Zhejiang Sanfer Electric Co.Ltd(605336) : annual audit report of Zhejiang Sanfer Electric Co.Ltd(605336) 2021

Zhejiang Sanfer Electric Co.Ltd(605336) audited financial statements for 2021

Beijing Institute of Certified Public Accountants

Business report unified coding reporting system

Unified code of business reporting: 110 Andon Health Co.Ltd(002432) 022018005790

Zhejiang Sanfer Electric Co.Ltd(605336) 2021 annual audit report name:

report

Report No.: Ernst & Young Huaming (2022) SZ No. 61444050b01

Name of audited (inspected) unit: Zhejiang Sanfer Electric Co.Ltd(605336)

Name of accounting firm: Ernst & Young Huaming Certified Public Accountants (special general partnership)

Business type: financial statement audit

Report opinion type: unqualified opinion

Report date: April 13, 2022

Filing date: April 13, 2022

Zhou Hua (110 Andon Health Co.Ltd(002432) 610),

Signed by:

Feng Bingzhang (110 Palm Eco-Town Development Co.Ltd(002431) 749)

(information can be queried by scanning QR code or logging into the official website of Beijing injection Association)

Note: this filing information only proves that the report has been filed with the Beijing Institute of certified public accountants, and does not mean that the Beijing Institute of Certified Public Accountants makes any form of guarantee for the content of the report in any sense.

Zhejiang Sanfer Electric Co.Ltd(605336)

catalogue

Page audit report 1 – 7 audited financial statements

Consolidated balance sheet 8 – 9 consolidated income statement 10

Consolidated statement of changes in shareholders’ equity 11 – 12 consolidated cash flow statement 13 – 14 company balance sheet 15 – 16 company income statement 17

Statement of changes in shareholders’ equity 18-19 cash flow statement 20-21 notes to financial statements 22-115 supplementary information

1. Detailed statement of non recurring gains and losses 1

2. Return on net assets and earnings per share 2

Zhejiang Sanfer Electric Co.Ltd(605336) notes to financial statements

RMB in 2021

1、 Basic information Zhejiang Sanfer Electric Co.Ltd(605336) (“the company”) was formerly Zhejiang Zhejiang Sanfer Electric Co.Ltd(605336) limited liability company incorporated in Zhejiang Province of the people’s Republic of China on December 15, 1998. On December 28, 2017, Zhejiang Zhejiang Sanfer Electric Co.Ltd(605336) Co., Ltd. was changed into a joint stock limited company and renamed Zhejiang Sanfer Electric Co.Ltd(605336) . The RMB common stock A shares issued by the company have been listed on the Shanghai Stock Exchange. The company is headquartered in Chengdong District, Shengzhou Economic Development Zone, Zhejiang Province Zhejiang Sanfer Electric Co.Ltd(605336) and its subsidiaries (“the group”) are mainly engaged in manufacturing and selling: integrated stoves, range hoods, gas stoves, ovens, sinks, integrated sinks, cabinets, integral cabinets, electric steamers, dishwashers, etc. The actual controllers of the group are Shang Ruoyun, Shao Xianqing and Shao Yuji. The financial statements were approved by the board of directors of the company on April 13, 2022. The consolidation scope of the consolidated financial statements is determined on the basis of control, and there is no change in the consolidation scope in 2021. 2、 Preparation basis of financial statements the financial statements are prepared in accordance with the accounting standards for business enterprises – Basic Standards issued by the Ministry of Finance and the specific accounting standards, application guidelines, interpretations and other relevant provisions issued and revised later (collectively referred to as “accounting standards for business enterprises”). The financial statements are presented on a going concern basis. When preparing the financial statements, except for some financial instruments, the valuation principle is historical cost. If an asset is impaired, the corresponding impairment provision shall be withdrawn in accordance with relevant regulations.

Zhejiang Sanfer Electric Co.Ltd(605336) notes to financial statements (Continued)

RMB in 2021

3、 Important accounting policies and accounting estimates the group has formulated specific accounting policies and accounting estimates according to the actual production and operation characteristics, which are mainly reflected in the provision for bad debts of accounts receivable, inventory valuation method, depreciation of fixed assets, amortization of intangible assets, amortization of long-term deferred expenses, provision of sales rebate, etc. 1. In accordance with the statement of accounting standards for business enterprises, the financial statements comply with the requirements of accounting standards for business enterprises and truly and completely reflect the financial position of the company and the group as of December 31, 2021 and the operating results and cash flow of 2021. 2. The accounting period of the group is the Gregorian calendar year, i.e. from January 1 to December 31. 3. Bookkeeping base currency the bookkeeping base currency of the group and the currency used in the preparation of the financial statements are RMB. Unless otherwise specified, it is expressed in RMB.

4. Consolidated financial statements the consolidation scope of consolidated financial statements is determined on the basis of control, including the financial statements of the company and all subsidiaries. Subsidiaries refer to the entities controlled by the company (including the separable parts of enterprises and invested units, as well as the structured entities controlled by the company). When preparing the consolidated financial statements, the subsidiaries adopt the accounting year and accounting policy consistent with that of the company. Assets, liabilities, equity, income, expenses and cash flows arising from all transactions between companies within the group are fully offset at the time of consolidation. If changes in relevant facts and circumstances lead to changes in one or more of the control elements, the group reassesses whether to control the investee.

