Goertek Inc.
Annual Report 2022
April 2023
Annual Report 2022
Section Ⅰ Important Notes, Contents and Interpretations
The Board of Directors, the Board of Supervisors, directors, supervisors andsenior management of the Company guarantee that the information presented inthis report shall be together be wholly liable for the truthfulness, accuracy andcompleteness of its contents and free of any false records, misleading statementsor material omissions, and will undertake individual and joint legal liabilities.Jiang Bin, the person in charge of the Company, and Li Yongzhi, the person incharge of accounting and the accounting department (accounting supervisor)guarantee that the financial report in this annual report is authentic, accurate andcomplete.All directors have attended the board meeting to review the annual report.The future plans and some forward-looking statements mentioned herein areplanned matters which shall not constitute a substantial commitment of theCompany to investors. Therefore, both investors and relevant persons shouldmaintain their risk awareness and understand the differences among plan,forecast and commitment. Please pay attention to investment risks.The Company faces the risks in market, operation and management. Investorsare kindly reminded to pay attention to possible investment risks. For details, see"Section III Management Discussion and Analysis, XI Outlook for the FutureDevelopment of the Company" in this report.The profit distribution proposal considered and approved by the Board ofDirectors of the Company is as follows: based on the total share capital registeredon the record date of equity distribution minus the repurchased shares in theCompany's specific securities repurchase account, the Company will distributecash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders,as well as 0 bonus shares (tax inclusive), and there is no conversion of capitalsurplus into share capital.
Contents
Section Ⅰ Important Notes, Contents and Interpretations ...... 2
Section Ⅱ Company Information and Financial Highlights ...... 7
Section III Management Discussion and Analysis ...... 11
Section IV Corporate Governance ...... 37
Section V Environmental and social responsibilities ...... 63
Section VI Important Matters ...... 65
Section VII Changes in Shares and Information about Shareholders ...... 78
Section VIII Information of Preference Shares ...... 85
Section IX Information on the Bonds ...... 86
Section X Financial Report ...... 87
Directory of Reference Files
(1) Financial statements with signatures and seals of the legal representative, the person in charge ofaccounting and the person in charge of accounting department (accounting supervisor);
(2) The originals of 2022 annual report and its abstract signed by the legal representative of theCompany;
(3) The originals of the auditor’s report with the seal of Zhongxi Certified Public Accountants(special general partnership) Co., Ltd. and the signature and seal of the certified public accountants;
(4) The originals of all company documents and announcements publicly disclosed in newspapersdesignated by China Securities Regulatory Commission (CSRC) during the reporting period.
Interpretations
| Terms | Refers to | Content of interpretation |
| Company, the Company, Goertek Inc. | Refers to | Goertek Inc. |
| Goertek Group | Refers to | Goertek Group Co., Ltd., Controlling shareholder of the Company |
| Weifang Goertek | Refers to | Weifang Goertek Electronics Co., Ltd., wholly owned subsidiary of the Company |
| Goertek Microelectronics | Refers to | Goertek Microelectronics Inc. controlled subsidiary of the Company |
| Weifang Goertek Microelectronics | Refers to | Weifang Goertek Microelectronics Co., Ltd., controlled subsidiary of the Company |
| Goertek Optical | Refers to | Goertek Optical Technology Co., Ltd., controlled subsidiary of the Company |
| Goertek Technology (Vietnam) | Refers to | Goertek Technology Vina Company Limited, wholly owned subsidiary of the Company |
| ODM | Refers to | Original Design and Manufacturing |
| JDM | Refers to | Joint Design and Manufacturing |
| Micro speaker | Refers to | The micro electro-acoustic components that transform electrical signal into acoustic signal, generate driving force through the magnetic line cutting of voice coil in magnetic field, to drive the diaphragm vibration, which then pushes the air for sounding. Compared with the micro receiver, it's characterized by higher power, wide frequency response and high fidelity, which is generally used for playing the sound. |
| MEMS | Refers to | Based on micron/nano technology, Micro electro mechanical system (MEMS) is a technology developed for designing, processing, manufacturing, measuring and controlling micron/nano materials. MEMS can integrate mechanical components, optical system and electric control system of driving components into a whole unit of microsystem, featured with miniaturization, intelligence, multi-function, high integration and being suitable for mass production. |
| Speaker module | Refers to | The acoustic component composed of one or several micro speakers and other electronic devices, which are assembled together through an injection molded housing. |
| Smart wearable devices | Refers to | A portable device that can be worn or carried directly, or integrated into the user's clothes or accessories. |
| Virtual Reality/VR | Refers to | A computer simulation system that can create and experience virtual world by using computer to generate a simulation environment into which immerses the users. |
| Augmented Reality/AR | Refers to | A technology that skillfully integrates virtual information with the real world. By making extensive use of multimedia, 3D modeling, real-time tracking and registration, intelligent interaction, sensing and other technical means, it applies the computer-generated text, images, 3D models, music, video and other virtual information to the real world after simulation. These two kinds of information complement each other to achieve “augmentation” of the real world. |
| Smart wireless earphones | Refers to | The new types of smart wireless earphones represented by TWS (True Wireless Stereo) earphones connect the left and right earphones with smart phones or other terminal devices through Bluetooth technology to form an independent stereo system, which realizes touch control, voice control, body information collection and other functions by adding various sensors. |
| Microsystem module | Refers to | Also known as SiP (System in Package) packaging module at the system level, it integrates multiple chips and passive components into the same package through advanced packaging technologies such as 3D packaging, to form a |
| module with whole or main functions of an electronic system, so as to realize the optimal combination of performance, volume, weight and other indicators. It is a versatile next-generation microelectronics technology. | ||
| Sensor | Refers to | A detection device that is capable of feeling the measured information, and able to transform the perceived information into electrical signals or other required forms of information for output based on certain rules, in order to meet the requirements of information transmission, processing, storage, display, recording and control. |
| Company Law | Refers to | Company Law of the People's Republic of China |
| Securities Law | Refers to | Securities Law of the People's Republic of China |
| Articles of Association | Refers to | Articles of Association of Goertek Inc. |
| CSRC | Refers to | China Securities Regulatory Commission |
| RMB, RMB 10,000, RMB 100,000,000 | Refers to | yuan (RMB), ten thousand yuan (RMB), hundred million yuan (RMB) |
| Reporting period | Refers to | January 1, 2022 to December 31, 2022 |
Other notes: In this report, any difference between the sum of some amounts and the sum of detailed items is due to rounding.
Section Ⅱ Company Information and Financial HighlightsI. Company Information
| Stock abbreviation | Goertek Inc. | Stock code | 002241 |
| The stock exchange where stocks are listed | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | Goertek Inc. | ||
| Abbreviation of the Company in Chinese | Goertek Inc. | ||
| Name of the Company in English (if any) | Goertek Inc. | ||
| Abbreviation of the Company in English (if any) | Goertek | ||
| Legal representative of the Company | Jiang Bin | ||
| Registered address | 268 Dongfang Road, High-tech Industrial Development District, Weifang | ||
| Postal code of registered address | 261031 | ||
| Previous changes of registered address of the Company | No change | ||
| Business address | 268 Dongfang Road, High-tech Industrial Development District, Weifang | ||
| Postal code of business address | 261031 | ||
| Company website | http://www.goertek.com | ||
| ir@goertek.com | |||
II. Contacts and Contact Information
| Board Secretary | Securities Affairs Representative | |
| Name | Jia Jun'an | Xu Yanqing, Xu Dapeng |
| Contact address | 268 Dongfang Road, High-tech Industrial Development District, Weifang | 268 Dongfang Road, High-tech Industrial Development District, Weifang |
| Tel. | 0536-3055688 | 0536-3055688 |
| Fax | 0536-3056777 | 0536-3056777 |
| ir@goertek.com | ir@goertek.com |
III. Information Disclosure and Place of the Report
| Website of the stock exchange for release of the Annual Report | Shenzhen Stock Exchange (http://www.szse.cn) |
| Name and website of the media for release of the Annual Report | Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, CNINFO (http://www.cninfo.com.cn) |
| Place where the Annual Report is available for inspection | Office of Board of Directors of the Company |
IV. Changes in Registration
| Unified Social Credit Code | 91370700729253432M |
| The changes in main business since the Company was listed (if any) | No change |
| Changes of controlling shareholders of the Company (if any) | No change |
V. Other Relevant Information
Accounting firm engaged by the Company
| Name of the accounting firm | Zhongxi Certified Public Accountants (special general partnership) |
| Business address of the accounting firm | Room 1101, No. 11, Chongwenmenwai Street, Dongcheng District, Beijing |
| Names of accountants signing the report | Du Yeqin, Zhang Shuli |
The sponsor institution engaged by the Company to perform continuous supervision during the reporting period? Applicable ? Not applicableThe financial advisor engaged by the Company to perform continuous supervision during the reporting period? Applicable ? Not applicableⅥ. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data? Yes ? No
| 2022 | 2021 | Year-on-year change | 2020 | |
| Operating revenue (RMB) | 104,894,324,162.26 | 78,221,418,618.02 | 34.10% | 57,742,742,893.96 |
| Net profit attributable to shareholders of the Company (RMB) | 1,749,181,131.83 | 4,274,702,999.38 | -59.08% | 2,848,007,269.61 |
| Net profit attributable to shareholders of the Company excluding non-recurring profits and losses (RMB) | 1,627,378,630.73 | 3,832,421,177.27 | -57.54% | 2,758,911,040.03 |
| Net cash flow from operating activities (RMB) | 8,317,113,364.68 | 8,598,475,527.88 | -3.27% | 7,682,256,113.68 |
| Basic earnings per share (RMB / share) | 0.52 | 1.29 | -59.69% | 0.89 |
| Diluted earnings per share (RMB / share) | 0.52 | 1.28 | -59.38% | 0.89 |
| Weighted average return on net assets | 6.17% | 17.61% | -11.44% | 16.40% |
| End of 2022 | End of 2021 | Year-on-year change | End of 2020 | |
| Total assets (RMB) | 77,176,355,467.91 | 61,079,051,133.27 | 26.35% | 49,117,826,313.41 |
| Net assets attributable to shareholders of the Company (RMB) | 29,491,882,199.49 | 27,327,747,993.97 | 7.92% | 19,653,252,273.26 |
Indicate whether the lower of the net profit before and after non-recurring gains and losses was negative for the last three accountingyears, and the latest auditor’s report indicated that there was uncertainty about the Company’s ability to continue as a going concern.? Yes ? NoIndicate whether the lower of the net profit before and after non-recurring gains and losses was negative. ? Yes ? No
Ⅶ. Differences in accounting data between domestic and foreign accounting standards
1. Differences in net profits and net assets in the financial reports disclosed according to internationalaccounting standards and Chinese accounting standards
? Applicable ? Not applicableDuring the reporting period, there is no difference in net profits and net assets in the financial reports disclosed pursuant tointernational accounting standards and Chinese accounting standards
2. Differences in net profits and net assets in the financial reports disclosed according to foreign accountingstandards and Chinese accounting standards? Applicable ? Not applicableDuring the reporting period, there is no difference in net profits and net assets in the financial reports disclosed pursuant to foreignaccounting standards and Chinese accounting standards.Ⅷ. Key Quarterly Financial Indicators
Unit: RMB
| The first quarter | The second quarter | The third quarter | The fourth quarter | |
| Operating revenue | 20,111,796,850.74 | 23,491,677,031.37 | 30,549,276,176.86 | 30,741,574,103.29 |
| Net profit attributable to shareholders of the Company | 901,114,518.82 | 1,177,731,691.33 | 1,761,261,980.08 | -2,090,927,058.40 |
| Net profit attributable to shareholders of the Company excluding non-recurring profits and losses (RMB) | 878,301,318.86 | 1,136,026,374.30 | 1,470,919,799.57 | -1,857,868,862.00 |
| Net cash flow from operating activities | 1,466,497,950.54 | 3,122,178,119.98 | -1,028,533,463.06 | 4,756,970,757.22 |
Whether there is significant difference between the above individual or aggregate financial indicators and that of what disclosed inthe quarterly reports and semi-annual reports disclosed by the Company? Yes ? NoⅨ. Items and Amounts of Non-recurring Profits and Losses
? Applicable ? Not applicable
Unit: RMB
| Item | 2022 | 2021 | 2020 | Explanation |
| Profits and losses on disposal of non-current assets (including the write-off portion of the provision for asset impairment) | 122,922,237.61 | -122,148,708.58 | -219,544,001.32 | Mainly investment income from disposal of equity owned in other companies |
| Government subsidies included in the current profits and losses (except those closely related to the Company's normal business, comply with national policies and regulations, and continuously grant in accordance with a certain standard quota or quantity) | 351,383,799.43 | 464,119,437.91 | 221,372,903.17 | Mainly special funds for enterprise innovation and development and other government subsidies |
| In addition to the effective hedging business related to normal business of the Company, the profits and losses from the changes in fair value arising from holding financial assets held for trading and financial liabilities held for trading, as well as the investment income from the disposal of financial assets held for trading, financial liabilities held for trading and available-for-sale financial assets | -367,080,970.87 | 185,179,920.90 | 102,685,404.04 | Mainly the gains from the fair value changes and transaction of the Company's foreign exchange derivatives |
| Other non-operating revenue and expenditures other than those mentioned above | 15,710,102.76 | 13,554,671.71 | 5,874,633.40 | |
| Other profit and loss items that meet the definition of non-recurring profit and loss | 42,288,231.23 | 2,603,363.20 | 3,236,394.55 | Mainly tax benefits and investment income from large-denomination deposits and other products |
| Less: Impact of income tax | 26,114,589.64 | 84,270,186.15 | 21,159,380.84 | |
| Impact of minority interests (after tax) | 17,306,309.42 | 16,756,676.88 | 3,369,723.42 | |
| Total | 121,802,501.10 | 442,281,822.11 | 89,096,229.58 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
? Applicable ? Not applicableMainly tax benefits and investment income from large-denomination deposits and other productsDescription of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on InformationDisclosure for Companies with Public Offerings of Securities - Non-recurring Profit and Loss, as recurring profit and loss? Applicable ? Not applicableThe Company did not classify any item of the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 onInformation Disclosure for Companies with Public Offerings of Securities - Non-recurring Profit and Loss, as recurring profit andloss in the reporting period.
Section III Management Discussion and AnalysisⅠ. The situation of the industry during the reporting periodDuring the reporting period, the Company's main business is categorized into the industry of the manufacturing of computer,communication, and other electronic equipment, and is divided into three segments including precision components business, smartaudio device business and smart hardware business. The Company operates mainly in consumer electronics, automotive electronicsand other industries, with the main products including acoustics, optics, microelectronics, structural components and other precisioncomponents, as well as smart hardware products such as virtual reality (VR)/augmented reality (AR) products, TWS smart earphones,smart wearable devices, gaming console and accessories, and smart home products. The Company serves the leading global customersin the technology and consumer electronics industry by providing them with vertically integrated product solutions of precisioncomponents and smart hardware, as well as the related design, R&D and manufacturing services.In the mobile era with smartphones as the core hardwares, a large number of outstanding well-known enterprises in technology andconsumer electronics industry had emerged worldwide based on the integration of hardware devices, software content and innovativeapplications, which drove the whole industry and related enterprises in its industrial chain to achieve significant growth and enterprisedevelopment through a long period of time in the past. However, affected by many adverse factors such as macroeconomic weaknessand high inflation in many European and American countries in 2022, global smartphone product shipments declined significantly, andthe transition of the technology and consumer electronics industry from the mobile era to the post-mobile era accelerated. During thereporting period, the Company continued to seize opportunities in the industry with the approach of the post-mobile era to consolidateits core competitiveness, actively expand the business of next-generation smart hardware and related components, and promote theCompany's overall business development.According to the statistics of IDC, a well-known consulting agency, the global smartphone shipment in 2022 reached about 1.21 billionunits, with an approximately 11% YoY decline. As the shipments decline, the pace of innovation in technologies and applicationscenarios of smartphone products has slowed down, the demand of smartphone related precision component has shrunk as well.However, at the same time, advanced technologies such as 5G, AI, intelligent interaction, sensor, software algorithm are furtherintegrated into next-generation smart hardware products, thus creating a large number of new applications and demands, so as topromote the sustainable development of next-generation smart hardware products such as VR/AR devices, smart wireless earphones,smart wearable devices and smart home products.In the first half of 2022, the global VR industry maintained a relatively strong momentum of growth. However, in the second half of2022, due to the adverse impact of macroeconomic downturn, inflation, weak consumption and other factors, VR products performedpoorer than expected in the third and fourth quarters which are traditionally the peak season of sales in Europe and the United States,and thus impacted the annual performance of the VR industry. According to the statistics of IDC, the global shipment of VR productsdeclined in 2022 compared to the previous year. However, according to the estimates of the Company's internal market researchdepartment, the total shipments of the world's top three VR device brands in 2022 still grew over the previous year. Though the growthof the global VR industry is slightly slower than expected, the well-known brand companies in consumer electronics and Internetindustries kept actively investing in VR, which promotes the continuous development of related hardware technology and softwarecontent. In 2022, AR products were still in the early stages of technological breakthroughs and product maturity. The global marketsize of AR products is still limited, and the hardware technologies still face challenges in many areas such as chip, optical display,communication, power consumption, size, weight, and others. However, the great market potential still attracts extensive attention andcontinuous investment from well-known companies in the industry.In November 2022, five government authorities including the Ministry of Industry and Information Technology co-issued The VirtualReality and Industry Application Integration Development Action Plan (2022-2026) to further laid down the overall requirements,goals, key tasks and projects for the development of China's VR industry, which was expected to promote the sustainable and healthydevelopment of the industry.According to the statistics of FutureSource, a famous consulting agency, the global shipment of TWS smart earphones reached about340 million units in 2022, up about 13% YoY. And about 98.61 million smart speakers were shipped globally in 2022, declined about
8.6% YoY. With the integration of AI, natural language processing and smart voice interaction technologies, the smart earphones,smart speakers and other products are expected to further develop in the future.According to the statistics of IDC, another well-known consulting agency, the global shipment of smart wearable products such assmart watches reached about 149 million units in 2022, with approximately 9.4% YoY increase. While the overall market size isgrowing steadily, next-generation health monitoring technology such as non-invasive glucose monitoring is also under developmentand improvement, which is expected to create new applications and market demands for smart wearable products in the future.
The development of next-generation smart hardware products has also boosted the demand for related precision components such asprecision optical components and modules, precision acoustic components, MEMS sensors and microsystem modules, hapticcomponents, and precision structural parts.From the perspective of competition, the global technology and consumer electronics industry still presents a centralized trend. Well-known enterprises with strong competitiveness and brand awareness demonstrate clear competitive advantages by possessing a largeamount of technologies, talents, funds, brands and industrial ecosystem resources, thus continuously lead the technology and productinnovation in the industry.From the perspective of supply chain, developing countries including China are demonstrating more and more important roles. On onehand, China still has advantages in terms of political/economic environment, infrastructure, industrial foundationmanagement/technical talent resources and other aspects. The overall competitiveness of electronic manufacturing enterprises of Chinais improving, and they undertake the demand of manufacturing service of the global supply chain. On the other hand, considering thecomplicated international political and economic environment, some enterprises faced the challenges of setting up a global supplychain, which needs to be tackled prudently in a scientific manner.II. The Company’s main business during the reporting periodThe Company is committed to serve the leading customers in the global technology and consumer electronics industry by providingvertically integrated product solutions of precision components and smart hardware, as well as related design, R&D and manufacturingservices.The Company's main business divides into three segments including precision components business, smart audio device business andsmart hardware business. The precision components business focuses on acoustics, optics, microelectronics, structural components,and other precision components. The related products include micro speaker/receiver, speaker module, haptic component (actuator),wireless charging device, antenna, MEMS microphone, MEMS sensors, microsystem module, VR optical component and module, ARoptical component, AR light engine, precision structural parts and etc. The above-mentioned products are widely applied in devicessuch as smartphones, tablets, smart wireless earphones, VR, AR, smart wearable and smart home devices. Smart audio device businessfocuses on providing products related to audio, voice interaction, AI, and other technologies. The main products include smart wirelessearphones (TWS), wired/wireless earphones, smart speakers, etc. Smart hardware business focuses on providing products related toentertainment, health and home security. The main products include VR, AR, smart wearable products, gaming consoles andaccessories, smart home products, etc. In addition, the Company actively explored business opportunities related to automotiveelectronics during the reporting period, and made progress in some new directions such as car sensors, optical modules, etc.The Company has innovative competitive advantages in the fields of acoustics, optics, MEMS microelectronics and precisionmanufacturing, and owns many intellectual property rights in the field of precision parts and components. In addition, the Companyhas accumulated rich experience in products and projects by cooperating with industry-leading clients in the field of smart audio deviceand smart hardware through "ODM", "JDM" and other business modes. During the reporting period, the Company maintained good,long-term cooperative relationships with leading clients in the global technology and consumer electronics industry. As a result, theCompany has been highly recognized by global clients for its product solutions and services, and remains being the industry-leadingmanufacturer in the fields of micro speakers, MEMS microphones, MEMS sensors, VR products, TWS, smart wearable products,gaming console and accessories, etc.During the reporting period, due to the business growth in VR, smart home gaming consoles and accessories, the revenue of theCompany grew significantly. The Company's position in the industry has also been further improved as well. The Company won manyhonors, including being ranked the 3rd company in the Top-100 China electronic component enterprises based on comprehensiveeconomic indexes, the 67th in the Top-500 private enterprises in China's manufacturing industry, the 118th in the Top-500 privateenterprises in China, and held the position of executive member company of CITIF.Ⅲ. Analysis of Core Competitiveness
1.Industry-leading precision and intelligent manufacturing capabilities
In technology and consumer electronics related fields, the Company has been widely recognized for precision manufacturingcapabilities and obtains great reputation. Relying on the core capabilities and long-term experience in the field of precisionmanufacturing, the Company has continuously improved the processing accuracy, efficiency and quality of precision components andsmart hardware products. The Company has in-house development capabilities of various core raw materials, and The Companyadopted multiple advanced processes and technologies such as ultra-high-precision mold, high-precision metal/non-metal processing,ultrasonic technology and laser technology, to build industry-leading precision manufacturing capabilities in the production of precision
optical components, MEMS sensors, microsystem modules and precision structural parts, thus ensuring the delivery of the productswith high precision, high efficiency and high quality.The Company, based on the capacities of advanced equipment development and flexible automation production, actively explores theintelligent manufacturing mode for upgrading. In the fields of automation, machine vision and AI related to intelligent manufacturing,the Company has built a future-oriented core capability of intelligent manufacturing by continuing investing in independent R&D,introducing global advanced technologies, core equipment and best practice experience for system integration, thus improving themanufacturing in all aspects through the application of information, automation, artificial intelligence and other technologies. TheCompany promotes the transformation of its manufacturing to a more digitalized, connected, intelligent, and service-oriented model,and to build the core capabilities of future-oriented intelligent manufacturing.
2. Multi-technologies integration platform and strong team of R&D personnel
The Company has established a product R&D and manufacturing platform integrating materials, structures, electronic circuits, softwarealgorithms, wireless communication, advanced technology, testing, automation and other technologies. Through cross-domaintechnology integration, the Company provides customers with advanced and systematic solutions for precision components and smarthardware products. The Company attaches great importance to the integration and cultivation of outstanding talents in the fields ofacoustics, optics, microelectronics, wireless communication, precision manufacturing, automation, and other sectors around the world.The Company has set up a team of technical personnel with profound technical strength and rich experience in product projects, andhas made a long-term cooperation with many well-known universities and scientific research institutions, such as Tsinghua University,Zhejiang University, Shandong University, Southeast University, Ocean University of China, Spring Institute of Chinese Science andTechnology, Xiamen University, and Changchun University of Science and Technology, which forms an open and comprehensivetechnology R&D platform in support of continuous innovation and R&D of technologies and products.During the reporting period, the Company applied for 3,388 patents, including 2,545 invention patents. A total of 2,195 patents hasbeen granted, including 1,250 invention patents. As of December 31, 2022, the Company has totally applied for 29,206 patents,including 3,738 foreign patent applications and 15,647 invention patents applications; a total of 17,720 patents have been granted,including 5,415 invention patents.
3. Continuous strategic innovation and transformation, and stable high-value customer relationshipsFacing the complex macroeconomic situation of domestic and overseas, the management of the Company actively carries out strategicalinnovation and transformation. While continuing to consolidate the core competitive advantages in conventional business, the Companyfirmly grasps the innovation opportunities of next-generation smart hardware products in the technology and consumer electronicsindustry. Relying on the high-value customer resources and good customer relationships worldwide, the Company, oriented by themarket and technology, continues to explore new business growth opportunities in the fields of consumer electronics and automotiveelectronics. The Company optimizes the allocation of strategical resource, supports strategical product development, continuesstrengthening and further utilize the customer resource advantages by closely following the world-class customers, in an effort totransform the needs of high-value customers into an inexhaustible driving force for the Company's sustainable development.
4. Excellent core management team
Although the Company experiences a rapid and sound development, the core management team keeps a steady and efficient style asalways. Facing the challenges and demands of smart hardware products in the post mobile era such as rapid development, high quality,high precision manufacturing, short delivery cycle and complex customer certification process, the core management team promptlyresponse to the market and makes changes and innovations continuously, to keep and enhance the Company's capabilities of strategicmanagement, operation, R&D, precision and intelligent manufacturing. The Company attaches importance to and promotes theinternationalization, specialization and rejuvenation of its core management team, and actively brings in senior management talentsand professionals from many international leading enterprises. At the same time, the Company has strengthened the echelon of itstalent team, more and more young talents grow up into the Company's core management team through training and practice. TheCompany boasts a management team with both experience and vitality that continues to promote the Company's stable and fastdevelopment in the future.IV. Analysis of Main Business
1. Overview
In 2022, as the global economy faced downward pressure from a macroeconomic perspective, China's economic development was alsoaffected by multiple unexpected factors at home and abroad. In the face of a severe external environment, China responded decisivelyand exercised timely regulation, introduced and implemented a package of policies and follow-up measures to stabilize the economy,and promoted economic stabilization and recovery, thus ensuring steady economic performance.
During the reporting period, the Company, by adhering to the product strategy of "Precision Components + Smart Hardware & Devices”,served the leading enterprises in the global technology and consumer electronics industry, actively promoted the development ofprecision components (acoustics, optics, microelectronics, structural parts, etc.) and emerging smart hardware business (VR/AR, smartwireless earphones, smart wearable and smart home devices, etc.). At the same time, the Company continued to promote its internalreform and operation management improvement, so that the Company’s operation from decision making to implementation operationwould be more efficient. This could lay a solid foundation for future development.During the reporting period, in the face of numerous challenges such as the weak global economy, high inflation in Europe and theUnited States, and the downturn in the consumer electronics industry, the management team and all staff of the company went all outto overcome these challenges calmly, completed various important tasks such as business expansion, project delivery and operationalimprovement, and promoted the stable development of various business fields. The Company's revenue in 2022 continued to growsignificantly.In the fourth quarter of 2022, the Company experienced fluctuations during the production of one of its new smart acoustic deviceproducts (for details, please refer to the relevant announcement made by the Company). After the occurrence of the above incidents,the Company's management team responded actively by communicating frequently with customers, facilitating the solution of theincidents, making an effort to maintain and improve customer relations, and ensured that other business cooperation is carried out asusual. The Company fully considered the impact of this matter, and based on the principle of prudence, increased the provision forrelated asset impairment, which resulted in a decline in the Company's net profit in 2022. In response to the above incidents, theCompany has carefully reflected on its mistakes and learned important lessons, and subsequently, rectified the shortcomings in relevantwork. The Company firmly believes that this contingency will not weaken the Company's core competitiveness, shake the Company'sbusiness foundation, or undermine the Company's stable and healthy development in the long term.During the reporting period, the Company achieved an operating revenue of RMB 104,894.3242 million, with a 34.10% YoY increase.The Company realized a net profit attributable to shareholders of listed companies of RMB 1,749.1811 million, with a 59.08% YoYdecline. The operating cost of the Company was RMB 93,233.4765 million, with a 38.81% YoY increase.During the reporting period, the total amount of the Company's selling expenses, administrative expenses, R&D expenses and financialexpenses was RMB 8,218.4527 million, with a 22.05% YoY increase.During the reporting period, the Company further strengthened the development of new technologies, products and techniques, activelybrought in high-level R&D talents, and invested RMB 5,198.3122 million in R&D, accounting for 4.96% of the revenue and 17.18%of the latest audited net assets of the Company.During the reporting period, the net cash flow from operating activities of the Company was RMB 8,317.1134 million, with a 3.27%YoY decline.
2. Revenue and cost
(1) Composition of operating revenue
Unit: RMB
| 2022 | 2021 | Year-on-year change | |||
| Amount | Proportion in operating revenue | Amount | Proportion in operating revenue | ||
| Total of operating revenue | 104,894,324,162.26 | 100% | 78,221,418,618.02 | 100% | 34.10% |
| Classified by industry | |||||
| Electronic components | 102,966,939,788.80 | 98.16% | 76,946,324,805.73 | 98.37% | 33.82% |
| Other business income | 1,927,384,373.46 | 1.84% | 1,275,093,812.29 | 1.63% | 51.16% |
| Classified by product | |||||
| Precision components | 14,003,616,502.68 | 13.35% | 13,840,133,491.33 | 17.69% | 1.18% |
| Smart audio device | 25,880,868,282.31 | 24.67% | 30,297,084,891.23 | 38.73% | -14.58% |
| Smart hardware | 63,082,455,003.81 | 60.14% | 32,809,106,423.17 | 41.94% | 92.27% |
| Other business income | 1,927,384,373.46 | 1.84% | 1,275,093,812.29 | 1.63% | 51.16% |
| Classified by region | |||||
| Domestic | 9,182,257,334.82 | 8.75% | 7,571,525,782.78 | 9.68% | 21.27% |
| Overseas | 95,712,066,827.44 | 91.25% | 70,649,892,835.24 | 90.32% | 35.47% |
| Classified by sales mode | |||||
| Direct selling | 104,414,898,362.49 | 99.54% | 77,770,329,729.13 | 99.42% | 34.26% |
| Distribution | 479,425,799.77 | 0.46% | 451,088,888.89 | 0.58% | 6.28% |
(2) Industries, products, regions and sales modes accounting for more than 10% of the Company's operating revenue oroperating profit? Applicable ? Not applicable
Unit: RMB
| Operating revenue | Operating cost | Gross profit margin | YoY change (%) of operating revenue | YoY change (%) of operating cost | YoY change (%) of gross profit margin | |
| Classified by industry | ||||||
| Electronic components | 102,966,939,788.80 | 91,509,198,680.69 | 11.13% | 33.82% | 38.54% | -3.03% |
| Classified by product | ||||||
| Precision components | 14,003,616,502.68 | 11,035,414,492.23 | 21.20% | 1.18% | 3.70% | -1.91% |
| Smart audio device | 25,880,868,282.31 | 24,417,812,289.94 | 5.65% | -14.58% | -10.12% | -4.68% |
| Smart hardware | 63,082,455,003.81 | 56,055,971,898.52 | 11.14% | 92.27% | 98.46% | -2.77% |
| Classified by region | ||||||
| Domestic | 7,668,917,691.68 | 6,712,603,655.53 | 12.47% | 11.50% | 13.37% | -1.44% |
| Overseas | 95,298,022,097.12 | 84,796,595,025.16 | 11.02% | 36.01% | 41.01% | -3.16% |
| Classified by sales mode | ||||||
| Direct selling | 102,489,902,939.54 | 91,100,679,999.97 | 11.11% | 33.98% | 38.73% | -3.05% |
| Distribution | 477,036,849.26 | 408,518,680.72 | 14.36% | 6.66% | 5.46% | 0.97% |
If the statistical caliber of the Company's main business data has been adjusted in the reporting period, adjusted statistics of mainbusiness are based on the caliber at the end of the reporting period of last year.? Applicable ? Not applicable
(3) Whether the Company's revenue from physical products sales is greater than the revenue from providing services? Yes ? No
| Classification of industry | Item | Unit | 2022 | 2021 | Year-on-year change |
| Electronic components industry | Sales volume | Ten thousand PCS | 453,825.95 | 540,341.87 | -16.01% |
| Output volume | Ten thousand PCS | 461,666.20 | 546,976.95 | -15.60% | |
| Inventory volume | Ten thousand PCS | 41,876.34 | 34,036.09 | 23.04% |
Reasons for changes in the relevant data over 30% year-on-year? Applicable ? Not applicable
(4) Fulfillment of major sales contracts and major procurement contracts signed by the Company as of the reporting period? Applicable ? Not applicable
(5) Composition of operating cost
Classification of industry
Unit: RMB
| Classification of industry | Item | 2022 | 2021 | Year-on-year change | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Electronic components | Direct materials | 80,345,630,863.86 | 87.80% | 55,843,214,176.77 | 84.54% | 43.88% |
| Direct labor expenses | 4,168,178,564.20 | 4.56% | 4,058,480,923.72 | 6.14% | 2.70% | |
| Manufacturing expenses | 6,995,389,252.63 | 7.64% | 6,152,377,303.86 | 9.31% | 13.70% | |
ExplanationDuring the reporting period, the Company's overall sales volume increased. At the same time, the sales revenue of smart hardwareproducts with a relatively high proportion of material cost increased.
(6) Whether there is any change in consolidation scope during the reporting period
? Yes ? NoDuring the current period, the Company acquired 8 subsidiaries through establishment. They are respectively Goertek OpticalTechnology (Qingdao) Co., Ltd, Goertek Optical Technology (Shanghai) Co., Ltd., Qingdao Resonance Venture Capital ManagementCo., Ltd., Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership), Weifang Goertek Electronics Co., Ltd.,Qingdao Goertek Horizons Technology Co., Ltd., Weifang High-tech Zone Goertek Education Center and GOERTEKMICROELECTRONICS VIETNAM COMPANY LIMITED.During the current period, the Company disposed of two subsidiaries, namely Shenzhen Mototek Smart Technology Co., Ltd. andQingdao Resonance Venture Capital Management Co., Ltd.
(7) Significant changes or adjustments in the Company's business, products or services during the reporting period? Applicable ? Not applicable
(8) Major customers and suppliers
Major customers of the Company
| Sales revenue from top five customers (RMB) | 92,215,461,912.74 |
| Proportion of total sales revenue from top five customers in total annual sales amount | 87.91% |
| Proportion of sales revenue from related parties among top five customers in total annual sales amount | 0.00% |
Information of top five customers
| No. | Name of customer | Sales amount (RMB) | Proportion in total annual sales amount |
| 1 | Customer 1 | 32,642,129,185.96 | 31.12% |
| 2 | Customer 2 | 29,741,869,268.77 | 28.35% |
| 3 | Customer 3 | 19,794,346,646.32 | 18.87% |
| 4 | Customer 4 | 6,317,827,464.88 | 6.02% |
| 5 | Customer 5 | 3,719,289,346.81 | 3.55% |
| Total | -- | 92,215,461,912.74 | 87.91% |
Other information of major customers? Applicable ? Not applicableThe top five customers do not have associated relationship with the Company. The Company's directors, supervisors, seniormanagement, core technicians, shareholders holding more than 5% of total shares, actual controllers and other related parties do notdirectly or indirectly own rights and interests in the main customers.Major suppliers of the Company
| Total purchase amount from top five suppliers (RMB) | 34,784,627,246.36 |
| Proportion of total purchase amount from top five suppliers in total annual purchase amount | 38.35% |
| Proportion of purchase amount from related parties among top five suppliers in total annual purchase amount | 0.00% |
Information of top five suppliers
| No. | Name of supplier | Purchase amount (RMB) | Proportion in total annual purchase amount |
| 1 | Supplier 1 | 19,413,509,317.84 | 21.41% |
| 2 | Supplier 2 | 8,083,723,203.19 | 8.91% |
| 3 | Supplier 3 | 4,219,990,040.96 | 4.65% |
| 4 | Supplier 4 | 1,652,205,913.87 | 1.82% |
| 5 | Supplier 5 | 1,415,198,770.50 | 1.56% |
| Total | -- | 34,784,627,246.36 | 38.35% |
Other information of major suppliers? Applicable ? Not applicableThe top five suppliers do not have associated relationship with the Company, and the Company's directors, supervisors, seniormanagement, core technicians, shareholders holding more than 5% of total shares, actual controllers and other related parties do notdirectly or indirectly own rights and interests in the main suppliers.
3. Expenses
Unit: RMB
| 2022 | 2021 | Year-on-year change | Note of significant change | |
| Selling expenses | 548,298,842.05 | 444,869,977.08 | 23.25% | No significant change |
| Administrative expenses | 2,294,505,645.46 | 1,951,657,773.32 | 17.57% | No significant change |
| Financial expenses | 149,123,081.74 | 167,099,982.36 | -10.76% | No significant change |
| R&D expenses | 5,226,525,154.99 | 4,170,074,282.10 | 25.33% | No significant change |
4. R&D Investment
? Applicable ? Not applicable
| Name of major R&D project | Purpose of project | Status of project | Objectives | Expected benefits to future development of the Company |
| R&D project of micro speaker module | Develop a new generation of micro speaker module products with high sensitivity, low distortion, large amplitude, waterproof and dustproof features. | In progress | Collaborate with major customers to iterate intelligent hardware products, complete R&D of a number of micro speaker module products, and achieve mass production and application on customer products | Continuously consolidate the Company's competitive advantage and market share in the field of acoustic precision components. |
| R&D project of MEMS sensor and microsystem module | To develop MEMS sensors and microsystem module products applied to smart hardware and automotive electronics. | In progress | To complete the R&D, verification, application and mass production of MEMS sensors and microsystem modules featuring voice interaction, adapterization and noise reduction, signal transmission and status monitoring, used in the field of smart hardware and automotive electronics | The project facilitates the Company’s business expansion in the field of MEMS sensors and microsystem modules, and further enhances the Company's comprehensive strength in the field of MEMS. |
| R&D project of VR/AR precision optical components and modules | Develop the precision optical components and module products by using emerging optical technologies such as “Pancake” folded-lightpath lenses and optical waveguide technology, and promote their application in VR/AR products. | In progress | Complete the R&D and mass production of optical lens and module products for new generation of all-in-one VR products, and improve the ability of comprehensive solution of optical devices and light engines for AR products. | The project helps enhance the Company's competitive advantage and market share in the field of VR/AR precision optical components and modules, promote the Company's ability to provide customers with customized VR/AR optical solutions, and improve the Company's vertical integration ability and profitability in the field of VR/AR. |
| R&D project of AR optical modules | To develop micro projection modules for AR, AR-HUD, and so on, and promote its application in consumer electronics, automotive electronics, etc. | In progress | To complete the design, technical verification and commercial application of related micro projection modules, and develop micro projection module solutions for consumer electronics and automotive electronics | Enhance the competitiveness of the Company in AR optical modules, and extend the Company's capabilities in optical modules to the field of automotive electronics |
| R&D project of all-in-one VR HMD | Develop lightweight all-in-one VR HMD products featured with high-definition display, precise motion tracking and other features. | In progress | Cooperate with our customer to complete R&D, validation, mass production of a number of new-generation all-in-one VR HMD products based on the latest chip platform | The project helps consolidate the Company's competitive advantage and market share in the field of VR. |
| R&D project of TWS smart wireless earphones | Develop a new generation of TWS smart wireless earphones | In progress | Cooperate with our customer to complete R&D, validation, mass production of a number of new-generation of TWS smart wireless earphones | It helps consolidate the Company's competitive advantage and market share in the field of TWS smart wireless earphones. |
| R&D project of smart wearable devices for sport and health related applications | Develop a new generation of smart wearable devices with functions of independent communication, health monitoring features and etc. | In progress | Cooperate with our customer to complete R&D, validation, mass production of a new generation of smart watches and smart bands | Consolidate the Company's competitive advantage and market share in smart wearable devices such as smart watches and smart bands |
| R&D project of smart wireless lightweight AR glasses | Develop wireless lightweight AR glasses and their main functional modules for future AR applications. | In progress | To complete the R&D and trial production of a number of AR glasses products, based on the latest chip platform, with the functions of data processing and wireless communication, using advanced precision optics and micro-display technologies such as optical waveguide and silicon-based LED, so as to develop the solution capability for AR glasses and their main functional modules | It helps enhance the Company's R&D experience and technology accumulation in the field of AR and facilitates the business expansion of the Company in AR field. |
R&D personnel of the Company
| 2022 | 2021 | Year-on-year change | |
| Number of R&D personnel | 12,305 | 12,895 | -4.58% |
| Proportion of R&D personnel | 14.42% | 13.46% | 0.96% |
| Academic structure of R&D personnel | |||
| Bachelor | 8,099 | 9,148 | -11.47% |
| Master | 2,550 | 2,414 | 5.63% |
| PhD | 54 | 63 | -14.29% |
| Age of R&D personnel | |||
| Below the age of 30 | 5,346 | 5,105 | 4.72% |
| Aged between 30 to 40 | 6,172 | 7,162 | -13.82% |
| Over the age of 40 | 787 | 628 | 25.32% |
The Company’s investment in R&D
| 2022 | 2021 | Year-on-year change | |
| Amount of R&D Investment (RMB) | 5,198,312,190.48 | 4,301,342,763.66 | 20.85% |
| Proportion of R&D investment in operating revenue | 4.96% | 5.50% | -0.54% |
| Capitalized amount of R&D investment (RMB) | 597,278,121.61 | 662,993,650.30 | -9.91% |
| Proportion of capitalized R&D investment in R&D investment | 11.49% | 15.41% | -3.92% |
Reasons and impacts of significant changes in R&D personnel composition of the Company? Applicable ? Not applicableReasons for significant changes in the proportion of total R & D investment in operating revenue compared with that of previous year? Applicable ? Not applicableReasons and explanation of its reasonableness of significant changes in capitalized R & D investment? Applicable ? Not applicable
5. Cash flow
Unit: RMB
| Item | 2022 | 2021 | Year-on-year change |
| Sub-total of cash inflow from operating activities | 92,960,786,011.89 | 85,523,439,745.15 | 8.70% |
| Sub-total of cash outflow from operating activities | 84,643,672,647.21 | 76,924,964,217.27 | 10.03% |
| Net cash flow from operating activities | 8,317,113,364.68 | 8,598,475,527.88 | -3.27% |
| Sub-total of cash inflow from investing activities | 1,141,805,421.45 | 3,276,323,800.48 | -65.15% |
| Sub-total of cash outflow from investing activities | 10,218,818,104.61 | 10,044,700,261.35 | 1.73% |
| Net cash flow from investing activities | -9,077,012,683.16 | -6,768,376,460.87 | 34.11% |
| Sub-total of cash inflow from financing activities | 31,722,066,906.40 | 14,003,754,499.97 | 126.53% |
| Sub-total of cash outflow from financing activities | 29,714,438,433.99 | 13,616,577,139.69 | 118.22% |
| Net cash flow from financing activities | 2,007,628,472.41 | 387,177,360.28 | 418.53% |
| Net increase in cash and cash equivalents | 1,662,092,566.77 | 2,224,708,917.50 | -25.29% |
Main influencing factors of significant year-on-year changes in relevant data? Applicable ? Not applicable
(1) The sub-total of cash inflow from investing activities was RMB 1,141.8054 million, with a year-on-year decline of 65.15%, andthe net cash flow generated from investing activities was RMB -9,077.0127 million, with a year-on-year decline of RMB 2,308.6362million, mainly due to the higher cash inflow from investing activities during the previous reporting period and the increase of theCompany's purchase of long-term assets, such as fixed assets, and structured deposits.
(2) The subtotal cash inflow from financing activities was RMB 31,722.0669 million, with a year-on-year increase of 126.53%; thesubtotal cash outflow from financing activities was RMB 29,714.4384 million, with a year-on-year increase of 118.22%; and the netcash flow generated from financing activities was RMB 2,007.6285 million, with a year-on-year increase of 418.53%, mainly due tothe increase in cash received from borrowings during the reporting period.The reason for significant difference between the net cash flow from the Company's operating activities during the reporting periodand net profit in current year.? Applicable ? Not applicableThe net cash flow generated from operating activities exceeded the net profit of the current year by 364.38%, mainly due to theexpansion of operation scale and the increase of accumulated asset depreciation and amortization and the provision for asset impairment.
V. Analysis of Non-main Business? Applicable ? Not applicable
Unit: RMB
| Amount | Proportion in total profit | Explanation of the cause | Whether it is sustainable | |
| Investment income | -36,243,969.62 | -2.40% | No | |
| Gains on changes in fair value | -57,081,334.97 | -3.78% | No | |
| Asset impairment | -1,782,744,359.91 | -118.12% | Mainly due to the provision for | No |
| losses | impairment of assets related to a new smart acoustic product during the reporting period | |||
| Non-operating income | 21,477,460.44 | 1.42% | No | |
| Non-operating expenses | 122,730,370.49 | 8.13% | No |
VI. Analysis of Assets and Liabilities
1. Major changes in asset composition
Unit: RMB
| End of 2022 | At the beginning of 2022 | YoY change (%) | Note of significant change | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Cash at bank and on hand | 12,682,871,091.80 | 16.43% | 10,048,521,696.09 | 16.45% | -0.02% | |
| Accounts receivable | 14,396,180,782.93 | 18.65% | 11,899,214,525.92 | 19.48% | -0.83% | |
| Inventories | 17,348,670,744.58 | 22.48% | 12,082,308,485.38 | 19.78% | 2.70% | Increased inventories along with the expansion of operation scale |
| Long-term equity investments | 361,008,671.83 | 0.47% | 437,402,203.91 | 0.72% | -0.25% | |
| Fixed assets | 21,459,756,268.25 | 27.81% | 18,123,352,480.76 | 29.67% | -1.86% | Raised funds to invest in projects, increased the purchase of production equipment, testing devices, and some infrastructure projects have been converted into fixed assets after reaching their intended state of use |
| Construction in progress | 2,424,443,775.33 | 3.14% | 2,127,055,853.77 | 3.48% | -0.34% | |
| Right-of-use assets | 580,175,922.73 | 0.75% | 330,796,520.66 | 0.54% | 0.21% | |
| Short-term borrowings | 7,120,846,026.67 | 9.23% | 4,284,859,347.02 | 7.02% | 2.21% | Increased operating capital along with the expansion of operation scale |
| Contract liabilities | 2,295,347,547.31 | 2.97% | 2,210,825,761.69 | 3.62% | -0.65% | |
| Long-term borrowings | 2,206,000,000.00 | 2.86% | 2,204,215,784.74 | 3.61% | -0.75% | |
| Lease liabilities | 470,704,507.75 | 0.61% | 210,209,955.40 | 0.34% | 0.27% | |
| Accounts payable | 25,748,758,270.19 | 33.36% | 18,529,609,655.40 | 30.34% | 3.02% | The number of purchasing orders |
| increased along with business expansion | ||||||
| Current portion of non-current liabilities | 1,095,618,327.74 | 1.42% | 501,408,170.04 | 0.82% | 0.60% | |
| Other current liabilities | 4,252,178.60 | 0.01% | 14,844,359.01 | 0.02% | -0.01% | |
| Deferred tax liabilities | 816,118,632.40 | 1.06% | 389,933,389.40 | 0.64% | 0.42% | |
| Financial liabilities held for trading | 202,293,742.46 | 0.26% | 15,190,564.34 | 0.02% | 0.24% | |
| Notes payable | 4,850,498,246.08 | 6.28% | 2,742,876,464.23 | 4.49% | 1.79% | With the expansion of operation scale, company's purchase payments settled by banker's acceptance bills increased, and the amount of outstanding acceptance bills increased |
Foreign assets account for a relatively high proportion? Applicable ? Not applicable
| Asset details | Cause of formation | Assets scale (RMB) | Location | Operation mode | Measures to ensure asset safety | Earnings | Proportion of overseas assets in the net assets of the Company | Whether there is a significant impairment risk |
| Goertek Technology (Vietnam) | Establishment | 4,107,738,419.61 | Vietnam | Production & sales | Effective internal control mechanism | Normal | 13.58% | No |
| Other circumstances | The assets scale refers to the net assets of overseas subsidiaries. The proportion of overseas assets in the net assets of the Company refers to the proportion of the net assets of overseas subsidiaries in the net assets of the listed Company at the end of the reporting period | |||||||
2. Assets and liabilities measured at fair value
? Applicable ? Not applicable
Unit: RMB
| Item | Opening balance | Profit and loss from changes in fair value in the reporting period | Cumulative changes in fair value included in equity | Impairment accrued in current period | Purchase amount in the reporting period | Sales amount in the reporting period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Financial assets held for trading (excluding derivative financial assets) | 300,234,328.79 | -49,950,701.98 | 210,000,000.00 | 11,100,146.56 | 471,383,773.37 | |||
| 2. Derivative financial assets | 20,462,992.36 | 164,830,672.72 | 646,234.52 | 185,939,899.60 | ||||
| 3. Other debt investments | 14,575,230.24 | 190,438,343.84 | 182,637,699.96 | 22,375,874.12 | ||||
| 4. Investments in other equity instruments | 465,677,764.54 | 63,867,720.18 | 201,302,452.01 | 20,893,800.00 | 39,145,000.85 | 699,249,262.24 | ||
| Sub-total of financial assets | 800,950,315.93 | 114,879,970.74 | 63,867,720.18 | 601,740,795.85 | 203,531,499.96 | 50,891,381.93 | 1,378,948,809.33 | |
| Total of above amounts | 800,950,315.93 | 114,879,970.74 | 63,867,720.18 | 601,740,795.85 | 203,531,499.96 | 50,891,381.93 | 1,378,948,809.33 | |
| Financial liabilities | 15,190,564.34 | -171,961,305.71 | 30,332,436.75 | 15,190,564.34 | 202,293,742.46 |
Other changesNoneWhether the measurement attributes of major assets of the Company have changed significantly during the reporting period? Yes ? No
3. Restrictions on asset rights as of the end of reporting period
| Items | Book value at the end of the reporting period (RMB) | Reasons for restrictions |
| Cash at bank and on hand | 1,392,748,538.84 | Deposit for bills and borrowings |
| Notes receivable | 5,848,815.01 | Bill pledge and others |
| Current portion of non-current assets | 70,184,291.67 | When large-denomination certificates of deposit is pledged to the bank, the bank will issue financing guarantees, notes and so on |
| Other non-current assets | 544,796,722.20 | |
| Total | 2,013,578,367.72 |
Ⅶ. Analysis of Investment
1. Overall situation
? Applicable ? Not applicable
| Investment amount in 2022 (RMB) | Investment amount in 2021 (RMB) | YoY change (%) |
| 9,210,478,674.05 | 7,494,700,261.35 | 22.89% |
Other explanations:
To better reflect the overall investment status of the Company during the reporting period, the statistical indicators were adjusted, alongwith the corresponding statistics of the same period of last year. The investment amount of the same period of last year was RMB
533.09 million before adjustment and RMB 7,494.70million after adjustment. The total investment amount of the Company in 2022was RMB 9,210.48 million, with a year-on-year growth of 22.89%, mainly due to the increased investment for purchasing equipment.
2. Major equity investments acquired during the reporting period
? Applicable ? Not applicable
3. Major non-equity investments in progress during the reporting period
? Applicable ? Not applicable
Unit: RMB
| Name of project | Investment mode | Whether it is the investment in fixed assets | Project industry | Amount invested during the reporting period | Accumulated actual investment by the end of the reporting period | Source of funds | Project progress | Estimated income | Accumulated income by the end of the reporting period | Reasons for failure to reach the planned progress and expected benefits | Disclosure date (if any) | Disclosure index (if any) |
| Project of Dongguan Songshan Lake Goertek Industrial Park | Self-built | Yes | Electronic components | 184,507,138.34 | 495,232,699.67 | Self-raised funds | 22.21% | Not applicable | Not applicable | Not applicable | January 3, 2019 | For details, see Announcement of Goertek Inc. on Signing of Investment Cooperation Agreement between the Wholly-owned Subsidiary of the Company and the Management Committee of Dongguan Songshan Lake High-tech Industrial Development Zone published in the information disclosure media such as CNINFO (http://www.cninfo.com.cn), Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily. |
| Total | -- | -- | -- | 184,507,138.34 | 495,232,699.67 | -- | -- | Not applicable | Not applicable | -- | -- | -- |
4. Financial asset investment
(1) Securities investment
? Applicable ? Not applicable
Unit: RMB
| Security type | Security code | Security abbreviation | Initial investment cost | Accounting measurement model | Book value at the beginning | Profit and loss from changes in fair value in the reporting period | Cumulative changes in fair value included in equity | Purchase amount in the reporting period | Sales amount in the reporting period | Profit and loss in the reporting period | Book value at the end of the reporting period | Accounting items | Source of funds |
| Domestic and foreign stocks | KOPN | KOPN | 84,852,571.05 | Fair value measurements | 98,804,286.66 | -66,082,088.60 | 32,722,198.06 | Financial assets held for trading | Self-raised funds | ||||
| Total | 84,852,571.05 | -- | 98,804,286.66 | -66,082,088.60 | 32,722,198.06 | -- | -- | ||||||
| Date of announcement disclosure by the Board of Directors for approval of securities investment | February 11, 2017 | ||||||||||||
| Date of announcement disclosure by shareholders meeting for approval of securities investment (if any) | March 2, 2017 | ||||||||||||
(2) Derivatives investment
? Applicable ? Not applicable
1) Investments in derivatives for hedging during the reporting period
? Applicable ? Not applicable
Unit: RMB 10,000
| Type of derivatives investment | Amount of initial investment | Profit and loss from changes in fair value in the reporting period | Cumulative changes in fair value included in equity | Amount of purchase during the reporting period | Amount of sales during the reporting period | Closing balance | Proportion of investment amount in the Company's net |
| asset at the end of the reporting period | |||||||
| Option | 121,138.30 | -1,799.24 | 931,833.60 | 760,458.70 | 292,513.20 | 9.67% | |
| Forward | 518,981.98 | -5,986.25 | 2,828,663.79 | 2,731,278.67 | 616,367.10 | 20.37% | |
| Swap | 178,519.60 | 7,072.43 | 519,780.22 | 380,493.00 | 317,806.82 | 10.50% | |
| Total | 818,639.88 | -713.06 | 4,280,277.61 | 3,872,230.37 | 1,226,687.12 | 40.54% | |
| Description of whether the accounting policies and specific accounting principles for the Company's hedging business has changed significantly compared with that of previous reporting period | The Company's derivatives transactions are calculated in accordance with Accounting Standards for Business Enterprises No. 22 — Recognition and Measurement of Financial Instruments. The initial measurement is based on the fair value of the derivatives on the date of the signing of the transaction contracts, and the subsequent measurement is based on its fair value. The derivative instrument with positive fair value is recognized as an asset, while the one with negative fair value is recognized as a liability. The profits and losses generated by changes in fair value are directly recognized in current profit and loss. The accounting policies and specific accounting principles for the Company's derivatives have no significant change compared with that of previous reporting period. | ||||||
| Statement of actual profit and loss in the reporting period | The actual profit and loss of the Company's investments in derivatives for hedging during the reporting period was -309.9996 million. | ||||||
| Statement of hedging effect | To avoid exchange rate risks in daily operations, the Company hedged against its risks through financial derivatives. The changes in the value of the financial derivatives effectively hedged the risk of changes in the existing position, and the overall hedging result is within expectations. | ||||||
| Source of funds for derivatives investment | Self-raised funds | ||||||
| Risk analysis and control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | 1. The financial derivatives transactions carried out by the Company are for the purpose of fixing costs, avoiding and preventing risks of foreign exchange rate and interest rate, and prohibiting any risk speculation. The trading quota of the Company's financial derivatives shall not exceed the authorized quota as reviewed and approved by the Board of Directors or the general meeting of shareholders. 2. The Company has formulated a strict management system for financial derivatives transactions, which clearly stipulates the operating principles, approval authority, responsible departments and persons, internal operating procedures, information isolation measures, internal risk reporting system and risk handling procedures, and information disclosure of financial derivatives transactions, in order to control trading risks arising therefrom. 3. The Company shall carefully review the terms of contracts signed with qualified banks and other financial institutions, and strictly implement the risk management system to prevent legal risks. 4. The Company's business personnel will continue to track the changes in the open market price or fair value of financial derivatives, timely assess the changes in risk exposure of financial derivatives transactions, and regularly report to the management of the Company. If any abnormal situation, inform the Board of Directors of the risk and take emergency measures accordingly. 5. The internal audit department regularly conducts internal audit on the compliance of financial derivatives transactions. | ||||||
| In case of changes in market price or fair | Changes in the fair value of foreign exchange derivatives are calculated based on the difference between the fair market price and the contract price in the month of the settlement date determined by the Company. | ||||||
| value of invested derivatives during the reporting period, the analysis of fair value of the derivatives shall disclose the specific methods used and the setting of relevant assumptions and parameters | |
| Litigation involved | None |
| Date of announcement disclosure by the Board of Directors for approval of the investment in derivatives | March 30, 2022 |
| Date of announcement disclosure by shareholders meeting for approval of the investment in derivatives | May 13, 2022 |
| Special opinions of independent directors on the Company's derivatives investment and risk control | The Company carries out financial derivatives transactions mainly to avoid foreign exchange risks associated with RMB exchange rate fluctuations and effectively control the cost uncertainty caused by foreign exchange risks. The Company has formulated the Management System of Goertek Inc.'s Financial Derivatives Trading Business, which is conducive to strengthen the management and control of the risks associated with financial derivatives transactions. The deliberation, approval, voting and other procedures of this proposal are in line with the relevant provisions of Company Law, Articles of Association, and overall interests of the Company, without damage to the legitimate rights and interests of minority shareholders. Therefore, the Company has been approved to carry out the business above. |
2) Investments in derivatives for speculation during the reporting period
? Applicable ? Not applicableThe Company did not make any investment in derivatives for speculation during the reporting period.
5. Use of raised funds
? Applicable ? Not applicable
(1) Overall use of raised funds
? Applicable ? Not applicable
Unit: RMB 10,000
| Year of raising | Means of raising | Total fund raised | The total amount of raised funds used during the reporting period | Accumulated amount of raised funds that have been used | Total amount of raised funds with changed purposes during the reporting period | Accumulated total amount of raised funds with changed purposes | Proportion of accumulated total amount of raised funds with changed purposes | Total amount of raised funds that have not been yet used | Purpose of the raised funds that have not been yet used | The amount of raised funds that have been idle for more than two years |
| 2020 | Public issuance of convertible corporate bonds | 398,903.00 | 130,147.65 | 337,203.58 | 0.00 | 0.00 | 0.00% | 61,699.42 | Supplementing working capital and deposited in the special account for raised funds | 0.00 |
| Total | -- | 398,903.00 | 130,147.65 | 337,203.58 | 0.00 | 0.00 | 0.00% | 61,699.42 | -- | 0.00 |
| Description of overall use of raised funds | ||||||||||
| The Company actually invested RMB 1,301.4765 million of raised fund in current period. As of December 31, 2022, the Company had used a total of RMB 3,372.0358 million of raised funds, with RMB 616.9942 million unused (interest excluded), of which RMB 450 million was used to temporarily supplement the working capital, and the remaining funds was deposited in the special account for raised funds of the Company. | ||||||||||
(2) Projects in which the raised funds were proposed to be invested
? Applicable ? Not applicable
Unit: RMB 10,000
| Committed investment projects and investment of over-raised funds | Whether the project has been changed (including partial changes) | Total committed investment of raised funds | Total investment after adjustment (1) | Amount invested during the reporting period | Accumulated investment amount at the end of the reporting period (2) | Investment progress at the end of the period (3)＝(2)/(1) | The date on which the project reaches its intended usage state | Benefits realized during the reporting period | Whether it achieved the expected benefits | Whether there is any significant change in the feasibility of the project |
| Committed investment projects | ||||||||||
| The project of binaural true wireless smart earphones | No | 218,903.00 | 218,903.00 | 55,521.72 | 220,141.92 | 100.57% | August 31, 2022 | 2,685.01 | No | No |
| AR/VR and related optical module project - AR/VR project | No | 60,000.00 | 60,000.00 | 30,205.61 | 60,581.38 | 100.97% | August 31, 2022 | 42,339.54 | Yes | No |
| AR/VR and related optical module project - optical module project | No | 40,000.00 | 40,000.00 | 30,589.63 | 33,758.03 | 84.40% | June 30, 2023 | 4,468.07 | Yes | No |
| Qingdao R&D center project | No | 80,000.00 | 80,000.00 | 13,830.69 | 22,722.25 | 28.40% | December 31, 2023 | Not applicable | Not applicable | No |
| Sub-total of committed investment projects | -- | 398,903.00 | 398,903.00 | 130,147.65 | 337,203.58 | -- | -- | 49,492.62 | -- | -- |
| Direction of the investment with over raised funds | ||||||||||
| None | ||||||||||
| Total | -- | 398,903.00 | 398,903.00 | 130,147.65 | 337,203.58 | -- | -- | 49,492.62 | -- | -- |
| Explain the reasons for failure to achieve the planned progress and estimated profit by item (including the reasons why "Not applicable" is selected under "Whether the estimated profit was achieved") | ① Affected by changes in the market and customers’ projects, the binaural true wireless smart earphones project did not achieve the expected profit. ② Affected by the actual needs of the Company and project, Qingdao R&D Center project was behind schedule. The Company may accelerate subsequent investment based on the actual needs, in an effort to achieve the maximum efficiency of the raised funds. | |||||||||
| Description of significant change in the feasibility of the project | Not applicable | |||||||||
| Amount, use of over-raised funds and progress of use thereof | Not applicable | |||||||||
| Change in location of the project invested with raised funds | Applicable | |||||||||
| Occurred in previous years | ||||||||||
| On August 20, 2020, the Company held the 8th meeting of the 5th Board of Directors and the 6th meeting of the 5th Board of Supervisors, which reviewed and approved the Proposal on Changing the Implementation Subject and Implementation Location of Some Investment Projects with Raised Capital and Increasing the Capital of Wholly-owned Subsidiaries, and agreed to change: the implementation subject of AR/VR and related optical module projects from Goertek Inc. to the Company’s subsidiaries Weifang Goertek and Goertek Optical; The implementation location was changed accordingly from Goertek Photoelectric Park in Weifang High-tech Zone to Weifang Goertek Plant, east of Gaoxin No. 2 Road, south of Yuqing East Street in Weifang comprehensive free trade zone and Goertek Optical Plant, phase III of Goertek Photoelectric Park in Weifang High-tech Zone; The Company increased the capital to Weifang Goertek with the raised funds of RMB 600 million and increased the capital to Goertek Optical with the raised funds of RMB 400 million, for the purpose of specific implementation of above-mentioned investment projects. | ||||||||||
| Adjustment on how to invest the projects with raised funds | Not applicable | |||||||||
| Upfront investment of the project with raised funds and replacement thereof | Applicable |
| On July 9, 2020, the Company held the 7th meeting of the 5th Board of Directors and the 5th meeting of the 5th Board of Supervisors, which reviewed and approved the Proposal on Replacing the Self-raised Funds Invested in the Projects in Advance with the Raised Funds, and agreed to use the raised funds to replace the self-raised funds of RMB 315.7238 million invested in the investment projects in advance. The fund replacement above has been verified by Zhongxi Certified Public Accountants (special general partnership) Co., Ltd., and an authentication report has been issued. | |
| Temporary replenishment of working capital with idle raised funds | Applicable |
| ① On July 9, 2020, the Company held the 7th meeting of the 5th Board of Directors and the 5th meeting of the 5th Board of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Idle Raised Funds. It was agreed that the Company shall use the idle raised funds not exceeding RMB 2.5 billion to temporarily supplement working capital. The validity period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to the special account for raised funds in a timely manner. The Company returned RMB 0.8 billion and RMB 1.7 billion of the raised funds to the special account for raised funds in advance on September 17, 2020 and November 4, 2020 respectively. ② On November 5, 2020, the Company held the 11th meeting of the 5th Board of Directors and the 9th meeting of the 5th Board of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds. It was agreed that the Company temporarily supplements the working capital with idle raised funds of no more than RMB 2.5 billion. The validity period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to the Company's special account for raised funds in a timely manner. The Company returned RMB 0.5 billion and RMB 2 billion of the raised funds to the special account for raised funds on October 29, 2021 and November 3, 2021 respectively. ③ On November 8, 2021, the Company held the 24th meeting of the 5th Board of Directors and the 19th meeting of the 5th Board of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds. It was agreed that the Company temporarily supplements the working capital with idle raised funds of no more than RMB 1.2 billion. The validity period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to the Company's special account for raised funds in a timely manner. The Company returned the above-mentioned RMB 300 million, RMB 100 million and RMB 100 million of the raised funds to the special account for raised funds on February 24, 2022, May 16, 2022, and August 29, 2022 respectively. The Company returned the remaining RMB 700 million of the raised funds to the special account for raised funds on November 4, 2022. ④ On November 21, 2022, the Company held the 1st meeting of the 6th Board of Directors and the 1st meeting of the 6th Board of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds. It was agreed that the Company temporarily supplements the working capital with idle raised funds of RMB 450 million. The validity period of which shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it shall be returned to the special account for raised funds in a timely manner. | |
| Amount and reasons for the balance of raised funds in the implementation of the project | Not applicable |
| Purpose of the raised funds that have not been yet used | The unused raised funds shall be deposited in the special account for raised funds. |
| Problems or other situations in the use and disclosure of raised funds | None |
(3) Changes in the projects in which the raised funds were proposed to be invested
? Applicable ? Not applicableThere was no change in the projects in which the raised funds were proposed to be invested during the reporting period.
Ⅷ. Sales of major assets and equities
1. Sales of major assets
? Applicable ? Not applicableThe Company did not sell any major assets during the reporting period.
