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三花智控:2020年半年度报告(英文版)2020-08-13  

						                    Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




Zhejiang Sanhua Intelligent Controls Co., Ltd.

           2020 Semi-Annual Report




                 August 2020




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                                               Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




              Section I Important Notes, Contents and Definitions

     The Board of Directors, Board of Supervisors, Directors, Supervisors and Senior Management
of Zhejiang Sanhua Intelligent Controls Co., Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report shall be authentic, accurate, complete and
free from material misstatement whether due to false record, misleading statement or significant
omission, and they will bear both individual and joint legal liabilities.

     Zhang Yabo, the Company's legal representative, Yu Yingkui, the person in charge of the
accounting work, and Sheng Xiaofeng, the person in charge of accounting department (Accounting
Officer) hereby declare and warrant that the financial statements in this report are authentic,
accurate and complete.

     All directors attended the board meeting to review this report.

     The Company describes in detail concerning the possible risks and countermeasures in Section
X " Risks of the Company and Countermeasures" under Section IV " Management’s Discussion and
Analysis of Operations". Please pay particular attention to relevant contents.

     The profit distribution proposal approved by the board of directors is as follows: With
3,582,258,682 as the base number, cash dividend of RMB 1.00 (including tax) will be distributed to
all shareholders for every 10 shares. The Company will not distribute bonus shares or convert
capital reserves to share capital.




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                                                                                       Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                                                                             CONTENTS




Section I Important Notes, Contents and Definitions................................................................................................................................ 2
Section II Corporate Profile and Key Financial Indicators........................................................................................................................5
Section III Corporate Business Overview................................................................................................................................................. 8
Section IV Management’s Discussion and Analysis of Operations.........................................................................................................12
Section V Significant Events................................................................................................................................................................... 34
Section VI Changes in Shares and Information about Shareholders....................................................................................................... 63
Section VII Information of Preferred Shares........................................................................................................................................... 73
Section VIII Information about Convertible Bonds.................................................................................................................................74
Section IX Information about Directors, Supervisors, Senior Management........................................................................................... 75
Section X Corporate Bonds..................................................................................................................................................................... 77
Section XI Financial Report.................................................................................................................................................................... 78
Section XII Documents Available for Inspection.................................................................................................................................. 191




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                                                       Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                                                    Definitions


                  Items                 Refers to                                  Definition

The Company, Company                    Refers to Zhejiang Sanhua Intelligent Controls Co., Ltd.

The Articles of Associations            Refers to Articles of Associations for Zhejiang Sanhua Intelligent Controls Co., Ltd.

The CSRC                                Refers to China Securities Regulatory Commission

SZSE                                    Refers to Shenzhen Stock Exchange

                                        Refers to Zhejiang Securities Regulatory Bureau of China Securities Regulatory
Zhejiang Securities Regulatory Bureau
                                                    Commission

General Meeting                         Refers to General Meeting of Zhejiang Sanhua Intelligent Controls Co., Ltd.

The Board of Directors                  Refers to The Board of Directors of Zhejiang Sanhua Intelligent Controls Co., Ltd.

The 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. 2020 Semi-Annual Report




             Section II Corporate Profile and Key Financial Indicators

I.       Corporate Information

Stock abbreviation          Sanhua Intelligent Controls              Stock code                    002050

Stock Exchange where the
shares of the Company are   Shenzhen Stock Exchange
listed
Name of the Company in
                            浙江三花智能控制股份有限公司
Chinese
Abbr. of the Company name
                            三花智控
in Chinese (if any)
Name of the Company in
                            ZHEJIANG SANHUA INTELLIGENT CONTROLS CO., LTD.
English (if any)
Abbr. of the Company name
                            SANHUA
in English (if any)

Legal Representative        Zhang Yabo


II. Contacts and Contact Information

                                                       Board Secretary                    Securities Affairs Representative

Name                                     Hu Kaicheng                                 Wang Yutong

                                         No. 12 St., No. 289 Xiasha Economic         No. 219, Woxi Avenue, Meizhu Town,
Address
                                         Development, Hangzhou, Zhejiang, China. Xinchang County, Zhejiang, China.

Tel.                                     0571-28020008                               0575-86255360

Fax                                      0571-28876605                               0575-86563888-8288

E-mail                                   shc@zjshc.com                               shc@zjshc.com


III. Other Relevant Information

1. Company’s contact information

Whether there is any change in the Company’s registered address, office address, zip code, website or email
address during the reporting period.
□Applicable √Not applicable
There are no changes in the Company’s registered address, office address, zip code, website or Company email
address during the reporting period. Please refer to 2019 Annual Report for details.




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                                                        Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


2. Information disclosure and place of the report

Whether there is any change in information disclosure and place of the report during the reporting period.
□ Applicable √ Not applicable
There are no changes in the newspaper designated by the Company for information disclosure, website specified
by CSRC for release of the report and place for report preparation during the reporting period. Please refer to 2019
Annual Report for details.

IV. Key Accounting Data and Financial Indicators

Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
                                                                         Corresponding Period of
                                           Current Reporting Period                                   YoY Change (%)
                                                                               Last Year

 Operating Revenue (RMB)                           5,318,178,626.77             5,831,107,028.08                    -8.80%

 Net Profit Attributable to Shareholders
                                                     643,481,717.35               692,968,498.78                    -7.14%
 of the Listed Company (RMB)

 Net Profit Attributable to Shareholders
 of the Listed Company after Deducting               582,191,161.67               641,841,146.76                    -9.29%
 Non-recurring Gains and Losses (RMB)

 Net Cash Flow Generated by
                                                   1,104,651,449.42               830,554,910.93                    33.00%
 Operational Activities (RMB)

 Basic Earnings per Share (RMB/Share)                             0.18                       0.19                   -5.26%

 Diluted Earnings per Share (RMB/Share)                           0.18                       0.19                   -5.26%

 Weighted Average ROE                                         6.74%                        7.99%                    -1.25%

                                           At the End of the Current
                                                                         At the End of Last Year      YoY Change (%)
                                               Reporting Period

 Total Assets (RMB)                               15,540,725,156.74            14,790,190,170.64                     5.07%

 Net Assets Attributable to Shareholders
                                                   9,528,973,610.48             9,291,632,928.45                     2.55%
 of the Listed Company (RMB)


V. Differences in Accounting Data between Domestic and Overseas Accounting Standards

1. Difference in the financial report of net profits and net assets according to the disclosure of
    International Financial Reporting Standards and China Accounting Standards

□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assets according to the disclosure of
International Financial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.




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                                                               Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
   Accounting Standards and China Accounting Standards

□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards in the reporting period.

VI. Items and Amounts of Non-recurring Gains and Losses

√ Applicable □ Not applicable
                                                                                                                          Unit: RMB

                               Items                                            Amount                           Note

 Gains or Losses from Disposal of Non-current Assets
                                                                                    -1,403,295.52
 (Including the Write-off for the Accrued Impairment of Assets)

 The Government Subsidies Included in the Current Gains and
 Losses (Excluding the Government Subsidies Closely Related
                                                                                   93,590,286.21
 to Regular Businesses of the Company and Issued in the Quota
 or Quantity Based on the National Standards)

 Gains or Losses Attributed to the Changes in Fair Value for
 Holding Held-for-trading financial assets, Derivative Financial
 Assets, Trading Financial Liabilities, Derivative Financial
 Liabilities and Investment Income from Disposal of
                                                                                  -23,409,775.96
 Held-for-trading financial assets, Derivative Financial Assets,
 Trading Financial Liabilities, Derivative Financial Liabilities
 and Other Debt Investment, Excluding Hedging Businesses
 Related to the Regular Business Operation of the Company

 Non-operating Income and Expenditures Other Than the Above                         1,196,846.18

 Other Gains and Losses Items that Fit in the Definition of
                                                                                    1,113,187.32
 Non-recurring Gains and Losses

 Less: Impact of Income Tax                                                         9,222,107.32

      Impact of Minority Equity (after tax)                                           574,585.23

 Total                                                                             61,290,555.68                  --

The reasons for the non-recurring gains and losses items defined or listed in the Explanatory Announcement No. 1
of Information Disclosure of Listed Companies – Non-recurring Gains and Losses are defined as recurring gains
and losses items
□Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in
the Explanatory Announcement No. 1 of Information Disclosure of Listed Companies – Non-recurring Gains and
Losses, as recurring gains and losses items.




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                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                        Section III Corporate Business Overview

I.   The Principal Business of the Company during the Reporting Period

1.   Main business
The Company adheres to the "focus on leading" business path, focusing on the research and application of heat
pump inverter control technology and thermal management system products, focusing on the development of
environmental thermal management solutions for heat exchange and intelligent control, and is committed to the
professional operation in the fields of building HVAC, electrical equipment and automobile thermal management.
According to the different stages, needs and characteristics of strategic business and their development, the
Company's business is mainly divided into refrigeration and air conditioning electrical components business and
automotive components business, to further clarify customer orientation and quickly respond to the market.


The main purpose of the Company is to produce and market components and parts for refrigeration A/C and
refrigerator, automobile A/C and thermal management of new energy vehicles, coffee maker, dishwasher and
washing machine. The main products of refrigeration and A/C electrical parts business 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 main products of
automotive components business include Thermal Expansion Valve, Receiver Drier, Electronic Expansion Valve,
Electronic Water Pump, etc., which are widely used in both traditional fuel vehicles and new energy vehicle
thermal management field.


During the reporting period, the Company's main business and its business model have not changed.


2.   Industry development
(1) Refrigeration and air conditioning electrical components industry
China is the largest manufacturing base of A/C and refrigerators in the world, and its production and sales volume
ranks first globally. In line with the trend of environmental protection in the world, energy-saving inverter and
intelligent technology have become the trend, which puts forward a series of new requirements for the market of
control components, and also brings new development opportunities. As a leading enterprise in the refrigeration
control components industry, the Company will follow the trend, firmly seize this opportunity and develop
steadily.


(2) Automotive components industry
The global automobile industry has been developing rapidly, which also drives the market demand of automotive
A/C and thermal management products to continue to grow substantially. In recent years, the development of new
energy vehicles has become a relatively certain trend, which puts forward higher and more updated requirements
for A/C and thermal management products. Focusing on the in-depth research on A/C and thermal management
system of new energy vehicles, the Company has gradually developed from components to module and
subsystems, and has become the supplier of Valeo, Mahler, Volkswagen, Mercedes Benz, BMW, Volvo, Toyota,


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                                                                Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


GM, Geely, BYD, SAIC and other customers.


3.     Industry status
The Company is the world's largest manufacturer of refrigeration control components and the world's leading
manufacturer of automotive A/C and thermal management system control components. "Sanhua" brand
refrigeration intelligent control components have become a world-famous brand, and a strategic partner of many
automobile enterprises and air-conditioning refrigeration appliance manufacturers in the world. After more than
30 years of development, the Company has established a leading position in the global market of refrigeration and
air conditioning intelligent control components. The market share of the Company's Electronic Expansion Valve,
Four-way Reversing Valve, Solenoid Valve, Microchannel Heat Exchanger, Omega Pump ranks first globally.
The market share of the Company's Service Valve, Vehicle Thermal Expansion Valve and Receiver Drier is in the
leading position in the world. At the same time, the Company focuses on the research and development of air
conditioning and thermal management products for new energy vehicles, became the first Chinese enterprise to
win the Pace Award of Automotive News of the United States.



II. Significant Changes in Main Assets

1. Significant changes in main assets



                  Major asset                                                Explanation on Major Changes


Equity Assets                                 No major changes

                                              Increased by 246.36 million compared with the beginning of the year, mainly due to
Fixed Assets
                                              investment of raised funds and the transformation of automation equipment

Intangible Assets                             No major changes

                                              Increased by 11.91 million compared with the beginning of the year, mainly due to
Construction in Progress
                                              investment of raised funds and the transformation of automation equipment

                                              Increased by 748.32 million compared with the beginning of the year, mainly due to net
Cash and Bank Balances
                                              cash inflow from operating activities

                                              Increased by 227.90 million compared with the beginning of the year, mainly due to
Held-for-trading financial assets
                                              increase of bank financial products

                                              Increased by 15.39 million compared with the beginning of the year, mainly due to
Derivative Financial Assets
                                              increasing in floating income of future contracts

                                              Increased by 28.31 million compared with the beginning of the year, mainly due to
Prepayments
                                              increasing in prepayment of inventories


2. Major overseas assets

√Applicable □ Not applicable
     Content of    Formation        Size of       Location       Operation       Control          Income    Proportion    Whether


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                                                      Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


      Assets                  Assets                       Mode      measures       Status      of overseas     there is
                                                                    of security                  assets in    significant
                                                                      assets                     net assets   impairment
                                                                                                   of the          risk
                                                                                                 Company

                                                      R&D,
                                                      Manufactur
 Sanhua                                                             Financial
                                                      ing,
 Internation                                                        supervision
               Equity       1,198,408,   The United   Marketing
 al Limited                                                         and           -20,604,13                  No
               Investment   135.25       States       and
 (USA)                                                              external      8.42
                                                      Investment
 (merger)                                                           audit
                                                      Manageme
                                                      nt

                                                      Manufactur
 Sanhua
                                                      ing,          Financial
 Internation
                                                      Marketing     supervision
 al            Equity       2,234,799,
                                         Singapore    and           and           32,301,884                  No
 Singapore     Investment   870.35
                                                      Investment    external      .25
 PTE. Ltd.
                                                      Manageme      audit
 (merger)
                                                      nt


III. Core Competitiveness Analysis

1. Clear strategic layout
The Company adheres to the "focus on leading" business path, takes the research and application of heat pump
inverter control technology and thermal management system products as the core, firmly grasps the development
theme of energy conservation, environmental protection and intelligent control, upgrades from "mechanical parts
development" to "system control technology solution development of electronic control integration". The
Company’s product series are expanded from household A/C and refrigerator components to the field of
commercial A/C and commercial refrigeration, and extending to the direction of inverter control technology and
system integration and upgrading. Meanwhile, after the injection of automotive business, it will give full play to
the synergy effect with the original business, continue to deepen the research and development of automobile A/C
and new energy vehicle thermal management system components, and actively lay out 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 granted patents both
domestic and abroad, including invention patents. All products, services and quality of the Company are to meet
the needs of customers as the first priority.



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                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


3. Quality assurance, scale economy effect
The Company's products cover refrigeration A/C electrical components and automotive components industry. The
market share of the Company's Electronic Expansion Valve, Four-way Reversing Valve, Solenoid Valve,
Microchannel Heat Exchanger, Automotive Electronic Expansion Valve, Omega Pump ranks first globally. The
market share of Service Valve, Vehicle Thermal Expansion Valve and Receiver Drier is in the leading position in
the world. The Company has established a complete and strict quality assurance system, passed ISO9001,
IATF16949, QC080000 quality system certification. The Company won the National Quality Award, Zhejiang
Quality Award, and won the high comments from JCI, Daikin, Carrier, Gree, Midea, Haier, Toyota, Benz,
Volkswagen, Valeo, Mahler 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 and other places, and has preliminary ability to cope with globalization. And in practice,
we have trained a number of management talents who can meet the needs of business development in different
countries and regions.




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                                                     Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




     Section IV Management’s Discussion and Analysis of Operations

I.   Overview

In the first half of 2020, under the influence of the COVID-19, strict epidemic prevention and control measures
were implemented at home and abroad, and the downward pressure on the economy was further increased. In
addition, the economic and trade friction between China and the United States brought adverse effects on the
Company's operation and market expectations. Specific to the industry in which the Company operates, the
Company's refrigeration and air conditioning electrical components business is affected by the epidemic, and the
overall performance is under pressure in the short term. However, with the inventory clearance of the industry and
the release of new energy efficiency standards for air conditioning, the demand has gradually begun to recover,
even reaching a new high point. The automotive components business has been greatly affected by the overall
decline of the automobile industry, but the long-term development trend of new energy vehicles is strong, and the
cumulative positive growth has been achieved.


During the reporting period, the operating revenue is RMB 5.318 billion, a year-on-year decrease of 8.80%; the
operating profit is RMB 740 million, a year-on-year decrease of 10.86%; the net profit attributable to shareholders
of the listed Company is RMB 643 million, a year-on-year decrease of 7.14%. The operating revenue of
refrigeration and air conditioning electrical components business is RMB 4.368 billion, a year-on-year decrease of
13.79%; the operating revenue of automotive components business is RMB 950 million, a year-on-year increase
of 24.34%.


The main works of the Company in the first half of 2020 are as follows:
1. Focus on operation and deepen industrial layout
     (1). Refrigeration and air conditioning electrical components business
     The Company's refrigeration and air conditioning electrical components business was negatively affected by
     the epidemic. Under the pressure of a sharp decline in the first quarter, the Company paid close attention to
     the market trend, actively adjusted the market strategy, further strengthened the strategic relationship with
     customers externally, seized orders, and steadily increased the market share, of which sales in May and June
     increased significantly. Internally, we will continue to sort out the integration of Aweco business, implement
     budget management, IE improvement and other measures to promote internal efficiency and cost reduction.
     At the same time, with the release of new energy efficiency standards for air conditioning, we will actively
     seize market opportunities such as energy efficiency upgrading and refrigerant switching, and continue to
     promote more competitive products.


     (2). Automotive components business
     In the first half of 2020, the global economy was affected by the epidemic at home and abroad in succession,
     and the automobile industry as a whole was greatly affected. On the premise of epidemic prevention and
     control, the automotive components business deal with the order delivery of overseas customers; at the same
     time, it actively promote the integrated module project among existing customers, so as to make the thermal
     management products more standardized, integrated and platform-based. At the same time of striving for the

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                                                          Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


    new project of existing customers, we actively develop new customers, realized the ice breaking of Japanese
    customers, and successfully entered the Toyota supplier system.


2. Unite as one and fight against the epidemic together
After the outbreak of the epidemic, under guidance of government departments, the Company focused on the
prevention and control of the epidemic on one hand and the resumption of production on the other hand. In each
subsidiary company around the world, timely implement the anti-epidemic material reserve, overcome plenty of
difficulties, implement of resumption of work in batches, provide timely product service for customers, and ensure
the normal operation and production.


3. Pay attention to the construction of talent team and establish sustained and long-term incentive mechanism
The Company continues to deepen the work of "strengthening the talents, streamlining and high efficiency",
promoting each business unit to optimize the talent development and elimination mechanism, and
comprehensively apply the talent review results. At the same time, during the reporting period, the Company
implemented the second restricted stock incentive plan for directors, senior managers and other core talents, and
further established and improved the Company's long-term incentive mechanism.



II. Main Business Analysis

Overview
Please refer to details in “I. Overview” of “Section IV Management’s Discussion and Analysis of Operation”


Changes in key financial data over the corresponding period of last year
                                                                                                                     Unit: RMB

                                                     Corresponding Period of
                          Current Reporting Period                              YoY Change (%)            Note of Change
                                                           Last Year

Operating Revenue            5,318,178,626.77           5,831,107,028.08             -8.80%

Operating Cost               3,839,626,004.70           4,179,915,713.98             -8.14%

Selling Expenses              257,442,500.54             263,730,876.93              -2.38%

Administrative Expenses       315,350,745.15             304,294,733.96              3.63%

                                                                                                       Mainly due to gains on
Financial Expenses            -29,893,397.04             12,364,734.89              -341.76%
                                                                                                      exchange rate fluctuation

                                                                                                       Mainly due to decrease
Income Tax Expenses            99,017,348.37             142,881,546.88             -30.70%
                                                                                                        in operating revenue

R&D Investments               240,012,928.38             248,506,405.93              -3.42%

                                                                                                       Mainly due to decrease
Net Cash Flows from                                                                                     in cash payment for
                             1,104,651,449.42            830,554,910.93              33.00%
Operating Activities                                                                                  goods and services in the
                                                                                                           current period



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                                                            Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                                                             Mainly due to increase in
Net Cash Flows from
                               -679,392,344.66             227,848,099.26              -398.18%              purchase    of    financial
Investment Activities
                                                                                                             products in this period

Net Cash Flows from                                                                                          Mainly due to increase in
                                310,293,217.58            -646,477,650.98              148.00%
Financing Activities                                                                                                 bank loan
Net Increase in Cash and
                                709,896,200.36             408,595,409.47              73.74%
Cash Equivalents

Whether there is significant change in Company’s profit structure or profit source during the reporting
period
□ Applicable √ Not applicable
There is no such case during the reporting period


Operating income structure


                                                                                                                              Unit: RMB

                               Current Reporting Period               Corresponding Period of Last Year

                                                 Proportion to                               Proportion to         YoY Change (%)
                             Amount                                       Amount
                                              operating income                           operating income

 Total Revenue            5,318,178,626.77                 100%     5,831,107,028.08                   100%                    -8.80%

 Classified by Industry

 General
 Equipment
                          5,318,178,626.77               100.00%    5,831,107,028.08                100.00%                    -8.80%
 Manufacturing
 Industry

 Classified by Products

 Refrigeration A/C
 Electrical               4,367,942,431.64                82.13%    5,066,906,018.45                 86.89%                   -13.79%
 Components

 Automotive
                           950,236,195.13                 17.87%      764,201,009.63                 13.11%                   24.34%
 Components

 Classified by Region

 Domestic                 2,479,768,382.72                46.63%    2,932,950,932.66                 50.30%                   -15.45%

 Overseas                 2,838,410,244.05                53.37%    2,898,156,095.42                 49.70%                    -2.06%

Industries, products or regions accounting for more than 10% of the Company’s operating income or
operating profit
√ Applicable □ Not applicable
                                                                                                                              Unit: RMB
                                                                            YoY Change (%) YoY Change (%) YoY Change (%)
                     Operating income   Operating cost     Gross margin
                                                                              of operating     of operating cost      of gross margin


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                                                         Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                                 income
Classified by industry
General
Equipment
                    5,318,178,626.77 3,839,626,004.70               27.80%              -8.80%             -8.14%              -0.52%
Manufacturing
Industry

Classified by product

Refrigeration A/C
Electrical          4,367,942,431.64 3,164,066,988.85               27.56%             -13.79%         -13.65%                 -0.12%
Components

Automotive
                       950,236,195.13   675,559,015.85              28.91%             24.34%          31.03%                  -3.63%
Components

Classified by region

Domestic            2,479,768,382.72 1,745,269,588.31               29.62%             -15.45%         -16.96%                 1.28%

Overseas            2,838,410,244.05 2,094,356,416.39               26.21%              -2.06%             0.77%               -2.08%

In the case that the Company's main business data statistics are adjusted during the reporting period, the
Company's main business data of the latest reporting period were adjusted according to the statistics at the
end of the last reporting period
□ Applicable √ Not applicable


Explanations on relevant data changed for more than 30% on a year-over-year base
√Applicable □Not applicable
The operating cost of auto parts increased by 31.03% over the same period of last year, mainly due to the increase
of 24.34% in operating revenue.

III. Non-Core Business Analysis

√Applicable □Not applicable
                                                                                                                          Unit: RMB

                                                Proportion to net
                              Amount                                         Note of Change                   Sustainability
                                                     profit

                                                                       Gains and losses of futures
                                                                       contract settlement, foreign
 Investment
                                -8,109,921.96             -1.10%       exchange forward contract      No
 Income
                                                                       settlement, bank financial
                                                                       product, etc.

                                                                       Floating income of futures
 Gains and Losses
                                                                       contracts, foreign exchange
 from Change of                  6,520,045.96                 0.88%                                   No
                                                                       forward contracts, bank
 Fair Value
                                                                       financial products, etc.



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                                                              Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                         Failure to pay,
 Non-operating
                               1,466,984.81                     0.20%    compensation and penalty         No
 Revenue
                                                                         income, etc.

 Non-operating                                                           Loss on scrapping of fixed
                               1,354,079.15                     0.18%                                     No
 Expenditures                                                            assets, etc.

                                                                                                          The government grants of
                                                                                                          VAT refund of civil welfare
                                                                                                          enterprises and software
 Other Gains                 101,528,141.23                   13.72%     Government grants, etc.          product VAT exceeding tax
                                                                                                          burden are sustainable,
                                                                                                          while the rest are not
                                                                                                          sustainable

 Credit
                             -12,874,290.80                   -1.74%     Bad debt loss, etc.              No
 Impairment Loss

 Assets                                                                  Loss on impairment of
                               -6,302,857.17                  -0.85%                                      No
 Impairment Loss                                                         inventories

 Gains on
                                                                         Gains on disposal of fixed
 Disposal of                    -319,355.00                   -0.04%                                      No
                                                                         assets
 Properties


IV. Analysis of Assets and Liabilities

1. Material changes of assets

                                                                                                                                 Unit: RMB

                      At the End of Current         At the End of Corresponding
                                                                                         YoY
                        Reporting Period                Period of Last Year
                                                                                        Change        Note of significant change
                                    Percentage of                    Percentage of
                      Amount                           Amount                            (%)
                                     total assets                     total assets

                                                                                                 Mainly due to the increase of net cash
 Cash and Bank     3,412,040,819.                   1,688,352,692.
                                      21.96%                            12.13%          9.83%      flow generated by the Company's
    Balances            22                               35
                                                                                                          operating activities

    Account        2,130,607,685.                   2,187,524,138.
                                      13.71%                            15.71%          -2.00%
   Receivable           90                               75

                   1,902,896,386.                   1,804,997,672.
   Inventories                        12.24%                            12.96%          -0.72%
                        17                               73

   Investment
                   26,263,000.26       0.17%        76,238,924.18       0.55%           -0.38%
    property

Long-term Equity
                   14,348,933.44       0.09%        11,813,021.01       0.08%           0.01%
   Investment

  Fixed Assets     3,625,967,658.     23.33%        3,040,588,886.      21.84%          1.49%


                                                                                                                                        16
                                                                      Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                               09                                33

 Construction in       492,864,704.9
                                              3.17%     640,806,251.81         4.60%         -1.43%
       Progress                4

      Short-term       1,267,378,241.                   1,408,757,665.
                                              8.16%                            10.12%        -1.96%
     borrowings                24                                49

                                                                                                       Mainly due to increased bank loans for
      Long-term        1,259,113,765.
                                              8.10%      2,000,000.00          0.01%         8.09%      project construction and automation
     borrowings                14
                                                                                                             equipment transformation,


2. Assets and liabilities measured at fair value

√ Applicable □ Not applicable


                                                                                                                                   Unit: RMB

                                     Profit and       Cumulative
                                     loss of fair     changes in        Impairment        Current
                      Opening                                                                          Current sale    Other       Closing
       Items                        value change      fair value       accrued in the    purchase
                       balance                                                                           amount       changes      balance
                                    in the current    included in      current period     amount
                                        period          equity

Financial Assets

1.
Held-for-tradi
ng      financial
assets              993,634,433.3                                                       228,200,957.                             1,221,535,2
                                    -300,099.30
(Excluding               1                                                                  00                                      91.01
Derivative
Financial
Assets)

2.Derivative
                                    15,393,725.5                                                                                 23,708,126.
Financial           8,314,400.73
                                          9                                                                                           32
Assets

                    1,001,948,834 15,093,626.2                                          228,200,957.                             1,245,243,4
       Total
                         .04              9                                                 00                                      17.33

     Financial                                                                                                                   8,449,613.0
                     126,364.40     8,323,248.69
     Liabilities                                                                                                                         9

Whether there were any material changes on the measurement attributes of major assets of the Company
during the reporting period:
□ Yes √ No




                                                                                                                                              17
                                                         Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


3. Assets right restrictions as of the end of reporting period

             Items                           Closing Book value                          Reasons for being restricted
Cash and Bank Balances                         148,361,603.85                 Deposits and investment deposits
Note Receivable                               1,264,550,094.76                Pledge for financing
Total                                         1,412,911,698.61                                        -


V.      Analysis of Investments

1. Overview

√Applicable □ Not applicable
  Investment during the Reporting Period   Investment over the Corresponding Period
                                                                                               Fluctuation Rate (%)
                  (RMB)                              of Last Year (RMB)

                     0.00                               9,238,318.85                                 -100.00%


2. Significant equity investment during the reporting period

□Applicable √Not applicable

3. Significant non-equity investment during the reporting period

□Applicable √ Not applicable

4. Financial asset portfolio

(1)Securities Investments

□ Applicable √ Not applicable
No such case in the reporting period.

(2)Derivatives Investments

√Applicable □ Not applicable




                                                                                                                            18
                                                                                                                        Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
                                                                                                                                                                         Unit: RMB in 10 thousand

                                                                                                                                                                            Proportion
                                                                                                                                                                             of closing
                                                                                                                                                                            investment
                                                                                                                                                                                            Actual
                                                                                                                                                                             amount to
                                                            Initial                                                Purchased        Sold                                                    gain or
Operation                                                                                                                                      Impairmen                        the
               Whether         Whether        Type of     investment                                  Opening       amount         amount                      Closing                       loss
party     of                                                                           Terminatio                                                   t                       Company’
               Related          related     derivatives   amount of     Initial date                investment     during the    during the                   investment                    during
derivatives                                                                              n date                                                 provisions                     s net
               party          transaction   investment    derivatives                                 amount        reporting     reporting                    amount                         the
investment                                                                                                                                       (if any)                    assets at
                                                          investment                                                 period        period                                                  reporting
                                                                                                                                                                             the end of
                                                                                                                                                                                            period
                                                                                                                                                                                the
                                                                                                                                                                             reporting
                                                                                                                                                                              period

                                            Futures
                                            contracts,
Futures                                     foreign
Company,       No             No            exchange
Bank                                        forward
                                            contracts,
                                            etc.

Total                                                                        --            --

Capital source of derivatives investment                  Company’s self-fund

Prosecution (if applicable)                               Not applicable

Announcement date for approvals of derivatives
investment from the board of directors (if any)

Announcement date for approvals of derivatives
investment from the general meeting (if any)

Risk analysis and control measures (including but not     In order to avoid the price risk of raw materials and exchange rate risk, the Company and its subsidiaries have carried out derivative

                                                                                                                                                                                                   19
                                                                                                                      Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
limited to, market risk, liquidity risk, credit risk,   business, including futures contracts and foreign exchange forward contracts. The Company and its subsidiaries strictly implement the
operational risk, legal risk, etc.) of holding          relevant provisions listed in the Management measures for operation of futures hedging business and Management institution for foreign
derivatives during the reporting period                 exchange hedging business.

Change of market price or fair value of invested
derivatives during the reporting period; specific
                                                        At the beginning of the reporting period, the floating income of invested derivatives at fair value was RMB 8.188 million, and that of
methods, related assumptions and parameter setting
                                                        derivatives at the end of the reporting period was RMB 15.2585 million.
of the derivatives’ fair value analysis should be
disclosed

During the current reporting period, whether there
was significant changes of accounting policies and
                                                        Not applicable
accounting principles of the Company’s derivatives
comparing to the prior reporting period

Specific opinions on the Company’s derivatives
investments and risk control from independent           Not applicable
directors




                                                                                                                                                                                             20
                                                               Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




5. Usage of raised funds

√Applicable □Not applicable

(1)Overall usage of raised fund

√Applicable □Not applicable
                                                                                                         Unit: RMB in 10 thousand

 Total Amount of Raised Funds                                                                                             171,631

 Total Amount of Raised Funds Invested in the Report
                                                                                                                        24,588.33
 Period

 Accumulated Amount of Fund Raised                                                                                     141,274.52

 Total Amount of Raised Funds with Use Alteration
                                                                                                                                   0
 during the Reporting Period

 Accumulated Amount of Raised Funds with Use
                                                                                                                         11,471.76
 Alteration

 Proportion of Accumulated Amount of Raised Funds
 with Use Alteration to the Total Amount of Raised                                                                          6.68%
 Funds

                                           Description of Overall Usage of Raised Funds

 The information in the above table includes the raised funds issued by the Company in 2015 and 2017.


 (1) Year 2015
 1. The actual amount of raised fund and date of transfer in
 Approved by China Securities Regulatory Commission (CSRC) [2015] No. 1454, the Company non-public offered 46,349,942
 common shares, with a total raised fund of RMB 399,999,999.46. After deducting the issuance expenses of RMB 5,999,999.47,
 the net amount of raised funds is RMB 393,999,999.99. The raised funds were transferred in on December 21st, 2015, and it has
 been verified by Tianjian accounting firm, which has issued the Capital Verification Report (TJY [2015] No. 531).


 As the principal body of the project is Hangzhou Sanhua Microchannel Heat Exchanger Co., Ltd. (hereinafter referred to as
 Sanhua Microchannel) and its subsidiary Sanhua Mexico Industry s. de.r.l.de C.V. (hereinafter referred to as Mexico
 Microchannel), the Company allocated RMB 393,999,999.99 of raised funds to Sanhua Microchannel in the form of capital
 increase on December 29th, 2015.


 2. Usage and balance of raised funds
 The Company has used RMB 345.6904 million of raised funds in previous years. The amount of bank deposit interest and
 financial income net of bank charges received in previous years was RMB 12.2878 million. The surplus balance of raised funds
 amounted to RMB 26,100, all of which has been used to permanently replenish the Company's working capital. From January to
 June 2020, the actual use of raised funds is RMB 5.3660 million, the amount of bank deposit interest and financial income after
 deducting bank charges is RMB 444,100. The surplus balance of raised funds amounted to RMB 55.6494 million, all of which


                                                                                                                                   21
                                                               Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


 has been used to permanently replenish the Company's working capital. The accumulated amount of used raised funds was RMB
 351.0564 million, the accumulated amount of bank deposits interest and financial income after deducting bank charges is RMB
 12.7319 million. The accumulated surplus balance of raised funds amounted to RMB 55.6755 million, all of which has been used
 to permanently replenish the Company's working capital.


 As of June 30th, 2020, the balance of raised funds is RMB 0.000 (including the net amount of accumulated bank deposit interest
 and financial income net of bank charges, etc.).


  (1) Year 2017
 1. The actual amount of raised fund and date of transfer in
 With the approval of China Securities Regulatory Commission (CSRC) [2017] No. 1392, the Company non-public issued
 88,154,000 common shares (A shares), with a total raised capital of RMB 1,322,310,000.00. After deducting the issuance
 expenses of RMB 13,078,480.00, the net amount of raised funds is RMB 1,309,231,520.00. The above-mentioned raised funds
 were transferred in on September 1st, 2017, and it has been verified by Tianjian accounting firm, which has issued the Capital
 Verification Report (TJY [2017] No. 327).


 Since Zhejiang Sanhua Automotive Components Co., Ltd. (hereinafter referred to as Sanhua Automotive) and its subsidiary
 Shaoxing Sanhua New Energy Automotive Components Co., Ltd. (hereinafter referred to as Shaoxing Automotive), the Company
 has allocated the raised funds of RMB 1,301,310,000.00 to Sanhua Automotive in the form of capital increase. Sanhua
 Automotive synchronously allocated the raised fund of RMB 503,620,000.00 to Shaoxing Automotive in the form of capital
 increase.


 2. Usage and balance of raised funds
 The Company has used RMB 821.1715 million of the raised funds in previous years, and the amount of bank deposit interest and
 financial income net of bank charges received in previous years was RMB 77.6239 million. From January to June 2020, the
 actual usage of raised funds is RMB 240.5173 million, and the amount of bank deposit interest and financial income net of bank
 charges is RMB 10.4168 million. The accumulated amount of used raised funds was RMB 1,061.6888 million, the accumulated
 amount of bank deposits interest and financial income after deducting bank charges is RMB 88.0407 million.


 As of June 30th, 2020, the balance of raised funds is RMB 48.6619 million (including the net amount of accumulated bank
 deposit interest and financial income deducting bank charges, etc.), and the balance of raised funds actually used by the Company
 to purchase financial products is RMB 300 million.


(2)Statement of Committed Investment Projects of Raised Funds

√Applicable □Not applicable


                                                                                                         Unit: RMB in 10 thousand

      Committed           Wheth       Total         Total   Invest     Accum      Invest    Date of   Benefit    Whethe    Whethe
  investment projects       er      commit      invest      ment in    ulative    ment       asset       s          r         r
   and allocation of      project       ted         ment       the      invest   progres    ready     achieve    expecte   feasibil
   over-raised funds        has      invest         after   current    ment at   s at the     for     d in the     d        ity of


                                                                                                                                      22
                                                       Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                        been     ment of   alterati    year       the end     end of      intende   current   benefit   project
                        (or      raised    on (a)                 of the       the         d use     year     s have      has
                      partiall   funds                            period      period                           been     change
                         y)                                         (b)        (%)                            achieve        d
                       altered                                                (d)=(b)                           d       signific
                                                                               /(a)                                      antly

Committed investment projects

Construction of
                                                                                          Decem
Microchannel Heat
                                                                  11,739.                 ber
Exchanger             Yes        22,755    11,760                             99.83%                          N/A       Yes
                                                                          6               31st,
production line in
                                                                                          2017
Mexico

Technical                                                                                                     N/A       No
transformation
project of heat                                                                           June
                                                                              100.00
exchanger with an     No          7,996     7,996                  7,996                  30th,
                                                                                      %
annual output of                                                                          2017
additional 800,000
units

Replenish working                                                                                             N/A       No
                      No          9,249     9,249                  8,649      93.51%
capital

Automatic technical                                                                                           N/A       No
transformation
                                                                                          Decem
project of heat
                                           11,471.                6,721.0                 ber
exchanger with an     No                               536.6                  58.59%
                                                76                        4               31st,
annual output of
                                                                                          2019
additional 700,000
units

New energy auto                                                                                               N/A       No
                                                                                          Decem
parts construction
                                                      13,539.     42,101.                 ber
project with annual   No         50,362    50,362                             83.60%
                                                          96          14                  31st,
output of 11.5
                                                                                          2021
million sets

Technical                                                                                                     N/A       No
transformation
project of
Automotive thermal                                                                        January
                                                      9,638.2     34,866.
management system     No         45,495    45,495                             76.64%      31st,
                                                              5       02
module with an                                                                            2021
annual output of
additional 7.3
million units


                                                                                                                                   23
                                                          Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Technical                                                                                                      N/A         No
transformation
project of
                                                                                         March
Automotive A/C                                                     18,614.
                       No         20,874       20,874    754.82               89.18%     31st,
control components                                                      65
                                                                                         2020
with an annual
output of additional
12.70 million units

Expansion of                                                                                                   N/A         No
product testing room                                                                     January
                                                                   8,529.2
and auxiliary          No         13,400       13,400     118.7               63.65%     31st,
                                                                          2
production room                                                                          2019
project

Payment of agents’                                                2,057.8                                     N/A         No
                       No           2,100       2,100                         97.99%
fees                                                                      5

Subtotal of
                                  172,23       172,70   24,588.     141,27
committed                   --                                                   --         --                    --            --
                                        1        7.76        33       4.52
investment projects

Investment of excess proceeds

--

                                  172,23       172,70   24,588.     141,27
Total                       --                                                   --         --             0      --            --
                                        1        7.76        33       4.52

                       Funds raised in 2015:
                       After deliberation and approval of the board of directors on August 6th, 2016, the date of asset ready for
                       intended use of " Technical transformation project of heat exchanger with an annual output of additional
                       800,000 units " was extended from June 2016 to June 2017, and other contents of the project remained
                       unchanged. This project has been completed.


