Goertek Inc.Annual Report 2021
March 2022
Section Ⅰ Important Notes, Contents and Interpretations
The Board of Directors, the Board of Supervisors, directors, supervisorsand senior management of the Company guarantee that the informationpresented in this report shall be together be wholly liable for the truthfulness,accuracy and completeness of its contents and free of any false records,misleading statements or material omissions, and will undertake individual andjoint legal liabilities.
Jiang Bin, the person in charge of the Company, and Li Yongzhi, the personin charge of accounting and the accounting department (accounting supervisor)guarantee that the financial report in this annual report is authentic, accurateand complete.
All directors have attended the board meeting to review the annual report.
The Company faces the risks in market, operation and management.Investors are kindly reminded to pay attention to possible investment risks. Fordetails, see "Section III Discussion and Analysis of Management of the Company,XI Outlook for the Future Development of the Company" in this report.
The future plans and some forward-looking statements mentioned hereinare planned 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 profit distribution proposal considered and approved by the Board ofDirectors of the Company is as follows: based on the total share capitalregistered on the record date of equity distribution minus the repurchasedshares in the Company's special repurchase account, the Company willdistribute cash dividend of RMB 2.00 (tax inclusive) for per 10 shares to all theshareholders, as well as 0 bonus shares (tax inclusive), and there is no conversionof capital reserves into share capital.
If any discrepancy between the English version and the Chinese version ofthe annual report, the Chinese version shall prevail.
Contents
SectionⅠImportant Notes, Contents and Interpretations ...... 2
SectionⅡCompany Information and Key Financial Indicators ...... 8
Section III Discussion and Analysis of Management of the Company ...... 13
Section IV Corporate Governance ...... 48
Section V Environmental and social responsibilities ...... 86
Section VI Important Matters ...... 90
Section VII. Changes in Shares and Information about Shareholders ............................................................................ 112
Section VIII Information of Preferred Shares ...... 121
Section IX Information on the Bonds ...... 122
Section X Financial Report ...... 123
Directory of Reference Files
(1) Financial statements with signatures and seals of the legal representative, the person in charge of accounting and the person incharge of accounting department (accounting supervisor);
(2) The originals of 2021 annual report and its abstract signed by the legal representative of the Company;
(3) The originals of the audit report with the seal of Zhongxi Certified Public Accountants (special general partnership) Co., Ltd. andthe signature and seal of the certified public accountants;
(4) The originals of all company documents and announcements publicly disclosed in newspapers designated by China SecuritiesRegulatory Commission (CSRC) during the reporting period.
Interpretation
| Terms | Refers to | Content of interpretation |
| Company, the Company, Goertek Inc. | Refer 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 |
| Weifang Goertek Microelectronics | Refers to | Weifang Goertek Microelectronics Co., Ltd., controlled subsidiary of the Company |
| Goertek Optical | Refers to | Goertek Optical Technology Co., Ltd., wholly owned 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 micro system, 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 the users immerse. | ||
| Augmented Reality/AR | Refers to | A technology that perfectly 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 enhance 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 and 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. |
| Micro-system 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 such as technologies 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 comprehensive emerging 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 | Refer to | yuan (RMB), ten thousand yuan (RMB), hundred million yuan (RMB) |
| Reporting period | Refers to | January 1, 2021 to December 31, 2021 |
Explanation on Other MattersIn this report, any difference between the sum of partial sums and the sum of detailed items is due to rounding.
Section II Company Information and Key Financial IndicatorsI. 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 | 歌尔股份有限公司 | ||
| Abbreviation of the Company in Chinese | 歌尔股份 | ||
| 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
| Organization 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) Co., Ltd. |
| Business address | Room 1101, No. 11, Chongwenmenwai Street, Dongcheng District, Beijing |
| Names of accountants signing the report | Du Yeqin, Mou Huiling |
The sponsor institution engaged by the Company to perform continuous supervision during the reporting period
√ Applicable □ Not applicable
| Name of the sponsor institution | Business address of the sponsor institution | Name of sponsor representative | Duration of continuous supervision |
| China Securities Co., Ltd. | 9th Floor, Building B, Kayheng Center, No.2 Chaoyangmennei Street, Dongcheng District, Beijing | Guan Feng, Huang Zhenyue | From June 12, 2020 to December 31, 2021 |
The financial advisor engaged by the Company to perform continuous supervision during the reporting period
□ Applicable √ Not applicable
Ⅵ. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□ Yes √ No
| 2021 | 2020 | Year-on-year change | 2019 |
| Operating revenue (RMB) | 78,221,418,618.02 | 57,742,742,893.96 | 35.47% | 35,147,806,427.74 |
| Net profit attributable to shareholders of the Company (RMB) | 4,274,702,999.38 | 2,848,007,269.61 | 50.09% | 1,280,542,212.61 |
| Net profit attributable to shareholders of the Company excluding non-recurring profits and losses (RMB) | 3,832,421,177.27 | 2,758,911,040.03 | 38.91% | 1,348,634,308.27 |
| Net cash flow from operating activities (RMB) | 8,598,475,527.88 | 7,682,256,113.68 | 11.93% | 5,451,430,414.59 |
| Basic earnings per share (RMB / share) | 1.29 | 0.89 | 44.94% | 0.40 |
| Diluted earnings per share (RMB / share) | 1.28 | 0.89 | 43.82% | 0.40 |
| Weighted average return on net assets | 17.61% | 16.40% | 1.21% | 8.19% |
| December 31, 2021 | December 31, 2020 | Year-on-year change | December 31, 2019 | |
| Total assets (RMB) | 61,079,051,133.27 | 49,117,826,313.41 | 24.35% | 34,660,304,627.21 |
| Net assets attributable to shareholders of the Company (RMB) | 27,327,747,993.97 | 19,653,252,273.26 | 39.05% | 16,107,163,639.60 |
The Company's net profit before and after deducting non-recurring profits and losses in the last three fiscal years, whichever is lower,is negative, and the audit report of last year shows that there is uncertainty in company's ability to continue as a going concern.
□ Yes √ No
The net profit before and after deducting non-recurring profits and losses, whichever is lower, is 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 applicable
During 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 applicable
During the reporting periods no differences in net profits and net assets in the financial reports disclosed according to foreignaccounting standards and Chinese accounting standards at the same time
Ⅷ. Key Quarterly Financial Indicators
Unit: RMB
| The first quarter | The second quarter | The third quarter | The fourth quarter | |
| Operating revenue | 14,028,169,300.89 | 16,259,628,386.33 | 22,501,367,860.88 | 25,432,253,069.92 |
| Net profit attributable to shareholders of the Company | 965,953,650.11 | 765,076,109.61 | 1,601,494,203.24 | 942,179,036.42 |
| Net profit attributable to shareholders of the Company excluding non-recurring profits and losses (RMB) | 601,329,147.56 | 808,228,696.46 | 1,609,128,973.48 | 813,734,359.77 |
| Net cash flow from operating activities | 873,274,388.66 | 3,108,904,252.54 | 1,776,650,281.67 | 2,839,646,605.01 |
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 √ No
Ⅸ. Items and Amounts of Non-recurring Profits and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2021 | 2020 | 2019 | Explanation |
| Profits and losses on disposal of non-current assets (including the write-off portion of the provision for asset impairment) | -122,148,708.58 | -219,544,001.32 | -195,445,840.66 | |
| 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) | 464,119,437.91 | 221,372,903.17 | 177,315,056.36 | |
| 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 held-for-trading financial assets and held-for-trading financial liabilities, as well as the investment income obtained from the disposal of held-for-trading financial assets, held-for-trading financial liabilities and | 185,179,920.90 | 102,685,404.04 | -81,283,474.24 |
| available-for-sale financial assets | ||||
| Other non-operating revenue and expenditures other than those mentioned above | 13,554,671.71 | 5,874,633.40 | 13,488,075.24 | |
| Other profit and loss items that meet the definition of non-recurring profit and loss | 2,603,363.20 | 3,236,394.55 | 685,750.54 | |
| Less: Impact of income tax | 84,270,186.15 | 21,159,380.84 | -17,148,337.10 | |
| Impact of minority shareholders' interest (after tax) | 16,756,676.88 | 3,369,723.42 | ||
| Total | 442,281,822.11 | 89,096,229.58 | -68,092,095.66 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
√ Applicable □ Not applicable
It mainly refers to returned service charge for withholding individual income tax and other fees.Description of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on Disclosure ofthe Information regarding the Companies Offering Their Securities to the Public - Non-recurring Profit and Loss, as recurring profitand loss
□ Applicable √ Not applicable
The Company did not classify any item of the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 onDisclosure of the Information regarding the Companies Offering Their Securities to the Public - Non-recurring Profit and Loss, asrecurring profit and loss in the reporting period.
Section III Discussion and Analysis of Management of the CompanyⅠ. The situation of the industry during the reporting period
During the reporting period, the Company's main business divides into three segments including precision components business,smart audio device business and smart hardware business. The main business of the company is categorized into the industry of themanufacturing of computer, communication, and other electronic equipment. The Company's main products include acoustics, optics,microelectronics, structural components and other precision components, as well as smart hardware products such as TWS smartearphones, virtual reality (VR)/augmented reality (AR) products, smart wearable devices, gaming console and accessories, and smarthome products. The Company serves the leading global customers in the technology and consumer electronics industry by providingthem with vertically integrated product solutions of precision components and smart hardware, as well as the related design, R&Dand manufacturing services.
In the mobile era when the smartphones became the core hardware devices, a large number of outstanding well-knownenterprises in technology and consumer electronics industry had emerged worldwide based on the integration of advanced hardwaredevices, software content and innovative applications, and drove the whole industry and related enterprises in its industrial chain toachieve significant growth and enterprise development through a long period of time in the past. As the growth of the smartphoneindustry has slowed down in recent years, the global technology and consumer electronics industry has begun the transition from themobile era to the post-mobile era.
According to the statistics of IDC, a well-known consulting agency, the global smartphone shipment in 2021 reached about 1.35billion units, with approximately 5.3% YoY increase, which has resumed growth in the post-epidemic era. But regarding to its overallperformance in recent years, the growth of global smartphone industry has slowed down significantly. Therefore, the players in theglobal consumer electronics industry are actively exploring and planning on new opportunities of the future growth of the business.
At the same time, advanced communication technologies such as 5G, along with AI, intelligent interaction, sensor, softwarealgorithm are further integrated into the new generation of smart hardware products, thus creating a large number of new applicationsand demands. These new smart hardware products represented by VR/AR devices, smart wireless earphones, smart wearable devicesand smart home products, have developed rapidly in recent years.
According to the statistics of IDC, the global shipment of virtual reality (VR) products reached about 9.36 million units in 2021,with approximately 68.6% YoY increase. The global shipment of augmented reality (AR) products reached about 330,000 units, withapproximately 13.8% YoY increase. The global VR industry continues its rapid development in 2021. More well-known
manufacturers in consumer electronics and Internet industries actively invest in VR, which promotes the continuous development ofrelated hardware technology and software content. The global market size of AR products is still relatively small, and AR hardwaretechnology still faces challenges in chips, optical display, communication, power consumption, size and weight. However, ARproducts have shown great market potential, and have attracted the global attention.
According to the statistics of Futuresource, a famous consulting agency, the global shipment of TWS smart earphones reachedabout 300 million units in 2021, with approximately 37% YoY increase. With more mature intelligent voice interaction functions andcontinuous improvement of user experience, the penetration rate of TWS smart earphones in overall earphone market continues toincrease and is expected to keep growing in future. According to the statistics of CCS Insight, another well-known consulting agency,the global shipment of smart wearable products represented by smart watches and smart bands reached about 232 million in 2021,with approximately 20.2% YoY increase. While the market size is growing steadily, high-accuracy health monitoring technology isalso under developing and improvement, which is expected to create new applications and market demands for smart wearableproducts in the future.
The rapid development of the new generation of smart hardware products has also boosted the demand for related precisioncomponents such as high-precision optical components and modules, precision acoustic components, MEMS sensors andmicro-system modules, haptic components, and precision structural parts, thus creating new directions and market space for precisioncomponents products.
With the new development stage of the industry and the rise of smart hardware products, the industry also shows a clearercompetition pattern. From the perspective of brand and enterprises, the global technology and consumer electronics industry shows acentralized trend in the competition. The leading enterprises with strong competitiveness and brand awareness demonstrate clearcompetitive advantages by leveraging their resource in technologies, talents, funds, brands and industrial ecosystem, and thus leadthe technology and product innovation in the industry to a certain extent.
From the perspective of supply chain, global technology and consumer electronics industry continued to shift the middle-end ofthe supply chain to China and other developing countries. In particular, with the continuous improvement of China'spolitical/economic environment, fundamental infrastructure, industrial layout, management/technical talent resources and otheraspects, the overall competitiveness of electronic manufacturing enterprises of China is improved significantly, thus effectivelyundertake the demand of global industry, and obtain new development opportunities.II. The Company’s main business during the reporting period
The Company is committed to serve the leading customers in the global technology and consumer electronics industry byproviding vertically integrated product solutions of precision components and smart hardware, as well as related design, R&D and
manufacturing services.The Company's main business divides into three segments including precision components business, smart audio devicebusiness and smart hardware business. The precision components business focuses on acoustics, optics, microelectronics, structuralcomponents, and other precision components. The related products include micro speaker/receiver, speaker module, hapticcomponent (actuator), wireless charging device, antenna, MEMS microphone, MEMS sensors, micro-system module, VR opticalcomponent and module, AR optical component, AR light engine, precision structural parts and etc. The above-mentioned productsare widely applied in devices such as smartphones, tablets, smart wireless earphones, VR, AR, smart wearable and smart homedevices. Smart audio device business focuses on providing products related to audio, voice interaction, artificial intelligence, andother technologies. The main products include smart wireless earphones (TWS), wired/wireless earphones, smart speakers, etc. Smarthardware business focuses on providing products related to entertainment, health and home security. The main products include VR,AR, smart wearable products, gaming consoles and accessories, smart home products, 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 projects by cooperating with industry-leading customers in the field of smart audio device andsmart hardware through "ODM", "JDM" and other business modes. During the reporting period, the Company maintained a good,long-term cooperative relationship with leading customers in the global technology and consumer electronics industry, kept growingin the number of patent applications and in technological capabilities. As a result, the company has been constantly recognized byglobal customers for its product solutions and service capability, and remains being an industry-leading manufacturer in the fields ofmicro speakers, MEMS microphones, MEMS sensors, TWS, VR products, smart wearable products, gaming console and accessories,etc.During the reporting period, due to the continuous growth of demand of smart hardware products such as VR, TWS, smartwearable products, gaming consoles and accessories, and the related precision components, the Company has achieved significantgrowth in revenue and net profit. At the same time, the Company further improved its position in the industry. During the reportingperiod, the Company won many honors, including being ranked the 3rd company in the Top-100 China electronic componententerprises based on comprehensive economic indexes, the 86th company in the Top-500 private enterprises in China'smanufacturing industry, the 164th company in the Top-500 private enterprises in China, as well as being the executive membercompany 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 ofprecision optical components, MEMS microphones, MEMS sensors, micro-system modules and precision structural parts, thusensuring the delivery of the products with high precision, high efficiency and high quality.At the same time, the Company actively explores the development of intelligent manufacturing mode based on the capacities ofadvanced equipment development and flexible automation production. In the fields of automation, machine vision and AI related tointelligent manufacturing, the Company has built a future-oriented core capability of intelligent manufacturing by continuinginvesting in independent R&D, introducing global advanced technologies, core equipment and best practice experience for systemintegration, thus improving the manufacturing in all aspects through the application of information, automation, artificial intelligenceand other technologies. The Company 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,software algorithms, wireless communication, advanced technology, testing, automation and other technologies. Throughcross-domain technology integration, the Company provides customers with advanced and systematic solutions for precisioncomponents and smart hardware products. The Company attaches great importance to the integration and cultivation of outstandingtalents in the fields of acoustics, optics, microelectronics, wireless communication, precision manufacturing, automation, and othersectors around the world. The Company has set up a team of technical personnel with profound technical strength and richexperience in product projects, and has made a long-term cooperation with many well-known universities and scientific researchinstitutions, such as Beijing University of Aeronautics and Astronautics, Tsinghua University, Shanghai Jiao Tong University, HarbinInstitute of Technology, Nanjing University, Southeast University, Changchun Institute of Optics, Fine Mechanics and Physics(CIOMP), Shandong University, China Ocean University(OUC), Changchun University of Science and Technology and DalianUniversity of Technology, which forms an open and comprehensive technology R&D platform in support of continuous innovationand R&D of technologies and products.
During the reporting period, the Company applied for 3,468 patents, including 2,539 invention patents. A total of 2,675 patentshas been granted, including 1,036 invention patents. Till December 31, 2021, the Company has totally applied for 25,818 patents
(including 3,322 foreign patent applications), including 13,102 invention patents; Total of 15,525 patents have been granted,including 4,165 invention patents.
3. Continuous strategic innovation and transformation, and stable high-value customer relationshipsFacing the complex macroeconomic situation of domestic and overseas and the slowdown in the growth of the smartphoneindustry, the management of the Company actively carries out strategical innovation and transformation. While continuing toconsolidate the core competitive advantages in the conventional precision component business, the Company firmly grasps theinnovation opportunities of smart hardware products in technology and consumer electronics industry. Relying on the high-valuecustomer resources and good customer relationships worldwide, the Company focuses on the market and technology and continues toexplore new business growth opportunities in the fields of TWS, VR / AR, gaming and accessories, smart wearable devices, etc. TheCompany optimizes the allocation of strategical resource, supports strategical product development, continues strengthening andfurther utilize the customer resource advantages by closely following the world-class customers, in an effort to transform the needs ofhigh-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 efficientstyle as always. 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 managementteam promptly response to the market and makes changes and innovations continuously, to keep and enhance the Company'scapabilities of strategic management, operation, R&D, precision and intelligent manufacturing. The Company attaches importance toand promotes the internationalization, specialization and rejuvenation of its core management team, and actively brings in seniormanagement talents and professionals from many international leading enterprises. At the same time, the Company has strengthenedthe echelon of its talent team, more and more young talents grow up into the Company's core management team through training andpractice. The Company boasts a management team with both experience and vitality that continues to promote the Company's stableand fast development in the future.IV. Analysis of Main Business
1. Overview
In 2021, the national economy was recovering after the outbreak of the epidemic, new changes presented in both domestic andoverseas, and more challenges appeared in the process to maintain the stability of the economy. Under that situation, Chinagovernment maintained the continuity and pertinence of macro policies, provided necessary support for economic recovery, and
adopted a series of effective measures, such as optimizing enterprise supporting policies, improving business environment,strengthening technology innovation and stabilizing the industry and supply chain, which finally supported China's economy toachieve a relatively high growth rate among its fellow countries.Facing the complex global political and economic environment, the repeated COVID-19 outbreaks in some countries andregions, as well as the challenges in global supply chain operation, the management and all staff of the Company made their bestefforts to respond, and successfully completed business development, project delivery, epidemic prevention and control, operationimprovement and other important work. Finally, the Company has achieved excellent business results with a remarkable growth inboth revenues and profits in 2021.
In recent years, the growth of the global smartphone market has slowed down. However, COVID-19 has impacted people's livesand work style, bringing in significant increase of demand for smart hardware devices in the applications such as onlinetelecommuting, social entertainment, sports and health. As a result, the emerging market of smart hardware products represented byVR, TWS, smart wearable, gaming consoles and accessories maintained a stable and rapid growth. Due to the Company's strategicalinvestment in smart hardware business in recent years, the growth of the new smart hardware product market has accelerated thesound development of the Company's business, in both precision components, smart audio devices and smart hardware sectors.
During the reporting period, the Company continued to uphold the product strategy of "precision components + smart hardware"by actively promoting the business of precision components, such as acoustics, optics, microelectronics and structural parts, as wellas smart hardware products such as VR/AR, smart wireless earphones (TWS), smart wearable and smart home devices. Especially,the businesses in VR, TWS, gaming consoles and accessories has experienced a rapid growth. By continuing to focus on leadingcustomers in the technology and consumer electronics industry and to improve customer service and relationships, the Company’sbusiness development have also achieved fruitful results. The promotion of the internal reform of the Company has realized moreefficient decision-making process, and the continuous improvement of the internal management and operation, lays a goodfoundation for the further development of the Company in the future.
During the reporting period, the Company achieved a revenue of RMB 78,221.4186 million, with a 35.47% YoY increase. TheCompany realized a net profit attributable to shareholders of listed companies of RMB 4,274.703 million, with a 50.09% YoYincrease. The operating cost of the Company was RMB 67,167.6667 million, with a 38.54% YoY increase.
During the reporting period, the total amount of the Company's sales expenses, administrative expenses, R&D expenses andfinancial expenses was RMB 6,733.702 million, with an 11.81% YoY increase.
During the reporting period, the Company further strengthened the development of new technologies, products and techniques,actively brought in high-level R&D talents, and invested RMB 4,301.3428 million in R&D, accounting for 5.50% of the revenue and
15.40% 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 8,598.4755 million, with an
11.93% YoY increase. The main reasons are as follows: during the reporting period, the Company expanded the business scale,improved the operating cycle, and thus the net cash flow from operating activities increased.
2. Revenue and cost
1) Composition of operating revenue
Unit: RMB
| 2021 | 2020 | Year-on-year change | |||
| Amount | Proportion in operating revenue | Amount | Proportion in operating revenue | ||
| Total of operating revenue | 78,221,418,618.02 | 100% | 57,742,742,893.96 | 100% | 35.47% |
| Classified by industry | |||||
| Electronic components | 76,946,324,805.73 | 98.37% | 56,531,616,437.84 | 97.90% | 36.11% |
| Other business income | 1,275,093,812.29 | 1.63% | 1,211,126,456.12 | 2.10% | 5.28% |
| Classified by product | |||||
| Precision components | 13,840,133,491.33 | 17.69% | 12,205,410,031.94 | 21.13% | 13.39% |
| Smart audio device | 30,297,084,891.23 | 38.73% | 26,674,264,183.42 | 46.20% | 13.58% |
| Smart hardware | 32,809,106,423.17 | 41.94% | 17,651,942,222.48 | 30.57% | 85.87% |
| Other business income | 1,275,093,812.29 | 1.63% | 1,211,126,456.12 | 2.10% | 5.28% |
| Classified by region | |||||
| Domestic | 7,571,525,782.78 | 9.68% | 6,999,168,774.17 | 12.12% | 8.18% |
| Overseas | 70,649,892,835.24 | 90.32% | 50,743,574,119.79 | 87.88% | 39.23% |
| Classified by sales mode | |||||
| Direct selling | 77,770,329,729.13 | 99.42% | 57,438,222,579.69 | 99.47% | 35.40% |
| Distribution | 451,088,888.89 | 0.58% | 304,520,314.27 | 0.53% | 48.13% |
(2) Industries, products, regions and sales modes accounting for more than 10% of the Company'soperating revenue or operating 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 | 76,946,324,805.73 | 66,054,072,404.35 | 14.16% | 36.11% | 39.24% | -1.92% |
| Classified by product | ||||||
| Precision components | 13,840,133,491.33 | 10,641,616,932.91 | 23.11% | 13.39% | 14.57% | -0.79% |
| Smart audio device | 30,297,084,891.23 | 27,167,160,928.24 | 10.33% | 13.58% | 19.64% | -4.54% |
| Smart hardware | 32,809,106,423.17 | 28,245,294,543.20 | 13.91% | 85.87% | 82.89% | 1.40% |
| Classified by region | ||||||
| Domestic | 6,878,087,190.33 | 5,921,035,748.23 | 13.91% | 7.59% | 8.97% | -1.10% |
| Overseas | 70,068,237,615.40 | 60,133,036,656.12 | 14.18% | 39.75% | 43.15% | -2.04% |
| Classified by sales mode | ||||||
| Direct selling | 76,499,084,617.78 | 65,666,703,312.23 | 14.16% | 36.05% | 39.18% | -1.93% |
| Distribution | 447,240,187.95 | 387,369,092.12 | 13.39% | 47.68% | 50.64% | -1.70% |
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 fromproviding services
√ Yes □ No
| Classification of industry | Item | Unit | 2021 | 2020 | Year-on-year change |
| Electronic components industry | Sales volume | Ten thousand PCS | 540,341.87 | 413,499.31 | 30.68% |
| Output volume | Ten thousand PCS | 546,976.95 | 416,352.11 | 31.37% | |
| Inventory volume | Ten thousand PCS | 34,036.09 | 27,401.01 | 24.21% |
Reasons for changes in the relevant data over 30% year-on-year
√ Applicable □ Not applicable
During the reporting period, both of the production volume and sales volume of the Company increased.
(4) Fulfillment of major sales contracts and major procurement contracts signed by the Company as of thereporting period
□ Applicable √ Not applicable
5) Composition of operating cost
Classification of industry
Unit: RMB
| Classification of industry | Item | 2021 | 2020 | Year-on-year change | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Electronic components | Direct materials | 55,843,214,176.77 | 84.54% | 39,047,644,492.84 | 82.31% | 43.01% |
| Direct labor expenses | 4,058,480,923.72 | 6.14% | 3,401,428,878.80 | 7.17% | 19.32% | |
| Manufacturing expenses | 6,152,377,303.86 | 9.31% | 4,990,659,944.90 | 10.52% | 23.28% | |
ExplanationDuring the reporting period, the Company's overall sales volume increased. At the same time, the sales revenue of Smart audiodevices and intelligent hardware products with relatively high material cost increased.
(6) Whether there is any change in consolidation scope during the reporting period
√ Yes □ No
During the reporting period, the Company established a subsidiary company GOERTEK MICROELECTRONICS KOREACO.,LTD.
(7) Significant changes or adjustments in the Company's business, products or services during thereporting period
□ Applicable √ Not applicable
(8) Major customers and suppliers
Major customers of the Company
| Sales revenue from top five customer | 67,695,045,138.61 |
| Proportion of total sales revenue from top five customers in total annual sales amount | 86.54% |
| 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 | 33,238,529,094.59 | 42.49% |
| 2 | Customer 2 | 18,457,651,840.69 | 23.60% |
| 3 | Customer 3 | 8,715,498,516.63 | 11.14% |
| 4 | Customer 4 | 3,918,367,657.28 | 5.01% |
| 5 | Customer 5 | 3,364,998,029.42 | 4.30% |
| Total | -- | 67,695,045,138.61 | 86.54% |
Other information of major customers
√ Applicable □ Not applicable
The top five customers 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 customers.Major suppliers of the Company
| Total purchase amount from top five suppliers (RMB) | 19,062,697,560.63 |
| Proportion of total purchase amount from top five suppliers in total annual purchase amount | 30.54% |
| 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 of total annual purchase amount |
| 1 | Supplier 1 | 7,471,595,122.65 | 11.97% |
| 2 | Supplier 2 | 5,464,068,547.98 | 8.75% |
| 3 | Supplier 3 | 2,732,526,729.39 | 4.38% |
| 4 | Supplier 4 | 1,834,123,435.48 | 2.94% |
| 5 | Supplier 5 | 1,560,383,725.13 | 2.50% |
| Total | -- | 19,062,697,560.63 | 30.54% |
Other information of major suppliers
√ Applicable □ Not applicable
The 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
| 2021 | 2020 | Year-on-year change | Note of significant change |
| Selling expenses | 444,869,977.08 | 476,066,518.64 | -6.55% | No significant change |
| Administrative expenses | 1,951,657,773.32 | 1,629,730,793.00 | 19.75% | No significant change |
| Financial expenses | 167,099,982.36 | 490,688,772.09 | -65.95% | The main reasons are as follows: Reduced loss on exchange during the reporting period; convertible bonds were converted into common stocks of the Company, interest expense reduced; interest income from money funds increased |
| R&D expenses | 4,170,074,282.10 | 3,425,971,011.65 | 21.72% | No significant change |
4. R&D Investment
√ Applicable □ Not applicable
| Names of major R&D projects | 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 | According to specific technical requirements of the customers, the Company has completed the research and development of a number of advanced micro speaker module products, and realized the mass production in smart phones, tablet computers, smart wearable and other products for main customers. | The project helps consolidate the Company's competitive advantage and market share in the field of acoustic precision components. |
| R&D project of MEMS sensor and micro system module | Develop new generation of MEMS sensors and micro-system module products that are applied to smart wireless earphones, smart wearable devices and other products. | In progress | Complete the R&D, verification and mass production of MEMS sensors and micro-system module products for terminal products, such as TWS smart wireless earphones, smart wearable devices. | The project facilitates the business expansion the Company in the field of MEMS sensors and micro-system 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 waveguide technology, and promote their application in | 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-engine modules 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 |
| Names of major R&D projects | Purpose of project | Status of project | Objectives | Expected benefits to future development of the Company |
| VR/AR products. | ability and profitability in the field of VR/AR. | |||
| 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 customers to complete R&D, validation, mass production and delivery of a variety of new-generation all-in-one VR HMD products. | 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 customers to complete R&D, validation, mass production and delivery of a variety 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 mornitoring features and etc. | In progress | Cooperate with customers to complete R&D, validation, mass production and delivery of a new generation of smart watches and smart bands. | It helps consolidate the Company's competitive advantage and market share in smart wearable devices such as smart watches and smart bands, and supports the Company's smart wearable business for further growth. |
| 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 | Complete the R&D and trial production of a variety of AR glasses products that, with the functions of data processing and wireless communication, apply 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
| 2021 | 2020 | Year-on-year change | |
| Number of R&D personnel | 12,895 | 12,177 | 5.90% |
| Proportion of R&D personnel | 13.46% | 13.94% | -0.48% |
| Academic structure of R&D personnel | —— | —— | —— |
| Undergraduate | 9,148 | 8,409 | 8.79% |
| Postgraduate | 2,414 | 1,982 | 21.80% |
| PhD | 63 | 58 | 8.62% |
| Age of R&D personnel | —— | —— | —— |
| Below the age of 30 | 5,105 | 4,821 | 5.89% |
| Aged between 30 to 40 | 7,162 | 6,838 | 4.74% |
| Over the age of 40 | 628 | 518 | 21.24% |
The Company’s investment in R&D
| 2021 | 2020 | Year-on-year change | |
| Amount of R&D Investment (RMB) | 4,301,342,763.66 | 3,532,801,720.56 | 21.75% |
| Proportion of R&D investment in operating revenue | 5.50% | 6.12% | -0.62% |
| Capitalized amount of R&D investment (RMB) | 662,993,650.30 | 541,498,060.65 | 22.44% |
| Proportion of capitalized R&D investment in R&D investment | 15.41% | 15.33% | 0.08% |
Reasons and impacts of significant changes in R&D personnel composition of the Company
□ Applicable √ Not applicable
Reasons for significant changes in the proportion of total R & D investment in operating revenue compared with that of previous year
□ Applicable √ Not applicable
Reasons and explanation of its reasonableness of significant changes in capitalized R & D investment
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
| Item | 2021 | 2020 | Year-on-year change |
| Sub-total of cash inflow from operating activities | 85,523,439,745.15 | 60,932,031,432.73 | 40.36% |
| Sub-total of cash outflow from operating activities | 76,924,964,217.27 | 53,249,775,319.05 | 44.46% |
| Net cash flow from operating activities | 8,598,475,527.88 | 7,682,256,113.68 | 11.93% |
| Sub-total of cash inflow from investment activities | 3,276,323,800.48 | 505,861,986.28 | 547.67% |
| Sub-total of cash outflow from investment activities | 10,044,700,261.35 | 5,806,999,821.95 | 72.98% |
| Net cash flow from investing activities | -6,768,376,460.87 | -5,301,137,835.67 | 27.68% |
| Sub-total of cash inflow from financing activities | 14,003,754,499.97 | 15,780,475,210.72 | -11.26% |
| Sub-total of cash outflow from financing activities | 13,616,577,139.69 | 14,138,013,422.54 | -3.69% |
| Net cash flow from financing activities | 387,177,360.28 | 1,642,461,788.18 | -76.43% |
| Net increase in cash and cash equivalents | 2,224,708,917.50 | 3,818,588,192.22 | -41.74% |
Main influencing factors of significant year-on-year changes in relevant data
√ Applicable □ Not applicable
(1) The sub-total of cash inflow from operating activities was RMB 85,523.4397 million, with year-on-year increase of 40.36%,mainly due to the expansion of the Company's sales and the increase of sales receipts and advances received during the reportingperiod.
(2) The sub-total of cash outflow from operating activities was RMB 76,924.9642 million, with year-on-year increase of 44.46%,mainly due to the increase of the Company's purchase of raw materials and payment of employee salaries during the reporting period.
(3) The sub-total of cash inflow from investment activities was RMB 3,276.3238 million, with year-on-year increase of
547.67%, mainly due to the fact that the structural deposits purchased by the Company were collected at maturity during thereporting period.
(4) The sub-total of cash outflow from investment activities was RMB 10,044.7003 million, with year-on-year increase of
72.98%, mainly due to the increase of the Company's purchase of fixed assets and other long-term assets, and purchase of structureddeposits during the reporting period.
(5) The net cash flow from financing activities was 387.1774 million, with a year-on-year decrease of 76.43%, mainly due toRMB 3,995 million in cash received by the Company from issuing bonds during the previous 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 applicable
The net cash flow from operating activities exceeded the net profit of current year by 99.64%, mainly due to the improvement ofthe Company's refined operation capacity, optimization of operation cycle and reduction of capital occupation.
V. Analysis of Non-main Business
√ Applicable □ Not applicable
Unit: RMB
| Amount | Proportion in total | Explanation of the cause | Whether it is |
| profit | sustainable | |||
| Investment income | 469,239,884.79 | 10.19% | It is mainly due to the investment income obtained from transaction of foreign exchange and equity disposal of the Company | No |
| Gains from changes in fair value | -48,848,625.93 | -1.06% | It is mainly due to the change in valuation of the Company's stock foreign exchange derivatives | No |
| Asset impairment | -241,075,506.45 | -5.23% | It is mainly due to the provision for inventory depreciation | No |
| Non-operating revenue | 22,444,738.18 | 0.49% | It is mainly due to the unpayable payments and liquidated damages received | No |
| Non-operating expenditure | 99,858,949.06 | 2.17% | It is mainly due to the losses on scrapping of non-current assets of the Company | No |
VI. Analysis of Assets and Liabilities
1. Major changes in asset composition
Unit: RMB
| December 31, 2021 | January 1, 2021 | YoY change (%) | Note of significant change | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Cash and bank balances | 10,048,521,696.09 | 16.45% | 7,788,139,761.68 | 15.72% | 0.73% | No significant change |
| Accounts receivable | 11,899,214,525.92 | 19.48% | 9,951,611,596.65 | 20.09% | -0.61% | No significant change |
| Inventories | 12,082,308,485.38 | 19.78% | 9,170,731,903.19 | 18.52% | 1.26% | During the reporting period, inventory reserves increased along with business growth of the Company |
| Long-term equity investments | 437,402,203.91 | 0.72% | 337,410,802.56 | 0.68% | 0.04% | No significant change |
| Fixed assets | 18,123,352,480.76 | 29.67% | 14,674,535,924.15 | 29.63% | 0.04% | During the reporting period, the Company raised funds to invest in projects, increased the purchase of production equipment, and transferred of part of the infrastructure projects reached usable state to fixed assets |
| Construction in progress | 2,127,055,853.77 | 3.48% | 2,078,910,639.92 | 4.20% | -0.72% | No significant change |
| Right-of-use assets | 330,796,520.66 | 0.54% | 462,821,988.61 | 0.93% | -0.39% | No significant change |
| Short-term borrowings | 4,284,859,347.02 | 7.02% | 3,189,865,281.20 | 6.44% | 0.58% | During the reporting period, the demand for daily operating funds increased and short-term borrowings increased |
| Contract liabilities | 2,210,825,761.69 | 3.62% | 772,033,187.85 | 1.56% | 2.06% | During the reporting period, the goods were prepared for customers, and advance from customers increased |
| Long-term borrowings | 2,204,215,784.74 | 3.61% | 2,754,299,262.02 | 5.56% | -1.95% | No significant change |
| Lease liabilities | 210,209,955.40 | 0.34% | 298,830,498.84 | 0.60% | -0.26% | From January 1, 2021, the Company implemented the new lease rules, and payed the rent as agreed |
Foreign assets account for a relatively high proportion
□ Applicable √ Not applicable
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 report 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. Held-for-trading financial assets (excluding derivative financial assets) | 125,327,442.62 | 64,914,061.44 | 2,745,091,734.73 | 2,635,098,910.00 | 300,234,328.79 | |||
| 2. | 125,462,174.67 | -104,999,182.31 | 20,462,992.36 | |||||
| Derivative financial assets | ||||||||
| 3. Other debt investments | ||||||||
| 4. Investment in other equity instruments | 357,307,056.65 | 53,916,285.45 | 129,080,638.64 | 64,601,040.12 | 465,677,764.54 | |||
| Sub-total of financial assets | 608,096,673.94 | -40,085,120.87 | 53,916,285.45 | 2,874,172,373.37 | 2,699,699,950.12 | 786,375,085.69 | ||
| Total of above amounts | 608,096,673.94 | -40,085,120.87 | 53,916,285.45 | 2,874,172,373.37 | 2,699,699,950.12 | 786,375,085.69 | ||
| Financial liabilities | 43,578,775.71 | -8,763,505.06 | 6,427,059.28 | 43,578,775.71 | 15,190,564.34 |
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 year end (RMB) | Reasons for restrictions |
Cash and bank balances
| Cash and bank balances | 910,620,794.05 | Deposit for bills and borrowings |
| Notes receivable | 6,095,782.39 | Bill pledge and others |
| Other non-current assets | 122,540,194.44 | When large-denomination certificates of deposit was pledged to the bank, the bank issued a financing guarantee |
| Accounts receivable | 5,000,000.00 | Re-insurance accounts receivable not derecognized |
Total
| Total | 1,044,256,770.88 |
Ⅶ. Analysis of Investment
1. Overall situation
√ Applicable □ Not applicable
| Investment amount in 2021 (RMB) | Investment amount in 2020 (RMB) | YoY change (%) |
| 533,092,515.56 | 207,730,344.46 | 156.63% |
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 | 119,630,009.50 | 310,725,561.33 | Self-raised funds | 13.93% | 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 | -- | -- | -- | 119,630,009.50 | 310,725,561.33 | -- | -- | -- | -- | -- |
4. Financial asset investment
(1) Securities investment
√ Applicable □ Not applicable
Unit: RMB
| Type of security | Security code | Short name | Initial investment cost | Accounting measurement model | Book value at the beginning | Profit and loss from changes in fair value in the report 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 | 169,951,481.05 | Fair value measurements | 120,327,442.62 | 63,575,754.04 | 85,098,910.00 | 69,142,817.18 | 98,804,286.66 | Held-for-trading financial assets | Self-raised funds | ||
| Total | 169,951,481.05 | -- | 120,327,442.62 | 63,575,754.04 | 85,098,910.00 | 69,142,817.18 | 98,804,286.66 | -- | -- | ||||
| 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 | March 2, 2017 | ||||||||||||
(2) Derivatives investment
√ Applicable □ Not applicable
Unit: RMB 10,000
| Name of derivative investment operator | Associated relationship | Whether it is related party transaction | Type of derivatives investment | Initial amount of derivative investment | Start date | End date | Opening balance | Amount of purchase during the reporting period | Amount of sales during the reporting period | Amount of provision for impairment (if any) | Closing balance | Proportion of investment amount in the Company's net asset at the end of the reporting period | Actual profit and loss amount in the reporting period |
| Bank | Non associated relationship | No | Option | 330,812.43 | 330,812.43 | 243,551.74 | 453,225.87 | 121,138.30 | 4.34% | 4,083.00 | |||
| Bank | Non associated relationship | No | Forward | 515,467.10 | 515,467.10 | 1,288,528.97 | 1,285,014.09 | 518,981.98 | 18.58% | 25,495.32 | |||
| Bank | Non associated relationship | No | Swap | 214,630.06 | 214,630.06 | 191,271.00 | 227,381.46 | 178,519.60 | 6.39% | 4,766.87 | |||
| Total | 1,060,909.59 | -- | -- | 1,060,909.59 | 1,723,351.71 | 1,965,621.42 | 818,639.88 | 29.31% | 34,345.19 | ||||
| Source of funds for derivatives investment | Self-raised funds | ||||||||||||
| Litigation involved (if any) | None | ||||||||||||
| Date of announcement disclosure by the Board of Directors for approval of the investment in derivatives | March 27, 2021 | ||||||||||||
| Date of announcement disclosure by shareholders meeting for approval of the investment in derivatives | May 8, 2021 |
| 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 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 | 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. |
| Description of whether the accounting policies and specific accounting principles for the Company's derivatives have changed significantly compared with that of previous reporting period | The accounting policies and specific accounting principles for the Company's derivatives have no significant change compared with that of previous reporting period. |
| 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'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 |
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 bonds | 398,903.00 | 129,831.49 | 207,055.93 | 0.00 | 0.00 | 0.00% | 191,847.07 | Supplementing working capital and deposited in the special account for raised funds | 0.00 |
| Total | -- | 398,903.00 | 129,831.49 | 207,055.93 | 0.00 | 0.00 | 0.00% | 191,847.07 | -- | 0.00 |
| Description of overall use of raised funds | ||||||||||
| The Company actually invested RMB 1,298.3149 million in current period. As of December 31, 2021, the Company had used a total of RMB 2,070.5593 million of raised funds. The amount of unused raised funds was RMB 1,918.4707 million (interest excluded), of which RMB 1,200 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 | Total committed investme | Total investment after adjustme | Amount invested during the | Accumulated investment | Investment progress at the end | The date on which the project | Benefits realized during the | Whether it achieved the | Whether there is any significan |
| changed (including partial changes) | nt of raised funds | nt (1) | reporting period | amount at the end of the reporting period (2) | of the period (3)＝(2)/(1) | reaches its intended usage state | reporting period | expected benefits | t change in the feasibility of the project | |
| Committed investment projects | ||||||||||
| The project of true wireless smart earphones | No | 218,903 | 218,903 | 93,433 | 164,620.2 | 75.20% | August 31, 2022 | 33,365.12 | Not applicable | No |
| AR/VR and related optical module project - AR/VR project | No | 60,000 | 60,000 | 30,375.77 | 30,375.77 | 50.63% | August 31, 2022 | 46,014.2 | Yes | No |
| AR/VR and related optical module project - optical module project | No | 40,000 | 40,000 | 3,168.4 | 3,168.4 | 7.92% | August 31, 2022 | 825.17 | Not applicable | No |
| Qingdao R&D center project | No | 80,000 | 80,000 | 2,854.32 | 8,891.56 | 11.11% | August 31, 2022 | Not applicable | Not applicable | No |
| Sub-total of committed investment projects | -- | 398,903 | 398,903 | 129,831.49 | 207,055.93 | -- | -- | 80,204.49 | -- | -- |
| Direction of the investment with over raised funds | ||||||||||
| Not applicable | ||||||||||
| Total | -- | 398,903 | 398,903 | 129,831.49 | 207,055.93 | -- | -- | 80,204.49 | -- | -- |
| Descriptions and reasons for failure of meeting the planned schedule or expected revenue (by project) | Due to the impact of the project and the actual needs of the Company, the project of Qingdao R&D Center was behind schedule. The Company may accelerate subsequent investment according to the actual needs, and will strive 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 wholly-owned 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 |
| 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 use 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. 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 2,500 million. 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 0.5 billion and RMB 2 billion of the raised funds to the special account for raised funds in advance on October 29, 2021 and November 3, 2021 respectively. 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 RMB 1,200 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 applicable
There 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 applicable
The Company did not sell any major assets during the reporting period.
2. Sales of major equity
□ Applicable √ Not applicable
Ⅸ. Analysis of major subsidiaries and associates
√ Applicable □ Not applicable
Major 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 |
| Weifang Goertek | Subsidiary | Electronic component | 1,405,601,925.00 | 10,971,185,728.12 | 3,904,375,154.73 | 27,282,319,193.58 | 1,695,784,116.30 | 1,491,760,091.98 |
| manufacturing | ||||||||
| Goertek Technology (Vietnam) | Subsidiary | Electronic component manufacturing | 362,762,400.00 | 9,395,840,422.98 | 2,096,244,381.21 | 20,651,380,536.59 | 1,285,740,959.38 | 1,280,038,474.51 |
| Goertek (HongKong) Co., Limited | Subsidiary | Electronic component manufacturing | 1,542,045.00 | 6,835,046,824.10 | 1,075,332,121.44 | 19,422,367,892.29 | 836,073,059.54 | 706,793,733.63 |
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 MICROELECTRONICS KOREA CO.,LTD. | Newly established | No significant impact |
Description of major subsidiaries and associatesNoneⅩ. 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 smart hardware products have been the main focus of innovation and the growthdrivers of the global technology and consumer electronics industry over the past many years. However, the growth of smartphoneindustry has slowed down in recent years. According to the statistics of IDC, a well-known consulting agency, the global smartphoneshipment in 2022 is expected to reach 1.39 billion units, with year-on-year increase of approximately 3%. It is predicted that theaverage annual compound growth rate of smartphone shipments around the world will be about 3% from 2022 to 2025. As the corehardware in the mobile era, the slowdown of smartphone market also reflects the transition to the post-mobile era of the globaltechnology and consumer electronics industry.In the post-mobile era, along with the development of new technologies such as semiconductor, 5G, micro-display, sensor,intelligent interaction, battery, cloud and edge computing, the new generation of smart hardware products are greatly improved in
functions, and are suitable for more diversified applications. Many new smart hardware devices with great potential have revealedthemselves. In particular, the products such as VR/AR, smart wearable devices and smart wireless earphones have maintained a rapidgrowth in recent years, which attracts extensive attention in the global market. These products are expected to become the drivingforce for further development of global intelligent hardware market in the post-mobile era.According to the statistics of IDC, the global shipment of VR/AR products is expected to reach 19.10 million units in 2022, withapproximately 67.5% YoY increase. The CAGR of global VR shipment from 2022 to 2025 is expected to be about 59.2%. Thenumber of end users keeps growing steadily along with the upgrade of VR hardware. With the development and maturity of VRcontent and applications such as social networking, games, entertainment and live broadcasting, VR products are expected to boost inthe next few years. According to the statistics of IDC, the global shipment of AR products is expected to reach 1.35 million units in2022, with approximately 309% YoY increase. The CAGR of global AR shipment from 2022 to 2025 is expected to reachapproximately 121.4%. With the concept of "integration of virtual content and real life" and the ability to seamlessly connect tosmartphone ecosystem, AR product shows unlimited future possibilities and great market potentials, and is expected to become oneof the core smart hardware products in consumer electronics industry in the post-mobile era. Many well-known brand companies andstart-ups in the industry continue to explore and tackle the key technological roadblocks in semiconductor chips, optical waveguide,micro displays, new materials and other fields. The break-thru of those technologies are also expected to create a broader path for ARproducts in the next few years.According to the statistics of CCS Insight, a famous consulting agency, the global shipment of smart wearable products isexpected to reach 270 million units in 2022, with approximately 16.4% YoY increase. In the post epidemic era, consumers paygreater attention to sports and health. For billions of people over the globe who may have hypertension, diabetes or other sub-healthsituations, high precision and reliable health monitoring technologies, especially blood pressure monitoring and non-invasive bloodsugar level monitoring technology, are the focus of innovation in smart wearable devices, and have attracted significant amount ofinvestment from many industry leaders. The maturity and application of above technologies are expected to bring dramatic growthfor smart wearable products in future.According to the statistics of Futuresource, a well-known consulting agency, the global shipment of smart wireless earphones isexpected to keep growing steadily in the next few years, and the CAGR of TWS earphones from 2021 to 2025 is expected to reachabout 21.8%. With improved voice interaction function, more product choices, better features and user experience, the TWS productpenetration in the global earphone market is expected to increase continuously.The rapid development of emerging intelligent hardware products has also boosted the demand for related precision componentssuch as precision optics and modules, precision acoustic components, MEMS sensors and micro system modules, haptic componentsand precision structural parts, which creates new business opportunities for the precision components of the Company.
From the perspective of competition among brand companies, the global technology and consumer electronics industry maycontinue to demonstrate a centralized trend. In the post-mobile era, massive investment in technological innovation and R&D isrequired for the development of smart hardware products, for which the "soft power" of the ecosystem, such as developer base, userbase, software applications, entertainment content, community loyalty and data monetization, becomes more and more crucial. Theleading enterprises with capital, talent, technology and ecosystem advantages are expected to strengthen their competitive advantages,so as to lead technology and product innovation in the industry.From the perspective of supply chain, the middle-end of supply chain is expected to remain relying on developing countries.The electronic manufacturers in China are strengthening their overall competitiveness, and continue to expand their business in othercountries. China manufacturers are expected to meet the needs of smart hardware production in the post-mobile era and gain the newopportunities of development. At the same time, we also need to pay attention to the development and changes of internationalpolitical and economic situation. The changes in science, technology, trade and other policies between countries, as well as majorinternational events and their development, may also have significant impact to the competition and supply chain of global industry.Therefore, we need to pay continuous attention and respond positively.
2. Strategy for future development
Looking into the future, the Company will actively respond to the strategy of actualizing innovation-driven development andaccelerating the development of modern industrial system, and grasp the opportunities of transformation from the mobile era to thepost-mobile era by closely following the development of 5G, AI, IoT, cloud computing and other advanced technologies. TheCompany will continue to strengthen its development in the field of advanced precision components and next generation smarthardware products, constantly consolidate the strategical cooperation with world-class customers, and earnestly fulfill the economicand social responsibilities of the enterprises, thus achieving a long-term, stable and healthy growth of the business, and maximize theenterprise value and the return to shareholders.
(1) Actively grasp the new opportunities in the post-mobile era, and further promote the Company's strategy of "precisioncomponents + smart hardware". Further develop the businesses of precision components, such as acoustics, optics, microelectronicsand structural parts, and the businesses of smart hardware devices, such as VR/AR, smart wireless earphones, smart wearable andsmart home devices. Continue to strengthen the advantages of precision components business in smartphone and other traditionalhardware, and actively develop precision components and system hardware business related to new generation of smart hardwareproducts. Utilize the synergy between the Company's component and hardware device business, continue to strengthen the corecompetence in precision manufacturing and intelligent manufacturing, and provide customers with the first-class vertically integratedproduct solutions and "one-stop" R&D and manufacturing services.
(2) Continue the key-account strategy, remain customer orientation, and utilize the Company's advantages in customer resource.
Focus on serving leading customers in the global technology and consumer electronics industry, and continue to consolidatelong-term strategic cooperation with customers. Closely follow the strategical planning and development of world-class customers,and to create a global system of R&D, manufacturing and sales services accordingly. Continue to satisfy our customers with ourbusiness, technology, engineering, operation and delivery services, in order to achieve win-win cooperation and to grow with theworld-class customers.
(3) Adhere to technological innovation and continue to invest in R&D. Constantly improve the Company's technicalcompetitiveness in acoustics, optics, microelectronics, precision manufacturing, automation, IT technology, software algorithm andso on, and actively expand the layout in emerging technologies such as micro system modules, optical waveguide, nano-imprinting,haptics and etc., to build the core technical competitiveness of the enterprise. Firmly implement the talent strategy by integrating theoutstanding talents in management and technology fields around the world, build and effectively motivate a first-class talent team,thus to provide 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 pushforward internal reform and innovation, and to build core competitiveness upon continuous reform and innovation activities. Createan excellent corporate culture, undertake the core values of "customer orientation, personnel growth, integrity and pragmatism,win-win cooperation", and earnestly fulfill the economic and social responsibilities of the enterprise, to become a respectedworld-class enterprise.
