Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Zhejiang Sanhua Intelligent Controls Co., Ltd.
2023 Annual Report
April 2024
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2023 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 undertake both individual and joint legal liabilities.
Zhang Yabo, the Company's legal representative, Yu Yingkui, the person in charge of the
accounting work, and Li Zhimi, the person in charge of accounting department (Accounting Officer)
hereby declare and warrant that the financial statements in this report are authentic, accurate and
complete.
All directors attended the board meeting to review this report.
The forward-looking descriptions of future plans, development strategies, and other aspects
involved in this report do not constitute a substantial commitment of the Company to investors.
Investors are kindly advised 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’s
Discussion and Analysis of Operations”. Please pay attention to relevant contents.
The profit distribution proposal approved by the board of directors is set out as follows: Based
on the provisional share capital of 3,706,504,614 shares, cash dividend of RMB 2.50 (tax inclusive)
will be distributed to all shareholders for every 10 shares. The Company will not distribute bonus
shares or convert capital reserves to share capital.
Note: The share capital of the Company is 3,732,615,535 shares, of which the number of repurchased shares
is26,110,921. 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.
If the total share capital of the Company changes due to the conversion of convertible bonds,
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 constant distribution proportion.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
CONTENTS
Section I Important Notes, Contents and Definitions ................................................................................................ 2
Section II Corporate Profile and Key Financial Indicators ........................................................................................ 9
I. Corporate Information ............................................................................................................................... 9
II. Contacts and Contact Information ..................................................................................................... 9
III. Information Disclosure and Place of the Report .............................................................................. 10
IV. Company Registration and Alteration ............................................................................................. 10
V. Other Relevant Information ............................................................................................................. 10
VI. Key Accounting Data and Financial Indicators ............................................................................... 10
VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards ............. 11
VIII. Key Quarterly Financial Indicators .................................................................................................. 12
IX. Items and Amounts of Non-recurring Gains and Losses ................................................................. 12
Section III Management’s Discussion and Analysis of Operations ......................................................................... 15
I. Industry situation of the Company during the reporting period............................................................... 15
II. The Principal Business of the Company during the Reporting Period ............................................ 16
III. Core Competitiveness Analysis ....................................................................................................... 17
IV. Main Business Analysis ................................................................................................................... 18
V. Non-core Business Analysis ............................................................................................................ 29
VI. Analysis of Assets and Liabilities .................................................................................................... 30
VII. Analysis of Investment .................................................................................................................... 33
VIII. Disposal of Significant Assets and Equity ....................................................................................... 38
IX. Analysis of Major Subsidiaries and Investees ................................................................................. 38
X. Structural Entities Controlled by the Company ............................................................................... 40
XI. Outlook for the Future Development of the Company .................................................................... 40
XII. Reception of activities including research, communication and interviews during the report period
41
XIII. Implementation status of action plan “Dual improvement in quality and return” ........................... 43
Section IV Corporate Governance ........................................................................................................................... 44
I. Basic situation of corporate governance .................................................................................................. 44
II. Company’s Independence in Businesses, Management, Assets, Institutions and Finance from
Controlling Shareholders ................................................................................................................................. 45
III. Horizontal Competition ................................................................................................................... 46
IV. Annual General Meeting and Extraordinary General Meetings convened during the Reporting Period
46
V. Information of directors, supervisors, senior management .............................................................. 47
VI. Performance of duties by directors during the reporting period ...................................................... 59
VII. Performance of duties by special committees under the board during the reporting period ............ 60
VIII. Performance of duties by the Supervisory Committee .................................................................... 63
IX. Staff in the Company ....................................................................................................................... 63
X. Profit distribution of ordinary shares and capitalization of capital reserves .................................... 65
XI. The Implementation of an Equity Incentive Plan, Employee Stock Ownership Plan, or Other
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Incentive Plans ................................................................................................................................................. 66
XII. Construction and implementation of internal control ...................................................................... 68
XIII. Management and control of subsidiaries during the reporting period ............................................. 69
XIV. Self-evaluation report on internal control or Internal control audit report....................................... 69
XV. Governance problem rectification of the Company ......................................................................... 71
Section V Environmental and Social Responsibility ............................................................................................... 72
I. Material environmental issues ................................................................................................................. 72
II. Social responsibility......................................................................................................................... 77
III. Achievements of poverty alleviation and rural revitalization .......................................................... 77
Section VI Significant Events .................................................................................................................................. 78
I. Performance of commitments .................................................................................................................. 78
II. The Company’s funds used by the controlling shareholder or its related parties for non-operating
purposes. 84
III. Illegal external guarantee ................................................................................................................. 84
IV. Explanation Given by the Board of Directors Regarding the “Non-standard Auditor’s Report” Issued
by the CPA Firm for the Reporting Period ...................................................................................................... 84
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 ..... 84
VI. For changes in accounting policies, accounting estimates and accounting methods as compared to
the financial report for the prior year ............................................................................................................... 84
VII. Explanation for changes in scope of the consolidated financial statements as compared to the
financial report for the prior year ..................................................................................................................... 84
VIII. Engagement and disengagement of the CPA firm ........................................................................... 85
IX. Listing suspension and termination after disclosure of this annual report ....................................... 86
X. Bankruptcy and Restructuring ......................................................................................................... 86
XI. Material Litigation and Arbitration .................................................................................................. 86
XII. Punishments and Rectifications ....................................................................................................... 86
XIII. Integrity of the Company and Its Controlling Shareholders and Actual Controllers ....................... 86
XIV. Significant Related-party Transaction ............................................................................................. 86
XV. Significant Contracts and Execution................................................................................................ 87
XVI. Other Significant Events .................................................................................................................. 96
XVII. Significant Events of the Company’s Subsidiaries .......................................................................... 97
Section VII Changes in Shares and Information about Shareholders ...................................................................... 98
I. Changes in Shares .................................................................................................................................... 98
II. Issuance and Listing of Securities.................................................................................................. 102
III. Particulars about the shareholders and actual controller ................................................................ 103
IV. Information about the implementation of share repurchase during the reporting period ............... 111
Section VIII Information of Preferred Shares........................................................................................................ 113
Section IX Bonds ................................................................................................................................................... 114
I. Enterprise bond (hereinafter referred to as the bond issued by domestic state-owned entity) ............... 114
II. Corporate bond .............................................................................................................................. 114
III. Debt financing instruments of non-financial enterprises ............................................................... 114
IV. Convertible bond ........................................................................................................................... 114
V. The loss within the scope of consolidated statements in the reporting period exceeded 10% of the net
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
assets at the end of the previous year ............................................................................................................. 116
VI. Overdue interest-bearing debts other than bonds by the end of this reporting period ................... 116
VII. Whether there is any violation of rules or regulations during the reporting period ....................... 116
VIII. Main accounting data and financial indicators of the Company in recent two years by the end of the
reporting period ............................................................................................................................................. 116
Section X Financial Report .................................................................................................................................... 118
I. Audit report............................................................................................................................................ 118
II. Financial Statements ...................................................................................................................... 122
III. Company profile ............................................................................................................................ 146
IV. Preparation basis of the financial statements ................................................................................. 147
V. Significant accounting policies and estimates ............................................................................... 147
VI. Taxes .............................................................................................................................................. 164
VII. Notes to Items in the Consolidated Financial Statements .............................................................. 166
VIII. Government grants......................................................................................................................... 217
IX. Interest in other entities.................................................................................................................. 218
X. Risks Related to Financial Instruments.......................................................................................... 220
XI. Disclosure of Fair Values .............................................................................................................. 224
XII. Related party relationships and transactions .................................................................................. 224
Items ...................................................................................................................................................................... 228
XIII. Share-based payment ..................................................................................................................... 229
XIV. Commitments and contingencies ................................................................................................... 232
XV. Events after the balance sheet date ................................................................................................ 232
XVI. Other Significant Events ................................................................................................................ 233
XVII. Notes to items of parent Company financial statements ................................................................ 234
XVIII. Supplementary information ........................................................................................................... 244
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Documents Available for Inspection
1. The 2023 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. Original audit report with the seal of the accounting firm, signature and seal of the registered accountant
4. Articles of Association
5. Original copy of all the Company's documents and announcements published on the newspapers
designated by CSRC within the reporting period.
6. Other documents available for inspection.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Definitions
Items Refers to Definition
The Company, Company Refers to Zhejiang Sanhua Intelligent Controls Co., Ltd.
The Articles of Association Refers to Articles of Association 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 of Shareholders of Zhejiang Sanhua Intelligent Controls Co.,
General Meeting of Shareholders Refers to
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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Section II Corporate Profile and Key Financial Indicators
I. Corporate Information
Stock abbreviation Sanhua Intelligent Controls Stock code 002050
Former stock abbreviation (if
Sanhua Co.,
any)
Stock Exchange Shenzhen Stock Exchange
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 in
三花智控
Chinese
Name of the Company in
ZHEJIANG SANHUA INTELLIGENT CONTROLS CO., LTD.
English (if any)
Abbr. of the Company name in
SANHUA
English (if any)
Legal representative Zhang Yabo
Registered Address No. 219 Woxi Avenue, Chengtan Street, Xinchang, Shaoxing, Zhejiang
Post Code of Registered
312530
Address
June 19, 2015, the registered address of the Company was changed from Xialiquan, Qixing Street,
Xinchang, Zhejiang to No. 219 Woxi Avenue, Meizhu, Xinchang, Zhejiang;
Historical changes of the February 29, 2016, the registered address of the Company was changed from No. 219 Woxi
Company's registered address Avenue, Meizhu, Xinchang, Zhejiang to Xialiquan, Qixing Street, Xinchang, Zhejiang.
June 2, 2023, the registered address of the Company was changed from Xialiquan, Qixing Street,
Xinchang, Zhejiang to No. 219 Woxi Avenue, Chengtan Street, Xinchang, Shaoxing, Zhejiang
Office Building in Sanhua Industrial Park
Office Address
No. 219 Woxi Avenue, Chengtan Street, Xinchang, Shaoxing, Zhejiang
Post Code of Office Address 312530
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
Office Building in Sanhua Industrial Park Office Building in Sanhua Industrial Park
Address No. 12 Baiyang Street, Qiantang New No. 219 Woxi Avenue, Chengtan Street,
District, Hangzhou, Zhejiang Xinchang, Shaoxing, Zhejiang
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Tel. 0571-28020008 0575-86255360
Fax 0571-28876605 0575-86563888-8288
E-mail shc@zjshc.com shc@zjshc.com
III. Information Disclosure and Place of the Report
The website of the stock exchange where the Company discloses
Shenzhen Stock Exchange：http://www.szse.cn
the annual report
Media and website designated by the Company for disclosure of Securities Times, Shanghai Securities News
the Annual Report CNINFO: http://www.cninfo.com.cn
Place where the Annual Report is available for inspection Office of the Board of Directors of the Company
IV. Company Registration and Alteration
Unified Social Credit Code 913300006096907427
In 2017, the Company completed a major asset reorganization
Changes in principle business activities since the Company was
and changed main business to Refrigeration A/C Electrical
listed (if any)
Components business and Automotive Components business.
Changes of controlling shareholders of the Company (if any) N/A
V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm Pan-China Certified Public Accountants LLP.
Building B, China Resources Building, 1366 Qianjiang Road,
Business address of the accounting firm
Shangcheng District, Hangzhou, Zhejiang, China
Name of accountants for signature Luo Xunchao, Zhang Xin
Sponsor institution engaged by the Company to perform the duties of continuous supervision during the reporting
period
□ Applicable √ Not applicable
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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2023 2022 YoY Change 2021
Total Revenue (RMB) 24,557,802,066.59 21,347,549,741.00 15.04% 16,020,809,805.52
Net Profit Attributable
to Shareholders of the
2,920,992,940.01 2,573,344,179.92 13.51% 1,684,044,407.47
Listed Company
(RMB)
Net Profit Attributable
to Shareholders of the
Listed Company after
2,917,029,188.01 2,291,450,453.44 27.30% 1,487,491,274.21
Deducting Non-
recurring Gains and
Losses (RMB)
Net Cash Flow
Generated from
3,723,964,354.63 2,509,666,490.56 48.38% 1,555,819,103.29
Operational Activities
(RMB)
Basic Earnings per
0.81 0.72 12.50% 0.47
Share (RMB/Share)
Diluted Earnings per
0.81 0.72 12.50% 0.47
Share (RMB/Share)
Weighted Average
19.18% 21.38% -2.20% 15.98%
ROE
At the End of 2023 At the End of 2022 YoY Change (%) At the End of 2021
Total Assets (RMB) 31,890,584,773.41 27,961,214,156.28 14.05% 23,619,966,759.91
Net Assets Attributable
to Shareholders of the
17,894,403,984.79 12,941,310,409.42 38.27% 11,150,308,271.43
Listed 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 net profits and net assets of disclosed financial report according to the International
Financial Reporting Standards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2. Difference in the net profits and net assets of disclosed financial report according to the Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference.
VIII. Key Quarterly Financial Indicators
Unit: RMB
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Total revenue 5,678,755,521.90 6,850,165,103.69 6,446,857,573.91 5,582,023,867.09
Net profit attributable
to shareholders of the 601,262,668.34 793,498,180.51 764,870,374.92 761,361,716.24
Company
Net profit attributable
to shareholders of the
Company excluding 556,696,354.35 910,693,912.34 755,386,134.37 694,252,786.95
non-recurring gains
and losses
Net cash flows from
735,871,707.43 982,801,886.18 644,966,480.16 1,360,324,280.86
operating 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 2023 2022 2021 Note
Profits or losses from
disposal of non-current
assets (including the
-1,157,418.11 445,368,259.89 -7,164,158.61
write-off for the
impairment provision
of assets)
The government
subsidies included in
the current profits and
losses (excluding the
government subsidy
closely related to 93,921,181.44 91,659,049.88 101,910,018.36
regular course of
business of the
Company and
government subsidy
based on standard
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
quota or quantitative
continuous application
according to the state
industrial policy.)
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 derivatives and
exchange rate
derivatives. In 2023,
the futures income was
9.5091 million yuan,
and the foreign
Gains and losses from
exchange loss was
changes in fair value
99.384 million yuan. In
arising from the
2022, the futures loss
holding of financial
was 6.4275 million
assets and financial
yuan, and the foreign
liabilities by non-
exchange loss was
financial enterprises, as
191.8364 million yuan.
well as gains and losses
-89,874,825.04 -198,263,945.31 123,439,358.54 Meanwhile, the
from the disposal of
exchange earnings in
financial assets and
2023 were 133.5151
financial liabilities,
million yuan, and the
excluding effective
exchange earnings in
hedging business
2022 were 228.8434
related to normal
million yuan.
business operations of
According to the
the company
Explanatory
Announcement of
Information Disclosure
of Listed Companies
No. 1 – Non-recurring
Gains and Losses,
exchange gains and
losses are recurring
gains and losses, and
futures and foreign
exchange gains and
losses are non-
recurring gains and
losses.
Other non-operating
income and
10,206,261.89 -1,251,705.71 -3,359,134.55
expenditures except the
items mentioned above
Other gains and losses
items that fit the
definition of non- 1,445,314.58 765,674.33
recurring gains and
losses
Gains and losses -7,000,000.00
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
arising from
contingencies unrelated
to the normal operation
of the Company's
business
Less: Impact of income
1,905,361.61 46,164,566.99 17,841,108.54
tax
Impact of the
minority interests (after 7,226,086.57 3,898,679.86 1,197,516.27
tax)
Total 3,963,752.00 281,893,726.48 196,553,133.26 --
Details of other gains and losses items that meet the definition of non-recurring gains and losses:
□Applicable √ Not applicable
The Company did not have other gain/ loss items that meet the definition of non-recurring gains and losses.
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
The Company did not define any non-recurring gains and losses items, defined and listed in the Explanatory
Announcement of Information Disclosure of Listed Companies No. 1 – Non-recurring Gains and Losses, as
recurring gains and losses items.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Section III Management’s Discussion and Analysis of Operations
I. Industry situation 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
In 2023, despite adverse effects such as overseas economic fluctuations and intensified geopolitical conflicts,
the global economy still maintained significant resilience and achieved stable growth. According to the International
Monetary Fund, the global economic growth rate in 2023 is 3.2%. The Chinese economy has withstood multiple
pressures and overall rebounded, achieving a GDP of 126.1 trillion yuan for the whole year, a year-on-year growth
of 5.2%.
(1) Refrigeration and air conditioning electrical components industry
With the recovery of demand after the epidemic, the stimulation of summer high temperatures, the promotion
of guaranteed delivery of buildings, and the gradual relaxation of urban purchase restrictions, the air conditioning
market continues to grow. According to Industry Online, the production of household air conditioners in China in
2023 was 168.69 million units, a year-on-year increase of 11.1%; The total annual sales revenue of the central air
conditioning market was 142.9 billion yuan, a year-on-year increase of 11.1%.
With the global trend of environmental protection and carbon reduction, the proposal of China's "dual carbon"
goals, and the improvement of intelligent refrigeration and air conditioning equipment and energy efficiency
standards, there is a new demand for the refrigeration and air conditioning electrical components industry around
the world, bringing new market space and value increment. As a leader in refrigeration and air conditioning control
components, the Company, with years of manufacturing experience, leading market technology, and extensive and
deep cooperation with customers, will adapt to market changes, seize opportunities, and develop steadily.
(2) Automotive components industry
According to EV Tank and the China Association of Automobile Manufacturers, global sales of NEVs reached
14.653 million units in 2023, a year-on-year increase of 35.4%, accounting for 16.1% of global vehicle sales in
2023; Among them, the sales of NEVs in China accounted for 64.8% of global sales, reaching 9.495 million units,
a year-on-year increase of 37.9%, and accounting for 31.6% of national vehicle sales in 2023.
In recent years, the development of NEVs worldwide has continued to grow rapidly, becoming an unstoppable
trend. Riding the global trend of NEVs, the Company's NEV thermal management product market is expanding
rapidly. NEVs from different routes have put forward new requirements for automotive thermal management
products, which are becoming more technology intensive and capital intensive. The Company has been in the field
of automotive thermal management since its early years, with profound technical accumulation and widespread
customer recognition. It has entered subsystems and components from automotive thermal management components,
and has now become an important partner for customers such as BYD, Volvo, Geely, Valeo, Mahler, Volkswagen,
Mercedes Benz, BMW, Toyota, General Motors, Li Auto, NIO, etc.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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. The Company takes improving energy
efficiency level of various end products as its responsibility, leading the global transformation of energy-saving and
environmental protection products. 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 Electric Expansion Valve, Thermal Management Integrated Module for new energy vehicle,
Omega Pump ranks first globally. The market share of the Company's Service Valve, Automotive 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
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.
The Company adheres to the "Dedication and Leadership, Innovation and Surpassing" business path,
concentrating on the research and application of heat pump technology and thermal management system products.
It focuses on the development of environmental thermal management solutions for heat exchange and temperature
intelligent control and is dedicated to specialized management in the fields of building HVAC, electrical equipment,
and new energy vehicle thermal management. Based on the different stages and characteristics of strategic business
and mature business, the Company's business is mainly divided into refrigeration and air conditioning electrical
components business and automotive components business. Refrigeration and air conditioning electrical
components 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, Electric Expansion Valve, Electric Water Pump,
and Thermal Management Integrated Module for new energy vehicle, etc., which are widely used in both NEVs
and ICVs.
During the reporting period, there were no changes in the Company's main business or business model.
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 volume Sales volume
YoY Change YoY Change
2023 2022 2023 2022
(%) (%)
Classified by Components (Unit: million PCs)
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
NEVs thermal
management 62.7827 41.2295 52.28% 62.5181 38.3518 63.01%
products
ICVs thermal
management 169.5683 129.0791 31.37% 169.5093 129.1160 31.28%
products
Classified by Whole Vehicle Package (Unit: million PCs)
Classified by After-sales market (Unit: million PCs)
Other classifications (Unit: million PCs)
Domestic 137.8682 107.4399 28.32% 138.0081 105.4194 30.91%
Overseas 94.4828 62.8687 50.29% 94.0193 62.0484 51.53%
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 NEVs market, which drives the rapid growth of the production
and sales of NEVs thermal management products.
Sale model of vehicle components
The Company's customers are mainly domestic and foreign vehicle manufacturers and tier 1 manufacturers. The
mainly sale mode is direct sale.
Whether the Company carries out auto finance business
□Applicable √ Not applicable
Whether the Company carries out business related to NEVs
√Applicable □ Not applicable
Production and operation of NEVs parts
Unit: million PCs
Product category Production capacity Production volume Sales volume Revenue (RMB)
NEVs thermal
72.1960 62.7827 62.5181 8,929,632,402.32
management products
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 layout
The Company adheres to the "Dedication and Leadership, Innovation and Surpassing” 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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 components 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 3,792 patents both
domestic and abroad, including 1,879 invention patents. The Company has established a comprehensive multi-
disciplinary R&D team for product development and technical research, and established a matrix R&D
organizational structure. Utilizing the model of product development driven by technological research, we can
promote innovation. Meanwhile, a technical expert committee has been established to guide and manage
technological development. All products, services and quality of the 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 Electric Expansion Valve, Thermal Management Integrated Module
for new energy vehicle, Omega Pump ranks first globally. The market share of Service Valve, Automotive 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, National Technological Innovation
Demonstration Enterprise 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, Thailand, India and other places. 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 2023, although the world economy remains resilient in exchange rate fluctuations and geopolitical conflicts,
China's socio-economic operation has normalized, the country has strengthened macroeconomic regulation, and the
economy is moving towards recovery and high-quality development. With the global clean energy revolution and
18
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
the flourishing development of artificial intelligence, the "new economy" industries such as NEVs, AI, energy
storage, as well as constantly iterating heat pumps and commercial refrigeration are flourishing. At the Company
level, the refrigeration and air conditioning electrical components business has been stimulated by consumer
recovery and summer high temperatures, resulting in a steady increase in domestic and international market share
and steady growth in performance. With the continuous penetration and prosperity of NEVs, the automotive
components business continues to upgrade its products. The customer distribution continues to expand, global orders
continue to be released, achieving a rapid increase in revenue.
During the reporting period, the total revenue is RMB 24.558 billion, a year-on-year increase of 15.04%; the
net profit is RMB 3.553 billion, a year-on-year increase of 15.85%; the net profit attributable to shareholders of the
listed Company is RMB 2.921 billion, a year-on-year increase of 13.51%. The revenue of refrigeration and air
conditioning electrical components business is RMB 14.644 billion, a year-on-year increase of 5.86%; the revenue
of automotive components business is RMB 9.914 billion, a year-on-year increase of 31.94%.
1. Strive for excellence and continuously update and expand business layout
(1) Refrigeration and air conditioning electrical components business
In 2023, while maintaining its original dominant product market share, the Company is committed to increasing
the market share of high margin products and new generation products, and exploring new areas of high potential
product business opportunities. In terms of customer expansion, the Company promotes deepening cooperation with
strategic customers and promotes mature products to new customers. In terms of technological research and
development, the Company closely follows the market pulse and evolves synchronously, effectively reducing costs
while improving performance. In terms of patent layout, in addition to patent application and authorization, patent
protection is used to consolidate intellectual property barriers and provide support for product innovation. In terms
of operational management, the Company promotes activities such as self-developed key manufacturing equipment,
lean production, and digital transformation to improve production efficiency while reducing manufacturing costs.
In addition, in the process of globalization, we will continue to increase the layout of global manufacturing and
research and development in factories in Vietnam, Mexico, and Thailand, as well as the construction of talent teams.
(2) Automotive components business
The competition in the NEVs market has been intensifying year by year. In terms of customer expansion, the
Company is based on the benchmark customer demonstration effect, guided by customer needs, and continuously
rising to a new stage in new projects and business opportunities. In terms of technological research and development,
significant achievements have been made in continuously improving product strength through technological
innovation, especially in the design and promotion of intelligent, standardized, and modular integrated components,
the development of a new generation of electronic expansion valves for vehicles, and the upgrading of pump
products. In terms of operational management, improve and connect the entire process planning chain, create
resilient supply chain management, and build a global operational database to enhance the level of informatization.
In terms of global layout, we will continue to carry out the construction and new production capacity layout of
factories in Mexico, Poland, Zhongshan, Shenyang, and Shaoxing Binhai in China, to implement a global supply
map.
(3) Strategic emerging businesses
The development of artificial intelligence has just begun, and the biomimetic robots industry is changing
rapidly, which is expected to become a revolutionary industry after computers, smartphones, and NEVs. It has great
19
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
development potential and broad application prospects, making it a new track for future industries. In the field of
biomimetic robots, the Company focuses on electromechanical actuators and fully cooperates with customers for
product research and development, trial production, and iteration.
The expectation for the growth of energy storage demand is clear. The Company closely tracks the
development trend of energy storage system technology, synchronously promotes the expansion of market
opportunities for application components in the energy storage field, as well as the development of energy storage
thermal management units, forming a relatively complete series of unit products, which are listed as supporting
products for top customers, laying the foundation for the subsequent development of products with technological
advantages.
2. Proposed issuance of Global Depositary Receipts (GDRs) and listing on the Swiss Stock Exchange
In order to further promote the globalization strategy, the Company continue to promote the GDR project. The
raised funds are intended to expand the Company's global business layout, strengthen the production and
manufacturing of refrigeration control components, new energy thermal management and robot electromechanical
actuator businesses, improve the Company's R&D investment and technological innovation, and enhance the
Company's intelligent manufacturing, digitization, and informatization level.
3. Value service, shareholder returns, and improve corporate governance system
During the reporting period, in order to safeguard the interests of shareholders and enhance the confidence of
investors, the Company carried out share repurchase plan with its own funds to protect the long-term interests of
the Company and small and medium-sized 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 relations management and other aspects. And ensured smooth communication
between investors and listed company through various methods such as interactive platform, answering investor
call, on-site reception.
4. Assist in carbon neutrality and strive to establish a clean and low-carbon energy system
In terms of carbon reduction and emission reduction, the Company has accelerated the application of
photovoltaic and energy storage in the industry park. The energy utilization efficiency of the Company's smart
microgrid project has achieved multi energy complementarity and has been included in the Zhejiang Province 2023
New Power System Pilot Project Plan. In July 2023, the Company published CDP report again, and in 2024, it
disclosed the first Environmental, Social, and Governance (ESG) report.
2. Revenue and Costs
(1) Revenue structure
Unit: RMB
2023 2022
YoY Change (%)
Proportion to Proportion to
Amount Amount
revenue revenue
Revenue 24,557,802,066.59 100.00% 21,347,549,741.00 100.00% 15.04%
20
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Classified by Industry
General
Equipment
24,557,802,066.59 100.00% 21,347,549,741.00 100.00% 15.04%
Manufacturing
Industry
Classified by Products
Refrigeration A/C
Electrical 14,644,135,166.57 59.63% 13,833,786,079.86 64.80% 5.86%
Components
Automotive
9,913,666,900.02 40.37% 7,513,763,661.14 35.20% 31.94%
Components
Classified by Region
Domestic 13,403,443,275.68 54.58% 11,415,857,116.85 53.48% 17.41%
Overseas 11,154,358,790.91 45.42% 9,931,692,624.15 46.52% 12.31%
Classified by Sales Model
Direct Sale 24,557,802,066.59 100.00% 21,347,549,741.00 100.00% 15.04%
(2) Industries, products, regions or sale models accounting for more than 10% of the Company’s revenue or
operating profit
√ Applicable □ Not applicable
Unit: RMB
YoY Change YoY Change
YoY Change
Revenue Operating cost Gross margin (%) of (%) of gross
(%) of revenue
operating cost margin
Classified by Industry
General
Equipment 24,557,802,066 17,708,120,277
27.89% 15.04% 12.21% 1.81%
Manufacturing .59 .33
Industry
Classified by Products
Refrigeration
A/C Electrical 14,644,135,166 10,514,157,902
28.20% 5.86% 2.93% 2.04%
Components .57 .87
Business
Automotive
9,913,666,900. 7,193,962,374.
Components 27.43% 31.94% 29.24% 1.51%
02 46
Business
Classified by Region
13,403,443,275 9,874,767,081.
Domestic 26.33% 17.41% 13.93% 2.26%
.68 31
21
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
11,154,358,790 7,833,353,196.
Overseas 29.77% 12.31% 10.12% 1.39%
.91 02
Classified by Sales Model
24,557,802,066 17,708,120,277
Direct Sale 27.89% 15.04% 12.21% 1.81%
.59 .33
When the statistical caliber of the Company's major business data is adjusted during the reporting period, the
Company's major business data would be adjusted according to the end of the reporting period in the most recent
period.
□ Applicable √ Not applicable
(3) Whether revenue from physical products sales greater than revenue from providing services
√ Yes □ No
Industry Item Unit 2023 2022 YoY Change (%)
Sales Yuan 24,557,802,066.59 21,347,549,741.00 15.04%
General
Equipment
Production Yuan 24,661,487,925.77 21,887,981,655.33 12.67%
Manufacturing
Industry
Inventory Yuan 4,715,009,128.74 4,462,520,693.06 5.66%
Explanation on why the related data varied by more than 30% on a YOY basis
□ Applicable √ Not applicable
(4) Fulfillment of signed significant sales and procurement contracts by the end of reporting period
□ Applicable √ Not applicable
(5) Operating cost structure
Classification based on industry and products
Unit: RMB
2023 2022
YoY Change
Industry Item
Proportion to Proportion to (%)
Amount Amount
operating cost operating cost
General
Equipment 13,115,131,671 11,758,388,129
Material 74.06% 74.51% 11.54%
Manufacturing .51 .77
Industry
General
Equipment 2,523,256,970. 2,219,139,967.
Labor 14.25% 14.06% 13.70%
Manufacturing 91 42
Industry
General
Equipment Depreciation 516,350,365.38 2.92% 397,865,980.52 2.52% 29.78%
Manufacturing
22
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Industry
General
Equipment
Freight 573,973,563.84 3.24% 545,402,421.45 3.46% 5.24%
Manufacturing
Industry
General
Equipment
Energy Source 522,992,506.07 2.95% 445,206,543.55 2.82% 17.47%
Manufacturing
Industry
General
Equipment
Other 456,415,199.62 2.58% 415,096,138.59 2.63% 9.95%
Manufacturing
Industry
Unit: RMB
2023 2022
YoY Change
Product Item
Proportion to Proportion to (%)
Amount Amount
operating cost operating cost
Refrigeration
7,743,350,881. 7,547,972,672.
A/C Electrical Material 43.73% 47.83% 2.59%
56 72
Components
Refrigeration
1,625,493,308. 1,562,744,130.
A/C Electrical Labor 9.18% 9.90% 4.02%
75 39
Components
Refrigeration
A/C Electrical Depreciation 293,400,820.12 1.66% 256,801,359.03 1.63% 14.25%
Components
Refrigeration
A/C Electrical Freight 372,451,870.84 2.10% 367,797,612.73 2.33% 1.27%
Components
Refrigeration
A/C Electrical Energy Source 250,366,298.39 1.41% 242,566,647.87 1.54% 3.22%
Components
Refrigeration
A/C Electrical Other 229,094,723.21 1.29% 236,686,252.75 1.50% -3.21%
Components
Automotive 5,371,780,789. 4,210,415,457.
Material 30.34% 26.68% 27.58%
Components 95 05
Automotive
Labor 897,763,662.16 5.07% 656,395,837.03 4.16% 36.77%
Components
Automotive
Depreciation 222,949,545.26 1.26% 141,064,621.49 0.89% 58.05%
Components
Automotive
Freight 201,521,693.00 1.14% 177,604,808.72 1.13% 13.47%
Components
Automotive
Energy Source 272,626,207.68 1.54% 202,639,895.68 1.28% 34.54%
Components
Automotive
Other 227,320,476.41 1.28% 178,409,885.84 1.13% 27.41%
Components
23
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
(6) Changes in consolidation scope during the reporting period
√Yes □ No
1. Increase in consolidation scope
Proportion of
Equity acquisition Date of equity Capital
Name capital
method acquisition contribution
contribution
Guangdong Sanhua New Energy Vehicle Parts Co., Investment and
2023-02-17 183,712,500.00 100%
Ltd. establishment
Investment and
Shenyang Sanhua New Energy Vehicle Parts Co., Ltd. establishment 2023-03-08 17,000,000.00 100%
Investment and
Hangzhou Sanhua Intelligent Equipment Co., Ltd. establishment 2023-01-03 24,000,000.00 100%
SANHUA SINGAPORE AUTOMOTIVE Investment and
establishment 2023-11-20 0.00 100%
INVESTMENT PTE LTD.
Investment and
Minth Sanhua Auto Parts Poland Sp. Zoo. establishment 2023-01-24 5000 PLN 100%
Investment and
LEADERWAY COAHUILA, S.DE R.L.DE C.V. establishment 2023-10-01 10,000 MXN 100%
Investment and 100 million
SANHUA INDUSTRY (THAILAND) CO., LTD. establishment 2023-01-31 100%
THB
2. Reduction in consolidation scope
Net profit from
Equity disposal Date of equity Net assets on the beginning of
Name
method disposal disposal date the period to the
date of disposal
Liquidation and
Suzhou Xinzhi Automotive Parts Co., Ltd 2023-01-13 0.00 1,631.39
cancellation
(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
Total sales to top five customers (RMB) 8,719,088,090.35
Total sales to top five customers as a percentage of the total sales
35.51%
for the year (%)
Total sales to the related parties in top five customers as a
0.00%
percentage of the total sales of the year (%)
Information on top five customers
Percentage of total sales for
No. Name of Customer Sales Amount (RMB)
the year
24
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
1 First 3,582,715,408.45 14.59%
2 Second 2,134,361,702.41 8.69%
3 Third 1,128,597,176.25 4.60%
4 Fourth 1,071,372,376.82 4.36%
5 Fifth 802,041,426.42 3.27%
Total -- 8,719,088,090.35 35.51%
Other information of major customers
□Applicable√ Not applicable
Major suppliers of the Company
Total purchases from top five suppliers (RMB) 1,962,058,942.79
Total purchases from top five suppliers as a percentage of the
14.32%
total purchases for the year (%)
Total purchases from the related parties in the top five suppliers
0.00%
as a percentage of the total purchases for the year (%)
Information on top five suppliers of the Company
Percentage of total purchase
No. Name of Supplier Purchase Amount (RMB)
for the year
1 First 533,687,665.53 3.90%
2 Second 377,102,189.23 2.75%
3 Third 367,116,178.07 2.68%
4 Fourth 353,794,929.29 2.58%
5 Fifth 330,357,980.67 2.41%
Total -- 1,962,058,942.79 14.32%
Other information of major suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
Note of significant
2023 2022 YoY Change (%)
change
Mainly due to an
increase in employee
Sales expenses 663,304,325.04 512,599,257.66 29.40%
salaries, market
maintenance expenses,
25
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
travel expenses, etc.
Mainly due to the
increase in employee
Administrative salaries, office
1,476,334,172.35 1,266,974,971.99 16.52%
expenses expenses, intermediary
service fees, business
reception expense, etc.
Mainly due to a
Financial expenses -72,751,380.29 -177,540,645.27 59.02% decrease in exchange
earnings
Mainly due to an
R&D expenses 1,096,834,224.41 988,954,495.90 10.91% increase in personnel,
direct investment, etc.
4. R&D Investment
√Applicable □Not applicable
Expected impact on the
Name of main R&D Objectives to be
Project purpose Progress of the project future development of
projects achieved
the Company
Develop a new To improve product
Fourth Generation generation product To enhance product competitiveness, meet
Electronic Expansion with low cost, low Done competitiveness in cost customer needs and
Valve Development noise and high and performance gain greater market
performance share
To improve the
Develop lightweight competitiveness of the
To gain greater market
Electric Refrigerant and miniaturized refrigerant valve
share and support the
Column Valve refrigerant valve On going product by the plug-in
product platform
Development products with plug-in structure design,
strategy
type support the heat pump
modules strategy
To enhance
Develop low-cost, To gain greater market
M Platform Standard competitiveness of
lightweight and share and support the
Electric Water Pump On going medium-power EWPs,
miniaturized medium- product platform
Development and support the product
power EWP strategy
platform strategy
To improve product
Develop a new competitiveness in cost To improve product
Third Generation generation product and performance; Form competitiveness and
On going
Chiller Development with low cost or high standardized products gain greater market
performance and support the heat share
pump modules strategy
To enhance
competitiveness of
Develop low-cost, To gain greater market
L Platform Electric high-power EWPs,
lightweight and share and support the
Water Pump On going build solid foundation
miniaturized high- product platform
Development and technical reserve,
power EWP strategy
and support the product
platform strategy
Development of SPB Developing new Realize the Developing the market
(A) type shielded water products for the field of On going characteristics of for heat pump
pump heat pump heating product efficiency, heating，Realizing
26
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
energy conservation, new business growth
silence, high stability, points
and high cost-
effectiveness
Realize product
Developing a new iteration and
Enhance product
Development of C-type generation of low-cost, upgrading，Enhancing
On going competitiveness，
globe valve high-performance the competitiveness of
Expand market share
products refrigeration and air
conditioning products
Meeting customer
Omega-mini integrated Developing Enhance product
needs for
heating pump miniaturized integrated Done competitiveness and
miniaturization and
development heating pump products expand market share
high quality
Increasing the market
competitiveness of
Continuously
thermal expansion
Development of N increasing the market
Iterative updating of valves, lays a solid
series thermal Done competitiveness of
RFGF series foundation for
expansion valve thermal expansion
achieving market share
valve products
exceeding 50% in the
future.
Developing brand-new
composite sensor
integrating temperature
Leading sensor
Developing new and pressure,expanding
Development of PT products moving
generation vehicle- On going the application field of
transmitter forwards to automotive
used sensor commercial
field.
products,assisting the
rapid development of
commercial business.
Expanding company
Development of Assisting the business products lines, lays a
Developing products in
industrial shut-off On going expanding in industrial solid foundation for
industrial freezing field
valve freezing field. entering the industrial
refrigeration field.
For the fast-growing
Expand the application heat pump market,
Expand the application
Inserted fin MCHE range of must have a solution
of MCHE exchangers Ongoing
Development products,enhanced the for microchannel heat
in heat pumps
power of product pumps, creating a new
market growth
Developing a direct-
Research and
expansion (DX) cooled Improving energy Creating popular
development of direct-
system for thermal On going efficiency and reducing products to enhance
expansion (DX) cooled
management of energy costs product strength
system
storage systems
To Explore the most
valuable component in
Developing actuators Realize the Linear and the AI Robot market
Development of
for humanoid robot On going rotary functions of and provide new high
Actuator
joints humanoid robot joints. value-added growth
points for the company
in the next 5-10 years.
R&D personnel of the Company
27
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2023 2022 Change proportion
Number of R&D personnel
3,241 2,243 44.49%
(person)
Proportion of R&D personnel 18.28% 15.09% 3.19%
Academic structure of R&D personnel
Master degree and above 510 332 53.61%
Bachelor degree 1,929 1,358 42.05%
Junior college and below 802 553 45.03%
Age composition of R&D personnel
Under the age of 30 1,582 981 61.26%
Age between 30 and 40 1,191 895 33.07%
Over the age of 40 468 367 27.52%
R&D investment of the Company
2023 2022 YoY Change (%)
Amount of R&D expenses
1,096,834,224.41 988,954,495.90 10.91%
(RMB)
R&D investment as a
4.47% 4.63% -0.16%
percentage of revenue
Capitalized R&D expenses
0.00 0.00 0.00%
(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
□ 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 2023 2022 YoY Change (%)
Subtotal of cash inflows from
25,391,076,341.93 21,770,343,585.78 16.63%
operating activities
28
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Subtotal of cash outflows
21,667,111,987.30 19,260,677,095.22 12.49%
from operating activities
Net cash flows from operating
3,723,964,354.63 2,509,666,490.56 48.38%
activities
Subtotal of cash inflows from
1,695,486,300.46 383,808,450.48 341.75%
investing activities
Subtotal of cash outflows
2,904,766,053.95 3,055,122,290.58 -4.92%
from investing activities
Net cash flows from investing
-1,209,279,753.49 -2,671,313,840.10 54.73%
activities
Subtotal of cash inflows from
1,606,752,389.73 3,274,929,447.10 -50.94%
financing activities
Subtotal of cash outflows
2,698,602,678.24 3,871,803,752.46 -30.30%
from financing activities
Net cash flows from financing
-1,091,850,288.51 -596,874,305.36 -82.93%
activities
Net increase in cash and cash
1,574,626,897.07 -639,673,623.32 346.16%
equivalents
Explanation of why the related data varied significantly on a YoY basis
√ Applicable □ Not applicable
1. Net cash flow from operating activities increased: mainly due to an increase in cash received from selling goods
and providing services.