2. Sales of major equity
? Applicable ? Not applicableⅨ. Analysis of major subsidiaries and associates? Applicable ? Not applicableMajor subsidiaries and associates with an impact of more than 10% on the Company's net profit
Unit: RMB
| Name of company | Type of company | Main business | Registered capital | Total assets | Net asset | Operating revenue | Operating profit | Net profit |
| Goertek Technology Vina Company Limited | Subsidiary | Electronic component manufacturing | 796,907,040.00 | 12,409,733,040.39 | 4,107,738,419.61 | 18,006,535,442.52 | 1,410,777,715.29 | 1,409,023,464.60 |
| Weifang Goertek Electronics Co., Ltd. | Subsidiary | Electronic component manufacturing | 1,405,601,925.00 | 17,913,095,353.28 | 4,352,685,419.96 | 42,724,868,464.90 | 419,812,739.34 | 421,807,998.29 |
| Goertek (HongKong) Co.,Limited | Subsidiary | Electronic component manufacturing | 1,542,045.00 | 24,132,254,761.29 | 1,519,208,415.75 | 64,224,417,880.80 | 414,865,735.06 | 402,793,144.67 |
| Yili Precision Manufacturing Co., Ltd. | Subsidiary | Electronic component manufacturing | 330,000,000.00 | 3,693,141,919.10 | 861,868,622.80 | 2,623,240,930.28 | 389,987,170.03 | 343,924,705.39 |
| Weifang Goertek Microelectronics Co., Ltd. | Subsidiary | Electronic component manufacturing | 500,000,000.00 | 2,513,660,559.63 | 1,749,075,557.18 | 2,541,277,266.22 | 282,115,675.05 | 252,636,135.90 |
Acquisition and disposal of subsidiaries during the reporting period? Applicable ? Not applicable
| Name of company | Approach on acquisition and disposal of subsidiaries during the reporting period | Impact on overall production, operation and performance |
| Goertek Optical Technology (Qingdao) Co., Ltd | Newly established | No significant impact |
| Goertek Optical Technology (Shanghai) Co., Ltd | Newly established | No significant impact |
| Qingdao Resonance Venture Capital Management Co., Ltd. | Newly established | No significant impact |
| Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership) | Newly established | No significant impact |
| Weifang Goertek Electronics Co., Ltd. | Newly established | No significant impact |
| Qingdao Goertek Horizons Technology Co., Ltd | Newly established | No significant impact |
| Weifang High-tech Zone Goertek Education Center | Newly established | No significant impact |
| Goertek Microelectronics Vietnam Company Limited | Newly established | No significant impact |
| Shenzhen Mototek Smart Technology Co., Ltd. | Sales of equities | No significant impact |
| Qingdao Resonance Venture Capital Management Co., Ltd. | Sales of equities | No significant impact |
Description of major subsidiaries and associatesNone
Ⅹ. Structural Entities Controlled by the Company
? Applicable ? Not applicable
XI. Outlook for the Future Development of the Company
1. Industry trend and competition
In the mobile era, smartphones and related products have been the main focus of innovation and the growth drivers of the globaltechnology and consumer electronics industry over years. According to the forecast of IDC, a well-known consulting agency, the globalsmartphone shipment in 2023 will reach about 1.19 billion units, with an approximately 1.1% YoY decline. The global smartphoneshipment is expected to grow at an CAGR of only about 2.6% between 2023 and 2027. The slow-down of the growth reflects the trendthat the global technology and consumer electronics industry is stepping into the post-mobile era.In the post-mobile era, with the development of new technologies such as semiconductor, 5G, micro-display, sensor, intelligentinteraction, battery, cloud and edge computing, more and more next-generation smart hardware products with greatly improvedfunctions and diversified applications are emerging. In particular, new breakthroughs in the fields of AI, natural language processingand content generation technology are expected to further promote the development and application of those smart hardware products.According to the forecast of IDC, the global shipment of VR/AR products is expected to reach 10.1 million units in 2023, withapproximately a 14% YoY increase. The CAGR of global VR shipment from 2023 to 2026 is expected to be around 32%. The steadygrowth of VR end user, the upgrade of VR hardware and the development and maturity of VR content and applications such as socialnetworking, games, entertainment and live broadcasting, will help the VR industry to grow continuously in the next few years.According to the forecast of IDC, the global shipment of AR products is expected to reach 0.3 million units in 2023, with approximatelyan 11% YoY increase. The CAGR of global AR shipment from 2023 to 2026 is expected to be around 137%. With the abilities tocombine virtual world over reality and to seamless connect to the mobile Internet ecosystem, AR product shows unlimited futurepossibilities and great market potential, and is expected to become one of the core smart hardware products in the post-mobile era.Technological breakthroughs in semiconductor chips, optical waveguide, micro displays and other fields are also expected to promotethe development and maturity of AR products in the next few years.According to the forecast of IDC, the global shipment of smart watches is expected to reach 162 million units in 2023, withapproximately a 9.1% YoY increase. The CAGR of global shipment of smart watches from 2023 to 2027 is expected to be around
6.1%. The global market of smart wearable products is growing steadily but also incubate the opportunity of an explosive growth. Inthe post-mobile era, consumers pay greater attention to fitness and health. For millions of people around the globe those who hashypertension, diabetes and sub-health issues, high precision and reliable health monitoring technologies, especially precise bloodpressure monitoring and non-invasive blood sugar monitoring technologies, are currently the focus of innovation of the industry.Breakthroughs in the above technologies are expected to bring dramatic growth to smart wearable products before long.According to the forecast of FutureSource, the global shipment of TWS smart earphones is expected to reach about 366 million unitsin 2023, with approximately a 7.6% YoY increase. With the combination of AI, natural language processing and smart voice interactiontechnologies, the user experience of TWS smart earphones is expected to continuously improve, and its penetration is expected tocontinuously increase as well.The further development of next-generation smart hardware products will also boost the demand for related precision components suchas precision optics and modules, precision acoustic components, MEMS sensors and microsystem modules, haptic components andprecision structural parts, which will also create new business opportunities for the Company.In terms of the competitive landscape, the global technology and consumer electronics industry may continue to demonstrate acentralized trend. In the post-mobile era, massive investment in technological innovation and R&D is required for the development ofsmart hardware products, for which the "soft power" of the ecosystem, such as developer base, user base, software applications,entertainment content, community loyalty and data monetization, becomes more and more important. The leading companies withcapital, talent, technology and ecosystem advantages are expected to strengthen their competitive advantages, so as to lead technologyand product innovation in the industry.In terms of the supply chain, the electronic manufacturers in China are strengthening their overall competitiveness. These manufacturersare expected to better meet the needs of electronic product manufacturing in the post-mobile era and gain new opportunities ofdevelopment. However, it should also be noted that the changes in international political and economic landscapes, especially therelationship between major countries, may have a significant impact to pattern of the industrial supply chain. To which, manufacturersneed to pay more attention and respond carefully and scientifically.
2. Strategy for future development
Looking into the future, the Company will actively respond to the innovation-driven development strategy, promote the upgrade ofindustrial structure, strengthen technological innovation, and accelerate the development of a modern industrial system. It will graspthe opportunities of transformation from the mobile era to the post-mobile era by closely following the development of 5G, AI, IoT,cloud computing and other advanced technologies. The Company will continue to strengthen its development in the field of next-generation smart hardware products and related precision components, constantly consolidate the strategical cooperation with world-class customers, and fulfill the economic and social responsibilities of the enterprises, thus to achieve stable and healthy growth of theCompany’s value in return for shareholders.
(1) Actively grasp the new opportunities in the post-mobile era, and further promote the Company's strategy of "precision components+ smart hardware". Continue to strengthen the competitiveness of precision components and smart hardware products, and activelydevelop the business related to next-generation smart hardware products. Utilize the synergy between the Company's componentbusiness and system device business, continue to strengthen the core capabilities in precision and intelligent manufacturing, and providecustomers with the first-class vertically integrated product solutions and "one-stop" R&D and manufacturing services.
(2) Continue the key-account strategy, remain customer-oriented, maintain good relationships with core customers, and utilize theCompany's advantages in customer resource. Focus on serving leading customers in the global technology and consumer electronicsindustry, and continue to consolidate long-term strategic cooperation with customers. Closely follow the strategical planning anddevelopment of world-class customers, and to create a global system of R&D, manufacturing and sales services accordingly. Continueto satisfy our customers with our business, technology, engineering, operation and delivery services, in order to achieve win-wincooperation and to grow with the world-class customers.
(3) Adhere to technological innovation and continue to invest in R&D. Constantly improve the Company's technical competitivenessin acoustics, optics, microelectronics, precision manufacturing, automation, IT technology, software algorithm, etc., to build the coretechnical competitiveness for future development of the enterprise. Firmly implement the talent strategy by recruiting outstandingpersonnel in management and technology fields around the world, build and effectively motivate a first-class talent team, thus toprovide sufficient talents for future development of the Company.
(4) Constantly improve corporate governance and management, and promote the standardized and efficient internal operation.Continuously improve the internal structure, processes and internal management system. Strengthen the awareness of lean operation,improve the level of lean operation and seek benefits from it. Being market-oriented and customer-oriented, continues to push forwardinternal reform and innovation, and to build core competitiveness upon continuous reform and innovation activities. Create an excellentcorporate culture, undertake the core values of "customer orientation, personnel growth, integrity and pragmatism, win-wincooperation", and earnestly fulfill the economic and social responsibilities of the enterprise, to become a respected world-classenterprise.
3. Business operation during the reporting period and business plan for next year
In 2022, the Company carried the "precision components + smart hardware" strategy, remained customer-oriented and focused on keyaccounts. By leveraging the synergy between the components business and system device business, the Company grasped businessopportunities in next-generation smart hardware such as VR, gaming consoles and accessories, and gained continuous revenue growth.While consolidating the advantages in conventional business, the Company also explored new opportunities in both consumerelectronics and automotive electronics fields, and obtained progresses in precision optical components and modules, car sensors,microsystem modules and etc. The Company continued to invest in R&D and technological innovation, completed more patentapplications and gained more patent approvals, strengthened the capabilities of R&D and talent team, and further strengthened the corecompetitiveness of the Company.Looking into the year of 2023, the Company still faces many challenges due to downward pressure of global economy and thecomplexities in the external environment. However, there are new business opportunities in the global technology and consumerelectronics industry. The next-generation smart hardware products are more and more adopted in many fields. The hardware andsoftware ecosystems are constantly being improved. The Company's main business still have the potential of continuous growth andthe internal operation could also be further improved. The management and the staff of the Company will continue to implement ourstrategy and to achieve business objectives, so as to return the shareholders and investors with good business performance andcontinuous growth of the value of the Company.
(1) Maintain strategic focus and grasp development opportunities
The Company will seize the business opportunities of smart hardware products in the post-mobile era by adhering to the "precisioncomponents + smart hardware" strategy and utilize the synergy between the components and system device business. The Companywill further expand the business of smart hardware products by virtue of its core technological capabilities and advanced productsolutions in the field of precision components. And through that business development, the Company will create more applications and
demand for the precision components. By integrating the core capabilities in precision manufacturing and intelligent manufacturing,the Company will be able to provide first-class "one-stop" R&D and manufacturing services to global customers.
(2) Adhere to the customer-orientation philosophy and key-accounts strategy, identify and serve strategic customersFollow the strategy and business plan of core customers, the Company will carry out corresponding business, products and capacityplans, work with the customer in their frameworks and schedules and provide industry-leading R&D and manufacturing services. TheCompany will continuously build excellent customer service team to satisfy our customers in long term in all aspects of business,technology, engineering, operation, and delivery, to enhance customer loyalty and satisfaction, and achieve win-win cooperation withcustomers.
(3) Empower business expansion and create new opportunities
Based on the consolidation of the existing business advantages in precision components and smart hardware products, the Companywill further explore new directions and opportunities. By grasping the opportunities in precision optical components and modules,sensors, microsystem modules, VR, AR, and other products, the Company will secure the key projects to obtain core customers, andfollow up with new opportunities in automotive electronics, micro-display and other fields as well.
(4) Improve lean operation and complete successful delivery of key projects
The Company will constantly promote the idea of lean operation, learn from the project experience in 2022, to improve the level ofoperation and to support the business objectives with high-quality and efficient operation. The Company will make thorough planningof its resources, ensure the delivery of key projects that closely related to the strategy and the business objectives, and to achieve thegoals of the Company.
(5) Continue to invest in independent R&D and technological innovation, strengthen core competitiveness with talent strategyThe Company will continue to invest in R&D and technological innovations centered on future strategic directions, and strengthen thetechnical capabilities in the fields of acoustics, optics, microelectronics, precision and intelligent manufacturing. The Company willembrace the management and technical talents globally, keep bringing in high-level talents, carry out solid efforts in the selection,cultivation, motivation and retention of talents, and to support the Company's strategic implementation and business development withhigh-quality talent echelon.
(6) Effectively control risks and maintain healthy operation
The Company will continue to maintain a sound business strategy, strengthen risk awareness, pay close attention to changes in theexternal environment, perform effective control on risk indicators in production operation of the Company, take the initiative to identifyand resolve potential risks, and ensure sustainable development of production and operation activities.
4. The demand and planning of fund
The Company maintains a healthy asset and liability structure, and obtained a good long-term cooperative relationship with banks andother major financial institutions. In 2023, the Company will continue to improve the management of cash, optimize payment terms,control capital expenditure and enhance the efficiency of fund. The Company will carefully evaluate various financing tools to optimizethe asset-liability ratio and debt structure. The Company will also carefully manage financial derivatives trading activities with strictstandards, to actively avoid liquidity risks and foreign exchange risks. And with all the measures above, to thus provide stable andsufficient financial support to the development of the Company.
5. Future risks
(1) Macroeconomic risks
Global economy has yet to recover. Inflation remains high in major European and American countries. Unfavorable factors thataffecting investment and consumption still exist, which may hinder the development of the global technology and consumer electronicsindustry in the short term. The world political and economic situation remains complex and grim. Trade disputes between majorcountries and geopolitical events have brought uncertainties to global economy, which may adversely affect the business of theCompany. Some intelligent hardware products, such as smartphones, have slowed down or stagnated in growth rate, and some next-generation smart hardware products may develop slower than expected. This may impact the global market demand as well as theCompany's business performance.
(2) Operational risks
① Risks of relatively concentrated customers
The competitive pattern of global technology and consumer electronics industry, along with the Company's business model and keyaccount strategy, determined a relatively concentrated customer structure. As a result, the business income from a few core customersaccounts for a large proportion of the Company's overall revenue. Although the above customers are global industry leaders who havesignificant competitive advantages and market position, and have maintained long-term and stable cooperative relations with the
Company, under some special circumstances, they may bring fluctuations and risks to the Company's business if their business activitiesfluctuate.
② Risks of exchange rate fluctuation
The export business accounts for a high proportion of the Company's overall revenue. At the same time, the Company also imports aconsiderable number of raw materials, equipment and other products from overseas. These import and export businesses are primarilysettled in US dollars. Although the Company has adopted appropriate risk hedging tools, the significant fluctuation of RMB/US dollarexchange rate may still bring certain exchange rate risks to the Company.
③ Risks of loss of core technical talents
The technology and consumer electronics industry is a talent intensive industry. Therefore, the demand for core technical talents isstrong, and the competition for talents is very fierce. Core technical talents are the key resources for the Company to continuouslyimprove its core competitiveness and realize long-term development. For this reason, the Company will continue to improve variousincentive and restraint mechanisms in order to retain core technical talents. Under fierce competition, there may still be the loss of coretechnical talents, which may put the Company at a disadvantage in the competition and affect the business development in some cases.
(3) Risks of management
In recent years, the Company has successfully expanded its business in each product line. The business scale has been expandedsignificantly, as well as the variety of products and the size of the staff has grown rapidly. The growing business brings higherrequirements to the Company in overall operation and management ability. The Company implements the strategic plan of developingcore customer business and exploring new opportunities, which also requires the Company's management to maintain excellent abilitiesof judgment, execution and management. If the Company's management fails to match the business growth, or fails to be improved tomeet the needs of the Company's development, it may affect the execution of strategic planning and the delivery of business objectives,thus bringing management risks to the Company.Ⅻ. Reception, research, communication, interview and other activities during the reportingperiod? Applicable ? Not applicable
| Reception time | Reception place | Type of communication | Type of attendees | List of attendees | Main content of discussion and information provided | Index of related information |
| April 8, 2022 | The Company | Other | Other | Investors participated in the Company's performance presentation meeting of 2021 | The Company's overall operation and business development | The record of investor relations activities published on www.cnifo.com.cn on April 8, 2022 |
| April 27, 2022 | The Company | Conference Call | Institutional Investors | Hua An Fund, BlackRock Assets, Yinhua Fund, etc. | The Company's overall operation and business development | The record of investor relations activities published on www.cnifo.com.cn on April 27, 2022 |
| August 30, 2022 | The Company | Conference Call | Institutional Investors | Macquarie, Huaxin Securities, Huatai Securities, etc. | The Company's overall operation and business development | The record of investor relations activities published on www.cnifo.com.cn on August 30, 2022 |
| September 28, 2022 | The Company | Conference Call | Institutional Investors | Allianz Global Investors, CPPIB, Manulife, etc. | The Company's overall operation and business development | The record of investor relations activities published on www.cnifo.com.cn on September 28, 2022 |
| November 16, 2022 | The Company | Other | Other | Investors participated in the 2022 Online Collective Reception Day for Investors of Listed Companies in Shandong Province | The Company's overall operation and business development | The record of investor relations activities published on www.cnifo.com.cn on November 16, 2022 |
Section IV Corporate Governance
Ⅰ. Corporate Governance in PracticeDuring the reporting period, the Company continuously improved the corporate governance structure, the internal management andcontrol system, and continued to carry out corporate governance activities in strict accordance with the requirements of relevant laws,regulations and normative documents such as Company Law, Securities Law, Corporate Governance of Listed Companies, RulesGoverning the Listing of Shares on Shenzhen Stock Exchange as well as with relevant documents of China Securities RegulatoryCommission and the relevant instructions of Shandong Securities Regulatory Bureau, so as to further standardize the Company'soperation and improve the level of corporate governance.By the end of the reporting period, the actual practice of corporate governance met the relevant requirements of the above laws,administrative regulations, departmental rules and normative documents on the governance of listed companies, and no documentsconcerning administrative supervision measures taken by the supervised departments was received.By the end of the reporting period, the details of actual practice of corporate governance are as follows:
1. Shareholders and shareholders' meetings: The Company has convened and held shareholders' meetings in strict accordance with theRules for General Meeting of Shareholders of Listed Companies and the Company’s Rules of Procedure of Shareholders' Meetings, soas to ensure that all shareholders, especially minority shareholders, enjoy equal status and fully exercise their rights; In addition, lawyerswere engaged to witness the legitimacy of the convening, holding and voting procedures of each general meeting of shareholders.
2. The Company and controlling shareholders: The Company, with independent business and operation autonomy, is independent ofthe controlling shareholders in business, personnel, assets, organizations and finance. The Board of Directors, Board of Supervisorsand internal institutions of the Company operate independently. The controlling shareholders exercise their rights through shareholders’meeting, and there was no direct or indirect interference with the Company’s operations and decision-making beyond the generalmeeting of shareholders.
3. Directors and the Board of Directors: The Company elects directors in strict accordance with the selection and appointmentprocedures stipulated in the Articles of Association. There are three independent directors in the Board, the number of directors andthe composition of the Board of Directors meet the requirements of laws and regulations and the Articles of Association. All directorsmay carry out their work in accordance with Rules of Procedure of the Board of Directors and Working System for IndependentDirectors, they attended all the Board of Directors meetings, and all the related trainings as required.
4. Supervisors and the Board of Supervisors: The election of supervisors and the composition of the Board of Supervisors were in strictaccordance with relevant provisions of Company Law and Articles of Association. The Company's supervisors strictly followed theRules of Procedure of the Board of Supervisors. All supervisors scrupulously attended the sessions, seriously fulfilled their dutiesdiligently, and supervised and issued opinions for major issues, related-party transactions, and financial status.
5. Performance appraisals and incentives: The Company has gradually improved its fair and transparent performance evaluationstandards and incentive a restraint mechanism for directors, supervisors and senior management. The appointment of Company’s seniormanagement is open and transparent, and in line with the provisions of laws and regulations.
6. Stakeholders: The Company fully respects and safeguards the legitimate rights and interests of stakeholders, actively communicatesand coordinates with stakeholders, to balance the interests of the society, shareholders, the Company, employees and other parties, andjointly promotes the Company's development in a sustainable and steady manner.
7. Information disclosure and transparency: The Company duly performed the disclosure obligations in accordance with the provisionsof Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Articles of Association and Investor Relations ManagementRules, and discloses information as per the law, so as to ensure that the information disclosure is true, timely, accurate and complete.All shareholders were given equal access to the information. The Company has gradually revised and improved the Insider InformationManagement Rules, further improved the insider information management, strengthened the confidentiality of insider information,maintained the fair principle of information disclosure and protected the legitimate rights and interests of investors. The Company hasappointed the secretary of the Board of Directors as the head of investor relations management of the Company, responsible for theCompany's information disclosure and investor relations management. The Company has designated Securities Times, China SecuritiesJournal, Shanghai Securities News, Securities Daily and cninfo.com.cn to disclose Company’s information in a faithful, accurate andtimely manner, strictly in accordance with relevant laws and regulations, Rules on Information Disclosure and Rules on InternalReporting of Material Information, so that all shareholders have a fair chance to get information.Whether there is any significant difference between actual situation of corporate governance and laws, administrative regulations andthe provisions on governance of listed companies issued by CSRC
? Yes ? NoThere is no significant difference between the actual situation of corporate governance and the laws, administrative regulations andthe provisions on governance of listed companies issued by CSRC
Ⅱ. Particulars about the independence of the Company from controlling shareholder andactual controller in terms of the assets, personnel, finance, organization and businessThe Company is completely separated from the controlling shareholders in terms of business, personnel, assets, organization andfinance. The ownership of the assets is clear and belongs to the Company. The Company has the capability of self-operation in itsmarketing, production and procurement etc., does not depend on major shareholders or their affiliated enterprises, there is no mixedoperation with major shareholders.
1. Business independence: The Company had its own production, procurement and sales system, and was completely independent ofcontrolling shareholder in terms of business.
2. Personnel separation: There is a department responsible for the Company's labor, personnel and salary management in the Company,and rules and regulations has been established for appraisal of employees’ performance. Personnel of the Company were independentfrom the controlling shareholder. The Senior Management of the Company did not hold any positions other than director and supervisorin the related shareholders and other entities with same or similar business.
3. Institutional independence: The Board of Directors, Board of Supervisors, Senior Management and other internal organization ofthe Company operated independently, and each functional department is completely independent from controlling shareholder in termsof authority, personnel, production operation premises, etc., and there is no subordinate relationship between the controlling shareholderand its functional departments.
4. Asset independence: The title relationship between the Company and the controlling shareholder was clear. The Company’s assetswere complete. The Company has independent and complete production system, auxiliary production system and supporting facilities,as well as land use right, industrial property right, patented technology and other assets.
5. Financial independence: The Company has its own separate financial department and an independent accounting system and financialmanagement system from the controlling shareholder. The Company makes financial decisions on its own according to therequirements of relevant accounting systems of listed companies. At the same time, implement vertical management on financial affairsof its subsidiaries. The Company opened accounts in the bank independently, made tax declarations and performed tax obligationsindependent of shareholders according to law.
Ⅲ. Horizontal Competition
? Applicable ? Not applicable
Ⅳ. Annual General Meeting and Extraordinary General Meeting held during the ReportingPeriod
1. General meeting of shareholders during the reporting period
| Session | Type of meeting | Percentage of investor participation | Convening date | Disclosure date | Meeting resolution |
| General meeting of shareholders of 2021 | Annual general meeting of shareholders | 41.71% | May 12, 2022 | May 13, 2022 | For details, refer to the Announcement of Resolutions of the 2021 Annual General Meeting published by Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO (http://www.cninfo.com.cn) |
| The first extraordinary general | Extraordinary general meeting | 39.83% | July 26, 2022 | July 27, 2022 | For details, refer to the Announcement of the |
| Session | Type of meeting | Percentage of investor participation | Convening date | Disclosure date | Meeting resolution |
| meeting of shareholders in 2022 | of shareholders | Resolution of the 1st Extraordinary Shareholders' Meeting in 2022 published by Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO (http://www.cninfo.com.cn) | |||
| The second extraordinary general meeting of shareholders in 2022 | Extraordinary general meeting of shareholders | 35.66% | November 15, 2022 | November 16, 2022 | For details, refer to the Announcement of the Resolution of the 2nd Extraordinary Shareholders' Meeting in 2022 published by Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO (http://www.cninfo.com.cn) |
| The 3rd Extraordinary Shareholders' Meeting in 2022 | Extraordinary general meeting of shareholders | 30.84% | December 19, 2022 | December 20, 2022 | For details, refer to the Announcement of the Resolution of the 3rd Extraordinary Shareholders' Meeting in 2022 published by Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO (http://www.cninfo.com.cn) |
2. Extraordinary general meeting of shareholders requested by the Preference shareholders with votingrights restored
? Applicable ? Not applicableV. Directors, Supervisors and Senior Management
1. Basic Information
| Name | Position | Appointment status | Gender | Age | Term start date | Term end date | Number of shares held at the beginning of the period | Number of shares increased during the period | Number of shares decreased during the period | Other increase or decrease changes | Number of shares held at the end of the period | Reason for change in shares |
| Jiang Bin | Chairman | Incumbent | Male | 57 | July 27, 2007 | November 14, 2025 | 287,397,406 | 287,397,406 | ||||
| Jiang Long | Vice Chairman | Incumbent (resigned as | Male | 49 | July 27, 2007 | April 6, 2023 | 250,345,197 | 250,345,197 |
| President | Vice Chairman and President on April 6, 2023) | October 30, 2014 | April 6, 2023 | |||||||||
| Duan Huilu | Director | Incumbent | Male | 47 | February 4, 2016 | November 14, 2025 | 3,474,500 | 3,474,500 | ||||
| Vice President | March 25, 2011 | November 14, 2025 | ||||||||||
| Li Youbo | Vice President | Incumbent (Serving as President of the Company since April 7, 2023) | Male | 46 | June 2, 2021 | April 7, 2023 | ||||||
| Director | Incumbent | November 15, 2022 | November 14, 2025 | |||||||||
| Wang Kun | Independent Director | Incumbent | Female | 47 | November 8, 2019 | November 14, 2025 | ||||||
| Huang Yidong | Independent Director | Incumbent | Female | 58 | November 15, 2022 | November 14, 2025 | ||||||
| Jiang Fuxiu | Independent Director | Incumbent | Male | 54 | November 15, 2022 | November 14, 2025 | ||||||
| Feng Pengbo | Chairman of Board of Supervisors | Incumbent | Male | 55 | November 15, 2022 | November 14, 2025 | ||||||
| Xu Xiaofeng | Employee representative Supervisor | Incumbent | Female | 46 | September 17, 2013 | November 14, 2025 | ||||||
| Wei Wenbin | Employee representative Supervisor | Incumbent | Male | 45 | April 27, 2021 | November 14, 2025 | ||||||
| Gao Xiaoguang | Vice President | Incumbent | Male | 47 | April 12, 2012 | November 14, 2025 | ||||||
| Liu Chunfa | Vice President | Incumbent | Male | 47 | October 10, 2013 | November 14, 2025 | 864,000 | 864,000 | ||||
| Jiang Hongzhai | Vice President | Incumbent | Male | 53 | October 10, 2013 | November 14, 2025 | ||||||
| Yu Dachao | Vice President | Incumbent | Male | 45 | October 24, 2016 | November 14, 2025 | ||||||
| Jia Jun'an | Vice President, Secretary of the Board | Incumbent | Male | 52 | October 10, 2013 | November 14, 2025 | 200,000 | 600,000 | 800,000 | Increase holdings | ||
| Li Yongzhi | Chief Financial Officer | Incumbent | Male | 45 | January 27, 2021 | November 14, 2025 | ||||||
| Liu Chengmin | Director | Resigned | Male | 52 | November 29, 2016 | November 15, 2022 | ||||||
| Xia Shanhong | Independent Director | Resigned | Female | 65 | October 20, 2016 | November 15, 2022 | ||||||
| Wang Tianmiao | Independent Director | Resigned | Male | 63 | October 20, 2016 | November 15, 2022 | ||||||
| Sun Hongbin | Chairman of Board of Supervisors | Resigned | Male | 57 | September 17, 2013 | November 15, 2022 | 7,089,534 | 7,089,534 |
| Kazuyoshi Yoshinaga | Vice President | Incumbent (resigned on March 7, 2023) | Male | 56 | October 24, 2016 | March 7, 2023 | ||||||
| Zhu Shengbo | Vice President | Resigned | Male | 49 | June 2, 2021 | November 15, 2022 | ||||||
| Total | -- | -- | -- | -- | -- | -- | 549,370,637 | 600,000 | 0 | 549,970,637 | -- |
Whether there is any resignation of directors, supervisors and senior management during the reporting period? Yes ? NoChanges in directors, supervisors and senior management? Applicable ? Not applicable
| Name | Position | Type | Date | Reason |
| Liu Chengmin | Director | Leave office upon expiration of term | November 15, 2022 | Leave office upon expiration of term |
| Xia Shanhong | Independent Director | Leave office upon expiration of term | November 15, 2022 | Leave office upon expiration of term |
| Wang Tianmiao | Independent Director | Leave office upon expiration of term | November 15, 2022 | Leave office upon expiration of term |
| Sun Hongbin | Chairman of Board of Supervisors | Leave office upon expiration of term | November 15, 2022 | Leave office upon expiration of term |
| Zhu Shengbo | Vice President | Leave office upon expiration of term | November 15, 2022 | Leave office upon expiration of term |
| Huang Yidong | Independent Director | Elected | November 15, 2022 | Elected as an independent director of the 6th Board of Directors of the Company |
| Jiang Fuxiu | Independent Director | Elected | November 15, 2022 | Elected as an independent director of the 6th Board of Directors of the Company |
| Feng Pengbo | Chairman of Board of Supervisors | Elected | November 15, 2022 | Elected as Chairman of the 6th Board of Supervisors |
2. Biographical Information
Professional backgrounds, main working experience and current duties of the Directors, Supervisors and the Senior Management
(1) Members of the Board of Directors of the Company:
Jiangbin, male, a Chinese citizen with no foreign residency right, who was born on September 1966, holding a master's degree inbusiness administration from Tsinghua University and bachelor's degree in electronic engineering from Beihang University. Mr. Jiang,Chairman of the company, founded Goertek Inc. in 2001. He has more than 30 years of working experience in the electro-acousticindustry. He also serves as standing member of the 12th executive committee of the All-China Federation of Industry and Commerce,rotating chairman of China Electronic Components Association, and vice chairman of Industry of Virtual Reality Alliance. He has wonthe titles of National Model Worker, Shandong Province Model Worker, National Leading Entrepreneur in Electronic InformationIndustry, Leading Entrepreneur in Shandong Province, and Outstanding Talent in Qilu.Jiang Long, male, a Chinese citizen with no foreign residency right, who was born in February 1974, Ph.D. in strategic managementfrom the University of Maryland, a master's degree holder in management science from Renmin University of China, and a bachelor'sdegree holder in materials engineering from Tsinghua University. He served as the vice chairman and president of the Company as ofthe end of the reporting period. Joined the Company in 2004, Mr. Jiang successively served as vice president, senior vice president andexecutive vice president of the company. Mr. Jiang is also the Vice President of China Audio Industry Association and the chairman
of China Electronic Components Association-Electroacoustic Chapter. Mr. Jiang has extensive experience in marketing, sales andbusiness management. Mr. Jiang resigned as vice chairman, director and president of the Company on April 6, 2023.Duan Huilu, male, a Chinese citizen with no foreign residency right, who was born in February 1976, with a bachelor's degree inaccounting from Shandong University of Finance and Economics. Mr. Duan, Director and Vice President of the company, He joinedthe company in 2001 and successively served as the company's accountant, finance manager, finance department manager and chieffinancial officer. Mr. Duan has more than 20 years of working experience in corporate finance.Li Youbo, male, a Chinese citizen with no foreign residency right, who was born in December 1977, with a bachelor's degree inautomation from Dalian University of Technology. He served as the director and vice president of the Company as of the end of thereporting period. He joined the company in 2003 and successively served as engineer, technical manager, head of the businessdepartment, etc. Mr. Li has nearly 20 years of experience in R&D and manufacturing of electroacoustic components/devices. Li Youbohas assumed the position of President of the Company since April 7, 2023.Wang Kun, female, a Chinese citizen with no foreign residency right, who was born in April 1976, with a Ph.D. in accounting fromHong Kong University of Science and Technology and a bachelor's degree in accounting from Nankai University. She is currently anassociate professor at the Department of Accounting, School of Economics and Management, Tsinghua University, deputy directorand senior researcher of the Research Center of Corporate Governance of Tsinghua University, and an independent director of theCompany and China International Futures Co., Ltd. Ms. Wang used to serve as lecturer and director of the doctoral program in theDepartment of Accounting, School of Economics and Management, Tsinghua University, and independent director of BeijingThunisoft Co., Ltd., Integrated Electronic Systems Lab Co., Ltd., etc. She has won the Excellence in Teaching Award of the School ofEconomics and Management of Tsinghua University for several times and has rich experience in finance and auditing.Huang Yidong, female, a Chinese citizen with permanent residency in Japan, who was born in March 1965, with a Ph.D. in electronicengineering from Tsinghua University. She is currently a professor in the Department of Electronic Engineering of Tsinghua University,deputy director of the Academic Committee of Tsinghua University, and fellow of OSA. She is also the executive director of theOptical Society of China, member of the Micro-nano Optics Professional Committee, vice chairman of the China Electronic EducationSociety, vice president of the Higher Education Branch, deputy editor-in-chief of ACS Photonics magazine, and independent directorof the Company and Zhuhai Optical Library Technology Co., Ltd. She used to serve as distinguished researcher of NEC Institute ofOptical-Wireless Devices, deputy dean and head of the Department of Electronic Engineering of Tsinghua University, and dean ofTianjin Institute of Electronic Information of Tsinghua University.Jiang Fuxiu, male, a Chinese citizen with no foreign residency right, who was born in June 1969, served as a postdoctoral fellow inaccounting at Guanghua School of Management, Peking University, and has a Ph.D. in economics from Nanjing University. He is aprofessor and doctoral supervisor in the Department of Finance, Business School, Renmin University of China. He also serves as anindependent director of the Company and Beijing Chunju Technology Co., Ltd. He used to serve as an independent director of BeixunGroup Co., Ltd., Yantai Longyuan Power Technology Co., Ltd., Beijing Zhongxin International Travel Co., Ltd., Datang InternationalPower Generation Co., Ltd., etc.
(2) Members of the Supervisory Board of the Company
Feng Pengbo, male, a Chinese citizen with no foreign residency right, was born in July 1968. He has a bachelor's degree in mechanicalmanufacturing technology and equipment from Xi'an University of Technology and the professional title of Senior Engineer, and wonthe honor of Model Worker in Shandong Province. He is the chairman of the Supervisory Board. Mr. Feng is an expert in the automationand has rich experience in automation equipment R&D and manufacturing.Xu Xiaofeng, female, is a Chinese citizen with no foreign residency right, who was born in October 1977, has a bachelor's degree inelectrical technology from Zhengzhou Institute of Aeronautical Industry Management majoring and a bachelor's degree in businessadministration from China University of Petroleum. He is currently a supervisor of the Company and the person in charge of the workof the Party and masses. Ms. Xu joined the company in 2001, and successively served as the assistant manager of the quality controldepartment, the enterprise development department and the operation department, and the head of the Company's employee servicecenter. Ms. Xu has rich experience in business management.Wei Wenbin, male, a Chinese citizen with no foreign residency right, who was born in July 1978, has a bachelor's degree in materialshaping and control engineering from Jilin University. He is currently a supervisor and head of the employee management departmentof the Company. Mr. Wei joined the company in 2004, and successively served as the head of the company's production and operationmanagement department, human resources management department, lean manufacturing management department, employeemanagement and other related departments.
(3) Senior management personnel of the Company
Jiang Long (Refer to the resume above for details.)Li Youbo (Refer to the resume above for details.)
Liu Chunfa, male, a Chinese citizen with no foreign residency right, who was born in October 1976, graduated from Lanzhou RailwayInstitute majoring in mechatronics. Vice President of the company. Since joining the Company in 1999, he successively served asengineer and assistant manager of the R&D department, technical manager of the technical engineering department, senior productmanager, head of the manufacturing department, senior manager of the R&D department, person in charge of the business department,etc. Mr. Liu has over 20 years of experience in the fields of electroacoustic components, especially in miniature loudspeakers andreceivers.Jiang Hongzhai, male, a Chinese citizen with no foreign residency right, who was born in December 1970, graduated from ShandongInstitute of Information Technology, majoring in computer application. Vice President of the company. Mr. Jiang used to serve asfactory director of Yuefeng Electronic Technology (Dongguan) Co., Ltd., and engineer of Weifang Radio Eighth Factory. He joinedthe Company in 2006 and successively served as deputy general manager of equipment department, employee management department,manager of subsidiaries business, etc. Mr. Jiang has more than 20 years of experience in the field of precision machining, and has richexperience in logistics support such as administration and infrastructure, etc.Yu Dachao, male, a Chinese citizen with no foreign residency right, who was born in May 1978, has a bachelor's degree in computerscience and engineering, Tianjin University of Technology. Vice President of the company. He joined the Company in 2005 andsuccessively served as the manager, product manager, deputy general manager of the R&D department, head of the business department,and head of the supply chain management department. Mr. Yu has rich experience in the fields of intelligent electronic productdevelopment and supply chain management.Gao Xiaoguang, male, a Chinese citizen with no foreign residency right, who was born in March 1976, has a master’s degree in businessadministration from Southern Cross University, Australia. Vice President of the company. He joined the Company in 2001, andsuccessively served as manager, deputy manager and general manager of the device business department and head of the marketingsystem. He has rich experience in market expansion and key client maintenance.Duan Huilu (Refer to the resume above for details.)Jia Jun'an, male, a Chinese citizen with no foreign residency right, who was born in February 1971, holds a Ph.D. degree in economicsfrom Xiamen University, a master's degree of economics from Shandong University, a bachelor's degree in economics from ShandongUniversity of Finance and Economics. Vice President and the Secretary of the Board. He used to serve as the tax manager of KPMGEnterprise Consulting (China) Co., Ltd., Qingdao Branch. Mr. Jia joined the company in 2010 and served as deputy general managerof financial department. Mr. Jia is a member of Chinese Institute of Certified Public Accountants (CICPA) and member of Associationof Chartered Certified Accountants (ACCA), and holds the Certificate for Secretary of the Board of Directors, and his qualificationcomplies with relevant provisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange and the Articles ofAssociation.Kazuyoshi Yoshinaga, male, Japanese citizen, who was born in September 1967, holds a master's degree in business administrationfrom University of Washington and a bachelor's degree in mechanics from Tongji University. He currently serves as vice president ofthe Company, and deputy secretary-general of the China Virtual Reality Industry Association. He was an associate partner at IBM. Hejoined the Company in 2015, and has extensive experience in the field of strategy and transformation management. KazuyoshiYoshinaga resigned on March 7, 2023.Li Yongzhi, male, a Chinese citizen with no foreign residency right, who was born in November 1978, holds a master’s degree inbusiness management and a bachelor's degree in management from Hefei University of Technology. Chief Financial Officer of thecompany and the Head of the Accounting Office. He joined the Company in 2005 and successively served as accountant and financialmanager of the financial department. Mr. Li is senior accountant and certified management accountant (CMA), with more than 15years of experience in corporate finance.Positions held in shareholders’ entities? Applicable ? Not applicable
| Name | Name of the shareholder entity | Position undertaken in shareholder unit | Term start date | Term end date | Receive remuneration or allowance from shareholders’ entity (Yes/No) |
| Jiang Bin | Goertek Group Co., Ltd. | Chairman | November 15, 2021 | November 14, 2024 | No |
| Jiang Long | Goertek Group Co., Ltd. | Director | November 15, 2021 | November 14, 2024 | No |
| Duan Huilu | Goertek Group Co., Ltd. | Director | November 15, 2021 | November 14, 2024 | No |
| Positions held in shareholders’ entities | None | ||||
Positions held in other entities? Applicable ? Not applicable
| Name | Name of other entity | Position undertaken in other unit | Term start date | Term end date | Receive remuneration or allowance from shareholders’ entity (Yes/No) |
| Jiang Bin | Weifang Goertek Electronics Co., Ltd. | Chairman | November 23, 2019 | November 22, 2025 | No |
| Jiang Bin | Goertek Optical Technology Co., Ltd | Chairman | April 20, 2022 | April 19, 2025 | No |
| Jiang Bin | Beijing Goertek Investment Management Co., Ltd. | Executive Director | January 22, 2019 | January 21, 2025 | No |
| Jiang Bin | Weifang Goertek Education Investment Co., Ltd. | Executive Director | March 22, 2019 | March 21, 2025 | No |
| Jiang Long | Rongcheng Goertek Technology Co., Ltd. | Chairman | July 15, 2020 | July 14, 2023 | No |
| Jiang Long | Goertek Technology Vina Company Limited | Chairman | January 31, 2019 | December 31, 2024 | No |
| Jiang Long | Goertek Electronics, Inc. | Director | May 1, 2020 | April 30, 2023 | No |
| Jiang Long | Weifang Goertek Electronics Co., Ltd. | Director / General Manager | November 26, 2019 | November 25, 2025 | No |
| Jiang Long | Goertek Optical Technology Co., Ltd | Director / General Manager | April 20, 2022 | April 19, 2025 | No |
| Jiang Long | Goertek Technology Co., Ltd. | Executive Director / General Manager | December 10, 2021 | December 9, 2026 | No |
| Jiang Long | Goertek Intelligence Technology Co., Ltd. | Executive Director / General Manager | August 18, 2020 | August 17, 2023 | No |
| Jiang Long | Goertek Microelectronics Inc. | Chairman | October 20, 2020 | April 7, 2023 | No |
| Jiang Long | Qingdao Goertek Intelligent Sensor Co., Ltd. | Executive Director | October 22, 2021 | October 21, 2024 | No |
| Jiang Long | Weifang Goertek Microelectronics Co., Ltd. | Executive Director | December 9, 2019 | April 7, 2023 | No |
| Jiang Long | Shanghai Goertek Microelectronics Co., Ltd. | Executive Director | October 14, 2020 | April 7, 2023 | No |
| Jiang Long | Beijing Goertek Microelectronics Co., Ltd. | Executive Director | August 7, 2020 | April 7, 2023 | No |
| Jiang Long | Wuxi Goertek Microelectronics Co., Ltd. | Executive Director | August 7, 2020 | April 7, 2023 | No |
| Jiang Long | Shenzhen Goertek Microelectronics Co., Ltd. | Executive Director | July 23, 2020 | April 7, 2023 | No |
| Jiang Long | Rongcheng Goertek Microelectronics Co., Ltd. | Executive Director | November 1, 2021 | April 7, 2023 | No |
| Jiang Long | Qingdao Goertek Microelectronics Research Institute Co., Ltd. | Executive Director | November 30, 2020 | April 7, 2023 | No |
| Jiang Long | Enkris Semiconductor Inc. | Director | November 18, 2021 | April 7, 2023 | No |
| Jiang Long | Qingdao Virtual Reality Institute Co., Ltd. | Chairman | April 12, 2022 | April 11, 2025 | No |
| Jiang Long | Goertek Optical Technology (Shanghai) Co., Ltd | Director | February 16, 2022 | February 15, 2025 | No |
| Jiang Long | Qingdao Goertek Horizons Technology Co., Ltd | Director / General Manager | May 19, 2022 | May 18, 2025 | No |
| Jiang Long | Goertek Optical Technology (Qingdao) Co., Ltd | Director | June 29, 2022 | June 28, 2025 | No |
| Duan Huilu | Goertek Technology Vina Company Limited | Director | January 31, 2019 | No | |
| Duan Huilu | Goertek Technology Co., Ltd. | Supervisor | August 14, 2021 | August 13, 2024 | No |
| Duan Huilu | Goertek Investment Co., Ltd. | Executive Director / General Manager | December 7, 2015 | December 6, 2025 | No |
| Duan Huilu | Weifang Goertek Electronics Co., Ltd. | Director | November 23, 2021 | November 22, 2024 | No |
| Duan Huilu | Weifang Goertek Trading Co., Ltd. | Executive Director / General Manager | August 26, 2020 | August 25, 2023 | No |
| Duan Huilu | Beijing Goertek Investment Management Co., Ltd. | Supervisor | January 22, 2019 | January 21, 2025 | No |
| Duan Huilu | Goertek (HongKong) Co.,Limited | Director | April 26, 2019 | April 25, 2025 | No |
| Duan Huilu | Qingdao Goertek Commercial Factoring Co., Ltd. | Executive Director / General Manager | January 11, 2021 | January 10, 2024 | No |
| Liu Chunfa | Goertek Vina Co., Ltd. | Director | January 1, 2019 | No | |
| Liu Chunfa | Goertek Technology Vina Company Limited | Director | January 31, 2019 | No | |
| Liu Chunfa | Shanghai Goertek Technology Co., Ltd. | Supervisor | April 25, 2020 | April 24, 2023 | No |
| Jiang Hongzhai | Yili Precision Manufacturing Co., Ltd. | Executive Director | July 5, 2019 | July 4, 2022 | No |
| Jiang Hongzhai | Weifang Goertek Communication Technology Co., Ltd. | Executive Director | June 26, 2021 | June 25, 2024 | No |
| Jiang Hongzhai | Dongguan JoyForce Precision Manufacturing Co., Ltd. | Executive Director | December 11, 2019 | December 10, 2025 | No |
| Jiang Hongzhai | Kunshan Goertek Electronics Co., Ltd | Executive Director | November 9, 2020 | November 8, 2026 | No |
| Jiang Hongzhai | Nanning Goertek Electronics Co., Ltd | Chairman | November 12, 2021 | November 11, 2024 | No |
| Jiang | Nanning Goertek Trading | Chairman | November 29, 2021 | November 28, 2024 | No |
| Hongzhai | Co., Ltd. | ||||
| Yu Dachao | Beijing Goertek Technology Co., Ltd. | Executive Director / General Manager | November 30, 2019 | November 29, 2025 | No |
| Yu Dachao | Xi’an Goertek Electronic Technology Co., Ltd. | Executive Director | May 7, 2019 | May 6, 2025 | No |
| Yu Dachao | Qingdao Goertek Acoustics Technology Co., Ltd. | Executive Director / General Manager | December 10, 2021 | December 9, 2024 | No |
| Yu Dachao | Yishui TECO Electronic Technology Co., Ltd. | Chairman / General Manager | December 10, 2019 | December 9, 2025 | No |
| Yu Dachao | Goertek Technology Vina Company Limited | Director | January 31, 2021 | No | |
| Gao Xiaoguang | Yishui Goertek Electronics Co., Ltd. | Executive Director / General Manager | February 13, 2021 | April 19, 2022 | No |
| Gao Xiaoguang | Shenzhen Goertek Technology Co., Ltd. | Executive Director / General Manager | October 29, 2021 | October 28, 2024 | No |
| Gao Xiaoguang | Shanghai Goertek Technology Co., Ltd. | Executive Director | April 25, 2020 | April 24, 2023 | No |
| Gao Xiaoguang | Goertek Electronics, Inc. | Manager | December 19, 2018 | December 18, 2024 | No |
| Gao Xiaoguang | AKM Industrial Company Limited | Non-executive director | March 12, 2015 | July 31, 2022 | No |
| Jia Jun'an | Goertek Investment Co., Ltd. | Supervisor | December 7, 2021 | December 6, 2024 | No |
| Jia Jun'an | Weifang Goertek Electronics Co., Ltd. | Supervisor | November 26, 2019 | November 25, 2025 | No |
| Jia Jun'an | AKM Industrial Company Limited | Non-executive director | November 17, 2015 | July 31, 2022 | No |
| Li Yongzhi | Goertek Optical Technology Co., Ltd | Supervisor | March 23, 2021 | April 21, 2022 | No |
| Li Yongzhi | Goertek Intelligence Technology Co., Ltd. | Supervisor | August 18, 2020 | August 17, 2023 | No |
| Li Yongzhi | Kunshan Goertek Electronics Co., Ltd | Supervisor | November 9, 2020 | November 8, 2023 | No |
| Li Yongzhi | Qingdao Goertek Commercial Factoring Co., Ltd. | Supervisor | January 11, 2021 | January 10, 2024 | No |
| Li Yongzhi | Nanning Goertek Electronics Co., Ltd | Supervisor | November 12, 2021 | November 11, 2024 | No |
| Li Yongzhi | Nanning Goertek Trading Co., Ltd. | Supervisor | November 29, 2021 | November 28, 2024 | No |
| Li Yongzhi | Xi’an Goertek Electronic Technology Co., Ltd. | Supervisor | May 7, 2019 | May 6, 2025 | No |
| Li Yongzhi | Yishui TECO Electronic Technology Co., Ltd. | Supervisor | December 10, 2019 | December 9, 2025 | No |
| Li Yongzhi | Rongcheng Goertek Technology Co., Ltd. | Supervisor | July 15, 2020 | July 14, 2023 | No |
| Li Yongzhi | Goertek Microelectronics Inc. | Director | December 23, 2020 | December 22, 2023 | No |
| Li Youbo | Shanghai Goertek | General Manager | July 23, 2020 | July 22, 2023 | No |
| Technology Co., Ltd. | |||||
| Li Youbo | Weifang Goertek Electronics Co., Ltd. | Supervisor | May 9, 2022 | May 8, 2025 | |
| Zhu Shengbo | Nanning Goertek Electronics Co., Ltd | Director | November 12, 2021 | November 11, 2024 | No |
| Zhu Shengbo | Nanning Goertek Trading Co., Ltd. | Director | November 29, 2021 | November 28, 2024 | No |
| Zhu Shengbo | Goertek Vina Co., Ltd | Chairman | January 1, 2019 | No | |
| Zhu Shengbo | Goertek Technology Vina Company Limited | Director | January 31, 2019 | No | |
| Zhu Shengbo | Goertek Precision Industry Vietnam Company Limited | Executive Director | October 30, 2020 | October 29, 2025 | No |
| Zhu Shengbo | Goertek Technology (Hong Kong) Co.,Limited | Executive Director | August 7, 2020 | No | |
| Zhu Shengbo | Weifang Goertek Electronics Co., Ltd. | Executive Director / Manager | May 9, 2022 | May 8, 2025 | No |
| Wei Wenbin | Weifang Goertek Communication Technology Co., Ltd. | General Manager | June 26, 2021 | June 25, 2024 | No |
| Huang Yidong | Seetrum Companion (Shanghai) Enterprise Management Center (Limited Partnership) | Managing Partner | November 12, 2020 | No | |
| Huang Yidong | Advanced Fiber Resources (Zhuhai), Ltd. | Independent Director | March 31, 2021 | March 30, 2024 | Yes |
| Huang Yidong | Beijing Seetrum Technology Co., Ltd. Co., Ltd. | Supervisor | May 20, 2021 | No | |
| Huang Yidong | Tianjin Hi-Chip Technology Group Corporatiion. | Director | April 29, 2022 | April 28, 2025 | No |
| Feng Pengbo | Weifang Lokomo Precision Industry Co., Ltd. | Executive Director / General Manager | April 27, 2015 | April 21, 2022 | No |
| Feng Pengbo | Shenzhen Mototek Smart Technology Co., Ltd. | Supervisor | November 22, 2019 | November 21, 2025 | No |
| Feng Pengbo | Qingdao Virtual Reality Institute Co., Ltd. | Chairman | July 9, 2020 | April 24, 2022 | No |
| Feng Pengbo | BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | Chairman | August 31, 2021 | No | |
| Description of incumbency in other units | None | ||||
Penalties imposed by securities regulatory authorities on current and outgoing directors, supervisors and senior management of thecompany in the past three years? Applicable ? Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
The decision-making procedure, basis and actual payment of the remuneration of directors, supervisors and senior managementThe remuneration for the Company's directors shall be deliberated by the board of directors before being submitted to the generalmeeting of shareholders for determination; the remuneration for supervisors shall be deliberated by the board of supervisors beforebeing submitted to the general meeting of shareholders for determination; the remuneration for senior management personnel shall beproposed by the remuneration and appraisal committee and determined by the board of directors upon deliberation.Remuneration of directors, supervisors and senior management during reporting period
Unit: RMB 10,000
| Name | Position | Gender | Age | Appointment status | The total amount of pre-tax remuneration received from the company | Whether to get paid by the related party of the company |
| Jiang Bin | Chairman | Male | 57 | Incumbent | 181.50 | No |
| Jiang Long | Vice Chairman and President (resigned from the above positions on April 6, 2023) | Male | 49 | Incumbent | 175.50 | No |
| Duan Huilu | Director, Vice President | Male | 47 | Incumbent | 118.50 | No |
| Li Youbo | Director and Vice President (Serving as President of the Company since April 7, 2023) | Male | 46 | Incumbent | 118.50 | No |
| Wang Kun | Independent Director | Female | 47 | Incumbent | 18.00 | No |
| Huang Yidong | Independent Director | Female | 58 | Incumbent | 2.25 | No |
| Jiang Fuxiu | Independent Director | Male | 54 | Incumbent | 2.25 | No |
| Feng Pengbo | Chairman of Board of Supervisors | Male | 55 | Incumbent | 5.63 | No |
| Xu Xiaofeng | Employee representative Supervisor | Female | 46 | Incumbent | 47.63 | No |
| Wei Wenbin | Employee representative Supervisor | Male | 45 | Incumbent | 47.93 | No |
| Gao Xiaoguang | Vice President | Male | 47 | Incumbent | 118.50 | No |
| Liu Chunfa | Vice President | Male | 47 | Incumbent | 118.50 | No |
| Jiang Hongzhai | Vice President | Male | 53 | Incumbent | 118.50 | No |
| Jia Jun'an | Vice President, Secretary of the Board | Male | 52 | Incumbent | 116.25 | No |
| Yu Dachao | Vice President | Male | 45 | Incumbent | 118.50 | No |
| Li Yongzhi | Chief Financial Officer | Male | 45 | Incumbent | 114.00 | No |
| Sun Hongbin | Chairman of Board of Supervisors | Male | 57 | Resigned | 0.00 | Yes |
| Zhu Shengbo | Vice President | Male | 49 | Resigned | 105.00 | No |
| Xia Shanhong | Director | Female | 65 | Resigned | 15.75 | No |
| Wang Tianmiao | Independent Director | Male | 63 | Resigned | 15.75 | No |
| Liu Chengmin | Director | Male | 52 | Resigned | 15.75 | No |
| Kazuyoshi Yoshinaga | Vice President | Male | 56 | Resigned | 117.00 | No |
| Total | -- | -- | -- | -- | 1,691.18 | -- |
VI. Performance of Directors' Duties during the Reporting Period
1. Board of Directors
| Session | Convening date | Disclosure date | Meeting resolution |
| The 26th Meeting of the 5th Board of Directors | February 17, 2022 | February 18, 2022 | For details, refer to the Announcement on the Resolution of the 26th Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 27th Meeting of the 5th Board of Directors | March 29, 2022 | March 30, 2022 | For details, refer to the Announcement on the Resolution of the 27th Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 28th Meeting of the 5th Board of Directors | April 26, 2022 | April 27, 2022 | For details, refer to the Announcement on the Resolution of the 28th Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 29th Meeting of the 5th Board of Directors | May 20, 2022 | May 21, 2022 | For details, refer to the Announcement on the Resolution of the 29th Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 30th Meeting of the 5th Board of Directors | June 10, 2022 | June 11, 2022 | For details, refer to the Announcement on the Resolution of the 30th Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 31st Meeting of the 5th Board of Directors | July 8, 2022 | July 11, 2022 | For details, refer to the Announcement on the Resolution of the 31st Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 32nd Meeting of the 5th Board of Directors | August 29, 2022 | August 30, 2022 | For details, refer to the Announcement on the Resolution of the 32nd Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO |
| (http://www.cninfo.com.cn) | |||
| The 33rd Meeting of the 5th Board of Directors | September 13, 2022 | September 14, 2022 | For details, refer to the Announcement on the Resolution of the 33rd Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 34th Meeting of the 5th Board of Directors | October 27, 2022 | October 28, 2022 | For details, refer to the Announcement on the Resolution of the 34th Meeting of the 5th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 1st Meeting of the 6th Board of Directors | November 21, 2022 | November 22, 2022 | For details, refer to the Announcement on the Resolution of the 1st Meeting of the 6th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
| The 2nd Meeting of the 6th Board of Directors | December 2, 2022 | December 3, 2022 | For details, refer to the Announcement on the Resolution of the 2nd Meeting of the 6th Board of Directors published in Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, and CNINFO (http://www.cninfo.com.cn) |
2. Directors’ attendance at Board of Directors and general meeting of shareholders
| Directors’ attendance at Board of Directors and general meeting of shareholders | |||||||
| Name | Number of Attendance required during the reporting period (times) | Attendance in person (times) | Attendance by Tele-communication (times) | Entrusted presence (times) | Absence (times) | Whether there is absence in person for two consecutive times | Attendance of the general meeting of shareholders (times) |
| Jiang Bin | 11 | 10 | 1 | 0 | 0 | No | 4 |
| Jiang Long | 11 | 10 | 1 | 0 | 0 | No | 4 |
| Duan Huilu | 11 | 10 | 1 | 0 | 0 | No | 4 |
| Li Youbo | 2 | 1 | 1 | 0 | 0 | No | 1 |
| Wang Kun | 11 | 0 | 11 | 0 | 0 | No | 3 |
| Huang Yidong | 2 | 0 | 2 | 0 | 0 | No | 1 |
| Jiang Fuxiu | 2 | 0 | 2 | 0 | 0 | No | 1 |
| Xia Shanhong | 9 | 0 | 9 | 0 | 0 | No | 3 |
| Wang Tianmiao | 9 | 0 | 9 | 0 | 0 | No | 2 |
| Liu Chengmin | 9 | 0 | 9 | 0 | 0 | No | 2 |
Statement on failure to attend the Board of Directors for two consecutive timesNone
3. Objections raised by directors to relevant matters of the Company
Whether directors raise any objection to relevant matters of the Company? Yes ? NoNo objection was raised to relevant matters of the Company during the reporting period.
4. Other details on the performance of duties by directors
Whether proposals made by directors were adopted by the Company? Yes ? NoStatement on the adoption or non-adoption of proposals made by the directorsDuring the reporting period, the directors of the Company carried out work in strict accordance with Company Law, Securities Law,Corporate Governance of Listed Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Self-RegulatoryDirectives No.1 for Listed Companies on the Shenzhen Stock Exchange - Normative Operation of Listed Companies on the MainBoard, Articles of Association and Rules of Procedure of the Board of Directors. They fulfilled their duty of due diligence by forminga consensus after full discussion on major governance and business matters of the Company, and resolutely supervising and drivingthe implementation of the board resolution, so as to ensure the decision-making process being scientific, timely and efficient, play apositive role in the sustained, healthy and stable development of the Company, and effectively safeguard the legitimate rights andinterests of the Company and all shareholders.VII. Performance of Special Committees under the Board of Directors during the ReportingPeriod
| Committee name | Members | Number of meetings held | Convening date | Meeting content | Important opinions and suggestions proposed | Performance of other duties | Specific objections (if any) |
| Audit committee | Wang Kun, Jiang Bin, Xia Shanhong | 6 | January 26, 2022 | We reviewed and approved proposals such as Inspection Report on Important Matters including Related Transactions and Guarantees in the 2nd half of 2021, Internal Audit Work Report for Q4 2021 and the entire year of 2021. | Approved | Not applicable | Not applicable |
| March 28, 2022 | We reviewed and approved proposals such as Proposal on Deliberation of Annual Report of 2021 and its Abstract, Proposal on Deliberation of Financial Accounts of 2021, Proposal on the Deliberation of Self-assessment Report on Internal Control of 2021. | Approved | Not applicable | Not applicable |
| Committee name | Members | Number of meetings held | Convening date | Meeting content | Important opinions and suggestions proposed | Performance of other duties | Specific objections (if any) |
| April 25, 2022 | We reviewed and approved proposals such as Proposal on the deliberation of Goertek Inc. Quarterly Report in Q1 2022, Special Auditor’s Report on the Deposit and Use of Funds Raised in Q1 2022. | Approved | Not applicable | Not applicable | |||
| May 19, 2022 | We reviewed and approved Proposal on the Company's Foreign Investment Involving Related Transactions | Approved | Not applicable | Not applicable | |||
| August 26, 2022 | We reviewed and approved proposals such as Proposal on Deliberation of Goertek Inc. Interim Report of 2022 and Abstract of Interim Report of 2022, Special Audit Report on the Deposit and Use of Raised Funds in the Semiannual Period of 2022. | Approved | Not applicable | Not applicable | |||
| October 26, 2022 | We reviewed and approved proposals such as Proposal on Deliberation of Goertek Inc. Quarterly Report in Q3 2022. | Approved | Not applicable | Not applicable | |||
| Remuneration and assessment committee | Jiang Bin, Xia Shanhong, Wang Tianmiao | 7 | March 18, 2022 | We reviewed and approved Proposal on the Grant of Reserved Restricted Stock in the 2021 Stock Option and Incentive Plan | Approved | Not applicable | Not applicable |
| June 7, 2022 | We reviewed and approved proposals such as Proposal on the Adjustment of the List of Initial Incentive Participants of the Incentive and | Approved | Not applicable | Not applicable |
| Committee name | Members | Number of meetings held | Convening date | Meeting content | Important opinions and suggestions proposed | Performance of other duties | Specific objections (if any) |
| the Number of Granted Reserved Restricted Stocks and the Cancellation of Some Restricted Stocks in the 2021 Stock Option and Incentive Plan. | |||||||
| June 7, 2022 | We reviewed and approved Proposal on Deliberation of Goertek Inc.'s Home No. 6 ESOP (Draft) and Its Abstract, etc. | Approved | Not applicable | Not applicable | |||
| September 9, 2022 | We reviewed and approved proposals such as Proposal on the Adjustment of the List of Initial Incentive Participants and the Number of Granted Reserved Restricted Stocks in the 2022 Stock Option Incentive Plan. | Approved | Not applicable | Not applicable | |||
| October 25, 2022 | We reviewed and approved proposals such as Proposal on the Remuneration of Members of the 6th Board of Directors. | Approved | Not applicable | Not applicable | |||
| November 14, 2022 | We reviewed and approved Proposal on the Remuneration of Senior Management Personnel | Approved | Not applicable | Not applicable | |||
| Jiang Fuxiu, Jiang Bin, Huang Yidong | November 30, 2022 | We reviewed and approved Proposal on Adjustment of Goertek Inc.'s “Home No. 6” Employee Stock Ownership Plan (Draft) and its Abstract, etc. | Approved | Not applicable | Not applicable |
VIII. Performance of the Board of SupervisorsWhether the Board of Supervisors found out any risk of the Company in its supervision activities during the reporting period.? Yes ? No
The Board of Supervisors has no objection to the matters supervised during the reporting period.
IX. Personnel of the Company
1. Number of staff, specialty composition and educational level
| Number of staff of the parent company at the end of the Reporting Period | 32,783 |
| Number of Staff of major subsidiaries at the end of the Reporting Period | 52,575 |
| Total number of staff at the end of the Reporting Period | 85,358 |
| Total number of staff who receive remuneration during the Reporting Period | 85,358 |
| Number of retired staff the Company and its major subsidiaries are required to compensate | 0 |
| Specialty composition | |
| Category | Number |
| Production staff | 60,313 |
| Sales staff | 684 |
| Technical staff | 19,496 |
| Financial staff | 281 |
| Administrative staff | 4,584 |
| Total | 85,358 |
| Education background | |
| Category | Number |
| PhD | 76 |
| Master | 3,641 |
| Bachelor | 15,460 |
| College degree | 17,079 |
| Below college degree | 49,102 |
| Total | 85,358 |
2. Remuneration policy
The Company always takes human resources as the most important strategy and the top priority by continuously innovating theincentive plans to stimulate employees’ vitality and tap their potential. In 2022, the Company implemented an effective employeeincentive and retention strategy among key groups and for its core business, so as to share the growth of corporate benefits with itsemployees by optimizing the allocation mechanism.Despite external risks and challenges in 2022, the Company insisted on deliberating and adjusting remuneration, making employees'incomes increasing steadily. For core positions and key groups supporting the strategic new business development of the Company, aspecial incentive and retention policy has been implemented to effectively achieve the precision talent attraction and retention. Tofurther reserve talents for sustainable and sound development of the Company, we continuously raise the remuneration level of freshgraduates, adopted the strategy of "reward + house purchase subsidy” to retain high-end talents, and offered the "moat" special retentionincentive to core engineers.In terms of incentives, the Company continued implementing stock and option incentive plans for backbone employees, and releaseda new "Home No. 6" employee stock ownership plan in 2022 to drive employees to grow together with the Company. In recent years,through continuous innovation of equity incentives, the number of shareholders has increased year by year, and long-term incentiveshave become an important way for the Company to attract, retain and motivate employees to grow stronger together.In terms of welfare, the Company continued improving employee welfare, with a commitment to build a welfare system with Goertekcharacteristics, and improve home ownership, children's education, health care, holiday benefits, etc. in 2022. In addition, we kept
taking care of employee demands, seeking well-being for employees, improving employees' level of satisfaction with welfare, andenhancing employees' sense of belonging.
3. Training programmes
In 2022, the Human Resources Management Department worked in line with the company's development strategy and businessdemands. Under the guidance of the development plan of the global training center, the Company's talent training system was furtherconsolidated and improved. The capability building programs for key groups such as management personnel, professionals and newemployees focused more on business needs, and training resources became more systematic and standardized. At the same time, bydeveloping the administrative management mechanism and setting up relevant functions, we continued to create the learningatmosphere within the Company, in an effort to build a learning organization, enhance the ability of employees, and help the Companyachieve its business goals.In 2023, the Company, under the unified planning of the learning and development center, will carry out personnel training work byclosely surrounding the talent strategy. Horizontally, the Company will expand the groups of trainees. Vertically, improve varioustypes of training programs and strengthen the overall talent training system, and step up the training for key talents to meet theCompany's strategic needs for strategic talents. At the same time, the Company will focus on improving the digitalization of trainingto enrich employees’ learning experience, enhance employees’ capabilities, and improve the overall capabilities and performance ofthe Company.
