三花智控：Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report-慧博资讯

三花智控：Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report

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ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReportApril2024ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport22023AnnualReportSectionIImportantNotes,ContentsandDefinitionsTheBoardofDirectors,BoardofSupervisors,Directors,SupervisorsandSeniorManagementofZhejiangSanhuaIntelligentControlsCo.,Ltd.(hereinafterreferredtoasthe“Company”)herebyguaranteethattheinformationpresentedinthisreportshallbeauthentic,accurate,completeandfreefrommaterialmisstatementwhetherduetofalserecord,misleadingstatementorsignificantomission,andtheywillundertakebothindividualandjointlegalliabilities.ZhangYabo,theCompany'slegalrepresentative,YuYingkui,thepersoninchargeoftheaccountingwork,andLiZhimi,thepersoninchargeofaccountingdepartment(AccountingOfficer)herebydeclareandwarrantthatthefinancialstatementsinthisreportareauthentic,accurateandcomplete.Alldirectorsattendedtheboardmeetingtoreviewthisreport.Theforward-lookingdescriptionsoffutureplans,developmentstrategies,andotheraspectsinvolvedinthisreportdonotconstituteasubstantialcommitmentoftheCompanytoinvestors.Investorsarekindlyadvisedtopayattentiontoinvestmentrisks.TheCompanydescribesindetailconcerningthepossiblerisksandcountermeasuresinSectionXI“OutlookfortheFutureDevelopmentoftheCompany”underSectionIII“Management’sDiscussionandAnalysisofOperations”.Pleasepayattentiontorelevantcontents.Theprofitdistributionproposalapprovedbytheboardofdirectorsissetoutasfollows:Basedontheprovisionalsharecapitalof3,706,504,614shares,cashdividendofRMB2.50(taxinclusive)willbedistributedtoallshareholdersforevery10shares.TheCompanywillnotdistributebonussharesorconvertcapitalreservestosharecapital.Note:ThesharecapitaloftheCompanyis3,732,615,535shares,ofwhichthenumberofrepurchasedsharesis26,110,921.AccordingtotheprovisionsoftheCompanyLaw,thesharesheldbythelistedCompanythroughtherepurchaseaccountdonotenjoytherighttoparticipateinprofitdistributionortheconversionofcapitalreserveintosharecapital.IfthetotalsharecapitaloftheCompanychangesduetotheconversionofconvertiblebonds,ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport3sharerepurchase,exerciseofequityincentivescheme,refinancingandlistingofnewsharesbeforetheimplementationofthedistributionplan,thetotaldistributionamountshallbeadjustedaccordinglybasedontheprincipleofconstantdistributionproportion.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport4CONTENTSSectionIImportantNotes,ContentsandDefinitions................................................................................................2SectionIICorporateProfileandKeyFinancialIndicators........................................................................................9I.CorporateInformation...............................................................................................................................9II.ContactsandContactInformation.....................................................................................................9III.InformationDisclosureandPlaceoftheReport..............................................................................10IV.CompanyRegistrationandAlteration.............................................................................................10V.OtherRelevantInformation.............................................................................................................10VI.KeyAccountingDataandFinancialIndicators...............................................................................10VII.DifferencesinAccountingDatabetweenDomesticandOverseasAccountingStandards.............11VIII.KeyQuarterlyFinancialIndicators..................................................................................................12IX.ItemsandAmountsofNon-recurringGainsandLosses.................................................................12SectionIIIManagement’sDiscussionandAnalysisofOperations.........................................................................15I.IndustrysituationoftheCompanyduringthereportingperiod...............................................................15II.ThePrincipalBusinessoftheCompanyduringtheReportingPeriod............................................16III.CoreCompetitivenessAnalysis.......................................................................................................17IV.MainBusinessAnalysis...................................................................................................................18V.Non-coreBusinessAnalysis............................................................................................................29VI.AnalysisofAssetsandLiabilities....................................................................................................30VII.AnalysisofInvestment....................................................................................................................33VIII.DisposalofSignificantAssetsandEquity.......................................................................................38IX.AnalysisofMajorSubsidiariesandInvestees.................................................................................38X.StructuralEntitiesControlledbytheCompany...............................................................................40XI.OutlookfortheFutureDevelopmentoftheCompany....................................................................40XII.Receptionofactivitiesincludingresearch,communicationandinterviewsduringthereportperiod41XIII.Implementationstatusofactionplan“Dualimprovementinqualityandreturn”...........................43SectionIVCorporateGovernance...........................................................................................................................44I.Basicsituationofcorporategovernance..................................................................................................44II.Company’sIndependenceinBusinesses,Management,Assets,InstitutionsandFinancefromControllingShareholders.................................................................................................................................45III.HorizontalCompetition...................................................................................................................46IV.AnnualGeneralMeetingandExtraordinaryGeneralMeetingsconvenedduringtheReportingPeriod46V.Informationofdirectors,supervisors,seniormanagement..............................................................47VI.Performanceofdutiesbydirectorsduringthereportingperiod......................................................59VII.Performanceofdutiesbyspecialcommitteesundertheboardduringthereportingperiod............60VIII.PerformanceofdutiesbytheSupervisoryCommittee....................................................................63IX.StaffintheCompany.......................................................................................................................63X.Profitdistributionofordinarysharesandcapitalizationofcapitalreserves....................................65XI.TheImplementationofanEquityIncentivePlan,EmployeeStockOwnershipPlan,orOtherZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport5IncentivePlans.................................................................................................................................................66XII.Constructionandimplementationofinternalcontrol......................................................................68XIII.Managementandcontrolofsubsidiariesduringthereportingperiod.............................................69XIV.Self-evaluationreportoninternalcontrolorInternalcontrolauditreport.......................................69XV.GovernanceproblemrectificationoftheCompany.........................................................................71SectionVEnvironmentalandSocialResponsibility...............................................................................................72I.Materialenvironmentalissues.................................................................................................................72II.Socialresponsibility.........................................................................................................................77III.Achievementsofpovertyalleviationandruralrevitalization..........................................................77SectionVISignificantEvents..................................................................................................................................78I.Performanceofcommitments..................................................................................................................78II.TheCompany’sfundsusedbythecontrollingshareholderoritsrelatedpartiesfornon-operatingpurposes.84III.Illegalexternalguarantee.................................................................................................................84IV.ExplanationGivenbytheBoardofDirectorsRegardingthe“Non-standardAuditor’sReport”IssuedbytheCPAFirmfortheReportingPeriod......................................................................................................84V.ExplanationGivenbytheBoardofDirectors,BoardofSupervisorsandIndependentDirectors(ifany)Regardingthe“Non-standardAuditor’sReport”IssuedbytheCPAFirmfortheReportingPeriod.....84VI.Forchangesinaccountingpolicies,accountingestimatesandaccountingmethodsascomparedtothefinancialreportfortheprioryear...............................................................................................................84VII.Explanationforchangesinscopeoftheconsolidatedfinancialstatementsascomparedtothefinancialreportfortheprioryear.....................................................................................................................84VIII.EngagementanddisengagementoftheCPAfirm...........................................................................85IX.Listingsuspensionandterminationafterdisclosureofthisannualreport.......................................86X.BankruptcyandRestructuring.........................................................................................................86XI.MaterialLitigationandArbitration..................................................................................................86XII.PunishmentsandRectifications.......................................................................................................86XIII.IntegrityoftheCompanyandItsControllingShareholdersandActualControllers.......................86XIV.SignificantRelated-partyTransaction.............................................................................................86XV.SignificantContractsandExecution................................................................................................87XVI.OtherSignificantEvents..................................................................................................................96XVII.SignificantEventsoftheCompany’sSubsidiaries..........................................................................97SectionVIIChangesinSharesandInformationaboutShareholders......................................................................98I.ChangesinShares....................................................................................................................................98II.IssuanceandListingofSecurities..................................................................................................102III.Particularsabouttheshareholdersandactualcontroller................................................................103IV.Informationabouttheimplementationofsharerepurchaseduringthereportingperiod...............111SectionVIIIInformationofPreferredShares........................................................................................................113SectionIXBonds...................................................................................................................................................114I.Enterprisebond(hereinafterreferredtoasthebondissuedbydomesticstate-ownedentity)...............114II.Corporatebond..............................................................................................................................114III.Debtfinancinginstrumentsofnon-financialenterprises...............................................................114IV.Convertiblebond...........................................................................................................................114V.Thelosswithinthescopeofconsolidatedstatementsinthereportingperiodexceeded10%ofthenetZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport6assetsattheendofthepreviousyear.............................................................................................................116VI.Overdueinterest-bearingdebtsotherthanbondsbytheendofthisreportingperiod...................116VII.Whetherthereisanyviolationofrulesorregulationsduringthereportingperiod.......................116VIII.MainaccountingdataandfinancialindicatorsoftheCompanyinrecenttwoyearsbytheendofthereportingperiod.............................................................................................................................................116SectionXFinancialReport....................................................................................................................................118I.Auditreport............................................................................................................................................118II.FinancialStatements......................................................................................................................122III.Companyprofile............................................................................................................................146IV.Preparationbasisofthefinancialstatements.................................................................................147V.Significantaccountingpoliciesandestimates...............................................................................147VI.Taxes..............................................................................................................................................164VII.NotestoItemsintheConsolidatedFinancialStatements..............................................................166VIII.Governmentgrants.........................................................................................................................217IX.Interestinotherentities..................................................................................................................218X.RisksRelatedtoFinancialInstruments..........................................................................................220XI.DisclosureofFairValues..............................................................................................................224XII.Relatedpartyrelationshipsandtransactions..................................................................................224Items......................................................................................................................................................................228XIII.Share-basedpayment.....................................................................................................................229XIV.Commitmentsandcontingencies...................................................................................................232XV.Eventsafterthebalancesheetdate................................................................................................232XVI.OtherSignificantEvents................................................................................................................233XVII.NotestoitemsofparentCompanyfinancialstatements................................................................234XVIII.Supplementaryinformation...........................................................................................................244ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport7DocumentsAvailableforInspection1.The2023annualreportsignedbythechairmanoftheboard.2.ThefinancialreportsignedandsealedbytheCompany'slegalrepresentative,chieffinanceofficerandpersoninchargeofaccountingdepartment.3.Originalauditreportwiththesealoftheaccountingfirm,signatureandsealoftheregisteredaccountant4.ArticlesofAssociation5.OriginalcopyofalltheCompany'sdocumentsandannouncementspublishedonthenewspapersdesignatedbyCSRCwithinthereportingperiod.6.Otherdocumentsavailableforinspection.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport8DefinitionsItemsReferstoDefinitionTheCompany,CompanyReferstoZhejiangSanhuaIntelligentControlsCo.,Ltd.TheArticlesofAssociationReferstoArticlesofAssociationforZhejiangSanhuaIntelligentControlsCo.,Ltd.TheCSRCReferstoChinaSecuritiesRegulatoryCommissionSZSEReferstoShenzhenStockExchangeZhejiangSecuritiesRegulatoryBureauReferstoZhejiangSecuritiesRegulatoryBureauofChinaSecuritiesRegulatoryCommissionGeneralMeetingofShareholdersReferstoGeneralMeetingofShareholdersofZhejiangSanhuaIntelligentControlsCo.,Ltd.BoardofDirectorsReferstoTheBoardofDirectorsofZhejiangSanhuaIntelligentControlsCo.,Ltd.BoardofSupervisorsReferstoTheBoardofSupervisorsofZhejiangSanhuaIntelligentControlsCo.,Ltd.YuanReferstoRMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport9SectionIICorporateProfileandKeyFinancialIndicatorsI.CorporateInformationStockabbreviationSanhuaIntelligentControlsStockcode002050Formerstockabbreviation(ifany)SanhuaCo.,StockExchangeShenzhenStockExchangeNameoftheCompanyinChinese浙江三花智能控制股份有限公司Abbr.oftheCompanynameinChinese三花智控NameoftheCompanyinEnglish(ifany)ZHEJIANGSANHUAINTELLIGENTCONTROLSCO.,LTD.Abbr.oftheCompanynameinEnglish(ifany)SANHUALegalrepresentativeZhangYaboRegisteredAddressNo.219WoxiAvenue,ChengtanStreet,Xinchang,Shaoxing,ZhejiangPostCodeofRegisteredAddress312530HistoricalchangesoftheCompany'sregisteredaddressJune19,2015,theregisteredaddressoftheCompanywaschangedfromXialiquan,QixingStreet,Xinchang,ZhejiangtoNo.219WoxiAvenue,Meizhu,Xinchang,Zhejiang;February29,2016,theregisteredaddressoftheCompanywaschangedfromNo.219WoxiAvenue,Meizhu,Xinchang,ZhejiangtoXialiquan,QixingStreet,Xinchang,Zhejiang.June2,2023,theregisteredaddressoftheCompanywaschangedfromXialiquan,QixingStreet,Xinchang,ZhejiangtoNo.219WoxiAvenue,ChengtanStreet,Xinchang,Shaoxing,ZhejiangOfficeAddressOfficeBuildinginSanhuaIndustrialParkNo.219WoxiAvenue,ChengtanStreet,Xinchang,Shaoxing,ZhejiangPostCodeofOfficeAddress312530WebsiteE-mailshc@zjshc.comII.ContactsandContactInformationBoardSecretarySecuritiesAffairsRepresentativeNameHuKaichengWangYutongAddressOfficeBuildinginSanhuaIndustrialParkNo.12BaiyangStreet,QiantangNewDistrict,Hangzhou,ZhejiangOfficeBuildinginSanhuaIndustrialParkNo.219WoxiAvenue,ChengtanStreet,Xinchang,Shaoxing,ZhejiangZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport10Tel.0571-280200080575-86255360Fax0571-288766050575-86563888-8288E-mailshc@zjshc.comshc@zjshc.comIII.InformationDisclosureandPlaceoftheReportThewebsiteofthestockexchangewheretheCompanydisclosestheannualreportShenzhenStockExchange：MediaandwebsitedesignatedbytheCompanyfordisclosureoftheAnnualReportSecuritiesTimes,ShanghaiSecuritiesNewsCNINFO:PlacewheretheAnnualReportisavailableforinspectionOfficeoftheBoardofDirectorsoftheCompanyIV.CompanyRegistrationandAlterationUnifiedSocialCreditCode913300006096907427ChangesinprinciplebusinessactivitiessincetheCompanywaslisted(ifany)In2017,theCompanycompletedamajorassetreorganizationandchangedmainbusinesstoRefrigerationA/CElectricalComponentsbusinessandAutomotiveComponentsbusiness.ChangesofcontrollingshareholdersoftheCompany(ifany)N/AV.OtherRelevantInformationAccountingfirmengagedbytheCompanyNameoftheaccountingfirmPan-ChinaCertifiedPublicAccountantsLLP.BusinessaddressoftheaccountingfirmBuildingB,ChinaResourcesBuilding,1366QianjiangRoad,ShangchengDistrict,Hangzhou,Zhejiang,ChinaNameofaccountantsforsignatureLuoXunchao,ZhangXinSponsorinstitutionengagedbytheCompanytoperformthedutiesofcontinuoussupervisionduringthereportingperiod□Applicable√NotapplicableFinancialadvisorengagedbytheCompanytoperformthedutiesofcontinuoussupervisionduringthereportingperiod□Applicable√NotapplicableVI.KeyAccountingDataandFinancialIndicatorsWhethertheCompanyperformedaretrospectiveadjustmentorrestatementofpreviousaccountingdata□Yes√NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1120232022YoYChange2021TotalRevenue(RMB)24,557,802,066.5921,347,549,741.0015.04%16,020,809,805.52NetProfitAttributabletoShareholdersoftheListedCompany(RMB)2,920,992,940.012,573,344,179.9213.51%1,684,044,407.47NetProfitAttributabletoShareholdersoftheListedCompanyafterDeductingNon-recurringGainsandLosses(RMB)2,917,029,188.012,291,450,453.4427.30%1,487,491,274.21NetCashFlowGeneratedfromOperationalActivities(RMB)3,723,964,354.632,509,666,490.5648.38%1,555,819,103.29BasicEarningsperShare(RMB/Share)0.810.7212.50%0.47DilutedEarningsperShare(RMB/Share)0.810.7212.50%0.47WeightedAverageROE19.18%21.38%-2.20%15.98%AttheEndof2023AttheEndof2022YoYChange(%)AttheEndof2021TotalAssets(RMB)31,890,584,773.4127,961,214,156.2814.05%23,619,966,759.91NetAssetsAttributabletoShareholdersoftheListedCompany(RMB)17,894,403,984.7912,941,310,409.4238.27%11,150,308,271.43TheCompany'snetprofitbeforeandafterdeductingnon-recurringprofitandlossinthelastthreefiscalyears,whicheverislower,isnegativeandtheauditreportofthelastyearshowsthattheCompany'sabilitytocontinueasagoingconcernisuncertain□Yes√NoThelowerofthenetprofitbeforeandafterdeductingthenon-recurringprofitandlossisnegative□Yes√NoVII.DifferencesinAccountingDatabetweenDomesticandOverseasAccountingStandards1.DifferenceinthenetprofitsandnetassetsofdisclosedfinancialreportaccordingtotheInternationalFinancialReportingStandardsandChinaAccountingStandards□Applicable√NotapplicableThereisnodifference.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport122.DifferenceinthenetprofitsandnetassetsofdisclosedfinancialreportaccordingtotheOverseasAccountingStandardsandChinaAccountingStandards□Applicable√NotapplicableThereisnodifference.VIII.KeyQuarterlyFinancialIndicatorsUnit:RMB1stQuarter2ndQuarter3rdQuarter4thQuarterTotalrevenue5,678,755,521.906,850,165,103.696,446,857,573.915,582,023,867.09NetprofitattributabletoshareholdersoftheCompany601,262,668.34793,498,180.51764,870,374.92761,361,716.24NetprofitattributabletoshareholdersoftheCompanyexcludingnon-recurringgainsandlosses556,696,354.35910,693,912.34755,386,134.37694,252,786.95Netcashflowsfromoperatingactivities735,871,707.43982,801,886.18644,966,480.161,360,324,280.86Whetherthereissignificantdifferencebetweentheaboveindividualoraggregatefinancialindicatorsandthatofwhatdisclosedinthequarterlyreport,half-yearreport□Yes√NoIX.ItemsandAmountsofNon-recurringGainsandLosses√Applicable□NotapplicableUnit:RMBItem202320222021NoteProfitsorlossesfromdisposalofnon-currentassets(includingthewrite-offfortheimpairmentprovisionofassets)-1,157,418.11445,368,259.89-7,164,158.61Thegovernmentsubsidiesincludedinthecurrentprofitsandlosses(excludingthegovernmentsubsidycloselyrelatedtoregularcourseofbusinessoftheCompanyandgovernmentsubsidybasedonstandard93,921,181.4491,659,049.88101,910,018.36ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport13quotaorquantitativecontinuousapplicationaccordingtothestateindustrialpolicy.)Gainsandlossesfromchangesinfairvaluearisingfromtheholdingoffinancialassetsandfinancialliabilitiesbynon-financialenterprises,aswellasgainsandlossesfromthedisposaloffinancialassetsandfinancialliabilities,excludingeffectivehedgingbusinessrelatedtonormalbusinessoperationsofthecompany-89,874,825.04-198,263,945.31123,439,358.54Inordertoavoidthepriceriskofrawmaterialsandpreventexchangeraterisk,theCompanyanditssubsidiarieshavecarriedoutderivativesbusiness,includingfuturesderivativesandexchangeratederivatives.In2023,thefuturesincomewas9.5091millionyuan,andtheforeignexchangelosswas99.384millionyuan.In2022,thefutureslosswas6.4275millionyuan,andtheforeignexchangelosswas191.8364millionyuan.Meanwhile,theexchangeearningsin2023were133.5151millionyuan,andtheexchangeearningsin2022were228.8434millionyuan.AccordingtotheExplanatoryAnnouncementofInformationDisclosureofListedCompaniesNo.1–Non-recurringGainsandLosses,exchangegainsandlossesarerecurringgainsandlosses,andfuturesandforeignexchangegainsandlossesarenon-recurringgainsandlosses.Othernon-operatingincomeandexpendituresexcepttheitemsmentionedabove10,206,261.89-1,251,705.71-3,359,134.55Othergainsandlossesitemsthatfitthedefinitionofnon-recurringgainsandlosses1,445,314.58765,674.33Gainsandlosses-7,000,000.00ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport14arisingfromcontingenciesunrelatedtothenormaloperationoftheCompany'sbusinessLess:Impactofincometax1,905,361.6146,164,566.9917,841,108.54Impactoftheminorityinterests(aftertax)7,226,086.573,898,679.861,197,516.27Total3,963,752.00281,893,726.48196,553,133.26--Detailsofothergainsandlossesitemsthatmeetthedefinitionofnon-recurringgainsandlosses:□Applicable√NotapplicableTheCompanydidnothaveothergain/lossitemsthatmeetthedefinitionofnon-recurringgainsandlosses.Thereasonsforthenon-recurringgainsandlossesitemsdefinedorlistedintheExplanatoryAnnouncementNo.1ofInformationDisclosureofListedCompanies–Non-recurringGainsandLossesaredefinedasrecurringgainsandlossesitems□Applicable√NotapplicableTheCompanydidnotdefineanynon-recurringgainsandlossesitems,definedandlistedintheExplanatoryAnnouncementofInformationDisclosureofListedCompaniesNo.1–Non-recurringGainsandLosses,asrecurringgainsandlossesitems.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport15SectionIIIManagement’sDiscussionandAnalysisofOperationsI.IndustrysituationoftheCompanyduringthereportingperiodTheCompanyshallcomplywiththedisclosurerequirementsofautomobilemanufacturingrelatedindustrieslistedintheNo.3GuidelinesforSelf-disciplineSupervisionofPublicCompaniesofShenzhenStockExchange-IndustryInformationDisclosure.1.IndustrydevelopmentIn2023,despiteadverseeffectssuchasoverseaseconomicfluctuationsandintensifiedgeopoliticalconflicts,theglobaleconomystillmaintainedsignificantresilienceandachievedstablegrowth.AccordingtotheInternationalMonetaryFund,theglobaleconomicgrowthratein2023is3.2%.TheChineseeconomyhaswithstoodmultiplepressuresandoverallrebounded,achievingaGDPof126.1trillionyuanforthewholeyear,ayear-on-yeargrowthof5.2%.(1)RefrigerationandairconditioningelectricalcomponentsindustryWiththerecoveryofdemandaftertheepidemic,thestimulationofsummerhightemperatures,thepromotionofguaranteeddeliveryofbuildings,andthegradualrelaxationofurbanpurchaserestrictions,theairconditioningmarketcontinuestogrow.AccordingtoIndustryOnline,theproductionofhouseholdairconditionersinChinain2023was168.69millionunits,ayear-on-yearincreaseof11.1%;Thetotalannualsalesrevenueofthecentralairconditioningmarketwas142.9billionyuan,ayear-on-yearincreaseof11.1%.Withtheglobaltrendofenvironmentalprotectionandcarbonreduction,theproposalofChina's"dualcarbon"goals,andtheimprovementofintelligentrefrigerationandairconditioningequipmentandenergyefficiencystandards,thereisanewdemandfortherefrigerationandairconditioningelectricalcomponentsindustryaroundtheworld,bringingnewmarketspaceandvalueincrement.Asaleaderinrefrigerationandairconditioningcontrolcomponents,theCompany,withyearsofmanufacturingexperience,leadingmarkettechnology,andextensiveanddeepcooperationwithcustomers,willadapttomarketchanges,seizeopportunities,anddevelopsteadily.(2)AutomotivecomponentsindustryAccordingtoEVTankandtheChinaAssociationofAutomobileManufacturers,globalsalesofNEVsreached14.653millionunitsin2023,ayear-on-yearincreaseof35.4%,accountingfor16.1%ofglobalvehiclesalesin2023;Amongthem,thesalesofNEVsinChinaaccountedfor64.8%ofglobalsales,reaching9.495millionunits,ayear-on-yearincreaseof37.9%,andaccountingfor31.6%ofnationalvehiclesalesin2023.Inrecentyears,thedevelopmentofNEVsworldwidehascontinuedtogrowrapidly,becominganunstoppabletrend.RidingtheglobaltrendofNEVs,theCompany'sNEVthermalmanagementproductmarketisexpandingrapidly.NEVsfromdifferentrouteshaveputforwardnewrequirementsforautomotivethermalmanagementproducts,whicharebecomingmoretechnologyintensiveandcapitalintensive.TheCompanyhasbeeninthefieldofautomotivethermalmanagementsinceitsearlyyears,withprofoundtechnicalaccumulationandwidespreadcustomerrecognition.Ithasenteredsubsystemsandcomponentsfromautomotivethermalmanagementcomponents,andhasnowbecomeanimportantpartnerforcustomerssuchasBYD,Volvo,Geely,Valeo,Mahler,Volkswagen,MercedesBenz,BMW,Toyota,GeneralMotors,LiAuto,NIO,etc.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport162.IndustrystatusTheCompanyistheworld'slargestmanufacturerofrefrigerationcontrolcomponentsandtheworld'sleadingmanufacturerofautomotivethermalmanagementsystemcontrolcomponents."Sanhua"refrigerationintelligentcontrolcomponentshavebecomeaworld-famousbrand,andastrategicpartnerofmanyautomobileenterprisesandair-conditioningrefrigerationappliancemanufacturersintheworld.TheCompanytakesimprovingenergyefficiencylevelofvariousendproductsasitsresponsibility,leadingtheglobaltransformationofenergy-savingandenvironmentalprotectionproducts.Aftermorethan30yearsofdevelopment,theCompanyhasestablishedaleadingpositionintheglobalmarketofrefrigerationandautomotivethermalmanagement.ThemarketshareoftheCompany'sElectronicExpansionValve,Four-wayReversingValve,SolenoidValve,MicrochannelHeatExchanger,AutomotiveElectricExpansionValve,ThermalManagementIntegratedModulefornewenergyvehicle,OmegaPumpranksfirstglobally.ThemarketshareoftheCompany'sServiceValve,AutomotiveThermalExpansionValveandReceiverDrierisintheleadingpositionintheworld.II.ThePrincipalBusinessoftheCompanyduringtheReportingPeriodTheCompanyshallcomplywiththedisclosurerequirementsofautomobilemanufacturingrelatedindustrieslistedintheNo.3GuidelinesforSelf-disciplineSupervisionofPublicCompaniesofShenzhenStockExchange-IndustryInformationDisclosure.TheCompanyadherestothe"DedicationandLeadership,InnovationandSurpassing"businesspath,concentratingontheresearchandapplicationofheatpumptechnologyandthermalmanagementsystemproducts.ItfocusesonthedevelopmentofenvironmentalthermalmanagementsolutionsforheatexchangeandtemperatureintelligentcontrolandisdedicatedtospecializedmanagementinthefieldsofbuildingHVAC,electricalequipment,andnewenergyvehiclethermalmanagement.Basedonthedifferentstagesandcharacteristicsofstrategicbusinessandmaturebusiness,theCompany'sbusinessismainlydividedintorefrigerationandairconditioningelectricalcomponentsbusinessandautomotivecomponentsbusiness.RefrigerationandairconditioningelectricalcomponentsbusinessiscommittedtotheprofessionaloperationofbuildingHVACandelectricalequipment.ItsmainproductsincludeFour-wayReversingValve,ElectronicExpansionValve,SolenoidValve,MicrochannelHeatExchanger,OmegaPump,etc.,whicharewidelyusedinA/C,refrigerator,coldchainlogistics,dishwasherandotherfields.Theautomotivecomponentsbusinessfocusesonin-depthresearchinthefieldofautomotivethermalmanagement.ItsmainproductsincludeThermalExpansionValve,ElectricExpansionValve,ElectricWaterPump,andThermalManagementIntegratedModulefornewenergyvehicle,etc.,whicharewidelyusedinbothNEVsandICVs.Duringthereportingperiod,therewerenochangesintheCompany'smainbusinessorbusinessmodel.Manufacturing,productionandoperationofvehiclesduringthereportingperiod□Applicable√NotapplicableManufacturing,productionandoperationofvehiclecomponentsduringthereportingperiod√Applicable□NotapplicableProductionvolumeSalesvolume20232022YoYChange(%)20232022YoYChange(%)ClassifiedbyComponents(Unit:millionPCs)ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport17NEVsthermalmanagementproducts62.782741.229552.28%62.518138.351863.01%ICVsthermalmanagementproducts169.5683129.079131.37%169.5093129.116031.28%ClassifiedbyWholeVehiclePackage(Unit:millionPCs)ClassifiedbyAfter-salesmarket(Unit:millionPCs)Otherclassifications(Unit:millionPCs)Domestic137.8682107.439928.32%138.0081105.419430.91%Overseas94.482862.868750.29%94.019362.048451.53%Explanationonwhytherelateddatavariedbymorethan30%onaYOYbasis√Applicable□NotapplicableThisismainlyduetothecontinuousupsurgeoftheNEVsmarket,whichdrivestherapidgrowthoftheproductionandsalesofNEVsthermalmanagementproducts.SalemodelofvehiclecomponentsTheCompany'scustomersaremainlydomesticandforeignvehiclemanufacturersandtier1manufacturers.Themainlysalemodeisdirectsale.WhethertheCompanycarriesoutautofinancebusiness□Applicable√NotapplicableWhethertheCompanycarriesoutbusinessrelatedtoNEVs√Applicable□NotapplicableProductionandoperationofNEVspartsUnit:millionPCsProductcategoryProductioncapacityProductionvolumeSalesvolumeRevenue(RMB)NEVsthermalmanagementproducts72.196062.782762.51818,929,632,402.32III.CoreCompetitivenessAnalysisTheCompanyshallcomplywiththedisclosurerequirementsofautomobilemanufacturingrelatedindustrieslistedintheNo.3GuidelinesforSelf-disciplineSupervisionofPublicCompaniesofShenzhenStockExchange-IndustryInformationDisclosure.1.ClearstrategiclayoutTheCompanyadherestothe"DedicationandLeadership,InnovationandSurpassing”businesspath,takestheresearchandapplicationofheatpumptechnologyandthermalmanagementsystemproductsasthecore,firmlygraspsthedevelopmentthemeofenergyconservation,environmentalprotectionandintelligentcontrol,upgradesfrom"mechanicalpartsdevelopment"to"systemcontroltechnologysolutiondevelopmentofelectroniccontrolZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport18integration".TheCompany’sproductsseriesareexpandedfromhouseholdA/CandrefrigeratorcomponentstothefieldofcommercialA/Candcommercialrefrigeration,andextendingtothedirectionofinvertercontroltechnologyandsystemintegrationandupgrading.Meanwhile,aftertheinjectionofautomotivecomponentsbusiness,itgivesfullplaytothesynergyeffectwiththeoriginalbusiness,continuestodeepentheresearchanddevelopmentofnewenergyvehiclethermalmanagementsystemcomponents,andactivelyexploresthedeeperapplicationofthermalmanagementcomponentsandsubsystemsintheautomotivefield,soastoprovideglobalcustomerswithcompetitiveenvironmentalintelligentcontrolsolutions.2.Technologyleading,customerorientedAsanationalhigh-techenterprise,theCompanyhasalwaysadheredtothetechnologicalrouteofindependentdevelopmentandinnovation.Fordecades,ithasfocusedonthefieldofintelligentcontrolandvigorouslycultivatedcoretechnologieswithindependentintellectualpropertyrights.Ithasbeenauthorizedwith3,792patentsbothdomesticandabroad,including1,879inventionpatents.TheCompanyhasestablishedacomprehensivemulti-disciplinaryR&Dteamforproductdevelopmentandtechnicalresearch,andestablishedamatrixR&Dorganizationalstructure.Utilizingthemodelofproductdevelopmentdrivenbytechnologicalresearch,wecanpromoteinnovation.Meanwhile,atechnicalexpertcommitteehasbeenestablishedtoguideandmanagetechnologicaldevelopment.Allproducts,servicesandqualityoftheCompanytakemeetingtheneedsofcustomersasthefirstpriority.3.Qualityassurance,scaleeconomyeffectTheCompany'sproductscoverrefrigerationA/Celectricalcomponentsandautomotivecomponentsindustry.ThemarketshareoftheCompany'sElectronicExpansionValve,Four-wayReversingValve,SolenoidValve,MicrochannelHeatExchanger,AutomotiveElectricExpansionValve,ThermalManagementIntegratedModulefornewenergyvehicle,OmegaPumpranksfirstglobally.ThemarketshareofServiceValve,AutomotiveThermalExpansionValveandReceiverDrierisintheleadingpositionintheworld.TheCompanyhasestablishedacompleteandstrictqualityassurancesystem,achievedISO9001,IATF16949,QC080000qualitysystemcertification.TheCompanywontheNationalQualityAward,ZhejiangQualityAward,NationalTechnologicalInnovationDemonstrationEnterpriseandwonthehighcommentsfromJCI,Daikin,Carrier,Midea,Gree,Haier,Toyota,Benz,Volkswagen,Valeoandotherwell-knownenterprisesathomeandabroad.4.AdvantagesofglobalmarketingnetworkandproductionbaseSincethe1990s,theCompanyhasfocusedonexpandingtheinternationalmarket,andhasestablishedoverseassubsidiariesinJapan,SouthKorea,Singapore,theUnitedStates,Mexico,Germanyandotherplacestobuildaglobalmarketingnetwork.Atthesametime,ithasestablishedoverseasproductionbasesintheUnitedStates,Poland,Mexico,Vietnam,Thailand,Indiaandotherplaces.Andinpractice,wehavetrainedanumberofmanagementtalentswhocanmeettheneedsofbusinessdevelopmentindifferentcountriesandregions.IV.MainBusinessAnalysis1.OverviewIn2023,althoughtheworldeconomyremainsresilientinexchangeratefluctuationsandgeopoliticalconflicts,China'ssocio-economicoperationhasnormalized,thecountryhasstrengthenedmacroeconomicregulation,andtheeconomyismovingtowardsrecoveryandhigh-qualitydevelopment.WiththeglobalcleanenergyrevolutionandZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport19theflourishingdevelopmentofartificialintelligence,the"neweconomy"industriessuchasNEVs,AI,energystorage,aswellasconstantlyiteratingheatpumpsandcommercialrefrigerationareflourishing.AttheCompanylevel,therefrigerationandairconditioningelectricalcomponentsbusinesshasbeenstimulatedbyconsumerrecoveryandsummerhightemperatures,resultinginasteadyincreaseindomesticandinternationalmarketshareandsteadygrowthinperformance.WiththecontinuouspenetrationandprosperityofNEVs,theautomotivecomponentsbusinesscontinuestoupgradeitsproducts.Thecustomerdistributioncontinuestoexpand,globalorderscontinuetobereleased,achievingarapidincreaseinrevenue.Duringthereportingperiod,thetotalrevenueisRMB24.558billion,ayear-on-yearincreaseof15.04%;thenetprofitisRMB3.553billion,ayear-on-yearincreaseof15.85%;thenetprofitattributabletoshareholdersofthelistedCompanyisRMB2.921billion,ayear-on-yearincreaseof13.51%.TherevenueofrefrigerationandairconditioningelectricalcomponentsbusinessisRMB14.644billion,ayear-on-yearincreaseof5.86%;therevenueofautomotivecomponentsbusinessisRMB9.914billion,ayear-on-yearincreaseof31.94%.1.Striveforexcellenceandcontinuouslyupdateandexpandbusinesslayout(1)RefrigerationandairconditioningelectricalcomponentsbusinessIn2023,whilemaintainingitsoriginaldominantproductmarketshare,theCompanyiscommittedtoincreasingthemarketshareofhighmarginproductsandnewgenerationproducts,andexploringnewareasofhighpotentialproductbusinessopportunities.Intermsofcustomerexpansion,theCompanypromotesdeepeningcooperationwithstrategiccustomersandpromotesmatureproductstonewcustomers.Intermsoftechnologicalresearchanddevelopment,theCompanycloselyfollowsthemarketpulseandevolvessynchronously,effectivelyreducingcostswhileimprovingperformance.Intermsofpatentlayout,inadditiontopatentapplicationandauthorization,patentprotectionisusedtoconsolidateintellectualpropertybarriersandprovidesupportforproductinnovation.Intermsofoperationalmanagement,theCompanypromotesactivitiessuchasself-developedkeymanufacturingequipment,leanproduction,anddigitaltransformationtoimproveproductionefficiencywhilereducingmanufacturingcosts.Inaddition,intheprocessofglobalization,wewillcontinuetoincreasethelayoutofglobalmanufacturingandresearchanddevelopmentinfactoriesinVietnam,Mexico,andThailand,aswellastheconstructionoftalentteams.(2)AutomotivecomponentsbusinessThecompetitionintheNEVsmarkethasbeenintensifyingyearbyyear.Intermsofcustomerexpansion,theCompanyisbasedonthebenchmarkcustomerdemonstrationeffect,guidedbycustomerneeds,andcontinuouslyrisingtoanewstageinnewprojectsandbusinessopportunities.Intermsoftechnologicalresearchanddevelopment,significantachievementshavebeenmadeincontinuouslyimprovingproductstrengththroughtechnologicalinnovation,especiallyinthedesignandpromotionofintelligent,standardized,andmodularintegratedcomponents,thedevelopmentofanewgenerationofelectronicexpansionvalvesforvehicles,andtheupgradingofpumpproducts.Intermsofoperationalmanagement,improveandconnecttheentireprocessplanningchain,createresilientsupplychainmanagement,andbuildaglobaloperationaldatabasetoenhancethelevelofinformatization.Intermsofgloballayout,wewillcontinuetocarryouttheconstructionandnewproductioncapacitylayoutoffactoriesinMexico,Poland,Zhongshan,Shenyang,andShaoxingBinhaiinChina,toimplementaglobalsupplymap.(3)StrategicemergingbusinessesThedevelopmentofartificialintelligencehasjustbegun,andthebiomimeticrobotsindustryischangingrapidly,whichisexpectedtobecomearevolutionaryindustryaftercomputers,smartphones,andNEVs.IthasgreatZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport20developmentpotentialandbroadapplicationprospects,makingitanewtrackforfutureindustries.Inthefieldofbiomimeticrobots,theCompanyfocusesonelectromechanicalactuatorsandfullycooperateswithcustomersforproductresearchanddevelopment,trialproduction,anditeration.Theexpectationforthegrowthofenergystoragedemandisclear.TheCompanycloselytracksthedevelopmenttrendofenergystoragesystemtechnology,synchronouslypromotestheexpansionofmarketopportunitiesforapplicationcomponentsintheenergystoragefield,aswellasthedevelopmentofenergystoragethermalmanagementunits,formingarelativelycompleteseriesofunitproducts,whicharelistedassupportingproductsfortopcustomers,layingthefoundationforthesubsequentdevelopmentofproductswithtechnologicaladvantages.2.ProposedissuanceofGlobalDepositaryReceipts(GDRs)andlistingontheSwissStockExchangeInordertofurtherpromotetheglobalizationstrategy,theCompanycontinuetopromotetheGDRproject.TheraisedfundsareintendedtoexpandtheCompany'sglobalbusinesslayout,strengthentheproductionandmanufacturingofrefrigerationcontrolcomponents,newenergythermalmanagementandrobotelectromechanicalactuatorbusinesses,improvetheCompany'sR&Dinvestmentandtechnologicalinnovation,andenhancetheCompany'sintelligentmanufacturing,digitization,andinformatizationlevel.3.Valueservice,shareholderreturns,andimprovecorporategovernancesystemDuringthereportingperiod,inordertosafeguardtheinterestsofshareholdersandenhancetheconfidenceofinvestors,theCompanycarriedoutsharerepurchaseplanwithitsownfundstoprotectthelong-terminterestsoftheCompanyandsmallandmedium-sizedshareholders.Meanwhile,theCompanystrengthenedandimprovedtheconstructionofinternalcontrolsystem,standardizedtheoperationofthethreecommittees,improvedtheCompany'sinformationdisclosure,investorrelationsmanagementandotheraspects.Andensuredsmoothcommunicationbetweeninvestorsandlistedcompanythroughvariousmethodssuchasinteractiveplatform,answeringinvestorcall,on-sitereception.4.Assistincarbonneutralityandstrivetoestablishacleanandlow-carbonenergysystemIntermsofcarbonreductionandemissionreduction,theCompanyhasacceleratedtheapplicationofphotovoltaicandenergystorageintheindustrypark.TheenergyutilizationefficiencyoftheCompany'ssmartmicrogridprojecthasachievedmultienergycomplementarityandhasbeenincludedintheZhejiangProvince2023NewPowerSystemPilotProjectPlan.InJuly2023,theCompanypublishedCDPreportagain,andin2024,itdisclosedthefirstEnvironmental,Social,andGovernance(ESG)report.2.RevenueandCosts(1)RevenuestructureUnit:RMB20232022YoYChange(%)AmountProportiontorevenueAmountProportiontorevenueRevenue24,557,802,066.59100.00%21,347,549,741.00100.00%15.04%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport21ClassifiedbyIndustryGeneralEquipmentManufacturingIndustry24,557,802,066.59100.00%21,347,549,741.00100.00%15.04%ClassifiedbyProductsRefrigerationA/CElectricalComponents14,644,135,166.5759.63%13,833,786,079.8664.80%5.86%AutomotiveComponents9,913,666,900.0240.37%7,513,763,661.1435.20%31.94%ClassifiedbyRegionDomestic13,403,443,275.6854.58%11,415,857,116.8553.48%17.41%Overseas11,154,358,790.9145.42%9,931,692,624.1546.52%12.31%ClassifiedbySalesModelDirectSale24,557,802,066.59100.00%21,347,549,741.00100.00%15.04%(2)Industries,products,regionsorsalemodelsaccountingformorethan10%oftheCompany’srevenueoroperatingprofit√Applicable□NotapplicableUnit:RMBRevenueOperatingcostGrossmarginYoYChange(%)ofrevenueYoYChange(%)ofoperatingcostYoYChange(%)ofgrossmarginClassifiedbyIndustryGeneralEquipmentManufacturingIndustry24,557,802,066.5917,708,120,277.3327.89%15.04%12.21%1.81%ClassifiedbyProductsRefrigerationA/CElectricalComponentsBusiness14,644,135,166.5710,514,157,902.8728.20%5.86%2.93%2.04%AutomotiveComponentsBusiness9,913,666,900.027,193,962,374.4627.43%31.94%29.24%1.51%ClassifiedbyRegionDomestic13,403,443,275.689,874,767,081.3126.33%17.41%13.93%2.26%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport22Overseas11,154,358,790.917,833,353,196.0229.77%12.31%10.12%1.39%ClassifiedbySalesModelDirectSale24,557,802,066.5917,708,120,277.3327.89%15.04%12.21%1.81%WhenthestatisticalcaliberoftheCompany'smajorbusinessdataisadjustedduringthereportingperiod,theCompany'smajorbusinessdatawouldbeadjustedaccordingtotheendofthereportingperiodinthemostrecentperiod.□Applicable√Notapplicable(3)Whetherrevenuefromphysicalproductssalesgreaterthanrevenuefromprovidingservices√Yes□NoIndustryItemUnit20232022YoYChange(%)GeneralEquipmentManufacturingIndustrySalesYuan24,557,802,066.5921,347,549,741.0015.04%ProductionYuan24,661,487,925.7721,887,981,655.3312.67%InventoryYuan4,715,009,128.744,462,520,693.065.66%Explanationonwhytherelateddatavariedbymorethan30%onaYOYbasis□Applicable√Notapplicable(4)Fulfillmentofsignedsignificantsalesandprocurementcontractsbytheendofreportingperiod□Applicable√Notapplicable(5)OperatingcoststructureClassificationbasedonindustryandproductsUnit:RMBIndustryItem20232022YoYChange(%)AmountProportiontooperatingcostAmountProportiontooperatingcostGeneralEquipmentManufacturingIndustryMaterial13,115,131,671.5174.06%11,758,388,129.7774.51%11.54%GeneralEquipmentManufacturingIndustryLabor2,523,256,970.9114.25%2,219,139,967.4214.06%13.70%GeneralEquipmentManufacturingDepreciation516,350,365.382.92%397,865,980.522.52%29.78%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport23IndustryGeneralEquipmentManufacturingIndustryFreight573,973,563.843.24%545,402,421.453.46%5.24%GeneralEquipmentManufacturingIndustryEnergySource522,992,506.072.95%445,206,543.552.82%17.47%GeneralEquipmentManufacturingIndustryOther456,415,199.622.58%415,096,138.592.63%9.95%Unit:RMBProductItem20232022YoYChange(%)AmountProportiontooperatingcostAmountProportiontooperatingcostRefrigerationA/CElectricalComponentsMaterial7,743,350,881.5643.73%7,547,972,672.7247.83%2.59%RefrigerationA/CElectricalComponentsLabor1,625,493,308.759.18%1,562,744,130.399.90%4.02%RefrigerationA/CElectricalComponentsDepreciation293,400,820.121.66%256,801,359.031.63%14.25%RefrigerationA/CElectricalComponentsFreight372,451,870.842.10%367,797,612.732.33%1.27%RefrigerationA/CElectricalComponentsEnergySource250,366,298.391.41%242,566,647.871.54%3.22%RefrigerationA/CElectricalComponentsOther229,094,723.211.29%236,686,252.751.50%-3.21%AutomotiveComponentsMaterial5,371,780,789.9530.34%4,210,415,457.0526.68%27.58%AutomotiveComponentsLabor897,763,662.165.07%656,395,837.034.16%36.77%AutomotiveComponentsDepreciation222,949,545.261.26%141,064,621.490.89%58.05%AutomotiveComponentsFreight201,521,693.001.14%177,604,808.721.13%13.47%AutomotiveComponentsEnergySource272,626,207.681.54%202,639,895.681.28%34.54%AutomotiveComponentsOther227,320,476.411.28%178,409,885.841.13%27.41%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport24(6)Changesinconsolidationscopeduringthereportingperiod√Yes□No1.IncreaseinconsolidationscopeNameEquityacquisitionmethodDateofequityacquisitionCapitalcontributionProportionofcapitalcontributionGuangdongSanhuaNewEnergyVehiclePartsCo.,Ltd.Investmentandestablishment2023-02-17183,712,500.00100%ShenyangSanhuaNewEnergyVehiclePartsCo.,Ltd.Investmentandestablishment2023-03-0817,000,000.00100%HangzhouSanhuaIntelligentEquipmentCo.,Ltd.Investmentandestablishment2023-01-0324,000,000.00100%SANHUASINGAPOREAUTOMOTIVEINVESTMENTPTELTD.Investmentandestablishment2023-11-200.00100%MinthSanhuaAutoPartsPolandSp.Zoo.Investmentandestablishment2023-01-245000PLN100%LEADERWAYCOAHUILA,S.DER.L.DEC.V.Investmentandestablishment2023-10-0110,000MXN100%SANHUAINDUSTRY(THAILAND)CO.,LTD.Investmentandestablishment2023-01-31100millionTHB100%2.ReductioninconsolidationscopeNameEquitydisposalmethodDateofequitydisposalNetassetsondisposaldateNetprofitfromthebeginningoftheperiodtothedateofdisposalSuzhouXinzhiAutomotivePartsCo.,LtdLiquidationandcancellation2023-01-130.001,631.39(7)SignificantchangeoradjustmentoftheCompany’sbusiness,productsorservicesduringthereportingperiod:□Applicable√Notapplicable(8)Majorcustomersandsuppliers:MajorcustomersoftheCompanyTotalsalestotopfivecustomers(RMB)8,719,088,090.35Totalsalestotopfivecustomersasapercentageofthetotalsalesfortheyear(%)35.51%Totalsalestotherelatedpartiesintopfivecustomersasapercentageofthetotalsalesoftheyear(%)0.00%InformationontopfivecustomersNo.NameofCustomerSalesAmount(RMB)PercentageoftotalsalesfortheyearZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport251First3,582,715,408.4514.59%2Second2,134,361,702.418.69%3Third1,128,597,176.254.60%4Fourth1,071,372,376.824.36%5Fifth802,041,426.423.27%Total--8,719,088,090.3535.51%Otherinformationofmajorcustomers□Applicable√NotapplicableMajorsuppliersoftheCompanyTotalpurchasesfromtopfivesuppliers(RMB)1,962,058,942.79Totalpurchasesfromtopfivesuppliersasapercentageofthetotalpurchasesfortheyear(%)14.32%Totalpurchasesfromtherelatedpartiesinthetopfivesuppliersasapercentageofthetotalpurchasesfortheyear(%)0.00%InformationontopfivesuppliersoftheCompanyNo.NameofSupplierPurchaseAmount(RMB)Percentageoftotalpurchasefortheyear1First533,687,665.533.90%2Second377,102,189.232.75%3Third367,116,178.072.68%4Fourth353,794,929.292.58%5Fifth330,357,980.672.41%Total--1,962,058,942.7914.32%Otherinformationofmajorsuppliers□Applicable√Notapplicable3.ExpensesUnit:RMB20232022YoYChange(%)NoteofsignificantchangeSalesexpenses663,304,325.04512,599,257.6629.40%Mainlyduetoanincreaseinemployeesalaries,marketmaintenanceexpenses,ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport26travelexpenses,etc.Administrativeexpenses1,476,334,172.351,266,974,971.9916.52%Mainlyduetotheincreaseinemployeesalaries,officeexpenses,intermediaryservicefees,businessreceptionexpense,etc.Financialexpenses-72,751,380.29-177,540,645.2759.02%MainlyduetoadecreaseinexchangeearningsR&Dexpenses1,096,834,224.41988,954,495.9010.91%Mainlyduetoanincreaseinpersonnel,directinvestment,etc.4.R&DInvestment√Applicable□NotapplicableNameofmainR&DprojectsProjectpurposeProgressoftheprojectObjectivestobeachievedExpectedimpactonthefuturedevelopmentoftheCompanyFourthGenerationElectronicExpansionValveDevelopmentDevelopanewgenerationproductwithlowcost,lownoiseandhighperformanceDoneToenhanceproductcompetitivenessincostandperformanceToimproveproductcompetitiveness,meetcustomerneedsandgaingreatermarketshareElectricRefrigerantColumnValveDevelopmentDeveloplightweightandminiaturizedrefrigerantvalveproductswithplug-intypeOngoingToimprovethecompetitivenessoftherefrigerantvalveproductbytheplug-instructuredesign,supporttheheatpumpmodulesstrategyTogaingreatermarketshareandsupporttheproductplatformstrategyMPlatformStandardElectricWaterPumpDevelopmentDeveloplow-cost,lightweightandminiaturizedmedium-powerEWPOngoingToenhancecompetitivenessofmedium-powerEWPs,andsupporttheproductplatformstrategyTogaingreatermarketshareandsupporttheproductplatformstrategyThirdGenerationChillerDevelopmentDevelopanewgenerationproductwithlowcostorhighperformanceOngoingToimproveproductcompetitivenessincostandperformance;FormstandardizedproductsandsupporttheheatpumpmodulesstrategyToimproveproductcompetitivenessandgaingreatermarketshareLPlatformElectricWaterPumpDevelopmentDeveloplow-cost,lightweightandminiaturizedhigh-powerEWPOngoingToenhancecompetitivenessofhigh-powerEWPs,buildsolidfoundationandtechnicalreserve,andsupporttheproductplatformstrategyTogaingreatermarketshareandsupporttheproductplatformstrategyDevelopmentofSPB(A)typeshieldedwaterpumpDevelopingnewproductsforthefieldofheatpumpheatingOngoingRealizethecharacteristicsofproductefficiency,Developingthemarketforheatpumpheating，RealizingZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport27energyconservation,silence,highstability,andhighcost-effectivenessnewbusinessgrowthpointsDevelopmentofC-typeglobevalveDevelopinganewgenerationoflow-cost,high-performanceproductsOngoingRealizeproductiterationandupgrading，EnhancingthecompetitivenessofrefrigerationandairconditioningproductsEnhanceproductcompetitiveness，ExpandmarketshareOmega-miniintegratedheatingpumpdevelopmentDevelopingminiaturizedintegratedheatingpumpproductsDoneMeetingcustomerneedsforminiaturizationandhighqualityEnhanceproductcompetitivenessandexpandmarketshareDevelopmentofNseriesthermalexpansionvalveIterativeupdatingofRFGFseriesDoneContinuouslyincreasingthemarketcompetitivenessofthermalexpansionvalveproductsIncreasingthemarketcompetitivenessofthermalexpansionvalves,laysasolidfoundationforachievingmarketshareexceeding50%inthefuture.DevelopmentofPTtransmitterDevelopingnewgenerationvehicle-usedsensorOngoingDevelopingbrand-newcompositesensorintegratingtemperatureandpressure,expandingtheapplicationfieldofcommercialproducts,assistingtherapiddevelopmentofcommercialbusiness.Leadingsensorproductsmovingforwardstoautomotivefield.Developmentofindustrialshut-offvalveDevelopingproductsinindustrialfreezingfieldOngoingAssistingthebusinessexpandinginindustrialfreezingfield.Expandingcompanyproductslines,laysasolidfoundationforenteringtheindustrialrefrigerationfield.InsertedfinMCHEDevelopmentExpandtheapplicationofMCHEexchangersinheatpumpsOngoingExpandtheapplicationrangeofproducts,enhancedthepowerofproductForthefast-growingheatpumpmarket,musthaveasolutionformicrochannelheatpumps,creatinganewmarketgrowthResearchanddevelopmentofdirect-expansion(DX)cooledsystemDevelopingadirect-expansion(DX)cooledsystemforthermalmanagementofenergystoragesystemsOngoingImprovingenergyefficiencyandreducingcostsCreatingpopularproductstoenhanceproductstrengthDevelopmentofActuatorDevelopingactuatorsforhumanoidrobotjointsOngoingRealizetheLinearandrotaryfunctionsofhumanoidrobotjoints.ToExplorethemostvaluablecomponentintheAIRobotmarketandprovidenewhighvalue-addedgrowthpointsforthecompanyinthenext5-10years.R&DpersonneloftheCompanyZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2820232022ChangeproportionNumberofR&Dpersonnel(person)3,2412,24344.49%ProportionofR&Dpersonnel18.28%15.09%3.19%AcademicstructureofR&DpersonnelMasterdegreeandabove51033253.61%Bachelordegree1,9291,35842.05%Juniorcollegeandbelow80255345.03%AgecompositionofR&DpersonnelUndertheageof301,58298161.26%Agebetween30and401,19189533.07%Overtheageof4046836727.52%R&DinvestmentoftheCompany20232022YoYChange(%)AmountofR&Dexpenses(RMB)1,096,834,224.41988,954,495.9010.91%R&Dinvestmentasapercentageofrevenue4.47%4.63%-0.16%CapitalizedR&Dexpenses(RMB)0.000.000.00%CapitalizedR&DexpensesasapercentageofR&Dexpenses0.00%0.00%0.00%ReasonsandeffectsofmajorchangesinthecompositionofR&Dpersonnel□Applicable√NotapplicableReasonofsignificantchangeoftotalR&Dexpensesasapercentageoftotalrevenuecomparedtolastyear□Applicable√NotapplicableReasonandexplanationofitsreasonablenessofsignificantchangeofthecapitalizedR&Dexpenses□Applicable√Notapplicable5.CashflowUnit:RMBItems20232022YoYChange(%)Subtotalofcashinflowsfromoperatingactivities25,391,076,341.9321,770,343,585.7816.63%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport29Subtotalofcashoutflowsfromoperatingactivities21,667,111,987.3019,260,677,095.2212.49%Netcashflowsfromoperatingactivities3,723,964,354.632,509,666,490.5648.38%Subtotalofcashinflowsfrominvestingactivities1,695,486,300.46383,808,450.48341.75%Subtotalofcashoutflowsfrominvestingactivities2,904,766,053.953,055,122,290.58-4.92%Netcashflowsfrominvestingactivities-1,209,279,753.49-2,671,313,840.1054.73%Subtotalofcashinflowsfromfinancingactivities1,606,752,389.733,274,929,447.10-50.94%Subtotalofcashoutflowsfromfinancingactivities2,698,602,678.243,871,803,752.46-30.30%Netcashflowsfromfinancingactivities-1,091,850,288.51-596,874,305.36-82.93%Netincreaseincashandcashequivalents1,574,626,897.07-639,673,623.32346.16%ExplanationofwhytherelateddatavariedsignificantlyonaYoYbasis√Applicable□Notapplicable1.Netcashflowfromoperatingactivitiesincreased:mainlyduetoanincreaseincashreceivedfromsellinggoodsandprovidingservices.2.Netcashflowfrominvestmentactivitiesincreased:mainlyduetotheincreaseintheredemptionoflargecertificatesofdepositinthecurrentperiod.3.Netcashflowfromfinancingactivitiesdecreased:mainlyduetograntingrestrictedstockstoemployeesinthepreviousperiod,resultinginadecreaseincashreceivedfrominvestmentabsorptioninthecurrentperiod.Explanationofreasonsleadingtothematerialdifferencebetweencashflowfromoperatingactivitiesduringthereportingperiodandnetprofitfortheyear□Applicable√NotapplicableV.Non-coreBusinessAnalysis√Applicable□NotapplicableUnit:RMBAmountProportiontonetprofitNoteofChangeSustainabilityInvestmentIncome-131,453,928.62-3.70%Settlementgainsandlossesofexchangeratederivatives,settlementgainsandlossesoffuturesderivative,discountedbill,etc.NoGainsandLossesfromChangeofFairValue48,123,522.341.35%Settlementgainsandlossesofexchangeratederivatives,settlementgainsandlossesoffuturesderivatives,floatinggainsandNoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport30lossesofbankwealthmanagementproducts,etc.Non-operatingRevenue14,932,933.390.42%Paymentcancellation,compensationandpenaltygains,gainsfromretirementoffixedassets,etc.NoNon-operatingExpenditures14,625,298.020.41%Lossfromretirementoffixedassets,compensationandbreachofcontractexpenses,donationexpenses,etc.NoCreditImpairmentLoss-51,477,741.58-1.45%BaddebtlossesNoAssetsImpairmentLoss-55,376,891.25-1.56%Inventoryimpairmentloss,fixedassetimpairmentloss,goodwillimpairmentloss,etc.NoGainsonDisposalofProperties8,741,208.410.25%IncomefromdisposaloffixedassetsNoOtherGains188,255,263.065.30%Governmentsubsidies,value-addedtaxrefundsforcivilwelfareenterprises,refundsforsoftwareproductvalue-addedtaxoverpayment,value-addedtaxdeductions,etc.Thevalue-addedtaxrefundforcivilwelfareenterprises,taxrefundforsoftwareproductvalue-addedoverpayment,andvalue-addedtaxdeductionaresustainable,whiletherestarenotsustainableVI.AnalysisofAssetsandLiabilities1.MaterialchangesofassetsUnit:RMBDecember31st2023January1st2023YoYChange(%)NoteofsignificantchangeAmountPercentageoftotalassetsAmountPercentageoftotalassetsCashandBankBalances6,584,684,683.9320.65%5,878,243,652.5521.02%-0.37%AccountReceivable5,773,991,481.2218.11%5,228,117,225.5718.70%-0.59%Contractassets0.00%0.00%0.00%Inventories4,600,729,378.1914.43%4,334,875,287.8615.50%-1.07%Investmentproperty8,165,805.310.03%8,204,266.970.03%0.00%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport31Long-termEquityInvestment37,924,431.290.12%32,438,204.130.12%0.00%FixedAssets7,730,363,778.8224.24%6,374,896,070.4122.80%1.44%ConstructioninProgress2,036,326,757.726.39%1,032,505,633.513.69%2.70%Assetswithrightofuse313,254,745.530.98%284,277,365.321.02%-0.04%Short-termborrowings1,212,150,378.853.80%1,294,083,319.584.63%-0.83%Contractualliabilities51,788,802.030.16%57,955,080.600.21%-0.05%Long-termborrowings1,030,801,111.133.23%1,801,574,166.676.44%-3.21%Leaseliabilities221,295,481.860.69%202,028,482.090.72%-0.03%Notereceivable2,476,839,413.897.77%2,203,948,983.837.88%-0.11%Notepayable3,416,711,594.6410.71%2,580,274,767.649.23%1.48%Accountpayable4,449,940,359.8113.95%3,884,603,370.1613.89%0.06%Non-currentliabilitiesduewithinoneyear1,440,093,253.934.52%568,126,341.672.03%2.49%Mainlytheportionofnon-currentliabilitiesduewithinoneyearBondspayable0.00%2,776,763,361.839.93%-9.93%MainlyduetoearlyconversionandredemptionofconvertiblebondsincurrentperiodWhethertheproportionofoverseasassetsisrelativelyhigh√Applicable□NotapplicableContentofassetsCauseofformationAssetscaleLocationOperationmodeControlmeasurestoensureassetsecurityEarningsTheproportionofoverseasassetstothecompany'snetassetsWhetherthereissignificantimpairmentriskSANHUAINTERNATIONAL,INC.