3. Business operation during the reporting period and business plan for next year
In 2021, the Company grasped the business opportunities of the new generation of smart hardware such as VR, TWS, smartwearable devices, gaming consoles and accessories, implement the "precision components + smart hardware" strategy and utilizedthe synergy between the components business and system device business. The Company adhered to customer-orientation philosophyand focused on key business accounts, provided customers with high-quality R&D and manufacturing “one-stop” service, andachieved customer satisfaction. The Company also explored new business opportunities in precision optical components and modules,micro-system modules, MEMS sensors, haptic components, etc. From internal operation perspective, the Company continuouslyimproved the level of lean operation, and obtained solid progresses in input/output efficiency, operation cycle, inventory turnover,and capital cost. The Company continued to invest in R&D and technological innovation, increased the quantity of both patentapplications and patent approvals, strengthened the capabilities of R&D and talent team, and thus further consolidated the corecompetitiveness in technology field. The Company also formulated and implemented effective systems and measures to ensure stableoperation of business activities and control the risks. With all the measures above, the Company has finally achieved an excellent
business performance in 2021.Looking into the year of 2022, the Company still faces many challenges due to the ongoing global epidemic, the slow recoveryof global economy, the high and fluctuated commodity prices, and other complexities and uncertainties that may applied to theexternal environment. On the bright side, there are also new opportunities in global technology and consumer electronics industry.With the further integration and development of advanced technologies such as 5G, AI and the new generation of smart hardwareproducts, the Company faces new opportunities in both precision components and smart hardware business. The management and allstaff of the Company will continue to implement our strategy and to achieve business objectives, so as to return the shareholders andinvestors with excellent business performance and continuous growth of enterprise value.
(1) Maintain strategic focus and grasp development opportunities. The Company will seize the business opportunities of smarthardware products in the post-mobile era by adhering to the "precision components + smart hardware" strategy and utilize thesynergy between the components and system device business. With core technological capabilities and advanced precisioncomponent solutions, the Company will further enhance the effort in business development of smart hardware products. And throughthat business development, the Company will create more applications and demand for the precision components. By integrating thecore 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, and identify and serve strategic customers. Followthe strategy and business plan of core customers, the Company will carry out corresponding business, products and capacity plans,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 achieve win-win cooperation with customers.
(3) Empower business expansion and create new opportunities. Based on the consolidation of the existing business advantagesin precision components and smart hardware products, the Company will further explore new directions and opportunities. Bygrasping the opportunities in micro-system modules, MEMS sensors, precision optical components and modules, haptic components,precision structured parts, VR, smart home products and other products, the Company will secure the key projects of core customers,and also follow up with new directions and opportunities in automotive electronics, advanced materials, micro-display technologyand other fields with future potentials.
(4) Improve lean operation and complete successful delivery of key projects. The Company will continue to promote theawareness and improve the level of lean operation, and to support the business objectives with high-quality and efficient operation.The Company will make thorough planning of its resources, ensure the delivery of key projects that closely related to the strategy andthe business objectives, and to achieve the goals of the Company.
(5) Continue to invest in R&D and technological innovation, strengthen core competitiveness with talent strategy. The Companywill continue to invest in R&D and technological innovations centered on future strategic directions, and strengthen the technicalcapabilities in the fields of acoustics, optics, microelectronics, precision manufacturing, and intelligent manufacturing. The Companywill embrace 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 developmentwith high-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 the external environment, perform effective control on risk indicators inproduction operation of the Company, take the initiative to identify and resolve potential risks, and ensure sustainable development ofproduction 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 withbanks and other major financial institutions. In 2021, the Company successfully completed the conversion and delisting of thepreviously issued convertible bonds, and successfully completed the signing of long-term loan agreements between its subsidiarycompanies and International Finance Corporation, which further improved the Company's balance sheet structure and cost of funds.The Company will continue to improve the management of cash, asset-liability ratio and debt structure, to actively avoid liquidityrisks and foreign exchange risks, to control financial derivatives trading activities with strict standards, and thus providing stable andsufficient financial support to the development of the Company.
5. Future risks
(1) Macroeconomic risks
COVID-19 pandemic has not yet stopped globally, and the global economy is still in recovery. Unfavorable factors that affectinginvestment and consumption still exist, which may hinder global technology and consumer electronics industry from rapiddevelopment 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 ofenterprises. The slow growth of some smart hardware products such as smartphones, may affect the market demand of precisioncomponents, which may bring negative impact to the Company's performance.
(2) Operational risks
① Risks of concentrated customer structure
The competitive pattern of global technology and consumer electronics industry, along with the Company's business model andkey account strategy, determined a relatively concentrated customer structure. As a result, the business income from a few core
customers accounts for a large proportion of the Company's overall revenue. Although the above customers are global industryleaders who have significant competitive advantages and market position, and have maintained long-term and stable cooperativerelations with the Company, under some special circumstances, they may bring fluctuations and risks to the Company's business iftheir business activities fluctuate.
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 alsoimports a considerable number of raw materials, equipment and other products from overseas. These import and export businessesare primarily settled in US dollars. Although the Company has adopted appropriate risk hedging tools, the significant fluctuation ofRMB/US dollar exchange rate may still bring certain exchange rate risks to the Company.
③ Risks of the leaving of core technical talents
The technology and consumer electronics industry is a talent intensive industry. Therefore, the demand for core technical talentsis strong, 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. But due to the fierce competition, loss of core technicaltalents may still occur, which may put the Company at a disadvantage in the competition and affect the business development insome 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 ofdeveloping core customer business and exploring new opportunities, which also requires the Company's management to maintainexcellent abilities of judgment, execution and management. If the Company's management fails to match the business growth, or failsto be improved to meet the needs of the Company's development, it may affect the execution of strategic planning and the delivery ofbusiness 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 | Reception mode | Type of reception object | Reception object | Main content of discussion and information | Index of basic information of survey |
| provided | ||||||
| March 30, 2021 | The Company | Other | Institution | Investors participating in the Company's performance presentation meeting of 2020 | The Company's operation and business development | Refer to the record of investor relations activities on March 30, 2021 published on www.cnifo.com.cn |
| April 22, 2021 | The Company | Communication over phone | Institution | E Fund, Bosera Fund, Dacheng Fund, Hua An Fund and other funds | The Company's operation and business development | Refer to the record of investor relations activities on April 22, 2021 published on www.cnifo.com.cn |
| July 22, 2021 | The Company | Communication over phone | Institution | SOOCHOW Fund, CR Yuanta Fund, BOC Fund, YINHUA Fund and other funds | The Company's operation and business development | Refer to the record of investor relations activities on July 22, 2021 published on www.cnifo.com.cn |
| August 27, 2021 | The Company | Communication over phone | Institution | Fullgoal Fund, Xingquan Fund, 99 Fund, CCB Fund and other funds | The Company's operation and business development | Refer to the record of investor relations activities on August 27, 2021 published on www.cnifo.com.cn |
| October 27, 2021 | The Company | Communication over phone | Institution | E Fund, Hua An Fund, GF Securities, Harvest Fund and other funds | The Company's operation and business development | Cninfo.com, record of investor relations activities on October 27, 2021 published on www.cnifo.com.cn |
Section IV Corporate GovernanceⅠ. Corporate Governance in PracticeDuring the reporting period, the Company continuously improved the corporate governance structure, the internal managementand control system, and continued to carry out corporate governance activities in strict accordance with the requirements of relevantlaws, regulations and normative documents such as Company Law, Securities Law, Corporate Governance of Listed Companies,Rules Governing the Listing of Shares on Shenzhen Stock Exchange as well as with relevant documents of China SecuritiesRegulatory Commission and the relevant instructions of Shandong Securities Regulatory Bureau, so as to further standardize theCompany's operation 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 accordancewith the Rules for General Meeting of Shareholders of Listed Companies and the Company’s Rules of Procedure of Shareholders'Meetings, so as to ensure that all shareholders, especially minority shareholders, enjoy equal status and fully exercise their rights; Inaddition, lawyers were engaged to witness the legitimacy of the convening, holding and voting procedures of each general meeting ofshareholders.
2. The Company and controlling shareholders: The Company, with independent business and operation autonomy, isindependent of the controlling shareholders in business, personnel, assets, organisations and finance. The Board of Directors, Boardof Supervisors and internal institutions of the Company operate independently. The controlling shareholders exercise their rightsthrough shareholders’ meeting , and there was no direct or indirect interference with the Company’s operations and decision-makingbeyond the general meeting 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 directorscan 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 werein strict accordance with relevant provisions of Company Law and Articles of Association. The Company's supervisors strictlyfollowed the Rules of Procedure of the Board of Supervisors, All supervisors scrupulously attended the sessions, seriously fulfilledtheir duties diligently, and supervised and issued opinions for major issues, related-party transactions, and financial status.
5. Performance appraisals and incentives: The Company has gradually improving its fair and transparent performance evaluationstandards and incentive a restraint mechanisms for directors, supervisors and senior management. The appointment of Company’ssenior management 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, activelycommunicates and coordinates with stakeholders, to r balance the interests of the society, shareholders, the Company, employees andother parties, and jointly 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 theprovisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Articles of Association and Investor RelationsManagement Rules, and discloses information as per the law, so as to ensure that the information disclosure is true, timely, accurateand complete. All shareholders were given equal access to the information. The Company has gradually revised and improved theInsider Information Management Rules, further improved the insider information management, strengthened the confidentiality ofinsider information, maintained the fair principle of information disclosure and protected the legitimate rights and interests ofinvestors. The Company has appointed the secretary of the Board of Directors as the head of investor relations management of theCompany, responsible for the Company's information disclosure and investor relations management. The Company has designatedSecurities Times, China Securities Journal, Shanghai Securities News, Securities Daily and cninfo.com.cn to disclose Company’sinformation in a faithful, accurate and timely manner, strictly in accordance with relevant laws and regulations, so that allshareholders 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 √ No
There 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 business
The Company is completely separated from the controlling shareholders in terms of business, personnel, assets, organizationand finance. The ownership of the assets are clear and belongs to the Company. The Company has the capability of self-operation in
its marketing, production and procurement, 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 completelyindependent of controlling shareholder in terms of business.
2. Personnel separation: There is a department responsible for the Company's labor, personnel and salary management in theCompany, and rules and regulations has been established for appraisal of employees’ performance. Personnel of the Company wereindependent from the controlling shareholder. The Senior Management of the Company did not hold any positions other than directorand supervisor in 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 organizationof the Company operated independently, and each functional department is completely independent from controlling shareholder interms of authority, personnel, production operation premises and there is no subordinate relationship between the controllingshareholder and its functional departments.
4. Asset independence: The title relationship between the Company and the controlling shareholder was clear. The Company’sassets were complete. The Company has independent and complete production system, auxiliary production system and supportingfacilities, 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 andfinancial management 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 and straight-line managementon financial affairs of its subsidiaries. The Company opened accounts in the bank independently, made tax declarations andperformed tax obligations independent of shareholders according to law.Ⅲ. Horizontal Competition
□ Applicable √ Not applicable
Ⅳ. Annual General Meeting and Extraordinary General Meeting held during the Reporting Period
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 2020 | Annual general meeting of shareholders | 35.29% | May 7, 2021 | May 8, 2021 | Resolutions for the Annual General Meeting of Shareholders disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 8 May 2021(Announcement No 2021-083) |
| The first extraordinary general meeting of shareholders in 2021 | Extraordinary general meeting of shareholders | 48.53% | November 25, 2021 | November 26, 2021 | Resolutions for the First Extraordinatry General Meeting of Shareholders in 2021 disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 26 November 2021(Announcement No 2021-125) |
| The second extraordinary general meeting of shareholders in 2021 | Extraordinary general meeting of shareholders | 45.94% | December 16, 2021 | December 17, 2021 | Resolutions for the Second Extraordinatry General Meeting of Shareholders in 2021 disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 17 December 2021(Announcement No 2021-132) |
2. Extraordinary general meeting of shareholders requested by the Preferred shareholders with voting rights restored
□ Applicable √ Not applicable
V. 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 | 56 | July 27, 2007 | November 7, 2022 | 373,487,406 | 86,090,000 | 287,397,406 | Shareholding reduction; transfer to persons acting in concert | ||
| Jiang Long | Vice Chairman | Incumbent | Male | 48 | July 27, 2007 | November 7, 2022 | 197,255,197 | 53,090,000 | 250,345,197 | Shares granted to persons acting in concert | ||
| President | October 30, 2014 | November 12, 2022 | ||||||||||
| Duan Huilu | Director | Incumbent | Male | 46 | February 4, 2016 | November 7, 2022 | 4,474,500 | 1,000,000 | 3,474,500 | Reduction | ||
| Vice President | Incumbent | March 25, 2011 | November 12, 2022 | |||||||||
| Chief Financial Officer | Resigned | August 12, 2010 | January 27, 2021 | |||||||||
| Liu Chengmin | Director | Incumbent | Male | 51 | November 29, 2016 | November 7, 2022 | ||||||
| Xia Shanhong | Independent Director | Incumbent | Female | 64 | October 20, 2016 | November 7, 2022 |
| Wang Kun | Independent Director | Incumbent | Female | 46 | November 8, 2019 | November 7, 2022 | ||||||
| Wang Tianmiao | Independent Director | Incumbent | Male | 62 | October 20, 2016 | November 7, 2022 | ||||||
| Sun Hongbin | Chairman of Board of Supervisors | Incumbent | Male | 56 | September 17, 2013 | November 7, 2022 | 8,889,534 | 1,800,000 | 7,089,534 | Reduction | ||
| Feng Jianliang | Employee representative Supervisor | Resigned | Male | 48 | July 27, 2007 | April 27, 2021 | ||||||
| Xu Xiaofeng | Employee representative Supervisor | Incumbent | Female | 45 | September 17, 2013 | October 17, 2022 | ||||||
| Gao Xiaoguang | Vice President | Incumbent | Male | 46 | April 12, 2012 | November 12, 2022 | ||||||
| Liu Chunfa | Vice President | Incumbent | Male | 46 | October 10, 2013 | November 12, 2022 | 1,151,864 | 287,864 | 864,000 | Reduction | ||
| Jiang Hongzhai | Vice President | Incumbent | Male | 52 | October 10, 2013 | November 12, 2022 | ||||||
| Jia Jun'an | Vice President, Secretary of the Board | Incumbent | Male | 51 | October 10, 2013 | November 12, 2022 | 200,000 | 200,000 | ||||
| Feng Pengbo | Vice President | Resigned | Male | 54 | October 24, 2016 | September 10, 2021 | ||||||
| Yu Dachao | Vice President | Incumbent | Male | 44 | October 24, 2016 | November 12, 2022 |
| Kazuyoshi Yoshinaga | Vice President | Incumbent | Male | 55 | October 24, 2016 | November 12, 2022 | ||||||
| Li Yongzhi | Chief Financial Officer | Incumbent | Male | 44 | January 27, 2021 | November 12, 2022 | ||||||
| Wei Wenbin | Employee representative Supervisor | Appointed | Male | 44 | April 27, 2021 | October 17, 2022 | ||||||
| Li Youbo | Vice President | Appointed | Male | 45 | June 2, 2021 | November 12, 2022 | ||||||
| Zhu Shengbo | Vice President | Appointed | Male | 48 | June 2, 2021 | November 12, 2022 | ||||||
| Total | -- | -- | -- | -- | -- | -- | 585,458,501 | 53,090,000 | 89,177,864 | 549,370,637 | -- |
Whether there is any resignation of directors, supervisors and senior management during the reporting period
√ Yes □ No
During the reporting period, chief financial officer Duan Huilu and vice president Feng Pengbo resigned because of jobre-arrangement, and the employee representative supervisor Feng Jianliang resigned during the term of office due to job adjustment.Changes in directors, supervisors and senior management
√ Applicable □ Not applicable
| Name | Position | Type | Date | Reason |
| Duan Huilu | Chief Financial Officer | Resigned | January 27, 2021 | Job arrangement |
| Feng Jianliang | Employee representative supervisor | Resigned | April 26, 2021 | Job adjustment |
| Wei Wenbin | Employee representative supervisor | Elected | April 27, 2021 | Job arrangement |
| Li Youbo | Vice President | Appointed | June 2, 2021 | Job arrangement |
| Zhu Shengbo | Vice President | Appointed | June 2, 2021 | Job arrangement |
| Feng Pengbo | Vice President | Resigned | September 10, 2021 | Job arrangement |
2. Biographical Information
Professional backgrounds, main working experience and current duties of the Directors, Supervisors and the SeniorManagement
Directors:
Mr. Jiang Bin:
Mr. Jiang, Chairman of the company, master's degree holder of business administration from Tsinghua University, bachelor'sdegree holder of electronic engineering from Beihang University. Mr. Jiang founded Goertek Inc. in 2001. He has more than 30 yearsof working experience in the electro-acoustic industry. He also serves as standing member of the 12th executive committee of theAll-China Federation of Industry and Commerce, rotating chairman of China Electronic Components Association, and vice chairmanof Industry of Virtual Reality Alliance. He has successively won the titles of National Model Worker, Outstanding Entrepreneur ofChinese Electronic Information Industry, National Labor Medal of Shandong Province, Labor Model of Shandong Province,Outstanding Entrepreneur of Shandong Province, etc.
Mr. Jiang Long:
Mr. Jiang , Vice Chairman and President of the company, Ph.D in strategic management, the University of Maryland, a master'sdegree holder in management science from Renmin University of China, and a bachelor's degree holder in materials engineeringfrom Tsinghua University. 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 chairmanof China Electronic Components Association-Electroacoustic Chapter. Mr. Jiang has extensive experience in marketing, sales andbusiness management.Mr. Duan Huilu:
Mr. Duan, Director and Vice President of the company, bachelor's degree holder from Shandong University of Finance andEconomics. He joined the company in 2001 and successively served as the company's accountant, finance manager, financedepartment manager and chief financial officer. Mr. Duan has more than 20 years of working experience.
Mr. Liu Chengmin:
Mr. Liu, Director of the company, master's degree holder in mechanics from Harbin Institute of Technology. Mr. Liu currentlyserves as chairman of Beijing Fargo Capital Co., Ltd., managing partner of Tianjin Longyuan Yunteng Investment ManagementPartnership, and technology consultant of China Ping An Trust Co., Ltd. Mr. Liu used to serve as director of the telecom division ofHuawei's domestic marketing department, senior executive vice president of Tencent and president of Tencent Wireless InternetBusiness Group. He has rich experience in telecom and Internet.
Ms. Xia Shanhong:
Ms. Xia, Independent Director of the company. Ms. Xia used to serve as deputy director of the Institute of Electronics, ChineseAcademy of Sciences, director, researcher and doctoral supervisor of the State Key Laboratory of Transducer Technology, andreceived special government allowance from the State Council. She received a bachelor's degree from Tsinghua University, amaster's degree from the Chinese Academy of Sciences and a doctorate from the University of Cambridge in England. Ms. Xia is theRoyal Fellowship visiting scholar of the Royal Society and the Berkeley Scholarship visiting scholar of the University of California,Berkeley. She used to be the chief scientist of the National 973 Project, member of the MEMS overall expert group of the National863 Program and member of its advanced manufacturing technology expert group, member of the expert review team of theDepartment of Information Sciences of the National Natural Science Foundation of China, and chairman of the Transducers. Ms. Xiacurrently serves as member and director of Chinese Institute of Electronics, director of China Instrument and Control Society as wellas vice chairman of its sensor branch, member of Chinese Society of Micro-Nano Technology, and editorial board member of manyinternational academic journals.
Mr. Wang Tianmiao:
Mr. Wang, Independent Director of the company. Professor and Ph.D Tutor of Beihang University o, Honorary Director ofInstitute of Robotics at Beijing University of Aeronautics and Astronautics， Dean of Zhongguancun College of Innovation Angel.He received a doctorate and masters’ degree holder from Northwestern Polytechnic University and a bachelor's degree holder fromXi'an Jiaotong University. He is one of the distinguished professors of the Changjiang Scholars, winner of the National Science Fundfor Distinguished Young Scholars, member of the Advanced Robot Technology Innovation Team for National Defense, chief expertgroup leader in the field of advanced manufacturing under 863 National High-tech R&D Program in the 11th Five-Year Plan, head ofthe expert group of the Service Robotics program in the 12th Five-Year Plan, and president of the IEEE Robotics and AutomationSociety (Beijing region). He is mainly engaged in the research of advanced robot theory and technology, including bionic structure,medical robot, service robot and so on. Mr. Wang has won two second-class awards of National Science and Technology ProgressAward and one first-class award of Beijing Science and Technology Progress Award. He is also an independent director of ShanghaiSTEP Electric Corporation.Ms. Wang Kun:
Ms. Wang, Independent Director of the company. She serves as an associate professor in the School of Accounting, School ofEconomics and Management at Tsinghua University. She received her doctorate in Accounting from Hong Kong University ofScience and Technology and her bachelor's degree in Accounting from Nankai University. She joined the School of Accounting,School of Economics and Management at Tsinghua University in April 2003, and worked as a lecturer and associate professor. Sheserved as deputy director and senior researcher of the Research Center of Corporate Governance of Tsinghua University fromJanuary 2010. Ms. Wang served as the Ph. D. program director of the Accounting Department of the School of Economics andManagement of Tsinghua University from January 2011 to December 2013. She has won the Excellence in Teaching Award of theSchool of Economics and Management of Tsinghua University for several times. Ms. Wang is also an Independent Director of ChinaInternational Futures Co., Ltd. Ms. Wang used to be the Independent Director of Beijing Thunisoft Co., Ltd. and IntegratedElectronic Systems Lab Co., Ltd. Ms. Wang has rich experience in the fields of finance and auditing.
Supervisors:
Mr. Sun Hongbin:
Chairman of the Board of Supervisors. Bachelor in industrial automation from Shandong University. He used to serve as deputygeneral manager of the company, manager and director of the business department of China Electronics Import and export ShandongCorporation. Mr. Sun owns more than 30 years of working experience in marketing, and import & export business.
Ms. Xu Xiaofeng:
Employee Representative of the Board of Supervisors. Bachelor of Business Administration, China University of Petroleum.She graduated from the Zhengzhou University of Aeronautics, Electrical Technology Major. Ms. Xu joined the company in 2001,
and successively served as the assistant manager of the quality control department, the enterprise development department and theoperation department, and is now in charge of the company's employee service center. Ms. Xu has rich experience in businessmanagement.
Mr. Wei Wenbin:
Employee Representative of the Board of Supervisors. Graduated from Jilin University majoring in material forming and controlengineering, he is currently in charge of the staff management department of the company. Mr. Wei joined the company in 2004, andsuccessively served as the head of the company's production and operation management department, human resources managementdepartment, lean manufacturing management department and other related departments.Senior Management:
Mr. Jiang Long:
Refer to the resume above for details.
Mr. Duan Huilu:
Refer to the resume above for details.
Mr. Gao Xiaoguang:
Vice President of the company. Master's Degree in business administration from Southern Cross University in Australia. Hejoined the company in 2001, and successively served as manager of the device marketing department, deputy manager of the devicemarketing department, general manager of the device business department and head of the marketing. He has rich experience inmarket developing and key client maintaining.
Mr. Liu Chunfa:
Vice President of the company. Mr. Liu graduated from Lanzhou Railway Institute. He successively served as engineer of R &D department, chief of quality assurance department, assistant manager, technical manager of technical engineering department,senior product manager, head of manufacturing department, senior manager of R & D department, etc. Mr. Liu has rich experience inthe fields of electroacoustic components, especially in miniature loudspeakers and receivers.
Mr. Jiang Hongzhai:
Vice President of the company. Mr. Jiang graduated from Shandong College of Information Technology.. Joined the companyin 2006, Mr. Jiang is mainly responsible for the management of mold, injection molding, stamping and so on. Mr. Jiang used to serveas factory director of Yuefeng Electronic Technology (Dongguan) Co., Ltd., and engineer of Weifang Radio Eighth Factory. Mr.Jiang has more than 20 years of technical management experience in the field of precision machining.
Mr. Jia Junan:
Vice President and the Secretary of the Board. Ph.D in Economics, Xiamen University, Master of Economics, ShandongUniversity, Bachelor of Economics, Shandong University of Finance and Economics. Mr. Jia is the member of the Chinese Instituteof Certified Public Accountants（CICPA）and the Association of Chartered Certified Accountants（ACCA). Mr. Jia joined thecompany in 2010 and served as deputy general manager of financial department. He used to serve as the tax manager of KPMGEnterprise Consulting (China) Co., Ltd., Qingdao Branch. Mr. Jia holds the Certificate for Secretary of the Board of Directors, andhis qualification complies with relevant provisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange and theArticles of Association.
Mr. Yu Dachao:
Vice President of the company. Bachelor's in computer science and engineering, Tianjin University of Technology. He was incharge of the company's Bluetooth headsets, active 3D glasses and accessories for household video games. He has rich experience inthe R&D and manufacturing of electronic accessories.
Mr. Kazuyoshi Yoshinaga:
Vice President of the company. Japanese. He holds a master's degree in business administration from University of Washingtonand a bachelor's degree in mechanics from Tongji University. He used to be the associate partner of IBM and has extensiveexperience in the field of strategy and transformation management. He also serves as deputy secretary-general of the China VirtualReality Industry Association.
Mr. Li Yongzhi:
Chief Financial Officer of the company and the Head of the Accounting Office. Mr. Li holds a bachelor's degree in managementand a master's degree in business management from Hefei University of Technology. He joined Goertek in 2005 and successivelyserved as accountant and financial manager of the financial department. Mr. Li is senior accountant and certified managementaccountant（CMA), with more than 15 years of experience in corporate finance. After deliberation and approval by the 14th meetingof the fifth Board of Directors, he was appointed as the Chief Financial Officer of the company. His term of office begins from theapproval date of Board of Directors to the expiration date of the current Board of Directors’ term of office.
Mr. Li Youbo:
Vice President of the company. Mr. Li holds a bachelor's degree in automation from Dalian University of Technology. Hejoined the company in 2003 and successively served as engineer, technical manager, head of the business department, etc. Mr. Li hasnearly 20 years of experience in R&D and manufacturing of electroacoustic components.
Mr. Zhu Shengbo:
Vice President of the company. Mr. Zhu graduated from Shenyang University of Technology. He joined the company in 2005and successively served as production manager, assistant minister, minister, senior minister and head of the business department. He
used to serve as production director of Dongguan Samsung Electro-Mechanics Co., Ltd. Mr. Zhu has more than 20 years ofexperience in manufacturing, operation and management of consumer electronic products such as parts, accessories and devices.Positions held in shareholders’ entities
√ Applicable □ Not applicable
| Name | Name of the shareholder entity | Position undertaken in shareholder entity | 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 |
| Sun Hongbin | Goertek Group Co., Ltd. | General Manager | November 15, 2021 | November 14, 2024 | Yes |
Positions held in other entities
√ Applicable □ Not applicable
| Name | Name of other entity | Position undertaken in other entity | 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, 2022 | No |
| Jiang Bin | Beijing Goertek Investment Management Co., Ltd. | Executive Director | January 22, 2019 | January 21, 2022 | No |
| Jiang Bin | Weifang Goer Education Investment Co., Ltd. | Executive Director | March 22, 2019 | March 21, 2022 | No |
| Jiang Long | Rongcheng Goertek Technology Co., Ltd. | Executive Director | July 15, 2020 | July 14, 2023 | No |
| Jiang Long | Goertek Technology Vina Company Limited | Chairman | January 31, 2019 | December 31, 2021 | No |
| Jiang Long | Goertek Electronics, Inc. | Executive Director | May 1, 2020 | April 30, 2023 | No |
| Jiang Long | Weifang Goertek Electronics Co., Ltd. | Director / General Manager | November 26, 2019 | November 25, 2022 | No |
| Jiang Long | Goertek Technology Co., Ltd. | Executive Director / | December 10, 2021 | December 9, 2026 | No |
| General Manager | |||||
| 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 | October 30, 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 | December 8, 2022 | No |
| Jiang Long | Shanghai Ganyuzhi Technology Co., Ltd. | Executive Director | October 14, 2020 | October 13, 2023 | No |
| Jiang Long | Beijing Goertek Microelectronics Co., Ltd. | Executive Director | August 7, 2020 | August 6, 2023 | No |
| Jiang Long | Wuxi Goertek Microelectronics Co., Ltd. | Executive Director | August 7, 2020 | August 6, 2023 | No |
| Jiang Long | Shenzhen Goertek Microelectronics Co., Ltd. | Executive Director | July 23, 2020 | July 22, 2023 | No |
| Jiang Long | Rongcheng Goertek Microelectronics Co., Ltd. | Executive Director | November 1, 2021 | October 31, 2024 | No |
| Jiang Long | Qingdao Goertek Microelectronics Research Institute Co., Ltd. | Executive Director | November 30, 2020 | November 29, 2023 | No |
| Jiang Long | Enkris Semiconductor Inc. | Director | November 18, 2021 | November 17, 2024 | No |
| Duan Huilu | Goertek Technology Vina Company Limited | Director | January 31, 2019 | December 31, 2021 | 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, 2022 | 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, 2022 | No |
| Duan Huilu | Goertek (HongKong) Co., Limited | Director | April 26, 2019 | April 25, 2022 | No |
| Duan Huilu | Qingdao Goertek Commercial Factoring Co., Ltd. | Executive Director / General Manager | January 11, 2021 | January 10, 2024 | No |
| Sun Hongbin | Weifang Hanhui Enterprise Management Co., Ltd. | Executive Director | September 18, 2019 | September 17, 2022 | No |
| Sun Hongbin | Weifang Gaoge Education Investment Co., Ltd. | Director / General Manager | September 11, 2018 | February 3, 2021 | No |
| Sun Hongbin | Weifang Hanzhi Enterprise Management Co., Ltd. | Executive Director | October 11, 2017 | October 10, 2023 | No |
| Sun Hongbin | Weifang Goer Education Investment Co., Ltd. | General Manager | March 22, 2019 | March 21, 2022 | No |
| Sun Hongbin | Weifang Goer Real Estate Co., Ltd | Executive Director / General Manager | August 4, 2018 | August 3, 2024 | No |
| Sun Hongbin | Qingdao Goer Real Estate Co., Ltd. | Executive Director / General Manager | May 29, 2017 | May 28, 2023 | No |
| Sun Hongbin | Weifang Goer Farm Co., Ltd. | General Manager | September 23, 2017 | September 22, 2023 | No |
| Sun Hongbin | Weifang Goer Manor Trading Co., Ltd. | Executive Director | January 27, 2018 | January 26, 2024 | No |
| Sun Hongbin | Weifang Goer Property Service Co., Ltd | Executive Director / General Manager | February 23, 2018 | February 22, 2024 | No |
| Sun Hongbin | Dotcom Ivestment Co., Ltd | Executive Director / General Manager | June 4, 2015 | December 24, 2021 | No |
| Sun Hongbin | Weifang GoerHome Decoration Engineering Co., Ltd | Executive Director / General Manager | April 9, 2017 | July 14, 2021 | No |
| Sun Hongbin | Shandong Goer Education Group Co., Ltd. | General Manager | January 3, 2020 | January 2, 2023 | No |
| Sun Hongbin | Beihang Goer (Weifang) Intelligent Robot Co., Ltd | Director / General Manager | January 22, 2019 | August 31, 2021 | No |
| Sun Hongbin | GoerTek Group International Limited | Executive Director | August 13, 2018 | No | |
| Liu Chunfa | Goertek Vina Co., Ltd. | Director | January 1, 2019 | December 31, 2021 | No |
| Liu Chunfa | Goertek Technology Vina Company Limited | Director | January 31, 2019 | December 31, 2021 | 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, 2022 | No |
| Jiang Hongzhai | Kunshan Goertek Electronics Co., Ltd. | Executive Director | November 9, 2020 | November 8, 2023 | No |
| Jiang Hongzhai | Nanning Goertek Electronics Co., Ltd. | Chairman | November 12, 2021 | November 11, 2024 | No |
| Jiang Hongzhai | Nanning Goertek Trading Co., Ltd. | Chairman | November 29, 2021 | November 28, 2024 | No |
| Yu Dachao | Beijing Goertek Technology Co., Ltd. | Executive Director / General Manager | November 30, 2019 | November 29, 2022 | No |
| Yu Dachao | Xian Goertek Electronic Technology Co., Ltd. | Executive Director | May 7, 2019 | May 6, 2022 | 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, 2022 | No |
| Yu Dachao | Goertek Technology Vina Company Limited | Director | January 31, 2021 | January 30, 2024 | No |
| Gao Xiaoguang | Yishui Goertek Electronics Co., Ltd. | Executive Director / General | February 13, 2021 | February 12, 2024 | No |
| Manager | |||||
| 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, 2021 | No |
| Gao Xiaoguang | AKM Industrial Company Limited | Non-executive director | March 12, 2015 | 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, 2022 | No |
| Jia Jun'an | AKM Industrial Company Limited | Non-executive director | November 17, 2015 | No | |
| Li Yongzhi | Goertek Optical Technology Co., Ltd. | Supervisor | March 23, 2021 | March 22, 2024 | 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 | Xian Goertek Electronic Technology Co., Ltd. | Supervisor | May 7, 2019 | May 6, 2022 | No |
| Li Yongzhi | Yishui TECO Electronic Technology Co., Ltd. | Supervisor | December 10, 2019 | December 9, 2022 | No |
| Li Yongzhi | Rongcheng Goertek Technology Co., Ltd. | Supervisor | July 15, 2020 | July 14, 2023 | No |
| Li Yongzhi | Goertek Technology Vina Company Limited | Supervisor | January 31, 2019 | January 30, 2022 | No |
| Li Yongzhi | Goertek Microelectronics Inc. | Director | December 23, 2020 | December 22, 2023 | No |
| Kazuyoshi Yoshinaga | Goertek Vina Co., Ltd | General Manager | December 20, 2021 | No | |
| Kazuyoshi | Goertek Technology Vina Company | General | September 1, 2021 | No |
| Yoshinaga | Limited | Manager | |||
| Kazuyoshi Yoshinaga | Goertek Precision Industry Vietnam Company Limited | General Manager | September 1, 2021 | No | |
| Li Youbo | Shanghai Goertek Technology Co., Ltd. | General Manager | July 23, 2020 | July 22, 2023 | No |
| 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 | December 31, 2021 | No |
| Zhu Shengbo | Goertek Technology Vina Company Limited | Director | January 31, 2019 | January 30, 2022 | 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., Ltd. | Executive Director | August 7, 2020 | No | |
| Wei Wenbin | Weifang Goertek Communication Technology Co., Ltd. | General Manager | June 26, 2021 | June 25, 2024 | 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 plan of directors and supervisors of the company shall be formulated by the remuneration and assessmentcommittee of the Board of Directors, which shall be approved by the Board of Directors and submitted to the general meeting ofshareholders for approval before implementation.The remuneration standard for senior management shall be formulated by the remuneration and assessment committee, andimplemented after approval by the Board of Directors. Allowances for independent directors shall be paid on a regular basis.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 | Whether to get paid by the related party of the company |
| company | ||||||
| Jiang Bin | Chairman | Male | 56 | Incumbent | 180 | No |
| Jiang Long | Vice Chairman, President | Male | 48 | Incumbent | 180 | No |
| Xia Shanhong | Director | Female | 64 | Incumbent | 18 | No |
| Wang Kun | Independent Director | Female | 46 | Incumbent | 18 | No |
| Sun Hongbin | Chairman of Board of Supervisors | Male | 56 | Incumbent | 0 | Yes |
| Feng Jianliang | Employee Representative Supervisor | Male | 48 | Resigned | 15 | No |
| Xu Xiaofeng | Employee representative Supervisor | Female | 45 | Incumbent | 45 | No |
| Duan Huilu | Director, Vice President | Male | 46 | Incumbent | 120 | No |
| Gao Xiaoguang | Vice President | Male | 46 | Incumbent | 120 | No |
| Liu Chunfa | Vice President | Male | 46 | Incumbent | 120 | No |
| Jiang Hongzhai | Vice President | Male | 52 | Incumbent | 120 | No |
| Jia Jun'an | Vice President, Secretary of the Board | Male | 51 | Incumbent | 120 | No |
| Feng Pengbo | Vice President | Male | 54 | Resigned | 83 | No |
| Yu Dachao | Vice President | Male | 44 | Incumbent | 120 | No |
| Kazuyoshi Yoshinaga | Vice President | Male | 55 | Incumbent | 120 | No |
| Liu Chengmin | Director | Male | 51 | Incumbent | 18 | No |
| Wang Tianmiao | Independent Director | Male | 62 | Incumbent | 18 | No |
| Li Yongzhi | Chief Financial Officer | Male | 44 | Incumbent | 110 | No |
| Wei Wenbin | Employee representative Supervisor | Male | 44 | Incumbent | 30 | No |
| Li Youbo | Vice President | Male | 45 | Incumbent | 70 | No |
| Zhu Shengbo | Vice President | Male | 48 | Incumbent | 70 | No |
| Total | -- | -- | -- | -- | 1,695 | -- |
VI. Performance of Directors' Duties during the Reporting Period
1. Board of Directors
| Session | Convening date | Disclosure date | Meeting resolution |
| The 13th meeting of the 5th Board of Directors | January 15, 2021 | January 16, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 16 January 2021(Announcement No 2021-002) |
| The 14th meeting of the 5th Board of Directors | January 27, 2021 | January 28, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 28 January 2021(Announcement No 2021-012) |
| The 15th meeting of the 5th Board of Directors | January 29, 2021 | January 30, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 30 January 2021(Announcement No 2021-018) |
| The 16th meeting of the 5th Board of Directors | February 9, 2021 | February 10, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 10 February 2021(Announcement No 2021-031) |
| The 17th meeting of the 5th Board of Directors | March 1, 2021 | March 2, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 2 March 2021(Announcement No 2021-044) |
| The 18th meeting of the 5th Board of Directors | March 26, 2021 | March 27, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 27 March 2021(Announcement No 2021-050) |
| The 19th meeting of the 5th Board of Directors | April 16, 2021 | April 17, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 17 April 2021(Announcement No 2021-068) |
| The 20th meeting of the 5th Board of Directors | April 21, 2021 | April 22, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 22 April 2021(Announcement No 2021-074) |
| The 21st meeting of the 5th Board of Directors | June 2, 2021 | June 3, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 3 June 2021(Announcement No 2021-088) |
| The 22nd meeting of the 5th Board of Directors | August 26, 2021 | August 27, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 27 August 2021(Announcement No 2021-100) |
| The 23rd meeting of the 5th Board of Directors | October 26, 2021 | The board approved: Proposal on the examination of "Goertek Quarterly Report in Q3 2021” |
| Session | Convening date | Disclosure date | Meeting resolution |
| The 24th meeting of the 5th Board of Directors | November 8, 2021 | November 9, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 8 November 2021(Announcement No 2021-116) |
| The 25th meeting of the 5th Board of Directors | November 30, 2021 | December 1, 2021 | Resolutions were disclosed by the Company on Cninfo (www.cninfo.com.cn) and the four designated newspapers on 1 December 2021(Announcement No 2021-127) |
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 | 13 | 12 | 1 | 0 | 0 | No | 3 |
| Jiang Long | 13 | 11 | 2 | 0 | 0 | No | 2 |
| Duan Huilu | 13 | 13 | 0 | 0 | 0 | No | 3 |
| Xia Shanhong | 13 | 1 | 12 | 0 | 0 | No | 1 |
| Wang Tianmiao | 13 | 1 | 12 | 0 | 0 | No | 1 |
| Liu Chengmin | 13 | 1 | 10 | 2 | 0 | Yes | 2 |
| Wang Kun | 13 | 1 | 12 | 0 | 0 | No | 3 |
Statement on failure to attend the Board of Directors for two consecutive timesDue to the Corona Virus Disease, director Liu Chengmin was unable to personally attend the 16th meeting of the 5th Board ofDirectors and the 17th meeting of the 5th Board of Directors, and delegated director Duan Huilu and independent director Wang Kunto vote respectively.
3. Objections raised by directors to relevant matters of the Company
Whether directors raise any objection to relevant matters of the Company
□ Yes √ No
No 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 □ No
Statement on the adoption or non-adoption of proposals made by the directors
During the reporting period, the directors of the Company carried out work in strict accordance with Company Law, SecuritiesLaw, Corporate Governance of Listed Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange,Self-Regulatory Directives No.1 for Listed Companies on the Shenzhen Stock Exchange - Normative Operation of Listed Companieson the Main Board, Articles of Association and Rules of Procedure of the Board of Directors. They fulfilled their duty of duediligence by forming a consensus after full discussion on major governance and business matters of the Company, and resolutelysupervising and driving the implementation of the board resolution, so as to ensure the decision-making process being scientific,
timely and efficient, play a positive role in the sustained, healthy and stable development of the Company, and effectively safeguardthe legitimate rights and interests of the Company and all shareholders.
VII. Performance of Special Committees under the Board of Directors during the Reporting Period
| 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 | 5 | January 25, 2021 | The audit committee approved: 1.Special Audit Report on the Deposit and Use of Funds Raised in Q4 2020; 2. Inspection Report on Related Transactions and Guarantees of the Company in Q4 2020; 3. Internal Audit Work Report of 2020; 4. Internal Audit Work Plan of 2021; 5. Proposal on Nominating Mr. Du Lanzhen as Head of Internal Audit | Approved | ||
| March 26, 2021 | The audit committee approved: 1. Proposal on Approving of Financial Accounts of 2020; 2. Proposal on Approving of Financial Report and Abstract of 2020; 3. Proposal on Approving of Self-assessment Report on Internal Control of 2020; 4. Proposal on the Re-appointment of the Accounting Firm; 5. Report on the Audit Work of the Accounting Firm of 2020; 6. Report on the Performance of the Audit Committee of the Board of Directors in 2020 | Approved | |||||
| April 21, 2021 | The audit committee approved: 1. Proposal on Approving of Quarterly Report of the Company in Q1 2021 and Abstract of the Quarterly Report of the Company in Q1 2021; 2. Inspection Report on Related Transactions and Guarantees in Q1 2021; 3. Internal Audit Work Report in Q1 2021 | Approved | |||||
| August 26, 2021 | The audit committee approved: 1.Proposal on approving of Interim Report of 2021 and Abstract of Interim Report of 2021; 2. Special Audit Report on the Deposit and Use of Raised Funds | Approved |
| Committee name | Members | Number of meetings held | Convening date | Meeting content | Important opinions and suggestions proposed | Performance of other duties | Specific objections (if any) |
| in the Semiannual Period of 2021; 3. Inspection Report on Related Transactions and Guarantees of the Company in Q2 2021; 4. Internal Audit Work Report in Q2 2021 | |||||||
| October 26, 2021 | The audit committee approved: 1. Proposal on Approving of Quarterly Report in Q3 2021 and Abstract of Quarterly Report in Q3 2021; 2. Inspection Report on Related Transactions and Guarantees in Q3 2021; 3. Internal Audit Work Report in Q3 2021; 4. Special Audit Report on the Deposit and Use of Funds raised in Q3 2021 | Approved | |||||
| Remuneration and assessment committee | Jiang Bin, Xia Shanhong, Wang Tianmiao | 3 | January 22, 2021 | The remuneration and assessment committee approved: Proposal on the Remuneration of the Chief Financial Officer | Approved | ||
| April 13, 2021 | The remuneration and assessment committee approved: 1. Proposal on approving of Goertek Home No 5 Employee Stock Ownership Plan (Draft); 2. Proposal on approving of Administrative Measures of Goertek Home No 5 ESOP; 3. Proposal on approving of Stock Option Incentive Plan of Goertek of 2021 (Draft); 4. Proposal on approving of Measures for the Examination and Administration of the Implementation of the Goertek Stock Option Incentive Plan of 2021 | Approved | |||||
| May 31, 2021 | The remuneration and assessment approved: Proposal on the Remuneration of Vice President | Approved |
VIII. Performance of the Board of Supervisors
Whether 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 | 37,319 |
| Number of Staff of major subsidiaries at the end of the Reporting Period | 58,461 |
| Total number of staff at the end of the Reporting Period | 95,780 |
| Total number of staff who receive remuneration during the Reporting Period | 95,780 |
| Number of retired staff the Company and its major subsidiaries are required to compensate | 0 |
| Specialty composition | |
| Category | Number |
| Production staff | 69,815 |
| Sales staff | 670 |
| Technical staff | 19,753 |
| Financial staff | 306 |
| Administrative staff | 5,236 |
| Total | 95,780 |
| Educational level | |
| Category | Number |
| PhD | 78 |
| Postgraduate | 3,435 |
| Undergraduate | 16,170 |
| College degree | 18,823 |
| Below College degree | 57,274 |
| Total | 95,780 |
2. Remuneration policy
Goertek continued to put emphasis on the attraction, motivation and retention of talents, implemented competitive incentivepolicies on salary and welfare, and fulfilled the cultural concept of “we make, we share, we grow”.
Facing COVID-19 and economic challenges, the Company still steadily applied employee promotion and salary adjustment planto raise the salary level of employees. The Company also implemented special remuneration policies for core positions and talents
that support the development of strategic business, so as to effectively attract and retain talents, enrich the Company’s talent pool andimprove the quality and quantity of talents. In terms of incentive policy, through the issuance of ESOPs and new stock option plans,more and more core employees can share the fruit of company growth. The cohesion of the management team and the key staffs hasbeen effectively enhanced. In addition to material incentives, the Company fully investigated in the demands of employees, strived tobuild welfare system with its own characteristics, made full use of related resources, and cared for employees in an all-round way byproviding diversified benefits in children's education, house ownership, health security, and convenient life.
3. Training programmes
In 2021, the Human Resources Management Department followed Goertek's strategy and business development requirements,improved its all-category, full-field and whole-process talent training system, carried out diversified learning and training activities,strengthened the construction of a learning organization and promoted organizational performance. Along with the business reform,after a year of construction of the training system and intensive cultivation of the project, the Company further improved the trainingorganization, operation and management system for all staffs covering cadres, technical personnel, professionals and newemployees ,Wing Project of Goertek, thus helping the Company to achieve business objectives.In 2022, the Company will focus on building a global training management center and further reforming talent training mode.The Company will increase investment in the strengthening of talents training capacity, policy management, training developmentand resource management and make substantial breakthroughs in teacher recruitment, curriculum management, organization-relatedknowledge management, informatization and digitalization of training and so on, so as to helping the Company to become a leader inthe construction of leadership college, engineering college, new employee training college and professional development college.That’s how the Company achieves its cultural concept of “we make, we share, we grow”, and its mission of a better life enriched bytechnology.
4. Labor outsourcing
□ Applicable √ Not applicable
X. Profit Distribution and Conversion of Capital Reserves into Share CapitalFormulation, execution or adjustment of profit distribution policy, especially the cash dividend during the Reporting Period
√ Applicable □ Not applicable
The Company has strictly implemented the Shareholder Return Plan for the Next Three Years (2019-2021), and clarifies thestandard, ratio, and the decision making procedures of the distribution policy, which ensures the continuity and stability of the profitdistribution policy, in order to fully protect the legitimate rights and interests of minority investors. In addition, the Company has
conducted share repurchase in 2021. In accordance with the requirements of Company Law, Rules Governing the Listing of Shares onShenzhen Stock Exchange and Implementation Rules of Shenzhen Stock Exchange on the Share Repurchase of Listed Companies: theshares repurchased can be regarded as the amount of cash dividends and shall be included in the relevant calculation of cashdividends proportion of the year.
| 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 applicable
Profit distribution and conversion of capital reserves 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) | 2.00 |
| Conversion of capital reserves into share capital per 10 shares (shares) | 0 |
| Shares base of the distribution proposal(shares) | 3,342,055,585 |
| Cash dividend amount (RMB) (tax inclusive) | 668,411,117.00 |
| Cash dividend amount distributed by other means (such as shares repurchase) (RMB) | 1,999,998,595.63 |
| Total cash dividends (including other means) (RMB) | 2,668,409,712.63 |
| Distributable profit (RMB) | 15,372,823,358.48 |
| 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 reserve funds | |
| According to the standard unqualified opinion audit report issued by ZHONGXI CPAs (Special General Partnership) for Goertek, | |
XI. Equity Incentive Plan, Employee Stock Ownership Plan or Other Employee Incentives
√ Applicable □ Not applicable
1. Equity incentive
Stock Option Incentive Plan in 2021(hereinafter referred to as “the Incentive Plan”）：
On April 16, 2021, Goertek convened the 19th meeting of the 5th Board of Directors, which approved Proposal of 2021 StockOption Incentive Plan of Goertek Inc. (Draft) and the Summary, Proposal of Rules on the Implementation and Assessment of 2021Stock Option Incentive Plan, and Proposal of Requesting the General Meeting of Shareholders to Authorize the Board of Directors toHandle Matters Relevant to 2021 Stock Option Incentive Plan. The 14th meeting of the 5th Board of Supervisors approved relevantproposals, reviewed the list of participants awarded for the first time, and expressed the review opinions. Independent directors of theCompany expressed their agreed opinions on the Incentive Plan 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 2021Share Option Incentive Plan. On May 8, 2021, the Company disclosed Self-examination Report on the Trading of Shares by Insidersof the 2021 Share Option Incentive Plan.
On May 7, 2021, the proposals mentioned above were approved on the annual general meeting of 2020. The Board of Directorswere authorized to handle relevant matters regarding the Incentive Plan.
On June 2, 2021, Goertek convened the 21st meeting of the 5th Board of Directors and the 16th meeting of the 5th Board ofSupervisors. Proposal of the Adjustment of Participants Awarded for the First Time of the 2021 Share Option Incentive Plan,Number of Stock Options and Exercise Price, and the Proposal of Resolution of Grant Stock Options to the Participants wereapproved. The Board of Supervisors expressed the results of review on the list of incentive participant. Independent Directorsexpressed their agreed opinions on relevant matters independently. Beijing Tian Yuan Law Firm issued the Legal Opinions of BeijingTian Yuan Law Firm on Relevant Matters Regarding the Adjustment and First Grant of the 2021 Share Option Incentive Plan.
On June 24, 2021, Goertek completed the registration of the 2021 Incentive Plan.Stock options granted to Directors and senior management
□ Applicable √ Not applicable
The Appraisal and incentive mechanism for senior management
The remuneration plan of directors and supervisors of the company shall be formulated by the remuneration and assessmentcommittee of the Board of Directors, which shall be approved by the Board of Directors and submitted to the general meeting ofshareholders for approval before implementation. The remuneration standard for senior management shall be formulated by theremuneration and assessment committee, and implemented after approval by the Board of Directors.