4. Labor outsourcing
? Applicable ? Not applicable
X. Profit Distribution and Conversion of Capital Surplus into Share CapitalFormulation, execution or adjustment of profit distribution policy, especially the cash dividend during the Reporting Period? Applicable ? Not applicableThe Company has strictly implemented the Shareholder Return Plan for the Next Three Years (2022-2024), and clarifies the standard,ratio, and the decision making procedures of the distribution policy, which ensures the continuity and stability of the profit distributionpolicy, in order to fully protect the legitimate rights and interests of minority investors. The Company did not make changes to theprofit distribution policy during the reporting period.
| Special description of the cash dividend policy | |
| Whether in compliance with provisions in the Articles of Association or requirements of the resolution of the extraordinary general meeting of shareholders: | Yes |
| Whether the dividend standard and the proportion are definite and clear: | Yes |
| Whether the related decision-making procedures and mechanisms are complete: | Yes |
| Whether independent directors perform their duties responsibly and play their due roles: | Yes |
| Whether minority shareholders have the opportunity to fully express their opinions and demands and their legitimate rights and interests are fully protected: | Yes |
| Whether the conditions and procedures are transparent and comply with regulations while the cash dividend policy is adjusted or changed: | The cash dividend policy has not been adjusted. |
The profits of Goertek in the Reporting Period and the parent company's profits distributable to shareholders are positive, but theCompany did not put forward a proposed plan for cash dividend distribution.? Applicable ? Not applicableProfit distribution and conversion of capital surplus into share capital during the reporting period.? Applicable ? Not applicable
| Number of bonus shares per 10 shares | 0 |
| Dividend per 10 shares (RMB) (tax inclusive) | 1.00 |
| Conversion of capital surplus into share capital per 10 shares (shares) | 0 |
| Share capital base of the distribution proposal (shares) | 3,405,162,949 |
| Cash dividend amount (RMB) (tax inclusive) | 340,516,294.90 |
| Cash dividend amount distributed by other means (such as shares repurchase) (RMB) | 0.00 |
| Total cash dividends (including other means) (RMB) | 0.00 |
| Distributable profit (RMB) | 16,507,798,239.34 |
| Proportion of total cash dividends (including other means) in total profit distribution | 100% |
| Cash dividends | |
| If the Company is in developing stage, and there are major capital expenditure arrangements, the minimum proportion of cash dividends in profit distribution should reach 20%. | |
| Detailed description of the proposal for profit distribution or capitalization from capital surplus funds | |
| According to the standard unqualified opinion auditor’s report issued by ZHONGXI CPAs (Special General Partnership) for Goertek, the parent company reports a net profit of RMB -358,777,530.78 in 2022, net distributable profit of RMB 9,410,101,500.47 at the end of 2022, and the balance of capital surplus of RMB 8,421,030,014.05. The net distributable profit in the consolidated balance sheet is RMB 16,507,798,239.34. The profit distribution in 2022 is as follows: based on the total share capital registered on the record date of equity distribution minus the repurchased shares in the Company's specific securities repurchase account, the Company will distribute cash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders, as well as 0 bonus shares (tax inclusive), and there is no conversion of capital surplus into share capital. | |
XI. Equity Incentive Plan, Employee Stock Ownership Plan or Other Employee Incentives? Applicable ? Not applicable
1. Equity incentive
(1) Stock Option Incentive Plan in 2021 (hereinafter referred to as “the Incentive Plan 2021”):
On April 16, 2021, Goertek convened the 19th meeting of the 5th Board of Directors, which approved Proposal of 2021 Stock OptionIncentive Plan of Goertek Inc. (Draft) and the Summary, Proposal of Rules on the Implementation and Assessment of 2021 StockOption Incentive Plan, and Proposal of Requesting the General Meeting of Shareholders to Authorize the Board of Directors to HandleMatters Relevant to 2021 Stock Option Incentive Plan. The 14th meeting of the 5th Board of Supervisors approved relevant proposals,reviewed the list of participants awarded for the first time, and expressed the review opinions. Independent directors of the Companyexpressed their agreed opinions on the Incentive Plan 2021 independently.On April 17, 2021, Goertek disclosed the List of Participants Awarded for the First Time of the Incentive Plan on the websitehttp//:www.cninfo.com.cn. The Company publicized the names and positions of these participants from April 20 to April 29, 2021.During the publicity period, the Supervisors did not receive any objections, and no feedback was recorded. On April 30, 2021, theCompany disclosed the Result of Review by the Board of Supervisors on the List of Participants Awarded for the First Time of 2021Stock Option Incentive Plan. On May 8, 2021, the Company disclosed Self-examination Report on the Trading of Shares by Insidersof the 2021 Stock Option Incentive Plan.On May 7, 2021, the proposals mentioned above were approved on the annual general meeting of 2020. The Board of Directors wereauthorized to handle relevant matters regarding the Incentive Plan 2021.On June 2, 2021, Goertek convened the 21st meeting of the 5th Board of Directors and the 16th meeting of the 5th Board of Supervisors.Proposal of the Adjustment of Participants Awarded for the First Time of the 2021 Stock Option Incentive Plan, Number of StockOptions and Exercise Price, and the Proposal of Resolution of Grant Stock Options to the Participants were approved. The Board ofSupervisors expressed the results of review on the list of incentive participants. Independent Directors expressed their agreed opinionson relevant matters independently. Beijing Tian Yuan Law Firm issued the Legal Opinions of Beijing Tian Yuan Law Firm on RelevantMatters Regarding the Adjustment and First Grant of the 2021 Goertek Inc. Stock Option Incentive Plan.
On June 24, 2021, Goertek completed the registration of the Incentive Plan 2021.On March 29, 2022, Goertek convened the 27th meeting of the 5th Board of Directors and the 21st meeting of the 5th Board ofSupervisors, at which the Proposal on the Grant of Reserved Restricted Stock in the 2021 Stock Option Incentive Plan was approved.The independent directors of the Company expressed their independent opinions on this, and the Board of Supervisors verified andissued verification opinions on matters related to the list of initial incentive participants and grant arrangements reserved for stockoptions. Beijing Tian Yuan Law Firm issued legal opinions correspondingly.On April 20, 2022, Goertek completed the granting and registration of reserved stock options in the Incentive Plan 2021.On June 10, 2022, the Company convened the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board ofSupervisors,, and approved the Proposal on Adjusting the Exercise Price of the Company's 2021 Stock Option Incentive Plan, Proposalon the Adjustment of the List of Initial Incentive Participants of the Incentive and the Number of Granted Reserved Restricted Stocksand the Cancellation of Some Restricted Stocks in the 2021 Stock Option Incentive Plan and Proposal on the Achievement of theExercise Conditions of Initial Granted Stock Options for the First Exercise Period in the 2021 Stock Option Incentive Plan. The Boardof Directors determined that the exercise conditions for the initial granted stock options for the first exercise period of Incentive Plan2021 had been fulfilled, and the incentive participants may exercise their options in accordance with the relevant provisions of theIncentive Plan 2021 from June 24, 2022 to June 23, 2023. The Board of Supervisors expressed the review opinions on the list ofincentive participants and matters on the achievement of exercise conditions. Independent Directors expressed their agreed opinionson relevant matters independently. Beijing Tian Yuan Law Firm issued legal opinions correspondingly.On April 7, 2023, the Company convened the 3rd meeting of the 6th Board of Directors and the 3rd meeting of the 6th Board ofSupervisors, and approved the Proposal on the Adjustment of the List of Initial Incentive Participants of the Incentive and the Numberof Granted Reserved Restricted Stocks and the Cancellation of Some Restricted Stocks in the 2021 Stock Option Incentive Plan andthe Proposal on the Achievement of the Exercise Conditions of Initial Granted Stock Options for the First Exercise Period in the 2021Stock Option Incentive Plan. The Board of Directors determined that the exercise conditions for the first exercise period of the reservedgrant portion of the 2021 stock option incentive plan had been fulfilled, and the incentive participants may exercise their options inaccordance with the relevant provisions of this incentive plan from April 20, 2023 to April 19, 2024 (the actual exercise start time isdetermined according to the processing completion time of China Securities Depository and Clearing Co., Ltd., but not earlier thanApril 20, 2023). The Board of Supervisors expressed the review opinions on the adjustment of the list of incentive participants andachievement of exercise conditions. Independent Directors expressed their agreed opinions on relevant matters independently. BeijingTian Yuan Law Firm issued legal opinions correspondingly.
(2) Stock Option Incentive Plan in 2022 (hereinafter referred to as “the Incentive Plan 2022”)On July 8, 2022, Goertek convened the 31st meeting of the 5th Board of Directors, which approved Proposal of 2022 Stock OptionIncentive Plan of Goertek Inc. (Draft) and the Summary, Proposal of Rules on the Implementation and Assessment of 2022 StockOption Incentive Plan, and Proposal of Requesting the General Meeting of Shareholders to Authorize the Board of Directors to HandleMatters Relevant to 2022 Stock Option Incentive Plan. At the 25th meeting of the 5th Board of Supervisors, the Company, in additionto approving relevant proposals, expressed the review opinions on the list of initial incentive participants. Independent directors of theCompany expressed their agreed opinions on the Incentive Plan 2022 independently. Beijing Tian Yuan Law Firm issued legal opinionscorrespondingly.On July 11, 2022, Goertek disclosed the List of Initial Incentive Participants in the Goertek Inc. Incentive Plan 2022 on the websitehttp//:www.cninfo.com.cn. The Company started to publicize the names and positions of these participants on July 11, 2022. The Boardof Supervisors reviewed the participants and published the Review Opinions and Disclosure Statement by the Board of Supervisors onthe List of Initial Incentive Participants in the 2022 Stock Option Incentive Plan.On July 26, 2022, the proposals mentioned above were approved on the 1st extraordinary general meeting of 2022. The Incentive Plan2022 was approved. The Board of Directors were authorized to handle relevant matters regarding the Incentive Plan 2022. On July 27,2022, the Company disclosed the Self-examination Report on the Trading of Shares by Insiders of the 2022 Goertek Inc. Stock OptionIncentive Plan.On September 13, 2022, Goertek convened the 33rd meeting of the 5th Board of Directors and the 27th meeting of the 5th Board ofSupervisors. The Proposal of the Adjustment of Initial Incentive Participants and Number of Stock Options in the 2022 Stock OptionIncentive Plan and the Proposal on Granting Stock Options to the Participants were approved. The Board of Supervisors verified andexpressed the review opinions on matters related to the incentive plan. Independent Directors expressed their agreed opinions onrelevant matters independently. Beijing Tian Yuan Law Firm issued legal opinions correspondingly.On September 21, 2022, Goertek completed the registration of the 2022Incentive Plan.Stock options granted to Directors and senior management? Applicable ? Not applicable
The Appraisal and incentive mechanism for senior managementThe remuneration standard for senior management shall be formulated by the remuneration and assessment committee, andimplemented after approval by the Board of Directors.
2. Implementation of employee stock ownership plan
? Applicable ? Not applicableAll valid employee stock ownership plans during the reporting period
| Participants | Number | Total shares held | Changes | Shareholding percentage | Source of funds |
| Goertek Home No. 3 ESOP: part of Directors, Supervisors, senior management, key management personnel, and key business personnel | 1,600 | 0 | None | 0.00% | self-raised |
| Goertek Home No. 4 ESOP: Directors (excluding Independent Directors), Supervisors, senior management, key management personnel and key business personnel | 4,000 | 2,190,100 | None | 0.06% | n.a. |
| Goertek Home No. 5 ESOP: Directors (excluding Independent Directors), Supervisors, senior management, key management personnel and key business personnel | 25 | 5,500,000 | None | 0.16% | self-raised |
| Goertek Home No. 6 ESOP: Directors (excluding independent directors), supervisors, senior management personnel and key business personnel | 1,000 | 0 | None | 0.00% | self-raised |
Total shares held of Directors, Supervisors and senior management in ESOPs during the reporting period
| Name | Position | Number of shares held at the beginning of the reporting period | Number of shares held at the end of the reporting period | Shareholding percentage |
| Duan Huilu, Feng Jianliang, Xu Xiaofeng, Wei Wenbin, Gao Xiaoguang, Liu Chunfa, Jiang Hongzhai, Jia Jun’an, Feng Pengbo, Yu Dachao, Yoshinaga Kazuyoshi, Li Yongzhi, | Directors, Supervisors, senior management | 3,289,000 | 3,039,000 | 0.09% |
Changes of Asset Management Agency during the reporting period? Applicable ? Not applicableChanges in shareholders' equity caused by shares disposal of the participants and other reasons during the reporting period? Applicable ? Not applicableDuring the reporting period, the Company, after expiration of the lock-up period of Goertek's Home No. 4 ESOP and Home No. 5ESOP, reduced part of its shares in accordance with relevant regulations. By the end of the reporting period, Goertek's Home No. 3ESOP has expired and the liquidation has been completed. Goertek's Home No. 4 ESOP held 2.1901 million shares, accounting for
0.06% of total shares, while the Home No. 5 ESOP held 5.5 million shares, accounting for 0.16% of total share capital.Exercise of shareholders' rights during the reporting periodDuring the reporting period, the ESOPs exercised the shareholders' rights to participate in cash dividend of 2021, but did not participatein voting of the general meeting of shareholders or exercise other shareholders' rights.Other relevant situations and descriptions related to ESOPs during the reporting period? Applicable ? Not applicableChanges in members of the Management Committee of the ESOPs? Applicable ? Not applicableFinancial impacts of the ESOPs during the reporting period and relevant accounting treatment? Applicable ? Not applicableIn accordance with the Accounting Standard for Business Enterprises No.11 - Share-based Payments: if an equity-settled share-basedpayment in exchange for services received from employees could not exercise until the completion of services for a vesting period, oruntil the achievement of a specified performance condition, Goertek at each balance sheet date during the vesting period recognizesthe services received for the current period as related costs or expenses, and capital surplus, at amount equal to the fair value of theequity instruments at the grant date, based on the best estimate of the number of equity instruments expected to exercise. In 2022, theamortized expenses of Goertek’s Home No. 4 ESOP, Home No. 5 ESOP and Home No. 6 ESOP were RMB 138.6938 million, RMB
120.1858 million and RMB 8.4695 million respectively, which were recognized as related expenses and capital surplus.Termination of ESOP during the reporting period? Applicable ? Not applicableOn January 15, 2022, the Company published the Announcement on Self-termination of the Expiration of the Home No. 3 ESOP, andthe Home No. 3 ESOP expired on January 15, 2022 and was automatically terminated.Other explanations:
None
3. Other employee incentive measures
? Applicable ? Not applicableXII. Construction and implementation of the Company’s Internal Control System During theReporting Period
1. Construction and implementation of internal control
During the reporting period, in order to ensure the development of business activities and the realization of Goertek's strategic goals,Goertek attached great importance to the construction of internal control system. We gradually established a basic compliance, soundand effective internal control system covering all aspects of operation and management in accordance with the industry and assetstructure characteristics.
(1) Internal supervision
The Company has established the Internal Audit System, and has set up an independent internal audit department, which is responsiblefor internal audit work, the audit and efficiency supervision of financial revenue, expenditure, the implementation of financial system,the Company’s rules and regulations. The internal audit department also responsible for making proposals on the improvement of theCompany's internal control system.
Under the direct leadership of the Audit Committee, the audit department independently carries out internal audit and supervision，supervising the operation and management, financial condition and internal control implementation of the Company and its subsidiaries.Besides, the audit department issues independent auditor’s opinions, and regularly reports summaries and working plans to the AuditCommittee.
(2) Risk assessment
In combination with characteristics of the industry and actual operating status, the Company timely assesses internal and external riskssuch as environmental risk, business risk and financial risk, weighs the risk and return according to the results of risk analysis and risktolerance, determines strategies, and practically makes the risk controllable.
(3) Control activities
The Company constantly implements the workings of internal control in all kinds of business processes, conducts various internalcontrols, avoids the mere formality of internal policies and regulations, and improves the effectiveness and soundness of internal control.
(4) Information disclosure
The Company formulated the Information Disclosure Policy, the Accountability System Regarding Major Errors in the Annual ReportInformation Disclosure and the Policy on Management of the Personnel with Inside Information. According to the requirements ofrelevant laws and regulations, the Policy on Management of the Personnel with Inside Information has been revised in time, which hasdetailed the scope of inside information and related personnel, and the administrative measures on registration of personnel with insideinformation in material matters. The Company's information disclosure in 2022 complied with the relevant laws and regulations of theregulatory authorities and the provisions of the above-mentioned control system.
2. Details of material defects of internal control detected during the Reporting Period
? Yes ? NoXIII. Management and controls of subsidiaries during the Reporting PeriodNot applicableXIV. Self-assessment Report on Internal Control or Auditor’s Report on Internal Control
1. Self-assessment on internal control
| Disclosure date of the Internal Control Self-assessment Report | April 18, 2023 | |
| Disclosure index of the Internal Control Self-assessment Report | The Goertek Inc. Self-assessment Report on Internal Control of 2022 Disclosed on www.cninfo.com.cn on April 18, 2023 | |
| Proportion of the total assets of entities included in the assessment scope to the total assets of the Company’s consolidated financial statements | 100.00% | |
| Proportion of the total revenue of entities included in the assessment scope to the total revenue of the Company’s consolidated financial statements | 100.00% | |
| Defect Identification Standard | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | The qualitative standard of the assessment of internal control defects in financial reporting are as follows: Signs of material defects in financial reporting include: | The qualitative standard of the assessment of internal control defects in non-financial reporting determined by Goertek are as follows: The identification of defects in non-financial |
| (1) Fraud of directors, supervisors and senior management on the financial report; (2) Corrections of previously disclosed financial reports; (3) Material misstatement of current period financial statements identified by certified public accountant but not identified by the Company’s internal control; (4) Ineffective supervision on the financial statements by the audit committee and the internal audit department. Signs of important defects in financial reporting include: (1) Failure to select and apply accounting policies in accordance with Generally Accepted Accounting Principles; (2) No anti-fraud procedures and control measures have been established; (3) No corresponding control mechanism has been established or implemented for the accounting treatment of unconventional or special transactions, and there is no corresponding compensatory control; (4) One or more defects is or are existing in the control of the financial reporting process, that the prepared financial statements cannot be reasonably guaranteed to be true and complete. General defects: other internal control defects. | report is mainly determined by the impact of defects on the effectiveness of business processes and the possibility of occurrence. If the possibility of defect occurrence is low, and the defect will reduce the efficiency and effectiveness of work, or increase the uncertainty of the effectiveness, or make it deviate from the expected goal, it is a general defect. If the possibility of defect occurrence is relatively high, and the defect will significantly reduce the efficiency or effectiveness of work, or significantly increase the uncertainty of the effectiveness, or make it significantly deviate from the expected goal, it is an important defect. If the possibility of defect occurrence is high, and the defect will seriously reduce the efficiency or effectiveness of work, or seriously increase the uncertainty of the effectiveness, or make it seriously deviate from the expected goal, it is a material defect | |||||
| Quantitative criteria | (2) If one of the following conditions is met, it may be recognized as an important defect: | The quantitative standard of the assessment of internal control defects in non-financial reporting is in accordance with the quantitative standard of defects in financial reporting. | ||||
| Item | Impact of defects | |||||
| Potential misstatement of total profit | 3%≤misstatement <5% | |||||
| Potential misstatement of | 0.5≤misstatement <1% | |||||
| total assets | |
| Potential misstatement of revenue | 0.5≤misstatement <1% |
(3) If one of the following conditions is met, it may
be recognized as a minor defect:
| Number of material defects in financial reporting | 0 | ||||
| Number of material defects in non-financial reporting | 0 | ||||
| Number of important defects in financial reporting | 0 | ||||
| Number of important defects in non-financial reporting | 0 | ||||
2. Auditor’s Report on internal control
? Applicable ? Not applicable
| The opinion paragraph in the auditor’s report on internal control | |
| We believe that Goertek Inc. maintained effective internal control over accounting reports in all material aspects in accordance with the Basic Standards for Internal Corporate Control and relevant provisions on December 31, 2022. | |
| Disclosure of the Auditor’s Report on Internal Control | Disclosed |
| Disclosure date of the Auditor’s Report on Internal Control | April 18, 2023 |
| Disclosure index of the Auditor’s Report on Internal Control | |
The Audit Report on Internal Control of Goertek Inc. (Zhong XiSpecial Audit No. 2023T00212) published onwww.cninfo.com.cn on April 18, 2023
| Type of internal control auditor’s report opinions | standard unqualified opinion |
| Material defects found in non-financial reporting | No |
Whether the accounting firm issued a modified auditor’s report on internal controls? Yes ? NoWhether the Auditor’s Report on internal control is consistent with the Self-assessment Report of the board of directors? Yes ? No
XV. Rectification of Problems Identified by Self-examination in the Special Actions onGovernance of Listed Companies
Not applicable
Not applicable
Section V Environmental and social responsibilitiesI. Major Environmental Issues
Whether the listed company or its subsidiaries are entities with pollutant discharges announced by local environmental protectionauthorities? Yes ? NoPolicies and industry standards related to environmental protectionAll Goertek Inc.'s projects are encouraged according to the Decision of the National Development and Reform Commission onAmending the Catalogue of Industrial Structure Adjustment (2019 version) and are in line with national industrial development policies;and the projects meet the requirements of the Opinions of the People's Government of Shandong Province on the Implementation ofthe "Three Lines and One List” Ecological Zoning Management Approach. The pollutants are discharged in strict accordance with therequirements of the environmental impact assessment standard and the pollution discharge standard.All projects of Yili Precision Manufacturing Co., Ltd. are carried out in line with national industrial development policies according tothe Decision of the National Development and Reform Commission on Amending the Catalogue of Industrial Structure Adjustment(2019 version); and the projects meet the requirements of the Opinions of the People's Government of Shandong Province on theImplementation of the "Three Lines and One List” Ecological Zoning Management Approach. The pollutants are discharged in strictaccordance with the requirements of the environmental impact assessment standard and the pollution discharge standard.Administrative licenses for environmental protectionGoertek Inc. obtained the registration receipt of the pollution discharge permit in accordance with the Measures for the Managementof Pollution Discharge Permits (Trial) (Revised in 2019). The registration number is 91370700729253432M004Y, and the certificateis valid from November 12, 2020 to November 11, 2025.Yili Precision Manufacturing Co., Ltd. has applied for a pollution discharge permit as required. The certificate number is913707840744048096001V, and the certificate is valid from July 7, 2022 to July 6, 2027.Industry emission standards and the details of pollutant emissions involved in production and operation activities
| Name of the Company or subsidiaries | Types of major pollutants and particular pollutants | Name of major pollutants and particular pollutants | Type of discharge | Number of discharging ports | Locations of discharging ports | Concentration/intensity of pollutant discharged | Enforced standards of pollutant discharge | Total discharge volume | Total approved discharge volume | Discharge exceeding the standard |
| Goertek Inc. | Solid waste | Hazardous waste | Indirect discharge | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | None |
| Yili Precision Manufacturing Co., Ltd. | Wastewater | COD; ammonia nitrogen | Intermittent discharge | 1 | In the plant | COD: 50mg/L; ammonia nitrogen: 5mg/L | COD: 500mg/L; ammonia nitrogen: 45mg/L | COD: 20.07t/a; ammonia nitrogen: 1.963t/a | COD: 26.862t/a; ammonia nitrogen: 2.6029t/a | None |
Treatment of pollutantsIn accordance with The Environmental Impact Assessment and Approval, the Company establishes supporting measures for solid wastestorage, disposal and comprehensive utilization, along with leakage prevention and seepage prevention measures, and ensures thenormal operation of all the above measures.In accordance with The Environmental Impact Assessment and Approval, Yili Precision Manufacturing Co., Ltd. constructs supportingtreatment facilities for water and gas waste, takes measures of noise reduction, storage, disposal and comprehensive utilization of solidwaste, and leakage and seepage prevention, and ensures the normal operation of all above measures.Environmental self-monitoring programmeThe Company entrusts third-party monitoring organizations to monitor the environmental factors of the plant area and issue aninspection report every year.Yili Precision Manufacturing Co., Ltd. has installed online equipment for monitoring COD, ammonia nitrogen, flow rate and PH valueat the main wastewater discharge outlet, which is networked with the local department of environmental protection authorities. A thirdparty shall be entrusted to conduct environmental self-monitoring of waste water, waste gas, groundwater and soil pollutants in strictaccordance with the requirements of discharge permit, and related information shall be disclosed as required.
Emergency response plan for unexpected environmental eventsGoertek, combined with The National Environmental Emergency Response Plan and The Guidelines to Develop Emergency ResponsePlan for Environmental Pollution Accidents, has formulated The Environmental Emergency Response Plan based on various riskfactors, and has reported the plan to the High-tech Branch of Weifang Municipal Ecology and Environment Bureau for recording (No.370708-2022-036-L). Goertek also organizes relevant training and drills on a regular basis, in order to improve the emergency responseability of employees and achieve continuous improvement.In view of various risk factors, Yili Precision Manufacturing Co., Ltd. refers to The National Environmental Emergency Plan and TheGuidelines to Develop Emergency Response Plan for Environmental Pollution Accidents, formulates the Yili EnvironmentalEmergency Plan, and puts it on record in Anqiu Branch of Weifang Municipal Ecology and Environment Bureau (record No. 370784-2020-004-H). Relevant training and drills are organized on a regular basis to further improve employees’ ability to deal with emergencyevents and achieve continuous improvement.Investment in environmental governance and protection and the payment of environmental protection taxThe Company and its subsidiaries pay environmental protection tax as required, with a total of RMB 77,095.67 in 2022.Measures taken to reduce carbon emissions during the reporting period and their effects? Applicable ? Not applicableThe Company adheres to the energy management policy of ''compliant use of energy, improved efficiency, reduce emission, fullparticipation of all staffs and green development'', and incorporates this policy into its product manufacturing chain. By taking theestablishment of energy management system as a scientific management basis, the Company optimized its organizational structure ofmanagement, improved systems and processes, and emphasized the focus of management, so as to tap the potential for energy saving,actively improve the overall level of energy efficiency, and integrate emission reduction and green development targets into its internaloperation. It was awarded the honor of "National Green Factory" in 2022.The Company strived to promote clean energy applications, increased the proportion of green energy in all energy sources. It hasaccumulatively reduced emission of 38,601.01 tCO2e by introducing the distributed photovoltaic power generation projects. It activelycarried out energy-saving publicity activities and dug deep into energy-saving technological transformation projects. Through theconstruction of high-efficiency refrigeration rooms and the promotion of energy-saving technologies such as vacuum pumps, frequencyconversion, and automatic control, the Company managed to improve energy utilization efficiency and reduce emissions by 26,164tCO2e.Administrative penalties received for environmental issues during the reporting periodNoneOther environmental information that should be disclosedNoneOther information related to environmental protectionNoneII. Performance of Social Responsibility
During the reporting period, while the Company was committed to achieving its own development, it has also performed well in theprotection of the rights and interests of shareholders, creditors, employees, suppliers, customers and consumers, as well as inenvironmental protection and sustainable development, public relations and social public welfare undertakings. For details, see theCorporate Social Responsibility Report of 2022 released on "www.cninfo.com.cn". on April 18, 2023.
III. Consolidate and Carry Forward the Achievements of Poverty Alleviation and RuralRevitalizationThe Company has not carried out such work during the reporting period.
Section VI Important Matters
I. Fulfilment of Commitments
1. The commitments of the Company's actual controllers, shareholders, related parties, purchasers and companies that have been completely fulfilled duringthe reporting period or remain valid by the end of the reporting period.
? Applicable ? Not applicable
| Commitment matters | Commitment party | Commitment type | Commitment content | Commitment time | Commitment period | Performance of commitments |
| Commitments made during the joint-stock reform | Not applicable | |||||
| Commitments made in the report of acquisition or in the report of equity changes | Not applicable | |||||
| Commitments made during asset restructuring | Not applicable | |||||
| Commitments made during initial public offering or refinancing | Mr. Jiang Bin, the actual controller, and Mr. Jiang long, shareholder and the related party of the actual controller | Commitment to restricted stock | Mr. Jiang Bin and Mr. Jiang Long promise that the Company shares transferred each year during their tenure will not exceed 25% of the total company shares held by them, and the shares will not be transferred within six months after their resignation in future | October 8, 2007 | Long-term standing | Strictly fulfilled |
| Commitments made during initial public offering or refinancing | Mr. Jiang Bin and Ms. Hu Shuangmei, the actual controllers of the Company, Goertek Group Co., Ltd and Mr. Jiang Long, the shareholders who hold more than 5% of the Company shares | Horizontal competition related commitment | At present, there is no competition between the main businesses of Goertek Inc. and the commitment parties (company and persons) in this clause or other entities controlled by the commitment parties (company and persons). In future, in order to fundamentally avoid the possibility of competing with Goertek Inc., the commitment parties (company and persons) promise as follows: 1) The commitment parties (company and persons) will not engage in the same or similar business as Goertek Inc. in order to avoid direct or indirect | October 8, 2007 | Long-term standing | Strictly fulfilled |
| competition to the production and operation of Goertek Inc. Efforts will be made to urge other entities controlled by the commitment parties (company and persons) not to directly or indirectly participate in or carry out any business activity that compete with the production and operation of Goertek Inc. 2) If the commitment parties (company and persons) and the other entities controlled by the commitment parties (company and persons) except Goertek Inc., have competitive businesses of the same kind with Goertek Inc., which may bring unfair impacts on Goertek Inc. in terms of market share, business opportunities and resource allocation, etc. The commitment parties (company and persons) and other entities controlled by the commitment parties (company and persons) except Goertek Inc. will voluntarily give up business competition with Goertek Inc. 3) The commitment parties (company and persons) undertake to give Goertek Inc. the pre-emption right on the purchase of any assets and business to be sold, and will do its best to ensure that the price of the transaction is determined on the basis of fair, reasonable and normal commercial transactions with independent third parties. 4) The commitment parties (company and persons) will not be restricted from engaging in or continuing to engage in existing production business, in particular to provide Goertek Inc. with relevant materials and services needed for its operation. Since the date of issuance of this letter of commitment, the commitment parties (company and persons) undertake to indemnify Goertek Inc. for any loss or expense suffered or incurred in violation of any of the terms of this commitment. | ||||||
| Equity incentive commitments | The Company | Others commitments | Stock option incentive plan of 2021: The Company undertakes not to provide loans or any other form of financial assistance to any participants to obtain relevant rights and interests under this incentive plan, including guarantee for their loans | April 16, 2021 | From the issuance date of the commitment to the completion | Strictly fulfilled |
| of the implementation of the stock option incentive plan of 2021 | ||||||
| Equity incentive commitments | The Company | Others commitments | Stock option incentive plan of 2022: The Company undertakes not to provide loans or any other form of financial assistance to any participants to obtain relevant rights and interests under this incentive plan, including guarantee for their loans | July 8, 2022 | From the issuance date of the commitment to the completion of the implementation of the stock option incentive plan of 2022 | Strictly fulfilled |
| Other commitments made to minority shareholders | The Company | Others commitments | From March 5, 2020 to the end of the use of the funds raised from convertible corporate bonds issuing or within 36 months after the funds raised are in place, the Company will no longer increase the funds usage in financial business (including capital investment, borrowing, guarantee and other forms of capital investment). The Company will not use the funds raised directly or in disguise for financial business | March 5, 2020 | From March 5, 2020 to the end of the use of funds raised or within 36 months after the funds raised are in place | Strictly fulfilled |
| Other commitments made to minority shareholders | The Company | Others commitments | The Company promises not to carry out venture capital investment during the period of temporary working capital supplement with raised funds, and undertakes to use these raised funds only for production and operation related to the main business. The Company shall not directly or indirectly use raised funds for the subscription or placement of stocks, or for the trading of stocks and their derivatives, convertible corporate bonds, etc. | November 8, 2021 | During the time period of temporary liquidity replenishment with raised funds starting from November 8, 2021 | All raised funds have been returned on November 4, 2022, thus the commitment has been completely fulfilled |
| Other commitments made | The Company | Others commitments | The Company's temporary use of some idle raised funds | November | During the time | Strictly fulfilled |
| to minority shareholders | to supplement the working capital shall be used only for production and operation related to the main business. The Company shall not directly or indirectly use raised funds for the subscription or placement of new shares, or for the trading of shares and their derivatives, convertible bonds, etc. The Company undertakes that temporarily use of idle raised funds to supplement working capital shall be for daily production and operation activities only. The Company will not use idle raised funds to directly or indirectly make high-risk investments such as securities investment and derivatives trading. | 21, 2022 | period of temporary liquidity replenishment with raised funds starting from November 21, 2022 | |||
| Other commitments made to minority shareholders | Mr. Jia Jun'an, Vice President, Secretary of the Board | Commitment to restricted stock | Not to reduce his holdings of company shares or engaging in insider trading or short-swing trading within 6 months from April 6, 2022, nor to buy or sell company stocks during sensitive time periods. | April 6, 2022 | For the next 6 consecutive months from April 6, 2022 | Completely fulfilled on October 5, 2022 |
| Other commitments made to minority shareholders | Mr. Jia Jun'an, Vice President, Secretary of the Board | Commitment to restricted stock | Not to reduce his holdings of company shares or engaging in insider trading or short-swing trading within 6 months from April 15, 2022, nor to buy or sell company stocks during sensitive time periods. | April 15, 2022 | For the next 6 consecutive months from April 15, 2022 | Completely fulfilled on October 14, 2022 |
| Other commitments made to minority shareholders | Mr. Jia Jun'an, Vice President, Secretary of the Board | Commitment to restricted stock | Not to reduce his holdings of company shares or engaging in insider trading or short-swing trading within 6 months from September 23, 2022, nor to buy or sell company stocks during sensitive time periods. | September 23, 2022 | For the next 6 consecutive months from September 23, 2022 | Completely fulfilled on March 22, 2023 |
| Other commitments made to minority shareholders | Mr. Jia Jun'an, Vice President, Secretary of the Board | Commitment to restricted stock | Carry out in accordance with relevant laws and regulations and relevant provisions of Shenzhen Stock Exchange, not reduce his shareholding of the Company during the shareholding increase period and within the legal lock-up period, and complete the shareholding increase plan within the implementation period. The operation of shareholding increase shall strictly abide by the relevant regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange and not engage in trading, trading of shares during sensitive periods, and short-swing trading. | September 28, 2022 | Within 3 months from September 28, 2022 | Completely fulfilled on December 27, 2022 |
| Whether the commitments are fulfilled on time | Yes |
| If the commitments are not fulfilled within the time limit, specific reasons for the failure of complying and the work plan for the next step shall be explained in details | Not applicable |
2. If the Company's assets or projects have profit forecasts and the reporting period is still in the profitforecasting period, the Company shall make statement on whether the assets or projects reach the originalprofit forecast and provide relevant reasons? Applicable ? Not applicable
II. Non-operational Occupation of Funds by Controlling Shareholders and Other RelatedParties to Listed Companies
? Applicable ? Not applicableDuring the reporting period of the Company, there is no non-operational occupation of funds by controlling shareholders or otherrelated parties to the Company.
III. External Guarantee in Violation of Regulations? Applicable ? Not applicableThe Company has no violation of external guarantee during the reporting period.
IV. Explanation made by the Board of Directors about the modified audit opinion for thelatest period? Applicable ? Not applicableV. Explanation of the Accounting Firm's “Modified Auditor’s Report” by the Board ofDirectors, the Board of Supervisors and Independent Directors (if Any) During the ReportingPeriod
? Applicable ? Not applicableVI. Explanation of changes in Accounting Policies, Accounting Estimates or Correction ofMajor Accounting Errors Compared with the Financial Report of Previous Year? Applicable ? Not applicable
1. Changes in accounting policy
The Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises (Finance and Accounting[2021] No. 35) in 2021, and the Interpretation No. 16 of the Accounting Standards for Business Enterprises (Finance and Accounting[2022] No. 31) in 2022. The above changes in accounting policy have no significant impact on the financial statements of the Groupand the Company.
2. There is no change in accounting estimates during the reporting period.
3. There is no correction of major accounting errors during the reporting period.
VII. Explanation of Changes in the Scope of the Consolidated Statements Compared withPrevious Year's Financial Report
? Applicable ? Not applicableDuring the reporting period, the Company established 8 subsidiaries: Goertek Optical Technology (Qingdao) Co., Ltd, Goertek OpticalTechnology (Shanghai) Co., Ltd, Qingdao Resonance Venture Capital Management Co., Ltd., Qingdao Resonance Phase I VentureCapital Fund Partnership (Limited Partnership), Weifang Goertek Electronics Co., Ltd., Qingdao Goertek Horizons Technology Co.,Ltd, Weifang High-tech Zone Goertek Education Center, and Goertek Microelectronics Vietnam Company Limited. During thereporting period, the Company disposed of 2 subsidiaries: Shenzhen Mototek Smart Technology Co., Ltd. and Qingdao ResonanceVenture Capital Management Co., Ltd.
VIII. Appointment and Dismissal of Accounting FirmsAccounting firm currently appointed
| Name of the domestic accounting firm | Zhongxi Certified Public Accountants (special general partnership) |
| Remuneration of the domestic accounting firm (unit: RMB 10,000) | 220 |
| Consecutive audit service years of the domestic accounting firm | 4 |
| Name of certified public accountant of the domestic accounting firm | Du Yeqin, Zhang Shuli |
| Consecutive audit service years of certified public accountant of the domestic accounting firm | Du Yeqin has been in service for 3 years on end, and Zhang Shuli for 1 year |
| Name of overseas accounting firms (if any) | None |
| Remuneration of overseas accounting firms (unit: RMB 10,000) (if any) | 0 |
| Consecutive audit service years of overseas accounting firms (if any) | None |
| Names of certified public accountants of the overseas accounting firms | None |
| Consecutive audit service years of certified public accountants of overseas accounting firms (if any) | None |
Whether to reappoint accounting firm in current period? Yes ? NoEmployment of internal control audit accounting firms, financial consultants or sponsors? Applicable ? Not applicableDuring the reporting period, the Company engaged Zhongxi Certified Public Accountants (special general partnership) as the internalcontrol audit accounting firm and paid the internal control audit fee of RMB 800,000 during the period.
IX. Delisting After the Disclosure of Annual Report? Applicable ? Not applicableX. Bankruptcy or Reorganization Related Events? Applicable ? Not applicableNo bankruptcy or reorganization related events occurred during the reporting period.XI. Significant Lawsuit and Arbitration Events
? Applicable ? Not applicableNo significant litigation or arbitration events occurred during the reporting period.XII. Punishment and Rectification? Applicable ? Not applicableNo punishment or rectification occurred during the reporting period.
XIII. Integrity Issues of the Company, Controlling Shareholders and Actual Controllers
? Applicable ? Not applicable
XIV. Significant Affiliated Transactions
1. Affiliated transactions related to daily operations
? Applicable ? Not applicableNo significant affiliated transactions related to daily operations occurred during the reporting period.
2. Affiliated transactions involving the acquisition or sale of assets or equity
? Applicable ? Not applicableNo significant affiliated transactions involving the acquisition or sale of assets or equity occurred during the reporting period.
3. Affiliated transactions of joint external investment
? Applicable ? Not applicableNo significant affiliated transactions of joint external investment occurred during the reporting period.
4. Affiliated transactions of credits and liabilities
? Applicable ? Not applicableNo significant affiliated transactions of credits and liabilities occurred during the reporting period.
5. Business with affiliated financial company
? Applicable ? Not applicableThere was no deposit, loan, credit granting or other financial business between the Company and the affiliated financial company andits related parties.
6. Business between the related parties and the financial company controlled by the Company? Applicable ? Not applicableThere was not any financial company controlled by the Company.
7. Other significant affiliated transactions
? Applicable ? Not applicableNo other significant affiliated transactions occurred during the reporting period.XV. Significant Contracts and Executions
1. Trusteeship, contracting and leasing
(1) Trusteeship
? Applicable ? Not applicableNo trusteeship occurred during the reporting period.
(2) Contracting
? Applicable ? Not applicableNo contracting occurred during the reporting period.
(3) Leasing
? Applicable ? Not applicableNo significant leasing occurred during the reporting period.
2. Significant guarantees
? Applicable ? Not applicable
Unit: RMB 10,000
| External guarantee of the Company and its subsidiaries (excluding guarantees for subsidiaries) | ||||||||||
| Name of guaranteed party | Disclosure date of the amount limit of the guarantee | The amount limit of the guarantee | Actual occurrence date | Actual amount guaranteed | Guarantee type | Collateral (if any) | Counter-guarantee (if any) | Guarantee period | Whether the guarantee is complete | Whether guarantee for related parties |
| Not applicable | ||||||||||
| The Company's guarantee to its subsidiaries | ||||||||||
| Name of guaranteed party | Disclosure date of the amount limit of the guarantee | The amount limit of the guarantee | Actual occurrence date | Actual amount guaranteed | Guarantee type | Collateral (if any) | Counter-guarantee (if any) | Guarantee period | Whether the guarantee is complete | Whether guarantee for related parties |
| Goertek (HongKong) Co.,Limited | March 27, 2021 | 208,938.00 | September 10, 2021 | 6,964.60 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co.,Limited | March 27, 2021 | 208,938.00 | October 20, 2021 | 6,964.60 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co.,Limited | March 30, 2022 | 208,938.00 | September 10, 2022 | 6,964.60 | Joint liability guarantee | 1 year | No | No | ||
| Goertek (HongKong) Co.,Limited | March 30, 2022 | 208,938.00 | October 20, 2022 | 6,964.60 | Joint liability guarantee | 1 year | No | No | ||
| Goertek (HongKong) Co.,Limited | April 20, 2019 | 208,938.00 | January 16, 2020 | 79,379.03 | Joint liability guarantee | 3 years | Yes | No | ||
| Goertek (HongKong) Co.,Limited | April 20, 2019 | 208,938.00 | January 17, 2020 | 3,499.71 | Joint liability guarantee | 3 years | Yes | No | ||
| Goertek (HongKong) Co.,Limited | April 20, 2019 | 208,938.00 | February 24, 2020 | 49,448.66 | Joint liability guarantee | 3 years | Yes | No | ||
| Goertek (HongKong) Co.,Limited | March 27, 2021 | 208,938.00 | August 20, 2021 | 17,411.50 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co.,Limited | March 30, 2022 | 208,938.00 | August 20, 2022 | 17,411.50 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co.,Limited | March 30, 2022 | 208,938.00 | May 17, 2022 | 20,545.57 | Joint liability guarantee | 1 year | No | No | ||
| Goertek (HongKong) Co.,Limited | March 30, 2022 | 208,938.00 | May 24, 2022 | 14,277.43 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | June 6, 2021 | 2,154.46 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 30, 2022 | 65,000.00 | June 22, 2022 | 1,173.20 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | June 6, 2021 | 230.00 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 30, 2022 | 65,000.00 | June 22, 2022 | 108.00 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | July 30, 2021 | 3,516.54 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | October 18, 2021 | 318.26 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | August 1, 2021 | 270.77 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | June 29, 2021 | 571.38 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Microelectronics Inc. | March 27, 2021 | 2,640.00 | November 19, 2021 | 3.45 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Microelectronics Inc. | March 30, 2022 | 2,089.38 | November 18, 2022 | 2.77 | Joint liability guarantee | 1 year | No | No | ||
| Weifang Goertek Microelectronics Co., Ltd. | March 27, 2021 | 650.00 | March 27, 2021 | 7.80 | Joint liability guarantee | 1 year | Yes | No | ||
| Weifang Goertek Microelectronics Co., Ltd. | March 30, 2022 | 300.00 | May 12, 2022 | 20.06 | Joint liability guarantee | 1 year | No | No | ||
| Rongcheng Goertek Microelectronics Co., Ltd. | March 30, 2022 | 300.00 | May 12, 2022 | Joint liability guarantee | 1 year | No | No | |||
| Goertek | March 27, | 1,500.00 | June 10, | 199.88 | Joint | 1 year | Yes | No |
| Intelligence Technology Co., Ltd. | 2021 | 2021 | liability guarantee | |||||||
| Total amount of guarantee limit to subsidiaries approved during the reporting period (B1) | 489,742.38 | Total amount of actual guarantee to subsidiaries occurred during the reporting period (B2) | 238, 408.37 | |||||||
| Total amount of guarantee limit to subsidiaries approved at the end of the reporting period (B3) | 1,074,768.78 | Total balance of actual guarantee to subsidiaries occurred at the end of the reporting period (B4) | 50, 056.23 | |||||||
| The guarantee between subsidiaries | ||||||||||
| Name of guaranteed party | Disclosure date of the amount limit of the guarantee | The amount limit of the guarantee | Actual occurrence date | Actual amount guaranteed | Guarantee type | Collateral (if any) | Counter-guarantee (if any) | Guarantee period | Whether the guarantee is complete | Whether guarantee for related parties |
| Not applicable | ||||||||||
| Total amount of company guarantee (namely the sum of the previous three items) | ||||||||||
| Total amount of guarantee limit approved during the reporting period (A1+B1+C1) | 489,742.38 | Total amount of actual external guarantee occurred during the reporting period (A2+B2+C2) | 238, 408.37 | |||||||
| Total amount of external guarantee limit approved at the end of the reporting period (A3+B3+C3) | 1,074,768.78 | Total balance of actual external guarantee occurred at the end of the reporting period (A4+B4+C4) | 50, 056.23 | |||||||
| The proportion of the total amount of actual guarantee (i.e. A4+B4+C4) to the net assets of the Company | 1.70% | |||||||||
| Including: | ||||||||||
| Balance of guarantees for shareholders, actual controllers and their affiliate parties (D) | 0 | |||||||||
| Balance of guarantee provided directly or indirectly to the parties with an asset-liability ratio of more than 70% (E) | 48,752.20 | |||||||||
| Amount of total guarantees exceeding 50% of net assets (F) | 0 | |||||||||
| Total amount of the above three kinds of guarantees (D+E+F) | 48,752.20 | |||||||||
| Explanation of unexpired guarantee contracts for which there are guarantee liabilities or there are evidence showing the possibility of joint and several liability for repayment during the reporting period (if any) | None | |||||||||
| Description of external guarantees provided in violation of prescribed procedures (if any) | None | |||||||||
Specific description of complex guaranteesNone
3. Management trust of cash assets
(1) Entrusted financial investment
? Applicable ? Not applicableNo entrusted financial management occurred during the reporting period.
(2) Entrusted loans
? Applicable ? Not applicableNo entrusted loans occurred during the reporting period.
4. Other major contracts
? Applicable ? Not applicableNo other significant contracts occurred during the reporting period.XVI. Explanation of Other Significant Matters? Applicable ? Not applicableIn accordance with the requirements of laws and regulations, the Company has disclosed the significant matters that occurred duringthe reporting period on http://www.cninfo.com.cn, Securities Times, China Securities Journal, Shanghai Securities News and SecuritiesDaily. Other than that, no other significant matters occurred.XVII. Significant Matters Occurred to Subsidiaries of the Company? Applicable ? Not applicableOn November 10, 2020, the Company held the 12th meeting of the 5th board of directors and the 10th meeting of the 5th board ofsupervisors, which approved The Proposal of Planning the Spin-off of the Holding Subsidiary. It agreed to plan and prepare the spin-off of the Company's holding subsidiary Goertek Microelectronics Co., Ltd. For details, please see The Informative Announcement ofGoertek Inc. on Planning and Preparing the Spin-off of Holding Subsidiary issued on November 11, 2020.The 17th meeting of the 5th board of directors and the 12th meeting of the 5th board of supervisors were held on March 1, 2021 toapprove The Proposal on the Introduction of External Investors of the Holding Subsidiary and Affiliate Transactions. It agreed to accepta total of RMB 2,149.987749 million capital investment from 15 external investors, including Qingdao Microelectronics InnovationCenter Co., Ltd., Mr. Tang Wenbo, Gongqingcheng Chunlin Equity Investment Partnership(L.P.), Qingdao Henghuitai IndustryDevelopment Fund Co., Ltd., and Goertek Group Co., Ltd., in exchange of 10.4075% of Goermicro's equity after above capital increaseand share expansion. After the above investment, the percentage of shares of Goermicro held by the Company was diluted from 95.8773%to 85.8989%, which did not change the accounting consolidation scope of the financial statements of the Company. Details can befound in The Announcement of Goertek Inc. on the Introduction of External Investors of the Holding Subsidiary and AffiliateTransactions issued on March 2, 2021.On April 21, 2021, the Company held the 20th meeting of the 5th Board of Directors and the 15th meeting of the 5th Board ofSupervisors, which approved The Proposal on 'Plan for the Spin-off of Goertek Microelectronics Inc., a subsidiary of Goertek Inc., forListing on the Growth Enterprise Board' and other related proposals. Details can be found in related announcements published in ChinaSecurities Journal, Securities Times, Shanghai Securities News, Securities Daily and http://www.cninfo.com.cnon April 22, 2021.On November 8, 2021, the Company held the 24th meeting of the 5th Board of Directors and the 19th meeting of the 5th Board ofSupervisors, which approved The Proposal of 'Planning on the Spin-off of Goertek Microelectronics Inc. and Listing on the GrowthEnterprise Board of Shenzhen Stock Exchange (Revised)' and other related proposals. The above-mentioned proposals have beenreviewed and approved by the Company's first extraordinary general meeting of shareholders in 2021. Details can be found in relatedannouncements published in China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily andhttp://www.cninfo.com.cn on November 9, 2021 and November 26, 2021.On December 28, 2021, Goermicro received The Notice of Acceptance of Application Documents for Initial Public Offering of Sharesand Listing on GEM of Goertek Microelectronics Inc. (Shenzhen Stock Exchange (2021) No. 549). In accordance with relatedregulations, the Shenzhen Stock Exchange checked the application report and related application documents submitted by Goermicrofor initial public offering and listing on GEM, and decided to accept the application. Details can be found in The Informative
Announcement of Goertek on The Acceptance of Shenzhen Stock Exchange of The Application Documents of The Spin-off of GoertekMicroelectronics Inc. and Listing on GEM issued by the Company on December 29, 2021.According to the Announcement on the Results of the 74th Review Meeting of the GEM Listing Committee in 2022 issued by theShenzhen Stock Exchange on October 19, 2022, Goertek Microelectronics Inc. (IPO) meets the requirements for issuance, listing andinformation disclosure.On March 31, 2023, as the financial information recorded in the IPO application documents of Goertek Microelectronics Inc. hadexpired, a supplementary submission was required. According to the relevant provisions of the Review Rules of Shenzhen StockExchange for Stock Issuance and Listing, the review for issuance and listing review was suspended.
Section VII Changes in Shares and Information about ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
| Before the change | Increases or decreases (+, -) | After the change | |||||||
| Number | Percentage | New shares | Bonus shares | Transferred from reserves | Other | Sub-total | Number | Percentage | |
| I. Shares Subject to Selling Restrictions | 478,911,375 | 14.02% | -64,661,014 | -64,661,014 | 414,250,361 | 12.11% | |||
| 1. State shareholding | |||||||||
| 2. Shares held by state-owned corporates | |||||||||
| 3. Shares held by other domestic shareholders | 478,911,375 | 14.02% | -64,661,014 | -64,661,014 | 414,250,361 | 12.11% | |||
| Including: held by domestic corporates | |||||||||
| held by domestic individuals | 478,911,375 | 14.02% | -64,661,014 | -64,661,014 | 414,250,361 | 12.11% | |||
| 4. Shares held by foreign shareholders | |||||||||
| Including: held by foreign corporates | |||||||||
| held by foreign individuals | |||||||||
| II. Shares Without Restrictions | 2,937,409,661 | 85.98% | 68,743,178 | 68,743,178 | 3,006,152,839 | 87.89% | |||
| 1. RMB common shares | 2,937,409,661 | 85.98% | 68,743,178 | 68,743,178 | 3,006,152,839 | 87.89% | |||
| 2. Domestic listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total Number of Shares | 3,416,321,036 | 100.00% | 4,082,164 | 4,082,164 | 3,420,403,200 | 100.00% |
Reasons for changes in shares? Applicable ? Not applicableOn June 10, 2022, the Company held the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board ofSupervisors, which approved the Proposal on the Exercise Conditions for the First Exercise Period of the Initial Grant of the 2021Stock Option Incentive Plan. Grantees who meet the exercise conditions may exercise stock options during the first exercise period bymeans of voluntary exercise. The actual exercise period is from June 24, 2022, to June 23, 2023. For details, please refer to theAnnouncement of Goertek Inc. on the Adoption of a Voluntary Exercise Mode for the First Exercise Period of the Initial Grant of the2021 Stock Option Incentive Plan, disclosed by the Company on http://www.cninfo.com.cn, Securities Times, China Securities Journal,Shanghai Securities News and Securities Daily. During the reporting period, the grantees accumulatively exercised 4,082,164 sharesduring the first exercise period for the initial grant of 2021 stock option incentive plan.Approval of changes in shares? Applicable ? Not applicableOn June 10, 2022, the Company held the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board ofSupervisors, which approved the Proposal on the Exercise Conditions for the First Exercise Period of the Initial Grant of the 2021Stock Option Incentive Plan, among others. The Board of Directors held that the exercise conditions for the first exercise period of theinitial grant of the 2021 Stock Option Incentive Plan had been met. 503 grantees may exercise stock options during the first exerciseperiod by means of voluntary exercise.Transfer of ownership change of shares? Applicable ? Not applicableAccording to the 2021 Stock Option Incentive Plan of Goertek Inc. (Draft), the first exercise period of the initial grant is from June 24,2022, to June 23, 2023.The impact of share changes on the financial indicators such as basic earnings per share, diluted earnings per share and net assets pershare attributable to the Company's common shareholders in the latest year and the latest period? Applicable ? Not applicableDuring the reporting period, the exercise of stock options by grantees under the 2021 Stock Option Incentive Plan correspondinglyaffected basic earnings per share and diluted earnings per share, but did not have a significant impact.Other content that the Company considers necessary or that the securities regulator requires to be disclosed? Applicable ? Not applicable
2. Changes in restricted shares
? Applicable ? Not applicable
Unit: share
| Name of shareholder | Starting number of restricted shares in reporting period | Increased in reporting period | Decreased in current period | Closing number of restricted shares in reporting period | Type for restricted shares | Date of the removal of restrictions |
| Jiang Bin | 280,115,554 | 64,567,500 | 215,548,054 | Restricted shares | January 1, 2022 |
| of senior executives | ||||||
| Jiang Long | 187,758,898 | 187,758,898 | Restricted shares of senior executives | January 1, 2022 | ||
| Hu Shuangmei | 16,200,000 | 16,200,000 | Restricted shares of senior executives | January 1, 2022 | ||
| Sun Hongbin | 6,667,150 | 422,384 | 7,089,534 | Restricted shares of senior executives | January 1, 2022 | |
| Duan Huilu | 3,355,875 | 750,000 | 2,605,875 | Restricted shares of senior executives | January 1, 2022 | |
| Jia Jun'an | 150,000 | 450,000 | 600,000 | Restricted shares of senior executives | January 1, 2022 | |
| Liu Chunfa | 863,898 | 215,898 | 648,000 | Restricted shares of senior executives | January 1, 2022 | |
| Total | 495,111,375 | 872,384 | 65,533,398 | 430,450,361 | -- | -- |
II. Issuance and Listing of Securities
1. Securities issuance (excluding preference shares) during the reporting period? Applicable ? Not applicable
2. Description of changes in the total number of shares, the structure of shareholders, and the structure ofassets and liabilities? Applicable ? Not applicableAt the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board of Supervisors, the Company approved theProposal on the Exercise Conditions for the First Exercise Period of the Initial Grant of the 2021 Stock Option Incentive Plan. As theexercise conditions for the first exercise period of the initial grant of the 2021 Stock Option Incentive Plan had been met, the Companyagreed that grantees may exercise stock options by means of voluntary exercise. During the reporting period, as grantees voluntarilyexercised stock options, a total of 4,082,164 additional shares were issued.
3. Existing internal employee shares
? Applicable ? Not applicable
III. Shareholders and actual controllers
1. Number of shareholders and corresponding shareholding
Unit: share
| Total number of common shareholders at the end of the reporting | 524,569 | Total number of common shareholders as the end of the previous | 523,319 | Total number of preference sharehold | 0 | Total number of preference shareholders whose voting rights were restored at the end of the previous month before disclosure date of the annual report | 0 |
| period | month before disclosure date of the annual report | ers whose voting rights were restored at the end of the reporting period (if any) | ||||||
| Shareholding of shareholders with more than 5% of shares or the top 10 shareholders | ||||||||
| Name of shareholder | Type of shareholder | Percentage | Total common shares held at the end of the reporting period | Increase/decrease during the reporting period | The number of common shares held with trading restrictions | The number of shares held without trading restrictions | Pledge or freeze status | |
| Share status | Number | |||||||
| Goertek Group Co., Ltd. | Domestic non-state-owned corporation | 14.84% | 507,680,170 | 507,680,170 | ||||
| Jiang Bin | Domestic Individual | 8.40% | 287,397,406 | 215,548,054 | 71,849,352 | |||
| Jiang Long | Domestic Individual | 7.32% | 250,345,197 | 187,758,898 | 62,586,299 | Pledged | 93,500,000 | |
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | Overseas corporation | 3.64% | 124,575,288 | 124,575,288 | ||||
| China Securities Finance Corporation Limited | Other | 2.43% | 83,044,011 | 83,044,011 | ||||
| National Social Security Fund Portfolio 103 | Other | 0.76% | 26,000,000 | 26,000,000 | ||||
| Chen Shihui | Domestic Individual | 0.62% | 21,332,500 | 21,332,500 | ||||
| Tian'an Life Insurance Co., Ltd. - traditional products | Other | 0.58% | 20,000,000 | 20,000,000 | ||||
| Dajia Life Insurance Co., Ltd. - universal | Other | 0.51% | 17,567,904 | 17,567,904 | ||||
| products | ||||||||||
| Taiping Life Insurance Co., Ltd. | State-owned legal entity | 0.50% | 17,174,970 | 17,174,970 | ||||||
| Strategic investors or general legal entities who become the top 10 shareholders as a result of the placement of new shares (if any) | None | |||||||||
| Explanation of the association of the above shareholders or their action in concert | Jiang Bin and Jiang Long are brothers; Goertek Group Co., Ltd. is a company controlled by Jiang Bin and Jiang Long. | |||||||||
| Explanation on entrustment/acceptance and waiver of voting rights by the aforesaid shareholders | None | |||||||||
| Special notes on the existing special account of securities repurchasing in the Top 10 shareholders (if any) | The specific securities repurchase account of Goertek Inc. holds 74,265,451 common shares, accounting for 2.17%. | |||||||||
| Shareholding of top 10 shareholders of shares without sales restrictions | ||||||||||
| Name of shareholder | Number of shares without sales restrictions held at the end of the reporting period | Type of shares | ||||||||
| Type of shares | Number | |||||||||
| Goertek Group Co., Ltd. | 507,680,170 | Ordinary shares in RMB | 507,680,170 | |||||||
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | 124,575,288 | Ordinary shares in RMB | 124,575,288 | |||||||
| China Securities Finance Corporation Limited | 83,044,011 | Ordinary shares in RMB | 83,044,011 | |||||||
| Jiang Bin | 71,849,352 | Ordinary shares in RMB | 71,849,352 | |||||||
| Jiang Long | 62,586,299 | Ordinary shares in RMB | 62,586,299 | |||||||
| National Social Security Fund Portfolio 103 | 26,000,000 | Ordinary shares in RMB | 26,000,000 | |||||||
| Chen Shihui | 21,332,500 | Ordinary shares in RMB | 21,332,500 | |||||||
| Tian'an Life Insurance Co., Ltd. - traditional products | 20,000,000 | Ordinary shares in RMB | 20,000,000 | |||||||
| Dajia Life Insurance Co., Ltd. - universal products | 17,567,904 | Ordinary shares in RMB | 17,567,904 | |||||||
| Taiping Life Insurance Co., Ltd. | 17,174,970 | Ordinary shares in RMB | 17,174,970 | |||||||
| Explanation on association or action in concert among top 10 shareholders of shares without sales restrictions, or between top 10 shareholders of shares without sales restrictions and top 10 shareholders | Jiang Bin and Jiang Long are brothers; Goertek Group Co., Ltd. is a company controlled by Jiang Bin and Jiang Long. | |||||||||
| Explanation on the top ten common shareholders’ participation in the financing and loan businesses of securities trades(if any) | At the end of the reporting period, the shares held by Goertek Group Co., Ltd., the controlling shareholder of the Company include the 150,000,000 shares held in the customer credit transaction guarantee securities account of Southwest Securities Co., Ltd. |
Whether the Company’s top 10 common shareholders and top 10 common shareholders without share sales restrictions agreed onany repurchase transaction in the reporting period? Yes ? NoNone of the Company’s top 10 common shareholders and top 10 common shareholders without share sales restrictions agreed on anyrepurchase in the reporting period.
2. Particulars about the controlling shareholder
Nature of the controlling shareholder: Private corporateType of the controlling shareholder: Legal entity
| Name of the controlling shareholder | Legal representative/Head of the Company | Date of establishment | Organization code | Business scope |
| Goertek Group Co., Ltd. | Jiang Bin | April 24, 2001 | 913707007286084226 | Residential interior decoration; medical services; technology import and export; investing activities conducted with own funds; non-residential real estate leasing; technical services; wholesale of edible agricultural products; tree planting management; electronic products sales, etc. |
| Shareholdings of the controlling shareholder in other listed companies | None | |||
Change of the controlling shareholders in the reporting period? Applicable ? Not applicableNo change on the controlling shareholder of the Company in the reporting period
3. Actual controllers of the Company and persons acting in concert with the actual controllerNature of the actual controllers: Domestic individualType of the actual controllers: Individual
| Name of the actual controller | Relationship with the actual controller | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Jiang Bin | Himself | China | No |
| Hu Shuangmei | Himself | China | No |
| Jiang Long | Acting in concert (including agreement, relative and common control) | China | No |
| Main occupation and title | Mr. Jiang Bin is currently the board chairman of the Company; Mr. Jiang Long served as the vice chairman and president of the Company during the reporting period. (He resigned from the above positions on April 6, 2023.) |
| Information about other listed companies at home and abroad controlled in the last ten years | Goertek Inc. |
Change on the actual controllers in the reporting period? Applicable ? Not applicableNo change on the actual controllers of the Company in the reporting periodBlock Diagram for Property Right and Control Relationship Between the Company and its Actual Controllers
The actual controller controls the Company via trust or other ways of asset management? Applicable ? Not applicable
4. All the pledged shares account for 80% of the total shares held by the controlling shareholder or No.1shareholder of the Company and their persons acting in concert
? Applicable ? Not applicable
5. Particulars about other corporate shareholders with over 10% shares of the Company? Applicable ? Not applicable
6. Particulars on share sales restrictions for controlling shareholders, actual controllers, or other partiesinvolved in the reorganization of the Company or in any commitments related to the sales of share? Applicable ? Not applicable
IV. Specific Implementation of Share Repurchase in the Reporting Period
Progress of share repurchase? Applicable ? Not applicableThe progress of repurchased shares reduction through centralized trading at competitive price? Applicable ? Not applicable
| Jiang Bin | Hu Shuangmei |
Goertek Group Co., Ltd.
Goertek Group Co., Ltd.Goertek Inc.
Section VIII Information of Preference Shares
? Applicable ? Not applicableThere are no preference shares in the reporting period.
Section IX Information on the Bonds? Applicable ? Not applicable
Section X Financial Report
I. Auditor’s Report
| Auditor’s Opinion | Standard unqualified opinion |
| Auditor’s Report Sign-off Date | April 17, 2023 |
| Name of the audit institution | ZHONGXI CPAs (SPECIAL GENERAL PARTNERSHIP) |
| Auditor’s Report Number | Zhong Xi Cai Shen No. 2023S00781 |
| Name of the Certified Public Accountant | Du Yeqin, Zhang Shuli |
Text of the auditor’s report
Auditor’s Report
Zhong Xi Cai Shen No. 2023S00781To all the shareholders of Goertek Inc.,I. OpinionWe have audited the accompanying financial statements of Goertek Inc. (hereinafter referred to as "Goertek"), including theconsolidated and Company's balance sheets as of December 31, 2022, consolidated and Company's income statements, consolidatedand Company's cash flow statements, consolidated and Company's statements of changes in shareholder' equity, and notes to thefinancial statements for the year then ended.In our opinion, the accompanying financial statements have been prepared in all material aspects in accordance with the AccountingStandards for Business Enterprises, fairly reflecting the consolidated and Company's financial position as of December 31, 2022 andof the consolidated and Company's financial performance and cash flows for 2022.II. Basis for OpinionWe conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilitiesunder those Standards are further described in the “Certified Public Accountants’ Responsibilities for the Audit of the FinancialStatements” section of the auditor’s report. We are independent of Goertek Inc. in accordance with the Code of Ethics for CertifiedPublicAccountants of China (“Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditor’s opinion.III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, are of most significance in our audit of the financial statementsof the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in formingour opinion thereon, and we do not provide a separate opinion on these matters. We determine that the following matters are criticalaudit matters that need to be communicated in the audit report.(I) Revenue recognition
1. Description of the matters
Goertek Inc. is mainly in the business of producing and selling electronic components, and for the accounting policy of revenuerecognition, please refer to ''32. Income'' in ''V. Significant Accounting Policies and Accounting Estimates'' of notes to the financialstatements. In 2022, the operating revenue in the consolidated financial statements of Goertek Inc. is RMB 104,894.32 million.Revenue is one of the key performance indicators of Goertek Inc. and is the major source of profit of the Company, and the accuracyand completeness of revenue recognition has a significant impact on the profits of the Company. Therefore, we identified therecognition of Goertek Inc.’s revenue as a key audit matter.
2. Audit measures
We performed the following audit procedures in recognition of the operating revenue:
(1) Understood, evaluated and tested the design and operation effectiveness of internal control related to revenue recognition;
(2) Performed analytical review procedure to analyze the rationality of changes in the operating revenue and gross profits;
(3) Identified the risk in the commodity ownership and the contractual terms related to remuneration transfer, evaluated whether theaccounting policies for revenue recognition in different modes were appropriate, and evaluated whether the time point for revenuerecognition of the Company was consistent with the requirements in the Accounting Standards for Business Enterprises by checkingthe major sales contracts or orders, understanding the policies for receipt and return of goods, communicating with the managementand other procedures;
(4) Selected samples to check the sales contracts or orders, sales invoices, shipping orders, declarations for exportation, waybills(receipt forms), bank slips and other supporting documents related to revenue recognition, and executed external confirmationprocedures on a sampling basis;
(5) Selected samples to reconcile the shipping orders, declarations for exportation, waybills (receipt forms) and other supportingdocuments against the product sales revenue recognized before and after the balance sheet date to evaluate whether the revenue wasrecognized in the appropriate accounting period.(II) Provision for decline in the value of inventories
1. Description of the matters
For the related accounting policies, please refer to ''15. Inventory'' in ''V. Significant Accounting Policies and Accounting Estimates''of notes to the financial statements. As of December 31, 2022, the inventory balance was RMB 18,419.65 million, the amount ofprovision for decline in the value of inventories was RMB1,070.98 million, and the book value was RMB 17,348.67 million.On the balance sheet date, inventory is measured at cost or net realizable value (whichever is lower). The provision for decline in thevalue of inventories is generally made at the difference between an inventory item’s cost and its net realizable value. To determine thenet realizable value of the inventory, the Management needs to estimate the selling price of the inventory, the costs to be incurred bythe time of completion, selling expenses, and related taxes. In November 2022, Goertek Inc. announced that it had received a noticefrom a major overseas customer to suspend the production of one of its smart acoustic products. The matter resulted in the relatedinventory being partially excess and obsolete.We identified the provision for decline in the value of inventories as a key audit matter because the amount of inventory is significantand the provision for decline in the value of inventories requires significant accounting judgment and estimates by the Management.