                       After deliberation and approval of the board of directors on November 30th, 2017, the Company made
The situation and
                       some changes to the purpose of the raised funds for the " Construction of Microchannel Heat Exchanger
reasons of not
                       production line in Mexico", and transferred the remaining raised funds into " Automatic technical
reaching the planned
                       transformation project of heat exchanger with an annual output of additional 700,000 units". The new
schedule or expected
                       project plans to use RMB 114.7176 million of raised funds (including RMB 4.7676 million of bank
income (by specific
                       deposit interest and financing income of raised funds), accounting for 29.12% of the net amount of funds
project)
                       raised in 2015. Reasons for the change: In order to accelerate the development of Microchannel business,
                       improve the level of technical equipment, realize the adjustment and upgrading of product structure, and
                       give full play to the resource advantages of Sanhua Microchannel Hangzhou factory in R&D,
                       technology, equipment, and improve the utilization efficiency of raised funds. The Company postponed
                       the investment in the third production line and other related supporting facilities of Mexico project. The
                       investment of the third production line and other supporting facilities in Mexico project shall be arranged
                       by the Company with own funding.



                                                                                                                                     24
                                                           Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                        Funds raised in 2017:
                        (1) After deliberation and approval by the board of directors of the Company on April 1st, 2019, the date
                        of asset ready for intended use of " Technical transformation project of Automotive thermal management
                        system module with an annual output of additional 7.3 million units " and " Technical transformation
                        project of Automotive A/C control components with an annual output of additional 12.70 million units "
                        was extended from January 2019 to January 2021, the other contents of the project will remain
                        unchanged. Reasons for the change: Combined with the existing product structure and market trend, the
                        Company adopts the strategy of prudent use and reasonable investment for the raised funds. As the new
                        equipment tends to be more intelligent and systematic, the Company selects the equipment according to
                        the latest technical requirements and product models, so that the investment progress of new equipment
                        of the project is later than expected. On March 31st, 2020, " Technical transformation project of
                        Automotive A/C control components with an annual output of additional 12.70 million units " has been
                        completed.


                        (2) After deliberation and approval by the board of directors on April 27th, 2020, the date of asset ready
                        for intended use of " New energy auto parts construction project with annual output of 11.5 million sets"
                        was extended from December 2019 to December 2021, and other contents of the project remained
                        unchanged. Reasons for the change: Combined with the existing product structure and market trend, the
                        Company adopts the strategy of prudent use and reasonable investment for the raised funds. In
                        combination with customer feedback and production scheduling plan, the Company will gradually
                        release the production capacity according to the actual customer demand. In order to ensure that the
                        investment progress can meet the actual production demand, the Company will adjust the equipment
                        procurement timing of the raised fund investment project according to the customer's actual
                        requirements, thus extend the investment period of the raised fund investment project.

                        Funds raised in 2015:
                        1. Basic information about the change of projects invested by raising funds
                        After deliberation and approval of the board of directors on November 30th, 2017, the Company made
                        some changes to the purpose of the raised funds for the " Construction of Microchannel Heat Exchanger
                        production line in Mexico", and transferred the remaining raised funds into " Automatic technical
                        transformation project of heat exchanger with an annual output of additional 700,000 units". The new
                        project plans to use RMB 114.7176 million of raised funds (including RMB 4.7676 million of bank
Significant changes     deposit interest and financing income of raised funds), accounting for 29.12% of the net amount of funds
in the feasibility of   raised in 2015.
projects

                        2. Reasons for the change of the project invested by raising funds
                        In order to accelerate the development of Microchannel business, improve the level of technical
                        equipment, realize the adjustment and upgrading of product structure, and give full play to the resource
                        advantages of Sanhua Microchannel Hangzhou factory in R&D, technology, equipment, and improve the
                        utilization efficiency of raised funds. The Company postponed the investment in the third production line
                        and other related supporting facilities of Mexico project. The investment of the third production line and
                        other supporting facilities in Mexico project shall be arranged by the Company with own funding.



                                                                                                                                     25
                                                         Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                       3. Decision making procedures for the change of projects invested by raising funds
                       The change of raised investment project was approved by the board of directors of the Company on
                       November 30th, 2017.


                       4. Information disclosure of changes in projects invested by raised funds
                       On December 2nd, 2017, the Company disclosed the Announcement on Changing the Usage of Part
                       Raised Funds (Announcement No.: 2017-078).

Amount, usage and      Not applicable
use progress of
over-raised Funds

Change in              Not applicable
implementation
location of
investment projects
of Raised Funds

Adjustment to          Not applicable
implementation
method of
investment projects
of Raised Funds

                       Applicable
Advance investment
                       Raised funds in 2015: In 2016, the Company replaced the initial investment amount with raised funds of
and replacement of
                       RMB 72.6453 million.
projects invested
                       Funds raised in 2017: In 2017, the Company replaced the initial investment amount by raised funds of
with raised funds
                       RMB 140.5585 million.

Temporary              Not applicable
supplement of
working capital with
idle raised funds

                       Applicable

                       After deliberation and approval of the board of directors on November 30th, 2017, the Company made
                       some changes to the purpose of the raised funds for the " Construction of Microchannel Heat Exchanger
The amount and         production line in Mexico", and transferred the remaining raised funds into " Automatic technical
reasons of the         transformation project of heat exchanger with an annual output of additional 700,000 units". The new
balance of raised      project plans to use RMB 114.7176 million of raised funds (including RMB 4.7676 million of bank
funds in the project   deposit interest and financing income of raised funds), accounting for 29.12% of the net amount of funds
implementation         raised in 2015.


                       In order to accelerate the development of Microchannel business, improve the level of technical
                       equipment, realize the adjustment and upgrading of product structure, and give full play to the resource


                                                                                                                                  26
                                                          Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                       advantages of Sanhua Microchannel Hangzhou factory in R&D, technology, equipment, and improve the
                       utilization efficiency of raised funds. The Company postponed the investment in the third production line
                       and other related supporting facilities of Mexico project. The investment of the third production line and
                       other supporting facilities in Mexico project shall be arranged by the Company with own funding.


                       In April 2020, with the approval of the board of directors of the Company, the " Expansion of product
                       testing room and auxiliary production room project " and " Technical transformation project of
                       Automotive A/C control components with an annual output of additional 12.70 million units "
                       implemented by Sanhua Automotive and the " Automatic technical transformation project of heat
                       exchanger with an annual output of additional 700,000 units " implemented by Microchannel were
                       completed.


                       Among them, " Expansion of product testing room and auxiliary production room project " and "
                       Automatic technical transformation project of heat exchanger with an annual output of additional
                       700,000 units " were completed on December 31st, 2019, and the " Technical transformation project of
                       Automotive A/C control components with an annual output of additional 12.70 million units " was
                       complete on March 31st, 2020.


                       On March 31st, 2020, the final payment of " Expansion of product testing room and auxiliary production
                       room project " is about RMB 17.1548 million, which is to be paid by the raised funds according to the
                       contract. The ending balance of the project is about RMB 32.74 million. The usage will be determined
                       after performing the relevant approval procedures.


                       On March 31st, 2020, the final payment of " Technical transformation project of Automotive A/C control
                       components with an annual output of additional 12.70 million units " is about RMB 20.1527 million,
                       which is to be paid with raised funds according to the contract, and the ending balance of the project is
                       about RMB 19.9369 million (including the net amount of accumulated bank deposit interest and
                       financial income deducting bank charges). The usage shall be determined after relevant approval
                       procedures.


                       On March 31, 2020, the ending balance of " Automatic technical transformation project of heat
                       exchanger with an annual output of additional 700,000 units " was RMB 55.8663 million (including the
                       net amount of accumulated bank deposit interest and financial income net of bank charges, and the
                       unpaid balance of equipment of RMB 21.5949 million. The actual amount shall be subject to the balance
                       of the special account on the day when the fund is transferred out.). According to the resolution of the
                       board of directors on April 27, 2020, the ending balance of the project is proposed to replenish working
                       capital, and the remaining equipment balance to be paid shall be paid with its own funds. As of June 30th,
                       2020, the actual balance of RMB 55.6494 million has been used to replenish the working capital
                       permanently.

Use of unused raised
                       It is deposited in the special account of raised funds and used to purchase bank financial products.
funds

Problems or other      No



                                                                                                                                    27
                                                              Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


 situations in the use
 and disclosure of
 raised funds


(3)Statement of Altered Investment Projects of Raised Funds

√Applicable □Not applicable


                                                                                                               Unit: RMB in 10 thousand

                                Total
                               Raised
                                                                                                                            Whether
                              Funds to                                Investme
                                            Actual        Actual                    Date of      Benefits       Whether     feasibility
                                 be                                      nt
     Project        Project                investmen    accumulat                    asset      achieved        expected    of project
                              invested                                progress
      after         before                  t in the       ive                     ready for      in the        benefits         has
                               to the                                   (%)
 alteration     alteration                  current     investmen                  intended      current       have been    changed
                               project                               (c)=(b)/(a
                                              year         t (b)                      use          year         achieved    significan
                                after                                     )
                                                                                                                                 tly
                              alteration
                                 (a)

 Automati
 c
 technical
                Construct
 transform
                ion of
 ation
                Microcha
 project of
                nnel Heat
 heat                                                                             December                     Not
                Exchange      11,471.76        536.6     6,721.04       58.59%                                              No
 exchanger                                                                        31st, 2019                   applicable
                r
 with an
                productio
 annual
                n line in
 output of
                Mexico
 additional
 700,000
 units

 Total                --      11,471.76        536.6     6,721.04        --            --                  0         --          --

                                           1. Basic information about the change of projects invested by raising funds
                                           After deliberation and approval of the board of directors on November 30th, 2017, the
                                           Company made some changes to the purpose of the raised funds for the " Construction of
 Alteration reason, decision making
                                           Microchannel Heat Exchanger production line in Mexico", and transferred the remaining
 progress and information disclosure
                                           raised funds into " Automatic technical transformation project of heat exchanger with an
 (of a specific project)
                                           annual output of additional 700,000 units". The new project plans to use RMB 114.7176
                                           million of raised funds (including RMB 4.7676 million of bank deposit interest and
                                           financing income of raised funds), accounting for 29.12% of the net amount of funds



                                                                                                                                          28
                                                               Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                            raised in 2015.


                                            2. Reasons for the change of the project invested by raising funds
                                            In order to accelerate the development of Microchannel business, improve the level of
                                            technical equipment, realize the adjustment and upgrading of product structure, and give
                                            full play to the resource advantages of Sanhua Microchannel Hangzhou factory in R&D,
                                            technology, equipment, and improve the utilization efficiency of raised funds. The
                                            Company postponed the investment in the third production line and other related
                                            supporting facilities of Mexico project. The investment of the third production line and
                                            other supporting facilities in Mexico project shall be arranged by the Company with own
                                            funding.


                                            3. Decision making procedures for the change of projects invested by raising funds
                                            The change of raised investment project was approved by the board of directors of the
                                            Company on November 30th, 2017.


                                            4. Information disclosure of changes in projects invested by raised funds
                                            On December 2nd, 2017, the Company disclosed the Announcement on Changing the
                                            Usage of Part Raised Funds (Announcement No.: 2017-078).

 The situation and reasons of not
 reaching the planned schedule or
                                            Not applicable
 expected income (by specific
 project)

 Description of significant changes in
                                            Not applicable
 the feasibility of the changed project


6. Non-fundraising investment in significant projects during the reporting period

√Applicable □Not applicable
                                                                                                                 Unit: RMB in 10 thousand

                                                       Accumulated
                                     Investment           actual
                                                                                          Benefits
                                      amount in        investment                                                          Disclosure
                   Total planned                                        Investment      achieved in       Disclosure
    Project                                the         amount as of                                                         index (if
                    investment                                           progress        the current     date (if any)
                                      reporting         the end of                                                            any)
                                                                                             year
                                          period        the report
                                                          period

                                                                                       Not
 Vietnam                                                                               applicable
                   38 million U
 Industrial                               2,115.78        11,026.38         40.99%     (only
                              SD
 Plant Project                                                                         production
                                                                                       function,


                                                                                                                                        29
                                                     Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                           material
                                                                           supply and
                                                                           product sales
                                                                           are
                                                                           undertaken
                                                                           by related
                                                                           parties, and
                                                                           project
                                                                           benefits
                                                                           cannot be
                                                                           calculated
                                                                           separately)

                                                                           Not
 Construction                                                              applicable
 project of                                                                (the sales of
 commercial                                                                the products
 refrigeration                                                             are
 and air                                                                   undertaken
 conditioning                                                              by the
                      178,055        655.5       5,860.96         3.29%
 intelligent                                                               related
 control                                                                   parties, and
 components                                                                the benefits
 with annual                                                               of the project
 output of 65                                                              cannot be
 million sets                                                              calculated
                                                                           separately)

 Total                -           2,771.28      16,887.34        --              --              --              --


VI.        Disposal of Significant Assets and Equity

1. Disposal of significant assets

□ Applicable √ Not applicable
During the reporting period, there was no disposal of significant assets

2. Sale of significant equity

□ Applicable √ Not applicable

VII. 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


                                                                                                                        30
                                                        Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                                                                 Unit:RMB

 Company       Company         Principal   Registered       Total                    Operating     Operating
                                                                       Net assets                                Net profit
    name          type         business      capital       assets                     revenue        profit

                           Refrigerati
Zhejiang
                           on and A/C
Sanhua
                           electrical
Climate &
                           component       250            3,232,488,   3,058,812,    508,458,01   95,872,764    81,926,735
Appliance     Subsidiary
                           s               million           916.03        324.23          4.81           .44           .08
Controls
                           manufactur
Group Co.,
                           ing and
Ltd.
                           marketing

                           Refrigerati
Hangzhou                   on and A/C
Sanhua                     electrical
Microchan                  component       360            1,555,917,   1,080,336,    606,537,10   93,943,423    78,791,505
              Subsidiary
nel Heat                   s               million           273.38        030.91          5.77           .10           .08
Exchanger                  manufactur
Co., Ltd.                  ing and
                           marketing

                           Refrigerati
Zhejiang                   on and A/C
Sanhua                     electrical                     2,991,565,   89,744,313    1,629,816,    -20,435,66    -17,443,43
              Subsidiary                   50 million
Trading                    component                         951.62           .32        923.74          3.09          8.09
Co., Ltd.                  s
                           marketing

                           Automotiv
Zhejiang
                           e
Sanhua
                           component
Automotiv                                  1,460          3,522,572,   2,789,986,    950,236,19   196,052,90    170,228,21
              Subsidiary   s
e                                          million           484.15        415.80          5.13          2.07          7.65
                           manufactur
Componen
                           ing and
ts Co., Ltd
                           marketing

                           Refrigerati
                           on and A/C
                           electrical
Sanhua
                           component
Internation                                37.55
                           s                              1,198,408,   202,888,64    1,104,653,    -20,221,40    -20,604,13
al Limited    Subsidiary                   million
                           manufactur                        135.25          0.33        615.62          9.40          8.42
(USA)                                      USD
                           ing
(merger)
                           marketing
                           and
                           investment



                                                                                                                              31
                                                             Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                               manageme
                               nt

                               Refrigerati
                               on and A/C
                               electrical
 Sanhua                        component
 Internation                   s
                                              75.58
 al                            manufactur                      2,234,799,    574,784,67     1,527,163,    43,520,582     32,301,884
                Subsidiary                    million
 Singapore                     ing                                 870.35           7.46        374.13             .16          .25
                                              USD
 PTE. Ltd.                     marketing
 (merger)                      and
                               investment
                               manageme
                               nt

Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
                                             Equity acquisition and disposal method          Impact on overall production results
               Company name
                                                      during the reporting period                         Hangzhou

 AWECO Electric Equipment (Shanghai)
                                             Liquidation cancellation                      No significant impact
 Co., Ltd.

 Hangzhou Sanhua Household Thermal
                                             Liquidation cancellation                      No significant impact
 Management System Co., Ltd.


VIII.     Structural Entities Controlled by the Company

□ Applicable √ Not applicable

IX. Guidance on the Company’s Operational Result from January 1st 2020 to September 30th
          2020

□ Applicable √ Not applicable

X.    Risks of the Company and Countermeasures

1. Risk of raw material price fluctuation
The raw materials required by the Company are copper, aluminum, etc., which account for a large proportion in
the product cost composition. Therefore, the fluctuation of the market price of raw materials will bring greater
cost pressure to the Company. The Company will reduce the adverse impact of raw material price fluctuation by
establishing linkage pricing mechanism and bulk commodity future hedging operations.


2. Risk of rising labor costs
The Company's labor cost has been increasing annually, which has compressed the Company's profit space to a


                                                                                                                                    32
                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


certain extent. In the future, the Company will continue to promote lean production, process improvement,
technical transformation, etc. to improve the degree of automation and labor production efficiency.


3. Risk of trade and exchange rate
The Company's foreign trade export volume is large, involving North America, Europe, Japan, Southeast Asia and
other regions. The changes of the interregional trade policy have an impact to the Company's operation on a daily
basis. The Company can cope with the risk of interregional trade by means of overseas transfer of production
capacity. The fluctuation of exchange rate will have a certain impact on the Company's profits. According to the
actual situation, the Company can cope with and reduce the risk of exchange rate fluctuation by means of
long-term settlement of foreign exchange and the establishment of overseas production bases in the United States,
Poland, Mexico, India, etc.


4. Risk of the impact of infectious diseases
The COVID-19 has spread worldwide since the beginning of 2020. The Company's refrigeration, A/C and
electrical components, and auto parts business also suffer from the disease, since it affected production, supply
and sales. The Company estimates that the uncertainty of the pandemic pneumonia will continue to affect the
Company's revenues and profits. On the premise of meeting the requirements of epidemic prevention and control,
the Company timely adjusted relevant business strategies and actively organized the resumption of work and
production.




                                                                                                                      33
                                                          Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                                        Section V Significant Events

I.     Annual General Meeting and Extraordinary General Meetings Convened During the
         Reporting Period

1. Annual General Meeting convened during the current reporting period

                                            Proportion of
       Meeting              Nature          participating         Convened Date        Disclosure Date      Disclosure Index
                                              investors
                                                                                                          The announcement
                                                                                                          of the resolution of
                                                                                                          the first
                                                                                                          extraordinary
First Extraordinary                                                                                       general meeting of
                      Extraordinary
General Meeting in                                   11.86% February 10th 2020       February 11st 2020   shareholders in 2020
                      General Meeting
2020                                                                                                      No. 2020-014 was
                                                                                                          published in
                                                                                                          Securities Times,
                                                                                                          Shanghai Securities
                                                                                                          News and CNINFO
                                                                                                          The announcement
                                                                                                          on the resolution of
                                                                                                          the annual general
                                                                                                          meeting of
2019 Annual           Annual General
                                                                                                          shareholders in 2019
General Meeting of    Meeting of                     15.23% May 19th 2020            May 20th 2020
                                                                                                          (2020-045) was
Shareholders          Shareholders
                                                                                                          published in
                                                                                                          Securities Times,
                                                                                                          Shanghai Securities
                                                                                                          News and CNINFO.

                                                                                                          The announcement
                                                                                                          on the resolution of
                                                                                                          the second
Second                                                                                                    extraordinary
Extraordinary         Extraordinary                                                                       general meeting of
                                                     15.21% June 22nd 2020           June 23rd 2020
General Meeting in    General Meeting                                                                     shareholders in 2020
2020                                                                                                      (2020-055) was
                                                                                                          published in
                                                                                                          Securities Times,
                                                                                                          Shanghai Securities



                                                                                                                                 34
                                                                 Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                                                                    News and CNINFO.


2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
   rights

□ Applicable √ Not applicable

II. Profit distribution and conversion of capital reserve to share capital during the reporting
      period

√ Applicable □Not applicable
Bonus share issued per 10 shares (share)                                                                                                 0

Cash dividend per 10 shares (RMB) (tax
                                                                                                                                         1
inclusive)

Additional shares converted from capital reserves
                                                                                                                                         0
for 10 shares (share)

Total capital share basis for the distribution
                                                                                                                             3,582,258,682
proposal (share)

Total cash dividend (RMB) (tax inclusive)                                                                                   358,225,868.20

Cash dividend amount in other ways (such as
                                                                                                                                       0.00
share repurchase) (RMB)

Total cash dividends (including other ways)
                                                                                                                            358,225,868.20
(RMB)

Distributable profits (RMB)                                                                                             1,082,646,144.47

Percentage of cash dividends of the total
                                                                                                                                   33.09%
distributed profit (%)

                                                               Cash dividends

Other

                                Detailed description of profit distribution or capital reserves conversion plan

With 3,582,258,682 as the base number, cash dividend of RMB 1.00 (including tax) will be distributed to all shareholders for every
10 shares. A total of RMB 358,225,868.20 will be distributed.


III. Complete and Incomplete Commitments of the Company and Its Actual Controller,
       Shareholders, Related parties, Acquirers, and Other Related Parties by the End of the
       Reporting Period

√ Applicable □ Not applicable
                     Giver of                                                                     Date of         Term of
Commitments                        Nature               Details of commitments                                                Performance
                   commitments                                                                 commitments commitments

Commitment      Zhang Yabo,        Other When the number of shares sold through listing November 21st Long term               Strict


                                                                                                                                         35
                                                            Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


from           controlling   commi and trading in Shenzhen Stock Exchange                  2005                        performance
reformation of shareholder   tment reaches 1% of the total number of shares of the
shareholding   Sanhua                  Company, it shall make an announcement
               Holding                 within two working days from the date of the
               Group Co.,              occurrence of the fact.
               Ltd.

                             Comm
                             itment
                             on
                             horizo
               Zhang Daocai, ntal
               controlling   compe Zhang Daocai and Sanhua holding group, the
               shareholder   tition, controlling shareholder of the Company,
                                                                                           January 5th,                Strict
               Sanhua        related promise that there will not be any competition                       Long term
                                                                                           2009                        performance
               Holding       party     with Sanhua intelligent controls in the business
               Group Co.,    transac scope being or already carried out in the future.
               Ltd.          tions
                             and
                             capital
                             occupa
                             tion

                                       Sanhua Holding Group promises: after the
                             Comm
                                       completion of this transaction, Sanhua Holding
                             itment
                                       Group and Sanhua intelligent controls will sign
                             on
                                       an agreement according to law, perform legal
                             horizo
                                       procedures, fulfill the obligation of information
               Zhang Daocai, ntal
                                       disclosure and handle significant matters for
               controlling   compe
                                       approval in accordance with relevant laws,
               shareholder   tition,
                                       regulations, articles of association of Sanhua January 5th,                     Strict
               Sanhua        related                                                                      Long term
                                       intelligent   controls.   In   the   process    of 2009                         performance
               Holding       party
                                       implementation of related party transactions, we
               Group Co.,    transac
                                       will follow the principle of legality and
               Ltd.          tions
                                       reasonableness, ensure the fairness of prices and
                             and
                                       procedures, and make certain that the legitimate
                             capital
                                       interests of Sanhua intelligent controls and
                             occupa
                                       other shareholders will not be damaged through
                             tion
                                       related party transactions.

               Zhang Daocai, Comm
                                       In order to avoid horizontal competition with
               Zhang Yabo,   itment
                                       Sanhua intelligent controls, Zhang Daocai,
               Zhang         on
                                       Zhang Yabo, Zhang Shaobo, Sanhua Holding                                        Strict
               Shaobo,       horizo                                                        July 24th, 2015 Long term
                                       Group the controlling shareholder of the                                        performance
               controlling   ntal
                                       Company, and Sanhua Lvneng Industry, the
               shareholder   compe
                                       trading partner made the following
               Sanhua        tition,

                                                                                                                                 36
                                             Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Holding         related commitments:
Group Co.,      party   1. I (or the Company) will not directly or
Ltd., Zhejiang transac indirectly engage in or participate in the
Sanhua          tions   business that constitutes potential direct or
Lvneng          and     indirect competition with Sanhua Intelligent
Industrial      capital Controls and its subordinate enterprises;
Group Co.,      occupa guarantee that legal and effective measures shall
Ltd.            tion    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 further
                        expands its business scope, I (or the Company)
                        and other controlled enterprises will not
                        compete with Sanhua Intelligent Controls'
                        expanded business; if it is possible to compete
                        with Sanhua Intelligent Controls' business after
                        expansion, I (or the Company) and other
                        controlled enterprises will withdraw from
                        Sanhua Intelligent Controls in the following
                        ways of competition: A. Stop the businesses
                        that compete or may compete with Sanhua
                        Intelligent Controls; B. Inject the competitive
                        business into Sanhua Intelligent Controls; C.
                        Transfer the competitive business to an
                        unrelated third party.
                        3. If I (or the Company) and other enterprises
                        controlled by me (or the Company) have any
                        business opportunities to engage in and
                        participate in any activities that may compete
                        with Sanhua Intelligent Controls' business
                        operation, they shall immediately inform
                        Sanhua Intelligent Controls of the above
                        business opportunities. If Sanhua Intelligent
                        Controls makes an affirmative reply to take
                        advantage of the business opportunity within a
                        reasonable period specified in the notice, it shall
                        do its best to give the business opportunity to
                        Sanhua Intelligent Controls.
                        4. In case of breach of the above commitment, I
                        (or the Company) is willing to bear all
                        responsibilities arising therefrom and fully
                        compensate all direct or indirect losses caused


                                                                                                                37
                                              Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                        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
Zhang Daocai, Comm as shareholders of Sanhua intelligent controls to
Zhang Yabo,     itment seek for superior rights in terms of business
Zhang           on      cooperation and other aspects compared with
Shaobo,         horizo other third parties;
controlling     ntal    2. I (or the Company) will not take advantage of
shareholder     compe the right to enter into a transaction with Sanhua
Sanhua          tition, intellectual controls using the position as a
                                                                                                         Strict
Holding         related shareholder.                                         July 24th, 2015 Long term
                                                                                                         performance
Group Co.,      party   3. If there are necessary and unavoidable related
Ltd., Zhejiang transac party transactions, I (or the Company) and the
Sanhua         tions controlled enterprises will sign agreements with
Lvneng          and     Sanhua intelligent controls in accordance with
Industrial      capital the principles of fairness, follow legal
Group Co.,      occupa procedures, and perform the information
Ltd.            tion    disclosure obligations in accordance with the
                        requirements of relevant laws, regulatory
                        documents and the articles of association. It
                        shall also perform relevant internal
                        decision-making and approval procedures to
                        ensure that it will not conduct transactions with
                        Sanhua intelligent controls on terms that are
                        obviously unfair compared with the market
                        price, and will not use such transactions to
                        engage in any behavior that damages the
                        legitimate rights and interests of Sanhua
                        intelligent controls and other shareholders.

Zhang Daocai,           Zhang Daocai, Zhang Yabo, Zhang Shaobo and
Zhang Yabo,     Other Sanhua holding Group, the controlling
                                                                                                         Strict
Zhang           Comm shareholder of the Company, made the                    July 24th, 2015 Long term
                                                                                                         performance
Shaobo,         itment following commitments: after the completion of
controlling             the transaction, Sanhua intelligent controls will



                                                                                                                   38
                                                 Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


shareholder               continue to improve the corporate governance
Sanhua                    structure and independent operation of the
Holding                   Company management system in accordance
Group Co.,                with the requirements of relevant laws and
Ltd.                      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.

                          The shares acquired in this transaction shall not
                          be transferred within 36 months from the listing
                          date of new shares after the completion of the
                          issuance; within 6 months after the completion
Zhejiang       Comm
                          of the transaction, if the closing price of the
Sanhua         itment
                          shares of the listed Company is lower than the
Lvneng         of                                                             September    September     Strict
                          issue price of the shares to purchase assets for
Industrial     restrict                                                       20 , 2017
                                                                                th
                                                                                           19 , 2020
                                                                                             th
                                                                                                         performance
                          20 consecutive trading days, or if the closing
Group Co.,     ed
                          price at the end of 6th month is lower than the
Ltd.           shares
                          issue price of the shares to purchase assets, the
                          locking period of the shares acquired by the
                          Company due to this transaction will be
                          automatically extended for at least 6 months.

                          1. I (or the Company) and the controlled
                          enterprises will reduce the related party
                          transactions with Sanhua intelligent controls as
Zhang Daocai, Comm far as possible, and will not use the position as a
Zhang Yabo,    itment shareholder of Sanhua intellectual controls to
Zhang          on         seek the superior rights for business cooperation
Shaobo,        horizo with Sanhua intelligent controls compared with
controlling    ntal       other third parties;
shareholder    compe 2. I (or the Company) will not use my position
Sanhua         tition, as a shareholder of Sanhua intellectual controls
                                                                              September                  Strict
Holding        related to seek for the priority right to cooperate with                    Long term
                                                                              18 , 2017
                                                                                th
                                                                                                         performance
Group Co.,     party      Sanhua intellectual controls;
Ltd., Zhejiang transac 3. If there are necessary and unavoidable related
Sanhua         tions party transactions, I (or the Company) and the
Lvneng         and     controlled enterprises will sign agreements with
Industrial     capital Sanhua intelligent controls in accordance with
Group Co.,     occupa the principles of fairness, follow legal
Ltd.           tion       procedures, and perform the information
                          disclosure obligations in accordance with the
                          requirements of relevant laws, regulatory
                          documents and the articles of association. It



                                                                                                                    39
                                           Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                      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 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
Zhang Daocai, Comm and its subordinate enterprises Business.
Zhang Yabo,   itment 2. If Sanhua intelligent controls further expands
Zhang         on      its business scope, I (or the Company) and other
Shaobo,       horizo enterprises controlled by me (or the Company)
controlling   ntal    will not compete with Sanhua intelligent
shareholder   compe controls' expanded business; if it is possible to
Sanhua        tition, compete with Sanhua intelligent controls'
                                                                          September                Strict
Holding       related business after expansion, I (or the Company)                    Long term
                                                                          18 , 2017
                                                                            th
                                                                                                   performance
Group Co.,    party   and other enterprises controlled by me (or the
Ltd., Zhejiang transac Company) will withdraw from Sanhua
Sanhua        tions   intelligent controls in the following ways of
Lvneng        and     competition: A. stop the businesses that
Industrial    capital compete or may compete with Sanhua
Group Co.,    occupa intelligent controls; B. inject the competitive
Ltd.          tion    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


                                                                                                              40
                                                                Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                          controls makes an affirmative reply to take
                                          advantage of the business opportunity within a
                                          reasonable period specified in the notice, it shall
                                          do its best to give the business opportunity to
                                          Sanhua intelligent controls.
                                          4. In case of breach of the above commitment, I
                                          (or the Company) is willing to bear all
                                          responsibilities arising therefrom and fully
                                          compensate all direct or indirect losses caused
                                          to Sanhua intelligent controls.

               Zhang Daocai,
               Zhang Yabo,
               Zhang                      After the completion of the transaction, the
               Shaobo,                    listed Company will continue to improve the
               controlling                corporate governance structure and independent
               shareholder                operation of the Company management system
               Sanhua           Other in accordance with the requirements of relevant
                                                                                                September                   Strict
               Holding          commi laws and regulations and the articles of                                  Long term
                                                                                                18th, 2017                  performance
               Group Co.,       tment association, continue to maintain the
               Ltd., Zhejiang             independence of the listed Company in
               Sanhua                     business, assets, finance, institutions, personnel
               Lvneng                     and other aspects, and effectively protect the
               Industrial                 interests of all shareholders.
               Group Co.,
               Ltd.

                                Comm
                                itment
                                on        The commitment made at the time of IPO, it
                                horizo shall not engage in the same production,
               Zhang Daocai, ntal         operation or business as the Company in the
               controlling      compe future. In order to avoid business competition
               shareholder      tition, with the Company and clarify the
                                                                                                                            Strict
               Sanhua           related non-competition obligations, Sanhua Holding             June 7th 2005   Long term
                                                                                                                            performance
               Holding          party     Group, on behalf of itself and its subsidiaries
               Group Co.,       transac with more than 50% equity, makes a
               Ltd.             tions     commitment to Sanhua intelligent controls to
                                and       avoid possible horizontal competition.
                                capital
                                occupa
                                tion

Are the
commitments Yes
fulfilled on


                                                                                                                                      41
                                                  Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


time


IV. Engagement and Dismissal of the CPA firm

Whether the half year report was audited
□Yes √No
The Company’s report was not audited.

V. Explanation Given by the Board of Directors and Supervisory Committee Regarding the
     “Non-standard Auditor’s Report” Issued by the CPA Firm for the Reporting Period

□ Applicable √ Not applicable

VI. Explanation Given by the Board of Directors Regarding the “Non-standard Auditor’s
      Report” Issued by the CPA Firm for the Prior Year

□ Applicable √ Not applicable

VII.    Bankruptcy and Restructuring

□ Applicable √ Not applicable
No such case during the reporting period.

VIII. Material Litigation and Arbitration

Material Litigation and Arbitration
□ Applicable √ Not applicable
No such case during the reporting period.


Other litigations
□ Applicable √ Not applicable

IX. Media Queries

□ Applicable √ Not applicable
There was no prevalent media query during the reporting period.

X. Punishments and Rectifications

□ Applicable √ Not applicable
No such case during the reporting period.




                                                                                                                     42
                                                     Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


XI. Integrity of the Company and Its Controlling Shareholders and Actual Controllers

□ Applicable √ Not applicable

XII.      The Implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or
          Other Incentive Plans

√Applicable □Not applicable
1. During the reporting period, the Company has completed the repurchase and cancellation of 291,200 shares of
   all or part of the restricted shares held by 33 incentive objects (28 resigned and 5 failed to meet the personal
   performance assessment requirements during the first release period) involved in the incentive plan for
   restricted shares in 2018.
                Important issues                     Disclosure Date                        Disclosure Index

Announcement on the completion of
repurchase and cancellation of some restricted       March 3rd 2020                     http://www.cninfo.com.cn
stocks


2. During the reporting period, the Company launched the incentive plan for restricted stock in 2020, granting
   12.045 million shares of restricted stock to 914 incentive objects. The grant date of the equity incentive plan
   is February 24, 2020, and the grant price is RMB 9.85 per share. The listing date of the restricted shares
   granted this time is March 20, 2020.
                Important issues                     Disclosure Date                        Disclosure Index

Announcement on the resolution of the 7th
                                                    January 22nd 2020                   http://www.cninfo.com.cn
interim meeting of the 6th board of directors

Announcement on the resolution of the 7th
                                                    January 22nd 2020                   http://www.cninfo.com.cn
interim meeting of the 6th board of supervisors

Restricted stock incentive plan 2020 (Draft)        January 22nd 2020                   http://www.cninfo.com.cn

Management measures for the implementation
                                                    January 22nd 2020                   http://www.cninfo.com.cn
of restricted stock incentive plan in 2020

List of incentive objects of restricted stock in
                                                    January 22nd 2020                   http://www.cninfo.com.cn
2020

Examination and verification opinions of the
board of supervisors on the publicity of the list
                                                    February 4th 2020                   http://www.cninfo.com.cn
of incentive objects of the equity incentive plan
in 2020

Announcement of the resolution of the first
extraordinary general meeting of shareholders       February 11st 2020                  http://www.cninfo.com.cn
in 2020

Announcement on the resolution of the 8th
                                                    February 25th 2020                  http://www.cninfo.com.cn
interim meeting of the 6th board of directors



                                                                                                                        43
                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Announcement on the resolution of the 8th
                                                  February 25th 2020                  http://www.cninfo.com.cn
interim meeting of the 6th board of supervisors

Announcement on adjustment of incentive plan
                                                  February 25th 2020                  http://www.cninfo.com.cn
for restricted stock in 2020

Announcement on granting restricted shares to
incentive objects of restricted stock incentive   February 25th 2020                  http://www.cninfo.com.cn
plan in 2020

Announcement on completion of grant
registration of restricted stock incentive plan    March 23rd 2020                    http://www.cninfo.com.cn
in 2020


XIII. Significant Related-party Transaction

1. Significant related-party transactions arising from routine operation

□Applicable √Not applicable
No such case in the reporting period.

2. Related-party transactions regarding purchase and disposal of assets or equity

□Applicable √Not applicable
No such case in the reporting period.

3. Significant related-party transactions arising from joint investments on external parties

□Applicable √Not applicable
No such case in the reporting period.

4. Related credit and debt transactions

□ Applicable √Not applicable
No such case in the reporting period.

5. Other significant related party transactions

□Applicable √Not applicable
No such case in the reporting period.

XIV. Non-operating Capital Occupation of Listed Companies by Controlling Shareholders
     and Their Related Parties

□ Applicable √ Not applicable
No such case in the reporting period.

                                                                                                                      44
                                                            Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


XV.Significant Contracts and Their Execution

1. Matters on trusteeship, contracting, and leasing

(1)Trusteeship

□ Applicable √ Not applicable
No such case in the reporting period.

(2)Contracting

□ Applicable √ Not applicable
No such case in the reporting period.

(3)Leasing

√Applicable □ Not applicable
Illustration of lease
Aweco Polskas Appliance sp.z.o.o sp.k, a wholly-owned subsidiary of the Company, acquired 2 buildings through
leasing.


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


(1) Guarantees
                                                                                                       Unit: RMB in 10 thousand

              External Guarantees from the Company and its Subsidiaries (Excluding Guarantees to the Subsidiaries)
                        Announce
                          ment                                                                                          Guarant
                         Date of                   Actual           Actual                                               ee for
                                    Guarante                                       Type of       Term of      Due or
  Guaranteed Party      Disclosur                Occurrence       Guarantee                                             Related
                                    e Amount                                      Guarantee     Guarantee      Not
                         e of the                   Date           Amount                                               Parties
                        Guarantee                                                                                       or Not
                        Amount
                                               Company's Guarantees to Subsidiaries

                        Announc     Guarante       Actual           Actual         Type of       Term of      Due or    Guarant
  Guaranteed Party
                         ement      e Amount     Occurrence       Guarantee       Guarantee     Guarantee      Not       ee for


                                                                                                                                  45
                                                 Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                Date of                  Date           Amount                                               Related
               Disclosur                                                                                     Parties
                e of the                                                                                     or Not
               Guarante
               e Amount

Sanhua AWECO                                                          Joint         2018.11.05
               April 16,             November 5,
Appliance                   35,000                        18,310.3    liability     -2021.11.0    Yes        Yes
               2018                  2018
Systems GmbH                                                          guarantee     4

Sanhua AWECO                                                          Joint         2020.04.0
               April 3,
Appliance                   41,000   April 8, 2020        12,737.6    liability     8-2021.11.    No         Yes
               2019
Systems GmbH                                                          guarantee     04

Sanhua AWECO                                                          Joint         2020.06.0
               April 29,
Appliance                   52,000   June 5, 2020           8,757.1   liability     5-2021.11.    No         Yes
               2020
Systems GmbH                                                          guarantee     04

SANHUA
INTERNATION                                                           Joint         2018.09.1
               April 16,             September
AL                         132,000                       13,135.65    liability     7-2022.09.    Yes        Yes
               2019                  17, 2018
SINGAPORE                                                             guarantee     16
PTE. LTD.