(Consolidated)Equityinvestment3,664,462,710.84UnitedStatesResearchanddevelopment,manufacturing,sales,andinvestmentFinancialsupervision,commissionedexternalaudit760,912,442.45NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport32managementSanhuaInternationalSingaporePTE.Ltd.(Consolidated)Equityinvestment5,932,183,266.09SingaporeManufacturing,sales,andinvestmentmanagementFinancialsupervision,commissionedexternalaudit57,990,422.65No2.Assetsandliabilitiesmeasuredatfairvalue√Applicable□NotapplicableUnit:RMBItemsOpeningbalanceProfitandlossoffairvaluechangeinthecurrentperiodCumulativechangesinfairvalueincludedinequityImpairmentaccruedinthecurrentperiodCurrentpurchaseamountCurrentsaleamountOtherchangesClosingbalanceFinancialAssets1.Held-for-tradingfinancialassets(Excludingderivativefinancialassets)100,025,980.08-25,980.08100,000,000.002.Derivativefinancialassets8,938,874.0513,697,238.6322,636,112.68Subtotaloffinancialassets108,964,854.1313,671,258.55100,000,000.0022,636,112.68Total108,964,854.1313,671,258.55100,000,000.0022,636,112.68Financialliabilities48,671,373.81-34,452,263.7914,219,110.02WhethertherewereanymaterialchangesonthemeasurementattributesofmajorassetsoftheCompanyduringthereportingperiod:□Yes√No3.AssetsrightrestrictionsasoftheendofreportingperiodItemsClosingbookbalanceClosingBookvalueTypesofrestrictionsRestrictionreasonCashandBankBalances76,476,700.9576,476,700.95pledgeMargindepositedZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport33ItemsClosingbookbalanceClosingBookvalueTypesofrestrictionsRestrictionreasonCashandBankBalances281,570,379.73281,570,379.73pledgePledgeforfinancingNoteReceivable2,214,363,880.382,208,446,869.75pledgePledgeforfinancingAccountsreceivable66,621,446.8563,290,374.51pledgeElectronicdebtvouchersthathavebeentransferredforpaymentorfactoringfinancingbuthavenotyetmaturedTotal2,639,032,407.912,629,784,324.94----VII.AnalysisofInvestment1.Overview√Applicable□NotapplicableInvestmentduringtheReportingPeriod(RMB)InvestmentovertheCorrespondingPeriodofLastYear(RMB)YoYChange(%)1,297,612,083.541,068,188,900.0021.48%2.Significantequityinvestmentduringthereportingperiod□Applicable√Notapplicable3.Significantnon-equityinvestmentduringthereportingperiod□Applicable√Notapplicable4.Financialassetinvestment(1)SecuritiesInvestments□Applicable√NotapplicableNosuchcaseinthereportingperiod.(2)DerivativesInvestments√Applicable□Notapplicable1)Derivativeinvestmentsf。

2. orhedgingpurposesduringthereportingperiod√Applicable□NotapplicableUnit:RMBin10thousandZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport34TypesofderivativeinvestmentsInitialinvestmentamountBeginningbalanceGainsandlossesfromchangesinfairvalueinthecurrentperiodAccumulatedfairvaluechangesrecognizedinequityPurchaseamountduringthereportingperiodSalesamountduringthereportingperiodClosingbalanceRatioofendinginvestmentamounttothecompany'snetassetsattheendofthereportingperiodFuturesinstruments,foreignexchangeinstruments,etc.SourceoffundingforderivativeinvestmentOwnfundsRiskanalysisandcontrolmeasures(includingbutnotlimitedto,marketrisk,liquidityrisk,creditrisk,operationalrisk,legalrisk,etc.)ofholdingderivativesduringthereportingperiodInordertoavoidthepriceriskofrawmaterialsandexchangeraterisk,theCompanyanditssubsidiarieshavecarriedoutderivativebusiness,includingfuturescontractsandforeignexchangeforwardcontracts.TheCompanyanditssubsidiariesstrictlycomplywiththerelevantprovisionslistedintheManagementMeasuresforFutureHedgingBusinessandManagementMeasuresforForeignExchangeHedgingBusiness.Litigation(ifapplicable)N/ASpecialopinionsofindependentdirectorsonderivativesinvestmentandriskcontroloftheCompanyN/AZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport352)Derivativeinvestmentsforspeculativepurposesduringthereportingperiod□Applicable√NotapplicableNosuchcaseinthereportingperiod.5.Usageofraisedfunds√Applicable□Notapplicable(1).Overallusageofraisedfund√Applicable□NotapplicableUnit:RMBin10thousandYearMethodTotalamountofraisedfundsNetamountofraisedfundsTotalamountofraisedfundsinvestedinthereportperiodAccumulatedamountofraisedfundsinvestedTotalamountofraisedfundswithusealterationduringthereportingperiodAccumulatedamountofraisedfundswithusealterationProportionofaccumulatedamountofraisedfundswithusealterationtothetotalamountofraisedfundsTotalamountofunusedraisedfundsRaisedfundshasnotbeenusedRaisedfundshasnotbeenusedfortwoyears2021Publicoffering300,000298,753.145,894.38218,675.7385,200.45Depositedinthespecialaccountforraisedfundsandthesubscriptionoflargeamountcertificatesofdeposit.Total--300,000298,753.145,894.38218,675.7385,200.45--0DescriptionofOverallUsageofRaisedFunds1.TheactualamountofraisedfundanddateoftransferinInJune2021,withtheapprovalofChinaSecuritiesRegulatoryCommission(CSRC)[2021]No.168,theCompanypubliclyissued30millionpiecesofconvertiblecorporatebonds(Sanhuaconvertiblebond)withaparvalueofRMB100,issuedatfaceZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport36value,raisingRMB3billionintotal.Thenetamountofraisedfundsafterdeductingtheissuanceexpensesof12,468,991.59yuanis2,987,531,008.41yuan.Theabove-mentionedreceiptofraisedfundshasbeenverifiedbyTianjianaccountingfirm,whoissuedtheCapitalVerificationReport(TJY[2021]No.277).SinceZhejiangSanhuaCommercialRefrigerationCo.,Ltd.(affiliatedwholly-ownedsubsidiary,hereinafterreferredtoas"SanhuaCommercialRefrigeration")isoneoftheimplementationsubjects,theCompanyhasallocated1.487billionyuanoftheraisedfundstoSanhuaCommercialRefrigerationintheformofcapitalincrease.2.Usageandbalanceofraisedfunds(Unit:RMBin10thousand)ItemsIndexAmountNetamountoffundsraisedinthecurrentperiodA298,753.10AccumulatedamountasofthebeginningoftheperiodProjectinvestmentB1172,781.35NetincomefromraisedfundsB22,979.99AmountincurredinthisreportingperiodProjectinvestmentC145,894.38NetincomefromraisedfundsC22,143.09AccumulatedamountbytheendoftheperiodProjectinvestmentD1=B1+C1218,675.73NetincomefromraisedfundsD2=B2+C25,123.08CalculatedbalanceofraisedfundsE=A-D1+D285,200.45ActualbalanceofraisedfundsF85,200.45DifferenceG=E-F0.00(2).StatementofCommittedInvestmentProjectsofRaisedFunds√Applicable□NotapplicableUnit:RMBin10thousandCommittedinvestmentprojectsandallocationofover-raisedfundsWhetherprojecthasbeen(orpartially)alteredTotalcommittedinvestmentofraisedfundsTotalinvestmentafteralteration(1)InvestmentinthecurrentyearAccumulativeinvestmentattheendoftheperiod(2)Investmentprogressattheendoftheperiod(%)(3)=(2)/(1)DateofassetreadyforintendeduseBenefitsachievedinthecurrentyearWhetherexpectedbenefitshavebeenachievedWhetherfeasibilityofprojecthaschangedsignificantlyCommittedinvestmentprojectsConstructionprojectofcommercialrefrigerationandairconditioningintelligentcontrolcomponentswithanannualoutputof65millionsetsNo148,700148,70030,974.36109,328.1573.52%May31,2025N/ANoTechnicaltransformationprojectofhigh-efficiencyandenergy-savingrefrigerationandairNo69,80069,80014,919.5528,074.1840.22%August31,2024N/ANoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport37conditioningcontrolcomponentswithanannualoutputof50.5millionsetsSupplementaryofworkingcapitalNo81,50081,5000.4781,273.4099.72%N/ANoSubtotalofcommittedinvestmentprojects--300,000300,00045,894.38218,675.73--------InvestmentofoverraisedfundsN/ATotal--300,000300,00045,894.38218,675.73--------Circumstancesandreasonsfornotreachingtheplannedprogressorexpectedincome(byspecificproject)Fundsraisedin2021:Thefundsraisedin2021areplannedtobeusedfor3projects,namely,“Constructionprojectofcommercialrefrigerationandairconditioningintelligentcontrolcomponentswithanannualoutputof65millionsets”,“Technicaltransformationprojectofhigh-efficiencyandenergy-savingrefrigerationandairconditioningcontrolcomponentswithanannualoutputof50.5millionsets”and“Supplementaryofworkingcapital”.“Technicaltransformationprojectofhigh-efficiencyandenergy-savingrefrigerationandairconditioningcontrolcomponentswithanannualoutputof50.5millionsets”isatechnicaltransformationandupgradingproject,directlyimplementedbytheCompanyandincludedinintegratedmanagementandcentralizedaccounting.Theactualbenefitsofthisfundraisingprojectarenotexpectedtobeaccountedseparately.Thisprojectadoptsindependentlydevelopedproductionprocessesandtechnologies,introducesinternationaladvancedequipment,suchasvalveseatprocessingmachinesandcoreironprocessingmachines,andpurchasesdomesticallyadvancedproductionandtestingequipment,suchasfullyautomaticassemblymachines,comprehensivetestingbenches,automaticheliumtestingequipment,insulationandvoltagetesters,forminganannualproductioncapacityof50.5millionsetsofefficientandenergy-savingrefrigerationandairconditioningcontrolcomponents.ItisexpectedtohaveapositiveimpactontheCompany'sfutureperformanceimprovementinefficientandenergy-savingrefrigerationcontrolcomponentsbusiness.“Supplementaryofworkingcapital”doesnotdirectlygenerateeconomicbenefitsandcannotbeusedasanindependenteconomicanalysisobject.Theexpectedbenefitshavenotbeenmeasured,andtheactualbenefitscannotbeaccountedseparately.SignificantchangesinthefeasibilityofprojectsN/AAmount,usageanduseprogressofover-raisedFundsN/AChangeinimplementationlocationofinvestmentprojectsofRaisedFundsN/AAdjustmenttoimplementationmethodofinvestmentprojectsofRaisedFundsN/AAdvanceinvestmentandreplacementwithraisedfundsApplicableIn2021,theCompanyreplacedtheinitialinvestmentamountof179.3857millionyuanwithraisedfunds.TemporarysupplementofworkingcapitalwithidleraisedfundsN/AZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport38TheamountandreasonsofthebalanceofraisedfundsintheprojectimplementationN/AApplicationsofunusedraisedfundsDepositedinthespecialaccountforraisedfundsandthesubscriptionoflargeamountcertificatesofdeposit.ProblemsorothersituationsintheuseanddisclosureofraisedfundsN/A(3).StatementofAlteredInvestmentProjectsofRaisedFunds□Applicable√NotapplicableTherewerenochangesinraisedfundsduringthereportingperiod.VIII.DisposalofSignificantAssetsandEquity1.Disposalofsignificantassets□Applicable√NotapplicableDuringthereportingperiod,therewasnodisposalofsignificantassets2.Disposalofsignificantequity□Applicable√NotapplicableIX.AnalysisofMajorSubsidiariesandInvestees√Applicable□NotapplicableInformationaboutmajorsubsidiaries,andinvesteesthatcontributeabove10%oftheCompany’snetProfitUnit：RMBCompanynameCompanytypePrincipalbusinessRegisteredcapitalTotalassetsNetassetsRevenueOperatingprofitNetprofitZhejiangSanhuaAutomotiveComponentsCo.,Ltd.(Consolidated)SubsidiaryAutomotivecomponentsmanufacturingandmarketing2.16billion11,905,085,104.976,270,801,368.709,913,666,900.021,758,553,634.661,543,523,571.49ZhejiangSanhuaCommercialRefrigerationCo.,Ltd.(Consolidated)SubsidiaryRefrigerationandA/Celectricalcomponentsmanufacturingandmarketing1,655.29million3,623,528,707.462,099,228,855.932,207,861,626.88470,803,389.54413,684,061.57ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport39Sanhua(Hangzhou)MicroChannelHeatExchangerCo.,Ltd.(Consolidated)SubsidiaryRefrigerationandA/Celectricalcomponentsmanufacturingandmarketing360million2,233,616,449.511,284,299,602.171,982,577,021.15200,553,785.67163,632,919.11ZhejiangSanhuaTradingCo.,Ltd.SubsidiaryRefrigerationandA/Celectricalcomponentsmarketing50million6,390,990,069.82171,329,040.905,422,333,009.1424,819,305.7516,013,738.24SanhuaInternationalLtd.(UnitedStates)(Consolidated)SubsidiaryRefrigerationandA/Celectricalcomponentsmanufacturingmarketingandinvestmentmanagement37.55millionUSD3,664,462,710.841,151,297,049.645,764,789,496.95866,817,731.61760,912,442.45SanhuaInternationalSingaporePTE.Ltd.(Consolidated)SubsidiaryRefrigerationandA/Celectricalcomponentsmanufacturingmarketingandinvestmentmanagement151.513249millionUSD5,932,183,266.091,195,686,297.146,576,602,247.0594,757,870.6857,990,422.65Acquisitionanddisposalofsubsidiariesduringthereportingperiod√Applicable□NotapplicableNameMethodofacquisitionanddisposalofsubsidiariesduringthereportingperiodImpactonoveralloperationandperformanceGuangdongSanhuaNewEnergyVehiclePartsCo.,LtdInvestmentandestablishmentNosignificantimpactShenyangSanhuaNewEnergyVehiclePartsCo.,LtdInvestmentandestablishmentNosignificantimpactHangzhouSanhuaIntelligentEquipmentCo.,LtdInvestmentandestablishmentNosignificantimpactSANHUASINGAPOREAUTOMOTIVEINVESTMENTPTELTDInvestmentandestablishmentNosignificantimpactMinthSanhuaAutoPartsPolandSp.ZooInvestmentandestablishmentNosignificantimpactLEADERWAYCOAHUILA,S.DER.L.DEC.V.InvestmentandestablishmentNosignificantimpactZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport40SANHUAINDUSTRY(THAILAND)CO.,LTD.InvestmentandestablishmentNosignificantimpactSuzhouXinzhiAutomotivePartsCo.,Ltd.LiquidationandcancellationNosignificantimpactX.StructuralEntitiesControlledbytheCompany□Applicable√NotapplicableXI.OutlookfortheFutureDevelopmentoftheCompany1.DevelopmentstrategyTheCompanyadherestothebusinessstrategyof"DedicationandLeadership,InnovationandSurpassing"andfirmlygraspstheproductdevelopmentthemeofenergyconservation,environmentalprotectionandintelligentcontrol.Withtheresearchandapplicationofheatpumptechnologyandthermalmanagementsystemproductsasthecore,wecontinuouslyexpandtheglobalbusinesslayoutthroughcontinuousinnovationofproductsandtechnologies.Ittransformedfrom"costleading"to"technologyleading",from"mechanicalpartsdevelopment"to"electroniccontrolintegratedsystemcontroltechnologysolutiondevelopment"inordertoprovidecompetitiveenvironmentalintelligentcontrolsolutionsforglobalhigh-qualitycustomers.Sanhuahasbecomeagloballeaderintheclimateintelligentcontrolsystemindustry.2.Businessplanfor2024(1)RefrigerationairconditioningelectricalcomponentsbusinessAgainstthebackdropofglobalcleancarbonreductionandChina's"dualcarbon"strategy,wewillseizethetrendofenergyefficiencyupgradingandrefrigerantswitching,continuetopromoteperformanceoptimization,componentintegration,costlean,anddiversifiedproductdistribution,continuouslyexpandourexistingbusinessscaleandseeknewareasofbusinessgrowth.Underthenationalpolicyofexchangingoldfornewconsumergoodsin2024,theCompanyaimstoenhanceitsadvantageousproductproductioncapacity,increasecustomerdevelopmentandnewproductresearchanddevelopmentefforts,andstrivetoachievehigh-qualityperformancein2024.Thecompanyhasnormalizeditseffortstoreducecostsandincreaseefficiencythroughtechnologicalupgrades,processimprovements,equipmentautomation,andothermeans,whiledeepeningtheimplementationofqualityimprovementgoals.TheCompanyispromotingthereformofAwecoEurope,improvingitsbusinessphilosophyandprocesssystem,andachievingaturnaroundfromlossestoprofits.Intermsofproductionbaseprogress,wehavecompletedtheconstructionofthesecondphaseoftheVietnamfactoryandachievedthelandingofproductionlines,expandedproductionlinesinMexicoandThailand,andexpandedandoptimizedglobalproductionlayout.(2)AutomotivecomponentsbusinessThecompetitionintheNEVmarketisbecomingincreasinglyfierce,andpricecompetitionhasbecomethenorm.TheCompanyfocusesoncoreprojectsofglobalkeycustomersandstrengthenstheconstructionofcustomerlocalizationservicecapabilities;fullyutilizetechnologicalinnovationandscaleadvantagestoexpandandstrengthenvalveandpumpproducts,prioritizethepromotionofintelligentstandardizedintegratedcomponentproducts,optimizeproductdesign,shortenprojectcycles,andbringvaluetocustomerswhileimprovingefficiencyinternally;secondly,activelypromotemethodssuchasself-madekeyequipmentandlarge-scaleprocurementtocontrolcostsandreducecomprehensivecosts.Intheprocessofglobalization,weactivelypromotetheconstructionofproductionbasesinMexico,Poland,anddomesticShaoxingBinhai,Zhongshan,Shenyang,etc.,increaseZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport41productioncapacitylayoutandtalentteamconstruction,soastoachievehigh-speedgrowthintheglobalwaveofautomotiveelectrificationandintelligence.(3)StrategicemergingbusinessesInthefieldofbiomimeticrobots,theCompanyfocusesonelectromechanicalactuators,fullycooperatingwithcustomerproductresearchanddevelopment,trialproduction,iteration,andultimatelyachievingmassproductionandimplementation.Atthesametime,wewillsynchronizeandcooperatewithcustomerproductiontargets,activelyplantheoverseasproductionlayoutofelectromechanicalactuators,andwelcomethearrivaloftheeraof"Robotreplacement”.Electrochemicalenergystoragereliesonthe"dualcarbon"policy,coupledwiththestart-upandgrowthofindustrialandcommercialenergystorageapplications,establishinglong-termmarketdemand.TheCompanywillleverageitsexperienceinthedevelopmentandmanufacturingofthermalmanagementcomponentsandsystemsolutions,furtherleverageitscollaborativeadvantages,activelyexpanditscomponentbusinessdevelopmentintheenergystoragefield,andstrivetobecomealeadingsupplierofkeycomponentsandsystemsolutionsforglobalenergystoragethermalmanagementinthedesigniterationanddevelopmentofenergystoragethermalmanagementunits.3.Mainrisksforfuturedevelopment(1)RiskofpricefluctuationofrawmaterialsTherawmaterialsrequiredbytheCompanyarecopperandaluminum,whichaccountforalargeproportionofthecostcompositionoftheproducts.Therefore,thefluctuationofthemarketpriceofrawmaterialswillbringlargecostpressuretotheCompany.TheCompanywillreducetheadverseimpactofrawmaterialpricefluctuationsthroughtheestablishmentoflinkagepricingmechanism,hedgingoperationofcommodityfutures,andtimelynegotiationwithcustomers.(2)TheriskofrisinglaborcostThelaborcostsarerisingyearbyyear,whichreducestheprofitmarginoftheCompanytoacertainextent.Inthefuture,theCompanywillcontinuetoimprovethelevelofintelligentmanufacturingbycontinuouslypromotingleanproduction,processimprovementandtechnicaltransformation.(3)TradeandexchangerateriskTheCompany'sexportvolumeislarge,involvingNorthAmerica,Europe,Japan,SoutheastAsiaandotherregions.Duetothechangesinregionaltradepolicies,theCompany'sdailyoperationwillbeaffected.TheCompanydealswithinterregionaltraderisksthroughtransferringproductioncapacitytoforeigncountries.Inaddition,thefluctuationofexchangeratewillalsohaveacertainimpactontheprofit.Accordingtotheactualsituation,theCompanydealswithandreducesthisriskbymeansofforwardforeignexchangesettlementandestablishingoverseasproductionbasesintheUnitedStates,Poland,Mexico,Vietnam,Indiaandotherplaces.XII.Receptionofactivitiesincludingresearch,communicationandinterviewsduringthereportperiod√Applicable□NotapplicableDateofreceptionLocationofreceptionMethodofreceptionTypeofreceptionobjectReceptionobjectMaincontentsofdiscussionandmaterialsprovidedIndexofbasicsituationoftheresearchZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport42February6,2023HangzhouOn-siteresearchInstitutionZhongrongFundFanPengchengetc.15investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050February14,2023HangzhouOn-siteresearchInstitutionMorganStanleyCrystalChanetc.17investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050May3,2023ConferenceRoomTeleconferenceInstitutionXingyinFundXuFuyietc.287investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050June2,2023ShenzhenStockExchangeOtherInstitutionInvestorsparticipatingintheperformancebriefingonthethemeof"Newopportunitiesforthedevelopmentofprivateenterprises"organizedbySZSEIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050July6,2023HangzhouOn-siteresearchInstitutionSuporInvestmentLiYuluetc.13investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050August22,2023ConferenceRoomTeleconferenceInstitutionPinganBankLiuYingfeietc.758investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050September8,2023HangzhouOn-siteresearchInstitutionCaitongSecuritiesJinMinetc.17investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050October30,2023ConferenceRoomTeleconferenceInstitutionMinshengRoyalFundManagementSunWeietc.398investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050November8,2023SingaporeOtherInstitutionGICJuneLongetc.39investorsIntroductionofthecompany'so.com.cn/ssessgZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport43intotaloperationandreplytoinvestors'questionss/S002050November30,2023HangzhouOn-siteresearchInstitutionFeiluoAssetsZhangWenlietc.29investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050December15,2023HangzhouOn-siteresearchInstitutionZhongtaiSecuritiesHeJunyietc.8investorsintotalIntroductionofthecompany'soperationandreplytoinvestors'questionso.com.cn/ssessgs/S002050XIII.Implementationstatusofactionplan“Dualimprovementinqualityandreturn”Hasthecompanydisclosedanactionplanof"dualimprovementofqualityandreturn".□Applicable√NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport44SectionIVCorporateGovernanceI.BasicsituationofcorporategovernanceDuringthereportingperiod,theCompanystrictlyabidedbytheCompanyLaw,SecuritiesLaw,CodeofCorporateGovernanceforListedCompanies,Self-regulatoryGuidelinesforListedCompaniesNo.1-StandardizedOperationofMainBoardListedCompaniesandotherapplicablelawsandregulationsofChinaSecuritiesRegulatoryCommissionandShenzhenStockExchange.Wecontinuetoimprovethecorporategovernancestructure,establishandimprovetheinternalcontrolsystem,strengthenthemanagementofinformationdisclosure,activelycarryouttheactivitiesofinvestorrelations,standardizetheoperationoftheCompany,andimprovethelevelofcorporategovernance.Duringthereportingperiod,theCompanyrevisedtheArticlesofAssociation,RuleofProcedureforShareholdersMeeting,RulesofProcedureforBoardMeetings,IndependentDirectorSystem,AuditCommitteeSystemoftheBoardofDirectors,NominationCommitteeSystemoftheBoardofDirectors,CompensationandAssessmentCommitteeSystemoftheBoardofDirectors,andformulatedSpecialMeetingSystemforIndependentDirectorsandfurtherdesignedthecorporategovernancesystem.Asoftheendofthereportperiod,theactualsituationofcorporategovernanceconformstotheregulatorydocumentsofCSRConthegovernanceoflistedcompanies.1.ShareholdersandgeneralmeetingofshareholdersTheCompanyconvenesthegeneralmeetingofshareholdersinstrictaccordancewiththerequirementsoftheRulesforGeneralMeetingsofShareholdersofListedCompanies,theArticlesofAssociationandtheRulesofProcedureoftheShareholders'Meeting.Whentheshareholders'meetingdeliberatesrelatedmatters,therelatedshareholdersshallavoidvoting.Therelatedtransactionsshallbefairandreasonablewithoutanydamagetotheinterestsofshareholders.Treatallshareholdersequally,ensurethatallshareholders,especiallyminorshareholders,haveequalstatusandfullyexercisetheirrights.Theshareholders'meetingsheldduringthereportingperiodwereconvenedbytheboardofdirectorsandlawyerswereinvitedtoattendthemeetingonsite.2.DirectorsandtheboardofdirectorsTheCompanyelectdirectorsinstrictaccordancewiththeArticlesofAssociationandRulesofProcedurefortheBoardofDirectors;thenumberandcompositionoftheboardofdirectorsmeettherequirementsoflawsandregulationsandtheArticlesofAssociation.TheboardofdirectorsconvenesmeetingsinaccordancewiththeCompanyLawandtheRulesofProcedureoftheBoardofDirectors.Alldirectorsexercisetheirrightsdiligently,attendtheboardofdirectorsandshareholders'meetingandactivelyparticipateinrelevanttraining.3.SupervisorsandboardofsupervisorsTheboardofsupervisorselectsthesupervisorsinstrictaccordancewiththeCompanyLawandtheArticlesofAssociation;thecompositionandnumberoftheboardofsupervisorsmeettherequirementsoflawsandregulations.TheCompany'ssupervisorsconscientiouslyperformtheirdutiesinaccordancewiththeRulesofProcedureoftheBoardofSupervisors,andeffectivelysuperviseandexpresstheiropinionsontheCompany'smajorissues,relatedpartytransactions,financialsituation,andthelegalityandcomplianceoftheCompany'sdirectorsandseniormanagersinperformingtheirduties.4.RelationshipbetweencontrollingshareholdersandlistedcompaniesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport45Thecontrollingshareholderscanstrictlyregulatetheirownbehaviors.Thereisnodirectorindirectinterventionbeyondtheprovisionsofgeneralmeetingofshareholders.TheCompanyanditscontrollingshareholdersaremutuallyindependentofeachotherinpersonnel,assets,finance,institutionsandbusiness.Theboardofdirectors,boardofsupervisorsandinternalinstitutionsoftheCompanyoperateindependently.Thereisnosuchsituationthatthecontrollingshareholdersoccupythefundsofthelistedcompanyfornon-operatingpurposes.5.InformationdisclosureandinvestorrelationshipmanagementDuringthereportingperiod,theCompanydesignatedSecuritiestimes,ShanghaiSecuritiesNewsandCNINFOastheinformationdisclosuremedia,anddisclosedinformationtruthfully,accuratelyandtimelyinstrictaccordancewithrelevantlawsandregulations,soastoensurethatallshareholdersoftheCompanyhavefairaccesstotherelevantinformation.Inaddition,theCompanydesignatedthesecretaryoftheboardofdirectorsasthepersoninchargeofinvestorrelationshipmanagement.Dailymanagementofinvestorrelationsincludesansweringinvestors'questionsthroughtelephone,email,interactiveplatformetc.,strengtheningthecommunicationwithinvestorssoastofullyguaranteetheinvestors'righttolearnthetruth.6.PerformanceevaluationandincentivemechanismTheCompanyhasestablishedacomprehensiveemployeeperformanceevaluationandincentivemechanism.Theappointmentofseniormanagersisopenandtransparent,andconformstotherelevantlaws,regulationsandtheArticlesofAssociation.Inthefuture,theCompanywillexploremoreformsofincentivemethods,formamulti-levelincentivemechanism,improvetheperformanceevaluationstandards,bettermobilizetheworkenthusiasmofmanagementpersonnel,andattractandstabilizeexcellentmanagementtalentsandtechnicalandbusinessbackbones.7.StakeholdersTheCompanycanfullyrespectandsafeguardthelegitimaterightsandinterestsofstakeholders,andrealizethecoordinationandbalanceofinterestsofshareholders,employeesandsociety.TheCompanyadherestotherelevantlawsandregulations,constantlyimprovesthecorporategovernancesystem,andeffectivelyprotectstheinterestsofinvestors.WhethertheactualstatusofcorporategovernancesignificantlydeviatesfromtheregulatorydocumentsissuedbytheChinaSecuritiesRegulatoryCommissionregardingthegovernanceoflistedcompanies□Yes√NoII.Company’sIndependenceinBusinesses,Management,Assets,InstitutionsandFinancefromControllingShareholdersTheCompanyisseparatedfromthecontrollingshareholder,theactualcontrollerandthecontrolledenterprisesinbusiness,personnel,assets,institutionsandfinance,andhastheabilityofindependentoperation.1.BusinessindependenceThemainbusinessoftheCompanyisoutstanding,andithasitsowncorrespondingsysteminproduction,procurementandsales.Itisindependentofthecontrollingshareholder,hasacompletebusinessstructure,anddoesnotrelyontheshareholdersoranyotherrelatedparties.Theshareholdersexercisetheirrightthroughparticipatinginthegeneralmeetingofshareholdersinaccordancewiththelaw.ThereisnosuchsituationthattheshareholdersZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport46interfereintheoperationbeyondtheprovisionofgeneralmeeting.2.PersonnelindependenceThedirectors,supervisorsandseniormanagementoftheCompanyareelectedorappointedinaccordancewiththelegalelectionprocedurestipulatedintheCompanyLawandtheArticlesofAssociation.TheCompany'spersonnel,laborandwagesarecompletelyindependent.Thesalarypayment,welfareexpensesandotherexpensesofthestaffarestrictlyseparatedfromthecontrollingshareholder.3.AssetcompletenessTheCompanyhastangibleassets,suchasland,buildings,machineryandequipment,vehicles,officefacilities,testfacilitiesandintangibleassets,suchastrademarks,patents.Ithasanindependentprocurementandsalessystemandanindependentandcompleteassetstructure.4.InstitutionindependenceInaccordancewiththerelevantprovisionsoftheCompanyLawandtheArticlesofAssociation,theCompanyhasestablishedtheinstitutionslikegeneralmeetingofshareholders,theboardofdirectors,theboardofsupervisorsandotherauthorities,andformulatedthecorrespondingrulesofprocedure.TheCompany'sproductionandoperationsitesareseparatedfromthecontrollingshareholders,andacomprehensiveorganizationalsystemhasbeenestablished.Theboardofdirectors,theboardofsupervisorsandotherinternalinstitutionsoperateindependently.Thereisnosuchsituationthatthecontrollingshareholderinterferesinthebusinessactivitiesinthenameofthelistedcompany.5.FinanceindependenceTheCompanyhasanindependentfinancialdepartment,equippedwithfull-timefinancialpersonnel,andestablishedanindependentaccountingsystemandfinancialmanagementsystemthatcanindependentlymakefinancialdecisions.TheCompanyhasseparateaccountsandpaystaxesindependently,opensindependentaccountinbankandmakesfinancialdecisionsindependently.III.HorizontalCompetition□Applicable√NotapplicableIV.AnnualGeneralMeetingandExtraordinaryGeneralMeetingsconvenedduringtheReportingPeriod1.AnnualgeneralmeetingofshareholdersconvenedduringthereportingperiodMeetingNatureProportionofparticipatinginvestorsConvenedDateDisclosureDateDisclosureIndexAnnualgeneralmeetingofshareholdersof2022Annualgeneralmeetingofshareholders66.89%May19,2023May20,2023AnnouncementoftheAnnualGeneralMeetingofShareholdersof2022(2023-036)waspublishedintheSecuritiesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport47Times,ShanghaiSecuritiesJournalandCNINFO.The1stextraordinarygeneralmeetingofshareholdersin2023Interimgeneralmeetingofshareholders63.66%July6,2023July7,2023Announcementofthe1stExtraordinaryGeneralMeetingofShareholdersin2023(2023-063)waspublishedintheSecuritiesTimes,ShanghaiSecuritiesJournalandCNINFO.The2ndextraordinarygeneralmeetingofshareholdersin2023Interimgeneralmeetingofshareholders61.53%September7,2023September8,2023Announcementofthe2ndExtraordinaryGeneralMeetingofShareholdersin2023(2023-107)waspublishedintheSecuritiesTimes,ShanghaiSecuritiesJournalandCNINFO.The3rdextraordinarygeneralmeetingofshareholdersin2023Interimgeneralmeetingofshareholders60.88%October11,2023October12,2023Announcementofthe3rdExtraordinaryGeneralMeetingofShareholdersin2023(2023-117)waspublishedintheSecuritiesTimes,ShanghaiSecuritiesNewsandCNINFO.2.Extraordinarygeneralmeetingsconvenedattherequestofpreferredshareholderswithresumedvotingrights:□Applicable√NotapplicableV.Informationofdirectors,supervisors,seniormanagement1.BasicinformationNameGenderAgeTenurestatusCommencementoftermofofficeTerminationoftermofofficeSharesheldatthebeginningofthePeriod(ShareSharesincreasedduringthePeriod(Shares)SharesdecreasedduringthePeriod(Shares)Otherchanges(Shares)SharesheldattheendofthePeriod(Shares)ReasonsforincreaseordecreaseofsharesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport48s)ZhangYaboMale50Chairmanoftheboard,CEOIncumbentDecember13,2012January26,202539,024,20039,024,200WangDayongMale55Director,PresidentIncumbentDecember13,2012January26,2025336,75084,188252,562SharesreductionRenJintuMale62DirectorIncumbentJanuary26,2022January26,2025NiXiaomingMale56DirectorIncumbentMay6,2011January26,2025326,75081,688245,062SharesreductionChenYuzhongMale58Director,chiefengineerIncumbentNovember29,2011January26,2025336,750336,750ZhangShaoboMale45DirectorIncumbentMay18,2015January26,2025BaoEnsiMale56IndependentdirectorIncumbentAugust3,2021January26,2025ShiJianhuiMale52IndependentdirectorIncumbentMay19,2020January26,2025PanYalanFemale59IndependentdirectorIncumbentFebruary26,2021January26,2025ZhaoYajunMale53ConveneroftheboardofsupervisorsIncumbentNovember29,2011January26,2025MoYangMale48SupervisorIncumbentAugust3,2021January26,202514,56814,568ChenXiaomingMale55EmployeerepresentativesupervisorIncumbentMarch26,2011January26,202511,10011,100HuKaichengMale49Vicepresident,SecretaryoftheIncumbentJanuary26,2015January26,2025336,75084,188252,562SharesreductionZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport49boardofdirectorsYuYingkuiMale50Vicepresident,CFOIncumbentSeptember30,2011January26,2025368,05784,188283,869SharesreductionTotal------------40,754,9250334,25240,420,673--Duringthereportingperiod,whethertherewasanyresignationofdirectorsandsupervisorsanddismissalofseniormanagersduringtheirtermofoffice□Applicable√NotapplicableChangesofDirectors,SupervisorsandSeniorManagement□Applicable√Notapplicable2.PositionsandIncumbencyTheprofessionalbackground,mainworkexperienceandmainresponsibilitiesofthecurrentdirectors,supervisorsandseniormanagersofthecompanyMr.ZhangYabo:Bornin1974,masterofBusinessAdministrationofCEIBS.GraduatedfromShanghaiJiaoTongUniversityinJuly,1996.FromMay2007toSeptember2009,heservedasthevicepresidentofSanhuaHoldingGroupCo.,Ltd.;fromMay2007uptopresent,hehasbeenappointedasthedirectorandvicechairmanoftheboardofdirectorsofSanhuaHoldingGroupCo.,Ltd.;fromSeptember2009toDecember2012,heservedasthegeneralmanageroftheCompany;fromOctober2009uptopresent,hehasbeenappointedasthedirectoroftheCompany;fromDecember2012uptopresent,hehasservedasthechairmanoftheboardandCEOoftheCompany.Mr.WangDayong:Bornin1969,masterofBusinessAdministration(EMBA),senioreconomistandengineer.Heservedaschiefofplanningsection,Secretaryofgeneralmanager,directorofmanufacturingdepartment,directorofrefrigerationvalvebusinessdepartment,assistanttogeneralmanager,assistanttoPresident,vicepresidentanddirectorofSanhuaHoldingGroupCo.,Ltd.HeservedasasupervisoroftheCompanyfromDecember2001toApril2006,adirectoroftheCompanyfromApril2006toMay2011.HecurrentlyservesasadirectorofSanhuaHoldingGroupCo.,Ltd,andadirectorandPresidentoftheCompanysinceDecember2012.Mr.RenJintu:Bornin1962,collegedegree,associatesenioraccountant.From1980to1994,hesuccessivelyservedasdeputyfactorydirector,financialdirectoranddeputygeneralmanagerofXinchangRefrigerationPartsGeneralFactoryandZhejiangSanhuaGroupCo.,Ltd;From2001to2006,heservedasthedirectorandgeneralmanageroftheCompany;From2005to2015,heservedasvicepresidentofSanhuaHoldingGroupCo.,Ltd.andgeneralmanagerofShanghaiJingyiRealEstateCo.,Ltd;HeiscurrentlyadirectorofSanhuaHoldingGroupCo.,LtdandadirectorofNingboFuerdaIntelligentTechnologyCo.,Ltd;HeservedasadirectoroftheCompanysinceJanuary2022.Mr.NiXiaoming:Bornin1968,master’sdegree,senioreconomist.FromJanuary2009toJuly2009,heservedasthedeputygeneralmanagerofsalesoftheCompany;August2009,heservedasthedeputygeneralmanagerofZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport50SanhuaDanfoss(Hangzhou)MicrochannelHeatExchangerCo.,Ltd;sinceMay2010,hehasservedasthegeneralmanagerofSanhua(Hangzhou)MicroChannelHeatExchangerCo.,Ltd,aswellasthedirectorofSanhuaHoldingGroupCo.,Ltd;HehasbeenadirectoroftheCompanysinceMay,2011.Mr.ChenYuzhong:Bornin1966,master’sdegree,engineer.HewasthechiefengineeroftheCompanyfromDecember2001toMay2011;hewasthedeputygeneralmanageroftheCompanyfromMay2011toDecember2012;hehasbeenthechiefengineeroftheCompanysinceDecember2012;hehasbeenthegeneralmanagerofZhejiangSanhuaClimate&ApplianceControlsGroupCo.,Ltd.sinceAugust2015;heisalsothedirectorofSanhuaHoldingGroupCo.,Ltd;andhehasbeenthedirectoroftheCompanysinceNovember2011.Mr.ZhangShaobo:Born1979,master’sdegree,graduatedfromtheChinaEuropeInstituteofBusinessSchool.SinceNovember2012,heservedasgeneralmanagerofSanhuaRealEstateGroupandZhejiangSanhuaRealEstateCo.,Ltd;sinceJuly2013,hehasservedasgeneralmanagerofHangzhouSanhuaInternationalBuildingCo.,Ltd;FromOctober2023topresent,servedastheChairmanofZhejiangSanhuaZhiyuanRealEstateCo.,Ltd.FromMay2017toDecember2023,hehasservedasexecutivedirectorandgeneralmanagerofZhejiangSanhuaZhichengRealEstateDevelopmentCo.,Ltd;hecurrentlyservesasadirectorandassistantpresidentofSanhuaHoldingGroupCo.,Ltd.AndthechairmanofZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd;fromMay2015uptopresent,hehasservedasthedirectoroftheCompany.Mr.BaoEnsi:Bornin1968,doctor’sdegree,associatesenioraccountant.HehassuccessivelyservedasdirectorofChinaSecuritiesRegulatoryCommissionandfull-timememberofStockIssuanceAuditCommittee;HeadofFinanceDepartmentofChinaFinancialFuturesExchange,expertofinvestoreducationcenter,vicechairmanofBeijingHoujiCapitalManagementCompany.HeiscurrentlytheassistanttothechairmanofBeijingHoujiCapitalManagementCompany;HehasbeenanindependentdirectoroftheCompanysinceAugust2021.Mr.ShiJianhui:Bornin1972,heachievedamaster'sdegreeinEMBAfromChangjiangBusinessSchoolandShanghaiAdvancedFinanceCollege.Heusedtobethechairman/CEOofMinthGroupCo.,Ltd.andhecurrentlyservesastheCEOofXiaozhiInvestmentManagementPartnershipinMeishanBondedPortArea,Ningbo,ZhejiangProvince,managingpartnerofNingboLingdongVentureCapitalPartnership,managingpartnerofHangzhouChishiEnterpriseManagementConsultingPartnership;hecurrentlyservesasadirectorofBomeiIntelligentTechnology(Shanghai)Co.,Ltd,ChairmanofHangzhouGoodFaceTechnologyCo.,Ltd,DirectorofShanghaiTimeDrivingTechnologyCo.,Ltd,andChairmanofShanxiSishanNinruiConstructionEngineeringCo.,Ltd.HehasbeenappointedasanindependentdirectoroftheCompanysinceMay2020.Ms.PanYalan:Bornin1965,master’sdegree,amemberoftheLeagueofCivilSociety.ShestartedworkinginAugust1987.SheisaprofessorofAccountingCollegeofHangzhouUniversityofElectronicTechnology,tutorofgraduatestudents.Sheisanon-practicingCertifiedPublicAccountant.ShehasbeenappointedasanindependentdirectoroftheCompanysinceFebruary2021.Mr.ZhaoYajun:Bornin1971,master’sdegree,graduatedfromCollegeofBusinessAdministrationofZhejiangUniversity,associatesenioraccountant.From1996to2003,heworkedinZhejiangTianjianaccountingfirm;fromJanuary2004toFebruary2011,heservedasdeputyministerofFinanceDepartmentofSanhuaHoldingGroupCo.,Ltd.;fromFebruary2011toFebruary2014,heservedasministerofFinanceDepartmentofSanhuaHoldingGroupCo.,Ltd.;fromMarch2014uptopresent,hehasservedasdeputydirectoroffinanceofSanhuaHoldingGroupZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport51Co.,Ltd.HehasbeenasupervisoroftheCompanysinceNovember2011.Mr.MoYang:Bornin1976,master'sdegree,majoringinpoliticaleconomicsofZhejiangUniversity.HewasateacheroftheEconomicBranchoftheCityCollegeofZhejiangUniversityfromApril2002toJune2004;FromJuly2004toApril2006,heservedasassistanttotheexecutivedeputygeneralmanagerofZhejiangSanhuaClimate&ApplianceControlsGroupCo.,Ltd.;FromAugust2005toDecember2019,hesuccessivelyservedasthesecretaryofthepresident,thesecretaryofthechairmanoftheboardofdirectors,theviceministerofhumanresourcesdepartmentandtheministerofthepresident'sofficeofSanhuaHoldingGroupCo.,Ltd;FromDecember2019tonow,hehasservedastheministeroftheboardofdirectorsofficeinSanhuaHoldingGroupCo.,Ltd.FromJanuary2020topresent,hehasservedastheSecretaryGeneraloftheBoardofDirectorsofSanhuaHoldingsGroupCo.,Ltd.andalsoaSupervisorofSanhuaHoldingsGroupCo.,Ltd.HehasbeenasupervisoroftheCompanysinceAugust2021.Mr.ChenXiaoming:Bornin1969,collegedegree.InAugust2013,heservedasministerofqualitydepartmentandviceministeroffour-wayvalvebusinessdepartmentofWuhuSanhuaAutomaticControlComponentsCo.,Ltd.;inJanuary2016,heservedasministerofQualityDepartmentofWuhuSanhuaAutomaticControlComponentsCo.,Ltd;inDecember2016,heservedasministeroffour-wayvalvedepartmentandservicevalvedepartmentofWuhuSanhuaAutomaticControlComponentsCo.,Ltd.;fromAugust2017uptopresent,hehasservedasManufacturingDirector,ministeroffour-wayvalvedepartmentandservicevalvedepartmentofWuhuSanhuaAutomaticControlComponentsCo.,Ltd.FromApril2022topresent,hehasservedastheDeputyGeneralManageraswellasministerofManufacturingDepartmentandProductBusinessDepartmentofSanhua(Vietnam)Co.,Ltd.SinceMarch2011,hehasbeenappointedasemployeerepresentativesupervisoroftheCompany.Mr.HuKaicheng:Bornin1975,master'sdegree,bachelor'sdegreeofTongjiUniversity,SAIFEMBAofShanghaiJiaoTongUniversity.FromAugust2006toAugust2009,heservedasthedirectorofsuppliermanagement,procurementdirectorofZhejiangSanhuaClimate&ApplianceControlsGroupCo.,Ltd.andprocurementdirectoroftheCompany;fromSeptember2009toDecember2010,heservedinSanhuaHoldingGroupCo.,Ltd.;fromJanuary2011toOctober2014,heservedastheprocurementdirectoroftheCompany;fromOctober2014uptopresent,hehasservedasthevicepresidentoftheCompany;fromJanuary2015uptopresent,hehasservedastheSecretaryoftheboardofdirectorsoftheCompany.SinceOctober2023,hehasbeenappointedasthechairmanofHangzhouXiantuElectronicsCo.,Ltd.Mr.YuYingkui:Bornin1974,bachelordegree,accountant,accountingmajorofShanghaiUniversityofFinanceandEconomics.FromApril2001toDecember2003,hesuccessivelyservedasthechiefaccountantofthefinancialdepartmentofZhejiangSanhuaHoldingGroupCo.,Ltd.andZhejiangSanhuaClimate&ApplianceControlsGroupCo.,Ltd.;fromDecember2003toNovember2007,heservedasthedeputygeneralmanagerofShenyangDuruiWheelHubCo.,Ltd.;fromNovember2007uptopresent,hehasbeentheministerofthefinancialdepartmentoftheCompany;fromSeptember2011uptopresent,hehasbeenthechieffinancialofficeroftheCompany;fromJanuary2016uptopresent,hehasbeenthevicepresidentoftheCompany.Positionheldinshareholders’entities√Applicable□NotapplicableNameShareholder'sentityPositioninshareholders’CommencementofthetermTerminationofthetermCompensationandallowancefromtheshareholders'ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport52entitiesentityZhangYaboSanhuaHoldingGroupCo.,LtdVicechairman(director)July11,2000NoWangDayongSanhuaHoldingGroupCo.,LtdDirectorJuly11,2000NoRenJintuSanhuaHoldingGroupCo.,LtdDirectorJuly11,2000YesRenJintuZhejiangSanhualvnengIndustrialGroupCo.,LtdDirectorMarch15,2011NoNiXiaomingSanhuaHoldingGroupCo.,LtdDirectorJuly11,2000NoChenYuzhongSanhuaHoldingGroupCo.,LtdDirectorNovember26,2014NoZhangShaoboSanhuaHoldingGroupCo.,LtdDirectorAugust7,2003NoZhangShaoboZhejiangSanhualvnengIndustrialGroupCo.,LtdDirectorAugust14,2023YesZhaoYajunSanhuaHoldingGroupCo.,LtdDeputychieffinancialofficerMarch1,2014YesZhaoYajunZhejiangSanhuaLvnengIndustrialGroupCo.,LtdSupervisorJuly1,2019NoMoYangSanhuaHoldingGroupCo.,LtdSupervisorNovember26,2014YesPositionsheldinotherentities√Applicable□NotapplicableNameOtherentitiesPositionsinotherentitiesCommencementofthetermTerminationofthetermCompensationandallowancefromotherentitiesZhangYaboXinchangHuaxinIndustrialCo.,LtdChairmanoftheBoardMarch16,2016NoZhangYaboHangzhouZhishenInvestmentManagementCo.,LtdExecutiveDirectorJuly23,2007NoZhangYaboHangzhouZhishenInvestmentManagementCo.,LtdSupervisorJuly23,2007NoZhangYaboHangzhouSanhuaResearchInstituteCo.,LtdChairmanoftheBoardFebruary10,2017NoZhangYaboSanhuaTradingSingaporePrivateLimitedDirectorOctober13,2017NoZhangYaboZhejiangHaoyuanTechnologyCo.,LtdDirectorMay4,2018NoZhangYaboWuhuALDOCTechnologyCo.,LtdDirectorFebruary3,2016NoZhangYaboHangzhouFumoNewMaterialTechnologyCo.,DirectorJuly1,2016October20,2023NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport53LtdWangDayongHangzhouFufanInvestmentManagementCo.,LtdDirectorApril28,2016NoWangDayongXinchangHuayongEnterpriseManagementCo.,LtdExecutiveDirectorNovember11,2021NoWangDayongGuochuangEnergyInternetInnovationCenter(Guangdong)Co.,LtdDirectorAugust20,2019NoWangDayongZhejiangSanhuaIndustrialAutomationCo.,LtdExecutiveDirectorAugust1,2023NoWangDayongNingboJiaerlingPneumaticMachineryCo.,LtdDirectorOctober9,2023NoRenJintuHangzhouFufanInvestmentManagementCo.,LtdDirectorJuly9,2010NoRenJintuHangzhouXinjiIndustrialCo.,LtdExecutiveDirectorandGeneralManagerJanuary9,2007July26,2023NoRenJintuNingboFuerdaIntelligentTechnologyCo.,LtdDirectorApril8,2021NoRenJintuHangzhouSanhuaInternationalBuildingCo.,LtdSupervisorJuly31,2013NoRenJintuShenyangSanhuaDaikaWheelHubCo.,Ltd.(Bankruptcy)DirectorDecember1,2006NoRenJintuXinchangPrivateFinancingServiceCenterCo.,LtdChairmanofSupervisoryBoardApril8,2018NoRenJintuXinchangCountyUnitedInvestmentManagementCo.,LtdSupervisorApril29,2015NoRenJintuZhejiangSanhuaZhiyuanRealEstateCo.,Ltd.DirectorOctober30,2023NoZhangShaoboHangzhouFufanInvestmentManagementCo.,LtdChairmanoftheBoard,GeneralManagerJuly9,2010NoZhangShaoboZhejiangHuatengChairmanoftheDecember22,NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport54IndustrialCo.,LtdBoard2021ZhangShaoboNingboFuerdaIntelligentTechnologyCo.,LtdDirectorDecember26,2019NoZhangShaoboHangzhouZhishenInvestmentManagementCo.,LtdExecutiveDirectorandGeneralManagerJuly23,2007NoZhangShaoboHangzhouZhichengInvestmentManagementCo.,LtdManagerNovember4,2020NoZhangShaoboInnerMongoliaXiqiMiningCo.,LtdSupervisorSeptember11,2012NoZhangShaoboZhejiangSanhuaEcologicalAgricultureCo.,LtdExecutiveDirector,ManagerSeptember11,2018NoZhangShaoboHangzhouKaisidaTechnologyCo.,LtdExecutiveDirectorDecember1,2018NoZhangShaoboHangzhouSanhuaInternationalBuildingCo.,LtdExecutiveDirectorandGeneralManagerJuly31,2013NoZhangShaoboTianjinSanhuaIndustrialParkManagementCo.,LtdExecutiveDirector,ManagerOctober1,2018NoZhangShaoboZhejiangSanhuaZhichengRealEstateDevelopmentCo.,LtdExecutiveDirectorandGeneralManagerMay31,2017December29,2023NoZhangShaoboXinchangPrivateFinancingServiceCenterCo.,LtdDirectorApril8,2018NoZhangShaoboHangzhouFuxiangPropertyManagementCo.,LtdChairmanoftheBoardJanuary3,2016NoZhangShaoboShaoxingSanhuaZhiyueRealEstateDevelopmentCo.,LtdExecutiveDirector,ManagerSeptember1,2022NoZhangShaoboShanghaiSanhuaElectricCo.,LtdExecutiveDirector,ManagerApril10,2017NoZhangShaoboXinchangCountyUnitedInvestmentManagementCo.,LtdDirectorApril29,2015NoZhangShaoboShanghaiTihuCateringCo.,LtdDirectorSeptember26,2017NoZhangShaoboTianjinMinghaoManagementExecutiveDirector,ManagerMay25,2017November14,2023NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport55ConsultingCo.,LtdZhangShaoboHangzhouZhiwoInvestmentManagementCo.,LtdGeneralManagerJune16,2014NoZhangShaoboXinchangCountySanhuaPropertyManagementCo.,LtdChairmanoftheBoardMarch29,2011NoZhangShaoboXinchangSanhuaHongdaoVentureCapitalPartnership(limitedpartnership)ExecutivePartnerNoZhangShaoboXinchangZhushiVentureCapitalPartnership(limitedpartnership)ExecutivePartnerNoZhangShaoboHangzhouSanhuaHongdaoVentureCapitalPartnershipEnterprise(LimitedPartnership)ExecutivePartnerNoZhangShaoboZhejiangSanhuaZhiyuanRealEstateCo.,Ltd.GeneralManagerOctober30,2023NoBaoEnsiAerospaceEraElectronicTechnologyCo.,LtdIndependentDirectorJune22,2020June21,2023YesBaoEnsiChinaRailwayTrustCo.,Ltd.IndependentDirectorMay25,2022YesShiJianhuiBaimeiSmartTechnology(Shanghai)Co.,Ltd.DirectorJanuary1,2020YesShiJianhuiHangzhouHaomianTechnologyCo.,LtdGeneralManagerAugust19,2021NoShiJianhuiShanghaiShijiaTechnologyCo.,LtdDirectorJanuary26,2022NoShiJianhuiNingboMeishanBondedPortZoneXiaozhiEntrepreneurshipInvestmentPartnershipEnterprise(LimitedPartnership)ExecutivePartnerSeptember22,2017NoShiJianhuiNingboLingdongEntrepreneurshipExecutivePartnerJuly28,2020NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport56InvestmentPartnershipEnterprise(LimitedPartnership)ShiJianhuiHangzhouChishiEnterpriseManagementConsultingPartnership(LimitedPartnership)ExecutivePartnerAugust3,2022NoShiJianhuiShaanxiSishanNingruiConstructionEngineeringCo.,LtdGeneralManagerFebruary16,2023NoShiJianhuiNingboFangzhengAutomotiveMoldCo.,LtdIndependentDirectorDecember11,2023December10,2026YesShiJianhuiAAPICOHitechPublicCompanyLimitedIndependentDirectorJune29,2022YesPanYalanLin'anRuralCommercialBankCo.,LtdIndependentDirectorOctober15,2019YesPanYalanZhejiangDailyDigitalCultureGroupCo.,LtdIndependentDirectorDecember22,2021October16,2026YesPanYalanXianhengInternationalTechnologyCo.,LtdIndependentDirectorSeptember25,2023September24,2026YesZhaoYajunXinchangHuaxinIndustrialCo.,LtdDirectorMarch21,2017NoZhaoYajunNingboFuerdaIntelligentTechnologyCo.,LtdSupervisorApril8,2021NoZhaoYajunZhejiangXiezhongAutomobileNewEnergyTechnologyDevelopmentCo.,LtdSupervisorMay25,2018NoZhaoYajunShanghaiFuyulongAutomotiveTechnologyCo.,LtdSupervisorDecember26,2019NoZhaoYajunXinchangPrivateFinancingServiceCenterCo.,LtdSupervisorMarch26,2014NoZhaoYajunFuerda(Tianjin)IntelligentTechnologyCo.,LtdSupervisorNovember2,2018NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport57ZhaoYajunZhejiangHaoyuanTechnologyCo.,LtdSupervisorMay4,2018NoZhaoYajunHangzhouTongchanMachineryCo.,LtdSupervisorMay31,2011NoZhaoYajunShanghaiSanhuaElectricCo.,LtdSupervisorApril12,2011NoZhaoYajunWuhuALDOCTechnologyCo.,LtdSupervisorJuly31,2018NoZhaoYajunXinchangCountyUnitedInvestmentManagementCo.,LtdSupervisorJanuary1,2012NoZhaoYajunXiezhongInternationalThermalManagementSystem(Jiangsu)Co.,LtdChairmanoftheBoardofSupervisorsFebruary28,2019NoZhaoYajunNingboJiaerlingPneumaticMachineryCo.,LtdSupervisorOctober9,2023NoYuYingkuiZhejiangHuatengIndustrialCo.,LtdDirectorApril19,2010NoYuYingkuiXinchangPrivateFinancingServiceCenterCo.,LtdDirectorOctober23,2015NoYuYingkuiChongqingTainuoMachineryCo.,LtdDirectorDecember8,2016NoYuYingkuiNingboJinlifengMachineryCo.,LtdDirectorJuly2,2020NoYuYingkuiSanhuaTradingSingaporePrivateLimitedDirectorOctober13,2017NoDescriptionofemploymentinotherorganizationsTheaboveemploymentinotherentitiesdoesnotincludetheemploymentofdirectors,supervisorsandseniormanagementinsubsidiarieswithinthescopeoftheCompany'sconsolidatedfinancialstatements.Incumbentandresigneddirectors,supervisorsandseniormanagementpersonnelduringthereportingperiodthathavebeenimposedadministrativepenaltiesbytheCSRCduringthelastthreeyears.