2. Net cash flow from investment activities increased: mainly due to the increase in the redemption of large
certificates of deposit in the current period.
3. Net cash flow from financing activities decreased: mainly due to granting restricted stocks to employees in the
previous period, resulting in a decrease in cash received from investment absorption in the current period.
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
Amount Proportion to net profit Note of Change Sustainability
Settlement gains and
losses of exchange rate
derivatives, settlement
Investment Income -131,453,928.62 -3.70% No
gains and losses of
futures derivative,
discounted bill, etc.
Settlement gains and
losses of exchange rate
Gains and Losses from derivatives, settlement
48,123,522.34 1.35% No
Change of Fair Value gains and losses of
futures derivatives,
floating gains and
29
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
losses of bank wealth
management products,
etc.
Payment cancellation,
compensation and
Non-operating
14,932,933.39 0.42% penalty gains, gains No
Revenue
from retirement of
fixed assets, etc.
Loss from retirement
of fixed assets,
Non-operating compensation and
14,625,298.02 0.41% No
Expenditures breach of contract
expenses, donation
expenses, etc.
Credit Impairment
-51,477,741.58 -1.45% Bad debt losses No
Loss
Inventory impairment
loss, fixed asset
Assets Impairment
-55,376,891.25 -1.56% impairment loss, No
Loss
goodwill impairment
loss, etc.
Gains on Disposal of Income from disposal
8,741,208.41 0.25% No
Properties of fixed assets
The value-added tax
Government subsidies,
refund for civil welfare
value-added tax
enterprises, tax refund
refunds for civil
for software product
welfare enterprises,
value-added
Other Gains 188,255,263.06 5.30% refunds for software
overpayment, and
product value-added
value-added tax
tax overpayment,
deduction are
value-added tax
sustainable, while the
deductions, etc.
rest are not sustainable
VI. Analysis of Assets and Liabilities
1. Material changes of assets
Unit: RMB
December 31st 2023 January 1st 2023 Note of
YoY Change
significant
Percentage of Percentage of (%)
Amount Amount change
total assets total assets
Cash and Bank 6,584,684,683. 5,878,243,652.
20.65% 21.02% -0.37%
Balances 93 55
Account 5,773,991,481. 5,228,117,225.
18.11% 18.70% -0.59%
Receivable 22 57
Contract assets 0.00% 0.00% 0.00%
4,600,729,378. 4,334,875,287.
Inventories 14.43% 15.50% -1.07%
19 86
Investment
8,165,805.31 0.03% 8,204,266.97 0.03% 0.00%
property
30
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Long-term
Equity 37,924,431.29 0.12% 32,438,204.13 0.12% 0.00%
Investment
7,730,363,778. 6,374,896,070.
Fixed Assets 24.24% 22.80% 1.44%
82 41
Construction in 2,036,326,757. 1,032,505,633.
6.39% 3.69% 2.70%
Progress 72 51
Assets with
313,254,745.53 0.98% 284,277,365.32 1.02% -0.04%
right of use
Short-term 1,212,150,378. 1,294,083,319.
3.80% 4.63% -0.83%
borrowings 85 58
Contractual
51,788,802.03 0.16% 57,955,080.60 0.21% -0.05%
liabilities
Long-term 1,030,801,111. 1,801,574,166.
3.23% 6.44% -3.21%
borrowings 13 67
Lease liabilities 221,295,481.86 0.69% 202,028,482.09 0.72% -0.03%
2,476,839,413. 2,203,948,983.
Note receivable 7.77% 7.88% -0.11%
89 83
3,416,711,594. 2,580,274,767.
Note payable 10.71% 9.23% 1.48%
64 64
Account 4,449,940,359. 3,884,603,370.
13.95% 13.89% 0.06%
payable 81 16
Mainly the
Non-current portion of non-
1,440,093,253.
liabilities due 4.52% 568,126,341.67 2.03% 2.49% current
93
within one year liabilities due
within one year
Mainly due to
early
conversion and
2,776,763,361.
Bonds payable 0.00% 9.93% -9.93% redemption of
83
convertible
bonds in
current period
Whether the proportion of overseas assets is relatively high
√Applicable □Not applicable
The
Control proportion Whether
measures to of overseas there is
Content of Cause of Operation
Asset scale Location ensure Earnings assets to significant
assets formation mode
asset the impairment
security company's risk
net assets
Research
Financial
SANHUA and
supervision
INTERNA developme
,
TIONAL, Equity 3,664,462,7 United nt, 760,912,44
commissio No
INC. investment 10.84 States manufactur 2.45
ned
(Consolidat ing, sales,
external
ed) and
audit
investment
31
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
manageme
nt
Sanhua Financial
Manufactur
Internation supervision
ing, sales,
al ,
Equity 5,932,183,2 and
Singapore Singapore commissio 57,990,422. No
investment 66.09 investment
PTE. Ltd. ned 65
manageme
(Consolidat external
nt
ed) audit
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit and
Cumulative
loss of fair Impairment
changes in Current Current
Opening value accrued in Other Closing
Items fair value purchase sale
balance change in the current changes balance
included in amount amount
the current period
equity
period
Financial Assets
1.Held-for-
trading
financial
assets 100,025,98 100,000,00
-25,980.08
(Excluding 0.08 0.00
derivative
financial
assets)
2.Derivativ
8,938,874.0 13,697,238. 22,636,112.
e financial
5 63 68
assets
Subtotal of
108,964,85 13,671,258. 100,000,00 22,636,112.
financial
4.13 55 0.00 68
assets
108,964,85 13,671,258. 100,000,00 22,636,112.
Total
4.13 55 0.00 68
-
Financial 48,671,373. 14,219,110.
34,452,263.
liabilities 81 02
79
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
Types of
Items Closing book balance Closing Book value Restriction reason
restrictions
Cash and Bank
76,476,700.95 76,476,700.95 pledge Margin deposited
Balances
32
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Types of
Items Closing book balance Closing Book value Restriction reason
restrictions
Cash and Bank
281,570,379.73 281,570,379.73 pledge Pledge for financing
Balances
Note Receivable 2,214,363,880.38 2,208,446,869.75 pledge Pledge for financing
Electronic debt vouchers that
have been transferred for
Accounts
66,621,446.85 63,290,374.51 pledge payment or factoring
receivable
financing but have not yet
matured
Total 2,639,032,407.91 2,629,784,324.94 -- --
VII. Analysis of Investment
1. Overview
√Applicable □ Not applicable
Investment during the Reporting Period Investment over the Corresponding
YoY Change (%)
(RMB) Period of Last Year (RMB)
1,297,612,083.54 1,068,188,900.00 21.48%
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 investment
(1) Securities Investments
□ Applicable √ Not applicable
No such case in the reporting period.
(2) Derivatives Investments
√Applicable □ Not applicable
1) Derivative investments for hedging purposes during the reporting period
√Applicable □ Not applicable
Unit: RMB in 10 thousand
33
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Ratio of
ending
Gains and investment
Accumulat
losses from Purchase Sales amount to
ed fair
Types of Initial changes in amount amount the
Beginning value Closing
derivative investment fair value during the during the company's
balance changes balance
investments amount in the reporting reporting net assets
recognized
current period period at the end
in equity
period of the
reporting
period
Futures
instruments,
foreign
exchange
instruments,
etc.
Source of
funding for
Own funds
derivative
investment
Risk
analysis and
control
measures
(including
but not
limited to,
market risk,
In order to avoid the price risk of raw materials and exchange rate risk, the Company and its subsidiaries have
liquidity
carried out derivative business, including futures contracts and foreign exchange forward contracts. The Company
risk, credit
and its subsidiaries strictly comply with the relevant provisions listed in the Management Measures for Future
risk,
Hedging Business and Management Measures for Foreign Exchange Hedging Business.
operational
risk, legal
risk, etc.) of
holding
derivatives
during the
reporting
period
Litigation
(if N/A
applicable)
Special
opinions of
independent
directors on
derivatives
N/A
investment
and risk
control of
the
Company
34
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2) Derivative investments for speculative purposes during the reporting period
□Applicable √ Not applicable
No such case in the reporting period.
5. Usage of raised funds
√Applicable □ Not applicable
(1). Overall usage of raised fund
√Applicable □Not applicable
Unit: RMB in 10 thousand
Proport
ion of
Total
accumu
amount
lated
of Accum
Total amount
Accum raised ulated
amount of Raised
ulated funds amount Total
Total Net of raised Raised funds
amount with of amount
amount amount raised funds funds has not
of use raised of
Year Method of of funds with has not been
raised alterati funds unused
raised raised investe use been used for
funds on with raised
funds funds d in the alterati used two
investe during use funds
report on to years
d the alterati
period the total
reportin on
amount
g
of
period
raised
funds
Deposit
ed in
the
special
account
for
raised
Public 298,753 45,894. 218,675 85,200. funds
2021 300,000
offering .1 38 .73 45 and the
subscri
ption of
large
amount
certific
ates of
deposit.
298,753 45,894. 218,675 85,200.
Total -- 300,000 -- 0
.1 38 .73 45
Description of Overall Usage of Raised Funds
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 pieces of convertible corporate bonds (Sanhua convertible bond) with a par value of RMB 100, issued at face
35
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
value, raising RMB 3 billion in total. The net amount of raised funds after deducting the issuance expenses of 12,468,991.59 yuan
is 2,987,531,008.41 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. (affiliated wholly-owned subsidiary, hereinafter referred to as
"Sanhua Commercial Refrigeration") is one of the implementation subjects, the Company has allocated 1.487 billion yuan of the
raised funds to Sanhua Commercial Refrigeration in the form of capital increase.
2. Usage and balance of raised funds
(Unit: RMB in 10 thousand)
Items Index Amount
Net amount of funds raised in the current period A 298,753.10
Project investment B1
Accumulated amount as of the 172,781.35
beginning of the period
Net income from raised funds B2
2,979.99
Project investment C1
Amount incurred in this 45,894.38
reporting period
Net income from raised funds C2
2,143.09
Project investment D1=B1+C1
Accumulated amount by the 218,675.73
end of the period
Net income from raised funds D2=B2+C2
5,123.08
Calculated balance of raised funds E=A-D1+D2
85,200.45
Actual balance of raised funds F
85,200.45
Difference G=E-F
0.00
(2). Statement of Committed Investment Projects of Raised Funds
√Applicable □Not applicable
Unit: RMB in 10 thousand
Investme
Total nt Whether
Whether Accumul
committe Total progress Date of Benefits Whether feasibility
project Investme ative
Committed investment d investme at the end asset achieved expected of project
has been nt in the investme
projects and allocation investme nt after of the ready for in the benefits has
(or current nt at the
of over-raised funds nt of alteration period intended current have been changed
partially) year end of the
raised (1) (%) use year achieved significan
altered period (2)
funds (3) = (2)/ tly
(1)
Committed investment projects
Construction project of
commercial
refrigeration and air
109,328.1 May 31,
conditioning intelligent No 148,700 148,700 30,974.36 73.52% N/A No
5 2025
control components
with an annual output
of 65 million sets
Technical
transformation project
August
of high-efficiency and No 69,800 69,800 14,919.55 28,074.18 40.22% N/A No
31, 2024
energy-saving
refrigeration and air
36
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
conditioning control
components with an
annual output of 50.5
million sets
Supplementary of
No 81,500 81,500 0.47 81,273.40 99.72% N/A No
working capital
Subtotal of committed 218,675.7
-- 300,000 300,000 45,894.38 -- -- -- --
investment projects 3
Investment of over raised funds
N/A
218,675.7
Total -- 300,000 300,000 45,894.38 -- -- -- --
3
Funds raised in 2021:
The funds raised in 2021 are planned to be used for 3 projects, namely, “Construction project of commercial
refrigeration and air conditioning intelligent control components with an annual output of 65 million sets”,
“Technical transformation project of high-efficiency and energy-saving refrigeration and air conditioning
control components with an annual output of 50.5 million sets” and “Supplementary of working capital”.
“Technical transformation project of high-efficiency and energy-saving refrigeration and air conditioning
control components with an annual output of 50.5 million sets” is a technical transformation and upgrading
Circumstances and
project, directly implemented by the Company and included in integrated management and centralized
reasons for not
accounting. The actual benefits of this fundraising project are not expected to be accounted separately. This
reaching the planned
project adopts independently developed production processes and technologies, introduces international
progress or expected
advanced equipment, such as valve seat processing machines and core iron processing machines, and
income (by specific
purchases domestically advanced production and testing equipment, such as fully automatic assembly
project)
machines, comprehensive testing benches, automatic helium testing equipment, insulation and voltage
testers, forming an annual production capacity of 50.5 million sets of efficient and energy-saving
refrigeration and air conditioning control components. It is expected to have a positive impact on the
Company's future performance improvement in efficient and energy-saving refrigeration control components
business.
“Supplementary of working capital” does not directly generate economic benefits and cannot be used as an
independent economic analysis object. The expected benefits have not been measured, and the actual benefits
cannot be accounted separately.
Significant changes in
the feasibility of 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
Advance investment Applicable
and replacement with
raised funds In 2021, the Company replaced the initial investment amount of 179.3857 million yuan with raised funds.
Temporary supplement
of working capital with N/A
idle raised funds
37
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
The amount and
reasons of the balance
N/A
of raised funds in the
project implementation
Applications of unused
Deposited in the special account for raised funds and the subscription of large amount certificates of deposit.
raised funds
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 were no changes in raised funds during the reporting period.
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. Disposal 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 Operating
Total assets Net assets Revenue Net profit
name type business capital profit
Zhejiang
Automotiv
Sanhua
e
Automotiv
component
e 11,905,085, 6,270,801,3 9,913,666,9 1,758,553,6 1,543,523,5
Subsidiary s 2.16 billion
Component 104.97 68.70 00.02 34.66 71.49
manufactur
s Co., Ltd.
ing and
(Consolidat
marketing
ed)
Zhejiang Refrigerati
Sanhua on and A/C
Commercia electrical
l component 1,655.29 3,623,528,7 2,099,228,8 2,207,861,6 470,803,38 413,684,06
Subsidiary
Refrigerati s million 07.46 55.93 26.88 9.54 1.57
on Co., Ltd. manufactur
(Consolidat ing and
ed) marketing
38
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Sanhua
Refrigerati
(Hangzhou
on and A/C
) Micro
electrical
Channel
component 2,233,616,4 1,284,299,6 1,982,577,0 200,553,78 163,632,91
Heat Subsidiary 360 million
s 49.51 02.17 21.15 5.67 9.11
Exchanger
manufactur
Co., Ltd.
ing and
(Consolidat
marketing
ed)
Refrigerati
Zhejiang
on and A/C
Sanhua 6,390,990,0 171,329,04 5,422,333,0 24,819,305. 16,013,738.
Subsidiary electrical 50 million
Trading 69.82 0.90 09.14 75 24
component
Co., Ltd.
s marketing
Refrigerati
on and A/C
electrical
Sanhua
component
Internation
s
al Ltd. 37.55
manufactur 3,664,462,7 1,151,297,0 5,764,789,4 866,817,73 760,912,44
(United Subsidiary million
ing 10.84 49.64 96.95 1.61 2.45
States) USD
marketing
(Consolidat
and
ed)
investment
manageme
nt
Refrigerati
on and A/C
electrical
Sanhua
component
Internation
s
al 151.513249
manufactur 5,932,183,2 1,195,686,2 6,576,602,2 94,757,870. 57,990,422.
Singapore Subsidiary million
ing 66.09 97.14 47.05 68 65
PTE. Ltd. USD
marketing
(Consolidat
and
ed)
investment
manageme
nt
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
Method of acquisition and disposal of Impact on overall operation and
Name
subsidiaries during the reporting period performance
Guangdong Sanhua New Energy Vehicle
Investment and establishment No significant impact
Parts Co., Ltd
Shenyang Sanhua New Energy Vehicle
Investment and establishment No significant impact
Parts Co., Ltd
Hangzhou Sanhua Intelligent Equipment
Investment and establishment No significant impact
Co., Ltd
SANHUA SINGAPORE
AUTOMOTIVE Investment and establishment No significant impact
INVESTMENT PTE LTD
Minth Sanhua Auto Parts Poland Sp. Zoo Investment and establishment No significant impact
LEADERWAY COAHUILA, S.DE
Investment and establishment No significant impact
R.L.DE C.V.
39
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
SANHUA INDUSTRY (THAILAND)
Investment and establishment No significant impact
CO., LTD.
Suzhou Xinzhi Automotive Parts Co.,
Liquidation and cancellation No significant impact
Ltd.
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 "Dedication and Leadership, Innovation and Surpassing" 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 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 2024
(1) Refrigeration air conditioning electrical components business
Against the backdrop of global clean carbon reduction and China's "dual carbon" strategy, we will seize the
trend of energy efficiency upgrading and refrigerant switching, continue to promote performance optimization,
component integration, cost lean, and diversified product distribution, continuously expand our existing business
scale and seek new areas of business growth. Under the national policy of exchanging old for new consumer goods
in 2024, the Company aims to enhance its advantageous product production capacity, increase customer
development and new product research and development efforts, and strive to achieve high-quality performance in
2024. The company has normalized its efforts to reduce costs and increase efficiency through technological
upgrades, process improvements, equipment automation, and other means, while deepening the implementation of
quality improvement goals. The Company is promoting the reform of Aweco Europe, improving its business
philosophy and process system, and achieving a turnaround from losses to profits. In terms of production base
progress, we have completed the construction of the second phase of the Vietnam factory and achieved the landing
of production lines, expanded production lines in Mexico and Thailand, and expanded and optimized global
production layout.
(2) Automotive components business
The competition in the NEV market is becoming increasingly fierce, and price competition has become the
norm. The Company focuses on core projects of global key customers and strengthens the construction of customer
localization service capabilities; fully utilize technological innovation and scale advantages to expand and
strengthen valve and pump products, prioritize the promotion of intelligent standardized integrated component
products, optimize product design, shorten project cycles, and bring value to customers while improving efficiency
internally; secondly, actively promote methods such as self-made key equipment and large-scale procurement to
control costs and reduce comprehensive costs. In the process of globalization, we actively promote the construction
of production bases in Mexico, Poland, and domestic Shaoxing Binhai, Zhongshan, Shenyang, etc., increase
40
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
production capacity layout and talent team construction, so as to achieve high-speed growth in the global wave of
automotive electrification and intelligence.
(3) Strategic emerging businesses
In the field of biomimetic robots, the Company focuses on electromechanical actuators, fully cooperating with
customer product research and development, trial production, iteration, and ultimately achieving mass production
and implementation. At the same time, we will synchronize and cooperate with customer production targets, actively
plan the overseas production layout of electromechanical actuators, and welcome the arrival of the era of "Robot
replacement”.
Electrochemical energy storage relies on the "dual carbon" policy, coupled with the start-up and growth of
industrial and commercial energy storage applications, establishing long-term market demand. The Company will
leverage its experience in the development and manufacturing of thermal management components and system
solutions, further leverage its collaborative advantages, actively expand its component business development in the
energy storage field, and strive to become a leading supplier of key components and system solutions for global
energy storage thermal management in the design iteration and development of energy storage thermal management
units.
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
Index of basic
Date of Location of Method of Type of Reception of discussion
situation of the
reception reception reception reception object object and materials
research
provided
41
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Introduction of
Zhongrong
the company's
Fund Fan http://irm.cninf
February 6, On-site operation and
Hangzhou Institution Pengcheng o.com.cn/ssessg
2023 research reply to
etc.15 investors s/S002050
investors'
in total
questions
Introduction of
Morgan Stanley
the company's
Crystal Chan http://irm.cninf
February 14, On-site operation and
Hangzhou Institution etc. 17 o.com.cn/ssessg
2023 research reply to
investors in s/S002050
investors'
total
questions
Introduction of
Xingyin Fund the company's
http://irm.cninf
Conference Xu Fuyi etc. operation and
May 3,2023 Teleconference Institution o.com.cn/ssessg
Room 287 investors in reply to
s/S002050
total investors'
questions
Investors
participating in
the
performance
Introduction of
briefing on the
the company's
theme of "New http://irm.cninf
Shenzhen Stock operation and
June 2,2023 Other Institution opportunities o.com.cn/ssessg
Exchange reply to
for the s/S002050
investors'
development of
questions
private
enterprises"
organized by
SZSE
Introduction of
Supor
the company's
Investment Li http://irm.cninf
On-site operation and
July 6,2023 Hangzhou Institution Yulu etc. 13 o.com.cn/ssessg
research reply to
investors in s/S002050
investors'
total
questions
Introduction of
Pingan Bank the company's
http://irm.cninf
Conference Liu Yingfei etc. operation and
August 22,2023 Teleconference Institution o.com.cn/ssessg
Room 758 investors in reply to
s/S002050
total investors'
questions
Introduction of
Caitong
the company's
Securities Jin http://irm.cninf
September On-site operation and
Hangzhou Institution Min etc. 17 o.com.cn/ssessg
8,2023 research reply to
investors in s/S002050
investors'
total
questions
Minsheng Introduction of
Royal Fund the company's
http://irm.cninf
October 30, Conference Management operation and
Teleconference Institution o.com.cn/ssessg
2023 Room Sun Wei etc. reply to
s/S002050
398 investors in investors'
total questions
November 8, GIC June Long Introduction of http://irm.cninf
Singapore Other Institution
2023 etc.39 investors the company's o.com.cn/ssessg
42
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
in total operation and s/S002050
reply to
investors'
questions
Introduction of
Feiluo Assets
the company's
Zhang Wenli http://irm.cninf
November On-site operation and
Hangzhou Institution etc. 29 o.com.cn/ssessg
30,2023 research reply to
investors in s/S002050
investors'
total
questions
Introduction of
Zhongtai
the company's
Securities He http://irm.cninf
On-site operation and
December Hangzhou Institution Junyi etc. 8 o.com.cn/ssessg
research reply to
15,2023 investors in s/S002050
investors'
total
questions
XIII. Implementation status of action plan “Dual improvement in quality and return”
Has the company disclosed an action plan of "dual improvement of quality and return".
□ Applicable √ Not applicable
43
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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, Self-regulatory Guidelines for Listed Companies No. 1- Standardized
Operation of Main Board 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, Rule of
Procedure for Shareholders Meeting, Rules of Procedure for Board Meetings, Independent Director System, Audit
Committee System of the Board of Directors, Nomination Committee System of the Board of Directors,
Compensation and Assessment Committee System of the Board of Directors, and formulated Special Meeting System
for Independent Directors and further designed 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
Rules for General Meetings of Shareholders of Listed Companies, 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
44
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
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 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 learn the truth.
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
45
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
interfere in the operation beyond the provision of general meeting.
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, opens independent account
in bank and makes financial decisions independently.
III. Horizontal Competition
□ Applicable √ Not applicable
IV. Annual General Meeting and Extraordinary General Meetings convened during the
Reporting Period
1. Annual general meeting of shareholders convened during the reporting period
Proportion of
Meeting Nature participating Convened Date Disclosure Date Disclosure Index
investors
Announcement of
the Annual
Annual general
Annual general General Meeting
meeting of
meeting of 66.89% May 19, 2023 May 20, 2023 of Shareholders of
shareholders of
shareholders 2022(2023-036)
2022
was published in
the Securities
46
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Times, Shanghai
Securities Journal
and CNINFO.
Announcement of
the 1st
Extraordinary
The 1st General Meeting
extraordinary Interim general of Shareholders in
general meeting of meeting of 63.66% July 6, 2023 July 7, 2023 2023 (2023-063)
shareholders in shareholders was published in
2023 the Securities
Times, Shanghai
Securities Journal
and CNINFO.
Announcement of
the 2nd
Extraordinary
The 2nd General Meeting
extraordinary Interim general of Shareholders in
general meeting of meeting of 61.53% September 7, 2023 September 8, 2023 2023 (2023-107)
shareholders in shareholders was published in
2023 the Securities
Times, Shanghai
Securities Journal
and CNINFO.
Announcement of
the 3rd
Extraordinary
The 3rd General Meeting
extraordinary Interim general of Shareholders in
general meeting of meeting of 60.88% October 11, 2023 October 12, 2023 2023 (2023-117)
shareholders in shareholders was published in
2023 the Securities
Times, Shanghai
Securities News
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 Reaso
held at increas decrea
Comm Termi Other held at ns for
the ed sed
encem nation change the end increas
Gende Tenure beginn during during
Name Age Title ent of of term s of the e or
r status ing of the the
term of of (Share Period decrea
the Period Period
office office s) (Share se of
Period (Share (Share
s) shares
(Share s) s)
47
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
s)
Chair
man of Decem Januar
Zhang Incum 39,024 39,024
Male 50 the ber 13, y 26,
Yabo bent ,200 ,200
board, 2012 2025
CEO
Direct
Wang Decem Januar Shares
or, Incum 336,75 252,56
Dayon Male 55 ber 13, y 26, 84,188 reducti
Presid bent 0 2
g 2012 2025 on
ent
Januar Januar
Ren Direct Incum
Male 62 y 26, y 26,
Jintu or bent
2022 2025
Ni Januar Shares
Direct Incum May 6, 326,75 245,06
Xiaom Male 56 y 26, 81,688 reducti
or bent 2011 0 2
ing 2025 on
Direct
Nove
Chen or, Januar
Incum mber 336,75 336,75
Yuzho Male 58 chief y 26,
bent 29, 0 0
ng engine 2025
2011
er
Zhang May Januar
Direct Incum
Shaob Male 45 18, y 26,
or bent
o 2015 2025
Indepe
August Januar
Bao ndent Incum
Male 56 3, y 26,
Ensi directo bent
2021 2025
r
Indepe
May Januar
Shi ndent Incum
Male 52 19, y 26,
Jianhui directo bent
2020 2025
r
Indepe
Februa Januar
Pan Femal ndent Incum
59 ry 26, y 26,
Yalan e directo bent
2021 2025
r
Conve
ner of
Nove
the Januar
Zhao Incum mber
Male 53 board y 26,
Yajun bent 29,
of 2025
2011
superv
isors
August Januar
Mo Superv Incum
Male 48 3, y 26, 14,568 14,568
Yang isor bent
2021 2025
Emplo
Chen yee March Januar
represe Incum
Xiaom Male 55 26, y 26, 11,100 11,100
ntative bent
ing superv 2011 2025
isor
Vice
preside
Hu Januar Januar Shares
nt, Incum 336,75 252,56
Kaiche Male 49 y 26, y 26, 84,188 reducti
Secret bent 0 2
ng 2015 2025 on
ary of
the
48
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
board
of
directo
rs
Vice Septe
Yu Januar Shares
preside Incum mber 368,05 283,86
Yingk Male 50 y 26, 84,188 reducti
nt, bent 30, 7 9
ui 2025 on
CFO 2011
40,754 334,25 40,420
Total -- -- -- -- -- -- 0 --
,925 2 ,673
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
Changes of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
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
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 of the board and CEO of the Company.
Mr. Wang Dayong: Born in 1969, 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 Co., Ltd. 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 Co., Ltd, and a director and President of the Company since December 2012.
Mr. Ren Jintu: Born in 1962, college degree, associate 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 and
a director of Ningbo Fuerda Intelligent Technology 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 January 2009 to July 2009, he served as
the deputy general manager of sales of the Company; August 2009, he served as the deputy general manager of
49
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 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;
From October 2023 to present, served as the Chairman of Zhejiang Sanhua Zhiyuan Real Estate Co., Ltd. From
May 2017 to December 2023, he has served as executive director and general manager of Zhejiang Sanhua Zhicheng
Real Estate Development Co., Ltd; he currently serves as a director and assistant president of Sanhua Holding Group
Co., Ltd. And the chairman of Zhejiang Sanhua Lvneng Industrial 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, associate 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 Houji Capital Management Company. He is currently the assistant to the chairman of Beijing Houji Capital
Management Company; 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 Minth Group Co., Ltd. and he currently
serves as the CEO of Xiaozhi Investment Management Partnership in Meishan Bonded Port Area, Ningbo, Zhejiang
Province, managing partner of Ningbo Lingdong Venture Capital Partnership, managing partner of Hangzhou
Chishi Enterprise Management Consulting Partnership; he currently serves as a director of Bomei Intelligent
Technology (Shanghai) Co., Ltd, Chairman of Hangzhou Good Face Technology Co., Ltd, Director of Shanghai
Time Driving Technology Co., Ltd, and Chairman of Shanxi Sishan Ninrui Construction Engineering Co., Ltd. He
has been appointed as an independent director of the Company since May 2020.
Ms. Pan Yalan: Born in 1965, master’s degree, a member of the League of Civil Society. She started working in
August 1987. She is a professor of Accounting College of Hangzhou University of Electronic Technology, tutor of
graduate students. She is a non-practicing Certified Public Accountant. 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 College of Business Administration of Zhejiang
University, associate senior accountant. From 1996 to 2003, he worked in Zhejiang Tianjian accounting firm; from
January 2004 to February 2011, he served as deputy minister of Finance Department of Sanhua Holding Group Co.,
Ltd.; from February 2011 to February 2014, he served as minister 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
50
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 minister of the president's office of Sanhua Holding Group Co., Ltd; From December
2019 to now, he has served as the minister of the board of directors office in Sanhua Holding Group Co., Ltd. From
January 2020 to present, he has served as the Secretary General of the Board of Directors of Sanhua Holdings Group
Co., Ltd. and also a Supervisor of Sanhua Holdings Group Co., Ltd. He has been a supervisor of the Company since
August 2021.
Mr. Chen Xiaoming: Born in 1969, college degree. In August 2013, he served as minister of quality department
and vice minister of four-way valve business department of Wuhu Sanhua Automatic Control Components Co.,
Ltd.; in January 2016, he served as minister of Quality Department of Wuhu Sanhua Automatic Control Components
Co., Ltd; in December 2016, he served as minister of four-way valve department and service valve department of
Wuhu Sanhua Automatic Control Components Co., Ltd.; from August 2017 up to present, he has served as
Manufacturing Director, minister of four-way valve department and service valve department of Wuhu Sanhua
Automatic Control Components Co., Ltd. From April 2022 to present, he has served as the Deputy General Manager
as well as minister of Manufacturing Department and Product Business Department of Sanhua (Vietnam) Co., Ltd.
Since March 2011, he has been appointed as employee representative 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. and procurement director
of the Company; 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 has served as the vice president of the Company; from January 2015 up to present, he has served as the
Secretary of the board of directors of the Company. Since October 2023, he has been appointed as the chairman of
Hangzhou Xiantu Electronics Co., Ltd.
Mr. Yu Yingkui: Born in 1974, bachelor degree, accountant, 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 minister 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
Compensation and
Shareholder's Position in Commencement of Termination of the
Name allowance from the
entity shareholders’ the term term
shareholders'
51
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
entities entity
Sanhua Holding Vice chairman
Zhang Yabo July 11, 2000 No
Group Co., Ltd (director)
Sanhua Holding
Wang Dayong Director July 11, 2000 No
Group Co., Ltd
Sanhua Holding
Ren Jintu Director July 11, 2000 Yes
Group Co., Ltd
Zhejiang Sanhua
Ren Jintu lvneng Industrial Director March 15, 2011 No
Group Co., Ltd
Sanhua Holding
Ni Xiaoming Director July 11, 2000 No
Group Co., Ltd
Sanhua Holding November 26,
Chen Yuzhong Director No
Group Co., Ltd 2014
Sanhua Holding
Zhang Shaobo Director August 7, 2003 No
Group Co., Ltd
Zhejiang Sanhua
Zhang Shaobo lvneng Industrial Director August 14, 2023 Yes
Group Co., Ltd
Sanhua Holding Deputy chief
Zhao Yajun March 1, 2014 Yes
Group Co., Ltd financial officer
Zhejiang Sanhua
Zhao Yajun Lvneng Industrial Supervisor July 1, 2019 No
Group Co., Ltd
Sanhua Holding November 26,
Mo Yang Supervisor Yes
Group Co., Ltd 2014
Positions held in other entities
√Applicable □ Not applicable
Compensation and
Positions in other Commencement of Termination of the
Name Other entities allowance from
entities the term term
other entities
Xinchang Huaxin Chairman of the
Zhang Yabo March 16, 2016 No
Industrial Co., Ltd Board
Hangzhou Zhishen
Investment
Zhang Yabo Executive Director July 23, 2007 No
Management Co.,
Ltd
Hangzhou Zhishen
Investment
Zhang Yabo Supervisor July 23, 2007 No
Management Co.,
Ltd
Hangzhou Sanhua
Chairman of the
Zhang Yabo Research Institute February 10, 2017 No
Board
Co., Ltd
Sanhua Trading
Zhang Yabo Singapore Private Director October 13, 2017 No
Limited
Zhejiang Haoyuan
Zhang Yabo Technology Co., Director May 4, 2018 No
Ltd
Wuhu ALDOC
Zhang Yabo Technology Co., Director February 3, 2016 No
Ltd
Hangzhou Fumo
Zhang Yabo New Material Director July 1, 2016 October 20, 2023 No
Technology Co.,
52
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Ltd
Hangzhou Fufan
Investment
Wang Dayong Director April 28, 2016 No
Management Co.,
Ltd
Xinchang
Huayong
November 11,
Wang Dayong Enterprise Executive Director No
2021
Management Co.,
Ltd
Guochuang
Energy Internet
Wang Dayong Innovation Center Director August 20, 2019 No
(Guangdong) Co.,
Ltd
Zhejiang Sanhua
Industrial
Wang Dayong Executive Director August 1, 2023 No
Automation Co.,
Ltd
Ningbo Jiaerling
Pneumatic
Wang Dayong Director October 9, 2023 No
Machinery Co.,
Ltd
Hangzhou Fufan
Investment
Ren Jintu Director July 9, 2010 No
Management Co.,
Ltd
Executive Director
Hangzhou Xinji
Ren Jintu and General January 9, 2007 July 26, 2023 No
Industrial Co., Ltd
Manager
Ningbo Fuerda
Intelligent
Ren Jintu Technology Co., Director April 8, 2021 No
Ltd
Hangzhou Sanhua
Ren Jintu International Supervisor July 31, 2013 No
Building Co., Ltd
Shenyang Sanhua
Daika Wheel Hub
Ren Jintu Director December 1, 2006 No
Co., Ltd.
(Bankruptcy)
Xinchang Private
Chairman of
Ren Jintu Financing Service April 8, 2018 No
Supervisory Board
Center Co., Ltd
Xinchang County
United Investment
Ren Jintu Supervisor April 29, 2015 No
Management Co.,
Ltd
Zhejiang Sanhua
Ren Jintu Zhiyuan Real Director October 30, 2023 No
Estate Co., Ltd.
Hangzhou Fufan
Chairman of the
Investment
Zhang Shaobo Board, General July 9, 2010 No
Management Co.,
Manager
Ltd
Zhang Shaobo Zhejiang Huateng Chairman of the December 22, No
53
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Industrial Co., Ltd Board 2021
Ningbo Fuerda
Intelligent December 26,
Zhang Shaobo Director No
Technology Co., 2019
Ltd
Hangzhou Zhishen
Executive Director
Investment
Zhang Shaobo and General July 23, 2007 No
Management Co.,
Manager
Ltd
Hangzhou
Zhicheng
Zhang Shaobo Investment Manager November 4, 2020 No
Management Co.,
Ltd
Inner Mongolia
September 11,
Zhang Shaobo Xiqi Mining Co., Supervisor No
2012
Ltd
Zhejiang Sanhua
Ecological Executive September 11,
Zhang Shaobo No
Agriculture Co., Director, Manager 2018
Ltd
Hangzhou Kaisida
Zhang Shaobo Technology Co., Executive Director December 1, 2018 No
Ltd
Hangzhou Sanhua Executive Director
Zhang Shaobo International and General July 31, 2013 No
Building Co., Ltd Manager
Tianjin Sanhua
Industrial Park Executive
Zhang Shaobo October 1, 2018 No
Management Co., Director, Manager
Ltd
Zhejiang Sanhua
Zhicheng Real Executive Director
December 29,
Zhang Shaobo Estate and General May 31, 2017 No
2023
Development Co., Manager
Ltd
Xinchang Private
Zhang Shaobo Financing Service Director April 8, 2018 No
Center Co., Ltd
Hangzhou Fuxiang
Property Chairman of the
Zhang Shaobo January 3, 2016 No
Management Co., Board
Ltd
Shaoxing Sanhua
Zhiyue Real Estate Executive
Zhang Shaobo September 1, 2022 No
Development Co., Director, Manager
Ltd
Shanghai Sanhua Executive
Zhang Shaobo April 10, 2017 No
Electric Co., Ltd Director, Manager
Xinchang County
United Investment
Zhang Shaobo Director April 29, 2015 No
Management Co.,
Ltd
Shanghai Tihu September 26,
Zhang Shaobo Director No
Catering Co., Ltd 2017
Tianjin Minghao Executive November 14,
Zhang Shaobo May 25, 2017 No
Management Director, Manager 2023
54
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Consulting Co.,
Ltd
Hangzhou Zhiwo
Investment
Zhang Shaobo General Manager June 16, 2014 No
Management Co.,
Ltd
Xinchang County
Sanhua Property Chairman of the
Zhang Shaobo March 29, 2011 No
Management Co., Board
Ltd
Xinchang Sanhua
Hongdao Venture
Zhang Shaobo Capital Partnership Executive Partner No
(limited
partnership)
Xinchang Zhushi
Venture Capital
Zhang Shaobo Partnership Executive Partner No
(limited
partnership)
Hangzhou Sanhua
Hongdao Venture
Capital Partnership
Zhang Shaobo Executive Partner No
Enterprise
(Limited
Partnership)
Zhejiang Sanhua
Zhang Shaobo Zhiyuan Real General Manager October 30, 2023 No
Estate Co., Ltd.
Aerospace Era
Electronic Independent
Bao Ensi June 22, 2020 June 21, 2023 Yes
Technology Co., Director
Ltd
China Railway Independent
Bao Ensi May 25, 2022 Yes
Trust Co., Ltd. Director
Baimei Smart
Technology
Shi Jianhui Director January 1, 2020 Yes
(Shanghai) Co.,
Ltd.