SANHUA
INTERNATION                                                           Joint         2019.07.2
               April 3,
AL                         132,000   July 29, 2019        9,203.35    liability     9-2020.01.    Yes        Yes
               2019
SINGAPORE                                                             guarantee     30
PTE. LTD.

SANHUA
INTERNATION                                                           Joint         2019.09.2
               April 3,              September
AL                         132,000                          7,079.5   liability     3-2020.09.    No         Yes
               2019                  23, 2019
SINGAPORE                                                             guarantee     23
PTE. LTD.

SANHUA
INTERNATION                                                           Joint         2019.07.0
               April 3,
AL                         132,000   July 5, 2019          11,941.5   liability     5-2022.06.    No         Yes
               2019
SINGAPORE                                                             guarantee     20
PTE. LTD.

SANHUA                                                                Joint         2019.12.0
               April 3,              December 9,
INTERNATION                 30,000                       21,946.45    liability     9-2022.12.    No         Yes
               2019                  2019
AL, INC.                                                              guarantee     09

SANHUA                                                                Joint         2019.01.1
               April 16,             January 18,
INTERNATION                 30,000                       10,619.25    liability     8-2020.01.    Yes        Yes
               2018                  2019
AL, INC.                                                              guarantee     21

SANHUA         April 3,     30,000   January 21,         10,619.25    Joint         2020.01.2     No         Yes



                                                                                                                       46
                                                           Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


INTERNATION         2019                       2020                                liability    1-2020.07.
AL, INC.                                                                           guarantee    09

SANHUA
INTERNATION                                                                        Joint        2020.06.1
                    April 29,
AL                                 150,000     June 12, 2020            7,500      liability    2-2022.12.   No        Yes
                    2019
SINGAPORE                                                                          guarantee    25
PTE. LTD.

SANHUA
INTERNATION                                                                        Joint        2020.02.1
                    April 3,                   February 10,
AL                                 132,000                          10,349.3       liability    0-2021.02.   No        Yes
                    2019                       2020
SINGAPORE                                                                          guarantee    09
PTE. LTD.

Total Amount of Guarantees                                      Total Amount of Guarantees
to Subsidiaries Approved                                        to Subsidiaries Actually
                                                      310,000                                                         49,963.25
during the Reporting Period                                     Occurred during the
(B1)                                                            Reporting Period (B2)
Total Amount of Guarantees                                      Total Balance of Guarantees
to Subsidiaries Approved by                                     Actually Paid to
                                                   384,673.6                                                           90,930.7
the End of the Reporting                                        Subsidiaries at the End of
Period (B3)                                                     the Reporting Period (B4)
                                             Subsidiaries' Guarantees to Subsidiaries
                      Announc
                       ement                                                                                           Guarant
                       Date of                    Actual           Actual                                               ee for
                                  Guarante                                           Type of     Term of     Due or
Guaranteed Party      Disclosur                 Occurrence       Guarantee                                             Related
                                  e Amount                                          Guarantee   Guarantee     Not
                      e of the                     Date           Amount                                                Parties
                      Guarante                                                                                          or Not
                      e Amount

The total amount of the Company's guarantees (the total of the above three items)
Total Amount of Guarantees                                      Total Amount of Guarantees
Approved during the                                             Actually Occurred during
                                                      310,000                                                         49,963.25
Reporting Period                                                the Reporting Period
(A1+B1+C1)                                                      (A2+B2+C2)
Total Amount of Guarantees                                      Total Balance of Guarantees
Approved by the End of the                                      Actually Paid at the End of
                                                   384,673.6                                                           90,930.7
Reporting Period                                                the Reporting Period
(A3+B3+C3)                                                      (A4+B4+C4)
Total Amount of Actual Guarantees (A4+B4+C4) as a
                                                                                                                         9.54%
Percentage of the Company's Net Assets

Of which:
Balance of Debt Guarantees Directly or Indirectly Offered to
Guaranteed Objects with Asset-liability Ratio Exceeding                                                                90,930.7
70% (E)


                                                                                                                                  47
                                                      Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


 Total Amount of the Above Three Guarantees (D+E+F)                                                              90,930.7

(2) Illegal external guarantees
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.

3. Entrusted wealth management

√Applicable □ Not applicable
                                                                                                   Unit: RMB in 10 thousand

                                                                              Balance before         Overdue uncollected
     Specific types         Capital source              Amount
                                                                                 maturity                  amount

 Bank financial         The Company’s owned
                                                              238,982.3                120,930.9                        0
 products               funds and raised funds

 Total                                                        238,982.3                120,930.9                        0

Specific situation of high-risk entrusted financial management with large single amount or low security, poor
liquidity and without guarantee of principal
√Applicable □ Not applicable




                                                                                                                           48
                                                                                                              Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                                                                                                          Unit: RMB in 10 thousand

                                                                                                                                                                  Future
                                                                                                                                  Actual
                                                                                                                                             Amount               entruste
                                                                                                 Referen               Actual     recover                                     Event
                                                                                                                                               of       Throug       d
                                                                                      Determi      ce                   profit      y of                                     overvie
            Type                                                 Termina   Capital                          Expecte                          provisio   h legal   financia
 Name of               Product     Amoun    Capital     Start                          nation    annualiz              and loss    profit                                    w and
              of                                                  tion     investm                          d return                          n for     procedu      l
  trustee               type         t      source      date                             of      ed rate                in the    and loss                                   relevant
            trustee                                               date       ent                            (if any)                         impair      res or   manage
                                                                                       return      of                  reportin    in the                                     index
                                                                                                                                             ment (if     not      ment
                                                                                                  return               g period   reportin                                   (if any)
                                                                                                                                              any)                plan or
                                                                                                                                  g period
                                                                                                                                                                    not

Shaoxing
                                                                                      Floating
Xinchang
                                                                            Bank      income
sub                     Cash
                                                       Decemb    January   financia   without
branch of              deposit              Self-fun
            Bank                   19,500              er 31,      15,        l       guarant    3.24%                  25.99      25.99                  Yes        -
Bank of               (Company                ds
                                                        2019      2020     product     ee of
Communi                   )
                                                                              s       principa
cations
                                                                                         l
Co., Ltd

Shaoxing
                                                                                      Floating
Xinchang
                                                                            Bank      income
sub                     Cash
                                                       January   January   financia   without
branch of              deposit              Self-fun
            Bank                   10,000                15,       21,        l       guarant    3.39%                  5.56       5.56                   Yes        -
Bank of               (Company                ds
                                                        2020      2020     product     ee of
Communi                   )
                                                                              s       principa
cations
                                                                                         l
Co., Ltd

Bank of               "Tianlibao            Self-fun   January    April     Bank      Floating
            Bank                   10,000                                                        4.00%                  99.73      99.73                  Yes        -
Hangzhou                  "                   ds         21,       21,     financia   income

                                                                                                                                                                                  49
                                                                                                        Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
Xinchang           structured                        2020      2020        l        with
sub                 deposit                                             product    guarant
branch             products                                                s        ee of
                                                                                   principa
                                                                                      l

Shaoxing
                                                                                   Floating
Xinchang
                                                                         Bank      income
sub                  Cash
                                                              March     financia   without
branch of           deposit              Self-fun   March
            Bank                5,000                           16,        l       guarant    3.09%              5.50       5.50                  Yes         -
Bank of            (Company                ds       6, 2020
                                                               2020     product     ee of
Communi                )
                                                                           s       principa
cations
                                                                                      l
Co., Ltd

Shaoxing
                                                                                   Floating
Xinchang
                                                                         Bank      income
sub
                   Structured                       March     Septem    financia    with
branch of                                Self-fun
            Bank    deposits    7,000                 31,     ber 23,      l       guarant    3.75%   126.23       0          0                   Yes         -
Bank of                                    ds
                   176 days                          2020      2020     product     ee of
Communi
                                                                           s       principa
cations
                                                                                      l
Co., Ltd

                                                                                   Floating
Bank of            "Tianlibao                                            Bank      income
Hangzhou               "                            March               financia    with
                                         Self-fun             May 26,
Xinchang    Bank   structured   20,000                26,                  l       guarant    3.80%             127.01     127.01                 Yes         -
                                           ds                  2020
sub                 deposit                          2020               product     ee of
branch             products                                                s       principa
                                                                                      l

ABC         Bank   Huilifeng    10,000   Self-fun    April    Decemb     Bank      Floating   3.70%   252.73       0          0                   Yes         -

                                                                                                                                                                           50
                                                                                                     Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
Xinchang            issue                 ds        22,     er 28,   financia   income
sub                4840 of                         2020     2020        l        with
branch              2020                                             product    guarant
                  customize                                             s        ee of
                   d RMB                                                        principa
                  structured                                                       l
                   deposit
                  products
                    (250
                    days)

                                                                                Floating
Bank of                                                               Bank      income
China              Linked                          April             financia    with
                                        Self-fun           May 29,
Xinchang   Bank   structured   10,000               27,                 l       guarant    3.60%              31.56      31.56                 Yes         -
                                          ds                2020
sub               deposits                         2020              product     ee of
branch                                                                  s       principa
                                                                                   l

                                                                                Floating
Bank of                                                               Bank      income
China              Linked                          April             financia    with
                                        Self-fun           May 29,
Xinchang   Bank   structured   10,000               27,                 l       guarant    3.60%              31.56      31.56                 Yes         -
                                          ds                2020
sub               deposits                         2020              product     ee of
branch                                                                  s       principa
                                                                                   l

                  Huilifeng                                           Bank      Floating
ABC
                  no.4917                          April   Decemb    financia   income
Xinchang                                Self-fun
           Bank   customize    10,000               29,     er 28,      l        with      3.70%   245.66       0          0                   Yes         -
sub                                       ds
                   d RMB                           2020     2020     product    guarant
branch
                  structured                                            s        ee of

                                                                                                                                                                        51
                                                                                                         Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
                    deposit                                                         principa
                   products                                                            l
                    in 2020
                     (243
                     days)

                   97 days of
Shaoxing
                    Bank of                                                         Floating
Xinchang
                   Communi                                                Bank      income
sub
                    cations                                   Septem     financia    with
branch of                                Self-fun   June 5,
            Bank   Yuntong      10,000                        ber 10,       l       guarant    3.27%   86.66        0          0                   Yes         -
Bank of                                    ds        2020
                    wealth                                     2020      product     ee of
Communi
                   fixed term                                               s       principa
cations
                   structured                                                          l
Co., Ltd
                    deposit

                   Huilifeng
                    no.5371
                                                                                    Floating
                   customize
                                                                          Bank      income
ABC                 d RMB
                                                              Decemb     financia    with
Xinchang           structured            Self-fun   June 5,
            Bank                10,000                         er 18,       l       guarant    3.40%   182.08       0          0                   Yes         -
sub                 deposit                ds        2020
                                                               2020      product     ee of
branch             products
                                                                            s       principa
                    in 2020
                                                                                       l
                     (196
                     days)

Shaoxing                                                                  Bank      Floating
                     Cash
Xinchang                                                                 financia   income
                    deposit              Self-fun   May 26,   June 15,
sub         Bank                6,000                                       l       without    3.16%              10.37      10.37                 Yes         -
                   (Company                ds        2020      2020
branch of                                                                product    guarant
                       )
Bank of                                                                     s        ee of

                                                                                                                                                                            52
                                                                                                      Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
Communi                                                                            principa
cations                                                                               l
Co., Ltd

                                                                                   Floating
Heng                                                                     Bank      income
Seng                                                                    financia    with
                   Hengliyin            Self-fun   April 4,   January
Bank        Bank                6,000                                      l       guarant    4.10%           176.64     176.64                 Yes         -
                       g                  ds        2019      3, 2020
Hangzhou                                                                product     ee of
Branch                                                                     s       principa
                                                                                      l

                                                                                   Floating
ICBC                                                                     Bank      income
economic                                                      January   financia   without
                                        Self-fun   January
developm    Bank   Tianlibao    5,000                           22,        l       guarant    3.30%            6.12       6.12                  Yes         -
                                          ds       3, 2020
ent sub                                                        2020     product     ee of
branch                                                                     s       principa
                                                                                      l

Guangzho
u
                                                                                   Floating
Developm
                                                                         Bank      income
ent Bank           Xinjiaxin
                                                   October    January   financia    with
Hangzhou            No.16               Raised
            Bank                5,500                28,        13,        l       guarant    3.95%            43.24      43.24                 Yes         -
Xiaoshan           structured            funds
                                                    2019       2020     product     ee of
sub                 deposit
                                                                           s       principa
branch
                                                                                      l
(Shaoxing
)

ICBC                                    Self-fun   Februar    Februar    Bank      Floating
            Bank   Tianlibao    5,000                                                         3.13%            0.85       0.85                  Yes         -
economic                                  ds        y 24,      y 26,    financia   income

                                                                                                                                                                         53
                                                                                                        Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
developm                                            2020      2020         l       without
ent sub                                                                 product    guarant
branch                                                                     s        ee of
                                                                                   principa
                                                                                      l

                                                                                   Floating
Hangzhou
                                                                         Bank      income
Xiaoshan           Xinjiaxin
                                                    April    Februar    financia    with
sub                 No.16               Self-fun
            Bank                5,000                30,      y 24,        l       guarant    4.10%             158.96     158.96                 Yes         -
branch of          structured             ds
                                                    2019      2020      product     ee of
Guangfa             deposit
                                                                           s       principa
bank
                                                                                      l

                                                                                   Floating
ICBC                                                                     Bank      income
economic                                           March     March      financia   without
                                        Self-fun
developm    Bank   Tianlibao    5,000                26,       27,         l       guarant    3.13%              0.25       0.25                  Yes         -
                                          ds
ent sub                                             2020      2020      product     ee of
branch                                                                     s       principa
                                                                                      l

                                                                                   Floating
Hangzhou
                                                                         Bank      income
Xiaoshan           Xinjiaxin
                                                              April     financia    with
sub                 No.16               Self-fun   January
            Bank                5,500                          20,         l       guarant    3.90%              59.88      59.88                 Yes         -
branch of          structured             ds       3, 2020
                                                              2020      product     ee of
Guangfa             deposit
                                                                           s       principa
bank
                                                                                      l

Hangzhou           Xinjiaxin                       January               Bank      Floating
                                        Raised               July 13,
Xiaoshan    Bank    No.16       5,500                14,                financia   income     3.95%   107.44       0          0                   Yes         -
                                         funds                2020
sub                structured                       2020                   l        with

                                                                                                                                                                           54
                                                                                                         Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
branch of           deposit                                              product    guarant
Guangfa                                                                     s        ee of
bank                                                                                principa
(Shaoxing                                                                              l
)

                                                                                    Floating
Hangzhou
                                                                          Bank      income
Xiaoshan
                                                    April      April     financia    with
sub                Xinjiaxin            Raised
            Bank               7,000                 29,        27,         l       guarant    2.69%             270.01     270.01                 Yes         -
branch of           No.16                funds
                                                    2019       2020      product     ee of
Guangfa
                                                                            s       principa
bank
                                                                                       l

                                                                                    Floating
Hangzhou
                                                                          Bank      income
Xiaoshan
                                                                         financia    with
sub                Xinjiaxin            Raised     July 30,   July 29,
            Bank               8,000                                        l       guarant    4.05%    324         0          0                   Yes         -
branch of           No.16                funds      2019       2020
                                                                         product     ee of
Guangfa
                                                                            s       principa
bank
                                                                                       l

                                                                                    Floating
Hangzhou
                                                                          Bank      income
Xiaoshan
                                                   October    October    financia    with
sub                Xinjiaxin            Self-fun
            Bank               7,500                 25,        25,         l       guarant    3.95%   297.06       0          0                   Yes         -
branch of           No.16                 ds
                                                    2019       2020      product     ee of
Guangfa
                                                                            s       principa
bank
                                                                                       l

Hangzhou                                            April      April      Bank      Floating
                   Xinjiaxin            Raised
Xiaoshan    Bank               10,000                29,        27,      financia   income     4.10%             385.73     385.73                 Yes         -
                    No.16                funds
sub                                                 2019       2020         l        with

                                                                                                                                                                            55
                                                                                                        Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
branch of                                                               product    guarant
Guangfa                                                                    s        ee of
bank                                                                               principa
(Shaoxing                                                                             l
)

Hangzhou
                                                                                   Floating
Xiaoshan
                                                                         Bank      income
sub
                                                                        financia    with
branch of          Xinjiaxin           Raised     July 30,   July 29,
            Bank               5,500                                       l       guarant    4.05%   222.75       0          0                   Yes         -
Guangfa             No.16               funds      2019       2020
                                                                        product     ee of
bank
                                                                           s       principa
(Shaoxing
                                                                                      l
)

                                                                                   Floating
Hangzhou
                                                                         Bank      income
Xiaoshan
                                                   April     October    financia    with
sub                Xinjiaxin           Self-fun
            Bank               5,500                21,        21,         l       guarant    3.90%   107.25       0          0                   Yes         -
branch of           No.16                ds
                                                   2020       2020      product     ee of
Guangfa
                                                                           s       principa
bank
                                                                                      l

                                                                                   Floating
Hangzhou
                                                                         Bank      income
Xiaoshan
                                                   April                financia    with
sub                Xinjiaxin           Raised                June 2,
            Bank               7,000                27,                    l       guarant    3.55%              23.43      23.43                 Yes         -
branch of           No.16               funds                 2020
                                                   2020                 product     ee of
Guangfa
                                                                           s       principa
bank
                                                                                      l

ICBC               Tianlibao           Self-fun   June 9,    June 10,    Bank      Floating
            Bank               6,000                                                          3.00%              0.39       0.39                  Yes         -
economic           (without              ds        2020       2020      financia   income

                                                                                                                                                                           56
                                                                                                         Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report
developm          guarantee                                                  l       without
ent sub              of                                                   product    guarant
branch            principal)                                                 s        ee of
                                                                                     principa
                                                                                        l

                                                                                     Floating
ICBC              Tianlibao                                                Bank      income
economic          (without                                                financia   without
                                         Self-fun   June 10,   June 24,
developm   Bank   guarantee    8,000                                         l       guarant    3.00%             8.42       8.42                  Yes         -
                                           ds        2020       2020
ent sub              of                                                   product     ee of
branch            principal)                                                 s       principa
                                                                                        l

                  Win win
                   interest                                                          Floating
China
                     rate                                                  Bank      income
CITIC
                  structure                         January    January    financia    with
Bank                                     Raised
           Bank    31784       5,000                  15,        31,         l       guarant    2.60%             5.38       5.38                  Yes         -
Fengqi                                    funds
                    RMB                              2020       2020      product     ee of
sub
                  structured                                                 s       principa
branch
                   deposit                                                              l
                  products

                               249,50                                                                   1,951.8   1,476.5
Total                                       --         --         --         --         --       --                            --                   --         --         --
                                  0[1]
                                                                                                             6           8




                                                                                                                                                                               57
                                                            Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Note: [1] During the reporting period, the accumulated financial management amount of the Company is RMB
3,258.7019 million, and the above information are the details of the Company's single significant financial
management (single amount of more than RMB 50 million).


Entrusted financial management is expected to be unable to recover the principal or there are other situations that
may lead to impairment
□ Applicable √ Not applicable

4. Other significant contracts

□ Applicable √ Not applicable
No such case in the reporting period.

XVI. Social Responsibility

1. Significant environmental problems

Whether the Company or the Company’s subsidiaries are critical pollutant enterprises disclosed by National
Environmental Protection Department
Yes

                Name of
                  main
  Name of                                             Distribution   Emission                                Approved      Over
                pollutants     Emission   Number of                               Emission         Total
Company or                                            of emission concentratio                                 total     standard
                   and          mode       outlets                                standards      emissions
 subsidiary                                             outlets          n                                   emission    emission
               characteristi
               c pollutants

                                                                                     The
                                                                                 limitation of
                                                                                   COD in
 Zhejiang
                                                                                 GB8978-19
  Sanhua                                                                                                                    Not
                                                                                      96                     61.867 T
 Intelligent      COD          Nanotube      1           North       ≦500mg/L                   17.463 T               exceeding
                                                                                  Integrated                   /year
  Controls                                                                                                              the standard
                                                                                 Wastewater
  Co., Ltd
                                                                                  Emission
                                                                                 Standard is
                                                                                  500mg / L

                                                                                     The
 Zhejiang                                                                         limitation
  Sanhua                                                                           listed in                                Not
                Ammonia                                                                                      6.186 T
 Intelligent                   Nanotube      1           North       ≦35mg/L DB33/887-2         1.746 T                exceeding
                Nitrogen                                                                                       /year
  Controls                                                                       013 Indirect                           the standard
  Co., Ltd                                                                        Emission
                                                                                  Limits of


                                                                                                                                    58
                                           Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                               Nitrogen
                                                                  and
                                                              Phosphorus
                                                              Pollutants
                                                                 from
                                                               Industrial
                                                              Wastewater
                                                              is 35mg / L

                                                                  The
                                                               limitation
                                                               listed in
 Zhejiang                                                     GB13271-2
 Sanhua                                                           014                                  Not
                          Direct
Intelligent    SO2                  1   North    ≦50mg/m3     Emission      0.37 T    2.15 T /year exceeding
                         emission
 Controls                                                     Standard of                          the standard
 Co., Ltd                                                         Air
                                                               Pollutants
                                                              for Boilers
                                                              is 50mg/m3

                                                              According
                                                               to the low
                                                               Nitrogen
                                                               emission
 Zhejiang
                                                              requirement
 Sanhua                                                                                                Not
              Nitrogen    Direct                               s of local                10.06 T
Intelligent                         1   North    ≦50mg/m3                   1.729 T                exceeding
               Oxide     emission                             government                  /year
 Controls                                                                                          the standard
                                                               , the limit
 Co., Ltd
                                                               value of
                                                               gas-fired
                                                               boiler is
                                                              50mg / m3

 Zhejiang
                                                                  The
 Sanhua
                                                               limitation
Climate &                                                                                              Not
                                                                 from                    9.205 T
Appliance      COD       Nanotube   1   South    ≦500mg/l                   3.206 T                exceeding
                                                              GB8979-19                   /year
 Controls                                                                                          the standard
                                                              96 is 500mg
Group Co.,
                                                                  /L
   Ltd.

 Zhejiang                                                         The
 Sanhua                                                        limitation                              Not
               Total
Climate &                Nanotube   1   South     ≦2.0mg/l      from        0.051 T        /       exceeding
              Copper
Appliance                                                     GB8979-19                            the standard
 Controls                                                        96 is


                                                                                                              59
                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Group Co.,                                                             2.0mg/l
   Ltd.

Construction and operation of pollution control facilities
Adhering to the advanced management concept, the Company takes "developing energy-saving and low-carbon
economy, creating a green quality environment" as its own responsibility, constantly surpasses, and becomes an
important creator and contributor of human green quality living environment with limited resources and unlimited
wisdom.


1. In terms of waste water treatment, the Company responded to the construction of "five water treatment",
   "eliminating inferior V-type water" and "zero direct discharge of sewage" in the whole province. The
   Company renovated the rainwater and sewage outlets in the factory area, implemented the separation of
   rainwater and sewage, and installed cut-off valves and video monitoring equipment at the Company's
   rainwater discharge outlets, and collected and treated the early rainwater. There are two wastewater treatment
   stations in the factory. The sewage treatment stations have been equipped with standardized sewage outlets
   and set up discharge outlet signs. Online monitoring device, solenoid valve flowmeter and card swiping
   sewage system are installed at the discharge outlet, which has been connected with the environmental
   protection department. The monitoring indicators include pH, COD, total copper, total zinc and flow.
   Wastewater treatment: The Company has entrusted a third-party professional treatment unit for treatment. The
   discharge indicators of the Company's internal control wastewater are stricter than the environmental
   discharge standard. The final treated wastewater is discharged into the sewage collection pipe network of the
   industrial zone and sent to Shengxin sewage treatment plant for retreatment.


2. Waste gas treatment: The Company has acid pickling, electroplating waste gas, welding dust, ultrasonic
   cleaning and other waste gas. All kinds of waste gas discharge cylinders are equipped with corresponding
   waste gas treatment devices. The acid pickling and electroplating waste gas absorption and treatment tower is
   installed with automatic dosing system, and the waste gas is discharged to air after treatment. At the same
   time, in order to win the blue-sky defense activity, the Company carried out low Nitrogen emission
   transformation of the Company's gas boilers in accordance with the requirements of relevant official
   departments in 2019.


3. Solid waste and soil treatment: all kinds of hazardous waste of the Company are entrusted to the third
   qualified party for disposal, the general solid waste with utilization value is recycled, the domestic waste is
   cleared and transported by the environmental sanitation station, and the construction waste is cleaned and
   transported by the construction unit. In 2019, the Company commissioned a third party to investigate the
   current situation of soil and groundwater environment of the production site, and no pollution was found. The
   Company also tested the soil and groundwater every year and publicized it on the corresponding website. In
   March 2020, Sanhua Refrigeration Group carried out a special site investigation on soil and groundwater in
   Xialiquan plant area, and prepared an investigation report. No pollution was found.


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.



                                                                                                                      60
                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


5. The "three wastes" pollution control facilities of the Company are in normal and stable operation, the
   pollutants are discharged based on the standard, and there is no environmental pollution event.


Environmental Impact Assessment (EIA) of construction projects and other administrative permits for
environmental protection
1. Since 2010, the Company has invested in the construction of Meizhu Sanhua Industrial Estate in Xinchang
County, and has obtained 22 EIA replies. All the projects have passed.


2. Zhejiang Sanhua Climate & Appliance Controls Group Co., Ltd. has invested in Xialiquan of Xinchang County
since 2013, and has obtained 6 EIA replies. All the projects have passed.


Emergency Response Plan
1. The Company re-prepared the Emergency Response Plan in November 2017, and filed with Xinchang
Environmental Protection Bureau on January 25, 2018 (Record No. 3306242018001).


2. In order to manage environmental emergencies and reduce the environmental hazards caused by sudden
environmental pollution accidents, Zhejiang Sanhua Climate & Appliance Controls Group Co., Ltd. re-compiled
Emergency Response Plan for Environmental Pollution Accidents of Zhejiang Sanhua Climate & Appliance
Controls Group Co., Ltd. (simplified version) in October 2018, which was filed with Xinchang County
Environmental Protection Bureau on October 29, 2018 (Record No. 3306242018013).


Environmental self-monitoring program
The Company formulated Self-monitoring Scheme of Zhejiang Sanhua Intelligent Control Co., Ltd. according to
the requirements of the superior environmental protection department, combined with the actual production
situation and the actual needs of environmental management of the Company. The sewage station of the Company
is equipped with a laboratory, and the detection is conducted by a specially assigned person. On line automatic
monitoring equipment such as pH, COD, TOC, total copper, total zinc, flow rate etc. are installed at the
Company's total wastewater discharge outlet, so as to achieve the combination of automatic monitoring and
manual testing. For the pollution factors such as suspended matters, total Phosphorus, Ammonia Nitrogen, total
Iron and Petroleum, the Company entrusts a third-party testing agency to carry out regular monitoring. The
monitoring results are published regularly on the enterprise self-monitoring information disclosure platform of
Zhejiang Province.


Zhejiang Sanhua Climate & Appliance Controls Group Co., Ltd. has good pollutant emission monitoring and
management ability, and can timely inform the environmental protection administrative department and the public
of the monitoring information. According to the actual production situation and the actual needs of environmental
management, the environmental protection laboratory of wastewater treatment station is set up, and the detection
is carried out by specially assigned person daily. On line automatic monitoring equipment such as pH, COD, TOC,
total copper and flow rate are installed at the total wastewater discharge outlet of the Company. The combination
of automatic monitoring and manual testing effectively ensures the timeliness and effectiveness of monitoring. At
the same time, a third-party testing Company is entrusted to carry out regular monitoring. The monitoring results
are published regularly on the enterprise self-monitoring information disclosure platform of Zhejiang Province.


                                                                                                                      61
                                                    Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




Other environmental information that should be disclosed
Not applicable


Other environmental information
Not applicable

2. Fulfillment of the social responsibility of targeted poverty alleviation

Not applicable

XVII. Other Significant Events

□ Applicable √ Not applicable
There were no other significant issues that need to be explained during the current reporting period.

XVIII. Significant Events of the Company’s Subsidiaries

□ Applicable √ Not applicable




                                                                                                                       62
                                                             Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




     Section VI Changes in Shares and Information about Shareholders

I.     Changes in Shares

1. Changes in shares

                                                                                                                                 Unit: Share

                                Before the change                  Changes in the period (+, -)                     After the change

                                                                              Share
                                                       New                 transferred
                                                                  Bonus
                                Shares       Ratio     Shares                 from         Others       Sub-total   Shares        Ratio
                                                                  share
                                                       Issued                capital
                                                                             reserve

1. Shares subject to           346,976,7                                    107,619,1 11,753,80 119,372,9 466,349,7
                                             12.55%                                                                                12.98%
conditional restriction(s)            85                                              76            0          76        61

                               346,976,7                                    107,619,1 11,753,80 119,372,9 466,349,7
3) Other domestic shares                     12.55%                                                                                12.98%
                                      85                                              76            0          76        61

Of which:     Shares held by 299,892,7                                      89,967,81                   89,967,81 389,860,5
                                             10.84%                                                                                10.85%
       domestic legal person          03                                               1                        1        14

     Shares held by domestic 47,084,08                                      17,683,86 11,753,80 29,437,66 76,489,24
                                              1.71%                                                                                 2.13%
              natural person             2                                             5            0           5            7

2. Shares without              2,418,681,                                   719,055,9 -12,045,00 707,010,9 3,125,692
                                             87.45%                                                                                87.02%
restriction                          113                                              04            0          04      ,017

                               2,418,681,                                   719,055,9 -12,045,00 707,010,9 3,125,692
1) RMB ordinary shares                       87.45%                                                                                87.02%
                                     113                                              04            0          04      ,017

                               2,765,657,                                   826,675,0                   826,383,8 3,592,041
3. Total                                     100.00%                                       -291,200                              100.00%
                                     898                                              80                       80      ,778

Reason for the changes in share capital
√ Applicable □ Not applicable
1. On March 2, 2020, the Company has completed the repurchase and cancellation of 0.2912 million shares of all
or part of the restricted shares held by 33 incentive objects who do not meet the requirements of the incentive plan
for restricted shares in 2018 (28 resigned, and 5 failed to meet the individual performance assessment
requirements during the first release period).

2. On February 24, 2020, the Company granted 12.045 million shares of restricted shares to 914 incentive objects
under the Company's restricted stock incentive plan in 2020, and the shares came from the Company's repurchase
account. The listing date of the stock is March 20, 2020.

3. On June 3, 2020, the Company implemented the profit distribution plan for the year of 2019: The plan of


                                                                                                                                          63
                                                     Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


converting capital reserve into share capital takes 2,755,583,602 shares of capital stock as the base, and distribute
3 shares for every 10 shares of all shareholders, with a total of 826,675,080 shares. After the conversion, the total
share capital increased from 2,765,366,698 to 3,592,041,778 shares.


Approval for changes in share capital
√ Applicable □ Not applicable
1. The proposal on repurchase and cancellation of some restricted shares has been deliberated and approved by the
first extraordinary general meeting of shareholders in 2019. The resolution announcement of the general meeting
of shareholders was published in the Securities Times, Shanghai Securities News and CNINFO
(www.cninfo.com.cn) on November 12, 2019.


2. The granting of 12.045 million restricted shares to the incentive objects of the incentive plan for restricted
shares in 2020 has been deliberated and approved at the eighth interim meeting of the sixth board of directors. The
announcement of the resolution was published in the Securities Times, Shanghai Securities News and CNINFO
(www.cninfo.com.cn) on February 25, 2020.


3. The Company's equity distribution plan for 2019 has been deliberated and approved by the 2019 annual general
meeting of shareholders held on May 19, 2020. The resolution announcement of the general meeting of
shareholders was published in the Securities Times, Shanghai Securities News and CNINFO (www.cninfo.com.cn)
on May 20, 2020.


Transfer of shares
√ Applicable □ Not applicable
1. On February 24, 2020, the Company granted 12.045 million restricted shares to 914 incentive objects under the
Company's restricted stock incentive plan in 2020, and the shares came from the Company's repurchase account.


2. On June 3, 2020, after the implementation of the profit distribution plan in 2019, the Company's share capital
increased from 2,765,366,698 shares to 3,592,041,778 shares.


Information about the implementation of share repurchase
√Applicable □Not applicable
On June 16, 2020, the Announcement about Halfway Through the Buyback Plan is not yet Implemented was
published in Securities Times, Shanghai Securities News and CNINFO (www.cninfo.com.cn).


The progress on reduction of re-purchase shares by means of centralized bidding
□Applicable √Not applicable


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


                                                                                                                        64
                                                            Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Please refer to the financial report for details.


Other contents that the Company considers necessary or required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable

2. Changes in restricted shares

√ Applicable □ Not applicable
                                                                                                                               Unit: Share
                    Opening balance                                         Closing balance
    Name of                            Vested in current   Increased in                            Note for
                      of restricted                                           of restricted                         Date of unlocking
   shareholder                              period         current period                      restricted shares
                         shares                                                  shares

                                                                                              Non public
                                                                                              offering of shares
                                                                                              Due to the
                                                                                              implementation
                                                                                              of the equity
                                                                                              distribution plan
Zhejiang Sanhua                                                                               in 2019 on June
                                                                                                                    September 18
Lvneng Industrial       299,892,703                            89,967,811       389,860,514 3, 2020, the
                                                                                                                    2020
Group Co., Ltd                                                                                capital reserve
                                                                                              was converted to
                                                                                              share capital, and
                                                                                              89,967,811 shares
                                                                                              of restricted
                                                                                              shares were
                                                                                              added.

                                                                                              Executive locked
                                                                                              shares
                                                                                              Due to the
                                                                                              implementation
                                                                                              of the equity
                                                                                                                    According to the
                                                                                              distribution plan
                                                                                                                    relevant
                                                                                              in 2019 on June
                                                                                                                    provisions of
Zhang Yabo                37,518,000                           11,255,400         48,773,400 3, 2020, the
                                                                                                                    executives shares
                                                                                              capital reserve
                                                                                                                    management
                                                                                              was converted
                                                                                              into share capital,
                                                                                              and the number
                                                                                              of restricted
                                                                                              shares was
                                                                                              increased by


                                                                                                                                       65
                       Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                          11,255,400
                                                          shares.

                                                          Executive locked
                                                          shares
                                                          Due to the
                                                          implementation
                                                          of the equity
                                                          distribution plan     According to the
                                                          in 2019 on June       relevant
                                                          3, 2020, the          provisions of
Wang Dayong    6,500           1,950              8,450
                                                          capital reserve       executives shares
                                                          was converted         management
                                                          into share capital,
                                                          and the number
                                                          of restricted
                                                          shares was
                                                          increased by
                                                          1,950 shares.

                                                          Executive locked
                                                          shares
                                                          Due to the
                                                          implementation
                                                          of the equity
                                                          distribution plan     According to the
                                                          in 2019 on June       relevant
                                                          3, 2020, the          provisions of
Ni Xiaoming    6,500           1,950              8,450
                                                          capital reserve       executives shares
                                                          was converted         management
                                                          into share capital,
                                                          and the number
                                                          of restricted
                                                          shares was
                                                          increased by
                                                          1,950 shares.

                                                          Executive locked
                                                          shares
                                                                                According to the
                                                          Due to the
                                                                                relevant
                                                          implementation
                                                                                provisions of
Chen Yuzhong   6,500           1,950              8,450 of the equity
                                                                                executives shares
                                                          distribution plan
                                                                                management
                                                          in 2019 on June
                                                          3, 2020, the
                                                          capital reserve



                                                                                                   66
                                Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                   was converted
                                                                   into share capital,
                                                                   and the number
                                                                   of restricted
                                                                   shares was
                                                                   increased by
                                                                   1,950 shares.

                                                                   Executive locked
                                                                   shares
                                                                   Due to the
                                                                   implementation
                                                                   of the equity
                                                                   distribution plan     According to the
                                                                   in 2019 on June       relevant
                                                                   3, 2020, the          provisions of
Hu Kaicheng            6,500            1,950              8,450
                                                                   capital reserve       executives shares
                                                                   was converted         management
                                                                   into share capital,
                                                                   and the number
                                                                   of restricted
                                                                   shares was
                                                                   increased by
                                                                   1,950 shares.

                                                                   Executive locked
                                                                   shares
                                                                   Due to the
                                                                   implementation
                                                                   of the equity
                                                                   distribution plan     According to the
                                                                   in 2019 on June       relevant
                                                                   3, 2020, the          provisions of
Yu Yingkui            30,582            9,175            39,757
                                                                   capital reserve       executives shares
                                                                   was converted         management
                                                                   into share capital,
                                                                   and the number
                                                                   of restricted
                                                                   shares was
                                                                   increased by
                                                                   9,175 shares.

                                                                   Equity incentive      For details, please
                                                                   stock:1. On           refer to the
Incentive objects   9,509,500      18,132,790        27,642,290
                                                                   February 24,          Company's draft
                                                                   2020, 12.045          of restricted stock



                                                                                                            67
                                                                 Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


                                                                                                        million restricted incentive plan in
                                                                                                        shares were          2018 and 2020
                                                                                                        granted under the and relevant
                                                                                                        restricted stock     announcements
                                                                                                        incentive plan in
                                                                                                        2020. 2.Due to
                                                                                                        the
                                                                                                        implementation
                                                                                                        of the equity
                                                                                                        distribution plan
                                                                                                        in 2019 on June
                                                                                                        3, 2020, the
                                                                                                        capital reserve is
                                                                                                        converted to
                                                                                                        share capital, and
                                                                                                        the number of
                                                                                                        restricted shares
                                                                                                        is increased by
                                                                                                        18,132,790.

Total                     346,976,785                     0         119,372,976           466,349,761           --                   --


II. Issuance and Listing of Securities

□ Applicable √ Not applicable

III. Total Number of Shareholders and Their Shareholdings

                                                                                                                                     Unit: Share

                                                                         Total Number of Preferred
                                                                         Shareholders (If Any) (Refer
 Total Number of Common
                                                                         to Note 8) Whose Voting
 Shareholders at the End of                                   56,410                                                                         0
                                                                         Rights Have Been Recovered
 the Reporting Period
                                                                         at the End of the Reporting
                                                                         Period

           Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them
                                                                                     The                               Pledged or frozen
                                                        Total                     number of The number
                                                                    Increase/
                                        Share-holdi     shares                    common       of shares
                                                                       decrease
   Name of              Nature of           ng        held at the                   shares       held
                                                                    during the
  shareholder       shareholder         percentage end of the                     held with     without         Status            Amount
                                                                    reporting
                                           (%)        reporting                    trading      trading
                                                                       period
                                                        period                    restriction restrictions
                                                                                      s


                                                                                                                                               68
                                                      Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Sanhua
                 Domestic
Holding                                     1,069,5     172,686,4              1,069,537
                 non-state-owned   29.78%                                                   Pledged          140,270,000
Group Co.,                                   37,580     42                           ,580
                 corporation
Ltd.

