term deferred 6068825.10 4754692.01
expenses
Deferred tax assets 115356.39 115356.39
Liabilities 12595829.92 10092339.85
Accounts payable 5547165.87 5547165.87
Salary payable 526155.63 526155.63
Lease liabilities 4019018.35 4019018.35
Deferred tax liability 2503490.07
Net assets 29154527.70 14968083.95
Less: Minority interests 8746358.31 4490425.19
Net assets acquired 20408169.39 10477658.76
(2) Determination method of fair value of identifiable assets and liabilities
The fair value of identifiable assets and liabilities of Sanhua Plate Exchange is determined at the assessed value.(II). Changes in consolidation scope due to other reasons
Actual
Proportion of
Equity acquisition Date of equity contribution at
Name of subsidiaries capital
method acquisition the end of the
contribution
period
Zhejiang Sanhua Automotive Components Trading Co.New investment 2021-08-31 0.00 100%
Ltd
Zhejiang Sanhua Heat Exchanger Co. Ltd New investment 2021-12-13 0.00 100%
(7) Significant change or adjustment of the Company’s business products or services during the reporting
period:
□ Applicable √ Not applicable
(8) Major customers and suppliers:
Major customers of the Company
Sales to top five customers (RMB) 5603027061.52
Total sales to top five customers as a percentage of the
34.98%
total sales for the year (%)
Total sales to the related parties in top five customers as
0.00%
a percentage of the total sales of the year (%)
Information on top five customers
No. Name of Customer Sales Amount (RMB) Percentage of total sales for the year
1 First 1799438899.34 11.23%
23Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2 Second 1061623336.82 6.63%
3 Third 1060089878.28 6.62%
4 Fourth 1023667724.20 6.39%
5 Fifth 658207222.88 4.11%
Total -- 5603027061.52 34.98%
Other information of major customers
□Applicable√ Not applicable
Major suppliers of the Company
Total purchases from top five suppliers (RMB) 1460941015.24
Total purchases from top five suppliers as a percentage
14.80%
of the total purchases for the year (%)
Total purchases from the related parties in the top five
suppliers as a percentage of the total purchases for the 0.00%
year (%)
Information on top five suppliers of the Company
No. Name of Supplier Purchase Amount (RMB) Percentage of total purchase for the year
1 First 565773118.04 5.73%
2 Second 329541125.17 3.34%
3 Third 251506989.10 2.55%
4 Fourth 157097558.68 1.59%
5 Fifth 157022224.25 1.59%
Total -- 1460941015.24 14.80%
Other information on major suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
2021 2020 YoY Change (%) Note of significant change
It is mainly due to the increase of
Sales expenses 449226532.55 365125043.08 23.03% employees’ salary storage and
handling fee etc
Administrative
875802861.33764084428.8814.62%
expenses
Mainly due to the increase of interest
Financial expenses 84108848.11 128860093.64 -34.73%
income
R&D expenses 751138559.24 518401363.63 44.90% It is mainly due to the increase of
24Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
employees’ salary material and
power cost mold manufacturing
cost etc
4. R&D Investment
√Applicable □Not applicable
Name of main R & Progress of the Expected impact on the future
Project purpose Objectives to be achieved
D projects project development of the Company
To extend portfolio of coolant
High Power Development of high Development of high power
pumps enhance its
Coolant Pump power coolant pumps Completed coolant pumps to cover
competitiveness and increase
Development (high power level) market demand
more market share
Development of position To improve product
Valve Position Achieve low-cost and
control for automotive competitiveness meet
Control Completed high-precision position
refrigerant valves and customer demands and
Development control for valves
coolant valves increase market share
Development of To expand thermal
Heat Pump Module Development of heat management system market in
Improve productivity and
with Integrated pump modules based on Ongoing the new energy vehicles to
increase product reliability
Control of Valves valves integration achieve new market growth of
and Sensors heat pump modules
New Integrated Extend system operation
To enrich product diversity of
Module temperature to extreme low
Development of new heat new energy vehicle thermal
Development and Completed end and reduce the energy
pump module management systems and
System Application consumption of air
expand market opportunities
Research conditioning system
Development of key
To expand CO2 refrigerant
CO2 Refrigerant components for new Enhance product
Completed product market in the new
Valve Development energy vehicle thermal competitiveness
energy vehicles
management systems
To enrich the product lines;
Develop E-type Develop standardized enhance the product
electronic platform for EEV Completed Realize noise optimization competitiveness applicable to
expansion valve products refrigerating AC area; raise
the market sharing
Realize the product
Develop Q05-type Develop new products
miniaturization; improve the Explore the new growth point
gas proportional applied in kitchen Completed
performance of voltage of kitchen appliance market
valve appliances
stabilization
Aluminium wire Develop a new type of Completed Realize the application of new Improve product cost
25Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
and chain pole motor for washing materials and new competitiveness and market
motor development heating pumps enrich the technologies share
types of heating pumps
and meet the demands of
different customers
Enhance the market
New Pressure Enhance the market
Develop competitive Pressure competitiveness of Pressure
Controller competitiveness of Completed
Control Valve Controller expand the
Development Pressure Controller
Company's market share
Head Pressure New development of Develop competitive Head Enrich the company's product
Control Valve Head Pressure Control Ongoing Pressure Control Valve with line expand the company's
Development Valve product line high reliability market share
Automotive
Improve the company's
Eletromagnet Expand product line in Improve the reliability of
Completed business engagement with
Switch automotive field Automotive Eletromagnet
strategic customers
Development
Development of Develop microchannel
Improve capacity and water
low cost and high evaporator for computer
drainage performance realize Explore new growth of IDC
efficienct room and indirect Ongoing
the MCHE evaporator evaporator
microchannel evaporative cooling air
application for IDC
evaporator for IDC conditioner
R & D personnel of the Company
2021 2020 Change proportion
Number of R & D personnel
1890157619.92%
(person)
Proportion of R & D personnel 13.05% 12.06% 0.99%
Academic structure of R & D
——————
personnel
Junior college and below 466 425 9.65%
Bachelor degree 1104 878 25.74%
Master degree and above 320 273 17.22%
Age composition of R & D
——————
personnel
Under the age of 30 748 525 42.48%
Age between 30 and 40 821 761 7.88%
Over the age of 40 321 290 10.69%
R & D investment of the Company
2021 2020 YoY Change (%)
Amount of R&D expenses 751138559.24 518401363.63 44.90%
26Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
(RMB)
R&D investment as a
percentage of operating 4.69% 4.28% 0.41%
income
Capitalized R&D expenses
0.000.000.00%
(RMB)
Capitalized R&D expenses as
a percentage of R&D 0.00% 0.00% 0.00%
expenses
Reasons and effects of major changes in the composition of R & D personnel of the company
□ Applicable √ Not applicable
Reason of significant change of total R&D expenses as a percentage of total revenue compared to last year
□ Applicable √ Not applicable
Reason and explanation of its reasonableness of significant change of the capitalized R&D expenses
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
Items 2021 2020 YoY Change (%)
Subtotal of cash inflows from
16425564998.5412367638678.5732.81%
operating activities
Subtotal of cash outflows
14869745895.2510280294895.4644.64%
from operating activities
Net cash flows from
1555819103.292087343783.11-25.46%
operating activities
Subtotal of cash inflows from
805822215.02644636918.3925.00%
investing activities
Subtotal of cash outflows
5855480452.101439811450.15306.68%
from investing activities
Net cash flows from
-5049658237.08-795174531.76-535.04%
investing activities
Subtotal of cash inflows from
4431276476.922163516795.02104.82%
financing activities
Subtotal of cash outflows
1607793271.802559032808.73-37.17%
from financing activities
Net cash flows from
2823483205.12-395516013.71813.87%
financing activities
Net increase in cash and
-710141813.45846361023.53-183.91%
cash equivalents
Explanation of why the related data varied significantly on a YoY basis
√ Applicable □ Not applicable
27Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
1. The net cash flow from investing activities decreased by 535.04% mainly due to the purchase of large
certificates of deposit.
2. The net cash flow from financing activities increased by 813.87% mainly due to the issuance of convertible
bonds.
3. The cash and cash equivalents decreased by 183.91% mainly due to the purchase of large certificates of
deposit.Explanation of reasons leading to the material difference between cash flow from operating activities during the
reporting period and net profit for the year
□ Applicable √ Not applicable
V. Non-Core Business Analysis
√Applicable □Not applicable
Unit: RMB
Proportion to net
Amount Note of Change Sustainability
profit
Gains and losses of futures
contract settlement foreign
Investment
141572602.13 7.16% exchange forward contract No
Income
settlement bank financial
product etc.Floating profit and loss of
Gains and Losses foreign exchange
from Change of 3221397.38 0.16% instruments futures No
Fair Value instruments bank financial
products etc.Income from nonpayment
compensation and
Non-operating
4792550.68 0.24% liquidated damages gains No
Revenue
from retirement of fixed
assets etc.Loss on retirement of fixed
Non-operating
14928195.40 0.76% assets compensation No
Expenditures
expenditure donation etc.Credit
-56834285.92 -2.88% Bad debt loss etc. No
Impairment Loss
Loss on impairment of
Assets
-93213670.21 -4.72% inventories fixed assets No
Impairment Loss
goodwill etc.Gains on -387648.44 -0.02% Gains on disposal of fixed No
28Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Disposal of assets
Properties
The government grants of
Government subsidies
VAT refund of civil welfare
value-added tax rebate for
enterprises and software
civil affairs and welfare
Other Gains 122787760.00 6.21% product VAT exceeding tax
enterprises value-added tax
burden are sustainable
rebate for software
while the rest are not
products etc.sustainable
VI. Analysis of Assets and Liabilities
1. Material changes of assets
Unit: RMB
December 31st 2021 January 1st 2021
YoY
Percentage Change Note of significant change
Percentage of
Amount of total Amount (%)
total assets
assets
Mainly due to the increase of funds
Cash and Bank 3489687568.
6707721861.13 28.40% 20.49% 7.91% raised by issuing Sanhua convertible
Balances 14
bonds
Account 2355613299.
3516292868.3914.89%13.83%1.06%
Receivable 57
Contract assets 0.00% 0.00% 0.00%
2307761706.
Inventories 3637853809.47 15.40% 13.55% 1.85%
46
Investment
8531303.620.04%10067588.960.06%-0.02%
property
Long-term Equity
22680930.510.10%15219616.680.09%0.01%
Investment
3719643719.
Fixed Assets 4232706801.07 17.92% 21.84% -3.92%
40
Construction in
1343528875.405.69%628730529.073.69%2.00%
Progress
Assets with right
215324024.260.91%202831869.221.19%-0.28%
of use
Short-term
738190910.543.13%383088296.602.25%0.88%
borrowings
29Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Contractual
79816249.220.34%42581607.670.25%0.09%
liabilities
Mainly due to the transfer of some
Long-term 1707918994.
801461958.89 3.39% 10.03% -6.64% guaranteed loans into non-current
borrowings 87
liabilities due within one year
Lease liabilities 157981678.16 0.67% 149779815.53 0.88% -0.21%
Non-current
Mainly due to the increase of
liabilities due 1763342887.58 7.47% 153273858.59 0.90% 6.57%
guaranteed loans due within one year.within one year
Mainly due to the increase in the
Bonds payable 2652035619.50 11.23% 0.00% 11.23%
issuance of Sanhua convertible bonds
Whether the proportion of overseas assets is relatively high
□ Applicable √ Not applicable
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit and Cumulative
loss of fair changes in Impairment Current
Opening Current sale Other Closing
Items value change fair value accrued in the purchase
balance amount changes balance
in the current included in current period amount
period equity
Financial Assets
1.
Held-for-tradi
ng financial
assets 752224861.7 646500000. 109383374
-596487.044255000.00
(Excluding 8 00 .74
derivative
financial
assets)
2.Derivative
54640365.
financial 58330486.53 -3690121.50
03
assets
Subtotal of
810555348.3646500000.164023739
financial -4286608.54 4255000.00
100.77
assets
810555348.3646500000.164023739
Total -4286608.54 4255000.00
100.77
Financial 7939957.91 -7939957.91 0.00
30Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
liabilities
Whether there were any material changes on the measurement attributes of major assets of the Company during
the reporting period:
□ Yes √ No
3. Assets right restrictions as of the end of reporting period
Items Closing Book value Reasons for being restricted
14584887.96 Margin deposited
Cash and Bank Balances
66852328.10 Margin deposited in futures institutions
Note Receivable 872096928.77 Pledge for financing
80207552.58 Evidence of supply chain finance that has been
Accounts receivable
endorsed paid or discounted but has not expired
Total 1033741697.41 -
VII. Analysis of Investment
1. Overview
√Applicable □ Not applicable
Investment during the Reporting Period Investment over the Corresponding Period
YoY Change (%)
(RMB) of Last Year (RMB)
398750500.00277394000.0043.75%
2. Significant equity investment during the reporting period
□Applicable √Not applicable
3. Significant non-equity investment during the reporting period
□Applicable √Not applicable
4. Financial asset portfolio
（1）Securities Investments
□ Applicable √ Not applicable
No such case in the reporting period.
（2）Derivatives Investments
√Applicable □ Not applicable
31Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Proporti
on of
Actua
investm
Amount l
Initial Amount Investm ent
Name of Amount of profit
Whether Types of amount purchas ent amount
derivati Relation Initial sold provisio and
it is a derivativ of ed amount in the
ves with Starting Termina investm during n for loss
related es derivati during at the compan
investm related date tion date ent the impairm durin
transacti investme ves the end of y’s net
ent party amount reportin ent g the
on nt investm reportin the assets at
operator g period accrued report
ent g period period end of
(if any) ing
the
period
reportin
g period
Futures
instrume
Futures
Non-rel nts
compani
ated No foreign
es and
parties exchange
banks
instrume
nts etc.Total -- --
Sources of funds for derivatives
Own fund
investment
Litigation involved (if applicable) N/A
Disclosure date of board of directors'
announcement on the approval of N/A
derivatives investment (if any)
Disclosure date of shareholder
meeting's announcement on the
N/A
approval of derivatives investment (if
any)
Risk analysis and description of
In order to avoid the price risk of raw materials and prevent exchange rate risk the
control measures for derivatives
Company and its subsidiaries have carried out derivatives business including futures
positions during the reporting period
instruments and foreign exchange instruments. The Company and its subsidiaries strictly
(including but not limited to market
implement the relevant provisions of the Management measures for the operation of futures
risk liquidity risk credit risk
hedging business and the Management system for foreign exchange hedging business.operational risk legal risk etc.)
Changes in market prices or product
fair value of invested derivatives
during the reporting period and the N/A
analysis of the fair value of
derivatives should disclose the
32Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
specific methods used and the setting
of related assumptions and
parameters.Explanation of whether the
Company’s derivatives accounting
policies and specific accounting
N/A
principles have changed significantly
during the reporting period compared
with the previous reporting period
Independent directors' special
opinions on the Company's
N/A
derivatives investment and risk
control
5. Usage of raised funds
√Applicable □ Not applicable
(1). Overall usage of raised fund
√Applicable □Not applicable
Unit: RMB in 10 thousand
Proportion
of
Total
accumulat
Total amount of
Accumulat ed amount
amount of Accumulat raised Total Raised
Total ed amount of raised Raised
raised ed amount funds with amount of funds has
amount of of raised funds with funds has
Year Method funds of raised use unused not been
raised funds with use not been
invested in funds alteration raised used for
funds use alteration used
the report invested during the funds two years
alteration to the total
period reporting
amount of
period
raised
funds
Deposited
in the
special
Non-publi account of
20171322317182.74132606.882611.02
c offering raised
funds or
permanentl
y replenish
33Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
of working
capital.Deposited
in the
special
account
for raised
Public funds and
2021298753.1112860.66112860.66187153.72
offering the
subscriptio
n of large
amount
certificates
of deposit.Total -- 430984.1 120043.4 245467.54 189764.74 --
Description of Overall Usage of Raised Funds
(I) Year 2017
1. The actual amount of raised fund and date of transfer in
With the approval of China Securities Regulatory Commission (CSRC) [2017] No. 1392 the Company non-public issued
88154000 common shares (A shares) with a total raised capital of RMB 1322310000.00. After deducting the issuance expenses
of RMB 13078480.00 the net amount of raised funds is RMB 1309231520.00. The above-mentioned raised funds were
transferred in on September 1st 2017 and it has been verified by Tianjian accounting firm which has issued the Capital
Verification Report (TJY [2017] No. 327).As the implementation subjects are Zhejiang Sanhua Automotive Components Co. Ltd. (hereinafter referred to as Sanhua Auto)
and its subsidiary Shaoxing Sanhua New Energy Automotive Components Co. Ltd. (hereinafter referred to as Shaoxing Auto) the
Company has allocated the raised funds of RMB 1301310000.00 to Sanhua Auto in the form of capital increase. Sanhua Auto
synchronously allocated the raised fund of RMB 503620000.00 to Shaoxing Auto in the form of capital increase.
2. Usage and balance of raised funds
Amount (Unit: RMB in 10
Items Index
thousand)
Net amount of raised funds A 132231.00
Project investment B1 125424.14
Accumulated amount as of the
Net income from raised funds B2 9824.59
beginning of the period
Replenish working capital B3 0.00
Amount incurred in this Project investment C1 7182.74
reporting period Net income from raised funds C2 275.93
34Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Replenish working capital C3 7113.62
Project investment D1=B1+C1 132606.88
Accumulated amount by the
Net income from raised funds D2=B2+C2 10100.52
end of the period
Replenish working capital D2=B3+C3 7113.62
Calculated balance of raised funds E 2611.02
Actual balance of raised funds F 2611.02
Difference G=E-F 0.00
Note: the net income from raised funds refers to the net amount of interest income and wealth management income after deducting
bank handling charges the same below.(II) Year 2021
1. The actual amount of raised fund and date of transfer in
In June 2021 with the approval of China Securities Regulatory Commission (CSRC) [2021] No. 168 the Company publicly issued
30 million convertible corporate bonds (Sanhua convertible bond) with a par value of RMB 100 issued at face value raising RMB
3 billion in total. The net amount of raised funds after deducting the issuance expenses of 12468991.59 yuan is 2987531008.41
yuan. The above-mentioned receipt of raised funds has been verified by Tianjian accounting firm who issued the Capital
Verification Report (TJY [2021] No. 277).Since Zhejiang Sanhua Commercial Refrigeration Co. Ltd. (hereinafter referred to as "Sanhua Commercial") is one of the
implementation subjects the Company has allocated 1487000000.00 yuan of the raised funds to Sanhua Commercial in the form
of capital increase.
2. Usage and balance of raised funds
Amount (Unit: RMB in 10
Items Index
thousand)
Net amount of funds raised in the current period A 298753.10
Amount incurred in this Project investment B1 112860.65
reporting period Net income from raised funds B2 1261.27
Calculated balance of raised funds C=A-B1+B2 187153.72
Actual balance of raised funds D 187153.72
Difference E=C-D 0.00
(2). Statement of Committed Investment Projects of Raised Funds
√Applicable □Not applicable
Unit: RMB in 10 thousand
35Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Investme
Total nt Whether
Whether Accumul Whether
committe Total progress Date of Benefits feasibility
project Investme ative expected
Committed investment d investme at the end asset achieved of project
has been nt in the investme benefits
projects and allocation investme nt after of the ready for in the has
(or current nt at the have
of over-raised funds nt of alteration period intended current changed
partially) year end of the been
raised (1) (%) use year significan
altered period (2) achieved
funds (3)=(2)/(1 tly
)
Committed investment projects
Construction project of
new energy vehicle
Decembe
parts with an annual No 50362 50362 4860.69 52325.55 103.90% 8554.11 Yes No
r 31 2021
output of 11.5 million
sets
Technical
transformation project
of thermal management
January
system modules of new No 45495 45495 2193.42 49343.68 108.46% N/A No
312021
energy vehicles with an
annual output of 7.3
million sets
Technical
transformation project
of automotive air
March
conditioning control No 20874 20874 128.63 19193.15 91.95% N/A No
312020
parts with an annual
output of 12.70 million
sets
Expansion of product
testing room and January
No 13400 13400 9686.65 72.29% N/A No
production auxiliary 31 2019
room project
Payment of
No 2100 2100 2057.85 97.99% N/A No
intermediary fees
Construction project of
commercial
refrigeration and air
May 31
conditioning intelligent No 148700 148700 25505.89 25505.89 17.15% N/A No
2025
control components
with an annual output
of 65 million sets
36Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Technical
transformation project
of high-efficiency and
energy-saving
August
refrigeration and air No 69800 69800 6081.84 6081.84 8.71% N/A No
312024
conditioning control
components with an
annual output of 50.5
million sets
Supplementary of
No 81500 81500 81272.93 81272.93 99.72% N/A No
working capital
Subtotal of committed 245467.5
--432231432231120043.4----8554.11----
investment projects 4
Investment of over raised funds
245467.5
Total -- 432231 432231 120043.4 -- -- 8554.11 -- --
4
Funds raised in 2017:
(1) Upon deliberation and approval by the board of directors on April 1 2019 the date of scheduled
serviceability status of "7.3 million sets of new energy vehicle thermal management system components
project" and "12.7 million sets of vehicle air conditioning control components project" has been extended
from January 2019 to January 2021 and other contents of the project remain unchanged. The specific
reasons for the slowdown of the construction progress of the above two projects are as follows:
The Company adopts the strategy of prudent use and reasonable investment of the raised funds in
combination with the existing product structure and market trend. As the new equipment tends to be more
Circumstances and intelligent and systematic the Company has selected the equipment according to the latest technical
reasons for not requirements and product models so that the investment progress of the new equipment of the project is
reaching the planned later than expected.progress or expected
income (by specific In March 2020 "12.7 million sets of automotive air conditioning control parts project" has been completed
project) and accepted. In January 2021 the "technical transformation project of thermal management system
components for new energy vehicles with an annual output of 7.3 million sets" has been completed and
accepted.
(2) Upon deliberation and approval by the board of directors on April 27 2020 the date of scheduled
serviceability status of "construction project of new energy vehicle parts with an annual output of 11.5
million sets" has been extended from December 2019 to December 2021 while other contents of the
project remain unchanged. The specific reasons for the slowdown of the construction progress of the
project are as follows:
37Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
The Company adopts the strategy of prudent use and reasonable investment of the raised funds in
combination with the changing situation of the existing market. In combination with customer feedback
and production scheduling plan the Company will gradually release the production capacity according to
the actual customer demand. In order to ensure that the investment progress can meet the actual production
progress demand the Company will adjust the equipment procurement time of the raised investment
project and extend the investment period of the raised capital investment project according to the
customer's time node requirements. In December 2021 the "construction project of new energy auto parts
with an annual output of 11.5 million sets" has been completed and accepted.Funds raised in 2021: N/A
Significant changes in
Funds raised in 2017: N/A
the feasibility of
Funds raised in 2021: N/A
projects
Amount usage and use
progress of over-raised N/A
Funds
Change in
implementation
location of investment N/A
projects of Raised
Funds
Adjustment to
implementation
method of investment N/A
projects of Raised
Funds
Applicable
Advance investment
Funds raised in 2017: In 2017 the Company replaced the initial investment of 140.5585 million yuan with
and replacement of
raised funds.projects invested with
Funds raised in 2021: In 2021 the Company replaced the initial investment amount of 179.3857 million
raised funds
yuan with raised funds.Temporary supplement
of working capital with N/A
idle raised funds
The amount and Applicable
reasons of the balance
Funds raised in 2017: Net income was generated from raised funds.of raised funds in the
Funds raised in 2021: N/A
project implementation
Funds raised in 2017: Deposited in the special account for raised funds or permanently replenished working
Applications of unused
capital.raised funds
Funds raised in 2021: Deposited in the special account for raised funds and the subscription of large
38Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
amount certificates of deposit.Problems or other
situations in the use
N/A
and disclosure of raised
funds
(3). Statement of Altered Investment Projects of Raised Funds
□ Applicable √ Not applicable
There was no change in the projects of raised funds in the reporting period of the Company.VIII. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable √ Not applicable
During the reporting period there was no disposal of significant assets
2. Sale of significant equity
□ Applicable √ Not applicable
IX. Analysis of Major Subsidiaries and Investees
√ Applicable □ Not applicable
Information about major subsidiaries and investees that contribute above 10% of the Company’s net Profit
Unit：RMB
Company Company Principal Registered Total Operating Operating
Net assets Net profit
name type business capital assets revenue profit
Refrigerati
Zhejiang
on and A/C
Sanhua
electrical
Climate &
component 250 3946847 3412317 2188044 27797405 24730006
Appliance Subsidiary
s million 321.16 413.01 976.98 4.00 9.95
Controls
manufactur
Group
ing and
Co.Ltd
marketing
Sanhua Refrigerati
(Hangzhou on and A/C
) Micro electrical 360 1894543 1122885 1578706 10044665 77592200
Subsidiary
Channel component million 722.92 863.25 848.06 9.51 .27
Heat s
Exchanger manufactur
39Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Co.Ltd. ing and
marketing
Refrigerati
Zhejiang on and A/C
Sanhua electrical 2795262 15558738 3998424 40167121 28630862
Subsidiary 50 million
Trading component 530.97 5.38 476.58 .12 .79
Co. Ltd. s
marketing
Automotiv
Zhejiang
e
Sanhua
component
Automotiv 1460 6112493 3585008 4802488 65194283 57988582
Subsidiary s
e million 450.31 236.50 880.73 7.99 3.63
manufactur
Componen
ing and
ts Co. Ltd
marketing
Refrigerati
on and A/C
electrical
component
Sanhua
s
Internation 37.55
manufactur 1731520 34493447 3328087 12625576 95720965
al Subsidiary million
ing 770.46 7.67 769.01 1.41 .43
Inc.(Conso USD
marketing
lidated)
and
investment
manageme
nt
Refrigerati
on and A/C
electrical
Sanhua
component
Internation
s
al
manufactur $150.5798 3154827 1005412 4970111 11938303 96565287
Singapore Subsidiary
ing 33 million 708.76 510.81 788.18 6.78 .41
PTE. Ltd.marketing
(Consolida
and
ted)
investment
manageme
nt
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
Corporate name Method of acquisition and disposal of Impact on overall operation and
40Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
subsidiaries during the reporting period performance
Zhejiang Sanhua Plate Exchange
Equity acquisition No significant impact
Technology Co. Ltd
Zhejiang Sanhua Automotive Trading Co.New investment No significant impact
Ltd
Zhejiang Sanhua Heat Exchanger Co. Ltd New investment No significant impact
X. Structural Entities Controlled by the Company
□ Applicable √ Not applicable
XI. Outlook for the Future Development of the Company
1. Development strategy
The Company adheres to the business strategy of "Focusing on leading innovation and transcendence" and firmly
grasps the product development theme of energy conservation environmental protection and intelligent control.With the research and application of heat pump technology and thermal management system products as the core
we continuously deepen and expand the global business layout through continuous innovation of products and
technologies. It transformed from "cost leading" to "technology leading" from "mechanical parts development" to
"electronic control integrated system control technology solution development" in order to provide competitive
environmental intelligent control solutions for global high-quality customers. Sanhua has become a global leader
in the climate intelligent control system industry.
2. Business plan for 2022
(1) Refrigeration air conditioning electrical parts business
The refrigeration and air conditioning electrical parts business will seize the opportunities of energy efficiency
upgrading refrigerant switching VRF and other related business products continue to expand the customer base
strengthen the acquisition and transformation of business opportunities and improve operation sales. The
Company promotes intelligent manufacturing and lean production increases special procurement management
deeply promotes team building and constantly improves product competitiveness. Continue to integrate and
improve the operation and management of Aweco at home and abroad increase the construction of overseas
factories in Vietnam and Mexico improve the overall operation efficiency of overseas manufacturing and
marketing give full play to the advantages of overseas factories and effectively deal with challenges such as trade
barriers and rising prices of international logistics so as to create greater benefits. At the same time we will
accelerate the relocation of overall commercial plant in Daming City and lay a solid foundation in various
commercial fields of consumption upgrading and industrial upgrading of the Chinese market in the future.
(2) Automotive components business
Under the development opportunity of new energy vehicle thermal management industry automotive components
business will insist the direction of system integration increase R & D investments and maintain the leading
technology of the industry. At the same time in the process of rapid growth of new energy thermal management
we always pay attention to the changes of market demand and competition pattern constantly accelerate the
41Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
construction of information technology and intellectualization increase the construction and management of
supply chain pay attention to cost control actively respond to the needs of customers and ensure the product
quality and delivery of projects. In addition in the process of global development we will actively promote the
construction of Mexico and Binhai increase the layout of production capacity and the construction of talent team
so as to grow rapidly in global automotive electrification and intellectualization.
3. Main risks for future development
(1) Risk of price fluctuation of raw materials
The raw materials required by the Company are copper and aluminum which account for a large proportion of the
cost composition of the products. Therefore the fluctuation of the market price of raw materials will bring large cost
pressure to the Company. The Company will reduce the adverse impact of raw material price fluctuations through
the establishment of linkage pricing mechanism hedging operation of commodity futures and timely negotiation
with customers.
(2) The risk of rising labor cost
The labor costs are rising year by year which reduces the profit margin of the Company to a certain extent. In the
future the Company will continue to improve the level of intelligent manufacturing by continuously promoting
lean production process improvement and technical transformation.
(3) Trade and exchange rate risk
The Company's export volume is large involving North America Europe Japan Southeast Asia and other regions.Due to the changes in regional trade policies the Company's daily operation will be affected. The Company deals
with interregional trade risks through transferring production capacity to foreign countries. In addition the
fluctuation of exchange rate will also have a certain impact on the profit. According to the actual situation the
Company deals with and reduces this risk by means of forward foreign exchange settlement and establishing
overseas production bases in the United States Poland Mexico Vietnam India and other places.XII. Reception of activities including research communication and interviews during the
report period
√ Applicable □ Not applicable
Main contents of
Time of Location of Method of Type of discussion and Index of basic situation
Reception object
reception reception reception reception object materials of the research
provided
Introduction of
HSBC Qianhai the company's
Chen Jiasong operation and http://irm.cninfo.com.c
January 6 2021 Hangzhou On-site research Institution
and other 9 reply to n/ssessgs/S002050
investors investors'
questions
March 26 2021 Conference Telephone Institution Schroeder Fund Introduction of http://irm.cninfo.com.c
42Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Room communication Zhang Xiaodong the company's n/ssessgs/S002050
and other 187 operation and
investors reply to
investors'
questions
Introduction of
Capital
the company's
Securities Wang
operation and http://irm.cninfo.com.c
April 13 2021 Hangzhou On-site research Institution Xiaosheng and
reply to n/ssessgs/S002050
other 13
investors'
Investors
questions
Introduction of
Investors
the company's
participated in
Conference operation and http://irm.cninfo.com.c
April 16 2021 Other Other online
Room reply to n/ssessgs/S002050
performance
investors'
presentation
questions
Introduction of
CSC Huang the company's
Wentao and operation and http://irm.cninfo.com.c
April 28 2021 Hangzhou On-site research Institution
other 15 reply to n/ssessgs/S002050
investors investors'
questions
Introduction of
BOC Fund the company's
Zhang Fei and operation and http://irm.cninfo.com.c
June 21 2021 Hangzhou On-site research Institution
other 14 reply to n/ssessgs/S002050
investors investors'
questions
Introduction of
the company's
Springs Luo
operation and http://irm.cninfo.com.c
June 29 2021 Hangzhou On-site research Institution Yida and other
reply to n/ssessgs/S002050
40 investors
investors'
questions
Introduction of
Minsheng
the company's
securities 17
operation and http://irm.cninfo.com.c
July 8 2021 Hangzhou On-site research Institution investors
reply to n/ssessgs/S002050
including Xu
investors'
Hao
questions
August 11 2021 Conference Telephone Institution Capital Group Introduction of http://irm.cninfo.com.c
43Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Room communication Tian Xiaosu and the company's n/ssessgs/S002050
other 306 operation and
investors reply to
investors'
questions
Introduction of
the company's
AIA Wen Jie
Conference Telephone operation and http://irm.cninfo.com.c
August 24 2021 Institution Chan and other
Room communication reply to n/ssessgs/S002050
43 investors
investors'
questions
Introduction of
Zheshang
the company's
Securities
September 15 operation and http://irm.cninfo.com.c
Hangzhou On-site research Institution Zhang Zixian
2021 reply to n/ssessgs/S002050
and other 4
investors'
investors
questions
Introduction of
Huatai Bairui Li the company's
September 22 Yiyang and operation and http://irm.cninfo.com.c
Hangzhou On-site research Institution
2021 other 21 reply to n/ssessgs/S002050
investors investors'
questions
Introduction of
Gao Yi assets the company's
October 25 Conference Telephone Chen Junbin and operation and http://irm.cninfo.com.c
Institution
2021 Room communication other 289 reply to n/ssessgs/S002050
investors investors'
questions
44Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section IV Corporate Governance
I. Basic situation of corporate governance
During the reporting period the Company strictly abided by the Company Law Securities Law Code of
Corporate Governance for Listed Companies in China Stock Listing Rules of the Shenzhen Stock Exchange
Guidelines of the Shenzhen Stock Exchange for the Standard Operation of Listed Companies and other applicable
laws and regulations of China Securities Regulatory Commission and Shenzhen Stock Exchange. We continue to
improve the corporate governance structure establish and improve the internal control system strengthen the
management of information disclosure actively carry out the activities of investor relations standardize the
operation of the Company and improve the level of corporate governance. During the reporting period the
Company revised the Articles of Association and further planned the corporate governance system. As of the end
of the report period the actual situation of corporate governance conforms to the regulatory documents of CSRC
on the governance of listed companies.
1. Shareholders and general meeting of shareholders
The Company convenes the general meeting of shareholders in strict accordance with the requirements of the
Normative Opinions of the General Meeting of Shareholders the Articles of Association and the Rules of
Procedure of the Shareholders' Meeting. When the shareholders' meeting deliberates related matters the related
shareholders shall avoid voting. The related transactions shall be fair and reasonable without any damage to the
interests of shareholders. Treat all shareholders equally ensure that all shareholders especially minor
shareholders have equal status and fully exercise their rights. The shareholders' meetings held during the
reporting period were convened by the board of directors and lawyers were invited to attend the meeting on site.
2. Directors and the board of directors
The Company elect directors in strict accordance with the Articles of Association and Rules of Procedure for the
Board of Directors; the number and composition of the board of directors meet the requirements of laws and
regulations and the Articles of Association. The board of directors convenes meetings in accordance with the
Company Law and the Rules of Procedure of the Board of Directors. All directors exercise their rights diligently
attend the board of directors and shareholders' meeting and actively participate in relevant training.
3. Supervisors and board of supervisors
The board of supervisors elects the supervisors in strict accordance with the Company Law and the Articles of
Association; the composition and number of the board of supervisors meet the requirements of laws and
regulations. The Company's supervisors conscientiously perform their duties in accordance with the Rules of
Procedure of the Board of Supervisors and effectively supervise and express their opinions on the Company's
major issues related party transactions financial situation and the legality and compliance of the Company's
directors and senior managers in performing their duties.
4. Relationship between controlling shareholders and listed companies
The controlling shareholders can strictly regulate their own behaviors. There is no direct or indirect intervention
beyond the provisions of general meeting of shareholders. The Company and its controlling shareholders are
45Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
mutually independent of each other in personnel assets finance institutions and business. The board of directors
board of supervisors and internal institutions of the Company operate independently. There is no such situation
that the controlling shareholders occupy the funds of the listed company for non-operating purposes.
5. Information disclosure and investor relationship management
During the reporting period the Company designated China Securities Journal Securities times Shanghai
Securities News and CNINFO as the information disclosure media and disclosed information truthfully
accurately and timely in strict accordance with relevant laws and regulations so as to ensure that all shareholders
of the Company have fair access to the relevant information. In addition the Company designated the secretary of
the board of directors as the person in charge of investor relationship management. Daily management of investor
relations includes answering investors' questions through telephone email interactive platform etc. strengthening
the communication with investors so as to fully guarantee the investors' right to know.
6. Performance evaluation and incentive mechanism
The Company has established a comprehensive employee performance evaluation and incentive mechanism. The
appointment of senior managers is open and transparent and conforms to the relevant laws regulations and the
Articles of Association. In the future the Company will explore more forms of incentive methods form a
multi-level incentive mechanism improve the performance evaluation standards better mobilize the work
enthusiasm of management personnel and attract and stabilize excellent management talents and technical and
business backbones.
7. Stakeholders
The Company can fully respect and safeguard the legitimate rights and interests of stakeholders and realize the
coordination and balance of interests of shareholders employees and society. The Company adheres to the
relevant laws and regulations constantly improves the corporate governance system and effectively protects the
interests of investors.Whether the actual status of corporate governance significantly deviates from the regulatory documents issued by
the China Securities Regulatory Commission regarding the governance of listed companies
□ Yes √ No
II. Company’s Independence in Businesses Management Assets Institutions and Finance
from Controlling Shareholders
The Company is separated from the controlling shareholder the actual controller and the controlled enterprises in
business personnel assets institutions and finance and has the ability of independent operation.
1. Business independence
The main business of the Company is outstanding and it has its own corresponding system in production
procurement and sales. It is independent of the controlling shareholder has a complete business structure and
does not rely on the shareholders or any other related parties. The shareholders exercise their right through
participating in the general meeting of shareholders in accordance with the law. There is no such situation that the
shareholders interfere in the operation beyond the provision of general meeting.
46Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2. Personnel independence
The directors supervisors and senior management of the Company are elected or appointed in accordance with
the legal election procedure stipulated in the Company Law and the Articles of Association. The Company's
personnel labor and wages are completely independent. The salary payment welfare expenses and other expenses
of the staff are strictly separated from the controlling shareholder.
3. Asset completeness
The Company has tangible assets such as land buildings machinery and equipment vehicles office facilities
test facilities and intangible assets such as trademarks patents. It has an independent procurement and sales
system and an independent and complete asset structure.
4. Institution independence
In accordance with the relevant provisions of the Company Law and the Articles of Association the Company has
established the institutions like general meeting of shareholders the board of directors the board of supervisors
and other authorities and formulated the corresponding rules of procedure. The Company's production and
operation sites are separated from the controlling shareholders and a comprehensive organizational system has
been established. The board of directors the board of supervisors and other internal institutions operate
independently. There is no such situation that the controlling shareholder interferes in the business activities in the
name of the listed company.
5. Finance independence
The Company has an independent financial department equipped with full-time financial personnel and
established an independent accounting system and financial management system that can independently make
financial decisions. The Company has separate accounts and pays taxes independently.III. Horizontal competition
□ Applicable √ Not applicable
IV. Annual General Meeting and Extraordinary General Meetings convened during the
Reporting Period
1. Annual General Meeting convened during the reporting period
Proportion of
Meeting Nature participating Convened Date Disclosure Date Disclosure Index
investors
Announcement of
the 1st Extraordinary
The 1st
General Meeting of
extraordinary Interim general
69.04% February 25 2021 February 26 2021 Shareholders in 2021
general meeting of meeting
(2021-012) was
shareholders in 2021
published in the
Securities Times
47Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
China Securities
Journal and
CNINFO.Announcement of
the Annual General
Meeting of
Shareholders in 2020
Annual general
Annual General (2021-029) was
meeting of 69.96% April 16 2021 April 17 2021
Meeting published in the
shareholders in 2020
Securities Times
China Securities
Journal and
CNINFO.Announcement of
the 2nd
Extraordinary
General Meeting of
The 2nd
Shareholders in 2021
extraordinary Interim general
67.48% June 24 2021 June 25 2021 (2021-055) was
general meeting of meeting
published in the
shareholders in 2021
Securities Times
China Securities
Journal and
CNINFO.Announcement of
the 3rd
Extraordinary
General Meeting of
The 3rd
Shareholders in 2021
extraordinary Interim general
69.02% August 3 2021 August 4 2021 (2021-070) was
general meeting of meeting
published in the
shareholders in 2021
Securities Times
China Securities
Journal and
CNINFO.Announcement of
the 4th
The 4th Extraordinary
extraordinary Interim general General Meeting of
73.55% November 16 2021 November 17 2021
general meeting of meeting Shareholders in 2021
shareholders in 2020 (2021-097) was
published in the
Securities Times
48Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
China Securities
Journal and
CNINFO.
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Not applicable
V. Information of directors supervisors senior management
1. Basic information
Shares
Shares Shares Shares Reasons
held at
Commen Terminat increased decrease held at for
the Other
Tenure cement ion of during d during the end increase
Name Title Gender Age beginnin changes
status of term term of the the of the or
g of the (Shares)
of office office Period Period Period decrease
Period
(Shares) (Shares) (Shares) of shares
(Shares)
Chairma
Decembe
Zhang n of the Incumbe January 520312 520312
Male 48 r 13
Yabo board nt 25 2025 00 00
2012
CEO
Decembe
Wang Director Incumbe January
Male 53 r 13 256750 256750
Dayong President nt 25 2025
2012
Ren Incumbe January January
Director Male 60
Jintu nt 26 2022 25 2025
April 28 January
Yu Shuli Director Resigned Male 74
2006262022
Ni
Incumbe May 6 January
Xiaomin Director Male 54 256750 256750
nt 2011 25 2025
g
Director Novemb
Chen Incumbe January
chief Male 56 er 29 256750 256750
Yuzhong nt 25 2025
engineer 2011
Zhang Incumbe May 18 January
Director Male 43
Shaobo nt 2015 25 2025
Independ
May 18 August
Ji Hua ent Resigned Male 54
201532021
director
49Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Independ
Incumbe August January
Bao Ensi ent Male 54
nt 3 2021 25 2025
director
Independ
Shi Incumbe May 19 January
ent Male 50
Jianhui nt 2020 25 2025
director
Independ
Zhu June 8 February
ent Resigned Male 46
Hongjun 2020 26 2021
director
Independ
Pan Incumbe February January
ent Female 57
Yalan nt 26 2021 25 2025
director
Convene
r of the
Weng June 8 August
board of Resigned Male 56
Weifeng 2014 3 2021
supervis
ors
Convene
r of the Novemb
Zhao Incumbe January
board of Male 51 er 29
Yajun nt 25 2025
supervis 2011
ors
Supervis Incumbe August January
Mo Yang Male 46 10068 4500 14568
or nt 3 2021 25 2025
Chen
Supervis Incumbe March January
Xiaomin Male 53 11100 11100
or nt 26 2011 25 2025
g
Vice
president
Hu
Incumbe January January
Kaichen Secretary Male 47 256750 256750
nt 26 2015 25 2025
g of the
board of
directors
Vice Septemb
Yu Incumbe January
president Male 48 er 30 288057 288057
Yingkui nt 25 2025
CFO 2011
533674533719
Total -- -- -- -- -- -- 4500 0 --
2525
On January 26 2022 Mr. Yu Shuli resigned upon expiration of his term of office. The general meeting of
shareholders agreed to appoint Mr. Ren Jintu as the director of the Company.
50Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
During the reporting period whether there was any resignation of directors and supervisors and dismissal of
senior managers during their term of office
√Applicable □Not applicable
1. Mr. Zhu Hongjun resigned the position as an independent director of the sixth board of directors and chairman
of the audit committee of the Company because of job switching he no longer meets the requirements for the
appointment qualification of independent directors listed in the Opinions on further standardizing the part-time
(post holding) of Party and government leading cadres in Enterprises of the Organization Department of the CPC
Central Committee. After resignation he no longer held any position in the Company.
2. Mr. Weng Weifeng resigned his position as the convener and supervisor of the board of supervisors due to job
switching. After resignation he no longer held any position in the Company.