2. Implementation of employee stock ownership plan
√ Applicable □ Not applicable
All 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 | 1,349,600 | None | 0.04% | self-raised |
| Goertek Home No. 4 ESOP: Directors (excluding Independent Directors), Supervisors, senior management, key management personnel and key business personnel | 4,000 | 20,539,684 | None | 0.60% | n.a. |
| Goertek Home No. 5 ESOP: Directors (excluding Independent Directors), Supervisors, senior management, key management personnel and key business personnel | 25 | 11,000,000 | None | 0.32% | 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 at the beginning of the reporting period | Shareholding percentage |
| Duan Huilu, Feng Jianliang, | Directors, | 8,036,551 | 3,289,000 | 0.10% |
| Xu Xiaofeng, Wei Wenbin, Gao Xiaoguang, Liu Chunfa, Jiang Hongzhai, Jia Jun’an, Feng Pengbo, Yu Dachao, Yoshinaga Kazuyoshi, Li Yongzhi, Li Youbo, Zhu Shengbo | Supervisors, senior management |
Changes of Asset Management Agency during the reporting period
□ Applicable √ Not applicable
Changes in shareholders' equity caused by shares disposal of the participants and other reasons during the reporting period
√ Applicable □ Not applicable
During the reporting period, the Goertek Home No. 3 ESOP, and Home No. 4 ESOP after the expiration of the lock-up period,sold part of shares in accordance with relevant regulations. By the end of the reporting period, Goertek's Home No. 3 ESOP held
1.3496 million shares, shareholding percentage was 0.04%, while the Home No. 4 ESOP held 20.5397 million shares, shareholdingpercentage was 0.60%. The Home No. 5 ESOP held 11 million shares, shareholding percentage was 0.32%.Exercise of shareholders' rights during the reporting period
During the reporting period, the ESOPs exercised the shareholders' rights to participate in cash dividend of 2020, but did notparticipate in 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 applicable
Changes in members of the Management Committee of the ESOPs
□ Applicable √ Not applicable
Financial impacts of the ESOPs during the reporting period and relevant accounting treatment
√ Applicable □ Not applicable
In accordance with the Accounting Standard for Business Enterprises No.11 - Share-based Payments: if an equity-settledshare-based payment in exchange for services received from employees could not exercise until the completion of services for avesting period, or until the achievement of a specified performance condition, Goertek at each balance sheet date during the vestingperiod recognizes the services received for the current period as related costs or expenses, and capital reserve, at amount equal to thefair value of the equity instruments at the grant date, based on the best estimate of the number of equity instruments expected toexercise. The expenses amortization of the Goertek Home No. 4 ESOP and the Goertek Home No. 5 ESOP in 2021 is RMB
422.8195 million and RMB 111.0332 million respectively, which is recognized as related expenses and capital reserve.Termination of ESOP during the reporting period
□ Applicable √ Not applicable
Explanation on Other MattersNone
3. Other employee incentive measures
□ Applicable √ Not applicable
XII. 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 strategicgoals, Goertek attached great importance to the construction of internal control system. We gradually established a basic compliance,sound and effective internal control system covering all aspects of operation and management in accordance with the industry andasset structure characteristics.
(1) Internal supervision
The Company has established the Internal Audit System, and has set up an independent internal audit department, which isresponsible for internal audit work, the audit and efficiency supervision of financial revenue, expenditure, the implementation offinancial system, the Company’s rules and regulations. The internal audit department also responsible for making proposals on theimprovement of the Company's internal control system.
Under the direct leadership of the Audit Committee, the audit department independently carries out internal audit andsupervision， supervising the operation and management, financial condition and internal control implementation of the Companyand its subsidiaries. Besides, the audit department issues independent audit opinions, and regularly reports summaries and workingplans to the Audit Committee.
(2) Risk assessment
In combination with characteristics of the industry and actual operating status, the Company timely assesses internal andexternal risks such as environmental risk, business risk and financial risk, weighs the risk and return according to the results of riskanalysis and risk tolerance, 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 variousinternal controls, avoids the mere formality of internal policies and regulations, and improves the effectiveness and soundness ofinternal control.
(4) Information disclosure
The Company formulated the Information Disclosure Policy, the Accountability System Regarding Major Errors in the AnnualReport Information Disclosure and the Policy on Management of the Personnel with Inside Information. According to the
requirements of relevant laws and regulations, the Policy on Management of the Personnel with Inside Information has been revisedin time, which has detailed the scope of inside information and related personnel, and the administrative measures on registration ofpersonnel with inside information in material matters. The Company's information disclosure in 2021 complied with the relevantlaws and regulations of the regulatory authorities and the provisions of the above-mentioned control system.
2. Details of material defects of internal control detected during the Reporting Period
□ Yes √ No
XIII. Management and controls of subsidiaries during the Reporting PeriodNot applicableXIV. Self-assessment Report on Internal Control or Audit Report on Internal Control
1. Self-assessment on internal control
| Disclosure date of the Internal Control Self-assessment Report | March 30, 2022 | |
| Disclosure index of the Internal Control Self-assessment Report | Disclosed on www.cninfo.com.cn on March 30, 2022 | |
| 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: (1) Fraud of directors, supervisors and senior management on the financial report; (2) Corrections of previously disclosed financial | 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 report is mainly determined by the impact of defects on the effectiveness of business processes and the possibility of |
| 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. | 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 total assets | 0.5≤misstatement <1% |
| 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. Audit Report on internal control
□ Applicable √ Not applicable
| Audit Opinion in Audit Report on Internal Control | |
| In our opinion, the Company has maintained effective internal control of financial reports in accordance with the Basic Rules for Internal Control of Enterprises as of 31 December 2021. | |
| Disclosure of the Audit Report on Internal Control | Disclosed |
| Disclosure date of the Audit Report | March 30, 2022 |
| on Internal Control | |
| Disclosure index of the Audit Report on Internal Control | www.cninfo.com.cn, March 30, 2022 |
| Type of internal control audit report opinions | standard unqualified opinion |
| Material defects found in non-financial reporting | No |
Whether the Auditor set out the Audit Report on internal control with any opinions of non-standardization.
□ Yes √ No
Whether the Audit Report on internal control is consistent with the Self-assessment Report on internal control opinion.
√ Yes □ No
XV. Rectification of Problems Identified by Self-examination in the Special Actions onGovernance of Listed Companies
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 □ No
| Name of the Company or subsidiaries | Type of major pollutants and name of particular pollutants | Type of discharge | Number of discharging ports | Locations of discharging ports | Concentration of pollutant discharged | Enforced standards of pollutant concentration | Total discharge volume | Total approved discharge volume | Discharge exceeding the standard |
| Goertek Inc. | Hazardous waste | Indirect discharge | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | None |
| Yili Precision Manufacturing Co., Ltd. | COD; ammonia nitrogen | Intermittent discharge | 1 | In the plant | COD: 50mg/L; ammonia nitrogen: 5mg/L | COD: 500mg/L; ammonia nitrogen: 45mg/L | COD: 8.523t/a; ammonia nitrogen: 0.168t/a | COD: 23.189t/a; ammonia nitrogen: 2.3389t/a | None |
Construction and operation of pollution prevention facilities
In accordance with The Environmental Impact Assessment and Approval, the Company establishes supporting measures forsolid waste storage, disposal and comprehensive utilization, along with leakage prevention and seepage prevention measures, andensures the normal operation of all above measures.In accordance with The Environmental Impact Assessment and Approval, Yili Precision Manufacturing Co., Ltd. constructssupporting treatment facilities for water and gas waste. Takes measures of noise reduction measures, storage, disposal andcomprehensive utilization of solid waste, and leakage and seepage prevention, and ensures the normal operation of all abovemeasures.Environmental impact assessment of construction projects and other administrative licenses for environmental protectionThe construction projects of Goertek Inc. have obtained The Environmental Impact Assessment and Approval from theHigh-tech Branch of Weifang Municipal Ecology and Environment Bureau in accordance with the regulations, and have obtainedenvironmental protection acceptance opinions according to The Interim Measures for Environmental Protection Acceptance ofConstruction Project Completion.
The construction projects of Yili Precision Manufacturing Co., Ltd. have obtained The Environmental Impact Assessment andApproval from the Anqiu Branch of Weifang Municipal Ecology and Environment Bureau in accordance with the regulations, andhave obtained environmental protection acceptance opinions according to The Interim Measures for Environmental ProtectionAcceptance of Construction Project Completion.Emergency response plan for unexpected environmental eventsIn view of various risk factors, combined with The National Environmental Emergency Response Plan and The Guidelines toDevelop Emergency Response Plan for Environmental Pollution Accidents, Goertek has formulated The Environmental EmergencyResponse Plan, and has reported the plan to the High-tech Branch of Weifang Municipal Ecology and Environment Bureau forrecording (No. 370708-2021-079-L). Goertek also organizes relevant training and drills on a regular basis, in order to improve theemergency response ability of employees and achieve continuous improvement.In view of various risk factors, Yili Precision Manufacturing Co., Ltd. refers to the National Environmental Emergency Planand Guidelines to Develop Emergency Response Plan for Environmental Pollution Accidents, formulates the Yili EnvironmentalEmergency Plan, and puts it on record in Anqiu Branch of Weifang Ecological 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 withemergency events and achieve continuous improvement.Environmental self-monitoring programmeThe Company entrusts third-party monitoring organization to monitor the environmental factors of the plant area and issue aninspection report every year.The main waste water outlet of Yili Precision Manufacturing Co., Ltd. is equipped with on-line monitoring equipment of COD,ammonia nitrogen, flow rate and PH value, which is connected with the local department of environmental protection authorities.Environmental self-monitoring of waste water, waste gas, groundwater and soil pollutants is carried out in strict accordance with therequirements of the pollutant discharge permit, and related information is disclosed as required. Environmental self-monitoring ofwaste water, waste gas, groundwater and soil pollutants is carried out in strict accordance with the requirements of the pollutantdischarge permit, and related information is disclosed as required.Administrative penalties received for environmental issues during the reporting periodNoneOther environmental information that should be disclosedNoneMeasures taken to reduce carbon emissions during the reporting period and their effects
√ Applicable □ Not applicable
The Company took “compliant use of energy, improved efficiency, reduce emission, full participation of all staffs and greendevelopment” as its energy management policy, and implemented this policy onto 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 of energy saving,actively improve the overall level of energy efficiency, and integrate emission reduction and green development targets into itsinternal operation.The Company strived to promote clean energy application, increased the proportion of green energy in all energy sources,introduced distributed photovoltaic power generation and solar heat collection projects, and successfully achieved the annualemission reduction of 32,993tCO2e. It also conducted energy-saving-oriented technological transformation to improve equipmentenergy efficiency, applied energy-saving technologies such as vacuum pump, frequency conversion, automatic control and so on. Anannual emission reduction of 25,492tCO2e has been reached.Other 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 inthe protection 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 2021 released on "www.cninfo.com.cn" on March 30, 2022. For details, see the CorporateSocial responsibility Report of 2021 released on "www.cninfo.com.cn" on March 30, 2022.
III. Consolidate and Carry Forward the Achievements of Poverty Alleviation and RuralRevitalization
The Company has always responded positively to relevant calls of the authorities at all levels on targeted poverty alleviation,such as The Poverty Alleviation Plan for the 13th Five-Year Plan Period (2016-2020) issued by the State Council. In addition, theCompany has carried out tailored accurate poverty alleviation efforts according to The Circular on Information Disclosure of PovertyAlleviation Work of Listed Companies issued by Shenzhen Stock Exchange, and implements relevant arrangements and requirementsof The Opinions of the China Securities Regulatory Commission on Giving Full Play to the Role of the Capital Market to Serve theNational Poverty Alleviation Strategy.
In September, 2020, the Company renewed The Agricultural and Sideline Products Purchasing Agreement with the AnqiuBangquan Fruit and Vegetable Planting Professional Cooperative. The Company will purchase products from the cooperative and
keep the price from fluctuation to reduce the production and operation risk of poor households, and ensure that the per capita incomeof registered poor households will increase by no less than RMB 2,000 each year. The support duration will be no less than 2 years,and the agreements could be renewed.
Section VI Important MattersI. Fulfilment of Commitments
1. The commitments of the Company's actual controllers, shareholders, related parties, purchasers and companies that have been completely fulfilledduring the 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 share merger 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 |
| Mr. Jiang Bin and Ms. Hu Shuangmei, the actual controllers of the Company, | Horizontal competition related | 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 | October 8, 2007 | Long-term standing | Strictly fulfilled |
| Goertek Group Co., Ltd and Mr. Jiang Long, the shareholders who hold more than 5% of the Company shares | commitment | 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 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. | |||||
| Controlling shareholder | Other commitments | 1. In addition to setting a guarantee for the non-public offering of the exchangeable bonds, the stocks to be exchanged shall not be subject to other restrictions such as freeze by judicial domicile before the bond issue. No restriction is imposed on the sale of shares prepared for exchange when entering the stock exchange period, and the transfer of this part of shares does not violate the controlling shareholder's commitments to the Company, investors and Shenzhen Stock Exchange. 2. The controlling shareholder will not increase its holdings of the Company shares within six months before and after current holders exercise the stock exchanges. 3. The controlling shareholder does not have situation stipulated in Article 6 of the Several Provisions on Shareholding Reduction by Shareholders, Directors, Supervisors and Senior Executives of Listed Companies (Announcement [2017] No. 9, CSRC). 4. The controlling shareholder will not directly transfer control of Goertek Inc. to others through the current issuance of exchangeable bonds; 5. During the stock exchange period, if there are situations not allowed as stipulated by the Several Provisions on Shareholding Reduction by Shareholders, Directors, | January 11, 2021 | From the issuance date of the commitment to the completion of current non-public offering of exchangeable bonds | The 2021 Goertek Exchangeable Bonds was delisted on January 17, 2022, thus the commitment has been completely fulfilled |
| Supervisors and Senior Executives of Listed Companies and the Implementing Rules of the Shenzhen Stock Exchange for the Sale of Shares by Shareholders, Directors, Supervisors and Senior Management of Listed Companies, the controlling shareholder undertakes to suspend the application for share exchange until relevant circumstances are eliminated. | ||||||
| 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 of the implementation of the stock option incentive plan of 2021 | Strictly fulfilled |
| Other commitments made to minority shareholders | Controlling shareholders and actual controller | Commitment of profit dilution counter-measures | Commitment of profit dilution counter-measures in accordance with relevant regulations of China Securities Regulatory Commission | September 10, 2019 | From the issuance date of the commitment to the completion of the convertible bonds | Goertek Convertible Bond No.2 was delisted on March 11, 2021, thus the commitment has been completely fulfilled |
| Directors and senior | Commitment of | Commitment of profit dilution counter-measures in | September | From the | Goertek |
| management | profit dilution counter-measures | accordance with relevant regulations of China Securities Regulatory Commission | 10, 2019 | issuance date of the commitment to the completion of the convertible bonds | Convertible Bond No.2 was delisted on March 11, 2021, thus the commitment has been completely fulfilled |
| The Company | Others commitments | From March 5, 2020 to the end of the use of the funds raised from convertible 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, 2022 | 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 |
| The Company | Others commitments | The Company promises not to carry out venture capital investment during the period of temporary liquidity replenishment with raised funds, and undertakes to use these raised funds during temporary liquidity replenishment 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 bonds, etc. | November 5, 2020 | During the time period of temporary liquidity replenishment with raised funds starting from November 5, 2020 | All raised funds have been returned on November 3, 2021, thus the commitment has been completely fulfilled |
| The Company | Others | The Company promises not to carry out venture capital | November 8, | During the | Strictly |
| commitments | investment during the period of temporary liquidity replenishment with raised funds, and undertakes to use these raised funds during temporary liquidity replenishment 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 bonds, etc. | 2021 | time period of temporary liquidity replenishment with raised funds starting from November 8, 2021 | fulfilled | |
| Directors and senior management | Commitment to restricted stock | The directors and senior management of the Company promise not to reduce their holdings of company shares within 6 months from November 18, 2020, not to engage in insider trading or short-swing trading, and not to buy or sell company stocks during sensitive time periods | November 17, 2020 | In the next six consecutive months from November 18, 2020 | Completely fulfilled on May 17, 2021 |
| The Company, actual controller of the Company | Horizontal competition related commitment | 1. The commitment parties (company and persons) are committed, during the time period of being the controlling shareholders or actual controller of Goertek Microelectronics Co., Ltd. (hereafter referred to as “Goermicro”), to making Goermicro (including its holding subsidiaries and branches) the only company engaged in the R&D, production and sales of MEMS devices and micro-system modules, among all entities controlled by the commitment parties (company and persons) 2. During the time period when the commitment parties (company and persons) are the controlling shareholder or actual controller of Goermicro，the commitment parties (company and persons) undertake that after the completion of the spin-off of Goermicro, all reasonable efforts will be made to ensure that, except Goermicro and its holding | November 8, 2021 | During the period that the Company and the actual controller of the Company act as the controlling shareholder or actual controller of Goermicro | Strictly fulfilled |
| persons) violates the above commitments, the commitment parties (company and persons) will compensate Goermicro and/or its holding subsidiaries with the benefits and gains obtained from the transaction. If the violation of the above commitments causes economic losses to Goermicro and/or its holding subsidiaries, the commitment parties (company and persons) will bear the corresponding liability of compensation in accordance with laws | |||||
| The Company, actual controller of the Company | Commitments related to affiliate transactions | 1. After the completion of the spin-off of Goermicro, the commitment parties (company and persons) will exercise and perform rights and obligations as a micro-shareholder or actual controller of Goermicro in good faith, fully respect the independent legal entity status of Goermicro, and guarantee its independent operation and decision-making process. 2. After the completion of the spin-off, the commitment parties (company and persons) will try its best to avoid and reduce affiliate transactions between Goermicro and/or its holding subsidiaries and the commitment parties (company and persons) and their controlled companies (except Goermicro and/or its holding subsidiaries, hereafter referred to as "affiliated enterprises" ) . For affiliate transactions that cannot be avoided or can be conducted with reasonable causes, the commitment parties (company and persons) and their affiliated enterprises will follow the principles of fairness and openness. Agreements with Goermicro and/or its holding subsidiaries will be signed in accordance with relevant laws and regulations. The approval procedures and | November 8, 2021 | Long-term standing | Strictly fulfilled |
| the commitment parties (company and persons) will compensate for Goermicro and/or its holding subsidiaries with the benefits and gains obtained from the transaction. If the violation of the above commitments causes economic losses to Goermicro and/or its holding subsidiaries, the commitment parties (company and persons) will bear the corresponding liability for compensation in accordance with laws | |||
| 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 report period is still in the profit forecasting period, the Company shall make statementon whether the assets or projects reach the original profit forecast and provide relevant reasons
□ Applicable √ Not applicable
II. Non-operational Occupation of Funds by Controlling Shareholders and Other Related Parties to Listed Companies
□ Applicable √ Not applicable
During the reporting period of the Company, there is no non-operational occupation of funds by controlling shareholders or other related parties to the Company.III. External Guarantee in Violation of Regulations
□ Applicable √ Not applicable
The Company has no violation of external guarantee during the reporting period.
IV. Explanation of the Board of Directors on the Relevant Information of the Latest “Qualified Audit Report”
□ Applicable √ Not applicable
V. Explanation of the Accounting Firm's “Non-standard Audit Report” by the Board of Directors, the Board of Supervisors andIndependent Directors (if Any) During the Reporting Period
□ Applicable √ Not applicable
VI. 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. Accounting policy changes caused by the implementation of the new accounting standards of leaseOn December 7, 2018, the Ministry of Finance issued The Accounting Standards for Enterprises No.21–Leases (2018 Revision)(Finance and Accounting [2018] No. 35) (hereinafter referred to as “new standards of lease”). With the resolution of the 18thmeeting of the 5th board of directors on March 26, 2021, the Company has implemented the above-mentioned new standards of leasefrom January 1, 2021, and related accounting policies has been changed in accordance with the provisions of the new standards oflease. For details, see “Section 10, Financial Report, V, 37, (1) Important accounting policy changes” in this report.
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 applicable
During the reporting period, the Company established a subsidiary company GOERTEK MICROELECTRONICS KOREA 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) Co., Ltd. |
| Remuneration of the domestic accounting firm (RMB million) | 200 |
| Consecutive audit service years of the domestic accounting firm | 3 |
| Name of certified public accountant of the domestic accounting firm | Du Yeqin, Mou Huiling |
| Consecutive audit service years of certified public accountant of the domestic accounting firm | Du Yeqin for 2 years and Mou Huiling for 1 year |
Whether to reappoint accounting firm in current period
□ Yes √ No
Employment of internal control audit accounting firms, financial consultants or sponsors
√ Applicable □ Not applicable
Due to the demand of public issuance of convertible bonds in 2020, the Company hired China Securities Co., Ltd. as its sponsor,and the sponsor's representatives were Guan Feng and Huang Zhenyue. The continuous supervision period was from June 12, 2020 toDecember 31, 2021. No remuneration was paid during the supervision period of 2021.
IX. Delisting After the Disclosure of Annual Report
□ Applicable √ Not applicable
X. Bankruptcy or Reorganization Related Events
□ Applicable √ Not applicable
No bankruptcy reorganization related events occurred during the reporting period.XI. Significant Lawsuit and Arbitration Events
□ Applicable √ Not applicable
No significant litigation or arbitration events occurred during the reporting period.XII. Punishment and Rectification
□ Applicable √ Not applicable
No punishment and 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 applicable
No 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 applicable
No 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 applicable
No significant affiliated transactions of joint external investment occurred during the reporting period.
4. Affiliated transactions of credits and liabilities
□ Applicable √ Not applicable
No significant affiliated transactions of credits and liabilities occurred during the reporting period.
5. Business with affiliated financial company
□ Applicable √ Not applicable
There 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 affiliated parties and the financial company controlled by the Company
□ Applicable √ Not applicable
There was no deposit, loan, credit granting or other financial business between the affiliated parties and the financial companycontrolled by the Company.
7. Other significant affiliated transactions
□ Applicable √ Not applicable
No other significant affiliated transactions occurred during the reporting period.
XIV. Significant Contracts and Their Executions
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship occurred during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No contracting occurred during the reporting period.
(3) Leasing
□ Applicable √ Not applicable
No 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 affiliated parties |
| Not applicable | ||||||||||
| Total amount of external guarantee limit approved during the reporting period (A1) | Total amount of actual external guarantee occurred during the reporting period (A2) | |||||||||
| Total amount of external guarantee limit approved at the end of the reporting period (A3) | Total balance of actual external guarantee occurred at the end of the reporting period (A4) | |||||||||
| 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 affiliated parties |
| Goertek (HongKong) Co., Limited | April 17, 2020 | 191,271.00 | September 10, 2020 | 6,375.70 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co., Limited | March 27, 2021 | 191,271.00 | September 10, 2021 | 6,375.70 | Joint liability guarantee | 1 year | No | No | ||
| Goertek (HongKong) Co., Limited | April 17, 2020 | 191,271.00 | October 20, 2020 | 6,375.70 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co., Limited | March 27, 2021 | 191,271.00 | October 20, 2021 | 6,375.70 | Joint liability guarantee | 1 year | No | No | ||
| Goertek | April 20, | 191,271.00 | January 16, | 72,667.04 | Joint | 3 years | No | No | ||
| (HongKong) Co., Limited | 2019 | 2020 | liability guarantee | |||||||
| Goertek (HongKong) Co., Limited | April 20, 2019 | 191,271.00 | January 17, 2020 | 3,203.79 | Joint liability guarantee | 3 years | No | No | ||
| Goertek (HongKong) Co., Limited | April 20, 2019 | 191,271.00 | February 24, 2020 | 70,132.70 | Joint liability guarantee | 3 years | Yes | No | ||
| Goertek (HongKong) Co., Limited | April 20, 2019 | 191,271.00 | February 24, 2020 | 45,267.47 | Joint liability guarantee | 3 years | No | No | ||
| Goertek (HongKong) Co., Limited | April 17, 2020 | 191,271.00 | May 19, 2020 | 4,239.84 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co., Limited | April 17, 2020 | 191,271.00 | November 29, 2020 | 9,563.55 | Joint liability guarantee | 6 months | Yes | No | ||
| Goertek Technology Vina Company Limited | September 11, 2019 | 63,757.00 | August 14, 2020 | 318.79 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co., Limited | April 17, 2020 | 191,271.00 | August 20, 2020 | 15,939.25 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek (HongKong) Co., Limited | March 27, 2021 | 191,271.00 | August 20, 2021 | 15,939.25 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | September 11, 2019 | 63,757.00 | September 24, 2020 | 6,056.92 | Joint liability guarantee | 1 year | Yes | No |
| Goertek Technology Co., Ltd. | August 22, 2018 | 80,000.00 | September 20, 2018 | 39,682.93 | Joint liability guarantee | 8 years | Yes | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 191,271.00 | August 16, 2021 | 19,127.10 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | January 18, 2020 | 45,000.00 | June 10, 2020 | 2,689.37 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | July 10, 2020 | 84,000.00 | December 1, 2020 | 862.42 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | August 1, 2021 | 1,434.22 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | June 6, 2021 | 1,391.11 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | June 6, 2021 | 193.18 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | January 18, 2020 | 45,000.00 | February 21, 2020 | 28,390.00 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company | March 27, 2021 | 156,500.00 | July 30, 2021 | 25,928.34 | Joint liability guarantee | 1 year | No | No |
| Limited | ||||||||||
| Goertek Technology Vina Company Limited | January 18, 2020 | 45,000.00 | August 27, 2020 | 270.28 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | July 10, 2020 | 84,000.00 | August 20, 2020 | 1,748.52 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | October 18, 2021 | 3,595.59 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Technology Vina Company Limited | March 27, 2021 | 156,500.00 | June 29, 2021 | 6,216.41 | Joint liability guarantee | 1 year | No | No | ||
| Weifang Goertek Microelectronics Co., Ltd. | January 18, 2020 | 4,000.00 | March 2, 2020 | 882.99 | Joint liability guarantee | 1 year | Yes | No | ||
| Weifang Goertek Microelectronics Co., Ltd. | January 18, 2020 | 4,000.00 | March 10, 2020 | 138.75 | Joint liability guarantee | 1 year | Yes | No | ||
| Weifang Goertek Microelectronics Co., Ltd. | March 27, 2021 | 650.00 | March 27, 2021 | 11.00 | Joint liability guarantee | 1 year | No | No | ||
| Goertek Microelectronics Inc. | July 10, 2020 | 32,000.00 | November 19, 2020 | 26.34 | Joint liability guarantee | 1 year | Yes | No | ||
| Goertek Microelectr | March 27, 2021 | 2,640.00 | November 19, 2021 | 47.93 | Joint liability | 1 year | No | No |
| onics Inc. | guarantee | ||||||||||
| Goertek Intelligence Technology Co., Ltd. | March 27, 2021 | 1,500.00 | June 10, 2021 | 196.26 | Joint liability guarantee | 1 year | No | No | |||
| Total amount of guarantee limit to subsidiaries approved during the reporting period (B1) | 1,080,040.8 | Total amount of actual guarantee to subsidiaries occurred during the reporting period (B2) | 401,664.13 | ||||||||
| Total amount of guarantee limit to subsidiaries approved at the end of the reporting period (B3) | 1,271,311.8 | Total balance of actual guarantee to subsidiaries occurred at the end of the reporting period (B4) | 188,842.99 | ||||||||
| The guarantee of subsidiaries to 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 affiliated parties | |
| Not applicable | |||||||||||
| Total amount of guarantee limit to subsidiaries approved during the reporting period (C1) | Total amount of actual guarantee to subsidiaries occurred during the reporting period (C2) | ||||||||||
| Total amount of guarantee limit to subsidiaries approved at the end of the reporting period (C3) | Total balance of actual guarantee to subsidiaries occurred at the end of the reporting period (C4) | ||||||||||
| 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) | 1,080,040.8 | Total amount of actual external guarantee occurred during the reporting period (A2+B2+C2) | 401,664.13 | ||||||||
| Total amount of external guarantee limit approved at the | 1,271,311.8 | Total balance of actual external guarantee | 188,842.99 | ||||||||
| end of the reporting period (A3+B3+C3) | occurred at the end of the reporting period (A4+B4+C4) | ||
| The proportion of the total amount of actual guarantee (i.e. A4+B4+C4) to the net assets of the Company | 6.91% | ||
| Including: | |||
| Balance of guarantees for shareholders, actual controllers and their affiliate parties (D) | |||
| Debt guarantee balance provided directly or indirectly to the guaranteed parties with an asset-liability ratio of more than 70% (E) | 188,784.06 | ||
| Amount of total guarantees exceeding 50% of net assets (F) | |||
| Total amount of the above three kinds of guarantees (D+E+F) | 188,784.06 | ||
| Explanation of unexpired guarantee contracts that have occurred liabilities during the reporting period or where there is evidence that they may bear possible joint and several liabilities (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 applicable
No entrusted financial management occurred during the reporting period.
(2) Entrusted loans
□ Applicable √ Not applicable
No entrusted loans occurred during the reporting period.
4. Other major contracts
□ Applicable √ Not applicable
No other significant contracts occurred during the reporting period.
XVI. Explanation of Other Significant Matters
√ Applicable □ Not applicable
In accordance with the requirements of laws and regulations, the Company has disclosed the significant matters that occurredduring the reporting period on http://www.cninfo.com.cn, Securities Times, China Securities Journal, Shanghai Securities News andSecurities Daily. Other than that, no other significant matters occurred.XVII. Significant Matters Occurred to Subsidiaries of the Company
√ Applicable □ Not applicable
On November 10, 2020, the Company held the 12th meeting of the 5th board of directors and the 10th meeting of the 5th boardof supervisors, which approved The Proposal of Planning the Spin-off of the Holding Subsidiary. It agreed to plan and prepare thespin-off of the Company's holding subsidiary Goertek Microelectronics Co., Ltd. For details, please see The InformativeAnnouncement of Goertek 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, 2021to approve The Proposal on the Introduction of External Investors of the Holding Subsidiary and Affiliate Transactions. It agreed toaccept a total of RMB 2,149.987749 million capital investment from 15 external investors, including Qingdao MicroelectronicsInnovation Center Co., Ltd., Mr. Tang Wenbo, Gongqingcheng Chunlin Equity Investment Partnership (L.P.), Qingdao HenghuitaiIndustry Development Fund Co., Ltd., and Goertek Group Co., Ltd., in exchange of 10.4075% of Goermicro's equity after abovecapital increase and share expansion. After the above investment, the percentage of shares of Goermicro held by the Company wasdiluted from 95.8773% to 85.8989%, which did not change the accounting consolidation scope of the financial statements of theCompany. Details can be found in The Announcement of Goertek Inc. on the Introduction of External Investors of the HoldingSubsidiary and Affiliate Transactions 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 of “Planning on the Spin-off of Goertek Microelectronics Inc. and Listing on the GrowthEnterprise Board of Shenzhen Stock Exchange” and other related proposals. Details can be found in related announcementspublished in China Securities 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 related
announcements 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 ofShares and 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 InformativeAnnouncement 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.
Section VII. Changes in Shares and Information about Shareholders
I. 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 | Others | Sub-total | Number | Percentage | |
| I. Shares Subject to Selling Restrictions | 486,567,825 | 14.86% | -7,656,450 | -7,656,450 | 478,911,375 | 14.02% | |||
| 1. State shareholding | |||||||||
| 2. Shares held by state-owned corporates | |||||||||
| 3. Shares held by other domestic shareholders | 486,567,825 | 14.86% | -7,656,450 | -7,656,450 | 478,911,375 | 14.02% | |||
| Including: held by domestic corporates | |||||||||
| held by domestic individuals | 486,567,825 | 14.86% | -7,656,450 | -7,656,450 | 478,911,375 | 14.02% | |||
| 4. Shares held by foreign shareholers | |||||||||
| Including: held by foreign corporates | |||||||||
| held by foreign individuals | |||||||||
| II. Shares Without Restrictions | 2,788,870,602 | 85.14% | 148,539,059 | 148,539,059 | 2,937,409,661 | 85.98% | |||
| 1. RMB ordinary shares | 2,788,870,602 | 85.14% | 148,539,059 | 148,539,059 | 2,937,409,661 | 85.98% | |||
| 2. Domestic listed foreign shares | |||||||||
| 3. Overseas listed foreign | |||||||||
| shares | |||||||||
| 4. Others | |||||||||
| III. Total Number of Shares | 3,275,438,427 | 100.00% | 140,882,609 | 140,882,609 | 3,416,321,036 | 100.00% |
Reasons for changes in shares
√ Applicable □ Not applicable
In accordance with the provisions of the relevant regulations and The Prospectus for the Public Offering of Convertible Bondsby Goertek Inc., the “Goertek Convertible Bond No.2” issued by the Company can be converted into shares from December 18, 2020.As of the end of the reporting period, the number of converted shares was 171,217,088 (of which 140,882,609 shares were convertedduring the reporting period), and the total share capital of the Company increased to 3,416,321,036 shares.Approval of changes in shares
√ Applicable □ Not applicable
The 23rd meeting of the 4th board of directors was held on September 10, 2019. The board of directors deliberated andapproved The Proposal on the Public Issuance of Convertible Bonds and other proposals. On September 27, 2019, the Company heldthe 2nd extraordinary general meeting of shareholders. The meeting approved the Proposal on “The Plan for the Public Issuance ofConvertible Bonds" and other proposals. Approved by the CSRC Permission [2020] No. 780, the Company publicly issued 40 millionconvertible bonds on June 12, 2020, each with par value of RMB 100, and the total issue amount was RMB 4,000 million. With theconsent of “Shen Zheng Shang [2020] No. 610" issued by the Shenzhen Stock Exchange, RMB 4,000 million of convertible bondswere listed for trading on the Shenzhen Stock Exchange since July 13, 2020. The bond is referred to as “Goertek Convertible BondNo. 2” and the bond code is “128112”. According to the relevant regulations and The Prospectus for the Public Offering ofConvertible Bonds by Goertek Inc., the “Goertek Convertible Bond No.2” issued by the Company can be converted into shares fromDecember 18, 2020. The Company has fully redeemed all registered “Goertek Convertible Bond No. 2", as of the redemptionregistration date (one trading day before the redemption date: March 2, 2021) Since March 3, 2021, " Goertek Convertible Bond No.2" was no longer traded or convertible. “Goertek Convertible Bond No. 2" was delisted on March 11, 2021. “Goertek ConvertibleBond No. 2" was delisted on March 11, 2021.Transfer of ownership change of shares
□ Applicable √ Not applicable
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 applicable
During the reporting period, the partial conversion of convertible bonds into shares correspondingly affected basic earnings pershare and diluted earnings per share, but did not have a significant impact. The impact on the net assets per share attributable to thecommon shareholders of the Company is as follows:
| Financial indicators | 2021 | 2020 | ||
| Before share changes | After share changes | Before share changes | After share changes | |
| Net assets per share attributable to shareholders of the Company (RMB) | 7.39 | 8.00 | 5.86 | 6.00 |
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 | 305,989,504 | 25,873,950 | 280,115,554 | Restricted shares of senior executives | January 1, 2021 | |
| Jiang Long | 147,941,398 | 39,817,500 | 187,758,898 | Restricted shares of senior executives | January 1, 2021 | |
| Hu Shuangmei | 21,600,000 | 5,400,000 | 16,200,000 | Restricted shares of senior executives | January 16, 2021 | |
| Sun Hongbin | 6,667,150 | 6,667,150 | Restricted shares of senior executives | January 1, 2021 | ||
| Duan Huilu | 3,355,875 | 3,355,875 | Restricted shares of senior executives | January 1, 2021 | ||
| Jia Jun'an | 150,000 | 150,000 | Restricted shares of senior executives | January 1, 2021 | ||
| Liu Chunfa | 863,898 | 863,898 | Restricted shares of senior executives | January 1, 2021 | ||
| Total | 486,567,825 | 39,817,500 | 31,273,950 | 495,111,375 | -- | -- |
II. Issuance and Listing of Securities
1. Securities issuance (excluding preferred 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 applicable
The 40 million convertible bonds, referred to as “Goertek Convertible Bond No.2”, publicly issued by the Company on June 12,2020, were listed for trading on the Shenzhen Stock Exchange since July 13, 2020. “Goertek Convertible Bond No.2” could beconverted into shares of the Company since December 18, 2020, and the total share capital changed from 3,275,438,427 to3,416,321,036 during the reporting period due to the convertion of Goertek Convertible Bond No.2. The changes in the structure ofthe Company's assets and liabilities are detailed in Section X Financial Report.
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 period | 178,252 | Total number of common shareholders as the end of the previous month before disclosure date of the annual report | 198,374 | Total number of preferred shareholders whose voting rights were restored at the end of the reporting period (if any) | 0 | Total number of preferred shareholders whose voting rights were restored at the end of the previous month before disclosure date of the annual report | 0 | ||||
| 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 | 15.37% | 525,183,974 | -58,599,695 | 525,183,974 | Pledged | 100,400,305 | ||||
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | Overseas corporation | 9.36% | 319,905,460 | 156,836,627 | 319,905,460 | |||
| Jiang Bin | Domestic Individual | 8.41% | 287,397,406 | -86,090,000 | 280,115,554 | 7,281,852 | ||
| Jiang Long | Domestic Individual | 7.33% | 250,345,197 | 53,090,000 | 187,758,898 | 62,586,299 | Pledged | 15,000,000 |
| China Securities Finance Corporation Limited | Others | 2.43% | 83,044,011 | 83,044,011 | ||||
| National Social Security Fund Portfolio 103 | Others | 0.74% | 25,299,922 | 25,299,922 | ||||
| National Social Security Fund Portfolio 601 | Others | 0.71% | 24,132,745 | 24,132,745 | ||||
| Shanghai Pudong Development Bank Co., Ltd. - E-fund Yuxiang Return Bond Type Securities Investment Fund | Other | 0.69% | 23,636,361 | 23,636,361 | ||||
| Bank of Communications Co., Ltd. - E-fund Compet Adv Enterprises Alloc Type Securities Investment Fund | Others | 0.62% | 21,089,337 | 21,089,337 | ||||
| Abu Dhabi Investment Authority | Overseas corporation | 0.60% | 20,654,581 | 20,654,581 | ||||
| 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 | Jiang Bin and Jiang Long are brothers; Goertek Group Co., Ltd. is a company controlled by Jiang | |||||||
| of the above shareholders or their action in concert | 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 special account of securities repurchasing of Goertek Inc. holds 74,265,451 ordinary 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. | 525,183,974 | Ordinary shares in RMB | 525,183,974 |
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | 319,905,460 | Ordinary shares in RMB | 319,905,460 |
| China Securities Finance Corporation Limited | 83,044,011 | Ordinary shares in RMB | 83,044,011 |
| Jiang Long | 62,586,299 | Ordinary shares in RMB | 62,586,299 |
| National Social Security Fund Portfolio 103 | 25,299,922 | Ordinary shares in RMB | 25,299,922 |
| National Social Security Fund Portfolio 601 | 24,132,745 | Ordinary shares in RMB | 24,132,745 |
| Shanghai Pudong Development Bank Co., Ltd. - E-fund Yuxiang Return Bond Type Securities Investment Fund | 23,636,361 | Ordinary shares in RMB | 23,636,361 |
| Bank of Communications Co., Ltd. - E-fund Compet Adv Enterprises Alloc Type Securities Investment Fund | 21,089,337 | Ordinary shares in RMB | 21,089,337 |
| Abu Dhabi Investment Authority | 20,654,581 | Ordinary shares in RMB | 20,654,581 |
| Industrial And Commercial Bank of China Limited - Selected Stock-type Securities Fund of E Fund | 20,562,486 | Ordinary shares in RMB | 20,562,486 |
| Explanation on association or | Jiang Bin and Jiang Long are brothers; Goertek Group Co., Ltd. is a company controlled by Jiang | ||
| 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 | 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 on anyrepurchase transaction in the reporting period
□ Yes √ No
None 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; investment 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 applicable
No 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 the current chairman of the Company; and Mr. Jiang Long is the current vice chairman and president of the Company. | ||
| 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 applicable
No 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 PeriodProgress of share repurchase
√ Applicable □ Not applicable
| Repurchasing plan disclosure date | Amount of shares to be repurchase according to the plan | Percentage of the total share capital to be repurchase according to the plan | RMB amount of shares to be repurchased according to the plan | Duration for repurchase | Purpose of repurchase | Amount of shares actually repurchased | Proportion of repurchased shares to the total underlying stocks involved in the equity incentive plan (if any) |
| January 30, 2021 | No less than RMB 1,000,000,000 and no more than RMB 2,000,000,000 | January 29, 2021 - July 29, 2021, within six months since the date of the board of directors approved the repurchase plan | Employee stock ownership plan or equity incentive plan for the employees of the Company | 59,929,533 |
Progress on reduction and repurchase of shares through centralized bidding
□ Applicable √ Not applicable
Section VIII Information of Preferred Shares
□ Applicable √ Not applicable
There are no preferred shares in the reporting period.
Section IX Information on the Bonds
□ Applicable √ Not applicable
Section X Financial Report
I. Audit Report
| Audit Opinion | Standard unqualified audit opinion |
| Audit Report Sign-off Date | March 29, 2022 |
| Name of the audit institution | Zhongxi Certified Public Accountants (special general partnership) Co., Ltd. |
| Audit Report Number | No. 2022S00281 of Zhong Xi Cai Shen |
| Name of the Certified Public Accountant | Du Yeqin, Mou Huiling |
Text of the auditor’s reportAuditor’s Report
No. 2022S00281 of Zhong Xi Cai ShenTo all the shareholders of Goertek Inc.,I. Audit opinionWe have audited the accompanying financial statements of Goertek Inc. (hereinafter referred to as "Goertek"), which comprisethe consolidated and company’s balance sheet as of December 31, 2021, consolidated and company’s income statements,consolidated and company’s cash flow statements, consolidated and company’s statements of changes in shareholder' equity, andnotes to the financial statements for the year then ended.
In our opinion, the accompanying financial statements have been prepared in all material aspects in accordance with theAccounting Standards for Business Enterprises, giving a true and fair view of the consolidated and company’s financial position as at31 December 2021 and of the consolidated and company’s financial performance and cash flows for 2021.
II. Basis for Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Ourresponsibilities under those Standards are further described in the “Certified Public Accountants’ Responsibilities for the Audit of theFinancial Statements” section of the audit report. We are independent of Goertek 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 audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, are of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements, 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 is mainly in the business of producing and selling electron 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 2021, the operating revenue in the consolidated financial statements of Goertek is RMB 78,221,418,618.02. Revenueis one of the key performance indicators of Goertek and is the major source of profit of the Company, and the accuracy andcompleteness of revenue recognition has a significant impact on the profits of the Company. Therefore, we identified the recognitionof Goertek’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 whetherthe accounting policies for revenue recognition in different modes were appropriate, and evaluated whether the time point forrevenue recognition of the Company was consistent with the requirements in the Accounting Standards for Business Enterprises bychecking the major sales contracts or orders, understanding the policies for receipt and return of goods, communicating with themanagement and 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) Government subsidies
1. Description of the matters
As stated in “36. Deferred income” of Note VII, “51. Other income” of Note VII and “65. Government subsidies” of Note VII ofthe financial statements, the government subsidies received by Goertek for the year 2021 was RMB 465,518,187.04, and thegovernment subsidies included in other income for current year was RMB 464,119,437.91. Goertek has received a large amount ofgovernment subsidies, which casted a relatively significant impact on the net profit of the current year, and appropriate recognitionand measurement of the government subsidies have a significant impact on the accuracy and rationality of financial statementsprepared. Therefore, we identified the recognition and measurement of Goertek’s government subsidies as a key audit matter.
2. Audit Measures
We preformed the following audit procedures in recognition of the government subsidy:
(1) Evaluated the accounting policies related to Goertek’s recognition and measurement of the government subsidies;
(2) Checked all the receipts and documents of Goertek related to the government subsidies for the year 2021; judged whether thetype of the government subsidies is related to assets or income and whether the conditions for government subsidiesw were metaccording to the contents of relevant documents;
(3) Checked whether the payer and fund source of the government subsidies is consistent with those in the subsidy document toevaluate the appropriateness of the fund source of the government subsidy.
(4) In respect of the government subsidies related to the income, checked whether relevant expenses incurred by the Companyas the subsidy beneficiary are included in the profit and loss, and accordingly, checked whether the profit and loss brought forward inconnection with the government subsidies was appropriate to the corresponding expense;
(5) In respect of the government subsidies related to assets, checked whether the amount of the deferred income distributed andincluded in the current profit and loss within the service life of relevant asset was correct.
IV. Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management of Goertek (hereinafter referred to as “Management”) is responsible for the preparation and fair presentation of thefinancial statements in accordance with the Accounting Standards for Business Enterprises, and for the design, implementation andmaintenance of such internal control necessary to enable that the financial statements are free from material misstatement, whetherdue to fraud or error.
In preparing the financial statements, Management is responsible for assessing the ability of Goertek to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unlessManagement intends to liquidate Goertek 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.
V. Certified Public Accounts’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with the Auditing Standards will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financialstatements.
As part of an audit in accordance with the Auditing Standards, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate forthe circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by Management.