□Applicable√Notapplicable3.Remunerationofdirectors,supervisorsandseniormanagementpersonnelDecision-makingProcessThesalariesofdirectors,supervisors,andseniormanagementpersonnelshallbedeterminedinaccordancewiththestandardsstipulatedintheCompany'sunifiedsalarymanagementsystem.AccordingtotheCompany'sperformanceevaluationmechanism,regularevaluationsareconductedonthedirectors,supervisors,andseniorZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport58managementpersonnel,andcompensationisdeterminedbasedontheevaluationresults.Theallowancestandardsforindependentdirectorsshallbereviewedanddecidedintheshareholders'meeting.BasisfordeterminationTheremunerationofdirectors,supervisors,andseniormanagementpersonnelisdeterminedbasedonthecompany'soperatingperformanceandperformanceevaluationindicators.Remunerationofdirectors,supervisorsandseniormanagementpersonnelUnit:RMBin10thousandNameGenderAgeTenurestatusTotalremunerationfromtheCompany(RMB'0,000)Remunerationfromrelatedparties(Y/N)ZhangYaboMale50Director,Chairman,CEOIncumbent309.91NoWangDayongMale55Director,PresidentIncumbent423.65NoRenJintuMale62DirectorIncumbent0YesNiXiaomingMale56DirectorIncumbent275.43NoChenYuzhongMale58Director,chiefengineerIncumbent420.22NoZhangShaoboMale45DirectorIncumbent0YesBaoEnsiMale56IndependentdirectorIncumbent10.8NoShiJianhuiMale52IndependentdirectorIncumbent10.8NoPanYalanFemale59IndependentdirectorIncumbent10.8NoZhaoYajunMale53ConveneroftheboardofsupervisorsIncumbent0YesMoYangMale48SupervisorIncumbent0YesChenXiaomingMale55SupervisorIncumbent55.16NoHuKaichengMale49Vicepresident,SecretaryoftheboardofdirectorsIncumbent90.05NoYuYingkuiMale50Vicepresident,CFOIncumbent134.75NoTotal--------1,741.57--ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport59Explanationofothersituations□Applicable√NotapplicableVI.Performanceofdutiesbydirectorsduringthereportingperiod1.BoardofdirectorsinthereportingperiodMeetingConvenedDateDisclosureDateDisclosureIndexThe10thinterimmeetingofthe7thboardofdirectorsMarch15,2023March16,2023The11thmeetingofthe7thboardofdirectorsApril27,2023April29,2023The12thinterimmeetingofthe7thboardofdirectorsJune20,2023June21,2023The13thinterimmeetingofthe7thboardofdirectorsJuly7,2023July8,2023The14thinterimmeetingofthe7thboardofdirectorsAugust22,2023August23,2023The15thinterimmeetingofthe7thboardofdirectorsSeptember1,2023September5,2023The16thinterimmeetingofthe7thboardofdirectorsSeptember25,2023September26,2023The17thmeetingofthe7thboardofdirectorsOctober30,2023October31,2023The18thinterimmeetingofthe7thboardofdirectorsNovember6,2023November7,2023The19thinterimmeetingofthe7thboardofdirectorsDecember28,2023December29,20232.AttendanceofdirectorsinboardmeetingsandgeneralmeetingsAttendanceofdirectorsinboardmeetingsandgeneralmeetingsNameofDirectorBoardmeetingpresencerequiredinthereportingperiod(times)Boardmeetingpresenceonsite(times)Boardmeetingpresenceonsite(times)Boardmeetingpresencethroughaproxy(times)Boardmeetingabsence(times)BoardmeetingnotattendinpersonfortwoconsecutivetimesPresenceofdirectorsingeneralmeetings(times)ZhangYabo101900N/A2WangDayong101900N/A3RenJintu101900N/A3ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport60NiXiaoming101900N/A1ChenYuzhong101900N/A3ZhangShaobo1001000N/A1BaoEnsi101900N/A0ShiJianhui1001000N/A1PanYalan101900N/A4ExplanationofnotattendingtheboardofdirectorsinpersonfortwoconsecutivetimesNotapplicable3.ObjectionsraisedbydirectorstorelevantmattersoftheCompanyWhetherthereisanyobjectiononrelatedissuesoftheCompanyfromdirectors□Yes√No4.OtherdetailsabouttheperformanceofdutiesbydirectorsWhetherthereisanysuggestionfromdirectorsadoptedbytheCompany√Yes□NoDuringthereportingperiod,thedirectorsstrictlycompliedwiththerelevantlaws,regulationsandtheArticlesofAssociation,performedtheirdutiesconscientiously,paidcloseattentiontotheCompany'soperation,regularlyreviewedtheCompany'sannouncements,gotaccesstotheinformationofoperationanddevelopmentperiodically,deeplydiscussedtheopportunitiesandchallengesintheoperationanddevelopment,andtimelypromptedrisks.Directorsputforwardreasonableopinionsandsuggestionsfromtheirprofessionalperspectives,whichenhancedthescientificdecision-makingoftheboardofdirectors.Meanwhile,directorsprovidedindependentandfairopinionsonrelatedtransactions,profitdistribution,stockbuyback,guaranteeandArticlesofAssociationduringthereportingperiod.InordertoimprovethesupervisionmechanismoftheCompanyandsafeguardthelegalrightsofallshareholders,theCompanyshalladopttheopinionsofdirectors.VII.PerformanceofdutiesbyspecialcommitteesundertheboardduringthereportingperiodCommitteeMemberNumberofmeetingsDateofmeetingsMeetingcontentImportantopinionsandsuggestionsOtherperformanceofdutiesDetailsofobjections(ifany)AuditCommitteeIndependentdirectorPanYalan;IndependentdirectorShiJianhui;DirectorRenJintu5April17,20231.Deliberationofthe2022annualreportanditsabstract;2.SpecificreportonannualdepositandactualuseofZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport61raisedfunds;3.ProposalonthepredictionoftheCompany'sdailyrelatedpartytransactionsin2023;4.Proposalonengagementoftheauditinstitutionin2023;5.Firstquarterreportin2023June7,20231.ProposalonthereportontheuseoftheCompany'spreviousraisedfunds;2.ProposalonthePlanfortheUseofFundsRaisedfromtheIssuanceofGDRbytheCompany；3.ProposalontheFeasibilityAnalysisReportoftheCompany'sOverseasIssuanceofGDRRaisedFundsandtheIncreaseofDomesticSharesAugust16,20231.Semi-annualreportin2023;2.Specificreportontheannualdepositandactualuseoftheraisedfundsinthehalfyearof2023.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport62August25,2023ProposalonthereportontheuseoftheCompany'spreviousraisedfundsOctober16,2023Thirdquarterreportin2023RemunerationandAssessmentCommitteeIndependentdirectorShiJianhui;IndependentdirectorBaoEnsi;DirectorRenJintu2April18,2023ProposalontheachievementoftheunlockingconditionsforthethirdvestingperiodoftheRestrictedstockincentiveplanin2020June15,20231.ProposalontheAchievementofExerciseConditionsduringtheFirstVestingPeriodofthe2022StockAppreciationRightsIncentivePlan2.ProposalontheAchievementofUnlockingConditionsoftheFirstVestingPeriodoftheRestrictedStockIncentivePlanin2022StrategicCommitteeChairmanoftheBoardZhangYabo;DirectorWangDayong;DirectorNiXiaoming;DirectorChenYuzhong;1April17,2023Deliberationofthe2022annualreportanditsabstractZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport63DirectorZhangShaobo;IndependentdirectorShiJianhui;VIII.PerformanceofdutiesbytheSupervisoryCommitteeWhetherthereisanyrisktotheCompanyidentifiedbySupervisoryCommitteewhenperformingitsdutiesduringtheReportingPeriod□Yes√NoIX.StaffintheCompany1.Statisticsofemployees,professionalstructureofthestaff,andeducationalbackgroundNumberofincumbentemployeesintheparentcompany3,386Numberofincumbentemployeesinmajorsubsidiaries14,346Numberofincumbentemployees17,732Numberofemployeesreceivingsalariesincurrentperiod17,732NumberofretiredemployeesrequiringtheparentCompanyanditssubsidiariestobearcosts0ProfessionalstructureProfessionalCategoryNumberofemployeesProductionstaff11,447Salesstaff645Technicalstaff3,241Financialstaff376AdministrativeStaff2,023Total17,732EducationalbackgroundEducationalbackgroundNumberofemployeesMasterandabove959ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport64Bachelor4,852College4,120Others7,801Total17,7322.StaffremunerationpolicyTheCompanyhasestablishedasalaryincentivesystemaccordingtothebusinessdevelopmentstrategyandhumanresourcesstrategy.Basedonthemarketsalarylevelandthevalue,employees’abilityandperformanceresults,theCompanyhasestablishedacomprehensivesalarysystemwiththestructureofbasicsalary,bonusandlong-termincentive,andhasformedrelevantsalaryincentivesystemstoensuretherationalityofemployees'valuecontributionandtheirreturnofincome.ThismotivatesemployeestocontinuouslycreatevalueanddrivestheCompany'ssustainedhigh-qualitydevelopment.Everyyear,theCompanycarriesouttheestimationofcollegestudentsandprofessionaltalents,whichhasplayedanimportantroleinmotivatingemployeesatalllevels.AndregularreviewmarketcompensationtoensurecompetitivenessoftheCompany'soverallsalarysystem.Inaddition,theCompanycarriesoutR&DAchievementAward,QualityAward,ManagementAchievementAward,PatentAward,CostReductionAward,LeanImprovementAwardandotherawardseveryyear,whicheffectivelyencouragetalents’innovation.TheCompanylaunchedphaseIequityincentiveplanin2018,phaseIIrestrictedstockincentiveplanin2020andPhaseIIIequityincentiveplanin2022,whichplayedanincentiveandretentionroleforthekeytalentsandlaidafoundationforsustainabledevelopment.3.StafftrainingplansBasedonthedevelopmentplanfrom2021to2025,theCompanyimplementsthetalentsstrategyof“Internaltrainingfirst,moderateexternalintroduction”,whichwillbededicatedtooptimizingthetalentmanagementmechanism.Inordertoidentifytalents,theCompanyestablishedtalentstandardsatalllevelsandgraduallyimprovetheevaluationsystem.Sometalentsdevelopmentprojectsarelaunched,suchasLeadershipProject,OverseasFactoryManagerTrainingProgram,InternationalTalentTrainingProgram,TechnologyManufacturingTalentTrainingProject,ManagementTraineeProgram,etc.Atthesametime,wewillstrengthenourinfrastructure,continuouslyintroducelearningtechnologies,continuetoimproveourinternallecturerteamanddevelopinternalcourseresources,andcreatealearningplatform.Throughthefiveforcemechanismsoftraction(culturaltraction),internaldrive(growthdrive),externaldrive(lecturerdrive),supportiveforce(resourceconstructionsupport),andorganizationallearning(learningorganizationconstruction),wepromoteallemployees'independentlearningandtalenttransformationandupgrading,andhelporganizationsandtalentsachieveglobalcompetitiveness.4.Laboroutsourcing□Applicable√NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport65X.ProfitdistributionofordinarysharesandcapitalizationofcapitalreservesProfitdistributionpolicyinthereportingperiod,especiallytheformulation,implementationandadjustmentofcashdividendpolicy□Applicable√NotapplicableDuringthereportingperiod,theCompanywasprofitableandtheparentcompanyhadapositiveprofitavailableforshareholderdistribution,butnocashdividenddistributionplanwasproposed.□Applicable√NotapplicableProfitdistributionandconversionofcapitalreservetosharecapitalduringthisreportingperiod√Applicable□NotapplicableBonusshareissuedper10shares(share)0Cashdividendper10shares(RMB)(taxinclusive)2.50Additionalsharesconvertedfromcapitalsurplusforevery10shares(share)0Totalcapitalsharebasisforthedistributionproposal(share)3,706,504,614Totalcashdividend(RMB)(taxinclusive)926,626,153.50Cashdividendamountinotherways(suchassharerepurchase)(RMB)0.00Totalcashdividends(includingotherways)(RMB)926,626,153.50Distributableprofits(RMB)1,768,214,110.04Percentageofcashdividendsinthetotaldistributedprofit(%)100%CashdividendsIftheCompanyisingrowthstageandtherearemajorcapitalexpenditurearrangements,theproportionofcashdividendsinthisprofitdistributionshallbeatleast20%.DetaileddescriptionofprofitdistributionorcapitalreservesconversionplanBasedontheprovisionalsharecapitalof3,706,504,614shares,cashdividendofRMB2.50(taxinclusive)willbedistributedtoallshareholdersforevery10shares.TheCompanywillnotdistributebonussharesorconvertcapitalreservestosharecapital.Note:ThesharecapitaloftheCompanyis3,732,615,535shares,ofwhichthenumberofrepurchasedsharesis26,110,921.AccordingtotheprovisionsoftheCompanyLaw,thesharesheldbythelistedcompanythroughtherepurchaseaccountdonotenjoytherighttoparticipateinprofitdistributionortheconversionofcapitalreserveintosharecapital.IfthetotalsharecapitaloftheCompanychangesduetotheconversionofconvertiblebonds,sharerepurchase,exerciseofequityincentivescheme,refinancingandlistingofnewsharesbeforetheimplementationofthedistributionplan,thetotaldistributionamountshallbeadjustedaccordinglybasedontheprincipleofconstantdistributionproportion.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport66XI.TheImplementationofanEquityIncentivePlan,EmployeeStockOwnershipPlan,orOtherIncentivePlans√Applicable□Notapplicable1.EquityIncentivePlan1.In2020,theCompanylaunchedthe2020restrictedstockincentiveplan,granting12.045millionrestrictedsharesto914incentiveobjects.ThegrantdateofthisequityincentiveplanwasFebruary24,2020.ThegrantpriceofrestrictedshareswasRMB9.85pershare,andthelistingdatewasMarch20,2020.(1)OnApril27,2023,theCompanyheldthe11thmeetingofthe7thBoardofDirectorsandthe9thmeetingofthe7thBoardofSupervisors,respectively,inwhich,Proposalontheachievementofunlockingconditionsofthethirdvestingperiodofthe2020restrictedstockincentiveplanwasapproved.ThelistingdateforcirculationoftherestrictedshareswasMay15,2023.Thenumberofshareholdersmeetingtheunlockingconditionwas825.Atotalof5.85millionshareswerereleased,accountingfor0.1629%oftheCompany'scurrenttotalsharecapital.(2)OnJune20,2023,theCompanyheldthe12thinterimmeetingofthe7thboardofdirectorsandthe10thinterimmeetingofthe7thboardofsupervisorsrespectively,inwhichProposalonadjustingtherepurchasepriceof2020restrictedstockincentiveplanandProposalonrepurchaseandcancellationofsomerestrictedstockswereapproved.TheCompanyrepurchasedandcancelled62,400restrictedsharesheldby19unqualifiedincentiveobjectsinthe2020restrictedstockincentiveplanatapriceofRMB6.6615pershare.(3)OnJuly6,2023,thefirstextraordinarygeneralmeetingofshareholdersin2023washeld,inwhichProposalonrepurchaseandcancellationofsomerestrictedshareswasapproved.TheCompanyrepurchasedandcancelled62,400restrictedsharesheldby19unqualifiedincentiveobjectsinthe2020restrictedstockincentiveplanatapriceofRMB6.6615pershare.2.In2022,theCompanylaunchedthe2022restrictedstockincentiveplanandstockappreciationrightincentiveplan,granting17.585millionrestrictedsharesto1,366incentiveobjectsand485,000stockappreciationrightsto41incentiveobjects.ThegrantingdateofthisequityincentiveplanwasMay31,2022.Thegrantingpriceofrestrictedsharesandstockappreciationrightswas10yuan/share.ThelistingdateoftherestrictedsharesisJune30,2022.(1)OnJune20,2023,theCompanyheldthe12thinterimmeetingofthe7thboardofdirectorsandthe10thinterimmeetingofthe7thboardofsupervisors,inwhichfollowingproposalswereapproved:ProposalonAdjustingtheRepurchasePriceof2022RestrictedStockIncentivePlan,ProposalontheAchievementofUnlockingConditionsoftheFirstVestingPeriodoftheRestrictedStockIncentivePlanin2022,ProposalonRepurchaseandCancellationofsomeRestrictedStocks,ProposalonAdjustingtheExercisePriceofthe2022StockAppreciationRightsIncentivePlan,ProposalontheAchievementofExerciseConditionsduringtheFirstVestingPeriodofthe2022StockAppreciationRightsIncentivePlanandProposalonCancellationofPartialStockAppreciationRights,.ThelistingdateoftherestrictedshareswasJune30,2023.Thenumberofshareholdersmeetingtheunlockingconditionwas1,345.Atotalof5.238millionshareswerereleasedZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport67accountingfor0.1459%oftheCompany'scurrenttotalsharecapital.TheCompanyrepurchasedandcancelled118,000restrictedsharesheldby21unqualifiedincentiveobjectsinthe2022restrictedstockincentiveplanatapriceofRMB9.70pershare.Thetotalnumberofincentiveobjectseligiblefortheexerciseofstockappreciationrightswas39,andthenumberofexercisableshareswas139,500.TheCompanycancelledallorpartofthestockappreciationrightsheldby2incentiveobjectswhodonotmeettheconditionsinthe2022stockappreciationrightsincentiveplan,totaling20,000shares.(2)OnJuly6,2023,thefirstextraordinarygeneralmeetingofshareholdersin2023washeld,inwhichProposalonrepurchaseandcancellationofsomerestrictedshareswasapproved.TheCompanyrepurchasedandcancelled118,000restrictedsharesheldby21unqualifiedincentiveobjectsinthe2022restrictedstockincentiveplanatapriceofRMB9.70pershare.Shareincentivesfordirectorsandseniorexecutivesinthereportingperiod√Applicable□NotapplicableUnit:shareNameNumberofstockoptionsheldatthebeginningoftheyearNumberofnewlygrantedstockoptionsinthereportingperiodNumberofexercisablesharesinthereportingperiodNumberofexercisedshar。

3. esinthereportingperiodExercisepriceofexercisedsharesduringthereportingperiod(yuan/share)NumberofstockoptionsheldattheendoftheperiodMarketpriceattheendofthereportperiod(yuan/share)RestrictedSharesheldatthebeginningoftheperiodSharesvestedinthecurrentperiodSharesnewlygrantedinthecurrentperiodPriceforrestrictedsharesgranted(RMBpershare)RestrictedSharesheldatperiod-endWangDayongDirect,President29.40132,00076,00056,000NiXiaomingDirect29.40122,00073,00049,000ChenYuzhongDirect,chiefengineer29.40132,00076,00056,000HuKaichengVicepresident,Secretaryoftheboardofdirectors29.40132,00076,00056,000ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport68YuYingkuiVicepresident,CFO29.40132,00076,00056,000Total--0000--650,000377,0000--273,000Note(ifany)1.Atthebeginningofeachyear,thenumberoflockedsharesshouldbere-calculatedaccordingto75%ofthetotalnumberofsharesheldbytheseniormanagement.Thenumberofunlockedsharesinthisperiodis25%ofthetotalnumberofsharesatthebeginningoftheyear.2.May15,2023,thethirdvestingperiodofthe2020Restrictedstockincentiveplanmatured,andtherestrictedsharesoftheabove-mentioneddirectorsandseniormanagementhavebeenunlockedby52,000shareseach,totaling260,000shares.3.June30,2023,thefirstvestingperiodofthe2022Restrictedstockincentiveplanmatured,andtherestrictedsharesofdirectorWangDayong,ChenYuzhong,seniormanagementHuKaicheng,andYuYingkuihavebeenunlockedby24,000shareseach;restrictedsharesofdirectorNiXiaominghavebeenunlockedby21,000shares,totaling117000shares.AssessmentandincentivemechanismfortheseniormanagementInordertoencourageseniormanagersbetterperformtheirdutiesandclarifytheirrightsandobligations,theCompanyhasestablishedafairlysophisticatedperformanceevaluationstandardandremunerationsystem,accordingtowhichseniormanagers’performanceandannualbusinessindicatorswouldbeassessed.TheseniormanagersoftheCompanyareresponsibletotheboardofdirectorsandundertakethebusinessobjectivesissuedbytheboard.Theremunerationandassessmentcommitteeoftheboardformulatetheremunerationplanbasedonevaluationofseniormanagers’ability,performanceandcompletionofbusinesstargets.2.EmployeeStockOwnershipPlan□Applicable√Notapplicable3.Otherincentiveplan□Applicable√NotapplicableXII.Constructionandimplementationofinternalcontrol1.ConstructionandimplementationofinternalcontrolInaccordancewiththerequirementsoftheCompanyLawandotherrelevantregulationsandnormativedocuments,theCompanyhassetupaninternalcontrolsystemincombinationwithitsownbusinesscharacteristics,whichiscomposedofthegeneralmeeting,theboardofdirectors,theboardofsupervisors,themanagement,eachcontrollingsubsidiaryanditsfunctionaldepartments.Thus,itformedarelativelyeffectivedivisionofresponsibilitiesandbalances.TheCompanycontinuestostrengthenthecontrolofhigh-riskareassuchassalesbusiness,procurementZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport69business,majorinvestments,acquisitionandmerger,assetsecurityandinformationsystemmanagement,andhasestablishedcorrespondingcontrolpoliciesandprocedures.Duringthereportingperiod,theCompanytimelyorganizeddirectors,supervisorsandseniormanagerstoparticipateinrelevanttrainingorganizedbyregulatoryauthorities,whichimprovesthemanagement'sawarenessofstandardizedoperation,ensurestheeffectiveimplementationofinternalcontrolsystem,effectivelyimprovesthestandardoperationlevelandpromotesthehealthyandsustainabledevelopmentoftheCompany.TheCompany'sinternalauditdepartmentshallregularlyinspectandsupervisetheestablishmentandimplementationofthisinternalcontrolsystemaswellastheauthenticityandcompletenessofitsfinancialinformation.Duringthereportingperiod,theCompanyestablishedeffectiveinternalcontroloverthebusinessesincludedintheevaluationscope.Ithasachieveditsinternalcontroltargetintermsoftheauthenticityofoperatingresults,businesscomplianceandtheeffectivenessofinternalcontrol.2.Anysignificantinternalcontroldeficienciesduringthereportingperiod□Yes√NoXIII.ManagementandcontrolofsubsidiariesduringthereportingperiodNotapplicableXIV.Self-evaluationreportoninternalcontrolorInternalcontrolauditreport1.Self-evaluationreportoninternalcontrolDisclosuredateoftheinternalcontrolself-evaluationreportApril30,2024Disclosureindexoffulltextofself-evaluationreportoninternalcontrolSelf-evaluationReportonInternalControloftheCompanyin2023Proportionofassetsevaluatedintotalassets100.00%Proportionofrevenueevaluatedintotalrevenueperconsolidatedfinancialstatement100.00%RecognitionstandardofdeficienciesNatureFinancialreportlevelNon-financialreportlevelQualitativecriteriaSignificantdeficiency:1.Fraudofdirectors,supervisorsandseniormanagers;2.MajormisstatementinthecurrentfinancialreportfoundbytheCPAbutnotidentifiedbytheinternalcontroloftheCompany;3.TheCompanyhasmajorviolationsoflawsandregulationsinfinancialaccounting,assetmanagement,capitaloperation,informationdisclosure,productquality,Significantdeficiency:Thepossibilityofdefectsishigh,whichwillsignificantlyreducetheworkefficiencyoreffect,orsignificantlyincreasetheuncertaintyoftheeffect,ormakeitsignificantlydeviatefromtheexpectedgoal.Importantdefects：Defectsaremorelikelytooccur,whichZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport70safetyproduction,environmentalprotectionandotheraspects,causingmajorlossesandadverseeffectstotheCompany,orsubjecttomajoradministrativesupervisionandpunishment;4.SupervisionoftheauditcommitteeandinternalcontroldepartmentisineffectiveontheCompany'sexternalfinancialreportandinternalcontrol.Importantdeficiency:(1).FailuretoselectandapplyaccountingpoliciesinaccordancewithGAAP；(2).Failuretoestablishanti-fraudproceduresandcontrolmeasures;(3).Itcannotreasonablyguaranteethetruthfulnessandcompletenessofthefinancialstatementsduetooneormoredefectsincontrolprocess;(4).Thereisnocorrespondingcontrolmechanismornocompensatorycontrolfortheaccountingtreatmentofnon-routineorspecialtransactions.Generaldeficiency:Generaldefectsotherthantheabove-mentioned.willseriouslyreducetheworkefficiencyoreffect,orseriouslyincreasetheuncertaintyoftheeffect,ormakeitseriouslydeviatefromtheexpectedgoal.Generaldefects：Theprobabilityofdefectsissmall,whichwillreducetheefficiencyoreffect,increasetheuncertaintyoftheeffect,ormakeitdeviatefromtheexpectedgoal.QuantitativecriteriaThequantitativestandardisbasedonthepercentageofpotentialmisstatementsofpre-taxprofit.Significantdeficiency:Thisdefectaloneortogetherwithotherdefectsmaycausethemisstatementoffinancialreporttoexceed10%oftheprofitbeforetax.Importantdefects:Thisdefectaloneortogetherwithotherdefectsmaycausethemisstatementoffinancialreporttoexceed5%butlessthan10%oftheprofitbeforetax.Generaldefects:Thisdefectaloneortogetherwithotherdefectsmaycausethemisstatementoffinancialreportlessthan5%oftheprofitbeforetax.Thequantitativestandardisbasedonthepercentageofpotentialmisstatementsofpre-taxprofit.Significantdeficiency:Thisdefectaloneortogetherwithotherdefectsmaycausethemisstatementoffinancialreporttoexceed10%oftheprofitbeforetax.Importantdefects:Thisdefectaloneortogetherwithotherdefectsmaycausethemisstatementoffinancialreporttoexceed5%butlessthan10%oftheprofitbeforetax.Generaldefects:Thisdefectaloneortogetherwithotherdefectsmaycausethemisstatementoffinancialreportlessthan5%oftheprofitbeforetax.Numberofsignificantdeficienciesinfinancialreportlevel0Numberofsignificantdeficienciesinnon-financialreportlevel0Numberofimportantdeficienciesinfinancialreportlevel0Numberofimportantdeficienciesinnon-financialreportlevel02.Auditreportorassurancereportoninternalcontrol√Applicable□NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport71DeliberationOpinionParagraphinInternalControlAuditReportWebelievethattheCompanymaintainedeffectiveinternalcontroloverfinancialreportinginallmaterialaspectsasofDecember31st2023inaccordancewiththeBasicStandardforEnterpriseInternalControlandotherrelatedregulations.DisclosureofinternalcontrolauditreportDiscloseDisclosuredateofthefulltextoftheauditor’sreportoninternalcontrolApril30,2024Disclosureindexoffulltextofinternalcontrolauditreport2023InternalControlAuditReport(ww.cninfo.com.cn)InternalcontrolauditopinionStandardunqualifiedauditopinionWhetherthereismaterialweaknessofnon-financialreportNoWhethertheaccountingfirmissuedaninternalcontrolauditreportwithanon-standardopinion□Yes√NoWhethertheinternalcontrolauditreportissuedbytheaccountingfirmisconsistentwiththeself-evaluationreportoftheboardofdirectors√Yes□NoXV.GovernanceproblemrectificationoftheCompanyAccordingtoself-examination,theCompanyhasnomaterialviolationsaffectingthelevelofcorporategovernance.TheCompanyhasestablishedarelativelycompleteandreasonablecorporategovernancestructureandinternalcontrolsysteminaccordancewiththeCompanyLaw,SecuritiesLaw,GuidelinesforGovernanceofListedCompaniesandotherrelevantlawsandregulations.However,withthecontinuousdevelopmentoftheCompany'sbusinessscaleandthechangesofexternalmacroeconomicandmarketenvironment,theCompanyneedstofurtherimproveitsinternalcontrolsystem,continuetostrengthenitsownconstruction,effectivelyimprovetheCompany'sstandardizedoperationlevelandtheeffectivenessofcorporategovernance.TheCompanywillcontinuouslyimprovethegovernancequalitybyimprovingtheabilitiesofscientificdecisionsmaking,stableoperation,andstandardizedevelopment.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport72SectionVEnvironmentalandSocialResponsibilityI.MaterialenvironmentalissuesWhethertheCompanyortheCompany’ssubsidiariesarecriticalpollutantenterprisesdisclosedbyNationalEnvironmentalProtectionDepartment√Yes□NoEnvironmentalprotectionrelatedpoliciesandindustrystandardsDuringthereportingperiod,theCompanystrictlyadheredtonationalenvironmentalprotectionrelatedlawsandregulationsinitsdailyproductionandoperation,suchastheEnvironmentalProtectionLaw,theAirPollutionPreventionandControlLaw,theWaterPollutionPreventionandControlLaw,theSolidWastePollutionEnvironmentalPreventionandControlLaw,theEnvironmentalNoisePollutionPreventionandControlLaw,theSoilPollutionPreventionandControlLaw,theEnvironmentalImpactAssessmentLaw,etc.TheCompanystrictlyimplementsnationalenvironmentalprotectionrelatedindustrystandards,suchastheElectroplatingPollutantDischargeStandard(GB2190-2008),ComprehensiveAirPollutantDischargeStandard(GB16297-1996),ComprehensiveWastewaterDischargeStandard(GB8978-1996),EmissionStandardforAirPollutantsfromBoilers(GB13271-2014),EmissionStandardforPollutantsintheSyntheticResinIndustry(GB31572-2015),UnorganizedEmissionControlStandardforvolatileorganiccompounds(GB37822-2019),theElectroplatingWaterPollutantDischargeStandard(DB33/2260-2020)inZhejiangProvinceandIndirectEmissionLimitsofNitrogenandPhosphorusPollutantsinIndustrialEnterpriseWastewater(DB33/887-2013),andEmissionStandardforEnvironmentalNoiseattheBoundaryofIndustrialEnterprises(GB12348-2008).Administrativepermitsforenvironmentalprotection1.Since2010,theCompanyhasinvestedintheconstructionofMeizhuSanhuaIndustrialEstateinXinchangCounty,andhasobtained25EIApermits.Alltheprojectshavepassed.InOctober2023,theCompanycompletedthereapplicationofthenationalversionofthepollutiondischargepermit2.ZhejiangSanhuaCommercialRefrigerationCo.,Ltd.obtainedtheenvironmentalimpactassessmentapprovalin2018,obtainedthepollutiondischargepermitinJanuary2022,officiallystartedproductioninSeptember2022,andcompletedtheenvironmentalprotection"threesimultaneities"checkandacceptinOctober2022.Atpresent,theCompanyisoperatingnormally,andallthreewasteemissionshavemetthenationalemissionstandards.IndustryemissionstandardsandspecificsituationsofpollutantemissionsinvolvedinproductionandbusinessactivitiesNameofCompanyorsubsidiaryMainpollutantsandtypesofcharacteristicpollutantsNameofmainpollutantsandcharacteristicpollutantsEmissionmodeNumberofoutletsDistributionofemissionoutletsEmissionconcentrationEmissionstandardsTotalemissionsApprovedtotalemissionOverstandardemissionZhejiangSanhuaIntelligeWastewaterCODSewersystem1North≦500mg/LThelimitationof43.27T62.386T/yearNotexceedingtheZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport73ntControlsCo.,Ltd.CODinGB8978-1996IntegratedWastewaterEmissionStandardis500mg/LstandardZhejiangSanhuaIntelligentControlsCo.,LtdWastewaterAmmoniaNitrogenSewersystem1North≦35mg/LThelimitationlistedinDB33/887-2013IndirectEmissionLimitsofNitrogenandPhosphorusPollutantsfromIndustrialWastewateris35mg/L4.33T6.262T/yearNotexceedingthestandardZhejiangSanhuaIntelligentControlsCo.,LtdWastegasSO2Directemission1North≦50mg/m3ThelimitationlistedinGB13271-2014EmissionStandardofAirPollutantsforBoilersis50mg/m30.137Tbasedonthetestreport2.15T/yearNotexceedingthestandardZhejiangSanhuaIntelligentControlsCo.,LtdWastegasNitrogenOxideDirectemission1North≦50mg/m3AccordingtothelowNitrogenemissionrequirementsoflocal0.92Tbasedonthetestreport10.06T/yearNotexceedingthestandardZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport74government,thelimitvalueofgas-firedboileris50mg/m3ZhejiangSanhuaCommercialRefrigerationCo.LtdWastewaterCODSewersystem1South≦500mg/lThelimitationfromGB8979-1996is500mg/L17.83T20.73T/yearNotexceedingthestandardZhejiangSanhuaCommercialRefrigerationCo.LtdWastewaterTotalCopperSewersystem1South≦2.0mg/lThelimitationfromGB8979-1996is2.0mg/l0.178T/NotexceedingthestandardTreatmentofpollutantsAdheringtotheadvancedmanagementconcept,theCompanytakes"developingenergy-savingandlow-carboneconomy,creatingagreenqualityenvironment"asitsownresponsibility,constantlysurpasses,andbecomesanimportantcreatorandcontributorofhumangreenqualitylivingenvironmentwithlimitedresourcesandunlimitedwisdom.1.Intermsofwastewatertreatment,theCompanyrespondedtotheconstructionof"fivewatertreatment","eliminatinginferiorV-typewater"and"zerodirectdischargeofsewage"inthewholeprovince.TheCompanyrenovatedtherainwaterandsewageoutletsinthefactoryarea,implementedtheseparationofrainwaterandsewage,andinstalledcut-offvalvesandvideomonitoringequipmentattheCompany'srainwaterdischargeoutlets,andcollectedandtreatedtheearlyrainwater.Therearetwowastewatertreatmentstationsinthefactory.Thesewagetreatmentstationshavebeenequippedwithstandardizedsewageoutletsandsetupdischargeoutletsigns.Onlinemonitoringdevice,solenoidvalveflowmeterandcardswipingsewagesystemareinstalledatthedischargeoutlet,whichhasbeenconnectedwiththeenvironmentalprotectiondepartment.ThemonitoringindicatorsincludePH,COD,totalCopper,totalZinc,totalChromium,totalNickelandflow.Wastewatertreatment:TheCompanyhasentrustedathird-partyprofessionaltreatmentunitfortreatment.ThedischargeindicatorsoftheCompany'sinternalcontrolwastewaterarestricterthantheenvironmentaldischargestandard.ThefinaltreatedwastewaterisdischargedintothesewagecollectionpipenetworkoftheindustrialzoneandsenttoShengxinsewagetreatmentplantforretreatment.2.Wastegastreatment:TheCompanyhasacidpickling,electroplatingwastegas,weldingdustandotherwastegas.Allkindsofwastegasdischargecylindersareequippedwithcorrespondingwastegastreatmentdevices.Theacidpicklingandelectroplatingwastegasabsorptionandtreatmenttowerisinstalledwithautomaticdosingsystem,andthewastegasisdischargedtoairaftertreatment.Atthesametime,inordertowintheblue-skydefenseactivity,theCompanycarriedoutlowNitrogenemissiontransformationoftheCompany'sgasboilersinaccordancewiththerequirementsofrelevantofficialdepartmentsin2019.In2021,thetransformationandupgradingofVOCstreatmentfacilitiesinindustrialenterpriseshavebeenimplemented.Atthesametime,theprocesshasbeenimproved,andthewatercleaningisusedtoreplacetheorganicsolventcleaning,soastoreducethegenerationofVOCs.In2022,theCompanycarriedoutanupgradeandZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport75transformationofdiesel-poweredmobilesourceemissions,upgradingfromtheoriginalNationalIIemissionstandardtoNationalIV,greatlyreducingparticulatematteremissions.In2023,theCompanypassedtheB-levelacceptancecheckofairpollutionpreventionandcontrolperformanceforkeyindustryenterprisesinZhejiangProvince.3.Solidwasteandsoiltreatment(groundwater):allkindsofhazardouswasteoftheCompanyareentrustedtothethirdqualifiedpartyfordisposal,thegeneralsolidwastewithutilizationvalueisrecycled,thedomesticwasteisclearedandtransportedbytheenvironmentalsanitationstation,andtheconstructionwasteiscleanedandtransportedbytheconstructionunit.InJuly2020,theCompanybecameoneofthefirst"wastefreefactories"inShaoxing.TheCompanycommissionedathird-partytestingagencytoconductsoilandgroundwatertestingin2022,andnocontaminationwasfound.In2023,theCompanyisnolongerlistedasakeyregulatoryunitforsoilpollution.ZhejiangSanhuaCommercialRefrigerationCo.,Ltdpassedthe"ZeroWasteFactory"examinationinShaoxingCityin20234.Noisecontrol:TheCompany'sexistingmainnoiseisworkshopproductionnoise,aircompressorroom,wastegasandwastewatertreatmentequipmentnoise.Equipmentlayoutisreasonable,andtreesareplantedaroundtheworkshop.Noiseatfactorymeetsthestandard.5.The"threewastes"pollutioncontrolfacilitiesoftheCompanyareinnormalandstableoperation.Thepollutantsaredischargedbasedonthestandard,andthereisnoenvironmentalpollutionevent.EmergencyResponsePlan1.TheCompanyre-preparedtheEmergencyResponsePlaninAugust2023,andfiledwithXinchangEnvironmentalProtectionBureauonAugust30,2023(RecordNo.330624-2023-40-M).2.Inordertomanageenvironmentalemergenciesandreducetheenvironmentalhazardscausedbysuddenenvironmentalpollutionaccidents,ZhejiangSanhuaCommercialRefrigerationCo.,LtdcompiledEmergencyResponsePlanforEnvironmentalPollutionAccidentsofZhejiangSanhuaCommercialRefrigerationCo.,Ltd(simplifiedversion)inJuly2022,whichwasfiledwithXinchangBranchofShaoxingEcologicalEnvironmentBureauonSeptember27,2022(RecordNo.3306242022-51-L).Environmentalself-monitoringprogramTheCompanyformulatedSelf-monitoringSchemeofZhejiangSanhuaIntelligentControlCo.,Ltd.accordingtotherequirementsofthesuperiorenvironmentalprotectiondepartment,combinedwiththeactualproductionsituationandtheactualneedsofenvironmentalmanagementoftheCompany.ThesewagestationoftheCompanyisequippedwithalaboratory,andthedetectionisconductedbyaspeciallyassignedperson.OnlineautomaticmonitoringequipmentsuchasPH,COD,TOC,totalCopper,totalZinc,totalChromium,totalNickel,flowrateetc.areinstalledattheCompany'stotalwastewaterdischargeoutlet,soastoachievethecombinationofautomaticmonitoringandmanualtesting.Forthepollutionfactorssuchassuspendedmatters,totalPhosphorus,AmmoniaNitrogen,totalIronandPetroleum,theCompanyentrustsathird-partytestingagencytocarryoutregularmonitoring.Themonitoringresultsarepublishedregularlyontheenterpriseself-monitoringinformationdisclosureplatformofZhejiangProvince.ZhejiangSanhuaCommercialRefrigerationCo.,Ltdhasgoodpollutantemissionmonitoringandmanagementability,andcantimelyinformtheenvironmentalprotectionadministrativedepartmentandthepublicofthemonitoringinformation.Accordingtotheactualproductionsituationandtheactualneedsofenvironmentalmanagement,theenvironmentalprotectionlaboratoryofwastewatertreatmentstationissetup,andthedetectioniscarriedoutbyspeciallyassignedpersondaily.OnlineautomaticmonitoringequipmentsuchasPH,COD,TOC,totalcopperandflowrateareinstalledatthetotalwastewaterdischargeoutletoftheCompany.Thecombinationofautomaticmonitoringandmanualtestingeffectivelyensuresthetimelinessandeffectivenessofmonitoring.AtZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport76thesametime,athird-partytestingCompanyisentrustedtocarryoutregularmonitoring.Themonitoringresultsarepublishedregularlyontheenterpriseself-monitoringinformationdisclosureplatformofZhejiangProvince.InvestmentinenvironmentalgovernanceandprotectionandpaymentofenvironmentalprotectiontaxesDuringthereportingperiod,theCompany'senvironmentalgovernance,investment,andpaymentofenvironmentalprotectiontaxamountedto28.8332millionyuan.Measuresandeffectsinreducingcarbonemissionsduringthereportingperiod√Applicable□NotapplicableTherearedirectgreenhousegasemissionsfromtheuseofnaturalgas,gasoline,anddieselfuel,aswellasindirectgreenhousegasemissionsfrompurchasedelectricityintheCompany'sproductionandoperations.Inthisregard,theCompanyiscommittedtoenergysavingandemissionreductionpractices,aswellascontinuestoinnovategreenproducttechnologiestoensureeffectiveuseofresourcesandimproveoperationalefficiency.Asoftheendofthereportingperiod,theCompanyhadpreparedandissuedtheEnergyManagementMeasures,GasandLiquidManagementMeasures,CompressedAirUseInspectionandReward&PenaltyManagementRegulations,TrialManagementMeasuresforCompressedAirCostReduction,WaterConservationSystem,andothermanagementsystemsrelatingtoresourceconservation.Byregularlycheckingusage,weaimtominimizetheconsumptionofwater,electricity,fuel,andotherresources,andactivelyassistsocietyinenergyconservationandemissionreductionwhileoptimizingourownenergyresourcecosts.Atthesametime,theCompanyhasalwaysadheredtothebusinessphilosophyofenergysavingandenvironmentalprotection,constantlyinnovatingproductsandtechnologies,andiscommittedtopromotingthegreenandlow-carbondevelopmentoftheindustry.1.Lowcarbondesign:Introducelow-carbonthinkingfromthedesignanddevelopmentstage,followthelow-carbonmanagementthroughouttheproductlifecycle,andprioritizetheselectionoflow-carbonrawmaterials(includingbutnotlimitedtohydroelectricsmeltingofmetals,recycledmetals,etc.),recyclablematerials,andminiaturizeddesignwhileensuringtechnicalrequirements.2.Optimizetheenergystructure:Inordertoachievethegoalsofcleanenergyandhigherresourceutilizationefficiency,distributedphotovoltaicsarewidelyusedinindustrialareastoreplacetheoriginalpurchasedelectricityandadoptwasteheatrecoverytechnology.Simultaneouslyincreasingthepurchasingmethodsofgreenelectricity.Ontheotherhand,theenergystoragesystemintheproductionparkcancomprehensivelytakeadvantageofpeakandvalleyelectricity,whichimprovestheefficiencyofdistributedphotovoltaicutilization.3.Accuratecontrolofenergyefficiency:TheCompanycontinuestopromotetheapplicationofsmartenergyIOTplatform,andeffectivelycontrolstheuseefficiencyofallenergywithinthescopethroughreal-timedisplayofdigitalinformation,traceability,technicaltransformationandenergyconservationandconsumptionreductionanalysis.4.Promotegreentechnology:TheCompanyreducesenergyconsumptionandimprovesenergyefficiencythroughtheimprovementofmanufacturingandtechnologicalprocess.Reduceenergyconsumptionandcarbonemissionbytroubleshootingofairleakagepointofcompressedairpipelineofequipment,upgradingandtransformationofaircompressor,emissionreductionoftriplesupplyandnitrogenrecycling.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport775.Strengthengreencooperation:Inordertoreducetheenergyconsumptionrequiredforliquefactionduringthetransportationofoxygenandnitrogen,andreducetheimpactonclimate,thecompanyhasreplacedthemethodofpurchasingliquidoxygenandnitrogenwithself-madeoxygenandnitrogen.6.Completegreenproducts:Inordertosignificantlyreducecarbonemissionsduringtheuseofterminalproductsandpromotegreenandlow-carbondevelopmentintheindustry,theCompanyhasdevelopedaseriesoflow-carbonkeycorecomponents,suchaselectronicexpansionvalves,invertercontrollers,andmicrochannelproducts.7.Productionlayout:Sanhuaadherestotheconceptof"wherevercustomersare,Sanhuaisthere"Bysettingupfactoriesnearby,wenotonlyservecustomersbutalsoreducecarbonemissionsintransportation.WehaveestablishedproductionbasesinMexico,Poland,Vietnam,Thailand,India,Hangzhou,Wuhu,Zhongshan,andotherareas.Atthesametime,astheworld'slargestrefrigerationcontrolcomponentmanufacturerandaleadingglobalmanufacturerofthermalmanagementsystemcontrolcomponentsfornewenergyvehicles,theCompanyfullygraspsthebusinessopportunitiesbroughtbytheglobalintelligentenergy-savingandenvironmentallyfriendlyhomeappliancesanddevelopmentoftheglobalnewenergyvehicleindustry,activelyexploresgreenandefficientrefrigerationtechnology,andcontinuestobringprofessionalandgreenproductsolutionstotheindustry.AdministrativepenaltiesduetoenvironmentalissuesduringthereportingperiodNotapplicableOtherenvironmentalinformationthatshouldbedisclosedNotapplicableOtherenvironmentalinformationNotapplicableII.SocialresponsibilityPleaserefertothe2023Environmental,Social,andGovernance(ESG)ReportonCNINFO(fordetails.III.AchievementsofpovertyalleviationandruralrevitalizationNotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport78SectionVISignificantEventsI.Performanceofcommitments1.CompleteandincompletecommitmentsoftheCompanyanditsactualcontroller,shareholders,relatedparties,acquirers,andotherrelatedpartiesforthecommitmentsbytheendofthereportingperiod.√Applicable□NotapplicableCommitmentsCommitmentpartyNatureDetailsofcommitmentsDateofcommitmentsTermofcommitmentsPerformanceCommitmentfromreformationofshareholdingZhangYabo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.OthercommitmentWhenthenumberofsharessoldthroughlistingandtradinginShenzhenStockExchangereaches1%ofthetotalnumberofsharesoftheCompany,itshallmakeanannouncementwithintwoworkingdaysfromthedateoftheoccurrenceofthefact.November21,2005UntilthecommitmentisfulfilledStrictperformanceCommitmentsfromassetsreorganizationZhangDaocai,controllingshareholderSanhuaHoldingGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupationZhangDaocaiandSanhuaholdinggroup,thecontrollingshareholderoftheCompany,promisethattherewillnotbeanycompetitionwithSanhuaintelligentcontrolsinthebusinessscopebeingoralreadycarriedoutinthefuture.January5,2009LongtermStrictperformanceZhangDaocai,controllingshareholderSanhuaHoldingGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupationSanhuaHoldingGrouppromises:afterthecompletionofthistransaction,SanhuaHoldingGroupandSanhuaintelligentcontrolswillsignanagreementaccordingtolaw,performlegalprocedures,fulfilltheobligationofinformationdisclosureandhandlesignificantmattersforapprovalinaccordancewithrelevantlaws,regulations,andarticlesofassociationofSanhuaintelligentcontrols.Intheprocessofimplementationofrelatedpartytransactions,wewillfollowtheprincipleoflegalityandreasonableness,ensurethefairnessofpricesandprocedures,andmakecertainthatthelegitimateinterestsofSanhuaintelligentcontrolsandothershareholderswillnotbedamagedthroughrelatedpartytransactions.January5,2009LongtermStrictperformanceZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport79ZhangDaocai,ZhangYabo,ZhangShaobo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupationInordertoavoidhorizontalcompetitionwithSanhuaintelligentcontrols,ZhangDaocai,ZhangYabo,ZhangShaobo,SanhuaHoldingGroupthecontrollingshareholderoftheCompany,andSanhuaLvnengIndustry,thetradingpartnermadethefollowingcommitments:1.I(ortheCompany)willnotdirectlyorindirectlyengageinorparticipateinthebusinessthatconstitutespotentialdirectorindirectcompetitionwithSanhuaIntelligentControlsanditssubordinateenterprises;guaranteethatlegalandeffectivemeasuresshallbetakentourgeotherenterprisescontrolledbyme(ortheCompany)nottoengageinorparticipateinanybusinesscompetingwithSanhuaIntelligentControlsanditssubordinateenterprises.2.IfSanhuaIntelligentControlsfurtherexpandsitsbusinessscope,I(ortheCompany)andothercontrolledenterpriseswillnotcompetewithSanhuaIntelligentControls'expandedbusiness;ifitispossibletocompetewithSanhuaIntelligentControls'businessafterexpansion,I(ortheCompany)andothercontrolledenterpriseswillwithdrawfromSanhuaIntelligentControlsinthefollowingwaysofcompetition:A.StopthebusinessesthatcompeteormaycompetewithSanhuaIntelligentControls;B.InjectthecompetitivebusinessintoSanhuaIntelligentControls;C.Transferthecompetitivebusinesstoanunrelatedthirdparty.3.IfI(ortheCompany)andotherenterprisescontrolledbyme(ortheCompany)haveanybusinessopportunitiestoengageinandparticipateinanyactivitiesthatmaycompetewithSanhuaIntelligentControls'businessoperation,theyshallimmediatelyinformSanhuaIntelligentControlsoftheabovebusinessopportunities.IfSanhuaIntelligentControlsmakesanaffirmativereplytotakeadvantageofthebusinessopportunitywithinareasonableperiodspecifiedinthenotice,itshalldoitsbesttogivethebusinessopportunitytoSanhuaIntelligentControls.July24,2015LongtermStrictperformanceZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport804.Incaseofbreachoftheabovecommitment,I(ortheCompany)iswillingtobearallresponsibilitiesarisingtherefromandfullycompensatealldirectorindirectlossescausedtoSanhuaIntelligentControls.ZhangDaocai,ZhangYabo,ZhangShaobo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupationInordertostandardizetherelatedpartytransactionswithSanhuaIntelligentControls,ZhangDaocai,ZhangYabo,ZhangShaobo,SanhuaHoldingGroupthecontrollingshareholderoftheCompanyandSanhuaLvnengIndustrialthetradingpartnermadethefollowingcommitments:1.I(ortheCompany)andthecontrolledenterpriseswillreducetherelatedpartytransactionswithSanhuaintelligentcontrolsasfaraspossible,andwillnotusetheirownstatusasshareholdersofSanhuaintelligentcontrolstoseekforsuperiorrightsintermsofbusinesscooperationandotheraspectscomparedwithotherthirdparties;2.I(ortheCompany)willnottakeadvantageoftherighttoenterintoatransactionwithSanhuaintellectualcontrolsusingthepositionasashareholder.3.Iftherearenecessaryandunavoidablerelatedpartytransactions,I(ortheCompany)andthecontrolledenterpriseswillsignagreementswithSanhuaintelligentcontrolsinaccordancewiththeprinciplesoffairness,followlegalprocedures,andperformtheinformationdisclosureobligationsinaccordancewiththerequirementsofrelevantlaws,regulatorydocumentsandthearticlesofassociation.Itshallalsoperformrelevantinternaldecision-makingandapprovalprocedurestoensurethatitwillnotconducttransactionswithSanhuaintelligentcontrolsontermsthatareobviouslyunfaircomparedwiththemarketprice,andwillnotusesuchtransactionstoengageinanybehaviorthatdamagesthelegitimaterightsJuly24,2015LongtermStrictperformanceZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport81andinterestsofSanhuaintelligentcontrolsandothershareholders.ZhangDaocai,ZhangYabo,ZhangShaobo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.OtherCommitmentZhangDaocai,ZhangYabo,ZhangShaoboandSanhuaholdingGroup,thecontrollingshareholderoftheCompany,madethefollowingcommitments:afterthecompletionofthetransaction,SanhuaintelligentcontrolswillcontinuetoimprovethecorporategovernancestructureandindependentoperationoftheCompanymanagementsysteminaccordancewiththerequirementsofrelevantlawsandregulationsandthearticlesofAssociation,andcontinuetomaintaintheindependenceofSanhuaintelligentcontrolsinbusiness,assets,finance,institutions,personnel,etc.toprotecttheinterestsofallshareholders.July24,2015LongtermStrictperformanceZhangDaocai,ZhangYabo,ZhangShaobo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupation1.I(ortheCompany)andthecontrolledenterpriseswillreducetherelatedpartytransactionswithSanhuaintelligentcontrolsasfaraspossible,andwillnotusethepositionasashareholderofSanhuaintellectualcontrolstoseekthesuperiorrightsforbusinesscooperationwithSanhuaintelligentcontrolscomparedwithotherthirdparties;2.I(ortheCompany)willnotusemypositionasashareholderofSanhuaintellectualcontrolstoseekforthepriorityrighttocooperatewithSanhuaintellectualcontrols;3.Iftherearenecessaryandunavoidablerelatedpartytransactions,I(ortheCompany)andthecontrolledenterpriseswillsignagreementswithSanhuaintelligentcontrolsinaccordancewiththeprinciplesoffairness,followlegalprocedures,andperformtheinformationdisclosureobligationsinaccordancewiththerequirementsofrelevantlaws,regulatorydocumentsandthearticlesofassociation.Itshallalsoperformrelevantinternaldecision-makingandSeptember18,2017LongtermStrictperformanceZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport82approvalprocedurestoensurethatitwillnotconducttransactionswithSanhuaintelligentcontrolsontermsthatareobviouslyunfaircomparedwiththemarketprice,andwillnotusesuchtransactionstoengageinanybehaviorthatdamagesthelegitimaterightsandinterestsofSanhuaintelligentcontrolsandothershareholders.ZhangDaocai,ZhangYabo,ZhangShaobo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupation1.I(ortheCompany)willnotdirectlyorindirectlyengageinorparticipateinanybusinessthatmayconstitutepotentialdirectorindirectcompetitionwithSanhuaintelligentcontrolsanditssubordinateenterprises;guaranteedthatlegalandeffectivemeasureswillbetakentourgeotherenterprisescontrolledbyme(ortheCompany)nottoengageinorparticipateinanybusinessthatiscompetitivewithSanhuaintelligentcontrolsanditssubordinateenterprisesBusiness.2.IfSanhuaintelligentcontrolsfurtherexpandsitsbusinessscope,I(ortheCompany)andotherenterprisescontrolledbyme(ortheCompany)willnotcompetewithSanhuaintelligentcontrols'expandedbusiness;ifitispossibletocompetewithSanhuaintelligentcontrols'businessafterexpansion,I(ortheCompany)andotherenterprisescontrolledbyme(ortheCompany)willwithdrawfromSanhuaintelligentcontrolsinthefollowingwaysofcompetition:A.stopthebusinessesthatcompeteormaycompetewithSanhuaintelligentcontrols;B.injectthecompetitivebusinessintoSanhuaintelligentcontrols;C.transferthecompetitivebusinesstoanunrelatedthirdparty.3.IfI(ortheCompany)andotherenterprisescontrolledbyme(ortheCompany)haveanybusinessopportunitiestoengageinandparticipateinanyactivitiesthatmaycompetewithSanhuaintelligentcontrols'businessoperation,theyshallimmediatelyinformSanhuaintelligentcontrolsoftheabovebusinessopportunities.IfSanhuaintelligentcontrolsSeptember18,2017LongtermStrictperformanceZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport83makesanaffirmativereplytotakeadvantageofthebusinessopportunitywithinareasonableperiodspecifiedinthenotice,itshalldoitsbesttogivethebusinessopportunitytoSanhuaintelligentcontrols.4.Incaseofbreachoftheabovecommitment,I(ortheCompany)iswillingtobearallresponsibilitiesarisingtherefromandfullycompensatealldirectorindirectlossescausedtoSanhuaintelligentcontrols.ZhangDaocai,ZhangYabo,ZhangShaobo,controllingshareholderSanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.OthercommitmentAfterthecompletionofthetransaction,thelistedCompanywillcontinuetoimprovethecorporategovernancestructureandindependentoperationoftheCompanymanagementsysteminaccordancewiththerequirementsofrelevantlawsandregulationsandthearticlesofassociation,continuetomaintaintheindependenceofthelistedCompanyinbusiness,assets,finance,institutions,personnelandotheraspects,andeffectivelyprotecttheinterestsofallshareholders.September18,2017LongtermStrictperformanceCommitmentmadeduringinitialpublicofferingorrefinancingZhangDaocai,controllingshareholderSanhuaHoldingGroupCo.,Ltd.Commitmentonhorizontalcompetition,relatedpartytransactionsandcapitaloccupationThecommitmentmadeatthetimeofIPO,itshallnotengageinthesameproduction,operationorbusinessastheCompanyinthefuture.InordertoavoidbusinesscompetitionwiththeCompanyandclarifythenon-competitionobligations,SanhuaHoldingGroup,onbehalfofitselfanditssubsidiarieswithmorethan50%equity,makesacommitmenttoSanhuaintelligentcontrolstoavoidpossiblehorizontalcompetition.June72005LongtermStrictperformanceOthercommitmentsmadetominorityshareholdersoftheCompanyThecontrollingshareholdersofthelistedCompanySanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.,andMr.ZhangYaboOthercommitmentWillnotactivelyreduceholdingsoftheCompany'sshareswithineighteenmonthsfromAugust18,2022.August18,202218monthsStrictperformanceAretheYesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport84commitmentsfulfilledontime2.IfthereisaprofitforecastfortheCompany'sassetsorprojects,andthereportingperiodisstillintheprofitforecastperiod,theCompanyshallexplainthereasonsfortheassetsorprojectsreachingtheoriginalprofitforecast□Applicable√NotapplicableII.TheCompany’sfundsusedbythecontrollingshareholderoritsrelatedpartiesfornon-operatingpurposes.□Applicable√NotapplicableNosuchcaseduringthereportingperiod.III.Illegalexternalguarantee□Applicable√NotapplicableNoillegalexternalguaranteesduringthereportingperiod.IV.ExplanationGivenbytheBoardofDirectorsRegardingthe“Non-standardAuditor’sReport”IssuedbytheCPAFirmfortheReportingPeriod□Applicable√NotapplicableV.ExplanationGivenbytheBoardofDirectors,BoardofSupervisorsandIndependentDirectors(ifany)Regardingthe“Non-standardAuditor’sReport”IssuedbytheCPAFirmfortheReportingPeriod□Applicable√NotapplicableVI.Forchangesinaccountingpolicies,accountingestimatesandaccountingmethodsascomparedtothefinancialreportfortheprioryear√Applicable□NotapplicableAccountingpolicychangescausedbychangesincorporateaccountingstandardsStartingfromJanuary1,2023,theCompanyimplementedtheAccountingStandardsforEnterprisesInterpretationNo.16issuedbytheMinistryofFinance,whichstipulatesthatdeferredincometaxrelatedtoassetsandliabilitiesarisingfromindividualtransactionsisnotsubjecttotheaccountingtreatmentofinitialrecognitionexemption.ThischangeinaccountingpolicyhasnoimpactontheCompany'sfinancialstatements.VII.Explanationforchangesinscopeoftheconsolidatedfinancialstatementsascomparedtothefinancialreportfortheprioryear√Applicable□NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport851.IncreaseinconsolidationscopeNameEquityacquisitionmethodDateofequityacquisitionCapitalcontributionProportionofcapitalcontributionGuangdongSanhuaNewEnergyVehiclePartsCo.,Ltd.Investmentandestablishment2023-02-17183,712,500.00100%ShenyangSanhuaNewEnergyVehiclePartsCo.,Ltd.Investmentandestablishment2023-03-0817,000,000.00100%HangzhouSanhuaIntelligentEquipmentCo.,Ltd.Investmentandestablishment2023-01-0324,000,000.00100%SANHUASINGAPOREAUTOMOTIVEINVESTMENTPTELTD.Investmentandestablishment2023-11-200.00100%MinthSanhuaAutoPartsPolandSp.Zoo.Investmentandestablishment2023-01-245000PLN100%LEADERWAYCOAHUILA,S.DER.L.DEC.V.Investmentandestablishment2023-10-0110,000MXN100%SANHUAINDUSTRY(THAILAND)CO.,LTD.Investmentandestablishment2023-01-31100millionTHB100%2.ReductioninconsolidationscopeNameEquitydisposalmethodDateofequitydisposalNetassetsondisposaldateNetprofitfromthebeginningoftheperiodtothedateofdisposalSuzhouXinzhiAutomotivePartsCo.,LtdLiquidationandcancellation2023-01-130.001,631.39VIII.EngagementanddisengagementoftheCPAfirmCPAfirmengagedatpresentNameofthedomesticCPAfirmPan-ChinaCertifiedPublicAccountantsLLP.Remunerationofdomesticaccountingfirms(in10,000yuan)318ConsecutiveyearsoftheauditserviceprovidedbythedomesticCPAfirm23NameofthecertifiedpublicaccountantsfromthedomesticCPAfirmLuoXunchao,ZhangXinConsecutiveyearsoftheauditserviceprovidedbythecertifiedpublicaccountantsfromthedomesticCPAfirmLuoXunchaohasbeeninservicefor5consecutiveyearsZhangXinhasbeeninservicefor3consecutiveyearsWhethertheCPAfirmwaschangedinthecurrentperiod□Yes√NoEngagementofinternalcontrolauditCPAfirm,financialadvisororsponsor√Applicable□NotapplicableDuringthereportingperiod,theCompanyengagedPan-ChinaCertifiedPublicAccountantsLLP.asitsinternalcontrolauditaccountingfirm,withaninternalcontrolauditfeeof212,000yuan.