Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Zhejiang Sanhua Intelligent Controls Co., Ltd.
2021 Annual Report
March 2022
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section I Important Notes, Contents and Definitions
The Board of Directors, Board of Supervisors, Directors, Supervisors and Senior Management
of Zhejiang Sanhua Intelligent Controls Co., Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report shall be authentic, accurate, complete and
free from material misstatement whether due to false record, misleading statement or significant
omission, and they will bear both individual and joint legal liabilities.
Zhang Yabo, the Company's legal representative, Yu Yingkui, the person in charge of the
accounting work, and Sheng Xiaofeng, the person in charge of accounting department (Accounting
Officer) hereby declare and warrant that the financial statements in this report are authentic,
accurate and complete.
All directors attended the board meeting to review this report.
This annual report involves forward-looking statements such as future plans and does not
constitute the Company's substantive commitment to investors. Investors are recommended to pay
attention to investment risks.
The Company describes in detail concerning the possible risks and countermeasures in Section
XI “Outlook for the Future Development of the Company” under Section III “Management’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: Based on
provisional 3,569,927,512 shares of capital stock as of March 18, 2022 [note], cash dividend of
RMB 1.50 (including tax) will be distributed to all shareholders for every 10 shares. The Company
will not distribute bonus shares or convert capital reserves to share capital.
If the total share capital of the Company changes due to the conversion of convertible bonds,
share repurchase, exercise of equity incentive scheme, refinancing and listing of new shares before
the implementation of the distribution plan, the total distribution amount shall be adjusted
accordingly based on the principle of unchanged distribution proportion.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Note: As of March 18, 2022, the share capital of the Company was 3,591,098,972 shares, of which the number of repurchased
shares is 21,171,460. According to the provisions of the Company Law, the shares held by the listed company through the repurchase
account do not enjoy the right to participate in profit distribution or the conversion of capital reserve into share capital.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
CONTENTS
Section I Important Notes, Contents and Definitions ........................................................................................................................ 2
Section II Corporate Profile and Key Financial Indicators ................................................................................................................ 7
Section III Management’s Discussion and Analysis of Operations .................................................................................................. 13
Section IV Corporate Governance ................................................................................................................................................. 45
Section V Environmental and Social Responsibility ....................................................................................................................... 77
Section VI Significant Events ....................................................................................................................................................... 85
Section VII Changes in Shares and Information about Shareholders ............................................................................................. 109
Section VIII Information of Preferred Shares ............................................................................................................................... 123
Section IX Bonds ....................................................................................................................................................................... 124
Section X Financial Report ......................................................................................................................................................... 128
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Documents Available for Inspection
1. The 2021 annual report signed by the chairman of the board.
2. The financial report signed and sealed by the Company's legal representative, chief finance officer and
person in charge of accounting department.
3. Articles of Association.
4. Original copy of all the Company's documents and announcements published on the newspapers
designated by CSRC within the reporting period.
5. Other documents available for inspection.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Definitions
Items Refers to Definition
The Company, Company Refers to Zhejiang Sanhua Intelligent Controls Co., Ltd.
The Articles of Associations Refers to Articles of Associations for Zhejiang Sanhua Intelligent Controls Co., Ltd.
The CSRC Refers to China Securities Regulatory Commission
SZSE Refers to Shenzhen Stock Exchange
Zhejiang Securities Regulatory Bureau of China Securities Regulatory
Zhejiang Securities Regulatory Bureau Refers to
Commission
General Meeting Refers to General Meeting of Zhejiang Sanhua Intelligent Controls Co., Ltd.
Board of Directors Refers to The Board of Directors of Zhejiang Sanhua Intelligent Controls Co., Ltd.
Board of Supervisors Refers to The Board of Supervisors of Zhejiang Sanhua Intelligent Controls Co., Ltd.
Yuan Refers to RMB
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section II Corporate Profile and Key Financial Indicators
I. Corporate Information
Stock abbreviation Sanhua Intelligent Controls Stock code 002050
Stock Exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in
浙江三花智能控制股份有限公司
Chinese
Abbr. of the Company name
三花智控
in Chinese (if any)
Name of the Company in
ZHEJIANG SANHUA INTELLIGENT CONTROLS CO., LTD.
English (if any)
Abbr. of the Company name
SANHUA
in English (if any)
Legal representative Zhang Yabo
Registered Address Xialiquan, Qixing Street, Xinchang, Zhejiang
Post Code of Registered
312500
Address
Historical changes of the
N/A
Company's registered address
Office Address No. 219, Woxi Avenue, Meizhu, Xinchang, Zhejiang, China
Post Code of Office Address 312532
Website http://www.zjshc.com
E-mail shc@zjshc.com
II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name Hu Kaicheng Wang Yutong
No. 12 Baiyang Street, Qiantang New No. 219, Woxi Avenue, Meizhu, Xinchang
Address
District, Hangzhou, Zhejiang, China County, Zhejiang, China.
Tel. 0571-28020008 0575-86255360
Fax 0571-28876605 0575-86563888-8288
E-mail shc@zjshc.com shc@zjshc.com
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
III. Information Disclosure and Place of the Report
The website of the stock exchange where the
Shenzhen Stock Exchange : http://www.szse.cn
Company discloses the annual report
Media and website designated by the Company for China Securities Journal, Securities Times
release of the Annual Report CNINFO (http://www.cninfo.com.cn)
Place where the Annual Report is available for
Office of the Board of Directors of the Company
inspection
IV. Company Registration and Alteration
Organization code 913300006096907427
Changes in principle business activities
No change
since the Company was listed (if any)
Changes of controlling shareholders of the
No change
Company (if any)
V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm Pan-China Certified Public Accountants LLP
Business address of the accounting Building B, China Resources Building, 1366 Qianjiang Road, Shangcheng District, Hangzhou
firm City, Zhejiang Province, China
Name of accountants for writing
Luo Xunchao, Zhang Xin
signature
Sponsor institution engaged by the Company to continuously perform its supervisory function during the
Reporting Period
√Applicable □ Not applicable
Name of sponsor institution Office address Name of sponsor representative Supervision period
No. 201, Wuxing Road, June 30, 2021 to December 31,
Zheshang Securities Co., Ltd Wang Yiming, Pan Xun
Hangzhou, Zhejiang 2022
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reporting
period
□ Applicable √ Not applicable
VI. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
2021 2020 YoY Change (%) 2019
Operating Revenue (RMB) 16,020,809,805.52 12,109,833,368.44 32.30% 11,287,489,442.23
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Net Profit Attributable to
Shareholders of the Listed 1,684,044,407.47 1,462,158,821.57 15.18% 1,421,204,236.13
Company (RMB)
Net Profit Attributable to
Shareholders of the Listed
Company after Deducting 1,487,491,274.21 1,270,609,746.53 17.07% 1,351,335,040.19
Non-recurring Gains and Losses
(RMB)
Net Cash Flow Generated by
1,555,819,103.29 2,087,343,783.11 -25.46% 1,900,163,604.60
Operational Activities (RMB)
Basic Earnings per Share
0.47 0.41 14.63% 0.40
(RMB/Share)
Diluted Earnings per Share
0.47 0.41 14.63% 0.40
(RMB/Share)
Weighted Average ROE 15.98% 15.04% 0.94% 16.08%
At the End of 2021 At the End of 2020 YoY Change (%) At the End of 2019
Total Assets (RMB) 23,619,966,759.91 17,032,530,730.18 38.68% 14,790,190,170.64
Net Assets Attributable to
Shareholders of the Listed 11,150,308,271.43 10,064,794,519.57 10.79% 9,291,632,928.45
Company (RMB)
The Company's net profit before and after deducting non-recurring profit and loss in the last three fiscal years,
whichever is lower, is negative and the audit report of the last year shows that the Company's ability to continue as a
going concern is uncertain
□ Yes √ No
The lower of the net profit before and after deducting the non-recurring profit and loss is negative
□ Yes √ No
VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assets according to the disclosure of
International Financial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.
2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Accounting Standards and China Accounting Standards in the reporting period.
VIII. Key Quarterly Financial Indicators
Unit: RMB
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Total revenue 3,408,216,862.74 4,265,864,898.95 4,045,798,609.62 4,300,929,434.21
Net profit attributable to
360,076,304.91 463,804,916.79 469,290,292.27 390,872,893.50
shareholders of the Company
Net profit attributable to
shareholders of the Company
321,171,217.99 398,600,437.79 446,694,527.91 321,025,090.52
excluding non-recurring gains
and losses
Net cash flows from operating
189,951,485.75 635,265,137.51 335,389,549.66 395,212,930.37
activities
Whether there is significant difference between the above individual or aggregate financial indicators and that of
what disclosed in the quarterly report, half-year report
□ Yes √ No
IX. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2021 2020 2019 Note
Profit or loss from disposal of non-current
assets (including the write-off for the -7,164,158.61 -14,770,607.27 -6,087,268.05
impairment provision of assets)
The government subsidies included in the
current profits and losses (excluding the
government subsidy closely related to
regular course of business of the Company
101,910,018.36 134,101,082.00 86,311,151.49
and government subsidy based on
standard quota or quantitative continuous
application according to the state
industrial policy.)
Capital occupation fees charged to
non-financial enterprises included in 61,191.86
current profits and losses
Profits and losses attributed to change in In order to avoid the
fair value for held-for-trading financial price risk of raw
123,439,358.54 91,394,679.61 563,966.95
assets, derivative financial assets, materials and
held-for-trading financial liabilities, and prevent exchange
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
derivative financial liabilities; and rate risk, the
investment income from disposal of Company and its
held-for-trading financial assets, subsidiaries have
derivative financial assets, carried out
held-for-trading financial liabilities, derivatives business,
derivative financial liabilities and other including futures
debt investments, excluding the effective contracts and
hedging business related to the regular foreign exchange
business operation of the Company. forward contracts.
In 2021, the futures
income was 31.4482
million yuan and the
foreign exchange
income was 91.9912
million yuan. In
2020, the futures
income was 36.3784
million yuan and the
foreign exchange
income was 55.0162
million yuan.
Meanwhile, the
exchange loss was
95.9901 million
yuan in 2021 and
112.6759 million
yuan in 2020.
According to the
No. 1 explanatory
announcement on
information
disclosure of public
companies-
Non-recurring gains
and losses,
exchange gains and
losses are recurring
gains and losses,
and Futures and
forward gains and
losses are
non-recurring gains
and losses.
Other non-operating income and -3,359,134.55 620,065.25 5,445,213.46
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
expenditures except the items mentioned
above
Other gains and losses items that fit the
definition of non-recurring gains and 765,674.33 1,246,912.65 92,329.55
losses
Less: Impact of income tax 17,841,108.54 19,272,109.42 13,966,646.08
Impact of the minority interests (after
1,197,516.27 1,770,947.78 2,550,743.24
tax)
Total 196,553,133.26 191,549,075.04 69,869,195.94 --
Details of other gains and losses items that meet the definition of non-recurring gains and losses:
□Applicable √ Not applicable
The reasons for the non-recurring gains and losses items defined or listed in the Explanatory Announcement No. 1
of Information Disclosure of Listed Companies – Non-recurring Gains and Losses are defined as recurring gains
and losses items
□Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in
the Explanatory Announcement No. 1 of Information Disclosure of Listed Companies – Non-recurring Gains and
Losses, as recurring gains and losses items.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section III Management’s Discussion and Analysis of Operations
I. Industry of the Company during the reporting period
The Company shall comply with the disclosure requirements of automobile manufacturing related industries listed
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.
1. Industry development
(1) Refrigeration and air conditioning electrical components industry
China is the largest manufacturing base of A/C and refrigerators in the world, and its production and sales volume
ranks first globally. In line with the trend of environmental protection in the world, energy-saving inverter and
intelligent technology have become the trend, which puts forward a series of new requirements for the market of
control components, and also brings new development opportunities. As a leading enterprise in the refrigeration
control components industry, the Company will follow the trend, firmly seize this opportunity and develop
steadily.
(2) Automotive components industry
The global automobile industry has been developing rapidly, which also drives the market demand of automotive
thermal management products to continue to grow substantially. In recent years, the development of new energy
vehicles has become a certain trend, which puts forward higher and more updated requirements for thermal
management products no matter in hybrid, pure electric or hydrogen energy vehicles. The Company is positioned
in the field of new energy vehicle thermal management system, gradually expands from components to module
and subsystems, and has become the supplier of Valeo, Volkswagen, Mercedes Benz, BMW, Volvo, Toyota, GM,
Geely, BYD, SAIC, NIO and other cooperative partners.
2. Industry status
The Company is the world's largest manufacturer of refrigeration control components and the world's leading
manufacturer of automotive thermal management system control components. "Sanhua" refrigeration intelligent
control components have become a world-famous brand, and a strategic partner of many automobile enterprises
and air-conditioning refrigeration appliance manufacturers in the world. After more than 30 years of development,
the Company has established a leading position in the global market of refrigeration and automotive thermal
management. The market share of the Company's Electronic Expansion Valve, Four-way Reversing Valve,
Solenoid Valve, Microchannel Heat Exchanger, Automotive Electronic Expansion Valve, Thermal Management
Integrated Module for new energy vehicle, Omega Pump ranks first globally. The market share of the Company's
Service Valve, Vehicle Thermal Expansion Valve and Receiver Drier is in the leading position in the world.
II. The Principal Business of the Company during the Reporting Period
The Company shall comply with the disclosure requirements of automobile manufacturing related industries listed
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.
The Company adheres to the "Focus on Leading, Innovation, and Transcendence" business path, concentrating on
the research and application of heat pump technology and thermal management system products, focusing on the
development of environmental thermal management solutions for heat exchange and temperature intelligent
control. According to the different stages and characteristics of strategic business and their development, the
Company's business is mainly divided into refrigeration and air conditioning electrical components business and
automotive components business. Refrigeration and air conditioning electrical parts business is committed to the
professional operation of building HVAC and electrical equipment. Its main products include Four-way Reversing
Valve, Electronic Expansion Valve, Solenoid Valve, Microchannel Heat Exchanger, Omega Pump, etc., which are
widely used in A/C, refrigerator, cold chain logistics, dishwasher and other fields. The automotive components
business focuses on in-depth research in the field of automotive thermal management. Its main products include
Thermal Expansion Valve, Electronic Expansion Valve, Electronic Water Pump, and Thermal Management
Integrated Module for new energy vehicle, etc., which are widely used in both new energy vehicles and traditional
fuel vehicles.
During the reporting period, the Company's main business and its business model have not changed.
Manufacturing, production and operation of vehicles during the reporting period
□Applicable √ Not applicable
Manufacturing, production and operation of vehicle components during the reporting period
√Applicable □ Not applicable
Production output Sales volume
2021 2020 YoY Change (%) 2021 2020 YoY Change (%)
Classified by Components and Parts (Unit: million PCs)
New energy vehicle
thermal management 19.4666 7.7423 151.43% 18.8118 7.0355 167.39%
products
Tranditional fuel
vehicle thermal
109.1905 85.3787 27.89% 108.2491 84.6391 27.89%
management
products
Classified by Regions (Unit: million PCs)
Domestic 84.2232 56.8080 48.26% 83.1957 55.9441 48.71%
Overseas 44.4339 36.3129 22.36% 43.8652 35.7305 22.77%
Explanation on why the related data varied by more than 30% on a YOY basis
√ Applicable □ Not applicable
This is mainly due to the continuous upsurge of the new energy vehicle market, which drives the rapid growth of
the production and sales of new energy vehicle thermal management products.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Sale model of vehicle components
The Company's customers are mainly domestic and foreign vehicle manufacturers and tier 1 suppliers. The sale
mode is mainly direct sale.
Whether the Company carries out auto finance business
□Applicable √ Not applicable
Whether the Company carries out business related to new energy vehicles
√Applicable □ Not applicable
Production and operation of new energy vehicles parts
Unit: million PCs
Product category Production capacity Production volume Sales volume Revenue (RMB)
New energy vehicle
thermal management 26.00 19.4666 18.8118 4,003,834,979.86
products
Subsidy income of new energy vehicles
Not applicable
III. Core Competitiveness Analysis
The Company shall comply with the disclosure requirements of automobile manufacturing related industries listed
in the No.3 Guidelines for Self-discipline Supervision of Public Companies of Shenzhen Stock Exchange - Industry
Information Disclosure.
1. Clear strategic layout
The Company adheres to the "Focus on Leading, Innovation, and Transcendence” business path, takes the
research and application of heat pump technology and thermal management system products as the core, firmly
grasps the development theme of energy conservation, environmental protection and intelligent control, upgrades
from "mechanical parts development" to "system control technology solution development of electronic control
integration". The Company’s products series are expanded from household A/C and refrigerator components to the
field of commercial A/C and commercial refrigeration, and extending to the direction of inverter control
technology and system integration and upgrading. Meanwhile, after the injection of automotive business, it gives
full play to the synergy effect with the original business, continues to deepen the research and development of new
energy vehicle thermal management system components, and actively explores the deeper application of thermal
management components and subsystems in the automotive field, so as to provide global customers with
competitive environmental intelligent control solutions.
2. Technology leading, customer oriented
As a national high-tech enterprise, the Company has always adhered to the technological route of independent
development and innovation. For decades, it has focused on the field of intelligent control and vigorously
cultivated core technologies with independent intellectual property rights. It has been authorized with 2,802
patents both domestic and abroad, including 1,366 invention patents. All products, services and quality of the
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Company take meeting the needs of customers as the first priority.
3. Quality assurance, scale economy effect
The Company's products cover refrigeration A/C electrical components and automotive components industry. The
market share of the Company's Electronic Expansion Valve, Four-way Reversing Valve, Solenoid Valve,
Microchannel Heat Exchanger, Automotive Electronic Expansion Valve, Thermal Management Integrated Module
for new energy vehicle, Omega Pump ranks first globally. The market share of Service Valve, Vehicle Thermal
Expansion Valve and Receiver Drier is in the leading position in the world. The Company has established a
complete and strict quality assurance system, achieved ISO9001, IATF16949, QC080000 quality system
certification. The Company won the National Quality Award, Zhejiang Quality Award, and won the high
comments from JCI, Daikin, Carrier, Midea, Gree, Haier, Toyota, Benz, Volkswagen, Valeo and other well-known
enterprises at home and abroad.
4. Advantages of global marketing network and production base
Since the 1990s, the Company has focused on expanding the international market, and has established overseas
subsidiaries in Japan, South Korea, Singapore, the United States, Mexico, Germany and other places to build a
global marketing network. At the same time, it has established overseas production bases in the United States,
Poland, Mexico, Vietnam, India and other places, and gradually it has ability to cope with globalization. And in
practice, we have trained a number of management talents who can meet the needs of business development in
different countries and regions.
IV. Main Business Analysis
1. Overview
In 2021, under the background of the continuous impact of the overseas epidemic, the sharp rise in international
shipping prices, the continuous rise in the price of bulk raw materials, the appreciation of the RMB exchange rate
against the US dollar and other factors, the challenges of economic development are unprecedented. However, in
the medium and long term, the upgrading of industrial structure, consumption diversification, the guidance of
national policies on the development of green and intelligent industries and the upgrading of product standards in
the household appliance industry will bring new opportunities and growth engine. Specific to the industry in
which the Company operates, the refrigeration and air conditioning electrical parts business is driven by the
upgrading of household appliance consumption concept, and it still maintains sustained and stable growth. The
automotive parts business has driven the rapid growth of performance due to the upsurge of the new energy
vehicle market.
During the reporting period, the total revenue is RMB 16.02 billion, a year-on-year increase of 32.30%; the net
income is RMB 1.99 billion, a year-on-year increase of 16.74%; the net profit attributable to shareholders of the
listed Company is RMB 1.68 billion, a year-on-year increase of 15.18%. The revenue of refrigeration and air
conditioning electrical components business is RMB 11.22 billion, a year-on-year increase of 16.36%; the revenue
of automotive components business is RMB 4.80 billion, a year-on-year increase of 94.50%.
1. Focus on operation and deepen industrial layout
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
(1). Refrigeration and air conditioning electrical components business
The refrigeration and air conditioning electrical parts business seizes the development opportunities of energy
efficiency upgrading, refrigerant switching, consumption upgrading, VRF and other related business products,
continue to expand customers, strengthen the acquisition and transformation of business opportunities, and
improve product sales. At the same time, it actively expands to kitchen electrical parts, further broaden the
Company's potential development fields, and continuously improve its sustainable profitability and market
competitiveness. Relying on the increasing of domestic dishwasher penetration rate and the transformation of
internal supply chain, Aweco business has achieved continuous positive profitability in 2021. After the relocation
of the new plant in Sanhua, Vietnam, it has been recognized by important customers in the United States, and the
cost of some products has been lower than that in China. In addition, the construction of the plant in Daming city
will be accelerated, which lays a solid foundation for the development of commercial fields brought by the
consumption upgrading and industrial upgrading of the Chinese market in the future.
(2). Automotive components business
The automotive components business adheres to positioning strategic customers, orderly promotes the production
line construction of the Mexican factory and Shaoxing Binhai factory, so as to meet the increasing capacity
requirements of customers. By the end of 2021, all the projects from raised funds investment have been tested and
put into operation. On the premise of meeting the projects promotion of current customers, the Company actively
develops competitive products and techniques. During the reporting period, the Company continued to expand
new customers and achieved comprehensive business cooperation with domestic emerging vehicle makers,
traditional fuel vehicle makers and joint venture vehicle enterprises, which laid the foundation for the subsequent
sustained rapid growth. In terms of internal management, take first-class enterprises as benchmarks, sort out and
establish a global quality management system, and improve the quality management of factories at home and
abroad. Under the challenge of rising raw material prices and freight charges, we will spare no effort to promote
the cost reduction and efficiency increase of all employees, and gradually promote the linkage of product prices
with downstream customers.
2. Continue to promote investment and construction, and improve the profitability of the Company
The Company's convertible bonds were listed and traded in Shenzhen Stock Exchange on June 30, 2021, raising
RMB 3 billion, which is mainly used for "Construction project of 65 million sets of commercial refrigeration and
air conditioning intelligent control components per year" and "Technical transformation project of 50.5 million
sets of high-efficiency and energy-saving refrigeration and air conditioning control components per year". The
implementation of these projects will help promote the development of the Company's products towards a more
efficient and energy-saving direction, further improve the Company's business scale and competitive advantage,
optimize the business structure, improve the Company's sustainable profitability, and lay a foundation for the
Company to achieve the medium and long-term strategic development goals.
3. Strengthen the creation of product strength and improve the patent layout of strategic products
During the reporting period, the Company invested 751 million yuan in R & D, an increase of 44.9% year-on-year.
This continuous R & D investment was used to build the product strength. And the Company participated in
market competition with new products and new technologies through continuous optimization iteration. In terms
of patent layout, we will continue to implement "high-quality patents and high-value patents" through specialized
promotion of the patent layout of key products. By the end of the report period, 2,802 patents have been
authorized at home and abroad, including 1,366 invention patents.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
4. Pay attention to the construction of talent team and establish sustained and long-term incentive mechanism
The Company continued to deepen the work of "strengthening the talents, streamlining and high efficiency",
promote each business unit to optimize the talent development and elimination mechanism, and comprehensively
apply the results of talent review. At the same time, during the reporting period, the Company carried out
Scientific and Technological Achievement Award and Operation and Management Achievement Award,
encouraged outstanding talents to create greater value in the future, and further established and improved the
Company's long-term incentive mechanism.
5. Attach great importance to the maintenance of investor relations, strengthen the awareness of service and return to
shareholders
During the reporting period, in order to safeguard the interests of shareholders and enhance the confidence of
investors, the Company carried out share repurchase with its own funds to protect the long-term interests of the
Company and shareholders. Meanwhile, the Company strengthened and improved the construction of internal
control system, standardized the operation of the three committees, improved the Company's information disclosure,
investor relationship management and other aspects. And ensured smooth communication between investors and
listed company through interactive platform, investor call answering, on-site reception and other means.
2. Operating incomes and operating costs
(1) Operating income structure
Unit: RMB
2021 2020 YoY Change (%)
Amount Proportion to Amount Proportion to
operating revenue operating revenue
Total Revenue 16,020,809,805.52 100% 12,109,833,368.44 100% 32.30%
Classified by Industry
General Equipment
Manufacturing 16,020,809,805.52 100.00% 12,109,833,368.44 100.00% 32.30%
Industry
Classified by Products
Refrigeration A/C
Electrical 11,218,320,924.79 70.02% 9,640,647,193.31 79.61% 16.36%
Components
Automotive
4,802,488,880.73 29.98% 2,469,186,175.13 20.39% 94.50%
Components
Classified by Region
Domestic 8,112,471,456.27 50.64% 5,864,589,812.78 48.43% 38.33%
Overseas 7,908,338,349.25 49.36% 6,245,243,555.66 51.57% 26.63%
Classified by Sales Model
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Direct Sale 16,020,809,805.52 100.00% 12,109,833,368.44 100.00% 32.30%
(2) Industries, products, regions or sale models accounting for more than 10% of the Company’s operating
income or operating profit
√ Applicable □ Not applicable
Unit: RMB
YoY Change
YoY Change YoY Change
Operating (%) of
Operating cost Gross margin (%) of (%) of gross
revenue operating
operating cost margin
income
Classified by Industry
General
Equipment 16,020,809,805 11,907,350,969
25.68% 32.30% 36.27% -2.16%
Manufacturing .52 .11
Industry
Classified by Products
Refrigeration
11,218,320,924 8,250,209,698.
A/C Electrical 26.46% 16.36% 18.84% -1.53%
.79 67
Components
Automotive 4,802,488,880. 3,657,141,270.
23.85% 94.50% 103.63% -3.41%
Components 73 44
Classified by Region
8,112,471,456. 6,153,997,773.
Domestic 24.14% 38.33% 41.95% -1.93%
27 09
7,908,338,349. 5,753,353,196.
Overseas 27.25% 26.63% 30.68% -2.25%
25 02
Classified by Sales Model
16,020,809,805 11,907,350,969
Direct Sale 25.68% 32.30% 36.27% -2.16%
.52 .11
Adjusted statistics of principal business are based on the caliber at the end of the reporting period of last year, if
the statistics caliber of principal business has been changed during the reporting period
□ Applicable √ Not applicable
(3) If revenue from physical products sales greater than revenue from providing services
√ Yes □ No
Industry Item Unit 2021 2020 YoY Change (%)
General Sales Yuan 16,020,809,805.52 12,109,833,368.44 32.30%
19
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Equipment Production Yuan 17,250,026,781.56 12,170,122,424.44 41.74%
Manufacturing
Inventory Yuan 3,718,213,579.16 2,402,338,998.74 54.77%
Industry
Explanation on why the related data varied by more than 30% on a YOY basis
√ Applicable □ Not applicable
It is mainly due to the increase of production and inventories in warehouse driven by the growth of sales.
(4) Fulfillment of signed significant sales and procurement contracts by the reporting period
□ Applicable √ Not applicable
(5) Operating cost structure
Classification based on industry and products
Unit: RMB
2021 2020
YoY Change
Industry Item Proportion to Proportion to
Amount Amount (%)
operating cost operating cost
General
Equipment 8,798,731,493. 6,445,946,206.
Material 73.89% 73.77% 36.50%
Manufacturing 26 35
Industry
General
Equipment 1,645,068,024. 1,274,879,076.
Labor 13.82% 14.59% 29.04%
Manufacturing 73 04
Industry
General
Equipment
Depreciation 344,128,341.18 2.89% 254,799,059.70 2.92% 35.06%
Manufacturing
Industry
General
Equipment
Freight 514,826,171.07 4.32% 284,652,271.01 3.26% 80.86%
Manufacturing
Industry
General
Equipment
Energy Source 264,446,475.24 2.22% 188,350,845.76 2.16% 40.40%
Manufacturing
Industry
General
Equipment
Other 340,150,463.63 2.86% 289,593,579.50 3.30% 17.46%
Manufacturing
Industry
20
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Unit: RMB
2021 2020
YoY Change
Product Item Proportion to Proportion to
Amount Amount (%)
operating cost operating cost
Refrigeration
6,057,972,672. 5,186,890,211.
A/C Electrical Material 50.88% 59.36% 16.79%
72 38
Components
Refrigeration
1,229,719,787. 1,059,871,851.
A/C Electrical Labor 10.33% 12.13% 16.03%
71 73
Components
Refrigeration
A/C Electrical Depreciation 241,554,717.50 2.03% 201,479,294.12 2.31% 19.89%
Components
Refrigeration
A/C Electrical Freight 381,394,362.19 3.20% 224,442,230.91 2.57% 69.93%
Components
Refrigeration
A/C Electrical Energy Source 170,046,647.87 1.43% 140,848,963.04 1.61% 20.73%
Components
Refrigeration
A/C Electrical Other 169,521,510.68 1.42% 128,686,216.03 1.47% 31.73%
Components
Automotive 2,740,758,820. 1,259,055,994.
Material 23.02% 14.41% 117.68%
Components 54 97
Automotive
Labor 415,348,237.02 3.49% 215,007,224.31 2.46% 93.18%
Components
Automotive
Depreciation 102,573,623.68 0.86% 53,319,765.58 0.61% 92.37%
Components
Automotive
Freight 133,431,808.88 1.12% 60,210,040.10 0.69% 121.61%
Components
Automotive
Energy Source 94,399,827.37 0.79% 47,501,882.72 0.54% 98.73%
Components
Automotive
Other 170,628,952.95 1.43% 160,907,363.47 1.84% 6.04%
Components
(6) Any change in consolidation scope during the reporting period
√Yes □ No
(I). Business combination under different control
21
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
1. Business combination under different control in this reporting period
(1) Basic information
Date of equity Cost of equity
Name of the acquiree Proportion of equity acquisition Equity acquisition method
acquisition acquisition
Zhejiang Sanhua Plate
RMB 28.00 milli
Exchange Technology Co., 2021-12-14 70% Equity transfer agreement
on
Ltd
(Continued)
Determination Revenue of the acquiree from Net profit of the acquiree
Date of equity
Name of the acquiree basis of purchase the acquisition date to the end from the acquisition date to
acquisition
date of the period the end of the period
Zhejiang Sanhua Plate Complete the
Exchange Technology Co., 2021-12-14 equity transfer and 0.00 0.00
Ltd make payment
(2) Other instructions
In December 2021, the Company acquired 70% equity of Zhejiang Sanhua Plate Exchange Technology Co., Ltd.
(hereinafter referred to as Sanhua Plate Exchange) from Su Jun. The pricing of this equity transaction is based on
the assessed value, the basic transfer price is 28 million yuan, and the assessment payment of consideration is 7
million yuan.
If the net profit of the Sanhua Plate Exchange in 2022 realize 6.4 million yuan, the Company will pay another 3.5
million yuan. Otherwise, the Company will not need to pay any more. If the net profit of Sanhua Plate Exchange
in 2023 realize 8 million yuan, the Company will pay another 3.5 million yuan. Otherwise, the Company will not
need to pay any more.
According to the profit forecast data and the judgment of the Company's management, it is difficult for Sanhua
Plate Exchange to achieve the assessment net profit, and the assessment payment of consideration is estimated at
zero yuan.
2. Cost of M&A and goodwill
Items Amount
Cost of M&A 28,000,000.00
Cash 28,000,000.00
Less: fair value of identifiable net assets obtained 20,408,169.39
Goodwill 7,591,830.61
3. Identifiable assets and liabilities of the acquiree on the acquisition date
(1) Details
Item Sanhua Plate Exchange
Fair value on the purchase date Book value on purchase date
Assets 41,750,357.62 25,060,423.80
Accounts receivable 2,456,829.86 2,456,829.86
Inventory 7,730,397.40 7,730,397.40
Other current assets 1,769,614.51 1,769,614.51
Fixed assets 6,672,716.01 4,214,515.28
22
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Assets with right of use 4,019,018.35 4,019,018.35
Intangible assets 12,917,600.00
Long term deferred 6,068,825.10 4,754,692.01
expenses
Deferred tax assets 115,356.39 115,356.39
Liabilities 12,595,829.92 10,092,339.85
Accounts payable 5,547,165.87 5,547,165.87
Salary payable 526,155.63 526,155.63
Lease liabilities 4,019,018.35 4,019,018.35
Deferred tax liability 2,503,490.07
Net assets 29,154,527.70 14,968,083.95
Less: Minority interests 8,746,358.31 4,490,425.19
Net assets acquired 20,408,169.39 10,477,658.76
(2) Determination method of fair value of identifiable assets and liabilities
The fair value of identifiable assets and liabilities of Sanhua Plate Exchange is determined at the assessed value.
(II). Changes in consolidation scope due to other reasons
Actual
Proportion of
Equity acquisition Date of equity contribution at
Name of subsidiaries capital
method acquisition the end of the
contribution
period
Zhejiang Sanhua Automotive Components Trading Co.,
New investment 2021-08-31 0.00 100%
Ltd
Zhejiang Sanhua Heat Exchanger Co., Ltd New investment 2021-12-13 0.00 100%
(7) Significant change or adjustment of the Company’s business, products or services during the reporting
period:
□ Applicable √ Not applicable
(8) Major customers and suppliers:
Major customers of the Company
Sales to top five customers (RMB) 5,603,027,061.52
Total sales to top five customers as a percentage of the
34.98%
total sales for the year (%)
Total sales to the related parties in top five customers as
0.00%
a percentage of the total sales of the year (%)
Information on top five customers
No. Name of Customer Sales Amount (RMB) Percentage of total sales for the year
1 First 1,799,438,899.34 11.23%
23
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
2 Second 1,061,623,336.82 6.63%
3 Third 1,060,089,878.28 6.62%
4 Fourth 1,023,667,724.20 6.39%
5 Fifth 658,207,222.88 4.11%
Total -- 5,603,027,061.52 34.98%
Other information of major customers
□Applicable√ Not applicable
Major suppliers of the Company
Total purchases from top five suppliers (RMB) 1,460,941,015.24
Total purchases from top five suppliers as a percentage
14.80%
of the total purchases for the year (%)
Total purchases from the related parties in the top five
suppliers as a percentage of the total purchases for the 0.00%
year (%)
Information on top five suppliers of the Company
No. Name of Supplier Purchase Amount (RMB) Percentage of total purchase for the year
1 First 565,773,118.04 5.73%
2 Second 329,541,125.17 3.34%
3 Third 251,506,989.10 2.55%
4 Fourth 157,097,558.68 1.59%
5 Fifth 157,022,224.25 1.59%
Total -- 1,460,941,015.24 14.80%
Other information on major suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
2021 2020 YoY Change (%) Note of significant change
It is mainly due to the increase of
Sales expenses 449,226,532.55 365,125,043.08 23.03% employees’ salary, storage and
handling fee, etc
Administrative
875,802,861.33 764,084,428.88 14.62%
expenses
Mainly due to the increase of interest
Financial expenses 84,108,848.11 128,860,093.64 -34.73%
income
R&D expenses 751,138,559.24 518,401,363.63 44.90% It is mainly due to the increase of
24
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
employees’ salary, material and
power cost, mold manufacturing
cost, etc
4. R&D Investment
√Applicable □Not applicable
Name of main R & Progress of the Expected impact on the future
Project purpose Objectives to be achieved
D projects project development of the Company
To extend portfolio of coolant
High Power Development of high Development of high power
pumps, enhance its
Coolant Pump power coolant pumps Completed coolant pumps to cover
competitiveness and increase
Development (high power level) market demand
more market share
Development of position To improve product
Valve Position Achieve low-cost and
control for automotive competitiveness, meet
Control Completed high-precision position
refrigerant valves and customer demands and
Development control for valves
coolant valves increase market share
Development of To expand thermal
Heat Pump Module Development of heat management system market in
Improve productivity and
with Integrated pump modules based on Ongoing the new energy vehicles to
increase product reliability
Control of Valves valves integration achieve new market growth of
and Sensors heat pump modules
New Integrated Extend system operation
To enrich product diversity of
Module temperature to extreme low
Development of new heat new energy vehicle thermal
Development and Completed end and reduce the energy
pump module management systems and
System Application consumption of air
expand market opportunities
Research conditioning system
Development of key
To expand CO2 refrigerant
CO2 Refrigerant components for new Enhance product
Completed product market in the new
Valve Development energy vehicle thermal competitiveness
energy vehicles
management systems
To enrich the product lines;
Develop E-type Develop standardized enhance the product
electronic platform for EEV Completed Realize noise optimization competitiveness applicable to
expansion valve products refrigerating AC area; raise
the market sharing
Realize the product
Develop Q05-type Develop new products
miniaturization; improve the Explore the new growth point
gas proportional applied in kitchen Completed
performance of voltage of kitchen appliance market
valve appliances
stabilization
Aluminium wire Develop a new type of Completed Realize the application of new Improve product cost
25
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
and chain pole motor for washing materials and new competitiveness and market
motor development heating pumps, enrich the technologies share
types of heating pumps
and meet the demands of
different customers
Enhance the market
New Pressure Enhance the market
Develop competitive Pressure competitiveness of Pressure
Controller competitiveness of Completed
Control Valve Controller, expand the
Development Pressure Controller
Company's market share
Head Pressure New development of Develop competitive Head Enrich the company's product
Control Valve Head Pressure Control Ongoing Pressure Control Valve with line, expand the company's
Development Valve product line high reliability market share
Automotive
Improve the company's
Eletromagnet Expand product line in Improve the reliability of
Completed business engagement with
Switch automotive field Automotive Eletromagnet
strategic customers
Development
Development of Develop microchannel
Improve capacity and water
low cost and high evaporator for computer
drainage performance, realize Explore new growth of IDC
efficienct room and indirect Ongoing
the MCHE evaporator evaporator
microchannel evaporative cooling air
application for IDC
evaporator for IDC conditioner
R & D personnel of the Company
2021 2020 Change proportion
Number of R & D personnel
1,890 1,576 19.92%
(person)
Proportion of R & D personnel 13.05% 12.06% 0.99%
Academic structure of R & D
—— —— ——
personnel
Junior college and below 466 425 9.65%
Bachelor degree 1,104 878 25.74%
Master degree and above 320 273 17.22%
Age composition of R & D
—— —— ——
personnel
Under the age of 30 748 525 42.48%
Age between 30 and 40 821 761 7.88%
Over the age of 40 321 290 10.69%
R & D investment of the Company
2021 2020 YoY Change (%)
Amount of R&D expenses 751,138,559.24 518,401,363.63 44.90%
26
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
(RMB)
R&D investment as a
percentage of operating 4.69% 4.28% 0.41%
income
Capitalized R&D expenses
0.00 0.00 0.00%
(RMB)
Capitalized R&D expenses as
a percentage of R&D 0.00% 0.00% 0.00%
expenses
Reasons and effects of major changes in the composition of R & D personnel of the company
□ Applicable √ Not applicable
Reason of significant change of total R&D expenses as a percentage of total revenue compared to last year
□ Applicable √ Not applicable
Reason and explanation of its reasonableness of significant change of the capitalized R&D expenses
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
Items 2021 2020 YoY Change (%)
Subtotal of cash inflows from
16,425,564,998.54 12,367,638,678.57 32.81%
operating activities
Subtotal of cash outflows
14,869,745,895.25 10,280,294,895.46 44.64%
from operating activities
Net cash flows from
1,555,819,103.29 2,087,343,783.11 -25.46%
operating activities
Subtotal of cash inflows from
805,822,215.02 644,636,918.39 25.00%
investing activities
Subtotal of cash outflows
5,855,480,452.10 1,439,811,450.15 306.68%
from investing activities
Net cash flows from
-5,049,658,237.08 -795,174,531.76 -535.04%
investing activities
Subtotal of cash inflows from
4,431,276,476.92 2,163,516,795.02 104.82%
financing activities
Subtotal of cash outflows
1,607,793,271.80 2,559,032,808.73 -37.17%
from financing activities
Net cash flows from
2,823,483,205.12 -395,516,013.71 813.87%
financing activities
Net increase in cash and
-710,141,813.45 846,361,023.53 -183.91%
cash equivalents
Explanation of why the related data varied significantly on a YoY basis
√ Applicable □ Not applicable
27
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
1. The net cash flow from investing activities decreased by 535.04%, mainly due to the purchase of large
certificates of deposit.
2. The net cash flow from financing activities increased by 813.87%, mainly due to the issuance of convertible
bonds.
3. The cash and cash equivalents decreased by 183.91%, mainly due to the purchase of large certificates of
deposit.
Explanation of reasons leading to the material difference between cash flow from operating activities during the
reporting period and net profit for the year
□ Applicable √ Not applicable
V. Non-Core Business Analysis
√Applicable □Not applicable
Unit: RMB
Proportion to net
Amount Note of Change Sustainability
profit
Gains and losses of futures
contract settlement, foreign
Investment
141,572,602.13 7.16% exchange forward contract No
Income
settlement, bank financial
product, etc.
Floating profit and loss of
Gains and Losses foreign exchange
from Change of 3,221,397.38 0.16% instruments, futures No
Fair Value instruments, bank financial
products, etc.
Income from nonpayment,
compensation and
Non-operating
4,792,550.68 0.24% liquidated damages, gains No
Revenue
from retirement of fixed
assets, etc.
Loss on retirement of fixed
Non-operating
14,928,195.40 0.76% assets, compensation No
Expenditures
expenditure, donation, etc.
Credit
-56,834,285.92 -2.88% Bad debt loss, etc. No
Impairment Loss
Loss on impairment of
Assets
-93,213,670.21 -4.72% inventories, fixed assets, No
Impairment Loss
goodwill, etc.
Gains on -387,648.44 -0.02% Gains on disposal of fixed No
28
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Disposal of assets
Properties
The government grants of
Government subsidies,
VAT refund of civil welfare
value-added tax rebate for
enterprises and software
civil affairs and welfare
Other Gains 122,787,760.00 6.21% product VAT exceeding tax
enterprises, value-added tax
burden are sustainable,
rebate for software
while the rest are not
products, etc.
sustainable
VI. Analysis of Assets and Liabilities
1. Material changes of assets
Unit: RMB
December 31st 2021 January 1st 2021
YoY
Percentage Change Note of significant change
Percentage of
Amount of total Amount (%)
total assets
assets
Mainly due to the increase of funds
Cash and Bank 3,489,687,568.
6,707,721,861.13 28.40% 20.49% 7.91% raised by issuing Sanhua convertible
Balances 14
bonds
Account 2,355,613,299.
3,516,292,868.39 14.89% 13.83% 1.06%
Receivable 57
Contract assets 0.00% 0.00% 0.00%
2,307,761,706.
Inventories 3,637,853,809.47 15.40% 13.55% 1.85%
46
Investment
8,531,303.62 0.04% 10,067,588.96 0.06% -0.02%
property
Long-term Equity
22,680,930.51 0.10% 15,219,616.68 0.09% 0.01%
Investment
3,719,643,719.
Fixed Assets 4,232,706,801.07 17.92% 21.84% -3.92%
40
Construction in
1,343,528,875.40 5.69% 628,730,529.07 3.69% 2.00%
Progress
Assets with right
215,324,024.26 0.91% 202,831,869.22 1.19% -0.28%
of use
Short-term
738,190,910.54 3.13% 383,088,296.60 2.25% 0.88%
borrowings
29
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Contractual
79,816,249.22 0.34% 42,581,607.67 0.25% 0.09%
liabilities
Mainly due to the transfer of some
Long-term 1,707,918,994.
801,461,958.89 3.39% 10.03% -6.64% guaranteed loans into non-current
borrowings 87
liabilities due within one year
Lease liabilities 157,981,678.16 0.67% 149,779,815.53 0.88% -0.21%
Non-current
Mainly due to the increase of
liabilities due 1,763,342,887.58 7.47% 153,273,858.59 0.90% 6.57%
guaranteed loans due within one year.
within one year
Mainly due to the increase in the
Bonds payable 2,652,035,619.50 11.23% 0.00% 11.23%
issuance of Sanhua convertible bonds
Whether the proportion of overseas assets is relatively high
□ Applicable √ Not applicable
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit and Cumulative
loss of fair changes in Impairment Current
Opening Current sale Other Closing
Items value change fair value accrued in the purchase
balance amount changes balance
in the current included in current period amount
period equity
Financial Assets
1.
Held-for-tradi
ng financial
assets 752,224,861.7 646,500,000. 109,383,374
-596,487.04 4,255,000.00
(Excluding 8 00 .74
derivative
financial
assets)
2.Derivative
54,640,365.
financial 58,330,486.53 -3,690,121.50
03
assets
Subtotal of
810,555,348.3 646,500,000. 164,023,739
financial -4,286,608.54 4,255,000.00
1 00 .77
assets
810,555,348.3 646,500,000. 164,023,739
Total -4,286,608.54 4,255,000.00
1 00 .77
Financial 7,939,957.91 -7,939,957.91 0.00
30
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
liabilities
Whether there were any material changes on the measurement attributes of major assets of the Company during
the reporting period:
□ Yes √ No
3. Assets right restrictions as of the end of reporting period
Items Closing Book value Reasons for being restricted
14,584,887.96 Margin deposited
Cash and Bank Balances
66,852,328.10 Margin deposited in futures institutions
Note Receivable 872,096,928.77 Pledge for financing
80,207,552.58 Evidence of supply chain finance that has been
Accounts receivable
endorsed, paid or discounted but has not expired
Total 1,033,741,697.41 -
VII. Analysis of Investment
1. Overview
√Applicable □ Not applicable
Investment during the Reporting Period Investment over the Corresponding Period
YoY Change (%)
(RMB) of Last Year (RMB)
398,750,500.00 277,394,000.00 43.75%
2. Significant equity investment during the reporting period
□Applicable √Not applicable
3. Significant non-equity investment during the reporting period
□Applicable √Not applicable
4. Financial asset portfolio
（1）Securities Investments
□ Applicable √ Not applicable
No such case in the reporting period.
（2）Derivatives Investments
√Applicable □ Not applicable
31
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Proporti
on of
Actua
investm
Amount l
Initial Amount Investm ent
Name of Amount of profit
Whether Types of amount purchas ent amount
derivati Relation Initial sold provisio and
it is a derivativ of ed amount in the
ves with Starting Termina investm during n for loss
related es derivati during at the compan
investm related date tion date ent the impairm durin
transacti investme ves the end of y’s net
ent party amount reportin ent g the
on nt investm reportin the assets at
operator g period accrued report
ent g period period end of
(if any) ing
the
period
reportin
g period
Futures
instrume
Futures
Non-rel nts,
compani
ated No foreign
es and
parties exchange
banks
instrume
nts, etc.
Total -- --
Sources of funds for derivatives
Own fund
investment
Litigation involved (if applicable) N/A
Disclosure date of board of directors'
announcement on the approval of N/A
derivatives investment (if any)
Disclosure date of shareholder
meeting's announcement on the
N/A
approval of derivatives investment (if
any)
Risk analysis and description of
In order to avoid the price risk of raw materials and prevent exchange rate risk, the
control measures for derivatives
Company and its subsidiaries have carried out derivatives business, including futures
positions during the reporting period
instruments and foreign exchange instruments. The Company and its subsidiaries strictly
(including but not limited to market
implement the relevant provisions of the Management measures for the operation of futures
risk, liquidity risk, credit risk,
hedging business and the Management system for foreign exchange hedging business.
operational risk, legal risk, etc.)
Changes in market prices or product
fair value of invested derivatives
during the reporting period, and the N/A
analysis of the fair value of
derivatives should disclose the
32
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
specific methods used and the setting
of related assumptions and
parameters.
Explanation of whether the
Company’s derivatives accounting
policies and specific accounting
N/A
principles have changed significantly
during the reporting period compared
with the previous reporting period
Independent directors' special
opinions on the Company's
N/A
derivatives investment and risk
control
5. Usage of raised funds
√Applicable □ Not applicable
(1). Overall usage of raised fund
√Applicable □Not applicable
Unit: RMB in 10 thousand
Proportion
of
Total
accumulat
Total amount of
Accumulat ed amount
amount of Accumulat raised Total Raised
Total ed amount of raised Raised
raised ed amount funds with amount of funds has
amount of of raised funds with funds has
Year Method funds of raised use unused not been
raised funds with use not been
invested in funds alteration raised used for
funds use alteration used
the report invested during the funds two years
alteration to the total
period reporting
amount of
period
raised
funds
Deposited
in the
special
Non-publi account of
2017 132,231 7,182.74 132,606.88 2,611.02
c offering raised
funds or
permanentl
y replenish
33
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
of working
capital.
Deposited
in the
special
account
for raised
Public funds and
2021 298,753.1 112,860.66 112,860.66 187,153.72
offering the
subscriptio
n of large
amount
certificates
of deposit.
Total -- 430,984.1 120,043.4 245,467.54 189,764.74 --
Description of Overall Usage of Raised Funds
(I) Year 2017
1. The actual amount of raised fund and date of transfer in
With the approval of China Securities Regulatory Commission (CSRC) [2017] No. 1392, the Company non-public issued
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).
As the implementation subjects are Zhejiang Sanhua Automotive Components Co., Ltd. (hereinafter referred to as Sanhua Auto)
and its subsidiary Shaoxing Sanhua New Energy Automotive Components Co., Ltd. (hereinafter referred to as Shaoxing Auto), the
Company has allocated the raised funds of RMB 1,301,310,000.00 to Sanhua Auto in the form of capital increase. Sanhua Auto
synchronously allocated the raised fund of RMB 503,620,000.00 to Shaoxing Auto in the form of capital increase.
2. Usage and balance of raised funds
Amount (Unit: RMB in 10
Items Index
thousand)
Net amount of raised funds A 132,231.00
Project investment B1 125,424.14
Accumulated amount as of the
Net income from raised funds B2 9,824.59
beginning of the period
Replenish working capital B3 0.00
Amount incurred in this Project investment C1 7,182.74
reporting period Net income from raised funds C2 275.93
34
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Replenish working capital C3 7,113.62
Project investment D1=B1+C1 132,606.88
Accumulated amount by the
Net income from raised funds D2=B2+C2 10,100.52
end of the period
Replenish working capital D2=B3+C3 7,113.62
Calculated balance of raised funds E 2,611.02
Actual balance of raised funds F 2,611.02
Difference G=E-F 0.00
Note: the net income from raised funds refers to the net amount of interest income and wealth management income after deducting
bank handling charges, the same below.
(II) Year 2021
1. The actual amount of raised fund and date of transfer in
In June 2021, with the approval of China Securities Regulatory Commission (CSRC) [2021] No. 168, the Company publicly issued
30 million convertible corporate bonds (Sanhua convertible bond) with a par value of RMB 100, issued at face value, raising RMB
3 billion in total. The net amount of raised funds after deducting the issuance expenses of 12,468,991.59 yuan is 2,987,531,008.41
yuan. The above-mentioned receipt of raised funds has been verified by Tianjian accounting firm, who issued the Capital
Verification Report (TJY [2021] No. 277).
Since Zhejiang Sanhua Commercial Refrigeration Co., Ltd. (hereinafter referred to as "Sanhua Commercial") is one of the
implementation subjects, the Company has allocated 1,487,000,000.00 yuan of the raised funds to Sanhua Commercial in the form
of capital increase.