4. Conclude on the appropriateness of Management’s use of the going concern basis of accounting. And, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Goertek’sability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditreport 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 audit report. However, future events or conditions may causeGoertek to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities withinGoertek to express an opinion on the financial statements. We are responsible for the instruction, supervision and execution of theGroup’s audit, and assume full responsibility for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the auditand significant 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 requirementsregarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear onour independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ouraudit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
| Zhongxi Certified Public Accountants (special general partnership) Co., Ltd. | Certified Public Accountant in China (Project partner): Du Yeqin |
| Beijing, China | Certified Public Accountant in China: Mou Huiling |
March 29, 2022
II. Financial StatementsThe currency in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Goertek Inc.
December 31, 2021
Unit: RMB
| Item | December 31, 2021 | December 31, 2020 |
| Current assets: | ||
| Cash and bank balances | 10,048,521,696.09 | 7,788,139,761.68 |
| Deposit reservation for balance | ||
| Lending funds | ||
| Held-for-trading financial assets | 119,267,279.02 | 250,789,617.29 |
| Derivative financial assets | ||
| Notes receivable | 50,094,700.47 | 93,015,027.25 |
| Accounts receivable | 11,899,214,525.92 | 9,951,611,596.65 |
| Receivable financing | 14,575,230.24 | |
| Prepayments | 97,544,817.98 | 295,557,594.21 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Provision of cession receivable | ||
| Other receivables | 374,669,355.98 | 56,282,930.78 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Redemptory monetary capital for sale | ||
| Inventories | 12,082,308,485.38 | 9,170,731,903.19 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | 67,724.41 | |
| Other current assets | 475,772,227.60 | 522,858,736.68 |
| Total current assets | 35,161,968,318.68 | 28,129,054,892.14 |
| Non-current assets: |
| Item | December 31, 2021 | December 31, 2020 |
| Loans and advances disbursed | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 437,402,203.91 | 337,410,802.56 |
| Investments in other equity instruments | 465,677,764.54 | 357,307,056.65 |
| Other non-current financial assets | 201,430,042.13 | |
| Investment properties | ||
| Fixed assets | 18,123,352,480.76 | 14,674,535,924.15 |
| Construction in progress | 2,127,055,853.77 | 2,078,910,639.92 |
| Manufacturing biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 330,796,520.66 | |
| Intangible assets | 2,762,793,788.85 | 2,730,415,540.35 |
| Development expenditure | 242,956,092.44 | 107,970,366.02 |
| Goodwill | 16,859,185.08 | 16,859,185.08 |
| Long-term deferred expenses | 207,195,490.25 | 152,215,032.28 |
| Deferred tax assets | 495,124,421.81 | 275,559,445.74 |
| Other non-current assets | 506,438,970.39 | 257,587,428.52 |
| Total non-current assets | 25,917,082,814.59 | 20,988,771,421.27 |
| Total assets | 61,079,051,133.27 | 49,117,826,313.41 |
| Current liabilities: | ||
| Short-term borrowings | 4,284,859,347.02 | 3,189,865,281.20 |
| Borrowings from banks and other financial institutions | ||
| Borrowing funds | ||
| Held-for-trading financial liabilities | 15,190,564.34 | 43,578,775.71 |
| Derivative financial liabilities | ||
| Notes payable | 2,742,876,464.23 | 1,797,630,927.08 |
| Accounts payable | 18,529,609,655.40 | 15,526,558,924.33 |
| Advances from customers | ||
| Contract liabilities | 2,210,825,761.69 | 772,033,187.85 |
| Item | December 31, 2021 | December 31, 2020 |
| Financial assets sold for repurchase | ||
| Customer deposits and deposits from banks and other financial institutions | ||
| Receivings from vicariously traded securities | ||
| Receivings from vicariously sold securities | ||
| Payroll payable | 1,066,570,159.63 | 1,136,453,967.56 |
| Taxes payable | 356,610,000.28 | 195,498,317.72 |
| Other payables | 80,187,733.17 | 67,844,709.64 |
| Including: Interest payable | 8,911,319.91 | |
| Dividends payable | ||
| Handling charges and commissions payable | ||
| Dividend payable for reinsurance | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 501,408,170.04 | |
| Other current liabilities | 14,844,359.01 | 7,012,595.33 |
| Total current liabilities | 29,802,982,214.81 | 22,736,476,686.42 |
| Non-current liabilities: | ||
| Reserve fund for insurance contracts | ||
| Long-term borrowings | 2,204,215,784.74 | 2,754,299,262.02 |
| Bonds payable | 3,031,391,335.56 | |
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 210,209,955.40 | |
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | 540,321,080.65 | 538,922,331.52 |
| Deferred tax liabilities | 389,933,389.40 | 323,065,909.80 |
| Item | December 31, 2021 | December 31, 2020 |
| Other non-current liabilities | ||
| Total non-current liabilities | 3,344,680,210.19 | 6,647,678,838.90 |
| Total liabilities | 33,147,662,425.00 | 29,384,155,525.32 |
| Owners' equity: | ||
| Share capital | 3,416,321,036.00 | 3,275,438,427.00 |
| Other equity instruments | 317,690,852.25 | |
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 9,478,106,194.30 | 3,811,658,791.28 |
| Less: Treasury shares | 2,291,973,146.75 | 516,007,644.95 |
| Other comprehensive income | -100,146,769.57 | -112,010,012.52 |
| Special reserves | ||
| Surplus reserves | 1,446,536,121.51 | 1,370,122,868.85 |
| General risk reserve | 6,081,200.00 | 6,081,200.00 |
| Retained earnings | 15,372,823,358.48 | 11,500,277,791.35 |
| Total equity attributable to the owners of the Company | 27,327,747,993.97 | 19,653,252,273.26 |
| Minority equity | 603,640,714.30 | 80,418,514.83 |
| Total owners' equity | 27,931,388,708.27 | 19,733,670,788.09 |
| Total liabilities and owners' equity | 61,079,051,133.27 | 49,117,826,313.41 |
Legal representative: Jiang Bin Person in charge of accounting: Li Yongzhi Head of the accountinginstitution: Li Yongzhi
2. Parent company balance sheet
Unit: RMB
| Item | December 31, 2021 | December 31, 2020 |
| Current assets: | ||
| Cash and bank balances | 4,068,082,163.75 | 2,834,936,444.19 |
| Held-for-trading financial assets | 102,214,286.66 | 182,338,601.65 |
| Derivative financial assets | ||
| Notes receivable | 15,951,819.79 | 75,154,389.95 |
| Accounts receivable | 8,009,174,174.20 | 9,745,537,067.95 |
| Receivable financing | 12,277,005.37 |
| Item | December 31, 2021 | December 31, 2020 |
| Prepayments | 33,005,000.34 | 37,867,760.48 |
| Other receivables | 3,927,667,930.14 | 3,761,565,682.66 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Inventories | 5,386,290,840.96 | 2,307,402,064.65 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 89,132,401.04 | 132,090,455.49 |
| Total current assets | 21,643,795,622.25 | 19,076,892,467.02 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 6,182,937,106.09 | 5,896,926,627.12 |
| Investments in other equity instruments | ||
| Other non-current financial assets | 81,254,792.77 | |
| Investment properties | ||
| Fixed assets | 9,979,950,421.03 | 8,801,650,213.78 |
| Construction in progress | 1,083,563,418.24 | 313,889,183.09 |
| Manufacturing biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 70,843,695.85 | |
| Intangible assets | 2,283,338,054.04 | 2,258,621,419.91 |
| Development expenditure | 105,363,784.94 | 12,173,386.98 |
| Goodwill | ||
| Long-term deferred expenses | 6,206,772.89 | 417,895.69 |
| Deferred tax assets | 233,025,132.43 | 54,618,987.06 |
| Other non-current assets | 297,122,363.13 | 110,169,734.82 |
| Total non-current assets | 20,323,605,541.41 | 17,448,467,448.45 |
| Total assets | 41,967,401,163.66 | 36,525,359,915.47 |
| Current liabilities: |
| Item | December 31, 2021 | December 31, 2020 |
| Short-term borrowings | 3,346,827,327.53 | 2,426,635,181.20 |
| Held-for-trading financial liabilities | 4,080,000.00 | |
| Derivative financial liabilities | ||
| Notes payable | 2,348,480,930.59 | 1,616,583,704.36 |
| Accounts payable | 9,328,493,202.63 | 7,583,147,844.25 |
| Advances from customers | ||
| Contract liabilities | 340,559,741.33 | 363,007,702.67 |
| Payroll payable | 550,001,996.91 | 606,402,939.12 |
| Taxes payable | 37,673,083.32 | 34,135,334.79 |
| Other payables | 3,270,836,911.14 | 1,440,612,669.29 |
| Including: Interest payable | 6,306,124.36 | |
| Dividends payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 412,234,240.19 | |
| Other current liabilities | 9,670,427.10 | 9,707,204.85 |
| Total current liabilities | 19,648,857,860.74 | 14,080,232,580.53 |
| Non-current liabilities: | ||
| Long-term borrowings | 990,921,555.56 | 400,000,000.00 |
| Bonds payable | 3,031,391,335.56 | |
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 52,713,002.49 | |
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | 186,139,483.46 | 202,689,088.19 |
| Deferred tax liabilities | 373,963,793.59 | 299,192,361.87 |
| Other non-current liabilities | ||
| Total non-current liabilities | 1,603,737,835.10 | 3,933,272,785.62 |
| Total liabilities | 21,252,595,695.84 | 18,013,505,366.15 |
| Owners' equity: | ||
| Share capital | 3,416,321,036.00 | 3,275,438,427.00 |
| Item | December 31, 2021 | December 31, 2020 |
| Other equity instruments | 317,690,852.25 | |
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 7,706,634,091.21 | 3,815,383,616.46 |
| Less: Treasury shares | 2,291,973,146.75 | 516,007,644.95 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 1,446,533,339.11 | 1,370,120,086.45 |
| Retained earnings | 10,437,290,148.25 | 10,249,229,212.11 |
| Total owners' equity | 20,714,805,467.82 | 18,511,854,549.32 |
| Total liabilities and owners' equity | 41,967,401,163.66 | 36,525,359,915.47 |
3. Consolidated income statement
Unit: RMB
| Item | 2021 | 2020 |
| I. Total operating revenue | 78,221,418,618.02 | 57,742,742,893.96 |
| Including: Operating revenue | 78,221,418,618.02 | 57,742,742,893.96 |
| Interest income | ||
| Earned premium | ||
| Total revenue from handling charges and commissions | ||
| II. Total Operating Cost | 74,123,260,660.02 | 54,706,662,977.17 |
| Including: Operating cost | 67,167,666,659.66 | 48,483,805,411.74 |
| 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 | 221,891,985.50 | 200,400,470.05 |
| Selling expenses | 444,869,977.08 | 476,066,518.64 |
| Item | 2021 | 2020 |
| Administrative expenses | 1,951,657,773.32 | 1,629,730,793.00 |
| R&D expenses | 4,170,074,282.10 | 3,425,971,011.65 |
| Financial expenses | 167,099,982.36 | 490,688,772.09 |
| Including: Interest expenses | 209,622,292.85 | 276,706,601.19 |
| Interest income | 91,492,632.72 | 39,217,451.01 |
| Add: Other income | 466,722,801.11 | 224,609,297.72 |
| Investment income ("-" for loss) | 469,239,884.79 | 138,553,145.35 |
| Including: Investment gains in associated enterprise and joint-venture enterprise | 23,111,753.41 | 25,126,283.51 |
| Profit or loss arising from derecognition of financial assets measured at amortised costs | -7,852,608.05 | |
| Exchange gains ("-" for loss) | ||
| Net exposure hedging income ("-" for loss) | ||
| Gains from changes in fair value ("-" for loss) | -48,848,625.93 | 160,215,070.58 |
| Credit impairment losses ("-" for loss) | -29,693,677.67 | -28,402,825.32 |
| Asset impairment losses ("-" for loss) | -241,075,506.45 | -207,798,137.99 |
| Gains on disposal of assets ("-" for loss) | -31,179,825.99 | -62,250,234.59 |
| III. Operating Profit ("-" for loss) | 4,683,323,007.86 | 3,261,006,232.54 |
| Add: Non-operating revenue | 22,444,738.18 | 18,801,027.06 |
| Less: Non-operating expenses | 99,858,949.06 | 57,841,977.98 |
| IV. Total Profit (“-” for total losses) | 4,605,908,796.98 | 3,221,965,281.62 |
| Less: Income tax expenses | 298,842,312.64 | 370,078,167.44 |
| V. Net profit ("-" for net loss) | 4,307,066,484.34 | 2,851,887,114.18 |
| (I) Classification by business continuity | ||
| 1. Net profit from continuing operations (“-” for net loss) | 4,307,066,484.34 | 2,851,887,114.18 |
| 2. Net profit from discontinued operations (“-” for net loss) | ||
| (II) Classification by ownership | ||
| 1. Net profit attributable to the shareholders of the Company | 4,274,702,999.38 | 2,848,007,269.61 |
| 2. Minority interests | 32,363,484.96 | 3,879,844.57 |
| VI. Other comprehensive income, net of tax | 21,620,809.04 | -27,186,319.43 |
| Other comprehensive income, net of tax attributable to the owners of the Company | 11,863,242.95 | -27,509,272.02 |
| Item | 2021 | 2020 |
| (I) Other comprehensive income items which will not be reclassified subsequently to profit or loss | 39,220,079.94 | 7,711,365.44 |
| 1. Changes arising from remeasurement of defined benefit plan | ||
| 2. Other comprehensive income that will not be transferred subsequently to profit or loss under the equity method | ||
| 3. Changes in fair value of investments in other equity instruments | 39,220,079.94 | 7,711,365.44 |
| 4. Changes in the fair value of the Company’s credit risk | ||
| 5. Others | ||
| (II) Other comprehensive income items which will be reclassified subsequently to profit or loss | -27,356,836.99 | -35,220,637.46 |
| 1. Other comprehensive income that will be transferred subsequently to profit or loss under the equity method | 7,950,273.16 | 23,160,776.33 |
| 2. Changes in fair value of debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Credit impairment provision of other debt investments | ||
| 5. Effective portion of cash flow hedging gains or losses | ||
| 6. Differences on translation of foreign currency financial statements | -35,307,110.15 | -58,381,413.79 |
| 7. Others | ||
| Net other comprehensive income, net of tax, attributable to minority shareholders | 9,757,566.09 | 322,952.59 |
| VII. Total comprehensive income | 4,328,687,293.38 | 2,824,700,794.75 |
| Total comprehensive income attributable the owners of the Company | 4,286,566,242.33 | 2,820,497,997.59 |
| Total comprehensive income attributable to minority shareholders | 42,121,051.05 | 4,202,797.16 |
| VIII. Earnings per share: | ||
| (I) Basic earnings per share | 1.29 | 0.89 |
| (II) Diluted earnings per share | 1.28 | 0.89 |
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 Person in charge of accounting: Li Yongzhi Head of the accountinginstitution: Li Yongzhi
4. Parent Company Income Statement
Unit: RMB
| Item | 2021 | 2020 |
| I. Operating revenue | 38,570,677,177.70 | 34,110,338,839.51 |
| Less: Operating costs | 33,462,769,638.76 | 28,351,975,958.13 |
| Taxes and surcharges | 154,866,730.44 | 170,319,519.27 |
| Selling expenses | 366,931,444.56 | 314,460,991.97 |
| Administrative expenses | 1,596,480,325.17 | 1,328,539,562.59 |
| R&D expenses | 2,398,742,531.34 | 2,064,307,059.29 |
| Financial expenses | 194,864,359.66 | 432,277,098.79 |
| Including: Interest expenses | 146,895,744.91 | 224,966,925.23 |
| Interest income | 46,415,186.23 | 27,722,299.33 |
| Add: Other income | 219,224,748.04 | 42,807,336.38 |
| Investment income ("-" for loss) | 197,716,898.27 | 694,476,722.54 |
| Including: Investment gains in associated enterprise and joint-venture enterprise | ||
| Profit or loss arising from derecognition of financial assets measured at amortised costs (“-” for loss) | -2,297,194.72 | |
| Net exposure hedging income ("-" for loss) | ||
| Gains from changes in fair value ("-" for loss) | -12,391,097.59 | 115,960,471.31 |
| Credit impairment losses ("-" for loss) | -9,464,407.85 | 22,732,822.75 |
| Asset impairment losses ("-" for loss) | -60,378,317.10 | -77,813,666.52 |
| Gains on disposal of assets ("-" for loss) | -19,259,431.72 | -46,327,143.99 |
| II. Operating Profit ("-" for loss) | 711,470,539.82 | 2,200,295,191.94 |
| Add: Non-operating revenue | 14,343,882.35 | 11,191,626.67 |
| Less: Non-operating expenses | 81,884,486.81 | 50,815,665.01 |
| III. Total profit (“-” for total losses) | 643,929,935.36 | 2,160,671,153.60 |
| Less: Income tax expenses | -114,650,228.04 | 233,595,325.88 |
| IV. Net profit ("-" for net loss) | 758,580,163.40 | 1,927,075,827.72 |
| (I) Net profit from continuing operations (“-” for net | 758,580,163.40 | 1,927,075,827.72 |
| Item | 2021 | 2020 |
| 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 arising from remeasurement of defined benefit plan | ||
| 2. Other comprehensive income that will not be transferred subsequently to profit or loss under the equity method | ||
| 3. Changes in fair value of investments in other equity instruments | ||
| 4. Changes in the fair value of the Company’s credit risk | ||
| 5. Others | ||
| (II) Other comprehensive income items which will be reclassified subsequently to profit or loss | ||
| 1. Other comprehensive income that will be transferred subsequently to profit or loss under the equity method | ||
| 2. Changes in fair value of debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Credit impairment provision of other debt investments | ||
| 5. Effective portion of cash flow hedging gains or losses | ||
| 6. Differences on translation of foreign currency financial statements | ||
| 7. Others | ||
| VI. Total comprehensive income | 758,580,163.40 | 1,927,075,827.72 |
| VII. Earnings per share: | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated statement of cash flows
Unit: RMB
| Item | 2021 | 2020 |
| I. Cash flows from operating activities: | ||
| Cash received from sale of goods or rendering of services | 79,015,187,941.07 | 57,009,742,269.73 |
| Net increase in customer deposits and deposits from banks and other financial institutions | ||
| Net decrease in deposits with the Central Bank | ||
| Net increase in borrowings 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 | 2,491,572,718.66 | 2,159,494,513.63 |
| Cash received relating to other operating activities | 4,016,679,085.42 | 1,762,794,649.37 |
| Sub-total of cash inflow from operating activities | 85,523,439,745.15 | 60,932,031,432.73 |
| Cash paid for goods and services | 63,038,774,946.46 | 42,635,569,184.82 |
| 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 | 7,719,283,934.60 | 6,749,284,393.90 |
| Payments of taxes and surcharges | 748,229,544.50 | 692,836,225.96 |
| Item | 2021 | 2020 |
| Cash paid relating to other operating activities | 5,418,675,791.71 | 3,172,085,514.37 |
| Sub-total of cash outflow from operating activities | 76,924,964,217.27 | 53,249,775,319.05 |
| Net cash flow from operating activities | 8,598,475,527.88 | 7,682,256,113.68 |
| II. Cash flows from investing activities | ||
| Cash received from disposal of investments | 3,101,972,150.22 | 205,395,809.87 |
| Cash received from returns on investments | 36,359,530.84 | 3,071,032.35 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 121,860,250.62 | 50,158,655.80 |
| Net cash received from disposal of subsidiaries and other business units | 6,872,916.88 | 200,825,819.91 |
| Cash received relating to other investing activities | 9,258,951.92 | 46,410,668.35 |
| Sub-total of cash inflow from investment activities | 3,276,323,800.48 | 505,861,986.28 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 6,961,607,745.79 | 5,599,269,477.49 |
| Cash paid to acquire investments | 3,083,092,515.56 | 207,730,344.46 |
| Net increase in pledged loans | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid relating to other investing activities | ||
| Sub-total of cash outflow from investment activities | 10,044,700,261.35 | 5,806,999,821.95 |
| Net cash flow from investing activities | -6,768,376,460.87 | -5,301,137,835.67 |
| III. Cash flows from financing activities | ||
| Cash received from capital contributions | 2,178,807,429.01 | 50,528,721.67 |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | 2,178,807,429.01 | 50,528,721.67 |
| Cash received from borrowings | 10,317,581,649.46 | 10,493,168,094.87 |
| Cash received from issuing bonds | 3,995,000,000.00 | |
| Cash received relating to other financing activities | 1,507,365,421.50 | 1,241,778,394.18 |
| Sub-total of cash inflow from financing activities | 14,003,754,499.97 | 15,780,475,210.72 |
| Cash repayments of borrowings | 9,404,218,099.41 | 11,495,387,428.29 |
| Cash payments for distribution of dividends, profits, or cash payments for interest expenses | 674,578,631.48 | 571,889,154.03 |
| Including: Cash payments for dividends and profits to minority shareholders of the subsidiaries | 5,932,783.34 | |
| Cash payments relating to other financing | 3,537,780,408.80 | 2,070,736,840.22 |
| Item | 2021 | 2020 |
| activities | ||
| Sub-total of cash outflow from financing activities | 13,616,577,139.69 | 14,138,013,422.54 |
| Net cash flow from financing activities | 387,177,360.28 | 1,642,461,788.18 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 7,432,490.21 | -204,991,873.97 |
| V. Net Increase in cash and cash equivalents | 2,224,708,917.50 | 3,818,588,192.22 |
| Add: Opening balance of cash and cash equivalents | 6,913,191,984.54 | 3,094,603,792.32 |
| VI. Closing balance of cash and cash equivalents | 9,137,900,902.04 | 6,913,191,984.54 |
6. Parent company cash flow statement
Unit: RMB
| Item | 2021 | 2020 |
| I. Cash flows from operating activities: | ||
| Cash received from sale of goods or rendering of services | 41,440,959,868.63 | 34,637,760,388.75 |
| Refund of taxes and surcharges | 1,790,617,461.55 | 1,794,636,342.45 |
| Cash received relating to other operating activities | 413,354,244.31 | 991,600,112.67 |
| Sub-total of cash inflow from operating activities | 43,644,931,574.49 | 37,423,996,843.87 |
| Cash paid for goods and services | 33,515,828,921.22 | 26,854,502,114.47 |
| Cash paid to and on behalf of employees | 4,068,784,659.43 | 3,352,126,718.10 |
| Payments of taxes and surcharges | 194,091,540.85 | 264,439,744.87 |
| Cash paid relating to other operating activities | 1,609,432,568.10 | 2,384,116,356.74 |
| Sub-total of cash outflow from operating activities | 39,388,137,689.60 | 32,855,184,934.18 |
| Net cash flow from operating activities | 4,256,793,884.89 | 4,568,811,909.69 |
| II. Cash flows from investing activities | ||
| Cash received from disposal of investments | 236,295,118.62 | 246,753,013.74 |
| Cash received from returns on investments | 544,414.32 | 619,011,093.47 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 323,227,247.63 | 374,260,043.85 |
| Net cash received from disposal of |
| Item | 2021 | 2020 |
| subsidiaries and other business units | ||
| Cash received relating to other investing activities | 8,951,126,589.67 | 7,265,257,255.90 |
| Sub-total of cash inflow from investment activities | 9,511,193,370.24 | 8,505,281,406.96 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 4,448,253,564.40 | 2,931,933,621.75 |
| Cash paid to acquire investments | 418,652,038.10 | 2,187,937,880.00 |
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid relating to other investing activities | 8,806,986,219.18 | 8,331,815,435.05 |
| Sub-total of cash outflow from investment activities | 13,673,891,821.68 | 13,451,686,936.80 |
| Net cash flow from investing activities | -4,162,698,451.44 | -4,946,405,529.84 |
| III. Cash flows from financing activities | ||
| Cash received from capital contributions | ||
| Cash received from borrowings | 9,085,440,334.00 | 7,418,870,421.56 |
| Cash received from issuing bonds | 3,995,000,000.00 | |
| Cash received relating to other financing activities | 6,191,082,902.13 | 3,252,923,797.17 |
| Sub-total of cash inflow from financing activities | 15,276,523,236.13 | 14,666,794,218.73 |
| Cash repayments of borrowings | 7,202,245,451.93 | 10,012,913,837.30 |
| Cash payments for distribution of dividends, profits, or cash payments for interest expenses | 618,985,623.65 | 470,044,905.35 |
| Cash payments relating to other financing activities | 6,373,227,380.30 | 2,806,526,945.85 |
| Sub-total of cash outflow from financing activities | 14,194,458,455.88 | 13,289,485,688.50 |
| Net cash flow from financing activities | 1,082,064,780.25 | 1,377,308,530.23 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | -5,853,969.14 | -21,879,842.75 |
| V. Net Increase in cash and cash equivalents | 1,170,306,244.56 | 977,835,067.33 |
| Add: Opening balance of cash and cash equivalents | 2,309,983,958.74 | 1,332,148,891.41 |
| VI. Closing balance of cash and cash equivalents | 3,480,290,203.30 | 2,309,983,958.74 |
7. Consolidated statement of changes in owners' equity
Amount of current period
Unit: RMB
| Item | 2021 | ||||||||||||||
| Owners' equity attributable to the Company | Minority equity | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Retained earnings | Other | Sub-total | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| I. Balance at December 31, 2020 | 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 under common control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at January 1, 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 | ||||
| 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. Ordinary 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 owners' 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 reserves | 75,858,016.34 | -75,858,016.34 | |||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Dividends to owners or shareholde | -499,658,337.75 | -499,658,337.75 | -5,932,783.34 | -505,591,121.09 |
| rs | |||||||||||||||
| 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 reserves converted into capital (or share capital) | |||||||||||||||
| 2. Surplus reserves converted into capital (or share capital) | |||||||||||||||
| 3. Surplus reserves for making up losses | |||||||||||||||
| 4. Carry-over retained earnings |
| from defined benefit plan changes | |||||||||||||||
| 5. Carry-over retained earnings 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) Special reserves | |||||||||||||||
| 1. Withdrawal in current period | |||||||||||||||
| 2. Use in current period | |||||||||||||||
| (VI) Other | |||||||||||||||
| IV. Balance at December | 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 |
Amount in previous period
Unit: RMB
31, 2021Item
| Item | 2020 | ||||||||||||||
| Owners' equity attributable to the Company | Minority equity | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Retained earnings | Other | Sub-total | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| I. Balance at December 31, 2020 | 3,245,103,948.00 | 2,996,990,669.12 | 395,758,317.37 | -84,500,740.50 | 1,177,415,286.08 | 4,896,400.00 | 9,163,016,394.27 | 16,107,163,639.60 | 22,041,359.27 | 16,129,204,998.87 | |||||
| Add: Changes in accounting policy | 196,303.24 | 196,303.24 | 196,303.24 | ||||||||||||
| Corrections of errors in previous period | |||||||||||||||
| Business combination under common | |||||||||||||||
| control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at January 1, 2021 | 3,245,103,948.00 | 2,996,990,669.12 | 395,758,317.37 | -84,500,740.50 | 1,177,415,286.08 | 4,896,400.00 | 9,163,212,697.51 | 16,107,359,942.84 | 22,041,359.27 | 16,129,401,302.11 | |||||
| III. Changes in Current Period (“-” for decrease) | 30,334,479.00 | 317,690,852.25 | 814,668,122.16 | 120,249,327.58 | -27,509,272.02 | 192,707,582.77 | 1,184,800.00 | 2,337,065,093.84 | 3,545,892,330.42 | 58,377,155.56 | 3,604,269,485.98 | ||||
| (I) Total comprehensive income | -27,509,272.02 | 2,848,007,269.61 | 2,820,497,997.59 | 4,202,797.16 | 2,824,700,794.75 | ||||||||||
| (II) Capital invested and reduced by owners | 30,334,479.00 | 317,690,852.25 | 1,175,630,540.76 | 477,129,807.72 | 1,046,526,064.29 | 50,092,419.94 | 1,096,618,484.23 | ||||||||
| 1. Ordinary shares invested by owners | 30,334,479.00 | -68,078,830.06 | 703,406,567.98 | 477,129,807.72 | 188,532,409.20 | 50,092,419.94 | 238,624,829.14 | ||||||||
| 2. Capital contributed from other | 385,769,682.31 | 385,769,682.31 | 385,769,682.31 |
| equity instrument holders | |||||||||||||||
| 3. Amounts of share-based payments recognized in owners' equity | 472,223,972.78 | 472,223,972.78 | 472,223,972.78 | ||||||||||||
| 4. Other | |||||||||||||||
| (III) Profit distribution | 192,707,582.77 | 1,184,800.00 | -510,942,175.77 | -317,049,793.00 | -317,049,793.00 | ||||||||||
| 1. Appropriation of surplus reserves | 192,707,582.77 | -192,707,582.77 | |||||||||||||
| 2. Appropriation of general risk reserve | 1,184,800.00 | -1,184,800.00 | |||||||||||||
| 3. Dividends to owners or shareholder | -317,049,793.00 | -317,049,793.00 | -317,049,793.00 |
| s | |||||||||||||||
| 4. Other | |||||||||||||||
| (IV) Internal carry-over of shareholders' equity | -360,962,418.60 | -356,880,480.14 | -4,081,938.46 | 4,081,938.46 | |||||||||||
| 1. Capital reserves converted into capital (or share capital) | |||||||||||||||
| 2. Surplus reserves converted into capital (or share capital) | |||||||||||||||
| 3. Surplus reserves for making up losses | |||||||||||||||
| 4. Carry-over retained earnings |
| from defined benefit plan changes | |||||||||||||||
| 5. Carry-over retained earnings from other comprehensive income | |||||||||||||||
| 6. Other | -360,962,418.60 | -356,880,480.14 | -4,081,938.46 | 4,081,938.46 | |||||||||||
| (V) Special reserves | |||||||||||||||
| 1. Withdrawal in current period | |||||||||||||||
| 2. Use in current period | |||||||||||||||
| (VI) Other | |||||||||||||||
| IV. 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 |
8. Parent company statement of changes in owners' Equity
Amount of current period
Unit: RMB
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| I. Balance at December 31, 2020 | 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 | ||||||||||||
| Other | ||||||||||||
| II. Balance at January 1, 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 | |||||
| III. Changes in Current Period | 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 | |||||
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| (“-” for decrease) | ||||||||||||
| (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. Ordinary 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 owners' equity | 795,977,775.38 | 795,977,775.38 | ||||||||||
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 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 reserves | 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 reserves converted into capital (or share capital) | ||||||||||||
| 2. Surplus reserves converted into | ||||||||||||
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| capital (or share capital) | ||||||||||||
| 3. Surplus reserves for making up losses | ||||||||||||
| 4. Carry-over retained earnings from defined benefit plan changes | ||||||||||||
| 5. Carry-over retained earnings 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) Special reserves | ||||||||||||
| 1. Withdrawal in current | ||||||||||||
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| period | ||||||||||||
| 2. Use in current period | ||||||||||||
| (VI) Other | ||||||||||||
| IV. 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 | ||||||
Amount in previous period
Unit: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| I. Balance at December 31, 2020 | 3,245,103,948.00 | 3,030,803,915.63 | 395,758,317.37 | 1,177,412,503.68 | 8,831,910,760.16 | 15,889,472,810.10 | ||||||
| Add: Changes in accounting policy | ||||||||||||
| Corrections of | ||||||||||||
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| errors in previous period | ||||||||||||
| Other | ||||||||||||
| II. Balance at January 1, 2021 | 3,245,103,948.00 | 3,030,803,915.63 | 395,758,317.37 | 1,177,412,503.68 | 8,831,910,760.16 | 15,889,472,810.10 | ||||||
| III. Changes in Current Period (“-” for decrease) | 30,334,479.00 | 317,690,852.25 | 784,579,700.83 | 120,249,327.58 | 192,707,582.77 | 1,417,318,451.95 | 2,622,381,739.22 | |||||
| (I) Total comprehensive income | 1,927,075,827.72 | 1,927,075,827.72 | ||||||||||
| (II) Capital invested and reduced by owners | 30,334,479.00 | 317,690,852.25 | 1,141,460,180.97 | 477,129,807.72 | 1,012,355,704.50 | |||||||
| 1. Ordinary shares invested by owners | 30,334,479.00 | -68,078,830.06 | 687,349,380.98 | 477,129,807.72 | 172,475,222.20 | |||||||
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 2. Capital contributed from other equity instrument holders | 385,769,682.31 | 385,769,682.31 | ||||||||||
| 3. Amounts of share-based payments recognized in owners' equity | 454,110,799.99 | 454,110,799.99 | ||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | 192,707,582.77 | -509,757,375.77 | -317,049,793.00 | |||||||||
| 1. Appropriation of surplus reserves | 192,707,582.77 | -192,707,582.77 | ||||||||||
| 2. Dividends to owners or shareholders | -317,049,793.00 | -317,049,793.00 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Internal | -356,880,480.14 | -356,880,480.1 | ||||||||||
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| carry-over of shareholders' equity | 4 | |||||||||||
| 1. Capital reserves converted into capital (or share capital) | ||||||||||||
| 2. Surplus reserves converted into capital (or share capital) | ||||||||||||
| 3. Surplus reserves for making up losses | ||||||||||||
| 4. Carry-over retained earnings from defined benefit plan changes | ||||||||||||
| 5. Carry-over retained | ||||||||||||
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Other | Total owners' equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| earnings from other comprehensive income | ||||||||||||
| 6. Other | -356,880,480.14 | -356,880,480.14 | ||||||||||
| (V) Special reserves | ||||||||||||
| 1. Withdrawal in current period | ||||||||||||
| 2. Use in current period | ||||||||||||
| (VI) Other | ||||||||||||
| IV. 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 | |||||
III. Company ProfileGoertek Inc. (hereinafter referred to as “the Company” or “Goertek”) was established on July 27, 2007, through an overallchange of WeiFang IEA Electro-Acoustic Co., Ltd. (hereinafter referred to as "IEA”).
IEA, the predecessor of the Company that was established on June 25, 2001 was a joint venture established by law. In May,2007, the Company was changed to a domestic enterprise as approved by the document of Wei Wai Jing Mao Wai Zi (2007) No. 172.It was at the 2nd extraordinary general meeting of shareholders of IEA in 2017, held on June 26, 2007, that WeifangYitonggong Electronics Co., Ltd（the name of the Company was changed to “Goertek Group Co., Ltd. ”in October 2016, hereinafterreferred to as “Goertek group”）transferred its 29.40 million shares in IEA to 17 natural persons including Jiang Bin and Jiang Long,Langfang Development Zone Yongzhen Electronic Technology Co., Ltd.（hereinafter referred to as “Yongzheng Electronic”) andBeijing Yirun Venture 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 Longjointly entered into an initiator agreement, changing IEA as a whole to Goertek Acoustic Inc. in the form of initiation, in which theaudited net assets of IEA as of June 30, 2007 were taken as the contribution upon stock discount at the proportion of approximately 1：
0.8.
As approved by the document of China Securities Regulatory Commission［2008］NO. 613，the principal undertaker CITICSecurities Co., Ltd. issued 30 million ordinary shares (Class A shares) ，through offline inquiry and placement in combination withonline subscription, pricing, and issue, at the price of RMB 18.78 per share. The raised funds mentioned above were verified byBandung Certified Public Accountants Co., Ltd. which issued the capital verification report (Wan Kuai Ye Zi [2008] No. 19). Thestocks of the Company were listed and traded at Shenzhen Stock Exchange on May 22, 2008.The Company changed its registeredcapital to RMB 120 million and completed the industrial and commercial change registration on July 22, 2008.
As reviewed and approved at annual general meeting of shareholders of the Company of 2008, held on April 17, 2009, thetotal share capital of the Company, namely 120 million shares as of December 31, 2008, was taken as the basis to convert capitalreserve to share capital. 10 shares for every 10 shares were converted to all shareholders, with 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 beenverified by 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 annual general meeting of shareholders of the Company of 2009, held on February 26, 2010, thetotal share capital of the Company, namely 240 million shares as of December 31, 2009，was taken as the basis to convert capitalreserve to share capital 5 shares for every 10 shares were converted to all shareholders, and total of 120 million shares were
converted. Thus, the total share capital of the Company was changed to 360 million shares. The above change in the registeredcapital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification report(Hao Hua Yan Zi [2020] NO. 20). The industrial and commercial change registration was completed on March 30, 2010.
As approved through the Reply on Approving Non-public Issuing of Stocks by Goertek Acoustic Inc. of China SecuritiesRegulatory Commission (Zheng Jian Xu Ke [2010] NO. 1255), on September 29, 2010, the Company had the principal underwriterCITIC Securities Co., Ltd. to issue 15.791275 million (Class A shares) to 5 specific objects through private issuing at the price ofRMB 33.01 per share. The net amount of actual raised funds was RMB 506.21998775 million. The raised funds mentioned abovehave been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification report (HaoHua Yan Zi [2010] No. 90. The Company changed its capital to RMB 375.791275 million, and completed the industrial andcommercial change registration on December 13, 2010.
As reviewed and approved at the company's annual general meeting of shareholders of 2010 on May 25, 2011, the total shareof the Company, namely 375.791275 million shares as of December 31, 2010, was taken as the basis to convert capital reserve toshare capital, and 10 shares for every 10 shares were converted to all the shareholders，with total of 375.791275 million sharesconverted. Upon such conversion, the total share capital of the Company was changed to 751.58255 million shares. The abovechange in registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issued the capitalverification report (Guo Hao Yan Zi [2011] No.49), and the industrial and commercial change registration was completed on June 24,2011.
As approved through the Reply on Approving Non-public Issuing of Stocks by Goertek Acoustic Inc. of China SecuritiesRegulatory Commission (Zheng Jian Xu Ke［2012] No. 108), GF Securities Co., Ltd. issued 96.434183 million shares (Class A shares)in RMB to 10 specific objects through private issuing at the price of RMB 24.69 per share，and the net amount of the actually raisedfunds was RMB 2,320.77885875 million. The raised funds mentioned above have been verified by Crowe Horwath Certified PublicAccounts Co., 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 848.016733 million, and completed the industrial and commercial changeregistration on May 7, 2012.
As reviewed and approved at company's general meeting of shareholders of 2012 held on May 9, 2013, the total share capitalof the Company, namely 848,016,733 shares as of December 31, 2012, was taken as the basis to distribute 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 Companyalso converted capital reserve to share capital, and 8 shares for every 10 shares were converted to all shareholders, with total678,413,386 shares converted. Upon such conversion, the total share capital of the Company was changed to 1,526,430,119 shares.The above change in the registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. (special
general partnership) which has issued the capital verification report (Guo Hao Yan Zi [2013] No. 408A0001). The industrial andcommercial change registration was 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 theCompany requested conversion of shares, the registered capital of the Company was changed to RMB1,526,581,348. The scope ofbusiness was changed to development, manufacturing and sales of: Acoustic, optical and wireless communication technologies andrelated products, robots and automation equipment, intelligent electromechanical and information products, precision moulds forelectronic products, precision hardware, semiconductor products and MEMS products, consumer electronics, LED package andrelevant application products; Development and sales of the software related to the above products; Services related to the abovetechnologies and products; Import and export of goods and technologies (excluding radio transmission and satellite receivingequipment and the items prohibited by the national laws and regulations). (For the items requiring approval by law, businessactivities may only be conducted in respect thereof upon approval of relevant department)
As reviewed and approved at company’s annual general meeting of shareholders of 2016, held on April 14, 2017, the totalshare capital of the Company, namely 1,538,642,707 shares as of April 27,2017, which was the profit distribution equity registrationdate of the Company, was taken as the basis for the distribution of cash dividends RMB 1.5 (tax inclusive) for every 10 shares to allthe shareholders, with total RMB 230,796,406.05 distributed. 10 shares per every 10 shares were converted to all shareholders aswell.
According to the Proposal on Redemption of “Goertek Convertible Bonds” reviewed and approved at the 8th meeting of the4th board of directors held by the Company on May 23, 2017, it was resolved to exercise the conditional redemption right of“Goertek Convertible Bonds “which were not converted to shares 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. Through the above change,the Company changed its registered capital to RMB 3,245,103,948, and completed the industrial and commercial change registrationon November 3, 2017.
According to the Proposal on Early Redemption of “Goertek Convertible Bonds NO.2” reviewed and approved at the13thmeeting of the 5th board of directors and the 11th meeting of the 5th board of supervisors held by the Company on January 15,2021,it was resolved to exercise the conditional redemption right of “Goertek Convertible Bonds NO.2 2” to redeem all the “GoertekConvertible Bonds NO.2”, based on the price of the par value of the bonds plus the accrued interest for the current period. As ofMarch 3, 2021, “Goertek Convertible Bonds NO.2” was no longer traded and converted. Through the above change, the Companychanged its registered capital to RMB 3,416,321,036, and completed the industrial and commercial registration on June 22, 2021.
The registered address of the headquarters of the Company: 268 Dongfang Road, Weifang Hi-Tech Industrial DevelopmentZone.
The Company and its subsidiaries (collectively, “the Group”) are mainly in the business of operating electron components. Themain business 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 March 29, 2022.As of December 31, 2021, the Group has included a total of 51 subsidiaries into its scope of consolidation, and for details,please refer to Note IX “Equity in Other Entities”. In current period, one more subsidiary has been included into its scope ofconsolidation in comparison to previous year, and 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 inaccordance with The Accounting Standards for Business Enterprises - Basic Standards (issued by Order No. 33 of the Ministry ofFinance and amended by Order No. 76 of the Ministry of Finance) issued by the Ministry of Finance, 42 specific accountingstandards, application guidelines of accounting standards for business enterprises, explanations on the accounting standards forbusiness enterprises and other related regulations (hereinafter collectively referred to as "Accounting Standards for BusinessEnterprises") issued and amended on or after 15 February, 2006, and Preparation Rules for Information Disclosure by CompaniesOffering 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 Groupwas on the accrual basis. The value of non-current assets held for sale shall be lesser of non-current assets held for sale less the salescost at 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,without matters or circumstances causing significant doubt over the ability to continue as a going concern. Therefore, these financialstatements were 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,R&D expenditure 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 expenditure” of Note V. For explanation on themajor accounting judgments and estimates made by the management, please refer to “36. Other important accounting policies andaccounting policies and estimates” of Note V.
1. Statement of compliance with Accounting Standards for Business Enterprises
The 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 31,2021, as well as the business performance, and cash flows and other relevant information for the year 2021. 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 PublicNo. 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 accountingperiod means a reporting period that is shorter than a complete accounting year. The Company adopts the calendar year as itsaccounting 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 forassets and liabilities.
4. Functional currency
RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries are operated, andthe Company 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 FUNDLP and Goertek Microelectronics Holding Co., Ltd. take USD as their functional currency, and all other overseas subsidiaries of theCompany take the lawful currency of the country or region where their registered addresses are located as their functional currency.The currency adopted 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 onereporting entity. Business consolidation is divided into business consolidation of enterprises under common control and businessconsolidation of 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 arecontrolled by the same party or parties before and after the consolidation, and such control is not temporary. In the businessconsolidation of enterprises under common control, the party which acquires the control of other enterprises in the businessconsolidation is the consolidating party and the other enterprises in the business consolidation are the consolidated parties. Businessconsolidation date is the 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 onbusiness consolidation date. The difference between the book value of the net assets acquired by the consolidating party and the bookvalue of the consideration paid for the consolidation (or total par value of the shares issued) is adjusted to capital reserves (sharepremiums). Adjustments shall be made to retained earnings in the event that the capital reserves (share premiums) are not sufficientfor write-down.Any direct costs incurred by the consolidating party as a result of the business consolidation are recognized in the profit or lossfor current 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 arenot controlled 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 assetspaid, liabilities incurred or assumed and equity securities issued by the acquiring party in exchange for the control of the acquired
parties on the acquisition date, the audit, legal service, assessment, consulting and other intermediate fees incurred for businessconsolidation of enterprises, and other management fees, which are recognized in the profit or loss for the current period whenincurred. The costs of the acquiring party for issuing equity or debt securities as part of the business consideration for the businessconsolidation are included in the initially recognized amount of these equity or debt securities. The contingent business considerationshall be included in the consolidation cost at its fair value on the acquisition date, and the goodwill shall be adjusted and combinedaccordingly if the contingent consideration needs to be adjusted when new or further evidences arise in connection with thecircumstances existing on the acquisition date within 12 months after the acquisition date. The acquisition cost incurred by theacquiring party and the identifiable net assets acquired in the business consolidation shall be measured at the fair value on theacquisition date. If the consolidation cost is higher than the fair value of the identifiable net assets acquired from the acquired partieson the acquisition date, the difference thereof shall be recognized as the goodwill. If the consolidation cost is lower than the fair valueof the identifiable net assets acquired from the acquired parties in the business consolidation, the fair value of the identifiable assets,liabilities and contingent liabilities as well as the measurement of the consolidation cost shall be first reviewed. If upon review, theconsolidation cost is still lower than the fair value of the identifiable net assets acquired from the acquired parties in the businessconsolidation, such difference shall be recognized in the profit or loss for current period.If the deductible temporary difference acquired by the acquiring party from the acquired parties is not recognized for failure tomeet the conditions for recognition of the deferred tax assets on the acquisition date, and if new or further information is obtainedwithin 12 months after the acquisition date, showing that relevant circumstances on the acquisition date have already existed and it isexpected that the economic benefits brought about by the deductible temporary difference of the acquiring party on the acquisitiondate may be realized, relevant deferred tax assets shall be recognized and the goodwill shall be reduced. If the goodwill is insufficientfor write-down, the difference will be recognized in the profit or loss for current period. In addition to the above condition, thedeferred tax assets recognized in connection with the consolidation of enterprises shall be recognized in the profit or loss for currentperiod.
If the business consolidation of enterprises not under common control is realized step by step through multiple transactions,whether such transactions fall within a “package deal” shall be judged according to the standards for judgment of “package deal” inthe Notice by the Ministry of Finance of Issuing the Interpretation No. 5 of the Accounting Standards for Business Enterprises (CaiKuai [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 suchinvestment. If other comprehensive income is involved in the equity of the acquired parties held before the acquisition date, theaccounting treatment of other comprehensive incomes while disposing such investment, shall be conducted on the same basis as thedirect disposal of related assets 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 atthe fair value of such equity on the acquisition date, and the difference between the fair value and its book value shall be recognizedin investment income in current period. If other comprehensive income is involved in the equity of the acquired parties held beforethe acquisition date, the accounting treatment of other comprehensive incomes related, shall be conducted on the same basis as thedirect disposal 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 meansthat the Group enjoys variable returns through its power in the invested parties and its participation in relevant activities of theinvested parties, and is able to influence the amount of such returns by applying its power in the invested parties. The Company andall its subsidiaries are 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 relevantelements of the 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 andactual control over the production and operation decisions of the subsidiaries. It shall cease to do so as of the date when the actualcontrol is lost. For the disposal subsidiaries, the business performance and cash flows prior to the disposal date have beenappropriately included in the consolidated income statement and consolidated statement of cash flows. The opening balance of theconsolidated balance sheets shall not be adjusted for the subsidiaries disposed in current period. For the subsidiaries added throughthe consolidation of enterprises not under common control, the business performance and cash flows have been appropriatelyincluded in the consolidated income statement and consolidated cash flow statement after acquisition date. The opening balance andcomparative figures of consolidated financial statements shall not be adjusted. For the subsidiaries added during consolidation ofenterprises under common control and the subsidiaries under absorption consolidation, the business performance and cash flows,
from the beginning of current period to consolidation date, have been appropriately included in consolidated income statement andconsolidated cash flow statement. The comparison 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 aredifferent from those of the Company, the financial statements of the subsidiaries shall be adjusted based on the accounting policiesand accounting periods of the Company. The individual financial statements of the subsidiaries acquired from consolidation ofenterprises not under common 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 beseparately listed under the shareholders' equity and net profit in the consolidated financial statements as minority equity and minorityinterests. These current profits or losses of the subsidiaries which are attributable to the minority equity shall be presented as“minority interests” under the net profit of the consolidated financial statements. If the losses of the subsidiaries attributed to theminority shareholders are more than the shareholders’ equity owned by the minority shareholders in such subsidiaries at thebeginning of the period, the minority interests shall be offset.
If the control of the previous subsidiaries is lost due to disposal of some equity investments or for any other reasons, theremaining equity shall be re-measured at fair value on the date when control is lost. The difference between the sum of considerationreceived from disposal of equity and the fair value of the remaining equity, and the Company’s share of the previous subsidiaries’ netassets calculated at the previous shareholding proportion from the acquisition date, shall be recognized in investment income in theperiod when control is lost. Other comprehensive income related to the equity investment of the previous subsidiaries shall beconducted on the same basis as the direct disposal of related assets or liabilities by the acquired parties when the control is lost(Except for the change caused by the re-measurement of net liabilities or net assets of the defined benefit plan in the previoussubsidiary, the remaining part shall be converted into investment income for current period). Thereafter, such remaining equity shallbe subject to subsequent measurement according to the Accounting Standards for Business Enterprises No. 2 - Long-term EquityInvestments or Accounting Standards for Business Enterprises No. 22 - Confirmation and Measurement of Financial Instruments andother relevant regulations. For details, please refer to “18. Long-term equity investments” of Note V or “9. Financial instruments” ofNote V.
If the Group disposes of the equity investment of the subsidiaries step by step through multiple transactions until it loses thecontrol thereof, it is necessary to determine whether such transactions fall within "a package deal". The multiple transactions shall betaken as "package deal" for accounting treatment, if the terms, conditions and economic impacts of the transactions undertaken todispose of the equity investment of the subsidiaries meet one or more of the following conditions: ① these transactions are entered
into at the same time or with their impacts on each other considered; ② a complete business result may only be achieved throughthese transactions when taken as a whole; ③ one transaction depends on at least one of the other transactions; ④ one transaction isnot economical on its own, but it is economical when considered together with other transactions. If they do not fall within "packagedeal", each of them shall be subject to accounting treatment according to the principles applicable to “Partial disposal of thelong-term equity investments in the subsidiaries without losing control” (for details, please refer to (2)④ of 18 of Note V) and “Lossof control of the previous subsidiaries due to disposal of some equity investments or for any other reasons”, as appropriate. If thetransactions taken to dispose of the equity investment in the subsidiaries until lost of control are recognized as “package deal”, thesetransactions shall be subject to accounting treatment as one transaction in which the subsidiaries are disposed and the control is lost.However, the difference between the price for each disposal before the control is lost and share of such subsidiaries’ net assets as aresult of disposal of investment, shall be recognized in other comprehensive income in the consolidated financial statements, and beincluded in profit or loss for the period when 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(generally due within three months from the date of purchase) and highly liquid investments which are readily convertible intoknown amounts of 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 spotexchange rate prevailing at the date of the transaction (it means, in most cases, the central parity of the foreign exchange rateannounced by the People's Bank of China on that day; the same hereinafter). However, a foreign currency exchange transaction orother foreign currency exchange involved transaction of the Group is translated into the functional currency using the actualexchange rate.
(2) Translation method of monetary items denominated in foreign currencies and non-monetary items denominated in foreigncurrencies
The foreign currency monetary items on the balance sheet date is translated at the spot exchange rate on the balance sheet date,and the exchange differences arising therefrom are included in the current profits and losses, except that ① the exchange differencearising from the special foreign currency borrowing related to the purchase and construction of assets eligible for capitalization istreated in accordance with the principle of capitalization of borrowing costs; and ② the exchange difference from changes in
carrying amounts, other than amortized cost, of available-for-sale monetary items in foreign currencies is recognized in othercomprehensive income.
Non-monetary items denominated in foreign currency that are measured at historical cost shall still be valued in the functionalcurrency and converted at the spot exchange rate as of the transaction date. Non-monetary items denominated in foreign currency thatare measured at fair value are converted by using the exchange rate at the date when fair value is determined and the differencebetween the converted functional currency amount and the prior amount in functional currency is recorded as profit or loss arisingfrom a change in 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 inaccordance with the following methods: The assets and liabilities items in the balance sheet are translated at the spot exchange rateon the balance sheet date; except for "retained earnings", other items of shareholder's equity are converted at the spot exchange rate atthe time of occurrence. Revenues and expenses in the profit statement are translated using the average exchange rates prevailing inthe period of the transactions. Retained earnings in the beginning of the year are the retained earnings at the end of the prior year astranslated; retained earnings at the end of the period are calculated and presented according to the translated profit distributions;exchange differences from translation between translated assets and translated liabilities and equities are recognized in othercomprehensive income as exchange differences from translation. When the Group disposes of, and loses the control over, an overseasoperation, exchange differences from translation which are presented in “equity” of the balance sheet and related to the overseasoperation 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 exchangerates prevailing in the period of the cash flows. Any impact of exchange rate changes on cash is presented as a separate adjustingitem in the cash 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 theprior year’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 adisposal of partial equity investments or any other reason, exchange differences which are presented in “shareholder’s equity/owner’sequity” of the balance sheet, related to the overseas operation and attributable to the parent company are all transferred to the profitor loss of the period of disposal.
If the proportion of equities in an overseas operation declines (but the control over that overseas operation is not lost) for adisposal of partial equity investments or any other reason, exchange differences which are related to that partial disposal areattributed to minority equity and not transferred to the profit or loss of the period of disposal. When the disposal of overseas
operation involves a part of the equities in an associate or joint venture, exchange differences from translation which are related tothe overseas operation are, based on 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 comprehensiveincome as “exchange differences from translation”, and when the overseas operation is disposed, are transferred to the profit or lossof the period 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,financial assets are classified by the Group into financial assets at amortized cost, financial assets at fair value through othercomprehensive income, 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 valuethrough profit and loss, the related transaction costs shall be included directly into current profits and losses. For the financial assetsor financial liabilities of other categories, the related transaction costs shall be included in the initially recognized amount. For theaccounts receivable or notes receivable arising from the sale of products or the provision of labor services, which do not include orconsider major financing components, the amount of consideration that the Group is expected to be entitled to is taken as the initiallyrecognized amount.
① Financial assets at amortized cost
The Group’s business model for managing financial assets is aimed to collect contractual cash flow, and the contractual cashflow characteristics of such financial assets are consistent with the basic lending arrangement, i.e., the cash flow generated on aspecific date is only the payment of principal and interest based on the amount of outstanding principal. For such financial assets, theGroup shall perform subsequent measurements at the amortized cost by effective interest method. The gains or losses arising fromamortization or impairment 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 sellit, and the characteristics of contractual cash flow of this type of financial assets shall be consistent with the basic lendingarrangement. The Group 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 effectiveinterest method shall be included in current profits and losses.Apart from that, the Group shall designate some investments in non-trading equity instruments as financial assets measured atfair value and the changes thereof shall be included in other comprehensive income. The Group will include the relevant dividendincome of this type of financial assets into current profits and losses, and the changes in fair value into other comprehensive income.Upon the termination of recognition of financial assets, the accumulated gains or losses previously included in other comprehensiveincome shall be transferred out of other comprehensive income and transferred to the retained earnings, other than being included incurrent profits 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 valuethrough other comprehensive income as mentioned above, are classified by the Group into those measured at fair value through profitand loss. In addition, at initial recognition, part of the financial assets can be recognized by the Group as financial assets measured atfair value through profit and loss, to eliminate or significantly reduce accounting mismatch. The financial assets are subsequentlymeasured by the 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 otherfinancial liabilities. For the financial liabilities at fair value through profit and loss, the related transaction costs shall be includeddirectly in current profits and losses. For other financial liabilities, the related transaction costs shall be included in the initiallyrecognized amount.
① Financial liabilities at fair value through profit and loss
The financial liabilities at fair value through profit and loss shall include held-for-trading financial liabilities (includingderivatives falling into the category of financial liabilities) and financial liabilities designated as those measured at fair value throughprofit or loss at initial recognition.
Held-for-trading financial liabilities (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 profitor loss due to change in the Group’s own credit risks shall be included in other comprehensive income. Upon the termination ofrecognition of such liability, the accumulative change in its fair value caused by the change of its own credit risk included in othercomprehensive income is transferred to retained earnings. The changes in its fair value shall be recorded in current gains and losses.If the treatment of the impact on the credit risk change of the financial liabilities in the above manner will cause or expand the
accounting mismatch in the profit and loss, the Group will recognize all the gains or losses (including the changes in the Group’sown credit risks) of the financial 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 forderecognition or continue to relate to the transferred financial assets and financial guarantee contracts shall be classified as financialliabilities measured at amortized cost, which shall be subsequently measured at amortized cost, and the gains or losses arising fromderecognition or 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;
② The financial asset has been transferred and almost all risks and rewards in the ownership of the financial asset have beentransferred to the transferee; or ③ The financial asset has been transferred and the enterprise has neither transferred nor retainedalmost all risks and rewards 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 assetand if the enterprise does not waive its control over the financial asset, it shall, according to the extent of its continuous involvementin the transferred financial asset, recognize the relevant financial asset and recognize the relevant liabilities accordingly. The extentof involvement 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 ofthe transferred financial asset and the sum of the transfer consideration received and the change in fair value originally recognized inother comprehensive 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 financialassets is apportioned 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 berecognized in 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 therisks and rewards related to the ownership of the financial asset have been transferred. If all the risks and rewards related to theownership of the financial asset have been transferred to the transferee, the Group shall de-recognize the financial asset; If all therisks and rewards related to the ownership of the financial asset have been retained, the Group shall not de-recognize the financialasset. If none of the risks and rewards related to the ownership of the financial asset has been transferred or retained, the Group shall
continue to determine whether it retains the control over the asset, and the accounting standard stated in the aforesaid paragraphsshall 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 thederecognized part and the consideration paid (including the transferred non-cash assets or the liabilities assumed) is included incurrent profits and losses by 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 thetime being, and the Group plans to settle on a netting basis or capitalize financial assets and serve financial liabilities, any net amountfrom netting 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 inthe orderly transactions on the measurement date. The fair value of a financial instrument in an active market is determined by theGroup at the price quoted in the active market. The quotation in an active market refers to the price that is easily acquired fromexchanges, brokers, industry associations, pricing service agencies, and the like on a regular basis and represents the actual markettransactions in fair trade. If there is no financial instrument in an active market, its fair value shall be determined by the Group viavaluation techniques. Valuation techniques include looking into the prices used in recent market transactions by parties who refer tofamiliar situations and trade voluntarily and the current fair value of other financial instruments which are essentially the same, aswell as using the discounted cash flow method, the option pricing model and the like. During valuation, the Group shall adopt thevaluation techniques applicable under the current circumstances and supported by sufficient available data and other information,select the input values consistent with the characteristics of assets or liabilities considered by market participants in the transactionsof related assets or liabilities, and give priority to the relevant observable input values as much as possible. The unobservable inputvalues are used only when the relevant input 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.The Group’s issuance (including refinancing), repurchase, sales or cancellation of an equity instrument shall be accounted for as achange to equity. Transaction costs of an equity transaction are accounted for as a deduction from equity. The Group does notrecognize changes in the fair value of equity instruments.If the Group's equity instruments distribute dividends (covering "interest" incurred by instruments classified as equityinstruments) 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 amortizedcost, 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 andall cash flows expected to be received, discounted at the original actual interest rate, i.e., the present value of all cash shortages.Purchased or originated credit-impaired financial assets shall be discounted by the Group according to credit-adjusted effectiveinterest rate adjusted by credit of such financial assets.