2. Audit measures
We performed the following audit procedures on the provision for inventory write down:
(1) We understood, evaluated, and tested the effectiveness of the design and operation of internal controls related to the provision forinventory write down;
(2) We implemented the inventory monitoring procedure, paying attention to slow-moving, excessive, obsolete, or damaged inventoryitems, and checking the relevant inventory list with the Management's inventory write down list;
(3) We obtained the year-end inventory age list and performed an analytical review of older inventories based on the condition of theproducts to evaluate the rationality of the provision for inventory write down;
(4) We obtained the inventory write down calculation table and reviewed the net realizable value of inventory and the amount ofprovision for inventory provision, so as to evaluate the rationality of accounting judgments made by the Management in determiningthe net realizable value of inventory;
(5) In response to the suspension of production of a smart acoustic product for a major overseas customer, we paid special attention tothe delivery of inventory and the disposal plan of raw materials and work-in-progress inventory.(III) Provision for impairment of fixed assets
1. Description of the matters
For the provision for impairment of fixed assets, please refer to ''25. Impairment of Long-term Assets'' in ''V. Significant AccountingPolicies and Accounting Estimates''. As of December 31, 2022, the book value of the Company's fixed assets was RMB 21,459.76million, and the provision for impairment of fixed assets in 2022 was RMB 579.46 million.
In November 2022, Goertek Inc. announced that it had received a notice from a major overseas customer to suspend the production ofone of its smart acoustic products. This matter resulted in impairment of the related fixed assets. The Management conductedimpairment tests on the related fixed assets on the balance sheet date. If the impairment test results show that the recoverable amountof an asset is lower than its book value, the provision for impairment shall be accrued according to the difference and recorded into theimpairment loss. The recoverable amount is the higher of the net amount of the fair value of the asset less the disposal expenses andthe present value of the expected future cash flow of the asset.Since the book value of fixed assets has a significant impact on financial statements and the provision for impairment of fixed assetsrequires the management to make significant accounting judgments and estimates, we identified the provision for impairment of fixedassets as a key audit matter.
2. Audit measures
We mainly implemented the following audit procedures for the provision for impairment of fixed assets:
(1) We understood, evaluated, and tested the effectiveness of the design and operation of internal control related to the provision forimpairment of fixed assets;
(2) We inspected relevant fixed assets on site and implemented monitoring procedures to verify whether there are idle situations anddetermine whether there are signs of impairment;
(3) In response to the suspended production of a smart acoustic product for a major overseas customer, we paid special attention to theuse of related fixed assets and related disposal plans;
(4) We analyzed the Management's judgment on whether there are signs of possible impairment of fixed assets at the end of the period,evaluated the appropriateness of the Management's fixed asset impairment test method, and reviewed the key assumptions andrationality of judgments adopted by the Management in the impairment test method;
(5) We obtained appraisal reports on fixed assets from third-party institutions and reviewed the appraisal scope, assumptions,conclusions, etc. in the appraisal reports.IV. Other InformationThe Management of Goertek Inc. (the Management) is responsible for Other Information. Other Information includes informationcovered in the 2022 Annual Report of Goertek Inc. but excludes financial statements and auditor’s reports.Our auditor’s opinions on financial statements do not cover Other Information. We also do not express any kind of verificationconclusion on Other Information.In combination with our audit of the financial statements, we're obliged to read the Other Information. In the process, we considerwhether the Other Information is materially inconsistent with the financial statements or the information we learned during the audit,or whether there is a material misstatement.Based on the work that we have already done, if we determine that the Other Information contains material misstatements, we shouldreport the fact. In this regard, we have nothing to report.V. Responsibilities of Management and Governance for the Financial StatementsThe management of Goertek Inc. is responsible for the preparation and fair presentation of the financial statements in accordance withthe Accounting Standards for Business Enterprises, and for the design, implementation and maintenance of such internal controlnecessary to ensure that the financial statements are free from material misstatement, whether due to fraud or error.In preparing the financial statements, Management is responsible for assessing the ability of Goertek Inc. to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management intendsto liquidate Goertek Inc. or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the financial reporting process of Goertek Inc.VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with the Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users made on the basis of these financial statements.As part of an audit in accordance with the Auditing Standards, we exercise professional judgment and maintain professional skepticismthroughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements due to fraud or error, design and perform auditprocedures to address those risks, and obtain audit evidence that is sufficient and appropriate as the basis for our opinion. The risk ofnot detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit to design appropriate audit procedures.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by Management.
4. Conclude on the appropriateness of Management's use of the going concern basis of accounting. And, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Goertek Inc.’s abilityto continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the financial statements or, if such disclosures are inadequate, to express a qualified opinion. Ourconclusions are based on the information obtained up to the date of our auditor’s report. However, future events or conditions maycause Goertek Inc. to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements fairlyrepresent the underlying transactions and events.
6. Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities within Goertek Inc. toexpress an opinion on the financial statements. We are responsible for the instruction, supervision and execution of the Group’s audit,and assume full responsibility for the auditor’s opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence and communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence and, where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance in theaudit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’sreport unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expectedto outweigh the public interest benefits of such communication.
| Zhongxi Certified Public Accountants (SPECIAL GENERAL PARTNERSHIP) | Certified Public Accountant in China (Engagement partner): ___________ Du Yeqin |
| Beijing China | Certified Public Accountant in China: ___________ Zhang Shuli |
April 17, 2023
II. Financial StatementsThe currency in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Goertek Inc.
December 31, 2022
Unit: RMB
| Item | December 31, 2022 | January 1, 2022 |
| Current assets: | ||
| Cash at bank and on hand | 12,682,871,091.80 | 10,048,521,696.09 |
| Deposit reservation for balance | ||
| Lending funds | ||
| Financial assets held for trading | 338,662,097.66 | 119,267,279.02 |
| Derivative financial assets | ||
| Notes receivable | 25,847,492.24 | 50,094,700.47 |
| Accounts receivable | 14,396,180,782.93 | 11,899,214,525.92 |
| Financing receivables | 22,375,874.12 | 14,575,230.24 |
| Advances to suppliers | 50,656,153.43 | 97,544,817.98 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Provision of cession receivable | ||
| Other receivables | 96,442,803.18 | 374,669,355.98 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Redemptory financial asset for sale | ||
| Inventories | 17,348,670,744.58 | 12,082,308,485.38 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | 70,302,566.25 | |
| Other current assets | 530,991,435.56 | 475,772,227.60 |
| Total current assets | 45,563,001,041.75 | 35,161,968,318.68 |
| Non-current assets: | ||
| Loans and advances disbursed | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 361,008,671.83 | 437,402,203.91 |
| Investments in other equity instruments | 699,249,262.24 | 465,677,764.54 |
| Other non-current financial assets | 318,661,575.31 | 201,430,042.13 |
| Investment properties | ||
| Fixed assets | 21,459,756,268.25 | 18,123,352,480.76 |
| Construction in progress | 2,424,443,775.33 | 2,127,055,853.77 |
| Bearer biological assets |
| Oil and gas assets | ||
| Right-of-use assets | 580,175,922.73 | 330,796,520.66 |
| Intangible assets | 2,720,793,670.68 | 2,762,793,788.85 |
| Development costs | 361,178,111.91 | 242,956,092.44 |
| Goodwill | 16,859,185.08 | 16,859,185.08 |
| Long-term prepaid expenses | 337,561,524.06 | 207,195,490.25 |
| Deferred tax assets | 1,369,530,623.51 | 495,124,421.81 |
| Other non-current assets | 964,135,835.23 | 506,438,970.39 |
| Total non-current assets | 31,613,354,426.16 | 25,917,082,814.59 |
| Total assets | 77,176,355,467.91 | 61,079,051,133.27 |
| Current liabilities: | ||
| Short-term borrowings | 7,120,846,026.67 | 4,284,859,347.02 |
| Borrowings from banks and other financial institutions | ||
| Borrowing funds | ||
| Financial liabilities held for trading | 202,293,742.46 | 15,190,564.34 |
| Derivative financial liabilities | ||
| Notes payable | 4,850,498,246.08 | 2,742,876,464.23 |
| Accounts payable | 25,748,758,270.19 | 18,529,609,655.40 |
| Advances from customers | ||
| Contract liabilities | 2,295,347,547.31 | 2,210,825,761.69 |
| Financial assets sold for repurchase | ||
| Customer deposits and deposits from banks and other financial institutions | ||
| Receiving from vicariously traded securities | ||
| Receiving from vicariously sold securities | ||
| Employee benefits payable | 1,039,571,778.39 | 1,066,570,159.63 |
| Taxes payable | 284,911,767.58 | 356,610,000.28 |
| Other payables | 78,974,306.79 | 80,187,733.17 |
| Including: Interest payable | ||
| Dividends payable | ||
| Handling charges and commissions payable | ||
| Dividend payable for reinsurance | ||
| Liabilities held for sale | ||
| Current portion of non-current liabilities | 1,095,618,327.74 | 501,408,170.04 |
| Other current liabilities | 4,252,178.60 | 14,844,359.01 |
| Total current liabilities | 42,721,072,191.81 | 29,802,982,214.81 |
| Non-current liabilities: | ||
| Reserve fund for insurance contracts | ||
| Long-term borrowings | 2,206,000,000.00 | 2,204,215,784.74 |
| Debentures payable | ||
| Including: Preference shares |
| Perpetual bonds | ||
| Lease liabilities | 470,704,507.75 | 210,209,955.40 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 532,374,144.38 | 540,321,080.65 |
| Deferred tax liabilities | 816,118,632.40 | 389,933,389.40 |
| Other non-current liabilities | 172,261,037.39 | |
| Total non-current liabilities | 4,197,458,321.92 | 3,344,680,210.19 |
| Total liabilities | 46,918,530,513.73 | 33,147,662,425.00 |
| Shareholders’ equity: | ||
| Share capital | 3,420,403,200.00 | 3,416,321,036.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital surplus | 10,280,659,251.03 | 9,478,106,194.30 |
| Less: Treasury stock | 2,291,973,146.75 | 2,291,973,146.75 |
| Other comprehensive income | 122,377,334.36 | -100,146,769.57 |
| Specific reserve | ||
| Surplus reserve | 1,446,536,121.51 | 1,446,536,121.51 |
| General risk reserve | 6,081,200.00 | 6,081,200.00 |
| Undistributed profits | 16,507,798,239.34 | 15,372,823,358.48 |
| Total equity attributable to the owners of the Company | 29,491,882,199.49 | 27,327,747,993.97 |
| Minority interests | 765,942,754.69 | 603,640,714.30 |
| Total shareholders’ equity | 30,257,824,954.18 | 27,931,388,708.27 |
| Total liabilities and shareholders’ equity | 77,176,355,467.91 | 61,079,051,133.27 |
| Legal representative: Jiang Bin | Principal in charge of accounting: Li Yongzhi | Head of the accounting department: Li Yongzhi |
2. Parent company balance sheet
Unit: RMB
| Item | December 31, 2022 | January 1, 2022 |
| Current assets: | ||
| Cash at bank and on hand | 3,297,113,271.47 | 4,068,082,163.75 |
| Financial assets held for trading | 182,610,198.06 | 102,214,286.66 |
| Derivative financial assets | ||
| Notes receivable | 7,252,050.59 | 15,951,819.79 |
| Accounts receivable | 8,870,599,478.20 | 8,009,174,174.20 |
| Financing receivables | 20,812,233.59 | 12,277,005.37 |
| Advances to suppliers | 12,302,281.24 | 33,005,000.34 |
| Other receivables | 7,549,205,233.13 | 3,927,667,930.14 |
| Including: Interest receivable | ||
| Dividends receivable |
| Inventories | 4,322,610,550.17 | 5,386,290,840.96 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | 70,184,291.67 | |
| Other current assets | 150,596,159.89 | 89,132,401.04 |
| Total current assets | 24,483,285,748.01 | 21,643,795,622.25 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 6,761,368,254.99 | 6,182,937,106.09 |
| Investments in other equity instruments | ||
| Other non-current financial assets | 187,386,179.39 | 81,254,792.77 |
| Investment properties | ||
| Fixed assets | 10,645,143,425.63 | 9,979,950,421.03 |
| Construction in progress | 1,126,851,927.87 | 1,083,563,418.24 |
| Bearer biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 280,327,936.71 | 70,843,695.85 |
| Intangible assets | 1,984,169,023.39 | 2,283,338,054.04 |
| Development costs | 241,947,146.57 | 105,363,784.94 |
| Goodwill | ||
| Long-term prepaid expenses | 20,436,053.45 | 6,206,772.89 |
| Deferred tax assets | 788,677,414.86 | 233,025,132.43 |
| Other non-current assets | 669,073,701.52 | 297,122,363.13 |
| Total non-current assets | 22,705,381,064.38 | 20,323,605,541.41 |
| Total assets | 47,188,666,812.39 | 41,967,401,163.66 |
| Current liabilities: | ||
| Short-term borrowings | 4,444,406,920.52 | 3,346,827,327.53 |
| Financial liabilities held for trading | 19,392,000.00 | 4,080,000.00 |
| Derivative financial liabilities | ||
| Notes payable | 4,648,250,141.38 | 2,348,480,930.59 |
| Accounts payable | 9,328,082,173.15 | 9,328,493,202.63 |
| Advances from customers | ||
| Contract liabilities | 1,005,783,290.09 | 340,559,741.33 |
| Employee benefits payable | 493,789,544.79 | 550,001,996.91 |
| Taxes payable | 40,037,090.10 | 37,673,083.32 |
| Other payables | 2,600,416,992.05 | 3,270,836,911.14 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities held for sale | ||
| Current portion of non-current liabilities | 1,006,575,141.61 | 412,234,240.19 |
| Other current liabilities | 1,487,433.65 | 9,670,427.10 |
| Total current liabilities | 23,588,220,727.34 | 19,648,857,860.74 |
| Non-current liabilities: | ||
| Long-term borrowings | 2,206,000,000.00 | 990,921,555.56 |
| Debentures payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | 267,086,388.96 | 52,713,002.49 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 184,692,979.14 | 186,139,483.46 |
| Deferred tax liabilities | 536,571,810.07 | 373,963,793.59 |
| Other non-current liabilities | ||
| Total non-current liabilities | 3,194,351,178.17 | 1,603,737,835.10 |
| Total liabilities | 26,782,571,905.51 | 21,252,595,695.84 |
| Shareholders’ equity: | ||
| Share capital | 3,420,403,200.00 | 3,416,321,036.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital surplus | 8,421,030,014.05 | 7,706,634,091.21 |
| Less: Treasury stock | 2,291,973,146.75 | 2,291,973,146.75 |
| Other comprehensive income | ||
| Specific reserve | ||
| Surplus reserve | 1,446,533,339.11 | 1,446,533,339.11 |
| Undistributed profits | 9,410,101,500.47 | 10,437,290,148.25 |
| Total shareholders’ equity | 20,406,094,906.88 | 20,714,805,467.82 |
| Total liabilities and shareholders’ equity | 47,188,666,812.39 | 41,967,401,163.66 |
3. Consolidated income statement
Unit: RMB
| Item | 2022 | 2021 |
| I. Revenue | 104,894,324,162.26 | 78,221,418,618.02 |
| Including: Operating revenue | 104,894,324,162.26 | 78,221,418,618.02 |
| Interest income | ||
| Earned premium | ||
| Total revenue from handling charges and commissions | ||
| II. Total Operating Cost | 101,718,859,767.81 | 74,123,260,660.02 |
| Including: cost of sales | 93,233,476,543.28 | 67,167,666,659.66 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrender value | ||
| Net payments for insurance claims |
| Net amount of withdrawal of insurance contract reserve | ||
| Expenditures of policy dividend | ||
| Amortized reinsurance expenditures | ||
| Taxes and surcharges | 266,930,500.29 | 221,891,985.50 |
| Selling expenses | 548,298,842.05 | 444,869,977.08 |
| General and administrative expenses | 2,294,505,645.46 | 1,951,657,773.32 |
| Research and development expenses | 5,226,525,154.99 | 4,170,074,282.10 |
| Financial expenses | 149,123,081.74 | 167,099,982.36 |
| Including: Interest expenses | 303,539,076.90 | 209,622,292.85 |
| Interest income | 189,356,256.02 | 91,492,632.72 |
| Add: Other income | 373,205,863.18 | 466,722,801.11 |
| Investment income ("-" for loss) | -36,243,969.62 | 469,239,884.79 |
| Including: Investment income from associates and joint ventures | 2,298,237.32 | 23,111,753.41 |
| Profits or losses arising from derecognised financial assets at amortised cost | -23,037,232.06 | -7,852,608.05 |
| Exchange gains ("-" for loss) | ||
| Net exposure hedging income ("-" for loss) | ||
| Gains on changes in fair value ("-" for loss) | -57,081,334.97 | -48,848,625.93 |
| Credit impairment losses ("-" for loss) | -14,220,595.92 | -29,693,677.67 |
| Asset impairment losses ("-" for loss) | -1,782,744,359.91 | -241,075,506.45 |
| Gains on disposal of assets ("-" for loss) | -47,898,939.73 | -31,179,825.99 |
| III. Operating Profit ("-" for loss) | 1,610,481,057.48 | 4,683,323,007.86 |
| Add: Non-operating income | 21,477,460.44 | 22,444,738.18 |
| Less: Non-operating expenses | 122,730,370.49 | 99,858,949.06 |
| IV. Total Profit (“-” for total losses) | 1,509,228,147.43 | 4,605,908,796.98 |
| Less: Income tax expenses | -281,790,237.36 | 298,842,312.64 |
| V. Net profit ("-" for net loss) | 1,791,018,384.79 | 4,307,066,484.34 |
| (I) Classification by continuity of operations | ||
| 1. Net profit from continuing operations (“-” for net loss) | 1,791,018,384.79 | 4,307,066,484.34 |
| 2. Net profit from discontinued operations (“-” for net loss) | ||
| (II) Classification by ownership of the equity | ||
| 1. Net profit attributable to the | 1,749,181,131.83 | 4,274,702,999.38 |
| shareholders of the Company | ||
| 2. Minority interests | 41,837,252.96 | 32,363,484.96 |
| VI. Other comprehensive income, net of tax | 225,089,038.47 | 21,620,809.04 |
| Other comprehensive income, net of tax attributable to the shareholders of the Company | 222,524,103.93 | 11,863,242.95 |
| (I) Other comprehensive income items which will not be reclassified subsequently to profit or loss | 2,195,604.99 | 39,220,079.94 |
| 1. Changes in remeasurement of defined benefit plan | ||
| 2. Shares of other comprehensive income of the investee accounted for using equity method that will not be subsequently reclassified to profit or loss | ||
| 3. Changes in fair value of investments in other equity instruments | 2,195,604.99 | 39,220,079.94 |
| 4. Changes in fair value attributable to change in the credit risk of financial liability designated at FVPL | ||
| 5. Others | ||
| (II) Other comprehensive income items which will be reclassified subsequently to profit or loss | 220,328,498.94 | -27,356,836.99 |
| 1. Shares of other comprehensive income of the investee accounted for using equity method that will be reclassified to profit or loss | -27,351,340.30 | 7,950,273.16 |
| 2. Changes in fair value of other debt investments | ||
| 3. Shares of financial assets reclassified to other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Effective portion of gains or losses on hedging instruments in a cash flow hedge | ||
| 6. Translation differences on translation of foreign currency financial statements | 247,679,839.24 | -35,307,110.15 |
| 7. Others | ||
| Net other comprehensive income, net of tax, attributable to minority shareholders | 2,564,934.54 | 9,757,566.09 |
| VII. Total comprehensive income | 2,016,107,423.26 | 4,328,687,293.38 |
| Attributable to the shareholders of the Company | 1,971,705,235.76 | 4,286,566,242.33 |
| Attributable to minority shareholders | 44,402,187.50 | 42,121,051.05 |
| VIII. Earnings per share | ||
| (I) Basic earnings per share | 0.52 | 1.29 |
| (II) Diluted earnings per share | 0.52 | 1.28 |
In case of consolidation of enterprises under common control during current period, the net profit before consolidation realized byconsolidated party is RMB 0.00. The net profit realized by the consolidated party in the previous period is RMB 0.00.
| Legal representative: Jiang Bin | Principal in charge of accounting: Li Yongzhi | Head of the accounting department: Li Yongzhi |
4. Parent Company Income Statement
Unit: RMB
| Item | 2022 | 2021 |
| I. Revenue | 42,977,392,050.91 | 38,570,677,177.70 |
| Less: Cost of sales | 37,992,035,039.68 | 33,462,769,638.76 |
| Taxes and surcharges | 166,468,610.77 | 154,866,730.44 |
| Selling expenses | 357,947,471.28 | 366,931,444.56 |
| General and administrative expenses | 1,883,669,477.96 | 1,596,480,325.17 |
| Research and development expenses | 2,842,072,542.12 | 2,398,742,531.34 |
| Financial expenses | -286,250,474.81 | 194,864,359.66 |
| Including: Interest expenses | 244,537,695.61 | 146,895,744.91 |
| Interest income | 119,926,860.39 | 46,415,186.23 |
| Add: Other income | 59,312,468.45 | 219,224,748.04 |
| Investment income ("-" for loss) | 656,680,494.07 | 197,716,898.27 |
| Including: Investment income from associates and joint ventures | -7,694,836.13 | |
| Profits or losses arising from derecognised financial assets at amortised cost (“-” for loss) | -2,297,194.72 | |
| Net exposure hedging income ("-" for loss) | ||
| Gains on changes in fair value ("-" for loss) | 81,215,298.02 | -12,391,097.59 |
| Credit impairment losses ("-" for loss) | 7,287,106.67 | -9,464,407.85 |
| Asset impairment losses ("-" for loss) | -1,496,859,325.46 | -60,378,317.10 |
| Gains on disposal of assets ("-" for loss) | -3,522,548.55 | -19,259,431.72 |
| II. Operating Profit ("-" for loss) | -674,437,122.89 | 711,470,539.82 |
| Add: Non-operating income | 10,715,077.09 | 14,343,882.35 |
| Less: Non-operating expenses | 88,097,731.93 | 81,884,486.81 |
| III. Total profit (“-” for total losses) | -751,819,777.73 | 643,929,935.36 |
| Less: Income tax expenses | -393,042,246.95 | -114,650,228.04 |
| IV. Net profit ("-" for net loss) | -358,777,530.78 | 758,580,163.40 |
| (I) Net profit from continuing | -358,777,530.78 | 758,580,163.40 |
| operations (“-” for net loss) | ||
| (II) Net profit from discontinued operations (“-” for net loss) | ||
| V. Other comprehensive income, net of tax | ||
| (I) Other comprehensive income items which will not be reclassified subsequently to profit or loss | ||
| 1. Changes in remeasurement of defined benefit plan | ||
| 2. Shares of other comprehensive income of the investee accounted for using equity method that will not be subsequently reclassified to profit or loss | ||
| 3. Changes in fair value of investments in other equity instruments | ||
| 4. Changes in fair value attributable to change in the credit risk of financial liability designated at FVPL | ||
| 5. Others | ||
| (II) Other comprehensive income items which will be reclassified subsequently to profit or loss | ||
| 1. Shares of other comprehensive income of the investee accounted for using equity method that will be reclassified to profit or loss | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Shares of financial assets reclassified to other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Effective portion of gains or losses on hedging instruments in a cash flow hedge | ||
| 6. Translation differences on translation of foreign currency financial statements | ||
| 7. Others | ||
| VI. Total comprehensive income | -358,777,530.78 | 758,580,163.40 |
| VII. Earnings per share | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated statement of cash flows
Unit: RMB
| Item | 2022 | 2021 |
| I. Cash flows from operating activities: | ||
| Cash received from sale of goods or rendering of services | 87,859,623,816.37 | 79,015,187,941.07 |
| Net increase in customer deposits and deposits from banks and other financial institutions | ||
| Net increase in borrowings from banks and other financial institutions | ||
| Net increase in borrowing funds from other financial institutions | ||
| Cash receipts from original insurance contract premium | ||
| Net cash received from reinsurance business | ||
| Net increase in deposits and investments from policy holders | ||
| Cash received from for interests, fees and commissions | ||
| Net increase in borrowing funds | ||
| Net increase in repurchase business funds | ||
| Net cash received from securities trading brokerage | ||
| Refund of taxes and surcharges | 3,177,120,800.53 | 2,491,572,718.66 |
| Cash received relating to other operating activities | 1,924,041,394.99 | 4,016,679,085.42 |
| Sub-total of cash inflow from operating activities | 92,960,786,011.89 | 85,523,439,745.15 |
| Cash paid for goods and services | 70,912,862,925.28 | 63,038,774,946.46 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits with central bank and other financial institutions | ||
| Payments of claims for original insurance contracts | ||
| Net increase in lending funds | ||
| Cash paid for interests, fees and commissions | ||
| Cash payments of policy dividend | ||
| Cash paid to and on behalf of employees | 9,048,023,602.48 | 7,719,283,934.60 |
| Payments of taxes and surcharges | 835,585,413.96 | 748,229,544.50 |
| Cash paid relating to other operating activities | 3,847,200,705.49 | 5,418,675,791.71 |
| Sub-total of cash outflow from operating activities | 84,643,672,647.21 | 76,924,964,217.27 |
| Net cash flow from operating activities | 8,317,113,364.68 | 8,598,475,527.88 |
| II. Cash flows from investing activities |
| Cash received from disposal of investments | 1,060,923,791.21 | 3,101,972,150.22 |
| Cash received from returns on investments | 9,371,384.39 | 36,359,530.84 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 49,533,749.98 | 121,860,250.62 |
| Net cash received from disposal of subsidiaries and other business units | 322,965.16 | 6,872,916.88 |
| Cash received relating to other investing activities | 21,653,530.71 | 9,258,951.92 |
| Sub-total of cash inflow from investing activities | 1,141,805,421.45 | 3,276,323,800.48 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 8,090,107,306.38 | 6,961,607,745.79 |
| Cash paid to acquire investments | 2,118,347,402.73 | 3,083,092,515.56 |
| Net increase in pledged loans | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid relating to other investing activities | 10,363,395.50 | |
| Sub-total of cash outflow from investing activities | 10,218,818,104.61 | 10,044,700,261.35 |
| Net cash flow from investing activities | -9,077,012,683.16 | -6,768,376,460.87 |
| III. Cash flows from financing activities | ||
| Cash received from capital contributions | 395,195,770.87 | 2,178,807,429.01 |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | 276,358,071.55 | 2,178,807,429.01 |
| Cash received from borrowings | 28,642,971,147.51 | 10,317,581,649.46 |
| Cash received relating to other financing activities | 2,683,899,988.02 | 1,507,365,421.50 |
| Sub-total of cash inflow from financing activities | 31,722,066,906.40 | 14,003,754,499.97 |
| Cash repayments of borrowings | 25,446,211,817.27 | 9,404,218,099.41 |
| Cash payments for distribution of dividends, profits, or cash payments for interest expenses | 953,234,131.28 | 674,578,631.48 |
| Including: Cash payments for dividends and profits to minority shareholders of the subsidiaries | 5,932,783.34 | |
| Cash payments relating to other financing activities | 3,314,992,485.44 | 3,537,780,408.80 |
| Sub-total of cash outflow from financing activities | 29,714,438,433.99 | 13,616,577,139.69 |
| Net cash flow from financing activities | 2,007,628,472.41 | 387,177,360.28 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 414,363,412.84 | 7,432,490.21 |
| V. Net Increase in cash and cash equivalents | 1,662,092,566.77 | 2,224,708,917.50 |
| Add: Cash and cash equivalents at beginning of year | 9,137,900,902.04 | 6,913,191,984.54 |
| VI. Cash and cash equivalents at end of year | 10,799,993,468.81 | 9,137,900,902.04 |
| Legal representative: Jiang Bin | Principal in charge of accounting: Li Yongzhi | Head of the accounting department: Li Yongzhi |
6. Parent company cash flow statement
Unit: RMB
| Item | 2022 | 2021 |
| I. Cash flows from operating activities: | ||
| Cash received from sale of goods or rendering of services | 44,433,843,690.52 | 41,440,959,868.63 |
| Refund of taxes and surcharges | 2,133,662,516.06 | 1,790,617,461.55 |
| Cash received relating to other operating activities | 444,026,016.74 | 413,354,244.31 |
| Sub-total of cash inflow from operating activities | 47,011,532,223.32 | 43,644,931,574.49 |
| Cash paid for goods and services | 35,135,811,819.24 | 33,515,828,921.22 |
| Cash paid to and on behalf of employees | 4,730,047,823.61 | 4,068,784,659.43 |
| Payments of taxes and surcharges | 204,340,880.43 | 194,091,540.85 |
| Cash paid relating to other operating activities | 2,185,115,476.07 | 1,609,432,568.10 |
| Sub-total of cash outflow from operating activities | 42,255,315,999.35 | 39,388,137,689.60 |
| Net cash flow from operating activities | 4,756,216,223.97 | 4,256,793,884.89 |
| II. Cash flows from investing activities | ||
| Cash received from disposal of investments | 292,167,856.22 | 236,295,118.62 |
| Cash received from returns on investments | 650,503,164.62 | 544,414.32 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 2,121,526,013.95 | 323,227,247.63 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received relating to other investing activities | 13,607,538,495.79 | 8,951,126,589.67 |
| Sub-total of cash inflow from investing activities | 16,671,735,530.58 | 9,511,193,370.24 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 5,264,058,543.36 | 4,448,253,564.40 |
| Cash paid to acquire investments | 1,586,419,475.27 | 418,652,038.10 |
| Net cash paid to acquire subsidiaries and |
| other business units | ||
| Cash paid relating to other investing activities | 17,199,579,824.51 | 8,806,986,219.18 |
| Sub-total of cash outflow from investing activities | 24,050,057,843.14 | 13,673,891,821.68 |
| Net cash flow from investing activities | -7,378,322,312.56 | -4,162,698,451.44 |
| III. Cash flows from financing activities | ||
| Cash received from capital contributions | 118,837,699.32 | |
| Cash received from borrowings | 24,900,350,751.32 | 9,085,440,334.00 |
| Cash received relating to other financing activities | 9,056,368,411.19 | 6,191,082,902.13 |
| Sub-total of cash inflow from financing activities | 34,075,556,861.83 | 15,276,523,236.13 |
| Cash repayments of borrowings | 22,139,255,620.15 | 7,202,245,451.93 |
| Cash payments for distribution of dividends, profits, or cash payments for interest expenses | 882,706,689.89 | 618,985,623.65 |
| Cash payments relating to other financing activities | 10,020,646,445.56 | 6,373,227,380.30 |
| Sub-total of cash outflow from financing activities | 33,042,608,755.60 | 14,194,458,455.88 |
| Net cash flow from financing activities | 1,032,948,106.23 | 1,082,064,780.25 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 59,283,372.51 | -5,853,969.14 |
| V. Net Increase in cash and cash equivalents | -1,529,874,609.85 | 1,170,306,244.56 |
| Add: Cash and cash equivalents at beginning of year | 3,480,290,203.30 | 2,309,983,958.74 |
| VI. Cash and cash equivalents at end of year | 1,950,415,593.45 | 3,480,290,203.30 |
7. Consolidated statement of changes in shareholders' equity
Amount of current period
Unit: RMB
| Item | 2022 | ||||||||||||||
| Shareholders' equity attributable to the Company | Minority interests | Total shareholders’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserve | General risk reserve | Undistributed profits | Other | Sub-total | |||||
| Preference shares | Perpetual bonds | Other | |||||||||||||
| I. Balance at December 31, 2021 | 3,416,321,036.00 | 9,478,106,194.30 | 2,291,973,146.75 | -100,146,769.57 | 1,446,536,121.51 | 6,081,200.00 | 15,372,823,358.48 | 27,327,747,993.97 | 603,640,714.30 | 27,931,388,708.27 | |||||
| Add: Changes in accounting policy | |||||||||||||||
| Corrections of errors in previous period | |||||||||||||||
| Business merger under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance | 3,416,321,036 | 9,478,106,194. | 2,291,973, | - | 1,446,536,121 | 6,081,200. | 15,372,823,35 | 27,327,747,9 | 603,640,714 | 27,931,388,70 | |||||
| at January 1, 2022 | .00 | 30 | 146.75 | 100,146,769.57 | .51 | 00 | 8.48 | 93.97 | .30 | 8.27 | |||||
| III. Changes in Current Period (“-” for decrease) | 4,082,164.00 | 802,553,056.73 | 222,524,103.93 | 1,134,974,880.86 | 2,164,134,205.52 | 162,302,040.39 | 2,326,436,245.91 | ||||||||
| (I) Total comprehensive income | 222,524,103.93 | 1,749,181,131.83 | 1,971,705,235.76 | 44,402,187.50 | 2,016,107,423.26 | ||||||||||
| (II) Capital invested and reduced by owners | 4,082,164.00 | 858,469,728.22 | 862,551,892.22 | 117,995,183.97 | 980,547,076.19 | ||||||||||
| 1. Common shares invested by owners | 4,082,164.00 | 209,719,886.13 | 213,802,050.13 | 179,264,458.74 | 393,066,508.87 | ||||||||||
| 2. Capital contributed from other equity instrument holders | |||||||||||||||
| 3. Amounts of share-based payments recognized in shareholders' equity | 648,749,842.09 | 648,749,842.09 | 10,626,166.45 | 659,376,008.54 | |||||||||||
| 4. Other | -71,895,441.22 | -71,895,441.22 |
| (III) Profit distribution | -668,411,117.00 | -668,411,117.00 | -668,411,117.00 | ||||||||||||
| 1. Appropriation of surplus reserve | |||||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Dividends to owners or shareholders | -668,411,117.00 | -668,411,117.00 | -668,411,117.00 | ||||||||||||
| 4. Other | |||||||||||||||
| (IV) Internal carry-over of shareholders' equity | |||||||||||||||
| 1. Capital surplus converted into capital (or share capital) | |||||||||||||||
| 2. Surplus reserve converted into capital |
| (or share capital) | |||||||||||||||
| 3. Surplus reserve for making up losses | |||||||||||||||
| 4. Carry-over undistributed profits from defined benefit plan changes | |||||||||||||||
| 5. Carry-over undistributed profits from other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Specific reserve | |||||||||||||||
| 1. Withdrawal in current period | 9,450,078.52 | 9,450,078.52 | 9,450,078.52 | ||||||||||||
| 2. Use in current period | -9,450,078.52 | -9,450,078.52 | -9,450,078.52 | ||||||||||||
| (VI) Other | -55,916,671.49 | 54,204,866.03 | -1,711,805.46 | -95,331.08 | -1,807,136.54 | ||||||||||
| IV. Balance at | 3,420,403,200.00 | 10,280,659,251.03 | 2,291,973,146.75 | 122,377,334.36 | 1,446,536,121.51 | 6,081,200.00 | 16,507,798,239.34 | 29,491,882,199.49 | 765,942,754.69 | 30,257,824,954.18 |
Amount in previous period
Unit: RMB
December31, 2022
Item
| Item | 2021 | ||||||||||||||
| Shareholders' equity attributable to the Company | Minority interests | Total shareholders’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserve | General risk reserve | Undistributed profits | Other | Sub-total | |||||
| Preference shares | Perpetual bonds | Other | |||||||||||||
| I. Balance at December 31, 2021 | 3,275,438,427.00 | 317,690,852.25 | 3,811,658,791.28 | 516,007,644.95 | -112,010,012.52 | 1,370,122,868.85 | 6,081,200.00 | 11,500,277,791.35 | 19,653,252,273.26 | 80,418,514.83 | 19,733,670,788.09 | ||||
| Add: Changes in accounting policy | |||||||||||||||
| Corrections of errors in previous period | |||||||||||||||
| Business combination involving enterprises under common control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at January 1, 2022 | 3,275,438,427.00 | 317,690,852.25 | 3,811,658,791.28 | 516,007,644.95 | -112,010,012.52 | 1,370,122,868.85 | 6,081,200.00 | 11,500,277,791.35 | 19,653,252,273.26 | 80,418,514.83 | 19,733,670,788.09 | ||||
| III. Changes in Current Period (“-” for decrease) | 140,882,609.00 | -317,690,852.25 | 5,666,447,403.02 | 1,775,965,501.80 | 11,863,242.95 | 76,413,252.66 | 3,872,545,567.13 | 7,674,495,720.71 | 523,222,199.47 | 8,197,717,920.18 | |||||
| (I) Total comprehensive income | 193,810,124.25 | 4,274,702,999.38 | 4,468,513,123.63 | 42,121,051.05 | 4,510,634,174.68 | ||||||||||
| (II) Capital invested and reduced by owners | 140,882,609.00 | -317,690,852.25 | 4,080,674,276.46 | 1,999,998,595.63 | 1,903,867,437.58 | 2,178,807,429.01 | 4,082,674,866.59 | ||||||||
| 1. Common shares invested by owners | 140,882,609.00 | -316,184,720.61 | 3,209,305,793.20 | 1,999,998,595.63 | 1,034,005,085.96 | 2,178,807,429.01 | 3,212,812,514.97 | ||||||||
| 2. Capital contributed from other equity instrument holders | |||||||||||||||
| 3. Amounts of share-based payments recognized in shareholders' equity | 871,368,483.26 | 871,368,483.26 | 871,368,483.26 | ||||||||||||
| 4. Other | - | - | -1,506,131.64 |
| 1,506,131.64 | 1,506,131.64 | ||||||||||||||
| (III) Profit distribution | 75,858,016.34 | -575,516,354.09 | -499,658,337.75 | -5,932,783.34 | -505,591,121.09 | ||||||||||
| 1. Appropriation of surplus reserve | 75,858,016.34 | -75,858,016.34 | |||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Dividends to owners or shareholders | -499,658,337.75 | -499,658,337.75 | -5,932,783.34 | -505,591,121.09 | |||||||||||
| 4. Other | |||||||||||||||
| (IV) Internal carry-over of shareholders' equity | 1,585,773,126.56 | -224,033,093.83 | -181,946,881.30 | 555,236.32 | 173,358,921.84 | 1,801,773,497.25 | -1,691,773,497.25 | 110,000,000.00 | |||||||
| 1. Capital surplus converted into capital (or share capital) | |||||||||||||||
| 2. Surplus |
| reserve converted into capital (or share capital) | |||||||||||||||
| 3. Surplus reserve for making up losses | |||||||||||||||
| 4. Carry-over undistributed profits from defined benefit plan changes | |||||||||||||||
| 5. Carry-over undistributed profits from other comprehensive income | -181,946,881.30 | 555,236.32 | 173,358,921.84 | -8,032,723.14 | 8,032,723.14 | ||||||||||
| 6. Other | 1,585,773,126.56 | -224,033,093.83 | 1,809,806,220.39 | -1,699,806,220.39 | 110,000,000.00 | ||||||||||
| (V) Specific reserves | |||||||||||||||
| 1. Withdrawal in current period | |||||||||||||||
| 2. Use in |
| current period | |||||||||||||||
| (VI) Other | |||||||||||||||
| IV. Balance at December 31, 2022 | 3,416,321,036.00 | 9,478,106,194.30 | 2,291,973,146.75 | -100,146,769.57 | 1,446,536,121.51 | 6,081,200.00 | 15,372,823,358.48 | 27,327,747,993.97 | 603,640,714.30 | 27,931,388,708.27 |
8. Parent company statement of changes in shareholders’ equity
Amount of current period
Unit: RMB
| Item | 2022 | |||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserve | Undistributed profits | Other | Total shareholders’ equity | |||
| Preference shares | Perpetual bonds | Other | ||||||||||
| I. Balance at December 31, 2021 | 3,416,321,036.00 | 7,706,634,091.21 | 2,291,973,146.75 | 1,446,533,339.11 | 10,437,290,148.25 | 20,714,805,467.82 | ||||||
| Add: Changes in accounting policy | ||||||||||||
| Corrections of errors in previous period | ||||||||||||
| Others | ||||||||||||
| II. Balance at January 1, | 3,416,321,036.00 | 7,706,634,091.21 | 2,291,973,146.75 | 1,446,533,339.11 | 10,437,290,148.25 | 20,714,805,467.82 | ||||||
| 2022 | ||||||||||||
| III. Changes in Current Period (“-” for decrease) | 4,082,164.00 | 714,395,922.84 | -1,027,188,647.78 | -308,710,560.94 | ||||||||
| (I) Total comprehensive income | -358,777,530.78 | -358,777,530.78 | ||||||||||
| (II) Capital invested and reduced by owners | 4,082,164.00 | 714,395,922.84 | 718,478,086.84 | |||||||||
| 1. Common shares invested by owners | 4,082,164.00 | 114,831,273.32 | 118,913,437.32 | |||||||||
| 2. Capital contributed from other equity instrument holders | ||||||||||||
| 3. Amounts of share-based payments recognized in shareholders' equity | 599,564,649.52 | 599,564,649.52 | ||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | -668,411,117.00 | -668,411,117.00 | ||||||||||
| 1. Appropriation of surplus reserve |
| 2. Dividends to owners or shareholders | -668,411,117.00 | -668,411,117.00 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Internal carry-over of shareholders' equity | ||||||||||||
| 1. Capital surplus converted into capital (or share capital) | ||||||||||||
| 2. Surplus reserve converted into capital (or share capital) | ||||||||||||
| 3. Surplus reserve for making up losses | ||||||||||||
| 4. Carry-over undistributed profits from defined benefit plan changes | ||||||||||||
| 5. Carry-over undistributed profits from other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Specific |
| reserves | ||||||||||||
| 1. Withdrawal in current period | 9,450,078.52 | 9,450,078.52 | ||||||||||
| 2. Use in current period | -9,450,078.52 | -9,450,078.52 | ||||||||||
| (VI) Other | ||||||||||||
| IV. Balance at December 31, 2022 | 3,420,403,200.00 | 8,421,030,014.05 | 2,291,973,146.75 | 1,446,533,339.11 | 9,410,101,500.47 | 20,406,094,906.88 |
Amount in previous period
Unit: RMB
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserve | Undistributed profits | Other | Total shareholders’ equity | |||
| Preference shares | Perpetual bonds | Other | ||||||||||
| I. Balance at December 31, 2021 | 3,275,438,427.00 | 317,690,852.25 | 3,815,383,616.46 | 516,007,644.95 | 1,370,120,086.45 | 10,249,229,212.11 | 18,511,854,549.32 | |||||
| Add: Changes in accounting policy | ||||||||||||
| Corrections of errors in previous period | ||||||||||||
| Others | ||||||||||||
| II. Balance at January 1, | 3,275,438,427.00 | 317,690,852.25 | 3,815,383,616.46 | 516,007,644.95 | 1,370,120,086.45 | 10,249,229,212.11 | 18,511,854,549.32 | |||||
| 2022 | ||||||||||||
| III. Changes in Current Period (“-” for decrease) | 140,882,609.00 | -317,690,852.25 | 3,891,250,474.75 | 1,775,965,501.80 | 76,413,252.66 | 188,060,936.14 | 2,202,950,918.50 | |||||
| (I) Total comprehensive income | 5,552,363.15 | 758,580,163.40 | 764,132,526.55 | |||||||||
| (II) Capital invested and reduced by owners | 140,882,609.00 | -317,690,852.25 | 4,005,283,568.58 | 1,999,998,595.63 | 1,828,476,729.70 | |||||||
| 1. Common shares invested by owners | 140,882,609.00 | -316,184,720.61 | 3,209,305,793.20 | 1,999,998,595.63 | 1,034,005,085.96 | |||||||
| 2. Capital contributed from other equity instrument holders | ||||||||||||
| 3. Amounts of share-based payments recognized in shareholders' equity | 795,977,775.38 | 795,977,775.38 | ||||||||||
| 4. Other | -1,506,131.64 | -1,506,131.64 | ||||||||||
| (III) Profit distribution | 75,858,016.34 | -575,516,354.09 | -499,658,337.75 | |||||||||
| 1. Appropriation of surplus reserve | 75,858,016.34 | -75,858,016.34 |
| 2. Dividends to owners or shareholders | -499,658,337.75 | -499,658,337.75 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Internal carry-over of shareholders' equity | -114,033,093.83 | -224,033,093.83 | -5,552,363.15 | 555,236.32 | 4,997,126.83 | 110,000,000.00 | ||||||
| 1. Capital surplus converted into capital (or share capital) | ||||||||||||
| 2. Surplus reserve converted into capital (or share capital) | ||||||||||||
| 3. Surplus reserve for making up losses | ||||||||||||
| 4. Carry-over undistributed profits from defined benefit plan changes | ||||||||||||
| 5. Carry-over undistributed profits from other comprehensive income | -5,552,363.15 | 555,236.32 | 4,997,126.83 | |||||||||
| 6. Other | -114,033,093.83 | -224,033,093.83 | 110,000,000.00 | |||||||||
| (V) Specific |
| reserves | ||||||||||||
| 1. Withdrawal in current period | ||||||||||||
| 2. Use in current period | ||||||||||||
| (VI) Other | ||||||||||||
| IV. Balance at December 31, 2022 | 3,416,321,036.00 | 7,706,634,091.21 | 2,291,973,146.75 | 1,446,533,339.11 | 10,437,290,148.25 | 20,714,805,467.82 |
III. Company Profile
Goertek Inc. (hereinafter referred to as ''the Company'' or ''Goertek'') was established on July 27, 2007, through an overall change ofWeiFang IEA Electro-Acoustic Co., Ltd. (hereinafter referred to as "IEA").IEA, the predecessor of the Company, was a joint venture established by law on June 25, 2001. In May 2007, the Company was changedto a domestic enterprise with the approval of the document of Wei Wai Jing Mao Wai Zi (2007) No. 172.Based on the resolution of the 2nd extraordinary shareholders' meeting of IEA in 2007, held on June 26, 2007, Weifang YitonggongElectronics Co., Ltd (the name of the Company was changed to "Goertek Group Co., Ltd." in October 2016, hereinafter referred to as"Goertek group") transferred its 29.40 million shares in IEA to 17 natural persons including Jiang Bin and Jiang Long, LangfangDevelopment Zone Yongzhen Electronic Technology Co., Ltd. (hereinafter referred to as "Yongzheng Electronic") and Beijing YirunVenture Capital Investment Co., Ltd (hereinafter referred to as "Yirun VCI").On July 18, 2007, Goertek Group, Yongzhen Electronic, Yirun VCI and the 17 persons including Jiang Bin and Jiang Long jointlyentered into an initiator agreement, changing IEA as a whole to Goertek Acoustic Inc. in the form of initiation, in which the net assetsof IEA, audited on June 30, 2007, were taken as the capital contribution upon stock discount at a ratio of approximately 1:0.8As approved by the document of China Securities Regulatory Commission [2008] No. 613, the principal undertaker CITIC SecuritiesCo., Ltd. issued 30 million common shares (Class A shares) through offline inquiry and placement in combination with onlinesubscription, pricing, and issue, at the price of RMB 18.78 per share. The raised funds mentioned above were verified by BandungCertified Public Accountants Co., Ltd. which issued the capital verification report (Wan Kuai Ye Zi [2008] No. 19). The stocks of theCompany were listed and traded at Shenzhen Stock Exchange on May 22, 2008. The Company changed its registered capital to RMB120 million and completed the industrial and commercial change registration on July 22, 2008.As reviewed and approved at the annual general meeting of shareholders of the Company of 2008, held on April 17, 2009, the totalshare capital of the Company, namely 120 million shares as of December 31, 2008, was taken as the basis to convert capital surplus toshare capital. 10 bonus shares for every 10 shares were converted to all shareholders, with a total of 120 million shares converted. Thus,the total share capital of the Company was changed to 240 million shares. The above change in the registered capital has been verifiedby Bandung Asia Certified Public Accountants Co., Ltd. which has issued the capital verification report (Wan Ya Kuai Ye Zi (2009)No. 2427), and the industrial and commercial change registration was completed on July 20, 2009.As reviewed and approved at the annual general meeting of shareholders of the Company of 2009, held on February 26, 2010, the totalshare capital of the Company, namely 240 million shares as of December 31, 2009, was taken as the basis to convert capital surplus toshare capital. 5 bonus shares for every 10 shares were converted to all shareholders, and a total of 120 million bonus shares wereconverted. Thus, the total share capital of the Company was changed to 360 million shares. The above change in the registered capitalhas been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification report (Hao HuaYan Zi [2020] NO. 20). The industrial and commercial change registration was completed on March 30, 2010.As approved by the China Securities Regulatory Commission in its Reply on Approving Non-public Issuing of Stocks by GoertekAcoustic Inc. (Zheng Jian Xu Ke [2010] No. 1255), on September 29, 2010, the Company had the principal underwriter CITICSecurities Co., Ltd. to issue 15.791275 million (Class A shares) to 5 specific objects through private issuing at the price of RMB 33.01per share. The net amount of actual raised funds was RMB 506.21998775 million. The raised funds above have been verified by CroweHorwath Certified Public Accountants Co., Ltd. which has issued the capital verification report (Hao Hua Yan Zi [2010] No. 90. TheCompany changed its registered capital to RMB 375.791275 million and completed the industrial and commercial change registrationon December 13, 2010.As reviewed and approved at the annual general meeting of shareholders of the Company of 2010, held on May 25, 2011, the totalshare capital of the Company, namely 375.791275 million shares as of December 31, 2010, was taken as the basis to convert capitalsurplus to share capital. 10 bonus shares for every 10 shares were converted to all shareholders, and a total of 375.791275 millionbonus shares were converted. Upon such conversion, the total share capital of the Company was changed to 751.582550 million shares.The above change in registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issuedthe capital verification report (Guo Hao Yan Zi [2011] No. 49), and the industrial and commercial change registration was completedon June 24, 2011.As approved by the China Securities Regulatory Commission in its Reply on Approving Non-public Issuing of Stocks by GoertekAcoustic Inc. (Zheng Jian Xu Ke [2012] No. 108), GF Securities Co., Ltd. issued 96.434183 million shares (Class A shares) in RMBto 10 specific objects through private issuing at the price of RMB 24.69 per share, and the net amount of the actually raised funds wasRMB 2,320.77885875 million. The raised funds mentioned above have been verified by Crowe Horwath Certified Public AccountsCo., Ltd. (special general partnership) which has issued the capital verification report (Guo Hao Yan Zi [2012] No. 408A14). The
Company changed its registered capital to RMB 848,016,733 and completed the industrial and commercial change registration on May7, 2012.As reviewed and approved at the Company's general meeting of shareholders of 2012 held on May 9, 2013, the Company's total sharecapital of 848,016,733 shares as of December 31, 2012, was taken as the basis for distributing cash dividends of RMB 1.5 (tax inclusive)for every 10 shares to all the shareholders, with cash dividends of RMB 127,202,509.95 in total. The Company also converted capitalsurplus to share capital, and 8 bonus shares for every 10 shares were converted to all shareholders, with a total of 678,413,386 sharesconverted. Upon such conversion, the total share capital of the Company was changed to 1,526,430,119 shares. The above change inthe registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. (special general partnership) whichhas issued the capital verification report (Guo Hao Yan Zi [2013] No. 408A0001). The industrial and commercial change registrationwas completed on June 19, 2013.On June 2, 2016, the name of Goertek Acoustic Inc. was changed to Goertek Inc. As the holder of the convertible bonds of the Companyrequested conversion of shares, the registered capital of the Company was changed to RMB 1,526,581,348. The scope of business waschanged to development, manufacturing and sales of: Acoustic, optical and wireless communication technologies and related products,robots and automation equipment, intelligent electromechanical and information products, precision molds for electronic products,precision hardware, semiconductor products and MEMS products, consumer electronics, LED package and relevant applicationproducts; Development and sales of the software related to the above products; Services related to the above technologies and products;Import and export of goods and technologies (excluding radio transmission and satellite receiving equipment, except for the itemsprohibited by the national laws and regulations). (For the items requiring approval by law, business activities may only be conductedin respect thereof upon approval of relevant department)As reviewed and approved at the Company's annual general meeting of shareholders of 2016, held on April 14, 2017, the Company'stotal share capital of 1,538,642,707 shares as of April 27, 2017, on which the profit distribution equity of the Company was registered,was taken as the basis for the distribution of cash dividends RMB 1.5 (tax inclusive) for every 10 shares to all the shareholders, with atotal of RMB 230,796,406.05 distributed. 10 shares per every 10 shares were converted to all shareholders as well.According to the Proposal on Redemption of ''Goertek Convertible Bonds'' reviewed and approved at the 8th meeting of the 4th Boardof Directors held by the Company on May 23, 2017, it was resolved to exercise the conditional redemption right of ''Goertek ConvertibleBonds'' to redeem all the unconverted ''Goertek Convertible Bonds'' at the price of the par value of the bonds plus the accrued interestfor current period. ''Goertek Convertible Bonds'' was no longer traded and converted from June 30, 2017. After the above change, theCompany changed its registered capital to RMB 3,245,103,948, and completed the industrial and commercial change registration onNovember 3, 2017.According to the Proposal on Early Redemption of ''Goertek Convertible Bonds No. 2'' reviewed and approved at the 13th meeting ofthe 5th Board of Directors and the 11th meeting of the 5th Board of Supervisors held by the Company on January 15, 2021, it wasresolved to exercise the conditional redemption right of ''Goertek Convertible Bonds No. 2'' to redeem all the ''Goertek ConvertibleBonds No. 2'', at the price of the par value of the bonds plus the accrued interest for the current period. As of March 3, 2021, ''GoertekConvertible Bonds No. 2'' was no longer traded and converted. After the above change, the Company changed its registered capital toRMB 3,416,321,036, and completed the industrial and commercial change registration on June 22, 2021.The Company's initial grant of certain stock options under the 2021 Stock Option Incentive Plan entered its first exercise period onJune 24, 2022. Due to employees' exercise of the right, the Company issued 4,082,164 Class A Shares to the incentive targets. Theshare capital of the Company has been changed to RMB 3,420,403,200.The registered address of the Company headquarters: 268 Dongfang Road, Weifang Hi-Tech Industrial Development Zone.The Company and its subsidiaries (collectively, ''the Group'') are mainly engaged in the business of electronic components. The mainbusiness of the Group is categorized into the industry of the manufacturing of computer, communication, and other electronicequipment. The Company's main products include acoustics, optics, microelectronics, structural components and other precisioncomponents, as well as smart hardware products such as TWS smart earphones, virtual reality (VR)/augmented reality (AR) products,smart wearable devices, gaming console and accessories, and smart home products.These financial statements have been approved by the Board of directors of the Company on April 17, 2023.As of December 31, 2022, the Group has included a total of 57 subsidiaries into its scope of consolidation, and for details, please referto Note IX “Equity in Other Entities”. In terms of consolidated scope, the Group in the current period gained 8 subsidiaries and disposedof 2 subsidiaries compared with the previous year. For details, please refer to Note VIII "Changes in the Scope of Consolidation".
IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Group has prepared the financial statements on a going concern basis, based on the actual transactions and matters in accordancewith The Accounting Standards for Business Enterprises - Basic Standards (issued by Order No. 33 of the Ministry of Finance andamended by Order No. 76 of the Ministry of Finance) issued by the Ministry of Finance, 42 specific accounting standards, applicationguidelines of accounting standards for business enterprises, explanations on the accounting standards for business enterprises and otherrelated regulations (hereinafter collectively referred to as "Accounting Standards for Business Enterprises") issued and amended on orafter 15 February, 2006, and Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 -General Provisions on Financial Reports (2014 Revision) issued by CSRC.According to relevant provisions in the Accounting Standards for Business Enterprises, the accounting calculation of the Group wason the accrual basis. The value of non-current assets held for sale shall be lesser of non-current assets held for sale less the sales costat fair value, or the original book value at the time when the hold-for-sale conditions were met. In case of asset impairment, theappropriate impairment provision shall be accrued according to relevant regulations.
2. Continue as a going concern
The Company evaluated its ability to continue as a going concern for 12 months after the end of the current reporting period, withoutmatters or circumstances causing significant doubt over the ability to continue as a going concern. Therefore, these financial statementswere prepared on a going concern basis.
V. Significant Accounting Policies and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
The Group has formulated several specific accounting policies and accounting estimates in respect of the revenue recognition, researchand development costs and other transactions and matters, according to the provisions of relevant Accounting Standards for BusinessEnterprises on the basis of the actual production and operation characteristics. For details, please refer to the descriptions in “32.Revenue” and “24(2). Accounting policy for internal research and development costs” of Note V. For explanation on the majoraccounting judgments and estimates made by the management, please refer to “37. Other important accounting policies and accountingpolicies and estimates” of Note V.
1. Statement of compliance with Accounting Standards for Business EnterprisesThe financial statements have been prepared by the Group in compliance with the requirements of the Accounting Standards forBusiness Enterprises, and give a true and complete view of the financial status of the Company and the Group as at December 31, 2022,as well as the business performance, and cash flows and other relevant information for the year 2022. In addition, the financialstatements of the Company and the Group comply in all material aspects with the requirements concerning disclosure of the financialstatements and the notes specified in Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 - General Provisions on Financial Reports (2014 Revision) by CSRC.
2. Accounting period
The accounting period of the Group is divided by annual accounting period and interim accounting period. Interim accounting periodmeans a reporting period that is shorter than a complete accounting year. The Company adopts the calendar year as its accounting year,namely January 1 to December 31 of each year.
3. Business cycle
The normal business cycle means the period from the Group’s purchase of the assets for processing to realization of cash or cashequivalents. The Group takes 12 months as a business cycle and adopts the business cycle as liquidity classification standard for assetsand liabilities.
4. Functional currency
RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries are operated, and theCompany and its domestic subsidiaries take RMB as the functional currency. Goertek (HongKong) Co.,Limited, Goertek Technology(Hong Kong) Co.,Limited, Goertek Microelectronics (Hong Kong) Co., Ltd., OPTIMAS CAPITAL PARTNERS FUND LP andGoertek Microelectronics Holdings Co., Ltd. take USD as their functional currency, and all other overseas subsidiaries of the Companytake the lawful currency of the country or region where their registered addresses are located as their functional currency. The currencyadopted by the Group in preparing these financial statements is RMB.
5. Accounting treatments for business consolidation of enterprises under and not under common controlBusiness consolidation means the transaction or matter in which two or more separate enterprises are consolidated into one reportingentity. Business consolidation is divided into business consolidation of enterprises under common control and business consolidationof enterprises not under common control.
(1) Business consolidation of enterprises under common control
Business consolidation of enterprises under common control is the consolidation in which enterprises consolidated are controlled bythe same party or parties before and after the consolidation, and such control is not temporary. In the business consolidation ofenterprises under common control, the party which acquires the control of other enterprises in the business consolidation is theconsolidating party and the other enterprises in the business consolidation are the consolidated parties. Business consolidation date isthe date on which the consolidating party actually acquires the control of the consolidated parties.The assets and liabilities acquired by the consolidating party are measured on the basis of book value of consolidated parties on businessconsolidation date. The difference between the book value of the net assets acquired by the consolidating party and the book value ofthe consideration paid for the consolidation (or total par value of the shares issued) is adjusted to capital surplus (share capitalpremiums). Adjustments shall be made to undistributed profits in the event that the capital surplus (share capital premiums) are notsufficient for write-down.Any direct costs incurred by the consolidating party as a result of the business consolidation are recognized in the profit or loss forcurrent period when incurred.
(2) Business consolidation of enterprises not under common control
Business consolidation of enterprises not under common control is the consolidation in which the enterprises consolidated are notcontrolled by the same party or parties before and after the business consolidation. In the business consolidation of enterprises notunder common control, the party which acquires the control of other enterprises in the business consolidation on the acquisition dateis the consolidating party and the other enterprises in the business consolidation are the acquired parties. Acquisition date is the dateon which the acquiring party actually acquires the control of the acquired parties.In the business consolidation of enterprises not under common control, the cost of consolidation includes the fair value of assets paid,liabilities incurred or assumed and equity securities issued by the acquiring party in exchange for the control of the acquired parties onthe acquisition date, the audit, legal service, assessment, consulting and other intermediate fees incurred for business consolidation ofenterprises, and other management fees, which are recognized in the profit or loss for the current period when incurred. The costs ofthe acquiring party for issuing equity or debt securities as part of the business consideration for the business consolidation are includedin the initially recognized amount of these equity or debt securities. The contingent business consideration shall be included in theconsolidation cost at its fair value on the acquisition date, and the goodwill shall be adjusted and combined accordingly if the contingentconsideration needs to be adjusted when new or further evidences arise in connection with the circumstances existing on the acquisitiondate within 12 months after the acquisition date. The acquisition cost incurred by the acquiring party and the identifiable net assetsacquired in the business consolidation shall be measured at the fair value on the acquisition date. If the consolidation cost is higherthan the fair value of the identifiable net assets acquired from the acquired parties on the acquisition date, the difference thereof shallbe recognized as the goodwill. If the consolidation cost is lower than the fair value of the identifiable net assets acquired from theacquired parties in the business consolidation, the fair value of the identifiable assets, liabilities and contingent liabilities as well as themeasurement of the consolidation cost shall be first reviewed. If upon review, the consolidation cost is still lower than the fair value ofthe identifiable net assets acquired from the acquired parties in the business consolidation, such difference shall be recognized in theprofit or loss for current period.If the deductible temporary difference acquired by the acquiring party from the acquired parties is not recognized for failure to meetthe conditions for recognition of the deferred tax assets on the acquisition date, and if new or further information is obtained within 12months after the acquisition date, showing that relevant circumstances on the acquisition date have already existed and it is expectedthat the economic benefits brought about by the deductible temporary difference of the acquiring party on the acquisition date may be
realized, relevant deferred tax assets shall be recognized and the goodwill shall be reduced. If the goodwill is insufficient for write-down, the difference will be recognized in the profit or loss for current period. In addition to the above condition, the deferred taxassets recognized in connection with the consolidation of enterprises shall be recognized in the profit or loss for current period.If the business consolidation of enterprises not under common control is realized step by step through multiple transactions, whethersuch transactions fall within a “package deal” shall be judged according to the standards for judgment of “package deal” in the Noticeby the Ministry of Finance of Issuing the Interpretation No. 5 of the Accounting Standards for Business Enterprises (Finance andAccounting [2012] No. 19) and Article 51 of the Accounting Standards for Business Enterprises No. 33 - Consolidated FinancialStatements (see 6(2) of Note V). If they fall within "package deal”, see the description in the previous paragraphs of this part and “18.Long-term equity investments” of Note V for accounting treatment. If they do not fall within “package deal”, relevant accountingtreatment shall be distinguished for individual financial statements and consolidated financial statements:
In the individual financial statements, the sum of the book value of the equity investment of the acquired parties held before theacquisition date and the increased investment cost on the acquisition date shall be taken as the initial investment cost of such investment.If other comprehensive income is involved in the equity of the acquired parties held before the acquisition date, the accounting treatmentof other comprehensive incomes while disposing such investment, shall be conducted on the same basis as the direct disposal of relatedassets or liabilities by the acquired parties.In the consolidated financial statements, the equity of the acquired parties held before the acquisition date shall be remeasured at thefair value of such equity on the acquisition date, and the difference between the fair value and its book value shall be recognized ininvestment income in current period. If other comprehensive income is involved in the equity of the acquired parties held before theacquisition date, the accounting treatment of other comprehensive incomes related, shall be conducted on the same basis as the directdisposal of related assets or liabilities by the acquired parties.
6. Method for Preparing the Consolidated Financial Statement
(1) Principles for determination of the scope of consolidated financial statements
The scope of the consolidation of consolidated financial statements shall be determined on the basis of control. Control means that theGroup enjoys variable returns through its power in the invested parties and its participation in relevant activities of the invested parties,and is able to influence the amount of such returns by applying its power in the invested parties. The Company and all its subsidiariesare included in the scope of consolidation. Subsidiary means the entity controlled by the Group.The Group shall launch re-assessment, if the changes in relevant facts and circumstances that lead to changes in relevant elements ofthe above control definition occur.
(2) Method for preparing the consolidated financial statements
The Company shall include the subsidiaries into the scope of consolidation from the date when it obtains the net assets and actualcontrol over the production and operation decisions of the subsidiaries. It shall cease to do so as of the date when the actual control islost. For the disposal subsidiaries, the business performance and cash flows prior to the disposal date have been appropriately includedin the consolidated income statement and consolidated statement of cash flows. The opening balance of the consolidated balance sheetsshall not be adjusted for the subsidiaries disposed in current period. For the subsidiaries added through the consolidation of enterprisesnot under common control, the business performance and cash flows have been appropriately included in the consolidated incomestatement and consolidated cash flow statement after acquisition date. The opening balance and comparative figures of consolidatedfinancial statements shall not be adjusted. For the subsidiaries added during consolidation of enterprises under common control andthe subsidiaries under absorption consolidation, the business performance and cash flows, from the beginning of current period toconsolidation date, have been appropriately included in consolidated income statement and consolidated cash flow statement. Thecomparison figures in the consolidated financial statements shall be adjusted at the same time.In preparing the consolidated financial statements, if the accounting policies or accounting periods of the subsidiaries are different fromthose of the Company, the financial statements of the subsidiaries shall be adjusted based on the accounting policies and accountingperiods of the Company. The individual financial statements of the subsidiaries acquired from consolidation of enterprises not undercommon control are adjusted based on the fair value of the identifiable net assets on the acquisition date.All the material account balances, transactions and unrealized profits within the Group shall be offset during preparation of theconsolidated financial statements.The shareholders' equity and current net profits or losses of the subsidiaries which are not owned by the Company shall be separatelylisted under the shareholders' equity and net profit in the consolidated financial statements as minority interest and minority interests.These current profits or losses of the subsidiaries which are attributable to the minority interest shall be presented as “minority interests”under the net profit of the consolidated financial statements. If the losses of the subsidiaries attributed to the minority shareholders are
more than the shareholders’ equity owned by the minority shareholders in such subsidiaries at the beginning of the period, the minorityinterests shall be offset.If the control of the previous subsidiaries is lost due to disposal of some equity investments or for any other reasons, the remainingequity shall be re-measured at fair value on the date when control is lost. The difference between the sum of consideration receivedfrom disposal of equity and the fair value of the remaining equity, and the Company’s share of the previous subsidiaries’ net assetscalculated at the previous shareholding proportion from the acquisition date, shall be recognized in investment income in the periodwhen control is lost. Other comprehensive income related to the equity investment of the previous subsidiaries shall be conducted onthe same basis as the direct disposal of related assets or liabilities by the acquired parties when the control is lost (Except for the changecaused by the re-measurement of net liabilities or net assets of the defined benefit plan in the previous subsidiary, the remaining partshall be converted into investment income for current period). Thereafter, such remaining equity shall be subject to subsequentmeasurement according to the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments or AccountingStandards for Business Enterprises No. 22 - Confirmation and Measurement of Financial Instruments and other relevant regulations.For details, please refer to “18. Long-term equity investments” of Note V or “9. Financial instruments” of Note V.If the Group disposes of the equity investment of the subsidiaries step by step through multiple transactions until it loses the controlthereof, it is necessary to determine whether such transactions fall within "a package deal". The multiple transactions shall be taken as"package deal" for accounting treatment, if the terms, conditions and economic impacts of the transactions undertaken to dispose theequity investment of the subsidiaries meet one or more of the following conditions: ① these transactions are entered into at the sametime or with their impacts on each other considered; ② a complete business result may be achieved only when these transactions whentaken as a whole; ③ one transaction depends on at least one of the other transactions; ④ one transaction is not economical on its own,but it is economical when considered together with other transactions. If they do not fall within "package deal", each of them shall besubject to accounting treatment according to the principles applicable to ''Partial disposal of the long-term equity investments in thesubsidiaries without losing control'' (for details, please refer to (2) ④ of 18 of Note V) and ''Loss of control of the previous subsidiariesdue to disposal of some equity investments or for any other reasons'', as appropriate. If the transactions taken to dispose of the equityinvestment in the subsidiaries until loss of control are recognized as “package deal”, these transactions shall be subject to accountingtreatment as one transaction in which the subsidiaries are disposed and the control is lost. However, the difference between the pricefor each disposal before the control is lost and share of such subsidiaries’ net assets as a result of disposal of investment, shall berecognized in other comprehensive income in the consolidated financial statements, and be included in profit or loss for the periodwhen the control is lost.