Zhejiang
Sanhua
                 Domestic
Lvneng                                      742,747     171,403,3    389,860   352,887,4
                 non-state-owned   20.68%
Industrial                                     ,954     74              ,514          40
                 corporation
Group Co.,
Ltd

Hong Kong
Central          Overseas                   239,069     -18,744,5              239,069,5
                                   6.66%
Clearing         corporation                   ,530     65                            30
Limited

                 Domestic                   52,031,                  48,773,
Zhang Yabo                         1.45%                2,007,200              3,257,800
                 Individual                    200                       400

Industrial and
Commercial
Bank of
China
Limited-E
fund
emerging                                    39,181,     39,181,94              39,181,94
                 Others            1.09%
growth                                         947      7                               7
flexible
allocation
hybrid
securities
investment
fund

China
Construction
Bank
Corporation -
Bank of
Communicati                                 31,240,     16,904,60              31,240,75
                 Others            0.87%
ons Schroder                                   755      9                               5
alpha core
hybrid
securities
investment
fund



                                                                                                                         69
                                                       Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


Industrial and
Commercial
Bank of
China
Limited
                                             30,570,     30,570,32              30,570,32
Huaan media      Others             0.85%
                                                328      8                               8
Internet
hybrid
securities
investment
fund

National
                 Domestic
Social                                       26,883,                            26,883,23
                 state-owned        0.75%                4,595,053
Security                                        230                                      0
                 corporation
Fund-112

National
                 Domestic
Social                                       24,651,                            24,651,15
                 state-owned        0.69%                8,586,158
Security                                        152                                      2
                 corporation
Fund-111

CITIC Bank
Co., Ltd. -
Bank of
Communicati
ons
Schroeder
                                             23,734,                            23,734,48
new vitality     Others             0.66%                8,805,048
                                                481                                      1
flexible
allocation of
hybrid
securities
investment
funds
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)

                               Among the above shareholders, Sanhua Holding Group Co., Ltd., Zhejiang Sanhua Lvneng
Explanation on Associated
                               Industrial Group Co., Ltd. and Zhang Yabo are the persons acting in concert. The Company
Relationship or Concerted
                               does not know whether there is any related relationship between other shareholders, or
Actions among the
                               whether they belong to the persons acting in concert stipulated in the Administrative
Above-Mentioned Shareholders
                               Measures for the Acquisition of Listed Companies.


                                                                                                                          70
                                                          Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


 Particulars about Shares Held by Top Ten Common Shareholders Holding Shares That Are Not Subject to Trading Restrictions

                                           Number of Common Shares Held without                          Type of shares
       Name of Shareholder
                                        Restrictions at the End of the Reporting Period               Type            Amount

                                                                                              RMB common
Sanhua Holding Group Co., Ltd.                                               1,069,537,580                         1,069,537,580
                                                                                              stock

Zhejiang Sanhua Lvneng                                                                        RMB common
                                                                              352,887,440                            352,887,440
Industrial Group Co., Ltd                                                                     stock

Hong Kong Central Clearing                                                                    RMB common
                                                                              239,069,530                            239,069,530
Limited                                                                                       stock

Industrial and Commercial Bank
of China Limited-E fund
                                                                                              RMB common
emerging growth flexible                                                        39,181,947                             39,181,947
                                                                                              stock
allocation hybrid securities
investment fund

China Construction Bank
Corporation - Bank of
                                                                                              RMB common
Communications Schroder alpha                                                   31,240,755                             31,240,755
                                                                                              stock
core hybrid securities investment
fund

Industrial and Commercial Bank
of China Limited Huaan media                                                                  RMB common
                                                                                30,570,328                             30,570,328
Internet hybrid securities                                                                    stock
investment fund

National Social Security                                                                      RMB common
                                                                                26,883,230                             26,883,230
Fund-112                                                                                      stock

National Social Security                                                                      RMB common
                                                                                24,651,152                             24,651,152
Fund-111                                                                                      stock

CITIC Bank Co., Ltd. - Bank of
Communications Schroeder new                                                                  RMB common
                                                                                23,734,481                             23,734,481
vitality flexible allocation of                                                               stock
hybrid securities investment funds

Agricultural Bank of China Ltd.
                                                                                              RMB common
Hua'an intelligent life hybrid                                                  23,251,750                             23,251,750
                                                                                              stock
securities investment fund

Explanation of Associated
Relationship or Concerted            Among the above shareholders, Sanhua Holding Group Co., Ltd., and Zhejiang Sanhua
Actions among Top Ten Common         Lvneng Industrial Group Co., Ltd. are the persons acting in concert. The Company does not
Shareholders without Trading         know whether there is any related relationship between other shareholders, or whether they
Restrictions, and among Top Ten      belong to the persons acting in concert stipulated in the Administrative Measures for the
Common Shareholders without          Acquisition of Listed Companies.
Trading Restrictions and Top Ten



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                                                     Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


 Common Shareholders
 Explanation of Top Ten Common
 Shareholders’ Participation in
                                   No
 Securities Margin Trading (If
 Any) (Refer to Note 4)
Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducted any
agreed buy-back in the reporting period?
□ Applicable √ Not applicable
No such cases during the current reporting period.



IV. Changes in Controlling Shareholders and Actual Controllers

Change of the controlling shareholder during the current reporting period
□ Applicable √ Not applicable
No such cases in the reporting period.

Change of the actual controller during the reporting period
□ Applicable √ Not applicable
No such cases in the current reporting period.




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                                                   Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                     Section VII Information of Preferred Shares

□ Applicable √ Not applicable
No existed preferred shares for the Company during the current reporting period.




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                                                    Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                Section VIII Information about Convertible Bonds

□ Applicable √ Not applicable
No existed Convertible bonds for the Company during the current reporting period.




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                                                                Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




            Section IX Information about Directors, Supervisors, Senior

                                                        Management

I.      Shareholding changes of directors, supervisors, senior management

√ Applicable □ Not applicable
                                                                                         Number of
                                                                                                         Number of
                                       Shares                                            restricted
                                                     Shares        Shares      Shares                    restricted
                                      held at the                                        shares held
                                                    increased    decreased held at the                    shares         Number of restricted
                            Tenure    beginning                                            at the
     Name     Position                              during the during the end of the                      granted        shares held at the end
                            status      of the                                           beginning
                                                     Period        Period      Period                    during the of the period (shares)
                                        Period                                             of the
                                                     (shares)     (Shares)    (Shares)                    period
                                       (Shares)                                            period
                                                                                                          (shares)
                                                                                          (shares)

Zhang        Chairman
                          Incumbent 50,024,000 12,007,200 10,000,000 52,031,200                      0               0                       0
Yabo         、CEO
             Director,
Wang         senior
                          Incumbent     130,000       169,000                  299,000       91,000        157,300                    248,300
Dayong       manageme
             nt

             Director,
Chen         senior
                          Incumbent     130,000       169,000                  299,000       91,000        157,300                    248,300
Yuzhong      manageme
             nt

Ni
             Director     Incumbent     130,000       169,000                  299,000       91,000        157,300                    248,300
Xiaoming

             Board
             Secretary,
Hu
             senior       Incumbent     130,000       169,000                  299,000       91,000        157,300                    248,300
Kaicheng
             manageme
             nt

             CFO,
             senior
Yu Yingkui                Incumbent     154,082       176,225                  330,307       91,000        157,300                    248,300
             manageme
             nt

Total             --          --      50,698,082 12,859,425 10,000,000 53,557,507           455,000        786,500                  1,241,500




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                                                  Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report


II. Changes of Directors, Supervisors and Senior Management

√Applicable □Not applicable
     Name           Position          Type          Date                                Reasons

                                Leave the
                Independent     position when
Shen Yuping                                      June 7 2020   Leave the position when six-year term of office expires
                Director        term of office
                                expires

                                Leave the
                Independent     position when
Zhang Yaping                                     June 7 2020   Leave the position when six-year term of office expires
                Director        term of office
                                expires

                Independent                                    The number of independent directors is less than one
Shi Jianhui                     Appointment      June 8 2020
                Director                                       third of the board members

                                                               Independent director with financial major. The number of
                Independent
Zhu Hongjun                     Appointment      June 8 2020   independent directors is less than one third of the board
                Director
                                                               members




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                                                 Zhejiang Sanhua Intelligent Controls Co., Ltd. 2020 Semi-Annual Report




                                 Section X Corporate Bonds

Whether the Company has publicly issued corporate bonds on Stock Exchange, which has not terminated or
terminated but fail to collect the full payment before the half year report authorized disclosure date.
□Yes √No




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                                                      2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.




                                         Section XI Financial Report

I. Auditor Report

Whether audit has been performed on this interim financial report
□ Yes √ No
The Company’s 2020 Half Year Report has not been audited

II. Financial Statements

Units of financial reports in the notes: RMB

1. Consolidated Balance Sheet

Prepared by: Zhejiang Sanhua Intelligent Controls Co., Ltd.
                                                                                                              Unit: RMB

                         Items                           June 30, 2020                       December 31, 2019

Current Assets:

  Cash and Bank Balances                                         3,412,040,819.22                       2,663,719,770.15

  Settlement funds

  Loans to other banks

  Held-for-trading financial assets                              1,221,535,291.01                         993,634,433.31

  Derivative financial assets                                         23,708,126.32                         8,314,400.73

  Notes receivable                                                  1,652,911,349.99                    2,097,159,908.40

  Accounts receivable                                            2,130,607,685.90                       1,871,323,522.82

  Receivable financing

  Advances paid                                                       91,178,630.33                        62,871,924.30

  Premium receivable

  Reinsurance accounts receivable

  Reinsurance reserves receivable

  Other receivables                                                   66,256,474.54                        97,394,782.97

       Including: Interest receivable

                  Dividends receivable

  Financial assets under reverse repo

  Inventories                                                    1,902,896,386.17                       2,180,838,596.07

  Contract assets


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  Assets classified as held for sale

  Non-current assets due within one year

  Other current assets                                   81,420,752.84                          75,933,253.28

Total current assets                                 10,582,555,516.32                      10,051,190,592.03

Non-current assets:

  Loans and advances paid

  Debt investments

  Other debt investments

  Long-term receivable                                    2,306,862.76                           2,145,963.27

  Long-term equity investments                           14,348,933.44                          14,522,259.80

  Other equity instrument investments

  Other non-current financial assets

  Investment property                                    26,263,000.26                          27,025,974.05

  Fixed assets                                        3,625,967,658.09                       3,379,608,199.26

  Construction in progress                              492,864,704.94                         480,959,262.46

  Productive biological assets

  Oil & gas assets

  Right-of-use assets

  Intangible assets                                     521,013,723.37                         525,867,518.75

  Development expenditures

  Goodwill                                               31,959,091.60                          31,959,091.60

  Long-term prepayments                                   4,818,348.86                           8,720,120.64

  Deferred tax assets                                    84,285,107.91                          88,952,931.69

  Other non-current assets                              154,342,209.19                         179,238,257.09

Total non-current assets                              4,958,169,640.42                       4,738,999,578.61

Total assets                                         15,540,725,156.74                      14,790,190,170.64

Current liabilities:

  Short-term borrowings                               1,267,378,241.24                       1,295,610,572.07

  Central bank loans

  Loans from other banks

  Held-for-trading financial liabilities

  Derivative financial liabilities                        8,449,613.09                             126,364.40

  Notes payable                                         973,763,888.02                       1,130,668,415.32

  Accounts payable                                    1,565,086,777.42                       1,587,763,752.62



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  Advances received                                           31,296,264.17                          23,453,218.32

  Contract liabilities

  Financial liabilities under repo

  Absorbing deposit and interbank deposit

  Deposit for agency security transaction

  Deposit for agency security underwriting

  Employee benefits payable                                  162,360,168.58                         228,997,483.82

  Taxes and rates payable                                     56,961,785.44                          58,192,607.75

  Other payables                                             292,885,146.18                         161,237,214.88

          Including: Interest Payable

                      Dividends Payable                        1,310,000.00                           1,772,750.00

  Handling fee and commission payable

  Reinsurance accounts payable

  Liabilities classified as held for sale

  Non-current liabilities due within one year                                                       222,228,097.22

  Other current liabilities

Total current liabilities                                  4,358,181,884.14                       4,708,277,726.40

Non-current liabilities:

  Insurance policy reserve

  Long-term borrowings                                     1,259,113,765.14                         392,882,280.09

  Bonds payable

   Including: Preferred shares

                Perpetual bonds

  Lease liabilities

  Long-term payables                                          92,435,999.26                          94,235,857.77

  Long-term employee benefits payable

  Provisions

  Deferred income                                             79,093,357.32                          82,537,550.43

  Deferred tax liabilities                                    69,319,249.50                          65,049,361.71

  Other non-current liabilities                               82,435,946.79                          81,788,928.52

Total non-current liabilities                              1,582,398,318.01                         716,493,978.52

Total liabilities                                          5,940,580,202.15                       5,424,771,704.92

Equity:

  Share capital                                            3,592,041,778.00                       2,765,657,898.00



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                                                     2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.


  Other equity instruments

   Including: Preferred shares

               Perpetual bonds

  Capital reserve                                                 243,740,344.02                       1,090,800,022.06

  Less: Treasury shares                                           309,452,726.34                         363,781,151.34

  Other comprehensive income                                      -65,788,870.48                         -39,332,748.50

  Special reserve

  Surplus reserve                                                 559,896,619.39                         559,896,619.39

  General risk reserve

  Undistributed profit                                          5,508,536,465.89                       5,278,392,288.84

  Total equity attributable to the parent Company               9,528,973,610.48                       9,291,632,928.45

  Non-controlling interest                                         71,171,344.11                          73,785,537.27

Total equity                                                    9,600,144,954.59                       9,365,418,465.72

Total liabilities & equity                                     15,540,725,156.74                      14,790,190,170.64


Legal representative: Zhang Yabo       Person in charge of accounting: Yu Yingkui            Person in charge of the
accounting institution: Sheng Xiaofeng

2. Balance Sheet of the Parent Company

                                                                                                             Unit: RMB

                             Items                     June 30, 2020                       December 31, 2019

Current assets:

   Cash and bank balances                                       1,450,068,513.99                      1,039,915,005.31

   Held-for-trading financial assets                              653,228,000.00                        195,000,000.00

   Derivative financial assets                                     11,362,725.00                          2,069,850.00

   Notes receivable                                               374,959,009.23                        161,946,880.21

   Accounts receivable                                            933,630,950.88                      1,135,299,895.98

   Receivables financing

   Advances paid                                                   15,111,207.68                          6,076,163.25

   Other receivables                                              564,793,977.69                        603,257,516.95

        Including: Interest Receivable                              1,789,540.22

                    Dividends Receivable                           14,438,323.76

   Inventories                                                    344,463,393.93                        519,241,847.99

   Contract assets

   Assets classified as held for sale


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                                           2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.


  Non-current assets due within one year

  Other current assets                                   27,796,271.79                         21,333,811.35

Total current assets                                  4,375,414,050.19                      3,684,140,971.04

Non-current assets:

  Debt investments

  Other debt investments

  Long-term receivable

  Long-term equity investments                        4,402,111,834.98                      4,256,633,941.06

  Other equity instrument investments

  Other non-current financial assets

  Investment property

  Fixed assets                                        1,497,464,939.91                      1,460,855,506.39

  Construction in progress                               65,263,049.57                         44,135,844.65

  Productive biological assets

  Oil & gas assets

  Right-of-use assets

  Intangible assets                                     186,236,958.19                        189,181,593.94

  Development expenditures

  Goodwill

  Long-term prepayments                                     312,659.05                            625,318.03

  Deferred tax assets                                     8,164,241.86                         17,068,063.08

  Other non-current assets                               67,980,073.91                        109,659,279.90

Total non-current assets                              6,227,533,757.47                      6,078,159,547.05

Total assets                                         10,602,947,807.66                      9,762,300,518.09

Current liabilities:

  Short-term borrowings                                 771,283,865.78                        730,799,542.65

  Held-for-trading financial liabilities

  Derivative financial liabilities

  Notes payable                                          58,894,261.28

  Accounts payable                                    1,414,719,890.68                      1,431,862,681.89

  Advances received                                         216,579.50                             92,676.29

  Contract liabilities

  Employee benefits payable                              60,750,804.91                         65,680,254.82

  Taxes and rates payable                                 7,918,874.44                          1,576,623.72



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  Other payables                                           1,503,361,654.84                      1,252,808,472.44

          Including: interest payable

                     Dividends Payable

  Liabilities classified as held for sale

  Non-current liabilities due within one year                                                      220,225,194.44

  Other current liabilities

                    Total current liabilities              3,817,145,931.43                      3,703,045,446.25

Non-current liabilities:

  Long-term borrowings                                       770,756,434.72

  Bonds payable

   Including: Preferred shares

                 Perpetual bonds

  Lease liabilities

  Long-term payables

  Long-term employee benefits payable

  Provisions

  Deferred income                                             27,394,542.02                         30,895,817.00

  Deferred tax liabilities                                    32,962,814.80                         31,296,603.88

  Other non-current liabilities

Total non-current liabilities                                831,113,791.54                         62,192,420.88

Total liabilities                                          4,648,259,722.97                      3,765,237,867.13

Equity:

  Share capital                                            3,592,041,778.00                      2,765,657,898.00

  Other equity instruments

   Including: Preferred shares

                 Perpetual bonds

  Capital reserve                                          1,158,243,441.49                      2,005,303,119.53

  Less: treasury shares                                      309,452,726.34                        363,781,151.34

  Other comprehensive income

  Special reserve

  Surplus reserve                                            431,209,447.07                        431,209,447.07

  Undistributed profit                                     1,082,646,144.47                      1,158,673,337.70

                         Total equity                      5,954,688,084.69                      5,997,062,650.96

                 Total liabilities & equity               10,602,947,807.66                      9,762,300,518.09



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3. Consolidated Income Statement

                                                                                                                Unit: RMB

                           Items                          2020 Interim                          2019 Interim

I. Total operating revenue                                        5,318,178,626.77                      5,831,107,028.08

  Including: Operating revenue                                    5,318,178,626.77                      5,831,107,028.08

             Interest income

             Premium earned
           Revenue from handling charges and
   commission
II. Total operating cost                                          4,658,848,422.13                      5,050,671,056.89

  Including: Operating cost                                       3,839,626,004.70                      4,179,915,713.98

             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                                    36,309,640.40                         41,858,591.20

             Selling expenses                                       257,442,500.54                        263,730,876.93

             Administrative expenses                                315,350,745.15                        304,294,733.96

             R&D expenses                                           240,012,928.38                        248,506,405.93

             Financial expenses                                     -29,893,397.04                         12,364,734.89

                Including: Interest expenses                         32,558,310.10                         26,919,773.79

                             Interest income                         19,167,271.27                         11,053,538.87

  Add: Other income                                                 101,528,141.23                         52,433,523.85

        Investment income (or less: losses)                           -8,109,921.96                        30,358,255.34
          Including: Investment income from
                                                                      1,826,673.64                             508,944.08
   associates and joint ventures
        Gains from derecognition of financial assets
                                                                         -114,807.17
   at amortized cost
        Gains on foreign exchange (or less: losses)
         Gains on net exposure to hedging risk (or
   less: losses)
        Gains on changes in fair value (or less:
                                                                      6,520,045.96                          8,436,416.96
   losses)
        Credit impairment loss                                      -12,874,290.80                        -19,122,897.76



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        Assets impairment loss                                             -6,302,857.17                       -22,535,866.59

        Gains on asset disposal (or less: losses)                           -319,355.00                           -122,323.66

III. Operating profit (or less: losses)                                  739,771,966.90                        829,883,079.33

   Add: Non-operating revenue                                              1,466,984.81                          2,717,783.94

    Less: Non-operating expenditures                                       1,354,079.15                          1,257,816.96

IV. Profit before tax (or less: total loss)                              739,884,872.56                        831,343,046.31

  Less: Income tax expense                                                99,017,348.37                        142,881,546.88

V. Net profit (or less: net loss)                                        640,867,524.19                        688,461,499.43

(I) Categorized by the continuity of operations
   1. Net profit from continuing operations (or less:
                                                                         640,867,524.19                        688,461,499.43
   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
                                                                         643,481,717.35                        692,968,498.78
   Company (or less: net loss)
   2. Net profit attributable to non-controlling
                                                                           -2,614,193.16                        -4,506,999.35
   shareholders (or less: net loss)
VI. Other comprehensive income after tax                                 -26,456,121.98                         -3,329,949.74
  Items attributable to the owners of the parent
                                                                         -26,456,121.98                         -3,329,949.74
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
   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                   -26,456,121.98                         -3,329,949.74
   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                                                -26,456,121.98                         -3,329,949.74

   7. Others

  Items attributable to non-controlling shareholders




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                                                        2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.


VII. Total comprehensive income                                      614,411,402.21                        685,131,549.69
   Items attributable to the owners of the parent
                                                                     617,025,595.37                        689,638,549.04
   Company
   Items attributable to non-controlling shareholders                  -2,614,193.16                        -4,506,999.35

VIII. Earnings per share (EPS):

(I) Basic EPS (yuan per share)                                                  0.18                                   0.19

(II) Diluted EPS (yuan per share)                                               0.18                                   0.19


Legal representative: Zhang Yabo       Person in charge of accounting: Yu Yingkui               Person in charge of the
accounting institution: Sheng Xiaofeng

4. Income Statement of the Parent Company

                                                                                                                 Unit: RMB

                          Items                            2020 Interim                          2019 Interim

I. Operating revenue                                               2,117,212,102.62                      2,495,838,463.84

  Less: Operating cost                                             1,616,751,481.77                      1,965,004,672.15

         Taxes and surcharges                                         14,883,710.72                         15,997,771.30

         Selling expenses                                             15,130,538.49                         18,249,452.87

         Administrative expenses                                      72,140,520.61                         69,118,857.63

         R&D expenses                                                 88,292,793.63                         96,190,250.84

         Financial expenses                                            8,904,811.12                             129,571.18

             Including: Interest expenses                             34,495,598.61                         30,358,919.36

                        Interest income                               10,398,609.20                         21,885,553.49

  Add: Other income                                                   52,824,654.27                         21,442,460.57

         Investment income (or less: losses)                          10,995,316.73                        254,931,773.19
            Including: Investment income from
                                                                       1,922,776.38                             867,006.32
   associates and joint ventures
        Gains from derecognition of financial assets
   at amortized cost
        Gains on net exposure to hedging (or less:
   losses)
        Gains on changes in fair value (or less:
                                                                      12,520,875.00                         -1,337,748.00
   losses)
         Credit impairment loss                                        1,810,314.30                             -882,179.01

         Assets impairment loss

         Gains on asset disposal (or less: losses)                         60,000.75                            126,257.34

II. Operating profit (or less: losses)                               379,319,407.33                        605,428,451.96

  Add: Non-operating revenue                                              472,666.13                             98,027.21




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  Less: Non-operating expenditures                                            137,009.04                            301,568.34

III. Profit before tax (or less: total loss)                             379,655,064.42                        605,224,910.83

  Less: Income tax expense                                                42,344,717.35                         52,218,796.69

IV. Net profit (or less: net loss)                                       337,310,347.07                        553,006,114.14
(I) Net profit from continuing operations (or less: net
                                                                         337,310,347.07                        553,006,114.14
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
   assets into other comprehensive income
   4. Provision for credit impairment of other debt
   investments
   5. Cash flow hedging reserve (profit or loss on
   cash flow hedging)
   6. Translation reserve

   7. Others

VI. Total comprehensive income                                           337,310,347.07                        553,006,114.14


5. Consolidated Cash Flow Statement

                                                                                                                     Unit: RMB

                           Items                               2020 Interim                          2019 Interim

I. Cash flows from operating activities:
  Cash receipts from sale of goods or rendering of
                                                                       5,669,226,956.30                      5,690,456,680.63
  services
  Net increase of client deposit and interbank deposit

  Net increase of central bank loans
  Net increase of loans from other financial
  institutions



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                                                          2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.


  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                                               135,301,637.22                        139,825,545.01

  Other cash receipts related to operating activities                  138,981,847.05                        121,184,630.63
     Subtotal of cash inflows from operating
                                                                     5,943,510,440.57                      5,951,466,856.27
     activities
  Cash payments for goods purchased and services
                                                                     3,476,000,876.09                      3,742,133,669.66
  received
  Net increase of loans and advances to clients
  Net increase of central bank deposit and interbank
  deposit
  Cash payments for insurance indemnities of
       original insurance contracts
  Net increase of loans to others
  Cash payments for interest, handling charges and
  commission
  Cash payments for policy bonus

  Cash paid to and on behalf of employees                              783,884,263.51                        775,495,900.36

  Cash payments for taxes and rates                                    205,682,821.70                        239,712,962.89

  Other cash payments related to operating activities                  373,291,029.85                        363,569,412.43
     Subtotal of cash outflows from operating
                                                                     4,838,858,991.15                      5,120,911,945.34
     activities
        Net cash flows from operating activities                     1,104,651,449.42                        830,554,910.93

II. Cash flows from investing activities:

  Cash receipts from withdrawal of investments

  Cash receipts from investment income                                  23,348,369.16                         33,755,279.46
  Net cash receipts from the disposal of fixed assets,
                                                                         2,066,447.61                          3,718,696.87
   intangible assets and other long-term assets
  Net cash receipts from the disposal of subsidiaries
   & other business units
  Other cash receipts related to investing activities                  277,649,043.00                        620,914,127.51

     Subtotal of cash inflows from investing activities                303,063,859.77                        658,388,103.84
  Cash payments for the acquisition of fixed assets,
                                                                       442,252,824.96                        402,675,247.21
   intangible assets and other long-term assets
  Cash payments for investments



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  Net increase of pledged borrowings
  Net cash payments for the acquisition of
   subsidiaries & other business units
  Other cash payments related to investing activities                540,203,379.47                         27,864,757.37
    Subtotal of cash outflows from investing
                                                                     982,456,204.43                        430,540,004.58
    activities
        Net cash flows from investing activities                    -679,392,344.66                        227,848,099.26

III. Cash flows from financing activities:

 Cash receipts from absorbing investments                            118,643,250.00                          3,609,000.00
 Including: Cash received by subsidiaries from
                                                                                                             3,609,000.00
   non-controlling shareholders as investments
 Cash receipts from borrowings                                     1,379,378,896.06                        652,992,773.64

 Other cash receipts related to financing activities                  26,080,652.17                         58,902,676.13
     Subtotal of cash inflows from financing
                                                                   1,524,102,798.23                        715,504,449.77
     activities
 Cash payments for the repayment of borrowings                       758,969,786.13                        600,819,921.22
 Cash payments for distribution of dividends or
                                                                     451,059,488.63                        559,026,654.00
   profits and for interest expenses
 Including: Cash paid by subsidiaries to
                                                                       2,680,000.00                         11,299,967.32
   non-controlling shareholders as dividend or profit
 Other cash payments related to financing activities                   3,780,305.89                        202,135,525.53
     Subtotal of cash outflows from financing
                                                                   1,213,809,580.65                      1,361,982,100.75
     activities
        Net cash flows from financing activities                     310,293,217.58                       -646,477,650.98
IV. Effect of foreign exchange rate changes on cash
                                                                     -25,656,121.98                         -3,329,949.74
& cash equivalents
V. Net increase in cash and cash equivalents                         709,896,200.36                        408,595,409.47

 Add: Opening balance of cash and cash equivalents                 2,553,783,015.01                      1,164,542,861.48

VI. Closing balance of cash and cash equivalents                   3,263,679,215.37                      1,573,138,270.95


6. Cash Flow Statement of the Parent Company

                                                                                                                Unit: RMB

                         Items                             2020 Interim                          2019 Interim

I. Cash flows from operating activities:
Cash receipts from sale of goods and rendering of
                                                                   1,582,936,545.48                      1,575,934,290.46
services
Receipts of tax refund                                                45,688,483.71                         45,554,541.66

Other cash receipts related to operating activities                   59,466,164.51                         36,560,819.24

  Subtotal of cash inflows from operating activities               1,688,091,193.70                      1,658,049,651.36
Cash payments for goods purchased and services
                                                                     822,533,884.63                        927,035,338.75
received



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Cash paid to and on behalf of employees                               193,396,299.54                        153,147,803.53

Cash payments for taxes and rates                                      51,272,174.14                         42,816,607.59

Other cash payments related to operating activities                    79,419,321.52                         64,546,685.86

  Subtotal of cash outflows from operating activities               1,146,621,679.83                      1,187,546,435.73

     Net cash flows from operating activities                         541,469,513.87                        470,503,215.63

II. Cash flows from investing activities:

 Cash receipts from withdrawal of investments                           3,000,000.00                          5,000,000.00

 Cash receipts from investment income                                   6,834,184.92                        252,050,133.00
 Net cash receipts from the disposal of fixed assets,
                                                                          174,800.00                          2,191,607.40
  intangible assets and other long-term assets
 Net cash receipts from the disposal of subsidiaries &
                                                                                                              3,609,000.00
  other business units
 Other cash receipts related to investing activities                  175,228,503.46                        499,884,082.87

   Subtotal of cash inflows from investing activities                 185,237,488.38                        762,734,823.27
 Cash payments for the acquisition of fixed assets,
                                                                      102,274,729.91                        145,172,309.32
  intangible assets and other long-term assets
 Cash payments for investments                                        140,874,000.00                          9,238,318.85
 Net cash payments for the acquisition of subsidiaries
  & other business units
 Other cash payments related to investing activities                  472,363,792.38                        309,114,325.61

   Subtotal of cash outflows from investing activities                715,512,522.29                        463,524,953.78

     Net cash flows from investing activities                        -530,275,033.91                        299,209,869.49

III. Cash flows from financing activities:

 Cash receipts from absorbing investments                             118,643,250.00

 Cash receipts from borrowings                                      1,159,811,000.00                        350,000,000.00

 Other cash receipts related to financing activities                  161,770,652.17                         77,272,550.00

   Subtotal of cash inflows from financing activities               1,440,224,902.17                        427,272,550.00

 Cash payments for the repayment of borrowings                        570,000,000.00                        150,000,000.00
 Cash payments for distribution of or profits and for
                                                                      437,223,073.41                        538,405,951.79
   interest expenses
 Other cash payments related to financing activities                   12,254,861.11                        202,454,564.36

   Subtotal of cash outflows from financing activities              1,019,477,934.52                        890,860,516.15

     Net cash flows from financing activities                         420,746,967.65                       -463,587,966.15
IV. Effect of foreign exchange rate changes on cash
and cash equivalents
V. Net increase in cash and cash equivalents                          431,941,447.61                        306,125,118.97

Add: Opening balance of cash and cash equivalents                     974,923,339.25                        259,366,745.24

VI. Closing balance of cash and cash equivalents                    1,406,864,786.86                        565,491,864.21




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7. Consolidated Statement of Changes in Owners' Equity

Amount of this period
                                                                                                                                                                                           Unit: RMB

                                                                                                    2020 Interim

                                                                       Equity Attributable to parent Company

                                  Other equity
   Items                                                                                                                       Gener
                                                                            Less:                     Speci                                                         Non-controll
                                   instruments                                               Other               Surplus         al                                                     Total equity
                                                                                                        al                            Undistributed                 ing interest
              Share Capital                          Capital reserve      treasury       comprehensiv                           risk                Others Subtotal
                               Preferr Perpet                                                         reser      reserve                 profit
                                              Othe                         shares          e income                            reserv
                                 ed     ual                                                            ve
                                               rs                                                                                 e
                               shares bonds
I. Balance
at the end    2,765,657,898.                         1,090,800,022. 363,781,151.3 -39,332,748.5               559,896,619.3           5,278,392,288.         9,291,632, 73,785,537.2 9,365,418,465.
of prior                 00                                       06                 4              0                      9                      84             928.45             7               72
year
Add:
 Cumulat
 ive
 changes
 of
 accounti
 ng
 policies
 Error
 correctio
 n of prior
 period
 Business
 combinat
 ion under
 common
 control
 Others
II. Balance
at the        2,765,657,898.                         1,090,800,022. 363,781,151.3 -39,332,748.5               559,896,619.3           5,278,392,288.         9,291,632, 73,785,537.2 9,365,418,465.
beginning                00                                       06                 4              0                      9                      84             928.45             7               72
of current
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year
III. Current
period                        -847,059,678.0 -54,328,425.0 -26,456,121.9                                  237,340,6 -2,614,193.1
increase     826,383,880.00                                                      230,144,177.05                                     234,726,488.87
(or less:                                 4               0               8                                   82.03             6
decrease)
(I) Total
comprehen                                                      -26,456,121.9                              617,025,5 -2,614,193.1
                                                                                 643,481,717.35                                     614,411,402.21
sive                                                                      8                                   95.37             6
income
(II) Capital
contributed                                    -54,328,425.0                                              33,652,62
or             -291,200.00    -20,384,598.04                                                                                         33,652,626.96
withdrawn                                                 0                                                     6.96
by owners
1. Ordinary
shares                                         -49,264,050.0
                              -49,264,050.00
contributed                                               0
by owners
2. Capital
contributed
by holders
of other
equity
instrument
s
3. Amount
of
share-base                                                                                                30,463,13
                              30,463,131.96                                                                                          30,463,131.96
d payment                                                                                                       1.96
included in
equity
                                                                                                         3,189,495.
4. Others      -291,200.00     -1,583,680.00 -5,064,375.00                                                                            3,189,495.00
                                                                                                                 00

(III) Profit                                                                      -413,337,540.3          -413,337,                 -413,337,540.3
distribution                                                                                   0             540.30                              0
1.
Appropriat
ion of
surplus
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                                                 2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
reserve
2.
Appropriat
ion of
general
risk reserve
3.
Appropriat                                          -413,337,540.3          -413,337,                -413,337,540.3
ion of
profit to                                                        0             540.30                              0
owners
4. Others
(IV)
Internal                        -826,675,080.0
carry-over     826,675,080.00
within                                      0
equity
1. Transfer
of capital                      -826,675,080.0
            826,675,080.00
reserve to                                  0
capital
2. Transfer
of surplus
reserve to
capital
3. Surplus
reserve to
cover
losses
4. Changes
in defined
benefit
plan
carried
over to
retained
earnings
5. Other
comprehen
sive
income

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                                                                                                                                          2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
carried
over to
retained
earnings
6. Others
(V) Special
reserve
1.
Appropriat
ion of
current
period
2.
Applicatio
n of
current
period
(VI) Others
IV.
Balance at    3,592,041,778.                                              309,452,726.3 -65,788,870.4            559,896,619.3               5,508,536,465.              9,528,973, 71,171,344.1 9,600,144,954.
the end of                                            243,740,344.02
current                  00                                                                4            8                       9                         89                610.48            1             59
period

Amount of Previous Period
                                                                                                                                                                                                      Unit: RMB

                                                                                                        2019 Interim

                                                                          Equity Attributable to parent Company

                                   Other equity                                                                                  Other                                            Non-controll
   Items                                                                                                                                                       Share              ing interest Total equity
                                                                                                       Capit
                                   instruments                               Share         Other equity al        Share          equity                              Other equity
                                                          Capital                                                                              Capital                              Capital    Share Capital
              Share Capital                                                                                                                                    Capit
                               Preferr Perpetu            reserve           Capital        instruments reser     Capital        instrume       reserve               instruments    reserve
                                               Othe                                                     ve                                                      al
                                 ed       al
                                                rs                                                                                  nts
                               shares bonds
I. Balance at 2,130,646,835                            1,702,234,409 116,457,618. -39,303,906.                 448,843,076.                 4,488,881,759              8,614,844,555 85,232,116.4 8,700,076,671
the end of
prior year              .00                                         .35               45           65                      37                            .86                     .48              6         .94


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                                                                                          2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
Add:
 Cumulati
 ve
 changes                                                                    120,088.18       8,359,634.19          8,479,722.37                   8,479,722.37
 of
 accountin
 g policies
 Error
 correction
 of prior
 period
 Business
 combinati
 on under
 common
 control
 Others
II. Balance
at the       2,130,646,835   1,702,234,409 116,457,618. -39,303,906.       448,963,164.     4,497,241,394         8,623,324,277 85,232,116.4 8,708,556,394
beginning of           .00             .35            45             65             55                 .05                   .85             6              .31
current year
III. Current
period       635,011,063.0   -625,636,164. 183,524,664. -3,329,949.7                        163,792,612.2         -13,687,103.8 -9,687,586.8 -23,374,690.6
increase (or
less:                    0              78            63              4                                  8                     7             2               9
decrease)
(I) Total                                                   -3,329,949.7                    692,968,498.7         689,638,549.0 -4,506,999.3 685,131,549.6
comprehens
ive income                                                            4                                  8                     4             5               9
(II) Capital
contributed                                  183,524,664.                                                         -173,701,035. -5,180,587.4 -178,881,622.
or                            9,823,629.60
withdrawn                                             63                                                                      03             7              50
by owners
1. Ordinary
shares                                                                                                                             -5,180,587.4
                                                                                                                                                  -5,180,587.47
contributed                                                                                                                                  7
by owners
2. Capital
contributed
by holders
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                                                              2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
of other
equity
instruments
3. Amount
of
share-based
                               9,823,629.60                                            9,823,629.60                 9,823,629.60
payment
included in
equity
                                               183,524,664.                           -183,524,664.                 -183,524,664.
4. Others
                                                        63                                        63                           63

(III) Profit                                                    -529,175,886.         -529,175,886.                 -529,175,886.
distribution                                                                50                    50                           50
1.
Appropriati
on of
surplus
reserve
2.
Appropriati
on of
general risk
reserve
3.
Appropriati                                                     -529,175,886.         -529,175,886.                 -529,175,886.
on of profit                                                                50                    50                           50
to owners
4. Others
(IV) Internal
carry-over 635,011,063.0       -635,011,063.
within                 0                 00
equity
1. Transfer
of capital     635,011,063.0   -635,011,063.
reserve to                0              00
capital
2. Transfer
of surplus
reserve to
                                                                                                                               96
                                                                                                 2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
capital
3. Surplus
reserve to
cover losses
4. Changes
in defined
benefit plan
carried over
to retained
earnings
5. Other
comprehens
ive income
carried over
to retained
earnings
6. Others
(V) Special
reserve
1.
Appropriati
on of
current
period
2.
Application
of current
period
(VI) Others                               -448,731.38                                                                      -448,731.38                  -448,731.38
IV. Balance
at the end of 2,765,657,898             1,076,598,244 299,982,283. -42,633,856.   448,963,164.     4,661,034,006         8,609,637,173 75,544,529.6 8,685,181,703
current                 .00                       .57           08          39             55                 .33                   .98             4            .62
period


8. Statement of Changes in Owners' Equity of the Parent Company

Amount of this period
                                                                                                                                                         Unit: RMB
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                                                                                                                         2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.