Hangzhou
Haomian
Shi Jianhui General Manager August 19, 2021 No
Technology Co.,
Ltd
Shanghai Shijia
Shi Jianhui Technology Co., Director January 26, 2022 No
Ltd
Ningbo Meishan
Bonded Port Zone
Xiaozhi
Entrepreneurship
September 22,
Shi Jianhui Investment Executive Partner No
2017
Partnership
Enterprise
(Limited
Partnership)
Ningbo Lingdong
Shi Jianhui Executive Partner July 28, 2020 No
Entrepreneurship
55
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Investment
Partnership
Enterprise
(Limited
Partnership)
Hangzhou Chishi
Enterprise
Management
Shi Jianhui Consulting Executive Partner August 3, 2022 No
Partnership
(Limited
Partnership)
Shaanxi Sishan
Ningrui
Shi Jianhui Construction General Manager February 16, 2023 No
Engineering Co.,
Ltd
Ningbo Fangzheng
Independent December 11, December 10,
Shi Jianhui Automotive Mold Yes
Director 2023 2026
Co., Ltd
AAPICO Hitech
Independent
Shi Jianhui Public Company June 29, 2022 Yes
Director
Limited
Lin'an Rural
Independent
Pan Yalan Commercial Bank October 15, 2019 Yes
Director
Co., Ltd
Zhejiang Daily
Independent December 22,
Pan Yalan Digital Culture October 16, 2026 Yes
Director 2021
Group Co., Ltd
Xianheng
International Independent September 25, September 24,
Pan Yalan Yes
Technology Co., Director 2023 2026
Ltd
Xinchang Huaxin
Zhao Yajun Director March 21, 2017 No
Industrial Co., Ltd
Ningbo Fuerda
Intelligent
Zhao Yajun Supervisor April 8, 2021 No
Technology Co.,
Ltd
Zhejiang Xiezhong
Automobile New
Energy
Zhao Yajun Supervisor May 25, 2018 No
Technology
Development Co.,
Ltd
Shanghai
Fuyulong
December 26,
Zhao Yajun Automotive Supervisor No
2019
Technology Co.,
Ltd
Xinchang Private
Zhao Yajun Financing Service Supervisor March 26, 2014 No
Center Co., Ltd
Fuerda (Tianjin)
Intelligent
Zhao Yajun Supervisor November 2, 2018 No
Technology Co.,
Ltd
56
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Zhejiang Haoyuan
Zhao Yajun Technology Co., Supervisor May 4, 2018 No
Ltd
Hangzhou
Tongchan
Zhao Yajun Supervisor May 31, 2011 No
Machinery Co.,
Ltd
Shanghai Sanhua
Zhao Yajun Supervisor April 12, 2011 No
Electric Co., Ltd
Wuhu ALDOC
Zhao Yajun Technology Co., Supervisor July 31, 2018 No
Ltd
Xinchang County
United Investment
Zhao Yajun Supervisor January 1, 2012 No
Management Co.,
Ltd
Xiezhong
International
Chairman of the
Thermal
Zhao Yajun Board of February 28, 2019 No
Management
Supervisors
System (Jiangsu)
Co., Ltd
Ningbo Jiaerling
Pneumatic
Zhao Yajun Supervisor October 9, 2023 No
Machinery Co.,
Ltd
Zhejiang Huateng
Yu Yingkui Director April 19, 2010 No
Industrial Co., Ltd
Xinchang Private
Yu Yingkui Financing Service Director October 23, 2015 No
Center Co., Ltd
Chongqing Tainuo
Yu Yingkui Machinery Co., Director December 8, 2016 No
Ltd
Ningbo Jinlifeng
Yu Yingkui Machinery Co., Director July 2, 2020 No
Ltd
Sanhua Trading
Yu Yingkui Singapore Private Director October 13, 2017 No
Limited
Description of
The above employment in other entities does not include the employment of directors, supervisors and
employment in
other organizations senior management in subsidiaries within the scope of the Company's consolidated financial statements.
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
Decision-making Process
The salaries of directors, supervisors, and senior management personnel shall be determined in accordance with
the standards stipulated in the Company's unified salary management system. According to the Company's
performance evaluation mechanism, regular evaluations are conducted on the directors, supervisors, and senior
57
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
management personnel, and compensation is determined based on the evaluation results. The allowance standards
for independent directors shall be reviewed and decided in the shareholders' meeting.
Basis for determination
The remuneration of directors, supervisors, and senior management personnel is determined based on the
company's operating performance and performance evaluation indicators.
Remuneration of directors, supervisors and senior management personnel
Unit: RMB in 10 thousand
Total
remuneration Remuneration
Name Gender Age Title Tenure status from the from related
Company parties (Y/N)
(RMB'0,000)
Director,
Zhang Yabo Male 50 Incumbent 309.91 No
Chairman, CEO
Director,
Wang Dayong Male 55 Incumbent 423.65 No
President
Ren Jintu Male 62 Director Incumbent 0 Yes
Ni Xiaoming Male 56 Director Incumbent 275.43 No
Director, chief
Chen Yuzhong Male 58 Incumbent 420.22 No
engineer
Zhang Shaobo Male 45 Director Incumbent 0 Yes
Independent
Bao Ensi Male 56 Incumbent 10.8 No
director
Independent
Shi Jianhui Male 52 Incumbent 10.8 No
director
Independent
Pan Yalan Female 59 Incumbent 10.8 No
director
Convener of the
Zhao Yajun Male 53 board of Incumbent 0 Yes
supervisors
Mo Yang Male 48 Supervisor Incumbent 0 Yes
Chen Xiaoming Male 55 Supervisor Incumbent 55.16 No
Vice president,
Secretary of the
Hu Kaicheng Male 49 Incumbent 90.05 No
board of
directors
Vice president,
Yu Yingkui Male 50 Incumbent 134.75 No
CFO
Total -- -- -- -- 1,741.57 --
58
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Explanation of other situations
□ Applicable √ Not applicable
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 10th interim meeting of
March 15, 2023 March 16, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 11th meeting of the 7th
April 27, 2023 April 29, 2023 http://www.cninfo.com.cn
board of directors
The 12th interim meeting of
June 20, 2023 June 21, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 13th interim meeting of
July 7, 2023 July 8, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 14th interim meeting of
August 22, 2023 August 23, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 15th interim meeting of
September 1, 2023 September 5, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 16th interim meeting of
September 25, 2023 September 26, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 17th meeting of the 7th
October 30, 2023 October 31, 2023 http://www.cninfo.com.cn
board of directors
The 18th interim meeting of
November 6, 2023 November 7, 2023 http://www.cninfo.com.cn
the 7th board of directors
The 19th interim meeting of
December 28, 2023 December 29, 2023 http://www.cninfo.com.cn
the 7th board of directors
2. Attendance of directors in board meetings and general meetings
Attendance of directors in board meetings and general meetings
Board Board
meeting Board meeting not Presence of
Board Board Board directors in
presence meeting attend in
Name of meeting meeting meeting general
required in presence person for
Director presence on presence on absence meetings
the reporting through a two
site (times) site (times) (times) (times)
period proxy (times) consecutive
(times) times
Zhang Yabo 10 1 9 0 0 N/A 2
Wang
10 1 9 0 0 N/A 3
Dayong
Ren Jintu 10 1 9 0 0 N/A 3
59
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Ni Xiaoming 10 1 9 0 0 N/A 1
Chen
10 1 9 0 0 N/A 3
Yuzhong
Zhang
10 0 10 0 0 N/A 1
Shaobo
Bao Ensi 10 1 9 0 0 N/A 0
Shi Jianhui 10 0 10 0 0 N/A 1
Pan Yalan 10 1 9 0 0 N/A 4
Explanation of not attending the board of directors in person for two consecutive times
Not applicable
3. Objections raised by directors to relevant matters of the Company
Whether there is any objection on related issues of the Company from directors?
□ Yes √ No
4. Other details about the performance of duties by directors
Whether there is any suggestion from directors adopted 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, stock buyback, guarantee and Articles of Association 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 objections (if
meetings meetings content
suggestions of duties any)
1.Deliberatio
Independent n of the 2022
director Pan annual report
Yalan; and its
Audit Independent April 17, abstract;
5 2.Specific
Committee director Shi 2023
Jianhui; report on
Director Ren annual
Jintu deposit and
actual use of
60
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
raised funds;
3. Proposal
on the
prediction of
the
Company's
daily related
party
transactions
in 2023; 4.
Proposal on
engagement
of the audit
institution in
2023; 5. First
quarter report
in 2023
1. Proposal
on the report
on the use of
the
Company's
previous
raised funds;
2. Proposal
on the Plan
for the Use
of Funds
Raised from
the Issuance
of GDR by
June 7, 2023 the
Company；
3. Proposal
on the
Feasibility
Analysis
Report of the
Company's
Overseas
Issuance of
GDR Raised
Funds and
the Increase
of Domestic
Shares
1.Semi-
annual report
in 2023; 2.
Specific
report on the
August 16, annual
2023 deposit and
actual use of
the raised
funds in the
half year of
2023.
61
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Proposal on
the report on
August 25, the use of the
2023 Company's
previous
raised funds
Third quarter
October 16,
report in
2023
2023
Proposal on
the
achievement
of the
unlocking
conditions
April 18,
for the third
2023
vesting
period of the
Restricted
stock
incentive
plan in 2020
1. Proposal
on the
Independent Achievement
director Shi of Exercise
Remuneratio Jianhui; Conditions
n and Independent during the
2
Assessment director Bao First Vesting
Committee Ensi; Period of the
Director Ren 2022 Stock
Jintu Appreciation
Rights
Incentive
June 15,
Plan 2.
2023
Proposal on
the
Achievement
of Unlocking
Conditions of
the First
Vesting
Period of the
Restricted
Stock
Incentive
Plan in 2022
Chairman of
the Board
Zhang Yabo;
Director Deliberation
Wang of the 2022
Strategic April 17,
Dayong; 1 annual report
Committee 2023
Director Ni and its
Xiaoming; abstract
Director
Chen
Yuzhong;
62
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Director
Zhang
Shaobo;
Independent
director Shi
Jianhui;
VIII. Performance of duties by the Supervisory Committee
Whether there is any risk 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 3,386
Number of incumbent employees in major subsidiaries 14,346
Number of incumbent employees 17,732
Number of employees receiving salaries in current period 17,732
Number of retired employees requiring the parent Company
0
and its subsidiaries to bear costs
Professional structure
Professional Category Number of employees
Production staff 11,447
Sales staff 645
Technical staff 3,241
Financial staff 376
Administrative Staff 2,023
Total 17,732
Educational background
Educational background Number of employees
Master and above 959
63
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Bachelor 4,852
College 4,120
Others 7,801
Total 17,732
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, employees’ ability and performance
results, the Company has established a comprehensive salary system with the structure of basic salary, bonus and
long-term incentive, and has formed relevant salary incentive systems to ensure the rationality of employees' value
contribution and their return of income. This motivates employees to continuously create value and drives the
Company's sustained high-quality development.
Every year, the Company carries out the estimation of college students and professional talents, which has
played an important role in motivating 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
launched phase I equity incentive plan in 2018, phase II restricted stock incentive plan in 2020 and Phase III equity
incentive plan in 2022, which played an incentive and retention role for the key talents and laid a foundation for
sustainable development.
3. Staff training plans
Based on the development plan from 2021 to 2025, the Company implements the talents strategy of “Internal
training first, moderate external introduction”, 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, Overseas
Factory Manager Training Program, International Talent Training Program, Technology Manufacturing Talent
Training Project, Management Trainee Program, etc.
At the same time, we will strengthen our infrastructure, continuously introduce learning technologies, continue
to improve our internal lecturer team and develop internal course resources, and create a learning platform. Through
the five force mechanisms of traction (cultural traction), internal drive (growth drive), external drive (lecturer drive),
supportive force (resource construction support), and organizational learning (learning organization construction),
we promote all employees' independent learning and talent transformation and upgrading, and help organizations
and talents achieve global competitiveness.
4. Labor outsourcing
□ Applicable √ Not applicable
64
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
X. Profit distribution of ordinary shares and capitalization of capital reserves
Profit distribution policy 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 parent company had a positive profit available for
shareholder distribution, but no cash dividend distribution plan was proposed.
□ Applicable √ Not applicable
Profit distribution and conversion of capital reserve to share capital during this reporting period
√ Applicable □Not applicable
Bonus share issued per 10 shares (share) 0
Cash dividend per 10 shares (RMB) (tax inclusive) 2.50
Additional shares converted from capital surplus
0
for every 10 shares (share)
Total capital share basis for the distribution
3,706,504,614
proposal (share)
Total cash dividend (RMB) (tax inclusive) 926,626,153.50
Cash dividend amount in other ways (such as share
0.00
repurchase) (RMB)
Total cash dividends (including other ways)
926,626,153.50
(RMB)
Distributable profits (RMB) 1,768,214,110.04
Percentage of cash dividends in the total distributed
100%
profit (%)
Cash dividends
If the Company is in growth stage and there are major capital expenditure arrangements, the proportion of cash dividends in this
profit distribution shall be at least 20%.
Detailed description of profit distribution or capital reserves conversion plan
Based on the provisional share capital of 3,706,504,614 shares, cash dividend of RMB 2.50 (tax inclusive) will be distributed to
all shareholders for every 10 shares. The Company will not distribute bonus shares or convert capital reserves to share capital.
Note: The share capital of the Company is 3,732,615,535 shares, of which the number of repurchased shares is26,110,921.
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.
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 constant distribution proportion.
65
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
XI. The Implementation of an Equity Incentive Plan, Employee Stock Ownership Plan, or Other
Incentive Plans
√ Applicable □ Not applicable
1. Equity Incentive Plan
1. In 2020, the Company launched the 2020 restricted stock incentive plan, granting 12.045 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 April 27, 2023, the Company held the 11th meeting of the 7th Board of Directors and the 9th meeting of the
7th Board of Supervisors, respectively, in which, Proposal on the achievement of unlocking conditions of the
third vesting period of the 2020 restricted stock incentive plan was approved. The listing date for circulation of
the restricted shares was May 15, 2023. The number of shareholders meeting the unlocking condition was 825.
A total of 5.85 million shares were released, accounting for 0.1629% of the Company's current total share capital.
(2) On June 20, 2023, the Company held the 12th interim meeting of the 7th board of directors and the 10th interim
meeting of the 7th board of supervisors respectively, in which Proposal on adjusting the repurchase price of
2020 restricted stock incentive plan and Proposal on repurchase and cancellation of some restricted stocks were
approved. The Company repurchased and cancelled 62,400 restricted shares held by 19 unqualified incentive
objects in the 2020 restricted stock incentive plan at a price of RMB 6.6615 per share.
(3) On July 6, 2023, the first extraordinary general meeting of shareholders in 2023 was held, in which Proposal
on repurchase and cancellation of some restricted shares was approved. The Company repurchased and
cancelled 62,400 restricted shares held by 19 unqualified incentive objects in the 2020 restricted stock incentive
plan at a price of RMB 6.6615 per share.
2. In 2022, the Company launched the 2022 restricted stock incentive plan and stock appreciation right
incentive plan, granting 17.585 million restricted shares to 1,366 incentive objects and 485,000 stock appreciation
rights to 41 incentive objects. The granting date of this equity incentive plan was May 31, 2022. The granting price
of restricted shares and stock appreciation rights was 10 yuan/share. The listing date of the restricted shares is June
30, 2022.
(1) On June 20, 2023, the Company held the 12th interim meeting of the 7th board of directors and the 10th interim
meeting of the 7th board of supervisors, in which following proposals were approved: Proposal on Adjusting
the Repurchase Price of 2022 Restricted Stock Incentive Plan, Proposal on the Achievement of Unlocking
Conditions of the First Vesting Period of the Restricted Stock Incentive Plan in 2022, Proposal on Repurchase
and Cancellation of some Restricted Stocks, Proposal on Adjusting the Exercise Price of the 2022 Stock
Appreciation Rights Incentive Plan, Proposal on the Achievement of Exercise Conditions during the First
Vesting Period of the 2022 Stock Appreciation Rights Incentive Plan and Proposal on Cancellation of Partial
Stock Appreciation Rights,. The listing date of the restricted shares was June 30, 2023. The number of
shareholders meeting the unlocking condition was 1,345. A total of 5.238 million shares were released
66
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
accounting for 0.1459% of the Company's current total share capital. The Company repurchased and cancelled
118,000 restricted shares held by 21 unqualified incentive objects in the 2022 restricted stock incentive plan at
a price of RMB 9.70 per share. The total number of incentive objects eligible for the exercise of stock
appreciation rights was 39, and the number of exercisable shares was 139,500. The Company cancelled all or
part of the stock appreciation rights held by 2 incentive objects who do not meet the conditions in the 2022
stock appreciation rights incentive plan, totaling 20,000 shares.
(2) On July 6, 2023, the first extraordinary general meeting of shareholders in 2023 was held, in which Proposal
on repurchase and cancellation of some restricted shares was approved. The Company repurchased and
cancelled 118,000 restricted shares held by 21 unqualified incentive objects in the 2022 restricted stock
incentive plan at a price of RMB 9.70 per share.
Share incentives for directors and senior executives in the reporting period
√ Applicable □ Not applicable
Unit: share
Exerci
se
Numb
price
Numb er of Marke Price
Numb Numb of Numb Restri Share
er of newly t price for
er of er of exerci er of cted Share s Restri
stock grante at the restric
exerci exerci sed stock Share s newly cted
option d end of ted
sable sed shares option s held vested grante Share
s held stock the shares
Name Title shares shares during s held at the in the d in s held
at the option report grante
in the in the the at the begin curren the at
begin s in period d
report report report end of ning t curren period
ning the (yuan (RMB
ing ing ing the of the period t -end
of the report / per
period period period period period period
year ing share) share)
(yuan
period
/
share)
Direct
Wang
, 132,0 76,00 56,00
Dayo 29.40
Presid 00 0 0
ng
ent
Ni
122,0 73,00 49,00
Xiao Direct 29.40
00 0 0
ming
Direct
Chen
, chief 132,0 76,00 56,00
Yuzh 29.40
engin 00 0 0
ong
eer
Vice
presid
ent,
Secret
Hu
ary of 132,0 76,00 56,00
Kaich 29.40
the 00 0 0
eng
board
of
direct
ors
67
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Vice
Yu
presid 132,0 76,00 56,00
Yingk 29.40
ent, 00 0 0
ui
CFO
650,0 377,0 273,0
Total -- 0 0 0 0 -- 0 -- 0 --
00 00 00
1. At the beginning of each year, the number of locked shares should be re-calculated according
to 75% of the total number of shares held by the senior management. The number of unlocked
shares in this period is 25% of the total number of shares at the beginning of the year.
2. May 15, 2023, the third vesting period of the 2020 Restricted stock incentive plan matured,
and the restricted shares of the above-mentioned directors and senior management have been
unlocked by 52,000 shares each, totaling 260,000 shares.
Note (if any)
3. June 30, 2023, the first vesting period of the 2022 Restricted stock incentive plan matured,
and the restricted shares of director Wang Dayong, Chen Yuzhong, senior management Hu
Kaicheng, and Yu Yingkui have been unlocked by 24,000 shares each; restricted shares of
director Ni Xiaoming have been unlocked by 21,000 shares, totaling 117000 shares.
Assessment and incentive mechanism for the senior management
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.
2. Employee Stock Ownership 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, 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
68
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 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
XIII. Management and control of subsidiaries during the reporting period
Not applicable
XIV. Self-evaluation report on internal control or Internal control audit report
1. Self-evaluation report on internal control
Disclosure date of the internal control
April 30, 2024
self-evaluation report
Disclosure index of full text of self- Self-evaluation Report on Internal Control of the Company in 2023
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:
1. Fraud of directors, supervisors and The possibility of defects is high, which
senior managers; 2. Major misstatement will significantly reduce the work
in 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, or
Qualitative criteria make it significantly deviate from the
control of the Company; 3. The Company
has major violations of laws and expected goal.
regulations in financial accounting, asset
management, capital operation, Important defects：
information disclosure, product quality, Defects are more likely to occur, which
69
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
safety production, environmental will seriously reduce the work efficiency
protection and other aspects, causing or effect, or seriously increase the
major losses and adverse effects to the uncertainty of the effect, or make it
Company, or subject to major seriously deviate from the expected goal.
administrative supervision and
punishment; 4. Supervision of the audit General defects：
committee and internal control The probability of defects is small, which
department is ineffective on the
will reduce the efficiency or effect,
Company's external financial report and
internal control. increase the uncertainty of the effect, or
make it deviate from the expected goal.
Important 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 The quantitative standard is based on the
percentage of potential misstatements of percentage of potential misstatements of
pre-tax profit. pre-tax profit.
Significant deficiency: Significant deficiency:
This defect alone or together with other This defect alone or together with other
defects may cause the misstatement of defects may cause the misstatement of
financial report to exceed 10% of the financial report to exceed 10% of the
profit before tax. profit before tax.
Quantitative criteria Important defects: Important defects:
This defect alone or together with other This defect alone or together with other
defects may cause the misstatement of defects may cause the misstatement of
financial report to exceed 5% but less than financial report to exceed 5% but less than
10% of the profit before tax. 10% of the profit before tax.
General defects: General defects:
This defect alone or together with other This defect alone or together with other
defects may cause the misstatement of defects may cause the misstatement of
financial report less than 5% of the profit financial report less than 5% of the profit
before tax. 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 non-
0
financial report level
2. Audit report or assurance report on internal control
√ Applicable □ Not applicable
70
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Deliberation Opinion Paragraph in Internal Control Audit Report
We believe that the Company maintained effective internal control over financial reporting in all material aspects as of December
31st 2023 in accordance with the Basic Standard for Enterprise Internal Control and other related regulations.
Disclosure of internal control audit report Disclose
Disclosure date of the full text of the auditor’s report on
April 30, 2024
internal control
2023 Internal Control Audit Report
Disclosure index of full text of internal control audit report
(ww.cninfo.com.cn)
Internal control audit opinion Standard unqualified audit opinion
Whether there is material weakness of non-financial report No
Whether the accounting firm issued an internal control audit report with a non-standard opinion
□Yes √No
Whether the internal control audit report issued by the accounting firm is consistent with the self-evaluation report
of the board of directors
√Yes □No
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.
71
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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 □No
Environmental protection related policies and industry standards
During the reporting period, the Company strictly adhered to national environmental protection related laws
and regulations in its daily production and operation, such as the Environmental Protection Law, the Air Pollution
Prevention and Control Law, the Water Pollution Prevention and Control Law, the Solid Waste Pollution
Environmental Prevention and Control Law, the Environmental Noise Pollution Prevention and Control Law, the
Soil Pollution Prevention and Control Law, the Environmental Impact Assessment Law, etc. The Company strictly
implements national environmental protection related industry standards, such as the Electroplating Pollutant
Discharge Standard (GB2190-2008), Comprehensive Air Pollutant Discharge Standard (GB16297-1996),
Comprehensive Wastewater Discharge Standard (GB8978-1996), Emission Standard for Air Pollutants from
Boilers (GB13271-2014), Emission Standard for Pollutants in the Synthetic Resin Industry (GB31572-2015),
Unorganized Emission Control Standard for volatile organic compounds (GB37822-2019), the Electroplating
Water Pollutant Discharge Standard (DB33/2260-2020) in Zhejiang Province and Indirect Emission Limits of
Nitrogen and Phosphorus Pollutants in Industrial Enterprise Wastewater (DB33/887-2013), and Emission Standard
for Environmental Noise at the Boundary of Industrial Enterprises (GB 12348-2008).
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 permits. All the projects have passed. In October 2023, the Company completed
the reapplication of the national version of the pollution discharge permit
2. Zhejiang Sanhua Commercial Refrigeration Co., Ltd. obtained the environmental impact assessment
approval in 2018, obtained the pollution discharge permit in January 2022, officially started production in
September 2022, and completed the environmental protection "three simultaneities" check and accept in October
2022. At present, the Company is operating normally, and all three waste emissions have met the national emission
standards.
Industry emission standards and specific situations of pollutant emissions involved in production and business
activities
Main Name of
pollutant main
Name of
s and pollutant Distribut Emissio Emissio
Compan Number Total Approve Over
types of s and Emissio ion of n n
y or of emission d total standard
character character n mode emission concentr standard
subsidiar outlets s emission emission
istic istic outlets ation s
y
pollutant pollutant
s s
Zhejiang The Not
Waste Sewer ≦ 62.386 T
Sanhua COD 1 North limitatio 43.27T exceedin
water system 500mg/L /year
Intellige n of g the
72
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
nt COD in standard
Controls GB8978
Co., Ltd. -1996
Integrate
d
Wastewa
ter
Emissio
n
Standar
d is
500mg /
L
The
limitatio
n listed
in
DB33/8
87-2013
Indirect
Emissio
Zhejiang
n Limits
Sanhua Not
Ammoni of
Intellige Waste Sewer ≦ 6.262 T exceedin
a 1 North Nitrogen 4.33T
nt water system 35mg/L /year g the
Nitrogen and
Controls standard
Phospho
Co., Ltd
rus
Pollutan
ts from
Industri
al
Wastewa
ter is
35mg / L
The
limitatio
n listed
in
GB1327
Zhejiang 1-2014
Sanhua Emissio 0.137T Not
≦
Intellige Waste Direct n based on 2.15 T exceedin
SO2 1 North 50mg/m
nt gas emission Standard the test /year g the
3
Controls of Air report standard
Co., Ltd Pollutant
s for
Boilers
is
50mg/m
3
Accordi
Zhejiang ng to the
Sanhua low 0.92T Not
≦
Intellige Waste Nitrogen Direct Nitrogen based on 10.06 T exceedin
1 North 50mg/m
nt gas Oxide emission emission the test /year g the
3
Controls requirem report standard
Co., Ltd ents of
local
73
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
governm
ent, the
limit
value of
gas-fired
boiler is
50mg /
m3
Zhejiang The
Sanhua limitatio
Not
Commer n from
Waste Sewer ≦ 20.73 T exceedin
cial COD 1 South GB8979 17.83T
water system 500mg/l /year g the
Refriger -1996 is
standard
ation Co. 500mg /
Ltd L
Zhejiang
The
Sanhua
limitatio Not
Commer
Waste Total Sewer ≦ n from exceedin
cial 1 South 0.178T /
water Copper system 2.0mg/l GB8979 g the
Refriger
-1996 is standard
ation Co.
2.0mg/l
Ltd
Treatment of pollutants
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 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, total Chromium, total Nickel 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 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. In 2022, the Company carried out an upgrade and
74
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
transformation of diesel-powered mobile source emissions, upgrading from the original National II emission
standard to National IV, greatly reducing particulate matter emissions. In 2023, the Company passed the B-
level acceptance check of air pollution prevention and control performance for key industry enterprises in
Zhejiang Province.
3. Solid waste and soil treatment (groundwater): 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. In July 2020, the Company became one of the first "waste free
factories" in Shaoxing. The Company commissioned a third-party testing agency to conduct soil and
groundwater testing in 2022, and no contamination was found. In 2023, the Company is no longer listed as a
key regulatory unit for soil pollution. Zhejiang Sanhua Commercial Refrigeration Co., Ltd passed the "Zero
Waste Factory" examination in Shaoxing City in 2023
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.
Emergency Response Plan
1. The Company re-prepared the Emergency Response Plan in August 2023, and filed with Xinchang
Environmental Protection Bureau on August 30, 2023 (Record No. 330624-2023-40-M).
2. In order to manage environmental emergencies and reduce the environmental hazards caused by sudden
environmental pollution accidents, Zhejiang Sanhua Commercial Refrigeration Co., Ltd compiled Emergency
Response Plan for Environmental Pollution Accidents of Zhejiang Sanhua Commercial Refrigeration Co., Ltd
(simplified version) in July 2022, which was filed with Xinchang Branch of Shaoxing Ecological Environment
Bureau on September 27, 2022 (Record No. 3306242022-51-L).
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, total Chromium, total Nickel, 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 Commercial Refrigeration 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
75
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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.
Investment in environmental governance and protection and payment of environmental protection taxes
During the reporting period, the Company's environmental governance, investment, and payment of environmental
protection tax amounted to 28.8332 million yuan.
Measures and effects in reducing carbon emissions during the reporting period
√ Applicable □ Not applicable
There are direct greenhouse gas emissions from the use of natural gas, gasoline, and diesel fuel, as well as
indirect greenhouse gas emissions from purchased electricity in the Company's production and operations. In this
regard, the Company is committed to energy saving and emission reduction practices, as well as continues to
innovate green product technologies to ensure effective use of resources and improve operational efficiency. As of
the end of the reporting period, the Company had prepared and issued the Energy Management Measures, Gas and
Liquid Management Measures, Compressed Air Use Inspection and Reward & Penalty Management Regulations,
Trial Management Measures for Compressed Air Cost Reduction, Water Conservation System, and other
management systems relating to resource conservation. By regularly checking usage, we aim to minimize the
consumption of water, electricity, fuel, and other resources, and actively assist society in energy conservation and
emission reduction while optimizing our own energy resource costs. At the same time, the Company has always
adhered to the business philosophy of energy saving and environmental protection, constantly innovating products
and technologies, and is committed to promoting the green and low-carbon development of the industry.
1. Low carbon design: Introduce low-carbon thinking from the design and development stage, follow the low-carbon
management throughout the product lifecycle, and prioritize the selection of low-carbon raw materials (including
but not limited to hydroelectric smelting of metals, recycled metals, etc.), recyclable materials, and miniaturized
design while ensuring technical requirements.
2. Optimize the energy structure: In order to achieve the goals of clean energy and higher resource utilization
efficiency, distributed photovoltaics are widely used in industrial areas to replace the original purchased electricity
and adopt waste heat recovery technology. Simultaneously increasing the purchasing methods of green electricity.
On the other hand, the energy storage system in the production park can comprehensively take advantage of peak
and valley electricity, which improves the efficiency of distributed photovoltaic utilization.
3. Accurate control of energy efficiency: 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.
4. Promote green technology: The Company 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.
76
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
5. Strengthen green cooperation: In order to reduce the energy consumption required for liquefaction during the
transportation of oxygen and nitrogen, and reduce the impact on climate, the company has replaced the method of
purchasing liquid oxygen and nitrogen with self-made oxygen and nitrogen.
6. Complete green products: In order to significantly reduce carbon emissions during the use of terminal products
and promote green and low-carbon development in the industry, the Company has developed a series of low-carbon
key core components, such as electronic expansion valves, inverter controllers, and microchannel products.
7. Production layout: Sanhua adheres to the concept of "wherever customers are, Sanhua is there" By setting up
factories nearby, we not only serve customers but also reduce carbon emissions in transportation. We have
established production bases in Mexico, Poland, Vietnam, Thailand, India, Hangzhou, Wuhu, Zhongshan, and other
areas.
At the same time, as the world's largest refrigeration control component manufacturer and a leading global
manufacturer of thermal management system control components for new energy vehicles, the Company fully
grasps the business opportunities brought by the global intelligent energy-saving and environmentally friendly home
appliances and development of the global new energy vehicle industry, actively explores green and efficient
refrigeration technology, and continues to bring professional and green product solutions to the industry.
Administrative penalties due to environmental issues during the reporting period
Not applicable
Other environmental information that should be disclosed
Not applicable
Other environmental information
Not applicable
II. Social responsibility
Please refer to the 2023 Environmental, Social, and Governance (ESG) Report on CNINFO
(http://www.cninfo.com.cn) for details.
III. Achievements of poverty alleviation and rural revitalization
Not applicable
77
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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
Date of Term of
Commitment Perform
Commitments Nature Details of commitments commitment commitme
party ance
s nts
When the number of shares sold
through listing and trading in
Zhang Yabo, Shenzhen Stock Exchange
Commitment Until the
controlling reaches 1% of the total number Strict
from Other November commitme
shareholder of shares of the Company, it perform
reformation of commitment 21, 2005 nt is
Sanhua Holding shall make an announcement ance
shareholding fulfilled
Group Co., Ltd. within two working days from
the date of the occurrence of the
fact.
Zhang Daocai and Sanhua
Commitment
holding group, the controlling
Zhang Daocai, on horizontal
shareholder of the Company,
controlling competition, Strict
promise that there will not be January 5,
shareholder related party Long term perform
any competition with Sanhua 2009
Sanhua Holding transactions and ance
intelligent controls in the
Group Co., Ltd. capital
business scope being or already
occupation
carried out in the future.
Sanhua Holding Group
promises: after the completion
of this transaction, Sanhua
Holding Group and Sanhua
intelligent controls will sign an
agreement according to law,
perform legal procedures, fulfill
Commitments the obligation of information
from assets disclosure and handle
reorganization Commitment significant matters for approval
Zhang Daocai, on horizontal in accordance with relevant
controlling competition, laws, regulations, and articles of Strict
January 5,
shareholder related party association of Sanhua intelligent Long term perform
2009
Sanhua Holding transactions and controls. In the process of ance
Group Co., Ltd. capital implementation of related party
occupation transactions, we will follow the
principle of legality and
reasonableness, ensure the
fairness of prices and
procedures, and make certain
that the legitimate interests of
Sanhua intelligent controls and
other shareholders will not be
damaged through related party
transactions.
78
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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;
guarantee that legal and
effective measures shall be
taken to urge other enterprises
controlled by me (or the
Company) not to engage in or
participate in any business
competing with Sanhua
Intelligent Controls and its
subordinate enterprises.
2. If Sanhua Intelligent Controls
Zhang Daocai, further expands its business
Zhang Yabo, scope, I (or the Company) and
other controlled enterprises will
Zhang Shaobo, Commitment not compete with Sanhua
controlling on horizontal Intelligent Controls' expanded
shareholder competition, business; if it is possible to Strict
July 24,
Sanhua Holding related party compete with Sanhua Intelligent Long term perform
Controls' business after 2015
Group Co., transactions and ance
Ltd., Zhejiang capital expansion, I (or the Company)
and other controlled enterprises
Sanhua Lvneng occupation
will withdraw from Sanhua
Industrial Intelligent Controls in the
Group Co., Ltd. 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 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.
79
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 enterprises will
reduce the related party
transactions with Sanhua
intelligent controls as far as
possible, and will not use their
own status as shareholders of
Sanhua intelligent controls to
seek for superior rights in terms
of business cooperation and
other aspects compared with
other third parties;
Zhang Daocai, 2. I (or the Company) will not
Zhang Yabo, take advantage of the right to
enter into a transaction with
Zhang Shaobo, Commitment Sanhua intellectual controls
controlling on horizontal using the position as a
shareholder competition, shareholder. Strict
July 24,
Sanhua Holding related party 3. If there are necessary and Long term perform
2015
Group Co., transactions and unavoidable related party ance
Ltd., Zhejiang capital transactions, I (or the Company)
Sanhua Lvneng occupation and the controlled enterprises
Industrial will sign agreements with
Group Co., Ltd. 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 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
80
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
and interests of Sanhua
intelligent controls and other
shareholders.
Zhang Daocai, Zhang Yabo,
Zhang Shaobo and Sanhua
holding Group, the controlling
shareholder of the Company,
made the following
commitments: after the
completion of the transaction,
Sanhua intelligent controls will
Zhang Daocai,
continue to improve the
Zhang Yabo,
corporate governance structure
Zhang Shaobo, Strict
Other and independent operation of July 24,
controlling Long term perform
Commitment the Company management 2015
shareholder ance
system in accordance with the
Sanhua Holding
requirements of relevant laws
Group Co., Ltd.
and regulations and the articles
of Association, and continue to
maintain the independence of
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 shareholder of
Sanhua intellectual controls to
seek the superior rights for
business cooperation with
Sanhua intelligent controls
compared with other third
parties;
Zhang Daocai,
2. I (or the Company) will not
Zhang Yabo, use my position as a shareholder
Zhang Shaobo, Commitment of Sanhua intellectual controls
controlling on horizontal to seek for the priority right to
shareholder competition, cooperate with Sanhua Strict
intellectual controls; September
Sanhua Holding related party Long term perform
3. If there are necessary and 18, 2017
Group Co., transactions and ance
Ltd., Zhejiang capital unavoidable related party
Sanhua Lvneng occupation transactions, I (or the Company)
Industrial and the controlled enterprises
Group Co., Ltd. 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
81
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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.
2. If Sanhua intelligent controls
further expands its business
scope, I (or the Company) and
Zhang Daocai, other enterprises controlled by
Zhang Yabo, me (or the Company) will not
compete with Sanhua intelligent
Zhang Shaobo, Commitment controls' expanded business; if it
controlling on horizontal is possible to compete with
shareholder competition, Sanhua intelligent controls' Strict
September
Sanhua Holding related party business after expansion, I (or Long term perform
the Company) and other 18, 2017
Group Co., transactions and ance
Ltd., Zhejiang capital enterprises controlled by me (or
the Company) will withdraw
Sanhua Lvneng occupation
from Sanhua intelligent controls
Industrial in the following ways of
Group Co., Ltd. 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 operation, they shall
immediately inform Sanhua
intelligent controls of the above
business opportunities. If
Sanhua intelligent controls
82
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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.
After the completion of the
transaction, the listed Company
will continue to improve the
Zhang Daocai,
corporate governance structure
Zhang Yabo,
and independent operation of
Zhang Shaobo,
the Company management
controlling
system in accordance with the
shareholder Strict
Other requirements of relevant laws September
Sanhua Holding Long term perform
commitment and regulations and the articles 18, 2017
Group Co., ance
of association, continue to
Ltd., Zhejiang
maintain the independence of
Sanhua Lvneng
the listed Company in business,
Industrial
assets, finance, institutions,
Group Co., Ltd.
personnel and other aspects, and
effectively protect the interests
of all shareholders.
The commitment made at the
time of IPO, it shall not engage
in the same production,
operation or business as the
Commitment Company in the future. In order
Commitment Zhang Daocai, on horizontal to avoid business competition
with the Company and clarify
made during controlling competition, Strict
the non-competition
initial public shareholder related party obligations, Sanhua Holding June 7 2005 Long term perform
offering or Sanhua Holding transactions and Group, on behalf of itself and its ance
refinancing Group Co., Ltd. capital subsidiaries with more than 50%
occupation equity, makes a commitment to
Sanhua intelligent controls to
avoid possible horizontal
competition.
The controlling
shareholders of
the listed
Other Company
commitments Sanhua Holding Will not actively reduce
Strict
made to Group Co., Other holdings of the Company's August 18,
18 months perform
minority Ltd., Zhejiang commitment shares within eighteen months 2022
ance
shareholders of Sanhua Lvneng from August 18, 2022.
the Company Industrial
Group Co.,
Ltd., and Mr.
Zhang Yabo
Are the Yes
83
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
commitments
fulfilled on time
2. If there is a profit forecast for the Company's assets or projects, and the reporting period is still in the
profit forecast period, the Company shall explain the reasons for the assets or projects reaching the original
profit forecast
□ 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’s
Report” 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
Accounting policy changes caused by changes in corporate accounting standards
Starting from January 1, 2023, the Company implemented the Accounting Standards for Enterprises
Interpretation No. 16 issued by the Ministry of Finance, which stipulates that deferred income tax related to assets
and liabilities arising from individual transactions is not subject to the accounting treatment of initial recognition
exemption. This change in accounting policy has no impact on the Company's financial statements.
VII. Explanation for changes in scope of the consolidated financial statements as compared
to the financial report for the prior year
√ Applicable □ Not applicable
84
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
1. Increase in consolidation scope
Proportion of
Equity acquisition Date of equity Capital
Name capital
method acquisition contribution
contribution
Guangdong Sanhua New Energy Vehicle Parts Co., Investment and
2023-02-17 183,712,500.00 100%
Ltd. establishment
Investment and
Shenyang Sanhua New Energy Vehicle Parts Co., Ltd. establishment 2023-03-08 17,000,000.00 100%
Investment and
Hangzhou Sanhua Intelligent Equipment Co., Ltd. establishment 2023-01-03 24,000,000.00 100%
SANHUA SINGAPORE AUTOMOTIVE Investment and
establishment 2023-11-20 0.00 100%
INVESTMENT PTE LTD.
Investment and
Minth Sanhua Auto Parts Poland Sp. Zoo. establishment 2023-01-24 5000 PLN 100%
Investment and
LEADERWAY COAHUILA, S.DE R.L.DE C.V. establishment 2023-10-01 10,000 MXN 100%
Investment and 100 million
SANHUA INDUSTRY (THAILAND) CO., LTD. establishment 2023-01-31 100%
THB
2. Reduction in consolidation scope
Net profit from
Equity disposal Date of equity Net assets on the beginning of
Name
method disposal disposal date the period to the
date of disposal
Liquidation and
Suzhou Xinzhi Automotive Parts Co., Ltd 2023-01-13 0.00 1,631.39
cancellation
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 10,000 yuan) 318
Consecutive years of the audit service provided by the domestic
23
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 5 consecutive years
public accountants from the domestic CPA firm Zhang Xin has been in service for 3 consecutive years
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 engaged Pan-China Certified Public Accountants LLP. as its internal
control audit accounting firm, with an internal control audit fee of 212,000 yuan.
85
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
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.
86
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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.
XV. Significant Contracts and 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
87
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
External Guarantees from the Company and its Subsidiaries (Excluding Guarantees to the Subsidiaries)
Announc
ement
Guarante
Date of Actual
Guarant Guarante Actual Type of Counter Term of e for
Disclosu Guarante Collatera Due or
eed e Occurre Guarante guarante Guarante Related
re of the e l (if any) not
Party Amount nce Date e e (if any) e Parties
Guarante Amount
or Not
e
Amount
Company's Guarantees to Subsidiaries
Announc
ement
Guarante
Date of Actual
Guarant Guarante Actual Type of Counter Term of e for
Disclosu Guarante Collatera Due or
eed e Occurre Guarante guarante Guarante Related
re of the e l (if any) not
Party Amount nce Date e e (if any) e Parties
Guarante Amount
or Not
e
Amount
Sanhua
AWEC
O
Joint 2022.04.