7. Criteria for determining cash and cash equivalents
Cash and cash equivalents of the Group include cash on hand, deposits available at any time for payment, and short-term (generallydue within three months from the date of purchase) and highly liquid investments which are readily convertible into known amountsof cash and subject to an insignificant risk of changes in value.
8. Foreign currency business and foreign currency statement translation
(1) Conversion method of foreign currency transaction
A foreign currency transaction of the Group is translated into the functional currency at initial recognition, using the spot exchangerate prevailing at the date of the transaction (it means, in most cases, the central parity of the foreign exchange rate announced by thePeople's Bank of China on that day; the same hereinafter). However, a foreign currency exchange transaction or other foreign currencyexchange involved transaction of the Group is translated into the functional currency using the actual exchange rate.
(2) Translation method of monetary items denominated in foreign currencies and non-monetary items denominated in foreigncurrenciesThe foreign currency monetary items on the balance sheet date are translated at the spot exchange rate on the balance sheet date, andthe exchange differences arising therefrom are included in the current profits and losses, except for the exchange difference of theprincipal and interest of foreign currency special loans related to the acquisition and construction of assets eligible for capitalization.Non-monetary items denominated in foreign currency that are measured at historical cost shall still be valued in the functional currencyand converted at the spot exchange rate as of the transaction date. Non-monetary items denominated in foreign currency that aremeasured at fair value are converted by using the exchange rate at the date when fair value is determined and the difference betweenthe converted functional currency amount and the prior amount in functional currency is recorded as profit or loss arising from a changein fair value (including exchange rate change) for the current period or other comprehensive income.
(3) Translation method of foreign currency financial statements
The foreign currency financial statements of overseas operations shall be converted into Chinese currency statements in accordancewith the following methods: The assets and liabilities items in the balance sheet are translated at the spot exchange rate on the balancesheet date; except for "undistributed profits", other items of shareholder's equity are converted at the spot exchange rate at the time ofoccurrence. Revenues and expenses in the profit statement are translated using the average exchange rates prevailing in the period ofthe transactions. Undistributed profits in the beginning of the year are the undistributed profits at the end of the prior year as translated;undistributed profits at the end of the period are calculated and presented according to the translated profit distributions; exchangedifferences from translation between translated assets and translated liabilities and equities are recognized in other comprehensiveincome as exchange differences from translation. When the Group disposes of, and loses the control over, an overseas operation,exchange differences from translation which are presented in “equity” of the balance sheet and related to the overseas operation are,all or based on the disposal proportion, transferred to the profit or loss of the period of disposal.Cash flows denominated in foreign currencies and cash flows of overseas subsidiaries are translated using the average exchange ratesprevailing in the period of the cash flows. Any impact of exchange rate changes on cash is presented as a separate adjusting item in thecash flow statement.The amount in the beginning of the year and the actual amount of the prior year are presented as translated amounts based on the prioryear’s financial statements.When all the equities of the Group in an overseas operation are disposed, or the control over an overseas operation is lost for a disposalof partial equity investments or any other reason, exchange differences which are presented in “shareholder’s equity/owner’s equity”of the balance sheet, related to the overseas operation and attributable to the parent company are all transferred to the profit or loss ofthe period of disposal.If the proportion of equities in an overseas operation declines (but the control over that overseas operation is not lost) for a disposal ofpartial equity investments or any other reason, exchange differences which are related to that partial disposal are attributed to minorityinterest and not transferred to the profit or loss of the period of disposal. When the disposal of overseas operation involves a part of theequities in an associate or joint venture, exchange differences from translation which are related to the overseas operation are, basedon the disposal proportion, transferred to the profit or loss of the period of disposal.For any monetary item denominated in a foreign currency which is substantially net investment in an overseas operation, in theconsolidated financial statements, exchange differences from the exchange rate changes are recognized in other comprehensive incomeas “exchange differences from translation”, and when the overseas operation is disposed, are transferred to the profit or loss of theperiod of disposal.
9. Financial instruments
A financial asset or financial liability shall be recognized when the Group becomes a party to a financial instrument contract.
(1) Classification, recognition and measurement of financial assets
Pursuant to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, financialassets are classified by the Group into financial assets at amortized cost, financial assets at fair value through other comprehensiveincome, and financial assets at fair value through profit and loss.Financial assets, when initially recognized, shall be measured at fair value. For the financial assets measured at fair value through profitand loss, the related transaction costs shall be included directly into current profits and losses. For the financial assets or financialliabilities of other categories, the related transaction costs shall be included in the initially recognized amount. For the accountsreceivable or notes receivable arising from the sale of products or the provision of labor services, which do not include or considermajor financing components, the amount of consideration that the Group is expected to be entitled to is taken as the initially recognizedamount.
① Financial assets measured at amortized cost
The Group’s business model for managing financial assets is aimed to collect contractual cash flow, and the contractual cash flowcharacteristics of such financial assets are consistent with the basic lending arrangement, i.e., the cash flow generated on a specific dateis only the payment of principal and interest based on the amount of outstanding principal. For such financial assets, the Group shallperform subsequent measurements at the amortized cost by effective interest method. The gains or losses arising from amortization orimpairment shall be included in current profits and losses.
② Financial assets at fair value through other comprehensive income
The Group's business model for managing this type of financial assets aims both to collect the contractual cash flow and to sell it, andthe characteristics of contractual cash flow of this type of financial assets shall be consistent with the basic lending arrangement. TheGroup measures these financial assets at fair value and the changes thereof shall be included in other comprehensive income, but the
impairment losses or gains, exchange gains and losses and interest income calculated by the effective interest method shall be includedin current profits and losses.Apart from that, the Group shall designate some investments in non-trading equity instruments as financial assets measured at fairvalue and the changes thereof shall be included in other comprehensive income. The Group will include the relevant dividend incomeof this type of financial assets into current profits and losses, and the changes in fair value into other comprehensive income. Upon thetermination of recognition of financial assets, the accumulated gains or losses previously included in other comprehensive income shallbe transferred out of other comprehensive income and transferred to the undistributed profits, other than being included in currentprofits and losses.
③ Financial assets at fair value through profit or loss
The financial assets except those classified into financial assets measured at amortized cost and financial assets at fair value throughother comprehensive income as mentioned above, are classified by the Group into those measured at fair value through profit and loss.In addition, at initial recognition, part of the financial assets can be recognized by the Group as financial assets measured at fair valuethrough profit and loss, to eliminate or significantly reduce accounting mismatch. The financial assets are subsequently measured bythe Group at fair value, and changes in fair value are included in current profits and losses.
(2) Classification, recognition and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities at fair value through profit and loss, and other financialliabilities. For the financial liabilities at fair value through profit and loss, the related transaction costs shall be included directly incurrent profits and losses. For other financial liabilities, the related transaction costs shall be included in the initially recognized amount.
① Financial liabilities at fair value through profit and loss
The financial liabilities at fair value through profit and loss shall include financial liabilities held for trading (including derivativesfalling into the category of financial liabilities) and financial liabilities designated as those measured at fair value through profit or lossat initial recognition.Financial liabilities held for trading (including derivatives falling into the category of financial liabilities) shall be subsequentlymeasured at fair value. Except for hedging accounting, changes in fair value shall be included in current profits and losses.The amount of change in the fair value of a financial liability which is designated as those measured at fair value through profit or lossdue to change in the Group’s own credit risks shall be included in other comprehensive income. Upon the termination of recognitionof such liability, the accumulative change in its fair value caused by the change of its own credit risk included in other comprehensiveincome is transferred to undistributed profits. The changes in its fair value shall be recorded in current gains and losses. If the treatmentof the impact on the credit risk change of the financial liabilities in the above manner will cause or expand the accounting mismatch inthe profit and loss, the Group will recognize all the gains or losses (including the changes in the Group’s own credit risks) of thefinancial liabilities into current profits and losses.
② Other financial liabilities
Other financial liabilities except those caused by the transfer of financial assets that do not conform to the conditions for derecognitionor continue to relate to the transferred financial assets and financial guarantee contracts shall be classified as financial liabilitiesmeasured at amortized cost, which shall be subsequently measured at amortized cost, and the gains or losses arising from derecognitionor amortization shall be included in current profits and losses.
(3) Principle of recognition and measurement method of financial asset transfer
The financial asset shall be de-recognized if: ① The contractual right to receive cash flows of the financial asset is terminated; ②Thefinancial asset has been transferred and almost all risks and rewards in the ownership of the financial asset have been transferred to thetransferee; or ③ The financial asset has been transferred and the enterprise has neither transferred nor retained almost all risks andrewards in the ownership of the financial asset, but has waived its control over the financial asset.If the enterprise does not transfer or retain substantially all of the risks and rewards related to the ownership of a financial asset and ifthe enterprise does not waive its control over the financial asset, it shall, according to the extent of its continuous involvement in thetransferred financial asset, recognize the relevant financial asset and recognize the relevant liabilities accordingly. The extent ofinvolvement in the financial asset transferred, refers to the company’s exposure to changes in the value of the financial assets.If the overall transfer of a financial asset meets the conditions for de-recognition, the difference between the carrying value of thetransferred financial asset and the sum of the transfer consideration received and the change in fair value originally recognized in othercomprehensive income will be recognized in current profits and losses.If the partial transfer of financial assets meets the conditions for derecognition, the carrying value of the transferred financial assets isapportioned between the derecognized part and the non-derecognized part according to their respective relative fair values, and the
difference between the sum of the transfer consideration received and the change in fair value originally recognized in othercomprehensive income and apportioned to the de-recognition component and the aforesaid attributed carrying value will be recognizedin current profits and losses.If a financial asset is sold with the right of recourse or an endorsement, the Group needs to determine whether almost all the risks andrewards related to the ownership of the financial asset have been transferred. If all the risks and rewards related to the ownership of thefinancial asset have been transferred to the transferee, the Group shall de-recognize the financial asset; If all the risks and rewardsrelated to the ownership of the financial asset have been retained, the Group shall not de-recognize the financial asset. If none of therisks and rewards related to the ownership of the financial asset has been transferred or retained, the Group shall continue to determinewhether it retains the control over the asset, and the accounting standard stated in the aforesaid paragraphs shall apply.
(4) Derecognition of financial liabilities
When the current obligations of a financial liability (or part of it) have been discharged, the financial liability (or that part of thefinancial liability) shall be de-recognized by the Group accordingly. When the Group (borrower) signs an agreement with a lender toreplace a financial liability with a new one, in case of substantially different terms of contract between the new one and the originalone, the Group shall derecognize the original one and recognize the new one. If a substantial modification is made to all (or part of)the original financial liabilities by the Group, the original financial liabilities shall be de-recognized, and at the same time, a newfinancial liability shall be recognized in accordance with the modified terms.If all (or a part of) the financial liability is de-recognized, the difference between the carrying value allocated to the derecognized partand the consideration paid (including the transferred non-cash assets or the liabilities assumed) is included in current profits and lossesby the Group.
(5) Offset of financial assets and financial liabilities
When the Group has the legal right to offset the recognized financial assets and financial liabilities, which is enforceable for the timebeing, and the Group plans to settle on a netting basis or capitalize financial assets and serve financial liabilities, any net amount fromnetting of financial assets and financial liabilities shall be included in the balance sheet. Otherwise financial assets and financialliabilities shall be included separately in the balance sheet and shall not offset each other.
(6) Method of determining the fair value of financial assets and financial liabilities
Fair value refers to the price that market participants can receive by selling an asset or need to pay by transferring a liability in theorderly transactions on the measurement date. The fair value of a financial instrument in an active market is determined by the Groupat the price quoted in the active market. The quotation in an active market refers to the price that is easily acquired from exchanges,brokers, industry associations, pricing service agencies, and the like on a regular basis and represents the actual market transactions infair trade. If there is no financial instrument in an active market, its fair value shall be determined by the Group via valuation techniques.Valuation techniques include looking into the prices used in recent market transactions by parties who refer to familiar situations andtrade voluntarily and the current fair value of other financial instruments which are essentially the same, as well as using the discountedcash flow method, the option pricing model and the like. During valuation, the Group shall adopt the valuation techniques applicableunder the current circumstances and supported by sufficient available data and other information, select the input values consistentwith the characteristics of assets or liabilities considered by market participants in the transactions of related assets or liabilities, andgive priority to the relevant observable input values as much as possible. The unobservable input values are used only when the relevantinput values are unavailable or impracticable.
(7) Equity instruments
An equity instrument is a contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. TheGroup’s issuance (including refinancing), repurchase, sales or cancellation of an equity instrument shall be accounted for as a changeto equity. Transaction costs of an equity transaction are accounted for as a deduction from equity. The Group does not recognizechanges in the fair value of equity instruments.If the Group's equity instruments distribute dividends (covering "interest" incurred by instruments classified as equity instruments)during the existence thereof, the dividends shall be treated as profit distribution.
10. Impairment of financial assets
The financial assets for which the Group needs to recognize the impairment losses are financial assets measured at amortized cost,which mainly include notes receivable, accounts receivable, other receivables, contract assets, and so on.
(1) Method for recognizing provision for impairment
Based on the expected credit loss, the Group shall make provision for impairment of the aforementioned items by its applicablemeasurement method (general method or simplified method) of expected credit loss and recognize the credit impairment losses.
Credit loss means the difference between all contractual cash flows receivable by the Group in accordance with the contract and allcash flows expected to be received, discounted at the original actual interest rate, i.e., the present value of all cash shortages. Purchasedor originated credit-impaired financial assets shall be discounted by the Group according to credit-adjusted effective interest rateadjusted by credit of such financial assets.According to the general methods to measure expected credit losses, the Group evaluates whether the credit risk of the financial assets(including other applicable items; the same hereinafter) has increased significantly since the initial recognition at each balance sheetdate. If the credit risk of the financial instrument has increased significantly since the initial recognition, the Group measures its lossallowance according to the amount equivalent to the expected credit loss of the financial instrument over its expected lifetime; if thecredit risk has not increased significantly since initial recognition, the Group measures its loss allowance according to the amountequivalent to the expected credit loss of the financial instrument in the next 12 months. When assessing expected credit loss, the Groupgives consideration to all reasonable and well-founded information, including forward-looking information.For financial instruments with relatively low credit risks on the balance sheet date, the Group assumes that their credit risks have notincreased significantly since initial recognition, and measures loss allowance based on the expected credit loss within the next 12months.
(2) Criteria for judging whether the credit risks have increased significantly since initial recognitionWhen the default probability of a financial asset within the expected duration determined on the balance sheet date is significantlyhigher than that in initial recognition, it suggests that the credit risks of the financial asset have significantly increased. Except underspecial circumstances, the Group determines whether credit risks have increased significantly since initial recognition by estimatingthe changes in lifetime risk of default occurring based on the changes in 12-month risk of default occurring as a reasonable.
(3) Grouping method for assessing the expected credit risks
The Group carries out separate credit risk evaluation for financial assets with significantly different credit risks, including receivablesin dispute with the other party or involving litigation or arbitration; accounts receivable where there are obvious signs that the debtormay not be able to fulfill the repayment obligation, etc.Except for the financial assets that are individually assessed for credit risks, the Group shall classify the financial assets into differentgroups in view of the common risk characteristics, and assess the credit risks on the basis of groups.
(4) Accounting treatment methods for impairment of financial assets
At the end of a period, the Group shall calculate the expected credit loss of all types of financial assets. If the expected credit loss isgreater than the carrying value of its current provision for impairment, the difference shall be recognized as impairment loss; if it isless than the carrying value of current provision for impairment, the difference shall be recognized as impairment gain.
(5) Determination method for measurement of expected credit losses of various financial assets
① Notes receivable
For note receivable, the Group measures loss allowance according to the amount equivalent to the expected credit loss over the lifetime.Depending on their credit risk characteristics, notes receivable are classified into different groups:
| Items | Basis for determining groups |
| Bank acceptance notes | The accepter is a bank with low credit risk |
| Commercial acceptance notes | By accepter’s credit risk (the same as that of accounts receivable) |
② Accounts receivable
For accounts receivable not containing significant financing components, the Group measures loss allowance according to the amountequivalent to the expected credit loss over the lifetime.Except for accounts receivable for which credit risk is assessed separately, depending on their credit risk characteristics, accountsreceivable is classified into different groups:
| Items | Basis for determining groups |
| Accounts receivable aging group | Except for the receivables for which the loss allowance of impairment has been calculated separately, the Group shall determine, through present situation analysis, the proportion of allowance for bad debt based on the expected credit loss rate of identical or similar receivables in previous years with similar credit risk characteristics classified by aging |
| Related party group | The parent and subsidiary companies included in the consolidated financial statements are divided into groups according to equity relationship. |
③ Other receivables and factoring receivables
The Group measures impairment losses based on whether the credit risk of other receivables and factoring receivables has increasedsignificantly since initial recognition, using an amount equivalent to expected credit loss within the next 12 months or entire duration.
11. Notes receivable
For further details, please see this Note V. 9. “Financial Instruments” and 10. “Impairment of Financial Assets”.
12. Accounts receivable
For further details, please see this Note V. 9. “Financial Instruments” and 10. “Impairment of Financial Assets”.
13. Financing receivables
Notes receivable and accounts receivable which are classified as measured at fair value through other comprehensive income arepresented under “financing receivables” if they have original maturity up to one year (including one year) or under other debtinvestments if they have original maturity more than one year. For relevant accounting policies, please see Note V. 9. ''FinancialInstrument'' and 10. ''Impairment of Financial Assets''.
14. Other receivables
Methods for determining and accounting the expected credit losses of other receivablesFor further details, please see this Note V. 9. “Financial Instruments” and 10. “Impairment of Financial Assets”.
15. Inventories
(1) Classification of inventory
Inventory types include among others raw materials, goods in stock, revolving materials and unfinished in process.
(2) Valuation methods of inventory acquired and sold
When inventory is acquired, it is measured based on actual cost, including purchase cost, processing cost and other costs. Wheninventory is acquired and sold, it is priced according to the monthly weighted average method.
(3) Determination method of the net realizable value of inventory and calculation method of depreciation allowanceNet realizable value means the estimated selling price of inventory less the estimated cost to be incurred by the time of completion, theestimated selling expense and related taxes. In determining the net realizable value of inventory, based on obtained evidence, the Groupconsiders the purpose of the inventory and the impact of any matters occurring after the balance sheet date.On the balance sheet date, inventory is measured at cost or net realizable value (whichever is lower). If the net realizable value is lowerthan its cost, the Group will make provision for inventory depreciation. The provision for decline in the value of inventories is generallymade at the difference between an inventory item’s cost and its net realizable value. For the inventory with a large quantity andrelatively low unit price, the inventory depreciation allowance is accrued based on the inventory category; for inventories associatedwith product series manufactured and sold in the same area, with the same or similar end use or purpose, and are difficult to be measuredseparately from other items, the depreciation allowances are consolidated and accrued. For raw materials with a large quantity and lowunit price, the provision of inventory depreciation is generally made according to the time the inventory has been kept.After the provision of inventory depreciation is made, if the original trigger for inventory write-down has disappeared so that the netrealizable value of the inventory is higher than the carrying value, the amount of provision of inventory depreciation shall be reversed,and the reversed amount shall be recognized in current profits and losses.
(4) The inventory system is a perpetual inventory system.
(5) Amortization method of revolving materials
The Group’s revolving materials include low-value consumables and packaging materials. Large revolving materials are amortized atthe time of receipt over months of the expected service life. Other low-value consumables are amortized at the time of receipt usingthe one-off amortization method. Packaging materials are amortized at the time of receipt using the one-off amortization method.
16. Contract assets
The Group records the right where the customer has not paid the contract consideration but the Group has performed its contractobligation and the Group is not prevented from being unconditionally paid by the customer (depending on the lapse of time only) as
contract assets in the balance sheet. Contract assets and contract liabilities under the same contract are listed on a net basis. Contractassets and contract liabilities under different contracts will not be offset.Please refer to Note V. 10. "Impairment of Financial Assets" for details of the method for determining and accounting the expectedcredit loss of contract assets.
17. Contract costs
If the incremental cost incurred by the Group to acquire the contract is expected to be recovered, it is recognized as an asset as thecontract acquisition cost. However, if the amortization period for the asset does not exceed one year, the asset shall be recorded incurrent profits and losses at the time of occurrence.A cost incurred for performing a contract which does not fall within the regulated scope of accounting standards for business enterprisesother than Accounting Standards for Business Enterprises No. 14 - Income (revised in 2017) shall be recognized as an asset if: ① suchcost directly relates to a current or expected contract, including direct labor, direct materials, manufacturing costs (or similar costs),costs clearly borne by customers and other costs only incurred due to the contract; ② such cost increases the resources of the Groupfor fulfilling its obligations in the future; and ③ such cost is expected to be recoverable.The assets related to contract costs are amortized on the same basis as the revenue recognition of goods related to the assets, and arerecorded in the current profits and losses.
18. Long-term equity investments
Long-term equity investments in this part refer to the long-term equity investments through which the Group has control, joint controlor significant influence over investee. The long-term equity investments through which the Group does not have control, joint controlor significant influence over investee, is taken as a financial asset at fair value recorded in current profits and losses. If it is non-trading,the Group can choose to designate it as a financial asset at fair value recorded in other comprehensive income at initial recognition.For details about the relevant accounting policy, please see this Note V. 9. “Financial Instrument”.Joint control refers to the Group’s common control of an arrangement in accordance with relevant agreement, and the relevant activitiesof the arrangement must be unanimously agreed by the participants sharing the control before a decision can be made. Significantinfluence refers to the Group’s right to participate in the decision-making of an invested entity's financial and operational policies, butnot to control or jointly control the formulation of these policies with other parties.
(1) Determination of investment cost
For long-term equity investments arising from business combination under the same control, the proportion of the carrying value ofthe stakeholders’ equity of the merged party in the consolidated financial statements of the final controlling party is regarded as theinitial investment cost of long-term equity investments on the combination date. If there is a difference between the initial investmentcost of long-term equity investments and the cash paid, non-cash assets transferred, and carrying value of liabilities assumed, the capitalsurplus shall be adjusted. Where the capital surplus is insufficient to absorb the difference, undistributed profits shall be adjusted. Theinvestments cost which adopts the equity securities issued as the consideration should be adopted as the initial investments cost of thelong-term equity investments according to the proportion of the carrying value of the stakeholders’ equity of the merged party in theconsolidated financial statements of the final controlling party, and adjust the capital surplus by the difference between the initialinvestments cost of long-term equity investments and the amount of issued stock’s face value (regarded as share capital). If the capitalsurplus is insufficient to absorb the difference, undistributed profits should be adjusted. If the equity of the acquiree under the samecontrol is acquired step by step through multiple transactions leading to a merger of enterprises under the same control, the transactionsshall be confirmed whether they belong to a “package transaction”: If they belong to a “package transaction”, all transactions shall betreated as one transaction over which the acquiree has control. If it is not a “package transaction”, the Group regards the initial cost ofthe long-term equity investments as the proportion of the shareholders' equity of the acquired enterprise to the carrying amount in theconsolidated financial statements of the final controller at the date of combination. If there is a difference between the initial investmentscost of long-term equity investments on the date of combination and the sum of the carrying value of the long-term equity investmentsbefore the merger plus the carrying value of the new share payment consideration on the date of combination, the capital surplus shallbe adjusted. Where the capital surplus is insufficient to absorb the difference, undistributed profits shall be adjusted. If the equityinvestment held before the combination date is measured using the equity method or recorded as a financial asset at fair value in othercomprehensive income. The other comprehensive income recognized as a result will not be accounted temporarily.For the acquisition of long-term equity investments involving enterprises under common control, the Group regards the initial cost ofthe long-term equity investments at that date as business combination cost, including the sum of fair values of assets paid, liabilitiesincurred or borne, and equity securities issued, by the buyer. If the equity of the acquiree is acquired step by step through multiple
transactions leading to a merger of enterprises under different control, the transactions shall be confirmed whether they belong to a“package transaction”: If they belong to a “package transaction”, all transactions shall be treated as one transaction over which theacquiree has control. If it is not a “package transaction”, the sum of the carrying value of the original equity investments plus the newinvestments cost is regarded as the initial investments cost of long-term equity investments calculated by the cost method. If theprevious equity is measured using the equity method, the relevant other comprehensive income will not be accounted temporarily.Acquisition-related costs including auditing fees, legal services fees, valuation advice fees and other relevant management fees aregenerally recognized in profit or loss as incurred.A long-term equity investments acquired other than through a business combination is initially measured at the cost, and such cost isdetermined at the amount of cash paid by the Group, the fair value of the equity securities issued by the Group, the value agreed in aninvestment contract or agreement, the fair value or carrying value of asset exchanged in the non-monetary asset exchange, or the fairvalue of the long-term equity investments. Costs, taxes and other necessary expenses directly related to the acquisition of the long-termequity investments are also included in the investment cost. If additional investments addition has a significant influence over investee,or jointly control other than the control over investee, the cost of long-term equity investments shall be the sum of the fair value of theoriginal equity investments determined according to Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments and the cost of the additional investment.
(2) Method of subsequent measurement and recognition of profits and losses
The long-term equity investments through which the Group has joint control (except for joint operation) or significant influence overinvestee shall be calculated by the equity method. The Group's financial statements use the cost method to calculate long-term equityinvestments that constitutes control over invested entities.
① Long-term equity investments calculated by cost method
Under the cost method, a long-term equity investment is measured at initial investments cost. Increasing or reducing investments willadjust the cost of long-term equity investments accordingly. Except for actual price paid when the investment is obtained or the cashdividends or profits that are included in the consideration that has been declared but not yet disbursed, the current investment incomeshall be recognized according to the cash dividends or profits declared by the invested entity.
② Long-term equity investments accounted by equity method
When the initial investments cost of long-term equity investments accounted under equity method is greater than the investments, thedifference in the fair value share of the identifiable net assets of the invested entity is enjoyed, without adjusting the initial investmentscost of long-term equity investments; when the initial investments cost is less than the investments, the difference in the fair valueshare of the identifiable net assets of the invested entity is included in the current profits and losses, and the cost of long-term equityinvestments shall be adjusted accordingly.When the equity method is adopted, according to the share of the net profit and loss and other comprehensive income realized by theinvested entity, the investments income and other comprehensive income shall be recognized respectively, and the book value of thelong-term equity investments shall be adjusted; the book value of the long-term equity investments is reduced correspondingly inaccordance with the portion of the profits or cash dividends declared and distributed by the invested entity; for changes in owner’sequity other than net profit and loss, other comprehensive income and profit distribution of the invested entity, the book value of long-term equity investments shall be adjusted and included in capital surplus. The share of net profit and loss of the invested entity shall berecognized, based on the fair value of various identifiable assets of the invested entity when the investment is made, after adjustmentof the net profit of the invested entity. When the accounting policy and accounting period adopted by the invested entity are inconsistentwith those of the Group, the investment income and other comprehensive income shall be recognized based on the adjusted financialstatements of the invested entity in accordance with the Group's accounting policies and accounting period. For the Group's transactionswith its associates and joint ventures, if the invested or sold asset does not constitute a business, unrealized profits or losses resultingfrom the transactions are recognized as investment income or loss to the extent that those attributable to the Group's equity interest areeliminated. However, unrealized losses resulting from the Group's transactions with its invested entity in respect of impairment losseson the transferred assets should not be eliminated. If the asset invested by the Group to its associates and joint ventures constitutes abusiness, to the extent that the investor realizes long-term equity investments other than control, the fair value of the invested businessshall be the initial investments cost of the additional long-term equity investments, and the difference between the initial investmentscost and the carrying value of the invested business shall be recorded in the profit or loss of the current period. If the asset sold by theGroup to its associates and joint ventures constitutes a business, the difference between the consideration received and the carryingvalue of the invested business shall be recorded in the profit or loss of the current period. If the asset purchased by the Group from itsassociates or joint ventures constitutes a business, the accounting shall be made pursuant to the Accounting Standards for BusinessEnterprises No. 20 - Business Combination shall apply, the gain or loss from the transaction shall be fully recognized.
The Group de-recognizes its share of net losses of the invested entity after the carrying amount of the long-term equity investmentstogether with any long-term interests that substantially constitute part of its net investments in the invested entity shall be written downto zero. In addition, if the Group has the obligation to bear additional losses to the invested entity, the provisions shall be recognizedaccording to the expected obligations and be recorded in the investment losses of the current period. Where net profits are subsequentlymade by the invested entity, the Group resumes recognizing its share of those profits only after its share of the profits exceeds the shareof losses previously not recognized.
③ Acquisition of minority interest
When preparing consolidated financial statements, if there is a difference between the new long-term equity investments acquired as aresult of the purchase of minority shares and the share of net assets continuously calculated from the date of purchase (or merger) ofthe subsidiary based on the new shareholding ratio, the capital surplus shall be adjusted. Where capital surplus is insufficient to offsetthe difference, the undistributed profits are adjusted.
④ Long-term equity investments disposal
In consolidated financial statements, where a parent company partially disposes of a long-term equity investment in a subsidiary withoutlosing the control over it, the difference between the disposing price and the net assets of the subsidiary obtained from the disposal ofthe long-term equity investments shall be recognized in the shareholder's equity. If it's partial disposal by a parent company of a long-term equity investment in a subsidiary and the control over the subsidiary is lost, the accounting policy stipulated in this Note V. 6. (2)"Method for Preparing the Consolidated Financial Statements" shall apply.For disposal of long-term equity investments in other situations, the difference between the disposed equity’s book value and the actualproceeds is included in the current profits and losses.When the Group reduces its ownership interest in investee but continues to use the equity method for long-term equity investments,other comprehensive income previously recorded as shareholders' equity is disposed in proportion, subject to the accounting treatmentapplicable to the assets or liabilities related to direct disposal of the invested entity. The equity recognized by the Group, other than thechange of the net profits and loss, other comprehensive income and profit distribution of the invested entity, is transferred to currentprofits and losses in proportion.When the Group reduces its ownership interest but the Group continues to use the cost method for long-term equity investments, forthe other comprehensive income recognized by the Group using equity method prior to the control over the investee or under financialinstrument recognition and measurement standard, other comprehensive income previously recorded as shareholders’ equity is subjectto the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity and is transferred tocurrent profits and losses in proportion. Then the other changes in shareholders’ equity recognized by the Group using equity method,not arising from the change of the net profits and loss, other comprehensive income or profit distribution of the invested entity, arereclassified to profit and loss in proportion.If the Group loses its control over the invested entity due to the disposal of a portion of an equity investment, the equity method isadopted in the preparation of individual financial statements when the remaining equity allows the Group to exercise joint control orhold significant influence on the invested entity, and the remaining equity after disposal is regarded as being adjusted by the equitymethod at the time of acquisition; if the remaining equity after disposal does not allow the Group to exercise joint control or holdsignificant influence on the invested entity, it is calculated in accordance with the relevant provisions of financial instrument recognitionand measurement standards, and the difference between the fair value and the book value on the day when the control is lost is recordedin current profits and losses. If other comprehensive income recognized, using the equity method or under the standards for recognitionand measurement of financial instruments before the Group obtains the control over the invested entity, is subject to the accountingtreatment applicable to the assets or liabilities related to direct disposal of the invested entity when the control over the invested entityis lost, changes in the shareholders’ equity of the net assets of the invested entity recognized using the equity method, except for netprofits and losses, other comprehensive income and profit distributions, shall be transferred to current profits and losses when thecontrol over the invested entity is lost. Other comprehensive income and other shareholders’ equity are transferred in proportion whenthe remaining equity after disposal is calculated by the equity method. If the remaining equity after disposal is calculated in accordancewith the standards for recognition and measurement of financial instruments, other comprehensive income and other shareholders’equity are transferred in full.If joint control or significant influence on the invested entity is lost by the Group due to the disposal of some equity investments, theremaining equity after disposal is calculated according to the financial instrument recognition and measurement standards. Thedifference between the fair value and the book value on the day when joint control or significant influence is lost is recorded in currentprofits and losses. Other comprehensive income of the equity investment previously recognized using the equity method is subject tothe accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity when the Group stopsusing the equity method. Shareholders’ equity recognized by the Group, other than the change of the net profits and loss, other
comprehensive income and profit distribution of the invested entity, is reclassified to profit and losses fully when the Group stops usingthe equity method.The equity investments in the subsidiary is disposed of step by step by the Group through multiple transactions until the control is lost.The aforementioned transactions, if belong to package transactions, are disposed as one transaction for disposal of the equityinvestments of the subsidiary and loss of control. The difference between the price of each disposal before the control is lost and thecarrying value of long-term equity investments related to the disposed equity are recorded in other comprehensive income, and thentransferred to the profit or loss of the current period when the control is lost.
19. Investment properties
Measurement of investment propertiesMeasurement by cost methodDepreciation or amortization methodInvestment properties mean the properties held for the purpose of rent earning or capital appreciation, or both. It includes the land userights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, thevacant buildings held by the Group for the purpose of leases will also be reported as investment properties, if the board of directors (orsimilar authority) makes a resolution in written form that expressly indicates that the buildings will be used for leases and the intentionof holding will not change in the short term.Investment properties are initially measured at cost. Subsequent expenses related to investment properties shall, if economic profitsrelated to the property are likely to be gained and its costs can be measured reliably, be recorded as the cost of investment properties.Other subsequent expenditures are recorded in the current profits and losses when incurred.The Group adopts the cost model for subsequent measurement of investment properties. The investment properties are depreciated oramortized in accordance with policies consistent with building or land use rights.For method of impairment test and method of provision for impairment of investment properties, please see this Note V. 25.“Impairment of Long-term Assets”.When self-use properties or inventories are converted to investment properties, or investment properties are converted to self-useproperties, the value after the conversion shall be recognized at the carrying value before the conversion.When investment properties are disposed or permanently withdrawn from use and is not expected to obtain economic benefits from itsdisposal, the investment properties shall be de-recognized. The disposal income from the sale, transfer, abandonment or destruction ofinvestment properties less its carrying value and relevant taxes shall be recognized in current losses and profits.
20. Fixed assets
(1) Recognition criteria
Fixed assets mean the tangible assets held with a service life exceeding one fiscal year for the production of goods, provision of laborservices, leasing or management. Fixed assets may be recognized when they meet the following conditions: Economic benefits relatingto the fixed asset are likely to be gained by the Group, and the cost of the fixed asset can be measured reliably. Fixed assets are initiallymeasured at cost, with the influence of estimated abandonment cost taken into account.
(2) Depreciation methods
| Category | Depreciation methods | Depreciable life | Ratio of remaining value | Annual depreciation |
| Houses and buildings | Straight-line method | 20-30 years | 5%-10% | 3%-4.75% |
| Production equipment | Straight-line method | 5-10 years | 5%-10% | 9%-19% |
| Test equipment | Straight-line method | 5-10 years | 5%-10% | 9%-19% |
| Office equipment | Straight-line method | 5 years | 5%-10% | 18%-19% |
| Transportation equipment | Straight-line method | 5 years | 5%-10% | 18%-19% |
(3) Recognition basis, valuation and depreciation method of fixed assets leased by financing
See Note 35. “Lease” for details
21. Construction in progress
The cost of construction in progress is determined at the actual construction expense, including various construction expendituresincurred during the period of construction, capitalized borrowing costs and other related expenses before the project reaches thepredetermined conditions for use. Construction in progress is transferred to fixed assets when it has reached the working condition forits intended use.For the method of impairment test and method of provision for impairment of construction in progress, please see this Note V. 25.“Impairment of Long-term Assets”.
22. Borrowing costs
Borrowing costs include interest on borrowing, amortization of discount or premium, auxiliary expenses and exchange differences dueto foreign currency borrowing, etc. Borrowing costs that can be directly attributable to the acquisition, construction or production ofassets eligible for capitalization shall be capitalized when the asset expenditure has been incurred, the borrowing cost has been incurred,and the acquisition, construction or production necessary to make the asset reach the predetermined conditions for use or sale hasstarted, and the capitalization shall discontinue when the constructed or produced assets eligible for capitalization reach thepredetermined conditions for use or sale. The remaining borrowing costs are recognized as costs at the time of occurrence.The amount to be capitalized is the actual interest expense incurred on the specific borrowings less any bank interest earned fromunused funds of the designated borrowings or any investment income arising from the temporary investment of those funds. The amountto be capitalized on the general borrowings is calculated by applying a capitalization rate to the weighted average of the excess amountsof cumulative expenditures on the asset over and above the amounts of the specific borrowings. Capitalization rate is calculated anddetermined based on the weighted average interest rate of general borrowings.During the period of capitalization, exchange differences arising from special borrowings in a foreign currency shall be fully capitalized,and exchange differences arising from general borrowings in a foreign currency shall be recognized in profits and losses.Assets eligible for capitalization refer to fixed assets, investment properties, inventories and other assets that need to go through quitea long time of acquisition or production activities to reach the predetermined usable or salable state.If an abnormal interruption of assets eligible for capitalization occurs in the process of acquisition, construction or production andcontinues over 3 months, the capitalization of borrowing costs shall cease and shall not restart until the acquisition, construction orproduction of such assets resume.
23. Right-of-use assets
See Note 35. “Lease” for details
24. Intangible assets
(1) Valuation method, service life and impairment test
Intangible assets mean the identifiable non-monetary assets owned or controlled by the Group without physical substance.The intangible assets shall be initially measured at cost. Expenses related to the intangible assets are recognized in the cost of intangibleassets when it is likely that the associated economic benefits will be gained by the Group and the associated costs can be measuredreliably. Other expenses related to the intangible assets are recognized in profit or loss for the period in which it is incurred.The acquired land use right is generally recognized as intangible assets. Expenses related to land use right and construction cost frombuildings such as self-built factory, etc. are recognized as intangible assets and fixed assets, respectively. In the case of purchasedbuildings, related costs are shared between the cost of land use rights and the cost of buildings. The related costs that cannot be allocatedreasonably are recognized as fixed assets.When intangible assets with a finite useful life are available for use, their original cost is amortized over their estimated useful lifeusing the straight-line method. Intangible assets with uncertain service life shall not be amortized.For intangible assets with a finite useful life, the Group reviews their useful life and amortization method at the end of the period, andaccounts for any change as a change in an accounting estimate. For intangible assets with uncertain service life, the Group reviewstheir useful life. If it is evident that the duration of associated economic benefits is predictable, the useful life is estimated and the assetis amortized pursuant to amortization policies for intangible assets with finite useful life.
(2) Accounting policy for internal research and development costs
The expenditure for research and development projects in the Group is divided into research phase expenditure and development phaseexpenditure.The classification into the expenditure in the research phase or the expenditure in the development phase in relation to internal R&Dprojects of the Group conforms to the following standards:
Expenditures in the research phase are defined as those spent in an innovative, explorative and planned investigation to acquire andunderstand new scientific or technical knowledge. The research is the preparation in documents and other aspects for furtherdevelopment. It is very uncertain whether the completed research will move onto the development phase and whether the developmentwill lead to the emergence of an intangible asset. Therefore, the Group includes the expenditures in the research phase in expenses andrecognize them in the profit or loss of the current period.Expenditures in the development phase refer to the expenditures incurred during the stage of applying research results or otherknowledge to a project or design to produce new or substantially improved materials, devices and products before commercial massproduction or use. As the development phase comes after the research phase, the majority of basic conditions for a new product ortechnology have been established. Thus, the Group recognizes the expenditures in development phase eligible for capitalization asintangible assets. Gross expenditures incurred in the period from the point when the conditions for capitalization are satisfied to thepoint when intangible assets are ready for the intended purpose are capitalized. No adjustment will be made further for any expenditurethat has been included in expense and recognized in profit or loss before the same intangible assets have met the conditions forcapitalization in the development phase.Expenditures in the research phase are included in the current profits and losses when incurred.Expenditures in the development phase are recognized as intangible assets only when the following conditions are all satisfied, or areincluded in the profit or loss of the current period:
① Having completed the intangible assets, enabling them to be technically feasible for use or sale;
② Having the intention to complete the intangible assets and use or sell them;
③ The ways in which intangible assets generate economic benefits, including the proof that there is a market for the product producedusing the intangible assets or for the intangible assets. Where the intangible assets are used internally, their usefulness shall be proved;
④ Having sufficient technical, financial and other resources to complete the development of the intangible assets, and having theability to use or sell the intangible asset;
⑤ Expenditures attributable to the development phase of the intangible assets can be measured reliably.If it is impossible to distinguish between expenditures in the research phase and expenditures in the development phase, the R&Dexpenditures incurred shall be included in the profit or loss of the current period.
(3) Method of impairment test and method of provision for impairment of intangible assetsFor the method of impairment test and method of provision for impairment of intangible assets, please see this Note V. 25 “Impairmentof Long-term Assets”.
25. Impairment of long-term assets
For non-current and non-financial assets including fixed assets, construction in progress, intangible assets with finite useful life,investment properties measured at cost, and long-term equity investments in subsidiaries, associates and joint ventures, the Groupassesses whether there is an indication of impairment at the date of balance sheet. If there is such an indication, the Group estimatesthe recoverable amount and carries out an impairment test. An impairment test shall be conducted every year for intangible assets withuncertain goodwill and service life and those have not yet reached the usable state, regardless of whether there are signs of impairment.If the impairment test results show that the recoverable amount of an asset is lower than its book value, the provision for impairmentis accrued according to the difference and is recorded in the impairment loss. The recoverable amount is the higher of the net amountof the fair value of the asset less the disposal expenses and the present value of the expected future cash flow of the asset. The fairvalue of an asset is measured as the price agreed in a sales contract concluded in good faith. In absence of any such sales contract, ifthere is an active market for the asset, the best information available is used as a basis to estimate the fair value of the asset. Disposalexpenses include legal fees, taxes and transportation fees related to the disposal of an asset, and direct expenses incurred to make theasset salable. The present value of expected future cash flows of an asset is measured by applying an appropriate discount rate to theexpected future cash flows generated during the continuous use of the asset at the time of final disposal. The asset impairment provision
is calculated and recognized on the basis of individual assets. In the case of difficulty in estimating the recoverable amount of anindividual asset, the recoverable amount of the asset group to which the individual asset belong is calculated. An asset group is thesmallest unit of combined assets that can generate cash inflows independently.For goodwill listed separately in the financial statements, the carrying amount of such goodwill arising from business combinations isallocated to relevant asset groups or asset group portfolios. If the test results show that the recoverable amount of asset groups or assetgroup portfolio containing allocated goodwill is lower than its book value, the corresponding impairment loss shall be recognized. Theamount of impairment loss shall firstly be deducted from the carrying amount of goodwill embodied in the asset groups or asset groupportfolios, then be deducted from the carrying amounts of other assets based on the proportions of their carrying amounts in the assetgroups or asset group portfolios.The impairment losses of assets will not be reversed in subsequent periods once recognized.
26. Long-term prepaid expenses
Long-term prepaid expenses refer to expenses that have already incurred but should be borne by the current and future instalments fora period of more than one year. Long-term prepaid expenses shall be amortized according to the straight-line method within theestimated period of benefit.
27. Contract liabilities
Contract liabilities are defined as the Group's obligation to transfer goods to a customer for received or receivable consideration fromthe customer. The Group presents as contract liabilities, at the earlier time point of actual payment by a customer or the payment due,if the Group has paid the contract consideration or the Group has acquired the right to collect unconditionally before the goods aretransferred by the Group to the customer. Contract assets and contract liabilities under the same contract are listed on a net basis.Contract assets and contract liabilities under different contracts will not be offset.
28. Employee remuneration
(1) Accounting treatment of short-term remuneration
Short-term employee benefits include employee wages or salaries, bonuses, allowances and subsidies, employee welfare fees, medicalinsurance contributions, maternity insurance contributions and work injury insurance contributions, housing provident fundcontributions, union running costs and employee education costs, and non-monetary benefits. During the accounting period when theemployees provide services for the Group, the short-term remuneration actually incurred is recognized as a liability and recorded inthe current profits and losses or related asset costs. The non-monetary welfare in short-term remuneration should be measured at fairvalue.
(2) Accounting treatment of post-employment benefits
Post-employment benefit mainly covers basic pension insurance and unemployment insurance. Most of post-employment benefit plansare mainly defined benefit plans. The defined benefit plans of the Group are basic pension insurance and unemployment insurance, andthe contributions thereto are recorded in the asset cost or the profit or loss of the current period when they occur.
(3) Accounting treatment of dismission welfare
Where the Group terminates the labor relationship with an employee before the labor contract expires, or offers proposed compensationfor encouraging the employee to accept the redundancies voluntarily, if the Group cannot unilaterally withdraw the termination benefitsprovided by the termination of labor relations plan or reduction proposal, and the Group recognizes the costs related to thereorganization involving the payment of the termination benefits (whichever comes first), the employee remuneration liabilities arisingfrom the termination benefits are recognized and recorded in the current profits and losses. However, termination benefits which areexpected not to be fully paid within twelve months after the end of the annual reporting period are accounted for as other long-termemployee remuneration.Internal employee retirement programs are accounted for, using the above method applicable to termination benefits. The Grouprecognizes in the profit or loss of the current period (termination benefits) employee salaries and contributions to the employee's socialinsurance covered by its internal retirement program from the day when the employees stop their services until their statutory retirementdates, when the conditions for provisions are satisfied.
(4) Accounting treatment of other long-term employee benefits
If other long-term employee benefit provided by the Group for its employees constitutes the defined contribution plan, the accountingtreatment for the defined contribution plan applies. In any other circumstance, the accounting treatment for the defined benefit planapplies.
29. Lease liabilities
For recognition methods and accounting of lease liabilities, please see this Note V. 35. “Lease”.
30. Provisions
Obligation relating to a contingent are recognized as provisions when they meet the following conditions: (1) the Group has a presentobligation related to a contingency; (2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be measured reliably.
Provisions are measured against the best estimate of the consideration required to settle the present obligation at the balance sheet date,taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money.If all or part of the expenses required to settle the provisions are expected to be compensated by a third party, the amount ofcompensation is recognized separately as an asset when it is basically recognized that it can be received, and the recognizedcompensation amount doesn’t exceed the book value of the provision.
31. Share-based payment
(1) Accounting treatment of share-based payment
Share-based payment is a transaction where equity instruments are granted or equity instrument-based liabilities are assumed for theconsideration of the services provided by employees or other parties. Share-based payment is classified into cash-settled share-basedpayment and equity-settled share-based payment.
① Equity-settled share-based payment
Equity-settled share-based payments made for the consideration of the services provided by the employees, is measured at the fairvalue of equity instruments on the date of grant to the employees. In the case that the right can be exercised after the completion ofservices in the waiting period or satisfaction of stipulated performance conditions, the fair value amount shall, on the basis of the bestestimate of the quantity of equity instruments with vesting in the waiting period, be recorded in relevant cost or expense using thestraight-line method. In the case that the right can be exercised immediately after the grant, it is recorded in relevant cost or expenseon the grant date, and the capital surplus is increased accordingly.On each balance sheet date during the waiting period, the Group makes the best estimate based on the latest available follow-upinformation such as changes in the number of employees with vested rights, and revises the estimated number of equity instrumentswith vesting. The impact of the above estimation is recorded in the cost or expense of the current period, and the capital surplus adjustedaccordingly.Equity-settled share-based payments made for the consideration of the services provided by other parties shall, if the fair value of theservices can be measured reliably, is measured at fair value at the date of acquisition, and if the fair value of the services cannot bemeasured reliably but the fair value of the equity instruments can be measured reliably, is measured at fair value at the date ofacquisition. They are recorded in the cost or expense, and the shareholder’s equity is increased accordingly.
② Cash-settled share-based payment
Cash-settled share-based payment shall be measured according to the fair value of liabilities determined on the basis of shares or otherequity instruments undertaken by the Group. In the case that the right is exercised immediately after the grant, it is recorded in relevantcost or expense, and the liability is increased accordingly. If the right is exercised only after the completion of services in the waitingperiod and satisfaction of stipulated performance conditions, on each balance sheet date within the waiting period, based on the bestestimate of the vesting condition and according to the fair value of the liabilities assumed by the Group, the services acquired in thecurrent period are recorded in the costs or expenses, and the liability is increased accordingly.On each balance sheet date and settlement date before the settlement of related liabilities, the fair value of liabilities shall be re-measured,and the changes shall be recorded in the current profits and losses.
(2) Accounting treatment related to modification and termination of share-based payment plan
When the Group modifies the share-based payment plan, if the fair value of the granted equity instruments is increased by modification,the increase of the services acquired shall be recognized according to the increase of the fair value of the equity instruments. Theincrease of fair value of equity instruments refers to the difference between the fair values of equity instruments before and aftermodification on the modification date. If the total fair value of share-based payment is reduced by modification or other ways that areunfavorable to employees, the accounting treatment of the acquired services will continue, as if the change never happened unless theGroup cancels some or all of the granted equity instruments.During the waiting period, if the granted equity instruments are canceled, the Group will treat the cancellation of the granted equityinstruments as accelerated exercise, and immediately record the amount to be recognized in the remaining waiting period into thecurrent profits and losses, and recognize the capital surplus at the same time. If the employee or other party can choose to meet thenon-vesting condition but fails to meet it during the waiting period, the Group will treat it as cancellation for granting equity instruments.
32. Revenue
Accounting policies adopted for revenue recognition and measurement
(1) Principles of revenue recognition
If a contract between the Group and a customer meets the following conditions, revenue is recognized when the customer obtains thecontrol over the goods: the parties to the contract have approved the contract and pledged to perform their obligations; the contractdefines the rights and obligations of the parties about transfer of the goods or provision of the services; the contract contains paymentterms about the proposed transferred goods; the contract has commercial substance, which means that the performance of the contractwould change the risks, time distribution or amount of the future cash flows of the Group; and the consideration to which the Group isentitled for transferring the goods to the customer is very likely to be recovered.At the contract commencement date, the Group identifies each individual performance obligation existing under the contract, andapportions the trading price to each individual performance obligation based on the proportion of the selling prices of the goodscommitted by the individual performance obligations. The trading price is determined by taking into account of the influence of variableconsideration, major financing components in the contract, non-cash consideration, consideration payable to customers and otherfactors.If each individual performance obligation under the contract meets any of the following conditions, the Group will, according to theprogress of performance in the relevant performance period, recognize the part of trading price apportioned to the individualperformance obligation as a revenue: the customer obtains and consumes economic benefits from the performance by the Group at thetime of performance; the customer has control over the goods in production during the performance by the Group; the goods producedduring the performance by the Group have irreplaceable use, and the Group is entitled to be paid for the completed part of the obligationup to now in the entire contract period. The performance schedule is determined by output method or input method according to thenature of the goods transferred. If the performance schedule cannot be reasonably determined and the incurred costs of the Group areexpected to be compensated, the revenue is recognized according to the amount of the incurred costs until the performance schedulecan be reasonably determined.If none of the above condition is met, the Group will, at the point when the customer obtains the control over the goods, recognize thepart of trading price apportioned to the individual performance obligation as a revenue. To determine whether the customer obtains thecontrol over the goods, the Group considers the following indications: the Group enjoys the current right to be paid for the goods, andthe customer has the current obligation to pay for the goods; the Group has transferred legal ownership of the goods to the customer,and the customer has owned the legal ownership over the goods; the Group has delivered the goods physically to the customer, and thecustomer has possessed the goods in kind; the Group has passed on to the customer major risks and rewards of the ownership of thegoods, and the customer has received the major risks and rewards of the ownership of the goods; the customer has accepted the goods;and any other indication that the customer has obtained the control over the goods.
(2) Specific methods for revenue recognition
① Domestic sales
A. General sales modeThe Group arranges production according to a sales contract or order with a customer; upon shipment from the warehouse, the productsare transported and delivered to the place of delivery designated by the customer; the customer’s warehousing employee checks thequantity of the products and also carries out a spot check for the quality of the products; after the quantity and quality are accepted, theemployee will sign and stamp on the receipt for confirmation. The revenue is recognized when the Group obtains the signed andstamped receipt or when the Group obtains the signed and stamped receipt and makes a reconciliation with the customer.B. VMI sales mode
The Group arranges production according to a sales contract or order with the customer; upon shipment from the warehouse, theproducts will be transported and delivered to the delivery place designated by the customer; the customer's warehouse personnel checksthe quantity of the products and also carries out a spot check for the quality of the products; after the quantity and quality are accepted,the warehouse personnel will sign and stamp on the receipt for confirmation. Sales revenue will be recognized based on the actualreceipt of goods by the customer and reconciliation with the customer.
② Overseas sales
A. General sales modeThe Group arranges production according to a sales contract or order with a customer; the export delivery is made through customsclearance after the products are verified as qualified through inspection; for the purpose of delivering the products, the revenue isrecognized at the time of control transfer depending on specific terms of trade.B. VMI sales modeThe Group arranges production according to a sales contract or order with a customer; the export is made through customs clearanceafter the products are verified as qualified through inspection; after the Group completes export declaration formalities and obtains anexport declaration form, and the products are transported to the place designated by the customer, the revenue is recognized when thecustomer accepts the products.Different operating modes in the same kind of business lead to different accounting policies for revenue recognitionNone
33. Government subsidies
Government subsidies refer to the monetary assets and non-monetary assets obtained by the Group from the government free of charge,excluding the investment made by the government as an investor which enjoys the corresponding owner's equity. Government subsidiesare divided into asset-related government subsidies and income-related government subsidies. Asset-related government subsidies referto the government subsidies obtained by the Group and used for acquiring or forming long-term assets by other means. Othergovernment subsidies are defined as government subsidies related to income. If no target of grants is specified in governmentdocuments, government subsidies are classified into government subsidies related to assets and government subsidies related to incomeas follows: (1) if the government document stipulates grants for a defined project, the grants will be divided according to the proportionof expenditures transformed into assets and expenditures recorded in expenses in the budget of the defined project, and the proportionwill be reviewed at each balance sheet date and be changed if necessary; and (2) if the government document contains general statementon the purpose of grants, other than a defined project, the grants will be treated as government subsidies related to income. Governmentsubsidies in the form of monetary assets shall be measured at the amount received or receivable. Government subsidies in the form ofnon-monetary assets shall be measured at fair value. If the fair value cannot be reliably acquired, the government subsidies shall bemeasured at nominal amount. Government subsidies measured at nominal amount shall be directly recorded in the current profits andlosses.The Group recognizes and measures government subsidies generally at the time of receipt according to the actually received amounts.However, at the end of the period, the subsidy shall be measured according to the amount receivable when there is conclusive evidencethat it can meet the relevant conditions stipulated by the financial support policy and is expected to receive financial support funds. Agovernment subsidy measured at the amount receivable shall meet the following conditions: (1) the amount of grant receivable hasbeen confirmed in a governmental document or can be reasonably estimated according to any officially issued measures for themanagement of financial support funds, without significant uncertainty in the estimated amount; (2) the measurement is based on thefinancial support projects and its measures for the management of financial support funds officially released and proactively disclosedby local fiscal authority according to the Government Information Disclosure Regulations, and the measures are inclusive (applicableto any eligible enterprise), other than for specific enterprises; (3) the relevant grant approval document has clearly stated the period ofpayment, and as the payment of the grant is guaranteed by corresponding fiscal budgets, there is reasonable assurance that the paymentwill be made within certain time of period; and (4) other relevant conditions should be met according to the actual situation of theGroup and the grant (if any).Asset-related government subsidies are recognized as deferred income, and shall be recorded in current profits and losses in stagesaccording to a reasonable and systematic method within the service life of the relevant assets. If income-related government subsidiesare received as compensation for related costs or losses in future periods, they are recognized as deferred income, and are recorded incurrent profits and losses during the period when the related costs or losses are recognized; those received as compensation for relatedcosts or losses incurred are directly included in current profits and losses.
If a government subsidy contains an asset-related component and an income-related component, the two components are subject toseparate accounting treatment. If it is difficult to distinguish them, the subsidy shall be classified as income-related governmentsubsidies.Government subsidies related to the daily operating activities of the Group shall be recorded in other income according to the natureof operating business. Government subsidies unrelated to the daily activities are recorded in non-operating income.Where any recognized government subsidy needs to be returned, in the case of related deferred income balance, the carrying amountof the deferred income balance shall be written down, and any excess shall be recognized in the profit or loss of the current period. Inother circumstances, the returned subsidy is directly recorded in the profit or loss of the current period.
34. Deferred tax assets/liabilities
(1) Current income taxes
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the amount expectedto be paid (or returned) according to the requirements of tax laws. The taxable income as basis for the current income tax expense iscalculated after appropriate adjustment is made to the pre-tax accounting profit of the year according to the requirements of tax laws.
(2) Deferred tax assets and liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax bases, or between the carryingamounts of those items that are not recognized as assets or liabilities and of which the tax bases can be determined according to taxlaws and tax bases, deferred tax assets and liabilities are recognized using the balance sheet liability method.For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arisingfrom a transaction (not a business combination) that affects neither accounting profits nor taxable profits (or deductible losses) at thetime of transaction, no deferred tax liability is recognized. In addition, for the taxable temporary differences associated with investmentsin subsidiaries, associates and joint ventures, if the Group is able to control the timing of the reversal of the temporary difference andit is probable that the temporary difference will not reverse in the foreseeable future, no deferred tax liability is recognized. Except forthe above exceptions, the Group recognizes deferred tax liabilities arising from all other taxable temporary differences.For temporary differences associated with the initial recognition of an asset or liability arising from a transaction (not a businesscombination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferredtax assets are recognized. In addition, for the deductible temporary differences associated with investments in subsidiaries, associatesand joint ventures, the corresponding deferred tax assets shall not be recognized if it is not probable that the temporary difference willreverse in the foreseeable future, or if it is not probable that taxable profits will be available in the future against which the deductibletemporary difference can be utilized. For the above exceptions, deferred tax assets for deductible temporary differences are recognizedby the Group to the extent that it is probable that taxable profits will be available against which the deductible temporary differencescan be utilized.For deductible losses and tax credits that can be carried forward to later years, the corresponding deferred tax assets are recognized tothe extent that the future taxable income that can be used to offset the deductible losses and tax credits is likely to be obtained.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expected to beapplicable when the asset is realized or the liability is settled.On the balance sheet date, the carrying amount of deferred tax assets shall be reviewed. If it is unlikely to obtain sufficient taxableincome in the future to offset against the profits arising from deferred tax assets, the carrying amount of the deferred tax assets shall bewritten down. When it is probable that sufficient taxable income will be available, such written-down amount shall be subsequentlyreversed.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.Except that current income taxes and deferred taxes arising from transactions or events recognized in other comprehensive income ordirectly recorded in shareholders’ equity are recorded in other comprehensive income or shareholders’ equity, and that deferred taxesarising from business combinations adjust the carrying amount of goodwill, all other current income taxes and deferred tax expensesor gains are recorded in the profit or loss of the current period.
(4) Income tax offset
When there is a legal right to settle on a net basis and the intention is to settle on a net basis or to realize assets and to settle liabilitiessimultaneously, the current income tax assets and current income tax liabilities of the Group are offset and presented as net amount.
When there is a legal right to settle current income tax assets and current income tax liabilities on a net basis, and the deferred taxassets and deferred tax liabilities are related to the income tax levied by the same tax administration department on the same tax payeror to different tax payers, but in each future period of reversing material deferred tax assets and liabilities, the tax payers involvedintend to settle the current income tax assets and liabilities on a net basis or realize assets and settle liabilities at the same time, thedeferred tax assets and deferred tax liabilities of the Group are offset and presented as net amount.
35. Lease
(1) Accounting treatment method of operating lease
For more information, see this section (3) - the determination method and accounting treatment method of leasing under the new leasingstandard.
(2) Accounting treatment method of financial lease
For more information, see this section (3) - the determination method and accounting treatment method of leasing under the new leasingstandard.
(3) The determination method and accounting treatment method of leasing under the new leasing standardLease refers to a contract under which a lessor assigns the right to use an asset to a lessee for consideration, for a defined period.If a contract is signed or changed after the date of initial implementation, the Group considers, at the date of commencement or change,whether the contract is a lease or contains a lease. Except for changes in the terms and conditions of the contract, the Group will notre-consider whether the contract is a lease or contains a lease.
(1) The Group as lessee
① Right-of-use assets
Except for short-term leases and leases for low-value assets, the Group recognizes the right-of-use assets of a lease at the leasecommencement date. The lease commencement date refers to the day from which the lessor offers the leased asset to the Group for itsuse. The right-of-use assets shall be initially measured at cost. The cost includes:
A. initially measured amounts of lease liabilities;B. any lease payments made at or before the lease commencement date, less the relative amount of any lease incentives enjoyed if thereare lease incentives;C. any initial direct costs incurred by the Group;D. an estimate of costs to be incurred by the Group in dismantling and removing the underlying assets, restoring the site on which it islocated or restoring the underlying asset to the condition required by the terms of the lease.The Group calculates the right-of-use assets for depreciation with reference to the provisions of Accounting Standards for BusinessEnterprises No. 4 - Fixed Assets concerning depreciation. If the Group can reasonably determine that it will obtain the ownership ofleased assets when the lease term expires, the right-of-use assets are depreciated over the remaining service life of the leased assets. Ifthe Group cannot reasonably determine that it will obtain the ownership of leased assets when the lease term expires, the right-of-useassets are depreciated over the shorter of the lease term and the remaining service life of the leased assets.The Group determines whether the right-of-use assets are impaired, and performs accounting treatment for recognized impairment lossaccording to the regulations of Accounting Standard for Business Enterprise No. 8 – Impairment of Assets.
② Lease liabilities
Except for short-term leases and leases for low-value assets, the Group initially measures the lease liabilities at the lease commencementdate according to the present value of the lease payment not made as of that date. When measuring the present value of a lease payment,the Group uses the interest rate implicit in the lease as the discount rate, and adopts the incremental borrowing rate as the discount rateif the interest rate implicit in the lease is not determinable.The lease payment refers to the amount paid by the Group to the lessor related to the right to use the leased assets during the lease term,including:
A. The fixed amount and substantial fixed amount less the relative amount of any lease incentives enjoyed if there are lease incentives;B. The index or rate based variable amount which is determined at the time of initial measurement according to the index or rateprevailing at the lease commencement date;
C. The exercise price of the call option when the Group reasonably decides to exercise the call option;D. The payment for exercising the option to terminate the lease, provided that it is reflected in the lease period that the Group willexercise the option to terminate the lease; andE. The estimated amount to be paid according to the residual value of guarantee provided by the Group.Variable lease payments not included in the measurement of lease liabilities, when actually incurred, shall be recorded in the currentprofits and losses or related asset costs.From the lease commencement date, the Group calculates the interest expense of lease liabilities for each period of the lease term at afixed periodic interest rate and records it in current profits and losses or related asset costs.After the lease commencement date, the Group will re-measure the lease liabilities and adjust the right-of-use assets if:
A. In the case of any change to the lease term or the result of evaluation on the call option, the lease liabilities will be re-measured bythe Group according to the changed lease payment and the present value calculated based on the modified discount rate.B. In the case of changes in the amount to be paid estimated based on the residual value of guarantee or the index or rate for calculatingthe lease payment, the Group will re-measure the lease liabilities according to the changed lease payment and the present valuecalculated from the original discounting rate.
③ Short-term leases and leases of low-value assets
For short-term leases and leases for low-value assets of buildings, transport vehicles, machinery equipment and office equipment, theGroup chooses not to recognize right-of-use assets or lease liabilities. The short-term lease refers to the lease that does not contain thecall option and has a lease period of no more than 12 months from the lease commencement date. The lease for low-value assets refersto the lease under which individual lease asset has a low value if it is brand new. In each period within the lease term, the Group recordsthe lease payments of short-term leases and leases for low-value assets into the profit or loss of the current period or the relevant assetcost using the straight-line method.
④ Change of lease
When a lease changes and the following conditions are satisfied, the Group will treat such change as an independent lease:
A. The Group expands the lease scope by acquiring the right to use one or more additional leased assets;B. The increased consideration is in line with the price of the expanded part of the lease scope as adjusted for the contract change.If a lease change is not treated as an independent lease, at the effective date of the lease change, the Group will re-apportion the changedcontract price, re-determine the lease term, and re-measure the lease liabilities according to the changed lease payment and the presentvalue calculated based on the modified discount rate.If the lease change narrows the lease scope or shortens the lease term, the Group will reduce the carrying value of the right-of-useassets accordingly, and record the gain or loss from the terminated or partially terminated lease in the profit or loss of the current period.If any other lease change triggers the re-measurement of the lease liabilities, the Group will adjust the carrying value of the right-of-use assets accordingly.
(2) The Group as lessor
① Division of a lease
If a contract contains the lease component and the non-lease component, the Group will apportion the contract consideration accordingto the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue concerning the apportionment of trading price.And the basis for apportionment is the respective prices of the lease component and the non-lease component.