According to the general methods to measure expected credit impairment losses, the Group evaluates whether the credit risk ofthe financial assets (including other applicable items; the same hereinafter) has increased significantly since the initial recognition ateach balance sheet date. If the credit risk of the financial instrument has increased significantly since the initial recognition, theGroup measures its loss allowance according to the amount equivalent to the expected credit loss of the financial instrument over itsexpected lifetime; if the credit risk has not increased significantly since initial recognition, the Group measures its loss allowanceaccording to the amount equivalent to the expected credit loss of the financial instrument in the next 12 months. When assessingexpected credit loss, the Group gives consideration to all reasonable and well-founded information, including forward-lookinginformation.
For financial instruments with relatively low credit risks on the balance sheet date, the Group assumes that their credit risks havenot increased 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 recognition
When the default probability of a financial asset within the expected duration determined on the balance sheet date issignificantly higher than that in initial recognition, it suggests that the credit risks of the financial asset have significantly increased.Except under special circumstances, the Group determines whether credit risks have increased significantly since initial recognitionby estimating the changes in lifetime risk of default occurring based on the changes in 12-month risk of default occurring as areasonable .
(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, includingreceivables in dispute with the other party or involving litigation or arbitration; accounts receivable where there are obvious signsthat the debtor may 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 intodifferent groups 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 creditloss is greater than the carrying value of its current provision for impairment, the difference shall be recognized as impairment loss; ifit is less than the carrying value of current provision for impairment, the difference shall be recognized as impairment gain.
(5)Determination method for measurement of credit impairment losses of various financial assets
①Notes receivable
For accounts receivable, the Group measures loss allowance according to the amount equivalent to the expected credit loss overthe 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 payable) |
②Accounts receivable
For accounts receivable not containing significant financing components, the Group measures loss allowance according to theamount equivalent 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,accounts receivable are classified into different groups:
| Items | Basis for determining groups | Methods of calculation |
| 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 | Aging analysis method |
| loss rate of identical or similar receivables in previous years with similar credit risk characteristics classified by aging | ||
| Accounts receivable factoring aging group | Accounts receivable arising from factoring business of factoring companies | Aging analysis method |
| Related party group | The parent and subsidiary companies included in the consolidated financial statements are divided into groups according to equity relationship. | No allowance for bad debt |
③ Other receivables
Impairment loss is measured by the Group as the amount equivalent to the expected credit loss in the next 12 months or over thelifetime, based on whether the credit risk of other receivables has increased significantly since initial recognition. Except for otherreceivables for which credit risk are assessed separately, depending on their credit risk characteristics, they are classified intodifferent groups in such way as “accounts receivable” are classified.
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. Receivable financing
Notes receivable and accounts receivable which are classified as measured at fair value through other comprehensive income arepresented under “financing of receivable” if they have original maturity up to one year (including one year) or under other debtinvestment if they have original maturity more than one year. For relevant accounting policies, please see this Note V. 9. “FinancialInstrument” and 10. “Impairment of Financial Assets”.
14. Other receivables
For 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 allowance
Net realizable value means the estimated selling price of inventory less the estimated cost to be incurred by the time ofcompletion, the estimated selling expense and related taxes. In determining the net realizable value of inventory, based on obtainedevidence, the Group considers 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 valueis lower than its cost, the Group will make provision for inventory depreciation. The provision for inventory depreciation 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 bemeasured separately from other items, the depreciation allowances are consolidated and accrued. For raw materials with a largequantity and low unit price, the provision of inventory depreciation is generally made according to the time the inventory has beenkept.
After the provision of inventory depreciation is made, if the original trigger for inventory write-down has disappeared so that thenet realizable value of the inventory is higher than the carrying value, the amount of provision of inventory depreciation shall bereversed, 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 areamortized at the time of receipt over months of the expected service life. Other low-value consumables are amortized at the time ofreceipt using the one-off amortization method. Packaging materials are amortized at the time of receipt using the one-offamortization 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 acontract asset 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 this Note V. 10. "Impairment of financial assets" for details of the determination method and accountingtreatment method of the expected credit 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 asthe contract 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 businessenterprises other than Accounting Standards for Business Enterprises No. 14 - Income (revised in 2017) shall be recognized as anasset if: ① such cost 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 theresources of the Group to fulfill 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, andare recorded in the current profits and losses.
18. Long-term equity investments
Long-term equity investment in this part refers to the long-term equity investment through which the Group has control, jointcontrol or significant influence over investee. The long-term equity investments through which the Group does not have control, jointcontrol or significant influence over investee, is taken as a financial asset at fair value recorded in current profits and losses. If it isnon-trading, the Group can choose to designate it as a financial asset at fair value recorded in other comprehensive income at initialrecognition. 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 relevantactivities of the arrangement must be unanimously agreed by the participants sharing the control before a decision can be made.Significant influence refers to the Group’s right to participate in the decision-making of an invested entity's financial and operationalpolicies, but not 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 valueof the stakeholders’ equity of the merged party in the consolidated financial statements of the final controlling party is regarded asthe initial investment cost of long-term equity investments on the combination date. If there is a difference between the initialinvestment cost of long-term equity investments and the cash paid, non-cash assets transferred, and carrying value of liabilities
assumed, the capital reserve shall be adjusted. Where the capital reserve is insufficient to absorb the difference, retained earningsshall be adjusted. The investments cost which adopts the equity securities issued as the consideration should be adopted as the initialinvestments cost of the long-term equity investments according to the proportion of the carrying value of the stakeholders’ equity ofthe merged party in the consolidated financial statements of the final controlling party, and adjust the capital reserve by the differencebetween the initial investments cost of long-term equity investments and the amount of issued stock’s face value (regarded as capitalstock). If the capital reserve is insufficient to absorb the difference, retained earnings should be adjusted. If the equity of the acquireeunder the same control is acquired step by step through multiple transactions leading to a merger of enterprises under the samecontrol, 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 the acquiree has control. If it is not a “package transaction”, the Groupregards the initial cost of the long-term equity investments as the proportion of the shareholders' equity/owners' equity of the acquiredenterprise to the carrying amount in the consolidated financial statements of the final controller at the date of combination. If there isa difference between the initial investments cost of long-term equity investments on the date of combination and the sum of thecarrying value of the long-term equity investments before the merger plus the carrying value of the new share payment considerationon the date of combination, the capital reserve shall be adjusted. Where the capital reserve is insufficient to absorb the difference,retained earnings shall be adjusted. If the equity investment held before the combination date is measured using the equity method orrecorded as a financial asset at fair value in other comprehensive income. The other comprehensive income recognized as a resultwill not be accounted temporarily.For the acquisition of long-term equity investments involving enterprises under common control, the Group regards the initialcost of the long-term equity investments at that date as business combination cost, including the sum of fair values of assets paid,liabilities incurred or borne, and equity securities issued, by the buyer. If the equity of the acquiree is acquired step by step throughmultiple transactions leading to a merger of enterprises under different control, the transactions shall be confirmed whether theybelong to a “package transaction”: If they belong to a “package transaction”, all transactions shall be treated as one transaction overwhich the acquiree has control. If it is not a “package transaction”, the sum of the carrying value of the original equity investmentsplus the new investments cost is regarded as the initial investments cost calculated by the cost method. If the previous equity ismeasured 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 feesare generally 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 suchcost is determined at the amount of cash paid by the Group, the fair value of the equity securities issued by the Group, the valueagreed in an investments contract or agreement, the fair value or carrying value of asset exchanged in the non-monetary asset
exchange, or the fair value of the long-term equity investments. Costs, taxes and other necessary expenses directly related to theacquisition of the long-term equity investments are also included in the investments cost. If an investments addition results in thejoint control or significant influence over investee, other than the control over investee, the cost of long-term equity investments isthe sum of the fair value of the original equity investments determined according to Accounting Standards for Business EnterprisesNo. 22 - Recognition and Measurement of Financial Instruments and the cost of the investments addition.
(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 influenceover investee shall be calculated by the equity method. The Group's financial statements use the cost method to calculate long-termequity investments that constitutes control over invested entities.
① Long-term equity investments calculated by cost method
Under the cost method, a long-term equity investments is measured at initial investments cost. Increasing or reducinginvestments will adjust the cost of long-term equity investments accordingly. Except for actual price paid when the investment isobtained or the cash dividends or profits that are included in the consideration that has been declared but not yet disbursed, thecurrent investment income shall be recognized according to the cash dividends or profits declared by the invested entity.
② Long-term equity investments accounted under equity method
When the initial investments cost of long-term equity investments accounted under equity method is greater than theinvestments, the difference in the fair value share of the identifiable net assets of the invested entity is enjoyed, without adjusting theinitial investments cost of long-term equity investments; when the initial investments cost is less than the investments, the differencein the fair value share of the identifiable net assets of the invested entity is included in the current profits and losses, and the cost oflong-term equity investments shall be adjusted accordingly.
When the equity method is adopted, according to the share of the net profit and loss and other comprehensive income realizedby the invested entity, the investments income and other comprehensive income shall be recognized respectively, and the book valueof the long-term equity investments shall be adjusted; the book value of the long-term equity investments is reduced correspondinglyin accordance 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 oflong-term equity investments shall be adjusted and included in capital reserve. The share of net profit and loss of the invested entityshall be recognized, based on the fair value of various identifiable assets of the invested entity when the investment is made, afteradjustment of the net profit of the invested entity. When the accounting policy and accounting period adopted by the invested entityare inconsistent with those of the Group, the investment income and other comprehensive income shall be recognized based on theadjusted financial statements of the invested entity in accordance with the Group's accounting policies and accounting period. For the
Group's transactions with its associates and joint ventures, if the invested or sold asset does not constitute a business, unrealizedprofits or losses resulting from the transactions are recognized as investment income or loss to the extent that those attributable to theGroup's equity interest are eliminated. However, unrealized losses resulting from the Group's transactions with its invested entity inrespect of impairment losses on the transferred assets should not be eliminated. If the asset invested by the Group to its associates andjoint ventures constitutes a business, to the extent that the investor realizes long-term equity investments other than control, the fairvalue of the invested business shall be the initial investments cost of the additional long-term equity investments, and the differencebetween the initial investments cost and the carrying value of the invested business shall be recorded in the profit or loss of thecurrent period. If the asset sold by the Group to its associates and joint ventures constitutes a business, the difference between theconsideration received and the carrying value of the invested business shall be recorded in the profit or loss of the current period. Ifthe Group acquires an asset that is a business from its associates or joint ventures, the accounting treatment pursuant to theAccounting Standards for Business Enterprises No. 20 - Business Combination shall apply, the gain or loss from the transaction shallbe fully recognized.
The Group de-recognizes its share of net losses of the invested entity after the carrying amount of the long-term equityinvestments together with any long-term interests that substantially constitute part of its net investments in the invested entity shall bewritten down to zero. In addition, if the Group has the obligation to bear additional losses to the invested entity, the expectedliabilities shall be recognized according to the expected obligations and be recorded in the investment losses of the current period.Where net profits are subsequently made by the invested entity, the Group resumes recognizing its share of those profits only after itsshare of the profits exceeds the share of losses previously not recognized.
③ Acquisition of minority equity
When preparing consolidated financial statements, if there is a difference between the new long-term equity investmentsacquired as a result of the purchase of minority shares and the share of net assets continuously calculated from the date of purchase(or merger) of the subsidiary based on the new shareholding ratio, the capital reserve shall be adjusted. Where capital reserve isinsufficient to offset the difference, the retained earnings are adjusted.
④ Long-term equity investments disposal
In consolidated financial statements, where a parent company disposes of a long-term equity investments in a subsidiary whilethe control over the subsidiary is reserved, the difference between the disposing price and the net assets of the subsidiary obtainedfrom disposal of the long-term equity investments shall be recognized in the shareholder’s equity. If partial disposal by a parentcompany of a long-term equity investments in a subsidiary and the control over the subsidiary is lost, the accounting policy stipulatedin 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 theactual proceeds is included in the current profits and losses.When the Group reduces its ownership interest in investee but continues to use the equity method, other comprehensive incomepreviously recorded as owners' equity is disposed in proportion, subject to the accounting treatment applicable to the assets orliabilities related to direct disposal of the invested entity. The equity recognized by the Group, other than the change of the net profitsand loss, other comprehensive income and profit distribution of the invested entity, is transferred to current profits and losses inproportion.When the Group reduces its ownership interest but the Group continues to use the cost method, for the other comprehensiveincome recognized by the Group using equity method prior to the control over the investee or under financial instrument recognitionand measurement standard, other comprehensive income previously recorded as owners' equity is subject to the accounting treatmentapplicable to the assets or liabilities related to direct disposal of the invested entity and is transferred to current profits and losses inproportion. Then the other changes in owners’ equity recognized by the Group using equity method, not arising from the change ofthe net profits and loss, other comprehensive income or profit distribution of the invested entity, are reclassified to profit and loss inproportion.If the Group loses its control over the invested entity due to the disposal of a portion of an equity investment, the equity methodis adopted in the preparation of individual financial statements when the remaining equity allows the Group to exercise joint controlor hold 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 instrumentrecognition and measurement standards, and the difference between the fair value and the book value on the day when the control islost is recorded in current profits and losses. If other comprehensive income recognized, using the equity method or under thestandards for recognition and measurement of financial instruments before the Group obtains the control over the invested entity, issubject to the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity when thecontrol over the invested entity is lost, changes in the owners’ equity of the net assets of the invested entity recognized using theequity method, except for net profits and losses, other comprehensive income and profit distributions, shall be transferred to currentprofits and losses when the control over the invested entity is lost. Other comprehensive income and other owners’ equity aretransferred in proportion when the remaining equity after disposal is calculated by the equity method. If the remaining equity afterdisposal is calculated in accordance with the standards for recognition and measurement of financial instruments, othercomprehensive income and other owners’ 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,the remaining 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 incurrent profits and losses. Other comprehensive income of the equity investment previously recognized using the equity method issubject to the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity when theGroup stops using the equity method. Owners' equity recognized by the Group, other than the change of the net profits and loss, othercomprehensive income and profit distribution of the invested entity, is reclassified to profit and losses fully when the Group stopsusing the equity method.The equity investments in the subsidiary is disposed of step by step by the Group through multiple transactions until the controlis 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 method
Investment property means the property held for the purpose of rent earning or capital appreciation, or both. It includes the landuse rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition,the vacant buildings held by the Group for the purpose of leases will also be reported as investment property, if the board of directors(or similar authority) makes a resolution in written form that expressly indicates that the buildings will be used for leases and theintention of holding will not change in the short term.
Investment property is initially measured at cost. Subsequent expenses related to investment property 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 property.Other subsequent expenditures are recorded in the current profits and losses when incurred.
The Group adopts the cost model for subsequent measurement of investment property. The investment property is 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 property, please see this Note V. 25.“Impairment of Long-term Assets”.
When self-use property or inventory is converted to investment property, or investment property is converted to self-useproperty, the value after the conversion shall be recognized at the carrying value before the conversion.When investment property is disposed or permanently withdrawn from use and is not expected to obtain economic benefits fromits disposal, the investment property shall be de-recognized. The disposal income from the sale, transfer, abandonment or destructionof investment property 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 oflabor services, leasing or management. A fixed asset may be recognized when it satisfies the following conditions: Economic benefitsrelating to the fixed asset are likely to be gained by the Group, and the cost of the fixed asset can be measured reliably. Fixed assetsare initially measured 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% |
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from disposal of theasset, after the estimated costs of disposal is deducted, if the asset were already of the age and in the condition expected at the end ofits useful life.
(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 constructionexpenditures incurred during the period of construction, capitalized borrowing costs and other related expenses before the project
reaches the predetermined conditions for use. Construction in progress is transferred to fixed assets when it has reached the workingcondition for its 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 exchangedifferences due to foreign currency borrowing, etc. Borrowing costs that can be directly attributable to the acquisition, constructionor production of assets eligible for capitalization shall be capitalized when the asset expenditure has been incurred, the borrowingcost has been incurred, and the acquisition, construction or production necessary to make the asset reach the predeterminedconditions for use or sale has started, and the capitalization shall discontinue when the constructed or produced assets eligible forcapitalization reach the predetermined conditions for use or sale. The remaining borrowing costs are recognized as costs at the timeof occurrence.The amount to be capitalized is the actual interest expense incurred on the specific borrowings less any bank interest earnedfrom unused funds of the designated borrowings or any investment income arising from the temporary investment of those funds.The amount to be capitalized on the general borrowings is calculated by applying a capitalization rate to the weighted average of theexcess amounts of cumulative expenditures on the asset over and above the amounts of the specific borrowings. Capitalization rate iscalculated and determined 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 fullycapitalized, 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 throughquite a 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 productionand continues over 3 months, the capitalization of borrowing costs shall cease and shall not restart until the acquisition, constructionor production of such assets resume.
23. Right-of-use assets
For recognition methods and accounting of right-of-use assets, please see this Note V. 35. “Lease”.
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 ofintangible assets when it is likely that the associated economic benefits will be gained by the Group and the associated costs can bemeasured reliably. 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 costfrom buildings such as self-built factory, etc. are recognized as intangible assets and fixed assets, respectively. In the case ofpurchased buildings, related costs are shared between the cost of land use rights and the cost of buildings. The related costs thatcannot be allocated reasonably are recognized as fixed assets.When an intangible asset with a finite useful life is available for use, its original cost is amortized over its estimated useful lifeusing the straight-line method. Intangible assets with uncertain service life shall not be amortized.
For an intangible asset with a finite useful life, the Group reviews its useful life and amortization method at the end of theperiod, and accounts for any change as a change in an accounting estimate. For an intangible asset with uncertain service life, theGroup reviews its useful life. If it is evident that the duration of associated economic benefits is predictable, the useful life isestimated and the asset is amortized pursuant to amortization policies for intangible assets with finite useful life.
(2) Accounting policy for internal research and development expenditure
The expenditure for research and development projects in the Group is divided into research phase expenditure and developmentphase expenditure.
The classification into the expenditure in the research phase or the expenditure in the development phase in relation to internalR&D projects 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 acquireand understand 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 thedevelopment will lead to the emergence of an intangible asset. Therefore, the Group includes the expenditures in the research phasein expenses and recognize 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 mass
production 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 anyexpenditure that has been included in expense and recognized in profit or loss before the same intangible asset has met the conditionsfor capitalization 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 are included 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 Having the proof that the intangible asset can generate economic benefits, that there is a market for the product producedusing the intangible asset or for the intangible asset itself, and that the intangible asset is useful and will be used internally;
④ Having sufficient technical, financial and other resources to complete the development of the intangible assets, and havingthe ability to use or sell the intangible asset;
⑤ Expenditures attributable to the development phase of the intangible asset can be measured reliably.
If it is impossible to distinguish between expenditures in the research phase and expenditures in the development phase, theR&D expenditures 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 assets
For the method of impairment test and method of provision for impairment of intangible assets, please see this Note V. 25“Impairment of 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,investments 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 assetswith uncertain goodwill and service life and those have not yet reached the usable state, regardless of whether there are signs ofimpairment.
If the impairment test results show that the recoverable amount of an asset is lower than its book value, the provision forimpairment is accrued according to the difference and is recorded in the impairment loss. The recoverable amount is the higher of thenet amount of the fair value of the asset less the disposal expenses and the present value of the expected future cash flow of the asset.The fair value of an asset is measured as the price agreed in a sales contract concluded in good faith. In absence of any such salescontract, if there is an active market for the asset, the best information available is used as a basis to estimate the fair value of theasset. Disposal expenses include legal fees, taxes and transportation fees related to the disposal of an asset, and direct expensesincurred to make the asset salable. The present value of expected future cash flows of an asset is measured by applying anappropriate discount rate to the expected future cash flows generated during the continuous use of the asset at the time of finaldisposal. The asset impairment provision is calculated and recognized on the basis of individual assets. In the case of difficulty inestimating the recoverable amount of an individual asset, the recoverable amount of the asset group to which the individual assetbelong is calculated. An asset group is the smallest 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 businesscombinations is allocated to relevant asset groups or asset group portfolios. If the test results show that the recoverable amount ofasset groups or asset group portfolio containing allocated goodwill is lower than its book value, the corresponding impairment lossshall be recognized. The amount of impairment loss shall firstly be deducted from the carrying amount of goodwill embodied in theasset groups or asset group portfolios, then be deducted from the carrying amounts of other assets based on the proportions of theircarrying amounts in the asset groups or asset group portfolios.The impairment losses of assets will not be reversed in subsequent periods once recognized.
26. Long-term deferred expenses
Long-term deferred expenses refer to expenses that have already incurred but should be borne by the current and futureinstalments for a period of more than one year. Long-term deferred expenses shall be amortized according to the straight-line methodwithin the estimated period of benefit.
27. Contract liabilities
Contract liability is defined as the Group's obligation to transfer goods to a customer for received or receivable considerationfrom the customer. The Group presents as a contract liability, at the earlier time point of actual payment by a customer or thepayment due, if the Group has paid the contract consideration or the Group has acquired the right to collect unconditionally beforethe goods are transferred by the Group to the customer. Contract assets and contract liabilities under the same contract are listed on anet 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,medical insurance 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-employmentbenefit plans are mainly defined benefit plans. The defined benefit plans of the Group are basic pension insurance and unemploymentinsurance, and the 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 proposedcompensation for encouraging the employee to accept the redundancies voluntarily, if the Group cannot unilaterally withdraw thetermination benefits provided by the termination of labor relations plan or reduction proposal, and the Group recognizes the costsrelated to the reorganization involving the payment of the termination benefits (whichever comes first), the employee remunerationliabilities arising from the termination benefits are recognized and recorded in the current profits and losses. However, terminationbenefits which are expected not to be fully paid within twelve months after the end of the annual reporting period are accounted foras other long-term employee 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'ssocial insurance covered by its internal retirement program from the day when the employees stop their services until their statutoryretirement dates, when the conditions for recognizing liabilities 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, theaccounting treatment for the defined contribution plan applies. In any other circumstance, the accounting treatment for the definedbenefit plan applies.
29. Lease liabilities
For recognition methods and accounting of lease liabilities, please see this Note V. 35. “Lease”.
30. Provisions
An obligation relating to a contingent is recognized as a provision when it meets the following conditions: (1) the Group has apresent obligation related to a contingency; (2) it is probable that an outflow of economic benefits will be required to settle theobligation; and (3) the amount of the obligation can be measured reliably.
A provision is measured against the best estimate of the consideration required to settle the present obligation at the balancesheet 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 provision 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 forthe consideration of the services provided by employees or other parties. Share-based payment is classified into cash-settledshare-based payment 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 thefair value of equity instruments on the date of grant to the employees. In the case that the right can be exercised after the completionof services in the waiting period or satisfaction of stipulated performance conditions, the fair value amount shall, on the basis of thebest estimate of the quantity of equity instruments with vesting in the waiting period, be recorded in relevant cost or expense using
the straight-line method. In the case that the right can be exercised immediately after the grant, it is recorded in relevant cost orexpense on the grant date, and the capital reserve 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 reserveadjusted accordingly.
Equity-settled share-based payments made for the consideration of the services provided by other parties shall, if the fair valueof the services can be measured reliably, is measured at fair value at the date of acquisition, and if the fair value of the servicescannot be measured reliably but the fair value of the equity instruments can be measured reliably, is measured at fair value at the dateof acquisition. They are recorded in the cost or expense, and the shareholder’s equity is increased accordingly.
② Cash-settled share-based payment settled
Cash-settled share-based payment shall be measured according to the fair value of liabilities determined on the basis of shares orother equity instruments undertaken by the Group. In the case that the right is exercised immediately after the grant, it is recorded inrelevant cost or expense, and the liability is increased accordingly. If the right is exercised only after the completion of services in thewaiting period and satisfaction of stipulated performance conditions, on each balance sheet date within the waiting period, based onthe best estimate of the vesting condition and according to the fair value of the liabilities assumed by the Group, the services acquiredin the current 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 bere-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 bymodification, the increase of the services acquired shall be recognized according to the increase of the fair value of the equityinstruments. The increase of fair value of equity instruments refers to the difference between the fair values of equity instrumentsbefore and after modification on the modification date. If the total fair value of share-based payment is reduced by modification orother ways that are unfavorable to employees, the accounting treatment of the acquired services will continue, as if the change neverhappened unless the Group cancels some or all of the granted equity instruments.
During the waiting period, if the granted equity instruments are cancelled, the Group will treat the cancellation of the grantedequity instruments as accelerated exercise, and immediately record the amount to be recognized in the remaining waiting period intothe current profits and losses, and recognize the capital reserve at the same time. If the employee or other party can choose to meet
the non-vesting condition but fails to meet it during the waiting period, the Group will treat it as cancellation for granting equityinstruments.
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 customerobtains the control over the goods: the parties to the contract have approved the contract and pledged to perform their obligations; thecontract defines the rights and obligations of the parties about transfer of the goods or provision of the services; the contract containspayment terms about the proposed transferred goods; the contract has commercial substance, which means that the performance ofthe contract would change the risks, time distribution or amount of the future cash flows of the Group; and the consideration to whichthe Group is entitled 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,and apportions 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 ofvariable consideration, major financing components in the contract, non-cash consideration, consideration payable to customers andother factors.
If each individual performance obligation under the contract meets any of the following conditions, the Group will, according tothe progress 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 atthe time of performance; the customer has control over the goods in production during the performance by the Group; the goodsproduced during the performance by the Group have irreplaceable use, and the Group is entitled to be paid for the completed part ofthe obligation up to now in the entire contract period. The performance schedule is determined by output method or input methodaccording to the nature of the goods transferred. If the performance schedule cannot be reasonably determined and the incurred costsof the Group are expected to be compensated, the revenue is recognized according to the amount of the incurred costs until theperformance schedule can 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 the part of trading price apportioned to the individual performance obligation as a revenue. To determine whether thecustomer obtains the control over the goods, the Group considers the following indications: the Group enjoys the current right to bepaid for the goods, and the 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 physicallyto the customer, and the customer has possessed the goods in kind; the Group has passed on to the customer major risks and rewardsof the ownership of the goods, and the customer has received the major risks and rewards of the ownership of the goods; thecustomer 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, theproducts are transported and delivered to the place of delivery designated by the customer; the customer’s warehousing employeechecks the quantity of the products and also carries out a spot check for the quality of the products; after the quantity and quality areaccepted, the employee will sign and stamp on the receipt for confirmation. The revenue is recognized when the Group obtains thesigned and stamped receipt or when the Group obtains the signed and stamped receipt and makes a reconciliation with the customer.B. VMI sales modeThe Group arranges production according to a sales contract or order with a customer; upon shipment from the warehouse, theproducts are transported and delivered to the place of delivery designated by the customer; the customer’s warehousing employeechecks the quantity of the products and also carries out a spot check for the quality of the products; after the quantity and quality areaccepted, the employee will sign and stamp on the receipt for confirmation. The revenue is recognized after the customer accepts theproducts.
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 throughcustoms clearance after the products are verified as qualified through inspection; for the purpose of delivering the products, therevenue is recognized 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 customsclearance after the products are verified as qualified through inspection; after the Group completes export declaration formalities andobtains an export declaration form, and the products are transported to the place designated by the customer, the revenue isrecognized when the customer accepts the products.Different operating modes in the same kind of business lead to different accounting policies for revenue recognition
None
33. Government subsidies
Government subsidies refer to the monetary assets and non-monetary assets obtained by the Group from the government free ofcharge, excluding the investment made by the government as an investor which enjoys the corresponding owner's equity.Government subsidies are divided into asset-related government subsidies and income-related government subsidies. Asset-relatedgovernment subsidies refer to the government subsidies obtained by the Group and used for acquiring or forming long-term assets byother means. Other government subsidies are defined as government subsidies related to income. If no target of grants is specified ingovernment documents, government subsidies are classified into government subsidies related to assets and government subsidiesrelated to income as follows: (1) if the government document stipulates grants for a defined project, the grants will be dividedaccording to the proportion of expenditures transformed into assets and expenditures recorded in expenses in the budget of thedefined project, and the proportion will be reviewed at each balance sheet date and be changed if necessary; and (2) if thegovernment document contains general statement on the purpose of grants, other than a defined project, the grants will be treated asgovernment subsidies related to income. Government subsidies in the form of monetary assets shall be measured at the amountreceived or receivable. Government subsidies in the form of non-monetary assets shall be measured at fair value. If the fair valuecannot be reliably acquired, the government subsidies shall be measured at nominal amount. Government subsidies measured atnominal amount shall be directly recorded in the current profits and losses.The Group recognizes and measures government subsidies generally at the time of receipt according to the actually receivedamounts. However, at the end of the period, the subsidy shall be measured according to the amount receivable when there isconclusive evidence that it can meet the relevant conditions stipulated by the financial support policy and is expected to receivefinancial support funds. A government subsidy measured at the amount receivable shall meet the following conditions: (1) theamount of grant receivable has been confirmed in a governmental document or can be reasonably estimated according to anyofficially issued measures for the management of financial support funds, without significant uncertainty in the estimated amount; (2)the measurement is based on the financial support projects and its measures for the management of financial support funds officiallyreleased and proactively disclosed by local fiscal authority according to the Government Information Disclosure Regulations, and themeasures are inclusive (applicable to any eligible enterprise), other than for specific enterprises; (3) the relevant grant approvaldocument has clearly stated the period of payment, and as the payment of the grant is guaranteed by corresponding fiscal budgets,there is reasonable assurance that the payment will be made within certain time of period; and (4) other relevant conditions should bemet according to the actual situation of the Group and the grant (if any).Asset-related government subsidies are recognized as deferred income, and shall be recorded in current profits and losses instages according to a reasonable and systematic method within the service life of the relevant assets. If income-related government
subsidies are received as compensation for related costs or losses in future periods, they are recognized as deferred income, and arerecorded in current profits and losses during the period when the related costs or losses are recognized; those received ascompensation for related costs 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 subjectto separate 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 thenature of operating business. Government subsidies unrelated to the daily activities are recorded in non-operating revenue.Where any recognized government subsidy needs to be returned, in the case of related deferred income balance, the carryingamount of the deferred income balance shall be written down, and any excess shall be recognized in the profit or loss of the currentperiod. In other 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 amountexpected to be paid (or returned) according to the requirements of tax laws. The taxable income as basis for the current income taxexpense is calculated after appropriate adjustment is made to the pre-tax accounting profit of the year according to the requirementsof 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 thecarrying amounts of those items that are not recognized as assets or liabilities and of which the tax bases can be determined accordingto tax laws 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 liabilityarising from a transaction (not a business combination) that affects neither accounting profits nor taxable profits (or deductible losses)at the time of transaction, no deferred tax liability is recognized. In addition, for the taxable temporary differences associated withinvestments in subsidiaries, associates and joint ventures, if the Group is able to control the timing of the reversal of the temporarydifference and it is probable that the temporary difference will not reverse in the foreseeable future, no deferred tax liability isrecognized. Except for the above exceptions, the Group recognizes deferred tax liabilities arising from all other taxable temporarydifferences.
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 liability is recognized. In addition, for the deductible temporary differences associated with investments in subsidiaries, associatesand joint ventures, the corresponding deferred tax asset 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 arerecognized by the Group to the extent that it is probable that taxable profits will be available against which the deductible temporarydifferences can be utilized.For deductible losses and tax credits that can be carried forward to later years, the corresponding deferred tax assets arerecognized to the extent that the future taxable income that can be used to offset the deductible losses and tax credits is likely to beobtained.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expectedto be applicable 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 sufficienttaxable income in the future to offset against the profits arising from deferred tax assets, the carrying amount of the deferred taxassets shall be written down. When it is probable that sufficient taxable income will be available, such written-down amount shall besubsequently reversed.
(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 comprehensiveincome or directly recorded in shareholders’ equity are recorded in other comprehensive income or shareholders’ equity, and thatdeferred taxes arising from business combinations adjust the carrying amount of goodwill, all other current income taxes anddeferred tax expenses or 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 settleliabilities simultaneously, the current income tax assets and current income tax liabilities of the Group are offset and presented as netamount.
When there is a legal right to settle current income tax assets and current income tax liabilities on a net basis, and the deferredtax assets and deferred tax liabilities are related to the income tax levied by the same tax administration department on the same taxpayer or to different tax payers, but in each future period of reversing material deferred tax assets and liabilities, the tax payers
involved intend to settle the current income tax assets and liabilities on a net basis or realize assets and settle liabilities at the sametime, the deferred 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 newleasing standard.
(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 newleasing standard.
(3) The determination method and accounting treatment method of leasing under the new leasing standard
Lease 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 orchange, whether the contract is a lease or contains a lease. Except for changes in the terms and conditions of the contract, the Groupwill not re-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 forits use. 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 enjoyedif there are 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 onwhich it is located or restoring the underlying asset to the condition required by the terms of the lease.
With reference to the provisions of Accounting Standards for Business Enterprises No. 4 - Fixed Assets concerning depreciation,the Group calculates the depreciation of right-of-use assets. 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.If the Group cannot reasonably determine that it will obtain the ownership of leased assets when the lease term expires, theright-of-use assets 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 recognizedimpairment loss according 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 a lease liability at the leasecommencement date according to the present value of the lease payment not made as of that date. When measuring the present valueof a lease payment, the Group uses the interest rate implicit in the lease as the discount rate, and adopts the incremental borrowingrate as the discount rate if 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 thelease term, including:
A. The fixed amount and substantial fixed amount less the relative amount of any lease incentives enjoyed if there are leaseincentives;
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 Groupwill exercise the option to terminate the lease; and
E. 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 thecurrent profits 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 leaseterm at a fixed 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 a lease liability 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 liability will be re-measuredby the 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 forcalculating the lease payment, the Group will re-measure the lease liability according to the changed lease payment and the presentvalue calculated from the original discounting rate.
③ Short-term leases and leases for low-value assets
For short-term leases and leases for low-value assets of buildings, transport vehicles, machinery equipment and officeequipment, the Group chooses not to recognize right-of-use assets or lease liabilities. The short-term lease refers to the lease that doesnot contain the call option and has a lease period of no more than 12 months from the lease commencement date. The lease forlow-value assets refers to the lease under which individual lease asset has a low value if it is brand new. In each period within thelease term, the Group records the lease payments of short-term leases and leases for low-value assets into the profit or loss of thecurrent period or the relevant asset cost 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 contractchange.
If a lease change is not treated as an independent lease, at the effective date of the lease change, the Group will re-apportion thechanged contract price, re-determine the lease term, and re-measure the lease liability according to the changed lease payment andthe present value 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 theright-of-use assets accordingly, and record the gain or loss from the terminated or partially terminated lease in the profit or loss of thecurrent period. If any other lease change triggers the re-measurement of the lease liability, the Group will adjust the carrying value ofthe 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 considerationaccording to the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue concerning apportionment of tradingprice, and the basis for apportionment 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 whichare not financing 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 fromoperating leases in rental income. The initial direct expenses related to an operating lease incurred by the Group are capitalized whenincurred, apportioned during the lease term on the same recognition basis as rental income, and recorded in the current profit and lossby installments.The variable lease payment received by the Group under an operating lease not included in the lease receipt is recorded in theprofit or loss of the current period at the time of actual occurrence.B. The Group as lessor under financial leasesAt the lease commencement date, the Group measures the carrying value of the financing lease receivable as net leaseinvestment, and de-recognizes the financing lease asset. The net lease investment is the sum of the unsecured residual value and thepresent value of the 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 thelease 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 theindex or rate 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 leaseperiod that 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 thirdparty who has economic capacity to perform the guarantee obligation.
Variable lease payment receivable not included in the measurement of lease net investment shall, when actually incurred, beincluded in the current profits and losses.The Group measures and recognizes the interest income of each period within the lease term according to the fixed periodicinterest rate.
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 thelease payment 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 contractchange.
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, theGroup will, from the effective date of the lease change, consider the change as a new lease and the net lease investment prior to theeffective date of the lease commencement as the carrying value of the leased asset;
B. Assuming that the change takes effect at the lease commencement date, and the lease is classified as a financing lease, theGroup will apply the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement ofFinancial Instruments concerning the modification or re-negotiation of contract.
36. 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. Thejudgments, estimates and assumptions would affect the reported amounts of incomes, expenses, assets and liabilities, as well as thedisclosure of contingent liabilities at the balance sheet date. However, the actual results from the uncertainty in the estimates maydiffer from the current estimates made by the Group’s management, subject to further significant adjustments to the carrying amountsof the affected assets or liabilities.
The above judgments, estimates and assumptions will be reviewed periodically by the Group on the going-concern basis. If achange in accounting estimates only affects the period in which the change occurs, the affected amount will be recognized in theperiod in which the change occurs. If the change affects both the period in which the change occurs and future periods, the affectedamount will be 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 onthe amounts 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 accountingjudgments and estimates: identification of customer contracts; estimation of the recoverability of the considerations enjoyed due tothe transfer of goods to customers; identification of performance obligations in contracts; estimation of the variable consideration in acontract and the amount of accumulated recognized income that is unlikely to be significantly reversed when the relevant uncertaintyis eliminated; whether there is material financing component in a contract; estimation of separate selling prices of individualperformance obligations in a contract; determination on whether the performance obligation shall be performed in a time span or at apoint of time; and determination of performance progress.The Group makes judgments based on historical experience and practices, and major changes in judgments and estimates wouldhave impact (and even significant impact) on the change of operating income, operating cost, and profit and loss during the current orfuture periods.
(2) Classification of a 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 thecustomer has the right to use the asset for a certain period. During assessment, the Groups shall consider the nature or substantialreplacement of the asset, and whether the customer has the right to obtain almost all economic benefits arising from the use of theasset during the period 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 managementneeds to 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 liability 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 thefacts and circumstances related to the economic benefits brought by the exercise of the option by the Group, including expectedchanges in the facts and circumstances from the lease commencement date to the option exercise date. Different judgments andestimates would affect the recognition of lease liabilities and right-of-use assets and further affect the profit or loss of subsequentperiods.
(3) Impairment of financial assets
The Group assesses impairments of financial instruments using the expected credit loss model, where the Group is required tomake significant judgments and estimates, as well as consider all reasonable and evidence-based information, includingforward-looking information. In making the judgments and estimates, the Group predicts expected changes in debtor's credit riskbased on historical data, as well as economic policies, macroeconomic indicators, industry risks, external market conditions,technical conditions, changes in 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 realizablevalue. For the inventories with cost higher than net realizable value as well as obsolete and unsalable inventories, the Groupcalculates provisions for the impairment of inventories. The inventories are impaired to their net reliable value, depending on theassessment of salability of inventories and their net realizable value. To identify inventory impairment, the management is required tomake judgments and estimates after obtaining conclusive evidence, as well as considering the purpose of inventories held, the impactof events occurring after the balance sheet date and other factors. Any difference between actual results and prior estimates will, inthe period when relevant estimates are changed, affect the carrying amount of inventories and the provision for inventory impairmentor 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 investmentsor contracts 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 indicationof impairment. For intangible assets with an uncertain service life, the impairment test will be carried out annually and when there isan indication of impairment. The impairment test will be carried out for non-current assets other than financial assets, when there isan indication 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 fairvalue less disposal 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 similarassets in fair 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 calculatingpresent value of the asset (or a group of assets) in estimation of present value of future cash flows. When estimating the recoverableamount, the Group uses all relevant information available, including the output, selling price and related operating costs predicted onthe basis of 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 ofan asset group or group portfolio to which goodwill has been allocated. When estimating the present value of future cash flows, theGroup needs to predict cash flows generating from an asset group or group portfolio in the future, and chooses an appropriatediscount rate to determine the present value of future cash flows.
(7) Depreciation and amortization
The Group depreciates and amortizes investment property, fixed assets and intangible assets over their respective service life,using the straight-line method, with their respective residual value taken into account. The Group periodically reviews the service lifeof assets to determine the amounts of depreciation and amortization expenses for each reporting period. The service life is determinedby the Group based on its historic experience acquired on similar assets and expected technical developments. For significantchanges in prior estimates, depreciation and amortization expenses will be adjusted in the coming periods.
(8) Development expenditures
When determining capitalized amounts, the Group’s management needs to assume estimated future cash flows, appropriatediscount rates 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 andgood prospects, and the market reaction to the products produced with these intangible assets also supports the management’spre-estimated income arising from the project. However, the increasing competition makes the management reconsider theassumptions about market share and estimated gross profits of the products. After a thorough review, the Group’s managementbelieves that the carrying value of intellectual properties can be fully recovered notwithstanding a lowered rate of return of theproducts. The Group will continue to keep close attention on relevant developments. Once there is an indication that it is necessary toadjust the assumptions of relevant accounting 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 taxassets for all unused tax losses. In this case, the Group’s management shall make important judgments to estimate the time andamount of future taxable profits and, by taking into account of its tax plan, to determine the amount of deferred tax assets that shouldbe recognized.
(10) Income tax
In normal operating activities of the Group, there are some transactions with certain uncertainties in final tax treatment andcalculation. Tax deductible expenses for some items are subject to review and approval by tax authority. Any difference betweenfinal results and initially estimated amounts due to these tax matters exerts impact on income taxes and deferred taxes of the periodwhen the final results are determined.
37. Changes in important accounting policies and accounting estimates
(1) Changes in important accounting policies
√ Applicable □ Not applicable
| Contents and causes of changes in accounting policies | Approval procedure | Notes |
| On December 7, 2018, the Ministry of Finance issued The Accounting Standards for Enterprises No.21–Leases (2018 Revision) (Finance and Accounting [2018] No. 35) (hereinafter referred to as “new standards of lease”). According to the resolution adopted on March 26, 2021 at the 18th meeting of the 5th Board of Directors of the Group, the Group has implemented the above-mentioned New Lease Standards from January 1, 2021 and made changes to relevant accounting policies according to the provisions of the New Lease Standards. | 1. The changes are made according to state policies; 2. At the 18th meeting of the 5th Board of Directors and the 13th meeting of the 5th Board of Supervisors held on March 26, 2021, the Proposal on Changing Accounting Policies was reviewed and adopted, and the independent directors expressed the opinion of approval of the prop In accordance with relevant provisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange and Articles of Association, this issue of changing accounting policies was submitted to the Board of Directors to review and approve, without the need of the submission to the Shareholders’ Meeting. |
Changes in accounting policies resulting from the implementation of the New Lease Standards:
On December 7, 2018, the Ministry of Finance issued The Accounting Standards for Enterprises No.21–Leases (2018 Revision)(Finance and Accounting [2018] No. 35) (hereinafter referred to as “new standards of lease”). According to the resolution adopted onMarch 26, 2021 at the 18th meeting of the 5th Board of Directors of the Group, the Group has implemented the above-mentionedNew Lease Standards from January 1, 2021 and made changes to relevant accounting policies according to the provisions of the NewLease Standards.
Pursuant to the new lease standards, for existing contracts prior to the initial implementation date, the Group chooses not tore-evaluate whether it is a lease or it contains a lease.
The Group chooses to adjust the cumulative impact of the lease contracts that have not been completed as of January 1, 2021only. The balances of retained earnings and other related items on financial statements at the beginning of the period when the NewLease Standards are initially implemented (i.e., January 1, 2021) are adjusted for the cumulative impact amount of the initialimplementation, and the information in the comparative period is not adjusted.
At the effective date of the New Lease Standards (i.e., January 1, 2021), the Group’s transitional measures and their impact aredescribed below:
A. The Group as lessee
The Group does not have financing lease prior to the effective date.
For the operating leases before the effective date (except for short-term leases and leases for low-value assets which areaccounted for using a simplified method), the Group has right-of-use assets measured at the amount of lease liabilities and adjustedfor prepaid rental. At the effective date, the Group tests right-of-use assets for any impairment and adjusts their carrying value.
B. The Group as lessor
For the subleases which are classified as operating leases at the effective date and are surviving after the effective date, theGroup re-values and re-classifies them as a sublessor, based on the remaining lease term and the terms and conditions of the originalleases and the subleases, at the effective date.
C. The impact from the implementation of new lease standards on financial statements as of January 1, 2021 is as follows:
Unit: RMB
| Report items | Amount as of December 31, 2020 (before change) | Amount as of January 1, 2021 (after change) | ||
| Consolidated Statements | Company’s Statements | Consolidated Statements | Company’s Statements | |
| Prepayments | 295,557,594.21 | 37,867,760.48 | 250,349,223.52 | 23,024,960.48 |
| Right-of-use assets | 462,821,988.61 | 133,419,713.77 | ||
| Other non-current assets | 257,587,428.52 | 250,950,629.05 | ||
| Accounts payable | 15,526,558,924.33 | 15,525,355,089.28 | ||
| Non-current liabilities due within one year | 113,350,154.66 | 56,366,215.71 | ||
| Lease liabilities | 298,830,498.84 | 62,210,698.06 | ||
(2) Changes in important accounting estimates
□ Applicable √ Not applicable
(3) Adjustments to related items of financial statements at the beginning of the current year upon initialimplementation of the new lease standards since 2021
√ Applicable □ Not applicable
Whether it is necessary to adjust the accounting items of the balance sheet at the beginning of the year
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| Current assets: | |||
| Cash and bank balances | 7,788,139,761.68 | 7,788,139,761.68 | |
| Deposit reservation for balance | |||
| Lending funds | |||
| Held-for-trading financial assets | 250,789,617.29 | 250,789,617.29 | |
| Derivative financial assets | |||
| Notes receivable | 93,015,027.25 | 93,015,027.25 | |
| Accounts receivable | 9,951,611,596.65 | 9,951,611,596.65 | |
| Receivable financing | |||
| Prepayments | 295,557,594.21 | 250,349,223.52 | -45,208,370.69 |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Provision of cession receivable | |||
| Other receivables | 56,282,930.78 | 56,282,930.78 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Redemptory monetary capital for sale | |||
| Inventories | 9,170,731,903.19 | 9,170,731,903.19 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | 67,724.41 | 67,724.41 | |
| Other current assets | 522,858,736.68 | 522,858,736.68 | |
| Total current assets | 28,129,054,892.14 | 28,083,846,521.45 | -45,208,370.69 |
| Non-current assets: | |||
| Loans and advances |
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| disbursed | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 337,410,802.56 | 337,410,802.56 | |
| Investments in other equity instruments | 357,307,056.65 | 357,307,056.65 | |
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 14,674,535,924.15 | 14,674,535,924.15 | |
| Construction in progress | 2,078,910,639.92 | 2,078,910,639.92 | |
| Manufacturing biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 462,821,988.61 | 462,821,988.61 | |
| Intangible assets | 2,730,415,540.35 | 2,730,415,540.35 | |
| Development expenditure | 107,970,366.02 | 107,970,366.02 | |
| Goodwill | 16,859,185.08 | 16,859,185.08 | |
| Long-term deferred expenses | 152,215,032.28 | 152,215,032.28 | |
| Deferred tax assets | 275,559,445.74 | 275,559,445.74 | |
| Other non-current assets | 257,587,428.52 | 250,950,629.05 | -6,636,799.47 |
| Total non-current assets | 20,988,771,421.27 | 21,444,956,610.41 | 456,185,189.14 |
| Total assets | 49,117,826,313.41 | 49,528,803,131.86 | 410,976,818.45 |
| Current liabilities: | |||
| Short-term borrowings | 3,189,865,281.20 | 3,189,865,281.20 | |
| Borrowings from banks and other financial institutions | |||
| Borrowing funds | |||
| Held-for-trading financial liabilities | 43,578,775.71 | 43,578,775.71 | |
| Derivative financial liabilities |
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| Notes payable | 1,797,630,927.08 | 1,797,630,927.08 | |
| Accounts payable | 15,526,558,924.33 | 15,525,355,089.28 | -1,203,835.05 |
| Advances from customers | |||
| Contract liabilities | 772,033,187.85 | 772,033,187.85 | |
| Financial assets sold for repurchase | |||
| Customer deposits and deposits from banks and other financial institutions | |||
| Receivings from vicariously traded securities | |||
| Receivings from vicariously sold securities | |||
| Payroll payable | 1,136,453,967.56 | 1,136,453,967.56 | |
| Taxes payable | 195,498,317.72 | 195,498,317.72 | |
| Other payables | 67,844,709.64 | 67,844,709.64 | |
| Including: Interest payable | 8,911,319.91 | 8,911,319.91 | |
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Dividend payable for reinsurance | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 113,350,154.66 | 113,350,154.66 | |
| Other current liabilities | 7,012,595.33 | 7,012,595.33 | |
| Total current liabilities | 22,736,476,686.42 | 22,848,623,006.03 | 112,146,319.61 |
| Non-current liabilities: | |||
| Reserve fund for insurance contracts | |||
| Long-term borrowings | 2,754,299,262.02 | 2,754,299,262.02 | |
| Bonds payable | 3,031,391,335.56 | 3,031,391,335.56 | |
| Including: Preferred shares | |||
| Perpetual bonds |
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| Lease liabilities | 298,830,498.84 | 298,830,498.84 | |
| Long-term payables | |||
| Long-term payroll payable | |||
| Provisions | |||
| Deferred income | 538,922,331.52 | 538,922,331.52 | |
| Deferred tax liabilities | 323,065,909.80 | 323,065,909.80 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 6,647,678,838.90 | 6,946,509,337.74 | 298,830,498.84 |
| Total liabilities | 29,384,155,525.32 | 29,795,132,343.77 | 410,976,818.45 |
| Owners' equity: | |||
| Share capital | 3,275,438,427.00 | 3,275,438,427.00 | |
| Other equity instruments | 317,690,852.25 | 317,690,852.25 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,811,658,791.28 | 3,811,658,791.28 | |
| Less: Treasury shares | 516,007,644.95 | 516,007,644.95 | |
| Other comprehensive income | -112,010,012.52 | -112,010,012.52 | |
| Special reserves | |||
| Surplus reserves | 1,370,122,868.85 | 1,370,122,868.85 | |
| General risk reserve | 6,081,200.00 | 6,081,200.00 | |
| Retained earnings | 11,500,277,791.35 | 11,500,277,791.35 | |
| Total equity attributable to the owners of the Company | 19,653,252,273.26 | 19,653,252,273.26 | |
| Minority equity | 80,418,514.83 | 80,418,514.83 | |
| Total owners' equity | 19,733,670,788.09 | 19,733,670,788.09 | |
| Total liabilities and owners' equity | 49,117,826,313.41 | 49,528,803,131.86 | 410,976,818.45 |
Adjustment explanationThe Company has implemented the Accounting Standards for Business Enterprises No. 21 - Lease amended by the Ministry ofFinance from January 1, 2021.Balance Sheet of the Parent Company
Unit: RMB
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| Current assets: | |||
| Cash and bank balances | 2,834,936,444.19 | 2,834,936,444.19 | |
| Held-for-trading financial assets | 182,338,601.65 | 182,338,601.65 | |
| Derivative financial assets | |||
| Notes receivable | 75,154,389.95 | 75,154,389.95 | |
| Accounts receivable | 9,745,537,067.95 | 9,745,537,067.95 | |
| Receivable financing | |||
| Prepayments | 37,867,760.48 | 23,024,960.48 | -14,842,800.00 |
| Other receivables | 3,761,565,682.66 | 3,761,565,682.66 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Inventories | 2,307,402,064.65 | 2,307,402,064.65 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 132,090,455.49 | 132,090,455.49 | |
| Total current assets | 19,076,892,467.02 | 19,062,049,667.02 | -14,842,800.00 |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 5,896,926,627.12 | 5,896,926,627.12 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 8,801,650,213.78 | 8,801,650,213.78 | |
| Construction in progress | 313,889,183.09 | 313,889,183.09 | |
| Manufacturing biological |
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 133,419,713.77 | 133,419,713.77 | |
| Intangible assets | 2,258,621,419.91 | 2,258,621,419.91 | |
| Development expenditure | 12,173,386.98 | 12,173,386.98 | |
| Goodwill | |||
| Long-term deferred expenses | 417,895.69 | 417,895.69 | |
| Deferred tax assets | 54,618,987.06 | 54,618,987.06 | |
| Other non-current assets | 110,169,734.82 | 110,169,734.82 | |
| Total non-current assets | 17,448,467,448.45 | 17,581,887,162.22 | 133,419,713.77 |
| Total assets | 36,525,359,915.47 | 36,643,936,829.24 | 118,576,913.77 |
| Current liabilities: | |||
| Short-term borrowings | 2,426,635,181.20 | 2,426,635,181.20 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 1,616,583,704.36 | 1,616,583,704.36 | |
| Accounts payable | 7,583,147,844.25 | 7,583,147,844.25 | |
| Advances from customers | |||
| Contract liabilities | 363,007,702.67 | 363,007,702.67 | |
| Payroll payable | 606,402,939.12 | 606,402,939.12 | |
| Taxes payable | 34,135,334.79 | 34,135,334.79 | |
| Other payables | 1,440,612,669.29 | 1,440,612,669.29 | |
| Including: Interest payable | 6,306,124.36 | 6,306,124.36 | |
| Dividends payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 56,366,215.71 | 56,366,215.71 | |
| Other current liabilities | 9,707,204.85 | 9,707,204.85 | |
| Total current liabilities | 14,080,232,580.53 | 14,136,598,796.24 | 56,366,215.71 |
| Non-current liabilities: |
| Item | December 31, 2020 | January 1, 2021 | Amount adjusted |
| Long-term borrowings | 400,000,000.00 | 400,000,000.00 | |
| Bonds payable | 3,031,391,335.56 | 3,031,391,335.56 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 62,210,698.06 | 62,210,698.06 | |
| Long-term payables | |||
| Long-term payroll payable | |||
| Provisions | |||
| Deferred income | 202,689,088.19 | 202,689,088.19 | |
| Deferred tax liabilities | 299,192,361.87 | 299,192,361.87 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 3,933,272,785.62 | 3,995,483,483.68 | 62,210,698.06 |
| Total liabilities | 18,013,505,366.15 | 18,132,082,279.92 | 118,576,913.77 |
| Owners' equity: | |||
| Share capital | 3,275,438,427.00 | 3,275,438,427.00 | |
| Other equity instruments | 317,690,852.25 | 317,690,852.25 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,815,383,616.46 | 3,815,383,616.46 | |
| Less: Treasury shares | 516,007,644.95 | 516,007,644.95 | |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 1,370,120,086.45 | 1,370,120,086.45 | |
| Retained earnings | 10,249,229,212.11 | 10,249,229,212.11 | |
| Total owners' equity | 18,511,854,549.32 | 18,511,854,549.32 | |
| Total liabilities and owners' equity | 36,525,359,915.47 | 36,643,936,829.24 | 118,576,913.77 |
Adjustment explanationThe Company has implemented the Accounting Standards for Business Enterprises No. 21 - Lease amended by the Ministry ofFinance from January 1, 2021.