                                                                                                   2020 Interim

      Items                                Other equity instruments                                         Other
                                                                                         Less: treasury               Special                   Undistributed
                       Share Capital     Preferred Perpetual           Capital reserve                  comprehensive         Surplus reserve                     Others      Total equity
                                                             Others                         shares                    reserve                      profit
                                          shares    bonds                                                  income
I. Balance at the
                      2,765,657,898.00                                2,005,303,119.53 363,781,151.34                          431,209,447.07 1,158,673,337.70             5,997,062,650.96
end of prior year
Add: Cumulative
changes of
accounting
policies
   Error
   correction of
   prior period
   Others
II. Balance at the
beginning of       2,765,657,898.00                                   2,005,303,119.53 363,781,151.34                          431,209,447.07 1,158,673,337.70             5,997,062,650.96
current year
III. Current period
increase (or less:     826,383,880.00                                 -847,059,678.04 -54,328,425.00                                             -76,027,193.23              -42,374,566.27
decrease)
(I) Total
comprehensive                                                                                                                                   337,310,347.07               337,310,347.07
income
(II) Capital
contributed or
                          -291,200.00                                   -20,384,598.04 -54,328,425.00                                                                         33,652,626.96
withdrawn by
owners
1. Ordinary shares
contributed by                                                          -49,264,050.00 -49,264,050.00
owners
2. Capital
contributed by
holders of other
equity instruments
3. Amount of
share-based
                                                                        30,463,131.96                                                                                         30,463,131.96
payment included
in equity

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                                                                       2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.

4. Others                -291,200.00     -1,583,680.00 -5,064,375.00                                                         3,189,495.00
(III) Profit
                                                                                             -413,337,540.30              -413,337,540.30
distribution
1. Appropriation
of surplus reserve
2. Appropriation
                                                                                             -413,337,540.30              -413,337,540.30
of profit to owners
3. Others
(IV) Internal
carry-over within     826,675,080.00   -826,675,080.00
equity
1.Transfer of
capital reserve to    826,675,080.00   -826,675,080.00
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
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                                                                                                                            2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
IV. Balance at the
end of current     3,592,041,778.00                                    1,158,243,441.49 309,452,726.34                            431,209,447.07 1,082,646,144.47             5,954,688,084.69
period
Amount of Previous Period
                                                                                                                                                                                    Unit: RMB

                                                                                                     2019 Interim

       Items                              Other equity instruments                                          Other
                                                                                         Less: treasury                 Special                     Undistributed
                       Share Capital     Preferred Perpetual           Capital reserve                  comprehensive             Surplus reserve                    Others      Total equity
                                                             Others                         shares                      reserve                        profit
                                          shares    bonds                                                  income
I. Balance at the
                      2,130,646,835.00                                2,621,241,593.01 116,457,618.45                             320,155,904.05 688,311,336.98               5,643,898,050.59
end of prior year
Add: Cumulative
changes of                                                                                                                            120,088.18      1,080,793.66                1,200,881.84
accounting policies
   Error correction
   of prior period
   Others
II. Balance at the
beginning of          2,130,646,835.00                                2,621,241,593.01 116,457,618.45                             320,275,992.23 689,392,130.64               5,645,098,932.43
current year
III. Current period
increase (or less:     635,011,063.00                                 -625,187,433.40 183,524,664.63                                                 23,830,227.64             -149,870,807.39
decrease)
(I) Total
comprehensive                                                                                                                                       553,006,114.14              553,006,114.14
income
(II) Capital
contributed or
                                                                          9,823,629.60 183,524,664.63                                                                          -173,701,035.03
withdrawn by
owners
1. Ordinary shares
contributed by
owners
2. Capital
contributed by
holders of other
equity instruments
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                                                                           2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
3. Amount of
share-based
                                          9,823,629.60                                                                           9,823,629.60
payment included
in equity
4. Others                                                 183,524,664.63                                                      -183,524,664.63
(III) Profit
                                                                                                -529,175,886.50               -529,175,886.50
distribution
1. Appropriation of
surplus reserve
2. Appropriation of
                                                                                                -529,175,886.50               -529,175,886.50
profit to owners
3. Others
(IV) Internal
carry-over within      635,011,063.00   -635,011,063.00
equity
1.Transfer of
capital reserve to     635,011,063.00   -635,011,063.00
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


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                                                                        2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.
2. Application of
current period
(VI) Others
IV. Balance at the
end of current     2,765,657,898.00   1,996,054,159.61 299,982,283.08        320,275,992.23 713,222,358.28                5,495,228,125.04
period




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III. Basic information of the Company

     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 Company operates in the machinery manufacturing industry. Business scope includes production and
marketing of Service Valve, Electronic Expansion valve, Drainage Pump, Solenoid Valve, One-way Valve,
Compressor Parts, Pressure Pipeline Components, Electromechanical Hydraulic Control Pump and other
electromechanical hydraulic control components, undertaking services of inspection, test and analysis of
refrigeration accessories, and engaging in import and export business. Main products include control components
and parts of household appliances and automobile A/C.
    The financial statements have been approved by the board of directors of the Company and disclosed on
August 11th, 2020.
    Zhejiang Sanhua Climate & Appliance Controls Group Co., Ltd and other subsidiaries are included in the
scope of consolidated financial statements in the current period. For further details, please refer to the change of
consolidation scope in the notes to the financial report and the description of equity in other entities.

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 the capability to continue as a going concern business for at least 12 months as of the end
of current reporting period, without any significant matter affecting its capability of going concern.

V. Significant Accounting Polices and Accounting Estimates

Notes to specific accounting policies and accounting estimates:

1. Statement of compliance with China Accounting Standards for Business Enterprises

    The financial statements have been prepared in accordance with the requirements of China Accounting
Standards for Business Enterprises (CASBEs), and present truly and completely the financial position, results of
operations and cash flows of the Company.

2. Accounting period

     The accounting period of the Company is from 1 January to 31 December of each calendar year.




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                                                           2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.


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 Company’s functional currency is Renminbi (RMB) Yuan.

5. The accounting treatment of business combinations involving enterprises under common control and
business combinations not involving enterprises 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 of identifiable net assets obtained from the acquiree at
the acquisition date, the excess is recognized as goodwill; otherwise, the fair value of identifiable assets, liabilities
and contingent liabilities, and the measurement of the combination cost are reviewed, then the difference is
recognized in profit or loss.


6. Compilation method of consolidated financial statements


     The parent Company brings all its controlled subsidiaries into its 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.

7. Recognition criteria of cash and cash equivalents

     Cash as presented in cash flow statement refers to cash on hand and deposit on demand for payment. Cash
equivalents refer to short-term, highly liquid investments that can be readily converted to cash and that are subject
to an insignificant risk of changes in value.

8. Conversion of transactions and financial statements denominated in foreign currencies

     1. Translation of transactions denominated in foreign currency
     Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange rate / at the
beginning of the month 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

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with difference, except for those arising from the principal and interest of exclusive borrowings eligible for
capitalization, included in profit or loss; non-cash items carried at historical costs are translated at the spot
exchange rate at the transaction date, with its RMB amount unchanged; non-cash items carried at fair value in
foreign currency are translated at the spot exchange rate at the date when the fair value was determined, with
difference included in profit or loss or other comprehensive income.
     2. Translation of financial statements measured in foreign currency
     The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the balance sheet date;
the equity items, other than undistributed profit, are translated at the spot rate at the transaction date; the revenues
and expenses in the income statement are translated into RMB at the approximate exchange rate similar to the
systematically and rationally determined spot exchange rate at the transaction date. The difference arising from
foreign currency translation is included in other comprehensive income.


9、Financial instruments


      Financial instruments refer to contracts that form one party’s financial assets into other parties’ financial
liabilities or equity instruments.
      1. Classification of financial assets and financial liabilities
According to the business model of financial assets management of the Company and the contractual cash flow
characteristics of financial assets, the financial assets are mainly classified at the initial recognition into: (1)
financial assets at amortized cost; (2) financial assets at fair value through profit or loss. Financial liabilities are
mainly classified into the following four categories when initially recognized: (1) financial liabilities at amortized
cost. (2) financial liabilities at fair value through profit or loss;

      2. Recognition criteria, measurement method and derecognition condition of financial assets and financial
liabilities
     (1) Recognition criteria and measurement method of financial assets and financial liabilities
     When the Company becomes a party to a financial instrument, it is recognized as a financial asset or
financial liability. The financial assets and financial liabilities initially recognized by the Company are measured
at fair value; for the financial assets and liabilities at fair value through profit or loss, the transaction expenses
thereof are directly included in profit or loss; for other categories of financial assets and financial liabilities, the
transaction expenses thereof are included into the initially recognized amount. However, at initial recognition, for
accounts receivable that do not contain a significant financing component or contracts in which the financing
components with associated period less than one year are not considered, the Company measures at their
transaction price.
     (2) Subsequent measurement of financial assets
     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.
     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
     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 through the amortization process.

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      Financial liabilities designated as at fair value through profit or loss. The Company measures such kind of
liabilities at fair value. Other gains or losses on those financial liabilities shall be included into profit or loss,
except for financial liabilities that are part of hedging relationships.
      (4) Derecognition of financial assets and financial liabilities
      Financial assets are derecognized when:
      a. the contractual rights to the cash flows from the financial assets expire; or
      b. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with
“CASBE23 – Transfer of Financial Assets”.
      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 are 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.
      4. Fair value determination method of financial assets and liabilities
      The Company use valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value.
      5. Impairment of financial instruments
      (1) Measurement and accounting treatment
      The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets at
amortized cost. The Company considers reasonable and evidence-based information about past events, current
conditions, and forecasts of future economic conditions, and uses the risk of default as the weight to calculate the
difference between the contractual cash flow receivable and the expected cash flow Probability-weighted amount
of the present value to confirm expected credit losses. The Company separately measures the expected credit
losses of financial instruments at different stages on the balance sheet date. The first stage ,if the credit risk of a
financial instrument has not increased significantly since the initial recognition, and the loss provision is measured
according to the expected credit loss in the next 12 months. The second stage, if the credit risk of a financial
instrument has increased significantly since its initial recognition but no credit impairment has occurred, and the
loss provision is measured based on the expected credit loss for the entire duration. The third stage, if a financial
instrument has been credit-impaired since its initial recognition, and the loss provision is measured based on the
expected credit loss for the entire duration.
      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


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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 low credit risk on the balance sheet date.
      Regarding the accounts receivable (including bills receivable and accounts receivable) stipulated in the
"CASBE14 –Revenue", regardless of whether it contains significant financing components (including financing in
contracts not exceeding one year) Component), the Company measures the loss provision based on the expected
credit loss for the entire duration.
      For financial instruments in the first and second stages and with lower credit risk, the interest income is
calculated based on the book balance and the effective interest rate without deducting the provision for
impairment. For financial instruments in the third stage, the interest income is calculated based on the amortized
cost and the actual interest rate after the book balance minus the provision for impairment.
      If the "credit risk-related information" of a single instrument has been known or is relatively easily available,
the Company assesses expected credit risk and measures expected credit losses on the basis of a single financial
instrument. Such financial instruments usually include accounts receivable from related parties, deposit deposits
receivable from government units or public utility units, and financial instruments with solid evidence that credit
impairment has occurred.
      If sufficient evidence of “credit risk-related information” cannot be obtained at a reasonable cost at the level
of individual instruments, the Company assesses expected credit risk and measures expected credit losses based
on a combination of financial instruments. The Company combines financial instruments based on the same or
similar credit risk characteristics, including but not limited to aging combinations.
      If the availability of "credit risk-related information" of a single tool changes from being difficult to obtain to
being available, the Company will change from a combination-based assessment measurement to a single
tool-based assessment measurement.
      The Company remeasures expected credit losses on each balance sheet date, and the resulting increase in loss
reserves or the amount of reversal is included in the current profits and losses as impairment losses or gains. For
financial assets measured at amortized cost, the loss allowance shall be deducted from the book value of the
financial assets listed in the balance sheet.
      (2) Financial instruments with expected credit risk assessed and expected credit losses measured on a
collective basis
      For other receivables that are difficult to be evaluated and measured by a single tool, the Company mainly
combines aging as a credit risk feature, refers to historical credit loss experience, combines current conditions and
forecasts of future economic conditions, and adopts default risk exposure and The expected credit loss rate in the
next 12 months or the entire duration is used to calculate the expected credit loss.
      (3) Accounts receivable and contract assets with expected credit losses measured on a collective basis
      Regarding the accounts receivable specified in the "CASBE14 –Revenue", regardless of whether it contains
significant financing components (including financing components in contracts not exceeding one year), refer to
historical credit loss experience and combine current The situation and the forecast of future economic conditions,
through the default risk exposure and the entire duration of the expected credit loss rate, calculate the expected
credit loss. For accounts receivable that are difficult to be evaluated and measured by a single tool, the Company
divides the accounts receivable into several combinations based on credit risk characteristics, and calculates the
expected credit loss on the basis of the combination. The basis for determining the combination and the specific
accrual method are shown below table:
       Portfolio Name         Basis for determination of              Method for measuring expected credit loss


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                                             portfolio
Notes           receivable—Bank Accepted by financial
                                                                                    No provision
acceptance bill                    institutions
Notes receivable— Commercial Not accepted by financial
                                                                                         5%
acceptance bill                    institutions
Accounts        receivable—Ages                          receivable with provision made on a collective basis based on the
                                   Ages
portfolios                                                      comparison table of age and expected credit loss rate
     Accounts receivable – comparison table of ages and lifetime expected credit loss rate
                               Ages                                              Expected credit loss rate
Within 1 year                                                                              5%
1-2 years                                                                                  10%
2-3years                                                                                   30%
Over 3 years                                                                               50%
     6. Offsetting financial assets and financial liabilities
     Financial assets and financial liabilities are presented separately in the balance sheet and are not offset.
However, the Company offsets a financial asset and a financial liability and presents the net amount in the balance
sheet when those who meet the corresponding conditions at the same time.

10. Notes Receivable

     Reference 9. Financial instruments.

11. Accounts Receivable

     Reference 9. Financial instruments.

12. Other receivables

Recognizing methods and accounting methods of the expected credit loss of other receivables
     Reference 9. Financial instruments.

13. Inventories

     1. Category of inventory
     Inventories include materials, work in process in the process of production and finished goods etc.

     2.Determination of cost
     If priced at actual cost, the weighted average method is adopted. If priced according to the planned cost, the
cost difference shall be carried forward at the same time at the end of the month.
     3. Basis for the determination of net realizable value and provision method for decline in value of inventories
     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.

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     5. Revolving materials are amortized with one-off method.

14. Long-term equity investments

     1. Judgment of joint control and significant influence
     Joint control is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control. Significant
influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control of these policies.
     2. Determination of investment cost
     (1) For business combination under common control, if the consideration of the combining party is that it
makes payment in cash, transfers non-cash assets, assumes its liabilities or issues equity securities, on the date of
combination, it regards the share of the carrying amount of the equity of the combined party included the
consolidated financial statements of the ultimate controlling party as the initial cost of the investment. The
difference between the initial cost of the long-term equity investments and the carrying amount of the combination
consideration paid or the par value of shares issued offsets capital reserve; if the balance of capital reserve is
insufficient to offset, any excess is adjusted to retained earnings.
     (2) For business combination not under common control, investment cost is initially recognized at the
acquisition-date fair value of considerations paid.
     (3) Long-term equity investments obtained through ways other than business combination: the initial cost of
a long-term equity investment obtained by making payment in cash is the purchase cost which is actually paid.
     3. Subsequent measurement and recognition method of gain or loss
     For long-term equity investments with control relationship, it is accounted for with cost method; for
long-term equity investments with joint control or significant influence relationship, it is accounted for with equity
method.

15. Investment property

Investment property measurement model
Measurement by cost method
Depreciation or amortization method
     1. Investment property includes land use right of rent-out property and of property held for capital
appreciation and buildings that have been leased out.
     2. The initial measurement of investment property is based on its cost, and subsequent measurement is made
using the cost model, the depreciation or amortization method is the same as that of fixed assets and intangible
assets.

16.Fixed assets

    1. Recognition principles of fixed assets
     Fixed assets are tangible assets held for use in the production or supply of goods or 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.


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     2. Depreciation method of different categories of fixed assets
  Categories                                                                        Estimated residual value Annual depreciation rate
                             Depreciation method             Useful life (years)
                                                                                        proportion (%)                (%)
Buildings and structures Straight-line method          20-30                       0%、5%、10%               3%~5%

Machinery and
                           Straight-line method        5-12                        0%、5%、10%               7.50%~20%
equipment

Measurement analysis
                           Straight-line method        5-10                        5%                        9.50%~19%
equipment

Vehicle                    Straight-line method        5-8                         0%、5%、10%               11.25%~20%

Office equipment and
                           Straight-line method        5-8                         0%、5%、10%               11.25%~20%
others


17. Construction in progress

     1. Construction in progress is recognized if, and only if, it is probable that future economic benefits
associated with the item will flow to the Company, and the cost of the item can be measured reliably.
Construction in progress is measured at the actual cost incurred to reach its designed usable conditions.
     2. Construction in progress is transferred into fixed assets at its actual cost when it reaches its designed
usable conditions. When the construction completion cost reaches final estimating and auditing of the construction
in progress was not finished while it reaching the designed usable conditions, it is transferred to fixed assets using
estimated value first, and then adjusted accordingly when the actual cost is settled, but the accumulated
depreciation is not to be adjusted retrospectively.

18. Borrowing costs

     Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it is capitalized and included in the costs of relevant
assets; other borrowing costs are recognized as expenses on the basis of the actual amount incurred, and are
included in profit or loss.

19. Intangible assets

         (1). Valuation method, service life, impairment test
     Intangible asset includes land use right, patent right and non-patented technology etc. The initial
measurement of intangible asset is based its cost.
       For intangible assets with finite useful lives, its amortization amount is amortized within its useful life
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:
                            Categories                                  Amortization method          Amortization period (years)
Land use right                                                           Straight-line method          Contractual service life
AWECO intellectual property and business resources                       Straight-line method                    4-7
RANCO intellectual property and business resources                       Straight-line method                    5-8
Intellectual Property of Air Conditioning Controller                     Straight-line method                    5-10


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Patented technology of electronic expansion valve controller of Straight-line method                      10
Dotech
Software                                                        Straight-line method                     1-4
     Intangible assets with indefinite useful life are not amortized, but their useful life is reviewed annually. The
indefinite land ownership held by overseas subsidiaries abroad is not amortized due to uncertain service life.
     (2). Accounting policy for internal R&D expenditure
     Expenditures on the research phase of an internal project are recognized as profit or loss when it is incurred.
An intangible asset arising from the development phase of an internal project is recognized if the Company can
meet the corresponding conditions.

20. Impairment of long-term assets

     Long-term assets, such as long-term equity investment, investment properties, fixed assets, construction in
progress, intangible assets that measured at cost are tested for impairment if there is any indication that an asset
may be impaired at the balance sheet date. Impairment test to goodwill and the intangible assets whose using life
is not certain shall be carried out at least at the end of each year. Goodwill shall be tested for impairment in
combination with its related asset group or combination of asset groups.
     If the recoverable amount of the aforementioned long-term assets is lower than its book value, the asset
impairment provision shall be recognized according to the difference and included in the current profit and loss.

21. Long-term prepayments

     The long-term deferred expenses have been accounted for and the amortization period is more than 1 year
(excluding 1 year). Long-term prepayments are recorded with actual cost, and evenly amortized within its
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.

22. 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
     The Company classifies post-employment benefit plans as either defined contribution plans or defined
benefit plans. The Company recognizes in the accounting period in which an employee provides service the
contribution payable to a defined contribution plan as a liability, with a corresponding charge to profit or loss or
the cost of a relevant asset.
     (3). Termination benefits
     Termination benefits provided to employees are recognized as an employee benefit liability for termination
benefits, with a corresponding charge to profit or loss at the earlier of the following dates: a. when the Company
cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a
curtailment proposal; or b. when the Company recognizes cost or expenses related to a restructuring that involves


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the payment of termination benefits.

23. 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.

24. 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
goods or services received can be measured reliably, the fair value is measured at the date the Company obtains
the goods or the counterparty renders service; if the fair value of the goods or services received cannot be
measured reliably, the fair value of the equity instruments granted measured at the date the Company obtains the
goods or the counterparty renders service is referred to, and recognized as transaction cost or expense, with a
corresponding increase in equity.
        (2) Cash-settled share-based payment
      For cash-settled share-based payment transactions with employees, if share appreciation rights vest
immediately, the fair value of the liability incurred as the acquisition of goods or services is measured at grant
date and recognized as transaction cost or expense, with a corresponding increase in liabilities; if share
appreciation rights do not vest until the employees have completed a specified period of service, the liability is
measured, at each balance sheet date until settled, at the fair value of the share appreciation rights measured at
grant date based on the best estimate of the number of share appreciation right expected to vest.
        (3) Modifications and cancellations of share-based payment terms and conditions
      If the modification increases the fair value of the equity instruments granted, measured immediately before
and after the modification, the Company includes the incremental fair value granted in the measurement of the
amount recognized for services received as consideration for the equity instruments granted; similarly, if the
modification increases the number of equity instruments granted, the Company includes the fair value of the
additional equity instruments granted, measured at the date of the modification, in the measurement of the amount
recognized for services received as consideration for the equity instruments granted; if the Company modifies the


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vesting conditions in a manner that is beneficial to the employee, the Company takes the modified vesting
conditions into account.
      If the modification reduces the fair value of the equity instruments granted, measured immediately before and
after the modification, the Company does not take into account that decrease in fair value and continue to measure
the amount recognized for services received as consideration for the equity instruments based on the grant date
fair value of the equity instruments granted; if the modification reduces the number of equity instruments granted
to an employee, that reduction is accounted for as a cancellation of that portion of the grant; if the Company
modifies the vesting conditions in a manner that is not beneficial to the employee, the Company does not take the
modified vesting conditions into account.
      If the Company cancels or settles a grant of equity instruments during the vesting period (other than a grant
cancelled by forfeiture when the vesting conditions are not satisfied), the Company accounts for the cancellation
or settlement as an acceleration of vesting, and therefore recognizes immediately the amount that otherwise would
have been recognized for services received over the remainder of the vesting period.

25. Revenue

Accounting policies used in revenue recognition and measurement.
     1. Revenue recognition principles
     At contract inception, the Company shall assess the contracts and shall identify each performance obligation
in the contracts, and determine whether the performance obligation should be satisfied over time or at a point in
time.
     The Company satisfies a performance obligation over time if one of the following criteria is met, otherwise,
the performance obligation is satisfied at a point in time: (1) the customer simultaneously receives and consumes
the benefits provided by the Company’s performance as the Company performs; (2) the customer can control
goods or services as they are created by the Company’s performance; (3) the Company’s performance does not
create goods or services with an alternative uses and the Company has an enforceable right to payment for
performance completed to date.
     For each performance obligation satisfied over time, the Company shall recognize revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. In the circumstance that the
progress cannot be measured reasonably, but the costs incurred in satisfying the performance obligation are
expected to be recovered, the Company shall recognize revenue only to the extent of the costs incurred until it can
reasonably measure the progress. To determine whether the customer has obtained control of goods, the Company
shall consider the following indicators: (1) the Company has a present right to payment for the goods, i.e., the
customer is presently obliged to pay for the goods; (2) the Company has transferred the legal title of the goods to
the customer, i.e., the customer has legal title to the goods; (3) the Company has transferred physical possession of
the goods, i.e., the customer has physically possessed the goods; (4) the Company has transferred significant risks
and rewards of ownership of the goods, i.e., the customer has obtained significant risks and rewards of ownership
of the goods; (5) the customer has accepted the goods; (6) other indicators showing the customer has obtained
control over the goods.
     2. 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 promised goods or services to a customer, excluding amounts collected on behalf of
third parties and those expected to be refunded to the customer.


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     (2) If the consideration promised in a contract includes a variable amount, the Company shall estimate the
amount of consideration at expected value or the most likely amount. The Company shall include in the
transaction price 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
     (1) The Company mainly sells control components and parts for household appliances and automobile air
conditioners. Due to continuous batch supply, product sales revenue is confirmed after delivery inspection and
receipt of payment receipts. Export sales revenue is recognized after customs declaration and export and obtaining
the bill of lading.
     (2) Recognition of income from the sale of scrap metal after weighing and taking delivery and obtaining
receipts。
Differences in revenue recognition accounting policies caused by different business models of similar businesses

26. 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


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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.

27. 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 profits 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 profits 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: (a) business combination; and (b) the
transactions or items directly recognized in equity.

28. Leases

      (1). Accounting of operating lease
      When the Company is the lessee, during each period of the lease term, the rent is included in the relevant
asset cost or recognized as the current profit and loss according to the straight-line method, and the initial direct
expenses incurred are directly included in the current profit and loss. Contingent rents are included in the current
profits and losses when they actually occur.
      When the Company is the lessor, during each period of the lease term, the rent is recognized as the current
profit and loss according to the straight-line method, and the initial direct expenses incurred are directly included
in the current profit and loss except for the larger amount which is capitalized and included in the profit and loss
in installments. Contingent rents are included in the current profits and losses when they actually occur.
      (2). Accounting of finance lease
      When the Company is the lessee, on the start date of the lease term, the Company uses the lower of the fair
value of the leased asset on the lease start date and the present value of the minimum lease payment as the entry
value of the leased asset, and the minimum lease payment as the long-term payable For the recorded value of the


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loan, the difference is the unrecognized financing cost, and the initial direct cost incurred is included in the value
of the leased asset. In each period of the lease period, the actual interest rate method is used to calculate and
confirm the current financing costs.
     When the Company is the lessor, at the beginning of the lease period, the Company uses the sum of the
minimum lease payment on the lease start date and the initial direct cost as the entry value of the financial lease
receivable, and records the unsecured residual value at the same time; collects the minimum lease payment The
difference between the sum of initial direct costs and the sum of unguaranteed residual value and the sum of its
present value is recognized as unrealized financing income. In each period of the lease period, the actual interest
rate method is used to calculate and confirm the current financing income.

29. Other significant accounting policies and estimates

     Segment reporting
     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. An operating
segment is a component of the Company that:
     1. engages in business activities from which it may earn revenues and incur expenses;
     2. whose financial performance are regularly reviewed by Management to make decisions about resource to
be allocated to the segment and assess its performance; and
     3. for which financial information regarding financial position, financial performance and cash flows is
available.

30.Changes in significant accounting policies and accounting estimates

(1) Changes in significant accounting policies
√ Applicable □ Not applicable
     The Company has adopted “CASBE 14 - Revenue” revised by Ministry of Finance of PRC (the “revised
lease standard”) since January 1, 2020.

(2) Adjustments to the first implementation of the financial statements at the beginning of the year at the
first implementation of new revenue standards.
√ Applicable □ Not applicable
Whether it is necessary to adjust the balance sheet accounts at the beginning of the year
□ Yes √ No
Explain why there is no need to adjust the balance sheet accounts at the beginning of the year
The Company has adopted “CASBE 14 - Revenue” revised by Ministry of Finance of PRC (the “revised lease
standard”) since January 1, 2020.No impact on the data at the beginning of the year.

Ⅵ. Taxes

1. Major categories of taxes and tax rates


               Tax Type                             Taxation basis                                Tax rate



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                                            The taxable revenue from sales of goods or
VAT                                                                                      13%
                                            rendering of services

                                            The sum of turnover tax payable and VAT
Urban maintenance and construction tax                                                   5%,7%
                                            exemption

Enterprise income tax                       Taxable income                               15%,25%

Different enterprise income tax rates applicable to different taxpayers:
                           Taxpayers                                                       Income tax rate

Zhejiang Sanhua Intelligent Controls Co., Ltd                       15%

Zhejiang Sanhua Climate & Appliance Controls group Co., Ltd         15%

Wuhu Sanhua Auto-control Components Co., Ltd                        15%

Zhejiang Sanhua Automotive Components Co., Ltd.                     15%

Sanhua(hangzhou) Micro Channel Heat Exchanger Co., Ltd              15%

Hangzhou Leaderway Electronics Co. Ltd                              15%

Zhuhai Hengtu Electronics Co., Ltd.                                 15%

Wuhu Sanhua Refrigeration Fittings Co. Ltd                          15%

Sanhua (Jiangxi) Self - control Components Co., Ltd.                15%

Wuhan Sanhua Refrigeration Parts Co., Ltd                           15%

Sanhua AWECO Appliance Systems (Wuhu) Co., Ltd.                     15%

Domestic taxpayers other than the above-mentioned                   25%


2. Preferential tax rate

      1.Enterprise income tax
      Being categorized as high-tech enterprises, the income tax of the Company and several subsidiaries for 2020
are temporarily calculated at a preferential tax rate of 15%, and the final income tax settlement shall prevail.
      2.Value-added tax
      Several subsidiaries are welfare enterprises and can enjoy the preferential policy of "VAT refund". The
exceeding portion over the 3% VAT payable of the certified software products enjoy the immediate refund policy.
Export goods enjoy the VAT exemption and refund policy.

Ⅶ. Notes to Items in the Consolidated Financial Statements

1. Cash and bank balances

                                                                                                                        Unit: RMB

                  Items                                  Closing balance                             Opening balance

Cash on hand                                                               572,367.71                                  417,814.58

Cash in bank                                                          3,263,106,847.66                           2,553,365,200.43



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Other cash and bank balances                                 148,361,603.85                             109,936,755.14

Total                                                      3,412,040,819.22                           2,663,719,770.15

  Including: deposit overseas                                346,614,002.37                             488,694,193.85

               The total amount of the cash
and bank balances that are limited by                        148,361,603.85                             109,936,755.14
mortgage, pledge or freeze

Other remarks:

2. Held-for-trading financial assets

                                                                                                             Unit: RMB

                    Items                       Closing balance                          Opening balance

Financial assets at fair value through profit
                                                           1,221,535,291.01                             993,634,433.31
or loss

  Including:

          Bank financial products                          1,221,535,291.01                             993,634,433.31

  Including:

                    Total                                  1,221,535,291.01                             993,634,433.31

Other remarks:

3. Derivative Financial Assets

                                                                                                             Unit: RMB

                    Items                       Closing balance                          Opening balance

Foreign exchange contract                                         229,194.90                               3,371,510.40

Futures contract                                              23,478,931.42                                4,942,890.33

                    Total                                     23,708,126.32                                8,314,400.73

Other remarks:

4. Notes receivable

(1)Categories of notes receivable

                                                                                                             Unit: RMB

                    Items                       Closing balance                          Opening balance

Bank acceptance bill                                       1,551,375,087.54                           1,981,778,291.59

Commercial acceptance bill                                   101,536,262.45                             115,381,616.81

                    Total                                  1,652,911,349.99                           2,097,159,908.40



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                                                                                                                                          Unit: RMB

                                             Closing balance                                             Opening balance

                                                   Provision for bad
                              Book balance                                Carryin       Book balance          Provision for bad debt Carryin
     Categories                                          debt
                                                                            g                                                                 g
                                                             Accrued                 Amount      Proportion Amount           Accrued
                           Amount Proportion Amount                       amount                                                           amount
                                                             proportion                                                      proportion

  Including:

Notes receivable with
                                                                          1,652,9                                                          2,097,1
provision for bad          1,658,25                5,344,0                           2,103,232                6,072,716.
                                      100.00%                    0.32% 11,349.                    100.00%                         0.29% 59,908.
debt made on a             5,363.79                 13.80                              ,625.08                          68
                                                                                99                                                                40
collective basis

  Including:

                                                                          1,551,3                                                          1,981,7
                           1,551,37                                                  1,981,778
Bank acceptance bill                      93.55%                          75,087.                    94.23%                                78,291.
                           5,087.54                                                    ,291.59
                                                                                54                                                                59

Commercial                 106,880,                5,344,0                101,536 121,454,3                   6,072,716.                   115,381
                                          6.45%                  5.00%                               5.77%                        5.00%
acceptance bill              276.25                 13.80                 ,262.45       33.49                           68                 ,616.81

                                                                          1,652,9                                                          2,097,1
                           1,658,25                5,344,0                           2,103,232                6,072,716.
        Total                         100.00%                    0.32% 11,349.                    100.00%                         0.29% 59,908.
                           5,363.79                 13.80                              ,625.08                          68
                                                                                99                                                                40

Provision for bad debt made on a collective basis:
                                                                                                                                          Unit: RMB

                                                                                 Closing balance
               Items
                                              Book balance                   Provision for bad debt                 Accrued proportion

Bank acceptance bill                                1,551,375,087.54

Commercial acceptance bill                            106,880,276.25                          5,344,013.80                                  5.00%

                Total                               1,658,255,363.79                          5,344,013.80 --

Remarks on the determination basis of portfolio:
If the provision for bad debt of notes receivable is in accordance with the general expected credit loss model,
please refer to the disclosure of the bad debt provision for other receivables:
□ Applicable √ Not Applicable

(2)Provision for bad debt accrued, recovered or reversed in current period

Provision for bad debt accrued in current period:
                                                                                                                                          Unit: RMB

                                                                 Changed amount of this period
   Categories           Opening balance                                                                                          Closing balance
                                               Accrual           Recovered or            Write off             Others



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                                                                 reversed

Commercial
                         6,072,716.68                             728,702.88                                                      5,344,013.80
acceptance bill

Total                    6,072,716.68                             728,702.88                                                      5,344,013.80

Including significant provision for bad debt recovered or reversed amount:
□ Applicable √ Not Applicable

(3)Notes receivable pledged by the Company at the end of the reporting period

                                                                                                                                      Unit: RMB

                              Items                                                        Closing balance of pledged notes

Bank acceptance bill                                                                                                          1,264,550,094.76

Total                                                                                                                         1,264,550,094.76


(4)Endorsed or discounted but undue notes at the balance sheet date

                                                                                                                                      Unit: RMB

                Items                       Closing balance derecognized                           Closing balance not yet derecognized

Bank acceptance bill                                                   32,009,582.10

Commercial acceptance bill                                             29,035,960.88                                              8,977,580.15

Total                                                                  61,045,542.98                                              8,977,580.15


5. Accounts receivable

(1)Disclosure of accounts receivable by categories

                                                                                                                                      Unit: RMB

                                          Closing balance                                                Opening balance

                                                 Provision for bad                      Book balance         Provision for bad debt
                           Book balance                                Carryin
        Categories                                     debt                                                                           Carrying
                                                                            g
                        Amount Proportion Amount Accrued                             Amount       Proportion Amount Accrued            amount
                                                                       amount
                                                          proportion                                                     proportion

Receivables with
                        473,410.                473,410                              447,139.6               447,139.
provision made on an                    0.02%               100.00%                                  0.02%                  100.00%        0.00
                              84                    .84                                       7                     67
individual basis

Including:

Receivables with                                                       2,130,6
                        2,243,48                112,875                              1,970,386               99,063,4                 1,871,323
provision made on a                   99.98%                  5.03% 07,685.                         99.98%                    5.03%
                        3,549.68                ,863.78                                ,982.39                   59.57                  ,522.82
collective basis                                                                90



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Including:

                                                                      2,130,6
                        2,243,95               113,349                          1,970,834                99,510,5              1,871,323
Total                                100.00%                 5.05% 07,685.                  100.00%                    5.05%
                        6,960.52               ,274.62                            ,122.06                  99.24                 ,522.82
                                                                          90

Provision made on an individual basis:
                                                                                                                               Unit: RMB

                                                                         Closing balance
          Items
                                   Book balance          Provision for bad debt       Accrued proportion            Accrued reason

Guangzhou Taiyi
Automobile Air
                                          473,410.84                  473,410.84                   100.00%
Conditioning Electronic
Equipment Co., Ltd., etc.

             Total                        473,410.84                  473,410.84 --                            --



Provision made on a collective basis: provision made on a collective basis based on the aging of the accounts
receivable
                                                                                                                               Unit: RMB

                                                                            Closing balance
                Items
                                           Book balance                  Provision for bad debt                Accrued proportion

Within 1 year                                     2,234,190,927.71                    111,709,546.37                              5.00%

1 to 2 years                                           8,639,632.26                         863,963.23                           10.00%

2 to 3 years                                             120,703.35                          36,211.00                           30.00%

Over 3 years                                             532,286.36                         266,143.18                           50.00%

Total                                             2,243,483,549.68                    112,875,863.78 --

Remarks on the determination basis of portfolio:
If the provision for bad debt of accounts receivable is in accordance with the general expected credit loss model,
please refer to the disclosure of bad debt provision for other receivables:
□ Applicable √ Not Applicable
Disclosure by aging
                                                                                                                               Unit: RMB

                             Aging                                                             Closing balance

Within 1 year (including 1 year)                                                                                      2,234,190,927.71

1 to 2 years                                                                                                              8,639,632.26

2 to 3 years                                                                                                                120,703.35

Over 3 years                                                                                                              1,005,697.20

Total                                                                                                                 2,243,956,960.52




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(2)Provision for bad debt accrued, recovered or reversed in current period

Provision for bad debt accrued in current period:
                                                                                                                               Unit: RMB

                                                            Changed amount of the current period
   Categories       Opening balance                                                                                   Closing balance
                                             Accrued        Recovered or reversed      Write off         Others

Receivables with
provision made
                           447,139.67           26,271.17                                                                  473,410.84
on an individual
basis

Receivables with
provision made
                         99,063,459.57      13,812,949.09                                     544.88                   112,875,863.78
on a collective
basis

        Total            99,510,599.24      13,839,220.26                                     544.88                   113,349,274.62


(3)Actual write-off of accounts receivable in current period

Actual write-off of accounts receivable in current period is RMB 544.88.