② Classification of a lease
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Leases which are notfinancing leases are defined as operating leases.A. The Group as lessor under operating leasesThe Group adopts the straight-line method in each period of the lease term, and recognizes the lease receipts arising from operatingleases in rental income. The initial direct expenses related to an operating lease incurred by the Group are capitalized when incurred,apportioned during the lease term on the same recognition basis as rental income, and recorded in the current profit and loss byinstallments.The variable lease payment received by the Group under an operating lease not included in the lease receipt is recorded in the profit orloss of the current period at the time of actual occurrence.B. The Group as lessor under financial leases
At the lease commencement date, the Group measures the carrying value of the financing lease receivable as net lease investment, andde-recognizes the financing lease asset. The net lease investment is the sum of the unsecured residual value and the present value ofthe lease payment receivable at the lease commencement date discounted by the interest rate implicit in the lease.The lease payment refers to the amount paid by the lessee as the Group transfers the right to use the leased assets during the lease term,including:
(A). The fixed amount and substantial fixed amount paid by the lessee less the relative amount of any lease incentives received;(B). The lessee's index or rate based variable amount which is determined at the time of initial measurement according to the index orrate prevailing at the lease commencement date;(C). The exercise price of the call option when the Group reasonably decides that the lessee is to exercise the call option;(D). The payment made by the lessee for exercising the option to terminate the lease, provided that it is reflected in the lease periodthat the lessee will exercise the option to terminate the lease; and(E). The residual value of guarantee provided by the lessee, a party in association with the lessee and any independent third party whohas economic capacity to perform the guarantee obligation.Variable lease payment receivable not included in the measurement of lease net investment shall, when actually incurred, be includedin the current profits and losses.The Group measures and recognizes the interest income of each period within the lease term according to the fixed periodic interestrate.
③ Sublease
The Group as the sub-lessor considers the original lease and the sublease as two independent contracts. The Group classifies thesublease according to the right-of-use assets arising from the original lease, other than the underlying asset of the original lease.
④ Change of lease
If an operating lease changes, the Group will, from the effective date of the change, considers the change as a new lease, and the leasepayment received in advance or receivable related to the lease before the change as new lease payments.When a lease changes and the following conditions are satisfied, the Group will treat such change as an independent lease:
A. The Group expands the lease scope by acquiring the right to use one or more additional leased assets;B. The increased consideration is in line with the price of the expanded part of the lease scope as adjusted for the contract change.If a financing lease change is not treated as an independent lease, the Group will treat the changed lease as follows:
A. Assuming that the change takes effect at the lease commencement date, and the lease is classified as an operating lease, the Groupwill, from the effective date of the lease change, consider the change as a new lease and the net lease investment prior to the effectivedate of the lease commencement as the carrying value of the leased asset;B. Assuming that the change takes effect on the lease commencement date, and the lease is classified as a financing lease, the Groupwill conduct accounting in accordance with the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments concerning the modification or re-negotiation of contract.
36. Specific reserve
According to the relevant regulations of the Ministry of Finance and the Ministry of Emergency Management, the Group accruesspecific reserve for production safety. The specific reserve is mainly used for safety expenditure in the process of production andoperation.The provision for specific reserve is recognized as relevant cost or profit or loss for the current period, and it is also included in specificreserve. The specific reserve is written down when withdrawal of safety fund is of expense expenditure. If it is capital expenditure, theexpenditure incurred is recorded in construction in progress and recognized as fixed assets when the project is completed and is readyfor the intended use, and meanwhile, specific reserve is written down at the cost of the fixed assets and accumulated depreciation isrecognized at the same amount. Consequently, such fixed assets are not depreciated in subsequent periods.
37. Other important accounting policies and accounting estimates
While using accounting policies, due to the uncertainty in operating activities, the Group needs to make judgment, estimates andassumptions on the carrying value of accounts which cannot be measured accurately. The judgment, estimates and assumptions aremade based on the historical experience of the Group’s management and other factors that are considered to be relevant. The judgments,estimates and assumptions would affect the reported amounts of incomes, expenses, assets and liabilities, as well as the disclosure of
contingent liabilities at the balance sheet date. However, the actual results from the uncertainty in the estimates may differ from thecurrent estimates made by the Group’s management, subject to further significant adjustments to the carrying amounts of the affectedassets or liabilities.The above judgments, estimates and assumptions will be reviewed periodically by the Group on the going-concern basis. If a changein accounting estimates only affects the period in which the change occurs, the affected amount will be recognized in the period inwhich the change occurs. If the change affects both the period in which the change occurs and future periods, the affected amount willbe recognized in the period in which the change occurs.At the balance sheet date, the major fields in which the Group is required to make the judgments, estimates and assumptions on theamounts in the financial statements are shown below:
(1) Revenue recognition
As stated in this Note V. 32. ''Revenue'', the Group's revenue recognition involves the following significant accounting judgments andestimates: identification of customer contracts; estimation of the recoverability of the considerations enjoyed due to the transfer ofgoods to customers; identification of performance obligations in contracts; estimation of the variable consideration in a contract andthe amount of accumulated recognized income that is unlikely to be significantly reversed when the relevant uncertainty is eliminated;whether there is material financing component in a contract; estimation of separate selling prices of individual performance obligationsin a contract; determination on whether the performance obligation shall be performed in a time span or at a point of time; anddetermination of performance progress.The Group makes judgments based on historical experience and practices, and major changes in judgments and estimates would haveimpact (and even significant impact) on the change of operating income, operating cost, and profit and loss during the current or futureperiods.
(2) Lease
① Identification of a lease
While identifying that a contract is or contains a lease, the Group needs to assess whether there is an identified asset and the customerhas the right to use the asset for a certain period. During assessment, the Groups shall consider the nature or substantial replacement ofthe asset, and whether the customer has the right to obtain almost all economic benefits arising from the use of the asset during theperiod and can control the use of the asset.
② Classification of a lease
The Group as the lessor classifies leases into operating leases and financing leases. In the classification process, the management needsto make appropriate analysis and judgment on whether all risks and rewards related to the ownership of leased assets have beensubstantially transferred to the lessee.
③ Lease liabilities
The Group, as a lessee, initially measures the lease liabilities at the present value of lease payments that are unpaid at the leasecommencement date. For measuring the present value of the lease payment, the Group estimates the discounting rate in use and thelease term of the lease contract with an option of renewal or termination. For assessing the lease term, the Group considers all the factsand circumstances related to the economic benefits brought by the exercise of the option by the Group, including expected changes inthe facts and circumstances from the lease commencement date to the option exercise date. Different judgments and estimates wouldaffect the recognition of lease liabilities and right-of-use assets and further affect the profit or loss of subsequent periods.
(3) Impairment of financial assets
The Group assesses impairments of financial instruments using the expected credit loss model, where the Group is required to makesignificant judgments and estimates, as well as consider all reasonable and evidence-based information, including forward-lookinginformation. In making the judgments and estimates, the Group predicts expected changes in debtor's credit risk based on historicaldata, as well as economic policies, macroeconomic indicators, industry risks, external market conditions, technical conditions, changesin customer conditions and other factors.
(4) Provisions for the decline in value of inventories
Under accounting policies for inventories, the Group measures inventories according to the lower of cost and net realizable value. Forthe inventories with cost higher than net realizable value as well as obsolete and unsalable inventories, the Group calculates provisionsfor the impairment of inventories. The inventories are impaired to their net reliable value, depending on the assessment of salability ofinventories and their net realizable value. To identify inventory impairment, the management is required to make judgments andestimates after obtaining conclusive evidence, as well as considering the purpose of inventories held, the impact of events occurring
after the balance sheet date and other factors. Any difference between actual results and prior estimates will, in the period when relevantestimates are changed, affect the carrying amount of inventories and the provision for inventory impairment or reversal thereof.
(5) Fair value of financial instruments
If there is no financial instrument in an active trading market, its fair value is determined by the Group through various valuationmethods. The valuation techniques include disclosed cash flow modeling, etc. In the valuation process, the Group needs to estimatefuture cash flow, credit risk, market volatility and correlation, etc. and choose an appropriate discounting rate. These relevantassumptions are uncertain, and their changes would affect the fair value of financial instruments. For equity instrument investments orcontracts with public quotes, the Group will not regard costs as the best fair value estimate.
(6) Impairment provision for long-term assets
For non-current assets other than financial assets, the Group will, at the balance sheet date, judges whether there is an indication ofimpairment. For intangible assets with an uncertain service life, the impairment test will be carried out annually and when there is anindication of impairment. The impairment test will be carried out for non-current assets other than financial assets, when there is anindication that the carrying amount cannot be recovered.When the carrying value of an asset or group of assets is higher than the recoverable amount, the higher of the net of the fair value lessdisposal costs and the present value of estimated future cash flows represents the impairment.The net of the fair value less disposal costs is determined by the sales agreement price or observable market price of similar assets infair trade reduced by incremental costs directly attributable to the disposal of the asset.Important judgments shall be made on the output, selling price, related operating costs and discount rate used in calculating presentvalue of the asset (or a group of assets) in estimation of present value of future cash flows. When estimating the recoverable amount,the Group uses all relevant information available, including the output, selling price and related operating costs predicted on the basisof reasonable and evidence-based assumptions.The Group tests goodwill for any impairment annually at least. This requires estimating the present value of future cash flows of anasset group or group portfolio to which goodwill has been allocated. When estimating the present value of future cash flows, the Groupneeds to predict cash flows generating from an asset group or group portfolio in the future, and chooses an appropriate discount rate todetermine the present value of future cash flows.
(7) Depreciation and amortization
The Group depreciates and amortizes investment properties, fixed assets and intangible assets over their respective service life, usingthe straight-line method, with their respective residual value taken into account. The Group periodically reviews the service life ofassets to determine the amounts of depreciation and amortization expenses for each reporting period. The service life is determined bythe Group based on its historic experience acquired on similar assets and expected technical developments. For significant changes inprior estimates, depreciation and amortization expenses will be adjusted in the coming periods.
(8) Development costs
When determining capitalized amounts, the Group’s management needs to assume estimated future cash flows, appropriate discountrates and expected return periods of relevant assets.The Group’s management believes that the products with its self-developed proprietary technology have a broad market and goodprospects, and the market reaction to the products produced with these intangible assets also supports the management’s pre-estimatedincome arising from the project. However, the increasing competition makes the management reconsider the assumptions about marketshare and estimated gross profits of the products. After a thorough review, the Group’s management believes that the carrying valueof intellectual properties can be fully recovered notwithstanding a lowered rate of return of the products. The Group will continue tokeep close attention on relevant developments. Once there is an indication that it is necessary to adjust the assumptions of relevantaccounting estimates, the Group will make adjustment in the period when that indication appears.
(9) Deferred tax assets
To the extent that it is likely that there will be sufficient taxable profits to cover the losses, the Group recognizes deferred tax assets forall unused tax losses. In this case, the Group’s management shall make important judgments to estimate the time and amount of futuretaxable profits and, by taking into account of its tax plan, to determine the amount of deferred tax assets that should be recognized.
(10) Income tax
In normal operating activities of the Group, there are some transactions with certain uncertainties in final tax treatment and calculation.Tax deductible expenses for some items are subject to review and approval by tax authority. Any difference between final results andinitially estimated amounts due to these tax matters exerts impact on income taxes and deferred taxes of the period when the finalresults are determined.
38. Changes in important accounting policies and accounting estimates
(1) Important changes in accounting policy
? Applicable ? Not applicable
| Contents and causes of changes in accounting policy | Approval procedure | Notes |
| On December 30, 2021, the Ministry of Finance issued the Notice on Issuing the Interpretation No. 15 of the Accounting Standards for Business Enterprises (Finance and Accounting [2021] No. 35); on November 30, 2022, it issued the Notice on Issuing the Interpretation No. 16 of the Accounting Standards for Business Enterprises (Finance and Accounting [2022] No. 31). In accordance with the above provisions, the Company will make corresponding changes to the original accounting policies and implement them on the prescribed starting date. | 1. Changes in national policy requirements; 2. The Company held the 4th meeting of the 6th Board of Directors and the 4th meeting of the 6th Board of Supervisors on April 17, 2023, reviewed and approved the Proposal on Changes in Accounting Policy. The independent directors expressed their independent opinions on this matter. In accordance with relevant provisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange and Articles of Association, this issue of changes in accounting policy was submitted to the Board of Directors to review and approve, without the need of the submission to the Shareholders' Meeting. | The above changes in accounting policy have no significant impact on the financial statements of the Group and the Company. |
(2) Changes in important accounting estimates
? Applicable ? Not applicable
39. Others
NoneVI. Taxable Items
1. Main tax types and rates
| Tax types | Taxation basis | Tax rate |
| VAT | Output taxes on taxable income shall be calculated at the rate of 13%, 9% and 6%, and value added taxes are calculated and paid according to the difference resulting from the deduction of the allowed deductible input tax in the period. | 13%, 9%, 6% |
| City maintenance and construction tax | 7% and 5% of actually-paid turnover tax | 7%、5% |
| Enterprise income tax | 15% or 25%, for overseas subsidiaries, the tax shall be paid according to the statutory tax rate of the country or region where it is located. | 25%、15% |
| Education surcharge | 3% of the amount of actually-paid turnover tax | 3% |
| Local education surcharges | 2% of the amount of actually-paid turnover tax | 2% |
Disclose the specific information in the case of tax payers with different tax rates of enterprise income tax
| Name of taxpayer | Rate of income tax |
| Goertek Inc. | 15% |
| Weifang Goertek Electronics Co., Ltd. | 15% |
| Goertek Microelectronics Inc. | 15% |
| Qingdao Goertek Microelectronics Research Institute Co., Ltd. | 25% |
| Qingdao Goertek Intelligent Sensor Co., Ltd. | 15% |
| Weifang Goertek Microelectronics Co., Ltd. | 15% |
| Rongcheng Goertek Microelectronics Co., Ltd. | 15% |
| Beijing Goertek Microelectronics Co., Ltd. | 2.5% |
| Shenzhen Goertek Microelectronics Co., Ltd. | 25% |
| Wuxi Goertek Microelectronics Co., Ltd. | 25% |
| Shanghai Goertek Microelectronics Co., Ltd. | 25% |
| Goertek Microelectronics Holdings Co., Ltd. | 16.5% |
| Goertek Microelectronics (Hong Kong) Co., Ltd. | 16.5% |
| GOERTEK MICROELECTRONICS CORPORATION | The federal tax rate for enterprise income tax is 21%, and the local enterprise income tax rate in California is 8.84%. |
| GOERTEK MICROELECTRONICS KOREA CO., LTD. | Corporation tax: Tax rate shall be 10% if the income is less than KRW 200 million; 20% if the income is KRW 200 million-20 billion; 22% if the income is KRW 20 billion-300 billion; and 25% if the income is more than KRW 300 billion. local corporation tax: 10% of taxable income |
| Goertek Microelectronics Vietnam Company Limited | 20% |
| Weifang Goertek Trading Co., Ltd. | 25% |
| Yishui Goertek Electronics Co., Ltd. | 25% |
| Yili Precision Manufacturing Co., Ltd. | 15% |
| Weifang Goertek Communication Technology Co., Ltd. | 25% |
| Goertek Optical Technology Co., Ltd | 15% |
| Goertek Technology Co., Ltd. | 15% |
| Beijing Goertek Technology Co., Ltd. | 15% |
| Qingdao Goertek Acoustics Technology Co., Ltd. | 25% |
| Shenzhen Goertek Technology Co., Ltd. | 15% |
| Shanghai Goertek Technology Co., Ltd. | 25% |
| Nanjing Goertek Technology Co., Ltd. | 25% |
| Weifang Lokomo Precision Industry Co., Ltd. | 15% |
| Goertek Investment Co., Ltd. | 25% |
| Beijing Goertek Investment Management Co., Ltd. | 25% |
| Olive Smart Hardware Investment Center LP | -- |
| Dongguan JoyForce Precision Manufacturing Co., Ltd. | 15% |
| Goertek Intelligence Technology Co., Ltd. | 15% |
| Rongcheng Goertek Technology Co., Ltd. | 25% |
| Qingdao Goertek Commercial Factoring Co., Ltd. | 25% |
| Kunshan Goertek Electronics Co., Ltd | 15% |
| Nanning Goertek Electronics Co., Ltd | 25% |
| Nanning Goertek Trading Co., Ltd. | 25% |
| Xi’an Goertek Electronic Technology Co., Ltd. | 15% |
| Yishui TECO Electronic Technology Co., Ltd. | 25% |
| Goertek Optical Technology (Qingdao) Co., Ltd | 25% |
| Goertek Optical Technology (Shanghai) Co., Ltd | 25% |
| Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership) | -- |
| Weifang Goertek Electronics Co., Ltd. | 25% |
| Qingdao Goertek Horizons Technology Co., Ltd | 25% |
| Weifang High-tech Zone Goertek Education Center | 25% |
| Goertek Vina Co., Ltd | 20% |
| Goertek Technology Korea Co., Ltd. | Corporation tax: Tax rate shall be 10% if the income is less than KRW 200 million; 20% if the income is KRW 200 million-20 billion; 22% if the income is KRW 20 billion-300 billion; and 25% if the income is more than KRW 300 billion. local corporation tax: 10% of taxable income |
| Goertek (HongKong) Co.,Limited | The tax rate of 8.25% is applied to the taxable profit which does not exceed HKD 2,000,000, and the tax rate of 16.5% is applied to the part of taxable profit which exceeds HKD 2,000,000. |
| Goertek Technology Vina Company Limited | 20% |
| Goertek Precision Industry Vietnam Company Limited | 20% |
| GoerTek Audio Technologies Aps | 22% |
| Goertek Seiki Technology Co., Ltd. | 38% |
| Optimas Capital Partners Fund LP | -- |
| Goertek Electronics, Inc. | The federal tax rate for enterprise income tax is 21%, and the local enterprise income tax rate in California is 8.84%. |
| Goertek Technology Taiwan Co., Ltd. | 20% |
| Goertek Technology Japan Co., Ltd. | 38% |
| Goertek Technology (Hong Kong) Co.,Limited | 16.5% |
Other explanations:
Shanghai Ganyuzhi Technology Co., Ltd. changed its name to Shanghai Goertek Microelectronics Co., Ltd. on November 3, 2022.
2. Tax incentives
(1) According to the Reply on the Filings of the First Batch of High-Tech Enterprises in Shandong Province in 2020 issued by theOffice of Leading Group for the Recognition and Management of National High-Tech Enterprises, the Company and its subsidiaries,Weifang Goertek Electronics Co., Ltd. and Weifang Goertek Microelectronics Co., Ltd., have been recognized as high-tech enterprisesfor a 3-year validity period, and their preferential period for enterprise income tax is from January 1, 2020 to December 31, 2022. Theenterprise income tax rate of 15% applied to the Company and its subsidiaries, Weifang Goertek Electronics Co., Ltd. and WeifangGoertek Microelectronics Co., Ltd., for year 2022.
(2) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2022, issued by the Office ofLeading Group for the Recognition and Management of National High-Tech Enterprises on January 6, 2023, Goertek MicroelectronicsInc., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterprise income taxis from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to Goertek Microelectronics Inc. foryear 2022.
(3) According to the Reply on the Filings of High-Tech Enterprises in Qingdao City in 2020, issued by the Office of Leading Groupfor the Recognition and Management of National High-Tech Enterprises on January 15, 2021, a subsidiary, Qingdao Goertek IntelligentSensor Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterpriseincome tax is from January 1, 2020 to December 31, 2022. The enterprise income tax rate of 15% applied to the subsidiary, QingdaoGoertek Intelligent Sensor Co., Ltd., for year 2022.
(4) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2022, issued by theOffice of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2023, two subsidiaries,Rongcheng Goertek Microelectronics Co., Ltd. and Yili Precision Manufacturing Co., Ltd., have been recognized as a high-techenterprise for a validity period of 3 years, and the preferential period for enterprise income tax is from January 1, 2022 to December31, 2024. The enterprise income tax rate of 15% applied to Rongcheng Goertek Microelectronics Co., Ltd. and Yili PrecisionManufacturing Co., Ltd. for year 2022.
(5) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2021 issued by theOffice of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2022, a subsidiary,Goertek Optical Technology Co., Ltd, has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferentialperiod for enterprise income tax is from January 1, 2021 to December 31, 2023. The enterprise income tax rate of 15% applied to thesubsidiary, Goertek Optical Technology Co., Ltd, for year 2022.
(6) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2022 issued by the Office ofLeading Group for the Recognition and Management of National High-Tech Enterprises on December 14, 2022, Goertek TechnologyCo., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterprise incometax is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to the subsidiary, Goertek TechnologyCo., Ltd., for year 2022.
(7) According to the Reply on the Filings of the Third Batch of High-Tech Enterprises in Beijing City in 2020 (GKHZ [2021] No.37),issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 22, 2021,a subsidiary, Beijing Goertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, andits preferential period for enterprise income tax is from January 1, 2020 to December 31, 2022. The enterprise income tax rate of 15%applies to the subsidiary, Beijing Goertek Technology Co., Ltd., for year 2022.
(8) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shenzhen in 2022 issued by the Office ofLeading Group for the Recognition and Management of National High-Tech Enterprises on December 19, 2022, a subsidiary, ShenzhenGoertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential periodfor enterprise income tax is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to the subsidiary,Shenzhen Goertek Technology Co., Ltd., for year 2022.
(9) According to the Notice on Publishing a List of the Second Batch of High-Tech Enterprises to be Recognized in Shandong Provincein 2020 issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December8, 2020, Weifang Lokomo Precision Industry Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise fora validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2020 to December 31, 2022. Theenterprise income tax rate of 15% applied to the subsidiary, Weifang Lokomo Precision Industry Co., Ltd. for year 2022.
(10) According to the Notice on Publishing the Filings of the Second Batch of High-Tech Enterprises in Guangdong Province in 2021issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 20, 2021,Dongguan JoyForce Precision Manufacturing Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprisefor a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2021 to December 31, 2023. Theenterprise income tax rate of 15% applies to the subsidiary, Dongguan JoyForce Precision Manufacturing Co., Ltd. for year 2022.
(11) According to the Announcement on Filing the Second Batch of High-Tech Enterprises in Guangdong Province in 2022 issued bythe Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 22, 2022, GoertekIntelligence Technology Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise for a validity period of3 years, and its preferential period for enterprise income tax is from January 1, 2022 to December 31, 2024. The enterprise income taxrate of 15% applied to the subsidiary, Goertek Intelligence Technology Co., Ltd., for year 2022.
(12) According to the Notice on Publishing a List of the Second Batch of Proposed Recognized High-Tech Enterprises in JiangsuProvince in 2021 issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises onNovember 30, 2021, Kunshan Goertek Electronics Co., Ltd, a subsidiary of the Company, has been recognized as a high-tech enterprisefor a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2021 to December 31, 2023. Theenterprise income tax rate of 15% applied to the subsidiary, Kunshan Goertek Electronics Co., Ltd, for year 2022.
(13) According to the Reply on the Filings of the First Batch of High-Tech Enterprises in Shaanxi Province in 2022 (GKHZ [2022]No. 170) issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on November14, 2022, Xi’an Goertek Electronic Technology Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprisefor a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2022 to December 31, 2024. Theenterprise income tax rate of 15% applied to the subsidiary, Xi’an Goertek Electronic Technology Co., Ltd., for year 2022.
(14) Goertek (HongKong) Co.,Limited is an entity eligible for the two-tier profit tax system. The tax rate of 8.25% is applied to thetaxable profit which does not exceed HKD 2,000,000, and the tax rate of 16.5% is applied to the part of taxable profit which exceedsHKD 2,000,000.
(15) According to the Announcement of the Ministry of Finance and the State Taxation Administration on Implementing thePreferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial and Commercial Households(Announcement No.12/2021 of the Ministry of Finance and the State Taxation Administration) and the Announcement of the StateTaxation Administration on Matters Concerning the Implementation of Preferential Income Tax Policies Supporting the Developmentof Small Low-Profit Enterprises and Individual Industrial and Commercial Households (Announcement No.8/2021 of the StateTaxation Administration), from January 1, 2021 to December 31, 2022, for small and low-profit enterprises, the portion of annualtaxable income not exceeding 1 million yuan shall be included in the taxable income at a rate of 12.5%, and enterprise income tax willbe levied at the rate of 20%. The above preferential tax policies are applicable to the subsidiary, Beijing Goertek Microelectronics Co.,Ltd., and enterprise income tax is levied at the actual tax rate of 2.5% in 2022.
(16) According to the laws of Vietnam, GOERTEK MICROELECTRONICS VIETNAM COMPANY LIMITED, a subsidiary of theCompany, enjoys tax exemption for 4 years and a 50% reduction of payable tax amounts for 9 subsequent years. The preferential CITrate is 10% for 15 years from the first year of income generation. At the same time, starting from the first profitable year (after makingup for the losses of previous years), the first to fourth years are exempt from corporate income tax, and the fifth to thirteenth years aresubject to a 50% reduction in corporate income tax. If the enterprise has no taxable profit within three years from the start of taxincentive activities, the tax holiday and tax reduction period will be calculated from the fourth year of operation. The subsidiary isexempt from corporate income tax in 2022.
3. Others
NoneVII. Notes to consolidated financial statements
1. Cash at bank and on hand
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 33,671.21 | 160,703.83 |
| Bank deposits | 11,290,088,881.75 | 9,137,740,198.21 |
| Other monetary capital | 1,392,748,538.84 | 910,620,794.05 |
| Total | 12,682,871,091.80 | 10,048,521,696.09 |
| Including: Total amounts deposited abroad | 1,370,158,074.20 | 1,091,856,806.03 |
| The total funds restricted by mortgage, pledge or freeze are as follows: | 1,392,748,538.84 | 910,620,794.05 |
Other explanations:
Other monetary funds at the end of the period mainly involve notes, bonds and L/C margins.
2. Financial assets held for trading
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit and loss | 338,662,097.66 | 119,267,279.02 |
| Including: | ||
| Investments in equity instruments | 152,722,198.06 | 98,804,286.66 |
| Derivative financial assets | 185,939,899.60 | 20,462,992.36 |
| Total | 338,662,097.66 | 119,267,279.02 |
3. Notes receivable
(1) Notes receivable listed by classification
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance notes | 25,847,492.24 | 48,384,771.72 |
| Commercial acceptance notes | 1,709,928.75 | |
| Total | 25,847,492.24 | 50,094,700.47 |
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad-debt provision | Book value | Book balance | Bad-debt provision | Book value | |||||
| Amount | Proportion | Amount | Proportion of accrual | Amount | Proportion | Amount | Proportion of accrual | |||
| Notes receivable with bad debt reserves by group | 25,847,492.24 | 100.00% | 25,847,492.24 | 50,094,700.47 | 100.00% | 50,094,700.47 | ||||
| Including: | ||||||||||
| Bank acceptance notes | 25,847,492.24 | 100.00% | 25,847,492.24 | 48,384,771.72 | 96.59% | 48,384,771.72 | ||||
| Commercial acceptance notes | 1,709,928.75 | 3.41% | 1,709,928.75 | |||||||
| Total | 25,847,492.24 | 100.00% | 25,847,492.24 | 50,094,700.47 | 100.00% | 50,094,700.47 | ||||
If the provision for bad debts on notes receivable is based on the general model of expected credit losses, please disclose informationabout the provision for bad debts by referring to the disclosure of other receivables:
? Applicable ? Not applicable
(2) Accrual, recovery or return of bad debt reserve in current period
None
(3) Notes receivable pledged at the end of the period
Unit: RMB
| Item | Amount pledged at the end of the period |
| Bank acceptance notes | 5,848,815.01 |
| Total | 5,848,815.01 |
Other explanations:
A note pledge is a splitting of a large denomination note into multiple banker's acceptance bills in small denomination.
(4) Notes receivable endorsed or discounted by the Group at the end of the period and not yet due on thebalance sheet date
Unit: RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Bank acceptance notes | 2,371,001.15 | |
| Total | 2,371,001.15 |
(5) Notes that have been transferred to accounts receivable by the Group at the end of the period due to thenon-performance of the contract of the drawerNone
(6) Notes receivable actually written off in the current period
None
4. Accounts receivable
(1) Accounts receivable disclosed by classification
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad-debt provision | Book value | Book balance | Bad-debt provision | Book value | |||||
| Amount | Proportion | Amount | Proportion of accrual | Amount | Proportion | Amount | Proportion of accrual | |||
| Accounts receivable with bad debts reserves by group | 14,545,194,129.78 | 100.00% | 149,013,346.85 | 1.02% | 14,396,180,782.93 | 12,025,540,710.73 | 100.00% | 126,326,184.81 | 1.05% | 11,899,214,525.92 |
| Including: | ||||||||||
| Accounts receivable aging group | 14,310,390,851.16 | 98.39% | 147,839,330.46 | 1.03% | 14,162,551,520.70 | 11,857,375,456.09 | 98.60% | 125,485,358.54 | 1.06% | 11,731,890,097.55 |
| Portfolio of factoring receivables | 234,803,278.62 | 1.61% | 1,174,016.39 | 0.50% | 233,629,262.23 | 168,165,254.64 | 1.40% | 840,826.27 | 0.50% | 167,324,428.37 |
| Total | 14,545,194,129.78 | 100.00% | 149,013,346.85 | 1.02% | 14,396,180,782.93 | 12,025,540,710.73 | 100.00% | 126,326,184.81 | 1.05% | 11,899,214,525.92 |
Bad debt reserves on a group basis: Accounts receivable aging group
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Within 1 year | 14,298,053,717.77 | 142,980,537.18 | 1.00% |
| 1 to 2 years | 10,227,450.14 | 3,068,235.02 | 30.00% |
| 2 to 3 years | 638,249.98 | 319,124.99 | 50.00% |
| Over 3 years | 1,471,433.27 | 1,471,433.27 | 100.00% |
| Total | 14,310,390,851.16 | 147,839,330.46 | |
Description for basis of determining the group:
For further details, please see Note V. 10. ''Impairment of financial assets''.
Provision for bad debts by group: portfolio of factoring receivables
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Undue | 234,803,278.62 | 1,174,016.39 | 0.50% |
| Overdue 1-90 days | |||
| Overdue 91-180 days | |||
| Overdue 181-360 days | |||
| Overdue more than 360 days | |||
| Total | 234,803,278.62 | 1,174,016.39 | |
Description for basis of determining the group:
For further details, please see Note V. 10. ''Impairment of financial assets''.If the provision for bad debts on accounts receivable is based on the general model of expected credit losses, please discloseinformation about the provision for bad debts by referring to the disclosure of other receivables:
? Applicable ? Not applicableDisclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 14,532,856,996.39 |
| 1 to 2 years | 10,227,450.14 |
| 2 to 3 years | 638,249.98 |
| Over 3 years | 1,471,433.27 |
| 3 to 4 years | 1,397,650.48 |
| 4 to 5 years | 0.00 |
| Over 5 years | 73,782.79 |
| Total | 14,545,194,129.78 |
(2) Accrual, recovery or return of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
| Category | Opening balance | Changes in amount of the current period | Closing balance | |||
| Accrual | Withdrawal or write-back | Write-off | Other | |||
| Accounts receivable with bad debts reserves by group | 126,326,184.81 | 16,834,146.02 | -5,853,016.02 | 149,013,346.85 | ||
| Total | 126,326,184.81 | 16,834,146.02 | -5,853,016.02 | 149,013,346.85 | ||
Among them, significant information of bad debt reserves withdrawn or written back in the current period:
NoneOther explanations:
Bad debt provision for factoring receivables accrued, reversed or recovered during the period
| Bad-debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss over the next 12 months | Expected credit loss for the entire duration (credit impairment not occurred) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance at the end of the previous year | 840,826.27 | 840,826.27 | ||
| In the current period, the balance at the end of the previous year: | ||||
| - Transferred to second stage | ||||
| - Transferred to third stage | ||||
| - Reversed to second stage | ||||
| - Reversed to first stage | ||||
| Accrual in the current period | 333,190.12 | 333,190.12 | ||
| Current reverse | ||||
| Current resale | ||||
| Amount written off in the current period | ||||
| Other changes | ||||
| Closing balance | 1,174,016.39 | 1,174,016.39 |
(3) Accounts receivable actually written off in current period
None
(4) Accounts receivable of the 5 highest closing balance by debtor
Unit: RMB
| Company name | Closing balance of accounts receivable | Proportion of total closing balance of accounts receivable | Closing balance of bad debt provision |
| Customer 1 | 6,320,677,712.98 | 43.46% | 63,206,777.13 |
| Customer 2 | 1,852,535,914.15 | 12.74% | 18,525,359.14 |
| Customer 3 | 882,328,281.57 | 6.07% | 8,823,282.81 |
| Customer 4 | 868,620,745.78 | 5.97% | 8,686,207.46 |
| Customer 5 | 835,789,178.64 | 5.74% | 8,357,891.79 |
| Total | 10,759,951,833.12 | 73.98% |
(5) Amount of assets and liabilities formed by transferring accounts receivable and continuing to beinvolvedNone
(6) Accounts receivable derecognized due to transfer of financial assets
Unit: RMB
| Transfer method of financial assets | Amount of accounts receivable recognized at the end of the period | Gains or losses related to derecognition |
| Buyout factoring | 5,303,127,647.05 | -23,037,232.06 |
5. Financing receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Notes receivable | 22,375,874.12 | 14,575,230.24 |
| Total | 22,375,874.12 | 14,575,230.24 |
Changes in the current period of financing receivables and changes in fair value? Applicable ? Not applicableIf the provision for impairment of financing receivables is accrued according to the general model of expected credit loss, pleaserefer to the disclosure methods for other receivables when disclosing information related to provision for impairment:
? Applicable ? Not applicable
6. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 50,645,746.34 | 99.98% | 85,353,901.12 | 87.50% |
| 1 to 2 years | 10,407.09 | 0.02% | 12,190,916.86 | 12.50% |
| Total | 50,656,153.43 | 97,544,817.98 | ||
Explanation of reasons why advances to suppliers aged more than 1 year with significant amount are not settled in time:
None
(2) Advance payment in the five highest closing balance by seller
| Company name | Book balance (RMB) | Percentage of total balance of prepayment (%) |
| Company 1 | 7,987,275.00 | 15.77 |
| Company 2 | 6,666,720.00 | 13.16 |
| Company 3 | 5,847,378.37 | 11.54 |
| Company 4 | 3,869,299.47 | 7.64 |
| Company 5 | 2,306,248.20 | 4.55 |
| Total | 26,676,921.04 | 52.66 |
7. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 96,442,803.18 | 374,669,355.98 |
| Total | 96,442,803.18 | 374,669,355.98 |
(1) Interest receivable
None
(2) Dividends receivable
None
(3) Other receivables
1) Classification of other receivables by nature of payment
Unit: RMB
| Nature of payment | Closing book balance | Opening book balance |
| Tax refund for export receivable | 1,541,663.86 | 107,739,537.40 |
| Security deposit | 56,247,217.13 | 90,839,988.55 |
| Current account | 9,261,136.47 | 164,646,290.05 |
| Withholding and remitting social insurance and housing provident fund | 53,852,019.34 | 39,293,343.86 |
| Other | 572,915.09 | 815,580.66 |
| Total | 121,474,951.89 | 403,334,740.52 |
2) Provision for bad debts
Unit: RMB
| Bad-debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss over the next 12 months | Expected credit loss for the entire duration (credit impairment not occurred) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance as of January 1, 2022: | 28,665,384.54 | 28,665,384.54 | ||
| Balance as of January 1, 2022 in the current period | ||||
| - Transferred to third stage | -894,232.57 | 894,232.57 | ||
| Accrual in the current period | -3,024,992.01 | 411,441.91 | -2,613,550.10 | |
| Amount written off in the current period | 970,882.57 | 970,882.57 | ||
| Other changes | 48,803.16 | 48,803.16 | ||
| Balance as of December 31, 2022: | 24,697,356.80 | 334,791.91 | 25,032,148.71 |
Significant changes in the carrying value of changes in the allowances for losses in the current period? Applicable ? Not applicableDisclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 84,047,670.81 |
| 1 to 2 years | 10,851,113.92 |
| 2 to 3 years | 11,279,658.86 |
| Over 3 years | 15,296,508.30 |
| 3 to 4 years | 3,010,094.34 |
| 4 to 5 years | 6,358,648.54 |
| Over 5 years | 5,927,765.42 |
| Total | 121,474,951.89 |
3) Accrual, recovery or return of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
| Category | Opening balance | Changes in amount of the current period | Closing balance | |||
| Accrual | Withdrawal or write-back | Write-off | Other | |||
| Accounts receivable with bad debts reserves by group | 28,665,384.54 | -2,613,550.10 | 970,882.57 | 48,803.16 | 25,032,148.71 | |
| Total | 28,665,384.54 | -2,613,550.10 | 970,882.57 | 48,803.16 | 25,032,148.71 | |
Among them, significant amount in bad debt reserves written back or withdrawn in the current period:
None
4) Other receivables actually written off in the current period
Unit: RMB
| Item | Written off amount |
| Other receivables actually written off | 970,882.57 |
Among them, write-off of other significant receivables:
None
5) Other receivables of the 5 highest closing balance by debtor
Unit: RMB
| Company name | Nature of payment | Closing balance | Aging | Ratio in the total closing balance of other receivables | Closing balance of bad debt provision |
| 1 | Withholding and remitting social insurance and housing provident fund | 53,852,019.34 | Within 1 year | 44.34% | 538,520.19 |
| 2 | Security deposit | 6,634,710.00 | Over 3 years | 5.46% | 6,634,710.00 |
| 3 | Earnest money | 6,522,194.38 | Over 3 years | 5.37% | 6,522,194.38 |
| 4 | Security deposit | 6,213,130.31 | 2-3 years | 5.11% | 3,106,565.16 |
| 5 | Earnest money | 6,000,000.00 | Within 1 year, 1-2 years | 4.94% | 930,000.00 |
| Total | 79,222,054.03 | 65.22% | 17,731,989.73 |
6) Other receivables involving government subsidies
None
7) Other receivables derecognized due to transfer of financial assets
None
8) Amount of assets and liabilities formed by transferring other receivables and continuing to be involvedNone
8. Inventories
Whether the Company needs to comply with disclosure requirements of real estate industryNo
(1) Inventory classification
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Inventory falling price reserves or provision for impairment of contract performance cost | Book value | Book balance | Inventory falling price reserves or provision for impairment of contract performance cost | Book value | |
| Raw materials | 6,446,001,906.31 | 258,676,409.56 | 6,187,325,496.75 | 5,166,920,234.13 | 110,350,236.94 | 5,056,569,997.19 |
| Products in process | 2,676,387,256.76 | 565,750,473.85 | 2,110,636,782.91 | 2,315,184,723.77 | 59,814,311.48 | 2,255,370,412.29 |
| Goods in stock | 8,733,573,211.28 | 246,557,267.39 | 8,487,015,943.89 | 4,408,510,122.04 | 59,150,749.51 | 4,349,359,372.53 |
| Revolving materials | 563,692,521.03 | 563,692,521.03 | 421,008,703.37 | 421,008,703.37 | ||
| Total | 18,419,654,895.38 | 1,070,984,150.80 | 17,348,670,744.58 | 12,311,623,783.31 | 229,315,297.93 | 12,082,308,485.38 |
(2) Inventory falling price reserves or provision for impairment of contract performance cost
Unit: RMB
| Item | Opening balance | Increased amount in the current period | Decreased amount in the current period | Closing balance | ||
| Accrual | Other | Write-back or resale | Other | |||
| Raw materials | 110,350,236.94 | 349,831,755.11 | 201,853,198.93 | -347,616.44 | 258,676,409.56 | |
| Products in process | 59,814,311.48 | 601,865,519.43 | 97,356,053.87 | -1,426,696.81 | 565,750,473.85 | |
| Goods in stock | 59,150,749.51 | 251,582,163.71 | 68,213,059.58 | -4,037,413.75 | 246,557,267.39 | |
| Total | 229,315,297.93 | 1,203,279,438.25 | 367,422,312.38 | -5,811,727.00 | 1,070,984,150.80 | |
(3) Explanation of the closing balance of inventory containing the capitalized amount of borrowing costsNone
(4) Explanation of amortization amount of contract performance cost in current periodNone
9. Current portion of non-current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Current portion of non-current assets | 70,302,566.25 | |
| Total | 70,302,566.25 |
Significant debt investments/other debt investmentsNone
10. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Input tax retained for VAT | 288,229,492.06 | 326,273,163.10 |
| Input tax to be verified and to be deducted | 74,879,772.45 | 129,974,831.71 |
| Advance payment of enterprise income tax | 152,235,755.00 | 6,833,590.83 |
| Other | 15,646,416.05 | 12,690,641.96 |
| Total | 530,991,435.56 | 475,772,227.60 |
11. Long-term equity investments
Unit: RMB
| Invested entity | Opening balance (book value) | Increase or decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||||||
| Investment addition | Investment reduction | Recognized investment gain and loss under equity method | Other comprehensive income adjustments | Other changes in equity | Cash dividends or profits declared | Provision for impairment reserve | Other | ||||
| I. Joint Venture | |||||||||||
| II. Affiliated enterprises | |||||||||||
| AKM Industrial Company Limited | 318,147,443.07 | 325,487,199.68 | 9,868,272.14 | -15,493,341.86 | 4,520,134.39 | -17,484,960.72 | |||||
| Qingdao Virtual Reality Institute Co., Ltd. | 39,212,455.60 | -1,135,734.37 | 38,076,721.23 | ||||||||
| Enkris Semiconductor Inc. | 80,042,305.24 | 50,000,000.00 | 1,260,535.68 | -676,054.19 | 130,626,786.73 | ||||||
| Beijing Uphoton Technology Co., Ltd. | 200,000,000.00 | -7,694,836.13 | 192,305,163.87 | ||||||||
| Sub-total | 437,402,203.91 | 250,000,000.00 | 325,487,199.68 | 2,298,237.32 | -15,493,341.86 | -676,054.19 | 4,520,134.39 | -17,484,960.72 | 361,008,671.83 | ||
| Total | 437,402,203.91 | 250,000,000.00 | 325,487,199.68 | 2,298,237.32 | -15,493,341.86 | -676,054.19 | 4,520,134.39 | -17,484,960.72 | 361,008,671.83 |
12. Investments in other equity instruments
Unit: RMB
| Item | Closing balance | Opening balance |
| Investment projects of the Fund Company | 399,417,490.79 | 318,163,764.54 |
| Mobvoi Inc. | 139,292,000.00 | 127,514,000.00 |
| Shenzhen New Radio Technology Co., Ltd. | 20,000,000.00 | 20,000,000.00 |
| Nanjing Xinshijie Microelectronics Technology Co., Ltd. | 50,000,000.00 | |
| KOLMOSTAR (CAYMAN) LIMITED | 34,823,000.00 | |
| EMPOWER SEMICONDUCTOR, INC. | 55,716,771.45 | |
| Total | 699,249,262.24 | 465,677,764.54 |
Disclose investments in non-trading equity instruments of the period by item
Unit: RMB
| Name of project | Dividend income recognized | Accumulative gains | Accumulative losses | Amount of other comprehensive income transferred to undistributed profits | Reasons for designation of financial assets at fair value through other comprehensive income | Reasons for other comprehensive income transferred to undistributed profits |
| Investment projects of the Fund Company | 63,867,720.18 | 54,204,866.03 | Non-trading equity instrument | Disposal of equity | ||
| Mobvoi Inc. | Non-trading equity instrument | |||||
| Shenzhen New Radio Technology Co., Ltd. | Non-trading equity instrument | |||||
| Nanjing Xinshijie Microelectronics Technology Co., Ltd. | Non-trading equity instrument | |||||
| KOLMOSTAR (CAYMAN) LIMITED | Non-trading equity instrument | |||||
| EMPOWER SEMICONDUCTOR, INC. | Non-trading equity instrument | |||||
| Total | 63,867,720.18 | 54,204,866.03 |
Other explanations:
The accumulative gain from the disposal of the equity held by the fund company is RMB 93,489,685.96, of which RMB 54,204,866.03is transferred to undistributed profits, and equity attributable to other partners of the fund company is RMB 39,284,819.93.
13. Other non-current financial assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets classified as measured at fair value with changes recorded in current profits and losses | 318,661,575.31 | 201,430,042.13 |
| Total | 318,661,575.31 | 201,430,042.13 |
14. Fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 21,459,756,268.25 | 18,123,352,480.76 |
| Total | 21,459,756,268.25 | 18,123,352,480.76 |
(1) Overview of fixed assets
Unit: RMB
| Item | Houses and buildings | Production equipment | Test equipment | Office equipment | Transportation equipment | Total |
| I. Original book value: | ||||||
| 1. Opening balance | 8,908,580,031.83 | 14,760,235,631.60 | 2,270,622,048.27 | 627,324,825.83 | 23,392,392.51 | 26,590,154,930.04 |
| 2. Amount increased in current period | 954,037,962.29 | 5,342,238,805.29 | 653,888,026.10 | 143,902,249.49 | 1,442,342.86 | 7,095,509,386.03 |
| (1) Purchase | 28,931,306.90 | 1,738,835,094.71 | 232,984,667.73 | 135,329,066.20 | 1,376,826.86 | 2,137,456,962.40 |
| (2) Transfer from construction in progress | 822,311,194.19 | 3,484,350,588.69 | 407,795,051.27 | 4,334,451.45 | 4,718,791,285.60 | |
| (3) Increase in business combinations | ||||||
| (4) Impact of difference from translation of statements in foreign currency | 49,073,587.67 | 118,860,328.51 | 13,108,307.10 | 4,238,731.84 | 65,516.00 | 185,346,471.12 |
| (5) Provisional estimate adjustment | 53,721,873.53 | 192,793.38 | 53,914,666.91 | |||
| 3. Amount decreased in current period | 15,780,124.16 | 600,452,131.25 | 229,656,360.99 | 41,007,602.48 | 518,730.34 | 887,414,949.22 |
| (1) Disposal or scrapping | 59,825.50 | 483,700,868.86 | 99,169,031.48 | 40,998,358.50 | 518,730.34 | 624,446,814.68 |
| (2) Transfer to construction in progress | 116,400,876.14 | 130,487,329.51 | 246,888,205.65 |
| (3) Provisional estimate adjustment | 15,720,298.66 | 350,386.25 | 16,070,684.91 | |||
| (4) Others - disposal of subsidiaries | 9,243.98 | 9,243.98 | ||||
| 4. Closing balance | 9,846,837,869.96 | 19,502,022,305.64 | 2,694,853,713.38 | 730,219,472.84 | 24,316,005.03 | 32,798,249,366.85 |
| II. Accumulated depreciation | ||||||
| 1. Opening balance | 1,322,505,674.30 | 5,970,789,207.13 | 831,755,135.49 | 325,266,424.92 | 16,486,007.44 | 8,466,802,449.28 |
| 2. Amount increased in current period | 307,373,203.80 | 2,055,865,192.39 | 297,801,645.96 | 104,812,884.43 | 1,818,061.66 | 2,767,670,988.24 |
| (1) Accrual | 304,074,483.41 | 2,033,456,070.43 | 295,499,133.96 | 102,518,087.30 | 1,806,379.33 | 2,737,354,154.43 |
| (2) Impact of difference from translation of statements in foreign currency | 3,298,720.39 | 22,409,121.96 | 2,302,512.00 | 2,294,797.13 | 11,682.33 | 30,316,833.81 |
| 3. Amount decreased in current period | 28,416.95 | 343,711,613.31 | 107,419,493.15 | 23,829,173.94 | 456,563.23 | 475,445,260.58 |
| (1) Disposal or scrapping | 28,416.95 | 325,835,508.12 | 66,818,768.54 | 23,828,640.60 | 456,563.23 | 416,967,897.44 |
| (2) Transfer to construction in progress | 17,876,105.19 | 40,600,724.61 | 58,476,829.80 | |||
| (3) Others - disposal of subsidiaries | 533.34 | 533.34 | ||||
| 4. Closing balance | 1,629,850,461.15 | 7,682,942,786.21 | 1,022,137,288.30 | 406,250,135.41 | 17,847,505.87 | 10,759,028,176.94 |
| III. Impairment provision | ||||||
| 1. Opening balance | ||||||
| 2. Amount increased in current period | 568,248,570.99 | 8,918,010.08 | 2,298,340.59 | 579,464,921.66 | ||
| (1) Accrual | 568,248,570.99 | 8,918,010.08 | 2,298,340.59 | 579,464,921.66 | ||
| 3. Amount decreased in current period | ||||||
| (1) Disposal or scrapping | ||||||
| 4. Closing balance | 568,248,570.99 | 8,918,010.08 | 2,298,340.59 | 579,464,921.66 |
| IV. Book value | ||||||
| 1. Book value at the end of the reporting period | 8,216,987,408.81 | 11,250,830,948.44 | 1,663,798,415.00 | 321,670,996.84 | 6,468,499.16 | 21,459,756,268.25 |
| 2. Opening book value | 7,586,074,357.53 | 8,789,446,424.47 | 1,438,866,912.78 | 302,058,400.91 | 6,906,385.07 | 18,123,352,480.76 |
(2) Fixed assets temporarily idle
Unit: RMB
| Item | Original book value | Accumulated depreciation | Depreciation reserves | Book value | Notes |
| Houses and buildings | 510,898,895.26 | 83,167,961.06 | 427,730,934.20 | ||
| Production equipment | 2,851,846,929.06 | 195,002,843.55 | 568,248,570.99 | 2,088,595,514.52 | |
| Test equipment | 81,518,296.69 | 16,004,787.81 | 8,918,010.08 | 56,595,498.80 | |
| Office equipment | 37,679,813.88 | 11,594,110.80 | 2,298,340.59 | 23,787,362.49 | |
| Total | 3,481,943,934.89 | 305,769,703.22 | 579,464,921.66 | 2,596,709,310.01 |
(3) Fixed assets leased out through operating leases
Unit: RMB
| Item | Book value at the end of the reporting period |
| Houses and buildings | 320,815,654.11 |
| Production equipment and other equipment | 324,777,276.11 |
| Total | 645,592,930.22 |
(4) Overview of the fixed assets for which certificates of title to be obtained
Unit: RMB
| Item | Book value | Reasons for not obtaining the certificate of title |
| 9# Factory building | 144,927,930.97 | Property rights certificate under processing |
| 55# Factory building | 89,166,685.42 | Property rights certificate under processing |
| 56# Factory building | 88,849,225.81 | Property rights certificate under processing |
| 52# Apartment | 185,265,107.54 | Property rights certificate under processing |
| 23# Apartment | 2,597,183.74 | Property rights certificate under processing |
| E area carport | 42,025,112.90 | Property rights certificate under processing |
| Total | 552,831,246.38 |
(5) Liquidation of fixed assets
None
15. Construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 2,276,965,736.33 | 2,127,055,853.77 |
| Construction materials | 147,478,039.00 | |
| Total | 2,424,443,775.33 | 2,127,055,853.77 |
(1) Overview of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Unaccepted equipment | 530,677,599.03 | 530,677,599.03 | 705,426,549.35 | 705,426,549.35 | ||
| 2# Office building | 287,041,263.11 | 287,041,263.11 | 160,023,622.42 | 160,023,622.42 | ||
| Self-made equipment | 239,378,426.17 | 239,378,426.17 | 453,794,330.67 | 453,794,330.67 | ||
| Sporadic projects | 183,389,745.14 | 183,389,745.14 | 155,430,727.09 | 155,430,727.09 | ||
| 63# Factory building | 158,512,473.50 | 158,512,473.50 | 38,623,187.09 | 38,623,187.09 | ||
| Infrastructure construction | 147,355,671.17 | 147,355,671.17 | 1,614,213.25 | 1,614,213.25 | ||
| 39# Factory building | 111,488,614.81 | 111,488,614.81 | 106,641,302.22 | 106,641,302.22 | ||
| 72# Factory building | 78,813,471.88 | 78,813,471.88 | 12,277,054.11 | 12,277,054.11 | ||
| 74# Factory building | 64,820,307.60 | 64,820,307.60 | 17,779,539.88 | 17,779,539.88 | ||
| 64# Factory building | 59,007,078.74 | 59,007,078.74 | 8,103,133.65 | 8,103,133.65 | ||
| 75# Factory building | 57,780,367.36 | 57,780,367.36 | 15,726,428.05 | 15,726,428.05 | ||
| 76# Factory building | 54,322,988.22 | 54,322,988.22 | 22,751,748.04 | 22,751,748.04 | ||
| 65# Factory building | 37,794,076.56 | 37,794,076.56 | 4,363,631.55 | 4,363,631.55 | ||
| 66# Factory building | 37,772,311.18 | 37,772,311.18 | 4,361,621.04 | 4,361,621.04 | ||
| 67# Factory building | 36,939,485.41 | 36,939,485.41 | 12,688,314.15 | 12,688,314.15 | ||
| 68# Factory building | 34,968,643.25 | 34,968,643.25 | 13,063,930.16 | 13,063,930.16 | ||
| 69# Factory building | 34,606,945.61 | 34,606,945.61 | 13,084,558.18 | 13,084,558.18 | ||
| 73# Factory building | 34,217,551.92 | 34,217,551.92 | 18,061,783.67 | 18,061,783.67 | ||
| 77# Factory building | 26,720,487.51 | 26,720,487.51 | ||||
| 70# Factory building | 21,058,712.36 | 21,058,712.36 | 6,883,803.12 | 6,883,803.12 | ||
| 71# Factory building | 18,649,051.46 | 18,649,051.46 | 5,376,869.24 | 5,376,869.24 | ||
| Reconstruction and expansion of factory buildings | 10,924,075.53 | 10,924,075.53 | ||||
| 80# Factory building | 5,762,284.64 | 5,762,284.64 | ||||
| 78# Factory building | 4,873,511.68 | 4,873,511.68 | ||||
| 79# Factory building | 90,592.49 | 90,592.49 | ||||
| 52# Factory building | 77,142,513.20 | 77,142,513.20 | ||||
| 46# Factory building | 56,866,174.61 | 56,866,174.61 | ||||
| 38# Factory building | 27,185,507.14 | 27,185,507.14 | ||||
| 37# Factory building | 65,991,667.31 | 65,991,667.31 | ||||
| 47# Factory building | 8,653,090.45 | 8,653,090.45 | ||||
| 49# Factory building | 10,804,751.93 | 10,804,751.93 | ||||
| 43# Factory building | 17,137,354.45 | 17,137,354.45 | ||||
| 48# Factory building | 9,111,894.09 | 9,111,894.09 | ||||
| 42# Factory building | 78,086,553.66 | 78,086,553.66 | ||||
| Total | 2,276,965,736.33 | 2,276,965,736.33 | 2,127,055,853.77 | 2,127,055,853.77 |
(2) Increase or decrease of significant construction in progress in current period
Unit: RMB
| Name of project | Budget amount | Opening balance | Increased amount in the current period | Amount transferred to fixed assets in current period | Other amount decreased in current period | Closing balance | Proportion of total project input to budget | Project progress | Accumulated amount of interest capitalization | Including: Amount of interest capitalization in current period | Interest capitalization rate for current period | Source of funds |
| Unaccepted equipment | 705,426,549.35 | 1,721,559,636.32 | 1,900,211,048.64 | -3,902,462.00 | 530,677,599.03 | Other | ||||||
| 2# Office | 357,080, | 160,023,6 | 127,017,6 | 287,041, | 80.39% | 90% | Other |
| building | 000.00 | 22.42 | 40.69 | 263.11 | ||||||||
| Self-made equipment | 453,794,330.67 | 1,781,853,138.27 | 1,996,269,042.77 | 239,378,426.17 | Other | |||||||
| Sporadic projects | 155,430,727.09 | 304,476,842.17 | 106,291,620.80 | 170,226,203.32 | 183,389,745.14 | Other | ||||||
| 63# Factory building | 172,939,700.00 | 38,623,187.09 | 119,889,286.41 | 158,512,473.50 | 91.66% | 95% | Other | |||||
| Infrastructure construction | 1,614,213.25 | 177,455,519.34 | 31,714,061.42 | 147,355,671.17 | Other | |||||||
| 39# Factory building | 133,327,700.00 | 106,641,302.22 | 4,847,312.59 | 111,488,614.81 | 83.62% | 85% | Other | |||||
| 72# Factory building | 92,834,000.00 | 12,277,054.11 | 63,863,680.13 | -2,672,737.64 | 78,813,471.88 | 84.90% | 75% | Other | ||||
| 74# Factory building | 67,737,000.00 | 17,779,539.88 | 44,908,352.41 | -2,132,415.31 | 64,820,307.60 | 95.69% | 85% | Other | ||||
| 64# Factory building | 77,500,000.00 | 8,103,133.65 | 50,903,945.09 | 59,007,078.74 | 76.14% | 90% | Other | |||||
| 75# Factory building | 59,965,000.00 | 15,726,428.05 | 40,156,281.49 | -1,897,657.82 | 57,780,367.36 | 96.36% | 85% | Other | ||||
| 76# Factory building | 56,401,000.00 | 22,751,748.04 | 29,580,863.46 | -1,990,376.72 | 54,322,988.22 | 96.32% | 95% | Other | ||||
| 65# Factory building | 90,000,000.00 | 4,363,631.55 | 33,430,445.01 | 37,794,076.56 | 41.99% | 43% | Other | |||||
| 66# Factory building | 90,000,000.00 | 4,361,621.04 | 33,410,690.14 | 37,772,311.18 | 41.97% | 43% | Other | |||||
| 67# Factory building | 39,464,000.00 | 12,688,314.15 | 22,969,774.41 | -1,281,396.85 | 36,939,485.41 | 93.60% | 85% | Other | ||||
| 68# Factory building | 40,951,000.00 | 13,063,930.16 | 20,664,429.06 | -1,240,284.03 | 34,968,643.25 | 85.39% | 85% | Other | ||||
| 69# Factory building | 41,006,000.00 | 13,084,558.18 | 20,290,899.38 | -1,231,488.05 | 34,606,945.61 | 84.39% | 83% | Other | ||||
| 73# Factory building | 51,949,000.00 | 18,061,783.67 | 14,805,451.98 | -1,350,316.27 | 34,217,551.92 | 65.87% | 70% | Other | ||||
| 77# Factory building | 36,041,484.00 | 26,720,487.51 | 26,720,487.51 | 74.14% | 90% | Other | ||||||
| 70# Factory building | 25,857,000.00 | 6,883,803.12 | 13,453,454.81 | -721,454.43 | 21,058,712.36 | 81.44% | 85% | Other | ||||
| 71# Factory building | 19,454,000.00 | 5,376,869.24 | 12,973,741.55 | -298,440.67 | 18,649,051.46 | 95.86% | 85% | Other | ||||
| Reconstruction and expansion of factory buildings | 82,160,278.33 | 71,236,202.80 | 10,924,075.53 | Other |
| 80# Factory building | 187,000,000.00 | 5,762,284.64 | 5,762,284.64 | 3.08% | 3% | Other | ||||||
| 78# Factory building | 155,382,125.40 | 4,873,511.68 | 4,873,511.68 | 3.14% | 2% | Other | ||||||
| 79# Factory building | 330,260,781.60 | 90,592.49 | 90,592.49 | 0.03% | Other | |||||||
| 52# Factory building | 204,098,200.00 | 77,142,513.20 | 108,612,781.92 | 185,755,295.12 | 91.01% | 100% | Other | |||||
| 46# Factory building | 94,000,000.00 | 56,866,174.61 | 62,049,634.16 | 118,915,808.77 | 126.51% | 100% | Other | |||||
| 38# Factory building | 62,493,272.60 | 27,185,507.14 | 38,231,138.08 | 65,416,645.22 | 104.68% | 100% | Other | |||||
| 37# Factory building | 99,990,000.00 | 65,991,667.31 | 31,150,045.73 | 97,141,713.04 | 97.15% | 100% | Other | |||||
| 47# Factory building | 24,500,000.00 | 8,653,090.45 | 17,771,284.55 | 26,424,375.00 | 107.85% | 100% | Other | |||||
| 49# Factory building | 32,000,000.00 | 10,804,751.93 | 6,021,972.30 | 16,826,724.23 | 52.58% | 100% | Other | |||||
| 43# Factory building | 18,670,000.00 | 17,137,354.45 | 592,457.59 | 17,729,812.04 | 94.96% | 100% | Other | |||||
| 48# Factory building | 9,200,000.00 | 9,111,894.09 | -2,363,815.71 | 6,748,078.38 | 73.35% | 100% | Other | |||||
| 42# Factory building | 82,826,867.00 | 78,086,553.66 | 24,303.71 | 78,110,857.37 | 94.31% | 100% | Other | |||||
| Total | 2,752,928,130.60 | 2,127,055,853.77 | 5,020,208,341.69 | 4,718,791,285.60 | 151,507,173.53 | 2,276,965,736.33 |
(3) Provision for impairment of construction in progress in current period
None
(4) Construction materials
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Construction materials | 147,478,039.00 | 147,478,039.00 | ||||
| Total | 147,478,039.00 | 147,478,039.00 | ||||
16. Right-of-use assets
Unit: RMB
| Item | Houses and buildings | Total |
| I. Original book value | ||
| 1. Opening balance | 441,665,247.28 | 441,665,247.28 |
| 2. Amount increased in current period | 396,364,758.73 | 396,364,758.73 |
| (1) New leases in the current period | 387,332,676.00 | 387,332,676.00 |
| (2) Impact of difference from translation of statements in foreign currency | 9,032,082.73 | 9,032,082.73 |
| 3. Amount decreased in current | 42,555,571.38 | 42,555,571.38 |
| period | ||
| (1) Disposal | 42,555,571.38 | 42,555,571.38 |
| 4. Closing balance | 795,474,434.63 | 795,474,434.63 |
| II. Accumulated depreciation | ||
| 1. Opening balance | 110,868,726.62 | 110,868,726.62 |
| 2. Amount increased in current period | 135,485,658.48 | 135,485,658.48 |
| (1) Accrual | 132,043,964.75 | 132,043,964.75 |
| (2) Impact of difference from translation of statements in foreign currency | 3,441,693.73 | 3,441,693.73 |
| 3. Amount decreased in current period | 31,055,873.20 | 31,055,873.20 |
| (1) Disposal | 31,055,873.20 | 31,055,873.20 |
| 4. Closing balance | 215,298,511.90 | 215,298,511.90 |
| III. Impairment provision | ||
| 1. Opening balance | ||
| 2. Amount increased in current period | ||
| (1) Accrual | ||
| 3. Amount decreased in current period | ||
| (1) Disposal | ||
| 4. Closing balance | ||
| IV. Book value | ||
| 1. Book value at the end of the reporting period | 580,175,922.73 | 580,175,922.73 |
| 2. Opening book value | 330,796,520.66 | 330,796,520.66 |
17. Intangible assets
(1) Overview of intangible assets
Unit: RMB
| Item | Land-use right | Patent right | Non-patent technology | Other | Total |
| I. Original book value | |||||
| 1. Opening balance | 1,439,499,400.79 | 8,964,410.00 | 3,305,496,457.05 | 235,180,322.80 | 4,989,140,590.64 |
| 2. Amount increased in current period | 132,428,026.82 | 479,056,102.14 | 36,282,298.76 | 647,766,427.72 | |
| (1) Purchase | 116,914,980.00 | 36,367,588.82 | 153,282,568.82 | ||
| (2) Internal R&D | 479,056,102.14 | 479,056,102.14 | |||
| (3) Increase in business combinations | |||||
| (4) Impact of difference from | 15,513,046.82 | -85,290.06 | 15,427,756.76 |
| translation of statements in foreign currency | |||||
| 3. Amount decreased in current period | 218,038,817.46 | 218,038,817.46 | |||
| (1) Disposal | 216,021,931.15 | 216,021,931.15 | |||
| (2) Others - disposal of subsidiaries | 2,016,886.31 | 2,016,886.31 | |||
| 4. Closing balance | 1,571,927,427.61 | 8,964,410.00 | 3,566,513,741.73 | 271,462,621.56 | 5,418,868,200.90 |
| II. Accumulated amortization | |||||
| 1. Opening balance | 175,704,043.04 | 2,838,729.83 | 1,910,763,604.90 | 137,040,424.02 | 2,226,346,801.79 |
| 2. Amount increased in current period | 29,177,012.50 | 896,441.00 | 623,541,411.21 | 35,546,615.63 | 689,161,480.34 |
| (1) Accrual | 28,116,040.52 | 896,441.00 | 623,541,411.21 | 35,606,271.90 | 688,160,164.63 |
| (2) Impact of difference from translation of statements in foreign currency | 1,060,971.98 | -59,656.27 | 1,001,315.71 | ||
| 3. Amount decreased in current period | 217,433,751.91 | 217,433,751.91 | |||
| (1) Disposal | 216,021,931.15 | 216,021,931.15 | |||
| (2) Others | 1,411,820.76 | 1,411,820.76 | |||
| 4. Closing balance | 204,881,055.54 | 3,735,170.83 | 2,316,871,264.20 | 172,587,039.65 | 2,698,074,530.22 |
| III. Impairment provision | |||||
| 1. Opening balance | |||||
| 2. Amount increased in current period | |||||
| (1) Accrual | |||||
| 3. Amount decreased in current period | |||||
| (1) Disposal | |||||
| 4. Closing balance | |||||
| IV. Book value | |||||
| 1. Book value at the end of the reporting period | 1,367,046,372.07 | 5,229,239.17 | 1,249,642,477.53 | 98,875,581.91 | 2,720,793,670.68 |
| 2. Opening book value | 1,263,795,357.75 | 6,125,680.17 | 1,394,732,852.15 | 98,139,898.78 | 2,762,793,788.85 |
At the end of this period, the proportion of intangible assets created through internal research and development of the Company tothe balance of intangible assets is 59.21%.