3. Mr. Ji Hua resigned upon expiration of six-year term of office as an independent director.
Changes of Directors Supervisors and Senior Management
√Applicable □Not applicable
Name Position Type Date Reasons
Resigned upon
Yu Shuli Director expiration of January 26 2022 Resigned upon expiration of term of office
term of office
Ren Jintu Director Elected January 26 2022 Elected by the Board of Directors
Resigned upon
Independent
Ji Hua expiration of August 3 2021 Resigned upon expiration of term of office
director
term of office
Independent
Bao Ensi Elected August 3 2021 Elected by the Board of Directors
director
Independent February 26
Zhu Hongjun Resigned Resigned
director 2021
Independent February 26
Pan Yalan Elected Elected by the Board of Directors
director 2021
Convener of the
Weng Weifeng board of Resigned August 3 2021 Resigned
supervisors
Mo Yang Supervisor Elected August 3 2021 Elected by the Board of Supervisor
2. Positions and Incumbency
The professional background main work experience and main responsibilities of the current directors supervisors
and senior managers of the company
Mr. Zhang Yabo: Born in 1974 master of Business Administration of CEIBS. Graduated from Shanghai Jiao Tong
51Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
University in July 1996. From May 2007 to September 2009 he served as the vice president of Sanhua Holding
Group Co. Ltd.; from May 2007 up to present he has been appointed as the director and vice chairman of the board
of directors of Sanhua Holding Group Co. Ltd.; from September 2009 to December 2012 he served as the general
manager of the Company; from October 2009 up to present he has been appointed as the director of the Company;
from December 2012 up to present he has served as the chairman and CEO of the Company.Mr. Wang Dayong: Born in 1969 senior manager master of Business Administration (EMBA) senior economist
and engineer. He served as chief of planning section Secretary of general manager director of manufacturing
department director of refrigeration valve business department assistant to general manager assistant to President
vice president and director of Sanhua Holding Group. He served as a supervisor of the Company from December
2001 to April 2006 a director of the Company from April 2006 to May 2011. He currently serves as a director of
Sanhua Holding Group and a director and President of the Company since December 2012.Mr. Ren Jintu: Born in 1962 college degree senior accountant. From 1980 to 1994 he successively served as
deputy factory director financial director and deputy general manager of Xinchang Refrigeration Parts General
Factory and Zhejiang Sanhua Group Co. Ltd; From 2001 to 2006 he served as the director and general manager of
the Company; From 2005 to 2015 he served as vice president of Sanhua Holding Group Co. Ltd. and general
manager of Shanghai Jingyi Real Estate Co. Ltd; He is currently a director of Sanhua Holding Group Co. Ltd; He
served as a director of the Company since January 2022.Mr. Ni Xiaoming: Born in 1968 master’s degree senior economist. From November 2005 to July 2009 he served
as the general manager of Sanhua International (USA) Co. Ltd. and the deputy general manager of sales of
Zhejiang Sanhua Climate & Appliance Controls Group Co.Ltd.; August 2009 he served as the deputy general
manager of Sanhua Danfoss (Hangzhou) Microchannel Heat Exchanger Co. Ltd.; since May 2010 he has served
as the general manager of Sanhua (Hangzhou) Micro Channel Heat Exchanger Co.Ltd.. as well as the director of
Sanhua Holding Group Co. Ltd.; He has been a director of the Company since May 2011.Mr. Chen Yuzhong: Born in 1966 master’s degree engineer. He was the chief engineer of the Company from
December 2001 to May 2011; he was the deputy general manager of the Company from May 2011 to December
2012; he has been the chief engineer of the Company since December 2012; he has been the general manager of
Zhejiang Sanhua Climate & Appliance Controls Group Co.Ltd. since August 2015; he is also the director of
Sanhua Holding Group Co. Ltd.; and he has been the director of the Company since November 2011.Mr. Zhang shaobo: Born 1979 master’s degree graduated from the China Europe Institute of Business School.Since November 2012 he has served as general manager of Sanhua Real Estate Group and Zhejiang Sanhua Real
Estate Co. Ltd.; since July 2013 he has served as general manager of Hangzhou Sanhua International Building
Co. Ltd.; since May 2017 he has served as executive director and general manager of Zhejiang Sanhua Zhicheng
Real Estate Development Co. Ltd.; he currently serves as a director of Sanhua Holding Group Co. Ltd.; from
May 2015 up to present he has served as the director of the Company.Mr. Bao Ensi: Born in 1968 doctor’s degree senior accountant. He has successively served as director of China
Securities Regulatory Commission and full-time member of Stock Issuance Audit Committee; Head of Finance
Department of China Financial Futures Exchange expert of investor education center vice chairman of Beijing
52Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Houji Capital Management Company. He is currently the assistant to the chairman of Beijing Houji Capital
Management Company; He also serves as an independent director of Aerospace Era Electronic Technology Co.Ltd. and Fujian Yanjing Huiquan Beer Co. Ltd. Mr. Bao Ensi has obtained the Qualification Certificate of
Independent Director recognized by Shenzhen Stock Exchange. He has been an independent director of the
Company since August 2021.Mr. Shi Jianhui Born in 1972 he achieved a master's degree in EMBA from Changjiang Business School and
Shanghai Advanced Finance College. He used to be the chairman / CEO of Minshi Group Co. Ltd. and he
currently serves as the CEO of Xiaozhi Investment Management Partnership in Meishan Bonded Port Area
Ningbo Zhejiang Province. He has been appointed as an independent director of the Company since June 2020.Ms. Pan Yalan: Born in 1965 master degree a member of the League of Civil Society. She participated in work in
August 1987. She is professor of Accounting College of Hangzhou University of Electronic Technology tutor of
graduate students and "151" talents in Zhejiang Province in the new century (third level). Currently she is a
member of the CPPCC of Zhejiang Province member of the Zhejiang Provincial Committee of the Democratic
League a member of the Zhejiang Provincial Finance Association a standing director of Zhejiang Provincial
Taxation Society and a special auditor of Zhejiang Audit Department. She has been appointed as an independent
director of the Company since February 2021.Mr. Zhao Yajun: Born in 1971 master’s degree graduated from school of Business Administration of Zhejiang
University with senior accountant title. From 1996 to 2003 he worked in Zhejiang Tianjian accounting firm; from
January 2004 to February 2011 he served as deputy director of Finance Department of Sanhua Holding Group
Co. Ltd.; from February 2011 to February 2014 he served as director of Finance Department of Sanhua Holding
Group Co. Ltd.; from March 2014 up to present he has served as deputy director of finance of Sanhua Holding
Group Co. Ltd. He has been a supervisor of the Company since November 2011.Mr. Mo Yang: Born in 1976 master's degree majoring in political economics of Zhejiang University. He was a
teacher of the Economic Branch of the City College of Zhejiang University from April 2002 to June 2004; From
July 2004 to April 2006 he served as assistant to the executive deputy general manager of Zhejiang Sanhua
Climate & Appliance Controls Group Co.Ltd; From August 2005 to December 2019 he successively served as
the secretary of the president the secretary of the chairman of the board of directors the vice minister of human
resources department and the director of the president's office of Sanhua Holding Group Co. Ltd; From December
2019 to now he has served as the director of the board of directors office in Sanhua Holding Group Co. Ltd. He
has been a supervisor of the Company since August 2021.Mr. Chen Xiaoming: From October 2008 to October 2011 he served as director of quality management
department of Zhejiang Sanhua Intelligent Controls Co. Ltd.; in November 2011 he served as management
representative and director of Quality Department of Changzhou Ranco four-way valve Co. Ltd.; in August 2013
he served as director of quality department and vice director of four-way valve business department of Wuhu
Sanhua Automatic Control Components Co. Ltd.; in January 2016 he served as director of Quality Department of
Wuhu Sanhua Automatic Control Components Co. Ltd; in December 2016 he served as director of four-way
valve department and stop valve department of Wuhu Sanhua Automatic Control Components Co. Ltd.; from
August 2017 up to present he has served as Manufacturing Director of Wuhu Sanhua Automatic Control
53Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Components Co. Ltd. since March 2011 he has been appointed as supervisor of the Company.Mr. Hu Kaicheng: Born in 1975 master's degree bachelor's degree of Tongji University SAIF EMBA of
Shanghai Jiao Tong University. From August 2006 to August 2009 he served as the director of supplier
management procurement director of Zhejiang Sanhua Climate & Appliance Controls Group Co.Ltd.; from
September 2009 to December 2010 he served in Sanhua Holding Group Co. Ltd.; from January 2011 to October
2014 he served as the procurement director of the Company; from October 2014 up to present he served as the
vice president of the Company; from January 2015 up to present he served as the Secretary of the board of
directors of the Company.Mr. Yu Yingkui: Born in 1974 bachelor degree accounting major of Shanghai University of Finance and
Economics. From April 2001 to December 2003 he successively served as the chief accountant of the financial
department of Zhejiang Sanhua Holding Group Co. Ltd. and Zhejiang Sanhua Climate & Appliance Controls
Group Co.Ltd.; from December 2003 to November 2007 he served as the deputy general manager of Shenyang
Durui Wheel Hub Co. Ltd.; from November 2007 up to present he has been the director of the financial
department of the Company; from September 2011 up to present he has been the chief financial officer of the
Company; from January 2016 up to present he has been the vice president of the Company.Position held in shareholders’ entities
√Applicable □ Not applicable
Position in Compensation and
Commencemen Termination of
Name Shareholder's entity shareholders’ allowance from the
t of the term the term
entities shareholders' entity
Vice
Zhang Yabo Sanhua Holding Group Co. Ltd chairman July 11 2000 No
(director)
Wang Dayong Sanhua Holding Group Co. Ltd Director July 11 2000 No
Ren Jintu Sanhua Holding Group Co. Ltd Director July 11 2000 Yes
Zhejiang Sanhua lvneng Industrial Group
Ren Jintu Director March 15 2011 No
Co. Ltd
Ni Xiaoming Sanhua Holding Group Co. Ltd Director July 11 2000 No
November 26
Chen Yuzhong Sanhua Holding Group Co. Ltd Director No
2014
Zhang Shaobo Sanhua Holding Group Co. Ltd Director August 7 2003 Yes
Director，Zhejiang Sanhua lvneng Industrial Group
Zhang Shaobo general August 7 2003 No
Co. Ltd
manager
February 25 September 8
Weng Weifeng Sanhua Holding Group Co. Ltd Director Yes
20192021
Zhao Yajun Sanhua Holding Group Co. Ltd Deputy chief March 1 2014 Yes
54Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
financial
officer
Zhejiang Sanhua Lvneng Industrial Group
Zhao Yajun Supervisor July 1 2019 No
Co. Ltd
November 26
Mo Yang Sanhua Holding Group Co. Ltd Supervisor Yes
2014
Description of
the position in
No
shareholders’
entities
Positions held in other entities
√Applicable □ Not applicable
Compensation
Position in and allowance
Commencemen Termination of
Name Shareholder's entity shareholders’ from the
t of the term the term
entities shareholders'
entity
Hangzhou Sanhua Research Institute Co. February 10
Zhang Yabo Chairman No
Ltd 2017
Hangzhou Fumo New Material Technology
Zhang Yabo Director July 1 2016 No
Co. Ltd
Zhang Yabo Xinchang Huaxin Investment Co. Ltd Chairman March 16 2016 No
February 3
Zhang Yabo Wuhu Aldoc Technology Co. Ltd Director No
2016
Executive
Hangzhou Zhicheng Investment director and
Zhang Yabo July 23 2007 No
Management Co. Ltd general
manager
Hangzhou Zhishen Investment Management
Zhang Yabo Supervisor July 23 2007 No
Co. Ltd
Zhang Yabo Zhejiang Haoyuan Technology Co. Ltd Director May 4 2018 No
October 13
Zhang Yabo Sanhua Trading Singapore Pte Ltd Director No
2017
Xinchang Huayong Enterprise Management Executive November 11
Wang Dayong No
Co. Ltd director 2021
Hangzhou Fufan Investment Management
Wang Dayong Director April 28 2016 No
Co. Ltd
Guochuang Energy Internet Innovation August 20
Wang Dayong Director No
Center (Guangdong) Co. Ltd 2019
55Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Executive
director and
Ren Jintu Hangzhou Xinji Industrial Co. Ltd January 9 2007 No
general
manager
Director and
Hangzhou Fufan Investment Management
Ren Jintu general July 9 2010 No
Co. Ltd
manager
Manager
September 11
Ren Jintu Inner Mongolia Xiqi Mining Co. Ltd executive No
2012
director
Xinchang United Investment Management
Ren Jintu Supervisor April 29 2015 No
Co. Ltd
Hangzhou Sanhua International Building
Ren Jintu Supervisor July 31 2013 No
Co. Ltd
Supervisory
Xinchang Private Financing Service Center
Ren Jintu board April 8 2018 No
Co. Ltd
chairman
Ningbo Fulda Intelligent Technology Co.Ren Jintu Director April 8 2021 No
Ltd
Executive
Zhang Shaobo Shanghai Sanhua Electric Co. Ltd April 10 2017 No
director
Hangzhou Zhiwo Investment Management General
Zhang Shaobo June 16 2014 No
Co. Ltd manager
Executive
Hangzhou Zhishen Investment Management director
Zhang Shaobo July 23 2007 No
Co. Ltd general
manager
Hangzhou Fuxiang Property Management
Zhang Shaobo Chairman January 3 2016 No
Co. Ltd
Xinchang Sanhua Property Management
Zhang Shaobo Chairman March 29 2011 No
Co. Ltd
Executive
Tianjin Minghao Management Consulting director
Zhang Shaobo May 25 2017 No
Co. Ltd general
manager
Executive
Hangzhou Sanhua International Building director
Zhang Shaobo July 31 2013 No
Co. Ltd general
manager
Zhang Shaobo Xinchang Private Financing Service Center Director March 26 2014 No
56Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Co. Ltd
September 11
Zhang Shaobo Inner Mongolia Xiqi Mining Co. Ltd Supervisor No
2012
Executive
Zhejiang Sanhua Zhicheng Real Estate director
Zhang Shaobo May 31 2017 No
Development Co. Ltd general
manager
Hangzhou Fufan Investment Management
Zhang Shaobo Chairman July 9 2010 No
Co. Ltd
Xinchang United Investment Management December 31
Zhang Shaobo Director No
Co. Ltd 2008
Executive
Zhang Shaobo Hangzhou Kaisida Technology Co. Ltd June 15 2020 No
director
Executive
Tianjin Sanhua Industrial Park Management director
Zhang Shaobo May 9 2019 No
Co. Ltd general
manager
Hangzhou Huaqin Investment Management December 25
Zhang Shaobo Supervisor No
Co. Ltd 2006
Hangzhou Mifeng Catering Management
Zhang Shaobo Supervisor March 31 2015 No
Co. Ltd
September 26
Zhang Shaobo Shanghai Tihu catering Co. Ltd Director No
2017
Ningbo Fulda Intelligent Technology Co. December 26
Zhang Shaobo Director No
Ltd 2019
Executive
Zhejiang Sanhua Ecological Agriculture director September 11
Zhang Shaobo No
Co. Ltd general 2018
manager
Hangzhou Zhicheng Investment General November 4
Zhang Shaobo No
Management Co. Ltd manager 2020
Executive
Hangzhou Zhiyong Enterprise Management director
Zhang Shaobo April 27 2018 No
Co. Ltd general
manager
December 22
Zhang Shaobo Zhejiang Huateng Industrial Co. Ltd Chairman No
2021
Aerospace Times Electronic Technology
Bao Ensi Director August 9 2017 Yes
Co. Ltd
57Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Bao Ensi Beijing Shoushang Group Co. Ltd Director June 10 2015 Yes
Bao Ensi Fujian Yanjing Huiquan Beer Co. Ltd Director May 29 2015 Yes
Zhejiang Lin'an Rural Commercial Bank Independent
Pan Yalan March 16 2020 Yes
Co. Ltd director
Zhejiang Newspaper Digital Culture Group Independent December 22
Pan Yalan Yes
Co. Ltd director 2021
Shenyang Sanhua Daika wheel Hub Co.Weng Weifeng Director June 4 2013 No
Ltd
Weng Weifeng Shenyang Durui Wheel Hub Co. Ltd Director May 10 2013 No
Ningbo Fulda Intelligent Technology Co. December 26
Weng Weifeng Chairman Yes
Ltd 2019
Shanghai Fuyulong Automobile Technology December 26
Weng Weifeng Chairman No
Co. Ltd 2019
Shanghai Futailong Automotive Electronic
Weng Weifeng Chairman July 15 2020 No
Technology Co. Ltd
Tianjin Sanhua Industrial Park Management October 10
Weng Weifeng Supervisor No
Co. Ltd 2018
Tianjin Sanhua Fuda Intelligent Technology November 2
Weng Weifeng Chairman No
Co. Ltd 2018
Zhao Yajun Shanghai Sanhua Electric Co. Ltd Supervisor April 12 2011 No
Zhao Yajun Hangzhou Tongchan Machinery Co. Ltd Supervisor May 31 2011 No
Xinchang Private Financing Service Center
Zhao Yajun Supervisor March 26 2014 No
Co. Ltd
Xinchang United Investment Management
Zhao Yajun Supervisor January 1 2012 No
Co. Ltd
Zhejiang Xiezhong Automobile New
Zhao Yajun Supervisor May 25 2018 No
Energy Technology Development Co. Ltd
Zhao Yajun Wuhu Aldoc Technology Co. Ltd Supervisor July 31 2018 No
Zhao Yajun Zhejiang Haoyuan Technology Co. Ltd Supervisor May 4 2018 No
Zhao Yajun Xinchang Huaxin Investment Co. Ltd Director March 21 2017 No
Shanghai Fuyulong Automobile Technology December 26
Zhao Yajun Supervisor No
Co. Ltd 2019
Tianjin Sanhua Fuda Intelligent Technology November 2
Zhao Yajun Supervisor No
Co. Ltd 2018
Nanjing Xiezhong Automobile New Energy February 28
Zhao Yajun Supervisor No
Technology Development Co. Ltd 2019
Ningbo Fuerda Intelligent Technology Co.Zhao Yajun Supervisor April 8 2021 No
Ltd
58Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Yu Yingkui Zhejiang Huateng Investment Co. Ltd Director April 19 2010 No
December 8
Yu Yingkui Chongqing Tainuo Machinery Co. Ltd Director No
2016
Nanchang Sanhua Jinlifeng Machinery Co.Yu Yingkui Director July 12 2017 No
Ltd
Xinchang Private Financing Service Center October 23
Yu Yingkui Director No
Co. Ltd 2015
Yu Yingkui Ningbo Jinlifeng Machinery Co. Ltd Director July 2 2020 No
October 13
Yu Yingkui Sanhua Trading Singapore Pte Ltd Director No
2017
Description of
the position in No
other entities
Incumbent and resigned directors supervisors and senior management personnel during the reporting period that
have been imposed administrative penalties by the CSRC during the last three years.□ Applicable √ Not applicable
3. Remuneration of directors supervisors and senior management personnel
The remuneration of senior managers shall be assessed by the remuneration and assessment committee of the
board of directors according to the job responsibilities and the performance assessment standards and procedures.After completion of the main business performance indicators the annual remuneration of the senior managers
shall be proposed. The amount of remuneration for this year shall be within the range determined by the board of
directors. The Company shall bear the travel expenses incurred by the independent directors for attending
meetings. The amount of remuneration of directors and supervisors in this year is within the remuneration range
determined by the general meeting of shareholders.Remuneration of directors supervisors and senior management personnel
Total
remuneration Remuneration
Name Title Gender Age Tenure status from the from related
Company parties (Y/N)
(RMB'0000)
Director
Zhang Yabo Male 48 Incumbent 233.29 No
Chairman CEO
Director
Wang Dayong Male 53 Incumbent 210.97 No
President
Ren Jintu Director Male 60 Incumbent 0 Yes
Yu Shuli Director Male 74 Resigned 8 No
Ni Xiaoming Director Male 54 Incumbent 130.24 No
59Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Director chief
Chen Yuzhong Male 56 Incumbent 222.83 No
engineer
Zhang Shaobo Director Male 43 Incumbent 0 Yes
Independent
Ji Hua Male 54 Resigned 6.42 No
director
Independent
Bao Ensi Male 54 Incumbent 4.34 No
director
Independent
Shi Jianhui Male 50 Incumbent 10.8 No
director
Independent
Zhu Hongjun Male 46 Resigned 0 No
director
Independent
Pan Yalan Female 57 Incumbent 9.08 No
director
Convener of the
Weng Weifeng board of Male 56 Resigned 0 Yes
supervisors
Convener of the
Zhao Yajun board of Male 51 Incumbent 0 Yes
supervisors
Mo Yang Supervisor Male 46 Incumbent 0 Yes
Chen Xiaoming Supervisor Male 53 Incumbent 29.64 No
Secretary of the
board of
Hu Kaicheng Male 47 Incumbent 81.35 No
directors vice
president
CFO vice
Yu Yingkui Male 48 Incumbent 109.27 No
president
Total -- -- -- -- 1056.23 --
VI. Performance of duties by directors during the reporting period
1. Board of directors in the reporting period
Meeting Convened Date Disclosure Date Disclosure Index
The 14th interim meeting of the
February 9 2021 February 10 2021 http://www.cninfo.com.cn
6th board of directors
The 15th meeting of the 6th http://www.cninfo.com.cn
March 25 2021 March 27 2021
board of directors
The 16th interim meeting of the April 22 2021 April 23 2021 http://www.cninfo.com.cn
60Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
6th board of directors
The 17th interim meeting of the http://www.cninfo.com.cn
May 27 2021 May 28 2021
6th board of directors
The 18th interim meeting of the http://www.cninfo.com.cn
June 8 2021 June 9 2021
6th board of directors
The 19th interim meeting of the http://www.cninfo.com.cn
June 23 2021 June 24 2021
6th board of directors
The 20th interim meeting of the http://www.cninfo.com.cn
July 16 2021 July 17 2021
6th board of directors
The 21st interim meeting of the http://www.cninfo.com.cn
August 11 2021 August 12 2021
6th board of directors
The 22nd meeting of the 6th http://www.cninfo.com.cn
October 25 2021 October 26 2021
board of directors
2. Attendance of directors in board meetings and general meetings
Attendance of directors in board meetings and general meetings
Board meeting Board meeting Board meeting Presence of
Board meeting
presence Board meeting presence by Board meeting not attend in directors in
presence
Name of Director required in the presence on telecom- absence person for two general
through a
reporting site (times) communicatio (times) consecutive meetings
proxy (times)
period (times) n (times) times (times)
Zhang Yabo 9 1 8 0 0 N/A 3
Wang Dayong 9 1 8 0 0 N/A 5
Ren Jintu 0 0 0 0 0 N/A
Yu Shuli 9 1 8 0 0 N/A 1
Ni Xiaoming 9 1 8 0 0 N/A
Chen Yuzhong 9 0 9 0 0 N/A 4
Zhang Shaobo 9 0 9 0 0 N/A
Ji Hua 7 1 6 0 0 N/A
Bao Ensi 2 0 2 0 0 N/A
Shi Jianhui 9 1 8 0 0 N/A
Zhu Hongjun 1 0 1 0 0 N/A
Pan Yalan 8 1 7 0 0 N/A 3
Explanation of not attending the board of directors in person for two consecutive times
Not applicable
61Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
3. Objections raised by directors to relevant matters of the Company
Were there any objections on related issues of the Company from independent directors?
□ Yes √ No
4. Other details about the performance of duties by directors
Were there any suggestions from directors accepted by the Company?
√ Yes □ No
During the reporting period the directors strictly complied with the relevant laws regulations and the Articles of
Association performed their duties conscientiously paid close attention to the Company's operation regularly
reviewed the Company's announcements got access to the information of operation and development periodically
deeply discussed the opportunities and challenges in the operation and development and timely prompted risks.Directors put forward reasonable opinions and suggestions from their professional perspectives which enhanced
the scientific decision-making of the board of directors. Meanwhile directors provided independent and fair
opinions on related transactions profit distribution equity incentive and convertible bonds during the reporting
period. In order to improve the supervision mechanism of the Company and safeguard the legal rights of all
shareholders the Company shall adopt the opinions of directors.VII. Performance of duties by special committees under the Board during the Reporting Period
Important Other Details of
Number of Date of Meeting
Committee Member opinions and performance of objections (if
meetings meetings content
suggestions duties any)
1. Deliberation
of the 2020
annual report
and its
summary;
Independent 2. Specific
director Pan report on
Yalan; annual deposit
Audit Independent March 22 and actual use
6
Committee director Shi 2021 of raised funds
Jianhui; in 2020;
Director Yu 3. Proposal on
Shuli the prediction
of the
Company's
daily related
party
transactions in
62Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2021;
4. Proposal on
appointment of
the audit
institution in
2021;
5. Proposal on
permanent
replenishment
of working
capital with
surplus raised
funds.Report of the
April 20 2022 first quarter in
2021
1. Proposal on
using the raised
funds to
replace the its
own funds
invested in
advance;
June 22 2021
2. Proposal on
capital increase
to
wholly-owned
subsidiaries
with raised
funds.Proposal on
using some idle
raised funds to
July 15 2021
purchase bank
financial
products.
1. Semi-annual
report of the
Company in
August 6 2021 2021;
2. Specific
report on the
annual deposit
63Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
and actual use
of the raised
funds in the
half year of
2021.
1. Third quarter
report of the
Company in
2021;
2. Proposal on
using some idle
raised funds to
purchase bank
October 14 financial
2021 products;
3. Proposal on
using the raised
funds to
replace
issuance
expenses which
was paid by its
own funds
Proposal on
examining the
qualifications
February 4
of candidates
Independent 2021
for the sixth
director Ji Hua;
board of
Chairman
Nomination director.Zhang Yabo; 2
Committee Proposal on
Independent
examining the
director Shi
qualifications
Jianhui October 14
of candidates
2021
for the sixth
board of
director.Independent 1. Proposal on
Remuneratio director Shi adjusting the
n and Jianhui; repurchase
1 May 28 2021
Assessment Independent price of
Committee director Ji Hua; restricted stock
Director Yu incentive plan
64Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Shuli in 2018;
2. Proposal on
adjusting the
exercise price
of 2018 stock
appreciation
right incentive
plan;
3. Proposal on
adjusting the
repurchase
price of
restricted stock
incentive plan
in 2020;
4. Proposal on
the
achievement of
restriction
lifting in the
first vesting
period of the
restricted stock
incentive plan
in 2020;
5. Proposal on
cancellation of
some stock
appreciation
rights;
6. Proposal on
repurchase and
cancellation of
some restricted
shares.
1. Proposal on
Independent
cancellation of
director Shi
Remuneratio some stock
Jianhui;
n and October 14 appreciation
Independent 1
Assessment 2021 rights;
director Bao
Committee 2. Proposal on
Ensi; Director
the
Yu Shuli
achievement of
65Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
exercise
conditions in
the third
vesting period
of 2018 stock
appreciation
right incentive
plan;
3. Proposal on
the
achievement of
restriction
lifting in the
third vesting
period of the
restricted stock
incentive plan
in 2018;
4. Proposal on
repurchase and
cancellation of
some restricted
shares.Chairman
Zhang Yabo;
Director Wang
Dayong;
Deliberation of
Director Ni
the
Xiaoming;
Strategic March 25 development
Director Chen 1
Committee 2021 plan of the
Yuzhong;
Company in
Independent
2021.
director Shi
Jianhui;
Director Zhang
Shaobo
Director Wang
Dayong;
Executive Director Ni
0
Committee Xiaoming;
Director Chen
Yuzhong
66Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
VIII. Performance of duties by the Supervisory Committee
Were there any risks to the Company identified by Supervisory Committee when performing its duties during the
Reporting Period?
□ Yes √ No
IX. Staff in the Company
1. Statistics of employees professional structure of the staff and educational background
Number of incumbent employees in the parent company 4270
Number of incumbent employees in major subsidiaries 10208
Number of incumbent employees 14478
Number of employees receiving salaries in current period 14478
Number of retired employees requiring the parent Company and
0
its subsidiaries to bear costs
Professional structure
Tier Number of employees
Production staff 9657
Sales staff 533
Engineers 1890
Financial staff 272
Administrative Staff 2126
Total 14478
Educational background
Educational background Number of employees
Master and above 564
Bachelor 2549
College technical secondary school 3738
Others 7627
Total 14478
2. Staff remuneration policy
The Company has established a salary incentive system according to the business development strategy and
human resources strategy. Based on the market salary level and the value ability and performance results the
Company has established a comprehensive salary system with the structure of basic salary reward bonus and
long-term incentive and has formed relevant salary incentive systems to ensure the scientificity of employees'
value contribution and their return of income. Thus it stimulates employees' enthusiasm and work innovation
ability and promotes the continuous high-quality development of the Company.Every year the Company carries out the estimation of college students and professional talents which has played
67Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
an important role in motivating new college students and employees at all levels. And regular review market
compensation to ensure competitiveness of the Company's overall salary system. In addition the Company carries
out R & D Achievement Award Quality Award Management Achievement Award Patent Award Cost
Reduction Award Lean Improvement Award and other awards every year which effectively encourage talents’
innovation. The Company’s phase I equity incentive plan in 2018 and phase II restricted stock incentive plan in
2020 played an incentive and retention role for the key talents and laid a foundation for sustainable development.
3. Staff training plansBased on the development plan from 2021 to 2025 the Company implements the talents strategy of “Internaltraining first and external recruitment second” which will be dedicated to optimizing the talent management
mechanism. In order to identify talents the Company established talent standards at all levels and gradually
improve the evaluation system. Some talents development projects are launched such as Leadership Project
International talent training program Technology manufacturing talent training project etc.Through continuous learning further enhance the internal lecturer team and the development of internal
curriculum resources. The Company strengthens its global competitiveness of talents through five aspects which
is power of culture power of internal drive power of external drive power of resource construction and power of
continuous learning.
4. Labor outsourcing
□ Applicable √ Not applicable
X. Profit distribution of ordinary shares and capitalization of capital reserves
Profit distribution policy of ordinary shares in the reporting period especially the formulation implementation
and adjustment of cash dividend policy
□ Applicable √ Not applicable
During the reporting period the Company was profitable and the distributable profits to ordinary shareholders of
the parent company was positive but the Company did not propose a cash dividend distribution plan of ordinary
shares.□ Applicable √ Not applicable
Profit distribution and capitalizing of capital reserves proposal for the current reporting period
√ Applicable □Not applicable
Bonus share issued per 10 shares (share) 0
Cash dividend per 10 shares (RMB) (tax
1.50
inclusive)
Total capital share basis for the distribution
3569927512
proposal (share)
Total cash dividend (RMB) (tax inclusive) 535489126.80
68Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Cash dividend amount in other ways (such as
200011001.49
share repurchase) (RMB)
Total cash dividends (including other ways)
735500128.29
(RMB)
Distributable profits (RMB) 768646528.98
Percentage of cash dividends in the total
100%
distributed profit (%)
Cash dividends
Other
Detailed description of profit distribution or capital reserves conversion plan
Based on provisional 3569927512 shares of capital stock as of March 18 2022 [note] cash dividend of RMB 1.50 (including tax)
will be distributed to all shareholders for every 10 shares. The Company will not distribute bonus shares or convert capital reserves to
share capital.If the total share capital of the Company changes due to the conversion of convertible bonds share repurchase exercise of equity
incentive scheme refinancing and listing of new shares before the implementation of the distribution plan the total distribution
amount shall be adjusted accordingly based on the principle of unchanged distribution proportion.Note: As of March 18 2022 the share capital of the Company was 3591098972 shares of which the number of repurchased shares
is 21171460. According to the provisions of the Company Law the shares held by the listed company through the repurchase
account do not enjoy the right to participate in profit distribution or the conversion of capital reserve into share capital.XI. The Implementation of an Equity Incentive Plan Employee Stock Incentive Plan or Other
Incentive Plans
√ Applicable □ Not applicable
1. Equity incentive plan
In order to further improve the Company's corporate governance structure promote the Company to establish and
improve the incentive mechanism attract and retain excellent talents and effectively mobilize the enthusiasm of
the core talents the Company launched phase I and phase II equity incentive schemes.
1. In 2018 the Company launched the 2018 restricted stock incentive plan and stock appreciation right incentive
plan granting 10.33 million restricted shares to 753 incentive objects and 355000 stock appreciation rights to 22
incentive objects. The grant date of this equity incentive plan is September 18 2018. The grant price of restricted
shares and stock appreciation rights is RMB 8.37 per share and the listing date is November 6 2018.
(1) On October 24 2019 the Company held the 5th interim meeting of the sixth board of directors and the 5th
interim meeting of the sixth board of supervisors respectively in which Resolution on adjusting the
69Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
repurchase price and repurchase quantity of restricted stock incentive plan in 2018 Resolution on the
achievement of exercise conditions adjustment of exercise price quantity and cancellation of some stock
appreciation rights in the first vesting period of 2018 stock appreciation rights incentive plan Resolution on
repurchase and cancellation of some restricted stocks Resolution on the achievement of the unlocking
conditions of first vesting period of 2018 restricted stock incentive plan were approved.The unlocking date of the restricted shares was November 6 2019 and the number of incentive objects
qualified for unlocking was 720. A total of 3.9195 million shares were released accounting for 0.1417% of
the Company's total share capital. There were 19 incentive objects meeting the conditions for the exercise of
the stock appreciation right and the number of exercisable shares was 95550.
(2) On November 11 2019 the first extraordinary general meeting of shareholders of 2019 was held in which
the Resolution on repurchase and cancellation of some restricted stocks was approved. The Company
repurchased and cancelled all or part of the restricted stocks held by unqualified incentive objects in 2018
restricted stock incentive plan totaling of 291200 shares.
(3) On October 20 2020 the Company held the 13th interim meeting of the sixth board of directors and the 12th
interim meeting of the sixth board of supervisors respectively in which Resolution on adjusting the
repurchase price and repurchase quantity of restricted stock incentive plan in 2018 Resolution on the
achievement of exercise conditions adjustment of exercise price quantity and cancellation of some stock
appreciation rights in the second vesting period of 2018 stock appreciation rights incentive plan Resolution
on repurchase and cancellation of some restricted stocks Resolution on the achievement of the unlocking
conditions of second vesting period of 2018 restricted stock incentive plan were approved.The unlocking date of the restricted shares was November 6 2020 and the number of incentive objects
qualified for unlocking was 702. A total of 4.9889 million shares were released accounting for 0.1389% of
the Company's total share capital. There were 18 incentive objects meeting the conditions for the exercise of
the stock appreciation right and the number of exercisable shares was 131820.
(4) On November 5 2020 the fourth extraordinary general meeting of shareholders of 2020 was held in which
Resolution of repurchase and cancellation of some restricted stocks was approved. The Company repurchased
and cancelled all or part of the restricted stocks held by unqualified incentive objects in the 2018 restricted
stock incentive plan totaling of 336310 shares.
(5) On June 24 2021 the second extraordinary general meeting of shareholders in 2021 was held in which
Proposal on Repurchase and Cancellation of Some Restricted Shares was approved. The Company
repurchased and cancelled 145340 restricted shares held by unqualified incentive objects in the restricted
stock incentive plan in 2018.
(6) On October 25 2021 the Company held the 22nd Meeting of the 6th board of directors and the 21st Meeting
of the 6th board of supervisors respectively in which Proposal on repurchase and cancellation of some
restricted shares Proposal on the achievement of lifting the restrictions during the third vesting period of the
restricted stock incentive plan in 2018 Proposal on cancellation of some stock appreciation rights and
Proposal on achievement of exercise conditions in the third vesting period of 2018 stock appreciation rights
incentive plan. The listing date of the restricted shares was November 8 2021. The number of shareholders
who were qualified to unlock was 676. A total of 6.4659 million shares were released accounting for 0.18%
of the total share capital of the Company. The total number of incentive objects meeting the exercise
conditions of stock appreciation right was 16 and the number of exercisable rights was 135200 shares.
70Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
(7) On November 16 2021 the fourth extraordinary general meeting of shareholders in 2021 was held in which
Proposal on repurchase and cancellation of some restricted shares was passed. The Company repurchased
and cancelled a total of 47320 restricted shares held by unqualified incentive objects in the restricted stock
incentive plan in 2018.
2. In 2020 the Company launched the 2020 restricted stock incentive plan granting 12.04 million restricted
shares to 914 incentive objects. The grant date of this equity incentive plan was February 24 2020. The grant
price of restricted shares was RMB 9.85 per share and the listing date was March 20 2020.
(1) On November 5 2020 the fourth extraordinary general meeting of shareholders of 2020 was held in which
the Resolution on repurchase and cancellation of some restricted stocks was approved. The Company
repurchased and cancelled all or part of the restricted stocks held by unqualified incentive objects in 2020
restricted stock incentive plan totaling of 104000 shares.
(2) On June 8 2021 the Company held the 18th interim meeting of the 6th board of directors and the 16th
interim meeting of the 6th board of supervisors respectively in which Proposal on adjusting the repurchase
price of 2020 restricted stock incentive plan Proposal on repurchase and cancellation of some restricted
stocks and Proposal on the achievement of lifting the restrictions during the first vesting period of the
restricted stock incentive plan in 2020 were approved. The listing date of the restricted shares was June 18
2021. The number of shareholders meeting the unlocking condition was 883. A total of 4596150 shares were
released accounting for 0.1280% of the total share capital.
(3) On June 24 2021 the second extraordinary general meeting of shareholders in 2021 was held in which
Proposal on repurchase and cancellation of some restricted shares was approved. The Company repurchased
and cancelled 229450 restricted shares held by unqualified incentive objects in the 2020 restricted stock
incentive plan.
(4) On November 16 2021 the fourth extraordinary general meeting of shareholders in 2021 was held in which
Proposal on repurchase and cancellation of some restricted shares was approved. The Company repurchased
and cancelled 113750 restricted shares held by unqualified incentive objects in the 2020 restricted stock
incentive plan.Share incentives for directors and senior executives in the reporting period
√ Applicable □ Not applicable
Unit: share
Number Number Exercise Number
Restrict
of stock of Number price of of stock Market
Number ed Price for
options newly of exercise options price at Shares Restrict
of Shares Shares restricte
held at granted exercisa d shares held at the end newly ed
exercise held at vested d shares
the stock ble during the end of the granted Shares
Name Title d shares the in the granted
beginni options shares the of the report in the held at
in the beginni current (RMB
ng of in the in the reportin period period current period-e
reportin ng of period per
the year reportin reportin g period (yuan / period nd
g period the share)
g period g period (yuan / share)
period
share)
71Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Director
Wang
25.319760010660091000
Dayong General
manager
Ni
Xiaomi Director 25.3 197600 106600 91000
ng
Chen Director
Yuzhon chief 25.3 197600 106600 91000
g engineer
Vice
presiden
t
Hu
Secretar
Kaichen 25.3 197600 106600 91000
y of the
g
board of
director
s
Vice
Yu
presiden 25.3 197600 106600 91000
Yingkui
t CFO
Total -- 0 0 0 0 -- 0 -- 988000 533000 0 -- 455000
1. At the beginning of each year the number of locked shares of senior executives is
recalculated according to 75% of the total number of shares held by them. The number of
unlocked shares in current period is 25% of the total shares at the beginning of the year.
2. On June 18 2021 the first vesting period of the 2020 restricted stock incentive plan
Note (if
matured. 39000 restricted shares owned by the each director and senior manager totalling of
any)
195000 restricted shares were released.
3. On November 8 2021 the third vesting period of the 2018 restricted stock incentive plan
matured. 67600 restricted shares owned by the each director and senior manager totalling of
338000 restricted shares were released.
Assessment and incentive mechanism for the senior management
√Applicable □Not applicable
In order to encourage senior managers better perform their duties and clarify their rights and obligations the
Company has established a fairly sophisticated performance evaluation standard and remuneration system
according to which senior managers’ performance and annual business indicators would be assessed.The senior managers of the Company are responsible to the board of directors and undertake the business
objectives issued by the board. The remuneration and assessment committee of the board formulate the
remuneration plan based on evaluation of senior managers’ ability performance and completion of business
targets.
72Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2. Implementation of employee stock inventive plan
□ Applicable √ Not applicable
3. Other incentive plan
□ Applicable √ Not applicable
XII. Construction and implementation of internal control
1. Construction and implementation of internal control
In accordance with the requirements of the Company Law and other relevant regulations and normative
documents the Company has set up an internal control system in combination with its own business
characteristics which is composed of the general meeting of shareholders the board of directors the board of
supervisors the management each controlling subsidiary and its functional departments. Thus it formed a
relatively effective division of responsibilities and balances.The Company continues to strengthen the control of high-risk areas such as sales business procurement business
major investments acquisition and merger asset security and information system management and has
established corresponding control policies and procedures.During the reporting period the Company revised and formulated rules and regulations such as Measures for the
registration of insiders and Management system of environmental information disclosure and emergencies further
improved insider information management strengthened the confidentiality of insider information maintained the
fairness of information disclosure and further standardized environmental information disclosure and improved
its ability to respond to environmental emergencies.Meanwhile the Company timely organized directors supervisors and senior managers to participate in relevant
training organized by regulatory authorities which improves the management's awareness of standardized
operation ensures the effective implementation of internal control system effectively improves the standard
operation level and promotes the healthy and sustainable development of the Company.The Company's internal audit department shall regularly inspect and supervise the establishment and
implementation of this internal control system as well as the authenticity and completeness of its financial
information. During the reporting period the Company established effective internal control over the businesses
included in the evaluation scope. It has achieved its internal control target in terms of the authenticity of operating
results business compliance and the effectiveness of internal control.
2. Any significant internal control deficiencies during the reporting period
□ Yes √ No
73Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
XIII. Management and control of subsidiaries during the reporting period
Problems
Integration Follow up
Corporate name Integration plan encountered in Solutions taken Solution progress
progress solution plan
integration
Zhejiang Sanhua
Plate Exchange
/ Completed / / / /
Technology Co.Ltd
XIV. Self-evaluation report on internal control or Internal control audit report
1. Self-evaluation report on internal control
Disclosure date of full text of
March 25 2022
self-evaluation report on internal control
Disclosure index of full text of Self-evaluation Report on Internal Control of the Company in 2021
self-evaluation report on internal control http://www.cninfo.com.cn
Proportion of assets evaluated in total
100.00%
assets
Proportion of revenue evaluated in total
revenue per consolidated financial 100.00%
statement
Recognition standard of deficiencies
Nature Financial report level Non-financial report level
Significant deficiency: Significant deficiency: The possibility
1. Fraud of directors supervisors and of defects is high which will
senior managers；2. Major misstatement in significantly reduce the work
the current financial report found by the efficiency or effect or significantly
CPA but not identified by the internal increase the uncertainty of the effect
control of the Company；3. The Company or make it significantly deviate from
has major violations of laws and the expected goal.regulations in financial accounting asset Important defects：Defects are more
management capital operation likely to occur which will seriously
Qualitative criteria
information disclosure product quality reduce the work efficiency or effect or
safety production environmental seriously increase the uncertainty of
protection and other aspects causing the effect or make it seriously deviate
major losses and adverse effects to the from the expected goal.Company or subject to major General defects：The probability of
administrative supervision and defects is small which will reduce the
punishment；4. Supervision of the audit efficiency or effect increase the
committee and internal control department uncertainty of the effect or make it
is ineffective on the Company's external deviate from the expected goal.
74Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
financial report and internal control.Significant deficiency: (1). Failure to
select and apply accounting policies in
accordance with GAAP； (2). Failure to
establish anti-fraud procedures and control
measures； (3). It cannot reasonably
guarantee the truthfulness and
completeness of the financial statements
due to one or more defects in control
process； (4). There is no corresponding
control mechanism or no compensatory
control for the accounting treatment of
non-routine or special transactions.General deficiency：General defects other
than the above-mentioned.The quantitative standard is based on
The quantitative standard is based on the
the percentage of potential
percentage of potential misstatements of
misstatements of pre-tax profit.pre-tax profit.Significant deficiency：This defect
Significant deficiency：This defect alone
alone or together with other defects
or together with other defects may cause
may cause the misstatement of
the misstatement of financial report to
financial report to exceed 10% of the
exceed 10% of the profit before tax.profit before tax.Important defects：This defect alone or
Quantitative criteria Important defects：This defect alone or
together with other defects may cause the
together with other defects may cause
misstatement of financial report to exceed
the misstatement of financial report to
5% but less than 10% of the profit before
exceed 5% but less than 10% of the
tax.profit before tax.General defects：This defect alone or
General defects：This defect alone or
together with other defects may cause the
together with other defects may cause
misstatement of financial report less than
the misstatement of financial report
5% of the profit before tax.
less than 5% of the profit before tax.Number of significant deficiencies in
0
financial report level
Number of significant deficiencies in
0
non-financial report level
Number of important deficiencies in
0
financial report level
Number of important deficiencies in
0
non-financial report level
75Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2. Audit report or assurance report on internal control
□ Applicable √ Not applicable
XV. Governance problem rectification of the Company
According to self-examination the Company has no material violations affecting the level of corporate
governance. The Company has established a relatively complete and reasonable corporate governance structure
and internal control system in accordance with the Company Law Securities Law Guidelines for Governance of
Listed Companies and other relevant laws and regulations. However with the continuous development of the
Company's business scale and the changes of external macroeconomic and market environment the Company
needs to further improve its internal control system continue to strengthen its own construction effectively
improve the Company's standardized operation level and the effectiveness of corporate governance. The Company
will continuously improve the governance quality by improving the abilities of scientific decisions making stable
operation and standardize development.
76Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section V Environmental and Social Responsibility
I. Material environmental issues
Whether the Company or the Company’s subsidiaries are critical pollutant enterprises disclosed by National
Environmental Protection Department
Yes
Name of
main
Name of Distribution Emission Approved Over
pollutants Emission Number of Emission Total
Company or of emission concentratio total standard
and mode outlets standards emissions
subsidiary outlets n emission emission
characteristi
c pollutants
The
limitation of
COD in
Zhejiang
GB8978-19
Sanhua Not
96 61.867 T
Intelligent COD Nanotube 1 North ≦500mg/L 42.79T exceeding
Integrated /year
Controls the standard
Wastewater
Co. Ltd
Emission
Standard is
500mg / L
The
limitation
listed in
DB33/887-2
013 Indirect
Zhejiang Emission
Sanhua Limits of Not
Ammonia 6.186 T
Intelligent Nanotube 1 North ≦35mg/L Nitrogen 4.28T exceeding
Nitrogen /year
Controls and the standard
Co. Ltd Phosphorus
Pollutants
from
Industrial
Wastewater
is 35mg / L
Zhejiang Direct The Not
SO2 1 North ≦50mg/m3 0.678T 2.15 T /year
Sanhua emission limitation exceeding
77Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Intelligent listed in the standard
Controls GB13271-2
Co. Ltd 014
Emission
Standard of
Air
Pollutants
for Boilers
is 50mg/m3
According
to the low
Nitrogen
emission
Zhejiang
requirement
Sanhua Not
Nitrogen Direct s of local 10.06 T
Intelligent 1 North ≦50mg/m3 3.17T exceeding
Oxide emission government /year
Controls the standard
the limit
Co. Ltd
value of
gas-fired
boiler is
50mg / m3
Zhejiang
The
Sanhua
limitation
Climate & Not
from 9.205 T
Appliance COD Nanotube 1 South ≦500mg/l 2.377T exceeding
GB8979-19 /year
Controls the standard
96 is 500mg
Group
/ L
Co.Ltd
Zhejiang
The
Sanhua
limitation
Climate & Not
Total from
Appliance Nanotube 1 South ≦2.0mg/l 0.079T / exceeding
Copper GB8979-19
Controls the standard
96 is
Group
2.0mg/l
Co.Ltd
Construction and operation of pollution control facilities
Adhering to the advanced management concept the Company takes "developing energy-saving and low-carbon
economy creating a green quality environment" as its own responsibility constantly surpasses and becomes an
important creator and contributor of human green quality living environment with limited resources and unlimited
wisdom.
1. In terms of waste water treatment the Company responded to the construction of "five water treatment"
"eliminating inferior V-type water" and "zero direct discharge of sewage" in the whole province. The
78Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Company renovated the rainwater and sewage outlets in the factory area implemented the separation of
rainwater and sewage and installed cut-off valves and video monitoring equipment at the Company's
rainwater discharge outlets and collected and treated the early rainwater. There are two wastewater treatment
stations in the factory. The sewage treatment stations have been equipped with standardized sewage outlets
and set up discharge outlet signs. Online monitoring device solenoid valve flowmeter and card swiping
sewage system are installed at the discharge outlet which has been connected with the environmental
protection department. The monitoring indicators include pH COD total copper total zinc and flow.Wastewater treatment: The Company has entrusted a third-party professional treatment unit for treatment. The
discharge indicators of the Company's internal control wastewater are stricter than the environmental
discharge standard. The final treated wastewater is discharged into the sewage collection pipe network of the
industrial zone and sent to Shengxin sewage treatment plant for retreatment.
2. Waste gas treatment: The Company has acid pickling electroplating waste gas welding dust ultrasonic
cleaning and other waste gas. All kinds of waste gas discharge cylinders are equipped with corresponding
waste gas treatment devices. The acid pickling and electroplating waste gas absorption and treatment tower is
installed with automatic dosing system and the waste gas is discharged to air after treatment. At the same
time in order to win the blue-sky defense activity the Company carried out low Nitrogen emission
transformation of the Company's gas boilers in accordance with the requirements of relevant official
departments in 2019. In 2021 the transformation and upgrading of VOCs treatment facilities in industrial
enterprises have been implemented. At the same time the process has been improved and the water cleaning
is used to replace the organic solvent cleaning so as to reduce the generation of VOCs.
3. Solid waste and soil treatment: all kinds of hazardous waste of the Company are entrusted to the third
qualified party for disposal the general solid waste with utilization value is recycled the domestic waste is
cleared and transported by the environmental sanitation station and the construction waste is cleaned and
transported by the construction unit. The Company also tests the soil and groundwater every year and
publishes them on the corresponding website In March 2020 Sanhua Refrigeration Group carried out a
special site investigation on soil and groundwater in Xialiquan plant area and prepared an investigation report.No pollution was found. In July 2020 the Company became one of the first "waste free factories" in
Shaoxing.
4. Noise control: The Company's existing main noise is workshop production noise air compressor room waste
gas and waste water treatment equipment noise. Equipment layout is reasonable and trees are planted around
the workshop. Noise at factory meets the standard.
5. The "three wastes" pollution control facilities of the Company are in normal and stable operation. The
pollutants are discharged based on the standard and there is no environmental pollution event.Environmental Impact Assessment (EIA) of construction projects and other administrative permits for
environmental protection
1. Since 2010 the Company has invested in the construction of Meizhu Sanhua Industrial Estate in Xinchang
County and has obtained 25 EIA replies. All the projects have passed. In August 2020 the Company obtained the
79Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
national emission permit.
2. Zhejiang Sanhua Climate & Appliance Controls Group Co.Ltd. has invested in Xialiquan of Xinchang County
since 2013 and has obtained 6 EIA replies. All the projects have passed.Emergency Response Plan
1. The Company re-prepared the Emergency Response Plan in April 2021 and filed with Xinchang Environmental
Protection Bureau on June 10 2021 (Record No. 330624-2021-06-M).
2. In order to manage environmental emergencies and reduce the environmental hazards caused by sudden
environmental pollution accidents Zhejiang Sanhua Climate & Appliance Controls Group Co.Ltd. re-compiled
Emergency Response Plan for Environmental Pollution Accidents of Zhejiang Sanhua Climate & Appliance
Controls Group Co.Ltd. (simplified version) in October 2018 which was filed with Xinchang County
Environmental Protection Bureau on October 29 2018 (Record No. 3306242018013).Environmental self-monitoring program
The Company formulated Self-monitoring Scheme of Zhejiang Sanhua Intelligent Control Co. Ltd. according to
the requirements of the superior environmental protection department combined with the actual production
situation and the actual needs of environmental management of the Company. The sewage station of the Company
is equipped with a laboratory and the detection is conducted by a specially assigned person. On line automatic
monitoring equipment such as pH COD TOC total copper total zinc flow rate etc. are installed at the
Company's total wastewater discharge outlet so as to achieve the combination of automatic monitoring and
manual testing. For the pollution factors such as suspended matters total Phosphorus Ammonia Nitrogen total
Iron and Petroleum the Company entrusts a third-party testing agency to carry out regular monitoring. The
monitoring results are published regularly on the enterprise self-monitoring information disclosure platform of
Zhejiang Province.Zhejiang Sanhua Climate & Appliance Controls Group Co.Ltd. has good pollutant emission monitoring and
management ability and can timely inform the environmental protection administrative department and the public
of the monitoring information. According to the actual production situation and the actual needs of environmental
management the environmental protection laboratory of wastewater treatment station is set up and the detection
is carried out by specially assigned person daily. On line automatic monitoring equipment such as pH COD TOC
total copper and flow rate are installed at the total wastewater discharge outlet of the Company. The combination
of automatic monitoring and manual testing effectively ensures the timeliness and effectiveness of monitoring. At
the same time a third-party testing Company is entrusted to carry out regular monitoring. The monitoring results
are published regularly on the enterprise self-monitoring information disclosure platform of Zhejiang Province.Administrative penalties for environmental problems during the reporting period
Not applicable
Other environmental information that should be disclosed
Not applicable
Measures and effects in reducing carbon emissions during the reporting period
80Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
√ Applicable □ Not applicable
1. The Company continues to promote the application of smart energy IOT platform and effectively controls the
use efficiency of all energy within the scope through real-time display of digital information traceability
technical transformation and energy conservation and consumption reduction analysis.
2. The industrial zone uses distributed photovoltaic to replace the original purchased electricity in a large area to
achieve clean energy and adopts waste heat recovery technology to achieve lower energy consumption and higher
resource utilization efficiency.
3. The Company improves and reduces energy consumption and improves energy efficiency through the
improvement of manufacturing and technological process. Reduce energy consumption and carbon emission by
troubleshooting of air leakage point of compressed air pipeline of equipment upgrading and transformation of air
compressor emission reduction of triple supply and nitrogen recycling.Other environmental information
Not applicable
II. Social responsibility
During the reporting period the Company actively fulfilled its social responsibilities. The Company takes
"People-oriented Continuous innovation Employee satisfaction Customer satisfaction Supplier satisfaction
Shareholder satisfaction and Social satisfaction" as its core values. While continuously creating value for
shareholders it also actively undertakes the responsibility to employees customers society and other stakeholders.The Company fully respects and protects the legitimate rights and interests of relevant stakeholders adheres to
paying equal attention to economic benefits social benefits and environmental benefits and realizes the
sustainable development of society and the Company.
(1) Maintain the continuous and stable growth of revenue care about the return of shareholders
Since listing the Company has established a corporate governance organization composed of the general meeting
of shareholders the board of directors and the board of supervisors and formed a complete internal control
system in strict accordance with the requirements of the Company Law the Listing Rules of Shenzhen Stock
Exchange and the Articles of Association. During the reporting period the Company continuously improved the
governance structure and internal control system to raise the standard operation level and fully protected the
legitimate rights and interests of all shareholders. The general meeting of shareholders the board of directors and
the board of supervisors exercise their functions and powers within the scope of relevant laws and regulations.The convening proposal notice and resolution procedures of previous meetings are in line with laws and
regulations. There is no case of ultra vires approval or implementation before approval so as to ensure that the
rights of all shareholders are not infringed especially minor shareholders.Information disclosure the Company has been strictly in compliance with the relevant provisions of CSRC and
Shenzhen Stock Exchange and has fulfilled the obligation of truthfulness accuracy timeliness and completeness.The Company enhances the interaction with investors by means of investor hotline interactive platform and
reception of investors so that investors can have a more in-depth understanding of the Company's development
81Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
production and operation. It promotes the Company to establish a long-term and stable relationship with investors
and safeguard the legitimate rights and interests of minor investors effectively. At the same time the Company
pays special attention to the management of insider information and actively prevents the occurrence of insider
trading. During the reporting period the Company does not have insider trading or damage the interests of
shareholders.The Company attaches great importance to the return to shareholders. According to the relevant provisions of
China Securities Regulatory Commission on cash dividends and sustainable development the Company has
formulated and strictly implemented the continuous dividend return plan for shareholders since listing and
insisted on sharing the Company's operation achievements with shareholders.
(2) Safeguard the legitimate rights and interests of employees and improve their comprehensive ability
The Company always adheres to the people-oriented core values takes improving the working environment of
employees realizing their self-worth improving their quality of life and promoting their career growth which is
also treated as the important part of the Company's development strategy. It regards employees as the Company's
primary resources earnestly protects their rights and interests and strives to realize the common development of
employees and the enterprise so as to enhance the cohesion of the enterprise.Abiding by the Labor Law Labor Contract Law Law on the Protection of Women's Rights and Interests and other
relevant laws and regulations the Company establishes a series of labor management systems signs labor
contracts with employees according to law pays employees' wages in full timely and pays various social
insurance for employees. The Company has a sound vacation system. Employees not only enjoy national statutory
holidays according to law but also enjoy gifts from the Company on various important public festivals such as
Spring Festival Mid-Autumn Festival International Women's Day etc.The Company has established a reasonable human resource management system and a scientific performance
appraisal system. In order to implement the principle of equality between men and women the Company links the
performance appraisal of management cadres at all levels with the Company's business objectives. In order to
motivate the employees stimulate their sense of responsibility and mission managements’ KPI aligned with the
Company’s operation target and related income evaluation system was implemented. In addition the Company
has established a perfect staff training system designed training courses for each employee and encouraged
employees to study in their spare time to improve their own quality and comprehensive ability.At the same time the Company has always attached importance to and adhered to the construction of enterprise
culture creating a healthy positive and cooperative working atmosphere. The Company actively cares for the life
of employees sends greetings to employees who have encounter sudden disasters. And it establishes the
"Sanhua--One family" fund to help employees in difficulties and increase their sense of belonging to the
enterprise. The Company also carries out sports job skills competitions festival parties and other recreational
activities to show the good spirit of employees and it builds a communication platform for employees which
effectively stimulate the sense of collective honor and team cohesion.
(3) Safeguard the rights and interests of suppliers and treat customers with integrity
In line with the principle of "Communication with integrity and sharing value" the Company pays attention to the
82Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
relationship with suppliers and customers constantly strengthens the communication and cooperation with all
parties and earnestly protects their legitimate rights and interests.For suppliers the Company always adheres to the business values of “Honesty Fairness Mutual Benefit andCollaborative Development” strictly complies with contracts signed with suppliers establishes and strictly
implements the procurement standards and evaluation system carries out stable and effective management of
procurement so as to effectively protect the legitimate rights and interests of suppliers. The Company continues to
strengthen the internal control and audit supervision of the supply chain resolutely eradicate black box operation
commercial bribery and improper transactions strive to provide a good competitive environment for suppliers
and promote the long-term and stable cooperation between the Company and suppliers.For customers the Company always maintains the concept of "Customer first grow together with customers"
attaches great importance to customer relationship management takes customers’ satisfaction as the standard to
measure the Company's operation and is committed to providing customers with high-quality products and
services. Over the years the Company has established a good corporate image and gained a good reputation from
all walks of life.
(4) Energy saving innovative production and environmental protection
The Company takes the vision of "Developing energy saving and low-carbon economy creating a quality and
green environment" while pursuing economic benefits. It pays attention to environmental protection and energy
conservation and consumption reduction takes the construction of resource saving and environment-friendly
enterprises as an important part of sustainable development strategy actively promotes the strategic
transformation from "Cost leading" to "Technology leading" and continuously develops independent intellectual
property rights new products and new technologies such as energy saving environmental protection material
saving consumption reduction. At the same time the Company has successfully developed the inverter controller
and other system solutions which will further improve the energy conservation and environmental protection of
air conditioning system.The Company emphasizes safety production and environmental protection and adheres to the principle of
"Prevention first combination of prevention and control". While realizing its own development it actively
shoulders the social responsibility of environmental protection and strives to promote the sustainable
development of society and environment. The Company strictly abides by related national laws and regulations.On the one hand the Company has established strict rules in effectively guiding the safety and environmental
protection of each subsidiary company; on the other hand the Company continuously optimizes the production
process continuously carries out the overhaul and technical transformation of environmental protection facilities
actively deepens the three wastes treatment and clean production level. In addition the Company has prepared an
effective comprehensive emergency plan for environmental risks and various specific emergency. Equipped with a
sound emergency management team and various emergency facilities equipment and materials regular
emergency training and drills are carried out so as to minimize the occurrence of environmental pollution safety
accidents.
(5) Shoulder social responsibility and participate in social charity
The Company takes "Public welfare society building a harmonious society" as an important responsibility. With
its continuous development it has also made positive contributions to the infrastructure construction
83Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
environmental protection poverty alleviation and community construction of Shaoxing. During the reporting
period the Company actively undertakes its due responsibilities and obligations and strives to create a good
corporate image.III. Achievements of poverty alleviation and rural revitalization
In the reporting year of the Company there has been no targeted poverty alleviation activity or follow-up
targeted poverty alleviation plan.
84Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section VI Significant Events
I. Performance of commitments
1. Complete and incomplete commitments of the Company and its actual controller shareholders related
parties acquirers and other related parties for the commitments by the end of the reporting period.√ Applicable □ Not applicable
Commitment Date of Term of
Commitments Nature Details of commitments Performance
party commitments commitments
Zhang Yabo
When the number of shares sold through listing
controlling
Commitment Other and trading in Shenzhen Stock Exchange
shareholder
from commi reaches 1% of the total number of shares of the November 21st Strict
Sanhua Long term
reformation of tment Company it shall make an announcement 2005 performance
Holding
shareholding within two working days from the date of the
Group Co.occurrence of the fact.Ltd.Comm
itment
on
horizo
Zhang Daocai ntal
controlling compe Zhang Daocai and Sanhua holding group the
shareholder tition controlling shareholder of the Company
January 5th Strict
Sanhua related promise that there will not be any competition Long term
2009 performance
Holding party with Sanhua intelligent controls in the business
Group Co. transac scope being or already carried out in the future.Ltd. tions
Commitments and
from assets capital
reorganization occupa
tion
Comm Sanhua Holding Group promises: after the
itment completion of this transaction Sanhua Holding
Zhang Daocai
on Group and Sanhua intelligent controls will sign
controlling
horizo an agreement according to law perform legal
shareholder
ntal procedures fulfill the obligation of information January 5
th Strict
Sanhua Long term
compe disclosure and handle significant matters for 2009 performance
Holding
tition approval in accordance with relevant laws
Group Co.related regulations and articles of association of
Ltd.party Sanhua intelligent controls. In the process of
transac implementation of related party transactions we
85Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
tions will follow the principle of legality and
and reasonableness ensure the fairness of prices and
capital procedures and make certain that the legitimate
occupa interests of Sanhua intelligent controls and
tion other shareholders will not be damaged through
related party transactions.In order to avoid horizontal competition with
Sanhua intelligent controls Zhang Daocai
Zhang Yabo Zhang Shaobo Sanhua Holding
Group the controlling shareholder of the
Company and Sanhua Lvneng Industry the
trading partner made the following
commitments:
1. I (or the Company) will not directly or
indirectly engage in or participate in the
business that constitutes potential direct or
indirect competition with Sanhua Intelligent
Controls and its subordinate enterprises;
Zhang Daocai Comm
guarantee that legal and effective measures shall
Zhang Yabo itment
be taken to urge other enterprises controlled by
Zhang on
me (or the Company) not to engage in or
Shaobo horizo
participate in any business competing with
controlling ntal
Sanhua Intelligent Controls and its subordinate
shareholder compe
enterprises.Sanhua tition
2. If Sanhua Intelligent Controls further Strict
Holding related July 24th 2015 Long term
expands its business scope I (or the Company) performance
Group Co. party
and other controlled enterprises will not
Ltd. Zhejiang transac
compete with Sanhua Intelligent Controls'
Sanhua tions
expanded business; if it is possible to compete
Lvneng and
with Sanhua Intelligent Controls' business after
Industrial capital
expansion I (or the Company) and other
Group Co. occupa
controlled enterprises will withdraw from
Ltd. tion
Sanhua Intelligent Controls in the following
ways of competition: A. Stop the businesses
that compete or may compete with Sanhua
Intelligent Controls; B. Inject the competitive
business into Sanhua Intelligent Controls; C.Transfer the competitive business to an
unrelated third party.
3. If I (or the Company) and other enterprises
controlled by me (or the Company) have any
business opportunities to engage in and
participate in any activities that may compete
with Sanhua Intelligent Controls' business
86Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
operation they shall immediately inform
Sanhua Intelligent Controls of the above
business opportunities. If Sanhua Intelligent
Controls makes an affirmative reply to take
advantage of the business opportunity within a
reasonable period specified in the notice it shall
do its best to give the business opportunity to
Sanhua Intelligent Controls.
4. In case of breach of the above commitment I
(or the Company) is willing to bear all
responsibilities arising therefrom and fully
compensate all direct or indirect losses caused
to Sanhua Intelligent Controls.In order to standardize the related party
transactions with Sanhua Intelligent Controls
Zhang Daocai Zhang Yabo Zhang Shaobo
Sanhua Holding Group the controlling
shareholder of the Company and Sanhua
Lvneng Industrial the trading partner made the
following commitments:
1. I (or the Company) and the controlled
Zhang Daocai Comm
enterprises will reduce the related party
Zhang Yabo itment
transactions with Sanhua intelligent controls as
Zhang on
far as possible and will not use their own status
Shaobo horizo
as shareholders of Sanhua intelligent controls to
controlling ntal
seek for superior rights in terms of business
shareholder compe
cooperation and other aspects compared with
Sanhua tition
other third parties; Strict
Holding related July 24th 2015 Long term
2. I (or the Company) will not take advantage of performance
Group Co. party
the right to enter into a transaction with Sanhua
Ltd. Zhejiang transac
intellectual controls using the position as a
Sanhua tions
shareholder.Lvneng and
Industrial capital 3. If there are necessary and unavoidable related
Group Co. occupa party transactions I (or the Company) and the
Ltd. tion controlled enterprises will sign agreements with
Sanhua intelligent controls in accordance with
the principles of fairness follow legal
procedures and perform the information
disclosure obligations in accordance with the
requirements of relevant laws regulatory
documents and the articles of association. It
shall also perform relevant internal
decision-making and approval procedures to
87Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
ensure that it will not conduct transactions with
Sanhua intelligent controls on terms that are
obviously unfair compared with the market
price and will not use such transactions to
engage in any behavior that damages the
legitimate rights and interests of Sanhua
intelligent controls and other shareholders.Zhang Daocai Zhang Yabo Zhang Shaobo and
Sanhua holding Group the controlling
Zhang Daocai shareholder of the Company made the
Zhang Yabo following commitments: after the completion of
Zhang the transaction Sanhua intelligent controls will
Shaobo continue to improve the corporate governance
Other
controlling structure and independent operation of the Strict
Comm July 24th 2015 Long term
shareholder Company management system in accordance performance
itment
Sanhua with the requirements of relevant laws and
Holding regulations and the articles of Association and
Group Co. continue to maintain the independence of
Ltd. Sanhua intelligent controls in business assets
finance institutions personnel etc. to protect
the interests of all shareholders.
1. I (or the Company) and the controlled
enterprises will reduce the related party
transactions with Sanhua intelligent controls as
far as possible and will not use the position as a
Zhang Daocai Comm
shareholder of Sanhua intellectual controls to
Zhang Yabo itment
seek the superior rights for business cooperation
Zhang on
with Sanhua intelligent controls compared with
Shaobo horizo
other third parties;
controlling ntal
2. I (or the Company) will not use my position
shareholder compe
as a shareholder of Sanhua intellectual controls
Sanhua tition
to seek for the priority right to cooperate with September Strict
Holding related Long term
th
Sanhua intellectual controls; 18 2017 performance
Group Co. party
3. If there are necessary and unavoidable related
Ltd. Zhejiang transac
party transactions I (or the Company) and the
Sanhua tions
controlled enterprises will sign agreements with
Lvneng and
Sanhua intelligent controls in accordance with
Industrial capital
the principles of fairness follow legal
Group Co. occupa
procedures and perform the information
Ltd. tion
disclosure obligations in accordance with the
requirements of relevant laws regulatory
documents and the articles of association. It
shall also perform relevant internal
88Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
decision-making and approval procedures to
ensure that it will not conduct transactions with
Sanhua intelligent controls on terms that are
obviously unfair compared with the market
price and will not use such transactions to
engage in any behavior that damages the
legitimate rights and interests of Sanhua
intelligent controls and other shareholders.
1. I (or the Company) will not directly or
indirectly engage in or participate in any
business that may constitute potential direct or
indirect competition with Sanhua intelligent
controls and its subordinate enterprises;
guaranteed that legal and effective measures
will be taken to urge other enterprises
controlled by me (or the Company) not to
engage in or participate in any business that is
competitive with Sanhua intelligent controls
and its subordinate enterprises Business.Zhang Daocai Comm
2. If Sanhua intelligent controls further expands
Zhang Yabo itment
its business scope I (or the Company) and other
Zhang on
enterprises controlled by me (or the Company)
Shaobo horizo
will not compete with Sanhua intelligent
controlling ntal
controls' expanded business; if it is possible to
shareholder compe
compete with Sanhua intelligent controls'
Sanhua tition
business after expansion I (or the Company) September Strict
Holding related Long term
th
and other enterprises controlled by me (or the 18 2017 performance
Group Co. party
Company) will withdraw from Sanhua
Ltd. Zhejiang transac
intelligent controls in the following ways of
Sanhua tions
competition: A. stop the businesses that
Lvneng and
compete or may compete with Sanhua
Industrial capital
intelligent controls; B. inject the competitive
Group Co. occupa
business into Sanhua intelligent controls; C.Ltd. tion
transfer the competitive business to an unrelated
third party.
3. If I (or the Company) and other enterprises
controlled by me (or the Company) have any
business opportunities to engage in and
participate in any activities that may compete
with Sanhua intelligent controls' business
operation they shall immediately inform
Sanhua intelligent controls of the above
business opportunities. If Sanhua intelligent
controls makes an affirmative reply to take
89Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
advantage of the business opportunity within a
reasonable period specified in the notice it shall
do its best to give the business opportunity to
Sanhua intelligent controls.
4. In case of breach of the above commitment I
(or the Company) is willing to bear all
responsibilities arising therefrom and fully
compensate all direct or indirect losses caused
to Sanhua intelligent controls.Zhang Daocai
Zhang Yabo
Zhang After the completion of the transaction the
Shaobo listed Company will continue to improve the
controlling corporate governance structure and independent
shareholder operation of the Company management system
Sanhua Other in accordance with the requirements of relevant
September Strict
Holding commi laws and regulations and the articles of Long term
18th 2017 performance
Group Co. tment association continue to maintain the
Ltd. Zhejiang independence of the listed Company in
Sanhua business assets finance institutions personnel
Lvneng and other aspects and effectively protect the
Industrial interests of all shareholders.Group Co.Ltd.Comm
itment
on The commitment made at the time of IPO it
horizo shall not engage in the same production
Zhang Daocai ntal operation or business as the Company in the
controlling compe future. In order to avoid business competition
Commitment
shareholder tition with the Company and clarify the
from initial Strict
Sanhua related non-competition obligations Sanhua Holding June 7th 2005 Long term
public offering performance
Holding party Group on behalf of itself and its subsidiaries
or refinancing
Group Co. transac with more than 50% equity makes a
Ltd. tions commitment to Sanhua intelligent controls to
and avoid possible horizontal competition.capital
occupa
tion
Are the
commitments
Yes
fulfilled on
time
90Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2. Where any profit forecast was made for any of the Company’s assets or projects and the current reporting
period is still within the forecast period the Company shall explain whether the performance of the asset or
project reaches the profit forecast and why:
□ Applicable √ Not applicable
II. The Company’s funds used by the controlling shareholder or its related parties for
non-operating purposes.□ Applicable √ Not applicable
No such case during the reporting period.III. Illegal external guarantee
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.IV. Explanation Given by the Board of Directors Regarding the “Non-standard Auditor’sReport” Issued by the CPA Firm for the Reporting Period
□ Applicable √ Not applicable
V. Explanation Given by the Board of Directors Board of Supervisors and Independent
Directors(if any) Regarding the “Non-standard Auditor’s Report” Issued by the CPA
Firm for the Reporting Period
□ Applicable √ Not applicable
VI. For changes in accounting policies accounting estimates and accounting methods as
compared to the financial report for the prior year
√ Applicable □ Not applicable
Description of changes in accounting policies
1. New lease standard
The Company has implemented the revised No. 21 Accounting Standards for Business Enterprises - Leasing
(hereinafter referred to as the “new leasing standards”) from January 1 2021 (hereinafter referred to as the “firstimplementation date”).
(1) As for the existing contract before the first execution date the Company chooses not to reevaluate whether it is
a lease or includes a lease.
(2) For the lease contract in which the Company is the lessee the Company implements the new leasing standard
since the first implementation date and the Company adjusts the amount of retained earnings at the beginning of
the reporting period and other relevant items in the financial statements according to the cumulative impact of the
implementation of the new lease standard and it does not adjust the information of the comparable period. The
specific treatment is as follows:
91Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
For the financial lease before the first implementation date the Company shall measure the right of use assets and
lease liabilities respectively according to the original book value of the financial lease in assets and the financial
lease payable on the first implementation date.For the operating lease before the first implementation date the Company shall measure the lease liability at the
present value discounted by the company's incremental loan interest rate on the first implementation date
according to the remaining lease payment on the first implementation date and measure the right to use asset
according to the amount equal to the lease liability and make necessary adjustments according to the prepaid rent.A. The main impact of the implementation of the new leasing standards on the Company's financial statements on
January 1 2021 is as follows:
Items Balance sheet
December 31 2020 Impact of adjustment of January 1 2021
new lease standards
Fixed assets 3839408059.45 -119764340.05 3719643719.40
Assets with right of use +202831869.22 202831869.22
Non-current liabilities due within 130553923.87 +22719934.72 153273858.59
one year
Lease liabilities +149779815.53 149779815.53
Long term accounts payable 90336083.27 -89432221.08 903862.19
B. Simplified treatment of operating leases before the first implementation date
For lease contracts completed within 12 months after the first implementation date the Company adopts a
simplified method and does not recognize the assets with right of use and lease liabilities. The above simplified
treatment has no significant impacts on its financial statements.
(3) For the operating lease contracts of low value assets existing before the first implementation date the
Company adopts a simplified method does not recognize the assets with right of use and lease liabilities and
carries out accounting treatment in accordance with the new lease standards from the first implementation date.
(4) In terms of the lease contract with the Company as the lessor it shall be subject to accounting treatment in
accordance with the new lease standards from the first implementation date.
2. Q & A on the implementation of accounting standards for business enterprises
In November 2021 the accounting department of the Ministry of Finance issued the Q&A on the implementation
of accounting standards for business enterprises (the fifth batch). This article points out that: In general the
transportation activities that take place in order to perform the customer's contract before the control of the
enterprise's goods or services is transferred to the customer do not constitute a single performance obligation and
the relevant transportation costs should be regarded as the contract performance costs. The Company adopts the
92Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
same basis as the recognition of revenue from goods or services to amortize and record it into the current profit
and loss. The contract performance cost shall be carried forward and included in the title of "main business cost"
or "other business cost" when recognizing the revenue of goods or services and shall be listed in the item of
"operating cost" in the income statement.Due to the implementation of the Q&A on the implementation of accounting standards for business enterprises
(the fifth batch) the Company retroactively corrected the recording of sales freight and miscellaneous expenses in
2020 and reclassified the item from "sales expenses" to "operating costs". The adjustment impact of the
accounting policy change on the financial statements of 2020 is shown in the table below:
Item Income statement for the year of 2020
Before adjustment Adjustment After adjustment
Consolidated income statement
Operating costs 8500391322.27 +237829716.09 8738221038.36
Selling expenses 602954759.17 -237829716.09 365125043.08
Income statement of parent company
Operating costs 3383660538.43 +22580796.28 3406241334.71
Selling expenses 51140200.18 -22580796.28 28559403.90
VII. Explanation for changes in scope of the consolidated financial statements as compared
to the financial report for the prior year
√ Applicable □ Not applicable
(I). Business combination under different control
1. Business combination under different control in this reporting period
(1) Basic information
Date of equity Cost of equity
Name of the acquiree Proportion of equity acquisition Equity acquisition method
acquisition acquisition
Zhejiang Sanhua Plate
RMB 28.00 milli
Exchange Technology Co. 2021-12-14 70% Equity transfer agreement
on
Ltd
(Continued)
Determination Revenue of the acquiree from Net profit of the acquiree
Date of equity
Name of the acquiree basis of purchase the acquisition date to the end from the acquisition date to
acquisition
date of the period the end of the period
Zhejiang Sanhua Plate Complete the
Exchange Technology Co. 2021-12-14 equity transfer and 0.00 0.00
Ltd make payment
(2) Other instructions
In December 2021 the Company acquired 70% equity of Zhejiang Sanhua Plate Exchange Technology Co. Ltd.(hereinafter referred to as Sanhua Plate Exchange) from Su Jun. The pricing of this equity transaction is based on
the assessed value the basic transfer price is 28 million yuan and the assessment payment of consideration is 7
million yuan.If the net profit of the Sanhua Plate Exchange in 2022 realize 6.4 million yuan the Company will pay another 3.5
93Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
million yuan. Otherwise the Company will not need to pay any more. If the net profit of Sanhua Plate Exchange
in 2023 realize 8 million yuan the Company will pay another 3.5 million yuan. Otherwise the Company will not
need to pay any more.According to the profit forecast data and the judgment of the Company's management it is difficult for Sanhua
Plate Exchange to achieve the assessment net profit and the assessment payment of consideration is estimated at
zero yuan.
2. Cost of M&A and goodwill
Items Amount
Cost of M&A 28000000.00
Cash 28000000.00
Less: fair value of identifiable net assets obtained 20408169.39
Goodwill 7591830.61
3. Identifiable assets and liabilities of the acquiree on the acquisition date
(1) Details
Item Sanhua Plate Exchange
Fair value on the purchase date Book value on purchase date
Assets 41750357.62 25060423.80
Accounts receivable 2456829.86 2456829.86
Inventory 7730397.40 7730397.40
Other current assets 1769614.51 1769614.51
Fixed assets 6672716.01 4214515.28
Assets with right of use 4019018.35 4019018.35
Intangible assets 12917600.00
Long term deferred 6068825.10 4754692.01
expenses
Deferred tax assets 115356.39 115356.39
Liabilities 12595829.92 10092339.85
Accounts payable 5547165.87 5547165.87
Salary payable 526155.63 526155.63
Lease liabilities 4019018.35 4019018.35
Deferred tax liability 2503490.07
Net assets 29154527.70 14968083.95
Less: Minority interests 8746358.31 4490425.19
Net assets acquired 20408169.39 10477658.76
(2) Determination method of fair value of identifiable assets and liabilities
The fair value of identifiable assets and liabilities of Sanhua Plate Exchange is determined at the assessed value.(II). Changes in consolidation scope due to other reasons
Actual Proportion of
Equity acquisition Date of equity
Name of subsidiaries contribution at capital
method acquisition
the end of the contribution
94Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
period
Zhejiang Sanhua Automotive Components Trading Co.New investment 2021-08-31 0.00 100%
Ltd
Zhejiang Sanhua Heat Exchanger Co. Ltd New investment 2021-12-13 0.00 100%
VIII. Engagement and disengagement of the CPA firm
CPA firm engaged at present
Name of the domestic CPA firm Pan-China Certified Public Accountants LLP
Remuneration of domestic accounting firms (in 10000 yuan) 245.28
Consecutive years of the audit service provided by the domestic
21
CPA firm
Name of the certified public accountants from the domestic CPA
Luo Xunchao Zhang Xin
firm
Consecutive years of the audit service provided by the certified Luo Xunchao has been in service for 3 consecutive years
public accountants from the domestic CPA firm Zhang Xin has been in service for 1year
Whether the CPA firm was changed in the current period
□ Yes √ No
Engagement of internal control audit CPA firm financial advisor or sponsor
√Applicable □Not applicable
During the reporting period the Company did not change accounting firm or engage an internal control audit
accounting firm. This year the Company hired Zheshang Securities Co. Ltd. due to the issuance of convertible
bonds and paid a total of 11 million yuan (including tax).IX. Listing suspension and termination after disclosure of this annual report
□ Applicable √ Not applicable
X. Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such case during the reporting period.XI. Material Litigation and Arbitration
□ Applicable √ Not applicable
No such case during the reporting period.XII. Punishments and Rectifications
□ Applicable √ Not applicable
95Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
No such case during the reporting period.XIII. Integrity of the Company and Its Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XIV. Significant Related-party Transaction
1. Related-party transactions arising from routine operation
□Applicable √Not applicable
No such case in the reporting period.
2. Related-party transactions regarding purchase and disposal of assets or equity
□Applicable √Not applicable
No such case in the reporting period.
3. Significant related-party transactions arising from joint investments on external parties
□Applicable √Not applicable
No such case in the reporting period.
4. Related credit and debt transactions
□ Applicable √Not applicable
No such case in the reporting period.
5. Transactions with related financial companies
□ Applicable √Not applicable
No such case in the reporting period.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable √Not applicable
No such case in the reporting period.
7. Other significant related party transactions
□ Applicable √Not applicable
No such case in the reporting period.
96Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
XV. Significant Contracts and Their Execution
1. Matters on trusteeship contracting and leasing
（1）Trusteeship
□ Applicable √ Not applicable
No such case in the reporting period.
（2）Contracting
□ Applicable √ Not applicable
No such case in the reporting period.
（3）Leasing
√Applicable □ Not applicable
Illustration of lease
For details of related information about leasing please refer to “Section X financial report”.Items with profit and loss exceeding 10% of the total profit of the Company in the report period
□ Applicable √ Not applicable
During the reporting period there is no leasing project with profit and loss of more than 10% of the total profit of
the Company during the reporting period.
2. Significant guarantees
√Applicable □ Not applicable
Unit: RMB in 10 thousand
External Guarantees from the Company and its Subsidiaries (Excluding Guarantees to the Subsidiaries)
Announce
ment Date Guarante
Counter
of Actual Actual e for
Guaranteed Guarantee Type of Collateral guarant Term of Due or
Disclosure Occurrence Guarantee Related
Party Amount Guarantee (if any) ee (if Guarantee Not
of the Date Amount Parties or
any)
Guarantee Not
Amount
Company's Guarantees to Subsidiaries
Announce Guarante
Counter
ment Date Actual Actual e for
Guaranteed Guarantee Type of Collateral guarant Term of Due or
of Occurrence Guarantee Related
Party Amount Guarantee (if any) ee (if Guarantee Not
Disclosure Date Amount Parties or
any)
of the Not
97Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Guarantee
Amount
SANHUA
INTERNAT
Joint 2020.02.1
IONAL April 3 February
132000 9385.61 liability 0-2021.02 Yes Yes
SINGAPO 2019 10 2020
guarantee .09
RE PTE.LTD.SANHUA
INTERNAT
Joint 2020.09.1
IONAL April 29 September
150000 7219.7 liability 4-2021.09 Yes Yes
SINGAPO 2020 14 2020
guarantee .13
RE PTE.LTD.SANHUA
INTERNAT
Joint 2020.11.0
IONAL April 29 November
150000 7219.7 liability 2-2021.11 Yes Yes
SINGAPO 2020 2 2020
guarantee .01
RE PTE.LTD.SANHUA
INTERNAT
Joint 2020.06.1
IONAL April 29 June 12
150000 7500 liability 2-2022.12 No Yes
SINGAPO 2020 2020
guarantee .25
RE PTE.LTD.SANHUA
INTERNAT
Joint 2019.07.0
IONAL April 3 July 5
132000 10829.55 liability 5-2022.06 No Yes
SINGAPO 2019 2019
guarantee .20
RE PTE.LTD.SANHUA
Joint 2019.12.0
INTERNAT April 3 December
30000 19764.67 liability 9-2022.12 No Yes
IONALIN 2019 9 2019
guarantee .09
C.SANHUA
Joint 2020.06.2
INTERNAT April 29 June 24
50000 9563.55 liability 4-2021.06 Yes Yes
IONALIN 2020 2020
guarantee .23
C.SANHUA March 27 June 8 Joint 2021.06.0
180000 1443.94 Yes Yes
INTERNAT 2021 2021 liability 8-2021.12
98Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
IONAL guarantee .08
SINGAPO
RE PTE.LTD.SANHUA
INTERNAT
Joint 2021.02.1
IONAL April 29 February
150000 9385.61 liability 0-2022.02 No Yes
SINGAPO 2020 10 2021
guarantee .10
RE PTE.LTD.SANHUA
INTERNAT
Joint 2021.11.0
IONAL October 26 November
180000 7219.7 liability 2-2022.4. No Yes
SINGAPO 2021 2 2021
guarantee 22
RE PTE.LTD.SANHUA
Joint 2021.06.2
INTERNAT March 27 June 24
50000 9563.55 liability 4-2022.06 No Yes
IONALIN 2021 2021
guarantee .16
C.SANHUA
INTERNAT
Joint 2021.09.1
IONAL March 27 September
180000 7219.7 liability 4-2022.08 No Yes
SINGAPO 2021 14 2021
guarantee .30
RE PTE.LTD.SANHUA
INTERNAT
Joint 2021.10.2
IONAL March 27 October 25
180000 6375.7 liability 5-2022.01 No Yes
SINGAPO 2021 2021
guarantee .25
RE PTE.LTD.SANHUA
INTERNAT
Joint 2021.11.2
IONAL October 26 November
180000 6375.7 liability 3-2022.2. No Yes
SINGAPO 2021 23 2021
guarantee 22
RE PTE.LTD.SANHUA
Joint 2021.11.2
INTERNAT October 26 November
180000 6375.7 liability 4-2022.2. No Yes
IONAL 2021 24 2021
guarantee 24
SINGAPO
99Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
RE PTE.LTD.Total Amount of Total Amount of
Guarantees to Guarantees to
Subsidiaries Approved 285000 Subsidiaries Actually 53959.6
during the Reporting Occurred during the
Period (B1) Reporting Period (B2)
Total Amount of Total Balance of
Guarantees to Guarantees Actually
Subsidiaries Approved 285000 Paid to Subsidiaries at 90609.88
by the End of the the End of the Reporting
Reporting Period (B3) Period (B4)
Subsidiaries' Guarantees to Subsidiaries
Announce
ment Date Guarante
Counter
of Actual Actual e for
Guaranteed Guarantee Type of Collateral guarant Term of Due or
Disclosure Occurrence Guarantee Related
Party Amount Guarantee (if any) ee (if Guarantee Not
of the Date Amount Parties or
any)
Guarantee Not
Amount
The total amount of the Company's guarantees (the total of the above three items)
Total Amount of
Total Amount of Guarantees Guarantees Actually
Approved during the Reporting 285000 Occurred during the 53959.6
Period (A1+B1+C1) Reporting Period
(A2+B2+C2)
Total Balance of
Total Amount of Guarantees Guarantees Actually
Approved by the End of the 285000 Paid at the End of the 90609.88
Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Total Amount of Actual Guarantees (A4+B4+C4)
8.13%
as a Percentage of the Company's Net Assets
Of which：
Balance of Debt Guarantees Directly or Indirectly
Offered to Guaranteed Objects with Asset-liability 29328.22
Ratio Exceeding 70% (E)
Total Amount of the Above Three Guarantees
29328.22
(D+E+F)
100Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
3. Entrusting others to manage cash assets
(1) Entrusted financing
√Applicable □ Not applicable
Entrusted financing during the reporting period
Unit: RMB in 10 thousand
Accrued impairment
amount of overdue
Balance before Overdue uncollected
Specific type Capital source Amount unrecovered
maturity amount
financial
management
Bank financial
Own funds 70048.5 10824
products
Bank financial
Raised funds 5000 0
products
Total 75048.5 10824
101Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Details of high-risk entrusted financial management with large single amount low security or poor liquidity
√Applicable □ Not applicable
Future
Actual
Amount entruste
Referen Actual recover Event
of Throug d
Determi ce profit y of overvie
Type Termina Capital Expecte provisio h legal financia
Name of Product Amoun Capital Start nation annualiz and loss profit w and
of tion investm d return n for procedu l
trustee type t source date of ed rate in the and loss relevant
trustee date ent (if any) impair res or manage
return of reportin in the index
ment (if not ment
return g period reportin (if any)
any) plan or
g period
not
Industrial Legal Floating
and person income
Commerci "Tianlibao Decemb Februar without
Own
al Bank of Bank " net 20000 er 30 y 19 guarant 2.62% 7.19 7.19 Yes -
funds
China worth 2020 2021 ee of
Xinchang financial principa
sub branch products l
"E-SMAR
Industrial T" net Floating
and worth income
Commerci legal Decemb without
Own January
al Bank of Bank person 5000 er 31 guarant 3.03% 1.66 1.66 Yes -
funds 4 2021
China RMB 2020 ee of
Xinchang financial principa
sub branch products l
without
102Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
fixed term
Bank of
communic
ations
Yuntong
Bank of wealth Floating
Communi fixed-term income
cations structured Februar with
Own April 9
Co. Ltd. Bank deposit 10000 y 10 guarant 3.50% 85.34 80.51 Yes -
funds 2021
Shaoxing for 89 2021 ee of
Xinchang days principa
sub branch (linked l
exchange
rate
appreciati
on)
structured
deposits
with
Guarantee Floating
of RMB income
BNP
Principal August with
Paribas Own June 29 1695.5 1599.5
Bank and daily 10000 26 guarant 3.80% Yes -
Shanghai funds 2021 7 9
interest in 2021 ee of
Branch
the range principa
of the l
euro
against
the US
103Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
dollar
China
Constructi
on Bank Floating
China Zhejiang income
Constructi Branch Decemb with
Own July 2
on Bank Bank customize 20，000 er 31 guarant 3.80% 341.48 322.15 Yes -
funds 2021
Xinchang d unit 2021 ee of
sub branch structured principa
deposit l
No. 302 in
2021
China
Constructi
on Bank Floating
China Zhejiang income
Constructi Branch with
Own July 2 June 30
on Bank Bank customize 10000 guarant 3.80% Yes -
funds 2021 2022
Xinchang d unit ee of
sub branch structured principa
deposit l
No. 303 in
2021
Floating
Bank of income
Septem Decemb
Hangzhou Ji Tianyi Own without
Bank 5000 ber 15 er 15 3.80% 53.98 53.98 Yes -
Xinchang No. 1904 funds guarant
20212021
sub branch ee of
principa
104Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
l
Floating
income
Bank of
Septem Decemb without
Hangzhou Ji Tianyi Own
Bank 5000 ber 15 er 15 guarant 3.80% 53.98 53.98 Yes -
Xinchang No. 1904 funds
2021 2021 ee of
sub branch
principa
l
Guangzho
Floating
u
income
Developm
October January with
ent Bank Xinjiaxin Own
Bank 9500 22 22 guarant 3.30% 78.16 73.74 Yes -
Hangzhou No. 16 funds
2020 2021 ee of
Xiaoshan
principa
sub
l
branch
Floating
Hang income
Seng October January with
Heng Own
Bank Bank 5000 23 22 guarant 3.35% 42.34 39.94 Yes -
Huiying funds
Hangzhou 2020 2021 ee of
Branch principa
l
Income
China
with
CITIC Decemb Februar
Structured Own guarant
Bank Bank 5000 er 31 y 1 3.55% 16.05 15.14 Yes -
deposit funds ee of
Hangzhou 2020 2021
principa
Branch
l
105Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
104502375.7
Total
05
Note: The accumulated financial management is 1.595 billion yuan during the reporting period. The above mentioned are the specific circumstances of the single
significant financial management (single amount of more than 50 million yuan)
The principal of entrusted financial management is expected uncollectible or there are other situations that may lead to impairment
□ Applicable √ Not applicable
106Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
(2) Entrusted loans
□ Applicable √ Not applicable
No such case in the reporting period.