2. Usage and balance of raised funds
Amount (Unit: RMB in 10
Items Index
thousand)
Net amount of funds raised in the current period A 298,753.10
Amount incurred in this Project investment B1 112,860.65
reporting period Net income from raised funds B2 1,261.27
Calculated balance of raised funds C=A-B1+B2 187,153.72
Actual balance of raised funds D 187,153.72
Difference E=C-D 0.00
(2). Statement of Committed Investment Projects of Raised Funds
√Applicable □Not applicable
Unit: RMB in 10 thousand
35
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Investme
Total nt Whether
Whether Accumul Whether
committe Total progress Date of Benefits feasibility
project Investme ative expected
Committed investment d investme at the end asset achieved of project
has been nt in the investme benefits
projects and allocation investme nt after of the ready for in the has
(or current nt at the have
of over-raised funds nt of alteration period intended current changed
partially) year end of the been
raised (1) (%) use year significan
altered period (2) achieved
funds (3)=(2)/(1 tly
)
Committed investment projects
Construction project of
new energy vehicle
Decembe
parts with an annual No 50,362 50,362 4,860.69 52,325.55 103.90% 8,554.11 Yes No
r 31, 2021
output of 11.5 million
sets
Technical
transformation project
of thermal management
January
system modules of new No 45,495 45,495 2,193.42 49,343.68 108.46% N/A No
31, 2021
energy vehicles with an
annual output of 7.3
million sets
Technical
transformation project
of automotive air
March
conditioning control No 20,874 20,874 128.63 19,193.15 91.95% N/A No
31, 2020
parts with an annual
output of 12.70 million
sets
Expansion of product
testing room and January
No 13,400 13,400 9,686.65 72.29% N/A No
production auxiliary 31, 2019
room project
Payment of
No 2,100 2,100 2,057.85 97.99% N/A No
intermediary fees
Construction project of
commercial
refrigeration and air
May 31,
conditioning intelligent No 148,700 148,700 25,505.89 25,505.89 17.15% N/A No
2025
control components
with an annual output
of 65 million sets
36
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Technical
transformation project
of high-efficiency and
energy-saving
August
refrigeration and air No 69,800 69,800 6,081.84 6,081.84 8.71% N/A No
31, 2024
conditioning control
components with an
annual output of 50.5
million sets
Supplementary of
No 81,500 81,500 81,272.93 81,272.93 99.72% N/A No
working capital
Subtotal of committed 245,467.5
-- 432,231 432,231 120,043.4 -- -- 8,554.11 -- --
investment projects 4
Investment of over raised funds
245,467.5
Total -- 432,231 432,231 120,043.4 -- -- 8,554.11 -- --
4
Funds raised in 2017:
(1) Upon deliberation and approval by the board of directors on April 1, 2019, the date of scheduled
serviceability status of "7.3 million sets of new energy vehicle thermal management system components
project" and "12.7 million sets of vehicle air conditioning control components project" has been extended
from January 2019 to January 2021, and other contents of the project remain unchanged. The specific
reasons for the slowdown of the construction progress of the above two projects are as follows:
The Company adopts the strategy of prudent use and reasonable investment of the raised funds in
combination with the existing product structure and market trend. As the new equipment tends to be more
Circumstances and intelligent and systematic, the Company has selected the equipment according to the latest technical
reasons for not requirements and product models, so that the investment progress of the new equipment of the project is
reaching the planned later than expected.
progress or expected
income (by specific In March 2020, "12.7 million sets of automotive air conditioning control parts project" has been completed
project) and accepted. In January 2021, the "technical transformation project of thermal management system
components for new energy vehicles with an annual output of 7.3 million sets" has been completed and
accepted.
(2) Upon deliberation and approval by the board of directors on April 27, 2020, the date of scheduled
serviceability status of "construction project of new energy vehicle parts with an annual output of 11.5
million sets" has been extended from December 2019 to December 2021, while other contents of the
project remain unchanged. The specific reasons for the slowdown of the construction progress of the
project are as follows:
37
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
The Company adopts the strategy of prudent use and reasonable investment of the raised funds in
combination with the changing situation of the existing market. In combination with customer feedback
and production scheduling plan, the Company will gradually release the production capacity according to
the actual customer demand. In order to ensure that the investment progress can meet the actual production
progress demand, the Company will adjust the equipment procurement time of the raised investment
project and extend the investment period of the raised capital investment project according to the
customer's time node requirements. In December 2021, the "construction project of new energy auto parts
with an annual output of 11.5 million sets" has been completed and accepted.
Funds raised in 2021: N/A
Significant changes in
Funds raised in 2017: N/A
the feasibility of
Funds raised in 2021: N/A
projects
Amount, usage and use
progress of over-raised N/A
Funds
Change in
implementation
location of investment N/A
projects of Raised
Funds
Adjustment to
implementation
method of investment N/A
projects of Raised
Funds
Applicable
Advance investment
Funds raised in 2017: In 2017, the Company replaced the initial investment of 140.5585 million yuan with
and replacement of
raised funds.
projects invested with
Funds raised in 2021: In 2021, the Company replaced the initial investment amount of 179.3857 million
raised funds
yuan with raised funds.
Temporary supplement
of working capital with N/A
idle raised funds
The amount and Applicable
reasons of the balance
Funds raised in 2017: Net income was generated from raised funds.
of raised funds in the
Funds raised in 2021: N/A
project implementation
Funds raised in 2017: Deposited in the special account for raised funds or permanently replenished working
Applications of unused
capital.
raised funds
Funds raised in 2021: Deposited in the special account for raised funds and the subscription of large
38
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
amount certificates of deposit.
Problems or other
situations in the use
N/A
and disclosure of raised
funds
(3). Statement of Altered Investment Projects of Raised Funds
□ Applicable √ Not applicable
There was no change in the projects of raised funds in the reporting period of the Company.
VIII. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable √ Not applicable
During the reporting period, there was no disposal of significant assets
2. Sale of significant equity
□ Applicable √ Not applicable
IX. Analysis of Major Subsidiaries and Investees
√ Applicable □ Not applicable
Information about major subsidiaries, and investees that contribute above 10% of the Company’s net Profit
Unit：RMB
Company Company Principal Registered Total Operating Operating
Net assets Net profit
name type business capital assets revenue profit
Refrigerati
Zhejiang
on and A/C
Sanhua
electrical
Climate &
component 250 3,946,847, 3,412,317, 2,188,044, 277,974,05 247,300,06
Appliance Subsidiary
s million 321.16 413.01 976.98 4.00 9.95
Controls
manufactur
Group
ing and
Co.,Ltd
marketing
Sanhua Refrigerati
(Hangzhou on and A/C
) Micro electrical 360 1,894,543, 1,122,885, 1,578,706, 100,446,65 77,592,200
Subsidiary
Channel component million 722.92 863.25 848.06 9.51 .27
Heat s
Exchanger manufactur
39
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Co.,Ltd. ing and
marketing
Refrigerati
Zhejiang on and A/C
Sanhua electrical 2,795,262, 155,587,38 3,998,424, 40,167,121 28,630,862
Subsidiary 50 million
Trading component 530.97 5.38 476.58 .12 .79
Co., Ltd. s
marketing
Automotiv
Zhejiang
e
Sanhua
component
Automotiv 1,460 6,112,493, 3,585,008, 4,802,488, 651,942,83 579,885,82
Subsidiary s
e million 450.31 236.50 880.73 7.99 3.63
manufactur
Componen
ing and
ts Co., Ltd
marketing
Refrigerati
on and A/C
electrical
component
Sanhua
s
Internation 37.55
manufactur 1,731,520, 344,934,47 3,328,087, 126,255,76 95,720,965
al Subsidiary million
ing 770.46 7.67 769.01 1.41 .43
Inc.(Conso USD
marketing
lidated)
and
investment
manageme
nt
Refrigerati
on and A/C
electrical
Sanhua
component
Internation
s
al
manufactur $150.5798 3,154,827, 1,005,412, 4,970,111, 119,383,03 96,565,287
Singapore Subsidiary
ing 33 million 708.76 510.81 788.18 6.78 .41
PTE. Ltd.
marketing
(Consolida
and
ted)
investment
manageme
nt
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
Corporate name Method of acquisition and disposal of Impact on overall operation and
40
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
subsidiaries during the reporting period performance
Zhejiang Sanhua Plate Exchange
Equity acquisition No significant impact
Technology Co., Ltd
Zhejiang Sanhua Automotive Trading Co.,
New investment No significant impact
Ltd
Zhejiang Sanhua Heat Exchanger Co., Ltd New investment No significant impact
X. Structural Entities Controlled by the Company
□ Applicable √ Not applicable
XI. Outlook for the Future Development of the Company
1. Development strategy
The Company adheres to the business strategy of "Focusing on leading, innovation and transcendence" and firmly
grasps the product development theme of energy conservation, environmental protection and intelligent control.
With the research and application of heat pump technology and thermal management system products as the core,
we continuously deepen and expand the global business layout through continuous innovation of products and
technologies. It transformed from "cost leading" to "technology leading", from "mechanical parts development" to
"electronic control integrated system control technology solution development" in order to provide competitive
environmental intelligent control solutions for global high-quality customers. Sanhua has become a global leader
in the climate intelligent control system industry.
2. Business plan for 2022
(1) Refrigeration air conditioning electrical parts business
The refrigeration and air conditioning electrical parts business will seize the opportunities of energy efficiency
upgrading, refrigerant switching, VRF and other related business products, continue to expand the customer base,
strengthen the acquisition and transformation of business opportunities, and improve operation sales. The
Company promotes intelligent manufacturing and lean production, increases special procurement management,
deeply promotes team building, and constantly improves product competitiveness. Continue to integrate and
improve the operation and management of Aweco at home and abroad, increase the construction of overseas
factories in Vietnam and Mexico, improve the overall operation efficiency of overseas manufacturing and
marketing, give full play to the advantages of overseas factories and effectively deal with challenges such as trade
barriers and rising prices of international logistics, so as to create greater benefits. At the same time, we will
accelerate the relocation of overall commercial plant in Daming City, and lay a solid foundation in various
commercial fields of consumption upgrading and industrial upgrading of the Chinese market in the future.
(2) Automotive components business
Under the development opportunity of new energy vehicle thermal management industry, automotive components
business will insist the direction of system integration, increase R & D investments, and maintain the leading
technology of the industry. At the same time, in the process of rapid growth of new energy thermal management,
we always pay attention to the changes of market demand and competition pattern, constantly accelerate the
41
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
construction of information technology and intellectualization, increase the construction and management of
supply chain, pay attention to cost control, actively respond to the needs of customers, and ensure the product
quality and delivery of projects. In addition, in the process of global development, we will actively promote the
construction of Mexico and Binhai, increase the layout of production capacity and the construction of talent team,
so as to grow rapidly in global automotive electrification and intellectualization.
3. Main risks for future development
(1) Risk of price fluctuation of raw materials
The raw materials required by the Company are copper and aluminum, which account for a large proportion of the
cost composition of the products. Therefore, the fluctuation of the market price of raw materials will bring large cost
pressure to the Company. The Company will reduce the adverse impact of raw material price fluctuations through
the establishment of linkage pricing mechanism, hedging operation of commodity futures, and timely negotiation
with customers.
(2) The risk of rising labor cost
The labor costs are rising year by year, which reduces the profit margin of the Company to a certain extent. In the
future, the Company will continue to improve the level of intelligent manufacturing by continuously promoting
lean production, process improvement and technical transformation.
(3) Trade and exchange rate risk
The Company's export volume is large, involving North America, Europe, Japan, Southeast Asia and other regions.
Due to the changes in regional trade policies, the Company's daily operation will be affected. The Company deals
with interregional trade risks through transferring production capacity to foreign countries. In addition, the
fluctuation of exchange rate will also have a certain impact on the profit. According to the actual situation, the
Company deals with and reduces this risk by means of forward foreign exchange settlement and establishing
overseas production bases in the United States, Poland, Mexico, Vietnam, India and other places.
XII. Reception of activities including research, communication and interviews during the
report period
√ Applicable □ Not applicable
Main contents of
Time of Location of Method of Type of discussion and Index of basic situation
Reception object
reception reception reception reception object materials of the research
provided
Introduction of
HSBC Qianhai, the company's
Chen Jiasong operation and http://irm.cninfo.com.c
January 6, 2021 Hangzhou On-site research Institution
and other 9 reply to n/ssessgs/S002050
investors investors'
questions
March 26, 2021 Conference Telephone Institution Schroeder Fund, Introduction of http://irm.cninfo.com.c
42
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Room communication Zhang Xiaodong the company's n/ssessgs/S002050
and other 187 operation and
investors reply to
investors'
questions
Introduction of
Capital
the company's
Securities, Wang
operation and http://irm.cninfo.com.c
April 13, 2021 Hangzhou On-site research Institution Xiaosheng and
reply to n/ssessgs/S002050
other 13
investors'
Investors
questions
Introduction of
Investors
the company's
participated in
Conference operation and http://irm.cninfo.com.c
April 16, 2021 Other Other online
Room reply to n/ssessgs/S002050
performance
investors'
presentation
questions
Introduction of
CSC, Huang the company's
Wentao and operation and http://irm.cninfo.com.c
April 28, 2021 Hangzhou On-site research Institution
other 15 reply to n/ssessgs/S002050
investors investors'
questions
Introduction of
BOC Fund, the company's
Zhang Fei and operation and http://irm.cninfo.com.c
June 21, 2021 Hangzhou On-site research Institution
other 14 reply to n/ssessgs/S002050
investors investors'
questions
Introduction of
the company's
Springs, Luo
operation and http://irm.cninfo.com.c
June 29, 2021 Hangzhou On-site research Institution Yida and other
reply to n/ssessgs/S002050
40 investors
investors'
questions
Introduction of
Minsheng
the company's
securities, 17
operation and http://irm.cninfo.com.c
July 8, 2021 Hangzhou On-site research Institution investors
reply to n/ssessgs/S002050
including Xu
investors'
Hao
questions
August 11, 2021 Conference Telephone Institution Capital Group, Introduction of http://irm.cninfo.com.c
43
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Room communication Tian Xiaosu and the company's n/ssessgs/S002050
other 306 operation and
investors reply to
investors'
questions
Introduction of
the company's
AIA, Wen Jie
Conference Telephone operation and http://irm.cninfo.com.c
August 24, 2021 Institution Chan and other
Room communication reply to n/ssessgs/S002050
43 investors
investors'
questions
Introduction of
Zheshang
the company's
Securities,
September 15, operation and http://irm.cninfo.com.c
Hangzhou On-site research Institution Zhang Zixian
2021 reply to n/ssessgs/S002050
and other 4
investors'
investors
questions
Introduction of
Huatai Bairui, Li the company's
September 22, Yiyang and operation and http://irm.cninfo.com.c
Hangzhou On-site research Institution
2021 other 21 reply to n/ssessgs/S002050
investors investors'
questions
Introduction of
Gao Yi assets, the company's
October 25, Conference Telephone Chen Junbin and operation and http://irm.cninfo.com.c
Institution
2021 Room communication other 289 reply to n/ssessgs/S002050
investors investors'
questions
44
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section IV Corporate Governance
I. Basic situation of corporate governance
During the reporting period, the Company strictly abided by the Company Law, Securities Law, Code of
Corporate Governance for Listed Companies in China, Stock Listing Rules of the Shenzhen Stock Exchange,
Guidelines of the Shenzhen Stock Exchange for the Standard Operation of Listed Companies and other applicable
laws and regulations of China Securities Regulatory Commission and Shenzhen Stock Exchange. We continue to
improve the corporate governance structure, establish and improve the internal control system, strengthen the
management of information disclosure, actively carry out the activities of investor relations, standardize the
operation of the Company, and improve the level of corporate governance. During the reporting period, the
Company revised the Articles of Association and further planned the corporate governance system. As of the end
of the report period, the actual situation of corporate governance conforms to the regulatory documents of CSRC
on the governance of listed companies.
1. Shareholders and general meeting of shareholders
The Company convenes the general meeting of shareholders in strict accordance with the requirements of the
Normative Opinions of the General Meeting of Shareholders, the Articles of Association and the Rules of
Procedure of the Shareholders' Meeting. When the shareholders' meeting deliberates related matters, the related
shareholders shall avoid voting. The related transactions shall be fair and reasonable without any damage to the
interests of shareholders. Treat all shareholders equally, ensure that all shareholders, especially minor
shareholders, have equal status and fully exercise their rights. The shareholders' meetings held during the
reporting period were convened by the board of directors and lawyers were invited to attend the meeting on site.
2. Directors and the board of directors
The Company elect directors in strict accordance with the Articles of Association and Rules of Procedure for the
Board of Directors; the number and composition of the board of directors meet the requirements of laws and
regulations and the Articles of Association. The board of directors convenes meetings in accordance with the
Company Law and the Rules of Procedure of the Board of Directors. All directors exercise their rights diligently,
attend the board of directors and shareholders' meeting and actively participate in relevant training.
3. Supervisors and board of supervisors
The board of supervisors elects the supervisors in strict accordance with the Company Law and the Articles of
Association; the composition and number of the board of supervisors meet the requirements of laws and
regulations. The Company's supervisors conscientiously perform their duties in accordance with the Rules of
Procedure of the Board of Supervisors, and effectively supervise and express their opinions on the Company's
major issues, related party transactions, financial situation, and the legality and compliance of the Company's
directors and senior managers in performing their duties.
4. Relationship between controlling shareholders and listed companies
The controlling shareholders can strictly regulate their own behaviors. There is no direct or indirect intervention
beyond the provisions of general meeting of shareholders. The Company and its controlling shareholders are
45
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
mutually independent of each other in personnel, assets, finance, institutions and business. The board of directors,
board of supervisors and internal institutions of the Company operate independently. There is no such situation
that the controlling shareholders occupy the funds of the listed company for non-operating purposes.
5. Information disclosure and investor relationship management
During the reporting period, the Company designated China Securities Journal, Securities times, Shanghai
Securities News and CNINFO as the information disclosure media, and disclosed information truthfully,
accurately and timely in strict accordance with relevant laws and regulations, so as to ensure that all shareholders
of the Company have fair access to the relevant information. In addition, the Company designated the secretary of
the board of directors as the person in charge of investor relationship management. Daily management of investor
relations includes answering investors' questions through telephone, email, interactive platform etc., strengthening
the communication with investors so as to fully guarantee the investors' right to know.
6. Performance evaluation and incentive mechanism
The Company has established a comprehensive employee performance evaluation and incentive mechanism. The
appointment of senior managers is open and transparent, and conforms to the relevant laws, regulations and the
Articles of Association. In the future, the Company will explore more forms of incentive methods, form a
multi-level incentive mechanism, improve the performance evaluation standards, better mobilize the work
enthusiasm of management personnel, and attract and stabilize excellent management talents and technical and
business backbones.
7. Stakeholders
The Company can fully respect and safeguard the legitimate rights and interests of stakeholders, and realize the
coordination and balance of interests of shareholders, employees and society. The Company adheres to the
relevant laws and regulations, constantly improves the corporate governance system, and effectively protects the
interests of investors.
Whether the actual status of corporate governance significantly deviates from the regulatory documents issued by
the China Securities Regulatory Commission regarding the governance of listed companies
□ Yes √ No
II. Company’s Independence in Businesses, Management, Assets, Institutions and Finance
from Controlling Shareholders
The Company is separated from the controlling shareholder, the actual controller and the controlled enterprises in
business, personnel, assets, institutions and finance, and has the ability of independent operation.
1. Business independence
The main business of the Company is outstanding, and it has its own corresponding system in production,
procurement and sales. It is independent of the controlling shareholder, has a complete business structure, and
does not rely on the shareholders or any other related parties. The shareholders exercise their right through
participating in the general meeting of shareholders in accordance with the law. There is no such situation that the
shareholders interfere in the operation beyond the provision of general meeting.
46
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
2. Personnel independence
The directors, supervisors and senior management of the Company are elected or appointed in accordance with
the legal election procedure stipulated in the Company Law and the Articles of Association. The Company's
personnel, labor and wages are completely independent. The salary payment, welfare expenses and other expenses
of the staff are strictly separated from the controlling shareholder.
3. Asset completeness
The Company has tangible assets, such as land, buildings, machinery and equipment, vehicles, office facilities,
test facilities and intangible assets, such as trademarks, patents. It has an independent procurement and sales
system and an independent and complete asset structure.
4. Institution independence
In accordance with the relevant provisions of the Company Law and the Articles of Association, the Company has
established the institutions like general meeting of shareholders, the board of directors, the board of supervisors
and other authorities, and formulated the corresponding rules of procedure. The Company's production and
operation sites are separated from the controlling shareholders, and a comprehensive organizational system has
been established. The board of directors, the board of supervisors and other internal institutions operate
independently. There is no such situation that the controlling shareholder interferes in the business activities in the
name of the listed company.
5. Finance independence
The Company has an independent financial department, equipped with full-time financial personnel, and
established an independent accounting system and financial management system that can independently make
financial decisions. The Company has separate accounts and pays taxes independently.
III. Horizontal competition
□ Applicable √ Not applicable
IV. Annual General Meeting and Extraordinary General Meetings convened during the
Reporting Period
1. Annual General Meeting convened during the reporting period
Proportion of
Meeting Nature participating Convened Date Disclosure Date Disclosure Index
investors
Announcement of
the 1st Extraordinary
The 1st
General Meeting of
extraordinary Interim general
69.04% February 25, 2021 February 26, 2021 Shareholders in 2021
general meeting of meeting
(2021-012) was
shareholders in 2021
published in the
Securities Times,
47
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
China Securities
Journal and
CNINFO.
Announcement of
the Annual General
Meeting of
Shareholders in 2020
Annual general
Annual General (2021-029) was
meeting of 69.96% April 16, 2021 April 17, 2021
Meeting published in the
shareholders in 2020
Securities Times,
China Securities
Journal and
CNINFO.
Announcement of
the 2nd
Extraordinary
General Meeting of
The 2nd
Shareholders in 2021
extraordinary Interim general
67.48% June 24, 2021 June 25, 2021 (2021-055) was
general meeting of meeting
published in the
shareholders in 2021
Securities Times,
China Securities
Journal and
CNINFO.
Announcement of
the 3rd
Extraordinary
General Meeting of
The 3rd
Shareholders in 2021
extraordinary Interim general
69.02% August 3, 2021 August 4, 2021 (2021-070) was
general meeting of meeting
published in the
shareholders in 2021
Securities Times,
China Securities
Journal and
CNINFO.
Announcement of
the 4th
The 4th Extraordinary
extraordinary Interim general General Meeting of
73.55% November 16, 2021 November 17, 2021
general meeting of meeting Shareholders in 2021
shareholders in 2020 (2021-097) was
published in the
Securities Times,
48
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
China Securities
Journal and
CNINFO.
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Not applicable
V. Information of directors, supervisors, senior management
1. Basic information
Shares
Shares Shares Shares Reasons
held at
Commen Terminat increased decrease held at for
the Other
Tenure cement ion of during d during the end increase
Name Title Gender Age beginnin changes
status of term term of the the of the or
g of the (Shares)
of office office Period Period Period decrease
Period
(Shares) (Shares) (Shares) of shares
(Shares)
Chairma
Decembe
Zhang n of the Incumbe January 52,031,2 52,031,2
Male 48 r 13,
Yabo board, nt 25, 2025 00 00
2012
CEO
Decembe
Wang Director, Incumbe January
Male 53 r 13, 256,750 256,750
Dayong President nt 25, 2025
2012
Ren Incumbe January January
Director Male 60
Jintu nt 26, 2022 25, 2025
April 28, January
Yu Shuli Director Resigned Male 74
2006 26, 2022
Ni
Incumbe May 6, January
Xiaomin Director Male 54 256,750 256,750
nt 2011 25, 2025
g
Director, Novemb
Chen Incumbe January
chief Male 56 er 29, 256,750 256,750
Yuzhong nt 25, 2025
engineer 2011
Zhang Incumbe May 18, January
Director Male 43
Shaobo nt 2015 25, 2025
Independ
May 18, August
Ji Hua ent Resigned Male 54
2015 3, 2021
director
49
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Independ
Incumbe August January
Bao Ensi ent Male 54
nt 3, 2021 25, 2025
director
Independ
Shi Incumbe May 19, January
ent Male 50
Jianhui nt 2020 25, 2025
director
Independ
Zhu June 8, February
ent Resigned Male 46
Hongjun 2020 26, 2021
director
Independ
Pan Incumbe February January
ent Female 57
Yalan nt 26, 2021 25, 2025
director
Convene
r of the
Weng June 8, August
board of Resigned Male 56
Weifeng 2014 3, 2021
supervis
ors
Convene
r of the Novemb
Zhao Incumbe January
board of Male 51 er 29,
Yajun nt 25, 2025
supervis 2011
ors
Supervis Incumbe August January
Mo Yang Male 46 10,068 4,500 14,568
or nt 3, 2021 25, 2025
Chen
Supervis Incumbe March January
Xiaomin Male 53 11,100 11,100
or nt 26, 2011 25, 2025
g
Vice
president
Hu ,
Incumbe January January
Kaichen Secretary Male 47 256,750 256,750
nt 26, 2015 25, 2025
g of the
board of
directors
Vice Septemb
Yu Incumbe January
president Male 48 er 30, 288,057 288,057
Yingkui nt 25, 2025
, CFO 2011
53,367,4 53,371,9
Total -- -- -- -- -- -- 4,500 0 --
25 25
On January 26, 2022, Mr. Yu Shuli resigned upon expiration of his term of office. The general meeting of
shareholders agreed to appoint Mr. Ren Jintu as the director of the Company.
50
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
During the reporting period, whether there was any resignation of directors and supervisors and dismissal of
senior managers during their term of office
√Applicable □Not applicable
1. Mr. Zhu Hongjun resigned the position as an independent director of the sixth board of directors and chairman
of the audit committee of the Company, because of job switching he no longer meets the requirements for the
appointment qualification of independent directors listed in the Opinions on further standardizing the part-time
(post holding) of Party and government leading cadres in Enterprises of the Organization Department of the CPC
Central Committee. After resignation, he no longer held any position in the Company.
2. Mr. Weng Weifeng resigned his position as the convener and supervisor of the board of supervisors due to job
switching. After resignation, he no longer held any position in the Company.
3. Mr. Ji Hua resigned upon expiration of six-year term of office as an independent director.
Changes of Directors, Supervisors and Senior Management
√Applicable □Not applicable
Name Position Type Date Reasons
Resigned upon
Yu Shuli Director expiration of January 26, 2022 Resigned upon expiration of term of office
term of office
Ren Jintu Director Elected January 26, 2022 Elected by the Board of Directors
Resigned upon
Independent
Ji Hua expiration of August 3, 2021 Resigned upon expiration of term of office
director
term of office
Independent
Bao Ensi Elected August 3, 2021 Elected by the Board of Directors
director
Independent February 26,
Zhu Hongjun Resigned Resigned
director 2021
Independent February 26,
Pan Yalan Elected Elected by the Board of Directors
director 2021
Convener of the
Weng Weifeng board of Resigned August 3, 2021 Resigned
supervisors
Mo Yang Supervisor Elected August 3, 2021 Elected by the Board of Supervisor
2. Positions and Incumbency
The professional background, main work experience and main responsibilities of the current directors, supervisors
and senior managers of the company
Mr. Zhang Yabo: Born in 1974, master of Business Administration of CEIBS. Graduated from Shanghai Jiao Tong
51
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
University in July, 1996. From May 2007 to September 2009, he served as the vice president of Sanhua Holding
Group Co., Ltd.; from May 2007 up to present, he has been appointed as the director and vice chairman of the board
of directors of Sanhua Holding Group Co., Ltd.; from September 2009 to December 2012, he served as the general
manager of the Company; from October 2009 up to present, he has been appointed as the director of the Company;
from December 2012 up to present, he has served as the chairman and CEO of the Company.
Mr. Wang Dayong: Born in 1969, senior manager, master of Business Administration (EMBA), senior economist
and engineer. He served as chief of planning section, Secretary of general manager, director of manufacturing
department, director of refrigeration valve business department, assistant to general manager, assistant to President,
vice president and director of Sanhua Holding Group. He served as a supervisor of the Company from December
2001 to April 2006, a director of the Company from April 2006 to May 2011. He currently serves as a director of
Sanhua Holding Group, and a director and President of the Company since December 2012.
Mr. Ren Jintu: Born in 1962, college degree, senior accountant. From 1980 to 1994, he successively served as
deputy factory director, financial director and deputy general manager of Xinchang Refrigeration Parts General
Factory and Zhejiang Sanhua Group Co., Ltd; From 2001 to 2006, he served as the director and general manager of
the Company; From 2005 to 2015, he served as vice president of Sanhua Holding Group Co., Ltd. and general
manager of Shanghai Jingyi Real Estate Co., Ltd; He is currently a director of Sanhua Holding Group Co., Ltd; He
served as a director of the Company since January 2022.
Mr. Ni Xiaoming: Born in 1968, master’s degree, senior economist. From November 2005 to July 2009, he served
as the general manager of Sanhua International (USA) Co., Ltd. and the deputy general manager of sales of
Zhejiang Sanhua Climate & Appliance Controls Group Co.,Ltd.; August 2009, he served as the deputy general
manager of Sanhua Danfoss (Hangzhou) Microchannel Heat Exchanger Co., Ltd.; since May 2010, he has served
as the general manager of Sanhua (Hangzhou) Micro Channel Heat Exchanger Co.,Ltd.., as well as the director of
Sanhua Holding Group Co., Ltd.; He has been a director of the Company since May, 2011.
Mr. Chen Yuzhong: Born in 1966, master’s degree, engineer. He was the chief engineer of the Company from
December 2001 to May 2011; he was the deputy general manager of the Company from May 2011 to December
2012; he has been the chief engineer of the Company since December 2012; he has been the general manager of
Zhejiang Sanhua Climate & Appliance Controls Group Co.,Ltd. since August 2015; he is also the director of
Sanhua Holding Group Co., Ltd.; and he has been the director of the Company since November 2011.
Mr. Zhang shaobo: Born 1979, master’s degree, graduated from the China Europe Institute of Business School.
Since November 2012, he has served as general manager of Sanhua Real Estate Group and Zhejiang Sanhua Real
Estate Co., Ltd.; since July 2013, he has served as general manager of Hangzhou Sanhua International Building
Co., Ltd.; since May 2017, he has served as executive director and general manager of Zhejiang Sanhua Zhicheng
Real Estate Development Co., Ltd.; he currently serves as a director of Sanhua Holding Group Co., Ltd.; from
May 2015 up to present, he has served as the director of the Company.
Mr. Bao Ensi: Born in 1968, doctor’s degree, senior accountant. He has successively served as director of China
Securities Regulatory Commission and full-time member of Stock Issuance Audit Committee; Head of Finance
Department of China Financial Futures Exchange, expert of investor education center, vice chairman of Beijing
52
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Houji Capital Management Company. He is currently the assistant to the chairman of Beijing Houji Capital
Management Company; He also serves as an independent director of Aerospace Era Electronic Technology Co.,
Ltd. and Fujian Yanjing Huiquan Beer Co., Ltd. Mr. Bao Ensi has obtained the Qualification Certificate of
Independent Director recognized by Shenzhen Stock Exchange. He has been an independent director of the
Company since August 2021.
Mr. Shi Jianhui, Born in 1972, he achieved a master's degree in EMBA from Changjiang Business School and
Shanghai Advanced Finance College. He used to be the chairman / CEO of Minshi Group Co., Ltd. and he
currently serves as the CEO of Xiaozhi Investment Management Partnership in Meishan Bonded Port Area,
Ningbo, Zhejiang Province. He has been appointed as an independent director of the Company since June 2020.
Ms. Pan Yalan: Born in 1965, master degree, a member of the League of Civil Society. She participated in work in
August 1987. She is professor of Accounting College of Hangzhou University of Electronic Technology, tutor of
graduate students, and "151" talents in Zhejiang Province in the new century (third level). Currently she is a
member of the CPPCC of Zhejiang Province, member of the Zhejiang Provincial Committee of the Democratic
League, a member of the Zhejiang Provincial Finance Association, a standing director of Zhejiang Provincial
Taxation Society and a special auditor of Zhejiang Audit Department. She has been appointed as an independent
director of the Company since February 2021.
Mr. Zhao Yajun: Born in 1971, master’s degree, graduated from school of Business Administration of Zhejiang
University, with senior accountant title. From 1996 to 2003, he worked in Zhejiang Tianjian accounting firm; from
January 2004 to February 2011, he served as deputy director of Finance Department of Sanhua Holding Group
Co., Ltd.; from February 2011 to February 2014, he served as director of Finance Department of Sanhua Holding
Group Co., Ltd.; from March 2014 up to present, he has served as deputy director of finance of Sanhua Holding
Group Co., Ltd. He has been a supervisor of the Company since November 2011.
Mr. Mo Yang: Born in 1976, master's degree, majoring in political economics of Zhejiang University. He was a
teacher of the Economic Branch of the City College of Zhejiang University from April 2002 to June 2004; From
July 2004 to April 2006, he served as assistant to the executive deputy general manager of Zhejiang Sanhua
Climate & Appliance Controls Group Co.,Ltd; From August 2005 to December 2019, he successively served as
the secretary of the president, the secretary of the chairman of the board of directors, the vice minister of human
resources department and the director of the president's office of Sanhua Holding Group Co., Ltd; From December
2019 to now, he has served as the director of the board of directors office in Sanhua Holding Group Co., Ltd. He
has been a supervisor of the Company since August 2021.
Mr. Chen Xiaoming: From October 2008 to October 2011, he served as director of quality management
department of Zhejiang Sanhua Intelligent Controls Co., Ltd.; in November 2011, he served as management
representative and director of Quality Department of Changzhou Ranco four-way valve Co., Ltd.; in August 2013,
he served as director of quality department and vice director of four-way valve business department of Wuhu
Sanhua Automatic Control Components Co., Ltd.; in January 2016, he served as director of Quality Department of
Wuhu Sanhua Automatic Control Components Co., Ltd; in December 2016, he served as director of four-way
valve department and stop valve department of Wuhu Sanhua Automatic Control Components Co., Ltd.; from
August 2017 up to present, he has served as Manufacturing Director of Wuhu Sanhua Automatic Control
53
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Components Co., Ltd., since March 2011, he has been appointed as supervisor of the Company.
Mr. Hu Kaicheng: Born in 1975, master's degree, bachelor's degree of Tongji University, SAIF EMBA of
Shanghai Jiao Tong University. From August 2006 to August 2009, he served as the director of supplier
management, procurement director of Zhejiang Sanhua Climate & Appliance Controls Group Co.,Ltd.; from
September 2009 to December 2010, he served in Sanhua Holding Group Co., Ltd.; from January 2011 to October
2014, he served as the procurement director of the Company; from October 2014 up to present, he served as the
vice president of the Company; from January 2015 up to present, he served as the Secretary of the board of
directors of the Company.
Mr. Yu Yingkui: Born in 1974, bachelor degree, accounting major of Shanghai University of Finance and
Economics. From April 2001 to December 2003, he successively served as the chief accountant of the financial
department of Zhejiang Sanhua Holding Group Co., Ltd. and Zhejiang Sanhua Climate & Appliance Controls
Group Co.,Ltd.; from December 2003 to November 2007, he served as the deputy general manager of Shenyang
Durui Wheel Hub Co., Ltd.; from November 2007 up to present, he has been the director of the financial
department of the Company; from September 2011 up to present, he has been the chief financial officer of the
Company; from January 2016 up to present, he has been the vice president of the Company.
Position held in shareholders’ entities
√Applicable □ Not applicable
Position in Compensation and
Commencemen Termination of
Name Shareholder's entity shareholders’ allowance from the
t of the term the term
entities shareholders' entity
Vice
Zhang Yabo Sanhua Holding Group Co., Ltd chairman July 11, 2000 No
(director)
Wang Dayong Sanhua Holding Group Co., Ltd Director July 11, 2000 No
Ren Jintu Sanhua Holding Group Co., Ltd Director July 11, 2000 Yes
Zhejiang Sanhua lvneng Industrial Group
Ren Jintu Director March 15, 2011 No
Co., Ltd
Ni Xiaoming Sanhua Holding Group Co., Ltd Director July 11, 2000 No
November 26,
Chen Yuzhong Sanhua Holding Group Co., Ltd Director No
2014
Zhang Shaobo Sanhua Holding Group Co., Ltd Director August 7, 2003 Yes
Director，
Zhejiang Sanhua lvneng Industrial Group
Zhang Shaobo general August 7, 2003 No
Co., Ltd
manager
February 25, September 8,
Weng Weifeng Sanhua Holding Group Co., Ltd Director Yes
2019 2021
Zhao Yajun Sanhua Holding Group Co., Ltd Deputy chief March 1, 2014 Yes
54
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
financial
officer
Zhejiang Sanhua Lvneng Industrial Group
Zhao Yajun Supervisor July 1, 2019 No
Co., Ltd
November 26,
Mo Yang Sanhua Holding Group Co., Ltd Supervisor Yes
2014
Description of
the position in
No
shareholders’
entities
Positions held in other entities
√Applicable □ Not applicable
Compensation
Position in and allowance
Commencemen Termination of
Name Shareholder's entity shareholders’ from the
t of the term the term
entities shareholders'
entity
Hangzhou Sanhua Research Institute Co., February 10,
Zhang Yabo Chairman No
Ltd 2017
Hangzhou Fumo New Material Technology
Zhang Yabo Director July 1, 2016 No
Co., Ltd
Zhang Yabo Xinchang Huaxin Investment Co., Ltd Chairman March 16, 2016 No
February 3,
Zhang Yabo Wuhu Aldoc Technology Co., Ltd Director No
2016
Executive
Hangzhou Zhicheng Investment director and
Zhang Yabo July 23, 2007 No
Management Co., Ltd general
manager
Hangzhou Zhishen Investment Management
Zhang Yabo Supervisor July 23, 2007 No
Co., Ltd
Zhang Yabo Zhejiang Haoyuan Technology Co., Ltd Director May 4, 2018 No
October 13,
Zhang Yabo Sanhua Trading Singapore Pte Ltd Director No
2017
Xinchang Huayong Enterprise Management Executive November 11,
Wang Dayong No
Co., Ltd director 2021
Hangzhou Fufan Investment Management
Wang Dayong Director April 28, 2016 No
Co., Ltd
Guochuang Energy Internet Innovation August 20,
Wang Dayong Director No
Center (Guangdong) Co., Ltd 2019
55
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Executive
director and
Ren Jintu Hangzhou Xinji Industrial Co., Ltd January 9, 2007 No
general
manager
Director and
Hangzhou Fufan Investment Management
Ren Jintu general July 9, 2010 No
Co., Ltd
manager
Manager,
September 11,
Ren Jintu Inner Mongolia Xiqi Mining Co., Ltd executive No
2012
director
Xinchang United Investment Management
Ren Jintu Supervisor April 29, 2015 No
Co., Ltd
Hangzhou Sanhua International Building
Ren Jintu Supervisor July 31, 2013 No
Co., Ltd
Supervisory
Xinchang Private Financing Service Center
Ren Jintu board April 8, 2018 No
Co., Ltd
chairman
Ningbo Fulda Intelligent Technology Co.,
Ren Jintu Director April 8, 2021 No
Ltd
Executive
Zhang Shaobo Shanghai Sanhua Electric Co., Ltd April 10, 2017 No
director
Hangzhou Zhiwo Investment Management General
Zhang Shaobo June 16, 2014 No
Co., Ltd manager
Executive
Hangzhou Zhishen Investment Management director,
Zhang Shaobo July 23, 2007 No
Co., Ltd general
manager
Hangzhou Fuxiang Property Management
Zhang Shaobo Chairman January 3, 2016 No
Co., Ltd
Xinchang Sanhua Property Management
Zhang Shaobo Chairman March 29, 2011 No
Co., Ltd
Executive
Tianjin Minghao Management Consulting director,
Zhang Shaobo May 25, 2017 No
Co., Ltd general
manager
Executive
Hangzhou Sanhua International Building director,
Zhang Shaobo July 31, 2013 No
Co., Ltd general
manager
Zhang Shaobo Xinchang Private Financing Service Center Director March 26, 2014 No
56
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Co., Ltd
September 11,
Zhang Shaobo Inner Mongolia Xiqi Mining Co., Ltd Supervisor No
2012
Executive
Zhejiang Sanhua Zhicheng Real Estate director,
Zhang Shaobo May 31, 2017 No
Development Co., Ltd general
manager
Hangzhou Fufan Investment Management
Zhang Shaobo Chairman July 9, 2010 No
Co., Ltd
Xinchang United Investment Management December 31,
Zhang Shaobo Director No
Co., Ltd 2008
Executive
Zhang Shaobo Hangzhou Kaisida Technology Co., Ltd June 15, 2020 No
director
Executive
Tianjin Sanhua Industrial Park Management director,
Zhang Shaobo May 9, 2019 No
Co., Ltd general
manager
Hangzhou Huaqin Investment Management December 25,
Zhang Shaobo Supervisor No
Co., Ltd 2006
Hangzhou Mifeng Catering Management
Zhang Shaobo Supervisor March 31, 2015 No
Co., Ltd
September 26,
Zhang Shaobo Shanghai Tihu catering Co., Ltd Director No
2017
Ningbo Fulda Intelligent Technology Co., December 26,
Zhang Shaobo Director No
Ltd 2019
Executive
Zhejiang Sanhua Ecological Agriculture director, September 11,
Zhang Shaobo No
Co., Ltd general 2018
manager
Hangzhou Zhicheng Investment General November 4,
Zhang Shaobo No
Management Co., Ltd manager 2020
Executive
Hangzhou Zhiyong Enterprise Management director,
Zhang Shaobo April 27, 2018 No
Co., Ltd general
manager
December 22,
Zhang Shaobo Zhejiang Huateng Industrial Co., Ltd Chairman No
2021
Aerospace Times Electronic Technology
Bao Ensi Director August 9, 2017 Yes
Co., Ltd
57
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Bao Ensi Beijing Shoushang Group Co., Ltd Director June 10, 2015 Yes
Bao Ensi Fujian Yanjing Huiquan Beer Co., Ltd Director May 29, 2015 Yes
Zhejiang Lin'an Rural Commercial Bank Independent
Pan Yalan March 16, 2020 Yes
Co., Ltd director
Zhejiang Newspaper Digital Culture Group Independent December 22,
Pan Yalan Yes
Co., Ltd director 2021
Shenyang Sanhua Daika wheel Hub Co.,
Weng Weifeng Director June 4, 2013 No
Ltd
Weng Weifeng Shenyang Durui Wheel Hub Co., Ltd Director May 10, 2013 No
Ningbo Fulda Intelligent Technology Co., December 26,
Weng Weifeng Chairman Yes
Ltd 2019
Shanghai Fuyulong Automobile Technology December 26,
Weng Weifeng Chairman No
Co., Ltd 2019
Shanghai Futailong Automotive Electronic
Weng Weifeng Chairman July 15, 2020 No
Technology Co., Ltd
Tianjin Sanhua Industrial Park Management October 10,
Weng Weifeng Supervisor No
Co., Ltd 2018
Tianjin Sanhua Fuda Intelligent Technology November 2,
Weng Weifeng Chairman No
Co., Ltd 2018
Zhao Yajun Shanghai Sanhua Electric Co., Ltd Supervisor April 12, 2011 No
Zhao Yajun Hangzhou Tongchan Machinery Co., Ltd Supervisor May 31, 2011 No
Xinchang Private Financing Service Center
Zhao Yajun Supervisor March 26, 2014 No
Co., Ltd
Xinchang United Investment Management
Zhao Yajun Supervisor January 1, 2012 No
Co., Ltd
Zhejiang Xiezhong Automobile New
Zhao Yajun Supervisor May 25, 2018 No
Energy Technology Development Co., Ltd
Zhao Yajun Wuhu Aldoc Technology Co., Ltd Supervisor July 31, 2018 No
Zhao Yajun Zhejiang Haoyuan Technology Co., Ltd Supervisor May 4, 2018 No
Zhao Yajun Xinchang Huaxin Investment Co., Ltd Director March 21, 2017 No
Shanghai Fuyulong Automobile Technology December 26,
Zhao Yajun Supervisor No
Co., Ltd 2019
Tianjin Sanhua Fuda Intelligent Technology November 2,
Zhao Yajun Supervisor No
Co., Ltd 2018
Nanjing Xiezhong Automobile New Energy February 28,
Zhao Yajun Supervisor No
Technology Development Co., Ltd 2019
Ningbo Fuerda Intelligent Technology Co.,
Zhao Yajun Supervisor April 8, 2021 No
Ltd
58
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Yu Yingkui Zhejiang Huateng Investment Co., Ltd Director April 19, 2010 No
December 8,
Yu Yingkui Chongqing Tainuo Machinery Co., Ltd Director No
2016
Nanchang Sanhua Jinlifeng Machinery Co.,
Yu Yingkui Director July 12, 2017 No
Ltd
Xinchang Private Financing Service Center October 23,
Yu Yingkui Director No
Co., Ltd 2015
Yu Yingkui Ningbo Jinlifeng Machinery Co., Ltd Director July 2, 2020 No
October 13,
Yu Yingkui Sanhua Trading Singapore Pte Ltd Director No
2017
Description of
the position in No
other entities
Incumbent and resigned directors, supervisors and senior management personnel during the reporting period that
have been imposed administrative penalties by the CSRC during the last three years.
□ Applicable √ Not applicable
3. Remuneration of directors, supervisors and senior management personnel
The remuneration of senior managers shall be assessed by the remuneration and assessment committee of the
board of directors according to the job responsibilities and the performance assessment standards and procedures.
After completion of the main business performance indicators, the annual remuneration of the senior managers
shall be proposed. The amount of remuneration for this year shall be within the range determined by the board of
directors. The Company shall bear the travel expenses incurred by the independent directors for attending
meetings. The amount of remuneration of directors and supervisors in this year is within the remuneration range
determined by the general meeting of shareholders.
Remuneration of directors, supervisors and senior management personnel
Total
remuneration Remuneration
Name Title Gender Age Tenure status from the from related
Company parties (Y/N)
(RMB'0,000)
Director,
Zhang Yabo Male 48 Incumbent 233.29 No
Chairman, CEO
Director,
Wang Dayong Male 53 Incumbent 210.97 No
President
Ren Jintu Director Male 60 Incumbent 0 Yes
Yu Shuli Director Male 74 Resigned 8 No
Ni Xiaoming Director Male 54 Incumbent 130.24 No
59
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Director, chief
Chen Yuzhong Male 56 Incumbent 222.83 No
engineer
Zhang Shaobo Director Male 43 Incumbent 0 Yes
Independent
Ji Hua Male 54 Resigned 6.42 No
director
Independent
Bao Ensi Male 54 Incumbent 4.34 No
director
Independent
Shi Jianhui Male 50 Incumbent 10.8 No
director
Independent
Zhu Hongjun Male 46 Resigned 0 No
director
Independent
Pan Yalan Female 57 Incumbent 9.08 No
director
Convener of the
Weng Weifeng board of Male 56 Resigned 0 Yes
supervisors
Convener of the
Zhao Yajun board of Male 51 Incumbent 0 Yes
supervisors
Mo Yang Supervisor Male 46 Incumbent 0 Yes
Chen Xiaoming Supervisor Male 53 Incumbent 29.64 No
Secretary of the
board of
Hu Kaicheng Male 47 Incumbent 81.35 No
directors, vice
president
CFO, vice
Yu Yingkui Male 48 Incumbent 109.27 No
president
Total -- -- -- -- 1,056.23 --
VI. Performance of duties by directors during the reporting period
1. Board of directors in the reporting period
Meeting Convened Date Disclosure Date Disclosure Index
The 14th interim meeting of the
February 9, 2021 February 10, 2021 http://www.cninfo.com.cn
6th board of directors
The 15th meeting of the 6th http://www.cninfo.com.cn
March 25, 2021 March 27, 2021
board of directors
The 16th interim meeting of the April 22, 2021 April 23, 2021 http://www.cninfo.com.cn
60
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
6th board of directors
The 17th interim meeting of the http://www.cninfo.com.cn
May 27, 2021 May 28, 2021
6th board of directors
The 18th interim meeting of the http://www.cninfo.com.cn
June 8, 2021 June 9, 2021
6th board of directors
The 19th interim meeting of the http://www.cninfo.com.cn
June 23, 2021 June 24, 2021
6th board of directors
The 20th interim meeting of the http://www.cninfo.com.cn
July 16, 2021 July 17, 2021
6th board of directors
The 21st interim meeting of the http://www.cninfo.com.cn
August 11, 2021 August 12, 2021
6th board of directors
The 22nd meeting of the 6th http://www.cninfo.com.cn
October 25, 2021 October 26, 2021
board of directors
2. Attendance of directors in board meetings and general meetings
Attendance of directors in board meetings and general meetings
Board meeting Board meeting Board meeting Presence of
Board meeting
presence Board meeting presence by Board meeting not attend in directors in
presence
Name of Director required in the presence on telecom- absence person for two general
through a
reporting site (times) communicatio (times) consecutive meetings
proxy (times)
period (times) n (times) times (times)
Zhang Yabo 9 1 8 0 0 N/A 3
Wang Dayong 9 1 8 0 0 N/A 5
Ren Jintu 0 0 0 0 0 N/A
Yu Shuli 9 1 8 0 0 N/A 1
Ni Xiaoming 9 1 8 0 0 N/A
Chen Yuzhong 9 0 9 0 0 N/A 4
Zhang Shaobo 9 0 9 0 0 N/A
Ji Hua 7 1 6 0 0 N/A
Bao Ensi 2 0 2 0 0 N/A
Shi Jianhui 9 1 8 0 0 N/A
Zhu Hongjun 1 0 1 0 0 N/A
Pan Yalan 8 1 7 0 0 N/A 3
Explanation of not attending the board of directors in person for two consecutive times
Not applicable
61
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
3. Objections raised by directors to relevant matters of the Company
Were there any objections on related issues of the Company from independent directors?
□ Yes √ No
4. Other details about the performance of duties by directors
Were there any suggestions from directors accepted by the Company?
√ Yes □ No
During the reporting period, the directors strictly complied with the relevant laws, regulations and the Articles of
Association, performed their duties conscientiously, paid close attention to the Company's operation, regularly
reviewed the Company's announcements, got access to the information of operation and development periodically,
deeply discussed the opportunities and challenges in the operation and development, and timely prompted risks.
Directors put forward reasonable opinions and suggestions from their professional perspectives, which enhanced
the scientific decision-making of the board of directors. Meanwhile, directors provided independent and fair
opinions on related transactions, profit distribution, equity incentive and convertible bonds during the reporting
period. In order to improve the supervision mechanism of the Company and safeguard the legal rights of all
shareholders, the Company shall adopt the opinions of directors.
VII. Performance of duties by special committees under the Board during the Reporting Period
Important Other Details of
Number of Date of Meeting
Committee Member opinions and performance of objections (if
meetings meetings content
suggestions duties any)
1. Deliberation
of the 2020
annual report
and its
summary;
Independent 2. Specific
director Pan report on
Yalan; annual deposit
Audit Independent March 22, and actual use
6
Committee director Shi 2021 of raised funds
Jianhui; in 2020;
Director Yu 3. Proposal on
Shuli the prediction
of the
Company's
daily related
party
transactions in
62
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
2021;
4. Proposal on
appointment of
the audit
institution in
2021;
5. Proposal on
permanent
replenishment
of working
capital with
surplus raised
funds.
Report of the
April 20, 2022 first quarter in
2021
1. Proposal on
using the raised
funds to
replace the its
own funds
invested in
advance;
June 22, 2021
2. Proposal on
capital increase
to
wholly-owned
subsidiaries
with raised
funds.
Proposal on
using some idle
raised funds to
July 15, 2021
purchase bank
financial
products.
1. Semi-annual
report of the
Company in
August 6, 2021 2021;
2. Specific
report on the
annual deposit
63
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
and actual use
of the raised
funds in the
half year of
2021.