(2) Overview of land-use right without certificates of title
Unit: RMB
| Item | Book value | Reasons for not obtaining the certificate of title |
| Land use right 1 | 58,449,401.70 | Property rights certificate under processing |
| Land use right 2 | 58,270,720.00 | Property rights certificate under processing |
18. Development costs
Unit: RMB
| Item | Opening balance | Increased amount in the current period | Decreased amount in the current period | Closing balance | ||
| Internal development costs | Other | Recognized as intangible assets | Transfer to current profit and loss | |||
| Self-developed technologies for electroacoustic products | 242,956,092.44 | 5,198,312,190.48 | 479,056,102.14 | 4,601,034,068.87 | 361,178,111.91 | |
| Total | 242,956,092.44 | 5,198,312,190.48 | 479,056,102.14 | 4,601,034,068.87 | 361,178,111.91 | |
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Name of the invested entity or matter forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Formed by business combinations | Other | Disposal | Other | |||
| Goertek Electronics, Inc. | 1,743,540.56 | 1,743,540.56 | ||||
| Weifang Goertek Communication Technology Co., Ltd. | 15,115,644.52 | 15,115,644.52 | ||||
| GoerTek Audio Technologies Aps | 8,831,473.29 | 8,831,473.29 | ||||
| Total | 25,690,658.37 | 25,690,658.37 | ||||
(2) Impairment provision for goodwill
Unit: RMB
| Name of the invested entity or matter forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Accrual | Other | Disposal | Other | |||
| Goertek Electronics, Inc. | ||||||
| Weifang Goertek Communication Technology Co., Ltd. | ||||||
| GoerTek Audio Technologies Aps | 8,831,473.29 | 8,831,473.29 | ||||
| Total | 8,831,473.29 | 8,831,473.29 |
Information about the asset group or portfolio of asset groups of goodwillAs of December 31, 2021, the net value of goodwill was RMB 16,859,185.08, of which RMB 15,115,644.52 was related to theacquisition of Weifang Goertek Communication Technology Co., Ltd. No goodwill impairment was recognized in the year, as therecoverable amount of the relevant group of assets valued under the equity method was higher than its carrying value (including partof carrying value of goodwill apportioned).Explain the goodwill impairment test process, key parameters (such as the forecast period growth rate, stable period growth rate,profit rate, discount rate, forecast period, etc. when the present value of the future cash flow is expected) and the recognition methodof goodwill impairment lossNoneImpact of goodwill impairment testNone
20. Long-term prepaid expenses
Unit: RMB
| Item | Opening balance | Increased amount in the current period | Amortized amount in the current period | Other decreased amount | Closing balance |
| Expenditure on house improvement | 192,445,511.85 | 184,443,025.84 | 75,544,265.81 | -2,093,031.38 | 303,437,303.26 |
| IT project service fee | 4,439,272.89 | 28,477,398.48 | 5,832,519.69 | 27,084,151.68 | |
| Design fee | 350,431.01 | 7,872,669.14 | 1,435,531.03 | 6,787,569.12 | |
| Financing guarantee fee | 1,767,500.00 | 1,515,000.00 | 252,500.00 | ||
| Bank commission and arrangement fee | 8,192,774.50 | 8,643,038.50 | -450,264.00 | ||
| Total | 207,195,490.25 | 220,793,093.46 | 92,970,355.03 | -2,543,295.38 | 337,561,524.06 |
21. Deferred tax assets/liabilities
(1) Deferred tax assets not offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 1,714,479,986.93 | 259,912,213.28 | 286,270,259.14 | 45,253,703.58 |
| Unrealized profit from internal transaction | 1,106,784,542.91 | 182,217,984.94 | 1,058,642,169.31 | 161,021,024.99 |
| Deductible loss | 4,978,155,153.32 | 825,412,239.76 | 1,291,424,655.49 | 204,109,171.19 |
| Government subsidies | 303,540,279.67 | 47,040,683.06 | 299,191,717.99 | 46,916,190.75 |
| Financial assets held for trading - changes in fair value of equity | 52,130,372.98 | 7,819,555.95 | ||
| instrument | ||||
| Changes in the fair value of derivative financial instruments | 182,318,270.45 | 29,492,906.86 | 15,190,564.34 | 2,285,343.12 |
| Temporary differences of fixed assets | 42,335,704.66 | 6,350,355.70 | 46,297,192.22 | 6,944,578.83 |
| Expenses of share-based payment | 75,231,226.39 | 11,284,683.96 | 190,629,395.67 | 28,594,409.35 |
| Total | 8,454,975,537.31 | 1,369,530,623.51 | 3,187,645,954.16 | 495,124,421.81 |
(2) Deferred tax liabilities not offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Asset appreciation after re-evaluation following the combination with an enterprise under different control | 4,126,637.34 | 1,031,659.32 | 4,338,259.81 | 1,084,564.94 |
| Changes in the fair value of derivative financial instruments | 185,939,899.60 | 27,939,770.90 | 29,721,944.30 | 4,739,855.81 |
| Difference in time point for recognition of interest income of factoring business | 5,039,047.50 | 1,259,761.87 | 5,581,895.45 | 1,395,473.86 |
| Difference between the book value of fixed assets and their tax bases | 4,664,457,309.75 | 783,266,986.21 | 2,536,133,275.63 | 380,419,991.34 |
| Financial assets held for trading - changes in fair value of equity instrument | 17,469,694.02 | 2,620,454.10 | 15,290,023.02 | 2,293,503.45 |
| Total | 4,877,032,588.21 | 816,118,632.40 | 2,591,065,398.21 | 389,933,389.40 |
(3) Deferred tax assets or liabilities presented in net amount after offsetting
Unit: RMB
| Item | Amount of deferred tax assets and liabilities mutually offset at the end of the period | Closing balance of deferred tax assets or liabilities after offsetting | Amount of deferred tax assets and liabilities mutually offset at the beginning of the period | Opening balance of deferred tax assets or liabilities after offsetting |
| Deferred tax assets | 1,369,530,623.51 | 495,124,421.81 | ||
| Deferred tax liabilities | 816,118,632.40 | 389,933,389.40 |
(4) Details of unrecognized deferred tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 108,002,751.78 | 98,037,802.83 |
| Deductible loss | 1,113,018,229.33 | 916,176,966.88 |
| Government subsidies | 8,950,659.40 | 3,972,247.35 |
| Unrealized profit from internal transaction | 228,644,722.04 | 198,600,822.88 |
| Total | 1,458,616,362.55 | 1,216,787,839.94 |
(5) Deductible loss of unrecognized deferred tax assets will expire in the following years
Unit: RMB
| Year | Closing balance | Opening balance | Notes |
| 2022 | 9,008,881.10 | ||
| 2023 | 42,489,136.50 | 58,999,159.63 | |
| 2024 | 55,578,667.67 | 77,929,325.94 | |
| 2025 | 115,720,117.70 | 160,630,241.51 | |
| 2026 | 129,251,092.62 | 172,308,560.69 | |
| 2027 | 104,866,432.82 | 718,056.78 | |
| 2028 | 44,300,430.49 | 37,679,003.68 | |
| 2029 | 84,671,122.89 | 76,312,985.99 | |
| 2030 | 131,354,916.79 | 125,931,259.51 | |
| 2031 | 215,711,939.66 | 196,659,492.05 | |
| 2032 | 189,074,372.19 | ||
| Total | 1,113,018,229.33 | 916,176,966.88 |
22. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Contract assets | 119,469.27 | 1,194.69 | 118,274.58 | 119,469.27 | 1,194.69 | 118,274.58 |
| Prepayment for long-term assets | 269,755,356.88 | 269,755,356.88 | 366,744,190.26 | 366,744,190.26 | ||
| Input tax to be deducted but expected not to be deducted within one year | 17,036,311.11 | 17,036,311.11 | ||||
| Large-denomination certificates of deposit issued by banks | 655,000,458.30 | 655,000,458.30 | 122,540,194.44 | 122,540,194.44 | ||
| Prepaid long-term borrowings financing costs | 101,102,677.91 | 101,102,677.91 | ||||
| Equity investment transfer receivable | 8,461,633.81 | 8,461,633.81 | ||||
| The portion due within one year (Note VII. 9) | -70,303,760.94 | -1,194.69 | -70,302,566.25 | |||
| Total | 964,135,835.23 | 964,135,835.23 | 506,440,165.08 | 1,194.69 | 506,438,970.39 |
23. Short-term borrowings
(1) Types of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Secured borrowings | 508,878,860.80 | 1,008,216,693.01 |
| Credit borrowings | 6,611,967,165.87 | 3,276,642,654.01 |
| Total | 7,120,846,026.67 | 4,284,859,347.02 |
Explanation of the types of short-term borrowings:
The year-end balance of guaranteed loan is RMB 508,878,860.80 (principal: RMB 507,522,000.00; interest: RMB 1,356,860.80). Apart of the principal, RMB 487,522,000.00, is secured by a guarantee provided by Goertek Group Co., Ltd., and the remainder issecured by a guarantee provided by its subsidiary, Goertek (HongKong) Co.,Limited.
(2) Short-term borrowings that are overdue and not repaid
None
24. Financial liabilities held for trading
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial liabilities held for trading | 202,293,742.46 | 15,190,564.34 |
| Including: | ||
| Derivative financial liabilities | 202,293,742.46 | 15,190,564.34 |
| Total | 202,293,742.46 | 15,190,564.34 |
25. Notes payable
Unit: RMB
| Type | Closing balance | Opening balance |
| Commercial acceptance notes | 170,000,000.00 | |
| Bank acceptance notes | 4,269,924,397.04 | 2,742,876,464.23 |
| Domestic letter of credit | 410,573,849.04 | |
| Total | 4,850,498,246.08 | 2,742,876,464.23 |
The amount of notes payable due and unpaid at the end of this period is RMB 0.00.
26. Accounts Payable
(1) Presentation of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Material cost and others | 23,460,996,615.58 | 16,391,404,094.29 |
| Payment for equipment | 1,794,480,008.06 | 1,663,151,657.69 |
| Payment for construction projects | 493,281,646.55 | 475,053,903.42 |
| Total | 25,748,758,270.19 | 18,529,609,655.40 |
(2) Important accounts payable aged above 1 year
Unit: RMB
| Item | Closing balance | Reasons for outstanding or carry-over |
| Payment for construction projects | 12,117,672.27 | Unsettled |
| Payment for construction projects | 6,935,430.37 | Unsettled |
| Payment for material | 5,835,592.51 | Unsettled |
| Payment for construction projects | 4,690,057.47 | Unsettled |
| Payment for construction projects | 3,456,102.47 | Unsettled |
| Payment for material | 3,079,988.19 | Unsettled |
| Payment for construction projects | 2,767,116.22 | Unsettled |
| Payment for equipment | 2,743,629.95 | Unsettled |
| Payment for construction projects | 2,500,498.78 | Unsettled |
| Payment for construction projects | 2,250,000.00 | Unsettled |
| Payment for material | 2,172,999.02 | Unsettled |
| Total | 48,549,087.25 |
27. Contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Advance payment received for products | 2,295,347,547.31 | 2,210,825,761.69 |
| Total | 2,295,347,547.31 | 2,210,825,761.69 |
Amount and causes of significant changes in book value during the reporting periodNone
28. Employee benefits payable
(1) Presentation of employee benefits payable to employees
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| I. Short-term payroll | 1,066,570,159.63 | 8,623,115,311.57 | 8,690,667,606.34 | 999,017,864.86 |
| II. Post-employment benefits—defined contribution plans | 710,631,079.84 | 710,631,079.84 | ||
| II. Dismission welfare | 59,659,156.13 | 19,105,242.60 | 40,553,913.53 | |
| Total | 1,066,570,159.63 | 9,393,405,547.54 | 9,420,403,928.78 | 1,039,571,778.39 |
(2) Presentation of short-term payroll
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Salaries, bonuses, allowances and subsidies | 1,054,909,054.85 | 7,549,129,018.00 | 7,620,021,779.44 | 984,016,293.41 |
| 2. Employee welfare fee | 458,239,229.72 | 458,239,229.72 |
| 3. Social insurance premium | 337,929,585.44 | 337,817,349.72 | 112,235.72 | |
| Incl.: Medical insurance premium | 317,618,738.11 | 317,541,288.91 | 77,449.20 | |
| Work injury insurance premium | 18,650,439.40 | 18,650,439.40 | ||
| Maternity insurance premium | 1,660,407.93 | 1,625,621.41 | 34,786.52 | |
| 4. Housing provident fund | 259,098,144.56 | 259,098,144.56 | ||
| 5. Labor union expenditure and employee education expenses | 11,661,104.78 | 18,719,333.85 | 15,491,102.90 | 14,889,335.73 |
| Total | 1,066,570,159.63 | 8,623,115,311.57 | 8,690,667,606.34 | 999,017,864.86 |
(3) Presentation of defined contribution plans
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Basic endowment insurance premium | 684,904,874.52 | 684,904,874.52 | ||
| 2. Unemployment insurance premium | 25,726,205.32 | 25,726,205.32 | ||
| Total | 710,631,079.84 | 710,631,079.84 |
Other explanations:
The Group contributes to mandatory pension program and unemployment benefit programs established by government authority. Underthese programs, the Group makes monthly contributions to these programs at certain percentages according to the social insurancecontribution base for 2022. Except the above monthly contributions, the Group is not under other payment obligations. Correspondingexpenditures are recorded in the current profits and losses, or related asset costs when incurred.
29. Taxes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| VAT | 38,043,970.81 | 35,791,727.76 |
| Enterprise income tax | 174,981,926.24 | 254,141,624.62 |
| Personal income tax | 11,883,118.28 | 9,980,898.05 |
| City maintenance and construction tax | 10,809,326.00 | 19,989,711.74 |
| Education surcharge | 3,269,592.35 | 8,056,604.31 |
| Local education surcharges | 3,106,645.36 | 5,766,024.57 |
| Housing property tax | 19,768,868.36 | 16,792,720.42 |
| Land use tax | 2,934,841.41 | 2,926,628.84 |
| Stamp duties tax | 20,091,251.59 | 3,141,644.18 |
| Water resource tax | 48.00 | 20.00 |
| Environmental protection tax | 22,179.18 | 5,024.73 |
| Withholding taxes | 17,371.06 | |
| Total | 284,911,767.58 | 356,610,000.28 |
30. Other payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other payables | 78,974,306.79 | 80,187,733.17 |
| Total | 78,974,306.79 | 80,187,733.17 |
(1) Interest payable
None
(2) Dividends payable
None
(3) Other payables
1) Presentation of other payables by nature of payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Current accounts payable | 19,961,968.64 | 30,175,265.11 |
| Employee benefits payable | 3,334,897.96 | 4,246,920.21 |
| Deposit payable | 46,944,671.46 | 44,029,093.10 |
| Various security deposits payable | 8,732,768.73 | 1,736,454.75 |
| Total | 78,974,306.79 | 80,187,733.17 |
2) Other important payables aged above 1 year
None
31. Current portion of non-current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year (Note VII, 33) | 992,791,555.56 | 400,000,000.00 |
| Lease liabilities due within one year (Notes VII, 34) | 102,826,772.18 | 101,408,170.04 |
| Total | 1,095,618,327.74 | 501,408,170.04 |
32. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Notes receivable endorsed, undue and not de-recognized | 1,709,928.75 | |
| VAT payable—tax on items to be resold | 4,252,178.60 | 13,134,430.26 |
| Total | 4,252,178.60 | 14,844,359.01 |
Change in short-term debentures payable:
None
33. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Secured borrowings | 1,100,982,361.11 | 1,613,294,229.18 |
| Credit borrowings | 2,097,809,194.45 | 990,921,555.56 |
| Long-term borrowings due within one year (Note VII, 31) | -992,791,555.56 | -400,000,000.00 |
| Total | 2,206,000,000.00 | 2,204,215,784.74 |
Description of types of long-term borrowings:
The year-end balance of guaranteed loan is RMB 1,100,982,361.11, consisting of RMB 1,100,000,000.00 of principal and RMB982,361.11 of interest. The borrowing is secured by a guarantee provided by Goertek Group Co., Ltd.Other explanations, including interest rate range:
The interest rate range for long-term borrowings is 2.65%-3.7% on Dec. 31, 2022. (2.7%-3.7% on December 31, 2021).
34. Lease liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease payment | 639,092,280.68 | 327,964,908.57 |
| Unrecognized financing fees | -65,561,000.75 | -16,346,783.13 |
| Lease liabilities due within one year (Notes VII, 31) | -102,826,772.18 | -101,408,170.04 |
| Total | 470,704,507.75 | 210,209,955.40 |
35. Deferred income
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Cause of formation |
| Government subsidies | 540,321,080.65 | 158,061,363.10 | 166,008,299.37 | 532,374,144.38 | |
| Total | 540,321,080.65 | 158,061,363.10 | 166,008,299.37 | 532,374,144.38 | -- |
Items involving government subsidies:
Unit: RMB
| Liability item | Opening balance | Amount of new subsidies in current period | Amount included in non-operating revenue of the current period | Amount included in other income in current period | Amount of cost offset in current period | Other changes | Closing balance | Asset-related/income-related |
| Special funding for corporate innovation, technical transformation and | 500,221,040.05 | 55,206,363.10 | 61,526,672.71 | 493,900,730.44 | Asset-related |
| industrial upgrading | ||||||||
| Awards and subsidies for public leasehold houses | 40,100,040.60 | 1,626,626.66 | 38,473,413.94 | Asset-related | ||||
| Subsidies for R&D projects, etc. | 102,855,000.00 | 102,855,000.00 | Income-related | |||||
| Total | 540,321,080.65 | 158,061,363.10 | 166,008,299.37 | 532,374,144.38 |
36. Other non-current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Equity of other partners of the fund company | 172,261,037.39 | |
| Total | 172,261,037.39 |
37. Share capital
Unit: RMB
| Opening balance | Increase or decrease in the change (+, -) | Closing balance | |||||
| New shares | Bonus shares | Transferred from reserves | Other | Sub-total | |||
| Total shares | 3,416,321,036.00 | 4,082,164.00 | 4,082,164.00 | 3,420,403,200.00 | |||
Other explanations:
(1) The Company's initial grant of certain stock options under the 2021 Stock Option Incentive Plan entered its first exercise period onJune 24, 2022. Due to employees' exercise of the right, the Company issued 4,082,164 Class A Shares to the incentive targets. Theshare capital of the Company has been changed to RMB 3,420,403,200.
(2) As of December 31, 2022, the 93,500,000 shares of the Company held by the controlling shareholders and their persons acting inconcert have been pledged, representing 2.73% of total shares of the Company. Specifically:
Mr. Jiang Long, a shareholder of the Company, pledged his 93,500,000 shares of the Company. Among them, 16,500,000 shares arepledged to China Merchants Securities Asset Management Co., Ltd., and the pledge period is from November 1, 2022 to June 13, 2023;33,000,000 shares are pledged to China Merchants Securities Asset Management Co., Ltd., and the pledge period is from June 13, 2022to June 13, 2023; 16,000,000 shares are pledged to Zhongtai Securities (Shanghai) Co., Ltd., and the pledge period is from November1, 2022 to June 13, 2023; 28,000,000 shares are pledged to Zhongtai Securities (Shanghai) Co., Ltd., and the pledge period is fromJune 13, 2022 to June 13, 2023.
38. Capital surplus
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium (Share capital premium) | 8,673,556,974.68 | 771,293,555.91 | 9,444,850,530.59 | |
| Other capital surplus | 804,549,219.62 | 648,749,842.09 | 617,490,341.27 | 835,808,720.44 |
| Total | 9,478,106,194.30 | 1,420,043,398.00 | 617,490,341.27 | 10,280,659,251.03 |
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
(1) Capital surplus: Share capital premium increased by RMB 771,293,555.91 this year. Reasons: a. The initial grant of stock optionsunder the 2021 Stock Option Incentive Plan has entered the first exercise period, and the additional issuance of shares increased thecapital surplus by RMB 114,831,273.32; b. As the employee stock ownership plan has reached the release stage and the initial grant ofthe 2021 stock options has entered the first exercise period. For this batch, other capital surplus of RMB 561,573,669.78 recognizedduring the waiting period is transferred to share capital premium; c. Premium contribution by minority shareholders of the subsidiaryGoertek Optical Technology Co., Ltd increased the capital surplus by RMB 94,888,612.81.
(2) Capital surplus: Other capital surplus increased by RMB 648,749,842.09 this year, all of which were formed by share-basedpayment. For details, please refer to Note XIII, Share-based Payment 1. The overall situation of share-based payment.
(3) Capital surplus: Other capital surplus decreased by RMB 617,490,341.27 this year. Reasons: a. As the employee stock ownershipplan has reached the release stage and the initial grant of the 2021 stock options has entered the first exercise period, a capital surplusof RMB 561,573,669.78 is transferred to share capital premium; b. Under the equity method, changes in other shareholders’ equity inthe investment unit resulted in a decrease of RMB 55,916,671.49.
39. Treasury stock
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Shares of the Company repurchased for employee stock programs or equity incentives | 2,291,973,146.75 | 2,291,973,146.75 | ||
| Total | 2,291,973,146.75 | 2,291,973,146.75 |
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
As of December 31, 2022, there were cumulatively 74,265,451 treasury stock, representing 2.17% of the total share capital of theCompany.
40. Other comprehensive income
Unit: RMB
| Item | Opening balance | 2022 | Closing balance | |||||
| Amount incurred before income tax in the current period | Less: Recorded in other comprehensive income for the previous period and transferred in profit or loss for the current period | Less: Recorded in other comprehensive income for the previous period and transferred in undistributed profits for the current period | Less: Income tax expenses | Amount after tax attributable to the parent company | Attributed after tax to minority shareholders | |||
| I. Other comprehensive income that cannot be subsequently reclassified into profit and loss | 46,931,445.38 | 96,344,086.62 | 93,489,685.96 | 2,195,604.99 | 658,795.67 | 49,127,050.37 | ||
| Changes in the fair value of investments in | 46,931,445.38 | 96,344,086.62 | 93,489,685.96 | 2,195,604.99 | 658,795.67 | 49,127,050.37 | ||
| other equity instruments | ||||||||
| II. Other comprehensive income that will be reclassified into profit or loss | -147,078,214.95 | 244,763,633.22 | 11,857,998.44 | 220,328,498.94 | 12,577,135.84 | 73,250,283.99 | ||
| Including: other comprehensive income that can be converted into gains and losses under the equity method | 27,351,340.30 | -15,493,341.86 | 11,857,998.44 | -27,351,340.30 | ||||
| Difference from translation of financial statements in foreign currency | -174,429,555.25 | 260,256,975.08 | 247,679,839.24 | 12,577,135.84 | 73,250,283.99 | |||
| Total other comprehensive incomes | -100,146,769.57 | 341,107,719.84 | 11,857,998.44 | 93,489,685.96 | 222,524,103.93 | 13,235,931.51 | 122,377,334.36 |
Other explanations, including the adjustment of the effective part of cash flow hedging gains and losses into the initially recognizedamount of the hedged item:
(1) Other comprehensive income that cannot be subsequently reclassified into profit and loss: Under the item of changes in the fairvalue of investments in other equity instruments, RMB 658,795.67 is attributable to minority shareholders after tax, which is the equityof other partners of the fund company. The statement is presented in other non-current liabilities.
(2) Other comprehensive income that will be reclassified into profit or loss: Under the item of difference from translation of financialstatements in foreign currency, RMB 12,577,135.84 is attributable to minority shareholders after tax. Of which, RMB 10,012,201.30is the equity of other partners of the fund company. The statement is presented in other non-current liabilities.
41. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus reserve | 1,446,536,121.51 | 1,446,536,121.51 | ||
| Total | 1,446,536,121.51 | 1,446,536,121.51 |
Explanation of surplus reserve, including the increase and decrease in the current period and explanation of reasons for changes:
According to the Company Law and the Articles of Association, the Company allocates 10% of net profits to the statutory surplusreserve. The Company does not need to allocate further amounts if the cumulative amount of the statutory surplus reserve reaches morethan 50% of the registered capital.The Company may extract any surplus reserve after extracting the statutory surplus reserve. Any surplus reserve may be used to coverthe losses of previous years or increase the share capital after approval.
42. General risk reserve
| Items | Balance at the end of the previous year | Increase in the current period | Decrease in the current period | Closing balance |
| Reserve for risks in financing factoring business | 6,081,200.00 | 6,081,200.00 |
Other explanations:
According to the Notice by the General Office of the China Banking and Insurance Regulatory Commission of Strengthening theSupervision and Administration of Commercial Factoring Enterprises (YBJBF [2019] No. 205), the Group allocates 1% of the closingbalance of financing factoring business to the provision for risks.
43. Undistributed profits
Unit: RMB
| Item | 2022 | 2021 |
| Undistributed profits at the end of last period before adjustment | 15,372,823,358.48 | 11,500,277,791.35 |
| Undistributed profits at the beginning of the period after adjustment | 15,372,823,358.48 | 11,500,277,791.35 |
| Plus: net profit attributable to the owner of the parent company in the current period | 1,749,181,131.83 | 4,274,702,999.38 |
| Less: Withdrawal of statutory surplus reserve | 75,858,016.34 | |
| Common stock dividends payable | 668,411,117.00 | 499,658,337.75 |
| Add: Disposal of investments in other equity instruments | 54,204,866.03 | 173,358,921.84 |
| Undistributed profits at the end of the period | 16,507,798,239.34 | 15,372,823,358.48 |
Details of the adjustment of the undistributed profits at the beginning of the period:
1) The undistributed profits affected by the retroactive adjustment in accordance with Accounting Standards for Business Enterprisesand the related new regulations at the beginning of the period is RMB 0.00.
2) The undistributed profits affected by the changes in accounting policy at the beginning of the period is RMB 0.00.
3) The undistributed profits affected by the correction of major accounting errors at the beginning of the period is RMB 0.00.
4) The undistributed profits affected by the change of combination scope caused by the common control at the beginning of theperiod is RMB 0.00.
5) The undistributed profits affected by other adjustments at the beginning of the period is RMB 0.00.
44. Operating revenue and operating cost
Unit: RMB
| Item | 2022 | 2021 | ||
| Income | Cost | Income | Cost | |
| Main business | 102,966,939,788.80 | 91,509,198,680.69 | 76,946,324,805.73 | 66,054,072,404.35 |
| Other business | 1,927,384,373.46 | 1,724,277,862.59 | 1,275,093,812.29 | 1,113,594,255.31 |
| Total | 104,894,324,162.26 | 93,233,476,543.28 | 78,221,418,618.02 | 67,167,666,659.66 |
Whether the lower of the audited net profit before and the audited net profit after deducting non-recurring profits and losses isnegative? Yes ?NoRevenue related information:
Unit: RMB
| Classification of contracts | Division 1 | Total |
| Product types | ||
| Including: | ||
| Precision components | 14,003,616,502.68 | 14,003,616,502.68 |
| Smart audio device | 25,880,868,282.31 | 25,880,868,282.31 |
| Smart hardware | 63,082,455,003.81 | 63,082,455,003.81 |
| Other business income | 1,927,384,373.46 | 1,927,384,373.46 |
| By business regions | ||
| Including: | ||
| Domestic | 9,182,257,334.82 | 9,182,257,334.82 |
| Overseas | 95,712,066,827.44 | 95,712,066,827.44 |
| By sales channel | ||
| Including: | ||
| Direct selling | 104,414,898,362.49 | 104,414,898,362.49 |
| Distribution | 479,425,799.77 | 479,425,799.77 |
| Total | 104,894,324,162.26 | 104,894,324,162.26 |
Information about performance obligations:
NoneInformation about the trading price apportioned to remaining performance obligations:
None
45. Taxes and surcharges
Unit: RMB
| Item | 2022 | 2021 |
| City maintenance and construction tax | 66,516,485.50 | 66,914,986.17 |
| Education surcharge | 20,113,757.39 | 25,069,506.18 |
| Housing property tax | 72,739,156.82 | 62,157,864.15 |
| Land use tax | 12,404,902.13 | 4,928,054.01 |
| Vehicle and vessel use tax | 50,823.89 | 52,964.86 |
| Stamp duties tax | 75,852,578.16 | 45,106,860.23 |
| Local education surcharges | 19,015,218.97 | 17,398,626.51 |
| Local water conservancy construction fund | 160,251.76 | 220,917.98 |
| Water resource tax | 230.00 | 15,694.00 |
| Environmental protection tax | 77,095.67 | 26,511.41 |
| Total | 266,930,500.29 | 221,891,985.50 |
46. Selling expenses
Unit: RMB
| Item | 2022 | 2021 |
| Employee remuneration | 377,301,268.94 | 269,460,139.20 |
| Share-based apportioned payment | 44,473,697.53 | 63,634,538.59 |
| Rental fees | 5,212,260.22 | 4,474,361.06 |
| Sales commission | 19,599,978.50 | 13,450,128.71 |
| Insurance expenses | 17,874,354.85 | 21,984,424.28 |
| Entertainment expenses | 15,172,602.51 | 12,782,841.89 |
| Travel expenses | 16,715,766.24 | 11,173,815.95 |
| Office expenses | 21,541,427.80 | 14,724,830.06 |
| Depreciation cost | 14,823,196.77 | 14,204,718.91 |
| Other expenses | 15,584,288.69 | 18,980,178.43 |
| Total | 548,298,842.05 | 444,869,977.08 |
47. General and administrative expenses
Unit: RMB
| Item | 2022 | 2021 |
| Employee remuneration | 1,167,274,863.96 | 917,532,446.14 |
| Share-based apportioned payment | 465,535,747.22 | 495,415,756.61 |
| Office expenses | 165,198,225.61 | 110,998,813.33 |
| Consulting fees | 54,679,471.16 | 50,040,642.58 |
| Depreciation cost | 99,094,366.24 | 113,225,494.49 |
| Amortization of intangible assets | 59,414,772.34 | 49,984,739.09 |
| Recruitment and training fees | 49,182,108.76 | 36,270,849.32 |
| Rental fees | 13,335,129.18 | 7,451,592.83 |
| Entertainment expenses | 27,173,035.83 | 17,746,437.84 |
| Travel expenses | 29,354,745.57 | 21,380,866.38 |
| Security expenses | 40,398,042.61 | 22,040,105.21 |
| Property insurance | 8,548,266.15 | 9,898,802.88 |
| Other expenses | 115,316,870.83 | 99,671,226.62 |
| Total | 2,294,505,645.46 | 1,951,657,773.32 |
48. Research and development expenses
Unit: RMB
| Item | 2022 | 2021 |
| Employee remuneration | 2,210,936,970.20 | 1,816,259,331.16 |
| Direct input cost | 1,822,282,210.46 | 1,321,811,155.22 |
| Amortization of intangible assets | 628,118,767.01 | 534,352,849.63 |
| Depreciation cost | 165,357,575.09 | 115,335,756.86 |
| Share-based apportioned payment | 126,807,377.90 | 237,184,411.36 |
| Design fees | 33,121,202.94 | 15,289,807.24 |
| Other expenses | 239,901,051.39 | 129,840,970.63 |
| Total | 5,226,525,154.99 | 4,170,074,282.10 |
49. Financial expenses
Unit: RMB
| Item | 2022 | 2021 |
| Interest expense | 303,539,076.90 | 213,431,869.57 |
| Less: Interest income | 189,356,256.02 | 91,492,632.72 |
| Less: Amount of interest capitalized | 3,809,576.72 | |
| Exchange gains and losses | -21,268,273.24 | 27,313,452.95 |
| Item | 2022 | 2021 |
| Less: Amount of foreign exchange gain/loss capitalized | ||
| Other | 56,208,534.10 | 21,656,869.28 |
| Total | 149,123,081.74 | 167,099,982.36 |
50. Other income
Unit: RMB
| Sources of other income | 2022 | 2021 |
| Government subsidies | 351,383,799.43 | 464,119,437.91 |
| Tax benefit included | 15,097,894.50 | 1,044,485.08 |
| Return of individual tax handling fee | 6,724,169.25 | 1,558,878.12 |
| Total | 373,205,863.18 | 466,722,801.11 |
51. Investment income
Unit: RMB
| Item | 2022 | 2021 |
| Return on long-term equity investments measured by the equity method | 2,298,237.32 | 23,111,753.41 |
| Investments income from disposal of long-term equity investments | 287,784,190.15 | 6,872,916.88 |
| Investment income from disposal of financial assets held for trading | -309,999,635.90 | 425,908,909.46 |
| Investment income from products such as certificates of deposit | 20,466,167.48 | 20,903,469.99 |
| Profits or losses arising from derecognised financial assets at amortised cost | -23,037,232.06 | -7,852,608.05 |
| Discount losses of financing receivables that meet the conditions for derecognition | -13,755,696.61 | |
| Other | 295,443.10 | |
| Total | -36,243,969.62 | 469,239,884.79 |
52. Gains on changes in fair value
Unit: RMB
| Sources of gains on changes in fair value | 2022 | 2021 |
| Financial assets held for trading | 98,748,584.12 | -41,409,120.87 |
| Including: Gains on changes in fair value due to derivative financial instruments | 164,830,672.72 | -104,999,182.31 |
| Financial liabilities held for trading | -171,961,305.71 | -8,763,505.06 |
| Other non-current financial assets | 16,131,386.62 | 1,324,000.00 |
| Total | -57,081,334.97 | -48,848,625.93 |
53. Credit impairment losses
Unit: RMB
| Item | 2022 | 2021 |
| Credit impairment losses on bad debts of other receivables | 2,613,550.10 | -10,478,144.68 |
| Credit impairment losses on bad debts of accounts receivable | -16,834,146.02 | -19,215,532.99 |
| Total | -14,220,595.92 | -29,693,677.67 |
54. Asset impairment losses
Unit: RMB
| Item | 2022 | 2021 |
| I. Loss on bad debts | ||
| II. Loss of inventory falling price and impairment loss of contract performance cost | -1,203,279,438.25 | -241,076,190.54 |
| III. Impairment loss of long-term equity investments | ||
| IV. Impairment loss of investment properties | ||
| V. Fixed assets impairment losses | -579,464,921.66 | |
| VI. Impairment loss from construction materials | ||
| VII. Impairment loss of construction in progress | ||
| VIII. Impairment loss of bearer biological assets | ||
| IX. Impairment loss of oil and gas assets | ||
| X. Impairment loss of intangible assets | ||
| XI. Impairment loss of goodwill | ||
| XII. Impairment loss of contract assets | 684.09 | |
| XIII. Others | ||
| Total | -1,782,744,359.91 | -241,075,506.45 |
55. Gains on disposal of assets
Unit: RMB
| Source of income from disposal of assets | 2022 | 2021 |
| Gains on disposal of fixed assets | -47,534,013.23 | -31,557,333.48 |
| Income from disposal of intangible assets | -7,866.28 | |
| Income from disposal of right-of-use assets | -364,926.50 | 385,373.77 |
| Total | -47,898,939.73 | -31,179,825.99 |
56. Non-operating income
Unit: RMB
| Item | 2022 | 2021 | Amount recorded in current non-recurring profits and losses |
| Gains from damage and liquidation of non-current assets | 464,291.05 | 50,066.59 | 464,291.05 |
| Other | 21,013,169.39 | 22,394,671.59 | 21,013,169.39 |
| Total | 21,477,460.44 | 22,444,738.18 | 21,477,460.44 |
Government subsidies included in current profit and loss:
NoneOther explanations:
Non-operating income: The others are mainly unpayable amounts and liquidated damages, etc.
57. Non-operating expenses
Unit: RMB
| Item | 2022 | 2021 | Amount recorded in current non-recurring profits and losses |
| Donation given | 4,251,201.32 | 2,304,955.25 | 4,251,201.32 |
| Losses from damage and liquidation of non-current assets | 117,427,303.86 | 91,018,949.18 | 117,427,303.86 |
| Other | 1,051,865.31 | 6,535,044.63 | 1,051,865.31 |
| Total | 122,730,370.49 | 99,858,949.06 | 122,730,370.49 |
58. Income tax expenses
(1) Income tax expense statement
Unit: RMB
| Item | 2022 | 2021 |
| Current income tax expenses | 164,522,364.79 | 451,539,809.11 |
| Deferred income tax expenses | -446,312,602.15 | -152,697,496.47 |
| Total | -281,790,237.36 | 298,842,312.64 |
(2) Adjustment process of accounting profit and income tax expenses
Unit: RMB
| Item | 2022 |
| Total profit | 1,509,228,147.43 |
| Income tax expense calculated at statutory/applicable tax rate | 226,384,222.11 |
| Impact of different tax rates applied to subsidiaries | -189,362,810.30 |
| Impact of adjusting income tax in previous periods | 5,094,761.83 |
| Impact of non-taxable income | -47,193,013.18 |
| Impact of non-deductible costs, expenses and losses | 9,644,530.80 |
| Impact of deductible loss of unrecognized deferred tax assets in previous period | -24,531,504.83 |
| Impact of deductible temporary differences or deductible losses of unrecognized deferred tax assets in current period | 59,052,399.11 |
| Changes in balance of beginning deferred tax assets/liabilities due to tax rate adjustment | 11,813,185.71 |
| Impact of the weighted deduction of research and development expenses | -386,478,046.71 |
| The impact of weighted deduction of depreciation of fixed assets for high-tech enterprises | -37,683,420.89 |
| Impact of share-based payment | 91,469,458.99 |
| Income tax expenses | -281,790,237.36 |
59. Other comprehensive income
For details, see Note VII. 40. Other comprehensive income.
60. Cash flow statement items
(1) Cash received relating to other operating activities
Unit: RMB
| Item | 2022 | 2021 |
| Government subsidies | 343,436,863.16 | 465,518,187.04 |
| Current account | 1,258,014,604.41 | 3,315,066,295.04 |
| Interest income | 183,221,677.04 | 79,467,922.20 |
| Other | 139,368,250.38 | 156,626,681.14 |
| Total | 1,924,041,394.99 | 4,016,679,085.42 |
(2) Cash paid relating to other operating activities
Unit: RMB
| Item | 2022 | 2021 |
| Research and development expenses | 2,084,157,358.43 | 1,462,687,665.98 |
| Current account | 1,129,587,037.65 | 3,404,842,851.48 |
| Office expenses | 186,739,653.41 | 125,723,643.39 |
| Rental fees | 18,547,389.40 | 11,925,953.89 |
| Consulting fees | 54,679,471.16 | 50,040,642.58 |
| Entertainment expenses | 42,345,638.34 | 30,529,279.73 |
| Travel expenses | 46,070,511.81 | 32,554,682.33 |
| Insurance expenses | 26,422,621.00 | 31,883,227.16 |
| Sales commission | 19,599,978.50 | 13,450,128.71 |
| Other | 239,051,045.79 | 255,037,716.46 |
| Total | 3,847,200,705.49 | 5,418,675,791.71 |
(3) Cash received relating to other investing activities
Unit: RMB
| Item | 2022 | 2021 |
| Unexpired option premium received | 21,653,530.71 | 9,258,951.92 |
| Total | 21,653,530.71 | 9,258,951.92 |
(4) Cash paid relating to other investing activities
Unit: RMB
| Item | 2022 | 2021 |
| Net cash paid for disposal of subsidiaries and other business units | 10,363,395.50 | |
| Total | 10,363,395.50 |
(5) Cash received relating to other financing activities
Unit: RMB
| Item | 2022 | 2021 |
| Various securities in other currencies recovered | 2,601,999,441.96 | 1,380,340,710.98 |
| Interest income on raised funds | 6,134,578.99 | 12,024,710.52 |
| Contributions from other partners of the fund company | 75,765,967.07 | |
| Subscription of employee stock ownership plan | 110,000,000.00 | |
| Borrowing of accounts receivable factoring | 5,000,000.00 | |
| Total | 2,683,899,988.02 | 1,507,365,421.50 |
(6) Cash paid relating to other financing activities
Unit: RMB
| Item | 2022 | 2021 |
| Various security deposit payments for other monetary capital | 3,078,483,092.56 | 1,416,013,727.89 |
| Rental fees payment | 128,750,261.16 | 102,991,821.74 |
| Financing expense paid with borrowings | 103,495,260.30 | |
| Listing expense of the Goertek Microelectronics subsidiary | 4,263,871.42 | 8,983,655.49 |
| Repurchase of treasury stock | 1,999,998,595.63 | |
| Buy-out factoring fee | 7,852,608.05 | |
| Intermediary fee of issuance of bonds | 1,940,000.00 | |
| Total | 3,314,992,485.44 | 3,537,780,408.80 |
61. Supplementary information for cash flow statement
(1) Supplementary information for cash flow statement
Unit: RMB
| Supplementary information | Amount of current period | Amount in previous period |
| 1. Reconciliation of net profit to cash flow from operating activities | ||
| Net profit | 1,791,018,384.79 | 4,307,066,484.34 |
| Add: Provision for impairment of assets | 1,782,744,359.91 | 241,075,506.45 |
| Credit impairment losses | 14,220,595.92 | 29,693,677.67 |
| Depreciation of fixed assets, depletion of oil and gas assets and depreciation of bearer biological assets | 2,737,354,154.43 | 2,117,567,273.70 |
| Depreciation of right-of-use assets | 132,043,964.75 | 122,484,411.95 |
| Amortization of intangible assets | 688,160,164.63 | 588,754,476.68 |
| Long-term prepaid expenses | 92,970,355.03 | 89,042,424.24 |
| Losses on disposal of fixed assets, intangible assets and other long-term | 47,898,939.73 | 31,179,825.99 |
| assets (Use "-" for gain) | ||
| Loss on retirement of fixed assets (Use "-" for gain) | 116,963,012.81 | 90,968,882.59 |
| Loss on changes in fair value (Use "-" for gain) | 57,081,334.97 | 48,848,625.93 |
| Financial expenses (Use "-" for gain) | -67,001,475.56 | 214,683,875.67 |
| Investment loss (Use "-" for gain) | -548,959.05 | -469,239,884.79 |
| Decrease in deferred tax assets (Use "-" for gain) | -874,406,201.70 | -219,564,976.07 |
| Increase in deferred tax liabilities (Use "-" for decrease) | 426,185,243.00 | 66,867,479.60 |
| Decrease in inventory (Use "-" for increase) | -6,108,031,112.07 | -3,013,184,423.74 |
| Decrease of operating receivable items (Use "-" for increase) | -2,061,081,561.57 | -1,591,304,230.95 |
| Increase in operational payables (Use "-" for decrease) | 8,882,166,156.12 | 5,072,167,615.36 |
| Other | 659,376,008.54 | 871,368,483.26 |
| Net cash flow from operating activities | 8,317,113,364.68 | 8,598,475,527.88 |
| 2. Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Debts transferred to capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under finance lease | ||
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 10,799,993,468.81 | 9,137,900,902.04 |
| Less: Opening balance of cash | 9,137,900,902.04 | 6,913,191,984.54 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 1,662,092,566.77 | 2,224,708,917.50 |
(2) Net cash paid for the acquisition of subsidiaries in the current period
None
(3) Net amount of cash received for disposal of subsidiaries in the current period
Unit: RMB
| Amount | |
| Cash or cash equivalents received in the current period from the disposal of subsidiaries | 1,487,700.00 |
| Including: | |
| Shenzhen Mototek Smart Technology Co., Ltd. | 1,397,700.00 |
| Qingdao Resonance Venture Capital Management Co., Ltd. | 90,000.00 |
| Less: cash and cash equivalents held by the Company on the date of loss of control | 11,528,130.34 |
| Including: | |
| Shenzhen Mototek Smart Technology Co., Ltd. | 1,074,734.84 |
| Qingdao Resonance Venture Capital Management Co., Ltd. | 10,453,395.50 |
| Including: | |
| Net cash received on disposal of subsidiaries | -10,040,430.34 |
Other explanations:
The net amount of cash received from the disposal of subsidiaries is RMB -10,040,430.34. As shown in the statement, net cash receivedfrom disposal of subsidiaries and other business units is RMB 322,965.16, and cash received relating to other investing activities isRMB 10,363,395.50.
(4) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 10,799,993,468.81 | 9,137,900,902.04 |
| Including: Cash on hand | 33,671.21 | 160,703.83 |
| Bank deposits that can be used for payment at any time | 10,799,959,797.60 | 9,137,740,198.21 |
| II. Cash equivalents | ||
| III. Closing balance of cash and cash equivalents | 10,799,993,468.81 | 9,137,900,902.04 |
62. Assets with restricted ownership or right to use
Unit: RMB
| Item | Book value at the end of the reporting period | Reasons for restrictions |
| Cash at bank and on hand | 1,392,748,538.84 | Deposit for bills and borrowings |
| Notes receivable | 5,848,815.01 | Bill pledge and others |
| Current portion of non-current assets | 70,184,291.67 | When large-denomination certificates of deposit is pledged to the bank, the bank will issue financing guarantees, notes and so on |
| Other non-current assets | 544,796,722.20 | |
| Total | 2,013,578,367.72 |
63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Closing foreign currency balance | Converted exchange rate | Closing converted RMB balance |
| Cash at bank and on hand | 5,214,817,550.47 | ||
| Including: USD | 721,965,497.12 | 6.9646 | 5,028,200,901.24 |
| Item | Closing foreign currency balance | Converted exchange rate | Closing converted RMB balance |
| EUR | 405,195.97 | 7.4229 | 3,007,729.17 |
| HKD | 6,941,764.38 | 0.89327 | 6,200,869.87 |
| JPY | 286,096,106.00 | 0.052358 | 14,979,419.92 |
| KRW | 41,603,189.63 | 0.005523 | 229,774.42 |
| NTD | 12,940,036.00 | 0.227060 | 2,938,164.57 |
| VDN | 526,837,230,968.00 | 0.000295 | 155,416,983.14 |
| DKK | 3,850,242.00 | 0.998303 | 3,843,708.14 |
| Accounts receivable | 12,360,319,597.57 | ||
| Including: USD | 1,773,906,842.40 | 6.9646 | 12,354,551,594.58 |
| EUR | |||
| HKD | |||
| JPY | 14,403,528.61 | 0.052358 | 754,139.95 |
| KRW | 1,029,775.74 | 0.005523 | 5,687.45 |
| NTD | 8,572,715.01 | 0.227060 | 1,946,520.67 |
| VDN | 10,348,213,427.08 | 0.000295 | 3,052,722.96 |
| DKK | 8,947.14 | 0.998303 | 8,931.96 |
| Other receivables | 26,812,047.16 | ||
| Including: USD | 156,444.76 | 6.9646 | 1,089,575.18 |
| JPY | 153,881,253.00 | 0.052358 | 8,056,914.64 |
| KRW | 56,661,531.91 | 0.005523 | 312,941.64 |
| NTD | 3,339,993.00 | 0.227060 | 758,378.81 |
| VDN | 55,780,573,284.01 | 0.000295 | 16,455,269.12 |
| DKK | 139,204.00 | 0.998303 | 138,967.77 |
| Short-term borrowings | 2,820,642,774.42 | ||
| Including: USD | 390,366,793.00 | 6.9646 | 2,718,748,566.53 |
| VDN | 345,404,094,537.49 | 0.000295 | 101,894,207.89 |
| Accounts payable | 15,723,817,308.55 | ||
| Including: USD | 2,235,704,428.62 | 6.9646 | 15,570,787,063.57 |
| EUR | 213,478.00 | 7.4229 | 1,584,625.85 |
| JPY | 117,563,703.96 | 0.052358 | 6,155,400.41 |
| KRW | 116,634.40 | 0.005523 | 644.17 |
| NTD | 72,614.00 | 0.227060 | 16,487.73 |
| VDN | 492,451,141,765.14 | 0.000295 | 145,273,086.82 |
| Other payables | 10,948,533.09 | ||
| Including: USD | 347,299.40 | 6.9646 | 2,418,801.40 |
| JPY | 20,642,447.72 | 0.052358 | 1,080,797.28 |
| KRW | 3,582,778.82 | 0.005523 | 19,787.69 |
| NTD | 14,341,665.33 | 0.227060 | 3,256,418.53 |
| VDN | 12,024,034,599.82 | 0.000295 | 3,547,090.21 |
| DKK | 626,701.49 | 0.998303 | 625,637.98 |
| Current portion of non-current liabilities | 34,475,504.62 | ||
| Including: USD | 560,377.09 | 6.9646 | 3,902,802.28 |
| Item | Closing foreign currency balance | Converted exchange rate | Closing converted RMB balance |
| JPY | 135,528,112.75 | 0.052358 | 7,095,980.93 |
| VDN | 79,582,106,482.23 | 0.000295 | 23,476,721.41 |
| Lease liabilities | 87,442,458.88 | ||
| Including: USD | 583,928.07 | 6.9646 | 4,066,825.44 |
| JPY | 187,325,864.03 | 0.052358 | 9,808,007.59 |
| VDN | 249,381,782,531.75 | 0.000295 | 73,567,625.85 |
(2) Explanation of overseas operating entities, including, the main overseas operating places, bookkeepingbase currency and selection basis for important overseas operating entities, and the reasons for changes inbookkeeping base currency.
? Applicable ? Not applicable
| Name of the important overseas operating entity | Main location of business operation | Accounting currency | Accounting currency selection basis | Whether there is any change in the accounting currency |
| Goertek Vina Co., Ltd | Vietnam | VDN | Legal currency of the country where it is registered | No |
| Goertek Technology Vina Company Limited | Vietnam | VDN | Legal currency of the country where it is registered | No |
| Goertek (HongKong) Co.,Limited | Hong Kong | USD | Currency adopted in business receipts and payments | No |
64. Government subsidies
(1) Basic information of government subsidies
Unit: RMB
| Type | Amount | Reported items | Amount recorded in current profits and losses |
| Income-related | 185,375,500.06 | Other income | 185,375,500.06 |
| Income-related | 102,855,000.00 | Deferred income | 102,855,000.00 |
| Asset-related | 55,206,363.10 | Deferred income | 1,975,233.51 |
| Total | 343,436,863.16 | 290,205,733.57 |
(2) Refund of government subsidies
? Applicable ? Not applicable
65. Others
None
VIII. Change of combination scope
1. Business combination not under common control
None
2. Business combination under common control
None
3. Counter purchase
None
4. Disposal of subsidiaries
Whether there is a situation where a single disposal of investment in a subsidiary result in loss of control? Yes ? No
Unit: RMB
| Name of subsidiary | Equity disposal price | Equity disposal ratio | Equity disposal method | Point of loss of control | The basis for determining the point of loss of control | The difference between the disposal price and the share of the net assets of the subsidiary at the consolidated financial statement level corresponding to the disposal of the investment | Percentage of equity remaining on the date of loss of control | Book value of equity remaining on the date of loss of control | Fair value of equity remaining on the date of loss of control | Gains or losses arising from remeasurement of remaining equity at fair value | Determination method and main assumptions of the fair value of the remaining equity on the date of loss of control | The amount of other comprehensive income related to the original subsidiary equity investment transferred to investment profit and loss |
| Shenzhen Mototek Smart Technology Co., Ltd. | 1,397,700.00 | 100.00% | Equity transfer | November 7, 2022 | Transfer of control | 243,183.53 | ||||||
| Qingdao Resonance Venture Capital Management Co., Ltd. | 2,295,000.00 | 51.00% | Equity transfer | December 27, 2022 | Transfer of control | -466,685.97 |
Whether there is any step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control in thecurrent period? Yes ? No
5. Change of combination scope for other reasons
Explain the changes in the combination scope caused by other reasons (such as newly established subsidiaries, liquidation
subsidiaries, etc.) and relevant information:
During the current period, the Company acquired 8 subsidiaries through establishment. They are respectively Goertek OpticalTechnology (Qingdao) Co., Ltd, Goertek Optical Technology (Shanghai) Co., Ltd, Qingdao Resonance Venture Capital ManagementCo., Ltd., Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership), Weifang Goertek Electronics Co., Ltd.,Qingdao Goertek Horizons Technology Co., Ltd, Weifang High-tech Zone Goertek Education Center and GOERTEKMICROELECTRONICS VIETNAM COMPANY LIMITED.
6. Others
None
IX. Interests in other entities
1. Interests in subsidiaries
(1) Composition of the Group
| Name of subsidiary | Main location of business operation | Registration place | Business nature | Percentage | Acquisition method | |
| Direct | Indirect | |||||
| Weifang Goertek Electronics Co., Ltd. | Weifang | Weifang | Production | 100.00% | Business combination involving enterprises under common control | |
| Goertek Microelectronics Inc. | Qingdao | Qingdao | R&D, production & sales | 85.90% | Establishment | |
| Qingdao Goertek Microelectronics Research Institute Co., Ltd. | Qingdao | Qingdao | R&D, production & sales | 85.90% | Establishment | |
| Qingdao Goertek Intelligent Sensor Co., Ltd. | Qingdao | Qingdao | R&D, production & sales | 85.90% | Establishment | |
| Weifang Goertek Microelectronics Co., Ltd. | Weifang | Weifang | R&D, production & sales | 85.90% | Business combination not involving enterprises under common control | |
| Rongcheng Goertek Microelectronics Co., Ltd. | Rongcheng | Rongcheng | R&D, production & sales | 85.90% | Establishment | |
| Beijing Goertek Microelectronics Co., Ltd. | Beijing | Beijing | Sales | 85.90% | Establishment | |
| Shenzhen Goertek Microelectronics Co., Ltd. | Shenzhen | Shenzhen | R&D and sales | 85.90% | Establishment | |
| Wuxi Goertek Microelectronics Co., Ltd. | Wuxi | Wuxi | R&D | 85.90% | Establishment | |
| Shanghai Goertek Microelectronics Co., Ltd. | Shanghai | Shanghai | R&D | 85.90% | Establishment | |
| Goertek Microelectronics Holdings Co., Ltd. | Hong Kong | Hong Kong | Investment | 85.90% | Establishment | |
| Goertek Microelectronics (Hong Kong) Co., Ltd. | Hong Kong | Hong Kong | Trade | 85.90% | Establishment | |
| GOERTEK MICROELECTRONICS CORPORATION | USA | USA | R&D and sales | 85.90% | Establishment | |
| Goertek Microelectronics Korea Co., Ltd. | Korea | Korea | R&D and sales | 85.90% | Establishment | |
| Goertek Microelectronics Vietnam Company Limited | Vietnam | Vietnam | Production & sales | 85.90% | Establishment | |
| Weifang Goertek Trading Co., Ltd. | Weifang | Weifang | Import and export trade | 100.00% | Establishment | |
| Yishui Goertek Electronics Co., Ltd. | Yishui | Yishui | Production & sales | 100.00% | Establishment | |
| Yili Precision Manufacturing Co., Ltd. | Weifang | Weifang | Production & sales | 100.00% | Establishment | |
| Weifang Goertek Communication Technology Co., Ltd. | Weifang | Weifang | Production & sales | 100.00% | Business combination not involving enterprises under common control | |
| Goertek Optical Technology Co., Ltd | Weifang | Weifang | Production & sales | 65.10% | Business combination not involving enterprises under common control | |
| Goertek Technology Co., Ltd. | Qingdao | Qingdao | R&D | 100.00% | Establishment | |
| Beijing Goertek Technology Co., Ltd. | Beijing | Beijing | R&D | 100.00% | Business combination involving |
| enterprises under common control | ||||||
| Qingdao Goertek Acoustics Technology Co., Ltd. | Qingdao | Qingdao | R&D and trading | 100.00% | Establishment | |
| Shenzhen Goertek Technology Co., Ltd. | Shenzhen | Shenzhen | R&D and design | 100.00% | Business combination involving enterprises under common control | |
| Shanghai Goertek Technology Co., Ltd. | Shanghai | Shanghai | R&D | 100.00% | Establishment | |
| Nanjing Goertek Technology Co., Ltd. | Nanjing | Nanjing | R&D | 100.00% | Establishment | |
| Weifang Lokomo Precision Industry Co., Ltd. | Weifang | Weifang | Production & sales | 100.00% | Business combination involving enterprises under common control | |
| Goertek Investment Co., Ltd. | Shanghai | Shanghai | Investment | 100.00% | Establishment | |
| Beijing Goertek Investment Management Co., Ltd. | Beijing | Beijing | Investment asset management | 100.00% | Establishment | |
| Olive Smart Hardware Investment Center LP | Qingdao | Qingdao | Equity investment | 100.00% | Establishment | |
| Dongguan JoyForce Precision Manufacturing Co., Ltd. | Dongguan | Dongguan | R&D, production & sales | 100.00% | Establishment | |
| Goertek Intelligence Technology Co., Ltd. | Dongguan | Dongguan | R&D, production & sales | 100.00% | Establishment | |
| Rongcheng Goertek Technology Co., Ltd. | Rongcheng | Rongcheng | R&D, production & sales | 100.00% | Establishment | |
| Qingdao Goertek Commercial Factoring Co., Ltd. | Qingdao | Qingdao | Commercial factoring | 100.00% | Establishment |
| Kunshan Goertek Electronics Co., Ltd | Kunshan | Kunshan | R&D | 100.00% | Establishment | |
| Nanning Goertek Electronics Co., Ltd | Nanning | Nanning | R&D, production & sales | 100.00% | Establishment | |
| Nanning Goertek Trading Co., Ltd. | Nanning | Nanning | Trade | 100.00% | Establishment | |
| Xi’an Goertek Electronic Technology Co., Ltd. | Xi'an | Xi'an | R&D | 100.00% | Establishment | |
| Yishui TECO Electronic Technology Co., Ltd. | Yishui | Yishui | R&D, production & sales | 100.00% | Establishment | |
| Goertek Optical Technology (Qingdao) Co., Ltd | Qingdao | Qingdao | R&D, production & sales | 65.10% | Establishment | |
| Goertek Optical Technology (Shanghai) Co., Ltd | Shanghai | Shanghai | R&D, production & sales | 65.10% | Establishment | |
| Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership) | Qingdao | Qingdao | Investment | 72.00% | Establishment | |
| Weifang Goertek Electronics Co., Ltd. | Weifang | Weifang | Production & sales | 100.00% | Establishment | |
| Qingdao Goertek Horizons Technology Co., Ltd | Qingdao | Qingdao | Production & sales | 100.00% | Establishment | |
| Weifang High-tech Zone Goertek Education Center | Weifang | Weifang | Education and training | 100.00% | Establishment | |
| Goertek Vina Co., Ltd | Vietnam | Vietnam | Production & sales | 98.00% | 2.00% | Establishment |
| Goertek Technology Korea Co., Ltd. | Korea | Korea | R&D and trading | 100.00% | Establishment | |
| Goertek (HongKong) Co.,Limited | Hong Kong | Hong Kong | Trade investment | 100.00% | Establishment |
| Goertek Technology Vina Company Limited | Vietnam | Vietnam | Production & sales | 100.00% | Establishment | |
| Goertek Precision Industry Vietnam Company Limited | Vietnam | Vietnam | Production & sales | 100.00% | Establishment | |
| GoerTek Audio Technologies Aps | Denmark | Denmark | Sales services | 100.00% | Establishment | |
| Goertek Seiki Technology Co., Ltd. | Japan | Japan | R&D, production & sales | 100.00% | Establishment | |
| OPTIMAS CAPITAL PARTNERS FUND LP | Hong Kong | Hong Kong | Investment | 76.92% | Establishment | |
| Goertek Electronics, Inc. | USA | USA | R&D and trading | 100.00% | Business combination not involving enterprises under common control | |
| Goertek Technology Taiwan Co., Ltd. | Taiwan | Taiwan | Trade | 100.00% | Establishment | |
| Goertek Technology Japan Co., Ltd. | Japan | Japan | R&D and trading | 100.00% | Establishment | |
| Goertek Technology (Hong Kong) Co.,Limited | Hong Kong | Hong Kong | Trade investment | 100.00% | Establishment |
Explanation of the shareholding ratio in subsidiaries different from the voting ratio:
The percentages of indirect shareholdings are equal to the sum of all the share proportions of entities within the Group which hold theequity of the subsidiary.Basis for holding half or less of the voting power but still controlling the investee, and holding more than half of the voting rights butnot controlling the investee:
NoneBasis for controlling important structured entities included in the combination scope:
NoneBasis for determining whether a company is an agent or a principal:
None
(2) Important non-wholly-owned subsidiary
Unit: RMB
| Name of subsidiary | Shareholding ratio of minority shareholders | Gain or loss which belongs to minority shareholders in the | Dividends declared and distributed to minority shareholders in the | Balance of minority interest at the end of the period |
| current period | current period | |||
| Goertek Microelectronics Inc. | 14.10% | 45,892,240.23 | 588,098,360.72 |
Explanation of the shareholding ratio of minority shareholders in subsidiaries different from the voting ratio:
None
(3) Main financial information of major non-wholly-owned subsidiaries
Unit: RMB
| Name of subsidiary | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Goertek Microelectronics Inc. | 3,280,736,543.83 | 1,912,061,705.04 | 5,192,798,248.87 | 719,627,589.92 | 302,828,445.93 | 1,022,456,035.85 | 3,719,286,194.06 | 1,449,333,493.18 | 5,168,619,687.24 | 1,116,518,234.62 | 278,293,567.19 | 1,394,811,801.81 |
Unit: RMB
| Name of subsidiary | 2022 | 2021 | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows generated from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows generated from operating activities | |
| Goertek Microelectronics Inc. | 3,125,294,545.15 | 325,529,492.08 | 343,719,098.17 | 694,417,027.98 | 3,345,124,962.51 | 329,435,281.13 | 326,211,317.42 | -174,770,880.10 |
(4) Major restrictions on using the Group's assets and paying off the Group's debts
None
(5) Financial support or other support provided to structured entities included in consolidated financial statementsNone
2. The share of owner's equity in the subsidiary has changed and still controls the transactions of thesubsidiary
(1) Explanation of changes in the share of shareholders’ equity in subsidiaries
In June 2022, Goertek Group Co., Ltd., Zhuoguang Tonghe Technology (Tianjin) Partnership (Limited Partnership), ZhuoguangHongda Technology (Tianjin) Partnership (Limited Partnership), Zhuoguang Jiacheng Technology (Tianjin) Partnership (LimitedPartnership), Zhuoguang Xiangrong Technology (Tianjin) Partnership (Limited Partnership), Jiang Bin, and Jiang Long increased thecapital of the subsidiary, Goertek Optical Technology Co., Ltd, by RMB 513.74 million. Of which, RMB 321.68 million was includedin the newly added registered capital, and the rest was included in the capital surplus. After the capital increase, the Company'sshareholding in Goertek Optical Technology Co., Ltd changed from 100.00% to 65.10%. As of the end of the period, Goertek OpticalTechnology Co., Ltd had received a capital increase of RMB 274,153,071.55 from minority shareholders. The premium contributionof minority shareholders increased the capital surplus by RMB 94,888,612.81.
(2) The impact of transactions on minority’ equity and the equity attributable to the parent company
Unit: RMB
| Goertek Optical Technology Co., Ltd | |
| Purchase cost/disposal consideration | 274,153,071.55 |
| —Cash | 274,153,071.55 |
| —Fair value of non-cash assets |
| Total purchase cost/disposal consideration | 274,153,071.55 |
| Less: The net asset share of a subsidiary calculated according to the proportion of the equity acquired/disposed | 179,264,458.74 |
| Difference | 94,888,612.81 |
| Including: Adjustment of capital surplus | 94,888,612.81 |
| Adjusted surplus reserve | |
| Undistributed profits after adjustment |
3. Rights and interests in joint venture arrangements and associated enterprises
(1) Important joint ventures and associated enterprises
None
(2) Main financial information of important joint ventures
None
(3) Main financial information of important associated enterprises
None
(4) Summary of financial information of unimportant joint ventures and associates
Unit: RMB
| Closing balance/amount incurred in current period | Opening balance/amount incurred in previous period | |
| Joint ventures: | ||
| The total of the following items calculated according to the shareholding ratio | ||
| Associated enterprises: | ||
| Total book value of investment | 361,008,671.83 | 437,402,203.91 |
| The total of the following items calculated according to the shareholding ratio | ||
| —Net profit | 2,298,237.32 | 23,111,753.41 |
| —Other comprehensive income | -15,493,341.86 | 1,189,723.34 |
| —Total comprehensive income | -13,195,104.54 | 24,301,476.75 |
(5) Statement of important restrictions on the ability of joint ventures or associates to transfer capital to theCompanyNone
(6) Excess losses incurred by joint ventures or associated enterprises
None
(7) Unrecognized commitments related to the investment in joint ventures
None
(8) Contingent liabilities related to the investment in joint ventures or associatesNone
4. Important joint operation
None
5. Rights and interests in structured entities not included in consolidated financial statementsExplanation of structured entities not recorded in the consolidated financial statements:
None
6. Others
NoneX. Risks related to financial instrumentsThe major financial instruments of the Group include equity investments, accounts receivable, borrowings and accounts payable, etc.For details on the financial instruments, please see this Note VII. Relevant Items. Risks related to the financial instruments and theGroup’s risk management policy used for reducing these risks is stated as follows. The Group’s management manages and monitorsthese exposures to ensure that these risks are controlled within a limited scope.The Group analyzes the reasonableness of risk variables and the impact of potential changes on current loss or profit or shareholder’sequity using sensitivity analysis techniques. As risk variables rarely change in isolation, and the correlation between any two of therisk variables will have a great effect on the final impact amount of a certain risk variable, the following disclosures are made assumingthat each variable changes in isolation.(I) Risk management goals and policiesThe Group’s risk management aims to reach appropriate balancing between risks and benefits, to minimize the negative impact of riskson the Group's operating results, and to maximize the interests of shareholders and other equity investors. Based on these riskmanagement goals, the Group’s basic strategy for risk management is to determine and analyze various risks faced by the Group,establish an appropriate risk tolerance bottom line and conduct risk management, and supervise various risks in a timely and reliablemanner to control the risks within a limited scope.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate change. The Group’s exposure to foreign exchange mainly involvesUS dollars. Except that the Company and its subsidiaries purchase and sell in USD, EUR, JPY, VND, DKK, HKD, NTD and KRW,other main business of the Group is measured and settled in RMB. As of December 31, 2022, the foreign currency monetary items ofthe Company are detailed in Note VII. 63. Except that the assets or liabilities, financial assets held for trading, financial liabilities heldfor trading, some investments in other equity instruments, some other non-current financial assets, and some other non-current assetsmentioned in the table are foreign currency balances, the Group's assets and liabilities are mainly recorded in RMB. The foreignexchange risks arising from the assets and liabilities denominated in foreign currencies may have an impact on the operating results ofthe Group.The Group closely monitors the impact of exchange rate changes on the Group's foreign exchange risks. The Company has largevolume of export sales, and needs to import some raw materials. Some equipment for research, development, production and testingof the Company also needs to be purchased from abroad. The Company's export sales and imported raw materials are mainly settled inUSD. The depreciation of USD and the appreciation of RMB will reduce the procurement cost of imported raw materials, but adverselyaffect the competitiveness of the Company's products in overseas markets. Considering the import of raw materials and export ofproducts, the appreciation of RMB against USD will affect the Company's profitability to some extent.Sensitivity analysis over foreign exchange risks:
When other variables remain unchanged, the possible reasonable changes in USD currency rate may have the following effects oncurrent profits and losses, as well as shareholders' equity:
Unit: RMB
| Item | Change in exchange rate | 2022 | 2021 | ||
| Impact on net profit | Impact on shareholders' equity | Impact on net profit | Impact on shareholders' equity | ||
| USD | 3% appreciation against RMB | -17,700,129.48 | -20,864,011.13 | 74,152,124.92 | 71,951,894.19 |
| USD | 3% depreciation against RMB | 17,700,129.48 | 20,864,011.13 | -74,152,124.92 | -71,951,894.19 |
(2) Interest rate risk - cash flow change risk
The Group's risk of cash flow changes of financial instruments arising from interest rate changes mainly involves floating rate bankborrowings. At present, the interest rate of the Group's bank borrowings is mainly floating rate.Interest rate risk sensitivity analysis:
The sensitivity analysis over interest rate risks is conducted based on the following assumptions:
Changes in market interest rates affect the interest income or expense of financial instruments with variable interest rates;For fixed-rate financial instruments measured at fair value, changes in market interest rates only affect their interest income or expense;For derivative financial instruments designated as hedge instruments, changes in market interest rates affect their fair value, and allinterest rate hedging is expected to be highly effective;Changes in fair values of derivative financial instruments and other financial assets and liabilities are calculated using the discountedcash flow method at the market interest rate on the balance sheet date.On the basis of the above assumptions, when other variables remain unchanged, the possible reasonable changes in interest rates mayhave the following effects on current profits and losses, as well as shareholders' equity:
Unit: RMB
| Item | Interest rate change | 2022 | 2021 | ||
| Impact on net profit | Impact on shareholders' equity | Impact on net profit | Impact on shareholders' equity | ||
| Bank borrowings | Float up by 10% | -24,185,541.46 | -24,185,541.46 | -16,563,847.02 | -16,563,847.02 |
| Bank borrowings | Float down by 10% | 24,185,541.46 | 24,185,541.46 | 16,563,847.02 | 16,563,847.02 |
(3) Other price risks
None
2. Credit risk
As of December 31, 2022, the maximum credit risk exposure that may cause the Group's financial loss resulted from the loss in theGroup's financial assets caused by the counterparty's failure to perform its contractual obligations.In order to reduce credit risk, the Group sets up a team to determine the credit limit, conduct credit approval, and implement othermonitoring procedures to ensure that necessary measures are taken to recover overdue claims. Additionally, the Company cooperateswith commercial insurance institutions to insure for high-risk customers, so as to reduce the risk of bad debts from credit sale. Inaddition, the Group reviews the recovery of each individual receivable on each balance sheet date to ensure that adequate bad debtprovision is made for unrecoverable amounts. Therefore, the Group’s management believes that the credit risk undertaken by the Grouphas been greatly reduced.The Group has put in place necessary policies to ensure that all its customers have good credit records.The Group's non-cash cash at bank and on hand are mainly deposited with financial institutions with good credit. The managementbelieves that there is no significant credit risk, and it is expected that the default of counterparty will not cause significant losses to theGroup.