Electrica
March April 1, liability 01-
l 5,000 3,816.17 Yes Yes
25, 2022 2022 guarante 2023.04.
Equipme
e 01
nt
(Wuhu)
Co., Ltd.
SANHU
A
INTER
Joint 2022.05.
NATIO
March May 10, liability 10-
NAL 230,000 3,929.6 Yes Yes
25, 2022 2022 guarante 2023.05.
SINGAP
e 10
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.11.
NATIO Novemb
August liability 11-
NAL 240,000 er 11, 7,859.2 Yes Yes
13, 2022 guarante 2023.5.1
SINGAP 2022
e 0
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.05.
NATIO
March May 23, liability 23-
NAL 230,000 5,666.16 Yes Yes
25, 2022 2022 guarante 2023.05.
SINGAP
e 23
ORE
PTE.
LTD.
88
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
SANHU
A Joint 2022.06.
INTER March June 17, 10,624.0 liability 17-
50,000 Yes Yes
NATIO 25, 2022 2022 5 guarante 2023.06.
NAL, e 09
INC.
SANHU
A
INTER
Joint
NATIO Septemb 2022.9.5
August liability
NAL 240,000 er 5, 7,859.2 - Yes Yes
13, 2022 guarante
SINGAP 2022 2023.9.4
e
ORE
PTE.
LTD.
SANHU
A Joint
Septemb 2022.9.9
INTER August liability
95,000 er 9, 4,249.62 - Yes Yes
NATIO 13, 2022 guarante
2022 2023.9.8
NAL, e
INC.
SANHU
A
INTER
Joint 2022.10.
NATIO
August October 10,216.9 liability 19-
NAL 240,000 Yes Yes
13, 2022 19, 2022 6 guarante 2023.10.
SINGAP
e 18
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.10.
NATIO
August October liability 21-
NAL 240,000 5,501.44 Yes Yes
13, 2022 21, 2022 guarante 2023.10.
SINGAP
e 20
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.10.
NATIO
August October liability 21-
NAL 240,000 5,501.44 Yes Yes
13, 2022 21, 2022 guarante 2023.10.
SINGAP
e 20
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.10.
NATIO
August October liability 26-
NAL 240,000 4,715.52 Yes Yes
13, 2022 26, 2022 guarante 2023.10.
SINGAP
e 25
ORE
PTE.
LTD.
89
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
SANHU
A
INTER
Joint 2022.11.
NATIO Novemb
August liability 21-
NAL 240,000 er 21, 7,859.2 Yes Yes
13, 2022 guarante 2023.11.
SINGAP 2022
e 20
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.11.
NATIO Novemb
August liability 21-
NAL 240,000 er 21, 7,082.7 Yes Yes
13, 2022 guarante 2023.11.
SINGAP 2022
e 20
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.11.
NATIO Novemb
August liability 25-
NAL 240,000 er 25, 14,165.4 Yes Yes
13, 2022 guarante 2023.11.
SINGAP 2022
e 24
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2022.12.
NATIO Decemb
August liability 20-
NAL 240,000 er 20, 7,082.7 Yes Yes
13, 2022 guarante 2023.12.
SINGAP 2022
e 19
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.5.2
NATIO
April 29, May 23, liability 3-
NAL 340,000 5,666.16 Yes Yes
2023 2023 guarante 2024.5.2
SINGAP
e 2
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.5.2
NATIO
April 29, May 22, liability 2-
NAL 340,000 7,082.7 Yes Yes
2023 2023 guarante 2024.5.2
SINGAP
e 1
ORE
PTE.
LTD.
SANHU Joint 2023.5.1
April 29, May 19,
A 340,000 14,165.4 liability 9- Yes Yes
2023 2023
INTER guarante 2024.5.1
90
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
NATIO e 8
NAL
SINGAP
ORE
PTE.
LTD.
SANHU
A Joint
Septemb 2023.9.8
INTER April 29, liability
95,000 er 8, 2,833.08 - No Yes
NATIO 2023 guarante
2023 2024.9.6
NAL, e
INC.
SANHU
A Joint 2023.9.1
Septemb
INTER April 29, liability -
95,000 er 1, 1,416.54 No Yes
NATIO 2023 guarante 2024.9.3
2023
NAL, e 0
INC.
SANHU
A
INTER
Joint
NATIO 2023.5.1
April 29, May 11, liability
NAL 340,000 2,124.81 1- No Yes
2023 2023 guarante
SINGAP 2024.7.8
e
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.3.2
NATIO
August March liability 4-
NAL 240,000 5,501.44 No Yes
13, 2022 24, 2023 guarante 2024.3.2
SINGAP
e 3
ORE
PTE.
LTD.
SANHU
A
INTER
Joint
NATIO 2023.5.4
April 29, May 4, liability
NAL 340,000 3,143.68 - No Yes
2023 2023 guarante
SINGAP 2024.5.3
e
ORE
PTE.
LTD.
SANHU
A
INTER
Joint
NATIO 2023.5.4
April 29, May 4, liability
NAL 340,000 4,715.52 - No Yes
2023 2023 guarante
SINGAP 2024.5.3
e
ORE
PTE.
LTD.
SANHU Joint 2023.5.1
April 29, May 11,
A 340,000 3,929.6 liability 1- No Yes
2023 2023
INTER guarante 2024.5.1
91
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
NATIO e 0
NAL
SINGAP
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.5.2
NATIO
April 29, May 22, 14,932.4 liability 2-
NAL 340,000 No Yes
2023 2023 8 guarante 2024.5.2
SINGAP
e 1
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.5.3
NATIO
April 29, May 31, liability 1-
NAL 340,000 7,859.2 No Yes
2023 2023 guarante 2024.5.3
SINGAP
e 0
ORE
PTE.
LTD.
SANHU
A Joint
2023.6.9
INTER April 29, June 9, 10,624.0 liability
95,000 - No Yes
NATIO 2023 2023 5 guarante
2024.6.5
NAL, e
INC.
SANHU
A Joint 2023.8.2
INTER April 29, August liability 1-
240,000 14,165.4 No Yes
NATIO 2023 21, 2023 guarante 2024.8.2
NAL, e 0
INC.
SANHU
A
INTER
Joint 2023.10.
NATIO
April 29, October liability 20-
NAL 240,000 5,501.44 No Yes
2023 20, 2023 guarante 2024.10.
SINGAP
e 19
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.10.
NATIO
April 29, October liability 25-
NAL 240,000 4,715.52 No Yes
2023 25, 2023 guarante 2024.10.
SINGAP
e 24
ORE
PTE.
LTD.
SANHU Novemb Joint 2023.11.
April 29,
A 240,000 er 20, 7,859.2 liability 20- No Yes
2023
INTER 2023 guarante 2024.11.
92
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
NATIO e 19
NAL
SINGAP
ORE
PTE.
LTD.
SANHU
A
INTER
Joint 2023.11.
NATIO Novemb
April 29, liability 20-
NAL 240,000 er 20, 7,082.7 No Yes
2023 guarante 2024.11.
SINGAP 2023
e 19
ORE
PTE.
LTD.
Guangd
ong
Sanhua
New Joint
Novemb Novemb 2023.11.
Energy liability
er 7, 500 er 29, 500 29- No Yes
Automot guarante
ive 2023 2023 2024.4.2
e
Compon
ents Co.,
Ltd
SANHU
A
INTER
Joint 2023.12.
NATIO Decemb
April 29, 10,216.9 liability 7-
NAL 240,000 er 7, No Yes
2023 6 guarante 2024.12.
SINGAP 2023
e 6
ORE
PTE.
LTD.
Total Amount of Total Amount of
Guarantees to Guarantees to
Subsidiaries Subsidiaries Actually
550,500 134,035.88
Approved during the Occurred during the
Reporting Period Reporting Period
(B1) (B2)
Total Amount of Total Balance of
Guarantees to Guarantees Actually
Subsidiaries Paid to Subsidiaries
550,500 107,121.62
Approved by the End at the End of the
of the Reporting Reporting Period
Period (B3) (B4)
Subsidiaries' Guarantees to Subsidiaries
Announc
ement
Guarante
Date of Actual
Guarant Guarante Actual Type of Counter Term of e for
Disclosu Guarante Collatera Due or
eed e Occurre Guarante guarante Guarante Related
re of the e l (if any) not
Party Amount nce Date e e (if any) e Parties
Guarante Amount
or Not
e
Amount
93
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 550,500 Occurred during the 134,035.88
Reporting Period Reporting Period
(A1+B1+C1) (A2+B2+C2)
Total Amount of Total Balance of
Guarantees Guarantees Actually
Approved by the End 550,500 Paid at the End of the 107,121.62
of the Reporting Reporting Period
Period (A3+B3+C3) (A4+B4+C4)
Total Amount of Actual Guarantees
(A4+B4+C4) as a Percentage of the 5.99%
Company's Net Assets
Of which：
Balance of Debt Guarantees Directly or
Indirectly Offered to Guaranteed Objects with 0
Asset-liability Ratio Exceeding 70% (E)
Total Amount of the Above Three Guarantees
0
(D+E+F)
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
Overdue
Balance before amount of overdue
Specific type Capital source Amount uncollected
maturity unrecovered
amount
financial
management
Bank financial
Own funds 13,000
products
Total 13,000
Details of high-risk entrusted financial management with large single amount, low security or poor liquidity
√Applicable □ Not applicable
Unit: RMB in 10 thousand
Refe Actu Actu Am Futu Eve
renc al al ount re nt
Thro
Ty Dete e Exp profi reco of entr over
A Ca Capi ugh
pe St rmin annu ecte t very prov uste view
Name Prod m pit tal legal
of art End atio alize d and of ision d and
of uct o al inve proc
tru da date n of d retur loss profi for fina rele
trustee type u sou stme edur
ste te retur rate n (if in t imp ncial vant
nt rce nt es or
e n of any) the and airm man inde
not
retur repo loss ent age x (if
n rting in (if men any)
94
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
peri the any) t
od repo plan
rting or
peri not
od
12-
mont
h
matu
rity
RM Floa
BNP B ting
Paribas struc Ju inco
(China) tured 5, O ne me
Limited depo
Shangh Ba 0 wn 16 June 13, with 17.7 17.7
sit Yes
ai nk linke 0 fun , 2023 guar 4 4
Branch d to 0 ds 20 ante
a 22 e of
bask prin
et of cipal
custo
mize
d
indic
es
JP
Mor
gan
JP XRP Floa
Morgan Inde ting
Chase x Ju inco
Bank
(China) 100 5, O ne me
Limited Ba % 0 wn 27 June 27, with 41.4 41.4
Yes
Shangh nk Capit 0 fun , 2023 guar 5 5
ai al 0 ds 20 ante
Branch Prote 22 e of
cted prin
Struc cipal
tured
Depo
sit
"Gal
axy
Jinsh
an"
Certi Floa
ficat ting
M
es of inco
China ar
Inco 3, O me
Galaxy Sec ch April
me 0 wn with 4.00
Securiti urit 21 17, 3.62 3.62 Yes
No. 0 fun guar %
es Co. y , 2023
1345 0 ds ante
Ltd. 20
9 e of
23
(Prin prin
cipal cipal
Prote
cted
Fixe
d
95
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Inco
me
Certi
ficat
es)
1
3,
62.8
Total 0 -- -- -- -- -- -- -- -- -- --
1
0
0
The principal of entrusted financial management is expected uncollectible or there are other situations that may
lead to impairment
□ Applicable √ Not applicable
(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. Repurchase of company shares
The 18th extraordinary meeting of the 7th Board of Directors, held on November 6, 2023, reviewed and
approved the Proposal on Repurchase of Company Shares, agreeing that the Company will use its own funds to
repurchase some of the company's shares through the secondary market by centralized bidding for subsequent
implementation of equity incentives or employee shareholding plans. The total amount of funds for this repurchase
shall not be less than RMB 200 million and shall not exceed RMB 400 million. The repurchase price shall not
exceed RMB 36.00 per share, and the repurchase period shall be within 12 months from the date of approval of the
repurchase plan by the Company's board of directors. For details, please refer to the relevant announcements
disclosed by the company on the CNINFO.
As of the end of the reporting period, the Company repurchased 702,900 shares through a dedicated stock
repurchase securities account by centralized bidding trading, accounting for 0.0188% of the Company's current total
share capital. The highest transaction price was 29.09 yuan/share, and the lowest transaction price was 28.01
yuan/share, with a total transaction amount of 19,990,058.81 yuan (excluding transaction fees).
2. Early redemption of "Sanhua Convertible Bonds"
The 13th extraordinary meeting of the 7th Board of Directors held on July 7, 2023 reviewed and approved the
proposal on early redemption of "Sanhua Convertible Bonds". Since conditional redemption clauses have been
triggered, it agreed to the Company’s early redemption of convertible corporate bonds that have not been converted
96
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
into shares as of the redemption registration date (July 31, 2023). As of the close of market on July 31, 2023, a total
of 37,663 unconverted bonds of "Sanhua Convertible Bonds" have been fully redeemed by the Company at a
redemption price of 100.10 yuan per bond (including current accrued interest), with a total redemption payment of
3,770,066.30 yuan. Starting from August 9, 2023, "Sanhua Convertible Bonds" was delisted from the Shenzhen
Stock Exchange. For details, please refer to the relevant announcements disclosed on the CNINFO.
XVII. Significant Events of the Company’s Subsidiaries
□ Applicable √ Not applicable
97
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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
transferre
New Bonus d
Shares Ratio Shares from Others Sub-total Shares Ratio
share
Issued capital
reserve
1. Shares
subject to - -
63,266, 42,522,19
conditional 1.76% 20,744,15 20,744,15 1.14%
341 1
restriction(s 0 0
)
1) Shares
held by
states
2) Shares
held by
state-owned
corporations
3) Shares
held by - -
63,043, 42,466,19
other 1.75% 20,577,15 20,577,15 1.14%
341 1
domestic 0 0
investors
Of
which:
Shares held
by domestic
corporations
Shares
- -
held by 63,043, 42,466,19
1.75% 20,577,15 20,577,15 1.14%
domestic 341 1
0 0
individuals
4) Shares
held by
223,000 0.01% -167,000 -167,000 56,000 0.00%
overseas
investors
Of
which:
Shares held
by overseas
corporations
98
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Shares
held by
223,000 0.01% -167,000 -167,000 56,000 0.00%
overseas
individuals
2. Shares
3,527,6 162,490,2 162,490,2 3,690,093
without 98.24% 98.86%
03,124 20 20 ,344
restriction
1) RMB
3,527,6 162,490,2 162,490,2 3,690,093
common 98.24% 98.86%
03,124 20 20 ,344
shares
2)
Domesticall
y listed
foreign
shares
3) Foreign
shares listed
overseas
4) Others
3,590,8 141,746,0 141,746,0 3,732,615
3. Total 100.00% 100.00%
69,465 70 70 ,535
Reason for the changes in share capital
√ Applicable □ Not applicable
1. At the beginning of each year, the number of locked shares should be re-calculated according to 75% of the total
number of shares held by the senior management.
2. May 15, 2023, the third vesting period of the 2020 Restricted stock incentive plan matured, and 5.85 million
restricted stocks of 825 incentive objects who meet the conditions were listed for circulation.
3. June 30, 2023, the first vesting period of the 2022 Restricted stock incentive plan matured, and 5.238 million
restricted stocks of 1,345 incentive objects who meet the conditions were listed for circulation.
4. The Company repurchased and cancelled a total of 180,400 restricted shares held by incentive recipients who do
not meet the conditions.
5. From January 1, 2023 to July 31, 2023, the "Sanhua Convertible Bonds" decreased by RMB 2,994,679,400
(29,946,794 pieces) due to share conversion, with a total of 141,926,470 shares converted. On August 1, 2023, all
remaining unconverted convertible bonds were redeemed by the Company.
Approval for changes in share capital
√ Applicable □ Not applicable
1. 2020 restricted stock incentive plan
(1) April 27, 2023, the Company held the 11th meeting of the 7th Board of Directors and the 9th meeting of the 7th
Board of Supervisors, respectively, in which, Proposal on the achievement of unlocking conditions of the third
vesting period of the 2020 restricted stock incentive plan was approved. The listing date for circulation of the
restricted shares was May 15, 2023. A total of 5.85 million shares were released.
99
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
(2) June 20, 2023, the Company held the 12th interim meeting of the 7th board of directors and the 10th interim
meeting of the 7th board of supervisors respectively, in which Proposal on adjusting the repurchase price of 2020
restricted stock incentive plan and Proposal on repurchase and cancellation of some restricted stocks were
approved. The Company repurchased and cancelled 62,400 restricted shares held by unqualified incentive objects
in the 2020 restricted stock incentive plan.
(3) July 6, 2023, the first extraordinary general meeting of shareholders in 2023 was held, in which Proposal on
repurchase and cancellation of some restricted shares was approved. The Company repurchased and cancelled
62,400 restricted shares held by unqualified incentive objects in the 2020 restricted stock incentive plan.
2. 2022 restricted stock incentive plan
(1) June 20, 2023, the Company held the 12th interim meeting of the 7th board of directors and the 10th interim
meeting of the 7th board of supervisors, in which following proposals were approved: Proposal on Adjusting the
Repurchase Price of 2022 Restricted Stock Incentive Plan, Proposal on Repurchase and Cancellation of some
Restricted Stocks and Proposal on the Achievement of Unlocking Conditions of the First Vesting Period of the
Restricted Stock Incentive Plan in 2022. The listing date of the restricted shares was June 30, 2023. A total of 5.238
million shares were released. The Company repurchased and cancelled 118,000 restricted shares held by unqualified
incentive objects in the 2022 restricted stock incentive plan.
(2) July 6, 2023, the first extraordinary general meeting of shareholders in 2023 was held, in which Proposal on
repurchase and cancellation of some restricted shares was approved. The Company repurchased and cancelled
118,000 restricted shares held by unqualified incentive objects in the 2022 restricted stock incentive plan.
3. Convertible bonds
May 27, 2021, the 17th extraordinary meeting of the 6th Board of Directors and the 15th extraordinary meeting of
the 6th Board of Supervisors deliberated and approved the Proposal on Further Clarifying the Specific Plan for the
Public Issuance of Convertible Corporate Bonds by the Company and Proposal on Public Issuance of Convertible
Corporate Bonds. The convertible bond conversion period of the Company is from the first trading date (December
7, 2021), which is six months later from June 7, 2021 (end of issuance), to the maturity date of the convertible bond
(May 31, 2027).
Transfer of shares
√ Applicable □ Not applicable
In 2023, the Company repurchased 180,400 shares that were not qualified for unlocking.
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.
100
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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
Unlock shares Closing balance Note for
Name of balance of Vested in Date of
in current of restricted restricted
shareholder restricted current period unlocking
period shares shares
shares
Comply with Comply with
the relevant the relevant
provisions of provisions of
Zhang Yabo 39,023,400 0 9,755,250 29,268,150
executives executives
shares shares
management management
Comply with Comply with
relevant relevant
provisions of provisions of
Wang Dayong 272,562 0 20,000 252,562 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Ni Xiaoming 262,562 0 17,500 245,062 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Chen Yuzhong 272,562 0 20,000 252,562 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Hu Kaicheng 272,562 0 20,000 252,562 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Yu Yingkui 296,042 0 20,000 276,042 equity incentive equity incentive
and executive and executive
shares shares
management. management.
101
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Comply with Comply with
relevant relevant
provisions of provisions of
Mo Yang 10,926 0 0 10,926
executive executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Chen Xiaoming 8,325 0 0 8,325
executive executive
shares shares
management. management.
Comply with Comply with
Other incentive relevant relevant
22,847,400 0 10,891,400 11,956,000
objects provisions of provisions of
equity incentive equity incentive
Total 63,266,341 0 20,744,150 42,522,191 -- --
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. July 6, 2023, the first extraordinary general meeting of shareholders in 2023 was held, in which Proposal
on repurchase and cancellation of some restricted shares was approved. The Company repurchased and cancelled
180,400 restricted shares held by unqualified incentive objects in the 2022 restricted stock incentive plan.
2. May 27, 2021, the 17th extraordinary meeting of the 6th Board of Directors and the 15th extraordinary
meeting of the 6th Board of Supervisors deliberated and approved the Proposal on Further Clarifying the Specific
Plan for the Public Issuance of Convertible Corporate Bonds by the Company and Proposal on Public Issuance of
Convertible Corporate Bonds. The convertible bond conversion period of the Company is from the first trading date
(December 7, 2021), which is six months later from June 7, 2021 (end of issuance), to the maturity date of the
convertible bond (May 31, 2027). From January 1, 2023 to July 31, 2023, the "Sanhua Convertible Bonds" decreased
by RMB 2,994,679,400 (29,946,794 pieces) due to share conversion, with a total of 141,926,470 shares converted.
On August 1, 2023, all remaining unconverted convertible bonds were redeemed by the Company.
3. Existent shares held by internal staff of the Company
□ Applicable √ Not applicable
102
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: Share
Total
Number of
Total Preferred
number of Shareholde
Total common rs (If Any)
Total number of preferred
Number of shareholder (Refer to
shareholders (if any)
Common s at the end Note 8)
(refer to Note 8) with
Shareholde of previous Whose
52,273 84,746 0 resumed voting rights at 0
rs at the month Voting
the end of previous month
End of the before the Rights
before the disclosure date
Reporting disclosure Have Been
of the annual report
Period date of the Recovered
annual at the End
report of the
Reporting
Period
Particulars about Shares Held by Shareholders with a Shareholding Percentage over 5% or the Top 10 of Them
(excluding Securities Lending and Borrowing)
Total Increase/ The The
Pledged, marked or frozen
Share- shares held number of number of
decrease
Name of Nature of holding at the end shares held shares held
during the
shareholder shareholder percentage of the with without
reporting Status Amount
(%) reporting trading trading
period
period restrictions restrictions
Sanhua Domestic
Holding non-state- 948,487,07 - 948,487,07
owned 25.41%
Group Co., 7 30,378,708 7
Ltd. corporation
Zhejiang
Sanhua Domestic
Lvneng non-state- 742,747,95 742,747,95 150,000,00
owned 19.90% 4,160,000 Pledged
Industrial 4 4 0
Group Co., corporation
Ltd
Hong Kong
Central Overseas 579,152,01 579,152,01
15.52% 31,513,126
Clearing corporation 5 5
Limited
Zhang Domestic
1.05% 39,024,200 0 29,268,150 9,756,050
Yabo Individual
National
Social
Security
Fund Others 0.59% 22,074,567 22,074,567 22,074,567
(NSSF)
104th
Portfolio
China
Merchants Others 0.57% 21,419,354 121,312 21,419,354
Bank
103
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Corporatio
n-
Quanguo
Xuyuan
Three Year
Holding
Period
Hybrid
Securities
Investment
Fund
Industrial
and
Commercia
l Bank of
China
Limited -
GF Multi -
Others 0.57% 21,226,564 21,226,564
Factor 10,180,010
Flexible
Allocation
Hybrid
Securities
Investment
Fund
Kuwait
Overseas
Investment 0.47% 17,546,539 -1,472,965 17,546,539
corporation
Authority
Industrial
and
Commercia
l Bank of
China
Limited - Others 0.45% 16,653,597 8, 106, 107 16,653,597
Huatai-
Perry CSI
300 Traded
Open-End
Index Fund
China Life
Insurance
Company
Limited-
Traditional
-General Others 0.45% 16,624,990 16,624,990 16,624,990
Insurance
Products-
005L-CT-
001
Shanghai
Information about
Strategic Investors’ or
General Legal Persons’
Becoming Top Ten No
Common Shareholders for
Placement of New Shares
(If Any) (Refer to Note 3)
104
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Explanation on Among the above shareholders, Sanhua Holding Group Co., Ltd., Zhejiang Sanhua Lvneng
Associated Relationship Industrial Group Co., Ltd. and Zhang Yabo are the persons acting in concert. The Company does not
or Concerted Actions know whether there is any related relationship between other shareholders, or whether they belong
among the Above- to the persons acting in concert stipulated in the Administrative Measures for the Acquisition of
Mentioned Shareholders Listed Companies.
Particulars about Shares Held by Top 10 Common Shareholders Holding Shares That Are Not Subject to Trading Restrictions
Type of shares
Number of Common Shares Held without Restrictions at the End of
Name of Shareholder
the Reporting Period
Type Amount
RMB
Sanhua Holding Group 948,487,07
948,487,077 common
Co., Ltd. 7
stock
RMB
Zhejiang Sanhua Lvneng 742,747,95
742,747,954 common
Industrial Group Co., Ltd 4
stock
RMB
Hong Kong Central 579,152,01
579,152,015 common
Clearing Limited 5
stock
National Social Security RMB
Fund (NSSF) 104th 22,074,567 common 22,074,567
Portfolio stock
China Merchants Bank
Corporation - Quanguo
RMB
Xuyuan Three Year
21,419,354 common 21,419,354
Holding Period Hybrid
stock
Securities Investment
Fund
Industrial and
Commercial Bank of
RMB
China Limited - GF Multi
21,226,564 common 21,226,564
Factor Flexible Allocation
stock
Hybrid Securities
Investment Fund
RMB
Kuwait Investment
17,546,539 common 17,546,539
Authority
stock
Industrial and
Commercial Bank of RMB
China Limited - Huatai- 16,653,597 common 16,653,597
Perry CSI 300 Traded stock
Open-End Index Fund
China Life Insurance
Company Limited- RMB
Traditional-General 16,624,990 common 16,624,990
Insurance Products-005L- stock
CT-001 Shanghai
Industrial and
Commercial Bank of
China Limited - ETF CSI RMB
New Energy Vehicle 15,986,434 common 15,986,434
Industry Index Initiated stock
Securities Investment
Fund (LOF)
105
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Explanation of Associated
Relationship or Concerted
Actions among Top Ten
Common Shareholders
Among the above shareholders, Sanhua Holding Group Co., Ltd. and Zhejiang Sanhua Lvneng
without Trading
Industrial Group Co., Ltd. are the persons acting in concert. The Company does not know whether
Restrictions, and among
there is any related relationship between other shareholders, or whether they belong to the persons
Top Ten Common
acting in concert stipulated in the Administrative Measures for the Acquisition of Listed Companies.
Shareholders without
Trading Restrictions and
Top Ten Common
Shareholders
Explanation of Top Ten
Common Shareholders’
Participation in Securities N/A
Margin Trading (If Any)
(Refer to Note 4)
The top ten shareholders participating in the Securities Lending and Borrowing
√ Applicable □ Not applicable
Unit: share
The top ten shareholders participating in Securities Lending and Borrowing
Shares in the common
Shares lent and not yet Shares in the common
account and Shares lent and not yet
returned at the period- account and credit account
Full name credit account at the returned at the period-end
begin at the period-end
of period-begin
shareholder As % of As % of As % of As % of
Total Total Total Total
total share total share total share total share
shares shares shares shares
capital capital capital capital
Zhejiang
Sanhua
Lvneng 738,587,95 742,747,95
20.57% 4,160,000 0.12% 19.90% 0 0.00%
Industrial 4 4
Group Co.,
Ltd
Industrial
and
Commercia
l Bank of
China
Limited - 8,547,490 0.24% 243,000 0.01% 16,653,597 0.45% 20,600 0.00%
Huatai-
Perry CSI
300 Traded
Open-End
Index Fund
Changes in the top ten shareholders compared to the previous period
√Applicable □ Not applicable
Unit: share
Changes in top 10 shareholders compared to last period
106
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
The number of shares held in the
ordinary account and credit account of
At the end of the period, the number of
New/Exiting shareholders at the end of the period, as
Full name of shares lent and not yet returned
shareholder in well as the shares lent and not yet
shareholders returned
current period
Ratio in total
Total quantity Ratio in total shares Total quantity
shares
Hangzhou Zhichun
Investment
Management Co.
Exiting
Ltd - Zhichun 0 0.00% 0 0.00%
shareholder
Select Phase I
Private Securities
Investment Fund
Exiting
#Fang deji 0 0.00% 0 0.00%
shareholder
National Social
Security Fund New
0 0.00% 22,074,567 0.59%
(NSSF) 104th shareholder
Portfolio
Kuwait
Government New
0 0.00% 17,546,539 0.47%
Investment shareholder
Authority
Industrial and
Commercial Bank
of China Limited - New
20,600 0.00% 16,674,197 0.45%
Huatai-Perry CSI shareholder
300 Traded Open-
End Index Fund
China Life
Insurance
Company Limited-
New
Traditional- 0 0.00% 16,624,990 0.45%
shareholder
General Insurance
Products-005L-
CT-001 Shanghai
Abu Dhabi
Exiting
Investment 0 0.00% 8,587,782 0.23%
shareholder
Authority
Exiting
Fang Wenjun 0 0.00% 0 0.00%
shareholder
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: Natural person
Type of the actual controller: Corporation
Name of controlling Legal Representative
Date of establishment Organization code Business scope
shareholder /People in charge
107
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 the
enterprise and its
member enterprises. It
is engaged in the export
business of raw and
auxiliary materials,
machinery and
equipment, instruments
and meters, spare parts
Sanhua Holding Group
Zhang Daocai July 11, 2000 91330624720002522J and related
Co., Ltd
technologies needed by
the enterprise and its
member enterprises for
production and
scientific research; it is
engaged in the
processing 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.
108
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 Whether he/she has obtained
Relationship with the actual
Nationality the right of residence in
controller controller
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 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 entrepreneur of Zhejiang Province, leading
figures of Zhejiang Manufacturing and other honors.
Mr. Zhang Yabo: Chinese nationality, CPC member, born in 1974, senior economist, 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
Main occupation and position 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, 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, Zhejiang
excellent entrepreneurs, glorious Zhejiang businessman, etc. Now he serves as a representative to
the 14th National People's Congress, the 13th Executive Committee Member of the China
Federation of Industry and Party Representative of the 15th Zhejiang Provincial Party Congress,
Vice President of Zhejiang Chamber of Commerce and Chairman Supervisor of the Zhejiang
Chamber of Commerce.
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., chairman of the
board of Zhejiang Sanhua Lvneng Industrial Group Co., Ltd., General Manager of Hangzhou
Sanhua International Building Co., Ltd., and chairman of the board of Zhejiang Sanhua Zhiyuan
Real Estate Co., Ltd.
Domestic and foreign listed
companies controlled in the N/A
past 10 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 are detailed as
follows:
109
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Zhang Yu
22% Daocai Qingjuan 21%
Zhang Yabo Zhang Shaobo
51% 6%
39.95% Xinchang Huaqing Investment Co., Ltd. 45.45%
Xinchang Huaxin Industrial Co., Ltd. Zhejiang Huateng Industrial Co., Ltd. 10.04%
12.00% 28.77% 9.04%
11.78% Sanhua Holding Group Co., Ltd.
100%
1.05%
Hong Kong Haoyide International Ltd.
46.22%
100%
Fuxun Co., Ltd.
28.20%
25.41%
Zhejiang Sanhua lvneng Industrial Group Co., Ltd.
19.90%
Zhejiang Sanhua Intelligent Controls Co., Ltd.
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
5. Particulars about other corporate shareholders with shareholding proportion over 10%
√ Applicable □ Not applicable
Name of corporate Legal
Date of incorporation Registered capital Main business
shareholder representative
Manufacturing and sales: air
suspension assembly, general
Zhejiang Sanhua equipment, electromechanical
Lvneng Industrial Zhang Shaobo September 30, 2001 649 million yuan equipment, technology development,
Group Co., Ltd technical service, technical
consultation, achievement transfer:
electromechanical technology,
110
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 raw materials (except
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 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
August 2022, the Company disclosed Announcement on Sanhua Holdings, Sanhua Lvneng, and Mr. Zhang
Yabo's Commitment not to Actively Reduce Their Holdings of the Company Stocks. The controlling shareholder
Sanhua Holdings, the shareholder Sanhua Lvneng, and the actual controller Mr. Zhang Yabo will not actively reduce
their holdings of the Company's shares within 18 months from August 18, 2022.
IV. Information about the implementation of share repurchase during the reporting period
Information about the implementation of share repurchase
√Applicable □Not applicable
111
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Proportion of
Proposed repurchased
Scheme Number of Proportion in repurchase Quantity shares in
Period to be Repurchase
disclosure shares to be total share amount Unit: repurchased equity
repurchased purpose
date repurchased capital (RMB in 10 (shares) incentive
thousand) plan shares
(if any)
For equity
October 27, incentive plan
October 27, 5,555,555- 0.15%- 20,000- 2022 - or employee
7,535,067 100.00%
2022 11,111,110 0.30% 40,000 October 26, stock
2023 ownership
plan
For equity
November 7, incentive plan
November 7, 5,555,555- 0.15%- 20,000- 2023 - or employee
702,900 100.00%
2023 11,111,110, 0.30% 40,000 November 6, stock
2024 ownership
plan
The progress on reduction of re-purchase shares by means of centralized bidding
□Applicable √Not applicable
112
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Section VIII Information of Preferred Shares
□ Applicable √ Not applicable
No existing preferred shares for the Company during the current reporting period.
113
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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
1. The Company implemented the 2021 profit distribution plan. According to the relevant provisions of the price
adjustment of convertible corporate bonds, the conversion price of Sanhua convertible bonds should be adjusted
accordingly. The conversion price of Sanhua convertible bonds before the adjustment is 21.55 yuan/share, and the
adjusted conversion price is 21.40 yuan/share. The adjusted conversion price took effect from May 11, 2022.
2. The Company implemented a profit distribution plan for the half year of 2022. According to the relevant
provisions on the price adjustment of convertible corporate bonds, the conversion price of Sanhua convertible bonds
should be adjusted accordingly. Before the adjustment, the conversion price of Sanhua convertible bonds is 21.40
yuan/share, and after the adjustment, the conversion price is 21.30 yuan/share. The adjusted conversion price took
effect from September 22, 2022.
3. The Company implemented the 2022 profit distribution plan. According to the relevant provisions of the price
adjustment of convertible corporate bonds, the conversion price of Sanhua convertible bonds was adjusted from
21.30 yuan/share to 21.10 yuan/share. The adjusted conversion price took effect from June 9, 2023.
2. Share Conversions (Accumulative)
√Applicable □ Not applicable
Abbreviati Total Total Cumulative Cumulative Proportion Amount of Proportion
Period of
on of issued issued amount of number of of the shares not of the
conversion
convertible amount amount converted converted number of yet amount of
114
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
bonds (piece) (yuan) shares shares converted converted non-
(yuan) (shares) shares to (yuan) converted
the total shares in
issued the total
shares of amount of
the issuance
Company
before the
date of
conversion
December
Sanhua
7, 2021 - 3,000,000,0 2,996,233,7 141,998,77 3,766,300.0
Convertible 30,000,000 3.95% 0.00%
July 31, 00.00 00.00 7 0
Bond
2023
3. Top 10 Holders of the Convertible Bond
August 9, 2023, "Sanhua Convertible Bonds" were delisted from the Shenzhen Stock Exchange.
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
Regarding the relevant financial indicators of the Company at the end of the reporting period, please refer to
"8. Main accounting data and financial indicators of the company for the past two years as of the end of the
reporting period".
CSCI Pengyuan issued the 2023 Tracking Rating Report on the 2021 Public Issuance of Convertible Corporate
Bonds by Zhejiang Sanhua Intelligent Controls Co., Ltd. on June 27, 2023, 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.
The convertible corporate bonds have triggered the conditional redemption clause stipulated in the Zhejiang
Sanhua Intelligent Controls Co., Ltd. Public Issuance of Convertible Corporate Bonds Prospectus. On July 7, 2023,
the Company held the 13th extraordinary meeting of the 7th Board of Directors and the 11th extraordinary meeting
of the 7th Board of Supervisors, which reviewed and passed the Proposal on Early Redemption of Sanhua
Convertible Bonds and agreed to the Company's exercise of the conditional redemption right and redemption of all
unconverted Sanhua Convertible Bonds registered with China Securities Depository and Clearing Corporation
Shenzhen Branch after the close of the market on the redemption registration date at the price of the face value plus
accrued interest. Redemption registration date: July 31, 2023, redemption date: August 1, 2023, redemption price:
100.10 yuan/piece (including accrued interest, annual interest rate is 0.60%, and tax inclusive). A total of
3,770,066.30 yuan was paid for redemption. On August 9, 2023, "Sanhua Convertible Bonds" were delisted from
the Shenzhen Stock Exchange.
115
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Due to the fact that the unconverted portion of the "Sanhua Convertible Bond" has been fully redeemed by the
Company and delisted from the Shenzhen Stock Exchange, China Securities CSCI Pengyuan decided to terminate
the tracking rating of Sanhua Intelligent Controls and Sanhua Convertible Bond. The original rating is valid until
August 11, 2023, and will no longer be updated.
The cumulative conversion of "Sanhua Convertible Bonds" into shares is 141,998,777, and the total share
capital of the Company has increased by 141,998,777 shares result from conversion, which has increased the
Company's capital strength. Meanwhile, due to an increase in total share capital, the Company's EPS would be
diluted in the short term.
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 1.7 1.98 -14.14%
Asset liability ratio 43.36% 53.08% -9.72%
Quick ratio 1.31 1.53 -14.38%
Corresponding Period of Last
Current Reporting Period YoY Change (%)
Year
Net profit after deducting non-
291,702.92 229,145.05 27.30%
recurring profit and loss
EBITDA total debt ratio 64.58% 43.52% 21.06%
Times interest earned ratio 17.75 14.08 26.07%
Cash interest guarantee times 26.12 23.46 11.34%
116
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
EBITDA Time interest earned
21.65 16.84 28.56%
ratio
Repayment of debt (%) 100.00% 100.00%
Payment of interest (%) 100.00% 100.00%
117
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Section X Financial Report
I. Audit report
Type of audit opinion Standard Unqualified opinion
Date of signing of audit report April 28, 2024
Name of audit firm Pan-China Certified Public Accountants LLP
Document number of audit report PCCPAAR [2024] No. 4888
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, 2023, 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, 2023, 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 (25), Ⅴ (2) 1 and XV 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 2023, the amount of operating income of the Company is RMB 24.5578 billion, As
operating revenue is one of the key performance indicators of the Company, there might be inherent risks that 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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 with
accounting 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;
(II) Inventories valuation
1. Matters description
Please refer to section Ⅲ (12) and Ⅴ (1) 8 of the notes to the financial statements for details.
As of December 31, 2023, the book balance of the Company's inventories amounted to RMB 4.60073 billion,
the major components are metal materials such as copper and aluminum. The metal materials have high value and
good liquidity, they are important controlled assets. Therefore, we have identified the existence, valuation, and
transfer of inventory as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for inventories valuation are as follows:
(1) We implemented analysis procedures to identify significant or abnormal changes in inventory size and
structure, and verify the authenticity or reasonableness of such changes;
(2) We implemented detail test and checked supporting documents related to material purchase by sampling
method, including purchases contracts, input invoices, warehouse receipts, purchase payments, etc;
(3) We performed confirmation procedures on current purchases amount by sampling method in combination
with confirmation procedure of accounts payable;
(4) We searched the market price trends of the main raw materials and compared them with the actual purchase
prices to check for any abnormal situations;
(5) We gained an understanding of the production process and cost accounting methods, and conducted
sampling reviews to verify the consistency and rationality of production cost collection and allocation;
(6)We conducted sampling tests on the inventories valuation to check the pricing accuracy of the inventories
issuance amount and the balance amount;
(7)We implemented inventory monitoring to check if there is a significant deviation between the account and
the actual situation;
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.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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.