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport86IX.Listingsuspensionandterminationafterdisclosureofthisannualreport□Applicable√NotapplicableX.BankruptcyandRestructuring□Applicable√NotapplicableNosuchcaseduringthereportingperiod.XI.MaterialLitigationandArbitration□Applicable√NotapplicableNosuchcaseduringthereportingperiod.XII.PunishmentsandRectifications□Applicable√NotapplicableNosuchcaseduringthereportingperiod.XIII.IntegrityoftheCompanyandItsControllingShareholdersandActualControllers□Applicable√NotapplicableXIV.SignificantRelated-partyTransaction1.Related-partytransactionsarisingfromroutineoperation□Applicable√NotapplicableNosuchcaseinthereportingperiod.2.Related-partytransactionsregardingpurchaseanddisposalofassetsorequity□Applicable√NotapplicableNosuchcaseinthereportingperiod.3.Significantrelated-partytransactionsarisingfromjointinvestmentsonexternalparties□Applicable√NotapplicableNosuchcaseinthereportingperiod.4.Relatedcreditanddebttransactions□Applicable√NotapplicableNosuchcaseinthereportingperiod.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport875.Transactionswithrelatedfinancialcompanies□Applicable√NotapplicableNosuchcaseinthereportingperiod.6.TransactionsbetweenfinancialcompaniescontrolledbytheCompanyandrelatedparties□Applicable√NotapplicableNosuchcaseinthereportingperiod.7.Othersignificantrelatedpartytransactions□Applicable√NotapplicableNosuchcaseinthereportingperiod.XV.SignificantContractsandExecution1.Mattersontrusteeship,contracting,andleasing（1）Trusteeship□Applicable√NotapplicableNosuchcaseinthereportingperiod.（2）Contracting□Applicable√NotapplicableNosuchcaseinthereportingperiod.（3）Leasing√Applicable□NotapplicableIllustrationofleaseFordetailsofrelatedinformationaboutleasing,pleasereferto“SectionXfinancialreport”.Itemswithprofitandlossexceeding10%ofthetotalprofitoftheCompanyinthereportperiod□Applicable√NotapplicableDuringthereportingperiod,thereisnoleasingprojectwithprofitandlossofmorethan10%ofthetotalprofitoftheCompanyduringthereportingperiod.2.Significantguarantees√Applicable□NotapplicableUnit:RMBin10thousandZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport88ExternalGuaranteesfromtheCompanyanditsSubsidiaries(ExcludingGuaranteestotheSubsidiaries)GuaranteedPartyAnnouncementDateofDisclosureoftheGuaranteeAmountGuaranteeAmountActualOccurrenceDateActualGuaranteeAmountTypeofGuaranteeCollateral(ifany)Counterguarantee(ifany)TermofGuaranteeDueornotGuaranteeforRelatedPartiesorNotCompany'sGuaranteestoSubsidiariesGuaranteedPartyAnnouncementDateofDisclosureoftheGuaranteeAmountGuaranteeAmountActualOccurrenceDateActualGuaranteeAmountTypeofGuaranteeCollateral(ifany)Counterguarantee(ifany)TermofGuaranteeDueornotGuaranteeforRelatedPartiesorNotSanhuaAWECOElectricalEquipment(Wuhu)Co.,Ltd.March25,20225,000April1,20223,816.17Jointliabilityguarantee2022.04.01-2023.04.01YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.March25,2022230,000May10,20223,929.6Jointliabilityguarantee2022.05.10-2023.05.10YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000November11,20227,859.2Jointliabilityguarantee2022.11.11-2023.5.10YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.March25,2022230,000May23,20225,666.16Jointliabilityguarantee2022.05.23-2023.05.23YesYesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport89SANHUAINTERNATIONAL,INC.March25,202250,000June17,202210,624.05Jointliabilityguarantee2022.06.17-2023.06.09YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000September5,20227,859.2Jointliabilityguarantee2022.9.5-2023.9.4YesYesSANHUAINTERNATIONAL,INC.August13,202295,000September9,20224,249.62Jointliabilityguarantee2022.9.9-2023.9.8YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000October19,202210,216.96Jointliabilityguarantee2022.10.19-2023.10.18YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000October21,20225,501.44Jointliabilityguarantee2022.10.21-2023.10.20YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000October21,20225,501.44Jointliabilityguarantee2022.10.21-2023.10.20YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000October26,20224,715.52Jointliabilityguarantee2022.10.26-2023.10.25YesYesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport90SANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000November21,20227,859.2Jointliabilityguarantee2022.11.21-2023.11.20YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000November21,20227,082.7Jointliabilityguarantee2022.11.21-2023.11.20YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000November25,202214,165.4Jointliabilityguarantee2022.11.25-2023.11.24YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000December20,20227,082.7Jointliabilityguarantee2022.12.20-2023.12.19YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May23,20235,666.16Jointliabilityguarantee2023.5.23-2024.5.22YesYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May22,20237,082.7Jointliabilityguarantee2023.5.22-2024.5.21YesYesSANHUAINTERApril29,2023340,000May19,202314,165.4Jointliabilityguarante2023.5.19-2024.5.1YesYesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport91NATIONALSINGAPOREPTE.LTD.e8SANHUAINTERNATIONAL,INC.April29,202395,000September8,20232,833.08Jointliabilityguarantee2023.9.8-2024.9.6NoYesSANHUAINTERNATIONAL,INC.April29,202395,000September1,20231,416.54Jointliabilityguarantee2023.9.1-2024.9.30NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May11,20232,124.81Jointliabilityguarantee2023.5.11-2024.7.8NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.August13,2022240,000March24,20235,501.44Jointliabilityguarantee2023.3.24-2024.3.23NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May4,20233,143.68Jointliabilityguarantee2023.5.4-2024.5.3NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May4,20234,715.52Jointliabilityguarantee2023.5.4-2024.5.3NoYesSANHUAINTERApril29,2023340,000May11,20233,929.6Jointliabilityguarante2023.5.11-2024.5.1NoYesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport92NATIONALSINGAPOREPTE.LTD.e0SANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May22,202314,932.48Jointliabilityguarantee2023.5.22-2024.5.21NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023340,000May31,20237,859.2Jointliabilityguarantee2023.5.31-2024.5.30NoYesSANHUAINTERNATIONAL,INC.April29,202395,000June9,202310,624.05Jointliabilityguarantee2023.6.9-2024.6.5NoYesSANHUAINTERNATIONAL,INC.April29,2023240,000August21,202314,165.4Jointliabilityguarantee2023.8.21-2024.8.20NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023240,000October20,20235,501.44Jointliabilityguarantee2023.10.20-2024.10.19NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023240,000October25,20234,715.52Jointliabilityguarantee2023.10.25-2024.10.24NoYesSANHUAINTERApril29,2023240,000November20,20237,859.2Jointliabilityguarante2023.11.20-2024.11.NoYesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport93NATIONALSINGAPOREPTE.LTD.e19SANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023240,000November20,20237,082.7Jointliabilityguarantee2023.11.20-2024.11.19NoYesGuangdongSanhuaNewEnergyAutomotiveComponentsCo.,LtdNovember7,2023500November29,2023500Jointliabilityguarantee2023.11.29-2024.4.2NoYesSANHUAINTERNATIONALSINGAPOREPTE.LTD.April29,2023240,000December7,202310,216.96Jointliabilityguarantee2023.12.7-2024.12.6NoYesTotalAmountofGuaranteestoSubsidiariesApprovedduringtheReportingPeriod(B1)550,500TotalAmountofGuaranteestoSubsidiariesActuallyOccurredduringtheReportingPeriod(B2)134,035.88TotalAmountofGuaranteestoSubsidiariesApprovedbytheEndoftheReportingPeriod(B3)550,500TotalBalanceofGuaranteesActuallyPaidtoSubsidiariesattheEndoftheReportingPeriod(B4)107,121.62Subsidiaries'GuaranteestoSubsidiariesGuaranteedPartyAnnouncementDateofDisclosureoftheGuaranteeAmountGuaranteeAmountActualOccurrenceDateActualGuaranteeAmountTypeofGuaranteeCollateral(ifany)Counterguarantee(ifany)TermofGuaranteeDueornotGuaranteeforRelatedPartiesorNotZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport94ThetotalamountoftheCompany'sguarantees(thetotaloftheabovethreeitems)TotalAmountofGuaranteesApprovedduringtheReportingPeriod(A1+B1+C1)550,500TotalAmountofGuaranteesActuallyOccurredduringtheReportingPeriod(A2+B2+C2)134,035.88TotalAmountofGuaranteesApprovedbytheEndoftheReportingPeriod(A3+B3+C3)550,500TotalBalanceofGuaranteesActuallyPaidattheEndoftheReportingPeriod(A4+B4+C4)107,121.62TotalAmountofActualGuarantees(A4+B4+C4)asaPercentageoftheCompany'sNetAssets5.99%Ofwhich：BalanceofDebtGuaranteesDirectlyorIndirectlyOfferedtoGuaranteedObjectswithAsset-liabilityRatioExceeding70%(E)0TotalAmountoftheAboveThreeGuarantees(D+E+F)03.Entrustingotherstomanagecashassets(1)Entrustedfinancing√Applicable□NotapplicableEntrustedfinancingduringthereportingperiodUnit:RMBin10thousandSpecifictypeCapitalsourceAmountBalancebeforematurityOverdueuncollectedamountAccruedimpairmentamountofoverdueunrecoveredfinancialmanagementBankfinancialproductsOwnfunds13,000Total13,000Detailsofhigh-riskentrustedfinancialmanagementwithlargesingleamount,lowsecurityorpoorliquidity√Applicable□NotapplicableUnit:RMBin10thousandNameoftrusteeTypeoftrusteeProducttypeAmountCapitalsourceStartdateEnddateCapitalinvestmentDeterminationofreturnReferenceannualizedrateofreturnExpectedreturn(ifany)ActualprofitandlossinthereportingActualrecoveryofprofitandlossinAmountofprovisionforimpairment(ifThroughlegalproceduresornotFutureentrustedfinancialmanagemenEventoverviewandrelevantindex(ifany)ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport95periodthereportingperiodany)tplanornotBNPParibas(China)LimitedShanghaiBranchBank12-monthmaturityRMBstructureddepositlinkedtoabasketofcustomizedindices5,000OwnfundsJune16,2022June13,2023Floatingincomewithguaranteeofprincipal17.7417.74YesJPMorganChaseBank(China)LimitedShanghaiBranchBankJPMorganXRPIndex100%CapitalProtectedStructuredDeposit5,000OwnfundsJune27,2022June27,2023Floatingincomewithguaranteeofprincipal41.4541.45YesChinaGalaxySecuritiesCo.Ltd.Security"GalaxyJinshan"CertificatesofIncomeNo.13459(PrincipalProtectedFixed3,000OwnfundsMarch21,2023April17,2023Floatingincomewithguaranteeofprincipal4.00%3.623.62YesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport96IncomeCertificates)Total13,000------------62.81--------Theprincipalofentrustedfinancialmanagementisexpecteduncollectibleorthereareothersituationsthatmayleadtoimpairment□Applicable√Notapplicable(2)Entrustedloans□Applicable√NotapplicableNosuchcaseinthereportingperiod.4.Significantcontractsinoperation□Applicable√NotapplicableNosuchcaseinthereportingperiod.XVI.OtherSignificantEvents√Applicable□Notapplicable1.RepurchaseofcompanysharesThe18thextraordinarymeetingofthe7thBoardofDirectors,heldonNovember6,2023,reviewedandapprovedtheProposalonRepurchaseofCompanyShares,agreeingthattheCompanywilluseitsownfundstorepurchasesomeofthecompany'ssharesthroughthesecondarymarketbycentralizedbiddingforsubsequentimplementationofequityincentivesoremployeeshareholdingplans.ThetotalamountoffundsforthisrepurchaseshallnotbelessthanRMB200millionandshallnotexceedRMB400million.TherepurchasepriceshallnotexceedRMB36.00pershare,andtherepurchaseperiodshallbewithin12monthsfromthedateofapprovaloftherepurchaseplanbytheCompany'sboardofdirectors.Fordetails,pleaserefertotherelevantannouncementsdisclosedbythecompanyontheCNINFO.Asoftheendofthereportingperiod,theCompanyrepurchased702,900sharesthroughadedicatedstockrepurchasesecuritiesaccountbycentralizedbiddingtrading,accountingfor0.0188%oftheCompany'scurrenttotalsharecapital.Thehighesttransactionpricewas29.09yuan/share,andthelowesttransactionpricewas28.01yuan/share,withatotaltransactionamountof19,990,058.81yuan(excludingtransactionfees).2.Earlyredemptionof"SanhuaConvertibleBonds"The13thextraordinarymeetingofthe7thBoardofDirectorsheldonJuly7,2023reviewedandapprovedtheproposalonearlyredemptionof"SanhuaConvertibleBonds".Sinceconditionalredemptionclauseshavebeentriggered,itagreedtotheCompany’searlyredemptionofconvertiblecorporatebondsthathavenotbeenconvertedZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport97intosharesasoftheredemptionregistrationdate(July31,2023).AsofthecloseofmarketonJuly31,2023,atotalof37,663unconvertedbondsof"SanhuaConvertibleBonds"havebeenfullyredeemedbytheCompanyataredemptionpriceof100.10yuanperbond(includingcurrentaccruedinterest),withatotalredemptionpaymentof3,770,066.30yuan.StartingfromAugust9,2023,"SanhuaConvertibleBonds"wasdelistedfromtheShenzhenStockExchange.Fordetails,pleaserefertotherelevantannouncementsdisclosedontheCNINFO.XVII.SignificantEventsoftheCompany’sSubsidiaries□Applicable√NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport98SectionVIIChangesinSharesandInformationaboutShareholdersI.ChangesinShares1.ChangesinsharesUnit:ShareBeforethechangeChangesintheperiod(+,-)AfterthechangeSharesRatioNewSharesIssuedBonusshareSharetransferredfromcapitalreserveOthersSub-totalSharesRatio1.Sharessubjecttoconditionalrestriction(s)63,266,3411.76%-20,744,150-20,744,15042,522,1911.14%1)Sharesheldbystates2)Sharesheldbystate-ownedcorporations3)Sharesheldbyotherdomesticinvestors63,043,3411.75%-20,577,150-20,577,15042,466,1911.14%Ofwhich:SharesheldbydomesticcorporationsSharesheldbydomesticindividuals63,043,3411.75%-20,577,150-20,577,15042,466,1911.14%4)Sharesheldbyoverseasinvestors223,0000.01%-167,000-167,00056,0000.00%Ofwhich:SharesheldbyoverseascorporationsZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport99Sharesheldbyoverseasindividuals223,0000.01%-167,000-167,00056,0000.00%2.Shareswithoutrestriction3,527,603,12498.24%162,490,220162,490,2203,690,093,34498.86%1)RMBcommonshares3,527,603,12498.24%162,490,220162,490,2203,690,093,34498.86%2)Domesticallylistedforeignshares3)Foreignshareslistedoverseas4)Others3.Total3,590,869,465100.00%141,746,070141,746,0703,732,615,535100.00%Reasonforthechangesinsharecapital√Applicable□Notapplicable1.Atthebeginningofeachyear,thenumberoflockedsharesshouldbere-calculatedaccordingto75%ofthetotalnumberofsharesheldbytheseniormanagement.2.May15,2023,thethirdvestingperiodofthe2020Restrictedstockincentiveplanmatured,and5.85millionrestrictedstocksof825incentiveobjectswhomeettheconditionswerelistedforcirculation.3.June30,2023,thefirstvestingperiodofthe2022Restrictedstockincentiveplanmatured,and5.238millionrestrictedstocksof1,345incentiveobjectswhomeettheconditionswerelistedforcirculation.4.TheCompanyrepurchasedandcancelledatotalof180,400restrictedsharesheldbyincentiverecipientswhodonotmeettheconditions.5.FromJanuary1,2023toJuly31,2023,the"SanhuaConvertibleBonds"decreasedbyRMB2,994,679,400(29,946,794pieces)duetoshareconversion,withatotalof141,926,470sharesconverted.OnAugust1,2023,allremainingunconvertedconvertiblebondswereredeemedbytheCompany.Approvalforchangesinsharecapital√Applicable□Notapplicable1.2020restrictedstockincentiveplan(1)April27,2023,theCompanyheldthe11thmeetingofthe7thBoardofDirectorsandthe9thmeetingofthe7thBoardofSupervisors,respectively,inwhich,Proposalontheachievementofunlockingconditionsofthethirdvestingperiodofthe2020restrictedstockincentiveplanwasapproved.ThelistingdateforcirculationoftherestrictedshareswasMay15,2023.Atotalof5.85millionshareswerereleased.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport100(2)June20,2023,theCompanyheldthe12thinterimmeetingofthe7thboardofdirectorsandthe10thinterimmeetingofthe7thboardofsupervisorsrespectively,inwhichProposalonadjustingtherepurchasepriceof2020restrictedstockincentiveplanandProposalonrepurchaseandcancellationofsomerestrictedstockswereapproved.TheCompanyrepurchasedandcancelled62,400restrictedsharesheldbyunqualifiedincentiveobjectsinthe2020restrictedstockincentiveplan.(3)July6,2023,thefirstextraordinarygeneralmeetingofshareholdersin2023washeld,inwhichProposalonrepurchaseandcancellationofsomerestrictedshareswasapproved.TheCompanyrepurchasedandcancelled62,400restrictedsharesheldbyunqualifiedincentiveobjectsinthe2020restrictedstockincentiveplan.2.2022restrictedstockincentiveplan(1)June20,2023,theCompanyheldthe12thinterimmeetingofthe7thboardofdirectorsandthe10thinterimmeetingofthe7thboardofsupervisors,inwhichfollowingproposalswereapproved:ProposalonAdjustingtheRepurchasePriceof2022RestrictedStockIncentivePlan,ProposalonRepurchaseandCancellationofsomeRestrictedStocksandProposalontheAchievementofUnlockingConditionsoftheFirstVestingPeriodoftheRestrictedStockIncentivePlanin2022.ThelistingdateoftherestrictedshareswasJune30,2023.Atotalof5.238millionshareswerereleased.TheCompanyrepurchasedandcancelled118,000restrictedsharesheldbyunqualifiedincentiveobjectsinthe2022restrictedstockincentiveplan.(2)July6,2023,thefirstextraordinarygeneralmeetingofshareholdersin2023washeld,inwhichProposalonrepurchaseandcancellationofsomerestrictedshareswasapproved.TheCompanyrepurchasedandcancelled118,000restrictedsharesheldbyunqualifiedincentiveobjectsinthe2022restrictedstockincentiveplan.3.ConvertiblebondsMay27,2021,the17thextraordinarymeetingofthe6thBoardofDirectorsandthe15thextraordinarymeetingofthe6thBoardofSupervisorsdeliberatedandapprovedtheProposalonFurtherClarifyingtheSpecificPlanforthePublicIssuanceofConvertibleCorporateBondsbytheCompanyandProposalonPublicIssuanceofConvertibleCorporateBonds.TheconvertiblebondconversionperiodoftheCompanyisfromthefirsttradingdate(December7,2021),whichissixmonthslaterfromJune7,2021(endofissuance),tothematuritydateoftheconvertiblebond(May31,2027).Transferofshares√Applicable□NotapplicableIn2023,theCompanyrepurchased180,400sharesthatwerenotqualifiedforunlocking.Effectsofchangesinsharecapitalonthebasicearningspershare("EPS"),dilutedEPS,netassetspershareattributabletocommonshareholdersoftheCompany,andotherfinancialindexesoverthelastyearandlastperiod√Applicable□NotapplicablePleaserefertothefinancialreportfordetails.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport101OthercontentsthattheCompanyconsidersnecessaryorrequiredbythesecuritiesregulatoryauthoritiestodisclose□Applicable√Notapplicable2.Changesinrestrictedshares√Applicable□NotapplicableUnit:ShareNameofshareholderOpeningbalanceofrestrictedsharesVestedincurrentperiodUnlocksharesincurrentperiodClosingbalanceofrestrictedsharesNoteforrestrictedsharesDateofunlockingZhangYabo39,023,40009,755,25029,268,150ComplywiththerelevantprovisionsofexecutivessharesmanagementComplywiththerelevantprovisionsofexecutivessharesmanagementWangDayong272,562020,000252,562Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.NiXiaoming262,562017,500245,062Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.ChenYuzhong272,562020,000252,562Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.HuKaicheng272,562020,000252,562Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.YuYingkui296,042020,000276,042Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.Complywithrelevantprovisionsofequityincentiveandexecutivesharesmanagement.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport102MoYang10,9260010,926Complywithrelevantprovisionsofexecutivesharesmanagement.Complywithrelevantprovisionsofexecutivesharesmanagement.ChenXiaoming8,325008,325Complywithrelevantprovisionsofexecutivesharesmanagement.Complywithrelevantprovisionsofexecutivesharesmanagement.Otherincentiveobjects22,847,400010,891,40011,956,000ComplywithrelevantprovisionsofequityincentiveComplywithrelevantprovisionsofequityincentiveTotal63,266,341020,744,15042,522,191----II.IssuanceandListingofSecurities1.Securities(excludepreferredshare)issuedduringthereportingperiod□Applicable√Notapplicable2.Explanationonchangesinsharecapital&thestructureofshareholders,thestructureofassetsandliabilities√Applicable□Notapplicable1.July6,2023,thefirstextraordinarygeneralmeetingofshareholdersin2023washeld,inwhichProposalonrepurchaseandcancellationofsomerestrictedshareswasapproved.TheCompanyrepurchasedandcancelled180,400restrictedsharesheldbyunqualifiedincentiveobjectsinthe2022restrictedstockincentiveplan.2.May27,2021,the17thextraordinarymeetingofthe6thBoardofDirectorsandthe15thextraordinarymeetingofthe6thBoardofSupervisorsdeliberatedandapprovedtheProposalonFurtherClarifyingtheSpecificPlanforthePublicIssuanceofConvertibleCorporateBondsbytheCompanyandProposalonPublicIssuanceofConvertibleCorporateBonds.TheconvertiblebondconversionperiodoftheCompanyisfromthefirsttradingdate(December7,2021),whichissixmonthslaterfromJune7,2021(endofissuance),tothematuritydateoftheconvertiblebond(May31,2027).FromJanuary1,2023toJuly31,2023,the"SanhuaConvertibleBonds"decreasedbyRMB2,994,679,400(29,946,794pieces)duetoshareconversion,withatotalof141,926,470sharesconverted.OnAugust1,2023,allremainingunconvertedconvertiblebondswereredeemedbytheCompany.3.ExistentsharesheldbyinternalstaffoftheCompany□Applicable√NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport103III.Particularsabouttheshareholdersandactualcontroller1.TotalnumberofshareholdersandtheirshareholdingsUnit:ShareTotalNumberofCommonShareholdersattheEndoftheReportingPeriod52,273Totalnumberofcommonshareholdersattheendofpreviousmonthbeforethedisclosuredateoftheannualreport84,746TotalNumberofPreferredShareholders(IfAny)(RefertoNote8)WhoseVotingRightsHaveBeenRecoveredattheEndoftheReportingPeriod0Totalnumberofpreferredshareholders(ifany)(refertoNote8)withresumedvotingrightsattheendofpreviousmonthbeforethedisclosuredateoftheannualreport0ParticularsaboutSharesHeldbyShareholderswithaShareholdingPercentageover5%ortheTop10ofThem(excludingSecuritiesLendingandBorrowing)NameofshareholderNatureofshareholderShare-holdingpercentage(%)TotalsharesheldattheendofthereportingperiodIncrease/decreaseduringthereportingperiodThenumberofsharesheldwithtradingrestrictionsThenumberofsharesheldwithouttradingrestrictionsPledged,markedorfrozenStatusAmountSanhuaHoldingGroupCo.,Ltd.Domesticnon-state-ownedcorporation25.41%948,487,077-30,378,708948,487,077ZhejiangSanhuaLvnengIndustrialGroupCo.,LtdDomesticnon-state-ownedcorporation19.90%742,747,9544,160,000742,747,954Pledged150,000,000HongKongCentralClearingLimitedOverseascorporation15.52%579,152,01531,513,126579,152,015ZhangYaboDomesticIndividual1.05%39,024,200029,268,1509,756,050NationalSocialSecurityFund(NSSF)104thPortfolioOthers0.59%22,074,56722,074,56722,074,567ChinaMerchantsBankOthers0.57%21,419,354121,31221,419,354ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport104Corporation-QuanguoXuyuanThreeYearHoldingPeriodHybridSecuritiesInvestmentFundIndustrialandCommercialBankofChinaLimited-GFMultiFactorFlexibleAllocationHybridSecuritiesInvestmentFundOthers0.57%21,226,564-10,180,01021,226,564KuwaitInvestmentAuthorityOverseascorporation0.47%17,546,539-1,472,96517,546,539IndustrialandCommercialBankofChinaLimited-Huatai-PerryCSI300TradedOpen-EndIndexFundOthers0.45%16,653,5978,106,10716,653,597ChinaLifeInsuranceCompanyLimited-Traditional-GeneralInsurancePro。

4. ducts-005L-CT-001ShanghaiOthers0.45%16,624,99016,624,99016,624,990InformationaboutStrategicInvestors’orGeneralLegalPersons’BecomingTopTenCommonShareholdersforPlacementofNewShares(IfAny)(RefertoNote3)NoZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport105ExplanationonAssociatedRelationshiporConcertedActionsamongtheAbove-MentionedShareholdersAmongtheaboveshareholders,SanhuaHoldingGroupCo.,Ltd.,ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.andZhangYaboarethepersonsactinginconcert.TheCompanydoesnotknowwhetherthereisanyrelatedrelationshipbetweenothershareholders,orwhethertheybelongtothepersonsactinginconcertstipulatedintheAdministrativeMeasuresfortheAcquisitionofListedCompanies.ParticularsaboutSharesHeldbyTop10CommonShareholdersHoldingSharesThatAreNotSubjecttoTradingRestrictionsNameofShareholderNumberofCommonSharesHeldwithoutRestrictionsattheEndoftheReportingPeriodTypeofsharesTypeAmountSanhuaHoldingGroupCo.,Ltd.948,487,077RMBcommonstock948,487,077ZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd742,747,954RMBcommonstock742,747,954HongKongCentralClearingLimited579,152,015RMBcommonstock579,152,015NationalSocialSecurityFund(NSSF)104thPortfolio22,074,567RMBcommonstock22,074,567ChinaMerchantsBankCorporation-QuanguoXuyuanThreeYearHoldingPeriodHybridSecuritiesInvestmentFund21,419,354RMBcommonstock21,419,354IndustrialandCommercialBankofChinaLimited-GFMultiFactorFlexibleAllocationHybridSecuritiesInvestmentFund21,226,564RMBcommonstock21,226,564KuwaitInvestmentAuthority17,546,539RMBcommonstock17,546,539IndustrialandCommercialBankofChinaLimited-Huatai-PerryCSI300TradedOpen-EndIndexFund16,653,597RMBcommonstock16,653,597ChinaLifeInsuranceCompanyLimited-Traditional-GeneralInsuranceProducts-005L-CT-001Shanghai16,624,990RMBcommonstock16,624,990IndustrialandCommercialBankofChinaLimited-ETFCSINewEnergyVehicleIndustryIndexInitiatedSecuritiesInvestmentFund(LOF)15,986,434RMBcommonstock15,986,434ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport106ExplanationofAssociatedRelationshiporConcertedActionsamongTopTenCommonShareholderswithoutTradingRestrictions,andamongTopTenCommonShareholderswithoutTradingRestrictionsandTopTenCommonShareholdersAmongtheaboveshareholders,SanhuaHoldingGroupCo.,Ltd.andZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.arethepersonsactinginconcert.TheCompanydoesnotknowwhetherthereisanyrelatedrelationshipbetweenothershareholders,orwhethertheybelongtothepersonsactinginconcertstipulatedintheAdministrativeMeasuresfortheAcquisitionofListedCompanies.ExplanationofTopTenCommonShareholders’ParticipationinSecuritiesMarginTrading(IfAny)(RefertoNote4)N/AThetoptenshareholdersparticipatingintheSecuritiesLendingandBorrowing√Applicable□NotapplicableUnit:shareThetoptenshareholdersparticipatinginSecuritiesLendingandBorrowingFullnameofshareholderSharesinthecommonaccountandcreditaccountattheperiod-beginShareslentandnotyetreturnedattheperiod-beginSharesinthecommonaccountandcreditaccountattheperiod-endShareslentandnotyetreturnedattheperiod-endTotalsharesAs%oftotalsharecapitalTotalsharesAs%oftotalsharecapitalTotalsharesAs%oftotalsharecapitalTotalsharesAs%oftotalsharecapitalZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd738,587,95420.57%4,160,0000.12%742,747,95419.90%00.00%IndustrialandCommercialBankofChinaLimited-Huatai-PerryCSI300TradedOpen-EndIndexFund8,547,4900.24%243,0000.01%16,653,5970.45%20,6000.00%Changesinthetoptenshareholderscomparedtothepreviousperiod√Applicable□NotapplicableUnit:shareChangesintop10shareholderscomparedtolastperiodZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport107FullnameofshareholdersNew/ExitingshareholderincurrentperiodAttheendoftheperiod,thenumberofshareslentandnotyetreturnedThenumberofsharesheldintheordinaryaccountandcreditaccountofshareholdersattheendoftheperiod,aswellastheshareslentandnotyetreturnedTotalquantityRatiointotalsharesTotalquantityRatiointotalsharesHangzhouZhichunInvestmentManagementCo.Ltd-ZhichunSelectPhaseIPrivateSecuritiesInvestmentFundExitingshareholder00.00%00.00%#FangdejiExitingshareholder00.00%00.00%NationalSocialSecurityFund(NSSF)104thPortfolioNewshareholder00.00%22,074,5670.59%KuwaitGovernmentInvestmentAuthorityNewshareholder00.00%17,546,5390.47%IndustrialandCommercialBankofChinaLimited-Huatai-PerryCSI300TradedOpen-EndIndexFundNewshareholder20,6000.00%16,674,1970.45%ChinaLifeInsuranceCompanyLimited-Traditional-GeneralInsuranceProducts-005L-CT-001ShanghaiNewshareholder00.00%16,624,9900.45%AbuDhabiInvestmentAuthorityExitingshareholder00.00%8,587,7820.23%FangWenjunExitingshareholder00.00%00.00%AnyoftheCompany’stop10commonshareholdersortop10non-restrictedcommonshareholdersconductedanyagreedbuy-backinthereportingperiod□Applicable√NotapplicableNosuchcasesduringthecurrentreportingperiod.2.ParticularsaboutcontrollingshareholderoftheCompanyNatureofthecontrollingshareholder:NaturalpersonTypeoftheactualcontroller:CorporationNameofcontrollingshareholderLegalRepresentative/PeopleinchargeDateofestablishmentOrganizationcodeBusinessscopeZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport108SanhuaHoldingGroupCo.,LtdZhangDaocaiJuly11,200091330624720002522JIndustrialinvestment;Manufacturingandsales:Generalparts,electronicproducts;sales:metalmaterials(excludingpreciousandraremetals),chemicalrawmaterials(exceptdangerouschemicalsandprecursorchemicals),rubber;exportofproductsandrelatedtechnologiesproducedbytheenterpriseanditsmemberenterprises.Itisengagedintheexportbusinessofrawandauxiliarymaterials,machineryandequipment,instrumentsandmeters,sparepartsandrelatedtechnologiesneededbytheenterpriseanditsmemberenterprisesforproductionandscientificresearch;itisengagedintheprocessingofimportedmaterialsandthebusinessof"threesuppliesandonesupplement".Technicalconsultation,technicalservice,financialconsultationandinvestmentconsultation.(Intermsofprojectssubjecttoapprovalaccordingtolaw,businessactivitiescanbecarriedoutonlyafterapprovalbyrelevantdepartments.)SharesheldbythecontrollingshareholderinotherforeignlistedcompaniesthroughcontrollingorholdingduringthereportingperiodN/AChangeofthecontrollingshareholderduringthereportingperiod□Applicable√NotapplicableTheCompany'scontrollingshareholderhasnotchangedduringthereportingperiod.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1093.ParticularsabouttheCompany’sactualcontroller&concertedpartiesNatureoftheactualcontroller:DomesticnaturalpersonTypeoftheactualcontroller:NaturalpersonNameoftheactualcontrollerRelationshipwiththeactualcontrollerNationalityWhetherhe/shehasobtainedtherightofresidenceinanothercountryorregionZhangDaocaiHimselfChinaNoZhangYaboHimselfChinaNoZhangShaoboHimselfChinaNoMainoccupationandpositionMr.ZhangDaocai:Chinesenationality,bornin1950,senioreconomist,andspecialsupervisorofMBAgraduatestudentofZhejiangUniversity.HeishonorarychairmanoftheCompanyandchairmanoftheboardofdirectorsofSanhuaHoldingGroupCo.,Ltd.Hewaselectedastherepresentativeofthe8th,9th,10th,11thand12thNationalPeople'sCongressofZhejiangProvinceandvicepresidentoftheChinaEnterpriseFederationandtheChineseEntrepreneursAssociation.VicepresidentofZhejiangsmallandmediumsizedEnterprisesAssociation,vicepresidentofZhejiangBusinessManagementResearchAssociationandvicepresidentofAsiaPacificChineseLeadersAssociation,andwontheNationalLaborMedalofMay1st,nationalexcellententrepreneur,masterofChinesemanagement,mostcreativeChinesebusinessleaderinAsiaPacific,ModelworkerofZhejiangProvince,meritoriousentrepreneurofimplementingthe"eighteightstrategy"inZhejiangProvince,lifelongleaderentrepreneurofZhejiangProvince,leadingfiguresofZhejiangManufacturingandotherhonors.Mr.ZhangYabo:Chinesenationality,CPCmember,bornin1974,senioreconomist,graduatedfromShanghaiJiaotongUniversity,receivedamaster'sdegreeinBusinessAdministrationfromCEIBS.Atpresent,heisthechairmanoftheboardoftheCompany,SecretaryofthePartycommitteeofSanhuaholdinggroup,vicechairmananddirectoroftheboardofSanhuaHoldingGroupCo.,Ltd.HehassuccessivelywonZhejiangoutstandingyoungprivateentrepreneurs,Zhejiangoperationandmanagementmasters,Shaoxinglabormodel,Shaoxingtoptenoutstandingyoungpeople,Shaoxingmayoraward,ChangjiangRiverDeltatoptenoutstandingyoungbusinessmen,FengyunZhejiangbusinessmen,Zhejiangoutstandingentrepreneurs,Zhejiangexcellententrepreneurs,gloriousZhejiangbusinessman,etc.Nowheservesasarepresentativetothe14thNationalPeople'sCongress,the13thExecutiveCommitteeMemberoftheChinaFederationofIndustryandPartyRepresentativeofthe15thZhejiangProvincialPartyCongress,VicePresidentofZhejiangChamberofCommerceandChairmanSupervisoroftheZhejiangChamberofCommerce.Mr.ZhangShaobo:Chinesenationality,bornin1979,master'sdegree,graduatedfromCEIBS.HeservesasadirectoroftheCompany,directorofSanhuaHoldingGroupCo.,Ltd.,chairmanoftheboardofZhejiangSanhuaLvnengIndustrialGroupCo.,Ltd.,GeneralManagerofHangzhouSanhuaInternationalBuildingCo.,Ltd.,andchairmanoftheboardofZhejiangSanhuaZhiyuanRealEstateCo.,Ltd.Domesticandforeignlistedcompaniescontrolledinthepast10yearsN/AChangeoftheactualcontrollerduringthereportingperiod□Applicable√NotapplicableNosuchchangeduringthereportingperiod.TheownershipandcontrollingrelationshipbetweentheactualcontrollerandtheCompanyaredetailedasfollows:ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport110TheactualcontrollercontrolstheCompanyviatrustorotherwaysofassetmanagement□Applicable√Notapplicable4.ThecumulativenumberofPledgedSharesoftheCompany'scontrollingshareholderorthelargestshareholderanditsconcertedactorsaccountsfor80%oftheCompany'sshares□Applicable√Notapplicable5.Particularsaboutothercorporateshareholderswithshareholdingproportionover10%√Applicable□NotapplicableNameofcorporateshareholderLegalrepresentativeDateofincorporationRegisteredcapitalMainbusinessZhejiangSanhuaLvnengIndustrialGroupCo.,LtdZhangShaoboSeptember30,2001649millionyuanManufacturingandsales:airsuspensionassembly,generalequipment,electromechanicalequipment,technologydevelopment,technicalservice,technicalconsultation,achievementtransfer:electromechanicaltechnology,10.04%45.45%28.77%9.04%ZhejiangHuatengIndustrialCo.,Ltd.6%19.90%28.20%100%100%22%21%39.95%12.00%51%1.05%ZhangYaboZhangDaocaiZhangShaoboSanhuaHoldingGroupCo.,Ltd.11.78%25.41%FuxunCo.,Ltd.ZhejiangSanhualvnengIndustrialGroupCo.,Ltd.46.22%ZhejiangSanhuaIntelligentControlsCo.,Ltd.XinchangHuaqingInvestmentCo.,Ltd.XinchangHuaxinIndustrialCo.,Ltd.YuQingjuanHongKongHaoyideInternationalLtd.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport111environmentalprotectiontechnology,biotechnology(exceptforhumanstemcells,genediagnosisandtreatmenttechnologydevelopmentandapplication);electronicandelectricalproducts,metalmaterials(excludingpreciousmetals),chemicalrawmaterials(exceptchemicaldangerousgoodsandprecursorchemicals)Wholesale,retailandimportandexportbusinessofgoldandsilverjewelry,rubber,mineralproducts,machineryandequipment,instrumentsandaccessories;services:enterprisemanagementconsulting,propertymanagement(operatingbyqualificationcertificate),self-ownedhouseleasing,industrialinvestmentmanagement,consultingmanagement(exceptforsecuritiesandgoods,withoutapprovaloffinancialsupervisiondepartments,shallnotengageindeposit,financingguarantee,agencyforpublicfinancingFinancialservicessuchascustomerfinance),powersupply,developmentandconstructionofdistributedsolarenergyprojects,andcontractenergymanagement.(Exceptforthoseinvolvingtheimplementationofspecialmanagementmeasuresforaccessstipulatedbythestate).(Intermsofprojectssubjecttoapprovalaccordingtolaw,businessactivitiescanbecarriedoutonlyafterapprovalbyrelevantdepartments.)6.Particularsonshareholdingdecreaserestrictionsforthecontrollingshareholders,actualcontroller,restructurerorothercommittingparties√Applicable□NotapplicableAugust2022,theCompanydisclosedAnnouncementonSanhuaHoldings,SanhuaLvneng,andMr.ZhangYabo'sCommitmentnottoActivelyReduceTheirHoldingsoftheCompanyStocks.ThecontrollingshareholderSanhuaHoldings,theshareholderSanhuaLvneng,andtheactualcontrollerMr.ZhangYabowillnotactivelyreducetheirholdingsoftheCompany'sshareswithin18monthsfromAugust18,2022.IV.InformationabouttheimplementationofsharerepurchaseduringthereportingperiodInformationabouttheimplementationofsharerepurchase√Applicable□NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport112SchemedisclosuredateNumberofsharestoberepurchasedProportionintotalsharecapitalProposedrepurchaseamountUnit:(RMBin10thousand)PeriodtoberepurchasedRepurchasepurposeQuantityrepurchased(shares)Proportionofrepurchasedsharesinequityincentiveplanshares(ifany)October27,20225,555,555-11,111,1100.15%-0.30%20,000-40,000October27,2022-October26,2023Forequityincentiveplanoremployeestockownershipplan7,535,067100.00%November7,20235,555,555-11,111,110,0.15%-0.30%20,000-40,000November7,2023-November6,2024Forequityincentiveplanoremployeestockownershipplan702,900100.00%Theprogressonreductionofre-purchasesharesbymeansofcentralizedbidding□Applicable√NotapplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport113SectionVIIIInformationofPreferredShares□Applicable√NotapplicableNoexistingpreferredsharesfortheCompanyduringthecurrentreportingperiod.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport114SectionIXBonds√Applicable□NotapplicableI.Enterprisebond(hereinafterreferredtoasthebondissuedbydomesticstate-ownedentity)□Applicable√NotapplicableII.Corporatebond□Applicable√NotapplicableIII.Debtfinancinginstrumentsofnon-financialenterprises□Applicable√NotapplicableIV.Convertiblebond√Applicable□Notapplicable1.PreviousAdjustmentsofStockConversionPrice1.TheCompanyimplementedthe2021profitdistributionplan.Accordingtotherelevantprovisionsofthepriceadjustmentofconvertiblecorporatebonds,theconversionpriceofSanhuaconvertiblebondsshouldbeadjustedaccordingly.TheconversionpriceofSanhuaconvertiblebondsbeforetheadjustmentis21.55yuan/share,andtheadjustedconversionpriceis21.40yuan/share.TheadjustedconversionpricetookeffectfromMay11,2022.2.TheCompanyimplementedaprofitdistributionplanforthehalfyearof2022.Accordingtotherelevantprovisionsonthepriceadjustmentofconvertiblecorporatebonds,theconversionpriceofSanhuaconvertiblebondsshouldbeadjustedaccordingly.Beforetheadjustment,theconversionpriceofSanhuaconvertiblebondsis21.40yuan/share,andaftertheadjustment,theconversionpriceis21.30yuan/share.TheadjustedconversionpricetookeffectfromSeptember22,2022.3.TheCompanyimplementedthe2022profitdistributionplan.Accordingtotherelevantprovisionsofthepriceadjustmentofconvertiblecorporatebonds,theconversionpriceofSanhuaconvertiblebondswasadjustedfrom21.30yuan/shareto21.10yuan/share.TheadjustedconversionpricetookeffectfromJune9,2023.2.ShareConversions(Accumulative)√Applicable□NotapplicableAbbreviationofconvertiblePeriodofconversionTotalissuedamountTotalissuedamountCumulativeamountofconvertedCumulativenumberofconvertedProportionofthenumberofAmountofsharesnotyetProportionoftheamountofZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport115bonds(piece)(yuan)shares(yuan)shares(shares)convertedsharestothetotalissuedsharesoftheCompanybeforethedateofconversionconverted(yuan)non-convertedsharesinthetotalamountofissuanceSanhuaConvertibleBondDecember7,2021-July31,202330,000,0003,000,000,000.002,996,233,700.00141,998,7773.95%3,766,300.000.00%3.Top10HoldersoftheConvertibleBondAugust9,2023,"SanhuaConvertibleBonds"weredelistedfromtheShenzhenStockExchange.4.TheProfitability,AssetandCreditStatusoftheGuarantorHaveChangedSignificantly□Applicable√Notapplicable5.Bytheendofthereportingperiod,theCompany'sliabilities,creditchangesandcasharrangementsfordebtrepaymentinfutureRegardingtherelevantfinancialindicatorsoftheCompanyattheendofthereportingperiod,pleasereferto"8.Mainaccountingdataandfinancialindicatorsofthecompanyforthepasttwoyearsasoftheendofthereportingperiod".CSCIPengyuanissuedthe2023TrackingRatingReportonthe2021PublicIssuanceofConvertibleCorporateBondsbyZhejiangSanhuaIntelligentControlsCo.,Ltd.onJune27,2023,accordingtowhichthecreditratingofSanhuaconvertiblebondsremainsAA+,theCompany'screditratingremainsAA+,andtheratingoutlookremainsstable.Theresultofthisratinghasnotchangedcomparedwiththelastone.TheconvertiblecorporatebondshavetriggeredtheconditionalredemptionclausestipulatedintheZhejiangSanhuaIntelligentControlsCo.,Ltd.PublicIssuanceofConvertibleCorporateBondsProspectus.OnJuly7,2023,theCompanyheldthe13thextraordinarymeetingofthe7thBoardofDirectorsandthe11thextraordinarymeetingofthe7thBoardofSupervisors,whichreviewedandpassedtheProposalonEarlyRedemptionofSanhuaConvertibleBondsandagreedtotheCompany'sexerciseoftheconditionalredemptionrightandredemptionofallunconvertedSanhuaConvertibleBondsregisteredwithChinaSecuritiesDepositoryandClearingCorporationShenzhenBranchafterthecloseofthemarketontheredemptionregistrationdateatthepriceofthefacevalueplusaccruedinterest.Redemptionregistrationdate:July31,2023,redemptiondate:August1,2023,redemptionprice:100.10yuan/piece(includingaccruedinterest,annualinterestrateis0.60%,andtaxinclusive).Atotalof3,770,066.30yuanwaspaidforredemption.OnAugust9,2023,"SanhuaConvertibleBonds"weredelistedfromtheShenzhenStockExchange.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport116Duetothefactthattheunconvertedportionofthe"SanhuaConvertibleBond"hasbeenfullyredeemedbytheCompanyanddelistedfromtheShenzhenStockExchange,ChinaSecuritiesCSCIPengyuandecidedtoterminatethetrackingratingofSanhuaIntelligentControlsandSanhuaConvertibleBond.TheoriginalratingisvaliduntilAugust11,2023,andwillnolongerbeupdated.Thecumulativeconversionof"SanhuaConvertibleBonds"intosharesis141,998,777,andthetotalsharecapitaloftheCompanyhasincreasedby141,998,777sharesresultfromconversion,whichhasincreasedtheCompany'scapitalstrength.Meanwhile,duetoanincreaseintotalsharecapital,theCompany'sEPSwouldbedilutedintheshortterm.V.Thelosswithinthescopeofconsolidatedstatementsinthereportingperiodexceeded10%ofthenetassetsattheendofthepreviousyear□Applicable√NotapplicableVI.Overdueinterest-bearingdebtsotherthanbondsbytheendofthisreportingperiod□Applicable√NotapplicableVII.Whetherthereisanyviolationofrulesorregulationsduringthereportingperiod□Applicable√NotapplicableVIII.MainaccountingdataandfinancialindicatorsoftheCompanyinrecenttwoyearsbytheendofthereportingperiodUnit:RMBin10thousandItemAttheendofthereportingperiodAttheendoflastyearYoYChange(%)Currentratio1.71.98-14.14%Assetliabilityratio43.36%53.08%-9.72%Quickratio1.311.53-14.38%CurrentReportingPeriodCorrespondingPeriodofLastYearYoYChange(%)Netprofitafterdeductingnon-recurringprofitandloss291,702.92229,145.0527.30%EBITDAtotaldebtratio64.58%43.52%21.06%Timesinterestearnedratio17.7514.0826.07%Cashinterestguaranteetimes26.1223.4611.34%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport117EBITDATimeinterestearnedratio21.6516.8428.56%Repaymentofdebt(%)100.00%100.00%Paymentofinterest(%)100.00%100.00%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport118SectionXFinancialReportI.AuditreportTypeofauditopinionStandardUnqualifiedopinionDateofsigningofauditreportApril28,2024NameofauditfirmPan-ChinaCertifiedPublicAccountantsLLPDocumentnumberofauditreportPCCPAAR[2024]No.4888NameofthecertifiedaccountantsLuoXunchao、ZhangXinAuditor’sReportTotheShareholdersofZhejiangSanhuaIntelligentControlsCo.,Ltd.:1.AuditOpinionWehaveauditedtheaccompanyingfinancialstatementsofZhejiangSanhuaIntelligentControlsCo.,Ltd.(the“Company”),whichcomprisetheconsolidatedandparentcompanybalancesheetsasatDecember31,2023,theconsolidatedandparentcompanyincomestatements,theconsolidatedandparentcompanycashflowstatements,andtheconsolidatedandparentcompanystatementsofchangesinequityfortheyearthenended,aswellasnotestofinancialstatements.Inouropinion,theattachedfinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyasatDecember31,2023,andofitsfinancialperformanceanditscashflowsfortheyearthenendedinaccordancewithChinaAccountingStandardsforBusinessEnterprises.2.BasisforAuditOpinionWeconductedourauditinaccordancewithChinaStandardsonAuditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheCertifiedPublicAccountant’sResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.WeareindependentoftheCompanyinaccordancewiththeChinaCodeofEthicsforCertifiedPublicAccountants,andwehavefulfilledotherethicalresponsibilities.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.3.KeyAuditMattersKeyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotexpressaseparateopiniononthesematters.(I)Revenuerecognition1.MattersdescriptionPleaserefertosectionⅢ(25),Ⅴ(2)1andXVofthenotestothefinancialstatementsfordetails.ThemajorityoftheCompany'srevenuecomesfromcontrollingcomponentsandcomponentsforhomeappliancesandautomobiles.In2023,theamountofoperatingincomeoftheCompanyisRMB24.5578billion,AsoperatingrevenueisoneofthekeyperformanceindicatorsoftheCompany,theremightbeinherentrisksthattheCompany’smanagement(the“Management”)adoptsinappropriaterevenuerecognitiontoachievespecificgoalsorexpectations,wehaveidentifiedrevenuerecognitionasakeyauditmatter.2.ResponsiveauditproceduresZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport119Ourmainauditproceduresforrevenuerecognitionareasfollows:(1)Weobtainedunderstandingsofkeyinternalcontrolsrelatedtorevenuerecognition,assessedthedesignofthesecontrols,determinedwhethertheyhadbeenexecuted,andtestedtheeffectivenessoftheoperation;(2)Wecheckedsalecontracts,obtainedunderstandingsofmaincontractualtermsorconditions,andassessedwhethertherevenuerecognitionmethodwasappropriate;(3)Weperformedanalysisprocedureonoperatingrevenue,soastoidentifywhethertherearesignificantorabnormalfluctuationsandimplementedtherationalityofsuchfluctuations;(4)Weimplementeddetailtestandcheckedsupportingdocumentsrelatedtorevenuerecognitionbysamplingmethod,includingsalescontracts,salesinvoices,salescollection,deliverylists,shippingdocuments,clientacceptancereceipts,exportdeclaration,ladingbill,weobtainedinformationfromE-portandcomparedwithaccountingrecordsofexportrevenue；(5)Weperformedconfirmationproceduresoncurrentsalesamountbysamplingmethodincombinationwithconfirmationprocedureofaccountsreceivable;(6)Weinquiredtheindustrialandcommercialregistrationinformationorpublicinformationofmajorcustomerstoevaluatewhetherthebusinesslogicrelatedtosalestransactionsistenable;(7)Weimplementedcut-offtestsontheoperatingrevenuerecognizedbeforeandafterthebalancesheetdatetoevaluatewhethertheoperatingrevenueisrecognizedinanappropriateperiod;(II)Inventoriesvaluation1.MattersdescriptionPleaserefertosectionⅢ(12)andⅤ(1)8ofthenotestothefinancialstatementsfordetails.AsofDecember31,2023,thebookbalanceoftheCompany'sinventoriesamountedtoRMB4.60073billion,themajorcomponentsaremetalmaterialssuchascopperandaluminum.Themetalmaterialshavehighvalueandgoodliquidity,theyareimportantcontrolledassets.Therefore,wehaveidentifiedtheexistence,valuation,andtransferofinventoryasakeyauditmatter.2.ResponsiveauditproceduresOurmainauditproceduresforinventoriesvaluationareasfollows:(1)Weimplementedanalysisprocedurestoidentifysignificantorabnormalchangesininventorysizeandstructure,andverifytheauthenticityorreasonablenessofsuchchanges;(2)Weimplementeddetailtestandcheckedsupportingdocumentsrelatedtomaterialpurchasebysamplingmethod,includingpurchasescontracts,inputinvoices,warehousereceipts,purchasepayments,etc;(3)Weperformedconfirmationproceduresoncurrentpurchasesamountbysamplingmethodincombinationwithconfirmationprocedureofaccountspayable;(4)Wesearchedthemarketpricetrendsofthemainrawmaterialsandcomparedthemwiththeactualpurchasepricestocheckforanyabnormalsituations;(5)Wegainedanunderstandingoftheproductionprocessandcostaccountingmethods,andconductedsamplingreviewstoverifytheconsistencyandrationalityofproductioncostcollectionandallocation;(6)Weconductedsamplingtestsontheinventoriesvaluationtocheckthepricingaccuracyoftheinventoriesissuanceamountandthebalanceamount;(7)Weimplementedinventorymonitoringtocheckifthereisasignificantdeviationbetweentheaccountandtheactualsituation;4.OtherInformationTheCompany’smanagement(the“Management”)isresponsiblefortheotherinformation.TheotherinformationcomprisestheinformationincludedintheCompany’sannualreport,butdoesnotincludethefinancialstatementsandourauditor’sreportthereon.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport120Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.Ifbasedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementoftheotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.5.ResponsibilitiesoftheManagementandThoseChargedwithGovernancefortheFinancialStatementsTheManagementisresponsibleforpreparingandpresentingfairlythefinancialstatementsinaccordancewithChinaAccountingStandardsforBusinessEnterprises,aswellasdesigning,implementingandmaintaininginternalcontrolrelevanttothepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Inpreparingthefinancialstatements,theManagementisresponsibleforassessingtheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlesstheManagementeitherintendstoliquidatetheCompanyortoceaseoperations,orhasnorealisticalternativebuttodoso.ThosechargedwithgovernanceareresponsibleforoverseeingtheCompany’sfinancialreportingprocess.6.CertifiedPublicAccountant’sResponsibilitiesfortheAuditoftheFinancialStatementsOurobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithChinaStandardsonAuditingwillalwaysdetectamaterialmisstatementwhenitexists.Misstatementcanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.WeexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheauditperformedinaccordancewithChinaStandardsonAuditing.Wealso:(I)Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.(II)Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances.(III)EvaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebytheManagement.(IV)ConcludeontheappropriatenessoftheManagement’suseofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheCompany’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentioninourauditor’sreporttotherelateddisclosuresinthefinancialstatements.Ifthedisclosureisinsufficient,weshouldexpressanonunqualifiedopinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditor’sreport.However,futureeventsorconditionsmaycausetheCompanytoceasetocontinueasagoingconcern.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport121(V)Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.(VI)ObtainsufficientandappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithintheCompanytoexpressanopiniononthefinancialstatements.Weareresponsibleforthedirection,supervisionandperformanceofthegroupaudit.Weremainsoleresponsibilityforourauditopinion.Wecommunicatewiththosechargedwithgovernanceregardingtheplannedauditscope,timescheduleandsignificantauditfindings,includinganydeficienciesininternalcontrolofconcernthatweidentifyduringouraudit.Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialstatementsofthecurrentperiodandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor’sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.Pan-ChinaCertifiedPublicAccountantsLLPChineseCertifiedPublicAccountant：LuoXunchao(EngagementPartner)Hangzhou·ChinaChineseCertifiedPublicAccountant：ZhangXinDateofReport:April28,2024ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport122II.FinancialStatementsUnitsoffinancialreportsinthenotes:RMB1.ConsolidatedbalancesheetPreparedby:ZhejiangSanhuaIntelligentControlsCo.,Ltd.December31,2023Unit:RMBItemsDecember31,2023January1,2023Currentasset：CashandBankBalances6,584,684,683.935,878,243,652.55SettlementfundsLoanstootherbanksHeld-for-tradingfinancialassets100,025,980.08Derivativefinancialassets22,636,112.688,938,874.05Notesreceivable2,476,839,413.892,203,948,983.83Accountsreceivable5,773,991,481.225,228,117,225.57ReceivablefinancingAdvancespaid133,792,623.54117,887,007.07PremiumreceivableReinsuranceaccountsreceivableReinsurancereservesreceivableOtherreceivables227,792,892.12726,641,478.35Including:InterestreceivableDividendsreceivableRepurchasingoffinancialassetsInventories4,600,729,378.194,334,875,287.86ContractassetsAssetsheldforsalesNon-currentassetsduewithinoneyearOthercurrentassets251,073,584.56157,025,076.05Totalcurrentassets20,071,540,170.1318,755,703,565.41Non-currentassets:LoansandadvancespaidDebtinvestmentsOtherdebtinvestmentsLong-termreceivable3,805,833.603,712,290.00Long-termequityinvestments37,924,431.2932,438,204.13OtherequityinstrumentinvestmentsOthernon-currentfinancialassetsInvestmentproperty8,165,805.318,204,266.97Fixedassets7,730,363,778.826,374,896,070.41ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport123Constructioninprogress2,036,326,757.721,032,505,633.51ProductivebiologicalassetsOil&gasassetsRight-of-useassets313,254,745.53284,277,365.32Intangibleassets843,866,292.82727,263,351.69DevelopmentexpendituresGoodwill6,785,228.047,591,830.61Long-termprepayments118,096,436.0956,157,277.16Deferredtaxassets156,432,157.23221,158,674.48Othernon-currentassets564,023,136.83457,305,626.59Totalnon-currentassets11,819,044,603.289,205,510,590.87Totalassets31,890,584,773.4127,961,214,156.28Currentliabilities:Short-termborrowings1,212,150,378.851,294,083,319.58CentralbankloansLoansfromotherbanksHeld-for-tradingfinancialliabilities3,500,000.003,500,000.00Derivativefinancialliabilities10,719,110.0245,171,373.81Notespayable3,416,711,594.642,580,274,767.64Accountspayable4,449,940,359.813,884,603,370.16AdvancesreceivedContractliabilities51,788,802.0357,955,080.60SellingofrepurchasedfinancialassetsAbsorbingdepositandinterbankdepositDepositforagencysecuritytransactionDepositforagencysecurityunderwritingEmployeebenefitspayable598,801,246.34475,157,429.15Taxesandratespayable382,396,791.19190,789,559.16Otherpayables250,642,662.86354,255,114.06Including:InterestPayableDividendsPayableHandlingfeeandcommissionpayableReinsuranceaccountspayableLiabilitiesclassifiedasheldforsaleNon-currentliabilitiesduewithinoneyear1,440,093,253.93568,126,341.67Othercurrentliabilities2,099,986.272,007,578.03Totalcurrentliabilities11,818,844,185.949,455,923,933.86Non-currentliabilities:InsurancepolicyreserveLong-termborrowings1,030,801,111.131,801,574,166.67Bondspayable2,776,763,361.83Including:PreferredsharesPerpetualbondsLeaseliabilities221,295,481.86202,028,482.09ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport124Long-termpayables11,290,788.324,831,202.13Long-termemployeebenefitspayable39,840,362.77ProvisionsDeferredincome379,140,042.48254,044,715.64Deferredtaxliabilities307,511,069.3288,757,921.37Othernon-currentliabilities18,154,107.2557,990,181.87Totalnon-currentliabilities2,008,032,963.115,385,990,031.60Totalliabilities13,826,877,149.0514,841,913,965.46Equity:Sharecapital3,732,615,535.003,590,869,465.00Otherequityinstruments409,544,970.41Including:PreferredsharesPerpetualbondsCapitalreserve3,455,643,565.98282,602,695.98Less:Treasuryshares423,468,591.57330,022,975.53Othercomprehensiveincome114,757,064.28-8,543,048.33SpecialreserveSurplusreserve1,011,914,243.67863,523,059.01GeneralriskreserveUndistributedprofit10,002,942,167.438,133,336,242.88TotalequityattributabletotheparentCompany17,894,403,984.7912,941,310,409.42Non-controllinginterest169,303,639.57177,989,781.40Totalequity18,063,707,624.3613,119,300,190.82Totalliabilities&equity31,890,584,773.4127,961,214,156.28Legalrepresentative：ZhangYaboOfficerinchargeofaccounting：YuYingkuiHeadofaccountingdepartment：LiZhimi2.ParentCompanyBalanceSheetUnit:RMBItemsDecember31,2023January1,2023Currentassets:Cashandbankbalances3,755,111,885.563,453,268,955.31Held-for-tradingfinancialassets100,025,980.08Derivativefinancialassets1,463,100.003,754,234.25Notesreceivable1,293,651,597.021,108,678,741.44Accountsreceivable703,445,875.41804,258,235.12ReceivablesfinancingAdvancespaid7,501,313.449,470,841.56Otherreceivables2,269,591,236.02650,791,643.96Including:InterestReceivableDividendsReceivable550,000,000.00Inventories772,429,361.79719,679,218.08ContractassetsAssetsclassifiedasheldforsaleNon-currentassetsduewithinoneyearZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport125OthercurrentassetsTotalcurrentassets8,803,194,369.246,849,927,849.80Non-currentassets:DebtinvestmentsOtherdebtinvestmentsLong-termreceivable500,000.00420,000.00Long-termequityinvestments8,880,133,268.577,542,658,709.77OtherequityinstrumentinvestmentsOthernon-currentfinancialassetsInvestmentpropertyFixedassets1,623,330,889.081,593,110,699.80Constructioninprogress53,871,265.0836,026,798.77ProductivebiologicalassetsOil&gasassetsRight-of-useassets9,370,623.9511,493,242.24Intangibleassets142,130,830.79142,723,611.23DevelopmentexpendituresGoodwillLong-termprepayments15,876,569.882,396,803.91Deferredtaxassets5,587,256.3533,318,204.92Othernon-currentassets99,458,254.340,289,058.97Totalnon-currentassets10,830,258,958.019,402,437,129.61Totalassets19,633,453,327.2516,252,364,979.41Currentliabilities:Short-termborrowings202,384,500.02199,743,666.65Held-for-tradingfinancialliabilitiesDerivativefinancialliabilities11,750.00Notespayable559,657,858.19510,877,753.94Accountspayable1,465,144,230.801,384,664,289.76AdvancesreceivedContractliabilities121,488.76154,996.96Employeebenefitspayable127,817,926.77111,391,004.02Taxesandratespayable112,191,203.1745,225,803.58Otherpayables4,315,100,068.761,852,846,536.99Including:interestpayableDividendsPayableLiabilitiesclassifiedasheldforsaleNon-currentliabilitiesduewithinoneyear1,373,267,226.41503,606,063.10OthercurrentliabilitiesTotalcurrentliabilities8,155,684,502.884,608,521,865.00Non-currentliabilities:Long-termborrowings1,030,801,111.131,801,574,166.67Bondspayable2,776,763,361.83Including:PreferredsharesPerpetualbondsLeaseliabilities5,571,522.938,472,484.42Long-termpayablesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport126Long-termemployeebenefitspayableProvisionsDeferredincome47,332,045.4949,178,671.24Deferredtaxliabilities81,604,566.5285,516,449.61Othernon-currentliabilitiesTotalnon-currentliabilities1,165,309,246.074,721,505,133.77Totalliabilities9,320,993,748.959,330,026,998.77Equity:Sharecapital3,732,615,535.003,590,869,465.00Otherequityinstruments409,544,970.41Including:PreferredsharesPerpetualbondsCapitalreserve4,351,276,453.481,180,826,355.13Less:treasuryshares423,468,591.57330,022,975.53OthercomprehensiveincomeSpecialreserveSurplusreserve883,822,071.35735,430,886.69Undistributedprofit1,768,214,110.041,335,689,278.94Totalequity10,312,459,578.306,922,337,980.64Totalliabilities&equity19,633,453,327.2516,252,364,979.413.ConsolidatedIncomestatementUnit:RMBItemsYear2023Year2022I.Totaloperatingrevenue24,557,802,066.5921,347,549,741.00Including:Operatingrevenue24,557,802,066.5921,347,549,741.00InterestincomePremiumearnedRevenuefromhandlingchargesandcommissionII.Totaloperatingcost21,011,657,641.3418,482,154,912.56Including:Operatingcost17,708,120,277.3315,781,099,181.30InterestexpensesHandlingchargesandcommissionexpendituresSurrendervalueNetpaymentofinsuranceclaimsNetprovisionofinsurancepolicyreservePremiumbonusexpendituresReinsuranceexpensesTaxesandsurcharges139,816,022.50110,067,650.98Sellingexpenses663,304,325.04512,599,257.66Administrativeexpenses1,476,334,172.351,266,974,971.99R&Dexpenses1,096,834,224.41988,954,495.90Financialexpenses-72,751,380.29-177,540,645.27Including:Interestexpenses212,081,658.78233,211,546.41Interestincome159,145,071.07188,127,427.03Add:Otherincome188,255,263.06125,193,412.16ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport127Investmentincome(orless:losses)-131,453,928.62-84,748,419.92Including:Investmentincomefromassociatesandjointventures7,986,227.167,732,273.62Gainsfromderecognitionoffinancialassetsatamortizedcost-5,619,589.87-894,817.78Gainsonforeignexchange(orless:losses)Gainsonnetexposuretohedgingrisk(orless:losses)Gainsonchangesinfairvalue(orless:losses)48,123,522.34-107,344,289.86Creditimpairmentloss(orless:losses)-51,477,741.58-97,762,426.98Assetsimpairmentloss(orless:losses)-55,376,891.25-93,592,437.64Gainsonassetdisposal(orless:losses)8,741,208.41459,760,649.40III.Operatingprofit(orless:losses)3,552,955,857.613,066,901,315.60Add:Non-operatingrevenue14,932,933.396,780,118.95Less:Non-operatingexpenditures14,625,298.0222,424,214.17IV.Profitbeforetax(orless:totalloss)3,553,263,492.983,051,257,220.38Less:Incometaxexpense619,548,753.99443,205,596.36V.Netprofit(orless:netloss)2,933,714,738.992,608,051,624.02(I)Categorizedbythecontinuityofoperations1.Netprofitfromcontinuingoperations(orless:netloss)2,933,714,738.992,608,051,624.022.Netprofitfromdiscontinuedoperations(orless:netloss)(II)Categorizedbytheportionofequityownership1.NetprofitattributabletoownersofparentCompany(orless:netloss)2,920,992,940.012,573,344,179.922.Netprofitattributabletonon-controllingshareholders(orless:netloss)12,721,798.9834,707,444.10VI.Othercomprehensiveincomeaftertax123,300,112.61120,867,799.06ItemsattributabletotheownersoftheparentCompany123,300,112.61120,867,799.06(I)Nottobereclassifiedsubsequentlytoprofitorloss1.Changesinremeasurementonthenetdefinedbenefitplan2.ItemsunderequitymethodthatwillnotbereclassifiedtoprofitorlossZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1283.Changesinfairvalueofotherequityinstrumentinvestments4.Changesinfairvalueofowncreditrisk5.Others(II)Tobereclassifiedsubsequentlytoprofitorloss123,300,112.61120,867,799.061.Itemsunderequitymethodthatmaybereclassifiedtoprofitorloss2.Changesinfairvalueofotherdebtinvestments3.Profitorlossfromreclassificationoffinancialassetsintoothercomprehensiveincome4.Provisionforcreditimpairmentofotherdebtinvestments5.Cashflowhedgingreserve6.Translationreserve123,300,112.61120,867,799.067.OthersItemsattributabletonon-controllingshareholdersVII.Totalcomprehensiveincome3,057,014,851.602,728,919,423.08ItemsattributabletotheownersoftheparentCompany3,044,293,052.622,694,211,978.98Itemsattributabletonon-controllingshareholders12,721,798.9834,707,444.10VIII.Earningspershare(EPS):(I)BasicEPS(yuanpershare)0.810.72(II)DilutedEPS(yuanpershare)0.810.72Legalrepresentative：ZhangYaboOfficerinchargeofaccounting：YuYingkuiHeadofaccountingdepartment：LiZhimi4.IncomestatementoftheParentCompanyUnit:RMBItemsYear2023Year2022I.Operatingrevenue6,035,624,442.656,133,372,192.60Less:Operatingcost4,644,457,006.094,690,817,575.37Taxesandsurcharges37,243,922.6334,478,215.83Sellingexpenses43,876,850.5241,424,684.51Administrativeexpenses298,794,306.84252,968,198.30R&Dexpenses246,667,877.34279,691,985.86Financialexpenses45,466,484.3346,058,576.01Including:Interestexpenses156,056,944.56208,134,702.45Interestincome111,419,579.71108,419,319.10Add:Otherincome29,311,262.3517,853,503.82Investmentincome(orless:losses)855,697,868.30860,886,523.39ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport129Including:Investmentincomefromassociatesandjointventures6,857,976.747,043,506.52Gainsfromderecognitionoffinancialassetsatamortizedcost(orless:losses)Gainsonnetexposuretohedging(orless:losses)Gainsonchangesinfairvalue(orless:losses)-2,305,364.331,577,988.74Creditimpairmentloss(orless:losses)-10,404,792.17-66,279.41Assetsimpairmentloss(orless:losses)-58,872.39-1,885,559.31Gainsonassetdisposal(orless:losses)780,544.4566,064,875.35II.Operatingprofit(orless:losses)1,592,138,641.111,732,364,009.30Add:Non-operatingrevenue1,573,287.56647,594.43Less:Non-operatingexpenditures2,946,675.16737,165.26III.Profitbeforetax(orless:totalloss)1,590,765,253.511,732,274,438.47Less:Incometaxexpense106,853,406.95108,939,145.40IV.Netprofit(orless:netloss)1,483,911,846.561,623,335,293.07(I)Netprofitfromcontinuingoperations(orless:netloss)1,483,911,846.561,623,335,293.07(II)Netprofitfromdiscontinuedoperations(orless:netloss)V.Othercomprehensiveincomeaftertax(I)Nottobereclassifiedsubsequentlytoprofitorloss1.Changesinremeasurementonthenetdefinedbenefitplan2.Itemsunderequitymethodthatwillnotbereclassifiedtoprofitorloss3.Changesinfairvalueofotherequityinstrumentinvestments4.Changesinfairvalueofowncreditrisk5.Others(II)Tobereclassifiedsubsequentlytoprofitorloss1.Itemsunderequitymethodthatmaybereclassifiedtoprofitorloss2.Changesinfairvalueofotherdebtinvestments3.ProfitorlossfromreclassificationoffinancialZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport130assetsintoothercomprehensiveincome4.Provisionforcreditimpairmentofotherdebtinvestments5.Cashflowhedgingreserve(profitorlossoncashflowhedging)6.Translationreserve7.OthersVI.Totalcomprehensiveincome1,483,911,846.561,623,335,293.075.ConsolidatedCashFlowStatementUnit:RMBItemsYear2023Year2022I.Cashflowsfromoperatingactivities:Cashreceiptsfromsaleofgoodsorrenderingofservices24,566,452,573.2620,872,917,738.46NetincreaseofclientdepositandinterbankdepositNetincreaseofcentralbankloansNetincreaseofloansfromotherfinancialinstitutionsCashreceiptsfromoriginalinsurancecontractpremiumNetcashreceiptsfromreinsuranceNetincreaseofpolicy-holderdepositandinvestmentCashreceiptsfrominterest,handlingchargesandcommissionNetincreaseofloansfromothersNetincreaseofrepurchaseNetcashreceiptsfromagencysecuritytransactionReceiptsoftaxrefund484,789,623.62622,285,533.37Othercashreceiptsrelatedtooperatingactivities339,834,145.05275,140,313.95Subtotalofcashinflowsfromoperatingactivities25,391,076,341.9321,770,343,585.78Cashpaymentsforgoodspurchasedandservicesreceived16,770,167,910.9715,301,115,799.05NetincreaseofloansandadvancestoclientsNetincreaseofcentralbankdepositandinterbankdepositCashpaymentsforinsuranceindemnitiesoforiginalinsurancecontractsNetincreaseofloanstoothersCashpaymentsforinterest,handlingchargesandcommissionCashpaymentsforpolicybonusZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport131Cashpaidtoandonbehalfofemployees3,528,344,941.322,745,851,492.25Cashpaymentsfortaxesandrates717,979,563.06622,332,714.28Othercashpaymentsrelatedtooperatingactivities650,619,571.95591,377,089.64Subtotalofcashoutflowsfromoperatingactivities21,667,111,987.3019,260,677,095.22Netcashflowsfromoperatingactivities3,723,964,354.632,509,666,490.56II.Cashflowsfrominvestingactivities:Cashreceiptsfromwithdrawalofinvestments1,250,000.00Cashreceiptsfrominvestmentincome2,671,131.504,682,003.17Netcashreceiptsfromthedisposaloffixedassets,intangibleassetsandotherlong-termassets591,067,618.0584,636,447.31Netcashreceiptsfromthedisposalofsubsidiaries&otherbusinessunitsOthercashreceiptsrelatedtoinvestingactivities1,101,747,550.91293,240,000.00Subtotalofcashinflowsfrominvestingactivities1,695,486,300.46383,808,450.48Cashpaymentsfortheacquisitionoffixedassets,intangibleassetsandotherlong-termassets2,745,462,227.772,941,806,763.96Cashpaymentsforinvestments3,500,000.005,938,072.83NetincreaseofpledgedborrowingsNetcashpaymentsfortheacquisitionofsubsidiaries&otherbusinessunitsOthercashpaymentsrelatedtoinvestingactivities155,803,826.18107,377,453.79Subtotalofcashoutflowsfrominvestingactivities2,904,766,053.953,055,122,290.58Netcashflowsfrominvestingactivities-1,209,279,753.49-2,671,313,840.10III.Cashflowsfromfinancingactivities:Cashreceiptsfromabsorbinginvestments7,090,938.20224,850,000.00Including:Cashreceivedbysubsidiariesfromnon-controllingshareholdersasinvestments7,090,938.2049,000,000.00Cashreceiptsfromborrowings1,567,786,939.453,001,232,279.95Othercashreceiptsrelatedtofinancingactivities31,874,512.0848,847,167.15Subtotalofcashinflowsfromfinancingactivities1,606,752,389.733,274,929,447.10Cashpaymentsfortherepaymentofborrowings1,308,452,644.962,670,214,365.21Cashpaymentsfordistributionofdividendsorprofitsandforinterestexpenses1,066,830,039.621,021,597,287.64ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport132Including:Cashpaidbysubsidiariestonon-controllingshareholdersasdividendorprofit25,692,386.098,000,000.00Othercashpaymentsrelatedtofinancingactivities323,319,993.66179,992,099.61Subtotalofcashoutflowsfromfinancingactivities2,698,602,678.243,871,803,752.46Netcashflowsfromfinancingactivities-1,091,850,288.51-596,874,305.36IV.Effectofforeignexchangeratechangesoncash&cashequivalents151,792,584.44118,848,031.58V.Netincreaseincashandcashequivalents1,574,626,897.07-639,673,623.32Add:Openingbalanceofcashandcashequivalents2,050,328,601.772,690,002,225.09VI.Closingbalanceofcashandcashequivalents3,624,955,498.842,050,328,601.776.CashFlowStatementoftheParentCompanyUnit:RMBItemsYear2023Year2022I.Cashflowsfromoperatingactivities:Cashreceiptsfromsaleofgoodsandrenderingofservices5,249,148,595.565,367,245,758.43Receiptsoftaxrefund97,118,035.37111,835,579.64Othercashreceiptsrelatedtooperatingactivities93,644,650.8137,286,693.99Subtotalofcashinflowsfromoperatingactivities5,439,911,281.745,516,368,032.06Cashpaymentsforgoodspurchasedandservicesreceived3,843,328,325.844,083,441,935.71Cashpaidtoandonbehalfofemployees555,364,759.84522,088,529.80Cashpaymentsfortaxesandrates131,083,648.39127,349,235.37Othercashpaymentsrelatedtooperatingactivities107,109,355.8781,209,792.50Subtotalofcashoutflowsfromoperatingactivities4,636,886,089.944,814,089,493.38Netcashflowsfromoperatingactivities803,025,191.80702,278,538.68II.Cashflowsfrominvestingactivities:Cashreceiptsfromwithdrawalofinvestments1,250,000.00Cashreceiptsfrominvestmentincome296,264,902.08882,489,350.91Netcashreceiptsfromthedisposaloffixedassets,intangibleassetsandotherlong-termassets100,682,940.0222,329,052.30Netcashreceiptsfromthedisposalofsubsidiaries&otherbusinessunitsOthercashreceiptsrelatedtoinvestingactivities907,825,506.1964,159,339.81Subtotalofcashinflowsfrominvesting1,304,773,348.29970,227,743.02ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport133activitiesCashpaymentsfortheacquisitionoffixedassets,intangibleassetsandotherlong-termassets298,167,575.30233,324,050.58Cashpaymentsforinvestments249,714,910.391,067,688,900.00Netcashpaymentsfortheacquisitionofsubsidiaries&otherbusinessunitsOthercashpaymentsrelatedtoinvestingactivities1,436,710,655.47641,733,853.66Subtotalofcashoutflowsfrominvestingactivities1,984,593,141.161,942,746,804.24Netcashflowsfrominvestingactivities-679,819,792.87-972,519,061.22III.Cashflowsfromfinancingactivities:Cashreceiptsfromabsorbinginvestments175,850,000.00Cashreceiptsfromborrowings800,000,000.002,299,092,500.00Othercashreceiptsrelatedtofinancingactivities2,237,929,883.41677,506,135.83Subtotalofcashinflowsfromfinancingactivities3,037,929,883.413,152,448,635.83Cashpaymentsfortherepaymentofborrowings540,733,987.382,030,000,000.00Cashpaymentsfordistributionofdividendsorprofitsandforinterestexpenses979,392,786.32976,048,229.99Othercashpaymentsrelatedtofinancingactivities844,479,220.53258,895,668.90Subtotalofcashoutflowsfromfinancingactivities2,364,605,994.233,264,943,898.89Netcashflowsfromfinancingactivities673,323,889.18-112,495,263.06IV.EffectofforeignexchangeratechangesoncashandcashequivalentsV.Netincreaseincashandcashequivalents796,529,288.11-382,735,785.60Add:Openingbalanceofcashandcashequivalents996,678,169.381,379,413,954.98VI.Closingbalanceofcashandcashequivalents1,793,207,457.49996,678,169.387.ConsolidatedStatementofChangesinOwners'EquityAmountofthisperiodZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport134Unit:RMBItemsYear2023EquityAttributabletoparentCompanyNon-controllinginterestTotalequityShareCapitalOtherequityinstrumentsCapitalreserveLess:treasurysharesOthercomprehensiveincomeSpecialreserveSurplusreserveGeneralriskreserveUndistributedprofitOthersSubtotalPreferredsharesPerpetualbondsOthersI.Balanceattheendofprioryear3,590,869,465.00409,544,970.41282,602,695.98330,022,975.53-8,543,048.33863,523,059.018,133,336,242.8812,941,310,409.42177,989,781.4013,119,300,190.82Add:CumulativechangesofaccountingpoliciesErrorcorrectionofpriorperiodBusinesscombinationundercommoncontrolOthersII.Balanceatthebeginningofcurrentyear3,590,869,465.00409,544,970.41282,602,695.98330,022,975.53-8,543,048.33863,523,059.018,133,336,242.8812,941,310,409.42177,989,781.4013,119,300,190.82III.Currentperiodincrease(orless:decrease)141,746,070.00-409,544,970.413,173,040,870.0093,445,616.04123,300,112.61148,391,184.661,869,605,924.554,953,093,575.37-8,686,141.834,944,407,433.54ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport135(I)Totalcomprehensiveincome123,300,112.612,920,992,940.013,044,293,052.6212,721,798.983,057,014,851.60(II)Capitalcontributedorwithdrawnbyowners141,746,070.00-409,544,970.413,173,040,870.0093,445,616.042,811,796,353.554,284,445.282,816,080,798.831.Ordinarysharescontributedbyowners7,090,938.207,090,938.202.Capitalcontributedbyholdersofotherequityinstruments141,926,470.00-409,544,970.413,104,716,711.552,837,098,211.142,837,098,211.143.Amountofshare-basedpaymentincludedinequity69,716,518.4569,716,518.4569,716,518.454.Others-180,400.00-1,392,360.0093,445,616.04-95,018,376.04-2,806,492.92-97,824,868.96(III)Profitdistribution148,391,184.66-1,051,387,015.46-902,995,830.80-25,692,386.09-928,688,216.891.Appropriationofsurplusreserve148,391,184.66-148,391,184.662.Appropriationofgeneralriskreserve3.Appropriation-902,995,83-902,995,83-25,692,38-928,688,216.89ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport136ofprofittoowners0.800.806.094.Others(IV)Internalcarry-overwithinequity1.Transferofcapitalreservetocapital2.Transferofsurplusreservetocapital3.Surplusreservetocoverlosses4.Changesindefinedbenefitplancarriedovertoretainedearnings5.Othercomprehensiveincomecarriedovertoretainedearnings6.Others(V)Specialreserve1.Appropriationofcurrentperiod2.ApplicationofcurrentperiodZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport137(VI)OthersIV.Balanceattheendofcurrentperiod3,732,615,535.003,455,643,565.98423,468,591.57114,757,064.281,011,914,243.6710,002,942,167.4317,894,403,984.79169,303,639.5718,063,707,624.36AmountofPreviousPeriodUnit:RMBItemsYear2022EquityAttributabletoparentCompanyNon-controllinginterestTotalequityShareCapitalOtherequityinstrumentsCapitalreserveLess:treasurysharesOthercomprehensiveincomeSpecialreserveSurplusreserveGeneralriskreserveUndistributedprofitOthersSubtotalPreferredsharesPerpetualbondsOthersI.Balanceattheendofprioryear3,591,090,218.00409,684,602.93373,419,775.02411,949,612.90-129,410,847.39701,784,529.706,615,689,606.0711,150,308,271.43102,282,337.3011,252,590,608.73Add:CumulativechangesofaccountingpoliciesErrorcorrectionofpriorperiodBusinesscombinationundercommoncontrolOthersII.Balanceatthebeginning3,591,090,21409,684,602.93373,419,775.02411,949,612.90-129,410,847.39701,784,529.706,615,689,606.0711,150,308,271.43102,282,337.3011,252,590,608.73ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport138ofcurrentyear8.00III.Currentperiodincrease(orless:decrease)-220,753.00-139,632.52-90,817,079.04-81,926,637.37120,867,799.06161,738,529.311,517,646,636.811,791,002,137.9975,707,444.101,866,709,582.09(I)Totalcomprehensiveincome120,867,799.062,573,344,179.922,694,211,978.9834,707,444.102,728,919,423.08(II)Capitalcontributedorwithdrawnbyowners-220,753.00-139,632.52-90,817,079.04-81,926,637.37-9,250,827.1949,000,000.0039,749,172.811.Ordinarysharescontributedbyowners-149,824,200.00-149,824,200.0049,000,000.0049,000,000.002.Capitalcontributedbyholdersofotherequityinstruments47,697.00-139,632.521,020,868.77928,933.25928,933.253.Amountofshare-basedpaymentincludedinequity59,586,627.1959,586,627.1959,586,627.194.Others-268,450.00-1,600,375.0067,897,562.63-69,766,387.63-69,766,387.63(III)Profitdistribution161,738,529.31-1,055,697,543.11-893,959,013.80-8,000,000.00-901,959,013.801.Appropriationofsurplus161,738,529.31-161,738,529.31ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport139reserve2.Appropriationofgeneralriskreserve3.Appropriationofprofittoowners-893,959,013.80-893,959,013.80-8,000,000.00-901,959,013.804.Others(IV)Internalcarry-overwithinequity1.Transferofcapitalreservetocapital2.Transferofsurplusreservetocapital3.Surplusreservetocoverlosses4.Changesindefinedbenefitplancarriedovertoretainedearnings5.Othercomprehensiveincomecarriedovertoretainedearnings6.Others(V)SpecialZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport140reserve1.Appropriationofcurrentperiod2.Applicationofcurrentperiod(VI)OthersIV.Balanceattheendofcurrentperiod3,590,869,465.00409,544,970.41282,602,695.98330,022,975.53-8,543,048.33863,523,059.018,133,336,242.8812,941,310,409.42177,989,781.4013,119,300,190.828.StatementofChangesinOwners'EquityoftheParentCompanyAmountofthisperiodUnit:RMBItemsYear2023ShareCapitalOtherequityinstrumentsCapitalreserveLess:treasurysharesOthercomprehensiveincomeSpecialreserveSurplusreserveUndistributedprofitOthersTotalequityPreferredsharesPerpetualbondsOthersI.Balanceattheendofprioryear3,590,869,465.00409,544,970.411,180,826,355.13330,022,975.53735,430,886.691,335,689,278.946,922,337,980.64Add:CumulativechangesofaccountingpoliciesErrorcorrectionofpriorperiodOthersZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport141II.Balanceatthebeginningofcurrentyear3,590,869,465.00409,544,970.411,180,826,355.13330,022,975.53735,430,886.691,335,689,278.946,922,337,980.64III.Currentperiodincrease(orless:decrease)141,746,070.00-409,544,970.413,170,450,098.3593,445,616.04148,391,184.66432,524,831.103,390,121,597.66(I)Totalcomprehensiveincome1,483,911,846.561,483,911,846.56(II)Capitalcontributedorwithdrawnbyowners141,746,070.00-409,544,970.413,170,450,098.3593,445,616.042,809,205,581.901.Ordinarysharescontributedbyowners2.Capitalcontributedbyholdersofotherequityinstruments141,926,470.00-409,544,970.413,104,716,711.552,837,098,211.143.Amountofshare-basedpaymentincludedinequity67,125,746.8067,125,746.804.Others-180,400.00-1,392,360.0093,445,616.04-95,018,376.04(III)Profitdistribution148,391,184.66-1,051,387,015.46-902,995,830.801.Appropriationofsurplusreserve148,391,184.66-148,391,184.66ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1422.Appropriationofprofittoowners-902,995,830.80-902,995,830.803.Others(IV)Internalcarry-overwithinequity1.Transferofcapitalreservetocapital2.Transferofsurplusreservetocapital3.Surplusreservetocoverlosses4.Changesindefinedbenefitplancarriedovertoretainedearnings5.Othercomprehensiveincomecarriedovertoretainedearnings6.Others(V)Specialreserve1.Appropriationofcurrentperiod2.Applicationofcurrentperiod(VI)OthersZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport143IV.Balanceattheendofcurrentperiod3,732,615,535.004,351,276,453.48423,468,591.57883,822,071.351,768,214,110.0410,312,459,578.30AmountofPreviousPeriodUnit:RMBItemsYear2022ShareCapitalOtherequityinstrumentsCapitalreserveLess:treasurysharesOthercomprehensiveincomeSpecialreserveSurplusreserveUndistributedprofitOthersTotalequityPreferredsharesPerpetualbondsOthersI.Balanceattheendofprioryear3,591,090,218.00409,684,602.931,267,607,857.61411,949,612.90573,097,357.38768,646,528.986,198,176,952.00Add:CumulativechangesofaccountingpoliciesErrorcorrectionofpriorperiodOthersII.Balanceatthebeginningofcurrentyear3,591,090,218.00409,684,602.931,267,607,857.61411,949,612.90573,097,357.38768,646,528.986,198,176,952.00III.Currentperiodincrease(orless:decrease)-220,753.00-139,632.52-86,781,502.48-81,926,637.37162,333,529.31567,042,749.96724,161,028.64(I)Totalcomprehensiveincome1,623,335,293.071,623,335,293.07(II)Capitalcontributedor-220,753.00-139,632.52-86,781,502.48-81,926,637.37-5,215,250.63ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport144withdrawnbyowners1.Ordinarysharescontributedbyowners-149,824,200.00-149,824,200.002.Capitalcontributedbyholdersofotherequityinstruments47,697.00-139,632.521,020,868.77928,933.253.Amountofshare-basedpaymentincludedinequity63,622,203.7563,622,203.754.Others-268,450.00-1,600,375.0067,897,562.63-69,766,387.63(III)Profitdistribution162,333,529.31-1,056,292,543.11-893,959,013.801.Appropriationofsurplusreserve162,333,529.31-162,333,529.312.Appropriationofprofittoowners-893,959,013.80-893,959,013.803.Others(IV)Internalcarry-overwithinequity1.TransferofcapitalreservetocapitalZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1452.Transferofsurplusreservetocapital3.Surplusreservetocoverlosses4.Changesindefinedbenefitplancarriedovertoretainedearnings5.Othercomprehensiveincomecarriedovertoretainedearnings6.Others(V)Specialreserve1.Appropriationofcurrentperiod2.Applicationofcurrentperiod(VI)OthersIV.Balanceattheendofcurrentperiod3,590,869,465.00409,544,970.411,180,826,355.13330,022,975.53735,430,886.691,335,689,278.946,922,337,980.64ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport146III.CompanyprofileTheCompanywasestablishedbytheoriginalSanhuaFujiKokiCo.,Ltd.TheCompanycurrentlyholdsabusinesslicensewithaunifiedsocialcreditcodeof913300006096907427registeredandissuedbyZhejiangAdministrationofIndustryandCommerce,withheadquarterinShaoxingCity,ZhejiangProvince.Theregisteredcapitalof3,732,615,535.00yuan,totalshareof3,732,615,535shares(eachwithparvalueofoneyuan).TheCompany’sshareswerelistedatShenzhenStockExchange.TheCompanyoperatesinthemachinerymanufacturingindustry.BusinessscopeincludesproductionandmarketingofServiceValve,ElectronicExpansionvalve,DrainagePump,SolenoidValve,One-wayValve,CompressorParts,PressurePipelineComponents,ElectromechanicalHydraulicControlPumpandotherelectromechanicalhydrauliccontrolcomponents,undertakingservicesofinspection,testandanalysisofrefrigerationaccessories,andengaginginimportandexportbusiness.MainproductsincludecontrolcomponentsandpartsofhouseholdappliancesandautomobileA/C.TheCompanyoperatesinthemachinerymanufacturingindustry,mainbusinessactivitiesincluderesearchanddevelopment,productionandsalesofrefrigerationandair-conditioningappliancesandautomotivecomponents.ThesefinancialstatementswereapprovedforpublicreportingonApril28,2024bytheCompany'sSeventhandTwenty-firstBoardofDirectors.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport147IV.Preparationbasisofthefinancialstatements1.PreparationbasisThefinancialstatementshavebeenpreparedonthebasisofgoingconcern.2.GoingconcernTheCompanyhasnoeventsorconditionsthatmaycastsignificantdoubtsupontheCompany’sabilitytocontinueasagoingconcernwithinthe12monthsafterthebalancesheetdate.V.SignificantaccountingpoliciesandestimatesTipsonspecificaccountingpoliciesandaccountingestimates:TheCompanyhassetupaccountingpoliciesandestimatesontransactionsoreventssuchasimpairmentoffinancialinstruments,inventories,depreciationoffixedassets,constructioninprogress,intangibleassets,revenuerecognition,share-basedpayment,etc.,basedontheCompany’sactualproductionandoperationfeatures.1.StatementofcompliancewithChinaAccountingStandardsforBusinessEnterprisesThefinancialstatementshavebeenpreparedinaccordancewiththerequirementsofChinaAccountingStandardsforBusinessEnterprises(CASBEs),andpresenttrulyandcompletelythefinancialposition,resultsofoperationsandcashflowsoftheCompany.2.AccountingperiodTheaccountingyearoftheCompanyrunsfromJanuary1toDecember31undertheGregoriancalendar.3.OperatingcycleTheCompanyhasarelativelyshortoperatingcycleforitsbusiness,anassetoraliabilityisclassifiedascurrentifitisexpectedtoberealizedorduewithin12months.4.FunctionalcurrencyThefunctionalcurrencyoftheCompanyanditsdomesticsubsidiariesisRenminbi(RMB)Yuan,whilethefunctionalcurrencyofsubsidiariesengagedinoverseasoperationsincludingSANHUAAWECOApplianceSystemsGmbH、SanhuaInternationalIncetc.isthecurrencyoftheprimaryeconomicenvironmentinwhichtheyoperate.5.Determinationmethodandbasisforselectionofmateriality√Applicable□NotApplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport148DiscloseditemsinvolvingmaterialityjudgementsMaterialitycriteriaSignificantaccountsreceivablewithprovisionforbaddebtsmadeonanindividualbasisIndividualaccrualsaccountingformorethan5%ofthetotalbaddebtprovisionforalltypesofaccountsreceivableandamountingtomorethan30millionyuanareconsideredsignificant.SignificantotherreceivableswithprovisionforbaddebtsmadeonanindividualbasisIndividualaccrualsaccountingfor5%ormoreofthetotalbaddebtprovisionforeach。

5. categoryofotherreceivablesandamountingtomorethan20millionyuanareconsideredsignificant.SignificantconstructioninprogressThebudgetforasingleprojectismorethan500millionyuan.SignificantcashflowsfrominvestingactivitiesAsingleinvestingactivitythataccountsformorethan5%ofthetotalcashinflowsoroutflowsrelatedtothereceiptordisbursementofcashrelatedtoinvestingactivitiesandisgreaterthan50millionyuanisconsideredtobesignificant.Significantsubsidiaries,notwholly-ownedsubsidiariesSubsidiarieswithtotalassets/totalrevenue/profitbeforetaxinexcessof15%ofthegroup’stotalassets/totalrevenue/profitbeforetaxareidentifiedassignificantsubsidiaries/significantnotwholly-ownedsubsidiaries.Significantjointventures,associatesandjointoperationsJointventuresorassociateswithtotalassetsexceeding1billionyuanareconsideredsignificant.SignificantcommitmentsProjectmattersinwhichtheCompanyisinvolvedinfundraisingareconsideredsignificant.SignificanteventssubsequenttothebalancesheetdateDistributionofprofitafterthebalancesheetdate,significantfinancing,etc.6.Accountingtreatmentsofbusinesscombinationunderandnotundercommoncontrol1.AccountingtreatmentofbusinesscombinationundercommoncontrolAssetsandliabilitiesarisingfrombusinesscombinationaremeasuredatcarryingamountofthecombinedpartyincludedintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyatthecombinationdate.Differencebetweencarryingamountoftheequityofthecombinedpartyincludedintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyandthatofthecombinationconsiderationortotalparvalueofsharesissuedisadjustedtocapitalreserve,ifthebalanceofcapitalreserveisinsufficienttooffset,anyexcessisadjustedtoretainedearnings.2.AccountingtreatmentofbusinesscombinationnotundercommoncontrolWhencombinationcostisinexcessofthefairvalueshareofidentifiablenetassetsobtainedfromtheacquireeattheacquisitiondate,theexcessisrecognizedasgoodwill;Ifthecombinationcostislessthanthefairvalueshareofidentifiablenetassetsobtainedfromtheacquiree,thefairvalueoftheidentifiableassets,liabilities,andcontingentliabilitiesobtainedfromtheacquiree,aswellasthemeasurementofthecombinationcost,needtobereviewedatfirst.Afterreview,ifthecombinationcostisstilllessthanthefairvalueshareoftheidentifiablenetassetsobtainedfromtheacquiree,thedifferenceisrecognizedinprofitorloss.7.Judgementcriteriaforcontrolandcompilationmethodofconsolidatedfinancialstatements1.JudgementofcontrolHavingthepowerovertheinvestedparty,enjoyingvariablereturnsthroughparticipatinginrelatedactivitiesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport149oftheinvestedparty,andhavingtheabilitytousethepowerovertheinvestedpartytoinfluenceitsvariablereturnamount,isrecognizedascontrol.2.CompilationmethodofconsolidatedfinancialstatementsTheparentcompanybringsallitscontrolledsubsidiariesintotheconsolidationscope.Theconsolidatedfinancialstatementsarecompiledbytheparentcompanyaccordingto“CASBE33–ConsolidatedFinancialStatements”,basedonrelevantinformationandthefinancialstatementsoftheparentcompanyanditssubsidiaries.8.RecognitioncriteriaofcashandcashequivalentsCashaspresentedincashflowstatementreferstocashonhandanddepositondemandforpayment.Cashequivalentsrefertoshort-term,highlyliquidinvestmentsthatcanbereadilyconvertedtocashandthataresubjecttoaninsignificantriskofchangesinvalue.9.Foreigncurrencytranslation1.TranslationoftransactionsdenominatedinforeigncurrencyTransactionsdenominatedinforeigncurrencyaretranslatedintoRMByuanatthespotexchangerateortheapproximateexchangeratesimilartothespotexchangerateatthetransactiondateatinitialrecognition.Atthebalancesheetdate,monetaryitemsdenominatedinforeigncurrencyaretranslatedatthespotexchangerateatthebalancesheetdatewithdifference,exceptforthosearisingfromtheprincipalandinterestofexclusiveborrowingseligibleforcapitalization,includedinprofitorloss;non-cashitemscarriedathistoricalcostsaretranslatedatthespotexchangerateatthetransactiondate,withitsRMBamountunchanged;non-cashitemscarriedatfairvalueinforeigncurrencyaretranslatedatthespotexchangerateatthedatewhenthefairvaluewasdetermined,withdifferenceincludedinprofitorlossorothercomprehensiveincome.2.TranslationoffinancialstatementsmeasuredinforeigncurrencyTheassetsandliabilitiesinthebalancesheetaretranslatedatthespotrateatthebalancesheetdate;theequityitems,otherthanundistributedprofit,aretranslatedatthespotrateatthetransactiondate;therevenuesandexpensesintheincomestatementaretranslatedattheapproximateexchangeratesimilartothesystematicallyandrationallydeterminedspotexchangerateatthetransactiondate.Thedifferencearisingfromforeigncurrencytranslationisincludedinothercomprehensiveincome.10．Financialinstruments1.ClassificationoffinancialassetsandfinancialliabilitiesFinancialassetsareclassifiedintothefollowingthreecategorieswheninitiallyrecognized:(1)financialassetsatamortizedcost;(2)financialassetsatfairvaluethroughothercomprehensiveincome;(3)financialassetsatfairvaluethroughprofitorloss.Financialliabilitiesareclassifiedintothefollowingfourcategorieswheninitiallyrecognized:(1)financialliabilitiesatfairvaluethroughprofitorloss;(2)financialliabilitiesthatarisewhenatransferofafinancialassetdoesnotqualifyforderecognitionorwhenthecontinuinginvolvementapproachapplies;(3)financialguaranteecontractsnotfallwithintheabovecategories(1)and(2),andcommitmentstoprovidealoanatabelow-marketinterestrate,whichdonotfallwithintheabovecategory(1);(4)financialliabilitiesatamortizedcost.2.Recognitioncriteria,measurementmethodandderecognitionconditionoffinancialassetsandfinancialliabilities(1)RecognitioncriteriaandmeasurementmethodoffinancialassetsandfinancialliabilitiesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport150WhentheCompanybecomesapartytoafinancialinstrument,itisrecognizedasafinancialassetorfinancialliability.ThefinancialassetsandfinancialliabilitiesinitiallyrecognizedbytheCompanyaremeasuredatfairvalue;forthefinancialassetsandliabilitiesatfairvaluethroughprofitorloss,thetransactionexpensesthereofaredirectlyincludedinprofitorloss;forothercategoriesoffinancialassetsandfinancialliabilities,thetransactionexpensesthereofareincludedintotheinitiallyrecognizedamount.However,atinitialrecognition,foraccountsreceivablethatdonotcontainasignificantfinancingcomponentorincircumstanceswheretheCompanydoesnotconsiderthefinancingcomponentsincontractswithinoneyear,theCompanymeasuresthetransactionpriceinaccordancewith“CASBE14–Revenues”.(2)Subsequentmeasurementoffinancialassets1)FinancialassetsmeasuredatamortizedcostsTheCompanymeasuresitsfinancialassetsattheamortizedcostsusingeffectiveinterestmethod.Gainsorlossesonfinancialassetsthataremeasuredatamortizedcostandarenotpartofhedgingrelationshipsshallbeincludedintoprofitorlosswhenthefinancialassetsarederecognized,reclassified,throughtheamortizationprocessorinordertorecognizeimpairmentgainsorlosses.2)DebtinstrumentinvestmentsatfairvaluethroughothercomprehensiveincomeTheCompanymeasuresitsdebtinstrumentinvestmentsatfairvalue.Interests,impairmentlossesorgains,andgainsandlossesonforeignexchangethatcalculatedusingeffectiveinterestmethodshallbeincludedintoprofitorloss,whileothergainsorlossesareincludedintoothercomprehensiveincome.Accumulatedgainsorlossesthatinitiallyrecognizedasothercomprehensiveincomeshouldbetransferredoutintoprofitorlosswhenthefinancialassetsarederecognized.3)EquityinstrumentinvestmentsatfairvaluethroughothercomprehensiveincomeTheCompanymeasuresitsequityinstrumentinvestmentsatfairvalue.Dividendsobtained(otherthanthoseaspartofinvestmentcostrecovery)shallbeincludedintoprofitorloss,whileothergainsorlossesareincludedintoothercomprehensiveincome.Accumulatedgainsorlossesthatinitiallyrecognizedasothercomprehensiveincomeshouldbetransferredoutintoretainedearningswhenthefinancialassetsarederecognized.4)FinancialassetsatfairvaluethroughprofitorlossTheCompanymeasuresitsfinancialassetsatfairvalue.Gainsorlossesarisingfromchangesinfairvalue(includinginterestsanddividends)shallbeincludedintoprofitorloss,exceptforfinancialassetsthatarepartofhedgingrelationships.(3)Subsequentmeasurementoffinancialliabilities1)FinancialliabilitiesatfairvaluethroughprofitorlossFinancialliabilitiesatfairvaluethroughprofitorlossincludeheld-for-tradingfinancialliabilities(includingderivativesthatareliabilities)andfinancialliabilitiesdesignatedasatfairvaluethroughprofitorloss.TheCompanymeasuressuchkindofliabilitiesatfairvalue.TheamountofchangesinthefairvalueofthefinancialliabilitiesthatareattributabletochangesintheCompany’sowncreditriskshallbeincludedintoothercomprehensiveincome,unlesssuchtreatmentwouldcreateorenlargeaccountingmismatchesinprofitorloss.Othergainsorlossesonthosefinancialliabilities(includinginterests,changesinfairvaluethatareattributabletoreasonsotherthanchangesintheCompany’sowncreditrisk)shallbeincludedintoprofitorloss,exceptforfinancialliabilitiesthatarepartofhedgingrelationships.Accumulatedgainsorlossesthatoriginallyrecognizedasothercomprehensiveincomeshouldbetransferredoutintoretainedearningswhenthefinancialliabilitiesarederecognized.2)FinancialliabilitiesthatarisewhenatransferofafinancialassetdoesnotqualifyforderecognitionorwhenthecontinuinginvolvementapproachappliesTheCompanymeasuresitsfinancialliabilitiesinaccordancewith“CASBE23–TransferofFinancialAssets”.3)Financialguaranteecontractsnotfallwithintheabovecategories1)and2),andcommitmentstoprovideaZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport151loanatabelow-marketinterestrate,whichdonotfallwithintheabovecategory1)TheCompanymeasuresitsfinancialliabilitiesatthehigherof:a.theamountoflossallowancesinaccordancewithimpairmentrequirementsoffinancialinstruments;b.theamountinitiallyrecognizedlesstheamountofaccumulatedamortizationrecognizedinaccordancewith“CASBE14–Revenues”.4)FinancialliabilitiesatamortizedcostTheCompanymeasuresitsfinancialliabilitiesatamortizedcostusingeffectiveinterestmethod.Gainsorlossesonfinancialliabilitiesthataremeasuredatamortizedcostandarenotpartofhedgingrelationshipsshallbeincludedintoprofitorlosswhenthefinancialliabilitiesarederecognizedandamortizedusingeffectiveinterestmethod.(4)Derecognitionoffinancialassetsandfinancialliabilities1)Financialassetsarederecognizedwhen:a.thecontractualrightstothecashflowsfromthefinancialassetsexpire;b.thefinancialassetshavebeentransferredandthetransferqualifiesforderecognitioninaccordancewith“CASBE23–TransferofFinancialAssets”.2)Onlywhentheunderlyingpresentobligationsofafinancialliabilityarerelievedtotallyorpartlymaythefinancialliabilitybederecognizedaccordingly.3.RecognitioncriteriaandmeasurementmethodoffinancialassetstransferWheretheCompanyhastransferredsubstantiallyalloftherisksandrewardsrelatedtotheownershipofthefinancialasset,itderecognizesthefinancialasset,andanyrightorliabilityarisingfromsuchtransferisrecognizedindependentlyasanassetoraliability.Ifitretainedsubstantiallyalloftherisksandrewardsrelatedtotheownershipofthefinancialasset,itcontinuesrecognizingthefinancialasset.WheretheCompanydoesnottransferorretainsubstantiallyalloftherisksandrewardsrelatedtotheownershipofafinancialasset,itisdealtwithaccordingtothecircumstancesasfollowsrespectively:(1)iftheCompanydoesnotretainitscontroloverthefinancialasset,itderecognizesthefinancialasset,andanyrightorliabilityarisingfromsuchtransferisrecognizedindependentlyasanassetoraliability;(2)iftheCompanyretainsitscontroloverthefinancialasset,accordingtotheextentofitscontinuinginvolvementinthetransferredfinancialasset,itrecognizestherelatedfinancialassetandrecognizestherelevantliabilityaccordingly.Ifthetransferofanentirefinancialassetsatisfiestheconditionsforderecognition,thedifferencebetweentheamountsofthefollowingtwoitemsisincludedinprofitorloss:(1)thecarryingamountofthetransferredfinancialassetasofthedateofderecognition;(2)thesumofconsiderationreceivedfromthetransferofthefinancialasset,andtheaccumulativeamountofthechangesofthefairvalueoriginallyincludedinothercomprehensiveincomeproportionatetothetransferredfinancialasset(financialassetstransferredrefertodebtinstrumentinvestmentsatfairvaluethroughothercomprehensiveincome).Ifthetransferoffinancialassetpartiallysatisfiestheconditionstoderecognition,theentirecarryingamountofthetransferredfinancialassetis,betweentheportionwhichisderecognizedandtheportionwhichisnot,apportionedaccordingtotheirrespectiverelativefairvalue,andthedifferencebetweentheamountsofthefollowingtwoitemsisincludedintoprofitorloss:(1)thecarryingamountoftheportionwhichisderecognized;(2)thesumofconsiderationoftheportionwhichisderecognized,andtheportionoftheaccumulativeamountofthechangesinthefairvalueoriginallyincludedinothercomprehensiveincomewhichiscorrespondingtotheportionwhichisderecognized(financialassetstransferredrefertodebtinstrumentinvestmentsatfairvaluethroughothercomprehensiveincome).4.FairvaluedeterminationmethodoffinancialassetsandliabilitiesTheCompanyusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataandinformationareavailabletomeasurefairvalue.Theinputstovaluationtechniquesusedtomeasurefairvaluearearrangedinthefollowinghierarchyandusedaccordingly:ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport152(1)Level1inputsareunadjustedquotedpricesinactivemarketsforidenticalassetsorliabilitiesthattheCompanycanaccessatthemeasurementdate.(2)Level2inputsareinputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectlyorindirectly.Level2inputsinclude:quotedpricesforsimilarassetsorliabilitiesinactivemarkets;quotedpricesforidenticalorsimilarassetsorliabilitiesinmarketsthatarenotactive;inputsotherthanquotedpricesthatareobservablefortheassetorliability,forexample,interestratesandyieldcurvesobservableatcommonlyquotedintervals;market-corroboratedinputs;(3)Level3inputsareunobservableinputsfortheassetorliability.Level3inputsincludeinterestratethatisnotobservableandcannotbecorroboratedbyobservablemarketdataatcommonlyquotedintervals,historicalvolatility,futurecashflowstobepaidtofulfillthedisposalobligationassumedinbusinesscombination,financialforecastdevelopedusingtheCompany’sowndata,etc.5.ImpairmentoffinancialinstrumentsTheCompany,onthebasisofexpectedcreditloss,recognizeslossallowancesoffinancialassetsatamortizedcost,debtinstrumentinvestmentsatfairvaluethroughothercomprehensiveincome,contractassets,leasesreceivable,loancommitmentsotherthanfinancialliabilitiesatfairvaluethroughprofitorloss,financialguaranteecontractsnotbelongtofinancialliabilitiesatfairvaluethroughprofitorlossorfinancialliabilitiesthatarisewhenatransferofafinancialassetdoesnotqualifyforderecognitionorwhenthecontinuinginvolvementapproachapplies.Expectedcreditlossesrefertotheweightedaverageofcreditlosseswiththerespectiverisksofadefaultoccurringastheweights.CreditlossreferstothedifferencebetweenallcontractualcashflowsthatareduetotheCompanyinaccordancewiththecontractandallthecashflowsthattheCompanyexpectstoreceive(i.e.allcashshortfalls),discountedattheoriginaleffectiveinterestrate.Amongwhich,purchasedororiginatedcredit-impairedfinancialassetsarediscountedatthecredit-adjustedeffectiveinterestrate.Atthebalancesheetdate,theCompanyshallonlyrecognizethecumulativechangesinthelifetimeexpectedcreditlossessinceinitialrecognitionasalossallowanceforpurchasedororiginatedcredit-impairedfinancialassets.Forleasesreceivable,andaccountsreceivableandcontractassetsresultingfromtransactionsregulatedin“CASBE14–Revenues”,theCompanychoosessimplifiedapproachtomeasurethelossallowanceatanamountequaltolifetimeexpectedcreditlosses.Forfinancialassetsotherthantheabove,oneachbalancesheetdate,theCompanyshallassesswhetherthecreditriskonthefinancialinstrumenthasincreasedsignificantlysinceinitialrecognition.TheCompanyshallmeasurethelossallowanceforthefinancialinstrumentatanamountequaltothelifetimeexpectedcreditlossesifthecreditriskonthatfinancialinstrumenthasincreasedsignificantlysinceinitialrecognition;otherwise,theCompanyshallmeasurethelossallowanceforthatfinancialinstrumentatanamountequalto12-monthexpectedcreditloss.Consideringreasonableandsupportableforward-lookinginformation,theCompanycomparestheriskofadefaultoccurringonthefinancialinstrumentasatthebalancesheetdatewiththeriskofadefaultoccurringonthefinancialinstrumentasatthedateofinitialrecognition,soastoassesswhetherthecreditriskonthefinancialinstrumenthasincreasedsignificantlysinceinitialrecognition.TheCompanymayassumethatthecreditriskonafinancialinstrumenthasnotincreasedsignificantlysinceinitialrecognitionifthefinancialinstrumentisdeterminedtohaverelativelylowcreditriskatthebalancesheetdate.TheCompanyshallestimateexpectedcreditriskandmeasureexpectedcreditlossesonanindividualoracollectivebasis.WhentheCompanyadoptsthecollectivebasis,financialinstrumentsaregroupedwithsimilarcreditriskfeatures.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport153TheCompanyshallremeasureexpectedcreditlossoneachbalancesheetdate,andincreasedorreversedamountsoflossallowancearisingtherefromshallbeincludedintoprofitorlossasimpairmentlossesorgains.Forafinancialassetmeasuredatamortizedcost,thelossallowancereducesthecarryingamountofsuchfinancialassetpresentedinthebalancesheet;foradebtinvestmentmeasuredatfairvaluethroughothercomprehensiveincome,thelossallowanceshallberecognizedinothercomprehensiveincomeandshallnotreducethecarryingamountofsuchfinancialasset.6.OffsettingfinancialassetsandfinancialliabilitiesFinancialassetsandfinancialliabilitiesarepresentedseparatelyinthebalancesheetandarenotoffset.However,theCompanyoffsetsafinancialassetandafinancialliabilityandpresentsthenetamountinthebalancesheetwhen,andonlywhen,theCompany:(1)currentlyhasalegallyenforceablerighttosetofftherecognizedamounts;and(2)intendseithertosettleonanetbasis,ortorealizetheassetandsettletheliabilitysimultaneously.Foratransferofafinancialassetthatdoesnotqualifyforderecognition,theCompanydoesnotoffsetthetransferredassetandtheassociatedliability.Recognitioncriteriaandaccrualmethodforexpectedcreditlossesofreceivablesandcontractassets1.ReceivablesandcontractassetswithexpectedcreditlossesmeasuredonacollectivebasisusingsimilarcreditriskfeaturesCategoriesBasisfordeterminationofportfolioMethodformeasuringexpectedcreditlossNotesreceivable-BankacceptancereceivableTypeofnotesBasedonhistoricalcreditlossexperience,thecurrentsituationandtheforecastoffutureeconomicconditions,theCompanycalculatesexpectedcreditlossthroughexposureatdefaultandlifetimeexpectedcreditlossrate.Notesreceivable-TradeacceptancereceivableNotesreceivable-financecompanyAccountsreceivable–PortfoliogroupedwithagingAgingBasedonhistoricalcreditlossexperience,thecurrentsituationandtheforecastoffutureeconomicconditions,theCompanypreparesthecomparisontableofaccountsreceivableagesandlifetimeexpectedcreditlossrate,soastocalculateexpectedcreditloss.Otherreceivable–PortfoliogroupedwithagingAgingBasedonhistoricalcreditlossexperience,thecurrentsituationandtheforecastoffutureeconomicconditions,theCompanypreparesthecomparisontableofotherreceivableagesandlifetimeexpectedcreditlossrate,soastocalculateexpectedcreditloss.2.Accountsreceivable–comparisontableofagingandlifetimeexpectedcreditlossrateofportfoliogroupedwithaging.AgingExpectedcreditlossrate(%)Within1year5%1-2years10%2-3years30%Over3years50%Agingofaccountsreceivable/otherreceivables/…arecalculatedfromthemonthwhensuchreceivablesareaccrued.3.RecognitioncriteriaforreceivablesandcontractassetswithexpectedcreditlossesmeasuredonanindividualbasisForreceivablesandcontractassetswhosecreditriskissignificantlydifferentfromthatofportfolios,theZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport154Companyaccruesexpectedcreditlossesonanindividualbasis.11．Inventories1.ClassificationofinventoriesInventoriesincludefinishedgoodsorgoodsheldforsaleintheordinarycourseofbusiness,workinprocessintheprocessofproduction,materialsorsuppliesetc.,tobeconsumedintheproductionprocessorintherenderingofservices.2.AccountingmethodfordispatchinginventoriesInventoriesdispatchedfromstorageareaccountedforwithweightedaveragemethodorspecificidentificationmethodattheendofeachmonth.3.BasisfordeterminingnetrealizablevalueAtthebalancesheetdate,inventoriesaremeasuredatthelowerofcostornetrealizablevalue;provisionsforinventorywrite-downaremadeontheexcessofitscostoverthenetrealizablevalue.4.InventorysystemTheperpetualinventorysystemisadopted.5.Amortizationmethodoflow-valueconsumablesandpackagesLow-valueconsumablesandpackagesareamortizedwithone-offmethodatthetimeofpurchaseorreceipt.12．Long-termequityinvestments1.JudgmentofjointcontrolandsignificantinfluenceJointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingcontrol.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontrolofthesepolicies.2.Determinationofinvestmentcost(1)Forbusinesscombinationundercommoncontrol,iftheconsiderationofthecombiningpartyisthatitmakespaymentincash,transfersnon-cashassets,assumesitsliabilitiesorissuesequitysecurities,onthedateofcombination,itregardstheshareofthecarryingamountoftheequityofthecombinedpartyincludedtheconsolidatedfinancialstatementsoftheultimatecontrollingpartyastheinitialcostoftheinvestment.Thedifferencebetweentheinitialcostofthelong-termequityinvestmentsandthecarryingamountofthecombinationconsiderationpaidortheparvalueofsharesissuedoffsetscapitalreserve;ifthebalanceofcapitalreserveisinsufficienttooffset,anyexcessisadjustedtoretainedearnings.(2)Forbusinesscombinationnotundercommoncontrol,investmentcostisinitiallyrecognizedattheacquisition-datefairvalueofconsiderationspaid.(3)Long-termequityinvestmentsobtainedthroughwaysotherthanbusinesscombination,theinitialcostofalong-termequityinvestmentobtainedbymakingpaymentincashisthepurchasecostwhichisactuallypaid.3.SubsequentmeasurementandrecognitionmethodofprofitorlossForlong-termequityinvestmentswithcontrolrelationship,itisaccountedforwithcostmethod;forlong-termequityinvestmentsofassociatedenterprisesandcooperativeenterprises,itisaccountedforwithequitymethod.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport15513.InvestmentpropertyMeasurementmodelofinvestmentpropertyCostmethodmeasurementDepreciationoramortizationmethod1.Investmentpropertyincludeslanduserightofleased-outpropertyandofpropertyheldforcapitalappreciationandbuildingsthathavebeenleasedout.2.Theinitialmeasurementofinvestmentpropertyisbasedonitscost,andsubsequentmeasurementismadeusingthecostmodel,thedepreciationoramortizationmethodisthesameasthatoffixedassetsandintangibleassets.14.Fixedassets（1）RecognitionprinciplesoffixedassetsFixedassetsaretangibleassetsheldforuseintheproductionofgoodsorrenderingofservices,forrentaltoothers,orforadministrativepurposes,andexpectedtobeusedduringmorethanoneaccountingyear.Fixedassetsarerecognizedif,andonlyif,itisprobablethatfutureeconomicbenefitsassociatedwiththeassetswillflowtotheCompanyandthecostoftheassetscanbemeasuredreliably.（2）DepreciationmethodofdifferentcategoriesoffixedassetsCategoriesDepreciationmethodUsefullife(years)Estimatedresidualvalueproportion(%)Annualdepreciationrate(%)BuildingsandstructuresStraight-linemethod20-300-53.17～5.00MachineryandequipmentStraight-linemethod5-120-57.92～20.00MeasurementanalysisequipmentStraight-linemethod5-100-59.50～19.00VehicleStraight-linemethod5-80-511.88～20.00OfficeequipmentandothersStraight-linemethod5-80-511.88～20.0015．Constructioninprogress1.Constructioninprogressisrecognizedif,andonlyif,itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheCompany,andthecostoftheitemcanbemeasuredreliably.Constructioninprogressismeasuredattheactualcostincurredtoreachitsdesignedusableconditions.2.Constructioninprogressistransferredintofixedassetsatitsactualcostwhenitreachesthedesignedusableconditions.Whentheauditingoftheconstructioninprogresswasnotfinishedwhilereachingthedesignedusableconditions,itistransferredtofixedassetsusingestimatedvaluefirst,andthenadjustedaccordinglywhentheactualcostissettled,buttheaccumulateddepreciationisnottobeadjustedretrospectively.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport156CategoriesStandardsandtimepointoftransferringconstructioninprogresstofixedassetsMachineryAfterinstallationandcommissioning,itmeetsthestandardofproductionHousesandbuildingsAfterinstallationandcommissioning,theconstructioniscompletedandacceptedtomeetthecommissioningstandards16．