1. Third quarter
report of the
Company in
2021;
2. Proposal on
using some idle
raised funds to
purchase bank
October 14, financial
2021 products;
3. Proposal on
using the raised
funds to
replace
issuance
expenses which
was paid by its
own funds
Proposal on
examining the
qualifications
February 4,
of candidates
Independent 2021
for the sixth
director Ji Hua;
board of
Chairman
Nomination director.
Zhang Yabo; 2
Committee Proposal on
Independent
examining the
director Shi
qualifications
Jianhui October 14,
of candidates
2021
for the sixth
board of
director.
Independent 1. Proposal on
Remuneratio director Shi adjusting the
n and Jianhui; repurchase
1 May 28, 2021
Assessment Independent price of
Committee director Ji Hua; restricted stock
Director Yu incentive plan
64
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Shuli in 2018;
2. Proposal on
adjusting the
exercise price
of 2018 stock
appreciation
right incentive
plan;
3. Proposal on
adjusting the
repurchase
price of
restricted stock
incentive plan
in 2020;
4. Proposal on
the
achievement of
restriction
lifting in the
first vesting
period of the
restricted stock
incentive plan
in 2020;
5. Proposal on
cancellation of
some stock
appreciation
rights;
6. Proposal on
repurchase and
cancellation of
some restricted
shares.
1. Proposal on
Independent
cancellation of
director Shi
Remuneratio some stock
Jianhui;
n and October 14, appreciation
Independent 1
Assessment 2021 rights;
director Bao
Committee 2. Proposal on
Ensi; Director
the
Yu Shuli
achievement of
65
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
exercise
conditions in
the third
vesting period
of 2018 stock
appreciation
right incentive
plan;
3. Proposal on
the
achievement of
restriction
lifting in the
third vesting
period of the
restricted stock
incentive plan
in 2018;
4. Proposal on
repurchase and
cancellation of
some restricted
shares.
Chairman
Zhang Yabo;
Director Wang
Dayong;
Deliberation of
Director Ni
the
Xiaoming;
Strategic March 25, development
Director Chen 1
Committee 2021 plan of the
Yuzhong;
Company in
Independent
2021.
director Shi
Jianhui;
Director Zhang
Shaobo
Director Wang
Dayong;
Executive Director Ni
0
Committee Xiaoming;
Director Chen
Yuzhong
66
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
VIII. Performance of duties by the Supervisory Committee
Were there any risks to the Company identified by Supervisory Committee when performing its duties during the
Reporting Period?
□ Yes √ No
IX. Staff in the Company
1. Statistics of employees, professional structure of the staff, and educational background
Number of incumbent employees in the parent company 4,270
Number of incumbent employees in major subsidiaries 10,208
Number of incumbent employees 14,478
Number of employees receiving salaries in current period 14,478
Number of retired employees requiring the parent Company and
0
its subsidiaries to bear costs
Professional structure
Tier Number of employees
Production staff 9,657
Sales staff 533
Engineers 1,890
Financial staff 272
Administrative Staff 2,126
Total 14,478
Educational background
Educational background Number of employees
Master and above 564
Bachelor 2,549
College, technical secondary school 3,738
Others 7,627
Total 14,478
2. Staff remuneration policy
The Company has established a salary incentive system according to the business development strategy and
human resources strategy. Based on the market salary level and the value, ability and performance results, the
Company has established a comprehensive salary system with the structure of basic salary, reward bonus and
long-term incentive, and has formed relevant salary incentive systems to ensure the scientificity of employees'
value contribution and their return of income. Thus, it stimulates employees' enthusiasm and work innovation
ability, and promotes the continuous high-quality development of the Company.
Every year, the Company carries out the estimation of college students and professional talents, which has played
67
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
an important role in motivating new college students and employees at all levels. And regular review market
compensation to ensure competitiveness of the Company's overall salary system. In addition, the Company carries
out R & D Achievement Award, Quality Award, Management Achievement Award, Patent Award, Cost
Reduction Award, Lean Improvement Award and other awards every year, which effectively encourage talents’
innovation. The Company’s phase I equity incentive plan in 2018 and phase II restricted stock incentive plan in
2020 played an incentive and retention role for the key talents and laid a foundation for sustainable development.
3. Staff training plans
Based on the development plan from 2021 to 2025, the Company implements the talents strategy of “Internal
training first and external recruitment second”, which will be dedicated to optimizing the talent management
mechanism. In order to identify talents, the Company established talent standards at all levels and gradually
improve the evaluation system. Some talents development projects are launched, such as Leadership Project,
International talent training program, Technology manufacturing talent training project, etc.
Through continuous learning, further enhance the internal lecturer team and the development of internal
curriculum resources. The Company strengthens its global competitiveness of talents through five aspects which
is power of culture, power of internal drive, power of external drive, power of resource construction and power of
continuous learning.
4. Labor outsourcing
□ Applicable √ Not applicable
X. Profit distribution of ordinary shares and capitalization of capital reserves
Profit distribution policy of ordinary shares in the reporting period, especially the formulation, implementation
and adjustment of cash dividend policy
□ Applicable √ Not applicable
During the reporting period, the Company was profitable and the distributable profits to ordinary shareholders of
the parent company was positive, but the Company did not propose a cash dividend distribution plan of ordinary
shares.
□ Applicable √ Not applicable
Profit distribution and capitalizing of capital reserves proposal for the current reporting period
√ Applicable □Not applicable
Bonus share issued per 10 shares (share) 0
Cash dividend per 10 shares (RMB) (tax
1.50
inclusive)
Total capital share basis for the distribution
3,569,927,512
proposal (share)
Total cash dividend (RMB) (tax inclusive) 535,489,126.80
68
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Cash dividend amount in other ways (such as
200,011,001.49
share repurchase) (RMB)
Total cash dividends (including other ways)
735,500,128.29
(RMB)
Distributable profits (RMB) 768,646,528.98
Percentage of cash dividends in the total
100%
distributed profit (%)
Cash dividends
Other
Detailed description of profit distribution or capital reserves conversion plan
Based on provisional 3,569,927,512 shares of capital stock as of March 18, 2022 [note], cash dividend of RMB 1.50 (including tax)
will be distributed to all shareholders for every 10 shares. The Company will not distribute bonus shares or convert capital reserves to
share capital.
If the total share capital of the Company changes due to the conversion of convertible bonds, share repurchase, exercise of equity
incentive scheme, refinancing and listing of new shares before the implementation of the distribution plan, the total distribution
amount shall be adjusted accordingly based on the principle of unchanged distribution proportion.
Note: As of March 18, 2022, the share capital of the Company was 3,591,098,972 shares, of which the number of repurchased shares
is 21,171,460. According to the provisions of the Company Law, the shares held by the listed company through the repurchase
account do not enjoy the right to participate in profit distribution or the conversion of capital reserve into share capital.
XI. The Implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or Other
Incentive Plans
√ Applicable □ Not applicable
1. Equity incentive plan
In order to further improve the Company's corporate governance structure, promote the Company to establish and
improve the incentive mechanism, attract and retain excellent talents, and effectively mobilize the enthusiasm of
the core talents, the Company launched phase I and phase II equity incentive schemes.
1. In 2018, the Company launched the 2018 restricted stock incentive plan and stock appreciation right incentive
plan, granting 10.33 million restricted shares to 753 incentive objects and 355,000 stock appreciation rights to 22
incentive objects. The grant date of this equity incentive plan is September 18, 2018. The grant price of restricted
shares and stock appreciation rights is RMB 8.37 per share, and the listing date is November 6, 2018.
(1) On October 24, 2019, the Company held the 5th interim meeting of the sixth board of directors and the 5th
interim meeting of the sixth board of supervisors respectively in which Resolution on adjusting the
69
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
repurchase price and repurchase quantity of restricted stock incentive plan in 2018, Resolution on the
achievement of exercise conditions, adjustment of exercise price, quantity and cancellation of some stock
appreciation rights in the first vesting period of 2018 stock appreciation rights incentive plan, Resolution on
repurchase and cancellation of some restricted stocks, Resolution on the achievement of the unlocking
conditions of first vesting period of 2018 restricted stock incentive plan were approved.
The unlocking date of the restricted shares was November 6, 2019, and the number of incentive objects
qualified for unlocking was 720. A total of 3.9195 million shares were released, accounting for 0.1417% of
the Company's total share capital. There were 19 incentive objects meeting the conditions for the exercise of
the stock appreciation right, and the number of exercisable shares was 95,550.
(2) On November 11, 2019, the first extraordinary general meeting of shareholders of 2019 was held, in which
the Resolution on repurchase and cancellation of some restricted stocks was approved. The Company
repurchased and cancelled all or part of the restricted stocks held by unqualified incentive objects in 2018
restricted stock incentive plan, totaling of 291,200 shares.
(3) On October 20, 2020, the Company held the 13th interim meeting of the sixth board of directors and the 12th
interim meeting of the sixth board of supervisors respectively in which Resolution on adjusting the
repurchase price and repurchase quantity of restricted stock incentive plan in 2018, Resolution on the
achievement of exercise conditions, adjustment of exercise price, quantity and cancellation of some stock
appreciation rights in the second vesting period of 2018 stock appreciation rights incentive plan, Resolution
on repurchase and cancellation of some restricted stocks, Resolution on the achievement of the unlocking
conditions of second vesting period of 2018 restricted stock incentive plan were approved.
The unlocking date of the restricted shares was November 6, 2020, and the number of incentive objects
qualified for unlocking was 702. A total of 4.9889 million shares were released, accounting for 0.1389% of
the Company's total share capital. There were 18 incentive objects meeting the conditions for the exercise of
the stock appreciation right, and the number of exercisable shares was 131,820.
(4) On November 5, 2020, the fourth extraordinary general meeting of shareholders of 2020 was held, in which
Resolution of repurchase and cancellation of some restricted stocks was approved. The Company repurchased
and cancelled all or part of the restricted stocks held by unqualified incentive objects in the 2018 restricted
stock incentive plan, totaling of 336,310 shares.
(5) On June 24, 2021, the second extraordinary general meeting of shareholders in 2021 was held, in which
Proposal on Repurchase and Cancellation of Some Restricted Shares was approved. The Company
repurchased and cancelled 145,340 restricted shares held by unqualified incentive objects in the restricted
stock incentive plan in 2018.
(6) On October 25, 2021, the Company held the 22nd Meeting of the 6th board of directors and the 21st Meeting
of the 6th board of supervisors respectively, in which Proposal on repurchase and cancellation of some
restricted shares, Proposal on the achievement of lifting the restrictions during the third vesting period of the
restricted stock incentive plan in 2018, Proposal on cancellation of some stock appreciation rights and
Proposal on achievement of exercise conditions in the third vesting period of 2018 stock appreciation rights
incentive plan. The listing date of the restricted shares was November 8, 2021. The number of shareholders
who were qualified to unlock was 676. A total of 6.4659 million shares were released, accounting for 0.18%
of the total share capital of the Company. The total number of incentive objects meeting the exercise
conditions of stock appreciation right was 16, and the number of exercisable rights was 135,200 shares.
70
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
(7) On November 16, 2021, the fourth extraordinary general meeting of shareholders in 2021 was held, in which
Proposal on repurchase and cancellation of some restricted shares was passed. The Company repurchased
and cancelled a total of 47,320 restricted shares held by unqualified incentive objects in the restricted stock
incentive plan in 2018.
2. In 2020, the Company launched the 2020 restricted stock incentive plan, granting 12.04 million restricted
shares to 914 incentive objects. The grant date of this equity incentive plan was February 24, 2020. The grant
price of restricted shares was RMB 9.85 per share, and the listing date was March 20, 2020.
(1) On November 5, 2020, the fourth extraordinary general meeting of shareholders of 2020 was held, in which
the Resolution on repurchase and cancellation of some restricted stocks was approved. The Company
repurchased and cancelled all or part of the restricted stocks held by unqualified incentive objects in 2020
restricted stock incentive plan, totaling of 104,000 shares.
(2) On June 8, 2021, the Company held the 18th interim meeting of the 6th board of directors and the 16th
interim meeting of the 6th board of supervisors respectively, in which Proposal on adjusting the repurchase
price of 2020 restricted stock incentive plan, Proposal on repurchase and cancellation of some restricted
stocks and Proposal on the achievement of lifting the restrictions during the first vesting period of the
restricted stock incentive plan in 2020 were approved. The listing date of the restricted shares was June 18,
2021. The number of shareholders meeting the unlocking condition was 883. A total of 4,596,150 shares were
released, accounting for 0.1280% of the total share capital.
(3) On June 24, 2021, the second extraordinary general meeting of shareholders in 2021 was held, in which
Proposal on repurchase and cancellation of some restricted shares was approved. The Company repurchased
and cancelled 229,450 restricted shares held by unqualified incentive objects in the 2020 restricted stock
incentive plan.
(4) On November 16, 2021, the fourth extraordinary general meeting of shareholders in 2021 was held, in which
Proposal on repurchase and cancellation of some restricted shares was approved. The Company repurchased
and cancelled 113,750 restricted shares held by unqualified incentive objects in the 2020 restricted stock
incentive plan.
Share incentives for directors and senior executives in the reporting period
√ Applicable □ Not applicable
Unit: share
Number Number Exercise Number
Restrict
of stock of Number price of of stock Market
Number ed Price for
options newly of exercise options price at Shares Restrict
of Shares Shares restricte
held at granted exercisa d shares held at the end newly ed
exercise held at vested d shares
the stock ble during the end of the granted Shares
Name Title d shares the in the granted
beginni options shares the of the report in the held at
in the beginni current (RMB
ng of in the in the reportin period period current period-e
reportin ng of period per
the year reportin reportin g period (yuan / period nd
g period the share)
g period g period (yuan / share)
period
share)
71
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Director
Wang ,
25.3 197,600 106,600 91,000
Dayong General
manager
Ni
Xiaomi Director 25.3 197,600 106,600 91,000
ng
Chen Director
Yuzhon , chief 25.3 197,600 106,600 91,000
g engineer
Vice
presiden
t,
Hu
Secretar
Kaichen 25.3 197,600 106,600 91,000
y of the
g
board of
director
s
Vice
Yu
presiden 25.3 197,600 106,600 91,000
Yingkui
t, CFO
Total -- 0 0 0 0 -- 0 -- 988,000 533,000 0 -- 455,000
1. At the beginning of each year, the number of locked shares of senior executives is
recalculated according to 75% of the total number of shares held by them. The number of
unlocked shares in current period is 25% of the total shares at the beginning of the year.
2. On June 18, 2021, the first vesting period of the 2020 restricted stock incentive plan
Note (if
matured. 39,000 restricted shares owned by the each director and senior manager, totalling of
any)
195,000 restricted shares, were released.
3. On November 8, 2021, the third vesting period of the 2018 restricted stock incentive plan
matured. 67,600 restricted shares owned by the each director and senior manager, totalling of
338,000 restricted shares, were released.
Assessment and incentive mechanism for the senior management
√Applicable □Not applicable
In order to encourage senior managers better perform their duties and clarify their rights and obligations, the
Company has established a fairly sophisticated performance evaluation standard and remuneration system,
according to which senior managers’ performance and annual business indicators would be assessed.
The senior managers of the Company are responsible to the board of directors and undertake the business
objectives issued by the board. The remuneration and assessment committee of the board formulate the
remuneration plan based on evaluation of senior managers’ ability, performance and completion of business
targets.
72
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
2. Implementation of employee stock inventive plan
□ Applicable √ Not applicable
3. Other incentive plan
□ Applicable √ Not applicable
XII. Construction and implementation of internal control
1. Construction and implementation of internal control
In accordance with the requirements of the Company Law and other relevant regulations and normative
documents, the Company has set up an internal control system in combination with its own business
characteristics, which is composed of the general meeting of shareholders, the board of directors, the board of
supervisors, the management, each controlling subsidiary and its functional departments. Thus, it formed a
relatively effective division of responsibilities and balances.
The Company continues to strengthen the control of high-risk areas such as sales business, procurement business,
major investments, acquisition and merger, asset security and information system management, and has
established corresponding control policies and procedures.
During the reporting period, the Company revised and formulated rules and regulations such as Measures for the
registration of insiders and Management system of environmental information disclosure and emergencies, further
improved insider information management, strengthened the confidentiality of insider information, maintained the
fairness of information disclosure, and further standardized environmental information disclosure, and improved
its ability to respond to environmental emergencies.
Meanwhile, the Company timely organized directors, supervisors and senior managers to participate in relevant
training organized by regulatory authorities, which improves the management's awareness of standardized
operation, ensures the effective implementation of internal control system, effectively improves the standard
operation level and promotes the healthy and sustainable development of the Company.
The Company's internal audit department shall regularly inspect and supervise the establishment and
implementation of this internal control system as well as the authenticity and completeness of its financial
information. During the reporting period, the Company established effective internal control over the businesses
included in the evaluation scope. It has achieved its internal control target in terms of the authenticity of operating
results, business compliance and the effectiveness of internal control.
2. Any significant internal control deficiencies during the reporting period
□ Yes √ No
73
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
XIII. Management and control of subsidiaries during the reporting period
Problems
Integration Follow up
Corporate name Integration plan encountered in Solutions taken Solution progress
progress solution plan
integration
Zhejiang Sanhua
Plate Exchange
/ Completed / / / /
Technology Co.,
Ltd
XIV. Self-evaluation report on internal control or Internal control audit report
1. Self-evaluation report on internal control
Disclosure date of full text of
March 25, 2022
self-evaluation report on internal control
Disclosure index of full text of Self-evaluation Report on Internal Control of the Company in 2021
self-evaluation report on internal control http://www.cninfo.com.cn
Proportion of assets evaluated in total
100.00%
assets
Proportion of revenue evaluated in total
revenue per consolidated financial 100.00%
statement
Recognition standard of deficiencies
Nature Financial report level Non-financial report level
Significant deficiency: Significant deficiency: The possibility
1. Fraud of directors, supervisors and of defects is high, which will
senior managers；2. Major misstatement in significantly reduce the work
the current financial report found by the efficiency or effect, or significantly
CPA but not identified by the internal increase the uncertainty of the effect,
control of the Company；3. The Company or make it significantly deviate from
has major violations of laws and the expected goal.
regulations in financial accounting, asset Important defects：Defects are more
management, capital operation, likely to occur, which will seriously
Qualitative criteria
information disclosure, product quality, reduce the work efficiency or effect, or
safety production, environmental seriously increase the uncertainty of
protection and other aspects, causing the effect, or make it seriously deviate
major losses and adverse effects to the from the expected goal.
Company, or subject to major General defects：The probability of
administrative supervision and defects is small, which will reduce the
punishment；4. Supervision of the audit efficiency or effect, increase the
committee and internal control department uncertainty of the effect, or make it
is ineffective on the Company's external deviate from the expected goal.
74
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
financial report and internal control.
Significant deficiency: (1). Failure to
select and apply accounting policies in
accordance with GAAP； (2). Failure to
establish anti-fraud procedures and control
measures； (3). It cannot reasonably
guarantee the truthfulness and
completeness of the financial statements
due to one or more defects in control
process； (4). There is no corresponding
control mechanism or no compensatory
control for the accounting treatment of
non-routine or special transactions.
General deficiency：General defects other
than the above-mentioned.
The quantitative standard is based on
The quantitative standard is based on the
the percentage of potential
percentage of potential misstatements of
misstatements of pre-tax profit.
pre-tax profit.
Significant deficiency：This defect
Significant deficiency：This defect alone
alone or together with other defects
or together with other defects may cause
may cause the misstatement of
the misstatement of financial report to
financial report to exceed 10% of the
exceed 10% of the profit before tax.
profit before tax.
Important defects：This defect alone or
Quantitative criteria Important defects：This defect alone or
together with other defects may cause the
together with other defects may cause
misstatement of financial report to exceed
the misstatement of financial report to
5% but less than 10% of the profit before
exceed 5% but less than 10% of the
tax.
profit before tax.
General defects：This defect alone or
General defects：This defect alone or
together with other defects may cause the
together with other defects may cause
misstatement of financial report less than
the misstatement of financial report
5% of the profit before tax.
less than 5% of the profit before tax.
Number of significant deficiencies in
0
financial report level
Number of significant deficiencies in
0
non-financial report level
Number of important deficiencies in
0
financial report level
Number of important deficiencies in
0
non-financial report level
75
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
2. Audit report or assurance report on internal control
□ Applicable √ Not applicable
XV. Governance problem rectification of the Company
According to self-examination, the Company has no material violations affecting the level of corporate
governance. The Company has established a relatively complete and reasonable corporate governance structure
and internal control system in accordance with the Company Law, Securities Law, Guidelines for Governance of
Listed Companies and other relevant laws and regulations. However, with the continuous development of the
Company's business scale and the changes of external macroeconomic and market environment, the Company
needs to further improve its internal control system, continue to strengthen its own construction, effectively
improve the Company's standardized operation level and the effectiveness of corporate governance. The Company
will continuously improve the governance quality by improving the abilities of scientific decisions making, stable
operation, and standardize development.
76
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section V Environmental and Social Responsibility
I. Material environmental issues
Whether the Company or the Company’s subsidiaries are critical pollutant enterprises disclosed by National
Environmental Protection Department
Yes
Name of
main
Name of Distribution Emission Approved Over
pollutants Emission Number of Emission Total
Company or of emission concentratio total standard
and mode outlets standards emissions
subsidiary outlets n emission emission
characteristi
c pollutants
The
limitation of
COD in
Zhejiang
GB8978-19
Sanhua Not
96 61.867 T
Intelligent COD Nanotube 1 North ≦500mg/L 42.79T exceeding
Integrated /year
Controls the standard
Wastewater
Co., Ltd
Emission
Standard is
500mg / L
The
limitation
listed in
DB33/887-2
013 Indirect
Zhejiang Emission
Sanhua Limits of Not
Ammonia 6.186 T
Intelligent Nanotube 1 North ≦35mg/L Nitrogen 4.28T exceeding
Nitrogen /year
Controls and the standard
Co., Ltd Phosphorus
Pollutants
from
Industrial
Wastewater
is 35mg / L
Zhejiang Direct The Not
SO2 1 North ≦50mg/m3 0.678T 2.15 T /year
Sanhua emission limitation exceeding
77
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Intelligent listed in the standard
Controls GB13271-2
Co., Ltd 014
Emission
Standard of
Air
Pollutants
for Boilers
is 50mg/m3
According
to the low
Nitrogen
emission
Zhejiang
requirement
Sanhua Not
Nitrogen Direct s of local 10.06 T
Intelligent 1 North ≦50mg/m3 3.17T exceeding
Oxide emission government /year
Controls the standard
, the limit
Co., Ltd
value of
gas-fired
boiler is
50mg / m3
Zhejiang
The
Sanhua
limitation
Climate & Not
from 9.205 T
Appliance COD Nanotube 1 South ≦500mg/l 2.377T exceeding
GB8979-19 /year
Controls the standard
96 is 500mg
Group
/L
Co.,Ltd
Zhejiang
The
Sanhua
limitation
Climate & Not
Total from
Appliance Nanotube 1 South ≦2.0mg/l 0.079T / exceeding
Copper GB8979-19
Controls the standard
96 is
Group
2.0mg/l
Co.,Ltd
Construction and operation of pollution control facilities
Adhering to the advanced management concept, the Company takes "developing energy-saving and low-carbon
economy, creating a green quality environment" as its own responsibility, constantly surpasses, and becomes an
important creator and contributor of human green quality living environment with limited resources and unlimited
wisdom.
1. In terms of waste water treatment, the Company responded to the construction of "five water treatment",
"eliminating inferior V-type water" and "zero direct discharge of sewage" in the whole province. The
78
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Company renovated the rainwater and sewage outlets in the factory area, implemented the separation of
rainwater and sewage, and installed cut-off valves and video monitoring equipment at the Company's
rainwater discharge outlets, and collected and treated the early rainwater. There are two wastewater treatment
stations in the factory. The sewage treatment stations have been equipped with standardized sewage outlets
and set up discharge outlet signs. Online monitoring device, solenoid valve flowmeter and card swiping
sewage system are installed at the discharge outlet, which has been connected with the environmental
protection department. The monitoring indicators include pH, COD, total copper, total zinc and flow.
Wastewater treatment: The Company has entrusted a third-party professional treatment unit for treatment. The
discharge indicators of the Company's internal control wastewater are stricter than the environmental
discharge standard. The final treated wastewater is discharged into the sewage collection pipe network of the
industrial zone and sent to Shengxin sewage treatment plant for retreatment.
2. Waste gas treatment: The Company has acid pickling, electroplating waste gas, welding dust, ultrasonic
cleaning and other waste gas. All kinds of waste gas discharge cylinders are equipped with corresponding
waste gas treatment devices. The acid pickling and electroplating waste gas absorption and treatment tower is
installed with automatic dosing system, and the waste gas is discharged to air after treatment. At the same
time, in order to win the blue-sky defense activity, the Company carried out low Nitrogen emission
transformation of the Company's gas boilers in accordance with the requirements of relevant official
departments in 2019. In 2021, the transformation and upgrading of VOCs treatment facilities in industrial
enterprises have been implemented. At the same time, the process has been improved, and the water cleaning
is used to replace the organic solvent cleaning, so as to reduce the generation of VOCs.
3. Solid waste and soil treatment: all kinds of hazardous waste of the Company are entrusted to the third
qualified party for disposal, the general solid waste with utilization value is recycled, the domestic waste is
cleared and transported by the environmental sanitation station, and the construction waste is cleaned and
transported by the construction unit. The Company also tests the soil and groundwater every year and
publishes them on the corresponding website In March 2020, Sanhua Refrigeration Group carried out a
special site investigation on soil and groundwater in Xialiquan plant area, and prepared an investigation report.
No pollution was found. In July 2020, the Company became one of the first "waste free factories" in
Shaoxing.
4. Noise control: The Company's existing main noise is workshop production noise, air compressor room, waste
gas and waste water treatment equipment noise. Equipment layout is reasonable, and trees are planted around
the workshop. Noise at factory meets the standard.
5. The "three wastes" pollution control facilities of the Company are in normal and stable operation. The
pollutants are discharged based on the standard, and there is no environmental pollution event.
Environmental Impact Assessment (EIA) of construction projects and other administrative permits for
environmental protection
1. Since 2010, the Company has invested in the construction of Meizhu Sanhua Industrial Estate in Xinchang
County, and has obtained 25 EIA replies. All the projects have passed. In August 2020, the Company obtained the
79
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
national emission permit.
2. Zhejiang Sanhua Climate & Appliance Controls Group Co.,Ltd. has invested in Xialiquan of Xinchang County
since 2013, and has obtained 6 EIA replies. All the projects have passed.
Emergency Response Plan
1. The Company re-prepared the Emergency Response Plan in April 2021, and filed with Xinchang Environmental
Protection Bureau on June 10, 2021 (Record No. 330624-2021-06-M).
2. In order to manage environmental emergencies and reduce the environmental hazards caused by sudden
environmental pollution accidents, Zhejiang Sanhua Climate & Appliance Controls Group Co.,Ltd. re-compiled
Emergency Response Plan for Environmental Pollution Accidents of Zhejiang Sanhua Climate & Appliance
Controls Group Co.,Ltd. (simplified version) in October 2018, which was filed with Xinchang County
Environmental Protection Bureau on October 29, 2018 (Record No. 3306242018013).
Environmental self-monitoring program
The Company formulated Self-monitoring Scheme of Zhejiang Sanhua Intelligent Control Co., Ltd. according to
the requirements of the superior environmental protection department, combined with the actual production
situation and the actual needs of environmental management of the Company. The sewage station of the Company
is equipped with a laboratory, and the detection is conducted by a specially assigned person. On line automatic
monitoring equipment such as pH, COD, TOC, total copper, total zinc, flow rate etc. are installed at the
Company's total wastewater discharge outlet, so as to achieve the combination of automatic monitoring and
manual testing. For the pollution factors such as suspended matters, total Phosphorus, Ammonia Nitrogen, total
Iron and Petroleum, the Company entrusts a third-party testing agency to carry out regular monitoring. The
monitoring results are published regularly on the enterprise self-monitoring information disclosure platform of
Zhejiang Province.
Zhejiang Sanhua Climate & Appliance Controls Group Co.,Ltd. has good pollutant emission monitoring and
management ability, and can timely inform the environmental protection administrative department and the public
of the monitoring information. According to the actual production situation and the actual needs of environmental
management, the environmental protection laboratory of wastewater treatment station is set up, and the detection
is carried out by specially assigned person daily. On line automatic monitoring equipment such as pH, COD, TOC,
total copper and flow rate are installed at the total wastewater discharge outlet of the Company. The combination
of automatic monitoring and manual testing effectively ensures the timeliness and effectiveness of monitoring. At
the same time, a third-party testing Company is entrusted to carry out regular monitoring. The monitoring results
are published regularly on the enterprise self-monitoring information disclosure platform of Zhejiang Province.
Administrative penalties for environmental problems during the reporting period
Not applicable
Other environmental information that should be disclosed
Not applicable
Measures and effects in reducing carbon emissions during the reporting period
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
√ Applicable □ Not applicable
1. The Company continues to promote the application of smart energy IOT platform, and effectively controls the
use efficiency of all energy within the scope through real-time display of digital information, traceability,
technical transformation and energy conservation and consumption reduction analysis.
2. The industrial zone uses distributed photovoltaic to replace the original purchased electricity in a large area to
achieve clean energy, and adopts waste heat recovery technology to achieve lower energy consumption and higher
resource utilization efficiency.
3. The Company improves and reduces energy consumption and improves energy efficiency through the
improvement of manufacturing and technological process. Reduce energy consumption and carbon emission by
troubleshooting of air leakage point of compressed air pipeline of equipment, upgrading and transformation of air
compressor, emission reduction of triple supply and nitrogen recycling.
Other environmental information
Not applicable
II. Social responsibility
During the reporting period, the Company actively fulfilled its social responsibilities. The Company takes
"People-oriented, Continuous innovation, Employee satisfaction, Customer satisfaction, Supplier satisfaction,
Shareholder satisfaction and Social satisfaction" as its core values. While continuously creating value for
shareholders, it also actively undertakes the responsibility to employees, customers, society and other stakeholders.
The Company fully respects and protects the legitimate rights and interests of relevant stakeholders, adheres to
paying equal attention to economic benefits, social benefits and environmental benefits, and realizes the
sustainable development of society and the Company.
(1) Maintain the continuous and stable growth of revenue, care about the return of shareholders
Since listing, the Company has established a corporate governance organization composed of the general meeting
of shareholders, the board of directors and the board of supervisors, and formed a complete internal control
system in strict accordance with the requirements of the Company Law, the Listing Rules of Shenzhen Stock
Exchange and the Articles of Association. During the reporting period, the Company continuously improved the
governance structure and internal control system to raise the standard operation level, and fully protected the
legitimate rights and interests of all shareholders. The general meeting of shareholders, the board of directors and
the board of supervisors exercise their functions and powers within the scope of relevant laws and regulations.
The convening, proposal, notice and resolution procedures of previous meetings are in line with laws and
regulations. There is no case of ultra vires approval or implementation before approval, so as to ensure that the
rights of all shareholders are not infringed, especially minor shareholders.
Information disclosure, the Company has been strictly in compliance with the relevant provisions of CSRC and
Shenzhen Stock Exchange, and has fulfilled the obligation of truthfulness, accuracy, timeliness and completeness.
The Company enhances the interaction with investors by means of investor hotline, interactive platform and
reception of investors, so that investors can have a more in-depth understanding of the Company's development,
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
production and operation. It promotes the Company to establish a long-term and stable relationship with investors,
and safeguard the legitimate rights and interests of minor investors effectively. At the same time, the Company
pays special attention to the management of insider information, and actively prevents the occurrence of insider
trading. During the reporting period, the Company does not have insider trading or damage the interests of
shareholders.
The Company attaches great importance to the return to shareholders. According to the relevant provisions of
China Securities Regulatory Commission on cash dividends and sustainable development, the Company has
formulated and strictly implemented the continuous dividend return plan for shareholders since listing, and
insisted on sharing the Company's operation achievements with shareholders.
(2) Safeguard the legitimate rights and interests of employees and improve their comprehensive ability
The Company always adheres to the people-oriented core values, takes improving the working environment of
employees, realizing their self-worth, improving their quality of life and promoting their career growth which is
also treated as the important part of the Company's development strategy. It regards employees as the Company's
primary resources, earnestly protects their rights and interests, and strives to realize the common development of
employees and the enterprise, so as to enhance the cohesion of the enterprise.
Abiding by the Labor Law, Labor Contract Law, Law on the Protection of Women's Rights and Interests and other
relevant laws and regulations, the Company establishes a series of labor management systems, signs labor
contracts with employees according to law, pays employees' wages in full timely, and pays various social
insurance for employees. The Company has a sound vacation system. Employees not only enjoy national statutory
holidays according to law, but also enjoy gifts from the Company on various important public festivals such as
Spring Festival, Mid-Autumn Festival, International Women's Day, etc.
The Company has established a reasonable human resource management system and a scientific performance
appraisal system. In order to implement the principle of equality between men and women, the Company links the
performance appraisal of management cadres at all levels with the Company's business objectives. In order to
motivate the employees, stimulate their sense of responsibility and mission, managements’ KPI aligned with the
Company’s operation target and related income evaluation system was implemented. In addition, the Company
has established a perfect staff training system, designed training courses for each employee, and encouraged
employees to study in their spare time to improve their own quality and comprehensive ability.
At the same time, the Company has always attached importance to and adhered to the construction of enterprise
culture, creating a healthy, positive and cooperative working atmosphere. The Company actively cares for the life
of employees, sends greetings to employees who have encounter sudden disasters. And it establishes the
"Sanhua--One family" fund to help employees in difficulties and increase their sense of belonging to the
enterprise. The Company also carries out sports, job skills competitions, festival parties and other recreational
activities to show the good spirit of employees, and it builds a communication platform for employees, which
effectively stimulate the sense of collective honor and team cohesion.
(3) Safeguard the rights and interests of suppliers and treat customers with integrity
In line with the principle of "Communication with integrity and sharing value", the Company pays attention to the
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
relationship with suppliers and customers, constantly strengthens the communication and cooperation with all
parties, and earnestly protects their legitimate rights and interests.
For suppliers, the Company always adheres to the business values of “Honesty, Fairness, Mutual Benefit, and
Collaborative Development”, strictly complies with contracts signed with suppliers, establishes and strictly
implements the procurement standards and evaluation system, carries out stable and effective management of
procurement, so as to effectively protect the legitimate rights and interests of suppliers. The Company continues to
strengthen the internal control and audit supervision of the supply chain, resolutely eradicate black box operation,
commercial bribery and improper transactions, strive to provide a good competitive environment for suppliers,
and promote the long-term and stable cooperation between the Company and suppliers.
For customers, the Company always maintains the concept of "Customer first, grow together with customers",
attaches great importance to customer relationship management, takes customers’ satisfaction as the standard to
measure the Company's operation, and is committed to providing customers with high-quality products and
services. Over the years, the Company has established a good corporate image and gained a good reputation from
all walks of life.
(4) Energy saving, innovative production and environmental protection
The Company takes the vision of "Developing energy saving and low-carbon economy, creating a quality and
green environment", while pursuing economic benefits. It pays attention to environmental protection and energy
conservation and consumption reduction, takes the construction of resource saving and environment-friendly
enterprises as an important part of sustainable development strategy, actively promotes the strategic
transformation from "Cost leading" to "Technology leading", and continuously develops independent intellectual
property rights, new products and new technologies, such as energy saving, environmental protection, material
saving, consumption reduction. At the same time, the Company has successfully developed the inverter controller
and other system solutions, which will further improve the energy conservation and environmental protection of
air conditioning system.
The Company emphasizes safety production and environmental protection, and adheres to the principle of
"Prevention first, combination of prevention and control". While realizing its own development, it actively
shoulders the social responsibility of environmental protection, and strives to promote the sustainable
development of society and environment. The Company strictly abides by related national laws and regulations.
On the one hand, the Company has established strict rules in effectively guiding the safety and environmental
protection of each subsidiary company; on the other hand, the Company continuously optimizes the production
process, continuously carries out the overhaul and technical transformation of environmental protection facilities,
actively deepens the three wastes treatment and clean production level. In addition, the Company has prepared an
effective comprehensive emergency plan for environmental risks and various specific emergency. Equipped with a
sound emergency management team and various emergency facilities, equipment and materials, regular
emergency training and drills are carried out, so as to minimize the occurrence of environmental pollution safety
accidents.
(5) Shoulder social responsibility and participate in social charity
The Company takes "Public welfare society, building a harmonious society" as an important responsibility. With
its continuous development, it has also made positive contributions to the infrastructure construction,
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
environmental protection, poverty alleviation and community construction of Shaoxing. During the reporting
period, the Company actively undertakes its due responsibilities and obligations, and strives to create a good
corporate image.
III. Achievements of poverty alleviation and rural revitalization
In the reporting year of the Company, there has been no targeted poverty alleviation activity, or follow-up
targeted poverty alleviation plan.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section VI Significant Events
I. Performance of commitments
1. Complete and incomplete commitments of the Company and its actual controller, shareholders, related
parties, acquirers, and other related parties for the commitments by the end of the reporting period.
√ Applicable □ Not applicable
Commitment Date of Term of
Commitments Nature Details of commitments Performance
party commitments commitments
Zhang Yabo,
When the number of shares sold through listing
controlling
Commitment Other and trading in Shenzhen Stock Exchange
shareholder
from commi reaches 1% of the total number of shares of the November 21st Strict
Sanhua Long term
reformation of tment Company, it shall make an announcement 2005 performance
Holding
shareholding within two working days from the date of the
Group Co.,
occurrence of the fact.
Ltd.
Comm
itment
on
horizo
Zhang Daocai, ntal
controlling compe Zhang Daocai and Sanhua holding group, the
shareholder tition, controlling shareholder of the Company,
January 5th, Strict
Sanhua related promise that there will not be any competition Long term
2009 performance
Holding party with Sanhua intelligent controls in the business
Group Co., transac scope being or already carried out in the future.
Ltd. tions
Commitments and
from assets capital
reorganization occupa
tion
Comm Sanhua Holding Group promises: after the
itment completion of this transaction, Sanhua Holding
Zhang Daocai,
on Group and Sanhua intelligent controls will sign
controlling
horizo an agreement according to law, perform legal
shareholder
ntal procedures, fulfill the obligation of information January 5th, Strict
Sanhua Long term
compe disclosure and handle significant matters for 2009 performance
Holding
tition, approval in accordance with relevant laws,
Group Co.,
related regulations, and articles of association of
Ltd.
party Sanhua intelligent controls. In the process of
transac implementation of related party transactions, we
85
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
tions will follow the principle of legality and
and reasonableness, ensure the fairness of prices and
capital procedures, and make certain that the legitimate
occupa interests of Sanhua intelligent controls and
tion other shareholders will not be damaged through
related party transactions.
In order to avoid horizontal competition with
Sanhua intelligent controls, Zhang Daocai,
Zhang Yabo, Zhang Shaobo, Sanhua Holding
Group the controlling shareholder of the
Company, and Sanhua Lvneng Industry, the
trading partner made the following
commitments:
1. I (or the Company) will not directly or
indirectly engage in or participate in the
business that constitutes potential direct or
indirect competition with Sanhua Intelligent
Controls and its subordinate enterprises;
Zhang Daocai, Comm
guarantee that legal and effective measures shall
Zhang Yabo, itment
be taken to urge other enterprises controlled by
Zhang on
me (or the Company) not to engage in or
Shaobo, horizo
participate in any business competing with
controlling ntal
Sanhua Intelligent Controls and its subordinate
shareholder compe
enterprises.
Sanhua tition,
2. If Sanhua Intelligent Controls further Strict
Holding related July 24th, 2015 Long term
expands its business scope, I (or the Company) performance
Group Co., party
and other controlled enterprises will not
Ltd., Zhejiang transac
compete with Sanhua Intelligent Controls'
Sanhua tions
expanded business; if it is possible to compete
Lvneng and
with Sanhua Intelligent Controls' business after
Industrial capital
expansion, I (or the Company) and other
Group Co., occupa
controlled enterprises will withdraw from
Ltd. tion
Sanhua Intelligent Controls in the following
ways of competition: A. Stop the businesses
that compete or may compete with Sanhua
Intelligent Controls; B. Inject the competitive
business into Sanhua Intelligent Controls; C.
Transfer the competitive business to an
unrelated third party.
3. If I (or the Company) and other enterprises
controlled by me (or the Company) have any
business opportunities to engage in and
participate in any activities that may compete
with Sanhua Intelligent Controls' business
86
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
operation, they shall immediately inform
Sanhua Intelligent Controls of the above
business opportunities. If Sanhua Intelligent
Controls makes an affirmative reply to take
advantage of the business opportunity within a
reasonable period specified in the notice, it shall
do its best to give the business opportunity to
Sanhua Intelligent Controls.
4. In case of breach of the above commitment, I
(or the Company) is willing to bear all
responsibilities arising therefrom and fully
compensate all direct or indirect losses caused
to Sanhua Intelligent Controls.
In order to standardize the related party
transactions with Sanhua Intelligent Controls,
Zhang Daocai, Zhang Yabo, Zhang Shaobo,
Sanhua Holding Group the controlling
shareholder of the Company and Sanhua
Lvneng Industrial the trading partner made the
following commitments:
1. I (or the Company) and the controlled
Zhang Daocai, Comm
enterprises will reduce the related party
Zhang Yabo, itment
transactions with Sanhua intelligent controls as
Zhang on
far as possible, and will not use their own status
Shaobo, horizo
as shareholders of Sanhua intelligent controls to
controlling ntal
seek for superior rights in terms of business
shareholder compe
cooperation and other aspects compared with
Sanhua tition,
other third parties; Strict
Holding related July 24th, 2015 Long term
2. I (or the Company) will not take advantage of performance
Group Co., party
the right to enter into a transaction with Sanhua
Ltd., Zhejiang transac
intellectual controls using the position as a
Sanhua tions
shareholder.
Lvneng and
Industrial capital 3. If there are necessary and unavoidable related
Group Co., occupa party transactions, I (or the Company) and the
Ltd. tion controlled enterprises will sign agreements with
Sanhua intelligent controls in accordance with
the principles of fairness, follow legal
procedures, and perform the information
disclosure obligations in accordance with the
requirements of relevant laws, regulatory
documents and the articles of association. It
shall also perform relevant internal
decision-making and approval procedures to
87
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
ensure that it will not conduct transactions with
Sanhua intelligent controls on terms that are
obviously unfair compared with the market
price, and will not use such transactions to
engage in any behavior that damages the
legitimate rights and interests of Sanhua
intelligent controls and other shareholders.
Zhang Daocai, Zhang Yabo, Zhang Shaobo and
Sanhua holding Group, the controlling
Zhang Daocai, shareholder of the Company, made the
Zhang Yabo, following commitments: after the completion of
Zhang the transaction, Sanhua intelligent controls will
Shaobo, continue to improve the corporate governance
Other
controlling structure and independent operation of the Strict
Comm July 24th, 2015 Long term
shareholder Company management system in accordance performance
itment
Sanhua with the requirements of relevant laws and
Holding regulations and the articles of Association, and
Group Co., continue to maintain the independence of
Ltd. Sanhua intelligent controls in business, assets,
finance, institutions, personnel, etc. to protect
the interests of all shareholders.
1. I (or the Company) and the controlled
enterprises will reduce the related party
transactions with Sanhua intelligent controls as
far as possible, and will not use the position as a
Zhang Daocai, Comm
shareholder of Sanhua intellectual controls to
Zhang Yabo, itment
seek the superior rights for business cooperation
Zhang on
with Sanhua intelligent controls compared with
Shaobo, horizo
other third parties;
controlling ntal
2. I (or the Company) will not use my position
shareholder compe
as a shareholder of Sanhua intellectual controls
Sanhua tition,
to seek for the priority right to cooperate with September Strict
Holding related th
Long term
Sanhua intellectual controls; 18 , 2017 performance
Group Co., party
3. If there are necessary and unavoidable related
Ltd., Zhejiang transac
party transactions, I (or the Company) and the
Sanhua tions
controlled enterprises will sign agreements with
Lvneng and
Sanhua intelligent controls in accordance with
Industrial capital
the principles of fairness, follow legal
Group Co., occupa
procedures, and perform the information
Ltd. tion
disclosure obligations in accordance with the
requirements of relevant laws, regulatory
documents and the articles of association. It
shall also perform relevant internal
88
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
decision-making and approval procedures to
ensure that it will not conduct transactions with
Sanhua intelligent controls on terms that are
obviously unfair compared with the market
price, and will not use such transactions to
engage in any behavior that damages the
legitimate rights and interests of Sanhua
intelligent controls and other shareholders.
1. I (or the Company) will not directly or
indirectly engage in or participate in any
business that may constitute potential direct or
indirect competition with Sanhua intelligent
controls and its subordinate enterprises;
guaranteed that legal and effective measures
will be taken to urge other enterprises
controlled by me (or the Company) not to
engage in or participate in any business that is
competitive with Sanhua intelligent controls
and its subordinate enterprises Business.
Zhang Daocai, Comm
2. If Sanhua intelligent controls further expands
Zhang Yabo, itment
its business scope, I (or the Company) and other
Zhang on
enterprises controlled by me (or the Company)
Shaobo, horizo
will not compete with Sanhua intelligent
controlling ntal
controls' expanded business; if it is possible to
shareholder compe
compete with Sanhua intelligent controls'
Sanhua tition,
business after expansion, I (or the Company) September Strict
Holding related th
Long term
and other enterprises controlled by me (or the 18 , 2017 performance
Group Co., party
Company) will withdraw from Sanhua
Ltd., Zhejiang transac
intelligent controls in the following ways of
Sanhua tions
competition: A. stop the businesses that
Lvneng and
compete or may compete with Sanhua
Industrial capital
intelligent controls; B. inject the competitive
Group Co., occupa
business into Sanhua intelligent controls; C.
Ltd. tion
transfer the competitive business to an unrelated
third party.
3. If I (or the Company) and other enterprises
controlled by me (or the Company) have any
business opportunities to engage in and
participate in any activities that may compete
with Sanhua intelligent controls' business
operation, they shall immediately inform
Sanhua intelligent controls of the above
business opportunities. If Sanhua intelligent
controls makes an affirmative reply to take
89
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
advantage of the business opportunity within a
reasonable period specified in the notice, it shall
do its best to give the business opportunity to
Sanhua intelligent controls.
4. In case of breach of the above commitment, I
(or the Company) is willing to bear all
responsibilities arising therefrom and fully
compensate all direct or indirect losses caused
to Sanhua intelligent controls.
Zhang Daocai,
Zhang Yabo,
Zhang After the completion of the transaction, the
Shaobo, listed Company will continue to improve the
controlling corporate governance structure and independent
shareholder operation of the Company management system
Sanhua Other in accordance with the requirements of relevant
September Strict
Holding commi laws and regulations and the articles of Long term
18th, 2017 performance
Group Co., tment association, continue to maintain the
Ltd., Zhejiang independence of the listed Company in
Sanhua business, assets, finance, institutions, personnel
Lvneng and other aspects, and effectively protect the
Industrial interests of all shareholders.
Group Co.,
Ltd.
Comm
itment
on The commitment made at the time of IPO, it
horizo shall not engage in the same production,
Zhang Daocai, ntal operation or business as the Company in the
controlling compe future. In order to avoid business competition
Commitment
shareholder tition, with the Company and clarify the
from initial Strict
Sanhua related non-competition obligations, Sanhua Holding June 7th 2005 Long term
public offering performance
Holding party Group, on behalf of itself and its subsidiaries
or refinancing
Group Co., transac with more than 50% equity, makes a
Ltd. tions commitment to Sanhua intelligent controls to
and avoid possible horizontal competition.
capital
occupa
tion
Are the
commitments
Yes
fulfilled on
time
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
2. Where any profit forecast was made for any of the Company’s assets or projects and the current reporting
period is still within the forecast period, the Company shall explain whether the performance of the asset or
project reaches the profit forecast and why:
□ Applicable √ Not applicable
II. The Company’s funds used by the controlling shareholder or its related parties for
non-operating purposes.
□ Applicable √ Not applicable
No such case during the reporting period.
III. Illegal external guarantee
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.
IV. Explanation Given by the Board of Directors Regarding the “Non-standard Auditor’s
Report” Issued by the CPA Firm for the Reporting Period
□ Applicable √ Not applicable
V. Explanation Given by the Board of Directors, Board of Supervisors and Independent
Directors(if any) Regarding the “Non-standard Auditor’s Report” Issued by the CPA
Firm for the Reporting Period
□ Applicable √ Not applicable
VI. For changes in accounting policies, accounting estimates and accounting methods as
compared to the financial report for the prior year
√ Applicable □ Not applicable
Description of changes in accounting policies
1. New lease standard
The Company has implemented the revised No. 21 Accounting Standards for Business Enterprises - Leasing
(hereinafter referred to as the “new leasing standards”) from January 1, 2021 (hereinafter referred to as the “first
implementation date”).
(1) As for the existing contract before the first execution date, the Company chooses not to reevaluate whether it is
a lease or includes a lease.
(2) For the lease contract in which the Company is the lessee, the Company implements the new leasing standard
since the first implementation date, and the Company adjusts the amount of retained earnings at the beginning of
the reporting period and other relevant items in the financial statements according to the cumulative impact of the
implementation of the new lease standard, and it does not adjust the information of the comparable period. The
specific treatment is as follows:
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
For the financial lease before the first implementation date, the Company shall measure the right of use assets and
lease liabilities respectively according to the original book value of the financial lease in assets and the financial
lease payable on the first implementation date.
For the operating lease before the first implementation date, the Company shall measure the lease liability at the
present value discounted by the company's incremental loan interest rate on the first implementation date
according to the remaining lease payment on the first implementation date, and measure the right to use asset
according to the amount equal to the lease liability and make necessary adjustments according to the prepaid rent.
A. The main impact of the implementation of the new leasing standards on the Company's financial statements on
January 1, 2021 is as follows:
Items Balance sheet
December 31, 2020 Impact of adjustment of January 1, 2021
new lease standards
Fixed assets 3,839,408,059.45 -119,764,340.05 3,719,643,719.40
Assets with right of use +202,831,869.22 202,831,869.22
Non-current liabilities due within 130,553,923.87 +22,719,934.72 153,273,858.59
one year
Lease liabilities +149,779,815.53 149,779,815.53
Long term accounts payable 90,336,083.27 -89,432,221.08 903,862.19
B. Simplified treatment of operating leases before the first implementation date
For lease contracts completed within 12 months after the first implementation date, the Company adopts a
simplified method and does not recognize the assets with right of use and lease liabilities. The above simplified
treatment has no significant impacts on its financial statements.
(3) For the operating lease contracts of low value assets existing before the first implementation date, the
Company adopts a simplified method, does not recognize the assets with right of use and lease liabilities, and
carries out accounting treatment in accordance with the new lease standards from the first implementation date.
(4) In terms of the lease contract with the Company as the lessor, it shall be subject to accounting treatment in
accordance with the new lease standards from the first implementation date.
2. Q & A on the implementation of accounting standards for business enterprises
In November 2021, the accounting department of the Ministry of Finance issued the Q&A on the implementation
of accounting standards for business enterprises (the fifth batch). This article points out that: In general, the
transportation activities that take place in order to perform the customer's contract before the control of the
enterprise's goods or services is transferred to the customer do not constitute a single performance obligation, and
the relevant transportation costs should be regarded as the contract performance costs. The Company adopts the
92
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
same basis as the recognition of revenue from goods or services to amortize and record it into the current profit
and loss. The contract performance cost shall be carried forward and included in the title of "main business cost"
or "other business cost" when recognizing the revenue of goods or services, and shall be listed in the item of
"operating cost" in the income statement.