(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 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 .If the disclosure is insufficient, we should express a non unqualified 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.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
(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：Luo Xun chao
(Engagement Partner)
Hangzhou China Chinese Certified Public Accountant：Zhang Xin
Date of Report: April 28, 2024
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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, 2023
Unit: RMB
Items December 31,2023 January 1, 2023
Current asset：
Cash and Bank Balances 6,584,684,683.93 5,878,243,652.55
Settlement funds
Loans to other banks
Held-for-trading financial
100,025,980.08
assets
Derivative financial assets 22,636,112.68 8,938,874.05
Notes receivable 2,476,839,413.89 2,203,948,983.83
Accounts receivable 5,773,991,481.22 5,228,117,225.57
Receivable financing
Advances paid 133,792,623.54 117,887,007.07
Premium receivable
Reinsurance accounts
receivable
Reinsurance reserves
receivable
Other receivables 227,792,892.12 726,641,478.35
Including: Interest
receivable
Dividends
receivable
Repurchasing of financial
assets
Inventories 4,600,729,378.19 4,334,875,287.86
Contract assets
Assets held for sales
Non-current assets due
within one year
Other current assets 251,073,584.56 157,025,076.05
Total current assets 20,071,540,170.13 18,755,703,565.41
Non-current assets:
Loans and advances paid
Debt investments
Other debt investments
Long-term receivable 3,805,833.60 3,712,290.00
Long-term equity
37,924,431.29 32,438,204.13
investments
Other equity instrument
investments
Other non-current financial
assets
Investment property 8,165,805.31 8,204,266.97
Fixed assets 7,730,363,778.82 6,374,896,070.41
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Construction in progress 2,036,326,757.72 1,032,505,633.51
Productive biological assets
Oil & gas assets
Right-of-use assets 313,254,745.53 284,277,365.32
Intangible assets 843,866,292.82 727,263,351.69
Development expenditures
Goodwill 6,785,228.04 7,591,830.61
Long-term prepayments 118,096,436.09 56,157,277.16
Deferred tax assets 156,432,157.23 221,158,674.48
Other non-current assets 564,023,136.83 457,305,626.59
Total non-current assets 11,819,044,603.28 9,205,510,590.87
Total assets 31,890,584,773.41 27,961,214,156.28
Current liabilities:
Short-term borrowings 1,212,150,378.85 1,294,083,319.58
Central bank loans
Loans from other banks
Held-for-trading financial
3,500,000.00 3,500,000.00
liabilities
Derivative financial liabilities 10,719,110.02 45,171,373.81
Notes payable 3,416,711,594.64 2,580,274,767.64
Accounts payable 4,449,940,359.81 3,884,603,370.16
Advances received
Contract liabilities 51,788,802.03 57,955,080.60
Selling of repurchased
financial assets
Absorbing deposit and
interbank deposit
Deposit for agency security
transaction
Deposit for agency security
underwriting
Employee benefits payable 598,801,246.34 475,157,429.15
Taxes and rates payable 382,396,791.19 190,789,559.16
Other payables 250,642,662.86 354,255,114.06
Including: Interest
Payable
Dividends
Payable
Handling fee and
commission payable
Reinsurance accounts
payable
Liabilities classified as
held for sale
Non-current liabilities due
1,440,093,253.93 568,126,341.67
within one year
Other current liabilities 2,099,986.27 2,007,578.03
Total current liabilities 11,818,844,185.94 9,455,923,933.86
Non-current liabilities:
Insurance policy reserve
Long-term borrowings 1,030,801,111.13 1,801,574,166.67
Bonds payable 2,776,763,361.83
Including: Preferred shares
Perpetual bonds
Lease liabilities 221,295,481.86 202,028,482.09
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Long-term payables 11,290,788.32 4,831,202.13
Long-term employee 39,840,362.77
benefits payable
Provisions
Deferred income 379,140,042.48 254,044,715.64
Deferred tax liabilities 307,511,069.3 288,757,921.37
Other non-current liabilities 18,154,107.25 57,990,181.87
Total non-current liabilities 2,008,032,963.11 5,385,990,031.60
Total liabilities 13,826,877,149.05 14,841,913,965.46
Equity:
Share capital 3,732,615,535.00 3,590,869,465.00
Other equity instruments 409,544,970.41
Including: Preferred shares
Perpetual bonds
Capital reserve 3,455,643,565.98 282,602,695.98
Less: Treasury shares 423,468,591.57 330,022,975.53
Other comprehensive income 114,757,064.28 -8,543,048.33
Special reserve
Surplus reserve 1,011,914,243.67 863,523,059.01
General risk reserve
Undistributed profit 10,002,942,167.43 8,133,336,242.88
Total equity attributable to the
17,894,403,984.79 12,941,310,409.42
parent Company
Non-controlling interest 169,303,639.57 177,989,781.40
Total equity 18,063,707,624.36 13,119,300,190.82
Total liabilities & equity 31,890,584,773.41 27,961,214,156.28
Legal representative：Zhang Yabo Officer in charge of accounting：Yu Yingkui Head of accounting department：
Li Zhimi
2. Parent Company Balance Sheet
Unit: RMB
Items December 31,2023 January 1, 2023
Current assets:
Cash and bank balances 3,755,111,885.56 3,453,268,955.31
Held-for-trading financial
100,025,980.08
assets
Derivative financial assets 1,463,100.00 3,754,234.25
Notes receivable 1,293,651,597.02 1,108,678,741.44
Accounts receivable 703,445,875.41 804,258,235.12
Receivables financing
Advances paid 7,501,313.44 9,470,841.56
Other receivables 2,269,591,236.02 650,791,643.96
Including: Interest
Receivable
Dividends
550,000,000.00
Receivable
Inventories 772,429,361.79 719,679,218.08
Contract assets
Assets classified as held for
sale
Non-current assets due
within one year
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Other current assets
Total current assets 8,803,194,369.24 6,849,927,849.80
Non-current assets:
Debt investments
Other debt investments
Long-term receivable 500,000.00 420,000.00
Long-term equity investments 8,880,133,268.57 7,542,658,709.77
Other equity instrument
investments
Other non-current financial
assets
Investment property
Fixed assets 1,623,330,889.08 1,593,110,699.80
Construction in progress 53,871,265.08 36,026,798.77
Productive biological assets
Oil & gas assets
Right-of-use assets 9,370,623.95 11,493,242.24
Intangible assets 142,130,830.79 142,723,611.23
Development expenditures
Goodwill
Long-term prepayments 15,876,569.88 2,396,803.91
Deferred tax assets 5,587,256.35 33,318,204.92
Other non-current assets 99,458,254.3 40,289,058.97
Total non-current assets 10,830,258,958.01 9,402,437,129.61
Total assets 19,633,453,327.25 16,252,364,979.41
Current liabilities:
Short-term borrowings 202,384,500.02 199,743,666.65
Held-for-trading financial
liabilities
Derivative financial liabilities 11,750.00
Notes payable 559,657,858.19 510,877,753.94
Accounts payable 1,465,144,230.80 1,384,664,289.76
Advances received
Contract liabilities 121,488.76 154,996.96
Employee benefits payable 127,817,926.77 111,391,004.02
Taxes and rates payable 112,191,203.17 45,225,803.58
Other payables 4,315,100,068.76 1,852,846,536.99
Including: interest
payable
Dividends
Payable
Liabilities classified as held for
sale
Non-current liabilities due
1,373,267,226.41 503,606,063.10
within one year
Other current liabilities
Total current liabilities 8,155,684,502.88 4,608,521,865.00
Non-current liabilities:
Long-term borrowings 1,030,801,111.13 1,801,574,166.67
Bonds payable 2,776,763,361.83
Including: Preferred shares
Perpetual bonds
Lease liabilities 5,571,522.93 8,472,484.42
Long-term payables
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Long-term employee benefits
payable
Provisions
Deferred income 47,332,045.49 49,178,671.24
Deferred tax liabilities 81,604,566.52 85,516,449.61
Other non-current
liabilities
Total non-current liabilities 1,165,309,246.07 4,721,505,133.77
Total liabilities 9,320,993,748.95 9,330,026,998.77
Equity:
Share capital 3,732,615,535.00 3,590,869,465.00
Other equity instruments 409,544,970.41
Including: Preferred shares
Perpetual bonds
Capital reserve 4,351,276,453.48 1,180,826,355.13
Less: treasury shares 423,468,591.57 330,022,975.53
Other comprehensive income
Special reserve
Surplus reserve 883,822,071.35 735,430,886.69
Undistributed profit 1,768,214,110.04 1,335,689,278.94
Total equity 10,312,459,578.30 6,922,337,980.64
Total liabilities & equity 19,633,453,327.25 16,252,364,979.41
3. Consolidated Income statement
Unit: RMB
Items Year 2023 Year 2022
I. Total operating revenue 24,557,802,066.59 21,347,549,741.00
Including: Operating revenue 24,557,802,066.59 21,347,549,741.00
Interest income
Premium earned
Revenue from handling
charges and commission
II. Total operating cost 21,011,657,641.34 18,482,154,912.56
Including: Operating cost 17,708,120,277.33 15,781,099,181.30
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 139,816,022.50 110,067,650.98
Selling expenses 663,304,325.04 512,599,257.66
Administrative expenses 1,476,334,172.35 1,266,974,971.99
R&D expenses 1,096,834,224.41 988,954,495.90
Financial expenses -72,751,380.29 -177,540,645.27
Including: Interest expenses 212,081,658.78 233,211,546.41
Interest income 159,145,071.07 188,127,427.03
Add: Other income 188,255,263.06 125,193,412.16
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Investment income (or less:
-131,453,928.62 -84,748,419.92
losses)
Including: Investment
income from associates and joint 7,986,227.16 7,732,273.62
ventures
Gains from derecognition
of financial assets at amortized -5,619,589.87 -894,817.78
cost
Gains on foreign
exchange (or less: losses)
Gains on net exposure to
hedging risk (or less: losses)
Gains on changes in fair
48,123,522.34 -107,344,289.86
value (or less: losses)
Credit impairment loss (or
-51,477,741.58 -97,762,426.98
less: losses)
Assets impairment loss
-55,376,891.25 -93,592,437.64
(or less: losses)
Gains on asset disposal (or
8,741,208.41 459,760,649.40
less: losses)
III. Operating profit (or less:
3,552,955,857.61 3,066,901,315.60
losses)
Add: Non-operating revenue 14,932,933.39 6,780,118.95
Less: Non-operating
14,625,298.02 22,424,214.17
expenditures
IV. Profit before tax (or less: total
3,553,263,492.98 3,051,257,220.38
loss)
Less: Income tax expense 619,548,753.99 443,205,596.36
V. Net profit (or less: net loss) 2,933,714,738.99 2,608,051,624.02
(I) Categorized by the continuity
of operations
1. Net profit from continuing
2,933,714,738.99 2,608,051,624.02
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 of parent Company (or 2,920,992,940.01 2,573,344,179.92
less: net loss)
2. Net profit attributable to
non-controlling shareholders 12,721,798.98 34,707,444.10
(or less: net loss)
VI. Other comprehensive income
123,300,112.61 120,867,799.06
after tax
Items attributable to the
123,300,112.61 120,867,799.06
owners of the parent Company
(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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
123,300,112.61 120,867,799.06
subsequently to 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 123,300,112.61 120,867,799.06
7. Others
Items attributable to non-
controlling shareholders
VII. Total comprehensive income 3,057,014,851.60 2,728,919,423.08
Items attributable to the
3,044,293,052.62 2,694,211,978.98
owners of the parent Company
Items attributable to non-
12,721,798.98 34,707,444.10
controlling shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) 0.81 0.72
(II) Diluted EPS (yuan per share) 0.81 0.72
Legal representative：Zhang Yabo Officer in charge of accounting：Yu Yingkui Head of accounting department：
Li Zhimi
4. Income statement of the Parent Company
Unit: RMB
Items Year 2023 Year 2022
I. Operating revenue 6,035,624,442.65 6,133,372,192.60
Less: Operating cost 4,644,457,006.09 4,690,817,575.37
Taxes and surcharges 37,243,922.63 34,478,215.83
Selling expenses 43,876,850.52 41,424,684.51
Administrative expenses 298,794,306.84 252,968,198.30
R&D expenses 246,667,877.34 279,691,985.86
Financial expenses 45,466,484.33 46,058,576.01
Including: Interest expenses 156,056,944.56 208,134,702.45
Interest income 111,419,579.71 108,419,319.10
Add: Other income 29,311,262.35 17,853,503.82
Investment income (or less:
855,697,868.30 860,886,523.39
losses)
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Including: Investment
income from associates and 6,857,976.74 7,043,506.52
joint ventures
Gains from derecognition of
financial assets at amortized
cost
(or less: losses)
Gains on net exposure to
hedging (or less: losses)
Gains on changes in fair
-2,305,364.33 1,577,988.74
value (or less: losses)
Credit impairment loss (or
-10,404,792.17 -66,279.41
less: losses)
Assets impairment loss (or
-58,872.39 -1,885,559.31
less: losses)
Gains on asset disposal (or
780,544.45 66,064,875.35
less: losses)
II. Operating profit (or less:
1,592,138,641.11 1,732,364,009.30
losses)
Add: Non-operating revenue 1,573,287.56 647,594.43
Less: Non-operating
2,946,675.16 737,165.26
expenditures
III. Profit before tax (or less:
1,590,765,253.51 1,732,274,438.47
total loss)
Less: Income tax expense 106,853,406.95 108,939,145.40
IV. Net profit (or less: net loss) 1,483,911,846.56 1,623,335,293.07
(I) Net profit from continuing
1,483,911,846.56 1,623,335,293.07
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 loss
2. Changes in fair value of
other debt investments
3. Profit or loss from
reclassification of financial
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
1,483,911,846.56 1,623,335,293.07
income
5. Consolidated Cash Flow Statement
Unit: RMB
Items Year 2023 Year 2022
I. Cash flows from operating
activities:
Cash receipts from sale of goods or
24,566,452,573.26 20,872,917,738.46
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
Receipts of tax refund 484,789,623.62 622,285,533.37
Other cash receipts related to
339,834,145.05 275,140,313.95
operating activities
Subtotal of cash inflows from
25,391,076,341.93 21,770,343,585.78
operating activities
Cash payments for goods
16,770,167,910.97 15,301,115,799.05
purchased and 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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Cash paid to and on behalf of
3,528,344,941.32 2,745,851,492.25
employees
Cash payments for taxes and rates 717,979,563.06 622,332,714.28
Other cash payments related to
650,619,571.95 591,377,089.64
operating activities
Subtotal of cash outflows from
21,667,111,987.30 19,260,677,095.22
operating activities
Net cash flows from operating
3,723,964,354.63 2,509,666,490.56
activities
II. Cash flows from investing
activities:
Cash receipts from withdrawal of
1,250,000.00
investments
Cash receipts from investment
2,671,131.50 4,682,003.17
income
Net cash receipts from the disposal
of fixed assets, intangible assets and 591,067,618.05 84,636,447.31
other long-term assets
Net cash receipts from the disposal
of subsidiaries & other business units
Other cash receipts related to
1,101,747,550.91 293,240,000.00
investing activities
Subtotal of cash inflows from
1,695,486,300.46 383,808,450.48
investing activities
Cash payments for the acquisition
of fixed assets, intangible assets and 2,745,462,227.77 2,941,806,763.96
other long-term assets
Cash payments for investments 3,500,000.00 5,938,072.83
Net increase of pledged
borrowings
Net cash payments for the
acquisition of subsidiaries & other
business units
Other cash payments related to
155,803,826.18 107,377,453.79
investing activities
Subtotal of cash outflows from
2,904,766,053.95 3,055,122,290.58
investing activities
Net cash flows from investing
-1,209,279,753.49 -2,671,313,840.10
activities
III. Cash flows from financing
activities:
Cash receipts from absorbing
7,090,938.20 224,850,000.00
investments
Including: Cash received by
subsidiaries from non-controlling 7,090,938.20 49,000,000.00
shareholders as investments
Cash receipts from borrowings 1,567,786,939.45 3,001,232,279.95
Other cash receipts related to
31,874,512.08 48,847,167.15
financing activities
Subtotal of cash inflows from
1,606,752,389.73 3,274,929,447.10
financing activities
Cash payments for the repayment
1,308,452,644.96 2,670,214,365.21
of borrowings
Cash payments for distribution of
dividends or profits and for interest 1,066,830,039.62 1,021,597,287.64
expenses
131
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Including: Cash paid by
subsidiaries to non-controlling 25,692,386.09 8,000,000.00
shareholders as dividend or profit
Other cash payments related to
323,319,993.66 179,992,099.61
financing activities
Subtotal of cash outflows from
2,698,602,678.24 3,871,803,752.46
financing activities
Net cash flows from financing
-1,091,850,288.51 -596,874,305.36
activities
IV. Effect of foreign exchange rate
151,792,584.44 118,848,031.58
changes on cash & cash equivalents
V. Net increase in cash and cash
1,574,626,897.07 -639,673,623.32
equivalents
Add: Opening balance of cash and
2,050,328,601.77 2,690,002,225.09
cash equivalents
VI. Closing balance of cash and cash
3,624,955,498.84 2,050,328,601.77
equivalents
6. Cash Flow Statement of the Parent Company
Unit: RMB
Items Year 2023 Year 2022
I. Cash flows from operating activities:
Cash receipts from sale of goods and
5,249,148,595.56 5,367,245,758.43
rendering of services
Receipts of tax refund 97,118,035.37 111,835,579.64
Other cash receipts related to
93,644,650.81 37,286,693.99
operating activities
Subtotal of cash inflows from
5,439,911,281.74 5,516,368,032.06
operating activities
Cash payments for goods purchased
3,843,328,325.84 4,083,441,935.71
and services received
Cash paid to and on behalf of
555,364,759.84 522,088,529.80
employees
Cash payments for taxes and rates 131,083,648.39 127,349,235.37
Other cash payments related to
107,109,355.87 81,209,792.50
operating activities
Subtotal of cash outflows from
4,636,886,089.94 4,814,089,493.38
operating activities
Net cash flows from operating
803,025,191.80 702,278,538.68
activities
II. Cash flows from investing
activities:
Cash receipts from withdrawal of
1,250,000.00
investments
Cash receipts from investment
296,264,902.08 882,489,350.91
income
Net cash receipts from the disposal
of fixed assets, intangible assets and 100,682,940.02 22,329,052.30
other long-term assets
Net cash receipts from the disposal
of subsidiaries & other business units
Other cash receipts related to
907,825,506.19 64,159,339.81
investing activities
Subtotal of cash inflows from investing 1,304,773,348.29 970,227,743.02
132
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
activities
Cash payments for the acquisition of
fixed assets, intangible assets and other 298,167,575.30 233,324,050.58
long-term assets
Cash payments for investments 249,714,910.39 1,067,688,900.00
Net cash payments for the
acquisition of subsidiaries & other
business units
Other cash payments related to
1,436,710,655.47 641,733,853.66
investing activities
Subtotal of cash outflows from
1,984,593,141.16 1,942,746,804.24
investing activities
Net cash flows from investing
-679,819,792.87 -972,519,061.22
activities
III. Cash flows from financing
activities:
Cash receipts from absorbing
175,850,000.00
investments
Cash receipts from borrowings 800,000,000.00 2,299,092,500.00
Other cash receipts related to
2,237,929,883.41 677,506,135.83
financing activities
Subtotal of cash inflows from
3,037,929,883.41 3,152,448,635.83
financing activities
Cash payments for the repayment of
540,733,987.38 2,030,000,000.00
borrowings
Cash payments for distribution of
dividends or profits and for interest 979,392,786.32 976,048,229.99
expenses
Other cash payments related to
844,479,220.53 258,895,668.90
financing activities
Subtotal of cash outflows from
2,364,605,994.23 3,264,943,898.89
financing activities
Net cash flows from financing
673,323,889.18 -112,495,263.06
activities
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
796,529,288.11 -382,735,785.60
equivalents
Add: Opening balance of cash and
996,678,169.38 1,379,413,954.98
cash equivalents
VI. Closing balance of cash and cash
1,793,207,457.49 996,678,169.38
equivalents
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
133
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Unit: RMB
Year 2023
Equity Attributable to parent Company
Other equity
Gen Non-
instruments Other Spe
Items Share Less: eral Undistrib controlli
Prefe Perpe Capital compre cial Surplus Oth Total equity
Capita treasury risk uted Subtotal ng
rred tual Oth reserve hensive rese reserve ers
l shares reser profit interest
share bond ers income rve
ve
s s
409,
I. Balance at 3,590,8 -
544, 282,602,69 330,022,9 863,523,0 8,133,336, 12,941,310, 177,989,7 13,119,300,190
the end of 69,465. 8,543,048
970. 5.98 75.53 59.01 242.88 409.42 81.40 .82
prior year 00 .33
41
Add:
Cumulative
changes of
accounting
policies
Error
correction of
prior period
Business
combination
under
common
control
Others
II. Balance at 409,
3,590,8 -
the beginning 544, 282,602,69 330,022,9 863,523,0 8,133,336, 12,941,310, 177,989,7 13,119,300,190
69,465. 8,543,048
of current 970. 5.98 75.53 59.01 242.88 409.42 81.40 .82
00 .33
year 41
-
III. Current
141,74 409, -
period 3,173,040, 93,445,61 123,300,1 148,391,1 1,869,605, 4,953,093,5 4,944,407,433.
6,070.0 544, 8,686,141
increase (or 870.00 6.04 12.61 84.66 924.55 75.37 54
0 970. .83
less: decrease)
41
134
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
(I) Total
123,300,1 2,920,992, 3,044,293,0 12,721,79 3,057,014,851.
comprehensiv
12.61 940.01 52.62 8.98 60
e income
-
(II) Capital
141,74 409,
contributed or 3,173,040, 93,445,61 2,811,796,3 4,284,445 2,816,080,798.
6,070.0 544,
withdrawn by 870.00 6.04 53.55 .28 83
0 970.
owners
41
1. Ordinary
shares 7,090,938
7,090,938.20
contributed by .20
owners
2. Capital -
contributed by 141,92 409,
3,104,716, 2,837,098,2 2,837,098,211.
holders of 6,470.0 544,
711.55 11.14 14
other equity 0 970.
instruments 41
3. Amount of
share-based
69,716,518 69,716,518.
payment 69,716,518.45
.45 45
included in
equity
- - - -
93,445,61
4. Others 180,40 1,392,360. 95,018,376. 2,806,492 -97,824,868.96
6.04
0.00 00 04 .92
- - -
(III) Profit 148,391,1 -
1,051,387, 902,995,83 25,692,38
distribution 84.66 928,688,216.89
015.46 0.80 6.09
1.
-
Appropriation 148,391,1
148,391,18
of surplus 84.66
4.66
reserve
2.
Appropriation
of general risk
reserve
3. - - - -
Appropriation 902,995,83 902,995,83 25,692,38 928,688,216.89
135
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
of profit to 0.80 0.80 6.09
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
5. Other
comprehensiv
e income
carried over
to retained
earnings
6. Others
(V) Special
reserve
1.
Appropriation
of current
period
2. Application
of current
period
136
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
(VI) Others
IV. Balance at 3,732,6
3,455,643, 423,468,5 114,757,0 1,011,914 10,002,942 17,894,403, 169,303,6 18,063,707,624
the end of 15,535.
565.98 91.57 64.28 ,243.67 ,167.43 984.79 39.57 .36
current period 00
Amount of Previous Period
Unit: RMB
Year 2022
Equity Attributable to parent Company
Other equity
Sha
instruments Other Spe Gen Non-
Items re Less: eral Ot
Pref Perp Capital compreh cial Surplus Undistribute controlling Total equity
Ca treasury risk
d profit her Subtotal interest
erred etual reserve ensive rese reserve reser
pita Others shares s
shar bond income rve ve
l
es s
3,59
I. Balance at -
1,09 409,684,6 373,419,7 411,949,6 701,784,5 6,615,689, 11,150,308, 102,282,3 11,252,590,
the end of 129,410,8
0,21 02.93 75.02 12.90 29.70 606.07 271.43 37.30 608.73
prior year 47.39
8.00
Add:
Cumulative
changes of
accounting
policies
Error
correction of
prior period
Business
combination
under
common
control
Others
3,59 -
II. Balance at 409,684,6 373,419,7 411,949,6 701,784,5 6,615,689, 11,150,308, 102,282,3 11,252,590,
1,09 129,410,8
the beginning 02.93 75.02 12.90 29.70 606.07 271.43 37.30 608.73
0,21 47.39
137
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
of current 8.00
year
III. Current
-
period - - -
220, 120,867,7 161,738,5 1,517,646, 1,791,002,1 75,707,44 1,866,709,5
increase (or 139,632.5 90,817,07 81,926,63
753. 99.06 29.31 636.81 37.99 4.10 82.09
less: 2 9.04 7.37
00
decrease)
(I) Total
120,867,7 2,573,344, 2,694,211,9 34,707,44 2,728,919,4
comprehensiv
99.06 179.92 78.98 4.10 23.08
e income
(II) Capital -
- - - -
contributed or 220, 49,000,00 39,749,172.
139,632.5 90,817,07 81,926,63 9,250,827.1
withdrawn by 753. 0.00 81
2 9.04 7.37 9
owners 00
1. Ordinary
- -
shares 49,000,00 49,000,000.
149,824,2 149,824,2
contributed 0.00 00
00.00 00.00
by owners
2. Capital
contributed 47,6 -
1,020,868
by holders of 97.0 139,632.5 928,933.25 928,933.25
.77
other equity 0 2
instruments
3. Amount of
share-based
59,586,62 59,586,627. 59,586,627.
payment
7.19 19 19
included in
equity
-
- - -
268, 67,897,56
4. Others 1,600,375 69,766,387. 69,766,387.
450. 2.63
.00 63 63
00
- - - -
(III) Profit 161,738,5
1,055,697, 893,959,013 8,000,000 901,959,01
distribution 29.31
543.11 .80 .00 3.80
1. -
161,738,5
Appropriation 161,738,52
29.31
of surplus 9.31
138
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
reserve
2.
Appropriation
of general
risk reserve
3.
- - - -
Appropriation
893,959,01 893,959,013 8,000,000 901,959,01
of profit to
3.80 .80 .00 3.80
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
5. Other
comprehensiv
e income
carried over
to retained
earnings
6. Others
(V) Special
139
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
reserve
1.
Appropriation
of current
period
2. Application
of current
period
(VI) Others
3,59
IV. Balance -
0,86 409,544,9 282,602,6 330,022,9 863,523,0 8,133,336, 12,941,310, 177,989,7 13,119,300,
at the end of 8,543,048.
9,46 70.41 95.98 75.53 59.01 242.88 409.42 81.40 190.82
current period 33
5.00
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
Year 2023
Other equity instruments Other Spec
Less:
Items Share Prefer Perpet Capital comprehe ial Surplus Undistribute Oth
treasury Total equity
Capital red ual Others reserve nsive reser reserve d profit ers
shares
shares bonds income ve
I. Balance at the
3,590,86 409,544,970. 1,180,826,355 330,022,975. 735,430,886. 1,335,689,278. 6,922,337,980.
end of prior
9,465.00 41 .13 53 69 94 64
year
Add:
Cumulative
changes of
accounting
policies
Error correction
of prior period
Others
140
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
II. Balance at
3,590,86 409,544,970. 1,180,826,355 330,022,975. 735,430,886. 1,335,689,278. 6,922,337,980.
the beginning
9,465.00 41 .13 53 69 94 64
of current year
III. Current
-
period increase 141,746, 3,170,450,098 93,445,616.0 148,391,184. 432,524,831.1 3,390,121,597.
409,544,970.
(or less: 070.00 .35 4 66 0 66
41
decrease)
(I) Total
1,483,911,846. 1,483,911,846.
comprehensive
56 56
income
(II) Capital
-
contributed or 141,746, 3,170,450,098 93,445,616.0 2,809,205,581.
409,544,970.
withdrawn by 070.00 .35 4 90
41
owners
1. Ordinary
shares
contributed by
owners
2. Capital
contributed by -
141,926, 3,104,716,711 2,837,098,211.
holders of other 409,544,970.
470.00 .55 14
equity 41
instruments
3. Amount of
share-based
payment 67,125,746.80 67,125,746.80
included in
equity
-
93,445,616.0
4. Others 180,400. -1,392,360.00 -95,018,376.04
4
00
- -
(III) Profit 148,391,184.
1,051,387,015. 902,995,830.8
distribution 66
46 0
1.
-
Appropriation 148,391,184.
148,391,184.6
of surplus 66
6
reserve
141
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2.
- -
Appropriation
902,995,830.8 902,995,830.8
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
5. Other
comprehensive
income carried
over to retained
earnings
6. Others
(V) Special
reserve
1.
Appropriation
of current
period
2. Application
of current
period
(VI) Others
142
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
IV. Balance at
3,732,61 4,351,276,453 423,468,591. 883,822,071. 1,768,214,110. 10,312,459,57
the end of
5,535.00 .48 57 35 04 8.30
current period
Amount of Previous Period
Unit: RMB
Year 2022
Other equity instruments Other Spec
Less:
Items Share Prefer Perpet Capital comprehen ial Surplus Undistribute Othe
treasury Total equity
Capital red ual Others reserve sive reser reserve d profit rs
shares
shares bonds income ve
I. Balance at
3,591,090, 409,684,602. 1,267,607,857 411,949,612. 573,097,357. 768,646,528.9 6,198,176,952.
the end of
218.00 93 .61 90 38 8 00
prior year
Add:
Cumulative
changes of
accounting
policies
Error
correction of
prior period
Others
II. Balance at
the beginning 3,591,090, 409,684,602. 1,267,607,857 411,949,612. 573,097,357. 768,646,528.9 6,198,176,952.
of current 218.00 93 .61 90 38 8 00
year
III. Current
period -
- - 162,333,529. 567,042,749.9 724,161,028.6
increase (or -139,632.52 81,926,637.3
220,753.00 86,781,502.48 31 6 4
less: 7
decrease)
(I) Total
1,623,335,293 1,623,335,293.
comprehensiv
.07 07
e income
-
(II) Capital - -
-139,632.52 81,926,637.3 -5,215,250.63
contributed or 220,753.00 86,781,502.48
7
143
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
withdrawn by
owners
1. Ordinary
- -
shares
149,824,200.0 149,824,200.
contributed
0 00
by owners
2. Capital
contributed
by holders of 47,697.00 -139,632.52 1,020,868.77 928,933.25
other equity
instruments
3. Amount of
share-based
payment 63,622,203.75 63,622,203.75
included in
equity
- 67,897,562.6
4. Others -1,600,375.00 -69,766,387.63
268,450.00 3
- -
(III) Profit 162,333,529.
1,056,292,543 893,959,013.8
distribution 31
.11 0
1.
-
Appropriation 162,333,529.
162,333,529.3
of surplus 31
1
reserve
2.
- -
Appropriation
893,959,013.8 893,959,013.8
of profit to
0 0
owners
3. Others
(IV) Internal
carry-over
within equity
1.Transfer of
capital
reserve to
capital
144
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
comprehensiv
e income
carried over
to retained
earnings
6. Others
(V) Special
reserve
1.
Appropriation
of current
period
2. Application
of current
period
(VI) Others
IV. Balance
3,590,869, 409,544,970. 1,180,826,355 330,022,975. 735,430,886. 1,335,689,278 6,922,337,980.
at the end of
465.00 41 .13 53 69 .94 64
current period
145
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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 3,732,615,535.00 yuan, total share of 3,732,615,535 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 Company operates in the machinery manufacturing industry, main business activities include research and
development, production and sales of refrigeration and air-conditioning appliances and automotive components.
These financial statements were approved for public reporting on April 28, 2024 by the Company's Seventh
and Twenty-first Board of Directors.
146
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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:
The Company has set up accounting policies and estimates on transactions or events such as impairment of
financial instruments, inventories, depreciation of fixed assets, construction in progress, intangible assets, revenue
recognition, share-based payment,etc., based on the Company’s actual production and operation features.
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. Determination method and basis for selection of materiality
√ Applicable □Not Applicable
147
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Disclosed items involving materiality judgements Materiality criteria
Individual accruals accounting for more than 5% of
Significant accounts receivable with provision for bad the total bad debt provision for all types of accounts
debts made on an individual basis receivable and amounting to more than 30 million
yuan are considered significant.
Individual accruals accounting for 5% or more of the
Significant other receivables with provision for bad total bad debt provision for each category of other
debts made on an individual basis receivables and amounting to more than 20 million
yuan are considered significant.
The budget for a single project is more than 500
Significant construction in progress
million yuan.
A single investing activity that accounts for more than
5% of the total cash inflows or outflows related to the
Significant cash flows from investing activities receipt or disbursement of cash related to investing
activities and is greater than 50 million yuan is
considered to be significant.
Subsidiaries with total assets/total revenue/profit
before tax in excess of 15% of the group’s total
Significant subsidiaries, not wholly-owned
assets/total revenue/profit before tax are identified as
subsidiaries
significant subsidiaries/significant not wholly-owned
subsidiaries.
Significant joint ventures, associates and joint Joint ventures or associates with total assets exceeding
operations 1 billion yuan are considered significant.
Project matters in which the Company is involved in
Significant commitments
fundraising are considered significant.
Distribution of profit after the balance sheet date,
Significant events subsequent to the balance sheet date
significant financing, etc.
6. 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.
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 share of identifiable net assets obtained from the acquiree
at the acquisition date, the excess is recognized as goodwill; If the combination cost is less than the fair value share
of identifiable net assets obtained from the acquiree, the fair value of the identifiable assets, liabilities, and
contingent liabilities obtained from the acquiree, as well as the measurement of the combination cost, need to be
reviewed at first. After review, if the combination cost is still less than the fair value share of the identifiable net
assets obtained from the acquiree , the difference is recognized in profit or loss.
7. Judgement criteria for control and compilation method of consolidated financial statements
1.Judgement of control
Having the power over the invested party, enjoying variable returns through participating in related activities
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of the invested party, and having the ability to use the power over the invested party to influence its variable return
amount, is recognized as control.
2. Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into the consolidation scope. The consolidated
financial statements are compiled by the parent company according to “CASBE 33 – Consolidated Financial
Statements”, based on relevant information and the financial statements of the parent company and its subsidiaries.
8. 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.
9. 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 or the
approximate exchange rate similar to 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 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 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.
10．Financial instruments
1. Classification of financial assets and financial liabilities
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
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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
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 applies
The Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of Financial Assets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2), and commitments to provide a
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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
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:
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(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
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.
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.
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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.
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.
Recognition criteria and accrual method for expected credit losses of receivables and contract assets
1. Receivables and contract assets with expected credit losses measured on a collective basis using similar
credit risk features
Basis for
Categories determination of Method for measuring expected credit loss
portfolio
Notes receivable-Bank
acceptance receivable Based on historical credit loss experience, the current
situation and the forecast of future economic
Notes receivable -Trade
Type of notes conditions, the Company calculates expected credit
acceptance receivable
loss through exposure at default and lifetime expected
Notes receivable -finance credit loss rate.
company
Based on historical credit loss experience, the current
situation and the forecast of future economic
Accounts receivable –
Aging conditions, the Company prepares the comparison
Portfolio grouped with aging
table of accounts receivable ages and lifetime expected
credit loss rate , so as to calculate expected credit loss.
Based on historical credit loss experience, the current
situation and the forecast of future economic
Other receivable – Portfolio
Aging conditions, the Company prepares the comparison
grouped with aging
table of other receivable ages and lifetime expected
credit loss rate , so as to calculate expected credit loss.
2.Accounts receivable – comparison table of aging and lifetime expected credit loss rate of portfolio grouped
with aging.
Aging Expected credit loss rate (%)
Within 1 year 5%
1-2 years 10%
2-3 years 30%
Over 3 years 50%
Aging of accounts receivable/other receivables/… are calculated from the month when such receivables are
accrued.
3.Recognition criteria for receivables and contract assets with expected credit losses measured on an
individual basis
For receivables and contract assets whose credit risk is significantly different from that of portfolios, the
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Company accrues expected credit losses on an individual basis.
11．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 or specific identification
method at the end of each month.
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
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 at the time of purchase or receipt.
12．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.
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.
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13. Investment property
Measurement model of investment property
Cost method measurement
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.
14. 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
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 Depreciation Estimated residual Annual depreciation
Useful life (years)
method value proportion (%) rate (%)
Buildings and Straight-line
20-30 0-5 3.17～5.00
structures method
Machinery and Straight-line
5-12 0-5 7.92～20.00
equipment method
Measurement Straight-line
5-10 0-5 9.50～19.00
analysis equipment method
Straight-line
Vehicle 5-8 0-5 11.88～20.00
method
Office equipment Straight-line
5-8 0-5 11.88～20.00
and others method
15．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.
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Categories Standards and time point of transferring construction in progress to fixed assets
Machinery After installation and commissioning, it meets the standard of production
After installation and commissioning, the construction is completed and accepted to
Houses and buildings
meet the commissioning standards
16．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.
17．Intangible assets
(1) Service life and its basis for determination, estimate, amortization method or review procedure
1.Intangible assets include land use right, land ownership, application software and intellectual property etc.
The initial measurement of intangible assets is based on its cost.
2. For intangible assets with finite useful lives, their amortization amounts are amortized within their useful
lives systematically and reasonably, if it is unable to determine the expected realization pattern reliably, intangible
assets are amortized by the straight-line method with details .as follows:
Items Useful life and determination basis Amortization method
Land use rights fifty years,Contractual service life Straight-line method
Application software 1-4,Useful life Straight-line method
Intellectual property 5-10,Useful life Straight-line method
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.
3.R&D costs
The collection of R&D costs is directly related to the R&D activities of enterprises, including R&D personnel
salaries, R&D materials, depreciation and amortization expenses, technical cooperation fees, evaluation and testing
fees, etc. The costs incurred during the research phase of internal R&D projects are recognized in the current period's
profit and loss when incurred. Expenditures on the research phase of an internal project are recognized as profit or
loss when they are incurred. An intangible asset arising from the development phase of an internal project is
recognized if the Company can meet relevant conditions.
18．Impairment of part 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.
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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.
19．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.
20．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
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.
4. Other long-term employee benefits
When other long-term employee benefits provided to the employees satisfied the conditions for classifying as
a defined contribution plan, those benefits are accounted for in accordance with the requirements relating to defined
contribution plan, while other benefits are accounted for in accordance with the requirements relating to defined
benefit plan. To simplify relevant accounting treatments, the total net amount of recognized employee compensation
costs as service costs, net interest on other long-term employee benefits net liabilities or net assets, and changes
resulting from remeasuring other long-term employee benefits net liabilities or net assets shall be recognized in the
current period's profit and loss or related asset costs
21．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.
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22．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.
For equity-settled share-based payment transaction with parties other than employees, if the fair value of the
services received can be measured reliably, the fair value is measured at the date the Company receives the service;
if the fair value of the services received cannot be measured reliably, but that of equity instruments can be measured
reliably, the fair value of the equity instruments granted measured at the date the Company receives the 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
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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.
23. 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.
24．Revenue
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. For each performance obligation satisfied at a point in time, the Company shall recognize
revenue at the time point that the customer obtains control of relevant goods or services. 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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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. The effects of a
significant financing component shall not be considered if the Company expects, at the contract inception, that the
period between when the customer obtains control over goods or services and when the customer pays consideration
will be one year or less.
(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 of
household appliances and automobiles, which belong to the performance obligations at a certain point in time.
The revenue from domestic sales of products shall be recognized based on sales contracts, settlement vouchers
(delivery or usage),and other documents upon completion of product delivery; and the revenue from export of
products shall be recognized according to the sales contract, customs declaration form, bill of lading, and other
documents upon completion of customs declaration and export. The sales revenue of metal scrap is recognized after
weighing and picking up the goods and obtaining the receipt certificate.
25．Costs of obtaining a contract and costs to fulfill 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 fulfill 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 Company shall recognize a reversal of an impairment loss previously recognized in profit or
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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
impairment had been made previously.
26．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 an obligation to transfer goods to a customer for which the Company has received
consideration (or the amount is due) from the customer as a contract liability.
27．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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
subsidised interest shall offset relevant borrowing cost.
28．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.
5.Deferred tax assets and deferred tax liabilities shall offset each other and be presented on a net basis when
the following conditions are all met: (1) the Company has the legal right to settle off current tax assets against
current tax liabilities; (2) Deferred income tax assets and deferred income tax liabilities are related to the income
tax levied by the same tax administration department on the same taxpayer or related to the same tax administration
department for different taxpayers. However, in each period during which significant deferred income tax assets
and deferred income tax liabilities are reversed in the future, the taxpayer involved intends to settle the current
income tax assets and liabilities on a net basis or simultaneously acquire assets and settle debts.
29. Leases
1. 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.
For all short-term leases and leases of low-value assets, lease payments are recognized as cost or profit or loss
with straight-line 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.
(1) Right-of-use assets
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initial measurement
of the lease liabilities; 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; and 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. 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.
(2) Lease liabilities
At the commencement date, 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.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.
2.The Company as lessor
At the commencement date, the Company classifies a lease as a finance lease if it transfers substantially all the
risks and rewards incidental to ownership of an underlying asset. Otherwise, it is classified as an operating lease.