BorrowingcostsWheretheborrowingcostsincurredtotheCompanycanbedirectlyattributabletotheacquisitionandconstructionorproductionofassetseligibleforcapitalization,itiscapitalizedandincludedinthecostsofrelevantassets;otherborrowingcostsarerecognizedasexpensesonthebasisoftheactualamountincurred,andareincludedinprofitorloss.17．Intangibleassets(1)Servicelifeanditsbasisfordetermination,estimate,amortizationmethodorreviewprocedure1.Intangibleassetsincludelanduseright,landownership,applicationsoftwareandintellectualpropertyetc.Theinitialmeasurementofintangibleassetsisbasedonitscost.2.Forintangibleassetswithfiniteusefullives,theiramortizationamountsareamortizedwithintheirusefullivessystematicallyandreasonably,ifitisunabletodeterminetheexpectedrealizationpatternreliably,intangibleassetsareamortizedbythestraight-linemethodwithdetails.asfollows:ItemsUsefullifeanddeterminationbasisAmortizationmethodLanduserightsfiftyyears,ContractualservicelifeStraight-linemethodApplicationsoftware1-4,UsefullifeStraight-linemethodIntellectualproperty5-10,UsefullifeStraight-linemethodIntangibleassetswithindefiniteusefullifearenotamortized,buttheirusefullifeisreviewedannually.Theindefinitelandownershipheldbyoverseassubsidiariesabroadisnotamortizedduetouncertainservicelife.3.R&DcostsThecollectionofR&DcostsisdirectlyrelatedtotheR&Dactivitiesofenterprises,includingR&Dpersonnelsalaries,R&Dmaterials,depreciationandamortizationexpenses,technicalcooperationfees,evaluationandtestingfees,etc.ThecostsincurredduringtheresearchphaseofinternalR&Dprojectsarerecognizedinthecurrentperiod'sprofitandlosswhenincurred.Expendituresontheresearchphaseofaninternalprojectarerecognizedasprofitorlosswhentheyareincurred.AnintangibleassetarisingfromthedevelopmentphaseofaninternalprojectisrecognizediftheCompanycanmeetrelevantconditions.18．Impairmentofpartoflong-termassetsForlong-termassetssuchaslong-termequityinvestments,investmentpropertyatcostmodel,fixedassets,constructioninprogress,right-of-useassets,intangibleassetswithfiniteusefullives,etc.,ifatthebalancesheetdatethereisindicationofimpairment,therecoverableamountistobeestimated.Forgoodwillrecognizedinbusinesscombinationandintangibleassetswithindefiniteusefullives,nomatterwhetherthereisindicationofimpairment,impairmenttestisperformedannually.Impairmenttestongoodwillisperformedonrelatedassetgrouporassetgroupportfolio.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport157Whentherecoverableamountofsuchlong-termassetsislowerthantheircarryingamount,thedifferenceisrecognizedasprovisionforassetsimpairmentthroughprofitorloss.19．Long-termprepaymentsLong-termprepaymentsareexpensesthathavebeenrecognizedbutwithamortizationperiodoveroneyear(excludingoneyear).Theyarerecordedwithactualcost,andevenlyamortizedwithinthebeneficiaryperiodorstipulatedperiod.Ifitemsoflong-termprepaymentsfailtobebeneficialtothefollowingaccountingperiods,residualvaluesofsuchitemsareincludedinprofitorloss.20．Employeebenefits1.Short-termemployeebenefitsTheCompanyrecognizes,intheaccountingperiodinwhichanemployeeprovidesservice,short-termemployeebenefitsactuallyincurredasliabilities,withacorrespondingchargetoprofitorlossorthecostofarelevantasset.2.Post-employmentbenefitsPost-employmentbenefitplansaremainlyclassifiedasdefinedcontributionplans.Duringtheaccountingperiodemployeesprovideservices,accordingthedefinedcontributionplan,theamountpayableisrecognizedasliabilitiesandincludedinthecurrentprofitsandlossesorrelevantassetcosts.3.TerminationbenefitsTerminationbenefitsprovidedtoemployeesarerecognizedasanemployeebenefitliability,withacorrespondingchargetoprofitorlossattheearlierofthefollowingdates:(1)whentheCompanycannotunilaterallywithdrawtheofferofterminationbenefitsbecauseofanemploymentterminationplanoracurtailmentproposal;(2)whentheCompanyrecognizescostorexpensesrelatedtoarestructuringthatinvolvesthepaymentofterminationbenefits.4.Otherlong-termemployeebenefitsWhenotherlong-termemployeebenefitsprovidedtotheemployeessatisfiedtheconditionsforclassifyingasadefinedcontributionplan,thosebenefitsareaccountedforinaccordancewiththerequirementsrelatingtodefinedcontributionplan,whileotherbenefitsareaccountedforinaccordancewiththerequirementsrelatingtodefinedbenefitplan.Tosimplifyrelevantaccountingtreatments,thetotalnetamountofrecognizedemployeecompensationcostsasservicecosts,netinterestonotherlong-termemployeebenefitsnetliabilitiesornetassets,andchangesresultingfromremeasuringotherlong-termemployeebenefitsnetliabilitiesornetassetsshallberecognizedinthecurrentperiod'sprofitandlossorrelatedassetcosts21．Provisions1.Provisionsarerecognizedwhenfulfillingthepresentobligationsarisingfromcontingenciessuchasprovidingguaranteeforotherparties,litigation,productsqualityguarantee,onerouscontract,etc.,maycausetheoutflowoftheeconomicbenefitandsuchobligationscanbereliablymeasured.2.Theinitialmeasurementofprovisionsisbasedonthebestestimatedexpendituresrequiredinfulfillingthepresentobligations,anditscarryingamountisreviewedatthebalancesheetdate.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport15822．Share-basedpayment1.Typesofshare-basedpaymentShare-basedpaymentconsistsofequity-settledshare-basedpaymentandcash-settledshare-basedpayment.2.Accountingtreatmentforsettlements,modificationsandcancellationsofshare-basedpaymenttermsandconditions(1)Equity-settledshare-basedpaymentForequity-settledshare-basedpaymenttransactionwithemployees,iftheequityinstrumentsgrantedvestimmediately,thefairvalueofthoseequityinstrumentsismeasuredatgrantdateandrecognizedastransactioncostorexpense,withacorrespondingadjustmentincapitalreserve;iftheequityinstrumentsgranteddonotvestuntilthecounterpartycompletesaspecifiedperiodofservice,atthebalancesheetdatewithinthevestingperiod,thefairvalueofthoseequityinstrumentsmeasuredatgrantdatebasedonthebestestimateofthenumberofequityinstrumentsexpectedtovestisrecognizedastransactioncostorexpense,withacorrespondingadjustmentincapitalreserve.Forequity-settledshare-basedpaymenttransactionwithpartiesotherthanemployees,ifthefairvalueoftheservicesreceivedcanbemeasuredreliably,thefairvalueismeasuredatthedatetheCompanyreceivestheservice;ifthefairvalueoftheservicesreceivedcannotbemeasuredreliably,butthatofequityinstrumentscanbemeasuredreliably,thefairvalueoftheequityinstrumentsgrantedmeasuredatthedatetheCompanyreceivestheserviceisreferredto,andrecognizedastransactioncostorexpense,withacorrespondingincreaseinequity.(2)Cash-settledshare-basedpaymentForcash-settledshare-basedpaymenttransactionswithemployees,ifshareappreciationrightsvestimmediately,thefairvalueoftheliabilityincurredastheacquisitionofgoodsorservicesismeasuredatgrantdateandrecognizedastransactioncostorexpense,withacorrespondingincreaseinliabilities;ifshareappreciationrightsdonotvestuntiltheemployeeshavecompletedaspecifiedperiodofservice,theliabilityismeasured,ateachbalancesheetdateuntilsettled,atthefairvalueoftheshareappreciationrightsmeasuredatgrantdatebasedonthebestestimateofthenumberofshareappreciationrightexpectedtovest.(3)Modificationsandcancellationsofshare-basedpaymenttermsandconditionsIfthemodificationincreasesthefairvalueoftheequityinstrumentsgranted,measuredimmediatelybeforeandafterthemodification,theCompanyincludestheincrementalfairvaluegrantedinthemeasurementoftheamountrecognizedforservicesreceivedasconsiderationfortheequityinstrumentsgranted;similarly,ifthemodificationincreasesthenumberofequityinstrumentsgranted,theCompanyincludesthefairvalueoftheadditionalequityinstrumentsgranted,measuredatthedateofthemodification,inthemeasurementoftheamountrecognizedforservicesreceivedasconsiderationfortheequityinstrumentsgranted;iftheCompanymodifiesthevestingconditionsinamannerthatisbeneficialtotheemployee,theCompanytakesthemodifiedvestingconditionsintoaccount.Ifthemodificationreducesthefairvalueoftheequityinstrumentsgranted,measuredimmediatelybeforeandafterthemodification,theCompanydoesnottakeintoaccountthatdecreaseinfairvalueandcontinuetomeasuretheamountrecognizedforservicesreceivedasconsiderationfortheequityinstrumentsbasedonthegrantdatefairvalueoftheequityinstrumentsgranted;ifthemodificationreducesthenumberofequityinstrumentsgrantedtoanemployee,thatreductionisaccountedforasacancellationofthatportionofthegrant;iftheCompanymodifiesthevestingconditionsinamannerthatisnotbeneficialtotheemployee,theCompanydoesnottakethemodifiedvestingconditionsintoaccount.IftheCompanycancelsorsettlesagrantofequityinstrumentsduringthevestingperiod(otherthanagrantcancelledbyforfeiturewhenthevestingconditionsarenotsatisfied),theCompanyaccountsforthecancellationorZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport159settlementasanaccelerationofvesting,andthereforerecognizesimmediatelytheamountthatotherwisewouldhavebeenrecognizedforservicesreceivedovertheremainderofthevestingperiod.23.ConvertiblebondsTheCompanyclassifiesconvertiblebondsatinitialrecognitionasafinancialassetorliabilityorequityinstrument,basedoncontracttermsandeconomicessenceitrevealsinsteadofitslegalform,combiningwiththedefinitionsoffinancialasset,liabilityandequityinstrument.Atthebalancesheetdate,forafinancialinstrumentclassifiedasanequityinstrument,itsinterestexpenditureordividenddistributionistreatedasprofitdistribution,andsharerepurchaseandcancellationaretreatedaschangesinequity;forafinancialinstrumentclassifiedasafinancialliability,itsinterestexpenditureordividenddistributionistreatedasborrowingexpense,andgainorlossonrepurchaseorredemptionisincludedinprofitorloss.24．Revenue1.RevenuerecognitionprinciplesAtcontractinception,theCompanyshallassessthecontractsandshallidentifyeachperformanceobligationinthecontracts,anddeterminewhethertheperformanceobligationshouldbesatisfiedovertimeoratapointintime.TheCompanysatisfiesaperformanceobligationovertimeifoneofthefollowingcriteriaismet,otherwise,theperformanceobligationissatisfiedatapointintime:(1)thecustomersimultaneouslyreceivesandconsumesthebenefitsprovidedbytheCompany’sperformanceastheCompanyperforms;(2)thecustomercancontrolgoodsorservicesastheyarecreatedbytheCompany’sperformance;(3)theCompany’sperformancedoesnotcreategoodsorserviceswithanalternativeusesandtheCompanyhasanenforceablerighttopaymentforperformancecompletedtodate.Foreachperformanceobligationsatisfiedovertime,theCompanyshallrecognizerevenueovertimebymeasuringtheprogresstowardscompletesatisfactionofthatperformanceobligation.Inthecircumstancethattheprogresscannotbemeasuredreasonably,butthecostsincurredinsatisfyingtheperformanceobligationareexpectedtoberecovered,theCompanyshallrecognizerevenueonlytotheextentofthecostsincurreduntilitcanreasonablymeasuretheprogress.Foreachperformanceobligationsatisfiedatapointintime,theCompanyshallrecognizerevenueatthetimepointthatthecustomerobtainscontrolofrelevantgoodsorservices.Todeterminewhetherthecustomerhasobtainedcontrolofgoods,theCompanyshallconsiderthefollowingindicators:(1)theCompanyhasapresentrighttopaymentforthegoods,i.e.,thecustomerispresentlyobligedtopayforthegoods;(2)theCompanyhastransferredthelegaltitleofthegoodstothecustomer,i.e.,thecustomerhaslegaltitletothegoods;(3)theCompanyhastransferredphysicalpossessionofthegoods,i.e.,thecustomerhasphysicallypossessedthegoods;(4)theCompanyhastransferredsignificantrisksandrewardsofownershipofthegoods,i.e.,thecustomerhasobtainedsignificantrisksandrewardsofownershipofthegoods;(5)thecustomerhasacceptedthegoods;(6)otherindicatorsshowingthecustomerhasobtainedcontroloverthegoods.2.Revenuemeasurementprinciple(1)Revenueismeasuredattheamountofthetransactionpricethatisallocatedtoeachperformanceobligation.ThetransactionpriceistheamountofconsiderationtowhichtheCompanyexpectstobeentitledinexchangefortransferringgoodsorservicestoacustomer,excludingamountscollectedonbehalfofthirdpartiesandthoseexpectedtoberefundedtothecustomer.(2)Iftheconsiderationpromisedinacontractincludesavariableamount,theCompanyshallconfirmthebestestimateofvariableconsiderationatexpectedvalueorthemostlikelyamount.However,thetransactionpricethatZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport160includestheamountofvariableconsiderationonlytotheextentthatitishighprobablethatasignificantreversalintheamountofcumulativerevenuerecognizedwillnotoccurwhentheuncertaintyassociatedwiththevariableconsiderationissubsequentlyresolved.(3)Inthecircumstancethatthecontractcontainsasignificantfinancingcomponent,theCompanyshalldeterminethetransactionpricebasedonthepricethatacustomerwouldhavepaidforifthecustomerhadpaidcashforobtainingcontroloverthosegoodsorservices.Thedifferencebetweenthetransactionpriceandtheamountofpromisedconsiderationisamortizedundereffectiveinterestmethodovercontractualperiod.TheeffectsofasignificantfinancingcomponentshallnotbeconsiderediftheCompanyexpects,atthecontractinception,thattheperiodbetweenwhenthecustomerobtainscontrolovergoodsorservicesandwhenthecustomerpaysconsiderationwillbeoneyearorless.(4)Forcontractscontainingtwoormoreperformanceobligations,theCompanyshalldeterminethestand-alonesellingpriceatcontractinceptionofthedistinctgoodunderlyingeachperformanceobligationandallocatethetransactionpricetoeachperformanceobligationonarelativestand-alonesellingpricebasis.3.RevenuerecognitionmethodThecompany'smainbusinessactivitiesaretheR&D,productionandsalesofcontrolcomponentsandpartsofhouseholdappliancesandautomobiles,whichbelongtotheperformanceobligationsatacertainpointintime.Therevenuefromdomesticsalesofproductsshallberecognizedbasedonsalescontracts,settlementvouchers(deliveryorusage),andotherdocumentsuponcompletionofproductdelivery;andtherevenuefromexportofproductsshallberecognizedaccordingtothesalescontract,customsdeclarationform,billoflading,andotherdocumentsuponcompletionofcustomsdeclarationandexport.Thesalesrevenueofmetalscrapisrecognizedafterweighingandpickingupthegoodsandobtainingthereceiptcertificate.25．CostsofobtainingacontractandcoststofulfillacontractTheCompanyrecognizesasanassettheincrementalcostsofobtainingacontractifthosecostsareexpectedtoberecovered.Thecostsofobtainingacontractshallbeincludedintoprofitorlosswhenincurrediftheamortizationperiodoftheassetisoneyearorless.Ifthecostsincurredinfulfillingacontractarenotwithinthescopeofstandardsrelatedtoinventories,fixedassetsorintangibleassets,etc.,theCompanyshallrecognizethecoststofulfillacontractasanassetifallthefollowingcriteriaaresatisfied:1.Thecostsrelatedirectlytoacontractortoananticipatedcontract,includingdirectlabor,directmaterials,manufacturingoverheadcost(orsimilarcost),costthatareexplicitlychargeabletothecustomerunderthecontract,andothercoststhatareonlyrelatedtothecontract;2.ThecostsenhanceresourcesoftheCompanythatwillbeusedinsatisfyingperformanceobligationsinthefuture;3.Thecostsareexpectedtoberecovered.Anassetrelatedtocontractcostsshallbeamortizedonasystematicbasisthatisconsistentwithrelatedgoodsorservices,withamortizationincludedintoprofitorloss.TheCompanyshallmakeprovisionforimpairmentandrecognizeanimpairmentlosstotheextentthatthecarryingamountofanassetrelatedtocontractcostsexceedstheremainingamountofconsiderationthattheCompanyexpectstoreceiveinexchangeforthegoodsorservicestowhichtheassetrelateslessthecostsexpectedtobeincurred.TheCompanyshallrecognizeareversalofanimpairmentlosspreviouslyrecognizedinprofitorlosswhentheimpairmentconditionsnolongerexistorhaveimproved.ThecarryingamountoftheassetafterthereversalshallnotexceedtheamountthatwouldhavebeendeterminedonthereversaldateifnoprovisionforZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport161impairmenthadbeenmadepreviously.26．Contractassets,contractliabilitiesTheCompanypresentscontractassetsorcontractliabilitiesinthebalancesheetbasedontherelationshipbetweenitsperformanceobligationsandcustomers’payments.Contractassetsandcontractliabilitiesunderthesamecontractshalloffseteachotherandbepresentedonanetbasis.TheCompanypresentsanunconditionalrighttoconsideration(i.e.,onlythepassageoftimeisrequiredbeforetheconsiderationisdue)asareceivable,andpresentsarighttoconsiderationinexchangeforgoodsthatithastransferredtoacustomer(whichisconditionalonsomethingotherthanthepassageoftime)asacontractasset.TheCompanypresentsanobligationtotransfergoodstoacustomerforwhichtheCompanyhasreceivedconsideration(ortheamountisdue)fromthecustomerasacontractliability.27．Governmentgrants1.Governmentgrantsshallberecognizedif,andonlyif,thefollowingconditionsareallmet:(1)theCompanywillcomplywiththeconditionsattachingtothegrants;(2)thegrantswillbereceived.Monetarygovernmentgrantsaremeasuredattheamountreceivedorreceivable.Non-monetarygovernmentgrantsaremeasuredatfairvalue,andcanbemeasuredatnominalamountinthecircumstancethatfairvaluecan’tbeassessed.2.GovernmentgrantsrelatedtoassetsGovernmentgrantsrelatedtoassetsaregovernmentgrantswithwhichtheCompanyconstructorotherwiseacquirelong-termassetsunderrequirementsofgovernment.Inthecircumstancesthatthereisnospecificgovernmentrequirement,theCompanyshalldeterminebasedontheprimaryconditiontoacquirethegrantsandgovernmentgrantsrelatedtoassetsaregovernmentgrantswhoseprimaryconditionistoconstructorotherwiseacquirelong-termassets.Theyoffsetcarryingamountofrelevantassetsorrecognizedasdeferredincome.Ifrecognizedasdeferredincome,theyareincludedinprofitorlossonasystematicbasisovertheusefullivesoftherelevantassets.Thosemeasuredatnotionalamountisdirectlyincludedintoprofitorloss.Forassetssold,transferred,disposedordamagedwithintheusefullives,balanceofunamortizeddeferredincomeistransferredintoprofitorlossoftheyearinwhichthedisposaloccurred.3.GovernmentgrantsrelatedtoincomeGovernmentgrantsrelatedtoincomearegovernmentgrantsotherthanthoserelatedtoassets.Forgovernmentgrantsthatcontainbothpartsrelatedtoassetsandpartsrelatedtoincome,inwhichthosetwopartsareblurredandthuscollectivelyclassifiedasgovernmentgrantsrelatedtoincome.Forgovernmentgrantsrelatedtoincomeusedforcompensatingtherelatedfuturecost,expensesorlossesoftheCompanyarerecognizedasdeferredincomeandareincludedinprofitorlossoroffsetrelevantcostduringtheperiodinwhichtherelevantcost,expensesorlossesarerecognized;forgovernmentgrantsrelatedtoincomeusedforcompensatingtherelatedcost,expensesorlossesincurredtotheCompany,theyaredirectlyincludedinprofitorlossordirectlyoffsetrelevantcost.4.Governmentgrantsrelatedtotheordinarycourseofbusinessshallbeincludedintootherincomeoroffsetrelevantcostbasedonbusinessnature,whilethosenotrelatedtotheordinarycourseofbusinessshallbeincludedintonon-operatingrevenueorexpenditures.5.Policyinterestsubvention(1)Inthecircumstancethatgovernmentappropriatesinterestsubventiontolendingbank,whoprovidesloansfortheCompanywithapolicysubsidisedinterestrate,borrowingsarecarriedattheamountreceived,withrelevantborrowingscostcomputedbasedontheprincipalandthepolicysubsidisedinterestrate.(2)InthecircumstancethatgovernmentdirectlyappropriatesinterestsubventiontotheCompany,theZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport162subsidisedinterestshalloffsetrelevantborrowingcost.28．Deferredtaxassets/Deferredtaxliabilities1.Deferredtaxassetsordeferredtaxliabilitiesarecalculatedandrecognizedbasedonthedifferencebetweenthecarryingamountandtaxbaseofassetsandliabilities(andthedifferenceofthecarryingamountandtaxbaseofitemsnotrecognizedasassetsandliabilitiesbutwiththeirtaxbasebeingabletobedeterminedaccordingtotaxlaws)andinaccordancewiththetaxrateapplicabletotheperiodduringwhichtheassetsareexpectedtoberecoveredortheliabilitiesareexpectedtobesettled.2.Adeferredtaxassetisrecognizedtotheextentoftheamountofthetaxableincome,whichitismostlikelytoobtainandwhichcanbedeductedfromthedeductibletemporarydifference.Atthebalancesheetdate,ifthereisanyexactevidencethatitisprobablethatfuturetaxableincomewillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilized,thedeferredtaxassetsunrecognizedinpriorperiodsarerecognized.3.Atthebalancesheetdate,thecarryingamountofdeferredtaxassetsisreviewed.Thecarryingamountofadeferredtaxassetisreducedtotheextentthatitisnolongerprobablethatsufficienttaxableincomewillbeavailabletoallowthebenefitofthedeferredtaxassettobeutilized.Suchreductionissubsequentlyreversedtotheextentthatitbecomesprobablethatsufficienttaxableincomewillbeavailable.4.Theincometaxanddeferredtaxfortheperiodaretreatedasincometaxexpensesorincomethroughprofitorloss,excludingthosearisingfromthefollowingcircumstances:(1)businesscombination;and(2)thetransactionsoritemsdirectlyrecognizedinequity.5.Deferredtaxassetsanddeferredtaxliabilitiesshalloffseteachotherandbepresentedonanetbasiswhenthefollowingconditionsareallmet:(1)theCompanyhasthelegalrighttosettleoffcurrenttaxassetsagainstcurrenttaxliabilities;(2)Deferredincometaxassetsanddeferredincometaxliabilitiesarerelatedtotheincometaxleviedbythesametaxadministrationdepartmentonthesametaxpayerorrelatedtothesametaxadministrationdepartmentfordifferenttaxpayers.However,ineachperiodduringwhichsignificantdeferredincometaxassetsanddeferredincometaxliabilitiesarereversedinthefuture,thetaxpayerinvolvedintendstosettlethecurrentincometaxassetsandliabilitiesonanetbasisorsimultaneouslyacquireassetsandsettledebts.29.Leases1.TheCompanyaslesseeAtthecommencementdate,theCompanyrecognizesaleasethathasaleasetermof12monthsorlessasashort-termlease,whichshallnotcontainapurchaseoption;theCompanyrecognizesaleaseasaleaseofalow-valueassetiftheunderlyingassetisoflowvaluewhenitisnew.Forallshort-termleasesandleasesoflow-valueassets,leasepaymentsarerecognizedascostorprofitorlosswithstraight-linemethodovertheleaseterm.Apartfromtheabove-mentionedshort-termleasesandleasesoflow-valueassetswithsimplifiedapproach,theCompanyrecognizesright-of-useassetsandleaseliabilitiesatthecommencementdate.(1)Right-of-useassetsZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport163Theright-of-useassetismeasuredatcostandthecostshallcomprise:1)theamountoftheinitialmeasurementoftheleaseliabilities;2)anyleasepaymentsmadeatorbeforethecommencementdate,lessanyleaseincentivesreceived;3)anyinitialdirectcostsincurredbythelessee;and4)anestimateofcoststobeincurredbythelesseeindismantlingandremovingtheunderlyingasset,restoringthesiteonwhichitislocatedorrestoringtheunderlyingassettotheconditionrequiredbythetermsandconditionsofthelease.TheCompanydepreciatestheright-of-useassetusingthestraight-linemethod.Ifitisreasonabletobecertainthattheownershipoftheunderlyingassetcanbeacquiredbytheendoftheleaseterm,theCompanydepreciatestheright-of-useassetfromthecommencementdatetotheendoftheusefullifeoftheunderlyingasset.Otherwise,theCompanydepreciatestheright-of-useassetfromthecommencementdatetotheearlieroftheendoftheusefullifeoftheright-of-useassetortheendoftheleaseterm.(2)LeaseliabilitiesAtthecommencementdate,theCompanymeasurestheleaseliabilityatthepresentvalueoftheleasepaymentsthatarenotpaidatthatdate,discountedusingtheinterestrateimplicitinthelease.Unrecognizedfinancingexpenses,calculatedatthedifferencebetweentheleasepaymentanditspresentvalue,arerecognizedasinterestexpensesovertheleasetermusingthediscountratewhichhasbeenusedtodeterminethepresentvalueofleasepaymentandincludedinprofitorloss.Variableleasepaymentsnotincludedinthemeasurementofleaseliabilitiesareincludedinprofitorlossintheperiodsinwhichtheyareincurred.2.TheCompanyaslessorAtthecommencementdate,theCompanyclassifiesaleaseasafinanceleaseifittransferssubstantiallyalltherisksandrewardsincidentaltoownershipofanunderlyingasset.Otherwise,itisclassifiedasanoperatinglease.Foroperatinglease,leasereceiptsarerecognizedasleaseincomewithstraight-linemethodovertheleaseterm.Initialdirectcostsincurredshallbecapitalized,amortizedonthesamebasisastherecognitionofleaseincome,andincludedintoprofitorlossbyinstallments.Variableleasepaymentsrelatedtooperatingleasewhicharenotincludedintheleasepaymentarechargedasprofitorlossintheperiodsinwhichtheyareincurred.30.SegmentreportingOperatingsegmentsaredeterminedbasedonthestructureoftheCompany’sinternalorganization,managementrequirementsandinternalreportingsystem.AnoperatingsegmentisacomponentoftheCompany:1.thatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses;2.whosefinancialperformanceisregularlyreviewedbytheManagementtomakedecisionsaboutresourcetobeallocatedtothesegmentandtoassessitsperformance;and3.forwhichaccountinginformationregardingfinancialposition,financialperformanceandcashflowsisavailablethroughanalysis.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport16431.SharerepurchaseWhentheCompanyrepurchasesitssharesforthepurposeofreducingitsregisteredcapitalorrewardingitsemployees.Theamountactuallypaidshallbetreatedastreasurystockandregisteredforfuturereferenceatthesametime.Ifthepurchasedsharesaretoberetired,thedifferencebetweenthetotalbookvalueofsharesretiredandthecashdistributedtoexistingshareholdersforrepurchaseistoreducecapitalreserve,orretainedearningswhenthecapitalreserveisnotenoughtoreduce.IftheCompanyrepurchasesvestedequityinstrumentsinequity-settledshare-basedpaymenttransactionswithemployees,costoftreasurysharesgrantedtoemployeesandcapitalreserve(othercapitalreserve)accumulatedwithinthevestingperiodaretobewrittenoffonthepaymentmadetoemployees,withacorrespondingadjustmentincapitalreserve(sharepremium).32.OthersignificantaccountingpoliciesandestimatesChangesinaccountingpoliciesarisingfromchangesinCASBEsTheCompanyhasadoptedtheregulationsaboutaccountingfordeferredtaxrelatedtoassetsandliabilitiesarisingfromasingletransactiontowhichtheinitialrecognitionexemptiondoesnotapplyinthe“InterpretationofChinaAccountingStandardsforBusinessEnterprisesNo.16”issuedbytheMinistryofFinancesinceJanuary1,2023,suchchangeinaccountingpolicieshasnoimpactontheCompany’sfinancialstatements.VI.Taxes1.MajorcategoriesoftaxesandtaxratesTaxTypeTaxationbasisTaxrateEnterpriseincometaxTaxableincome15%，25%Value-addedtax(VAT)Theoutputtaxcalculatedbasedontherevenuefromsalesofgoodsorrenderingofservicesinaccordancewiththetaxlaw,netoftheinputtaxthatisallowedtobedeductedinthecurrentperiod13%，9%，6%HousingpropertytaxForhousingpropertyleviedonthebasisofprice,housingpropertytaxisleviedattherateof1.2%ofthebalanceafterdeducting30%ofthecost;forhousingpropertyleviedonthebasisofrent,housingpropertytaxisleviedattherateof12%ofleaseincome12%,1.2%UrbanmaintenanceandconstructiontaxTurnovertaxactuallypaid7%，5%EducationsurchargeTurnovertaxactuallypaid3%LocaleducationsurchargeTurnovertaxactuallypaid2%Differententerpriseincometaxratesapplicabletodifferenttaxpayers:TaxpayersIncometaxrateZhejiangSanhuaIntelligentControlsCo.,Ltd15%ZhejiangSanhuaCommercialRefrigerationCo.Ltd15%Sanhua(hangzhou)MicroChannelHeatExchangerCo.,Ltd15%ZhejiangSanhuaAutomotiveComponentsCo.,Ltd.15%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport165ShaoxingSanhuaNewEnergyAutomotiveComponentsCo.,Ltd15%WuhuSanhuaAuto-controlComponentsCo.,Ltdandothersubsidiaries15%Domestictaxpayersotherthantheabove-mentioned25%2.TaxpreferentialpoliciesThecompanyandseveralsubsidiariescanenjoytaxincentivesforhigh-techenterprises,andthefinalsettlementandpaymentshallprevail.ExportgoodsenjoytheVATexemptionandrefundpolicy;theexceedingportionoverthe3%VATpayableofthecertifiedsoftwareproductsenjoytheimmediaterefundpolicy;severalsubsidiariesarewelfareenterprises,andvalue-addedtaxenjoysthepreferentialpolicyofimmediatecollectionandrefundofthe"employmentquotafordisabledpersons".3.OthersTheoverseassubsidiaryshallbesubjecttothetaxregulationsofitshostcountry.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport166VII.NotestoItemsintheConsolidatedFinancialStatements1.CashandbankbalancesUnit:RMBItemsClosingbalanceOpeningbalanceCashonhand291,216.13329,823.40Cashinbank6,507,907,610.985,790,429,124.91Othercashandbankbalances76,485,856.8287,484,704.24Total6,584,684,683.935,878,243,652.55Including:Depositedoverseas510,550,872.27425,176,344.58Otherremarks:AsofDecember31,2023,bankdepositscontaininglargedepositcertificateswithfixedinterestratesamountedto2883.2525millionyuan.2.Held-for-tradingfinancialassetsUnit:RMBItemsClosingbalanceOpeningbalanceFinancialassetsatfairvaluethroughprofitorloss100,025,980.08Including:Bankfinancialproducts100,025,980.08Including:Total100,025,980.083.DerivativeFinancialAssetsUnit:RMBItemsClosingbalanceOpeningbalanceForeignexchangetool20,878,992.103,320,177.30Futurestools1,757,120.585,618,696.75Total22,636,112.688,938,874.054.Notesreceivable（1）CategoriesofnotesreceivableUnit:RMBItemsClosingbalanceOpeningbalanceBankacceptance2,332,015,457.091,542,383,601.65Financialcompanyacceptance137,191,175.41649,528,377.20Tradeacceptance7,632,781.3912,037,004.98Total2,476,839,413.892,203,948,983.83ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport167（2）ProvisionforbaddebtsUnit:RMBCategoriesClosingbalanceOpeningbalanceBookbalanceProvisionforbaddebtCarryingamountBookbalanceProvisionforbaddebtCarryingamountAmountProportionAmountProvisionproportionAmountProportionAmountProvisionproportionIncluding:Notesreceivablewithprovisionforbaddebtmadeonacollectivebasis2,484,457,759.72100.00%7,618,345.830.31%2,476,839,413.892,204,582,510.42100.00%633,526.590.03%2,203,948,983.83Including:Bankacceptance2,332,015,457.0993.87%2,332,015,457.091,542,383,601.6569.97%1,542,383,601.65Financialcompanyacceptance144,407,795.905.81%7,216,620.495.00%137,191,175.41649,528,377.2029.46%649,528,377.20Tradeacceptance8,034,506.730.32%401,725.345.00%7,632,781.3912,670,531.570.57%633,526.595.00%12,037,004.98Total2,484,457,759.72100.00%7,618,345.830.31%2,476,839,413.892,204,582,510.42100.00%633,526.590.03%2,203,948,983.83Provisionforbaddebtmadeonacollectivebasis:Unit:RMBItemsClosingbalanceBookbalanceProvisionforbaddebtProvisionproportion(%)Bankacceptanceportfolio2,332,015,457.09ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport168Financialcompanyacceptance144,407,795.907,216,620.495.00%Tradeacceptanceportfolio8,034,506.73401,725.345.00%Total2,484,457,759.727,618,345.83Explanationfordeterminingthebasisofthiscombination:Iftheprovisionforbaddebtofnotesreceivableisinaccordancewiththegeneralexpectedcreditlossmodel:√Applicable□NotApplicableUnit:RMBProvisionforbaddebtPhaseIPhaseIIPhaseIIISubtotal12monthexpectedcreditlossesLifetimeexpectedcreditlosses(creditnotimpaired)Lifetimeexpectedcreditlosses(creditimpaired)BalanceonJanuary1,2023633,526.59633,526.59ThebalanceasofJanuary1,2023isinthecurrentperiod————————Provisionmadeinthecurrentperiod7,618,345.837,618,345.83Provisionrecoveredincurrentperiod633,526.59633,526.59BalanceonDecember31,20227,618,345.837,618,345.83（3）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiodProvisionforbaddebtaccruedincurrentperiod:Unit:RMBCategoriesOpeningbalanceChangedamountofthisperiodClosingbalanceAccrualRecoveredorreversedWriteoffOthersProvisionforbaddebtmadeonacollectivebasis633,526.597,618,345.83633,526.597,618,345.83Total633,526.597,618,345.83633,526.597,618,345.83Includingsignificantprovisionforbaddebtrecoveredorreversedamount:□Applicable√NotApplicable（4）PledgednotesatthebalancesheetdateUnit:RMBItemsClosingbalanceofpledgednotesZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport169Bankacceptance2,096,023,667.74Financialcompanyacceptance118,340,212.64Total2,214,363,880.38（5）EndorsedordiscountedbutunduenotesatthebalancesheetdateUnit:RMBItemsClosingbalancederecognizedClosingbalancenotyetderecognizedBankacceptance84,953,207.66Financialcompanyacceptance42,410.07Total84,953,207.6642,410.075.Accountsreceivable（1）DisclosureofaccountsreceivablebyagingUnit:RMBARAgingClosingbalanceOpeningbalanceWithin1year(includingoneyear)6,039,601,208.015,497,261,560.391to2years45,652,788.887,808,747.902to3years388,260.852,798,610.70Over3years265,553.29977,173.43Total6,085,907,811.035,508,846,092.42（2）DisclosureofaccountsreceivablebycategoriesUnit:RMBCategoriesClosingbalanceOpeningbalanceBookbalanceProvisionforbaddebtCarryingamountBookbalanceProvisionforbaddebtCarryingamountAmountProportionAmountAccruedproportionAmountProportionAmountAccruedproportionReceivableswithprovisionmadeonanindividualbasis5,690,817.360.09%5,690,817.36100.00%4,641,982.820.08%4,641,982.82100.00%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport170Including:Receivableswithprovisionmadeonacollectivebasis6,080,216,993.6799.91%306,225,512.455.04%5,773,991,481.225,504,204,109.6099.92%276,086,884.035.02%5,228,117,225.57Including:Total6,085,907,811.03100.00%311,916,329.815.13%5,773,991,481.225,508,846,092.42100.00%280,728,866.855.10%5,228,117,225.57Provisionmadeonanindividualbasis:Therearenoprovisionsmadeonanindividualbasisneedtobedisclosedinthisperiod.Provisionmadeonacollectivebasis:Unit:RMBItemsClosingbalanceBookbalanceProvisionforbaddebtAccruedproportionWithin1year6,039,601,208.01301,980,060.405.00%1to2years39,961,971.523,996,197.1510.00%2to3years388,260.85116,478.2530.00%Over3years265,553.29132,776.6550.00%Total6,080,216,993.67306,225,512.45--Iftheprovisionforbaddebtofaccountsreceivableisinaccordancewiththegeneralexpectedcreditlossmodel:√Applicable□NotApplicableUnit:RMBProvisionforbaddebtPhaseIPhaseIIPhaseIIISubtotal12monthexpectedcreditlossesLifetimeexpectedcreditlosses(creditnotimpaired)Lifetimeexpectedcreditlosses(creditimpaired)BalanceonJanuary1,2023276,086,884.034,641,982.82280,728,866.85ThebalanceasofJanuary1,2023isinthecurrentperiod————————Provisionaccruedinthecurrentperiod35,249,220.815,690,817.3640,940,038.17Provisionreversedincurrentperiod5,110,592.394,641,982.829,752,575.21BalanceonDecember31,2023306,225,512.455,690,817.36311,916,329.81ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport171（3）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiodProvisionforbaddebtaccruedincurrentperiod:Unit:RMBCategoriesOpeningbalanceChangedamountofthecurrentperiodClosingbalanceAccruedRecoveredorreversedWriteoffOthersReceivableswithprovisionmadeonanindividualbasis4,641,982.825,690,817.364,641,982.825,690,817.36Receivableswithprovisionmadeonacollectivebasis276,086,884.0335,249,220.815,110,592.39306,225,512.45Total280,728,866.8540,940,038.179,752,575.21311,916,329.81（4）DetailsaboutaccountsreceivableactuallywrittenoffinthecurrentperiodUnit:RMBItemAmountActuallywrittenoffamount9,752,575.21Explanationofaccountsreceivablewrittenoff:Therearenosignificantaccountsreceivablewriteoffsinthisperiod.（5）AccountsreceivableandcontractassetsofthetopfiveendingbalancesClosingbalanceoftop5debtorstotaled3052.9295millionyuan,accountingfor50.16%ofthetotalclosingbalanceofaccountsreceivable.Thecorrespondingprovisionforbaddebtsofaccountsreceivableis152.8455millionyuan.（6）OtherremarksSomeofthecompany'saccountsreceivablearecollectedbydigitalandelectronicdebtvouchers.Thesedebtvouchershavecertaincreditliquidityandcanbeusedforcommercialfactoringortransferpayment.AsofDecember31,2023,thecompanyhad1461.8171millionyuanofdigitalandelectronicdebtvouchersinhand,and66.6214millionyuanofdigitalandelectronicdebtvouchersthathadbeentransferredforpaymentbutnotexpired.6.OtherreceivablesUnit:RMBItemsClosingbalanceOpeningbalanceOtherreceivables227,792,892.12726,641,478.35Total227,792,892.12726,641,478.35（1）Otherreceivables1）OtherreceivablescategorizedbynatureUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport172ItemsClosingbalanceOpeningbalanceLandcompensationaccountsreceivable546,216,590.00Taxrefundreceivable164,712,845.63123,916,253.13Guaranteedeposits45,694,632.7036,247,343.32Others25,466,493.8125,467,213.32Total235,873,972.14731,847,399.772）DisclosurebyagingUnit:RMBAgingClosingbalanceOpeningbalanceWithin1year(including1year)209,294,612.66704,067,052.731to2years7,805,876.6310,965,046.272to3years6,125,806.344,366,231.62Over3years12,647,676.5112,449,069.15Total235,873,972.14731,847,399.773）Disclosurebycategories√Applicable□NotApplicableUnit:RMBCategoriesClosingbalanceOpeningbalanceBookbalanceProvisionforbaddebtCarryingamountBookbalanceProvisionforbaddebtCarryingamountAmountProportionAmountAccruedproportionAmountProportionAmountAccruedproportionProvisionmadeonanindividualbasis170,268,281.6872.19%170,268,281.68681,876,064.5993.17%681,876,064.59Including:ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport173Provisionmadeonacollectivebasis65,605,690.4627.81%8,081,080.0212.32%57,524,610.4449,971,335.186.83%5,205,921.4210.42%44,765,413.76Including:Total235,873,972.14100.00%8,081,080.023.43%227,792,892.12731,847,399.77100.00%5,205,921.420.71%726,641,478.35Provisionmadeonacollectivebasis:Unit:RMBItemsClosingbalanceBookbalanceProvisionforbaddebtAccruedproportionWithin1year46,025,761.722,301,288.085.00%1to2years7,805,876.68780,587.6710.00%2to3years4,439,108.821,331,732.6530.00%Over3years7,334,943.243,667,471.6250.00%Total65,605,690.468,081,080.02--Provisionforbaddebtofotherreceivablesinaccordancewiththegeneralexpectedcreditlossmodel:Unit:RMBProvisionforbaddebtPhaseIPhaseIIPhaseIIISubtotal12monthexpectedcreditlossesLifetimeexpectedcreditlosses(creditnotimpaired)Lifetimeexpectedcreditlosses(creditimpaired)BalanceonJanuary1,20231,690,955.36927,834.882,587,131.185,205,921.42ThebalanceasofJanuary1,2023isinthecurrentperiod————————--TransferredtophaseII-390,293.83390,293.83--TransferredtophaseIII-887,821.76887,821.76Provisionmadeinthecurrentperiod1,000,626.55350,280.721,524,251.332,875,158.60BalanceonDecember31,20232,301,288.08780,587.674,999,204.278,081,080.02ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport174Lossprovisionsforsignificantchangesinbookbalancesincurrentperiod□Applicable√NotApplicable4）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiodProvisionforbaddebtaccruedincurrentperiod:Unit:RMBCategoriesOpeningbalanceChangedamountofthecurrentperiodClosingbalanceAccruedRecoveredorreversedWriteoffOthersProvisionmadeonacollectivebasis5,205,921.422,875,158.608,081,080.02Total5,205,921.422,875,158.608,081,080.025）Detailsofthetop5debtorswithlargestbalancesUnit:RMBItemsNatureofreceivablesClosingbalanceAgesProportiontothetotalbalanceofotherreceivablesProvisionforbaddebtattheendoftheperiodTaxrefundreceivablesTaxrefund164,712,845.63Within1year69.83%USCustomsCustomsdeposit5,312,733.27Within1ye。

6. ar2.25%ShanghaiYinghengElectronicsCo.,LtdPerformancebond3,494,680.001to3years1.48%906,536.24ShanghaiChengshengIndustrialCo.,LtdPerformancebond2,813,643.00Within1year1.19%140,682.15TCLAirConditioner(Wuhan)Co.,Ltd.Performancebond2,000,840.001to3years0.85%175,420.00Total--178,334,741.90--75.61%1,222,638.397.Advancespaid（1）AdvancespaidbyagingUnit:RMBAgingClosingbalanceOpeningbalanceAmountPercentageAmountPercentageWithin1year128,617,877.129,613.00%111,759,824.579,480.00%1to2years2,851,372.48213.00%3,542,204.41301.00%2to3years1,053,936.1279.00%1,425,109.32121.00%Over3years1,269,437.8295.00%1,159,868.7798.00%ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport175Total133,792,623.54117,887,007.07（2）Top5debtorswiththelargestadvancespaidbalancesClosingbalanceoftop5debtorstotaled21,846,055.10yuan,accountingfor16.33%ofthetotalclosingbalance.8.InventoriesWhethertheCompanyneedstocomplywiththedisclosurerequirementsoftherealestateindustryNo（1）CategoriesofinventoriesUnit:RMBItemsClosingbalanceOpeningbalanceBookbalanceProvisionfordeclineinvalueofinventoriesorprovisionforimpairmentofcontractperformancecostsCarryingamountBookbalanceProvisionfordeclineinvalueofinventoriesorprovisionforimpairmentofcontractperformancecostsCarryingamountRawmaterials932,169,486.9061,788,757.16870,380,729.741,050,007,307.6959,101,594.10990,905,713.59Work-in-progress596,409,922.791,602,512.78594,807,410.01711,592,586.632,028,013.70709,564,572.93Finishedgoods3,179,557,350.4750,888,480.613,128,668,869.862,696,034,401.1366,515,797.402,629,518,603.73Others6,872,368.586,872,368.584,886,397.614,886,397.61Total4,715,009,128.74114,279,750.554,600,729,378.194,462,520,693.06127,645,405.204,334,875,287.86（2）ProvisionfordeclineinvalueofinventoriesandProvisionforimpairmentofcontractperformancecostsUnit:RMBItemsOpeningbalanceIncreaseincurrentperiodDecreaseincurrentperiodClosingbalanceAccruedOthersReversalorwriteoffOthersRawmaterials59,101,594.1041,417,111.1538,729,948.0961,788,757.16Work-in-progress2,028,013.701,023,331.091,448,832.011,602,512.78Finishedgoods66,515,797.4043,625,594.2359,252,911.0250,888,480.61Total127,645,405.2086,066,036.4799,431,691.12114,279,750.55ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1769.OthercurrentassetsUnit:RMBItemsClosingbalanceOpeningbalanceDeductibleinputtax186,254,431.54133,303,058.03PrepaidEnterpriseincometax61,993,000.4622,470,498.36Others2,826,152.561,251,519.66Total251,073,584.56157,025,076.0510.Long-termreceivable（1）Long-termreceivableUnit:RMBItemsClosingbalanceOpeningbalanceRangeofdiscountrateBookbalanceProvisionforbaddebtCarryingamountBookbalanceProvisionforbaddebtCarryingamountEmployeehomeloan3,805,833.603,805,833.603,712,290.003,712,290.00Total3,805,833.603,805,833.603,712,290.003,712,290.00--（2）DisclosurebycategoriesUnit:RMBCategoriesClosingbalanceOpeningbalanceBookbalanceProvisionforbaddebtCarryingamountBookbalanceProvisionforbaddebtCarryingamountAmountProportionAmountAccruedproportionAmountProportionAmountAccruedproportionProvisionmadeonanindividualbasis3,805,833.60100.00%3,805,833.603,712,290.00100.00%3,712,290.00Including:Total3,805,833.60100.00%3,805,833.603,712,290.00100.00%3,712,290.00ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport177Provisionforbaddebtsbasedonthegeneralmodelofexpectedcreditlosses11.Long-termequityinvestmentsUnit:RMBInvesteesOpeningbalance(Bookvalue)OpeningbalanceofprovisionforimpairmentChangesincurrentperiodClosingbalance(Bookvalue)ClosingbalanceofprovisionforimpairmentInvestmentsincreasedInvestmentsdecreasedInvestmentincomerecognizedunderequitymethodAdjustmentinothercomprehensiveincomeChangesinotherequityCashdividend/ProfitdeclaredfordistributionProvisionforimpairmentOthers1.Associates2.JointventuresGuochuangEnergyInternetInnovationCenter(Guangdong)Co.,Ltd.5,078,465.12-137,314.094,941,151.03ChongqingTainuoMachineryCo.,Ltd.16,130,424.274,673,752.522,500,000.0018,304,176.79NingboJinlifengMachineryCo.,Ltd.2,141,904.04676,920.352,818,824.39QingdaoSanhuaJinlifengMachineryCo.,Ltd.5,146,568.552,060,634.267,207,202.81ZhongshanXuanyiPipeManufacturingCo.,Ltd.2,193,221.72613,091.862,806,313.58Xinchan1,747,62099,142.261,846,762ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport178gzhejiangenergysanhuacomprehensiveenergyco.LTD.43.69Subtotal32,438,204.137,986,227.162,500,000.0037,924,431.29Total32,438,204.137,986,227.162,500,000.0037,924,431.29Therecoverableamountisdeterminedbasedonthenetamountafterdeductingdisposalexpensesfromfairvalue□Applicable√NotApplicableTherecoverableamountisdeterminedbasedonthepresentvalueofexpectedfuturecashflows□Applicable√NotApplicable12.InvestmentpropertyInvestmentpropertymeasuredbycostmethod√Applicable□NotApplicableUnit:RMBItemsBuildingsandstructuresLanduserightandOverseaslandownershipTotalⅠ.OriginalCarryingamount1.Openingbalance11,995,674.893,273,498.9015,269,173.792.Increaseincurrentperiod993,124.90192,408.301,185,533.20（1）Acquisition（2）Transferredinfrominventory\fixedassets\constructioninprogress（3）Increaseinbusinessmerger（4）ConverteddifferenceinForeignCurrencyStatements993,124.90192,408.301,185,533.203.Decreaseincurrentperiod（1）DisposalZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport179（2）Othertransferout4.Closingbalance12,988,799.793,465,907.2016,454,706.99Ⅱ.Accumulateddepreciationandamortization1.Openingbalance7,064,906.827,064,906.822.Increaseincurrentperiod1,223,994.861,223,994.86（1）Accrualoramortization808,736.83808,736.83（2）ConverteddifferenceinForeignCurrencyStatements415,258.03415,258.033.Decreaseincurrentperiod（1）Disposal（2）Othertransferout4.Closingbalance8,288,901.688,288,901.68Ⅲ.Provisionforimpairment1.Openingbalance2.Increaseincurrentperiod（1）Accrual3.Decreaseincurrentperiod（1）Disposal（2）Othertransferout4.ClosingbalanceⅣ.Carryingamount1.Closingbalance4,699,898.113,465,907.208,165,805.312.Openingbalance4,930,768.073,273,498.908,204,266.97Therecoverableamountisdeterminedbasedonthenetamountafterdeductingdisposalexpensesfromfairvalue□Applicable√NotApplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport180Therecoverableamountisdeterminedbasedonthepresentvalueofexpectedfuturecashflows□Applicable√NotApplicable13.FixedassetsUnit:RMBItemsClosingbalanceOpeningbalanceFixedassets7,730,363,778.826,374,896,070.41Total7,730,363,778.826,374,896,070.41（1）FixedassetsUnit:RMBItemsBuildingsandstructuresMachineryandequipmentMeasurementanalysisequipmentTransportationvehiclesOfficeandotherequipmentTotalⅠ.Originalbookvalue:1.Openingbalance3,360,496,386.325,701,259,308.59135,378,683.0442,330,286.64255,616,625.989,495,081,290.572.Increaseincurrentperiod687,264,552.271,338,686,491.3134,988,279.209,555,825.7845,161,054.472,115,656,203.03（1）Acquisition410,548,528.3634,265,180.479,445,660.3635,553,734.82489,813,104.01（2）Transferredinfromconstructioninprogress644,316,852.03869,034,702.036,569,908.291,519,921,462.35（3）Increaseinbusinessmerger（4）ConverteddifferenceinForeignCurrencyStatements42,947,700.2459,103,260.92723,098.73110,165.423,037,411.36105,921,636.673.Decreaseincurrentperiod389,122.00188,954,426.275,612,576.983,873,591.7012,244,951.25211,074,668.20（1）Disposalorscrap389,122.00188,954,426.275,612,576.983,873,591.7012,244,951.25211,074,668.204.Closingbalance4,047,371,816.596,850,991,373.63164,754,385.2648,012,520.72288,532,729.2011,399,662,825.40Ⅱ.Accumulateddepreciation1.Opening617,289,101.862,265,586,904.9654,450,679.8929,302,894.64141,787,435.543,108,417,016.89ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport181balance2.Increaseincurrentperiod140,806,956.64520,044,350.1315,360,830.473,778,481.2825,257,836.12705,248,454.64（1）Accrual135,866,284.62499,460,426.7315,098,439.073,738,385.2723,934,364.05678,097,899.74(2)ConverteddifferenceinForeignCurrencyStatements4,940,672.0220,583,923.40262,391.4040,096.011,323,472.0727,150,554.903.Decreaseincurrentperiod290,950.20137,465,249.085,187,575.633,491,704.2322,217,529.39168,653,008.53（1）Disposalorscrap290,950.20137,465,249.085,187,575.633,491,704.2322,217,529.39168,653,008.534.Closingbalance757,805,108.302,648,166,006.0164,623,934.7329,589,671.69144,827,742.273,645,012,463.00Ⅲ.Provisionforimpairment1.Openingbalance11,341,489.66426,713.6111,768,203.272.Increaseincurrentperiod13,333,293.4730,713.1313,364,006.60（1）Accrual13,333,293.4730,713.1313,364,006.603.Decreaseincurrentperiod845,626.29845,626.29（1）Disposalorscrap845,626.29845,626.294.Closingbalance23,829,156.84457,426.7424,286,583.58Ⅳ.Carryingamount1.Closingbalance3,289,566,708.294,178,996,210.78100,130,450.5318,422,849.03143,247,560.197,730,363,778.822.Openingbalance2,743,207,284.463,424,330,913.9780,928,003.1513,027,392.00113,402,476.836,374,896,070.41（2）TemporarilyidlefixedassetsUnit:RMBItemOriginalbookvalueAccumulateddepreciationImpairmentprovisionNetbookvalueNotesMachineryandequipment48,129,393.5523,668,486.6823,829,156.84631,750.03Officeequipmentandothers1,255,412.90791,886.16457,426.746,100.00Subtotal49,384,806.4524,460,372.8424,286,583.58637,850.03ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport182（3）FixedassetsleasedoutthroughoperatingleasesUnit:RMBItemClosingbalanceBuildingsandstructures34,172,628.21（4）FixedassetswithcertificateoftitlesbeingunsettledUnit:RMBItemCarryingamountReasonsforunsettlementSitongnewfactory1#productionworkshopandpowerworkshop35,056,634.48Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionParts,accessories,andClassAwarehouseinthenewfactoryofSitong22,954,435.22Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionPumpandauxiliaryroominthenewfactoryofSitong2,741,113.66Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionDormitoryofSitong1#&2#35,554,570.20Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionFactory13-15#inMeichuNorthDistrict142,495,110.09Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionFinishedproductwarehouseandClassAwarehouseinMeichuNorthDistrict30,649,122.93Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionPower,tooling,experimentaltesting,andR&Dtestingworkshopin1-8#ofCommercial412,803,830.71Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionCommercialrefrigerationproductwarehouse,rawmaterialwarehouse,ClassAwarehouse,andClassCwarehouse63,241,439.96Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionCommercialdormitory1-4#116,656,306.64Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionCommercialcanteens,trainingbuildings,etc47,493,902.32Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionWuhuSanhuaAutomaticControldormitory70,077,958.31Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletion1#Superworkshopandpowerplant191,901,543.45Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionHeatexchanger9#productionworkshop143,250,912.26Newassets,thecertificateoftitletobeprocesseduniformlyaftertheoverallcompletionSubtotal1,314,876,880.23ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport183（5）Impairmenttestingoffixedassets√Applicable□NotApplicableTherecoverableamountisdeterminedbasedonthenetamountafterdeductingdisposalexpensesfromfairvalue√Applicable□NotApplicableUnit:RMBItemBookvalueRecoverableamountImpairmentamountDeterminationoffairvalueanddisposalcostsKeyparametersandthedeterminationbasisMachineryandequipment13,820,786.46487,492.9913,333,293.47ResidualcomponentrecoveryamountFairpricesofavailablecomponentsandmarketpricesofrecyclablemetalsOfficeandotherequipment36,813.136,100.0030,713.13ResidualcomponentrecoveryamountFairpricesofavailablecomponentsandmarketpricesofrecyclablemetals合计13,857,599.59493,592.9913,364,006.60Therecoverableamountisdeterminedbasedonthepresentvalueofexpectedfuturecashflows□Applicable√NotApplicable14.ConstructioninprogressUnit:RMBItemsClosingbalanceOpeningbalanceConstructioninprogress2,036,326,757.721,032,505,633.51Total2,036,326,757.721,032,505,633.51（1）DetailsofconstructioninprogressUnit:RMBItemsClosingbalanceOpeningbalanceBookbalanceProvisionforimpairmentCarryingamountBookbalanceProvisionforimpairmentCarryingamountAnnualproductionof12millionsetsofintelligentthermalmanagementcomponentsofnewenergyvehiclestechnicalrenovationproject259,331,934.09259,331,934.09Annualproductionof208,351,289.28208,351,289.281,381,023.101,381,023.10ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport18412.5millionsetsofintelligentthermalmanagementmodulefornewenergyvehiclesconstructionprojectAnnualproductionof8millionsetsofintelligentthermalmanagementcomponentproject186,106,762.72186,106,762.72SanhuaMinshiAutomotiveinvestment21millioneurostoestablishanewautomotivepartsproductionlineproject138,550,445.99138,550,445.99IndustrialPlantEngineeringinMexico128,804,884.71128,804,884.713,725,739.803,725,739.80ThenewenergyvehiclethermalmanagementpartsproductionprojectinGuangdongSanhua113,445,275.23113,445,275.23Annualproductionof1.5millionsetsnewenergythermalmanagementcomponentproject87,649,308.5087,649,308.50108,269,402.41108,269,402.41Annualoutputof11millionsetsofhighefficiencyheatexchangecomponentfornewenergyvehiclesproject87,188,916.5587,188,916.55139,499,206.94139,499,206.94DormitoryofAutomotive77,248,786.3777,248,786.37973,975.02973,975.02150-3#-6#73,709,950.0073,709,950.00ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport185RentaldormitorybuildingsAnnualoutputof14millionsetsofnewenergycoolingcomponenttechnologyrenovationproject66,609,673.6166,609,673.6162,488,698.2562,488,698.25Annualoutputof11millionsetsofcomponentstechnicalrenovationprojects61,306,246.9061,306,246.9094,275,393.2494,275,393.245millionsetsoftechnicalrenovationprojectsandequipment28,032,778.6828,032,778.68418,584.08418,584.08VietnamIndustrialPlantEngineering27,351,178.9627,351,178.96Annualoutputof3millionsetsofthermalmanagementcomponentsfornewenergyvehiclestechnicalrenovationproject24,537,513.2024,537,513.2029,805,708.0229,805,708.02Annualoutputof4millionsetsofheatpumpcomponentsfornewenergyvehiclestechnicalrenovationproject16,303,564.1016,303,564.107,109,389.237,109,389.23Annualoutputof65millionsetsofintelligentcontrolcomponentsforcommercialrefrigerationandairconditioningproject14,882,282.3414,882,282.34224,972,262.42224,972,262.42ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport186Sanhuanewenergyvehiclebatterywatercooledplateproductionlineconstructionproject13,525,758.0313,525,758.03Annualoutputof3millionsetsofplateheatexchangeunitsandannualoutputof2millionsetsofEXVelectronicexpansionvalvecomponentsproject11,493,210.7811,493,210.785,808,045.045,808,045.04Annualoutputof7.3millionsetsofnewenergyvehiclethermalmanagementsystemcomponentproject225,840.24225,840.24others411,896,997.68411,896,997.68353,552,365.72353,552,365.72Total2,036,326,757.722,036,326,757.721,032,505,633.511,032,505,633.51（2）ChangesofsignificantconstructioninprogressincurrentperiodUnit:RMBItemsBudgetOpeningbalanceIncreasedincurrentperiodTransferredtofixedassetsinthecurrentperiodOtheramountsdecreasedincurrentperiodClosingbalanceAccumulatedinvestmenttobudget(%)Completionpercentage(%)AccumulatedamountofcapitalizedinterestIncluding:capitalizedinterestincurrentperiodCapitalizationrateforinterestincurrentperiodFundsourceAnnualproductionof65millionsetsofcommercialrefrigerationandairconditioning1,780,550,000.00224,972,262.42381,945,390.44592,035,370.5214,882,282.3472.85%72.85%RaisedfundsZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport187intelligentcontrolcomponentsconstructionprojectAnnualoutputof50.5millionsetsofhighefficiencyandenergysavingrefrigerationandairconditioningcontrolcomponentsproject785,570,000.0056,064,537.2756,064,537.2725.49%25.49%RaisedfundsAnnualproductionof8millionsetsofintelligentthermalmanagementcomponentsproject＄150,000,000.0033,662,258.66137,442,356.3164,061,735.51107,042,879.4616.11%16.11%Self-raisedfundsAnnualproductionof1.5millionsetsofnewenergythermalmanagementcomponentsproject650,500,000.00108,269,402.4181,892,850.59102,512,944.5087,649,308.50132.35%99.98%Self-raisedfundsAnnualoutputof11million940,000,000.00139,499,206.94224,000,782.85276,311,073.2487,188,916.5567.42%67.42%Self-raisedfundsZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport188setsofnewenergyvehicleshighefficiencyheatexchangerassemblyprojectAnnualoutputof12.5millionsetsintelligentthermalmanagementmodulefornewenergyvehiclesconstructionproject1,372,650,000.00208,351,289.28208,351,289.2815.18%15.18%Self-raisedfundsThenewenergyvehiclethermalmanagementpartsproductionprojectinGuangdongSanhua2,050,000,000.00113,445,275.23113,445,275.235.53%5.53%Self-raisedfundsTotal506,403,130.431,203,142,481.971,090,985,661.04618,559,951.36（3）Impairmenttestingofconstructioninprogress□Applicable√NotApplicable15.RightofuseassetsUnit:RMBItemsHousesandbuildingsVehicleTotalⅠ.OriginalCarryingamountZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1891.Openingbalance416,197,719.615,551,120.98421,748,840.592.Increasedincurrentperiod113,559,504.873,969,838.09117,529,342.96(1)Rent101,353,957.173,632,056.22104,986,013.39(2)ConverteddifferenceinForeignCurrencyStatements12,205,547.70337,781.8712,543,329.573.Decreasedincurrentperiod14,641,415.8914,641,415.89(1)Disposal14,641,415.8914,641,415.894.Closingbalance515,115,808.599,520,959.07524,636,767.66Ⅱ.Accumulatedamortization1.Openingbalance135,550,130.721,921,344.55137,471,475.272.Increasedincurrentperiod87,372,354.66932,919.0788,305,273.73(1)Accrual83,206,841.69797,377.8084,004,219.49(2)ConverteddifferenceinForeignCurrencyStatements4,165,512.97135,541.274,301,054.243.Decreasedincurrentperiod14,394,726.8714,394,726.87(1)Disposal14,394,726.8714,394,726.874.Closingbalance208,527,758.512,854,263.62211,382,022.13Ⅲ.Provisionforimpairment1.Openingbalance2.Increasedincurrentperiod（1）Accrual3.Decreasedincurrentperiod（1）Disposal4.ClosingbalanceⅣ.Carryingamount1.Closingbalance306,588,050.086,666,695.45313,254,745.532.Openingbalance280,647,588.893,629,776.43284,277,365.3216.IntangibleAssets（1）DetailsofintangibleassetsUnit:RMBItemsLanduserightOverseaslandownershipApplicationsoftwareIntellectualpropertyTotalⅠ.OriginalCarryingamountZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1901.Openingbalance713,720,608.5583,863,040.6244,529,249.8265,624,940.36907,737,839.352.Increasedincurrentperiod117,345,133.9913,800,135.7916,913,625.19148,058,894.97（1）Acquisition117,869,554.353,275,011.3315,809,957.13136,954,522.81（2）Internalresearchanddevelopment（3）Increasedinbusinessmerger（4）ConverteddifferenceinForeignCurrencyStatements-524,420.3610,525,124.461,103,668.0611,104,372.163.Decreasedincurrentperiod9,797,412.672,200,121.2112,800,000.0024,797,533.88（1）Disposal9,797,412.672,200,121.2112,800,000.0024,797,533.884.Closingbalance831,065,742.5487,865,763.7459,242,753.8052,824,940.361,030,999,200.44Ⅱ.Accumulatedamortization1.Openingbalance103,834,913.72596,533.1032,928,912.9438,991,387.94176,351,747.702.Increasedincurrentperiod16,659,385.88142,702.826,048,579.164,459,627.5527,310,295.41（1）Accrual16,722,904.70131,913.385,296,099.934,459,627.5526,610,545.56ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport191（2)ConverteddifferenceinForeignCurrencyStatements-63,518.8210,789.44752,479.23699,749.853.Decreasedincurrentperiod3,729,135.4912,800,000.0016,529,135.49（1）Disposal3,729,135.4912,800,000.0016,529,135.494.Closingbalance120,494,299.60739,235.9235,248,356.6130,651,015.49187,132,907.62Ⅲ.Provisionforimpairment1.Openingbalance4,122,739.964,122,739.962.Increasedincurrentperiod48,599.6448,599.64（1）Accrual（2)ConverteddifferenceinForeignCurrencyStatements48,599.6448,599.643.Decreasedincurrentperiod4,171,339.604,171,339.60（1）Disposal4,171,339.604,171,339.604.ClosingbalanceⅣ.CarryingamountZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1921.Closingbalance710,571,442.9487,126,527.8223,994,397.1922,173,924.87843,866,292.822.Openingbalance609,885,694.8379,143,767.5611,600,336.8826,633,552.42727,263,351.69Attheendofthisperiod,theproportionofintangibleassetsformedthroughinternalresearchanddevelopmentofthecompanytothebalanceofintangibleassetsis0.00%.17.Goodwill（1）OriginalCarryingamountofgoodwillUnit:RMBInvesteeoreventsresultingingoodwillOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceDuetobusinesscombinationDisposalR-SquaredPuckettInc.31,959,091.6031,959,091.60GoodwillofAssetGroupofZhejiangSanhuaplateExchangeTechnologyCo.,Ltd5,839,387.565,839,387.56GoodwillofNon-AssetGroupofZhejiangSanhuaplateExchangeTechnologyCo.,Ltd1,752,443.051,752,443.05Total39,550,922.2139,550,922.21（2）ProvisionforgoodwillimpairmentUnit:RMBInvesteeoreventsresultingingoodwillOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceProvisionmadeDisposalR-SquaredPuckettInc.31,959,091.6031,959,091.60GoodwillofNon-AssetGroupofZhejiangSanhuaplateExchange806,602.57806,602.57ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport193TechnologyCo.,LtdTotal31,959,091.60806,602.5732,765,694.17（3）OtherremarksGoodwillofNon-AssetGroupofZhejiangSanhuaplateExchangeTechnologyCo.,Ltd.referstothegoodwillformedbyrecognizingdeferredincometaxliabilitiesforassetvaluationappreciation,thegoodwillgeneratedwhenZhejiangSanhuaCommercialCo.,Ltd.acquiredandmergedZhejiangSanhuaplateExchangeTechnologyCo.,Ltd.undernon-commoncontrol,thegoodwillimpairmentlossisprovisionedsynchronouslywiththereversalofdeferredtaxliabilities.18.Long-termprepaymentsUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodAmortizationOtherdecreasesClosingbalanceRentalhousingconstructionandtransformationexpenditure45,670,895.5357,100,577.0111,681,710.7091,089,761.84Compensatedusefeeforemissionrights4,878,409.324,878,409.32Expendituresontoolingandmolds5,607,972.3133,624,937.1512,226,235.2127,006,674.25Total56,157,277.1690,725,514.1628,786,355.23118,096,436.0919.Deferredtaxassets/deferredtaxliabilities（1）DeferredtaxassetsbeforeoffsetUnit:RMBItemsClosingbalanceOpeningbalanceDeductibletemporarydifferenceDeferredtaxassetsDeductibletemporarydifferenceDeferredtaxassetsProvisionforbaddebt261,315,206.5854,641,190.49195,934,543.9239,038,062.56Provisionforinventorywrite-down42,325,391.268,139,006.8468,011,211.8211,412,992.83Unrealizedprofitfrominternaltransactions433,833,345.3634,546,191.69332,697,154.6332,810,835.04Deductiblelosses76,215,945.9518,485,636.55380,148,112.8158,645,816.34Deferredincome-governmentgrants378,102,855.5368,133,180.61253,297,140.8642,600,561.83Provisionforfixedassetsimpairments20,614,046.133,102,355.159,930,453.591,533,546.13Leaseliabilities85,136,567.3616,775,016.78ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport194Share-basedpaymentexpenses(accountingstandards)43,389,666.676,683,677.5171,597,367.2511,139,948.95Share-basedpaymentexpenses(differencebetweentaxandaccountingstandards)71,791,236.1211,058,611.5746,031,824.127,065,126.85Floatinglossofderivativeinstruments1,228,538.00184,280.703,949,625.00592,813.75Differencebetweenaccountingcostandtaxcostofconvertiblecorporatebonds108,793,134.6716,318,970.20Total1,413,952,798.96221,749,147.891,470,390,568.67221,158,674.48（2）DeferredtaxliabilitiesbeforeoffsetUnit:RMBItemsClosingbalanceOpeningbalanceTaxabletemporarydifferenceDeferredtaxliabilitiesTaxabletemporarydifferenceDeferredtaxliabilitiesAppreciationofassetsappraisalofthebusinesscombinationsnotundercommoncontrol9,008,004.601,351,200.6911,345,644.731,701,846.71Accelerateddepreciationofequipment2,047,041,074.93324,214,511.191,688,493,838.12263,941,331.71Floatinggainonderivatives1,463,100.00219,465.005,585,129.251,048,679.39Accruedinterestofcertificateofdeposit191,331,258.6230,267,866.29142,322,188.5322,066,063.56Right-of-useassets85,136,567.3616,775,016.78Total2,333,980,005.51372,828,059.951,847,746,800.63288,757,921.37（3）DeferredtaxassetsorliabilitiesafteroffsetshownonanetoffsettingbasisUnit:RMBItemsDeferredtaxassetsandliabilitiesoffsetamountattheendofthebalanceamountClosingbalanceofdeferredtaxassetsorliabilitiesafteroffsetDeferredtaxassetsandliabilitiesoffsetamountatthebeginningofthebalanceamountOpeningbalanceofdeferredtaxassetsorliabilitiesafteroffsetDeferredtaxassets65,316,990.66156,432,157.23221,158,674.48Deferredtaxliabilities65,316,990.66307,511,069.30288,757,921.37ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport195（4）DetailsofunrecognizeddeferredtaxassetsUnit:RMBItemsClosingbalanceOpeningbalanceProvisionforbaddebt66,300,549.0890,633,770.94Provisionforinventorywrite-down71,954,359.2959,634,193.38Deductiblelossesofsubsidiaries280,085,140.01137,111,606.69Investmentlossesrecognizedbytheequitymethod20,324,431.2914,838,204.13Floatinglossonderivatives9,490,572.0244,721,748.81Deferredincome-governmentgrants1,037,186.95747,574.78Total449,192,238.64347,687,098.73（5）DeductiblelossesofunrecognizeddeferredtaxassetswillexpireinthefollowingyearsUnit:RMBMaturityyearsClosingbalanceOpeningbalanceRemarksYear20251,160,674.551,176,424.56Year2026521,923.98673,774.12Year202723,055,008.7820,123,335.62Year202874,714,376.6410,478,078.42Year202916,716,170.447,488,066.67Year203012,549,643.8816,606,149.99Year203169,321,405.0366,879,893.60Year20326,336,459.0713,685,883.71Year203375,709,477.64Total280,085,140.01137,111,606.6920.Othernon-currentassetsUnit:RMBItemsClosingbalanceOpeningbalanceBookbalanceProvisionforimpairmentCarryingamountBookbalanceProvisionforimpairmentCarryingamountAdvancedpaymentfornon-currentassetspurchasing564,023,136.83564,023,136.83457,305,626.59457,305,626.59Total564,023,136.83564,023,136.83457,305,626.59457,305,626.59ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport19621.AssetswithtitleoruserightrestrictionsUnit:RMBItemsClosingOpeningBookbalanceCarryingamountTypeofrestrictionsReasonsforrestrictionsBookbalanceCarryingamountTypeofrestrictionsReasonsforrestrictionsCashandbankbalances76,476,700.9576,476,700.95PledgeGuaranteedeposit87,482,650.1287,482,650.12PledgeGuaranteedepositCashandbankbalances281,570,379.73281,570,379.73PledgePledgefinancing209,826,666.67209,826,666.67PledgePledgefinancingNotesreceivable2,214,363,880.382,208,446,869.75PledgePledgefinancing2,015,272,320.992,015,272,320.99PledgePledgefinancingAccountsreceivable66,621,446.8563,290,374.51PledgeDigitalandelectronicdebtvouchersthathavebeenendorsedordiscountedbutarenotdue296,551,088.70281,723,534.27PledgeDigitalandelectronicdebtvouchersthathavebeenendorsedordiscountedbutarenotdueTotal2,639,032,407.912,629,784,324.942,609,132,726.482,594,305,172.0522.Short-termborrowings（1）Categoriesofshort-termborrowingsUnit:RMBItemsClosingbalanceOpeningbalanceCreditborrowings200,000,000.00100,000,000.00Overseasloanunderdomesticguarantee1,002,451,361.04943,525,006.00Financialassetdiscountfinancing5,748,871.44249,357,225.37Pledgeandguaranteedloan220,000.00Accruedinterest3,950,146.37981,088.21Total1,212,150,378.851,294,083,319.58ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport19723.TradingfinancialliabilitiesUnit:RMBItemsClosingbalanceOpeningbalanceTradingfinancialliabilities3,500,000.003,500,000.00Including:Contingentconsiderationforbusinessmerge3,500,000.003,500,000.00Including:Total3,500,000.003,500,000.0024.DerivativefinancialliabilitiesUnit:RMBItemsClosingbalanceOpeningbalanceExchangeratederivative10,719,110.0244,709,998.81Futuresderivative461,375.00Total10,719,110.0245,171,373.8125.NotespayableUnit:RMBCategoriesClosingbalanceOpeningbalanceBankacceptance3,416,711,594.642,580,274,767.64Total3,416,711,594.642,580,274,767.6426.Accountspayable（1）DetailsofaccountspayableUnit:RMBItemsClosingbalanceOpeningbalanceWithin1year4,405,227,329.993,851,682,948.051to2years27,522,682.3518,716,087.912to3years10,155,105.497,655,237.97Over3years7,035,241.986,549,096.23Total4,449,940,359.813,884,603,370.1627.OtherpayablesUnit:RMBItemClosingbalanceOpeningbalanceOtherpayables250,642,662.86354,255,114.06Total250,642,662.86354,255,114.06ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport198（1）Otherpayables1）OtherpayableslistedbynatureUnit:RMBItemsClosingbalanceOpeningbalanceRestrictedsharesrepoobligations118,010,274.29214,659,660.00Compensationforproductqualityloss19,370,760.5815,270,978.03Guaranteedeposit41,716,593.2013,673,464.47Rentandpropertyfee2,401,192.284,859,929.85Collectionoftalentawards4,114,516.004,592,661.00Shareholdingtransferpayment3,500,000.00Others65,029,326.5197,698,420.71Total250,642,662.86354,255,114.0628.ContractliabilitiesUnit:RMBItemsClosingbalanceOpeningbalanceCustomercontractadvancepayment51,788,802.0357,955,080.60Total51,788,802.0357,955,080.6029.Employeebenefitspayable（1）DetailsofemployeebenefitspayableUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceⅠ.Short-termemployeebenefits464,664,017.263,556,649,017.783,439,758,760.05581,554,274.99Ⅱ.Post-employmentbenefits-definedcontributionplan6,840,467.11105,561,454.50100,384,302.9512,017,618.66Ⅲ.Terminationbenefits3,652,944.787,924,041.526,347,633.615,229,352.69Total475,157,429.153,670,134,513.803,546,490,696.61598,801,246.34（2）DetailsofShort-termemployeebenefitsUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalance1.Wage,bonus,allowancesandsubsidy426,154,617.002,691,477,436.882,588,872,061.00528,759,992.882.Employeewelfarefund522,798.23147,677,416.29147,394,665.34805,549.18ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport1993.Socialinsurancepremium12,990,659.88176,907,460.56171,176,350.0618,721,770.38Including:Medicarepremium3,743,732.8763,922,904.6062,049,718.555,616,918.92Occupationalinjuriespremium265,634.674,044,522.073,563,028.77747,127.97Maternitypremium37,181.62249,202.93164,508.69121,875.86Overseassocialsecuritycontributions8,944,110.72108,690,830.96105,399,094.0512,235,847.634.Housingprovidentfund1,329,442.4066,097,171.9067,407,328.3019,286.005.Dispatchingremuneration17,315,817.31446,547,843.07440,052,591.8323,811,068.556.Stockappreciationoption5,217,299.985,530,710.022,868,120.007,879,890.007.Other1,133,382.4622,410,979.0621,987,643.521,556,718.00Total464,664,017.263,556,649,017.783,439,758,760.05581,554,274.99（3）DetailsofdefinedcontributionplanUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalance1.Basicendowmentinsurancepremium6,609,221.19101,682,915.4296,688,409.6011,603,727.012.Unemploymentinsurancepremium231,245.923,878,539.083,695,893.35413,891.65Total6,840,467.11105,561,454.50100,384,302.9512,017,618.6630.TaxesandratespayableUnit:RMBItemsClosingbalanceOpeningbalanceEnterpriseincometax186,575,216.8771,995,026.46VAT30,168,036.7718,411,585.20Housingpropertytax23,482,515.6318,812,611.09Landusetax12,974,469.6012,197,167.13Urbanmaintenanceandconstructiontax5,330,039.264,291,676.87Educationsurcharge2,459,912.392,043,785.75Localeducationsurcharge1,639,941.611,362,523.90Overseastax99,516,370.9146,713,362.21Individualincometax12,843,108.539,417,459.50Others7,407,179.625,544,361.05Total382,396,791.19190,789,559.1631.Non-currentliabilitiesduewithinoneyearUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport200ItemsClosingbalanceOpeningbalanceGuaranteedborrowings1,370,000,000.00500,000,000.00Accruedinterest1,195,277.78465,277.78Leaseliabilities68,897,976.1567,661,063.89Total1,440,093,253.93568,126,341.6732.OthercurrentliabilitiesUnit:RMBItemsClosingbalanceOpeningbalanceOutputtaxtobewrittenoff2,099,986.272,007,578.03Total2,099,986.272,007,578.0333.Long-termborrowings（1）Categoriesoflong-termborrowingsUnit:RMBItemsClosingbalanceOpeningbalanceGuaranteedborrowings1,030,000,000.001,800,000,000.00Accruedinterest801,111.131,574,166.67Total1,030,801,111.131,801,574,166.6734.Bondspayable（1）BondspayableUnit:RMBItemsClosingbalanceOpeningbalanceSanhuaConvertiblebonds2,776,763,361.83Total2,776,763,361.83（2）Changesofbondspayable（doesnotincludepreferredshares,perpetualbondsandotherfinancialinstrumentsclassifiedasfinancialliabilities）Unit:RMBBondnameParvalueCouponReleasedateBondtermIssuanceamountOpeningbalanceCurrentissuanceAccruedinterestatparvalueAmortizationindiscountorpremiumCurrentrepaymentConversionfromsharestoequityinstrumeCurrentinterestpayableCurrentredemptionEndingbalanceWhetherdefaultZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport201ntsSanhuaConvertiblebonds100.00Jun,20216years3,000,000,000.002,776,763,361.835,000,000.0071,130,544.56-2,837,347,315.2011,993,564.803,553,026.39denyTotal——3,000,000,000.002,776,763,361.835,000,000.0071,130,544.56-2,837,347,315.2011,993,564.803,553,026.39——（3）ExplanationofConvertibleCorporateBondsExplanationofconditionsandtimeofshareconversionforconvertiblebonds.WiththeapprovalofChinaSecuritiesRegulatoryCommissionindocumentzjxk[2021]No.168,thecompanypubliclyissued30millionconvertiblecorporatebonds(hereinafterreferredtoasSanhuaconvertiblebonds)inJune2021,withafacevalueof100yuaneachandatotalissuanceamountof300millionyuan.ThestartandenddateofSanhuaconvertiblebondsisfromDecember7,2021toMay31,2027,andtheinitialconversionpriceis21.55yuan/share.72,307sharesweretransferredinthepriorperiodand141,926,470inthecurrentperiod,foratotalof141,998,777shares.37,663bondsremaining,allredeemed.35.LeasedliabilitiesUnit:RMBItemsClosingbalanceOpeningbalanceLeasepayables290,193,458.01269,689,545.98Less：Leasedliabilitiesduewithin1year-68,897,976.15-67,661,063.89Total221,295,481.86202,028,482.0936.Long-termpayablesUnit:RMBItemsClosingbalanceOpeningbalanceLong-termpayables11,290,788.324,831,202.13Total11,290,788.324,831,202.13（1）Long-termpayableslistedbynatureUnit:RMBItemsClosingbalanceOpeningbalanceStockappreciationrightsdeposit3,499,818.324,831,202.13Retentionmoney7,790,970.00Total11,290,788.324,831,202.13ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport20237.Long-termemployeebenefitspayable（1）Tableoflong-termemployeebenefitspayableUnit:RMBItemsClosingbalanceOpeningbalanceLong-termemployeerightsprotectionfunds39,840,362.77Total39,840,362.7738.DeferredincomeUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceReasonsforbalanceGovernmentgrants254,044,715.64163,601,198.2538,505,871.41379,140,042.48RelatedtoassetsTotal254,044,715.64163,601,198.2538,505,871.41379,140,042.48--39.Othernon-currentliabilitiesUnit:RMBItemsClosingbalanceOpeningbalanceEngineeringagentconstructionfund18,154,107.2523,729,805.25Long-termemployeerightsprotectionpayment34,260,376.62Total18,154,107.2557,990,181.8740.SharecapitalUnit:RMBOpeningbalanceChangedamountofcurrentperiod（+/-）ClosingbalanceIssueofnewsharesBonussharesReservetransferredtosharesOthersSubtotalTotalshares3,590,869,465.00141,746,070.00141,746,070.003,732,615,535.00Otherremarks:Inthecurrentperiod,141,926,470shareswereincreasedduetotheconversionof"Sanhuaconvertiblebonds",and180,400shareswerereducedduetotherepurchaseandcancellationofrestrictedshares.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport20341.Otherequityinstruments(1)Statementofchangesinpreferredshares,perpetualbondsandotherfinancialinstrumentsissuedattheendoftheperiodUnit:RMBFinancialinstrumentsissuedOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceQtyBookvalueQtyBookvalueQtyBookvalueQtyBookvalueConvertiblebonds29,984,457.00409,544,970.4129,984,457.00409,544,970.41Total29,984,457.00409,544,970.4129,984,457.00409,544,970.41Theincreaseanddecreaseofotherequityinstrumentsinthecurrentperiod,thereasonsforthechange,andthebasisofrelevantaccountingtreatment:WiththeapprovaloftheCSRCindocumentzjxk[2021]No.168,thecompanypubliclyissued30millionconvertiblecorporatebondsinJune2021,withafacevalueof100yuaneachandatotalissuanceamountof300millionyuan.Theamountoftheseconvertiblecorporatebondsinitiallyclassifiedasequityinstrumentsis409,766,556.24yuan.Inthecurrentperiod,duetotheconversionofdebttoequity,409,544,970.41yuanofequityinstrumentswasdecreased.42.CapitalreserveUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceCapitalpremium（Sharepremium）81,960,309.013,214,043,939.853,296,004,248.86Othercapitalreserve200,642,386.9755,720,530.1596,723,600.00159,639,317.12Total282,602,695.983,269,764,470.0096,723,600.003,455,643,565.9843.TreasurysharesUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceRestrictedshares214,659,660.0096,649,810.00118,009,850.00Reposhares115,363,315.53190,095,426.04305,458,741.57Total330,022,975.53190,095,426.0496,649,810.00423,468,591.5744.Othercomprehensiveincome(OCI)Unit:RMBItemsOpeningbalanceChangedamountofthecurrentperiodClosingbalanceCurrentperiodcumulativeLess:OCIcarriedLess:OCIcarriedLess:incomeAttributabletotheparentAttributabletoNon-ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport204beforeincometaxforwardtransferredtoprofitorlossforwardtransferredtoundistributedprofittaxexpenseCompanyaftertaxcontrollinginterestaftertaxItemstobereclassifiedsubsequentlytoprofitorloss-8,543,048.33123,300,112.61123,300,112.61114,757,064.28ConverteddifferenceinForeign-8,543,048.33123,300,112.61123,300,112.61114,757,064.28Othercomprehensiveincomeintotal-8,543,048.33123,300,112.61123,300,112.61114,757,064.2845.SurplusreserveUnit:RMBItemsOpeningbalanceIncreasedincurrentperiodDecreasedincurrentperiodClosingbalanceStatutorysurplusreserve837,028,002.43148,391,184.66985,419,187.09Discretionarysurplusreserve8,681,137.208,681,137.20Reservefund17,813,919.3817,813,919.38Total863,523,059.01148,391,184.661,011,914,243.67Remarksonsurplusreserve,includingmovementincurrentperiodandthereasonforchanges:ThisperiodincreasedbyRMB148,391,184.66,accordingtotheparentcompany'scurrentnetprofit10%ofthestatutorysurplusreserve.46.UndistributedprofitUnit:RMBItemsCurrentperiodPreviousperiodBalancebeforeadjustmentattheendofthepreviousperiod8,133,336,242.886,615,689,606.07Balanceafteradjustmentattheendofthepreviousperiod8,133,336,242.886,615,689,606.07Add:NetprofitattributabletoshareholdersoftheparentCompanyforcurrentyear2,920,992,940.012,573,344,179.92Less:Appropriationofstatutorysurplusreserve148,391,184.66161,738,529.31Payabledividendsonordinaryshares902,995,830.80893,959,013.80Closingbalance10,002,942,167.438,133,336,242.88Detailsofundistributedprofitsadjustmentatthebeginningoftheperiod1)duetotheretroactiveadjustmentoftheaccountingstandardsforbusinessenterprisesanditsrelevantnewprovisions,theundistributedprofitatthebeginningoftheperiod0.00yuan.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2052)duetothechangeofaccountingpolicy,theundistributedprofitatthebeginningoftheperiodwasaffectedby0.00yuan.3)duetothecorrectionofmajoraccountingerrors,theundistributedprofitatthebeginningoftheperiodwasaffectedby0.00yuan.4)thechangeofconsolidationscopeduetothesamecontrolaffectstheundistributedprofitatthebeginningoftheperiodby0.00yuan.5)thetotalimpactofotheradjustmentsontheundistributedprofitatthebeginningoftheperiodis0.00yuan.47.OperatingrevenueandOperatingcostUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeRevenueCostRevenueCostMainoperations23,942,063,896.2617,157,130,173.2320,494,502,732.6114,967,335,446.87Otheroperations615,738,170.33550,990,104.10853,047,008.39813,763,734.43Total24,557,802,066.5917,708,120,277.3321,347,549,741.0015,781,099,181.30Afterdeductingnon-recurringprofitorlossbyaudit,whetherthenetprofitisnegativeornot□Applicable√NotApplicableOtherremarks:1)RevenuedecompositionbyproductorservicetypeThedecompositionofrevenuebyproductorservicetypeisdetailedinnoteX(V)andaccountingestimate24tothefinancialstatements.2)Incomedecompositionwasaccordingtothetimeofgoodsorservicestransfer.ItemCurrentperiodcumulativePrecedingperiodcomparativeRecognitionofrevenueatacertainpointintime24,546,747,326.1021,337,361,339.43Total24,546,747,326.1021,337,361,339.4348.TaxesandsurchargesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeUrbanmaintenanceandconstructiontax41,620,164.9831,612,152.21Educationsurcharge20,384,359.0416,437,746.25Localeducationsurcharge13,605,572.7210,958,497.49Housingpropertytax28,446,815.0222,290,882.13Landusetax5,066,854.788,169,260.25Stampduty21,392,535.7413,239,684.94Localfoundationforwaterworks1,145,402.41995,943.11Overseastaxesandfees8,030,714.766,280,593.23Others123,603.0582,891.37Total139,816,022.50110,067,650.9849.AdministrativeexpensesUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport206ItemsCurrentperiodcumulativePrecedingperiodcomparativeLaborcost871,450,950.33715,760,569.17Share-basedpaymentremuneration51,167,739.3563,796,510.49Depreciationandamortizationexpense134,971,322.17129,839,251.84Officeexpense217,169,017.48174,159,668.47Intermediaryorganexpense78,105,298.3665,491,200.20Relocationpayment20,589,497.9132,137,262.51Entertainmentexpense24,892,269.9214,669,991.91Vehicleexpense18,256,637.9614,899,276.85Sporadicrenovationexpenseinthepark23,581,176.2924,954,126.54Securityfundforthedisabled5,838,805.653,287,378.79Others30,311,456.9327,979,735.22Total1,476,334,172.351,266,974,971.9950.SellingexpensesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeLaborcost331,659,767.15269,411,821.59Warehousing,freightandmiscellaneouscharges102,848,591.9197,821,539.87Entertainmentexpense62,370,229.5052,943,592.53Travelexpense42,454,354.3326,483,360.78Productwarrantyexpense65,738,686.7920,192,786.24Advertisingexpense24,044,549.1617,666,279.17Others34,188,146.2028,079,877.48Total663,304,325.04512,599,257.6651.R&DexpensesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeLaborcost586,262,227.24498,865,837.12Directinputexpense372,589,479.63348,796,355.72Depreciationandamortizationexpense42,222,750.7939,471,888.97Moldmanufacturingexpense52,682,753.4268,578,613.77Royalties12,029,990.6310,654,860.81OutsourcingR&Dexpense1,187,512.675,365,574.72Others29,859,510.0317,221,364.79Total1,096,834,224.41988,954,495.9052.FinancialexpensesUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport207ItemsCurrentperiodcumulativePrecedingperiodcomparativeInterestexpense212,081,658.78233,211,546.41Including:Interestonbondpayable76,130,544.56132,562,707.58Interestonleaseliabilities2,624,284.04133,741.11Interestincome-159,145,071.07-188,127,427.03Exchangegainsorlosses-133,515,123.19-228,843,448.26Others7,827,155.196,218,683.61Total-72,751,380.29-177,540,645.2753.OtherincomeUnit:RMBSourceoftheotherincomeCurrentperiodcumulativePrecedingperiodcomparativeGovernmentsubsidiesrelatedtoassets38,505,871.4129,910,459.07Governmentsubsidiesrelatedtorevenue110,601,829.4093,837,638.51VATextradeductions37,270,140.16Handlingfeesforwithholdingindividualincometax1,877,422.091,445,314.58Total188,255,263.06125,193,412.1654.GainsorlossesonchangesinfairvalueUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeFloatingincomeofbankfinancingproducts-25,980.08-1,117,394.66Contingentconsiderationpaymentforbusinesscombination-3,500,000.00Floatingincomeoffuturescontracts-3,400,201.17372,665.94Floatingincomeofforeignexchangecontract51,549,703.59-103,099,561.14Total48,123,522.34-107,344,289.8655.InvestmentincomeUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeInvestmentincomefromlong-termequityinvestmentsunderequitymethod7,986,227.167,732,273.62Businesscombinationnotundercommoncontrolcontingentconsiderations-3,500,000.00Gainsandlossesonbankfinancialproducts171,131.503,532,582.76ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport208Gainsandlossesonexchangeratederivatives-150,933,667.67-88,736,858.29Gainsandlossesonfuturesderivatives12,909,340.21-6,800,191.82Incomefromderecognitionoffinancialassetsmeasuredatamortizedcost-5,619,589.87-894,817.78Advancepaymentgains4,032,630.053,918,591.59Total-131,453,928.62-84,748,419.9256.CreditimpairmentlossUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeProvisionforbaddebt-51,477,741.58-97,762,426.98Total-51,477,741.58-97,762,426.9857.AssetsimpairmentlossUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeI.Inventorywrite-downlossandcontractperformancecostimpairmentloss-41,206,282.08-93,592,437.64II.Impairmentlossoffixedassets-13,364,006.60III.Goodwillimpairmentloss-806,602.57Total-55,376,891.25-93,592,437.6458.GainsonassetdisposalUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeGainsondisposalofassets8,741,208.41459,760,649.4059.Non-operatingrevenueUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeAmountrecordedintothecurrentnon-recurringprofitandlossExemptedpayment7,200,691.962,316,719.907,200,691.96Compensationandpenaltyincome3,348,736.312,360,757.643,348,736.31Gainsfromretirementoffixedassets1,419,940.46148,387.391,419,940.46Others2,963,564.661,954,254.022,963,564.66Total14,932,933.396,780,118.9514,932,933.3960.Non-operatingexpendituresUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport209ItemsCurrentperiodcumulativePrecedingperiodcomparativeAmountincludedinnon-recurringprofitorlossLossesonretirementoffixedassets11,318,566.9814,540,776.9011,318,566.98Litigationfordamages1,169,762.746,137,932.541,169,762.74Others2,136,968.301,745,504.732,136,968.30Total14,625,298.0222,424,214.1714,625,298.0261.Incometaxexpenses（1）IncometaxexpensesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeCurrentperiodincometaxexpenses537,385,513.45404,677,979.49Deferredincometaxexpenses82,163,240.5438,527,616.87Total619,548,753.99443,205,596.36（2）ReconciliationofaccountingprofittoincometaxexpensesUnit:RMBItemsCurrentperiodcumulativeIncomebeforetax3,553,263,492.98Incometaxexpensecalculatedattheapplicabletaxrate692,427,582.22Adjustmentofpreliminaryincometaxexpensesettlementandpayment12,130,983.14PlusdeductionofR&Dexpenses-160,053,901.72Thedifferencebetweentaxandaccountingstandardsforconvertiblecorporatebonds27,011,884.13Effectofutilizationofdeductiblelossesnotpreviouslyrecognizedasdeferredtaxassets25,762,605.94Others22,269,600.28Incometaxexpenses619,548,753.9962.OthercomprehensiveincomePleaserefertothenotesofbalancesheetitemsandothercomprehensiveincomefordetails.63.Notestoitemsoftheconsolidatedcashflowstatement（1）CashrelatedtooperatingactivitiesOthercashreceiptsrelatedtooperatingactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeGovernmentgrants238,258,666.39190,317,245.39ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport210Interestincome54,287,886.3869,627,397.60Rentalincome11,054,740.493,129,586.41Guaranteedeposit28,043,128.737,751,072.89Insuranceindemnities3,348,736.312,360,757.64Other4,840,986.751,954,254.02Total339,834,145.05275,140,313.95OthercashpaymentsrelatedtooperatingactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeGuaranteedepositandExpensepayments650,619,571.95591,377,089.64Total650,619,571.95591,377,089.64（2）CashrelatedtoinvestmentactivitiesOthercashreceiptsrelatedtoinvestingactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeRedemptionofbankfinancingproducts100,000,000.008,240,000.00Restrictedfunds26,801,109.49IncomefromFuturescontractderivativessettlement12,909,340.21Redemptionofcertificatesofdeposit962,037,101.21285,000,000.00Total1,101,747,550.91293,240,000.00ImportantcashreceivedrelatedtoinvestmentactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeCompensationforlandcollectionandstorage546,216,590.00Total546,216,590.00OthercashpaymentsrelatedtoinvestingactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativerestrictedfunds4,870,158.5111,540,191.45Lossonexchangeratederivativesinstrumentsettlement150,933,667.6789,037,070.52Lossonfuturesderivativessettlement6,800,191.82Total155,803,826.18107,377,453.79ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport211ImportantcashpaymentsrelatedtoinvestmentactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeConstructionprojectofintelligentcontrolcomponentsforcommercialrefrigerationandairconditioningwithanannualproductioncapacityof65millionsets309,743,621.56528,478,999.60Efficientandenergy-savingrefrigerationandairconditioningcontrolcomponenttechnologyrenovationprojectwithanannualproductioncapacityof50.5millionsets149,195,510.9170,727,961.93Total458,939,132.47599,206,961.53（3）CashrelatedtofinancingactivitiesOthercashreceiptsrelatedtofinancingactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeRestrictedfunds15,585,461.7344,015,965.02Notes/Electronicdebtvoucherdiscountfinancing16,289,050.35DepositofStockappreciationright4,831,202.13Total31,874,512.0848,847,167.15OthercashpaymentsrelatedtofinancingactivitiesUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeReposharesexpenses190,095,426.04104,577,950.13Restrictedstockrepurchaseexpenses1,572,760.001,868,825.00Rentalexpenses103,809,960.2763,525,409.50Restrictedfunds26,510,463.5410,019,914.98DepositofStockappreciationright1,331,383.81Total323,319,993.66179,992,099.61Changesinliabilitiesrelatedtofinancingactivities√Applicable□NotApplicableUnit:RMBItemsOpeningbalanceIncreaseDecreaseClosingbalanceChangesincashChangesinnon-cashChangesincashChangesinnon-cashShort-term1,294,083,319.984,075,989.803,950,146.37809,433,733.17260,525,343.731,212,150,378.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport212borrowings5885Long-termborrowings(includinglong-termborrowingsduewithinoneyear)2,302,039,444.45600,000,000.001,996,388.91502,039,444.452,401,996,388.91Bondspayable(includingbondspayableduewithinoneyear)2,776,763,361.8376,130,544.5615,546,591.192,837,347,315.20Leaseliabilities(leaseliabilitiesduewithinoneyear)269,689,545.98124,647,452.30103,809,960.27333,580.00290,193,458.01Dividendspayable902,995,830.80902,995,830.80Total6,642,575,671.841,584,075,989.801,109,720,362.942,333,825,559.883,098,206,238.933,904,340,225.77（4）PresentationofcashflowsonanetbasisThecashflowrelatedtocorporatebankwealthmanagementandlargedepositcertificatebusinessreferstothecashinflowsandoutflowsofprojectswithlargeamountsandshortmaturities,aspresentingtheabovecashflowsonanetbasiscanbetterexplaintheirimpactontheCompany’spaymentabilityandsolvency,andismorehelpfultoevaluatetheCompany’spaymentabilityandsolvencyandanalyzeitsfuturecashflows,theCompanypresentscashflowsrelatedtotheabovebusinessonanetbasis.Ifcashflowsrelatedtotheabovebusinessarepresentedonagrossbasis,effectsontheCompany’scashflowstatementareasfollows:Unit:RMBItemsIncreaseinthecurrentperiodIncreaseintheprecedingperiodOthercashreceiptsrelatedtoinvestingactivities150,599,133.34216,400,000.00Othercashpaymentsrelatedtoinvestingactivities150,599,133.34216,400,000.00（5）SignificantactivitiesnotinvolvingcashreceiptsandpaymentsEndorsedacceptanceanddigitalelectronicdebtvouchersthatdonotinvolvecashreceiptsandpaymentsZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport213Unit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeEndorsedacceptanceanddigitalelectronicdebtvouchers190,927,646.72153,096,073.61Including:Paymentforoperatingactivities186,949,115.96152,360,373.61Paymentforinvestmentactivities3,978,530.76735,700.0064.Supplementinformationtothecashflowstatement（1）SupplementinformationtothecashflowstatementUnit:RMBSupplementinformationCurrentperiodcumulativePrecedingperiodcomparative1.Reconciliationofnetprofittocashflowfromoperatingactivities:----Netprofit2,933,714,738.992,608,051,624.02Add:Provisionforassetsimpairmentloss106,854,632.83191,354,864.62Depreciationoffixedassets,oilandgasassets,productivebiologicalassets687,654,098.90537,069,500.40Amortizationofright-of-useassets84,004,219.4968,555,980.56Amortizationofintangibleassets26,610,545.5628,123,911.80AmortizationofLong-termprepayments28,786,355.239,859,380.30Lossondisposaloffixedassets,intangibleassetsandotherlong-termassets(Less:gains)-8,741,208.41-459,760,649.40Lossonretirementoffixedassets(Less:gains)9,898,626.5214,392,389.51Lossesonchangesinfairvalue(Less:gains)-48,123,522.34107,344,289.86Financialexpenses(Less:gains)-26,290,649.10131,751,392.89Investmentlosses(Less:gains)129,866,968.8083,653,602.14Decreaseofdeferredtaxassets(Less:increase)64,726,517.25-67,896,167.64Increaseofdeferredtaxliabilities(Less:decrease)18,753,147.93115,847,772.06Decreaseofinventories(Less:increase)-343,250,556.55-790,661,843.32Decreaseofoperatingreceivables(Less:increase)-1,398,918,684.91-1,896,835,512.76Increaseofoperatingpayables(Less:decrease)1,388,702,605.991,762,012,880.65ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport214Others69,716,518.4566,803,074.87Netcashflowsfromoperatingactivities3,723,964,354.632,509,666,490.562.Significantinvestingandfinancingactivitiesnotrelatedtocashreceiptsandpayments:Conversionofdebtintocapital2,837,347,315.20928,933.25ConvertiblebondsduewithinoneyearFixedassetsleasedinunderfinanceleases3.Netchangesincashandcashequivalents:Cashattheendoftheperiod3,624,955,498.842,050,328,601.77Less:Cashatthebeginningoftheperiod2,050,328,601.772,690,002,225.09Add:CashequivalentsattheendoftheperiodLess:CashequivalentsatthebeginningoftheperiodNetincreaseofcashandcashequivalents1,574,626,897.07-639,673,623.32（2）CompositionofcashandcashequivalentsUnit:RMBItemsClosingbalanceOpeningbalanceI.Cash3,624,955,498.8442,050,328,601.777Including:Cashonhand291,216.133329,823.400Cashinbankthatcanbereadilydrawnondemand3,624,655,126.8442,049,996,724.255Othermonetaryfundsthatcanbereadilyforpayment9,155.8772,054.122III.Cashandcashequivalentsatendofyear3,624,955,498.8442,050,328,601.777（3）SituationswherethescopeofuseislimitedbutstillclassifiedascashandcashequivalentsUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeReasonsforstillbeingclassifiedascashandcashequivalentsCashandbankbalances852,004,540.001,289,517,361.17Fundraising,specialpurpose,readyforwithdrawalatanytimeTotal852,004,540.001,289,517,361.17（4）CashandbankbalancesthatdonotbelongtocashandcashequivalentsUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport215ItemsCurrentperiodcumulativePrecedingperiodcomparativeReasonsthatdonotbelongtocashandcashequivalentsPrincipalandinterestofdepositcertificates2,883,252,484.143,740,432,400.66ManagementintendstoholdontomaturityMargindeposit35,074,314.1016,303,609.84LiquidityrestrictedFuturescontractmargin41,402,386.8571,179,040.28LiquidityrestrictedTotal2,959,729,185.093,827,915,050.7865Monetaryitemsinforeigncurrencies（1）MonetaryitemsinforeigncurrenciesUnit:RMBItemsClosingbalanceinforeigncurrenciesExchangerateRMBequivalentCashandBankBalances----Including:USD70,238,474.747.0827497,478,045.04EUR24,560,051.197.8592193,022,354.31Othercurrencies78,997,528.76Subtotal769,497,928.11Derivativefinancialassets----Including:USD1,598,764.507.082711,323,569.32Othercurrencies358,871.00Subtotal11,682,440.32Accountsreceivable----Including:USD195,108,218.287.08271,381,892,977.61EUR72,016,162.867.8592565,989,427.17Othercurrencies86,066,430.48Subtotal2,033,948,835.26OtherreceivablesIncluding:USD1,780,985.637.082712,614,186.92EUR248,793.427.85921,955,317.25Othercurrencies124,076,074.24Subtotal138,645,578.41Long-termreceivableIncluding:EUR58,000.007.8592455,833.60Short-termborrowingsIncluding:USD45,111,926.667.0827319,514,242.95EUR87,098,627.677.8592684,525,534.58Subtotal1,004,039,777.53AccountspayableIncluding:USD22,507,068.267.0827159,410,812.37EUR53,212,126.177.8592418,204,742.00Othercurrencies105,920,365.39Subtotal683,535,919.76OtherpayablesIncluding:USD3,574,433.927.082725,316,643.13EUR1,687,488.237.859213,262,307.52Othercurrencies33,523,174.42Subtotal72,102,125.07Non-currentliabilitiesdueZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport216withinoneyearIncluding:USD2,345,369.087.082716,611,545.58EUR1,413,126.887.859211,106,046.78Othercurrencies8,187,851.87Subtotal35,905,444.23LeaseliabilitiesIncluding:USD6,979,089.867.082749,430,799.75EUR8,060,089.487.859263,345,855.24Othercurrencies15,457,769.48Subtotal128,234,424.47（2）Notesonoverseasoperatingentities,includingforthesignificantoverseasoperatingentities,itsmainoperatinglocations,reportingcurrencyandthebasisforselectionshouldbedisclosed,andthereasonforchangesinreportingcurrencyshouldalsobedisclosed.√Applicable□NotApplicableTheCompanyhasseveraloverseassubsidiaries,locateintheUnitedStates,Europe,Japan,Poland,Mexico,Vietnamandothercountries,whereUSdollars,Euro,Japaneseyen,Polishzloty,MexicanpesosVietnamesedong,etc.areusedasthestandardreportingcurrency.66.Leases(1)TheCompanyaslessee1)PleaserefertosectionX(VIII)15ofnotestothefinancialstatementsfordetailsonright-of-useassets.2)PleaserefertosectionX(V)29ofnotestothefinancialstatementsfordetailsontheCompany’saccountingpoliciesonshort-termleasesandleasesforwhichtheunderlyingassetisoflowvalue.Theamountsofshort-termleasesandlow-valueassetleasesincludedintoprofitorlossareasfollows:ItemsCurrentperiodcumulativePrecedingperiodcomparativeExpenserelatingtoshort-termleases37,499,886.3522,190,437.02Total37,499,886.3522,190,437.023)ProfitorlossandcashflowsrelatedtoleasesItemsCurrentperiodcumulativePrecedingperiodcomparativeInterestexpensesonleaseliabilities2,624,284.041,333,741.11Totalcashoutflowsrelatedtoleases143,934,130.6687,049,587.634)PleaserefertosectionX(X)ofnotestothefinancialstatementsfordetailsonmaturityanalysisofleaseliabilitiesandrelatedliquidityriskmanagement.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport217(2)TheCompanyaslessor1)Operatingleasea.LeaseincomeItemsCurrentperiodcumulativePrecedingperiodcomparativeLeaseincome11,054,740.4910,188,401.57Including:Incomerelatingtovariableleasepaymentsnotincludedinthemeasurementoftheleaseliabilities——b.AssetsleasedoutunderoperatingleasesItemsClosingbalanceDecember31,2022Fixedassets34,172,628.2112,847,391.04Intangibleassets6,297,200.856,511,950.93Investmentproperty8,165,805.318,204,266.97Total48,635,634.3727,563,608.94PleaserefertosectionX(VII)13ofnotestothefinancialstatementsfordetailsonfixedassetsleasedoutunderoperatingleases.2)Undiscountedleasepaymentstobereceivedarisingfromnon-cancellableleasesbasedontheleasecontractsignedwithlesseeRemainingyearsClosingbalanceDecember31,2022Within1year7,306,068.167,972,292.40Total7,306,068.167,972,292.40VIII.Governmentgrants（1）GovernmentgrantsincreasedinthecurrentperiodUnit:RMBItemsAmountGovernmentgrantsrelatedtoassets163,601,198.25Including:Includedintodeferredincome163,601,198.25Governmentgrantsrelatedtoincome110,601,829.40Including:Includedintootherdincome110,601,829.40Total274,203,027.65ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport218（2）GovernmentgrantsrecognizedbasedonreceivablesUnit:RMBItemsClosingbookbalanceGovernmentgrantsreceivable4,061,100.73Total4,061,100.73（3）LiabilitiesrelatedtogovernmentgrantsUnit:RMBItemsOpeningbalanceIncreaseCarryoverClosingbalanceRemarksDeferredincome254,044,715.64163,601,198.2538,505,871.41379,140,042.48RelatedtoassetsTotal254,044,715.64163,601,198.2538,505,871.41379,140,042.48（4）GovernmentgrantsincludedintoprofitorlossUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeOtherincome149,107,700.81123,748,097.58Total149,107,700.81123,748,097.58IX.Interestinotherentities1.Compositionofenterprisegroup（1）ThecompanyincludessubsidiariessuchasZhejiangSanhuaAutomotivePartsCo.,Ltd.inthescopeofconsolidatedfinancialstatements.（2）BasicinformationofimportantsubsidiariesSubsidynameRegisteredcapitalMainoperatingplaceandplaceofregistrationBusinessnatureHoldingproportionAcquisitionmethodDirectIndirectZhejiangSanhuaAutomotiveComponentsCo.,Ltd.216,000ZhejiangAutomotivecomponents100.00%BusinesscombinationundercommoncontrolSanhua(hangzhou)MicroChannelHeat36,000ZhejiangRefrigerationcomponents100.00%BusinesscombinationundercommonZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport219ExchangerCo.,LtdcontrolZhejiangSanhuaTradingCo.,Ltd5,000ZhejiangRefrigerationcomponents100.00%InvestmentandestablishmentZhejiangSanhuaCommercialRefrigerationCo.Ltd165,529ZhejiangRefrigerationcomponents100.00%InvestmentandestablishmentSanhuaInternationalInc.37.55millionUSDUSABusiness100.00%InvestmentandestablishmentWuhuSanhuaAutomaticControlComponentsCo.,Ltd30,000AnhuiRefrigerationcomponents100.00%Investmentandestablishment2.Changesinthescopeofconsolidationduetootherreasons（1）IncreaseinconsolidationscopeSubsidynameEquityacquisitionmethodDateofequityacquisitionCapitalcontributionProportionofcapitalcontributionGuangdongSanhuaNewEnergyVehiclePartsCo.,Ltd.Investmentandestablishment2023-02-17183,712,500.00100%ShenyangSanhuaNewEnergyVehiclePartsCo.,Ltd.Investmentandestablishment2023-03-0817,000,000.00100%HangzhouSanhuaIntelligentEquipmentCo.,Ltd.Investmentandestablishment2023-01-0324,000,000.00100%SANHUASINGAPOREAUTOMOTIVEINVESTMENTPTELTDInvestmentandestablishment2023-11-200.00100%MinthSanhuaAutoPartsPolandSp.zooInvestmentandestablishment2023-01-245000PLN100%LEADERWAYCOAHUILA,S.DER.L.DEC.V.Investmentandestablishment2023-10-0110,000MXN100%SANHUAINDUSTRY(THAILAND)CO.,LTD.Investmentandestablishment2023-01-31100millionTHB100%（2）ReductioninconsolidationscopeNameEquitydisposalmethodDateofequitydisposalNetassetsondisposaldateNetprofitfromthebeginningoftheperiodtothedateofdisposalSuzhouXinzhiAutomotivePartsCo.,LtdLiquidationandcancellation2023-01-130.001,631.39ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2203.significantwholly-ownedsubsidiariesAsofDecember31,2023,thecompanyhasnosignificantwholly-ownedsubsidiaries.4.Equityinjointventuresorassociates（1）SignificantjointventuresandassociatesAsofDecember31,2023,thecompanyhasnosignificantjointventuresandassociates.（2）AggregatedfinancialinformationofinsignificantjointventuresandassociatesUnit:RMBItemsClosingbalance/CurrentperiodcumulativeOpeningbalance/PrecedingperiodcomparativeAssociates----Totalbookvalueofinvestment37,924,431.2932,438,204.13Totalofthefollowingitemscalculatedbyshareholdingratio7,986,227.167,732,273.62-Netprofit7,986,227.167,732,273.62-Totalcomprehensiveincome7,986,227.167,732,273.62X.RisksRelatedtoFinancialInstrumentsInriskmanagement,theCompanyaimstoseektheappropriatebalancebetweentherisksandbenefitsfromitsuseoffinancialinstrumentsandtomitigatetheadverseeffectsthattherisksoffinancialinstrumentshaveontheCompany’sfinancialperformance,soastomaximizetheprofitsofshareholdersandotherequityinvestors.Basedonsuchriskmanagementobjectives,theCompany’sriskmanagementpoliciesareestablishedtoidentifyandanalyzetherisksfacedbytheCompany,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadheren。

7. cetolimitsonatimelyandreliablebasis.Thecompanyfacesvariousrisksrelatedtofinancialinstrumentsindailyactivities,mainlyincludingcreditrisk,liquidityrisk,andmarketrisk.Themanagementhasreviewedandapprovedpoliciesformanagingtheserisks,summarizedasfollows.(I)CreditriskCreditriskistheriskthatonepartytoafinancialinstrumentwillcauseafinanciallossfortheotherpartybyfailingtodischargeanobligation.1.Creditriskmanagementpractice(1)EvaluationmethodofcreditriskAteachbalancesheetdate,theCompanyassesseswhetherthecreditriskonafinancialinstrumenthasZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport221increasedsignificantlysinceinitialrecognition.Whenassessingwhetherthecreditriskhasincreasedsignificantlysinceinitialrecognition,theCompanytakesintoaccountreasonableandsupportableinformation,whichisavailablewithoutunduecostoreffort,includingqualitativeandquantitativeanalysisbasedonhistoricaldata,externalcreditriskrating,andforward-lookinginformation.TheCompanydeterminesthechangesindefaultriskoffinancialinstrumentsduringtheestimatedlifetimethroughcomparisonofthedefaultriskatthebalancesheetdateandtheinitialrecognitiondate,onanindividualbasisoracollectivebasis.TheCompanyconsidersthecreditriskonafinancialinstrumenthasincreasedsignificantlywhenoneormoreofthefollowingqualitativeandquantitativestandardsaremet:1)Quantitativestandardmainlyrelatestothescenarioinwhich,atthebalancesheetdate,theprobabilityofdefaultintheremaininglifetimehasrisenbymorethanacertainpercentagecomparedwiththeinitialrecognition;2)Qualitativestandardmainlyrelatestosignificantadversechangesinthedebtor’soperationorfinancialposition,presentorexpectedchangesintechnology,market,economyorlegalenvironmentthatwillhavesignificantadverseimpactonthedebtor’srepaymentability.(2)Definitionofdefaultandcredit-impairedassetsAfinancialinstrumentisdefinedasdefaultedwhenoneormorefollowingeventshaveoccurred,ofwhichthestandardisconsistentwiththatforcredit-impairment:1)significantfinancialdifficultyofthedebtor;2)abreachofbindingclauseofcontract;3)itisverylikelythatthedebtorwillenterbankruptcyorotherfinancialreorganization;4)thecreditorofthedebtor,foreconomicorcontractualreasonsrelatingtothedebtor’sfinancialdifficulty,havinggrantedtothedebtoraconcession(s)thatthecreditorwouldnototherwiseconsider.2.MeasurementofexpectedcreditlossesThekeyfactorsinthemeasurementofexpectedcreditlossincludetheprobabilityofdefault,lossrateofdefault,andexposuretodefaultrisk.TheCompanydevelopsamodeloftheprobabilityofdefault,lossrateofdefault,andexposuretodefaultriskonthebasisofquantitativeanalysisofhistoricaldata(e.g.counterpartyrating,guaranteemeasuresandcollateraltype,paymentmethod,etc.)andforward-lookinginformation.3.Theadjustmenttablefortheopeningbalanceandclosingbalanceoffinancialinstrumentlossreservesisdetailedintherelevantnotestothesefinancialstatements.4.ExposuretocreditriskandconcentrationofcreditriskTheCompany’screditriskisprimarilyattributabletocashandbankbalancesandreceivables.Inordertocontrolsuchrisks,theCompanyhastakenthefollowingmeasures:(1)CashandbankbalancesTheCompanydepositsitsbankbalancesandothercashandbankbalancesinfinancialinstitutionswithrelativelyhighcreditlevels,hence,itscreditriskisrelativelylow.(2)ReceivablesTheCompanyperformscreditassessmentoncustomersusingcreditsettlementonacontinuousbasis.TheCompanyselectscredibleandwell-reputedcustomersbasedoncreditassessmentresult,andconductsongoingmonitoringonbalanceofreceivables,toavoidsignificantrisksinbaddebts.TheCompanyconductstransactionswithrecognizedandcreditworthycustomers,andcreditriskiscentrallymanagedbycustomers.TheCompanyhadcertaincreditconcentrationrisks,theaccountreceivablesmainlyoriginatefromthetopfivecustomerswithoutstandingbalances.TheaccountsreceivablefromtheCompany'scustomershavebeendigitizedandelectronic,withcertaincreditliquidity.Inaddition,thebalanceoftheCompany'saccountsreceivablebasicallydoesnotholdcollateralorothercreditenhancements.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport222ThemaximumamountofexposuretocreditriskoftheCompanyisthecarryingamountofeachfinancialassetatthebalancesheet.(II)LiquidityriskLiquidityriskistheriskthattheCompanymayencounterdeficiencyoffundsinmeetingobligationsassociatedwithcashorotherfinancialassetssettlement,whichispossiblyattributabletofailureinsellingfinancialassetsatfairvalueonatimelybasis,orfailureincollectingliabilitiesfromcounterpartiesofcontracts,orearlyredemptionofdebts,orfailureinachievingestimatedcashflows.Inordertocontrolsuchrisk,theCompanycomprehensivelyutilizesfinancingtoolssuchasnotessettlement,bankborrowings,etc.andadoptslong-termandshort-termfinancingmethodstooptimizefinancingstructures,andfinallymaintainsabalancebetweenfinancingsustainabilityandflexibility.TheCompanyhasobtainedcreditlimitfromseveralcommercialbankstomeetworkingcapitalrequirementsandexpenditures.Thefinancialliabilitiesofthecompanyareclassifiedandpresentedbasedonremainingtimeperiodtillmaturityinthetablebelow:ItemsClosingbalanceCarryingamountContractamountnotyetdiscountedWithin1year1-3yearsOver3yearsShort-termborrowings1,212,150,378.851,220,397,152.461,220,397,152.46Notespayable3,416,711,594.643,416,711,594.643,416,711,594.64Accountspayable4,449,940,359.814,449,940,359.814,449,940,359.81Otherpayable250,642,662.86250,642,662.86250,642,662.86Non-currentliabilitiesduewithinoneyear1,440,093,253.931,451,597,753.931,451,597,753.93Long-termborrowings1,030,801,111.131,091,440,666.681,091,440,666.68Leaseliabilities221,295,481.86227,606,748.4212,657,389.96105,453,688.05109,495,670.41Subtotal12,021,634,843.0812,108,336,938.8010,801,946,913.661,196,894,354.73109,495,670.41(Continued)ItemsOpeningbalanceCarryingamountContractamountnotyetdiscountedWithin1year1-3yearsOver3yearsShort-termborrowings1,294,083,319.581,318,138,966.951,318,138,966.95Held-for-tradingfinancialliabilities3,500,000.003,500,000.003,500,000.00Notespayable2,580,274,767.642,580,274,767.642,580,274,767.64Accountspayable3,884,603,370.163,884,603,370.163,884,603,370.16Otherpayable354,255,114.06354,255,114.06354,255,114.06Non-currentliabilitiesduewithinoneyear568,126,341.67576,413,851.86576,413,851.86Long-termborrowings1,801,574,166.671,885,327,439.311,885,327,439.31Bondspayable2,776,763,361.833,403,596,480.6912,858,645.4863,972,770.233,326,765,064.98Leaseliabilities202,028,482.09202,028,482.091,905,044.87101,977,666.9498,145,770.28Subtotal13,465,208,923.7014,208,138,472.768,731,949,761.022,051,277,876.483,424,910,835.26(III)MarketriskZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport223MarketriskistheriskthattheCompanymayencounterfluctuationinfairvalueorfuturecashflowsoffinancialinstrumentsduetochangesinmarketprice.Marketriskmainlyincludesinterestrateriskandexchangeraterisk.1.InterestRateRiskInterestrateriskreferstotheriskoffluctuationsinthefairvalueorfuturecashflowsoffinancialinstrumentsduetochangesinmarketinterestrates.Fairvalueinterestrisksarisefromfixed-ratefinancialinstruments.TheCompanydeterminestheproportionoffixed-ratefinancialinstrumentsandfloating-ratefinancialinstrumentsbasedonthemarketenvironment.Thescaleofthecompany'sliabilitiesneedtopayinterestiscontrolledatareasonablelevel,andtheburdenoffinancialexpensesisnotheavy.Anincreaseininterestrateswithinareasonablerangewillnothaveasignificantadverseimpactonfinancialperformance.Thecompany'smanagementwillcontinuetomonitorinterestratelevelsandtakenecessaryresponsemeasuresinatimelymannerbasedonthelatestmarketconditions2.ExchangeRateRiskTheexchangerateriskreferstotheriskoffluctuationsinthefairvalueorfuturecashflowsoffinancialinstrumentsduetochangesinforeignexchangerates.Thecompany'sproductionbaseandsalesmarketaredistributedinmajordevelopedanddevelopingcountries,includingtheUnitedStates,theEuropeanUnion,Japan,India,Mexico,etc.Thebusinessvolumesettledineurosanddollarshasacertainproportion,anditfacessignificantexchangeraterisks.Basedoninternalriskcontrolpolicies,thecompany'smanagementhastakenseveralmeasurestorespondexchangeraterisks.Firstly,basedonthetrendofexchangeratefluctuations,timelysettlementordelayedsettlementofexportreceipts;secondly,hedgeforeigncurrencymonetaryassetsandcontrolnetriskexposurebyoverseasfinancingthroughdomesticguaranteeandexternalloan;thirdly,carryoutforwardexchangesettlementandforeigncurrencyswapbusiness,andlockinexchangerates.Thesituationofthecompany'sforeigncurrencymonetaryassetsandliabilitiesattheendoftheperiodcanbefoundinsection10(7)ofthenotestotheconsolidatedfinancialstatementsforforeigncurrencymonetaryitemsinsection65.