4. Significant contracts in operation
□ Applicable √ Not applicable
No such case in the reporting period.XVI. Other Significant Events
√Applicable □ Not applicable
1. Issuance of convertible bond
The 17th interim meeting of the sixth board of directors of the Company approved the Proposal on further
clarifying the specific plan of the company's public issuance of convertible corporate bonds the Proposal on the
listing of convertible corporate bonds and other relevant proposals. On June 1 2021 the Company issued
convertible bonds and the original shareholders applied online on the priority placement date. On June 7 the
raised funds were transferred to the Company's account and the bond registration was completed in Shenzhen
Branch of China Securities Depository and Clearing Corporation on June 11. With the approval of Shenzhen
Stock Exchange Sanhua convertible bonds were listed and traded on June 30 2021. The securities are referred to
as "Sanhua convertible bonds" the securities code is "127036" and the number of listed bonds is 30 million.From December 7 2021 "Sanhua convertible bonds" started the stock conversion period. See the relevant
announcement disclosed on CNINFO for details.By the end of the reporting period "Sanhua convertible bonds" had decreased by 532100 yuan (5321 pieces) due
to share conversion and the number of shares converted was 24610.
2. Repurchase of shares of the Company
July 16 2021 the 20th extraordinary meeting of the 6th board of directors deliberated and approved the Proposal
on share repurchase scheme of the Company which agreed the Company to buy back part of the Company’s
shares through centralized bidding through the secondary market with its own funds for subsequent
implementation of equity incentive or employee stock ownership plan. The total capital of this repurchase shall
not be less than 200 million yuan and not more than 400 million yuan the repurchase price shall not exceed 30.00
yuan / share and the repurchase period shall be within 12 months from the date approved by the board of directors
of the Company. See the relevant announcement disclosed by the Company on CNINFO for details.By the end of the reporting period the number of shares repurchased by the Company through the special
securities account for stock repurchase through centralized bidding transaction was 8293764 shares accounting
for 0.23% of the Company's current total share capital. The highest transaction price was 27.31 yuan / share the
lowest transaction price was 22.55 yuan / share and the total value of was 200011001.49 yuan (excluding
transaction costs).
107Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
XVII. Significant Events of the Company’s Subsidiaries
□ Applicable √ Not applicable
108Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: Share
Before the change Changes in the period (+ -) After the change
Share
New transferred
Bonus
Shares Ratio Shares from Others Sub-total Shares Ratio
share
Issued capital
reserve
1. Shares subject to 6126830 -1091814 -1091814 5035016
1.71%1.40%
conditional restriction(s) 5 4 4 1
1) Shares held by states
2) Shared held by
state-owned enterprises
6083800-1076539-10765395007261
3) Other domestic shares 1.70% 1.39%
5441
Of which: Shares held by
domestic legal person
Shares held by domestic 6083800 -1076539 -1076539 5007261
1.70%1.39%
natural person 5 4 4 1
4) Foreign shares 430300 0.01% -152750 -152750 277550 0.01%
Shares held by foreign
4303000.01%-152750-1527502775500.01%
natural person
2. Shares without 3530333 1056796 1056796 3540901
98.29%98.60%
restriction 163 4 4 127
3530333105679610567963540901
1) RMB common shares 98.29% 98.60%
16344127
35916013591251
3. Total 100.00% -350180 -350180 100.00%
468288
Reason for the changes in share capital
√ Applicable □ Not applicable
1. At the beginning of each year the number of locked shares of the executives is re-calculated according to 75% of
the total number of shares held by the executives.
2. The Company repurchased and cancelled 374790 restricted shares held by unqualified incentive objects. After
109Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
this the total share capital of the Company was reduced from 3591601468 shares to 3591226678 shares.
3. On June 18 2021 the first phase of the restricted stock incentive plan in 2020 matured and 4.5961 million
restricted shares of 883 incentive objects meeting the conditions were listed for circulation.
4. On November 8 2021 the third phase of the restricted stock incentive plan in 2018 matured and 6.4659
million restricted shares of 676 incentive objects meeting the conditions were listed for circulation.
5. From December 7 2021 to December 31 2021 "Sanhua convertible bonds" decreased by RMB 532100 (5321
pieces) due to share conversion and the number of converted shares was 24610.Approval for changes in share capital
√ Applicable □ Not applicable
1. On June 8 2021 the 18th interim meeting of the sixth board of directors and the 16th interim meeting of the
sixth board of supervisors deliberated and approved the Proposal on adjusting the repurchase price of restricted
stock incentive plan in 2020 and Proposal on the achievement of lifting of restrictions in the first vesting period of
the restricted stock incentive plan in 2020. There were 883 incentive objects eligible for unlocking and the
number of released shares was 4.5961 million shares.
2. On June 24 2021 the second extraordinary general meeting of shareholders in 2021 deliberated and approved
the Proposal on repurchase and cancellation of partial restricted shares. The Company repurchased and cancelled
374790 shares held by the incentive objects that are not qualified for unlocking. After completion of repurchase
and cancellation the total number of shares of the Company was reduced from 3591601468 to 3591226678.
3. On October 25 2021 the 22th interim meeting of the sixth board of directors and the 21th interim meeting of
the sixth board of supervisors deliberated and approved the Proposal on the achievement of lifting of restrictions
in the third vesting period of the restricted stock incentive plan in 2018. There were 676 incentive objects eligible
for unlocking and the number of released shares was 6.4659 million shares.
4. On May 27 2021 the 17th interim meeting of the sixth board of directors and the 15th interim meeting of the
sixth board of supervisors deliberated and approved the Proposal on further clarifying the specific scheme of the
Company's public issuance of convertible corporate bonds and Proposal on public issuance and listing of
convertible corporate bonds. The term of converting is from the first trading day (December 7 2021) which is six
months after June 7 2021 to the maturity date of convertible bonds (May 31 2027).Transfer of shares
√ Applicable □ Not applicable
The Company repurchased 374790 shares that were not qualified for unlocking. After cancellation its share
capital was reduced from 3591601468 to 3591226678.Effects of changes in share capital on the basic earnings per share ("EPS") diluted EPS net assets per
share attributable to common shareholders of the Company and other financial indexes over the last year
and last period
√Applicable □Not applicable
Please refer to the financial report for details.
110Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Other contents that the Company considers necessary or required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
Opening balance Closing balance
Name of Vested in current Unlock shares in Note for Date of
of restricted of restricted
shareholder period current period restricted shares unlocking
shares shares
Comply with the Comply with the
relevant relevant
Zhang Yabo 39023400 39023400 provisions of provisions of
executives shares executives shares
management management
Comply with Comply with
relevant relevant
provisions of provisions of
Wang Dayong 197600 5038 192562 equity incentive equity incentive
and executive and executive
shares shares
management. management.Comply with Comply with
relevant relevant
provisions of provisions of
Ni Xiaoming 197600 5038 192562 equity incentive equity incentive
and executive and executive
shares shares
management. management.Comply with Comply with
relevant relevant
provisions of provisions of
Chen Yuzhong 197600 5038 192562 equity incentive equity incentive
and executive and executive
shares shares
management. management.Comply with Comply with
relevant relevant
provisions of provisions of
Hu Kaicheng 197600 5038 192562
equity incentive equity incentive
and executive and executive
shares shares
111Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
management. management.Comply with Comply with
relevant relevant
provisions of provisions of
Yu Yingkui 221080 5038 216042 equity incentive equity incentive
and executive and executive
shares shares
management. management.Comply with Comply with
relevant relevant
Mo Yang 0 10926 10926 provisions of provisions of
executive shares executive shares
management. management.Comply with Comply with
relevant relevant
Chen Xiaoming 8325 8325 provisions of provisions of
executive shares executive shares
management. management.Comply with Comply with
Other incentive relevant relevant
212251001090388010321220
objects provisions of provisions of
equity incentive equity incentive
Total 61268305 0 10929070 50350161 -- --
II. Issuance and Listing of Securities
1. Securities (exclude preferred share) issued during the reporting period
□ Applicable √ Not applicable
2. Explanation on changes in share capital & the structure of shareholders the structure of assets and
liabilities
√Applicable □ Not applicable
1. On June 24 2021 the second extraordinary general meeting of shareholders in 2021 deliberated and approved
the Proposal on repurchase and cancellation of partial restricted shares. The Company repurchased and cancelled
374790 shares held by the incentive objects that are not qualified for unlocking. After completion of repurchase
and cancellation the total number of shares of the Company was reduced from 3591601468 to 3591226678.
2. The convertible bonds issued by the Company entered the stock conversion period from December 7 2021. By
the end of the reporting period the "Sanhua convertible bonds" decreased by RMB 532100 (5321 pieces) due to
the stock conversion and the number of shares converted was 24610 shares. As of December 31 2021 the total
number of shares of the Company is 3591251288.
112Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
3. Existent shares held by internal staff of the Company
□ Applicable √ Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: Share
Total number of
Total Number of
preferred
Total number of Preferred
shareholders (if
Total Number common Shareholders (If
any) (refer to
of Common shareholders at Any) (Refer to
Note 8) with
Shareholders at the end of Note 8) Whose
61484 84905 0 resumed voting 0
the End of the previous month Voting Rights
rights at the end
Reporting before the Have Been
of previous
Period disclosure date of Recovered at the
month before the
the annual report End of the
disclosure date of
Reporting Period
the annual report
Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them
The Pledged or frozen
The
Total number
Increase/ number of
shares of
Share-hol decrease shares
held at common
Name of Nature of ding during held
the end of shares
shareholder shareholder percentag the without Status Amount
the held with
e (%) reporting trading
reporting trading
period restriction
period restriction
s
s
Domestic
Sanhua Holding 1057245 -122918 1057245
non-state-owned 29.44% Pledged 228128169
Group Co. Ltd. 749 31 749
corporation
Hong Kong
Overseas 8145974 5294243 8145974
Central Clearing 22.68%
corporation 54 39 54
Limited
Zhejiang Sanhua Domestic
74274797427479
Lvneng Industrial non-state-owned 20.68% 0
5454
Group Co. Ltd corporation
Domestic 5203120 3902340 1300780
Zhang Yabo 1.45% 0
Individual 0 0 0
Abu Dhabi Overseas 0.67% 2416356 4834679 2416356
113Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Investment corporation 0 0
Authority
Wanjin Global
Hong Kong
Overseas 2232006 2232006 2232006
Limited - Wanjin 0.62%
corporation 2 2 2
Global Equity
Fund
China Construction
Bank Corporation -
Bocom Schroder 2047702 -114993 2047702
Others 0.57%
Alpha Core Hybrid 0 03 0
Securities
Investment Fund
Bank of China
Limited - E Fund
Strategic Emerging 2018019 2018019 2018019
Others 0.56%
Industry Equity 5 5 5
Securities
Investment Fund
Industrial and
Commercial Bank
of China Limited -
Bocom Schroeder
1940073-3445661940073
Advantageous Others 0.54%
545
Industries Flexible
Allocation Hybrid
Securities
Investment Funds
Industrial and
Commercial Bank
of China Limited -
E Fund Emerging 1929475 -114418 1929475
Others 0.54%
Growth Flexible 4 10 4
Allocation Hybrid
Securities
Investment Fund
Information about Strategic Investors’
or General Legal Persons’ Becoming
Top Ten Common Shareholders for No
Placement of New Shares (If Any)
(Refer to Note 3)
Explanation on Associated Among the above shareholders Sanhua Holding Group Co. Ltd. Zhejiang Sanhua Lvneng
114Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Relationship or Concerted Actions Industrial Group Co. Ltd. and Zhang Yabo are the persons acting in concert. The Company
among the Above-Mentioned does not know whether there is any related relationship between other shareholders or
Shareholders whether they belong to the persons acting in concert stipulated in the Administrative
Measures for the Acquisition of Listed Companies.Particulars about Shares Held by Top Ten Common Shareholders Holding Shares That Are Not Subject to Trading Restrictions
Number of Common Shares Held without Restrictions Type of shares
Name of Shareholder
at the End of the Reporting Period Type Amount
RMB common
Sanhua Holding Group Co. Ltd. 1057245749 1057245749
stock
RMB common
Hong Kong Central Clearing Limited 814597454 814597454
stock
Zhejiang Sanhua Lvneng Industrial RMB common
742747954742747954
Group Co. Ltd stock
RMB common
Abu Dhabi Investment Authority 24163560 24163560
stock
Wanjin Global Hong Kong Limited - RMB common
2232006222320062
Wanjin Global Equity Fund stock
China Construction Bank Corporation
RMB common
- Bocom Schroder Alpha Core Hybrid 20477020 20477020
stock
Securities Investment Fund
Bank of China Limited - E Fund
RMB common
Strategic Emerging Industry Equity 20180195 20180195
stock
Securities Investment Fund
Industrial and Commercial Bank of
China Limited - Bocom Schroeder
RMB common
Advantageous Industries Flexible 19400735 19400735
stock
Allocation Hybrid Securities
Investment Funds
Industrial and Commercial Bank of
China Limited - E Fund Emerging RMB common
1929475419294754
Growth Flexible Allocation Hybrid stock
Securities Investment Fund
China Merchants Bank Co. Ltd. - E
RMB common
Fund Innovative Growth Hybrid 16585154 16585154
stock
Securities Investment Fund
Explanation of Associated Among the above shareholders Sanhua Holding Group Co. Ltd.and Zhejiang Sanhua
Relationship or Concerted Actions Lvneng Industrial Group Co. Ltd. are the persons acting in concert. The Company does not
among Top Ten Common know whether there is any related relationship between other shareholders or whether they
Shareholders without Trading belong to the persons acting in concert stipulated in the Administrative Measures for the
Restrictions and among Top Ten Acquisition of Listed Companies.
115Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Common Shareholders without
Trading Restrictions and Top Ten
Common Shareholders
Explanation of Top Ten Common
Shareholders’ Participation in
No
Securities Margin Trading (If Any)
(Refer to Note 4)
Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducted any
agreed buy-back in the reporting period?
□ Applicable √ Not applicable
No such cases during the current reporting period.
2. Particulars about controlling shareholder of the Company
Nature of the controlling shareholder: Domestic non-state-owned corporation
Type of the actual controller: Corporation
Name of controlling Legal Representative
Date of establishment Organization code Business scope
shareholder /People in charge
Industrial investment;
Manufacturing and sales:
General parts electronic
products; sales: metal
materials (excluding
precious and rare metals)
chemical raw materials
(except dangerous
chemicals and precursor
chemicals) rubber; export
of products and related
technologies produced by
Sanhua Holding Group Co.Zhang Daocai July 11 2000 911330624720002522J the enterprise and its
Ltd
member enterprises. It is
engaged in the export
business of raw and
auxiliary materials
machinery and equipment
instruments and meters
spare parts and related
technologies needed by the
enterprise and its member
enterprises for production
and scientific research; it is
engaged in the processing
116Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
of imported materials and
the business of "three
supplies and one
supplement". Technical
consultation technical
service financial
consultation and investment
consultation. (In terms of
projects subject to approval
according to law business
activities can be carried out
only after approval by
relevant departments.)
Shares held by the controlling
shareholder in other foreign
listed companies through N/A
controlling or holding during
the reporting period
Change of the controlling shareholder during the reporting period
□ Applicable √ Not applicable
The Company's controlling shareholder has not changed during the reporting period.
3. Particulars about the Company’s actual controller & concerted parties
Nature of the actual controller: Domestic natural person
Type of the actual controller: Natural person
Name of the actual Relationship with the Whether he/she has obtained the right of
Nationality
controller actual controller residence in another country or region
Zhang Daocai Himself China No
Zhang Yabo Himself China No
Zhang Shaobo Himself China No
Mr. Zhang Daocai: Chinese nationality born in 1950 senior economist and special
supervisor of MBA graduate student of Zhejiang University. He is honorary chairman of the
Company and chairman of the board of directors of Sanhua Holding Group Co. Ltd. He was
elected as the representative of the 8th 9th 10th 11th and 12th National People's Congress
of Zhejiang Province and vice president of the China Enterprise Federation and the Chinese
Main occupation and position Entrepreneurs Association. Vice president of Zhejiang small and medium sized Enterprises
Association vice president of Zhejiang Business Management Research Association and vice
president of Asia Pacific Chinese Leaders Association and won the National Labor Medal of
May 1st national excellent entrepreneur master of Chinese management most creative
Chinese business leader in Asia Pacific Model worker of Zhejiang Province meritorious
entrepreneur of implementing the "eight eight strategy" in Zhejiang Province lifelong leader
117Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
entrepreneur of Zhejiang Province leading figures of Zhejiang Manufacturing and other
honors.Mr. Zhang Yabo: Chinese nationality CPC member born in 1974 graduated from Shanghai
Jiaotong University received a master's degree in Business Administration from CEIBS. At
present he is the chairman of the board of the Company Secretary of the Party committee of
Sanhua holding group vice chairman and director of the board of Sanhua Holding Group
Co. Ltd. He has successively won Zhejiang outstanding young private entrepreneurs
Zhejiang operation and management masters Senior economist Shaoxing labor model
Shaoxing top ten outstanding young people Shaoxing mayor award Changjiang River Delta
top ten outstanding young businessmen Fengyun Zhejiang businessmen Zhejiang
outstanding entrepreneurs glorious Zhejiang businessman etc. He served as member of the
12th Zhejiang Provincial Committee of the Chinese people's Political Consultative
Conference deputy to the 5th 6th and 7th Shaoxing people's Congress vice chairman of
Zhejiang Youth Federation President of Zhejiang Youth Entrepreneurs Association and
Director of China Youth Entrepreneurs Association.Mr. Zhang Shaobo: Chinese nationality born in 1979 master's degree graduated from
CEIBS. He serves as a director of the Company director of Sanhua Holding Group Co. Ltd.CEO of Hangzhou Sanhua International Building Co. Ltd. and executive director and CEO
of Zhejiang Sanhua Zhicheng Real Estate Development Co. Ltd.Domestic and foreign listed
companies controlled in the past 10 N/A
years
Change of the actual controller during the reporting period
□ Applicable √ Not applicable
No such change during the reporting period.The ownership and controlling relationship between the actual controller and the Company is detailed as follows:
118Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
22% Zhang Daocai Yu Qingjuan 21%
Zhang Yabo Zhang Shaobo
51%6%
39.95% Xinchang Huaqing Investment Co. Ltd 37.04%
10.04%
Xinchang Huaxin Investment Co. Ltd Zhejiang Huateng Industrial Co. Ltd.08%
12.00%28.77%9.04%
11.78% Sanhua Holding Group Co. Ltd
100%
1.45%
Hong Kong Haoyide International Limited
62.11%
100%
Fuxun Co. Ltd
37.89%
29.44%
Zhejiang Sanhua lvneng Industrial Group Co. Ltd
20.68%
Zhejiang Sanhua Intelligent Controls Co. Ltd浙江三花智能控制股份有限公司
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. The cumulative number of Pledged Shares of the Company's controlling shareholder or the largest
shareholder and its concerted actors accounts for 80% of the Company's shares
√ Applicable □ Not applicable
119Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
5. Particulars about other corporate shareholders with shareholding proportion over 10%
√ Applicable □ Not applicable
Date of
Name of corporate shareholder Legal representative Registered capital Main business
incorporation
Manufacturing and sales: air
suspension assembly
general equipment
electromechanical
equipment technology
development technical
service technical
consultation achievement
transfer: electromechanical
technology environmental
protection technology
biotechnology (except for
human stem cells gene
diagnosis and treatment
technology development
and application); electronic
and electrical products
metal materials (excluding
precious metals) chemical
Zhejiang Sanhua Lvneng September 30
Zhang Shaobo 483 million yuan raw materials (except
Industrial Group Co. Ltd 2001
chemical dangerous goods
and precursor chemicals)
Wholesale retail and import
and export business of gold
and silver jewelry rubber
mineral products machinery
and equipment instruments
and accessories; services:
enterprise management
consulting property
management (operating by
qualification certificate)
self-owned house leasing
industrial investment
management consulting
management (except for
securities and goods
without approval of
financial supervision
120Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
departments shall not
engage in deposit financing
guarantee agency for public
financing Financial services
such as customer finance)
power supply development
and construction of
distributed solar energy
projects and contract
energy management.
(Except for those involving
the implementation of
special management
measures for access
stipulated by the state). (In
terms of projects subject to
approval according to law
business activities can be
carried out only after
approval by relevant
departments.)
6. Particulars on shareholding decrease restrictions for the controlling shareholders actual controller
restructurer or other committing parties
□ Applicable √ Not applicable
IV. Information about the implementation of share repurchase during the reporting
period
Information about the implementation of share repurchase
√Applicable □Not applicable
Proportion of
Number of Proportion in Proposed Quantity repurchased
Scheme Period to be Repurchase
shares to be total share repurchase repurchased shares in equity
disclosure date repurchased purpose
repurchased capital amount (shares) incentive plan
shares (if any)
For equity
200 million incentive plan
July 17 2021 -
July 17 2021 6666666-133 0.19%-0.37% yuan - 400 or employee 8293764
July 16 2022
33333 million yuan stock
ownership plan
The progress on reduction of re-purchase shares by means of centralized bidding
121Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
□Applicable √Not applicable
122Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section VIII Information of Preferred Shares
□ Applicable √ Not applicable
No existed preferred shares for the Company during the current reporting period.
123Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section IX Bonds
√Applicable □ Not applicable
I. Enterprise bond (hereinafter referred to as the bond issued by domestic state-owned
entity)
□ Applicable √ Not applicable
II. Corporate bond
□ Applicable √ Not applicable
III. Debt financing instruments of non-financial enterprises
□ Applicable √ Not applicable
IV. Convertible bond
√ Applicable □ Not applicable
1. Previous Adjustments of Stock Conversion Price
□ Applicable √ Not applicable
2. Share Conversions (Accumulative)
√Applicable □ Not applicable
Proportion of
the number
Proportion of
of converted
Cumulative the amount of
Cumulative shares to the Amount of
Abbreviation Total issued number of non-converte
Period of Total issued amount of total issued shares not yet
of convertible amount converted d shares in
conversion amount converted shares of the converted
bonds (piece) shares the total
shares (yuan) Company (yuan)
(shares) amount of
before the
issuance
date of
conversion
Sanhua December 7
300000000299946790
convertible 2021 to May 30000000 532100.00 24610 0.00% 99.98%
0.000.00
bond 31 2027
124Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
3. Top 10 Holders of the Convertible Bond
Unit: share
Number of Amount of
Proportion of
Nature of convertible bonds convertible bonds
convertible bonds
Name of convertible bond holder convertible bond held at the end of the held at the end of the
held at the end of the
holders reporting period reporting period
reporting period
(share) (yuan)
Domestic
1 Sanhua Holding Group Co. Ltd. non-state-owned 8854432 885443200.00 29.52%
corporation
Domestic
Zhejiang Sanhua Lvneng Industrial
2 non-state-owned 6220514 622051400.00 20.74%
Group Co. Ltd
corporation
Industrial and Commercial Bank of
3 China Limited - Boshi credit bond Others 800055 80005500.00 2.67%
investment fund
Industrial and Commercial Bank of
China Limited huitianfu
4 Others 519001 51900100.00 1.73%
convertible bond securities
investment fund
Kunlun Health Insurance Co. Ltd.
5 Others 489988 48998800.00 1.63%
- traditional insurance products 1
Industrial Bank Co. Ltd. - Zhuque
6 Anxin bond securities investment Others 367094 36709400.00 1.22%
fund
Domestic
7 Zhongtai Securities Co. Ltd state-owned 301134 30113400.00 1.00%
corporation
Agricultural Bank of China
8 Limited - Penghua convertible Others 289071 28907100.00 0.96%
bond securities investment fund
Zhongtai Securities Asset
Management - Bank of Gansu
"HuiFu" series financial product
9 Others 235119 23511900.00 0.78%
plan - Qilu asset management 0006
directional asset management
contract
Zhejiang Jing'an Investment
10 Management Co. Ltd. - Jing'an Others 217759 21775900.00 0.73%
Mingyuan private equity securities
125Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
investment fund
4. The Profitability Asset and Credit Status of the Guarantor Have Changed Significantly
□ Applicable √ Not applicable
5. By the end of the reporting period the Company's liabilities credit changes and cash arrangements for
debt repayment in future
During the reporting period CSCI Pengyuan issued the Tracking rating report on the public issuance of
convertible corporate bonds by Zhejiang Sanhua Intelligent Controls Co. Ltd. in 2021 on June 29 2021
according to which the credit rating of Sanhua convertible bonds remains AA + the Company's credit rating
remains AA + and the rating outlook remains stable. The result of this rating has not changed compared with the
last one.Please refer “VIII. Main accounting data and financial indicators” under “Section IX Bond” for more details.V. The loss within the scope of consolidated statements in the reporting period exceeded
10% of the net assets at the end of the previous year
□ Applicable √ Not applicable
VI. Overdue interest bearing debts other than bonds by the end of this reporting period
□ Applicable √ Not applicable
VII. Whether there is any violation of rules or regulations during the reporting period
□ Applicable √ Not applicable
VIII. Main accounting data and financial indicators of the Company in recent two years by
the end of the reporting period
Unit: RMB in 10 thousand
At the end of the reporting
Item At the end of last year YoY Change (%)
period
Current ratio 1.98 2.45 -19.18%
Asset liability ratio 52.36% 40.39% 11.97%
Quick ratio 1.55 1.96 -20.92%
Corresponding Period of Last
Current Reporting Period YoY Change (%)
Year
Net profit after deducting
148749.13127060.9717.07%
non-recurring profit and loss
126Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
EBITDA total debt ratio 33.77% 61.44% -27.67%
Time interest earned ratio 15.08 27.14 -44.44%
Cash interest guarantee times 20.99 33.76 -37.83%
EBITDA Time interest earned
18.8833.7-43.98%
ratio
Repayment of debt (%) 100.00% 100.00%
Payment of interest (%) 100.00% 100.00%
127Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Section X Financial Report
I. Audit report
Type of audit opinion Standard Unqualified opinion
Date of signing of audit report March 23 2022
Name of audit firm Pan-China Certified Public Accountants LLP
Document number of audit report PCCPAAR [2022] No. 1208
Name of the certified accountants Luo Xunchao Zhang Xin
Auditor’s Report
To the Shareholders of Zhejiang Sanhua Intelligent Controls Co. Ltd.:
1. Audit Opinion
We have audited the accompanying financial statements of Zhejiang Sanhua Intelligent Controls Co. Ltd.(the “Company”) which comprise the consolidated and parent company balance sheets as at December 31 2021
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 then ended as
well as notes to financial statements.In our opinion the attached financial statements present fairly in all material respects the financial position
of the Company as at December 31 2021 and of its financial performance and its cash flows for the year then
ended in accordance with China Accounting Standards for Business Enterprises.
2. Basis for Audit Opinion
We conducted our audit in accordance with China Standards on Auditing. 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 China Code of
Ethics for Certified Public Accountants and we have fulfilled other ethical responsibilities. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
3. 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 express a separate opinion on
these matters.(I) Revenue recognition
1. Matters description
Please refer to section Ⅲ (24) Ⅴ (2) 1and XIV (1) of the notes to the financial statements for details.The majority of the Company's revenue comes from controlling components and components for home
appliances and automobiles. In 2021 the amount of operating income of the Company is RMB 16.02081 billion.As operating revenue is one of the key performance indicators of the Company there might be inherent risks that
128Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
the Company’s management (the “Management”) adopts inappropriate revenue recognition to achieve specific
goals or expectations we have identified revenue recognition as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition assessed the design
of these controls determined whether they had been executed and tested the effectiveness of the operation;
(2) We checked sale contracts obtained understandings of main contractual terms or conditions and
assessed whether the revenue recognition method was appropriate;
(3) We performed analysis procedure on operating revenue so as to identify whether there are significant or
abnormal fluctuations and implemented the rationality of such fluctuations;
(4)We implemented detail test and checked supporting documents related to revenue recognition by
sampling method including sales contracts sales invoices sales collection delivery lists shipping documents
client acceptance receipts export declaration，lading bill we obtained information from E-port and compared withaccounting records of export revenue；
(5) We performed confirmation procedures on current sales amount by sampling method in combination
with confirmation procedure of accounts receivable;
(6) We inquired the industrial and commercial registration information or public information of major
customers to evaluate whether the business logic related to sales transactions is tenable;
(7) We implemented cut-off tests on the operating revenue recognized before and after the balance sheet date
to evaluate whether the operating revenue is recognized in an appropriate period;
(8) We checked whether information related to operating revenue had been presented appropriately in the
financial statements.(II) Impairment of accounts receivable
1. Matters description
Please refer to section Ⅲ (9) and Ⅴ (1) 5 of the notes to the financial statements for details.As of December 31 2021 the book balance of the Company's accounts receivable amounted to RMB
3.70369 billion with provision for bad debt was RMB 187.39 million.
As the amount of accounts receivable is significant and the impairment involves significant judgment of the
Management we have identified impairment of accounts receivable as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of accounts receivable are as follows:
(1) We reviewed the accounts receivable with provision for bad debts made in previous periods for their
subsequent write-off or reversal and assessed the accuracy of historical estimations made by the Management;
(2) We reviewed the consideration of the Management on credit risk assessment and objective evidence and
assessed whether the credit risk features of accounts receivable had been appropriately identified by the
Management;
(3) For accounts receivable with expected credit losses measured on a collective basis we assessed the
reasonableness of portfolio classification on the basis of credit risk features; we assessed the reasonableness of the
comparison table of ages and expected credit loss rate of accounts receivable prepared by the Management based
on the historical credit loss experience of portfolios with similar credit risk features and forward-looking
estimations; and reviewed whether the calculation of provision for bad debts was accurate;
(4) We checked the subsequent collection of accounts receivable and assessed the reasonableness of
provision for bad debts made by the Management;
129Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
4. Other Information
The Company’s management (the “Management”) is responsible for the other information. The other
information comprises the information included in the Company’s annual report but does not include the financial
statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.In connection with our audit of the financial statements our responsibility is to read the other information
and in doing so consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of the other
information we are required to report that fact. We have nothing to report in this regard.
5. Responsibilities of the Management and Those Charged with Governance for the Financial Statements
The Management is responsible for preparing and presenting fairly the financial statements in accordance
with China Accounting Standards for Business Enterprises as well as designing implementing and maintaining
internal control relevant to the preparation of financial statements that are free from material misstatement
whether due to fraud or error.In preparing the financial statements the Management is responsible for assessing the Company’s ability to
continue as a going concern disclosing as applicable matters related to going concern and using the going
concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations
or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.
6. Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with China Standards on Auditing will always detect a material misstatement when it exists.Misstatement can arise from fraud or error and are considered material if individually or in the aggregate they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.We exercise professional judgment and maintain professional skepticism throughout the audit performed in
accordance with China Standards on Auditing. We also:
(I) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or
error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions
misrepresentations or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Management.(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and
based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that
130Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause
the Company to cease to continue as a going concern.(V) Evaluate the overall presentation structure and content of the financial statements and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are responsible for
the direction supervision and performance of the group audit. We remain sole responsibility for our audit opinion.We communicate with those charged with governance regarding the planned audit scope time schedule and
significant audit findings including any deficiencies in internal control of concern that we identify during our
audit.We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence and where applicable related safeguards.From the matters communicated with those charged with governance we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when in extremely rare circumstances we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant
(Engagement Partner) Luo Xun chao
Hangzhou · China Chinese Certified Public Accountant
Zhang Xin
Date of Report: March 23 2022
131Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
II. Financial Statements
Units of financial reports in the notes: RMB
1. Consolidated balance sheet
Prepared by: Zhejiang Sanhua Intelligent Controls Co. Ltd.December 31 2021
Unit: RMB
Items December 312021 December 312020
Current asset：
Cash and Bank Balances 6707721861.13 3489687568.14
Settlement funds
Loans to other banks
Held-for-trading financial assets 109383374.74 752224861.78
Derivative financial assets 54640365.03 58330486.53
Notes receivable 2144193032.32 2323934781.53
Accounts receivable 3516292868.39 2355613299.57
Receivable financing
Advances paid 93884245.02 69404326.45
Premium receivable
Reinsurance accounts receivable
Reinsurance reserves receivable
Other receivables 121135343.85 76935495.05
Including: Interest receivable
Dividends receivable
Repurchasing of financial assets
Inventories 3637853809.47 2307761706.46
Contract assets
Assets held for sales
Non-current assets due within
one year
Other current assets 185985696.06 150460488.01
Total current assets 16571090596.01 11584353013.52
Non-current assets:
132Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Loans and advances paid
Debt investments
Other debt investments
Long-term receivable 3608561.00 2074750.00
Long-term equity investments 22680930.51 15219616.68
Other equity instrument
investments
Other non-current financial
assets
Investment property 8531303.62 10067588.96
Fixed assets 4232706801.07 3839408059.45
Construction in progress 1343528875.40 628730529.07
Productive biological assets
Oil & gas assets
Right-of-use assets 215324024.26
Intangible assets 696390544.36 507693672.93
Development expenditures
Goodwill 7591830.61 31959091.60
Long-term prepayments 36640828.07 23706401.61
Deferred tax assets 153262506.84 137808879.28
Other non-current assets 328609958.16 251509127.08
Total non-current assets 7048876163.90 5448177716.66
Total assets 23619966759.91 17032530730.18
Current liabilities:
Short-term borrowings 738190910.54 383088296.60
Central bank loans
Loans from other banks
Held-for-trading financial
liabilities
Derivative financial liabilities 7939957.91
Notes payable 1891526333.48 1238574463.73
Accounts payable 3214698131.59 2279661755.97
Advances received 10000000.00
Contract liabilities 79816249.22 42581607.67
Selling of repurchased financial
133Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
assets
Absorbing deposit and interbank
deposit
Deposit for agency security
transaction
Deposit for agency security
underwriting
Employee benefits payable 371773987.76 289305913.99
Taxes and rates payable 113404466.20 75008142.06
Other payables 172923251.10 270888400.58
Including: Interest Payable
Dividends Payable
Handling fee and commission
payable
Reinsurance accounts payable
Liabilities classified as held for
sale
Non-current liabilities due 1763342887.58 130553923.87
within one year
Other current liabilities 5276677.78
Total current liabilities 8350952895.25 4727602462.38
Non-current liabilities:
Insurance policy reserve
Long-term borrowings 801461958.89 1707918994.87
Bonds payable 2652035619.50
Including: Preferred shares
Perpetual bonds
Lease liabilities 157981678.16
Long-term payables 90336083.27
Long-term employee benefits
payable
Provisions 2638000.00
Deferred income 156831834.71 140105336.43
Deferred tax liabilities 172910149.31 130778184.48
Other non-current liabilities 75202015.36 80398897.72
Total non-current liabilities 4016423255.93 2152175496.77
134Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Total liabilities 12367376151.18 6879777959.15
Equity:
Share capital 3591090218.00 3591601468.00
Other equity instruments 409684602.93
Including: Preferred shares
Perpetual bonds
Capital reserve 373419775.02 315417434.22
Less: Treasury shares 411949612.90 281483741.34
Other comprehensive income -129410847.39 -89624962.61
Special reserve
Surplus reserve 701784529.70 637967613.47
General risk reserve
Undistributed profit 6615689606.07 5890916707.83
Total equity attributable to the parent 11150308271.43 10064794519.57
Company
Non-controlling interest 102282337.30 87958251.46
Total equity 11252590608.73 10152752771.03
Total liabilities & equity 23619966759.91 17032530730.18
Legal representative：Zhang Yabo Officer in charge of accounting：Yu Yingkui Head of accounting department：Sheng Xiaofeng
2. Parent Company Balance Sheet
Unit: RMB
Items December 312021 December 312020
Current assets:
Cash and bank balances 3392202314.60 1848930095.07
Held-for-trading financial assets 101020675.59 323000000.00
Derivative financial assets 794800.00 8856174.56
Notes receivable 1081856992.97 773393944.74
Accounts receivable 575659433.91 729906676.91
Receivables financing
Advances paid 10590428.30 6803910.27
Other receivables 389775386.82 348897078.11
Including: Interest Receivable
Dividends Receivable 19000000.00
135Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Inventories 731722817.30 553388303.73
Contract assets
Assets classified as held for sale
Non-current assets due within
one year
Other current assets 46083837.26
Total current assets 6283622849.49 4639260020.65
Non-current assets:
Debt investments
Other debt investments
Long-term receivable
Long-term equity investments 6428786880.28 4528546229.37
Other equity instrument
investments
Other non-current financial assets
Investment property
Fixed assets 1526603446.11 1565826802.57
Construction in progress 73592261.61 71862243.72
Productive biological assets
Oil & gas assets
Right-of-use assets
Intangible assets 153726187.34 156335743.52
Development expenditures
Goodwill
Long-term prepayments 2526712.00
Deferred tax assets 27736717.51 7336345.87
Other non-current assets 42826333.80 36566524.79
Total non-current assets 8255798538.65 6366473889.84
Total assets 14539421388.14 11005733910.49
Current liabilities:
Short-term borrowings 20012527.78
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 588779423.55 381631833.96
Accounts payable 1428940784.60 1566994944.07
136Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Advances received
Contract liabilities 213590.21 1155759.09
Employee benefits payable 107620422.34 93150785.46
Taxes and rates payable 20645647.29 10811341.50
Other payables 1215554441.77 1355955388.81
Including: interest payable
Dividends Payable
Liabilities classified as held for
sale
Non-current liabilities due within 1431477411.53
one year
Other current liabilities
Total current liabilities 4793231721.29 3429712580.67
Non-current liabilities:
Long-term borrowings 800824388.89 1381428522.65
Bonds payable 2652035619.50
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions 2638000.00
Deferred income 35807671.23 35908399.54
Deferred tax liabilities 59345035.23 48177657.42
Other non-current liabilities
Total non-current liabilities 3548012714.85 1468152579.61
Total liabilities 8341244436.14 4897865160.28
Equity:
Share capital 3591090218.00 3591601468.00
Other equity instruments 409684602.93
Including: Preferred shares
Perpetual bonds
Capital reserve 1267607857.61 1198721706.52
Less: treasury shares 411949612.90 281483741.34
Other comprehensive income
137Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Special reserve
Surplus reserve 573097357.38 509280441.15
Undistributed profit 768646528.98 1089748875.88
Total equity 6198176952.00 6107868750.21
Total liabilities & equity 14539421388.14 11005733910.49
3. Consolidated Income statement
Unit: RMB
Items Year2021 Year2020
I. Total operating revenue 16020809805.52 12109833368.44
Including: Operating revenue 16020809805.52 12109833368.44
Interest income
Premium earned
Revenue from handling charges and
commission
II. Total operating cost 14151191300.33 10592665388.40
Including: Operating cost 11907350969.11 8738221038.36
Interest expenses
Handling charges and commission
expenditures
Surrender value
Net payment of insurance claims
Net provision of insurance policy
reserve
Premium bonus expenditures
Reinsurance expenses
Taxes and surcharges 83563529.99 77973420.81
Selling expenses 449226532.55 365125043.08
Administrative expenses 875802861.33 764084428.88
R&D expenses 751138559.24 518401363.63
Financial expenses 84108848.11 128860093.64
Including: Interest expenses 146890397.95 64733993.15
Interest income 163144645.89 52233256.57
Add: Other income 122787760.00 151555896.45
Investment income (or less: 141572602.13 89078877.16
losses)
138Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Including: Investment income 7011313.83 2199442.47
from associates and joint ventures
Gains from derecognition of -1533698.47 -4369430.89
financial assets at amortized cost
Gains on foreign exchange (or
less: losses)
Gains on net exposure to
hedging risk (or less: losses)
Gains on changes in fair value 3221397.38 31847915.76
(or less: losses)
Credit impairment loss (or less: -56834285.92 -28677382.30
losses)
Assets impairment loss (or less: -93213670.21 -58672538.84
losses)
Gains on asset disposal (or less: -387648.44 -486378.33
losses)
III. Operating profit (or less: losses) 1986764660.13 1701814369.94
Add: Non-operating revenue 4792550.68 5055479.82
Less: Non-operating expenditures 14928195.40 14843633.18
IV. Profit before tax (or less: total loss) 1976629015.41 1692026216.58
Less: Income tax expense 271804477.77 218702864.60
V. Net profit (or less: net loss) 1704824537.64 1473323351.98
(I) Categorized by the continuity of
operations
1. Net profit from continuing 1704824537.64 1473323351.98
operations (or less: net loss)
2. Net profit from discontinued
operations (or less: net loss)
(II) Categorized by the portion of
equity ownership
1. Net profit attributable to owners 1684044407.47 1462158821.57
of parent Company (or less: net
loss)
2. Net profit attributable to 20780130.17 11164530.41
non-controlling shareholders (or
less: net loss)
VI. Other comprehensive income after -39785884.78 -50292214.11
tax
Items attributable to the owners of -39785884.78 -50292214.11
the parent Company
(I) Not to be reclassified subsequently
to profit or loss
1.Changes in remeasurement on the
net defined benefit plan
139Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
2. Items under equity method that
will not be reclassified to profit or
loss
3. Changes in fair value of other
equity instrument investments
4. Changes in fair value of own
credit risk
5. Others
(II) To be reclassified subsequently to -39785884.78 -50292214.11
profit or loss
1. Items under equity method that
may be reclassified to profit or loss
2. Changes in fair value of other
debt investments
3. Profit or loss from
reclassification of financial assets
into other comprehensive income
4. Provision for credit impairment
of other debt investments
5.Cash flow hedging reserve
6. Translation reserve -39785884.78 -50292214.11
7. Others
Items attributable to non-controlling
shareholders
VII. Total comprehensive income 1665038652.86 1423031137.87
Items attributable to the owners of 1644258522.69 1411866607.46
the parent Company
Items attributable to non-controlling 20780130.17 11164530.41
shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) 0.47 0.41
(II) Diluted EPS (yuan per share) 0.47 0.41
Legal representative：Zhang Yabo Officer in charge of accounting：Yu Yingkui Head of accounting department：Sheng Xiaofeng
4. Income statement of the Parent Company
Unit: RMB
Items Year2021 Year2020
I. Operating revenue 5177254561.82 4516583047.45
Less: Operating cost 3999539505.73 3406241334.71
Taxes and surcharges 32253209.34 27452644.93
Selling expenses 30588887.74 28559403.90
Administrative expenses 245562330.87 187763288.96
R&D expenses 243661101.29 188357821.51
140Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Financial expenses 65705083.81 85010110.29
Including: Interest expenses 131726916.21 41141318.78
Interest income 84424936.52 25340320.97
Add: Other income 37994497.58 62733688.49
Investment income (or less: 128686271.39 189487259.99
losses)
Including: Investment income 6438328.13 2298930.50
from associates and joint ventures
Gains from derecognition of
financial assets at amortized cost
Gains on net exposure to hedging
(or less: losses)
Gains on changes in fair value (or -4340698.97 4086324.56
less: losses)
Credit impairment loss (or less: -1940041.81 -631899.35
losses)
Assets impairment loss (or less: -1595901.84 -1496468.86
losses)
Gains on asset disposal (or less: 140600.00 70090.31
losses)
II. Operating profit (or less: losses) 718889169.39 847447438.29
Add: Non-operating revenue 1115178.89 1907081.98
Less: Non-operating expenditures 2008942.30 8389545.94
III. Profit before tax (or less: total 717995405.98 840964974.33
loss)
Less: Income tax expense 79826243.65 60255033.57
IV. Net profit (or less: net loss) 638169162.33 780709940.76
(I) Net profit from continuing 638169162.33 780709940.76
operations (or less: net loss)
(II) Net profit from discontinued
operations (or less: net loss)
V. Other comprehensive income after
tax
(I) Not to be reclassified subsequently
to profit or loss
1.Changes in remeasurement on
the net defined benefit plan
2. Items under equity method that
will not be reclassified to profit or
loss
3. Changes in fair value of other
equity instrument investments
4. Changes in fair value of own
credit risk
5. Others
(II) To be reclassified subsequently to
profit or loss
1. Items under equity method that
may be reclassified to profit or
141Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
loss
2. Changes in fair value of other
debt investments
3. Profit or loss from
reclassification of financial assets
into other comprehensive income
4. Provision for credit impairment
of other debt investments
5. Cash flow hedging reserve
(profit or loss on cash flow
hedging)
6. Translation reserve
7. Others
VI. Total comprehensive income 638169162.33 780709940.76
VII. Earnings per share (EPS):
(I) Basic EPS (yuan per share)
(II) Diluted EPS (yuan per share)
5. Consolidated Cash Flow Statement
Unit: RMB
Items Year 2021 Year 2020
I. Cash flows from operating activities:
Cash receipts from sale of goods or 15665586228.21 11849284665.68
rendering of services
Net increase of client deposit and
interbank deposit
Net increase of central bank loans
Net increase of loans from other financial
institutions
Cash receipts from original insurance
contract premium
Net cash receipts from reinsurance
Net increase of policy-holder deposit and
investment
Cash receipts from interest handling
charges and commission
Net increase of loans from others
Net increase of repurchase
Net cash receipts from agency security
transaction
142Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Receipts of tax refund 449675718.06 264818602.07
Other cash receipts related to operating 310303052.27 253535410.82
activities
Subtotal of cash inflows from operating 16425564998.54 12367638678.57
activities
Cash payments for goods purchased and 11715511301.72 7545742409.64
services received
Net increase of loans and advances to
clients
Net increase of central bank deposit and
interbank deposit
Cash payments for insurance indemnities
of original insurance contracts
Net increase of loans to others
Cash payments for interest handling
charges and commission
Cash payments for policy bonus
Cash paid to and on behalf of employees 2250992731.15 1677941014.69
Cash payments for taxes and rates 421980964.22 363999449.11
Other cash payments related to operating 481260898.16 692612022.02
activities
Subtotal of cash outflows from operating 14869745895.25 10280294895.46
activities
Net cash flows from operating activities 1555819103.29 2087343783.11
II. Cash flows from investing activities:
Cash receipts from withdrawal of
investments
Cash receipts from investment income 17973512.65 49339043.29
Net cash receipts from the disposal of 24621563.92 18788012.61
fixed assets intangible assets and other
long-term assets
Net cash receipts from the disposal of 290189.18
subsidiaries & other business units
Other cash receipts related to investing 763227138.45 576219673.31
activities
Subtotal of cash inflows from investing 805822215.02 644636918.39
activities
Cash payments for the acquisition of 1952005483.09 1149361450.15
143Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
fixed assets intangible assets and other
long-term assets
Cash payments for investments 1950000.00 1250000.00
Net increase of pledged borrowings
Net cash payments for the acquisition of 28000000.00
subsidiaries & other business units
Other cash payments related to investing 3873524969.01 289200000.00
activities
Subtotal of cash outflows from investing 5855480452.10 1439811450.15
activities
Net cash flows from investing activities -5049658237.08 -795174531.76
III. Cash flows from financing activities:
Cash receipts from absorbing 3000000.00 118643250.00
investments
Including: Cash received by subsidiaries
from non-controlling shareholders as
investments
Cash receipts from borrowings 4374592836.66 2020339244.88
Other cash receipts related to financing 53683640.26 24534300.14
activities
Subtotal of cash inflows from financing 4431276476.92 2163516795.02
activities
Cash payments for the repayment of 380944246.34 1705455347.51
borrowings
Cash payments for distribution of 982548138.98 842824941.43
dividends or profits and for interest
expenses
Including: Cash paid by subsidiaries to 18202402.64 4007833.39
non-controlling shareholders as dividend or
profit
Other cash payments related to financing 244300886.48 10752519.79
activities
Subtotal of cash outflows from financing 1607793271.80 2559032808.73
activities
Net cash flows from financing activities 2823483205.12 -395516013.71
IV. Effect of foreign exchange rate changes -39785884.78 -50292214.11
on cash & cash equivalents
V. Net increase in cash and cash -710141813.45 846361023.53
equivalents
144Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Add: Opening balance of cash and cash 3400144038.54 2553783015.01
equivalents
VI. Closing balance of cash and cash 2690002225.09 3400144038.54
equivalents
6. Cash Flow Statement of the Parent Company
Unit: RMB
Items Year 2021 Year 2020
I. Cash flows from operating activities:
Cash receipts from sale of goods and 4552593960.07 3591777322.35
rendering of services
Receipts of tax refund 91032428.31 72901445.17
Other cash receipts related to operating 148753935.08 93832945.34
activities
Subtotal of cash inflows from operating 4792380323.46 3758511712.86
activities
Cash payments for goods purchased and 3390162593.35 1965431440.25
services received
Cash paid to and on behalf of employees 489699623.10 391589764.85
Cash payments for taxes and rates 101139657.54 91135303.51
Other cash payments related to operating 192477373.76 153131340.36
activities
Subtotal of cash outflows from operating 4173479247.75 2601287848.97
activities
Net cash flows from operating activities 618901075.71 1157223863.89
II. Cash flows from investing activities:
Cash receipts from withdrawal of 19217446.05
investments
Cash receipts from investment income 79458560.23 225498714.94
Net cash receipts from the disposal of fixed 5236022.97 5013171.60
assets intangible assets and other long-term
assets
Net cash receipts from the disposal of 2119122.19
subsidiaries & other business units
Other cash receipts related to investing 282769383.03 271933366.03
activities
Subtotal of cash inflows from investing 367463966.23 523781820.81
activities
145Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Cash payments for the acquisition of fixed 141993812.89 235141413.93
assets intangible assets and other long-term
assets
Cash payments for investments 1869460500.00 236348684.83
Net cash payments for the acquisition of
subsidiaries & other business units
Other cash payments related to investing 1991561492.47 149070741.05
activities
Subtotal of cash outflows from investing 4003015805.36 620560839.81
activities
Net cash flows from investing activities -3635551839.13 -96779019.00
III. Cash flows from financing activities:
Cash receipts from absorbing investments 118643250.00
Cash receipts from borrowings 3850000000.00 1519811000.00
Other cash receipts related to financing 356883274.78 83377450.00
activities
Subtotal of cash inflows from financing 4206883274.78 1721831700.00
activities
Cash payments for the repayment of 20000000.00 1069811000.00
borrowings
Cash payments for distribution of 951587071.48 844817849.02
dividends or profits and for interest expenses
Other cash payments related to financing 642469365.41 39333154.61
activities
Subtotal of cash outflows from financing 1614056436.89 1953962003.63
activities
Net cash flows from financing activities 2592826837.89 -232130303.63
IV. Effect of foreign exchange rate changes
on cash and cash equivalents
V. Net increase in cash and cash equivalents -423823925.53 828314541.26
Add: Opening balance of cash and cash 1803237880.51 974923339.25
equivalents
VI. Closing balance of cash and cash 1379413954.98 1803237880.51
equivalents
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
146Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Unit: RMB
Year 2021
Equity Attributable to parent Company
Other equity instruments Gene
Items Other Speci
Non-contr
Less: ral
Prefer Capital comprehe al Surplus Undistribut Othe
olling Total equity
Share Capital Perpet treasury risk Subtotal Othe
red ual reserve nsive reser
rs
reserve ed profit interest
rs shares reserbonds
shares income ve
ve
I. Balance 359160146 31541743 2814837 -896249 6379676 5890916 10064794 8795825 10152752771
at the end 8.00 4.22 41.34 62.61 13.47 707.83 519.57 1.46 .03
of prior
year
Add:
Cumulativ
e changes
of
accounting
policies
Error
correction
of prior
period
Business
combinati
on under
common
control
147Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Others
II. Balance 359160146 31541743 2814837 -896249 6379676 5890916 10064794 8795825 10152752771
at the 8.00 4.22 41.34 62.61 13.47 707.83 519.57 1.46 .03
beginning
of current
year
III. -511250.00 409 58002340 1304658 -397858 6381691 72477289 10855137 1432408 1099837837.Current 684 .80 71.56 84.78 6.23 8.24 51.86 5.84 70
period 602.increase 93
(or less:
decrease)
(I) Total -397858 1684044 16442585 2078013 1665038652.comprehen 84.78 407.47 22.69 0.17 86
sive
income
(II) Capital -511250.00 409 58002340 1304658 33670982 3000000. 339709822.17
contribute 684 .80 71.56 2.17 00
d or 602.withdrawn 93
by owners
1.3000000.3000000.00
Ordinary 00
shares
contribute
d by
owners
2. Capital 24610.00 409 518108.87 542718.87 410227321.80
148Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
contribute 684
d by 602.holders of 93
other
equity
instrument
s
3. Amount 60225070 -6957364 12979871 129798713.43
of .93 2.50 3.43
share-base
d payment
included in
equity
-535860.00-2740839.2000395-20331621-203316213.0
4. Others
0014.063.066
(III) Profit 6381691 -9592715 -89545459 -1820240 -913656995.6
distributio 6.23 09.23 3.00 2.64 4
n
1.6381691-6381691
Appropriat 6.23 6.23
ion of
surplus
reserve
2.