For operating lease,lease receipts are recognized as lease income with straight-line 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.
30. 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; and
3. for which accounting information regarding financial position, financial performance and cash flows is
available through analysis.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
31. 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).
32. Other significant accounting policies and estimates
Changes in accounting policies arising from changes in CASBEs
The Company has adopted the regulations about accounting for deferred tax related to assets and liabilities
arising from a single transaction to which the initial recognition exemption does not apply in the “Interpretation
of China Accounting Standards for Business Enterprises No. 16” issued by the Ministry of Finance since January
1, 2023,such change in accounting policies has no impact on the Company’s financial statements.
VI. Taxes
1. Major categories of taxes and tax rates
Tax Type Taxation basis Tax rate
Enterprise income tax Taxable income 15%，25%
The output tax calculated based on the revenue from sales
of goods or rendering of services in accordance with the
Value-added tax (VAT) 13%，9%，6%
tax law, net of the input tax that is allowed to be deducted
in the current period
For housing property levied on the basis of price, housing
property tax is levied at the rate of 1.2% of the balance after
Housing property tax deducting 30% of the cost; for housing property levied on 12%,1.2%
the basis of rent, housing property tax is levied at the rate
of 12% of lease income
Urban maintenance and
Turnover tax actually paid 7%，5%
construction tax
Education surcharge Turnover tax actually paid 3%
Local education surcharge Turnover tax actually paid 2%
Different enterprise income tax rates applicable to different taxpayers:
Taxpayers Income tax rate
Zhejiang Sanhua Intelligent Controls Co., Ltd 15%
Zhejiang Sanhua Commercial Refrigeration Co. Ltd 15%
Sanhua (hangzhou) Micro Channel Heat Exchanger Co., Ltd 15%
Zhejiang Sanhua Automotive Components Co., Ltd. 15%
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Shaoxing Sanhua New Energy Automotive Components Co., 15%
Ltd
Wuhu Sanhua Auto-control Components Co., Ltd and other 15%
subsidiaries
Domestic taxpayers other than the above-mentioned 25%
2. Tax preferential policies
The company and several subsidiaries can enjoy tax incentives for high-tech enterprises, and the final
settlement and payment shall prevail.
Export goods enjoy the VAT exemption and refund policy; the exceeding portion over the 3% VAT payable
of the certified software products enjoy the immediate refund policy; several subsidiaries are welfare enterprises,
and value-added tax enjoys the preferential policy of immediate collection and refund of the "employment quota
for disabled persons".
3. Others
The overseas subsidiary shall be subject to the tax regulations of its host country.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 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 291,216.13 329,823.40
Cash in bank 6,507,907,610.98 5,790,429,124.91
Other cash and bank balances 76,485,856.82 87,484,704.24
Total 6,584,684,683.93 5,878,243,652.55
Including: Deposited overseas 510,550,872.27 425,176,344.58
Other remarks:
As of December 31, 2023, bank deposits containing large deposit certificates with fixed interest rates amounted
to 2883.2525 million yuan.
2. Held-for-trading financial assets
Unit: RMB
Items Closing balance Opening balance
Financial assets at fair value through profit
100,025,980.08
or loss
Including:
Bank financial products 100,025,980.08
Including:
Total 100,025,980.08
3. Derivative Financial Assets
Unit: RMB
Items Closing balance Opening balance
Foreign exchange tool 20,878,992.10 3,320,177.30
Futures tools 1,757,120.58 5,618,696.75
Total 22,636,112.68 8,938,874.05
4. Notes receivable
（1）Categories of notes receivable
Unit: RMB
Items Closing balance Opening balance
Bank acceptance 2,332,015,457.09 1,542,383,601.65
Financial company acceptance 137,191,175.41 649,528,377.20
Trade acceptance 7,632,781.39 12,037,004.98
Total 2,476,839,413.89 2,203,948,983.83
166
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（2）Provision for bad debts
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Book balance Book balance
bad debt bad debt
Categori Amount Proport Amount Pro
Pro
es Carrying ion visi Carrying
visi on
Amoun Propo on amount amount
Amount pro
t rtion pro port
port ion
ion
Including
:
Notes
receivabl
e with
provision
2,484,4
for bad 100.0 7,618,34 0.31 2,476,83 2,204,58 100.00 633,526. 0.03 2,203,948,9
57,759.
debt 0% 5.83 % 9,413.89 2,510.42 % 59 % 83.83
72
made on
a
collectiv
e basis
Including
:
Bank 2,332,0
93.87 2,332,01 1,542,38 1,542,383,6
acceptan 15,457. 69.97%
% 5,457.09 3,601.65 01.65
ce 09
Financial
144,40
company 5.81 7,216,62 5.00 137,191, 649,528, 649,528,37
7,795.9 29.46%
acceptan % 0.49 % 175.41 377.20 7.20
0
ce
Trade
8,034,5 0.32 401,725. 5.00 7,632,78 12,670,5 633,526. 5.00 12,037,004.
acceptan 0.57%
06.73 % 34 % 1.39 31.57 59 % 98
ce
2,484,4
100.0 7,618,34 0.31 2,476,83 2,204,58 100.00 633,526. 0.03 2,203,948,9
Total 57,759.
0% 5.83 % 9,413.89 2,510.42 % 59 % 83.83
72
Provision for bad debt made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Provision proportion (%)
Bank acceptance
2,332,015,457.09
portfolio
167
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Financial company
144,407,795.90 7,216,620.49 5.00%
acceptance
Trade acceptance
8,034,506.73 401,725.34 5.00%
portfolio
Total 2,484,457,759.72 7,618,345.83
Explanation for determining the basis of this combination:
If the provision for bad debt of notes receivable is in accordance with the general expected credit loss model:
√ Applicable □ Not Applicable
Unit: RMB
Phase I Phase II Phase III
Provision for bad Subtotal
debt 12month expected credit Lifetime expected
Lifetime expected credit credit losses
losses
losses (credit not impaired) (credit impaired)
Balance on January
1, 2023 633,526.59 633,526.59
The balance as of —— —— —— ——
January 1, 2023 is
in the current
period
Provision made in
the current period 7,618,345.83 7,618,345.83
Provision recovered
in current period
633,526.59 633,526.59
Balance on
December 31, 2022 7,618,345.83 7,618,345.83
（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 this period
Opening Closing
Categories Recovered or
balance Accrual Write off Others balance
reversed
Provision for
bad debt made
633,526.59 7,618,345.83 633,526.59 7,618,345.83
on a collective
basis
Total 633,526.59 7,618,345.83 633,526.59 7,618,345.83
Including significant provision for bad debt recovered or reversed amount:
□ Applicable √ Not Applicable
（4）Pledged notes at the balance sheet date
Unit: RMB
Items Closing balance of pledged notes
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Bank acceptance 2,096,023,667.74
Financial company acceptance 118,340,212.64
Total 2,214,363,880.38
（5）Endorsed or discounted but undue notes at the balance sheet date
Unit: RMB
Closing balance not yet
Items Closing balance derecognized
derecognized
Bank acceptance 84,953,207.66
Financial company acceptance 42,410.07
Total 84,953,207.66 42,410.07
5. Accounts receivable
（1）Disclosure of accounts receivable by aging
Unit: RMB
AR Aging Closing balance Opening balance
Within 1 year (including one year) 6,039,601,208.01 5,497,261,560.39
1 to 2 years 45,652,788.88 7,808,747.90
2 to 3 years 388,260.85 2,798,610.70
Over 3 years 265,553.29 977,173.43
Total 6,085,907,811.03 5,508,846,092.42
（2）Disclosure of accounts receivable by categories
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Book balance Book balance
Catego bad debt bad debt
ries Amount Propo Amoun Accru Carrying Amount Propo Amoun Accru Carrying
rtion t ed amount rtion t ed amount
propo propo
rtion rtion
Receiv
ables
with
provisi
on 5,690,817. 5,690,81 100.00 4,641,982. 4,641,98 100.00
0.09% 0.08%
made 36 7.36 % 82 2.82 %
on an
individ
ual
basis
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Includi
ng:
Receiv
ables
with
provisi
on 6,080,216, 99.91 306,225, 5,773,991, 5,504,204, 99.92 276,086, 5,228,117,
5.04% 5.02%
made 993.67 % 512.45 481.22 109.60 % 884.03 225.57
on a
collecti
ve
basis
Includi
ng:
6,085,907, 100.00 311,916, 5,773,991, 5,508,846, 100.00 280,728, 5,228,117,
Total 5.13% 5.10%
811.03 % 329.81 481.22 092.42 % 866.85 225.57
Provision made on an individual basis:
There are no provisions made on an individual basis need to be disclosed in this period.
Provision made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Accrued proportion
Within 1 year 6,039,601,208.01 301,980,060.40 5.00%
1 to 2 years 39,961,971.52 3,996,197.15 10.00%
2 to 3 years 388,260.85 116,478.25 30.00%
Over 3 years 265,553.29 132,776.65 50.00%
Total 6,080,216,993.67 306,225,512.45 --
If the provision for bad debt of accounts receivable is in accordance with the general expected credit loss
model:
√Applicable □ Not Applicable
Unit: RMB
Provision for bad debt Phase I Phase II Phase III
12month expected Lifetime expected Lifetime expected Subtotal
credit losses credit losses (credit not credit losses (credit
impaired) impaired)
Balance on January 1, 2023 276,086,884.03 4,641,982.82 280,728,866.85
The balance as of January 1, —— —— —— ——
2023 is in the current period
Provision accrued in the
35,249,220.81 5,690,817.36 40,940,038.17
current period
Provision reversed in current
period 5,110,592.39 4,641,982.82 9,752,575.21
Balance on December 31,
306,225,512.45 5,690,817.36 311,916,329.81
2023
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（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
Categories Recovered
balance Accrued Write off Others balance
or reversed
Receivables with
provision made on 4,641,982.82 5,690,817.36 4,641,982.82 5,690,817.36
an individual basis
Receivables with
provision made on 276,086,884.03 35,249,220.81 5,110,592.39 306,225,512.45
a collective basis
Total 280,728,866.85 40,940,038.17 9,752,575.21 311,916,329.81
（4）Details about accounts receivable actually written off in the current period
Unit: RMB
Item Amount
Actually written off amount 9,752,575.21
Explanation of accounts receivable written off :
There are no significant accounts receivable write offs in this period.
（5）Accounts receivable and contract assets of the top five ending balances
Closing balance of top 5 debtors totaled 3052.9295 million yuan, accounting for 50.16% of the total closing
balance of accounts receivable. The corresponding provision for bad debts of accounts receivable is 152.8455
million yuan.
（6）Other remarks
Some of the company's accounts receivable are collected by digital and electronic debt vouchers. These debt
vouchers have certain credit liquidity and can be used for commercial factoring or transfer payment. As of December
31, 2023, the company had 1461.8171 million yuan of digital and electronic debt vouchers in hand, and 66.6214
million yuan of digital and electronic debt vouchers that had been transferred for payment but not expired.
6. Other receivables
Unit: RMB
Items Closing balance Opening balance
Other receivables 227,792,892.12 726,641,478.35
Total 227,792,892.12 726,641,478.35
（1）Other receivables
1）Other receivables categorized by nature
Unit: RMB
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Items Closing balance Opening balance
Land compensation accounts
546,216,590.00
receivable
Tax refund receivable 164,712,845.63 123,916,253.13
Guarantee deposits 45,694,632.70 36,247,343.32
Others 25,466,493.81 25,467,213.32
Total 235,873,972.14 731,847,399.77
2）Disclosure by aging
Unit: RMB
Aging Closing balance Opening balance
Within 1 year (including 1 year) 209,294,612.66 704,067,052.73
1 to 2 years 7,805,876.63 10,965,046.27
2 to 3 years 6,125,806.34 4,366,231.62
Over 3 years 12,647,676.51 12,449,069.15
Total 235,873,972.14 731,847,399.77
3）Disclosure by categories
√ Applicable □Not Applicable
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Book balance Book balance
Catego bad debt bad debt
ries Amount Propor Amoun Accru Carrying Amount Propor Amoun Accru Carrying
tion t ed amount tion t ed amount
propor propor
tion tion
Provisi
on
made
170,268,2 170,268,2 681,876,0 681,876,0
on an 72.19% 93.17%
81.68 81.68 64.59 64.59
individ
ual
basis
Includi
ng:
172
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Provisi
on
made 65,605,69 8,081,08 57,524,61 49,971,33 5,205,92 44,765,41
27.81% 12.32% 6.83% 10.42%
on a 0.46 0.02 0.44 5.18 1.42 3.76
collect
ive
basis
Includi
ng:
235,873,9 100.00 8,081,08 227,792,8 731,847,3 100.00 5,205,92 726,641,4
Total 3.43% 0.71%
72.14 % 0.02 92.12 99.77 % 1.42 78.35
Provision made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Accrued proportion
Within 1 year 46,025,761.72 2,301,288.08 5.00%
1 to 2 years 7,805,876.68 780,587.67 10.00%
2 to 3 years 4,439,108.82 1,331,732.65 30.00%
Over 3 years 7,334,943.24 3,667,471.62 50.00%
Total 65,605,690.46 8,081,080.02 --
Provision for bad debt of other receivables in accordance with the general expected credit loss model:
Unit: RMB
Phase I Phase II Phase III
Provision for bad
12month Lifetime expected Lifetime expected Subtotal
debt
expected credit credit losses (credit credit losses (credit
losses not impaired) impaired)
Balance on January
1,690,955.36 927,834.88 2,587,131.18 5,205,921.42
1, 2023
The balance as of
January 1, 2023 is
—— —— —— ——
in the current
period
--Transferred to
-390,293.83 390,293.83
phase II
--Transferred to
-887,821.76 887,821.76
phase III
Provision made in
1,000,626.55 350,280.72 1,524,251.33 2,875,158.60
the current period
Balance on
2,301,288.08 780,587.67 4,999,204.27 8,081,080.02
December 31, 2023
173
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
4）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
Categories Recovered or Write
balance Accrued Others balance
reversed off
Provision made on a collective
5,205,921.42 2,875,158.60 8,081,080.02
basis
Total 5,205,921.42 2,875,158.60 8,081,080.02
5）Details of the top 5 debtors with largest balances
Unit: RMB
Proportion to Provision for
Nature of the total balance bad debt at the
Items Closing balance Ages
receivables of other end of the
receivables period
Tax refund
Tax refund 164,712,845.63 Within 1 year 69.83%
receivables
Customs
US Customs 5,312,733.27 Within 1 year 2.25%
deposit
Shanghai
Yingheng Performance
3,494,680.00 1 to 3 years 1.48% 906,536.24
Electronics Co., bond
Ltd
Shanghai
Chengsheng Performance
2,813,643.00 Within 1 year 1.19% 140,682.15
Industrial Co., bond
Ltd
TCL Air
Conditioner Performance
2,000,840.00 1 to 3 years 0.85% 175,420.00
(Wuhan) Co., bond
Ltd.
Total -- 178,334,741.90 -- 75.61% 1,222,638.39
7. Advances paid
（1）Advances paid by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Percentage Amount Percentage
Within 1 year 128,617,877.12 9,613.00% 111,759,824.57 9,480.00%
1 to 2 years 2,851,372.48 213.00% 3,542,204.41 301.00%
2 to 3 years 1,053,936.12 79.00% 1,425,109.32 121.00%
Over 3 years 1,269,437.82 95.00% 1,159,868.77 98.00%
174
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Total 133,792,623.54 117,887,007.07
（2）Top 5 debtors with the largest advances paid balances
Closing balance of top 5 debtors totaled 21,846,055.10yuan, accounting for 16.33% of the total closing balance .
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
decline in decline in
value of value of
inventories inventories
Items or provision Carrying or provision Carrying
Book balance Book balance
for amount for amount
impairment impairment
of contract of contract
performance performance
costs costs
Raw
932,169,486.90 61,788,757.16 870,380,729.74 1,050,007,307.69 59,101,594.10 990,905,713.59
materials
Work-
in- 596,409,922.79 1,602,512.78 594,807,410.01 711,592,586.63 2,028,013.70 709,564,572.93
progress
Finished
3,179,557,350.47 50,888,480.61 3,128,668,869.86 2,696,034,401.13 66,515,797.40 2,629,518,603.73
goods
Others 6,872,368.58 6,872,368.58 4,886,397.61 4,886,397.61
Total 4,715,009,128.74 114,279,750.55 4,600,729,378.19 4,462,520,693.06 127,645,405.20 4,334,875,287.86
（2）Provision for decline in value of inventories and Provision for impairment of contract performance
costs
Unit: RMB
Decrease in current
Increase in current period
Opening period
Items Closing balance
balance Reversal or
Accrued Others Others
write off
Raw materials 59,101,594.10 41,417,111.15 38,729,948.09 61,788,757.16
Work-in-
2,028,013.70 1,023,331.09 1,448,832.01 1,602,512.78
progress
Finished goods 66,515,797.40 43,625,594.23 59,252,911.02 50,888,480.61
Total 127,645,405.20 86,066,036.47 99,431,691.12 114,279,750.55
175
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
9. Other current assets
Unit: RMB
Items Closing balance Opening balance
Deductible input tax 186,254,431.54 133,303,058.03
Prepaid Enterprise income tax 61,993,000.46 22,470,498.36
Others 2,826,152.56 1,251,519.66
Total 251,073,584.56 157,025,076.05
10. Long-term receivable
（1）Long-term receivable
Unit: RMB
Closing balance Opening balance
Range of
Provision Provision
Items Book Carrying Book Carrying discount
for bad for bad
balance amount balance amount rate
debt debt
Employee
3,805,833.60 3,805,833.60 3,712,290.00 3,712,290.00
home loan
Total 3,805,833.60 3,805,833.60 3,712,290.00 3,712,290.00 --
（2）Disclosure by categories
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Book balance Book balance
Categor bad debt bad debt
Carryin Carryin
ies Amount Proport Amo Accrue Amount Proport Amo Accrue
g g
ion unt d ion unt d
amount amount
proport proport
ion ion
Provisi
on
made
3,805,83 3,805,83 3,712,29 3,712,29
on an 100.00% 100.00%
3.60 3.60 0.00 0.00
individ
ual
basis
Includi
ng:
3,805,83 3,805,83 3,712,29 3,712,29
Total 100.00% 100.00%
3.60 3.60 0.00 0.00
176
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Provision for bad debts based on the general model of expected credit losses
11. Long-term equity investments
Unit: RMB
Changes in current period
Opening Closing
Investm Cash
balance Adjustm balance
Opening ent dividend Closing
of Investm Investm ent in Provisio of
Investee balance income Changes / Profit balance
provisio ents ents other n for provisio
s (Book recogniz in other declared Others (Book
n for increase decrease compreh impairm n for
value) ed under equity for value)
impairm d d ensive ent impairm
equity distribut
ent income ent
method ion
1. Associates
2. Joint ventures
Guochu
ang
Energy
Internet
Innovati -
5,078,465 4,941,151
on 137,314.0
.12 .03
Center 9
(Guangd
ong)
Co.,
Ltd.
Chongqi
ng
Tainuo 16,130,42 4,673,752 2,500,000 18,304,17
Machine 4.27 .52 .00 6.79
ry Co.,
Ltd.
Ningbo
Jinlifeng
2,141,904 676,920.3 2,818,824
Machine
.04 5 .39
ry Co.,
Ltd.
Qingdao
Sanhua
Jinlifeng 5,146,568 2,060,634 7,207,202
Machine .55 .26 .81
ry Co.,
Ltd.
Zhongsh
an
Xuanyi
Pipe 2,193,221 613,091.8 2,806,313
Manufa .72 6 .58
cturing
Co.,
Ltd.
Xinchan 1,747,620 99,142.26 1,846,762
177
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
g .43 .69
zhejiang
energy
sanhua
compreh
ensive
energy
co. LTD
32,438,20 7,986,227 2,500,000 37,924,43
Subtotal
4.13 .16 .00 1.29
32,438,20 7,986,227 2,500,000 37,924,43
Total
4.13 .16 .00 1.29
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable √ Not Applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable √ Not Applicable
12. Investment property
Investment property measured by cost method
√ Applicable □ Not Applicable
Unit: RMB
Land use right and
Items Buildings and structures Total
Overseas land ownership
Ⅰ. Original Carrying
amount
1.Opening balance 11,995,674.89 3,273,498.90 15,269,173.79
2.Increase in current
993,124.90 192,408.30 1,185,533.20
period
（1）Acquisition
（2）Transferred in
from inventory\fixed
assets\ construction in
progress
（3）Increase in
business merger
（4）Converted
difference in Foreign 993,124.90 192,408.30 1,185,533.20
Currency Statements
3.Decrease in current
period
（1）Disposal
178
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（2）Other transfer out
4.Closing balance 12,988,799.79 3,465,907.20 16,454,706.99
Ⅱ. Accumulated
depreciation and
amortization
1.Opening balance 7,064,906.82 7,064,906.82
2. Increase in current
1,223,994.86 1,223,994.86
period
（1）Accrual or
808,736.83 808,736.83
amortization
（2）Converted
difference in Foreign 415,258.03 415,258.03
Currency Statements
3.Decrease in current
period
（1）Disposal
（2）Other transfer out
4.Closing balance 8,288,901.68 8,288,901.68
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 4,699,898.11 3,465,907.20 8,165,805.31
2.Opening balance 4,930,768.07 3,273,498.90 8,204,266.97
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable √ Not Applicable
179
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable √ Not Applicable
13. Fixed assets
Unit: RMB
Items Closing balance Opening balance
Fixed assets 7,730,363,778.82 6,374,896,070.41
Total 7,730,363,778.82 6,374,896,070.41
（1）Fixed assets
Unit: RMB
Measurement Office and
Buildings and Machinery and Transportation
Items analysis other Total
structures equipment vehicles
equipment equipment
Ⅰ. Original
book
value:
1.Opening
3,360,496,386.32 5,701,259,308.59 135,378,683.04 42,330,286.64 255,616,625.98 9,495,081,290.57
balance
2. Increase
in current 687,264,552.27 1,338,686,491.31 34,988,279.20 9,555,825.78 45,161,054.47 2,115,656,203.03
period
（1）
410,548,528.36 34,265,180.47 9,445,660.36 35,553,734.82 489,813,104.01
Acquisition
（2）
Transferred in
from 644,316,852.03 869,034,702.03 6,569,908.29 1,519,921,462.35
construction in
progress
（3）Increase
in business
merger
（4）
Converted
difference in
42,947,700.24 59,103,260.92 723,098.73 110,165.42 3,037,411.36 105,921,636.67
Foreign
Currency
Statements
3. Decrease
in current 389,122.00 188,954,426.27 5,612,576.98 3,873,591.70 12,244,951.25 211,074,668.20
period
（1）
Disposal or 389,122.00 188,954,426.27 5,612,576.98 3,873,591.70 12,244,951.25 211,074,668.20
scrap
4.Closing 11,399,662,825.4
4,047,371,816.59 6,850,991,373.63 164,754,385.26 48,012,520.72 288,532,729.20
balance 0
Ⅱ.
Accumulated
depreciation
1.Opening 617,289,101.86 2,265,586,904.96 54,450,679.89 29,302,894.64 141,787,435.54 3,108,417,016.89
180
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
balance
2. Increase
in current 140,806,956.64 520,044,350.13 15,360,830.47 3,778,481.28 25,257,836.12 705,248,454.64
period
（1）Accrual 135,866,284.62 499,460,426.73 15,098,439.07 3,738,385.27 23,934,364.05 678,097,899.74
(2) Converted
difference in
Foreign 4,940,672.02 20,583,923.40 262,391.40 40,096.01 1,323,472.07 27,150,554.90
Currency
Statements
3. Decrease
in current 290,950.20 137,465,249.08 5,187,575.63 3,491,704.23 22,217,529.39 168,653,008.53
period
（1）Disposal
290,950.20 137,465,249.08 5,187,575.63 3,491,704.23 22,217,529.39 168,653,008.53
or scrap
4.Closing
757,805,108.30 2,648,166,006.01 64,623,934.73 29,589,671.69 144,827,742.27 3,645,012,463.00
balance
Ⅲ. Provision
for
impairment
1.Opening
11,341,489.66 426,713.61 11,768,203.27
balance
2. Increase
in current 13,333,293.47 30,713.13 13,364,006.60
period
（1）Accrual 13,333,293.47 30,713.13 13,364,006.60
3. Decrease
in current 845,626.29 845,626.29
period
（1）Disposal
845,626.29 845,626.29
or scrap
4.Closing
23,829,156.84 457,426.74 24,286,583.58
balance
Ⅳ. Carrying
amount
1.Closing
3,289,566,708.29 4,178,996,210.78 100,130,450.53 18,422,849.03 143,247,560.19 7,730,363,778.82
balance
2.Opening
2,743,207,284.46 3,424,330,913.97 80,928,003.15 13,027,392.00 113,402,476.83 6,374,896,070.41
balance
（2）Temporarily idle fixed assets
Unit: RMB
Original book Accumulated Impairment
Item Net book value Notes
value depreciation provision
Machinery and
48,129,393.55 23,668,486.68 23,829,156.84 631,750.03
equipment
Office equipment
1,255,412.90 791,886.16 457,426.74 6,100.00
and others
Subtotal 49,384,806.45 24,460,372.84 24,286,583.58 637,850.03
181
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（3）Fixed assets leased out through operating leases
Unit: RMB
Item Closing balance
Buildings and structures 34,172,628.21
（4）Fixed assets with certificate of titles being unsettled
Unit: RMB
Item Carrying amount Reasons for unsettlement
New assets, the certificate of title to
Sitong new factory1# production
35,056,634.48 be processed uniformly after the
workshop and power workshop
overall completion
Parts, accessories, and Class A New assets, the certificate of title to
warehouse in the new factory of 22,954,435.22 be processed uniformly after the
Sitong overall completion
New assets, the certificate of title to
Pump and auxiliary room in the new
2,741,113.66 be processed uniformly after the
factory of Sitong
overall completion
New assets, the certificate of title to
Dormitory of Sitong 1#&2# 35,554,570.20 be processed uniformly after the
overall completion
New assets, the certificate of title to
Factory 13-15# in Meichu North
142,495,110.09 be processed uniformly after the
District
overall completion
Finished product warehouse and New assets, the certificate of title to
Class A warehouse in Meichu North 30,649,122.93 be processed uniformly after the
District overall completion
Power, tooling, experimental testing, New assets, the certificate of title to
and R&D testing workshop in 1-8 # 412,803,830.71 be processed uniformly after the
of Commercial overall completion
Commercial refrigeration product
New assets, the certificate of title to
warehouse, raw material warehouse,
63,241,439.96 be processed uniformly after the
Class A warehouse, and Class C
overall completion
warehouse
New assets, the certificate of title to
Commercial dormitory 1-4# 116,656,306.64 be processed uniformly after the
overall completion
New assets, the certificate of title to
Commercial canteens, training
47,493,902.32 be processed uniformly after the
buildings, etc
overall completion
New assets, the certificate of title to
Wuhu Sanhua Automatic Control
70,077,958.31 be processed uniformly after the
dormitory
overall completion
New assets, the certificate of title to
1 # Super workshop and power plant 191,901,543.45 be processed uniformly after the
overall completion
New assets, the certificate of title to
Heat exchanger 9 # production
143,250,912.26 be processed uniformly after the
workshop
overall completion
Subtotal 1,314,876,880.23
182
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（5）Impairment testing of fixed assets
√ Applicable □ Not Applicable
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
√ Applicable □ Not Applicable
Unit: RMB
Key parameters
Determination of
Recoverable Impairment and the
Item Book value fair value and
amount amount determination
disposal costs
basis
Fair prices of
Residual available
Machinery and
13,820,786.46 487,492.99 13,333,293.47 component components and
equipment
recovery amount market prices of
recyclable metals
Fair prices of
Residual available
Office and other
36,813.13 6,100.00 30,713.13 component components and
equipment
recovery amount market prices of
recyclable metals
合计 13,857,599.59 493,592.99 13,364,006.60
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable √ Not Applicable
14. Construction in progress
Unit: RMB
Items Closing balance Opening balance
Construction in progress 2,036,326,757.72 1,032,505,633.51
Total 2,036,326,757.72 1,032,505,633.51
（1）Details of construction in progress
Unit: RMB
Closing balance Opening balance
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Annual
production of
12 million sets
of intelligent
thermal
management
259,331,934.09 259,331,934.09
components of
new energy
vehicles
technical
renovation
project
Annual
208,351,289.28 208,351,289.28 1,381,023.10 1,381,023.10
production of
183
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
12.5 million
sets of
intelligent
thermal
management
module for new
energy vehicles
construction
project
Annual
production of 8
million sets of
intelligent
186,106,762.72 186,106,762.72
thermal
management
component
project
Sanhua Minshi
Automotive
investment 21
million euros to
establish a new 138,550,445.99 138,550,445.99
automotive
parts
production line
project
Industrial Plant
Engineering in 128,804,884.71 128,804,884.71 3,725,739.80 3,725,739.80
Mexico
The new
energy vehicle
thermal
management
parts 113,445,275.23 113,445,275.23
production
project in
Guangdong
Sanhua
Annual
production of
1.5 million sets
new energy
87,649,308.50 87,649,308.50 108,269,402.41 108,269,402.41
thermal
management
component
project
Annual output
of 11 million
sets of high
efficiency heat
87,188,916.55 87,188,916.55 139,499,206.94 139,499,206.94
exchange
component for
new energy
vehicles project
Dormitory of
77,248,786.37 77,248,786.37 973,975.02 973,975.02
Automotive
150-3 # -6 # 73,709,950.00 73,709,950.00
184
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Rental
dormitory
buildings
Annual output
of 14 million
sets of new
energy cooling
66,609,673.61 66,609,673.61 62,488,698.25 62,488,698.25
component
technology
renovation
project
Annual output
of 11 million
sets of
components 61,306,246.90 61,306,246.90 94,275,393.24 94,275,393.24
technical
renovation
projects
5 million sets
of technical
renovation 28,032,778.68 28,032,778.68 418,584.08 418,584.08
projects and
equipment
Vietnam
Industrial Plant 27,351,178.96 27,351,178.96
Engineering
Annual output
of 3 million
sets of thermal
management
components for
24,537,513.20 24,537,513.20 29,805,708.02 29,805,708.02
new energy
vehicles
technical
renovation
project
Annual output
of 4 million
sets of heat
pump
components for
16,303,564.10 16,303,564.10 7,109,389.23 7,109,389.23
new energy
vehicles
technical
renovation
project
Annual output
of 65 million
sets of
intelligent
control
components for 14,882,282.34 14,882,282.34 224,972,262.42 224,972,262.42
commercial
refrigeration
and air
conditioning
project
185
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Sanhua new
energy vehicle
battery water
cooled plate 13,525,758.03 13,525,758.03
production line
construction
project
Annual output
of 3 million
sets of plate
heat exchange
units and
annual output
of 2 million 11,493,210.78 11,493,210.78 5,808,045.04 5,808,045.04
sets of EXV
electronic
expansion
valve
components
project
Annual output
of 7.3 million
sets of new
energy vehicle
thermal 225,840.24 225,840.24
management
system
component
project
others 411,896,997.68 411,896,997.68 353,552,365.72 353,552,365.72
Total 2,036,326,757.72 2,036,326,757.72 1,032,505,633.51 1,032,505,633.51
（2）Changes of significant construction in progress in current period
Unit: RMB
Transfe Includi
Other Accum Capitali
rred Accum ng:
amount Comple ulated zation
Increas to fixed ulated capitali
Openin s tion amount rate for
Budge ed in assets Closing investm zed Fund
Items g decreas percent of interest
t current in balance ent to interest source
balance ed in age capitali in
period the budget in
current (%) zed current
current (%) current
period interest period
period period
Annual
producti
on of 65
million
sets of
1,780,
commer 224,972, 381,945, 592,035, 14,882,2 Raised
550,00 72.85% 72.85%
cial 262.42 390.44 370.52 82.34 funds
0.00
refrigera
tion and
air
conditio
ning
186
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
intellige
nt
control
compon
ents
construc
tion
project
Annual
output
of 50.5
million
sets of
high
efficienc
y and
energy 785,57
56,064,5 56,064,5 Raised
saving 0,000. 25.49% 25.49%
37.27 37.27 funds
refrigera 00
tion and
air
conditio
ning
control
compon
ents
project
Annual
producti
on of 8
million
sets of
intellige ＄150, Self-
33,662,2 137,442, 64,061,7 107,042,
nt 000,00 16.11% 16.11% raised
58.66 356.31 35.51 879.46
thermal 0.00 funds
manage
ment
compon
ents
project
Annual
producti
on of 1.5
million
sets of
new 650,50 Self-
108,269, 81,892,8 102,512, 87,649,3
energy 0,000. 132.35% 99.98% raised
402.41 50.59 944.50 08.50
thermal 00 funds
manage
ment
compon
ents
project
Annual
940,00 Self-
output 139,499, 224,000, 276,311, 87,188,9
0,000. 67.42% 67.42% raised
of 11 206.94 782.85 073.24 16.55
00 funds
million
187
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
sets of
new
energy
vehicles
high
efficienc
y heat
exchang
er
assembl
y project
Annual
output
of 12.5
million
sets
intellige
nt
thermal 1,372, Self-
208,351, 208,351,
manage 650,00 15.18% 15.18% raised
289.28 289.28
ment 0.00 funds
module
for new
energy
vehicles
construc
tion
project
The new
energy
vehicle
thermal
manage
ment
2,050, Self-
parts 113,445, 113,445,
000,00 5.53% 5.53% raised
producti 275.23 275.23
0.00 funds
on
project
in
Guangd
ong
Sanhua
506,403, 1,203,14 1,090,98 618,559,
Total
130.43 2,481.97 5,661.04 951.36
（3）Impairment testing of construction in progress
□ Applicable √ Not Applicable
15. Right of use assets
Unit: RMB
Items Houses and buildings Vehicle Total
Ⅰ. Original Carrying
amount
188
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
1.Opening balance 416,197,719.61 5,551,120.98 421,748,840.59
2.Increased in current
113,559,504.87 3,969,838.09 117,529,342.96
period
(1) Rent 101,353,957.17 3,632,056.22 104,986,013.39
(2) Converted difference in
Foreign Currency 12,205,547.70 337,781.87 12,543,329.57
Statements
3.Decreased in current
14,641,415.89 14,641,415.89
period
(1) Disposal 14,641,415.89 14,641,415.89
4.Closing balance 515,115,808.59 9,520,959.07 524,636,767.66
Ⅱ. Accumulated
amortization
1.Opening balance 135,550,130.72 1,921,344.55 137,471,475.27
2.Increased in current
87,372,354.66 932,919.07 88,305,273.73
period
(1) Accrual 83,206,841.69 797,377.80 84,004,219.49
(2) Converted
difference in Foreign 4,165,512.97 135,541.27 4,301,054.24
Currency Statements
3. Decreased in
14,394,726.87 14,394,726.87
current period
(1) Disposal 14,394,726.87 14,394,726.87
4.Closing balance 208,527,758.51 2,854,263.62 211,382,022.13
Ⅲ. Provision
for impairment
1.Opening balance
2. Increased in current
period
（1）Accrual
3. Decreased in
current period
（1）Disposal
4.Closing balance
Ⅳ. Carrying amount
1.Closing balance 306,588,050.08 6,666,695.45 313,254,745.53
2.Opening balance 280,647,588.89 3,629,776.43 284,277,365.32
16. Intangible Assets
（1）Details of intangible assets
Unit: RMB
Overseas land Application Intellectual
Items Land use right Total
ownership software property
Ⅰ. Original Carrying
amount
189
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
1.Opening balance
713,720,608.55 83,863,040.62 44,529,249.82 65,624,940.36 907,737,839.35
2.Increased in
current period
117,345,133.99 13,800,135.79 16,913,625.19 148,058,894.97
（1）
Acquisition 117,869,554.35 3,275,011.33 15,809,957.13 136,954,522.81
（2）Internal
research and
development
（3）Increased
in business merger
（4）Converted
difference in Foreign
Currency Statements
-524,420.36 10,525,124.46 1,103,668.06 11,104,372.16
3.Decreased in
9,797,412.67 2,200,121.21 12,800,000.00 24,797,533.88
current period
（1）Disposal 9,797,412.67 2,200,121.21 12,800,000.00 24,797,533.88
4.Closing balance 831,065,742.54 87,865,763.74 59,242,753.80 52,824,940.36 1,030,999,200.44
Ⅱ.
Accumulated
amortization
1.Opening balance 103,834,913.72 596,533.10 32,928,912.94 38,991,387.94 176,351,747.70
2.Increased in
16,659,385.88 142,702.82 6,048,579.16 4,459,627.55 27,310,295.41
current period
（1）Accrual 16,722,904.70 131,913.38 5,296,099.93 4,459,627.55 26,610,545.56
190
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（2) Converted
difference in Foreign -63,518.82 10,789.44 752,479.23 699,749.85
Currency Statements
3. Decreased in
3,729,135.49 12,800,000.00 16,529,135.49
current period
（1）Disposal 3,729,135.49 12,800,000.00 16,529,135.49
4.Closing balance 120,494,299.60 739,235.92 35,248,356.61 30,651,015.49 187,132,907.62
Ⅲ. Provision
for impairment
1.Opening balance 4,122,739.96 4,122,739.96
2. Increased in
48,599.64 48,599.64
current period
（1）Accrual
（2) Converted
difference in Foreign 48,599.64 48,599.64
Currency Statements
3. Decreased in
4,171,339.60 4,171,339.60
current period
（1）Disposal 4,171,339.60 4,171,339.60
4.Closing balance
Ⅳ. Carrying amount
191
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
1.Closing balance 710,571,442.94 87,126,527.82 23,994,397.19 22,173,924.87 843,866,292.82
2.Opening balance 609,885,694.83 79,143,767.56 11,600,336.88 26,633,552.42 727,263,351.69
At the end of this period, the proportion of intangible assets formed through internal research and development
of the company to the balance of intangible assets is 0.00%.
17. Goodwill
（1）Original Carrying amount of goodwill
Unit: RMB
Investee or Increased in current period Decreased in current period
events Opening Due to Closing
resulting in balance business Disposal balance
goodwill combination
R-Squared
31,959,091.60 31,959,091.60
Puckett Inc.
Goodwill of
Asset Group of
Zhejiang
Sanhua plate 5,839,387.56 5,839,387.56
Exchange
Technology
Co., Ltd
Goodwill of
Non-Asset
Group of
Zhejiang
1,752,443.05 1,752,443.05
Sanhua plate
Exchange
Technology
Co., Ltd
Total 39,550,922.21 39,550,922.21
（2）Provision for goodwill impairment
Unit: RMB
Investee or Increased in current period Decreased in current period
events Opening Closing
Provision Disposal
resulting in balance balance
made
goodwill
R-Squared
31,959,091.60 31,959,091.60
Puckett Inc.
Goodwill of
Non-Asset
Group of
806,602.57 806,602.57
Zhejiang
Sanhua plate
Exchange
192
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Technology
Co., Ltd
Total 31,959,091.60 806,602.57 32,765,694.17
（3）Other remarks
Goodwill of Non-Asset Group of Zhejiang Sanhua plate Exchange Technology Co., Ltd. refers to the goodwill
formed by recognizing deferred income tax liabilities for asset valuation appreciation, the goodwill generated when
Zhejiang Sanhua Commercial Co., Ltd. acquired and merged Zhejiang Sanhua plate Exchange Technology Co., Ltd.
under non-common control, the goodwill impairment loss is provisioned synchronously with the reversal of deferred
tax liabilities.