Due to the implementation of the Q&A on the implementation of accounting standards for business enterprises
(the fifth batch), the Company retroactively corrected the recording of sales freight and miscellaneous expenses in
2020, and reclassified the item from "sales expenses" to "operating costs". The adjustment impact of the
accounting policy change on the financial statements of 2020 is shown in the table below:
Item Income statement for the year of 2020
Before adjustment Adjustment After adjustment
Consolidated income statement
Operating costs 8,500,391,322.27 +237,829,716.09 8,738,221,038.36
Selling expenses 602,954,759.17 -237,829,716.09 365,125,043.08
Income statement of parent company
Operating costs 3,383,660,538.43 +22,580,796.28 3,406,241,334.71
Selling expenses 51,140,200.18 -22,580,796.28 28,559,403.90
VII. Explanation for changes in scope of the consolidated financial statements as compared
to the financial report for the prior year
√ Applicable □ Not applicable
(I). Business combination under different control
1. Business combination under different control in this reporting period
(1) Basic information
Date of equity Cost of equity
Name of the acquiree Proportion of equity acquisition Equity acquisition method
acquisition acquisition
Zhejiang Sanhua Plate
RMB 28.00 milli
Exchange Technology Co., 2021-12-14 70% Equity transfer agreement
on
Ltd
(Continued)
Determination Revenue of the acquiree from Net profit of the acquiree
Date of equity
Name of the acquiree basis of purchase the acquisition date to the end from the acquisition date to
acquisition
date of the period the end of the period
Zhejiang Sanhua Plate Complete the
Exchange Technology Co., 2021-12-14 equity transfer and 0.00 0.00
Ltd make payment
(2) Other instructions
In December 2021, the Company acquired 70% equity of Zhejiang Sanhua Plate Exchange Technology Co., Ltd.
(hereinafter referred to as Sanhua Plate Exchange) from Su Jun. The pricing of this equity transaction is based on
the assessed value, the basic transfer price is 28 million yuan, and the assessment payment of consideration is 7
million yuan.
If the net profit of the Sanhua Plate Exchange in 2022 realize 6.4 million yuan, the Company will pay another 3.5
93
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
million yuan. Otherwise, the Company will not need to pay any more. If the net profit of Sanhua Plate Exchange
in 2023 realize 8 million yuan, the Company will pay another 3.5 million yuan. Otherwise, the Company will not
need to pay any more.
According to the profit forecast data and the judgment of the Company's management, it is difficult for Sanhua
Plate Exchange to achieve the assessment net profit, and the assessment payment of consideration is estimated at
zero yuan.
2. Cost of M&A and goodwill
Items Amount
Cost of M&A 28,000,000.00
Cash 28,000,000.00
Less: fair value of identifiable net assets obtained 20,408,169.39
Goodwill 7,591,830.61
3. Identifiable assets and liabilities of the acquiree on the acquisition date
(1) Details
Item Sanhua Plate Exchange
Fair value on the purchase date Book value on purchase date
Assets 41,750,357.62 25,060,423.80
Accounts receivable 2,456,829.86 2,456,829.86
Inventory 7,730,397.40 7,730,397.40
Other current assets 1,769,614.51 1,769,614.51
Fixed assets 6,672,716.01 4,214,515.28
Assets with right of use 4,019,018.35 4,019,018.35
Intangible assets 12,917,600.00
Long term deferred 6,068,825.10 4,754,692.01
expenses
Deferred tax assets 115,356.39 115,356.39
Liabilities 12,595,829.92 10,092,339.85
Accounts payable 5,547,165.87 5,547,165.87
Salary payable 526,155.63 526,155.63
Lease liabilities 4,019,018.35 4,019,018.35
Deferred tax liability 2,503,490.07
Net assets 29,154,527.70 14,968,083.95
Less: Minority interests 8,746,358.31 4,490,425.19
Net assets acquired 20,408,169.39 10,477,658.76
(2) Determination method of fair value of identifiable assets and liabilities
The fair value of identifiable assets and liabilities of Sanhua Plate Exchange is determined at the assessed value.
(II). Changes in consolidation scope due to other reasons
Actual Proportion of
Equity acquisition Date of equity
Name of subsidiaries contribution at capital
method acquisition
the end of the contribution
94
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
period
Zhejiang Sanhua Automotive Components Trading Co.,
New investment 2021-08-31 0.00 100%
Ltd
Zhejiang Sanhua Heat Exchanger Co., Ltd New investment 2021-12-13 0.00 100%
VIII. Engagement and disengagement of the CPA firm
CPA firm engaged at present
Name of the domestic CPA firm Pan-China Certified Public Accountants LLP
Remuneration of domestic accounting firms (in 10,000 yuan) 245.28
Consecutive years of the audit service provided by the domestic
21
CPA firm
Name of the certified public accountants from the domestic CPA
Luo Xunchao, Zhang Xin
firm
Consecutive years of the audit service provided by the certified Luo Xunchao has been in service for 3 consecutive years
public accountants from the domestic CPA firm Zhang Xin has been in service for 1year
Whether the CPA firm was changed in the current period
□ Yes √ No
Engagement of internal control audit CPA firm, financial advisor or sponsor
√Applicable □Not applicable
During the reporting period, the Company did not change accounting firm or engage an internal control audit
accounting firm. This year, the Company hired Zheshang Securities Co., Ltd. due to the issuance of convertible
bonds, and paid a total of 11 million yuan (including tax).
IX. Listing suspension and termination after disclosure of this annual report
□ Applicable √ Not applicable
X. Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such case during the reporting period.
XI. Material Litigation and Arbitration
□ Applicable √ Not applicable
No such case during the reporting period.
XII. Punishments and Rectifications
□ Applicable √ Not applicable
95
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
No such case during the reporting period.
XIII. Integrity of the Company and Its Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XIV. Significant Related-party Transaction
1. Related-party transactions arising from routine operation
□Applicable √Not applicable
No such case in the reporting period.
2. Related-party transactions regarding purchase and disposal of assets or equity
□Applicable √Not applicable
No such case in the reporting period.
3. Significant related-party transactions arising from joint investments on external parties
□Applicable √Not applicable
No such case in the reporting period.
4. Related credit and debt transactions
□ Applicable √Not applicable
No such case in the reporting period.
5. Transactions with related financial companies
□ Applicable √Not applicable
No such case in the reporting period.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable √Not applicable
No such case in the reporting period.
7. Other significant related party transactions
□ Applicable √Not applicable
No such case in the reporting period.
96
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
XV. Significant Contracts and Their Execution
1. Matters on trusteeship, contracting, and leasing
（1）Trusteeship
□ Applicable √ Not applicable
No such case in the reporting period.
（2）Contracting
□ Applicable √ Not applicable
No such case in the reporting period.
（3）Leasing
√Applicable □ Not applicable
Illustration of lease
For details of related information about leasing, please refer to “Section X financial report”.
Items with profit and loss exceeding 10% of the total profit of the Company in the report period
□ Applicable √ Not applicable
During the reporting period, there is no leasing project with profit and loss of more than 10% of the total profit of
the Company during the reporting period.
2. Significant guarantees
√Applicable □ Not applicable
Unit: RMB in 10 thousand
External Guarantees from the Company and its Subsidiaries (Excluding Guarantees to the Subsidiaries)
Announce
ment Date Guarante
Counter
of Actual Actual e for
Guaranteed Guarantee Type of Collateral guarant Term of Due or
Disclosure Occurrence Guarantee Related
Party Amount Guarantee (if any) ee (if Guarantee Not
of the Date Amount Parties or
any)
Guarantee Not
Amount
Company's Guarantees to Subsidiaries
Announce Guarante
Counter
ment Date Actual Actual e for
Guaranteed Guarantee Type of Collateral guarant Term of Due or
of Occurrence Guarantee Related
Party Amount Guarantee (if any) ee (if Guarantee Not
Disclosure Date Amount Parties or
any)
of the Not
97
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Guarantee
Amount
SANHUA
INTERNAT
Joint 2020.02.1
IONAL April 3, February
132,000 9,385.61 liability 0-2021.02 Yes Yes
SINGAPO 2019 10, 2020
guarantee .09
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2020.09.1
IONAL April 29, September
150,000 7,219.7 liability 4-2021.09 Yes Yes
SINGAPO 2020 14, 2020
guarantee .13
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2020.11.0
IONAL April 29, November
150,000 7,219.7 liability 2-2021.11 Yes Yes
SINGAPO 2020 2, 2020
guarantee .01
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2020.06.1
IONAL April 29, June 12,
150,000 7,500 liability 2-2022.12 No Yes
SINGAPO 2020 2020
guarantee .25
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2019.07.0
IONAL April 3, July 5,
132,000 10,829.55 liability 5-2022.06 No Yes
SINGAPO 2019 2019
guarantee .20
RE PTE.
LTD.
SANHUA
Joint 2019.12.0
INTERNAT April 3, December
30,000 19,764.67 liability 9-2022.12 No Yes
IONAL,IN 2019 9, 2019
guarantee .09
C.
SANHUA
Joint 2020.06.2
INTERNAT April 29, June 24,
50,000 9,563.55 liability 4-2021.06 Yes Yes
IONAL,IN 2020 2020
guarantee .23
C.
SANHUA March 27, June 8, Joint 2021.06.0
180,000 1,443.94 Yes Yes
INTERNAT 2021 2021 liability 8-2021.12
98
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
IONAL guarantee .08
SINGAPO
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2021.02.1
IONAL April 29, February
150,000 9,385.61 liability 0-2022.02 No Yes
SINGAPO 2020 10, 2021
guarantee .10
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2021.11.0
IONAL October 26, November
180,000 7,219.7 liability 2-2022.4. No Yes
SINGAPO 2021 2, 2021
guarantee 22
RE PTE.
LTD.
SANHUA
Joint 2021.06.2
INTERNAT March 27, June 24,
50,000 9,563.55 liability 4-2022.06 No Yes
IONAL,IN 2021 2021
guarantee .16
C.
SANHUA
INTERNAT
Joint 2021.09.1
IONAL March 27, September
180,000 7,219.7 liability 4-2022.08 No Yes
SINGAPO 2021 14, 2021
guarantee .30
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2021.10.2
IONAL March 27, October 25,
180,000 6,375.7 liability 5-2022.01 No Yes
SINGAPO 2021 2021
guarantee .25
RE PTE.
LTD.
SANHUA
INTERNAT
Joint 2021.11.2
IONAL October 26, November
180,000 6,375.7 liability 3-2022.2. No Yes
SINGAPO 2021 23, 2021
guarantee 22
RE PTE.
LTD.
SANHUA
Joint 2021.11.2
INTERNAT October 26, November
180,000 6,375.7 liability 4-2022.2. No Yes
IONAL 2021 24, 2021
guarantee 24
SINGAPO
99
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
RE PTE.
LTD.
Total Amount of Total Amount of
Guarantees to Guarantees to
Subsidiaries Approved 285,000 Subsidiaries Actually 53,959.6
during the Reporting Occurred during the
Period (B1) Reporting Period (B2)
Total Amount of Total Balance of
Guarantees to Guarantees Actually
Subsidiaries Approved 285,000 Paid to Subsidiaries at 90,609.88
by the End of the the End of the Reporting
Reporting Period (B3) Period (B4)
Subsidiaries' Guarantees to Subsidiaries
Announce
ment Date Guarante
Counter
of Actual Actual e for
Guaranteed Guarantee Type of Collateral guarant Term of Due or
Disclosure Occurrence Guarantee Related
Party Amount Guarantee (if any) ee (if Guarantee Not
of the Date Amount Parties or
any)
Guarantee Not
Amount
The total amount of the Company's guarantees (the total of the above three items)
Total Amount of
Total Amount of Guarantees Guarantees Actually
Approved during the Reporting 285,000 Occurred during the 53,959.6
Period (A1+B1+C1) Reporting Period
(A2+B2+C2)
Total Balance of
Total Amount of Guarantees Guarantees Actually
Approved by the End of the 285,000 Paid at the End of the 90,609.88
Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Total Amount of Actual Guarantees (A4+B4+C4)
8.13%
as a Percentage of the Company's Net Assets
Of which：
Balance of Debt Guarantees Directly or Indirectly
Offered to Guaranteed Objects with Asset-liability 29,328.22
Ratio Exceeding 70% (E)
Total Amount of the Above Three Guarantees
29,328.22
(D+E+F)
100
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
3. Entrusting others to manage cash assets
(1) Entrusted financing
√Applicable □ Not applicable
Entrusted financing during the reporting period
Unit: RMB in 10 thousand
Accrued impairment
amount of overdue
Balance before Overdue uncollected
Specific type Capital source Amount unrecovered
maturity amount
financial
management
Bank financial
Own funds 70,048.5 10,824
products
Bank financial
Raised funds 5,000 0
products
Total 75,048.5 10,824
101
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Details of high-risk entrusted financial management with large single amount, low security or poor liquidity
√Applicable □ Not applicable
Future
Actual
Amount entruste
Referen Actual recover Event
of Throug d
Determi ce profit y of overvie
Type Termina Capital Expecte provisio h legal financia
Name of Product Amoun Capital Start nation annualiz and loss profit w and
of tion investm d return n for procedu l
trustee type t source date of ed rate in the and loss relevant
trustee date ent (if any) impair res or manage
return of reportin in the index
ment (if not ment
return g period reportin (if any)
any) plan or
g period
not
Industrial Legal Floating
and person income
Commerci "Tianlibao Decemb Februar without
Own
al Bank of Bank " net 20,000 er 30, y 19, guarant 2.62% 7.19 7.19 Yes -
funds
China worth 2020 2021 ee of
Xinchang financial principa
sub branch products l
"E-SMAR
Industrial T" net Floating
and worth income
Commerci legal Decemb without
Own January
al Bank of Bank person 5,000 er 31, guarant 3.03% 1.66 1.66 Yes -
funds 4, 2021
China RMB 2020 ee of
Xinchang financial principa
sub branch products l
without
102
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
fixed term
Bank of
communic
ations
Yuntong
Bank of wealth Floating
Communi fixed-term income
cations structured Februar with
Own April 9,
Co., Ltd. Bank deposit 10,000 y 10, guarant 3.50% 85.34 80.51 Yes -
funds 2021
Shaoxing for 89 2021 ee of
Xinchang days principa
sub branch (linked l
exchange
rate
appreciati
on)
structured
deposits
with
Guarantee Floating
of RMB income
BNP
Principal August with
Paribas Own June 29, 1,695.5 1,599.5
Bank and daily 10,000 26, guarant 3.80% Yes -
Shanghai funds 2021 7 9
interest in 2021 ee of
Branch
the range principa
of the l
euro
against
the US
103
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
dollar
China
Constructi
on Bank Floating
China Zhejiang income
Constructi Branch Decemb with
Own July 2,
on Bank Bank customize 20，000 er 31, guarant 3.80% 341.48 322.15 Yes -
funds 2021
Xinchang d unit 2021 ee of
sub branch structured principa
deposit l
No. 302 in
2021
China
Constructi
on Bank Floating
China Zhejiang income
Constructi Branch with
Own July 2, June 30,
on Bank Bank customize 10,000 guarant 3.80% Yes -
funds 2021 2022
Xinchang d unit ee of
sub branch structured principa
deposit l
No. 303 in
2021
Floating
Bank of income
Septem Decemb
Hangzhou Ji Tianyi Own without
Bank 5,000 ber 15, er 15, 3.80% 53.98 53.98 Yes -
Xinchang No. 1904 funds guarant
2021 2021
sub branch ee of
principa
104
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
l
Floating
income
Bank of
Septem Decemb without
Hangzhou Ji Tianyi Own
Bank 5,000 ber 15, er 15, guarant 3.80% 53.98 53.98 Yes -
Xinchang No. 1904 funds
2021 2021 ee of
sub branch
principa
l
Guangzho
Floating
u
income
Developm
October January with
ent Bank Xinjiaxin Own
Bank 9,500 22, 22, guarant 3.30% 78.16 73.74 Yes -
Hangzhou No. 16 funds
2020 2021 ee of
Xiaoshan
principa
sub
l
branch
Floating
Hang income
Seng October January with
Heng Own
Bank Bank 5,000 23, 22, guarant 3.35% 42.34 39.94 Yes -
Huiying funds
Hangzhou 2020 2021 ee of
Branch principa
l
Income
China
with
CITIC Decemb Februar
Structured Own guarant
Bank Bank 5,000 er 31, y 1, 3.55% 16.05 15.14 Yes -
deposit funds ee of
Hangzhou 2020 2021
principa
Branch
l
105
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
104,50 2,375.7
Total
0 5
Note: The accumulated financial management is 1.595 billion yuan during the reporting period. The above mentioned are the specific circumstances of the single
significant financial management (single amount of more than 50 million yuan)
The principal of entrusted financial management is expected uncollectible or there are other situations that may lead to impairment
□ Applicable √ Not applicable
106
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
(2) Entrusted loans
□ Applicable √ Not applicable
No such case in the reporting period.
4. Significant contracts in operation
□ Applicable √ Not applicable
No such case in the reporting period.
XVI. Other Significant Events
√Applicable □ Not applicable
1. Issuance of convertible bond
The 17th interim meeting of the sixth board of directors of the Company approved the Proposal on further
clarifying the specific plan of the company's public issuance of convertible corporate bonds, the Proposal on the
listing of convertible corporate bonds and other relevant proposals. On June 1, 2021, the Company issued
convertible bonds, and the original shareholders applied online on the priority placement date. On June 7, the
raised funds were transferred to the Company's account, and the bond registration was completed in Shenzhen
Branch of China Securities Depository and Clearing Corporation on June 11. With the approval of Shenzhen
Stock Exchange, Sanhua convertible bonds were listed and traded on June 30, 2021. The securities are referred to
as "Sanhua convertible bonds", the securities code is "127036", and the number of listed bonds is 30 million.
From December 7, 2021, "Sanhua convertible bonds" started the stock conversion period. See the relevant
announcement disclosed on CNINFO for details.
By the end of the reporting period, "Sanhua convertible bonds" had decreased by 532,100 yuan (5,321 pieces) due
to share conversion, and the number of shares converted was 24,610.
2. Repurchase of shares of the Company
July 16, 2021, the 20th extraordinary meeting of the 6th board of directors deliberated and approved the Proposal
on share repurchase scheme of the Company, which agreed the Company to buy back part of the Company’s
shares through centralized bidding through the secondary market with its own funds for subsequent
implementation of equity incentive or employee stock ownership plan. The total capital of this repurchase shall
not be less than 200 million yuan and not more than 400 million yuan, the repurchase price shall not exceed 30.00
yuan / share, and the repurchase period shall be within 12 months from the date approved by the board of directors
of the Company. See the relevant announcement disclosed by the Company on CNINFO for details.
By the end of the reporting period, the number of shares repurchased by the Company through the special
securities account for stock repurchase through centralized bidding transaction was 8,293,764 shares, accounting
for 0.23% of the Company's current total share capital. The highest transaction price was 27.31 yuan / share, the
lowest transaction price was 22.55 yuan / share, and the total value of was 200,011,001.49 yuan (excluding
transaction costs).
107
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
XVII. Significant Events of the Company’s Subsidiaries
□ Applicable √ Not applicable
108
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: Share
Before the change Changes in the period (+, -) After the change
Share
New transferred
Bonus
Shares Ratio Shares from Others Sub-total Shares Ratio
share
Issued capital
reserve
1. Shares subject to 61,268,30 -10,918,14 -10,918,14 50,350,16
1.71% 1.40%
conditional restriction(s) 5 4 4 1
1) Shares held by states
2) Shared held by
state-owned enterprises
60,838,00 -10,765,39 -10,765,39 50,072,61
3) Other domestic shares 1.70% 1.39%
5 4 4 1
Of which: Shares held by
domestic legal person
Shares held by domestic 60,838,00 -10,765,39 -10,765,39 50,072,61
1.70% 1.39%
natural person 5 4 4 1
4) Foreign shares 430,300 0.01% -152,750 -152,750 277,550 0.01%
Shares held by foreign
430,300 0.01% -152,750 -152,750 277,550 0.01%
natural person
2. Shares without 3,530,333, 10,567,96 10,567,96 3,540,901
98.29% 98.60%
restriction 163 4 4 ,127
3,530,333, 10,567,96 10,567,96 3,540,901
1) RMB common shares 98.29% 98.60%
163 4 4 ,127
3,591,601, 3,591,251
3. Total 100.00% -350,180 -350,180 100.00%
468 ,288
Reason for the changes in share capital
√ Applicable □ Not applicable
1. At the beginning of each year, the number of locked shares of the executives is re-calculated according to 75% of
the total number of shares held by the executives.
2. The Company repurchased and cancelled 374,790 restricted shares held by unqualified incentive objects. After
109
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
this, the total share capital of the Company was reduced from 3,591,601,468 shares to 3,591,226,678 shares.
3. On June 18, 2021, the first phase of the restricted stock incentive plan in 2020 matured, and 4.5961 million
restricted shares of 883 incentive objects meeting the conditions were listed for circulation.
4. On November 8, 2021, the third phase of the restricted stock incentive plan in 2018 matured, and 6.4659
million restricted shares of 676 incentive objects meeting the conditions were listed for circulation.
5. From December 7, 2021 to December 31, 2021, "Sanhua convertible bonds" decreased by RMB 532,100 (5,321
pieces) due to share conversion, and the number of converted shares was 24,610.
Approval for changes in share capital
√ Applicable □ Not applicable
1. On June 8, 2021, the 18th interim meeting of the sixth board of directors and the 16th interim meeting of the
sixth board of supervisors deliberated and approved the Proposal on adjusting the repurchase price of restricted
stock incentive plan in 2020 and Proposal on the achievement of lifting of restrictions in the first vesting period of
the restricted stock incentive plan in 2020. There were 883 incentive objects eligible for unlocking, and the
number of released shares was 4.5961 million shares.
2. On June 24, 2021, the second extraordinary general meeting of shareholders in 2021 deliberated and approved
the Proposal on repurchase and cancellation of partial restricted shares. The Company repurchased and cancelled
374,790 shares held by the incentive objects that are not qualified for unlocking. After completion of repurchase
and cancellation, the total number of shares of the Company was reduced from 3,591,601,468 to 3,591,226,678.
3. On October 25, 2021, the 22th interim meeting of the sixth board of directors and the 21th interim meeting of
the sixth board of supervisors deliberated and approved the Proposal on the achievement of lifting of restrictions
in the third vesting period of the restricted stock incentive plan in 2018. There were 676 incentive objects eligible
for unlocking, and the number of released shares was 6.4659 million shares.
4. On May 27, 2021, the 17th interim meeting of the sixth board of directors and the 15th interim meeting of the
sixth board of supervisors deliberated and approved the Proposal on further clarifying the specific scheme of the
Company's public issuance of convertible corporate bonds and Proposal on public issuance and listing of
convertible corporate bonds. The term of converting is from the first trading day (December 7, 2021) which is six
months after June 7, 2021, to the maturity date of convertible bonds (May 31, 2027).
Transfer of shares
√ Applicable □ Not applicable
The Company repurchased 374,790 shares that were not qualified for unlocking. After cancellation, its share
capital was reduced from 3,591,601,468 to 3,591,226,678.
Effects of changes in share capital on the basic earnings per share ("EPS"), diluted EPS, net assets per
share attributable to common shareholders of the Company, and other financial indexes over the last year
and last period
√Applicable □Not applicable
Please refer to the financial report for details.
110
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Other contents that the Company considers necessary or required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
Opening balance Closing balance
Name of Vested in current Unlock shares in Note for Date of
of restricted of restricted
shareholder period current period restricted shares unlocking
shares shares
Comply with the Comply with the
relevant relevant
Zhang Yabo 39,023,400 39,023,400 provisions of provisions of
executives shares executives shares
management management
Comply with Comply with
relevant relevant
provisions of provisions of
Wang Dayong 197,600 5,038 192,562 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Ni Xiaoming 197,600 5,038 192,562 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Chen Yuzhong 197,600 5,038 192,562 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Hu Kaicheng 197,600 5,038 192,562
equity incentive equity incentive
and executive and executive
shares shares
111
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
management. management.
Comply with Comply with
relevant relevant
provisions of provisions of
Yu Yingkui 221,080 5,038 216,042 equity incentive equity incentive
and executive and executive
shares shares
management. management.
Comply with Comply with
relevant relevant
Mo Yang 0 10,926 10,926 provisions of provisions of
executive shares executive shares
management. management.
Comply with Comply with
relevant relevant
Chen Xiaoming 8,325 8,325 provisions of provisions of
executive shares executive shares
management. management.
Comply with Comply with
Other incentive relevant relevant
21,225,100 10,903,880 10,321,220
objects provisions of provisions of
equity incentive equity incentive
Total 61,268,305 0 10,929,070 50,350,161 -- --
II. Issuance and Listing of Securities
1. Securities (exclude preferred share) issued during the reporting period
□ Applicable √ Not applicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
√Applicable □ Not applicable
1. On June 24, 2021, the second extraordinary general meeting of shareholders in 2021 deliberated and approved
the Proposal on repurchase and cancellation of partial restricted shares. The Company repurchased and cancelled
374,790 shares held by the incentive objects that are not qualified for unlocking. After completion of repurchase
and cancellation, the total number of shares of the Company was reduced from 3,591,601,468 to 3,591,226,678.
2. The convertible bonds issued by the Company entered the stock conversion period from December 7, 2021. By
the end of the reporting period, the "Sanhua convertible bonds" decreased by RMB 532,100 (5,321 pieces) due to
the stock conversion, and the number of shares converted was 24,610 shares. As of December 31, 2021, the total
number of shares of the Company is 3,591,251,288.
112
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
3. Existent shares held by internal staff of the Company
□ Applicable √ Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: Share
Total number of
Total Number of
preferred
Total number of Preferred
shareholders (if
Total Number common Shareholders (If
any) (refer to
of Common shareholders at Any) (Refer to
Note 8) with
Shareholders at the end of Note 8) Whose
61,484 84,905 0 resumed voting 0
the End of the previous month Voting Rights
rights at the end
Reporting before the Have Been
of previous
Period disclosure date of Recovered at the
month before the
the annual report End of the
disclosure date of
Reporting Period
the annual report
Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them
The Pledged or frozen
The
Total number
Increase/ number of
shares of
Share-hol decrease shares
held at common
Name of Nature of ding during held
the end of shares
shareholder shareholder percentag the without Status Amount
the held with
e (%) reporting trading
reporting trading
period restriction
period restriction
s
s
Domestic
Sanhua Holding 1,057,245 -12,291,8 1,057,245,
non-state-owned 29.44% Pledged 228,128,169
Group Co., Ltd. ,749 31 749
corporation
Hong Kong
Overseas 814,597,4 529,424,3 814,597,4
Central Clearing 22.68%
corporation 54 39 54
Limited
Zhejiang Sanhua Domestic
742,747,9 742,747,9
Lvneng Industrial non-state-owned 20.68% 0
54 54
Group Co., Ltd corporation
Domestic 52,031,20 39,023,40 13,007,80
Zhang Yabo 1.45% 0
Individual 0 0 0
Abu Dhabi Overseas 0.67% 24,163,56 4,834,679 24,163,56
113
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Investment corporation 0 0
Authority
Wanjin Global
Hong Kong
Overseas 22,320,06 22,320,06 22,320,06
Limited - Wanjin 0.62%
corporation 22 2
Global Equity
Fund
China Construction
Bank Corporation -
Bocom Schroder 20,477,02 -11,499,3 20,477,02
Others 0.57%
Alpha Core Hybrid 0 03 0
Securities
Investment Fund
Bank of China
Limited - E Fund
Strategic Emerging 20,180,19 20,180,19 20,180,19
Others 0.56%
Industry Equity 55 5
Securities
Investment Fund
Industrial and
Commercial Bank
of China Limited -
Bocom Schroeder
19,400,73 -3,445,66 19,400,73
Advantageous Others 0.54%
54 5
Industries Flexible
Allocation Hybrid
Securities
Investment Funds
Industrial and
Commercial Bank
of China Limited -
E Fund Emerging 19,294,75 -11,441,8 19,294,75
Others 0.54%
Growth Flexible 4 10 4
Allocation Hybrid
Securities
Investment Fund
Information about Strategic Investors’
or General Legal Persons’ Becoming
Top Ten Common Shareholders for No
Placement of New Shares (If Any)
(Refer to Note 3)
Explanation on Associated Among the above shareholders, Sanhua Holding Group Co., Ltd., Zhejiang Sanhua Lvneng
114
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Relationship or Concerted Actions Industrial Group Co., Ltd. and Zhang Yabo are the persons acting in concert. The Company
among the Above-Mentioned does not know whether there is any related relationship between other shareholders, or
Shareholders whether they belong to the persons acting in concert stipulated in the Administrative
Measures for the Acquisition of Listed Companies.
Particulars about Shares Held by Top Ten Common Shareholders Holding Shares That Are Not Subject to Trading Restrictions
Number of Common Shares Held without Restrictions Type of shares
Name of Shareholder
at the End of the Reporting Period Type Amount
RMB common
Sanhua Holding Group Co., Ltd. 1,057,245,749 1,057,245,749
stock
RMB common
Hong Kong Central Clearing Limited 814,597,454 814,597,454
stock
Zhejiang Sanhua Lvneng Industrial RMB common
742,747,954 742,747,954
Group Co., Ltd stock
RMB common
Abu Dhabi Investment Authority 24,163,560 24,163,560
stock
Wanjin Global Hong Kong Limited - RMB common
22,320,062 22,320,062
Wanjin Global Equity Fund stock
China Construction Bank Corporation
RMB common
- Bocom Schroder Alpha Core Hybrid 20,477,020 20,477,020
stock
Securities Investment Fund
Bank of China Limited - E Fund
RMB common
Strategic Emerging Industry Equity 20,180,195 20,180,195
stock
Securities Investment Fund
Industrial and Commercial Bank of
China Limited - Bocom Schroeder
RMB common
Advantageous Industries Flexible 19,400,735 19,400,735
stock
Allocation Hybrid Securities
Investment Funds
Industrial and Commercial Bank of
China Limited - E Fund Emerging RMB common
19,294,754 19,294,754
Growth Flexible Allocation Hybrid stock
Securities Investment Fund
China Merchants Bank Co., Ltd. - E
RMB common
Fund Innovative Growth Hybrid 16,585,154 16,585,154
stock
Securities Investment Fund
Explanation of Associated Among the above shareholders, Sanhua Holding Group Co., Ltd.and Zhejiang Sanhua
Relationship or Concerted Actions Lvneng Industrial Group Co., Ltd. are the persons acting in concert. The Company does not
among Top Ten Common know whether there is any related relationship between other shareholders, or whether they
Shareholders without Trading belong to the persons acting in concert stipulated in the Administrative Measures for the
Restrictions, and among Top Ten Acquisition of Listed Companies.
115
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Common Shareholders without
Trading Restrictions and Top Ten
Common Shareholders
Explanation of Top Ten Common
Shareholders’ Participation in
No
Securities Margin Trading (If Any)
(Refer to Note 4)
Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducted any
agreed buy-back in the reporting period?
□ Applicable √ Not applicable
No such cases during the current reporting period.
2. Particulars about controlling shareholder of the Company
Nature of the controlling shareholder: Domestic non-state-owned corporation
Type of the actual controller: Corporation
Name of controlling Legal Representative
Date of establishment Organization code Business scope
shareholder /People in charge
Industrial investment;
Manufacturing and sales:
General parts, electronic
products; sales: metal
materials (excluding
precious and rare metals),
chemical raw materials
(except dangerous
chemicals and precursor
chemicals), rubber; export
of products and related
technologies produced by
Sanhua Holding Group Co.,
Zhang Daocai July 11, 2000 911330624720002522J the enterprise and its
Ltd
member enterprises. It is
engaged in the export
business of raw and
auxiliary materials,
machinery and equipment,
instruments and meters,
spare parts and related
technologies needed by the
enterprise and its member
enterprises for production
and scientific research; it is
engaged in the processing
116
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
of imported materials and
the business of "three
supplies and one
supplement". Technical
consultation, technical
service, financial
consultation and investment
consultation. (In terms of
projects subject to approval
according to law, business
activities can be carried out
only after approval by
relevant departments.)
Shares held by the controlling
shareholder in other foreign
listed companies through N/A
controlling or holding during
the reporting period
Change of the controlling shareholder during the reporting period
□ Applicable √ Not applicable
The Company's controlling shareholder has not changed during the reporting period.
3. Particulars about the Company’s actual controller & concerted parties
Nature of the actual controller: Domestic natural person
Type of the actual controller: Natural person
Name of the actual Relationship with the Whether he/she has obtained the right of
Nationality
controller actual controller residence in another country or region
Zhang Daocai Himself China No
Zhang Yabo Himself China No
Zhang Shaobo Himself China No
Mr. Zhang Daocai: Chinese nationality, born in 1950, senior economist, and special
supervisor of MBA graduate student of Zhejiang University. He is honorary chairman of the
Company and chairman of the board of directors of Sanhua Holding Group Co., Ltd. He was
elected as the representative of the 8th, 9th, 10th, 11th and 12th National People's Congress
of Zhejiang Province and vice president of the China Enterprise Federation and the Chinese
Main occupation and position Entrepreneurs Association. Vice president of Zhejiang small and medium sized Enterprises
Association, vice president of Zhejiang Business Management Research Association and vice
president of Asia Pacific Chinese Leaders Association, and won the National Labor Medal of
May 1st, national excellent entrepreneur, master of Chinese management, most creative
Chinese business leader in Asia Pacific, Model worker of Zhejiang Province, meritorious
entrepreneur of implementing the "eight eight strategy" in Zhejiang Province, lifelong leader
117
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
entrepreneur of Zhejiang Province, leading figures of Zhejiang Manufacturing and other
honors.
Mr. Zhang Yabo: Chinese nationality, CPC member, born in 1974, graduated from Shanghai
Jiaotong University, received a master's degree in Business Administration from CEIBS. At
present, he is the chairman of the board of the Company, Secretary of the Party committee of
Sanhua holding group, vice chairman and director of the board of Sanhua Holding Group
Co., Ltd. He has successively won Zhejiang outstanding young private entrepreneurs,
Zhejiang operation and management masters, Senior economist, Shaoxing labor model,
Shaoxing top ten outstanding young people, Shaoxing mayor award, Changjiang River Delta
top ten outstanding young businessmen, Fengyun Zhejiang businessmen, Zhejiang
outstanding entrepreneurs, glorious Zhejiang businessman, etc. He served as member of the
12th Zhejiang Provincial Committee of the Chinese people's Political Consultative
Conference, deputy to the 5th, 6th and 7th Shaoxing people's Congress, vice chairman of
Zhejiang Youth Federation, President of Zhejiang Youth Entrepreneurs Association, and
Director of China Youth Entrepreneurs Association.
Mr. Zhang Shaobo: Chinese nationality, born in 1979, master's degree, graduated from
CEIBS. He serves as a director of the Company, director of Sanhua Holding Group Co., Ltd.,
CEO of Hangzhou Sanhua International Building Co., Ltd., and executive director and CEO
of Zhejiang Sanhua Zhicheng Real Estate Development Co., Ltd.
Domestic and foreign listed
companies controlled in the past 10 N/A
years
Change of the actual controller during the reporting period
□ Applicable √ Not applicable
No such change during the reporting period.
The ownership and controlling relationship between the actual controller and the Company is detailed as follows:
118
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
22% Zhang Daocai Yu Qingjuan 21%
Zhang Yabo Zhang Shaobo
51% 6%
39.95% Xinchang Huaqing Investment Co., Ltd 37.04%
10.04%
Xinchang Huaxin Investment Co., Ltd Zhejiang Huateng Industrial Co., Ltd
.08%
12.00% 28.77% 9.04%
11.78% Sanhua Holding Group Co., Ltd
100%
1.45%
Hong Kong Haoyide International Limited
62.11%
100%
Fuxun Co., Ltd
37.89%
29.44%
Zhejiang Sanhua lvneng Industrial Group Co., Ltd
20.68%
Zhejiang Sanhua Intelligent Controls Co., Ltd
浙江三花智能控制股份有限公司
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. The cumulative number of Pledged Shares of the Company's controlling shareholder or the largest
shareholder and its concerted actors accounts for 80% of the Company's shares
√ Applicable □ Not applicable
119
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
5. Particulars about other corporate shareholders with shareholding proportion over 10%
√ Applicable □ Not applicable
Date of
Name of corporate shareholder Legal representative Registered capital Main business
incorporation
Manufacturing and sales: air
suspension assembly,
general equipment,
electromechanical
equipment, technology
development, technical
service, technical
consultation, achievement
transfer: electromechanical
technology, environmental
protection technology,
biotechnology (except for
human stem cells, gene
diagnosis and treatment
technology development
and application); electronic
and electrical products,
metal materials (excluding
precious metals), chemical
Zhejiang Sanhua Lvneng September 30,
Zhang Shaobo 483 million yuan raw materials (except
Industrial Group Co., Ltd 2001
chemical dangerous goods
and precursor chemicals)
Wholesale, retail and import
and export business of gold
and silver jewelry, rubber,
mineral products, machinery
and equipment, instruments
and accessories; services:
enterprise management
consulting, property
management (operating by
qualification certificate),
self-owned house leasing,
industrial investment
management, consulting
management (except for
securities and goods,
without approval of
financial supervision
120
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
departments, shall not
engage in deposit, financing
guarantee, agency for public
financing Financial services
such as customer finance),
power supply, development
and construction of
distributed solar energy
projects, and contract
energy management.
(Except for those involving
the implementation of
special management
measures for access
stipulated by the state). (In
terms of projects subject to
approval according to law,
business activities can be
carried out only after
approval by relevant
departments.)
6. Particulars on shareholding decrease restrictions for the controlling shareholders, actual controller,
restructurer or other committing parties
□ Applicable √ Not applicable
IV. Information about the implementation of share repurchase during the reporting
period
Information about the implementation of share repurchase
√Applicable □Not applicable
Proportion of
Number of Proportion in Proposed Quantity repurchased
Scheme Period to be Repurchase
shares to be total share repurchase repurchased shares in equity
disclosure date repurchased purpose
repurchased capital amount (shares) incentive plan
shares (if any)
For equity
200 million incentive plan
July 17, 2021 -
July 17, 2021 6,666,666-13,3 0.19%-0.37% yuan - 400 or employee 8,293,764
July 16, 2022
33,333 million yuan stock
ownership plan
The progress on reduction of re-purchase shares by means of centralized bidding
121
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
□Applicable √Not applicable
122
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section VIII Information of Preferred Shares
□ Applicable √ Not applicable
No existed preferred shares for the Company during the current reporting period.
123
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section IX Bonds
√Applicable □ Not applicable
I. Enterprise bond (hereinafter referred to as the bond issued by domestic state-owned
entity)
□ Applicable √ Not applicable
II. Corporate bond
□ Applicable √ Not applicable
III. Debt financing instruments of non-financial enterprises
□ Applicable √ Not applicable
IV. Convertible bond
√ Applicable □ Not applicable
1. Previous Adjustments of Stock Conversion Price
□ Applicable √ Not applicable
2. Share Conversions (Accumulative)
√Applicable □ Not applicable
Proportion of
the number
Proportion of
of converted
Cumulative the amount of
Cumulative shares to the Amount of
Abbreviation Total issued number of non-converte
Period of Total issued amount of total issued shares not yet
of convertible amount converted d shares in
conversion amount converted shares of the converted
bonds (piece) shares the total
shares (yuan) Company (yuan)
(shares) amount of
before the
issuance
date of
conversion
Sanhua December 7,
3,000,000,00 2,999,467,90
convertible 2021 to May 30,000,000 532,100.00 24,610 0.00% 99.98%
0.00 0.00
bond 31, 2027
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
3. Top 10 Holders of the Convertible Bond
Unit: share
Number of Amount of
Proportion of
Nature of convertible bonds convertible bonds
convertible bonds
Name of convertible bond holder convertible bond held at the end of the held at the end of the
held at the end of the
holders reporting period reporting period
reporting period
(share) (yuan)
Domestic
1 Sanhua Holding Group Co., Ltd. non-state-owned 8,854,432 885,443,200.00 29.52%
corporation
Domestic
Zhejiang Sanhua Lvneng Industrial
2 non-state-owned 6,220,514 622,051,400.00 20.74%
Group Co., Ltd
corporation
Industrial and Commercial Bank of
3 China Limited - Boshi credit bond Others 800,055 80,005,500.00 2.67%
investment fund
Industrial and Commercial Bank of
China Limited huitianfu
4 Others 519,001 51,900,100.00 1.73%
convertible bond securities
investment fund
Kunlun Health Insurance Co., Ltd.
5 Others 489,988 48,998,800.00 1.63%
- traditional insurance products 1
Industrial Bank Co., Ltd. - Zhuque
6 Anxin bond securities investment Others 367,094 36,709,400.00 1.22%
fund
Domestic
7 Zhongtai Securities Co., Ltd state-owned 301,134 30,113,400.00 1.00%
corporation
Agricultural Bank of China
8 Limited - Penghua convertible Others 289,071 28,907,100.00 0.96%
bond securities investment fund
Zhongtai Securities Asset
Management - Bank of Gansu
"HuiFu" series financial product
9 Others 235,119 23,511,900.00 0.78%
plan - Qilu asset management 0006
directional asset management
contract
Zhejiang Jing'an Investment
10 Management Co., Ltd. - Jing'an Others 217,759 21,775,900.00 0.73%
Mingyuan private equity securities
125
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
investment fund
4. The Profitability, Asset and Credit Status of the Guarantor Have Changed Significantly
□ Applicable √ Not applicable
5. By the end of the reporting period, the Company's liabilities, credit changes and cash arrangements for
debt repayment in future
During the reporting period, CSCI Pengyuan issued the Tracking rating report on the public issuance of
convertible corporate bonds by Zhejiang Sanhua Intelligent Controls Co., Ltd. in 2021 on June 29, 2021,
according to which the credit rating of Sanhua convertible bonds remains AA +, the Company's credit rating
remains AA +, and the rating outlook remains stable. The result of this rating has not changed compared with the
last one.
Please refer “VIII. Main accounting data and financial indicators” under “Section IX Bond” for more details.
V. The loss within the scope of consolidated statements in the reporting period exceeded
10% of the net assets at the end of the previous year
□ Applicable √ Not applicable
VI. Overdue interest bearing debts other than bonds by the end of this reporting period
□ Applicable √ Not applicable
VII. Whether there is any violation of rules or regulations during the reporting period
□ Applicable √ Not applicable
VIII. Main accounting data and financial indicators of the Company in recent two years by
the end of the reporting period
Unit: RMB in 10 thousand
At the end of the reporting
Item At the end of last year YoY Change (%)
period
Current ratio 1.98 2.45 -19.18%
Asset liability ratio 52.36% 40.39% 11.97%
Quick ratio 1.55 1.96 -20.92%
Corresponding Period of Last
Current Reporting Period YoY Change (%)
Year
Net profit after deducting
148,749.13 127,060.97 17.07%
non-recurring profit and loss
126
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
EBITDA total debt ratio 33.77% 61.44% -27.67%
Time interest earned ratio 15.08 27.14 -44.44%
Cash interest guarantee times 20.99 33.76 -37.83%
EBITDA Time interest earned
18.88 33.7 -43.98%
ratio
Repayment of debt (%) 100.00% 100.00%
Payment of interest (%) 100.00% 100.00%
127
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Section X Financial Report
I. Audit report
Type of audit opinion Standard Unqualified opinion
Date of signing of audit report March 23, 2022
Name of audit firm Pan-China Certified Public Accountants LLP
Document number of audit report PCCPAAR [2022] No. 1208
Name of the certified accountants Luo Xunchao , Zhang Xin
Auditor’s Report
To the Shareholders of Zhejiang Sanhua Intelligent Controls Co., Ltd.:
1. Audit Opinion
We have audited the accompanying financial statements of Zhejiang Sanhua Intelligent Controls Co., Ltd.
(the “Company”), which comprise the consolidated and parent company balance sheets as at December 31, 2021,
the consolidated and parent company income statements, the consolidated and parent company cash flow
statements, and the consolidated and parent company statements of changes in equity for the year then ended, as
well as notes to financial statements.
In our opinion, the attached financial statements present fairly, in all material respects, the financial position
of the Company as at December 31, 2021, and of its financial performance and its cash flows for the year then
ended in accordance with China Accounting Standards for Business Enterprises.
2. Basis for Audit Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those
standards are further described in the Certified Public Accountant’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled other ethical responsibilities. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
3. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not express a separate opinion on
these matters.
(I) Revenue recognition
1. Matters description
Please refer to section Ⅲ (24), Ⅴ (2) 1and XIV (1) of the notes to the financial statements for details.
The majority of the Company's revenue comes from controlling components and components for home
appliances and automobiles. In 2021, the amount of operating income of the Company is RMB 16.02081 billion.
As operating revenue is one of the key performance indicators of the Company, there might be inherent risks that
128
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
the Company’s management (the “Management”) adopts inappropriate revenue recognition to achieve specific
goals or expectations, we have identified revenue recognition as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition, assessed the design
of these controls, determined whether they had been executed, and tested the effectiveness of the operation;
(2) We checked sale contracts, obtained understandings of main contractual terms or conditions, and
assessed whether the revenue recognition method was appropriate;
(3) We performed analysis procedure on operating revenue, so as to identify whether there are significant or
abnormal fluctuations and implemented the rationality of such fluctuations;
(4)We implemented detail test and checked supporting documents related to revenue recognition by
sampling method, including sales contracts, sales invoices, sales collection, delivery lists, shipping documents,
client acceptance receipts, export declaration，lading bill, we obtained information from E-port and compared with
accounting records of export revenue；
(5) We performed confirmation procedures on current sales amount by sampling method in combination
with confirmation procedure of accounts receivable;
(6) We inquired the industrial and commercial registration information or public information of major
customers to evaluate whether the business logic related to sales transactions is tenable;
(7) We implemented cut-off tests on the operating revenue recognized before and after the balance sheet date
to evaluate whether the operating revenue is recognized in an appropriate period;
(8) We checked whether information related to operating revenue had been presented appropriately in the
financial statements.
(II) Impairment of accounts receivable
1. Matters description
Please refer to section Ⅲ (9) and Ⅴ (1) 5 of the notes to the financial statements for details.
As of December 31, 2021, the book balance of the Company's accounts receivable amounted to RMB
3.70369 billion, with provision for bad debt was RMB 187.39 million.
As the amount of accounts receivable is significant and the impairment involves significant judgment of the
Management, we have identified impairment of accounts receivable as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of accounts receivable are as follows:
(1) We reviewed the accounts receivable with provision for bad debts made in previous periods for their
subsequent write-off or reversal, and assessed the accuracy of historical estimations made by the Management;
(2) We reviewed the consideration of the Management on credit risk assessment and objective evidence, and
assessed whether the credit risk features of accounts receivable had been appropriately identified by the
Management;
(3) For accounts receivable with expected credit losses measured on a collective basis, we assessed the
reasonableness of portfolio classification on the basis of credit risk features; we assessed the reasonableness of the
comparison table of ages and expected credit loss rate of accounts receivable prepared by the Management based
on the historical credit loss experience of portfolios with similar credit risk features and forward-looking
estimations; and reviewed whether the calculation of provision for bad debts was accurate;
(4) We checked the subsequent collection of accounts receivable and assessed the reasonableness of
provision for bad debts made by the Management;
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
4. Other Information
The Company’s management (the “Management”) is responsible for the other information. The other
information comprises the information included in the Company’s annual report, but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact. We have nothing to report in this regard.
5. Responsibilities of the Management and Those Charged with Governance for the Financial Statements
The Management is responsible for preparing and presenting fairly the financial statements in accordance
with China Accounting Standards for Business Enterprises, as well as designing, implementing and maintaining
internal control relevant to the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
6. Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with China Standards on Auditing will always detect a material misstatement when it exists.
Misstatement can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
We exercise professional judgment and maintain professional skepticism throughout the audit performed in
accordance with China Standards on Auditing. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Management.
(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
130
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Company to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain sole responsibility for our audit opinion.
We communicate with those charged with governance regarding the planned audit scope, time schedule and
significant audit findings, including any deficiencies in internal control of concern that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant
(Engagement Partner) Luo Xun chao
Hangzhou China Chinese Certified Public Accountant
Zhang Xin
Date of Report: March 23, 2022
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
II. Financial Statements
Units of financial reports in the notes: RMB
1. Consolidated balance sheet
Prepared by: Zhejiang Sanhua Intelligent Controls Co., Ltd.