Appropriat
ion of
general
risk
149Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
reserve
3.-8954545-89545459-1820240-913656995.6
Appropriat 93.00 3.00 2.64 4
ion of
profit to
owners
4. Others
(IV)
Internal
carry-over
within
equity
1. Transfer
of capital
reserve to
capital
2. Transfer
of surplus
reserve to
capital
3. Surplus
reserve to
cover
losses
4. Changes
in defined
benefit
plan
carried
over to
retained
earnings
150Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
5. Other
comprehen
sive
income
carried
over to
retained
earnings
6. Others
(V)
Special
reserve
1.
Appropriat
ion of
current
period
2.
Applicatio
n of
current
period
(VI) 8746358. 8746358.31
Others 31
IV. 359109021 409 37341977 4119496 -129410 7017845 6615689 11150308 1022823 11252590608
Balance at 8.00 684 5.02 12.90 847.39 29.70 606.07 271.43 37.30 .73
the end of 602.current 93
period
Amount of Previous Period
Unit: RMB
Year 2020
Items
Non-contro
Equity Attributable to parent Company Total equity lling
151Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
interest
Other equity Other Spec
Less: Gene
Share instruments Capital comprehe ial Surplus ral Undistributed Oth
treasury risk Subtotal profit
Capital Prefer Perpet Oth reserve nsive reser
ers
reserve reser
red ual shares ve
ers income ve
shares bonds
I. Balance 27656578 10908000 36378115 -393327 5598966 52783922 92916329 7378553 93654184
at the end 98.00 22.06 1.34 48.50 19.39 88.84 28.45 7.27 65.72
of prior
year
Add:
Cumulativ
e changes
of
accountin
g policies
Error
correction
of prior
period
Business
combinati
on under
common
control
Others
II. 27656578 10908000 36378115 -393327 5598966 52783922 92916329 7378553 93654184
Balance at
the 98.00 22.06 1.34 48.50 19.39 88.84 28.45 7.27 65.72
beginning
152Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
of current
year
III. 82594357 -77538258 -8229741 -502922 7807099 61252441 773161591 1417271 787334305
Current 0.00 7.84 0.00 14.11 4.08 8.99 .12 4.19 .31
period
increase
(or less:
decrease)
(I) Total -502922 14621588 141186660 1116453 14230311
comprehe
nsive 14.11 21.57 7.46 0.41 37.87
income
(II) -731510.00 54313350. -8229741 135879250 135879250
Capital
contribute 39 0.00 .39 .39
d or
withdraw
n by
owners
1.-49264050-1679073118643250.118643250.
Ordinary .00 00.00 00 00
shares
contribute
d by
owners
2. Capital
contribute
d by
holders of
other
equity
instrumen
ts
153Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
3. Amount 10702981 89793814 17236000. 17236000.
of 4.39 .00 39 39
share-base
d payment
included
in equity
-731510.00-3452414.-4183924.
4. Others
0000
(III) Profit 7807099 -84963440 -77156340 -400783 -77557124
distributio 4.08 2.58 8.50 3.39 1.89
n
1.7807099-78070994
Appropria 4.08 .08
tion of
surplus
reserve
2.
Appropria
tion of
general
risk
reserve
3.-77156340-77156340-400783-77557124
Appropria
tion of 8.50 8.50 3.39 1.89
profit to
owners
4. Others
(IV) 82667508 -82667508
Internal 0.00 0.00
carry-over
154Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
within
equity
1.82667508-82667508
Transfer
of capital 0.00 0.00
reserve to
capital
2.
Transfer
of surplus
reserve to
capital
3. Surplus
reserve to
cover
losses
4.
Changes
in defined
benefit
plan
carried
over to
retained
earnings
5. Other
comprehe
nsive
income
carried
over to
retained
earnings
6. Others
(V)
Special
reserve
1.
155Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Appropria
tion of
current
period
2.
Applicatio
n of
current
period
(VI) -3020858. -3020858.2 7016017 3995158.9
Others 23 3 .17 4
IV. 35916014 31541743 28148374 -896249 6379676 58909167 10064794 8795825 10152752
Balance at 68.00 4.22 1.34 62.61 13.47 07.83 519.57 1.46 771.03
the end of
current
period
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
Year 2021
Other equity instruments Speci
Items Less: Other
al Surplus Undistributed Other
Share Capital Perpetu Capital reserve treasury comprehensi Total equity
Preferre
Others reserv reserve profit al shares ve income s
d shares e
bonds
I. Balance at 3591601468. 1198721706. 281483741. 509280441. 1089748875. 6107868750.the end of 00 52 34 15 88 21
prior year
156Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
Add:
Cumulative
changes of
accounting
policies
Error
correction of
prior period
Others
II. Balance 3591601468. 1198721706. 281483741. 509280441. 1089748875. 6107868750.at the
beginning of 00 52 34 15 88 21
current year
III. Current -511250.00 409684602. 68886151.09 130465871. 63816916.2 -321102346.9 90308201.79
period
increase (or 93 56 3 0
less:
decrease)
(I) Total 638169162.3 638169162.3
comprehensi
ve income 3 3
(II) Capital -511250.00 409684602. 68886151.09 130465871. 347593632.4
contributed
or 93 56 6
withdrawn
by owners
1. Ordinary
shares
contributed
by owners
2. Capital 24610.00 409684602. 518108.87 410227321.8
contributed
by holders of 93 0
other equity
instruments
3. Amount 71108881.22 -69573642. 140682523.7
of
157Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
share-based 50 2
payment
included in
equity
-535860.00-2740839.00200039514.-203316213.0
4. Others
066
(III) Profit 63816916.2 -959271509.2 -895454593.0
distribution 3 3 0
1.63816916.2-63816916.23
Appropriatio
n of surplus 3
reserve
2.-895454593.0-895454593.0
Appropriatio
n of profit to 0 0
owners
3. Others
(IV) Internal
carry-over
within equity
1.Transfer of
capital
reserve to
capital
2.Transfer of
surplus
reserve to
capital
3.Surplus
reserve to
cover losses
4. Changes
in defined
benefit plan
carried over
to retained
earnings
158Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
5. Other
comprehensi
ve income
carried over
to retained
earnings
6. Others
(V) Special
reserve
1.
Appropriatio
n of current
period
2.
Application
of current
period
(VI) Others
IV. Balance 3591090218. 409684602. 1267607857. 411949612. 573097357. 768646528.9 6198176952.at the end of
current 00 93 61 90 38 8 00
period
Amount of Previous Period
Unit: RMB
Year 2020
Other equity instruments Specia
Items Other
Less: treasury l Surplus Undistributed Other
Share Capital Preferre Perpetu Other Capital reserve comprehensi Total equity shares reserv reserve profit
ve income s
d shares al bonds s e
I. Balance at 2765657898. 2005303119. 363781151.3 431209447. 1158673337. 5997062650.the end of 00 53 4 07 70 96
prior year
Add:
Cumulative
159Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
changes of
accounting
policies
Error
correction of
prior period
Others
II. Balance at 2765657898. 2005303119. 363781151.3 431209447. 1158673337. 5997062650.the beginning
of current 00 53 4 07 70 96
year
III. Current 825943570.00 -806581413.0 -82297410.0 78070994.0 -68924461.82 110806099.25
period
increase (or 1 0 8
less:
decrease)
(I) Total 780709940.76 780709940.76
comprehensi
ve income
(II) Capital -731510.00 20093666.99 -82297410.0 101659566.99
contributed
or withdrawn 0
by owners
1. Ordinary -49264050.00 -167907300. 118643250.00
shares
contributed 00
by owners
2. Capital
contributed
by holders of
other equity
instruments
3. Amount of 72810130.99 89793814.00 -16983683.01
share-based
payment
included in
equity
160Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
4. Others -731510.00 -3452414.00 -4183924.00
(III) Profit 78070994.0 -849634402.5 -771563408.5
distribution 8 8 0
1.78070994.0-78070994.08
Appropriatio
n of surplus 8
reserve
2.-771563408.5-771563408.5
Appropriatio
n of profit to 0 0
owners
3. Others
(IV) Internal 826675080.00 -826675080.0
carry-over
within equity 0
1.Transfer of 826675080.00 -826675080.0
capital
reserve to 0
capital
2.Transfer of
surplus
reserve to
capital
3.Surplus
reserve to
cover losses
4. Changes in
defined
benefit plan
carried over
to retained
earnings
5. Other
comprehensi
ve income
carried over
to retained
earnings
161Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
6. Others
(V) Special
reserve
1.
Appropriatio
n of current
period
2.
Application
of current
period
(VI) Others
IV. Balance 3591601468. 1198721706. 281483741.3 509280441. 1089748875. 6107868750.at the end of
current 00 52 4 15 88 21
period
162Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report
III. Company profile
The Company was established by the original Sanhua Fuji Koki Co. Ltd. The Company currently holds a
business license with a unified social credit code of 913300006096907427 registered and issued by Zhejiang
Administration of Industry and Commerce with headquarter in Shaoxing City Zhejiang Province. The registered
capital of 3591226678.00 yuan total share of 3591090218 shares (each with par value of one yuan). The
Company’s shares were listed at Shenzhen Stock Exchange.The Company operates in the machinery manufacturing industry. Business scope includes production and
marketing of Service Valve Electronic Expansion valve Drainage Pump Solenoid Valve One-way Valve
Compressor Parts Pressure Pipeline Components Electromechanical Hydraulic Control Pump and other
electromechanical hydraulic control components undertaking services of inspection test and analysis of
refrigeration accessories and engaging in import and export business. Main products include control components
and parts of household appliances and automobile A/C.The financial statements have been approved by the board of directors of the Company and disclosed on
March 23 2022.Zhejiang Sanhua Climate and Appliance Controls Group Co. Ltd. and other subsidiaries are included in the
scope of consolidated financial statements in the current period. For further details please refer to the change of
consolidation scope in the notes to the financial report and the description of equity in other entities.
163Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
IV. Preparation basis of the financial statements
1. Preparation basis
The financial statements have been prepared on the basis of going concern.
2. Going concern
The Company has no events or conditions that may cast significant doubts upon the Company’s ability to
continue as a going concern within the 12 months after the balance sheet date.V. Significant accounting policies and estimates
Tips on specific accounting policies and accounting estimates:
1. Statement of compliance with China Accounting Standards for Business Enterprises
The financial statements have been prepared in accordance with the requirements of China Accounting
Standards for Business Enterprises (CASBEs) and present truly and completely the financial position results of
operations and cash flows of the Company.
2. Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian calendar.
3. Operating cycle
The Company has a relatively short operating cycle for its business an asset or a liability is classified as
current if it is expected to be realized or due within 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (RMB) Yuan while the
functional currency of subsidiaries engaged in overseas operations including SANHUA AWECO Appliance
Systems GmbH Sanhua International Inc. etc. is the currency of the primary economic environment in which they
operate.
5. Accounting treatments of business combination under and not under common control
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the combined
party included in the consolidated financial statements of the ultimate controlling party at the combination date.
164Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Difference between carrying amount of the equity of the combined party included in the consolidated financial
statements of the ultimate controlling party and that of the combination consideration or total par value of shares
issued is adjusted to capital reserve if the balance of capital reserve is insufficient to offset any excess is adjusted
to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the acquiree at
the acquisition date the excess is recognized as goodwill; otherwise the fair value of identifiable assets liabilities
and contingent liabilities and the measurement of the combination cost are reviewed then the difference is
recognized in profit or loss.
6. Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into the consolidation scope. The consolidatedfinancial statements are compiled by the parent company according to “CASBE 33 – Consolidated FinancialStatements” based on relevant information and the financial statements of the parent company and its
subsidiaries.
7. Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for payment. Cash
equivalents refer to short-term highly liquid investments that can be readily converted to cash and that are subject
to an insignificant risk of changes in value.
8. Foreign currency translation
1. Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange rate at the
transaction date at initial recognition. At the balance sheet date monetary items denominated in foreign currency
are translated at the spot exchange rate at the balance sheet date with difference except for those arising from the
principal and interest of exclusive borrowings eligible for capitalization included in profit or loss; non-cash items
carried at historical costs are translated at the spot exchange rate at the transaction date with its RMB amount
unchanged; non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at the
date when the fair value was determined with difference included in profit or loss or other comprehensive
income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the balance sheet date;
the equity items other than undistributed profit are translated at the spot rate at the transaction date; the revenues
and expenses in the income statement are translated into RMB at the approximate exchange rate similar to the
systematically and rationally determined spot exchange rate at the transaction date. The difference arising from
foreign currency translation is included in other comprehensive income.
9．Financial instruments
1. Classification of financial assets and financial liabilities
165Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Financial assets are classified into the following three categories when initially recognized: (1) financial
assets at amortized cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets
at fair value through profit or loss.Financial liabilities are classified into the following four categories when initially recognized: (1) financial
liabilities at fair value through profit or loss; (2) financial liabilities that arise when a transfer of a financial asset
does not qualify for derecognition or when the continuing involvement approach applies; (3) financial guarantee
contracts not fall within the above categories (1) and (2) and commitments to provide a loan at a below-market
interest rate which do not fall within the above category (1); (4) financial liabilities at amortized cost.
2. Recognition criteria measurement method and derecognition condition of financial assets and financial
liabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilities
When the Company becomes a party to a financial instrument it is recognized as a financial asset or
financial liability. The financial assets and financial liabilities initially recognized by the Company are measured
at fair value; for the financial assets and liabilities at fair value through profit or loss the transaction expenses
thereof are directly included in profit or loss; for other categories of financial assets and financial liabilities the
transaction expenses thereof are included into the initially recognized amount. However at initial recognition for
accounts receivable that do not contain a significant financing component or in circumstances where the Company
does not consider the financing components in contracts within one year the Company measures the transaction
price in accordance with “CASBE 14 – Revenues”.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized costs
The Company measures its financial assets at the amortized costs using effective interest method. Gains or
losses on financial assets that are measured at amortized cost and are not part of hedging relationships shall be
included into profit or loss when the financial assets are derecognized reclassified through the amortization
process or in order to recognize impairment gains or losses.
2) Debt instrument investments at fair value through other comprehensive income
The Company measures its debt instrument investments at fair value. Interests impairment losses or gains
and gains and losses on foreign exchange that calculated using effective interest method shall be included into
profit or loss while other gains or losses are included into other comprehensive income. Accumulated gains or
losses that initially recognized as other comprehensive income should be transferred out into profit or loss when
the financial assets are derecognized.
3) Equity instrument investments at fair value through other comprehensive income
The Company measures its equity instrument investments at fair value. Dividends obtained (other than those
as part of investment cost recovery) shall be included into profit or loss while other gains or losses are included
into other comprehensive income. Accumulated gains or losses that initially recognized as other comprehensive
income should be transferred out into retained earnings when the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes in fair value
(including interests and dividends) shall be included into profit or loss except for financial assets that are part of
hedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
166Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities (including
derivatives that are liabilities) and financial liabilities designated as at fair value through profit or loss. The
Company measures such kind of liabilities at fair value. The amount of changes in the fair value of the financial
liabilities that are attributable to changes in the Company’s own credit risk shall be included into other
comprehensive income unless such treatment would create or enlarge accounting mismatches in profit or loss.Other gains or losses on those financial liabilities (including interests changes in fair value that are attributable to
reasons other than changes in the Company’s own credit risk) shall be included into profit or loss except for
financial liabilities that are part of hedging relationships. Accumulated gains or losses that originally recognized as
other comprehensive income should be transferred out into retained earnings when the financial liabilities are
derecognized.
2) Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or
when the continuing involvement approach appliesThe Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of FinancialAssets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2) and commitments to provide a
loan at a below-market interest rate which do not fall within the above category 1)
The Company measures its financial liabilities at the higher of: a. the amount of loss allowances in
accordance with impairment requirements of financial instruments; b. the amount initially recognized less the
amount of accumulated amortization recognized in accordance with “CASBE 14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method. Gains or
losses on financial liabilities that are measured at amortized cost and are not part of hedging relationships shall be
included into profit or loss when the financial liabilities are derecognized and amortized using effective interest
method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire;
b. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with
“CASBE 23 – Transfer of Financial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally or partly may the
financial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the ownership of the
financial asset it derecognizes the financial asset and any right or liability arising from such transfer is
recognized independently as an asset or a liability. If it retained substantially all of the risks and rewards related to
the ownership of the financial asset it continues recognizing the financial asset. Where the Company does not
transfer or retain substantially all of the risks and rewards related to the ownership of a financial asset it is dealt
with according to the circumstances as follows respectively: (1) if the Company does not retain its control over the
financial asset it derecognizes the financial asset and any right or liability arising from such transfer is
recognized independently as an asset or a liability; (2) if the Company retains its control over the financial asset
according to the extent of its continuing involvement in the transferred financial asset it recognizes the related
financial asset and recognizes the relevant liability accordingly.If the transfer of an entire financial asset satisfies the conditions for derecognition the difference between the
167Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
amounts of the following two items is included in profit or loss: (1) the carrying amount of the transferred
financial asset as of the date of derecognition; (2) the sum of consideration received from the transfer of the
financial asset and the accumulative amount of the changes of the fair value originally included in other
comprehensive income proportionate to the transferred financial asset (financial assets transferred refer to debt
instrument investments at fair value through other comprehensive income). If the transfer of financial asset
partially satisfies the conditions to derecognition the entire carrying amount of the transferred financial asset is
between the portion which is derecognized and the portion which is not apportioned according to their respective
relative fair value and the difference between the amounts of the following two items is included into profit or
loss: (1) the carrying amount of the portion which is derecognized; (2) the sum of consideration of the portion
which is derecognized and the portion of the accumulative amount of the changes in the fair value originally
included in other comprehensive income which is corresponding to the portion which is derecognized (financial
assets transferred refer to debt instrument investments at fair value through other comprehensive income).
4. Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data and information are available to measure fair value. The inputs to valuation techniques used to measure fair
value are arranged in the following hierarchy and used accordingly:
(1) Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the
Company can access at the measurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset
or liability either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other
than quoted prices that are observable for the asset or liability for example interest rates and yield curves
observable at commonly quoted intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest rate that is
not observable and cannot be corroborated by observable market data at commonly quoted intervals historical
volatility future cash flows to be paid to fulfill the disposal obligation assumed in business combination financial
forecast developed using the Company’s own data etc.
5. Impairment of financial instruments
(1) Measurement and accounting treatment
The Company on the basis of expected credit loss recognizes loss allowances of financial assets at
amortized cost debt instrument investments at fair value through other comprehensive income contract assets
leases receivable loan commitments other than financial liabilities at fair value through profit or loss financial
guarantee contracts not belong to financial liabilities at fair value through profit or loss or financial liabilities that
arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement
approach applies.Expected credit losses refer to the weighted average of credit losses with the respective risks of a default
occurring as the weights. Credit loss refers to the difference between all contractual cash flows that are due to the
Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash
shortfalls) discounted at the original effective interest rate. Among which purchased or originated credit-impaired
financial assets are discounted at the credit-adjusted effective interest rate.At the balance sheet date the Company shall only recognize the cumulative changes in the lifetime expected
credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial
assets.
168Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
For leases receivable and accounts receivable and contract assets resulting from transactions regulated in
“CASBE 14 – Revenues” the Company chooses simplified approach to measure the loss allowance at an amount
equal to lifetime expected credit losses.For financial assets other than the above on each balance sheet date the Company shall assess whether the
credit risk on the financial instrument has increased significantly since initial recognition. The Company shall
measure the loss allowance for the financial instrument at an amount equal to the lifetime expected credit losses if
the credit risk on that financial instrument has increased significantly since initial recognition; otherwise the
Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected
credit loss.Considering reasonable and supportable forward-looking information the Company compares the risk of a
default occurring on the financial instrument as at the balance sheet date with the risk of a default occurring on the
financial instrument as at the date of initial recognition so as to assess whether the credit risk on the financial
instrument has increased significantly since initial recognition.The Company may assume that the credit risk on a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to have relatively low credit risk at the balance sheet
date.The Company shall estimate expected credit risk and measure expected credit losses on an individual or a
collective basis. When the Company adopts the collective basis financial instruments are grouped with similar
credit risk features.The Company shall remeasure expected credit loss on each balance sheet date and increased or reversed
amounts of loss allowance arising therefrom shall be included into profit or loss as impairment losses or gains. For
a financial asset measured at amortized cost the loss allowance reduces the carrying amount of such financial
asset presented in the balance sheet; for a debt investment measured at fair value through other comprehensive
income the loss allowance shall be recognized in other comprehensive income and shall not reduce the carrying
amount of such financial asset.
(2) Financial instruments with expected credit risk assessed and expected credit losses measured on a
collective basis
Items Basis for determination Method for measuring expected
of portfolio credit loss
Based on historical credit loss
experience the current situation and
the forecast of future economic
Other receivables – Portfolio grouped
Ages conditions the Company calculates
with ages
expected credit loss through
exposure at default and 12-month or
lifetime expected credit loss rate.
(3) Accounts receivable and contract assets with expected credit losses measured on a collective basis
1) Specific portfolios and method for measuring expected credit loss
Items Basis for determination Method for measuring
of portfolio expected credit loss
Based on historical credit
Notes receivable-Bank acceptance Accepted by financial loss experience the
receivable institutions current situation and the
forecast of future
economic conditions the
Notes receivable -Trade acceptance Not accepted by financial Company calculates
169Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Items Basis for determination Method for measuring
of portfolio expected credit loss
receivable institutions expected credit loss
through exposure at
default and lifetime
expected credit loss rate.Based on historical credit
loss experience the
current situation and the
forecast of future
economic conditions the
Accounts receivable – Portfolio Company prepares the
Ages
grouped with ages comparison table of ages
and lifetime expected
credit loss rate of
accounts receivable so as
to calculate expected
credit loss.
2) Accounts receivable – comparison table of ages and lifetime expected credit loss rate of portfolio grouped
with ages
Ages Expected credit loss rate (%)
Within 1 year (inclusive the same 5%
hereinafter)
1-2 years 10%
2-3 years 30%
Over 3 years 50%
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset.However the Company offsets a financial asset and a financial liability and presents the net amount in the balance
sheet when and only when the Company: (1) currently has a legally enforceable right to set off the recognized
amounts; and (2) intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.For a transfer of a financial asset that does not qualify for derecognition the Company does not offset the
transferred asset and the associated liability.
10．Inventories
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business work in process
in the process of production materials or supplies etc. to be consumed in the production process or in the
rendering of services.
2. Accounting method for dispatching inventories
Inventories dispatched from storage are accounted for with weighted average method at the end of each
month/specific identification method.
3. Basis for determining net realizable value
At the balance sheet date inventories are measured at the lower of cost or net realizable value; provisions for
170Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
inventory write-down are made on the excess of its cost over the net realizable value.
4. Inventory system
The perpetual inventory system is adopted.
5. Amortization method of low-value consumables and packages
Low-value consumables and packages are amortized with one-off method.
11. Contract assets contract liabilities
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship
between its performance obligations and customers’ payments. Contract assets and contract liabilities under the
same contract shall offset each other and be presented on a net basis.The Company presents an unconditional right to consideration (i.e. only the passage of time is required
before the consideration is due) as a receivable and presents a right to consideration in exchange for goods that it
has transferred to a customer (which is conditional on something other than the passage of time) as a contract
asset.The company presents the obligation to transfer goods to customers for the consideration received or
receivable from customers as contract liabilities.
12. Contract costs
Assets related to contract costs including costs of obtaining a contract and costs to fulfil a contract.The Company recognizes as an asset the incremental costs of obtaining a contract if those costs are expected
to be recovered. The costs of obtaining a contract shall be included into profit or loss when incurred if the
amortization period of the asset is one year or less.If the costs incurred in fulfilling a contract are not within the scope of standards related to inventories fixed
assets or intangible assets etc. the Company shall recognize the costs to fulfil a contract as an asset if all the
following criteria are satisfied:
1. The costs relate directly to a contract or to an anticipated contract including direct labor direct materials
manufacturing overhead cost (or similar cost) cost that are explicitly chargeable to the customer under the
contract and other costs that are only related to the contract;
2. The costs enhance resources of the Company that will be used in satisfying performance obligations in the
future;
3. The costs are expected to be recovered.
An asset related to contract costs shall be amortized on a systematic basis that is consistent with related
goods or services with amortization included into profit or loss.The Company shall make provision for impairment and recognize an impairment loss to the extent that the
carrying amount of an asset related to contract costs exceeds the remaining amount of consideration that the
Company expects to receive in exchange for the goods or services to which the asset relates less the costs
expected to be incurred. The original provision for asset impairment shall be reversed and included in the current
profit and loss when the impairment conditions no longer exist or have improved. The carrying amount of the
asset after the reversal shall not exceed the amount that would have been determined on the reversal date if no
provision for impairment had been made previously.
171Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
13．Long-term receivables
14．Long-term equity investments
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement which exists only when decisions
about the relevant activities require the unanimous consent of the parties sharing control. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint control
of these policies.
2. Determination of investment cost
(1) For business combination under common control if the consideration of the combining party is that it
makes payment in cash transfers non-cash assets assumes its liabilities or issues equity securities on the date of
combination it regards the share of the carrying amount of the equity of the combined party included the
consolidated financial statements of the ultimate controlling party as the initial cost of the investment. The
difference between the initial cost of the long-term equity investments and the carrying amount of the combination
consideration paid or the par value of shares issued offsets capital reserve; if the balance of capital reserve is
insufficient to offset any excess is adjusted to retained earnings.
(2) For business combination not under common control investment cost is initially recognized at the
acquisition-date fair value of considerations paid.
(3) Long-term equity investments obtained through ways other than business combination: the initial cost of a
long-term equity investment obtained by making payment in cash is the purchase cost which is actually paid; that
obtained on the basis of issuing equity securities is the fair value of the equity securities issued; that obtained
through debt restructuring is determined according to “CASBE 12 – Debt Restructuring”; and that obtained through
non-cash assets exchange is determined according to “CASBE 7 – Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit or loss
For long-term equity investments with control relationship it is accounted for with cost method; for long-term
equity investments of associated enterprises and cooperative enterprises it is accounted for with equity method.
15. Investment property
Investment property measurement model
Measurement by cost method
Depreciation or amortization method
1. Investment property includes land use right of leased-out property and of property held for capital
appreciation and buildings that have been leased out.
2. The initial measurement of investment property is based on its cost and subsequent measurement is made
using the cost model the depreciation or amortization method is the same as that of fixed assets and intangible
assets.
16. Fixed assets
（1）Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production of goods or rendering of services for rental to
others or for administrative purposes and expected to be used during more than one accounting year. Fixed assets
172Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
are recognized if and only if it is probable that future economic benefits associated with the assets will flow to
the Company and the cost of the assets can be measured reliably.
（2）Depreciation method of different categories of fixed assets
Categories Estimated residual value Annual depreciation rate Depreciation method Useful life (years)
proportion (%) (%)
Buildings and
Straight-line method 20-30 0%、5% 3.17%～5.00%
structures
Machinery and
Straight-line method 5-12 0%、5% 7.92%～20.00%
equipment
Measurement analysis
Straight-line method 5-10 0%、5% 9.50%～19.00%
equipment
Vehicle Straight-line method 5-8 0%、5% 11.88%～20.00%
Office equipment and
Straight-line method 5-8 0%、5% 11.88%～20.00%
others
17．Construction in progress
1. Construction in progress is recognized if and only if it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be measured reliably.Construction in progress is measured at the actual cost incurred to reach its designed usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches the designed
usable conditions. When the auditing of the construction in progress was not finished while reaching the designed
usable conditions it is transferred to fixed assets using estimated value first and then adjusted accordingly when
the actual cost is settled but the accumulated depreciation is not to be adjusted retrospectively.
18．Borrowing costs
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization it is capitalized and included in the costs of relevant
assets; other borrowing costs are recognized as expenses on the basis of the actual amount incurred and are
included in profit or loss.
19．Right-of-use assets
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initial
measurement of the lease liability; 2) any lease payments made at or before the commencement date less any
lease incentives received; 3) any initial direct costs incurred by the lessee; 4) an estimate of costs to be incurred
by the lessee in dismantling and removing the underlying asset restoring the site on which it is located or
restoring the underlying asset to the condition required by the terms and conditions of the lease.The Company depreciates the right-of-use asset using the straight-line method. If it is reasonable to be
certain that the ownership of the underlying asset can be acquired by the end of the lease term the Company
depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset.
173Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Otherwise the Company depreciates the right-of-use asset from the commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term.
20．Intangible assets
(1) Valuation method service life impairment test
1. Intangible assets include land use right patent right and non-patented technology etc. The initial
measurement of intangible assets is based on its cost.
2. Amortization method
Categories Amortization method Amortization period (years)
Land use rights Straight-line method Contractual service life
Application software Straight-line method 1-4
Intellectual property Straight-line method 5-10
Intangible assets with indefinite useful life are not amortized but their useful life is reviewed annually. The
indefinite land ownership held by overseas subsidiaries abroad is not amortized due to uncertain service life.
（2）Accounting policy for internal R&D expenditure
Expenditures on the research phase of an internal project are recognized as profit or loss when it is incurred.An intangible asset arising from the development phase of an internal project is recognized if the Company can
meet the corresponding conditions.
21．Impairment of long-term assets
For long-term assets such as long-term equity investments investment property at cost model fixed assets
construction in progress right-of-use assets intangible assets with finite useful lives etc. if at the balance sheet
date there is indication of impairment the recoverable amount is to be estimated. For goodwill recognized in
business combination and intangible assets with indefinite useful lives no matter whether there is indication of
impairment impairment test is performed annually. Impairment test on goodwill is performed on related asset
group or asset group portfolio.When the recoverable amount of such long-term assets is lower than their carrying amount the difference is
recognized as provision for assets impairment through profit or loss.
22．Long-term prepayments
Long-term prepayments are expenses that have been recognized but with amortization period over one year
(excluding one year). They are recorded with actual cost and evenly amortized within the beneficiary period or
stipulated period. If items of long-term prepayments fail to be beneficial to the following accounting periods
residual values of such items are included in profit or loss.
23．Employee benefits
(1) Short-term employee benefits
The Company recognizes in the accounting period in which an employee provides service short-term
employee benefits actually incurred as liabilities with a corresponding charge to profit or loss or the cost of a
174Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
relevant asset.
(2) Post-employment benefits
Post-employment benefit plans are mainly classified as defined contribution plans.During the accounting period employees provide services according the defined contribution plan the
amount payable is recognized as liabilities and included in the current profits and losses or relevant asset costs.
(3) Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability with a
corresponding charge to profit or loss at the earlier of the following dates: (1) when the Company cannot
unilaterally withdraw the offer of termination benefits because of an employment termination plan or a
curtailment proposal; (2) when the Company recognizes cost or expenses related to a restructuring that involves
the payment of termination benefits.
24. Lease liability
On the lease inception day the Company measures the lease liability at the present value of the lease
payments that are not paid at that date discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined the Company’s incremental borrowing rate shall be used. Unrecognized financing expenses
calculated at the difference between the lease payment and its present value are recognized as interest expenses
over the lease term using the discount rate which has been used to determine the present value of lease payment
and included in profit or loss. Variable lease payments not included in the measurement of lease liabilities are
included in profit or loss in the periods in which they are incurred.
25．Provisions
1. Provisions are recognized when fulfilling the present obligations arising from contingencies such as
providing guarantee for other parties litigation products quality guarantee onerous contract etc. may cause the
outflow of the economic benefit and such obligations can be reliably measured.
2. The initial measurement of provisions is based on the best estimated expenditures required in fulfilling
the present obligations and its carrying amount is reviewed at the balance sheet date.
26．Share-based payment
1. Types of share-based payment
Share-based payment consists of equity-settled share-based payment and cash-settled share-based payment.
2. Accounting treatment for settlements modifications and cancellations of share-based payment terms and
conditions
(1) Equity-settled share-based payment
For equity-settled share-based payment transaction with employees if the equity instruments granted vest
immediately the fair value of those equity instruments is measured at grant date and recognized as transaction
cost or expense with a corresponding adjustment in capital reserve; if the equity instruments granted do not vest
until the counterparty completes a specified period of service at the balance sheet date within the vesting period
the fair value of those equity instruments measured at grant date based on the best estimate of the number of
equity instruments expected to vest is recognized as transaction cost or expense with a corresponding adjustment
in capital reserve.
175Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
For equity-settled share-based payment transaction with parties other than employees if the fair value of the
goods or services received can be measured reliably the fair value is measured at the date the Company obtains
the goods or the counterparty renders service; if the fair value of the goods or services received cannot be
measured reliably the fair value of the equity instruments granted measured at the date the Company obtains the
goods or the counterparty renders service is referred to and recognized as transaction cost or expense with a
corresponding increase in equity.
(2) Cash-settled share-based payment
For cash-settled share-based payment transactions with employees if share appreciation rights vest
immediately the fair value of the liability incurred as the acquisition of goods or services is measured at grant
date and recognized as transaction cost or expense with a corresponding increase in liabilities; if share
appreciation rights do not vest until the employees have completed a specified period of service the liability is
measured at each balance sheet date until settled at the fair value of the share appreciation rights measured at
grant date based on the best estimate of the number of share appreciation right expected to vest.
(3) Modifications and cancellations of share-based payment terms and conditions
If the modification increases the fair value of the equity instruments granted measured immediately before
and after the modification the Company includes the incremental fair value granted in the measurement of the
amount recognized for services received as consideration for the equity instruments granted; similarly if the
modification increases the number of equity instruments granted the Company includes the fair value of the
additional equity instruments granted measured at the date of the modification in the measurement of the amount
recognized for services received as consideration for the equity instruments granted; if the Company modifies the
vesting conditions in a manner that is beneficial to the employee the Company takes the modified vesting
conditions into account.If the modification reduces the fair value of the equity instruments granted measured immediately before and
after the modification the Company does not take into account that decrease in fair value and continue to measure
the amount recognized for services received as consideration for the equity instruments based on the grant date
fair value of the equity instruments granted; if the modification reduces the number of equity instruments granted
to an employee that reduction is accounted for as a cancellation of that portion of the grant; if the Company
modifies the vesting conditions in a manner that is not beneficial to the employee the Company does not take the
modified vesting conditions into account.If the Company cancels or settles a grant of equity instruments during the vesting period (other than a grant
cancelled by forfeiture when the vesting conditions are not satisfied) the Company accounts for the cancellation
or settlement as an acceleration of vesting and therefore recognizes immediately the amount that otherwise would
have been recognized for services received over the remainder of the vesting period.
27. Convertible bonds
The Company classifies convertible bonds at initial recognition as a financial asset or liability or equity
instrument based on contract terms and economic essence it reveals instead of its legal form combining with the
definitions of financial asset liability and equity instrument.At the balance sheet date for a financial instrument classified as an equity instrument its interest expenditure
or dividend distribution is treated as profit distribution and share repurchase and cancellation are treated as changes
in equity; for a financial instrument classified as a financial liability its interest expenditure or dividend distribution
is treated as borrowing expense and gain or loss on repurchase or redemption is included in profit or loss.
176Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
28．Revenue
Accounting policies used in revenue recognition and measurement
1. Revenue recognition principles
At contract inception the Company shall assess the contracts and shall identify each performance obligation
in the contracts and determine whether the performance obligation should be satisfied over time or at a point in
time.The Company satisfies a performance obligation over time if one of the following criteria is met otherwise
the performance obligation is satisfied at a point in time: (1) the customer simultaneously receives and consumes
the benefits provided by the Company’s performance as the Company performs; (2) the customer can control
goods or services as they are created by the Company’s performance; (3) the Company’s performance does not
create goods or services with an alternative uses and the Company has an enforceable right to payment for
performance completed to date.For each performance obligation satisfied over time the Company shall recognize revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. In the circumstance that the
progress cannot be measured reasonably but the costs incurred in satisfying the performance obligation are
expected to be recovered the Company shall recognize revenue only to the extent of the costs incurred until it can
reasonably measure the progress. To determine whether the customer has obtained control of goods the Company
shall consider the following indicators: (1) the Company has a present right to payment for the goods i.e. the
customer is presently obliged to pay for the goods; (2) the Company has transferred the legal title of the goods to
the customer i.e. the customer has legal title to the goods; (3) the Company has transferred physical possession of
the goods i.e. the customer has physically possessed the goods; (4) the Company has transferred significant risks
and rewards of ownership of the goods i.e. the customer has obtained significant risks and rewards of ownership
of the goods; (5) the customer has accepted the goods; (6) other indicators showing the customer has obtained
control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to each performance
obligation. The transaction price is the amount of consideration to which the Company expects to be entitled in
exchange for transferring goods or services to a customer excluding amounts collected on behalf of third parties
and those expected to be refunded to the customer.
(2) If the consideration promised in a contract includes a variable amount the Company shall confirm the
best estimate of variable consideration at expected value or the most likely amount. However the transaction price
that includes the amount of variable consideration only to the extent that it is high probable that a significant
reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the
variable consideration is subsequently resolved.
(3) In the circumstance that the contract contains a significant financing component the Company shall
determine the transaction price based on the price that a customer would have paid for if the customer had paid
cash for obtaining control over those goods or services. The difference between the transaction price and the
amount of promised consideration is amortized under effective interest method over contractual period.
(4) For contracts containing two or more performance obligations the Company shall determine the
stand-alone selling price at contract inception of the distinct good underlying each performance obligation and
allocate the transaction price to each performance obligation on a relative stand-alone selling price basis.
3. Revenue recognition method
The company's main business activities are the R&D production and sales of control components and parts
177Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
of household appliances and automobiles which belong to the performance obligations at a certain point in time.The income from domestic sales of products shall be recognized after the delivery inspection and the receipt
certificate are obtained and the income from export of products shall be recognized after the export declaration
and the bill of lading are obtained. The sales revenue of metal scrap is recognized after weighing and picking up
the goods and obtaining the receipt certificate.Differences in accounting policies for revenue recognition due to different business models adopted by
similar businesses
24．Government grants
1. Government grants shall be recognized if and only if the following conditions are all met: (1) the Company
will comply with the conditions attaching to the grants; (2) the grants will be received. Monetary government grants
are measured at the amount received or receivable. Non-monetary government grants are measured at fair value and
can be measured at nominal amount in the circumstance that fair value can’t be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company construct or otherwise
acquire long-term assets under requirements of government. In the circumstances that there is no specific
government requirement the Company shall determine based on the primary condition to acquire the grants and
government grants related to assets are government grants whose primary condition is to construct or otherwise
acquire long-term assets. They offset carrying amount of relevant assets or recognized as deferred income. If
recognized as deferred income they are included in profit or loss on a systematic basis over the useful lives of the
relevant assets. Those measured at notional amount is directly included into profit or loss. For assets sold
transferred disposed or damaged within the useful lives balance of unamortized deferred income is transferred
into profit or loss of the year in which the disposal occurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. For
government grants that contain both parts related to assets and parts related to income in which those two parts
are blurred and thus collectively classified as government grants related to income. For government grants related
to income used for compensating the related future cost expenses or losses of the Company are recognized as
deferred income and are included in profit or loss or offset relevant cost during the period in which the relevant
cost expenses or losses are recognized; for government grants related to income used for compensating the
related cost expenses or losses incurred to the Company they are directly included in profit or loss or directly
offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into other income or offset
relevant cost based on business nature while those not related to the ordinary course of business shall be included
into non-operating revenue or expenditures.
5. Policy interest subvention
(1) In the circumstance that government appropriates interest subvention to lending bank who provides loans
for the Company with a policy subsidised interest rate borrowings are carried at the amount received with
relevant borrowings cost computed based on the principal and the policy subsidised interest rate.
(2) In the circumstance that government directly appropriates interest subvention to the Company the
subsidised interest shall offset relevant borrowing cost.
178Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
30．Deferred tax assets/Deferred tax liabilities
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between
the carrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base of
items not recognized as assets and liabilities but with their tax base being able to be determined according to tax
laws) and in accordance with the tax rate applicable to the period during which the assets are expected to be
recovered or the liabilities are expected to be settled.
2. A deferred tax asset is recognized to the extent of the amount of the taxable income which it is most likely to
obtain and which can be deducted from the deductible temporary difference. At the balance sheet date if there is any
exact evidence that it is probable that future taxable income will be available against which deductible temporary
differences can be utilized the deferred tax assets unrecognized in prior periods are recognized.
3. At the balance sheet date the carrying amount of deferred tax assets is reviewed. The carrying amount of a
deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable income will be available
to allow the benefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed to the extent that
it becomes probable that sufficient taxable income will be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or income through profit
or loss excluding those arising from the following circumstances: (1) business combination; and (2) the transactions
or items directly recognized in equity.
31. Leases
(1) Operating lease
The Company as lessee at the commencement date the Company recognizes a lease that has a lease term of
12 months or less as a short-term lease which shall not contain a purchase option; the Company recognizes a
lease as a lease of a low-value asset if the underlying asset is of low value when it is new. If the Company
subleases an asset or expects to sublease an asset the head lease does not qualify as a lease of a low-value asset.For all assets in short-term leases and leases of low-value assets lease payments are recognized as cost or profit or
loss with straight-line method/unit-of-production method over the lease term. Apart from the above-mentioned
short-term leases and leases of low-value assets with simplified approach the Company recognizes right-of-use
assets and lease liabilities at the commencement date.The Company as lessor at the commencement date lease receipts are recognized as lease income with
straight-line method/unit-of-production method over the lease term. Initial direct costs incurred shall be
capitalized amortized on the same basis as the recognition of lease income and included into profit or loss by
installments. Variable lease payments related to operating lease which are not included in the lease payment are
charged as profit or loss in the periods in which they are incurred.
(2) Finance lease
The Company as lessee at the commencement date the Company recognizes a lease that has a lease term of
12 months or less as a short-term lease which shall not contain a purchase option; the Company recognizes a
lease as a lease of a low-value asset if the underlying asset is of low value when it is new. If the Company
subleases an asset or expects to sublease an asset the head lease does not qualify as a lease of a low-value asset.For all assets in short-term leases and leases of low-value assets lease payments are recognized as cost or profit or
179Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
loss with straight-line method/unit-of-production method over the lease term. Apart from the above-mentioned
short-term leases and leases of low-value assets with simplified approach the Company recognizes right-of-use
assets and lease liabilities at the commencement date.The Company as lessor at the commencement date the Company recognizes the finance lease payment
receivable based on the net investment in the lease (sum of the present value of unguaranteed residual value and
lease receipts that are not received at the commencement date discounted by the interest rate implicit in the lease)
and derecognizes assets held under the finance lease. The Company calculates and recognizes interest income
using the interest rate implicit in the lease over the lease term. Variable lease payments not included in the
measurement of the net investment in the lease are charged as profit or loss in the periods in which they are
incurred.
32. Share repurchase
When the Company repurchases its shares for the purpose of reducing its registered capital or rewarding its
employees. The amount actually paid shall be treated as treasury stock and registered for future reference at the
same time. If the purchased shares are to be retired the difference between the total book value of shares retired
and the cash distributed to existing shareholders for repurchase is to reduce capital reserve or retained earnings
when the capital reserve is not enough to reduce. If the Company repurchases vested equity instruments in
equity-settled share-based payment transactions with employees cost of treasury shares granted to employees and
capital reserve (other capital reserve) accumulated within the vesting period are to be written off on the payment
made to employees with a corresponding adjustment in capital reserve (share premium).
33. Other important accounting policies and accounting estimates
Segment reporting
Operating segments are determined based on the structure of the Company’s internal organization
management requirements and internal reporting system. An operating segment is a component of the Company:
1. That engages in business activities from which it may earn revenues and incur expenses;
2. Whose financial performance is regularly reviewed by the Management to make decisions about resource
to be allocated to the segment and to assess its performance;
3. For which accounting information regarding financial position financial performance and cash flows is
available through analysis.
34. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
1. New lease criteria
180Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
(1) The company will implement the revised accounting standards for Business Enterprises No. 21 - leasing
(hereinafter referred to as the new leasing standards) from January 1 2021 (hereinafter referred to as the first
implementation date).* For contracts existing before the first execution date the company chooses not to reevaluate whether they
are leases or include leases.* For the lease contract in which the company is the lessee the company adjusts the amount of retained
earnings at the beginning of the reporting period and other relevant items in the financial statements according to
the cumulative impact for adjusting from original standard to the new lease standard on the first implementation
date and does not adjust the information of the comparable period. The specific treatment is as follows:
For the financial lease before the first execution date the company shall measure the right of use assets and
lease liabilities respectively according to the original book value of the financial lease in assets and the financial
lease payable on the first execution date.For the operating lease before the first execution date the company shall measure the lease liability at the
present value discounted by the company's incremental loan interest rate on the first execution date according to
the remaining lease payment on the first execution date and measure the right to use asset according to the
amount equal to the lease liability and make necessary adjustments according to the prepaid rent.A. The main impact of the implementation of the new leasing standards on the company's financial
statements on January 1 2021 is as follows:
Balance Sheet
Items Effect of new lease criteria
Dec 312020 Jan 1 2021
adjustment
Fixed assets 3839408059.45 -119764340.05 3719643719.40
Right of use assets +202831869.22 202831869.22
Non-current liabilities due within
130553923.87+22719934.72153273858.59
one year
Lease liabilities +149779815.53 149779815.53
Long-term payables 90336083.27 -89432221.08 903862.19
B. Simplified treatment of operating leases before the first execution date
For lease contracts completed within 12 months after the first execution date the company adopts a
simplified method and does not recognize the right of use assets and lease liabilities; The above simplified
treatment has no significant impact on the company's financial statements.* For the operating lease contracts of low value assets existing before the first execution date the company
adopts a simplified method does not recognize the right of use assets and lease liabilities and carries out
accounting treatment in accordance with the new lease standards from the first execution date.* The lease contract with the company as the lessor shall be subject to accounting treatment in accordance
181Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
with the new lease standards from the first execution date.
2. Q&A on the implementation of accounting standards for business enterprises
In November 2021 the accounting department of the Ministry of Finance issued the fifth batch of questions
and answers on the implementation of accounting standards for business enterprises in 2021. According to the
article under normal circumstances the transportation activities before the control of the enterprise's goods or
services is transferred to the customer and in order to perform the customer's contract do not constitute a single
performance obligation and the relevant transportation costs should be regarded as the contract performance costs
amortized on the same basis as the recognition of the revenue of goods or services and included in the current
profit and loss The contract performance cost shall be carried forward and included in the title of "main business
cost" or "other business cost" when recognizing the revenue of goods or services and shall be listed in the item of
"operating cost" in the income statement.Due to the implementation of the question and answer on the implementation of accounting standards for
business enterprises (the fifth batch) the company retroactively corrected the presentation of sales freight and
miscellaneous expenses in 2020 and reclassified the item from "sales expenses" to "operating costs". The
adjustment impact of the accounting policy change on the financial statements of 2020 is shown in the table
below:
Items Income statement in 2020
Amount before Amounts affected Adjusted amount
adjustment
Consolidated income statement
Operating cost 8500391322.27 +237829716.09 8738221038.36
Selling expenses 602954759.17 -237829716.09 365125043.08
Parent Company Income statement
Operating cost 3383660538.43 +22580796.28 3406241334.71
Selling expenses 51140200.18 -22580796.28 28559403.90
（2）Changes in significant accounting estimates
□ Applicable √ Not applicable
（3）Since 2021 Adjustments to the relevant items of financial statements at the beginning of the year at
the first implementation of new lease standards .□ Applicable √ Not applicable
Whether it is necessary to adjust the balance sheet accounts at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Items December 312020 January 12021 Adjustments
182Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Current asset：
Cash and Bank Balances 3489687568.14 3489687568.14
Settlement funds
Loans to other banks
Held-for-trading financial assets 752224861.78 752224861.78
Derivative financial assets 58330486.53 58330486.53
Notes receivable 2323934781.53 2323934781.53
Accounts receivable 2355613299.57 2355613299.57
Receivable financing
Advances paid 69404326.45 69404326.45
Premium receivable
Reinsurance accounts receivable
Reinsurance reserves receivable
Other receivables 76935495.05 76935495.05
Including: Interest receivable
Dividends receivable
Repurchasing of financial assets
Inventories 2307761706.46 2307761706.46
Contract assets
Assets held for sales
Non-current assets due within one
year
Other current assets 150460488.01 150460488.01
Total current assets 11584353013.52 11584353013.52
Non-current assets:
Loans and advances paid
Debt investments
Other debt investments
Long-term receivable 2074750.00 2074750.00
Long-term equity investments 15219616.68 15219616.68
Other equity instrument investments
Other non-current financial assets
Investment property 10067588.96 10067588.96
Fixed assets 3839408059.45 3719643719.40 -119764340.05
183Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Construction in progress 628730529.07 628730529.07
Productive biological assets
Oil & gas assets
Right-of-use assets 202831869.22 202831869.22
Intangible assets 507693672.93 507693672.93
Development expenditures
Goodwill 31959091.60 31959091.60
Long-term prepayments 23706401.61 23706401.61
Deferred tax assets 137808879.28 137808879.28
Other non-current assets 251509127.08 251509127.08
Total non-current assets 5448177716.66 5531245245.83 83067529.17
Total assets 17032530730.18 17115598259.35 83067529.17
Current liabilities:
Short-term borrowings 383088296.60 383088296.60
Central bank loans
Loans from other banks
Held-for-trading financial liabilities
Derivative financial liabilities 7939957.91 7939957.91
Notes payable 1238574463.73 1238574463.73
Accounts payable 2279661755.97 2279661755.97
Advances received 10000000.00 10000000.00
Contract liabilities 42581607.67 42581607.67
Selling of repurchased financial assets
Absorbing deposit and interbank
deposit
Deposit for agency security
transaction
Deposit for agency security
underwriting
Employee benefits payable 289305913.99 289305913.99
Taxes and rates payable 75008142.06 75008142.06
Other payables 270888400.58 270888400.58
Including: Interest Payable
Dividends Payable
Handling fee and commission
184Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
payable
Reinsurance accounts payable
Liabilities classified as held for sale
Non-current liabilities due within one
130553923.87153273858.5922719934.72
year
Other current liabilities
Total current liabilities 4727602462.38 4750322397.10 22719934.72
Non-current liabilities:
Insurance policy reserve
Long-term borrowings 1707918994.87 1707918994.87
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 149779815.53 149779815.53
Long-term payables 90336083.27 903862.19 -89432221.08
Long-term employee benefits
payable
Provisions 2638000.00 2638000.00
Deferred income 140105336.43 140105336.43
Deferred tax liabilities 130778184.48 130778184.48
Other non-current liabilities 80398897.72 80398897.72
Total non-current liabilities 2152175496.77 2212523091.22 60347594.45
Total liabilities 6879777959.15 6962845488.32 83067529.17
Equity:
Share capital 3591601468.00 3591601468.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 315417434.22 315417434.22
Less: Treasury shares 281483741.34 281483741.34
Other comprehensive income -89624962.61 -89624962.61
Special reserve
Surplus reserve 637967613.47 637967613.47
General risk reserve
185Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Undistributed profit 5890916707.83 5890916707.83
Total equity attributable to the parent
10064794519.5710064794519.57
Company
Non-controlling interest 87958251.46 87958251.46
Total equity 10152752771.03 10152752771.03
Total liabilities & equity 17032530730.18 17115598259.35 83067529.17
Adjustment statement
Parent Company Balance Sheet
Items December 312020 January 12021 Adjustment
Current assets:
Cash and bank balances 1848930095.07 1848930095.07
Held-for-trading financial assets 323000000.00 323000000.00
Derivative financial assets 8856174.56 8856174.56
Notes receivable 773393944.74 773393944.74
Accounts receivable 729906676.91 729906676.91
Receivables financing
Advances paid 6803910.27 6803910.27
Other receivables 348897078.11 348897078.11
Including: Interest Receivable
Dividends Receivable
Inventories 553388303.73 553388303.73
Contract assets
Assets classified as held for sale
Non-current assets due within one
year
Other current assets 46083837.26 46083837.26
Total current assets 4639260020.65 4639260020.65
Non-current assets:
Debt investments
Other debt investments
Long-term receivable
Long-term equity investments 4528546229.37 4528546229.37
Other equity instrument investments
Other non-current financial assets
Investment property
186Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Fixed assets 1565826802.57 1565826802.57
Construction in progress 71862243.72 71862243.72
Productive biological assets
Oil & gas assets
Right-of-use assets
Intangible assets 156335743.52 156335743.52
Development expenditures
Goodwill
Long-term prepayments
Deferred tax assets 7336345.87 7336345.87
Other non-current assets 36566524.79 36566524.79
Total non-current assets 6366473889.84 6366473889.84
Total assets 11005733910.49 11005733910.49
Current liabilities:
Short-term borrowings 20012527.78 20012527.78
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 381631833.96 381631833.96
Accounts payable 1566994944.07 1566994944.07
Advances received
Contract liabilities 1155759.09 1155759.09
Employee benefits payable 93150785.46 93150785.46
Taxes and rates payable 10811341.50 10811341.50
Other payables 1355955388.81 1355955388.81
Including: interest payable
Dividends Payable
Liabilities classified as held for sale
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 3429712580.67 3429712580.67
Non-current liabilities:
Long-term borrowings 1381428522.65 1381428522.65
Bonds payable
187Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits payable
Provisions 2638000.00 2638000.00
Deferred income 35908399.54 35908399.54
Deferred tax liabilities 48177657.42 48177657.42
Other non-current liabilities
Total non-current liabilities 1468152579.61 1468152579.61
Total liabilities 4897865160.28 4897865160.28
Equity:
Share capital 3591601468.00 3591601468.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 1198721706.52 1198721706.52
Less: treasury shares 281483741.34 281483741.34
Other comprehensive income
Special reserve
Surplus reserve 509280441.15 509280441.15
Undistributed profit 1089748875.88 1089748875.88
Total equity 6107868750.21 6107868750.21
Total liabilities & equity 11005733910.49 11005733910.49
Adjustment statement
（4）Since 2021 the statements of first implementation of new lease standards to trace and adjust previous
comparative data.√ Applicable □ Not applicable
A. The main impact for implementation of the new lease standards on the company's financial statements on
January 1 2021 is shown as following:
Items Balance Sheet
Dec 31 2021 New lease standards effect Jan 1 2021
Fixed assets 3839408059.45 -119764340.05 3719643719.40
Right-of-use assets +202831869.22 202831869.22
188Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Non-current 130553923.87 +22719934.72 153273858.59
liabilities due
within one year
Lease liabilities +149779815.53 149779815.53
Long-term payables 90336083.27 -89432221.08 903862.19
B. Simplified treatment of operating leases before the first execution date
For lease contracts completed within 12 months after the first execution date the company adopts a
simplified method and does not recognize the right of use assets and lease liabilities. The above simplified
treatment has no significant impact on the company's financial statements.* For the operating lease contracts of low value assets existing before the first execution date the company
adopts a simplified method does not recognize the right of use assets and lease liabilities and carries out new
lease standards from the first execution date.* The lease contract with the company as the lessor shall be subject to new lease standards from the first
execution date.Ⅵ. Taxes
1. Major categories of taxes and tax rates
Tax Type Taxation basis Tax rate
The output tax calculated based on the revenue from sales of goods or rendering of
VAT services in accordance with the tax law net of the input tax that is allowed to be deducted 13%9%6%
in the current period
Urban maintenance and
The sum of turnover tax payable and value-added tax exemption 5%7%
construction tax
Enterprise income tax Taxable income 15%25%
Different enterprise income tax rates applicable to different taxpayers:
Taxpayers Income tax rate
Zhejiang Sanhua Intelligent Controls Co. Ltd 15%
Zhejiang Sanhua Climate and Appliance Controls Group Co. Ltd 15%
Sanhua (Hangzhou) Micro Channel Heat Exchanger Co. Ltd 15%
Zhejiang Sanhua Automotive Components Co. Ltd. 15%
Shaoxing Sanhua New Energy Automotive Components Co. Ltd- 15%
Wuhu Sanhua Auto-control Components Co. Ltd and other subsidiaries 15%
Domestic taxpayers other than the above-mentioned 25%
189Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
2. Tax preferential policies
Being categorized as high-tech enterprises the income tax of the Company and several subsidiaries for 2020
are temporarily calculated at a preferential tax rate of 15% and the final income tax settlement shall prevail.Several subsidiaries are welfare enterprises and can enjoy the preferential policy of "VAT refund". The
exceeding portion over the 3% VAT payable of the certified software products enjoy the immediate refund policy.Export goods enjoy the VAT exemption and refund policy.
3. Others
The overseas subsidiary shall be subject to the tax regulations of its host country.
190Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Ⅶ. Notes to Items in the Consolidated Financial Statements
1. Cash and bank balances
Unit: RMB
Items Closing balance Opening balance
Cash on hand 214611.31 232265.51
Cash in bank 6602049617.99 3411034773.03
Other cash and bank balances 105457631.83 78420529.60
Total 6707721861.13 3489687568.14
Including: Deposited overseas 294941970.98 370754548.72
The total amount of the cash and bank balances that
81437216.0689543529.60
are limited by mortgage pledge or freeze
Other remarks:
As of December 31 2021 bank deposits containing large deposit certificates with fixed interest rates
amounted to 3936.2824 million yuan.
2. Held-for-trading financial assets
Unit: RMB
Items Closing balance Opening balance
Financial assets at fair value through
109383374.74752224861.78
profit or loss
Including:
Bank financial products 109383374.74 752224861.78
Including:
Total 109383374.74 752224861.78
Other remarks:
3. Derivative Financial Assets
Unit: RMB
Items Closing balance Opening balance
Foreign exchange tool 50103815.20 49339961.11
Futures tools 4536549.83 8990525.42
Total 54640365.03 58330486.53
Other remarks:
191Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
4. Notes receivable
（1）Categories of notes receivable
Unit: RMB
Items Closing balance Opening balance
Bank acceptance 2131097187.89 2190368328.70
Trade acceptance 13095844.43 133566452.83
Total 2144193032.32 2323934781.53
Unit: RMB
Closing balance Opening balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Amount Proportio Amount Provi
Categories Prov Carrying
ision n sion Carrying amount
Proport amount
Amount Amount prop prop
ion
ortio ortio
n n
Including:
Notes
receivable
with
provision
214488100.000.03214419323309647029813.0.30
for bad 689254.97 100.00% 2323934781.53
2287.29%%032.32594.8330%
debt made
on a
collective
basis
Including:
Bank 213109 99.36 2131097 2190368
93.97%2190368328.70
acceptance 7187.89 % 187.89 328.70
Trade 137850 5.00 13095844 14059626 7029813. 5.00
0.64%689254.976.03%133566452.83
acceptance 99.40 % .43 6.13 30 %
192Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
214488100.000.03214419323309647029813.0.30
Total 689254.97 100.00% 2323934781.53
2287.29%%032.32594.8330%
Provision for bad debt made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Provision proportion (%)
Bank acceptance portfolio 2131097187.89
Trade acceptance portfolio 13785099.40 689254.97 5.00%
Total 2144882287.29 689254.97 --
If the provision for bad debt of notes receivable is in accordance with the general expected credit loss model
please refer to the disclosure of the bad debt provision for other receivables:
√ Applicable □ Not Applicable
Provision for bad debt Subtotal
Phase I Phase II Phase III
12? month expected credit losses Lifetime expected credit losses Lifetime expected credit losses (credit
(credit not impaired) impaired)
Balance on January 1
7029813.307029813.30
2021
The balance as of —— —— —— ——
January 1 2021 is in
the current period
--Transferred to phase
II
--Transferred to phase
III
--Reversed to phase II
--Reversed to phase I
Provision made in the
-6340558.33-6340558.33
current period
Provision recovered in
current period
193Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Provision reversed in
current period
Provision written off in
current period
Other changes
Balance on December 689254.97 689254.97
312021
（2）Provision for bad debt accrued recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of this period
Opening Closing
Categories Recovered or
balance Accrual Write off Others balance
reversed
Trade acceptance 7029813.30 -6340558.33 689254.97
Total 7029813.30 -6340558.33 689254.97
Including significant provision for bad debt recovered or reversed amount:
□ Applicable √ Not Applicable
（3）Pledged notes at the balance sheet date
Unit: RMB
Items Closing balance of pledged notes
Bank acceptance 872096928.77
Total 872096928.77
（4）Endorsed or discounted but undue notes at the balance sheet date
Unit: RMB
Items Closing balance derecognized Closing balance not yet derecognized
Bank acceptance 81200963.56
Total 81200963.56
5. Accounts receivable
（1）Disclosure of accounts receivable by categories
Unit: RMB
194Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Closing balance Opening balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Categor
Amount Propor Amount Accru Carrying ies Amount Propor Amount Accru
Carrying
tion ed amount tion ed amount
propor propor
tion tion
Receiv
ables
with
provisi
on 1066059. 1066059 100.00 100.00
0.03%0.0057335.280.00%57335.280.00
made 26 .26 % %
on an
individ
ual
basis
Includi
ng:
Receiv
ables
with
provisi
370262099.97186328035162922481072100.0012545872355613
on 5.03% 5.06%
878.17%09.78868.39027.67%28.10299.57
made
on a
collecti
ve basis
Includi
ng:
3703686100.00187394035162922481129100.0012551602355613
Total 5.06% 5.06%
937.43%69.04868.39362.95%63.38299.57
Provision made on an individual basis:
Unit: RMB
Closing balance
Debtors
Book balance Provision for bad debts Accrued proportion Reasons
Beijing Baowo Automobile Co. Ltd 560808.07 560808.07 100.00%
Brilliance Automobile Group Holding 488550.18 488550.18 100.00%
195Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Co. Ltd
Brilliance Renault Jinbei Automobile
16701.0116701.01100.00%
Co. Ltd
Total 1066059.26 1066059.26 -- --
Provision for bad debt accrued made on account receivable portfolio: Provision for account receivable bad debt
adopting aging portfolio
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Accrued proportion
Within 1 year 3689604291.47 184478957.74 5.00%
1 to 2 years 11154224.17 1115422.40 10.00%
2 to 3 years 987758.04 296327.40 30.00%
Over 3 years 874604.49 437302.24 50.00%
Total 3702620878.17 186328009.78 --
If the provision for bad debt of accounts receivable is in accordance with the general expected credit loss
model please refer to the disclosure of bad debt provision for other receivables:
√Applicable □ Not Applicable
Provision for bad debt Phase I Phase II Phase III Subtotal
12? month expected Lifetime expected credit losses Lifetime expected credit losses (credit
credit losses (credit not impaired) impaired)
Balance on January 1 2021 125458728.10 57335.28 125516063.38
The balance as of January 1 2021 —— —— —— ——
is in the current period
--Transferred to phase II
--Transferred to phase III
--Reversed to phase II
--Reversed to phase I
Provision made in the current 61050798.14 1066059.26 62116857.40
period
Provision recovered in current 57335.28 57335.28
period
Provision reversed in current period
Provision written off in current 301150.24 0.00 301150.24
period
Other changes 119633.78 119633.78
Balance on December 31 2021 186328009.78 1066059.26 187394069.04
Disclosure by aging
Unit: RMB
196Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Aging Book balance
Within 1 year 3689604291.47
1 to 2 years 11659475.36
2 to 3 years 1548566.11
Over 3 years 874604.49
Total 3703686937.43
（2）Provision for bad debt accrued recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Categories Opening balance Recovered Closing balance
Accrued Write off Others
or reversed
Receivables with
provision made on an 57335.28 1066059.26 57335.28 1066059.26
individual basis
Receivables with
provision made on a 125458728.10 61050798.14 301150.24 119633.78 186328009.78
collective basis
Total 125516063.38 62116857.40 57335.28 301150.24 119633.78 187394069.04
（3）Details about accounts receivable actually written off in the current period
In current period the Company write-off a total of small sporadic accounts 301150.24 yuan.
（4）Other remarks
1. Closing balance of top 5 debtors totaled 1661477672.44 yuan accounting for 44.86% of the total closing
balance of accounts receivable and provision for bad debts made thereon totaled 83073883.62 yuan.
2. Some of the company's accounts receivable are collected by supply chain financial vouchers such as
"Meiyi order of Midea Group" "Gree financial order of Gree Electric Appliance" and "TCL gold order". The
company has not terminated the recognition of accounts receivable before the actual arrival of funds. At the same
time the company endorsed and paid part of the supply chain financial credentials to the upstream suppliers.Before the expiration of the supply chain financial credentials the company did not terminate the recognition of
accounts payable.
3. As of December 31 2021 the company had 341.0447 million yuan of supply chain financial vouchers in
hand 30.5218 million yuan of supply chain financial vouchers that had been endorsed and paid but not expired
and 49.6858 million yuan of supply chain financial vouchers that had been used for factoring financing but not
expired.
197Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
6. Advances paid
（1）Advances paid by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Percentage Amount Percentage
Within 1 year (including 1 year) 90174287.14 96.05% 61348884.20 88.39%
1 to 2 years 2441003.70 2.60% 6712609.39 9.68%
2 to 3 years 649786.02 0.69% 64117.70 0.09%
Over 3 years 619168.16 0.66% 1278715.16 1.84%
Total 93884245.02 -- 69404326.45 --
（2）Top 5 debtors with the largest advances paid balances
Closing balance of top 5 debtors totaled 15945327.84 yuan accounting for 16.98% of the total closing balance
of advances paid.
7. Other receivables
Unit: RMB
Items Closing balance Opening balance
Other receivables 121135343.85 76935495.05
Total 121135343.85 76935495.05
（1）Other receivables
1）Other receivables categorized by nature
Unit: RMB
Items Closing balance Opening balance
Tax refund receivable 61621187.53 36628075.87
Guarantee deposits 38950699.99 30801053.14
Others 23872426.88 11700014.42
Total 124444314.40 79129143.43
2）Provision of bad debt
Unit: RMB
198Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Phase I Phase II Phase III
12? month
Provision for bad debt Lifetime expected credit Lifetime expected credit Subtotal
expected credit
losses (credit not impaired) losses (credit impaired)
losses
Balance on January 1
856410.481337237.902193648.38
2021
The balance as of
January 1 2021 is in —— —— —— ——
the current period
Provision made in the
-286910.88286910.88
current period
Provision recovered in
891664.46223657.711115322.17
current period
Balance on December
1461164.061847806.493308970.55
312021
Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
Disclose by aging
Unit: RMB
Aging Closing balance
Within 1 year (including 1 year) 90844468.36
1 to 2 years 10520630.08
2 to 3 years 2257005.77
Over 3 years 20822210.19
Total 124444314.40
3）Provision for bad debt accrued recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Opening
Categories Recovered or Write Closing balance
balance Accrued Others
reversed off
Receivables with provision made on a
2193648.381115322.173308970.55
collective basis
Total 2193648.38 1115322.17 3308970.55
4）Details of the top 5 debtors with largest balances
Unit: RMB
199Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Proportion to the Provision for bad
Nature of
Items Closing balance Ages total balance of debt at the end of
receivables
other receivables the period
Tax refund
Tax refund 61621187.53 Within 1 year 49.52%
receivables
Finance Bureau of
Performance bond 6971285.00 2 to 4 years 5.60%
Xinchang County
Shaoxing Binhai Performance bond
New City for land and
5410000.00 3 to 5 years 4.35%
Management project
Committee construction
US Customs Customs deposit 4782412.57 Within 1 year 3.84%
Wuhu Yijiang Deposit of
District Finance construction 3751000.00 3 to 8 years 3.01%
Bureau projects
Total -- 82535885.10 -- 66.32%
5）Other receivables related to Government grants
Unit: RMB
Estimated receipt time
Items Government grant Closing balance Ages
amount and basis
Expected to be fully
received from January
Local finance and VAT refund of civil Within 1
2991672.38 to April 2022 based on
taxation departments welfare enterprises year(including 1 year)
the tax refund
application form.
8. Inventories
Whether the Company needs to comply with the disclosure requirements of the real estate industry
No
（1）Categories of inventories
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Items decline in decline in
Book balance Carrying amount Book balance Carrying amount
value of value of
inventories or inventories or
200Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
provision for provision for
impairment of impairment of
contract contract
performance performance
costs costs
Raw materials 988227079.33 33309247.33 954917832.00 530578235.34 38591465.21 491986770.13
Work-in-progress 475907400.34 1451381.52 474456018.82 377607984.60 661948.94 376946035.66
Finished goods 2231635847.92 45599140.84 2186036707.08 1488998382.81 55323878.13 1433674504.68
Others 22443251.57 0.00 22443251.57 5154395.99 0.00 5154395.99
Total 3718213579.16 80359769.69 3637853809.47 2402338998.74 94577292.28 2307761706.46
（2）Provision for decline in value of inventories and Provision for impairment of contract performance
costs
Unit: RMB
Increase in current period Decrease in current period
Items Opening balance Reversal or write Closing balance
Accrued Others Others
off
Raw materials 38591465.21 9799422.31 -1640749.46 13440890.73 0.00 33309247.33
Work-in-progress 661948.94 1364721.51 -56525.88 518763.05 0.00 1451381.52
Finished goods 55323878.13 40661086.31 -862310.74 49523512.86 0.00 45599140.84
Total 94577292.28 51825230.13 -2559586.08 63483166.64 0.00 80359769.69
The determination of the net realizable value of the excess & obsolete inventories of metal materials at the
end of the period is the scrap metal recovery price. The determination of the net realizable value of the excess &
obsolete inventories of electronic components is RMB 0.
9. Other current assets
Unit: RMB
Items Closing balance Opening balance
Deductible input tax 154807049.35 100377659.11
Prepaid Enterprise income tax 30197003.59 49911203.33
Others 981643.12 171625.57
Total 185985696.06 150460488.01
Other remarks:
201Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
10. Long-term receivable
（1）Long-term receivable
Unit: RMB
Closing balance Opening balance
Range of
Items Book Provision for Carrying Book Provision for Carrying
discount rate
balance bad debt amount balance bad debt amount
Employee home
3608561.003608561.002074750.002074750.00
loan
Total 3608561.00 3608561.00 2074750.00 2074750.00 --
Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
11. Long-term equity investments
Unit: RMB
Increase and decrease in current period
Investme Ending
Adjustme
Opening nt profit Ending balance
nt of Declared Provision
balance Increase Reduce and loss Other balance of
Investee other cash for
(book investmen investmen recognize changes Other (book impairme
comprehe dividends impairme
value) t t d under in equity value) nt
nsive or profits nt
equity provision
income
method
I. Joint venture
II. Affiliates
Guochuan
g Energy
Internet
Innovatio 1525252 1540339
15087.23
n Center .76 .99
(Guangdo
ng) Co.Ltd.Chongqin
g Tainuo
9396904576223015000001365913
Machiner.73.65.005.38
y Co.Ltd.Nanchang 1517138 -3150.25 1513988
202Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Sanhua .95 .70
Jinlifeng
Machiner
y Co.Ltd.Ningbo
Jinlifeng
1062209449942.21512151
Machiner.183.41
y Co.Ltd.Qingdao
Sanhua
Jinlifeng 439804.2 439804.2
Machiner 6 6
y Co.Ltd.Zhongsha
n Xuanyi
Pipe 1718111 463034.6 2181145
Manufact .06 4 .70
uring Co.Ltd.Xinchang
zhejiang
energy
sanhua 1950000 -115634. 1834365
comprehe .00 93 .07
nsive
energy
co. LTD
15219611950000701131315000002268093
Subtotal
6.68.00.83.000.51
15219611950000701131315000002268093
Total
6.68.00.83.000.51
12. Investment property
（1）Investment property measured by cost method
√ Applicable □ Not Applicable
Unit: RMB
203Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Land use right and
Buildings and Construction in
Items Overseas land Total
structures progress
ownership
Ⅰ. Original Carrying
amount
1.Opening balance 12643427.54 3539025.00 16182452.54
2.Increase in current
-1128896.59-355137.30-1484033.89
period
（1）Acquisition 0.00 0.00 0.00
（2）Transferred in
from inventory\fixed
assets\ construction in
progress
（3）Acquisition
（4）Converted
difference in Foreign -1128896.59 -355137.30 -1484033.89
Currency Statements
3.Decrease in current
0.000.00
period
（1）Disposal
（2）Other transfer out 0.00
4.Closing balance 11514530.95 3183887.70 14698418.65
Ⅱ. Accumulated
depreciation and
amortization
1.Opening balance 6114863.58 0.00 6114863.58
2. Increase in current
52251.450.0052251.45
period
（1）Accrual or
703648.660.00703648.66
amortization
（2）Converted
difference in Foreign -651397.21 0.00 -651397.21
Currency Statements
3.Decrease in current
0.000.000.00
period
（1）Disposal
（2）Other transfer out 0.00
204Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
4.Closing balance 6167115.03 0.00 6167115.03
Ⅲ. Provision for
impairment
1.Opening balance
2. Increase in current
period
（1）Accrual
3.Decrease in current
period
（1）Disposal
（2）Other transfer out
4.Closing balance
Ⅳ. Carrying amount
1.Closing balance 5347415.92 3183887.70 8531303.62
2.Opening balance 6528563.96 3539025.00 10067588.96
（2）Investment property measured by fair value measurement model
□Applicable √ Not Applicable
13. Fixed assets
Unit: RMB
Items Closing balance Opening balance
Fixed assets 4232706801.07 3719643719.40
Total 4232706801.07 3719643719.40
（1）Fixed assets
Unit: RMB
Measurement
Buildings and Machinery and Transportation Office and other
Items analysis Total
structures equipment vehicles equipment
equipment
Ⅰ. Original book
value:
205Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
1.Opening
2186731560.593639249906.77115451585.4240354179.00236938987.106218726218.88
balance
2. Increase in
85753185.45830991718.703415898.382393404.6749660651.88972214859.08
current period
（1）Acquisition 5268594.25 61795173.93 4351746.29 2654513.93 53634771.82 127704800.22
（2）Transferred
in from
89532110.52805015560.80108618.81217861.35894874151.48
construction in
progress
（3）Business
6665427.65145112.356810540.00
combination
（4）Transferred
in from
-9047519.32-42484443.68-1080960.26-369728.07-4191981.29-57174632.62
investment
property
3. Decrease in
11544357.2786541790.504779404.786722812.5833463547.80143051912.93
current period
（1）Disposal
11544357.2786541790.504779404.786722812.5833463547.80143051912.93
or scrap
（2）Other
decrease
4.Closing balance 2260940388.77 4383699834.97 114088079.02 36024771.09 253136091.18 7047889165.03
Ⅱ. Accumulated
depreciation
1.Opening
582526293.441678476511.9040099350.8230404077.31163881935.332495388168.80
balance
2. Increase in
79963917.25307126433.7210580075.133757831.7317000675.57418428933.40
current period
（1）Accrual 94480392.73 328163242.06 10758603.61 3969356.54 19570255.28 456941850.22
(2)Transferred in
from investment 133228.77 4595.22 137823.99
property
(3) Converted
difference in
-14516475.48-21170037.11-183123.70-211524.81-2569579.71-38650740.81
Foreign Currency
Statements
3. Decrease in
1533210.8667738378.044534598.255993658.5230960277.68110760123.35
current period
（1）Disposal or 1533210.86 67738378.04 4534598.25 5993658.52 30960277.68 110760123.35
206Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
scrap
（2) Otherdecrease
4.Closing balance 660956999.83 1917864567.58 46144827.70 28168250.52 149922333.22 2803056978.85
Ⅲ. Provision for
impairment
1.Opening
3694330.683694330.68
balance
2. Increase in
9002634.87426713.619429348.48
current period
（1）Accrual 9002634.87 426713.61 9429348.48
3. Decrease in
998294.05998294.05
current period
（1）Disposal or
998294.05998294.05
scrap
4.Closing
11698671.50426713.6112125385.11
balance
Ⅳ. Carrying
amount
1.Closing
1599983388.942454136595.8967943251.327856520.57102787044.354232706801.07
balance
2.Opening
1604205267.151957079064.1975352234.609950101.6973057051.773719643719.40
balance
（2）Fixed assets with certificate of titles being unsettled
Unit: RMB
Reasons for failure to complete the
Items Book value
certificate of title
New assets the certificate of title to be
Shaoxing new energy plant (phase I and
234609170.55 processed uniformly after the overall
phase II)
completion
New assets the certificate of title to be
13# factory in Meizhu North district 72817599.71 processed uniformly after the overall
completion
14# factory in Meizhu North district 23395496.97 New assets the certificate of title to be
207Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
processed uniformly after the overall
completion
New assets the certificate of title to be
15# factory in Meizhu North district 57378046.45 processed uniformly after the overall
completion
New assets the certificate of title to be
Meizhu North District finished product
20359267.46 processed uniformly after the overall
warehouse
completion
New assets the certificate of title to be
Meizhu North District class A warehouse 1802339.34 processed uniformly after the overall
completion
Subtotal 410361920.48
14. Construction in progress
Unit: RMB
Items Closing balance Opening balance
Construction in progress 1343528875.40 628730529.07
Total 1343528875.40 628730529.07
（1）Details of construction in progress
Unit: RMB
Closing balance Opening balance
Items Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Annual
production of 65
million sets of
commercial
refrigeration and
284815371.33284815371.3325812948.2525812948.25
air conditioning
intelligent control
components
construction
project
Annual
production of 7.3
million sets of 1406087.14 1406087.14 145885533.67 145885533.67
new energy
vehicle thermal
208Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
management
system
components
project
Annual
production of 11.5
million sets of 78290263.60 78290263.60
new energy auto
parts project
Annual
production of 1.5
million sets of
new energy
181228255.83181228255.8388939186.1888939186.18
thermal
management
components
project
Annual
production of 1
million sets of
new energy
3772038.193772038.19
vehicle
air-conditioning
thermal sensors
project
Annual
production of 4
million sets of
new energy
vehicles 34615615.96 34615615.96
technical
transformation
project of heat
pump components
Annual
production of 3
million sets of
plate heat
exchanger 7569035.77 7569035.77
technical
transformation
project and 2
million sets of
209Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
EXV electronic
expansion valve
components
technical
transformation
project
Annual output of 3
million sets
thermal
management parts
118637568.31118637568.31
of new energy
vehicles technical
transformation
project
Annual output of
11 million sets of
new energy
vehicles high 93731401.89 93731401.89
efficiency heat
exchanger
assembly project
Annual output of
50.5 million sets
of high efficiency
and energy saving
refrigeration and 6939814.05 6939814.05 11841050.00 11841050.00
air conditioning
control
components
project
Vietnam industrial
92246267.7092246267.7080569043.2480569043.24
plant project
Mexico industrial
53528222.7953528222.79
plant project
Others 468811234.63 468811234.63 193620465.94 193620465.94
Total 1343528875.40 1343528875.40 628730529.07 628730529.07
（2）Changes of significant construction in progress in current period
Items Budget Opening Increase Transferr Other Closing Accumul Completi Accumul Includin Capitaliz Fund
210Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
balance d in ed amounts balance ated on ated g: ation rate source
current to fixed decrease investme percenta amount capitaliz for
period d in nt to assets in ge
of ed interest
current budget
the (%)
capitaliz interest in
period (%) ed in current
current
interest current period
period
period
Annual
productio
n of 65
million
sets of
commerci
al
refrigerati 1780.55
258129 300330 346938 663436 284815 Raised
on and air million 19.63%
48.25 604.68 16.80 4.80 371.33 funds
conditioni yuan
ng
intelligent
control
componen
ts
constructi
on project
Annual
productio
n of 7.3
million
sets of
new
468.60
energy 145885 703529 214832 140608 Raised
million 87.66%
vehicle 533.67 51.71 398.24 7.14 funds
yuan
thermal
managem
ent
system
componen
ts project
Annual
productio 528.80
782902 770326 155322 Raised
n of 11.5 million 0.00 92.19%
63.60 12.41 876.01 funds
million yuan
sets of
211Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
new
energy
auto parts
project
Annual
productio
n of 1.5
million
sets of
500.00
new 889391 297607 205318 181228 self-raise
million 77.36%
energy 86.18 966.13 896.48 255.83 d funds
yuan
thermal
managem
ent
componen
ts project
Annual
productio
n of 1
million
sets of
new 44.7860
377203 377203 self-raise
energy million 0.00 0.00 45.81%
8.19 8.19 d funds
vehicle yuan
air-conditi
oning
thermal
sensors
project
Annual
productio
n of 4
million
sets of
new 161.254
energy 5 118084 834691 346156 self-raise
0.0073.23%
vehicles million 776.40 60.44 15.96 d funds
technical yuan
transform
ation
project of
heat pump
componen
212Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
ts
Annual
productio
n of 3
million
sets of
plate heat
exchanger
technical
transform
ation
project
195.50
and 2 264721 189031 756903 self-raise
million 0.00 13.54%
million 88.45 52.68 5.77 d funds
yuan
sets of
EXV
electronic
expansion
valve
componen
ts
technical
transform
ation
project
Annual
output of
3 million
sets
thermal
managem 206.290
ent parts 4 139030 203933 118637 self-raise
0.0067.40%
of new million 886.89 18.58 568.31 d funds
energy yuan
vehicles
technical
transform
ation
project
Annual
760.00
output of 937314 937314 self-raise
million 0.00 0.00 18.41%
11 million 01.89 01.89 d funds
yuan
sets of
213Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
new
energy
vehicles
high
efficiency
heat
exchanger
assembly
project
Annual
output of
50.5
million
sets of
high
efficiency
785.57
and 118410 192135 241147 693981 Raised
million 9.63%
energy 50.00 51.33 87.28 4.05 funds
yuan
saving
refrigerati
on and air
conditioni
ng control
componen
ts project
Vietnam
28.00
industrial 805690 128783 120115 922462 self-raise
million 50.25%
plant 43.24 84.27 9.81 67.70 d funds
dollars
project
Mexico
39.7456
industrial 535282 535282 self-raise
million 0.00 0.00 21.12%
plant 22.79 22.79 d funds
dollars
project
435110120826762021663436874717
Total -- -- --
063.133546.95604.514.80640.77
15. Right of use assets
Unit: RMB
Items Houses and buildings Vehicle Total
Ⅰ. Original
Carrying amount
214Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
1.Opening balance 232086443.59 0.00 232086443.59
2.Increased in current
50843216.722858999.5453702216.26
period
（1) Rent 67889381.37 3021201.05 70910582.42
（2）Effect of Foreign Currency
-17046164.65-162201.51-17208366.16
Translation
3.Decreased in current period
4.Closing balance 282929660.31 2858999.54 285788659.85
Ⅱ.Accumulated 0.00
amortization
1.Opening balance 29254574.37 0.00 29254574.37
2.Increased in current
39387968.501822092.7241210061.22
period
（1）Accrual 43261725.68 1925466.71 45187192.39
（2) Converteddifference in Foreign Currency -3873757.18 -103373.99 -3977131.17
Statements
3. Decreased in current
period
（1）Disposal 0.00
4.Closing balance 68642542.87 1822092.72 70464635.59
Ⅲ. Provision
for impairment
1.Opening balance
2. Increased in current
period
（1）Accrual
3. Decreased in current
period
（1）Disposal
4.Closing balance
215Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Ⅳ. Carrying amount
1.Closing balance 214287117.44 1036906.82 215324024.26
2.Opening balance 202831869.22 0.00 202831869.22
Other remarks:
The difference between the beginning amount and the ending amount of the previous year (December 31 2020) is
detailed in Section VI (VI) of this financial report.