18. Long-term prepayments
Unit: RMB
Opening Increased in
Items Amortization Other decreases Closing balance
balance current period
Rental housing
construction
and 45,670,895.53 57,100,577.01 11,681,710.70 91,089,761.84
transformation
expenditure
Compensated
use fee for 4,878,409.32 4,878,409.32
emission rights
Expenditures on
tooling and 5,607,972.31 33,624,937.15 12,226,235.21 27,006,674.25
molds
Total 56,157,277.16 90,725,514.16 28,786,355.23 118,096,436.09
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
261,315,206.58 54,641,190.49 195,934,543.92 39,038,062.56
debt
Provision for
42,325,391.26 8,139,006.84 68,011,211.82 11,412,992.83
inventory write-down
Unrealized profit
from internal 433,833,345.36 34,546,191.69 332,697,154.63 32,810,835.04
transactions
Deductible losses 76,215,945.95 18,485,636.55 380,148,112.81 58,645,816.34
Deferred income-
378,102,855.53 68,133,180.61 253,297,140.86 42,600,561.83
government grants
Provision for fixed
20,614,046.13 3,102,355.15 9,930,453.59 1,533,546.13
assets impairments
Lease liabilities 85,136,567.36 16,775,016.78
193
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Share-based payment
expenses (accounting 43,389,666.67 6,683,677.51 71,597,367.25 11,139,948.95
standards)
Share-based payment
expenses (difference
71,791,236.12 11,058,611.57 46,031,824.12 7,065,126.85
between tax and
accounting standards)
Floating loss of
derivative 1,228,538.00 184,280.70 3,949,625.00 592,813.75
instruments
Difference between
accounting cost and
tax cost of 108,793,134.67 16,318,970.20
convertible corporate
bonds
Total 1,413,952,798.96 221,749,147.89 1,470,390,568.67 221,158,674.48
（2）Deferred tax liabilities before offset
Unit: RMB
Closing balance Opening balance
Items Taxable temporary Deferred tax Taxable temporary Deferred tax
difference liabilities difference liabilities
Appreciation of
assets appraisal of the
business
9,008,004.60 1,351,200.69 11,345,644.73 1,701,846.71
combinations not
under common
control
Accelerated
depreciation of 2,047,041,074.93 324,214,511.19 1,688,493,838.12 263,941,331.71
equipment
Floating gain on
1,463,100.00 219,465.00 5,585,129.25 1,048,679.39
derivatives
Accrued interest of
191,331,258.62 30,267,866.29 142,322,188.53 22,066,063.56
certificate of deposit
Right-of-use assets 85,136,567.36 16,775,016.78
Total 2,333,980,005.51 372,828,059.95 1,847,746,800.63 288,757,921.37
（3）Deferred tax assets or liabilities after offset shown on a net offsetting basis
Unit: RMB
Deferred tax assets Deferred tax assets
Closing balance of Opening balance of
and liabilities offset and liabilities offset
deferred tax assets deferred tax assets
Items amount at the end amount at the
or liabilities after or liabilities after
of the balance beginning of the
offset offset
amount balance amount
Deferred tax assets 65,316,990.66 156,432,157.23 221,158,674.48
Deferred tax
65,316,990.66 307,511,069.30 288,757,921.37
liabilities
194
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（4）Details of unrecognized deferred tax assets
Unit: RMB
Items Closing balance Opening balance
Provision for bad debt 66,300,549.08 90,633,770.94
Provision for inventory write-down 71,954,359.29 59,634,193.38
Deductible losses of subsidiaries 280,085,140.01 137,111,606.69
Investment losses recognized by the equity
20,324,431.29 14,838,204.13
method
Floating loss on derivatives 9,490,572.02 44,721,748.81
Deferred income-government grants 1,037,186.95 747,574.78
Total 449,192,238.64 347,687,098.73
（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 1,160,674.55 1,176,424.56
Year 2026 521,923.98 673,774.12
Year 2027 23,055,008.78 20,123,335.62
Year 2028 74,714,376.64 10,478,078.42
Year 2029 16,716,170.44 7,488,066.67
Year 2030 12,549,643.88 16,606,149.99
Year 2031 69,321,405.03 66,879,893.60
Year 2032 6,336,459.07 13,685,883.71
Year 2033 75,709,477.64
Total 280,085,140.01 137,111,606.69
20. Other non-current assets
Unit: RMB
Closing balance Opening balance
Provision Provision
Items Book Carrying Carrying
for Book balance for
balance amount amount
impairment impairment
Advanced
payment for
564,023,136. 564,023,136.8 457,305,626.5 457,305,626.5
non-current
83 3 9 9
assets
purchasing
564,023,136. 564,023,136.8 457,305,626.5 457,305,626.5
Total
83 3 9 9
195
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
21. Assets with title or use right restrictions
Unit: RMB
Closing Opening
Reasons Reasons
Type of Type of
Items Book Carrying for Book Carrying for
restriction restriction
balance amount restriction balance amount restriction
s s
s s
Cash and
76,476,70 76,476,70 Guarante 87,482,65 87,482,65 Guarante
bank Pledge Pledge
0.95 0.95 e deposit 0.12 0.12 e deposit
balances
Cash and
281,570,3 281,570,3 Pledge 209,826,6 209,826,6 Pledge
bank Pledge Pledge
79.73 79.73 financing 66.67 66.67 financing
balances
Notes
2,214,363 2,208,446 Pledge 2,015,272 2,015,272 Pledge
receivabl Pledge Pledge
,880.38 ,869.75 financing ,320.99 ,320.99 financing
e
Digital Digital
and and
electronic electronic
debt debt
vouchers vouchers
Accounts
66,621,44 63,290,37 that have 296,551,0 281,723,5 that have
receivabl Pledge Pledge
6.85 4.51 been 88.70 34.27 been
e
endorsed endorsed
or or
discounte discounte
d but are d but are
not due not due
2,639,032 2,629,784 2,609,132 2,594,305
Total
,407.91 ,324.94 ,726.48 ,172.05
22. Short-term borrowings
（1）Categories of short-term borrowings
Unit: RMB
Items Closing balance Opening balance
Credit borrowings 200,000,000.00 100,000,000.00
Overseas loan under domestic
1,002,451,361.04 943,525,006.00
guarantee
Financial asset discount financing 5,748,871.44 249,357,225.37
Pledge and guaranteed loan 220,000.00
Accrued interest 3,950,146.37 981,088.21
Total 1,212,150,378.85 1,294,083,319.58
196
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
23. Trading financial liabilities
Unit: RMB
Items Closing balance Opening balance
Trading financial liabilities 3,500,000.00 3,500,000.00
Including:
Contingent consideration for
3,500,000.00 3,500,000.00
business merge
Including:
Total 3,500,000.00 3,500,000.00
24. Derivative financial liabilities
Unit: RMB
Items Closing balance Opening balance
Exchange rate derivative 10,719,110.02 44,709,998.81
Futures derivative 461,375.00
Total 10,719,110.02 45,171,373.81
25. Notes payable
Unit: RMB
Categories Closing balance Opening balance
Bank acceptance 3,416,711,594.64 2,580,274,767.64
Total 3,416,711,594.64 2,580,274,767.64
26. Accounts payable
（1）Details of accounts payable
Unit: RMB
Items Closing balance Opening balance
Within 1 year 4,405,227,329.99 3,851,682,948.05
1 to 2 years 27,522,682.35 18,716,087.91
2 to 3 years 10,155,105.49 7,655,237.97
Over 3 years 7,035,241.98 6,549,096.23
Total 4,449,940,359.81 3,884,603,370.16
27. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 250,642,662.86 354,255,114.06
Total 250,642,662.86 354,255,114.06
197
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（1）Other payables
1）Other payables listed by nature
Unit: RMB
Items Closing balance Opening balance
Restricted shares repo obligations 118,010,274.29 214,659,660.00
Compensation for product quality
19,370,760.58 15,270,978.03
loss
Guarantee deposit 41,716,593.20 13,673,464.47
Rent and property fee 2,401,192.28 4,859,929.85
Collection of talent awards 4,114,516.00 4,592,661.00
Shareholding transfer payment 3,500,000.00
Others 65,029,326.51 97,698,420.71
Total 250,642,662.86 354,255,114.06
28. Contract liabilities
Unit: RMB
Items Closing balance Opening balance
Customer contract advance
51,788,802.03 57,955,080.60
payment
Total 51,788,802.03 57,955,080.60
29. Employee benefits payable
（1）Details of employee benefits payable
Unit: RMB
Opening Increased in Decreased in Closing
Items
balance current period current period balance
Ⅰ. Short-term employee
464,664,017.26 3,556,649,017.78 3,439,758,760.05 581,554,274.99
benefits
Ⅱ. Post-employment benefits -
6,840,467.11 105,561,454.50 100,384,302.95 12,017,618.66
defined contribution plan
Ⅲ. Termination benefits 3,652,944.78 7,924,041.52 6,347,633.61 5,229,352.69
Total 475,157,429.15 3,670,134,513.80 3,546,490,696.61 598,801,246.34
（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,
allowances and 426,154,617.00 2,691,477,436.88 2,588,872,061.00 528,759,992.88
subsidy
2. Employee welfare
522,798.23 147,677,416.29 147,394,665.34 805,549.18
fund
198
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
3. Social insurance
12,990,659.88 176,907,460.56 171,176,350.06 18,721,770.38
premium
Including:
3,743,732.87 63,922,904.60 62,049,718.55 5,616,918.92
Medicare premium
Occupational injuries 265,634.67 4,044,522.07 3,563,028.77 747,127.97
premium
37,181.62 249,202.93 164,508.69 121,875.86
Maternity premium
Overseas social
8,944,110.72 108,690,830.96 105,399,094.05 12,235,847.63
security contributions
4. Housing provident
1,329,442.40 66,097,171.90 67,407,328.30 19,286.00
fund
5.Dispatching
17,315,817.31 446,547,843.07 440,052,591.83 23,811,068.55
remuneration
6. Stock appreciation
5,217,299.98 5,530,710.02 2,868,120.00 7,879,890.00
option
7.Other 1,133,382.46 22,410,979.06 21,987,643.52 1,556,718.00
Total 464,664,017.26 3,556,649,017.78 3,439,758,760.05 581,554,274.99
（3）Details of defined contribution plan
Unit: RMB
Opening Increased in current Decreased in current Closing
Items
balance period period balance
1. Basic endowment insurance
6,609,221.19 101,682,915.42 96,688,409.60 11,603,727.01
premium
2. Unemployment insurance
231,245.92 3,878,539.08 3,695,893.35 413,891.65
premium
Total 6,840,467.11 105,561,454.50 100,384,302.95 12,017,618.66
30. Taxes and rates payable
Unit: RMB
Items Closing balance Opening balance
Enterprise income tax 186,575,216.87 71,995,026.46
VAT 30,168,036.77 18,411,585.20
Housing property tax 23,482,515.63 18,812,611.09
Land use tax 12,974,469.60 12,197,167.13
Urban maintenance and
5,330,039.26 4,291,676.87
construction tax
Education surcharge 2,459,912.39 2,043,785.75
Local education surcharge 1,639,941.61 1,362,523.90
Overseas tax 99,516,370.91 46,713,362.21
Individual income tax 12,843,108.53 9,417,459.50
Others 7,407,179.62 5,544,361.05
Total 382,396,791.19 190,789,559.16
31. Non-current liabilities due within one year
Unit: RMB
199
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Items Closing balance Opening balance
Guaranteed borrowings 1,370,000,000.00 500,000,000.00
Accrued interest 1,195,277.78 465,277.78
Lease liabilities 68,897,976.15 67,661,063.89
Total 1,440,093,253.93 568,126,341.67
32. Other current liabilities
Unit: RMB
Items Closing balance Opening balance
Output tax to be written off 2,099,986.27 2,007,578.03
Total 2,099,986.27 2,007,578.03
33. Long-term borrowings
（1）Categories of long-term borrowings
Unit: RMB
Items Closing balance Opening balance
Guaranteed borrowings 1,030,000,000.00 1,800,000,000.00
Accrued interest 801,111.13 1,574,166.67
Total 1,030,801,111.13 1,801,574,166.67
34.Bonds payable
（1）Bonds payable
Unit: RMB
Items Closing balance Opening balance
Sanhua Convertible bonds 2,776,763,361.83
Total 2,776,763,361.83
（2）Changes of bonds payable（does not include preferred shares, perpetual bonds and other financial
instruments classified as financial liabilities）
Unit: RMB
Con
Am vers
Acc ortiz ion
rued atio fro Curr
Curr Curr Wh
Bon Issu Ope Curr inter n in m ent End
Par Rele Bon ent ent ethe
d Cou ance ning ent est disc shar inter ing
valu ase d repa rede r
nam pon amo bala issu at ount es est bala
e date term yme mpti defa
e unt nce ance par or to pay nce
nt on ult
valu pre equi able
e miu ty
m instr
ume
200
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
nts
San
hua -
3,00 2,77 71,1 11,9
Con Jun, 6 5,00 2,83 3,55
100. 0,00 6,76 30,5 93,5 den
verti 202 year 0,00 7,34 3,02
00 0,00 3,36 44.5 64.8 y
ble 1 s 0.00 7,31 6.39
0.00 1.83 6 0
bon 5.20
ds
-
3,00 2,77 71,1 11,9
5,00 2,83 3,55
Tota 0,00 6,76 30,5 93,5
—— 0,00 7,34 3,02 ——
l 0,00 3,36 44.5 64.8
0.00 7,31 6.39
0.00 1.83 6 0
5.20
（3）Explanation of Convertible Corporate Bonds
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 300 million 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. 72,307 shares were transferred in the prior period and 141,926,470 in the
current period, for a total of 141,998,777 shares.37,663 bonds remaining, all redeemed.
35.Leased liabilities
Unit: RMB
Items Closing balance Opening balance
Lease payables 290,193,458.01 269,689,545.98
Less：Leased liabilities due within 1
-68,897,976.15 -67,661,063.89
year
Total 221,295,481.86 202,028,482.09
36. Long-term payables
Unit: RMB
Items Closing balance Opening balance
Long-term payables 11,290,788.32 4,831,202.13
Total 11,290,788.32 4,831,202.13
（1）Long-term payables listed by nature
Unit: RMB
Items Closing balance Opening balance
Stock appreciation rights deposit 3,499,818.32 4,831,202.13
Retention money 7,790,970.00
Total 11,290,788.32 4,831,202.13
201
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
37.Long-term employee benefits payable
（1）Table of long-term employee benefits payable
Unit: RMB
Items Closing balance Opening balance
Long-term employee rights protection funds 39,840,362.77
Total 39,840,362.77
38. Deferred income
Unit: RMB
Opening Increased in current Decreased in Closing Reasons for
Items
balance period current period balance balance
Government Related to
254,044,715.64 163,601,198.25 38,505,871.41 379,140,042.48
grants assets
Total 254,044,715.64 163,601,198.25 38,505,871.41 379,140,042.48 --
39. Other non-current liabilities
Unit: RMB
Items Closing balance Opening balance
Engineering agent construction
18,154,107.25 23,729,805.25
fund
Long-term employee rights
34,260,376.62
protection payment
Total 18,154,107.25 57,990,181.87
40. Share capital
Unit: RMB
Changed amount of current period（+/-）
Issue
Reserve
Opening balance of Bonu Closing balance
transferre
new s Others Subtotal
d to
share shares
shares
s
Total
3,590,869,465.0 141,746,070.0 141,746,070.0 3,732,615,535.0
share
0 0 0 0
s
Other remarks:
In the current period, 141,926,470 shares were increased due to the conversion of "Sanhua convertible bonds",
and 180,400 shares were reduced due to the repurchase and cancellation of restricted shares.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
41. Other equity instruments
(1) Statement of changes in preferred shares, perpetual bonds and other financial instruments issued at the
end of the period
Unit: RMB
Financial Increased in current Decreased in current
Opening balance Closing balance
instruments period period
issued Qty Book value Qty Book value Qty Book value Qty Book value
Convertible 29,984,457. 409,544,97 29,984,457. 409,544,97
bonds 00 0.41 00 0.41
29,984,457. 409,544,97 29,984,457. 409,544,97
Total
00 0.41 00 0.41
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 300
million yuan. The amount of these convertible corporate bonds initially classified as equity instruments is
409,766,556.24 yuan. In the current period, due to the conversion of debt to equity, 409,544,970.41 yuan of equity
instruments was decreased.
42. Capital reserve
Unit: RMB
Increased in current Decreased in
Items Opening balance Closing balance
period current period
Capital premium
（Share 81,960,309.01 3,214,043,939.85 3,296,004,248.86
premium）
Other capital
200,642,386.97 55,720,530.15 96,723,600.00 159,639,317.12
reserve
Total 282,602,695.98 3,269,764,470.00 96,723,600.00 3,455,643,565.98
43. Treasury shares
Unit: RMB
Increased in current Decreased in
Items Opening balance Closing balance
period current period
Restricted shares 214,659,660.00 96,649,810.00 118,009,850.00
Repo shares 115,363,315.53 190,095,426.04 305,458,741.57
Total 330,022,975.53 190,095,426.04 96,649,810.00 423,468,591.57
44. Other comprehensive income (OCI)
Unit: RMB
Changed amount of the current period
Opening Current Less: Less: Less: Attributabl Attributa Closing
Items
balance period OCI OCI inco e to ble to balance
cumulative carried carried me the parent Non-
203
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
before forward forward tax Company controlli
income tax transfer transferre expen after ng
red to d to se tax interest
profit or undistrib after tax
loss uted
profit
Items to be
reclassified -
123,300,11 123,300,11 114,757,06
subsequent 8,543,048
2.61 2.61 4.28
ly to profit .33
or loss
-
Converted 123,300,11 123,300,11 114,757,06
8,543,048
difference 2.61 2.61 4.28
.33
in Foreign
Other
comprehen -
123,300,11 123,300,11 114,757,06
sive 8,543,048
2.61 2.61 4.28
income in .33
total
45. Surplus reserve
Unit: RMB
Opening Increased in current Decreased in current
Items Closing balance
balance period period
Statutory surplus
837,028,002.43 148,391,184.66 985,419,187.09
reserve
Discretionary surplus
8,681,137.20 8,681,137.20
reserve
Reserve fund 17,813,919.38 17,813,919.38
Total 863,523,059.01 148,391,184.66 1,011,914,243.67
Remarks on surplus reserve, including movement in current period and the reason for changes:
This period increased by RMB 148,391,184.66, according to the parent company's current net profit 10% of
the statutory surplus reserve.
46. Undistributed profit
Unit: RMB
Items Current period Previous period
Balance before adjustment at the end of the
8,133,336,242.88 6,615,689,606.07
previous period
Balance after adjustment at the end of the
8,133,336,242.88 6,615,689,606.07
previous period
Add: Net profit attributable to shareholders
2,920,992,940.01 2,573,344,179.92
of the parent Company for current year
Less: Appropriation of statutory surplus
148,391,184.66 161,738,529.31
reserve
Payable dividends on ordinary shares 902,995,830.80 893,959,013.80
Closing balance 10,002,942,167.43 8,133,336,242.88
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.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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.
47. Operating revenue and Operating cost
Unit: RMB
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 23,942,063,896.26 17,157,130,173.23 20,494,502,732.61 14,967,335,446.87
Other operations 615,738,170.33 550,990,104.10 853,047,008.39 813,763,734.43
Total 24,557,802,066.59 17,708,120,277.33 21,347,549,741.00 15,781,099,181.30
After deducting non-recurring profit or loss by audit, whether the net profit is negative or not
□ Applicable √ Not Applicable
Other remarks:
1) Revenue decomposition by product or service type
The decomposition of revenue by product or service type is detailed in note X (V) and accounting estimate 24 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 point in
24,546,747,326.10 21,337,361,339.43
time
Total 24,546,747,326.10 21,337,361,339.43
48. Taxes and surcharges
Unit: RMB
Items Current period cumulative Preceding period comparative
Urban maintenance and construction
41,620,164.98 31,612,152.21
tax
Education surcharge 20,384,359.04 16,437,746.25
Local education surcharge 13,605,572.72 10,958,497.49
Housing property tax 28,446,815.02 22,290,882.13
Land use tax 5,066,854.78 8,169,260.25
Stamp duty 21,392,535.74 13,239,684.94
Local foundation for water works 1,145,402.41 995,943.11
Overseas taxes and fees 8,030,714.76 6,280,593.23
Others 123,603.05 82,891.37
Total 139,816,022.50 110,067,650.98
49. Administrative expenses
Unit: RMB
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Items Current period cumulative Preceding period comparative
Labor cost 871,450,950.33 715,760,569.17
Share-based payment
51,167,739.35 63,796,510.49
remuneration
Depreciation and amortization
134,971,322.17 129,839,251.84
expense
Office expense 217,169,017.48 174,159,668.47
Intermediary organ expense 78,105,298.36 65,491,200.20
Relocation payment 20,589,497.91 32,137,262.51
Entertainment expense 24,892,269.92 14,669,991.91
Vehicle expense 18,256,637.96 14,899,276.85
Sporadic renovation expense in the
23,581,176.29 24,954,126.54
park
Security fund for the disabled 5,838,805.65 3,287,378.79
Others 30,311,456.93 27,979,735.22
Total 1,476,334,172.35 1,266,974,971.99
50. Selling expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 331,659,767.15 269,411,821.59
Warehousing, freight and
102,848,591.91 97,821,539.87
miscellaneous charges
Entertainment expense 62,370,229.50 52,943,592.53
Travel expense 42,454,354.33 26,483,360.78
Product warranty expense 65,738,686.79 20,192,786.24
Advertising expense 24,044,549.16 17,666,279.17
Others 34,188,146.20 28,079,877.48
Total 663,304,325.04 512,599,257.66
51. R&D expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 586,262,227.24 498,865,837.12
Direct input expense 372,589,479.63 348,796,355.72
Depreciation and amortization
42,222,750.79 39,471,888.97
expense
Mold manufacturing expense 52,682,753.42 68,578,613.77
Royalties 12,029,990.63 10,654,860.81
Outsourcing R&D expense 1,187,512.67 5,365,574.72
Others 29,859,510.03 17,221,364.79
Total 1,096,834,224.41 988,954,495.90
52. Financial expenses
Unit: RMB
206
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Items Current period cumulative Preceding period comparative
Interest expense 212,081,658.78 233,211,546.41
Including: Interest on bond payable 76,130,544.56 132,562,707.58
Interest on lease liabilities 2,624,284.04 133,741.11
Interest income -159,145,071.07 -188,127,427.03
Exchange gains or losses -133,515,123.19 -228,843,448.26
Others 7,827,155.19 6,218,683.61
Total -72,751,380.29 -177,540,645.27
53. Other income
Unit: RMB
Source of the other income Current period cumulative Preceding period comparative
Government subsidies related to
38,505,871.41 29,910,459.07
assets
Government subsidies related to
110,601,829.40 93,837,638.51
revenue
VAT extra deductions 37,270,140.16
Handling fees for withholding
1,877,422.09 1,445,314.58
individual income tax
Total 188,255,263.06 125,193,412.16
54. Gains or losses on changes in fair value
Unit: RMB
Items Current period cumulative Preceding period comparative
Floating income of bank financing
-25,980.08 -1,117,394.66
products
Contingent consideration payment
-3,500,000.00
for business combination
Floating income of futures
-3,400,201.17 372,665.94
contracts
Floating income of foreign
51,549,703.59 -103,099,561.14
exchange contract
Total 48,123,522.34 -107,344,289.86
55. Investment income
Unit: RMB
Items Current period cumulative Preceding period comparative
Investment income from long-term
7,986,227.16 7,732,273.62
equity investments under equity method
Business combination not under
common control contingent -3,500,000.00
considerations
Gains and losses on bank financial
171,131.50 3,532,582.76
products
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Gains and losses on exchange rate
-150,933,667.67 -88,736,858.29
derivatives
Gains and losses on futures derivatives 12,909,340.21 -6,800,191.82
Income from derecognition of financial
-5,619,589.87 -894,817.78
assets measured at amortized cost
Advance payment gains 4,032,630.05 3,918,591.59
Total -131,453,928.62 -84,748,419.92
56. Credit impairment loss
Unit: RMB
Items Current period cumulative Preceding period comparative
Provision for bad debt -51,477,741.58 -97,762,426.98
Total -51,477,741.58 -97,762,426.98
57. Assets impairment loss
Unit: RMB
Items Current period cumulative Preceding period comparative
I. Inventory write-down loss and
contract performance cost -41,206,282.08 -93,592,437.64
impairment loss
II. Impairment loss of fixed assets -13,364,006.60
III. Goodwill impairment loss -806,602.57
Total -55,376,891.25 -93,592,437.64
58. Gains on asset disposal
Unit: RMB
Items Current period cumulative Preceding period comparative
Gains on disposal of assets 8,741,208.41 459,760,649.40
59. Non-operating revenue
Unit: RMB
Current period Preceding period Amount recorded into the current non-
Items
cumulative comparative recurring profit and loss
Exempted payment 7,200,691.96 2,316,719.90 7,200,691.96
Compensation and
3,348,736.31 2,360,757.64 3,348,736.31
penalty income
Gains from retirement of
1,419,940.46 148,387.39 1,419,940.46
fixed assets
Others 2,963,564.66 1,954,254.02 2,963,564.66
Total 14,932,933.39 6,780,118.95 14,932,933.39
60. Non-operating expenditures
Unit: RMB
208
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Current period Preceding period Amount included in non-
Items
cumulative comparative recurring profit or loss
Losses on retirement of
11,318,566.98 14,540,776.90 11,318,566.98
fixed assets
Litigation for damages 1,169,762.74 6,137,932.54 1,169,762.74
Others 2,136,968.30 1,745,504.73 2,136,968.30
Total 14,625,298.02 22,424,214.17 14,625,298.02
61. Income tax expenses
（1）Income tax expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Current period income tax
537,385,513.45 404,677,979.49
expenses
Deferred income tax expenses 82,163,240.54 38,527,616.87
Total 619,548,753.99 443,205,596.36
（2）Reconciliation of accounting profit to income tax expenses
Unit: RMB
Items Current period cumulative
Income before tax 3,553,263,492.98
Income tax expense calculated at the applicable tax rate 692,427,582.22
Adjustment of preliminary income tax expense
12,130,983.14
settlement and payment
Plus deduction of R&D expenses -160,053,901.72
The difference between tax and accounting standards
27,011,884.13
for convertible corporate bonds
Effect of utilization of deductible losses not previously
25,762,605.94
recognized as deferred tax assets
Others 22,269,600.28
Income tax expenses 619,548,753.99
62. Other comprehensive income
Please refer to the notes of balance sheet items and other comprehensive income for details.
63. Notes to items of the consolidated cash flow statement
（1）Cash related to operating activities
Other cash receipts related to operating activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Government grants 238,258,666.39 190,317,245.39
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Interest income 54,287,886.38 69,627,397.60
Rental income 11,054,740.49 3,129,586.41
Guarantee deposit 28,043,128.73 7,751,072.89
Insurance indemnities 3,348,736.31 2,360,757.64
Other 4,840,986.75 1,954,254.02
Total 339,834,145.05 275,140,313.95
Other cash payments related to operating activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Guarantee deposit and Expense
650,619,571.95 591,377,089.64
payments
Total 650,619,571.95 591,377,089.64
（2）Cash related to investment activities
Other cash receipts related to investing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Redemption of bank financing
100,000,000.00 8,240,000.00
products
Restricted funds 26,801,109.49
Income from Futures contract
12,909,340.21
derivatives settlement
Redemption of certificates of deposit 962,037,101.21 285,000,000.00
Total 1,101,747,550.91 293,240,000.00
Important cash received related to investment activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Compensation for land collection
546,216,590.00
and storage
Total 546,216,590.00
Other cash payments related to investing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
restricted funds 4,870,158.51 11,540,191.45
Loss on exchange rate derivatives
150,933,667.67 89,037,070.52
instrument settlement
Loss on futures derivatives settlement 6,800,191.82
Total 155,803,826.18 107,377,453.79
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Important cash payments related to investment activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Construction project of intelligent control
components for commercial refrigeration
309,743,621.56 528,478,999.60
and air conditioning with an annual
production capacity of 65 million sets
Efficient and energy-saving refrigeration
and air conditioning control component
technology renovation project with an 149,195,510.91 70,727,961.93
annual production capacity of 50.5
million sets
Total 458,939,132.47 599,206,961.53
（3）Cash related to financing activities
Other cash receipts related to financing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Restricted funds 15,585,461.73 44,015,965.02
Notes /Electronic debt voucher
16,289,050.35
discount financing
Deposit of Stock appreciation right 4,831,202.13
Total 31,874,512.08 48,847,167.15
Other cash payments related to financing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Repo shares expenses 190,095,426.04 104,577,950.13
Restricted stock repurchase expenses 1,572,760.00 1,868,825.00
Rental expenses 103,809,960.27 63,525,409.50
Restricted funds 26,510,463.54 10,019,914.98
Deposit of Stock appreciation right 1,331,383.81
Total 323,319,993.66 179,992,099.61
Changes in liabilities related to financing activities
√ Applicable □ Not Applicable
Unit: RMB
Increase Decrease
Opening Closing
Items Changes in Changes in Changes in Changes in
balance balance
cash non-cash cash non-cash
Short-term 1,294,083,319. 984,075,989.80 3,950,146.37 809,433,733.17 260,525,343.73 1,212,150,378.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
borrowings 58 85
Long-term
borrowings
(including
2,302,039,444. 2,401,996,388.
long-term 600,000,000.00 1,996,388.91 502,039,444.45
45 91
borrowings
due within
one year)
Bonds
payable
(including
2,776,763,361. 2,837,347,315.
bonds 76,130,544.56 15,546,591.19
83 20
payable due
within one
year)
Lease
liabilities
(lease
269,689,545.98 124,647,452.30 103,809,960.27 333,580.00 290,193,458.01
liabilities due
within one
year)
Dividends
902,995,830.80 902,995,830.80
payable
6,642,575,671. 1,584,075,989. 1,109,720,362. 2,333,825,559. 3,098,206,238. 3,904,340,225.
Total
84 80 94 88 93 77
（4）Presentation of cash flows on a net basis
The cash flow related to corporate bank wealth management and large deposit certificate business refers to the
cash inflows and outflows of projects with large amounts and short maturities, as presenting the above cash flows
on a net basis can better explain their impact on the Company’s payment ability and solvency, and is more helpful
to evaluate the Company’s payment ability and solvency and analyze its future cash flows, the Company presents
cash flows related to the above business on a net basis. If cash flows related to the above business are presented on
a gross basis, effects on the Company’s cash flow statement are as follows:
Unit: RMB
Increase in the current Increase in the preceding
Items
period period
Other cash receipts related to investing activities
150,599,133.34 216,400,000.00
Other cash payments related to investing activities
150,599,133.34 216,400,000.00
（5）Significant activities not involving cash receipts and payments
Endorsed acceptance and digital electronic debt vouchers that do not involve cash receipts and payments
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Unit: RMB
Current period Preceding period
Items
cumulative comparative
Endorsed acceptance and digital electronic debt vouchers 190,927,646.72 153,096,073.61
Including:Payment for operating activities 186,949,115.96 152,360,373.61
Payment for investment activities 3,978,530.76 735,700.00
64. 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:
Net profit 2,933,714,738.99 2,608,051,624.02
Add: Provision for assets
106,854,632.83 191,354,864.62
impairment loss
Depreciation of fixed assets,
oil and gas assets, productive 687,654,098.90 537,069,500.40
biological assets
Amortization of right-of-use
84,004,219.49 68,555,980.56
assets
Amortization of intangible
26,610,545.56 28,123,911.80
assets
Amortization of Long-term
28,786,355.23 9,859,380.30
prepayments
Loss on disposal of
fixed assets, intangible assets and -8,741,208.41 -459,760,649.40
other long-term assets (Less: gains)
Loss on retirement of
9,898,626.52 14,392,389.51
fixed assets (Less: gains)
Losses on changes in fair
-48,123,522.34 107,344,289.86
value (Less: gains)
Financial expenses (Less:
-26,290,649.10 131,751,392.89
gains)
Investment losses (Less: gains) 129,866,968.80 83,653,602.14
Decrease of deferred tax
64,726,517.25 -67,896,167.64
assets (Less: increase)
Increase of deferred tax
18,753,147.93 115,847,772.06
liabilities (Less: decrease)
Decrease of inventories (Less:
-343,250,556.55 -790,661,843.32
increase)
Decrease of operating
-1,398,918,684.91 -1,896,835,512.76
receivables (Less: increase)
Increase of operating
1,388,702,605.99 1,762,012,880.65
payables (Less: decrease)
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Others 69,716,518.45 66,803,074.87
Net cash flows from operating
3,723,964,354.63 2,509,666,490.56
activities
2. Significant investing and
financing activities not related to
cash receipts and payments:
Conversion of debt into capital 2,837,347,315.20 928,933.25
Convertible bonds due within
one year
Fixed assets leased in under
finance leases
3. Net changes in cash and cash
equivalents:
Cash at the end of the period 3,624,955,498.84 2,050,328,601.77
Less: Cash at the beginning of
2,050,328,601.77 2,690,002,225.09
the 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
1,574,626,897.07 -639,673,623.32
equivalents
（2）Composition of cash and cash equivalents
Unit: RMB
Items Closing balance Opening balance
I.Cash 3,624,955,498.84 4 2,050,328,601.77 7
Including: Cash on hand 291,216.13 3 329,823.40 0
Cash in bank that can be
3,624,655,126.84 4 2,049,996,724.25 5
readily drawn on demand
Other monetary funds that can
9,155.87 7 2,054.12 2
be readily for payment
III. Cash and cash equivalents at end
3,624,955,498.84 4 2,050,328,601.77 7
of year
（3）Situations where the scope of use is limited but still classified as cash and cash equivalents
Unit: RMB
Reasons for still being
Current period Preceding period
Items classified as cash and
cumulative comparative
cash equivalents
Fundraising, special
Cash and bank balances 852,004,540.00 1,289,517,361.17 purpose, ready for
withdrawal at any time
Total 852,004,540.00 1,289,517,361.17
（4）Cash and bank balances that do not belong to cash and cash equivalents
Unit: RMB
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Reasons that do not
Preceding period
Items Current period cumulative belong to cash and cash
comparative
equivalents
Principal and interest of Management intends to
2,883,252,484.14 3,740,432,400.66
deposit certificates hold on to maturity
Margin deposit 35,074,314.10 16,303,609.84 Liquidity restricted
Futures contract margin 41,402,386.85 71,179,040.28 Liquidity restricted
Total 2,959,729,185.09 3,827,915,050.78
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 70,238,474.74 7.0827 497,478,045.04
EUR 24,560,051.19 7.8592 193,022,354.31
Other currencies 78,997,528.76
Subtotal 769,497,928.11
Derivative financial assets -- --
Including: USD 1,598,764.50 7.0827 11,323,569.32
Other currencies 358,871.00
Subtotal 11,682,440.32
Accounts receivable -- --
Including: USD 195,108,218.28 7.0827 1,381,892,977.61
EUR 72,016,162.86 7.8592 565,989,427.17
Other currencies 86,066,430.48
Subtotal 2,033,948,835.26
Other receivables
Including: USD 1,780,985.63 7.0827 12,614,186.92
EUR 248,793.42 7.8592 1,955,317.25
Other currencies 124,076,074.24
Subtotal 138,645,578.41
Long-term receivable
Including: EUR 58,000.00 7.8592 455,833.60
Short-term borrowings
Including: USD 45,111,926.66 7.0827 319,514,242.95
EUR 87,098,627.67 7.8592 684,525,534.58
Subtotal 1,004,039,777.53
Accounts payable
Including: USD 22,507,068.26 7.0827 159,410,812.37
EUR 53,212,126.17 7.8592 418,204,742.00
Other currencies 105,920,365.39
Subtotal 683,535,919.76
Other payables
Including: USD 3,574,433.92 7.0827 25,316,643.13
EUR 1,687,488.23 7.8592 13,262,307.52
Other currencies 33,523,174.42
Subtotal 72,102,125.07
Non-current liabilities due
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
within one year
Including: USD 2,345,369.08 7.0827 16,611,545.58
EUR 1,413,126.88 7.8592 11,106,046.78
Other currencies 8,187,851.87
Subtotal 35,905,444.23
Lease liabilities
Including: USD 6,979,089.86 7.0827 49,430,799.75
EUR 8,060,089.48 7.8592 63,345,855.24
Other currencies 15,457,769.48
Subtotal 128,234,424.47
（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. Leases
(1) The Company as lessee
1) Please refer to section X (VIII) 15 of notes to the financial statements for details on right-of-use assets.
2) Please refer to section X (V) 29 of notes to the financial statements for details on the Company’s accounting
policies on short-term leases and leases for which the underlying asset is of low value. The amounts of short-term
leases and low-value asset leases included into profit or loss are as follows:
Current period Preceding period
Items
cumulative comparative
Expense relating to short-term leases 37,499,886.35 22,190,437.02
Total 37,499,886.35 22,190,437.02
3) Profit or loss and cash flows related to leases
Current period Preceding period
Items
cumulative comparative
Interest expenses on lease liabilities 2,624,284.04 1,333,741.11
Total cash outflows related to leases 143,934,130.66 87,049,587.63
4) Please refer to section X (X) of notes to the financial statements for details on maturity analysis of lease
liabilities and related liquidity risk management.
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(2) The Company as lessor
1) Operating lease
a. Lease income
Current period Preceding period
Items
cumulative comparative
Lease income 11,054,740.49 10,188,401.57
Including: Income relating to variable lease payments not
— —
included in the measurement of the lease liabilities
b. Assets leased out under operating leases
Items Closing balance December 31, 2022
Fixed assets 34,172,628.21 12,847,391.04
Intangible assets 6,297,200.85 6,511,950.93
Investment property 8,165,805.31 8,204,266.97
Total 48,635,634.37 27,563,608.94
Please refer to section X (VII) 13 of notes to the financial statements for details on fixed assets leased out under
operating leases.
2) Undiscounted lease payments to be received arising from non-cancellable leases based on the lease contract
signed with lessee
Remaining years Closing balance December 31, 2022
Within 1 year 7,306,068.16 7,972,292.40
Total 7,306,068.16 7,972,292.40
VIII. Government grants
（1）Government grants increased in the current period
Unit: RMB
Items Amount
Government grants related to assets 163,601,198.25
Including: Included into deferred income 163,601,198.25
Government grants related to income 110,601,829.40
Including: Included into otherd income 110,601,829.40
Total 274,203,027.65
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
（2）Government grants recognized based on receivables
Unit: RMB
Items Closing book balance
Government grants receivable 4,061,100.73
Total 4,061,100.73
（3）Liabilities related to government grants
Unit: RMB
Items Opening balance Increase Carryover Closing balance Remarks
Deferred income 254,044,715.64 163,601,198.25 38,505,871.41 379,140,042.48 Related to assets
Total 254,044,715.64 163,601,198.25 38,505,871.41 379,140,042.48
（4）Government grants included into profit or loss
Unit: RMB
Items Current period cumulative Preceding period comparative
Other income 149,107,700.81 123,748,097.58
Total 149,107,700.81 123,748,097.58
IX. Interest in other entities
1. Composition of enterprise group
（1）The company includes subsidiaries such as Zhejiang Sanhua Automotive Parts Co., Ltd. in the scope
of consolidated financial statements.
（2）Basic information of important subsidiaries
Main Holding proportion
operating
Subsidy Registered Business Acquisition
place and
name capital nature Direct Indirect method
place of
registration
Zhejiang Business
Sanhua combination
Automotive
Automotive 216,000 Zhejiang 100.00% under
components
Components common
Co., Ltd. control
Sanhua Business
(hangzhou) Refrigeration combination
36,000 Zhejiang 100.00%
Micro components under
Channel Heat common
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Exchanger control
Co., Ltd
Zhejiang
Sanhua Refrigeration Investment and
5,000 Zhejiang 100.00% establishment
Trading Co., components
Ltd
Zhejiang
Sanhua
Refrigeration Investment and
Commercial 165,529 Zhejiang 100.00% establishment
components
Refrigeration
Co. Ltd
Sanhua
37.55 million Investment and
International USA Business 100.00% establishment
USD
Inc.