(4)Top 5 debtors with the largest accounts receivable balances

                                                                                                                               Unit: RMB

                                                                  Proportion to the total balance of Provision for bad debt at the end
          Debtors                     Closing balance
                                                                        accounts receivable                    of the period

Top 5 debtors with the
                                                763,257,417.91                             34.01%                       38,205,528.30
largest balances

            Total                               763,257,417.91                             34.01%


6. Advances paid

(1)Advances paid by aging

                                                                                                                               Unit: RMB

                                               Closing balance                                      Opening balance
           Aging
                                    Amount                     Percentage                  Amount                   Percentage

Within 1 year (including
                                         87,228,820.00                   95.67%               59,688,137.51                     94.94%
1 year)

1 to 2 years                              1,885,267.20                      2.07%              1,274,082.94                      2.03%

2 to 3 years                              1,083,388.18                      1.19%              1,799,865.58                      2.86%



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Over 3 years                              981,154.95                        1.07%                109,838.27                      0.17%

          Total                     91,178,630.33                --                           62,871,924.30            --

Remarks on reasons for unsettled significant advances paid with aging over one year:

(2)Top 5 debtors with the largest advances paid balances

Closing balance of the top 5 debtors totaled RMB 24,167,344.71, accounting for 26.51% of the total closing
balance of the advances paid.
Other remarks:

7. Other receivables

                                                                                                                             Unit: RMB

                    Items                                Closing balance                                 Opening balance

Other receivables                                                           66,256,474.54                              97,394,782.97

                     Total                                                  66,256,474.54                              97,394,782.97


(1)Other receivables

1)Other receivables categorized by nature

                                                                                                                             Unit: RMB

                    Items                                Closing balance                                 Opening balance

Tax refund receivable                                                       20,548,202.00                              46,670,909.67

Guarantee deposits                                                          32,751,602.02                              30,166,732.62

Others                                                                      15,438,204.76                              23,292,984.90

                     Total                                                  68,738,008.78                            100,130,627.19


2)Provision of bad debt

                                                                                                                             Unit: RMB

                                Phase 1                    Phase 2                          Phase 3

                             Next 12month          Lifetime expected credit         Lifetime expected credit
 Provision for bad debt                                                                                               Total
                             expected credit           losses (credit not           losses (credit impaired)
                                 losses                   impaired)

Balance on January 1,
                                  1,439,293.11                   1,296,551.11                                              2,735,844.22
2020

Balance in current period
                                  ——                       ——                            ——                     ——
on January 1, 2020




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Provision made in
                                                                        121,411.51                                               121,411.51
current period

Provision recovered in
                                        375,721.49                                                                               375,721.49
current period

Balance on June 30, 2020               1,063,571.62                   1,417,962.62                                             2,481,534.24

Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
Disclose by aging
                                                                                                                                  Unit: RMB

                                Aging                                                             Closing balance

Within 1 year (including 1 year)                                                                                               1,063,571.62

1 to 2 years                                                                                                                     375,109.33

2 to 3 years                                                                                                                     238,282.05

Over 3 years                                                                                                                     804,571.24

Total                                                                                                                          2,481,534.24


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
             Categories                Opening balance                       Recovered or                                  Closing balance
                                                            Accrued                              Write off      Others
                                                                                 reversed

Receivables with provision
                                             2,735,844.22   121,411.51             375,721.49                                  2,481,534.24
made on a collective basis

Total                                        2,735,844.22   121,411.51             375,721.49                                  2,481,534.24




4)Details of the top 5 debtors with largest balances

                                                                                                                                  Unit: RMB

                                                                                                  Proportion to the      Provision for bad
                               Nature of
        Items                                    Closing balance                 Ages           total balance of other debt at the end of the
                              receivables
                                                                                                     receivables              period

Tax refund                                                            Within 1
                          Tax refund                  20,548,202.00                                           29.89%
receivables                                                           year(including 1 year)

Finance Bureau of
                          Performance bond             6,971,285.00 1 to 3 years                              10.14%
Xinchang County


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Shaoxing Binhai
                       Performance bond
New City
                       for land and project           5,410,000.00 1 to 3 years                              7.87%
Management
                       construction
Committee

Xinchang County
                       Deposit of
Land Reserve                                          3,774,000.00 Over 3 years                              5.49%
                       construction projects
Development Center

Finance Bureau of
                       Deposit of
Yijiang District,                                     3,751,000.00 1 to 7 years                              5.46%
                       construction projects
Wuhu City

Total                            --                  40,454,487.00              --                          58.85%


5)Other receivables related to Government grants

                                                                                                                                 Unit: RMB

                                                                                                                   Estimated receipt time,
           Items               Government grant               Closing balance                  Ages
                                                                                                                       amount and basis

Local finance and          VAT refund of civil                                                                  From July to October,
                                                                      2,521,640.84 Within 1 year
taxation departments       welfare enterprises                                                                  2020, Tax refund return


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 or
        Items                             inventories or
                       Book balance                           Carrying amount        Book balance      provision for      Carrying amount
                                          provision for
                                                                                                       impairment of
                                         impairment of
                                                                                                         contract
                                               contract
                                                                                                       performance
                                        performance costs
                                                                                                           costs

Raw materials          458,105,736.83         34,167,655.65    423,938,081.18        402,017,918.68     29,042,388.91       372,975,529.77

Work-in-progress       225,619,929.38          4,730,403.55    220,889,525.83        312,143,395.71      4,759,164.75       307,384,230.96

Finished goods      1,309,147,400.86          51,969,501.50 1,257,177,899.36 1,558,291,038.03           58,630,244.52 1,499,660,793.51


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Others                     890,879.80                             890,879.80         818,041.83                               818,041.83

Total              1,993,763,946.87         90,867,560.70 1,902,896,386.17 2,273,270,394.25             92,431,798.18 2,180,838,596.07


( 2) Provision for decline in value of inventories and Provision for impairment of contract performance
costs

                                                                                                                               Unit: RMB

                                             Increase in current period             Decrease in current period
        Items      Opening balance                                                                                     Closing balance
                                            Accrued             Others         Reversal or write off       Others

Raw materials          29,042,388.91         5,799,127.62                                  673,860.88                     34,167,655.65

Work-in-progress         4,759,164.75                                                       28,761.20                        4,730,403.55

Finished goods         58,630,244.52         1,957,614.90                                8,618,357.92                     51,969,501.50

Others

Total                  92,431,798.18         7,756,742.52                                9,320,980.00                     90,867,560.70

    The determination of the net realizable value of the excess & obsolete inventories of metal materials at the
end of the period is the scrap metal recovery price. The determination of the net realizable value of the excess &
obsolete inventories of electronic components is RMB 0.

9. Other current assets

                                                                                                                               Unit: RMB

                   Items                                    Closing balance                                Opening balance

Deductible input tax                                                        25,187,707.43                                 41,622,415.21

Prepaid Enterprise income tax                                               52,657,538.58                                 33,856,030.95

Others                                                                        3,575,506.83                                    454,807.12

                   Total                                                    81,420,752.84                                 75,933,253.28

Other remarks:

10. Long-term receivable

(1)Long-term receivable

                                                                                                                               Unit: RMB

                                      Closing balance                                 Opening balance
                                                                                                                             Range of
        Items                          Provision for    Carrying                           Provision for    Carrying
                    Book balance                                          Book balance                                    discount rate
                                         bad debt        amount                              bad debt        amount

Employee home
                       2,306,862.76                     2,306,862.76        2,145,963.27                   2,145,963.27
loan

         Total         2,306,862.76                     2,306,862.76        2,145,963.27                   2,145,963.27          --


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Impairment of provision for bad debt
                                                                                                                                      Unit: RMB

                                     Phase 1                        Phase 2                            Phase 3

                                  Next 12month              Lifetime expected credit       Lifetime expected credit
 Provision for bad debt                                                                                                        Total
                                  expected credit              losses (credit not          losses (credit impaired)
                                      losses                       impaired)

Balance in current period
                                       ——                          ——                               ——                   ——
on January 1, 2020

Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable

11. Long-term equity investments

                                                                                                                                      Unit: RMB

                                                      Increase/decrease in current period

                                                    Investm                                                                            Closing
                                                                                           Cash
                                                      ent        Adjust                                                                balance
            Opening                                                                      dividends       Provi            Closing
                        Investm       Investm       income       ment in      Change                                                     of
            balance                                                                      or profit        sion            balance
Investees                   ent         ent         recogni       other         s in                                                  provision
            (Carrying                                                                    declared         for    Others   (Carrying
                        increas       decreas        zed         compre        other                                                     for
            amount)                                                                         to           impai            amount)
                            ed          ed           under       hensive      equity                                                  impairme
                                                                                         distributi      rment
                                                    equity       income                                                                  nt
                                                                                            on
                                                    method

Ⅰ. Joint ventures

Ⅱ.Associates

 Guochu
 ang
 Energy
 Internet
 Innovat
             1,493,7                                                                                                       1,493,2
 ion                                                -446.80
                18.98                                                                                                        72.18
 Center
 (Guang
 dong)
 Co.,
 Ltd.

 Chongq
 ing
             8,847,7                                1,544,8                              1,500,000                         8,892,5
 Tainuo
                28.00                                 30.62                                      .00                         58.62
 Machin
 ery Co.,


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 Ltd.

 Nancha
 ng
 Sanhua
 Jinlifen   2,335,2   406,36                  500,000.0                        2,241,6
 g           42.16       4.13                         0                          06.29
 Machin
 ery Co.,
 Ltd.

 Zhongs
 han
 Sanhua
            27,971.   -27,971
 Tainuo                                                                           0.00
                57        .57
 Machin
 ery Co.,
 Ltd.

 Qingda
 o
 Sanhua
 Jinlifen
              0.00                                                                0.00
 g
 Machin
 ery Co.,
 Ltd.

 Zhongs
 han
 Xuanyi
 Pipe       1,817,5   -96,102                                                  1,721,4
 Manufa      99.09        .74                                                    96.35
 cturing
 Co.,
 Ltd.

 Subtota    14,522,   1,826,6                 2,000,000                        14,348,
 l          259.80     73.64                        .00                        933.44

            14,522,   1,826,6                 2,000,000                        14,348,
 Total
            259.80     73.64                        .00                        933.44

Other remarks




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12. Investment property

(1)Investment property measured by cost method

√ Applicable □ Not Applicable
                                                                                                                        Unit: RMB

                                Buildings and         Land use right and
             Items                                                            Construction in progress          Total
                                  structures        Overseas land ownership

Ⅰ. Original Carrying
amount

1.Opening balance                   36,137,499.11             10,455,622.00                                      46,593,121.11

2.Increase in current period           282,802.21                 64,165.50                                         346,967.71

(1)Acquisition

(2)Transferred in from
inventory\fixed assets\
construction in progress

(3)Business combination

(4)Converted difference in
Foreign Currency                       282,802.21                 64,165.50                                         346,967.71
Statements

3.Decrease in current period

(1)Disposal

(2)Other transfer out



4.Closing balance                  36,420,301.32              10,519,787.50                                      46,940,088.82

Ⅱ. Accumulated
depreciation and
amortization

1.Opening balance                  17,507,685.84               2,059,461.22                                      19,567,147.06

2. Increase in current period        1,033,941.04                 76,000.46                                       1,109,941.50

(1)Accrual or
                                       926,917.56                 76,000.46                                       1,002,918.02
amortization

(2)Converted difference in
Foreign Currency                       107,023.48                                                                   107,023.48
Statements

3.Decrease in current period

(1)Disposal

(2)Other transfer out


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4.Closing balance                         18,541,626.88            2,135,461.68                                       20,677,088.56

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                         17,878,674.44            8,384,325.82                                       26,263,000.26

2.Opening balance                         18,629,813.27            8,396,160.78                                       27,025,974.05


13. Fixed assets

                                                                                                                          Unit: RMB

                    Items                                   Closing balance                            Opening balance

Fixed assets                                                           3,625,967,658.09                             3,379,608,199.26

Total                                                                  3,625,967,658.09                             3,379,608,199.26


(1)Fixed assets

                                                                                                                          Unit: RMB

                                                                Measurement
                          Buildings and       Machinery and                       Transportation Office and other
          Items                                                   analysis                                               Total
                             structures         equipment                            vehicles       equipment
                                                                 equipment

Ⅰ. Original book
value:

  1.Opening
                       2,157,358,358.56 3,050,563,131.59         77,768,081.99 40,349,952.76       224,254,779.28 5,550,294,304.18
balance

  2. Increase in
                            111,153,335.56     278,877,291.33    41,353,626.09     1,581,881.78      9,740,831.02    442,706,965.78
current period

   (1)Acquisition                            124,325,170.02    41,146,993.83     1,489,848.06      8,732,046.43    175,694,058.34



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    (2)Transferred
in from construction     105,968,706.98   148,477,278.54      206,632.26                                       254,652,617.78
in progress

     (3)Business
combination

   (4)Converted
difference in
                           5,184,628.58     6,074,842.77                       92,033.72      1,008,784.59      12,360,289.66
Foreign Currency
Statements

  3. Decrease in
                                           17,441,634.83     1,347,431.51   2,109,809.33       3,118,668.47     24,017,544.14
current period

    (1)Disposal or
                                           17,441,634.83     1,347,431.51   2,109,809.33       3,118,668.47     24,017,544.14
scrap



  4.Closing balance     2,268,511,694.12 3,311,998,788.09 117,774,276.57 39,822,025.21      230,876,941.83 5,968,983,725.82

Ⅱ.Accumulated
depreciation

  1.Opening
                         509,863,544.24 1,443,454,422.50    32,773,108.28 30,515,107.61     150,112,811.87 2,166,718,994.50
balance

  2. Increase in
                          45,052,679.92   131,765,110.76     2,746,767.73   2,108,258.55     10,233,255.85     191,906,072.81
current period

     (1)Accrual         44,186,222.63   128,551,265.70     2,746,767.73   2,065,618.96      9,806,448.80     187,356,323.82

        (2) Converted
difference in
                             866,457.29     3,213,845.06                       42,639.59        426,807.05       4,549,748.99
Foreign Currency
Statements

  3. Decrease in
                                           13,440,835.83     1,209,644.23   2,026,811.77      2,898,818.17      19,576,110.00
current period

    (1)Disposal or
                                           13,440,835.83     1,209,644.23   2,026,811.77      2,898,818.17      19,576,110.00
scrap



  4.Closing balance      554,916,224.16 1,561,778,697.43    34,310,231.78 30,596,554.39     157,447,249.55 2,339,048,957.31

Ⅲ. Provision for
impairment

  1.Opening
                                             3,967,110.42                                                        3,967,110.42
balance

  2. Increase in
current period



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     (1)Accrual



  3. Decrease in
current period

    (1)Disposal or
scrap



  4.Closing balance                             3,967,110.42                                                               3,967,110.42

Ⅳ. Carrying amount

  1.Closing balance    1,713,595,469.96 1,746,252,980.24         83,464,044.79      9,225,470.82       73,429,692.28 3,625,967,658.09

  2.Opening
                       1,647,494,814.32 1,603,141,598.67         44,994,973.71      9,834,845.15       74,141,967.41 3,379,608,199.26
balance


(2)Fixed assets leased through financial leasing

                                                                                                                               Unit: RMB

                                Original book                Accumulated                 Provision for
          Items                                                                                                    Carrying amount
                                       value                 depreciation                 impairment

Buildings and structures               154,848,669.67            23,947,897.44                                           130,900,772.23


(3)Fixed assets with certificate of titles being unsettled

                                                                                                                               Unit: RMB

                   Items                       Carrying amount                             Reasons for unsettlement

                                                                        New assets, the certificate of title to be processed uniformly
13# factory in Meizhu North district                    85,729,372.11
                                                                        after the overall completion

Finished goods warehouse in Meizhu                                      New assets, the certificate of title to be processed uniformly
                                                        23,998,659.71
North district                                                          after the overall completion

                                                                        New assets, the certificate of title to be processed uniformly
14# factory in Meizhu North district                    26,710,037.05
                                                                        after the overall completion

                                                                        New assets, the certificate of title to be processed uniformly
Staff dormitory in Meizhu (Phase II)                    25,416,491.44
                                                                        after the overall completion

                                                                        New assets, the certificate of title to be processed uniformly
15# factory in Meizhu North district                    53,734,878.02
                                                                        after the overall completion

                                                                        New assets, the certificate of title to be processed uniformly
Class A warehouse                                        1,968,323.02
                                                                        after the overall completion

                                                                        New assets, the certificate of title to be processed uniformly
Auxiliary room                                           1,629,791.85
                                                                        after the overall completion



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Subtotal                                             219,187,553.20

Other remarks

14. Construction in progress

                                                                                                                             Unit: RMB

                     Items                                Closing balance                               Opening balance

Construction in progress                                                  492,864,704.94                                480,959,262.46

Total                                                                     492,864,704.94                                480,959,262.46


(1)Details of construction in progress

                                                                                                                             Unit: RMB

                                                  Closing balance                                    Opening balance
             Items                                 Provision for       Carrying       Book balance      Provision for     Carrying
                                 Book balance
                                                    impairment          amount                          impairment         amount

Annual production of 7.3
million sets of new energy
                                 121,470,097.80                     121,470,097.80     78,050,708.13                     78,050,708.13
vehicle thermal management
system components project

Annual production of 12.7
million sets of automotive air
                                   1,251,699.09                        1,251,699.09    50,740,941.36                     50,740,941.36
conditioning control
components project

Annual production of 11.5
million sets of new energy       126,534,443.53                     126,534,443.53 100,809,231.62                       100,809,231.62
auto parts project

Construction of a
micro-channel heat exchanger
                                      92,307.69                           92,307.69         92,307.69                        92,307.69
production line project in
Mexico

Newly added an annual
production of 800,000 heat
                                   1,014,928.03                        1,014,928.03        160,228.03                      160,228.03
exchanger technology
transformation projects

Infrastructure project of
                                  12,071,299.73                       12,071,299.73     5,043,312.03                      5,043,312.03
Meizhu North district

Annual production of 65
million sets of commercial        20,370,108.79                       20,370,108.79    13,815,107.62                     13,815,107.62
refrigeration and air



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conditioning intelligent
control components
construction project

Annual production of 103
million residential
                                     33,214,448.15                       33,214,448.15       19,942,496.28                         19,942,496.28
air-conditioning control
components project

Annual production of 1
million sets of new energy
                                      2,957,132.27                        2,957,132.27         2,877,561.33                            2,877,561.33
vehicle air-conditioning
thermal sensors project

Annual production of 2
million sets of automotive              504,871.82                            504,871.82       2,088,782.95                            2,088,782.95
air-conditioning parts project

Vietnam industrial plant
                                     51,029,148.57                       51,029,148.57       32,155,560.02                         32,155,560.02
project

Others                              122,354,219.47                     122,354,219.47 175,183,025.40                              175,183,025.40

Total                               492,864,704.94                     492,864,704.94 480,959,262.46                              480,959,262.46


(2)Changes of significant construction in progress in current period

                                                                                                                                           Unit: RMB

                                                                                                                  Includin
                                              Transferr                                               Accumul                 Capitaliz
                                                           Other               Accumul                               g:
                                                 ed                                      Completi       ated                  ation rate
                                   Increase               amounts                ated                             capitaliz
                                              to fixed                                       on       amount                     for
                       Opening       d in                 decrease Closing investme                                  ed                      Fund
  Items     Budget                            assets in                                    percenta      of                    interest
                       balance     current                 d in     balance     nt to                             interest                  source
                                                the                                          ge       capitaliz                  in
                                   period                 current              budget                                in
                                               current                                       (%)         ed                    current
                                                          period                 (%)                              current
                                               period                                                 interest                 period
                                                                                                                   period

Annual
producti
on of 7.3
million
sets of
new         468,600, 78,050,7 82,385,1 38,965,7                     121,470,                                                               Raised
                                                                                49.03%
energy       000.00        08.13      60.56      70.89               097.80                                                                funds
vehicle
thermal
manage
ment
system


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compone
nts
project

Annual
producti
on of
12.7
million
sets of
automoti 215,000, 50,740,9 31,270,2 80,759,5      1,251,69                                                   Raised
                                                             80.39%
ve air       000.00    41.36     97.35    39.62       9.09                                                   funds
conditio
ning
control
compone
nts
project

Annual
producti
on of
11.5
million
            528,800, 100,809, 134,131, 108,406,   126,534,                                                   Raised
sets of                                                      64.37%
             000.00   231.62    873.58   661.67    443.53                                                    funds
new
energy
auto
parts
project

Construc
tion of a
micro-ch
annel
heat
exchang     96,075,0 92,307.6                     92,307.6
                                                             94.20%                                          Other
er            00.00        9                            9
producti
on line
project
in
Mexico

Newly
            73,560,0 160,228. 854,700.            1,014,92
added an                                                     98.10%                                          Other
              00.00       03       00                 8.03
annual


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producti
on of
800,000
heat
exchang
er
technolo
gy
transfor
mation
projects

Infrastru
cture
project
             482,340, 5,043,31 9,118,89 2,090,90   12,071,2
of                                                            57.63%                                          Other
              000.00      2.03     5.95     8.25     99.73
Meizhu
North
district

Annual
producti
on of 65
million
sets of
commerc
ial
refrigerat
ion and
air          1,526,30 13,815,1 6,555,00            20,370,1
                                                              1.33%                                           Other
conditio     2,000.00   07.62      1.17              08.79
ning
intellige
nt
control
compone
nts
construct
ion
project

Annual
producti
             1,104,05 19,942,4 22,702,6 9,430,68   33,214,4
on of                                                         45.72%                                          Other
             0,000.00   96.28    38.70      6.83     48.15
103
million



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residenti
al
air-condi
tioning
control
compone
nts
project

Annual
producti
on of 1
million
sets of
new
            44,786,0 2,877,56 179,400. 99,829.0      2,957,13
energy                                                          39.21%                                          Other
              00.00       1.33       00         6        2.27
vehicle
air-condi
tioning
thermal
sensors
project

Annual
producti
on of 2
million
sets of
            42,830,0 2,088,78             1,583,91   504,871.
automoti                                                        119.98%                                         Other
              00.00       2.95               1.13         82
ve
air-condi
tioning
parts
project

Vietnam
            USD18,6
industria              32,155,5 21,157,8 2,284,21    51,029,1
            40,000.0                                            40.40%                                          Other
l plant                  60.02    02.84      4.29      48.57
                  0
project

                       305,776, 308,355, 243,621,    370,510,
Total                                                             --       --                                      --
                        237.06   770.15    521.74     485.47




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15. Intangible Assets

(1)Details of intangible assets

                                                                                                                                         Unit: RMB

                                                                                                              Patented
                                                                   AWECO         RANCO                       technology
                                                                                              Intellectual
                                                                  intellectual intellectual                      of
                                                  Overseas                                     property
                Land use    Patent   Non-patent                    property      property                    electronic
     Items                                           land                                     right of air                   Software      Total
                 right      right    technology                       and          and                       expansion
                                                  ownership                                   conditione
                                                                   business      business                      valve
                                                                                              r controller
                                                                  resources      resources                   controller
                                                                                                             of Dotech

Ⅰ.
Original
Carrying
amount


             553,075,84                           29,413,801 103,486,78 1,758,479. 42,150,175 6,634,364. 27,892,661 764,412,12
1.Opening
                     9.31                                   .81          9.02            45           .56              80          .59        1.54
balance


2.Increase
                                                                  1,784,737.                                                3,876,142. 6,543,897.
d in         376,887.43                           475,709.06                     30,420.30
                                                                            64                                                     70              13
current
period

        (1)
                                                                                                                            3,635,042. 3,635,042.
Acquisitio
                                                                                                                                   77              77
n

        (2)
Internal
research
and
developme
nt

        (3)
Business
combinatio
n

(4)
Converted                                                         1,784,737.                                                             2,908,854.
             376,887.43                           475,709.06                     30,420.30                                  241,099.93
difference                                                                  64                                                                     36
in Foreign


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                                             2020 Interim Report of Zhejiang Sanhua Intelligent Control Co., Ltd.


Currency
Statements


3.Decrease
d in                                                                                          341,251.27 341,251.27
current
period

        (1)
                                                                                              341,251.27 341,251.27
Disposal




             553,452,73      29,889,510 105,271,52 1,788,899. 42,150,175 6,634,364. 31,427,553 770,614,76
4.Closing
                     6.74           .87         6.66          75           .56          80           .02        7.40
balance

Ⅱ.
Accumulat
ed
amortizati
on


             86,030,559                   103,485,85                21,257,295                22,519,438 234,414,99
1.Opening                    205,745.37                363,239.45                552,863.70
                       .93                      4.20                       .24                       .24        6.13
balance


2.Increase
                5,528,131.                1,785,672.                1,947,508.                1,664,441. 11,336,543
d in                          69,310.41                  9,760.30                331,718.22
                       27                        46                        80                        95           .41
current
period

        (1) 5,528,131.                                            1,947,508.                1,456,578. 9,330,200.
                              66,263.84                                          331,718.22
Accrual                27                                                  80                        82           95

(2)
Converted
difference                                1,785,672.                                                       2,006,342.
                               3,046.57                  9,760.30                             207,863.13
in Foreign                                       46                                                               46
Currency
Statements

       3.
Decreased
                                                                                              341,251.27 341,251.27
in current
period

        (1)
                                                                                              341,251.27 341,251.27
Disposal



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               91,558,691                105,271,52                23,204,804                23,842,628 245,410,28
4.Closing                   275,055.78                372,999.75                884,581.92
                      .20                      6.66                       .04                       .92        8.27
balance

Ⅲ.Provisi
on
for
impairmen
t


                            4,129,606.                                                                    4,129,606.
1.Opening
                                   66                                                                            66
balance

       2.
Increased
                             61,149.10                                                                    61,149.10
in current
period

           (1)
Accrual

    (2)
Converted
difference
                             61,149.10                                                                    61,149.10
in Foreign
Currency
Statements

       3.
Decreased
in current
period

       (1)
Disposal




                            4,190,755.                                                                    4,190,755.
4.Closing
                                   76                                                                            76
balance

Ⅳ.
Carrying
amount


               461,894,04   25,423,699                1,415,900. 18,945,371 5,749,782. 7,584,924. 521,013,72
1.Closing
                     5.54          .33                       00           .52          88           10         3.37
balance



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                467,045,28                           25,078,449                   1,395,240. 20,892,880 6,081,501. 5,373,223. 525,867,51
2.Opening                                                              934.82
                      9.38                                   .78                         00         .32         10            35          8.75
balance

At the balance sheet date, intangible assets formed from internal R&D account for 0.00% of total closing balance
of intangible assets.

16. Goodwill

(1)Original Carrying amount of goodwill

                                                                                                                                      Unit: RMB

Investee or events                             Increased in current period               Decreased in current period
   resulting in       Opening balance     Due to business                                                                   Closing balance
                                                                                        Disposal
    goodwill                               combination

R-Squared
                         31,959,091.60                                                                                        31,959,091.60
Puckett Inc.

        Total            31,959,091.60                                                                                        31,959,091.60


17. Long-term prepayments

                                                                                                                                      Unit: RMB

                                                  Increased in current
          Items              Opening balance                                   Amortization        Other decreases      Closing balance
                                                        period

Plant renovation
                                  7,223,760.94             111,964.96              3,423,783.44                                3,911,942.46
expenditure

Compensated use fee
                                   968,938.03                                        484,468.98                                    484,469.05
for emission rights

Tools                              527,421.67                                        105,484.32                                    421,937.35

Total                             8,720,120.64             111,964.96              4,013,736.74                                4,818,348.86

Other remarks


18. Deferred tax assets / deferred tax liabilities

(1)Deferred tax assets before offset

                                                                                                                                      Unit: RMB

                                                  Closing balance                                         Opening balance

           Items                Deductible temporary               Deferred tax          Deductible temporary          Deferred tax
                                     difference                       assets                   difference                    assets

Provision for bad debt                   69,545,031.10                 14,408,313.03               71,519,997.24              14,114,166.19


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Provision for inventory
                                       68,581,055.63                11,089,479.84                 69,518,382.06             11,230,078.81
write-down

Unrealized profit from
                                      163,448,516.71                18,214,164.00                223,604,977.62             25,040,965.45
internal transactions

Deductible losses                      44,805,724.24                 9,694,985.94                 72,228,904.20             13,514,908.45

Deferred income:
                                       79,093,357.32                12,664,031.04                 82,537,550.43             12,800,632.56
government grants

Provision for fixed assets
                                         3,898,415.90                  584,762.40                  3,898,415.90                584,762.39
impairments

Floating loss on
                                          382,124.00                     62,148.60                  126,364.40                   18,954.66
derivatives

Share-based payment                    67,151,015.24                10,432,601.50                 47,235,572.03              7,487,443.77

Provisional cost estimate              47,564,143.70                 7,134,621.56                 27,740,129.55              4,161,019.41

           Total                      544,469,383.84                84,285,107.91                598,410,293.43             88,952,931.69


(2)Deferred tax liabilities before offset

                                                                                                                                 Unit: RMB

                                                 Closing balance                                       Opening balance

           Items              Taxable temporary                                          Taxable temporary
                                                          Deferred tax liabilities                                Deferred tax liabilities
                                    difference                                               difference

Depreciation and
                                      408,599,505.53                64,804,531.68                396,585,435.74             62,347,023.15
amortization expense

Floating gain on
                                       15,889,565.30                 2,383,434.80                  2,906,246.02                435,936.90
derivatives

Floating gain on financial
                                       12,226,291.01                 2,131,283.02                 12,526,390.31              2,266,401.66
products

           Total                      436,715,361.84                69,319,249.50                412,018,072.07             65,049,361.71


(3)Details of unrecognized deferred tax assets

                                                                                                                                 Unit: RMB

                    Items                                    Closing balance                               Opening balance

Provision for bad debt                                                       51,629,791.56                                  36,799,162.90

Provision for inventory write-down                                           22,286,505.07                                  22,913,416.12

Deductible losses of subsidiaries                                            27,578,280.52                                  97,583,268.62

Provision for fixed assets impairments                                               68,694.52                                   68,694.52

Provision for intangible                                                       4,190,755.76                                  4,129,606.66


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assets impairment

Floating loss on derivatives                                                 8,067,489.09

Share-based payment                                                          1,606,100.11                                    1,840,976.14

Total                                                                     115,427,616.63                                  163,335,124.96


(4)Maturity years of deductible losses of unrecognized deferred tax assets

                                                                                                                               Unit: RMB

         Maturity years                  Closing balance                     Opening balance                        Remarks

Year 2020                                            129,751.40                           770,856.07

Year 2021                                          1,257,463.18                       14,131,496.37

Year 2022                                                                             23,008,626.48

Year 2023                                         15,620,641.85                       24,053,673.84

Year 2024                                          9,171,321.25                       17,510,655.24

Year 2025                                            614,389.17

Year 2028                                                                             10,478,078.42

Year 2029                                                                                7,629,882.20

Year 2030                                            784,713.67

             Total                                27,578,280.52                       97,583,268.62                     --

Other remarks:

19. Other non-current assets

                                                                                                                               Unit: RMB

                                                           Closing balance                               Opening balance
                     Items                                  Provision for     Carrying                       Provision for    Carrying
                                           Book balance                                       Book balance
                                                             impairment        amount                        impairment        amount

                                            154,342,209.                     154,342,209. 179,238,257.                       179,238,257.
Advanced payment for assets purchasing
                                                      19                                 19             09                               09

                                            154,342,209.                     154,342,209. 179,238,257.                       179,238,257.
Total
                                                      19                                 19             09                               09

Other remarks:

20. Short-term borrowings

(1)Categories of short-term borrowings

                                                                                                                               Unit: RMB



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                     Items                       Closing balance                          Opening balance

Secured borrowings                                            770,795,000.00                             730,000,000.00

Overseas loan under domestic guarantee                        495,427,500.00                             562,083,652.90

Accrued interest                                                   1,155,741.24                             3,526,919.17

Total                                                       1,267,378,241.24                           1,295,610,572.07


21. Derivative financial liabilities

                                                                                                              Unit: RMB

                     Items                       Closing balance                          Opening balance

Foreign exchange forward contract                                  8,401,313.09                              126,364.40

Futures contract                                                     48,300.00

Total                                                              8,449,613.09                              126,364.40

Other remarks:

22. Notes payable

                                                                                                              Unit: RMB

                   Categories                    Closing balance                          Opening balance

Bank acceptance bill                                          973,763,888.02                           1,130,668,415.32

Total                                                         973,763,888.02                           1,130,668,415.32

At the balance sheet date, balances due but unpaid totaled RMB 0.

23. Accounts payable

(1)Details of accounts payable

                                                                                                              Unit: RMB

                     Items                       Closing balance                          Opening balance

Within 1 year(including 1 year)                             1,533,770,039.02                           1,538,694,359.81

1 to 2 years                                                   21,896,931.86                              36,247,361.15

2 to 3 years                                                       4,847,681.00                             7,254,952.39

Over 3 years                                                       4,572,125.54                             5,567,079.27

                     Total                                  1,565,086,777.42                           1,587,763,752.62




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24. Advances received

(1)Details of advances received

                                                                                                                             Unit: RMB

                      Items                                Closing balance                               Opening balance

Advances received from sales of goods                                       31,296,264.17                              23,453,218.32

                      Total                                                 31,296,264.17                              23,453,218.32


25. Employee benefits payable

(1)Details of employee benefits payable

                                                                                                                             Unit: RMB

                                                          Increased in current         Decreased in current
           Items                 Opening balance                                                                 Closing balance
                                                                 period                      period

Ⅰ.Short-term employee
                                       221,838,334.79            700,236,484.92               763,597,486.94         158,477,332.77
benefits

Ⅱ.Post-employment
benefits - defined                         3,701,568.23           14,445,109.26                16,128,693.35               2,017,984.14
contribution plan

Ⅲ.Termination benefits                    3,457,580.80                                         1,592,729.13               1,864,851.67

           Total                       228,997,483.82            714,681,594.18               781,318,909.42         162,360,168.58


(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 subsidy 203,198,192.24               585,062,334.41            656,434,798.79         131,825,727.86

2. Employee welfare fund                        2,134,102.51         25,652,596.89             27,008,804.02                777,895.38

3. Social insurance premium                    11,162,051.71         49,376,025.31             40,948,536.92           19,589,540.10

     Including: Medicare premium                2,023,459.75         10,098,636.99             10,751,102.22               1,370,994.52

                   Occupational injuries
                                                  211,099.28              616,425.35              671,139.76                156,384.87
premium

                   Maternity premium              233,674.66              300,264.44              412,512.75                121,426.35

Overseas social security contributions          8,693,818.02         38,360,698.53             29,113,782.19           17,940,734.36

4. Housing provident fund                         265,855.34          11,935,507.71            11,871,329.34                330,033.71

5. Trade union fund and employee                  104,574.42           2,327,899.34             2,301,195.18                131,278.58


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education fund

Salaries of subcontractor                   3,511,341.29           24,981,456.04           25,032,822.69               3,459,974.64

Share-based payment                         1,462,217.28              900,665.22                                       2,362,882.50

Total                                     221,838,334.79          700,236,484.92          763,597,486.94           158,477,332.77


(3)Details of defined contribution plan

                                                                                                                         Unit: RMB

                                                           Increased in current    Decreased in current
                 Items                   Opening balance                                                     Closing balance
                                                                 period                   period

1. Basic endowment insurance premium        3,584,148.09        13,982,466.15              15,605,518.18               1,961,096.06

2. Unemployment insurance premium             117,420.14           462,643.11                 523,175.17                 56,888.08

                   Total                    3,701,568.23        14,445,109.26              16,128,693.35               2,017,984.14

Other remarks:

26. Taxes and rates payable

                                                                                                                         Unit: RMB

                    Items                              Closing balance                               Opening balance

Enterprise income tax                                                     22,518,002.09                             27,169,457.87

VAT                                                                       14,994,809.42                             12,303,529.64

Individual income tax                                                      4,004,798.97                                6,570,153.06

Urban maintenance and construction tax                                     2,171,687.86                                2,004,384.14

Education surcharge                                                        1,136,266.20                                1,098,720.52

Local education surcharge                                                   757,510.79                                  623,676.41

Housing property tax                                                       6,904,279.76                                5,263,984.54

Land use tax                                                               3,319,306.44                                2,277,425.60

Local foundation for water works                                             52,046.35                                    6,051.60

Others                                                                     1,103,077.56                                 875,224.37

                    Total                                                 56,961,785.44                             58,192,607.75

Other remarks:

27. Other payables

                                                                                                                         Unit: RMB

                    Item                               Closing balance                               Opening balance

Dividend payable                                                           1,310,000.00                                1,772,750.00



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Other payables                                                 291,575,146.18                             159,464,464.88

                    Total                                      292,885,146.18                             161,237,214.88


(1)Dividend payable

                                                                                                               Unit: RMB

                    Items                         Closing balance                          Opening balance

Dividend of restricted shares                                                                                1,772,750.00

Dividend payable attributable to
                                                                    1,310,000.00
non-controlling interest

                    Total                                           1,310,000.00                             1,772,750.00

Other remarks, including disclosure of reason for unpaid dividend payable with aging over 1 year

(2)Other payables

1)Other payables listed by nature

                                                                                                               Unit: RMB

                    Items                         Closing balance                          Opening balance

Restricted shares repo obligations                             173,032,675.00                              57,578,920.00

Freight and miscellaneous charges                               34,794,242.70                              39,930,705.16

Product warranty fee                                                3,023,787.70                             3,114,096.06

Guarantee deposit                                               19,318,281.20                              18,044,694.61

Rent and property fee                                               4,621,092.70                             2,609,059.40

Compensation for product quality loss                           20,502,176.15                                1,125,611.68

Collection and payment for talent incentive                         2,000,000.00                             1,969,150.29

Others                                                          34,282,890.73                              35,092,227.68

Total                                                          291,575,146.18                             159,464,464.88


28. Non-current liabilities due within one year

                                                                                                               Unit: RMB

                    Items                         Closing balance                          Opening balance

Guaranteed loans                                                                                          222,000,000.00

Accrued interest                                                                                              228,097.22

Total                                                                                                     222,228,097.22

Other remarks:



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29. Long-term borrowings

(1)Categories of long-term borrowings

                                                                                                                        Unit: RMB

                   Items                                   Closing balance                          Opening balance

Secured borrowings                                                      790,582,938.30

Overseas loan under domestic guarantee                                  467,285,650.00                             392,371,834.47

Accrued interest                                                             1,245,176.84                              510,445.62

Total                                                                 1,259,113,765.14                             392,882,280.09


30. Long-term payables

                                                                                                                        Unit: RMB

                   Items                                   Closing balance                          Opening balance

Long-term payables                                                       92,435,999.26                              94,235,857.77

Total                                                                    92,435,999.26                              94,235,857.77


(1)Long-term payables listed by nature

                                                                                                                        Unit: RMB

                   Items                                   Closing balance                          Opening balance

Payables for financial leasing                                           90,811,210.12                              92,607,634.64

Stock appreciation rights deposit                                            1,624,789.14                             1,628,223.13

Other remarks:
Payables for financial leasing
                                    Remaining lease term                                                 Amount
Within 1 year(including 1 year)                                                                                        7,623,284.47
1 to 2 years                                                                                                           7,078,477.83
2 to 3 years                                                                                                          10,192,259.83
Over 3 years                                                                                                          74,697,343.36
                                          Subtotal                                                                    99,591,365.49
Less: Unrecognized financing charges                                                                                   8,780,155.37
                                          Subtotal                                                                    90,811,210.12