16. Intangible Assets
（1）Details of intangible assets
Unit: RMB
Non-patent Overseas land Application Intellectual
Items Land use right Patent right Total
technology ownership software property
Ⅰ. Original
Carrying
amount
1.Opening
552419787.6128945626.5133233505.1948784540.36663383459.67
balance
2.Increased in 157569960.91 33321857.60 5479869.82 12917600.00 209289288.33
current period
（1）
158053500.0035142755.567341120.840.00200537376.40
Acquisition
（2）
Internal
research and
development
（3）
Business 12917600.00 12917600.00
combination
（4）
Transferred in
from -483539.09 -1820897.96 -1861251.02 0.00 -4165688.07
investment
property
3.Decreased
in current
period
（1）
216Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Disposal
4.Closing
709989748.5262267484.1138713375.0161702140.36872672748.00
balance
Ⅱ.Accumulated
amortization
1.Opening
99284584.15314580.9625859551.9426368612.98151827330.03
balance
2.Increased in 13843452.25 112159.24 2166671.22 4558454.10 20680736.81
current period
（1）
13843452.25120771.503889768.914558454.1022412446.76
Accrual
（2) Converteddifference in
Foreign 0.00 -8612.26 -1723097.69 0.00 -1731709.95
Currency
Statements
3.
Decreased in 0.00 0.00 0.00 0.00 0.00
current period
（1）
Disposal
4.Closing
113128036.40426740.2028026223.1630927067.08172508066.84
balance
Ⅲ. Provision
for impairment
1.Opening
0.003862456.710.000.003862456.71
balance
2.
Increased in -88319.91 0.00 0.00 -88319.91
current period
（1）
Accrual
（2)Converted 0.00 -88319.91 0.00 0.00 -88319.91
difference in
217Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Foreign
Currency
Statements
3.
Decreased in
current period
（1）
Disposal
4.Closing
0.003774136.800.000.003774136.80
balance
Ⅳ. Carrying
amount
1.Closing
596861712.1258066607.1110687151.8530775073.28696390544.36
balance
2.Opening
453135203.4624768588.847373953.2522415927.38507693672.93
balance
17. Goodwill
（1）Original Carrying amount of goodwill
Unit: RMB
Investee or events Increased in current period Decreased in current period
resulting in Opening balance Due to business Closing balance
Disposal
goodwill combination
R-Squared
31959091.6031959091.60
Puckett Inc.Zhejiang Sanhua
plate Exchange
7591830.617591830.61
Technology Co.Ltd
Total 31959091.60 7591830.61 39550922.21
（2）Provision for goodwill impairment
Unit: RMB
Investee or Opening Increased in current period Decreased in current period Closing
events resulting balance Provision made … Disposal … balance
218Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
in goodwill
R-Squared
31959091.6031959091.60
Puckett Inc.Total 31959091.60 31959091.60
Related information of asset group or asset group portfolios which include goodwill
Composition of asset group or asset group portfolio The enterprises corresponding to this asset group portfolio include Zhejiang
Sanhua microchannel heat exchanger Co. Ltd. and its subsidiaries
(hereinafter referred to as microchannel asset group)
Book value of asset group or asset group portfolio 1446999852.04
Book value of goodwill allocated to this asset group 31959091.60
or asset group portfolio
Book value of asset group or asset group portfolio 1478958943.64
containing goodwill
Whether the asset group or combination of asset R-Squared Puckett Inc. was originally an independent enterprise. Since it was
groups is consistent with the asset group or acquired by the company the microchannel business has been internally
combination of asset groups determined on the integrated. At present it mainly undertakes the sales function of the
purchase date and goodwill impairment test in American market its procurement and production functions have been
previous years undertaken by the Mexican factory and its R&D and management functions
have been undertaken by the domestic company. The company assesses and
evaluates the microchannel business as a whole. R-Squared Puckett Inc. can
no longer be recognized as an independent asset group. The company
consolidated the microchannel business as a microchannel asset group.The microchannel asset group is consistent with the asset group determined
by the goodwill impairment test in previous years.Impairment test process the key parameters(Such as expected future cash flow when the present value of the
forecast period growth rate stable period growth rate profit margin discount rate forecast period) and recognition
method of goodwill impairment loss:
The recoverable amount of goodwill is calculated according to the present value of the estimated future cash
flow. Based on December 31 2021 the Company performed an impairment test on the value of the microchannel
asset group portfolio. The recoverable amount of the asset group portfolio is estimated by the discounted value of
the estimated future cash flow. Based on the analysis of the development stage of the industry and the
competitiveness of the company the cash flow from 2022 to 2025 is determined by the prediction data approved by
the management and the cash flow in subsequent years is estimated at zero growth rate. The pre tax discount rate
includes the time value of the current currency market and the specific risk interest rate of microchannel business
which is estimated at 13.13% (2020: 13.80%).Other key parameters used in the impairment test include: estimated selling price sales volume production
cost and other related expenses. The company determines the above key data based on historical experience and
market development forecast.According to the appraisal report (Kun yuan Ping Bao [2022] No. 100) issued by Kun yuan asset appraisal Co.Ltd. the recoverable amount of the asset group portfolio containing goodwill in the microchannel asset group is
1443.4064 million yuan which is lower than the book value of 1478.9589 million yuan. The goodwill impairment
loss of 31.9591 million yuan should be recognized in this period which belongs to the company.
219Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
19. Long-term prepayments
Unit: RMB
Increased in
Items Opening balance Amortization Other decreases Closing balance
current period
Rental housing
construction and
23706401.6110618211.596821663.0727502950.13
transformation
expenditure
Compensated use
fee for emission 0.00 3158390.00 631678.00 2526712.00
rights
Others 0.00 6626661.39 15495.45 6611165.94
Total 23706401.61 20403262.98 7468836.52 36640828.07
19. Deferred tax assets / deferred tax liabilities
（1）Deferred tax assets before offset
Unit: RMB
Closing balance Opening balance
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
difference assets difference assets
Provision for bad debt 122506455.16 23438581.33 78915609.30 15835440.18
Provision for inventory
46952738.868222942.5467642565.6011282463.93
write-down
Unrealized profit from
258273537.2732617712.51180209650.5417242885.11
internal transactions
Deductible losses 173493878.13 26364728.72 153097367.85 32871988.62
Deferred income:
155568312.2725652746.86140105328.4322782106.08
government grants
Provision for fixed assets
12125385.111818807.783694330.68554149.61
impairments
The share-paid
remuneration without
pre-tax deduction 59634274.87 9190479.70 70222810.23 11050883.17
calculated according to
the accounting standard
The expected additional
98930228.8015271454.24139395300.3022008772.76
deductible share-based
220Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
remuneration in the
future period calculated
according to the tax
standard
Difference between
accounting cost and tax
71233687.7410685053.16
cost of convertible
corporate bonds
Cost estimation 27565532.12 4134829.82
Floating loss of
300000.0045360.00
derivative instruments
Total 998718498.21 153262506.84 861148495.05 137808879.28
（2）Deferred tax liabilities before offset
Unit: RMB
Closing balance Opening balance
Items Taxable temporary Deferred tax Taxable temporary
Deferred tax liabilities
difference liabilities difference
Appreciation of assets
appraisal of the business
16689933.822503490.07
combinations not under
common control
Depreciation and
1076829976.01161524496.34770755369.92128446514.86
amortization expense
Floating gain on
14280622.902142093.4413804602.362070690.35
derivatives
Accrued interest of
43518763.176586968.05
certificate of deposit
Floating gain on financial
1020675.59153101.411739861.78260979.27
products
Total 1152339971.49 172910149.31 786299834.06 130778184.48
（3）Deferred tax assets or liabilities after offset shown on a net offsetting basis
Unit: RMB
Deferred tax assets and Closing balance of Deferred tax assets and Opening balance of
Items
liabilities offset deferred tax assets or liabilities offset deferred tax assets or
221Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
amount at the end of liabilities after offset amount at the liabilities after offset
the balance amount beginning of the
balance amount
Deferred tax assets 153262506.84 137808879.28
Deferred tax liabilities 172910149.31 130778184.48
（4）Details of unrecognized deferred tax assets
Unit: RMB
Items Closing balance Opening balance
Provision for bad debt 68885839.40 55823915.76
Provision for inventory write-down 33407030.83 26934726.68
Deductible losses of subsidiaries 119908522.27 24790389.63
Investment losses recognized by the equity
9330930.514319616.68
method
Floating loss on derivatives 7639957.91
Others 15001942.21
Total 231532323.01 134510548.87
（5）Deductible losses of unrecognized deferred tax assets will expire in the following years
Unit: RMB
Maturity years Closing balance Opening balance Remarks
Year 2025 1176424.56 445585.90
Year 2026 676929.68
Year 2028 10478078.42 10478078.42
Year 2029 7488066.67 7488066.67
Year 2030 31604893.55 6378658.64
Year 2031 68484129.39
Total 119908522.27 24790389.63 --
20. Other non-current assets
Unit: RMB
Closing balance Opening balance
Items Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
222Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Advanced
payment for
non-current 328609958.16 328609958.16 251509127.08 251509127.08
assets
purchasing
Total 328609958.16 328609958.16 251509127.08 251509127.08
Other remarks:
21. Short-term borrowings
（1）Categories of short-term borrowings
Unit: RMB
Items Closing balance Opening balance
Credit borrowings 20000000.00
Overseas loan under domestic guarantee 588918308.44 362698500.00
Bill discount financing 98796666.66
Factoring financing of account receivable 49685762.67
Accrued interest 790172.77 389796.60
合计738190910.54383088296.60
22. Derivative financial liabilities
Unit: RMB
Items Closing balance Opening balance
Foreign exchange tool 7939957.91
Total 7939957.91
23. Notes payable
Unit: RMB
Categories Closing balance Opening balance
Bank acceptance bill 1891526333.48 1238574463.73
Total 1891526333.48 1238574463.73
At the balance sheet date balances due but unpaid totaled RMB 0.
223Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
24. Accounts payable
（1）Details of accounts payable
Unit: RMB
Items Closing balance Opening balance
Within 1 year(including 1 year) 3165267168.95 2184050911.51
1 to 2 years 40604444.51 88579882.54
2 to 3 years 4647692.76 1289268.11
Over 3 years 4178825.37 5741693.81
Total 3214698131.59 2279661755.97
25. Advances received
（1）Details of advances received
Unit: RMB
Items Closing balance Opening balance
Advance collection of asset package
10000000.00
disposal funds
Total 10000000.00
26. Contract liabilities
Unit: RMB
Items Closing balance Opening balance
Advance payment for sales 79816249.22 42581607.67
Total 79816249.22 42581607.67
27. Employee benefits payable
（1）Details of employee benefits payable
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Ⅰ. Short-term employee benefits 282701491.43 2267258680.29 2186778975.25 363181196.47
Ⅱ. Post-employment benefits - defined 2888141.35 65128724.55 62261841.95 5755023.95
224Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
contribution plan
Ⅲ. Termination benefits 3716281.21 1825820.96 2704334.83 2837767.34
Total 289305913.99 2334213225.80 2251745152.03 371773987.76
（2）Details of Short-term employee benefits
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
1. Wage bonus
264874751.981698778065.661632087231.02331565586.62
allowances and subsidy
2. Employee welfare
99852508.5599784157.6268350.93
fund
3. Social insurance
10408040.81111351219.55110131931.1211627329.24
premium
Including: Medicare
2289049.4540395055.8639477699.593206405.72
premium
Occupational injuries 256781.03 1550201.30 1653211.20 153771.13
premium
116439.60197312.10274184.2839567.42
Maternity premium
Overseas social security
7745770.7369208650.2968726836.058227584.97
contributions
4. Housing provident
38212952.2138206374.216578.00
fund
5. Trade union fund and
1224164.0610688243.6410638788.691273619.01
employee education fund
8、Dispatching
3460279.64308349070.62293169617.5918639732.67
remuneration
9、Cash stock
2734254.9426620.062760875.000.00
appreciation option
Total 282701491.43 2267258680.29 2186778975.25 363181196.47
（3）Details of defined contribution plan
Unit: RMB
Items Opening Increased in current Decreased in current Closing balance
225Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
balance period period
1. Basic endowment insurance
2771543.3563003140.3960213916.175560767.57
premium
2. Unemployment insurance
116598.002125584.162047925.78194256.38
premium
Total 2888141.35 65128724.55 62261841.95 5755023.95
28. Taxes and rates payable
Unit: RMB
Items Closing balance Opening balance
VAT 9508902.15 14647359.92
Enterprise income tax 64102462.85 33105141.57
Individual income tax 7076026.18 5797449.67
Urban maintenance and construction tax 1552749.69 2283772.47
Education surcharge 918423.85 1207595.10
Local education surcharge 545284.63 717275.16
Housing property tax 18040043.30 14503893.38
Land use tax 10576760.58 2162780.06
Local foundation for water works 64041.47 60119.04
Others 1019771.50 522755.69
Total 113404466.20 75008142.06
29. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 172923251.10 270888400.58
Total 172923251.10 270888400.58
（1）Other payables
1）Other payables listed by nature
Unit: RMB
Items Closing balance Opening balance
Restricted shares repo obligations 75490047.50 145063690.00
226Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Product warranty fee 5480670.32 2757036.90
Guarantee deposit 10645357.68 6564169.23
Rent and property fee 5524510.45 7877975.71
Compensation for product quality loss 13500685.28 3889429.08
Collection of talent awards 2355610.90 1320000.00
Freight and miscellaneous charges 72117058.15
Others 59926368.97 31299041.51
Total 172923251.10 270888400.58
30. Non-current liabilities due within one year
Unit: RMB
Items Closing balance Opening balance
Guaranteed borrowings 1430000000.00
Overseas loan under domestic guarantee 294046008.86 130498000.00
Accrued interest 1723095.18 55923.87
Lease liabilities 37573783.54 22719934.72
Total 1763342887.58 153273858.59
Other remarks:
The difference between the beginning amount and the ending amount of the previous year (December 31
2020) is detailed in Section VI (VI) of this financial report.
31. Other current liabilities
Unit: RMB
Items Closing balance Opening balance
Output tax to be written off 5276677.78
Total 5276677.78
32. Long-term borrowings
（1）Categories of long-term borrowings
Unit: RMB
Items Closing balance Opening balance
Guaranteed borrowings 800000000.00 1380000000.00
Overseas loan under domestic guarantee 637570.00 326142884.74
227Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Accrued interest 824388.89 1776110.13
Total 801461958.89 1707918994.87
33. Bonds payable
（1）Bonds payable
单位：元
Items Ending balance Opening balance
Sanhua Convertible bonds 2652035619.50
Total 2652035619.50
（2）Changes of bonds payable（does not include preferred shares perpetual bonds and other financialinstruments classified as financial liabilities）
Unit: RMB
Accr Conve
Amort Initiall Amort Funds
ued rsion
ization y Accru ization return
Issuan Ope inter Curren from Endin
in classif ed in ed
Bond Par Release Bond ce ning Current est t Issuan shares g
discou ied as interes discou from
name value date term amoun bala issuance at repay ce fee to balanc
nt or equity t at par nt or debt to
t nce par ment equity e
premi instru value premi equity
valu instru
um ments um swap
e ments
Sanhu
a 3000 349 35100 -1246 -4097 71233 2652
Jun 6 300000 3499 -4607 -1754
Conve 100.00 00000 937 1860. 8370. 66556 687.7 03561
2021 years 0000.00 379.22 65.56 .85
rtible 0.00 9.22 09 81 .24 4 9.50
bonds
300034935100-1246-4097712332652
3000003499-4607-1754
Total -- -- -- 00000 937 1860. 8370. 66556 687.7 03561
0000.00379.2265.56.85
0.009.220981.2449.50
（3）Explanation of conditions and time of share conversion for convertible bonds
With the approval of China Securities Regulatory Commission in document zjxk [2021] No. 168 the company
publicly issued 30 million convertible corporate bonds (hereinafter referred to as Sanhua convertible bonds) in June
2021 with a face value of 100 yuan each and a total issuance amount of 3 billion yuan.
The start and end date of Sanhua convertible bonds is from December 7 2021 to May 31 2027 and the initial
conversion price is 21.55 yuan / share. As of December 31 2021 5321 Sanhua convertible bonds have been
converted into 24610 ordinary shares.
228Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
34. Leased liabilities
Unit: RMB
Items Closing balance Opening balance
Leased liabilities 195555461.70 172499750.25
Less：Leased liabilities due within 1 year -37573783.54 -22719934.72
Total 157981678.16 149779815.53
Other remarks:
The difference between the beginning amount and the ending amount of the previous year (December 31 2020) is
detailed in Section VI (VI) of this financial report.
35. Long-term payables
Unit: RMB
Items Closing balance Opening balance
Long-term payables 903862.19
Total 903862.19
（1）Long-term payables listed by nature
Unit: RMB
Items Closing balance Opening balance
Stock appreciation rights deposit 903862.19
Other remarks:
The difference between the beginning amount and the end amount of the previous year (December 31 2020)
is detailed in Section VI (VI) of this financial report
36. Provisions
Unit: RMB
Items Closing balance Opening balance Reasons for balance
Pending lawsuit 2638000.00
Total 2638000.00 --
Other remarks，Including the relevant significant assumptions and estimates of the significant provisions:
37. Deferred income
Unit: RMB
Items Opening balance Increased in current Decreased in current Closing balance Reasons for
229Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
period period balance
Government Related to
140105336.4340938414.8624211916.58156831834.71
grants assets
Total 140105336.43 40938414.86 24211916.58 156831834.71 --
Other remarks:
Details of government subsidies included in current profits and losses please see the financial report for reference.
38. Other non-current liabilities
Unit: RMB
Items Closing balance Opening balance
Engineering agent construction fund 28782218.09 28782218.09
Long-term employee rights protection
46419797.2751616679.63
payment
Total 75202015.36 80398897.72
Other remarks:
According to local investment promotion policies the "seven connections and one leveling" project of the
construction land of the Wuhu city is completed by Wuhu high-tech Industrial Development Zone Administration
Committee. As the state-owned assets management unit of Wuhu high-tech Industrial Development Zone Wuhu
Xinma Investment Co. Ltd. and Wuhu High-tech Construction Development Co. Ltd. entrusted Wuhu Sanhua
Auto-control Components Co. Ltd and Wuhu Sanhua Technology Co. Ltd. to build the "seven connections and
one leveling" project and allocated RMB 72.03 million as engineering fund. As of December 312021 the
accumulated amount of hedging and written-off of engineering agent construction fund and project expense was
RMB 43.2478 million，and the amount to be written-off at the end of the period was RMB 28.7822 million.Long-term employee rights protection payment: retirement pensions of Mr. Harald Schrott who is the former
actual controller of the Germany Aweco residential appliances business and his father Hugo Schrott. Based on
Austrian labor law one-time welfare compensation for termination of labor contract; one-time welfare
compensation for retirement disability and death. The amount of such liabilities is estimated and determined by
an independent actuary.
39. Share capital
Unit: RMB
Changed amount of current period（+/-）
Issue of Reserve
Opening balance Bonus Closing balance
new transferred to Others Subtotal
shares
shares shares
Total
3591601468.00-511250.00-511250.003591090218.00
shares
Other remarks:
In the current period 24610 shares were increased due to the conversion of "Sanhua convertible bonds" and
230Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
535860 shares were reduced due to the repurchase and cancellation of restricted shares
40. Other equity instruments
(1) Basic information of preferred shares perpetual bonds and other financial instruments issued at the
end of the period
Relevant details please see the introduction of other important matters in Section X (XVI) of this financial
report for reference.
(2) Statement of changes in preferred shares perpetual bonds and other financial instruments issued at the
end of the period
Unit: RMB
Financial Opening balance Increased in current period Decreased in current period Closing balance
instruments
Qty Book value Qty Book value Qty Book value Qty Book value
issued
Convertible
30000000409766556.24532181953.3129994679409684602.93
bonds
Total 30000000 409766556.24 5321 81953.31 29994679 409684602.93
The increase and decrease of other equity instruments in the current period the reasons for the change and the
basis of relevant accounting treatment:
With the approval of the CSRC in document zjxk [2021] No. 168 the company publicly issued 30 million
convertible corporate bonds in June 2021 with a face value of 100 yuan each and a total issuance amount of 3
billion yuan. The amount of these convertible corporate bonds initially classified as equity instruments is
409766556.24 yuan. In the current period due to the conversion of debt to equity 81953.31 yuan of equity
instruments was added.Other remarks
41. Capital reserve
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Capital premium
99640721.5191418878.73191059600.24（Share premium）
Other capital reserve 215776712.71 60225070.93 93641608.86 182360174.78
Total 315417434.22 151643949.66 93641608.86 373419775.02
Other remarks including changes and reasons in the current period:
Reasons for the change of increase or decrease in current period:* Equity Incentive Restricted Shares
unlock 11062090 shares this period，the corresponding accumulative compensation paid by shares is RMB
90900769.86，a premium on the share capital transferred in such amount from other capital reserves；* The
231Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
capital stock premium increased by 518108.87 Yuan due to the debt to equity swap of "Sanhua convertible
bonds"* Repo and cancellation of equity incentive restricted shares that have granted but not met the unlock
condition，share premium decreased RMB 2740839.00；* Other capital reserve increased RMB 51697222.60due to the confirmation of share-based payment remuneration.；* The available income tax benefit due to the
expected tax cost of equity incentive restricted shares that are no unlockable exceeds accounting cost the closing
balance was RMB 8527848.33 higher than the opening balance other capital reserve and deferred tax assets
increased such amount；
42. Treasury shares
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Restricted shares 145063690.00 69573642.50 75490047.50
Repo shares 136420051.34 200039514.06 336459565.40
Total 281483741.34 200039514.06 69573642.50 411949612.90
Other remarks including changed amount of the current period and movement reason:
(1) Restricted shares
* Unlock 6465940 restricted shares of equity incentive granted in 2018. After ex rights and ex dividend the
grant price per share is 4.3393 yuan and the unlocking amount is 28057971.00 yuan Unlock 4596150 restricted
shares of equity incentive granted in 2020. The grant price per share after ex rights and ex dividend is 7.1115 yuan
and the unlocking amount is 32685697.50 yuan; Treasury shares and repurchase obligations payable shall be
reduced by the same amount.* May 2021，The company implemented the 2020 annual equity distribution，the dividend of the not
unlocked portion of the equity incentive restricted shares is RMB 5553275.00，suspended by the company. At
the same time，treasury shares and related liabilities for repo obligation decreased such amount.* Repo and cancellation of equity incentive restricted shares that have not met the unlock condition，treasuryshares offset against RMB3276699.00.In current period the Company repurchased 8293764shares through call auction and paid a total share
repurchase amount of 200039514.06 yuan.
43. Other comprehensive income (OCI)
Unit: RMB
Changed amount of the current period
Less: Less: OCI Attributable Attributable
Current OCI carried Less: to to
Opening period carried forward incom Closing
Items the parent Non-controlli
balance cumulative forward transferred e tax balance
Company ng
before transferr to expens
after interest
income tax ed to undistribut e
tax after tax
profit or ed profit
232Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
loss
Items to be
reclassified
-89624962.-39785884.-39785884.-129410847.subsequently
61787839
to profit or
loss
-89624962.-39785884.-39785884.-129410847.Translation
61787839
reserves
Other
comprehensi -89624962. -39785884. -39785884. -129410847.ve income in 61 78 78 39
total
Other remarks including adjustment for converting the effective part of the cash flow hedge profit and losses into
the hedged item initial recognized amount:
The translation differences of foreign currency statements belong to the parent company and have no
impact on corporate income tax.
44. Surplus reserve
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Statutory surplus reserve 611472556.89 63816916.23 675289473.12
Discretionary surplus
8681137.208681137.20
reserve
Reserve fund 17813919.38 17813919.38
Total 637967613.47 63816916.23 701784529.70
Remarks on surplus reserve including movement in current period and the reason for changes:
This period increased by RMB 63816916.23，According to the parent company's current net profit 10% of the
statutory surplus reserve.
45. Undistributed profit
Unit: RMB
Items Current period Last period
Balance before adjustment at the end of the
5890916707.835278392288.84
previous period
Balance after adjustment at the end of the previous
5890916707.835278392288.84
period
233Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Add: Net profit attributable to shareholders of the
1684044407.471462158821.57
parent Company for current year
Less: Appropriation of statutory surplus reserve 63816916.23 78070994.08
Payable dividends on ordinary shares 895454593.00 771563408.50
Closing balance 6615689606.07 5890916707.83
Details of undistributed profits adjustment at the beginning of the period
1). Due to the retroactive adjustment of the accounting standards for business enterprises and its relevant new
provisions the undistributed profit at the beginning of the period 0.00 yuan.
2). Due to the change of accounting policy the undistributed profit at the beginning of the period was affected by
0.00 yuan.
3). Due to the correction of major accounting errors the undistributed profit at the beginning of the period was
affected by 0.00 yuan.
4). The change of consolidation scope due to the same control affects the undistributed profit at the beginning of
the period by 0.00 yuan.
5). The total impact of other adjustments on the undistributed profit at the beginning of the period is 0.00 yuan.
46. Operating revenue and Operating cost
Unit: RMB
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 15320159124.37 11239932600.42 11665371918.47 8319360567.91
Other operations 700650681.15 667418368.69 444461449.97 418860470.45
Total 16020809805.52 11907350969.11 12109833368.44 8738221038.36
After deducting non-recurring profit or loss by audit whether the net profit is negative or not
□ Applicable √ Not Applicable
Other remarks
Breakdown of revenue generated by contracts with customers by major categories
1) Revenue decomposition by product or service type
The decomposition of revenue by product or service type is detailed in note XIV (I) to the financial
statements.
2) Income decomposition was according to the time of goods or services transfer.
Item Current period cumulative Preceding period comparative
Recognition of revenue at a certain 16011597055.08 12099564633.72
point in time
Recognition of revenue over a period 9212750.44 10268734.72
of time
Total 16020809805.52 12109833368.44
234Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
47. Taxes and surcharges
Unit: RMB
Items Current period cumulative Preceding period comparative
Urban maintenance and construction tax 23550102.70 26020701.95
Education surcharge 12271122.11 13060313.39
Housing property tax 18201499.81 19644211.36
Land use tax 9829194.63 3415856.97
Stamp duty 5612844.37 2650817.59
Local foundation for water works 704457.11 596652.81
Others 5213561.16 3665075.62
Local education surcharge 8180748.10 8919791.12
Total 83563529.99 77973420.81
48. Selling expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 230870245.85 185383982.72
Warehousing freight and miscellaneous
80729629.9760554223.42
charges
Entertainment expense 41824687.72 38123695.62
Travel expense 18099214.71 16841187.92
Market maintenance fee 50166361.46 41332674.93
Advertising expense 12059349.62 12803945.68
Others 15477043.22 10085332.79
Total 449226532.55 365125043.08
Other remarks:
Due to the implementation of the Q&A on the Implementation of Accounting Standards for Business Enterprises
(batch 5) the company will retroactively correct the presentation of sales and incidental expenses in 2020 and
reclassify the items from "selling expenses" to "operating costs" as described in Section VI (VI) of this financial
report.
49. Administrative expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 494243600.32 400277866.64
235Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Share-based payment remuneration 47453874.76 72810130.99
Depreciation and amortization expense 114268657.76 96201760.17
Office expense 105050490.36 94094129.08
Intermediary organ expense 56124341.11 48741873.10
Entertainment expense 16099578.20 14907529.66
Vehicle expense 11544975.21 10658851.78
Sporadic renovation expense in the park 17843375.87 17734954.44
Security fund for the disabled 3157345.53 2441941.61
Others 10016622.21 6215391.41
Total 875802861.33 764084428.88
50. R&D expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 403228674.30 291552480.55
Material and power expense 231465729.15 136062761.46
Depreciation and amortization expense 35351729.36 31108149.42
Mold manufacturing expense 60978249.32 30480247.99
Royalties 9131467.11 4865282.70
Outsourcing R&D expense 665969.71 841185.47
Others 10316740.29 23491256.04
Total 751138559.24 518401363.63
51. Financial expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Interest expense 146890397.95 64733993.15
Including: bond payable interest 74733687.74
Interest on lease liabilities 216112.22
Interest income -163144645.89 -52233256.57
Exchange gains or losses 95990142.26 112675905.53
Others 4372953.79 3683451.53
Total 84108848.11 128860093.64
236Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
52. Other income
Unit: RMB
Source of the other income Current period cumulative Preceding period comparative
Government subsidies related to assets 24211916.58 18853006.64
Government subsidies related to revenue 97810169.09 131455977.16
Handling fees for withholding individual
765674.331246912.65
income tax
Total 122787760.00 151555896.45
53. Investment income
Unit: RMB
Items Current period cumulative Preceding period comparative
Investment income from long-term equity
7011313.832199442.47
investments under equity method
disposal of long-term equity investments -4100413.03
Investment income of bank financing
16473512.6546589043.29
products
Gains and losses on settlement of foreign
84019324.4119642289.10
exchange contract
Gains and losses on settlement of futures
35602149.7129117946.22
contracts
Bill discount interest -1533698.47 -4369430.89
Total 141572602.13 89078877.16
54. Gains or losses on changes in fair value
Unit: RMB
Items Current period cumulative Preceding period comparative
Floating income of bank financing
-596487.04-10786528.53
products
Floating income of futures contracts -4153975.59 7260487.69
Floating income of foreign exchange
7971860.0135373956.60
contract
Total 3221397.38 31847915.76
237Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
55. Credit impairment loss
Unit: RMB
Items Current period cumulative Preceding period comparative
Provision for bad debt -56834285.92 -28677382.30
Total -56834285.92 -28677382.30
56. Assets impairment loss
Unit: RMB
Items Current period cumulative Preceding period comparative
Ⅱ. Inventory write-down loss and contract
-51825230.13-58672538.84
performance cost impairment loss
V. Impairment loss of fixed assets -9429348.48 0.00
XI. Goodwill impairment loss -31959091.60 0.00
Total -93213670.21 -58672538.84
Other remarks:
57. Gains on asset disposal
Unit: RMB
Items Current period cumulative Preceding period comparative
Gains on disposal of fixed assets -387648.44 -486378.33
58. Non-operating revenue
Unit: RMB
Current period Preceding period Amount recorded into the current
Items
cumulative comparative non-recurring profit and loss
Exempted payment 1663567.85 3090050.86 1663567.85
Compensation and penalty
2232754.091056661.412232754.09
income
Gains from retirement of
208668.3084161.06208668.30
fixed assets
Others 687560.44 824606.49 687560.44
Total 4792550.68 5055479.82 4792550.68
238Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
59. Non-operating expenditures
Unit: RMB
Amount included in
Items Current period cumulative Preceding period comparative
non-recurring profit or loss
Losses on retirement of fixed
6985178.4710492379.676985178.47
assets
Litigation for damages 4971711.20 2638000.00 4971711.20
Donation expenditures 495026.83 51555.76 495026.83
Others 2476278.90 1661697.75 2476278.90
Total 14928195.40 14843633.18 14928195.40
60. Income tax expenses
（1）Income tax expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Current period income tax expenses 254222957.91 185380549.14
Deferred income tax expenses 17581519.86 33322315.46
Total 271804477.77 218702864.60
（2）Reconciliation of accounting profit to income tax expenses
Unit: RMB
Items Current period cumulative
Income before tax 1976629015.41
Income tax expense calculated at the applicable tax rate 329915459.20
Adjustment of preliminary income tax expense settlement and
13933805.43
payment
Tax impact of research and development expenses plus deduction -97297971.85
Others 25253184.99
Income tax expenses 271804477.77
61. Other comprehensive income
Please refer to the notes of balance sheet items and other comprehensive income for details.
239Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
62. Notes to items of the consolidated cash flow statement
（1）Other cash receipts related to operating activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Government grants 195905022.49 189256546.89
Interest income 89862225.91 52233256.57
Net change in restricted funds 11123000.00
Rental income 9785805.55 10255696.35
Insurance indemnities 2050150.25 1056661.41
Other 1576848.07 733249.60
Total 310303052.27 253535410.82
（2）Other cash payments related to operating activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Net change in restricted funds 11123000.00
Guarantee deposit 8149646.85 12114845.90
Expense payments for the period 473111251.31 669374176.12
Total 481260898.16 692612022.02
（3）Other cash receipts related to investing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Redemption of bank financing products 642245000.00 520254995.00
Net change in restricted funds 7204442.99
Profit on Foreign exchange contract
84019324.4119642289.10
settlement
Profit on Futures contract settlement 36962814.04 29117946.22
Total 763227138.45 576219673.31
240Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
（4）Other cash payments related to investing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Subscription expenses for certificates of
3839000000.00
deposit
Net change in restricted funds 34524969.01
Payments for purchasing bank financing
289200000.00
products
Total 3873524969.01 289200000.00
（5）Other cash receipts related to financing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Net change in restricted funds 6147618.22 24311782.55
Factoring financing of accounts receivable 47536022.04
Disposal of part of the subsidiary's equity 222517.59
Total 53683640.26 24534300.14
（6）Other cash payments related to financing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Repo shares expenses 200011001.49
Restricted stock repurchase expenses 3276699.00 2309044.00
Rental expenses 26860033.64 5768763.60
Convertible bond issuance service fee etc 14153152.35 2674712.19
Total 244300886.48 10752519.79
63. Supplement information to the cash flow statement
（1）Supplement information to the cash flow statement
Unit: RMB
Supplement information Current period cumulative Preceding period comparative
1. Reconciliation of net profit to cash flow
----
from operating activities:
241Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Net profit 1704824537.64 1473323351.98
Add: Provision for assets impairment
150047956.1387349921.14
loss
Depreciation of fixed assets oil
457645498.88398438067.60
and gas assets productive biological assets
Amortization of right-of-use assets 45187192.39
Amortization of intangible assets 22412446.76 20558264.41
Amortization of Long-term prepayments 7468836.52 5698329.34
Loss on disposal of fixed
assets intangible assets and other 387648.44 486378.33
long-term assets (Less: gains)
Loss on retirement of fixed
6776510.1710408218.61
assets (Less: gains)
Losses on changes in fair value
-3221397.38-31847915.76
(Less: gains)
Financial expenses (Less: gains) 76990021.45 85662587.59
Investment losses (Less: gains) -143106300.60 -93448308.05
Decrease of deferred tax assets
-6925779.23-14636264.19
(Less: increase)
Increase of deferred tax liabilities
42131964.8365728822.77
(Less: decrease)
Decrease of inventories (Less:
-1379357747.06-188213271.68
increase)
Decrease of operating receivables
-1130326675.79-817805253.81
(Less: increase)
Increase of operating payables
1653187167.541012830723.84
(Less: decrease)
Others 51697222.60 72810130.99
Net cash flows from operating activities 1555819103.29 2087343783.11
2. Significant investing and financing
activities not related to cash receipts and -- --
payments:
Conversion of debt into capital
Convertible bonds due within one
year
Fixed assets leased in under finance
leases
3. Net changes in cash and cash -- --
242Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
equivalents:
Cash at the end of the period 2690002225.09 3400144038.54
Less: Cash at the beginning of the
3400144038.542553783015.01
period
Add: Cash equivalents at the end of
the period
Less: Cash equivalents at the
beginning of the period
Net increase of cash and cash
-710141813.45846361023.53
equivalents
（2）Net cash receipts from disposal of subsidiaries in current period
Unit: RMB
Amount
Cash and cash equivalents paid in current period for merger in
28000000.00
current period
Including: --
Zhejiang Sanhua plate Exchange Technology Co. Ltd 28000000.00
Including: --
Including: --
Net cash receipts from disposal of subsidiaries in current period 28000000.00
（3）Composition of cash and cash equivalents
Unit: RMB
Items Closing balance Opening balance
Ⅰ . Cash 2690002225.09 3400144038.54
Including: Cash on hand 214611.31 232265.51
Cash in bank that can be readily
2689767198.013399911773.03
drawn on demand
Other monetary funds that can be
20415.77
readily for payment
Ⅲ. Cash and cash equivalents at end of year 2690002225.09 3400144038.54
Other remarks:
On December 31 2021，monetary funds include RMB 3936282419.98 of principal and interest of CDS and
time deposits RMB 38584887.96 of margin deposits and RMB 66852328.10 of futures contract deposits totals
243Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
RMB 4041719636.04. Such monetary funds do not belong to cash and cash equivalents.
（4）Amount of endorsed acceptance not involving cash receipts and payments
Items Current period cumulative Preceding period comparative
Amount of commercial bills and supply chain financial 213080551.18 112518677.57
vouchers endorsed and transferred
Including: Payment for operating activities 212391551.18 109630824.74
Payment for investment activities 689000.00 2887852.83
64. Assets with restriction on ownership or use rights
Unit: RMB
Items Carrying amount at the end of the period Cause of restriction
Cash and Bank Balances 14584887.96 Guarantee deposit
Cash and Bank Balances 66852328.10 Margin deposit with a futures institution
Notes receivable 872096928.77 Pledge financing
Supply chain finance credentials that have
Accounts receivable 80207552.58 been endorsed or discounted but are not
due
Total 1033741697.41 --
65. Monetary items in foreign currencies
（1）Monetary items in foreign currencies
Unit: RMB
Closing balance in foreign Exchange rate RMB equivalent
Items
currencies
Cash and Bank Balances -- --
Including: USD 75071897.41 6.3757 478635896.32
EUR 12323466.71 7.2197 88971732.61
HKD
Other currencies 0.00 0 40554414.41
Subtotal 608162043.34
Accounts receivable -- --
Including: USD 191919521.97 6.3757 1223621296.22
244Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
EUR 49284527.47 7.2197 355819502.98
HKD
Other currencies 81554120.37
Subtotal 1660994919.57
Long-term borrowings -- --
Including: USD 100000.00 6.3757 637570.00
EUR
HKD
Subtotal 637570.00
Derivative financial assets
Including: USD 5973592.10 6.3757 38085831.15
Other currencies 0.00 0.0000 2273910.98
Subtotal 40359742.13
Other receivables
Including: USD 1044378.43 6.3757 6658643.56
EUR 732729.47 7.2197 5290086.95
Other currencies 31088048.23
Subtotal 43036778.74
Long-term receivable
Including: EUR 130000.00 7.2197 938561.00
Subtotal 938561.00
Short-term borrowings
Including: USD 55069683.74 6.3757 351107782.62
EUR 33047908.27 7.2197 238595983.34
Subtotal 589703765.96
Accounts payable
Including: USD 12944979.57 6.3757 82533306.24
EUR 38736726.67 7.2197 279667545.54
Other currencies 36762969.35
Subtotal 398963821.13
Other payables
Including: USD 9873703.28 6.3757 62951770.00
EUR 933970.48 7.2197 6742986.67
Other currencies 7067245.36
245Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Subtotal 76762002.03
Non-current liabilities due within
one year
Including: USD 30019052.80 6.3757 191392474.94
EUR 15636083.80 7.2197 112887834.20
Other currencies 0.00 0.0000 848055.19
Subtotal 305128364.34
Lease liabilities
Including: USD 10537378.87 6.3757 67183166.46
EUR 10343644.06 7.2197 74678007.02
Other currencies 0.00 0.0000 303785.03
Subtotal 142164958.51
（2）Notes on overseas operating entities including for the significant overseas operating entities its main
operating locations reporting currency and the basis for selection should be disclosed and the reason for
changes in reporting currency should also be disclosed.√ Applicable □ Not Applicable
The Company has several overseas subsidiaries locate in the United States Europe Japan Poland Mexico
Vietnam and other countries where US dollars Euro Japanese yen Polish zloty Mexican pesos Vietnamese
dong etc. are used as the standard reporting currency.