(4) Explanation of comparative data at early stage of retroactive adjustment after the initialimplementation of the new lease standards in 2021
□ Applicable √ Not applicable
38. Others
NoneVI. Taxable Items
1. Main tax types and rates
| Tax types | Taxation basis | Tax rate |
| VAT | Output taxes are calculated by applying 13%, 9% and 6% tax rates to taxable income, 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 the amount of actually-paid turnover tax | 7%、5% |
| Enterprise income tax | 15% or 25%, or the national or local statutory tax rate prevailing in an overseas subsidiary’s jurisdiction | 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. | 25% |
| 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. | 25% |
| Beijing Goertek Microelectronics Co., Ltd. | 25% |
| Shenzhen Goertek Microelectronics Co., Ltd. | 25% |
| Wuxi Goertek Microelectronics Co., Ltd. | 25% |
| Shanghai Ganyuzhi Technology 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. | Tax rate is 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. |
| 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. | 25% |
| 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% |
| Shenzhen Mototek Smart Technology Co., Ltd. | 15% |
| 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. | 25% |
| Nanning Goertek Electronics Co., Ltd. | 15% |
| Nanning Goertek Trading Co., Ltd. | 25% |
| Xian Goertek Electronic Technology Co., Ltd. | 25% |
| Yishui TECO Electronic Technology Co., Ltd. | 25% |
| Goertek Vina Co., Ltd | 20% |
| Goertek Precision Industry Vietnam Company Limited | 20% |
| Goertek Technology Korea Co., Ltd. | Tax rate is 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. | |
| Goertek (HongKong) Co., Limited | 8.25%/16.5% |
| Goertek Technology (Hong Kong)Co., Ltd. | 16.5% |
| Goertek Technology Vina Company Limited | 20% |
| GoerTek Audio Technologies Aps | 22% |
| Goertek Seiki Techonology株式会社 | 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% |
2. Tax preference
(1) According to the Reply to the Filings of the First Batch of High-Tech Enterprises in Shandong Province in 2020 issued bythe Office of Leading Group for the Recognition and Management of National High-Tech Enterprises, the Company and itssubsidiaries, Weifang Goertek Electronics Co., Ltd. and Weifang Goertek Microelectronics Co., Ltd., have been recognized ashigh-tech enterprises for a 3-year validity period, and their preferential period for the purpose of enterprise income tax is fromJanuary 1, 2020 to December 31, 2022. The enterprise income tax rate of 15% applies to the Company and its subsidiaries, WeifangGoertek Electronics Co., Ltd. and Weifang Goertek Microelectronics Co., Ltd., for year 2021.
(2) According to the Reply to the Filings of High-Tech Enterprises in Qingdao City in 2020 issued by the Office of LeadingGroup for the Recognition and Management of National High-Tech Enterprises on January 15, 2021, a subsidiary, Qingdao GoertekIntelligent Sensor Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential periodfor the purpose of enterprise income tax is from January 1, 2020 to December 31, 2022. The enterprise income tax rate of 15%applies to the subsidiary, Qingdao Goertek Intelligent Sensor Co., Ltd., for year 2021.
(3) According to the Reply to the Filings of the First Batch of High-Tech Enterprises in Shandong Province in 2019 issued bythe Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 22, 2020, asubsidiary, Yili Precision Manufacturing Co., Ltd. has been recognized as a high-tech enterprise for a validity period of 3 years, andits preferential period for the purpose of enterprise income tax is from January 1, 2019 to December 31, 2021. The enterprise incometax rate of 15% applies to the subsidiary Yili Precision Manufacturing Co., Ltd. for year 2021.
(4) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2021 issued by
the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2022, asubsidiary, Goertek Optical Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, andits preferential period for the purpose of enterprise income tax is from January 1, 2021 to December 31, 2023. The enterprise incometax rate of 15% applies to the subsidiary, Goertek Optical Technology Co., Ltd., for year 2021.
(5) According to the Reply to 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 January22, 2021, a subsidiary, Beijing Goertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3years, and its preferential period for the purpose of enterprise income tax is from January 1, 2020 to December 31, 2022. Theenterprise income tax rate of 15% applies to the subsidiary, Beijing Goertek Technology Co., Ltd., for year 2021.
(6) According to the Reply to the Filings of the Second Batch of High-Tech Enterprises in Shenzhen City in 2019 (GKHZ [2020]No.47) issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on February17, 2020, a subsidiary, Shenzhen Goertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of3 years, and its preferential period for the purpose of enterprise income tax is from January 1, 2019 to December 31, 2021. Theenterprise income tax rate of 15% applies to the subsidiary, Shenzhen Goertek Technology Co., Ltd., for year 2021.
(7) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shenzhen in 2021 issued by the Officeof Leading Group for the Recognition and Management of National High-Tech Enterprises on January 17, 2022, a subsidiary,Shenzhen Mototek Smart Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and itspreferential period for the purpose of enterprise income tax is from January 1, 2021 to December 31, 2023. The enterprise income taxrate of 15% applies to the subsidiary, Shenzhen Mototek Smart Technology Co., Ltd., for year 2021.
(8) According to the Notice on Publishing a List of the Second Batch of Proposed Recognized High-Tech Enterprises inShandong Province in 2020 issued by the Office of Leading Group for the Recognition and Management of National High-TechEnterprises on December 8, 2020, a subsidiary, Weifang Lokomo Precision Industry Co., Ltd. has been recognized as a high-techenterprise for a validity period of 3 years, and its preferential period for the purpose of enterprise income tax is from January 1, 2020to December 31, 2022. The enterprise income tax rate of 15% applies to the subsidiary, Weifang Lokomo Precision Industry Co., Ltd.for year 2021.
(9) According to the Notice on Publishing the Filings of the Second Batch of High-Tech Enterprises in Guangdong Province in2021 issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December20, 2021, a subsidiary, Dongguan Yili Precision Manufacturing Co., Ltd. has been recognized as a high-tech enterprise for a validityperiod of 3 years, and its preferential period for the purpose of enterprise income tax is from January 1, 2021 to December 31, 2023.The enterprise income tax rate of 15% applies to the subsidiary, Dongguan Yili Precision Manufacturing Co., Ltd. for year 2021.
(10) According to the Reply to the Filings of the Second Batch of High-Tech Enterprises in Guangdong Province in 2019(GKHZ [2020] No.50) issued by the Office of Leading Group for the Recognition and Management of National High-TechEnterprises on February 18, 2020, a subsidiary, Goertek Intelligence Technology Co., Ltd., has been recognized as a high-techenterprise for a validity period of 3 years, and its preferential period for the purpose of enterprise income tax is from January 1, 2019to December 31, 2021. The enterprise income tax rate of 15% applies to the subsidiary, Goertek Intelligence Technology Co., Ltd.,for year 2021.
(11) According to the Announcement of the Ministry of Finance, the State Taxation Administration and the NationalDevelopment and Reform Commission on Continuing the Enterprise Income Tax Policies for the Large-Scale Development ofWestern China (No. 23/2020), from January 1, 2021 to December 31, 2030, enterprise income tax will be levied at a reduced rate of15% for encouraged industrial enterprises located in the western region. The enterprise income tax rate of 15% applies to thesubsidiary, Nanning Goertek Electronics Co., Ltd., for year 2021.
(12) Goertek (HongKong) Co., Limited is an entity eligible for the two-tier profit tax system. The tax rate of 8.25% is applied tothe 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 whichexceeds HKD 2,000,000.
(13) According to the Announcement of the State Administration of Taxation on Issues Concerning the Implementation of theInclusive Income Tax Deduction and Exemption Policies for Small Low-Profit Enterprises (State Administration of TaxationAnnouncement No.2/2019), from January 1, 2019 to December 31, 2021, for small low-profit enterprises, 25% of the part of theannual taxable income not exceeding RMB 1 million shall be determined as valid taxable income and enterprise income tax will belevied at a reduced rate of 20%; 50% of the part of the annual taxable income between RMB 1 million and RMB 3 million shall bedetermined as valid taxable income and enterprise income tax will be levied at a reduced rate of 20%. According to theAnnouncement of the Ministry of Finance and the State Taxation Administration on Implementing the Preferential Income TaxPolicies for Micro and Small Enterprises and Individual Industrial and Commercial Households (Announcement No.12/2021 of theMinistry of Finance and the State Taxation Administration) and the Announcement of the State Taxation Administration on MattersConcerning the Implementation of Preferential Income Tax Policies Supporting the Development of Small Low-Profit Enterprisesand Individual Industrial and Commercial Households (Announcement No.8/2021 of the State Taxation Administration), fromJanuary 1, 2021 to December 31, 2022, for small low-profit enterprises, 12.5% of the part of the annual taxable income not exceedingRMB 1 million shall be determined as valid taxable income and enterprise income tax will be levied at a reduced rate of 20%. Theabove preferential tax policies are applicable to the subsidiary, Beijing Goertek Microelectronics Co., Ltd., and enterprise income taxis levied at the actual tax rate of 2.5% in 2021.
3. Others
None
VII. Notes to consolidated financial statements
1. Cash and bank balances
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 160,703.83 | 183,125.46 |
| Bank deposits | 9,137,740,198.21 | 6,913,008,859.08 |
| Other monetary capital | 910,620,794.05 | 874,947,777.14 |
| Total | 10,048,521,696.09 | 7,788,139,761.68 |
| Including: Total amounts deposited abroad | 1,091,856,806.03 | 1,341,665,954.60 |
| The total funds restricted by mortgage, pledge or freeze are as follows: | 910,620,794.05 | 874,947,777.14 |
Explanation on Other MattersBalances in other currencies at the end of the year involve notes, bonds and L/C margins.
2. Held-for-trading financial assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit and loss | 119,267,279.02 | 250,789,617.29 |
| Including: | ||
| Investments in equity instruments | 98,804,286.66 | 125,327,442.62 |
| Derivative financial assets | 20,462,992.36 | 125,462,174.67 |
| Total | 119,267,279.02 | 250,789,617.29 |
3. Notes receivable
(1) Notes receivable listed by classification
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance notes | 48,384,771.72 | 93,015,027.25 |
| Commercial acceptance notes | 1,709,928.75 | |
| Total | 50,094,700.47 | 93,015,027.25 |
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 | 50,094,700.47 | 100.00% | 50,094,700.47 | 93,015,027.25 | 100.00% | 93,015,027.25 | ||||
| Including: | ||||||||||
| Bank acceptance notes | 48,384,771.72 | 96.59% | 48,384,771.72 | 93,015,027.25 | 100.00% | 93,015,027.25 | ||||
| Commercial acceptance notes | 1,709,928.75 | 3.41% | 1,709,928.75 | |||||||
| Total | 50,094,700.47 | 100.00% | 50,094,700.47 | 93,015,027.25 | 100.00% | 93,015,027.25 | ||||
(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 | 4,385,853.64 |
| Total | 4,385,853.64 |
(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 | 76,909,941.48 | |
| Commercial acceptance notes | 1,709,928.75 | |
| Total | 76,909,941.48 | 1,709,928.75 |
(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 for bad debt reserves by item | 531,002.50 | 0.01% | 531,002.50 | 100.00% | ||||||
| Accounts receivable with bad debts reserves by group | 12,025,540,710.73 | 100.00% | 126,326,184.81 | 1.05% | 11,899,214,525.92 | 10,058,824,426.15 | 99.99% | 107,212,829.50 | 1.07% | 9,951,611,596.65 |
| Including: | ||||||||||
| Accounts receivable aging group | 11,857,375,456.09 | 98.60% | 125,485,358.54 | 1.06% | 11,731,890,097.55 | 9,858,116,092.81 | 98.00% | 106,209,287.83 | 1.08% | 9,751,906,804.98 |
| Accounts receivable factoring aging group | 168,165,254.64 | 1.40% | 840,826.27 | 0.50% | 167,324,428.37 | 200,708,333.34 | 2.00% | 1,003,541.67 | 0.50% | 199,704,791.67 |
| Total | 12,025,540,710.73 | 100.00% | 126,326,184.81 | 1.05% | 11,899,214,525.92 | 10,059,355,428.65 | 100.00% | 107,743,832.00 | 1.07% | 9,951,611,596.65 |
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 | 11,841,985,759.80 | 118,419,857.60 | 1.00% |
| 1 to 2 years | 3,586,193.03 | 1,075,857.91 | 30.00% |
| 2 to 3 years | 11,627,720.47 | 5,813,860.24 | 50.00% |
| Over 3 years | 175,782.79 | 175,782.79 | 100.00% |
| Total | 11,857,375,456.09 | 125,485,358.54 | -- |
Description for basis of determining the group:
For further details, please see this Note V. 10. “Impairment of financial assets”.Bad debt reserves by group: Accounts receivable factoring aging group
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Undue | 168,165,254.64 | 840,826.27 | 0.50% |
| Overdue 1-90 days | |||
| Overdue 91-180 days | |||
| Overdue 181-360 days | |||
| Overdue more than 360 days | |||
| Total | 168,165,254.64 | 840,826.27 | -- |
Description for basis of determining the group:
For further details, please see this Note V. 10. “Impairment of financial assets”.Disclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 12,010,151,014.44 |
| 1 to 2 years | 3,586,193.03 |
| 2 to 3 years | 11,627,720.47 |
| Over 3 years | 175,782.79 |
| 3 to 4 years | 68,408.50 |
| 4 to 5 years | 34.29 |
| Over 5 years | 107,340.00 |
| Total | 12,025,540,710.73 |
(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 for bad debt reserves by item | 531,002.50 | 102,177.68 | 633,180.18 | |||
| Accounts receivable | 107,212,829.50 | 19,113,355.31 | 126,326,184.81 | |||
| with bad debts reserves by group | ||||||
| Total | 107,743,832.00 | 19,215,532.99 | 633,180.18 | 126,326,184.81 |
Among them, significant information of bad debt reserves withdrawn or written back in the current period:
None
(3) Accounts receivable actually written off in current period
Unit: RMB
| Item | Written off amount |
| Accounts receivable actually written off | 633,180.18 |
Among them, significant information of accounts receivable written off:
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 | 3,340,717,904.53 | 27.78% | 33,407,179.05 |
| Customer 2 | 2,141,740,691.91 | 17.81% | 21,417,406.92 |
| Customer 3 | 1,944,785,829.66 | 16.17% | 19,447,858.29 |
| Customer 4 | 1,146,613,449.59 | 9.54% | 11,466,134.49 |
| Customer 5 | 715,446,129.70 | 5.95% | 7,154,461.30 |
| Total | 9,289,304,005.39 | 77.25% |
(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
| Transfer method of financial assets | Amount of receivables derecognized | Gains or losses related to derecognition |
| Buyout factoring | 1,673,167,869.71 | -7,852,608.05 |
5. Receivable financing
Unit: RMB
| Item | Closing balance | Opening balance |
| Notes receivable | 14,575,230.24 | |
| Total | 14,575,230.24 |
Changes in the current period of receivables financing and changes in fair value
□ Applicable √ Not applicable
If the provision for impairment of receivables financing 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. Prepayments
(1) Presentation of prepayments by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 85,353,901.12 | 87.50% | 250,173,008.49 | 99.93% |
| 1 to 2 years | 12,190,916.86 | 12.50% | 176,215.03 | 0.07% |
| Total | 97,544,817.98 | -- | 250,349,223.52 | -- |
Explanation of reasons why prepayments aged more than 1 year with significant amount are not settled in time:
| Company name | Year-end balance | Reasons for no settlement |
| Company 1 | 12,178,509.88 | Prepaid goods payments |
| Total | 12,178,509.88 |
(2) Advance payment in the five highest closing balance by seller
The sum of the five highest prepayments in the year-end balance ranked by seller is RMB 37,372,531.31, accounting for 38.31%of the total year-end balance of prepayments.
7. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 374,669,355.98 | 56,282,930.78 |
| Total | 374,669,355.98 | 56,282,930.78 |
(1) Interest receivable
None
(2) Dividend 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 | 107,739,537.40 | 12,490,314.32 |
| Security deposit | 90,839,988.55 | 57,935,416.76 |
| Current account | 164,646,290.05 | 3,135,180.20 |
| Withholding and remitting social insurance and housing provident fund | 39,293,343.86 | |
| Reserve fund | 148,313.37 | |
| Other | 815,580.66 | 771,845.99 |
| Total | 403,334,740.52 | 74,481,070.64 |
2) Provision for bad debts
Unit: RMB
| Bad-debt provision | First stage | Second stage | Third stage | Total |
| Expected credit impairment losses over the next 12 months | Expected credit impairment losses for the entire life (credit impairment not occurred) | Expected credit impairment losses for the entire life (credit impairment has occurred) | ||
| Balance as of January 1, 2021: | 18,198,139.86 | 18,198,139.86 | ||
| Balance as of January 1, 2021 in the current period | —— | —— | —— | —— |
| Accrual in the current period | 10,478,144.68 | 10,478,144.68 | ||
| Amount written off in the current period | 10,900.00 | 10,900.00 |
| Balance as of December 31, 2021 | 28,665,384.54 | 28,665,384.54 |
Significant changes in the carrying value of changes in the allowances for losses in the current period
□ Applicable √ Not applicable
Disclosed by aging of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 359,333,933.07 |
| 1 to 2 years | 23,443,684.75 |
| 2 to 3 years | 5,036,365.84 |
| Over 3 years | 15,520,756.86 |
| 3 to 4 years | 8,670,851.36 |
| 4 to 5 years | 5,156,222.00 |
| Over 5 years | 1,693,683.50 |
| Total | 403,334,740.52 |
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 for bad debt reserves by item | 10,900.00 | 10,900.00 | ||||
| Accounts receivable with bad debts reserves by group | 18,198,139.86 | 10,467,244.68 | 28,665,384.54 | |||
| Total | 18,198,139.86 | 10,478,144.68 | 10,900.00 | 28,665,384.54 | ||
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 | 10,900.00 |
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 |
| Company 1 | Current account | 157,406,315.35 | Within 1 year | 39.02% | 1,574,063.15 |
| Company 2 | Tax refund for export receivable - VAT | 91,830,238.29 | Within 1 year | 22.77% | 918,302.38 |
| Company 3 | Withholding and remitting social insurance and housing provident fund | 39,293,343.86 | Within 1 year | 9.74% | 392,933.44 |
| Company 4 | Earnest money | 31,145,566.89 | Within 1 year, 2-3 years | 7.72% | 331,613.25 |
| Company 5 | Tax refund for export receivable - VAT - Vietnam | 15,469,749.17 | Within 1 year, 1-2 years | 3.84% | 3,057,843.71 |
| Total | -- | 335,145,213.56 | -- | 83.09% | 6,274,755.93 |
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 | Provision for decline in value of inventories or provision for impairment of contract performance cost | Book value | Book balance | Provision for decline in value of inventories or provision for impairment of contract performance cost | Book value | |
| Raw materials | 5,166,920,234.13 | 110,350,236.94 | 5,056,569,997.19 | 2,281,283,533.83 | 85,486,871.76 | 2,195,796,662.07 |
| Products in process | 2,315,184,723.77 | 59,814,311.48 | 2,255,370,412.29 | 1,191,893,176.31 | 19,025,767.50 | 1,172,867,408.81 |
| Goods in stock | 4,408,510,122.04 | 59,150,749.51 | 4,349,359,372.53 | 5,479,699,670.13 | 23,194,817.12 | 5,456,504,853.01 |
| Revolving materials | 421,008,703.37 | 421,008,703.37 | 345,562,979.30 | 345,562,979.30 | ||
| Total | 12,311,623,783.31 | 229,315,297.93 | 12,082,308,485.38 | 9,298,439,359.57 | 127,707,456.38 | 9,170,731,903.19 |
(2) Provision for decline in value of inventories and 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 | 85,486,871.76 | 112,760,089.91 | 87,896,724.73 | 110,350,236.94 | ||
| Products in process | 19,025,767.50 | 64,384,648.25 | 23,596,104.27 | 59,814,311.48 | ||
| Goods in stock | 23,194,817.12 | 63,931,452.38 | 27,975,519.99 | 59,150,749.51 | ||
| Total | 127,707,456.38 | 241,076,190.54 | 139,468,348.99 | 229,315,297.93 | ||
(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. Non-current assets due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Non-current assets due within one year | 67,724.41 | |
| Total | 67,724.41 |
Significant debt investments/other debt investmentsNone
10. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Input tax retained for VAT | 326,273,163.10 | 379,913,842.53 |
| Input tax to be verified and to be deducted | 129,974,831.71 | 116,105,675.19 |
| Advance payment of enterprise income tax | 6,833,590.83 | 26,715,612.43 |
| Prepaid IPO fees | 8,983,655.49 | |
| Prepaid housing property tax and stamp tax | 123,606.53 | |
| Other | 3,706,986.47 | |
| Total | 475,772,227.60 | 522,858,736.68 |
11. Long-term equity investments
Unit: RMB
| Invested entity | Opening balance (book value) | Increase or decrease in the current period | Balance at the end of the period (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 | 295,656,242.7 | 25,611,552.36 | 1,189,723.34 | 4,310,075.40 | 318,147,443.07 | ||||||
| Industrial Company Limited | 7 | ||||||||||
| Qingdao Virtual Reality Institute Co., Ltd. | 41,754,559.79 | -2,542,104.19 | 39,212,455.60 | ||||||||
| Enkris Semiconductor Inc. | 80,000,000.00 | 42,305.24 | 80,042,305.24 | ||||||||
| Sub-total | 337,410,802.56 | 80,000,000.00 | 23,111,753.41 | 1,189,723.34 | 4,310,075.40 | 437,402,203.91 | |||||
| Total | 337,410,802.56 | 80,000,000.00 | 23,111,753.41 | 1,189,723.34 | 4,310,075.40 | 437,402,203.91 |
12. Investments in other equity instruments
Unit: RMB
| Item | Closing balance | Opening balance |
| Investment projects of the Fund Company | 318,163,764.54 | 174,609,853.97 |
| Mobvoi Inc. | 127,514,000.00 | 130,498,000.00 |
| Shenzhen New Radio Technology Co., Ltd. | 20,000,000.00 | |
| WaveOptics Ltd. | 52,199,202.68 | |
| Total | 465,677,764.54 | 357,307,056.65 |
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 consolidated income transferred to retained earnings | Reasons for designation of financial assets at fair value through other comprehensive income | Reasons for other comprehensive income transferred to retained earnings |
| Investment projects of the Fund Company | 95,817,145.93 | 26,771,103.27 | Non-trading equity instrument | Disposal of equity | ||
| Mobvoi Inc. | Non-trading equity instrument | |||||
| Shenzhen New Radio | Non-trading equity |
| Technology Co., Ltd. | instrument | |||||
| WaveOptics Ltd. | 148,122,883.71 | 148,122,883.71 | Non-trading equity instrument | Disposal of equity | ||
| Total | 243,940,029.64 | 174,893,986.98 |
Other explanations:
The accumulative gain from the disposal of the equity holded by Fund Company is RMB 34,803,826.41, of which RMB26,771,103.27 is transferred to retained earnings, and shareholder’s equity attributable to minority shareholders is RMB8,032,723.14.
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 | 201,430,042.13 | |
| Total | 201,430,042.13 |
14. Fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 18,123,352,480.76 | 14,674,535,924.15 |
| Total | 18,123,352,480.76 | 14,674,535,924.15 |
(1) Overview of fixed assets
Unit: RMB
| Item | Building and construction | Production equipment | Test equipment | Office equipment | Transportation equipment | Total |
| I. Original book value: | ||||||
| 1. Opening balance | 7,121,398,847.56 | 12,070,283,197.03 | 1,795,312,380.94 | 521,767,194.82 | 25,875,255.77 | 21,534,636,876.12 |
| 2. Amount increased in current period | 1,795,834,230.50 | 3,204,456,050.25 | 676,309,350.27 | 129,223,313.01 | 2,285,790.68 | 5,808,108,734.71 |
| (1) Purchase | 2,036,092,696.98 | 390,230,169.19 | 109,666,214.07 | 2,291,943.99 | 2,538,281,024.23 |
| (2) Transfer from construction in progress | 1,804,564,617.12 | 1,184,116,991.99 | 286,722,503.39 | 23,055,792.94 | 3,298,459,905.44 | |
| (3) Increase in business combinations | ||||||
| (4) Impact of difference from translation of statements in foreign currency | -8,730,386.62 | -15,753,638.72 | -643,322.31 | -3,498,694.00 | -6,153.31 | -28,632,194.96 |
| 3. Amount decreased in current period | 8,653,046.23 | 514,503,615.68 | 200,999,682.94 | 23,665,682.00 | 4,768,653.94 | 752,590,680.79 |
| (1) Disposal or scrap | 143,415.86 | 505,251,114.04 | 142,281,695.71 | 23,665,682.00 | 4,768,653.94 | 676,110,561.55 |
| (2) Others | 8,509,630.37 | 9,252,501.64 | 58,717,987.23 | 76,480,119.24 | ||
| 4. Closing 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 |
| II. Accumulated depreciation | ||||||
| 1. Opening balance | 1,049,234,767.80 | 4,861,162,487.45 | 668,695,109.01 | 262,240,878.17 | 18,767,709.54 | 6,860,100,951.97 |
| 2. Amount increased in current period | 273,335,622.88 | 1,482,974,003.26 | 271,115,007.30 | 83,455,591.99 | 1,691,119.26 | 2,112,571,344.69 |
| (1) Accrual | 274,144,247.96 | 1,485,053,048.65 | 271,252,103.77 | 85,426,423.54 | 1,691,449.78 | 2,117,567,273.70 |
| (2) Impact of difference from translation of statements in foreign currency | -808,625.08 | -2,079,045.39 | -137,096.47 | -1,970,831.55 | -330.52 | -4,995,929.01 |
| 3. Amount decreased in current period | 64,716.38 | 373,347,283.58 | 108,054,980.82 | 20,430,045.24 | 3,972,821.36 | 505,869,847.38 |
| (1) Disposal or scrap | 64,716.38 | 368,079,520.59 | 84,303,154.85 | 20,430,045.24 | 3,972,821.36 | 476,850,258.42 |
| (2) Others | 5,267,762.99 | 23,751,825.97 | 29,019,588.96 | |||
| 4. Closing 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 |
| III. Impairment provision | ||||||
| 1. Opening balance | ||||||
| 2. Amount increased in current period | ||||||
| 3. Amount decreased in current period | ||||||
| 4. Closing balance | ||||||
| IV. Book Value | ||||||
| 1. Closing 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. Opening book value | 6,072,164,079.76 | 7,209,120,709.58 | 1,126,617,271.93 | 259,526,316.65 | 7,107,546.23 | 14,674,535,924.15 |
Explanation on Other MattersOther decrease in fixed assets represents the estimated amount of fixed assets adjusted after upgrade and renovation, astransferred to construction in progress and houses and buildings.
(2) Temporarily idle fixed assets
None
(3) Fixed assets leased out through operating leases
Unit: RMB
| Item | Book value at the end of the reporting period |
| Houses and buildings | 362,897,570.63 |
(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 |
| Qingdao 1# Office building | 1,208,044,858.90 | Property rights certificate under processing |
| 9# Factory building | 149,942,591.23 | Approval in progress by the housing authority |
| 55# Factory building | 88,592,184.60 | Property rights certificate under processing |
| 56# Factory building | 88,253,422.34 | Property rights certificate under processing |
| 57# Factory building | 155,315,454.77 | Property rights certificate under processing |
| 23# Apartment | 2,707,332.15 | Property rights certificate under processing |
(5) Liquidation of fixed assets
None
15. Construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 2,127,055,853.77 | 2,078,910,639.92 |
| Total | 2,127,055,853.77 | 2,078,910,639.92 |
(1) Overview of construction projects in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Self-made equipment | 453,794,330.67 | 453,794,330.67 | 158,433,023.54 | 158,433,023.54 | ||
| Unaccepted equipment | 705,426,549.35 | 705,426,549.35 | 205,919,906.36 | 205,919,906.36 | ||
| 2# Office building | 160,023,622.42 | 160,023,622.42 | 91,982,146.20 | 91,982,146.20 | ||
| Sporadic projects | 157,044,940.34 | 157,044,940.34 | 77,163,481.14 | 77,163,481.14 | ||
| 39# Factory building | 106,641,302.22 | 106,641,302.22 | 63,400,326.60 | 63,400,326.60 | ||
| 42# Factory building | 78,086,553.66 | 78,086,553.66 | 43,602,044.74 | 43,602,044.74 | ||
| 52# Factory building | 77,142,513.20 | 77,142,513.20 | 1,920,779.74 | 1,920,779.74 | ||
| 37# Factory building | 65,991,667.31 | 65,991,667.31 | 58,643,938.12 | 58,643,938.12 | ||
| 46# Factory building | 56,866,174.61 | 56,866,174.61 | 35,435,572.74 | 35,435,572.74 | ||
| 63# Factory building | 38,623,187.09 | 38,623,187.09 | ||||
| 38# Factory building | 27,185,507.14 | 27,185,507.14 | 18,875,165.69 | 18,875,165.69 | ||
| 76# Factory building | 22,751,748.04 | 22,751,748.04 | ||||
| 73# Factory building | 18,061,783.67 | 18,061,783.67 | ||||
| 74# Factory building | 17,779,539.88 | 17,779,539.88 | ||||
| 43# Factory building | 17,137,354.45 | 17,137,354.45 | 14,607,806.39 | 14,607,806.39 | ||
| 75# Factory building | 15,726,428.05 | 15,726,428.05 | ||||
| 69# Factory building | 13,084,558.18 | 13,084,558.18 | ||||
| 68# Factory building | 13,063,930.16 | 13,063,930.16 | ||||
| 67# Factory building | 12,688,314.15 | 12,688,314.15 | ||||
| 72# Factory building | 12,277,054.11 | 12,277,054.11 | ||||
| 49# Factory building | 10,804,751.93 | 10,804,751.93 | 5,911,524.61 | 5,911,524.61 | ||
| 48# Factory building | 9,111,894.09 | 9,111,894.09 | 1,975,767.13 | 1,975,767.13 | ||
| 47# Factory | 8,653,090.45 | 8,653,090.45 | 4,225,214.79 | 4,225,214.79 |
| building | ||||||
| 64# Factory building | 8,103,133.65 | 8,103,133.65 | ||||
| 70# Factory building | 6,883,803.12 | 6,883,803.12 | ||||
| 71# Factory building | 5,376,869.24 | 5,376,869.24 | ||||
| 65# Factory building | 4,363,631.55 | 4,363,631.55 | ||||
| 66# Factory building | 4,361,621.04 | 4,361,621.04 | ||||
| Qingdao 1# Office building | 1,230,265,550.05 | 1,230,265,550.05 | ||||
| 55# Factory building | 24,550,734.57 | 24,550,734.57 | ||||
| 56# Factory building | 24,550,571.55 | 24,550,571.55 | ||||
| Reconstruction and expansion of factory buildings | 15,829,092.92 | 15,829,092.92 | ||||
| 57# Factory building | 1,047,196.58 | 1,047,196.58 | ||||
| Unaccepted software | 570,796.46 | 570,796.46 | ||||
| Total | 2,127,055,853.77 | 2,127,055,853.77 | 2,078,910,639.92 | 2,078,910,639.92 |
(2) Increase or decrease of significant construction projects 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 |
| Self-made equipment | 158,433,023.54 | 916,542,693.28 | 621,181,386.15 | 453,794,330.67 | Other | |||||||
| Unaccepted equipment | 205,919,906.36 | 1,373,401,618.69 | 873,894,975.70 | 705,426,549.35 | Other | |||||||
| 2# Office building | 357,080,000.00 | 91,982,146.20 | 68,041,476.22 | 160,023,622.42 | 44.81% | 40% | Other | |||||
| Sporadic projects | 77,163,481.14 | 296,869,053.18 | 165,275,117.11 | 51,712,476.87 | 157,044,940.34 | Other | ||||||
| 39# Factory building | 109,909,600.00 | 63,400,326.60 | 43,240,975.62 | 106,641,302.22 | 97.03% | 95% | Other | |||||
| 42# Factory building | 82,826,867.00 | 43,602,044.74 | 34,484,508.92 | 78,086,553.66 | 94.28% | 95% | Other | |||||
| 52# Factory building | 235,771,400.00 | 1,920,779.74 | 75,221,733.46 | 77,142,513.20 | 32.72% | 35% | Other | |||||
| 37# Factory building | 69,905,933.00 | 58,643,938.12 | 7,347,729.19 | 65,991,667.31 | 94.40% | 95% | Other | |||||
| 46# Factory building | 94,000,000.00 | 35,435,572.74 | 21,430,601.87 | 56,866,174.61 | 60.50% | 70% | Other |
| 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 |
| 63# Factory building | 172,939,700.00 | 38,623,187.09 | 38,623,187.09 | 22.33% | 25% | Other | ||||||
| 38# Factory building | 28,625,600.00 | 18,875,165.69 | 8,310,341.45 | 27,185,507.14 | 94.97% | 95% | Other | |||||
| 76# Factory building | 48,563,124.77 | 22,751,748.04 | 22,751,748.04 | 46.85% | 70% | Other | ||||||
| 73# Factory building | 49,331,582.51 | 18,061,783.67 | 18,061,783.67 | 36.61% | 40% | Other | ||||||
| 74# Factory building | 64,324,249.13 | 17,779,539.88 | 17,779,539.88 | 27.64% | 30% | Other | ||||||
| 43# Factory building | 18,670,000.00 | 14,607,806.39 | 2,529,548.06 | 17,137,354.45 | 91.79% | 92% | Other | |||||
| 75# Factory building | 56,944,053.31 | 15,726,428.05 | 15,726,428.05 | 27.62% | 30% | Other | ||||||
| 69# Factory building | 38,939,639.23 | 13,084,558.18 | 13,084,558.18 | 33.60% | 45% | Other | ||||||
| 68# Factory building | 38,888,118.50 | 13,063,930.16 | 13,063,930.16 | 33.59% | 45% | Other | ||||||
| 67# Factory building | 37,476,058.32 | 12,688,314.15 | 12,688,314.15 | 33.86% | 45% | Other | ||||||
| 72# Factory | 38,708,355.93 | 12,277,054.11 | 12,277,054.11 | 31.72% | 45% | Other |
| 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 |
| building | ||||||||||||
| 49# Factory building | 32,000,000.00 | 5,911,524.61 | 4,893,227.32 | 10,804,751.93 | 33.76% | 45% | Other | |||||
| 48# Factory building | 9,200,000.00 | 1,975,767.13 | 7,136,126.96 | 9,111,894.09 | 99.04% | 95% | Other | |||||
| 47# Factory building | 24,500,000.00 | 4,225,214.79 | 4,427,875.66 | 8,653,090.45 | 35.32% | 45% | Other | |||||
| 64# Factory building | 99,555,800.00 | 8,103,133.65 | 8,103,133.65 | 8.14% | 10% | Other | ||||||
| 70# Factory building | 24,554,153.73 | 6,883,803.12 | 6,883,803.12 | 28.04% | 45% | Other | ||||||
| 71# Factory building | 18,474,099.31 | 5,376,869.24 | 5,376,869.24 | 29.10% | 45% | Other | ||||||
| 65# Factory building | 90,000,000.00 | 4,363,631.55 | 4,363,631.55 | 4.85% | 5% | Other | ||||||
| 66# Factory building | 90,000,000.00 | 4,361,621.04 | 4,361,621.04 | 4.85% | 5% | Other | ||||||
| Qingdao 1# Office building | 1,500,000,000.00 | 1,230,265,550.05 | 478,756.44 | 1,230,744,306.49 | 82.05% | 100% | 34,278,258.45 | 3,809,576.72 | Other | |||
| 55# Factory | 99,670,000.00 | 24,550,734.57 | 64,041,450.03 | 88,592,184.60 | 88.89% | 100% | Other |
| 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 |
| building | ||||||||||||
| 56# Factory building | 99,670,000.00 | 24,550,571.55 | 63,702,850.79 | 88,253,422.34 | 88.55% | 100% | Other | |||||
| Reconstruction and expansion of factory buildings | 15,829,092.92 | 59,373,965.36 | 75,203,058.28 | Other | ||||||||
| 57# Factory building | 211,081,300.00 | 1,047,196.58 | 154,268,258.19 | 155,315,454.77 | 73.58% | 100% | Other | |||||
| Unaccepted software | 570,796.46 | 570,796.46 | Other | |||||||||
| Total | 3,841,609,634.74 | 2,078,910,639.92 | 3,398,888,392.62 | 3,298,459,905.44 | 52,283,273.33 | 2,127,055,853.77 | -- | -- | 34,278,258.45 | 3,809,576.72 | -- |
Explanation on Other Matters
Construction in progress – Other amounts decreased in the year represent the transfer of house construction fees arising from the original construction in progress to long-term deferredexpenses upon completion and the transfer of accepted software to intangible assets.
(3) Provision for impairment of construction in progress in current period
None
(4) Construction materials
None
16. Right-of-use assets
Unit: RMB
| Item | Building and construction | Total |
| I. Original book value: | ||
| 1. Opening balance | 462,821,988.61 | 462,821,988.61 |
| 2. Amount increased in current period | 16,290,960.23 | 16,290,960.23 |
| (1) New lease of current year | 22,944,855.42 | 22,944,855.42 |
| (2) Impact of change in the exchange rate | -6,653,895.19 | -6,653,895.19 |
| 3. Amount decreased in current period | 37,447,701.56 | 37,447,701.56 |
| (1) Amount disposed in current year | 37,447,701.56 | 37,447,701.56 |
| 4. Closing balance | 441,665,247.28 | 441,665,247.28 |
| II. Accumulated depreciation | ||
| 1. Opening balance | ||
| 2. Amount increased in current period | 122,484,411.95 | 122,484,411.95 |
| (1) Accrual | 122,484,411.95 | 122,484,411.95 |
| 3. Amount decreased in current period | 11,615,685.33 | 11,615,685.33 |
| (1) Disposal | 11,615,685.33 | 11,615,685.33 |
| 4. Closing balance | 110,868,726.62 | 110,868,726.62 |
| 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. Closing book value | 330,796,520.66 | 330,796,520.66 |
| 2. Opening book value | 462,821,988.61 | 462,821,988.61 |
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 | 1,404,807,112.85 | 8,964,410.00 | 2,922,489,842.67 | 178,444,433.82 | 4,514,705,799.34 |
| 2. Amount increased in current period | 34,692,287.94 | 529,007,097.09 | 56,735,888.98 | 620,435,274.01 | |
| (1) Purchase | 37,057,706.34 | 1,698,113.16 | 56,772,444.84 | 95,528,264.34 | |
| (2) Internal R&D | 528,007,923.88 | 528,007,923.88 | |||
| (3) Increase in business combinations | |||||
| (4) Impact of difference from translation of statements in foreign currency | -2,365,418.40 | -698,939.95 | -36,555.86 | -3,100,914.21 | |
| 3. Amount decreased in current period | 146,000,482.71 | 146,000,482.71 | |||
| (1) Disposal | 146,000,482.71 | 146,000,482.71 | |||
| (2) Others - disposal of subsidiaries | |||||
| 4. Closing balance | 1,439,499,400.79 | 8,964,410.00 | 3,305,496,457.05 | 235,180,322.80 | 4,989,140,590.64 |
| II. Accumulated amortization | |||||
| 1. Opening balance | 145,186,227.00 | 1,942,288.83 | 1,527,411,079.54 | 109,750,663.62 | 1,784,290,258.99 |
| 2. Amount increased in current period | 30,517,816.04 | 896,441.00 | 529,247,511.90 | 27,289,760.40 | 587,951,529.34 |
| (1) Accrual | 30,606,695.89 | 896,441.00 | 529,934,168.35 | 27,317,171.44 | 588,754,476.68 |
| (2) Impact of difference from translation of statements in foreign currency | -88,879.85 | -686,656.45 | -27,411.04 | -802,947.34 | |
| 3. Amount decreased in current period | 145,894,986.54 | 145,894,986.54 |
| (1) Disposal | 145,894,986.54 | 145,894,986.54 | |||
| (2) Others | |||||
| 4. Closing balance | 175,704,043.04 | 2,838,729.83 | 1,910,763,604.90 | 137,040,424.02 | 2,226,346,801.79 |
| III. Impairment provision | |||||
| 1. Opening balance | |||||
| 2. Amount increased in current period | |||||
| 3. Amount decreased in current period | |||||
| 4. Closing balance | |||||
| IV. Book value | |||||
| 1. Closing 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 |
| 2. Opening book value | 1,259,620,885.85 | 7,022,121.17 | 1,395,078,763.13 | 68,693,770.20 | 2,730,415,540.35 |
At the end of this period, the proportion of intangible assets created through internal research and development of the Company to thebalance of intangible assets is 59.04%.
(2) Overview of land-use right without certificates of title
None
18. Development expenditure
Unit: RMB
| Item | Opening balance | Increased amount in the current period | Decreased amount in the current period | Closing balance | ||
| Internal development expenses | Other | Recognized as intangible assets | Transfer to current profit and loss | |||
| Self-developed technologies for electroacoustic products | 107,970,366.02 | 4,301,342,763.66 | 528,007,923.88 | 3,638,349,113.36 | 242,956,092.44 | |
| Total | 107,970,366.02 | 4,301,342,763.66 | 528,007,923.88 | 3,638,349,113.36 | 242,956,092.44 | |
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Name of the invested entity or matter | Opening balance | Increase in the current period | Decrease in the | Closing balance |
| forming goodwill | current period | |||||
| 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 goodwill
At December 31, 2021, net value of goodwill is RMB 16,859,185.08, of which RMB 15,115,644.52 related to acquisition ofWeifang Goertek Communication Technology Co., Ltd. No goodwill impairment is recognized in the year, as the recoverableamount of the relevant group of assets valued under the equity method is higher than its carrying value (including part of carryingvalue 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 deferred 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 | 128,720,931.07 | 134,846,196.62 | 71,121,615.84 | 192,445,511.85 | |
| Electric power facility | 5,867,336.48 | 5,867,336.48 | |||
| Bank commission and arrangement fee | 16,767,021.31 | 8,574,246.81 | 8,192,774.50 | ||
| Financing guarantee fee | 3,030,000.00 | 1,262,500.00 | 1,767,500.00 | ||
| IT project service fee | 6,146,685.59 | 1,707,412.70 | 4,439,272.89 | ||
| Other | 859,743.42 | 509,312.41 | 350,431.01 | ||
| Total | 152,215,032.28 | 144,022,882.21 | 89,042,424.24 | 207,195,490.25 |
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 | 286,270,259.14 | 45,253,703.58 | 201,145,010.02 | 31,772,246.81 |
| Unrealized profit from internal transaction | 1,058,642,169.31 | 161,021,024.99 | 917,195,852.09 | 146,690,522.89 |
| Deductible loss | 1,291,424,655.49 | 204,109,171.19 | 105,178,529.87 | 25,019,797.35 |
| Government subsidies | 299,191,717.99 | 46,916,190.75 | 322,711,738.03 | 49,690,387.77 |
| Held-for-trading financial assets - changes in fair value of equity instrument | 49,624,038.43 | 7,443,605.78 | ||
| Changes in the fair value of derivative financial instruments | 15,190,564.34 | 2,285,343.12 | 43,578,775.71 | 7,190,497.99 |
| Temporary differences of fixed assets | 46,297,192.22 | 6,944,578.83 | 51,682,581.01 | 7,752,387.15 |
| Expenses of share-based payment | 190,629,395.67 | 28,594,409.35 | ||
| Total | 3,187,645,954.16 | 495,124,421.81 | 1,691,116,525.16 | 275,559,445.74 |
(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 | 4,338,259.81 | 1,084,564.94 | 4,549,882.24 | 1,137,470.56 |
| Changes in the fair value of derivative financial instruments | 29,721,944.30 | 4,739,855.81 | 171,872,843.02 | 26,894,130.21 |
| Difference in time point for recognition of interest income of factoring business | 5,581,895.45 | 1,395,473.86 | 2,503,977.04 | 625,994.26 |
| Difference between the book value of fixed assets and their tax bases | 2,536,133,275.63 | 380,419,991.34 | 1,962,722,098.44 | 294,408,314.77 |
| Held-for-trading financial assets - changes in fair value of equity instrument | 15,290,023.02 | 2,293,503.45 | ||
| Total | 2,591,065,398.21 | 389,933,389.40 | 2,141,648,800.74 | 323,065,909.80 |
(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 | 495,124,421.81 | 275,559,445.74 | ||
| Deferred tax liabilities | 389,933,389.40 | 323,065,909.80 |
(4) Details of unrecognized deferred tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 98,037,802.83 | 52,506,297.00 |
| Deductible loss | 916,176,966.88 | 655,499,213.78 |
| Government subsidies | 3,972,247.35 | 4,940,624.12 |
| Unrealized profit from internal transaction | 198,600,822.88 | 155,348,350.40 |
| Total | 1,216,787,839.94 | 868,294,485.30 |
(5) Deductible loss of unrecognized deferred tax assets will expire in the following years
Unit: RMB
| Year | Closing balance | Opening balance | Notes |
| 2021 | 44,036,312.92 | ||
| 2022 | 9,008,881.10 | 11,479,583.03 | |
| 2023 | 58,999,159.63 | 98,173,819.34 | |
| 2024 | 77,929,325.94 | 182,554,710.09 | |
| 2025 | 160,630,241.51 | 319,254,788.40 | |
| 2026 | 172,308,560.69 | ||
| 2027 | 718,056.78 | ||
| 2028 | 37,679,003.68 | ||
| 2029 | 76,312,985.99 | ||
| 2030 | 125,931,259.51 | ||
| 2031 | 196,659,492.05 | ||
| Total | 916,176,966.88 | 655,499,213.78 | -- |
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 | 187,877.77 | 1,878.78 | 185,998.99 |
| Prepayment for long-term assets | 366,744,190.26 | 366,744,190.26 | 235,100,069.21 | 235,100,069.21 | ||
| Input tax to be deducted but expected not to be deducted within one year | 17,036,311.11 | 17,036,311.11 | 15,732,285.26 | 15,732,285.26 | ||
| Certificate of deposit of large sums | 122,540,194.44 | 122,540,194.44 | ||||
| The part due within one year | -68,408.50 | -684.09 | -67,724.41 | |||
| Total | 506,440,165.08 | 1,194.69 | 506,438,970.39 | 250,951,823.74 | 1,194.69 | 250,950,629.05 |
23. Short-term borrowings
(1) Types of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Secured borrowings | 1,008,216,693.01 | 666,463,000.00 |
| Credit borrowings | 3,276,642,654.01 | 2,523,402,281.20 |
| Total | 4,284,859,347.02 | 3,189,865,281.20 |
Explanation of the types of short-term borrowings:
The year-end balance of secured borrowing is RMB 1,008,216,693.01, consisting of principle of RMB 1,005,956,500.00 andinterest of RMB 2,260,193.01. A part of the amount, RMB 719,050,000.00, is secured by a guarantee provided by Goertek Group Co.,Ltd., and the remainder is secured by a guarantee provided by its subsidiary, Goertek (HongKong) Co., Limited.