December 31, 2021
Unit: RMB
Items December 31,2021 December 31,2020
Current asset：
Cash and Bank Balances 6,707,721,861.13 3,489,687,568.14
Settlement funds
Loans to other banks
Held-for-trading financial assets 109,383,374.74 752,224,861.78
Derivative financial assets 54,640,365.03 58,330,486.53
Notes receivable 2,144,193,032.32 2,323,934,781.53
Accounts receivable 3,516,292,868.39 2,355,613,299.57
Receivable financing
Advances paid 93,884,245.02 69,404,326.45
Premium receivable
Reinsurance accounts receivable
Reinsurance reserves receivable
Other receivables 121,135,343.85 76,935,495.05
Including: Interest receivable
Dividends receivable
Repurchasing of financial assets
Inventories 3,637,853,809.47 2,307,761,706.46
Contract assets
Assets held for sales
Non-current assets due within
one year
Other current assets 185,985,696.06 150,460,488.01
Total current assets 16,571,090,596.01 11,584,353,013.52
Non-current assets:
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Loans and advances paid
Debt investments
Other debt investments
Long-term receivable 3,608,561.00 2,074,750.00
Long-term equity investments 22,680,930.51 15,219,616.68
Other equity instrument
investments
Other non-current financial
assets
Investment property 8,531,303.62 10,067,588.96
Fixed assets 4,232,706,801.07 3,839,408,059.45
Construction in progress 1,343,528,875.40 628,730,529.07
Productive biological assets
Oil & gas assets
Right-of-use assets 215,324,024.26
Intangible assets 696,390,544.36 507,693,672.93
Development expenditures
Goodwill 7,591,830.61 31,959,091.60
Long-term prepayments 36,640,828.07 23,706,401.61
Deferred tax assets 153,262,506.84 137,808,879.28
Other non-current assets 328,609,958.16 251,509,127.08
Total non-current assets 7,048,876,163.90 5,448,177,716.66
Total assets 23,619,966,759.91 17,032,530,730.18
Current liabilities:
Short-term borrowings 738,190,910.54 383,088,296.60
Central bank loans
Loans from other banks
Held-for-trading financial
liabilities
Derivative financial liabilities 7,939,957.91
Notes payable 1,891,526,333.48 1,238,574,463.73
Accounts payable 3,214,698,131.59 2,279,661,755.97
Advances received 10,000,000.00
Contract liabilities 79,816,249.22 42,581,607.67
Selling of repurchased financial
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assets
Absorbing deposit and interbank
deposit
Deposit for agency security
transaction
Deposit for agency security
underwriting
Employee benefits payable 371,773,987.76 289,305,913.99
Taxes and rates payable 113,404,466.20 75,008,142.06
Other payables 172,923,251.10 270,888,400.58
Including: Interest Payable
Dividends Payable
Handling fee and commission
payable
Reinsurance accounts payable
Liabilities classified as held for
sale
Non-current liabilities due 1,763,342,887.58 130,553,923.87
within one year
Other current liabilities 5,276,677.78
Total current liabilities 8,350,952,895.25 4,727,602,462.38
Non-current liabilities:
Insurance policy reserve
Long-term borrowings 801,461,958.89 1,707,918,994.87
Bonds payable 2,652,035,619.50
Including: Preferred shares
Perpetual bonds
Lease liabilities 157,981,678.16
Long-term payables 90,336,083.27
Long-term employee benefits
payable
Provisions 2,638,000.00
Deferred income 156,831,834.71 140,105,336.43
Deferred tax liabilities 172,910,149.31 130,778,184.48
Other non-current liabilities 75,202,015.36 80,398,897.72
Total non-current liabilities 4,016,423,255.93 2,152,175,496.77
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Total liabilities 12,367,376,151.18 6,879,777,959.15
Equity:
Share capital 3,591,090,218.00 3,591,601,468.00
Other equity instruments 409,684,602.93
Including: Preferred shares
Perpetual bonds
Capital reserve 373,419,775.02 315,417,434.22
Less: Treasury shares 411,949,612.90 281,483,741.34
Other comprehensive income -129,410,847.39 -89,624,962.61
Special reserve
Surplus reserve 701,784,529.70 637,967,613.47
General risk reserve
Undistributed profit 6,615,689,606.07 5,890,916,707.83
Total equity attributable to the parent 11,150,308,271.43 10,064,794,519.57
Company
Non-controlling interest 102,282,337.30 87,958,251.46
Total equity 11,252,590,608.73 10,152,752,771.03
Total liabilities & equity 23,619,966,759.91 17,032,530,730.18
Legal representative：Zhang Yabo Officer in charge of accounting：Yu Yingkui Head of accounting department：Sheng Xiaofeng
2. Parent Company Balance Sheet
Unit: RMB
Items December 31,2021 December 31,2020
Current assets:
Cash and bank balances 3,392,202,314.60 1,848,930,095.07
Held-for-trading financial assets 101,020,675.59 323,000,000.00
Derivative financial assets 794,800.00 8,856,174.56
Notes receivable 1,081,856,992.97 773,393,944.74
Accounts receivable 575,659,433.91 729,906,676.91
Receivables financing
Advances paid 10,590,428.30 6,803,910.27
Other receivables 389,775,386.82 348,897,078.11
Including: Interest Receivable
Dividends Receivable 19,000,000.00
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Inventories 731,722,817.30 553,388,303.73
Contract assets
Assets classified as held for sale
Non-current assets due within
one year
Other current assets 46,083,837.26
Total current assets 6,283,622,849.49 4,639,260,020.65
Non-current assets:
Debt investments
Other debt investments
Long-term receivable
Long-term equity investments 6,428,786,880.28 4,528,546,229.37
Other equity instrument
investments
Other non-current financial assets
Investment property
Fixed assets 1,526,603,446.11 1,565,826,802.57
Construction in progress 73,592,261.61 71,862,243.72
Productive biological assets
Oil & gas assets
Right-of-use assets
Intangible assets 153,726,187.34 156,335,743.52
Development expenditures
Goodwill
Long-term prepayments 2,526,712.00
Deferred tax assets 27,736,717.51 7,336,345.87
Other non-current assets 42,826,333.80 36,566,524.79
Total non-current assets 8,255,798,538.65 6,366,473,889.84
Total assets 14,539,421,388.14 11,005,733,910.49
Current liabilities:
Short-term borrowings 20,012,527.78
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 588,779,423.55 381,631,833.96
Accounts payable 1,428,940,784.60 1,566,994,944.07
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Advances received
Contract liabilities 213,590.21 1,155,759.09
Employee benefits payable 107,620,422.34 93,150,785.46
Taxes and rates payable 20,645,647.29 10,811,341.50
Other payables 1,215,554,441.77 1,355,955,388.81
Including: interest payable
Dividends Payable
Liabilities classified as held for
sale
Non-current liabilities due within 1,431,477,411.53
one year
Other current liabilities
Total current liabilities 4,793,231,721.29 3,429,712,580.67
Non-current liabilities:
Long-term borrowings 800,824,388.89 1,381,428,522.65
Bonds payable 2,652,035,619.50
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions 2,638,000.00
Deferred income 35,807,671.23 35,908,399.54
Deferred tax liabilities 59,345,035.23 48,177,657.42
Other non-current liabilities
Total non-current liabilities 3,548,012,714.85 1,468,152,579.61
Total liabilities 8,341,244,436.14 4,897,865,160.28
Equity:
Share capital 3,591,090,218.00 3,591,601,468.00
Other equity instruments 409,684,602.93
Including: Preferred shares
Perpetual bonds
Capital reserve 1,267,607,857.61 1,198,721,706.52
Less: treasury shares 411,949,612.90 281,483,741.34
Other comprehensive income
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Special reserve
Surplus reserve 573,097,357.38 509,280,441.15
Undistributed profit 768,646,528.98 1,089,748,875.88
Total equity 6,198,176,952.00 6,107,868,750.21
Total liabilities & equity 14,539,421,388.14 11,005,733,910.49
3. Consolidated Income statement
Unit: RMB
Items Year2021 Year2020
I. Total operating revenue 16,020,809,805.52 12,109,833,368.44
Including: Operating revenue 16,020,809,805.52 12,109,833,368.44
Interest income
Premium earned
Revenue from handling charges and
commission
II. Total operating cost 14,151,191,300.33 10,592,665,388.40
Including: Operating cost 11,907,350,969.11 8,738,221,038.36
Interest expenses
Handling charges and commission
expenditures
Surrender value
Net payment of insurance claims
Net provision of insurance policy
reserve
Premium bonus expenditures
Reinsurance expenses
Taxes and surcharges 83,563,529.99 77,973,420.81
Selling expenses 449,226,532.55 365,125,043.08
Administrative expenses 875,802,861.33 764,084,428.88
R&D expenses 751,138,559.24 518,401,363.63
Financial expenses 84,108,848.11 128,860,093.64
Including: Interest expenses 146,890,397.95 64,733,993.15
Interest income 163,144,645.89 52,233,256.57
Add: Other income 122,787,760.00 151,555,896.45
Investment income (or less: 141,572,602.13 89,078,877.16
losses)
138
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Including: Investment income 7,011,313.83 2,199,442.47
from associates and joint ventures
Gains from derecognition of -1,533,698.47 -4,369,430.89
financial assets at amortized cost
Gains on foreign exchange (or
less: losses)
Gains on net exposure to
hedging risk (or less: losses)
Gains on changes in fair value 3,221,397.38 31,847,915.76
(or less: losses)
Credit impairment loss (or less: -56,834,285.92 -28,677,382.30
losses)
Assets impairment loss (or less: -93,213,670.21 -58,672,538.84
losses)
Gains on asset disposal (or less: -387,648.44 -486,378.33
losses)
III. Operating profit (or less: losses) 1,986,764,660.13 1,701,814,369.94
Add: Non-operating revenue 4,792,550.68 5,055,479.82
Less: Non-operating expenditures 14,928,195.40 14,843,633.18
IV. Profit before tax (or less: total loss) 1,976,629,015.41 1,692,026,216.58
Less: Income tax expense 271,804,477.77 218,702,864.60
V. Net profit (or less: net loss) 1,704,824,537.64 1,473,323,351.98
(I) Categorized by the continuity of
operations
1. Net profit from continuing 1,704,824,537.64 1,473,323,351.98
operations (or less: net loss)
2. Net profit from discontinued
operations (or less: net loss)
(II) Categorized by the portion of
equity ownership
1. Net profit attributable to owners 1,684,044,407.47 1,462,158,821.57
of parent Company (or less: net
loss)
2. Net profit attributable to 20,780,130.17 11,164,530.41
non-controlling shareholders (or
less: net loss)
VI. Other comprehensive income after -39,785,884.78 -50,292,214.11
tax
Items attributable to the owners of -39,785,884.78 -50,292,214.11
the parent Company
(I) Not to be reclassified subsequently
to profit or loss
1.Changes in remeasurement on the
net defined benefit plan
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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 -39,785,884.78 -50,292,214.11
profit or loss
1. Items under equity method that
may be reclassified to profit or loss
2. Changes in fair value of other
debt investments
3. Profit or loss from
reclassification of financial assets
into other comprehensive income
4. Provision for credit impairment
of other debt investments
5.Cash flow hedging reserve
6. Translation reserve -39,785,884.78 -50,292,214.11
7. Others
Items attributable to non-controlling
shareholders
VII. Total comprehensive income 1,665,038,652.86 1,423,031,137.87
Items attributable to the owners of 1,644,258,522.69 1,411,866,607.46
the parent Company
Items attributable to non-controlling 20,780,130.17 11,164,530.41
shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) 0.47 0.41
(II) Diluted EPS (yuan per share) 0.47 0.41
Legal representative：Zhang Yabo Officer in charge of accounting：Yu Yingkui Head of accounting department：Sheng Xiaofeng
4. Income statement of the Parent Company
Unit: RMB
Items Year2021 Year2020
I. Operating revenue 5,177,254,561.82 4,516,583,047.45
Less: Operating cost 3,999,539,505.73 3,406,241,334.71
Taxes and surcharges 32,253,209.34 27,452,644.93
Selling expenses 30,588,887.74 28,559,403.90
Administrative expenses 245,562,330.87 187,763,288.96
R&D expenses 243,661,101.29 188,357,821.51
140
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Financial expenses 65,705,083.81 85,010,110.29
Including: Interest expenses 131,726,916.21 41,141,318.78
Interest income 84,424,936.52 25,340,320.97
Add: Other income 37,994,497.58 62,733,688.49
Investment income (or less: 128,686,271.39 189,487,259.99
losses)
Including: Investment income 6,438,328.13 2,298,930.50
from associates and joint ventures
Gains from derecognition of
financial assets at amortized cost
Gains on net exposure to hedging
(or less: losses)
Gains on changes in fair value (or -4,340,698.97 4,086,324.56
less: losses)
Credit impairment loss (or less: -1,940,041.81 -631,899.35
losses)
Assets impairment loss (or less: -1,595,901.84 -1,496,468.86
losses)
Gains on asset disposal (or less: 140,600.00 70,090.31
losses)
II. Operating profit (or less: losses) 718,889,169.39 847,447,438.29
Add: Non-operating revenue 1,115,178.89 1,907,081.98
Less: Non-operating expenditures 2,008,942.30 8,389,545.94
III. Profit before tax (or less: total 717,995,405.98 840,964,974.33
loss)
Less: Income tax expense 79,826,243.65 60,255,033.57
IV. Net profit (or less: net loss) 638,169,162.33 780,709,940.76
(I) Net profit from continuing 638,169,162.33 780,709,940.76
operations (or less: net loss)
(II) Net profit from discontinued
operations (or less: net loss)
V. Other comprehensive income after
tax
(I) Not to be reclassified subsequently
to profit or loss
1.Changes in remeasurement on
the net defined benefit plan
2. Items under equity method that
will not be reclassified to profit or
loss
3. Changes in fair value of other
equity instrument investments
4. Changes in fair value of own
credit risk
5. Others
(II) To be reclassified subsequently to
profit or loss
1. Items under equity method that
may be reclassified to profit or
141
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
loss
2. Changes in fair value of other
debt investments
3. Profit or loss from
reclassification of financial assets
into other comprehensive income
4. Provision for credit impairment
of other debt investments
5. Cash flow hedging reserve
(profit or loss on cash flow
hedging)
6. Translation reserve
7. Others
VI. Total comprehensive income 638,169,162.33 780,709,940.76
VII. Earnings per share (EPS):
(I) Basic EPS (yuan per share)
(II) Diluted EPS (yuan per share)
5. Consolidated Cash Flow Statement
Unit: RMB
Items Year 2021 Year 2020
I. Cash flows from operating activities:
Cash receipts from sale of goods or 15,665,586,228.21 11,849,284,665.68
rendering of services
Net increase of client deposit and
interbank deposit
Net increase of central bank loans
Net increase of loans from other financial
institutions
Cash receipts from original insurance
contract premium
Net cash receipts from reinsurance
Net increase of policy-holder deposit and
investment
Cash receipts from interest, handling
charges and commission
Net increase of loans from others
Net increase of repurchase
Net cash receipts from agency security
transaction
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Receipts of tax refund 449,675,718.06 264,818,602.07
Other cash receipts related to operating 310,303,052.27 253,535,410.82
activities
Subtotal of cash inflows from operating 16,425,564,998.54 12,367,638,678.57
activities
Cash payments for goods purchased and 11,715,511,301.72 7,545,742,409.64
services received
Net increase of loans and advances to
clients
Net increase of central bank deposit and
interbank deposit
Cash payments for insurance indemnities
of original insurance contracts
Net increase of loans to others
Cash payments for interest, handling
charges and commission
Cash payments for policy bonus
Cash paid to and on behalf of employees 2,250,992,731.15 1,677,941,014.69
Cash payments for taxes and rates 421,980,964.22 363,999,449.11
Other cash payments related to operating 481,260,898.16 692,612,022.02
activities
Subtotal of cash outflows from operating 14,869,745,895.25 10,280,294,895.46
activities
Net cash flows from operating activities 1,555,819,103.29 2,087,343,783.11
II. Cash flows from investing activities:
Cash receipts from withdrawal of
investments
Cash receipts from investment income 17,973,512.65 49,339,043.29
Net cash receipts from the disposal of 24,621,563.92 18,788,012.61
fixed assets, intangible assets and other
long-term assets
Net cash receipts from the disposal of 290,189.18
subsidiaries & other business units
Other cash receipts related to investing 763,227,138.45 576,219,673.31
activities
Subtotal of cash inflows from investing 805,822,215.02 644,636,918.39
activities
Cash payments for the acquisition of 1,952,005,483.09 1,149,361,450.15
143
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
fixed assets, intangible assets and other
long-term assets
Cash payments for investments 1,950,000.00 1,250,000.00
Net increase of pledged borrowings
Net cash payments for the acquisition of 28,000,000.00
subsidiaries & other business units
Other cash payments related to investing 3,873,524,969.01 289,200,000.00
activities
Subtotal of cash outflows from investing 5,855,480,452.10 1,439,811,450.15
activities
Net cash flows from investing activities -5,049,658,237.08 -795,174,531.76
III. Cash flows from financing activities:
Cash receipts from absorbing 3,000,000.00 118,643,250.00
investments
Including: Cash received by subsidiaries
from non-controlling shareholders as
investments
Cash receipts from borrowings 4,374,592,836.66 2,020,339,244.88
Other cash receipts related to financing 53,683,640.26 24,534,300.14
activities
Subtotal of cash inflows from financing 4,431,276,476.92 2,163,516,795.02
activities
Cash payments for the repayment of 380,944,246.34 1,705,455,347.51
borrowings
Cash payments for distribution of 982,548,138.98 842,824,941.43
dividends or profits and for interest
expenses
Including: Cash paid by subsidiaries to 18,202,402.64 4,007,833.39
non-controlling shareholders as dividend or
profit
Other cash payments related to financing 244,300,886.48 10,752,519.79
activities
Subtotal of cash outflows from financing 1,607,793,271.80 2,559,032,808.73
activities
Net cash flows from financing activities 2,823,483,205.12 -395,516,013.71
IV. Effect of foreign exchange rate changes -39,785,884.78 -50,292,214.11
on cash & cash equivalents
V. Net increase in cash and cash -710,141,813.45 846,361,023.53
equivalents
144
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Add: Opening balance of cash and cash 3,400,144,038.54 2,553,783,015.01
equivalents
VI. Closing balance of cash and cash 2,690,002,225.09 3,400,144,038.54
equivalents
6. Cash Flow Statement of the Parent Company
Unit: RMB
Items Year 2021 Year 2020
I. Cash flows from operating activities:
Cash receipts from sale of goods and 4,552,593,960.07 3,591,777,322.35
rendering of services
Receipts of tax refund 91,032,428.31 72,901,445.17
Other cash receipts related to operating 148,753,935.08 93,832,945.34
activities
Subtotal of cash inflows from operating 4,792,380,323.46 3,758,511,712.86
activities
Cash payments for goods purchased and 3,390,162,593.35 1,965,431,440.25
services received
Cash paid to and on behalf of employees 489,699,623.10 391,589,764.85
Cash payments for taxes and rates 101,139,657.54 91,135,303.51
Other cash payments related to operating 192,477,373.76 153,131,340.36
activities
Subtotal of cash outflows from operating 4,173,479,247.75 2,601,287,848.97
activities
Net cash flows from operating activities 618,901,075.71 1,157,223,863.89
II. Cash flows from investing activities:
Cash receipts from withdrawal of 19,217,446.05
investments
Cash receipts from investment income 79,458,560.23 225,498,714.94
Net cash receipts from the disposal of fixed 5,236,022.97 5,013,171.60
assets, intangible assets and other long-term
assets
Net cash receipts from the disposal of 2,119,122.19
subsidiaries & other business units
Other cash receipts related to investing 282,769,383.03 271,933,366.03
activities
Subtotal of cash inflows from investing 367,463,966.23 523,781,820.81
activities
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Cash payments for the acquisition of fixed 141,993,812.89 235,141,413.93
assets, intangible assets and other long-term
assets
Cash payments for investments 1,869,460,500.00 236,348,684.83
Net cash payments for the acquisition of
subsidiaries & other business units
Other cash payments related to investing 1,991,561,492.47 149,070,741.05
activities
Subtotal of cash outflows from investing 4,003,015,805.36 620,560,839.81
activities
Net cash flows from investing activities -3,635,551,839.13 -96,779,019.00
III. Cash flows from financing activities:
Cash receipts from absorbing investments 118,643,250.00
Cash receipts from borrowings 3,850,000,000.00 1,519,811,000.00
Other cash receipts related to financing 356,883,274.78 83,377,450.00
activities
Subtotal of cash inflows from financing 4,206,883,274.78 1,721,831,700.00
activities
Cash payments for the repayment of 20,000,000.00 1,069,811,000.00
borrowings
Cash payments for distribution of 951,587,071.48 844,817,849.02
dividends or profits and for interest expenses
Other cash payments related to financing 642,469,365.41 39,333,154.61
activities
Subtotal of cash outflows from financing 1,614,056,436.89 1,953,962,003.63
activities
Net cash flows from financing activities 2,592,826,837.89 -232,130,303.63
IV. Effect of foreign exchange rate changes
on cash and cash equivalents
V. Net increase in cash and cash equivalents -423,823,925.53 828,314,541.26
Add: Opening balance of cash and cash 1,803,237,880.51 974,923,339.25
equivalents
VI. Closing balance of cash and cash 1,379,413,954.98 1,803,237,880.51
equivalents
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
146
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Unit: RMB
Year 2021
Equity Attributable to parent Company
Other equity instruments Gene
Other Speci Non-contr
Items Less: ral
Capital comprehe al Surplus Undistribut Othe olling Total equity
Prefer Subtotal
Share Capital Perpet treasury risk
Othe reserve nsive reser ed profit rs interest
red ual reserve
rs shares reser
bonds income ve
shares
ve
I. Balance 3,591,601,46 315,417,43 281,483,7 -89,624,9 637,967,6 5,890,916, 10,064,794, 87,958,25 10,152,752,771
at the end 8.00 4.22 41.34 62.61 13.47 707.83 519.57 1.46 .03
of prior
year
Add:
Cumulativ
e changes
of
accounting
policies
Error
correction
of prior
period
Business
combinati
on under
common
control
147
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Others
II. Balance 3,591,601,46 315,417,43 281,483,7 -89,624,9 637,967,6 5,890,916, 10,064,794, 87,958,25 10,152,752,771
at the 8.00 4.22 41.34 62.61 13.47 707.83 519.57 1.46 .03
beginning
of current
year
III. -511,250.00 409, 58,002,340 130,465,8 -39,785,8 63,816,91 724,772,89 1,085,513,7 14,324,08 1,099,837,837.
Current 684, .80 71.56 84.78 6.23 8.24 51.86 5.84 70
period 602.
increase 93
(or less:
decrease)
(I) Total -39,785,8 1,684,044, 1,644,258,5 20,780,13 1,665,038,652.
comprehen 84.78 407.47 22.69 0.17 86
sive
income
(II) Capital -511,250.00 409, 58,002,340 130,465,8 336,709,82 3,000,000. 339,709,822.17
contribute 684, .80 71.56 2.17 00
d or 602.
withdrawn 93
by owners
1. 3,000,000. 3,000,000.00
Ordinary 00
shares
contribute
d by
owners
2. Capital 24,610.00 409, 518,108.87 542,718.87 410,227,321.80
148
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
contribute 684,
d by 602.
holders of 93
other
equity
instrument
s
3. Amount 60,225,070 -69,573,64 129,798,71 129,798,713.43
of .93 2.50 3.43
share-base
d payment
included in
equity
-535,860.00 -2,740,839. 200,039,5 -203,316,21 -203,316,213.0
4. Others
00 14.06 3.06 6
(III) Profit 63,816,91 -959,271,5 -895,454,59 -18,202,40 -913,656,995.6
distributio 6.23 09.23 3.00 2.64 4
n
1. 63,816,91 -63,816,91
Appropriat 6.23 6.23
ion of
surplus
reserve
2.
Appropriat
ion of
general
risk
149
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
reserve
3. -895,454,5 -895,454,59 -18,202,40 -913,656,995.6
Appropriat 93.00 3.00 2.64 4
ion of
profit to
owners
4. Others
(IV)
Internal
carry-over
within
equity
1. Transfer
of capital
reserve to
capital
2. Transfer
of surplus
reserve to
capital
3. Surplus
reserve to
cover
losses
4. Changes
in defined
benefit
plan
carried
over to
retained
earnings
150
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
5. Other
comprehen
sive
income
carried
over to
retained
earnings
6. Others
(V)
Special
reserve
1.
Appropriat
ion of
current
period
2.
Applicatio
n of
current
period
(VI) 8,746,358. 8,746,358.31
Others 31
IV. 3,591,090,21 409, 373,419,77 411,949,6 -129,410, 701,784,5 6,615,689, 11,150,308, 102,282,3 11,252,590,608
Balance at 8.00 684, 5.02 12.90 847.39 29.70 606.07 271.43 37.30 .73
the end of 602.
current 93
period
Amount of Previous Period
Unit: RMB
Year 2020
Items
Non-contro Total equity
Equity Attributable to parent Company lling
151
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
interest
Other equity Other Spec
Less: Gene
Share instruments Capital comprehe ial Surplus ral
Undistributed Oth
treasury risk
profit
Subtotal
Capital Prefer Perpet reserve nsive reser reser ers
Oth reserve
red ual shares ve
ers income ve
shares bonds
I. Balance 2,765,657,8 1,090,800,0 363,781,15 -39,332,7 559,896,6 5,278,392,2 9,291,632,9 73,785,53 9,365,418,4
at the end 98.00 22.06 1.34 48.50 19.39 88.84 28.45 7.27 65.72
of prior
year
Add:
Cumulativ
e changes
of
accountin
g policies
Error
correction
of prior
period
Business
combinati
on under
common
control
Others
II. 2,765,657,8 1,090,800,0 363,781,15 -39,332,7 559,896,6 5,278,392,2 9,291,632,9 73,785,53 9,365,418,4
Balance at
the 98.00 22.06 1.34 48.50 19.39 88.84 28.45 7.27 65.72
beginning
152
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
of current
year
III. 825,943,57 -775,382,58 -82,297,41 -50,292,2 78,070,99 612,524,41 773,161,591 14,172,71 787,334,305
Current 0.00 7.84 0.00 14.11 4.08 8.99 .12 4.19 .31
period
increase
(or less:
decrease)
(I) Total -50,292,2 1,462,158,8 1,411,866,60 11,164,53 1,423,031,1
comprehe
nsive 14.11 21.57 7.46 0.41 37.87
income
(II) -731,510.00 54,313,350. -82,297,41 135,879,250 135,879,250
Capital
contribute 39 0.00 .39 .39
d or
withdraw
n by
owners
1. -49,264,050 -167,907,3 118,643,250. 118,643,250.
Ordinary .00 00.00 00 00
shares
contribute
d by
owners
2. Capital
contribute
d by
holders of
other
equity
instrumen
ts
153
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
3. Amount 107,029,81 89,793,814 17,236,000. 17,236,000.
of 4.39 .00 39 39
share-base
d payment
included
in equity
-731,510.00 -3,452,414. -4,183,924.
4. Others
00 00
(III) Profit 78,070,99 -849,634,40 -771,563,40 -4,007,83 -775,571,24
distributio 4.08 2.58 8.50 3.39 1.89
n
1. 78,070,99 -78,070,994
Appropria 4.08 .08
tion of
surplus
reserve
2.
Appropria
tion of
general
risk
reserve
3. -771,563,40 -771,563,40 -4,007,83 -775,571,24
Appropria
tion of 8.50 8.50 3.39 1.89
profit to
owners
4. Others
(IV) 826,675,08 -826,675,08
Internal 0.00 0.00
carry-over
154
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
within
equity
1. 826,675,08 -826,675,08
Transfer
of capital 0.00 0.00
reserve to
capital
2.
Transfer
of surplus
reserve to
capital
3. Surplus
reserve to
cover
losses
4.
Changes
in defined
benefit
plan
carried
over to
retained
earnings
5. Other
comprehe
nsive
income
carried
over to
retained
earnings
6. Others
(V)
Special
reserve
1.
155
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Appropria
tion of
current
period
2.
Applicatio
n of
current
period
(VI) -3,020,858. -3,020,858.2 7,016,017 3,995,158.9
Others 23 3 .17 4
IV. 3,591,601,4 315,417,43 281,483,74 -89,624,9 637,967,6 5,890,916,7 10,064,794, 87,958,25 10,152,752,
Balance at 68.00 4.22 1.34 62.61 13.47 07.83 519.57 1.46 771.03
the end of
current
period
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
Year 2021
Other equity instruments Speci
Items Less: Other Other
al Surplus Undistributed
Share Capital Perpetu Capital reserve treasury comprehensi Total equity
Preferre reserv reserve profit s
al Others shares ve income
d shares e
bonds
I. Balance at 3,591,601,468. 1,198,721,706. 281,483,741. 509,280,441. 1,089,748,875. 6,107,868,750.
the end of 00 52 34 15 88 21
prior year
156
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
Add:
Cumulative
changes of
accounting
policies
Error
correction of
prior period
Others
II. Balance 3,591,601,468. 1,198,721,706. 281,483,741. 509,280,441. 1,089,748,875. 6,107,868,750.
at the
beginning of 00 52 34 15 88 21
current year
III. Current -511,250.00 409,684,602. 68,886,151.09 130,465,871. 63,816,916.2 -321,102,346.9 90,308,201.79
period
increase (or 93 56 3 0
less:
decrease)
(I) Total 638,169,162.3 638,169,162.3
comprehensi
ve income 3 3
(II) Capital -511,250.00 409,684,602. 68,886,151.09 130,465,871. 347,593,632.4
contributed
or 93 56 6
withdrawn
by owners
1. Ordinary
shares
contributed
by owners
2. Capital 24,610.00 409,684,602. 518,108.87 410,227,321.8
contributed
by holders of 93 0
other equity
instruments
3. Amount 71,108,881.22 -69,573,642. 140,682,523.7
of
157
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
share-based 50 2
payment
included in
equity
-535,860.00 -2,740,839.00 200,039,514. -203,316,213.0
4. Others
06 6
(III) Profit 63,816,916.2 -959,271,509.2 -895,454,593.0
distribution 3 3 0
1. 63,816,916.2 -63,816,916.23
Appropriatio
n of surplus 3
reserve
2. -895,454,593.0 -895,454,593.0
Appropriatio
n of profit to 0 0
owners
3. Others
(IV) Internal
carry-over
within equity
1.Transfer of
capital
reserve to
capital
2.Transfer of
surplus
reserve to
capital
3.Surplus
reserve to
cover losses
4. Changes
in defined
benefit plan
carried over
to retained
earnings
158
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
5. Other
comprehensi
ve income
carried over
to retained
earnings
6. Others
(V) Special
reserve
1.
Appropriatio
n of current
period
2.
Application
of current
period
(VI) Others
IV. Balance 3,591,090,218. 409,684,602. 1,267,607,857. 411,949,612. 573,097,357. 768,646,528.9 6,198,176,952.
at the end of
current 00 93 61 90 38 8 00
period
Amount of Previous Period
Unit: RMB
Year 2020
Other equity instruments Specia
Items Other Other
Less: treasury l Surplus Undistributed
Share Capital Preferre Perpetu Other Capital reserve comprehensi Total equity
shares reserv reserve profit s
ve income
d shares al bonds s e
I. Balance at 2,765,657,898. 2,005,303,119. 363,781,151.3 431,209,447. 1,158,673,337. 5,997,062,650.
the end of 00 53 4 07 70 96
prior year
Add:
Cumulative
159
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
changes of
accounting
policies
Error
correction of
prior period
Others
II. Balance at 2,765,657,898. 2,005,303,119. 363,781,151.3 431,209,447. 1,158,673,337. 5,997,062,650.
the beginning
of current 00 53 4 07 70 96
year
III. Current 825,943,570.00 -806,581,413.0 -82,297,410.0 78,070,994.0 -68,924,461.82 110,806,099.25
period
increase (or 1 0 8
less:
decrease)
(I) Total 780,709,940.76 780,709,940.76
comprehensi
ve income
(II) Capital -731,510.00 20,093,666.99 -82,297,410.0 101,659,566.99
contributed
or withdrawn 0
by owners
1. Ordinary -49,264,050.00 -167,907,300. 118,643,250.00
shares
contributed 00
by owners
2. Capital
contributed
by holders of
other equity
instruments
3. Amount of 72,810,130.99 89,793,814.00 -16,983,683.01
share-based
payment
included in
equity
160
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
4. Others -731,510.00 -3,452,414.00 -4,183,924.00
(III) Profit 78,070,994.0 -849,634,402.5 -771,563,408.5
distribution 8 8 0
1. 78,070,994.0 -78,070,994.08
Appropriatio
n of surplus 8
reserve
2. -771,563,408.5 -771,563,408.5
Appropriatio
n of profit to 0 0
owners
3. Others
(IV) Internal 826,675,080.00 -826,675,080.0
carry-over
within equity 0
1.Transfer of 826,675,080.00 -826,675,080.0
capital
reserve to 0
capital
2.Transfer of
surplus
reserve to
capital
3.Surplus
reserve to
cover losses
4. Changes in
defined
benefit plan
carried over
to retained
earnings
5. Other
comprehensi
ve income
carried over
to retained
earnings
161
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
6. Others
(V) Special
reserve
1.
Appropriatio
n of current
period
2.
Application
of current
period
(VI) Others
IV. Balance 3,591,601,468. 1,198,721,706. 281,483,741.3 509,280,441. 1,089,748,875. 6,107,868,750.
at the end of
current 00 52 4 15 88 21
period
162
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report
III. Company profile
The Company was established by the original Sanhua Fuji Koki Co., Ltd. The Company currently holds a
business license with a unified social credit code of 913300006096907427 registered and issued by Zhejiang
Administration of Industry and Commerce, with headquarter in Shaoxing City, Zhejiang Province. The registered
capital of 3,591,226,678.00 yuan, total share of 3,591,090,218 shares (each with par value of one yuan). The
Company’s shares were listed at Shenzhen Stock Exchange.
The Company operates in the machinery manufacturing industry. Business scope includes production and
marketing of Service Valve, Electronic Expansion valve, Drainage Pump, Solenoid Valve, One-way Valve,
Compressor Parts, Pressure Pipeline Components, Electromechanical Hydraulic Control Pump and other
electromechanical hydraulic control components, undertaking services of inspection, test and analysis of
refrigeration accessories, and engaging in import and export business. Main products include control components
and parts of household appliances and automobile A/C.
The financial statements have been approved by the board of directors of the Company and disclosed on
March 23, 2022.
Zhejiang Sanhua Climate and Appliance Controls Group Co., Ltd. and other subsidiaries are included in the
scope of consolidated financial statements in the current period. For further details, please refer to the change of
consolidation scope in the notes to the financial report and the description of equity in other entities.
163
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
IV. Preparation basis of the financial statements
1. Preparation basis
The financial statements have been prepared on the basis of going concern.
2. Going concern
The Company has no events or conditions that may cast significant doubts upon the Company’s ability to
continue as a going concern within the 12 months after the balance sheet date.
V. Significant accounting policies and estimates
Tips on specific accounting policies and accounting estimates:
1. Statement of compliance with China Accounting Standards for Business Enterprises
The financial statements have been prepared in accordance with the requirements of China Accounting
Standards for Business Enterprises (CASBEs), and present truly and completely the financial position, results of
operations and cash flows of the Company.
2. Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian calendar.
3. Operating cycle
The Company has a relatively short operating cycle for its business, an asset or a liability is classified as
current if it is expected to be realized or due within 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (RMB) Yuan, while the
functional currency of subsidiaries engaged in overseas operations including SANHUA AWECO Appliance
Systems GmbH, Sanhua International Inc. etc. is the currency of the primary economic environment in which they
operate.
5. Accounting treatments of business combination under and not under common control
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the combined
party included in the consolidated financial statements of the ultimate controlling party at the combination date.
164
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Difference between carrying amount of the equity of the combined party included in the consolidated financial
statements of the ultimate controlling party and that of the combination consideration or total par value of shares
issued is adjusted to capital reserve, if the balance of capital reserve is insufficient to offset, any excess is adjusted
to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the acquiree at
the acquisition date, the excess is recognized as goodwill; otherwise, the fair value of identifiable assets, liabilities
and contingent liabilities, and the measurement of the combination cost are reviewed, then the difference is
recognized in profit or loss.
6. Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into the consolidation scope. The 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. Foreign currency translation
1. Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange rate at the
transaction date at initial recognition. At the balance sheet date, monetary items denominated in foreign currency
are translated at the spot exchange rate at the balance sheet date with difference, except for those arising from the
principal and interest of exclusive borrowings eligible for capitalization, included in profit or loss; non-cash items
carried at historical costs are translated at the spot exchange rate at the transaction date, with its RMB amount
unchanged; non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at the
date when the fair value was determined, with difference included in profit or loss or other comprehensive
income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the balance sheet date;
the equity items, other than undistributed profit, are translated at the spot rate at the transaction date; the revenues
and expenses in the income statement are translated into RMB at the approximate exchange rate similar to the
systematically and rationally determined spot exchange rate at the transaction date. The difference arising from
foreign currency translation is included in other comprehensive income.
9．Financial instruments
1. Classification of financial assets and financial liabilities
165
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Financial assets are classified into the following three categories when initially recognized: (1) financial
assets at amortized cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets
at fair value through profit or loss.
Financial liabilities are classified into the following four categories when initially recognized: (1) financial
liabilities at fair value through profit or loss; (2) financial liabilities that arise when a transfer of a financial asset
does not qualify for derecognition or when the continuing involvement approach applies; (3) financial guarantee
contracts not fall within the above categories (1) and (2), and commitments to provide a loan at a below-market
interest rate, which do not fall within the above category (1); (4) financial liabilities at amortized cost.
2. Recognition criteria, measurement method and derecognition condition of financial assets and financial
liabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilities
When the Company becomes a party to a financial instrument, it is recognized as a financial asset or
financial liability. The financial assets and financial liabilities initially recognized by the Company are measured
at fair value; for the financial assets and liabilities at fair value through profit or loss, the transaction expenses
thereof are directly included in profit or loss; for other categories of financial assets and financial liabilities, the
transaction expenses thereof are included into the initially recognized amount. However, at initial recognition, for
accounts receivable that do not contain a significant financing component or in circumstances where the Company
does not consider the financing components in contracts within one year, the Company measures the transaction
price in accordance with “CASBE 14 – Revenues”.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized costs
The Company measures its financial assets at the amortized costs using effective interest method. Gains or
losses on financial assets that are measured at amortized cost and are not part of hedging relationships shall be
included into profit or loss when the financial assets are derecognized, reclassified, through the amortization
process or in order to recognize impairment gains or losses.
2) Debt instrument investments at fair value through other comprehensive income
The Company measures its debt instrument investments at fair value. Interests, impairment losses or gains,
and gains and losses on foreign exchange that calculated using effective interest method shall be included into
profit or loss, while other gains or losses are included into other comprehensive income. Accumulated gains or
losses that initially recognized as other comprehensive income should be transferred out into profit or loss when
the financial assets are derecognized.
3) Equity instrument investments at fair value through other comprehensive income
The Company measures its equity instrument investments at fair value. Dividends obtained (other than those
as part of investment cost recovery) shall be included into profit or loss, while other gains or losses are included
into other comprehensive income. Accumulated gains or losses that initially recognized as other comprehensive
income should be transferred out into retained earnings when the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes in fair value
(including interests and dividends) shall be included into profit or loss, except for financial assets that are part of
hedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
166
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities (including
derivatives that are liabilities) and financial liabilities designated as at fair value through profit or loss. The
Company measures such kind of liabilities at fair value. The amount of changes in the fair value of the financial
liabilities that are attributable to changes in the Company’s own credit risk shall be included into other
comprehensive income, unless such treatment would create or enlarge accounting mismatches in profit or loss.
Other gains or losses on those financial liabilities (including interests, changes in fair value that are attributable to
reasons other than changes in the Company’s own credit risk) shall be included into profit or loss, except for
financial liabilities that are part of hedging relationships. Accumulated gains or losses that originally recognized as
other comprehensive income should be transferred out into retained earnings when the financial liabilities are
derecognized.
2) Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or
when the continuing involvement approach applies
The Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of Financial
Assets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2), and commitments to provide a
loan at a below-market interest rate, which do not fall within the above category 1)
The Company measures its financial liabilities at the higher of: a. the amount of loss allowances in
accordance with impairment requirements of financial instruments; b. the amount initially recognized less the
amount of accumulated amortization recognized in accordance with “CASBE 14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method. Gains or
losses on financial liabilities that are measured at amortized cost and are not part of hedging relationships shall be
included into profit or loss when the financial liabilities are derecognized and amortized using effective interest
method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire;
b. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with
“CASBE 23 – Transfer of Financial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally or partly may the
financial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the ownership of the
financial asset, it derecognizes the financial asset, and any right or liability arising from such transfer is
recognized independently as an asset or a liability. If it retained substantially all of the risks and rewards related to
the ownership of the financial asset, it continues recognizing the financial asset. Where the Company does not
transfer or retain substantially all of the risks and rewards related to the ownership of a financial asset, it is dealt
with according to the circumstances as follows respectively: (1) if the Company does not retain its control over the
financial asset, it derecognizes the financial asset, and any right or liability arising from such transfer is
recognized independently as an asset or a liability; (2) if the Company retains its control over the financial asset,
according to the extent of its continuing involvement in the transferred financial asset, it recognizes the related
financial asset and recognizes the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference between the
167
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
amounts of the following two items is included in profit or loss: (1) the carrying amount of the transferred
financial asset as of the date of derecognition; (2) the sum of consideration received from the transfer of the
financial asset, and the accumulative amount of the changes of the fair value originally included in other
comprehensive income proportionate to the transferred financial asset (financial assets transferred refer to debt
instrument investments at fair value through other comprehensive income). If the transfer of financial asset
partially satisfies the conditions to derecognition, the entire carrying amount of the transferred financial asset is,
between the portion which is derecognized and the portion which is not, apportioned according to their respective
relative fair value, and the difference between the amounts of the following two items is included into profit or
loss: (1) the carrying amount of the portion which is derecognized; (2) the sum of consideration of the portion
which is derecognized, and the portion of the accumulative amount of the changes in the fair value originally
included in other comprehensive income which is corresponding to the portion which is derecognized (financial
assets transferred refer to debt instrument investments at fair value through other comprehensive income).
4. Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data and information are available to measure fair value. The inputs to valuation techniques used to measure fair
value are arranged in the following hierarchy and used accordingly:
(1) Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the
Company can access at the measurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other
than quoted prices that are observable for the asset or liability, for example, interest rates and yield curves
observable at commonly quoted intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest rate that is
not observable and cannot be corroborated by observable market data at commonly quoted intervals, historical
volatility, future cash flows to be paid to fulfill the disposal obligation assumed in business combination, financial
forecast developed using the Company’s own data, etc.
5. Impairment of financial instruments
(1) Measurement and accounting treatment
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets at
amortized cost, debt instrument investments at fair value through other comprehensive income, contract assets,
leases receivable, loan commitments other than financial liabilities at fair value through profit or loss, financial
guarantee contracts not belong to financial liabilities at fair value through profit or loss or financial liabilities that
arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement
approach applies.
Expected credit losses refer to the weighted average of credit losses with the respective risks of a default
occurring as the weights. Credit loss refers to the difference between all contractual cash flows that are due to the
Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash
shortfalls), discounted at the original effective interest rate. Among which, purchased or originated credit-impaired
financial assets are discounted at the credit-adjusted effective interest rate.
At the balance sheet date, the Company shall only recognize the cumulative changes in the lifetime expected
credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial
assets.
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For leases receivable, and accounts receivable and contract assets resulting from transactions regulated in
“CASBE 14 – Revenues”, the Company chooses simplified approach to measure the loss allowance at an amount
equal to lifetime expected credit losses.
For financial assets other than the above, on each balance sheet date, the Company shall assess whether the
credit risk on the financial instrument has increased significantly since initial recognition. The Company shall
measure the loss allowance for the financial instrument at an amount equal to the lifetime expected credit losses if
the credit risk on that financial instrument has increased significantly since initial recognition; otherwise, the
Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected
credit loss.
Considering reasonable and supportable forward-looking information, the Company compares the risk of a
default occurring on the financial instrument as at the balance sheet date with the risk of a default occurring on the
financial instrument as at the date of initial recognition, so as to assess whether the credit risk on the financial
instrument has increased significantly since initial recognition.
The Company may assume that the credit risk on a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to have relatively low credit risk at the balance sheet
date.
The Company shall estimate expected credit risk and measure expected credit losses on an individual or a
collective basis. When the Company adopts the collective basis, financial instruments are grouped with similar
credit risk features.
The Company shall remeasure expected credit loss on each balance sheet date, and increased or reversed
amounts of loss allowance arising therefrom shall be included into profit or loss as impairment losses or gains. For
a financial asset measured at amortized cost, the loss allowance reduces the carrying amount of such financial
asset presented in the balance sheet; for a debt investment measured at fair value through other comprehensive
income, the loss allowance shall be recognized in other comprehensive income and shall not reduce the carrying
amount of such financial asset.
(2) Financial instruments with expected credit risk assessed and expected credit losses measured on a
collective basis
Items Basis for determination Method for measuring expected
of portfolio credit loss
Based on historical credit loss
experience, the current situation and
the forecast of future economic
Other receivables – Portfolio grouped
Ages conditions, the Company calculates
with ages
expected credit loss through
exposure at default and 12-month or
lifetime expected credit loss rate.
(3) Accounts receivable and contract assets with expected credit losses measured on a collective basis
1) Specific portfolios and method for measuring expected credit loss
Items Basis for determination Method for measuring
of portfolio expected credit loss
Based on historical credit
Notes receivable-Bank acceptance Accepted by financial loss experience, the
receivable institutions current situation and the
forecast of future
economic conditions, the
Notes receivable -Trade acceptance Not accepted by financial Company calculates
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Items Basis for determination Method for measuring
of portfolio expected credit loss
receivable institutions expected credit loss
through exposure at
default and lifetime
expected credit loss rate.
Based on historical credit
loss experience, the
current situation and the
forecast of future
economic conditions, the
Accounts receivable – Portfolio Company prepares the
Ages
grouped with ages comparison table of ages
and lifetime expected
credit loss rate of
accounts receivable, so as
to calculate expected
credit loss.
2) Accounts receivable – comparison table of ages and lifetime expected credit loss rate of portfolio grouped
with ages
Ages Expected credit loss rate (%)
Within 1 year (inclusive, the same 5%
hereinafter)
1-2 years 10%
2-3 years 30%
Over 3 years 50%
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset.
However, the Company offsets a financial asset and a financial liability and presents the net amount in the balance
sheet when, and only when, the Company: (1) currently has a legally enforceable right to set off the recognized
amounts; and (2) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
For a transfer of a financial asset that does not qualify for derecognition, the Company does not offset the
transferred asset and the associated liability.
10．Inventories
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work in process
in the process of production, materials or supplies etc., to be consumed in the production process or in the
rendering of services.
2. Accounting method for dispatching inventories
Inventories dispatched from storage are accounted for with weighted average method at the end of each
month/specific identification method.
3. Basis for determining net realizable value
At the balance sheet date, inventories are measured at the lower of cost or net realizable value; provisions for
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inventory write-down are made on the excess of its cost over the net realizable value.
4. Inventory system
The perpetual inventory system is adopted.
5. Amortization method of low-value consumables and packages
Low-value consumables and packages are amortized with one-off method.
11. Contract assets, contract liabilities
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship
between its performance obligations and customers’ payments. Contract assets and contract liabilities under the
same contract shall offset each other and be presented on a net basis.
The Company presents an unconditional right to consideration (i.e., only the passage of time is required
before the consideration is due) as a receivable, and presents a right to consideration in exchange for goods that it
has transferred to a customer (which is conditional on something other than the passage of time) as a contract
asset.
The company presents the obligation to transfer goods to customers for the consideration received or
receivable from customers as contract liabilities.
12. Contract costs
Assets related to contract costs including costs of obtaining a contract and costs to fulfil a contract.
The Company recognizes as an asset the incremental costs of obtaining a contract if those costs are expected
to be recovered. The costs of obtaining a contract shall be included into profit or loss when incurred if the
amortization period of the asset is one year or less.
If the costs incurred in fulfilling a contract are not within the scope of standards related to inventories, fixed
assets or intangible assets, etc., the Company shall recognize the costs to fulfil a contract as an asset if all the
following criteria are satisfied:
1. The costs relate directly to a contract or to an anticipated contract, including direct labor, direct materials,
manufacturing overhead cost (or similar cost), cost that are explicitly chargeable to the customer under the
contract, and other costs that are only related to the contract;
2. The costs enhance resources of the Company that will be used in satisfying performance obligations in the
future;
3. The costs are expected to be recovered.
An asset related to contract costs shall be amortized on a systematic basis that is consistent with related
goods or services, with amortization included into profit or loss.
The Company shall make provision for impairment and recognize an impairment loss to the extent that the
carrying amount of an asset related to contract costs exceeds the remaining amount of consideration that the
Company expects to receive in exchange for the goods or services to which the asset relates less the costs
expected to be incurred. The original provision for asset impairment shall be reversed and included in the current
profit and loss when the impairment conditions no longer exist or have improved. The carrying amount of the
asset after the reversal shall not exceed the amount that would have been determined on the reversal date if no
provision for impairment had been made previously.
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13．Long-term receivables
14．Long-term equity investments
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require the unanimous consent of the parties sharing control. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint control
of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining party is that it
makes payment in cash, transfers non-cash assets, assumes its liabilities or issues equity securities, on the date of
combination, it regards the share of the carrying amount of the equity of the combined party included the
consolidated financial statements of the ultimate controlling party as the initial cost of the investment. The
difference between the initial cost of the long-term equity investments and the carrying amount of the combination
consideration paid or the par value of shares issued offsets capital reserve; if the balance of capital reserve is
insufficient to offset, any excess is adjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized at the
acquisition-date fair value of considerations paid.
(3) Long-term equity investments obtained through ways other than business combination: the initial cost of a
long-term equity investment obtained by making payment in cash is the purchase cost which is actually paid ; that
obtained on the basis of issuing equity securities is the fair value of the equity securities issued; that obtained
through debt restructuring is determined according to “CASBE 12 – Debt Restructuring”; and that obtained through
non-cash assets exchange is determined according to “CASBE 7 – Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit or loss
For long-term equity investments with control relationship, it is accounted for with cost method; for long-term
equity investments of associated enterprises and cooperative enterprises, it is accounted for with equity method.
15. Investment property
Investment property measurement model
Measurement by cost method
Depreciation or amortization method
1. Investment property includes land use right of leased-out property and of property held for capital
appreciation and buildings that have been leased out.
2. The initial measurement of investment property is based on its cost, and subsequent measurement is made
using the cost model, the depreciation or amortization method is the same as that of fixed assets and intangible
assets.
16. Fixed assets
（1）Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production of goods or rendering of services, for rental to
others, or for administrative purposes, and expected to be used during more than one accounting year. Fixed assets
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are recognized if, and only if, it is probable that future economic benefits associated with the assets will flow to
the Company and the cost of the assets can be measured reliably.
（2）Depreciation method of different categories of fixed assets
Categories Estimated residual value Annual depreciation rate
Depreciation method Useful life (years)
proportion (%) (%)
Buildings and
Straight-line method 20-30 0%、5% 3.17%～5.00%
structures
Machinery and
Straight-line method 5-12 0%、5% 7.92%～20.00%
equipment
Measurement analysis
Straight-line method 5-10 0%、5% 9.50%～19.00%
equipment
Vehicle Straight-line method 5-8 0%、5% 11.88%～20.00%
Office equipment and
Straight-line method 5-8 0%、5% 11.88%～20.00%
others
17．Construction in progress
1. Construction in progress is recognized if, and only if, it is probable that future economic benefits
associated with the item will flow to the Company, and the cost of the item can be measured reliably.
Construction in progress is measured at the actual cost incurred to reach its designed usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches the designed
usable conditions. When the auditing of the construction in progress was not finished while reaching the designed
usable conditions, it is transferred to fixed assets using estimated value first, and then adjusted accordingly when
the actual cost is settled, but the accumulated depreciation is not to be adjusted retrospectively.
18．Borrowing costs
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it is capitalized and included in the costs of relevant
assets; other borrowing costs are recognized as expenses on the basis of the actual amount incurred, and are
included in profit or loss.
19．Right-of-use assets
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initial
measurement of the lease liability; 2) any lease payments made at or before the commencement date, less any
lease incentives received; 3) any initial direct costs incurred by the lessee; 4) an estimate of costs to be incurred
by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or
restoring the underlying asset to the condition required by the terms and conditions of the lease.
The Company depreciates the right-of-use asset using the straight-line method. If it is reasonable to be
certain that the ownership of the underlying asset can be acquired by the end of the lease term, the Company
depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset.
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Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term.
20．Intangible assets
(1) Valuation method, service life, impairment test
1. Intangible assets include land use right, patent right and non-patented technology etc. The initial
measurement of intangible assets is based on its cost.
2. Amortization method
Categories Amortization method Amortization period (years)
Land use rights Straight-line method Contractual service life
Application software Straight-line method 1-4
Intellectual property Straight-line method 5-10
Intangible assets with indefinite useful life are not amortized, but their useful life is reviewed annually. The
indefinite land ownership held by overseas subsidiaries abroad is not amortized due to uncertain service life.
（2）Accounting policy for internal R&D expenditure
Expenditures on the research phase of an internal project are recognized as profit or loss when it is incurred.
An intangible asset arising from the development phase of an internal project is recognized if the Company can
meet the corresponding conditions.
21．Impairment of long-term assets
For long-term assets such as long-term equity investments, investment property at cost model, fixed assets,
construction in progress, right-of-use assets, intangible assets with finite useful lives, etc., if at the balance sheet
date there is indication of impairment, the recoverable amount is to be estimated. For goodwill recognized in
business combination and intangible assets with indefinite useful lives, no matter whether there is indication of
impairment, impairment test is performed annually. Impairment test on goodwill is performed on related asset
group or asset group portfolio.
When the recoverable amount of such long-term assets is lower than their carrying amount, the difference is
recognized as provision for assets impairment through profit or loss.