31. Deferred income

                                                                                                                        Unit: RMB



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                                                 Increased in current Decreased in current
         Items             Opening balance                                                         Closing balance             Reason
                                                          period                period

Government grants               82,537,550.43             5,184,500.00           8,628,693.11            79,093,357.32

Total                           82,537,550.43             5,184,500.00           8,628,693.11            79,093,357.32              --

Projects related to government grants:
                                                                                                                                      Unit: RMB

                                                                              The amount
                                                                   Grants                   offsetting                                   Related
                                       Openi Increase                         recorded as
                                                             included into                   cost and                                       to
                                         ng        d in                          other                        Other       Closing
                 Items                                       Non-operating                  expenses in                                  assets/rel
                                       balanc current                         income in                     changes       balance
                                                               revenue in                     current                                     ated to
                                          e       period                        current
                                                             current period                     period                                   income
                                                                                period

Comprehensive investment award
                                        3,343,                                                                           3,164,192. Related
for technological transformation of                                            178,944.00
                                       136.00                                                                                   00 to assets
industrial enterprises in Wuhu City

Policy grant for Wuhu City's strong
                                       795,00                                                                            750,000.0 Related
industrial base and manufacturing                                               45,000.00
                                         0.00                                                                                       0 to assets
strong province

Grant for an annual output of 2
                                        2,295,                                                                           2,037,443. Related
million sets of high-efficiency                                                257,973.82
                                       417.72                                                                                   90 to assets
energy-saving inverter controllers

Special fund grant for multistory
                                        5,215,                                                                           5,104,160. Related
factory buildings of small and                                                 110,959.98
                                       120.26                                                                                   28 to assets
medium-sized enterprises

Four-way reversing valve               733,33                                                                            653,333.4 Related
                                                                                79,999.98
optimization project                     3.40                                                                                       2 to assets

Technical transformation project for
the production line of energy-saving
                                       624,03                                                                            560,577.0 Related
residential air-conditioning control                                            63,461.52
                                         8.60                                                                                       8 to assets
components with an annual output
of 50 million sets

Industrial transfer projects and       450,69                                                                            450,690.7 Related
single equipment investment grant        0.70                                                                                       0 to assets

Comprehensive award and
compensation for investment in          2,218,                                                                           2,009,487. Related
                                                                               209,178.54
technological transformation of        666.33                                                                                   79 to assets
industrial enterprises

Industrial transformation and
                                        1,615,                                                                           1,514,046. Related
upgrading, technological                                                       101,212.50
                                       259.34                                                                                   84 to assets
transformation and industrial


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investment

Grant for research and development
project of ultrasonic argon protected            1,000,00                                                 950,000.0 Related
                                                                     49,999.98
welding self-fusion connection                      0.00                                                          2 to assets
technology for liquid storage tank

Grant for technical transformation
                                        3,032,                                                           2,653,000. Related
project of newly increased 800000                                   379,000.00
                                        000.00                                                                   00 to assets
sets of heat exchanger per year

Technical transformation project of
                                        5,008,                                                           4,650,555. Related
annual output of 100000 large heat                                  357,735.00
                                        290.00                                                                   00 to assets
exchangers

Grant for commercial machine
                                        2,030,                                                           1,660,950. Related
micro-channel heat exchanger                                        369,100.00
                                        050.00                                                                   00 to assets
technical transformation project

Grant for air-conditioning
                                        1,000,                                                            500,000.0 Related
component micro-channel heat                                        500,000.00
                                        000.00                                                                    0 to assets
exchanger project

Grant for project of an annual
output of 15 million commercial         4,898,                     1,224,499.9                           3,673,500. Related
refrigeration and air-conditioning      000.16                               8                                   18 to assets
automatic control components

Intelligent factory technological
                                        4,124,                                                           3,874,999. Related
transformation project based on The                                 250,000.02
                                        999.93                                                                   91 to assets
Internet of Things technology

Grant for innovation ability
                                        3,750,                                                           3,437,500. Related
construction project of National                                    312,499.98
                                        000.12                                                                   14 to assets
Enterprise Technology Center

Grant for construction project of
public test and detection service       1,399,                                                           1,049,999. Related
                                                                    350,000.04
platform for refrigeration              999.72                                                                   68 to assets
components

Grant for the construction project of
automatic control components for        960,00                                                            720,000.0 Related
                                                                    240,000.00
residential air conditioners with an      0.00                                                                    0 to assets
annual output of 10 million

Grant for construction project of
public inspection and testing service 641,66                                                              449,166.8 Related
                                                                    192,499.98
platform for automobile air               6.83                                                                    5 to assets
conditioning parts

Annual production of 3 million          816,75                                                            767,250.0 Related
                                                                     49,500.00
self-circulating superconducting          0.00                                                                    0 to assets


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plates technology project

Grant for construction project of 25
million sets of new energy-saving
                                       476,00                                                          408,000.2 Related
and environmental protection                                      67,999.98
                                         0.24                                                                  6 to assets
variable frequency air conditioning
expansion valve

Grant for pollution source treatment 1,347,                                                           1,257,941. Related
                                                                  89,450.00
project                                391.67                                                                 67 to assets

Grant for the annual production of
                                       5,280, 4,184,50                                                9,080,275. Related
11.5 million sets of new energy auto                             384,224.96
                                       000.00     0.00                                                        04 to assets
parts project

Grant for the technical
transformation project with an         2,760,                                                         2,484,000. Related
                                                                 276,000.00
annual output of 2 million sets of     000.08                                                                 08 to assets
air-conditioning parts

Grant for 1 million sets of
air-conditioning thermal sensor        6,407,                                                         5,949,775. Related
                                                                 457,674.98
technology transformation of new       450.08                                                                 10 to assets
energy vehicle

Grant for the industrialization
project of 20 million refrigeration    1,443,                                                          861,055.2 Related
                                                                 582,217.50
and air conditioning automatic         272.70                                                                  0 to assets
control components

Grant for intelligent manufacturing
technology transformation project      2,991,                                                         2,811,220. Related
                                                                 180,000.00
of 6 million sets of commercial        220.00                                                                 00 to assets
refrigeration components per year

Grant for technical transformation
                                       6,628,                                                         6,214,125. Related
project of intelligent manufacturing                             414,274.99
                                       400.00                                                                 01 to assets
of refrigeration components

Grant for technical transformation
project of 30 million sets of high
                                       7,200,                                                         6,799,999. Related
efficiency energy saving                                         400,000.01
                                       000.00                                                                 99 to assets
refrigeration and air conditioning
control components

Grant for energy-saving project with
an annual output of 35 million sets    3,051,                                                         2,596,111. Related
                                                                 455,285.37
of L-type four-way reversing valve     396.55                                                                 18 to assets
for air conditioners

                                       82,537 5,184,50          8,628,693.1                            79,093,35
                Subtotal
                                       ,550.4     0.00                    1                                 7.32


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                                           3

Other remarks:

32. Other non-current liabilities

                                                                                                                     Unit: RMB

                  Items                                 Closing balance                          Opening balance

Engineering agent construction fund                                    32,512,629.00                             32,512,629.00

Long-term employee rights protection
                                                                       49,923,317.79                             49,276,299.52
payment

                  Total                                                82,435,946.79                             81,788,928.52

Other remarks:
     According to local investment promotion policies, the "seven connections and one leveling" project of the
construction land of the Wuhu city is completed by Wuhu high-tech Industrial Development Zone Administration
Committee. As the state-owned assets management unit of Wuhu high-tech Industrial Development Zone, Wuhu
Xinma Investment Co., Ltd. and Wuhu High-tech Construction Development Co., Ltd. entrusted Wuhu Sanhua
Auto-control Components Co., Ltd and Wuhu Sanhua Technology Co., Ltd. to build the "seven connections and
one leveling" project, and allocated RMB 72.03 million as engineering fund. As of June 30, 2020, the
accumulated amount of hedging and written-off of engineering agent construction fund and project expense was
RMB 39.5174 million, and the amount to be written-off at the end of the period was RMB 32.5126 million.
     Long-term employee rights protection payment: retirement pensions of Mr. Harald Schrott who is the former
actual controller of the Germany Aweco residential appliances business, and his father Hugo Schrott. Based on
Austrian labor law, one-time welfare compensation for termination of labor contract and one-time welfare
compensation for retirement, disability and death. The amount of such liabilities is estimated and determined by
an independent actuary.

33. Share capital

                                                                                                                     Unit: RMB

                                                   Changed amount of current period(+/-)
                   Opening                                          Reserve                                        Closing
                                   Issue of new
                    balance                       Bonus shares   transferred to    Others          Subtotal        balance
                                      shares
                                                                     shares

                 2,765,657,898.                                                                                 3,592,041,778.
Total shares                                                     826,675,080.00    -291,200.00 826,383,880.00
                              00                                                                                             00

Other remarks:
      1   Approved by the Company’s shareholders meeting, the Company transferred 826,675,080 shares to all
          shareholders (excluding repo shareholders) with capital reserve at the ratio of increasing 3 shares for
          every 10 shares.
      2   Repo and write-down of 291,200 shares of equity incentive restricted shares that have not met unlock
          condition.


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34. Capital reserve

                                                                                                                  Unit: RMB

                                                 Increased in current      Decreased in current
          Items            Opening balance                                                             Closing balance
                                                       period                     period

Capital premium(Share
                                970,924,083.94                                     877,522,810.00             93,401,273.94
premium)

Other capital reserve           119,875,938.12            30,463,131.96                                      150,339,070.08

          Total               1,090,800,022.06            30,463,131.96            877,522,810.00            243,740,344.02

Other remarks, including changes in the current period:
①In current period, the Company granted 12.045 million restricted shares to incentive objects with the repo
shares in the previous period, the grant price was RMB 9.85 per share, and a total of RMB 118,643,250.00 was
raised. Treasury shares decreased RMB 167,907,300.00, and share premium decreased RMB 49,264,050.00. The
restricted shares have not met the unlock condition, the Company accounted them as treasury shares, and
recognized related liabilities for repo obligation.
②Repo and cancellation of equity incentive restricted shares that have not met the unlock condition, share capital
decreased RMB 291,200.00, treasury shares decreased RMB 1,874,880.00, Share premium decreased RMB
1,583,680.00.
③Due to transfer capital reserve to share capital, Share premium decreased RMB 826,675,080.00 .
④Other capital reserve increased RMB 30,463,131.96 due to the confirmation of share-based payment
remuneration.

35. Treasury shares

                                                                                                                  Unit: RMB

                                                 Increased in current      Decreased in current
          Items            Opening balance                                                             Closing balance
                                                       period                     period

Restricted shares                59,453,800.00          118,643,250.00               5,064,375.00            173,032,675.00

Repo shares                     304,327,351.34                                     167,907,300.00            136,420,051.34

          Total                 363,781,151.34          118,643,250.00             172,971,675.00            309,452,726.34

Other remarks, including changed amount of the current period and movement reason:
①In current period, the Company granted 12.045 million restricted shares to incentive objects with the repo
shares in the previous period, the grant price was RMB 9.85 per share, and a total of RMB 118,643,250.00 was
raised. Treasury shares decreased RMB 167,907,300.00, and share premium decreased RMB 49,264,050.00. The
restricted shares have not met the unlock condition, the Company accounted them as treasury shares, and
recognized related liabilities for repo obligation.
②Repo and cancellation of equity incentive restricted shares that have not met the unlock condition, share capital
decreased RMB 291,200.00, treasury shares decreased RMB 1,874,880.00, Share premium decreased RMB
1,583,680.00.


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③In May 2020, the Company implemented the 2019 equity distribution with a dividend of RMB 3,189,495.00 for
equity incentive restricted shares, and the treasury shares and repo obligations payable were reduced by the same
amount.

36. Other comprehensive income (OCI)

                                                                                                                                       Unit: RMB

                                                                           Changed amount of the current period

                                                                   Less:      OCI Less: OCI
                                                                                                           Attributabl Attributabl
                                                       Current carried             carried
                                                                                                              e to           e to
                                      Opening           period     forward         forward        Less:                                 Closing
                 Items                                                                                     the parent Non-contr
                                       balance        cumulativ transferred to transferred income tax                                   balance
                                                                                                           Company          olling
                                                       e before profit or loss to                expense
                                                                                                              after        interest
                                                      income tax                   undistribut
                                                                                                                 tax       after tax
                                                                                   ed profit

Items to be reclassified             -39,332,748. -26,456,12                                               -26,456,12                   -65,788,
subsequently to profit or loss                   50         1.98                                                   1.98                  870.48

                                     -39,332,748. -26,456,12                                               -26,456,12                   -65,788,
          Translation reserves
                                                 50         1.98                                                   1.98                  870.48

Other comprehensive income in        -39,332,748. -26,456,12                                               -26,456,12                   -65,788,
total                                            50         1.98                                                   1.98                  870.48

Other remarks, including the effective part of the cash flow hedge profit and losses converted into the initial
recognized amount adjustment of the hedged item

37. Surplus reserve

                                                                                                                                       Unit: RMB

                                                            Increased in current          Decreased in current
            Items                Opening balance                                                                          Closing balance
                                                                    period                       period

Statutory surplus reserve             533,401,562.81                                                                           533,401,562.81

Discretionary surplus
                                        8,681,137.20                                                                                8,681,137.20
reserve

Reserve fund                           17,813,919.38                                                                            17,813,919.38

            Total                     559,896,619.39                                                                           559,896,619.39

Remarks on surplus reserve, including movement in current period and the reason for changes:

38. Undistributed profit

                                                                                                                                       Unit: RMB

                         Items                                        Current period                              Previous period



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Balance before adjustment at the end of the
                                                                          5,278,392,288.84                       4,488,881,759.86
previous period

Add: Increase due to adjustment (or less:
                                                                                                                     8,359,634.19
decrease)

Opening balance after adjustment                                          5,278,392,288.84                       4,497,241,394.05

Add: Net profit attributable to shareholders of the
                                                                           643,481,717.35                          692,968,498.78
parent Company for current year

     Payable dividends on ordinary shares                                  413,337,540.30                          529,175,886.50

Closing balance                                                           5,508,536,465.89                       4,661,034,006.33


39. Operating revenue and Operating cost

                                                                                                                          Unit: RMB

                                        Current period cumulative                          Preceding period comparative
            Items
                                    Revenue                     Cost                     Revenue                   Cost

Main operations                    5,154,036,483.16           3,687,894,611.98           5,657,122,904.62        4,013,821,685.14

Other operations                     164,142,143.61            151,731,392.72             173,984,123.46           166,094,028.84

            Total                  5,318,178,626.77           3,839,626,004.70           5,831,107,028.08        4,179,915,713.98

Other remarks

40. Taxes and surcharges

                                                                                                                          Unit: RMB

                    Items                             Current period cumulative                Preceding period comparative

Urban maintenance and construction tax                                   11,285,362.07                              14,559,842.14

Education surcharge                                                       5,862,443.58                               7,549,103.76

Housing property tax                                                      7,739,313.64                               8,186,257.92

Land use tax                                                              3,936,973.44                               3,028,888.30

Stamp duty                                                                1,718,299.51                               1,675,871.24

Local education surcharge                                                 3,917,789.39                               5,008,401.78

Local foundation for water works                                            317,066.13                                 414,168.96

Others                                                                    1,532,392.64                               1,436,057.10

                    Total                                                36,309,640.40                              41,858,591.20

Other remarks:

41. Selling expenses

                                                                                                                          Unit: RMB


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                  Items                  Current period cumulative               Preceding period comparative

Labor cost                                                  89,959,268.53                              79,600,268.77

Warehousing, freight and miscellaneous
                                                           107,209,661.24                             107,031,581.41
charges

Entertainment expense                                       11,184,991.26                              16,553,036.80

Travel expense                                               7,216,150.87                              13,477,802.75

Market maintenance fee                                      21,127,233.51                              21,270,851.67

Advertising expense                                          3,565,221.92                               3,956,700.74

Others                                                      17,179,973.21                              21,840,634.79

                  Total                                    257,442,500.54                             263,730,876.93

Other remarks:

42. Administrative expenses

                                                                                                           Unit: RMB

                  Items                  Current period cumulative               Preceding period comparative

Labor cost                                                 180,394,958.75                             174,052,375.18

Share-based payment remuneration                            31,363,797.18                               9,774,107.10

Office expense                                              37,525,515.30                              33,355,750.99

Entertainment expense                                        4,931,757.55                               6,478,275.37

Depreciation and amortization expense                       33,079,843.36                              33,472,260.81

Intermediary service fee                                    15,638,721.85                              19,300,454.09

Vehicle expense                                              3,554,310.73                               4,306,818.34

Others                                                       8,861,840.43                              23,554,692.08

                  Total                                    315,350,745.15                             304,294,733.96

Other remarks:

43. R&D expenses

                                                                                                           Unit: RMB

                  Items                  Current period cumulative               Preceding period comparative

Labor cost                                                 133,441,569.36                             127,060,317.33

Material and power expense                                  70,421,777.52                              85,322,408.05

Depreciation and amortization expense                       16,095,750.47                              13,213,234.08

Mold manufacturing fee                                       9,274,489.97                              11,183,661.11

Travel expense                                               1,444,769.03                               3,375,949.73



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Royalties                                                      1,278,190.44                               1,240,756.22

Outsourcing R&D expense                                          734,967.97                                 772,130.15

Others                                                         7,321,413.62                               6,337,949.26

                     Total                                   240,012,928.38                             248,506,405.93

Other remarks:

44. Financial expenses

                                                                                                             Unit: RMB

                     Items                 Current period cumulative               Preceding period comparative

Interest expense                                              32,558,310.10                              26,919,773.79

Interest income                                              -19,167,271.27                             -11,053,538.87

Bank financing fee                                             1,399,332.23                               1,443,399.75

Cash discount                                                 -1,126,936.47                              -1,178,667.37

Exchange gains or losses                                     -45,679,616.29                              -5,962,024.68

Others                                                         2,122,784.66                               2,195,792.27

                     Total                                   -29,893,397.04                              12,364,734.89

Other remarks:

45. Other income

                                                                                                             Unit: RMB

         Source of the other income        Current period cumulative               Preceding period comparative

Government grants                                            100,414,953.91                              52,433,523.85

Including: VAT refund of civil welfare
                                                               5,134,826.02                               5,799,299.40
enterprises

              VAT refund on software
                                                               1,689,841.68                                 952,293.40
products in excess of tax burden

              Other government grants                         93,590,286.21                              45,681,931.05

Handling fees for withholding individual
                                                               1,113,187.32
income tax

                     Total                                   101,528,141.23                              52,433,523.85


46. Investment income

                                                                                                             Unit: RMB

                      Items                   Current period cumulative              Preceding period comparative

Investment income from long-term equity                            1,826,673.64                             508,944.08


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investments under equity method

Investment income of bank financing products                          20,408,132.79                          23,795,957.11

Gains and losses on settlement of futures
                                                                     -17,407,734.45                           -1,037,334.40
contracts

Gains and losses on settlement of foreign
                                                                     -12,822,186.77                            7,090,688.55
exchange contract

Bill discount interest                                                     -114,807.17

                         Total                                        -8,109,921.96                          30,358,255.34

Other remarks:

47. Gains or losses on changes in fair value

                                                                                                                 Unit: RMB

                    Items                      Current period cumulative                 Preceding period comparative

Floating income of bank financing
                                                                    -300,099.30
products

Floating income of futures contracts                              18,412,630.80                                 493,499.16

Floating income of foreign exchange
                                                                 -11,592,485.54                                7,942,917.80
contract

                    Total                                          6,520,045.96                                8,436,416.96

Other remarks:

48. Credit impairment loss

                                                                                                                 Unit: RMB

                    Items                      Current period cumulative                 Preceding period comparative

Provision for bad debt                                           -12,874,290.80                              -19,122,897.76

                    Total                                        -12,874,290.80                              -19,122,897.76

Other remarks:

49. Assets impairment loss

                                                                                                                 Unit: RMB

                    Items                      Current period cumulative                 Preceding period comparative

Ⅱ. Inventory write-down loss and contract
                                                                  -6,302,857.17                              -22,535,866.59
performance cost impairment loss

                    Total                                         -6,302,857.17                              -22,535,866.59

Other remarks:



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50. Gains on asset disposal

                                                                                                                          Unit: RMB

                     Items                          Current period cumulative                  Preceding period comparative

Gains on disposal of fixed assets                                           -319,355.00                                 -122,323.66


51. Non-operating revenue

                                                                                                                          Unit: RMB

                                                                                                      Amount recorded into the
             Items                   Current period cumulative      Preceding period comparative current non-recurring profit and
                                                                                                                 loss

Gains from retirement of fixed
                                                       26,006.68                           6,896.55                       26,006.68
assets

Compensation and penalty
                                                      471,406.19                     2,125,490.08                        471,406.19
income

Exempted payment                                      637,810.13                       250,063.97                        637,810.13

Others                                                331,761.81                       335,333.34                        331,761.81

             Total                                  1,466,984.81                     2,717,783.94                       1,466,984.81


52. Non-operating expenditures

                                                                                                                          Unit: RMB

                                                                                                         Amount included in
             Items                   Current period cumulative      Preceding period comparative
                                                                                                      non-recurring profit or loss

Donation expenditures                                  52,072.82                          44,582.08                       52,072.82

Losses on retirement of fixed
                                                    1,109,947.20                     1,055,756.60                       1,109,947.20
assets

Others                                                192,059.13                       157,478.28                        192,059.13

Total                                               1,354,079.15                     1,257,816.96                       1,354,079.15

Other remarks:

53. Income tax expenses

(1)Income tax expenses

                                                                                                                          Unit: RMB

                     Items                          Current period cumulative                  Preceding period comparative

Current period income tax expenses                                       90,079,636.80                              146,707,979.68



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Deferred income tax expenses                                               8,937,711.57                              -3,826,432.80

Total                                                                    99,017,348.37                              142,881,546.88


(2)Reconciliation of accounting profit to income tax expenses

                                                                                                                         Unit: RMB

                                 Items                                                Current period cumulative

Profit before tax                                                                                                   739,884,872.56

Income tax expense based on statutory/applicable tax rate                                                           115,033,160.69

Effect of prior income tax reconciliation                                                                            -7,748,107.85

Effect of deducible temporary differences or deductible losses
                                                                                                                        571,518.93
not recognized

Adjustment of permanent differences                                                                                  -8,839,223.40

Income tax expenses                                                                                                  99,017,348.37

Other remarks

54. Other comprehensive income

Please refer to the notes of balance sheet items and other comprehensive income for details.

55. Notes to items of the consolidated cash flow statement

Note: Based on the individual financial statements, bank finance products, restricted funds, collections and
payments are all listed in terms of net changes.

(1)Other cash receipts related to operating activities

                                                                                                                         Unit: RMB

                    Items                           Current period cumulative                  Preceding period comparative

Government grants                                                        88,442,413.04                               37,681,612.93

Net change in restricted funds                                                                                       22,717,257.39

Interest income                                                          19,167,271.27                               10,600,273.83

Rental income                                                              5,168,725.74                               5,610,795.32

Guarantee deposit, etc.                                                  26,203,437.00                               44,574,691.16

                    Total                                               138,981,847.05                              121,184,630.63

The remarks of other cash receipts related to operating activities:

(2)Other cash payments related to operating activities

                                                                                                                         Unit: RMB

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                      Items                    Current period cumulative               Preceding period comparative

Net change in restricted funds                                    56,390,427.84                                 494,179.42

Guarantee deposit                                                     901,638.78                              6,110,490.15

Expense payments for the period                                  315,998,963.23                             356,964,742.86

Total                                                            373,291,029.85                             363,569,412.43

The remarks of other cash payments related to operating activities:

(3)Other cash receipts related to investing activities

                                                                                                                 Unit: RMB

                      Items                    Current period cumulative               Preceding period comparative

Redemption of bank financing products                            276,799,043.00                             615,000,000.00

Net change in restricted funds                                        850,000.00                                891,000.00

Deposit of land transfer                                                                                      5,000,000.00

Call loans interest                                                                                              23,127.51

Total                                                            277,649,043.00                             620,914,127.51

The remarks of other cash receipts related to investing activities:

(4)Other cash payments related to investing activities

                                                                                                                 Unit: RMB

                      Items                    Current period cumulative               Preceding period comparative

Payments for purchasing bank financing
                                                                 505,000,000.00                              13,000,000.00
products

Net change in restricted funds                                     8,965,073.04                              12,864,757.37

Loss on foreign exchange contract
                                                                  12,129,251.67
settlement

Loss on futures contract settlement                               14,109,054.76

Call loans                                                                                                    2,000,000.00

Total                                                            540,203,379.47                              27,864,757.37

The remarks of other cash payments related to investing activities:

(5)Other cash receipts related to financing activities

                                                                                                                 Unit: RMB

                      Items                    Current period cumulative               Preceding period comparative

Net change in restricted funds                                    26,080,652.17                              58,902,676.13

Total                                                             26,080,652.17                              58,902,676.13


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The remarks of other cash payments related to investing activities:

(6)Other cash payments related to financing activities

                                                                                                                   Unit: RMB

                     Items                       Current period cumulative               Preceding period comparative

Bank financing fee                                                   1,399,332.23                               1,443,399.75

Repayment of finance lease and interest                              2,380,973.66                               5,346,642.30

Expenses for acquiring non-controlling
                                                                                                                9,238,318.85
interest in subsidiaries

Repo shares expenses                                                                                          186,107,164.63

Total                                                                3,780,305.89                             202,135,525.53

The remarks of other cash payments related to financing activities:

56. 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                                                  640,867,524.19                             688,461,499.43

       Add: Provision for assets impairment
                                                                    19,177,147.97                              41,658,764.35
loss

            Depreciation of fixed assets, oil
                                                                   188,283,241.38                             159,606,292.28
and gas assets, productive biological assets

            Amortization of intangible assets                        9,406,201.41                              10,687,228.25

            Amortization of Long-term
                                                                     4,013,736.74                               4,552,556.67
prepayments

            Loss on disposal of fixed assets,
intangible assets and other long-term assets                           319,355.00                                 122,323.66
(Less: gains)

            Loss on retirement of fixed assets
                                                                     1,083,940.52                               1,048,860.05
(Less: gains)

            Losses on changes in fair value
                                                                    -6,520,045.96                              -8,436,416.96
(Less: gains)

            Financial expenses (Less: gains)                        33,957,642.33                              26,709,252.54

            Investment income (Less: gains)                          8,109,921.96                             -30,358,255.34


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             Decrease of deferred tax assets
                                                                               4,667,823.78                              -6,184,126.60
(Less: increase)

             Increase of deferred tax liabilities
                                                                               4,269,887.79                                    677,648.21
(Less: decrease)

             Decrease in inventories (Less:
                                                                             271,639,352.73                             199,333,205.56
increase)

             Decrease in operating receivables
                                                                             112,901,508.32                            -272,007,374.07
(Less: increase)

             Increase of operating payables
                                                                            -218,889,585.92                                4,859,823.30
(Less: decrease)

             Others                                                           31,363,797.18                                9,823,629.60

             Net cash flow from operating
                                                                            1,104,651,449.42                            830,554,910.93
activities

2. Significant investing and financing
activities not related to cash receipts and                            --                                        --
payments:

3. Net changes in cash and cash equivalents:                           --                                        --

     Closing balance of cash                                                3,263,679,215.37                          1,573,138,270.95

     Less: Opening balance of cash                                          2,553,783,015.01                          1,164,542,861.48

     Net increase of cash and cash
                                                                             709,896,200.36                             408,595,409.47
equivalents


(2)Composition of cash and cash equivalents

                                                                                                                                Unit: RMB

                       Items                                    Closing balance                          Opening balance

Ⅰ . Cash                                                                   3,263,679,215.37                          2,553,783,015.01

Including: Cash on hand                                                           572,367.71                                   417,814.58

              Cash in bank that can be readily
                                                                            3,263,106,847.66                          2,553,365,200.43
drawn on demand

Ⅲ.Cash and cash equivalents at end of year                                 3,263,679,215.37                          2,553,783,015.01

Other remarks:

57. Assets with restriction on ownership or use rights

                                                                                                                                Unit: RMB

                       Items                        Carrying amount at the end of the period            Cause of restriction

Cash and Bank Balances                                                       148,361,603.85 Guarantee deposit and deposited



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                                                                                   investment fund

Notes receivable                                                1,264,550,094.76 Pledge financing

                      Total                                     1,412,911,698.61                       --

Other remarks:

58. 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                              88,601,273.08 7.0795                                              627,252,712.77

           EUR                              12,102,158.73 7.9610                                               96,345,285.65

           Other currencies                                                                                   143,557,821.59

Subtotal                                                                                                      867,155,820.01

Derivative financial assets

Including: USD                               1,096,031.70 7.0795                                                7,759,356.42

           EUR                                    7,436.83 7.9610                                                  59,204.60

Subtotal                                                                                                        7,818,561.02

Accounts receivable

Including: USD                            129,685,575.47 7.0795                                               918,109,031.54

           EUR                              25,679,783.62 7.9610                                              204,436,757.40

           Other currencies                                                                                    84,787,541.78

Subtotal                                                                                                    1,207,333,330.72

Other receivables

Including: USD                                 947,584.77 7.0795                                                6,708,426.38

           EUR                                 151,029.24 7.9610                                                1,202,343.78

           Other currencies                                                                                    13,691,631.92

Subtotal                                                                                                       21,602,402.08

Long-term receivable

Including: EUR                                 182,999.97 7.9610                                                1,456,862.76

Subtotal                                                                                                        1,456,862.76

Short-term borrowings

Including: USD                              35,000,000.00 7.0795                                              247,782,500.00



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            EUR                           45,379,501.79 7.9610                                          361,266,213.75

Subtotal                                                                                                609,048,713.75

Derivative financial liabilities

Including: USD                               508,835.62 7.0795                                            3,602,301.77

            Other currencies                                                                              4,168,901.99

Subtotal                                                                                                  7,771,203.76

Accounts payable

Including: USD                             8,261,395.33 7.0795                                           58,486,548.24

            EUR                            6,168,103.96 7.9610                                           49,104,275.63

            Other currencies                                                                             10,883,916.14

Subtotal                                                                                                118,474,740.01

Other payables

Including: USD                             2,961,019.03 7.0795                                           20,962,534.22

            EUR                            1,412,922.11 7.9610                                           11,248,272.92

            Other currencies                                                                              9,912,810.69

Subtotal                                                                                                 42,123,617.83

Long-term borrowings

Including: USD                            52,607,400.00 7.0795                                          372,434,088.30

            EUR                           14,500,000.00 7.9610                                          115,434,500.00

Subtotal                                                                                                487,868,588.30

Long-term payables

Including: USD                                82,565.00 7.0795                                              584,518.92

            EUR                           11,521,992.44 7.9610                                           91,726,581.81

            Other currencies                                                                                124,898.53

             Subtotal                                                                                    92,435,999.26

Other remarks:

(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
and other countries, where US dollars, Japanese yen, Polish zloty, Mexican pesos, etc. are used as the standard
reporting currency.




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59. Government grants

(1)Details

1) Government grants related to assets
For details, please refer to explanation of deferred income in the notes of the consolidated financial statements.
2) Government grants related to income and used to compensate relevant cost, expenses or losses.
                                           Items                                                Current period        Financial Report
                                                                                                 cumulative                  Items
 Award of Meizhu industrial park construction project                                           41,560,300.00         Other income
 Subsidy of COVID-19                                                                            10,344,959.70         Other income
 Refund of social security expenses                                                              7,403,385.72         Other income
 Award of industry support fund                                                                  7,104,236.00         Other income
 Award of enterprise R&D investment                                                              5,736,773.27         Other income
 VAT refund of civil welfare enterprises                                                         5,134,826.02         Other income
 Subsidy and award of technological innovation and entrepreneurship                              4,115,700.00         Other income
 Special funds for foreign trade and economic development                                        2,381,300.00         Other income
 VAT refund on software products in excess of tax burden                                         1,689,841.68         Other income
 Talent introduction and job stabilization subsidies                                             1,514,013.37         Other income
 Award of urban land use tax policy                                                              1,307,700.00         Other income
 Enterprise operation development reward                                                         1,090,000.00         Other income
 Reward of industrial information development                                                       984,100.00        Other income
 Others                                                                                          1,419,125.04         Other income
                                         Subtotal                                               91,786,260.80

(2). The amount of government grant included in the profit or loss statement in the current period is RMB
100,414,953.91

Ⅷ. Changes in the consolidation scope

1. Changes in consolidation scope due to other reasons

Changes in consolidation scope due to other reasons and related information (such as newly established subsidiary,
liquidation subsidiary, etc.
                                                                                                                           Net profit from the
                                                                                                  Net assets of the
                 Entity name                       Disposal method        Deregister date                                  beginning date to
                                                                                                   deregister date
                                                                                                                             deregister date
Hangzhou Sanhua Home Appliance Thermal               Liquidation
                                                                            2020/5/18                       147,448.25               -80,047.52
Management System Co., Ltd                           cancellation
                                                     Liquidation
Aweco Appliance (Shanghai) Co., Ltd                                          2020/6/2                           6,669.73             22,351.38
                                                     cancellation




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Ⅸ. Interest in other entities

1. Interest in subsidiaries

(1)Composition of enterprise group


                                            Main                                          Holding proportion
                                                        Place of                                                      Acquisition
              Subsidy name                operating                     Business nature
                                                      registration                        Direct      Indirect         method
                                            place

Zhejiang Sanhua Trading Co., Ltd          Zhejiang    Zhejiang          Commerce          100.00%                 Establishment

                                                                                                                  Business
Zhejiang Sanhua Climate & Appliance                                                                               combination
                                          Zhejiang    Zhejiang          Manufacture         74.00%       26.00%
Controls Group Co., Ltd                                                                                           under common
                                                                                                                  control

                                                                                                                  Business
Zhejiang Sanhua Automotive                                                                                        combination
                                          Zhejiang    Zhejiang          Manufacture       100.00%
Components Co., Ltd.                                                                                              under common
                                                                                                                  control

                                                                                                                  Business
Sanhua(hangzhou) Micro Channel Heat                                                                               combination
                                          Zhejiang    Zhejiang          Manufacture       100.00%
Exchanger Co., Ltd                                                                                                under common
                                                                                                                  control

                                                                                                                  Business
                                                                                                                  combination
Sanhua International Inc.                 USA         USA               Commerce          100.00%
                                                                                                                  under common
                                                                                                                  control

                                                                                                                  Business
                                                                                                                  combination
Sanhua International Singapore Pte. Ltd   Singapore Singapore           Commerce          100.00%
                                                                                                                  under common
                                                                                                                  control

Other remarks:
The above subsidiaries are significant subsidiaries of the Company.

2. Interest in joint venture arrangement or associates

(1)Aggregated financial information of insignificant joint ventures and associates

                                                                                                                            Unit: RMB

                                                Closing balance/ Current period             Opening balance/ Preceding period
                                                            cumulative                                  comparative

Joint ventures:                                                    --                                        --



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Proportionate shares in the following items                --                                         --

Associates:                                                --                                         --

Total Carrying amount of investment                               14,348,933.44                               14,522,259.80

Proportionate shares in the following items                --                                         --

--Net profit                                                        1,826,673.64                                 508,944.08

--Total comprehensive income                                        1,826,673.64                                 508,944.08

Other remarks

X. Risks Relating to Financial Instruments

      The Company has exposure to the following risks from its use of financial instruments, which mainly include:
credit risk, liquidity risk, and market risk. The Company's overall risk management strategy is aimed at the
unpredictability of the financial market and strives to reduce the potential adverse effects on the Company's
financial performance.
      (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 reporting date, the Company assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition. When assessing whether the credit risk has increased significantly since
initial recognition, the Company takes into account reasonable and supportable information, which is available
without undue cost or effort, including qualitative and quantitative analysis based on historical data, external
credit risk rating, and forward-looking information. The Company determines the changes in default risk of
financial instruments during the estimated lifetime through comparison of the default risk at the balance sheet date
and the initial recognition date, on an individual basis or a collective basis.
      The Company considers the credit risk on a financial instrument has increased significantly when one or
more of the following qualitative and quantitative standards are met. Quantitative standard mainly relates to the
scenario in which, on 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. 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 asset
      A financial asset is credit-impaired when one or more following events have occurred. The standard is
consistent with the definition of credit impairment. The debtor has significant financial difficulty. The debtor
breached the binding clause of the contract on the debtor. The debtor is likely to go bankrupt or other financial
reorganization. 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.