(2) Short-term borrowings that are overdue and not repaid
None
24. Held-for-trading financial liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Held-for-trading financial liabilities | 15,190,564.34 | 43,578,775.71 |
| Including: | ||
| Derivative financial liabilities | 15,190,564.34 | 43,578,775.71 |
| Total | 15,190,564.34 | 43,578,775.71 |
25. Notes payable
Unit: RMB
| Type | Closing balance | Opening balance |
| Bank acceptance notes | 2,742,876,464.23 | 1,797,630,927.08 |
| Total | 2,742,876,464.23 | 1,797,630,927.08 |
The amount of bills 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 | 16,391,404,094.29 | 14,068,333,091.24 |
| Payment for equipment | 1,663,151,657.69 | 866,620,185.20 |
| Payment for construction projects | 475,053,903.42 | 590,401,812.84 |
| Total | 18,529,609,655.40 | 15,525,355,089.28 |
(2) Important accounts payable aged above 1 year
Unit: RMB
| Item | Closing balance | Reasons for outstanding or carry-over |
| Payment for equipment | 4,553,236.38 | Unsettled |
| Payment for construction projects | 3,945,515.10 | Unsettled |
| Payment for equipment | 3,890,450.75 | Unsettled |
| Payment for construction projects | 3,456,102.47 | Unsettled |
| Payment for construction projects | 2,677,659.08 | Unsettled |
| Payment for equipment | 2,428,715.42 | Unsettled |
| Payment for construction projects | 2,057,801.58 | Unsettled |
| Payment for material | 1,785,884.72 | Unsettled |
| Payment for equipment | 1,757,381.39 | Unsettled |
| Payment for equipment | 1,394,369.95 | Unsettled |
| Payment for construction projects | 1,304,059.07 | Unsettled |
| Payment for material | 1,255,434.07 | Unsettled |
| Total | 30,506,609.98 | -- |
27. Contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Goods payments received in advance | 2,210,825,761.69 | 772,033,187.85 |
| Total | 2,210,825,761.69 | 772,033,187.85 |
28. Payroll payable
(1) Presentation of payroll payable to employees
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| I. Short-term payroll | 1,136,453,967.56 | 7,477,012,054.66 | 7,546,895,862.59 | 1,066,570,159.63 |
| II. Post-employment benefits—defined contribution plans | 552,597,537.13 | 552,597,537.13 | ||
| Total | 1,136,453,967.56 | 8,029,609,591.79 | 8,099,493,399.72 | 1,066,570,159.63 |
(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 | 1,126,479,091.79 | 6,610,396,096.58 | 6,681,966,133.52 | 1,054,909,054.85 |
| 2. Employee welfare fee | 426,845,347.70 | 426,845,347.70 | ||
| 3. Social insurance premium | 234,362,594.89 | 234,362,594.89 | ||
| Incl.: Medical insurance premium | 225,409,289.39 | 225,409,289.39 | ||
| Work injury insurance premium | 7,404,777.31 | 7,404,777.31 | ||
| Maternity insurance premium | 1,548,528.19 | 1,548,528.19 | ||
| 4. Housing provident fund | 182,639,259.43 | 182,639,259.43 | ||
| 5. Labor union expenditure and employee education expenses | 9,974,875.77 | 22,768,756.06 | 21,082,527.05 | 11,661,104.78 |
| Total | 1,136,453,967.56 | 7,477,012,054.66 | 7,546,895,862.59 | 1,066,570,159.63 |
(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 | 530,270,151.16 | 530,270,151.16 | ||
| 2. Unemployment insurance premium | 22,327,385.97 | 22,327,385.97 | ||
| Total | 552,597,537.13 | 552,597,537.13 |
Other explanations:
The Group contributes to mandatory pension program and unemployment benefit program established by governmentalauthority. Under these programs, the Group makes monthly contributions to these programs respectively at 16% and 0.70% of the2021 basis for social insurance contributions. Except the above monthly contributions, the Group is not under other paymentobligations. Corresponding expenditures 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 | 35,791,727.76 | 20,952,053.68 |
| Enterprise income tax | 254,141,624.62 | 131,731,154.94 |
| Personal income tax | 9,980,898.05 | 7,376,446.64 |
| City maintenance and construction tax | 19,989,711.74 | 9,791,014.76 |
| Education surcharge | 8,056,604.31 | 3,670,236.25 |
| Local education surcharges | 5,766,024.57 | 2,474,306.23 |
| Local water conservancy construction fund | 0.00 | 703,565.32 |
| Housing property tax | 16,792,720.42 | 11,797,756.21 |
| Land use tax | 2,926,628.84 | 4,682,015.07 |
| Stamp duties tax | 3,141,644.18 | 1,905,608.50 |
| Water resource tax | 20.00 | 32,414.00 |
| Environmental protection tax | 5,024.73 | 19,282.98 |
| Withholding taxes | 17,371.06 | 362,463.14 |
| Total | 356,610,000.28 | 195,498,317.72 |
30. Other payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest payable | 8,911,319.91 | |
| Other payables | 80,187,733.17 | 58,933,389.73 |
| Total | 80,187,733.17 | 67,844,709.64 |
(1) Interest payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest on long-term borrowings with payment of interest by installments and repayment of principal upon maturity | 1,925,046.99 | |
| Corporate bond interest | 4,381,543.10 | |
| Interest payable on short-term borrowings | 2,604,729.82 | |
| Total | 8,911,319.91 |
Important overdue and unpaid interest:
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 | 30,175,265.11 | 48,644,678.41 |
| Payroll payable | 4,246,920.21 | 6,104,492.63 |
| Deposit payable | 44,029,093.10 | 1,869,467.99 |
| Various security deposits payable | 1,736,454.75 | 2,314,750.70 |
| Total | 80,187,733.17 | 58,933,389.73 |
2) Other important payables aged above 1 year
None
31. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year | 400,000,000.00 | |
| Lease liabilities due within one year | 101,408,170.04 | 113,350,154.66 |
| Total | 501,408,170.04 | 113,350,154.66 |
32. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Notes receivable endorsed, undue and not de-recognized | 1,709,928.75 | 3,901,143.75 |
| VAT payable—tax on items to be resold | 13,134,430.26 | 3,111,451.58 |
| Total | 14,844,359.01 | 7,012,595.33 |
33. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Secured borrowings | 1,613,294,229.18 | 2,754,299,262.02 |
| Credit borrowings | 990,921,555.56 | |
| Long-term borrowings due within one year | -400,000,000.00 | |
| Total | 2,204,215,784.74 | 2,754,299,262.02 |
Description of types of long-term borrowings:
The year-end balance of secured borrowing is RMB 1,613,294,229.18, consisting of RMB 1,611,383,000.00 of principle andRMB 1,911,229.18 of interest. A part of the amount, RMB 400,000,000.00 of borrowing is secured by a guarantee provided byGoertek Group Co., Ltd., and the remaining borrowings is secured by a guarantee provided by its subsidiary, Goertek (HongKong)Co., Limited.Other explanations, including interest rate range:
| Creditor | Borrowing Starting date | Borrowing Closing date | Interest rate (%) | Currency | Closing balance | Opening balance | ||
| Foreign currency amount (RMB 10,000) | Local currency amount (RMB 10,000) | Foreign currency amount (RMB 10,000) | Local currency amount (RMB 10,000) | |||||
| Standard Chartered Bank syndicate | 1/16/2020 | 1/16/2023 | 1.65-3.46 | USD | 19,000.00 | 121,138.30 | 30,000.00 | 195,747.00 |
| China Development Bank | 9/29/2020 | 9/28/2022 | 3.54-3.79 | RMB | 40,000.00 | 40,000.00 | ||
| Shandong Province Branch of The Export-Import Bank of China | 3/11/2021 | 2/24/2023 | 2.70 | RMB | 50,000.00 | |||
| Shandong Province Branch of The Export-Import Bank of China | 5/28/2021 | 5/26/2023 | 3.40 | RMB | 49,000.00 | |||
| Syndicated loans | 9/20/2018 | 9/21/2026 | 5.39 | RMB | 39,682.93 |
34. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Convertible bond | 3,031,391,335.56 | |
| Total | 3,031,391,335.56 |
(2) Changes in bonds payable (excluding preferred shares, perpetual bonds and other financial instrumentsclassified as financial liabilities)
Unit: RMB
| Bond name | Face value | Issuing date | Bond period | Issued amount | Opening balance | Issue in the current period | Provision interest at face value | Premium or discount amortization | Repayment in current period | Share conversion in current year | Redemption in current year | Closing balance |
| Convertible bond | 4,000,000,000.00 | Friday, June 12, 2020 | 6 years | 4,000,000,000.00 | 3,031,391,335.56 | 687,779.54 | 12,132,769.38 | 3,029,105,297.84 | 14,418,807.10 | 0.00 | ||
| Total | -- | -- | -- | 4,000,000,00 | 3,031,391,3 | 687,779. | 12,132,7 | 3,029,10 | 14,418,8 | 0.00 |
| 0.00 | 35.56 | 54 | 69.38 | 5,297.84 | 07.10 |
(3) Explanation of conversion conditions and time of convertible bonds
As approved by the CSRC in its Reply on Approving Public Offering of Convertible Bonds by Goertek Inc. (CSRC Permit No.780/[2020]), the Group issued 40,000,000 convertible bonds with par value of RMB 100 on June 12, 2020. The coupon rate of thebonds is 0.20% for the first year, 0.40% for the second year, 0.60% for the third year, 1.50% for the fourth year, 1.80% for the fifthyear and 2.00% for the sixth year. Annual interest payment dates are each anniversary of the issuance date of convertible bonds, andthe principal and all interests accrued will be paid at maturity date.The conversion period starts from the first trading day after the expiration of six months from the issuance date of theconvertible bonds until the maturity date of the convertible bonds (from December 18, 2020 to June 11, 2026). The initial conversionprice is RMB 23.27 per share and remains unchanged up to date.For the Company’s A shares (stock abbreviation: Goertek; stock code: 002241), the closing price in more than ten trading daysin twenty consecutive trading days from December 18, 2020 to January 15, 2021 was not lower than 130% of the current “GoertekConvertible Bonds NO.2” conversion price at RMB 23.27 per share, i.e. RMB 30.26 per share. The conditional redemption of“Goertek Convertible Bonds NO.2” according to the Prospectus has been triggered.According to the Proposal on Early Redemption of “Goertek Convertible Bonds NO.2” reviewed and approved at the thirteenthsession of the fifth Board of Directors and the eleventh session of the fifth Board of Supervisors held by the Company on January 15,2021, it was resolved to exercise the conditional redemption right of “Goertek Convertible Bonds NO.2” to redeem after close ofmarket on the redemption registration date (March 2, 2021) all “Goertek Convertible Bonds NO.2” bonds at the price of the nominalvalue of the bonds plus the accrued interest for the current period. As of March 3, 2021, “Goertek Convertible Bonds NO.2” was nolonger traded and converted, and was delisted on March 11, 2021.
(4) Explanation of other financial instruments classified as financial liabilitiesNone
35. Lease liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease payment | 327,964,908.57 | 441,150,002.41 |
| Unrecognized financing fees | -16,346,783.13 | -28,969,348.91 |
| Lease liabilities due within one year | -101,408,170.04 | -113,350,154.66 |
| Total | 210,209,955.40 | 298,830,498.84 |
36. Deferred income
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Cause of formation |
| Government subsidies | 538,922,331.52 | 198,381,126.00 | 196,982,376.87 | 540,321,080.65 | |
| Total | 538,922,331.52 | 198,381,126.00 | 196,982,376.87 | 540,321,080.65 | -- |
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 industrial upgrading | 7,784,270.58 | 140,206,700.00 | 147,990,970.58 | Income-related | ||||
| Special funding for corporate innovation, technical transformation and industrial upgrading | 489,411,393.69 | 58,174,426.00 | 47,364,779.64 | 500,221,040.05 | Asset-related | |||
| Awards and subsidies for public leasehold houses | 41,726,667.25 | 1,626,626.65 | 40,100,040.60 | Asset-related |
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 | 3,275,438,427.00 | 140,882,609.00 | 140,882,609.00 | 3,416,321,036.00 |
Other explanations:
(1) Due to the convertible bond holders’ request for conversion in 2021, the equity capital of the Company was changed to RMB3,416,321,036.
(2) As of December 31, 2021, the 115,400,305 shares of the Company held by the controlling shareholders and their personsacting in concert have been pledged, representing 3.38% of total shares of the Company. Including:
① Mr. Jiang Long, a shareholder of the Company, pledged his 15,000,000 shares of the Company to China MerchantsSecurities Co., Ltd. for the period from August 3, 2021 to August 3, 2022.
② Goertek Group Co., Ltd., a shareholder of the Company, pledged its 100,400,305 shares of the Company to ZhongtaiSecurities Co., Ltd. for the period from March 30, 2021 until the procedures for pledge release are completed.
38. Other equity instruments
(1) Basic information of other financial instruments such as preferred stocks and perpetual bonds issued atthe end of the period
As approved by the CSRC in its Reply on Approving Public Offering of Convertible Bonds by Goertek Inc. (CSRC Permit No.780/[2020]), the Company issued 40,000,000 convertible bonds with par value of RMB 100 on June 12, 2020. The coupon rate of thebonds is 0.20% for the first year, 0.40% for the second year, 0.60% for the third year, 1.50% for the fourth year, 1.80% for the fifthyear and 2.00% for the sixth year. Annual interest payment dates are each anniversary of the issuance date of convertible bonds, andthe principal and all interests accrued will be paid at maturity date.
According to the Proposal on Early Redemption of “Goertek Convertible Bonds NO.2” reviewed and approved at the thirteenthsession of the fifth Board of Directors and the eleventh session of the fifth Board of Supervisors held by the Company on January 15,2021, it was resolved to exercise the conditional redemption right of “Goertek Convertible Bonds NO.2” to redeem all “GoertekConvertible Bonds NO.2” bonds which were not converted to shares at the price of the nominal value of the bonds plus the accruedinterest for the current period. As of March 3, 2021, “Goertek Convertible Bonds NO.2” was no longer traded and converted, and wasdelisted on March 11, 2021.
(2) Changes in financial instruments such as preferred shares and perpetual bonds outstanding at the endof the period
Unit: RMB
| Outstanding financial instruments | Beginning of the period | Increase in the current period | Decrease in the current period | End of period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
| Convertible bond | 141,560,665 | 317,690,852.25 | 141,560,665 | 317,690,852.25 | ||||
| Total | 141,560,665 | 317,690,852.25 | 141,560,665 | 317,690,852.25 | ||||
Changes of other equity instruments in the current period, explanation of reasons for changes, and basis for relevant accountingtreatment:
The decrease in the amount of other equity instruments relates to the conversion and redemption of the convertible bonds in theyear.
39. Capital reserves
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium (Equity premium) | 3,282,034,618.76 | 5,520,332,302.70 | 128,809,946.78 | 8,673,556,974.68 |
| Other capital reserves | 529,624,172.52 | 871,368,483.26 | 596,443,436.16 | 804,549,219.62 |
| Total | 3,811,658,791.28 | 6,391,700,785.96 | 725,253,382.94 | 9,478,106,194.30 |
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
① Capital reserves-equity premium increased by RMB 5,520,332,302.70 for the year, attributable to: 1. the conversion ofconvertible bonds, causing an increase in capital reserves-equity premium by RMB 3,209,305,793.20; 2. the share-based payment forthe first exercise related to “Homeland No. 4”, whereby other capital reserves of RMB 596,443,436.16 recognized during the waitingperiod was transferred into equity premium; and 3. an increase of RMB 1,714,583,073.34 in capital reserves-equity premium relatedto the increased holdings of the Company in a subsidiary, Goertek Microelectronics Inc. as a result of the minority shareholders’capital increase.
② Capital reserves-equity premium decreased by RMB 128,809,946.78, attributable to: 1. the non-trading transfer of the11,000,000 shares in the special securities account for repurchase to the special account for “Homeland No. 5” employee stockprogram at RMB 10 per share in the year, causing an increase in capital reserves-equity premium by RMB 114,033,093.83; and 2. theshare-based payment of Goertek Microelectronics Inc. in the year, causing an increase in minority equity and thus a decrease in
capital reserves-equity premium by RMB 14,776,852.95.
③ Capital reserves–other capital reserves increased by RMB 871,368,483.26 for the year, all related to the share-basedpayment. For the details, please see this Note XIII–Share-based Payment–2. Equity-settled share-based payment.
④ Capital reserves–other capital reserves decreased by RMB 596,443,436.16 for the year, all related to the share-basedpayment for the first exercise related to “Homeland No. 4”, with other capital reserves being transferred into equity premium.
40. Treasury shares
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Shares of the Company acquired for employee stock programs or equity incentives | 516,007,644.95 | 1,999,998,595.63 | 224,033,093.83 | 2,291,973,146.75 |
| Total | 516,007,644.95 | 1,999,998,595.63 | 224,033,093.83 | 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, 2021, the cumulative treasury shares are 74,265,451, representing 2.17% of total equity of the Company.Details are as follows:
1. Treasury shares buyback
At the 24th meeting of the 4th Board of Directors of the Company held on October 18, 2019, the Proposal on the Plan toRe-purchase Shares of the Company and other related proposals were deliberated and adopted, approving the Company to repurchaseits own shares at a price no higher than RMB 21.00 per share for employee stock programs or equity incentives through centralizedbidding, where the total amount of funding for share repurchase shall be no less than RMB 500 million and no more than RMB 1billion. The share repurchase proposal shall be implemented within 12 months after reviewed and adopted by the Board of Directorsof the Company. As of April 27, 2020, the share repurchase plan was completely implemented, and the 25,335,918 shares werere-purchased in total. The treasury shares acquired from this share repurchase represent 0.74% of the total equity of the Company atthe year end.
At the 15th and 16th meetings of the 5th Board of Directors of the Company held on January 29, 2021 and February 9, 2021respectively, the Proposal on the Deliberation of the Plan to Re-purchase Shares of the Company and the Proposal on theAmendment of the Plan to Re-purchase Shares of the Company were deliberated and adopted successively, approving the Company touse its own funds to repurchase its shares through centralized bidding for the later implementation of employee stock plans or equityincentives. The total amount of funding for share repurchase shall be no less than RMB 1,000 million (inclusive) and no more than
RMB 2,000 million, and the re-purchase price may not exceed RMB 39.00 per share. The share repurchase proposal shall beimplemented within 6 months after reviewed and adopted by the Board of Directors of the Company. As of February 23, 2021, theimplementation of share repurchase plan was completed, and the 59,929,533 shares were re-purchased in total. The treasury sharesacquired from this share repurchase represent 1.75% of the total equity of the Company at the year end.
2. Treasury shares transfer
On July 26, 2021, the Company received the Confirmation of Securities Transfer Registration issued by China SecuritiesDepository and Clearing Corporation Limited Shenzhen Branch. The 11,000,000 shares in the special securities account forrepurchase of the Company were transferred to the special account for “Homeland No. 5” employee stock program at RMB 10 pershare on July 23, 2021. As of the reporting date, there are a total of 11,000,000 shares in the special account for “Homeland No. 5”employee stock program, accounting for 0.32% of the Company's total share capital at the end of the period
41. Other comprehensive income
Unit: RMB
| Item | Opening balance | 2021 | 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 retained earnings 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 | 7,711,365.44 | 233,914,853.56 | 173,914,158.16 | 979,828.82 | 39,220,079.94 | 19,800,786.64 | 46,931,445.38 | |
| Changes in the | 7,711,365.44 | 233,914,853.56 | 173,914,158 | 979,828.8 | 39,220,07 | 19,800,78 | 46,931,4 | |
| fair value of other equity instruments | .16 | 2 | 9.94 | 6.64 | 45.38 | |||
| II. Other comprehensive income that will be reclassified into profit or loss | -119,721,377.96 | -29,367,334.40 | -27,356,836.99 | -2,010,497.41 | -147,078,214.95 | |||
| Including: other comprehensive income that can be converted into gains and losses under the equity method | 19,401,067.14 | 7,950,273.16 | 7,950,273.16 | 27,351,340.30 | ||||
| Difference from translation of financial statements in foreign currency | -139,122,445.10 | -37,317,607.56 | -35,307,110.15 | -2,010,497.41 | -174,429,555.25 | |||
| Total other comprehensive incomes | -112,010,012.52 | 204,547,519.16 | 173,914,158.16 | 979,828.82 | 11,863,242.95 | 17,790,289.23 | -100,146,769.57 |
Other explanations, including the adjustment of the effective part of cash flow hedging gains and losses into the initially recognizedamount of the hedged item:
None
42. Surplus reserves
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus reserves | 1,370,122,868.85 | 76,413,252.66 | 1,446,536,121.51 | |
| Total | 1,370,122,868.85 | 76,413,252.66 | 1,446,536,121.51 |
Explanation of surplus reserves, including the increase and decrease in the current period and explanation of reasons for changes:
According to the Company Law and its Articles of Association, the Company allocates 10% of net profits to the statutorysurplus reserves. The Company does not need to allocate further amounts if the cumulative amount of the statutory surplus reservesreaches more than 50% of the registered capital.The Company may extract any surplus reserves after extracting the statutory surplus reserve. Any surplus reserves may be usedto cover the losses of previous years or increase the share capital wafter approval.
The surplus reserves increased by RMB 76,413,252.66 for the period. The 10% of the Company's net profit is allocated to thesurplus reserves, i.e. RMB 75,858,016.34, and the surplus reserves increased by RMB 555,236.32 as a result of the disposal of otherequity instrument investments.
43. General risk reserve
Unit: RMB
| Items | Opening balance | 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 |
Explanation on Other MattersAccording 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 theclosing balance of financing factoring business to the provision for risks.
44. Retained earnings
Unit: RMB
| Item | 2021 | 2020 |
| Retained earnings at the end of last period before adjustment | 11,500,277,791.35 | 9,163,016,394.27 |
| Total retained earnings at the beginning of the adjustment period (increase+, decrease-) | 196,303.24 | |
| Retained earnings at the beginning of the period after adjustment | 11,500,277,791.35 | 9,163,212,697.51 |
| Plus: net profit attributable to the owner of the parent company in the current period | 4,274,702,999.38 | 2,848,007,269.61 |
| Less: Withdrawal of statutory surplus reserves | 75,858,016.34 | 192,707,582.77 |
| Appropriation of general risk reserve | 1,184,800.00 | |
| Common stock dividends converted to share capital | 499,658,337.75 | 317,049,793.00 |
| Add: Disposal of investments in other equity instruments | 173,358,921.84 | |
| Retained earnings at the end of the period | 15,372,823,358.48 | 11,500,277,791.35 |
Details of the adjustment of the retained earnings at the beginning of the period:
1) The retained earnings 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 retained earnings affected by the change of accounting policy at the beginning of the period is RMB 0.00.
3) The retained earnings affected by the correction of major accounting errors at the beginning of the period is RMB 0.00.
4) The retained earnings affected by the change of combination scope caused by the common control at the beginning of the period isRMB 0.00.
5) The retained earnings affected by other adjustments at the beginning of the period is RMB 0.00.
45. Operating revenue and operating cost
Unit: RMB
| Item | 2021 | 2020 | ||
| Income | Cost | Income | Cost | |
| Main business | 76,946,324,805.73 | 66,054,072,404.35 | 56,531,616,437.84 | 47,439,733,316.54 |
| Other business | 1,275,093,812.29 | 1,113,594,255.31 | 1,211,126,456.12 | 1,044,072,095.20 |
| Total | 78,221,418,618.02 | 67,167,666,659.66 | 57,742,742,893.96 | 48,483,805,411.74 |
Whether the lower of the audited net profit before and the audited net profit after deducting non-recurring profits and losses isnegative
□ Yes √ No
Revenue related information:
Unit: RMB
| Classification of contracts | Division 1 | Division 2 | Total |
| Product types | |||
| Including: | |||
| Precision components | 13,840,133,491.33 | 13,840,133,491.33 | |
| Smart audio device | 30,297,084,891.23 | 30,297,084,891.23 | |
| Smart hardware | 32,809,106,423.17 | 32,809,106,423.17 | |
| Other business income | 1,275,093,812.29 | 1,275,093,812.29 | |
| By business regions | |||
| Including: | |||
| Domestic | 7,571,525,782.78 | 7,571,525,782.78 | |
| Overseas | 70,649,892,835.24 | 70,649,892,835.24 | |
| By sales channel | |||
| Including: | |||
| Direct selling | 77,770,329,729.13 | 77,770,329,729.13 | |
| Distribution | 451,088,888.89 | 451,088,888.89 | |
| Total | 78,221,418,618.02 | 78,221,418,618.02 |
Information about performance obligations:
NoneInformation about the trading price apportioned to remaining performance obligations:
None
46. Taxes and surcharges
Unit: RMB
| Item | 2021 | 2020 |
| City maintenance and construction tax | 66,914,986.17 | 62,611,875.61 |
| Education surcharge | 25,069,506.18 | 26,868,948.83 |
| Housing property tax | 62,157,864.15 | 47,922,731.38 |
| Land use tax | 4,928,054.01 | 15,838,009.95 |
| Vehicle and vessel use tax | 52,964.86 | 40,230.39 |
| Stamp duties tax | 45,106,860.23 | 24,511,331.54 |
| Local education surcharges | 17,398,626.51 | 17,912,632.68 |
| Local water conservancy construction fund | 220,917.98 | 4,567,259.15 |
| Water resource tax | 15,694.00 | 72,626.00 |
| Environmental protection tax | 26,511.41 | 54,824.52 |
| Total | 221,891,985.50 | 200,400,470.05 |
Explanation on Other MattersFor the details of payment standards for taxes and surcharges, please see this Note VI. Tax.
47. Selling expenses
Unit: RMB
| Item | 2021 | 2020 |
| Employee remuneration | 269,460,139.20 | 313,042,495.30 |
| Share-based apportioned payment | 63,634,538.59 | 29,447,134.69 |
| Rental fees | 4,474,361.06 | 23,313,826.11 |
| Sales commission | 13,450,128.71 | 20,884,743.52 |
| Insurance expenses | 21,984,424.28 | 15,271,530.90 |
| Sample expenses | 12,221,433.86 | 14,406,615.59 |
| Entertainment expenses | 12,782,841.89 | 13,210,709.52 |
| Travel expenses | 11,173,815.95 | 10,757,426.34 |
| Office expenses | 14,724,830.06 | 15,878,891.93 |
| Depreciation cost | 14,204,718.91 | 10,031,075.82 |
| Raw and auxiliary materials | 1,006,244.40 | 1,206,442.37 |
| Other expenses | 5,752,500.17 | 8,615,626.55 |
| Total | 444,869,977.08 | 476,066,518.64 |
48. Administrative expenses
Unit: RMB
| Item | 2021 | 2020 |
| Employee remuneration | 917,532,446.14 | 946,318,870.14 |
| Share-based apportioned payment | 495,415,756.61 | 230,349,331.79 |
| Office expenses | 110,998,813.33 | 120,012,132.17 |
| Consulting fees | 50,040,642.58 | 58,295,036.01 |
| Depreciation cost | 113,225,494.49 | 46,771,658.24 |
| Amortization of intangible assets | 49,984,739.09 | 46,318,817.51 |
| Recruitment and training fees | 36,270,849.32 | 26,018,102.24 |
| Rental fees | 7,451,592.83 | 21,128,830.37 |
| Entertainment expenses | 17,746,437.84 | 19,860,887.78 |
| Travel expenses | 21,380,866.38 | 17,584,655.70 |
| Security expenses | 22,040,105.21 | 14,285,556.34 |
| Property insurance | 9,898,802.88 | 13,060,067.10 |
| Epidemic prevention cost | 9,781,437.76 | 8,216,830.16 |
| Other expenses | 89,889,788.86 | 61,510,017.45 |
| Total | 1,951,657,773.32 | 1,629,730,793.00 |
49. R&D expenses
Unit: RMB
| Item | 2021 | 2020 |
| Employee remuneration | 1,816,259,331.16 | 1,408,075,836.03 |
| Direct input cost | 1,321,811,155.22 | 1,114,489,356.70 |
| Amortization of intangible assets | 534,352,849.63 | 435,340,144.93 |
| Depreciation cost | 115,335,756.86 | 99,421,174.60 |
| Share-based apportioned payment | 237,184,411.36 | 178,305,912.88 |
| Design fees | 15,289,807.24 | 7,934,434.78 |
| Other expenses | 129,840,970.63 | 182,404,151.73 |
| Total | 4,170,074,282.10 | 3,425,971,011.65 |
50. Financial expenses
Unit: RMB
| Item | 2021 | 2020 |
| Interest expense | 213,431,869.57 | 299,081,520.81 |
| Less: Interest income | 91,492,632.72 | 39,217,451.01 |
| Less: Amount of interest capitalized | 3,809,576.72 | 22,374,919.62 |
| Exchange gains and losses | 27,313,452.95 | 214,005,083.18 |
| Less: Amount of foreign exchange gain/loss capitalized | ||
| Other | 21,656,869.28 | 39,194,538.73 |
| Total | 167,099,982.36 | 490,688,772.09 |
51. Other income
Unit: RMB
| Sources of other income | 2021 | 2020 |
| Government subsidies | 464,119,437.91 | 221,372,903.17 |
| Tax benefit included | 1,044,485.08 | 1,985,732.86 |
| Return of individual tax handling fee | 1,558,878.12 | 1,250,661.69 |
| Total | 466,722,801.11 | 224,609,297.72 |
52. Investment income
Unit: RMB
| Item | 2021 | 2020 |
| Return on long-term equity investments measured by the equity method | 23,111,753.41 | 25,126,283.51 |
| investments income from disposal of long-term equity investments | 6,872,916.88 | -112,378,182.41 |
| Investment income from derivative financial instruments | 343,451,879.97 | 225,805,044.25 |
| Investment income from disposal of equity | 82,457,029.49 | |
| Investment income from financial products | 20,903,469.99 | |
| Profit or loss arising from derecognition of financial assets measured at amortized costs | -7,852,608.05 | |
| Other | 295,443.10 | |
| Total | 469,239,884.79 | 138,553,145.35 |
53. Gains from changes in fair value
Unit: RMB
| Sources of gains from changes in fair value | 2021 | 2020 |
| Held-for-trading financial assets | -41,409,120.87 | 198,880,286.92 |
| Including: Gains from changes in fair value due to derivative financial instruments | -104,999,182.31 | 99,788,033.64 |
| Held-for-trading financial liabilities | -8,763,505.06 | -38,665,216.34 |
| Other non-current financial assets | 1,324,000.00 | |
| Total | -48,848,625.93 | 160,215,070.58 |
54. Credit impairment losses
Unit: RMB
| Item | 2021 | 2020 |
| Credit impairment losses on bad debts of other receivables | -10,478,144.68 | -6,502,717.39 |
| Credit impairment losses on bad debts of accounts receivable | -19,215,532.99 | -21,900,107.93 |
| Total | -29,693,677.67 | -28,402,825.32 |
55. Asset impairment losses
Unit: RMB
| Item | 2021 | 2020 |
| I. Loss on bad debts | ||
| II. Provision for decline in value of inventories or provision for impairment of contract performance cost | -241,076,190.54 | -124,906,385.59 |
| III. Impairment loss of long-term equity investments | ||
| IV. Impairment loss of investment properties | ||
| V. Asset impairment losses | ||
| VI. Impairment loss from construction materials | ||
| VII. Impairment loss of projects under |
| construction | ||
| VIII. Impairment loss of productive biological assets | ||
| IX. Impairment loss of oil and gas assets | ||
| X. Impairment loss of intangible assets | -82,892,206.40 | |
| XI. Impairment loss of goodwill | ||
| XII. Impairment loss of contract assets | 684.09 | 454.00 |
| XIII. Others | ||
| Total | -241,075,506.45 | -207,798,137.99 |
56. Gains on disposal of assets
Unit: RMB
| Source of income from disposal of assets | 2021 | 2020 |
| Gains on disposal of fixed assets | -31,557,333.48 | -62,250,234.59 |
| Income from disposal of intangible assets | -7,866.28 | |
| Income from disposal of right-of-use assets | 385,373.77 | |
| Total | -31,179,825.99 | -62,250,234.59 |
57. Non-operating revenue
Unit: RMB
| Item | 2021 | 2020 | Amount recorded in current non-recurring gains and losses |
| Donations accepted | 127,167.72 | ||
| Gains from damage and liquidation of non-current assets | 50,066.59 | 264,634.23 | 50,066.59 |
| Other | 22,394,671.59 | 18,409,225.11 | 22,394,671.59 |
| Total | 22,444,738.18 | 18,801,027.06 | 22,444,738.18 |
Other explanations:
Non-operating income - the rest in this category are mainly unpayable and the liquidated damages collected
58. Non-operating expenses
Unit: RMB
| Item | 2021 | 2020 | Amount recorded in current non-recurring gains and losses |
| Donation given | 2,304,955.25 | 11,280,281.54 | 2,304,955.25 |
| Losses from damage and liquidation of non-current assets | 91,018,949.18 | 45,180,218.55 | 91,018,949.18 |
| Other | 6,535,044.63 | 1,381,477.89 | 6,535,044.63 |
| Total | 99,858,949.06 | 57,841,977.98 | 99,858,949.06 |
59. Income tax expenses
(1) Details of Income tax expenses
Unit: RMB
| Item | 2021 | 2020 |
| Current income tax expenses | 451,539,809.11 | 341,769,162.80 |
| Deferred income tax expenses | -152,697,496.47 | 28,309,004.64 |
| Total | 298,842,312.64 | 370,078,167.44 |
(2) Adjustment process of accounting profit and income tax expenses
Unit: RMB
| Item | 2021 |
| Total profit | 4,605,908,796.98 |
| Income tax expense calculated at statutory/applicable tax rate | 690,886,319.55 |
| Impact of different tax rates applied to subsidiaries | -191,367,097.77 |
| Impact of adjusting income tax in previous periods | -6,876,153.83 |
| Impact of non-taxable income | -4,734,987.68 |
| Impact of non-deductible costs, expenses and losses | 11,546,808.03 |
| Impact of deductible loss of unrecognized deferred tax assets in previous period | -19,878,789.17 |
| Impact of deductible temporary differences or deductible losses of unrecognized deferred tax assets in current period | 65,353,357.68 |
| Changes in balance of beginning deferred tax assets/liabilities due to tax rate adjustment | 6,102,922.67 |
| Influence of deductible expenses included | -337,574,362.57 |
| Impact of share-based payment | 85,384,295.73 |
| Income tax expenses | 298,842,312.64 |
60. Other comprehensive income
See Note VII. 41 for details.
61. Cash flow statement items
(1) Cash received relating to other operating activities
Unit: RMB
| Item | 2021 | 2020 |
| Government subsidies | 465,518,187.04 | 363,513,441.39 |
| Current account | 3,315,066,295.04 | 1,344,344,686.65 |
| Interest income | 79,467,922.20 | 27,361,775.01 |
| Other | 156,626,681.14 | 27,574,746.32 |
| Total | 4,016,679,085.42 | 1,762,794,649.37 |
(2) Cash paid relating to other operating activities
Unit: RMB
| Item | 2021 | 2020 |
| R&D expenses | 1,462,687,665.98 | 1,337,512,674.33 |
| Current account | 3,404,842,851.48 | 1,319,017,827.75 |
| Office expenses | 125,723,643.39 | 129,721,767.60 |
| Rental fees | 11,925,953.89 | 59,285,456.46 |
| Consulting fees | 50,040,642.58 | 58,421,011.33 |
| Entertainment expenses | 30,529,279.73 | 33,071,597.30 |
| Travel expenses | 32,554,682.33 | 28,384,064.43 |
| Insurance expenses | 31,883,227.16 | 28,331,598.00 |
| Sales commission | 13,450,128.71 | 20,481,438.23 |
| Other | 255,037,716.46 | 157,858,078.94 |
| Total | 5,418,675,791.71 | 3,172,085,514.37 |
(3) Cash received relating to other investing activities
Unit: RMB
| Item | 2021 | 2020 |
| Unexpired option premium received | 9,258,951.92 | 46,410,668.35 |
| Total | 9,258,951.92 | 46,410,668.35 |
(4) Cash paid relating to other investing activities
None
(5) Cash received relating to other financing activities
Unit: RMB
| Item | 2021 | 2020 |
| Various securities in other currencies recovered | 1,380,340,710.98 | 1,229,922,718.18 |
| Interest income on raised funds | 12,024,710.52 | 11,855,676.00 |
| Subscription of employee stock ownership plan | 110,000,000.00 | |
| Borrowing of accounts receivable factoring | 5,000,000.00 | |
| Total | 1,507,365,421.50 | 1,241,778,394.18 |
(6) Cash paid relating to other financing activities
Unit: RMB
| Item | 2021 | 2020 |
| Various security deposit payments for other monetary capital | 1,416,013,727.89 | 1,589,807,032.50 |
| Repurchase of treasury shares | 1,999,998,595.63 | 477,129,807.72 |
| Rental fees payment | 102,991,821.74 | |
| Listing expense of the Goertek Microelectronics subsidiary | 8,983,655.49 | |
| Buy-out factoring fee | 7,852,608.05 | |
| Intermediary fee of issuance of bonds | 1,940,000.00 | 3,800,000.00 |
| Total | 3,537,780,408.80 | 2,070,736,840.22 |
62. Supplementary information for cash flow statement
(1) Supplementary information for cash flow statement
Unit: RMB
| Supplementary information | 2021 | 2020 |
| 1. Reconciliation of net profit to cash flow from operating activities: | -- | -- |
| Net profit | 4,307,066,484.34 | 2,851,887,114.18 |
| Add: Provision for impairment of assets | 241,075,506.45 | 236,200,963.31 |
| Depreciation of fixed assets, depletion of oil and gas assets and depreciation of productive biological assets | 2,117,567,273.70 | 1,653,795,246.56 |
| Credit impairment losses | 29,693,677.67 | |
| Depreciation of right-of-use assets | 122,484,411.95 | |
| Amortization of intangible assets | 588,754,476.68 | 483,117,594.62 |
| Long-term deferred expenses | 89,042,424.24 | 51,298,422.57 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (Use "-" for gain) | 31,179,825.99 | 62,250,234.59 |
| Loss on retirement of fixed assets (Use "-" for gain) | 90,968,882.59 | 44,915,584.32 |
| Loss on changes in fair value (Use "-" for gain) | 48,848,625.93 | -160,215,070.58 |
| Financial expenses (Use "-" for gain) | 214,683,875.67 | 329,201,716.98 |
| Investment loss (Use "-" for gain) | -469,239,884.79 | -138,553,145.35 |
| Decrease in deferred tax assets (Use "-" for gain) | -219,564,976.07 | -61,856,118.57 |
| Increase in deferred tax liabilities (Use "-" for decrease) | 66,867,479.60 | 90,165,123.21 |
| Decrease in inventory (Use "-" for increase) | -3,013,184,423.74 | -4,052,804,933.21 |
| Decrease of operating receivable items (Use "-" for increase) | -1,591,304,230.95 | -2,212,278,512.85 |
| Increase in operational payables (Use "-" for decrease) | 5,072,167,615.36 | 8,032,907,921.12 |
| Other | 871,368,483.26 | 472,223,972.78 |
| Net cash flow from operating activities | 8,598,475,527.88 | 7,682,256,113.68 |
| 2. Significant investing and financing activities that do not involve cash receipts and payments: | -- | -- |
| Debts transferred to capital | ||
| Convertible bonds due within one year | ||
| Fixed assets under finance lease | ||
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 9,137,900,902.04 | 6,913,191,984.54 |
| Less: Opening balance of cash | 6,913,191,984.54 | 3,094,603,792.32 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 2,224,708,917.50 | 3,818,588,192.22 |
Explanation on Other MattersThe rest RMB 871,368,483.26 results from share-based payment. For details, please see this Note XIII. Share-based Payment 2.Equity-settled share-based payment.
(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 periodNone
(4) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 9,137,900,902.04 | 6,913,191,984.54 |
| Including: Cash on hand | 160,703.83 | 183,125.46 |
| Bank deposits that can be used for payment at any time | 9,137,740,198.21 | 6,913,008,859.08 |
| II. Cash equivalents | ||
| III. Closing balance of cash and cash equivalents | 9,137,900,902.04 | 6,913,191,984.54 |
| Including: Cash and cash equivalents with restricted use by the parent company or a subsidiary of the Group |
63. Assets with restricted ownership or right to use
Unit: RMB
| Item | Book value at the end of the reporting period | Reasons for restrictions |
| Cash and bank balances | 910,620,794.05 | Deposit for bills and borrowings |
| Notes receivable | 6,095,782.39 | Bill pledge and others |
| Accounts receivable | 5,000,000.00 | Re-insurance accounts receivable not derecognized |
| Other non-current assets | 122,540,194.44 | When large-denomination certificates of deposit was pledged to the bank, the bank issued a financing guarantee |
| Total | 1,044,256,770.88 | -- |
64. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Closing foreign currency balance | Converted exchange rate | Closing converted RMB balance |
| Cash and bank balances | -- | -- | 4,788,520,304.46 |
| Including: USD | 728,656,732.50 | 6.3757 | 4,645,696,729.41 |
| EUR | 192,495.03 | 7.2197 | 1,389,756.38 |
| HKD | 40,598,223.59 | 0.8176 | 33,193,107.61 |
| JPY | 146,833,394.93 | 0.055415 | 8,136,772.58 |
| KRW | 1,186,032,024.25 | 0.00536 | 6,357,131.65 |
| NTD | 15,389,830.02 | 0.230378 | 3,545,478.26 |
| VDN | 314,031,455,432.68 | 0.00028 | 87,928,807.52 |
| DKK | 2,340,243.00 | 0.971062 | 2,272,521.05 |
| Accounts receivable | -- | -- | 10,025,961,604.40 |
| Including: USD | 1,569,926,808.24 | 6.3757 | 10,009,382,351.29 |
| EUR | |||
| HKD | |||
| JPY | 163,057,986.10 | 0.055415 | 9,035,858.30 |
| KRW | 1,165,526,919.78 | 0.00536 | 6,247,224.29 |
| VDN | 4,604,749,535.71 | 0.00028 | 1,289,329.87 |
| DKK | 7,044.50 | 0.971062 | 6,840.65 |
| Long-term borrowings | -- | -- | 1,213,294,229.18 |
| Including: USD | 190,299,767.74 | 6.3757 | 1,213,294,229.18 |
| EUR | |||
| HKD | |||
| Other receivables | 201,951,496.60 | ||
| Including: USD | 24,843,969.31 | 6.3757 | 158,397,695.13 |
| JPY | 177,339,532.08 | 0.055415 | 9,827,270.17 |
| KRW | 183,837,001.87 | 0.00536 | 985,366.33 |
| NTD | 5,559,638.98 | 0.230378 | 1,280,818.51 |
| VDN | 108,563,372,535.71 | 0.00028 | 30,397,744.31 |
| DKK | 1,094,268.08 | 0.971062 | 1,062,602.15 |
| Short-term borrowings | 512,628,201.89 | ||
| Including: USD | 80,403,438.35 | 6.3757 | 512,628,201.89 |
| Accounts payable | 10,127,400,129.15 | ||
| Including: USD | 1,554,897,224.09 | 6.3757 | 9,913,558,231.66 |
| EUR | 421,365.65 | 7.2197 | 3,042,133.60 |
| JPY | 604,092,239.47 | 0.055415 | 33,475,771.45 |
| KRW | 197,451,977.61 | 0.00536 | 1,058,342.60 |
| NTD | 102,078.02 | 0.230378 | 23,516.53 |
| VDN | 628,838,335,250.00 | 0.00028 | 176,074,733.87 |
| DKK | 172,388.00 | 0.971062 | 167,399.44 |
| Other payables | 12,185,391.02 | ||
| Including: USD | 489,210.52 | 6.3757 | 3,119,059.52 |
| JPY | 22,982,805.56 | 0.055415 | 1,273,592.17 |
| NTD | 10,562,613.01 | 0.230378 | 2,433,393.66 |
| KRW | 51,369,052.24 | 0.00536 | 275,338.12 |
| VDN | 16,650,695,321.43 | 0.00028 | 4,662,194.69 |
| DKK | 434,383.04 | 0.971062 | 421,812.86 |
(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 |
65. Government subsidies
(1) Basic information of government subsidies
Unit: RMB
| Type | Amount | Reported items | Amount recorded in current |
| profits and losses | |||
| Asset-related | 58,174,426.00 | Deferred income | 1,687,260.72 |
| Income-related | 140,206,700.00 | Deferred income | 140,206,700.00 |
| Income-related | 267,137,061.04 | Other income | 267,137,061.04 |
(2) Refund of government subsidies
□ Applicable √ Not applicable
66. Others
NoneVIII. 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
None
5. Change of combination scope for other reasons
Explain the changes in the combination scope caused by other reasons (such as newly established subsidiaries, liquidationsubsidiaries, etc.) and relevant information:
During the reporting period, the Company established a subsidiary company GOERTEK MICROELECTRONICS KOREACO.,LTD.
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 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 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 Ganyuzhi Technology 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 | |
| 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 under common control | |
| Goertek Optical Technology Co., Ltd. | Weifang | Weifang | Production & sales | 100.00% | Business combination not 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 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 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 | |
| Shenzhen Mototek Smart Technology Co., Ltd. | Shenzhen | Shenzhen | Production & sales | 100.00% | Business combination under common control | |
| Weifang Lokomo Precision Industry Co., Ltd. | Weifang | Weifang | Production & sales | 100.00% | Business combination 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 & | 100.00% | Establishment |
| sales | ||||||
| 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 | |
| Xian 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 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 Manufacturing (Vietnam) Co., Ltd. | Vietnam | Vietnam | Production & sales | 100.00% | Establishment | |
| GoerTek Audio Technologies Aps | Denmark | Denmark | Sales services | 100.00% | Establishment | |
| Goertek Seiki Techonology株式会社 | 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 under common control | |
| Goertek Technology Taiwan Co., Ltd. | Taiwan | Taiwan | R&D and trading | 100.00% | Establishment | |
| Goertek Technology (Japan) Co., Ltd. | Japan | Japan | R&D and | 100.00% | Establishment |
| trading | ||||||
| Goertek Technology (Hong Kong)Co., Ltd. | 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 whichhold the equity 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 current period | Dividends declared and distributed to minority shareholders in the current period | Balance of minority interest at the end of the period |
| Goertek Microelectronics Inc. | 14.10% | 32,204,132.27 | 532,193,657.63 |
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. | 3,719,286,194.06 | 1,449,333,493.18 | 5,168,619,687.24 | 1,116,518,234.62 | 278,293,567.19 | 1,394,811,801.81 | 1,810,965,783.37 | 949,034,763.27 | 2,760,000,546.64 | 1,296,973,732.89 | 226,803,466.70 | 1,523,777,199.59 |
Unit: RMB
| Name of subsidiary | 2021 | 2020 | ||||||
| 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. | 3,345,124,962.51 | 329,435,281.13 | 326,211,317.42 | -174,770,880.10 | 3,194,302,737.77 | 394,205,003.67 | 394,091,858.83 | 742,460,330.89 |
(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 financialstatementsNone
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 owners' equity in subsidiaries
In March 2021, 14 institutional shareholders, including Qingdao Microelectronics Innovation Center Co., Ltd., GongqingchengChunlin Equity Investment Partnership Corporation (Limited Partnership), Qingdao Henghuitai Industry Development Fund Co.,Ltd., and Tang Wenbo increased their investments by a total of RMB 2,149,987,749 in the subsidiary, Goertek Microelectronics Inc.of which RMB 60,580,100 was recorded in the additional registered capital and the remaining in the capital reserves. Uponcompletion of this capital increase, the Company’s equity in Goertek Microelectronics Inc. was changed from 95.88% to 85.90%.The minority shareholders made a premium contribution to increase the capital reserves by RMB 1,714,583,073.34.
(2) The impact of transactions on minority’ equity and the equity attributable to the parent company
Unit: RMB
| Goertek Microelectronics Inc. | |
| Purchase cost/disposal consideration | 2,149,987,749.00 |
| —Cash | 2,149,987,749.00 |
| —Fair value of non-cash assets | |
| Total purchase cost/disposal consideration | 2,149,987,749.00 |
| Less: The net asset share of a subsidiary calculated according to the proportion of the equity acquired/disposed | 361,679,118.20 |
| Difference | 1,788,308,630.80 |
| Including: Adjustment of capital reserves | 1,714,583,073.34 |
| Adjusted surplus reserves | |
| Retained earnings after adjustment |
Explanation on Other MattersThe difference is RMB 1,788,308,630.80, of which RMB 1,714,583,073.34 is recorded in the capital reserves attributable to theparent company, and the remaining RMB 73,725,557.46 in minority equity.
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 | |
| Associated enterprises: | -- | -- |
| Total book value of investment | 437,402,203.91 | 337,410,802.56 |
| The total of the following items calculated according to the shareholding ratio | -- | -- |
| —Net profit | 23,111,753.41 | 25,126,283.51 |
| —Other comprehensive income | 1,189,723.34 | 3,632,422.87 |
| —Total comprehensive income | 24,301,476.75 | 28,758,706.38 |
(5) Statement of important restrictions on the ability of joint ventures or associates to transfer capital to theCompany
None
(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 associates
None
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 andthe Group’s risk management policy used for reducing these risks is stated as follows. The Group’s management manages andmonitors these 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 orshareholder’s equity using sensitivity analysis techniques. As risk variables rarely change in isolation, and the correlation betweenany two of the risk variables will have a great effect on the final impact amount of a certain risk variable, the following disclosuresare made assuming that each variable changes in isolation.(I) Risk management goals and policies
The Group’s risk management aims to reach appropriate balancing between risks and benefits, to minimize the negative impactof risks on 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 mainlyinvolves US dollars. Except that the Company and its subsidiaries purchase and sell in USD, EUR, JPY, VND, DKK, HKD, NTDand KRW, other main business of the Group is measured and settled in RMB. As of December 31, 2021, for the foreign currencymonetary items of the Company, please see this Note VII. 64. Except that the assets or liabilities, held-for-trading financial assets,long-term equity investments - AKM Industrial Company Limited, other equity instrument investments and some other non-currentfinancial assets mentioned in the table are foreign currency balances, the Group's assets and liabilities are mainly recorded in RMB.The foreign exchange risks arising from the assets and liabilities denominated in foreign currencies may have an impact on theoperating results of the 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 settledin USD. The depreciation of USD and the appreciation of RMB will reduce the procurement cost of imported raw materials, butadversely affect the competitiveness of the Company's products in overseas markets. Considering the import of raw materials andexport of products, 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 pre-tax impact of possible reasonable changes in USD currency rate on currentprofits and losses, and shareholders' equity is as follows:
Unit: RMB
| Item | Change in exchange rate | 2021 | 2020 | ||
| Impact on net profit | Impact on shareholders' equity | Impact on net profit | Impact on shareholders' equity | ||
| USD | 3% appreciation against RMB | 74,152,124.92 | 71,951,894.19 | -46,192,125.00 | -46,223,483.50 |
| USD | 3% depreciation against RMB | -74,152,124.92 | -71,951,894.19 | 46,192,125.00 | 46,223,483.50 |
(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 ratebank borrowings. 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 orexpense;
For derivative financial instruments designated as hedge instruments, changes in market interest rates affect their fair value, andall interest 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 thediscounted cash 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 pre-tax impact of possible reasonablechanges in interest rates on current profits and losses, and shareholders' equity is as follows:
Unit: RMB
| Item | Interest rate change | 2021 | 2020 | ||
| Impact on net profit | Impact on shareholders' equity | Impact on net profit | Impact on shareholders' equity | ||
| Bank borrowings | Float up by 10% | -16,563,847.02 | -16,563,847.02 | -24,276,039.79 | -24,267,900.11 |
| Bank borrowings | Float down by 10% | 16,563,847.02 | 16,563,847.02 | 24,276,039.79 | 24,267,900.11 |
(3) Other price risks
None
2. Credit risk
As of December 31, 2021, the maximum credit risk exposure that may cause the Group's financial loss resulted from the loss inthe Group'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 implementother monitoring procedures to ensure that necessary measures are taken to recover overdue claims. Additionally, the Companycooperates with commercial insurance institutions to insure for high-risk customers, so as to reduce the risk of bad debts from creditsale. In addition, the Group reviews the recovery of each individual receivable on each balance sheet date to ensure that adequate baddebt provision is made for unrecoverable amounts. Therefore, the Group’s management believes that the credit risk undertaken by theGroup has 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 and bank balances 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 tothe Group.