22．Long-term prepayments
Long-term prepayments are expenses that have been recognized but with amortization period over one year
(excluding one year). They are recorded with actual cost, and evenly amortized within the beneficiary period or
stipulated period. If items of long-term prepayments fail to be beneficial to the following accounting periods,
residual values of such items are included in profit or loss.
23．Employee benefits
(1) Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service, short-term
employee benefits actually incurred as liabilities, with a corresponding charge to profit or loss or the cost of a
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relevant asset.
(2) Post-employment benefits
Post-employment benefit plans are mainly classified as defined contribution plans.
During the accounting period employees provide services, according the defined contribution plan, the
amount payable is recognized as liabilities and included in the current profits and losses or relevant asset costs.
(3) Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability, with a
corresponding charge to profit or loss at the earlier of the following dates: (1) when the Company cannot
unilaterally withdraw the offer of termination benefits because of an employment termination plan or a
curtailment proposal; (2) when the Company recognizes cost or expenses related to a restructuring that involves
the payment of termination benefits.
24. Lease liability
On the lease inception day, the Company measures the lease liability at the present value of the lease
payments that are not paid at that date, discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, the Company’s incremental borrowing rate shall be used. Unrecognized financing expenses,
calculated at the difference between the lease payment and its present value, are recognized as interest expenses
over the lease term using the discount rate which has been used to determine the present value of lease payment
and included in profit or loss. Variable lease payments not included in the measurement of lease liabilities are
included in profit or loss in the periods in which they are incurred.
25．Provisions
1. Provisions are recognized when fulfilling the present obligations arising from contingencies such as
providing guarantee for other parties, litigation, products quality guarantee, onerous contract, etc., may cause the
outflow of the economic benefit and such obligations can be reliably measured.
2. The initial measurement of provisions is based on the best estimated expenditures required in fulfilling
the present obligations, and its carrying amount is reviewed at the balance sheet date.
26．Share-based payment
1. Types of share-based payment
Share-based payment consists of equity-settled share-based payment and cash-settled share-based payment.
2. Accounting treatment for settlements, modifications and cancellations of share-based payment terms and
conditions
(1) Equity-settled share-based payment
For equity-settled share-based payment transaction with employees, if the equity instruments granted vest
immediately, the fair value of those equity instruments is measured at grant date and recognized as transaction
cost or expense, with a corresponding adjustment in capital reserve; if the equity instruments granted do not vest
until the counterparty completes a specified period of service, at the balance sheet date within the vesting period,
the fair value of those equity instruments measured at grant date based on the best estimate of the number of
equity instruments expected to vest is recognized as transaction cost or expense, with a corresponding adjustment
in capital reserve.
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For equity-settled share-based payment transaction with parties other than employees, if the fair value of the
goods or services received can be measured reliably, the fair value is measured at the date the Company obtains
the goods or the counterparty renders service; if the fair value of the goods or services received cannot be
measured reliably, the fair value of the equity instruments granted measured at the date the Company obtains the
goods or the counterparty renders service is referred to, and recognized as transaction cost or expense, with a
corresponding increase in equity.
(2) Cash-settled share-based payment
For cash-settled share-based payment transactions with employees, if share appreciation rights vest
immediately, the fair value of the liability incurred as the acquisition of goods or services is measured at grant
date and recognized as transaction cost or expense, with a corresponding increase in liabilities; if share
appreciation rights do not vest until the employees have completed a specified period of service, the liability is
measured, at each balance sheet date until settled, at the fair value of the share appreciation rights measured at
grant date based on the best estimate of the number of share appreciation right expected to vest.
(3) Modifications and cancellations of share-based payment terms and conditions
If the modification increases the fair value of the equity instruments granted, measured immediately before
and after the modification, the Company includes the incremental fair value granted in the measurement of the
amount recognized for services received as consideration for the equity instruments granted; similarly, if the
modification increases the number of equity instruments granted, the Company includes the fair value of the
additional equity instruments granted, measured at the date of the modification, in the measurement of the amount
recognized for services received as consideration for the equity instruments granted; if the Company modifies the
vesting conditions in a manner that is beneficial to the employee, the Company takes the modified vesting
conditions into account.
If the modification reduces the fair value of the equity instruments granted, measured immediately before and
after the modification, the Company does not take into account that decrease in fair value and continue to measure
the amount recognized for services received as consideration for the equity instruments based on the grant date
fair value of the equity instruments granted; if the modification reduces the number of equity instruments granted
to an employee, that reduction is accounted for as a cancellation of that portion of the grant; if the Company
modifies the vesting conditions in a manner that is not beneficial to the employee, the Company does not take the
modified vesting conditions into account.
If the Company cancels or settles a grant of equity instruments during the vesting period (other than a grant
cancelled by forfeiture when the vesting conditions are not satisfied), the Company accounts for the cancellation
or settlement as an acceleration of vesting, and therefore recognizes immediately the amount that otherwise would
have been recognized for services received over the remainder of the vesting period.
27. Convertible bonds
The Company classifies convertible bonds at initial recognition as a financial asset or liability or equity
instrument, based on contract terms and economic essence it reveals instead of its legal form, combining with the
definitions of financial asset, liability and equity instrument.
At the balance sheet date, for a financial instrument classified as an equity instrument, its interest expenditure
or dividend distribution is treated as profit distribution, and share repurchase and cancellation are treated as changes
in equity; for a financial instrument classified as a financial liability, its interest expenditure or dividend distribution
is treated as borrowing expense, and gain or loss on repurchase or redemption is included in profit or loss.
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28．Revenue
Accounting policies used in revenue recognition and measurement
1. Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performance obligation
in the contracts, and determine whether the performance obligation should be satisfied over time or at a point in
time.
The Company satisfies a performance obligation over time if one of the following criteria is met, otherwise,
the performance obligation is satisfied at a point in time: (1) the customer simultaneously receives and consumes
the benefits provided by the Company’s performance as the Company performs; (2) the customer can control
goods or services as they are created by the Company’s performance; (3) the Company’s performance does not
create goods or services with an alternative uses and the Company has an enforceable right to payment for
performance completed to date.
For each performance obligation satisfied over time, the Company shall recognize revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. In the circumstance that the
progress cannot be measured reasonably, but the costs incurred in satisfying the performance obligation are
expected to be recovered, the Company shall recognize revenue only to the extent of the costs incurred until it can
reasonably measure the progress. To determine whether the customer has obtained control of goods, the Company
shall consider the following indicators: (1) the Company has a present right to payment for the goods, i.e., the
customer is presently obliged to pay for the goods; (2) the Company has transferred the legal title of the goods to
the customer, i.e., the customer has legal title to the goods; (3) the Company has transferred physical possession of
the goods, i.e., the customer has physically possessed the goods; (4) the Company has transferred significant risks
and rewards of ownership of the goods, i.e., the customer has obtained significant risks and rewards of ownership
of the goods; (5) the customer has accepted the goods; (6) other indicators showing the customer has obtained
control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to each performance
obligation. The transaction price is the amount of consideration to which the Company expects to be entitled in
exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties
and those expected to be refunded to the customer.
(2) If the consideration promised in a contract includes a variable amount, the Company shall confirm the
best estimate of variable consideration at expected value or the most likely amount. However, the transaction price
that includes the amount of variable consideration only to the extent that it is high probable that a significant
reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the
variable consideration is subsequently resolved.
(3) In the circumstance that the contract contains a significant financing component, the Company shall
determine the transaction price based on the price that a customer would have paid for if the customer had paid
cash for obtaining control over those goods or services. The difference between the transaction price and the
amount of promised consideration is amortized under effective interest method over contractual period.
(4) For contracts containing two or more performance obligations, the Company shall determine the
stand-alone selling price at contract inception of the distinct good underlying each performance obligation and
allocate the transaction price to each performance obligation on a relative stand-alone selling price basis.
3. Revenue recognition method
The company's main business activities are the R&D, production and sales of control components and parts
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of household appliances and automobiles, which belong to the performance obligations at a certain point in time.
The income from domestic sales of products shall be recognized after the delivery inspection and the receipt
certificate are obtained, and the income from export of products shall be recognized after the export declaration
and the bill of lading are obtained. The sales revenue of metal scrap is recognized after weighing and picking up
the goods and obtaining the receipt certificate.
Differences in accounting policies for revenue recognition due to different business models adopted by
similar businesses
24．Government grants
1. Government grants shall be recognized if, and only if, the following conditions are all met: (1) the Company
will comply with the conditions attaching to the grants; (2) the grants will be received. Monetary government grants
are measured at the amount received or receivable. Non-monetary government grants are measured at fair value, and
can be measured at nominal amount in the circumstance that fair value can’t be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company construct or otherwise
acquire long-term assets under requirements of government. In the circumstances that there is no specific
government requirement, the Company shall determine based on the primary condition to acquire the grants and
government grants related to assets are government grants whose primary condition is to construct or otherwise
acquire long-term assets. They offset carrying amount of relevant assets or recognized as deferred income. If
recognized as deferred income, they are included in profit or loss on a systematic basis over the useful lives of the
relevant assets. Those measured at notional amount is directly included into profit or loss. For assets sold,
transferred, disposed or damaged within the useful lives, balance of unamortized deferred income is transferred
into profit or loss of the year in which the disposal occurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. For
government grants that contain both parts related to assets and parts related to income, in which those two parts
are blurred and thus collectively classified as government grants related to income. For government grants related
to income used for compensating the related future cost, expenses or losses of the Company are recognized as
deferred income and are included in profit or loss or offset relevant cost during the period in which the relevant
cost, expenses or losses are recognized; for government grants related to income used for compensating the
related cost, expenses or losses incurred to the Company, they are directly included in profit or loss or directly
offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into other income or offset
relevant cost based on business nature, while those not related to the ordinary course of business shall be included
into non-operating revenue or expenditures.
5. Policy interest subvention
(1) In the circumstance that government appropriates interest subvention to lending bank, who provides loans
for the Company with a policy subsidised interest rate, borrowings are carried at the amount received, with
relevant borrowings cost computed based on the principal and the policy subsidised interest rate.
(2) In the circumstance that government directly appropriates interest subvention to the Company, the
subsidised interest shall offset relevant borrowing cost.
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30．Deferred tax assets/Deferred tax liabilities
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between
the carrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base of
items not recognized as assets and liabilities but with their tax base being able to be determined according to tax
laws) and in accordance with the tax rate applicable to the period during which the assets are expected to be
recovered or the liabilities are expected to be settled.
2. A deferred tax asset is recognized to the extent of the amount of the taxable income, which it is most likely to
obtain and which can be deducted from the deductible temporary difference. At the balance sheet date, if there is any
exact evidence that it is probable that future taxable income will be available against which deductible temporary
differences can be utilized, the deferred tax assets unrecognized in prior periods are recognized.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of a
deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable income will be available
to allow the benefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed to the extent that
it becomes probable that sufficient taxable income will be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or income through profit
or loss, excluding those arising from the following circumstances: (1) business combination; and (2) the transactions
or items directly recognized in equity.
31. Leases
(1) Operating lease
The Company as lessee, at the commencement date, the Company recognizes a lease that has a lease term of
12 months or less as a short-term lease, which shall not contain a purchase option; the Company recognizes a
lease as a lease of a low-value asset if the underlying asset is of low value when it is new. If the Company
subleases an asset, or expects to sublease an asset, the head lease does not qualify as a lease of a low-value asset.
For all assets in short-term leases and leases of low-value assets, lease payments are recognized as cost or profit or
loss with straight-line method/unit-of-production method over the lease term. Apart from the above-mentioned
short-term leases and leases of low-value assets with simplified approach, the Company recognizes right-of-use
assets and lease liabilities at the commencement date.
The Company as lessor, at the commencement date, lease receipts are recognized as lease income with
straight-line method/unit-of-production method over the lease term. Initial direct costs incurred shall be
capitalized, amortized on the same basis as the recognition of lease income, and included into profit or loss by
installments. Variable lease payments related to operating lease which are not included in the lease payment are
charged as profit or loss in the periods in which they are incurred.
(2) Finance lease
The Company as lessee, at the commencement date, the Company recognizes a lease that has a lease term of
12 months or less as a short-term lease, which shall not contain a purchase option; the Company recognizes a
lease as a lease of a low-value asset if the underlying asset is of low value when it is new. If the Company
subleases an asset, or expects to sublease an asset, the head lease does not qualify as a lease of a low-value asset.
For all assets in short-term leases and leases of low-value assets, lease payments are recognized as cost or profit or
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loss with straight-line method/unit-of-production method over the lease term. Apart from the above-mentioned
short-term leases and leases of low-value assets with simplified approach, the Company recognizes right-of-use
assets and lease liabilities at the commencement date.
The Company as lessor, at the commencement date, the Company recognizes the finance lease payment
receivable based on the net investment in the lease (sum of the present value of unguaranteed residual value and
lease receipts that are not received at the commencement date, discounted by the interest rate implicit in the lease),
and derecognizes assets held under the finance lease. The Company calculates and recognizes interest income
using the interest rate implicit in the lease over the lease term. Variable lease payments not included in the
measurement of the net investment in the lease are charged as profit or loss in the periods in which they are
incurred.
32. Share repurchase
When the Company repurchases its shares for the purpose of reducing its registered capital or rewarding its
employees. The amount actually paid shall be treated as treasury stock and registered for future reference at the
same time. If the purchased shares are to be retired, the difference between the total book value of shares retired
and the cash distributed to existing shareholders for repurchase is to reduce capital reserve, or retained earnings
when the capital reserve is not enough to reduce. If the Company repurchases vested equity instruments in
equity-settled share-based payment transactions with employees, cost of treasury shares granted to employees and
capital reserve (other capital reserve) accumulated within the vesting period are to be written off on the payment
made to employees, with a corresponding adjustment in capital reserve (share premium).
33. Other important accounting policies and accounting estimates
Segment reporting
Operating segments are determined based on the structure of the Company’s internal organization,
management requirements and internal reporting system. An operating segment is a component of the Company:
1. That engages in business activities from which it may earn revenues and incur expenses;
2. Whose financial performance is regularly reviewed by the Management to make decisions about resource
to be allocated to the segment and to assess its performance;
3. For which accounting information regarding financial position, financial performance and cash flows is
available through analysis.
34. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
1. New lease criteria
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
(1) The company will implement the revised accounting standards for Business Enterprises No. 21 - leasing
(hereinafter referred to as the new leasing standards) from January 1, 2021 (hereinafter referred to as the first
implementation date).
① For contracts existing before the first execution date, the company chooses not to reevaluate whether they
are leases or include leases.
② For the lease contract in which the company is the lessee, the company adjusts the amount of retained
earnings at the beginning of the reporting period and other relevant items in the financial statements according to
the cumulative impact for adjusting from original standard to the new lease standard on the first implementation
date, and does not adjust the information of the comparable period. The specific treatment is as follows:
For the financial lease before the first execution date, the company shall measure the right of use assets and
lease liabilities respectively according to the original book value of the financial lease in assets and the financial
lease payable on the first execution date.
For the operating lease before the first execution date, the company shall measure the lease liability at the
present value discounted by the company's incremental loan interest rate on the first execution date according to
the remaining lease payment on the first execution date, and measure the right to use asset according to the
amount equal to the lease liability and make necessary adjustments according to the prepaid rent.
A. The main impact of the implementation of the new leasing standards on the company's financial
statements on January 1, 2021 is as follows:
Balance Sheet
Items Effect of new lease criteria
Dec 31,2020 Jan 1, 2021
adjustment
Fixed assets 3,839,408,059.45 -119,764,340.05 3,719,643,719.40
Right of use assets +202,831,869.22 202,831,869.22
Non-current liabilities due within
130,553,923.87 +22,719,934.72 153,273,858.59
one year
Lease liabilities +149,779,815.53 149,779,815.53
Long-term payables 90,336,083.27 -89,432,221.08 903,862.19
B. Simplified treatment of operating leases before the first execution date
For lease contracts completed within 12 months after the first execution date, the company adopts a
simplified method and does not recognize the right of use assets and lease liabilities; The above simplified
treatment has no significant impact on the company's financial statements.
③ For the operating lease contracts of low value assets existing before the first execution date, the company
adopts a simplified method, does not recognize the right of use assets and lease liabilities, and carries out
accounting treatment in accordance with the new lease standards from the first execution date.
④ The lease contract with the company as the lessor shall be subject to accounting treatment in accordance
181
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
with the new lease standards from the first execution date.
2. Q&A on the implementation of accounting standards for business enterprises
In November 2021, the accounting department of the Ministry of Finance issued the fifth batch of questions
and answers on the implementation of accounting standards for business enterprises in 2021. According to the
article, under normal circumstances, the transportation activities before the control of the enterprise's goods or
services is transferred to the customer and in order to perform the customer's contract do not constitute a single
performance obligation, and the relevant transportation costs should be regarded as the contract performance costs,
amortized on the same basis as the recognition of the revenue of goods or services, and included in the current
profit and loss, The contract performance cost shall be carried forward and included in the title of "main business
cost" or "other business cost" when recognizing the revenue of goods or services, and shall be listed in the item of
"operating cost" in the income statement.
Due to the implementation of the question and answer on the implementation of accounting standards for
business enterprises (the fifth batch), the company retroactively corrected the presentation of sales freight and
miscellaneous expenses in 2020, and reclassified the item from "sales expenses" to "operating costs". The
adjustment impact of the accounting policy change on the financial statements of 2020 is shown in the table
below:
Items Income statement in 2020
Amount before Amounts affected Adjusted amount
adjustment
Consolidated income statement
Operating cost 8,500,391,322.27 +237,829,716.09 8,738,221,038.36
Selling expenses 602,954,759.17 -237,829,716.09 365,125,043.08
Parent Company Income statement
Operating cost 3,383,660,538.43 +22,580,796.28 3,406,241,334.71
Selling expenses 51,140,200.18 -22,580,796.28 28,559,403.90
（2）Changes in significant accounting estimates
□ Applicable √ Not applicable
（3）Since 2021 , Adjustments to the relevant items of financial statements at the beginning of the year at
the first implementation of new lease standards .
□ Applicable √ Not applicable
Whether it is necessary to adjust the balance sheet accounts at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Items December 31,2020 January 1,2021 Adjustments
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Current asset：
Cash and Bank Balances 3,489,687,568.14 3,489,687,568.14
Settlement funds
Loans to other banks
Held-for-trading financial assets 752,224,861.78 752,224,861.78
Derivative financial assets 58,330,486.53 58,330,486.53
Notes receivable 2,323,934,781.53 2,323,934,781.53
Accounts receivable 2,355,613,299.57 2,355,613,299.57
Receivable financing
Advances paid 69,404,326.45 69,404,326.45
Premium receivable
Reinsurance accounts receivable
Reinsurance reserves receivable
Other receivables 76,935,495.05 76,935,495.05
Including: Interest receivable
Dividends receivable
Repurchasing of financial assets
Inventories 2,307,761,706.46 2,307,761,706.46
Contract assets
Assets held for sales
Non-current assets due within one
year
Other current assets 150,460,488.01 150,460,488.01
Total current assets 11,584,353,013.52 11,584,353,013.52
Non-current assets:
Loans and advances paid
Debt investments
Other debt investments
Long-term receivable 2,074,750.00 2,074,750.00
Long-term equity investments 15,219,616.68 15,219,616.68
Other equity instrument investments
Other non-current financial assets
Investment property 10,067,588.96 10,067,588.96
Fixed assets 3,839,408,059.45 3,719,643,719.40 -119,764,340.05
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Construction in progress 628,730,529.07 628,730,529.07
Productive biological assets
Oil & gas assets
Right-of-use assets 202,831,869.22 202,831,869.22
Intangible assets 507,693,672.93 507,693,672.93
Development expenditures
Goodwill 31,959,091.60 31,959,091.60
Long-term prepayments 23,706,401.61 23,706,401.61
Deferred tax assets 137,808,879.28 137,808,879.28
Other non-current assets 251,509,127.08 251,509,127.08
Total non-current assets 5,448,177,716.66 5,531,245,245.83 83,067,529.17
Total assets 17,032,530,730.18 17,115,598,259.35 83,067,529.17
Current liabilities:
Short-term borrowings 383,088,296.60 383,088,296.60
Central bank loans
Loans from other banks
Held-for-trading financial liabilities
Derivative financial liabilities 7,939,957.91 7,939,957.91
Notes payable 1,238,574,463.73 1,238,574,463.73
Accounts payable 2,279,661,755.97 2,279,661,755.97
Advances received 10,000,000.00 10,000,000.00
Contract liabilities 42,581,607.67 42,581,607.67
Selling of repurchased financial assets
Absorbing deposit and interbank
deposit
Deposit for agency security
transaction
Deposit for agency security
underwriting
Employee benefits payable 289,305,913.99 289,305,913.99
Taxes and rates payable 75,008,142.06 75,008,142.06
Other payables 270,888,400.58 270,888,400.58
Including: Interest Payable
Dividends Payable
Handling fee and commission
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
payable
Reinsurance accounts payable
Liabilities classified as held for sale
Non-current liabilities due within one
130,553,923.87 153,273,858.59 22,719,934.72
year
Other current liabilities
Total current liabilities 4,727,602,462.38 4,750,322,397.10 22,719,934.72
Non-current liabilities:
Insurance policy reserve
Long-term borrowings 1,707,918,994.87 1,707,918,994.87
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 149,779,815.53 149,779,815.53
Long-term payables 90,336,083.27 903,862.19 -89,432,221.08
Long-term employee benefits
payable
Provisions 2,638,000.00 2,638,000.00
Deferred income 140,105,336.43 140,105,336.43
Deferred tax liabilities 130,778,184.48 130,778,184.48
Other non-current liabilities 80,398,897.72 80,398,897.72
Total non-current liabilities 2,152,175,496.77 2,212,523,091.22 60,347,594.45
Total liabilities 6,879,777,959.15 6,962,845,488.32 83,067,529.17
Equity:
Share capital 3,591,601,468.00 3,591,601,468.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 315,417,434.22 315,417,434.22
Less: Treasury shares 281,483,741.34 281,483,741.34
Other comprehensive income -89,624,962.61 -89,624,962.61
Special reserve
Surplus reserve 637,967,613.47 637,967,613.47
General risk reserve
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Undistributed profit 5,890,916,707.83 5,890,916,707.83
Total equity attributable to the parent
10,064,794,519.57 10,064,794,519.57
Company
Non-controlling interest 87,958,251.46 87,958,251.46
Total equity 10,152,752,771.03 10,152,752,771.03
Total liabilities & equity 17,032,530,730.18 17,115,598,259.35 83,067,529.17
Adjustment statement
Parent Company Balance Sheet
Items December 31,2020 January 1,2021 Adjustment
Current assets:
Cash and bank balances 1,848,930,095.07 1,848,930,095.07
Held-for-trading financial assets 323,000,000.00 323,000,000.00
Derivative financial assets 8,856,174.56 8,856,174.56
Notes receivable 773,393,944.74 773,393,944.74
Accounts receivable 729,906,676.91 729,906,676.91
Receivables financing
Advances paid 6,803,910.27 6,803,910.27
Other receivables 348,897,078.11 348,897,078.11
Including: Interest Receivable
Dividends Receivable
Inventories 553,388,303.73 553,388,303.73
Contract assets
Assets classified as held for sale
Non-current assets due within one
year
Other current assets 46,083,837.26 46,083,837.26
Total current assets 4,639,260,020.65 4,639,260,020.65
Non-current assets:
Debt investments
Other debt investments
Long-term receivable
Long-term equity investments 4,528,546,229.37 4,528,546,229.37
Other equity instrument investments
Other non-current financial assets
Investment property
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Fixed assets 1,565,826,802.57 1,565,826,802.57
Construction in progress 71,862,243.72 71,862,243.72
Productive biological assets
Oil & gas assets
Right-of-use assets
Intangible assets 156,335,743.52 156,335,743.52
Development expenditures
Goodwill
Long-term prepayments
Deferred tax assets 7,336,345.87 7,336,345.87
Other non-current assets 36,566,524.79 36,566,524.79
Total non-current assets 6,366,473,889.84 6,366,473,889.84
Total assets 11,005,733,910.49 11,005,733,910.49
Current liabilities:
Short-term borrowings 20,012,527.78 20,012,527.78
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 381,631,833.96 381,631,833.96
Accounts payable 1,566,994,944.07 1,566,994,944.07
Advances received
Contract liabilities 1,155,759.09 1,155,759.09
Employee benefits payable 93,150,785.46 93,150,785.46
Taxes and rates payable 10,811,341.50 10,811,341.50
Other payables 1,355,955,388.81 1,355,955,388.81
Including: interest payable
Dividends Payable
Liabilities classified as held for sale
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 3,429,712,580.67 3,429,712,580.67
Non-current liabilities:
Long-term borrowings 1,381,428,522.65 1,381,428,522.65
Bonds payable
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Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits payable
Provisions 2,638,000.00 2,638,000.00
Deferred income 35,908,399.54 35,908,399.54
Deferred tax liabilities 48,177,657.42 48,177,657.42
Other non-current liabilities
Total non-current liabilities 1,468,152,579.61 1,468,152,579.61
Total liabilities 4,897,865,160.28 4,897,865,160.28
Equity:
Share capital 3,591,601,468.00 3,591,601,468.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 1,198,721,706.52 1,198,721,706.52
Less: treasury shares 281,483,741.34 281,483,741.34
Other comprehensive income
Special reserve
Surplus reserve 509,280,441.15 509,280,441.15
Undistributed profit 1,089,748,875.88 1,089,748,875.88
Total equity 6,107,868,750.21 6,107,868,750.21
Total liabilities & equity 11,005,733,910.49 11,005,733,910.49
Adjustment statement
（4）Since 2021 , the statements of first implementation of new lease standards to trace and adjust previous
comparative data.
√ Applicable □ Not applicable
A. The main impact for implementation of the new lease standards on the company's financial statements on
January 1, 2021 is shown as following:
Items Balance Sheet
Dec 31, 2021 New lease standards effect Jan 1, 2021
Fixed assets 3,839,408,059.45 -119,764,340.05 3,719,643,719.40
Right-of-use assets +202,831,869.22 202,831,869.22
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Non-current 130,553,923.87 +22,719,934.72 153,273,858.59
liabilities due
within one year
Lease liabilities +149,779,815.53 149,779,815.53
Long-term payables 90,336,083.27 -89,432,221.08 903,862.19
B. Simplified treatment of operating leases before the first execution date
For lease contracts completed within 12 months after the first execution date, the company adopts a
simplified method and does not recognize the right of use assets and lease liabilities. The above simplified
treatment has no significant impact on the company's financial statements.
③ For the operating lease contracts of low value assets existing before the first execution date, the company
adopts a simplified method, does not recognize the right of use assets and lease liabilities, and carries out new
lease standards from the first execution date.
④ The lease contract with the company as the lessor shall be subject to new lease standards from the first
execution date.
Ⅵ. Taxes
1. Major categories of taxes and tax rates
Tax Type Taxation basis Tax rate
The output tax calculated based on the revenue from sales of goods or rendering of
VAT services in accordance with the tax law, net of the input tax that is allowed to be deducted 13%,9%,6%
in the current period
Urban maintenance and
The sum of turnover tax payable and value-added tax exemption 5%,7%
construction tax
Enterprise income tax Taxable income 15%,25%
Different enterprise income tax rates applicable to different taxpayers:
Taxpayers Income tax rate
Zhejiang Sanhua Intelligent Controls Co., Ltd 15%
Zhejiang Sanhua Climate and Appliance Controls Group Co., Ltd 15%
Sanhua (Hangzhou) Micro Channel Heat Exchanger Co., Ltd 15%
Zhejiang Sanhua Automotive Components Co., Ltd. 15%
Shaoxing Sanhua New Energy Automotive Components Co., Ltd- 15%
Wuhu Sanhua Auto-control Components Co., Ltd and other subsidiaries 15%
Domestic taxpayers other than the above-mentioned 25%
189
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
2. Tax preferential policies
Being categorized as high-tech enterprises, the income tax of the Company and several subsidiaries for 2020
are temporarily calculated at a preferential tax rate of 15%, and the final income tax settlement shall prevail.
Several subsidiaries are welfare enterprises and can enjoy the preferential policy of "VAT refund". The
exceeding portion over the 3% VAT payable of the certified software products enjoy the immediate refund policy.
Export goods enjoy the VAT exemption and refund policy.
3. Others
The overseas subsidiary shall be subject to the tax regulations of its host country.
190
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Ⅶ. Notes to Items in the Consolidated Financial Statements
1. Cash and bank balances
Unit: RMB
Items Closing balance Opening balance
Cash on hand 214,611.31 232,265.51
Cash in bank 6,602,049,617.99 3,411,034,773.03
Other cash and bank balances 105,457,631.83 78,420,529.60
Total 6,707,721,861.13 3,489,687,568.14
Including: Deposited overseas 294,941,970.98 370,754,548.72
The total amount of the cash and bank balances that
81,437,216.06 89,543,529.60
are limited by mortgage, pledge or freeze
Other remarks:
As of December 31, 2021, bank deposits containing large deposit certificates with fixed interest rates
amounted to 3936.2824 million yuan.
2. Held-for-trading financial assets
Unit: RMB
Items Closing balance Opening balance
Financial assets at fair value through
109,383,374.74 752,224,861.78
profit or loss
Including:
Bank financial products 109,383,374.74 752,224,861.78
Including:
Total 109,383,374.74 752,224,861.78
Other remarks:
3. Derivative Financial Assets
Unit: RMB
Items Closing balance Opening balance
Foreign exchange tool 50,103,815.20 49,339,961.11
Futures tools 4,536,549.83 8,990,525.42
Total 54,640,365.03 58,330,486.53
Other remarks:
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4. Notes receivable
（1）Categories of notes receivable
Unit: RMB
Items Closing balance Opening balance
Bank acceptance 2,131,097,187.89 2,190,368,328.70
Trade acceptance 13,095,844.43 133,566,452.83
Total 2,144,193,032.32 2,323,934,781.53
Unit: RMB
Closing balance Opening balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Prov Amount Proportio Amount Provi
Categories Carrying
ision n sion Carrying amount
Proport amount
Amount Amount prop prop
ion
ortio ortio
n n
Including:
Notes
receivable
with
provision
2,144,88 100.00 0.03 2,144,193, 2,330,964, 7,029,813. 0.30
for bad 689,254.97 100.00% 2,323,934,781.53
2,287.29 % % 032.32 594.83 30 %
debt made
on a
collective
basis
Including:
Bank 2,131,09 99.36 2,131,097, 2,190,368,
93.97% 2,190,368,328.70
acceptance 7,187.89 % 187.89 328.70
Trade 13,785,0 5.00 13,095,844 140,596,26 7,029,813. 5.00
0.64% 689,254.97 6.03% 133,566,452.83
acceptance 99.40 % .43 6.13 30 %
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
2,144,88 100.00 0.03 2,144,193, 2,330,964, 7,029,813. 0.30
Total 689,254.97 100.00% 2,323,934,781.53
2,287.29 % % 032.32 594.83 30 %
Provision for bad debt made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Provision proportion (%)
Bank acceptance portfolio 2,131,097,187.89
Trade acceptance portfolio 13,785,099.40 689,254.97 5.00%
Total 2,144,882,287.29 689,254.97 --
If the provision for bad debt of notes receivable is in accordance with the general expected credit loss model,
please refer to the disclosure of the bad debt provision for other receivables:
√ Applicable □ Not Applicable
Provision for bad debt Subtotal
Phase I Phase II Phase III
12 month expected credit losses Lifetime expected credit losses Lifetime expected credit losses (credit
(credit not impaired) impaired)
Balance on January 1,
7,029,813.30 7,029,813.30
2021
The balance as of —— —— —— ——
January 1, 2021 is in
the current period
--Transferred to phase
II
--Transferred to phase
III
--Reversed to phase II
--Reversed to phase I
Provision made in the
-6,340,558.33 -6,340,558.33
current period
Provision recovered in
current period
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Provision reversed in
current period
Provision written off in
current period
Other changes
Balance on December 689,254.97 689,254.97
31, 2021
（2）Provision for bad debt accrued, recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of this period
Opening Closing
Categories Recovered or
balance Accrual Write off Others balance
reversed
Trade acceptance 7,029,813.30 -6,340,558.33 689,254.97
Total 7,029,813.30 -6,340,558.33 689,254.97
Including significant provision for bad debt recovered or reversed amount:
□ Applicable √ Not Applicable
（3）Pledged notes at the balance sheet date
Unit: RMB
Items Closing balance of pledged notes
Bank acceptance 872,096,928.77
Total 872,096,928.77
（4）Endorsed or discounted but undue notes at the balance sheet date
Unit: RMB
Items Closing balance derecognized Closing balance not yet derecognized
Bank acceptance 81,200,963.56
Total 81,200,963.56
5. Accounts receivable
（1）Disclosure of accounts receivable by categories
Unit: RMB
194
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Closing balance Opening balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Categor
Amount Propor Amount Accru Carrying Amount Propor Amount Accru Carrying
ies
tion ed amount tion ed amount
propor propor
tion tion
Receiv
ables
with
provisi
on 1,066,059. 1,066,059 100.00 100.00
0.03% 0.00 57,335.28 0.00% 57,335.28 0.00
made 26 .26 % %
on an
individ
ual
basis
Includi
ng:
Receiv
ables
with
provisi
3,702,620, 99.97 186,328,0 3,516,292, 2,481,072, 100.00 125,458,7 2,355,613,
on 5.03% 5.06%
878.17 % 09.78 868.39 027.67 % 28.10 299.57
made
on a
collecti
ve basis
Includi
ng:
3,703,686, 100.00 187,394,0 3,516,292, 2,481,129, 100.00 125,516,0 2,355,613,
Total 5.06% 5.06%
937.43 % 69.04 868.39 362.95 % 63.38 299.57
Provision made on an individual basis:
Unit: RMB
Closing balance
Debtors
Book balance Provision for bad debts Accrued proportion Reasons
Beijing Baowo Automobile Co., Ltd 560,808.07 560,808.07 100.00%
Brilliance Automobile Group Holding 488,550.18 488,550.18 100.00%
195
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Co., Ltd
Brilliance Renault Jinbei Automobile
16,701.01 16,701.01 100.00%
Co., Ltd
Total 1,066,059.26 1,066,059.26 -- --
Provision for bad debt accrued made on account receivable portfolio: Provision for account receivable bad debt
adopting aging portfolio
Unit: RMB
Closing balance
Items
Book balance Provision for bad debt Accrued proportion
Within 1 year 3,689,604,291.47 184,478,957.74 5.00%
1 to 2 years 11,154,224.17 1,115,422.40 10.00%
2 to 3 years 987,758.04 296,327.40 30.00%
Over 3 years 874,604.49 437,302.24 50.00%
Total 3,702,620,878.17 186,328,009.78 --
If the provision for bad debt of accounts receivable is in accordance with the general expected credit loss
model, please refer to the disclosure of bad debt provision for other receivables:
√Applicable □ Not Applicable
Provision for bad debt Phase I Phase II Phase III Subtotal
12 month expected Lifetime expected credit losses Lifetime expected credit losses (credit
credit losses (credit not impaired) impaired)
Balance on January 1, 2021 125,458,728.10 57,335.28 125,516,063.38
The balance as of January 1, 2021 —— —— —— ——
is in the current period
--Transferred to phase II
--Transferred to phase III
--Reversed to phase II
--Reversed to phase I
Provision made in the current 61,050,798.14 1,066,059.26 62,116,857.40
period
Provision recovered in current 57,335.28 57,335.28
period
Provision reversed in current period
Provision written off in current 301,150.24 0.00 301,150.24
period
Other changes 119,633.78 119,633.78
Balance on December 31, 2021 186,328,009.78 1,066,059.26 187,394,069.04
Disclosure by aging
Unit: RMB
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Aging Book balance
Within 1 year 3,689,604,291.47
1 to 2 years 11,659,475.36
2 to 3 years 1,548,566.11
Over 3 years 874,604.49
Total 3,703,686,937.43
（2）Provision for bad debt accrued, recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Categories Opening balance Recovered Closing balance
Accrued Write off Others
or reversed
Receivables with
provision made on an 57,335.28 1,066,059.26 57,335.28 1,066,059.26
individual basis
Receivables with
provision made on a 125,458,728.10 61,050,798.14 301,150.24 119,633.78 186,328,009.78
collective basis
Total 125,516,063.38 62,116,857.40 57,335.28 301,150.24 119,633.78 187,394,069.04
（3）Details about accounts receivable actually written off in the current period
In current period, the Company write-off a total of small sporadic accounts 301,150.24 yuan.
（4）Other remarks
1. Closing balance of top 5 debtors totaled 1,661,477,672.44 yuan, accounting for 44.86% of the total closing
balance of accounts receivable, and provision for bad debts made thereon totaled 83,073,883.62 yuan.
2. Some of the company's accounts receivable are collected by supply chain financial vouchers such as
"Meiyi order of Midea Group", "Gree financial order of Gree Electric Appliance" and "TCL gold order". The
company has not terminated the recognition of accounts receivable before the actual arrival of funds. At the same
time, the company endorsed and paid part of the supply chain financial credentials to the upstream suppliers.
Before the expiration of the supply chain financial credentials, the company did not terminate the recognition of
accounts payable.
3. As of December 31, 2021, the company had 341.0447 million yuan of supply chain financial vouchers in
hand, 30.5218 million yuan of supply chain financial vouchers that had been endorsed and paid but not expired,
and 49.6858 million yuan of supply chain financial vouchers that had been used for factoring financing but not
expired.
197
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
6. Advances paid
（1）Advances paid by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Percentage Amount Percentage
Within 1 year (including 1 year) 90,174,287.14 96.05% 61,348,884.20 88.39%
1 to 2 years 2,441,003.70 2.60% 6,712,609.39 9.68%
2 to 3 years 649,786.02 0.69% 64,117.70 0.09%
Over 3 years 619,168.16 0.66% 1,278,715.16 1.84%
Total 93,884,245.02 -- 69,404,326.45 --
（2）Top 5 debtors with the largest advances paid balances
Closing balance of top 5 debtors totaled 15,945,327.84 yuan, accounting for 16.98% of the total closing balance
of advances paid.
7. Other receivables
Unit: RMB
Items Closing balance Opening balance
Other receivables 121,135,343.85 76,935,495.05
Total 121,135,343.85 76,935,495.05
（1）Other receivables
1）Other receivables categorized by nature
Unit: RMB
Items Closing balance Opening balance
Tax refund receivable 61,621,187.53 36,628,075.87
Guarantee deposits 38,950,699.99 30,801,053.14
Others 23,872,426.88 11,700,014.42
Total 124,444,314.40 79,129,143.43
2）Provision of bad debt
Unit: RMB
198
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Phase I Phase II Phase III
12 month
Provision for bad debt Lifetime expected credit Lifetime expected credit Subtotal
expected credit
losses (credit not impaired) losses (credit impaired)
losses
Balance on January 1,
856,410.48 1,337,237.90 2,193,648.38
2021
The balance as of
January 1, 2021 is in —— —— —— ——
the current period
Provision made in the
-286,910.88 286,910.88
current period
Provision recovered in
891,664.46 223,657.71 1,115,322.17
current period
Balance on December
1,461,164.06 1,847,806.49 3,308,970.55
31, 2021
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) 90,844,468.36
1 to 2 years 10,520,630.08
2 to 3 years 2,257,005.77
Over 3 years 20,822,210.19
Total 124,444,314.40
3）Provision for bad debt accrued, recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Opening
Categories Recovered or Write Closing balance
balance Accrued Others
reversed off
Receivables with provision made on a
2,193,648.38 1,115,322.17 3,308,970.55
collective basis
Total 2,193,648.38 1,115,322.17 3,308,970.55
4）Details of the top 5 debtors with largest balances
Unit: RMB
199
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Proportion to the Provision for bad
Nature of
Items Closing balance Ages total balance of debt at the end of
receivables
other receivables the period
Tax refund
Tax refund 61,621,187.53 Within 1 year 49.52%
receivables
Finance Bureau of
Performance bond 6,971,285.00 2 to 4 years 5.60%
Xinchang County
Shaoxing Binhai Performance bond
New City for land and
5,410,000.00 3 to 5 years 4.35%
Management project
Committee construction
US Customs Customs deposit 4,782,412.57 Within 1 year 3.84%
Wuhu Yijiang Deposit of
District Finance construction 3,751,000.00 3 to 8 years 3.01%
Bureau projects
Total -- 82,535,885.10 -- 66.32%
5）Other receivables related to Government grants
Unit: RMB
Estimated receipt time,
Items Government grant Closing balance Ages
amount and basis
Expected to be fully
received from January
Local finance and VAT refund of civil Within 1
2,991,672.38 to April 2022, based on
taxation departments welfare enterprises year(including 1 year)
the tax refund
application form.
8. Inventories
Whether the Company needs to comply with the disclosure requirements of the real estate industry
No
（1）Categories of inventories
Unit: RMB
Closing balance Opening balance
Provision for Provision for
Items decline in decline in
Book balance Carrying amount Book balance Carrying amount
value of value of
inventories or inventories or
200
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
provision for provision for
impairment of impairment of
contract contract
performance performance
costs costs
Raw materials 988,227,079.33 33,309,247.33 954,917,832.00 530,578,235.34 38,591,465.21 491,986,770.13
Work-in-progress 475,907,400.34 1,451,381.52 474,456,018.82 377,607,984.60 661,948.94 376,946,035.66
Finished goods 2,231,635,847.92 45,599,140.84 2,186,036,707.08 1,488,998,382.81 55,323,878.13 1,433,674,504.68
Others 22,443,251.57 0.00 22,443,251.57 5,154,395.99 0.00 5,154,395.99
Total 3,718,213,579.16 80,359,769.69 3,637,853,809.47 2,402,338,998.74 94,577,292.28 2,307,761,706.46
（2）Provision for decline in value of inventories and Provision for impairment of contract performance
costs
Unit: RMB
Increase in current period Decrease in current period
Items Opening balance Reversal or write Closing balance
Accrued Others Others
off
Raw materials 38,591,465.21 9,799,422.31 -1,640,749.46 13,440,890.73 0.00 33,309,247.33
Work-in-progress 661,948.94 1,364,721.51 -56,525.88 518,763.05 0.00 1,451,381.52
Finished goods 55,323,878.13 40,661,086.31 -862,310.74 49,523,512.86 0.00 45,599,140.84
Total 94,577,292.28 51,825,230.13 -2,559,586.08 63,483,166.64 0.00 80,359,769.69
The determination of the net realizable value of the excess & obsolete inventories of metal materials at the
end of the period is the scrap metal recovery price. The determination of the net realizable value of the excess &
obsolete inventories of electronic components is RMB 0.
9. Other current assets
Unit: RMB
Items Closing balance Opening balance
Deductible input tax 154,807,049.35 100,377,659.11
Prepaid Enterprise income tax 30,197,003.59 49,911,203.33
Others 981,643.12 171,625.57
Total 185,985,696.06 150,460,488.01
Other remarks:
201
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
10. Long-term receivable
（1）Long-term receivable
Unit: RMB
Closing balance Opening balance
Range of
Items Book Provision for Carrying Book Provision for Carrying
discount rate
balance bad debt amount balance bad debt amount
Employee home
3,608,561.00 3,608,561.00 2,074,750.00 2,074,750.00
loan
Total 3,608,561.00 3,608,561.00 2,074,750.00 2,074,750.00 --
Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
11. Long-term equity investments
Unit: RMB
Increase and decrease in current period
Investme Ending
Adjustme
Opening nt profit Ending balance
nt of Declared Provision
balance Increase Reduce and loss Other balance of
Investee other cash for
(book investmen investmen recognize changes Other (book impairme
comprehe dividends impairme
value) t t d under in equity value) nt
nsive or profits nt
equity provision
income
method
I. Joint venture
II. Affiliates
Guochuan
g Energy
Internet
Innovatio 1,525,252 1,540,339
15,087.23
n Center .76 .99
(Guangdo
ng) Co.,
Ltd.
Chongqin
g Tainuo
9,396,904 5,762,230 1,500,000 13,659,13
Machiner
.73 .65 .00 5.38
y Co.,
Ltd.
Nanchang 1,517,138 -3,150.25 1,513,988
202
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Sanhua .95 .70
Jinlifeng
Machiner
y Co.,
Ltd.
Ningbo
Jinlifeng
1,062,209 449,942.2 1,512,151
Machiner
.18 3 .41
y Co.,
Ltd.
Qingdao
Sanhua
Jinlifeng 439,804.2 439,804.2
Machiner 6 6
y Co.,
Ltd.
Zhongsha
n Xuanyi
Pipe 1,718,111 463,034.6 2,181,145
Manufact .06 4 .70
uring Co.,
Ltd.
Xinchang
zhejiang
energy
sanhua 1,950,000 -115,634. 1,834,365
comprehe .00 93 .07
nsive
energy
co. LTD
15,219,61 1,950,000 7,011,313 1,500,000 22,680,93
Subtotal
6.68 .00 .83 .00 0.51
15,219,61 1,950,000 7,011,313 1,500,000 22,680,93
Total
6.68 .00 .83 .00 0.51
12. Investment property
（1）Investment property measured by cost method
√ Applicable □ Not Applicable
Unit: RMB
203
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Land use right and
Buildings and Construction in
Items Overseas land Total
structures progress
ownership
Ⅰ. Original Carrying
amount
1.Opening balance 12,643,427.54 3,539,025.00 16,182,452.54
2.Increase in current
-1,128,896.59 -355,137.30 -1,484,033.89
period
（1）Acquisition 0.00 0.00 0.00
（2）Transferred in
from inventory\fixed
assets\ construction in
progress
（3）Acquisition
（4）Converted
difference in Foreign -1,128,896.59 -355,137.30 -1,484,033.89
Currency Statements
3.Decrease in current
0.00 0.00
period
（1）Disposal
（2）Other transfer out 0.00
4.Closing balance 11,514,530.95 3,183,887.70 14,698,418.65
Ⅱ. Accumulated
depreciation and
amortization
1.Opening balance 6,114,863.58 0.00 6,114,863.58
2. Increase in current
52,251.45 0.00 52,251.45
period
（1）Accrual or
703,648.66 0.00 703,648.66
amortization
（2）Converted
difference in Foreign -651,397.21 0.00 -651,397.21
Currency Statements
3.Decrease in current
0.00 0.00 0.00
period
（1）Disposal
（2）Other transfer out 0.00
204
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
4.Closing balance 6,167,115.03 0.00 6,167,115.03
Ⅲ. Provision for
impairment
1.Opening balance
2. Increase in current
period
（1）Accrual
3.Decrease in current
period
（1）Disposal
（2）Other transfer out
4.Closing balance
Ⅳ. Carrying amount
1.Closing balance 5,347,415.92 3,183,887.70 8,531,303.62
2.Opening balance 6,528,563.96 3,539,025.00 10,067,588.96
（2）Investment property measured by fair value measurement model
□Applicable √ Not Applicable
13. Fixed assets
Unit: RMB
Items Closing balance Opening balance
Fixed assets 4,232,706,801.07 3,719,643,719.40
Total 4,232,706,801.07 3,719,643,719.40
（1）Fixed assets
Unit: RMB
Measurement
Buildings and Machinery and Transportation Office and other
Items analysis Total
structures equipment vehicles equipment
equipment
Ⅰ. Original book
value:
205
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
1.Opening
2,186,731,560.59 3,639,249,906.77 115,451,585.42 40,354,179.00 236,938,987.10 6,218,726,218.88
balance
2. Increase in
85,753,185.45 830,991,718.70 3,415,898.38 2,393,404.67 49,660,651.88 972,214,859.08
current period
（1）Acquisition 5,268,594.25 61,795,173.93 4,351,746.29 2,654,513.93 53,634,771.82 127,704,800.22
（2）Transferred
in from
89,532,110.52 805,015,560.80 108,618.81 217,861.35 894,874,151.48
construction in
progress
（3）Business
6,665,427.65 145,112.35 6,810,540.00
combination
（4）Transferred
in from
-9,047,519.32 -42,484,443.68 -1,080,960.26 -369,728.07 -4,191,981.29 -57,174,632.62
investment
property
3. Decrease in
11,544,357.27 86,541,790.50 4,779,404.78 6,722,812.58 33,463,547.80 143,051,912.93
current period
（1）Disposal
11,544,357.27 86,541,790.50 4,779,404.78 6,722,812.58 33,463,547.80 143,051,912.93
or scrap
（2）Other
decrease
4.Closing balance 2,260,940,388.77 4,383,699,834.97 114,088,079.02 36,024,771.09 253,136,091.18 7,047,889,165.03
Ⅱ. Accumulated
depreciation
1.Opening
582,526,293.44 1,678,476,511.90 40,099,350.82 30,404,077.31 163,881,935.33 2,495,388,168.80
balance
2. Increase in
79,963,917.25 307,126,433.72 10,580,075.13 3,757,831.73 17,000,675.57 418,428,933.40
current period
（1）Accrual 94,480,392.73 328,163,242.06 10,758,603.61 3,969,356.54 19,570,255.28 456,941,850.22
(2)Transferred in
from investment 133,228.77 4,595.22 137,823.99
property
(3) Converted
difference in
-14,516,475.48 -21,170,037.11 -183,123.70 -211,524.81 -2,569,579.71 -38,650,740.81
Foreign Currency
Statements
3. Decrease in
1,533,210.86 67,738,378.04 4,534,598.25 5,993,658.52 30,960,277.68 110,760,123.35
current period
（1）Disposal or 1,533,210.86 67,738,378.04 4,534,598.25 5,993,658.52 30,960,277.68 110,760,123.35
206
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
scrap
（2) Other
decrease
4.Closing balance 660,956,999.83 1,917,864,567.58 46,144,827.70 28,168,250.52 149,922,333.22 2,803,056,978.85
Ⅲ. Provision for
impairment
1.Opening
3,694,330.68 3,694,330.68
balance
2. Increase in
9,002,634.87 426,713.61 9,429,348.48
current period
（1）Accrual 9,002,634.87 426,713.61 9,429,348.48
3. Decrease in
998,294.05 998,294.05
current period
（1）Disposal or
998,294.05 998,294.05
scrap
4.Closing
11,698,671.50 426,713.61 12,125,385.11
balance
Ⅳ. Carrying
amount
1.Closing
1,599,983,388.94 2,454,136,595.89 67,943,251.32 7,856,520.57 102,787,044.35 4,232,706,801.07
balance
2.Opening
1,604,205,267.15 1,957,079,064.19 75,352,234.60 9,950,101.69 73,057,051.77 3,719,643,719.40
balance
（2）Fixed assets with certificate of titles being unsettled
Unit: RMB
Reasons for failure to complete the
Items Book value
certificate of title
New assets, the certificate of title to be
Shaoxing new energy plant (phase I and
234,609,170.55 processed uniformly after the overall
phase II)
completion
New assets, the certificate of title to be
13# factory in Meizhu North district 72,817,599.71 processed uniformly after the overall
completion
14# factory in Meizhu North district 23,395,496.97 New assets, the certificate of title to be
207
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
processed uniformly after the overall
completion
New assets, the certificate of title to be
15# factory in Meizhu North district 57,378,046.45 processed uniformly after the overall
completion
New assets, the certificate of title to be
Meizhu North District finished product
20,359,267.46 processed uniformly after the overall
warehouse
completion
New assets, the certificate of title to be
Meizhu North District class A warehouse 1,802,339.34 processed uniformly after the overall
completion
Subtotal 410,361,920.48
14. Construction in progress
Unit: RMB
Items Closing balance Opening balance
Construction in progress 1,343,528,875.40 628,730,529.07
Total 1,343,528,875.40 628,730,529.07
（1）Details of construction in progress
Unit: RMB
Closing balance Opening balance
Items Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Annual
production of 65
million sets of
commercial
refrigeration and
284,815,371.33 284,815,371.33 25,812,948.25 25,812,948.25
air conditioning
intelligent control
components
construction
project
Annual
production of 7.3
million sets of 1,406,087.14 1,406,087.14 145,885,533.67 145,885,533.67
new energy
vehicle thermal
208
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
management
system
components
project
Annual
production of 11.5
million sets of 78,290,263.60 78,290,263.60
new energy auto
parts project
Annual
production of 1.5
million sets of
new energy
181,228,255.83 181,228,255.83 88,939,186.18 88,939,186.18
thermal
management
components
project
Annual
production of 1
million sets of
new energy
3,772,038.19 3,772,038.19
vehicle
air-conditioning
thermal sensors
project
Annual
production of 4
million sets of
new energy
vehicles 34,615,615.96 34,615,615.96
technical
transformation
project of heat
pump components
Annual
production of 3
million sets of
plate heat
exchanger 7,569,035.77 7,569,035.77
technical
transformation
project and 2
million sets of
209
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
EXV electronic
expansion valve
components
technical
transformation
project
Annual output of 3
million sets
thermal
management parts
118,637,568.31 118,637,568.31
of new energy
vehicles technical
transformation
project
Annual output of
11 million sets of
new energy
vehicles high 93,731,401.89 93,731,401.89
efficiency heat
exchanger
assembly project
Annual output of
50.5 million sets
of high efficiency
and energy saving
refrigeration and 6,939,814.05 6,939,814.05 11,841,050.00 11,841,050.00
air conditioning
control
components
project
Vietnam industrial
92,246,267.70 92,246,267.70 80,569,043.24 80,569,043.24
plant project
Mexico industrial
53,528,222.79 53,528,222.79
plant project
Others 468,811,234.63 468,811,234.63 193,620,465.94 193,620,465.94
Total 1,343,528,875.40 1,343,528,875.40 628,730,529.07 628,730,529.07
（2）Changes of significant construction in progress in current period
Items Budget Opening Increase Transferr Other Closing Accumul Completi Accumul Includin Capitaliz Fund
210
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
balance d in ed amounts balance ated on ated g: ation rate source
current to fixed decrease investme percenta amount capitaliz for
period assets in d in nt to ge of ed interest
current budget (%) capitaliz interest in
the
period (%) ed in current
current
interest current period
period
period
Annual
productio
n of 65
million
sets of
commerci
al
refrigerati 1780.55
25,812,9 300,330, 34,693,8 6,634,36 284,815, Raised
on and air million 19.63%
48.25 604.68 16.80 4.80 371.33 funds
conditioni yuan
ng
intelligent
control
componen
ts
constructi
on project
Annual
productio
n of 7.3
million
sets of
new
468.60
energy 145,885, 70,352,9 214,832, 1,406,08 Raised
million 87.66%
vehicle 533.67 51.71 398.24 7.14 funds
yuan
thermal
managem
ent
system
componen
ts project
Annual
productio 528.80
78,290,2 77,032,6 155,322, Raised
n of 11.5 million 0.00 92.19%
63.60 12.41 876.01 funds
million yuan
sets of
211
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
new
energy
auto parts
project
Annual
productio
n of 1.5
million
sets of
500.00
new 88,939,1 297,607, 205,318, 181,228, self-raise
million 77.36%
energy 86.18 966.13 896.48 255.83 d funds
yuan
thermal
managem
ent
componen
ts project
Annual
productio
n of 1
million
sets of
new 44.7860
3,772,03 3,772,03 self-raise
energy million 0.00 0.00 45.81%
8.19 8.19 d funds
vehicle yuan
air-conditi
oning
thermal
sensors
project
Annual
productio
n of 4
million
sets of
new 161.254
energy 5 118,084, 83,469,1 34,615,6 self-raise
0.00 73.23%
vehicles million 776.40 60.44 15.96 d funds
technical yuan
transform
ation
project of
heat pump
componen
212
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
ts
Annual
productio
n of 3
million
sets of
plate heat
exchanger
technical
transform
ation
project
195.50
and 2 26,472,1 18,903,1 7,569,03 self-raise
million 0.00 13.54%
million 88.45 52.68 5.77 d funds
yuan
sets of
EXV
electronic
expansion
valve
componen
ts
technical
transform
ation
project
Annual
output of
3 million
sets
thermal
managem 206.290
ent parts 4 139,030, 20,393,3 118,637, self-raise
0.00 67.40%
of new million 886.89 18.58 568.31 d funds
energy yuan
vehicles
technical
transform
ation
project
Annual
760.00
output of 93,731,4 93,731,4 self-raise
million 0.00 0.00 18.41%
11 million 01.89 01.89 d funds
yuan
sets of
213
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
new
energy
vehicles
high
efficiency
heat
exchanger
assembly
project
Annual
output of
50.5
million
sets of
high
efficiency
785.57
and 11,841,0 19,213,5 24,114,7 6,939,81 Raised
million 9.63%
energy 50.00 51.33 87.28 4.05 funds
yuan
saving
refrigerati
on and air
conditioni
ng control
componen
ts project
Vietnam
28.00
industrial 80,569,0 12,878,3 1,201,15 92,246,2 self-raise
million 50.25%
plant 43.24 84.27 9.81 67.70 d funds
dollars
project
Mexico
39.7456
industrial 53,528,2 53,528,2 self-raise
million 0.00 0.00 21.12%
plant 22.79 22.79 d funds
dollars
project
435,110, 1,208,26 762,021, 6,634,36 874,717,
Total -- -- --
063.13 3,546.95 604.51 4.80 640.77
15. Right of use assets
Unit: RMB
Items Houses and buildings Vehicle Total
Ⅰ. Original
Carrying amount
214
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
1.Opening balance 232,086,443.59 0.00 232,086,443.59
2.Increased in current
50,843,216.72 2,858,999.54 53,702,216.26
period
（1) Rent 67,889,381.37 3,021,201.05 70,910,582.42
（2）Effect of Foreign Currency
-17,046,164.65 -162,201.51 -17,208,366.16
Translation
3.Decreased in current period
4.Closing balance 282,929,660.31 2,858,999.54 285,788,659.85
Ⅱ.