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      3. Please refer to “Notes receivable”, “Accounts receivable”, “Other receivable” for details on the
reconciliation table of opening balance and closing balance of provision for losses of financial instrument.
      4. Exposure to credit risk and concentration of credit risk
      The Company’s credit risk is primarily attributable to cash and bank balances, bank financial investments
and receivables.
      The Company deposits its bank balances and other cash and bank balances in financial institutions with
relatively high credit levels. Some bank acceptance bills held by the Company are accepted and paid by small and
medium financial institutions. In addition, in order to improve the efficiency of capital use, the Company entrusts
idle funds to banks for financial investment.
The management of the Company believes that, based on the current operating status of domestic banks, bank
balances and other cash, notes receivable and bank financial investments are not currently facing serious credit
risks. If there is a serious unfavorable differentiation in the bank's credit system in the future, the Company will
make adjustments in due course.
      The Company performs credit assessment on customers who uses credit settlement on a continuous basis.
Based on the customer's financial status, past credit history and other factors, assess the customer's credit rating,
and monitor the balance of accounts receivable to control credit risk exposure. For customers with bad credit
records, the Company will use written reminders, shorten or cancel credit periods, and reduce credit transaction
amounts to ensure that there is no major risk of bad debts.
      The Company conducts transactions with recognized and creditworthy customers, and the credit risk is
centralized and managed on the basis of customers. As of June 30,2020, the Company has a certain concentration
of credit risk, and 34.01% of accounts receivable was due from the five largest customers of the Company. The
Company held no collateral or other credit enhancement on balance of receivables.
      The maximum amount of exposure to credit risk of the Company is the carrying amount of each financial
asset on the balance sheet.
      (II) Liquidity risk
      The Company continues to monitor short-term and long-term funding needs to ensure that sufficient cash
reserves are maintained. At the same time, the Company continuously monitors compliance with the loan
agreement to ensure that the credit line obtained from commercial banks can meet short-term or long-term funding
needs. When necessary, the Company can implement equity financing.
      As of June 30,2020, the undiscounted contractual cash flows of the Company’s financial liabilities listed by
maturity date are shown in the following table.
      Financial instruments classified based on remaining time period till maturity
                                                                               Closing balance
                 Items
                                           Within 1 year           1-3 years              Over 3 years            Total

Short-term borrowings(Include interest) 1,275,596,654.06                                                      1,275,596,654.06
Notes payable                               973,763,888.02                                                        973,763,888.02
Accounts payable                           1,565,086,777.42                                                     1,565,086,777.42
Other payable                               291,575,146.18                                                        291,575,146.18
Long-term borrowings(Include interest)                          1,324,404,456.90                              1,324,404,456.90
Long-term payables(Include interest)                                17,738,655.90         74,697,343.36          92,435,999.26
                Subtotal                   4,106,022,465.68       1,342,143,112.80          74,697,343.36       5,522,862,921.84
     (Continued)
                   Items                                                       Opening balance


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                                              Within 1 year              1-3 years           Over 3 years              Total

Short-term borrowings(Include interest)     1,311,299,960.81                                                       1,311,299,960.81
Notes payable                                 1,130,668,415.32                                                       1,130,668,415.32
Accounts payable                              1,587,763,752.62                                                       1,587,763,752.62
Other payable                                  159,464,464.88                                                          159,464,464.88
Non-current liabilities due within one year    223,342,263.89                                                          223,342,263.89
  (Include interest)
Long-term borrowings(Include interest)                                 411,319,664.33                                411,319,664.33
Long-term payables(Include interest)                194,556.75          15,342,264.21           78,699,036.81         94,235,857.77
                 Subtotal                     4,412,733,414.27           426,661,928.54           78,699,036.81      4,918,094,379.62
       (II)Market Risk
      1. Interest Rate Risk
      The Company’s interest risk relates mainly to bank borrowings. The Company’s fair value interest risks
arise from fixed-rate financial instruments, while the cash flow interest risks arise from floating interest financial
instruments. The Company determines the proportion of fixed-rate financial instruments and floating interest rate
financial instruments based on the market environment. As of June 30, 2020, the Company's interest-bearing debt
accounted for a small proportion, and the interest rate risk it faced was within a controllable range.
      The Company continues to monitor the level of interest rates. Rising interest rates will have an adverse
impact on the Company's financial performance, and the management will make necessary response measures in
a timely manner based on the latest market conditions.
      2. Foreign currency risk
      The Company's production bases and sales markets are distributed in developed and developing countries,
including the United States, the European Union, Japan, India, Mexico, etc. The business volume settled in
Euros and U.S. dollars has a certain proportion, and the exchange rate risk is relatively high. Based on internal
risk control policies, the Company's management has taken several measures to deal with exchange rate risks: a.
pre-judgment based on the trend of exchange rate changes, timely settlement of foreign exchange receipts or
delayed settlement of foreign exchange; b. Carry out overseas financing through domestic guarantees and
overseas loans to hedge foreign currency monetary assets and control net risk exposure; and c. Carry out
forward exchange settlement and foreign currency swap business to lock in exchange rates.
      As of June 30, 2020, please refer to “monetary items in foreign currencies” of notes to financial statements
for details in foreign currency financial assets and liabilities.

XI. Disclosure of Fair Values

1. Fair values of the assets and liabilities at the end of the period

                                                                                                                              Unit: RMB

                                                              Fair value as of the balance sheet date
        Item Name
                                    Level 1                    Level 2                     Level 3                    Total

I. Recurring fair value
                                       --                          --                        --                         --
measurement

(I) Held-for-trading                  23,478,931.42           1,092,455,485.91              129,309,000.00          1,245,243,417.33


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financial assets

1. Financial assets
measured at fair value            23,478,931.42       1,092,455,485.91           129,309,000.00          1,245,243,417.33
through profit or loss

(1) Debt instrument
                                                      1,092,226,291.01           129,309,000.00          1,221,535,291.01
investments

(2) Derivative financial
                                  23,478,931.42               229,194.90                                    23,708,126.32
assets

Total amount of assets
constantly measured at            23,478,931.42       1,092,455,485.91           129,309,000.00          1,245,243,417.33
their fair values

(Ⅵ) Held-for-trading
                                        48,300.00         8,401,313.09                                       8,449,613.09
liabilities

  Derivative financial
                                        48,300.00         8,401,313.09                                       8,449,613.09
liabilities

Total amount of liabilities
constantly measured at                  48,300.00         8,401,313.09                                       8,449,613.09
their fair values

II. Non-constant
                                   --                    --                       --                         --
measurement at fair values


2. Basis for determining the market price of items under first level constant and non-constant measurement
at fair value.

      The fair value of futures contracts is measured at the exchange's open market quotes.

3. Items under second level constant and non-constant measurement at fair value, valuation technique
adopted, and qualitative and quantitative information of important parameters

     The fair value of forward foreign exchange contracts and bank financing products 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.

      If the fair value information is insufficient, the bank financing products are measured at cost on behalf of the
fair value.




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XII. Related party relationships and transactions

1. Parent Company


                                                                                                                      Voting right
                                                                                            Holding proportion
  Parent Company      Place of registration       Business nature      Registered capital                         proportion over the
                                                                                             over the Company
                                                                                                                       Company

Sanhua Holding
                      Zhejiang Province       Industrial Investment 660 million yuan                     50.46%                50.46%
Group Co., Ltd

     Remarks on the parent Company:
     As of June 30, 2020, Sanhua Holding Group Co., Ltd. directly holds 29.78% of the Company's shares, and
indirectly holds 20.68% of the shares through its subsidiaries, for a total of 50.46% of the shares.
The final controllers of the Company are Mr Zhang Daocai, Mr Zhang Yabo and Zhang Shaobo.
Other remarks:

2. Information about the Company's subsidiaries

Please refer to section IX of notes to financial statements.

3. Joint ventures and associates of the Company

Please refer to section IX of notes to financial statements for details on the Company’s significant joint ventures
and associates.
Details of other joint ventures or associates carrying out related party transactions with the Company in current
period or in preceding period but with balance in current period are as follows:
                   Joint ventures or associates                                       Relationships with the Company

Qingdao Sanhua jinlifeng Machinery Co., Ltd                          Associates

Zhongshan Xuanyi Pipe Manufacturing Co., Ltd.                        Associates

Chongqing Tainuo Machinery Co., Ltd                                  Associates

Other remarks
                            Joint ventures or associates                                           Abbreviation of associate

Qingdao Sanhua Jinlifeng Machinery Co., Ltd                                                                 QSJM

Zhongshan Xuanyi Pipe Manufacturing Co., Ltd.                                                               ZXPM

Chongqing Tainuo Machinery Co., Ltd                                                                         CTMC



4. Other related parties of the Company


                      Other related parties                                        Other relationships with the Company

Zhejiang Sanhua Lvneng Industry Group Co., Ltd                       Shareholders and under the same control of the parent Company

Hangzhou Sanhua Research Institute Co., Ltd.                         under the same control of the parent Company


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Hangzhou Tongchan Machinery Co., Ltd.                             under the same control of the parent Company

Zhejiang Haoyuan Technology Co., Ltd.                             under the same control of the parent Company

Hangzhou Sanhua International Building Co., Ltd.                  under the same control of the parent Company

Zhejiang Sanhua Zhicheng Real Estate Development Co., Ltd.        under the same control of the parent Company

Xinchang County Sanhua Property Management Co., Ltd.              under the same control of the parent Company

Wuhu Alda Technology Co., Ltd.                                    Subsidiary of a Company with shares held by the Company

Hangzhou Formost Material Technology Co., Ltd                     Subsidiary of a Company with shares held by the Company

Other remarks
                        Joint ventures or associates                                         Abbreviation of associate

Sanhua Holding Group Co., Ltd.                                                                           SHG

Zhejiang Sanhua Lvneng Industry Group Co., Ltd                                                           ZSGE

Hangzhou Sanhua Research Institute Co., Ltd.                                                             HSRI
Hangzhou Tongchan Machinery Co., Ltd.                                                                    HTM
Zhejiang Haoyuan Technology Co., Ltd.                                                                    ZHT

Hangzhou Sanhua International Building Co., Ltd.                                                         HSIB

Zhejiang Sanhua Zhicheng Real Estate Development Co., Ltd.                                               ZSZR

Xinchang County Sanhua Property Management Co., Ltd.                                                     XCSP
Wuhu Alda Technology Co., Ltd.                                                                           WAT
Hangzhou Formost Material Technology Co., Ltd                                                         HFMT


5. Related party transactions

(1)Purchase and sale of goods, rendering and receiving services

Purchase of goods and receiving of services
                                                                                                                           Unit: RMB

                         Content of        Current period      Approved Transaction Over the Transaction        Preceding period
   Related parties
                         transaction        cumulative                Limit                Limit or No            comparative

HSRI                 Merchandise                   14,303.48            1,500,000.00 No

HTM                  Merchandise                   57,168.14            1,500,000.00 No                                    81,077.58

HTM                  Services                                                                                             124,929.81

QSJM                 Merchandise               1,656,061.81             2,000,000.00 No                                   349,774.37

WAT                  Merchandise                    4,743.36               50,000.00 No                                    17,327.58

ZHT                  Merchandise               1,063,598.21             1,500,000.00 No

ZXPM                 Merchandise               5,023,870.90           10,000,000.00 No                                   6,263,590.90

Sale of goods and rendering of services
                                                                                                                           Unit: RMB


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        Related parties           Content of transaction         Current period cumulative      Preceding period comparative

HSRI                          Merchandise                                        182,978.26                        1,329,760.44

HSRI                          Services                                                                                 636,792.45

QSJM                          Merchandise                                         79,420.08                              4,064.97

SHG                           Merchandise                                        674,800.00

WAT                           Merchandise                                          7,230.77                            218,234.34

CTMC                          Merchandise                                                                              223,199.82

HSIB                          Merchandise                                                                              265,862.07
ZSZR                          Merchandise                                                                               17,388.50

     Other remarks:
     Due to the large number of related parties involved in related party transactions between the parent Company
Sanhua Holding Group Co., Ltd and its subsidiaries, the Company approved RMB 1.5 million as the overall
purchase quota for purchases from the parent company Sanhua Holding Group Co., Ltd. and its subsidiaries
collectively. The approval bases on the merger of the parent Company and its subsidiaries.

(2)Related party guarantees

The Company as guarantors
                                                                                                                        Unit: RMB

  Guaranteed parties                                                               Maturity date       Whether the guarantee is
                           Amount guaranteed       Commencement date
                                                                                                               mature
The Company as guaranteed parties


                                                                                Maturity date          Whether the guarantee is
  Guaranteed parties      Amount guaranteed     Commencement date
                                                                                                               mature
SHG                       RMB 250,000,000.00        February 27, 2020              February 26, 2022              No

SHG                       RMB 220,000,000.00           March 26, 2020                March 24, 2022               No

SHG                       RMB 100,000,000.00               April 23, 2020             April 22, 2022              No

SHG                       RMB 200,000,000.00               June 17, 2020               June 15, 2022              No

SHG                       RMB 150,000,000.00          August 28, 2019               August 27, 2020               No

SHG                       RMB 130,000,000.00       September 30, 2019            September 29, 2020               No

SHG                       RMB 100,000,000.00         October 24, 2019               October 23, 2020              No
SHG                        USD 20,000,000.00       December 24, 2019             December 23, 2021                No

SHG                        EUR 15,000,000.00                 July 5, 2019              June 20, 2022              No

Remarks of related party guarantees

(3)Key management’s emoluments

                                                                                                                        Unit: RMB


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                       Items                             Current period cumulative                      Preceding period comparative

       Key management’s emoluments                                                4,127,788.78                                    3,920,120.27


(4)Other related party transactions

                                                                                                                                   Unit: RMB
  Abbreviation of associate             Content of transaction                Current period cumulative         Preceding period comparative

HSRI                             Rental fee, property management                                   226,684.14                        270,459.92
ZHT                              fee, water     and electricity fee,                               628,351.19
ZSGE                             service fee                                                   1,032,369.03                        1,380,688.85
HTM                              Purchase equipment                                            5,112,554.76                        7,056,710.66
HFMT                                                                                               966,272.27                      1,908,561.58
HSRI                             Rental fee, property management                                   717,369.20                      1,595,968.94
SHG                              fee, water     and electricity fee,                           4,313,221.66                        3,496,679.16
WAT                              service fee                                                       197,707.74                        300,394.03
ZSGE                                                                                               720,433.64                        869,874.64




6.Balance due to or from related parties

(1)Receivables

                                                                                                                                     Unit: RMB

                                                                Closing balance                                   Opening Balance
       Items               Related parties
                                                   Book balance           Provision for bad debts      Book balance         Provision for bad debts

Accounts receivable HSRI                                  434,918.95                  21,745.95             358,962.37                  17,948.12

Accounts receivable QSJM                                   93,610.79                    4,680.54                 9,331.56                  466.58

Accounts receivable SHG                                 2,272,555.94                 113,627.80

Accounts receivable WAT                                   182,166.18                    9,108.31                62,502.41                 3,125.12

Accounts receivable XCSP                                       3,372.00                  168.60                  3,372.00                  168.60

Accounts receivable ZSGE                                   81,403.01                    4,070.15

Accounts receivable HFMT                                1,044,608.14                  52,230.41

Advances paid          HTM                              6,233,021.74

Advances paid          ZXPM                                                                                 186,974.96


(2)Payables

                                                                                                                                     Unit: RMB

               Items                         Related parties                     Closing balance                    Opening Balance


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Accounts payable                 HSRI                                                     266,150.00                        266,150.00

Accounts payable                 HTM                                                    2,536,979.58                      4,002,107.32

Accounts payable                 QSJM                                                   1,640,137.08                      1,177,838.77

Accounts payable                 ZXPM                                                   3,191,767.02

Advances received                WAT                                                        2,101.34                           2,101.34

Other payables                   HFMT                                                     100,000.00                        100,000.00

Other payables                   ZSGE                                                      30,135.60


XIII. Share-based payment

1. Overall information

√ Applicable □ Not applicable
Total equity instruments granted in current period                                                                 12.04 million shares

                                                                              Incentive plan for stock appreciation rights in 2018: The
                                                                              adjusted grant price of stock appreciation rights is 4.69
The range of exercise prices of share options outstanding at the end of the
                                                                              yuan, which will be unlocked in batches within 12
period and the remaining contractual life
                                                                              months after 24 months and 36 months from the grant
                                                                              date.

                                                                              2018 Restricted Stock Incentive Plan: The adjusted
                                                                              restricted stock grant price is 4.69 yuan, which will be
                                                                              unlocked in batches within 12 months after 24 months
The range of exercise prices of other equity instruments at the end of the    and 36 months after the grant date. 2020 Restricted
period and the remaining contractual life                                     Stock Incentive Plan: The adjusted restricted stock
                                                                              grant price is RMB 7.46, which will be unlocked in
                                                                              batches within 12 months after 12 months, 24 months,
                                                                              and 36 months from the grant date.

Other remarks
     In 2018, the Company implemented a restricted stock and stock appreciation right incentive plan for core
employees. Among them, the number of restricted stocks granted was 10.33 million shares, the number of stock
appreciation rights granted was 355,000 shares, and the grant price per share was RMB 8.37. The grant date was
September 18, 2018, at 30%:30%:40%. The proportion is unlocked year by year in batches.
     In May 2019 and June 2020, the Company implemented the 2018 and 2019 equity distribution. According to
the methods stipulated in the "2018 Restricted Stock Incentive Plan" and "2018 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 11.98 million shares. The number of value-added
rights granted was 325,300 shares, and the grant price per share was RMB 4.69.
     In 2020, the Company implemented a restricted stock incentive plan for core employees. The number of
grants 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. According to the method stipulated in


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the "2020 Restricted Stock Incentive Plan", the exercise price and quantity of the underlying stocks involved were
adjusted accordingly. After the adjustment, the number of restricted stocks granted was 15.6585 million shares,
and the grant price per share was RMB 7.46.

2.Equity-settled share-based payment

√ Applicable □ Not applicable
                                                                                                                               Unit: RMB

Determination method for grant-date fair value of equity               Calculated based on the closing price of the stock on the grant
instruments                                                            date minus the grant price of the restricted stock.

                                                                       According to the aforementioned adjusted restricted stock
                                                                       quantity (base number), it will be unlocked year by year in
                                                                       batches at a ratio of 30%:30%:40%. The Company estimates
Determination method for the best estimate of the number of equity the number of exercisable equity instruments on the following
instruments expected to vest                                           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).

Reasons for significant difference between the estimates in current
                                                                       Not applicable
period and preceding period

Capital reserve accumulated due to equity-settled share-based
                                                                                                                         54,905,976.80
payment

Total expenses incurred due to equity-settled share-based payment
                                                                                                                         30,463,131.96
transactions

Other remarks

3.Cash-settled share-based payment

√ Applicable □ Not applicable
                                                                                                                               Unit: RMB

                                                                       It is calculated based on the closing price of the stock on the
Determination method for the fair value of liability incurred by the
                                                                       balance sheet date after deduction of the adjusted stock
Company and to be settled in cash or other assets
                                                                       appreciation right grant price.

Liabilities incurred due to cash-settled share-based payment                                                                 3,139,116.00

Total expenses incurred due to cash-settled share-based payment
                                                                                                                              900,665.22
transactions

Other remarks

4. Modifications and cancellations of share-based payment transactions

     According to the resolution of the Company’s second extraordinary general meeting of shareholders in 2020,


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the Company adjusted some performance evaluation indicators for the above incentive plan. The main adjustment
content is the evaluation indicators for 2020 and beyond, adjusted from "weighted average return on net assets not
less than 17%" to "weighted average return on net assets not lower than 17% or not lower than the same industry
benchmarking Company's 80-th percentile weighted average return on net assets for the same period." Refer to the
Company's Corresponding announcements for details.

XIV. Commitments and contingencies

1. Significant commitments

Significant commitments on the balance sheet day
     Approved by the China Securities Regulatory Commission in the Securities Regulatory Commission [2017]
No. 1392 document, the Company issued shares in September 2017 to raise a total of 1.3223 million yuan. The
funds raised will be used to invest in the construction of "11.5 million sets of new energy auto parts construction
project", "new energy vehicle thermal management system component technology transformation project with an
annual output of 7.3 million sets", " vehicle air-conditioning control component technology transformation project
with an annual output of 12.7 million sets", "expanding product testing room and production auxiliary room
project" and "paying intermediary fees".
     As of June 30, 2020, please refer to the analysis of investment status in the discussion and analysis of the
Company's operation status in the 2020 semi-annual report for details of the expenditure of fundraising projects.

2. Contingencies

(1)If no important 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.

XV. Events after the balance sheet date

1. Profit distribution

                                                                                                                          Unit: RMB

Proposed distribution of profits or dividends                                                                        358,225,868.20

Profits or dividends declared to be distributed after deliberation and
                                                                                                                     358,225,868.20
approval


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

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identified the reportable segments based on products.

(2)Financial information of the reporting subsection

                                                                                                                                       Unit: RMB

                              Refrigeration and
                                                                                             Inter-segment
           Items               air-conditioning               Auto parts business                                              Total
                                                                                               elimination
                           electrical parts business

Total Operating revenue             4,367,942,431.64                 950,236,195.13                                          5,318,178,626.77

Total Operating cost                3,164,066,988.85                 675,559,015.85                                          3,839,626,004.70

Total assets                       12,018,152,672.59                3,522,572,484.15                                        15,540,725,156.74

Total liabilities                   5,207,994,133.80                 732,586,068.35                                          5,940,580,202.15


2.Other remarks

     Please refer to “Fixed assets” of notes to financial statements for details in fixed assets leased in by financing.
Please refer to “Long-term payables” of notes to financial statements for details in unrecognized financing costs
and minimum lease payments to be paid in subsequent years.

XVII. Notes to items of parent Company financial statements

1. Accounts receivable

(1)Disclosure of accounts receivable by categories

                                                                                                                                       Unit: RMB

                                          Closing balance                                              Opening balance

                                               Provision for bad                                             Provision for bad
                          Book balance                                                 Book balance
                                                       debt                                                          debt
       Category                                                         Carrying                                                    Carrying
                                                          Accrued                                                       Accrued
                                   Proportio                            amount                 Proportio                               amount
                       Amount                  Amount proportio                     Amount                  Amount      proportio
                                      n                                                        n
                                                                n                                                       n

Receivables with
                       823,985,                                        823,985,3 986,349,0                                          986,349,01
provision made on an                87.71%                                                         86.28%
                          398.50                                            98.50      14.75                                               4.75
individual basis

Including:

Receivables with
                       115,416,                5,770,81                109,645,5 156,790,4                  7,839,520               148,950,88
provision made on a                 12.29%                     5.00%                               13.72%                   5.00%
                          370.93                   8.55                     52.38      01.29                      .06                      1.23
collective basis

Including:




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                       939,401,              5,770,81               933,630,9 1,143,139                   7,839,520               1,135,299,8
        Total                      100.00%                  0.61%                             100.00%                     0.69%
                         769.43                   8.55                   50.88    ,416.04                         .06                   95.98

Provision made on an individual basis:
                                                                                                                                   Unit: RMB

                                                                                        Closing balance
                     Name                           Book balance          Provision for bad      Accrued proportion         Accrued reason
                                                                                 debt

Zhejiang Sanhua Trading Co., Ltd                    537,087,611.22

Sanhua International Singapore Pte. Ltd             245,518,524.35

Sanhua (Vietnam) Company Limited, etc.                   41,379,262.93

Total                                               823,985,398.50                                          --                     --

Provision made on a collective basis:
                                                                                                                                   Unit: RMB

                                                                              Closing balance
             Name
                                           Book balance                    Provision for bad debt                  Accrued proportion

Receivables with provision
                                                  115,416,370.93                          5,770,818.55                                  5.00%
made on a collective basis

Total                                             115,416,370.93                          5,770,818.55                     --

The statement of determination of a collective basis:
If the Provision for bad debt of accounts receivable is accrued in accordance with the general expected credit loss
model, please refer to the disclosure of other receivables to disclose the relevant information about the Provision
for bad debt:
□ Applicable √ Not Applicable
Disclosure by aging
                                                                                                                                   Unit: RMB

                             Aging                                                              Closing balance

Within 1 year (including 1 year)                                                                                            939,401,769.43

                              Total                                                                                         939,401,769.43


(2)Provision for bad debt accrued, recovered or reversed in current period

Provision for bad debt accrued in current period:
                                                                                                                                   Unit: RMB

                                                               Changed amount of the current period
         Category            Opening balance                                                                               Closing balance
                                                   Accrued       Recovered or reversed        Write off          Others

Receivables with provision
                                   7,839,520.06                             2,068,701.51                                        5,770,818.55
made on a collective basis



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            Total                     7,839,520.06                           2,068,701.51                                     5,770,818.55


(3)Top 5 debtors with the largest accounts receivable balances

                                                                                                                                Unit: RMB

                                                                        Proportion to the total balance     Provision for bad debt at the
             Name                             Closing balance
                                                                            of accounts receivable               end of the period

Top 5 debtors with largest
                                                       846,553,684.24                            90.12%                       2,292,600.34
balances

Total                                                  846,553,684.24                            90.12%


2. Other receivables

                                                                                                                                Unit: RMB

                      Items                                     Closing balance                             Opening balance

Interest receivable                                                               1,789,540.22

Dividends receivable                                                          14,438,323.76

Other receivables                                                            548,566,113.71                                603,257,516.95

                      Total                                                  564,793,977.69                                603,257,516.95


(1)Interest receivable

1)Categories of interest receivable

                                                                                                                                Unit: RMB

                      Items                                     Closing balance                             Opening balance

Interest on subsidiaries funds                                                    1,789,540.22

                      Total                                                       1,789,540.22


2)Provision for bad debt

□ Applicable √ Not Applicable

(2)Dividends receivable

1)Categories of dividends receivable

                                                                                                                                Unit: RMB

                              Project (or invested entity)                                Closing balance            Opening balance

Xinchang Sitong Electrical and Mechanical Co., Ltd                                               12,048,323.76


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Suzhou Sanhua Air-Conditioner Parts Co., Ltd                                                   1,190,000.00

Zhongshan Sanhua Air conditioning Refrigeration Components Co., Ltd                            1,200,000.00

                                      Total                                                  14,438,323.76


2)Provision for bad debt

□ Applicable √ Not Applicable
Other remarks:

(3)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
                                                                        534,369,210.21                              573,806,364.53
to subsidiaries

Refund of VAT receivable                                                       256,448.95                             15,017,287.01

Guarantee deposit                                                           10,381,285.00                             10,381,285.00

Others                                                                       4,214,247.02                                 4,660,439.18

                     Total                                              549,221,191.18                              603,865,375.72


2)Provision for bad debt

                                                                                                                            Unit: RMB

                                   Phase 1                  Phase 2                         Phase 3

                               Next 12month         Lifetime expected credit      Lifetime expected credit
 Provision for bad debt                                                                                              Total
                               expected credit         losses (credit not          losses (credit impaired)
                                    losses                 impaired)

Balance on January 1,
                                       607,858.77                                                                          607,858.77
2020

Balance in current period
                                     ——                    ——                            ——                    ——
on January 1, 2020

Provision made in
                                        47,218.70                                                                           47,218.70
current period

Balance on June 30, 2020               655,077.47                                                                          655,077.47

Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
Disclosure by aging


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                                                                                                                                    Unit: RMB

                               Aging                                                             Closing balance

Within 1 year (including 1 year)                                                                                                   117,125.08

1 to 2 years                                                                                                                       113,408.50

2 to 3 years                                                                                                                       221,343.39

Over 3 years                                                                                                                       203,200.50

Total                                                                                                                              655,077.47


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
      Category       Opening balance                        Recovered        or                                            Closing balance
                                         Accrued                                  Write off          Others
                                                            reversed

Receivables with
provision made
                            607,858.77          47,218.70                                                                          655,077.47
on a collective
basis

        Total               607,858.77          47,218.70                                                                          655,077.47




4)Top 5 debtors with the largest other receivables balances

                                                                                                                                    Unit: RMB

                  Debtors                   Nature of                                         Proportion      to   the Provision    for   bad
                                           receivables    Closing balance           Age       total balance of other debt at the end of the
                                                                                              receivables              period

Sanhua International Singapore Pte.
                                          Financial aid     141,590,000.00 1 to 2 years                       25.78%                      0.00
Ltd

Sanhua (Jiangxi) Self - control
                                          Financial aid      50,264,000.00 Within 1 year                       9.15%                      0.00
Components Co., Ltd.

Shaoxing Shangyu Sanli Copper                                                Within 1 year
                                          Financial aid      50,084,000.00                                     9.12%                      0.00
Industry Co., Ltd

Hangzhou Leaderway Electronics                                               Within 1 year
                                          Financial aid      48,000,000.00                                     8.74%                      0.00
Co., Ltd

Wuhu Sanhua Auto-control                                                     Within 1 year
                                          Financial aid      46,252,000.00                                     8.42%                      0.00
Components Co., Ltd

                   Total                        --          336,190,000.00           --                       61.21%                      0.00


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3. Long-term equity investments

                                                                                                                                  Unit: RMB

                                             Closing balance                                          Opening balance
      Investees         Book balance          Provision for                         Book balance         Provision for
                                                                Carrying amount                                          Carrying amount
                                               impairment                                                impairment

Investments in
                      4,389,484,397.89                          4,389,484,397.89 4,297,929,280.35         54,000,000.00 4,243,929,280.35
subsidiaries

Investments in
associates and              12,627,437.09                          12,627,437.09      12,704,660.71                          12,704,660.71
joint ventures

        Total          4,402,111,834.98                         4,402,111,834.98 4,310,633,941.06         54,000,000.00 4,256,633,941.06


(1)Investments in subsidiaries

                                                                                                                                  Unit: RMB

                                            Opening           Changed amount of the current period
                                                                                                          Closing balance Closing balance
                                       balance(Carr Investments Investmen Provision
                Investees                                                                                    (Carrying      of provision for
                                           ying      increased      ts       for                Others
                                                                                                              amount)         impairment
                                         amount)                decreased impairment

Sanhua International Singapore         454,171,908 142,872,270
                                                                                                           597,044,178.95
Pte. Ltd                                          .17            .78

Zhejiang Sanhua Self - control          32,000,000.
                                                                                                            32,000,000.00
Components Co., Ltd                                00

Zhejiang Sanhua Climate &
                                       310,155,131 3,544,630.4
Appliance Controls Group Co.,                                                                              313,699,761.65
                                                  .25              0
Ltd

Xinchang Sitong Electrical and          65,444,051.
                                                          303,458.12                                        65,747,509.27
Mechanical        Co., Ltd                         15

Wuhu Sanhua Auto-control               150,379,784
                                                          381,494.26                                       150,761,279.15
Components Co., Ltd                               .89

Shaoxing Shangyu Sanli Copper           31,930,719.
                                                          247,690.94                                        32,178,410.86
Industry Co., Ltd                                  92

Changzhou Ranco Reversing               35,196,850.
                                                           23,719.04                                        35,220,569.63
Value Co., Ltd                                     59

Suzhou Sanhua Air-Conditioner           8,395,763.8
                                                          112,619.90                                         8,508,383.76
Parts Co.,Ltd                                         6

Zhongshan Sanhua Refrigeration          5,163,639.2
                                                          254,300.23                                         5,417,939.52
Components Co., Ltd                                   9



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Zhongshan Sanhua Air
                                      4,885,524.3
conditioning Refrigeration                           135,071.10                                              5,020,595.42
                                                 2
Components Co., Ltd

Hangzhou Leaderway Electronics        47,798,913. 1,312,876.1
                                                                                                            49,111,789.97
Co., Ltd                                        83              4

Sanhua (Jiangxi) Self - control       92,824,141.
                                                     195,545.52                                             93,019,687.43
Components Co., Ltd.                            91

Wuhan Sanhua Refrigeration            3,734,983.4
                                                     186,130.72                                              3,921,114.18
Parts Co., Ltd                                   6

Sanhua (Hangzhou) Micro               635,170,819 3,821,105.6
                                                                                                           638,991,925.12
Channel Heat Exchanger Co., Ltd                .48              4

                                      51,053,113. 1,135,431.8
Zhejiang Sanhua Trading Co., Ltd                                                                            52,188,545.74
                                                94              0

Hangzhou Sanhua Home
                                      16,247,160.                    16,247,16
Appliance Thermal Management                                                                                         0.00
                                                09                        0.09
System Co., Ltd

Qingdao Debaiyi Refrigeration         14,580,943.
                                                                                                            14,580,943.52
Equipment Co., Ltd.                             52

Zhejiang Sanhua Automotive            1,977,416,8 6,900,232.0                                              1,984,317,035.
Components Co., Ltd.                        02.97               6                                                     03

                                      307,379,027
Sanhua International Inc.                            375,700.98                                            307,754,728.69
                                               .71

                                      4,243,929,2 161,802,277 16,247,16                                    4,389,484,397.
                 Total
                                            80.35             .63         0.09                                        89


(2)Investments in associates and joint ventures

                                                                                                                                  Unit: RMB

                                                             本期增减变动
                                                                                                                                  Closing
                                                                                    Cash
                                               Investme                                                                           balance
            Opening                                        Adjustme               dividend/                           Closing
                                               nt income                                       Provision                             of
            balance        Investme Investme               nt in other Changes      profit                            balance
Investees                                      recognize                                          for                             provision
            (Carrying        nts      nts                  comprehe in other      declared                  Others   (Carrying
                                                d under                                        impairme                              for
            amount) increased decreased                      nsive      equity       for                             amount)
                                                equity                                            nt                              impairme
                                                            income               distributio
                                                method                                                                               nt
                                                                                      n

Ⅰ. Joint ventures

Ⅱ. Associates

Guochuan 1,493,718                                                                                                   1,493,272
                                                 -446.80
g Energy             .98                                                                                                    .18


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Internet
Innovatio
n Center
(Guangdo
ng) Co.,
Ltd.

Nanchang
Sanhua
Jinlifeng   2,335,242                406,364.1                    500,000.0                       2,241,606
Machiner             .16                    3                             0                              .29
y Co.,
Ltd.

Zhongsha
n Sanhua
Tainuo                               -27,971.5
            27,971.57                                                                                   0.00
Machiner                                    7
y Co.,
Ltd.

Chongqin
g Tainuo
            8,847,728                1,544,830                    1,500,000                       8,892,558
Machiner
                     .00                   .62                          .00                              .62
y Co.,
Ltd.

Qingdao
Sanhua
Jinlifeng
                    0.00                                                                                0.00
Machiner
y Co.,
Ltd.

            12,704,66                1,922,776                    2,000,000                       12,627,43
 Subtotal
                    0.71                   .38                          .00                             7.09

            12,704,66                1,922,776                    2,000,000                       12,627,43
  Total
                    0.71                   .38                          .00                             7.09


(3)Other remarks

4. Operating revenue and Operating cost

                                                                                                               Unit: RMB

                               Current period cumulative                        Preceding period comparative
            Items
                           Revenue                   Cost                     Revenue                   Cost




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Main operations                     2,025,861,982.70            1,525,914,788.36            2,383,024,761.99            1,852,588,211.54

Other operations                        91,350,119.92               90,836,693.41             112,813,701.85             112,416,460.61

           Total                    2,117,212,102.62            1,616,751,481.77            2,495,838,463.84            1,965,004,672.15

Other remarks:

5. Investment income

                                                                                                                               Unit: RMB

                               Items                                  Current period cumulative          Preceding period comparative

Investment income from long-term equity investments under cost
                                                                                       16,058,323.76                     248,086,031.19
method

Investment income from long-term equity investments under
                                                                                         1,922,776.38                         867,006.32
equity method

Gains on disposal of long-term equity investments                                     -13,099,711.84                           57,012.43

Gains and losses on settlement of futures contracts                                     -5,205,759.36                         485,064.76

Gains and losses on settlement of foreign exchange contract                             -1,711,629.28                          48,634.20

Investment income of bank financing products                                             3,214,184.92                        5,388,024.29

Income of fund using fee                                                                 9,817,132.15

                                Total                                                  10,995,316.73                     254,931,773.19


6. Others

XVIII. Supplementary information

1. Non-recurring profit or loss in current period

√ Applicable □ Not Applicable
                                                                                                                               Unit: RMB

                                                   Items                                                      Amount          Remarks

Gains or loss on disposal of non-current assets                                                              -1,403,295.52

Government grant included in current period profit or loss (excluding Government grants closely
related to enterprise business and enjoyed in accordance with the unified national standard quota or         93,590,286.21
ration

Gains on changes in fair value of held-for-trading financial assets, derivative financial assets,
held-for-trading financial liabilities and derivative financial liabilities, and investment income from
disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial      -23,409,775.96
liabilities, derivative financial liabilities and other investment, excluding those arising from
hedging business related to operating activities

Other non-operating revenue or expenditures except the above items                                            1,196,846.18


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Other profit or loss satisfying the definition of non-recurring profit or loss                              1,113,187.32

Less: Enterprise income tax affected                                                                        9,222,107.32

      Non-controlling interest affected                                                                      574,585.23

                                                 Total                                                     61,290,555.68            --

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

2. ROE and EPS


                                                                                                        EPS
                                                                    Weighted
                Profit of the reporting period                                            Basic                     Diluted
                                                                  average ROE
                                                                                    EPS(RMB/share)              EPS(RMB/share)

Net profit attributable to shareholders of ordinary shares               6.74%                      0.18                             0.18

Net profit attributable to shareholders of ordinary shares
                                                                         6.10%                      0.16                             0.16
after deducting non-recurring profit or loss


3. Financial data variance between financial reporting prepared under domestic and international
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 ) Reasons for accounting data variance between financial reporting prepared under domestic and
international accounting standards, and for the difference adjustment on the data already audited by an
overseas audit institution, the name of the audit institution should be noted

4. Others

      1.Calculation process of weighted average ROE
      (1) Weighted average net assets
                                                                                               Weighted by       Weighted average net
                       Changed item in net assets                                Amount
                                                                                                   month                   assets


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Net assets attributable to shareholders of ordinary shares at the            9,291,632,928.45        6/6              9,291,632,928.45
beginning of period
                                                                               643,481,717.35        3/6
Net profit attributable to shareholders of ordinary shares
                                                                                                                        321,740,858.68
Cash dividend announced in May                                               -413,337,540.30         1/6                -68,889,590.05
Cash dividend announced in May, including the reduction of restricted            3,189,495.00        1/6                    531,582.50
shares repo obligations
                                                                               -26,456,121.98        3/6
Converted difference in Foreign Currency Statements
                                                                                                                        -13,228,060.99
Equity-settled share-based payment (phase 1)                                     4,728,589.32        3/6                  2,364,294.66
Equity-settled share-based payment (phase 2)                                    25,734,542.64        2/6                  8,578,180.88
Net assets attributable to shareholders of ordinary shares at the end of     9,528,973,610.48                         9,542,730,194.13
period
      (2) Weighted average ROE
                                     Items                                              Symbol          Current period cumulative
Net profit attributable to shareholders of ordinary shares                                A                             643,481,717.35
Non-recurring profit or loss                                                              B                              61,290,555.68
Net profit attributable to shareholders of ordinary shares after deducting              C=A-B                           582,191,161.67
non-recurring profit or loss
Weighted average net assets                                                               D                           9,542,730,194.13
Weighted average ROE                                                                    E=A/D                                    6.74%
Weighted average ROE after deducting non-recurring profit or loss                       F=C/D                                    6.10%
      2.Calculation process of Basic EPS and Diluted EPS
      (1) Basic EPS
                                     Items                                              Symbol             Current period cumulative
Net profit attributable to shareholders of ordinary shares                                 A                            643,481,717.35
Non-recurring profit or loss attributable to shareholders of ordinary shares               B                             61,290,555.68
Net profit attributable to shareholders of ordinary shares after deducting              C=A-B                           582,191,161.67
non-recurring profit or loss
Total shares at the beginning of period                                                    D                             2,765,657,898
Capital reserve converted into share capital                                               E                               826,675,080
Considering the number of restricted shares after the conversion and lifting               F                                27,642,290
of the ban
Weighted average number of ordinary shares outstanding (excluding                       G(noted)                         3,564,690,688
restricted shares)
Basic EPS                                                                               H=A/G                                       0.18
Basic EPS after deducting non-recurring profit or loss                                   I=C/G                                      0.16
Remark: G=D+E-F

      (2) Diluted EPS
                                   Items                                         Symbol              Current period cumulative
Net profit attributable to shareholders of ordinary shares                          A                                   643,481,717.35


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Non-recurring profit or loss                                                      B                                   61,290,555.68
Net profit attributable to shareholders of ordinary shares after deducting     C=A-B                                582,191,161.67
non-recurring profit or loss
Weighted average number of ordinary shares outstanding (excluding                 D                                   3,564,690,688
restricted shares)
Weighted average number of ordinary shares increased by equity                    E                                      14,003,342
incentive restricted shares
Weighted average number of ordinary shares outstanding after dilution          F=D+E                                  3,578,694,030
Diluted EPS                                                                    G=A/F                                             0.18
Diluted EPS after deducting non-recurring profit or loss                       H=C/F                                             0.16




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                  Section XII Documents Available for Inspection

     1. The financial 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 copy of all the Company's documents and announcements published on the newspapers
designated by CSRC within the reporting period.
     4. Other documents available for inspection




                                                                                                                     191