(1) There is no overdue and undepreciated amount in the Group's receivables;
(2) The analysis of financial assets with individual impairment involves the judgment on the factors to be considered in the impairmentof the financial assetsNone
3. Liquidity risk
When managing liquidity risk, the Group maintains and monitors cash and cash equivalents the management deems sufficient to meetthe Group's business needs and reduce the impact of cash flow fluctuations. The management of the Group monitors the use of bankborrowings and ensure the compliance with borrowing agreements.The Group uses bank borrowings and equity instruments as its main sources of funds. As of December 31, 2022, the unused bank creditline of the Group was RMB 31.583 billion (December 31, 2021: RMB 27.495 billion).(II) Transfer of financial assets
1. The financial assets transferred but not derecognized
None
2. The financial assets transferred and derecognized
| Items | Amount recognized at the end of the period (RMB) |
| Notes receivable | 2,371,001.15 |
(III) Offset of financial assets and financial liabilitiesNone
XI. Disclosure of fair value
1. The ending fair value of assets and liabilities measured at fair value
Unit: RMB
| Item | Fair value of closing | |||
| The first level of fair value measurement | The second level of fair value measurement | The third level of fair value measurement | Total | |
| I. Continuous fair value measurement | -- | -- | -- | -- |
| (I) Financial assets held for trading | 32,722,198.06 | 185,939,899.60 | 120,000,000.00 | 338,662,097.66 |
| 1. Financial assets measured at fair value through profit and loss | 32,722,198.06 | 185,939,899.60 | 120,000,000.00 | 338,662,097.66 |
| (2) Equity instrument investment | 32,722,198.06 | 120,000,000.00 | 152,722,198.06 | |
| (3) Derivative financial assets | 185,939,899.60 | 185,939,899.60 | ||
| (II) Other debt investments | 22,375,874.12 | 22,375,874.12 | ||
| (III) Investments in other equity instruments | 699,249,262.24 | 699,249,262.24 | ||
| (IV) Investment properties | ||||
| (V) Biological assets | ||||
| (VI) Other non-current financial assets | 318,661,575.31 | 318,661,575.31 | ||
| Total assets consistently measured at fair value | 32,722,198.06 | 185,939,899.60 | 1,160,286,711.67 | 1,378,948,809.33 |
| (VII) Financial liabilities held for trading | 202,293,742.46 | 202,293,742.46 | ||
| Derivative financial liabilities | 202,293,742.46 | 202,293,742.46 | ||
| (VIII) Financial liabilities designated to be measured at | ||||
| fair value through profit and loss | ||||
| Total liabilities continuously measured at fair value | 202,293,742.46 | 202,293,742.46 | ||
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Determination basis for the market price of continuous and non-continuous first-level fair valuemeasurement itemsThe closing price at the end of the year is used as the basis for determining the market price of the shares of foreign listed companiesheld by the Company.
3. Qualitative and quantitative information on the valuation techniques and important parameters used incontinuous and non-continuous second-level fair value measurement items
Directly or indirectly observable input values of related assets or liabilities except first-level inputs.
4. Qualitative and quantitative information on the valuation techniques and important parameters used incontinuous and non-continuous third-level fair value measurement itemsBasis for determining fair value according to the value assessed under the income method and the asset-based method and the net bookasset.
5. Adjustment information and sensitivity analysis of non-observable parameters between beginning andclosing book value for continuous third-level fair value measurement items
None
6. Conversion among different levels in the current period, reasons for conversion and the policy fordetermining conversion time points in continuous fair value measurement items,
None
7. Changes in valuation techniques during the current period and reasons for changes
None
8. Fair value of financial assets and financial liabilities not measured at fair value
None
9. Others
None
XII. Related parties and related transactions
1. Information about the parent company of the Company
| Parent company name | Registration place | Business nature | Registered capital | Shareholding ratio of the Company to the Company | Proportion of voting rights of the Company in the Company |
| Goertek Group Co., Ltd. | Weifang | Equity investment management, etc. | RMB 100 million | 14.84% | 14.84% |
Explanation of the parent company of the CompanyThe Company’s parent company and final parent company is Goertek Group Co., Ltd.The final controller of the Company is Goertek Group Co., Ltd.
2. Information on subsidiaries of the Company
See Note IX. 1. Interests in subsidiaries for details of the subsidiaries of the Company
3. Information on joint ventures and associated enterprises of the CompanySee Note IX. 3. Rights and interests in joint venture arrangements and associated enterprises for details of the important jointventures or associated enterprises of the Company
4. Information on other related parties
| Name of other related parties | Relationship between other related parties and the Company |
| Jiang Bin | Actual controller and board chairman of the Company |
| Hu Shuangmei | Person acting in concert with the actual controller |
| Shanghai Goertek Robot Co., Ltd. | Associate of the parent company |
| Weifang ShiXiang Real Estate Co., Ltd. | Associate of the parent company |
| Weifang Goer Farm Co., Ltd. | Business of the same actual controller |
| Weifang Goer Manor Trading Co., Ltd. | Business of the same actual controller |
| Weifang Goer Manor food & Beverage Co., Ltd. | Business of the same actual controller |
| Weifang Goer Property Service Co., Ltd. | Business of the same actual controller |
| Weifang Point Hotel Management Co., Ltd. | Business of the same actual controller |
| Weihai Goer Ecological Agriculture Co., Ltd. | Business of the same actual controller |
| Dotcom Investment Co., Ltd. | Enterprise controlled by an affiliated natural person |
| Beijing Bubble Lab Co., Ltd. | Enterprise controlled by an affiliated natural person |
| Weifang Daozao Catering Company Co., Ltd. | Business of the same actual controller |
| Weifang Goer Real Estate Co., Ltd. | Business of the same actual controller |
| Weifang Dotcom Catering Management Co., Ltd. | Enterprise controlled by an affiliated natural person |
| Qingdao Dotcom Catering Management Co., Ltd. | Enterprise controlled by an affiliated natural person |
| BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | Business of the same actual controller |
| Weifang Goer School | Business of the same actual controller |
| Weifang High-Tech Zone Yasong Linju Kindergarten | Business of the same actual controller |
| Weifang High-Tech Zone Goer Kindergarten | Business of the same actual controller |
| Dynaudio (Shanghai) Co,.Ltd | Enterprise controlled by an affiliated natural person |
| Dynaudio Holding A/S | Enterprise controlled by an affiliated natural person |
| Beijing Xiaoniao Tingting Technology Co., Ltd | Parent company's associate, de-registered on December 8, 2022 |
| Qingdao Point Hotel Management Co., Ltd. | Business of the same actual controller |
| Wemake (Weihai) Digital Creative Technology Co., Ltd. | Business of the same actual controller |
| Wemake (Qingdao) Digital Creative Technology Co., Ltd. | Business of the same actual controller |
| Weifang Hanzhi Enterprise Management Co., Ltd. | Business of the same actual controller |
| Weihai Point Hotel Management Co., Ltd. | Business of the same actual controller |
| Weifang Goerdyna Technology Co., Ltd. | Enterprise controlled by an affiliated natural person |
| Shandong Goer Education Group Co., Ltd. | Business of the same actual controller |
| Weifang Hanhui Enterprise Management Co., Ltd. | Business of the same actual controller |
| Wemake (Beijing) Digital Creative Technology Co., Ltd. | Business of the same actual controller |
| Weifang Gudian Garden Floriculture Co., Ltd. | Enterprise controlled by an affiliated natural person |
| Little Bird Co., Ltd | Enterprise controlled by an affiliated natural person |
| Jiaxing Yuguang Opto-electronic Technology Co, Ltd. | The subsidiary of a joint venture |
| Anqiu Wenge Vocational Training School Co., Ltd. | Business of the same actual controller |
| Gongqingcheng Zhuiyuan Phase II Venture Capital Partnership (Limited Partnership) | An enterprise actually controlled by Mr. Liu Chengmin, the former director of the Company and a joint investor of GravityXR Electronics and Technology Co., Ltd. |
| Shenzhen Zhuiyuan Fortune Investment Partnership (Limited Partnership) | An enterprise actually controlled by Mr. Liu Chengmin, the former director of the Company and a joint investor of Beijing Uphoton Technology Co., Ltd |
| GoerDyna Technology Co., Ltd. | Enterprise controlled by an affiliated natural person |
| Jiang Long | Affiliated natural person |
| Zhuoguang Xiangrong Technology (Tianjin) Partnership (Limited Partnership) | An entity controlled by affiliated natural persons as managing partners |
5. Related party transactions
(1) Related transactions involving commodity purchase, and rendering and receipt of servicesStatement of purchasing goods/accepting labor services
Unit: RMB
| Related parties | Related transactions | 2022 | Approved trading limit | Exceed the trading limit or not | 2021 |
| AKM Industrial Company Limited | Purchasing raw materials | 203,633,398.93 | 300,000,000.00 | No | 108,622,154.32 |
| Weifang Goer Farm Co., Ltd. | Purchasing goods and services | 49,549,859.14 | No | 11,559,035.68 | |
| Weifang Point Hotel Management Co., Ltd. | Purchasing goods and services | 16,117,887.30 | No | 14,774,953.49 | |
| Qingdao Virtual Reality Institute Co., Ltd. | Purchasing goods and services | 11,968,898.11 | 13,674,912.95 | ||
| Weifang Goer Property Service Co., Ltd. | Purchasing goods and services | 8,688,125.52 | No | 6,399,062.47 | |
| Weifang Goer Manor Trading Co., Ltd. | Purchasing goods | 8,499,702.97 | No | 2,279,607.11 | |
| Weifang Goerdyna Technology Co., Ltd. | Purchasing goods | 7,057,138.25 | No | 12,059,629.96 | |
| Goertek Group Co., Ltd. | Purchasing goods and services | 7,040,506.52 | No | ||
| Qingdao Point Hotel Management Co., Ltd. | Receiving labor service | 4,594,268.33 | No | 1,973,014.81 | |
| BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | Purchasing goods and services | 3,960,783.47 | No | 2,016,497.00 | |
| Shanghai Goertek Robot Co., Ltd. | Purchasing goods and services | 3,722,511.29 | 7,345,708.62 | ||
| Weifang Dotcom Catering Management Co., Ltd. | Purchasing goods and services | 2,752,240.44 | No | 30,550,429.90 |
| Weifang Goer Manor food & Beverage Co., Ltd. | Purchasing goods | 2,643,410.57 | No | 2,125,413.79 | |
| Beijing Bubble Lab Co., Ltd. | Purchasing goods and services | 2,312,197.60 | No | 2,068,337.18 | |
| Weihai Goer Ecological Agriculture Co., Ltd. | Purchasing goods | 1,778,882.75 | No | 632,726.75 | |
| Beijing Xiaoniao Tingting Technology Co., Ltd | Purchasing goods | 1,768,403.43 | 9,895,201.01 | ||
| Little Bird Co., Ltd | Purchasing goods | 1,023,036.15 | |||
| Dotcom Investment Co., Ltd. | Purchasing goods and services | 1,015,175.98 | No | 1,397,275.64 | |
| Weifang Daozao Catering Company Co., Ltd. | Purchasing goods and services | 303,917.60 | No | 485,022.00 | |
| Wemake (Weihai) Digital Creative Technology Co., Ltd. | Purchasing goods and services | 256,136.46 | No | 261,489.60 | |
| Wemake (Qingdao) Digital Creative Technology Co., Ltd. | Purchasing goods and services | 74,709.16 | No | ||
| Weifang Goer School | Receiving labor service | 65,140.00 | No | ||
| Wemake (Beijing) Digital Creative Technology Co., Ltd. | Receiving labor service | 61,072.39 | No | ||
| Qingdao Dotcom Catering Management Co., Ltd. | Purchasing goods | 21,818.80 | No | ||
| Weifang Gudian Garden Floriculture Co., Ltd. | Purchasing goods | 17,463.00 | No | ||
| Dynaudio Holding A/S | Purchasing goods and services | 13,356.22 | No | 10,088,269.89 | |
| Weifang Goer Real Estate Co., Ltd. | Receiving labor service | 3,600.00 | No | ||
| Weifang ShiXiang Real Estate Co., Ltd. | Purchasing goods and services | 800.00 | |||
| Dynaudio (Shanghai) Co,.Ltd | Purchasing goods | No | 454,032.00 | ||
| Qingdao Pico Technology Co., Ltd. | Purchasing goods | 8,172,060.06 | |||
| Weihai Point Hotel Management Co., Ltd. | Receiving labor service | 14,876.00 | No | 38,750.94 |
Statement of sales of goods/rendering of services
Unit: RMB
| Related parties | Related transactions | 2022 | 2021 |
| Weifang Goerdyna Technology | Sales of goods and services | 29,201,690.39 | 18,684,849.56 |
| Co., Ltd. | |||
| Little Bird Co., Ltd | Sales of goods | 11,728,490.03 | |
| Beijing Xiaoniao Tingting Technology Co., Ltd | Sales of goods | 8,203,382.90 | 43,567,472.65 |
| AKM Industrial Company Limited | Sales of goods | 7,937,930.55 | 1,134,756.63 |
| Goertek Group Co., Ltd. | Sales of goods and services | 3,136,184.07 | 1,790,210.80 |
| Qingdao Virtual Reality Institute Co., Ltd. | Sales of goods and services | 2,011,217.85 | 1,405,755.94 |
| Shanghai Goertek Robot Co., Ltd. | Sales of goods and services | 1,535,597.08 | 114,747.48 |
| Weifang Goer Farm Co., Ltd. | Sales of goods | 1,121,814.20 | |
| Weifang Dotcom Catering Management Co., Ltd. | Sales of goods and services | 719,821.85 | 1,477,900.21 |
| BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | Sales of goods | 677,865.74 | 12,156.24 |
| GravityXR Electronics and Technology Co., Ltd. | Sales of goods | 578,775.60 | |
| Jiaxing Yuguang Opto-electronic Technology Co, Ltd. | Sales of goods | 424,929.60 | |
| Dynaudio (Shanghai) Co,.Ltd | Sales of goods and services | 132,629.36 | 7,809,105.05 |
| Weifang Goer Manor Trading Co., Ltd. | Sales of goods | 128,364.96 | 154,535.59 |
| Anqiu Wenge Vocational Training School Co., Ltd. | Sales of goods | 22,641.51 | |
| Dynaudio Holding A/S | Sales of goods | 22,683.88 | 835,047.55 |
| Weifang Goertek Home Decoration Engineering Co., Ltd. | Rendering of service | 1,691,619.08 | |
| Wemake (Beijing) Digital Creative Technology Co., Ltd. | Rendering of service | 42,000.00 | |
| Qingdao Point Hotel Management Co., Ltd. | Rendering of service | 238,490.57 | |
| Qingdao Pico Technology Co., Ltd. | Sales of goods | 164,082,292.53 | |
| Weifang Goer School | Sales of goods | 29,339.62 | |
| Weifang Point Hotel Management Co., Ltd. | Sales of goods | 1,460.18 |
Explanation of related party transactions in purchasing and selling goods, rendering and receiving labor servicesFor details about the Company's and its subsidiaries' estimated trading limit of daily transactions with Goertek Group and itssubsidiaries, please see the Announcement of Goertek Inc. on Estimated Daily Related Transactions in 2022, issued throughinformation disclosure media on March 30, 2022.
(2) Related entrusted management/contracting and entrusted management/outsourcingNone
(3) Information of related lease
The Company acts as the lessor:
Unit: RMB
| Name of lessee | Type of leased assets | Lease income recognized in current period | Lease income recognized in last period |
| Weifang Goerdyna Technology Co., Ltd. | Building | 5,489,586.84 | 2,407,111.58 |
| Weifang Point Hotel Management Co., Ltd. | Building | 317,976.42 | 248,794.77 |
| BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | Building | 175,318.29 | 186,382.10 |
| Weifang High-Tech Zone Yasong Linju Kindergarten | Building | 152,190.47 | 43,885.72 |
| Anqiu Wenge Vocational Training School Co., Ltd. | Building | 114,285.71 | |
| Dotcom Investment Co., Ltd. | Building | 39,633.03 | |
| Weifang Dotcom Catering Management Co., Ltd. | Building | 39,633.03 | |
| Wemake (Weihai) Digital Creative Technology Co., Ltd. | Building | 28,899.08 | |
| Goertek Group Co., Ltd. | Building | 12,735.85 | |
| Weifang Goer School | Building | 91,721.99 | |
| Weifang High-Tech Zone Goer Kindergarten | Building | 22,400.00 | |
| Weifang Hanzhi Enterprise Management Co., Ltd. | Building | 39,633.03 | |
| Shandong Goer Education Group Co., Ltd. | Building | 7,840.44 |
The Company acts as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Rental charges for simplified treatment of short-term leases and low-value asset leases (if applicable) | Variable lease payments not included in the measurement of lease liabilities (if applicable) | Rent paid | Interest expenses incurred on lease liabilities | Increased right-of-use assets | |||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||
| Goertek Group Co., Ltd. | Building | 224,177.95 | 224,177.95 | 668,878.77 | 444,700.82 | 7,519.10 | 22,557.29 | 286,441.75 | |||
| Qingdao Virtual Reality Institute Co., Ltd. | Equipment | 615,087.00 | 615,087.00 | 615,087.00 | |||||||
| Weifang Goer Farm Co., Ltd. | Building | 1,449,000.00 | 1,449,000.00 | 1,449,000.00 | |||||||
| Weifang Hanhui Enterprise Management Co., Ltd. | Building | 20,078.80 | 20,078.80 | 20,078.80 | |||||||
(4) Related guarantees
The Company acts as the guarantor
Unit: RMB
| Guaranteed party | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek (HongKong) Co.,Limited | 174,115,000.00 | August 20, 2021 | August 20, 2022 | Yes |
| Goertek (HongKong) | 69,646,000.00 | September 10, 2021 | September 10, 2022 | Yes |
| Co.,Limited | ||||
| Goertek (HongKong) Co.,Limited | 69,646,000.00 | October 20, 2021 | October 20, 2022 | Yes |
| Goertek (HongKong) Co.,Limited | 793,790,285.00 | January 16, 2020 | January 16, 2023 | Yes |
| Goertek (HongKong) Co.,Limited | 34,997,115.00 | January 17, 2020 | January 16, 2023 | Yes |
| Goertek (HongKong) Co.,Limited | 494,486,600.00 | February 24, 2020 | January 16, 2023 | Yes |
| Goertek (HongKong) Co.,Limited | 69,646,000.00 | September 10, 2022 | February 5, 2023 | No |
| Goertek (HongKong) Co.,Limited | 69,646,000.00 | October 20, 2022 | February 5, 2023 | No |
| Goertek (HongKong) Co.,Limited | 174,115,000.00 | August 20, 2022 | August 9, 2023 | Yes |
| Goertek (HongKong) Co.,Limited | 205,455,700.00 | May 17, 2022 | April 26, 2023 | No |
| Goertek (HongKong) Co.,Limited | 142,774,300.00 | May 24, 2022 | May 4, 2023 | No |
| Goertek Technology Vina Company Limited | 23,000,000.00 | June 6, 2021 | June 5, 2022 | Yes |
| Goertek Technology Vina Company Limited | 4,500,000.00 | June 6, 2021 | June 5, 2022 | Yes |
| Goertek Technology Vina Company Limited | 496,413,129.00 | July 30, 2021 | July 29, 2022 | Yes |
| Goertek Technology Vina Company Limited | 85,036,553.00 | October 18, 2021 | October 17, 2022 | Yes |
| Goertek Technology Vina Company Limited | 55,000,000.00 | August 1, 2021 | July 30, 2022 | Yes |
| Goertek Technology Vina Company Limited | 139,292,000.00 | June 29, 2021 | June 29, 2022 | Yes |
| Goertek Technology Vina Company Limited | 11,732,000.00 | June 22, 2022 | June 21, 2023 | No |
| Goertek Technology Vina Company Limited | 1,080,000.00 | June 22, 2022 | June 21, 2023 | No |
| Weifang Goertek Microelectronics Co., Ltd. | 5,000,000.00 | March 27, 2021 | March 26, 2022 | Yes |
| Weifang Goertek Microelectronics Co., Ltd. | 3,000,000.00 | May 12, 2022 | May 11, 2023 | No |
| Rongcheng Goertek Microelectronics Co., Ltd. | 3,000,000.00 | May 12, 2022 | May 11, 2023 | No |
| Goertek Microelectronics Inc. | 20,893,800.00 | November 19, 2021 | November 18, 2022 | Yes |
| Goertek Microelectronics Inc. | 20,893,800.00 | November 18, 2022 | November 17, 2023 | No |
| Goertek Intelligence Technology Co., Ltd. | 4,000,000.00 | June 10, 2021 | June 9, 2022 | Yes |
The Company acts as the guaranteed party
Unit: RMB
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 400,000,000.00 | September 29, 2020 | September 28, 2022 | Yes |
| Goertek Group Co., Ltd. | 200,000,000.00 | April 1, 2021 | March 31, 2022 | Yes |
| Goertek Group Co., Ltd. | 50,000,000.00 | September 8, 2021 | March 7, 2022 | Yes |
| Goertek Group Co., Ltd. | 10,920,000.00 | September 28, 2021 | January 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 6,900,000.00 | September 28, 2021 | March 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 9,980,000.00 | September 28, 2021 | February 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 5,676,000.00 | October 25, 2021 | January 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 300,000,000.00 | October 29, 2021 | October 28, 2022 | Yes |
| Goertek Group Co., Ltd. | 4,880,000.00 | November 8, 2021 | April 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 4,550,000.00 | November 8, 2021 | February 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 3,870,000.00 | November 8, 2021 | January 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 50,000,000.00 | November 18, 2021 | May 17, 2022 | Yes |
| Goertek Group Co., Ltd. | 2,055,000.00 | November 29, 2021 | March 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 1,560,000.00 | November 29, 2021 | April 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 1,710,000.00 | November 29, 2021 | May 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 4,770,000.00 | November 29, 2021 | May 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 1,930,000.00 | November 29, 2021 | May 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 10,249,000.00 | November 29, 2021 | May 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 50,000,000.00 | December 17, 2021 | June 16, 2022 | Yes |
| Goertek Group Co., Ltd. | 4,800,000.00 | January 11, 2022 | June 27, 2022 | Yes |
| Goertek Group Co., Ltd. | 4,920,000.00 | January 11, 2022 | March 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 2,000,000.00 | January 11, 2022 | March 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 50,000,000.00 | January 19, 2022 | July 19, 2022 | Yes |
| Goertek Group Co., Ltd. | 200,000,000.00 | March 29, 2022 | March 29, 2027 | No |
| Goertek Group Co., Ltd. | 30,000,000.00 | April 21, 2022 | October 20, 2022 | Yes |
| Goertek Group Co., Ltd. | 40,000,000.00 | May 18, 2022 | November 18, 2022 | Yes |
| Goertek Group Co., Ltd. | 40,000,000.00 | June 17, 2022 | December 16, 2022 | Yes |
| Goertek Group Co., Ltd. | 200,000,000.00 | June 24, 2022 | March 29, 2027 | No |
| Goertek Group Co., Ltd. | 20,000,000.00 | July 19, 2022 | January 19, 2023 | No |
| Goertek Group Co., Ltd. | 30,000,000.00 | July 26, 2022 | September 25, 2022 | Yes |
| Goertek Group Co., Ltd. | 200,000,000.00 | July 29, 2022 | July 28, 2025 | No |
| Goertek Group Co., Ltd. | 500,000,000.00 | September 19, 2022 | September 19, 2025 | No |
| Goertek Group Co., Ltd. | 1,448,636.80 | February 2, 2021 | July 20, 2021 | Yes |
| Goertek Group Co., Ltd. | 15,000,000.00 | March 23, 2022 | May 31, 2023 | Yes |
| Goertek Group Co., Ltd. | 35,000,000.00 | September 2, 2022 | May 31, 2023 | No |
| Goertek Group Co., Ltd. | 9,000,000.00 | March 23, 2022 | May 31, 2023 | No |
| Goertek Group Co., Ltd. | 2,500,000.00 | March 23, 2022 | May 31, 2023 | No |
| Goertek Group Co., Ltd. | 146,256,600.00 | April 11, 2022 | July 31, 2023 | Yes |
| Goertek Group Co., Ltd. | 274,405,240.00 | September 2, 2022 | July 31, 2023 | No |
| Goertek Group Co., Ltd. | 130,000,000.00 | September 2, 2022 | May 31, 2023 | No |
| Goertek Group Co., Ltd. | 50,000,000.00 | September 2, 2022 | May 31, 2023 | No |
| Goertek Group Co., Ltd. | 26,000,000.00 | September 2, 2022 | May 31, 2023 | No |
Explanation of related guarantee
The borrowings of USD 113,975,000.00, USD 5,025,000.00, and USD 71,000,000.00 by a subsidiary, Goertek (HongKong)Co.,Limited, were repaid in January and March 2022.The borrowing of USD 25,000,000.00 by Goertek (HongKong) Co.,Limited, was repaid on December 23, 2022.
(5) Funds borrowed from related parties
None
(6) Transfer of assets and debt restructuring of related parties
Unit: RMB
| Related parties | Related transactions | 2022 | 2021 |
| Weifang Goer Real Estate Co., Ltd. | Purchasing fixed assets, etc. | 27,820,895.00 | |
| Wemake (Weihai) Digital Creative Technology Co., Ltd. | Purchasing fixed assets, etc. | 9,513,110.31 | 56,603.77 |
| Weifang Goer Farm Co., Ltd. | Purchasing fixed assets, etc. | 3,453,438.60 | |
| Qingdao Virtual Reality Institute Co., Ltd. | Purchasing fixed assets, etc. | 1,314,599.09 | 2,606,781.00 |
| Goertek Group Co., Ltd. | Purchasing fixed assets, etc. | 1,175,396.00 | 6,700,007.82 |
| Beijing Bubble Lab Co., Ltd. | Purchasing fixed assets, etc. | 592,444.40 | 1,845,155.05 |
| Dynaudio (Shanghai) Co,.Ltd | Purchasing fixed assets, etc. | 492,566.37 | |
| Shanghai Goertek Robot Co., Ltd. | Purchasing fixed assets, etc. | 943,396.20 | |
| Weifang ShiXiang Real Estate Co., Ltd. | Purchasing fixed assets, etc. | 387,250.60 | |
| Wemake (Beijing) Digital Creative Technology Co., Ltd. | Purchasing fixed assets, etc. | 2,237,536.87 | |
| Weifang Goertek Home Decoration Engineering Co., Ltd. | Purchasing fixed assets, etc. | 6,171,794.28 | |
| Wemake (Qingdao) Digital Creative Technology Co., Ltd. | Purchasing fixed assets, etc. | 215,405.66 | |
| Weifang Goerdyna Technology Co., Ltd. | Disposal of fixed assets | 6,676,812.63 | 9,295,634.00 |
| Goertek Group Co., Ltd. | Disposal of fixed assets | 249,760.94 | |
| Qingdao Virtual Reality Institute Co., Ltd. | Disposal of fixed assets | 2,646.30 | 6,485,086.09 |
| Wemake (Weihai) Digital Creative Technology Co., Ltd. | Disposal of fixed assets | 478.33 | |
| Weifang Point Hotel Management Co., Ltd. | Disposal of fixed assets | 4,760.77 |
(7) Remuneration of key managers
Unit: RMB
| Item | 2022 | 2021 |
| Remuneration of key managers | 16,911,750.00 | 16,950,000.00 |
(8) Other related transactions
Unit: RMB
| Item | Related transactions | Amount of current period | Amount in previous period |
| Beijing Uphoton Technology Co., Ltd. | Equity investment | 200,000,000.00 | |
| GravityXR Electronics and Technology Co., Ltd. | Equity investment | 90,000,000.00 | |
| Goerdyna Technology Co., Ltd. | Equity transfer | 1,397,700.00 | |
| Jiang Bin | Capital increase to subsidiaries | 64,290,000.00 | |
| Jiang Long | Capital increase to subsidiaries | 64,290,000.00 | |
| Goertek Group Co., Ltd. | Capital increase to subsidiaries | 64,000,000.00 | |
| Zhuoguang Xiangrong Technology (Tianjin) Partnership (Limited Partnership) | Capital increase to subsidiaries | 60,200,000.00 |
6. Receivables and payables of related parties
(1) Items with accounts receivable
Unit: RMB
| Name of project | Related parties | Closing balance | Opening balance | ||
| Book balance | Bad-debt provision | Book balance | Bad-debt provision | ||
| Accounts receivable | Weifang Goerdyna Technology Co., Ltd. | 10,399,970.66 | 103,999.71 | 10,925,126.65 | 109,251.27 |
| Accounts receivable | Little Bird Co., Ltd | 2,181,873.05 | 21,818.73 | ||
| Accounts receivable | AKM Industrial Company Limited | 466,054.46 | 4,660.54 | 516,600.00 | 5,166.00 |
| Accounts receivable | Shanghai Goertek Robot Co., Ltd. | 186,792.73 | 1,867.93 | 78,523.44 | 785.23 |
| Accounts receivable | Goertek Group Co., Ltd. | 104,206.00 | 1,042.06 | ||
| Accounts receivable | Weifang Dotcom Catering Management Co., Ltd. | 81,198.36 | 811.98 | ||
| Accounts receivable | Jiaxing Yuguang Opto-electronic Technology Co, Ltd. | 30,460.37 | 304.60 | ||
| Accounts receivable | Weifang Goer Manor Trading Co., Ltd. | 17,614.54 | 176.15 | ||
| Accounts receivable | Weifang High-Tech Zone Yasong Linju Kindergarten | 4,500.00 | 45.00 | ||
| Accounts receivable | Beijing Xiaoniao Tingting Technology Co., Ltd | 9,233,053.25 | 92,330.53 | ||
| Accounts receivable | Dynaudio (Shanghai) Co,.Ltd | 189,133.13 | 1,891.33 | ||
| Accounts receivable | Qingdao Point Hotel Management Co., Ltd. | 252,800.00 | 2,528.00 |
(2) Items with accounts payable
Unit: RMB
| Name of project | Related parties | Closing book balance | Opening book balance |
| Accounts payable | AKM Industrial Company Limited | 48,787,168.95 | 39,135,420.36 |
| Accounts payable | Qingdao Virtual Reality Institute Co., Ltd. | 6,797,327.04 | 4,925,805.03 |
| Accounts payable | Goertek Group Co., Ltd. | 902,885.49 | |
| Accounts payable | Weifang Goerdyna Technology Co., Ltd. | 831,553.78 | 12,408,592.87 |
| Accounts payable | Weifang Goer Farm Co., Ltd. | 640,072.69 | 1,747,498.74 |
| Accounts payable | Dynaudio (Shanghai) Co,.Ltd | 556,600.00 | |
| Accounts payable | Little Bird Co., Ltd | 360,559.97 | |
| Accounts payable | Weifang Point Hotel Management Co., Ltd. | 331,842.00 | 98,568.00 |
| Accounts payable | Weifang Goer Manor Trading Co., Ltd. | 264,603.04 | 212,941.81 |
| Accounts payable | Qingdao Point Hotel Management Co., Ltd. | 258,802.92 | |
| Accounts payable | Weifang Dotcom Catering Management Co., Ltd. | 237,005.09 | 260,375.00 |
| Accounts payable | Wemake (Qingdao) Digital Creative Technology Co., Ltd. | 172,083.50 | 404,150.41 |
| Accounts payable | Beijing Bubble Lab Co., Ltd. | 165,554.34 | 46,561.60 |
| Accounts payable | BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | 28,248.00 | |
| Accounts payable | Weihai Goer Ecological Agriculture Co., Ltd. | 26,800.00 | 30,200.00 |
| Accounts payable | Weifang Goer Manor food & Beverage Co., Ltd. | 17,707.81 | 37,890.84 |
| Accounts payable | Weifang Gudian Garden Floriculture Co., Ltd. | 7,296.00 | |
| Accounts payable | Weifang Goer Property Service Co., Ltd. | 1,542.00 | |
| Accounts payable | Beijing Xiaoniao Tingting Technology Co., Ltd | 2,757,461.08 | |
| Accounts payable | Wemake (Weihai) Digital Creative Technology Co., Ltd. | 10,293.85 | |
| Accounts payable | Dotcom Investment Co., Ltd. | 42,478.00 | |
| Contract liabilities | Little Bird Co., Ltd | 33.57 | |
| Other payables | Weifang Goer Property Service Co., Ltd. | 23,623.90 | |
| Other payables | Weifang Goer Real Estate Co., Ltd. | 805.20 | |
| Other payables | BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. | 28,248.00 |
7. Commitment of related parties
None
8. Others
None
XIII. Share-based payment
1. Overview of share-based payment
? Applicable ? Not applicable
Unit: RMB
| Total amount of equity instruments granted by the Company in the current period | 205,604,318.00 |
| Total amount of equity instruments exercised by the Company in the current period | 27,828,274.00 |
| Total amount of equity instruments of the Company which are invalid in the current period | 6,454,710.00 |
| The range of exercise price of stock options issued by the Company at the end of the period and their remaining period of contract | See Explanation of Other Matters below |
| The range of exercise price of other equity instrument options issued by the Company at the end of the period and their remaining period of contract | See Explanation of Other Matters below |
Other explanations:
(1) The Company's outstanding stock options at the end of the year
① 2022 Stock Option Incentive Plan
To fully mobilize the employees for enthusiasm and creativity, attract and retain outstanding management talents and businessbackbones, and improve the cohesion of employees and competitiveness of the Company, the "2022 Stock Option Incentive Plan" forthe key management backbones and business backbones (excluding directors and senior management) of the Company and its wholly-owned and controlled subsidiaries was considered and approved at the 31st meeting of the 5th Board of Directors held on July 8, 2022,and the 1st extraordinary general meeting of shareholders in 2022 held on July 26, 2022.The exercise price of the initial grant and reserved portion of the stock options in this incentive plan is RMB 34.24 per share, which isvalid for 48 months from the date of the stock option grant to the date when all stock options are exercised or canceled. The waitingperiods for the initial grant of stock options and the reserved grant of stock options under this incentive plan are 21 months and 12months after the grant date, respectively. The exercise periods begin after the expiration of the waiting periods. In the exercise period,the grantees will exercise the options in two phases according to the exercise ratio of 50%:50% at exercisable dates.The fair value of stock options shall be calculated and determined based on the Black Scholes option pricing model, the value of eachstock option for each phase of the initial grant is RMB 2.81 per share and RMB 4.73 per share respectively.Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange foremployee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equityinstruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.The share-based payment amortization expense recognized in 2022 is RMB 28,460,219.04 (RMB 28,460,219.04 in total). The amountincluded under capital surplus- other capital surplus is RMB 28,450,585.73, and the minority shareholders' equity is RMB 9,633.31.
② 2021 Stock Option Incentive Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up thebackbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the19th meeting of the 5th Board of Directors held on April 16, 2021 and the 2020 Annual General Meeting of Shareholders held on May7, 2021, the Company shall implement the "2021 Stock Option Incentive Plan" for the important personnel in management and variousdepartments (excluding directors and senior management) of the Company and its wholly-owned and holding subsidiaries.The exercise price of the initial grant and reserved portion of the stock options in this incentive plan is RMB 29.13 per share, which isvalid for 48 months from the date of the stock option grant to the date when all stock options are exercised or canceled. The 12 monthsfrom the day when the stock options are granted initially or when the reserved stock options are granted under the Incentive Plan shall
be the waiting period, and the options may be exercised after the end of the waiting period. In the exercise period, the grantees willexercise the options in two phases according to the exercise ratio of 50%:50% at exercisable dates.The fair value of stock options shall be calculated and determined based on the Black Scholes option pricing model, the value of eachstock option for each phase of the initial grant is RMB 12.06 per share and RMB 14.50 per share respectively; and the value of eachstock option for each phase of the reserved grant is RMB 5.51 per share and RMB 7.14 per share respectively.Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange foremployee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equityinstruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.The share-based payment amortization expense recognized in 2022 is RMB 303,755,357.46 (RMB 565,880,477.99 in total). Theamount included under capital surplus- other capital surplus is RMB 302,029,060.59, and the minority shareholders' equity is RMB1,726,296.87.
③ Goertek Microelectronics stock option incentive
According to the resolution of General Meeting dated September 29, 2020 and to the resolution of Board of Directors dated October27, 2020, Goertek Microelectronics shall grant 17.335 million stock options to the directors, senior management and key backbones(excluding supervisors and independent directors) of Goer Microelectronics and its holding subsidiaries to be exercised them in fivephases. The corresponding waiting periods are 18 months, 30 months, 42 months, 54 months and 66 months respectively from the dateof grant.Goer Microelectronic applies the Black-Scholes option pricing model to measure and determine the fair value of stock options. Thevalues of stock options for the five phases are respectively RMB 3.41 per share, RMB 4.67 per share, RMB 5.53 per share, RMB 6.28per share and RMB 7.45 per share.Under the Accounting Standards for Business Enterprises, Goertek Microelectronics recognizes share-based payments based on thebest estimate of the number of exercisable equity instruments and the fair value of the equity instruments on the grant date. And thepayments are amortized over a set service period. The share-based payment amortization expense recognized in 2022 is RMB3,568,283.61 (RMB 34,292,282.09 in total). The amount included under capital surplus- other capital surplus is RMB 3,065,116.37,and the minority interests is RMB 503,167.24.
(2) The Company's other outstanding equity instruments at the end of the year
① ''Homeland No. 4'' Employee Stock Ownership Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up thebackbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the5th meeting of the 5th Board of Directors held on April 21, 2020 and the 2019 Annual General Meeting of Shareholders held on May8, 2020, the Company shall implement the “Homeland No.4” employee stock plan for certain directors (excluding independentdirectors), supervisors and senior management as well as important personnel in management and various departments.In order to ensure the efficiency of the incentives, the employee stock plan received the transfer of 49,270,100 shares in the Company’sspecific securities repurchase account at nil, and no employee was required to pay for the shares. The validity period of the “HomelandNo.4” employee stock plan is 48 months, and the shares shall be released in three stages. The time of release is the end of 12 months,24 months or 36 months from the day when the Company declares the transfer of the last underlying shares of the Company to thename of this employee stock plan.Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange foremployee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equityinstruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.The share-based payment amortization expense recognized in 2022 is RMB 138,693,750.47 (RMB 1,015,624,005.31 in total). Theamount is included under capital surplus- other capital surplus.
② ''Homeland No. 5'' Employee Stock Ownership Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up thebackbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the19th meeting of the 5th Board of Directors held on April 16, 2021 and the 2020 Annual General Meeting of Shareholders held on May7, 2021 to implement the “Homeland No.5” employee stock plan for certain directors (excluding independent directors), supervisorsand senior management as well as important personnel in management and various departments who have made important contributionsto the development of the Company.
The “Homeland No.5” employee stock plan received the transfer of shares in the Company’s special securities account for re-purchaseat RMB 10 per share. The shares under the employee stock plan will be released in two stages. The time of release is the end of 12months or 24 months from the day of the transfer of the shares under the employee stock plan to this employee stock plan.Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange foremployee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equityinstruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.The share-based payment amortization expense recognized in 2022 is RMB 120,185,821.65 (RMB 231,219,021.65 in total). Theamount is included under capital surplus- other capital surplus.
③ ''Homeland No. 6'' Employee Stock Ownership Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up thebackbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the2nd meeting of the 6th Board of Directors held on December 2, 2022 and the 3rd extraordinary general meeting of shareholders in2022 held on 19 December 2022 to implement the ''Homeland No. 6'' employee stock plan for certain directors (excluding independentdirectors), supervisors and senior management as well as important personnel in management and various departments who have madeimportant contributions to the development of the Company.The “Homeland No.6” employee stock plan received the transfer of shares in the Company’s special securities account for re-purchaseat RMB 7 per share. The shares under the employee stock plan will be released in four stages. The time of release is the end of 18months, 30 months, 42 months, or 54 months from the day of the transfer of the shares under the employee stock plan to this employeestock plan.Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange foremployee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equityinstruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.The share-based payment amortization expense recognized in 2022 is RMB 8,469,500.90 (RMB 8,469,500.90 in total). The amount isincluded under capital surplus- other capital surplus.
④ Goertek Microelectronics equity incentive by way of capital increase
According to the resolution of the General Meeting of Shareholders on September 29, 2020 and the amended Articles of Associationof Goertek Microelectronics Co., Ltd., the natural-person shareholders Mr. Jiang Long and Mr. Song Qinglin subscribed for 21,500,000shares of Goertek Microelectronics by way of capital increase. The capital increase price was RMB 2 per share, which was lower thanthe fair value of Goertek Microelectronics shares, and the amount constituted a share-based payment.Under the Accounting Standards for Business Enterprises, Goertek Microelectronics recognizes share-based payments based on thebest estimate of the number of exercisable equity instruments and the fair value of the equity instruments at the grant date. And thepayments are amortized over a set service period. The share-based payment amortization expense recognized in 2022 is RMB49,923,000.00 (RMB 112,702,882.19 in total). The amount included under capital surplus- other capital surplus is RMB 42,883,307.85,and the minority interests is RMB 7,039,692.15.
⑤ Goertek Optical equity incentive by way of capital increase
According to the resolution of the General Meeting of Shareholders on June 20, 2022 and the amended Articles of Association ofGoertek Optical Technology Co., Ltd., the natural-person shareholders Mr. Jiang Bin, Mr. Jiang Long, and Goertek Optical employeeshareholding platform subscribed for 257.16 million shares of Goertek Optical by way of capital increase. The capital increase pricewas RMB 1.5 per share, which was lower than the fair value of Goertek Optical shares, and the amount constituted a share-basedpayment.Under the Accounting Standards for Business Enterprises, Goertek Optical recognizes share-based payments based on the best estimateof the number of exercisable equity instruments and the fair value of the equity instruments at the grant date. And the payments areamortized over a set service period. The share-based payment amortization expense recognized in 2022 is RMB 6,320,075.41 (RMB6,320,075.41 in total). The amount included under capital surplus- other capital surplus is RMB 4,972,698.53, and the minority interestsis RMB 1,347,376.88.
2. Share-based payment settled with equity
? Applicable ? Not applicable
Unit: RMB
| Determination method of the fair value of equity instruments at the date of grant | Black-Scholes model and fair value of equity instruments at the date of grant |
| Basis for determining the quantity of equity instruments with vesting | The Company makes the determination according the equity instruments corresponding to the current target employees and the forecast of the Company's performance in the next year, etc. |
| Reason for significant difference in estimation in the current period and estimation in the last period | None |
| Accumulative amount of equity-settled share-based payment included in capital surplus | 2,002,968,464.58 |
| Total amount of share-based payment settled with equity in current period | 659,376,008.54 |
3. Cash-settled payment settled in cash
? Applicable ? Not applicable
4. Modification and termination of share-based payment
On June 30, 2022, the Board of Directors of Goertek Microelectronics considered and approved the Proposal to adjust the "2020 StockOption Incentive Plan" and other proposals to adjust the relevant exercise dates. The grant date of the Stock Option Incentive Plan isOctober 27, 2020. The granted stock options are to be exercised in five installments, and the corresponding waiting periods are 24months, 36 months, 48 months, 60 months, and 72 months from the date of grant respectively.Due to the substandard performance in 2022 and the failure to meet the exercise conditions for the second exercise period of the stockoption incentive plan, Goertek Microelectronics intends to cancel 2.668 million shares of stock options.
5. Others
NoneXIV. Commitments and contingencies
1. Important commitments
Important commitments on the balance sheet dateNone
2. Contingencies
(1) Important contingencies on the balance sheet date
① Contingent liability derived from pending litigations and arbitrations, and financial influence therefromNone
② Contingent liabilities and financial impacts from debt guarantees for other organizations
As of the report date, except that the guarantees provided by the Company to its subsidiaries Goertek (HongKong) Co.,Limited, GoertekTechnology Vina Company Limited, Weifang Goertek Microelectronics Co., Ltd., Rongcheng Goertek Microelectronics Co., Ltd., andGoertek Microelectronics Inc. are not fulfilled as specified in Note XII.5, there is no debt guarantees of the Company provided to otherentities.
③ Contingent liabilities related to investments in joint ventures or associates
None
④ Other contingent liabilities and financial impacts
None
(2) The Company shall make a statement even if it does not have important contingencies to be disclosed
There are no important contingencies to be disclosed in the Company.
3. Others
None
XV. Matters after balance sheet date
1. Important non-adjustment matters
Unit: RMB
| Item | Content | Impacted amount on financial conditions and operating results | The reason why the impacted amount cannot be estimated |
| The progress of listing of a subsidiary, Goertek Microelectronics Inc. on SZSE ChiNext | Goertek Microelectronics Inc., a subsidiary of the Company, plans to be listed on the ChiNext of Shenzhen Stock Exchange. At present, the review procedure for issuance and listing is suspended. | Not applicable |
2. Profit distribution
Unit: RMB
| Profits or dividends to be distributed | 340,516,294.90 |
| Profits or dividend declared after deliberation and approval | 340,516,294.90 |
| Profit distribution plan | Based on the total share capital registered on the record date of equity distribution minus the repurchased shares in the Company's specific securities repurchase account, the Company will distribute cash dividend of RMB 1.00 (tax inclusive) for every 10 shares to all the shareholders, as well as 0 bonus shares (tax inclusive), and there is no conversion of capital surplus into share capital. |
3. Sales return
None
4. Explanation of other matters after the balance sheet date
On April 6, 2023, Mr. Jiang Long, Vice Chairman, Director, and President of the Company, resigned from the above position of theCompany for personal reasons. After his resignation, Mr. Jiang Long will serve as a senior advisor of the Company.XVI. Other important matters
1. Correction of early accounting errors
None
2. Debt restructuring
None
3. Asset replacement
None
4. Annuity plan
None
5. Discontinued operation
None
6. Division information
None
7. Other important transactions and matters that have an impact on investors' decisions
None
8. Others
Lease
(1) The Group as lessee
① For information on right-of-use assets and lease liabilities, please see Note VII. 16 and 34.
② Information on items recorded in current profit or loss and relevant asset costs
Unit: RMB
| Items | Amount of current period | Amount in previous period |
| Short-term lease expense (simplified treatment applies) | 70,892,405.81 | 56,008,840.98 |
| Interest on lease liabilities included in finance expenses | 17,092,607.19 | 13,692,320.31 |
| Income derived from the sublease of the right-of-use assets | 1,196,937.46 | 3,465,424.78 |
③ Cash outflows related to leases
Unit: RMB
| Items | Category of cash flows | Amount of current period | Amount in previous period |
| Cash for repayment of principal and interest of lease liabilities | Cash outflows from financing activities | 128,750,261.16 | 102,991,821.74 |
| Payment for short-term leases and leases for low-value assets (simplified treatment applies) | Cash outflows from operating activities | 70,892,405.81 | 56,008,840.98 |
| Total | 199,642,666.97 | 159,000,662.72 |
(2) The Group as lessor
① Information on financing lease
None
② Information on operating lease
Unit: RMB
| Items | Reported items | Amount of current period | Amount in previous period |
| Lease income | Other business income | 148,658,794.96 | 53,039,818.78 |
XVII. Notes to major items in the financial statements of the parent company
1. Accounts receivable
(1) Accounts receivable disclosed by classification
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad-debt provision | Book value | Book balance | Bad-debt provision | Book value | |||||
| Amount | Proportion | Amount | Proportion of accrual | Amount | Proportion | Amount | Proportion of accrual | |||
| Including: | ||||||||||
| Accounts receivable with bad debts reserves by group | 8,897,702,147.22 | 100.00% | 27,102,669.02 | 0.30% | 8,870,599,478.20 | 8,040,359,505.41 | 100.00% | 31,185,331.21 | 0.39% | 8,009,174,174.20 |
| Including: | ||||||||||
| Group by aging | 2,686,302,309.44 | 30.19% | 27,102,669.02 | 1.01% | 2,659,199,640.42 | 3,118,533,121.24 | 38.79% | 31,185,331.21 | 1.00% | 3,087,347,790.03 |
| Related party group | 6,211,399,837.78 | 69.81% | 6,211,399,837.78 | 4,921,826,384.17 | 61.21% | 4,921,826,384.17 | ||||
| Total | 8,897,702,147.22 | 100.00% | 27,102,669.02 | 0.30% | 8,870,599,478.20 | 8,040,359,505.41 | 100.00% | 31,185,331.21 | 0.39% | 8,009,174,174.20 |
Bad debt reserve grouping: Group by aging
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Within 1 year | 2,685,475,944.16 | 26,854,759.44 | 1.00% |
| 1 to 2 years | 826,365.28 | 247,909.58 | 30.00% |
| 2 to 3 years | |||
| Over 3 years | |||
| Total | 2,686,302,309.44 | 27,102,669.02 | |
Bad debt reserve grouping: Related party group
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Within 1 year | 6,211,399,837.78 | ||
| 1 to 2 years | |||
| 2 to 3 years | |||
| Over 3 years | |||
| Total | 6,211,399,837.78 | ||
If the provision for bad debts on accounts receivable is based on the general model of expected credit losses, please discloseinformation about the provision for bad debts by referring to the disclosure of other receivables:
? Applicable ? Not applicableDisclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 8,896,875,781.94 |
| 1 to 2 years | 826,365.28 |
| Total | 8,897,702,147.22 |
(2) Accrual, recovery or return of bad debt reserve in current period
None
(3) Accounts receivable actually written off in current period
None
(4) Accounts receivable of the 5 highest closing balance by debtor
Unit: RMB
| Company name | Closing balance of accounts receivable | Proportion of total closing balance of accounts receivable | Closing balance of bad debt provision |
| Company 1 | 3,248,732,170.92 | 36.51% | |
| Company 2 | 1,370,781,730.38 | 15.41% | |
| Company 3 | 544,455,732.91 | 6.12% | 5,444,557.33 |
| Company 4 | 521,513,579.22 | 5.86% | |
| Company 5 | 457,118,861.92 | 5.14% | |
| Total | 6,142,602,075.35 | 69.04% |
(5) Amount of assets and liabilities formed by transferring accounts receivable and continuing to beinvolved
None
(6) Accounts receivable derecognized due to transfer of financial assets
None
2. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 7,549,205,233.13 | 3,927,667,930.14 |
| Total | 7,549,205,233.13 | 3,927,667,930.14 |
(1) Interest receivable
None
(2) Dividends receivable
None
(3) Other receivables
1) Classification of other receivables by nature of payment
Unit: RMB
| Nature of payment | Closing book balance | Opening book balance |
| Current account | 7,513,774,764.36 | 3,774,035,738.53 |
| Security deposit | 5,919,227.94 | 40,178,537.85 |
| Tax refund for export receivable | 91,830,238.29 | |
| Withholding and remitting social insurance and housing provident fund | 30,376,964.77 | 25,693,583.89 |
| Total | 7,550,070,957.07 | 3,931,738,098.56 |
2) Provision for bad debts
Unit: RMB
| Bad-debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss over the next 12 months | Expected credit loss for the entire duration (credit impairment not occurred) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance as of January 1, 2022: | 4,070,168.42 | 4,070,168.42 | ||
| Balance as of January 1, 2022 in the current period | ||||
| Accrual in the current period | -3,204,444.48 | -3,204,444.48 | ||
| Balance as of December 31, 2022: | 865,723.94 | 865,723.94 |
Significant changes in the carrying value of changes in the allowances for losses in the current period? Applicable ? Not applicableDisclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 7,416,585,872.52 |
| 1 to 2 years | 133,312,317.97 |
| 2 to 3 years | 3,266.41 |
| Over 3 years | 169,500.17 |
| 3 to 4 years | 69,500.17 |
| 4 to 5 years | 0.00 |
| Over 5 years | 100,000.00 |
| Total | 7,550,070,957.07 |
3) Accrual, recovery or return of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
| Category | Opening balance | Changes in amount of the current period | Closing balance | |||
| Accrual | Withdrawal or write-back | Write-off | Other | |||
| Group by aging | 4,070,168.42 | -3,204,444.48 | 865,723.94 | |||
| Total | 4,070,168.42 | -3,204,444.48 | 865,723.94 | |||
4) Other receivables actually written off in the current period
None
5) Other receivables of the 5 highest closing balance by debtor
Unit: RMB
| Company name | Nature of payment | Closing balance | Aging | Ratio in the total closing balance of other receivables | Closing balance of bad debt provision |
| Company 1 | Current account | 2,236,100,000.00 | Within 1 year | 29.62% | |
| Company 2 | Current account | 2,025,329,657.63 | Within 1 year | 26.83% | |
| Company 3 | Current account | 1,223,530,287.69 | Within 1 year | 16.21% | |
| Company 4 | Current account | 705,971,412.50 | Within 1 year | 9.35% | |
| Company 5 | Current account | 664,922,879.36 | Within 1 year | 8.81% | |
| Total | 6,855,854,237.18 | 90.82% |
6) Other receivables involving government subsidies
None
7) Other receivables derecognized due to transfer of financial assets
None
8) Amount of assets and liabilities formed by transferring other receivables and continuing to be involvedNone
3. Long-term equity investments
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Investment in subsidiaries | 6,569,063,091.12 | 6,569,063,091.12 | 6,182,937,106.09 | 6,182,937,106.09 | ||
| Investment in associated businesses and joint ventures | 192,305,163.87 | 192,305,163.87 | ||||
| Total | 6,761,368,254.99 | 6,761,368,254.99 | 6,182,937,106.09 | 6,182,937,106.09 | ||
(1) Investment in subsidiaries
Unit: RMB
| Invested entity | Opening balance (book value) | Increase or decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||
| Investment addition | Investment reduction | Provision for impairment reserve | Other | ||||
| Weifang Goertek Electronics Co., Ltd. | 1,461,802,456.32 | 26,502,266.94 | 1,488,304,723.26 | ||||
| Weifang Goertek Trading Co., Ltd. | 50,369,428.17 | 1,176,985.98 | 51,546,414.15 | ||||
| Yishui Goertek Electronics Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Yili Precision Manufacturing Co., Ltd. | 331,899,916.31 | 6,645,851.82 | 338,545,768.13 | ||||
| Goertek Optical Technology Co., Ltd | 596,988,221.40 | 10,061,801.21 | 607,050,022.61 | ||||
| Goertek Technology Co., Ltd. | 958,337,466.08 | 31,376,217.82 | 989,713,683.90 | ||||
| Beijing Goertek Technology Co., Ltd. | 30,160,833.60 | 26,656,809.23 | 56,817,642.83 | ||||
| Qingdao Goertek Acoustics Technology Co., Ltd. | 61,876,266.54 | 27,071,578.01 | 88,947,844.55 | ||||
| Shenzhen Goertek Technology Co., Ltd. | 66,492,459.02 | 18,144,699.48 | 84,637,158.50 | ||||
| Shanghai Goertek Technology Co., Ltd. | 19,953,450.46 | 9,948,636.18 | 29,902,086.64 | ||||
| Nanjing Goertek Technology Co., Ltd. | 50,591,085.07 | 375,419.79 | 50,966,504.86 | ||||
| Shenzhen Mototek Smart Technology | 4,002,592.81 | 8,000,000.00 | 12,002,592.81 | ||||
| Invested entity | Opening balance (book value) | Increase or decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||
| Investment addition | Investment reduction | Provision for impairment reserve | Other | ||||
| Co., Ltd. | |||||||
| Weifang Lokomo Precision Industry Co., Ltd. | 50,632,152.89 | 1,299,249.01 | 51,931,401.90 | ||||
| Goertek Investment Co., Ltd. | 78,000,000.00 | 5,000,000.00 | 83,000,000.00 | ||||
| Beijing Goertek Investment Management Co., Ltd. | 2,744,323.56 | 1,591,323.18 | 4,335,646.74 | ||||
| Dongguan JoyForce Precision Manufacturing Co., Ltd. | 30,633,305.44 | 737,675.11 | 31,370,980.55 | ||||
| Goertek Vina Co., Ltd | 247,634,379.61 | 247,634,379.61 | |||||
| Goertek Technology Korea Co., Ltd. | 66,743,212.77 | 66,743,212.77 | |||||
| Goertek Electronics, Inc. | 206,204,739.77 | 4,622,220.97 | 210,826,960.74 | ||||
| Goertek Technology Taiwan Co., Ltd. | 129,078,085.50 | 20,877.78 | 129,098,963.28 | ||||
| Goertek Technology Japan Co., Ltd. | 114,559,591.29 | 19,669,345.44 | 134,228,936.73 | ||||
| Goertek Seiki Technology Co., Ltd. | 1,024,111.56 | 1,024,111.56 | |||||
| Goertek Intelligence Technology Co., Ltd. | 352,561,720.50 | 2,993,460.18 | 355,555,180.68 | ||||
| Goertek Microelectronics Inc. | 819,445,743.75 | 819,445,743.75 | |||||
| Beijing Goertek Microelectronics Co., Ltd. | 5,053,458.52 | 5,053,458.52 | |||||
| Invested entity | Opening balance (book value) | Increase or decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||
| Investment addition | Investment reduction | Provision for impairment reserve | Other | ||||
| Qingdao Goertek Microelectronics Research Institute Co., Ltd. | 460,436.04 | 460,436.04 | |||||
| Qingdao Goertek Intelligent Sensor Co., Ltd. | 842,096.78 | 842,096.78 | |||||
| Rongcheng Goertek Microelectronics Co., Ltd. | 524,895.84 | 524,895.84 | |||||
| Shanghai Goertek Microelectronics Co., Ltd. | 2,758,811.23 | 2,758,811.23 | |||||
| Shenzhen Goertek Microelectronics Co., Ltd. | 1,206,995.30 | 1,206,995.30 | |||||
| Weifang Goertek Microelectronics Co., Ltd. | 17,208,205.72 | 17,208,205.72 | |||||
| Wuxi Goertek Microelectronics Co., Ltd. | 940,460.62 | 940,460.62 | |||||
| Qingdao Goertek Commercial Factoring Co., Ltd. | 50,802,186.89 | 972,645.57 | 51,774,832.46 | ||||
| Kunshan Goertek Electronics Co., Ltd | 152,443,503.48 | 152,443,503.48 | |||||
| Rongcheng Goertek Technology Co., Ltd. | 100,696,635.98 | 4,041,660.58 | 104,738,296.56 | ||||
| Nanning Goertek Electronics Co., | 80,000,000.00 | 233,954.95 | 80,233,954.95 | ||||
| Invested entity | Opening balance (book value) | Increase or decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||
| Investment addition | Investment reduction | Provision for impairment reserve | Other | ||||
| Ltd | |||||||
| Xi’an Goertek Electronic Technology Co., Ltd. | 8,263,877.27 | 664,747.07 | 8,928,624.34 | ||||
| Weifang High-tech Zone Goertek Education Center | 300,000.00 | 300,000.00 | |||||
| Qingdao Resonance Venture Capital Management Co., Ltd. | 2,295,000.00 | 2,295,000.00 | |||||
| Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership) | 160,000,000.00 | 160,000,000.00 | |||||
| Qingdao Goertek Horizons Technology Co., Ltd | 30,021,151.54 | 30,021,151.54 | |||||
| Total | 6,182,937,106.09 | 400,423,577.84 | 14,297,592.81 | 6,569,063,091.12 | |||
(2) Investment in associated businesses and joint ventures
Unit: RMB
| Investor | Opening balance (book value) | Increase or decrease in the current period | Closing balance (book value) | Closing balance of impairment provision | |||||||
| Investment addition | Investment reduction | Recognized investment gain and loss under equity method | Other comprehensive income adjustments | Other changes in equity | Cash dividends or profits declared | Provision for impairment reserve | Other | ||||
| I. Joint Venture | |||||||||||
| II. Affiliated enterprises | |||||||||||
| Beijing Uphoton Technology Co., Ltd. | 200,000,000.00 | -7,694,836.13 | 192,305,163.87 | ||||||||
| Sub-total | 200,000,000.00 | -7,694,836. | 192,305,163.87 | ||||||||
| 13 | |||||||||||
| Total | 200,000,000.00 | -7,694,836.13 | 192,305,163.87 |
(3) Explanation of other matters:
None
4. Operating revenue and operating cost
Unit: RMB
| Item | 2022 | 2021 | ||
| Income | Cost | Income | Cost | |
| Main business | 35,652,094,423.46 | 32,162,388,871.15 | 28,940,399,193.43 | 25,585,348,376.14 |
| Other business | 7,325,297,627.45 | 5,829,646,168.53 | 9,630,277,984.27 | 7,877,421,262.62 |
| Total | 42,977,392,050.91 | 37,992,035,039.68 | 38,570,677,177.70 | 33,462,769,638.76 |
Information about performance obligations:
None
5. Investment income
Unit: RMB
| Item | 2022 | 2021 |
| Return on long-term equity investments measured by the equity method | -7,694,836.13 | |
| investments income from disposal of long-term equity investments | -10,604,892.81 | |
| Investment income from disposal of financial assets held for trading | 9,695,767.32 | 197,230,152.13 |
| Dividend income from long-term equity investments of subsidiaries | 645,651,914.62 | |
| Investment income from products such as certificates of deposit | 20,466,167.48 | 2,488,497.76 |
| Profits or losses arising from derecognised financial assets at amortised cost | -2,297,194.72 | |
| Discount losses of financing receivables that meet the conditions for derecognition | -833,626.41 | |
| Other | 295,443.10 | |
| Total | 656,680,494.07 | 197,716,898.27 |
6. Others
NoneXVIII. Supplementary information
1. Statement of non-recurring profits and losses for the current period
? Applicable ? Not applicable
Unit: RMB
| Item | Amount | Explanation |
| Loss or gain from disposal of non-current assets | 122,922,237.61 | Mainly investment income from disposal of equity owned in other companies |
| Tax refunds, reductions, and exemptions approved ultra vires or without official approval documents | ||
| Government subsidies included in the current profits and losses (except those closely related to the Company's normal business, comply with national policies and regulations, and continuously grant in accordance with a certain standard quota or quantity) | 351,383,799.43 | Mainly special funds for enterprise innovation and development and other government subsidies |
| Fund occupancy fees charged to non-financial enterprises that are included in current profit and loss | ||
| Income generated from the fair value of the identifiable net assets of an investee that is enjoyed by the Company when the investment cost of acquiring a subsidiary, joint venture, or joint venture is less than the cost of acquiring the investment | ||
| Profits and losses from exchange of non-monetary assets | ||
| Profits and losses from entrusting others to invest or manage assets | ||
| Provisions for impairment of various assets due to force majeure, such as natural disasters | ||
| Profits and losses from debt restructuring | ||
| Enterprise reorganization expenses, such as expenses for relocating employees, integration expenses, etc. | ||
| Profits and losses in excess of the fair value arising from a transaction with an apparently unfair price | ||
| Current net profits and losses of a subsidiary from the beginning of the current period until the combination date resulting from a business combination under common control | ||
| Profits and losses arising from contingencies unrelated to the normal operation of the Company | ||
| In addition to the effective hedging business related to normal business of the Company, the profits and losses from the changes in fair value arising from holding financial assets held for trading and financial liabilities held for trading, as well as the investment income obtained from the disposal of financial assets held for trading, financial liabilities held for trading and available-for-sale financial assets | -367,080,970.87 | Mainly the gains from the fair value changes and transaction of the Company's foreign exchange derivatives |
| Reversal of provision for impairment of receivables individually tested for impairment | ||
| Profits and losses on external entrusted loans | ||
| Profits and losses arising from changes in the fair value of investment properties subsequently measured using a fair value model |
| The impact of one-time adjustment on the current profits and losses according to the requirements of tax, accounting, and other laws and regulations | ||
| Custody fee income from entrusted operations | ||
| Other non-operating income and expenditures other than those mentioned above | 15,710,102.76 | |
| Other profit and loss items that meet the definition of non-recurring profit and loss | 42,288,231.23 | Mainly tax benefits and investment income from large-denomination deposits and other products |
| Less: Impact of income tax | 26,114,589.64 | |
| Impact of minority interests | 17,306,309.42 | |
| Total | 121,802,501.10 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
? Applicable ? Not applicableMainly tax benefits and investment income from large-denomination deposits and other productsDescription of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on InformationDisclosure for Companies with Public Offerings of Securities - Non-recurring Profit and Loss, as recurring profit and loss? Applicable ? Not applicable
2. Net assets income rate and earnings per share
| Profit during the reporting period | Weighted average return on net assets | Earnings per share | |
| Basic earnings per share (RMB / share) | Diluted earnings per share (RMB / share) | ||
| Net profit attributable to ordinary shareholders of the Company | 6.17% | 0.52 | 0.52 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring profits and losses | 5.74% | 0.49 | 0.49 |
3. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profits and net assets in the financial reports disclosed pursuant to internationalaccounting standards and Chinese accounting standards at the same time
? Applicable ? Not applicable
(2) Differences in net profits and net assets in the financial reports disclosed pursuant to foreign accountingstandards and Chinese accounting standards at the same time
? Applicable ? Not applicable
(3) Explanation of reasons for differences in accounting data under domestic and foreign accountingstandards; if the data audited by an overseas audit firm is adjusted for differences, the name of the overseasfirm shall be indicated.
None
4. Others
None
| Goertek Inc. | |||
| Chairman: Jiang Bin | |||
| April 17, 2023 | |||