(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 theimpairment of the financial assets
None
3. Liquidity risk
When managing liquidity risk, the Group maintains and monitors cash and cash equivalents the management deems sufficient tomeet the Group's business needs and reduce the impact of cash flow fluctuations. The management of the Group monitors the use ofbank borrowings 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, 2021, the unusedbank credit line of the Group was RMB 27.495 billion (December 31, 2020: RMB 18.932 billion).
(II) Transfer of financial assets
1. Transferred but not derecognized financial assets
Unit: RMB
| Items | Amount not derecognized at the end year |
| Notes receivable | 1,709,928.75 |
| Accounts receivable | 5,000,000.00 |
2. Transferred and derecognized financial assets
Unit: RMB
| Item | Amount derecognized at the end of year |
| Notes receivable | 76,909,941.48 |
| Accounts receivable | 1,673,167,869.71 |
(III) Offset of financial assets and financial liabilitiesNoneXI. 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) Held-for-trading financial assets | 98,804,286.66 | 20,462,992.36 | 119,267,279.02 | |
| 1. Financial assets measured at fair value through profit and loss | 98,804,286.66 | 20,462,992.36 | 119,267,279.02 | |
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | 98,804,286.66 | 98,804,286.66 | ||
| (3) Derivative financial assets | 20,462,992.36 | 20,462,992.36 | ||
| 2. Financial assets designated as measured at fair value through profit or loss | ||||
| (II) Other debt investments | ||||
| (III) Other equity instrument investments | 465,677,764.54 | 465,677,764.54 | ||
| (IV) Investment properties | ||||
| (V) Biological assets | ||||
| (VI) Other non-current financial assets | 201,430,042.13 | 201,430,042.13 | ||
| Total assets consistently measured at fair value | 98,804,286.66 | 20,462,992.36 | 667,107,806.67 | 786,375,085.69 |
| (VII) Held-for-trading financial liabilities | 15,190,564.34 | 15,190,564.34 | ||
| Including: Held-for-trading bonds issued | ||||
| Derivative financial liabilities | 15,190,564.34 | 15,190,564.34 | ||
| (VIII) Financial liabilities designated to be measured at fair value through profit and loss | ||||
| Total liabilities continuously measured at fair value | 15,190,564.34 | 15,190,564.34 | ||
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Determination basis for the market price of continuous and non-continuous first-level fair valuemeasurement items
The closing price at the end of the year is used as the basis for determining the market price of the shares of foreign listedcompanies held 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 items
Basis for determining fair value according to the value assessed under the income method and the asset-based method and thenet book asset.
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 changesNone
8. Fair value of financial assets and financial liabilities not measured at fair valueNone
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 | 15.37% | 15.37% |
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 Company
See 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 |
| Goertek Robotics Co., Ltd. | Associate of the parent company |
| Name of other related parties | Relationship between other related parties and the 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 Ivestment Co., Ltd | Enterprise controlled by an affiliated natural person |
| Beijing Dotcom Catering Management Co., Ltd | Enterprise controlled by an affiliated natural person |
| Beijing Dotcom Coffee Co., Ltd | Enterprise controlled by an affiliated natural person |
| Beijing Bubble lab Co., Ltd | Enterprise controlled by an affiliated natural person |
| Weifang Daocao Catering 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 |
| Beihang Goer (Weifang) Intelligent Robot Co., Ltd | Business of the same actual controller |
| Qingdao Goer Changguang Research Institute Co., Ltd | Parent company's associate, de-registered on January 18, 2022 |
| Weifang Goer Education Investment 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 | Business of the same actual controller |
| Dynaudio Holding A/S | Business of the same actual controller |
| Qingdao Pico Technology Co., Ltd. | Parent company's associate, disposed of on September 8, 2021. |
| Little Bird Co., Ltd | Business of the same actual controller |
| Qingdao Realtime Technology Co., Ltd. | Parent company's associate, de-registered on May 15, 2020 |
| Weifang GoerHome Decoration Engineering Co., Ltd | Business of the same actual controller, de-registered on August 12, 2021 |
| 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 |
| Weifang Hanzhi Enterprise Management Co., Ltd. | Business of the same actual controller |
| Weihai Point Hotel Management Co., Ltd | Business of the same actual controller |
| Qiangdao Goertek Robotics Co., Ltd | Business of the same actual controller |
| Weihai Goer Real Estate Co., Ltd | Business of the same actual controller |
| Name of other related parties | Relationship between other related parties and the Company |
| Weifang GoerDyna Electronic Technology Co., Ltd | Business of the same actual controller |
| Wemake (Qingdao) Digital Creative Technology Co., Ltd | Business of the same actual controller |
| 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 |
Explanation on Other Matters
Wemake (Beijing) Consulting Service Co., Ltd. was renamed Wemake (Beijing) Digital Creative Technology Co., Ltd in April2021.
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 | 2021 | Approved trading limit | Exceed the trading limit or not | 2020 |
| AKM Industrial Company Limited | Purchasing raw materials | 108,622,154.32 | 250,000,000.00 | No | 84,627,432.35 |
| Weifang Point Hotel Management Co., Ltd | Purchasing goods and services | 14,774,953.49 | No | 12,259,050.79 | |
| Wemake (Beijing) Digital Creative Technology Co., Ltd. | Purchasing goods and services | No | 2,686,233.61 | ||
| Beijing Dotcom Coffee Co., Ltd | Purchasing goods | 3,216.00 | |||
| Weifang Goer Property Service Co., Ltd | Purchasing goods and services | 6,399,062.47 | No | 4,813,056.62 | |
| Weifang GoerHome Decoration Engineering Co., Ltd | Receiving labor service | No | 9,258,618.50 | ||
| Dotcom Ivestment Co., Ltd | Purchasing goods and services | 1,397,275.64 | No | 2,337,361.77 | |
| Weifang Goer Real Estate Co., Ltd | Receiving labor service | 37,498,099.41 | |||
| Weifang Goer Farm Co., Ltd. | Purchasing goods and services | 11,559,035.68 | No | 3,442,382.54 | |
| Weihai Goer Ecological Agriculture Co., Ltd. | Purchasing goods | 632,726.75 | No | 171,040.00 |
| Weifang Goer Manor Food & Beverage Co., Ltd. | Purchasing goods | 2,125,413.79 | No | 2,212,729.94 | |
| Weifang Shixiang Real Estate Co., Ltd. | Purchasing goods and services | 800.00 | 366,380.86 | ||
| Weifang Dotcom Catering Management Co., Ltd | Purchasing goods and services | 30,550,429.90 | No | 23,438,086.32 | |
| Weifang Goer Manor Trading Co., Ltd. | Purchasing goods | 2,279,607.11 | No | 509,069.88 | |
| Weifang Daocao Catering Co., Ltd. | Purchasing goods and services | 485,022.00 | No | 425,240.40 | |
| Qiangdao Goertek Robotics Co., Ltd | Purchasing goods and services | 11,022.53 | |||
| Goertek Robotics Co., Ltd. | Purchasing goods and services | 7,345,708.62 | 794,392.50 | ||
| Beijing Dotcom Catering Management Co., Ltd | Purchasing goods | 128,750.00 | |||
| Beijing Bubble lab Co., Ltd | Purchasing goods and services | 2,068,337.18 | No | 96,425.00 | |
| Qingdao Point Hotel Management Co., Ltd | Receiving labor service | 1,973,014.81 | No | 519,363.79 | |
| Qingdao Goer Changguang Research Institute Co., Ltd | Receiving labor service | 9,000.00 | |||
| Wemake (Weihai) Digital Creative Technology Co., Ltd | Purchasing goods | 261,489.60 | No | 200,854.43 | |
| Beihang Goer (Weifang) Intelligent Robot Co., Ltd | Purchasing goods and services | 2,016,497.00 | No | 495,049.50 | |
| Dynaudio Holding A/S | Purchasing goods and services | 10,088,269.89 | No | 3,183,415.26 | |
| Little Bird Co., Ltd | Purchasing goods | 9,895,201.01 | |||
| Dynaudio Shanghai Co., Ltd | Purchasing goods | 454,032.00 | No | ||
| Qingdao Pico Technology Co., Ltd. | Purchasing goods | 8,172,060.06 | No | ||
| Qingdao Virtual Reality Institute Co., Ltd. | Receiving labor service | 13,674,912.95 | |||
| Weifang GoerDyna Electronic Technology Co., Ltd | Purchasing goods | 12,059,629.96 | No | ||
| Weihai Point Hotel Management Co., Ltd | Receiving labor service | 38,750.94 | No |
Statement of sales of goods/rendering of services
Unit: RMB
| Related parties | Related transactions | 2021 | 2020 |
| Qingdao Realtime Technology Co., Ltd. | Sales of goods | 4,524,024.14 | |
| Goertek Group Co., Ltd. | Sales of goods and services | 1,790,210.80 | 4,526,384.11 |
| Goertek Robotics Co., Ltd. | Sales of goods and services | 114,747.48 | 249,076.79 |
| Dotcom Ivestment Co., Ltd | Sales of goods | 10,353.98 | |
| Beijing Bubble lab Co., Ltd | Sales of goods | 320,500.00 | |
| Weifang Goer Real Estate Co., Ltd | Sales of goods and services | 784,572.77 | |
| Weifang Dotcom Catering Management Co., Ltd | Sales of goods and services | 1,477,900.21 | 3,118,178.42 |
| Weifang Goer Farm Co., Ltd. | Sales of goods | 56,603.76 | |
| Beihang Goer (Weifang) Intelligent Robot Co., Ltd | Sales of goods | 12,156.24 | 927,329.34 |
| Weifang Goer Manor Trading Co., Ltd. | Sales of goods | 154,535.59 | 333,314.56 |
| Weifang GoerHome Decoration Engineering Co., Ltd | Rendering of service | 1,691,619.08 | 57,728.01 |
| Dynaudio Holding A/S | Sales of goods | 835,047.55 | 294,064.33 |
| Dynaudio Shanghai Co., Ltd | Sales of goods and services | 7,809,105.05 | 1,187,797.81 |
| AKM Industrial Company Limited | Sales of goods | 1,134,756.63 | 964,951.31 |
| Weihai Goer Real Estate Co., Ltd | Sales of goods | 1,950.00 | |
| Little Bird Co., Ltd | Sales of goods | 43,567,472.65 | |
| 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 | |
| Qingdao Virtual Reality Institute Co., Ltd. | Sales of goods and services | 1,405,755.94 | |
| Weifang GoerDyna Electronic Technology Co., Ltd | Sales of goods and services | 18,684,849.56 | |
| 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 services
For details about the Company’s and its subsidiaries’ estimated trading limit of daily transactions with Goertek Group and itssubsidiaries, please see the Announcement of Estimated Daily Related Transactions in 2021 of Goertek Inc. issued on March 27,2021 through media for information disclosure.
(2) Related entrusted management/contracting and entrusted management/outsourcing
None
(3) Information of related lease
The Company acts as the lessor:
Unit: RMB
| Name of lessee | Types of leased assets | Lease income recognized in current period | Lease income recognized in last period |
| Weifang Goer Real Estate Co., Ltd | Building | 87,120.89 | |
| Weifang High-Tech Zone Yasong Linju Kindergarten | Building | 43,885.72 | 45,714.28 |
| Weifang Goer Education Investment Co., Ltd. | Building | 17,142.86 | |
| Weifang Point Hotel Management Co., Ltd | Building | 248,794.77 | 176,628.57 |
| Beihang Goer (Weifang) Intelligent Robot Co., Ltd | Building | 186,382.10 | 76,190.48 |
| Weifang Goer School | Building | 91,721.99 | 51,935.19 |
| Weifang Dotcom Catering Management Co., Ltd | Building | 34,285.71 | |
| Weifang Goer Farm Co., Ltd. | Building | 571.43 | |
| Weifang High-Tech Zone Goer Kindergarten | Building | 22,400.00 | 16,114.29 |
| Weifang Hanzhi Enterprise Management Co., Ltd. | Building | 39,633.03 | 54,679.25 |
| Qingdao Point Hotel Management Co., Ltd | Building | 1,981.13 | |
| Weihai Point Hotel Management Co., Ltd | Building | 1,320.75 | |
| Weihai Goer Ecological Agriculture Co., Ltd. | Building | 137.61 | |
| Shandong Goer Education Group Co., Ltd. | Building | 7,840.44 | |
| Weifang GoerDyna Electronic Technology Co., Ltd | Building | 2,407,111.58 |
The Company acts as the lessee:
Unit: RMB
| Name of lessor | Types of leased assets | Rental expenses recognized in current period | Rental expenses recognized in last period |
| Goertek Group Co., Ltd. | Building | 444,700.82 | 5,212,610.80 |
| Weifang Goer Farm Co., Ltd. | Building | 1,449,000.00 | |
| Weifang Hanhui Enterprise Management Co., Ltd. | Building | 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 | 63,757,000.00 | September 10, 2020 | September 10, 2021 | Yes |
| Goertek (HongKong) Co., Limited | 63,757,000.00 | September 10, 2021 | September 10, 2022 | No |
| Goertek (HongKong) Co., Limited | 63,757,000.00 | October 20, 2020 | October 20, 2021 | Yes |
| Goertek (HongKong) Co., Limited | 63,757,000.00 | October 20, 2021 | October 20, 2022 | No |
| Goertek (HongKong) Co., Limited | 726,670,407.50 | January 16, 2020 | January 16, 2023 | No |
| Goertek (HongKong) Co., Limited | 32,037,892.50 | January 17, 2020 | January 16, 2023 | No |
| Goertek (HongKong) Co., Limited | 701,327,000.00 | February 24, 2020 | January 16, 2023 | Yes |
| Goertek (HongKong) Co., Limited | 452,674,700.00 | February 24, 2020 | January 16, 2023 | No |
| Goertek (HongKong) Co., Limited | 95,635,500.00 | November 29, 2020 | May 25, 2021 | Yes |
| Goertek (HongKong) Co., Limited | 159,392,500.00 | August 20, 2020 | August 20, 2021 | Yes |
| Goertek (HongKong) Co., Limited | 159,392,500.00 | August 20, 2021 | August 20, 2022 | No |
| Goertek Technology Vina Company Limited | 191,271,000.00 | August 16, 2021 | December 16, 2021 | Yes |
| Goertek Technology Co., Ltd. | 396,829,262.02 | September 20, 2018 | September 21, 2026 | Yes |
| Goertek Technology Vina Company Limited | 50,400,000.00 | June 10, 2020 | June 9, 2021 | Yes |
| Goertek Technology Vina Company Limited | 23,000,000.00 | June 6, 2021 | June 5, 2022 | No |
| Goertek Technology Vina Company Limited | 4,500,000.00 | June 6, 2021 | June 5, 2022 | No |
| Goertek Technology Vina Company Limited | 283,900,000.00 | February 21, 2020 | February 20, 2021 | Yes |
| Goertek Technology Vina Company Limited | 496,413,129.00 | July 30, 2021 | July 29, 2022 | No |
| Goertek Technology Vina Company Limited | 89,259,800.00 | August 27, 2020 | August 26, 2021 | Yes |
| Goertek Technology Vina Company Limited | 85,617,550.00 | August 20, 2020 | July 2, 2021 | Yes |
| Goertek Technology Vina Company Limited | 85,036,553.00 | October 18, 2021 | October 17, 2022 | No |
| Goertek Technology Vina Company Limited | 56,000,000.00 | December 1, 2020 | November 30, 2021 | Yes |
| Goertek Technology Vina Company Limited | 55,000,000.00 | August 1, 2021 | July 30, 2022 | No |
| Goertek Technology Vina Company Limited | 127,514,000.00 | June 29, 2021 | June 29, 2022 | No |
| Weifang Goertek Microelectronics Co., Ltd. | 30,000,000.00 | March 2, 2020 | March 2, 2021 | Yes |
| Weifang Goertek Microelectronics Co., Ltd. | 10,000,000.00 | March 10, 2020 | March 9, 2021 | Yes |
| Weifang Goertek Microelectronics Co., Ltd. | 5,000,000.00 | March 27, 2021 | March 26, 2022 | No |
| Goertek Microelectronics Inc. | 19,127,100.00 | November 19, 2020 | November 18, 2021 | Yes |
| Goertek Microelectronics Inc. | 19,127,100.00 | November 19, 2021 | November 18, 2022 | No |
| Goertek Intelligence Technology Co., Ltd. | 4,000,000.00 | June 10, 2021 | June 9, 2022 | No |
| Goertek Technology Vina Company Limited | 60,569,150.00 | September 24, 2020 | August 31, 2021 | Yes |
| Goertek (HongKong) Co., Limited | 42,398,405.00 | May 19, 2020 | May 19, 2021 | Yes |
| Goertek Technology Vina Company Limited | 3,187,850.00 | August 14, 2020 | August 13, 2021 | Yes |
Explanation on Other MattersThe syndicated loan borne by Goertek Technology Co., Ltd., a subsidiary, was RMB 396,829,262.02, which was repaid inFebruary and March 2021.The borrowing borne by Goertek (HongKong) Co., Limited, a subsidiary, was USD 110,000,000.00, which was repaid in Julyand December 2021.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. | 10,000,000.00 | August 25, 2020 | February 24, 2021 | Yes |
| Goertek Group Co., Ltd. | 40,000,000.00 | September 18, 2020 | March 17, 2021 | Yes |
| Goertek Group Co., Ltd. | 25,000,000.00 | October 16, 2020 | April 15, 2021 | Yes |
| Goertek Group Co., Ltd. | 25,000,000.00 | November 27, 2020 | May 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 5,520,000.00 | October 29, 2020 | January 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 2,546,000.00 | October 29, 2020 | April 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 9,398,000.00 | November 11, 2020 | January 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 690,000.00 | November 11, 2020 | February 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 3,599,000.00 | November 11, 2020 | March 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,069,000.00 | November 11, 2020 | April 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,320,000.00 | November 26, 2020 | January 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 3,330,000.00 | November 26, 2020 | April 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,100,000.00 | November 26, 2020 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 3,200,000.00 | November 27, 2020 | February 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 6,830,000.00 | November 27, 2020 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 3,500,000.00 | December 8, 2020 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,110,000.00 | December 8, 2020 | February 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,259,000.00 | December 8, 2020 | April 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 6,017,000.00 | January 19, 2021 | March 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 7,309,000.00 | January 19, 2021 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 3,680,000.00 | January 19, 2021 | April 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 10,000,000.00 | February 19, 2021 | August 18, 2021 | Yes |
| Goertek Group Co., Ltd. | 40,000,000.00 | February 26, 2021 | August 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 6,900,000.00 | March 2, 2021 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 4,790,000.00 | March 2, 2021 | June 25, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 7,800,000.00 | March 2, 2021 | July 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,769,000.00 | March 18, 2021 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,120,000.00 | March 18, 2021 | June 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 4,280,000.00 | March 18, 2021 | August 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 25,000,000.00 | April 7, 2021 | October 6, 2021 | Yes |
| Goertek Group Co., Ltd. | 7,370,000.00 | April 27, 2021 | July 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 7,520,000.00 | April 28, 2021 | September 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 7,925,000.00 | April 28, 2021 | May 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 25,000,000.00 | April 29, 2021 | October 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,200,000.00 | May 7, 2021 | June 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 6,990,000.00 | May 7, 2021 | October 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 11,400,000.00 | May 31, 2021 | November 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 11,300,000.00 | May 31, 2021 | August 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 12,230,000.00 | July 7, 2021 | September 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 6,440,000.00 | July 7, 2021 | December 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 4,650,000.00 | July 14, 2021 | October 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 4,350,000.00 | July 27, 2021 | October 25, 2021 | Yes |
| Goertek Group Co., Ltd. (Note 1) | 50,000,000.00 | August 19, 2021 | February 18, 2022 | Yes |
| Goertek Group Co., Ltd. | 7,500,000.00 | September 28, 2021 | November 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 8,300,000.00 | September 28, 2021 | December 25, 2021 | Yes |
| Goertek Group Co., Ltd. | 400,000,000.00 | September 29, 2020 | September 28, 2022 | No |
| Goertek Group Co., Ltd. | 200,000,000.00 | April 1, 2021 | March 31, 2022 | No |
| Goertek Group Co., Ltd. | 300,000,000.00 | October 29, 2021 | October 28, 2022 | No |
| Goertek Group Co., Ltd. | 50,000,000.00 | September 8, 2021 | March 7, 2022 | No |
| Goertek Group Co., Ltd. | 50,000,000.00 | November 18, 2021 | May 17, 2022 | No |
| Goertek Group Co., Ltd. | 50,000,000.00 | December 17, 2021 | June 16, 2022 | No |
| Goertek Group Co., Ltd. | 10,920,000.00 | September 29, 2021 | January 25, 2022 | No |
| Goertek Group Co., Ltd. | 6,900,000.00 | September 29, 2021 | March 25, 2022 | No |
| Goertek Group Co., Ltd. | 9,980,000.00 | September 29, 2021 | February 25, 2022 | No |
| Goertek Group Co., Ltd. | 5,676,000.00 | October 25, 2021 | January 25, 2022 | No |
| Goertek Group Co., Ltd. | 4,880,000.00 | November 8, 2021 | April 25, 2022 | No |
| Goertek Group Co., Ltd. | 4,550,000.00 | November 8, 2021 | February 25, 2022 | No |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 3,870,000.00 | November 8, 2021 | January 25, 2022 | No |
| Goertek Group Co., Ltd. | 2,055,000.00 | November 29, 2021 | March 25, 2022 | No |
| Goertek Group Co., Ltd. | 1,560,000.00 | November 29, 2021 | April 25, 2022 | No |
| Goertek Group Co., Ltd. | 1,710,000.00 | November 29, 2021 | May 25, 2022 | No |
| Goertek Group Co., Ltd. | 4,770,000.00 | November 29, 2021 | May 25, 2022 | No |
| Goertek Group Co., Ltd. | 1,930,000.00 | November 29, 2021 | May 25, 2022 | No |
| Goertek Group Co., Ltd. | 10,249,000.00 | November 29, 2021 | May 25, 2022 | No |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,068,368.13 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,104,938.65 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,065,232.73 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,119,454.17 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,123,665.45 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,030.36 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,120,556.64 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,121,751.25 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,064,858.17 | March 30, 2021 | September 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,276,993.58 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 480,671.14 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 2,403,808.73 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 2,950,347.18 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 888,486.29 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 247,254.13 | April 27, 2021 | October 26, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 64,788.87 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 517,537.51 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 48,554.09 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 82,094.95 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 90,365.25 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 49,548.24 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 40,815.60 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 47,425.25 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 24,640.25 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 22,675.03 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 88,081.77 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 50,000.00 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 62,851.23 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 30,000.00 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 30,000.00 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 52,155.65 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 13,019.15 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 97,909.53 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 66,444.00 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 83,345.44 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 17,176.00 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 12,431.81 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 21,853.36 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 12,148.52 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 49,350.01 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,124,096.48 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 237,777.43 | April 27, 2021 | October 26, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,099,377.00 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 65,257.15 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 12,550.79 | April 28, 2021 | October 27, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 23,169.52 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 939,591.68 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,004,998.16 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,007,649.36 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 976,526.11 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 962,765.54 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,106,011.90 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 293,259.50 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 784,664.79 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 540,525.47 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,061,574.50 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,099,494.91 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,027,277.11 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 64,453.05 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,099,377.00 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,111,950.22 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 695,825.35 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,099,377.00 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,098,307.10 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 952,299.86 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 33,827.34 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 20,949.86 | April 28, 2021 | October 27, 2021 | Yes |
| Goertek Group Co., Ltd. | 616,643.96 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 586,791.52 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 500,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 309,061.98 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 500,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 591,482.62 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 500,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 603,697.27 | May 28, 2021 | November 28, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 807,584.74 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 851,518.57 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 567,479.76 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 500,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 555,488.21 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 500,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 942,760.48 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 500,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,998.98 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 54,139.39 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,996.95 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,996.95 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,999.04 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,998.98 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,998.98 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,996.95 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,998.98 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 50,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 31,133.05 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 235,429.08 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 61,175.70 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 50,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 29,480.80 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 48,849.21 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 112,999.66 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 20,617.62 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 60,410.99 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 40,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 26,427.26 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 14,831.02 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 10,772.54 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 57,439.38 | May 28, 2021 | November 28, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 18,221.25 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 20,918.79 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 50,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 91,197.71 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 52,348.38 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 30,000.00 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 32,004.57 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 316,786.23 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 96,178.71 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 44,814.95 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 20,247.27 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 31,380.63 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 87,485.08 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 39,210.95 | May 28, 2021 | November 28, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,128,803.54 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,916.87 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,052,906.99 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,121,985.68 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,126,886.41 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 930,109.53 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 679,882.36 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 281,493.98 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 109,818.28 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 167,823.51 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,066,691.49 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 946,602.93 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,052,073.47 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 928,117.52 | May 31, 2021 | November 30, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 1,108,191.00 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 301,317.50 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 865,435.48 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 4,378,550.51 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 54,069.32 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 15,283.85 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 18,366.21 | May 31, 2021 | November 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 601,647.24 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,105,564.64 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,127,861.48 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,109,525.93 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,015,049.17 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,008,404.23 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 546,954.14 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 253,542.65 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,126,669.99 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 958,335.53 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,047.41 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,070,204.71 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,096,262.33 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 922,474.54 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,129,915.25 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 314,468.47 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 754,519.95 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 64,668.99 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 11,516.96 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 600,148.96 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 69,722.81 | June 30, 2021 | December 30, 2021 | Yes |
| Guarantor | Guarantee amount | Starting date of guarantee | Maturity date of guarantee | Whether the guarantee has been performed fully |
| Goertek Group Co., Ltd. | 250,197.03 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 14,085.30 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 432,225.01 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 878,705.81 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 665,741.12 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,060,357.97 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 989,141.03 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 13,632.14 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 157,209.49 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 17,573.76 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 509,518.92 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 388,946.24 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 1,086,363.53 | June 30, 2021 | December 30, 2021 | Yes |
| Goertek Group Co., Ltd. | 522,807.40 | May 13, 2021 | December 13, 2021 | Yes |
| Goertek Group Co., Ltd. | 2,515,213.65 | June 17, 2021 | December 15, 2021 | Yes |
| Goertek Group Co., Ltd. (Note 2) | 1,326,145.60 | February 2, 2021 | July 20, 2021 | No |
Explanation of related guaranteeNote 1: The borrowing was repaid on November 1, 2021.Note 2: The equipment subject to the security failed to meet the acceptance standards within the validity period of the letter of creditand was not paid for.
(5) Funds borrowed from related parties
None
(6) Transfer of assets and debt restructuring of related parties
Unit: RMB
| Related parties | Related transactions | 2021 | 2020 |
| Goertek Robotics Co., Ltd. | Purchasing office equipment | 943,396.20 | 16,428.14 |
| Weifang Goer Real Estate Co., Ltd | Purchasing office equipment | 379,003.54 | |
| Weifang Shixiang Real Estate Co., Ltd. | Purchasing buildings and structures | 387,250.60 | 11,855,533.00 |
| Qingdao Realtime Technology Co., Ltd. | Purchasing office equipment | 54,797.35 |
| Beijing Bubble lab Co., Ltd | Purchasing office equipment | 1,845,155.05 | |
| Wemake (Beijing) Digital Creative Technology Co., Ltd. | Purchasing office equipment | 2,237,536.87 | |
| Goertek Group Co., Ltd. | Purchasing office equipment | 6,700,007.82 | |
| Weifang GoerHome Decoration Engineering Co., Ltd | Purchasing buildings and structures | 6,171,794.28 | |
| Wemake (Qingdao) Digital Creative Technology Co., Ltd | Purchasing office equipment | 215,405.66 | |
| Wemake (Weihai) Digital Creative Technology Co., Ltd | Purchasing office equipment | 56,603.77 | |
| Qingdao Virtual Reality Institute Co., Ltd. | Purchasing office equipment | 2,606,781.00 | |
| Qingdao Virtual Reality Institute Co., Ltd. | Disposal of fixed assets | 6,485,086.09 | |
| Weifang GoerDyna Electronic Technology Co., Ltd | Disposal of fixed assets | 9,295,634.00 | |
| Weifang Point Hotel Management Co., Ltd | Disposal of fixed assets | 4,760.77 |
(7) Remuneration of key managers
Unit: RMB
| Item | 2021 | 2020 |
| Remuneration of key managers | 16,950,000.00 | 15,520,000.00 |
(8) Other related transactions
None
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 | AKM Industrial Company Limited | 516,600.00 | 5,166.00 | 404,055.00 | 4,040.55 |
| Accounts receivable | Beijing Bubble lab Co., Ltd | 362,165.00 | 3,621.65 | ||
| Accounts | Weifang Dotcom Catering | 2,268,903.97 | 22,689.04 | ||
| receivable | Management Co., Ltd | ||||
| Accounts receivable | Little Bird Co., Ltd | 9,233,053.25 | 92,330.53 | 14,362,630.76 | 143,626.31 |
| Accounts receivable | Qingdao Pico Technology Co., Ltd. | 15,820,357.84 | 158,203.58 | ||
| Accounts receivable | Dynaudio Shanghai Co., Ltd | 189,133.13 | 1,891.33 | 1,327,754.52 | 13,277.55 |
| Accounts receivable | Goertek Robotics Co., Ltd. | 78,523.44 | 785.23 | ||
| Accounts receivable | Qingdao Point Hotel Management Co., Ltd | 252,800.00 | 2,528.00 | ||
| Accounts receivable | Weifang GoerDyna Electronic Technology Co., Ltd | 10,925,126.65 | 109,251.27 | ||
| Other receivables | Weifang Goer Farm Co., Ltd. | 50,000.00 | 500.00 | ||
| Other non-current assets | Beijing Bubble lab Co., Ltd | 1,426,472.10 | |||
| Other non-current assets | Dotcom Ivestment Co., Ltd | 1,252,224.66 |
(2) Items with accounts payable
Unit: RMB
| Name of project | Related parties | Closing book balance | Opening book balance |
| Accounts payable | AKM Industrial Company Limited | 39,135,420.36 | 29,088,400.44 |
| Accounts payable | Weifang Goer Real Estate Co., Ltd | 387,506.54 | |
| Accounts payable | Weifang Goer Property Service Co., Ltd | 1,542.00 | 21,811.87 |
| Accounts payable | Weifang Goer Manor Food & Beverage Co., Ltd. | 37,890.84 | 37,554.61 |
| Accounts payable | Weifang Goer Manor Trading Co., Ltd. | 212,941.81 | 26,999.93 |
| Accounts payable | Weifang Dotcom Catering Management Co., Ltd | 260,375.00 | 370,798.79 |
| Accounts payable | Weifang Goer Farm Co., Ltd. | 1,747,498.74 | 591,513.49 |
| Accounts payable | Beihang Goer (Weifang) Intelligent Robot Co., Ltd | 500,000.00 | |
| Accounts payable | Little Bird Co., Ltd | 2,757,461.08 | 704,088.56 |
| Accounts payable | Beijing Bubble lab Co., Ltd | 46,561.60 | 20,642.00 |
| Accounts payable | Wemake (Beijing) Digital Creative Technology Co., Ltd. | 64,788.94 |
| Accounts payable | Wemake (Weihai) Digital Creative Technology Co., Ltd | 10,293.85 | 70,205.77 |
| Accounts payable | Weihai Goer Ecological Agriculture Co., Ltd. | 30,200.00 | 30,240.00 |
| Accounts payable | Dotcom Ivestment Co., Ltd | 42,478.00 | |
| Accounts payable | Weifang Point Hotel Management Co., Ltd | 98,568.00 | |
| Accounts payable | Weifang GoerDyna Electronic Technology Co., Ltd | 12,408,592.87 | |
| Accounts payable | Qingdao Virtual Reality Institute Co., Ltd. | 4,925,805.03 | |
| Accounts payable | Wemake (Qingdao) Digital Creative Technology Co., Ltd | 404,150.41 | |
| Contract liabilities | Dynaudio Holding A/S | 234,908.37 | |
| Other payables | Beihang Goer (Weifang) Intelligent Robot Co., Ltd | 28,248.00 |
7. Commitment of related parties
None
8. Others
NoneXIII. 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 | 63,460,000.00 |
| Total amount of equity instruments exercised by the Company in the current period | 28,730,416.00 |
| Total amount of equity instruments of the Company which are invalid in the current period | 4,592,000.00 |
| 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 |
Explanation on Other Matters
(1) The range of exercise price of stock options issued by the Company at the end of the period and their remaining period ofcontractA. 2021 Share Option Incentive PlanTo 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 onMay 7, 2021, the Company shall implement the "2021 Stock Option Incentive Plan" for the important personnel in management andvarious departments (excluding directors and senior management) of the Company and its wholly-owned and holding subsidiaries.The exercise price for the first grant and the reserved stock options under the Incentive Plan is RMB 29.33 per share.The validity period of the Incentive Plan is 48 months, from the date of grant of stock options until the stock options are fullexercised or de-registered. The 12 months from the day when the stock options are granted initially or when the reserved stockoptions are granted under the Incentive Plan shall be the waiting period, and the options may be exercised after the end of the waitingperiod. In the exercise period, the grantees will exercise the options in two phases according to the exercise ratio of 50%:50% atexercisable dates.B. Equity incentive planAccording to the resolution of General Meeting dated September 29, 2020 and to the resolution of Board of Directors datedOctober 27, 2020, Goertek Microelectronics shall grant 17,335,000 stock options to the directors, senior management and keybackbones (excluding supervisors and independent directors) of Goer Microelectronics and its holding subsidiaries to be exercisedthem in five phases. The corresponding waiting periods are 18 months, 30 months, 42 months, 54 months and 66 months respectivelyfrom the date of grant.Goer Microelectronic applies the Black-Scholes option pricing model to measure and determine the fair value of stock options.The values 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
6.28 per share and RMB 7.45 per share.
(2) The range of exercise price of other equity instrument options issued by the Company at the end of the period and theirremaining period of contract
A. “Homeland No.4” employee stock 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 May
8, 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 theCompany’s special securities account for re-purchase at nil, and no employee was required to pay for the shares.
The validity period of the “Homeland No.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 lastunderlying shares of the Company to the name of this employee stock plan.B. “Homeland No.5” employee stock planTo 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 onMay 7, 2021 to implement the “Homeland No.5” employee stock plan for certain directors (excluding independent directors),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.5” employee stock plan received the transfer of shares in the Company’s special securities account forre-purchase at 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 12 months or 24months from the day of the transfer of the shares under the employee stock plan to this employee stock plan.
C. Equity incentive by way of capital increase
According to the resolution of the General Meeting of Shareholders and the amended Articles of Association of GoertekMicroelectronics, the natural-person shareholders Mr. Jiang Long and Mr. Song Qinglin subscribed for 21,500,000 shares of GoertekMicroelectronics by way of capital increase. The capital increase price was RMB 2 per share, which was lower than the fair value ofGoertek Microelectronics, and the amount constituted share-based payment.
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 reserves | 1,343,592,456.04 |
| Total amount of share-based payment settled with equity in current period | 871,368,483.26 |
3. Cash-settled payment settled in cash
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
None
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 organizationsAs of the report date, except that the guarantees provided by the Company to its subsidiaries Goertek (Hong Kong) Co., Limited,Goertek Technology Vina Company Limited, Weifang Goertek Microelectronics Co., Ltd., Goertek Intelligence Technology Co., Ltd.and Goertek Microelectronics Inc. are not fulfilled as specified in Note XII.5, there is no debt guarantees of the Company provided toother entities.
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 disclosedThere are no important contingencies to be disclosed in the Company.
3. Others
NoneXV. 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 |
| Matters on the disposal by subsidiaries of their interests in other companies | AKM Industrial Company Limited (hereinafter referred to as “AKM”), a company which Goertek (Hong Kong) Co., Limited, a wholly-owned subsidiary of the Company holds shares, announced on January 14, 2022 that Amway Industrial Limited and AKM Meadville (Xiamen) Co., Ltd. (referred to as “Co-offerers” collectively) proposed before the existing shareholders of AKM to privatize AKM by agreement arrangement in accordance with Article 673 of the Hong Kong Companies Ordinance. When the privatization proposal takes effect, the issued outstanding shares of AKM will be canceled, and the Co-offerers will pay the share cancellation price of HKD 1.82 per share (minus dividend adjustment (if any)) to the existing shareholders of AKM in cash. | After AKM’s privatization, Goertek (Hong Kong) Co., Limited, a wholly-owned subsidiary of the Company, will receive a total cancellation price of about HKD 660 million (minus dividend adjustment (if any) for its shares in AKM canceled, which will help improve the Company's profitability and cash flow. | |
| The progress of listing of a subsidiary, Goertek Microelectronics Inc. on SZSE | Goertek Microelectronics Inc., a subsidiary of the Company, plans to be listed on the ChiNext of Shenzhen Stock Exchange. At present, the issuer and sponsor take the initiative to apply for suspension of the review procedure for issuance and listing, and will resume the procedure as soon as possible depending on documentary preparation. | Not applicable |
2. Profit distribution
Unit: RMB
ChiNextProfits or dividends to be distributed
| Profits or dividends to be distributed | 668,411,117.00 |
| Profits or dividend declared after deliberation and approval | 668,411,117.00 |
3. Sales return
None
4. Explanation of other matters after the balance sheet date
NoneXVI. 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 this Note VII. 16 and 35.
② Information on items recorded in current profit or loss and relevant asset costs
| Items | Reported items | Amount (RMB) |
| Short-term lease expense (simplified treatment applies) | Administrative expenses | 24,744,987.37 |
| Selling expenses | 4,524,724.90 | |
| R&D expenses | 2,981,284.67 | |
| Cost of main business | 23,757,844.04 | |
| Interest expenses recognized on lease payment | Interest expenses | 13,692,320.31 |
| Income derived from the sublease of the right-of-use assets | Other business income | 3,465,424.78 |
③ Cash outflows related to leases
| Items | Category of cash flows | Amount in the current year (RMB) |
| Cash for repayment of principal and interest of lease liabilities | Cash outflows from financing activities | 102,991,821.74 |
| Payment for short-term leases and leases for low-value assets (simplified treatment applies) | Cash outflows from operating activities | 56,008,840.98 |
| Total | 159,000,662.72 |
(2) The Group as lessor
① Information on financing lease
None
② Information on operating lease
A. Items recorded in current profit or loss
| Items | Reported items | Amount (RMB) |
| Lease income | Other business income | 53,039,818.78 |
| Total | 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 | |||
| Accounts receivable for bad debt reserves by item | 531,002.50 | 0.01% | 531,002.50 | 100.00% | ||||||
| Accounts receivable with bad debts reserves by group | 8,040,359,505.41 | 100.00% | 31,185,331.21 | 0.39% | 8,009,174,174.20 | 9,771,125,513.47 | 99.99% | 25,588,445.52 | 0.26% | 9,745,537,067.95 |
| Including: | ||||||||||
| Group by aging | 3,118,533,121.24 | 38.79% | 31,185,331.21 | 1.00% | 3,087,347,790.03 | 2,443,254,164.24 | 25.00% | 25,588,445.52 | 1.05% | 2,417,665,718.72 |
| Related party group | 4,921,826,384.17 | 61.21% | 4,921,826,384.17 | 7,327,871,349.23 | 74.99% | 7,327,871,349.23 | ||||
| Total | 8,040,359,505.41 | 100.00% | 31,185,331.21 | 0.39% | 8,009,174,174.20 | 9,771,656,515.97 | 100.00% | 26,119,448.02 | 0.27% | 9,745,537,067.95 |
Bad debt reserve grouping: Group by aging
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Within 1 year | 3,118,533,121.24 | 31,185,331.21 | 1.00% |
| 1 to 2 years | |||
| 2 to 3 years | |||
| Over 3 years | |||
| Total | 3,118,533,121.24 | 31,185,331.21 | -- |
Description for basis of determining the group:
Bad debt reserve grouping: Related party group
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad-debt provision | Proportion of accrual | |
| Within 1 year | 4,921,826,384.17 | ||
| 1 to 2 years | |||
| 2 to 3 years | |||
| Over 3 years | |||
| Total | 4,921,826,384.17 | -- | |
Disclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 8,040,359,505.41 |
| Total | 8,040,359,505.41 |
(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 for bad debt reserves by item | 531,002.50 | 35,522.78 | 566,525.28 | |||
| Accounts receivable with bad debts reserves by group | 25,588,445.52 | 5,596,885.69 | 31,185,331.21 | |||
| Total | 26,119,448.02 | 5,632,408.47 | 566,525.28 | 31,185,331.21 |
Among them, significant information of bad debt reserves withdrawn or written back in the current period:
None
(3) Accounts receivable actually written off in current period
Unit: RMB
| Item | Written off amount |
| Accounts receivable actually written off | 566,525.28 |
(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 | 2,327,582,249.84 | 28.95% | |
| Company 2 | 1,146,613,449.59 | 14.26% | 11,466,134.50 |
| Company 3 | 797,260,785.21 | 9.92% | |
| Company 4 | 655,536,031.07 | 8.15% | |
| Company 5 | 611,058,683.09 | 7.60% | |
| Total | 5,538,051,198.80 | 68.88% | -- |
(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 receivables derecognized | Gains or losses related to derecognition of accounts receivable for the current year |
| Buyout factoring | 104,504,742.00 | -2,297,194.72 |
2. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 3,927,667,930.14 | 3,761,565,682.66 |
| Total | 3,927,667,930.14 | 3,761,565,682.66 |
(1) Interest receivable
None
(2) Dividend 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 | 3,774,035,738.53 | 3,753,395,937.93 |
| Security deposit | 40,178,537.85 | 8,019,073.86 |
| Tax refund for export receivable | 91,830,238.29 | |
| Withholding and remitting social insurance and housing provident fund | 25,693,583.89 | |
| Other | 388,839.91 | |
| Total | 3,931,738,098.56 | 3,761,803,851.70 |
2) Provision for bad debts
Unit: RMB
| Bad-debt provision | First stage | Second stage | Third stage | Total |
| Expected credit impairment losses over the next 12 months | Expected credit impairment losses for the entire life (credit impairment not occurred) | Expected credit impairment losses for the entire life (credit impairment has occurred) | ||
| Balance as of January 1, 2021: | 238,169.04 | 238,169.04 | ||
| Balance as of January 1, 2021 in the current period | —— | —— | —— | —— |
| Accrual in the current period | 3,831,999.38 | 3,831,999.38 | ||
| Balance as of December 31, 2021 | 4,070,168.42 | 4,070,168.42 |
Significant changes in the carrying value of changes in the allowances for losses in the current period
□ Applicable √ Not applicable
Disclosed by age of accounts receivable
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 3,798,881,748.08 |
| 1 to 2 years | 132,652,650.31 |
| 2 to 3 years | 103,700.17 |
| Over 3 years | 100,000.00 |
| 3 to 4 years | |
| 4 to 5 years | |
| Over 5 years | 100,000.00 |
| Total | 3,931,738,098.56 |
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 | 238,169.04 | 3,831,999.38 | 4,070,168.42 | |||
| Total | 238,169.04 | 3,831,999.38 | 4,070,168.42 | |||
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
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 | 1,249,000,000.00 | Within 1 year | 31.77% | |
| Company 2 | Current account | 652,471,412.50 | Within 1 year | 16.59% | |
| Company 3 | Current account | 465,600,000.00 | Within 1 year | 11.84% |
| Company 4 | Current account | 382,589,162.71 | Within 1 year | 9.73% | |
| Company 5 | Current account | 157,406,315.35 | Within 1 year | 4.01% | 1,574,063.15 |
| Total | -- | 2,907,066,890.56 | -- | 73.94% | 1,574,063.15 |
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 | 6,182,937,106.09 | 6,182,937,106.09 | 5,896,926,627.12 | 5,896,926,627.12 | ||
| Total | 6,182,937,106.09 | 6,182,937,106.09 | 5,896,926,627.12 | 5,896,926,627.12 | ||
(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. | 1,442,834,958.47 | 18,967,497.85 | 1,461,802,456.32 | ||||
| Weifang Goertek Trading Co., Ltd. | 50,000,000.00 | 369,428.17 | 50,369,428.17 | ||||
| Yishui Goertek Electronics Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| 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 | ||||
| Yili Precision Manufacturing Co., Ltd. | 330,000,000.00 | 1,899,916.31 | 331,899,916.31 | ||||
| Goertek Optical Technology Co., Ltd. | 595,162,190.72 | 1,826,030.68 | 596,988,221.40 | ||||
| Goertek Technology Co., Ltd. | 950,000,000.00 | 8,337,466.08 | 958,337,466.08 | ||||
| Beijing Goertek Technology Co., Ltd. | 7,418,835.34 | 22,741,998.26 | 30,160,833.60 | ||||
| Qingdao Goertek Acoustics Technology Co., Ltd. | 20,000,000.00 | 41,876,266.54 | 61,876,266.54 | ||||
| Shenzhen Goertek Technology Co., Ltd. | 49,597,980.97 | 16,894,478.05 | 66,492,459.02 | ||||
| Shanghai Goertek Technology Co., Ltd. | 10,000,000.00 | 9,953,450.46 | 19,953,450.46 | ||||
| Nanjing Goertek Technology Co., Ltd. | 50,000,000.00 | 591,085.07 | 50,591,085.07 | ||||
| Shenzhen Mototek Smart Technology Co., Ltd. | 4,002,592.81 | 4,002,592.81 | |||||
| Weifang Lokomo Precision Industry Co., Ltd. | 50,072,733.09 | 559,419.80 | 50,632,152.89 | ||||
| Goertek Investment Co., Ltd. | 75,000,000.00 | 3,000,000.00 | 78,000,000.00 | ||||
| Beijing Goertek Investment Management Co., Ltd. | 2,744,323.56 | 2,744,323.56 | |||||
| Dongguan JoyForce Precision Manufacturing Co., Ltd. | 30,000,000.00 | 633,305.44 | 30,633,305.44 | ||||
| Goertek Vina Co., Ltd | 247,634,379.61 | 247,634,379.61 | |||||
| Goertek Technology Korea Co., Ltd. | 66,148,905.23 | 594,307.54 | 66,743,212.77 | ||||
| Goertek Electronics, Inc. | 200,999,366.27 | 5,205,373.50 | 206,204,739.77 | ||||
| Goertek Technology Taiwan Co., Ltd. | 124,887,709.99 | 4,190,375.51 | 129,078,085.50 | ||||
| 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 | ||||
| Goertek Technology (Japan) Co., Ltd. | 115,858,424.29 | 1,298,833.00 | 114,559,591.29 | ||||
| Goertek Seiki Techonology株式会社 | 783,046.43 | 241,065.13 | 1,024,111.56 | ||||
| Goertek Intelligence Technology Co., Ltd. | 350,000,000.00 | 2,561,720.50 | 352,561,720.50 | ||||
| Goertek Microelectronics Inc. | 805,525,503.90 | 13,920,239.85 | 819,445,743.75 | ||||
| Beijing Goertek Microelectronics Co., Ltd. | 5,053,458.52 | 5,053,458.52 | |||||
| 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 Ganyuzhi Technology 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. | 50,000,000.00 | 802,186.89 | 50,802,186.89 | ||||
| Kunshan Goertek Electronics Co., Ltd. | 150,000,000.00 | 2,443,503.48 | 152,443,503.48 | ||||
| Rongcheng Goertek Technology Co., Ltd. | 3,000,000.00 | 97,696,635.98 | 100,696,635.98 | ||||
| Nanning Goertek | 80,000,000.00 | 80,000,000.00 | |||||
| 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 | ||||
| Electronics Co., Ltd. | |||||||
| Xian Goertek Electronic Technology Co., Ltd. | 8,000,000.00 | 263,877.27 | 8,263,877.27 | ||||
| Total | 5,896,926,627.12 | 287,309,311.97 | 1,298,833.00 | 6,182,937,106.09 | |||
(2) Investment in associated businesses and joint ventures
None
(3) Explanation of other matters:
None
4. Operating income and operating cost:
Unit: RMB
| Item | 2021 | 2020 | ||
| Income | Cost | Income | Cost | |
| Main business | 28,940,399,193.43 | 25,585,348,376.14 | 28,159,847,383.06 | 23,840,771,210.48 |
| Other business | 9,630,277,984.27 | 7,877,421,262.62 | 5,950,491,456.45 | 4,511,204,747.65 |
| Total | 38,570,677,177.70 | 33,462,769,638.76 | 34,110,338,839.51 | 28,351,975,958.13 |
Information about performance obligations:
Not applicable
5. Investment income
Unit: RMB
| Item | 2021 | 2020 |
| investments income from disposal of long-term equity investments | 132,058.00 | |
| Dividend income from long-term equity investments of subsidiaries | 619,011,093.47 | |
| investments income from disposal of long-term equity investments in subsidiaries | -50,327,104.67 |
| Investment income from derivative financial instruments | 127,863,191.52 | 125,660,675.74 |
| Investment income from disposal of equity | 69,366,960.61 | |
| Investment income from financial products | 2,488,497.76 | |
| Profit or loss arising from derecognition of financial assets measured at amortised costs | -2,297,194.72 | |
| Other | 295,443.10 | |
| Total | 197,716,898.27 | 694,476,722.54 |
6. Others
NoneXVIII. Supplementary information
1. Statement of non-recurring gains and losses for the current period
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Explanation |
| Loss or gain from disposal of non-current assets | -122,148,708.58 | |
| 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) | 464,119,437.91 | During the reporting period, the Company mainly obtained 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 held-for-trading financial assets and held-for-trading financial liabilities, as well as the investment income obtained from the disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets | 185,179,920.90 | |
| Other non-operating revenue and expenditures other than those mentioned above | 13,554,671.71 | |
| Other profit and loss items that meet the definition of non-recurring profit and loss | 2,603,363.20 | |
| Less: Impact of income tax | 84,270,186.15 |
| Impacted amount of minority shareholders' equity | 16,756,676.88 | |
| Total | 442,281,822.11 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
√ Applicable □ Not applicable
It mainly refers to returned service charge for withholding individual income tax and other fees.Description of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on Disclosure ofthe Information regarding the Companies Offering Their Securities to the Public - Non-recurring Profit and Loss, as recurring profitand 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 | 17.61% | 1.29 | 1.28 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 15.79% | 1.15 | 1.15 |
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 theoverseas firm shall be indicated.None
4. Others
None
| Goertek Inc. | |||
| Chairman: Jiang Bin | |||
| March 29, 2022 | |||