66. Government grants
（1）Details
1) Government grants related to assets
Unit: RMB
Items Opening Increased The Closing Related to
balance in current amount balance assets/rela
period recorded ted to
as other
income
income
in
current
period
246Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Grant for project of an annual output of 15 million commercial 244900 244900 0 Related
refrigeration and air-conditioning automatic control components 0.20 0.20 to assets
Special fund grant for multistory factory buildings of small and 499513 221919. 477321 Related
medium-sized enterprises 4.10 96 4.14 to assets
Grant for innovation ability construction project of National 312500 624999. 250000 Related
Enterprise Technology Center 0.16 96 0.20 to assets
Grant for energy-saving project with an annual output of 35 214082 214082 0 Related
million sets of L-type four-way reversing valve for air 5.75 5.75 to assets
conditioners
Grant for technical transformation project of newly increased 227400 758000. 151600 Related
800000 sets of heat exchanger per year 0.00 00 0.00 to assets
Grant for the technical transformation project with an annual 220800 552000. 165600 Related
output of 2 million sets of air-conditioning parts 0.08 00 0.08 to assets
Grant for the industrialization project of 20 million refrigeration 278837. 278837. 0 Related
and air conditioning automatic control components 70 70 to assets
Grant for commercial machine micro-channel heat exchanger 129185 738200. 553650. Related
technical transformation project 0.00 00 00 to assets
Grant for 1 million sets of air-conditioning thermal sensor 549210 915349. 457675 Related
technology transformation of new energy vehicle 0.16 92 0.24 to assets
Grant for an annual output of 2 million sets of high-efficiency 177947 515947. 126352 Related
energy-saving inverter controllers 0.08 64 2.44 to assets
Technical transformation project of annual output of 100000 505686 842810. 421405 Related
large heat exchangers 0.00 00 0.00 to assets
Grant for construction project of public test and detection 699999. 699999. 0 Related
service platform for refrigeration components 64 64 to assets
Grant for the construction project of automatic control 480000. 480000. 0 Related
components for residential air conditioners with an annual 00 00 to assets
output of 10 million
116849 178900. 989591. Related
Grant for pollution source treatment project
1.67 00 67 to assets
Grant for construction project of public inspection and testing 256666. 256666. 0 Related
service platform for automobile air conditioning parts 87 87 to assets
Technical transformation project for the production line of 497115. 126923. 370192. Related
energy-saving residential air-conditioning control components 56 04 52 to assets
with an annual output of 50 million sets
Grant for construction project of 25 million sets of new 340000. 135999. 204000. Related
energy-saving and environmental protection variable frequency 28 96 32 to assets
247Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
air conditioning expansion valve
Industrial transfer projects and single equipment investment 306364. 144326. 162037. Related
grant 06 64 42 to assets
Comprehensive investment award for technological 298524 357888. 262736 Related
transformation of industrial enterprises in Wuhu City 8.00 00 0.00 to assets
Industrial transformation and upgrading technological 141283 202424. 121040 Related
transformation and industrial investment 4.44 88 9.56 to assets
Intelligent factory technological transformation project based on 362499 499999. 312500 Related
The Internet of Things technology 9.89 89 0.00 to assets
Grant for the annual production of 11.5 million sets of new 176630 420000 219940 196636 Related
energy auto parts project 68.27 0.00 6.49 61.78 to assets
573333. 159999. 413333. Related
Four-way reversing valve optimization project
44 96 48 to assets
Policy grant for Wuhu City's strong industrial base and 705000. 90000.0 615000. Related
manufacturing strong province 00 0 00 to assets
Annual production of 3 million self-circulating superconducting 717750. 99000.0 618750. Related
plates technology project 00 0 00 to assets
Comprehensive award and compensation for investment in 194270 273782. 166891 Related
technological transformation of industrial enterprises 2.09 39 9.70 to assets
Grant for intelligent manufacturing technology transformation 263122 360000. 227122 Related
project of 6 million sets of commercial refrigeration components 0.00 00 0.00 to assets
per year
Grant for comprehensive upgrading and technical 579985 828550. 497130 Related
transformation project of intelligent manufacturing of 0.00 00 0.00 to assets
refrigeration components
Grant for technical transformation project of 30 million sets of 640000 800000. 560000 Related
high efficiency energy saving refrigeration and air conditioning 0.00 00 0.00 to assets
control components
Grant for an annual output of 7.3 million sets of new energy 403800 403800 363420 Related
vehicle thermal management system components technical 00.00 0.00 00.00 to assets
transformation
Grant for technical transformation project for the high efficiency 120151 121161 108035 Related
and energy saving refrigeration and air conditioning control 32.50 0.00 22.50 to assets
components with an annual output of 30 million sets
Grant for technical transformation project for the commercial 111572 330620 140061. 428186 Related
refrigeration control components with an annual output of 12 4.17 0.00 63 2.54 to assets
million sets
248Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Grant for equipment of New technological transformation for 127370 131762. 114194 Related
industrialization 7.32 02 5.30 to assets
Grant for promoting new industrialization and support 412191. 3435.00 408756. Related
technological transformation of enterprises 86 86 to assets
Technical transformation project of large heat exchanger with 602505 669450. 535560 Related
annual output of 700000 sets 0.00 00 0.00 to assets
Grant for an annual output of 50.5 million sets of technical 805220 67101.6 798509 Related
transformation of high-efficiency and energy-saving 0.00 7 8.33 to assets
refrigeration and air conditioning control components
Grant for an annual output of 11 million sets of new energy 231750 0 231750 Related
vehicles high efficiency heat exchanger assembly project 00.00 00.00 to assets
179282 18737.3 177408 Related
New industrialization fund subsidy
3.00 7 5.63 to assets
Total 140105 409384 242119 156831
336.4314.8616.58834.71
2) Government grants related to income and used to compensate relevant cost expenses or losses
Unit: RMB
Items Current period cumulative Financial Report Items
Subsidy of overseas COVID-19 15166186.20 Other income
Award of enterprise R&D investment 12314165.87 Other income
VAT refund of civil welfare 11084252.15 Other income
enterprises
VAT refund on software products in 9027815.16 Other income
excess of tax burden
Talent introduction and job 8881402.00 Other income
stabilization subsidies
Award of industry support fund 8782560.00 Other income
Subsidy and award of technological 8285400.00 Other income
innovation and entrepreneurship
Patent subsidy for enterprises 6452550.00 Other income
Innovation and Development Award 2971100.00 Other income
Enterprise operation development 2750000.00 Other income
reward
Awards for investment in major 1845040.00 Other income
industrial projects
Special funds for foreign trade and 1675000.00 Other income
economic development
Energy saving and environmental 1410942.00 Other income
protection subsidies
249Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Other 7163755.71 Other income
Subtotal 97810169.09
(2)The amount of government grant included in the profit or loss statement in the current period
Items Current period cumulative
Related to assets 24211916.58
Related to income 97810169.09
Total 122022085.67
The government subsidies included in the current profit and loss are presented in the "other income" item.Ⅷ. Changes in the consolidation scope
1. Business combination not under common control
(1) Business combination not under common control in current period
Unit: RMB
Acquiree’s
Proportion Determine Acquiree’s net
Equity Equity Equity Acqui income from
of equity basis for profit from
Acquirees acquisiti acquisition acquisitio sition acquisition date
acquired acquisitio acquisition date
on date cost n method date to period end
(%) n date to period end
Complete
Zhejiang
- the equity
Sanhua Agreemen
Decemb Dece delivery
plate 28000000. t
er 14 70% mber and pay
Exchange 00 assignmen
2021 14 the merger
Technolog t
2021 considerat
y Co. Ltd
ion
(2) Combination costs and goodwill
Unit: RMB
Combination costs
Cash 28000000.00
Fair value of non-cash assets
Fair value of debts issued or assumed
Fair value of equity securities issued
Fair value of contingent considerations
Acquisition-date fair value of equity held before the acquisition date
Others
Total combination costs 28000000.00
250Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Combination costs
Less: Share of fair value of net identifiable assets acquired 20408169.39
Goodwill/Balance of fair value of net identified assets acquired after 7591830.61
deducting combination costs
Determination method of fair value of combination costs contingent considerations and their movements:
In December 2021 the company acquired 70% equity of Zhejiang Sanhua plate Exchange Technology Co.Ltd from Su Jun. The pricing of this equity transaction is based on the assessed value the basic transfer price is 28
million yuan and the assessment payment consideration is 7 million yuan.If the net profit of Zhejiang Sanhua plate Exchange Technology Co. Ltd in 2022 is 6.4 million yuan the
company will pay another 3.5 million yuan; If not the company will not need to pay any more. If the net profit of
Zhejiang Sanhua plate Exchange Technology Co. Ltd in 2023 is 8 million yuan the company will pay another 3.5
million yuan; If not the company will not need to pay any more.According to the profit forecast data the management of the company judges that it is difficult to realize the
assessment net profit by Zhejiang Sanhua plate Exchange Technology Co. Ltd so the assessment payment
consideration is estimated at zero yuan.
(3) Combination costs and goodwill
Unit: RMB
Acquisition-date fair value Acquisition-date carrying amount
25060423.80
Assets: 41750357.62
Cash and bank balances 2456829.86 2456829.86
Accounts receivable 7730397.40 7730397.40
Inventories 1769614.51 1769614.51
Fixed assets 6672716.01 4214515.28
Intangible assets 12917600.00
Long-term prepayments 6068825.10 4754692.01
Right of use assets 4019018.35 4019018.35
Deferred tax assets 115356.39 115356.39
Liabilities: 10092339.85 10092339.85
Borrowings
Accounts payable 5547165.87 5547165.87
Deferred tax liabilities
Payroll payable 526155.63 526155.63
Lease liabilities 4019018.35 4019018.35
Deferred tax liabilities 2503490.07
Net assets 29154527.70 14968083.95
Less: Non-controlling interest 8746358.31 4490425.19
251Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Acquisition-date fair value Acquisition-date carrying amount
Net assets acquired 20408169.39 10477658.76
Fair value determination method on identifiable assets and liabilities:
The fair value of identifiable assets and liabilities of the company is determined according to the assessed value.
(4). Gains/Losses on fair value remeasurement of equity held before the acquisition date
Is there a transaction that realizes business combination step by step through multiple transactions and obtains
control during the reporting period
□Applicable √ Not applicable
(5) Combination costs or fair value of acquiree’s identifiable assets/liabilities failed to be reasonably
determined at the acquisition date or at the end of current period
(6) Other remarks
2. Changes in the consolidation scope due to other reasons
Explain the changes in the scope of consolidation caused by other reasons (e.g. new subsidiaries liquidation
subsidiaries etc.) and their related situations:
Entities Equity acquisition Equity acquisition Capital contribution Capital contribution
method date proportion (%)
Zhejiang Sanhua
Auto Zero New subsidiaries August 312021 0.00 100%
Trading Co. Ltd.Zhejiang Sanhua
plate Exchange
New subsidiaries December 132021 0.00 100%
Technology Co.Ltd
Ⅸ. Interest in other entities
1. Interest in subsidiaries
（1）Composition of enterprise group
Main operating Place of Holding proportion Acquisition
Subsidy name Business nature
place registration Direct Indirect method
Zhejiang Business
Sanhua Climate Zhejiang Zhejiang Manufacture 74.00% 26.00% combination
and Appliance under common
252Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Controls Group control
Co. Ltd.Zhejiang
Business
Sanhua
combination
Automotive Zhejiang Zhejiang Manufacture 100.00%
under common
Components
control
Co. Ltd.Sanhua
Business
(hangzhou)
combination
Micro Channel Zhejiang Zhejiang Manufacture 100.00%
under common
Heat Exchanger
control
Co. Ltd
Zhejiang
Sanhua Trading Zhejiang Zhejiang Commerce 100.00% Establishment
Co. Ltd
Business
SANHUA
Parts of combination
AWECO
Germany Germany household 100.00% not under
Appliance
appliances common
Systems GmbH
control
Remarks on inconsistency between holding proportion and voting rights proportion in subsidiaries:
Basis for the control of an investee while holding its half or less than half voting rights and the non-control
of an investee while holding its more than half voting rights
Basis for control of significant structured entities brought into the consolidation scope
Basis for determining an entity being acting as an agent or a principal
Other remarks:
The above subsidiaries are significant subsidiaries of the Company.
2. Interest in joint venture or associates
（1）Aggregated financial information of insignificant joint ventures and associates
Items Closing balance/Current period December 31 2020/Preceding
cumulative period comparative
Joint ventures -- --
Total of the following items calculated by
----
shareholding ratio
Associates -- --
Total book value of investment 22680930.51 15219616.68
Total of the following items calculated by -- --
shareholding ratio
Net profit 7011313.83 2199442.47
Other remarks:
253Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
X. Risks Related to Financial Instruments
In risk management the Company aims to seek the appropriate balance between the risks and benefits from
its use of financial instruments and to mitigate the adverse effects that the risks of financial instruments have on
the Company’s financial performance so as to maximize the profits of shareholders and other equity investors.Based on such risk management objectives the Company’s risk management policies are established to identify
and analyze the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and
adherence to limits on a timely and reliable basis.The Company has exposure to the following risks from its use of financial instruments which mainly include:
credit risk liquidity risk and market risk. The Management has deliberated and approved policies concerning
such risks and details are:
(I) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each balance sheet date the Company assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When assessing whether the credit risk has increased significantly
since initial recognition the Company takes into account reasonable and supportable information which is
available without undue cost or effort including qualitative and quantitative analysis based on historical data
external credit risk rating and forward-looking information. The Company determines the changes in default risk
of financial instruments during the estimated lifetime through comparison of the default risk at the balance sheet
date and the initial recognition date on an individual basis or a collective basis.The Company considers the credit risk on a financial instrument has increased significantly when one or
more of the following qualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which at the balance sheet date the probability of
default in the remaining lifetime has risen by more than a certain percentage compared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor’s operation or financial
position present or expected changes in technology market economy or legal environment that will have
significant adverse impact on the debtor’s repayment ability.
(2) Definition of default and credit-impaired assets
A financial instrument is defined as defaulted when one or more following events have occurred of which
the standard is consistent with that for credit-impairment:
1) Significant financial difficulty of the debtor;
2) A breach of binding clause of contract;
3) It is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) The creditor of the debtor for economic or contractual reasons relating to the debtor’s financial difficulty
having granted to the debtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default loss rate of
default and exposure to default risk. The Company develops a model of the probability of default loss rate of
default and exposure to default risk on the basis of quantitative analysis of historical data (e.g. counterparty rating
guarantee measures and collateral type payment method etc.) and forward-looking information.
3. Exposure to credit risk and concentration of credit risk
254Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In order to
control such risks the Company has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and bank balances in financial institutions with
relatively high credit levels hence its credit risk is relatively low.
(2) Receivables
The Company performs credit assessment on customers using credit settlement on a continuous basis. The
Company selects credible and well-reputed customers based on credit assessment result and conducts ongoing
monitoring on balance of receivables to avoid significant risks in bad debts.The company's accounts receivable risk points are distributed among multiple partners and multiple
customers. As of December 31 2021 the Company has no significant central credit risk and the proportion of
accounts receivable from the top five customers in book balance is at a reasonable and moderate level.The maximum amount of exposure to credit risk of the Company is the carrying amount of each financial
asset at the balance sheet.(II) Liquidity risk
The Company continues to monitor short-term and long-term funding needs to ensure that sufficient cash
reserves are maintained. At the same time the Company continuously monitors compliance with the loan
agreement to ensure that the credit line obtained from commercial banks can meet short-term or long-term funding
needs. When necessary the Company can implement equity financing.As of December 31 2021 the undiscounted contractual cash flows of the Company’s financial liabilities
listed by maturity date are shown in the following table:
Closing balance
Items
Within 1 year 1-3 years Over 3 years Total
Short-term borrowings 741497623.23 741497623.23
Notes payable 1891526333.48 1891526333.48
Accounts payable 3214698131.59 3214698131.59
Other payable 172923251.10 172923251.10
Non-current liabilities due within one year 1788496608.56 1788496608.56
Long-term borrowings 852116486.66 852116486.66
128977119.703299414690.003434390745.50
Bonds payable
5998935.80
Lease liabilities 14779459.15 71465390.94 71736828.07 157981678.16
Subtotal 7829920342.91 1052558997.30 3371151518.07 12253630858.28
(Continued)
Opening balance
Items
Within 1 year 1-3 years Over 3 years Total
Short-term borrowings 384529024.72 384529024.72
Notes payable 1238574463.73 1238574463.73
Accounts payable 2279661755.97 2279661755.97
Other payable 270888400.58 270888400.58
Non-current liabilities due within one year 155238316.00 155238316.00
Long-term borrowings 1781690487.83 1781690487.83
255Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Lease liabilities 67853620.87 81926194.66 149779815.53
Long-term payables 903862.19 903862.19
Subtotal 4329795823.19 1849544108.70 81926194.66 6261266126.55
Note: The difference between the beginning amount and the end amount of the previous year (December 31
2020) is detailed in note III (31) to the financial statements.
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value or future cash flows of
financial instruments due to changes in market price. Market risk mainly includes interest risk and foreign
currency risk.
1. Interest Rate Risk
Interest rate risk is the risk that an enterprise may encounter fluctuation in fair value or future cash flows of
financial instruments due to changes in market interest. The Company’s fair value interest risks arise from
fixed-rate financial instruments while the cash flow interest risks arise from floating-rate financial instruments.The Company determines the proportion of fixed-rate financial instruments and floating-rate financial
instruments based on the market environment and maintains a proper financial instruments portfolio through
regular review and monitoring.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial
instrument resulted from changes in exchange rate. The Company’s foreign currency risk relates mainly to foreign
currency monetary assets and liabilities. When short-term imbalance occurred to foreign currency assets and
liabilities the Company may trade foreign currency at market exchange rate when necessary in order to maintain
the net risk exposure within an acceptable level. The Company is mainly operated in mainland China whose main
activities are denominated in RMB hence the Company bears insignificant market risk arising from foreign
exchange changes.Please refer to section V (IV) 2 of notes to financial statements for details in foreign currency financial assets
and liabilities at the end of the period.XI. Disclosure of Fair Values
1. Fair values of the assets and liabilities at the end of the period
Unit: RMB
Fair value as of the balance sheet date
Item Name
Level 1 Level 2 Level 3 Total
Constant measurement at fair value -- -- -- --
1.Held-for-trading financial assets 4536549.83 159487189.94 164023739.77
Financial assets measured at fair value through profit or loss 4536549.83 159487189.94 164023739.77
Debt instrument investments 109383374.74 109383374.74
Derivative financial assets 4536549.83 50103815.20 54640365.03
Total amount of assets constantly measured at their fair values 4536549.83 159487189.94 164023739.77
256Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Non-constant measurement at fair value -- -- -- --
2. Basis for determining the market price of items under first level constant and non-constant measurement
at fair value.The fair value of futures contracts is measured at the exchange's open market quotes.
3. Items under second level constant and non-constant measurement at fair value valuation technique
adopted and qualitative and quantitative information of important parameters
The fair value of forward foreign exchange contracts is measured based on the valuation amount of the host
bank or the forward foreign exchange rate announced by the Bank of China. Bank financing products are
measured based on the valuation amount of the issuer or manager.XII. Related party relationships and transactions
1. Parent Company
Holding Voting right
Place of
Parent Company Business nature Registered capital proportion over proportion over
registration
the Company the Company
Sanhua Holding Industrial
Zhejiang Province 730 million yuan 50.12% 50.12%
Group Co. Ltd Investment
Remarks on the parent Company:
As of December 31 2021 Sanhua Holding Group Co. Ltd. (Hereinafter referred to as SHG)directly holds
29.44% of the Company's shares and indirectly holds 20.68% of the shares through its subsidiaries for a total of
50.12% of the shares.The final controllers of the Company are Mr Zhang Daocai Mr Zhang Yabo and Zhang
Shaobo.Other remarks:
2. Information about the Company's subsidiaries
Please refer to interest in other entities of notes to financial statements.
3. Joint ventures and associates of the Company
Please refer to notes to financial statements for details on the Company’s significant joint ventures and associates.Details of other joint ventures or associates carrying out related party transactions with the Company in current
period or in preceding period but with balance in current period are as follows:
Joint ventures or associates Abbreviation of associate
Chongqing Tainuo Machinery Co. Ltd CTMC
Qingdao Sanhua Jinlifeng Machinery Co. Ltd QSJM
257Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Zhongshan Xuanyi Pipe Making Co. Ltd ZXPM
Other remarks
4. Other related parties of the Company
Joint ventures or associates Abbreviation of associate
Zhejiang Sanhua Green Energy Industrial Group Co. Ltd. ZSGE
Hangzhou Tongchan Machinery Co. Ltd. HTM
Hangzhou Sanhua Research Institute Co. Ltd. HSRI
Hangzhou Sanhua International Building Co. Ltd. HSIB
Xinchang County Sanhua Property Management Co. Ltd. XCSP
Shanghai Sanhua Electric Co. Ltd SSE
Zhejiang Sanhua Zhicheng Real Estate Development Co. Ltd. ZSZR
Zhejiang Haoyuan Technology Co. Ltd. ZHT
Ningbo Fuerda Smartech Co. Ltd. NFS
Wuhu Alda Technology Co. Ltd. WAT
Hangzhou Formost Material Technology Co. Ltd HFMT
Other remarks
5. Related party transactions
（1）Purchase and sale of goods rendering and receiving services
Purchase of goods and receiving of services
Unit: RMB
Related Content of Current period Approved Over the Transaction Preceding period
parties transaction cumulative Transaction Limit Limit or No comparative
HTM Materials 4648299.74 700000.00 否 519318.58
HTM Services 28601.77 95000000.00 否
HSRI Water and electricity 否 115165.09
HSRI Materials 22229.77 700000.00 否 14303.48
ZSGE Utility 5012738.23 95000000.00 否 2151282.58
ZXPM Materials 20702956.31 35000000.00 否 9947414.32
QSJM Merchandise 否 1702420.54
WAT Merchandise 82035.40 200000.00 否 16601.77
ZHT Merchandise 否 1063598.21
ZHT Utility 10960870.64 95000000.00 否 7308466.90
258Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Sale of goods and rendering of services
Unit: RMB
Related parties Content of transaction Current period cumulative Preceding period comparative
SHG Merchandise and Materials 447493.03 1080229.07
SHG Water and electricity 749941.39 1871967.25
QSJM Materials 952156.49 291399.64
HFMT Water and electricity 630478.74 890529.83
CTMC Merchandise 74647.80
HSRI Water and electricity 980985.87 919853.20
HSRI Merchandise and Materials 4260641.75 305509.41
HSRI Services 23063.51
WAT Utility 209829.94 212462.82
WAT Merchandise and Materials 1726.07 1449.92
WAT Services 102949.51 59840.90
ZSGE Water and electricity 780198.27 1357863.17
ZSZR Merchandise 9734.51 29990.27
ZHT Water and electricity 137126.85 95522.69
ZHT Merchandise 159.29
HTM Water and electricity 20530.64 42297.07
Remarks of related transactions related to the purchase and sale of goods and the provision and acceptance of
services
Due to the large number of related parties involved in related party transactions between the parent
Company Sanhua Holding Group Co. Ltd and its subsidiaries the Company approved RMB 0.7 million as the
overall purchase quota for purchases and purchase rent equipment rental property management water electricity
and power service fee amount of 95 million yuan from the parent company Sanhua Holding Group Co. Ltd. and
its subsidiaries collectively. The approval bases on the merger of the parent Company and its subsidiaries.
（2）Related party leases
The Company as the lessor：
Unit: RMB
Lessees Types of asset leased Lease income for current period Lease income for the preceding period
SHG Office building 5309339.44 5309339.44
HFMT Plant 300342.85 1022346.21
WAT Plant 507964.54 345223.41
The Company as the lessee：
Unit: RMB
259Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Lessors Types of asset leased Lease expenses for current period Lease expenses for the preceding period
HSRI Office building 1125600.00 1134833.52
ZSGE Dormitory 3184967.59 80800.00
ZSGE Plant 2862761.88 405234.27
Remarks of related party leases
（3）Related party guarantees
The Company as guarantors
Unit: RMB
Guaranteed parties Maturity date Whether the guarantee is Amount guaranteed Commencement date
mature
The Company as guaranteed parties
Guaranteed parties Amount guaranteed Commencement date Maturity date Whether the guarantee is mature
SHG RMB 2230000000.00 February 7 2020 December 16 2023 No
SHG EUR14500000.00 July 05 2019 June 20 2022 No
Remarks of related party guarantees
The information in the table does not include related guarantees within the scope of consolidation nor related
guarantees that have been performed.
（4）Assets transfer and debt restructuring of the related parties
Unit: RMB
Related parties Content of related party transactions Current period cumulative Preceding period comparative
NFS Package assets 37215093.41
HTM Equipment 47965923.63 21622706.86
SHG Equipment 32800.96
HSIB Vehicle 44247.79
HSRI Equipment 791304.59 17393367.30
（5）Key management’s emoluments
Unit: RMB
Items Current period cumulative Preceding period comparative
Key management’s emoluments 10562300.00 5950600.00
（6）Other related party transactions
Unit: RMB
260Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Abbreviation of associate Content of transaction Current period cumulative Preceding period comparative
Property income 1684018.88 1684018.88
SHG
Service expenses 1167603.70
Property expenses 3112828.45 847318.27
ZSGE Service expenses 212086.77
Service income 3547.17 3849.06
HFMT Property income 148754.72 461320.79
HSRI Property expenses 123689.42 44752.78
HTM Service income 4943.40 6867.92
Service expenses 1129125.33
ZHT
Service income 396.10
In addition，it is affected by the inconsistency between the registered permanent residence of a fewemployees and the place of work，there are transactions between related parties that pay employee socialinsurance premium and housing accumulation fund on behalf of them. In current period，the company pays for therelated party RMB296028.83.
6. Balance due to or from related parties
（1）Receivables
Unit: RMB
Closing balance Opening Balance
Related
Items
parties Book balance Provision for bad Book balance Provision for bad
debts debts
Accounts receivable WAT 376293.54 18814.68
Accounts receivable SHG 180000.00 9000.00
Accounts receivable QSJM 68818.81 3440.94 26973.19 1348.66
Accounts receivable HSRI 4254623.49 212731.17 18514.60 925.73
Accounts receivable CTMC 84352.01 4217.60
Other receivables SHG 20000.00 1000.00
Other receivables ZHT 670000.00 33500.00
Other non-current assets 9122291.82
HTM
（Equipment payment in advance）
（2）Payables
Unit: RMB
Items Related parties Closing balance Opening Balance
Accounts payable HTM 6737074.50 3883247.79
261Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Accounts payable ZXPM 5977186.49 1072110.11
Accounts payable ZHT 316422.06
Accounts payable HSRI 261150.00 266150.00
Contract liabilities WAT 1518.94
Advances received NFS 10000000.00
Other payables HFMT 100000.00 100000.00
XIII. Share-based payment
1. Overall information
√ Applicable □ Not applicable
Unit: Shares
Total equity instruments granted in current period 0.00
Total equity instruments exercised in current period 11062090.00
Total equity instruments retired in current period 420160.00
The range of exercise prices of share options outstanding at the end of
Not applicable
the period and the remaining contractual life
2020 Restricted Stock Incentive Plan: The adjusted
restricted stock grant price is RMB 7.115 which will
The range of exercise prices of other equity instruments at the end of the
be unlocked in batches within 12 months after 12
period and the remaining contractual life
months 24 months and 36 months from the grant
date.Other remarks
In February 2020，the Company implemented a restricted stock incentive plan for core employees. Among
them，the number of restricted stocks granted was 12.045 million shares and the grant price per share was RMB
9.85，The grant date was February 24 2020 and it will be unlocked year by year in batches at a ratio of
30%:30%:40%.
In June 2020 the Company implemented the 2019 equity distribution. In September 2020 the company
implemented the 2020 semi-annual equity distribution. In May 2021 the company implemented the 2020 equity
distribution. According to the method stipulated in the "2020 Restricted Stock Incentive Plan" the exercise price
and quantity of the underlying stocks involved were adjusted accordingly. After the adjustment the number of
restricted stocks granted was 15.6585 million shares and the grant price per share was RMB 7.1115.
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
Determination method for grant-date fair value of equity Calculated based on the closing price of the stock on the grant date
262Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
instruments minus the grant price of the restricted stock.Determination method for the number of equity instruments
[Note]
expected to vest
Reasons for significant difference between the estimates in
Not applicable
current period and preceding period
Capital reserve accumulated due to equity-settled 148941110.78
share-based payment
Total expenses incurred due to equity-settled share-based 51697222.60
payment
Other remarks
Note： In 2020 the company initially granted 12.045 million restricted stocks to incentive object. Later it was
adjusted to 17.4577 million shares due to the annual distribution of equity in 2019. The number is the base，it willbe unlocked year by year in batches at a ratio of 30%:30%:40%. The Company estimates the number of exercisable
equity instruments on the following basis: the Company's operating performance can meet the target，the futurevoluntary turnover rate of the incentive objects is 0%，and the performance appraisal level is above C (the unlockingcoefficient is 1).XIV. Commitments and contingencies
1. Significant commitments
Significant contingencies existing on the balance sheet date
With the approval of the CSRC in document CSRC License [2021] No. 168 the company publicly issued 30
million convertible corporate bonds in June 2021 with a face value of 100 yuan each and net amount of raised
funds is 2987.53 million yuan. In addition to replenishing working capital the raised funds are committed to the
following projects:
Investment projects with raised funds Committed capital
Annual production of 65 million sets of commercial
refrigeration and air conditioning intelligent control 1487 million yuan
components construction project
Annual output of 50.5 million sets of high efficiency and
energy saving refrigeration and air conditioning control 698 million yuan
components project
2. Contingencies
（1）If no significant contingent matter to be disclosed by the Company it should also be noted accordingly
No important contingent matter needs to be disclosed by the Company.
263Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
（2）Other information required by the industry information disclosure guidelines
The company shall comply with the disclosure requirements of automobile manufacturing related industries in the
guidelines for self-discipline supervision of listed companies of Shenzhen Stock Exchange No. 3 - industry
information disclosure. The sales amount in the modes of mortgage sales and financial leasing accounts for more
than 10% of the operating revenue
□ Applicable □ Not Applicable
Guarantee of the company to the distributor
□ Applicable □ Not Applicable
XV. Events after the balance sheet date
1. Profit distribution
According to the profit distribution plan of 2021 approved by the board of directors of the company on
March 23 2022 cash of 1.50 yuan (including tax) for every 10 shares will be distributed to all shareholders based
on 3569927512 shares (total share capital minus repurchased shares of the company) on March 18 2022. The
profit distribution plan has yet to be considered and approved by the general meeting of shareholders.Note: as of March 18 2022 the share capital of the company is 3591098972 shares of which the number
of repurchased shares is 21171460. According to the provisions of the company law listed companies do not
have the right to participate in profit distribution and capital reserve to increase share capital by repurchasing the
shares of the company held through the special account.If the total share capital of the company changes due to the conversion of convertible bonds into shares share
repurchase equity incentive exercise refinancing and listing of new shares before the implementation of the
distribution plan the total distribution amount shall be adjusted accordingly according to the principle of
unchanged distribution proportion.XVI. Other Significant Events
1. Segment information
（1）Basis for reportable segments and the accounting policy
Reportable segments are identified based on operating segments which are determined based on the structure
of the Company’s internal organization management requirements and internal reporting system etc. and
identified the reportable segments based on products.
（2）Financial information of the reporting subsection
Unit: Ten thousand yuan RMB
Items Operating revenue Operating cost Total assets Total liabilities
Refrigeration and air-conditioning electrical 1121832.09 825020.97 1750747.33 983989.10
parts business
264Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
480248.89365714.13611249.35252748.52
Auto parts business
Total 1602080.98 1190735.10 2361996.68 1236737.62
2. Other remarks
Issuance of convertible corporate bonds
With the approval of the CSRC in document CSRC License [2021] No. 168 the company publicly issued 30
million convertible corporate bonds (hereinafter referred to as Sanhua convertible bonds) in June 2021 with a
face value of 100 yuan each and a total issuance amount of 3000 million yuan.The term of Sanhua convertible bonds is 6 years the interest is paid once a year and the principal and
interest of the last year are returned when due. The coupon rate is 0.2% in the first year 0.4% in the second year
0.6% in the third year 1.5% in the fourth year 1.8% in the fifth year and 2.0% in the sixth year. The start and end
date of Sanhua convertible bonds is from December 7 2021 to May 31 2027 and the initial conversion price is
21.55 yuan / share. Within five trading days after the maturity of Sanhua convertible bonds the company will
redeem the convertible bonds that have not been converted into shares at the price of 110% of the face value of
the bonds (including the last interest).XVII. Notes to items of parent Company financial statements
1. Accounts receivable
（1）Disclosure of accounts receivable by categories
Unit: RMB
Closing balance Opening balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Categor
Accrue Carrying Accrue Carrying y
Proport d amount Proport d amount
Amount Amount Amount Amount
ion proport ion proport
ion ion
Receiva 37907911 64.69 37907911 5689261 77.05 5689261
bles 2.37 % 2.37 07.65 % 07.65
with
provisio
n made
on an
individu
al basis
Includin
g:
265Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Receiva 2069266 35.31 1034633 5.00% 1965803 1694532 22.95 847266 5.00% 1609805
bles 54.25 % 2.71 21.54 30.80 % 1.54 69.26
with
provisio
n made
on a
collectiv
e basis
Includin
g:
5860057100.0010346331.77%57565947383793100.008472661.15%7299066
Total
66.62%2.7133.9138.45%1.5476.91
Provision made on an individual basis:
Unit: RMB
Closing balance
Name Book balance Provision for bad Accrued Accrued
debt proportion reason
SANHUA (VIETNAM) COMPANY LIMITED 120982815.88 0.00%
Zhejiang Sanhua Trading Co. Ltd 106410843.62 0.00%
SANHUA INTERNATIONAL SINGAPORE 70600688.73 0.00%
PTE.LTD.Sanhua International Inc. 37704819.29 0.00%
Zhejiang Sanhua Automotive Components Co. Ltd 15649848.37 0.00%
SHAOXING SANHUA NEW ENERGY 10000907.48 0.00%
AUTOMOTIVE COMPONENTS CO.LTD
Other subsidiaries 17729189.00 0.00%
Total 379079112.37 -- --
Provision made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Book balance Book balance
Within 1 year 206926654.25 10346332.71 5.00%
Total 206926654.25 10346332.71 --
The remarks of determination of a collective basis:
If the provision for bad debt of accounts receivable is accrued in accordance with the general expected credit loss
model please refer to the disclosure of other receivables to disclose the relevant information about the provision
for bad debt:
√ Applicable □ Not applicable
266Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Phase I Phase II Phase III Subtotal
Provision for bad debt 12? month expected Lifetime expected credit losses Lifetime expected credit losses
credit losses (credit not impaired) (credit impaired)
Balance on January 1 2021 8472661.54 8472661.54
The balance as of January 1 2021 is
————————
in the current period
--Transferred to phase II
--Transferred to phase III
--Reversed to phase II
--Reversed to phase I
Provision made in the current period 1873671.17 1873671.17
Provision recovered in current period
Provision reversed in current period
Provision written off in current
period
Other changes
Balance on December 31 2021 10346332.71 10346332.71
Disclosure by aging
Unit: RMB
Aging Closing balance
Within 1 year (including 1 year) 586005766.62
Total 586005766.62
（2）Provision for bad debt accrued recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Opening Closing
Category Recovered or Write
balance Accrued Others balance
reversed off
Receivables with provision made on a 8472661.54 1873671.17 10346332.71
collective basis
Total 8472661.54 1873671.17 10346332.71
Including significant provision for bad debt recovered or reversed amount:
（3）Top 5 debtors with the largest accounts receivable balances
（4）Assets and liabilities arising from transferred but still involved accounts receivable
Other remarks:
267Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Closing balance of top 5 debtors totaled 367198261.13 yuan accounting for 62.67% of the total closing
balance of accounts receivable and provision for bad debts made thereon totaled 1574954.68 yuan.
2. Other receivables
Unit: RMB
Items Closing balance Opening balance
Dividend receivable 19000000.00
Other receivables 370775386.82 348897078.11
Total 389775386.82 348897078.11
（1）Dividend receivable
Classification of dividends receivable
Items Closing balance Opening balance
Wuhu Sanhua Automatic Control Components Co. Ltd 12000000.00
Zhongshan Sanhua Refrigeration Components Co. Ltd 7000000.00
Total 19000000.00
（2）Other receivables
1）Other receivables categorized by nature
Unit: RMB
Other receivables categorized by nature Closing balance Opening balance
Principal and interest of capital assistance to subsidiaries 341107339.69 329063840.37
Tax refund receivable 15563784.83 8536537.99
Guarantee deposit 9827285.00 10381285.00
Others 4651964.58 1224031.39
Total 371150374.10 349205694.75
2）Provision for bad debt
Unit: RMB
Phase I Phase II Phase III
Next 12?month Lifetime expected credit Lifetime expected credit
Provision for bad debt Total
expected credit losses (credit not losses (credit impaired)
losses impaired)
Balance on January 1 43389.30 265227.34 308616.64
268Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
2021
Balance in current
period on January 1 —— —— —— ——
2021
--Transferred to phase -8826.15 8826.15
II
Provision made in 172778.03 172778.03
current period
Provision reversed in 106407.39 106407.39
current period
Balance on December
207341.18167646.10374987.28
312021
Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
Disclosure by aging
Unit: RMB
Aging Closing balance
Within 1 year (including 1 year) 207341.18
1 to 2 years 17652.30
2 to 3 years 21472.80
Over 3 years 128521.00
3 to 4 years 128521.00
Total 374987.28
3）Provision for bad debt accrued recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Opening Closing
Category Recovered or Write
balance Accrued Others balance
reversed off
Receivables with provision made on a 308616.64 172778.03 106407.39 374987.28
collective basis
Total 308616.64 172778.03 106407.39 374987.28
Including significant provision for bad debt recovered or reversed amount:
Unit: RMB
Debtors Recovered or reversed Way of collection
269Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
4）Top 5 debtors with the largest other receivables balances
Unit: RMB
Proportion to the Provision for bad
Nature of
Debtors Closing balance Age total balance of debt at the end of
receivables
other receivables the period
Shaoxing Shangyu Sanli Copper 70000000.00 18.86%
Financial aid Within 1 year
Industry Co. Ltd
Sanhua (Jiangxi) Self - control 50000000.00 13.47%
Financial aid Within 1 year
Components Co. Ltd
Wuhu Sanhua Auto-control 46000000.00 12.39%
Financial aid Within 1 year
Components Co. Ltd
Wuhu Sanhua Refrigeration 44159339.69 Within 1 year 11.90%
Financial aid
Accessories Co. Ltd
Zhongshan Sanhua Refrigeration 40000000.00 10.78%
Financial aid Within 1 year
Accessories Co. Ltd
Total -- 250159339.69 -- 67.40%
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Book balance Provision Book balance Provision for
Investees
for Carrying amount impairment Carrying amount
impairment
Investments in 6408397046.53 6408397046.53 4515044723.75 4515044723.75
subsidiaries
Investments in 20389833.75 20389833.75 13501505.62 13501505.62
associates and
joint ventures
Total 6428786880.28 6428786880.28 4528546229.37 4528546229.37
（1）Investments in subsidiaries
Unit: RMB
Changed amount of the current period Closing
Opening Closing balance balance of
Investments Investments
Provision
Investees balance(Carrying (Carrying provision
increased decreased
for Others
amount) amount) for
impairment
impairment
270Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Zhejiang 1994138976.82 11762979.23 2005901956.05
Sanhua
Automotive
Components
Co. Ltd.Sanhua 644441139.10 6542381.81 650983520.91
(Hangzhou)
Micro Channel
Heat Exchanger
Co. Ltd
Zhejiang 320278269.01 4619579.04 324897848.05
Sanhua Climate
& Appliance
Controls Group
Co. Ltd
Sanhua 308285328.31 -1254321.47 307031006.84
International
Inc.Sanhua 664644511.07 283315406.16 947959917.23
International
Singapore Pte.Ltd
Wuhu Sanhua 151271932.66 609721.39 151881654.05
Automatic
Control
Components
Co. Ltd
Sanhua 93367388.93 402619.88 93770008.81
(Jiangxi) Self -
control
Components
Co. Ltd
Xinchang 46645756.62 807610.51 47453367.13
Sitong
Electrical and
Mechanical
Co. Ltd
Zhejiang 68290894.37 1581000000.00 1649290894.37
Sanhua
Commercial
Refrigeration
Co. Ltd
271Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Zhejiang 53745007.56 1827465.44 55572473.00
Sanhua Trading
Co. Ltd
Changzhou 62499656.16 41958.44 62541614.60
Lanke four-way
valve co. LTD
Hangzhou 51017554.19 2197724.32 53215278.51
Leaderway
Electronics Co.Ltd
Shaoxing 32527587.10 417964.62 32945551.72
Shangyu Sanli
Copper
Industry Co.Ltd
Zhongshan 5082444.18 212849.20 5295293.38
Sanhua Air
conditioning
Refrigeration
Components
Co. Ltd
Wuhan Sanhua 4240191.30 321820.62 4562011.92
Refrigeration
Components
Co. Ltd
Zhongshan 5899010.73 332655.92 6231666.65
Sanhua
Refrigeration
Components
Co. Ltd
Suzhou Sanhua 8669075.64 193907.67 8862983.31
Air-Conditioner
Parts Co.Ltd
Total 4515044723.75 1893352322.78 6408397046.53
（2）Investments in associates and joint ventures
Unit: RMB
Opening Changed amount of the current period Closing Closin
Investees balance Investm Investm Investm Adjustme Chan Cash Provisi Oth balance g
(Carryin ents ents ent nt in ges dividend/ on for ers (Carryin balance
272Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
g increase decreas income other in profit impair g of
amount) d ed recogniz comprehe other declared ment amount) provisi
ed under nsive equit for on for
equity income y distributi impair
method on ment
Ⅰ. Joint ventures
Ⅱ. Associates
Guochua 152525 15087.2 154033
ng 2.76 3 9.99
Energy
Internet
Innovatio
n Center
(Guangdo
ng) Co.Ltd.Chongqin 939690 576223 1500000 136591
g Tainuo 4.73 0.65 .00 35.38
Machiner
y Co.Ltd.Nanchan 151713 -3150.2 151398
g Sanhua 8.95 5 8.70
Jinlifeng
Machiner
y Co.Ltd.Ningbo 106220 449942. 151215
Jinlifeng 9.18 23 1.41
Machiner
y Co.Ltd
Qingdao 0.00 329853. 329853.Sanhua 20 20
Jinlifeng
Machiner
y Co.Ltd.Xinchang 0.00 195000 -11563 183436
zhejiang 0.00 4.93 5.07
energy
sanhua
273Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
comprehe
nsive
energy
co. LTD
1350151950006438321500000203898
Subtotal
05.620.008.13.0033.75
1350151950006438321500000203898
Total
05.620.008.13.0033.75
（3）Other remarks
Due to the implementation of the enterprise group share payment transactions the company as a settlement
enterprise，according to the fair value of the granted entity instrument. Confirm equity investments in subsidiaries(service receivers). At the same time increase capital reserves 25841822.78yuan.
4. Operating revenue and Operating cost
Unit: RMB
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 4795178915.97 3636339329.61 4261339025.61 3166285730.64
Other operations 382075645.85 363200176.12 255244021.84 239955604.07
Total 5177254561.82 3999539505.73 4516583047.45 3406241334.71
Related information of revenue:
Unit: RMB
Contract classification Segment 1 Segment2 Total
Commodity type
Among:
Classification by business area
Among:
Market or customer type
Among:
Contract type
Among:
274Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Classification by time of commodity transfer
Among:
Classification by contract term
Among:
Classification by sales channel
Among:
Total
Information related to performance obligations:
/
Information related to the transaction price allocated to the remaining performance obligations:
At the end of the reporting period revenue corresponding to performance obligations for which the Company has
entered into contracts but not yet performed or fulfilled amounted to 0.00 yuan.Other remarks
5. Investment income
Unit: RMB
Items Current period Preceding period
cumulative comparative
Investment income from long-term equity investments under cost 77805606.15 174095823.76
method
Investment income from long-term equity investments under equity 6438328.13 2298930.50
method
Gains on disposal of long-term equity investments -27199644.40
Investment income of bank financing products 6621422.44 13307539.55
Gains and losses on settlement of futures contracts 15104176.44 17957388.89
Gains and losses on settlement of foreign exchange contract 10185206.59 -8360741.05
Income of fund using fee 12531531.64 17387962.74
Total 128686271.39 189487259.99
6. Others
R&D expenses
Unit: RMB
275Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
Items 2021 2020
Labor cost 124637638.62 101435220.21
Material and power expense 100401887.14 72943704.17
Depreciation and amortization expense 8889868.09 7931315.36
Mold manufacturing expense 5162383.68 2063576.52
Royalties 2206448.58 825497.30
Outsourcing R&D expense 611969.71 443167.38
Others 1750905.47 2715340.57
Total 243661101.29 188357821.51
XVIII. Supplementary information
1. Non-recurring profit or loss in current period
√ Applicable □ Not Applicable
Unit: RMB
Items Amount Remarks
Gains or loss on disposal of non-current assets -7164158.61
Government grants included in profit or loss
(excluding those closely related to operating activities
of the Company satisfying government policies and 101910018.36
regulations and continuously enjoyed with certain
quantity/quota based on certain standards)
In order to avoid the price risk of raw materials and
prevent exchange rate risk the company and its
subsidiaries have carried out derivatives business
including futures contracts and foreign exchange forward
contracts. In 2021 the futures income was 31.4482
Gains or losses on changes in fair value of
million yuan and the foreign exchange income was
held-for-trading financial assets held-for-trading
91.9912 million yuan; In 2020 the futures income was
financial liabilities and investment income from
36.3784 million yuan and the foreign exchange income
disposal of held-for-trading financial 123439358.54
was 55.0162 million yuan. Meanwhile the exchange loss
assetsheld-for-trading financial liabilities and other
was 95.9901 million yuan in 2021 and 112.6759 million
debt investments excluding those arising fromyuan in 2020. According to “the No. 1 Explanatoryhedging business related to operating activities
Announcement on Information Disclosure for
Companies Offering Their Securities to Public -Non-recurring Profit or Loss” exchange gains and losses
are recurring gains and losses and Futures and forward
gains and losses are non-recurring gains and losses.Other non-operating revenue or expenditures except -3359134.55
276Zhejiang Sanhua Intelligent Controls Co. Ltd. 2021 Annual Report.
the above items
Other profit or loss satisfying the definition of
765674.33
non-recurring profit or loss
Less: Enterprise income tax affected 17841108.54
Non-controlling interest affected 1197516.27
Total 196553133.26 --
Details of other profit and loss items that meet the definition of non-recurring profit and loss:
□ Applicable √ Not Applicable
The company has no specific circumstances of other profit and loss items that meet the definition of non-recurring
profit and loss.For items defined as non-recurring profit or loss according to “the No. 1 Explanatory Announcement onInformation Disclosure for Companies Offering Their Securities to Public - Non-recurring Profit or Loss”
non-recurring profit or loss items listed in the said document defined as project of recurring profit or loss specify
the reason
□ Applicable √ Not Applicable
2. ROE and EPS
EPS (yuan/share)
Weighted average
Profit of the reporting period Basic Diluted
ROE
EPS EPS
Net profit attributable to shareholders of ordinary shares 15.98% 0.47 0.47
Net profit attributable to shareholders of ordinary shares after deducting
14.12%0.420.42
non-recurring profit or loss
3. Financial data variance between financial reporting prepared under domestic and abroad accounting
standards
（1）Differences of net profits and net assets in the financial reports disclosed according to the IFRS and
Chinese Accounting Standards
□ Applicable √ Not Applicable
（2）Differences of net profits and net assets in the financial reports disclosed according to the overseas
accounting standards and Chinese Accounting Standards
□ Applicable √ Not Applicable
277