Wuhu
Sanhua
Automatic Refrigeration Investment and
30,000 Anhui 100.00% establishment
Control components
Components
Co., Ltd
2. Changes in the scope of consolidation due to other reasons
（1）Increase in consolidation scope
Equity Proportion of
Subsidy name acquisition Date of equity Capital
capital
acquisition contribution
method contribution
Guangdong Sanhua New Energy Vehicle Parts Co., Investment and
2023-02-17 183,712,500.00 100%
Ltd. establishment
Investment
Shenyang Sanhua New Energy Vehicle Parts Co., Ltd. and 2023-03-08 17,000,000.00 100%
establishment
Investment
Hangzhou Sanhua Intelligent Equipment Co., Ltd. and 2023-01-03 24,000,000.00 100%
establishment
SANHUA SINGAPORE AUTOMOTIVE Investment
and 2023-11-20 0.00 100%
INVESTMENT PTE LTD establishment
Investment
Minth Sanhua AutoParts Poland Sp.zoo and 2023-01-24 5000 PLN 100%
establishment
Investment
LEADERWAY COAHUILA,S.DE R.L.DE C.V. and 2023-10-01 10,000 MXN 100%
establishment
Investment
SANHUA INDUSTRY (THAILAND) CO.,LTD. and 2023-01-31 100 million THB 100%
establishment
（2）Reduction in consolidation scope
Net profit from
Equity disposal Date of equity Net assets on the beginning of
Name
method disposal disposal date the period to the
date of disposal
Liquidation and
Suzhou Xinzhi Automotive Parts Co., Ltd 2023-01-13 0.00 1,631.39
cancellation
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
3. significant wholly-owned subsidiaries
As of December 31, 2023, the company has no significant wholly-owned subsidiaries.
4. Equity in joint ventures or associates
（1）Significant joint ventures and associates
As of December 31, 2023, the company has no significant joint ventures and associates.
（2）Aggregated financial information of insignificant joint ventures and associates
Unit: RMB
Closing balance/Current Opening balance/Preceding
Items
period cumulative period comparative
Associates -- --
Total book value of investment 37,924,431.29 32,438,204.13
Total of the following items calculated by
7,986,227.16 7,732,273.62
shareholding ratio
-Net profit 7,986,227.16 7,732,273.62
-Total comprehensive income 7,986,227.16 7,732,273.62
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 faces various risks related to financial instruments in daily activities, mainly including credit
risk, liquidity risk, and market risk. The management has reviewed and approved policies for managing these risks,
summarized as follows.
(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
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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. The adjustment table for the opening balance and closing balance of financial instrument loss reserves is
detailed in the relevant notes to these financial statements.
4. Exposure to credit risk and concentration of credit risk
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 conducts transactions with recognized and creditworthy customers, and credit risk is centrally
managed by customers. The Company had certain credit concentration risks, the account receivables mainly
originate from the top five customers with outstanding balances.
The accounts receivable from the Company's customers have been digitized and electronic, with certain credit
liquidity. In addition, the balance of the Company's accounts receivable basically does not hold collateral or other
credit enhancements.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations associated
with cash or other financial assets settlement, which is possibly attributable to failure in selling financial assets at
fair value on a timely basis, or failure in collecting liabilities from counterparties of contracts, or early redemption
of debts, or failure in achieving estimated cash flows.
In order to control such risk, the Company comprehensively utilizes financing tools such as notes settlement,
bank borrowings, etc. and adopts long-term and short-term financing methods to optimize financing structures, and
finally maintains a balance between financing sustainability and flexibility. The Company has obtained credit limit
from several commercial banks to meet working capital requirements and expenditures.
The financial liabilities of the company are classified and presented based on remaining time period till
maturity in the table below:
Closing balance
Items Carrying Contract
amount amount not yet Within 1 year 1-3 years Over 3 years
discounted
Short-term borrowings 1,212,150,378.85 1,220,397,152.46 1,220,397,152.46
Notes payable 3,416,711,594.64 3,416,711,594.64 3,416,711,594.64
Accounts payable 4,449,940,359.81 4,449,940,359.81 4,449,940,359.81
Other payable 250,642,662.86 250,642,662.86 250,642,662.86
Non-current liabilities due within
1,440,093,253.93 1,451,597,753.93 1,451,597,753.93
one year
Long-term borrowings 1,030,801,111.13 1,091,440,666.68 1,091,440,666.68
Lease liabilities 221,295,481.86 227,606,748.42 12,657,389.96 105,453,688.05 109,495,670.41
Subtotal 12,021,634,843.08 12,108,336,938.80 10,801,946,913.66 1,196,894,354.73 109,495,670.41
(Continued)
Opening balance
Items Carrying Contract
amount amount not yet Within 1 year 1-3 years Over 3 years
discounted
Short-term borrowings 1,294,083,319.58 1,318,138,966.95 1,318,138,966.95
Held-for-trading financial liabilities 3,500,000.00 3,500,000.00 3,500,000.00
Notes payable 2,580,274,767.64 2,580,274,767.64 2,580,274,767.64
Accounts payable 3,884,603,370.16 3,884,603,370.16 3,884,603,370.16
Other payable 354,255,114.06 354,255,114.06 354,255,114.06
Non-current liabilities due within
568,126,341.67 576,413,851.86 576,413,851.86
one year
Long-term borrowings 1,801,574,166.67 1,885,327,439.31 1,885,327,439.31
Bonds payable 2,776,763,361.83 3,403,596,480.69 12,858,645.48 63,972,770.23 3,326,765,064.98
Lease liabilities 202,028,482.09 202,028,482.09 1,905,044.87 101,977,666.94 98,145,770.28
Subtotal 13,465,208,923.70 14,208,138,472.76 8,731,949,761.02 2,051,277,876.48 3,424,910,835.26
(III) Market risk
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 rate risk and exchange rate risk.
1. Interest Rate Risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments
due to changes in market interest rates. Fair value interest risks arise from fixed-rate financial instruments. The
Company determines the proportion of fixed-rate financial instruments and floating-rate financial instruments based
on the market environment.
The scale of the company's liabilities need to pay interest is controlled at a reasonable level, and the burden of
financial expenses is not heavy. An increase in interest rates within a reasonable range will not have a significant
adverse impact on financial performance. The company's management will continue to monitor interest rate levels
and take necessary response measures in a timely manner based on the latest market conditions
2. Exchange Rate Risk
The exchange rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial
instruments due to changes in foreign exchange rates. The company's production base and sales market are
distributed in major developed and developing countries, including the United States, the European Union, Japan,
India, Mexico, etc. The business volume settled in euros and dollars has a certain proportion, and it faces significant
exchange rate risks. Based on internal risk control policies, the company's management has taken several measures
to respond exchange rate risks. Firstly, based on the trend of exchange rate fluctuations, timely settlement or delayed
settlement of export receipts; secondly, hedge foreign currency monetary assets and control net risk exposure by
overseas financing through domestic guarantee and external loan; thirdly, carry out forward exchange settlement
and foreign currency swap business, and lock in exchange rates.
The situation of the company's foreign currency monetary assets and liabilities at the end of the period can be
found in section 10 (7) of the notes to the consolidated financial statements for foreign currency monetary items in
section 65.
(IV) Financial assets transfer
1. Financial assets derecognized due to transfer
Ways of financial Current transfer
Items Gains or losses Closing Balance
assets transfer amount
Endorsement
87,972,797.70 — 24,814,344.52
Bank acceptance payment
bill
Bank discount 99,187,040.61 -694,546.62 60,138,863.14
Total 187,159,838.31 -694,546.62 84,953,207.66
Ways of financial Current transfer
Items Gains or losses Closing Balance
assets transfer amount
Bank discount 42,410.07 -280.52 42,410.07
Financial company
acceptance bill Endorsement
191,089.61 —
payment
Endorsement
102,902,759.41 — 61,542,924.93
Electronic debt payment
voucher
Bank discount 16,246,640.28 -165,253.46 5,078,521.92
Total 119,382,899.37 -165,533.98 66,663,856.92
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
Level 1 fair Level 2 fair Level 3 fair
Item Name
value value value Total
measurement measurement measurement
I.Continuous fair value measurement -- -- -- --
1.Held-for-trading financial assets 1,757,120.58 20,878,992.10 22,636,112.68
(3) Derivative financial assets 1,757,120.58 20,878,992.10 22,636,112.68
Total amount of assets constantly measured at
1,757,120.58 20,878,992.10 22,636,112.68
their fair values
6. Held-for-trading liabilities 10,719,110.02 3,500,000.00 14,219,110.02
Derivative financial liabilities 10,719,110.02 10,719,110.02
Others 3,500,000.00 3,500,000.00
Total amount of liabilities constantly measured
10,719,110.02 3,500,000.00 14,219,110.02
at their fair values
II. 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 exchange rate 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.
4. Items under third level constant and non-constant measurement at fair value, valuation technique adopted,
and qualitative and quantitative information of important parameters
Contingent payment consideration of business combination are measured according to the contract agreement
based on the company's (Zhejiang Sanhua Board Exchange Technology Co., Ltd)2023 profit data forecast.
XII. Related party relationships and transactions
1. Parent Company
Holding Voting right
Parent Place of Registered
Business nature proportion over proportion over
Company registration capital
the Company the Company
Sanhua Holding Zhejiang Industrial 730 million
25.41% 45.31%
Group Co., Ltd Province Investment yuan
Remarks on the parent Company:
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
As of December 31, 2023, Sanhua Holding Group Co., Ltd. (Hereinafter referred to as SHG) directly holds
25.41% of the Company's shares, and indirectly holds 19.9% of the shares through its subsidiaries, for a total of
45.31% of the shares.
The final controllers of the Company are Mr Zhang Daocai, Mr Zhang Yabo and Zhang Shaobo.
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:
Associates or joint ventures Relationship with the Company Abbreviation of associate
Chongqing Tainuo Machinery Co., Ltd Joint ventures CTMC
Qingdao Sanhua Jinlifeng Machinery Co., Joint ventures QSJM
Ltd
Zhongshan Xuanyi Pipe Making Co., Ltd Joint ventures ZXPM
Ningbo Jinlifeng Machinery Co., Ltd Joint ventures NJM
4. Other related parties of the Company
Other related parties of the Company Relationship with the Company
Zhejiang Sanhua Green Energy Industrial Shareholders, under the control ZSGE
Group Co., Ltd. of the same parent company
Hangzhou Tongchan Machinery Co., Ltd. Under the control of the same HTM
parent company
Hangzhou Sanhua Research Institute Co., Under the control of the same HSRI
Ltd. parent company
Previously controlled by HLNE
Hangzhou Lvneng New Energy Vehicle
Sanhua Research Institute
Parts Co., Ltd
Under the control of the same HSIB
Hangzhou Sanhua International Building
parent company
Co., Ltd.
Xinchang County Sanhua Property Under the control of the same XCSP
Management Co., Ltd. parent company
Shanghai Sanhua Electric Co., Ltd Under the control of the same SSE
parent company
Under the control of the same ZSZR
Zhejiang Sanhua Zhicheng Real Estate
parent company
Development Co., Ltd.
Zhejiang Haoyuan Technology Co., Ltd. Under the control of the same ZHT
parent company
225
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Ningbo Fuerda Intelligent technology Co., Under the control of the same NFS
Ltd. parent company
Wuhu Alda Technology Co., Ltd. Joint-stock enterprise of the WAT
parent company
Hangzhou Formost Material Technology Joint-stock enterprise of the HFMT
Co., Ltd parent company
Ningbo Jiaerling Pneumatic Machinery Under the control of the same NJPM
Co.,Ltd. parent company
Tianjin Sanhua Industrial Park Under the control of the same TSIP
Management Co., Ltd. parent company
Shaoxing Sanhua Zhiyue Real Estate Under the control of the same SSZR
Development Co., Ltd. parent company
Shanghai Shijia Technology Co., Ltd. Shi Jianhui as director SST
5. Related party transactions
（1）Purchase and sale of goods, rendering and receiving services
Purchase of goods and receiving of services
Unit: RMB
Approved Over the
Related Content of Current period Preceding period
Transaction Transaction Limit
parties transaction cumulative comparative
Limit or No
SHG Services 556,770.56 75,100,000.00 117,481.65
SHG Goods 33,457.60 75,100,000.00
ZSGE Goods 1,975,992.88 75,100,000.00
ZSGE Services 4,196,676.62 75,100,000.00 5,067,869.97
HSRI Goods 405,850.00
HSRI Services 76,543.03 75,100,000.00 115,504.52
NFS Goods 32,409,031.07
ZXPM Goods 19,627,331.84 22,400,000.00 16,665,387.16
ZHT Goods 38,202,410.30 75,100,000.00
ZHT Services 1,939,571.51 75,100,000.00 1,392,002.29
QSJM Goods 4,471,352.50 4,500,000.00 2,214,292.50
WAT Goods 147,911.48 100,000.00 21,522.13
HLNE Services 309,962.61
XCSP Services 301,617.92 75,100,000.00 18,867.92
NJPM Goods 350,188.20 75,100,000.00
TSIP Services 919,982.30 75,100,000.00
Sale of goods and rendering of services
Unit: RMB
Related parties Content of transaction Current period cumulative Preceding period comparative
SHG Goods 2,879.18 20,895.46
SHG Services 1,684,018.88 1,684,018.87
HFMT Services 148,754.72 148,754.72
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
ZHT Goods 509,001.99
QSJM Goods 193,143.68 1,379,123.17
HLNE Goods 4,167,522.64 21,470,743.61
CTMC Goods 299,624.26
HSRI Goods 242,670.22 6,310,833.15
WAT Services 98,319.77 100,310.67
WAT Goods 39,567.85
ZSZR Goods 7,893.80
ZXPM Goods 52,701.18
SSZR Services 9,905.66
NJPM 178,619.47
Goods
SST Goods 308,194.07
NJM Goods 584,886.76
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 transaction limit with Sanhua Holdings Group Co., Ltd.
and its subsidiaries is approved through a consolidated summary, with a purchase goods, purchase rent, equipment
lease, property management, water and electricity power, and service fee limit of 75.10 million yuan.
（2）Related party leases
The Company as the lessor：
Unit: RMB
Lessees Confirmed rental income
Types of asset leased
Current period Preceding period
SHG Office building 5,309,339.44 5,309,339.45
SSZR Office building 48,165.14
HFMT Plant 300,342.84 300,342.85
WAT Plant 954,666.15 937,100.88
The Company as the lessee：
Unit: RMB
Lessor Confirmed rental expenses
Types of asset leased
Current period Preceding period
Office building 1,057,028.58 1,252,457.14
HSRI Plant 457,371.42
Dormitory 349,761.47
Dormitory 2,794,933.24 2,247,283.42
ZSGE
Plant 3,800,609.80 2,883,371.65
TSIP Plant 1,789,323.30
（3）Related party guarantees
Unit: RMB
Types of debt Amount guaranteed
Guaranteed parties Guaranteed party
instruments
SHG The company and its
Bank loans 2400 million yuan
subsidiaries
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
SHG The company Bank guarantee 3 million yuan
（4）Assets transfer and debt restructuring of the related parties
Unit: RMB
Related
Content of related party transactions Current period cumulative Preceding period comparative
parties
HTM Purchasing equipment 517,522.13
SHG Purchasing vehicles 131,626.41
HSRI Selling Equipment 205,309.73
HSRI Purchasing equipment 1,120,684.00
HLNE Purchasing equipment 1,537,099.74
（5）Key management’s emoluments
Unit: RMB
Items Current period cumulative Preceding period comparative
Key management’s emoluments 17,415,700.00 16,442,600.00
（6）Other related party transactions
Unit: RMB
Preceding period
Abbreviation of associate Content of transaction Current period cumulative
comparative
Water and electricity
ZSGE 8,958,049.18 9,961,116.87
payment
Water and electricity
ZHT 12,960,193.58
payment
Water and electricity
TSIP 1,164,076.58
payment
Water and electricity
SHG 830,948.28 853,994.99
collection
Water and electricity
HFMT 594,361.13 898,625.43
collection
Water and electricity
HSRI 1,833,782.25 1,694,581.23
collection
Water and electricity
WAT 390,267.49 363,426.93
collection
Water and electricity
ZSGE 947,855.37 693,341.07
collection
Water and electricity
ZHT 23,932,470.68 166,623.55
collection
Water and electricity
SSZR 3,150.55
payment
In addition，it is affected by the inconsistency between the registered permanent residence of a few employees
and the place of work, there are transactions between related parties that pay employee social insurance premium
and housing accumulation fund on behalf of them. In current period，the company pays for the related party RMB
862,432.60 .
228
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
6. Balance due to or from related parties
（1）Receivables
Unit: RMB
Closing balance Opening Balance
Items Related parties Book balance Provision for Book balance Provision for
bad debts bad debts
Accounts receivable HSRI 2,542.50 127.13 577,932.65 28,896.63
Accounts receivable HLNE 9,075,252.25 453,762.61
Accounts receivable QSJM 10,000.00 500.00
Accounts receivable WAT 6,139.97 307.00
Accounts receivable SST 48,205.80 2,410.29
Other receivables ZHT 670,000.00 670,000.00 670,000.00 51,475.00
Accounts prepaid ZXPM 67,660.61
（2）Payables
Unit: RMB
Items Related parties Closing balance Opening Balance
Accounts payable QSJM 380,902.10
Accounts payable ZXPM 14,415,289.63
Accounts payable ZHT 352,333.66
Accounts payable HSRI 357,150.00 719,760.50
Accounts payable NJPM 300,646.95
Other payables HFMT 100,000.00 100,000.00
Other payables HSRI 20,000.00
Other payables ZSGE 387,216.00
Other payables TSIP 706,263.58
XIII. Share-based payment
1. Overall information
√ Applicable □ Not applicable
Unit: RMB
Granted in the current Vested in the current Unlocked in the Expired in the current
Objects period period current period period
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Managem
33,937,400.
ent 4,088,000 56,200 465,400.00
00
personnel
R&D 36,169,800.
4,430,900 95,800 744,200.00
personnel 00
Sales 11,638,700.
1,405,100 7,800 69,800.00
personnel 00
Productio
9,604,800.0
n 1,164,000 20,600 157,200.00
0
personnel
91,350,700. 1,436,600.0
Total 11,088,000 180,400
00 0
Share options and other equity instruments outstanding at the balance sheet date
229
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
√ Applicable □ Not applicable
Share options outstanding Other equity instruments outstanding
Objects Range of exercise Remaining contractual Range of exercise Remaining contractual
prices life prices life
From the date of grant,
The adjusted restricted unlock in batches
Management
stock grant price is 9.65 within 12 months after
personnel
yuan 12 months, 24 months,
and 36 months.
From the date of grant,
The adjusted restricted unlock in batches
R&D personnel stock grant price is 9.65 within 12 months after
yuan 12 months, 24 months,
and 36 months.
From the date of grant,
The adjusted restricted unlock in batches
Sales personnel stock grant price is 9.65 within 12 months after
yuan 12 months, 24 months,
and 36 months.
From the date of grant,
The adjusted restricted unlock in batches
Production
stock grant price is 9.65 within 12 months after
personnel
yuan 12 months, 24 months,
and 36 months.
Other Remarks:
(1) Incentive plan for Restricted stock implemented in 2020
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. In April 2022, the Company implemented the 2021 equity distribution. In September 2022, the
Company implemented the 2022 semi-annual equity distribution. In June 2023, the Company implemented the 2022
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 6.6615.
(2) Incentive plan for Restricted stock implemented in 2022
In May 2022，the Company implemented a restricted stock incentive plan for core employees. Among them，
the number of restricted stocks granted was 17.5850 million shares , the number of stock appreciation rights granted
was 0.4850 million shares, and the grant price per share was RMB 10.00，The grant date was May 31, 2022, and
it will be unlocked year by year in batches at a ratio of 30%:30%:40%.
In September 2022, the Company implemented the 2022 semi-annual equity distribution. In June 2023, the
Company implemented the 2022 equity distribution. In October 2023, the Company implemented the 2023 semi-
annual equity distribution. According to the method stipulated in the "2022 Restricted Stock Incentive Plan"and
"2022 Stock Appreciation Rights 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 17.5850 million shares,
the number of stock appreciation rights granted was 0.4850 million shares, and the grant price per share was RMB
9.65.
230
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2.Equity-settled share-based payment
(1) Incentive plan for Restricted stock implemented in 2020
Unit: RMB
Determination method and important parameters Calculated based on the closing price of the stock on the
for grant-date fair value of equity instruments grant date minus the grant price of the restricted stock.
Determination method for the number of equity
[Note]
instruments expected to vest
Reasons for significant difference between the
Not applicable
estimates in current period and preceding period
Capital reserve accumulated due to equity-settled
133,196,520.00
share-based payment
Note：In 2020, the Company initially granted 12.045 million restricted stocks to incentive object. Later, it was
adjusted to 15.6585 million shares due to the annual distribution of equity in 2019. The number is the base, it will
be 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 future
voluntary turnover rate of the incentive objects is 0%，and the performance appraisal level is above C (the
unlocking coefficient is 1).
(2) Incentive plan for Restricted stock implemented in 2022
Unit: RMB
Determination method and key parameters of Calculated based on the closing price of the stock on the
grant-date fair value of equity instruments grant date minus the grant price of the restricted stock.
Determination method for the number of equity
[Note]
instruments expected to vest
Reasons for significant difference between the
estimates in the current period and preceding Not applicable
period
Capital reserve accumulated due to equity-settled
96,795,795.00
share-based payment
Note：In 2022, the Company initially granted 17.5850 million shares restricted stocks to incentive object. The
number is the base, it will be 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 future voluntary turnover rate of the incentive objects is 0%，and the performance appraisal
level is above C (the unlocking coefficient is 1).
3. Cash-settled share-based payment
Determination method and key parameters of the Calculated based on the closing price of the stock on the
fair value of liability incurred by the Company and balance sheet date minus the grant price of the stock
to be settled in cash or other equity instruments appreciation rights
Accumulated amount of liabilities incurred due to
7,879,890.00
cash-settled share-based payment
4. Total share-based payments recognized in the current period
Objects Equity-settled share-based payment Cash-settled share-based payment
Management personnel 51,167,739.35 5,530,710.02
Total 51,167,739.35 5,530,710.02
231
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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 2,987.53 million yuan. In addition to replenishing working capital, the raised funds are committed to the following
projects:
Investment projects with
Committed capital Actual capital
raised funds
Annual production of 65
million sets of commercial
refrigeration and air
1487 million yuan 1093.2815 million yuan
conditioning intelligent control
components construction
project
Annual output of 50.5 million
sets of high efficiency and
energy saving refrigeration 698 million yuan 280.7418 million yuan
and air conditioning control
components project
2. Contingencies
（1）Significant contingencies present on the balance sheet date
As of December 31, 2023, no important contingent matter needs to be disclosed by the Company.
（2）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.
（3）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. Notes of other events after the balance sheet date
(1) Dividend distribution
232
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
According to the profit distribution plan of 2023 approved by the board of directors of the Company on April
28, 2023, cash dividends of 2.5 yuan (including tax) for every 10 shares will be distributed to all shareholders based
on 3,706,504,614 shares on April 15, 2023, no bonus shares will be given, and no capital reserve will be converted
into share capital. A total of 926,626,153.50 yuan was distributed. The profit distribution plan has yet to be
considered and approved by the general meeting of shareholders.
(2) Major investment agreements
On January 4, 2024, the Company and its controlling subsidiary Hangzhou Leaderway Electronics Co., Ltd.
(Leaderway Electronics) signed the “Sanhua Intelligent Control Future Industry Center Project investment
agreement” with the Qiantang New Area Management Committee of Hangzhou, the project consists of two sub
projects, with a planned total investment of no less than 5 billion yuan. Among them, Leaderway Electronics plans
to invest in the construction of Leaderway Intelligent Variable Frequency Controller Production Base Project in
Qiantang District, with a total planned investment of no less than 1.2 billion yuan; And the Company plans to invest
in the construction of a robot electromechanical actuator and domain controller research and production base project
in Qiantang District, with a total planned investment of no less than 3.8 billion yuan.
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
2023
Items Total
Operating revenue Operating cost Total assets
liabilities
Refrigeration and air-conditioning
1,464,413.52 1,051,415.79 2,009,461.39 819,136.48
electrical parts business
Auto parts business 991,366.69 719,396.24 1,179,597.09 563,551.23
Total 2,455,780.21 1,770,812.03 3,189,058.48 1,382,687.71
2022
Items Total
Operating revenue Operating cost Total assets
liabilities
Refrigeration and air-conditioning
1,383,378.61 1,021,456.87 1,936,217.89 1,104,234.48
electrical parts business
Auto parts business 751,376.37 556,653.05 859,903.53 379,956.92
Total 2,134,754.98 1,578,109.92 2,796,121.42 1,484,191.40
233
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
XVII. Notes to items of parent Company financial statements
1. Accounts receivable
（1）Disclosure of accounts receivable by aging
Unit: RMB
Aging Closing balance Opening balance
Within 1 year 712,624,340.09 814,685,735.07
1 to 2 year 5,846,510.80 21,752.00
Total 718,470,850.89 814,707,487.07
（2）Disclosure of accounts receivable by bad debt provision method
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Book balance Book balance
bad debt bad debt
Catego
Accru Carrying Accru Carrying
ry
Propo ed amount Propo ed amount
Amount Amount Amount Amount
rtion propo rtion propo
rtion rtion
Receiv
ables
with
provisi
on 531,943, 74.04 5,690,8 1.07 526,252, 605,744, 74.35 605,744,
made 381.96 % 17.36 % 564.60 200.07 % 200.07
on an
individ
ual
basis
Includi
ng:
Receiv
ables
with
provisi
on 186,527, 25.96 9,334,1 5.00 177,193, 208,963, 25.65 10,449, 5.00 198,514,
made 468.93 % 58.12 % 310.81 287.00 % 251.95 % 035.05
on a
collect
ive
basis
Includi
ng:
718,470, 100.0 15,024, 2.09 703,445, 814,707, 100.0 10,449, 1.28 804,258,
Total
850.89 0% 975.48 % 875.41 487.07 0% 251.95 % 235.12
Provision made on an individual basis:
Unit: RMB
Opening balance Closing balance
Name
Book balance Provision Book balance Provision for Accrued Accrued
234
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
for bad debt bad debt proportion reason
Dayou Vinya
(Thailand) Co., 5,690,817.36 5,690,817.36 100.00%
Ltd
Several
605,744,200.07 526,252,564.60
subsidiaries
Total 605,744,200.07 531,943,381.96 5,690,817.36 -- --
Provision made on a collective basis:
Unit: RMB
Closing balance
Items Book balance Provision for Accrued
bad debt proportion
Within 1 year 186,371,775.49 9,318,588.78 5.00%
1 to 2 year 155,693.44 15,569.34 10.00%
Total 186,527,468.93 9,334,158.12 --
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:
□ Applicable √ Not applicable
（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 Write
balance Accrued Others balance
or reversed off
Provision made on an
5,690,817.36 5,690,817.36
individual basis
Receivables with provision
10,449,251.95 1,115,093.83 9,334,158.12
made on a collective basis
Total 10,449,251.95 5,690,817.36 1,115,093.83 15,024,975.48
（4）Top 5 of accounts receivable
Closing balance of top 5 debtors totaled 560.0402 million yuan, accounting for 77.95% of the total closing
balance of accounts receivable, and provision for bad debts made thereon totaled 5.0214 million yuan.
2. Other receivables
Unit: RMB
Items Closing balance Opening balance
Dividend receivable 550,000,000.00
Other receivables 1,719,591,236.02 650,791,643.96
Total 2,269,591,236.02 650,791,643.96
（1）Dividend receivable
Classification of dividends receivable
Unit: RMB
235
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Items Closing balance Opening balance
Zhejiang Sanhua Climate & Appliance Controls Group
550,000,000.00
Co.,Ltd
Total 550,000,000.00
（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
1,708,500,801.49 532,760,000.00
subsidiaries
Land accounts receivable 90,383,016.00
Tax refund receivable 6,387,103.55 18,982,883.07
Others 5,207,052.58 9,004,092.33
Total 1,720,094,957.62 651,129,991.40
2）Disclosure by aging
Unit: RMB
Aging Closing balance Opening balance
Within 1 year (including 1 year) 1,718,634,775.79 645,347,399.32
1 to 2 years 793,523.42 1,000,065.28
2 to 3 years 481,517.41 76,523.00
Over 3 years 185,141.00 4,706,003.80
Total 1,720,094,957.62 651,129,991.40
3）Disclosure of other receivables by bad debt provision method
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Book value Book value
bad debt bad debt
Catego
Accru Net book Accru Net book
ry
Propo Amou ed value Propo Amou ed value
Amount Amount
rtion nt propo rtion nt propo
rtion rtion
Receiv
ables
with
provisi
on 1,714,887 99.70 1,714,887 646,723, 99.32 646,723,
made ,905.04 % ,905.04 284.87 % 284.87
on an
individ
ual
basis
236
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Includi
ng:
Receiv
ables
with
provisi
on 5,207,052 0.30 503,7 9.67 4,703,330 4,406,70 0.68 338,3 7.68 4,068,35
made .58 % 21.60 % .98 6.53 % 47.44 % 9.09
on a
collect
ive
basis
Includi
ng:
1,720,094 100.0 503,7 0.03 1,719,591 651,129, 100.0 338,3 0.05 650,791,
Total
,957.62 0% 21.60 % ,236.02 991.40 0% 47.44 % 643.96
Provision made on an individual basis:
Unit: RMB
Opening balance Closing balance
Book balance Provision for Book balance Provision Accrued Accrued
Name
bad debt for bad proportion reason
debt
Land accounts
90,383,016.00
receivable
Tax refund
18,982,883.07 6,387,103.55
receivable
Government
4,597,385.80
receivable
Several
532,760,000.00 1,708,500,801.49
subsidiaries
Total 646,723,284.87 1,714,887,905.04 -- --
Provision made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Accrued proportion
Within 1 year 3,746,870.75 187,343.54 5.00%
1 to 2 year 793,523.42 79,352.34 10.00%
2 to 3 year 481,517.41 144,455.22 30.00%
3 to 4 year 185,141.00 92,570.50 50.00%
Total 5,207,052.58 503,721.60 --
The remarks of determination of a collective basis:
Provision for bad debts based on the general model of expected credit losses:
Unit: RMB
Phase I Phase II Phase III
Provision for bad Next 12month Lifetime expected Lifetime expected
Total
debt expected credit credit losses (credit credit losses (credit
losses not impaired) impaired)
Balance on January
161,075.01 100,006.53 77,265.90 338,347.44
1, 2023
Balance in current
—— —— —— ——
period on January 1,
237
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2023
--Transferred to
-39,676.17 39,676.17
phase II
--Transferred to
-96,303.48 96,303.48
phase III
Provision made in
65,944.70 35,973.12 63,456.34 165,374.16
current period
Balance on
187,343.54 79,352.34 237,025.72 503,721.60
December 31, 2023
Classification basis and bad debt provision ratio for each stage
Loss provisions for significant changes in book value in current period
□ Applicable √ Not Applicable
4）Top 5 debtors with the largest other receivables balances
Unit: RMB
Proportion to
Provision for
the total
Nature of bad debt at the
Debtors Closing balance Age balance of
receivables end of the
other
period
receivables
Zhejiang Sanhua
Financial Within 1
Commercial Refrigeration 799,150,000.00 46.46%
aid year
Co. Ltd
Sanhua International Financial Within 1
401,711,600.00 23.35%
Singapore Pte. Ltd. aid year
Hangzhou Leaderway Financial Within 1
131,180,000.00 7.63%
Electronics Co., Ltd aid year
Shaoxing Shangyu Sanli Financial Within 1
70,000,000.00 4.07%
Copper Industry Co., Ltd aid year
Sanhua New Energy
Thermal Management Financial Within 1
60,000,000.00 3.49%
Technology (Hangzhou) aid year
Co., Ltd
Total -- 1,462,041,600.00 -- 85.00%
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Book balance Provision Book balance Provision
Items for Carrying for Carrying
impairme amount impairme amount
nt nt
Investmen
ts in 8,846,816,951. 8,846,816,951. 7,513,700,369. 7,513,700,369.
subsidiarie 56 56 50 50
s
Investmen
ts in
33,316,317.01 33,316,317.01 28,958,340.27 28,958,340.27
associates
and joint
238
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
ventures
8,880,133,268. 8,880,133,268. 7,542,658,709. 7,542,658,709.
Total
57 57 77 77
（1）Investments in subsidiaries
Unit: RMB
Opening Changed amount of the current period Closing
balance Investment Investme balance
Closing
Opening of s increased nts Provisio of
balance
Investees balance(Carr provisio decrease n for Othe provisio
(Carrying
ying amount) n for d impairm rs n for
amount)
impairm ent impairm
ent ent
Zhejiang
Sanhua
Automoti
2,722,469,86 14,524,269. 2,736,994,13
ve 52
8.51 8.03
Compone
nts Co.,
Ltd.
Sanhua
(Hangzho
u) Micro
657,057,189. 4,605,465.24 661,662,655.
Channel
81 05
Heat
Exchange
r Co., Ltd
Zhejiang
Sanhua
Climate
1,047,897,17
& 328,576,392. 3.15
1,376,473,56
Appliance 73 5.88
Controls
Group
Co., Ltd
Sanhua
307,539,173. 324,474.51 307,863,648.
Internatio
79 30
nal Inc.
Sanhua
Internatio
950,862,026. 8,426,080.13 959,288,106.
nal
27 40
Singapore
Pte. Ltd
Wuhu
Sanhua
Automati 32,304,712.3
261,737,631. 4
294,042,343.
c Control
13 47
Compone
nts Co.,
Ltd
Sanhua
(Jiangxi)
94,024,591.8 203,065.86 94,227,657.6
Self -
1 7
control
Compone
239
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
nts Co.,
Ltd
Xinchang
Sitong
Electrical 90,389,156.
48,551,469.5 39
138,940,625.
and
5 94
Mechanic
al Co.,
Ltd
Zhejiang
Sanhua
Commerc 6,312,321.5
1,653,158,81 1
1,659,471,13
ial
7.69 9.20
Refrigerat
ion Co.
Ltd
Zhejiang
,812,380.2
Sanhua 57,843,827.5 0
59,656,207.7
Trading 0 0
Co. Ltd
Changzho
u Lanke
62,541,614.6 62,541,614.6
four-way
0 0
valve co.,
LTD
Hangzhou
Leaderwa 1,992,775.3
55,607,396.1 2
57,600,171.5
y
8 0
Electronic
s Co., Ltd
Shaoxing
Shangyu
Sanli 33,369,324.2 324,474.12 33,693,798.3
Copper 4 6
Industry
Co., Ltd
Zhongsha
n Sanhua
Air
conditioni
ng 284,656.38
5,556,306.77 5,840,963.15
Refrigerat
ion
Compone
nts Co.,
Ltd
Wuhan
Sanhua
Refrigerat
332,113.83
ion 4,959,860.95 5,291,974.78
Compone
nts Co.,
Ltd
Zhongsha
n Sanhua 216,346.14
6,587,521.80 6,803,867.94
Refrigerat
ion
240
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
Compone
nts Co.,
Ltd
Suzhou
Sanhua
Air- 182,190.96
9,079,389.05 9,261,580.01
Condition
er Parts
Co.,Ltd
Sanhua
AWECO
Appliance 152,877,775. 637,622.70 153,515,398.
Systems 96 66
(Wuhu)
Co., Ltd.
Zhejiang
Sanhua
Minshi
Automoti 51,000,000.0 51,000,000.0
ve 0 0
Compone
nts Co.,
Ltd
Sanhua
New
Energy
Thermal
Managem 92,347,303.
50,300,191.1 76
142,647,494.
ent
6 92
Technolo
gy
(Hangzho
u) Co.,
Ltd
Zhejiang
Xianji
30,000,000.
Intelligent 00
30,000,000.0
Technolo 0
gy Co.,
Ltd
1,333,116,5
7,513,700,36 82.06
8,846,816,95
Total
9.50 1.56
（2）Investments in associates and joint ventures
Unit: RMB
Openi Open Changed amount of the current period Closi
Closin
ng ing Invest ng
Adjust Cha Cash g
balanc balan ment Provi balan
Inves Inves ment in nge dividen balanc
e ce of incom sion ce of
Investe tment tment other s in d/profit Ot e
(Carryi provi e for provi
es s s compre othe declare her (Carryi
ng sion recog impai sion
incre decre hensiv r d for s ng
amoun for nized rmen for
ased ased e equi distrib amoun
t impai under t impai
income ty ution t)
rmen equity rmen
241
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
t metho t
d
Ⅰ. Joint ventures
Ⅱ. Associates
Guoch
uang
Energy
Interne
t
-
Innova 5,078, 4,941,
137,3
tion 465.12 151.03
14.09
Center
(Guang
dong)
Co.,
Ltd.
Chong
qing
Tainuo 16,130 4,673, 18,304
2,500,0
Machi ,424.2 752.5 ,176.7
00.00
nery 7 2 9
Co.,
Ltd.
Ningbo
Jinlifen
g
2,141, 676,9 2,818,
Machi
904.04 20.35 824.39
nery
Co.,
Ltd
Qingda
o
Sanhua
Jinlifen 1,545,
3,859, 5,405,
g 475.7
926.41 402.11
Machi 0
nery
Co.,
Ltd.
Xincha
ng
zhejian
g
energy
sanhua 1,747, 99,14 1,846,
compre 620.43 2.26 762.69
hensiv
e
energy
co.
LTD
28,958 6,857, 33,316
Subtot 2,500,0
,340.2 976.7 ,317.0
al 00.00
7 4 1
28,958 6,857, 33,316
2,500,0
Total ,340.2 976.7 ,317.0
00.00
7 4 1
242
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable √ Not Applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable √ Not Applicable
4. Operating revenue and Operating cost
Unit: RMB
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 5,648,172,805.20 4,284,161,402.85 5,741,546,510.68 4,327,000,541.95
Other operations 387,451,637.45 360,295,603.24 391,825,681.92 363,817,033.42
Total 6,035,624,442.65 4,644,457,006.09 6,133,372,192.60 4,690,817,575.37
5. Investment income
Unit: RMB
Items Current period Preceding period
cumulative comparative
Investment income from long-term equity investments
6,857,976.74 7,043,506.52
under equity method
Dividend income 815,502,001.82 845,000,000.00
Investment income of bank financing products 171,131.50 3,347,850.67
Gains and losses on settlement of futures contracts 6,112,835.61 -7,145,679.04
Gains and losses on settlement of foreign exchange contract 2,462,740.20 -1,483,174.62
Interest Income of fund 22,722,372.50 13,281,902.31
Advance payment gains 1,868,809.93 842,117.55
Total 855,697,868.30 860,886,523.39
6. Others
R&D expenses
Unit: RMB
Items 2023 2022
Labor cost 136,148,043.78 131,725,103.43
Material and power expense 88,491,000.88 127,572,484.24
Depreciation and amortization expense 8,741,825.68 8,852,856.39
Mold manufacturing expense 4,523,420.24 3,498,334.01
Royalties 1,991,176.57 3,624,114.79
Outsourcing R&D expense 550,514.94 1,855,912.87
Others 6,221,895.25 2,563,180.13
Total 246,667,877.34 279,691,985.86
243
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
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
-1,157,418.11
assets
Government grants included in profit or loss
(excluding those closely related to operating
activities of the Company, satisfying
93,921,181.44
government policies and 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 2023, the futures gain was 9.5091
Gains or losses on changes in fair value of million yuan and the foreign exchange loss
held-for-trading financial assets, held-for- was 99.384 million yuan; In 2022, the futures
trading financial liabilities , and investment loss was 6.4275 million yuan and the foreign
income from disposal of held-for-trading exchange loss was 191.8364 million yuan.
-89,874,825.04
financial assets,held-for-trading financial Meanwhile, the exchange income was
liabilities, and other debt investments, 133.5151 million yuan in 2023, the exchange
excluding those arising from hedging loss was 228.8434 million yuan in 2022.
business related to operating activities According to “ the No. 1 Explanatory
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
10,206,261.89
except the above items
Gains and losses arising from contingencies
unrelated to the normal operation of the
Company
Less: Enterprise income tax affected 1,905,361.61
Non-controlling interest affected (after
7,226,086.57
tax)
Total 3,963,752.00 --
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 on Information
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
244
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report
2. ROE and EPS
EPS (yuan/share)
Weighted average
Profit of the reporting period Diluted
ROE
Basic EPS EPS
Net profit attributable to shareholders of ordinary shares 19.18% 0.81 0.81
Net profit attributable to shareholders of ordinary shares
19.16% 0.81 0.81
after deducting 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
（3）Explanation of the reasons for differences in accounting data under domestic and foreign accounting
standards. If adjusting for differences in data already audited by overseas auditing institutions, the name of
the overseas institution should be indicated
245