(IV)Financialassetstransfer1.FinancialassetsderecognizedduetotransferItemsWaysoffinancialassetstransferCurrenttransferamountGainsorlossesClosingBalanceBankacceptancebillEndorsementpayment87,972,797.70—24,814,344.52Bankdiscount99,187,040.61-694,546.6260,138,863.14Total187,159,838.31-694,546.6284,953,207.66ItemsWaysoffinancialassetstransferCurrenttransferamountGainsorlossesClosingBalanceFinancialcompanyacceptancebillBankdiscount42,410.07-280.5242,410.07Endorsementpayment191,089.61—ElectronicdebtvoucherEndorsementpayment102,902,759.41—61,542,924.93Bankdiscount16,246,640.28-165,253.465,078,521.92Total119,382,899.37-165,533.9866,663,856.92ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport224XI.DisclosureofFairValues1.FairvaluesoftheassetsandliabilitiesattheendoftheperiodUnit:RMBItemNameFairvalueasofthebalancesheetdateLevel1fairvaluemeasurementLevel2fairvaluemeasurementLevel3fairvaluemeasurementTotalI.Continuousfairvaluemeasurement--------1.Held-for-tradingfinancialassets1,757,120.5820,878,992.1022,636,112.68(3)Derivativefinancialassets1,757,120.5820,878,992.1022,636,112.68Totalamountofassetsconstantlymeasuredattheirfairvalues1,757,120.5820,878,992.1022,636,112.686.Held-for-tradingliabilities10,719,110.023,500,000.0014,219,110.02Derivativefinancialliabilities10,719,110.0210,719,110.02Others3,500,000.003,500,000.00Totalamountofliabilitiesconstantlymeasuredattheirfairvalues10,719,110.023,500,000.0014,219,110.02II.Non-constantmeasurementatfairvalue--------2.Basisfordeterminingthemarketpriceofitemsunderfirstlevelconstantandnon-constantmeasurementatfairvalue.Thefairvalueoffuturescontractsismeasuredattheexchange'sopenmarketquotes.3.Itemsundersecondlevelconstantandnon-constantmeasurementatfairvalue,valuationtechniqueadopted,andqualitativeandquantitativeinformationofimportantparametersThefairvalueofexchangeratecontractsismeasuredbasedonthevaluationamountofthehostbankortheforwardforeignexchangerateannouncedbytheBankofChina.Bankfinancingproductsaremeasuredbasedonthevaluationamountoftheissuerormanager.4.Itemsunderthirdlevelconstantandnon-constantmeasurementatfairvalue,valuationtechniqueadopted,andqualitativeandquantitativeinformationofimportantparametersContingentpaymentconsiderationofbusinesscombinationaremeasuredaccordingtothecontractagreementbasedonthecompany's(ZhejiangSanhuaBoardExchangeTechnologyCo.,Ltd)2023profitdataforecast.XII.Relatedpartyrelationshipsandtransactions1.ParentCompanyParentCompanyPlaceofregistrationBusinessnatureRegisteredcapitalHoldingproportionovertheCompanyVotingrightproportionovertheCompanySanhuaHoldingGroupCo.,LtdZhejiangProvinceIndustrialInvestment730millionyuan25.41%45.31%RemarksontheparentCompany:ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport225AsofDecember31,2023,SanhuaHoldingGroupCo.,Ltd.(HereinafterreferredtoasSHG)directlyholds25.41%oftheCompany'sshares,andindirectlyholds19.9%ofthesharesthroughitssubsidiaries,foratotalof45.31%oftheshares.ThefinalcontrollersoftheCompanyareMrZhangDaocai,MrZhangYaboandZhangShaobo.2.InformationabouttheCompany'ssubsidiariesPleaserefertointerestinotherentitiesofnotestofinancialstatements.3.JointventuresandassociatesoftheCompanyPleaserefertonotestofinancialstatementsfordetailsontheCompany’ssignificantjointventuresandassociates.DetailsofotherjointventuresorassociatescarryingoutrelatedpartytransactionswiththeCompanyincurrentperiodorinprecedingperiodbutwithbalanceincurrentperiodareasfollows:AssociatesorjointventuresRelationshipwiththeCompanyAbbreviationofassociateChongqingTainuoMachineryCo.,LtdJointventuresCTMCQingdaoSanhuaJinlifengMachineryCo.,LtdJointventuresQSJMZhongshanXuanyiPipeMakingCo.,LtdJointventuresZXPMNingboJinlifengMachineryCo.,LtdJointventuresNJM4.OtherrelatedpartiesoftheCompanyOtherrelatedpartiesoftheCompanyRelationshipwiththeCompanyZhejiangSanhuaGreenEnergyIndustrialGroupCo.,Ltd.Shareholders,underthecontrolofthesameparentcompanyZSGEHangzhouTongchanMachineryCo.,Ltd.UnderthecontrolofthesameparentcompanyHTMHangzhouSanhuaResearchInstituteCo.,Ltd.UnderthecontrolofthesameparentcompanyHSRIHangzhouLvnengNewEnergyVehiclePartsCo.,LtdPreviouslycontrolledbySanhuaResearchInstituteHLNEHangzhouSanhuaInternationalBuildingCo.,Ltd.UnderthecontrolofthesameparentcompanyHSIBXinchangCountySanhuaPropertyManagementCo.,Ltd.UnderthecontrolofthesameparentcompanyXCSPShanghaiSanhuaElectricCo.,LtdUnderthecontrolofthesameparentcompanySSEZhejiangSanhuaZhichengRealEstateDevelopmentCo.,Ltd.UnderthecontrolofthesameparentcompanyZSZRZhejiangHaoyuanTechnologyCo.,Ltd.UnderthecontrolofthesameparentcompanyZHTZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport226NingboFuerdaIntelligenttechnologyCo.,Ltd.UnderthecontrolofthesameparentcompanyNFSWuhuAldaTechnologyCo.,Ltd.Joint-stockenterpriseoftheparentcompanyWATHangzhouFormostMaterialTechnologyCo.,LtdJoint-stockenterpriseoftheparentcompanyHFMTNingboJiaerlingPneumaticMachineryCo.,Ltd.UnderthecontrolofthesameparentcompanyNJPMTianjinSanhuaIndustrialParkManagementCo.,Ltd.UnderthecontrolofthesameparentcompanyTSIPShaoxingSanhuaZhiyueRealEstateDevelopmentCo.,Ltd.UnderthecontrolofthesameparentcompanySSZRShanghaiShijiaTechnologyCo.,Ltd.ShiJianhuiasdirectorSST5.Relatedpartytransactions（1）Purchaseandsaleofgoods,renderingandreceivingservicesPurchaseofgoodsandreceivingofservicesUnit:RMBRelatedpartiesContentoftransactionCurrentperiodcumulativeApprovedTransactionLimitOvertheTransactionLimitorNoPrecedingperiodcomparativeSHGServices556,770.5675,100,000.00117,481.65SHGGoods33,457.6075,100,000.00ZSGEGoods1,975,992.8875,100,000.00ZSGEServices4,196,676.6275,100,000.005,067,869.97HSRIGoods405,850.00HSRIServices76,543.0375,100,000.00115,504.52NFSGoods32,409,031.07ZXPMGoods19,627,331.8422,400,000.0016,665,387.16ZHTGoods38,202,410.3075,100,000.00ZHTServices1,939,571.5175,100,000.001,392,002.29QSJMGoods4,471,352.504,500,000.002,214,292.50WATGoods147,911.48100,000.0021,522.13HLNEServices309,962.61XCSPServices301,617.9275,100,000.0018,867.92NJPMGoods350,188.2075,100,000.00TSIPServices919,982.3075,100,000.00SaleofgoodsandrenderingofservicesUnit:RMBRelatedpartiesContentoftransactionCurrentperiodcumulativePrecedingperiodcomparativeSHGGoods2,879.1820,895.46SHGServices1,684,018.881,684,018.87HFMTServices148,754.72148,754.72ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport227ZHTGoods509,001.99QSJMGoods193,143.681,379,123.17HLNEGoods4,167,522.6421,470,743.61CTMCGoods299,624.26HSRIGoods242,670.226,310,833.15WATServices98,319.77100,310.67WATGoods39,567.85ZSZRGoods7,893.80ZXPMGoods52,701.18SSZRServices9,905.66NJPMGoods178,619.47SSTGoods308,194.07NJMGoods584,886.76RemarksofrelatedtransactionsrelatedtothepurchaseandsaleofgoodsandtheprovisionandacceptanceofservicesDuetothelargenumberofrelatedpartiesinvolvedinrelatedpartytransactionsbetweentheparentCompanySanhuaHoldingGroupCo.,Ltdanditssubsidiaries,thetransactionlimitwithSanhuaHoldingsGroupCo.,Ltd.anditssubsidiariesisapprovedthroughaconsolidatedsummary,withapurchasegoods,purchaserent,equipmentlease,propertymanagement,waterandelectricitypower,andservicefeelimitof75.10millionyuan.（2）RelatedpartyleasesTheCompanyasthelessor：Unit:RMBLesseesTypesofassetleasedConfirmedrentalincomeCurrentperiodPrecedingperiodSHGOfficebuilding5,309,339.445,309,339.45SSZROfficebuilding48,165.14HFMTPlant300,342.84300,342.85WATPlant954,666.15937,100.88TheCompanyasthelessee：Unit:RMBLessorTypesofassetleasedConfirmedrentalexpensesCurrentperiodPrecedingperiodHSRIOfficebuilding1,057,028.581,252,457.14Plant457,371.42Dormitory349,761.47ZSGEDormitory2,794,933.242,247,283.42Plant3,800,609.802,883,371.65TSIPPlant1,789,323.30（3）RelatedpartyguaranteesUnit:RMBGuaranteedpartiesGuaranteedpartyTypesofdebtinstrumentsAmountguaranteedSHGThecompanyanditssubsidiariesBankloans2400millionyuanZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport228SHGThecompanyBankguarantee3millionyuan（4）AssetstransferanddebtrestructuringoftherelatedpartiesUnit:RMBRelatedpartiesContentofrelatedpartytransactionsCurrentperiodcumulativePrecedingperiodcomparativeHTMPurchasingequipment517,522.13SHGPurchasingvehicles131,626.41HSRISellingEquipment205,309.73HSRIPurchasingequipment1,120,684.00HLNEPurchasingequipment1,537,099.74（5）Keymanagement’semolumentsUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeKeymanagement’semoluments17,415,700.0016,442,600.00（6）OtherrelatedpartytransactionsUnit:RMBAbbreviationofassociateContentoftransactionCurrentperiodcumulativePrecedingperiodcomparativeZSGEWaterandelectricitypayment8,958,049.189,961,116.87ZHTWaterandelectricitypayment12,960,193.58TSIPWaterandelectricitypayment1,164,076.58SHGWaterandelectricitycollection830,948.28853,994.99HFMTWaterandelectricitycollection594,361.13898,625.43HSRIWaterandelectricitycollection1,833,782.251,694,581.23WATWaterandelectricitycollection390,267.49363,426.93ZSGEWaterandelectricitycollection947,855.37693,341.07ZHTWaterandelectricitycollection23,932,470.68166,623.55SSZRWaterandelectricitypayment3,150.55Inaddition，itisaffectedbytheinconsistencybetweentheregisteredpermanentresidenceofafewemployeesandtheplaceofwork,therearetransactionsbetweenrelatedpartiesthatpayemployeesocialinsurancepremiumandhousingaccumulationfundonbehalfofthem.Incurrentperiod，thecompanypaysfortherelatedpartyRMB862,432.60.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2296.Balanceduetoorfromrelatedparties（1）ReceivablesUnit:RMBItemsRelatedpartiesClosingbalanceOpeningBalanceBookbalanceProvisionforbaddebtsBookbalanceProvisionforbaddebtsAccountsreceivableHSRI2,542.50127.13577,932.6528,896.63AccountsreceivableHLNE9,075,252.25453,762.61AccountsreceivableQSJM10,000.00500.00AccountsreceivableWAT6,139.97307.00AccountsreceivableSST48,205.802,410.29OtherreceivablesZHT670,000.00670,000.00670,000.0051,475.00AccountsprepaidZXPM67,660.61（2）PayablesUnit:RMBItemsRelatedpartiesClosingbalanceOpeningBalanceAccountspayableQSJM380,902.10AccountspayableZXPM14,415,289.63AccountspayableZHT352,333.66AccountspayableHSRI357,150.00719,760.50AccountspayableNJPM300,646.95OtherpayablesHFMT100,000.00100,000.00OtherpayablesHSRI20,000.00OtherpayablesZSGE387,216.00OtherpayablesTSIP706,263.58XIII.Share-basedpayment1.Overallinformation√Applicable□NotapplicableUnit:RMBObjectsGrantedinthecurrentperiodVestedinthecurrentperiodUnlockedinthecurrentperiodExpiredinthecurrentperiodQuantityAmountQuantityAmountQuantityAmountQuantityAmountManagementpersonnel4,088,00033,937,400.0056,200465,400.00R&Dpersonnel4,430,90036,169,800.0095,800744,200.00Salespersonnel1,405,10011,638,700.007,80069,800.00Productionpersonnel1,164,0009,604,800.0020,600157,200.00Total11,088,00091,350,700.00180,4001,436,600.00ShareoptionsandotherequityinstrumentsoutstandingatthebalancesheetdateZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport230√Applicable□NotapplicableObjectsShareoptionsoutstandingOtherequityinstrumentsoutstandingRangeofexercisepricesRemainingcontractuallifeRangeofexercisepricesRemainingcontractuallifeManagementpersonnelTheadjustedrestrictedstockgrantpriceis9.65yuanFromthedateofgrant,unlockinbatcheswithin12monthsafter12months,24months,and36months.R&DpersonnelTheadjustedrestrictedstockgrantpriceis9.65yuanFromthedateofgrant,unlockinbatcheswithin12monthsafter12months,24months,and36months.SalespersonnelTheadjustedrestrictedstockgrantpriceis9.65yuanFromthedateofgrant,unlockinbatcheswithin12monthsafter12months,24months,and36months.ProductionpersonnelTheadjustedrestrictedstockgrantpriceis9.65yuanFromthedateofgrant,unlockinbatcheswithin12monthsafter12months,24months,and36months.OtherRemarks:(1)IncentiveplanforRestrictedstockimplementedin2020InFebruary2020，theCompanyimplementedarestrictedstockincentiveplanforcoreemployees.Amongthem，thenumberofrestrictedstocksgrantedwas12.045millionshares,andthegrantpricepersharewasRMB9.85，ThegrantdatewasFebruary24,2020,anditwillbeunlockedyearbyyearinbatchesataratioof30%:30%:40%.InJune2020,theCompanyimplementedthe2019equitydistribution.InSeptember2020,theCompanyimplementedthe2020semi-annualequitydistribution.InMay2021,theCompanyimplementedthe2020equitydistribution.InApril2022,theCompanyimplementedthe2021equitydistribution.InSeptember2022,theCompanyimplementedthe2022semi-annualequitydistribution.InJune2023,theCompanyimplementedthe2022equitydistribution.Accordingtothemethodstipulatedinthe"2020RestrictedStockIncentivePlan",theexercisepriceandquantityoftheunderlyingstocksinvolvedwereadjustedaccordingly.Aftertheadjustment,thenumberofrestrictedstocksgrantedwas15.6585millionshares,andthegrantpricepersharewasRMB6.6615.(2)IncentiveplanforRestrictedstockimplementedin2022InMay2022，theCompanyimplementedarestrictedstockincentiveplanforcoreemployees.Amongthem，thenumberofrestrictedstocksgrantedwas17.5850millionshares,thenumberofstockappreciationrightsgrantedwas0.4850millionshares,andthegrantpricepersharewasRMB10.00，ThegrantdatewasMay31,2022,anditwillbeunlockedyearbyyearinbatchesataratioof30%:30%:40%.InSeptember2022,theCompanyimplementedthe2022semi-annualequitydistribution.InJune2023,theCompanyimplementedthe2022equitydistribution.InOctober2023,theCompanyimplementedthe2023semi-annualequitydistribution.Accordingtothemethodstipulatedinthe"2022RestrictedStockIncentivePlan"and"2022StockAppreciationRightsIncentivePlan",theexercisepriceandquantityoftheunderlyingstocksinvolvedwereadjustedaccordingly.Aftertheadjustment,thenumberofrestrictedstocksgrantedwas17.5850millionshares,thenumberofstockappreciationrightsgrantedwas0.4850millionshares,andthegrantpricepersharewasRMB9.65.ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2312.Equity-settledshare-basedpayment(1)IncentiveplanforRestrictedstockimplementedin2020Unit:RMBDeterminationmethodandimportantparametersforgrant-datefairvalueofequityinstrumentsCalculatedbasedontheclosingpriceofthestockonthegrantdateminusthegrantpriceoftherestrictedstock.Determinationmethodforthenumberofequityinstrumentsexpectedtovest[Note]ReasonsforsignificantdifferencebetweentheestimatesincurrentperiodandprecedingperiodNotapplicableCapitalreserveaccumulatedduetoequity-settledshare-basedpayment133,196,520.00Note：In2020,theCompanyinitiallygranted12.045millionrestrictedstockstoincentiveobject.Later,itwasadjustedto15.6585millionsharesduetotheannualdistributionofequityin2019.Thenumberisthebase,itwillbeunlockedyearbyyearinbatchesataratioof30%:30%:40%.TheCompanyestimatesthenumberofexercisableequityinstrumentsonthefollowingbasis:theCompany'soperatingperformancecanmeetthetarget，thefuturevoluntaryturnoverrateoftheincentiveobjectsis0%，andtheperformanceappraisallevelisaboveC(theunlockingcoefficientis1).(2)IncentiveplanforRestrictedstockimplementedin2022Unit:RMBDeterminationmethodandkeyparametersofgrant-datefairvalueofequityinstrumentsCalculatedbasedontheclosingpriceofthestockonthegrantdateminusthegrantpriceoftherestrictedstock.Determinationmethodforthenumberofequityinstrumentsexpectedtovest[Note]ReasonsforsignificantdifferencebetweentheestimatesinthecurrentperiodandprecedingperiodNotapplicableCapitalreserveaccumulatedduetoequity-settledshare-basedpayment96,795,795.00Note：In2022,theCompanyinitiallygranted17.5850millionsharesrestrictedstockstoincentiveobject.Thenumberisthebase,itwillbeunlockedyearbyyearinbatchesataratioof30%:30%:40%.TheCompanyestimatesthenumberofexercisableequityinstrumentsonthefollowingbasis:theCompany'soperatingperformancecanmeetthetarget，thefuturevoluntaryturnoverrateoftheincentiveobjectsis0%，andtheperformanceappraisallevelisaboveC(theunlockingcoefficientis1).3.Cash-settledshare-basedpaymentDeterminationmethodandkeyparametersofthefairvalueofliabilityincurredbytheCompanyandtobesettledincashorotherequityinstrumentsCalculatedbasedontheclosingpriceofthestockonthebalancesheetdateminusthegrantpriceofthestockappreciationrightsAccumulatedamountofliabilitiesincurredduetocash-settledshare-basedpayment7,879,890.004.Totalshare-basedpaymentsrecognizedinthecurrentperiodObjectsEquity-settledshare-basedpaymentCash-settledshare-basedpaymentManagementpersonnel51,167,739.355,530,710.02Total51,167,739.355,530,710.02ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport232XIV.Commitmentsandcontingencies1.SignificantcommitmentsSignificantcontingenciesexistingonthebalancesheetdateWiththeapprovaloftheCSRCindocumentCSRCLicense[2021]No.168,theCompanypubliclyissued30millionconvertiblecorporatebondsinJune2021,withafacevalueof100yuaneachandnetamountofraisedfundsis2,987.53millionyuan.Inadditiontoreplenishingworkingcapital,theraisedfundsarecommittedtothefollowingprojects:InvestmentprojectswithraisedfundsCommittedcapitalActualcapitalAnnualproductionof65millionsetsofcommercialrefrigerationandairconditioningintelligentcontrolcomponentsconstructionproject1487millionyuan1093.2815millionyuanAnnualoutputof50.5millionsetsofhighefficiencyandenergysavingrefrigerationandairconditioningcontrolcomponentsproject698millionyuan280.7418millionyuan2.Contingencies（1）SignificantcontingenciespresentonthebalancesheetdateAsofDecember31,2023,noimportantcontingentmatterneedstobedisclosedbytheCompany.（2）IfnosignificantcontingentmattertobedisclosedbytheCompany,itshouldalsobenotedaccordinglyNoimportantcontingentmatterneedstobedisclosedbytheCompany.（3）OtherinformationrequiredbytheindustryinformationdisclosureguidelinesTheCompanyshallcomplywiththedisclosurerequirementsofautomobilemanufacturingrelatedindustriesintheguidelinesforselfdisciplinesupervisionoflistedcompaniesofShenzhenStockExchangeNo.3-industryinformationdisclosure.Thesalesamountinthemodesofmortgagesalesandfinancialleasingaccountsformorethan10%oftheoperatingrevenue□Applicable√NotApplicableGuaranteeofthecompanytothedistributor□Applicable√NotApplicableXV.Eventsafterthebalancesheetdate1.Notesofothereventsafterthebalancesheetdate(1)DividenddistributionZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport233Accordingtotheprofitdistributionplanof2023approvedbytheboardofdirectorsoftheCompanyonApril28,2023,cashdividendsof2.5yuan(includingtax)forevery10shareswillbedistributedtoallshareholdersbasedon3,706,504,614sharesonApril15,2023,nobonusshareswillbegiven,andnocapitalreservewillbeconvertedintosharecapital.Atotalof926,626,153.50yuanwasdistributed.Theprofitdistributionplanhasyettobeconsideredandapprovedbythegeneralmeetingofshareholders.(2)MajorinvestmentagreementsOnJanuary4,2024,theCompanyanditscontrollingsubsidiaryHangzhouLeaderwayElectronicsCo.,Ltd.(LeaderwayElectronics)signedthe“SanhuaIntelligentControlFutureIndustryCenterProjectinvestmentagreement”withtheQiantangNewAreaManagementCommitteeofHangzhou,theprojectconsistsoftwosubprojects,withaplannedtotalinvestmentofnolessthan5billionyuan.Amongthem,LeaderwayElectronicsplanstoinvestintheconstructionofLeaderwayIntelligentVariableFrequencyControllerProductionBaseProjectinQiantangDistrict,withatotalplannedinvestmentofnolessthan1.2billionyuan;AndtheCompanyplanstoinvestintheconstructionofarobotelectromechanicalactuatoranddomaincontrollerresearchandproductionbaseprojectinQiantangDistrict,withatotalplannedinvestmentofnolessthan3.8billionyuan.XVI.OtherSignificantEvents1.Segmentinformation（1）BasisforreportablesegmentsandtheaccountingpolicyReportablesegmentsareidentifiedbasedonoperatingsegmentswhicharedeterminedbasedonthestructureoftheCompany’sinternalorganization,managementrequirementsandinternalreportingsystem,etc.,andidentifiedthereportablesegmentsbasedonproducts.（2）FinancialinformationofthereportingsubsectionUnit:TenthousandyuanRMBItems2023OperatingrevenueOperatingcostTotalassetsTotalliabilitiesRefrigerationandair-conditioningelectricalpartsbusiness1,464,413.521,051,415.792,009,461.39819,136.48Autopartsbusiness991,366.69719,396.241,179,597.09563,551.23Total2,455,780.211,770,812.033,189,058.481,382,687.71Items2022OperatingrevenueOperatingcostTotalassetsTotalliabilitiesRefrigerationandair-conditioningelectricalpartsbusiness1,383,378.611,021,456.871,936,217.891,104,234.48Autopartsbusiness751,376.37556,653.05859,903.53379,956.92Total2,134,754.981,578,109.922,796,121.421,484,191.40ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport234XVII.NotestoitemsofparentCompanyfinancialstatements1.Accountsreceivable（1）DisclosureofaccountsreceivablebyagingUnit:RMBAgingClosingbalanceOpeningbalanceWithin1year712,624,340.09814,685,735.071to2year5,846,510.8021,752.00Total718,470,850.89814,707,487.07（2）DisclosureofaccountsreceivablebybaddebtprovisionmethodUnit:RMBCategoryClosingbalanceOpeningbalanceBookbalanceProvisionforbaddebtCarryingamountBookbalanceProvisionforbaddebtCarryingamountAmountProportionAmountAccruedproportionAmountProportionAmountAccruedproportionReceivableswithprovisionmadeonanindividualbasis531,943,381.9674.04%5,690,817.361.07%526,252,564.60605,744,200.0774.35%605,744,200.07Including:Receivableswithprovisionmadeonacollectivebasis186,527,468.9325.96%9,334,158.125.00%177,193,310.81208,963,287.0025.65%10,449,251.955.00%198,514,035.05Including:Total718,470,850.89100.00%15,024,975.482.09%703,445,875.41814,707,487.07100.00%10,449,251.951.28%804,258,235.12Provisionmadeonanindividualbasis:Unit:RMBNameOpeningbalanceClosingbalanceBookbalanceProvisionBookbalanceProvisionforAccruedAccruedZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport235forbaddebtbaddebtproportionreasonDayouVinya(Thailand)Co.,Ltd5,690,817.365,690,817.36100.00%Severalsubsidiaries605,744,200.07526,252,564.60Total605,744,200.07531,943,381.965,690,817.36----Provisionmadeonacollectivebasis:Unit:RMBItemsClosingbalanceBookbalanceProvisionforbaddebtAccruedproportionWithin1year186,371,775.499,318,588.785.00%1to2year155,693.4415,569.3410.00%Total186,527,468.939,334,158.12--Theremarksofdeterminationofacollectivebasis:Iftheprovisionforbaddebtofaccountsreceivableisaccruedinaccordancewiththegeneralexpectedcreditlossmodel:□Applicable√Notapplicable（3）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiodProvisionforbaddebtaccruedincurrentperiod:Unit:RMBCategoryOpeningbalanceChangedamountofthecurrentperiodClosingbalanceAccruedRecoveredorreversedWriteoffOthersProvisionmadeonanindividualbasis5,690,817.365,690,817.36Receivableswithprovisionmadeonacollectivebasis10,449,251.951,115,093.839,334,158.12Total10,449,251.955,690,817.361,115,093.8315,024,975.48（4）Top5ofaccountsreceivableClosingbalanceoftop5debtorstotaled560.0402millionyuan,accountingfor77.95%ofthetotalclosingbalanceofaccountsreceivable,andprovisionforbaddebtsmadethereontotaled5.0214millionyuan.2.OtherreceivablesUnit:RMBItemsClosingbalanceOpeningbalanceDividendreceivable550,000,000.00Otherreceivables1,719,591,236.02650,791,643.96Total2,269,591,236.02650,791,643.96（1）DividendreceivableClassificationofdividendsreceivableUnit:RMBZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport236ItemsClosingbalanceOpeningbalanceZhejiangSanhuaClimate&ApplianceControlsGroupCo.,Ltd550,000,000.00Total550,000,000.00（2）Otherreceivables1）OtherreceivablescategorizedbynatureUnit:RMBOtherreceivablescategorizedbynatureClosingbalanceOpeningbalancePrincipalandinterestofcapitalassistancetosubsidiaries1,708,500,801.49532,760,000.00Landaccountsreceivable90,383,016.00Taxrefundreceivable6,387,103.5518,982,883.07Others5,207,052.589,004,092.33Total1,720,094,957.62651,129,991.402）DisclosurebyagingUnit:RMBAgingClosingbalanceOpeningbalanceWithin1year(including1year)1,718,634,775.79645,347,399.321to2years793,523.421,000,065.282to3years481,517.4176,523.00Over3years185,141.004,706,003.80Total1,720,094,957.62651,129,991.403）DisclosureofotherreceivablesbybaddebtprovisionmethodUnit:RMBCategoryClosingbalanceOpeningbalanceBookvalueProvisionforbaddebtNetbookvalueBookvalueProvisionforbaddebtNetbookvalueAmountProportionAmountAccruedproportionAmountProportionAmountAccruedproportionReceivableswithprovisionmadeonanindividualbasis1,714,887,905.0499.70%1,714,887,905.04646,723,284.8799.32%646,723,284.87ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport237Including:Receivableswithprovisionmadeonacollectivebasis5,207,052.580.30%503,721.609.67%4,703,330.984,406,706.530.68%338,347.447.68%4,068,359.09Including:Total1,720,094,957.62100.00%503,721.600.03%1,719,591,236.02651,129,991.40100.00%338,347.440.05%650,791,643.96Provisionmadeonanindividualbasis:Unit:RMBNameOpeningbalanceClosingbalanceBookbalanceProvisionforbaddebtBookbalanceProvisionforbaddebtAccruedproportionAccruedreasonLandaccountsreceivable90,383,016.00Taxrefundreceivable18,982,883.076,387,103.55Governmentreceivable4,597,385.80Severalsubsidiaries532,760,000.001,708,500,801.49Total646,723,284.871,714,887,905.04----Provisionmadeonacollectivebasis:Unit:RMBItemsClosingbalanceBookbalanceProvisionforbaddebtAccruedproportionWithin1year3,746,870.75187,343.545.00%1to2year793,523.4279,352.3410.00%2to3year481,517.41144,455.2230.00%3to4year185,141.0092,570.5050.00%Total5,207,052.58503,721.60--Theremarksofdeterminationofacollectivebasis:Provisionforbaddebtsbasedonthegeneralmodelofexpectedcreditlosses:Unit:RMBProvisionforbaddebtPhaseIPhaseIIPhaseIIITotalNext12monthexpectedcreditlossesLifetimeexpectedcreditlosses(creditnotimpaired)Lifetimeexpectedcreditlosses(creditimpaired)BalanceonJanuary1,2023161,075.01100,006.5377,265.90338,347.44BalanceincurrentperiodonJanuary1,————————ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2382023--TransferredtophaseII-39,676.1739,676.17--TransferredtophaseIII-96,303.4896,303.48Provisionmadeincurrentperiod65,944.7035,973.1263,456.34165,374.16BalanceonDecember31,2023187,343.5479,352.34237,025.72503,721.60ClassificationbasisandbaddebtprovisionratioforeachstageLossprovisionsforsignificantchangesinbookvalueincurrentperiod□Applicable√NotApplicable4）Top5debtorswiththelargestotherreceivablesbalancesUnit:RMBDebtorsNatureofreceivablesClosingbalanceAgeProportiontothetotalbalanceofotherreceivablesProvisionforbaddebtattheendoftheperiodZhejiangSanhuaCommercialRefrigerationCo.LtdFinancialaid799,150,000.00Within1year46.46%SanhuaInternationalSingaporePte.Ltd.Financialaid401,711,600.00Within1year23.35%HangzhouLeaderwayElectronicsCo.,LtdFinancialaid131,180,000.00Within1year7.63%ShaoxingShangyuSanliCopperIndustryCo.,LtdFinancialaid70,000,000.00Within1year4.07%SanhuaNewEnergyThermalManagementTechnology(Hangzhou)Co.,LtdFinancialaid60,000,000.00Within1year3.49%Total--1,462,041,600.00--85.00%3.Long-termequityinvestmentsUnit:RMBItemsClosingbalanceOpeningbalanceBookbalanceProvisionforimpairmentCarryingamountBookbalanceProvisionforimpairmentCarryingamountInvestmentsinsubsidiaries8,846,816,951.568,846,816,951.567,513,700,369.507,513,700,369.50Investmentsinassociatesandjoint33,316,317.0133,316,317.0128,958,340.2728,958,340.27ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport239venturesTotal8,880,133,268.578,880,133,268.577,542,658,709.777,542,658,709.77（1）InvestmentsinsubsidiariesUnit:RMBInvesteesOpeningbalance(Carryingamount)OpeningbalanceofprovisionforimpairmentChangedamountofthecurrentperiodClosingbalance(Carryingamount)ClosingbalanceofprovisionforimpairmentInvestmentsincreasedInvestmentsdecreasedProvisionforimpairmentOthersZhejiangSanhuaAutomotiveComponentsCo.,Ltd.2,722,469,868.5114,524,269.522,736,994,138.03Sanhua(Hangzhou)MicroChannelHeatExchangerCo.,Ltd657,057,189.814,605,465.24661,662,655.05ZhejiangSanhuaClimate&ApplianceControlsGroupCo.,Ltd328,576,392.731,047,897,173.151,376,473,565.88SanhuaInternationalInc.307,539,173.79324,474.51307,863,648.30SanhuaInternationalSingaporePte.Ltd950,862,026.278,426,080.13959,288,106.40WuhuSanhuaAutomaticControlComponentsCo.,Ltd261,737,631.1332,304,712.34294,042,343.47Sanhua(Jiangxi)Self-controlCompone94,024,591.81203,065.8694,227,657.67ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport240ntsCo.,LtdXinchangSitongElectricalandMechanicalCo.,Ltd48,551,469.5590,389,156.39138,940,625.94ZhejiangSanhuaCommercialRefrigerationCo.Ltd1,653,158,817.696,312,321.511,659,471,139.20ZhejiangSanhuaTradingCo.Ltd57,843,827.50,812,380.2059,656,207.70ChangzhouLankefour-wayvalveco.,LTD62,541,614.6062,541,614.60HangzhouLeaderwayElectronicsCo.,Ltd55,607,396.181,992,775.3257,600,171.50ShaoxingShangyuSanliCopperIndustryCo.,Ltd33,369,324.24324,474.1233,693,798.36ZhongshanSanhuaAirconditioningRefrigerationComponentsCo.,Ltd5,556,306.77284,656.385,840,963.15WuhanSanhuaRefrigerationComponentsCo.,Ltd4,959,860.95332,113.835,291,974.78ZhongshanSanhuaRefrigeration6,587,521.80216,346.146,803,867.94ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport241ComponentsCo.,LtdSuzhouSanhuaAir-ConditionerPartsCo.,Ltd9,079,389.05182,190.969,261,580.01SanhuaAWECOApplianceSystems(Wuhu)Co.,Ltd.152,877,775.96637,622.70153,515,398.66ZhejiangSanhuaMinshiAutomotiveComponentsCo.,Ltd51,000,000.0051,000,000.00SanhuaNewEnergyThermalManagementTechnology(Hangzhou)Co.,Ltd50,300,191.1692,347,303.76142,647,494.92ZhejiangXianjiIntelligentTechnologyCo.,Ltd30,000,000.0030,000,000.00Total7,513,700,369.501,333,116,582.068,846,816,951.56（2）InvestmentsinassociatesandjointventuresUnit:RMBInvesteesOpeningbalance(CarryingamountOpeningbalanceofprovisionforimpairmenChangedamountofthecurrentperiodClosingbalance(Carryingamount)ClosingbalanceofprovisionforimpairmenInvestmentsincreasedInvestmentsdecreasedInvestmentincomerecognizedunderequityAdjustmentinothercomprehensiveincomeChangesinotherequityCashdividend/profitdeclaredfordistributionProvisionforimpairmentOthersZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport242tmethodtⅠ.JointventuresⅡ.AssociatesGuochuangEnergyInternetInnovationCenter(Guangdong)Co.,Ltd.5,078,465.12-137,314.094,941,151.03ChongqingTainuoMachineryCo.,Ltd.16,130,424.274,673,752.522,500,000.0018,304,176.79NingboJinlifengMachineryCo.,Ltd2,141,904.04676,920.352,818,824.39QingdaoSanhuaJinlifengMachineryCo.,Ltd.3,859,926.411,545,475.705,405,402.11Xinchangzhejiangenergysanhuacomprehensiveenergyco.LTD1,747,620.4399,142.261,846,762.69Subtotal28,958,340.276,857,976.742,500,000.0033,316,317.01Total28,958,340.276,857,976.742,500,000.0033,316,317.01ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport243Therecoverableamountisdeterminedbasedonthenetamountafterdeductingdisposalexpensesfromfairvalue□Applicable√NotApplicableTherecoverableamountisdeterminedbasedonthepresentvalueofexpectedfuturecashflows□Applicable√NotApplicable4.OperatingrevenueandOperatingcostUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeRevenueCostRevenueCostMainoperations5,648,172,805.204,284,161,402.855,741,546,510.684,327,000,541.95Otheroperations387,451,637.45360,295,603.24391,825,681.92363,817,033.42Total6,035,624,442.654,644,457,006.096,133,372,192.604,690,817,575.375.InvestmentincomeUnit:RMBItemsCurrentperiodcumulativePrecedingperiodcomparativeInvestmentincomefromlong-termequityinvestmentsunderequitymethod6,857,976.747,043,506.52Dividendincome815,502,001.82845,000,000.00Investmentincomeofbankfinancingproducts171,131.503,347,850.67Gainsandlossesonsettlementoffuturescontracts6,112,835.61-7,145,679.04Gainsandlossesonsettlementofforeignexchangecontract2,462,740.20-1,483,174.62InterestIncomeoffund22,722,372.5013,281,902.31Advancepaymentgains1,868,809.93842,117.55Total855,697,868.30860,886,523.396.OthersR&DexpensesUnit:RMBItems20232022Laborcost136,148,043.78131,725,103.43Materialandpowerexpense88,491,000.88127,572,484.24Depreciationandamortizationexpense8,741,825.688,852,856.39Moldmanufacturingexpense4,523,420.243,498,334.01Royalties1,991,176.573,624,114.79OutsourcingR&Dexpense550,514.941,855,912.87Others6,221,895.252,563,180.13Total246,667,877.34279,691,985.86ZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport244XVIII.Supplementaryinformation1.Non-recurringprofitorlossincurrentperiod√Applicable□NotApplicableUnit:RMBItemsAmountRemarksGainsorlossondisposalofnon-currentassets-1,157,418.11Governmentgrantsincludedinprofitorloss(excludingthosecloselyrelatedtooperatingactivitiesoftheCompany,satisfyinggovernmentpoliciesandregulations,andcontinuouslyenjoyedwithcertainquantity/quotabasedoncertainstandards)93,921,181.44Gainsorlossesonchangesinfairvalueofheld-for-tradingfinancialassets,held-for-tradingfinancialliabilities,andinvestmentincomefromdisposalofheld-for-tradingfinancialassets,held-for-tradingfinancialliabilities,andotherdebtinvestments,excludingthosearisingfromhedgingbusinessrelatedtooperatingactivities-89,874,825.04Inordertoavoidthepriceriskofrawmaterialsandpreventexchangeraterisk,theCompanyanditssubsidiarieshavecarriedoutderivativesbusiness,includingfuturescontractsandforeignexchangeforwardcontracts.In2023,thefuturesgainwas9.5091millionyuanandtheforeignexchangelosswas99.384millionyuan;In2022,thefutureslosswas6.4275millionyuanandtheforeignexchangelosswas191.8364millionyuan.Meanwhile,theexchangeincomewas133.5151millionyuanin2023,theexchangelosswas228.8434millionyuanin2022.Accordingto“theNo.1ExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestoPublic-Non-recurringProfitorLoss”,exchangegainsandlossesarerecurringgainsandlosses,andFuturesandforwardgainsandlossesarenon-recurringgainsandlosses.Othernon-operatingrevenueorexpendituresexcepttheaboveitems10,206,261.89GainsandlossesarisingfromcontingenciesunrelatedtothenormaloperationoftheCompanyLess:Enterpriseincometaxaffected1,905,361.61Non-controllinginterestaffected(aftertax)7,226,086.57Total3,963,752.00--Detailsofotherprofitandlossitemsthatmeetthedefinitionofnon-recurringprofitandloss:□Applicable√NotApplicableTheCompanyhasnospecificcircumstancesofotherprofitandlossitemsthatmeetthedefinitionofnon-recurringprofitandloss.Foritemsdefinedasnon-recurringprofitorlossaccordingto“theNo.1ExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestoPublic-Non-recurringProfitorLoss”,non-recurringprofitorlossitemslistedinthesaiddocumentdefinedasprojectofrecurringprofitorloss,specifythereason□Applicable√NotApplicableZhejiangSanhuaIntelligentControlsCo.,Ltd.2023AnnualReport2452.ROEandEPSProfitofthereportingperiodWeightedaverageROEEPS(yuan/share)BasicEPSDilutedEPSNetprofitattributabletoshareholdersofordinaryshares19.18%0.810.81Netprofitattributabletoshareholdersofordinarysharesafterdeductingnon-recurringprofitorloss19.16%0.810.813.Financialdatavariancebetweenfinancialreportingpreparedunderdomesticandabroadaccountingstandards（1）DifferencesofnetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtotheIFRSandChineseAccountingStandards□Applicable√NotApplicable（2）DifferencesofnetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtotheoverseasaccountingstandardsandChineseAccountingStandards□Applicable√NotApplicable（3）Explanationofthereasonsfordifferencesinaccountingdataunderdomesticandforeignaccountingstandards.Ifadjustingfordifferencesindataalreadyauditedbyoverseasauditinginstitutions,thenameoftheoverseasinstitutionshouldbeindicated SectionIImportantNotes,ContentsandDefinitions SectionIICorporateProfileandKeyFinancialIndicators I.CorporateInformation II.ContactsandContactInformation III.InformationDisclosureandPlaceoftheReport IV.CompanyRegistrationandAlteration V.OtherRelevantInformation VI.KeyAccountingDataandFinancialIndicators VII.DifferencesinAccountingDatabetweenDomesticandOverseasAccountingStandards 1.DifferenceinthenetprofitsandnetassetsofdisclosedfinancialreportaccordingtotheInternationalFinancialReportingStandardsandChinaAccountingStandards 2.DifferenceinthenetprofitsandnetassetsofdisclosedfinancialreportaccordingtotheOverseasAccountingStandardsandChinaAccountingStandards VIII.KeyQuarterlyFinancialIndicators IX.ItemsandAmountsofNon-recurringGainsandLosses SectionIIIManagement’sDiscussionandAnalysisofOperations I.IndustrysituationoftheCompanyduringthereportingperiod II.ThePrincipalBusinessoftheCompanyduringtheReportingPeriod III.CoreCompetitivenessAnalysis IV.MainBusinessAnalysis 1.Overview 2.RevenueandCosts (1)Revenuestructure (2)Industries,products,regionsorsalemodelsaccountingformorethan10%oftheCompany’srevenueoroperatingprofit (3)Whetherrevenuefromphysicalproductssalesgreaterthanrevenuefromprovidingservices (4)Fulfillmentofsignedsignificantsalesandprocurementcontractsbytheendofreportingperiod (5)Operatingcoststructure (6)Changesinconsolidationscopeduringthereportingperiod (7)SignificantchangeoradjustmentoftheCompany’sbusiness,productsorservicesduringthereportingperiod: (8)Majorcustomersandsuppliers: 3.Expenses 4.R&DInvestment 5.Cashflow V.Non-coreBusinessAnalysis VI.AnalysisofAssetsandLiabilities 1.Materialchangesofassets 2.Assetsandliabilitiesmeasuredatfairvalue 3.Assetsrightrestrictionsasoftheendofreportingperiod VII.AnalysisofInvestment 1.Overview 2.Significantequityinvestmentduringthereportingperiod 3.Significantnon-equityinvestmentduringthereportingperiod 4.Financialassetinvestment (1)SecuritiesInvestments (2)DerivativesInvestments 1)Derivativeinvestmentsforhedgingpurposesduringthereportingperiod 2)Derivativeinvestmentsforspeculativepurposesduringthereportingperiod 5.Usageofraisedfunds (1).Overallusageofraisedfund (2).StatementofCommittedInvestmentProjectsofRaisedFunds (3).StatementofAlteredInvestmentProjectsofRaisedFunds VIII.DisposalofSignificantAssetsandEquity 1.Disposalofsignificantassets 2.Disposalofsignificantequity IX.AnalysisofMajorSubsidiariesandInvestees X.StructuralEntitiesControlledbytheCompany XI.OutlookfortheFutureDevelopmentoftheCompany XII.Receptionofactivitiesincludingresearch,communicationandinterviewsduringthereportperiod XIII.Implementationstatusofactionplan“Dualimprovementinqualityandreturn” SectionIVCorporateGovernance I.Basicsituationofcorporategovernance II.Company’sIndependenceinBusinesses,Management,Assets,InstitutionsandFinancefromControllingShareholders III.HorizontalCompetition IV.AnnualGeneralMeetingandExtraordinaryGeneralMeetingsconvenedduringtheReportingPeriod 1.Annualgeneralmeetingofshareholdersconvenedduringthereportingperiod 2.Extraordinarygeneralmeetingsconvenedattherequestofpreferredshareholderswithresumedvotingrights: V.Informationofdirectors,supervisors,seniormanagement 1.Basicinformation 2.PositionsandIncumbency 3.Remunerationofdirectors,supervisorsandseniormanagementpersonnel VI.Performanceofdutiesbydirectorsduringthereportingperiod 1.Boardofdirectorsinthereportingperiod 2.Attendanceofdirectorsinboardmeetingsandgeneralmeetings 3.ObjectionsraisedbydirectorstorelevantmattersoftheCompany 4.Otherdetailsabouttheperformanceofdutiesbydirectors VII.Performanceofdutiesbyspecialcommitteesundertheboardduringthereportingperiod VIII.PerformanceofdutiesbytheSupervisoryCommittee IX.StaffintheCompany X.Profitdistributionofordinarysharesandcapitalizationofcapitalreserves XI.TheImplementationofanEquityIncentivePlan,EmployeeStockOwnershipPlan,orOtherIncentivePlans 1.EquityIncentivePlan 2.EmployeeStockOwnershipPlan 3.Otherincentiveplan XII.Constructionandimplementationofinternalcontrol 1.Constructionandimplementationofinternalcontrol 2.Anysignificantinternalcontroldeficienciesduringthereportingperiod XIII.Managementandcontrolofsubsidiariesduringthereportingperiod XIV.Self-evaluationreportoninternalcontrolorInternalcontrolauditreport 1.Self-evaluationreportoninternalcontrol 2.Auditreportorassurancereportoninternalcontrol XV.GovernanceproblemrectificationoftheCompany SectionVEnvironmentalandSocialResponsibility I.Materialenvironmentalissues II.Socialresponsibility III.Achievementsofpovertyalleviationandruralrevitalization SectionVISignificantEvents I.Performanceofcommitments 1.CompleteandincompletecommitmentsoftheCompanyanditsactualcontroller,shareholders,relatedparties,acquirers,andotherrelatedpartiesforthecommitmentsbytheendofthereportingperiod. 2.IfthereisaprofitforecastfortheCompany'sassetsorprojects,andthereportingperiodisstillintheprofitforecastperiod,theCompanyshallexplainthereasonsfortheassetsorprojectsreachingtheoriginalprofitforecast II.TheCompany’sfundsusedbythecontrollingshareholderoritsrelatedpartiesfornon-operatingpurposes. III.Illegalexternalguarantee IV.ExplanationGivenbytheBoardofDirectorsRegardingthe“Non-standardAuditor’sReport”IssuedbytheCPAFirmfortheReportingPeriod V.ExplanationGivenbytheBoardofDirectors,BoardofSupervisorsandIndependentDirectors(ifany)Regardingthe“Non-standardAuditor’sReport”IssuedbytheCPAFirmfortheReportingPeriod VI.Forchangesinaccountingpolicies,accountingestimatesandaccountingmethodsascomparedtothefinancialreportfortheprioryear VII.Explanationforchangesinscopeoftheconsolidatedfinancialstatementsascomparedtothefinancialreportfortheprioryear VIII.EngagementanddisengagementoftheCPAfirm IX.Listingsuspensionandterminationafterdisclosureofthisannualreport X.BankruptcyandRestructuring XI.MaterialLitigationandArbitration XII.PunishmentsandRectifications XIII.IntegrityoftheCompanyandItsControllingShareholdersandActualControllers XIV.SignificantRelated-partyTransaction 1.Related-partytransactionsarisingfromroutineoperation 2.Related-partytransactionsregardingpurchaseanddisposalofassetsorequity 3.Significantrelated-partytransactionsarisingfromjointinvestmentsonexternalparties 4.Relatedcreditanddebttransactions 5.Transactionswithrelatedfinancialcompanies 6.TransactionsbetweenfinancialcompaniescontrolledbytheCompanyandrelatedparties 7.Othersignificantrelatedpartytransactions XV.SignificantContractsandExecution 1.Mattersontrusteeship,contracting,andleasing （1）Trusteeship （2）Contracting （3）Leasing 2.Significantguarantees 3.Entrustingotherstomanagecashassets 4.Significantcontractsinoperation XVI.OtherSignificantEvents XVII.SignificantEventsoftheCompany’sSubsidiaries SectionVIIChangesinSharesandInformationaboutShareholders I.ChangesinShares 1.Changesinshares 2.Changesinrestrictedshares II.IssuanceandListingofSecurities 1.Securities(excludepreferredshare)issuedduringthereportingperiod 2.Explanationonchangesinsharecapital&thestructureofshareholders,thestructureofassetsandliabilities 3.ExistentsharesheldbyinternalstaffoftheCompany III.Particularsabouttheshareholdersandactualcontroller 4.ThecumulativenumberofPledgedSharesoftheCompany'scontrollingshareholderorthelargestshareholderanditsconcertedactorsaccountsfor80%oftheCompany'sshares 5.Particularsaboutothercorporateshareholderswithshareholdingproportionover10% 6.Particularsonshareholdingdecreaserestrictionsforthecontrollingshareholders,actualcontroller,restructurerorothercommittingparties IV.Informationabouttheimplementationofsharerepurchaseduringthereportingperiod SectionVIIIInformationofPreferredShares SectionIXBonds I.Enterprisebond(hereinafterreferredtoasthebondissuedbydomesticstate-ownedentity) II.Corporatebond III.Debtfinancinginstrumentsofnon-financialenterprises IV.Convertiblebond 1.PreviousAdjustmentsofStockConversionPrice 2.ShareConversions(Accumulative) 3.Top10HoldersoftheConvertibleBond 4.TheProfitability,AssetandCreditStatusoftheGuarantorHaveChangedSignificantly 5.Bytheendofthereportingperiod,theCompany'sliabilities,creditchangesandcasharrangementsfordebtrepaymentinfuture V.Thelosswithinthescopeofconsolidatedstatementsinthereportingperiodexceeded10%ofthenetassetsattheendofthepreviousyear VI.Overdueinterest-bearingdebtsotherthanbondsbytheendofthisreportingperiod VII.Whetherthereisanyviolationofrulesorregulationsduringthereportingperiod VIII.MainaccountingdataandfinancialindicatorsoftheCompanyinrecenttwoyearsbytheendofthereportingperiod SectionXFinancialReport I.Auditreport II.FinancialStatements 1.Consolidatedbalancesheet 2.ParentCompanyBalanceSheet 3.ConsolidatedIncomestatement 4.IncomestatementoftheParentCompany 5.ConsolidatedCashFlowStatement 6.CashFlowStatementoftheParentCompany 7.ConsolidatedStatementofChangesinOwners'Equity 8.StatementofChangesinOwners'EquityoftheParentCompany III.Companyprofile IV.Preparationbasisofthefinancialstatements 1.Preparationbasis 2.Goingconcern V.Significantaccountingpoliciesandestimates 1.StatementofcompliancewithChinaAccountingStandardsforBusinessEnterprises 2.Accountingperiod 3.Operatingcycle 4.Functionalcurrency 5.Determinationmethodandbasisforselectionofmateriality 6.Accountingtreatmentsofbusinesscombinationunderandnotundercommoncontrol 7.Judgementcriteriaforcontrolandcompilationmethodofconsolidatedfinancialstatements 8.Recognitioncriteriaofcashandcashequivalents 9.Foreigncurrencytranslation 10．Financialinstruments 11．Inventories 12．Long-termequityinvestments 13.Investmentproperty 14.Fixedassets （1）Recognitionprinciplesoffixedassets （2）Depreciationmethodofdifferentcategoriesoffixedassets 15．Constructioninprogress 16．Borrowingcosts 17．Intangibleassets 18．Impairmentofpartoflong-termassets 19．Long-termprepayments 20．Employeebenefits 21．Provisions 22．Share-basedpayment 23.Convertiblebonds 24．Revenue 25．Costsofobtainingacontractandcoststofulfillacontract 26．Contractassets,contractliabilities 27．Governmentgrants 28．Deferredtaxassets/Deferredtaxliabilities 29.Leases 30.Segmentreporting 31.Sharerepurchase 32.Othersignificantaccountingpoliciesandestimates VI.Taxes 1.Majorcategoriesoftaxesandtaxrates 2.Taxpreferentialpolicies 3.Others VII.NotestoItemsintheConsolidatedFinancialStatements 1.Cashandbankbalances 2.Held-for-tradingfinancialassets 3.DerivativeFinancialAssets 4.Notesreceivable （1）Categoriesofnotesreceivable （2）Provisionforbaddebts （3）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiod （4）Pledgednotesatthebalancesheetdate （5）Endorsedordiscountedbutunduenotesatthebalancesheetdate 5.Accountsreceivable （1）Disclosureofaccountsreceivablebyaging （2）Disclosureofaccountsreceivablebycategories （3）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiod （4）Detailsaboutaccountsreceivableactuallywrittenoffinthecurrentperiod （5）Accountsreceivableandcontractassetsofthetopfiveendingbalances （6）Otherremarks 6.Otherreceivables （1）Otherreceivables 1）Otherreceivablescategorizedbynature 2）Disclosurebyaging 3）Disclosurebycategories 4）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiod 5）Detailsofthetop5debtorswithlargestbalances 7.Advancespaid （1）Advancespaidbyaging （2）Top5debtorswiththelargestadvancespaidbalances 8.Inventories （1）Categoriesofinventories （2）ProvisionfordeclineinvalueofinventoriesandProvisionforimpairmentofcontractperformancecosts 9.Othercurrentassets 10.Long-termreceivable （1）Long-termreceivable （2）Disclosurebycategories Provisionforbaddebtsbasedonthegeneralmodelofexpectedcreditlosses 11.Long-termequityinvestments 12.Investmentproperty Investmentpropertymeasuredbycostmethod 13.Fixedassets （1）Fixedassets （3）Fixedassetsleasedoutthroughoperatingleases （4）Fixedassetswithcertificateoftitlesbeingunsettled （5）Impairmenttestingoffixedassets 14.Constructioninprogress （1）Detailsofconstructioninprogress （2）Changesofsignificantconstructioninprogressincurrentperiod （3）Impairmenttestingofconstructioninprogress 15.Rightofuseassets 16.IntangibleAssets （1）Detailsofintangibleassets 17.Goodwill （1）OriginalCarryingamountofgoodwill （2）Provisionforgoodwillimpairment （3）Otherremarks 18.Long-termprepayments 19.Deferredtaxassets/deferredtaxliabilities （1）Deferredtaxassetsbeforeoffset （2）Deferredtaxliabilitiesbeforeoffset （3）Deferredtaxassetsorliabilitiesafteroffsetshownonanetoffsettingbasis （4）Detailsofunrecognizeddeferredtaxassets （5）Deductiblelossesofunrecognizeddeferredtaxassetswillexpireinthefollowingyears 20.Othernon-currentassets 21.Assetswithtitleoruserightrestrictions 22.Short-termborrowings （1）Categoriesofshort-termborrowings 23.Tradingfinancialliabilities 24.Derivativefinancialliabilities 25.Notespayable 26.Accountspayable （1）Detailsofaccountspayable 27.Otherpayables （1）Otherpayables 1）Otherpayableslistedbynature 28.Contractliabilities 29.Employeebenefitspayable （1）Detailsofemployeebenefitspayable （2）DetailsofShort-termemployeebenefits （3）Detailsofdefinedcontributionplan 30.Taxesandratespayable 31.Non-currentliabilitiesduewithinoneyear 32.Othercurrentliabilities 33.Long-termborrowings （1）Categoriesoflong-termborrowings 34.Bondspayable （1）Bondspayable （2）Changesofbondspayable（doesnotincludepreferredshares,perpetualbondsandotherfinancialinstrumentsclassifiedasfinancialliabilities）（3）ExplanationofConvertibleCorporateBonds WiththeapprovalofChinaSecuritiesRegulatoryCommissionindocumentzjxk[2021]No.168,thecompanypubliclyissued30millionconvertiblecorporatebonds(hereinafterreferredtoasSanhuaconvertiblebonds)inJune2021,withafacevalueof10... 35.Leasedliabilities 36.Long-termpayables （1）Long-termpayableslistedbynature 37.Long-termemployeebenefitspayable （1）Tableoflong-termemployeebenefitspayable 38.Deferredincome 39.Othernon-currentliabilities 40.Sharecapital 41.Otherequityinstruments (1)Statementofchangesinpreferredshares,perpetualbondsandotherfinancialinstrumentsissuedattheendoftheperiod 42.Capitalreserve 43.Treasuryshares 44.Othercomprehensiveincome(OCI) 45.Surplusreserve 46.Undistributedprofit 47.OperatingrevenueandOperatingcost 48.Taxesandsurcharges 49.Administrativeexpenses 50.Sellingexpenses 51.R&Dexpenses 52.Financialexpenses 53.Otherincome 54.Gainsorlossesonchangesinfairvalue 55.Investmentincome 56.Creditimpairmentloss 57.Assetsimpairmentloss 58.Gainsonassetdisposal 59.Non-operatingrevenue 60.Non-operatingexpenditures 61.Incometaxexpenses （1）Incometaxexpenses （2）Reconciliationofaccountingprofittoincometaxexpenses 62.Othercomprehensiveincome 63.Notestoitemsoftheconsolidatedcashflowstatement （1）Cashrelatedtooperatingactivities Othercashreceiptsrelatedtooperatingactivities Othercashpaymentsrelatedtooperatingactivities （2）Cashrelatedtoinvestmentactivities Othercashreceiptsrelatedtoinvestingactivities Othercashpaymentsrelatedtoinvestingactivities Importantcashpaymentsrelatedtoinvestmentactivities （3）Cashrelatedtofinancingactivities Othercashreceiptsrelatedtofinancingactivities Othercashpaymentsrelatedtofinancingactivities Changesinliabilitiesrelatedtofinancingactivities （4）Presentationofcashflowsonanetbasis （5）Significantactivitiesnotinvolvingcashreceiptsandpayments 64.Supplementinformationtothecashflowstatement （1）Supplementinformationtothecashflowstatement （2）Compositionofcashandcashequivalents （3）Situationswherethescopeofuseislimitedbutstillclassifiedascashandcashequivalents （4）Cashandbankbalancesthatdonotbelongtocashandcashequivalents 65Monetaryitemsinforeigncurrencies （1）Monetaryitemsinforeigncurrencies （2）Notesonoverseasoperatingentities,includingforthesignificantoverseasoperatingentities,itsmainoperatinglocations,reportingcurrencyandthebasisforselectionshouldbedisclosed,andthereasonforchangesinreportingcurrencyshou... 66.Leases (1)TheCompanyaslessee 3)Profitorlossandcashflowsrelatedtoleases 4)PleaserefertosectionX(X)ofnotestothefinancialstatementsfordetailsonmaturityanalysisofleaseliabilitiesandrelatedliquidityriskmanagement. (2)TheCompanyaslessor a.Leaseincome b.Assetsleasedoutunderoperatingleases VIII.Governmentgrants IX.Interestinotherentities （1）ThecompanyincludessubsidiariessuchasZhejiangSanhuaAutomotivePartsCo.,Ltd.inthescopeofconsolidatedfinancialstatements. 3.significantwholly-ownedsubsidiaries 4.Equityinjointventuresorassociates （1）Significantjointventuresandassociates AsofDecember31,2023,thecompanyhasnosignificantjointventuresandassociates. （2）Aggregatedfinancialinformationofinsignificantjointventuresandassociates X.RisksRelatedtoFinancialInstruments XI.DisclosureofFairValues 1.Fairvaluesoftheassetsandliabilitiesattheendoftheperiod 2.Basisfordeterminingthemarketpriceofitemsunderfirstlevelconstantandnon-constantmeasurementatfairvalue. 3.Itemsundersecondlevelconstantandnon-constantmeasurementatfairvalue,valuationtechniqueadopted,andqualitativeandquantitativeinformationofimportantparameters 4.Itemsunderthirdlevelconstantandnon-constantmeasurementatfairvalue,valuationtechniqueadopted,andqualitativeandquantitativeinformationofimportantparameters XII.Relatedpartyrelationshipsandtransactions 1.ParentCompany 2.InformationabouttheCompany'ssubsidiaries 3.JointventuresandassociatesoftheCompany 4.OtherrelatedpartiesoftheCompany 5.Relatedpartytransactions （1）Purchaseandsaleofgoods,renderingandreceivingservices （2）Relatedpartyleases （3）Relatedpartyguarantees （4）Assetstransferanddebtrestructuringoftherelatedparties （5）Keymanagement’semoluments （6）Otherrelatedpartytransactions 6.Balanceduetoorfromrelatedparties （1）Receivables （2）Payables XIII.Share-basedpayment 1.Overallinformation 2.Equity-settledshare-basedpayment 3.Cash-settledshare-basedpayment 4.Totalshare-basedpaymentsrecognizedinthecurrentperiod XIV.Commitmentsandcontingencies 1.Significantcommitments 2.Contingencies （2）IfnosignificantcontingentmattertobedisclosedbytheCompany,itshouldalsobenotedaccordingly （3）Otherinformationrequiredbytheindustryinformationdisclosureguidelines XV.Eventsafterthebalancesheetdate 1.Notesofothereventsafterthebalancesheetdate XVI.OtherSignificantEvents 1.Segmentinformation （1）Basisforreportablesegmentsandtheaccountingpolicy （2）Financialinformationofthereportingsubsection XVII.NotestoitemsofparentCompanyfinancialstatements 1.Accountsreceivable （1）Disclosureofaccountsreceivablebyaging （2）Disclosureofaccountsreceivablebybaddebtprovisionmethod （3）Provisionforbaddebtaccrued,recoveredorreversedincurrentperiod （4）Top5ofaccountsreceivable 2.Otherreceivables （1）Dividendreceivable （2）Otherreceivables 1）Otherreceivablescategorizedbynature 2）Disclosurebyaging 3）Disclosureofotherreceivablesbybaddebtprovisionmethod 4）Top5debtorswiththelargestotherreceivablesbalances 3.Long-termequityinvestments （1）Investmentsinsubsidiaries （2）Investmentsinassociatesandjointventures 4.OperatingrevenueandOperatingcost 5.Investmentincome 6.Others XVIII.Supplementaryinformation 1.Non-recurringprofitorlossincurrentperiod 2.ROEandEPS 3.Financialdatavariancebetweenfinancialreportingpreparedunderdomesticandabroadaccountingstandards （1）DifferencesofnetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtotheIFRSandChineseAccountingStandards （2）DifferencesofnetprofitsandnetassetsinthefinancialreportsdisclosedaccordingtotheoverseasaccountingstandardsandChineseAccountingStandard。

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三花智控：Zhejiang Sanhua Intelligent Controls Co., Ltd. 2023 Annual Report