Accumulated 0.00
amortization
1.Opening balance 29,254,574.37 0.00 29,254,574.37
2.Increased in current
39,387,968.50 1,822,092.72 41,210,061.22
period
（1）Accrual 43,261,725.68 1,925,466.71 45,187,192.39
（2) Converted
difference in Foreign Currency -3,873,757.18 -103,373.99 -3,977,131.17
Statements
3. Decreased in current
period
（1）Disposal 0.00
4.Closing balance 68,642,542.87 1,822,092.72 70,464,635.59
Ⅲ. Provision
for impairment
1.Opening balance
2. Increased in current
period
（1）Accrual
3. Decreased in current
period
（1）Disposal
4.Closing balance
215
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Ⅳ. Carrying amount
1.Closing balance 214,287,117.44 1,036,906.82 215,324,024.26
2.Opening balance 202,831,869.22 0.00 202,831,869.22
Other remarks:
The difference between the beginning amount and the ending amount of the previous year (December 31, 2020) is
detailed in Section VI (VI) of this financial report.
16. Intangible Assets
（1）Details of intangible assets
Unit: RMB
Non-patent Overseas land Application Intellectual
Items Land use right Patent right Total
technology ownership software property
Ⅰ. Original
Carrying
amount
1.Opening
552,419,787.61 28,945,626.51 33,233,505.19 48,784,540.36 663,383,459.67
balance
2.Increased in 157,569,960.91 33,321,857.60 5,479,869.82 12,917,600.00 209,289,288.33
current period
（1）
158,053,500.00 35,142,755.56 7,341,120.84 0.00 200,537,376.40
Acquisition
（2）
Internal
research and
development
（3）
Business 12,917,600.00 12,917,600.00
combination
（4）
Transferred in
from -483,539.09 -1,820,897.96 -1,861,251.02 0.00 -4,165,688.07
investment
property
3.Decreased
in current
period
（1）
216
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Disposal
4.Closing
709,989,748.52 62,267,484.11 38,713,375.01 61,702,140.36 872,672,748.00
balance
Ⅱ.
Accumulated
amortization
1.Opening
99,284,584.15 314,580.96 25,859,551.94 26,368,612.98 151,827,330.03
balance
2.Increased in 13,843,452.25 112,159.24 2,166,671.22 4,558,454.10 20,680,736.81
current period
（1）
13,843,452.25 120,771.50 3,889,768.91 4,558,454.10 22,412,446.76
Accrual
（2) Converted
difference in
Foreign 0.00 -8,612.26 -1,723,097.69 0.00 -1,731,709.95
Currency
Statements
3.
Decreased in 0.00 0.00 0.00 0.00 0.00
current period
（1）
Disposal
4.Closing
113,128,036.40 426,740.20 28,026,223.16 30,927,067.08 172,508,066.84
balance
Ⅲ. Provision
for impairment
1.Opening
0.00 3,862,456.71 0.00 0.00 3,862,456.71
balance
2.
Increased in -88,319.91 0.00 0.00 -88,319.91
current period
（1）
Accrual
（2)
Converted 0.00 -88,319.91 0.00 0.00 -88,319.91
difference in
217
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Foreign
Currency
Statements
3.
Decreased in
current period
（1）
Disposal
4.Closing
0.00 3,774,136.80 0.00 0.00 3,774,136.80
balance
Ⅳ. Carrying
amount
1.Closing
596,861,712.12 58,066,607.11 10,687,151.85 30,775,073.28 696,390,544.36
balance
2.Opening
453,135,203.46 24,768,588.84 7,373,953.25 22,415,927.38 507,693,672.93
balance
17. Goodwill
（1）Original Carrying amount of goodwill
Unit: RMB
Investee or events Increased in current period Decreased in current period
resulting in Opening balance Due to business Closing balance
Disposal
goodwill combination
R-Squared
31,959,091.60 31,959,091.60
Puckett Inc.
Zhejiang Sanhua
plate Exchange
7,591,830.61 7,591,830.61
Technology Co.,
Ltd
Total 31,959,091.60 7,591,830.61 39,550,922.21
（2）Provision for goodwill impairment
Unit: RMB
Investee or Opening Increased in current period Decreased in current period Closing
events resulting balance Provision made … Disposal … balance
218
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
in goodwill
R-Squared
31,959,091.60 31,959,091.60
Puckett Inc.
Total 31,959,091.60 31,959,091.60
Related information of asset group or asset group portfolios which include goodwill
Composition of asset group or asset group portfolio The enterprises corresponding to this asset group portfolio include Zhejiang
Sanhua microchannel heat exchanger Co., Ltd. and its subsidiaries
(hereinafter referred to as microchannel asset group)
Book value of asset group or asset group portfolio 1,446,999,852.04
Book value of goodwill allocated to this asset group 31,959,091.60
or asset group portfolio
Book value of asset group or asset group portfolio 1,478,958,943.64
containing goodwill
Whether the asset group or combination of asset R-Squared Puckett Inc. was originally an independent enterprise. Since it was
groups is consistent with the asset group or acquired by the company, the microchannel business has been internally
combination of asset groups determined on the integrated. At present, it mainly undertakes the sales function of the
purchase date and goodwill impairment test in American market, its procurement and production functions have been
previous years undertaken by the Mexican factory, and its R&D and management functions
have been undertaken by the domestic company. The company assesses and
evaluates the microchannel business as a whole. R-Squared Puckett Inc. can
no longer be recognized as an independent asset group. The company
consolidated the microchannel business as a microchannel asset group.
The microchannel asset group is consistent with the asset group determined
by the goodwill impairment test in previous years.
Impairment test process, the key parameters(Such as expected future cash flow when the present value of the
forecast period growth rate, stable period growth rate, profit margin, discount rate, forecast period) , and recognition
method of goodwill impairment loss:
The recoverable amount of goodwill is calculated according to the present value of the estimated future cash
flow. Based on December 31, 2021, the Company performed an impairment test on the value of the microchannel
asset group portfolio. The recoverable amount of the asset group portfolio is estimated by the discounted value of
the estimated future cash flow. Based on the analysis of the development stage of the industry and the
competitiveness of the company, the cash flow from 2022 to 2025 is determined by the prediction data approved by
the management, and the cash flow in subsequent years is estimated at zero growth rate. The pre tax discount rate
includes the time value of the current currency market and the specific risk interest rate of microchannel business,
which is estimated at 13.13% (2020: 13.80%).
Other key parameters used in the impairment test include: estimated selling price, sales volume, production
cost and other related expenses. The company determines the above key data based on historical experience and
market development forecast.
According to the appraisal report (Kun yuan Ping Bao [2022] No. 100) issued by Kun yuan asset appraisal Co.,
Ltd., the recoverable amount of the asset group portfolio containing goodwill in the microchannel asset group is
1443.4064 million yuan, which is lower than the book value of 1478.9589 million yuan. The goodwill impairment
loss of 31.9591 million yuan should be recognized in this period, which belongs to the company.
219
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
19. Long-term prepayments
Unit: RMB
Increased in
Items Opening balance Amortization Other decreases Closing balance
current period
Rental housing
construction and
23,706,401.61 10,618,211.59 6,821,663.07 27,502,950.13
transformation
expenditure
Compensated use
fee for emission 0.00 3,158,390.00 631,678.00 2,526,712.00
rights
Others 0.00 6,626,661.39 15,495.45 6,611,165.94
Total 23,706,401.61 20,403,262.98 7,468,836.52 36,640,828.07
19. Deferred tax assets / deferred tax liabilities
（1）Deferred tax assets before offset
Unit: RMB
Closing balance Opening balance
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
difference assets difference assets
Provision for bad debt 122,506,455.16 23,438,581.33 78,915,609.30 15,835,440.18
Provision for inventory
46,952,738.86 8,222,942.54 67,642,565.60 11,282,463.93
write-down
Unrealized profit from
258,273,537.27 32,617,712.51 180,209,650.54 17,242,885.11
internal transactions
Deductible losses 173,493,878.13 26,364,728.72 153,097,367.85 32,871,988.62
Deferred income:
155,568,312.27 25,652,746.86 140,105,328.43 22,782,106.08
government grants
Provision for fixed assets
12,125,385.11 1,818,807.78 3,694,330.68 554,149.61
impairments
The share-paid
remuneration without
pre-tax deduction 59,634,274.87 9,190,479.70 70,222,810.23 11,050,883.17
calculated according to
the accounting standard
The expected additional
98,930,228.80 15,271,454.24 139,395,300.30 22,008,772.76
deductible share-based
220
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
remuneration in the
future period calculated
according to the tax
standard
Difference between
accounting cost and tax
71,233,687.74 10,685,053.16
cost of convertible
corporate bonds
Cost estimation 27,565,532.12 4,134,829.82
Floating loss of
300,000.00 45,360.00
derivative instruments
Total 998,718,498.21 153,262,506.84 861,148,495.05 137,808,879.28
（2）Deferred tax liabilities before offset
Unit: RMB
Closing balance Opening balance
Items Taxable temporary Deferred tax Taxable temporary
Deferred tax liabilities
difference liabilities difference
Appreciation of assets
appraisal of the business
16,689,933.82 2,503,490.07
combinations not under
common control
Depreciation and
1,076,829,976.01 161,524,496.34 770,755,369.92 128,446,514.86
amortization expense
Floating gain on
14,280,622.90 2,142,093.44 13,804,602.36 2,070,690.35
derivatives
Accrued interest of
43,518,763.17 6,586,968.05
certificate of deposit
Floating gain on financial
1,020,675.59 153,101.41 1,739,861.78 260,979.27
products
Total 1,152,339,971.49 172,910,149.31 786,299,834.06 130,778,184.48
（3）Deferred tax assets or liabilities after offset shown on a net offsetting basis
Unit: RMB
Deferred tax assets and Closing balance of Deferred tax assets and Opening balance of
Items
liabilities offset deferred tax assets or liabilities offset deferred tax assets or
221
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amount at the end of liabilities after offset amount at the liabilities after offset
the balance amount beginning of the
balance amount
Deferred tax assets 153,262,506.84 137,808,879.28
Deferred tax liabilities 172,910,149.31 130,778,184.48
（4）Details of unrecognized deferred tax assets
Unit: RMB
Items Closing balance Opening balance
Provision for bad debt 68,885,839.40 55,823,915.76
Provision for inventory write-down 33,407,030.83 26,934,726.68
Deductible losses of subsidiaries 119,908,522.27 24,790,389.63
Investment losses recognized by the equity
9,330,930.51 4,319,616.68
method
Floating loss on derivatives 7,639,957.91
Others 15,001,942.21
Total 231,532,323.01 134,510,548.87
（5）Deductible losses of unrecognized deferred tax assets will expire in the following years
Unit: RMB
Maturity years Closing balance Opening balance Remarks
Year 2025 1,176,424.56 445,585.90
Year 2026 676,929.68
Year 2028 10,478,078.42 10,478,078.42
Year 2029 7,488,066.67 7,488,066.67
Year 2030 31,604,893.55 6,378,658.64
Year 2031 68,484,129.39
Total 119,908,522.27 24,790,389.63 --
20. Other non-current assets
Unit: RMB
Closing balance Opening balance
Items Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
222
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Advanced
payment for
non-current 328,609,958.16 328,609,958.16 251,509,127.08 251,509,127.08
assets
purchasing
Total 328,609,958.16 328,609,958.16 251,509,127.08 251,509,127.08
Other remarks:
21. Short-term borrowings
（1）Categories of short-term borrowings
Unit: RMB
Items Closing balance Opening balance
Credit borrowings 20,000,000.00
Overseas loan under domestic guarantee 588,918,308.44 362,698,500.00
Bill discount financing 98,796,666.66
Factoring financing of account receivable 49,685,762.67
Accrued interest 790,172.77 389,796.60
合计 738,190,910.54 383,088,296.60
22. Derivative financial liabilities
Unit: RMB
Items Closing balance Opening balance
Foreign exchange tool 7,939,957.91
Total 7,939,957.91
23. Notes payable
Unit: RMB
Categories Closing balance Opening balance
Bank acceptance bill 1,891,526,333.48 1,238,574,463.73
Total 1,891,526,333.48 1,238,574,463.73
At the balance sheet date, balances due but unpaid totaled RMB 0.
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Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
24. Accounts payable
（1）Details of accounts payable
Unit: RMB
Items Closing balance Opening balance
Within 1 year(including 1 year) 3,165,267,168.95 2,184,050,911.51
1 to 2 years 40,604,444.51 88,579,882.54
2 to 3 years 4,647,692.76 1,289,268.11
Over 3 years 4,178,825.37 5,741,693.81
Total 3,214,698,131.59 2,279,661,755.97
25. Advances received
（1）Details of advances received
Unit: RMB
Items Closing balance Opening balance
Advance collection of asset package
10,000,000.00
disposal funds
Total 10,000,000.00
26. Contract liabilities
Unit: RMB
Items Closing balance Opening balance
Advance payment for sales 79,816,249.22 42,581,607.67
Total 79,816,249.22 42,581,607.67
27. Employee benefits payable
（1）Details of employee benefits payable
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Ⅰ. Short-term employee benefits 282,701,491.43 2,267,258,680.29 2,186,778,975.25 363,181,196.47
Ⅱ. Post-employment benefits - defined 2,888,141.35 65,128,724.55 62,261,841.95 5,755,023.95
224
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
contribution plan
Ⅲ. Termination benefits 3,716,281.21 1,825,820.96 2,704,334.83 2,837,767.34
Total 289,305,913.99 2,334,213,225.80 2,251,745,152.03 371,773,987.76
（2）Details of Short-term employee benefits
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
1. Wage, bonus,
264,874,751.98 1,698,778,065.66 1,632,087,231.02 331,565,586.62
allowances and subsidy
2. Employee welfare
99,852,508.55 99,784,157.62 68,350.93
fund
3. Social insurance
10,408,040.81 111,351,219.55 110,131,931.12 11,627,329.24
premium
Including: Medicare
2,289,049.45 40,395,055.86 39,477,699.59 3,206,405.72
premium
Occupational injuries 256,781.03 1,550,201.30 1,653,211.20 153,771.13
premium
116,439.60 197,312.10 274,184.28 39,567.42
Maternity premium
Overseas social security
7,745,770.73 69,208,650.29 68,726,836.05 8,227,584.97
contributions
4. Housing provident
38,212,952.21 38,206,374.21 6,578.00
fund
5. Trade union fund and
1,224,164.06 10,688,243.64 10,638,788.69 1,273,619.01
employee education fund
8、Dispatching
3,460,279.64 308,349,070.62 293,169,617.59 18,639,732.67
remuneration
9、Cash stock
2,734,254.94 26,620.06 2,760,875.00 0.00
appreciation option
Total 282,701,491.43 2,267,258,680.29 2,186,778,975.25 363,181,196.47
（3）Details of defined contribution plan
Unit: RMB
Items Opening Increased in current Decreased in current Closing balance
225
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
balance period period
1. Basic endowment insurance
2,771,543.35 63,003,140.39 60,213,916.17 5,560,767.57
premium
2. Unemployment insurance
116,598.00 2,125,584.16 2,047,925.78 194,256.38
premium
Total 2,888,141.35 65,128,724.55 62,261,841.95 5,755,023.95
28. Taxes and rates payable
Unit: RMB
Items Closing balance Opening balance
VAT 9,508,902.15 14,647,359.92
Enterprise income tax 64,102,462.85 33,105,141.57
Individual income tax 7,076,026.18 5,797,449.67
Urban maintenance and construction tax 1,552,749.69 2,283,772.47
Education surcharge 918,423.85 1,207,595.10
Local education surcharge 545,284.63 717,275.16
Housing property tax 18,040,043.30 14,503,893.38
Land use tax 10,576,760.58 2,162,780.06
Local foundation for water works 64,041.47 60,119.04
Others 1,019,771.50 522,755.69
Total 113,404,466.20 75,008,142.06
29. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 172,923,251.10 270,888,400.58
Total 172,923,251.10 270,888,400.58
（1）Other payables
1）Other payables listed by nature
Unit: RMB
Items Closing balance Opening balance
Restricted shares repo obligations 75,490,047.50 145,063,690.00
226
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Product warranty fee 5,480,670.32 2,757,036.90
Guarantee deposit 10,645,357.68 6,564,169.23
Rent and property fee 5,524,510.45 7,877,975.71
Compensation for product quality loss 13,500,685.28 3,889,429.08
Collection of talent awards 2,355,610.90 1,320,000.00
Freight and miscellaneous charges 72,117,058.15
Others 59,926,368.97 31,299,041.51
Total 172,923,251.10 270,888,400.58
30. Non-current liabilities due within one year
Unit: RMB
Items Closing balance Opening balance
Guaranteed borrowings 1,430,000,000.00
Overseas loan under domestic guarantee 294,046,008.86 130,498,000.00
Accrued interest 1,723,095.18 55,923.87
Lease liabilities 37,573,783.54 22,719,934.72
Total 1,763,342,887.58 153,273,858.59
Other remarks:
The difference between the beginning amount and the ending amount of the previous year (December 31,
2020) is detailed in Section VI (VI) of this financial report.
31. Other current liabilities
Unit: RMB
Items Closing balance Opening balance
Output tax to be written off 5,276,677.78
Total 5,276,677.78
32. Long-term borrowings
（1）Categories of long-term borrowings
Unit: RMB
Items Closing balance Opening balance
Guaranteed borrowings 800,000,000.00 1,380,000,000.00
Overseas loan under domestic guarantee 637,570.00 326,142,884.74
227
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Accrued interest 824,388.89 1,776,110.13
Total 801,461,958.89 1,707,918,994.87
33. Bonds payable
（1）Bonds payable
单位：元
Items Ending balance Opening balance
Sanhua Convertible bonds 2,652,035,619.50
Total 2,652,035,619.50
（2）Changes of bonds payable（does not include preferred shares, perpetual bonds and other financial
instruments classified as financial liabilities）
Unit: RMB
Accr Conve
Amort Initiall Amort Funds
ued rsion
ization y Accru ization return
Issuan Ope inter Curren from Endin
in classif ed in ed
Bond Par Release Bond ce ning Current est t Issuan shares g
discou ied as interes discou from
name value date term amoun bala issuance at repay ce fee to balanc
nt or equity t at par nt or debt to
t nce par ment equity e
premi instru value premi equity
valu instru
um ments um swap
e ments
Sanhu
a 3,000, 3,49 351,00 -12,46 -409,7 71,233 2,652,
Jun, 6 3,000,00 3,499, -460,7 -1,754
Conve 100.00 000,00 9,37 1,860. 8,370. 66,556 ,687.7 035,61
2021 years 0,000.00 379.22 65.56 .85
rtible 0.00 9.22 09 81 .24 4 9.50
bonds
3,000, 3,49 351,00 -12,46 -409,7 71,233 2,652,
3,000,00 3,499, -460,7 -1,754
Total -- -- -- 000,00 9,37 1,860. 8,370. 66,556 ,687.7 035,61
0,000.00 379.22 65.56 .85
0.00 9.22 09 81 .24 4 9.50
（3）Explanation of conditions and time of share conversion for convertible bonds
With the approval of China Securities Regulatory Commission in document zjxk [2021] No. 168, the company
publicly issued 30 million convertible corporate bonds (hereinafter referred to as Sanhua convertible bonds) in June
2021, with a face value of 100 yuan each and a total issuance amount of 3 billion yuan.
The start and end date of Sanhua convertible bonds is from December 7, 2021 to May 31, 2027, and the initial
conversion price is 21.55 yuan / share. As of December 31, 2021, 5,321 Sanhua convertible bonds have been
converted into 24,610 ordinary shares.
228
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
34. Leased liabilities
Unit: RMB
Items Closing balance Opening balance
Leased liabilities 195,555,461.70 172,499,750.25
Less：Leased liabilities due within 1 year -37,573,783.54 -22,719,934.72
Total 157,981,678.16 149,779,815.53
Other remarks:
The difference between the beginning amount and the ending amount of the previous year (December 31, 2020) is
detailed in Section VI (VI) of this financial report.
35. Long-term payables
Unit: RMB
Items Closing balance Opening balance
Long-term payables 903,862.19
Total 903,862.19
（1）Long-term payables listed by nature
Unit: RMB
Items Closing balance Opening balance
Stock appreciation rights deposit 903,862.19
Other remarks:
The difference between the beginning amount and the end amount of the previous year (December 31, 2020)
is detailed in Section VI (VI) of this financial report
36. Provisions
Unit: RMB
Items Closing balance Opening balance Reasons for balance
Pending lawsuit 2,638,000.00
Total 2,638,000.00 --
Other remarks，Including the relevant significant assumptions and estimates of the significant provisions:
37. Deferred income
Unit: RMB
Items Opening balance Increased in current Decreased in current Closing balance Reasons for
229
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
period period balance
Government Related to
140,105,336.43 40,938,414.86 24,211,916.58 156,831,834.71
grants assets
Total 140,105,336.43 40,938,414.86 24,211,916.58 156,831,834.71 --
Other remarks:
Details of government subsidies included in current profits and losses please see the financial report for reference.
38. Other non-current liabilities
Unit: RMB
Items Closing balance Opening balance
Engineering agent construction fund 28,782,218.09 28,782,218.09
Long-term employee rights protection
46,419,797.27 51,616,679.63
payment
Total 75,202,015.36 80,398,897.72
Other remarks:
According to local investment promotion policies, the "seven connections and one leveling" project of the
construction land of the Wuhu city is completed by Wuhu high-tech Industrial Development Zone Administration
Committee. As the state-owned assets management unit of Wuhu high-tech Industrial Development Zone, Wuhu
Xinma Investment Co., Ltd. and Wuhu High-tech Construction Development Co., Ltd., entrusted Wuhu Sanhua
Auto-control Components Co., Ltd and Wuhu Sanhua Technology Co., Ltd. to build the "seven connections and
one leveling" project, and allocated RMB 72.03 million as engineering fund. As of December 31,2021, the
accumulated amount of hedging and written-off of engineering agent construction fund and project expense was
RMB 43.2478 million，and the amount to be written-off at the end of the period was RMB 28.7822 million.
Long-term employee rights protection payment: retirement pensions of Mr. Harald Schrott who is the former
actual controller of the Germany Aweco residential appliances business, and his father Hugo Schrott. Based on
Austrian labor law, one-time welfare compensation for termination of labor contract; one-time welfare
compensation for retirement, disability and death. The amount of such liabilities is estimated and determined by
an independent actuary.
39. Share capital
Unit: RMB
Changed amount of current period（+/-）
Issue of Reserve
Opening balance Bonus Closing balance
new transferred to Others Subtotal
shares
shares shares
Total
3,591,601,468.00 -511,250.00 -511,250.00 3,591,090,218.00
shares
Other remarks:
In the current period, 24,610 shares were increased due to the conversion of "Sanhua convertible bonds", and
230
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
535,860 shares were reduced due to the repurchase and cancellation of restricted shares
40. Other equity instruments
(1) Basic information of preferred shares, perpetual bonds and other financial instruments issued at the
end of the period
Relevant details please see the introduction of other important matters in Section X (XVI) of this financial
report for reference.
(2) Statement of changes in preferred shares, perpetual bonds and other financial instruments issued at the
end of the period
Unit: RMB
Financial Opening balance Increased in current period Decreased in current period Closing balance
instruments
Qty Book value Qty Book value Qty Book value Qty Book value
issued
Convertible
30,000,000 409,766,556.24 5,321 81,953.31 29,994,679 409,684,602.93
bonds
Total 30,000,000 409,766,556.24 5,321 81,953.31 29,994,679 409,684,602.93
The increase and decrease of other equity instruments in the current period, the reasons for the change, and the
basis of relevant accounting treatment:
With the approval of the CSRC in document zjxk [2021] No. 168, the company publicly issued 30 million
convertible corporate bonds in June 2021, with a face value of 100 yuan each and a total issuance amount of 3
billion yuan. The amount of these convertible corporate bonds initially classified as equity instruments is
409,766,556.24 yuan. In the current period, due to the conversion of debt to equity, 81,953.31 yuan of equity
instruments was added.
Other remarks
41. Capital reserve
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Capital premium
99,640,721.51 91,418,878.73 191,059,600.24
（Share premium）
Other capital reserve 215,776,712.71 60,225,070.93 93,641,608.86 182,360,174.78
Total 315,417,434.22 151,643,949.66 93,641,608.86 373,419,775.02
Other remarks, including changes and reasons in the current period:
Reasons for the change of increase or decrease in current period:① Equity Incentive Restricted Shares
unlock 11,062,090 shares this period，the corresponding accumulative compensation paid by shares is RMB
90,900,769.86，a premium on the share capital transferred in such amount from other capital reserves；②The
231
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
capital stock premium increased by 518,108.87 Yuan due to the debt to equity swap of "Sanhua convertible
bonds"③ Repo and cancellation of equity incentive restricted shares that have granted but not met the unlock
condition，share premium decreased RMB 2,740,839.00；④ Other capital reserve increased RMB 51,697,222.60
due to the confirmation of share-based payment remuneration.；⑤The available income tax benefit, due to the
expected tax cost of equity incentive restricted shares that are no unlockable exceeds accounting cost, the closing
balance was RMB 8,527,848.33 higher than the opening balance, other capital reserve and deferred tax assets
increased such amount；
42. Treasury shares
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Restricted shares 145,063,690.00 69,573,642.50 75,490,047.50
Repo shares 136,420,051.34 200,039,514.06 336,459,565.40
Total 281,483,741.34 200,039,514.06 69,573,642.50 411,949,612.90
Other remarks, including changed amount of the current period and movement reason:
(1) Restricted shares
①Unlock 6,465,940 restricted shares of equity incentive granted in 2018. After ex rights and ex dividend, the
grant price per share is 4.3393 yuan, and the unlocking amount is 28,057,971.00 yuan Unlock 4,596,150 restricted
shares of equity incentive granted in 2020. The grant price per share after ex rights and ex dividend is 7.1115 yuan,
and the unlocking amount is 32,685,697.50 yuan; Treasury shares and repurchase obligations payable shall be
reduced by the same amount.
②May 2021，The company implemented the 2020 annual equity distribution，the dividend of the not
unlocked portion of the equity incentive restricted shares is RMB 5,553,275.00，suspended by the company. At
the same time，treasury shares and related liabilities for repo obligation decreased such amount.
③Repo and cancellation of equity incentive restricted shares that have not met the unlock condition，treasury
shares offset against RMB3,276,699.00.
In current period, the Company repurchased 8,293,764shares through call auction, and paid a total share
repurchase amount of 200,039,514.06 yuan.
43. Other comprehensive income (OCI)
Unit: RMB
Changed amount of the current period
Less: Less: OCI
Attributable Attributable
Current OCI carried Less:
to to
Opening period carried forward incom Closing
Items the parent Non-controlli
balance cumulative forward transferred e tax balance
Company ng
before transferr to expens
after interest
income tax ed to undistribut e
tax after tax
profit or ed profit
232
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
loss
Items to be
reclassified
-89,624,962. -39,785,884. -39,785,884. -129,410,847.
subsequently
61 78 78 39
to profit or
loss
-89,624,962. -39,785,884. -39,785,884. -129,410,847.
Translation
61 78 78 39
reserves
Other
comprehensi -89,624,962. -39,785,884. -39,785,884. -129,410,847.
ve income in 61 78 78 39
total
Other remarks, including adjustment for converting the effective part of the cash flow hedge profit and losses into
the hedged item initial recognized amount:
The translation differences of foreign currency statements belong to the parent company and have no
impact on corporate income tax.
44. Surplus reserve
Unit: RMB
Increased in current Decreased in current
Items Opening balance Closing balance
period period
Statutory surplus reserve 611,472,556.89 63,816,916.23 675,289,473.12
Discretionary surplus
8,681,137.20 8,681,137.20
reserve
Reserve fund 17,813,919.38 17,813,919.38
Total 637,967,613.47 63,816,916.23 701,784,529.70
Remarks on surplus reserve, including movement in current period and the reason for changes:
This period increased by RMB 63,816,916.23，According to the parent company's current net profit 10% of the
statutory surplus reserve.
45. Undistributed profit
Unit: RMB
Items Current period Last period
Balance before adjustment at the end of the
5,890,916,707.83 5,278,392,288.84
previous period
Balance after adjustment at the end of the previous
5,890,916,707.83 5,278,392,288.84
period
233
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Add: Net profit attributable to shareholders of the
1,684,044,407.47 1,462,158,821.57
parent Company for current year
Less: Appropriation of statutory surplus reserve 63,816,916.23 78,070,994.08
Payable dividends on ordinary shares 895,454,593.00 771,563,408.50
Closing balance 6,615,689,606.07 5,890,916,707.83
Details of undistributed profits adjustment at the beginning of the period
1). Due to the retroactive adjustment of the accounting standards for business enterprises and its relevant new
provisions, the undistributed profit at the beginning of the period 0.00 yuan.
2). Due to the change of accounting policy, the undistributed profit at the beginning of the period was affected by
0.00 yuan.
3). Due to the correction of major accounting errors, the undistributed profit at the beginning of the period was
affected by 0.00 yuan.
4). The change of consolidation scope due to the same control affects the undistributed profit at the beginning of
the period by 0.00 yuan.
5). The total impact of other adjustments on the undistributed profit at the beginning of the period is 0.00 yuan.
46. Operating revenue and Operating cost
Unit: RMB
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 15,320,159,124.37 11,239,932,600.42 11,665,371,918.47 8,319,360,567.91
Other operations 700,650,681.15 667,418,368.69 444,461,449.97 418,860,470.45
Total 16,020,809,805.52 11,907,350,969.11 12,109,833,368.44 8,738,221,038.36
After deducting non-recurring profit or loss by audit, whether the net profit is negative or not
□ Applicable √ Not Applicable
Other remarks
Breakdown of revenue generated by contracts with customers by major categories
1) Revenue decomposition by product or service type
The decomposition of revenue by product or service type is detailed in note XIV (I) to the financial
statements.
2) Income decomposition was according to the time of goods or services transfer.
Item Current period cumulative Preceding period comparative
Recognition of revenue at a certain 16,011,597,055.08 12,099,564,633.72
point in time
Recognition of revenue over a period 9,212,750.44 10,268,734.72
of time
Total 16,020,809,805.52 12,109,833,368.44
234
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
47. Taxes and surcharges
Unit: RMB
Items Current period cumulative Preceding period comparative
Urban maintenance and construction tax 23,550,102.70 26,020,701.95
Education surcharge 12,271,122.11 13,060,313.39
Housing property tax 18,201,499.81 19,644,211.36
Land use tax 9,829,194.63 3,415,856.97
Stamp duty 5,612,844.37 2,650,817.59
Local foundation for water works 704,457.11 596,652.81
Others 5,213,561.16 3,665,075.62
Local education surcharge 8,180,748.10 8,919,791.12
Total 83,563,529.99 77,973,420.81
48. Selling expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 230,870,245.85 185,383,982.72
Warehousing, freight and miscellaneous
80,729,629.97 60,554,223.42
charges
Entertainment expense 41,824,687.72 38,123,695.62
Travel expense 18,099,214.71 16,841,187.92
Market maintenance fee 50,166,361.46 41,332,674.93
Advertising expense 12,059,349.62 12,803,945.68
Others 15,477,043.22 10,085,332.79
Total 449,226,532.55 365,125,043.08
Other remarks:
Due to the implementation of the Q&A on the Implementation of Accounting Standards for Business Enterprises
(batch 5), the company will retroactively correct the presentation of sales and incidental expenses in 2020, and
reclassify the items from "selling expenses" to "operating costs", as described in Section VI (VI) of this financial
report.
49. Administrative expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 494,243,600.32 400,277,866.64
235
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Share-based payment remuneration 47,453,874.76 72,810,130.99
Depreciation and amortization expense 114,268,657.76 96,201,760.17
Office expense 105,050,490.36 94,094,129.08
Intermediary organ expense 56,124,341.11 48,741,873.10
Entertainment expense 16,099,578.20 14,907,529.66
Vehicle expense 11,544,975.21 10,658,851.78
Sporadic renovation expense in the park 17,843,375.87 17,734,954.44
Security fund for the disabled 3,157,345.53 2,441,941.61
Others 10,016,622.21 6,215,391.41
Total 875,802,861.33 764,084,428.88
50. R&D expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Labor cost 403,228,674.30 291,552,480.55
Material and power expense 231,465,729.15 136,062,761.46
Depreciation and amortization expense 35,351,729.36 31,108,149.42
Mold manufacturing expense 60,978,249.32 30,480,247.99
Royalties 9,131,467.11 4,865,282.70
Outsourcing R&D expense 665,969.71 841,185.47
Others 10,316,740.29 23,491,256.04
Total 751,138,559.24 518,401,363.63
51. Financial expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Interest expense 146,890,397.95 64,733,993.15
Including: bond payable interest 74,733,687.74
Interest on lease liabilities 216,112.22
Interest income -163,144,645.89 -52,233,256.57
Exchange gains or losses 95,990,142.26 112,675,905.53
Others 4,372,953.79 3,683,451.53
Total 84,108,848.11 128,860,093.64
236
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
52. Other income
Unit: RMB
Source of the other income Current period cumulative Preceding period comparative
Government subsidies related to assets 24,211,916.58 18,853,006.64
Government subsidies related to revenue 97,810,169.09 131,455,977.16
Handling fees for withholding individual
765,674.33 1,246,912.65
income tax
Total 122,787,760.00 151,555,896.45
53. Investment income
Unit: RMB
Items Current period cumulative Preceding period comparative
Investment income from long-term equity
7,011,313.83 2,199,442.47
investments under equity method
disposal of long-term equity investments -4,100,413.03
Investment income of bank financing
16,473,512.65 46,589,043.29
products
Gains and losses on settlement of foreign
84,019,324.41 19,642,289.10
exchange contract
Gains and losses on settlement of futures
35,602,149.71 29,117,946.22
contracts
Bill discount interest -1,533,698.47 -4,369,430.89
Total 141,572,602.13 89,078,877.16
54. Gains or losses on changes in fair value
Unit: RMB
Items Current period cumulative Preceding period comparative
Floating income of bank financing
-596,487.04 -10,786,528.53
products
Floating income of futures contracts -4,153,975.59 7,260,487.69
Floating income of foreign exchange
7,971,860.01 35,373,956.60
contract
Total 3,221,397.38 31,847,915.76
237
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
55. Credit impairment loss
Unit: RMB
Items Current period cumulative Preceding period comparative
Provision for bad debt -56,834,285.92 -28,677,382.30
Total -56,834,285.92 -28,677,382.30
56. Assets impairment loss
Unit: RMB
Items Current period cumulative Preceding period comparative
Ⅱ. Inventory write-down loss and contract
-51,825,230.13 -58,672,538.84
performance cost impairment loss
V. Impairment loss of fixed assets -9,429,348.48 0.00
XI. Goodwill impairment loss -31,959,091.60 0.00
Total -93,213,670.21 -58,672,538.84
Other remarks:
57. Gains on asset disposal
Unit: RMB
Items Current period cumulative Preceding period comparative
Gains on disposal of fixed assets -387,648.44 -486,378.33
58. Non-operating revenue
Unit: RMB
Current period Preceding period Amount recorded into the current
Items
cumulative comparative non-recurring profit and loss
Exempted payment 1,663,567.85 3,090,050.86 1,663,567.85
Compensation and penalty
2,232,754.09 1,056,661.41 2,232,754.09
income
Gains from retirement of
208,668.30 84,161.06 208,668.30
fixed assets
Others 687,560.44 824,606.49 687,560.44
Total 4,792,550.68 5,055,479.82 4,792,550.68
238
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
59. Non-operating expenditures
Unit: RMB
Amount included in
Items Current period cumulative Preceding period comparative
non-recurring profit or loss
Losses on retirement of fixed
6,985,178.47 10,492,379.67 6,985,178.47
assets
Litigation for damages 4,971,711.20 2,638,000.00 4,971,711.20
Donation expenditures 495,026.83 51,555.76 495,026.83
Others 2,476,278.90 1,661,697.75 2,476,278.90
Total 14,928,195.40 14,843,633.18 14,928,195.40
60. Income tax expenses
（1）Income tax expenses
Unit: RMB
Items Current period cumulative Preceding period comparative
Current period income tax expenses 254,222,957.91 185,380,549.14
Deferred income tax expenses 17,581,519.86 33,322,315.46
Total 271,804,477.77 218,702,864.60
（2）Reconciliation of accounting profit to income tax expenses
Unit: RMB
Items Current period cumulative
Income before tax 1,976,629,015.41
Income tax expense calculated at the applicable tax rate 329,915,459.20
Adjustment of preliminary income tax expense settlement and
13,933,805.43
payment
Tax impact of research and development expenses plus deduction -97,297,971.85
Others 25,253,184.99
Income tax expenses 271,804,477.77
61. Other comprehensive income
Please refer to the notes of balance sheet items and other comprehensive income for details.
239
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
62. Notes to items of the consolidated cash flow statement
（1）Other cash receipts related to operating activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Government grants 195,905,022.49 189,256,546.89
Interest income 89,862,225.91 52,233,256.57
Net change in restricted funds 11,123,000.00
Rental income 9,785,805.55 10,255,696.35
Insurance indemnities 2,050,150.25 1,056,661.41
Other 1,576,848.07 733,249.60
Total 310,303,052.27 253,535,410.82
（2）Other cash payments related to operating activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Net change in restricted funds 11,123,000.00
Guarantee deposit 8,149,646.85 12,114,845.90
Expense payments for the period 473,111,251.31 669,374,176.12
Total 481,260,898.16 692,612,022.02
（3）Other cash receipts related to investing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Redemption of bank financing products 642,245,000.00 520,254,995.00
Net change in restricted funds 7,204,442.99
Profit on Foreign exchange contract
84,019,324.41 19,642,289.10
settlement
Profit on Futures contract settlement 36,962,814.04 29,117,946.22
Total 763,227,138.45 576,219,673.31
240
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
（4）Other cash payments related to investing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Subscription expenses for certificates of
3,839,000,000.00
deposit
Net change in restricted funds 34,524,969.01
Payments for purchasing bank financing
289,200,000.00
products
Total 3,873,524,969.01 289,200,000.00
（5）Other cash receipts related to financing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Net change in restricted funds 6,147,618.22 24,311,782.55
Factoring financing of accounts receivable 47,536,022.04
Disposal of part of the subsidiary's equity 222,517.59
Total 53,683,640.26 24,534,300.14
（6）Other cash payments related to financing activities
Unit: RMB
Items Current period cumulative Preceding period comparative
Repo shares expenses 200,011,001.49
Restricted stock repurchase expenses 3,276,699.00 2,309,044.00
Rental expenses 26,860,033.64 5,768,763.60
Convertible bond issuance service fee, etc 14,153,152.35 2,674,712.19
Total 244,300,886.48 10,752,519.79
63. Supplement information to the cash flow statement
（1）Supplement information to the cash flow statement
Unit: RMB
Supplement information Current period cumulative Preceding period comparative
1. Reconciliation of net profit to cash flow
-- --
from operating activities:
241
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Net profit 1,704,824,537.64 1,473,323,351.98
Add: Provision for assets impairment
150,047,956.13 87,349,921.14
loss
Depreciation of fixed assets, oil
457,645,498.88 398,438,067.60
and gas assets, productive biological assets
Amortization of right-of-use assets 45,187,192.39
Amortization of intangible assets 22,412,446.76 20,558,264.41
Amortization of Long-term prepayments 7,468,836.52 5,698,329.34
Loss on disposal of fixed
assets, intangible assets and other 387,648.44 486,378.33
long-term assets (Less: gains)
Loss on retirement of fixed
6,776,510.17 10,408,218.61
assets (Less: gains)
Losses on changes in fair value
-3,221,397.38 -31,847,915.76
(Less: gains)
Financial expenses (Less: gains) 76,990,021.45 85,662,587.59
Investment losses (Less: gains) -143,106,300.60 -93,448,308.05
Decrease of deferred tax assets
-6,925,779.23 -14,636,264.19
(Less: increase)
Increase of deferred tax liabilities
42,131,964.83 65,728,822.77
(Less: decrease)
Decrease of inventories (Less:
-1,379,357,747.06 -188,213,271.68
increase)
Decrease of operating receivables
-1,130,326,675.79 -817,805,253.81
(Less: increase)
Increase of operating payables
1,653,187,167.54 1,012,830,723.84
(Less: decrease)
Others 51,697,222.60 72,810,130.99
Net cash flows from operating activities 1,555,819,103.29 2,087,343,783.11
2. Significant investing and financing
activities not related to cash receipts and -- --
payments:
Conversion of debt into capital
Convertible bonds due within one
year
Fixed assets leased in under finance
leases
3. Net changes in cash and cash -- --
242
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
equivalents:
Cash at the end of the period 2,690,002,225.09 3,400,144,038.54
Less: Cash at the beginning of the
3,400,144,038.54 2,553,783,015.01
period
Add: Cash equivalents at the end of
the period
Less: Cash equivalents at the
beginning of the period
Net increase of cash and cash
-710,141,813.45 846,361,023.53
equivalents
（2）Net cash receipts from disposal of subsidiaries in current period
Unit: RMB
Amount
Cash and cash equivalents paid in current period for merger in
28,000,000.00
current period
Including: --
Zhejiang Sanhua plate Exchange Technology Co., Ltd 28,000,000.00
Including: --
Including: --
Net cash receipts from disposal of subsidiaries in current period 28,000,000.00
（3）Composition of cash and cash equivalents
Unit: RMB
Items Closing balance Opening balance
Ⅰ . Cash 2,690,002,225.09 3,400,144,038.54
Including: Cash on hand 214,611.31 232,265.51
Cash in bank that can be readily
2,689,767,198.01 3,399,911,773.03
drawn on demand
Other monetary funds that can be
20,415.77
readily for payment
Ⅲ. Cash and cash equivalents at end of year 2,690,002,225.09 3,400,144,038.54
Other remarks:
On December 31, 2021，monetary funds include RMB 3,936,282,419.98 of principal and interest of CDS and
time deposits, RMB 38,584,887.96 of margin deposits and RMB 66,852,328.10 of futures contract deposits, totals
243
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
RMB 4,041,719,636.04. Such monetary funds do not belong to cash and cash equivalents.
（4）Amount of endorsed acceptance not involving cash receipts and payments
Items Current period cumulative Preceding period comparative
Amount of commercial bills and supply chain financial 213,080,551.18 112,518,677.57
vouchers endorsed and transferred
Including: Payment for operating activities 212,391,551.18 109,630,824.74
Payment for investment activities 689,000.00 2,887,852.83
64. Assets with restriction on ownership or use rights
Unit: RMB
Items Carrying amount at the end of the period Cause of restriction
Cash and Bank Balances 14,584,887.96 Guarantee deposit
Cash and Bank Balances 66,852,328.10 Margin deposit with a futures institution
Notes receivable 872,096,928.77 Pledge financing
Supply chain finance credentials that have
Accounts receivable 80,207,552.58 been endorsed or discounted but are not
due
Total 1,033,741,697.41 --
65. Monetary items in foreign currencies
（1）Monetary items in foreign currencies
Unit: RMB
Closing balance in foreign Exchange rate RMB equivalent
Items
currencies
Cash and Bank Balances -- --
Including: USD 75,071,897.41 6.3757 478,635,896.32
EUR 12,323,466.71 7.2197 88,971,732.61
HKD
Other currencies 0.00 0 40,554,414.41
Subtotal 608,162,043.34
Accounts receivable -- --
Including: USD 191,919,521.97 6.3757 1,223,621,296.22
244
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
EUR 49,284,527.47 7.2197 355,819,502.98
HKD
Other currencies 81,554,120.37
Subtotal 1,660,994,919.57
Long-term borrowings -- --
Including: USD 100,000.00 6.3757 637,570.00
EUR
HKD
Subtotal 637,570.00
Derivative financial assets
Including: USD 5,973,592.10 6.3757 38,085,831.15
Other currencies 0.00 0.0000 2,273,910.98
Subtotal 40,359,742.13
Other receivables
Including: USD 1,044,378.43 6.3757 6,658,643.56
EUR 732,729.47 7.2197 5,290,086.95
Other currencies 31,088,048.23
Subtotal 43,036,778.74
Long-term receivable
Including: EUR 130,000.00 7.2197 938,561.00
Subtotal 938,561.00
Short-term borrowings
Including: USD 55,069,683.74 6.3757 351,107,782.62
EUR 33,047,908.27 7.2197 238,595,983.34
Subtotal 589,703,765.96
Accounts payable
Including: USD 12,944,979.57 6.3757 82,533,306.24
EUR 38,736,726.67 7.2197 279,667,545.54
Other currencies 36,762,969.35
Subtotal 398,963,821.13
Other payables
Including: USD 9,873,703.28 6.3757 62,951,770.00
EUR 933,970.48 7.2197 6,742,986.67
Other currencies 7,067,245.36
245
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Subtotal 76,762,002.03
Non-current liabilities due within
one year
Including: USD 30,019,052.80 6.3757 191,392,474.94
EUR 15,636,083.80 7.2197 112,887,834.20
Other currencies 0.00 0.0000 848,055.19
Subtotal 305,128,364.34
Lease liabilities
Including: USD 10,537,378.87 6.3757 67,183,166.46
EUR 10,343,644.06 7.2197 74,678,007.02
Other currencies 0.00 0.0000 303,785.03
Subtotal 142,164,958.51
（2）Notes on overseas operating entities, including for the significant overseas operating entities, its main
operating locations, reporting currency and the basis for selection should be disclosed, and the reason for
changes in reporting currency should also be disclosed.