Zhejiang Sanfer Electric Co.Ltd(605336) notes to financial statements (Continued)

RMB in 2021

3、 Important accounting policies and accounting estimates (Continued) Cash and cash equivalents refer to the group’s cash on hand and deposits that can be used for payment at any time; Cash equivalents refer to the short-term, highly liquid investments held by the group, which are easy to be converted into known amounts of cash and have little risk of value change. 6. The amount of foreign currency transactions is converted into the functional currency of the group. When a foreign currency transaction is initially recognized, the foreign currency amount is converted into the bookkeeping functional currency amount using the exchange rate at the beginning of the month in which the transaction occurs. On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The resulting balance between settlement and conversion of monetary items shall be included in the current profit and loss. Foreign currency non monetary items measured at historical cost shall still be translated at the exchange rate at the beginning of the month in which the transaction occurs, and the amount in the functional currency shall not be changed. Foreign currency non monetary items measured at fair value are translated at the spot exchange rate on the date when the fair value is determined, and the resulting difference is included in the current profit and loss or other comprehensive income according to the nature of non monetary items. Foreign currency cash flows are translated at the exchange rate at the beginning of the month in which the cash flows occur. The impact of exchange rate changes on cash is presented separately in the cash flow statement as a reconciliation item.

Zhejiang Sanfer Electric Co.Ltd(605336) notes to financial statements (Continued)

RMB in 2021

3、 Important accounting policies and accounting estimates (Continued) 7 Financial instruments financial instruments refer to the contracts that form the financial assets of an enterprise and form the financial liabilities or equity instruments of other units. Recognition and derecognition of financial instruments the Group recognizes a financial asset or financial liability when it becomes a party to the financial instrument contract. If the following conditions are met, the recognition of financial assets (or part of financial assets, or part of a group of similar financial assets) shall be terminated, that is, they shall be written off from their accounts and balance sheets: (1) the right to receive the cash flow of financial assets expires; (2) Transferred the right to receive the cash flow of financial assets, or assumed the obligation to timely pay the full amount of the received cash flow to a third party under the “handling agreement”; And (a) substantially transferred almost all the risks and rewards of the ownership of the financial asset, or (b) abandoned the control of the financial asset although substantially neither transferred nor retained almost all the risks and rewards of the ownership of the financial asset. If the liability for financial liabilities has been fulfilled, revoked or expired, the financial liabilities shall be derecognized. If the existing financial liabilities are replaced by another financial liability with substantially different terms by the same creditor, or the terms of the existing liabilities are substantially modified, such replacement or modification shall be treated as derecognition of the original liabilities and recognition of new liabilities, and the difference shall be included in the current profits and losses. Financial assets bought and sold in a conventional way shall be recognized and derecognized according to the accounting on the trading day. Buying and selling financial assets by conventional means refers to receiving or delivering financial assets within the time limit specified by laws and regulations or common practices in accordance with the terms of the contract. Trading day refers to the date on which the group promises to buy or sell financial assets. Classification and measurement of financial assets the financial assets of the group are classified into: financial assets measured at fair value through profit or loss and financial assets measured at amortized cost according to the business model of financial assets managed by the group and the contractual cash flow characteristics of financial assets at the time of initial recognition. Financial assets are measured at fair value at the time of initial recognition, but if the accounts receivable or notes receivable arising from the sale of goods or the provision of services do not contain significant financing components or do not consider the financing components of no more than one year, the initial measurement shall be made according to the transaction price.

Zhejiang Sanfer Electric Co.Ltd(605336) notes to financial statements (Continued)

RMB in 2021

3、 Important accounting policies and accounting estimates (Continued) 7 Financial instruments (Continued) classification and measurement of financial assets (Continued) for financial assets measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss, and the relevant transaction costs of other types of financial assets are included in the initial recognition amount. The subsequent measurement of financial assets depends on their classification: if the debt instrument investment financial assets measured at amortized cost meet the following conditions at the same time, they are classified as financial assets measured at amortized cost: the business model of managing the financial assets is to collect contract cash flow; The contractual terms of the financial asset stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the outstanding principal amount. The interest income of such financial assets is recognized by the effective interest rate method, and the gains or losses arising from the derecognition, modification or impairment are included in the current profit and loss. Financial assets measured at fair value with changes included in current profits and losses, financial assets other than the above financial assets measured at amortized cost and financial assets measured at fair value with changes included in other comprehensive income, are classified as financial assets measured at fair value with changes included in current profits and losses. For such financial assets, the fair value is adopted for subsequent measurement, and all changes in fair value are included in the current profit and loss. Classification and measurement of financial liabilities the group’s financial liabilities are classified as other financial liabilities at initial recognition. The relevant transaction costs of other financial liabilities are included in their initial recognition amount. The subsequent measurement of financial liabilities depends on their classification: for other financial liabilities, the effective interest rate method is adopted for the subsequent measurement according to the amortized cost.

Zhejiang Sanfer Electric Co.Ltd(605336) notes to financial statements (Continued)

RMB in 2021

3、 Important accounting policies and accounting estimates (Continued) 7 Impairment of financial instruments (Continued) based on the expected credit loss, the group carries out impairment treatment on the financial assets measured at amortized cost and recognizes the loss reserves. For receivables and contract assets without major financing components, the group uses a simplified measurement method to measure the loss reserves according to the amount equivalent to the expected credit loss in the whole duration. For financial assets other than the above simplified measurement methods, the Group assesses whether their credit risk has increased significantly since initial recognition on each balance sheet date. If the credit risk has not increased significantly since initial recognition and is in the first stage, the group measures the loss reserve according to the amount equivalent to the expected credit loss in the next 12 months,

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