√ Applicable □ Not Applicable
The Company has several overseas subsidiaries, locate in the United States, Europe, Japan, Poland, Mexico,
Vietnam and other countries, where US dollars, Euro, Japanese yen, Polish zloty, Mexican pesos Vietnamese
dong , etc. are used as the standard reporting currency.
66. Government grants
（1）Details
1) Government grants related to assets
Unit: RMB
Items Opening Increased The Closing Related to
balance in current amount balance assets/rela
period recorded ted to
as other income
income
in
current
period
246
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Grant for project of an annual output of 15 million commercial 2,449,00 2,449,00 0 Related
refrigeration and air-conditioning automatic control components 0.20 0.20 to assets
Special fund grant for multistory factory buildings of small and 4,995,13 221,919. 4,773,21 Related
medium-sized enterprises 4.10 96 4.14 to assets
Grant for innovation ability construction project of National 3,125,00 624,999. 2,500,00 Related
Enterprise Technology Center 0.16 96 0.20 to assets
Grant for energy-saving project with an annual output of 35 2,140,82 2,140,82 0 Related
million sets of L-type four-way reversing valve for air 5.75 5.75 to assets
conditioners
Grant for technical transformation project of newly increased 2,274,00 758,000. 1,516,00 Related
800000 sets of heat exchanger per year 0.00 00 0.00 to assets
Grant for the technical transformation project with an annual 2,208,00 552,000. 1,656,00 Related
output of 2 million sets of air-conditioning parts 0.08 00 0.08 to assets
Grant for the industrialization project of 20 million refrigeration 278,837. 278,837. 0 Related
and air conditioning automatic control components 70 70 to assets
Grant for commercial machine micro-channel heat exchanger 1,291,85 738,200. 553,650. Related
technical transformation project 0.00 00 00 to assets
Grant for 1 million sets of air-conditioning thermal sensor 5,492,10 915,349. 4,576,75 Related
technology transformation of new energy vehicle 0.16 92 0.24 to assets
Grant for an annual output of 2 million sets of high-efficiency 1,779,47 515,947. 1,263,52 Related
energy-saving inverter controllers 0.08 64 2.44 to assets
Technical transformation project of annual output of 100000 5,056,86 842,810. 4,214,05 Related
large heat exchangers 0.00 00 0.00 to assets
Grant for construction project of public test and detection 699,999. 699,999. 0 Related
service platform for refrigeration components 64 64 to assets
Grant for the construction project of automatic control 480,000. 480,000. 0 Related
components for residential air conditioners with an annual 00 00 to assets
output of 10 million
1,168,49 178,900. 989,591. Related
Grant for pollution source treatment project
1.67 00 67 to assets
Grant for construction project of public inspection and testing 256,666. 256,666. 0 Related
service platform for automobile air conditioning parts 87 87 to assets
Technical transformation project for the production line of 497,115. 126,923. 370,192. Related
energy-saving residential air-conditioning control components 56 04 52 to assets
with an annual output of 50 million sets
Grant for construction project of 25 million sets of new 340,000. 135,999. 204,000. Related
energy-saving and environmental protection variable frequency 28 96 32 to assets
247
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
air conditioning expansion valve
Industrial transfer projects and single equipment investment 306,364. 144,326. 162,037. Related
grant 06 64 42 to assets
Comprehensive investment award for technological 2,985,24 357,888. 2,627,36 Related
transformation of industrial enterprises in Wuhu City 8.00 00 0.00 to assets
Industrial transformation and upgrading, technological 1,412,83 202,424. 1,210,40 Related
transformation and industrial investment 4.44 88 9.56 to assets
Intelligent factory technological transformation project based on 3,624,99 499,999. 3,125,00 Related
The Internet of Things technology 9.89 89 0.00 to assets
Grant for the annual production of 11.5 million sets of new 17,663,0 4,200,00 2,199,40 19,663,6 Related
energy auto parts project 68.27 0.00 6.49 61.78 to assets
573,333. 159,999. 413,333. Related
Four-way reversing valve optimization project
44 96 48 to assets
Policy grant for Wuhu City's strong industrial base and 705,000. 90,000.0 615,000. Related
manufacturing strong province 00 0 00 to assets
Annual production of 3 million self-circulating superconducting 717,750. 99,000.0 618,750. Related
plates technology project 00 0 00 to assets
Comprehensive award and compensation for investment in 1,942,70 273,782. 1,668,91 Related
technological transformation of industrial enterprises 2.09 39 9.70 to assets
Grant for intelligent manufacturing technology transformation 2,631,22 360,000. 2,271,22 Related
project of 6 million sets of commercial refrigeration components 0.00 00 0.00 to assets
per year
Grant for comprehensive upgrading and technical 5,799,85 828,550. 4,971,30 Related
transformation project of intelligent manufacturing of 0.00 00 0.00 to assets
refrigeration components
Grant for technical transformation project of 30 million sets of 6,400,00 800,000. 5,600,00 Related
high efficiency energy saving refrigeration and air conditioning 0.00 00 0.00 to assets
control components
Grant for an annual output of 7.3 million sets of new energy 40,380,0 4,038,00 36,342,0 Related
vehicle thermal management system components technical 00.00 0.00 00.00 to assets
transformation
Grant for technical transformation project for the high efficiency 12,015,1 1,211,61 10,803,5 Related
and energy saving refrigeration and air conditioning control 32.50 0.00 22.50 to assets
components with an annual output of 30 million sets
Grant for technical transformation project for the commercial 1,115,72 3,306,20 140,061. 4,281,86 Related
refrigeration control components with an annual output of 12 4.17 0.00 63 2.54 to assets
million sets
248
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Grant for equipment of New technological transformation for 1,273,70 131,762. 1,141,94 Related
industrialization 7.32 02 5.30 to assets
Grant for promoting new industrialization and support 412,191. 3,435.00 408,756. Related
technological transformation of enterprises 86 86 to assets
Technical transformation project of large heat exchanger with 6,025,05 669,450. 5,355,60 Related
annual output of 700,000 sets 0.00 00 0.00 to assets
Grant for an annual output of 50.5 million sets of technical 8,052,20 67,101.6 7,985,09 Related
transformation of high-efficiency and energy-saving 0.00 7 8.33 to assets
refrigeration and air conditioning control components
Grant for an annual output of 11 million sets of new energy 23,175,0 0 23,175,0 Related
vehicles high efficiency heat exchanger assembly project 00.00 00.00 to assets
1,792,82 18,737.3 1,774,08 Related
New industrialization fund subsidy
3.00 7 5.63 to assets
Total 140,105, 40,938,4 24,211,9 156,831,
336.43 14.86 16.58 834.71
2) Government grants related to income and used to compensate relevant cost, expenses or losses
Unit: RMB
Items Current period cumulative Financial Report Items
Subsidy of overseas COVID-19 15,166,186.20 Other income
Award of enterprise R&D investment 12,314,165.87 Other income
VAT refund of civil welfare 11,084,252.15 Other income
enterprises
VAT refund on software products in 9,027,815.16 Other income
excess of tax burden
Talent introduction and job 8,881,402.00 Other income
stabilization subsidies
Award of industry support fund 8,782,560.00 Other income
Subsidy and award of technological 8,285,400.00 Other income
innovation and entrepreneurship
Patent subsidy for enterprises 6,452,550.00 Other income
Innovation and Development Award 2,971,100.00 Other income
Enterprise operation development 2,750,000.00 Other income
reward
Awards for investment in major 1,845,040.00 Other income
industrial projects
Special funds for foreign trade and 1,675,000.00 Other income
economic development
Energy saving and environmental 1,410,942.00 Other income
protection subsidies
249
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Other 7,163,755.71 Other income
Subtotal 97,810,169.09
(2)The amount of government grant included in the profit or loss statement in the current period
Items Current period cumulative
Related to assets 24,211,916.58
Related to income 97,810,169.09
Total 122,022,085.67
The government subsidies included in the current profit and loss are presented in the "other income" item.
Ⅷ. Changes in the consolidation scope
1. Business combination not under common control
(1) Business combination not under common control in current period
Unit: RMB
Acquiree’s
Proportion Determine Acquiree’s net
Equity Equity Equity Acqui income from
of equity basis for profit from
Acquirees acquisiti acquisition acquisitio sition acquisition date
acquired acquisitio acquisition date
on date cost n method date to period end
(%) n date to period end
Complete
Zhejiang
- the equity
Sanhua Agreemen
Decemb Dece delivery
plate 28,000,000. t
er 14, 70% mber and pay
Exchange 00 assignmen
2021 14, the merger
Technolog t
2021 considerat
y Co., Ltd
ion
(2) Combination costs and goodwill
Unit: RMB
Combination costs
Cash 28,000,000.00
Fair value of non-cash assets
Fair value of debts issued or assumed
Fair value of equity securities issued
Fair value of contingent considerations
Acquisition-date fair value of equity held before the acquisition date
Others
Total combination costs 28,000,000.00
250
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Combination costs
Less: Share of fair value of net identifiable assets acquired 20,408,169.39
Goodwill/Balance of fair value of net identified assets acquired after 7,591,830.61
deducting combination costs
Determination method of fair value of combination costs, contingent considerations and their movements:
In December 2021, the company acquired 70% equity of Zhejiang Sanhua plate Exchange Technology Co.,
Ltd from Su Jun. The pricing of this equity transaction is based on the assessed value, the basic transfer price is 28
million yuan, and the assessment payment consideration is 7 million yuan.
If the net profit of Zhejiang Sanhua plate Exchange Technology Co., Ltd in 2022 is 6.4 million yuan, the
company will pay another 3.5 million yuan; If not, the company will not need to pay any more. If the net profit of
Zhejiang Sanhua plate Exchange Technology Co., Ltd in 2023 is 8 million yuan, the company will pay another 3.5
million yuan; If not, the company will not need to pay any more.
According to the profit forecast data, the management of the company judges that it is difficult to realize the
assessment net profit by Zhejiang Sanhua plate Exchange Technology Co., Ltd, so the assessment payment
consideration is estimated at zero yuan.
(3) Combination costs and goodwill
Unit: RMB
Acquisition-date fair value Acquisition-date carrying amount
25,060,423.80
Assets: 41,750,357.62
Cash and bank balances 2,456,829.86 2,456,829.86
Accounts receivable 7,730,397.40 7,730,397.40
Inventories 1,769,614.51 1,769,614.51
Fixed assets 6,672,716.01 4,214,515.28
Intangible assets 12,917,600.00
Long-term prepayments 6,068,825.10 4,754,692.01
Right of use assets 4,019,018.35 4,019,018.35
Deferred tax assets 115,356.39 115,356.39
Liabilities: 10,092,339.85 10,092,339.85
Borrowings
Accounts payable 5,547,165.87 5,547,165.87
Deferred tax liabilities
Payroll payable 526,155.63 526,155.63
Lease liabilities 4,019,018.35 4,019,018.35
Deferred tax liabilities 2,503,490.07
Net assets 29,154,527.70 14,968,083.95
Less: Non-controlling interest 8,746,358.31 4,490,425.19
251
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Acquisition-date fair value Acquisition-date carrying amount
Net assets acquired 20,408,169.39 10,477,658.76
Fair value determination method on identifiable assets and liabilities:
The fair value of identifiable assets and liabilities of the company is determined according to the assessed value.
(4). Gains/Losses on fair value remeasurement of equity held before the acquisition date
Is there a transaction that realizes business combination step by step through multiple transactions and obtains
control during the reporting period
□Applicable √ Not applicable
(5) Combination costs or fair value of acquiree’s identifiable assets/liabilities failed to be reasonably
determined at the acquisition date or at the end of current period
(6) Other remarks
2. Changes in the consolidation scope due to other reasons
Explain the changes in the scope of consolidation caused by other reasons (e.g. new subsidiaries, liquidation
subsidiaries, etc.) and their related situations:
Entities Equity acquisition Equity acquisition Capital contribution Capital contribution
method date proportion (%)
Zhejiang Sanhua
Auto Zero New subsidiaries August 31,2021 0.00 100%
Trading Co., Ltd.
Zhejiang Sanhua
plate Exchange
Technology Co., New subsidiaries December 13,2021 0.00 100%
Ltd
Ⅸ. Interest in other entities
1. Interest in subsidiaries
（1）Composition of enterprise group
Main operating Place of Holding proportion Acquisition
Subsidy name Business nature
place registration Direct Indirect method
Zhejiang Business
Sanhua Climate Zhejiang Zhejiang Manufacture 74.00% 26.00% combination
and Appliance under common
252
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Controls Group control
Co., Ltd.
Zhejiang
Business
Sanhua
combination
Automotive Zhejiang Zhejiang Manufacture 100.00%
under common
Components
control
Co., Ltd.
Sanhua
Business
(hangzhou)
combination
Micro Channel Zhejiang Zhejiang Manufacture 100.00%
under common
Heat Exchanger
control
Co., Ltd
Zhejiang
Sanhua Trading Zhejiang Zhejiang Commerce 100.00% Establishment
Co., Ltd
Business
SANHUA
Parts of combination
AWECO
Germany Germany household 100.00% not under
Appliance
appliances common
Systems GmbH
control
Remarks on inconsistency between holding proportion and voting rights proportion in subsidiaries:
Basis for the control of an investee while holding its half or less than half voting rights, and the non-control
of an investee while holding its more than half voting rights
Basis for control of significant structured entities brought into the consolidation scope
Basis for determining an entity being acting as an agent or a principal
Other remarks:
The above subsidiaries are significant subsidiaries of the Company.
2. Interest in joint venture or associates
（1）Aggregated financial information of insignificant joint ventures and associates
Items Closing balance/Current period December 31, 2020/Preceding
cumulative period comparative
Joint ventures -- --
Total of the following items calculated by
-- --
shareholding ratio
Associates -- --
Total book value of investment 22,680,930.51 15,219,616.68
Total of the following items calculated by -- --
shareholding ratio
Net profit 7,011,313.83 2,199,442.47
Other remarks:
253
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
X. Risks Related to Financial Instruments
In risk management, the Company aims to seek the appropriate balance between the risks and benefits from
its use of financial instruments and to mitigate the adverse effects that the risks of financial instruments have on
the Company’s financial performance, so as to maximize the profits of shareholders and other equity investors.
Based on such risk management objectives, the Company’s risk management policies are established to identify
and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits on a timely and reliable basis.
The Company has exposure to the following risks from its use of financial instruments, which mainly include:
credit risk, liquidity risk, and market risk. The Management has deliberated and approved policies concerning
such risks, and details are:
(I) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each balance sheet date, the Company assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When assessing whether the credit risk has increased significantly
since initial recognition, the Company takes into account reasonable and supportable information, which is
available without undue cost or effort, including qualitative and quantitative analysis based on historical data,
external credit risk rating, and forward-looking information. The Company determines the changes in default risk
of financial instruments during the estimated lifetime through comparison of the default risk at the balance sheet
date and the initial recognition date, on an individual basis or a collective basis.
The Company considers the credit risk on a financial instrument has increased significantly when one or
more of the following qualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which, at the balance sheet date, the probability of
default in the remaining lifetime has risen by more than a certain percentage compared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor’s operation or financial
position, present or expected changes in technology, market, economy or legal environment that will have
significant adverse impact on the debtor’s repayment ability.
(2) Definition of default and credit-impaired assets
A financial instrument is defined as defaulted when one or more following events have occurred, of which
the standard is consistent with that for credit-impairment:
1) Significant financial difficulty of the debtor;
2) A breach of binding clause of contract;
3) It is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) The creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial difficulty,
having granted to the debtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, loss rate of
default, and exposure to default risk. The Company develops a model of the probability of default, loss rate of
default, and exposure to default risk on the basis of quantitative analysis of historical data (e.g. counterparty rating,
guarantee measures and collateral type, payment method, etc.) and forward-looking information.
3. Exposure to credit risk and concentration of credit risk
254
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In order to
control such risks, the Company has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and bank balances in financial institutions with
relatively high credit levels, hence, its credit risk is relatively low.
(2) Receivables
The Company performs credit assessment on customers using credit settlement on a continuous basis. The
Company selects credible and well-reputed customers based on credit assessment result, and conducts ongoing
monitoring on balance of receivables, to avoid significant risks in bad debts.
The company's accounts receivable risk points are distributed among multiple partners and multiple
customers. As of December 31 2021, the Company has no significant central credit risk, and the proportion of
accounts receivable from the top five customers in book balance is at a reasonable and moderate level.
The maximum amount of exposure to credit risk of the Company is the carrying amount of each financial
asset at the balance sheet.
(II) Liquidity risk
The Company continues to monitor short-term and long-term funding needs to ensure that sufficient cash
reserves are maintained. At the same time, the Company continuously monitors compliance with the loan
agreement to ensure that the credit line obtained from commercial banks can meet short-term or long-term funding
needs. When necessary, the Company can implement equity financing.
As of December 31, 2021, the undiscounted contractual cash flows of the Company’s financial liabilities
listed by maturity date are shown in the following table:
Closing balance
Items
Within 1 year 1-3 years Over 3 years Total
Short-term borrowings 741,497,623.23 741,497,623.23
Notes payable 1,891,526,333.48 1,891,526,333.48
Accounts payable 3,214,698,131.59 3,214,698,131.59
Other payable 172,923,251.10 172,923,251.10
Non-current liabilities due within one year 1,788,496,608.56 1,788,496,608.56
Long-term borrowings 852,116,486.66 852,116,486.66
128,977,119.70 3,299,414,690.00 3,434,390,745.50
Bonds payable
5,998,935.80
Lease liabilities 14,779,459.15 71,465,390.94 71,736,828.07 157,981,678.16
Subtotal 7,829,920,342.91 1,052,558,997.30 3,371,151,518.07 12,253,630,858.28
(Continued)
Opening balance
Items
Within 1 year 1-3 years Over 3 years Total
Short-term borrowings 384,529,024.72 384,529,024.72
Notes payable 1,238,574,463.73 1,238,574,463.73
Accounts payable 2,279,661,755.97 2,279,661,755.97
Other payable 270,888,400.58 270,888,400.58
Non-current liabilities due within one year 155,238,316.00 155,238,316.00
Long-term borrowings 1,781,690,487.83 1,781,690,487.83
255
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Lease liabilities 67,853,620.87 81,926,194.66 149,779,815.53
Long-term payables 903,862.19 903,862.19
Subtotal 4,329,795,823.19 1,849,544,108.70 81,926,194.66 6,261,266,126.55
Note: The difference between the beginning amount and the end amount of the previous year (December 31,
2020) is detailed in note III (31) to the financial statements.
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value or future cash flows of
financial instruments due to changes in market price. Market risk mainly includes interest risk and foreign
currency risk.
1. Interest Rate Risk
Interest rate risk is the risk that an enterprise may encounter fluctuation in fair value or future cash flows of
financial instruments due to changes in market interest. The Company’s fair value interest risks arise from
fixed-rate financial instruments, while the cash flow interest risks arise from floating-rate financial instruments.
The Company determines the proportion of fixed-rate financial instruments and floating-rate financial
instruments based on the market environment, and maintains a proper financial instruments portfolio through
regular review and monitoring.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial
instrument resulted from changes in exchange rate. The Company’s foreign currency risk relates mainly to foreign
currency monetary assets and liabilities. When short-term imbalance occurred to foreign currency assets and
liabilities, the Company may trade foreign currency at market exchange rate when necessary, in order to maintain
the net risk exposure within an acceptable level. The Company is mainly operated in mainland China, whose main
activities are denominated in RMB, hence, the Company bears insignificant market risk arising from foreign
exchange changes.
Please refer to section V (IV) 2 of notes to financial statements for details in foreign currency financial assets
and liabilities at the end of the period.
XI. Disclosure of Fair Values
1. Fair values of the assets and liabilities at the end of the period
Unit: RMB
Fair value as of the balance sheet date
Item Name
Level 1 Level 2 Level 3 Total
Constant measurement at fair value -- -- -- --
1.Held-for-trading financial assets 4,536,549.83 159,487,189.94 164,023,739.77
Financial assets measured at fair value through profit or loss 4,536,549.83 159,487,189.94 164,023,739.77
Debt instrument investments 109,383,374.74 109,383,374.74
Derivative financial assets 4,536,549.83 50,103,815.20 54,640,365.03
Total amount of assets constantly measured at their fair values 4,536,549.83 159,487,189.94 164,023,739.77
256
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Non-constant measurement at fair value -- -- -- --
2. Basis for determining the market price of items under first level constant and non-constant measurement
at fair value.
The fair value of futures contracts is measured at the exchange's open market quotes.
3. Items under second level constant and non-constant measurement at fair value, valuation technique
adopted, and qualitative and quantitative information of important parameters
The fair value of forward foreign exchange contracts is measured based on the valuation amount of the host
bank or the forward foreign exchange rate announced by the Bank of China. Bank financing products are
measured based on the valuation amount of the issuer or manager.
XII. Related party relationships and transactions
1. Parent Company
Holding Voting right
Place of
Parent Company Business nature Registered capital proportion over proportion over
registration
the Company the Company
Sanhua Holding Industrial
Zhejiang Province 730 million yuan 50.12% 50.12%
Group Co., Ltd Investment
Remarks on the parent Company:
As of December 31, 2021, Sanhua Holding Group Co., Ltd. (Hereinafter referred to as SHG)directly holds
29.44% of the Company's shares, and indirectly holds 20.68% of the shares through its subsidiaries, for a total of
50.12% of the shares.The final controllers of the Company are Mr Zhang Daocai, Mr Zhang Yabo and Zhang
Shaobo.
Other remarks:
2. Information about the Company's subsidiaries
Please refer to interest in other entities of notes to financial statements.
3. Joint ventures and associates of the Company
Please refer to notes to financial statements for details on the Company’s significant joint ventures and associates.
Details of other joint ventures or associates carrying out related party transactions with the Company in current
period or in preceding period but with balance in current period are as follows:
Joint ventures or associates Abbreviation of associate
Chongqing Tainuo Machinery Co., Ltd CTMC
Qingdao Sanhua Jinlifeng Machinery Co., Ltd QSJM
257
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Zhongshan Xuanyi Pipe Making Co., Ltd ZXPM
Other remarks
4. Other related parties of the Company
Joint ventures or associates Abbreviation of associate
Zhejiang Sanhua Green Energy Industrial Group Co., Ltd. ZSGE
Hangzhou Tongchan Machinery Co., Ltd. HTM
Hangzhou Sanhua Research Institute Co., Ltd. HSRI
Hangzhou Sanhua International Building Co., Ltd. HSIB
Xinchang County Sanhua Property Management Co., Ltd. XCSP
Shanghai Sanhua Electric Co., Ltd SSE
Zhejiang Sanhua Zhicheng Real Estate Development Co., Ltd. ZSZR
Zhejiang Haoyuan Technology Co., Ltd. ZHT
Ningbo Fuerda Smartech Co., Ltd. NFS
Wuhu Alda Technology Co., Ltd. WAT
Hangzhou Formost Material Technology Co., Ltd HFMT
Other remarks
5. Related party transactions
（1）Purchase and sale of goods, rendering and receiving services
Purchase of goods and receiving of services
Unit: RMB
Related Content of Current period Approved Over the Transaction Preceding period
parties transaction cumulative Transaction Limit Limit or No comparative
HTM Materials 4,648,299.74 700,000.00 否 519,318.58
HTM Services 28,601.77 95,000,000.00 否
HSRI Water and electricity 否 115,165.09
HSRI Materials 22,229.77 700,000.00 否 14,303.48
ZSGE Utility 5,012,738.23 95,000,000.00 否 2,151,282.58
ZXPM Materials 20,702,956.31 35,000,000.00 否 9,947,414.32
QSJM Merchandise 否 1,702,420.54
WAT Merchandise 82,035.40 200,000.00 否 16,601.77
ZHT Merchandise 否 1,063,598.21
ZHT Utility 10,960,870.64 95,000,000.00 否 7,308,466.90
258
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Sale of goods and rendering of services
Unit: RMB
Related parties Content of transaction Current period cumulative Preceding period comparative
SHG Merchandise and Materials 447,493.03 1,080,229.07
SHG Water and electricity 749,941.39 1,871,967.25
QSJM Materials 952,156.49 291,399.64
HFMT Water and electricity 630,478.74 890,529.83
CTMC Merchandise 74,647.80
HSRI Water and electricity 980,985.87 919,853.20
HSRI Merchandise and Materials 4,260,641.75 305,509.41
HSRI Services 23,063.51
WAT Utility 209,829.94 212,462.82
WAT Merchandise and Materials 1,726.07 1,449.92
WAT Services 102,949.51 59,840.90
ZSGE Water and electricity 780,198.27 1,357,863.17
ZSZR Merchandise 9,734.51 29,990.27
ZHT Water and electricity 137,126.85 95,522.69
ZHT Merchandise 159.29
HTM Water and electricity 20,530.64 42,297.07
Remarks of related transactions related to the purchase and sale of goods and the provision and acceptance of
services
Due to the large number of related parties involved in related party transactions between the parent
Company Sanhua Holding Group Co., Ltd and its subsidiaries, the Company approved RMB 0.7 million as the
overall purchase quota for purchases and purchase rent, equipment rental, property management, water, electricity
and power, service fee amount of 95 million yuan from the parent company Sanhua Holding Group Co., Ltd. and
its subsidiaries collectively. The approval bases on the merger of the parent Company and its subsidiaries.
（2）Related party leases
The Company as the lessor：
Unit: RMB
Lessees Types of asset leased Lease income for current period Lease income for the preceding period
SHG Office building 5,309,339.44 5,309,339.44
HFMT Plant 300,342.85 1,022,346.21
WAT Plant 507,964.54 345,223.41
The Company as the lessee：
Unit: RMB
259
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Lessors Types of asset leased Lease expenses for current period Lease expenses for the preceding period
HSRI Office building 1,125,600.00 1,134,833.52
ZSGE Dormitory 3,184,967.59 80,800.00
ZSGE Plant 2,862,761.88 405,234.27
Remarks of related party leases
（3）Related party guarantees
The Company as guarantors
Unit: RMB
Guaranteed parties Maturity date Whether the guarantee is
Amount guaranteed Commencement date
mature
The Company as guaranteed parties
Guaranteed parties Amount guaranteed Commencement date Maturity date Whether the guarantee is mature
SHG RMB 2,230,000,000.00 February 7, 2020 December 16, 2023 No
SHG EUR14,500,000.00 July 05, 2019 June 20, 2022 No
Remarks of related party guarantees
The information in the table does not include related guarantees within the scope of consolidation, nor related
guarantees that have been performed.
（4）Assets transfer and debt restructuring of the related parties
Unit: RMB
Related parties Content of related party transactions Current period cumulative Preceding period comparative
NFS Package assets 37,215,093.41
HTM Equipment 47,965,923.63 21,622,706.86
SHG Equipment 32,800.96
HSIB Vehicle 44,247.79
HSRI Equipment 791,304.59 17,393,367.30
（5）Key management’s emoluments
Unit: RMB
Items Current period cumulative Preceding period comparative
Key management’s emoluments 10,562,300.00 5,950,600.00
（6）Other related party transactions
Unit: RMB
260
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Abbreviation of associate Content of transaction Current period cumulative Preceding period comparative
Property income 1,684,018.88 1,684,018.88
SHG
Service expenses 1,167,603.70
Property expenses 3,112,828.45 847,318.27
ZSGE Service expenses 212,086.77
Service income 3,547.17 3,849.06
HFMT Property income 148,754.72 461,320.79
HSRI Property expenses 123,689.42 44,752.78
HTM Service income 4,943.40 6,867.92
Service expenses 1,129,125.33
ZHT
Service income 396.10
In addition，it is affected by the inconsistency between the registered permanent residence of a few
employees and the place of work，there are transactions between related parties that pay employee social
insurance premium and housing accumulation fund on behalf of them. In current period，the company pays for the
related party RMB296,028.83.
6. Balance due to or from related parties
（1）Receivables
Unit: RMB
Closing balance Opening Balance
Related
Items Provision for bad Provision for bad
parties Book balance Book balance
debts debts
Accounts receivable WAT 376,293.54 18,814.68
Accounts receivable SHG 180,000.00 9,000.00
Accounts receivable QSJM 68,818.81 3,440.94 26,973.19 1,348.66
Accounts receivable HSRI 4,254,623.49 212,731.17 18,514.60 925.73
Accounts receivable CTMC 84,352.01 4,217.60
Other receivables SHG 20,000.00 1,000.00
Other receivables ZHT 670,000.00 33,500.00
Other non-current assets 9,122,291.82
HTM
（Equipment payment in advance）
（2）Payables
Unit: RMB
Items Related parties Closing balance Opening Balance
Accounts payable HTM 6,737,074.50 3,883,247.79
261
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Accounts payable ZXPM 5,977,186.49 1,072,110.11
Accounts payable ZHT 316,422.06
Accounts payable HSRI 261,150.00 266,150.00
Contract liabilities WAT 1,518.94
Advances received NFS 10,000,000.00
Other payables HFMT 100,000.00 100,000.00
XIII. Share-based payment
1. Overall information
√ Applicable □ Not applicable
Unit: Shares
Total equity instruments granted in current period 0.00
Total equity instruments exercised in current period 11,062,090.00
Total equity instruments retired in current period 420,160.00
The range of exercise prices of share options outstanding at the end of
Not applicable
the period and the remaining contractual life
2020 Restricted Stock Incentive Plan: The adjusted
restricted stock grant price is RMB 7.115, which will
The range of exercise prices of other equity instruments at the end of the
be unlocked in batches within 12 months after 12
period and the remaining contractual life
months, 24 months, and 36 months from the grant
date.
Other remarks
In February 2020，the Company implemented a restricted stock incentive plan for core employees. Among
them，the number of restricted stocks granted was 12.045 million shares ,and the grant price per share was RMB
9.85，The grant date was February 24, 2020, and it will be unlocked year by year in batches at a ratio of
30%:30%:40%.
In June 2020, the Company implemented the 2019 equity distribution. In September 2020, the company
implemented the 2020 semi-annual equity distribution. In May 2021, the company implemented the 2020 equity
distribution. According to the method stipulated in the "2020 Restricted Stock Incentive Plan", the exercise price
and quantity of the underlying stocks involved were adjusted accordingly. After the adjustment, the number of
restricted stocks granted was 15.6585 million shares, and the grant price per share was RMB 7.1115.
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
Determination method for grant-date fair value of equity Calculated based on the closing price of the stock on the grant date
262
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
instruments minus the grant price of the restricted stock.
Determination method for the number of equity instruments
[Note]
expected to vest
Reasons for significant difference between the estimates in
Not applicable
current period and preceding period
Capital reserve accumulated due to equity-settled 148,941,110.78
share-based payment
Total expenses incurred due to equity-settled share-based 51,697,222.60
payment
Other remarks
Note： In 2020, the company initially granted 12.045 million restricted stocks to incentive object. Later, it was
adjusted to 17.4577 million shares due to the annual distribution of equity in 2019. The number is the base，it will
be unlocked year by year in batches at a ratio of 30%:30%:40%. The Company estimates the number of exercisable
equity instruments on the following basis: the Company's operating performance can meet the target，the future
voluntary turnover rate of the incentive objects is 0%，and the performance appraisal level is above C (the unlocking
coefficient is 1).
XIV. Commitments and contingencies
1. Significant commitments
Significant contingencies existing on the balance sheet date
With the approval of the CSRC in document CSRC License [2021] No. 168, the company publicly issued 30
million convertible corporate bonds in June 2021, with a face value of 100 yuan each and net amount of raised
funds is 2,987.53 million yuan. In addition to replenishing working capital, the raised funds are committed to the
following projects:
Investment projects with raised funds Committed capital
Annual production of 65 million sets of commercial
refrigeration and air conditioning intelligent control 1487 million yuan
components construction project
Annual output of 50.5 million sets of high efficiency and
energy saving refrigeration and air conditioning control 698 million yuan
components project
2. Contingencies
（1）If no significant contingent matter to be disclosed by the Company, it should also be noted accordingly
No important contingent matter needs to be disclosed by the Company.
263
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
（2）Other information required by the industry information disclosure guidelines
The company shall comply with the disclosure requirements of automobile manufacturing related industries in the
guidelines for self-discipline supervision of listed companies of Shenzhen Stock Exchange No. 3 - industry
information disclosure. The sales amount in the modes of mortgage sales and financial leasing accounts for more
than 10% of the operating revenue
□ Applicable □ Not Applicable
Guarantee of the company to the distributor
□ Applicable □ Not Applicable
XV. Events after the balance sheet date
1. Profit distribution
According to the profit distribution plan of 2021 approved by the board of directors of the company on
March 23, 2022, cash of 1.50 yuan (including tax) for every 10 shares will be distributed to all shareholders based
on 3,569,927,512 shares (total share capital minus repurchased shares of the company) on March 18, 2022. The
profit distribution plan has yet to be considered and approved by the general meeting of shareholders.
Note: as of March 18, 2022, the share capital of the company is 3,591,098,972 shares, of which the number
of repurchased shares is 21,171,460. According to the provisions of the company law, listed companies do not
have the right to participate in profit distribution and capital reserve to increase share capital by repurchasing the
shares of the company held through the special account.
If the total share capital of the company changes due to the conversion of convertible bonds into shares, share
repurchase, equity incentive exercise, refinancing and listing of new shares before the implementation of the
distribution plan, the total distribution amount shall be adjusted accordingly according to the principle of
unchanged distribution proportion.
XVI. Other Significant Events
1. Segment information
（1）Basis for reportable segments and the accounting policy
Reportable segments are identified based on operating segments which are determined based on the structure
of the Company’s internal organization, management requirements and internal reporting system, etc., and
identified the reportable segments based on products.
（2）Financial information of the reporting subsection
Unit: Ten thousand yuan RMB
Items Operating revenue Operating cost Total assets Total liabilities
Refrigeration and air-conditioning electrical 1,121,832.09 825,020.97 1,750,747.33 983,989.10
parts business
264
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
480,248.89 365,714.13 611,249.35 252,748.52
Auto parts business
Total 1,602,080.98 1,190,735.10 2,361,996.68 1,236,737.62
2. Other remarks
Issuance of convertible corporate bonds
With the approval of the CSRC in document CSRC License [2021] No. 168, the company publicly issued 30
million convertible corporate bonds (hereinafter referred to as Sanhua convertible bonds) in June 2021, with a
face value of 100 yuan each and a total issuance amount of 3000 million yuan.
The term of Sanhua convertible bonds is 6 years, the interest is paid once a year, and the principal and
interest of the last year are returned when due. The coupon rate is 0.2% in the first year, 0.4% in the second year,
0.6% in the third year, 1.5% in the fourth year, 1.8% in the fifth year and 2.0% in the sixth year. The start and end
date of Sanhua convertible bonds is from December 7, 2021 to May 31, 2027, and the initial conversion price is
21.55 yuan / share. Within five trading days after the maturity of Sanhua convertible bonds, the company will
redeem the convertible bonds that have not been converted into shares at the price of 110% of the face value of
the bonds (including the last interest).
XVII. Notes to items of parent Company financial statements
1. Accounts receivable
（1）Disclosure of accounts receivable by categories
Unit: RMB
Closing balance Opening balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Categor
Accrue Carrying Accrue Carrying
y
Proport d amount Proport d amount
Amount Amount Amount Amount
ion proport ion proport
ion ion
Receiva 379,079,11 64.69 379,079,11 568,926,1 77.05 568,926,1
bles 2.37 % 2.37 07.65 % 07.65
with
provisio
n made
on an
individu
al basis
Includin
g:
265
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Receiva 206,926,6 35.31 10,346,33 5.00% 196,580,3 169,453,2 22.95 8,472,66 5.00% 160,980,5
bles 54.25 % 2.71 21.54 30.80 % 1.54 69.26
with
provisio
n made
on a
collectiv
e basis
Includin
g:
586,005,7 100.00 10,346,33 1.77% 575,659,4 738,379,3 100.00 8,472,66 1.15% 729,906,6
Total
66.62 % 2.71 33.91 38.45 % 1.54 76.91
Provision made on an individual basis:
Unit: RMB
Closing balance
Name Book balance Provision for bad Accrued Accrued
debt proportion reason
SANHUA (VIETNAM) COMPANY LIMITED 120,982,815.88 0.00%
Zhejiang Sanhua Trading Co., Ltd 106,410,843.62 0.00%
SANHUA INTERNATIONAL SINGAPORE 70,600,688.73 0.00%
PTE.LTD.
Sanhua International Inc. 37,704,819.29 0.00%
Zhejiang Sanhua Automotive Components Co., Ltd 15,649,848.37 0.00%
SHAOXING SANHUA NEW ENERGY 10,000,907.48 0.00%
AUTOMOTIVE COMPONENTS CO.LTD
Other subsidiaries 17,729,189.00 0.00%
Total 379,079,112.37 -- --
Provision made on a collective basis:
Unit: RMB
Closing balance
Items
Book balance Book balance Book balance
Within 1 year 206,926,654.25 10,346,332.71 5.00%
Total 206,926,654.25 10,346,332.71 --
The remarks of determination of a collective basis:
If the provision for bad debt of accounts receivable is accrued in accordance with the general expected credit loss
model, please refer to the disclosure of other receivables to disclose the relevant information about the provision
for bad debt:
√ Applicable □ Not applicable
266
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Phase I Phase II Phase III Subtotal
Provision for bad debt 12 month expected Lifetime expected credit losses Lifetime expected credit losses
credit losses (credit not impaired) (credit impaired)
Balance on January 1, 2021 8,472,661.54 8,472,661.54
The balance as of January 1, 2021 is
—— —— —— ——
in the current period
--Transferred to phase II
--Transferred to phase III
--Reversed to phase II
--Reversed to phase I
Provision made in the current period 1,873,671.17 1,873,671.17
Provision recovered in current period
Provision reversed in current period
Provision written off in current
period
Other changes
Balance on December 31, 2021 10,346,332.71 10,346,332.71
Disclosure by aging
Unit: RMB
Aging Closing balance
Within 1 year (including 1 year) 586,005,766.62
Total 586,005,766.62
（2）Provision for bad debt accrued, recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Opening Closing
Category Recovered or Write
balance Accrued Others balance
reversed off
Receivables with provision made on a 8,472,661.54 1,873,671.17 10,346,332.71
collective basis
Total 8,472,661.54 1,873,671.17 10,346,332.71
Including significant provision for bad debt recovered or reversed amount:
（3）Top 5 debtors with the largest accounts receivable balances
（4）Assets and liabilities arising from transferred but still involved accounts receivable
Other remarks:
267
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Closing balance of top 5 debtors totaled 367,198,261.13 yuan, accounting for 62.67% of the total closing
balance of accounts receivable, and provision for bad debts made thereon totaled 1,574,954.68 yuan.
2. Other receivables
Unit: RMB
Items Closing balance Opening balance
Dividend receivable 19,000,000.00
Other receivables 370,775,386.82 348,897,078.11
Total 389,775,386.82 348,897,078.11
（1）Dividend receivable
Classification of dividends receivable
Items Closing balance Opening balance
Wuhu Sanhua Automatic Control Components Co., Ltd 12,000,000.00
Zhongshan Sanhua Refrigeration Components Co., Ltd 7,000,000.00
Total 19,000,000.00
（2）Other receivables
1）Other receivables categorized by nature
Unit: RMB
Other receivables categorized by nature Closing balance Opening balance
Principal and interest of capital assistance to subsidiaries 341,107,339.69 329,063,840.37
Tax refund receivable 15,563,784.83 8,536,537.99
Guarantee deposit 9,827,285.00 10,381,285.00
Others 4,651,964.58 1,224,031.39
Total 371,150,374.10 349,205,694.75
2）Provision for bad debt
Unit: RMB
Phase I Phase II Phase III
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, 43,389.30 265,227.34 308,616.64
268
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
2021
Balance in current
period on January 1, —— —— —— ——
2021
--Transferred to phase -8,826.15 8,826.15
II
Provision made in 172,778.03 172,778.03
current period
Provision reversed in 106,407.39 106,407.39
current period
Balance on December
207,341.18 167,646.10 374,987.28
31, 2021
Loss provisions for significant changes in book balances in current period
□ Applicable √ Not Applicable
Disclosure by aging
Unit: RMB
Aging Closing balance
Within 1 year (including 1 year) 207,341.18
1 to 2 years 17,652.30
2 to 3 years 21,472.80
Over 3 years 128,521.00
3 to 4 years 128,521.00
Total 374,987.28
3）Provision for bad debt accrued, recovered or reversed in current period
Provision for bad debt accrued in current period:
Unit: RMB
Changed amount of the current period
Opening Closing
Category Recovered or Write
balance Accrued Others balance
reversed off
Receivables with provision made on a 308,616.64 172,778.03 106,407.39 374,987.28
collective basis
Total 308,616.64 172,778.03 106,407.39 374,987.28
Including significant provision for bad debt recovered or reversed amount:
Unit: RMB
Debtors Recovered or reversed Way of collection
269
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
4）Top 5 debtors with the largest other receivables balances
Unit: RMB
Proportion to the Provision for bad
Nature of
Debtors Closing balance Age total balance of debt at the end of
receivables
other receivables the period
Shaoxing Shangyu Sanli Copper 70,000,000.00 18.86%
Financial aid Within 1 year
Industry Co., Ltd
Sanhua (Jiangxi) Self - control 50,000,000.00 13.47%
Financial aid Within 1 year
Components Co., Ltd
Wuhu Sanhua Auto-control 46,000,000.00 12.39%
Financial aid Within 1 year
Components Co., Ltd
Wuhu Sanhua Refrigeration 44,159,339.69 Within 1 year 11.90%
Financial aid
Accessories Co., Ltd
Zhongshan Sanhua Refrigeration 40,000,000.00 10.78%
Financial aid Within 1 year
Accessories Co., Ltd
Total -- 250,159,339.69 -- 67.40%
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Book balance Provision Book balance Provision for
Investees
for Carrying amount impairment Carrying amount
impairment
Investments in 6,408,397,046.53 6,408,397,046.53 4,515,044,723.75 4,515,044,723.75
subsidiaries
Investments in 20,389,833.75 20,389,833.75 13,501,505.62 13,501,505.62
associates and
joint ventures
Total 6,428,786,880.28 6,428,786,880.28 4,528,546,229.37 4,528,546,229.37
（1）Investments in subsidiaries
Unit: RMB
Changed amount of the current period Closing
Opening Investments Investments Closing balance balance of
Provision
Investees balance(Carrying (Carrying provision
increased decreased
for Others
amount) amount) for
impairment
impairment
270
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Zhejiang 1,994,138,976.82 11,762,979.23 2,005,901,956.05
Sanhua
Automotive
Components
Co., Ltd.
Sanhua 644,441,139.10 6,542,381.81 650,983,520.91
(Hangzhou)
Micro Channel
Heat Exchanger
Co., Ltd
Zhejiang 320,278,269.01 4,619,579.04 324,897,848.05
Sanhua Climate
& Appliance
Controls Group
Co., Ltd
Sanhua 308,285,328.31 -1,254,321.47 307,031,006.84
International
Inc.
Sanhua 664,644,511.07 283,315,406.16 947,959,917.23
International
Singapore Pte.
Ltd
Wuhu Sanhua 151,271,932.66 609,721.39 151,881,654.05
Automatic
Control
Components
Co., Ltd
Sanhua 93,367,388.93 402,619.88 93,770,008.81
(Jiangxi) Self -
control
Components
Co., Ltd
Xinchang 46,645,756.62 807,610.51 47,453,367.13
Sitong
Electrical and
Mechanical
Co., Ltd
Zhejiang 68,290,894.37 1,581,000,000.00 1,649,290,894.37
Sanhua
Commercial
Refrigeration
Co. Ltd
271
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Zhejiang 53,745,007.56 1,827,465.44 55,572,473.00
Sanhua Trading
Co. Ltd
Changzhou 62,499,656.16 41,958.44 62,541,614.60
Lanke four-way
valve co., LTD
Hangzhou 51,017,554.19 2,197,724.32 53,215,278.51
Leaderway
Electronics Co.,
Ltd
Shaoxing 32,527,587.10 417,964.62 32,945,551.72
Shangyu Sanli
Copper
Industry Co.,
Ltd
Zhongshan 5,082,444.18 212,849.20 5,295,293.38
Sanhua Air
conditioning
Refrigeration
Components
Co., Ltd
Wuhan Sanhua 4,240,191.30 321,820.62 4,562,011.92
Refrigeration
Components
Co., Ltd
Zhongshan 5,899,010.73 332,655.92 6,231,666.65
Sanhua
Refrigeration
Components
Co., Ltd
Suzhou Sanhua 8,669,075.64 193,907.67 8,862,983.31
Air-Conditioner
Parts Co.,Ltd
Total 4,515,044,723.75 1,893,352,322.78 6,408,397,046.53
（2）Investments in associates and joint ventures
Unit: RMB
Opening Changed amount of the current period Closing Closin
Investees balance Investm Investm Investm Adjustme Chan Cash Provisi Oth balance g
(Carryin ents ents ent nt in ges dividend/ on for ers (Carryin balance
272
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
g increase decreas income other in profit impair g of
amount) d ed recogniz comprehe other declared ment amount) provisi
ed under nsive equit for on for
equity income y distributi impair
method on ment
Ⅰ. Joint ventures
Ⅱ. Associates
Guochua 1,525,25 15,087.2 1,540,33
ng 2.76 3 9.99
Energy
Internet
Innovatio
n Center
(Guangdo
ng) Co.,
Ltd.
Chongqin 9,396,90 5,762,23 1,500,000 13,659,1
g Tainuo 4.73 0.65 .00 35.38
Machiner
y Co.,
Ltd.
Nanchan 1,517,13 -3,150.2 1,513,98
g Sanhua 8.95 5 8.70
Jinlifeng
Machiner
y Co.,
Ltd.
Ningbo 1,062,20 449,942. 1,512,15
Jinlifeng 9.18 23 1.41
Machiner
y Co.,
Ltd
Qingdao 0.00 329,853. 329,853.
Sanhua 20 20
Jinlifeng
Machiner
y Co.,
Ltd.
Xinchang 0.00 1,950,00 -115,63 1,834,36
zhejiang 0.00 4.93 5.07
energy
sanhua
273
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
comprehe
nsive
energy
co. LTD
13,501,5 1,950,00 6,438,32 1,500,000 20,389,8
Subtotal
05.62 0.00 8.13 .00 33.75
13,501,5 1,950,00 6,438,32 1,500,000 20,389,8
Total
05.62 0.00 8.13 .00 33.75
（3）Other remarks
Due to the implementation of the enterprise group share payment transactions, the company as a settlement
enterprise，according to the fair value of the granted entity instrument. Confirm equity investments in subsidiaries
(service receivers). At the same time, increase capital reserves 25,841,822.78yuan.
4. Operating revenue and Operating cost
Unit: RMB
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 4,795,178,915.97 3,636,339,329.61 4,261,339,025.61 3,166,285,730.64
Other operations 382,075,645.85 363,200,176.12 255,244,021.84 239,955,604.07
Total 5,177,254,561.82 3,999,539,505.73 4,516,583,047.45 3,406,241,334.71
Related information of revenue:
Unit: RMB
Contract classification Segment 1 Segment2 Total
Commodity type
Among:
Classification by business area
Among:
Market or customer type
Among:
Contract type
Among:
274
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Classification by time of commodity transfer
Among:
Classification by contract term
Among:
Classification by sales channel
Among:
Total
Information related to performance obligations:
/
Information related to the transaction price allocated to the remaining performance obligations:
At the end of the reporting period revenue corresponding to performance obligations for which the Company has
entered into contracts but not yet performed or fulfilled amounted to 0.00 yuan.
Other remarks
5. Investment income
Unit: RMB
Items Current period Preceding period
cumulative comparative
Investment income from long-term equity investments under cost 77,805,606.15 174,095,823.76
method
Investment income from long-term equity investments under equity 6,438,328.13 2,298,930.50
method
Gains on disposal of long-term equity investments -27,199,644.40
Investment income of bank financing products 6,621,422.44 13,307,539.55
Gains and losses on settlement of futures contracts 15,104,176.44 17,957,388.89
Gains and losses on settlement of foreign exchange contract 10,185,206.59 -8,360,741.05
Income of fund using fee 12,531,531.64 17,387,962.74
Total 128,686,271.39 189,487,259.99
6. Others
R&D expenses
Unit: RMB
275
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
Items 2021 2020
Labor cost 124,637,638.62 101,435,220.21
Material and power expense 100,401,887.14 72,943,704.17
Depreciation and amortization expense 8,889,868.09 7,931,315.36
Mold manufacturing expense 5,162,383.68 2,063,576.52
Royalties 2,206,448.58 825,497.30
Outsourcing R&D expense 611,969.71 443,167.38
Others 1,750,905.47 2,715,340.57
Total 243,661,101.29 188,357,821.51
XVIII. Supplementary information
1. Non-recurring profit or loss in current period
√ Applicable □ Not Applicable
Unit: RMB
Items Amount Remarks
Gains or loss on disposal of non-current assets -7,164,158.61
Government grants included in profit or loss
(excluding those closely related to operating activities
of the Company, satisfying government policies and 101,910,018.36
regulations, and continuously enjoyed with certain
quantity/quota based on certain standards)
In order to avoid the price risk of raw materials and
prevent exchange rate risk, the company and its
subsidiaries have carried out derivatives business,
including futures contracts and foreign exchange forward
contracts. In 2021, the futures income was 31.4482
Gains or losses on changes in fair value of
million yuan and the foreign exchange income was
held-for-trading financial assets, held-for-trading
91.9912 million yuan; In 2020, the futures income was
financial liabilities , and investment income from
36.3784 million yuan and the foreign exchange income
disposal of held-for-trading financial 123,439,358.54
was 55.0162 million yuan. Meanwhile, the exchange loss
assets,held-for-trading financial liabilities, and other
was 95.9901 million yuan in 2021 and 112.6759 million
debt investments, excluding those arising from
yuan in 2020. According to “the No. 1 Explanatory
hedging business related to operating activities
Announcement on Information Disclosure for
Companies Offering Their Securities to Public -
Non-recurring Profit or Loss”, exchange gains and losses
are recurring gains and losses, and Futures and forward
gains and losses are non-recurring gains and losses.
Other non-operating revenue or expenditures except -3,359,134.55
276
Zhejiang Sanhua Intelligent Controls Co., Ltd. 2021 Annual Report.
the above items
Other profit or loss satisfying the definition of
765,674.33
non-recurring profit or loss
Less: Enterprise income tax affected 17,841,108.54
Non-controlling interest affected 1,197,516.27
Total 196,553,133.26 --
Details of other profit and loss items that meet the definition of non-recurring profit and loss:
□ Applicable √ Not Applicable
The company has no specific circumstances of other profit and loss items that meet the definition of non-recurring
profit and loss.
For items defined as non-recurring profit or loss according to “the No. 1 Explanatory Announcement 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 (yuan/share)
Weighted average
Profit of the reporting period Basic Diluted
ROE
EPS EPS
Net profit attributable to shareholders of ordinary shares 15.98% 0.47 0.47
Net profit attributable to shareholders of ordinary shares after deducting
14.12% 0.42 0.42
non-recurring profit or loss
3. Financial data variance between financial reporting prepared under domestic and abroad accounting
standards
（1）Differences of net profits and net assets in the financial reports disclosed according to the IFRS and
Chinese Accounting Standards
□ Applicable √ Not Applicable
（2）Differences of net profits and net assets in the financial reports disclosed according to the overseas
accounting standards and Chinese Accounting Standards
□ Applicable √ Not Applicable
277
